Sector Overview
This comparison covers all 10 listed finance companies on NEPSE as of Q2 2082/83. EPS figures reflect the most recent quarterly financial statements filed with Nepal Rastra Bank.
Complete EPS Ranking — Finance Companies Q2 2082/83
| Rank | Company | EPS (Rs) | ROE (%) | ROA (%) | Tier |
|---|---|---|---|---|---|
| 1 | PFL | 43.20 | 65.36 | 4.70 | Top |
| 2 | GFCL | 23.61 | 10.36 | 1.40 | Top |
| 3 | MFIL | 20.03 | 11.72 | 1.04 | Top |
| 4 | GUFL | 14.21 | 9.30 | 1.10 | Mid |
| 5 | CFCL | 8.26 | 6.68 | 0.82 | Mid |
| 6 | ICFC | 5.41 | 3.20 | 0.26 | Low |
| 7 | GMFIL | 3.33 | 2.12 | 0.32 | Low |
| 8 | SIFC | 2.43 | 1.78 | 0.24 | Low |
| 9 | RLFL | 0.31 | 0.28 | 0.02 | Bottom |
| 10 | SFCL | 0.29 | 0.50 | 0.06 | Bottom |
The Three Tiers of Earnings
Nepal's finance company EPS landscape in Q2 2082/83 reveals a clear three-tier structure with a staggering 149x difference between the highest and lowest earners.
Tier 1: Top Earners (EPS above Rs 20)
PFL (Rs 43.20): Progressive Finance Limited dominates the EPS chart by a wide margin. Its EPS is nearly double that of the second-place company. However, this extraordinary earning is accompanied by the sector's worst NPL at 25.1% and a remarkably low book value of Rs 78.22. The low equity base inflates both EPS and ROE (65.36%), making the numbers look better than the underlying quality suggests. PFL's ROA of 4.70% — by far the sector's best — confirms the company generates high returns from its asset base, but the sustainability question looms large given asset quality concerns.
GFCL (Rs 23.61): Goodwill Finance Company Limited earns a solid second place. With ROE of 10.36% and the highest NIM in the sector at 7.04%, GFCL demonstrates strong pricing power and lending margins. Its book value of Rs 256.65 is the highest in the sector, suggesting substantial asset backing. The NPL of 6.70% is moderate — above the ideal threshold but manageable.
MFIL (Rs 20.03): MFIL rounds out the top tier with the best risk-adjusted profile. Its 11.72% ROE, 3.64% NPL, and balanced score of 62.25 (B) make it the sector's most fundamentally sound company. What MFIL sacrifices in raw EPS versus PFL and GFCL, it makes up for in quality and consistency.
Tier 2: Mid-Range (EPS Rs 5-15)
GUFL (Rs 14.21): Despite decent earnings, GUFL's negative P/E ratio and 17.46% NPL make it a cautionary tale. The EPS may not be sustainable given the provisioning pressure from bad loans.
CFCL (Rs 8.26): Central Finance earns moderately but faces its own NPL challenges at 14.18%. The ROE of 6.68% is unremarkable, and the company pays no dividends despite generating positive earnings.
ICFC (Rs 5.41): Despite having the sector's best NPL at 3.51%, ICFC's low EPS reflects a conservative lending approach. The company trades at a high P/E of 29.08x, suggesting the market values its quality over quantity approach.
Tier 3: Low Earners (EPS below Rs 5)
GMFIL (Rs 3.33), SIFC (Rs 2.43), RLFL (Rs 0.31), SFCL (Rs 0.29): These four companies generate minimal earnings per share. At Rs 0.29-0.31, RLFL and SFCL are essentially breaking even. SIFC's P/E of 93.52x is grotesquely overvalued for its negligible earnings. For perspective, at SFCL's EPS of Rs 0.29, an investor would need to wait over 1,358 years to recover their investment of Rs 394 through earnings alone (ignoring time value of money).
What Drives EPS Differences?
