Antique Stock Broking on Wednesday said NBFCs saw a healthy exit to FY26, signalling a strong FY27. That said, it believes macro risks warrant caution. For now, the brokerage has 'Buy' rating on Bajaj Finance, Cholamandalam Investment and Finance Company (CIFC), Shriram Housing Finance Limited (SHFL), L&T Finance Ltd, Aadhar Housing Ltd, Aptus Value Housing Finance India Ltd, HomeFirst and Indiashelter. The domestic brokerage suggested 'Hold' on  Mahindra & Mahindra Financial Services (MMFSL) and Aavas Financiers Ltd.

Antique said vehicle volumes are exhibiting early signs of a commercial vehicle (CV) upcycle, but the pace of recovery could witness a temporary delay amid rising fuel prices, which we believe will be followed by pent-up demand going forward. It noted that affordable HFCs too reported concerns in terms of inflation that may prompt a reassessment of FY27 growth guidance after Q1, but so far, the demand momentum remains unaffected.

Antique Stock Broking maintained its positive view on the sector and expects the impact of West Asia uncertainties
to be short-term in nature. While the inflationary pressure may hamper the growth in consumer, vehicles and housing over the near term, the brokerage expects the pent-up demand to follow in the second half of ongoing financial year. 

Gold financiers and diversified players are well positioned to outperform in the current environment, it said.

Explaining it, Antique Stock Broking said gold financing offers an effective hedge against any near-term slowdown in credit demand, positioning gold-focused and diversified financiers favorably. Its preferred picks among NBFC coverage are CIFC, SHFC and IndiaShelter.

Antique suggested a target of Rs 1,070 on Bajaj Finance, Rs 1,920 on CIFC, Rs 1,185 on SHFL, Rs 335 on L&T Finance, Rs 325 on MMFSL and Rs 620 on Aadhar. It set targets of Rs 330 on Aptus, Rs 1,570 on Aavas, Rs 1,450 on HomeFirst and Rs 980 on India Shelter.

In the March quarter, a sharp decline in cost of funds drove margin expansion across most companies, except Bajaj Finance, L&T Finance, SHFL & Aadhar where margins moderated due to PLR cuts. Strong disbursement momentum in Q4 set a strong positive tone for FY27 AUM growth, however, management commentaries showed slight hesitation due to near-term headwinds from West Asia conflict and weak
monsoon forecasts, it said.

"On the asset quality front, though each of these companies showed healthy improvement on GS3 as well as on the early
delinquencies, four companies (MMFS, CIFC, LTF and IndiaShelter) created management overlays aggregating Rs 55o crore to cushion themselves from the aforementioned headwinds," Antique said.