As advances continue to grow at robust pace, NBFC stock reports multi-fold jump in Q2 profit

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Bank advances to Non-Banking Financial Companies (NBFCs) in the second quarter continued to grow at a strong pace. Banks’ credit exposure to NBFCs stood at Rs 14.2 lakh crore in the September 2023 quarter, showing a year-on-year growth of 26.3 percent.

This increase is indicative of the strong growth observed in NBFCs during the post-pandemic period. In addition, the NBFC exposure proportion to aggregate credit has increased from 8.9 percent in the September 2022 quarter to 9.4 percent in September 2023.

As credit extended by banks to NBFCs has shown a consistent upward trend over the past five years, financial services major UY Fincorp has announced a whopping 90 percent jump in its net sales in the second quarter of the current financial year. The same was at Rs 29.10 crore, up from Rs 15.28 crore in the September 2022 quarter.

The quarterly net profit came in at Rs 51.17 crore in the quarter. This represents a growth of over 1500 percent from Rs 3.05 crore in the corresponding quarter in the previous financial year. EBITDA also rose significantly to Rs 69.02 crore.

Meanwhile, shares of UY Fincorp on Wednesday closed in the green with gains of three percent at Rs 25.85 on BSE, according to exchange data. The stock has shown strong performance, reaching 112.93 percent over the past year.

NBFCs are regulated by the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI). They are a major part of the financial lending sector and a major contributor to the economy.

Over that period, NBFCs have emerged as a vital source of credit for micro, small and medium enterprises (MSMEs).

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