This article first appeared on GuruFocus .
Release Date: July 30, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Record customer additions of 5 million and AUM growth of 37,000 crores, driving strong profit growth of 28%.
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Secular and broad-based growth across segments, with gold loan portfolio surging 112% and rural/urban consumer finance growing 49% and 38%.
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Significant improvement in asset quality, with loan loss to average AUM improving to 1.54% from 1.87% year-over-year.
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Strong momentum in AI and digital transformation, with AI voice and text bots handling 71% of DIY customer service volume and contributing to 20% of personal loan disbursements.
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Confidence in sustained improvement in credit costs, with vintage performance now running below pre-COVID benchmarks across businesses.
Negative Points
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OpEx to NTI ratio increased marginally to 33.1%, driven by accelerated investments in gold loan, branch expansion, and new labor code costs.
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MSME loan growth remained subdued at 2% due to ongoing portfolio pruning, with recovery expected only by Q3.
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Geopolitical tensions and monsoon uncertainty led to an additional management and macroeconomic provision of 296 crores, impacting credit cost metrics.
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Cost of funds expected to slowly creep up due to inflationary pressures from the West Asia crisis and potential monsoon impact.
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Intense competition in the gold loan and personal loan segments, with many new entrants, could pressure margins and growth sustainability.
Q & A Highlights
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Q: Given the strong Q1 performance, do you see the need to revise your FY27 guidance for AUM growth (22-24%) and credit costs, especially since MSME should return to growth by Q3? A: Rajeev Jain, Vice Chairman and Managing Director: It's a fair question. As they say, one swallow doesn't make a summer. We will wait for one more quarter. If we see continued momentum, we will revise guidance on top-line (AUM), PBT growth, ROA, or ROE. It does seem we are much better than the March guidance, but I would ask investors to wait for one more quarter to see if it sustains.
Q: You created a management and macro overlay provision of ~?296 crores this quarter. Is the thought process to utilize a good credit cycle to strengthen the balance sheet and keep ROE in a certain range, or could this translate into profits if the macro outlook improves? A: Rajeev Jain, Vice Chairman and Managing Director: We will continue to work towards strengthening balance sheet resilience and "bulletproofing" it. Given our size, scale, complexity, and stakeholder expectations, we want to be one of the most resilient companies in India. Give us one more quarter, and we will provide greater clarity on the direction of overlay creation.
Q: You mentioned a 20% YoY growth in SKU prices, but smartphone sales haven't seen much growth. What is compensating for this, and how are you bucking the industry trend? A: Manish (Management): While industry smartphone shipments declined 13-15%, we registered 20-23% growth. This is driven by a 30-33% increase in average ticket size (ATS) due to a higher contribution from Apple and price increases from other manufacturers. Our deeper penetration into our customer franchise and distribution network allows us to buck the industry trend.
Q: On the FinAI bit, how are you ensuring AI costs are under control given rising token costs? Are you using open-source or SLM models? A: Rajeev Jain, Vice Chairman and Managing Director & Anandrao (Management): We ensure the cost of AI is less than the cost of the human labor it replaces (e.g., voice AI is 1/3 the cost). We use open-source technologies, our own context layer (RAG), and "flash to mini" models instead of full-length LLMs. We also use simpler solutions like OCR where they achieve 98% accuracy, optimizing for efficiency, not just technology.
Q: Margins saw a yield improvement this quarter. Are you more comfortable with margins staying stable, or do you still see the guided moderation of 10-15 bps? A: Rajeev Jain, Vice Chairman and Managing Director: Give us one more quarter. As Sandeep (CFO) has guided, we foresee a moderation of 10-15 basis points at this juncture. I can change the guidance today, but it's not a lack of confidence; it's about being conscious that what we say, we stay with.
Q: Can you provide more color on the gold loan business, especially regarding competition and the fact that 25% of the business comes through the digital platform? A: Rajeev Jain, Vice Chairman and Managing Director: It's a network expansion business. We are adding ~110 new branches a month, targeting 2,800 branches. We see a capacity to deliver a peak AUM of ?37,000-38,000 crores at maturity. The 25% digital contribution is a key mode. Of the 86 million customers on the app, the mix is 70% existing-to-bank (ETB) and 30% new-to-bank (NTB).
Q: With the strong AI commitment and digital transformation, can we think of consolidated ROE touching 24% and ROA going beyond 5% over a 3-4 year runway? A: Rajeev Jain, Vice Chairman and Managing Director: If I was to maximize, the answer is yes, but I am interested in long-term sustainability. We are planning to launch two new lines of business. As AI transformation accelerates top-line or decelerates costs, 21-22% ROE is very possible. However, the goal is to reach ?10 lakh crore in AUM with the same sustainability and profitability metrics, not just to maximize a number.
Q: You mentioned a 20% YoY growth in SKU prices, but smartphone sales haven't seen much growth. What is compensating for this, and how are you bucking the industry trend? A: Manish (Management): While industry smartphone shipments declined 13-15%, we registered 20-23% growth. This is driven by a 30-33% increase in average ticket size (ATS) due to a higher contribution from Apple and price increases from other manufacturers. Our deeper penetration into our customer franchise and distribution network allows us to buck the industry trend.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
