L&T Finance, Bandhan Bank and Indusind Bank gained nearly 2-5% in today’s trading session after Goldman Sachs, in its report, said that the Micro Finance Industry is at an inflection point and accordingly recommended a buy on all these counters.
Goldman Sachs believes that of all the loan segments, MFI industry has seen a large state recovery given multiple bouts of impact due to Covid-19 and natural disasters. The report says that it appears that the MFI industry could be at the cusp of growth and improving returns.
The report also says that Bandhan, Indusind and L&TFinance are better ways to position for MFI recovery. These MFI’s have made conservative provisions and carry 70% provisions against restructured loans which allows them to kickstart growth as well as see improved returns due to normalisation of credit costs.
Goldman Sachs believes that the market is not pricing in any improvement in visibility of ROA’s or revival in growth momentum. They believe Bandhan, Indusind & L&T Financial Holdings is well placed to gain market share.
