Finbud Financial Services Ltd — Q2 FY26 earnings call

Typically, in the agent channel out of say a 100-rupee revenue that we would be making, close to 90% of that goes back to the agent and 5% is our processing, platform and manpower cost... On our agent business, our approval ratios are say roughly around 40% than our digital channel... all of that put together our digital business is roughly at a 15% margin profile business.

Provides a clear breakdown of cost structure and profitability for the two core business channels, highlighting the strategic role of the agent network for customer acquisition despite lower margins.

Asked by Rohan, Equirus

when we are talking about remarketing, there are three components of cost which are involved. One is the cost of remarketing to the consumer... Then there is an operations cost here... Plus, there's obviously a large team supporting these customers from technology analytics and a digital marketing standpoint, which is essentially the manpower cost which is required to build this entire platform and run it successfully. That cost is around 30% of the total revenue generated. So, 55% roughly is the cost of the manpower required to run the digital channel... And 25 rupees would be the cost of customer generation.

Explains the cost components of the digital channel, clarifying why margins are 15% despite the absence of agent commissions, detailing marketing, operations, and manpower costs.

Asked by Rohan, Equirus

I think the entire game is largely around being able to build the data monetization layer, because that's where the real sort of the effect of what we have done really comes through... The second piece is really in our ability to also expand our conversion funnels. And I think that's where a part of the NBFC story sort of comes through... The NBFC layer is more a strategic value-unlocking opportunity for us, which helps us unlock value.

Outlines the company's long-term strategy to leverage its data lake for new product offerings (credit and non-credit) and to use the NBFC as a strategic tool to improve conversion funnels and unlock value.

Asked by Chirag Sundesha, JSW Group

So currently, this is something that we are still working on, Rahul. Nothing that we can share currently officially. Once we have some insight into the fundraising over there, we will definitely come back to you... As of now, we have just started hiring the team over there in April, in May, June, actually. So as of now, some of the discussions that were there, that were primarily around, first, let's have the IPO out of our way. And then we will have those talks.

Indicates that while NBFC fundraising is ongoing, details are not yet public, and the IPO was a prerequisite for these discussions, suggesting a delay in external capital infusion for the NBFC.

Asked by Rahul, Lucky Securities

I think the change in mix would have a significantly large impact on the margins. Because once you see that mix changing from currently around 85%, 15%, or if it's 14% that we are at, to 70%/30%, the incremental digital contribution is coming at a far better margin profile... the ability to kind of create this super app kind of an ecosystem for the agents... will help us increase the margin on the agent ecosystem as well.

Explains how the planned shift towards a higher digital mix (70%/30% target) will significantly improve overall margins due to the higher profitability of the digital channel and how a 'super app' for agents will also boost agent channel margins.

Asked by Pranav (via Raashi Khatri)

I think it'll take us maybe in, I think maybe between three to six months, I would assume for us to get everything operationalized. It's also that we would have to sort of seek certain regulatory and board approvals, etc. So, we're in the process of doing all of that.

Provides a clear timeline for when the NBFC is expected to become fully operational, including regulatory approvals, which is crucial for its strategic role.

Asked by Ishan, Individual Investor

I think we're very confident of being able to get there... In terms of opportunity, obviously, the credit markets are very, very large... the market is very large, and we currently have a less than 1% market share. So, I think from just having a sort of a very minor market share itself, there's a possibility of creating a very large company... In terms of challenges, there are obviously macro level challenges... And also, other challenges are more regulatory in nature.

Reaffirms confidence in long-term revenue targets, citing market size and low current market share as opportunities, while acknowledging macro and regulatory challenges as key risks.

Asked by Venkata (via Raashi Khatri)

So honestly, this is a question which keeps coming back to us from various players. Our reply is that we do not have an insight on how they are showing such a higher margin... We have seen in the market that 90% of the revenue that we share with My Mudra We see there also payout sheets which there are floating in the market. They also tend to give 90% of their revenues, share 90% of their revenues with their agent. So in spite of that, how they are able to show that margin profile, we would be not able to comment on that.

Highlights a perceived discrepancy in reported PAT margins compared to competitors, with management unable to fully explain it, suggesting potential differences in business models or reporting, or competitive pressure.

Asked by Shamal (via Raashi Khatri)