Auto NBFC Disbursements Rise 20.7% in Q1FY27 as Portfolio Mix Broadens

Auto finance non-banking financial companies (NBFCs) reported a 20.7% year-on-year increase in disbursements for the first quarter of FY27, reaching approximately Rs 1.04 lakh crore. On a sequential basis, however, disbursements dipped 4.6%, reflecting a normalization in commercial vehicle (CV) financing after an unusually strong Q4FY26.

Sector assets under management (AUM) expanded by roughly 17% year-on-year, according to a market analysis. The growth pattern is shifting from a CV-led surge to a broader expansion across multiple product categories. While CV financing cooled sequentially across most lenders, this is attributed to fleet operators and OEMs digesting prior pre-buying activity, with festive-season restocking expected later in FY27.

Sequential CV disbursement declines were notable across major players: Cholamandalam fell 14.7%, Shriram Finance dropped 13.8%, Mahindra Finance decreased 24.9%, and Sundaram Finance contracted 3.5%. Sundaram Finance was the only lender to post positive overall sequential growth at 11.1%, supported by its retail franchise.

Diversification emerged as a key theme. Cholamandalam's non-vehicle mix crossed 40% of total disbursements, while Shriram Finance's non-CV vehicle finance segment grew 25% year-on-year. SME loans, LAP, gold loans, construction equipment, personal loans, and home loans are gaining share across balance sheets, reducing dependence on the vehicle cycle.

On profitability, sector pre-provision operating profit (PPOP) rose 35.7% year-on-year to Rs 11,771 crore, while profit after tax (PAT) surged 53.4% to approximately Rs 6,519 crore. Asset quality remained stable annually despite a seasonal monsoon blip, with Stage 2 and Stage 3 assets rising quarter-on-quarter across lenders. Management teams maintain confident FY27 growth guidance, targeting mid-teen to low-20s AUM growth through market share gains and product diversification.