Executive Commentary by Management

Lakshmipathy D, Managing Director, characterized the quarter as one of "strong performance" with an "upward trajectory." Key highlights from the commentary include:

  • Disbursements for Q2FY27 were ₹2,078 Crore, representing a 39% increase over the previous quarter (Q1FY27) and a 74% increase year-on-year (YoY). This was noted as the company's "historically best disbursements."
  • The Assets Under Management (AUM) or loan portfolio stood at ₹14,640 Crore as of September 30, 2026, a growth of 7% over the previous quarter and 14% YoY.
  • Collection efficiency (excluding NPAs) improved to 98.2% in Q2FY27 from 97.9% in Q1FY27. X-bucket collections improved to 99.4% from 99.2%.
  • Asset quality showed improvement: the current bucket proportion of AUM increased to 84.78% from 83.30%, and 30+ Days Past Due (DPD) reduced to 11.50% from 12.38%.
  • Slippages eased marginally to 0.68% of average AUM from 0.70% in Q1FY27.
  • Gross Stage 3 assets (Gross NPAs) were broadly stable at 3.48%.
  • Credit cost improved to 1.80% of average AUM from 1.85% in Q1FY27. Management expects "flattish credit slippages and credit cost for the rest of the year."
  • The company availed incremental debt of ₹825 Crore during the quarter at an all-inclusive cost of 8.43%. The overall cost of funds on the book eased marginally to 8.78% from 8.80% in Q1FY27.
  • Net Interest Margin (NIM) remained broadly stable at 19.87% compared to 19.97% in Q1FY27 and was 16 basis points higher YoY.
  • Management expects some increase in the cost of funds due to the tightening rate cycle, which may impact spreads and NIM, but expressed confidence in navigating it with "minimal impact."

Business and Operational Overview

The presentation outlines the company's core business model:

  • Target Customer: Small business owners and self-employed individuals with informal income, derived from everyday 'services'.
  • Ticket Size & Income: Average ticket size of ₹3–5 lakhs; household gross income of ₹25,000–40,000.
  • Geography: Primarily Southern India (Tamil Nadu, Andhra Pradesh, Telangana, Karnataka), Madhya Pradesh, Maharashtra, Uttar Pradesh, Chhattisgarh, Rajasthan, and Gujarat.
  • Collateral: All loans are secured against usually self-occupied residential property.
  • Distribution: 875 branches across 11 States/UTs. The state-wise portfolio breakdown as of Q2FY27 is: Tamil Nadu (27%), Andhra Pradesh (36%), Telangana (19%), Karnataka (4%), Madhya Pradesh (10%), Maharashtra (3%), Others (1%).
  • Proprietary Underwriting: A detailed process involving branch-level inspection, field credit inspection, and independent approval by a dedicated credit team. The model relies on ecosystem checks and physical verifications.
  • Technology: The company emphasizes a tech-supported business model with a robust Loan Origination System (LOS), API integrations, cloud architecture, data-driven risk analytics, and digital collections.
  • Employees: 15,172 employees as of the presentation date.
  • Social Impact (ESG): The presentation highlights the company's focus on financial inclusion, catering to low-income groups (LIG), and its Corporate Social Responsibility (CSR) initiatives. It notes that 48% of borrowers are from the low-income group and 20% are women borrowers. The company has raised sustainable finance from institutions like Swedfund (USD 20 Mn), IFC (USD 60 Mn), and ADB (USD 100 Mn), and has availed refinance from NABARD and SIDBI.
  • Governance: The board has high independent director representation, and most board committees are chaired by independent directors. The management team is listed with various chiefs heading different functions.

Financial Performance (Q2FY27)

| Particulars (₹ Mn) | Q2FY2027 | Q1FY2027 | Q2FY2026 | Y-o-Y Change | Q-o-Q Change |

