Financial Performance Highlights

Q4 FY26 Performance:

  • Total Income: ₹63.23 crores (compared to ₹52 crores in Q4 FY25)
  • Profit After Tax: ₹0.47 crores

FY26 Full Year Performance:

  • Total Income: ₹232 crores (compared to ₹199 crores in FY25)
  • Profit After Tax: ₹1.34 crores (compared to ₹1.25 crores in FY25)
  • Net Interest Margin: 13.9%
  • Operating Expense Ratio: 12.8%
  • Gross NPA: 3.59% (compared to 6.61% in FY25)
  • Net NPA: 1.75% (compared to 3.42% in FY25)
  • Credit Cost: 3.32% (compared to 3.43% in FY25)
  • Capital Adequacy Ratio: 29.48%
  • AUM: ₹893 crores (6% growth, though declined due to ARC transaction)

Strategic and Operational Updates

Portfolio Quality Improvement:

  • Collection efficiency improved to 93.5% overall
  • Current bucket (X bucket) efficiency improved to over 99.4% in March from 99% in January
  • Resolution rates in bucket 1 (30-60 days) improved to over 70%
  • Resolution rates in bucket 2 (60-90 days) improved to over 75%
  • Steady reduction in monthly bounce rates observed

Portfolio Mix Transition:

  • Secured loans now constitute 68% of AUM (including 5% unsecured loans backed by first loss default guarantee)
  • Significant increase from 45% secured portfolio last year
  • Target of nearly 80% secured AUM by March 2027
  • Secured disbursements increased to 67% from 49% last year
  • Average ticket size in secured loans now ₹6 lakhs, moving to ₹8-9 lakhs run rate

New Business Initiatives:

  • Launched renewable energy loans in April 2026
  • April disbursement: ₹50 lakhs
  • May disbursement: 10x growth (approximately ₹5 crores)
  • Target: 10% of AUM by March 2027
  • Solar loans focus on MSME solarization (atta chakki, oil expellers, jaggery units, telecom towers)
  • Planning digital lending initiative starting next month

Branch Network Strategy:

  • Operating across 12 states
  • Consolidating branch network rather than expanding
  • Moving branches from deep rural to Tier 1 locations (e.g., opened branches in Bangalore peripheries, Jaipur)
  • No new state expansion planned for FY27

Technology Enhancements:

  • Recently launched in-house LOS platform "Moneyboxx One"
  • Sikka app for operational efficiency
  • ML and AI-enabled underwriting through Cattle AI platform
  • Digital collection platform MB Collect
  • Technology improving turnaround time and field productivity

Partnership Developments:

  • Rabo Foundation: 3.3% first loss default guarantee support
  • Shell Foundation: 10% second loss fees guarantee after initial 3% loss coverage for green asset loans
  • Other partnerships with Gates Foundation, Water.org, Accion
  • Exploring additional strategic partnerships
  • Targeting 20-25% monthly business through direct partnerships

Growth Outlook and Targets

FY27 Guidance:

  • Projected 43-44% AUM growth for FY27
  • Month-on-month disbursement growth expected starting May/June 2026
  • Credit cost expected to reduce below 2% (from 3.32% in FY26)
  • Focus on improving return on assets and ROE through opex reduction and AUM growth

Funding Strategy:

  • Capital position comfortable with 29.48% CAR
  • Exploring co-lending partners in secured space
  • Potential equity raise in second half of FY27 (historical pattern of raising equity every year)

Product Details

Solar Loans:

  • Tenure: 4 years
  • Target customers: Operators with agri land/businesses (atta chakki, oil expeller, RO water plants, sheet metal fabrication)
  • Average ticket size: ₹4 lakhs
  • Interest rate: 22-22.5%
  • Overall yield: 23-24% including fees
  • Classification: Secured lending
  • No sales cost incurred (direct leads through partners)

Digital Lending:

  • Planned launch in coming months
  • Will be unsecured lending
  • Starting small with gradual increase

Risk Factors and Challenges

Industry Context:

  • Lending industry faced challenges over last 18-24 months, especially in microfinance and unsecured lending segments
  • MFI guardrails in July 2024 impacted ecosystem
  • Stress extended to secured lending markets, particularly small ticket size, self-employed and micro enterprise financing

Company Specific:

  • Higher employee costs as percentage of AUM (37-38%) due to low AUM base
  • Team restructuring with experienced hires from larger companies
  • Need for AUM growth to justify team structure and reduce opex ratio
  • Portfolio seasonality with weaker April-June period

Management Commentary

The company characterized FY26 as "a year of transition, correction and strengthening" with a challenging operating environment. Management emphasized their focus on disciplined underwriting, operational efficiency, and building a stronger foundation for long-term scalable growth. They expressed confidence in improving portfolio quality trends and achieving targeted growth in FY27 through strategic initiatives including secured lending focus, technology deployment, and partnership programs.