Whalesbook
📉 The Financial Deep Dive
Laxmi India Finance Ltd. has unveiled its Q3 FY26 unaudited financial results, showcasing substantial year-on-year growth overshadowed by a specific stress event.
The Numbers:
For the third quarter of FY26, the company posted a Profit After Tax (PAT) of ₹10.04 crore, marking a significant 64.32% increase from the ₹6.11 crore recorded in Q3 FY25. Profit Before Tax (PBT) also surged by 68.09% YoY to ₹13.43 crore. Total Income for the quarter reached ₹79.82 crore, up 29.28% YoY from ₹61.74 crore. The Net Interest Margin (NIM) saw a healthy 38.10% YoY increase, with Net Interest Income at ₹37.95 crore.
Sequentially, Q3 FY26 PAT grew by 6.70%, PBT by 5.09%, and Total Income by 4.72%.
For the nine-month period ended December 31st, 2025 (9M FY26), PAT rose 36.04% YoY to ₹29.10 crore. Total Income increased 30.62% YoY to ₹226.13 crore.
Operational Strengths & AUM Growth:
Assets Under Management (AUM) expanded by a healthy 21.11% YoY to ₹1,451.10 crore as of December 31st, 2025. The company's Own Book grew 23.68% YoY to ₹1,365.02 crore.
The Yield on Average Portfolio improved to 21.76% YoY, while the Average Cost of Borrowings declined to 10.94% YoY, aiding margin sustainability. The Capital Adequacy Ratio (CRAR) strengthened significantly to 28.40% from 20.76% YoY, indicating robust capital buffers for future growth. Return on Average Assets (RoA) stood at 2.53% and Return on Equity (RoE) at 11.04% for Q3 FY26.
Asset Quality Concerns & The DA Stress Event:
Reported asset quality metrics showed a Gross NPA of 2.40% and a Net NPA of 1.24%. The Provision Coverage Ratio (Stage 3) improved YoY to 49.19%. However, Credit Cost increased to 1.23% from 1.03% YoY.
A significant factor impacting these figures was a one-time stress event in the Direct Assignment (DA) loan pool acquired in January and July 2025, aggregating ₹25.12 crore. The DA partner faced unexpected financial distress, leading to non-receipt of EMIs and classification of affected accounts overdue beyond 90 days as NPAs. This external event negatively impacted the reported asset quality and profitability.
Underlying Performance:
Excluding the DA stress event, the underlying performance paints a more favourable picture. For 9M FY26, PBT would have been ₹51.25 crore (vs ₹38.97 crore reported), PAT ₹38.22 crore (vs ₹29.10 crore), RoE 14.31% (vs 11.04% reported), RoA 3.31% (vs 2.53% reported), Gross NPA 0.94% (vs 2.40% reported), and Net NPA 0.63% (vs 1.24% reported).
A one-time provision of ₹0.45 crore was also made for the implementation of new labour codes.
🚩 Risks & Outlook:
The DA stress event introduces a key risk, raising questions about counterparty risk management in DA transactions. While management assures continued strong capital buffers, stable margins, and disciplined underwriting, investors will closely monitor the company's ability to manage its DA partners and prevent future credit cost escalations. The focus on portfolio quality, controlled growth, and strengthened risk oversight mechanisms are critical for sustainable value creation. The underlying performance demonstrates operational strength, but the impact of external credit events remains a near-term concern.