CSL Finance — Q4 FY26 earnings call

Call held 2 Jun 2026

Management summary

CSL Finance reported a mixed Q4 FY26, with strong growth in its wholesale segment driving overall AUM and loan book expansion by 21% YoY. Full-year PAT increased by 19%, and ROE improved to 14.81%. However, the SME retail segment faced headwinds, leading to underwhelming performance and a sequential decline in Q4 disbursements. Asset quality saw some deterioration with GNPA and NNPA rising, and Q4 PAT was impacted by higher provisions.

Highlights

  • AUM grew 21% YoY to Rs. 1,448 crore in Q4 FY26 from Rs. 1,195 crore.

  • Loan book grew 21% YoY to Rs. 1,395 crore in FY26.

  • Full year PAT grew 19% over previous financial year to Rs. 86 crore.

  • ROE for FY26 improved to 14.81% from 13.31% in FY25.

  • Net interest income (NII) for Q4 FY26 stood at Rs. 45.4 crore, up 21% YoY and 10% sequentially.

Concerns

  • SME retail performance was "underwhelming" and "fell short of growth ambitions" in FY26.

  • Total disbursements during Q4 declined 16% sequentially to Rs. 301 crores.

  • Gross NPA stood at 1.1% in Q4 FY26, up from 0.46% in Q4 FY25.

  • Net NPA stood at 0.81% in Q4 FY26, up from 0.34% in Q4 FY25.

  • PAT for Q4 FY26 was down 7% sequentially to Rs. 19.4 crore due to higher total ECL provisions and write-offs.

Key financials

3 periods

Headline

  • AUM
    ₹1,448 Cr
    YoY +21%
  • Loan Book
    ₹1,395 Cr
    YoY +21%
  • Gross NPA
    1.1%
  • Net NPA
    0.81%
  • Net Worth
    ₹615 Cr
  • Book Value Per Share
    ₹270
  • Balance Sheet Liquidity
    ₹110.4 Cr
  • Leverage Ratio
    1.39×

Q4

  • Total Disbursements
    ₹301 Cr
    YoY +5% QoQ -16%
  • Net Interest Income
    ₹45.4 Cr
    YoY +21% QoQ +10%
  • PAT
    ₹19.4 Cr
    YoY +2% QoQ -7%
  • Profit Before Tax
    ₹30.18 Cr
    YoY +21% QoQ +18%
  • Tax Percentage
    27%

FY26

  • Cumulative Disbursements
    ₹1,255 Cr
    YoY +12%
  • Net Interest Income
    ₹168 Cr
    YoY +15%
  • PAT
    ₹86 Cr
    YoY +19%
  • ROE
    14.8%

What they filed

Q1 FY27: revenue up 18.6%, net profit up 4.8% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue54 53 57 59 64 +19%64 +21%69 +21%70 +19%
Net profit18 17 19 21 24 +33%21 +24%19 +0%22 +5%
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

  • AUM Mix
    69% Wholesale31% SME Retail

Capital allocation

high confidence
  • Liquidity Cash ₹110.4 Cr Our liquidity position remains healthy with Rs. 110.4 crore of balance sheet liquidity and our leverage ratio stands at a comfortable 1.39x as of March 31, 2026, well within our conservative thresholds and leaving meaningful headroom to increase leverage for growth in FY27.
    Our liquidity position remains healthy with Rs. 110.4 crore of balance sheet liquidity and our leverage ratio stands at a comfortable 1.39x as of March 31, 2026, well within our conservative thresholds and leaving meaningful headroom to increase leverage for growth in FY27.

Guidance & targets

AUM

  • AUM Growth AUM · FY27 · Medium confidence 15%-25%
    The next year guidance will be in line with anything between 15%-25% that we have been doing it for last 3-4 years.

    — Rohit Gupta

Segment Growth

  • Wholesale Segment Strength Segment Growth · FY27 · Medium confidence remain strong and will remain a key growth driver
    The wholesale segment is expected to remain strong and will remain a key growth driver.

    — Rachita Gupta

  • SME Retail Segment Normalcy Segment Growth · FY27 · Medium confidence return to normalcy
    We expect SME retail, which fell short of our growth ambitions in FY26, to return to normalcy in the coming year as the operating environment gradually improves.

