Nomura has highlighted concerns regarding moderating growth in the NBFC sector, emphasizing that risks in unsecured retail loans remain a key focus area. According to RBI’s stress-test projections, non-performing assets (NPAs) for NBFCs are expected to stabilize at 3.4% by September 2025. However, in a high-risk scenario, NPAs could rise to 6%, signaling caution for the sector.
Key Insights:
- Stress-Test Projections:
- NBFC NPAs projected to stay at 3.4% under baseline scenarios by Sep’25.
- High-risk scenarios could lead to NPAs climbing to 6%.
- Cautious Outlook:
- Nomura remains cautious on NBFCs at least until H1CY25 due to heightened risks in unsecured retail lending.
- Top Picks:
- Shriram Housing Finance continues to be Nomura’s top pick in the NBFC space.
- Maintain Buy on:
- Aadhar Housing Finance
- Five Star Business Finance
- LIC Housing Finance
- Negative Ratings:
- SBI Cards and M&M Financial Services maintain negative outlooks.
- Reduce Calls on:
- CreditAccess Grameen
- Cholamandalam Investment & Finance
- Bajaj Finance
Nomura advises caution for NBFCs in the near term, with a focus on robust underwriting practices to navigate the challenging environment. Top picks like Shriram Housing Finance and strong performers like Aadhar Housing Finance offer resilience amid sectoral headwinds.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investors are encouraged to conduct their own due diligence or consult a financial advisor before making investment decisions.
