Margins miss guidance; Affordable segment ramp nascent, long-term trajectory intact

Delivered ₹557.3 Cr, confirmed as 4.5% YoY growth

NIM 3.50% is 5–15 bps BELOW prior guidance range of 3.55–3.65%

Aligned with 18–20% FY27 guidance; retailportfolio 16% YoY ₹89,178 Cr

Net recognized growth only 18% YoY due to accounting change from check handover to realization

Growth rate achieved but contribution still below 45% target; only 11% YoY on apple-to-apple net basis

Prior guidance was 2.4–2.5%; now 2.4% (lower end), suggesting subtle downgrade

NIM 3.50% vs prior 3.55–3.65%; ROA cut to 2.4% FY27 from prior 2.4–2.5% (lower end), suggesting cautious reset

11% YoY growth vs 50–60% FY27 target; new CBO-led ramp only in early stages (July shows promise)

Incremental cost rose 18 bps in Q1; only partial relief from rating upgrades (~10 bps) expected

Gross NPA 0.95%, recoveries ₹67 Cr, negative credit cost -12 bps maintained vs prior calls

Margins and yield have bottomed. From H2 FY27 onwards, gradual improvement. 2-year horizon: Affordable mix rises to ~50%, improving margins. Construction finance capped at 3%.

Yes, Q2 will catch up. July already shows very good momentum. 18–20% guidance will be beaten.

Ending numbers understate avg leverage: 3.6 to 3.75. Q4 had high disbursements realized this quarter, plus flow-through impact of Q4 borrowings.

All segments transitioned from check handover to realization. Affordable apple-to-apple is 11% YoY.

Should remain negative this year with good recovery sight line. Long-term ROA 2.3–2.35%, this year 2.4%.

Some improvement in cost-of-borrowing post Q1 peak. Yields improving, Affordable/CF/Emerging mix offsets any further cost pressure. Rating upgrades to follow.

Last year repo rates were different, incremental yields fell industry-wide. Now no further repo cuts expected; only mix improvement will drive yield gains going forward.

Affordable: 2.5x to 2.6x higher. Overall: 60–70% higher net-to-net.

2.4% is the range we want to maintain. Affordable ramp under new CBO leadership is promising.

Prime mix has shifted to self-employed (better yields). Affordable 50–60% guidance will hold. July Affordable from Prime/Emerging branches doubled Q1 contribution.

Affordable yield up 50 bps from Q4 to Q1. Other products also improved. Confidence that spreads will improve.

10–15 bps benefit from mix shift. Without shift, would be stable at 8.92–8.95%.

Seasoned team in underwriting; delinquency in Prime/Emerging has actually improved sequentially despite mix shift. Collections and monitoring robust.

Around 10 bps benefit at least should come in fresh borrowing.

No recovery factored in FY27 as legal process takes time. Remedial actions started; dependent on buyer-seller meetings.

Affordable BT-in drastically down to 3.4% from 10.5% YoY. Company-level down 60 bps. Focus on new customer.

Fee income is not impacted by check realization change; it tracks committed disbursements. Fee growth should align with disbursement growth FY27.

Q1 delivered 15% YoY; check handover basis shows 18%, aligning with mid-range. Management guides they will 'beat' guidance.

Q1 showed only 11% YoY on apple-to-apple basis; new CBO-led strategy and Prime/Emerging sourcing starting to contribute in July. Execution risk remains high.

Q1 NIM 3.50% misses prior 3.55–3.65% guidance. Improvement dependent on rate environment (repo stable), mix shift (Affordable ramp slow), and cost stabilization (incremental borrowing costs still elevated).

Maintained sequentially but down from ~2.3–2.4% in prior years. Upside hinges on Affordable mix (currently 41%, target 45–50%) and yield stability in repo-hold scenario.

Affordable disbursement only 11% YoY vs 50–60% FY27 target. Segment critical to NIM expansion thesis. New CBO-led team and July momentum cited, but Q1 delivery fell short. Risk: mix shift stalls, limiting margin recovery.

Q1 NIM 3.50% falls 5–15 bps below prior guidance 3.55–3.65%. Cost of borrowing up 18 bps driven by liquidity tightness. Management claims 'bottoming' but evidence weak: 19 bps QoQ decline, incremental costs still elevated, mix improvement slow.

RBI cut FY27 GDP growth forecast from 6.9% to 6.66%; US-Iran conflict, oil price volatility, monsoon uncertainty cited. Housing demand has held up, but consumer sentiment risk if rates stay elevated or credit tightness worsens.

Q1 recoveries from written-off pool ₹67 Cr yielded -12 bps credit cost. Pool declining to ₹340 Cr; recoveries will naturally slow. ROA guidance of 2.4% FY27 assumes continued negative cost, but quantum erosion ahead. Fraud account (₹420 Cr, legacy FY22-23) unlikely to yield recovery in near term.

Transition from check handover to check realization basis creates ₹18–17 Cr lag between gross and net recognition. While non-recurring, it masks true Q1 disbursement momentum and complicates YoY comparisons for 2–3 quarters. Analyst skepticism on 56% growth figure is justified.