Finkurve Fin. Q1 FY27 earnings call

Finkurve Financial Services Limited reported a robust Q1 FY27, with Asset Under Management (AUM) growing by an impressive 135% year-on-year. This growth was complemented by a significant expansion in its physical footprint, as the branch network increased by 42%, from 83 to 118 branches as of June 30, 2026. Management indicated that 50% of the YoY AUM growth was driven by tonnage and the other 50% by price, with customer additions increasing by 15-20% month-on-month.

The company's financial performance saw revenues increase by almost 89% and Profit After Tax (PAT) by nearly 65% year-on-year. Despite this growth, the Return on Assets (ROA) stood at 2.9%, which management attributed to increased leverage and associated finance costs. However, the average Return on Equity (ROE) improved from 8.1% in Q1 last year to 9.7% this quarter. The debt-to-equity ratio increased to 2.9x from 0.7x, while capital adequacy remained healthy at 26.6%, providing a strong foundation for future expansion.

Finkurve maintained stable asset quality, reporting a Gross NPA of 0.54% and a Net NPA of 0.48%. The company also highlighted a comfortable liquidity position, with Rs. 56 crores in cash in hand and Rs. 67 crores in treasury investments as of June 30. Management noted that there is still a runway of approximately Rs. 800 crores before reaching optimal leverage status, indicating ample room for further growth without immediate capital constraints.

The company continued to scale its co-lending partnerships and saw traction in cross-sell initiatives, aiming to build a stronger fee income franchise. Significant strides were made in strengthening governance, including the onboarding of Mr. CVR Rajendran as Additional Director, Mr. Raju Shah as Chief Risk Officer, and Mr. Husain Pittalwala as Head of Compliances. These appointments underscore the commitment to robust risk management and regulatory adherence, especially in light of new RBI guidelines.

Management expects lending yields to stabilize around 20-20.5% and anticipates a 50 bps growth on the yield side, coupled with some deduction in the cost of funds due to an expected re-rating and increased co-lending share (target 15-20% by FY27 end). For the long term (next 5 years), the company targets an ROA of 3-3.5% and an ROE of 18%, aiming to achieve these by reaching a certain size and scale that allows for better operating leverage.

The company's expansion strategy focuses on organic growth in adjacent states, aiming to reach an average AUM of Rs. 12-13 crores per branch from the current Rs. 10.3 crores. New branches are expected to break even within 12-18 months, with a breakeven AUM of Rs. 5-6 crores. This disciplined approach to expansion is intended to ensure sustainable growth and operational efficiency.