NFL AUM falls 19% as credit costs return it to loss in Q2 FY27

Niyogin Fintech’s NFL NBFC business reported a Rs. 1.6 crore pre-tax loss in Q2 FY27 as assets under management (AUM) fell 19% quarter on quarter to Rs. 269.8 crore and credit costs reached Rs. 3.1 crore. Net interest income declined 19% to Rs. 8.3 crore, while headline gross non-performing assets (GNPA) were 8.9%.

Why did NFL report a loss in Q2 FY27?

NFL returned to a loss because income declined and credit costs exceeded pre-provisioning operating profit in Q2 FY27. Pre-provisioning operating profit fell 57% quarter on quarter to Rs. 1.7 crore, while credit cost rose 6% to Rs. 3.1 crore. As a result, profit before tax (PBT) excluding employee stock option plan (ESOP) cost changed from a Rs. 1.0 crore profit in Q1 FY27 to a Rs. 1.4 crore loss in Q2 FY27.

Gross income declined 24% sequentially to Rs. 22.7 crore. Commission sharing fell to Rs. 11.2 crore from Rs. 15.2 crore and interest expense fell to Rs. 3.3 crore from Rs. 4.4 crore, but these reductions did not offset the lower income base. Net interest income (NII) therefore fell from Rs. 10.2 crore to Rs. 8.3 crore, and PBT was a Rs. 1.6 crore loss against a Rs. 0.8 crore profit in Q1 FY27.

The quarterly outcome also deteriorated from Q2 FY26, when NFL reported Rs. 9.8 crore of NII and Rs. 1.7 crore of PBT. In Q2 FY27, other cost increased 14% sequentially to Rs. 3.1 crore, while employee cost excluding ESOP was broadly unchanged at Rs. 3.5 crore. Credit cost was 68% above the Rs. 1.8 crore reported a year earlier.

How much did NFL's lending portfolio contract?

NFL’s AUM, including off-book exposure, declined by Rs. 62.4 crore during Q2 FY27, falling to Rs. 269.8 crore from Rs. 332.2 crore in Q1 FY27. The reported 19% sequential reduction followed moderation in the prior quarter and left AUM 21% below Rs. 340.5 crore in Q2 FY26. NFL says future deployment depends on funding capacity, underwriting criteria and business opportunities.

The portfolio had risen from Rs. 314 crore in Q3 FY26 to Rs. 352 crore in Q4 FY26 before declining to about Rs. 332 crore in Q1 FY27 and Rs. 270 crore in Q2 FY27. NFL’s borrowings were comparatively stable quarter on quarter at Rs. 89.7 crore, versus Rs. 90.0 crore in Q1 FY27, although they were 11% below Rs. 101.1 crore a year earlier.

The displayed AUM, gross-income and credit-cost figures are marked as adjusted for first-loss default guarantee (FLDG) invoked. AUM also includes off-book exposures, so the Rs. 269.8 crore measure is broader than an on-book loan balance alone. NFL says disbursements are aligned with available liquidity and underwriting requirements, making funding availability a stated condition for scaling the partner-led book.

What does NFL's GNPA disclosure show about portfolio quality?

NFL reported headline GNPA of 8.9%, while the partnership and alliances portfolio was reported at 0.3% under a narrower calculation disclosed by NFL. The 0.3% figure is calculated net of exposures backed by 100% FLDG and other securities, and excludes the Finance Professionals Channel and legacy portfolio. The two percentages therefore cover different stated portfolio definitions.

Partnership and alliances accounted for 88% of the portfolio, according to the presentation, with the Finance Professionals Channel and legacy portfolio making up the remaining 12%. For the partnership-led segment, NFL lists partner FLDG as collateral and uses banking and liquid-income assessment for cash-flow evaluation. These mechanisms are part of the stated product structure rather than a guarantee of future credit outcomes.

The partnership segment serves customers with turnover below Rs. 1 crore, an average ticket size of Rs. 1 lakh and an average tenor of eight months. NFL says asset-quality monitoring remains important across the existing book, particularly given differences between legacy and partnership-led exposures. The Rs. 3.1 crore Q2 FY27 credit cost, compared with Rs. 2.9 crore in Q1 FY27, shows that provisioning remained material even as reported AUM reduced.

What will determine NFL's next phase of lending growth?

NFL says appropriate funding capacity, borrowing costs and credit performance will determine the conditions for measured expansion. Its immediate emphasis is maintaining lending economics, while disbursements remain linked to liquidity availability and underwriting requirements. This indicates that the lower Q2 FY27 AUM was accompanied by a stated focus on deployment discipline rather than a disclosed AUM growth target.

Platform activity continued despite the reduction in quarter-end AUM. NFL reported 3 lakh lifetime loans processed, up 4% from 2.9 lakh in Q1 FY27, and 1.2 crore total application programming interface (API) hits. NFL attributes the activity to a partnership-led model in which APIs and co-created credit products connect its underwriting and credit infrastructure with partner customer ecosystems.

Merchant EDI lending uses small-ticket loans and frequent repayments, according to the presentation. NFL says frequent merchant cash flows provide regular collection information and repayment behaviour can provide early performance indicators. NFL also says the combined EDI and EWI share was about 42% of the performing loan book in Q2 FY27, without expanding those labels further.

Conclusion

NFL’s Q2 FY27 results combined a Rs. 62.4 crore reduction in AUM with a Rs. 1.9 crore sequential decline in NII and a Rs. 3.1 crore credit cost. The consequence was a shift from Rs. 0.8 crore PBT in Q1 FY27 to a Rs. 1.6 crore loss, while the 8.9% headline GNPA should be considered alongside the separately calculated 0.3% partnership-portfolio GNPA.

Next, readers should watch whether funding capacity and borrowing costs permit renewed disbursement, as NFL identifies these as conditions for expanding the partner-led book. The next reported credit-cost trend, the movement in the Rs. 269.8 crore AUM base, and the performance of the 88% partnership-and-alliances portfolio will indicate whether the stated measured-expansion approach changes.