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    DCCL

    DCCL
    Financial Services·14 Nov 2025
    Management Summary

    Dar Credit & Capital Ltd. reported strong financial performance for Q2 FY26, with significant year-on-year growth in total income and PAT, alongside improved net profit margins. Asset quality showed improvement with GNPA at 1.29%. The company declared an interim dividend and outlined ambitious growth targets for AUM and business correspondent partnerships, while also addressing challenges in scaling secured MSME loans and managing liquidity.

    Highlights

    5
    • Total Income for Q2 FY26 increased by 15.3% year-on-year to Rs. 1203.75 lakhs.

    • Profit After Tax (PAT) for Q2 FY26 grew by 47.7% year-on-year to Rs. 249.76 lakhs.

    • Net Profit Margin for Q2 FY26 expanded by 456 basis points to 20.75%.

    • Gross Non-Performing Assets (GNPA) improved to 1.29% as of September 2025.

    • The company declared an interim dividend of 5% for the financial year 2025-26, reflecting consistent growth and healthy margins.

    Concerns

    2
    • Management acknowledged past impact of RBI restrictions on unsecured loans on cash flow, though stated it has improved.

    • Potential ALM mismatch identified as a challenge when scaling secured MSME loans, due to borrowers desiring longer repayment terms than the company's borrowing tenure.

    What Changed1

    vs Q3 FY26

    Guidance items9 → 13 (+4)
    Key financials

    Metrics

    14

    Periods

    3

    Headline

    6
    • Gross NPA
      1.3%
    • AUM
      ₹178 Cr
    • Net Worth
      ₹100 Cr
    • Average Term Loan Yield
      21.2%
    • Cost of Borrowing
      13%

    Q2

    4
    • Total Income
      1,203.75 lakhs
      YoY+15.3%
    • PBT
      287.24 lakhs
      YoY+30.6%
    • PAT
      249.76 lakhs
      YoY+47.7%
    • Net Profit Margin
      20.8%

    H1

    4
    • Total Income
      2,301.26 lakhs
      YoY+11.4%
    • PBT
      535.34 lakhs
      YoY+26%
    • PAT
      452.35 lakhs
      YoY+36.3%
    • Net Profit Margin
      19.7%

    Capital allocation

    2
    high confidence
    CategoryHeadline
    Dividend

    %5/share (interim)

    Liquidity

    Liquidity disclosed

    The company maintains very high liquidity, ensuring cash in hand equal to 2 months of repayment obligations as a permanent protocol.

    Guidance & targets

    13
    CategoryTargetPriority
    Profitability
    Net Profit
    ₹18-20 crores
    High
    AUM
    AUM Growth
    ₹250 crores
    High
    Asset Quality
    Gross NPA
    1-1.5%
    High
    Asset Quality
    Net NPA
    within 1%
    High
    Credit Cost
    Credit Cost Reduction
    0.5-1% reduction
    Medium
    Business Correspondent Portfolio
    BC Portfolio Value
    ₹30-40 crores
    High
    Business Correspondent Portfolio
    BC Portfolio Value
    ₹80 crores
    High
    Branch Expansion
    Number of Branches
    42 branches
    High
    Disbursements (Kaleidofin)
    Monthly Disbursement
    ₹1 crore/month
    High
    Disbursements (Kaleidofin)
    Monthly Disbursement
    ₹2 crore/month
    High
    Disbursements (Kisan Dhan)
    Monthly Disbursement
    ₹50 lakhs/month
    High
    Disbursements (Kisan Dhan)
    Monthly Disbursement
    ₹1-1.5 crores/month
    High
    Margins
    Margins Sustainability
    maintain or go up
    Medium

    AUM Growth

    next quarter
    Current₹178 crores
    TargetProgress towards ₹250 crores for FY26

    Why it matters

    AUM growth is a primary indicator of the company's expansion and business volume.

    Sir, your AUM has reached around Rs. 178 crores. What kind of AUM growth are you targeting for the full year? Around 250 crore in FY'26.

