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Shalibhadra Finance Limited — Q4 FY26 earnings call

Call held 1 Jun 2026

Management summary

Shalibhadra Finance reported a strong Q4 FY26, with AUM growing 25% YoY to 220 crores and PAT increasing 21.67% YoY to 19.48 crores. The company outlined its 'Shalibhadra 2.0' strategy, focusing on leveraging its strong capital base, advanced technology, and expanding branch network to reach 500 crores AUM by FY29 and 1,000 crores in the near future. While ROA is projected to slightly decline due to portfolio mix shifts, robust risk management and automation are expected to maintain asset quality.

Highlights

  • AUM grew 25% YoY to 220 crores from 176 crores in FY25.

  • PAT grew 21.67% YoY to 19.48 crores.

  • Robust ROI of 8.65% and ROE of 11.33%.

  • Strong CRAR of 78.28% provides substantial headroom to scale without needing equity dilution up to 1,000 crores AUM.

  • Underwriting process is almost 100% automated, leading to lower operational cost per loan and better oversight.

Concerns

  • ROA is expected to slightly decline to around 7% in the next two to three years from the current 8.65% due to the shift towards higher-ticket segments like Micro LAP and home loans.

  • Yield on advances declined from 25.4% in FY24 to 20.8% in FY26, attributed to increased competition and a focus on acquiring good quality customers.

  • Growth could be hindered by dependence on agriculture, with potential for NPA spikes and slowdown if there is drought or irregular rainfall.

Key financials

2 periods

Headline

  • AUM
    ₹220 Cr
    YoY +25%
  • PAT
    ₹19.48 Cr
    YoY +21.7%
  • ROI
    8.7%
  • ROE
    11.3%
  • GNPA
    2.9%
  • CRAR
    78.3%
  • Net Worth
    ₹172 Cr
  • Total Borrowing
    ₹50 Cr
  • Nationalized Bank Borrowing Share
    40%
  • Credit Cost (Two-Wheeler)
    2%
  • NNPA
    1%

FY26

  • Yield on Advances
    20.8%

What they filed

Q1 FY27: revenue up 15.7%, net profit up 7.4% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue8 10 9 9 9 +15%11 +13%11 +16%11 +16%
Net profit3 5 4 5 5 +38%5 +7%5 +16%5 +7%
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
    • Real estate for new branches ₹15 lakh
    • Other expenses for new branches ₹5 lakh
    With respect to capex, normally there's a capex of 20 lakhs per branch. That is the initial investment which is required... out of which 15 lakhs would be for real estate, 5 lakhs would be other expenses.
  • Debt Gross ₹50 Cr
    So, as on 31st March, our total borrowing was around 50 crores out of which I think 20 crores would be from nationalized banks. So, currently 40% is the nationalized bank borrowing and we expect this to be in the range of 50 to 60%. Going forward, maybe next year, around FY29, 60% would be a better ratio.

Guidance & targets

AUM

  • Total AUM AUM · FY29 · High confidence 500 crores
    Looking forward, our FY29 target is an AUM of 500 crores

    — Vatsal Doshi

  • Total AUM AUM · near future · Medium confidence 1,000 crores
    Till 1,000 crores of AUM, we do not need any further equity dilution. With the use of NCDs and term loans, that is why we have debt, we will be able to reach an AUM of 1,000 crores in near future without diluting equity.

    — Vatsal Doshi

  • Total AUM AUM · within five years · Medium confidence 1,000 crores
    Maybe another two years, within five years, we'll be able to reach 1000 crores AUM if everything goes right.

    — Vatsal Doshi

Branches

  • Total Branches Branches · FY27 · High confidence 100 branches
    We are targeting 100 branches by FY27

    — Vatsal Doshi

  • Total Branches Branches · current calendar year · High confidence 70 branches
    So, branch rollout schedule would be to reach 70 branches by current calendar year. That is our main target.

    — Vatsal Doshi

  • Total Branches Branches · year-end · High confidence 75 branches
    And going forward, maybe it will end the year by 75 branches

    — Vatsal Doshi

  • Total Branches Branches · next year · High confidence 85 branches
    and next year maybe we'll reach 85 branches.

    — Vatsal Doshi

  • Branch Addition Rate Branches · ongoing (36 months) · High confidence one branch per month
    We are targeting one branch every month. That is what our target is. So, within 36 months, we'll add 36 branches.

    — Vatsal Doshi

AUM Composition

  • AUM from existing products AUM Composition · by FY29 (out of 500 crores AUM) · High confidence 300 crores
    So, if we reach a scenario where we reach 500 crores of AUM, I expect that around 300 crores would be from existing products, that is two-wheelers and three-wheelers, four-wheelers.

    — Vatsal Doshi

  • AUM from newer products AUM Composition · by FY29 (out of 500 crores AUM) · High confidence 200 crores
    And around 200 crores of AUM would be from newer products.

