# 1. Financial Performance ## A. Key Figures * **Loan Portfolio:** **₹7,692 Cr** (Q3 FY'26) · **Disbursements:** **₹1,117 Cr** (Q3 FY'26) (+20% QoQ) * **Net Interest Income:** **₹209 Cr** (+1% YoY, +2% QoQ) * Cost of Funds: 10.3% (-50 bps YoY) · Incremental Borrowing Cost: 9.1% (-110 bps YoY) * Net Profit: **INR8.3 Cr** (Q3 FY'26) vs. ₹10.5 Cr prior quarter ## B. Revenue & Disbursements * **Strong Disbursement Growth:** Robust sequential expansion in disbursements, led by **21% growth in vehicle finance**, despite YoY decline due to prior-year high base. * **Yield Stability:** Disbursement yield improved to **2%**, reflecting pricing discipline and stable credit performance, up from 1% last quarter. * **Forward Momentum:** Management expects disbursement volumes to grow further in the current quarter, signaling recovery in demand traction. ## C. Net Interest Income & NIM * **NIM Resilience:** Net interest margin held steady despite yield pressures, supported by declining funding costs and lower incremental borrowing rates. * **Margin Tailwinds Ahead:** Ongoing roll-over of higher-cost debt with **incremental borrowings at 1%** positions NIM for gradual expansion. ## D. Cost of Funds * **Funding Cost Advantage:** Significant YoY reduction in cost of funds, with a **120 bps gap** between book (3%) and incremental (1%) rates, offering meaningful future interest expense savings. * **Further Room for Optimization:** Management sees potential for incremental borrowing costs to fall below **1%**, driven by continued refinancing and funding mix improvements. ## E. Profit & Margins * **Profitability Impact:** Net profit decline attributed entirely to **₹8 Cr one-time wage code-related expense**, masking underlying earnings stability. * **OPEX Discipline:** Operating expenses remain tightly managed; ex-one-time item, OPEX ratio improved, supporting operating leverage. * **Risk-Adjusted Growth:** Risk-based pricing framework now embedded to sustain growth while protecting **risk-adjusted yields and NIMs**. --- # 2. Loan Book & Asset Quality ## A. Key Figures * **AUM:** **₹128 Cr** (Dec '25) · **2,215 customers** * **Delinquency Reduction:** **~50% lower** in 2025 cohort vs. prior (like-for-like) · **~50% lower** in post-tightening origination * **Billing Efficiency:** **90%** (EMI collection rate) * **NPA Ratios:** **4.06%** Gross Stage 3 NPA · **1.76%** Net Stage 3 NPA * Stressed Loan Sale: ₹135.73 Cr sold for ₹108.55 Cr ## B. Delinquency Trends * **Sharply Improved Credit Quality:** 2025 cohort and post-policy tightening loans show **robust underwriting discipline**, with delinquency rates nearly halved versus earlier vintages. * **High Portfolio Quality:** Minimal delinquency stress with only **6 customers in 1+ DPD**, supported by conservative collateralization—**99% residential property-backed**—and **74% self-employed borrower base**. * **Strong Collection Performance:** Billing efficiency at **90%** underscores effective collections infrastructure and customer engagement. ## C. NPA Levels * **Proactive Balance Sheet Cleanup:** Stressed assets of **₹73 Cr** were sold at a discount, contributing to improved NPA metrics and reduced future risk. * **Declining Non-Starters:** Non-starter rate improved from **2% to 0.8%**, reflecting enhanced onboarding and underwriting precision. --- # 3. Segment & Product Performance ## A. Key Figures * **Vehicle Finance Disbursements:** ₹1,087 Cr Q3 FY'26 · ₹900 Cr Q2 FY'26 * **Micro LAP Disbursements:** ₹30 Cr Q3 FY'26 * **Micro LAP AUM:** ₹128 Cr ## B. Vehicle Finance Growth * **Retail-Led Scaling:** Accelerating disbursements in used vehicle finance reflect strong demand and deeper semi-urban/rural penetration, driving core growth post affordable housing exit. * **Structural Tailwinds:** Used vehicle financing outpaces new vehicle growth due to affordability advantages, with favorable unit economics attracting NBFC focus and supporting long-term AUM expansion. * **Prime Segment Expansion:** Entry into prime borrowers broadens addressable market, contributing to lower yields but also reduced credit costs, enhancing portfolio resilience. ## C. Micro LAP Expansion * **Strategic Diversification:** Micro LAP rollout across Tier 3–5 towns via 75 operational branches (up from 40) supports secured lending growth, with fully residential, predominantly self-occupied collateral ensuring high security. * **Growth Ambition:** Despite stable recent disbursements, company targets **doubling AUM next year** through calibrated branch expansion across 448 locations and continued investment. ## D. Yield Trends * **Yield Dynamics:** Near-term vehicle finance yields anchored at **~17%** to protect NIM, while Micro LAP’s **>22% yields** provide upward leverage on overall portfolio returns. * **Portfolio Mix Impact:** Shift toward lower-yielding prime segments is offset by high-yield Micro LAP growth, positioning net yields to stabilize or improve despite margin pressure in core segments. --- # 4. Branch & Distribution ## A. Key Figures * **Branch Network:** **448** branches across 23 states * **AUM:** **₹7,692 Cr** (₹7,219 Cr on-book, ₹473 Cr off-book) (+1.7% QoQ) * **Digital Adoption:** **50%** of applications