-based brokerage Jefferies has upgraded four non‑bank finance companies (NBFCs) in its latest coverage, suggesting they could deliver as much as 20 per cent upside over the next year. The broker’s call comes as the Nifty 50 has been trading in a narrow range, while bank stocks have shown limited momentum. By spotlighting the NBFC sector, Jefferies signals a shift in where growth‑oriented retail investors might find better returns. The firms – Bajaj Finance, Cholamandalam Investment and Finance Company, Aditya Birla Capital and Shriram Finance – are all expected to post robust earnings growth, driven by expanding consumer credit, higher interest margins and improving asset quality.
Management guidance points to a steady decline in non‑performing assets, while earnings‑per‑share estimates have been raised in Jefferies’ model. Although the research notes that a broad valuation re‑rating is unlikely, the combination of stronger fundamentals and upgraded EPS forecasts underpins the projected upside. For Indian investors, the recommendation translates into a potential diversification play beyond the traditional banking heavyweights that dominate the Sensex and Nifty. Adding exposure to these NBFCs could enhance portfolio returns, especially if the broader market continues to favour credit‑linked growth stories.
However, investors should remain mindful of sector‑specific risks such as regulatory changes and credit‑cycle sensitivity. Overall, Jefferies’ picks offer a compelling case for a measured tilt toward high‑quality NBFCs as the market seeks fresh earnings drivers.