Fedbank Financial Services Limited (Fedfina) is set to witness a significant change in its ownership structure as True North, a private equity firm, prepares to divest its entire 8.6% stake in the company. The non-banking financial company (NBFC) has appointed bankers to facilitate this block deal, signaling a potential shift in the company's investor base.

Key Highlights

• True North plans to sell its complete 8.6% stake in Fedbank Financial Services.
• Bankers have been appointed to manage the block deal.
• The transaction is expected to occur in the near future.

This development comes as a notable move in the financial services sector, potentially impacting Fedfina's shareholding pattern and market perception. Block deals of this nature often attract attention from institutional investors and can influence stock price movements.

Recent Investor Engagement

While not directly related to the stake sale, it's worth noting that Fedbank Financial Services has been actively engaging with the investment community. According to a recent disclosure filed with the stock exchanges:

This engagement demonstrates the company's commitment to maintaining open lines of communication with its investors and analysts, which is particularly important during periods of potential ownership changes.

As the block deal progresses, market participants will likely keep a close watch on any potential impacts on Fedbank Financial Services' stock price and overall market sentiment. The successful execution of this stake sale could also provide insights into investor appetite for NBFCs in the current market environment.

Investors and stakeholders are advised to stay tuned for further updates on this developing story, as the completion of the block deal could have implications for Fedbank Financial Services' future strategic direction and market positioning.

Fedbank Financial Services Limited (Fedfina) has reported a 24.2% year-on-year increase in net profit for the second quarter of fiscal year 2026, reaching INR 80.2 crores. The company's performance reflects its strategic focus on gold loans and Loan Against Property (LAP) business, while actively reducing exposure to unsecured lending.

Key Financial Highlights

Business Strategy and Expansion

Fedfina has been actively expanding its gold loan business, opening 57 new gold loan branches in Q2 FY26. The company plans to open approximately 150 new gold branches in the entire fiscal year, with about 90 more expected in the next two quarters.

The company is also optimizing its branch network by co-locating small ticket LAP branches with gold loan branches. So far, 49 small ticket LAP branches have been merged with gold branches, with a target of 75-80 such consolidations for the year.

Focus on Secured Lending

Fedfina has significantly reduced its exposure to unsecured lending:

• Completed assignment of business loan portfolio worth INR 115.6 crores
• Reduced on-book exposure of unsecured lending to less than 1%
• Sold deep delinquent NPAs worth INR 79.5 crores to an asset reconstruction company for INR 32.6 crores

Asset Quality and Provisioning

• Credit costs stood at 0.9% for the quarter, including a 20 basis points impact from ECL refresh exercise
• Provision Coverage Ratio (PCR) adjusted to 32% following the sale of deeper bucket NPAs

Funding and Cost of Borrowing

• Secured External Commercial Borrowings (ECBs) totaling $150 million
• Improved cost of borrowing by 37 basis points quarter-on-quarter to 8.19%
• Incremental borrowing cost for Q2 continues to be below 8%

Management Commentary

Parvez Mulla, MD & CEO of Fedbank Financial Services, stated, "We are focused on conserving and allocating capital to businesses with high ROA and ROE, while moving towards a fully secured lending portfolio. Our twin-engine strategy of Gold and LAP businesses is showing positive results."

C.V. Ganesh, CFO, added, "We have been deleveraging and releasing capital to avail the gold loan opportunity. Our aim is to build capacity for better performance in FY27 and FY28."

Outlook

While the company maintains its credit cost guidance of 1% (±10 bps) for FY26, management expects improvements as collection infrastructure strengthens. Fedfina remains committed to its strategy of expanding gold loans and LAP businesses while optimizing costs and improving asset quality.

The company's focus on secured lending and branch expansion, particularly in the gold loan segment, positions it for potential growth in the coming quarters, subject to market conditions and successful execution of its strategies.