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Below The Quote on Market by Krishna Appala, Sr. Research Analyst, Capitalmind Research

Bajaj Housing recently sought ?6,500 crore through its IPO, but the market's response was overwhelming, with bids exceeding ?4 lakh crore. This massive interest is driven by factors such as strong parentage, reasonable valuations, and the current IPO euphoria. The big question now is: will the Bajaj Housing IPO trigger a sector-wide re-rating for NBFCs? At least for the moment, the signs point to yes.

Despite delivering healthy growth and maintaining robust asset quality, NBFCs have been overlooked by the market for the past three years. The sector faced margin pressures due to rising capital costs. However, with interest rate cuts anticipated and valuations remaining attractive, NBFCs now present a better risk-reward ratio.

On the growth front, retail loan growth, particularly in personal, auto, and mortgage loans, continues to be strong, while MSME and business banking portfolios are also expanding robustly. Though challenges like rising funding costs and heightened competition in corporate lending persist, the overall credit quality of the sector remains solid. NBFCs are optimistic, focusing on a balanced approach while seizing opportunities in MSME, housing, and consumer loans.

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