Moneyboxx Finance Limited (BSE: 538446), the NBFC reported a 77.6% year-on-year increase in net profit for the third quarter, driven by a growing secured loan portfolio and improved asset quality metrics following significant non-performing asset transactions. This structural shift aims to reach an 80% secured asset mix by March 2027 to stabilize margins and enhance long-term operational efficiency.
The company announced its unaudited financial results for the quarter ended December 31, 2025, revealing a modest rise in total income to ₹54.72 crore. The company is currently executing a structural transition toward secured lending, which represented 60% of its total assets under management (AUM) at the close of the period.
Key Development
A central development in the reported quarter was the sharp reduction of the company’s Gross Non-Performing Asset (GNPA) ratio to 1.43%, down from 5.60% in the same period last year. This improvement primarily follows a successful Asset Reconstruction Company (ARC) transaction involving the transfer of stressed loans. To further bolster its capital position, the board approved an additional equity capital raise of ₹43.32 crore in January 2026, intended to support disbursement growth in the coming quarters.
Product Highlights
The company is currently leveraging its proprietary “Cattle AI App,” a technology-driven solution deployed in March 2025 to automate cattle identification and mitigate credit risk. Using muzzle pattern recognition and uniqueness detection, the application has reportedly achieved 100% accuracy in identifying individual livestock. Management indicates this technology has reduced fraud by 25% and lowered loan processing times by approximately 20% to 30%.
Financial Performance
Total income for the third quarter rose 5.6% year-on-year to ₹54.72 crore. For the nine-month period ended December 31, 2025, total income reached ₹168.90 crore, representing 14.8% growth over the previous year. Net profit after tax for the quarter was ₹0.35 crore, compared to ₹0.20 crore in Q3 FY25. However, net profit for the nine-month period declined to ₹0.87 crore from ₹6.53 crore a year earlier, largely due to higher finance and employee costs. Finance costs for the quarter climbed 32.9% year-on-year to ₹21.09 crore, while employee benefit expenses rose 10.8% to ₹22.17 crore. The company’s net worth was recorded at ₹26,196.07 lakhs as of December 31, 2025. The debt-to-equity ratio stood at 2.48, with total debts representing 69% of total assets.
Investment Thesis: Bull vs. Bear
Bull Case:
- Asset Quality Recovery: Significant reduction in GNPA (1.43%) and NNPA (0.72%) suggests a cleaner balance sheet following ARC transactions.
- Capital Buffers: Continued ability to raise equity, with over ₹270 crore received since inception and a healthy Capital Adequacy Ratio (CRAR) of 26.68%.
- Cost of Funds: The marginal cost of funds has declined to 11.8%, indicating improved access to cheaper debt from a diversified pool of 31 lenders.
Bear Case:
- Margin Compression: Net interest margins (NIM) fell to 14.0% in Q3 FY26 from 16.6% in the prior year, reflecting the lower-yield nature of the growing secured portfolio.
- High Operating Costs: Opex remains high at 12.9% of average AUM, pressuring overall profitability despite revenue growth.
- Portfolio Stress: While GNPA has fallen, 30+ Days Past Due (PAR) remains at 7.20%, indicating continued underlying credit pressure in the micro-enterprise segment.
Tech Adoption
The company’s proprietary Cattle AI app, rolled out in March 2025, has reduced fraud by around 25%, largely through automated detection of duplicate or mismatched livestock records via cattle de-duplication checks.
The platform integrates image-based uniqueness detection and muzzle pattern recognition to verify individual animals and prevent multiple loans against the same cattle. Management indicates that the muzzle recognition module has achieved near-perfect accuracy in identifying animals, while AI-driven image capture in the field enables automated breed classification and age estimation to validate that financed assets match loan documentation.
Beyond fraud mitigation, the automation layer has delivered operational efficiencies. Manual screening requirements have declined by roughly 30–40%, and loan processing times have shortened by approximately 20–30%, supporting faster disbursements and tighter risk controls.
Asset Cleanup
An ARC transaction executed in the December 2025 quarter materially improved asset quality, with the transfer of a sizeable pool of stressed loans driving a sharp reduction in headline NPA metrics. The company’s GNPA ratio declined to 1.43% as of December 31, 2025, from 7.28% in June 2025 and 5.60% in December 2024.
Net NPA fell to 0.72%, compared with 2.88% a year earlier, reflecting the removal of 2,417 stressed accounts. The transferred pool carried an aggregate principal outstanding of ₹3,231 lakh and a net book value of ₹2,484 lakh, with total consideration received at ₹2,170 lakh. Lower slippages and the portfolio clean-up also reduced impairment on financial instruments to ₹4.55 crore in Q3 FY26, down from ₹9.35 crore in Q3 FY25.
Management said the ARC sale, alongside a continued shift toward secured lending, now 60% of AUM, has strengthened the balance sheet and improved visibility on asset quality. However, 30+ DPD (PAR) remained elevated at 7.20%, suggesting residual stress in the underlying portfolio despite the sharp improvement in on-book NPA ratios.
Portfolio Focus
Management is sharpening its focus on the upper end of the micro-enterprise segment, targeting borrowers with bureau scores above 650 to improve portfolio quality and risk-adjusted yields. The company aims to scale AUM to ₹1,000 crore by expanding its “phygital” distribution model, supported by a network of 156 branches across 12 states.
Operationally, the strategy centers on driving operating leverage through scale and deeper digital integration. Management is targeting an opex-to-AUM ratio below 10% over the next two years, with branch productivity gains and process automation expected to support cost efficiencies alongside portfolio growth.
Regulatory Framework
Operating in the semi-urban and rural MSME lending market in India, the company operates within a competitive landscape that includes both banks and specialized NBFCs. It is classified as an NBFC–Base Layer entity under the Reserve Bank of India’s revised scale-based regulatory framework, and is therefore subject to the applicable prudential norms, capital requirements, and governance standards for that category.