|-------------------|---|--|--|--|--|

| Loan Portfolio (AUM) | 1,46,396 | 1,37,218 | 1,28,471 | 14% | 7% |

| Total Income | 8,750 | 8,387 | 8,065 | 8% | 4% |

| ∟ Interest Income | 8,364 | 8,096 | 7,743 | 8% | 3% |

| ∟ Net Gain on Fair Value Changes | 66 | 78 | 151 | -56% | -15% |

| ∟ Fee & Other Income | 320 | 213 | 172 | 86% | 50% |

| Interest Expenses | 1,677 | 1,715 | 1,800 | -7% | -2% |

| Net Interest Income (NII) | 7,073 | 6,672 | 6,265 | 13% | 6% |

| Operating Expenses | 2,683 | 2,435 | 1,936 | 39% | 10% |

| Pre-Provision Operating Profit (PPOP) | 4,390 | 4,237 | 4,329 | 1% | 4% |

| Credit Cost (Provisions) | 643 | 618 | 510 | 26% | 4% |

| Profit Before Tax (PBT) | 3,748 | 3,620 | 3,819 | -2% | 4% |

| Profit After Tax (PAT) | 2,993 | 2,714 | 2,861 | 5% | 10% |

| Earnings Per Share - Basic (₹) | 10.14 | 9.19 | 9.72 | - | - |

| Earnings Per Share - Diluted (₹) | 10.13 | 9.18 | 9.69 | - | - |

| Book Value Per Share (₹) | 266.02 | 256.14 | 228.85 | - | - |

Note: PAT for Q2FY2027 includes a reversal of excess tax provision amounting to ₹187.53 Mn in respect of earlier years.

Financial Performance (H1FY27)

| Particulars (₹ Mn) | H1FY2027 | H1FY2026 | Y-o-Y Change |

|-------------------|---|--|--|

| Loan Portfolio (AUM) | 1,46,396 | 1,28,471 | 14% |

| Total Income | 17,138 | 15,977 | 7% |

| Interest Expenses | 3,392 | 3,673 | -8% |

| Net Interest Income (NII) | 13,746 | 12,304 | 12% |

| Operating Expenses | 5,117 | 3,947 | 30% |

| Pre-Provision Operating Profit (PPOP) | 8,629 | 8,357 | 3% |

| Credit Cost (Provisions) | 1,262 | 988 | 28% |

| Profit Before Tax (PBT) | 7,367 | 7,369 | 0% |

| Profit After Tax (PAT) | 5,707 | 5,524 | 3% |

| Earnings Per Share - Basic (₹) | 19.33 | 18.76 | - |

| Earnings Per Share - Diluted (₹) | 19.31 | 18.71 | - |

Key Financial Ratios

| Particulars | Q2FY2027 | Q1FY2027 | Q2FY2026 | H1FY2027 | H1FY2026 |

| Net Interest Margin (NIM) % | 19.87% | 19.97% | 19.71% | 19.91% | 19.86% |

| Return on Average Loan Portfolio (PAT) | 8.39% | 8.11% | 8.98% | 8.25% | 8.90% |

| Return on Equity (RoE) | 15.25% | 14.46% | 16.91% | 14.86% | 16.74% |

| Cost to Income Ratio | 47.12% | 45.86% | 39.17% | 46.50% | 40.24% |

| Gross Stage 3 Assets (%) | 3.48% | 3.46% | 2.64%* | - | - |

| Debt/Equity Ratio | 1.01 | 1.03 | 1.23 | 1.01 | 1.23 |

*Note: Gross Stage 3 for Q2FY2026 was calculated as per a different RBI guideline; the presentation provides a 10-year snapshot showing 3.37% for FY2026.

Asset Quality (Expected Credit Loss - ECL)

| As of (₹ Mn) | Stage 1 (Gross) | Stage 2 (Gross) | Stage 3 (Gross) | Total Gross AUM | Total ECL Provision | ECL % of AUM |

| Sep 30, 2026 | 1,29,563 | 11,733 | 5,100 | 1,46,396 | 2,529 | 1.73% |

| Jun 30, 2026 | 1,20,223 | 12,243 | 4,752 | 1,37,218 | 2,443 | 1.78% |

| Sep 30, 2025 | 1,12,838 | 12,245 | 3,388 | 1,28,471 | 2,431 | 1.89% |

Liability Franchise & Liquidity

The company has borrowing relationships with multiple PSU and private banks. Its long-term credit ratings are ICRA AA (Stable), CARE AA (Positive), and India Ratings AA (Positive). Its short-term rating is CARE A1+.

  • Liquidity Buffer (as of Sep 2026): Unencumbered cash & cash equivalents stood at ₹12,867 Mn and unavailed sanctions from banks/FIs were ₹11,200 Mn, resulting in total liquidity of ₹24,067 Mn.
  • ALM: The projected cashflow schedule and cumulative mismatch table show no cumulative mismatch in any time bucket, indicating strong Asset-Liability Management.

Capital Structure

Total Equity as of September 30, 2026, was ₹79,034 Mn, compared to ₹76,534 Mn as of June 30, 2026, and ₹68,067 Mn as of September 30, 2025.