Paisalo Digital Ltd (NSE: PAISALO) Q4 2025 Earnings Call dated May. 14, 2025
Corporate Participants:
Unidentified Speaker
Santanu Agarwal — Deputy Managing Director
Analysts:
Unidentified Participant
Presentation:
operator
Sam.
Unidentified Speaker
Welcome.
Unidentified Speaker
Good afternoon everyone. My name is Gaurav Chaube and I’m the Chief Risk Officer for Pesa no Digital limited On the declaration of the results for the quarter and financial year ended 3-31-2025. It gives me immense pleasure to welcome the analysts, investors and our colleagues to this virtual meeting. We have with us today our DMD Mr. Shantanu Agarwal sir and myself. In this call, all participants will be in a listen only mode. The earnings presentation is uploaded on our website www.pesalo.in and on the stock exchanges. However, if you have any questions please email them to iratepesalo.in before I hand over the call, I would like to read out the Safe Harbor Statement.
This presentation contains forward looking statements which may be identified by their use of words like plans, expects, estimates or other words of similar meaning. All statements that address expectations or predictions about the future including but not limited to statements about strategy for growth, product development and market position are forward statements based on rational and data. Actual results may vary materially given the market circumstances. I will now hand over the call to our DMD Mr. Shantinu Agarwal sir to discuss the business in detail.
Santanu Agarwal — Deputy Managing Director
And a good evening everyone. A very well, a very warm welcome to Pesalo Digital’s Q4 FY25 and full year FY25 earnings presentation. We are pleased to share with you all the achievements and incredible progress that we have made over the last financial year. But first our heart goes out to those whose lives are profoundly affected by the recent ongoing tensions on the border. Peso is a company that historically has worked across almost all Indian states and we will do our part to ensure that the Indian economy is safe and secure. Two things that are absolutely foundational to the long term success of Peterlo is that one we run a great company and two, which is probably more important is in the long term health of India domestically and the future of free enterprise and democratic India.
In this evolving landscape, India’s role on the world stage has never been more vital. Our country, under the leadership of the Hon. Prime Minister has risen to the occasion demonstrating unity and a commitment to working to protect our shared values, including the Indian enterprise. India continues to inspire confidence among global investors, shining as a symbol of opportunity and optimism. Pesolo, with its extensive operations across multiple states, is proud to play a part in this success story. Our mission at Pesolo is to simplify small ticket size income generation loans by establishing ourselves as a trusted high tech, high touch financial companion for the people of India catering to their diverse financial needs.
This integration of high tech and high touch, customer centric approach and data analytics empowers us to deliver tailored and scalable solutions while minimizing risks and maintaining the highest standards of governance and regulatory adherence. We’ll take you through the earnings presentation which is uploaded on our website www.pesalo.in and on the stock exchanges. FY25 was another strong year for Pesolo with our company generating record revenue as well as setting numerous records in each of our lines of business. We earned revenue of INR 7711 million and a net income of INR 2001 million with the AUM crossing the benchmark of INR 50000 million or the half a billion dollar mark and coming in and at INR 52,328 million reflecting strong underlying performance across our businesses.
We also continue to reinforce our balance sheet. We grew our market share in several of our businesses and continue to make significant investment in products, people and technology while exercising strict risk discipline. We demonstrated the power of our investment philosophy and guiding principles as well as the value of being there for clients as we always have in good times and bad times. The result was continued broad healthy growth across the firm. The chart on page 21 of our investor presentation show and illustrate how we have grown our franchise. This unwavering commitment resulted in broad based growth across the firm with our customer franchise reaching 9.4 million plus in 2425.
We extended credit totaling INR 37,199 million to clients across the country, playing a crucial role in driving economic progress. We also crossed a staggering number of INR 40,000 million in GMV of customer initiated transactions within 24 months of launching our business correspondence division with INR 30,054 million in GMV for FY25 alone. This means that on a daily basis in FY25 we moved over INR 82 million across all of India as well as safeguarded data and financial assets of over 50 lakh customers. Presello’s success is built on the foundation of creep principles and strategies which has guided us through decades of growth and enabled effective capital management including dividends.
I’m incredibly proud of our company’s resilience and the achievements of our employees nationwide. Despite the macro environment challenges of the recent year, we have never wavered in our dedication to serving our clients and communities. Our works makes a difference and we are united by a shared purpose to empower individual homeowners and small businesses across the country as we look into the future years. Each of our businesses is on track to becoming the best in the country. We are increasing our market share, achieving strong financial results and maintaining an unwavering focus on serving our clients, communities, shareholders with distinction.
