Which NBFC Stocks Should You Invest In 2023

A quick look at five trusted NBFC stocks in India that have maintained a steady return in the mid and long term.

Banks and financial institutions are indispensable to the economy. This industry has been a reliable and stable part of the financial market. It is no surprise that of the top five stocks owned by mutual funds in India, three are banks, one is a non-banking finance company (NBFC) and one IT company.

Besides, mutual funds are optimistic about the NBFC outlook as they increase their stakes as recently as June 2023 in all leading NBFCs like HDFC, Shriram Finance, M&M Finance, LICHFL, Muthoot, etc.

Like mutual fund managers, you too, should consider NBFC stocks for investment purposes.

• In the NSE, financial investments, housing finance and lending companies have a combined market capitalisation of more than Rs 12 lakh crores.

• NBFCs saw significant mutual fund interest in June 2023 with their increase in AUM value. 

• Apart from the Bajaj Finance success story; Shriram, Chola, and Muthoot are some of the prominent NBFC stocks.

Best NBFC Stocks in India 2023

1. Bajaj Finance – Twenty years ago this stock would have cost you Rs 6, and nearly Rs 120 ten years ago. The stock is at Rs 7,160 today. As analysts continue to see upside in it, you should keep it on your watchlist. Its one-year return is 3.8% and its five-year return is 153%.

2. Cholamandalam Investment and Finance Co – Poised for a tenfold growth in three years, Cholamandalam had a one-year return of 38.7% and a five-year return of 270%. The company has achieved steady revenue and net profit growth in the last five years.

Also Read: Bajaj Finance Is Trading At A 52-Week High For These Reasons 

3. Muthoot Finance – While its revenue and profit have plateaued in these three years, its dividend and share price have steadily increased in the last five years. Its one-year return is 24.1% and its five-year return is 215%.

4. Shriram Finance – While the stock is trading at an all-time high level of around Rs 1,900, you should keep it in your watchlist and look for entry points. The company's earnings per share have zoomed from a stagnant Rs 100 level to Rs 160+ this year. Its one-year return is 41% and its five-year return is 43%.

5. Mahindra and Mahindra Finance – This stock is back to touching its highs of 2018, having maintained a steady share price growth since the pandemic crash. It has maintained a consistent revenue and net profit rise. M&M Finance's one-year return is 47% and its five-year return is -1.7%.

Conclusion

NBFCs are vital to the proper functioning of the country’s financial engine. They operate at higher interest levels compared to the banks, and as such remain attractive prospects for investors looking for profitable stocks. NBFC stocks are popular among fund managers, so make sure that your fund and stock portfolio don’t mirror the same NBFC stocks.

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Also Read: Earn More Interest On FD With NBFCs Over Banks. These NBFCs Are Offering Higher Interest Rates On FD. Check Interest Rates 

 Disclaimer: This article is intended for general information purposes only and should not be construed as insurance or investment or tax or legal advice. You should separately obtain independent advice when making decisions in these areas.