Key Financial and Operational Performance

Disbursements

  • Q1 FY27 disbursements stood at ₹2,609 crore, exceeding the company's internal target of ₹2,500 crore.
  • This represents a 29% Year-on-Year (YoY) growth compared to Q1 FY26 disbursements of ₹2,015 crore.
  • Growth was positive across all six geographical zones. Karnataka, the lowest growth zone, still grew at 18% YoY.
  • Growth was driven by contributions from the sales team and new branches opened post-March 2023.

Segment-wise Disbursement Breakdown (YoY Growth)

  • By Customer Type: Salaried segment grew by 21%; Self-Employed Non-Professional (SENP) segment grew by 44%.
  • By Product Type: Housing Loan (HL) disbursements grew by 28% to ₹1,650 crore (from ₹1,291 cr in Q1 FY26); Non-Housing Loan (NHL) disbursements grew by 32% to ₹958 crore (from ₹724 cr in Q1 FY26).

Assets Under Management (AUM) & Run-down

  • Net AUM growth for the quarter was 10.8% (annualized), slightly up from 10.4% in the previous year.
  • Net AUM addition for the quarter was ₹755 crore (Disbursements of ₹2,609 cr minus Run-down of ₹1,857 cr).
  • Total loan run-down (prepayments/closures) was ₹1,857 crore, higher than ₹1,730 crore in Q4 FY26.
  • Breakdown of Run-down:
  • Balance Transfer (BT) to other institutions: ₹408 crore (vs. ₹400 cr in Q4 FY26).
  • Loan Closures (sales, own funds, SARFAESI): ₹377 crore (vs. ₹360 cr in Q4 FY26).
  • Part Prepayments/Amortization: ₹1,072 crore (vs. ₹976 cr in Q4 FY26). The increase here is attributed to the shift from annual to quarterly interest reset, which shortened loan tenures, increasing the principal component of EMIs.
  • The company maintains its full-year FY27 guidance of 14% AUM growth but notes it may need to push disbursements higher to offset elevated run-down.

Net Interest Margin (NIM) & Spread

  • Yield on Loans for the quarter was sustained at 9.81%, as previously guided post the shift to quarterly reset and a Jan-2026 rate cut.
  • Cost of Borrowings was 6.98%, slightly better than the guided 6.99%, aided by repayment of high-cost NCDs and well-timed Commercial Paper (CP) issuances.
  • This resulted in a Spread of 2.83% and a NIM of 3.81%, exceeding the full-year guidance of 3.75%.
  • Management is confident in maintaining NIMs, citing available cheap bank funding and potential for better yields from a changing product/segment mix.

Asset Quality & Credit Cost

  • Stage 2 and Stage 3 delinquencies reduced in absolute value compared to March 31, 2026.
  • Gross NPA increased by approximately ₹17-18 crore sequentially, but this was more than offset by a reduction in SMA1 and SMA2 accounts.
  • The Net Automated Clearing House (NACH) bounce ratio has been declining for the last six consecutive quarters.
  • The company reaffirmed its full-year credit cost guidance of 10 basis points.

IT System Implementation

  • A new Core Banking Solution (CBS) encompassing Loan Origination System (LOS) and Loan Management System (LMS) was successfully piloted in 5 branches starting July 8, 2026.
  • All processes (sanctions, disbursements, NACH, closures, collections via BBPS) were tested successfully with minor teething issues.
  • The rollout to the remaining 245 branches is planned for Q2 FY27 (by end of September 2026), with implementations scheduled at month-ends.
  • Management does not anticipate any material impact on business or the Q2 disbursement target of ₹3,000 crore due to the rollout.

Other Business Updates

  • The number of Approved Project Finance (APF) projects increased from 271 to 331 in Q1.
  • 82% of new loans had a CIBIL score of above 700, indicating improved customer selection.
  • Underwriting was tweaked: special pricing tiers were moved from loans >₹20 lakh to loans >₹25 lakh to improve yields. Early Warning System (EWS) signals and other monitoring parameters were enhanced.
  • The company's exposure to the IT/ITES sector is approximately 6% of its customer base, and it has not observed any material asset quality issues stemming from recent sector disruptions.
  • The cumulative technical write-off amount over the company's ~25-year history is approximately ₹20 crore, reflecting a conservative credit culture.

Financial Metrics & Guidance

  • Return on Assets (ROA) for the quarter was 2.39% (vs. 2.53% in Q1 FY26).
  • Return on Equity (ROE) for the quarter was over 18%.
  • Cost-to-Income ratio is expected to be around 19.5% for FY27 due to IT-related depreciation and AMC costs, up from ~18% previously. This is expected to normalize over the long term.
  • The effective tax rate is expected to be 21% for FY27.
  • Full-year disbursement guidance is maintained at ~₹13,000 crore.

Participants

Management: Mr. Suresh Iyer (MD & CEO), Mr. Shailesh Kumar Singh (Deputy MD), Mr. Prakash Shanbhogue (President), Mr. Uthaya Kumar A (President & CRO), Mr. Abhishek Mishra (CFO).

Moderators: Mr. Nidhesh Jain and Ms. Swapna from Investec Capital Services.