UBS has shifted its stance on India's non-banking financial sector, upgrading Bajaj Finance to a neutral rating while issuing a buy recommendation for L&T Finance. Analysts at the firm suggest that these entities are currently better positioned for growth compared to traditional banking institutions.
The brokerage’s bullish outlook is anchored in a notable recovery within the unsecured lending segment. With asset quality showing signs of improvement and personal loan demand accelerating, the sector is poised for a potential re-rating in the coming quarters.
Beyond loan volume, UBS highlights a favorable environment characterized by robust liquidity and stable funding conditions. These macroeconomic tailwinds are expected to bolster return on assets (ROA) for select players, setting the stage for sustained performance.
Investors are advised to keep a close watch on these firms as they leverage digital growth and strategic lending expansion to outperform the broader financial services landscape.
