Moneyboxx Fin. — Q3 FY25 earnings call

Call held 11 Feb 2025

Management summary

Moneyboxx Finance Limited reported strong growth in AUM and total income for Q3 FY25, driven by strategic branch expansion and a shift towards secured lending. However, asset quality deteriorated with rising NPAs and credit costs, primarily due to industry-wide stress in the unsecured segment. The company is implementing aggressive collection strategies and aims to normalize asset quality and reduce operating expenses in the coming quarters.

Highlights

  • Assets Under Management (AUM) grew 56% YoY to INR 837 crores.

  • Q3 FY25 disbursements increased 8.3% YoY to INR 168 crores.

  • Total income for Q3 FY25 rose 54.6% YoY to INR 51.8 crores.

  • Profit After Tax (PAT) for Q3 FY25 stood at INR 0.2 crores.

  • Secured loan book now constitutes 38% of AUM, up from 17% in Q3 last year, targeting 60% by FY25 end.

  • Gross NPA (Stage 3) increased to 5.6% in Q3 FY25 from 2.78% in Q2 FY25.

  • Net NPA increased to 2.88% in Q3 FY25 from 1.41% in Q2 FY25.

  • Credit cost as a percentage of average AUM was 4.7%.

  • Collection efficiency (current & up to 30 DPD) improved to 97.3% in December '24.

Concerns

  • Industry-wide stress in unsecured loan segment

Key financials

2 periods

Headline

  • AUM
    ₹837 Cr
    YoY +56%
  • Gross NPA (Stage 3)
    5.6%
  • Net NPA
    2.9%
  • Credit Cost (% of Avg AUM)
    4.7%
  • NIM
    16.6%
  • Capital Adequacy
    35.8%

Q3

  • Disbursements
    ₹168 Cr
    YoY +8.3%
  • Total Income
    ₹51.8 Cr
    YoY +54.6%
  • PAT
    ₹0.2 Cr

What they filed

Q1 FY27: revenue down 11.9%, net profit down 12.5% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue49 52 52 59 55 +11%55 +6%63 +21%52 −12%
EBITDA19 18 15 23 24 +21%— — —
Net profit2 0 -5 0 0 −86%0 +75%0 +109%0 −12%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

high confidence
  • Liquidity Liquidity disclosed The company strengthened its capital position by announcing an equity raise of INR 175.8 crores, with INR 91.08 crores received in September '24 and INR 84.72 crores receivable by March 2026. Net worth increased from INR 169 crores (March '24) to INR 265 crores (December '24). Capital adequacy remains healthy at 35.76% and the debt-equity ratio is low at 1.78x.
    Further, the company strengthened its capital position by announcing an equity raise of INR175.8 crores out of which INR91.08 crores was received in September '24 and the balance INR84.72 crores is receivable by March 2026, which will provide adequate cushion for any further down trend. With this fund raise, net worth increased from INR 169 crores as of March 2024 to INR265 crores as of December 2024. And the expected capital infusion of INR84.72 crores on warrants conversion will increase the capital base to over INR350 crores. Capital adequacy remains healthy at 35.76% and the debt-equity ratio remains low at 1.78x as of December 31, 2024.

Guidance & targets

Operating Expenses

  • Opex as % of AUM Operating Expenses · FY26 · High confidence 10%
    Reducing operating expenses remains a key long-term objective, and we are on track to achieve our target of bringing the opex down to 10% by financial year '26.

    — Mayur Modi

Secured Loan Book

  • Secured loan book as % of AUM Secured Loan Book · end of financial year '25 · High confidence 60%
    Our secured loan book now makes up approximately 38% of the AUM as of quarter 3 financial year '25, rising from 17% in quarter 3 last year, and is expected to reach 60% by the end of financial year '25.

    — Mayur Modi

Collection Efficiency

  • Collection efficiency (0-90 DPD) Collection Efficiency · by June · Medium confidence Normal level
    So at least in the 0 to 90 bucket, everything will be corrected within next 4 to 5 months. Result will be seen month-on-month, but I hope the complete reversal will happen in another 4 to 5 months.

    — Deepak Aggarwal

Growth Rate

  • Overall growth rate Growth Rate · this year (FY25) · Medium confidence 25-35%
    This year has been exception because you know how the market is doing. So maybe for this year, I'm saying that anywhere between 25% to 35% growth rate this year.

