Vaibhav Vyapaar FY25 Profit Was Lifted by NPA Reversal

Vaibhav Vyapaar’s reported FY25 profitability was materially lifted by a Rs 3.4205 crore reversal of non-performing asset, or NPA, provisions after a Board-approved change in its NPA-recognition policy. The reversal exceeded the Rs 1.0276 crore profit before tax reported for FY25 and reduced other expenses to Rs 14.6649 crore from Rs 16.3274 crore in FY24.

How did the NPA-provision reversal affect Vaibhav Vyapaar FY25 profit?

Vaibhav Vyapaar recorded an NPA-provision reversal of Rs 3.4205 crore in FY25, compared with an NPA-provision charge of Rs 70.06 lakh in FY24. An NPA is a loan asset classified as non-performing, while a provision is an accounting charge set aside for expected loss. A reversal reduces expenses and raises reported profit, and Vaibhav Vyapaar says the reversal materially influenced FY25 profitability.

The direct effect appears in other expenses, which fell by Rs 1.6625 crore to Rs 14.6649 crore in FY25 from Rs 16.3274 crore in FY24. Vaibhav Vyapaar says that excluding the Rs 3.4205 crore reversal, FY25 other expenses would have been Rs 18.1930 crore, above the FY24 level. The reported reduction in this cost line therefore did not reflect a reduction in underlying expenses.

The year-on-year movement in the NPA-provision line was from a Rs 70.06 lakh charge in FY24 to a Rs 3.4205 crore reversal in FY25. That movement was larger than the Rs 41.98 lakh increase in reported profit before tax, which rose to Rs 1.0276 crore from Rs 60.78 lakh. This comparison is not an adjusted-profit measure reported by Vaibhav Vyapaar, but it shows why the policy change is central to interpreting the FY25 result.

What changed in Vaibhav Vyapaar’s NPA-recognition policy?

Vaibhav Vyapaar says the FY25 reversal primarily resulted from a change in its policy for recognising NPAs, approved by its Board of Directors through a resolution dated 3 March 2025. The disclosure does not specify the revised recognition threshold, the affected borrower accounts or the balance of provisions released. It therefore identifies the policy change as the primary cause but does not permit a separate measurement of policy and recovery effects.

The company contrasts the FY25 reversal with the Rs 70.06 lakh NPA provision created in FY24. The change turned the expense line from a charge into a credit within one financial year. The source says FY25 profitability was materially influenced by that reversal and says it should be considered when analysing financial performance for the relevant period.

Vaibhav Vyapaar’s portfolio-quality indicators moved differently across gross and net measures. Gross NPA, defined as gross non-performing assets divided by the total gross loan portfolio, declined to 5.25% in FY25 from 6.72% in FY24. Net NPA, defined as gross NPAs net of provisions as a percentage of the gross loan portfolio, increased to 1.73% from 0.60%, showing the effect that provisioning has on the net measure.

Did operating income also improve in FY25?

Vaibhav Vyapaar’s revenue from operations declined slightly in FY25 rather than driving the reported profit increase. Revenue from operations was Rs 25.0486 crore in FY25, down from Rs 25.2544 crore in FY24, while total income fell 0.47% to Rs 25.3439 crore. The company attributed the revenue change primarily to lower interest income from loans and advances and lower processing fees.

Interest from loans and advances fell to Rs 10.1156 crore in FY25 from Rs 11.4892 crore in FY24, while processing fees declined to Rs 9.8899 crore from Rs 10.9023 crore. These declines were partly offset by platform commission, which rose to Rs 2.4257 crore from Rs 1.0436 crore, and foreclosure charges, which increased to Rs 98.01 lakh from Rs 71.87 lakh. Miscellaneous income rose to Rs 1.6373 crore from Rs 1.1006 crore, which Vaibhav Vyapaar attributed to higher penal charges.

Other income increased to Rs 29.53 lakh in FY25 from Rs 20.86 lakh in FY24, primarily because profit on sales of mutual-fund units rose to Rs 20.01 lakh from Rs 8.07 lakh. The Rs 8.67 lakh increase in other income was smaller than the Rs 3.4205 crore NPA-provision reversal. The revenue data therefore does not show that FY25 profit growth was led by revenue expansion.

Which costs offset the FY25 provision benefit?

Vaibhav Vyapaar’s higher finance costs and debt write-offs offset part of the FY25 benefit from the provision reversal. Finance costs rose to Rs 5.0884 crore in FY25 from Rs 4.0221 crore in FY24 as the company used additional borrowings to maintain liquidity and support lending operations. Interest on financing arrangements other than inter-corporate deposits accounted for Rs 3.2877 crore, or 64.61%, of FY25 finance costs.

Irrecoverable debts written off increased to Rs 9.7572 crore in FY25 from Rs 6.5851 crore in FY24. Vaibhav Vyapaar says the increase reflected adherence to Reserve Bank of India, or RBI, write-off norms requiring derecognition of long-overdue and non-recoverable assets. Standard-asset provisions fell to Rs 59.32 lakh from Rs 85.82 lakh, which the company attributed to improved recoveries, asset-quality outcomes and timely provisioning actions.

Employee benefit expense decreased 6.63% to Rs 3.3092 crore in FY25 even as employee count rose to 50 from 44. Vaibhav Vyapaar attributed the reduction to a higher proportion of junior employees, moderated increments and lower variable pay. Depreciation and amortisation increased to Rs 1.2538 crore from Rs 96.14 lakh, chiefly because amortisation of intangible assets rose to Rs 1.1988 crore from Rs 90.99 lakh.

What do Vaibhav Vyapaar’s later results show?

Vaibhav Vyapaar reported a different earnings profile in FY26, when revenue from operations rose 46.91% to Rs 36.7994 crore and profit before tax rose to Rs 3.1510 crore. The NPA-provision line became a Rs 61.61 lakh charge in FY26 rather than a reversal. FY26 profit before tax was therefore reported after a provision expense, unlike the FY25 figure that included the Rs 3.4205 crore reversal.

FY26 costs also rose as the business expanded. Finance costs reached Rs 6.6444 crore, other expenses were Rs 22.0153 crore and short-term loans and advances increased to Rs 63.1531 crore from Rs 34.3327 crore at the FY25 end. Gross NPA declined further to 4.71% in FY26, while net NPA rose to 2.94% from 1.73%. The disclosure does not provide a direct reconciliation between those asset-quality ratios and the FY26 Rs 61.61 lakh provision charge.

Conclusion

Vaibhav Vyapaar’s FY25 profit before tax rose to Rs 1.0276 crore from Rs 60.78 lakh, but the company says a Rs 3.4205 crore NPA-provision reversal materially influenced that result. Revenue from operations declined slightly, while write-offs rose to Rs 9.7572 crore and finance costs increased to Rs 5.0884 crore, making the provision-policy effect central to interpreting the year-on-year profit increase.

The disclosed FY26 update provides the next comparison point. Revenue rose to Rs 36.7994 crore and profit before tax reached Rs 3.1510 crore, while the NPA line reverted to a Rs 61.61 lakh charge, net NPA increased to 2.94% and short-term loans and advances reached Rs 63.1531 crore.