Finance company Arman Financial Services announced Q4FY25 & FY25 results Q4FY25 Financial Highlights: Disbursements for Q4FY25 stood at ~Rs 544 crore PPoP for Q4FY25 grew by 15% year-on-year to ~Rs 102 crore. Gross Total Income stood at Rs 199 crore for Q4FY25 compared to Rs 182 crore for Q4FY24 PAT stood at Rs 12.8 crore for Q4FY25 compared to Rs 50.8 crore for Q4FY24 FY25 Financial Highlights: Consolidated disbursements for FY25 stood at ~Rs 1,713 crore, as compared to ~Rs 2,297 crore, Net total income for FY25 amounted to ~Rs 491 crore, registering a 24% year-on-year growth. Pre-Provision Operating Profit (PPoP) for FY25 registered a 14% year-on-year growth to ~Rs 333 crore. Shareholders' Equity as of March 31, 2025, stood at ~Rs 874 crore Total borrowings stood at ~Rs 1,759 crore (Including off balance sheet direct assignment (DA) liability) Additionally, the company has Rs 212.4 crore undrawn sanctions from existing lenders GNPA stood at 3.37%; NNPA stood at 0.55% Commenting on the Company’s performance, Jayendra Patel, Vice Chairman & Managing Director, Arman Financial Services said, “The financial results for the quarter and full year ended 31st March 2025 reflect the challenging operating environment that has persisted across the microfinance sector. In FY25, Namra Finance, Arman’s wholly owned MFI subsidiary, reported a net profit of Rs 7.8 crore compared to Rs 138.3 crore in FY24. However, for Q4FY25, Namra reported a net loss of Rs 0.26 crore as compared to a profit of Rs 38.7 crore in Q4FY24. This performance was primarily on account of elevated provisioning requirements driven by continued stress in rural markets. We have been sufficiently diligent to ensure sufficient provisions are in place to reflect the ground realities and have also taken accelerated write-offs. We remain confident in the MFI sector as a whole in the long term. However, until the sector deleverages and adapts to the changing culture of the rural sector, overall growth rate in the MFI segment will not return to normal. Over the years, the company has taken many initiatives to deal with both temporary and permanent changes in the sector. We have always believed in staying agile enough to take advantage of opportunities when they present themselves but also be prudent enough to step back and slow down when the situation demands. Namra Finance AUM declined by 23%, from Rs 2,193.1 crore as on March 31, 2024, to Rs 1,685.8 crore as on March 31, 2025. Overall consolidated AUM declined by 15%, from Rs 2,639.3 crore on March 31, 2024, to Rs 2,245.4 crore as on March 31, 2025. For Namra Finance, quarterly disbursements stood at Rs 393.3 crore, reflecting a year-on-year decline of 26%. For the full year FY25, disbursements stood at Rs 1,231.9 crore compared to Rs 1,895.2 crore in FY24. In FY25, the company has taken two key decisions: completely separating the credit and recovery functions from the branch operations. These decisions are based on data and logic, not emotions. While emotionally, we would like for rural culture to return to what it was; evidence and logic suggest that this is unlikely to happen, at least not fully. Traditionally, microfinance heavily relied on the Joint Liability Group (JLG) model and intertwined its sales, credit, and collection functions. Also, credit decisioning policies were largely population based. However, we believe that the time is ripe for change. This one-size-fits-all approach will have to be supplemented by individual assessment; we must change our systems to be able to evaluate each customer on his or her own individual merits and circumstances. That would require a strong and independent credit culture at the ground level and would require us to completely separate the historical conflict of interest between credit and sales. While this change would lead to higher operating costs, it will help us avoid higher credit costs, something we believe is the better trade-off. Separating collections is also a natural progression; field officers will continue to service regular collections and early delinquencies to preserve the FOcustomer relationship and the essence of the JLG model. Currently, we have implemented the new credit structure in 140 of our 391 branches, with the remaining branches to be implemented by Q2 of FY26. Early indicators in asset quality for loans originated under the new credit structure are encouraging. Additionally, all disbursements in the MFI segment starting from November 2024 are covered under the Credit Guarantee Fund for Micro Units (CGFMU) scheme. As of March 2025, 34% of the MFI AUM is covered under the CGFMU scheme. The company is also in compliance with MFIN Guardrails as of March 31, 2025. We have also successfully completed an ARC transaction in March 2025. Zero-bucket collection efficiency for the quarter stood at 98.5% and improve to 98.8% March 2025 for the MFI book, which is lower than expected but a significant improvement in comparison to Q3FY25. Overall collection efficiency on a consolidated basis stood at 95.3% for the quarter. The