Jefferies has turned more positive on consumer finance NBFCs, following the RBI’s surprise 50 basis point repo rate cut and 100 basis point CRR cut.
Jefferies said the move will lead to a faster reduction in cost of funds (CoF) across the NBFC sector.
The brokerage expects Net Interest Margins (NIMs) at fixed-rate lenders — such as auto NBFCs (Mahindra Finance, Chola Finance), SBI Cards, and gold loan NBFCs — to surprise positively.
However, near-term loan demand remains weak, Jefferies cautioned. It expects demand to stabilise and improve in the second half of FY26, as macroeconomic activity picks up.
While Gross NPA ratios may rise seasonally in Q1, asset quality is expected to improve through FY26.
Jefferies maintains Bajaj Finance, Chola Investment & Finance, and Shriram Housing Finance as its top picks in the NBFC space.
Disclaimer: The views and target prices mentioned in this article are as stated by Jefferies. They do not represent the opinions or recommendations of this publication. Readers are advised to consult their financial advisors before making any investment decisions.
