Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
Poonawalla Fincorp Ltd (NSE: POONAWALLA) Q4 2026 Earnings Call dated May. 05, 2026
Corporate Participants:
Shabnum Zaman — Company Secretary
Arvind Kapil — Managing Director and Chief Executive Officer
Harsh Kumar — Chief Human Resources Officer and Head Artificial Intelligence
Sunil Samdani — Executive Director
Analysts:
Chintan Shah — Analyst
Unidentified Participant
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Punawala Fincort Limited Q4FY 2526 earnings conference call. We have with us today on the call Mr. Arvind Kapil, Managing Director and Chief Executive Officer. Mr. Sunil Samdhani, Executive Director. Mr. Sriram Iyer, Chief Credit and Analytics Officer. Mr. Harsh Kumar, Head Artificial Intelligence and CHRO and other senior management officials. As a reminder, all participant lines will be in the listen only mode. And there will be an opportunity for you to ask questions after the presentation concludes.
Should you need assistance during this conference, please signal an operator by pressing star then zero on your touch tone phone. Please note that this conference is being recorded. I now hand the conference over to Shabnam Zaman, company secretary of Poonawala Fincorp Ltd. Thank you. And over to you.
Shabnum Zaman — Company Secretary
Thank you. In line with good corporate governance practices, please note this presentation may contain forward looking statements regarding the company’s future business prospects, strategies, estimates and profitability. But it is important to note that these statements are based on certain expectations, assumptions, anticipated developments and are subject to various risks and uncertainties. The actual results may differ significantly from what is stated in these forward looking statements. Risk and uncertainty related to these statements includes fluctuations in earnings, our ability to manage growth, competition, economic conditions in India and abroad, changes in laws, rules and regulations relating to any aspect of the company’s business operations, general economic market and business conditions.
Attracting and retaining skilled professionals as well as government policies and actions. Now I would like to hand over to Mr. Arjun Kapil, Managing Director and CEO of the company.
Arvind Kapil — Managing Director and Chief Executive Officer
Thank you, Shabnam. A very good evening to everyone and thank you for joining us. I’m pleased to report that quarter four financial year 26 marks a significant inflection point for our organization. Our strategic focus on scaling our six new business lines while maintaining rigorous cost discipline is now yielding tangible results. We have successfully expanded our return on assets a clear indicator of our improved earning power and quality of our portfolio. This performance is undermined by a meaningful shift in our efficiency profile.
We have driven operating leverage effectively bringing down OPEX to AUM ratio down to just a year ago. Our results demonstrate that our deliberate investments in technology and our specialized branch network are not just growing the top line but are structurally enhancing our profitability. I will begin by outlining our financial performance for the quarter and year and subsequently talk about the key drivers under finding them. We closed the year in AUM of around 60,348 crores. This year. This reflects a year on year robust growth of 69%.
The contribution to AUM from the customer businesses have substantially increased. Six new businesses are responsible for it. We’ve launched and they’re contributing close to 24% disbursement in this quarter versus 20 last quarter. We successfully operationalized 400 gold branches. The commitment we had made has been met at this juncture. Let me cover and reflect on the six vectors of our performance which are an outcome of the nature and granularity of our growth. Our NIM has expanded sequentially by 43 basis points from an 8.62% in quarter three to 9.05 in quarter four.
In our quarter one financial year 26 call we had guided that we will reduce either restore, sorry 9% NIM levels in 3 to 4 quarters. Happy to report back that we’ve achieved the same in three quarters. A significant contributor to the NIM going forward is our disbursement yield in my opinion which has already gone up by 40 basis points. It is a milestone that underscores the successful integration of our new product verticals and digital businesses. We plan to continue to optimize this by prioritizing segments with best risk reward dynamics.
There has been a quarter on quarter decline in credit cost of 2.62% to 2.51%. This improvement is further validated by our 6 month outcome 6 mobility plus which continues to further trend positively. Our GMPA for quarter four stands at 1.44% versus 1.51%. Credit cost declining trend is in line with the structural strength of our calibration and collections. It has started to play out as an advantage. And let’s remember that GNPA is a lead indicator of where the credit cost is heading for OPEX to AUM has declined from 4.76% in quarter four last year to 4.13 this quarter.
On the back of productivity gains in our new businesses. We believe that this is a structural shift in the OPEX levels that will sustain and further reduce over time. I will explain this aspect in detail shortly. The culmination of these moving parts is a 70% sequential growth impact reaching 255 crores for the quarter. You can see the profits are moving in a certain directory, the credit cost is moving in a certain trajectory and our OPEX to AUM is structurally moving to a lower floor. Our ROA has moved to a 1.81% this quarter versus 1.2 last quarter and if I compare it with the quarter ending March 25th it’s a difference which is around 0.78.
We believe it is the strongest evidence of our structural operating leverage. We crossed in my limited view threshold of our investments in tech collections and new business lines. It is slowly, steadily gradually compounding the 1.81% is a new baseline I believe and we should in my limited new growth trends to strength in couple of quarters among all our six vectors. In my limited view ROE I would treat as our North Star metrics. Let me now spend some time talking about the structural drivers undermining this growth.
