Arman Financial Services (ARMANFIN) Q2 25/26 earnings summary

Executive summary

• Early signs of recovery in the microfinance sector after a challenging period of credit stress and regulatory reforms, with a diversified NBFC focus on underserved rural and semi-urban retail markets across 11 states.

• Asset quality stabilizing, with improved collection efficiency and moderation in bad loans, supported by structural reforms and disciplined execution.

• H1FY26 saw a 13.6% year-over-year decline in AUM to INR 2,130 crore, with disbursements at INR 865 crore and a consolidated equity base of INR 872 crore.

• Robust capital adequacy (CRAR: 38.73% standalone, 57.78% Namra) and diversified product portfolio including microfinance, MSME, two-wheeler, and LAP loans.

• Unaudited standalone and consolidated financial results for the quarter and half year ended September 30, 2025, were reviewed and approved by the Board and auditors, with no material misstatements identified.

Financial highlights

• Consolidated AUM at INR 21.30 billion as of September 2025, lower year-on-year but stabilizing; H1 FY2026 disbursements at INR 8.65 billion, flat YoY; Q2 FY2026 disbursements up 26% YoY and 21% sequentially.

• H1 FY2026 gross total income at INR 3.10 billion, down 15% YoY; net total income at INR 2.08 billion, down 11% YoY; Q2 FY2026 net income up 11% sequentially, down 6% YoY.

• H1 FY2026 PPOP at INR 1.12 billion, down 31% YoY; Q2 FY2026 PPOP flat sequentially, down 28% YoY.

• H1 FY2026 net loss of INR 66 million; Q2 FY2026 net profit of INR 80 million versus INR 146 million loss in Q1; H1FY26 profit after tax was a loss of INR 6.6 crore compared to a profit of INR 63.3 crore in H1FY25.

• Collection efficiency improved to 95.6% in September; GNPA at 3.69%, NNPA at 0.53%; cumulative provisions cover 4.1% of consolidated AUM.

Segment performance

• Microfinance: Namra Finance AUM at INR 15.07 billion, stabilizing; H1 FY2026 disbursements at INR 6.05 billion, Q2 up 25% YoY and 24% sequentially; GNPA 3.77%.

• MSME: AUM at INR 473 crore (22.2%), yield 34.68%, GNPA 3.86%, highest ROA among segments.

• Two-wheeler: AUM at INR 75 crore (3.5%), yield 25.77%, GNPA 4.99%.

• LAP: AUM at INR 75 crore (3.5%), yield 21.66%, GNPA 0.16%.

• Non-MFI (MSME, LAP, two-wheeler): AUM up 29% YoY to INR 6.23 billion; H1 FY2026 disbursements up 26% YoY.