💰 Financial Performance

Revenue Growth by Segment

Total income (net of interest) grew 36.5% YoY to INR 456 Cr in FY25 from INR 334 Cr in FY24. The company is shifting focus to retail segments, with Commercial Vehicle (CV) disbursements now comprising approximately 33.3% of total disbursements as the company diversifies into Passenger Vehicles, Construction Equipment, and Micro LAP.

Geographic Revenue Split

Not specifically disclosed in available documents, though the company operates a nationwide network including 48 upgraded micro-branches and maintains a presence in Mumbai (Registered Office).

Profitability Margins

Profitability has been subdued with a Return on Assets (RoA) of 0.5% in FY25 compared to 0.8% in FY24 and 2.2% in FY23. Net profit for Q2 FY26 was INR 10.4 Cr, representing a 42.2% decrease from INR 18 Cr in Q2 FY25. Yields on loans improved significantly to 18.1% in FY25 from 13.4% in FY23 due to the shift toward higher-yielding CV segments.

EBITDA Margin

Not explicitly provided as a percentage, but Net Interest Income is supported by a declining cost of funds which reached 10.2% in Q2 FY26 (down from 10.8% YoY). Incremental borrowing costs have further dropped to a range of 9.0% - 9.25%.

Capital Expenditure

The company maintains a strong capital base with a Capital Adequacy Ratio of 37.3% as of Q2 FY26. It recently completed the sale of its subsidiary, Niwas Housing Finance, in July 2025 to WITKOPEEND B.V. (an EQT affiliate) to reallocate capital toward core retail growth.

Credit Rating & Borrowing

The company faces debt obligations of INR 3,194 Cr (including interest) due within one year. Borrowing costs were 11.4% in FY25 but have trended down to 10.2% in Q2 FY26. The company successfully raised INR 265.59 Cr through its maiden public issue of Secured Redeemable NCDs in September 2024.

⚙️ Operational Drivers

Raw Materials

As a financial services entity, the primary 'raw material' is capital/debt. Total borrowings are managed through NCDs (limit of INR 6,000 Cr approved), Commercial Papers, and bank lines.

Import Sources

Not applicable for a non-banking financial company (NBFC).

Key Suppliers

Funding is sourced from various banks, money market investors, and through the public NCD issue which saw participation for INR 265.59 Cr.

Capacity Expansion

The company is expanding its retail reach by upgrading 48 micro-branches and increasing field sales staff to support the Micro LAP and Vehicle Finance businesses.

Raw Material Costs

Cost of funds (interest expense) is the primary operational cost, which stood at 10.2% in Q2 FY26. Management is focused on reducing this to improve lending spreads.

Manufacturing Efficiency

Operational efficiency is measured by digital adoption: 95% of Micro LAP and 27% of vehicle finance collections are processed via eNACH as of September 2025.

Logistics & Distribution

Distribution is driven by a network of branches and Direct Selling Agents (DSAs), with payouts aligned to market standards to drive disbursement momentum.

📈 Strategic Growth

Expected Growth Rate

40-50%

Growth Strategy

The company expects H2 disbursements to be 1.4x to 1.5x of H1 disbursements. Strategy involves a total shift from corporate lending to a retail-focused model targeting Used CV and Micro LAP, supported by the sale of the housing finance subsidiary to focus management bandwidth and capital.

Products & Services

Used Commercial Vehicle (CV) loans, Micro Loan Against Property (LAP), Passenger Vehicle loans, Construction Equipment financing, and Farm Equipment loans.

Brand Portfolio

IndoStar, Indo Mitra (Customer App).

New Products/Services

Expansion into 'Prime' business segments and multi-product retail offerings using existing distribution strength.

Market Expansion

Focusing on growing the Micro LAP and Used CV book responsibly under tighter credit norms across its existing branch network.

Market Share & Ranking

Aims to be one of the top-performing retail NBFCs in India; specific market share percentage not disclosed.

Strategic Alliances

Majority owned by Brookfield Asset Management (56.20% stake) and Everstone Group (17.4%). The sale of Niwas Housing Finance was to an affiliate of BPEA EQT.

🌍 External Factors

Industry Trends

The NBFC industry is shifting toward retail and digital-first models. IndoStar is positioning itself as a multi-product retail lender to capture growth in the under-penetrated Micro LAP and used vehicle markets.

Competitive Landscape

Competes with other retail NBFCs and private banks in the CV and SME/LAP segments.

Competitive Moat

Moat is built on a strong capital base (37.3% CAR), backing from a global promoter (Brookfield), and a specialized distribution network for used CVs. Sustainability is driven by the transition to a granular retail book which reduces systemic risk.

Macro Economic Sensitivity

Highly sensitive to the macroeconomic environment and interest rate cycles, which affect both the cost of borrowing and the repayment capacity of CV operators and micro-enterprises.

Consumer Behavior

Increasing preference for digital self-service tools, evidenced by the 95% eNACH adoption in the Micro LAP segment.

Geopolitical Risks

Limited direct impact, though global fuel prices can affect the cash flows of the transport operator borrower segment.

⚖️ Regulatory & Governance

Industry Regulations

Regulated by the RBI as a systemically important non-deposit taking NBFC. Must comply with GS3 (Gross Stage 3) reporting and Capital Adequacy norms (currently 37.3%).

Environmental Compliance

Direct environmental risk is low. The company has an ESG Working Committee and follows a digital-first model to minimize paper waste.

Taxation Policy Impact

Standard Indian corporate tax rates apply; specific effective tax rate for FY25 not detailed in the snippets.

Legal Contingencies

The company underwent a secretarial audit for FY25 which confirmed compliance with applicable statutory provisions. No specific pending court case values were disclosed in the provided text.

⚠️ Risk Analysis

Key Uncertainties

Asset quality remains a primary risk, with GNPA at 4.52%. Failure to improve this could lead to higher credit costs, similar to the 12.4% credit cost seen in FY22.

Geographic Concentration Risk

While headquartered in Mumbai, the company is expanding its branch network to diversify geographic risk across India.

Third Party Dependencies

High dependency on banks for funding lines and on DSAs for lead generation and disbursements.

Technology Obsolescence Risk

Mitigated by active investment in the Indo Mitra app and digital collection tools; 100% score in RBI cybersecurity exercise indicates strong digital resilience.

Credit & Counterparty Risk

Exposure is diversified across retail borrowers in the CV and Micro LAP segments, reducing the impact of any single counterparty default.