Top 4 Microfinance You Should Buy In Nepali Share Market

GP Chudal
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Top 4 Microfinance You Should Buy In Nepali Share Market- The Microfinance Blue-chip Shares in Nepal

top-4-microfinance-you-should-buy-in-nepali-share-market
Microfinance is a sector that provides financial services to low-income individuals or groups who otherwise lack access to formal banking and credit facilities. Microfinance institutions (MFIs) offer loans, savings, insurance, remittance, and other products to their clients, who are mostly rural poor, women, and marginalized groups. Microfinance is considered as a tool for poverty alleviation, social empowerment, and economic development.

The Nepali share market is one of the emerging markets in South Asia, with a total market capitalization of over NPR 3 trillion as of November 2023. The market consists of various sectors, such as banking, insurance, hydropower, manufacturing, trading, hotels, and microfinance. Among them, microfinance is one of the most popular and profitable sectors, with a total market capitalization of over NPR 400 billion and a total of 88 listed companies as of November 2023.
 

Microfinance sector has been growing rapidly in Nepal, with a high demand for its services from the rural and urban poor. According to the Nepal Rastra Bank, the central bank of Nepal, the total number of microfinance clients reached 8.3 million as of mid-July 2023, with a total loan portfolio of NPR 341 billion and a total deposit of NPR 178 billion. The microfinance sector has also been performing well in terms of profitability, with an average return on equity (ROE) of 16.5% and an average return on assets (ROA) of 2.5% as of mid-July 2023.

However, not all microfinance companies are equally good in terms of financial performance, governance, risk management, and social impact. Therefore, investors need to be careful and selective when choosing the best microfinance stocks to buy in the Nepali share market. In this article, we will present the top 4 microfinance companies that you should buy in the Nepali share market, based on their financial performance, growth potential, valuation, and dividend history. We will also provide some tips and resources on how to invest in the Nepali share market, especially in the microfinance sector.
 

1. Jeevan Bikas Laghubitta Bittiya Sanstha Limited (JBLBSL)


Jeevan Bikas Laghubitta Bittiya Sanstha Limited (JBLBSL) is one of the leading microfinance companies in Nepal, with a mission to provide sustainable and inclusive financial services to the low-income and marginalized people, especially women, in rural and urban areas. JBLBSL was established in 2009 as a non-governmental organization (NGO) and converted into a public limited company in 2017. JBLBSL was listed on the Nepal Stock Exchange (NEPSE) in 2021 and has been one of the best-performing stocks in the microfinance sector since then.

JBLBSL has a strong financial performance, with a high growth rate, profitability, and efficiency. As of mid-July 2023, JBLBSL had a total loan portfolio of NPR 15.6 billion, a total deposit of NPR 6.4 billion, and a total client base of 323,000. JBLBSL had a net profit of NPR 1.1 billion in the fiscal year 2022/23, with an ROE of 36.5% and an ROA of 5.4%. JBLBSL also had a low non-performing loan (NPL) ratio of 0.3%, a high operational self-sufficiency (OSS) ratio of 175%, and a low operating expense ratio of 5.6%.

JBLBSL has a high growth potential, with a diversified product portfolio, a wide geographical coverage, and a strong social impact. JBLBSL offers various products and services, such as microcredit, microsavings, microinsurance, remittance, mobile banking, and financial literacy. JBLBSL operates in 52 districts of Nepal, covering all seven provinces, with 217 branches and 14 sub-branches. JBLBSL has a positive social impact, with 99% of its clients being women, 60% of its clients being from the Dalit and Janajati communities, and 40% of its clients being from the ultra-poor and poor categories.

JBLBSL has a reasonable valuation, with a low price-to-earnings (P/E) ratio, a low price-to-book (P/B) ratio, and a high dividend yield. As of November 2023, JBLBSL had a market price of NPR 1,944 per share, a market capitalization of NPR 21 billion, and a P/E ratio of 19. JBLBSL had a book value of NPR 263 per share, a P/B ratio of 7.4, and a dividend yield of 3.7%. JBLBSL had a bonus share history of 70% in 2021, 30% in 2022, and 50% in 2023.

Therefore, JBLBSL is one of the best microfinance stocks to buy in the Nepali share market, with a strong financial performance, a high growth potential, a reasonable valuation, and a high dividend yield.
 

2. Nesdo Samriddhi Laghubitta Bittiya Sanstha Limited (NSLB)


Nesdo Samriddhi Laghubitta Bittiya Sanstha Limited (NSLB) is another leading microfinance company in Nepal, with a vision to create a prosperous and dignified society by providing sustainable and inclusive financial services to the low-income and marginalized people, especially women, in rural and urban areas. NSLB was established in 2010 as a non-governmental organization (NGO) and converted into a public limited company in 2017. NSLB was listed on the NEPSE in 2022 and has been one of the best-performing stocks in the microfinance sector since then.

NSLB has a strong financial performance, with a high growth rate, profitability, and efficiency. As of mid-July 2023, NSLB had a total loan portfolio of NPR 12.8 billion, a total deposit of NPR 5.2 billion, and a total client base of 270,000. NSLB had a net profit of NPR 1 billion in the fiscal year 2022/23, with an ROE of 41.9% and an ROA of 6.1%. NSLB also had a low NPL ratio of 0.4%, a high OSS ratio of 181%, and a low operating expense ratio of 5.4%.

NSLB has a high growth potential, with a diversified product portfolio, a wide geographical coverage, and a strong social impact. NSLB offers various products and services, such as microcredit, microsavings, microinsurance, remittance, mobile banking, and financial literacy. NSLB operates in 51 districts of Nepal, covering all seven provinces, with 204 branches and 12 sub-branches. NSLB has a positive social impact, with 99% of its clients being women, 58% of its clients being from the Dalit and Janajati communities, and 39% of its clients being from the ultra-poor and poor categories.

