A positive growth trajectory has been forecasted for the Indian economy propelling the other segments to be a part of this growth journey. After the reveal of the Economic Survey 2023, Chief Economic Adviser V Anantha Nageswara forecasted a positive outlook for the Indian economy for the next few years. The World Economic Outlook Update predicts India’s GDP for the current year to be at 6.8%, while for the next financial year, it forecasts GDP growth of 6.1%, finally giving hopes for the year 2024-25 to be close to 6.8%. This unparalleled economic growth is said to benefit domestic financial companies and improve their credit profiles and asset qualities.
Domestic Financial Companies To Hit The Jackpot After Economic Growth: Reports Forecast
The continuous growth journey of the economy has trickled down its benefits to the various sectors of the economy as well, firmly pushing up the fintech sector in general. The reports by the S&P Global Ratings suggested that the economic recovery will improve the credit profile of domestic companies despite the spike in interest rates.
According to the report titled ‘Indian Finance Company Outlook 2023, “Asset quality of fincos will continue to generally improve, supported by strong macroeconomic trends, despite rising interest rates. The stable outlooks on most rated fincos reflect their strong earnings, capitalisation, and improving asset quality,”
In simple terms, large finance companies will have better growth as they will have access to better funding and stronger market share, while small fintech companies will use the originate-and-distribute business model.
So a general trend of improvement can be seen for the fincos. It is the right time to buy and sell unlisted shares of fintech companies to benefit from their financial growth. The S&P Global Ratings also states that the technologically advanced fintech will better grasp the market following the economic recovery.
The report states:
“Rising smartphone penetration, increasing internet connectivity, and the young tech-savvy demographic segment present vast lending opportunities in India”
Economic Recovery Changing Fate For Fincos
The US-based rating agency ranked and rated various fintech companies according to different parameters. Bajaj Finance Ltd secured a BB+ rating, while the score of Axis Bank improved on accounts of a stable future outlook. The ratings improved to ‘BBB-/A-3’ from ‘BB+/B.’ Other finance companies like Shriram Finance Co. Ltd and Manappuram Finance received a BB- rating, each with respect to a positive growth prospect. Muthoot Finance Ltd received a BB rating from the agency. If we look at the ratings of the growing and leading firms in the fin corp market, Hero Fincorp Ltd has secured a BB rating, and the rating agency has attributed the reason for this rating to an overall growth that the Indian economy is expected to witness in the coming year.
S&P Global credit analyst Deepali Seth Chhabria has also approved of the fact that the growth of financial companies will be better than uniform owing to the strengthening macroeconomic fundamentals that the Indian economy will foresee.
Hero Fincorp Benefitting From The Recovery
Along with the other major names in the financial markets, Hero Fincorp is one of the firms that has gained significant benefits from the economic recovery. The company’s financial statements show an improvement in revenues and profits. The sales of the company rose by 38% in December 2022. Along with the sales, the company’s net profit also grew from Rs. 130.81 crore to Rs 191.84 crore, showing a sharp rise of 46.66% as the last quarter ended in December 2022, as compared to the quarter ended in December 2021.
The standalone quarterly reports released by Hero Fincorp Limited have also shown signs of growth, as the total revenue of the company increased by 35% as compared to the last financial year, along with an increase in the profit after tax rising by 36%, from Rs. 180 crores in the previous financial year to Rs. 245 crores in the year 2022. The company’s net worth also showed significant signs of growth, rising from Rs 4782 crore to Rs. 7269 crores, showing a good 52% increase.
The company is also expected to show a feat of strength in the unlisted market, with a market valuation of Rs. 11241 crore, the Hero Fincorp Limited unlisted share price is trading at Rs. 925. So if you want to ride on the company’s growth journey, buying its unlisted share can be a way out. From a beginner to a seasoned investor, the need for a comprehensive trading platform is inevitable for all.
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