A Study On Financial Performance Analysis with Reference to Real Touch Finance

Abstract

The Indian financial sector boasts diversity and rapid expansion, featuring an array of financial institutions, including commercial banks, insurance companies, NBFCs, co-operatives, pension funds, and mutual funds. Among these, NBFCs play a pivotal role, contributing significantly to economic growth by offering credit and financial services to various sectors. This study undertakes a five-year analysis (2018-2022) of three selected NBFCs based on their Asset under Management (AUM), a key indicator of size and financial strength. The study evaluates short-term solvency, Leverage, profitability and earning capacity. Real Touch Finance Limited (RTFL) and Dharani Finance Limited exhibit consistent current ratios and favourable debt management. RTFL distinguishes itself with a positive trend in Return on Assets (ROA) and Return on Equity (ROE), reflecting its profit-generating ability. RTFL also excels in cost management, profitability, and interest-related earnings. All three NBFCs face challenges in profit generation. RTFL displays improved liquidity, long-term growth focus, a 6% rise in total revenue, but also a notable increase in administrative expenses. In summary, RTFL appears to be in a relatively stronger financial position compared to the others. However, its ability to manage cash effectively, make strategic investments, and address rising administrative expenses is pivotal for long-term financial stability and enhanced profitability. This study offers valuable insights for RTFL and other NBFC to identify opportunities for growth, potential threats, and areas for improvement for long-term success.