NBFCs Sector Check - Turbulence In The Near Term But Fundamentals Still Robust: Motilal Oswal

Motilal Oswal Report

The past 12 months have been highly eventful for the NBFC sector. Over the past year, we (in India as well as globally) have repeatedly moved our goalpost for interest rate cuts, which are naturally expected to benefit the NBFC/HFC sector.

While repo rate cuts are yet to happen in India, what kept the NBFC sector in the thick of the action (for better or worse) was the intense and sustained regulatory scrutiny (occasionally even culminating in a ban on business activity) and the weakness (over the last six months) in retail asset quality, particularly unsecured.

Add to this the narrative of a slowdown in consumption, evident in the last quarter, which has prompted us to revisit our outlook on loan growth for financial lenders.

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