# 1. Financial Performance ## A. Key Figures * **Total Income:** **₹2,187 Mn** Q1 FY'26 (+17%) * Disbursements: **₹7,581 Mn** Q1 FY'26 (+16%) * Net Interest Margin: 6.5% (+31 bps YoY) * Profit Before Tax: ₹636 Mn (+14%) · Profit After Tax: ₹472 Mn (+14%) * Return on Equity: 11.9% · Return on Assets: 3.7% * Capital Adequacy Ratio: 39.5% ## B. Revenue Growth * **Record Top-Line Performance:** Strong double-digit revenue growth driven by broad-based expansion across customer segments and geographies. * **Healthy Loan Demand & Collections:** Disbursements rose at a double-digit pace, reflecting robust demand for income-generating loans and efficient field-level collections. ## C. Net Interest Margin * **Margin Expansion Achieved:** NIM improved meaningfully on a year-on-year basis, supported by disciplined pricing and asset yield management. * **Sustainable Margin Profile:** Company expresses confidence in maintaining elevated margin levels amid continued focus on margin protection initiatives. ## D. Profitability Metrics * **Accelerated Bottom-Line Growth:** Profit growth outpaced top-line expansion, driven by operating leverage, cost discipline, and effective risk management. * **Healthy Capital Efficiency:** ROE and ROA remain solid despite growth investments, indicating efficient use of assets and equity. ## E. Balance Sheet Strength * **Resilient Capital Position:** Capital adequacy ratio remains strong, providing ample buffer to support future lending growth and absorb volatility. --- # 2. Loan Book & Asset Quality ## A. Key Figures * **AUM:** **₹520 Cr** (+14% YoY) * Disbursements: **₹7,581 Mn** (+16% YoY) * Gross NPA: 0.85% (improved) · Net NPA: 0.68% (improved) * Collection Efficiency: 99.8% (Q1 FY'26) vs. 99.2% (Q1 FY'25) ## B. AUM Growth * **Sustained Scaling:** AUM expansion reflects strong double-digit disbursement growth and robust demand, supported by a 25% 3-year CAGR, signaling durable franchise momentum. * **Portfolio Composition:** Microfinance accounts for **23% of AUM**, with **90% of exposure via co-lending**, minimizing balance sheet risk in this segment. * **Ticket Size Discipline:** Average loan size stands at **₹62 lakhs**, indicating focus on meaningful, asset-backed MSME/SME lending. ## C. NPA Trends * **High-Quality Underwriting:** Dominant MSME/SME portfolio benefits from asset-backed structures, local ecosystem expertise, and cash flow-based lending, driving **superior credit performance and low volatility**. * **Resilient Asset Quality:** Gross and net NPAs remain in decline, with management maintaining confidence in a **long-term NPA ratio below 2% including write-offs**. ## D. Collection Efficiency * **Strong Repayment Discipline:** Collection efficiency improved meaningfully year-on-year, reflecting portfolio resilience and effective collections infrastructure. --- # 3. Funding & Leverage ## A. Key Figures * **Total Borrowing:** **₹3,478.6 Cr** at **10.7% cost** (down from 13% five years ago) * Debt-to-Equity Ratio: 2.15x * ROE: 11.9% (Q1) * **Debt Mix:** **68%** banks/FIs · **18%** NCDs ## B. Borrowing Cost * **Favorable Liability Management:** Significant reduction in borrowing cost over five years reflects improved credit profile and benefit from declining interest rates. * **Strong Capacity for Growth:** Low debt-to-equity ratio provides substantial headroom to support expansion through incremental leverage. ## C. Debt Mix * **Stable Funding Base:** Dominant reliance on bank and FI borrowings underscores access to institutional credit, with NCDs forming a minor but strategic component. ## D. Leverage Ratio * **Underleveraged Position:** ROE currently constrained by conservative capital structure; **4x** leverage is well below peers, highlighting upside potential via optimal debt usage. --- # 4. Product & Segment Mix ## A. Key Figures * **Estimated Market Size:** **₹9,82,000 Cr** (total addressable market) * **Portfolio Allocation:** **23%** small income generation · **77%** MSME-SME AUM split ## B. SME-MSME Loans * **Strategic Expansion:** Co-lending extended to SME-MSME segment in Q1, marking a key shift beyond traditional small income generation focus. * **Hybrid Model Advantage:** Combines deep on-ground presence with scalable tech to serve underserved MSMEs, leveraging **SBI’s low-cost funds and infrastructure** for scale. * **Diversified Offerings:** SME-MSME borrowers access asset-backed loans, Udaan scheme, and working capital financing, reflecting a multi-product strategy. * **No Regional Constraints:** Management confirms **no geographical challenges** in MSME business, supporting national scalability. ## C. Income Generation Loans * **Progressive Customer Journey:** Entry-level Vikas loan transitions borrowers to Pragati micro-business loans, enabling structured financial inclusion. * **Product Breadth:** Five core loan products (Vikas, Umeed, Pragati, Do