The strength embedded in Pesolo, the expertise and cohesion of our people, our long standing client relationships, our innovative technology products and our growing presence in 22 states and our successful lending model are unmatched. These trends empower us to consistently support our clients and communities, invest in our future and seize the opportunities that lie ahead. The following charts illustrate the gains and improvements we have made over the years on page number 20 on page number two and Mr. Gaurav will take you through some of the highlights from page number 4, 5 and 19 to 26. Brief report card offer FY25 management assessment is the company delivered this FY25 assessment on customer franchise geographical expansion, opex to NTI, GNP and NNPA credit cost was elevated but within the long term outlook of less than 2% and the company took significant trade actions through FY25 and is optimistic about its impact on PNL and FY26.
The company also saw slight name compression of two bps. Now I would like to hand it over to Gaurav Chaubet, our CRO who will take you through the highlights of the year.
Unidentified Speaker
Thank you Shantanu Sir Good afternoon everyone. A warm welcome to you all for the review of our performance for the fourth quarter and full year ended March 31, 2025. Highest ever AUM as at Q4FY25 was up 14.10% at INR 52,328 million as against Q4FY24 at INR 45,860 million company successfully issued its first foreign currency convertible bonds FCCVs amounting to USD 50 million approximately that is INR 4230 million in FY25 USD 2 million has been converted into share capital in Q4. The company added a highest ever 1.52 million customers to its franchise. In FY25. The company has added highest ever record 5.16 million customers to its customer franchise.
Total customer Franchise stood at 9.45 million as of Q4FY25 as compared to 4.29 million as of Q4FY24. Our adjacency to an expanding customer base as stated in page 21 of the presentation is providing us valuable insights which combined with our data analytics and EWS framework As stated in page 17 of the presentation and which I will speak about later is making us better able to identify what customers want, when they want it and how they want it from a customer centric point of view and help us enhance credit character and credential analysis from an EWS point of view.
Total geographical Footprint as at FY 2025 stood at 3565 touch points across 22 states as compared to 2,455 touch points in the last fiscal. In Q4 the company added 27 new touch points. As at FY25 the touchpoints split is 351 branches, 1900 distribution points and 1314 CSPs. The company continues to protect its margin profile. Interest income for Q4FY25 was up 17% at INR 7711 million as against INR 6587 million. In Q4FY24 the company has posted 11.26% increase in PBT and 11.82% increase in PAT on year. On year basis GNP and NNPA stood at 0.99% and 0.76% as at Q4FY25 compared to 1.10% and 0.84% on A and 0.21% and 0.02% as at Q4FY24.
The company is continuing to augment its debt management infrastructure as a mitigation measure. The Company is proactively pruning as required. Pesalo has written of bad debts totaling to INR 508 million and has recovered old written off bad debts 1 worth INR 366 million as at Q4FY25 cost of funds came in at 10.54%, a decrease of 68 basis points on a year. On year basis NIM came in at 6.40%, a decrease of 2 basis points on a year on basis primarily due to some yield change on portfolio to bring it in expansion plans. OPEX to net total income improved to 21.99% versus 30.1% last fiscal year.
We continue to optimize operating expenses. I would say as we have mentioned in the past quarter’s presentation that it is one of the levers that we have continued. We have to continue to pull through both by optimization on one hand and continue to invest in technology and AI to improve productivity. So we may see some variance in terms of increase or decrease in OPEX to NTI on a short term to medium term basis. But as Chantanus have stated in the beginning business Transformation has entered phase three and it will take about four quarters to mature and AI transformation is also progressing well.
More on this will be later. Employee headcount stood at 3178 people. We added net 769 people in our company in Q4FY25 the company delivered annualized ROE of 12.96% and the company delivered annualized ROA of 3.89%. In terms of liquidity coverage it stood at 637% as against regulatory requirement of 85% with positive asset liability management across buckets. The tangible net worth is INR 15,257 million versus bank warning secured of INR 22,982 million. That is 1.51 times against the leverage threshold of 7 times. Credit rating of the company is IVR AA with stable outlook and IVR A1 plus for commercial paper.
Capital adequacy ratio remains strong at 39.16% as at Q4FY25. In conclusion, a good quarter on volume, AUM, OPEX and trade cost PAT was up by 11%, delivered AUM growth of 14% and added highest ever 1.52 million customers to its franchise. Total customer franchise stood at 9.45 million. Business transformation has entered phase three and AI transformation is progressing well. Business transformation is expected to reach maturity in the next four quarters. FY25 was a mixed year but overall a good year on volumes, customer acquisition and operating efficiencies. Now I would like to hand it over to Shantanu Agrawal sir, to expand on some additional points.
