Possible outliers; 6 NBFCs with strong parentage which meet quantitative investing parametersao ct yo ny: Peata a: ENEFCA Wh tng es yeats, while clean uo ie tll on, ome companies have emerged stronger after allthe changes. The NBFC “which survived and emerged stronger nad ene thing in common, they ad strong parentage in terms of ‘them being backed by 2 strong premoter group, who value thei reputation. In order to sift through the Tong list we have combined some both qualtative and quanttative parameters to reach a final it of stocks with an upside petential according to analysts, In India, there is history to all the major regulatory overhauls. It is a scam which brings in a crisis and that makes our regulators rework on the operating ‘guidelines for that sector. Right from 1992 Harshad Mehta scam, which gave SEBI its teeth, in 2000 it was Ketan parekh scam which brought in major changes on trading instruments and how trades are settled. In 2018, events at IL&FS, DHFL and Yes bank triggered the NBFC crisis which led regulators to bring in more stringent capital adequacy and disclosure related norms, In the last five years of consolidation some NBFC have washed away, some have emerged stronger. The ones who have emerged strong after all the ups and downs witnessed in NBFC space are likely to witness better growth. The reason, a number of them have implemented tech solutions both from growth and controlling non performing assets NPA’s. ‘We looked at the list of companies from NBFC space and used two parameters for filtering, One qualitative and second quantitative, First the qualitative ones, the mice nn inraeatenpoel-d-rekeetnaon petals amet ptsprmt AEDES emta toes ar st yo by Peel lan NFCA Win rg pa NBEC should have a strong backing in terms of being owned by an industrial house or promoter with a track record of corporate governance. Second, the PEG ratio should be less than 1. The reason, valuing a NBFC on traditional valuation parameters like PE and P/BV is probably not the best way. Also a long-term growth rate of at least 20% is applied to filter down the list. Also for the purpose of this report, the stocks must have an overall rating of either a “Strong Buy" or a “Buy”, The list has then been sorted with the highest potential stock coming on the top of the list. Upside Potential as of 24th February 2023 mice nn inraeatenpoel-d-rekeetnaon petals amet ptsprmt AEDES emteran asa ao ct yo ty Peata a: NEES Wh tr pes List based on 24th February 2023 Upside UG inst. Market, Company Stock Analyst Potential «PEG = ratio. Stake a(R Name Score Reco oe ratio: 4) (o) cr) SirremPrance 8 ay on) eran ‘ oxy oz 7g? Holdege Sais France 7 ay os 2208758 rolamandaam invesment ana toe 8 eT) company ‘Aditya Birla ° ‘Strong 10.40 0.60 24.00 34,362 Capital Buy ° " sabia ana ania ee Seraces Shriram Finance Ltd Formerly known as Shriram Transport Finance Company Limited, is a retail non-banking finance company (NBFC). The Company is engaged in offering credit solutions for commercial vehicles, two-wheeler loans, car loans, home loans, gold loans, and personal and small business loans. Through its cutting-edge technology, it is a digital financial institution that reflects the banking needs of Millennial and Generation Z customers. It offersa toes ar st yo by Peel lan NFCA Win rg pa priority financial services to those in the unbanked and underbanked sectors. It offers fixed deposits and recurring deposits. L&T Finance Holdings Limited is a diversified non-banking financial company that offers a range of financial products and services through its subsidiaries. The Company's business segments include Rural finance, Housing finance, Infrastructure finance and Defocused business. The Rural finance segment comprises farm equipment finance, two-wheeler finance, micro loans and consumer finance, The Housing finance segment comprises home loans, loan. against property and real estate finance. The Infrastructure finance segment comprises infrastructure business, The Defocused business segment comprises structured corporate loans, debt capital market, commercial vehicle finance, construction equipment finance, small and medium enterprise (SME) term loans, and leases. It operates approximately 197 branches across India. The Company offers its financial solutions to its customers across various sectors, including rural, housing, infrastructure and mutual funds. Bajaj Finance Limited is a non-banking financial company. The Company's, consumer lending products include consumer electronics, furniture, digital products, e-commerce purchases and daily spending financing. Its small and medium enterprises (SME) lending consist of working capital loans and term facilities to SME, and professionals. The Company's rural lending offers all its lending and deposits products, which include consumer business-to-business mice nn inraeatenpoel-d-rekeetnaon petals amet ptsprmt AEDES emt weSrc yey Pn rs NEC ster (B28) lending, personal loans, gold loans, and retail deposits in small towns and villages. Its loan against securities business offers medium-term and short-term financing against shares, bonds, mutual funds, insurance policies and deposits to customers. Its mortgages offer home loans, loans against property and developer finance. Its commercial lending is engaged in lending to auto component manufacturers and the light engineering industry, loans to financial institutions, loans to the specialty chemical and pharma industry. Cholamandalam Investment and Finance Company Limited is an equipment financing company. The Company offers financial services, including vehicle finance, home loans, home equity loans, small and medium enterprises (SME) loans, investment advisory services, stock broking and a range of other financial services to its customers. The Company's segments include Vehicle Finance Loans, Loan against property and Home Loans, The Vehicle Finance Loans segment provides loans to customers against purchase of new/used