Best NBFC Stock to Buy in India 2026

As India is poised for its ambitious economic goals to become a fully developed economy by 2047, ensuring 6.5-7.5% real GDP growth on average, the easy access to credit is paramount. And thus, the Non-Banking Financial Company (NBFC), the shadow banking sector, remains pivotal for credit expansion and financial inclusion. Resilient government CAPEX on infra and the increasing delinquencies/risks in unsecured digital lending (consumer durables), NFCs are now focusing more on asset-backed (secured) lending to core infra players like railways, power and REs. Apart from infra, NBFCs are now also focusing on microcredits in rural (underserved) segments, which generally have higher NIM and a robust collection mechanism. Also, recent RBI rate cuts (125 bps in 2025) and liquidity injections are helping to achieve higher NIMs in the MFI segment, ensuring robust AUM and asset quality.

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NBFC’s topline (lending) is expected to grow by around 15% CAGR on average in the next five years (2026-30)-in line with India’s estimated nominal GDP growth of 10-12%. This will be fueled by the government’s infra spending thrust and the revival in rural spending. MFIs are benefiting from the government's stress on financial inclusion. But there are also some risks in the form of regulatory (RBI) tightening and increasing delinquencies/NPAs in certain segments like unsecured consumer lending, especially in subprime borrowings.

The landscape of NBFC lending is now changing from sub-prime unsecured risky lending to secured ones –like CVs, tractors, SME (business) and various small/mid-size infra projects. This aligns with the government’s stress on multi-year infra projects and the rural/semi-urban economy.

Some of the primary tailwinds may be:

• Infra Boom: Government spending on power generation, transmission, renewables, and railways creates sustained loan demand for specialised (infra) financiers.
• Rate Cycle Support: RBI's repo rate cuts ease funding costs, improving net interest margins (NIMs) and repayment capacity of borrowers
• MFI recovery: After stress in MFIs- unsecured segments, rural-focused players are now targeting rural women entrepreneurs (formalisation of the rural economy), with disbursements rebounding amid a robust collection process (door to door/groups)
• Regulatory & Policy Stability: Policy certainty on co-lending and rule-based frameworks, ensuring stable growth in business loans to larger & well-capitalised entities

Some of the key headwinds may be:

• Higher credit costs in vulnerable subprime lending
• Potential economic slowdown due to various global & local issues
• Profitability (NIM) may face moderate pressure, but leaders with diversified portfolios and low NPAs are best positioned.
• Regulatory (RBI) scrutiny on liquidity and risk weights.

Overall, NBFCs’ share in regulated/formal credit is projected to rise to 21% by FY26, emphasising its growing importance. India’s NBFCs continue to play a vital & robust role in ensuring the country’s financial inclusion, formalisation of the economy and supporting economic growth despite increasing RBI-regulatory tightening & more scrutiny.

Infra financing by NBFCs is now a prime theme of the sector, focusing on prime/quality secured lending rather than subprime unsecured lending. Infra financing is primarily getting benefits from low-risk, low tenure bridge financing at higher rates (NBFC standard), yet backed by government assets & revenue visibility.

1) Power Finance Corporation (PFC)

PFC is a major PSU NBFC in the strategic power sector financing ecosystem for generations, transmissions and distributions (including REs). PFC will benefit from India’s focus on energy security & transition (RE). Although PFC is set for steady expansion, being a PSU, it enjoys a lower P/E and high dividend yield; i.e. undervalued. PFC may be a safe bet as a defensive play amid government support and a potential thrust on RE lending in the coming days.

2) REC Limited

Like PFC major PSU NBFC-REC has exposure in both power and infra.

3) Indian Railway Finance Corporation (IRFC)

IRFC is another major PSU NBFC-focused on railway infra, rolling stocks and various projects; it’s a safe play and a value pick on every major dips-have near near-sovereign risk profile. Government’s emphasis on railway capex, and recent restructuring of fare structure with a nominal increase in passenger fare (1/- per KM; cumulative INR 600 Cr. additional collections/revenues) may support the stock going forward; have moderate NIM.

These PSU NBFCs may provide defensive exposure, with low NPAs, moderate EPS growth and consistent dividend pay-outs-will be an integral part of India's growth story.

Diversified and Microfinance NBFCs

Select promising private players in consumer/SME and microfinance segments:

1) Poonawalla Fincorp

Poonawalla is a new generation leading NBFC amid a rapid expansion in digital finance in consumer and SME lending. It’s on the path of aggressive growth, yet ensuring quality borrowings led by a tech/AI-driven model and diversified segments.

2) CreditAccess Grameen

CreditAccess is a rural-savvy leading NBFC, mainly targeting rural women entrepreneurs and also individuals (financial inclusions and economic formalisations). Nowadays, most of the rural women are getting some form of cash regularly from the government (states/Federal) as ‘freebies’. MFIs are targeting these regular cash flows and encouraging rural women, having a lower cost of living, to invest these free funds in some productive business/economic activities. Almost assured EMI payments like government salaries. Rural women are also taking NBFC credit to buy expensive smartphones, TVs and other electronic items (consumer durables).

3) L&T Finance

Part of the L&T conglomerate, L&T Finance (NBFC) primarily targets rural, housing and SME borrowers. The diversification of loan portfolios and prudent risk management policy is helping in both the topline & bottom line. Also getting benefits from L&T group linkages and underlying synergies.

4) HDB Financial Services

HDB, a subsidiary of HDFC Bank Group, is a diversified retail-focused new generation NBFC. HDB operates across three key verticals-Enterprise Lending (e.g., loans against property-LAP, business loans), Asset Finance (e.g., commercial vehicles, tractors), and Consumer Finance (e.g., personal loans, gold loans, durables)-largely secured lending. HDB is a prime beneficiary for its HDFC Bank linkages & synergies; it has almost 1800 branches across India-70% of which are in Tier 4+ locations, with a client base of almost 20 million. Additionally, HDB also targets subprime borrowers in underserved mid to low-income segments in semi-urban and rural locations.

Conclusion

India’s shadow-banking (NBFC) sector will remain resilient due to disciplined, rule-based digital lending and a stress on quality, rather than quantity. Indian banking and non-banking financial services majors are now emphasising the return of capital rather than the return on capital. Also, MFIs and infra NBFCs are focused on sustainable secured or almost secured lending (e.g. rural women loan EMIs are secured in Jan Dhan bank accounts, getting monthly cash from the government). In 2026, India’s NBFCs continue to award a disciplined, bottom-up approach; it remains a bright spot in the overall resilient Indian financial sector.