Banking and Non Banking Finance Company (NBFC) shares have plunged over the last one week. In some cases, the shares have fallen as much as 40 to 50 per cent. It maybe time to buy selectively into good quality names. Here are a few banking and NBFC stocks that you can buy for the long term.
L&T Finance Holdings
L&T Finance Holdings has seen its shares collapse in line with the fall in the markets and a drop in NBFC stocks.
The shares which have even changed hand at Rs 200 this year, have now dropped to Rs 125. At these levels the stock looks an attractive bet.
The company has shown strong growth over the last couple of years, with asset quality constantly improving.
For the first quarter ending June 30, 2018, L&T Finance Holdings (LTFH) reported a growth in NIMs and fees to 6.58 per cent of average book, as compared to 5.77 per cent in the corresponding period of last year.
Similarly, consolidated profit after tax surged by a huge by 71% to Rs 538 crores in Q1 FY19 vs Rs. 314 crores in Q1 FY18. The cost to income ratio has decreased from 24.07% to 23.40%.
Interestingly, the book value has now rallied to Rs 59.89 as on June 30, 2018, as against Rs 42, in the corresponding period of last year. The company is seeing a robust growth in non wholesale business, with a constant improvement in asset quality.
The crack in the stock of L&T Finance Holdings is a solid opportunity to buy into the stock. The shares are now available at a p/e of just 10 times one year forward earnings. Check stock quote of L&T Finance Holdings here
The shares of Yes Bank have halved from levels of Rs 400 to the current levels of Rs 203. At these levels the stock is extremely cheap. Recently, the NSE had sought a clarification from the bank on a host of issues, including business dealings with Rana Kapoor's daughters and also window dressing of accounts to conceal NPAs.
The bank has denied any business dealings with the three daughters of Rana Kapoor. It has also in a statement to the NSE denied window dressing of corporate accounts to conceal NPAs.
The bank also said that it has regularly made disclosures regarding any divergences in asset quality classification, which has been validated by its statutory auditors.
The fall in the stock of Yes Bank has come largely after the refusal by the Reserve Bank of India to grant extension to Rana Kapoor as the CEO.
The shares of Yes Bank are now trading near 52 week lows of Rs 203 and with a p/e of around 9 times, one year forward earnings. The shares are also trading at less than 1.5 times one year forward p/b. A good stock to buy at Rs 203.
Dewan Housing Finance shares collapsed, following reports of NCD sale by DSP at slightly higher yields. The shares of DHFL have now plunged to Rs 290, from levels of Rs 600 plus.
Fear has gripped investors, following the IL&FS episode, which has left NBFC and banking stocks battered.
There were worries of a default, which could be baseless, going by the company's clarifications. DHFL as clarified saying that its commercial paper exposure is 6% of its total borrowings and the total assets and liability book is over Rs 1 lakh crore.
"The company remains cash surplus even after considering repayment of all liabilities on account of CP, NCD, interest payment, bank dues, etc. till March 2019. The Company is extremely well-matched in case of the ALM position," DHFL has clarified.
It has also stated that the promoters have not pledged any has the strongest asset quality among housing finance companies.
Ar Rs 290 per share, the stock is available dearth cheap. It is now available at a p/e of less than 6 times, considering a likely EPS of Rs 50 in 2018-19. The dividend yield now nears 2 per cent, with the price to book below 1 times. Buy the stock for long-term gains.
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