Laxmi India Finance Limited — Q3 FY26 earnings call

Call held 23 Feb 2026

Management summary

Laxmi India Finance Limited reported a strong 9-month performance with AUM reaching ₹1,451 crores and PAT of ₹29 crores. The company is focused on MSME secured lending, expanding its branch network, and leveraging technology to improve efficiency and reduce costs. A one-off NPA hit from a direct assignment transaction impacted current profitability metrics, but management expects full recovery and aims for an ROA of 3.5-3.75% and 30% AUM growth.

Highlights

  • AUM reached 1,451 crore for the last 9 months.

  • PAT of around 29 crores for the last 9 months.

  • Return on asset (adjusted for one-off NPA) would be 3.31%.

  • Cost of funds reduced by almost 64 bps to 10.94%.

  • Collection efficiency is 89%.

Concerns

  • Gross NPA increased to 2.4% due to a one-off DA transaction default.

  • Employee cost increased from 17 crore to 19 crore this quarter.

  • Still needs to make 8 crores more provision for the DA default in Q1 FY27.

Key financials

2 periods

Headline

  • AUM
    ₹1,451 Cr
  • PAT (9 months)
    ₹29 Cr
  • Return on Net Worth (9 months)
    11%
  • Return on Asset (9 months)
    2.5%
  • Gross NPA
    2.4%
  • Net NPA
    1.4%
  • Cost of Funds
    10.9%
  • Lending Rate
    21%
  • Collection Efficiency
    89%
  • Capital Adequacy Ratio
    28%

Q3

  • Employee Cost
    ₹19 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
  • Debt Debt disclosed Cost 10.9%
    So, now, I think so, our cost of fund has come to 10.94%, which have reduced almost 64 bps and the cost of fund and now we are approaching our rating agency also.
  • M&A Up Money (Jalandhar-based NBFC) Acquisition · Integrated · AUM ₹500 Cr

    Secured DA transaction to acquire a secured asset book of 500-600 crores.

    Default in this acquired book led to an NPA hit, requiring 9 crores provision already and 8 crores more in Q1 FY27.

    Yeah. So, Rakesh, this is like one DA transaction what we have done, this is a, which we got burst and this scenario in India is very less, like any DA transaction, it's not a common scenario. This is a very, what you can say, rare to rare has happened and this was a Jalandhar-based NBFC, Up Money, so it has an AUM of 500 to 600 crores and there we have done a secured DA transaction. Secured - we have purchased a secured asset. So, that has got defaulted. So, that is why this NPA has shoot up.

Guidance & targets

Profitability

  • Return on Asset (ROA) Profitability · High confidence 3.5 to 3.75%
    Strategic priorities, largely opting leverage, they can reach to ROAs of 3.5 to 3.75. So, that is what they are targeting.

    — Deepak Baid

Growth

  • AUM Growth Growth · High confidence 30%
    AUM growth of 30%, diversified their borrowing and liability franchise, remain at the forefront of technology advancement.

    — Deepak Baid

  • Branch AUM Growth Growth · year on year basis · High confidence 25 to 30%
    So, as far as the branch AUM is, the branch AUM will also grow by around 25 to 30% year on year basis.

    — Kuldeep Singh Sikarwar

  • Loan Disbursement Growth Growth · Q4 and FY27 · High confidence 30%
    Yeah, minimum. So, if you want to see the past also, we have grown with the 30-35 percentage on a year-to-year basis. So, we will be continuing with that.

    — Deepak Baid

Cost of Funds

  • Cost of Funds Cost of Funds · Medium confidence single digit
    So, once these lines and windows will open for us, then our pricing, what we expect is that we will touch somewhere around in a single digit.

    — Deepak Baid

Rating

  • Rating Upgrade Rating · this financial year only · Medium confidence good outlook, positive outlook
    So, we are expecting some good outlook, positive outlook by this financial year only.

    — Deepak Baid

Expansion

  • Branch Expansion Expansion · this year · High confidence add Maharashtra
    And we are planning to add Maharashtra also by this year.

    — Deepak Baid

What to watch in Q4 FY26

Recovery from DA transaction NPA

Q1 FY27
Current 9 crores provision made, 8 crores more needed
Target Significant recovery and reduction in remaining provision

Why it matters

Recovery will directly add to PAT and improve asset quality metrics, confirming the 'one-off' nature of the hit.

So, we have done almost 9 crores. So, now more, still 8 crores more has to be done. In Q1 that will come.

Risks & concerns

  • One-off NPA from Direct Assignment (DA) transaction

    medium

    A secured DA transaction with Jalandhar-based NBFC, Up Money (AUM 500-600 crores), defaulted, leading to an NPA hit. 9 crores provision made, 8 crores more needed. Management expects full recovery.

    Management acknowledged

  • Increased Employee Cost

    low

    Employee cost increased from 17 crore to 19 crore this quarter, attributed to opening 20-23 new branches this year. Management views this as an investment for future growth.

    Analyst acknowledged

  • Competition in MSME lending

    low

    Competition is growing in the market, but management believes their robust systems and direct approach to finding customer income provide a USP.

    Management acknowledged

Q&A highlights

7 direct
Impact of one-off NPA on profitability and recovery outlook Direct
Otherwise, my return on asset is 3.31%. So, return on asset is also, would be better. The PAT has also been better and NPA would be in 0.94. So, I believe this is a one-time hit what a company has, this has come to company. But otherwise, I believe, and this is a secured transaction also. So, I believe we will be able to collect it very, very soon and this whatever collection where we get, so directly will be added to a PAT.

