Arman Financial Services (ARMANFIN) Q1 25/26 earnings summary

Executive summary

• Q1 FY26 saw a challenging environment in microfinance, with uneven recovery, local stress impacting repayment, and a consolidated net loss of INR 15 crore compared to a profit of INR 31 crore in Q1FY25.

• The company maintained a conservative approach in MFI lending, focusing on portfolio quality and collections, while non-MFI segments (MSME, two-wheeler, Micro LAP) showed steady growth and better asset quality.

• Unaudited standalone and consolidated financial results for the quarter ended June 30, 2025, were approved, showing a consolidated net loss and a standalone net profit for the period.

• Collection efficiency remained stable at 95.3% for Q1FY26, with an active customer base of approximately 6.8 lakh.

• Board approved re-appointments of key directors and granted 8,100 stock options under the ESOP Plan 2023.

Financial highlights

• Disbursements for the quarter were INR 387 crores, down from INR 459 crores year-over-year.

• Gross total income was INR 151 crores; net total income was INR 98.8 crores.

• Pre-provisioning operating profit stood at INR 55 crores; provisions and write-offs surged to INR 66.5 crores.

• Namra Finance (MFI) AUM was INR 1,554 crores (down from INR 2,129 crores), with disbursements of INR 270 crores.

• MSME and non-MFI AUM grew 29% year-over-year to INR 602 crores; disbursements rose 10% to INR 117 crores.

Outlook and guidance

• Management expects MFI recovery to accelerate in H2 FY26 as rural economy strengthens, aided by favorable monsoons and agricultural output.

• No specific growth guidance provided for the year; management remains cautious and focused on asset quality.

• Plans to leverage recent capital raises to target AUM growth to INR 5,000+ crore, focusing on MFI, MSME, two-wheeler, and LAP segments.

• Strategic intent to increase MSME portfolio share to 35% and reduce MFI share to ~60% over time.

• Loan book decline expected to stop by September, with growth likely resuming in Q4; MSME and two-wheeler AUM expected to grow during festive season.