Best NBFC Stocks in India 2024 – List of Stocks & Analysis

Last updated on: February 13, 2024

The term NBFC refers to Non-Banking Financial Corporations and it is financial institutions that work much like banks. In most cases, NBFCs provide credit services to borrowers, however they are not allowed to take deposits from the public. If you are searching for great stocks to invest in, you can consider NBFC stocks like Bajaj finance shares & others as these stocks may give excellent returns to investors over a period of time. Let’s know more about NBFC stocks and find out the best NBFC stocks in India for investment.

best nbfc stocks in India

Top 10 NBFC Stocks in India

NBFC Stocks CMP Mkt Cap ROA
Bajaj Finance share price  ₹7,101.5 ₹4,40,635 5.30%
Cholamandalam Inv & Finance ₹1,103.9 ₹93,146 3.80%
IRFC ₹74.5 ₹98,366 1.35%
Shriram Finance ₹1,990 ₹74,163 2.89%
SBI Cards & Payments ₹740 ₹70,107 5.60%
Muthoot Finance ₹1,435.2 ₹56,804 4.85%
Aditya Birla Capital ₹175.00 ₹45,555.00 3%
Sundaram Finance ₹3,276.00 ₹36,392.00 2.87%
M&M Financial Services ₹267.00 ₹32,990.00 2.23%
CreditAccess Grameen ₹1,660.00 ₹26,400.00 4.20%

 

Why invest in Best NBFC stocks in India?

Expectations of peaked government bond rates and interest rate reductions have lead to an increased confidence in the stocks of Non-Banking Financial Companies (NBFCs). NBFCs gain from a fluctuating rate environment as they depend on bank borrowings and non-convertible debentures (NCDs), particularly those with a larger percentage of floating rates. The market’s expectations of a dovish posture by the RBI are shown by the recent decrease in the rates on government bonds. Additionally, with the merger of HDFC Bank and HDFC Ltd, less competition is anticipated in the wholesale borrowing sector. Nevertheless, while assessing the industry, other elements like credit growth and asset quality must also be taken into account.

There are numerous NBFCs operating in India and are listed on the stock exchanges like BSE and NSE. Let’s find out the best NBFC stocks in India to invest in.

List of Best NBFC Stocks in India

1. Bajaj Finance Limited
2. Cholamandalam Investment and Finance (Chola)
3. Shriram Finance Limited
4. Muthoot Finance Limited
5. IRFC
6. L&T Finance Holdings Limited
7. Poonawala Fincorp

  1. Bajaj Finance Limited

A subsidiary of Bajaj Finserv, Bajaj Finance Limited is one of the most popular non-banking financial companies with its headquarters in Pune. The NBFC has a market capitalization of Rs. 4.5 lakh cr and enjoys a fabulous present all across India with more than 7500 branches and over 7 crore customers.

Bajaj Finance Limited is the parent company of its fully owned subsidiaries, Bajaj Housing Finance and Bajaj Financial Securities Ltd.

Additionally, Bajaj Finance is an Associate Company of Snapwork Technologies Pvt Ltd, which supplies software products to Bajaj Finance. Bajaj Finance was able to bring on about 1.16 Cr new clients throughout the course of the year. 3.5 Cr individuals have used its digital app platform thanks to its technology infrastructure.

Bajaj Finance Ltd Annual report

Bajaj Finance share price currently stands at Rs. 7490 and the stock price has seen amazing growth over the past several years. According to company records, the NBFC’s Net Interest Income increased by almost 32% in FY23, from Rs. 21,892 Cr to Rs. 28,846 Cr. This growth had no effect on Net Interest Margins. Net Profits increased dramatically, from Rs. 7028 Cr in FY22 to Rs. 11508 Cr in FY23, a 64% increase. This was made feasible by the fact that its revenue surged exponentially while its costs only increased by 17%. Bajaj Finance share price has attained a growth of 24.35% over the past 5 years.

  1. Cholamandalam Investment and Finance (Chola)

Incorporated in 1978 as the financial services division of the Murugappa Group, Cholamandalam Investment and Finance Company Limited is commonly referred to as Chola. Originally founded as a source of equipment finance, Chola has evolved into a full-service provider of financial services.

