Bajaj Finance, M&M Financial top picks: IIFL

According to Sampath Kumar, Banking Analyst, Institutional Equities at IIFL, Bajaj Finance, Mahindra & Mahindra Financial Services and Shriram City Union are the top picks in NBFC space.

Kumar told CNBC-TV18, "We do track most of the large non-banking finance companies (NBFCs). M&M Financial Services' results have been exceptionally strong. There has been certain degree of disbelief on whether they can continue to deliver the kind of growth that they have been doing so far that is why the stock has reacted the way it has."
He further added, "It is very interesting, if you see the urban part of the economy it is growing slow but the rural part of the economy continues to do extremely well. You are seeing that across NBFCs who are positioned in this sector continue to do very well. Still there are no signs of significant slowdown coming through. So to that extent M&M Financial is very well positioned."
"Bajaj Finance, M&M Finance, Shriram City Union are the top picks in NBFC space and we have buy on Shriram Transport. So if you look at our investment hypothesis we prefer private sector over state owned banks, we prefer NBFCs as a rate cyclical play. They seem to be a better proxy to the interest rate cycle coming down than anybody else."