Skip to content

    Laxmi India Finance Q1 FY27 earnings call

    LAXMIINDIA
    Financial Services·13 Aug 2026
    Management Summary

    Laxmi India Finance Limited reported a robust Q1 FY27, marked by strong AUM and PAT growth, significant NIM expansion, and improved asset quality. While credit costs rose due to stress in the vehicle financing segment, management is taking corrective actions and remains confident in achieving its profitability and growth targets, supported by a strong capital base and planned future capital raise.

    Highlights

    5

    • Assets Under Management (AUM) grew 28% year-on-year to INR1721.7 crores, reflecting strong business momentum.

    • Profit After Tax (PAT) increased by approximately 70% to INR16.4 crores, driven by healthy growth and margin expansion.

    • Net Interest Margin (NIM) expanded to 11.36% from 10.43% a year ago, primarily due to a decline in the average cost of borrowing to 10.66%.

    • Return on Assets (ROA) improved significantly to 3.45% from 2.75% year-on-year.

    • Asset quality metrics improved with Gross NPA at 2.08% and Net NPA at 0.93% as of June 30, 2026, both lower than March 2026 levels.

    Concerns

    2

    • Credit cost increased to INR3.69 crores (0.95%) in Q1 FY27 from 0.58% in Q1 FY26, primarily attributed to stress in the vehicle financing portfolio.

    • Management noted that crude price increases could indirectly impact borrowers by incrementing their costs, though direct impact from global uncertainties on their Tier 2/3 customer base is limited.

    Key financials

    Single quarter

    21 metrics
    1. 01AUM₹1,721.7 Cr+28.0%YoY
    2. 02Own Book₹1,626.9 Cr+31.7%YoY
    3. 03Disbursement₹232 Cr+39.8%YoY
    4. 04Net Interest Income₹47.1 Cr+39%YoY
    5. 05Profit Before Tax₹21.9 Cr+72%YoY

    Capital allocation

    1
    high confidence
    CategoryHeadline
    Liquidity

    Cash ₹255.9 crores

    ALM position continues to remain comfortable with cumulative surplus across maturity buckets.

    Guidance & targets

    8
    CategoryTargetPriority
    Volume
    AUM Growth
    30-35%
    		High
    Profitability
    PAT Growth
    40-45%
    		High
    Profitability
    ROA
    3.5-3.75%
    		Medium
    Profitability
    Cost to Income Ratio
    42-44%
    		Low
    Debt
    Cost of Borrowing Reduction
    20-25 bps
    		Medium
    Debt
    Debt to Equity Ratio
    3.5-4%
    		Medium
    Capital
    Capital Raise
    INR300-350 crores
    		Medium
    Capacity
    New Branches
    30-35
    		High

    What to watch in Q2 FY27

    5

    ROA Improvement

    Next quarter (progress towards FY27 end target)
    Current3.45%
    TargetProgress towards 3.5-3.75%

    Why it matters

    ROA is a key profitability metric, and management has a specific year-end target that investors will monitor for progress.

    ROA is almost 3.45% right now... So we are targeting 3.5% to 3.75%. So I believe by end of the year we will achieve that target.

    Risks & concerns

    2
    RiskSeverity

    Stress in Vehicle Financing Portfolio

    Increased credit cost in Q1 FY27 primarily attributed to stress in the vehicle financing portfolio, leading to higher provisioning and monitoring. — Management acknowledged

    medium

    Impact of Global Uncertainties (Crude Price Increase)

    While the core customer base is less affected by global events, crude price increases can lead to incrementing costs for borrowers, posing an indirect challenge. — Analyst acknowledged

    low

    Q&A highlights

    7

    “The branches which we have opened last year, the number was 25 branches. Out of 25 branches, one is already in the breakeven stage. And if we talk about the maturity, this is linked with the breakeven only. So the branch expenses and the branch income, if we calculate both, it comes around 7 to 9 months to take the breakeven stage where the AUM of a branch at around INR1.5 crores to INR2 crores.”

    Provides specific metrics for new branch profitability and the AUM required for breakeven, indicating the efficiency of expansion.

    asked by Deepesh Sancheti

    2 min read6 chapters

    Detailed Narrative

    01

    Strong Q1 FY27 Performance and Growth Momentum

    Laxmi India Finance reported a strong Q1 FY27 with Assets Under Management (AUM) reaching INR1721.7 crores, representing a 28% year-on-year growth. Disbursements for the quarter stood at INR232 crores, a significant increase from INR166 crores in Q1 FY26. Net Interest Income (NII) grew by 39% year-on-year to INR47.1 crores, contributing to a 72% increase in Profit Before Tax (PBT) to INR21.9 crores and a 70% increase in Profit After Tax (PAT) to INR16.4 crores.

    02

    Margin Expansion Driven by Funding Cost Improvement

    The company's Net Interest Margin (NIM) expanded to 11.36% in Q1 FY27, up from 10.43% in the prior year, despite stable portfolio yields. This improvement was primarily driven by a decline in the average cost of borrowing, which reduced by 67 basis points year-on-year to 10.66%. Management anticipates a further reduction of 20-25 basis points in borrowing costs during the current fiscal year, assuming stable global rate conditions.

    03

    Asset Quality and Provisioning Strategy

    Asset quality showed improvement with Gross NPA at 2.08% (down from 2.13% in March 2026) and Net NPA at 0.93% (down from 1.09% in March 2026). However, credit costs increased to INR3.69 crores, or 0.95% of average gross loan, compared to 0.58% in Q1 FY26. This rise was mainly attributed to stress in the vehicle financing portfolio, prompting a 10% increase in provisioning for 'up money transactions' and a Provision Coverage Ratio (PCR) of 55.22%.

    04

    Robust Capital Position and Future Capital Raising Plans

    Laxmi India Finance maintains a strong capital base with a Capital Adequacy Ratio (CAR) of 25.32% and Tier 1 CAR of 24.82%. The net debt to equity ratio stands at 2.57 times, supported by liquidity of approximately INR255.9 crores at the end of the quarter. To sustain its targeted AUM growth, the company plans to raise INR300-350 crores in capital by mid-next financial year, aiming to extend its leverage to 3.5-4%.

    05

    Branch Network Expansion and Productivity

    The company's branch network expanded to 194 branches across six states, with 25 new branches opened last year, including 10 in Uttar Pradesh and 6 in Maharashtra. New branches typically achieve breakeven within 7-9 months, requiring an AUM of INR1.5-2 crores. Laxmi India Finance plans to add 30-35 new branches this year, focusing on improving productivity in existing and newer geographies through a cluster-based approach.

    06

    Product Mix and Underwriting Discipline

    MSME remains the largest vertical, accounting for approximately INR1,395 crores of AUM, followed by vehicle finance (INR131 crores), construction and loan against property (INR90 crores), wholesale lending (INR58 crores), and personal loans (INR49 crores). The company emphasizes a secured lending model, combining centralized credit assessment with local market knowledge, physical verification, and cash flow evaluation. Collection efforts are highly branch-led and field-intensive, with a focus on early stress identification.

    This is an AI-generated summary of a publicly available earnings call transcript.