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We expect steady disbursement growth for auto financiers in Q2; prefer players with a diversified portfolio (SHFL, CIFC). NIM is likely to be impacted in Q2FY27 due to hardening bond yields; possibility of a rate hike to exert further pressure. Credit cost is expected to remain broadly stable; however weak monsoons and rising fuel prices to impact borrower cash flows. HFCs are likely to see strong disbursement growth. NIM to be under pressure due to rise in incremental CoF; credit cost outlook benign. BAF has reported strong AUM growth of 26.5% YoY; commentary around sustaining growth momentum and asset quality are key. We upgraded CIFC and BAF to ‘Buy’ following a 13%/ 10% correction in their stock prices over the past month.

Auto financiers – asset quality monitorable:

We expect steady disbursement growth for CV financiers in Q2; diversified segments like HL/ LAP/ MSME/ gold to grow faster. Disbursement/ AUM growth for MMFS has picked up at 22%/ 15% YoY; however, impact of a weak monsoon is likely to be a key overhang. We expect NIM to see a compression due to hardening bond yields and credit cost to remain broadly stable. MMFS has already reported a flat Stage 3/improvement in Stage 2 QoQ. However, weak monsoons, elevated fuel prices and potential El Nino conditions are likely to put pressure on transporter cash flows

Housing financiers - NIM under pressure:

We expect strong disbursement momentum for HFCs to continue. Spread is likely be under pressure due to PLR cuts and rise in incremental CoF. LICHF expects to maintain reported NIM in the range of 2.6%-2.7% and is focusing on LAP/ LRD portfolio to support yield. CANF has guided for spread/ NIM at 2.75%/ 3.75% over the medium term. AAVAS has taken a PLR cut of 10bps (effective from Jun’26) and is seeing a rise in CoF due to liquidity tightening. HFFC is expected to maintain CoF in Q2 in a similar range as Q1, despite pressure on bond yields. Credit cost is expected to remain low/ benign across the board; LICHF is awaiting NCLT resolution for some large accounts.

BAF - NIM to see a slight compression; credit cost to improve:

BAF reported robust AUM growth of 26.5% YoY to INR5,847.5bn. New loans booked grew 11% YoY to 13.4mn and company added 4.4mn new customers in the quarter, taking the total number of customers to 128.8mn. We expect NIM to see a marginal compression in Q2 due to rise in incremental CoF. Credit cost to improve to 1.6%.

Exchanges – Lower volumes QoQ due to CAS:

BSE’s cash ADTO grew 32% YoY/ 5% QoQ to INR104.9bn in Q2FY27. Index options premium ADTO remained robust, rising 50% YoY to INR225.3bn although it declined 24% QoQ as CAS and prop. trading restrictions dented volumes in the derivatives segment. We expect operating revenue to decline ~8% YoY in Q2, with EBITDA/ PAT margin at 63%/ 44%. NSE’s cash ADTO grew 24% YoY but moderated 13% QoQ to INR1,183.8bn. Option premium ADTO saw a modest 3% YoY growth to INR479.8bn, while declining 25% QoQ. We expect operating revenue in Q2 to grow ~7% YoY in Q2, with EBITDA/ PAT margin of 75%/ 54%

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