    How to verify

    key_financials.metrics[label='AUM']

    Risks & concerns

    2
    RiskSeverity

    Impact of RBI restrictions on unsecured loans

    RBI restrictions on extra weightage on unsecured loans/microfinance industry had some impact on cash flow in the past, but conditions have improved.Management acknowledged

    medium

    ALM mismatch for secured MSME loans

    Borrowers for secured MSME loans desire higher ticket sizes and longer repayment durations, which can lead to an ALM mismatch given the company's maximum three-year borrowing period.Management acknowledged

    medium

    Q&A highlights

    8

    “You see the sector is improving. The NPA in March FY'25 and Q1 was little higher but now the sector is improving and that is why the NPA has improved. ... We have developed a better management team for collecting NPA.”

    Clarifies the drivers behind the significant reduction in GNPA, attributing it to both sector improvement and internal collection efforts.

    asked by Ravi Shah

    3 min read6 chapters

    Detailed Narrative

    01

    Strong Financial Performance in H1 FY26

    Dar Credit & Capital Ltd. reported a robust first half of FY26. Total income for H1 FY26 reached Rs. 2301.26 lakhs, marking an 11.4% year-on-year increase. Profit Before Tax (PBT) grew by 26.0% to Rs. 535.34 lakhs, and Profit After Tax (PAT) saw a significant jump of 36.3% to Rs. 452.35 lakhs. The net profit margin for H1 FY26 stood at 19.66%, an improvement of 360 basis points, demonstrating consistent growth and healthy margins.

    02

    Improving Asset Quality and Dividend Declaration

    The company's asset quality showed positive trends, with Gross Non-Performing Assets (GNPA) improving to 1.29% as of September 2025. Management attributes this to both an improving sector and enhanced collection management. Reflecting confidence in its performance, the board declared an interim dividend of 5% for the financial year 2025-26, a first for the company, rewarding shareholders due to decent profits and ample liquidity.

    03

    Business Correspondent Model Expansion

    DCCL is actively expanding its business correspondent model through partnerships with entities like SIDBI, ESAF, Kaleidofin, and Kisan Dhan. This model provides access to funds on tap while maintaining margins. For the Kaleidofin partnership, the company expects monthly disbursements to grow to Rs. 1 crore in Q3 and Rs. 2 crore in Q4. Similarly, for Kisan Dhan, disbursements are projected to be Rs. 50 lakhs per month in Q3, increasing to Rs. 1-1.5 crores per month in Q4. The company targets a business correspondent portfolio of Rs. 30-40 crores by end of FY26 and Rs. 80 crores by FY27.

    04

    Strategic Focus on Unique Lending Segments

    The company primarily focuses on four types of projects, including personal loans to municipal employees (safai karamcharis), secured MSME loans (Rs. 2-5 lakhs ticket size), and unsecured MSME loans (Rs. 50,000-2 lakhs ticket size). The personal loan product for municipal employees is highlighted as unique, with direct EMI deductions from municipalities, resulting in near-zero bad debt. This focus on a niche, underserved segment with direct collection mechanisms provides a competitive advantage and contributes to the low NPA levels.

    05

    Funding and Liquidity Management

    DCCL's average term loan yield is 21.23%, with an overall cost of borrowing around 13% (12% from banks, 14-15% from investor sector). The company successfully issued listed and rated debentures of Rs. 10 crore in September and raised Rs. 65 crores in H1 FY26. Plans are in place for an additional NCD issuance of Rs. 25-30 crores in H2. Management emphasizes maintaining high liquidity, ensuring cash reserves equivalent to two months of repayment obligations, and expects margins to be maintained or improve due to IPO proceeds and better negotiation power with lenders.

    06

    Digital Adoption and Branch Network Expansion

    While the customer onboarding process is fully digital, the company primarily relies on physical sourcing and 'touch banking' for loan origination, especially for its semi-urban customer base which may lack digital literacy. The company is expanding its physical footprint, having opened its first branch in Miryalaguda, Telangana, and aims to increase its total branches from 36 to 42 by FY26. Technology also supports GNPA reduction through data analytics and E-NACH, though physical follow-up remains critical for collections.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.