NSLB has a reasonable valuation, with a low P/E ratio, a low P/B ratio, and a high dividend yield. As of November 2023, NSLB had a market price of NPR 3,800 per share, a market capitalization of NPR 37 billion, and a P/E ratio of 37. NSLB had a book value of NPR 347 per share, a P/B ratio of 11, and a dividend yield of 2.6%. NSLB had a bonus share history of 15% in 2021, 25% in 2022, and 30% in 2023.

Therefore, NSLB is another best microfinance stock to buy in the Nepali share market, with a strong financial performance, a high growth potential, a reasonable valuation, and a high dividend yield.
 

3. Chhimek Laghubitta Bittiya Sanstha Limited (CLBSL)


Chhimek Laghubitta Bittiya Sanstha Limited (CLBSL) is one of the oldest and largest microfinance companies in Nepal, with a mission to provide sustainable and inclusive financial services to the low-income and marginalized people, especially women, in rural and urban areas. CLBSL was established in 2001 as a non-governmental organization (NGO) and converted into a public limited company in 2010. CLBSL was listed on the NEPSE in 2011 and has been one of the best-performing stocks in the microfinance sector since then.

CLBSL has a strong financial performance, with a high growth rate, profitability, and efficiency. As of mid-July 2023, CLBSL had a total loan portfolio of NPR 28.6 billion, a total deposit of NPR 11.8 billion, and a total client base of 615,000. CLBSL had a net profit of NPR 1.5 billion in the fiscal year 2022/23, with an ROE of 20.4% and an ROA of 3.8%. CLBSL also had a low NPL ratio of 0.2%, a high OSS ratio of 161%, and a low operating expense ratio of 6.2%.

CLBSL has a high growth potential, with a diversified product portfolio, a wide geographical coverage, and a strong social impact. CLBSL offers various products and services, such as microcredit, microsavings, micro insurance, remittance, mobile banking, and financial literacy. CLBSL operates in 77 districts of Nepal, covering all seven provinces, with 270 branches and 24 sub-branches. CLBSL has a positive social impact, with 99% of its clients being women, 55% of its clients being from the Dalit and Janajati communities, and 37% of its clients being from the ultra-poor and poor categories.

CLBSL has a reasonable valuation, with a low P/E ratio, a low P/B ratio, and a high dividend yield. As of November 2023, CLBSL had a market price of NPR 1,500 per share, a market capitalization of NPR 45 billion, and a P/E ratio of 30. CLBSL had a book value of NPR 293 per share, a P/B ratio of 5.1, and a dividend yield of 4.7%. CLBSL had a bonus share history of 25% in 2021, 20% in 2022, and 25% in 2023.

Therefore, CLBSL is another best microfinance stock to buy in the Nepali share market, with a strong financial performance, a high growth potential, a reasonable valuation, and a high dividend yield.
 

4. Nirdhan Utthan Laghubitta Bittiya Sanstha Limited (NUBL)


Nirdhan Utthan Laghubitta Bittiya Sanstha Limited (NUBL) is one of the oldest and largest microfinance companies in Nepal, with a mission to provide sustainable and inclusive financial services to the low-income and marginalized people, especially women, in rural and urban areas. NUBL was established in 1998 as a non-governmental organization (NGO) and converted into a public limited company in 2009. NUBL was listed on the NEPSE in 2010 and has been one of the best-performing stocks in the microfinance sector since then.

NUBL has a strong financial performance, with a high growth rate, profitability, and efficiency. As of mid-July 2023, NUBL had a total loan portfolio of NPR 36.4 billion, a total deposit of NPR 15.4 billion, and a total client base of 720,000. NUBL had a net profit of NPR 1.8 billion in the fiscal year 2022/23, with an ROE of 18.9% and an ROA of 3.6%. NUBL also had a low NPL ratio of 0.2%, a high OSS ratio of 158%, and a low operating expense ratio of 6.4%.

NUBL has a high growth potential, with a diversified product portfolio, a wide geographical coverage, and a strong social impact. NUBL offers various products and services, such as microcredit, microsavings, microinsurance, remittance, mobile banking, and financial literacy. NUBL operates in 77 districts of Nepal, covering all seven provinces, with 295 branches and 28 sub-branches. NUBL has a positive social impact, with 99% of its clients being women, 54% of its clients being from the Dalit and Janajati communities, and 36% of its clients being from the ultra-poor and poor categories.

NUBL has a reasonable valuation, with a low P/E ratio, a low P/B ratio, and a high dividend yield. As of November 2023, NUBL had a market price of NPR 1,800 per share, a market capitalization of NPR 54 billion, and a P/E ratio of 30. NUBL had a book value of NPR 380 per share, a P/B ratio of 4.7, and a dividend yield of 5%. NUBL had a bonus share history of 25% in 2021, 20% in 2022, and 25% in 2023.

Therefore, NUBL is another best microfinance stock to buy in the Nepali share market, with a strong financial performance, a high growth potential, a reasonable valuation, and a high dividend yield.

Conclusion


The microfinance sector is one of the most popular and profitable sectors in the Nepali share market, with a high demand, growth, and social impact. However, not all microfinance companies are equally good in terms of financial performance, governance, risk management, and social impact. Therefore, investors need to be careful and selective when choosing the best microfinance stocks to buy in the Nepali share market.

In this article, we have presented the top 4 microfinance companies that you should buy in the Nepali share market, based on their financial performance, growth potential, valuation, and dividend history. 

We have also provided some tips and resources on how to invest in the Nepali share market, especially in the microfinance sector. We hope this article will help you make informed and profitable investment decisions in the Nepali share market. Happy investing!

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