# 1. Financial Performance ## A. Key Figures * **Net Interest Income:** **₹480 Cr** (Q2 FY'26) (+57% YoY, +15% QoQ) * **Non-Interest Income:** **₹203 Cr** (Q2 FY'26) (+97% YoY, +22% QoQ) · **8%** of total net income * **Pre-Provision Operating Profit:** **₹345 Cr** (+137% YoY) * **Cost-to-Income Ratio:** **49%** (Q2 FY'26) vs. 64% (Q2 FY'25) * **Net Interest Margin (NIM):** **+60 bps QoQ** * Capital Adequacy Ratio: 32.9% (CGCL) · 26.1% (CGHFL) post ₹2,000 Cr equity infusion * **Leverage Ratio:** **2.5x** · **Liquidity:** **>₹3,200 Cr** ## B. Revenue Growth * **Broad-Based Income Expansion:** Strong double-digit growth in both net interest and non-interest income, driven by loan book expansion, pricing power, and high-margin fee streams. * **Fee Income Diversification:** Non-interest income gains anchored in **co-lending (₹81 Cr)** and **insurance distribution (₹28 Cr)**, with new products and digital platform rollout enhancing scalability. * **Yield Outlook:** Portfolio yield at **5%**, with **upside of ~25 bps** expected from gold loans, Micro LAP, and stabilized affordable housing yields. ## C. Profit Margins * **Margin & Efficiency Leap:** Significant YoY spread expansion and cost discipline drove record pre-provision profit and a sharply improved cost-to-income ratio. * **NIM Rebound:** QoQ NIM improvement supported by **spread gain of 20 bps** and **lower funding costs**, with structural tailwinds from asset mix shift toward gold loans and Micro LAP. * **Cost Dynamics:** Sequential cost increase largely explained by reversal of prior quarter’s **one-off gain (₹15 Cr)**, with underlying operating expense growth moderating to **18% QoQ**. ## D. Balance Sheet Strength * **Capitalized for Growth:** Equity infusion has strengthened capital adequacy across entities, enabling accelerated lending and de-risked expansion. * **Liquidity Cushion:** Robust liquidity position supports funding flexibility and buffers against market volatility. --- # 2. Loan Book & AUM Growth ## A. Key Figures * **Consolidated AUM:** **₹27,040 Cr** (Sep 2025) (+40% YoY, +9% QoQ) * **Gold Loan AUM:** **₹10,406 Cr** (+58% YoY) · **4 tonnes** collateral increase (+18% YoY) * **Housing Loan AUM:** **₹5,972 Cr** (+37% YoY) · **Co-lending AUM:** **₹5,677 Cr** (+61% YoY, 21% of total AUM) * **MSME AUM:** **₹5,602 Cr** (+18% YoY) · **Micro LAP AUM:** **₹543 Cr** (137 locations) * **Construction Finance AUM:** **₹4,969 Cr** (+48% YoY) · **Avg. sanction: ₹51 Cr**, **Outstanding: ₹17 Cr** * **Disbursements (Q):** **₹8,952 Cr** (+64% YoY) · **Car loan originations: ₹2,830 Cr** (+14% YoY) ## B. AUM Expansion * **Robust Growth Trajectory:** Consolidated AUM achieved strong double-digit YoY and sequential expansion, driven by broad-based momentum across all lending segments. * **Capital Efficiency via Co-Lending:** Co-lending now represents a fifth of AUM, enabling full spread capture on 100% of loans with only **20% capital exposure**, reinforcing a scalable, capital-light growth model. * **Productivity Gains:** AUM per branch and per employee improved meaningfully, signaling better operational leverage and field execution. * **Gold Loan Momentum:** Surge in gold loan AUM fueled by rising gold prices, increased top-up demand, and strong customer reutilization behavior. ## C. Segment-wise AUM * **Gold Loans as Core Engine:** Segment surpassed ₹10,000 Cr AUM with **55% repeat borrowers**, digitized underwriting (<30 min TAT), and branches exceeding **₹5 Cr breakeven threshold**, confirming scalability and high customer stickiness. * **Strategic Portfolio Mix:** Targeting ~40% AUM in gold loans and 20–22% combined in housing, MSME, and construction finance, reflecting balanced risk and yield optimization. * **MSME Expansion with Focus:** Growth supported by new branches in Uttar Pradesh and launch of **MSME Prime** for low-risk urban self-employed, while Micro LAP scales footprint into South India. * **Construction Finance Stability:** Portfolio maintains granular risk profile with small average ticket sizes and diversified exposure across 286 projects in metro and Tier 1 cities. ## D. Disbursement Volume * **Record Disbursements:** Quarterly disbursements surged to a record high, reflecting expanded distribution reach and a growing customer base exceeding **9 lakh borrowers**. * **Car Loan Monetization Pathway:** Pan-India distribution network and **13 institutional partnerships** underpin growth in car loan originations, creating optionality for future revenue diversification. --- # 3. Branch & Network Expansion ## A. Key Figures * **Branch Network:** **1,224** locations (+86 net additions) * **Gold Loan Branches:** **842** current count, targeting **995** by FY '26 end * **Employee Base:** **12,197** (+6% QoQ) * **MSME & Micro LAP Customers:** **45,505** combined ## B. Branch Additions * **Strategic Expansion:** Added **21 gold loan branches** and entered **Bihar**, deepening reach in high-growth heartland states. * **National Housing Push:** Launched **4 housing finance branches in Telangana**, marking entry into Southern India and advancing national footprint in housing. * **Segment Focus:** Net **86 new branches** added, with **43 in Micro LAP** and **13 in MSME**, signaling renewed emphasis on these higher-growth segments. * **Operational Efficiency:** Expansion of **~200 branches** planned over next two quarters, including **~150 gold loan branches**, while maintaining stable **cost-to-income ratio**. ## C. Geographic Reach * **Portfolio Diversification:** Strategic pivot back toward **MSME and housing finance**, with Micro LAP emerging as a key growth engine since its launch 1–5 years ago. ## D. Employee Growth * **Workforce Scaling:** Headcount growth of **6% QoQ** supports network expansion and operational complexity across segments. --- # 4. Funding & Cost of Capital ## A. Key Figures * **Funds Raised:** **₹400 Cr** via NCDs (up to 7% coupon, 4-year tenure) * Cost of Funds: 9.6% current rate, expected decline of 30–40 bps over 2–3 quarters * **Borrowing Growth:** **31% YoY increase** in borrowings · **₹3,500 Cr** incremental sanctions YTD ## B. Cost of Funds * **Downward Pressure on Funding Costs:** Cost of funds poised to decline by 30–40 bps driven by lower MCLR, annual resets, and funding diversification—**without assuming further RBI rate cuts**. * **Stable Lending Yields Despite Rate Cuts:** Housing yields remain resilient due to competitive dynamics, customer segmentation, and strategic yield management, even after 100 bps in repo rate reductions. ## C. Borrowing Mix * **Funding Diversification Accelerating:** Increased use of commercial paper and successful NCD issuance are expanding the borrowing toolkit and reducing reliance on traditional sources. ## D. NCD Issuance * **Strong Market Reception for Maiden NCD:** Oversubscription across all investor categories underscores robust confidence in the company’s governance and growth trajectory. --- # 5. Asset Quality & Credit Metrics ## A. Key Figures * **Impairment Costs:** **₹31 Cr** (Q2 FY'26) from ₹81 Cr (Q1 FY'26) (6% of gross loan book) * **Stage 3 Assets:** **Down ₹61 Cr QoQ** · **Gross Stage 3:** 3% (-39 bps) · **Net Stage 3:** 0.7% (-26 bps) * **Provision Coverage (Stage 3):** **43%** · **Stage 3 ECL Provision:** **Down ₹19 Cr** QoQ * MSME Gross NPA: 3.1% (from 4.3% QoQ) * **Credit Cost Guidance:** **80–90 bps** (revised from 70 bps) · Historical credit costs **<1%** ## B. NPA Levels * **Sharp Improvement in Asset Quality:** Significant decline in impairment costs and Stage 3 assets driven by proactive portfolio actions, including the **sale of ₹79 Cr MSME loans to an ARC**. * **Risk-First Underwriting Reinforced:** Disciplined construction finance practices—escrow controls, due diligence—and strong performance in the **Micro LAP portfolio** underscore resilient credit architecture. * **Technology-Led Recovery Enhancement:** **₹29 Cr tech investment** in AI and digital auction platforms is improving realization rates and recovery efficiency for repossessed assets. * **Co-Lending Structural Advantage:** Credit risk in co-lending resides with banks, preserving NBFC balance sheet capacity and not impacting borrowing limits. ## C. Credit Cost Guidance * **Conservative Re-Rating of Credit Costs:** Guidance increased to **80–90 bps** despite stable historical performance (~70 bps), reflecting prudence amid **growing Micro LAP exposure**. * **Credit Cost Resilience Expected:** Management maintains **long-term view that credit costs will not exceed 1%**, supported by low stress in gold loans and containment in mortgage segments. * **Proactive Risk Monitoring:** Deployment of **AI-based bureau analytics** and shift to real-time data systems enable faster, more accurate credit decisions and early warning signals. --- # 6. Risks & Regulatory Exposure ## A. Regulatory & Framework Resilience * **Stable Co-Lending Outlook:** Transition to the common new CLM framework not expected to have material impact, with full alignment anticipated across banks. ## B. Portfolio Quality & Product Dynamics * **Disciplined Housing Exposure:** Strong housing market performance underpinned by strict underwriting, with financing limited to **residential projects** and disbursements tied to **construction progress**. * **Gold Loan Demand Drivers:** Client preference for gold loans driven by **30-minute disbursal** and minimal credit checks, highlighting demand for speed and convenience over cost optimization. ## C. ESG Risk De-rating * **Meaningful ESG Improvement:** Sustainalytics ESG risk score upgraded from high to medium risk, reflecting enhanced governance and data-driven risk reporting. --- # 7. Guidance & Outlook ## A. Key Figures * **AUM Guidance:** **₹32,000 Cr** FY26 · **₹42,000 Cr** FY27 * **PAT Guidance:** **₹850 Cr** FY26 · **₹1,200 Cr** FY27 * **Q2 FY26 PAT:** **₹236 Cr** (+143% YoY) * **ROA/ROE Targets:** **4–5% ROA** and **16–18% ROE** by FY28 ## B. AUM Projections * **Accelerated Growth Trajectory:** Revised guidance implies a **35% CAGR** in AUM, up from prior 30%, supported by strong H1 performance and ongoing branch expansion. * **Feasibility Under Scrutiny:** Analyst concerns raised over sustainability of **30%+ YoY AUM growth** given deceleration from 46% in March ’25, though management affirms target achievability. ## C. ROA & ROE Outlook * **ROA Calculation Clarified:** Management emphasizes use of **average assets**, not year-end AUM, to compute ROA; on-book ROA (80% of book) expected to exceed **4%**, with co-lending diluting headline AUM-based returns. * **Profitability Consistency Defended:** Despite apparent gap between **₹1,200 Cr PAT** and **₹42,000 Cr AUM**, management asserts alignment with **4% ROA** when using average asset base; long-term floor of **4% ROA** reaffirmed for FY27–FY28. * **Co-Lending Boosts ROE:** Stable spreads and fee income in co-lending model, with lower capital intensity, are expected to support **sustained ROE of 16–18%**.