Recovery solidifying, macro caution tempers growth push

Delivered ₹201.8 Cr revenue, ~₹202 Cr gross income, 33.6% YoY growth

Delivered ₹45.2 Cr PAT; ₹60 Cr swing from loss position = ~410% recovery

Management stated figures exact; trending positive across quarters shown

OPM 60.4% = cost ratio ~39.6%; verbal claim of 44.3% vs delivered ~40%

Delivered numbers exact match; highest Q1 disbursements claimed and supported

Management acknowledged Q1 slower than personal expectation but acceptable

Was 9% Q4 FY26, now 8% Q1 FY27, targeting 7% by March. Cost leverage visible as portfolio grows.

Now 33% of book vs lower prior. Management shifting away from JLG reliance, sees individual performing better than JLG on AQ.

Rohan asked about '25–30% AUM growth guidance'; Aalok didn't confirm, instead emphasized discipline. Aligns with prior cautious stance.

GNPA 2.76% (vs 3.8% peak in Namra). Reflects credit structure strengthening & collection discipline yield.

Aalok: 'ground level environment not easy,' rural income flat, inflation up, West Asia disruptions absorbed but monitoring. No escalation but no removal of caution.

Primarily PTSD. Ground data favorable but macros worry me: rural income flat, inflation up, jobs exist but wrong type. Discipline prevents repeat of post-COVID euphoria.

Won't quantify. Credit costs are cyclical; history wrong. Balance sheet supports growth sacrifice today for 1% better cost tomorrow is wrong logic. When things go wrong, very quick.

No sacrifice yet. People have short memories; in 6–12 months pressure may return. Tweaking filters is common; I'm not immune. Typical human behavior.

₹185 Cr write-off pool sold to ARC March 2025. ~10% recovery this year, 3–4% overall—good. 12–18 months remaining before full sale.

Liquidity not high. Maintaining ₹300 Cr (~1.5 months repayment + 1 month disbursement). Goldilocks—not high, not low.

Yields: No rate cuts yet; customers affordable, RBI watching. Rates reasonable. Debt cost: Coming down marginally, targeting 20–30 bps via rating upgrades. Opex: 8% now (was 9%), target 7% by March. Infrastructure can handle ₹750 Cr/Q disbursement.

Telangana sectoral issues. Everyone reporting Telangana stress, 10–15 bps upward there. Other states stable. No broad competition risk visible.

Portfolio growth. MFI +₹200 Cr, Arman +₹100 Cr. NPAs came down but provision pools grow with portfolio size.

Marginal rain impact (Gujarat, U.P., Bihar). July slightly lower than June (3 bps zero-DPD), cyclical, being absorbed. Nothing concerning immediately.

Expect 3–3.5% going forward (not a formal guidance). With CGFMU cost, 3% sounds right, maybe 2.5%, 2% if lucky.

JLG no longer provides risk mitigation like 10 years ago. Still has opex advantages. But cannot rely on JLG alone; individualized credit assessment mandatory. Business more complex now; one-size-fits-all credit policy insufficient.

100%. Already achieved in Q4 (₹738 Cr microfinance alone). Infrastructure more than sufficient.

Not our normal business; unsecured bias. Secured lending competitive, taxes high, docs a hassle. MSME took 2–3 years to scale. Main constraint is competition—everybody wants it. Cannot force product growth.

ROA function of leverage, many flux factors. Historically 5–6% achievable. Won't give guidance. At 20% capital adequacy maybe 3.5–4% fully levered.

Individual performing better than JLG today. Opex controlled via 68–70% eNACH/UPI, reaching 85% cashless by month-end. New product, can't definitively prefer yet, but personally like it better.

Pilot: ₹50 lakh/month, zero NPA, 18–20% yield. Low-risk, low-return product.

Aalok didn't confirm when analyst referenced '25–30% AUM growth you have guided.' Q1 delivered 36% YoY but management emphasizes quality over growth speed.

Stated previously, reaffirmed multiple times. Path visible (was 9% last Q). Cost leverage contingent on AUM growth maintaining momentum.

Q4 FY26 achieved ₹738 Cr microfinance alone. No incremental capex burden implied; existing infrastructure sufficient.

Aalok acknowledged rural income growth has 'not been happening for a while,' inflation is 'increasing,' jobs available but 'not the jobs people want.' Portfolio lags could emerge if trend continues.

MSME par level 31–90 days rose 70 bps (0.7% to 0.9%). LAP GNPA doubled but low base. Vivek attributed to Telangana sectoral issues; 'everybody reporting concerns there.'

Opex 8.5% annualized vs 7% target. High due to BCM structure, dedicated collection teams, CGFMU subscription (management deliberate choices for AQ, not inefficiency).

LAP disbursements ₹50L/month; analyst expected ₹40–50 Cr/Q by now. High competition (banks, SFBs, MFIs, FinTechs all competing). Tax burden and documentation friction cited.

Aalok emphasized avoiding 'post-COVID euphoria' that led to prior losses. Rejection rates 'relatively high.' Q1 volumes 'a bit lower than expected' but acceptable. Risk: investor pressure to abandon discipline.