Aptus Value Hou.

Aptus achieved a significant milestone in Q1 FY26 by delivering an ROE of 20.1%, supported by a robust ROA of 7.9%. The company's NIM remained strong at 13.4%, while opex-to-assets was controlled at 2.7% despite ongoing investments in branch expansion and digital capabilities. Management is now targeting a medium-term ROE of 22%, driven by lower borrowing costs and steady yields.

The company's long-term credit rating was upgraded to CARE AA from AA-, reflecting its financial strength and prudent risk management. This upgrade, combined with the repo rate cycle, is expected to reduce the cost of borrowings by 40-45 basis points by the end of FY26. Incremental borrowing rates have already dropped to 8.05%-8.1% for the HFC entity, down from 8.6%-8.7% previously.

Aptus is successfully diversifying beyond its southern strongholds, with its loan book in Maharashtra and Odisha crossing ₹67 crores. The company plans to open 10 more branches in these states (5 each) during FY26, with another 10-15 planned for the following year. Management follows a 'contiguous expansion' strategy, focusing on understanding local culture and markets before scaling aggressively.

While GNPA saw a seasonal uptick to 1.49%, management remains confident in its credit underwriting, noting an average LTV of only 40%. The 30+ DPD stands at 6.45%, but the company maintains a high collection efficiency (99.12% for the quarter, improving to 99.7% in June). The use of SARFAESI for accounts beyond 90 days serves as a critical negotiation tool for settlements.

Digital-led customer acquisition is gaining traction, with 21% of Q1 FY26 business originating through referral apps, construction ecosystem apps, and social media. A new mobile-first lead management platform launched in April 2024 is streamlining operations and boosting collection productivity, helping to offset some of the challenges posed by field-level attrition.