Comparative Analysis of Finance Companies: Find Out the Performance of the Listed Finance Companies in the First Quarter

Tue, Nov 8, 2022 9:38 AM on Company Analysis, Stock Market, Exclusive,

Finance companies are licensed by the central bank with an objective to provide different banking and financial services to the general public since the outreach of the banking and financial services in Nepal is still lagging behind.

NEPSE currently has 15 listed finance companies for the year 2022. In order to facilitate the enthusiasts in the secondary market, the article has been prepared accumulating analysis of all the finance companies with respect to their performance in the first quarter of FY 2079/2080 that can be useful for investment purposes. The industry average includes all the 15 finance companies.

Financial Overview:

Net Profit:

Among the finance companies, Manjushree Finance Limited (MFIL) earned the most profit of Rs. 7.11 crores followed by Goodwill Finance Limited (GFCL) and ICFC Finance Limited (ICFC) with Rs. 3.84 crores and 3.35 crores respectively. Out of the 15 finance companies, Pokhara Finance Limited (PFL) has obtained the highest growth in net profit of massive 261.60% as compared to the first quarter of previous financial year.

The report also shows that, 2 companies viz. Reliance Finance Limited(RLFL) and Samriddhi Finance Company Limited (SFCL) has reported loss for the relevant period. Whereas, 8 companies have reported decline in net profit as compared to the preceding year's Q1. 

Paid-Up Capital:

Among the finance companies, Manjushree Finance Limited (MFIL) has the highest paid-up capital of Rs. 1.35 Arba followed by ICFC Finance Limited (ICFC) and Reliance Finance Limited(RLFL) with Rs. 1.13 Arba and Rs. 1.05 Arba respectively.

On the other hand, Multipurpose Finance Company Limited (MPFL) has the least share capital of Rs. 45 Crores. The industry average share capital is Rs. 90 Crores, and 7 companies have reported lower than average share capital. 

Reserve and Surplus:

In terms of Reserve and surplus, Gurkhas Finance Limited (GUFL) has the highest Reserve of Rs. 75 crores. Similarly, Goodwill Finance Limited (GFCL) has a reserve of Rs.64 crores and ICFC Finance Limited (ICFC) has Rs. 63 crores in reserve. However, Samriddhi Finance Company Limited (SFCL) has negative reserves of Rs. 18 Crores.

Deposit from customers:

Financial institutions are trying their best to attract their possible customers with the best services they can provide. As of the first quarter of FY 2079/2080, ICFC Finance Limited (ICFC) has been able to collect the highest deposit from its customers of Rs. 18.26 Arba. Similarly,  Goodwill Finance Limited (GFCL) has collected Rs. 11.28 Arba and Pokhara Finance Limited (PFL) has been able to collect Rs. 10.91 Arba in a deposit.

Apart from highest, Multipurpose Finance Company Limited (MPFL) has reported to collect lowest deposits worth Rs. 1.03 Arba.


Loans and Advances:

In terms of Loans and advances, ICFC Finance Limited (ICFC) has provided loans and advances of Rs. 14.13 Arba followed by Manjushree Finance Limited (MFIL) and Pokhara Finance Limited (PFL) of Rs. 9.76 Arba and Rs. 9.05 Arba respectively.

Multipurpose Finance Company Limited (MPFL) has disbursed loans of Rs. 79 Crores which is a finance company operating in 1 to 3 districts.

Net Interest Income:

Net interest income is the net earnings of finance companies through their core business of collecting deposits and lending loans. The company with the highest net interest income is Manjushree Finance Limited (MFIL) with an income of Rs 17.11 Crores followed by Goodwill Finance Limited (GFCL) with an income of Rs 15.03 Crores and ICFC Finance Limited (ICFC) with an income of Rs 14.88 Crores.


Provisions for the period (Impairment/Reversal):

Companies have set aside a certain amount in loan loss provision and have delayed the loan repayment of several borrowers. A total of Rs 34.99 Crores of amount has been shown in an impairment charge for a loan and other losses. Pokhara Finance Limited(PFL) has the highest impairment charge for a loan and other losses with Rs 7.56 Crores followed by Goodwill Finance Limited (GFCL) with a total of Rs. 4.71 crores. In the same vein, Gurkhas Finance Limited (GUFL) has the reversal impairment charge for a loan and other losses with Rs. 2.03 Crores.

* - Reversal and + Provision


Net worth per share:

As of the first quarter of FY 2079/2080, Gurkhas Finance Limited (GUFL) has reported a Net worth per share of Rs. 186. Similarly, Goodwill Finance Limited (GFCL) has reported a net worth per share of Rs. 167.83 and ICFC Finance Limited (ICFC) of Rs. 156.32.

Non-Performing Loan:

In today’s context, the concern of investors simply does not rest upon which bank has more loans. The nature of the loan portfolio equally matters. Multipurpose Finance Company Limited (MPFL) reported the lowest NPL of 0.22% in terms of asset quality. MPFL is followed by ICFC Finance Limited (ICFC) with an NPL of 1.31%. 

Nepal Finance Limited (NFS) has reported the highest NPL of 13.66%, followed by  Janaki Finance Company Limited (JFL) with an NPL of 10.02%. 

Price to Earnings ratio:

Price to Earnings (P/E) ratio tells investors how much the stock is selling for relative to its earnings. This indicator gives a clear picture of how much we are paying to get a rupee of earnings. So, lower the P/E better the deal.

The finance companies with the least P/E ratio are Manjushree Finance Limited (MFIL), Progressive Finance Limited (PROFL), and Goodwill Finance Limited (GFCL) with P/E of 18.28 times, 24.32 times and 27.39 times respectively.

While the P/E ratio tells us what we are paying for a rupee of earning, to know more about the company, investors have to dig into more metrics.

Also, the mentioned P/E is calculated as per closing price of scrips as of Q1 end. 

Earnings per share:

Since earnings per share (EPS) gives a great insight into the company, investors consider this metric as one of the important metrics while buying a stock.

As of the first quarter of FY 2079/2080, Majushree Finance Limited (MFIL) has earned Rs. 21.05 per share followed by Goodwill Finance Limited (GFCL) of Rs. 16.24.

2 companies, Reliance and Samriddhi Finance has however reported negative EPS for this quarter.

Finally, the table below shows provides a full picture of major indicators of 15 finance as of the first quarter of FY 2079-2080.