Manba Finance Limited — Q2 FY26 earnings call

Call held 12 Nov 2025

Management summary

Manba Finance delivered a strong H1 FY26, with Net Interest Income growing 21% YoY to INR 68 crores and Profit After Tax increasing 26% YoY to INR 21 crores. Asset under management reached INR 1,500 crores, reflecting 36% YoY growth, supported by record October disbursements and strategic expansion in small business loans. While facing a temporary profitability drag from excess liquidity in September and slower used car financing, management is proactively addressing these with new strategies and expects improved performance in H2 FY26, maintaining robust capital adequacy.

Highlights

  • Asset Under Management (AUM) reached INR 1,500 crores as of September 30, 2025, reflecting a robust 36% year-on-year growth.

  • Net Interest Income (NII) for H1 FY26 grew 21% YoY to INR 68 crores, and Profit After Tax (PAT) increased 26% YoY to INR 21 crores.

  • The company achieved a record disbursement of INR 175.40 crores in October 2025, the highest ever, driven by strong two-wheeler demand post-GST rate cuts.

  • Average cost of borrowing was reduced by approximately 100 basis points compared to March, with a target for further 25-50 bps reduction.

  • Capital Adequacy Ratio remains robust at 26.54%, providing ample cushion for future growth.

Concerns

  • QoQ AUM growth of 6% was lower than QoQ NII growth of 14%, partly attributed to the fast run-down of two-wheeler loans.

  • Used car financing segment is growing slower than expected, requiring a strategy change to a co-lending model.

  • Negative carry interest was incurred in September due to holding INR 400 crores of liquidity in anticipation of festival demand.

Key financials

3 periods

Headline

  • AUM
    ₹1,500 Cr
    YoY +36%
  • Average Cost of Borrowing
    10.7%
  • Capital Adequacy Ratio
    26.5%
  • Stage 3 Assets (% of gross)
    3.5%
  • Net Stage 3 Assets (%)
    2.7%

Q2 FY26

  • Credit Loss
    1%

H1 FY26

  • Net Interest Income
    ₹68 Cr
    YoY +21%
  • Profit After Tax
    ₹21 Cr
    YoY +26%
  • Net Interest Margin
    12.6%

What they filed

Q1 FY27: revenue up 38.8%, net profit up 30.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue65 69 68 67 78 +20%90 +30%93 +37%93 +39%
Net profit12 13 8 10 11 −8%13 +0%11 +38%13 +30%
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
  • Liquidity Liquidity disclosed INR 400 crores of liquidity was held in September for expected festival demand, leading to negative carry interest. This liquidity has now been deployed for new business.
    So, profitability is, you know, major of the disbursement are only happening in the third and third quarter only. So, and as I already told you that we are sitting on the 400 crores rupees of liquidity, so, that, you know, negative carry interest was more in the month of September. But from October, this is all used for the new business, new disbursement.

Guidance & targets

AUM

  • AUM AUM · FY26 · High confidence INR 1,700 crores to INR 1,750 crores
    Yes. So as already I discussed in the first quarter earning also, we were expecting anything between INR1,700 crores to INR1,750 crores AUM by end of this financial year.

    — Manish Shah

Growth

  • CAGR Growth Growth · next coming year · High confidence 30% to 35%
    but I can just say that whatever you know 30% CAGR growth 30% to 35% what we are reflecting in the previous last two to three years that is going to remain same in the next coming year also because this year PAT is also going to be very good because this is only up to September result.

    — Manish Shah

Profitability

  • Annual Profit Profitability · in two or three years · Medium confidence INR 100 crores
    earlier we were very ambitious and we guided for a INR100 crores type of annual profit in two or three years.

    — Manish Shah

Small Business Loan Portfolio

  • Unsecured SBL AUM Small Business Loan Portfolio · High confidence INR 85 crores to INR 90 crores max
    So, AUM will be stand at around INR85 crores to INR90 crores max, because we have a board approval not to go more than 7% of the total AUM.

    — Manish Shah

Cost of Borrowing

  • Cost of Borrowing Reduction Cost of Borrowing · coming quarter · High confidence 25 to 50 basis points
    It will come down by another 25 to 50 basis point down in the coming quarter.

    — Jay Mota

What to watch in Q3 FY26

Used Car Financing Performance

next quarter
Current Slower than expected, INR 20 crores disbursed, strategy changing to co-lending.
Target Improved volume and customer profile with co-lending model.

Why it matters

To assess the effectiveness of the new co-lending strategy and its contribution to AUM and profitability.

Used financing, it's going a little slow. I -- in fact, I will say slower than what we are expecting because the area, we have started only very, very few areas... So now we are changing the strategies. And now we are going on for used car with the co-lending model.

Risks & concerns

  • Slower-than-expected growth in used car financing

    medium

    Used car financing is 'going a little slow' and 'slower than what we are expecting' due to difficulty in finding right profile customers for target IRR, leading to a strategy change.

    Management acknowledged

  • Negative carry interest due to holding excess liquidity

    low

    INR 400 crores liquidity held for festival demand caused negative carry interest in September, impacting Q2 profitability, but this liquidity is now deployed.

    Management acknowledged

  • Marginal increase in Net Stage 3 assets

    low

    Net Stage 3 assets increased marginally to 2.68% from 2.64%, indicating a minor increase in delinquency, but credit risk is 'overall contained'.

    Management acknowledged

Q&A highlights

6 direct
Two-wheeler demand scenario post-festival and GST impact Direct
October we all know that two-wheeler sale has been jumped by 50% and still after going for 50% there are lot of products and lot of dealers are still shortage of vehicle supply. So, that vehicle supply now it is coming up. So, November is also going well and because of the rate cut, the people who were supposed to buy in the year or two, they are now making their mind and coming forward to buy the new vehicle.

