Strong PAT growth, but AUM guidance cut; monsoon headwinds remain

Disbursal ₹54,079 Cr vs ₹43,019 Cr Q2 FY26; +25.7% verified

Actual ₹3,29,021 Cr vs ₹2,81,309 Cr Q2 FY26; +16.9% matches

NIM 9.52% stated in call; guidance was to hold 9.04%; exceeded by 48 bps

Delivered PAT ₹3,683.8 Cr = +59.2% YoY; stated 59.37% near-match

Verified improvement; efficiency gains delivered as stated

Aditya Tiwari confirms: cut to 15–17% from 18% earlier; Revankar agrees

Temporarily elevated 30–40 bps due to monsoon; revert to 2% full-year (near-term stress)

Management states MSME geographical reach expanded post-merger; specific growth % not disclosed

Aditya Tiwari (Emkay) confirms Q1 call target of 18% now cut to 15–17%; management cites monsoon and rural demand caution

Long-term baseline remains 2%, but temporarily elevated 30–40 bps due to drought impact on Stage 1, Stage 2 in certain geographies

Q2 NIM 9.52% exceeded 9.04% guidance; but will decline as capital gets deployed and rates fall; settle at 8.5% long-term

Post-Shriram City Union merger, MSME now expanded beyond southern markets; management expects faster growth than other segments

Seasonal and geography-specific (drought-prone states); if demand remains good, will normalize in festive period. Provisioning at 2% sufficient.

Long-term guidance 2% holds; temporarily elevated 30–40 bps due to drought. Will normalize once monsoon/economic activity stabilizes.

Near-term 9.5%, medium-term around 9%, long-term 8.5%. Driven by equity capital deployment, interest rate environment, and new-loan yields (lower than existing book).

Combination of both. Post-merger, MSME now all-India vs prior south-only. Geographic expansion primary driver; ticket size and credit filters also factors.

Cautious due to monsoon and rural income pressure; 15–17% range is prudent. Q2 was 17% growth; will be similar in H2 if demand holds.

Don't have exact numbers across all geographies; Sanjay will provide. Maharashtra, Karnataka, Telangana largest hits; but income-dependent.

Introduced EMI and interest-servicing gold loans; customer education in progress. No structural stress; will normalize as customers adapt to new product.

Cost on book 8.4%, incremental could go to 8.35%; but if rates stay up, limited flexibility. Confident of maintaining current level due to fixed-rate term borrowings.

Insurance commission is small portion of total income (~1–2%). Even if halved (~₹100 Cr downside), immaterial to balance sheet. Waiting for revised guidelines.

Cut due to monsoon caution; H2 expected 15–17% run rate if demand normalizes; seasonal headwind

Current 9.52% elevated from fresh capital (lower cost); will compress as equity deploys; rate cycle also key

Q2 at 22.52%; operational leverage intact; guidance maintained

Long-term 2% guidance reaffirmed; near-term elevated due to drought-hit geographies; will revert post-monsoon

Maharashtra, Karnataka, Telangana exposed to weak monsoon; GS2, GS3 slippages up ~50% YoY in some areas; income-dependent customers stressed

Due to monsoon and rural demand pressure; management expects reversion to 2% baseline but timing uncertain; near-term pressure on profitability

Current 9.52% NIM elevated from fresh capital inflow (lower cost). If rate cycle reverses (RBI cuts), NIM will compress to 9% medium-term, 8.5% long-term. If capital deployment stalls, compression accelerates.

Gold loans showing strong 68% growth but GS2, GS3 elevated due to new EMI and interest-servicing products. Customers habituated to bullet repayment; EMI adoption ongoing. Risk of higher defaults if customer base doesn't adjust.

IRDA draft guidelines propose revision on distributor commission. If enacted, insurance income (currently small ~₹350 Cr prior year) could drop. Estimated impact ~₹100 Cr if commission halved.