    — Vatsal Doshi

Borrowing Mix

  • Nationalized Bank Borrowing Share Borrowing Mix · next year · High confidence 50-60%

    From 40% today

    currently 40% is the nationalized bank borrowing and we expect this to be in the range of 50 to 60%. Going forward, maybe next year, around FY29, 60% would be a better ratio.

    — Vatsal Doshi

  • Nationalized Bank Borrowing Share Borrowing Mix · FY29 · High confidence 60%

    From 40% today

    — Vatsal Doshi

Profitability

  • ROA Profitability · next two to three years · High confidence 7%

    From 8.65% today

    Currently, ROA is in the range of 8.65%. So, within next two to three years, we expect it to be around 7%.

    — Vatsal Doshi

Asset Quality

  • NNPA Asset Quality · next 2-3 years · High confidence around 1%

    From 1% today

    Currently, our NNPA is in the range of 1%. Going forward, I think it will be in the same range. For next 2-3 years.

    — Vatsal Doshi

Product Mix

  • Two-wheelers share Product Mix · next three years · High confidence 60%
    So what, what I said earlier, also what we're targeting is that next three years two wheelers would remain at 60% and what other newer products would be 40%.

    — Vatsal Doshi

  • Newer products share Product Mix · next three years · High confidence 40%

    — Vatsal Doshi

What to watch in Q1 FY27

ROA trajectory

Next 2-3 years
Current 8.65%
Target Moving towards 7%

Why it matters

Key profitability metric, expected to decline due to portfolio mix shift and competition.

Currently, ROA is in the range of 8.65%. So, within next two to three years, we expect it to be around 7%. With the increase in the share of LAP products, the ROA will come down.

Risks & concerns

  • Agricultural dependence leading to NPA spikes and growth slowdown

    high

    Majority of customers depend on agriculture; drought or irregular rainfall could lead to NPA spikes and slow down AUM growth.

    Management acknowledged

  • ROA compression due to portfolio shift and competition

    medium

    Shift to higher-ticket, lower-yield products (LAP, Home Loans) and increased competition expected to reduce ROA from 8.65% to ~7% in the next 2-3 years.

    Management acknowledged

  • Impact of RBI rate hikes on spreads

    low

    While borrowing costs may rise with RBI hikes, lending rates are fixed, leading to spread compression but not affecting core business strategy.

    Analyst acknowledged

Q&A highlights

8 direct
Credit cost for new segments (LAP/Home Loans) vs. vehicle finance Direct
Home loan and mortgage loan would have a lower credit cost compared to a two-wheeler loan... I expect that currently our credit cost is in the range of 2% for two-wheeler loans. We expect that the credit cost will be in the range of 1% in the case of mortgage loan.

Clarifies expected asset quality and profitability profile of new lending segments, showing lower risk for mortgage loans.

Asked by Dhaval Pandya

Impact of portfolio mix shift on NIMs and ROA Direct
So, as we enter into a higher ticket segments like Micro LAP and home loans, the ROA will slightly come down. Currently, ROA is in the range of 8.65%. So, within next two to three years, we expect it to be around 7%.

Provides guidance on future profitability metrics, indicating a slight compression in ROA as the portfolio shifts to lower-yield, higher-ticket products.

Asked by Aryanshi Sanghvi

Strategy for reducing cost of borrowing and upgrading credit ratings Direct
Firstly, that was the first time that we have raised NCD... there will be a gradual reduction in the interest rate that we offer on NCDs... Secondly, we are increasing the share of nationalized banks... once our AUM goes up, say if we reach 500 crores of AUM, there will be an automatic increase in the credit rating.

Outlines the company's strategy to improve its cost of funds and credit profile, crucial for scaling operations efficiently.

Asked by Rohan Choksi

Impact of RBI rate hikes on business Direct
See, all our loans are at a fixed rate of interest at what we lend... So, if there is an increase in rate by RBI, our borrowing cost will go up, which will lead to a lower spread... that does not have much impact on. There's not much business decision that goes into based on RBI interest rates.

Clarifies the company's interest rate risk management, indicating that while spreads might fluctuate, the fixed-rate lending model insulates business decisions from immediate RBI actions.

Asked by Rohan Choksi

Competition in new lending segments and its impact on spreads Direct
There may be some pressure on our margins and maybe in the next two to three years, the ROA will be in the range of 7%. There may be some reduction in spread because of competition.

Acknowledges competitive pressures in the expanding market and its potential impact on profitability, aligning with the earlier ROA guidance.

Asked by Darshil

Risk assessment in rural India where CIBIL data might be limited Direct
We have developed our own unique assessment mechanism for these customers... we make an estimate of how much property he owns, what is the current cash flow... Also, we take local reference checks from two people from the same village... if he has sold some produce in Mandi, then we take the Mandi receipt.

