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

Executive summary

• The company, a diversified NBFC focused on rural and semi-urban retail lending, faced sector challenges such as over-leveraging, weakening JLG model, and rising attrition, leading to increased delinquencies and impairment costs.

• AUM as of December 31, 2024, was INR 2,280 crore, down 6.5% year-on-year, with disbursements at INR 1,170 crore, down 28.2% year-on-year.

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

• The company prioritized portfolio quality and collections over growth, reinforcing underwriting standards, expanding the collection team, and separating credit from sales at the branch level.

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

Financial highlights

• Consolidated AUM as of December 31, 2024, stood at INR 2,280 crore, down 6.5% year-on-year.

• Q3 disbursements were INR 338 crore; nine-month disbursements were INR 1,170 crore, down 28% year-on-year.

• Net total income for 9M FY25 grew 24% year-on-year to INR 343.1 crore; gross total income up 11% to INR 530.7 crore.

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

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

Segment performance

• Microfinance subsidiary Namra Finance AUM was INR 1,768 crore, down 13.6% year-on-year; Q3 disbursements were INR 214 crore, down from INR 459 crore last year.

• Microfinance gross NPA stood at 4.4%, net NPA at 0.56%; capital adequacy at 45.7%.

• MSME, two-wheeler, and LAP segment AUM grew 30.9% year-on-year to INR 512 crore; Q3 income was INR 44.9 crore, up 32.4% year-on-year; PAT was INR 9.9 crore.

• MSME GNPA at 3.43%, two-wheeler GNPA at 4.03%; capital adequacy at 39.45%.

• Micro-LAP segment, still in pilot, is about 1% of AUM, with encouraging traction in rural areas.