    — Rachita Gupta

Credit Cost

  • Credit Cost Stabilization Credit Cost · next financial year · Medium confidence stabilizing between that credit cost only (around 0.5%)
    the credit cost which has been around 0.5%, I think we should be stabilizing between that credit cost only and the recovery should take care of whatever fresh NPAs that we may see.

    — Rohit Gupta

Asset Quality

  • NPA Increase Asset Quality · next financial year · High confidence should not increase
    going forward we don't expect that the absolute gross and net NPA should increase in the next financial year

    — Rohit Gupta

Operational Expansion

  • New Branch Opening Operational Expansion · Q3 FY27 · High confidence start in the 3rd Quarter
    rather than opening new branches that will start in the 3rd Quarter

    — Rohit Gupta

What to watch in Q1 FY27

SME Retail Segment Performance

FY27
Current Underperforming, 'underwhelming'
Target 'return to normalcy'

Why it matters

Improvement in SME retail is crucial for diversified growth and overall profitability, as it was a drag in FY26.

We expect SME retail, which fell short of our growth ambitions in FY26, to return to normalcy in the coming year as the operating environment gradually improves.

Risks & concerns

  • Underperformance of SME Retail Segment

    medium

    SME retail performance was 'underwhelming' in FY26 due to industry-wide consolidation, over-leveraged borrow profiles, stagnant income growth, and competitive intensity.

    Management acknowledged

  • Deterioration in Asset Quality (GNPA/NNPA increase)

    medium

    Gross NPA increased to 1.1% and Net NPA to 0.81% in Q4 FY26, partly due to lower NPA resolutions and revised provisioning norms.

    Management acknowledged

  • Impact of RBI Provisioning Directives

    low

    RBI directives led to increased provisioning for project financing (from 0.8% to 0.98%), impacting reported numbers, but a new ECL policy is expected to provide a more appropriate framework.

    Management acknowledged

Q&A highlights

7 direct
Q4 Disbursement Decline and FY27 AUM Guidance Direct
Largely, we have told that our wholesale business is a little lumpy. Sometimes in certain quarters our disbursements are higher, and it is better to see it more on a yearly basis rather than quarterly... The next year guidance will be in line with anything between 15%-25% that we have been doing it for last 3-4 years.

Clarifies the lumpy nature of wholesale disbursements and provides explicit AUM growth guidance for FY27.

Asked by Tejas Khandelwal

New ECL Framework Direct
I think it is largely for a retail segment where earlier our provisioning was very, very high... But now we have made it little more objective based on the performance of our SME portfolio last 4-5 years... Our existing ECL is providing much more than what the new ECL method will provide for that.

Explains the rationale and impact of the new ECL policy, indicating a more objective and potentially lower provisioning requirement for SME retail going forward, though current provisioning is conservative.

Asked by Tejas Khandelwal

Higher Taxes in Q4 Direct
Tax percentage goes up because of the amortization of those fees. As per IndAS we amortize those fees for the deferred but as per income tax we have to follow the Indian accounting method to determine the tax. So, our tax percentage is always higher than the normal tax which is 25.17% I think weighted average will be around 27%.

Provides a clear explanation for the higher tax rate in Q4, attributing it to accounting differences for fee amortization.

Asked by Tejas Khandelwal

Off-Book AUM / Co-Lending Strategy in Wholesale Direct
in last one or two quarters, one or two years, we have built more relationship with banks and NBFCs to do co-lending... it increases our fee income, reduces our risk at the same time it helps us to acquire more customers and increases our footage in the region where we are present.

Details the strategic shift towards co-lending to generate fee income, mitigate risk, and expand reach without solely relying on balance sheet growth.

Asked by Sanjay Ladha

SME Segment Performance and Future Strategy Direct
SME has not grown in last 12-15 months and whatever disbursement we have done it has been nullified by the aggressive run down and takeover of our existing good cases... now the focus is to consolidate those branches where productivity was very low and to focus in next 3 months on our existing branches and focus on improving the productivity and to do a good quality business.

Provides a comprehensive explanation for the SME segment's underperformance and outlines a clear strategy for consolidation, productivity improvement, and focusing on higher-quality customers.

