Company Overview & Key Financial Metrics

Performance Highlights (Q2 FY25)

1. Revenue and Profitability

2. Loan Book Performance

3. Asset Quality

4. Microfinance Segment

• Portfolio contribution reduced from 18% to 16% YoY
• Elevated credit costs around 10% for H1 FY25
• Additional ₹100 Cr. buffer for SMA book

Future Growth Strategies

1. Loan Disbursement Expansion
   • Small Business Loans: Flagship product expansion through new branch networks
   • Micro LAP: Consistent month-on-month growth
   • Vehicle Finance: Focus on used vehicle segments
2. Technology and Infrastructure
   • CRM enhancements
   • Customer mobile applications
   • “Selfie Loan App” development
   • 40-50 new branches annually
3. Product Diversification
   • Personal loans
   • Credit cards
   • AD-1 financial products
4. Macroeconomic Advantages
   • Strong retail deposit mix (79%)
   • Favorable bond market conditions

Risk Assessment

1. Microfinance Sector Challenges
   • ~50% SMA bucket conversion to NPAs
   • Continued sector stress expected for 2-3 quarters
2. Financial Structure Risks
   • High debt levels (₹37,917 Cr.)
   • Capital allocation requirements
3. Operational Efficiency
   • Cost to Income Ratio: 66%
   • Expected stabilization post-FY27
4. External Factors
   • Interest rate fluctuations
   • Geopolitical risks
   • Market volatility impact on treasury

Valuation and Recommendation

Investment Thesis

• Strong growth in secured loan segments
• Ongoing digital transformation
• Robust retail deposit base
• Long-term growth potential outweighing short-term challenges