Laxmi India Finance Limited — Q2 FY26 earnings call

Call held 19 Nov 2025

Management summary

Laxmi India Finance Limited reported a strong H1 FY26 with AUM growing 24.75% YoY to INR1,386.49 crores, bolstered by a successful IPO that infused INR151.58 crores and boosted CAR to 31.90%. The company's cost of borrowing declined to 11.10%, supporting margin improvement. Despite a sequential rise in NPAs attributed to floods and a Q2 cash crunch, management is confident in recovery, particularly from the secured book with a healthy LTV of 35%. The company is strategically expanding its branch network and focusing on digital payment modes to enhance efficiency and customer experience.

Highlights

  • Assets Under Management (AUM) crossed INR1,386.49 crores, reflecting a 24.75% year-on-year growth.

  • Successful IPO completion led to an equity infusion of INR151.58 crores, significantly strengthening the balance sheet and improving Capital Adequacy Ratio (CAR) to 31.90%.

  • Cost of borrowing continuously trended downwards to 11.10%, a 63 basis points reduction year-on-year.

  • Adjusted PAT (before IPO expenses) for H1 FY26 stood at INR21.72 crores, demonstrating a 42% year-on-year growth.

  • Management is confident in recovering sequential NPA increases due to a highly secured book with a healthy LTV of 35% on NPA cases.

Concerns

  • Sequential jump in NPAs attributed to floods in Rajasthan/Madhya Pradesh and a general Q2 cash crunch.

  • Stress observed in the heavy commercial vehicle segment, leading to a strategic shift in product mix.

  • Disbursements saw a slight sequential drop in Q2 FY26 to INR145 crores from INR166 crores in Q1 FY26, primarily due to weather conditions.

Key financials

3 periods

Headline

  • AUM
    ₹1,386.49 Cr
    YoY +24.8%
  • Net Worth
    ₹435 Cr
  • Capital Adequacy Ratio
    31.9%
  • Cost of Borrowing
    11.1%
  • Yield
    22.2%
  • Spread
    10.9%
  • GNPA
    1.6%
  • PCR
    47.2%
  • Credit Cost
    0.72%
  • Return on Assets
    2.6%
  • Return on Equity
    11%
  • NIM (June quarter)
    10.4%
  • NIM (September quarter)
    10.9%

Q2 FY26

  • Disbursements
    ₹145 Cr
    QoQ -12.7%

H1 FY26

  • PAT
    ₹19.06 Cr
    YoY +24.7%
  • Adjusted PAT
    ₹21.72 Cr
    YoY +42%
  • Disbursements
    ₹311 Cr

What they filed

Q1 FY27: revenue up 34.3%, net profit up 70.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue59 61 74 70 76 +29%79 +30%93 +26%94 +34%
Net profit9 6 15 10 9 +0%10 +67%21 +40%17 +70%
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.

Capital allocation

high confidence
  • Capex Capex disclosed
    • Capital expenditure for opening new branches ₹1.5 lakh
    • Capital expenditure for opening new branches ₹2.5 lakh
    About the branch expenses. So, the opening cost of the, you can say the capital expenditure in opening a branch is around 1.5 to 2.5 lakhs. That is depending upon the category of branches.
  • Debt Debt disclosed Cost 11.1%
    Our cost of borrowing is continuously in a downtrend trajectory, moving to 11.10%, supported by a rear-frame positive credit outlook.
  • Liquidity Cash ₹197.58 Cr · Undrawn ₹406 Cr Sufficient liquidity to cater to almost three to four months of disbursement requirements, along with undone sanctions.
    the company is having INR197.58 crores as of September 30, 2025. That will be catering to almost three to four months of disbursement requirements, along with undone sanctions of INR52 crores around also in hand, that is, tap liquidity that the company is having. I want to highlight undrawn sanctions as of 30th October stood for INR406 crores.

Guidance & targets

AUM

  • AUM Growth CAGR AUM · this year · Medium confidence better numbers, better CAGR

    From almost 32% today

    if you are going to see the coming CAGR, we are growing with almost 32%. So, we are expecting better numbers, better CAGR this year. So, we can't say the forwarding numbers. But yes, we are expecting better AUM growth as compared to previous years.

    — Deepak Baid

  • AUM Growth AUM · Q3 and Q4 · High confidence sustainable growth
    we cannot quote any number, but definitely this growth is sustainable. And we are maintaining in a similar fashion. And definitely in Q3 and Q4, it will be on a better side... we will be able to maintain the same CGR as before.

    — Kuldeep Sikarwar

Asset Quality

  • NPA numbers Asset Quality · this quarter and next quarter · High confidence downturn towards NPA numbers
    So in the future, what we are expecting is that this will be recovered because our 98.2% book is secured and with a very healthy LTV of 45%. And if we take a talk about the NPA cases, so, our NP cases, LTV stood for 35%, which is very healthy. Our collection officers are very confident that this coming quarter -- so, this quarter and next quarter, we will be recovering it. And there will be a good downturn towards NPA numbers.

