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    DCCL

    DCCL
    Financial Services·2 Jun 2025
    Management Summary

    Dar Credit & Capital Ltd. reported strong financial performance for FY25, with net profit growing by nearly 90% and significant improvements in RoA and RoE. The company outlined ambitious targets for FY26, including a PAT of INR 11-12 crores and an AUM of INR 300 crores, driven by fresh capital infusion from its IPO and expected reduction in cost of funds. Management emphasized its unique personal loan model and strategic partnerships for MSME lending.

    Highlights

    5

    • Net Profit stood at INR 7.04 crores for FY25, a growth of almost 90% year-on-year compared to INR 3.69 crores in FY24.

    • Operating profit and Net Interest Income both showed a growth of 30% year-on-year.

    • Return on Asset (RoA) increased to 3.16% for FY25 from 1.56% in FY24.

    • Return on Equity (RoE) increased to 9.57% for FY25 from 5.5% in FY24.

    • The company expects a PAT of INR 11-12 crores and an AUM of INR 300 crores for FY26.

    Key financials

    Single quarter

    08 metrics
    1. 01Net Profit (PAT)₹7.04 Cr+90.8%YoY
    2. 02Operating Profit Growth30%+30%YoY
    3. 03Net Interest Income Growth30%+30%YoY
    4. 04Interest Income₹41 Cr+28.1%YoY
    5. 05Return on Asset (RoA)3.2%

    Guidance & targets

    10
    CategoryTargetPriority
    Profitability
    Net Profit (PAT)
    INR 11-12 crores
    		High
    Profitability
    EPS
    at least INR 10
    		High
    Profitability
    Bottom Line Growth
    around 40%
    		High
    Profitability
    Return on Asset (RoA)
    almost 5.5% to 6%
    		Medium
    Asset Under Management
    AUM
    minimum INR 300 crores
    		High
    Asset Size
    Balance Sheet Size
    INR 500 crores
    		Medium
    Revenue
    Top Line Growth
    35-40%
    		High
    Cost of Funds
    Cost of Funds Reduction
    at least 1% down
    		High
    Asset Quality
    NPA
    within 1%
    		High
    Business Correspondent Earnings
    Business Correspondent Earnings
    INR 2-2.5 crores
    		High

    Net Profit (PAT) for FY26

    FY26
    CurrentINR 7.04 crores (FY25)
    TargetINR 11-12 crores

    Why it matters

    Achieving this target would represent significant profit growth and validate the impact of capital infusion and operational improvements.

    We are expecting a PAT of around INR11 crores, INR12 crores.

    How to verify

    guidance_and_targets[metric='Net Profit (PAT)']

    0

    Q&A highlights

    8

    “We have already started expansion of our business in our same line, same product line, same category and with the availability of new resources and even again this equity infusion, we will not be having any interest bearing. So, our margin will definitely improve.”

    Analyst sought clarity on the ambitious PAT growth target for FY26 and the drivers behind it, leading to management explaining the impact of IPO funds and improved margins.

    asked by Noel Shah

    2 min read6 chapters

    Detailed Narrative

    01

    Strong Financial Performance in FY25

    Dar Credit & Capital Ltd. reported robust financial results for the fiscal year ended March 31, 2025. Net profit surged by almost 90% year-on-year, reaching INR 7.04 crores compared to INR 3.69 crores in FY24. Both operating profit and net interest income demonstrated a healthy 30% year-on-year growth. The company's Return on Asset (RoA) significantly improved to 3.16% from 1.56% in the previous fiscal year, while Return on Equity (RoE) also rose to 9.57% from 5.5%.

    02

    Ambitious Growth Outlook for FY26

    Management provided strong guidance for FY26, projecting a Net Profit (PAT) of INR 11-12 crores and an EPS of at least INR 10. The company anticipates a top-line growth of 35-40% and a similar bottom-line growth. The total asset size (AUM) is expected to reach a minimum of INR 300 crores by March 2026, with a longer-term target of INR 500 crores for the balance sheet in the next few years. RoA is targeted to improve further to 5.5-6%.

    03

    Strategic Drivers: IPO Funds and Cost Optimization

    The recent infusion of INR 25 crores from the IPO is a key driver for future growth, enabling the company to borrow more capital at competitive rates and improve profitability. Management expects the cost of funds, currently hovering around 14-15.5%, to decrease by at least 1%. This cost optimization, combined with leveraging existing infrastructure and team, is expected to enhance margins and contribute to the targeted profit growth.

    04

    Unique Business Models and Asset Quality Focus

    Dar Credit & Capital operates with a unique personal loan model, primarily serving municipal employees through direct arrangements with municipalities, ensuring salary deductions for EMI. This 'touch banking' approach, while having higher operational costs, results in better recovery and historically low NPA levels (within 1%). The company also focuses on MSME loans up to INR 5 lakhs for small traders without collateral, supported by a partnership with SIDBI, where SIDBI encourages financing this segment.

    05

    Expansion Strategy and Portfolio Balance

    The company plans to continue penetrating its existing locations in Rajasthan, Madhya Pradesh, and parts of Gujarat, rather than expanding into new geographies in FY26. The personal loan portfolio currently constitutes around 40% of the book, and management aims to balance growth between personal loans and secured MSME loans (currently around INR 20 crores) to maintain overall gross NPA within 1%. Future geographical expansion will focus on bordering states like Maharashtra and Uttar Pradesh.

    06

    Business Correspondent and Asset Sale Contributions

    In FY25, the company generated approximately INR 1 crore from its business correspondent model, which is expected to double to INR 2-2.5 crores in FY26. Additionally, the company realized about INR 1 crore in profit from the sale of an idle residential asset and matured investments, contributing to the bottom line. This highlights diversified income streams and effective asset management.

    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.