Prefer retail NBFCs over gold lenders; avoid BPOs, mid-tier IT firms on watchlist: Deven Choksey

Deven Choksey, Managing Director of DRChoksey Finserv, said the firm currently prefers retail-focused non-banking financial companies (NBFCs), while maintaining a cautious stance on BPO companies and selectively tracking mid-tier IT firms.On the NBFC space, Choksey said the firm is more comfortable with companies that focus on retail lending rather than those concentrated in a single vertical.

He said, “As a strategy, we find ourselves more comfortable with the NBFC companies, which are retail-focused NBFC companies and which are not particularly vertically specific NBFC companies like gold.”
Also Read | Avoid Ola Electric; L&T stays a top holding, HDFC AMC well placed: Marketsmith’s Mayuresh JoshiHe added that housing finance companies (HFCs) remain an exception in some cases. According to him, companies catering to a broad retail borrower base are positioned better because of technology-led processes.

Choksey said firms such as Bajaj Housing Finance and Bajaj Finance stand out due to their use of technology in customer reach and credit underwriting. He said these companies are using technology to process loans faster, reach customers faster, and manage credit risk better.

On BPO companies, Choksey said the sector is going through a transition with the use of artificial intelligence in service delivery.
He said, “We believe that this particular business is undergoing a transformation, and they’re using AI agents at the forefront in probably producing the solution.”Also Read | AI-led IT selloff may be overdone, not the time to exit, says Edelweiss AMC CIO

However, he added that it is still unclear whether companies have fully shifted to outcome-based revenue models. He said if companies move towards revenue linked to results delivered for clients, it could support revenue growth. But he said the transition status is uncertain, and the firm is not taking a fundamental call on BPO companies at this stage.

In the IT sector, Choksey said some Indian mid-tier companies offering product-based solutions appear positioned to win new contracts.

He said, “Many of the Indian mid-tier IT companies, which are providing the productised solution to their customers, are relatively in a better position to bring new contracts.”

However, he added that these companies are not yet part of the firm’s recommendation basket.

For the full interview, watch the accompanying video

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