Identification & Evaluation of potential M&A opportunities in BFSI Space

Abstract

The past 6-7 years have been stressful for banks. With GDP growth slowing from a level of 24% (nominal GDP) to ~12% currently, credit growth in the banking system too has taken a knock. Outlook for a recovery in credit growth remains cloudy with the lack of meaningful private sector capex which hinges on capacity utilisation levels picking up and debt-heavy corporates deleveraging via a process of bank-led resolutions (e.g. NCLT) or equity infusions or M&A. This slowdown has impacted growth and profitability, mainly at 2 levels – margins and credit costs – resulting in a double-whammy of lower growth and lower profitability that has led to lower valuations as well.