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HDFC Securities: Indian Microfinance - Should You Look Micro As Macros Disappoint? 

HDFC Securities: Indian Microfinance - Should You Look Micro As Macros Disappoint?

A “centre leader” counts money to be distributed as a micro-loan at a meeting organized by a microfinance institution in Sadasivpet, India. (Photographer: Adeel Halim/Bloomberg)
A “centre leader” counts money to be distributed as a micro-loan at a meeting organized by a microfinance institution in Sadasivpet, India. (Photographer: Adeel Halim/Bloomberg)

BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

HDFC Securities Report

Fast growth, high return ratios, and social impact have drawn investors to microfinance over the years, despite the business being inherently risky.

In the past two years, while broader credit growth has slowed considerably, microcredit growth has fared better.

The microfinance sector had seen benign asset quality trends until Q1 FY21.

However, it had the highest proportion of loans under moratorium, and PAR (portfolio at risk) 30 for the industry has started to inch up.

Covid-19 may prove to be the biggest credit event in recent times.

Nevertheless, we believe that certain microfinanciers’ prospects remain intact, and they provide attractive long-term investment opportunities.

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HDFC Securities Indian Microfinance - Should you look micro as macros disappoint .pdf

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