Gold-loan focused non-bank lenders delivered exceptional performance in the June quarter (1QFY27), with Manappuram Finance leading at 57% year-on-year growth in assets under management (AUM), followed by Muthoot Finance at 43% and IIFL Finance at 38%. According to BofA Global Research, Shriram Finance and Piramal Finance also posted healthy growth of 15% and 25% respectively, while Sammaan Capital returned to growth after last year's balance-sheet reset. This strong asset growth performance positioned gold financiers at the forefront of the quarter's results across India's high-yield NBFC sector, with BofA Global Research noting that gold financiers led both sequential and annual asset growth during the quarter.
Asset quality trends remained favourable across nearly all six lenders in the June quarter, with gross and net non-performing asset ratios improving or holding steady through the quarter. As reported by BofA Global Research, profitability also recovered meaningfully as credit costs normalised, particularly at Manappuram and IIFL Finance. The improvement in asset quality metrics and reduced credit costs contributed to the sector's overall positive performance during the quarter, with BofA noting that asset quality trends were favourable across nearly all six lenders in the June quarter.
BofA Securities retained its Overweight recommendation on Muthoot Finance and IIFL Finance bonds, citing improving fundamentals, strengthening credit profiles and relatively attractive spreads. According to the brokerage, Muthoot continues to benefit from a favourable gold-loan environment, resilient growth and contained credit costs, while IIFL Finance's earnings trajectory and franchise strength support its case, with the company's ongoing income-tax matter seen as manageable given its balance-sheet strength. Shriram Finance, Manappuram Finance, Piramal Finance and Sammaan Capital remain Marketweight as strengthening credit metrics and recent rating upgrades are largely already reflected in current valuations, with BofA noting that these companies are already priced in for the recovery.
BofA's economists raised India's FY27 GDP growth forecast to 6.9% from 6.5% in June, citing stronger consumption and investment activity, even as geopolitical volatility persists. As reported by the brokerage, the Reserve Bank of India is expected to begin normalising policy from December 2026, taking the repo rate to 5.75% from 5.25% currently, as inflation stays contained despite weather-related risks from a weak monsoon. However, BofA cautioned that weather-related disruptions to rural cash flows and the longer-term effect of artificial intelligence-led job losses in select service industries are emerging risks worth monitoring for retail and small-business loan portfolios, even as the overall funding and liquidity backdrop for NBFCs remains supportive.
