Financial Services – Oct-Dec’25 Earnings Preview – NIM to improve; credit cost to moderate
Published on 08 Jan 2026
Auto Financiers: With the festive season in Q3, we expect an uptick in growth for auto financiers due to the relief from GST cuts. Cost of borrowing has started to taper off in Q2 and we expect the movement to continue in Q3 with MCLR repricing (CIFC) and credit rating upgrade (SHFL). Remain wary of asset quality trends for MMFS. Prefer diversified players- SHFL and CIFC.
HFCs: Large HFCs to see tepid growth due to intense competition from banks (LICHF, CANF); expect higher growth for affordable housing players (Aavas). Lower CoF due to repricing/ NHB sanctions to help NIM. Expect low credit cost for HFCs in Q3 with recoveries in key accounts (LICHF). Assume coverage for housing financiers.
Diversified: BAF has reported an AUM growth of 22% YoY- commentary around growth and asset quality are key. Stock has seen a significant correction, upgrade to BUY.
