India’s Non-Banking Financial Companies (NBFCs) are set to maintain a steady earnings trajectory in the near to medium term, supported by sustained credit demand across most sectors, according to a report by brokerage firm 360 ONE Capital.
Despite global geopolitical uncertainty and climate factors like El Niño, management teams across major NBFCs have retained their FY27 growth guidance, citing healthy disbursement pipelines and stable early delinquency metrics.
Q1 FY27 Performance Snapshot
Excluding power financiers, NBFCs under 360 ONE Capital’s coverage recorded strong year-on-year (YoY) growth in the first quarter of FY27:
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Profit After Tax (PAT): Up 36.9% YoY
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Operating Profit: Grew 24.9% YoY
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Net Interest Income (NII): Rose 23.9% YoY
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Assets Under Management (AUM): Broadly in line with estimates, expanding ~19% YoY
Sector-Wise Growth Trends
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Vehicle Financiers: AUM growth accelerated to 16.8% YoY (up from 16.4% in the previous quarter), driven by robust disbursement momentum and resilient rural/urban demand unaffected by monsoon patterns.
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Gold Financiers: Delivered the highest expansion at 47.1% YoY, though growth moderated sequentially following new regulatory guidelines on gold loans and stabilizing gold prices. Yield compression remains a key monitoring point.
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Housing Finance Companies (HFCs): Growth slowed to 5.6% YoY, primarily dragged down by balance transfers out of LIC Housing Finance. LIC Housing subsequently lowered its FY27 loan growth guidance to 8–10% (from 10–12% earlier), while prime private HFCs held their guidance steady.
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Power Financiers: Continued as the weakest segment, with AUM growing only 2.3% YoY and contracting 0.3% sequentially.
Key Monitorables Ahead
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Net Interest Margin (NIM) Compression: Increased competition is weighing on lending yields, particularly for gold loan providers and affordable housing financiers. Muthoot Finance, for example, saw a sharper-than-expected margin compression of ~300 bps in Q1 FY27.
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Asset Quality: Stressed assets remain stable for now, but yield sustainability and potential credit costs in lower-income borrower segments will be closely watched through the rest of FY27.
