Moneyboxx Fin.

Moneyboxx Finance Limited reported a 27% year-on-year growth in AUM, reaching INR 927 crores in FY25, up from INR 730 crores in FY24. Total income for FY25 increased by 56% year-on-year to INR 199 crores, with Net Interest Income growing 60% to INR 136 crores. Despite this growth, Profit After Tax for FY25 significantly declined to INR 1.25 crores from INR 9.14 crores in FY24, primarily due to higher NPA provisions. The Net Interest Margin remained stable at around 16.23% for Q4 FY25.

The company is undergoing a strategic shift towards secured lending, with the secured loan book now representing 45% of total AUM in Q4 FY25, a substantial increase from 24% in Q4 FY24. This shift is driven by new branch expansions in states like Gujarat and Bihar, which exclusively focus on secured business, and a deliberate move towards customers with better collateral and multiple income sources. Management aims to increase secured AUM to approximately 65% by March 2026 and further to 75-80% by FY27, expecting a more resilient and lower-risk portfolio.

Asset quality faced challenges in FY25, with Gross NPA rising to 6.61% and Net NPA to 3.42% in Q4 FY25, attributed to rural economic slowdown, heatwaves, and RBI tightening for unsecured lending. However, collection efforts have shown significant improvement, with overall collection efficiency (current and up to 30 days past due) reaching 99.4% in March 2025, up from 97.3% in December 2024. The company has built a robust collection infrastructure, including telecallers and state-level teams, and expects stabilization in the 0-90 days past due bucket by Q1 FY26.

Operating expenses as a percentage of AUM remained at 12.8% in FY25, similar to 12.7% in FY24, primarily due to branch expansion and lower-than-expected AUM growth. Management acknowledges that operating expenses are highly dependent on AUM scale and aims to reduce this ratio to between 11-12% in FY26 and below 10% over the next two years. The focus for the current year is on optimizing existing branches and growing AUM with the current manpower to improve operational leverage.

Moneyboxx Finance successfully raised INR 185 crores in NCDs during FY25, with INR 165 crores raised in a single month, strengthening its funding profile. The average cost of borrowing for FY25 was 13.1%, with the marginal cost at 12.3%, reflecting benefits from improved credit rating and scale. Management anticipates a further 3-3.5% reduction in borrowing costs over the next two to three years. The company maintains a healthy capital adequacy ratio of 29.25% and a debt-to-equity ratio of 2.44x, supported by INR 270 crores in equity raised since inception.

Management noted that FY25 was a challenging year for the industry, particularly for lenders with rural exposure, due to factors like elections, heatwaves, floods, and RBI's tightening of unsecured lending norms. Despite these headwinds, the broader economic environment in India remains encouraging, with projected GDP growth of 6.5% in FY26 and an optimistic agricultural outlook. The company expects FY26 to be a 'year of recovery' and FY27 to show 'very, very significantly better' results, driven by its strategic shifts and operational improvements.