NBFC, insurance firms may report strong Q1 despite higher cost of funds: Kotak Institutional Equities

He said, “Cost of funding for most of the NBFCs have gone up in the range of around 50-60 to even 100 basis points. Remember, we have seen a massive rise in policy rates and a large part of it has been passed on by banks in terms of MCLR hikes. So, you will see an impact on the cost of borrowing.”

According to him, there are several factors that contribute to the positive outlook for Q1 performances in these sectors. First, despite higher costs of funds, these firms have been proactive in managing their financial strategies.

"Second, the overall economic recovery and favourable market conditions have played a role in supporting the performance of NBFCs, housing finance and insurance firms. With gradual improvements in economic indicators and consumer sentiment, these sectors have experienced a surge in demand for their services. This increased business activity has positively impacted their revenue streams and is expected to reflect in their Q1 earnings," he said.

Furthermore, the implementation of digital transformation initiatives and the adoption of technology-driven solutions have enabled these sectors to enhance operational efficiency and expand their customer base. This strategic approach has provided a competitive edge, enabling them to capitalise on market opportunities and drive growth.

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