PTC India Financial Services Navigates Q2 FY26 with Strategic Shifts and Asset Quality Gains

PTC India Financial Services Limited (PFS) has released its financial results for the second quarter and half year ended September 30, 2025, revealing a period marked by significant strategic shifts and notable improvements in asset quality, even as it navigates certain operational and governance challenges. The company, an RBI-classified Infrastructure Finance Company, continues its journey towards becoming a preferred financial partner in the sustainable infrastructure value chain.

For Q2 FY26, PFS reported a total income of INR 131.86 crore, with a profit after tax (PAT) of INR 88.14 crore. This compares to a total income of INR 142.24 crore and PAT of INR 136.63 crore in the preceding quarter (Q1 FY26). For the first half of the fiscal year (H1 FY26), the company posted a total income of INR 274.10 crore and a PAT of INR 224.77 crore. While the PAT for H1 FY26 shows a substantial increase from H1 FY25 (INR 91.74 crore), the sequential dip in Q2 income and PAT reflects some of the operational nuances of the period.

Operational Highlights and Strategic Realignment

PFS demonstrated strong momentum in loan sanctions, achieving INR 1,048 crore in Q2 FY26, which is the highest in the last 10 quarters. This reflects a robust pipeline and a build-up of business momentum. A key strategic highlight is the company's commitment to private corporates, with 100% of its Q2 disbursements directed to this segment. This reinforces its focus on sustainable and profitable growth, moving away from high-value, high-risk projects towards mid-sized, granular lending.

The company has also made a significant foray into SME lending and is actively expanding into newer segments such as Electric Vehicle Mobility, Water Treatment Projects, Compressed Biogas, Bio Ethanol, and Energy Storage Systems. This diversification strategy aims to reduce concentration risk and create a more granular, broad-based credit portfolio. Management emphasized that this diversification will contribute to better margins and is supported by robust risk management systems.

Asset Quality and Financial Discipline

One of the most encouraging aspects of PFS's performance is the significant improvement in asset quality. Gross Stage III assets reduced by nearly 75% over the past year, from INR 764 crore in Q2 FY25 to INR 193 crore in Q2 FY26. Net Stage III also saw a substantial reduction to INR 47 crore. Importantly, there were no new loan slippages in Q2 FY26, and all loan accounts disbursed since FY18 remain classified as standard, underscoring the effectiveness of their credit appraisal and risk management practices. The company successfully resolved the Vento Power account and undertook technical write-offs, further cleaning up the balance sheet.

In terms of financial discipline, PFS reported a reduction in its cost of borrowing, which improved to 9.49% from 9.67% in Q1 FY26, thanks to support from banks like Canara Bank and Bank of India. The Capital Adequacy Ratio stood strong at 62.63% in Q2 FY26, indicating robust financial health.

Navigating Challenges and Future Outlook

Despite the positive strides, PFS faced some challenges. Disbursements in Q2 FY26, at INR 326 crore, fell short of the projected INR 1,000 crore. Management attributed this to lower demand in the power and construction sectors due to extended monsoon season, which deferred customer off-take. The company expects to make up for this shortfall in Q3 FY26, with a robust pipeline and plans to disburse around INR 1,000 crore.

A notable corporate update was the resignation of three Independent Directors on September 26, 2025. Management expressed surprise, stating no prior concerns were raised. However, the company acted swiftly, appointing Ms. Mini Ipe, a former MD of LIC, as an Independent Director and is in the process of appointing two more. Management acknowledged that this event could temporarily impact fund-raising abilities and decision-making processes, but emphasized that their credit ratings remained stable post-review by CRISIL and ICRA.

Looking ahead, PFS is focused on its 'Blueprint for Future,' which includes improving asset quality, de-risking its portfolio, focusing on distributed infrastructure, strengthening governance, diversifying resources, delivering customer-centric solutions, and prioritizing ESG goals. The company aims for a long-term gross NPA of 3% and net NPA of 1%, with credit costs not exceeding 60-70 basis points annually. Management expects the full-year loan book to be between INR 2,500 crore and INR 3,000 crore, with a potential capital raise planned for this financial year.

Conclusion: Strategic Clarity Amidst Transition

PFS is clearly in a phase of strategic realignment, demonstrating strong resolve in improving its asset quality and diversifying its lending portfolio. While operational challenges like disbursement shortfalls and governance changes have created some headwinds, management's proactive measures and clear forward-looking guidance indicate a commitment to sustained growth and enhanced stakeholder value. The focus on granular lending, private sector engagement, and robust risk management positions PFS to capitalize on opportunities in India's evolving infrastructure financing landscape.