    — Deepak Baid

Product Mix

  • MSME loan focus Product Mix · going forward · High confidence 80% to 85%

    From 80% today

    our main focus is towards the secured lending and MSME is our main product. So, which is 80%, so we are focusing to continue with this product with 80% to 85%, rest 15%, we will be covering through vehicle loans -- used vehicle loans. And especially, we will be ignoring the high commercial vehicles.

    — Deepak Baid

Branch Expansion

  • New branches to open Branch Expansion · this financial year · High confidence 29
    in the current financial year, we have planned for 29 branches to open in this financial year. Out of 29, 6 has already been opened. And 23 are also in planning.

    — Kuldeep Sikarwar

  • Entry into new state Branch Expansion · by the end of this financial year · Medium confidence one more state
    As well as we are planning to expand in one more state by the end of this financial year. That is under the consideration of the discussion with the management. So, once it will be finalized, we will be letting you know.

    — Kuldeep Sikarwar

Branch Profitability

  • Breakeven for new branches (AUM based) Branch Profitability · High confidence 7 to 8 months with AUM of 1.5 crores
    newly opened branch can achieve a breakeven with 7 to 8 months by achieving a AUM of 1.5 crores around. The breakeven means the expenses of branch in terms of the salary of the branch employees and the regular expenses, set up with the interest income of the branch.

    — Kuldeep Sikarwar

  • Breakeven for new branches (all expenses) Branch Profitability · High confidence within 1.5 years
    if all the expenses including HO and all other expenses have been added into the branch expense of newly opened branch, that can be achieved, the breakeven can be achieved within 1.5 years.

    — Kuldeep Sikarwar

Cost of Borrowing

  • Cost of borrowing Cost of Borrowing · further quarters · Medium confidence cut down this cost more

    From 11.10% today

    So, further we are planning to cut down this cost more and to add more customers in being the competitive market to add more quality customers.

    — Deepak Baid

What to watch in Q3 FY26

NPA reduction and recovery

next quarter
Current GNPA 1.59%, LTV on NPA cases 35%
Target downtrend towards NPA numbers

Why it matters

To verify management's confidence in recovering the recent sequential increase in NPAs, which was attributed to temporary external factors.

So in the future, what we are expecting is that this will be recovered because our 98.2% book is secured and with a very healthy LTV of 45%. And if we take a talk about the NPA cases, so, our NP cases, LTV stood for 35%, which is very healthy. Our collection officers are very confident that this coming quarter -- so, this quarter and next quarter, we will be recovering it. And there will be a good downturn towards NPA numbers.

Risks & concerns

  • Sequential jump in NPAs due to external factors

    medium

    NPAs increased by 0.30 basis points sequentially due to floods in rural areas of Rajasthan and Madhya Pradesh and a general Q2 cash crunch.

    Management acknowledged

  • Stress in heavy commercial vehicle segment

    medium

    The heavy commercial vehicle segment was 'painful' and facing pressure, leading to a strategic shift away from this product.

    Management acknowledged

  • Seasonal impact on collections and demand

    low

    Q1 was slow due to school fees, Q2 due to floods. However, Q3/Q4 are expected to be good due to Diwali season and improved demand.

    Analyst acknowledged

Q&A highlights

6 direct
Sequential jump in NPAs and outlook for recovery Direct
this quarter has shown a little bit of a jump of 0.30 basis because of two, three reasons. So, because first reason is that the flood which has come to the area where we are operating... Second, a little bit of cash crunch was there in a Q2... So in the future, what we are expecting is that this will be recovered because our 98.2% book is secured and with a very healthy LTV of 45%.

Addresses a key concern about asset quality, providing specific reasons for the increase and confidence in future recovery due to strong collateral.

Asked by Akash Jain

Strategic product mix and focus on MSME vs. Commercial Vehicles Direct
our main focus is towards the secured lending and MSME is our main product. So, which is 80%, so we are focusing to continue with this product with 80% to 85%, rest 15%, we will be covering through vehicle loans -- used vehicle loans. And especially, we will be ignoring the high commercial vehicles.

Clarifies the company's strategic shift away from higher-risk heavy commercial vehicles towards secured MSME and lighter vehicle segments.

Asked by Akash Jain

AUM growth outlook for FY26 Partial
if you are going to see the coming CAGR, we are growing with almost 32%. So, we are expecting better numbers, better CAGR this year. So, we can't say the forwarding numbers. But yes, we are expecting better AUM growth as compared to previous years.

Indicates management's expectation of continued strong AUM growth, though without providing a specific numerical target for the full year.

