💰 Financial Performance

Revenue Growth by Segment

Total income from operations grew 16.8% YoY to INR 123.42 Cr for the half-year ended September 30, 2025, compared to INR 105.67 Cr in the previous year. In Q2 FY26, SME retail disbursements showed a notable upturn, growing by 93% YoY and 61% sequentially, while the Wholesale vertical continued steady growth, maintaining a 65% share of the total AUM as of March 31, 2025.

Geographic Revenue Split

The company's operations are highly concentrated in the Delhi-NCR region, which accounts for the vast majority of the loan book. This concentration exposes the company to regional economic fluctuations and local regulatory changes in the National Capital Region.

Profitability Margins

Return on Assets (ROA) stood at 6.46% in FY25, a decrease from 7.18% in FY24. Return on Equity (ROE) was 13.31% in FY25, marginally lower than 13.33% in FY24. The decline in ROA is attributed to increased slippages in the SME Retail segment and higher operational expenses from branch expansions.

EBITDA Margin

Pre-Provision Operating Profit (PPoP) increased 18.6% from INR 88.41 Cr in FY24 to INR 104.88 Cr in FY25. Net Profit (PAT) for FY25 was INR 72.09 Cr, up 13.8% from INR 63.36 Cr in FY24, driven by a 21.1% increase in total income net of interest expense.

Capital Expenditure

While specific INR figures for future capex are not disclosed, the company opened 14 new branches in FY25 and is investing in a SOC2-compliant AWS Cloud tech stack to power the entire loan lifecycle from onboarding to analytics.

Credit Rating & Borrowing

The company's credit rating was recently upgraded to A- Stable. The average cost of funds ranges between 11% and 12%. The company has a diverse lender profile of 32 partners, including public and private banks, having onboarded 9 new partners in FY25.

⚙️ Operational Drivers

Raw Materials

Not applicable as CSL Finance is a Non-Banking Financial Company (NBFC); its primary 'raw material' is capital/debt for lending.

Import Sources

Not applicable for financial services.

Key Suppliers

The company sources capital from 32 lending partners, including public and private sector banks and financial institutions. Key lenders provide term loans, with INR 372.41 Cr disbursed to CSL in FY24.

Capacity Expansion

The company expanded its physical footprint by opening 14 new branches in FY25. It aims to increase productivity per branch to drive the SME retail loan book toward a target of INR 800 Cr to INR 850 Cr.

Raw Material Costs

Interest expense is the primary cost. Total Income (net of interest expense) rose from INR 90.35 Cr in FY23 to INR 123.65 Cr in FY24, reflecting efficient management of the 11-12% cost of funds.

Manufacturing Efficiency

Operational efficiency is measured by the operating expense to earning assets ratio, which improved to 3.62% in FY24. Collection efficiency remained robust at 98% in Q2 FY26.

Logistics & Distribution

Distribution is driven by the branch network and a team of 460 professionals. Employee expenses have increased due to targeted hiring at the mid-management level to strengthen credit and operations.

📈 Strategic Growth

Expected Growth Rate

29%

Growth Strategy

The company is shifting its product mix toward a 55:45 or 60:40 ratio between SME Retail and Wholesale within 12-18 months. Growth is driven by refining credit policies, simplifying SOPs to reduce disbursement time, and expanding the branch network to reach underbanked small businesses.

Products & Services

SME Retail loans (secured), Wholesale loans for real estate corporations, and loans for non-real estate corporations.

Brand Portfolio

CSL Finance Limited.

New Products/Services

The company is focusing on 'micro-lab' style business and has recently realigned its SME Retail segment to target larger ticket sizes and a broader customer profile to improve yield.

Market Expansion

Expansion is focused on increasing the density of branches in the North India region, specifically targeting the SME sector that lacks access to traditional banking.

Market Share & Ranking

Not disclosed in available documents, though management notes they are better placed than peers due to a 100% secured portfolio.

Strategic Alliances

The company has established partnerships with 32 lenders to ensure a steady flow of capital for disbursements, which totaled INR 293 Cr in Q2 FY26.

🌍 External Factors

Industry Trends

The NBFC industry is seeing a shift toward secured lending following stress in unsecured and MFI portfolios. CSL is positioned as a 100% secured lender, which management believes provides a competitive edge during market volatility.

Competitive Landscape

Competes with other NBFCs and banks in the SME and real estate lending space. Competition is primarily based on service delivery speed and the ability to underwrite underbanked customers using alternative data.

Competitive Moat

The moat is built on a 100% secured loan book, deep expertise in the Delhi-NCR real estate market, and a conservative risk DNA (1% provisioning). This is sustainable as long as asset quality (GNPA 0.46%) remains controlled.

Macro Economic Sensitivity

Highly sensitive to Indian economic growth and geopolitical tensions which could trigger a slowdown. A 1% increase in interest rates would directly impact the cost of the company's floating-rate borrowings.

Consumer Behavior

Small businesses are increasingly seeking faster turnaround times for credit, prompting CSL to focus on reducing disbursement times through technology.

Geopolitical Risks

Heightened geopolitical tensions are identified as a potential trigger for a domestic economic slowdown, which would reduce demand for SME and Wholesale credit.

⚖️ Regulatory & Governance

Industry Regulations

Subject to RBI regulations for NBFCs, including Capital Adequacy Ratios and provisioning norms. CSL maintains a 1% provision, exceeding the 0.4% regulatory requirement.

Environmental Compliance

Not a primary factor for NBFC operations; focus is more on SOC2 compliance for data security.

Taxation Policy Impact

The company's PBT for the half-year ended Sept 30, 2025, was INR 56.43 Cr. Effective tax rates follow standard Indian corporate tax laws for NBFCs.

⚠️ Risk Analysis

Key Uncertainties

Execution risk in the newer SME Retail segment and potential asset quality deterioration in the Wholesale book due to real estate sector cyclicality. GNPA rose slightly to 0.46% in FY25 from 0.44% in FY24.

Geographic Concentration Risk

Heavy concentration in the Delhi-NCR region, making the company vulnerable to local economic downturns.

Third Party Dependencies

Dependency on 32 lending partners for debt capital; any credit rating downgrade would increase the 11-12% borrowing cost.

Technology Obsolescence Risk

The company is mitigating this by hosting all core applications on AWS Cloud and implementing a future-ready tech stack for the entire loan lifecycle.

Credit & Counterparty Risk

Concentration risk is high, with 41% of AUM tied to the top 20 borrowers. Slippages in these large accounts would significantly impact the NNPA, which stood at 0.34% in FY25.