NBFC Stocks to Buy: The non-banking financial company (NBFC) sector delivered a strong performance in the March quarter of FY26, supported by robust loan growth, improving margins, and healthier asset quality, according to reports by brokerages Nirmal Bang and 360 One Capital Research. Both brokerages noted that credit demand remained resilient despite concerns surrounding geopolitical tensions in West Asia and evolving macroeconomic conditions. Aggregate assets under management across the sector continued to expand at a healthy pace, while lower funding costs and benign credit costs aided profitability.
Nirmal Bang said its Q4FY26 NBFC coverage universe reported a strong quarter, with robust AUM growth, margin expansion and broad-based improvement in asset quality highlighting the sector’s resilience despite emerging macro headwinds.
According to the brokerage, aggregate pre-provision operating profit (PPOP) rose around 27% year-on-year to Rs 225 billion, supported by nearly 20% growth in AUM to Rs 14,097 billion and broad-based net interest margin (NIM) expansion driven by lower cost of funds.
Top Picks: Shriram Finance Share Price Target
Nirmal Bang upgraded Shriram Finance to ‘Buy’ with a target price of Rs 4,900. Bajaj Finance and Shriram Finance remain its top picks within the sector.
360 One Capital Research said NBFCs under its coverage universe, excluding power financiers, delivered a strong earnings performance in the fourth quarter of FY26, with operating profitability exceeding expectations.
The brokerage attributed the performance to better-than-anticipated margins, lower operating expenses and benign credit costs. Net interest income (NII), operating profit and profit after tax (PAT) grew 24.9%, 29.1% and 42.1% year-on-year, respectively.
AUM growth, excluding power financiers, remained resilient at around 19% year-on-year and was broadly in line with expectations, the brokerage said.
According to management commentary cited by 360 One Capital Research, credit demand remains healthy and has not been affected by the ongoing West Asia crisis, with most lenders reiterating their near-term and medium-term growth guidance.
The brokerage said aggregate margin performance was modestly ahead of expectations, though trends varied across sub-sectors. Asset quality improved further across most segments, supported by declines in both Stage 2 and Stage 3 assets as well as lower-than-expected credit costs.
It added that management commentary and early delinquency indicators show no discernible asset quality stress linked to the West Asia crisis so far, with portfolio performance remaining broadly stable across lending segments.
(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money related decisions.)
