Smaller NBFCs may offer big returns

Despite the note ban, loan demand remained buoyant for most of them

One of the reasons why the Street was sceptic about smaller non-banking finance companies (NBFCs) was whether their stocks were getting rerating ahead of fundamentals. The note ban period between November 2016 and January 2017 has addressed this concern effectively, and stocks such as Capital First, Repco Home Finance, Cholamandalam Investment and Shriram City Union are yet to catch up with their pre-demonetisation levels; Can Fin Homes is an exception and is up 16 per cent since November 8, 2016. The recent correction offers investors a good opportunity to accumulate these well-managed smaller NBFCs.

Despite the note ban, loan demand remained