Details the company's proprietary, on-the-ground risk assessment methods for new-to-credit rural customers, highlighting a key competitive advantage and risk mitigation strategy.

Asked by Darshil

Risks to achieving 1000 crore AUM target, specifically geopolitical issues or slowdowns Direct
And what can hinder our growth would be, majority of our customer depend on agriculture as their source of income. So, if there is some drought, or maybe because of there is some irregular rainfall, that would be a dampener because of which there will be a spike in NPAs and we might have to slow down our growth.

Identifies a significant macro-economic risk (agricultural dependence) that could impact asset quality and growth trajectory, providing transparency on potential headwinds.

Asked by Darshil

Underwriting quality and risk management, including role of Chief Risk Officer and AI Direct
We have recently added a new Chief Risk Officer to our team maybe six months back... He has done multiple things to improve the underwriting quality. One could be the new software which he has customized to our needs... secondly there has been made, he has made some changes in our existing credit policies as well.

Highlights recent enhancements in risk management infrastructure and policies, crucial for maintaining asset quality while expanding into new segments and scaling.

Asked by Ayush Divecha

3 min read 8 chapters

Detailed narrative

Q4 FY26 Performance Overview

Shalibhadra Finance reported a strong Q4 FY26, closing the year with an AUM of 220 crores, marking a 25% growth from 176 crores in FY25. Profit After Tax (PAT) grew 21.67% YoY to 19.48 crores, with a robust Return on Investment (ROI) of 8.65% and Return on Equity (ROE) of 11.33%. The company maintained a nearly 100% secured book and a low Gross Non-Performing Asset (GNPA) of 2.94%, alongside a strong Capital to Risk-weighted Assets Ratio (CRAR) of 78.28%.

Shalibhadra 2.0 Strategy & Growth Pillars

The company outlined its 'Shalibhadra 2.0' strategy, anchored by three pillars. First, a strong capital position with a net worth of 172 crores and 78.28% CRAR provides headroom to scale up to 1,000 crores AUM without further equity dilution, leveraging NCDs and term loans. Second, technology is a key differentiator, with deliberate investments in digitization, automation, and AI-led processing across the lending workflow, achieving almost 100% automation in underwriting. Third, the company operates through owned branches, targeting 100 branches by FY27.

Expansion into New Lending Segments

FY26 saw the first meaningful step in the 2.0 strategy with the launch of new lending segments including micro-LAP, property loans, home loans, and personal loans. Management confirmed that the target customer segment for these new products remains the existing customer base, allowing for cross-selling. While credit cost for two-wheeler loans is 2%, mortgage loans are expected to have a lower credit cost of 1%, indicating a potentially lower risk profile for these new segments.

Technology Adoption and Operational Efficiency

Significant investments were made in technology, including proprietary LOS and LMS platforms, managing the full customer journey from digital onboarding to real-time collection monitoring. This automation has led to a reduction in per-branch cost and overall cost-to-income ratio. The company anticipates that technology will continue to drive efficiency and scale, directly translating into faster turnaround times, sharper credit decisions, and better oversight across its branch network.

Funding Strategy and Cost of Borrowing

As of March 31, total borrowing stood at 50 crores, with 40% (20 crores) from nationalized banks. The company aims to increase nationalized bank borrowing to 50-60% in the near term and 60% by FY29, as these banks offer lower interest rates (10-10.5%) compared to the 12% for newly raised NCDs. Management expects a gradual reduction in NCD interest rates as they gain experience. An AUM of 500 crores is expected to lead to an automatic two-notch credit rating upgrade, further improving borrowing costs.

Risk Management and Asset Quality Focus

The company's NNPA is currently 1% and is expected to remain in the same range for the next 2-3 years. To manage risks in new segments, Shalibhadra focuses on salaried customers, government employees, and those with significant agricultural assets, good CIBIL scores (above 700), and low leverage. A new Chief Risk Officer was appointed six months ago, implementing new software and stricter credit policies, such as requiring home ownership and increased down payment for new-to-credit customers, to maintain asset quality during expansion.

Branch Network Expansion

Shalibhadra plans to expand its branch network from 61 to 100 by FY27, with a target of 70 branches by the current calendar year and 75 by year-end. The broader target is to add one branch per month, aiming for 36 new branches in 36 months. Each new branch requires an initial capex of 20 lakhs (15 lakhs for real estate, 5 lakhs for other expenses) and is expected to break even within 1 to 1.5 years, typically reaching 50 lakhs AUM.

Outlook and Long-Term Targets

The company targets an AUM of 500 crores by FY29, with a further aspiration to reach 1,000 crores AUM within five years without equity dilution. The portfolio mix by FY29 is projected to be 60% from existing two-wheeler products and 40% from newer products. While the ROA is expected to slightly decline from 8.65% to around 7% in the next 2-3 years due to the shift towards higher-ticket, lower-yield products and competition, the company believes its robust capital, technology, and branch network will support sustainable growth.

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