💰 Financial Performance

Revenue Growth by Segment

Total revenue from operations grew 11.3% YoY to INR 5,756.14 Cr in FY25. In Q2 FY26, the Retail Finance (RF) portfolio share increased to 11.1% of AUM from 6.8% in Q1 FY26, reflecting a strategy to diversify beyond microfinance (GL) which saw a temporary decline due to accelerated write-offs.

Geographic Revenue Split

Borrower distribution as of FY25 is concentrated in Karnataka (24.7%), Maharashtra (20.2%), Tamil Nadu (18.6%), Madhya Pradesh (8.1%), and Bihar (6.8%). This geographic spread helps mitigate localized socio-political or weather-related risks.

Profitability Margins

Net Interest Margin (NIM) stood at 13.3% in Q2 FY26. Profit After Tax (PAT) for FY25 decreased 63.2% to INR 531.40 Cr from INR 1,445.93 Cr in FY24. Q2 FY26 PAT was INR 126 Cr, down 32.4% YoY, primarily due to elevated credit costs of 2.07% (non-annualized) for the quarter.

EBITDA Margin

Pre-Provision Operating Profit (PPOP) grew 3.4% YoY to INR 695 Cr in Q2 FY26. The PPOP margin remains robust at approximately 9.5% to 10% of assets, providing a buffer against high credit costs which reached an 8% annualized run rate in Q2 FY26.

Capital Expenditure

While specific INR Cr for CapEx is not detailed, the company opened 150 new branches in H1 FY26 (96 in Q2 FY26), bringing the total to 2,209 branches to support a 20%+ growth target for FY27.

Credit Rating & Borrowing

Maintains a credit rating of AA- (Stable) from Ind-Ra, ICRA, and CRISIL. The weighted average Cost of Borrowing (COB) was 9.6% in Q2 FY26, with a marginal COB of 8.9%, reflecting efficient liability management.

⚙️ Operational Drivers

Raw Materials

Capital and debt funding serve as the primary 'raw materials'. Total borrowings (excluding debt securities) stood at INR 18,890.1 Cr in Q2 FY26, with debt securities at INR 1,187.8 Cr.

Import Sources

Sourced from a mix of domestic and international markets. Foreign borrowings account for 23.7% of the liability mix, including External Commercial Borrowings (ECB) at 22.5%.

Key Suppliers

Funding is supplied by 42 commercial banks (56.8% of mix), 23 foreign lenders, 3 financial institutions (7.4%), and 6 NBFCs (1.9%).

Capacity Expansion

Current infrastructure includes 2,209 branches (up 8.8% YoY) and 21,701 employees (up 10.9% YoY). The company added 150 branches in H1 FY26 to drive future loan disbursements.

Raw Material Costs

Cost of Borrowing (COB) is 9.6% as of Q2 FY26. Management targets optimizing this through a diversified mix of long-term domestic and foreign sources.

Manufacturing Efficiency

Collection efficiency (excluding arrears) was 94.5% in Q2 FY26. Loan officer productivity is supported by a workforce of 14,496 loan officers (up 8.3% YoY).

Logistics & Distribution

Operating expenses (Opex) to GLP ratio stood at 5.2% in Q2 FY26. Management expects this to trend toward 4.6%-4.7% as portfolio growth resumes.

📈 Strategic Growth

Expected Growth Rate

20%+

Growth Strategy

Growth will be driven by expanding the Retail Finance portfolio (currently 11.1% of AUM), leveraging 150 newly opened branches, and increasing individual business loans to high-vintage group customers. Management expects momentum to return as PAR normalizes across geographies.

Products & Services

Provides Microfinance (Group Loans), Retail Finance (Individual Business Loans), and Group savings micro-insurance plans.

Brand Portfolio

CreditAccess Grameen.

New Products/Services

Introduced group savings micro-insurance and is scaling individual business loans through existing GL branches to capture higher-income segments.

Market Expansion

Focusing on contiguous district-based expansion within a 30-kilometer radius of each branch to maintain operational integrity and deep client relationships.

Market Share & Ranking

The NBFC-MFI segment leads the Indian microfinance industry with a 39.3% market share; CreditAccess is a dominant player in this segment.

🌍 External Factors

Industry Trends

The Indian MFI industry saw a 13.5% YoY de-growth in GLP to INR 3.75 trillion by March 2025. Trends show a shift toward 'MFIN Guardrails' for better risk-based pricing and customer retention.

Competitive Landscape

Competes with commercial banks, other NBFC-MFIs, and small finance banks in the micro-lending space.

Competitive Moat

Moat is built on a rural-focused, contiguous branch network and strong parentage (CreditAccess India B.V. holds 66.37%), providing access to patient global capital and fundraising networks.

Macro Economic Sensitivity

Highly sensitive to rural economic health and climate events; heavy rains/floods in Q2 FY26 delayed PAR recovery and increased credit costs.

Consumer Behavior

Increasing demand for individual business loans among mature microfinance clients as they graduate to higher credit requirements.

Geopolitical Risks

Vulnerable to socio-political disruptions and local-level interference in microfinance collections, as noted in industry-wide challenges.

⚖️ Regulatory & Governance

Industry Regulations

Complies with RBI Master Directions for MFIs and MFIN Guardrails 1.0 and 2.0, which regulate lending limits and operational integrity.

Environmental Compliance

Holds a 'Medium Risk' ESG score of 20.7 from Sustainalytics and an S&P Global ESG score of 52/100.

Taxation Policy Impact

Not specifically detailed; standard Indian corporate tax rates apply.

Legal Contingencies

As of March 2025, the company was in breach of covenants with certain lenders due to asset quality stress; however, waivers have been received from these lenders.

⚠️ Risk Analysis

Key Uncertainties

Credit cost volatility remains the primary risk, with an additional 40-50 bps credit cost expected in FY26 due to delayed PAR accretion improvement.

Geographic Concentration Risk

High concentration in Karnataka, Maharashtra, and Tamil Nadu, which together account for 63.5% of the borrower base.

Third Party Dependencies

Significant dependency on commercial banks for 56.8% of total funding requirements.

Technology Obsolescence Risk

The company is mitigating technology risk by transitioning to digital lending and app-based training for 26,161 staff members.

Credit & Counterparty Risk

Asset quality stress is evident with GNPA at 3.65% and NNPA at 1.26% in Q2 FY26. The company holds provisions of 4.06% (INR 1,030.8 Cr) to cover potential defaults.