The NBFC sector is expected to report a net profit of Rs 8,100 crore in Q1FY20, up 15 percent on a year-on-year basis, according to Motilal Oswal.

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The sector has reported an increase in its net profit for the June quarter consecutively for the last four years. The sector reported a PAT of Rs 3,600 crore in Q1FY16, which rose to Rs 7,100 crore in Q1FY19. In Q1FY17 and Q1FY18, the sector reported a profit of Rs 4,200 crore and Rs 4,900 crore, respectively, Motilal Oswal said in a note.

This translates to a gradual rise in the sector's first-quarter profit — it rose 4 percent YoY in FY16, 17 percent in FY17, 17 percent in FY18, and 44 percent in FY19.

"NBFCs are likely to post another quarter of double-digit growth. Bajaj Finance is expected to post another strong quarter, with over 40 percent profit growth. IndoStar Capital (131.5 percent), HDFC (27 percent), MAS Financial (30 percent) and PNB Housing (23 percent) are expected to deliver healthy profit growth, while Muthoot Finance, Indiabulls Housing Finance, and Repco are expected to deliver subdued growth in profitability," the brokerage said.

Amid individual stocks, the brokerage expects Bajaj Finance profit to rise 42.5 percent in the June-quarter (YoY) and 50 percent in FY20. "The company continues to enjoy liquidity from multiple sources – thus, its growth remains unaffected. AUM is expected to grow 38 percent YoY driven by all segments, barring two-wheelers finance. Growth in mortgages is a key monitorable," MOSL explained.

For HDFC, the profit is likely to increase 27.2 percent to Rs 2,786.2 crore. HDFC was able to manage the liquidity situation well this quarter. The mix of retail and corporate lending should remain largely stable for the company, it added.

For Indiabulls Housing, the net profit is likely to fall 21 percent in Q1 but rise 34 percent in FY20. MOSL expects Q1FY20 to be a tepid quarter for Indiabulls, as the AUM is expected to decline 3 percent QoQ to Rs 1.17 lakh crore.

"Quantum of sell-downs will be a key monitorable. In 4QFY19, the company recorded over Rs 500 crore upfront income from direct assignments. We estimate lower upfront income in 1QFY20, resulting in total income declining sequentially from Rs 18,300 crore to Rs 15,300 crore."

Meanwhile, L&T Finance Holdings (LTFH) reported an increase of 2 percent in consolidated net profit at Rs 549 crore for the quarter ended June 30, 2019. The company's net profit during the April-June quarter of 2018-19 stood at Rs 538 crore.

In the sector, MOSL has raised its weights in HDFC as the market share shift in both retail and corporate business will be toward well-established players in this tough operating environment. Core operating profitability is expected to improve as competitive intensity reduces. The brokerage has also replaced Shriram Transport Finance with M&M Finance Holdings as AUM growth in the latter is expected to be 15-16 percent despite moderation in OEM sales as the market share gains in key OEMs and expansion in new geographies/product categories continue.

Overall, the June-quarter earnings will most likely remain muted with financials taking the lead and metals dragging, the brokerage added.

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