    — Mayur Modi

Secured AUM

  • Secured AUM as % of total Secured AUM · next year (FY26) · High confidence 65%
    Next year, we should cross 65% in secured, maybe even more.

    — Deepak Aggarwal

What to watch in Q4 FY25

Opex as % of AUM

FY26
Current 12.6% (9M FY25)
Target Progress towards 10%

Why it matters

Key to improving overall profitability and operational efficiency.

Reducing operating expenses remains a key long-term objective, and we are on track to achieve our target of bringing the opex down to 10% by financial year '26.

Risks & concerns

  • Industry-wide stress in unsecured loan segment

    high

    This stress has led to a decline in asset quality and increased credit costs for the company.

    Management acknowledged

  • Global medium-term risks

    medium

    Geopolitical tensions, trade barriers, climate disruptions, weakening urban demand, and weak export performance could have a spillover effect on the financial system.

    Management acknowledged

  • Short-term impact on ROE and ROA

    medium

    Ongoing branch expansion is leading to increased operating expenses, which has a short-term negative impact on profitability metrics.

    Management acknowledged

Q&A highlights

7 direct
Resignation of internal auditor Direct
So basically, as we clarified also on the BSE, so it's not Viral Sheth has resigned from the organization. He remains Finance Controller of the company. It is just that there was too much on his table, and we had a new hire in internal audit function. So, Saurabh will take care from here. So, it is just that he was preoccupied with many other things. That's the only reason.

Clarifies a governance-related concern about a key internal role, indicating a restructuring of responsibilities rather than a departure.

Asked by Nisarg Vora

Intensifying collection efforts and preventing 30-90 DPD slippage Direct
So, as we have already also given in our presentation, so there are multiple steps taken through all the buckets. So, as we said in 0 to 30, we were not doing other than the LRO collection, the relationship manager collecting, we have introduced a telecalling. We have introduced SMS bot IVR as an additional help in the 0 to 30. In 30 to 60 bucket we have introduced a new line of credit officers, which will collect in that level.

Details the multi-pronged strategy being implemented to improve collection efficiency across different delinquency buckets, addressing a key asset quality concern.

Asked by Nisarg Vora

Secured loan collection efficiency being worse than Q1 and the nature of 'secured' loans Partial
No, secured is definitely secured. So, it is as secured as you see in the competition. It is just that a little bit impact of clientele getting impacted for a period of time because of which has been earlier also said that election heat wave steps and these clientele got more impacted than others. We had this portfolio, which is a livestock portfolio and the main income, maybe the 70%, 80% of income was from the milk, but there was this, as we always maintained that all our cattle customers have a secondary income, which in a large part is Agri income as well.

Addresses a critical question about the effectiveness of secured lending in the face of stress, attributing the current dip to specific customer profiles (livestock/agri income) impacted by external factors, while reaffirming the underlying security.

Asked by Nisarg Vora

Factors driving the strategic shift towards secured lending and its impact on profitability and risk management Direct
The biggest driver is the management call that we want to become a secured lender largely. So historically also, we have committed the same number, same thing that we started more as an unsecured lender, but the basic concept was there that we will fund only people having a self-occupied residential property, right, and they are natives of that place.

Explains the fundamental strategic rationale behind the shift to secured lending, emphasizing risk mitigation and long-term stability, which is crucial for understanding the company's future direction.

Asked by Saloni Shah

Changes to underwriting process to mitigate risk and outlook for credit costs Direct
One is when you said unsecured, the shift towards secured. The second is even in terms of clientele, how we are communicating with the team that we have to shift, make a shift towards more of a micro where we were saying that in the context from rural to rural and semi-urban and from just micro to small.

Details how the company is refining its underwriting by shifting towards secured loans and targeting a different clientele (micro to small), which is expected to improve asset quality and reduce credit costs.

Asked by Saloni Shah

Aggressive branch expansion strategy and its anticipated impact on business growth Direct
So basically, the strategy is in line with what the way we started that we will expand at least 60 branches, maybe 3 or 4 more will come in this financial year. But what has happened here is that we are now a pan-India franchise. So, with adding 4 South states, so now we have presence across India, largely, you can say. So that was one part.

Explains the rationale behind the rapid branch expansion, highlighting the goal of becoming a pan-India franchise and diversifying across regions and products to support AUM growth.