I quickly give you a sense there. Firstly I want to talk about our product mix and distribution. We like to think of our portfolio as a multi speed growth engine. Our consumer products like personal loan, consumer durables, I would like to call them our high velocity engines that introduce consumers and households to our franchise. If you look at Education loan and Gold provide the right balance of ease and resilience while our MSME and pre owned cars are calibrated business for us that enable us to participate in the growth story of the country.
Let me briefly talk about our new products portfolio Prime Personal Loans PL prime we introduced in August continues to demonstrate strong momentum. We ended mass 26 with a monthly disbursement run rate of approximately 468 crores. We continue to see that 70% plus customers have bureau scores of 750 plus employed with category A corporates earning 75,000 plus net take home in short credit resilient salary profiles. In quarter four 33% of disbursements were processed through a fully straight through digital processing.
This has increased from 28% in quarter three. We are very very excited about the digital calibration and the momentum it’s bringing and the cost efficiencies in operating leverage. We will move towards 35 to 40% over the next few quarters adding strengths to our operating leverage. EL prime has transitioned from a linear cost model to a scaling digital where we build AUM without a corresponding increase in the overhead. Just to give you a ballpark sense of the digital contribution increasing A quick sense on the Gold loans Our gold loan footprint as well as portfolio size are significantly scaled up.
Stayed on course with our earlier commitment on opening 400 branches. As of March they’ve been operationalized. Total disbursement in quarter four is close to 819 crores, a fairly decent step up. More than 90% of branches are in tier two tier three locations. These storefronts and customer prime is expected to deliver strong lifetime value to our franchise. We will aim to open branches along similar lines as last year. While opening dedicated gold branches creates a front end investment phase, the long term unit economics are very favorable to sustained profits.
These branches act as localized profit engines and once at scale require minimal incremental cost to maintain a quick sense on the consumer durable business. Consumer durable business for us continues to scale efficiently. Having onboarded 12,500 plus retail outlets across 240 locations, we’ve set up a plan to onboard around 12,000 outlets at the beginning of the year which we’ve surpassed. Seamless digital journey has enabled the business to disperse over 54,000 cases a single month. Conceptually, we view durables as the anchor product of the emerging middle class homes.
It creates a virtuous cycle. Wider penetration leads to richer behavior data for us which fuels smarter underwriting. Based on these beliefs, we aim to at least double the consumer durable customer count over financial year 27, basically strengthening our overall customer acquisition for the company commercial vehicle. Having a strong belief in last mine logistic and intracrush in the country, we’re consistently scaling up the business metrics. Average monthly dispersals approximately now 125 crores in quarter four grown by around 18% quarter and quarter.
Our disbursement yield has also grown by 40% quarter compared to 3. We have. Concluded financial year 26 with 1000 crores of disbursements. UCV continues to be the primary focus, comprising of 70% of the quarterly and annual disbursements. Education loans are one year since our launch. We built a strong Momentum processing over 22,000 files. As of March 26th. Education has crossed approximately 900 crores in dispersals driven by a distribution network now of around 500 plus consultants and strategic partners.
Firmly aligned with our original vision, we are also seeing a healthy traction in the instant sanction process which now contributes to nearly 20% of total sanctions. Secondly, I want to touch upon our risk calibration and collection performance in my perspective which will be covered by Sriram at length. A quick snapshot in this area is as I said, our credit cost declined further to approximately 2.51% improving sequentially from 2.62. The 6 mob 30 plus book delinquency declined by 30 basis points to a new low, reinforcing the underlying strength of our portfolio incrementally.
Monthly cohorts across products are showing healthier delinquency roll rates than the previous months. To give you a flavor, the 12 MOV90 of cohorts originated post September 24 has seen improvements of over 50% compared to the cohorts originated 12 months prior to September 24. This performance is primarily on the back of our fine tuned CRED models. We are able to continuously monitor refine the performance of a model with signals received from payments, data or collections visit refueling back to the credit guys.
Similarly, our collection capability continue to be sharpened via near real time digital feedback loops and AI led models of faithful strategies. We are in a position to dynamically update our models in a matter of days versus weeks reflecting agility in our feedback strategies. Third fundamental point Let me explain a point around structural efficiencies in operating leverage. Our operating expense to AEM ratios declined from 4.76 to 4.13 year on year. A few drivers of this to give you a sense first boy go about Planned investments in new products the renewal infrastructure, technology, human capital we’ve made over the past few quarters are now a source of operating leverage due to productivity gains.
Our digital capabilities across the company and website customer journeys have matured and are leading to improvements significantly in productivity, cost of acquisition and organic business boost and optimized digital performance funnels even on our website. For that matter, We’ve seen a 47% improvement in Q4 leading to a 51% improvement in share of voice over the last financial year. We continue to hold the performance levels across non paid search with approximately 7 million traffic in March low.
