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AUM Growth Momentum for NBFCs is Expected to Remain Strong across Segments in Q2FY27E; Sector Outlook Remains Positive

We maintain a positive outlook on NBFC sector led by resilient credit demand.

Sector View

We anticipate NBFC credit growth to remain in the range of 15.0–17.0% CAGR over FY26–FY28E. We believe that NBFCs are expected to gain market share from banks, driven by stronger loan origination, shorter TAT and focus on selected product categories.

We project the CV segment to underperform the overall credit growth over the short term, impacted by the ongoing West Asia conflict, with a modest inch-up in NPAs across CV financiers. Although we forecast some stress across MSMEs, segmental credit growth will remain buoyant on account of higher need for working capital loans.

Gold financiers are anticipated to witness a stronger credit growth led by improved disbursements and higher gold loan demand, while yields and the asset quality are anticipated to remain stable. Agri financiers may witness a softer credit demand on account of weaker southwest monsoon (~13% lower than LTA).

Cost of Funds (CoF) for NBFCs is expected to remain range-bound sequentially. Despite sharp increase in 10-year G-Sec yields, funding costs may not increase immediately given their higher dependency on term loans. In case of a rate hike in Oct-26 policy, CoF may get impacted with a lag of 3–6 months.

We estimate overall credit cost for NBFCs to remain stable largely on account of improved underwriting norms. In light of drought-like conditions across agrarian states, NBFCs may not observe significant delinquencies given limited exposure, except for some microfinance lenders.

Capri Global

Gold Loan AUM is anticipated to grow at 102.7% YoY driven by rapid expansion of branch network. Housing Loan AUM and Construction Finance AUM is expected to grow at 40.0% YoY and 35.1% YoY, respectively, led by stronger demand across borrower profile

MAS Financial Services

Micro-Enterprise AUM is anticipated to grow at 26.4% YoY, whereas 2-Wheeler AUM is forecast to increase at 21.4% YoY on account of steady demand across rural and urban India. SME AUM is expected to grow at 24.9% YoY, led by higher need for working capital loan, while CV AUM to grow at 5.5% YoY led as the company remains cautious due to West Asia conflict

High-conviction Investment Idea

We maintain a positive stance on Capri Global, which is expected to deliver strong AUM growth in Q2FY27E.

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