standalone segments under Arman, which include lending to MSMEs, Micro LAP, and two-wheeler customers, have shown resilience and delivered a stronger performance during the year. As of 31st March 2025, the standalone AUM stood at Rs 559.6 crore, registering a year-on-year growth of 25%. Disbursements for FY25 stood at Rs 481 crore, reflecting a growth of 20% over FY24. The portfolio continues to demonstrate healthy asset quality, with Gross NPA at 3.38%. This business benefits from a more diversified customer base, relatively lower delinquency levels, and a stable operating environment. Focused execution and prudent underwriting in these segments have helped offset some of the pressures seen in the microfinance business. Our consolidated balance sheet remains strong, supported by a healthy capital adequacy ratio—37.34% for Arman (standalone) and 48.37% for Namra as well as surplus liquidity of Rs 269.1 crore, providing us with the financial resilience to navigate this challenging phase. While the short-term outlook remains cautious, our strategic focus will remain on stabilizing the portfolio, improving operational efficiency, and reinforcing asset quality. We thank all our stakeholders and especially all the employees for the continued support.” Result PDF
Conference Call with Arman Financial Services Management and Analysts on Q3FY25 Performance and Outlook. Listen to the full earnings transcript.
Finance company Arman Financial Services announced Q3FY25 results Company’s consolidated Asset Under Management (AUM) stood at ~Rs 2,280 crore Disbursements for Q3FY25 stood at ~Rs 338 crore PPoP for Q3FY25 de-grew by 5% year-on-year to ~Rs 69 crore. PAT for Q3FY25 stood at Rs -7.3 crore. Jayendra Patel, Vice Chairman & Managing Director, Arman Financial Services said, “Over the past few quarters, the microfinance sector has faced a challenging landscape, impacting both operational efficiency and financial stability. Key issues such as overleveraging, weakening of center discipline, deterioration of the Joint Liability Group (JLG) model, and rising employee attrition have adversely affected collection efficiency. High attrition, particularly among field staff, has disrupted borrower engagement—critical for ensuring timely repayments and maintaining portfolio quality. Furthermore, the post-COVID euphoria among MFIs and, especially, non-MFI lenders in the retail unsecured space, coupled with a favourable regulatory environment, has significantly increased household indebtedness, despite limited real-income growth. This has further strained borrowers' ability to meet repayment obligations, resulting in higher delinquencies and a subsequent rise in impairment costs across the industry. These challenges have directly contributed to increased default rates and financial stress within the sector. In response, both the company and the industry have made significant efforts to strengthen underwriting standards and reduce customer leverage. Naturally, this has led to higher rejection rates and lower disbursements. Additionally, the increased focus on collections has stretched field bandwidth, further impacting sourcing and exacerbating staff attrition. As a result, disbursements and AUM have declined. However, the company remains well-capitalized and has not faced any restrictions in credit flows from banks or financial institutions. The evolving macroeconomic conditions have intensified pressures on microfinance institutions, necessitating a strategic recalibration of business models. The industry-wide AUM degrowth has also created liquidity issues for microfinance borrowers, which need to stabilize before the cycle reaches equilibrium. Result PDF
Finance company Arman Financial Services announced H1FY25 & Q2FY25 results Financial Highlights: Company’s consolidated Asset Under Management (AUM) stood at ~Rs 2,465 crore registering a growth of 7% YoY. Consolidated disbursements for H1FY25 stood at ~Rs 832 crore, a de-growth of 22% year-onyear, led by industry challenges. Disbursements for Q2FY25 stood at ~Rs 373 crore, registering a de-growth of 31% YoY. During the period ended 30th September 2024, the company has deliberately prioritized collections and portfolio quality over rapid expansion. Net total income for H1FY25 amounted to ~Rs 235 crore, registering a 32% year-on-year growth, while Q2FY25 net total income grew by 25% to ~Rs 116 crore. Pre-Provision Operating Profit (PPoP) for H1FY25 registered a 23% year-on-year growth to ~Rs 163 crore. PPoP for Q2FY25 grew by 12% year-on-year to ~Rs 78 crore. Shareholders' Equity as of September 30, 2024, stood at ~Rs 865 crore, calculated in accordance with IND-AS standards. For H1FY25, Return on Average AUM stood at 3.65%; while Return on Equity stood at 11.10%. Credit Rating upgraded to ‘A | Stable’ by Acuite Ratings for Namra Finance Limited Borrowing & Liquidity Profile: Total borrowings stood at ~Rs 2,019.5 crore (Including off balance sheet direct assignment (DA) liability). Of the total borrowings, 35.9% is through banks, 12.3% is through NBFCs, 