5 banking and financial services stocks for investors to buy
Collection trends have improved significantly
According to Emkay Global, recent discussions with various collection agencies indicate encouraging trends in collection and recovery across wallets and geographies despite setbacks caused by recent lockdowns amid the second wave of Covid-19. Considering that the severity of the blockages was relatively light compared to last year, most businesses remained partially functional, experiencing only limited restrictions on the flow of goods and services.
“Fully functioning e-commerce channels have allowed even partial movement of non-essential items throughout this period, helping businesses take enough time to ramp up their operations and assume business as usual status,” said the brokerage house.
Higher recoveries in housing and secure products; auto loans remain mixed, the brokerage said. Although collections for unsecured SME / business loans and durable consumer products have again struggled, the credit card segment is doing better as borrowers in general prefer to hold cash. The auto finance segment remained the most vulnerable, with passenger cars and 2Ws seeing collections normalization and passenger vehicle and passenger vehicle loans (including taxi aggregators) remaining under pressure.
Although the recovery in business was halted during the second wave of Covid, there is built-in optimism for the recovery that is playing out with the gradual unlocking and improvement of the macros. We continue to love NBFCs with a decent fit and diverse mix of assets and liabilities.
5 stocks to choose from in the banking and financial services space
Emkay Global has placed a buy on housing finance major HDFC stock with a price target of Rs 3,100. This is a jump of nearly 20% from current levels. HDFC shares last closed at Rs 2,487 on the NSE.
2. Cholamandalam investment
This is another share that was recommended from space, in the brokerage’s research report. He set a price target of Rs 650 on the share compared to the current market price of Cholamandalam Investment of Rs 538. This is still a jump of almost 20% from the current market price.
3. Financing of Shriram transport
According to Emkay Global, although the recovery in business was halted during the second wave of Covid, there is built-in optimism for the recovery that is playing out with the gradual unlocking and improvement of macros.
He recommended a “buy” on the stock of Shriram Transport Finance with a target price of Rs 1,680, against the current market price of Rs 1,380.
4. Magma Fincorp
Magma Fincorp is an NBFC that offers auto loans, SME loans, tractor loans, etc. a jump of almost 20% from the current market price.
5. Union Finances of the Town of Shriram
Another NBFC stock recommended by the brokerage is Shriram City Union Finance. The company expects a target of an increase of Rs 1,950 on the share, compared to the current market price of 1,753.
The above mentioned stocks were selected in the brokerage report of Emkay Global. The author, the brokerage or Greynium Information Technologies assume no responsibility for any losses that may result. The above article is for informational purposes only. Please consult a professional advisor.