Indian HY NBFC: 4QFY26 Deep dive - Strong growth across most NBFCs; near-term risks, select OWs

Research evidence excerpt

Indian HY NBFC: 4QFY26 Deep dive - Strong growth across most NBFCs; near-term risks, select OWs

LIN. Yield trends were mixed - benefiting MUTHIN, PIFINL and IIFOIN Key numbers and ratios used in the report 21

but compressing in MGFLIN - partly offset by easing funding costs across most issuers. List of acronyms 21

The AQ improved meaningfully YoY across the board with lower GNPAs/NNPAs. Research Analysts 29

Growth outlook strengthens, domestic risks remain

India's macro-outlook has improved following the easing of Middle East tensions and Rachna Jain, CFA Research Analyst

lower crude oil prices, prompting an upgrade in our FY27 GDP growth forecast to 6.9% Merrill Lynch (Singapore)

+65 6678 2972

while reducing inflation expectations to 4.8%. Although weather-related risks remain key rachna.jain2@bofa.com

variables to monitor, stronger domestic demand, improving external balances and a Jing Peng

stable fiscal position provide support to the growth outlook. For NBFCs, the combination Research Analyst

Merrill Lynch (Hong Kong)

of resilient economic activity, supportive liquidity conditions and healthy credit demand jing.peng2@bofa.com

should remain conducive to loan growth. Managements across covered NBFCs have Asia Pacific Credit Rsch Grp

guided for double digit AUM growth in FY27. However, rising rates from late FY27 could Merrill Lynch (Singapore)

keep funding costs elevated and reinforce the need for disciplined liability management. See Team Page for List of Analysts

Favour improving credits with attractive value

We remain Overweight on MUTHIN and IIFOIN (add IIFOIN 2030 with Overweight) bonds

under our coverage (refer to Exhibits 4 and 5), where improving fundamentals, strong

earnings momentum and attractive spreads continue to offer the best risk-reward.