Indostar Capital Finance Ltd — Q4 FY26 earnings call
Summary generated by AI from the official transcript Indostar Capital Finance Ltd filed with BSE on 03 Jun 2026. Every statement cites a verbatim quote from that document — open any citation to read it. This is a record of what management said, not a recommendation. How we check these summaries
The short read
IndoStar reported Q4 FY26 disbursements of Rs 1,306 crore, up 17% quarter-on-quarter, alongside a net loss of Rs 424 crore driven by an additional Rs 326 crore provision on security receipts and a Rs 49 crore management overlay related to the West Asia crisis. Management described FY26 as a year of tightening credit underwriting, diversifying the vehicle finance portfolio away from MHCV, and building sales capacity, with net interest margin expanding from 5.6% to 7.8% for the full year. The company also outlined a three-year framework through FY29 targeting 35% CAGR disbursement growth and profit after tax of Rs 450-500 crore.
Numbers mentioned
Disbursements: Rs 1,306 crore (Q4 FY26)
p. 7
“Our disbursement for the quarter stood at INR1,306 crores compared to INR1,117 crores in the previous quarter and INR1,080 crores in the same period last year, reflecting a strong 17% quarter-on-quarter and 21% year-on-year growth.”
Jayesh Jain, page 7 of the filed PDF · View the filing
Assets under management: Rs 8,056 crore (Q4 FY26)
p. 7
“Our asset under management increased to INR8,056 crores from INR7,692 crores in the previous quarter, reflecting a healthy 5% quarter-on-quarter increase.”
Jayesh Jain, page 7 of the filed PDF · View the filing
Net interest income: Rs 215 crore (Q4 FY26)
p. 7
“On the financial front, in Q4, our net interest income was around INR215 crores.”
Jayesh Jain, page 7 of the filed PDF · View the filing
Net interest margin: 8.7% (Q4 FY26)
p. 7
“This growth was driven by an improvement in net interest margin, which expanded from 5.9% in Q4 FY '25 to 8.7% in Q4 FY '26.”
Jayesh Jain, page 7 of the filed PDF · View the filing
Net loss: Rs 424 crore (Q4 FY26)
p. 7
“This onetime provisioning resulted in a net loss of INR424 crores for the quarter.”
Jayesh Jain, page 7 of the filed PDF · View the filing
Net interest income: Rs 772 crore (FY26)
p. 8
“For FY '26, our net interest income was around INR772 crores.”
Jayesh Jain, page 8 of the filed PDF · View the filing
Net interest margin: 7.8%, up from 5.6% (FY26)
p. 8
“Net interest margin improved from 5.6% to 7.8% during the year.”
Jayesh Jain, page 8 of the filed PDF · View the filing
Profit after tax: Rs 130 crore (FY26)
p. 8
“Profit after tax for FY '26 was INR130 crores as against INR53 crores in the previous year.”
Jayesh Jain, page 8 of the filed PDF · View the filing
Gross Stage 3 assets: 4.8% (Q4 FY26)
p. 8
“In terms of asset quality, gross Stage 3 assets increased to 4.8%, while net Stage 3 assets were at 2.1%.”
Jayesh Jain, page 8 of the filed PDF · View the filing
Capital adequacy ratio: 36.1% (Q4 FY26)
p. 8
“Our balance sheet remains robust with capital adequacy ratio of 36.1%, providing ample headroom for growth.”
Jayesh Jain, page 8 of the filed PDF · View the filing
Cost of funds: 10.2%, down from 11% (FY26)
p. 8
“The cost of funds has improved to 10.2%, down from 11% last year, while the incremental borrowing cost has reduced to 9% compared to 10% in Q4 FY '25.”
Jayesh Jain, page 8 of the filed PDF · View the filing
Additional provision on Security Receipts: Rs 326 crore (Q4 FY26)
p. 5
“we have taken an additional provision of INR326 crores this quarter”
Randhir Singh, page 5 of the filed PDF · View the filing
Micro LAP disbursements: Rs 52 crore (Q4 FY26)
p. 6
“During Q4 FY26, the Micro LAP business recorded disbursements of INR52 crores with AUM reaching INR175 crores.”
