JPMorgan highlighted several key takeaways from its meetings, including the impact of liquidity flows, interest rates, market-share gains and asset quality across the housing finance and gold loan segments.
According to the brokerage, the influx of liquidity from foreign currency non-resident (FCNR) deposits is neither prompting banks to increase competitive intensity in mortgages nor translating into lower cost of funds for non-banking financial companies (NBFCs).
For PNB Housing Finance, JPMorgan estimates that net interest margin (NIM) could improve by around 10 basis points, with earnings per share (EPS) rising 3-5%, for every 25 basis points increase in the policy rate.
For IIFL Finance, however, the brokerage sees limited scope to pass on higher interest rates to gold loan borrowers.
JPMorgan also said NBFCs continue to gain market share in both the housing finance and gold loan segments. On asset quality, the brokerage said conditions remain strong, with risks largely limited to the micro-loan against property (micro-LAP) segment.
PNB Housing Finance is JPMorgan’s top pick among housing finance companies, while IIFL Finance is its preferred stock among gold lenders.Among analysts covering PNB Housing Finance, 13 of 15 have a ‘Buy’ rating on the stock, while two have a ‘Hold’ rating. For IIFL Finance, seven of the eight analysts covering the stock have a ‘Buy’ rating, while one has a ‘Hold’ rating.
Shares of PNB Housing Finance were trading 1.65% higher at ₹1,102.90 on Tuesday and have gained 12% so far this year. IIFL Finance shares were down 1.18% at ₹591.10 and have declined 5% year-to-date.