Santanu Agarwal — Deputy Managing Director
We began our AI journey at PESO last fiscal. We have significantly bolstered our capabilities since then. We have a dedicated team. We are continuously trying to attract top talent from across the country and this focus also aligns with India’s growing prominence as a global hub for AI innovation. Already AI and ML are delivering tangible value across our operations. We have rolled out predictive AI in crucial areas like ews, VRE assessment, branch operations, fraud detection and risk management and have started seeing some immediate benefits. We are also actively exploring and working with generative AI Gen AI and have started deploying it in software development, customer service operations and overall productivity.
We envision a future where Gen AI redefines our business processes driving efficiency and innovation across the board. Our investment in AI is not merely a cost, it’s an investment that fuels growth. As AI becomes more integral to our operations, we anticipate it will enhance virtually every role within Pasalo. While AI may alter some job categories it will also create new opportunities reflecting India’s dynamic job market. As we have done before, we are committed to retraining and redeploying our workforce, ensuring that our employees continue to thrive in this evolving landscape. India’s vast and diverse data landscape combined with AI offers us a unique insight that can revolutionize how we manage risk and serve our customers fully.
Leverage this potential, we are committed to maintaining highest quality, high quality accessible data supported by necessary high performance computing performance. Managing the Strategic Importance of AI we last principal established the Business Intelligence Unit BIU and the team has been cleaning, testing, executing and we shall reach our expected level of maturity within the next four quarters. This decision underscores our belief in AI’s crucial role in Pasalo’s future and India’s potential as a leader in the space. By embedding data and analytics into our decision making processes, we are setting the stage for continuous learning, improvement and innovation.
Of course we remain vigilant about the risks associated with AI. Gaurav is ensuring that our risk and control framework try to ensure that we stay ahead of AI related challenges, particularly as India’s regulatory environment evolves. We also incorporated AI into some of our security measures to counteract potential threats, ensuring that our systems remain resilient. Pestello takes immense pride in our daily efforts to connect with individuals, clients, micro and small medium sized businesses across nearly every district in India. This ongoing dialogue is more than just business. It’s about building trust, establishing strong roots within the communities we serve.
We firmly believe that as NBFC earning that as an NBFC earning the trust of our communities is paramount. We are committed to uplifting the areas where we operate, understanding that our success is intertwined with the prosperity of these communities. We believe when communities thrive, so do we and this philosophy not only enhances our businesses but also contributes to the broader economic well being and long term shareholder value. Our approach is clear. Whether driven by the goodness of our hearts or by the sound business strategy, we focus on delivering measurable outcomes over the years. Many of our initiatives such as advancing unmanned Rural Centers have been born from this commitment.
Our last fiscal investment in our Business Correspondent channel underscores that investing in communities is not just a moral obligation but also a smart business strategy. We aim to become one of the largest nbs in the regions we operate. We recognize the importance of collaboration with local communities to gain market share and drive mutual growth. Some of our key initiatives include the business strategy group BSG. We established a BSG across the company connecting over 3,000 employees to encourage constant product development and innovation. This group fosters networking and has led multiple initiatives such as access to small ticket size, working capital demand loans, scaling of EV Division and the Next gen Leader Coaching program for early career professionals amongst numerous other ongoing projects.
Distribution Point Development to empower entrepreneurs and small businesses, we have expanded our distribution network to 1900 locations increasing our reach by more than 50%. These points link to branch focus on underserved communities offering coaching, debt access and business growth support. We expect to mentor over 10,000 business owners in the upcoming fiscal year, helping them improve operations, grow revenue and connect with local business community. Worst Skill Development Recognizing the untapped talent in the local communities, we have designed and deployed a training program to help bridge the skill gap for high demand jobs. This program has already made significant impact in communities like Jalgaon, Sivan and Itaba, connecting us with skilled workers and fostering local economic growth Branches we need to consider the unique need of communities across the country more thoughtfully.
Impact is most effective when it is local. A local brand branch, especially in a low neighborhood, low income neighborhood can be successful only when it fits the community’s needs. That is why over the last several years we have shifted our approach to how we offer access to financial as well as our various lending products and services to help borrowers. By making presalo truly available, aware and affordable especially in unplanned rural centers, we are delivering this approach to our high tech high touch model unique spaces in the heart of semi urban and rural communities. We have a total of 3565 high tech high touch touchpoints across 22 states in FY25 expanding our footprint in rural India with 351 branches 1314 customer service points across 22 states.
Pesolo is proud to be present in to be a significant presence in rural communities having service nearly 9.45 million consumers in these areas and they in FY25 have accessed over 52.32 billion in loans conducted INR 30.05 billion in customer initiated transactions INR 15.58 billion in APS transactions and one 12,697 savings banks account opened with one 36,236 Social Security schemes extended and benefiting from our additional financial services offering reference page number eight as we expand into 12 new states post FY22 and during FY25 by increasing our touch points we are confident in our ability to becoming a lending leader and a BAS provider in these communities, fueling local economies and advancing inclusive economic growth.
