Arman Financial Services Raises ₹407 Crore Through Debt Issuance

Arman Financial Services Limited has raised ₹407.00 crore by issuing privately placed debt securities, including a single issuance of ₹125.00 crore. The offering, conducted under SEBI regulations, includes five series with varying coupon rates between 10.90% and 11.65%, maturity dates, and payment frequencies. One specific series (SRN 1) saw its coupon rate adjusted upwards from 11.40% to 11.65% effective September 23, 2025.

Funding Diverse Lending Operations

The capital raised is vital for Arman Financial, a Non-Banking Financial Company (NBFC), to finance its various lending activities. These include microfinance, two-wheeler finance, MSME loans, and Loan Against Property (LAP). The company serves a significant population that is under-banked or lacks access to formal credit.

Securing this debt capital enables the company to manage its financial leverage and pursue its growth plans. However, the varying coupon rates highlight the cost of borrowing, which can impact the company's profit margins.

History of Capital Raising

Arman Financial Services has a track record of raising funds through debt and equity to support its expansion. In the financial year 2025 alone, the group raised ₹601.10 crore in new debt to fuel its operations. AFSL aims to consistently increase its loan portfolio (Assets Under Management or AUM) and broaden its geographical reach.

Industry Challenges Persist

Arman Financial operates in a competitive market, facing risks inherent in unsecured lending for microfinance and MSME segments, as well as potential regulatory changes. Recent reports indicate that the company is grappling with declining profitability, rising credit costs, and worsening asset quality. These factors led Acuite to downgrade and then withdraw its ratings for the company in September 2025. Analysts have also noted a low interest coverage ratio and a potentially high cost of borrowing.

Recent Financial Performance

Contextual financial metrics show a decline in consolidated AUM by 15% year-on-year to ₹2,245 crore as of March 31, 2025. On a standalone basis, Arman Financial Services recorded a 25% growth in its AUM, increasing from ₹446 crore to ₹560 crore by the same date.

Investor Focus

Looking ahead, investors will monitor how effectively Arman Financial deploys this new capital to drive AUM growth and improve profitability. Key areas of focus will include asset quality, collection rates, and the impact of rising interest expenses on profit margins. Future debt and equity issuances, along with the company's capital adequacy and debt levels, will also be crucial indicators of its financial health and growth prospects. The company's progress in the microfinance segment and its diversification efforts in MSME and LAP lending will also be watched closely.