IndoStar Capital Finance Limited released the transcript of its earnings conference call held on July 30, 2026, providing detailed insights into its Q1 FY27 performance and strategic outlook. The transcript confirms the company’s reported consolidated net profit of ₹11.5 crore for the quarter ended June 30, 2026, a sharp turnaround from the net loss of ₹423.9 crore in the preceding quarter. Managing Director Randhir Singh and Chief Financial Officer Jayesh Jain emphasized that the profitability swing was driven by a 44% surge in disbursements to ₹1,235 crore and significantly lower impairment charges, reaffirming the target of achieving a 35% compound annual growth rate (CAGR) in disbursements over the next three years.

The Board of Directors approved the unaudited financial results on July 29, 2026. Alongside the results, the Board authorized the issuance of Non-Convertible Debentures (NCDs) worth up to ₹6,000 crore through private placement, subject to shareholder approval at the upcoming 17th Annual General Meeting (AGM) scheduled for September 25, 2026. The AGM will also consider the appointment of S. R. Batliboi & Co. LLP as Statutory Auditors for a three-year term.

Financial Performance and Margin Dynamics

Net Interest Income stood at ₹219.5 crore, up 39% year-on-year, supported by improved portfolio yields and declining borrowing costs. Pre-provision operating profit (PPOP) remained stable at ₹92.9 crore compared to ₹93.3 crore in the previous quarter. Impairment on financial instruments dropped sharply to ₹81.45 crore in Q1 FY27, down from ₹517.27 crore in Q4 FY26, primarily due to the absence of large one-time provisions on security receipts and management overlays that impacted the prior quarter.

The weighted average cost of funds declined to 9.9% in Q1 FY27 from 10.7% in Q1 FY26, an improvement of 80 basis points. Jayesh Jain noted that while incremental borrowing costs were 9.1%, the overall book cost is expected to decrease further as high-cost debt maturing in Q2 FY27 is repaid. The company maintained strong liquidity, holding an average excess liquidity of ₹529 crore during the quarter as a contingency buffer.

Portfolio Quality and Asset Mix

Asset Under Management (AUM) increased to ₹8,244 crore as of June 30, 2026, representing a 6% year-on-year growth. Disbursements stood at ₹1,235 crore, with Vehicle Finance accounting for 97% of the total. The share of customers with a CIBIL score above 725 rose to 84% in Q1 FY27 from 63% in FY24, reflecting tighter underwriting standards implemented since January 2025. Early delinquency ratios improved to 2.29% from 5.55% in Q1 FY26, while non-starter ratios declined to 1.65% from 3.76%.

Gross Stage 3 assets stood at 4.84%, with Net Stage 3 assets at 2.48%. Randhir Singh noted that approximately 80% of NPAs pertain to the pre-January 2025 "old book," which is running off rapidly. He projected that the new book’s contribution to AUM would rise from 68% in June 2026 to 85% by Q4 FY27, leading to significant improvements in headline GNPA and credit costs over the next two to three quarters.

Micro LAP Expansion and Growth Drivers

The Micro LAP segment continued its disciplined scaling, with disbursements reaching ₹50 crore in Q1 FY27, up 85% year-on-year. AUM for this segment grew to ₹217 crore, nearly tripling from a year ago. The portfolio maintained strong asset quality, with 99.7% of loans remaining current and 90-plus days past due (DPD) at just 0.17%. Management plans to launch Micro LAP operations in Uttar Pradesh and Bihar in August and September 2026, aiming to double the segment’s AUM during FY27.

To support growth, IndoStar expanded its branch network to 468 branches across 24 states and union territories, adding 14 branches in the quarter. The company also increased its field sales force by 30% in the last six months, targeting a 50% increase by March 2027. Digital transformation efforts reduced loan turnaround time by 44% over the last year, enhancing operational productivity.

