Key Financial Performance (Consolidated)

  • Gross Total Income: ₹202 crores, up 34% YoY and 15% QoQ
  • Net Total Income: ₹138 crores
  • Pre-Provision Operating Profit (PPOP): ₹77 crores, increased from ₹59 crores in Q4 FY26
  • Provisions and Write-offs: ₹20 crores for the quarter
  • Profit After Tax: ₹45 crores, compared to:
  • Loss of ₹15 crores in Q1 FY26
  • Profit of ₹41 crores in Q4 FY26
  • Net Interest Margin (NIM): 17.4%
  • Return on Average AUM: 6.4% (annualized)
  • Return on Equity: 18.9% (annualized)

Operational Metrics (Consolidated)

  • AUM: Record high of ₹2,925 crores as of June 2026, representing 36% YoY growth
  • Disbursements: ₹686 crores in Q1 FY27, up 76% YoY (highest ever first quarter)
  • Collection Efficiency: 96.6% for Q1, with further improvement by June 2026
  • Asset Quality:
  • Gross NPA: 2.76% (improved over past four quarters)
  • Net NPA: 0.84%
  • Early-stage delinquencies: Approximately 99.5% zero DPD flow forwards
  • Individual Loan Portfolio: Now accounts for 33% of overall microfinance book
  • CGFMU Coverage: Approximately 94% of eligible microfinance portfolio covered under guarantee scheme

Capital and Liquidity Position

  • Capital Adequacy:
  • Arman stand-alone: 33.6%
  • Namra Finance: 38.8%
  • Shareholders' Equity: ₹979 crores (consolidated) as of June 2026
  • Liquidity Position: ₹286 crores across cash, bank balances, liquid investments, and undrawn CC limits
  • Undrawn Sanctions: ₹335 crores from existing lenders

Stand-alone Business Performance (Arman Financial)

  • AUM: ₹758 crores, up 26% YoY and 4% QoQ
  • Disbursements: ₹156 crores with MSME segment driving growth
  • Gross Total Income: ₹66 crores, up 30% YoY
  • PPOP: ₹24 crores
  • PAT: ₹15 crores, up 17% YoY and 48% QoQ

Subsidiary Performance (Namra Finance - Microfinance)

  • AUM: ₹2,167 crores as of June 2026, up 39% YoY and 8% QoQ
  • Disbursements: ₹530 crores
  • Gross Total Income: ₹138 crores, up 35% YoY from ₹101 crores in Q1 FY26
  • PPOP: ₹52 crores, up 64% YoY and 26% QoQ
  • PAT: ₹30 crores compared to loss of ₹28 crores in Q1 FY26
  • NIM: Improved to 15.37%
  • GNPA: Improved significantly from peak of 3.8% to 2.59%

Operational Improvements and Strategy

  • Strengthened credit function with independent credit and collection teams
  • Cost to income improved to 44.3% from 51.7% in previous quarter
  • Emphasis on individualized credit assessment using credit history, bureau behavior, and customer cash flow assessment
  • Increased reliance on digital repayment mechanisms (UPI mandates, e-NACH) with 68-70% clearance rates for individual loans
  • Rejection rates remain relatively high as part of risk posture

Management Commentary and Outlook

  • Operating environment shows improvement from second half of FY26 continuing into Q1 FY27
  • Management remains cautious despite favorable data, citing macroeconomic uncertainties, geopolitical tensions, and weather-related disruptions
  • Priority on protecting asset quality, maintaining underwriting discipline, improving operating efficiency, and responsible growth
  • Growth approach remains careful and calibrated based on collection trends, early delinquency patterns, and macroeconomic conditions
  • Target to reduce operating cost ratio to 7% by end of March 2027 (currently at 8.5% annualized)

Q&A Session Highlights

  • Asset Quality Concerns: Management acknowledges favorable data but maintains caution due to macroeconomic factors including rural income growth, inflation, and employment quality
  • Credit Cost Expectations: No formal guidance, but management references 3-3.5% range including CGFMU costs
  • Competition: Acknowledges increasing competition in individual lending and MSME segments, particularly in LAP
  • Geographic Stress: Telangana showing higher stress in MSME portfolio, affecting 31-90 day par levels (0.7% to 0.9%)
  • Recovery Trends: Bad debt recovery at 3-4%, with ARC transaction of ₹185 crores in March 2025 showing ~10% recovery
  • Product Performance: Individual loans performing better than JLG, but with higher opex; solar loans at experimental stage (₹50 lakhs/month at 18-20% yield)
  • Infrastructure Capacity: Current branch network (400+ branches) can support disbursements of ₹700-750 crores/quarter in microfinance