Why NBFC Stocks Are Back In Focus: Canara Bank, L&T Finance & New Entrants Gain?

NBFC stocks are gaining attention as investors see improving conditions for the financial sector. Concerns over a potential RBI shift towards tighter monetary policy have eased materially, while sovereign yields have also softened from earlier highs. Jitendra Sriram, Senior Fund Manager, Baroda MF, highlights improving scale economies and operating leverage across NBFCs as key positives. The latest portfolio additions include Five-Star Business Finance, CreditAccess Grameen, Canara Bank, L&T Finance and Adarsh Housing Finance. Improving net interest margins, better yields and falling operating costs could support earnings growth. With adequate capital availability and a more stable interest-rate environment, NBFCs remain a key sector to watch.