India's non-banking financial companies delivered robust first-quarter FY27 performance, with net interest income (NII), operating profit and profit after tax (PAT) growing 23.9%, 24.9% and 36.9% year-on-year respectively. According to 360 ONE Capital, aggregate assets under management (AUM) grew around 19% YoY, broadly in line with expectations. The brokerage expects asset quality to remain broadly stable, with early delinquency indicators showing no discernible asset quality stress from the geopolitical situation or El Nino. Management commentary indicated that credit demand has remained resilient, with the West Asia crisis having a limited impact so far.
Vehicle financiers emerged as the strongest performers with AUM growth accelerating to 16.8% YoY, compared with 16.4% in the previous quarter, supported by strong disbursement momentum. As reported by 360 ONE Capital, demand remains healthy with limited impact from monsoons and geopolitical uncertainties. The latest data from Centrum shows auto NBFC disbursements surged 20.7% YoY to ₹1.04 lakh crore in Q1FY27, driven by portfolio diversification and strong demand in non-commercial segments. CV financing cooled sequentially across major lenders, with Cholamandalam dropping 14.7%, Shriram Finance declining 13.8%, Mahindra Finance decreasing 24.9% and Sundaram Finance contracting 3.3%, though Sundaram remained the lone lender with positive QoQ growth of 11.1%.
Housing finance companies recorded slower-than-expected AUM growth of 5.6% YoY, partly due to elevated balance transfers out at LIC Housing Finance. According to 360 ONE Capital, LIC Housing Finance subsequently lowered its FY27 loan growth guidance to 8-10% from 10-12% earlier, while other prime HFCs maintained their growth outlook. The weaker growth was attributed to elevated balance transfers out at LIC Housing Finance. Other prime HFCs maintained their growth outlook, with management teams retaining their FY27 and medium-term growth guidance across the sector.
Gold financiers experienced growth moderation to 47.1% YoY, following stabilisation in gold prices and implementation of new gold loan guidelines. As reported by 360 ONE Capital, the brokerage flagged competitive pressure on yields as a key concern going forward. Margins were broadly in line with expectations, although Muthoot Finance saw sharper-than-expected compression of around 300 basis points. The competitive pressure on yields remains a key concern for this segment going forward.
Power financiers remained the weakest segment with their combined loan book growing only 2.3% YoY and declining 0.3% sequentially. According to 360 ONE Capital, this segment continues to show the weakest performance in the sector. The sustainability of net interest margins will remain a key monitorable amid yield pressures, particularly in gold and affordable housing finance segments.
