CENTRUM - Centrum Capital

📊 NSE: CENTRUM 🏢 Finance & Investments 📅 Last Updated: 12/13/2025 20:48

💰 Financial Performance

Revenue Growth by Segment

Brokerage revenues grew 11% YoY in H1 FY26, outperforming peers despite industry volume declines. The Wealth Management segment reached an AUM of over INR 41,000 Cr, serving 5,000+ clients across 18 locations. Investment Banking completed major deals including a USD 239 Million (INR 2,032 Cr) FCCB for Zee Entertainment and a INR 3,500 Cr QIP for Bank of Maharashtra.

Geographic Revenue Split

The company operates primarily in India with a presence in Tier-II and Tier-III cities for its affordable housing finance segment. It also maintains an international presence in Singapore to facilitate cross-border financial services. Specific percentage split by region is not disclosed in available documents.

Profitability Margins

The group has faced increasing losses at consolidated levels since FY22. This is primarily due to high provisioning for PMC Bank advances, high operational costs for setting up Unity Small Finance Bank, and incremental finance costs. The divestment of the housing finance business for ~INR 400 Cr is expected to improve capital efficiency.

EBITDA Margin

Core profitability has been impacted by high operating expenses in the early stages of the Small Finance Bank (Unity SFB). The company is targeting a reduction in financing costs by utilizing ~INR 750 Cr of interest-free cash flows from promoter equity and divestments to repay debt, which is expected to improve net margins.

Capital Expenditure

The company raised INR 149.71 Cr through a preferential issue of equity shares in August 2025. Additionally, promoters infused INR 50 Cr in August 2025, with another INR 50 Cr planned by March 2026 and INR 100 Cr in FY27 to strengthen the capital base.

Credit Rating & Borrowing

BWR has assigned a Negative outlook due to continued losses and high promoter share pledges. The company is focused on debt reduction using ~INR 750 Cr in total inflows to lower borrowing costs and strengthen its credit profile.

⚙️ Operational Drivers

Raw Materials

As a financial services firm, 'Capital' is the primary raw material, supplemented by 'Human Capital' (specialized management teams) and 'Technology Infrastructure' for digital banking.

Import Sources

Capital is sourced domestically from Indian promoters (INR 100 Cr infusion plan), HNIs, and family offices (INR 150 Cr raised in Q2 FY26), and internationally via instruments like FCCBs (USD 239 Million).

Key Suppliers

Not applicable for financial services; however, key capital providers include the Promoters (Jaspal Bindra and Chandir Gidwani), various High-Net-Worth Individuals, and institutional investors in QIPs.

Capacity Expansion

Wealth Management currently manages INR 41,000 Cr AUM across 18 locations. The lending business is being consolidated under Unity Small Finance Bank to leverage its expanding physical and digital reach for scale.

Raw Material Costs

Cost of funds is the primary operational cost. The company is moving toward 'interest-free' cash flows via equity infusions to replace high-cost debt, aiming to unlock ~INR 750 Cr for this purpose.

Manufacturing Efficiency

Efficiency is measured by AUM per client (Wealth) and brokerage revenue growth (11% YoY) relative to industry volume trends.

Logistics & Distribution

Distribution is driven by the physical and digital reach of Unity Bank and the 18-location footprint of the Wealth Management business.

📈 Strategic Growth

Expected Growth Rate

6.70%

Growth Strategy

Growth will be achieved by consolidating all lending activities under Unity Small Finance Bank to improve scale and efficiency. The company is divesting its ~50% stake in Centrum Housing Finance for ~INR 400 Cr to optimize capital. Strategic focus includes expanding the Wealth AUM (currently INR 41,000 Cr) and leveraging a robust Investment Banking pipeline for H2 FY26.

Products & Services

Investment banking, institutional broking, wealth management, insurance broking, affordable housing finance, microfinance, MSME loans, and small finance banking services.

Brand Portfolio

Centrum, Unity Small Finance Bank, Centrum Wealth, Centrum Housing Finance.

New Products/Services

Expansion of the Wealth product portfolio to include bespoke investment solutions and scaling digital banking products through Unity SFB.

Market Expansion

Focusing on underserved markets in Tier-II and Tier-III cities for lending, while expanding institutional engagement in the equities business.

Market Share & Ranking

Centrum is a Category I Merchant Banker. Its brokerage revenue grew 11% YoY, outperforming the general industry trend of volume declines.

Strategic Alliances

Amalgamation with Punjab and Maharashtra Co-operative Bank (PMC Bank) to form/expand Unity Small Finance Bank.

🌍 External Factors

Industry Trends

The industry is shifting toward integrated 'Phygital' banking models. Centrum is positioning itself by merging traditional lending into Unity SFB to leverage both physical branches and digital scale, while the wealth industry is seeing a trend toward bespoke, award-winning advisory services.

Competitive Landscape

Competes with major Indian financial conglomerates and specialized wealth managers. Outperformed peers in brokerage growth (11% vs industry decline) in H1 FY26.

Competitive Moat

Moat is built on a diversified financial services model (fee + lending) and a leadership team with 30+ years of experience (e.g., Jaspal Bindra). This diversification ensures revenue continuity even when specific segments like institutional broking face industry-wide volume declines.

Macro Economic Sensitivity

Highly sensitive to interest rate cycles and stock market volatility, which affects both the lending margins and fee-based investment banking income.

Consumer Behavior

Shift toward affordable housing in Tier-II/III cities and increasing demand for professional wealth management among HNIs (AUM >INR 41,000 Cr).

Geopolitical Risks

Exposure to global capital flow sentiment which impacts the ability to place large issues like the Bank of Maharashtra QIP or Zee FCCB.

⚖️ Regulatory & Governance

Industry Regulations

Operations are governed by RBI (for Unity SFB and NBFC arms) and SEBI (for Merchant Banking and Broking). Compliance with Regulation 33 and 34 of Listing Regulations is maintained.

Environmental Compliance

Not a high-impact factor for financial services; ESG focus is primarily on governance and social impact through affordable housing and microfinance.

Taxation Policy Impact

Financial results are prepared in compliance with Ind AS; specific effective tax rate % is not disclosed in the summary statements.

Legal Contingencies

The group integrated PMC Bank in Q4 FY22, involving significant credit costs and provisioning for legacy advances. No other specific pending court case values in INR were disclosed in the provided text.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the timeline for the Small Finance Bank to reach profitability given high initial operating expenses and the integration of legacy PMC Bank assets.