Key Financial Performance Highlights

Profitability

  • Reported highest quarterly profit of ₹502 crore in Q2 FY27, representing a fivefold growth over the past 5 years
  • H1 FY27 PAT reached ₹995 crore compared to ₹778 crore during the previous financial year
  • H1 ROA stood at 5.9% and ROE at 23.8%
  • PPOP grew 39.6% YoY and 11.2% QoQ to ₹970 crore in Q2 FY27
  • Cost-to-income ratio improved to 28.2%

Assets Under Management & Growth

  • AUM grew 19.5% YoY and 2.1% QoQ to ₹30,946 crore
  • Disbursements stood at ₹6,355 crore, up 19.4% YoY and 4.1% QoQ
  • H1 disbursements reached ₹12,461 crore
  • Added 2.3 lakh new borrowers in Q2 (35% new-to-credit), taking H1 additions to 4.9 lakh customers
  • Borrower retention rates improved from 85% in FY26 to 88% in H1 FY27

Retail Finance Business

  • Retail Finance AUM grew to ₹7,200 crore, now 23.3% of total AUM (up from 20.6% in Q1 FY27)
  • Secured book (Secured Business Loans, Affordable Housing Loans, 2-Wheeler Loans) grew 60.9% YoY to ₹695 crore
  • 2-Wheeler Loan book crossed ₹60 crore compared to ₹20 crore in Q1
  • Mortgage presence spans 300 GL and 128 Retail Finance branches
  • 2-Wheeler loans offered through 950+ Group Loan branches

Group Loan Portfolio

  • Group Loan portfolio stood at ₹23,746 crore as of September 2026
  • Marginal decline of 2% from start of FY27 due to write-offs and graduation
  • ₹614 crore portfolio written-off in H1 FY27, mostly consisting of Group Loans
  • Expect Group Loan book growth to return to guided levels in seasonally stronger second half

Asset Quality Metrics

  • Gross NPA: 1.79% (improved sequentially)
  • Net NPA: 0.59% (improved sequentially)
  • PAR 90+: 1.11% (improved sequentially)
  • Collection efficiency, excluding arrears: 97.9%
  • X-Bucket collection efficiency for September: 99.71%
  • Temporary increase in monthly PAR accretion rate during August and September due to excess rainfall and flooding in Bihar, UP, Chhattisgarh, and Madhya Pradesh, along with seasonal festivities

Credit Cost & Provisioning

  • Q2 credit cost: ₹299 crore or 0.99% (non-annualized)
  • Credit cost breakdown: 70 bps driven by new PAR, 29 bps due to increasing ECL provisioning rates
  • ECL provisioning strengthened to 3.31% after building macroprudential buffer of 45 bps (₹137 crore)
  • Annualized H1 FY27 credit cost: 3.43% (includes normative credit cost of 2.98% and 0.45% macroprudential buffer)

Margin Performance

  • NIM expanded to 15.1% in Q2 from 14.4% in Q1
  • Drivers: Lower interest reversals in Group Loan book, higher yielding individual loan book, stable cost of borrowing, higher capital push
  • Marginal cost of borrowing: 9.1% in Q2 FY27
  • Average cost of borrowing: stable at 9.1%

Capital Position

  • Capital adequacy: 26.9%
  • Tier 1 capital: 26.2%
  • Total equity base: ₹8,919 crore

Funding & Liability Management

  • Signed USD 175 million ECB loan in October 2026, syndicated by Standard Chartered Bank and DBS Bank
  • Fifth ECB syndication in past 5 years
  • Mobilized ₹940 crore of domestic NCDs through private placement in FY27
  • Funding strategy focuses on diversifying funding mix and securing long tenure funds
  • More than 80 lending institutions in borrowing base
  • Borrowing mix: 30% fixed, 40% MCLR-linked, 30% repo-linked

Operational Metrics

  • Network expanded to 2,326 branches across 460 districts (added 60 new branches during quarter)
  • Digital collections rose to 26.3% versus 18.1% a year ago
  • Dedicated collection team comprising 500+ employees across operating geographies

Updated Guidance for FY27

  • ROA: Raised to 5.2%-5.8% (from 4%-4.8% earlier)
  • ROE: Raised to 21%-24% (from 16%-20% earlier)
  • AUM Growth: Retained at 20%-25%
  • NIM: Raised to 14.4%-14.7% (from 12.8%-13.2% earlier)
  • Cost-to-Income: 29%-30%
  • Credit Cost: Maintained at 3%-4%

Risk Factors & Challenges

  • Emerging drought-related challenges in certain pockets of Maharashtra (6 districts identified)
  • Borrowers in affected areas requesting additional time for repayment, including restructuring options
  • Northeast monsoons expected to be normal, providing respite to Southern Peninsula India
  • Insurance regulation reform potential impact: 25-30 bps on ROA if commissions drop to indicated draft guidance levels

Strategic Initiatives

  • Focus on addressing credit needs of established seasoned customers through renewals, Group Loan servicing, and targeted graduation to individual secured lending products
  • New customer acquisition expected to be key growth driver with momentum accelerating in H2
  • Continued expansion of retail product offerings including mortgage and 2-wheeler finance

Promoter Update

  • Promoters in active discussion for strategic investor at HoldCo level
  • Expected progress in next couple of quarters

Management Participants

  • Mr. Ganesh Narayanan – Managing Director and Chief Executive Officer
  • Mr. Gururaj Rao – Chief Operating Officer
  • Mr. Nilesh Dalvi – Chief Financial Officer
  • Mr. Sahib Sharma – DGM, Investor Relations and Strategy
  • Moderator: Mr. Abhijit Tibrewal – Motilal Oswal Financial Services

Analyst Q&A Highlights

  • Discussion on 50 bps lending rate cut implementation and flexibility for future repricing
  • Credit cost trajectory expectations for Q3/Q4 within guided range of 3%-4%
  • Drought impact assessment and historical credit loss patterns
  • Operational changes in affected Maharashtra districts
  • Insurance regulation reform implications
  • Individual Business Loan portfolio performance and delinquency trends
  • Industry competitive landscape and market share dynamics
  • Borrower growth strategy and customer retention initiatives