According to reports from Nomura, the brokerage has identified Bajaj Finance, Shriram Finance, and Tata Capital as its top NBFC picks for Q1 FY27. Following the recent rally in NBFC stocks, Nomura now prefers Bajaj Finance over Cholamandalam Investment and Finance, as the valuation gap between the two has narrowed sharply. The brokerage continues to see upside potential in these companies while cautioning against stocks trading at excessive valuations. As reported by The Financial Express, Nomura expects 11-21% upside in Bajaj Finance, Shriram Finance, Tata Capital and Mahindra & Mahindra Financial Services despite the recent rally, while maintaining its 'Buy' rating on Bajaj Finance and reaffirming its 'Buy' rating on Shriram Finance and Tata Capital.
Bajaj Finance delivered exceptional Q1 FY27 results, reporting a 20% year-on-year increase in new loans booked to 1.61 crore, compared with 1.35 crore in the corresponding quarter last year. The company's customer franchise stood at 12.44 crore as of 30 June 2026, up from 10.65 crore a year earlier, with the addition of around 0.51 crore customers during Q1 FY27. Assets under management (AUM) rose 24% year-on-year to approximately ₹5,546.9 billion as of 30 June 2026, compared with ₹4,414.5 billion a year earlier, with the AUM increasing by about ₹369 billion during the quarter. The company's deposit book stood at approximately ₹685 billion as of 30 June 2026. Nomura expects Bajaj Finance to report 24% year-on-year AUM growth to ₹5.47 lakh crore in the June quarter, with net profit projected to increase 24% to ₹5,897 crore and net interest income expected to rise 21% year-on-year to ₹12,385 crore.
According to Nomura's Q1FY27 preview, NBFCs are expected to deliver another steady quarter, supported by healthy loan growth and stable asset quality, though higher funding costs are likely to keep margins under pressure. The brokerage expects all diversified lenders under coverage, except HDB Financial Services, to report more than 20% year-on-year growth in assets under management. Among vehicle financiers, Nomura expects a seasonally slower quarter, with higher fuel prices and supply disruptions emerging as key risks. Shriram Finance is expected to remain relatively insulated from funding cost pressures, while Mahindra & Mahindra Financial Services is anticipated to benefit from a 21% rise in disbursements. Nomura expects the June quarter to remain broadly supportive for the NBFC sector, with robust loan growth and stable credit quality offsetting the impact of elevated funding costs on profitability.
The recovery in the microfinance segment continues, with CreditAccess Grameen reported 16% year-on-year AUM growth in its pre-quarter update, as described by Nomura as "a promising recovery trend." Aadhar Housing Finance is expected to post around 20% year-on-year growth in both loans and net profit, with asset quality remaining broadly stable. Looking ahead, Nomura said management commentary on the cost of funds will be a key monitorable as concerns over global developments have eased. The brokerage also expects investors to track asset quality trends in vehicle finance and SME lending, along with the progress of the monsoon and fertilizer availability for rural-focused lenders.
