Emerald Finance

Emerald Finance reported robust Q2 FY26 results. On a stand-alone basis, total income increased by 66% year-on-year to INR 5 crores, and net profit more than doubled to INR 3 crores. Consolidated figures also showed strong growth, with total income rising 38% to INR 7 crores and net profit jumping 75% to INR 4 crores, reflecting consistent operational momentum.

For the first half of FY26, the company maintained its growth trajectory. Stand-alone total income grew 77% to INR 10 crores, with net profit increasing 121% to INR 6 crores. Consolidated H1 income rose 45% to INR 14 crores, and net profit grew 81% to INR 7 crores, underscoring the strength of its asset-light model and effective cost management.

The EWA vertical continues to be a key growth driver. Monthly disbursements reached INR 6 crores last month, with a target to grow to INR 13-15 crores by the end of FY26, at a month-on-month growth rate of 10-12%. The company has onboarded 145 corporates, with 120 currently active, and aims to reach 250 corporates by the end of FY26, maintaining a monthly onboarding rate of 20-25 corporates.

Emerald Finance's gold loan syndication business saw significant traction, with over INR 115 crores syndicated this quarter, compared to INR 80 crores in the previous quarter. This is a fee-based activity not booked on the company's balance sheet. Additionally, the company is actively cross-selling various loan products, including personal, business, vehicle, gold, and home loans, to its EWA customer base through its subsidiary Eclat, generating INR 4 crores in cross-sell this quarter.

The company's EBITDA margin currently stands at 78% and is expected to remain sustainable between 75-80%. While the PAT margin is currently 52%, management plans to stabilize it between 40-45% in the longer term as interest expenses may increase with scaling. The current Return on Equity (ROE) is around 14%, and Return on Capital Employed (ROCE) is 18.4%.

Emerald Finance's total borrowings increased slightly from INR 13 crores in March to INR 14 crores. The company's debt-to-equity ratio is currently 0.2, with a target to sustain it between 0.5-1x, indicating room for future leverage. Management is actively seeking to raise more debt from banks and NBFCs, anticipating a 0.5% reduction in its previous cost of funding of 10.5%.

Operational costs were optimized due to a shift towards direct business sourcing by employees, reducing commissions paid to sub-DSAs. In terms of asset quality, the company reported one business loan NPA of INR 30,000, which has been written off but recovery is hoped for. Additionally, two EWA employee accounts are in DPD 30+ (INR 8,000 and INR 6,000), but have not yet reached 90+ DPD.

The company demonstrated its commitment to social responsibility by spending INR 30 lakhs on CSR activities in H1 FY26, primarily supporting cancer patients and girls' education. This significantly exceeds the full-year regulatory requirement of INR 8 lakhs, highlighting a voluntary commitment to social causes.