NBFC Q2 Results Preview - A Mixed Bag; Prefer Housing Financiers: Nirmal Bang

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Nirmal Bang Report

We expect covered housing finance companies to deliver strong loan growth, driven by housing/loan against property segments. Prefer Home First Finance, PNB Housing and Repco Home Finance in the space. 

Growth in the used commercial vehicle portfolio is expected to support margins for commercial vehicle financiers. Diversified players (Cholamandalam, Shriram Finance) likely to perform better.

Overall asset quality environment for covered NBFCs remains benign; stress visible in MFI/unsecured loans. Credit costs are likely to be on the higher side; Mahindra Finance is a laggard.

In our view, the following will be the key monitorables from Q2 FY25 results–

1. FY25 growth guidance,

2. NIM movement in subsequent quarters and the likely benefit from a rate-cut,

3. Asset quality and collection efficiency trends.

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