The NBFC arm of JM Financial Group- JM Financial Credit Solutions is looking to expand its loan book by 25% in FY19 by increasing its client base and geographical reach. The company is planning to gear up in real estate funding which as per a report by Crisil is expected to grow at a CAGR of 20-25% due to regulations like RERA (RERA requires on time completion of project and hence will bring credit discipline and demand).
Why is this important
The PSU banks are facing the problems of NPA’s and many of them are placed under corrective action place by RBI which has lead to increase in market share of private sector banks and NBFC’s. Further NBFC’s are also given freedom to deal in risky products like receivables discounting, loan against shares which help them to increase their yields. While on one side PSU banks are battling NPA problems, selected private sector banks and NBFC’s have been posting stellar performance because of the structural shift from public banks to private.
Stock to be impacted
JM Financial (CMP: Rs 135, M.cap: Rs 11293 cr, 2x FY20E P/BV) is expected to increase its loan book size and improve NIM (net interest margin) if it is able to meet its guidance.