Arman Financial Services Limited (NSE: ARMANFIN), a Gujarat-based non-banking financial company (NBFC) focused on rural and semi-urban retail lending, has a market capitalization of approximately ₹4,500 crore. The company reported robust Q3 FY2025-26 results, demonstrating sequential recovery in earnings, stable asset quality, and diversification across multiple retail lending segments.
Management Summary and Strategic Views
The company is navigating a leadership evolution designed to drive growth toward an AUM target of ₹5,000+ crore.
- Key Appointments:
- Jayendra Patel, founder with over 40 years of experience, transitioned from Vice-Chairman & MD to Whole-time Director.
- Aalok Patel, licensed CPA (USA) with 16 years of banking experience, was elevated to Vice-Chairman & MD.
- Vivek Modi re-designated as Executive Director & Group CFO, reinforcing financial management expertise.
- Management Outlook: Leadership emphasizes a “calibrated and risk-first approach,” prioritizing tighter underwriting and collection efficiencies, which reached 96.3% in December 2025, over aggressive expansion.
Consolidated Financial Performance
For Q3 FY2025-26:
- Profit After Tax (PAT): ₹22 crore, up 177.5% quarter-on-quarter
- Consolidated AUM: ₹2,274 crore, up 6.8% quarter-on-quarter
- Quarterly Disbursements: ₹618 crore, up 83% YoY
- Net Interest Margin (NIM): 16.6%
Nine-month results (9M FY26):
- Gross Total Income: ₹470 crore
- Pre-Provisioning Operating Profit (PPoP): ₹166 crore
- Consolidated Shareholders’ Equity: ₹892 crore
Year-on-year AUM remained largely stable, with a 0.2% decline, reflecting disciplined portfolio growth.
Product Update and Innovation
Arman has expanded from a microfinance-heavy lender into a diversified NBFC:
- Microfinance (Namra Finance): Core segment with AUM ₹1,618 crore, employing Joint Liability Group (JLG) model. Q3 PAT ₹13 crore.
- MSME Loans: Largest contributor to standalone portfolio with AUM ₹489 crore, now highest ROA product.
- Loan Against Property (LAP): Pilot program scaled to ₹77 crore, targeting ₹3–20 lakh tickets in Tier 3–4 locations.
- Solar Loans: New pilot across Gujarat targeting green-energy financing.
- Two-Wheeler Loans: AUM ₹91 crore, serviced via 50+ dealerships, focusing on quick turnarounds.
Credit Ratings and Financial Health
- ACUITE: Reaffirmed A- | Stable
- CARE Ratings: Reaffirmed A- | Negative
- MFI Grading: Namra Finance awarded highest ‘MFI-1’ grading by CARE
The company maintains Gross NPA of 3.40% and Net NPA of 0.77%, with cumulative provisions of ₹74 crore (3.2% of AUM).
Geographical Expansion
Arman has expanded to 524 branches across 11 states:
- Key markets: Gujarat (30%), Uttar Pradesh (21%), Madhya Pradesh (16%), Bihar (11%)
- New states: Karnataka, Jharkhand, Telangana
The strategy focuses on rural and semi-urban underserved markets, leveraging both branch networks and digital channels.
Government Schemes and Regulatory Compliance
- Evaluating implications of new labor codes effective November 2025, with no immediate financial impact expected.
- Maintains strong ties with DFIs, including NABARD and SIDBI, supporting refinancing and priority-sector lending initiatives.
Mergers, Acquisitions, and Capital Raising
- No M&A activity in Q3 FY26.
- Historical funding includes strategic investments from Elevation Capital (formerly SAIF Partners) and Incofin.
- Recent capital: ₹230 crore QIP in Dec 2023, with board approval to raise up to ₹500 crore via NCDs.
Competitive Analysis
Arman’s competitive advantage stems from:
- Niche Focus: Targeting underserved informal customer segments.
- In-House Operations: Complete control over credit appraisal and collections.
- Volume-Led Growth: Focus on loan volume over ticket size.
- Digital Transformation: Paperless disbursements and automated transaction notifications.
Its GNPA levels remain below the sector average (4–5%), demonstrating superior credit risk management relative to peers.
Conclusion
Arman Financial Services Limited delivered a strong Q3 FY2025-26 performance, underpinned by sequential profit growth, high collection efficiency, stable margins, and prudent capital management. The company is well-positioned to pursue its ₹5,000 crore AUM target, with diversified product offerings, strategic leadership, and geographic expansion mitigating sectoral risks.