InvestorQ : Is it true that the asset quality of NBFCs is worsening? What is your view on Indiabulls Housing and Bajaj Finance?
Mahima Roy made post

Is it true that the asset quality of NBFCs is worsening? What is your view on Indiabulls Housing and Bajaj Finance?

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Aditi Sharma answered.
8 months ago
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It is estimated that COVID-19 outbreak could only worsen the economic slowdown that the country is facing by worsening asset quality of NBFCs. This has been specifically pointed out by Moody’s in its study. Moratoriums have led to significant decline in cash flows and now the loan moratorium has been extended by another 3 months. This could lead to their solvency ratios worsening still further. While the direct purchase of NBFC debt by the government will be some relief, it may not address the core problem according to Moody’s. It has been pointed out that most NBFCs also lend to the highly vulnerable category of individuals working in the informal part of the economy or the self-employed; where the NPAs are expected to rise sharply. Regarding the specific stocks, both the stocks could be under pressure. Bajaj Finance is seeing pressure on its retail and MSME portfolio while Indiabulls is seeing more cash flow pressures from the realtors.

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