India NBFCs show resilient growth amid diversifying auto finance

India’s non-banking financial companies (NBFCs) are projected to maintain steady growth through the medium term, driven by resilient credit demand despite geopolitical uncertainties. According to reports from 360 ONE Capital and Centrum, NBFCs showed strong earnings in the first quarter of FY27, with significant year-on-year increases in net interest income, operating profit, and profit after tax.

In the auto finance sector, disbursements grew 20.7 per cent year-on-year to approximately Rs 1.04 lakh crore. While commercial vehicle financing saw a sequential decline as volumes normalized following previous pre-buying, the sector is shifting toward a more diversified expansion phase. Non-commercial vehicle segments, including SME and retail franchises, have provided stability for several lenders.

However, some segments face specific challenges. Housing finance companies recorded slower-than-expected growth, leading LIC Housing Finance to lower its FY27 loan growth guidance. Additionally, analysts noted that lending yields and margins for gold and affordable housing financiers remain key areas to monitor.