M&M Finance our top NBFC pick, followed by Sundaram Finance: Prakash Diwan

In a chat with ET Now Prakash Diwan, Director, Altamount Capital Management shares his views on NBFCs. Excerpts:
ET Now: What about the NBFCs in the session today you have Dewan Housing Finance which has picked up, there is M&M financials which was up almost 12% at one point in time?

Prakash Diwan: M&M Financial has had a stellar run and the reason has been very clearly the kind of strong presence that it has in the rural consumption space. The housing finance companies have also started seeing some momentum, in expectation of a pick up in inventory and possibly, the interest rate cycle itself coming to a peak of sorts. Now that inflation is anyway giving that indication very directly, possibly we could be closer to that, but I would not read too much into the fact that these companies have started doing well a bit too late -- LIC Housing Finance the other day and today BHFL.

The housing finance space is something that I would watch more closely, but on the lines of M&M, you would have L&T Finance Holdings and you would also probably want to look at some of the Bajaj Group companies in that space and Sundaram Finance.

These are much better run companies than say, DHFL. So you have to be very selective in your portfolio and the business model in NBFCs, but of course M&M remains the top pick, followed by Sundaram Finance.