# 1. Financial Performance ## A. Key Figures * **AUM:** **₹16,594 Cr** (+22% YoY / +10% QoQ) · **5-year CAGR:** **26%** * **PAT:** **₹406 Cr** FY26 (+33% YoY) · **₹133 Cr** Q4 (+251% YoY) * **NIM:** **9.4%** (+25 bps YoY) · **5-year Expansion:** **380 bps** * **Return Metrics (FY26):** **2.8%** ROA · **11.1%** ROE (+110 bps) * **Asset Quality:** **1.2%** GNPA · **0.6%** NNPA · **2.8%** Credit Cost * **Cost of Funds:** **8.5%** Book (-48 bps) · **8.6%** Q4 Incremental ## B. Revenue & AUM Growth * **Strategic Mix Shift:** Robust AUM growth is increasingly driven by the **Direct-to-Customer (D2C)** segment, which now represents a majority share of the total portfolio. * **Diversified Income Streams:** Significant scaling in capital markets and fund management, with placement volumes exceeding **₹11,800 Cr** and credit fund AUM reaching **₹3,092 Cr**. * **Top-line Momentum:** Net interest income and total net revenue saw strong double-digit growth, supported by margin expansion and a stable opex ratio of **3.6%**. ## C. Profitability & Returns * **Record Earnings Power:** Achieved highest-ever quarterly profits in Q4; management confirmed results are purely organic with no one-off items. * **Operational Benchmarks:** Successfully hit long-term targets, including a **3% ROA** profile and a **60% D2C mix**, reflecting the transition to a high-yield retail franchise. * **Operating Leverage:** Pre-provisioning operating profit grew robustly, outpacing revenue growth in the final quarter. ## D. Asset Quality Metrics * **Prudent Risk Management:** Net NPAs remain consistently low due to a conservative **100% provisioning policy** on unsecured loans over 90 days past due. * **Collateral Efficiency:** Shift toward secured MSME loans (backed by **100% registered mortgages**) has allowed for optimized ECL coverage and lower provision requirements. * **Improving Credit Profile:** Significant reduction in Stage-2 assets and high collection efficiency (exceeding **99%**) in MSME and rural segments indicate strengthening portfolio health. * **Rural Resilience:** Credit costs in the rural segment saw a sharp annual decline, with the majority of the MFI book protected under the **CGFMU** guarantee scheme. --- # 2. Segment & Product Performance ## A. Key Figures * **D2C Portfolio:** **59%** of total AUM mix (vs. 19% in FY21) · **₹9,800 Cr+** scale (+39% to 50% YoY) * **MSME Lending:** **₹3,691 Cr** AUM (+43% YoY) · **17-18%** target yields * **Rural Finance:** **₹1,009 Cr** AUM · **₹305 Cr** Q4 disbursements (+17% QoQ) * **Consumer Finance:** **₹5,000 Cr+** AUM · **15%** risk-adjusted net yield ## B. Direct-to-Consumer (D2C) Expansion * **Strategic Pivot:** The D2C segment has become the dominant portfolio driver, shifting from a minority share to the majority of AUM within five years. * **Composition & Scale:** Robust expansion is underpinned by a diversified mix of MSME (22%), Consumer (30%), and MFI (6%) finance, benefiting from a large addressable market. ## C. MSME & Rural Lending * **Portfolio Rebound:** Rural AUM is being rebuilt following a prior contraction, now supported by improved performance and **CGFMU credit cover** protection. * **Quality-Focused MSME Strategy:** Management is targeting higher-quality borrowers with ticket sizes of **₹11–15 lakhs**, deliberately avoiding the riskier sub-₹7 lakh segment. * **Operational Recalibration:** Strategies are being adjusted to eliminate overlaps between MSME and MFI sectors, with plans to bifurcate digital and physical lending reports next fiscal. ## D. Consumer Finance Yields * **Stable Returns & Stickiness:** Risk-adjusted yields remain consistent with targets, supported by a high **70% repeat customer rate** and automated underwriting of **~25,000 loans daily**. * **Duration Shift:** Management has exited short-tenure products to build a more stable **15 to 18-month book**, aimed at reducing operational costs and increasing customer retention. * **Value-Based Lending:** Growth is being moderated by a self-imposed **cap on end APRs** and an exit from certain high-yield segments to ensure long-term sustainability. ## E. Credit Solution Business * **Counterparty Strength:** The platform maintains a high-quality partner network, with **90%** of the 368 originating partners rated **BBB or higher**. * **Fee Income Tailwinds:** Anticipated recovery in the MFI sector is expected to drive momentum in the placement and fee-based business lines. * **Point-of-Sale Integration:** Future growth initiatives focus on developing direct funding solutions at the point of transaction through strategic partner collaborations. --- # 3. Operational Strategy & Infrastructure ## A. Key Figures * **Branch Network:** **342** Total rural branches · **64** Q4FY26 additions * **Collection Efficiency (MSME):** **99.4%** March 2026 (vs. 97.8% Sept 2025) * **Collection Efficiency (Rural):** **99.6%** March 2026 · **99.5%** Karnataka recovery (vs. 94.5%) * **Data & Risk Infrastructure:** **5 Cr+** Data points · **30+** AI/ML models · **100+** Risk team members ## B. Branch Network Expansion * **Rural Scaling:** Rapid physical expansion supported by the proprietary **Nu Score scorecard**, which now underwrites the entirety of rural loan originations. * **Granular Market Intelligence:** Presence across **680 districts** allows for localized risk monitoring and real-time assessment of market dynamics through a hybrid partner-branch model. ## C. Collection & Recovery Systems * **Asset Quality Optimization:** Significant uptick in MSME collection efficiency underpinned by a shift toward **100% registered mortgage structures** for property-backed loans. * **Regional Recovery:** Rural collections reached near-total efficiency, notably