Akme Fintrade (India) Limited — Q3 FY25 earnings call

Call held 10 Feb 2025

Management summary

Akme Fintrade delivered a strong Q3 FY25, showcasing robust growth in AUM, profitability, and disbursements, coupled with significant improvements in asset quality. The company secured new funding and achieved a rating upgrade, reinforcing its financial stability. Strategic initiatives, including digital transformation and entry into EV financing, are underway to drive future growth, supported by ambitious long-term AUM and PAT targets.

Highlights

  • Asset Under Management (AUM) grew by 30% year-on-year to ₹523 crores in Q3 FY25.

  • Quarterly Profit After Tax (PAT) increased by 110% year-on-year to ₹8.93 crores, also showing a 9.69% quarter-on-quarter growth.

  • Disbursements for Q3 FY25 reached ₹70.12 crores, an impressive 185% year-on-year and 18% quarter-on-quarter growth.

  • Asset quality improved significantly, with Gross NPA reducing to 2.86% (from 3.13% in Q2 FY25) and Net NPA to 1.27% (from 1.47% in Q2 FY25).

  • The company received a rating upgrade from BBB Stable to BBB+ Stable, which is expected to reduce borrowing costs.

Concerns

  • Operational cost increased by 17.69% quarter-on-quarter, primarily due to business expansion and new hiring.

  • An analyst raised a concern that the proposed stock split could lead to the shares being perceived as a 'penny stock'.

Key financials

  1. AUM ₹523 Cr +30%YoY
  2. Quarterly PAT ₹8.93 Cr +110%YoY
  3. Disbursements ₹70.12 Cr +185%YoY
  4. Gross NPA 2.9%
  5. Net NPA 1.3%
  6. CRAR 65%
  7. Return on Equity 11.6%
  8. Operational Cost Increase 17.7% +17.7%QoQ

What they filed

Q1 FY27: revenue up 31.3%, net profit up 20.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue24 28 29 32 35 +46%40 +43%43 +48%42 +31%
EBITDA18 21 23 24 27 +50%— — —
Net profit8 9 8 10 10 +25%10 +11%12 +50%12 +20%
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.

Segment breakdown

  • Vehicle Loan Segment
    37% Growth31.6% Share of Overall Portfolio3% GNPA
  • MSME Business Loans
    2.8% GNPA

Guidance & targets

AUM

  • AUM AUM · Q4 FY25 · High confidence ₹600 crores
    We are projecting our total AUM of Rs. 600 crores by the end of March quarter.

    — Akash Jain

  • AUM Growth AUM · FY26 · High confidence 60%
    we are expecting that we will grow our AUM by around 60% in the next year

    — Akash Jain

  • AUM AUM · March 2026 · High confidence ₹1,000 crores
    So, we are targeting AUM of around Rs. 1,000 crores by the end of March 26

    — Akash Jain

  • AUM Growth AUM · FY27 · High confidence 50%
    and around further 50% in financial year 27.

    — Akash Jain

  • AUM AUM · March 2027 · High confidence ₹1,500 crores
    and around Rs. 1,500 crores by the end of March 27.

    — Akash Jain

Profitability

  • PAT for FY25 Profitability · FY25 · High confidence ₹35 crores
    We are hopeful that we will be achieving a total profit of around Rs. 10 crores in the fourth quarter, which will raise the total amount of PAT to Rs. 35 crores. And we are staying with our earlier guidance.

    — Akash Jain

  • PAT Ratio Profitability · FY26 · High confidence 35%
    our PAT, we are expecting that we will be having net profit ratio of around 35% in financial year 26

    — Akash Jain

  • PAT Ratio Profitability · FY27 · High confidence 30%
    and around 30% in financial year 27.

    — Akash Jain

Capital Adequacy

  • CRAR Capital Adequacy · FY25 · Medium confidence around 55%
    So, it will be somewhere around 55%. We will close this year by around 55%.

    — Akash Jain

Digital Transformation

  • Full Scale Digital Operations Digital Transformation · end of financial year · High confidence full scale
    we anticipate having full scale digital operations by the end of this financial year.

    — Akash Jain

Credit Rating

  • CARE Rating Credit Rating · by March · Medium confidence new rating
    we have filed papers for rating with CARE also and we are hoping that by the month of March we will get rating from CARE also.

    — Akash Jain

New Product Launch

  • EV Financing Product New Product Launch · this month (February 2025) · High confidence launched
    Our policy is trained and probably in this month only, we will launch the product and we will start building our books in EV also.

    — Akash Jain

What to watch in Q4 FY25

AUM Growth

next quarter (by end of March 2025)
Current ₹523 crores (Q3 FY25)
Target ₹600 crores

Why it matters

Achievement of this short-term AUM target is a key indicator of business expansion and execution capability.

We are projecting our total AUM of Rs. 600 crores by the end of March quarter.

Risks & concerns

  • MFI segment stress and industry overleveraging risk

    medium

    Management acknowledged industry-wide stress in the MFI segment and overleveraging risk but stated that their secured lending model insulates them from direct impact.

    Management downplayed

  • Perception of shares becoming a 'penny stock' after split

    low

    An analyst expressed concern that the stock split from Rs. 10 to Rs. 1 face value might lead to the shares being perceived as a 'penny stock'.

    Analyst deflected

Q&A highlights

8 direct
Utilization of funds from warrant issuance Direct
The balance 75% amount will be received within a period of 18 months depending upon our requirement and the investor's plan. We are using this amount for the purpose of our onward lending purposes only.

Clarifies the intended use and timeline for the capital raised through warrants, indicating it will be deployed for core lending activities.