What the Numbers Show

The most material shift in IndoStar’s Q1 FY27 performance is the normalization of impairment costs combined with efficient funding. In the corresponding quarter of FY26, the company recognized exceptional items totaling ₹1,175.95 crore due to the divestment of Niwas Housing Finance Limited, which skewed prior-year comparisons. The current quarter’s profit is purely operational, driven by lower credit losses rather than one-time gains. The simultaneous drop in cost of funds to 9.9% and rise in net interest income suggests improved margin dynamics, supporting the sustainability of the profitability turnaround. Furthermore, the strategic pivot towards higher-quality borrowers (CIBIL > 725) and diversification into passenger vehicles and construction equipment indicates a deliberate move to reduce concentration risk while maintaining yield stability.

IndoStar Capital Finance Limited’s Board of Directors approved the issuance of Non-Convertible Debentures (NCDs) for up to ₹6,000 crores through private placement on July 29, 2026. The proposal requires shareholder approval at the upcoming 17th Annual General Meeting (AGM). This capital raise coincides with the company reporting a consolidated net profit after tax (PAT) of ₹1,147 lakhs for the quarter ended June 30, 2026, driven by stable revenue growth despite the absence of exceptional gains recorded in the prior year.

The Board also appointed S. R. Batliboi & Co. LLP as Statutory Auditors for a three-year term and scheduled the AGM for September 25, 2026. The meeting will be conducted via Video Conferencing or Other Audio-Visual Means (OAVM). Additionally, the trading window for designated persons opens on August 3, 2026, following the conclusion of the board meeting which lasted from 1:00 p.m. to 2:45 p.m. IST.

Financial Performance in Q1FY27

IndoStar Capital Finance reported consolidated revenue from operations (including other income) of ₹36,672 lakhs for Q1FY27, an increase from ₹34,367 lakhs in the corresponding quarter of FY26. The profit before tax stood at ₹1,148 lakhs, compared to ₹70,450 lakhs in Q1FY25. The significant variance is attributed to an exceptional gain of ₹1,17,595 lakhs in the previous year from the divestment of Niwas Housing Finance Limited, which did not recur in the current period.

Standalone figures mirrored consolidated trends, with revenue at ₹36,667 lakhs and PAT at ₹1,144 lakhs. Interest income contributed ₹32,998 lakhs to the top line, while finance costs amounted to ₹14,438 lakhs. Impairment on financial instruments was recorded at ₹8,145 lakhs, reflecting ongoing credit risk management under the Expected Credit Loss framework.

Capital Raising and Corporate Actions

The proposed NCD issuance aims to bolster the company’s lending capabilities. The Board has authorized raising funds subject to shareholder ratification at the AGM. The proceeds will be utilized for onward lending to customers, consistent with the company’s core business model. In the current quarter, the company already raised ₹600 crores through three separate NCD issues on April 23, 2026, with ISINs INE896L07AP5, INE896L07AR1, and INE896L07AQ3. All funds were fully utilized without deviation.

The appointment of S. R. Batliboi & Co. LLP follows RBI guidelines requiring NBFCs to appoint statutory auditors for continuous three-year terms, subject to annual eligibility norms. The firm, established in 1949, will serve until the conclusion of the 20th AGM. MSKA & Associates LLP continues as the statutory auditor for the security cover certificate, confirming compliance with financial covenants for listed secured NCDs aggregating ₹3,09,039.87 lakhs.

What the Numbers Show

The normalization of profit figures in Q1FY27 provides a clearer view of IndoStar Capital Finance’s operational profitability. With the one-time divestment gain excluded, the core PAT of ₹1,147 lakhs represents a sustainable earnings base. The debt-equity ratio stands at 1.54, and the capital-to-risk-weighted assets ratio is 34.81%, indicating strong regulatory compliance. The new NCD authorization signals management’s confidence in asset quality and its intent to expand loan book growth in the coming quarters.

Source: https://lodr-files.dhan.co/lodr-inputs/Company/INE896L01010/2e390d7411114562.pdf