reversing previous regulatory-driven slippages in the Karnataka market. * **Productivity Tools:** Deployment of advanced digital collection systems to enhance field force output and enable data-driven delinquency monitoring. ## D. Technology & AI Underwriting * **Proprietary Risk Moat:** High-volume data ecosystem and machine learning models are utilized to ensure risk-adjusted returns **upward of 15%** in the digital lending space. * **On-Ground Validation:** Digital underwriting is augmented by physical oversight, with the risk team conducting annual site visits to **one-third of operational districts**. ## E. Partner & Distribution Mix * **Consumer Finance Distribution:** Portfolio is currently diversified across **28 partners**, with a strategic focus on managing concentration risks within this network. --- # 4. Capital & Funding Mix ## A. Key Figures * **Total Borrowings:** **₹12,258 Cr** · **~₹12,900 Cr** outstanding * **Liquidity Surplus:** **~₹1,250 Cr** * **Capital Adequacy Ratio:** **22.6%** * **Tangible Net Worth:** **₹3,896 Cr** (+13% YoY) * **Debt-Equity Ratio:** **3.1x** (vs. 3.9x in March 2024) ## B. Borrowing Diversification * **Strategic De-risking of Funding Base:** Successfully reduced reliance on bank borrowings from **65% to 52%** within one year, pivoting toward capital markets and offshore DFI partners. * **Robust Market Access:** Demonstrated strong institutional presence by placing nearly **₹10,000 Cr** in securitization deals and raising **₹8,000 Cr** in new debt despite a **50 bps** rise in G-Sec rates. ## C. Liquidity & Capital Adequacy * **Strong Growth Headroom:** Maintenance of a healthy capital adequacy ratio and significant liquidity surplus provides a solid buffer for future portfolio expansion. * **Improved Solvency Profile:** Significant reduction in leverage over a two-year period driven by a double-digit increase in tangible net worth. ## D. Interest Rate Strategy * **Shift to Fixed-Rate Liabilities:** Increased the share of fixed-rate instruments to mitigate interest rate volatility, reflecting management's view that rates have reached a cyclical floor. * **Hedging & Instrument Focus:** Prioritizing NCDs, ECBs, and PTC transactions to optimize the cost of funds amid higher hedging expenses. --- # 5. Regulatory & Credit Risks ## A. Key Figures * Stage-2 ECL Coverage: 12% (vs. 24% in December quarter) due to RBI guidelines and portfolio mix change * **Credit Cost Guidance:** **2.7% – 2.8%** Steady-state forward-looking * **FLDG Provisioning:** **₹68 Cr** Q4FY25 reserve · **₹29 Cr** Q4FY26 reversal * **High-Risk Sector Exposure:** **<2%** Gas, petrol, chemicals, and pesticides ## B. FLDG & ECL Provisions * **Regulatory Tailwinds:** Profitability is expected to stabilize following RBI’s February 2026 clarification allowing FLDG benefits to offset ECL requirements. * **Portfolio De-risking:** Significant reduction in Stage-2 provisioning driven by a mix shift, with **over 50%** of these assets now secured by FLDG coverage. * **Conservative Accounting:** Unsecured retail loans are written off at **90 DPD**, leaving Stage-3 assets primarily composed of secured MSME loans, which inherently require lower ECL. ## C. Sectoral Concentration & Macro Risks * **Calibrated MSME Exposure:** Management is tightening underwriting in the MSME segment to counter rising competition and localized stress. * **Geopolitical & Climate Overlays:** A prudent management overlay has been established to buffer against West Asia tensions and potential monsoon volatility. * **Resilient Momentum:** Despite historical disruptions and the **Karnataka microfinance ordinance**, the firm maintained disbursal momentum entering FY27. ## D. Interest Rate Sensitivity * **Hawkish Outlook:** Management signals that interest rates have bottomed; an RBI rate hike is anticipated due to inflationary pressures and incomplete banking transmission. --- # 6. Guidance & Outlook ## A. Key Figures * **Loan Growth Target:** **22% to 25%** FY27 (approx. 3x GDP) * **Return on Assets (ROA):** **3%+** overall · **4%+** consumer finance * **Return on Equity (ROE):** **15% to 17%** target (within 8-10 quarters) * **Credit Cost:** **2.8%** FY26 (Full Year) · **2.7% to 2.8%** FY27 Projection * **Cost of Funds:** **8.5% to 8.6%** FY27 Target ## B. Growth & ROE Targets * **Profitability Roadmap:** Management aims for mid-to-late teens equity returns by executing a risk-adjusted strategy over the next two years. * **High-Yield Segments:** The consumer finance book is expected to deliver superior risk-adjusted yields and returns significantly above the corporate average. ## C. Credit Cost Projections * **Stable Credit Quality:** FY27 credit costs are projected to remain consistent with prior performance, supported by a **₹66 crore** prudent overlay created for future uncertainty. * **Normalized Performance:** Adjusting for one-time overlays, the underlying credit cost reflects a normalized rate of **2.9% to 3%**. ## D. Margin & Yield Outlook * **NIM Expansion Drivers:** Net Interest Margins are expected to widen as the portfolio mix shifts toward a **65%** target, aided by a recovering Microfinance (MFI) market. * **Yield Optimization:** An increasing Direct-to-Consumer (D2C) mix is intended to bolster overall yields and mitigate potential margin compression. ## E. Strategic Product Roadmap * **Market Opportunity:** Strategy is aligned with capturing the massive projected household consumption market and the **INR 30 lakh crore** MSME credit gap through tech-led distribution. * **Segment Prioritization:** Launch of affordable housing products is deferred to prioritize the scaling of business loans and Loan Against Property (LAP) via the existing network.