18.7% is through debt and NCDs, 0.8% is through PTC, and 27.9% is through direct assignments (off-balance-sheet liabilities), of which 23.2% is through banks and 4.7% is through financial institutions. The rest is borrowed from DFIs (i.e., NABARD & SIDBI) and others. As on 30 th September 2024, the Company has a healthy liquidity position with ~Rs 281.2 crore in cash/bank balance, liquid investments, and undrawn CC limits. Additionally, the Company has ~Rs 157.5 crore undrawn sanctions from existing lenders. Asset Quality: GNPA stood at 3.7%; NNPA stood at 0.6%. Cumulative Provisions stood at ~Rs 114.3 crore as on 30 th September 2024 (covering 4.64% of the consolidated AUM, 5.88% on book) Jayendra Patel, Vice Chairman & Managing Director, Arman Financial Services, said: The microfinance industry is currently facing a significant rise in impairment costs due to overleveraging in the rural retail unsecured lending space, involving both MFIs and non-MFIs. This overleveraging has strained borrowers' repayment capacities, leading to increased delinquencies and higher default rates. High attrition rates among ground-level staff across the industry have also impacted collection efficiency, as staff turnover disrupts the continuity and effectiveness of borrower interactions, which are critical for ensuring timely repayments in microfinance. We have been anticipating an increase in credit costs due to over-leveraging since early last year. However, the extent of the challenges has been greater than expected, and the evolving macroeconomic and regulatory environment has only added to these difficulties. Given these challenges, we have adopted a cautious growth strategy, prioritizing collections and portfolio health over aggressive expansion. This approach is essential for safeguarding the quality of our assets and maintaining a stable financial position. For H1 FY25, total disbursements stood at Rs. 832 crore, compared to Rs. 1,068 crore in H1 FY24, indicating a slowdown in lending to focus on asset quality. Our Assets Under Management (AUM) reached Rs. 2,465 crore. The Gross Non-Performing Assets (GNPA) were at 3.74%, with Net Non-Performing Assets (NNPA) at 0.64%, which remain within manageable levels given the broader industry context. The Pre-Provision Operating Profit (PPoP) for the period stood at Rs. 163 crore, compared to Rs. 133 crore in H1 FY24. This growth in PPoP reflects our commitment to maintaining operational efficiency and cost discipline, even as we navigate a difficult macroeconomic environment. Impairment expenses amounted to Rs. 99 crore for H1 FY25, reflecting the impact of the current challenges on our financials. We understand that these impairment costs are a natural consequence of the changed risk environment, and we are taking all necessary steps to mitigate these risks. Both the industry and Arman are taking proactive steps to mitigate these issues and navigate through this difficult phase. The MFIN guardrails have been implemented to help manage overleveraging, and we are in the process of rolling out independent credit teams across all branches by the end of this fiscal year. These independent credit teams will enhance our credit assessment processes, ensuring greater oversight and quality control at the branch level. This initiative is aimed at improving our risk management capabilities and ensuring that we are better positioned to assess and respond to borrower needs effectively. Our focus remains on maintaining quality over quantity while navigating the uncertainties in the rural environment and awaiting the end of the down-cycle. We believe that by prioritizing quality, we will be better positioned to emerge stronger once the industry environment stabilizes. Finally, we acknowledge the challenges faced in H1 FY25, which have led to weaker-than-expected performance. However, we want to emphasize that these challenges are not unique to Arman but are being experienced across the industry. The rural sector, in particular, has faced significant pressures due to multiple factors, including erratic weather, elections, and general economic uncertainty, all of which have also impacted borrowers' ability to repay on time. Despite the near-term challenges, we remain confident in our long-term strategies, which we believe will position us for future growth. Arman, with its 32-year history, is no stranger to downcycles. We have successfully navigated similar situations in the past, and each time, we have emerged stronger and more resilient. Our experience in handling such challenges gives us the confidence to continue on our long-term path. We are steadfast, wellcapitalized, and poised to navigate these challenges effectively. With prudent management practices, a dedicated team, and a clear focus on risk mitigation, we are well-equipped to overcome the current headwinds and drive longterm growth for our stakeholders." Result PDF
Conference Call with Arman Financial Services Management and Analysts on Q1FY25 Performance and Outlook. Listen to the full earnings transcript.
