India’s non-banking financial companies (NBFCs) appear to be entering a more broad-based phase of cyclical recovery, with first-quarter FY27 results pointing to improvement across growth, asset quality, margins and operating leverage. The recovery is also beginning to feed into earnings expectations, with upgrades coming earlier than typically seen at this stage of the financial year.
What stands out this time is that the earnings improvement is not being driven solely by lower provisions. Loan growth has remained healthy across both secured and unsecured segments, while credit costs have normalised faster than anticipated. Funding costs are also expected to moderate from first-quarter levels, helping offset some pressure from gradually softer lending yields. At the same time, operating leverage is beginning to emerge as an additional support to profitability.
