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Financials may see FY21 earnings drop 40%; BNP Paribas gives 10 stock picks

Fiscal stimulus, the extension of RBI forbearance, normal monsoon and results of the first half of FY21 will decide the course of India's financial sector.

April 22, 2020 / 02:36 PM IST
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The coronavirus outbreak has hit India's financial sector hard and the lockdown is likely to have a severe near-term impact on banks and NBFCs, aggravating the issue of NPAs and liquidity squeeze.

As per a report by brokerage firm BNP Paribas Securities, financials may see FY21E earnings cut of about 40 percent on an average.

Since January 2020, Indian financials have corrected by 8-71 percent and underperformed the benchmark Nifty by 20 percent.

To factor in the lockdown impact, BNP Paribas said it assumed lower credit offtake and significantly higher credit cost for FY21/FY22 leading to FY21E earnings cuts of 9-70 percent for financials it covers, with diversified financiers impacted the most.