Why Bharat Financial Inclusion Shares Are Down 10% In 2 Days

Shares of microfinance companies such as Bharat Financial Inclusion, Ujjivan Financial Services, Satin Creditcare Network and Equitas Holdings fell for second day in a row on Tuesday. The Maharashtra government over the past weekend announced that a special investigation team (SIT) will be formed to investigate alleged violations of RBI guidelines by microfinance institutions.

Bharat Financial Inclusion was the top loser among the microfinance companies in today's session, with the stock falling 4.2 per cent, extending its yesterday's 6 per cent decline. This takes Bharat Financial Inclusion's two-day decline to 10.16 per cent. 

Ujjivan Financial Services, Satin Creditcare Network and Equitas Holdings also fell up to 4 per cent. 

Post-demonetisation of high value currency notes, shares of microfinance companies have been under pressure on fear that their collections would be impacted negatively. 

"Micro borrowers dependent on activities such as tourism, agriculture, FMCG goods etc may see their income getting impacted for 2-3 months without any substitution at a later date. It will be difficult for them to repay completely even if cash situation normalises in the next 1-2 months (their cash flow would have got impacted for 3 months)," says brokerage Religare, which has a sell rating on Bharat Financial Inclusion.

"We maintain our negative stance on the sector. Collections across regions are likely to suffer with demonetization," the brokerage said. 

Shares of Bharat Financial Inclusion, Ujjivan Financial Services, Satin Creditcare Network and Equitas Holdings ended on a weak note.