Financial Performance Highlights

  • Net Profit: Q2 FY27 PAT stood at ₹76.5 crore with net profit margins at 15.5%
  • Net Interest Income: Grew 42.8% YoY to ₹368.8 crore in Q2 FY27
  • Net Total Income: Increased 46.5% YoY to ₹495.3 crore in Q2 FY27 from ₹338.1 crore in Q2 FY26
  • Pre-Provision Operating Profit (PPOP): Grew significantly YoY to ₹145.5 crore
  • Net Interest Margin (NIM): Improved 28 bps YoY to 7.2% in Q2 FY27
  • Cost-to-Income Ratio: Adjusted for digital expenses at 68.7% in H1 FY27 versus 72.9% in H1 FY26

Business Growth Metrics

  • Gross Advances: Including IBPC stood at ₹14,972 crores, representing 34.6% YoY growth
  • Disbursements: ₹3,096 crores in Q2 FY27, up 27.4% YoY
  • Product Mix: Inclusive finance at 41% and retail assets at 59% of advances
  • Retail Assets Growth: Mortgages and CV growing at 36% YoY
  • Total Deposits: Grew 35% YoY to ₹16,184 crores
  • Retail Deposits: Including CASAs stood at ₹13,676 crores (84.5% of deposit base)
  • CASA Ratio: Stood at 19.4% with CASA balances growing 26.8% YoY in absolute terms

Asset Quality Improvement

  • Gross NPAs: Declined to 2.9% from 6.5% in June 2026 (Q1)
  • CGFMU Claims: Received ₹387 crores of claims in July 2026
  • Write-offs and OTS: ₹596 crores of legacy stressed assets written off/settled
  • Collection Efficiency: Current bucket efficiency for IF stood at 99.3% in Q2 FY27 versus 99.2% in Q1 FY27
  • Slippages: ₹122 crores in Q2 FY27 (approximately ₹65 crores from IF and remainder from secured/digital business)
  • Provision Coverage: PCR declined due to write-offs; including CGFMU cover, effective PCR is approximately 90%

Digital Initiatives Progress

  • Credit Line on UPI (CLOU): Over 14 lakh customers targeted, expected to increase substantially
  • Digital Customer Acquisition: Over 2 lakh customers onboarded through digital channels
  • Digital Contribution: Convenience fee from CLOU business increased by ₹14 crores, partially offsetting lower PSL income

Capital Management

  • CRAR: Stood at 19.37% in Q2 FY27
  • Tier 2 Capital: Raised ₹200 crores in October 2026, improving CRAR by 1.8%
  • Additional Fundraise: Another ₹200 crores Tier 2 planned by December or Q4 FY27
  • Capital Guidance: Comfortable with Tier 1 around 18.5-19%; overall CRAR target 20-22%

Risk Factors and Monitoring

  • Drought Impact: Monitoring drought conditions in Karnataka and Maharashtra affecting approximately ₹1,000-₹1,100 crores exposure
  • Collection Trends: October collections similar to September (99.3% efficiency); potential lagged impact being monitored
  • CGFMU Scheme: Cover for disbursements from April 2026 not yet opened; ₹40-45 crores provision made in H1 for expected premium
  • Exposure Management: Being cautious in onboarding new customers in drought-affected districts while servicing existing customers

Guidance and Outlook

  • Advances Growth: Maintained 30-35% for FY27
  • ROA Target: Exit ROA of approximately 1.4-1.5%
  • Product Mix: Medium-term target of 45% IF and 55% retail assets
  • Digital Business: Expected to become meaningful contributor across assets, deposits, and earnings
  • Branch Expansion: Planning to add ~50 branches in next 4-5 months, with ~10 already opened

Other Key Details

  • PSL Income: Significant reduction in Q2 FY27 (₹8 crores vs ₹45 crores in Q1) due to seasonal factors
  • Funding Strategy: Evaluating IBPC renewals at attractive rates (previously secured at <5% for 6-month money)
  • NABARD Borrowings: ₹1,200 crores variable rate borrowings now at 7.5% benefiting from rate cuts
  • FIG Provision: ₹6 crores provision made for Star Housing Finance account