The NBFC has 1,1204 branches throughout India and manages assets under management (AUM) of Rs. 1.14 Lakh Cr, up 36% from Rs. 82,904 Cr in FY22. Simultaneously, the Company accelerated payments by 87%, rising from Rs. 35.490 in FY22 to Rs. 66,532 in FY23. It is one of the best NBFC stocks to for investment.

  1. Shriram Finance Limited

In 1979, R. Thyagarajan, A.V.S Raja, and T. Jayaraman founded Shriram Finance. This Non-Banking Financial Company is top in the NBFC stocklist, specializes in truck, passenger, and other commercial vehicle hire purchase financing.

In addition, the company funds working capital loans, gold loans, MSMEs, construction equipment, and farm equipment.

Three companies came together to establish Shriram Finance Ltd.: Shriram Transport Finance Company Limited (STFC), Shriram Capital Limited (SCL), and Shriram City Union Finance Limited (SCUF).

With 1.85 lakh crore in assets under management and 73.24 lakh customers, it is now among the biggest retail NBFCs in India. With over 2922 branches operating all throughout the nation, 64,052 people work for it.

  1. Muthoot Finance Limited

Over the past one year, Muthoot Finance’s operational revenue was Rs. 13,362.32 Cr. Despite the need to address a -2% yearly revenue de-growth, the pre-tax margin is an excellent 41%, indicating solid financial success. It is among the top NBFC businesses in India because of its impressive 16% return on equity (ROE).

The NBFC offers a wide range of financial services including gold loan, housing finance, personal loan, insurance, and others.

  1. Indian Railway Finance Corporation (IRFC)

Since Indian Railway Finance Corporation was founded in 1986 with a particular goal, it is not a typical NBFC. The Indian Railways’ specialized financial arm, IRFC, raises money from both local and foreign capital markets.

The Ministry of Railways, Government of India, has administrative authority for the Company, which is a Public Sector Enterprise. The main goal of IRFC is to use market borrowing at competitive rates to satisfy the Indian Railways’ demand for “Extra Budgetary Resources” (EBR). (IRFC)

  1. L&T Finance Holdings Limited

Over a period of 12 months, L&T Finance Holdings’ operational revenue was Rs. 13,085.61 Cr. Although the 8% yearly sales increase is encouraging, the -4% pre-tax margin might be improved. While the ROE of 7% is reasonable, it might be improved.

  1. Poonawala Fincorp

An MSME and consumer lending company, Poonawalla Fincorp Limited is a Non-Banking Finance Company (NBFC) within the Cyrus Poonawalla group. To meet our clients’ and businesses’ expanding finance needs, we provide a broad range of products. It is undoubtedly one of the best NBFC stocks in India to choose.

Benefits of Choosing The Best NBFC Stocks in India

There are numerous benefits of choosing NBFC stocks in India for investment. Let’s explore them below.

Deposit Tenure and Types: Public deposits may be renewed or accepted by NBFCs for terms of one year to sixty months. Deposits that must be repaid upon request, however, are not accepted.

Interest Rate laws: The Reserve Bank of India’s (RBI) interest rate laws apply to non-bank financial companies (NBFCs). These rates, which have a ceiling of 12.5% annually, can be paid or compounded at intervals not less than monthly intervals.

Limitations on Incentives: NBFCs are not allowed to provide gifts, incentives, or other extra perks to depositors, in contrast to certain traditional banking organizations.

Credit Rating Requirements: NBFCs are required to maintain a minimum investment grade credit rating, with the exception of certain Asset Finance Companies (AFCs).

Insurance on Deposit: The RBI does not guarantee the return of deposits made with NBFCs, thus it’s important to understand that deposits with these organisations are not insured.

The Conclusion – Best NBFC Stocks in India

Investing in the best NBFC stocks in India presents investors with special opportunities as well as difficulties. The broad array of financial goods and services provided by the NBFC industry in India, together with its development potential, makes it a desirable investment choice.

Nonetheless, it’s crucial to approach NBFC stock investments cautiously and thoughtfully. Making educated investing decisions requires careful investigation, a diverse portfolio, and regular knowledge of news and market developments. Check out the aforementioned NBFC stocklist and choose the one matches your needs the best.

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