Gaurav, you wanted to discuss the EWS points earlier. Can you take it up right now before we start concluding?
Unidentified Speaker
Yeah. Thank you, sir. At Pesalo Digital Ltd. We recognize that effective risk management is not just a defensive measure, it’s a strategic necessity. To that end, we’ve developed a robust multi dimensional Early Warning Signals or EWS framework. The system is designed to detect potential risks early, allowing us to take timely proactive action. By combining diverse data sources with advanced processing techniques and the framework not only helps us to stay ahead of emerging challenges, but also significantly enhances our decision making and strengthens our Let me break it down for you. At the core of EWS Framework are several key input sources that provide a comprehensive view of risk.
First, we track geopolitical events. Political developments, whether domestic or international, can have a profound effect on operations. We monitor these closely to anticipate any impact on business continuity or credit exposure. Second, we integrate geospatial data drawing from credit bureaus and other geographic information systems to assess risks linked to specific regions. This is particularly useful in understanding localized vulnerabilities. Third, we monitor changes in macroeconomic indicators. These include interest rates, inflation and GDP growth. Timely insights into these matrices allows us to adjust our credit and operational strategies accordingly. Fourth, we analyze macroeconomic reports and data indicators. These reports offer broader economic perspectives that can directly influence our understanding of market dynamics and credit performance.
Fifth, we access regulatory and policy driven restrictions. Shifts in government policies or regulation are tracked to understand how they could affect our lending operations and compliance standards. Sixth, we keep a close eye on industry or geography specific events, whether it is a natural disaster affecting a region or a disruption in a particular sector. Seventh, we evaluate credit reports based on weighted average performance metrics derived from our internal scoring models. This provider provides us a nuanced view of borrowers, financial health and repayment behavior. Finally, we conduct rigorous portfolio monitoring. Accounts are tracked in 30 day delinquency buckets to identify early signs of strength stress, allowing us to intervene before the situation worsens.
Beyond these inputs, the EWS framework employs sophisticated data processing and analytical methods to translate raw data into actionable insights. We use rule based differential credit assessment to apply data driven rules to differentiate credit risk across product services, branches and committees. We’ve implemented automatic triggers based on geopolitical analysis which generate alerts when specific geopolitical or geographic risk thresholds are breached. This allows us to tailor our credit offerings more precisely through postal code level credit monitoring. We detect emerging risks tied to hyperlocal events like natural calamities or regional disruptions, thereby allowing us swift responses. Also Use geography based macro character assessments to evaluate borrowers based on the macroeconomic characteristics of their location, providing a predictive lens into regional vulnerabilities.
And finally, we built a robust system for enhanced credit character and credential analysis. This evaluates not just a borrower’s financial data, but also behavioral and personal attributes, offering a comprehensive risk profile. The result? A framework that delivers measurable strategic benefits across the organization, allowing us to for proactive risk management we can identify signs of stress early and act before they escalate. Safeguarding our portfolio Improved Asset quality Early interventions Reduce defaults and help us maintain a healthier loan book Enhanced Decision making With richer data and deeper insights, our teams make more informed and confident choices. Cost efficient Problem resolution Addressing issues early means fewer resources are spent on recovery later Regulatory Compliance Continuous monitoring ensures we remain aligned with evolving regulatory standards Customer Relationship Management Better risk prediction Help us build trust with customers by offering timely support and guidance.
Strategic Planning Insights Data generated by the EWS framework feeds directly into our strategic planning process, helping us align with the broader economic and market trends. Fraud Risk Management Mitigation Our AI driven alert systems and exception reports identify unusual activities helping prevent fraudulent transactions before they occur. Since Pesolo’s early Warning signal framework doesn’t just manage risk, it transforms it into a strategic advantage. It empowers us to operate smarter, safer and more sustainably in an increasingly complex environment. Back to you Shantanu sir.
Santanu Agarwal — Deputy Managing Director
The growing brand recognition and ecosystem of sno, a modern high tech high tech stack, data analytics capabilities, cost levers and a focus on governance is giving everyone that is us, our investors like large institution mutual funds etc, our individual investors and our borrowers the right to win.
Unidentified Speaker
As we move forward. We remain committed to innovation, resilience and the well being of our employees, customers and shareholders. Together we will ensure that Pesolo continues to thrive and grow in India’s rapidly evolving landscape. Thank you everyone for joining this call. As we conclude our earnings call, we invite you to explore the detailed earnings presentation available on our website and the stock exchanges. Thank you very much.
Santanu Agarwal — Deputy Managing Director
Thank you.
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