Kotak Institutional Equities expects strong June quarter growth for top NBFCs, led by Bajaj Finance and Bajaj Finserv. Analysts point to robust loan demand, stable asset quality, and wider profit margins as key drivers. Investors are watching for potential management commentary on future growth guidance.
As the Indian non-banking financial company sector prepares for the June quarter earnings results, Kotak Institutional Equities has shared a positive view on the performance of several major lenders. The brokerage firm highlights Bajaj Finance Ltd., Bajaj Finserv Ltd., and Aditya Birla Capital Ltd. as its preferred picks among large-cap companies. The analysis projects core profit before tax growth between 22% and 58% for the firms under their coverage, with potential net earnings growth reaching as high as 69% for some players.
Factors Driving Performance Expectations
The optimistic outlook is based on strong demand across several lending areas. Channel checks suggest high growth in personal loans, vehicle financing, MSME loans, and microfinance. Additionally, the brokerage expects net interest margins—the difference between interest earned from loans and interest paid on deposits—to expand by 9 to 80 basis points compared to the same period last year. This is attributed to a decrease in borrowing costs for these financial institutions.
Another point of interest for investors is the expectation of stable asset quality. Despite concerns about seasonal weakness, credit costs are projected to decrease by 5 to 35 basis points. This shift, combined with improved liquidity, may lead some companies to raise their growth guidance for the remainder of the fiscal year. Diversified lenders that have already maintained loan growth above 20% are considered particularly well-placed to benefit from these conditions.
Outlook for Housing and Mid-Cap Players
Beyond the large-cap names, the report also touches on the affordable housing segment, which is showing signs of a rebound. After a period of slower activity, early indicators from the fourth quarter of the 2026 fiscal year suggest a recovery is underway. Kotak has included mid-cap companies such as Aptus Value Housing Finance India Ltd., Aadhar Housing Finance Ltd., and Home First Finance India Ltd. in its list of favored entities, noting an expected pickup in performance for the current 2027 fiscal year.
While the sector outlook appears positive based on these projections, investors may track upcoming quarterly reports for confirmation of these trends. Key monitorables for the market include management commentary on loan growth, any changes in credit costs, and updates on the sustainability of margin expansion. The actual results will help determine if the anticipated growth materializes as lending environments and interest rate scenarios evolve.