Key Financial Figures

Disbursements: Record quarterly disbursements of ₹2,078 crores, up 39% quarter-on-quarter (QoQ) and 74% year-on-year (YoY).

Assets Under Management (AUM): ₹14,640 crores as of September 30, 2026, a growth of 6.7% QoQ and 14% YoY.

Profitability: Profit After Tax (PAT) of ₹299 crores for Q2 FY27, up 10% QoQ and 5% YoY. This includes a one-time tax benefit of ₹19 crores pertaining to previous years. Excluding this, PAT was ₹281 crores, up 3% QoQ. For H1 FY27, PAT was ₹571 crores, up 3% YoY.

Return Ratios: Return on Assets (ROA) improved by 28 basis points (bps) QoQ to 8.39%. Return on Equity (ROE) improved by 79 bps QoQ to 15.25%.

Net Interest Margin (NIM): Remained broadly stable at 19.87% compared to 19.97% in Q1 FY27 and was 16 bps higher YoY.

Cost of Funds: The cost of funds on the book eased marginally to 8.78% from 8.80% in Q1. The all-inclusive cost on incremental debt of ₹825 crores availed during the quarter was 8.43%.

Credit Cost: Improved to 1.80% of average AUM from 1.85% in Q1 FY27.

Net Worth: Stood at ₹7,903 crores.

Cost-to-Income Ratio: Remained elevated at slightly over 47%.

Liquidity: Stood at nearly ₹1,300 crores as of September 30, 2026, with unavailed sanctions of about ₹1,100 crores.

Operational and Asset Quality Highlights

Branch Expansion: Added 19 branches in Q2 FY27 and 75 branches over the last year.

Active Loans: Approximately 5.1 lakh active loans, representing 5% growth YoY.

Collection Efficiency: Unique customer collection efficiency improved to 98.2% in Q2 from 97.7% in Q1. X-bucket (current) collections improved to 99.4% from 99.2%.

Portfolio Quality: The current bucket proportion of AUM rose sharply from 83.3% to 84.78%. 1+ Days Past Due (DPD) improved to 15.2% from 16.7%. 30+ DPD improved to 11.5% from 12.38%.

Slippages: Eased marginally to 0.68% from 0.70% in Q1.

Gross Stage-3 (NPA): Broadly stable at 3.48%.

Provision Coverage Ratio (PCR): ~40% on Stage-3 assets and ~1.73% on overall AUM.

Stage-2 Assets: Absolute quantum dropped from ~₹1,225 crores (Sep '25) to ~₹1,173 crores (Sep '26).

Recoveries: Recovery from written-off accounts was ₹13 crores in Q2. Total resolution from NPAs and written-off accounts was ~₹35 crores for the quarter.

Strategic Updates & Guidance

Yield Increase: Implemented a ~1% yield hike on incremental disbursements effective October 2026. Yields were at 22.26% for Q2.

Growth Guidance: Management is confident of "very comfortably" crossing its initial AUM growth guidance for FY27. A formal update may be provided after Q3 results.

Credit Cost & Slippages Outlook: Expects flattish credit slippages and credit cost for the rest of FY27 despite industry headwinds.

Funding Cost Outlook: Expects incremental cost of borrowings to rise to 8.70%-8.75% in H2 FY27 and the overall book cost of funds to rise by 12-15 bps, exiting FY27 at ~8.90%.

NIM Outlook: Expects some NIM compression due to rising funding costs, which will be cushioned by the incremental yield hike and operating leverage.

Opex Outlook: Believes the cost-to-income ratio will trend down by 50-75 bps over the next couple of years to 6.75%-7.00% due to operating leverage. Legal and CSR expenses contributed to higher other expenses in Q2.

Asset Quality Outlook: Expects Gross NPA ratios to start improving in FY28, with slippages remaining flattish (~70 bps) for the next couple of quarters.

New Product: Management reiterated its interest in launching a new product line, with more details potentially shared in the next quarter.

Q&A Session Key Takeaways

Geographic Exposure & Drought Impact: Core states (Tamil Nadu, Andhra, Telangana) contributing 80%+ of AUM are not experiencing drought. Collections in other states like Karnataka are holding up well, with the worst of the previous stress (related to a state ordinance) behind them.

Repayment Rates & Behavioral Tenure: The elevated repayment rate (~36-37%) is partly due to a new top-up loan feature where outstanding is adjusted subject to strong filters. This is expected to add 1-2% to repayment rates. The behavioral tenure is expected to settle closer to 4 years.

Top-up Loans: Constitute ~10-15% of disbursements. They are offered only to current customers with a strong vintage (12-18 months) and credit history. The incremental disbursal on a top-up is typically ~50% of the outstanding amount.

Competition: Management does not see significant overlap or threat from PSU banks offering Mudra loans up to ₹20 lakhs, citing different borrower profiles and documentation requirements.

Liability Profile: ~69% of borrowing is from banks (vs. 67% in Q1). ~70% of the book is variable rate, comprising ~25% MCLR-linked, 30-35% repo/T-bill linked, and 15-18% SOFR/other external benchmark linked.

Recovery Timeline: Recovery from written-off accounts typically takes 18-24 months due to the lack of SARFAESI eligibility for loans under ₹20 lakhs. The company expects resolution from NPAs to cross ₹100 crores for FY27.

Ticket Size Mix: Disbursement mix is moving towards a target of 25% sub-₹3 lakh, 50% ₹3-5 lakh, and 25% above ₹5 lakh. The current mix is ~26-27% sub-₹3L, ~51-52% ₹3-5L, and the rest above ₹5L.

Customer Overlap: An estimated 30-40% of customers have some overlap with Microfinance Institution (MFI) loans. An estimated 40-50% of customers have some kind of gold loan overlap.