Clarifies the nature and impact of the NPA, indicating it's a one-time event with expected recovery, which significantly improves the underlying profitability metrics.

Asked by Rakesh Arora

Remaining provision for the one-off NPA Direct
So, we have done almost 9 crores. So, now more, still 8 crores more has to be done. In Q1 that will come.

Provides a clear timeline and amount for the remaining provisioning, allowing investors to model future earnings more accurately.

Asked by Rakesh Arora

Strategy for MSME lending to non-CIBIL customers and competitive advantage Direct
So, these customers are like, when we have started this business, so this was a big challenge to how to find out their income and how to find out the way where they can, we can have a transparency. So, we have made our application or our team a strength in that way that it is, for them, it is very easy to find out the excess income or really what income they are earning on a monthly basis and by evaluating, then we can take a call.

Explains the company's unique underwriting approach for informal sector customers, highlighting their USP in a competitive market.

Asked by Rakesh Arora

Collateral management and family involvement in loans Direct
So, like if let us say father is taking a loan, so his family, complete family has to come into the deal and then everyone has to give the sign, the documents and including the ladies, SPDC is what we are taking. So, this makes us a little bit different from other, you can say that and by giving no diversion in this.

Details a key risk mitigation strategy (family involvement, registered mortgage) that strengthens the security of their loans, especially in rural areas.

Asked by Rakesh Arora

Cost of sourcing and operating expenses for small ticket loans Direct
But the main thing is that how much clarity is your, transparency you are maintaining with your customer is most important. So, what I mean is, this costing will, is going down, will go down, because lot of now applications, what we are, applications we are using, where this cost of, cost will go down and lot of such applications will give a real time, in fact, real time approach to a customer also.

Addresses concerns about high operating costs, explaining that current costs are due to direct sourcing and technology investments are expected to reduce them in the future.

Asked by Rakesh Arora

Employee cost increase without additional business Direct
Yes. So, as we have opened new branches this year. So, we have ordered only, we have added almost 20-23 branches this year, exactly a number not wrong, 20-23 branches we have added. So, that has come and little bit due to Q2 was little bit slow.

Explains the increase in employee costs as an investment in new branch expansion, which is expected to yield returns in coming quarters.

Asked by Rakesh Arora

Plans for gold loan business Direct
Well, in this, some of the players have really done a tremendous, shown a tremendous growth in a gold loan. But yes, this, we do not have such any, any such plans to enter in a gold loan right now. Because again, this comes with a cost.

Clarifies that the company has no immediate plans to enter the gold loan segment, despite its growth, due to cost and risk considerations, maintaining focus on secured lending.

Asked by Rakesh Arora

2 min read 6 chapters

Detailed narrative

Company Overview and Growth Strategy

Laxmi India Finance Limited, an NBFC headquartered in Jaipur, reported an AUM of ₹1,451 crores and PAT of ₹29 crores for the last 9 months. The company, led by MD Deepak Baid, focuses primarily on secured lending to MSMEs, constituting 83-84% of its book, with an average ticket size of ₹7-8 lakhs. The strategy involves direct customer engagement through its extensive branch network and leveraging technology for efficient operations and risk management. The company aims for a 30% AUM growth and an ROA of 3.5-3.75%.

Product Portfolio and Customer Profile

The core product is SME MSME loans, secured by residential or commercial properties with an LTV of 45-50%. The company also offers vehicle lending for old vehicles (3-10 years old) and a small proportion of personal and business loans. Customers are typically small-time business owners in tier 2 and tier 3 cities, often non-income proof (NIP) customers without formal financial records. The company assesses their income by visiting their shops, checking diaries, and cross-referencing with neighbors and local businesses.

Asset Quality and NPA Management

The reported Gross NPA is 2.4% and Net NPA is 1.4%. These figures were impacted by a one-off default from a secured Direct Assignment (DA) transaction involving a ₹500-600 crore book from Up Money, a Jalandhar-based NBFC. The company has already made a provision of ₹9 crores and expects to make an additional ₹8 crores in Q1 FY27. Management is confident in recovering the amount due to the secured nature of the transaction and robust collection efforts, which currently yield an 89% efficiency.

Cost of Funds and Profitability Outlook

The cost of funds has reduced by 64 basis points to 10.94%. The company is actively pursuing a rating upgrade, which is expected this financial year, to further reduce its cost of funds to a single-digit percentage. This, combined with improved operational efficiency through technology (e.g., e-signature, CKYCs) and a focus on quality, is expected to drive ROA to the targeted 3.5-3.75% and adjusted Return on Net Worth to 14.31%.

Branch Network and Sourcing Strategy

Laxmi India Finance operates over 170 branches across Rajasthan, Gujarat, Madhya Pradesh, Chhattisgarh, and Uttar Pradesh, with plans to expand into Maharashtra this year. The company employs 1753 staff who directly source business, leveraging local knowledge. While the operating cost is currently high (around ₹90 crores), it is seen as an investment in direct customer relationships and transparency. New branches typically break even once their AUM reaches ₹1-1.5 crores, and existing branches contribute positively to the P&L.

Capital Adequacy and Future Growth

The Capital Adequacy Ratio stands at 28-29% as of December. The company aims for a debt-to-equity leverage of 4-4.5, after which it plans to raise new funds. Currently, the focus is on organic growth of its own book, targeting a 35% CAGR, and is not actively pursuing co-lending partnerships. There are no immediate plans to enter the gold loan segment due to associated costs and risks, maintaining a focus on secured lending.

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