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360 ONE Capital expects India’s non-banking financial companies to sustain steady growth over the near to medium term. Healthy credit demand continues to support lending activity despite geopolitical uncertainty. Management teams have kept their FY27 and medium-term growth guidance unchanged across most segments.
The NBFC growth outlook rests on “broadly stable” asset quality, with early delinquency data showing no clear stress from the West Asia crisis or El Nino. Still, the brokerage sees lending yields and net interest margins as key areas to watch.
Pressure appears most visible among gold lenders and affordable housing finance companies. The report said credit conditions remain supportive, although loan pricing will matter across retail lending categories.
NBFCs covered by 360 ONE Capital, excluding power financiers, reported strong earnings during the first quarter of FY27. Net interest income increased 23.9% from a year earlier. Operating profit rose 24.9%, while profit after tax climbed 36.9% over the same period.
Aggregate assets under management expanded by about 19% year on year, broadly matching the brokerage’s expectations. Management commentary showed that credit demand stayed resilient. The West Asia crisis had only a “limited impact” on borrowing activity during the quarter, according to the report. Profit growth therefore exceeded AUM growth, while operating income also increased at a faster rate.
The brokerage found no clear rise in early-stage repayment problems linked to geopolitical conditions or El Nino. Stressed assets stayed unchanged across most lending categories. These trends support the brokerage’s stable NBFC asset quality forecast for the near term.
Vehicle financiers recorded faster AUM growth during the quarter. Their combined portfolio expanded 16.8% year on year, up from 16.4% in the previous quarter. Strong disbursement activity supported the increase, while demand stayed healthy despite monsoon conditions and overseas tensions. The quarterly rise in vehicle finance growth measured 40 basis points.
Housing finance companies posted weaker growth. Their AUM rose 5.6% year on year, below expectations. Elevated balance transfers from LIC Housing Finance contributed to the slower result. The lender then cut its FY27 loan growth guidance to 8%–10% from its earlier forecast of 10%–12%. The revised range lowers both ends of the lender’s previous guidance by two percentage points for FY27.
Other prime housing financiers kept their existing growth targets. Yet affordable housing lenders continue to face pressure on yields and margins. Therefore, the brokerage will closely track funding costs, loan pricing, and customer movement during the coming quarters.
Gold finance companies recorded 47.1% year-on-year growth, but the pace moderated after gold prices stabilised. New gold loan guidelines also affected business conditions. Meanwhile, greater competition has placed pressure on lending yields across the segment, the brokerage said.
Power financiers remained the weakest group in the coverage list. Their combined loan book grew only 2.3% from a year earlier and fell 0.3% from the previous quarter. This performance stood well below the growth reported by vehicle, gold, and other retail-focused lenders.
Margins broadly matched expectations across the wider NBFC group. Muthoot Finance was an exception, recording a sharper-than-expected margin compression of about 300 basis points. 360 ONE Capital said the ability to maintain net interest margins will remain a main area to watch, particularly for gold and affordable housing financiers.
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