Asked by Akash Jain

NIM numbers clarification for June quarter Direct
net interest margin in June quarter was 10.43%. And in September, it is 10.88%... So, cost of fund has gone down. So, that is one reason... But this is 10.43 only. Anyways, if you want the detail, we can discuss more on that.

Corrects a previously reported NIM figure for the June quarter and attributes the improvement to a lower cost of funds.

Asked by Anmol Das

Operating cash flow being negative for an NBFC Direct
since we are the disbursement, since we are an NBFC, where the disbursement happens, the operating cash flow will be negative anyways? So, the method, which is an indirect method, which is used for the preparing of the cash flow, actually. So, any NBFCs, in the POS as well, you can have a view as well. So, the operating cash flow, where the disbursement happens, it is a negative sign. That's all.

Provides a clear explanation for the negative operating cash flow, reassuring analysts that it is a normal characteristic for a disbursing NBFC using indirect cash flow methods.

Asked by Dhanraj Tolani

Branch expansion plan and breakeven timelines Direct
we have planned for 29 branches to open in this financial year... newly opened branch can achieve a breakeven with 7 to 8 months by achieving a AUM of 1.5 crores around... if all the expenses including HO and all other expenses have been added into the branch expense of newly opened branch, that can be achieved, the breakeven can be achieved within 1.5 years.

Offers specific details on the company's growth strategy through branch expansion, including the number of planned branches and their expected profitability timelines.

Asked by Mahesh Sheth

Trends in 90+ overdue market and customer behavior Direct
We have seen that the customer who have crossed 90 plus have gone down also in a previous quarters also. But new customer has been added. So, we can see that there is a we are able to counter down the customers.

Provides insight into the dynamics of severe delinquencies, indicating that while new customers might be added to this bucket, the company is actively managing and reducing existing 90+ overdue accounts.

Asked by Vinod Shah

2 min read 6 chapters

Detailed narrative

Strong AUM Growth & Portfolio Expansion

Laxmi India Finance Limited achieved a significant 24.75% year-on-year growth in its Assets Under Management (AUM), reaching INR1,386.49 crores as of September 30, 2025. This growth was supported by healthy disbursements, with H1 FY26 disbursements totaling INR311 crores, though Q2 FY26 saw a slight sequential drop to INR145 crores due to weather conditions. The company expanded its footprint to 164 branches across five states, adding 6 new branches in H1 FY26, with plans for 23 more and entry into a new state by year-end.

IPO Bolsters Capital Adequacy and Liquidity

The successful completion of an IPO resulted in an equity infusion of INR151.58 crores, significantly strengthening the company's balance sheet. This boosted the Capital Adequacy Ratio (CAR) to 31.90%, positioning the company for responsible scaling in the coming years. The company maintains strong liquidity with INR197.58 crores as of September 30, 2025, and undrawn sanctions of INR406 crores as of October 30, 2025, ensuring sufficient funds for future disbursement requirements.

Improving Profitability and Cost of Funds

The company reported a PAT of INR19.06 crores for H1 FY26, representing a 24.74% year-on-year growth. Adjusted for IPO-related expenses of INR2.66 crores, the PAT stood at INR21.72 crores, a 42% YoY increase. The cost of borrowing continued its downtrend, reaching 11.10%, a 63 basis points reduction YoY. This improvement, coupled with a yield of 22.18% and a spread of 10.88%, enhances the company's margin while maintaining competitive customer pricing.

Asset Quality Challenges and Recovery Confidence

The company experienced a sequential jump in GNPA to 1.59%, attributed to floods in rural areas of Rajasthan and Madhya Pradesh and a general cash crunch in Q2. Management noted stress in the heavy commercial vehicle segment, leading to a strategic shift. Despite this, the company expressed high confidence in recovery, citing a healthy LTV of 35% on NPA cases and 45% on the overall book. The Provision Coverage Ratio (PCR) stands at 47.22%, and credit cost is 0.72%.

Strategic Product Mix and Digitalization Efforts

Laxmi India Finance is maintaining its focus on secured lending, with MSME loans constituting 80-85% of its portfolio, primarily small ticket sizes. The company is actively moving away from heavy commercial vehicles, instead targeting personal vehicles and LCV segments. Digitalization efforts are underway, with increased adoption of UPI payments for collections, which is improving efficiency and reducing risk. The Laxmi Mitra app is also being enhanced to onboard vendors and generate leads.

Customer Sentiment and Market Dynamics

Customer sentiments are reported to be positive, driven by the recent festival season and expected increase in agricultural output. The new GST regime has also boosted the industry. Management noted that the demand from the customer side is increasing across all states, with improved liquidity positions at the ground level. This positive sentiment is expected to contribute to sustainable growth in Q3 and Q4.

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

More Financial Services earnings calls