Financial Performance Highlights (H1 FY27)

  • Loan book grew 29% year-on-year to ₹1.86 lakh crore
  • Net profit increased 31% year-on-year for the half-year period
  • Revenue from operations increased 26% year-on-year
  • Disbursements stood at over ₹35,000 crore, representing 37% growth over previous financial year
  • Loan sanctions reached over ₹1 lakh crore during first half yearly
  • Asset quality improved with gross NPA declining to 0.7% and net NPA at 0.04%
  • Blended cost of funds stable at 7.07% despite rising interest rate environment
  • Net interest margin at 2.93%
  • Spread of 1.96% (2% excluding ₹20,000 crore GOI loan at 40bps spread)

Operational Metrics and Targets

  • FY27 disbursement target: ₹65,000 crore (₹35,000 crore achieved in H1)
  • Loan book target for FY27: ~₹2 lakh crore
  • 2030 loan book target: ₹3 lakh crore
  • Target spreads: 2%
  • Target net interest margin: 3%
  • Tax rate: ~21%

Funding Strategy and Cost Optimization

  • Leveraged RBI swap window for foreign currency borrowing
  • Raised $2 billion ECB at effective blended cost of ~6.75% after hedging
  • Bond raising: ₹2,200 crore in Q1 at ~7-7.25%, paused due to elevated yields
  • Bank borrowing cost: ~7.25%
  • Targeting over $3 billion through ECB route
  • Implementing quarterly resets for some loans instead of annual resets
  • Increased MCLR by 15 basis points after two years

Asset Quality and Recovery

  • Aggressive NPA resolution through one-time settlements and NCLT/NCLAT processes
  • H1 FY27 recovery: ₹32 crore
  • H1 FY27 resolution: ₹359 crore
  • FY26 recovery: ₹403 crore
  • FY26 resolution: ₹660 crore
  • FY25 recovery: ₹416 crore
  • Balance NPAs approximately ₹1,200 crore, primarily with NCLT and DRAT
  • 95% of NPAs from private sector entities

Business Development and Market Opportunity

  • Sanctioned ₹9,000 crore in PPP projects including:
  • Dharavi redevelopment project (Mumbai)
  • Road sector projects
  • Renewable energy projects
  • Pipeline of sanctioned projects: ₹3-4 lakh crore
  • Conversion period: 3-5 years for disbursement
  • Significant urban infrastructure opportunity identified: ₹250 lakh crore required by 2050 (World Bank estimate)
  • Government initiatives supporting growth:
  • Urban Challenge Fund (₹1 lakh crore grant + ₹1 lakh crore state contribution)
  • SASCI Loan (50-year interest-free loans to states)
  • 16th Finance Commission grants
  • PMAY 2.0
  • AMRUT 2.0
  • Smart Cities Mission
  • City Economic Region program

Regulatory Update

  • Classified as Upper Layer NBFC by RBI in August 2026
  • Requires enhanced compliance and exposure limit monitoring
  • Board approval required for exposures beyond 25%
  • Management indicates minimal operational impact as company was already compliant

Management Commentary and Strategy

  • Focus on maintaining 2% spread and 3% NIM despite rising interest rates
  • Targeting zero net NPA company status
  • Diversifying funding strategies including domestic and international sources
  • Working with multilateral banks (World Bank, ADB, KfW, AIIB, NDB)
  • Implementing UiWIN (Urban Invest Window) for project identification and capacity building
  • Monetizing assets including developing 1 lakh square meters of space over three years
  • Strengthening regional offices for post-sanction monitoring
  • Setting up strategic business group for urban transformation solutions

Q&A Highlights

  • Expect yield improvement in coming quarters due to transmission of rate increases and ECB benefits
  • No foreign currency translation losses expected due to hedging strategies
  • PPP lending focused on strong concession agreements, investment-grade entities, and third-party due diligence
  • Government loan of ₹20,000 crore (40bps spread) to mature in FY2028-2029
  • Most lending to state governments for infrastructure projects with multiplying economic effect