The 149x gap between PFL's Rs 43.2 and SFCL's Rs 0.29 is explained by several interconnected factors:
| Factor | High EPS Companies | Low EPS Companies |
|---|---|---|
| Net Interest Margin | Higher NIM (GFCL: 7.04%) | Lower NIM (PFL: 3.1%, RLFL: 3.32%) |
| Capital Structure | PFL has low BV (Rs 78.22) = higher EPS | Higher equity bases dilute per-share earnings |
| Asset Quality | MFIL: 3.64% NPL = low provisions | RLFL: 9.09% NPL = high provisions eating profits |
| Loan Book Size | Larger, more diversified loan portfolios | Smaller loan books with concentrated risk |
| Operational Efficiency | Lower cost-to-income ratios | Higher overhead relative to income |
EPS vs ROE: The Full Picture
Looking at EPS alone can be misleading. ROE provides context on how efficiently the company uses shareholder equity to generate earnings.
| Company | EPS (Rs) | ROE (%) | Book Value (Rs) | Insight |
|---|---|---|---|---|
| PFL | 43.20 | 65.36 | 78.22 | Inflated ROE due to low equity base |
| MFIL | 20.03 | 11.72 | 175.29 | Best genuine ROE — strong efficiency |
| GFCL | 23.61 | 10.36 | 256.65 | Solid ROE with highest book value |
| GUFL | 14.21 | 9.30 | 148.65 | Decent but NPL threatens sustainability |
| CFCL | 8.26 | 6.68 | 113.65 | Below average on both metrics |
| SFCL | 0.29 | 0.50 | 59.96 | Essentially zero profitability |
Key insight: PFL's ROE of 65.36% looks extraordinary, but it's largely a mathematical artifact of its very low book value (Rs 78.22). When a company has minimal equity, even moderate profits translate to very high ROE. MFIL's 11.72% ROE is achieved against a much larger equity base of Rs 175.29, making it a more genuine indicator of operational efficiency.
EPS Sustainability Analysis
Not all EPS numbers are created equal. Some companies generate sustainable, repeatable earnings while others show one-time spikes or fragile profitability. Here's our sustainability assessment:
Most Sustainable EPS
MFIL (Rs 20.03) — Best combination of solid earnings, low NPL (3.64%), healthy ROE (11.72%), and strong quality score (62.25). Most likely to maintain or grow its EPS in future quarters.
GFCL (Rs 23.61) — Strong margins (NIM 7.04%) and highest book value provide a solid foundation. Moderate NPL (6.70%) is the main risk to sustainability.
Least Sustainable EPS
PFL (Rs 43.20) — Despite the highest EPS, the 25.1% NPL is a ticking time bomb. Future provisioning requirements could dramatically reduce earnings. The low book value (Rs 78.22) leaves no cushion for absorbing losses.
GUFL (Rs 14.21) — With 17.46% NPL and a negative P/E, the current EPS level is likely to deteriorate as provisions catch up with bad loan realities.
Investment Implications
For investors using EPS as a selection criterion, the data suggests a clear strategy:
- Best EPS-based investment: MFIL — third highest EPS with the best risk profile. The score of 62.25 and Hold recommendation confirm its sector-leading quality.
- High risk, high reward: PFL — highest EPS but with potentially catastrophic NPL exposure. Only suitable for very aggressive investors.
- Value trap warning: Low-EPS companies (RLFL, SFCL, SIFC, GMFIL) with P/E ratios above 30x are significantly overvalued. Their stock prices don't reflect their minimal earnings power.
- Avoid: SFCL and RLFL with EPS below Rs 1 — these companies face existential profitability challenges.
Disclaimer: This EPS comparison is based on Q2 2082/83 financial data and is for informational purposes only. EPS can fluctuate significantly between quarters. It does not constitute investment advice. Always consult a licensed financial advisor before making investment decisions. Data source: NEPSE, NRB regulatory filings.