digital · **>80%** e-agreement/eNACH usage ## B. Network Expansion * **Strategic Physical Scaling:** Selective addition of **seven new branches** and upgrade of micro branches to full-fledged units, enhancing distribution and service depth. * **Geographic Diversification:** Full operations launched in Tamil Nadu; expanded into Andhra Pradesh and Telangana; pilot rollout in **5 branches in Gujarat** testing new market potential. * **Growth Drivers:** Strong quarterly AUM growth reflects synergies between network expansion and **frontline hiring momentum**. ## C. Frontline Hiring * **Capacity Buildout:** Disbursement capacity set to scale with a **30% increase in frontline sales personnel**, reinforcing growth trajectory in upcoming quarters. ## D. Digital Onboarding * **High Digital Penetration:** Despite semi-urban and rural footprint, **near 100% digitization** achieved in customer onboarding via e-applications and e-agreements. * **Tech Stack Maturation:** Digital infrastructure scaling effectively with e-KYC imminent; sustained **month-on-month improvement in digital adoption** signals strong operational efficiency. --- # 5. Funding & Capital Structure ## A. Key Figures * Debt-to-Equity Ratio: 1.2x (resilient, under-levered) · Peers: 3.5x–5x (target range) * Capital Adequacy Ratio: 14.4% (strong headroom for growth) * **Funding Inflow:** **INR150–200 Cr** from warrant conversion · **INR277 Cr** mutual fund investments · **INR22 Cr** cash & equivalents ## B. Debt-to-Equity Ratio * **Under-Levered Position:** Conservative capital structure at 2x debt-to-equity, supported by strong ALM and positive cumulative mismatches across all maturity buckets. * **Strategic Leverage Path:** Management targets peer-level leverage of **5x–5x** over the next **2–3 years**, aligning with growth ambitions and sector norms. * **Liquidity & Borrowing:** Healthy liquidity position with consistent improvement in incremental cost of borrowing, despite RBI holding repo rate at **25%**. ## C. Capital Adequacy * **Equity Infusion:** Preferential allotment completed post-warrant conversion, strengthening capital base with participation from BCP V and Florintree. * **Growth Headroom:** Capital adequacy ratio of 4% provides substantial flexibility to fund expansion organically or via strategic investments. --- # 6. Risks & Credit Quality ## A. Key Figures * CPI (Dec 2025): 1.33% (benign inflation environment) * **EMI-to-EMI Collection Efficiency:** **~90%** (strong collections) * **Delinquencies:** **6 out of 2,000+** customers (high portfolio quality) * **LTV Ratio:** **<40%** (low-risk secured lending) ## B. Repayment Stress * **Favorable Macro Backdrop:** Benign inflation supports credit expansion and economic growth, enhancing repayment capacity. * **Robust Collections Infrastructure:** Nearly 100% digital collections and strong early repayment trends reflect a sound risk profile. * **Proactive Risk Monitoring:** A comprehensive early warning system enables timely identification of potential stress across geographies and products. * **Credit Cost Outlook:** Management holds NSED credit costs under control but deferred specific guidance to next quarter’s update. ## C. Legacy Asset Exposure * **Contained Legacy Risks:** Corrective actions have addressed prior softness in loan performance, with residual legacy assets being actively managed. * **Conservative Lending Model:** Sub-40% LTV ratios and fully secured exposure mitigate downside risk in the portfolio. ## D. Underwriting Tightening * **Improved Asset Quality:** Tighter underwriting since January 2025 has led to **~50% lower delinquency rates** on new vintages, signaling stronger credit performance. * **Strategic Volume Trade-off:** H1 volume decline was intentional; recent easing of select restrictions reflects confidence in improved portfolio quality. * **Enhanced Credit Decisioning:** Rollout of scorecard-based approvals and mandatory personal credit officer meetings sustain high underwriting standards. * **Cost Trajectory Expected to Ease:** Higher current credit costs are transitional, with structural improvement anticipated as better-quality vintages dominate the book. --- # 7. Guidance & Outlook ## A. Key Figures * **Disbursements:** **20%** QoQ growth (Q3 vs Q2) * GDP Forecasts: 7.3% (RBI) · 7% (CRISIL) for FY '26 * **Sector AUM Growth:** **15–17%** (ICRA) · **18–19%** (CRISIL) projected for NBFC sector in FY '26 ## B. Disbursement Run Rate * **Positive Momentum:** Disbursement growth shows strong sequential acceleration, with current run rate expected to expand further to meet full-year targets. * **Macro Tailwinds:** Upbeat economic outlook supported by robust private consumption and sectoral growth in manufacturing and services. ## C. AUM Growth Targets * **Sector-Leading Expansion:** NBFC AUM poised for high-teens growth, led by vehicle finance, MSME, and micro lending segments. * **Strategic AUM Ambition:** Management targets to **double AUM** in Micro LAP, while used vehicle finance remains a focus area without a disclosed target. * **Asset Quality Improvement:** NPA trends expected to show meaningful improvement over the next two quarters following corrective actions.