Asked by Sanjay Ladha

Wholesale Segment Asset Quality Outlook Direct
We are providing provisions which is required as per the ECL policy and at the same time, we have not seen any kind of delinquencies in last 4-5 years... the way we do our diligence, we never see that there should be any challenge on recovering our principal and interest.

Reassures on the robust asset quality of the wholesale book despite increased RBI provisioning norms, citing strong diligence and no recent delinquencies.

Asked by Tejas Khandelwal

Replicating Wholesale Model in Other Geographies for SME Direct
Yes, focus has been on SME in last 2-3 years and going forward definitely we will look for other regions and market but in immediate next 12 months we would like to focus in our existing region... We have limited by funds and so unnecessary going into new region without any we will neither be able to create any kind of visibility there.

Explains the strategic decision to consolidate and deepen presence in existing regions for SME in the near term due to funding limitations and the need to maximize efficiency, rather than immediate geographical expansion.

Asked by Tejas Khandelwal

3 min read 7 chapters

Detailed narrative

Overall Performance (Q4 & FY26)

CSL Finance reported a varied performance in FY26, with strong growth in its wholesale segment contrasting with an 'underwhelming' SME retail performance. For Q4 FY26, AUM grew 21% year-on-year to Rs. 1,448 crore, with the loan book also expanding by 21% to Rs. 1,395 crore. Full-year PAT increased by 19% over FY25 to Rs. 86 crore, and ROE improved to 14.81% from 13.31% in FY25, reflecting an improved return profile of the equity base.

AUM & Disbursement Trends

The company's AUM mix has shifted significantly towards wholesale, now comprising 69% of the total, with SME retail at 31%. Total disbursements in Q4 FY26 were Rs. 301 crore, a 5% increase year-on-year but a 16% sequential decline from elevated Q3 levels, primarily due to the lumpy nature of wholesale activity. Cumulative disbursements for FY26 reached Rs. 1,255 crore, up 12% over FY25, with collection efficiency consistently at 98% across all quarters.

Asset Quality & Provisions

Asset quality saw some deterioration in Q4 FY26, with Gross NPA rising to 1.1% from 0.46% in Q4 FY25, and Net NPA increasing to 0.81% from 0.34%. This was partly attributed to lower NPA resolutions and revised RBI provisioning norms for project financing, which increased from 0.8% to 0.98%. However, management expressed confidence in faster resolutions for SARFAESI-compliant books and the quality of fresh underwriting in the SME retail segment over the past 12 months, with no material delinquencies.

P&L Performance

Net Interest Income (NII) for Q4 FY26 grew 21% year-on-year and 10% sequentially to Rs. 45.4 crore, driven by higher average AUM. For the full year, NII increased by 15% to Rs. 168 crore. Profit After Tax (PAT) for Q4 FY26 was Rs. 19.4 crore, up 2% year-on-year but down 7% sequentially, primarily due to higher total ECL provisions and write-offs during the quarter. Profit Before Tax (PBT) for Q4 stood at Rs. 30.18 crore, up 21% YoY and 18% sequentially.

Operational Highlights & Funding

CSL Finance operates 44 branches across 7 states, with a focus on optimizing existing locations rather than aggressive expansion in the near term. The company successfully on-boarded Bank of Baroda as a new lender and concluded a Rs. 30 crore NCD issue, diversifying its funding pool. Liquidity remains healthy at Rs. 110.4 crore, and the leverage ratio is comfortable at 1.39x, providing headroom for growth in FY27. The credit rating was reaffirmed at A- Stable by Acuité Ratings.

SME Retail Segment Challenges & Strategy

The SME retail segment faced significant challenges in FY26, including an over-leveraged borrow profile, stagnant income growth, and increased competitive intensity. Management noted that aggressive run-downs and takeovers of existing good cases nullified disbursements. The strategy for FY27 involves consolidating existing branches, improving productivity, and focusing on higher-quality customers with better CIBIL history and collateral, with new branch openings planned only from Q3 FY27.

Wholesale Segment Strategy & Off-Book AUM

The wholesale segment continues to be a key growth driver, with management highlighting an increased focus on off-book AUM through joint lending structures with banks and NBFCs. This strategy aims to generate fee-based income, mitigate risk, acquire more customers, and expand regional footprint. The company is selective in co-lending, typically for requirements above Rs. 30-40 crores, and maintains a stake of 10-40% in such transactions.

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