Finance company Arman Financial Services announced Q4FY24 & FY24 results: Growth momentum has continued driven by Micro-Finance and MSME business segments. Consolidated Asset Under Management (AUM) stood at ~Rs 2,639 crore which grew by 36% on a YoY basis. Disbursements for the FY24 stood at ~Rs 2,297 crore, registering a growth of 30% YoY compared to ~Rs 1,767 crore. Disbursements for Q4FY24 stood at ~Rs 669 crore, registering a growth of 6% YoY. Net total income for FY24 amounted to ~Rs 396 crore, registering a 57% YoY growth, while Q4FY24 net total income grew by 40% to ~Rs 120 crore. Pre-Provision Operating Profit (PPoP) for FY24 registered a 73% YoY growth to ~Rs 293 crore. PPoP for Q4FY24 grew by 40% YoY to ~Rs 88 crore Profit After Tax for FY24 stood at ~Rs 174 crore, reflecting a YoY growth of 85%. Shareholders' Equity as of Mar 31, 2024, stood at ~Rs 813 crore, calculated in accordance with IND-AS standards. For FY24, Return on Average AUM stood at 7.58%; while Return on Equity stood at 27.76% (ROE calculation includes QIP proceeds of ~Rs 230 crores raised in the last week of December 2023, which was yet to be fully deployed) Borrowing & Liquidity Profile: Total borrowings stood at ~Rs 2,261 crore (Including off balance sheet direct assignment (DA) liability) Of the total borrowings, 41.1% is through Banks, 13.8% is through NBFCs, 13.5% is through debt and NCDs, 3.0% is through PTC, 23.5% is through direct assignments (off balance-sheet liabilities) of which (18.78% Direct Assignment is through Banks and 4.75 % Direct Assignments is through Financial Institutions) and the rest is borrowed from DFIs (i.e., NABARD & SIDBI) and others. The company is successfully diversifying its funding sources. It has raised ~Rs 89 crore through listed Non-Convertible Debentures (NCDs) in FY24. As on 31st March 2024, the Company has a healthy liquidity position with ~Rs 179 crore in cash/bank balance, liquid investments, and undrawn CC limits. Additionally, the Company has ~Rs 320 crore undrawn sanctions from existing lenders. Collection Efficiency: Collection efficiency FY24 stood at 97.7%. Segment wise collection efficiency for FY 2024 stood at: Microfinance segment – 97.6% MSME segment – 98.4% 2W segment – 96.4% Asset Quality: GNPA stood at 2.88%; NNPA stood at 0.31% Cumulative Provisions stood at ~Rs 90.16 crore as on 31st March 2024 (covering 3.42% of the consolidated AUM, 4.20% on book) Commenting on the Company’s performance, Jayendra Patel, Vice Chairman & Managing Director, Arman Financial Services said, “After the initial two years of COVID-induced stress, the economy has made a significant recovery during the last two financial years. This rebound has positively impacted various sectors, particularly the microfinance and the MSME sectors. As a result, the industry has recorded steady and sharp growth over the last 2 years, with all parameters showing excellent results. Key indicators such as disbursements, AUM Growth, Opex, cost of borrowing, and asset quality have all shown improvements or have remained stable, reflecting the resilience and adaptability of the industry. Throughout the year, the sector maintained its momentum without any major negative news. This stability was bolstered by effective risk management practices and efficient last-mile delivery of credit to the customers. The consistent performance and positive developments have set a solid foundation for continued growth in the sector in the coming years. As a result, the credit ratings were upgraded to A- (Outlook Stable) by CARE Ratings in March’24 for both Arman & Namra. Now, turning to Arman’s FY24 consolidated performance, the company has implemented stringent credit filters, resulting in a high rejection rate but ensuring that we maintain a high-quality loan book. Despite the rigorous screening process, we reported 30% growth in disbursement to ~Rs 2,297 crore, driven by robust and consistent demand during the review period. Our Micro-Finance and MSME AUM reported a 35% and 44% YoY