Investors are advised to view recent dips in NBFC shares as buying opportunities, supported by strong earnings and robust credit demand projected into FY27, with key players like Shriram Finance benefiting from strategic investments.
NBFC shares remain in focus for investors looking for dips to buy after a strong earnings season, with Sunny Agarwal of SBI Securities saying the sector should continue to post healthy numbers as credit demand stays firm into FY27. In comments carried by Business Today on 17 August, Agarwal said advances growth for non-banking financial companies could still run at 15% to 25%, depending on scale and business mix, and argued that earnings visibility remains attractive if loan growth and funding conditions hold up. Financial stocks have already been one of the stronger parts of the market this earnings season, with banking and NBFCs both delivering broadly solid quarterly results, even as some investors remain wary about margin pressure in parts of the lending chain.
Agarwal’s message to investors was straightforward: periods of weakness may offer an entry point rather than a warning sign. He said NBFCs should continue to produce a healthy set of results and that any pullback in share prices could be an opportunity to accumulate. The key issue for the sector is whether balance-sheet growth can translate into stable or better spreads, since borrowing costs have a direct effect on profitability and even small changes in funding costs can meaningfully influence net interest margins, the gap between what lenders earn on loans and what they pay to borrow.
Among his preferred names, Shriram Finance stands out because of the potential benefit from the infusion of large funds from a Japanese conglomerate, which Agarwal said could reduce borrowing costs and support margins. That view fits with recent coverage of Japan’s MUFG Bank taking a 20% stake in the company, a move seen as strengthening its capital base. Bajaj Finance is another stock he favours after what he described as a very solid quarterly performance, though he still prefers buying on weakness rather than chasing the recent rally. SBI Securities is also constructive on smaller NBFCs such as Mahindra & Mahindra Financial Services and Northern ARC Capital. Kotak Institutional Equities has separately said NBFCs are in a sweet spot, pointing to stronger disbursements, improving net interest margins and lower stressed loans, although it noted that much of the near-term upside may already be reflected after the recent run-up.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