Ka Dum, Gati) serve new-to-credit rural and semi-urban populations. * **Current Co-Lending Focus:** All existing co-lending partnerships remain concentrated in the small income generation segment. ## D. Co-Lending Portfolio * **Established Banking Partnerships:** Five co-lending ties with major public and private banks, including SBI, PNB, BoB, Karnataka Bank, and UCO Bank. * **SBI as Pioneer Partner:** SBI onboarded the NBFC as one of its first co-lending partners in 2019, now expanded to include SME-MSME loans. * **Fee-Based Economics:** Servicing and processing fees from co-lending **fully cover operational costs**, ensuring capital-light scalability. --- # 5. Distribution & Expansion ## A. Key Figures * **Distribution Network:** **3,997** touchpoints across **22 states/UTs** (401 branches, 2,214 distribution points, 1,382 BCs) * **Branch Additions:** **50** new branches added in the quarter (record net addition) * Customer Base: Surpassed 11 million customers, with 1.5 million new customers added in Q1 ## B. Branch Network Strategy * **Data-Driven Expansion:** New branch locations selected via **geo-spatial mapping**, factoring in competitive intensity, economic activity, and credit performance trends. * **Cluster-Based Penetration:** Focus on deepening presence in high-potential districts first to build operational density, brand familiarity, and local risk oversight before regional spillover. * **Hybrid Growth Model:** Branch-led expansion remains a core pillar, integrated with BC and digital platforms to enable **scalable, capital-efficient growth**. ## C. BC Channel Growth & Inclusion * **BCs as Strategic Enablers:** Business correspondents form the backbone of last-mile delivery, leveraging local trust and cultural fluency to drive onboarding, risk assessment, and engagement. * **BaaS-Led Scale:** Partnerships with SBI, Bank of India allow compliant, low-cost delivery of deposits, remittances, and credit—accelerating reach without fixed infrastructure costs. * **Customer Pipeline Engine:** BC network drives first-time financial inclusion, builds brand equity, and creates a scalable funnel for future credit and cross-sell opportunities. ## D. Geographic Reach & Diversification * **Core Strength in North & Key States:** Historical concentration in northern India with **Delhi, UP, Maharashtra (~20% each)**, **Rajasthan, Haryana (15% each)**, and strong operational systems in these markets. * **Targeted Geographic Diversification:** Strategic push into new regions with low formal credit penetration and rising economic activity to capture untapped MSME/SME demand and de-risk regional concentration. --- # 6. Credit & Operational Risks ## A. Underwriting Standards * **Structural Resilience:** Largely insulated from sector-wide asset quality and regulatory pressures due to a differentiated model focused on income-generating loans for micro-entrepreneurs. * **Data-Driven Risk Assessment:** Proprietary **CCC model (Character, Credit Evaluation, Credibility)** integrates geospatial mapping, field investigations, and **AI/ML analysis of digital footprints** to assess borrower integrity and repayment discipline. * **Advanced Decision Engine:** In-house rule-based engine assigns internal borrower ratings using multi-parameter analysis, supported by **account aggregator data**, **KPIs**, and alternate data sources to validate income and indebtedness. * **Proactive Risk Monitoring:** **Early Warning System (EWS)** with automated triggers enables real-time detection of behavioral shifts and localized risks, enhancing portfolio oversight. ## B. Loan End-Use Monitoring * **Purpose Verification & Security:** Strict loan end-use monitoring ensures fund accountability; key products secured via **hypothecation of business inventory**—not fixed or specialized movable assets—providing collateral while preserving operational flexibility. ## C. Concentration Risk * **Geographic Diversification:** Deliberate spread across regions to reduce exposure to localized economic shocks and customer segment-specific downturns, supporting portfolio stability. --- # 7. Guidance & Outlook ## A. Key Figures * **ROE:** **12%** (sustainable, up from 7%-8% over 2 years) · Operating at **5x leverage** ## B. Co-Lending Expansion * **Strategic Scaling:** Accelerating asset-light growth via new and expanded co-lending partnerships with SBI, now extending into **MSME and SME segments**. * **Near-Term Catalyst:** Full operational rollout of SBI co-lending in MSME/SME expected by **Q4 FY26**, with performance anticipated to mirror prior success. * **Strong Start to FY26:** Business momentum remains robust at the start of the fiscal year, underpinned by inclusive lending focus. ## C. ROE Trajectory * **ROE Expansion Pathway:** Sustainable 12% ROE achieved despite conservative leverage; further gains expected from higher-margin co-lending model.