Regency Fincorp FY26: secured MSME pivot and digital lending build-out

Regency Fincorp Limited, a North India focused NBFC, used its May 2026 investor presentation and its maiden earnings call to outline a simple story. FY26 was a year of rapid scale-up, and FY27 onward is positioned as a phase of reshaping the loan book toward secured MSME lending, with digital lending for salaried borrowers as a second growth engine.

On the reported financial trajectory, the company’s FY26 presentation shows AUM rising to INR261 crore from INR180 crore in FY25. Total income increased to INR40.05 crore from INR21.66 crore, while PAT rose to INR13.42 crore from INR4.97 crore. The same deck highlights a rise in NIM to 10.26% from 7.41% and an improvement in operating efficiency, with opex as a percent of average AUM shown at 3.7% versus 4.3%.

The bigger change, however, sits inside the portfolio mix. The March 2026 AUM split disclosed in the presentation indicates that secured MSME loans now form the majority of the book.

The book is moving decisively toward secured MSME lending

As of March 2026, Regency’s product mix shows MSME secured loans at 61.0% of AUM, MSME unsecured at 26.4%, joint liability group loans for women borrowers at 10.7%, and digital lending at 1.9%. Management repeatedly framed secured MSME lending as the core product for the next phase, citing better risk adjusted comfort and collateral backed downside protection.

In the earnings call, management quantified how quickly this shift has already happened. The CFO stated that secured disbursements contributed about 57% of total disbursements in FY26, versus 23% in FY25. The secured loan book was described as around 61% of total AUM, up from 18% in the previous year.

Collateral and underwriting philosophy were also described in operational terms. For MSME secured loans, the company takes constructed residential or commercial property as collateral, with an LTV of about 50% to 60%. Management explicitly stated it does not take land, industrial land, or agricultural land as collateral. Tenure for MSME secured loans was described as typically 48 to 60 months, aligned to the company’s broader stated policy of not going beyond 60 months.

FY26 financial snapshot from the company’s disclosures

The presentation includes both headline performance metrics and detailed income statement and balance sheet tables. A consolidated versus standalone basis is not explicitly stated in the provided extract, so the numbers are reproduced as shown.

One key implication from the above is that profitability improved sharply, but reported asset quality ratios worsened year-on-year. During Q&A, management linked the increase in NPA ratios partly to the legacy microfinance style JLG segment and also indicated it is exiting that business.

The balance sheet table in the presentation shows total assets rising to INR329.34 crore at Mar-26 from INR229.11 crore at Mar-25, driven largely by growth in the loan book to INR261.23 crore from INR170.18 crore.

Exiting JLG, building salaried digital lending, and adding a wallet layer

A notable strategic decision from the concall is the runoff of the JLG book. The CFO stated the company stopped disbursing in JLG from November onwards and intends to let it amortize through collections. Management indicated an expectation that about 70% of the JLG book will run down by the end of the next financial year, and that the JLG book should become zero by the end of the next calendar year.

In parallel, the company is attempting to build digital lending for salaried customers through its Cash My Salary app. Management described this as a product for salaried individuals, with a salary threshold of more than INR45,000, and bank statement based verification supported by AI tools. Approval timelines were described as roughly 30 to 45 minutes, with a digital flow and limited human intervention.

The presentation and concall also reference a wallet initiative under the RegPay or RedPay naming. In the call, management stated it plans to launch a digital wallet over the next 12 months and also mentioned receiving an NOC from RBI for a PPI license. The intended benefit described is better control over disbursements and repayments, higher visibility into customer behaviour, and improved collections through digital payment rails.

This is positioned as more than a technology upgrade. Management framed it as a way to increase sourcing efficiency, standardise credit decisions using data-led tools, and improve monitoring through early warning signals.

Funding mix, cost of funds, and stated guardrails

The company’s debt profile slide shows total debt outstanding at INR169 crore at Mar-26, up from INR107 crore at Mar-25, with D/E at 1.05x and CRAR at 57.6%. The deck also provides a debt segment breakdown, with NCDs forming a meaningful share of the borrowings mix in Mar-26.

On funding cost, the concall commentary is direct. Management stated its current cost of funds is about 13% to 14% and it aims to reduce that to 11% to 12%. It also said that onboarding public sector banks could allow access to around 10% funding, while avoiding a firm commitment to an 8% cost of funds.

From a risk and balance sheet management lens, management repeatedly stated it wants to avoid ALM mismatch by keeping loan tenures within 60 months. The presentation also states internal leverage comfort and caps, including a stated cap of D/E at 3.5x and Tier 1 CRAR of at least 25% as a lender comfort framework, while the strategy slide sets a D/E below 3x and CRAR above 50% as guardrails.

The stated path to FY27 and FY30 targets

Regency’s vision slide sets an AUM path of INR261 crore in FY26, a target of INR500 crore in FY27, and a vision of INR3,000 crore plus by FY30. Execution levers listed include scaling secured MSME lending, introducing consumer durable and merchant financing as new product lines, expanding branches from 23 to 50 plus by FY27, and upgrading its credit rating to ACUITE A- by FY27.

The concall adds colour on how management thinks about scaling. It discussed increasing branch count, maintaining opex at roughly 2.5% to 2.75% going forward, and raising additional funding lines to support growth. However, the documents do not provide a quarter-by-quarter roadmap or a detailed bridge from current AUM to the FY30 number.

Takeaways from the presentation and maiden earnings call

FY26 shows strong reported growth in AUM, income, and PAT, alongside a clear portfolio shift toward secured MSME lending. The product mix is becoming more collateral-backed, with management describing conservative LTV discipline and a tighter focus on constructed properties.

At the same time, asset quality ratios increased in FY26 versus FY25, and management is responding by exiting JLG and focusing on a mix of secured MSME and salaried digital lending. The planned wallet and PPI license are positioned as the next layer in this transition, aimed at improving underwriting and collections through better data and payments control.

For investors tracking the next 12 to 18 months, the measurable checkpoints already stated by the company are the pace of secured mix increase, the runoff of the JLG book, branch expansion progress, reduction in cost of funds toward 11% to 12%, and whether digital lending scales meaningfully from its March 2026 base of 1.9% of AUM.