Laxmi India Finance reported a strong Q1, with AUM rising 27% to Rs 1,721 crore and profit climbing 70% to Rs 16.43 crore. The company successfully reduced its borrowing costs while maintaining a focus on secured MSME lending, despite ongoing resolution efforts regarding its Rs 19 crore Upmoney exposure.
Laxmi India Finance Reports Strong Growth
Rs 16.43 crore Q1 profit; Rs 1,721 crore total AUM.
Reader Takeaway: Strong profit growth and lower borrowing costs balance the drag from Upmoney asset quality issues.
What just happened
Laxmi India Finance posted a robust first-quarter performance with profit rising 70% year-on-year to Rs 16.43 crore. Assets under management (AUM) grew by 27% to reach Rs 1,721 crore, supported by a 38% surge in total disbursements to Rs 230 crore. The firm continues to lean heavily into its secured MSME lending segment, which currently comprises over 80% of its total business portfolio.
Why this matters
Improved operational efficiency has allowed the company to lower its cost of borrowing to 10.48%, down from 11.73% before its IPO. Management is targeting a 30% CAGR for AUM growth and plans to add 30-35 new branches this year. The company is actively diversifying its funding mix, with 80% of its debt now sourced from banks, providing a more stable liability profile for future expansion.
Upmoney Asset Quality Update
The company addressed concerns regarding its 'Upmoney' exposure of approximately Rs 18–19 crore. It has made a 70% provision against this sum as of June. Excluding this exposure, the gross NPA stands at a healthy 0.83%. Litigation and resolution efforts for this legacy asset are currently ongoing.
Risks to watch
Investors should closely track the resolution progress of the Upmoney exposure, as it continues to distort reported asset quality figures. Additionally, the company has paused plans for gold loans and supply-chain financing, indicating a cautious approach to new product lines in the current regulatory environment.
What to track next
The effectiveness of the firm's expansion into newer states like Uttar Pradesh and Maharashtra will be a key performance indicator. Furthermore, maintaining current net interest margins (NIMs) of 11.36% while the company scales its loan book remains a primary focus for management.