Arman Financial Services Limited , a prominent player in the microfinance and MSME lending sector, has reported a significant turnaround in its financial performance for the second quarter (Q2). The company has swung back to profitability with a net profit of INR 8.00 crores, marking a substantial improvement from the INR 14.60 crores loss recorded in the previous quarter (Q1).

Key Financial Highlights

• Profit Recovery: The company posted a profit of INR 8.00 crores in Q2, compared to a loss of INR 14.60 crores in Q1.
• Asset Under Management (AUM): Consolidated AUM stood at INR 2,130.00 crores.
• Disbursements: Grew by 26% year-on-year to INR 475.00 crores in Q2.
• Collection Efficiency: Improved to 95.60% in September.
• Asset Quality: Gross Non-Performing Assets (GNPA) improved to 3.69%, with Net NPA at 0.53%.

Improving Asset Quality and Operational Metrics

The company's return to profitability has been driven by several factors, including:

1. Enhanced Collection Efficiency: The collection efficiency improved to 95.60%, indicating stronger borrower discipline and improved field-level monitoring.
2. Declining Impairment Costs: Impairment costs have shown a consistent downward trend for three consecutive quarters, decreasing from INR 89.00 crores in Q4 of the previous fiscal year to INR 38.00 crores in Q2.
3. Asset Quality Improvement: The GNPA improved to 3.69%, while the NNPA stood at a low 0.53%, reflecting the company's focus on portfolio quality.

Segment-wise Performance

Microfinance (Namra Finance)

• AUM: INR 1,507.00 crores
• Disbursements in Q2: INR 335.00 crores (25% YoY increase)
• GNPA: 3.77%

MSME, LAP, and Two-Wheeler (Standalone)

• AUM: Grew by 29% YoY to INR 623.00 crores
• Disbursements in Q2: INR 140.00 crores (34% YoY growth)
• GNPA: 3.86% for MSME, 4.99% for Two-Wheeler, and 0.16% for LAP

Strategic Initiatives and Outlook

Aalok Patel, Joint Managing Director of Arman Financial Services, highlighted the company's strategic focus:

• Calibrated Growth Approach: The company is prioritizing portfolio quality and risk discipline over headline growth.
• Operational Reforms: Implementation of structural changes, including the separation of credit underwriting from recovery functions, which is now operational across 50% of the branches.
• Product Diversification: Continued expansion in MSME, Two-Wheeler, and LAP segments, while maintaining a calibrated approach in the Microfinance business.
• Technology Integration: The company is exploring the integration of AI and machine learning in its operations, particularly in areas like evaluations, back-end processes, and IT tracking.

Future Outlook

While the company remains cautiously optimistic about the future, management expects the momentum to strengthen further in the second half. They anticipate continued stabilization in microfinance asset quality, sustained strength in collections, and further moderation in credit costs.

Arman Financial Services appears well-positioned to capitalize on improving rural sentiment and a supportive policy environment. The company's focus remains on building scale with quality, aiming to deliver durable, profitable, and sustainable growth while creating long-term value for stakeholders.

As the microfinance industry evolves, Arman Financial is also considering strategic shifts, including potential diversification beyond traditional group-based lending models, to adapt to changing market dynamics and customer needs.

Investor Call Highlights

In the Q2 earnings conference call, management provided additional insights:

• The company is exploring the implementation of Credit Guarantee Fund for Micro Units (CGFMU) coverage for its MSME portfolio, similar to the 67% coverage in its microfinance portfolio.
• Arman is expanding its geographical footprint, having opened new branches in Uttar Pradesh, which is expected to contribute to MSME growth.
• The management aims for a sustainable Return on Assets (ROA) of 3.50% to 4.00% in the long term.

With these strategic initiatives and improving financial metrics, Arman Financial Services appears to be on a path of recovery and growth, navigating through the challenges in the microfinance and MSME lending space.

Elevation Capital V Limited, a significant shareholder in Arman Financial Services Limited , has reduced its stake in the company through a series of open market transactions. This move has resulted in a notable shift in the ownership structure of the financial services firm.

Key Details of the Transaction

On November 14, 2025, Elevation Capital V Limited executed a substantial sale of shares in Arman Financial Services. Here are the key details of the transaction:

Impact on Shareholding Structure

The sale has led to a significant change in Elevation Capital's position within Arman Financial Services:

• Before the transaction: Elevation Capital held a 12.55% stake in the company.
• After the transaction: Their holding has decreased to 10.35%.

This reduction represents a substantial change in the ownership structure of Arman Financial Services, potentially impacting the company's shareholder dynamics.

Company Overview

Arman Financial Services Limited is a financial services company. According to the LODR data, the company's equity share capital stands at Rs. 105,129,210, comprising 10,512,921 equity shares with a face value of Rs. 10 each.

Market Implications

While the reasons behind Elevation Capital's decision to reduce its stake are not explicitly stated, such moves by significant shareholders often attract market attention. Investors and analysts may closely watch for any potential impact on the stock price or changes in the company's strategic direction following this transaction.

It's important to note that despite the reduction, Elevation Capital V Limited remains a substantial shareholder in Arman Financial Services, retaining over 10% ownership in the company.

Shareholders and potential investors in Arman Financial Services should keep an eye on any further developments or disclosures from the company or its major shareholders that might provide additional context to this transaction.

Note: This article is based on the information provided in the regulatory filing dated November 17, 2025, and reflects the shareholding pattern as of September 30, 2025.