Asked by Kabir Shah

AUM projection for Q4 FY25 Direct
We are projecting our total AUM of Rs. 600 crores by the end of March quarter.

Provides a specific short-term target for Asset Under Management, a key growth metric for an NBFC.

Asked by Kabir Shah

Presence of stress in assets or delays in interest receivables Direct
So, as per the current trend, our stress levels are under control. We are not experiencing any significant increase in the stress level in our assets. As you can see in our numbers also, our GNPA is continuously in the decreasing trend.

Addresses critical asset quality concerns, reassuring investors about the stability of the loan book and effective collection mechanisms.

Asked by Kabir Shah

Rationale for the proposed stock split (Rs. 10 to Rs. 1 shares) Direct
So, the rationale behind this is that we want that many more investors join our company, become shareholders of our company. So, by splitting the share, it will be more accessible to them and this will increase our liquidity in the overall capital of the company.

Explains the strategic objective of the stock split, focusing on increasing investor accessibility and market liquidity.

Asked by Shreyans Jain

Revisiting PAT guidance for FY25 given current performance Direct
We are hopeful that we will be achieving a total profit of around Rs. 10 crores in the fourth quarter, which will raise the total amount of PAT to Rs. 35 crores. And we are staying with our earlier guidance.

Reaffirms the full-year profit target, providing confidence in the company's ability to meet its financial projections through strong Q4 performance.

Asked by Deepak

Impact of MFI industry stress on the company's collections or disbursements Direct
So, we are not doing any unsecured loans, so such type of concerns are not impacting us at a direct level, but however the overall impact which NBFC is facing, currently we are not facing such stress on our portfolio, but in future we are looking at all these old leverage conditions.

Clarifies that the company's secured lending model insulates it from the direct impacts of stress in the unsecured MFI segment, mitigating industry-wide concerns.

Asked by Rohan Mehta

Long-term vision for topline and strategy over the next 1-3 years Direct
we are expecting that we will grow our AUM by around 60% in the next year and around further 50% in financial year 27. So, we are targeting AUM of around Rs. 1,000 crores by the end of March 26 and around Rs. 1,500 crores by the end of March 27.

Outlines ambitious long-term growth targets for AUM and profitability, providing a clear strategic roadmap for investors.

Asked by Rohan Mehta

Filtering process to control overleveraging in the system Direct
Yes, we have our credit policy in place where we majorly focus on the overall FOIR of the customer. So, we are not funding if any customer is having more than 60% FOIR. So, we either reduce the loan amount or we reject the file.

Details specific risk management practices, demonstrating proactive measures to maintain asset quality and prevent customer overleveraging.

Asked by Rohan Mehta

2 min read 6 chapters

Detailed narrative

Q3 FY25 Performance Highlights

Akme Fintrade reported a robust Q3 FY25, with Asset Under Management (AUM) growing by 30% year-on-year to ₹523 crores. Quarterly Profit After Tax (PAT) saw a significant increase of 110% year-on-year, reaching ₹8.93 crores, and a 9.69% quarter-on-quarter growth. Disbursements for the quarter were ₹70.12 crores, marking an impressive 185% year-on-year and 18% quarter-on-quarter growth, primarily driven by the vehicle loan segment which grew by 37%.

Asset Quality and Risk Management

The company demonstrated improved asset quality, with Gross Non-Performing Assets (GNPA) reducing to 2.86% from 3.13% in Q2 FY25, and Net Non-Performing Assets (NNPA) decreasing to 1.27% from 1.47%. Management emphasized their focus on 100% secured lending for both vehicle loans (GNPA 2.96%) and MSME business loans (GNPA 2.82%), which insulates them from the stress seen in unsecured MFI segments. They also highlighted a stringent credit policy that rejects or reduces loans for customers with a Fixed Obligation to Income Ratio (FOIR) exceeding 60%.

Funding and Capital Adequacy

Akme Fintrade successfully raised ₹65 crores in term loans from various financial institutions during the quarter, including ₹10 crores from Shriram Finance and ₹25 crores each from Maanaveeya Development & Financial and Indian Overseas Bank. An additional ₹35 crores were raised through convertible warrants to support expansion plans. The company's Capital to Risk-weighted Assets Ratio (CRAR) stood at a strong 65% as of December 2025, with a target to close FY25 at around 55%. A recent rating upgrade from BBB Stable to BBB+ Stable is expected to further reduce borrowing costs.

Strategic Growth Initiatives

The company is actively pursuing digital transformation, aiming for full-scale digital operations by the end of the financial year to streamline processes and enhance customer experience. A significant new initiative is the foray into Electric Vehicle (EV) financing, targeting two-wheelers, three-wheelers, and solar rooftops, with a product launch anticipated in February 2025. They are also expanding their physical footprint, operating 14 branches in Rajasthan, 3 in Maharashtra, 6 in MP, and 5 in Gujarat, enhancing local presence and operational efficiency.

Future Outlook and Long-term Targets

Management projects AUM to reach ₹600 crores by the end of Q4 FY25. For the long term, they aim for AUM of ₹1,000 crores by March 2026 and ₹1,500 crores by March 2027, representing 60% and 50% growth in FY26 and FY27 respectively. Profit After Tax (PAT) ratio is targeted at 35% for FY26 and 30% for FY27. The company remains committed to its earlier FY25 PAT guidance of ₹35 crores, expecting ₹10 crores in Q4, and anticipates a new CARE rating by March.

Share Split Rationale

The company announced a stock split from ₹10 to ₹1 face value. The rationale behind this decision is to increase accessibility for a broader base of investors and enhance liquidity in the overall capital of the company. Management believes this will attract more investors and make the shares more accessible, thereby increasing overall market participation.

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