There is a simple explanation for reducing NIMs: cost of funds is rising since Dec’ 17 across the board. Leave alone NBFCs, even banks are feeling the heat.
The number of shares has decreased from 3,36,19,835 to 3,34,48,209 in April 2018. You can check the details here
it is found interesteing while ploting the Quaterlly data from screener to see in big just click twice the image
disc: not invested
Asset Reconstruction Business.
As NPA stress has grown to new high, I think this should negatively impact ARC in operations since many years. ARCs who acquired assets say till 2016 or before will face more the expected depreciation of the recoverable value and decrease in resolution expectations.
2016-17, 17-18 has huge flow of new NPA assets. That will give much larger choice to final Buyers and effect resolutions. Prices of NPA assets i think have fallen significantly. Property prices are down over 30% in open market and NPA properties will get resolved only at 50% of the original value few yrs ago. Even if ARC acquire assets at 50% of the total outstanding, due to delays in resolution it will add significant additional interest burden.
Though new ARC will find it attractive to buy assets at even low price but older ones will see deterioration in their old assets and stop buying. This shall effect JM Financial also.
These are my thoughts but I want to get some data to validate them. Have any one of you done NPA and ARC related business analysis or know any data sources ? Also share your views.