Laxmi India Finance Q1 net profit up 69% to ₹16.57 crore on margin expansion
Laxmi India Finance posted a 69% YoY increase in Q1FY27 net profit to ₹16.57 crore, driven by a 39% surge in net interest income and a 67 bps decline in borrowing costs. AUM grew 28% to ₹1,721.7 crore, with NIM expanding to 11.36%. Asset quality remained stable with gross NPAs at 2.08%, while management reaffirmed its FY27 guidance of 30-35% AUM growth.
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Laxmi India Finance reported a net profit of ₹16.57 crore for the quarter ended June 30, 2026, rising 69% year-on-year from ₹9.78 crore. The Jaipur-based non-banking financial company (NBFC) saw total revenue climb 34% to ₹93.50 crore, supported by robust growth in both interest income and fee-based earnings. Net interest income (NII) expanded 39% to ₹47.06 crore from ₹33.86 crore in the corresponding period last year. Management highlighted that the improvement in profitability was driven by a decline in the average cost of borrowing by 67 basis points to 10.66%, which helped expand the net interest margin (NIM) to 11.36% from 10.43% in Q1FY26.
The Board of Directors approved the unaudited financial results on August 12, 2026, following a review by statutory auditors S.C. Bapna & Associates, who issued an unmodified opinion. The company announced that its 29th Annual General Meeting will be held on September 16, 2026, via video conferencing. Additionally, Laxmi India Finance informed the exchanges that the transcript of the earnings call with analysts and investors, held on August 13, 2026, is now available on its website pursuant to Regulation 30 and 46 of the SEBI Listing Obligations and Disclosure Requirements Regulations, 2015.
Financial Performance
Interest income grew 27% YoY to ₹85.44 crore, while interest expenses rose 15% to ₹38.38 crore. Fees and commission income more than doubled to ₹5.67 crore from ₹2.58 crore in Q1FY26. Total operating expenses increased 34% to ₹29.94 crore (excluding impairment), primarily due to higher employee benefit expenses which rose 36% to ₹22.12 crore. Return on assets (ROA) improved to 3.45% from 2.75% year-ago, while return on average net worth stood at 13.86%.
| Metric: | Q1FY27 (₹ cr): | Q1FY26 (₹ cr): | Change: |
|---|---|---|---|
| Interest Earned: | 85.44 | 67.10 | +27% |
| Interest Expenses: | 38.38 | 33.23 | +15% |
| Net Interest Income: | 47.06 | 33.86 | +39% |
| Other Income: | 8.48 | 2.98 | +184% |
| Total Income: | 55.54 | 36.85 | +51% |
| Operating Expenses: | 29.94 | 22.37 | +34% |
| Profit Before Impairment & Tax: | 25.60 | 14.48 | +77% |
| Net Profit: | 16.57 | 9.78 | +69% |
Impairment charges (ECL provision) increased significantly to ₹3.01 crore from ₹0.79 crore, while write-offs decreased to ₹0.68 crore from ₹0.92 crore. The implied tax rate stood at 24.37%, slightly higher than 23.42% in Q1FY26. Management noted that credit cost for the quarter was ₹3.69 crore or 0.95% of average gross loans, compared with 0.58% in Q1FY26. This increase was attributed to specific older vintages in the vehicle financing portfolio and additional provisioning for up-money transactions.
What the Numbers Show
The divergence between total income growth (51%) and operating expense growth (34%) indicates strong operating leverage, with profit before impairment and tax expanding 77% to ₹25.60 crore. Net interest margin (NIM) improved as yields on average portfolio outpaced the cost of borrowings, which declined by 67 bps to 10.66%. Fee income’s contribution to total revenue improved to 6% from 4% year-ago, suggesting a gradual shift toward higher-margin, non-interest earnings alongside traditional lending activities. The company maintained a comfortable liquidity position of approximately ₹255.9 crore at the end of the quarter.