Asked by Devang Mehta

Effectiveness of legal actions for delinquent accounts Direct
Specifically on the legal action, it is not I would say, too early. One is with notices, with just notices, there is impact on collection, which happens. With respect to going legal see, last year, we only filed 10 cases, which was in H1. And in those actually 9 cases, in those 9 cases, in 4 cases, there is arrest warrant, which is already there. This quarter, we are doing about 170 filings in terms of legal.

Provides an update on the company's increasing reliance on legal recourse for recovery, indicating a more aggressive stance against delinquencies and its potential impact on future recoveries.

Asked by Sahil Vora

Reasons for noticeable increase in gross and net NPA levels Direct
The key is the flow. It's simple that the clientele, which moved to 90-plus bucket got increased. So last quarter, we had INR18 crores worth of clientele, which moved to 90-plus bucket. And that's why the INR9 crores of INR9.14 crores of provisioning, which has happened in this quarter.

Directly addresses the root cause of the NPA increase, linking it to a specific amount of clientele moving into higher delinquency buckets and the resulting provisioning.

Asked by Yash Matre

3 min read 6 chapters

Detailed narrative

Macroeconomic Environment and NBFC Sector Outlook

The Indian economy continues to expand, albeit at a slightly moderated pace, with the RBI forecasting 6.7% GDP growth for FY26. Headline inflation eased to 5.2% in December '24, leading the RBI to cut the repo rate by 25 basis points to 6.25%. While the NBFC sector shows resilience with strong capital buffers, global medium-term risks like geopolitical tensions and climate disruptions could pose spillover effects.

Q3 FY25 Financial Performance Overview

Moneyboxx Finance reported robust growth, with Assets Under Management (AUM) reaching INR 837 crores, a 56% year-on-year increase. Disbursements for Q3 FY25 were INR 168 crores, up 8.3% YoY. Total income grew 54.6% YoY to INR 51.8 crores, while Profit After Tax (PAT) stood at INR 0.2 crores. The company's Net Interest Margin (NIM) remained stable at 16.6%, with operating expenses as a percentage of AUM at 12.6% for 9M FY25.

Strategic Shift Towards Secured Lending

The company is strategically shifting its portfolio towards secured lending, with the secured loan book now constituting 38% of AUM in Q3 FY25, a significant rise from 17% in Q3 last year. This proportion is targeted to reach 60% by the end of FY25 and 65% by FY26. This shift aims to strengthen asset quality, enhance risk management, and build a more resilient loan book, leveraging lower borrowing costs and longer maturity periods associated with secured assets.

Asset Quality Challenges and Enhanced Collection Efforts

Asset quality deteriorated in Q3 FY25, with Gross NPA (Stage 3) rising to 5.6% from 2.78% in Q2 FY25, and Net NPA increasing to 2.88% from 1.41%. This was attributed to industry-wide stress in the unsecured segment and specific impacts on livestock-dependent customers. In response, Moneyboxx has intensified recovery efforts, including a dedicated collection team of over 100 members, telecalling agencies, digital interventions, and increased legal recourse (170 filings in Q3 FY25). Collection efficiency (current & up to 30 DPD) improved to 97.3% in December '24, with a target to normalize 0-90 DPD buckets by June.

Branch Expansion and Diversified Lending Partnerships

Moneyboxx significantly expanded its operational footprint, growing from 86 branches in 8 states in December last year to 160 branches across 12 states. This expansion, particularly into new markets like Andhra Pradesh, Telangana, Karnataka, and Tamil Nadu, aims to establish a pan-India presence and diversify the portfolio. The company successfully onboarded three new lending partners in Q3 FY25 (Indian Overseas Bank, Bajaj Finance Limited, Nabkisan Finance Limited), and Suryoday Small Finance Bank in January, bringing the total to 33 partners, including 12 banks.

Capital Position and Future Outlook

The company strengthened its capital position with an equity raise of INR 175.8 crores, of which INR 91.08 crores were received in September '24, and the remaining INR 84.72 crores are receivable by March 2026. Net worth increased to INR 265 crores by December '24, and capital adequacy remained healthy at 35.76%, with a low debt-equity ratio of 1.78x. Management anticipates further improvements in the coming quarters driven by an uptick in rural demand and continued refinement of credit assessment frameworks.

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