Strong recovery growth masks major claimed-vs-delivered PAT gap

Filed Q1 FY27 PAT ₹89.2 Cr; difference of ₹53.8 Cr (60% shortfall vs claim)

Filed revenue ₹234.7 Cr; ₹39.3 Cr gap (14% lower than claimed)

Core claim supported; recovery growth is consistent with improved market conditions

Filed NPM 37.9% (₹89.2/₹234.7); actual margin 13 percentage points lower

Growth narrative consistent with Q1 recovery performance and acquisition strategy

Retail & SME AUM 21% → 31% since March 2024; lowers concentration, steadier cash flows vs chunky corporate resolutions

Arcil share of industry AUM 11% → 15% in 2 yrs; pace faster in FY25-26 (6% → 10% acquisitions vs 14% prior year)

D/E fell to 0.34x from 0.4x; borrowings ₹1,100 Cr (down from ₹1,200 Cr); supports future acquisition capacity

Recovery rates up from 35% to 85% over recent years per Q&A; improves IRR/exit speed for newer acquisitions

Standalone claim ₹143 Cr, filed ₹89.2 Cr; suggests either presentation overstatement or unreconciled accounting gap

Improving economy widens resolution options; real estate assets recovering well. Market-driven, not Arcil-specific. Rate plateau likely given good economy already priced in.

Seasonality: Q1 light acquisitions, hence lower draw. Next 2-3 quarters expect drawing down, even marginal leverage increase as pipeline strong.

Will remain active on acquisitions and resolutions, balancing equal amounts. Focus on increasing stressed assets in AUM, but no specific number guidance given.

Market-driven availability. Retail increasingly available; both growing. No structural preference between them.

Event-based, lumpy. Continues as collection ongoing but write-off pool shrinking over time. Not a trend number; some years high, some low.

Early stage. Building infrastructure, doing POCs with own and few NBFCs. No revenue yet. Aspire significant role in portfolio over years but not quantified.

Fee growth driven by growing AUM, collection capabilities, and resolution activity. Momentum likely sustained; fee now 45-50% of overall revenue model.

No forward numbers. Process: look at IRR (cash flow-based), security/promoters, legal options, sustainability debt, and recovery time. Very different for retail (analytics) vs corporate (deal-by-deal).

Industry average recovery cycle now 4.5-5 years (down from 8+). Next 3-4 years max write-off <₹100 Cr; tail of old 8-year portfolio. Unlikely large write-offs going forward.

Seller requirement drives structure. IRR must match regardless of structure. Risk-adjusted pricing done. Most PSBs use auction; competition fair. All-cash or structured viewed same way on IRR basis.

Retail granular by nature; small assets, many daily repayments, natural hedge vs own borrowing. Corporate chunky; bulk repayment or restructure. Retail steadier cash; corporate volatile.

Standalone PAT claimed ₹143 Cr but filed ₹89.2 Cr (₹54 Cr, 60% gap). Consolidated ₹159 Cr also unexplained vs filed. Suggests accounting variance, timing mismatch, or presentation overstatement.

₹120 Cr recovery of written-off assets is event-based; management notes write-off pool aging, likely to decline materially. 8-year vintage pool exhausting; future tailwind limited.

Corporate book ~70% property-backed despite retail mix shift (21%→31%). Exposed to real estate cycle; stressed property resolution dependent on land appreciation, legal timelines.

100% cash deals require auction-based pricing discovery; risk of overpaying if competition is high. Management claims IRR discipline (20%+ target) but auction process may compress margins.

Consolidated PAT ₹159 Cr includes ~220 trusts Arcil acts as trustee but doesn't control. Non-operating subsidiaries mask fee revenue from other SR holders; Arcil's true standalone economics harder to assess.