Laxmi India Finance Navigates Q2 FY26 with Robust Growth and Strategic Digital Push

Laxmi India Finance Limited has reported a strong performance for the second quarter of the fiscal year 2026, showcasing disciplined growth and strategic strengthening across its operations. The company's Assets Under Management (AUM) reached an impressive ₹1,386.49 crores, reflecting a significant 24.75% year-on-year growth. This expansion underscores the trust customers place in the company and its ability to scale responsibly. Despite absorbing IPO-related expenses, the Profit After Tax (PAT) stood at ₹19.06 crore, a testament to the company's business resilience and operational strength. The successful completion of its Initial Public Offering (IPO) during the quarter injected ₹151.58 crores in equity, substantially bolstering the balance sheet and improving the Capital Adequacy Ratio (CRAR) to 31.90%, thereby providing a solid foundation for future expansion.

The company's financial health is further highlighted by a reduction in its cost of borrowing, which decreased to 11.10%, a 63 basis points reduction year-on-year. This improvement is attributed to an upgraded credit rating outlook and a more diversified lender base, including the onboarding of three new lenders: Bank of Baroda, South Indian Bank, and Karur Vysya Bank. This strategic move is expected to enhance margins and maintain competitive customer pricing. Operationally, Laxmi India Finance expanded its presence to 164 branches across five states, deepening its footprint in rural, semi-urban, and urban markets. The company continues to prioritize healthy asset quality, with Gross Non-Performing Assets (GNPA) at 1.59% and Net Non-Performing Assets (NNPA) at 0.84%, demonstrating prudent risk management.

Financial Highlights: A Quarter of Solid Performance

Laxmi India Finance's Q2 FY26 results reflect a period of sustained financial momentum. Total Revenue for September 2025 reached ₹146.30 crore, contributing to a half-year (H1 FY26) revenue of ₹146.30 crore, up 31.35% from H1 FY25. Net Interest Income (NII) for H1 FY26 was ₹71.72 crore, showing a 46.55% increase over H1 FY25. The Profit Before Tax (PBT) for September 2025 was ₹28.20 crore, and for H1 FY26, it was ₹25.54 crore, marking a 25.30% increase from September 2024. The company's Net Worth significantly grew to ₹435.16 crore by H1 FY26, an 83.73% increase from September 2024, largely due to the IPO. The Capital Adequacy Ratio (CRAR) stands strong at 31.90%, with Tier I CRAR at 31.26%. Asset quality metrics, despite a slight sequential uptick, remain robust, with a Provision Coverage Ratio (PCR) of 47.22%.

Strategic Expansion and Digital Transformation

Laxmi India Finance is actively pursuing a strategy of both physical and digital expansion to enhance its market reach and operational efficiency. The company's branch network has grown to 164 branches across key states like Rajasthan, Gujarat, Madhya Pradesh, Chhattisgarh, and Uttar Pradesh. Management has outlined plans to open 29 new branches in the current financial year, with 6 already operational and 23 in the planning phase, alongside an intention to enter one more state by year-end. This expansion is supported by a clear understanding of breakeven timelines, with new branches expected to achieve breakeven within 7-8 months by reaching an AUM of ₹1.5 crore, and overall breakeven within 1.5 years when considering all expenses.

Concurrently, the company is heavily investing in technology to streamline operations and improve customer experience. Its tech-enabled operations are centralized from Jaipur, utilizing online Loan Management Systems (LMS) and Loan Origination Systems (LOS) for efficiency and scalability. Recent digitalization initiatives include the implementation of Addetto-HR software for mobile-based attendance and real-time access to pay slips, and Synofin LOS & LMS applications for effective management. The introduction of Dynamics 365 Business Central further guarantees system transparency through audit logs. The Laxmi Mitra app is another key digital tool, enabling real-time loan tracking and minimal acquisition costs, with increasing UPI transactions indicating strong digital adoption.

Asset Quality Management and Product Focus

While maintaining a healthy asset quality, Laxmi India Finance experienced a slight sequential increase in NPAs during Q2 FY26. This was primarily attributed to external factors such as floods in Rajasthan and Madhya Pradesh, a general cash crunch in the quarter, and specific pressure observed in the heavy commercial vehicle segment. Despite this, the company's asset book remains largely secured, with 98.2% of loans backed by collateral and a healthy Loan-to-Value (LTV) of 35% on the NPA portion. Management expressed confidence in recovering these NPAs in the coming quarters, expecting a downtrend in these numbers.

In response to market realities, the company is strategically refining its product mix. While MSME loans remain the core product, constituting 80-85% of the portfolio, Laxmi India Finance is de-emphasizing heavy commercial vehicles due to segmental slowdowns and issues. Instead, it is focusing on private and multi-rooted vehicle loans for the remaining 15% of its portfolio. This shift aims to mitigate risks associated with underperforming segments and concentrate on areas with better growth prospects and asset quality. The company's diverse portfolio includes secured MSME/SME loans, mortgage loans, business loans, LAP, personal loans, commercial and non-commercial vehicle loans, tractor loans, two-wheelers, electric vehicles, and wholesale lending.

Outlook and Management Commentary

Laxmi India Finance's management maintains a confident and optimistic outlook for the upcoming quarters. They anticipate better AUM growth for the current year, building on a historical CAGR of almost 32%. The current growth trajectory is deemed sustainable for Q3 and Q4, driven by positive industrial output sentiments and a rapid increase in customer demand. The company's strengthened capital base from the IPO, coupled with a declining cost of borrowing, positions it favorably to enhance margins and pursue further growth.

Management's focus remains on quality expansion, technology-led innovation, and strong governance. They are committed to continuous improvement in collection efficiency and customer acquisition. The positive customer sentiments, especially following the festival season and improved liquidity, are expected to translate into good numbers in the coming quarter. Laxmi India Finance is poised for sustained, prudent growth, leveraging its robust financial position, expanding network, and digital capabilities to navigate the dynamic NBFC landscape effectively.