L&T Finance, Bajaj Finance upgraded as personal loan demand surges

Global investment bank UBS has raised its rating on L&T Finance and Bajaj Finance, citing anticipated expansion in the personal loan segment across India. The dual upgrades reflect confidence in the ability of both financial services companies to capitalize on growing consumer demand for credit, particularly in the retail borrowing space.

Beyond the upgrades, UBS has maintained its Buy rating on Poonawalla Fincorp, Cholamandalam Investment and Finance Company, and Shriram Finance. The brokerage's constructive stance on these three entities underscores its broader bullish outlook for India's non-banking financial sector, which has emerged as a key driver of retail credit expansion.

Meanwhile, UBS retained its Neutral rating on three lenders: HDB Financial Services, SBI Cards, and Mahindra & Mahindra Financial Services. The mixed ratings suggest the brokerage sees varying prospects across different segments of India's consumer lending landscape.

The upgrades coincide with strengthening consumer sentiment in India and rising disposable incomes, particularly among salaried professionals and small business owners. Personal finance has become an increasingly competitive arena, with non-bank lenders playing an expanded role in meeting credit demand that traditional banks have been slower to address. The sector's growth trajectory has attracted significant investor attention as India's middle class continues to expand.