Business
LIC‑Owned NBFC Stock in Focus Post This Update
What’s Making the Stock Noteworthy?
- Paisalo Digital—a LIC-backed NBFC—is making headlines after approving several fundraising initiatives that have shifted investor sentiment. One such move includes issuing Non-Convertible Debentures (NCDs) worth up to ₹50 crore, with a 10% coupon over a 24-month term
- The stock gained significantly after announcing a co‑lending loan agreement with State Bank of India (SBI), aimed at expanding SME lending via digital platforms, leading to a sharp 7% intraday rise in late June
- Earlier in June, it approved issuance of short-term commercial papers totaling ₹30 crore, which helped the stock rebound from its lows
Stock Performance Snapshot
- Currently trading under ₹50, Paisalo Digital’s share price has surged 9–10% in recent trading sessions amid strong market reaction to dividend announcements and Q1 earnings
- That marks a rebound after a sharp YTD decline of nearly 39%, and in the past year alone, the stock has lost over 60% in value
- Despite its small-cap status, the company has delivered over 175% returns over five years, making it a multibagger—but with high volatility and significant downside risk
- Recent regulatory filings also show institutional investor interest, with Equilibrated Venture increasing its promoter stake to around 15.67% of total shares
Why Is It in Focus?
- Aggressive Capital Raising Moves
- The NCD allotment (up to ₹50 cr) bolsters the company’s working capital, while the SBI co-lending tie-up positions it as a serious contender in SME lending
- Growth Versus Risk
- Despite the bullish fundraises, Paisalo faces tight margins and regulatory headwinds. Broader sentiment in the NBFC sector—especially after concerns over Bajaj Finance’s post-earnings decline—is adding to caution
- Stock Sentiment & Momentum
- Unexpected dividend news and board decisions have created short-term buying pressure, but structural weakness and steep recent declines suggest high risk remains
Comparison with LIC Housing Finance (LIC HFL)
While Paisalo captures headlines, its sister company LIC Housing Finance (LIC HFL)—also LIC-owned—offers much more stability but slower growth:
- As of the latest trading, LIC HFL trades around ₹620 on NSE/BSE, with a P/E ratio of ~6.3, well below the sector average of 12–15
- In Q4 FY2025, LIC HFL reported a 25% YoY PAT growth, declaring a 500% dividend payout and showing a loan book increase of around 7% YoY. However, net interest margins declined slightly to ~2.73–2.86%
- Technical analysts note a bearish rising‑wedge formation in LIC HFL’s chart, which may signal near-term pullbacks. Strategic options plays like a “Broken Wing” strategy are being recommended for conservative traders
- LIC HFL also recently launched India’s first-listed residential mortgage-backed securities (RMBS) edition, raising ₹10 billion via AAA-rated 20‑year securities—highlighting its institutional credibility and innovation
Conclusion & Investor Takeaway
| NBFC | Key Attributes |
|---|---|
| Paisalo Digital | Small-cap, high volatility, aggressive fundraising, recent IPO/dividend-driven BJP |
| LIC HFL | Large-cap, stable housing finance play, reliable dividends, expansion via structured debt products |
- Paisalo Digital remains a speculative, high-risk, high-return play: its recent fundraises and strategic partnerships could pay off if execution is solid—but sentiment remains fragile.
- LIC Housing Finance, on the other hand, is more suited for conservative investors seeking steady income, institutional innovation, and stability in the NBFC housing space.
- Broader sector caution remains due to macro pressures and recent NBFC volatility—Bajaj Finance’s decline casts a long shadow over smaller players too