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Start with comparable lenders
Compare companies that lend to similar customers through similar products, loan tenures, collateral and funding models. A consumer lender, vehicle financier, housing lender and microfinance lender can have materially different growth opportunities and credit risks. They are not direct peers simply because all are NBFCs.
Regulatory classification is not a substitute for business-model analysis. The RBI’s 2024–25 Upper Layer list includes Bajaj Finance, Shriram Finance and Cholamandalam Investment and Finance Company, but that designation does not make them comparable investments or endorse their quality.
For each company, note the lending segment, customer mix, collateral, loan duration and major funding sources. Prefer figures from the same reporting period and the same basis—standalone or consolidated—rather than mixing them.
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Assess AUM growth in context
Assets under management (AUM) growth shows how quickly a lender’s managed book is expanding. It does not show on its own whether that expansion is profitable, well-funded or prudent.
- Compare year-over-year growth over the same period, and consider a multi-year trend where available.
- Check whether growth comes from comparable products and customer segments. A change in portfolio mix can make a headline growth rate harder to interpret.
- Read growth alongside loan losses, credit costs, funding costs, profitability and capital needs.
Bajaj Finance reported FY2025 AUM of ₹416,661 crore, up 26% from ₹330,615 crore in FY2024, in its FY2025 annual report. This is a dated company example, not a target growth rate for other NBFCs.
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Read GNPA and NNPA with their definitions
Gross non-performing assets (GNPA) and net non-performing assets (NNPA) indicate recognized problem loans before and after provisions, respectively. Read both, but also check what loan book is included, how much provision the lender holds, and which recognition rules apply. A lower NNPA relative to GNPA reflects the effect of provisions; it does not by itself settle whether the underlying credit risk is low.
Recognition timing matters. Under the RBI’s Scale Based Regulation framework, Base Layer NBFCs had a glide path to reach the more-than-90-day overdue norm by March 31, 2026. The RBI’s Handbook of Statistics on the Indian Economy cautions that references to a 90-day norm should be read in light of applicable norms and SBR provisions. Differences in applicable recognition rules can affect comparisons, so check the company’s reported definitions and regulatory context.
Bajaj Finance reported FY2025 GNPA of 0.96% and NNPA of 0.44% in its FY2025 highlights. Those company-reported figures for that period are an illustration, not universal benchmarks for NBFCs.
Connect risk to returns and funding
Set growth and asset quality beside returns, provisions, funding and capital. Useful measures include return on assets (ROA), return on equity (ROE), credit costs, loan-loss provisions, funding costs, funding mix and capital adequacy. Strong growth with weaker returns or rising loss costs may tell a different story from growth supported by stable returns and controlled risk.
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In FY2025, Bajaj Finance reported ROA of 4.57% and ROE of 19.19%, while loan-loss provisions rose 72% year over year. The company attributed the increase to macro deterioration, increased leverage on unsecured loans and wider banking-industry stress, as described in its annual report. The figures illustrate why growth, NPAs and profitability should be considered together; they do not establish a peer benchmark.
Compare valuation on a common basis
Price-to-book (P/B) can be a starting point for comparing lenders, but it is not a standalone verdict. Relate it to sustainable ROE, expected growth, asset quality, capital requirements and funding risk. Compare companies using market prices from the same date and the same accounting basis; otherwise, differences may reflect timing or reporting choices rather than relative value.
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Best Value
The available company and regulatory figures here do not establish current peer multiples or support calling a named NBFC cheap or expensive. To make a current comparison, collect each peer’s dated filings and synchronized market prices, then calculate the same valuation measure consistently. Do not confuse market P/B with the RBI’s prudential definition of “fair value,” which is based on earning value and breakup value in its regulatory definitions.
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Once you have selected true business-model peers, use one reporting period and one accounting basis for each financial measure. Fill the table from each company’s latest filings; where disclosures differ, record the definition rather than treating unlike ratios as directly comparable.
| Comparison axis | What to record or check |
|---|---|
| Lending model | Products, customer segments, loan duration and collateral |
| AUM growth | Year-over-year and, where useful, multi-year growth for the same period |
| Asset quality | GNPA and NNPA levels, portfolio included and reported definitions |
| Provisions and credit costs | Provision coverage, loan-loss provisions and credit costs |
| Returns | ROA and ROE for the same reporting period |
| Funding and capital | Funding mix and cost, plus capital adequacy |
| Valuation | P/B or another chosen measure using market prices from a common date and a consistent accounting basis |
Use the table to identify questions and trade-offs, not to mechanically rank lenders by a single metric. For example, faster AUM growth is not automatically preferable if it coincides with rising credit costs or weaker returns; a low P/B also needs to be judged against sustainable returns and risk.
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Product prices and availability are accurate as of the date/time indicated and are subject to change. Any price and availability information displayed on Amazon at the time of purchase will apply.
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