Randhir Singh, page 6 of the filed PDF · View the filing
Collection efficiency: 97% (Q4 FY26)
p. 8
“In Q4 FY '26, our collection efficiency remained strong at around 97%, supported by improved underwriting process.”
Jayesh Jain, page 8 of the filed PDF · View the filing
What management said it would do
A record of statements made on the call, in the words management used. Parakho does not forecast, endorse or assess them, and their presence here is not a view on whether they will happen.
Disbursement CAGR — 35% CAGR · through FY29
stated conditionally by Randhir Singh
p. 6
“Barring any macroeconomic or system shocks, our 3-year strategic framework through FY '29 is modelled around the following targets:”
Randhir Singh, page 6 of the filed PDF · View the filing
Profit after tax — Rs 450 crore to Rs 500 crore · FY29
stated as an aspiration by Randhir Singh
p. 6
“aiming for a profit after tax target of INR450 crores to INR500 crores”
Randhir Singh, page 6 of the filed PDF · View the filing
Branch additions — about 100 branches · next 3 years
stated firmly by Randhir Singh
p. 6
“This trajectory will be structurally supported by the planned addition of about 100 branches over the next 3 years, expected portfolio level productivity gains of 10% to 15%.”
Randhir Singh, page 6 of the filed PDF · View the filing
Share of new-underwriting portfolio — 75% · September quarter
stated firmly by Randhir Singh
p. 4
“The percentage of our portfolio originated after our recalibration has already touched about 60% of our overall portfolio and is expected to be 75% by September quarter.”
Randhir Singh, page 4 of the filed PDF · View the filing
Gross Stage 3 assets — 3.75% to 4%
stated as an aspiration by Randhir Singh
p. 9
“I think we would basically eventually stabilize somewhere between 3.75% to 4%.”
Randhir Singh, page 9 of the filed PDF · View the filing
Credit cost — 2% to 2.5% · next year
stated conditionally by Randhir Singh
p. 10
“And as old book runs out, you would start seeing us stabilizing around 2% to 2.5% credit cost, which is what we're targeting as our yield is about 17% plus.”
Randhir Singh, page 10 of the filed PDF · View the filing
Loan book size — Rs 16,000 crore to Rs 17,000 crore · FY29
stated as an aspiration by Randhir Singh
p. 11
“You can put the number in excel, but I think you should be able to see something like INR16,000 crores to INR17,000 crores easily.”
Randhir Singh, page 11 of the filed PDF · View the filing
Micro LAP expansion — at least 2 additional states · FY27
stated firmly by Randhir Singh
p. 6
“we plan to launch this business in select branches in at least 2 additional states in FY '27, again, utilizing our existing VF branch network.”
Randhir Singh, page 6 of the filed PDF · View the filing
Opex growth — low increase relative to AUM growth
stated as an aspiration by Randhir Singh
p. 16
“The trend that you are seeing of a very moderate opex increase in the last 1 year, that trend will continue.”
Randhir Singh, page 16 of the filed PDF · View the filing
Micro LAP yield — around 20% · next 12, 18 to 24 months
stated conditionally by Randhir Singh
p. 15
“So if you look at it, all things considered, we would be able to maintain 20% for at least next 12, 18 to 24 months.”
Randhir Singh, page 15 of the filed PDF · View the filing
Q&A highlights
Management's answers to analyst questions, in Parakho's words rather than a transcript. Each row names who answered and carries the verbatim quote it was drawn from.
Management said impairment of stressed assets is largely complete and expressed confidence in the net carrying value, while the construction project realizations could take 18-36 months with redemption starting after 12-15 months.
Answered by Jayesh Jain
Asked by Danesh Mistry: Will there be further provisioning coming from the impaired housing finance sale book, and when do the SR-linked construction projects roll off?
p. 9
“This is a long gestation project and the realization could take around 18 to 35 months or 36 months.”
Jayesh Jain, page 9 of the filed PDF · View the filing
Management attributed the spike to legacy book while stating that new underwriting has much lower delinquency, and named a target of 3.75% to 4% for eventual stabilization.
Answered by Randhir Singh
Asked by Varun Gajaria: Why did Stage 3 assets spike quarter-on-quarter and what is the target level?
p. 9
“I think we would basically eventually stabilize somewhere between 3.75% to 4%.”
