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    Laxmi India Finance Q4 FY26 earnings call

    LAXMIINDIA
    Financial Services·14 May 2026
    Management Summary

    Laxmi India Finance delivered a strong Q4 and FY26, marked by over 27% AUM growth to INR1,626 crores and a 38% increase in PAT to INR49.7 crores. This performance was bolstered by healthy NII growth, NIM expansion to 11.26% driven by reduced borrowing costs, and a one-off direct assignment transaction. The company maintains robust capital adequacy at over 26% and aims for 30-35% annual AUM growth and 40-45% PAT growth, underpinned by disciplined underwriting and strategic branch expansion.

    Highlights

    5

    • AUM grew over 27% YoY to INR1,626 crores in FY26, with on-book AUM at INR1,519 crores.

    • PAT increased over 38% YoY to INR49.7 crores in FY26, supported by a one-off DA transaction contributing INR8.66 lakhs in Q4.

    • Net Interest Income grew nearly 39% YoY to INR161 crores in FY26.

    • Average cost of borrowing reduced to 10.8% from 11.48% in FY25, and NIM expanded to 11.26%.

    • Capital Adequacy Ratio improved to over 26%, and Net Worth increased to INR465 crores, providing strong growth headroom.

    Concerns

    2

    • Customer base growth was modest at 4.8% quarter-on-quarter, with strong revenue/PAT growth partially attributed to a one-off DA transaction.

    • Vulnerability of the semi-urban/underbanked portfolio to local economic disruptions, though management highlighted robust mitigation strategies.

    What Changed2

    vs Q1 FY27

    Guidance items8 → 5 (-3)Risks discussed2 → 3 (+1)

    Key financials

    Single quarter

    15 metrics
    1. 01AUM₹1,626 Cr+27%YoY
    2. 02On-book AUM₹1,519 Cr
    3. 03Disbursement₹821 Cr
    4. 04Customers42,800 count
    5. 05Net Interest Income₹161 Cr+39%YoY

    Capital allocation

    1
    high confidence
    CategoryHeadline
    Liquidity

    Liquidity disclosed

    Capital Adequacy Ratio improved to over 26% post-IPO, providing adequate headroom to support future growth.

    Guidance & targets

    5
    CategoryTargetPriority
    Volume
    AUM Compound Growth
    30% to 35%
    		High
    Profitability
    PAT Growth
    40% to 45%
    		High
    Profitability
    RoE
    above 12%, 12.5%
    		Medium
    Profitability
    RoA
    above 3%
    		Medium
    Debt
    Cost of Borrowing Reduction
    20 to 25 bps
    		Medium

    What to watch in Q1 FY27

    5

    AUM Growth

    medium term (next quarters)
    Current>27% YoY (FY26)
    Target30-35% annual growth

    Why it matters

    Key indicator of the company's ability to execute its growth strategy and expand its market presence.

    Looking ahead, with our strengthening capital base, expanding distribution network, improving funding profile, and scalable operating platform, we expect a compound growth of AUM at around 30% to 35% annually over the medium term⏳s.

    Risks & concerns

    3
    RiskSeverity

    Vulnerability of semi-urban/underbanked portfolio to local economic disruption

    Management acknowledges vulnerability but highlights robust underwriting, secured portfolio, and joint family system support as mitigants against local economic disruptions, rural slowdown, political events, and El Nino. — Analyst downplayed

    medium

    Competition from larger banks and Fintechs in MSME lending

    Management states their niche in serving 'non-income proof' customers and their 98% secured book differentiates them from banks (documentation requirements) and Fintechs (unsecured lending). — Analyst downplayed

    low

    Impact of global scenarios (energy, geopolitical) on business

    Management believes their customer base in Tier 2/3 cities, cash-flow driven businesses, and small vehicle portfolio (9%) are not highly dependent on oil or other global factors, thus limiting impact. — Analyst downplayed

    low

    Q&A highlights

    8

    “So actually, if you're going to see our footprints in Laxmi India, we have presence in only five states in Bharat. So we believe that we can grow, we can have more branches in other states where the requirement or where the businesses requirement is there.”

    Addresses how the company plans to achieve aggressive growth targets in a competitive environment, emphasizing geographical expansion and cautious branch opening.

    asked by Deepesh Sancheti

    2 min read6 chapters

    Detailed Narrative

    01

    Strong Financial Performance in FY26

    Laxmi India Finance reported a robust FY26, with Asset Under Management (AUM) growing over 27% year-on-year to INR1,626 crores. Net Interest Income (NII) increased by nearly 39% to INR161 crores, and Profit After Tax (PAT) surged over 38% to INR49.7 crores. This performance was supported by an expanded Net Interest Margin (NIM) of 11.26% and a reduced average cost of borrowing at 10.8% from 11.48% in FY25.

    02

    Strategic Growth and Expansion

    The company is pursuing a calibrated growth strategy, targeting a compound annual AUM growth of 30-35% and PAT growth of 40-45% over the medium term⏳. This will be achieved through geographical expansion into new states like Maharashtra and Uttar Pradesh, alongside strengthening density in existing markets. The branch-led model, with 176 branches across six states, focuses on underserved semi-urban and rural borrowers, with nearly 37% being first-time borrowers.

    03

    Robust Asset Quality and Risk Management

    Despite rapid growth, asset quality remains stable with Gross NPA at 2.13% and Net NPA at 1.09% as of March 2026. The company maintains a healthy Provision Coverage Ratio (PCR) of 49%, supported by a highly secured portfolio (98% of book) with an average Loan-to-Value (LTV) of 45% and 35-38% on NPA cases. Rigorous underwriting, including physical visits, RCU processes, and CIBIL checks for all family members, mitigates risks in its vulnerable customer segments.

    04

    Capital Adequacy and Funding Profile

    The company's capital position significantly improved post-IPO, with net worth increasing to approximately INR465 crores and a Capital Adequacy Ratio (CAR) exceeding 26%. This provides ample headroom for future growth. The recent credit rating upgrade to Acuite A/Stable outlook and relationships with over 40 lenders are expected to further diversify its liability franchise and reduce the cost of borrowing by an additional 20-25 basis points.

    05

    Operational Efficiency and Technology Adoption

    Laxmi India Finance is continuously investing in technology and infrastructure to enhance operational efficiency and risk control. Its digitalized ecosystem includes LOS/LMS platforms, CKYC integration, automated workflows, and CRM systems. The company aims to improve branch productivity and maintain underwriting discipline as it scales, with a focus on a cautious approach to new branch openings, which typically breakeven within 7-8 months at an AUM of INR1.5-2 crores.

    06

    Q4 Profitability Boost from DA Transaction

    The significant quarter-on-quarter increase in PAT and revenue was partly attributed to a Direct Assignment (DA) transaction of around INR41 crores in Q4 FY26. This transaction contributed an upfront profit of INR8.66 lakhs, which was included in the revenue and NIM for the quarter. This one-off📎 gain provided a temporary boost to reported profitability metrics beyond the organic growth from customer base expansion.

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