Asset Quality & Capital Position
The NBFC maintained healthy asset quality metrics, with gross Stage-3 assets at 2.08% and net Stage-3 assets at 0.94% as of June 30, 2026. Both metrics improved sequentially from March 2026 levels (gross NPA 2.13%, net NPA 1.09%). The capital adequacy ratio (CRAR) stood at 25.32%, significantly above regulatory requirements, with Tier 1 capital adequacy at 24.82%. Provision coverage ratio (PCR) for Stage-3 assets was maintained at prudent levels at 55.22%. Stage 2 assets reduced from ₹46.6 crore to ₹44 crore during the quarter.
The debt-equity ratio was reported at 3.10, with net worth at ₹482.12 crore. On a net basis, considering the liquidity position, the net debt-to-equity ratio stood at 2.57 times. The company confirmed compliance with all covenants related to its listed non-convertible debentures (NCDs), which had an outstanding value of ₹55.05 crore as of the quarter-end. An asset cover of 1.12x was maintained against these secured debt securities.
Strategic Initiatives & Business Profile
According to the investor presentation released alongside the results, Laxmi India Finance has crossed an Asset Under Management (AUM) of ₹1,600 crore following its successful IPO in August 2025. As of June 30, 2026, total AUM stood at ₹1,721.7 crore, representing a 28% year-on-year growth. The own book increased by 31.7% to ₹1,626.9 crore. Disbursements during the quarter stood at ₹232 crore compared with ₹166 crore in Q1FY26. The company operates through 194 branches across Rajasthan, Gujarat, Madhya Pradesh, Chhattisgarh, Uttar Pradesh, and Maharashtra, focusing on Tier II and III cities.
Key strategic priorities include:
- Targeted Returns: Aiming for ROA of 3.50% - 3.75% and ROE of 13.50% - 14.00% through scale benefits and improved asset mix.
- Borrowing Diversification: Exploring new funding avenues such as External Commercial Borrowings (ECBs) and consolidating borrowing mix with larger Private & Public Sector banks to improve cost of funds. Banks accounted for approximately 70% of overall borrowing mix and more than 84% of incremental borrowing during Q1FY27.
- Technology-led Execution: Utilizing tools like Tab-based LOS, Synofin LMS/LOS, and Synno CRM to reduce turnaround time (TAT) to 24-48 hours for commercial vehicle loans.
- Customer Base: Serving ~43,950 customers with 37% being first-time borrowers and 25% being rural/semi-rural women entrepreneurs.
The company’s lending portfolio is diversified across secured MSME/SME loans, mortgage loans, business loans, loan against property (LAP), personal loans, commercial & non-commercial vehicle loans, tractor loans, two-wheelers, electric vehicles, and wholesale lending. MSME remains the largest vertical with an AUM of approximately ₹1,395 crore.
Corporate Actions & Regulatory Disclosures
During the quarter, the company allotted 125,203 equity shares to employees upon exercise of stock options under its ESOP Scheme-2023, increasing paid-up capital to ₹26.20 crore. Additionally, new employee stock options were granted on May 12, 2026, under the existing scheme framework.
Pursuant to Regulations 30 and 47 of the SEBI Listing Obligations and Disclosure Requirements Regulations, 2015, the company published newspaper advertisements in "Financial Express" and "Jansatta" on August 14, 2026. These advertisements informed members about the convening of the 29th AGM on September 16, 2026, at 4:30 pm via video conferencing or other audio-visual means. Members were requested to register or update their email addresses for receiving the AGM notice, the Annual Report for FY25-26, and e-voting credentials.
Historical Stock Returns for Laxmi India Finance
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| -0.87% | -0.02% | -0.43% | +33.61% | -4.63% | 0.0% |
How will the recent increase in impairment charges and credit costs impact Laxmi India Finance's ability to sustain its targeted ROA of 3.50% - 3.75% in the coming quarters?
What specific risks or benefits might arise from the company's strategy to diversify funding through External Commercial Borrowings (ECBs) amidst current global interest rate volatility?
Given the heavy reliance on bank borrowings (70% of total mix), how vulnerable is the company's net interest margin to potential tightening of credit conditions by major lending banks?
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