growth respectively. This growth was also fuelled by the favourable economic environment and the revised regulatory framework issued by the Reserve Bank of India. Our consolidated Profit After Tax as on Mar-24 stood at ~Rs 174 crore, registering a growth of 85% YoY. Furthermore, Arman has always embraced a progressive approach, which has been instrumental in sustaining growth while maintaining asset quality and collection efficiency. Our gross non-performing assets (NPA) stood at 2.88%, and net non-performing assets were at a low 0.31% for the period. Regarding branch expansion, we have opened 67 new branches over the last twelve months, bringing our total branch count to 402. This expansion has been complemented by our successful penetration into newer states and geographies where the performance has been promising. Of the new branches opened in FY24. In addition, we have also initiated the Rural Micro-LAP product pilot in Q4. While it is too early to comment, we are bullish on this product gaining significant traction in the long run. Over the last year, the company initiated several new technological initiatives, such as Aadhaar based Biometric eSign, launch of new HR software, live staff tracking, streamlined paperless loan origination, AI Bot Calling, Monitoring App for Audit/Supervisors, launched Business Intelligence Unit using Advance Analytics, and many other initiatives. During the year, the company also concluded its a fund raise by way of a QIP of ~Rs 230 crore, which makes us adequately capitalized for future growth. We are confident that we are on the right track to achieve our strategic goal of building over ~Rs 5,000 crore of Assets Under Management while maintaining a balanced debt-to-equity ratio. This solid financial foundation and our strategic initiatives position us well for continued growth and success.” Result PDF
Non-banking Financial company Arman Financial Services announced Q1FY24 results: Company recorded the highest ever AUM of Rs 2,143 crore registering a healthy growth of 54.5% YoY and 10.3% QoQ Company experienced strong demand across all business segments, attributed to a robust credit need in rural India, combined with our technology-driven processes and rigorous underwriting practices. Consolidated disbursements for the quarter stood at Rs 537 crore as compared to Rs 380 crore for Q1FY23 increasing by 41.6% YoY Net Total Income for the Q1FY24 stood at Rs 86 crore registering a strong growth of 70.0% YoY PPoP grew by a healthy 98.8% over Q1FY23 to Rs 63 crore Profit After Tax stood at Rs 40 crore registering a robust growth of 154.2% YoY Shareholders' Equity stood at Rs 406 crore as on June 30, 2023 Total borrowings stood at Rs 2,161 crore. (Including the debt component of OCRPS and CCDs as per IND AS Rs 48 crore) Of the total borrowings, 33.2% is through Banks, 19.3% is through NBFCs, 13.4% is through debt and NCDs, 11.3% is through PTC, 19.2% is through direct assignments (off-balance-sheet liabilities) and the rest is borrowed from DFIs (i.e., NABARD & SIDBI) and others. The company has successfully been diversifying its funding sources. It raised Rs 45 crore through Market linked debentures (MLDs) last year and raised another Rs 49 crore through listed nonconvertible debentures (NCDs) in Q1 FY24. As on June 30, 2023, the Company has a healthy liquidity position with Rs 294 crore in cash/bank balance, liquid investments, and undrawn CC limits. Collection efficiency stood at 98.2% for Q1FY24 Segment-wise collection efficiency in June 2023 stood at: Microfinance segment – 98.3% MSME segment – 98.4% 2W segment – 96.6% GNPA stood at 2.49%; NNPA stood at 0.14% Cumulative Provisions stood at Rs 72 crore as on June 30, 2023 (covering 4.1% on-book POS), of this, provisions for Arman standalone stood at Rs 15.5 crore, and for Namra stood at Rs 56.5 crore The additional management overlay, over the regular ECL provisions is included in the Rs 72 crore, of which Rs 7.7 crore is for Arman and Rs 19.9 crore is for Namra. Result PDF