Top 5 Rising Finance Stocks in India 2025 – Trending Yet Undervalued Picks
Top 5 Rising Finance Stocks in India 2025 – Trending Yet Undervalued
India's financial sector is witnessing a major transformation in 2025. With economic growth, digitalization, and increasing retail participation, finance companies – including banks, NBFCs, fintechs, and asset managers – are showing strong potential. Yet, among the buzzing headlines, some finance stocks remain undervalued despite their rising performance, creating golden opportunities for smart investors.
In this blog, we explore 5 such rising yet undervalued finance stocks in India you should watch closely in 2025.
1. Federal Bank Ltd – Small Bank, Big Potential
Stock Price (June 2025): ₹185 (Approx)
Market Cap: ₹55,000 Cr
Sector: Private Banking
Federal Bank is quietly outperforming bigger peers. With a strong presence in South India and growing digital capabilities, it has delivered consistent profits, rising Net Interest Margins (NIMs), and excellent asset quality. The bank is aggressively focusing on retail and SME lending with limited exposure to risky corporate loans.
Why It’s Undervalued: Despite strong earnings and double-digit RoE, the stock still trades below its book value compared to large private banks like HDFC or ICICI. It’s a classic case of strong fundamentals meeting market ignorance.
2. Can Fin Homes – Riding the Housing Boom
Stock Price (June 2025): ₹680 (Approx)
Market Cap: ₹9,000 Cr
Sector: NBFC – Housing Finance
Can Fin Homes, backed by Canara Bank, specializes in affordable housing finance for salaried individuals. With interest in real estate booming post-pandemic and government incentives for housing, the company has seen a major uptick in loan disbursements and profits.
Why It’s Undervalued: While housing finance giants like HDFC command premium valuations, Can Fin offers similar growth potential with much lower valuations and a PE below 12. Its low NPAs and efficient cost management further strengthen its case.
3. Manappuram Finance – More Than Just Gold
Stock Price (June 2025): ₹170 (Approx)
Market Cap: ₹14,000 Cr
Sector: NBFC – Gold & Microfinance
Manappuram Finance has diversified significantly beyond gold loans into microfinance, vehicle loans, and SME lending. The company’s focus on Tier 2 and Tier 3 cities gives it an edge in underserved markets. With strong rural demand and rising gold prices, revenue and profits are on the rise.
Why It’s Undervalued: Despite robust earnings, the stock trades at a Price-to-Book ratio of less than 1, mostly due to past regulatory fears that no longer apply. Its expansion into high-growth verticals is not fully factored into the current stock price.
4. UTI Asset Management Company – Mutual Fund Momentum
Stock Price (June 2025): ₹905 (Approx)
Market Cap: ₹11,000 Cr
Sector: Asset Management
With SIPs (Systematic Investment Plans) touching all-time highs and more Indians investing in mutual funds, AMCs are benefiting hugely. UTI AMC, although less glamorous than HDFC or Nippon, has steadily improved its AUM and profitability.
Why It’s Undervalued: Trading at a discount to peers despite higher dividend yields and strong earnings growth, UTI AMC is a strong pick for long-term investors looking to ride India’s mutual fund wave.
5. Equitas Small Finance Bank – Banking the Unbanked
Stock Price (June 2025): ₹78 (Approx)
Market Cap: ₹9,500 Cr
Sector: Small Finance Bank
Equitas SFB is making waves in financial inclusion by offering banking services to the underbanked – micro-businesses, low-income groups, and rural areas. With a diversified loan book and rising digital adoption, it has shown strong deposit and loan growth in FY24 and FY25.
Why It’s Undervalued: The stock trades at a very modest valuation with low P/E and P/B multiples. Once regulatory limitations on promoter holdings ease and profitability remains consistent, rerating is highly possible.
Conclusion: Don’t Ignore Undervalued Financial Gems
While large-cap finance stocks dominate headlines, these mid-cap and small-cap gems often offer better returns with less attention. The key lies in spotting:
- Strong financial metrics (RoE, NIM, low NPAs)
- Consistent earnings growth
- Expanding market presence or digital transformation
- Trading at a discount to book value or industry peers
As always, conduct your own research or consult a financial advisor before investing. The Indian finance sector is set to grow massively, and these 5 stocks may just be your ticket to long-term wealth in 2025.
Note: Stock prices and market caps are approximate and may change with time. This is not financial advice, just informational content based on market trends.
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