Arman Financial Services Limited

Arman Financial Services Limited announced key leadership changes, with Mr. Aalok Patel transitioning to Vice Chairman & Managing Director and Mr. Vivek Modi appointed Executive Director and Group CFO, both pending shareholder approval. Management emphasized a commitment to calibrated, value-driven growth, learning from past crises. The company's future strategy focuses on product innovation and improved underwriting, moving beyond traditional JLG models to better assess customers and offer diverse products.

The company reported a strong Q3 FY26, with consolidated AUM reaching INR2,274 crores, a 7% sequential growth. Consolidated disbursements surged 30% sequentially to INR612 crores. Gross total income for the quarter stood at INR160 crores, contributing to INR470 crores for the nine months. Profit after tax (PAT) saw a significant 177% sequential increase to INR22 crores for the quarter, with nine-month PAT at INR16 crores.

The MFI subsidiary, Namra Finance, demonstrated a strong recovery, returning to profitability with INR13 crores PAT in Q3 FY26 after four consecutive quarters of losses. Its MFI portfolio grew 7.3% sequentially to INR1,618 crores, supported by INR455 crores in disbursements. Net interest margins improved to 14.77%, and 82% of the MFI portfolio is now covered under the CGFMU scheme, providing additional risk protection.

The stand-alone Arman business, focusing on non-MFI segments, saw its AUM grow 28% YoY to INR657 crores, with 74% in the MSME book. Disbursements for the non-MFI portfolio totaled INR163 crores in Q3 FY26, including INR115 crores in MSME, INR32 crores in two-wheeler, and INR16 crores in Micro LAP. The company also piloted solar loans, disbursing INR56 lakhs in two months, with a target of INR1 crore/month by March 2026.

Asset quality trends strengthened across the board. Consolidated GNPA improved to 3.4% in December 2025 from 3.69% in Q2 FY26, with NNPA at 0.77%. Collection efficiency for the consolidated entity improved to 96.3% in December 2025. Management noted that early delinquency indicators (PAR 30-90 bucket) showed sequential improvement, particularly in Microfinance, and expects GNPA to reduce further in Q4 FY26.

Arman Financial maintains a robust capital and liquidity position. The Board approved raising up to INR500 crores through NCDs via private placement, and INR522 crores of debt were raised during the quarter. The stand-alone entity's capital adequacy ratio (CAR) stood at 38.3%, and Namra Finance's CAR was 52.3%, both well above regulatory requirements. The company holds INR247 crores in cash, bank balances, liquid investments, and undrawn CC limits.

Operating expenses increased due to strategic investments in the BCM structure, separation of underwriting and recovery teams, and CGFMU premiums (INR7 crores this year). Management views these as necessary investments that enhance accountability and collection, providing more value than the cost. The company aims to settle its opex ratio at approximately 4.5-5% of total AUM for the Microfinance consolidated level.

Arman is actively pursuing product innovation, particularly in its stand-alone business. The Micro LAP portfolio is expanding across multiple states, moving beyond the pilot phase. A new solar loan product has been introduced, targeting rural households and small businesses, with initial disbursements of INR56 lakhs. This diversification strategy aims to build a more resilient company and capture new growth opportunities.