Arman Financial Services (ARMANFIN) Q3 24/25 earnings summary

Executive summary

• The company, a diversified NBFC focused on rural and semi-urban retail lending, operates across microfinance, MSME, two-wheeler, and LAP segments.

• The microfinance sector faced significant challenges, including over-leveraging, weakening of the JLG model, and rising borrower stress, leading to increased delinquencies and impairment costs over the past two quarters.

• The company adopted a cautious approach, prioritizing portfolio quality and collections over growth, resulting in lower disbursements and a 6.5% year-on-year decline in consolidated AUM to INR 2,280 crores as of December 31, 2024.

• Profit after tax for 9M FY25 was INR 39 crore, a 68% decline year-over-year, impacted by higher provisions and write-offs.

• Collection efficiency remained steady at 95.2% for 9M FY25 despite sectoral challenges.

Financial highlights

• Disbursements for Q3 FY25 were INR 338 crores, with nine-month disbursements at INR 1,170 crores, down 28% year-on-year.

• Gross total income for Q3 was INR 165 crores (down 2.4% YoY); nine-month income grew 10.9% to INR 530.7 crores.

• Pre-provision operating profit for 9M FY25 at INR 231.6 crores, up 13% year-over-year.

• Provisions and write-offs surged to INR 175 crores for 9M FY25, leading to a sharp drop in profit after tax.

• Loan write-offs for the quarter totaled about INR 50 crores.

Segment performance

• Microfinance AUM (Namra Finance) declined 13.6% YoY to INR 1,768 crores; Q3 disbursements were INR 214 crores vs. INR 459 crores last year.

• MSME, two-wheeler, and LAP AUM grew 30.9% YoY to INR 512 crores; Q3 income was INR 44.9 crores (up 32.4% YoY), and PAT was INR 9.9 crores.

• MSME: AUM at INR 410 crore (18%), yield at 37%, GNPA at 3.43%, NNPA at 0.90%.

• Two-wheeler loans: AUM at INR 83 crore (3.6%), yield at 25.2%, GNPA at 4.03%.

• Micro-LAP segment, still at pilot stage, is gaining traction, with focus on rural and tier 3/4 locations.