Randhir Singh, page 9 of the filed PDF · View the filing
Management explained the buffer comprised the SR provision, a West Asia crisis management overlay, and an annual ECL model update, and said there was no observed stress in the portfolio.
Answered by Jayesh Jain
Asked by Shreepal Doshi: What triggered the additional Rs 490 crore of provisioning buffers?
p. 10
“To confirm again, there are no stress signs which we are seeing, which you were trying to understand. It is more to do be prudent and provide for SR and MO.”
Jayesh Jain, page 10 of the filed PDF · View the filing
Management reiterated the 35% CAGR disbursement target and Rs 450-500 crore FY29 PAT target, supported by existing branch network operating leverage.
Answered by Randhir Singh
Asked by Shreepal Doshi: What is management's 2-3 year plan for loan book mix and profitability (ROA/ROE)?
p. 11
“We are also targeting FY '29 profitability of about INR450 crores to INR500 crores.”
Randhir Singh, page 11 of the filed PDF · View the filing
Management confirmed that slippages are concentrated in the older book, with the new underwriting cohort showing better quality.
Answered by Randhir Singh
Asked by Raghav: Are slippages mostly coming from the older (pre-recalibration) book?
p. 14
“That's right, Raghav. Absolutely right. We are seeing much better quality and you could see that in our portfolio mix.”
Randhir Singh, page 14 of the filed PDF · View the filing
Management said their target ticket size range of Rs 7.5-12 lakh can still support around 20% yields, and cited internal IRR data supporting this.
Answered by Randhir Singh
Asked by Raghav: How can IndoStar charge higher Micro LAP yields despite a larger ticket size than peers?
p. 15
“Our assessment is that over a long period of time, in a ticket size of INR7.5 lakh to about, let's say, INR10 lakhs to INR12 lakhs range, it is possible to get yields around 20%.”
Randhir Singh, page 15 of the filed PDF · View the filing
Management said opex growth will remain moderate due to operating leverage, without a meaningful increase this year.
Answered by Randhir Singh
Asked by Devesh Kayal: How will opex grow as disbursements scale 35-40%?
p. 16
“For this growth, at least for this year, we do not really see any meaningful increase.”
Randhir Singh, page 16 of the filed PDF · View the filing
Management confirmed the target is for FY29 and defended the 2-2.25% normalized credit cost assumption as based on a large dataset of over 60,000 loans, while acknowledging the numbers are open to interpretation.
Answered by Randhir Singh
Asked by Vibha: Is the Rs 450-500 crore profit target for FY27 or FY29, and does it represent the best-case scenario?
p. 18
“So this data is almost on 60,000-plus kind of. So it gives us confidence that it's not basis INR100 crores, INR500 crores, a large amount of data.”
Randhir Singh, page 18 of the filed PDF · View the filing
Risks flagged
Elevated crude oil prices from the West Asia conflict moderating India's GDP growth outlook
p. 3
“As per ICRA, India's GDP growth is expected to moderate to around 6.2% in FY '27 from the earlier estimate of 6.5%, primarily due to elevated crude oil prices triggered by the ongoing West Asia conflict.”
Randhir Singh, page 3 of the filed PDF · View the filing
Management overlay created for potential stress from the West Asia crisis affecting the vehicle finance portfolio
p. 7
“owing to the West Asia crisis, we created a prudent management overlay of INR49 crores against our vehicle finance portfolio.”
Jayesh Jain, page 7 of the filed PDF · View the filing
Legacy security receipts portfolio requiring additional provisioning to derisk the balance sheet
p. 5
“As a decisive step to derisk the balance sheet from potential future volatility arising from this portfolio, we have taken an additional provision of INR326 crores this quarter.”
Randhir Singh, page 5 of the filed PDF · View the filing
Possible need to prioritize portfolio quality over growth if stress signs emerge
p. 12
“in case we see any signs of deterioration or stress, we would choose portfolio quality over growth.”
Randhir Singh, page 12 of the filed PDF · View the filing
Generated by claude-sonnet-5. Source: the transcript as filed with BSE. We link to the exchange's copy; we do not host transcripts. Parakho is a data and screening tool, not an investment adviser — nothing here is a recommendation to buy, sell or hold.