Auto NBFCs' Q1FY27 disbursements grow 20.7% YoY despite CV dip

Auto finance NBFCs saw Q1FY27 disbursements grow 20.7% YoY to Rs 1.04 lakh crore but decline 4.6% QoQ on lower CV volumes. Sector AUM grew 17% YoY, with PAT surging 53.4% as lenders diversified their portfolios, a Centrum report noted.

Auto finance non-banking financial companies' (NBFCs) Q1FY27 disbursements grew 20.7 per cent YoY to ~Rs 1.04 lakh crore, but declined 4.6 per cent QoQ as commercial vehicle (CV) volumes normalised after Q4FY26's pre-buying.

According to a report by Centrum, auto NBFCs delivered strong earnings during the first quarter of FY27, scaling fresh highs as sector assets under management (AUM) expanded approximately 17 per cent YoY. The growth engine visibly matured, shifting from the commercial vehicle-led surge of FY26 into a broader and more diversified expansion phase.

Disbursement Trends and CV Normalization

"Disbursement growth stayed healthy on a YoY basis, sustained by the continuing tailwind from GST rate cuts and resilient PV and tractor demand, but CV financing cooled sequentially across nearly every lender, less a demand problem than a normalization after an unusually heavy Q4FY26, with fleet operators and OEMs digesting the prior quarter's pre-buying before festive-season restocking picks up later in FY27," the report said.

CV disbursements fell sequentially across major lenders, according to the report, with Cholamandalam dropping 14.7 per cent, Shriram Finance declining 13.8 per cent, Mahindra Finance decreasing 24.9 per cent, and Sundaram Finance contracting 3.5 per cent. Sundaram Finance remained the lone lender to record positive quarter-on-quarter overall disbursement growth of 11.1 per cent, aided by its retail franchise.

Strategic Diversification Gains Momentum

Non-commercial vehicle segments continued to gain ground across balance sheets. Cholamandalam's non-vehicle mix crossed 40 per cent of total disbursements, while Shriram Finance saw its non-CV vehicle finance segment rise 25 per cent YoY.

"The more durable story this quarter was diversification: SME/LAP, gold loans, construction equipment, personal loans and home loans continued to gain share across balance sheets, a deliberate strategy by most lenders to reduce dependence on the vehicle cycle and smooth earnings through periods exactly like this one," the report said.

Robust Profitability and Stable Asset Quality

On the operational and profitability front, sector pre-provision operating profit (PPOP) climbed 35.7 per cent YoY to Rs 11,771 crore, while profit after tax (PAT) surged 53.4 per cent to approximately Rs 6,519 crore. Asset quality remained stable on an annual basis despite a seasonal monsoon blip, with Stage 2 and Stage 3 assets rising QoQ across all lenders.

Positive Growth Outlook for FY27

The report noted that management teams across the sector maintain confident growth guidance for FY27, targeting mid-teen to low-20s AUM growth through market share gains and product diversification. (ANI)

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