NBFCs in demand; Bajaj Finance, Chola, L&T Finance hit record highs

Bajaj Finance surged 4 per cent to ₹1,058.60, while L&T Finance (₹271) and Cholamandalam Investment and Finance Company (₹1,691.90) were up 3 per cent each on the BSE in Wednesday's intra-day trade.

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Shares of non-banking finance companies (NBFCs) Bajaj Finance, Cholamandalam Investment and Finance Company (Chola) and L&T Finance rallied up to 4 per cent, hitting their respective all-time highs on the BSE in Wednesday’s intra-day trade owing to a healthy business outlook.

 

Bajaj Finance surged 4 per cent to ₹1,058.60, while L&T Finance (₹271) and Cholamandalam Investment and Finance Company (₹1,691.90) were up 3 per cent each on the BSE in intra-day trade.

Higher anticipated household consumption a key trigger

 

The rate rationalisation marks a structural positive for the consumption sector. Among the key drivers on the demand side, household consumption is expected to remain robust aided by tax relief in the Union Budget 2025-26. 

 

The combination of income-tax relief in the Union Budget for FY26, rate cuts leading to lower Equated Monthly Installments (EMIs), and a moderation in food inflation is expected to boost household disposable income and urban consumption in FY26, Chola said in its FY25 annual report.

 

Chola is one of the premier diversified NBFC in India, engaged in providing vehicle finance, home loans, loan against property, SME loans and unsecured loans.

Bajaj Finance in focus

 

Bajaj Finance is one of India’s largest and well-diversified NBFC. The company provides loans for two wheelers, consumer durables, housing, SME & MSME businesses etc. Bajaj Finance has an asset under management (AUM) of ~₹4.41 trillion as of June 2025, and continues to be the largest consumer durables lender in India.

 

On August 14, 2025, S&P Global Ratings upgraded the credit rating of Bajaj Finance and L&T Finance.

 

Bajaj Finance's creditworthiness benefits from the company's strong market position in the financing of consumer durables and two- and three-wheelers, and its adequate liquidity. 

 

“The stable rating outlook reflects our view that Bajaj Finance will maintain its strong market position and a healthy capital position over the next two years. We also expect the company's liquidity and funding profile to remain adequate over the period,” S&P Global Ratings said in its rating rationale.

 

Meanwhile, S&P Global expects L&T Finance's risk profile to improve as the company shifts toward more diversified retail lending. Economic growth should also help reduce legacy wholesale and security receipt exposures. Credit costs, while improving, will likely remain on the higher side compared with those of some rated peers, given the company's focus on loans to more vulnerable borrowers.

 

Meanwhile, the overall demand remains mixed sequentially with select seasonal purchases witnessed in consumer goods, better disbursements in affordable housing & loan against property (LAP) segments and gradually rising disbursements in unsecured products like personal loans (PL) & business loans (BL), analyst at InCred Equities said in NBFC sector’s Q2FY26 results preview.

 

Demand for unsecured products has been consistent, although lenders have been on a tight leash in recent quarters amid the underlying overleveraging. However, we observe some softness in disbursements, particularly in mid-to-high ticket loans. Vehicle financing remained subdued as customers also awaited the implementation of the Goods and Services Tax (GST) rate cut towards the end of September 2025. The brokerage firm said they await management commentary on sustainability of any improvement in the trend post GST rate cut.

 

The brokerage firm reiterated ADD rating on Bajaj Finance with a target price of ₹1,100 as they believe it is most favourably placed, given its risk-reward ratio. Analysts retain a HOLD rating on Chola with a target price of ₹1,700 amid a selective slowdown in its new products.