Diversified Financial Services - India: 1Q preview – AFCs: AQ stable, NIM moderation; AMCs: stable MF yields

Research evidence excerpt

Diversified Financial Services - India: 1Q preview – AFCs: AQ stable, NIM moderation; AMCs: stable MF yields

driven by varying yields on pricing actions and customer acquisition strategies. SBIC U/P 620 580 -6%

MFI portfolio expected to deliver sequential loan book growth, supported by stronger IPRU AMC NEUTRAL 3,500 3,600 3%

collections, though growth recovery is likely to remain gradual. ABSL AMC NEUTRAL 1,095 1,255 15%

UTI AMC U/P 935 875 -6%

SBIC: credit cost moderation, asset growth muted Source: BofA Global Research estimates BofA GLOBAL RESEARCH

We expect credit costs moderation to continue for SBIC (7.42% vs 7.69% QoQ),

reflecting a 7bp improvement in GS-2+3 and lower write-offs QoQ. We see receivables

growth at +6% YoY for SBIC in 1Q (vs 2% in FY26), lagging spends growth. NIMs to see Key Abbreviations:

some compression in 1Q on lower yields and slight rise in funding costs. We believe that

asset growth revival and mix improvement are critical for SBIC re-rating. AFCs: Asset Financing Companies

HFCs: better acquisition trends; AMCs: stable MF yields AMC: Asset Management Company

1Q for HFCs is expected to be better on acquisition trends and lower attrition in the CE: Collection Efficiency

recent months for IHL segment, although pricing remains competitive. Overall, the

DF: Developer Financedemand trends in prime housing continue to be soft, with players focusing on affordable

housing and NHI segments, while DF attrition remains elevated. We forecast loan book GL: Gold Loan

growth of 1%/6% QoQ growth for LICHF/BHFL, with slight moderation in NIMs. For

AMCs, we estimate flattish to slightly higher QAAUM on a sequential basis, reflecting GS-2/3: Gross Stage 2/3

softer flows amid prolonged market volatility, although AMCs expect broader investor