Ambani, Adani, and Godrej compete for a larger piece of the NBFC pie on Bajaj Way.

by Mapping Returns
adani and ambani

The field is levelled for a conflict between India’s major corporations in the NBFC sector. The Bajaj and Shriram companies now dominate the market for commercial loans, but Mukesh Ambani, a billionaire, is aiming to shake things up. Godrej Capital (GCL) and Adani Capital (ACL) are also looking to grow their portfolios in this market. Tata Group is a well-known NBFC with two joint ventures in insurance, a huge loan portfolio, and mutual funds.

As it has a wide range of customers at Reliance Jio, Reliance Retail, and Jio-bp, Jio Financial Services (JFSL), which will be listed on stock exchanges, will first concentrate on consumer and merchant loans. Over 400 million telecom and 200 million retail customers make up the group’s customer base. Additionally, JioMart, an e-commerce platform, and Reliance Retail both have connections with retailers that can be used to expand their lending bases. The merchant base of Reliance Retail has grown by two times since last year.

In addition to company loans, Adani Capital also provides financing for supply chain, commercial vehicles, and farm equipment. While Mahindra Finance has a significant presence in tractor loans, Shriram Transport Finance Corp (STFC) leads the market in commercial vehicle financing. Both have access to SME/business loans.

Due to their established business ties with the banks, negotiating for low-cost finance will be simpler for both corporate houses. GCL, which began its operations by offering home loans to Godrej Properties Ltd. clients two years ago, is also skilled at haggling with banks for lower rates. By March 2023, GCL hopes to have a balance sheet worth 6,000 crore. The balance sheet is anticipated to reach $12,000 crore by the end of FY 2024.

According to a Macquarie Capital Securities report, JFSL, which will be separated from Reliance Industries Ltd (RIL), would rank fifth in terms of net worth among Indian financial services companies. According to market value, the financial services division will own 6.1% of RIL, which is worth more over 1 lakh crore. KV Kamath, a seasoned banker, was recently named chairman of JFSL by RIL. After the debut of JFSL, according to Macquarie, Bajaj Finance and Paytm will be most vulnerable.

ACL, which debuted in 2017, intends to go public in 2024 in order to raise at least 1,500 crore by selling roughly 10% of its stock. With the use of technology, ACL, a lender to small and medium-sized businesses and farmers, hopes to increase its share of the market for loans between $30,000 and $3 lakh. According to the company’s CEO Gaurav Gupta, it oversees loans totaling about 3,000 crore. Every year, the lender hopes to double its loan book.

Since Bajaj Finance recorded an 88% increase in net profit at $2,781 crore for the September quarter, the industry is profitable. Net interest revenue increased 31%, from 5,337 crore to 7,001 crore. In September, assets under management increased 31% to 218,366 crore. As of the end of September, the gross and net NPAs were 1.17 and 0.44 percent, respectively, compared to 2.45 and 1.10 percent in the same quarter last year. On the stock market, Bajaj Finance is valued at $4 lakh crore.

The main company of the Shriram Group, STFC, reported a 2nd quarter net profit increase of 38% to $1,067 crore. Due to increased demand for both new and used automobiles and robust disbursements, the company’s overall revenue for the quarter under review increased by 14% to 5,351 crore. Total assets under management increased from 121,647 crore to 135,249 crore in just one year. During Q2, net interest revenue increased by 23% to 2,694 crore.

These NBFCs are unlikely to submit applications for banking licences because corporate houses are prohibited by regulation from operating full-fledged banks concurrently with other enterprises. When compared to March 2021, the lending market in India increased by 11.1% to 174.3 lakh crore. Commercial, retail, and microfinance lending each made up 49.5%, 48.9%, and 1.6% of the total pie, respectively.

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