Stocks to buy: Jefferies lists 11 NBFC picks with up to 48% upside potential. Do you own any?

Jefferies assigns ‘Buy’ calls to 11 non-banking financial companies (NBFCs), with target prices implying up to 48% upside potential. It also has ‘Hold’ ratings on Mahindra Finance, LIC Housing Finance, Bajaj Housing Finance, SBI Cards, Muthoot Finance, Piramal Finance and IIFL Finance.
The brokerage hosted nine of the companies and found that most reported healthy disbursement growth and resilient asset quality in the July-September quarter so far. Cost of funds (CoF) remains steady but could inch up if the RBI raises rates, while most companies expect net interest margins (NIMs) to remain range-bound in the near term.

Jefferies has a ‘Buy’ call on Cholamandalam Investment and Finance Company with a target price of Rs 2,100 apiece, implying 19% upside potential. The brokerage noted that September quarter disbursement trends remain healthy, with market-share gains across auto segments and strong traction in non-vehicle loans.Management reiterated its FY27 guidance of 22-23% AUM growth and credit costs at 1.5% of average assets. CoF remains broadly steady, although 25% of liabilities are repo-linked and 50% are floating liabilities, which could be affected by rate hikes upfront. The company expects NIMs to remain steady in FY27 compared with FY26.

Jefferies has a ‘Buy’ call on Shriram Finance with a target price of Rs 1,210 apiece, implying 20% upside potential. The brokerage highlighted steady disbursements, with management guiding for around 17% AUM growth in FY27, rising to 18-20% in FY28-29.A rising mix of new vehicles, which typically have longer tenors, should lower loan rundown rates from 52% to 48%, helping vehicle AUM grow 17-18% year on year while MSME growth picks up in the second half. CoF is likely to fall by 5-6 basis points per quarter, supporting near-term NIM expansion, while credit costs are expected to remain steady at 2% over the next two to three years.

Jefferies has a ‘Buy’ call on Can Fin Homes with a target price of Rs 1,075 apiece, implying 40% upside potential. The stock has fallen more than 8% in a month and 18% so far in 2026. Over the longer term, the stock has delivered marginally negative returns over three years but gained 15% in five years.

Jefferies has a ‘Buy’ call on Aptus Value Housing Finance with a target price of Rs 350 apiece, implying the highest potential upside among its picks at 48%.The brokerage highlighted the affordable housing finance company’s industry-leading profitability profile, forecasting ROA of 7.6% in FY27 and 7.3% in FY28. Core ROE is expected to remain strong at 20% through FY28.

Jefferies has a ‘Buy’ call on Home First Finance with a target price of Rs 1,470 apiece, implying 17% upside potential. The brokerage anticipates healthy operating metrics, modelling ROA at 3.9% in FY27 before easing to 3.7% in FY28.Core ROE is projected to expand gradually from 13% in FY26 to 14% in FY27 and 15% in FY28. The housing financier is valued at 2.9x FY26 and 2.5x FY27 P/B.

Jefferies has a ‘Buy’ call on Aavas Financiers with a target price of Rs 1,800 apiece, implying 36% upside potential.According to the brokerage, Aavas Financiers’ management expects AUM growth to improve to 17% in FY27 and 20% in FY28, driven by 23-25% disbursement growth and the addition of 35-40 new branches. Spreads may dip slightly in the near term but are expected to recover to 5% over FY27-28, supported by better pricing discipline and higher disbursement yields.

Jefferies has a ‘Buy’ call on Bajaj Finance with a target price of Rs 1,280 apiece, implying 25% upside potential.
The brokerage hosted Bajaj Finance MD Rajeev Jain and other executives for a roadshow. It noted that management remains confident about near-term and long-term growth and profitability. In the near term, strong demand, asset quality and efficiencies are expected to offset slightly lower NIMs, while management plans to use favourable conditions to build resilience.
Over the next 10 years, Bajaj Finance plans to grow AUM at a 23% CAGR and profits at a faster pace, Jefferies said. AI also remains a key focus for management and the board. The brokerage noted that succession will be through an internal selection, with an announcement likely in January or February 2028.

Jefferies has a ‘Buy’ call on Manappuram Finance with a target price of Rs 430 apiece, implying 36% upside potential. The shares have fallen around 10% in a month but gained 2.5% in 2026 so far and 10% over one year.
Over the longer term, the stock has delivered a 129% return over three years and gained 85% in five years.

Jefferies has a ‘Buy’ call on HDB Financial Services with a target price of Rs 880 apiece, implying 29% upside potential.The brokerage noted that the company is seeing improved disbursement growth in consumer and enterprise lending, although AUM growth may lag due to elevated rundown rates. HDB expects near-term margins to remain close to March quarter levels of 8.2% and aims to sustain NIMs above 8% in the medium term as the share of used vehicles, consumer and gold loans increases.Credit cost guidance for FY27 remains unchanged at 2.3%, while ROA is expected to expand to 2.5% over FY27-28.

Jefferies has a ‘Buy’ call on Poonawalla Fincorp with a target price of Rs 560 apiece, implying 19% upside potential. Management reiterated its expectation of 35-40% AUM CAGR over the next three years, supported by the expansion of gold-loan branches, consumer durable networks and CV partnerships.Key earnings drivers include expected NIM expansion from higher disbursement yields, lower operating expense ratios due to operating leverage and potential positive surprises on credit costs. Management expects ROA to rise to 3-3.5% by June 2028.

Jefferies has a ‘Buy’ call on Aditya Birla Capital with a target price of Rs 475 apiece, implying 18% upside potential.
Management expressed confidence in delivering 25% AUM CAGR over FY26-29, with unsecured loans gradually rising to 30% of the book. Jefferies believes Aditya Birla Capital could benefit if interest rates rise, given that 70% of its advances are floating-rate compared with 56% of its borrowings.
Credit cost guidance remains at 1-1.1%, while ROA is expected to improve to 2.5% by Q4 FY27, led by modest NIM expansion, operating leverage and controlled credit costs.
Disclaimer: This article has been written by Debaroti Adhikary, who is not a SEBI-registered Research Analyst or an Investment Adviser. Debaroti Adhikary and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here.