Highlights the significant positive impact of GST rate cuts on two-wheeler sales, leading to record October disbursements and a strong outlook for the coming quarters.

Asked by Mitul Shah

Disconnect between AUM growth and Net Interest Income growth Direct
Yeah, because you know it is incremental AUM we are talking about 6%. There is a huge disbursements are happening and in the two-wheeler the average loan tenure is only 24 months. So, it run down also fast. So, in the quarter, disbursement are pretty high and we also get a substantial earning on the processing fees and all also.

Clarifies that the lower AUM growth relative to NII growth is due to high disbursements, fast loan run-down, and processing fees, indicating healthy business activity despite the AUM metric.

Asked by Sudarshan

Strategy for Used Car Financing Direct
Used financing, it's going a little slow. I -- in fact, I will say slower than what we are expecting because the area, we have started only very, very few areas... So now we are changing the strategies. And now we are going on for used car with the co-lending model.

Reveals a challenge in a new segment and management's proactive strategy change to a co-lending model to improve customer profile and volume, indicating adaptability.

Asked by Sudarshan

Expansion of Small Business Loan (SBL) portfolio and future mix Direct
So that is going on very well. And month-on-month, we are our disbursement numbers are also increasing our AUM which stood at INR48 crores in the quarter 1 today, and it has gone almost INR70 crores... So very soon, latest by January, we'll start the MSME LAP. So that will be completely a secured loan.

Highlights the successful growth of the SBL portfolio and the upcoming launch of a secured product (MSME LAP), which will diversify the portfolio and potentially improve asset quality and blended yield.

Asked by Sudarshan

Profitability disconnect despite strong disbursement and revenue growth Direct
So, profitability is, you know, major of the disbursement are only happening in the third and third quarter only. So, and as I already told you that we are sitting on the 400 crores rupees of liquidity, so, that, you know, negative carry interest was more in the month of September. But from October, this is all used for the new business, new disbursement. And definitely, of course, the path is better only. But still, from the quarter three and quarter four, it seems it is going to be much better than what we have performed in the first half.

Explains the temporary drag on profitability due to holding excess liquidity and reassures investors that profitability is expected to improve significantly in the latter half of the fiscal year as this liquidity is deployed.

Asked by Shreya

Management of funding costs Direct
So, as far as the cost of borrowing is concerned, we have reduced our cost of borrowing by around 100 basis point compared to the borrowing we have done in the month of March... And further, we will be able to reduce the rate of interest and we are targeting K. It will come down by another 25 to 50 basis point down in the coming quarter.

Demonstrates proactive cost management and provides specific guidance for further reduction in funding costs, which will positively impact Net Interest Margin and overall profitability.

Asked by Shreya

2 min read 6 chapters

Detailed narrative

Robust AUM Growth and Strong Disbursement Momentum

Manba Finance demonstrated strong growth, with Asset Under Management (AUM) reaching INR 1,500 crores as of September 30, 2025, marking a 36% year-on-year increase. The company achieved a record-high disbursement of INR 398 crores during H1 FY26, up from INR 345 crores in the prior year. Notably, October 2025 saw a record disbursement of INR 175.40 crores, the highest ever for Manba Finance, primarily driven by a 50% jump in two-wheeler sales post-GST rate cuts, with strong momentum expected to continue.

Healthy Financial Performance in H1 FY26

For the first half of FY26, Manba Finance reported a Net Interest Income (NII) of INR 68 crores, reflecting a 21% year-on-year growth. Profit After Tax (PAT) for the same period increased by 26% year-on-year to INR 21 crores. The Net Interest Margin (NIM) remained strong at 12.56%. For Q2 FY26 specifically, NII stood at INR 38 crores (9% YoY growth) and PAT was INR 11 crores, indicating healthy profitability despite a competitive operating environment.

Improving Funding Efficiency and Stable Asset Quality

The company's average cost of borrowing was 10.67%, benefiting from improved lender relationships and favorable market conditions, with management targeting a further 25-50 basis points reduction in the coming quarter. Asset quality remained stable, with Stage 1 assets comprising 92.80% of the total portfolio. While Net Stage 3 assets marginally increased to 2.68% from 2.64%, the overall credit risk was contained, and credit loss for the quarter remained below 1%. Capital adequacy remains robust at 26.54%.

Strategic Expansion in Small Business Loans and Geographical Reach

Manba Finance is actively expanding its small business loan (SBL) portfolio, which grew from INR 48 crores in Q1 to almost INR 70 crores. The company plans to launch MSME LAP, a secured loan product, by January, aiming for a blended yield of 20-21% (unsecured at 24-26%, secured at 18-19%). Geographically, the focus is on deepening presence in existing states like Uttar Pradesh, with 12 new locations added and 10-15 more in the pipeline, alongside new BC partnerships to enhance distribution without direct operational costs.

Technology-Driven Operational Enhancements

The company continues to invest in digital initiatives to boost efficiency and customer experience. During the quarter, it launched instant disbursement via JustPay and implemented a straight-through process. Manba Finance also introduced HTP mode for used two-wheeler loans, a first in the industry, and integrated DigiLocker for seamless and paperless loan documentation, streamlining its operations.

Outlook on Profitability and AUM Targets

Management anticipates a significant improvement in profitability during Q3 and Q4 FY26, as the INR 400 crores of liquidity held in September (which caused negative carry interest) has now been fully deployed for new business. The company reiterated its AUM target of INR 1,700 crores to INR 1,750 crores by the end of FY26, consistent with its long-term goal of 30-35% CAGR growth and an annual profit of INR 100 crores in the next two to three years.

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