NBFC stocks poised for sustained gains on earnings strength: Jefferies

Jefferies has indicated that India's NBFC sector is well-positioned for continued upside, with earnings growth rather than valuation expansion expected to fuel the momentum in coming months. The investment bank's assessment suggests that fundamentals underpinning the sector remain resilient, offering investors conviction in the strength of the rally beyond near-term sentiment shifts.

Among its top sector recommendations, Jefferies highlighted Bajaj Finance and Shriram Finance as standout performers, noting their capacity to sustain elevated growth rates while maintaining operational efficiency. Both entities have demonstrated the ability to navigate market cycles and capitalize on expanding credit demand across retail and small business segments.

The Jefferies outlook underscores a shift in market dynamics where profitability improvements and loan growth are becoming the primary narrative rather than multiple expansion. This earnings-led approach provides a more sustainable foundation for stock appreciation, particularly in a macroeconomic environment where interest rates and policy variables remain in focus.

The NBFC sector has emerged as a significant beneficiary of India's robust credit growth, with improving asset quality and digital innovation enabling players to expand their customer base and penetration. Jefferies' stance reflects confidence that this operational momentum will translate into shareholder value creation across the medium term.