vehicles, tractors, construction equipment and loans to automobile dealers. The Loan against property segment provides loans to customers against immovable property. The Home Loans segment provides loans for the acquisition of residential property. It offers loans against shares, and other unsecured loans and security broking and insurance agency business. Its subsidiaries include Cholamandalam Securities Limited (CSEC) and Cholamandalam Home Finance Limited (CHFL).Src yey Pn rs NEC ster tes Ta eons Aditya Birla Capital Limited is an investment company. The Company, through its subsidiaries, is engaged in the provision of financial services consisting of lending, both as a non banking financial institution (NBFC) and as a housing finance institution, life and health insurance, asset management, general insurance and stock broking and others, The Company's segments include NBFC, Housing Finance, Life Insurance, Asset Management, General Insurance Broking, Stock and Securities Broking, Health Insurance and Other Financial Services, which includes general insurance advisory, asset reconstruction and private equity. The Company's subsidiaries include Aditya Birla Finance Limited, Aditya Birla Housing Finance Limited, Aditya Birla Money Limited, Aditya Birla Insurance Brokers Limited, Aditya Birla Money Mart Limited, Aditya Birla Money Insurance Advisory Services Limited, ABCAP Trustee Company Private Limited and others. Mahindra & Mahindra Financial Services Limited is a non-banking financial ‘company (NBFC). The Company is engaged in providing asset finance through its branch network. Its segments include Financing activities and Other reconciling items. The Financing activities segment is engaged in Financing and leasing of automobiles, tractors, commercial vehicles, small and medium enterprise, and housing finance. The Other reconciling items segment is engaged in insurance broking, asset management services and trusteeship services. It is involved in financing new pre-owned auto and utility vehicles, tractors, passenger cars and commercial vehicles, The Company also provides housing finance, personalao ct yo ty: Peata a: ENEFCA Wh tr pes loans, financing to small and medium enterprises, insurance broking and mutual fund distribution services. Its offerings also include wholesale inventory financing to dealers and retail-financing to customers in the United States, Its, customers include transport operators, farmers, and self-employed. Methodology used in filtering the list of stocks: 1) Stocks with “Strong Buy” & “Buy” recommendation rating The recommendation rating for each stock has been used from Institutional Brokers Estimate System (1/B/E/S) by Refinitiv. The recommendations are presented on a five-point standardized scale - Strong buy, buy, hold, reduce and sell. ‘The I/B/E/S mean is the average recommendation of all analysts covering the stock. The list provided below incorporates recommendation ratings having the recommendation rating of “Strong Buy” & “Buy” for these preferred stocks, 2) Average score with neutral to positive outlook The scrips which enjoy a high growth potential and having a broad market outlook of neutral to positive and one with the overall average score of 6 and above are considered for selection. mice nn inraeatenpoel-d-rekeetnaon petals amet ptsprmt AEDES emt weeran asa ao ct yo ty: Peata a: ENEFCA Wh tr pes 3) Aminimum long-term growth rate of 20% A long-term growth rate of at least 20% is applied to arrive at the list. Long-term growth rate is a compounded annual growth rate which takes into the consideration the current & projected EPS values. 4) Price-to-earnings to growth ratio of less than or equal to 1 The annual EPS growth of a company is equated with its price-to-earnings ratio. So, companies with this PEG ratio of less than or equal to 1 form part of this, selected list of stocks. Generally, lower this PEG ratio, the better it will be. Forward PE multiple is divided by the 5-year forecasted growth rate to arrive at the PEG ratio, 5) Market cap of over Rs 1,000 crore Only companies having market capitalization of more than Rs 1,000 crore form part of this selected series of stocks. 6) Institutional ownership of at least 5% Companies which enjoy higher institutional interest & having institutional mice nn inraeatenpoel-d-rekeetnaon petals amet ptsprmt AEDES emt weao ct yo ty: Peata a: ENEFCA Wh tr pes ownership of at least 5% are considered in this list. Stock Reports Plus, powered by Refinitiy, is a comprehensive research report that undertakes an in-depth quantitative analysis to generate standardized scores for each of the five key components. A simple average of these scores is then normally distributed to reach an average score. Each stock is ranked on a scale of 1 to 10. A score of 8 to 10 is considered positive, 4 to 7 is neutral and 1 to 3is given a negative outlook. In addition to these scores, the report also contains trend analysis, peer analysis and mean analysts recommendations to help an investor make better & informed investment decisions. ET is providing these research reports as a complimentary offering to all ETPrime users, Click here to know more. ‘To check out our premium screeners, click here, Disclaimer: The views, scores, research and investment tips expressed herein are not that of Economic Times (“ET’) or its management and have been gathered from various third-party sources. ET does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or mice nn inraeatenpoel-d-rekeetnaon petals amet ptsprmt AEDES emta toes ar st yo by Peel lan NFCA Win rg pa omissions or for the results obtained from the use of such information. The content provided herein including any output of tools/analysis is for informational purposes only and should not be relied upon or construed as an investment advice. ET advises users to check with a certified professional before making any investment decision. mice nn inraeatenpoel-d-rekeetnaon petals amet ptsprmt AEDES emt 02