Financial Performance Highlights

Q2 FY27 Results:

  • Assets Under Management (AUM): ₹72,659 million, representing 33% year-on-year growth
  • Disbursements: ₹15,673 million, up 42% YoY
  • Total Income: ₹2,773 million, up 24% YoY
  • Net Interest Income: ₹1,476 million, up 17% YoY
  • Profit Before Tax: ₹874 million, up 27% YoY
  • Profit After Tax: ₹656 million, up 27% YoY
  • Return on Assets: 3.3%
  • Return on Equity: 13.4% (improved from 11.8% in Q2 FY26)

H1 FY27 Results:

  • Disbursements: ₹32,982 million, up 77% YoY
  • Total Income: ₹5,376 million, up 21% YoY
  • Net Interest Income: ₹2,923 million, up 17% YoY
  • Profit Before Tax: ₹1,696 million, up 28% YoY
  • Profit After Tax: ₹1,270 million, up 29% YoY
  • Loan losses and provision: ₹155 million, down 47% YoY from ₹295 million

Asset Quality Metrics

  • Gross NPA: 0.66% (improved by 15 bps YoY)
  • Net NPA: 0.46% (improved by 19 bps YoY)
  • Collection Efficiency: 98.3%
  • Credit Cost: 0.4% in Q2 FY27 (compared to 1.1% in Q2 FY26)

Balance Sheet Position

  • Total Borrowings: ₹54,808 million as of September 30, 2026
  • Cost of Borrowing: 10% (declined by approximately 50 bps YoY)
  • Debt-to-Equity: 2.89x
  • Capital Adequacy: 30.7% (Tier 1 capital: 25.2%)
  • ALM Position: Comfortable with positive gap across buckets

Funding Activities (H1 FY27)

  • Public NCD issuance: ₹294.9 crores under ₹900 crores shelf program
  • Private placement of NCDs: ₹124.47 crores (listed dual-rated unsecured)
  • Commercial paper issuances: Over ₹177 crores

Operational Highlights

Distribution Network:

  • Total touchpoints: 6,415 across 23 states
  • Branches: 426
  • Distribution points: 4,299
  • Business Correspondent touchpoints: 1,690
  • Customer base: Approximately 20 million
  • Geographic coverage: 23 states and more than 10,000 pin codes

Business Correspondent Partnerships:

  • State Bank of India
  • Bank of India
  • Indian Overseas Bank
  • BC network served approximately 1.93 million customers across services including account opening, fund transfer, social security products, and micro credit

Technology and AI Implementation:

  • AI-enabled onboarding processed approximately 1.90 lakh applications in Q2
  • AI-driven outbound calling scaled to approximately 3 lakh calls daily
  • 25 live AI bots across the organization
  • Employee base declined by 11% YoY despite 33% AUM growth
  • 100% AI-assisted journey for legacy maintenance
  • 100% core-driven test kit generation

Portfolio Composition:

  • Agri and allied segments: Approximately 15% of portfolio
  • Diversified across food and hospitality, street vendors, health care, education, technology, manufacturing, textiles, transport and other SME and micro enterprise activities

Strategic Pillars

Management highlighted four reinforcing pillars for growth:

1. Distribution expansion combining branch-led presence with asset-light model

2. Product diversification around core MSME and micro entrepreneurs franchise

3. Technology and AI embedded across lending life cycle

4. Liability management focusing on diversification, funding flexibility and cost efficiency

Management Guidance and Commentary

Financial Targets:

  • Full year cost of funds guidance: 10.5% (currently at 10%)
  • Net Interest Margins expected to normalize to ~6% annualized (currently 5.7%)
  • Long-term ROE target: 15% to 18% range
  • Long-term ROA target: 4% to 4.5% range

Business Outlook:

  • Expect yield normalization in Q3 and Q4 as incremental interest income contribution progresses
  • Enhanced balance sheet capacity provides headroom for RoE improvement as deployment scales
  • Festive season and resilient consumption trends provide solid foundation for sustained growth
  • Targeting doubling of AUM revenue and PAT over next 3 fiscal years

Digital Initiatives:

  • Consumer-facing app targeted for launch by end of Q3 FY27 (around Christmas/New Year)
  • Expect 40-50% of acquisition through digital channels by end of 3-year strategy

Operational Environment Assessment

  • RBI revised FY27 real GDP growth estimate to 7.1%
  • 2026 Southwest monsoon ended at 87% of long period average with regional variations
  • Kharif sowing down only ~1% YoY covering 101% of normal acreage
  • Pressure concentrated in Maharashtra, parts of Karnataka, Andhra Pradesh and Telangana
  • Bihar experienced higher rainfall and flooding in certain areas
  • Rural vehicle registrations growing at marginally higher pace than urban markets

Q&A Session Key Points

Interest Rate Impact:

  • Expect 25-30 bps increase in borrowing costs due to RBI rate hike
  • Already priced into full year cost of funds guidance of 10.5%

Operational Efficiency:

  • Headcount reduction due to maturing distribution network and product expansion
  • AI framework still in implementation phase with cost currently elevated
  • Expect efficiency impact to become more visible towards Q1 FY28

Co-lending Business:

  • Status quo on co-lending with banks
  • Waiting for banks to complete compliance with circular requirements including CIF structure and CBS placement

Finance Cost vs Revenue Growth:

  • 33% YoY finance cost growth vs 24% income growth due to late deployment of funds
  • Expected to normalize in Q3 and Q4 as funds are fully deployed