Detailed Narrative
Strong Sanctions and Strategic Shift Towards Granular Lending
PTC India Financial Services reported record loan sanctions of INR1,048 crores in Q2 FY26, the highest in the last 10 quarters and exceeding the total sanctions of the preceding five quarters. This reflects the success of the company's business transformation strategy, focusing on granular lending, mid-sized projects (INR50-150 crores), and a shift away from high-value disbursements. The company is also expanding into the SME segment and focusing 100% of its disbursements in the private corporate space.
Continued Improvement in Asset Quality with Major NPA Resolution
The company achieved substantial improvement in asset quality, with Gross Stage III reducing by 75% to INR193 crores and Net Stage III by 83% to INR47 crores in Q2 FY26. A key highlight was the successful resolution of the Vento Power account, which concluded a INR115.6 crores transaction. Management noted no new slippages in Q2 or since FY18, with only one major NPA (Danu Wind, principal outstanding ~INR188 crores) remaining, for which a resolution is actively pursued, expected to yield a write-back of over INR220-230 crores.
Solid Financial Performance and Reduced Cost of Borrowing
For Q2 FY26, PTC India Financial Services reported a revenue of INR132 crores and a PAT of INR88 crores. The company's net worth improved to INR2,978 crores from INR2,754 crores in March 2025. Furthermore, the cost of borrowing was reduced to 9.49% in Q2 from 9.67% in Q1, with two banks already lowering their spreads and ongoing negotiations with others expected to yield further reductions.
Q2 Disbursement Shortfall and Revised Full-Year Targets
Q2 FY26 disbursements stood at INR326 crores, falling short of the projected INR1,000 crores due to extended monsoon season impacting construction and customer demand. Consequently, the full-year disbursement target has been revised downwards to INR2,500-3,000 crores from an earlier INR4,000 crores. However, management expects to make up for the shortfall in Q3, with a robust pipeline of over INR1,000 crores ready for sanction and a target of over INR1,500 crores in sanctions for Q3.
Board Reconstitution Underway Amidst Fundraising Delays
The resignation of three independent directors on September 26, 2025, was acknowledged as a surprise, though management stated it had no impact on credit ratings. Ms. Mini Ipe, a former MD of LIC, has been appointed as an independent director, with steps underway to appoint two more. While the board changes are not expected to affect ratings, management indicated they would push fresh fundraising efforts by a couple of months, requiring a renewed approach to engage stakeholders.
Long-Term Strategic Focus and Stable Credit Cost Guidance
The company is reformulating its long-term strategy, focusing on distributed infrastructure and sustainable finance, targeting smaller ticket sizes (INR50-150 crores) not typically served by larger players. Long-term targets include maintaining a Gross NPA of 3% and Net NPA close to 1%. Annualized credit costs are expected to be managed within 60-70 basis points, reflecting a prudent approach to growth and risk management.