Our AI investments are also beginning to improve our productivities. We are now live with 42 of 76 AI projects planned which I should cover in detail this quarter. We’ve launched multiple initiatives that are headed AI will talk about in detail shortly. Important to note this when we look at OPEX to aum. It’s important to contextualize it within the current year’s strategic investments. Along with robust profits. We’re making investments as well to keep the sustained profits as a model which we’re trying to achieve.
Our investments are building a more profitable mode for the future and we are deliberately continuing to invest behind the dual engine strategy. The first engine is focused on operational fortification, strengthening collections, upgrading technology and improving core execution capability. The second engine is geared towards market expansion franchise deepening including investments in new gold branches and consumer durable sector. On the first front, technology. Our investments are moving beyond digital towards building an AI LED intelligence layer.
We’re strengthening our backend engines to enable a more predictive underwriting and sharper decisioning. Importantly, we’re leveraging AI to identify customers with highest propensity for subsequent borrowing, thereby accelerating cross sell and material shortening conversion cycles on the collections infrastructure we’re consciously decoupling collections into distinct strategic vectors. We’re investing in robust tech enabled collection system to ensure rapid acquisition supported by strong scalable recovery framework.
On the second front, we view consumer durable as a critical first touch point in the customer life cycle enabling us to build early relationships and drive long term cross sell opportunities. By financing essential household needs, we effectively earn a seat at the tables of thousands of new households becoming their first point of engagement with formal credit. This creates a high velocity acquisition funnel for us. We view this as a foundational investment, one that strengthens the long term quality and depth of our franchise.
Similarly, on the gold loan branches in parallel act as a high yielding kind of a safety ward for lack of another word if one may use the term, while also providing strong risk buffer. While we’ve set ourselves an internal benchmark to close the next financial year at a lower OPEX to AEM ratio than our current levels, you may see fluctuations quarter on quarter for 10 to 25 basis points based on our investment trajectory and clustering of a branch opening. This is a similar kind of guidance we gave last year as well.
But I think the plan is that every March end we should structurally move to another level and build the strength for the company on OPEX to AUM getting lower in closing. Let me summarize. Our trajectory remains focused on sustainable high quality growth. Steady improvement in our credit profile with credit costs moderating to 2.51 and even more encouraging trends of 6 mob 30 plus data reflects the health of our lending ecosystem. We’re fairly looking confident on credit costs from here on. With asset quality improving across stage one, two and three we are operating from a position of strength.
If I can say that we’ve moved past the lifting of initial business setup and now firmly in the phase of harvesting operating ebridge. We remain committed to our investment philosophy in the tech and collection to further fortify this momentum and strengthen new businesses which are adding considerable value to our measurable metrics across business and risk. Thank you for your continued confidence in our vision. We stand committed to a focused strategy of creating long term predictable sustainable profits.
With that I will now hand the call over to Sriram. Thank you. Thank you Arjun. Good evening everyone. India’s growth momentum during the financial year 2026 remain anchored in domestic demand supported by consumption resilience and reinforced by policy measures for Punawara fincos. The step by step execution of this calibrated framework across origination, risk containment and collections is translating into a structurally stronger portfolio. This approach is delivering better incoming cohorts lower embedded volatility and sustained improvements in collection efficiency over the cycle.
Focusing on the asset quality, let me give you a glimpse of our key trends. The GMPA has shown a sequential improvement to 1.44% in Q4FY26 versus 1.84 in Q4FY25 and our MMPA which was 0.85 in Q4FY25 is down to 0.74 in Q4FY26 for the last four quarters. There has been a steady quarter on quarter improvement in stage one, Stage two and stage three composition of assets emphasizing our calibrated approach to portfolio expansion and strengthened debt management practices. Our stage one composition in quarter four FY26 is at 97.5% versus 96.3% in Q4FY25.
Stage two composition in Q4FY26 is at 1.1% versus 1.85% in Q4FY25. On stage three composition in Q4FY26 is At 1.44% versus 1.84% in Q4FY25. There has been significant improvement across all the stages stage one, two and three. The quarterly curric cost has improved to 2.51 for Q4FY26 versus 2.62 for Q3FY26 versus 3.14 for quarter four FY25 last year. I would further like to highlight a few critical areas that reinforce our commitment to delivering best in class credit costs in the industry. First and foremost is a credit by design framework.
We are meticulously building our portfolio skewed towards secured and unsecured products that inherently have lower risk and low risk cohorts. Like salary profiles across products, 6 mob 30 plus shows a downward trajectory compared to previous quarters. Key strategic changes for SME products like business loans and pre owned cars have supported improvement in fixed MOV 30+. The early monitoring indicator of 3 mob 30 for consumer loans continue to improve quarter on quarter strengthening our confidence our deliberate choices and product mix and disciplined risk calibration focuses on customer segments that have inherently lower risk and more stable behavior patterns.
DFL’s risk management framework continues to be in alignment with banking standards as reflected in our cattle delinquency which benchmarks us favorably against peers. Sequential improvement in the 6 mob 30 plus for the last 4 quarters is a testimony of this first framework implemented. 6 mob 30 plus as of Q4FY26 is 1.05 versus Q3FY26 at 1.3%. The 12 mob 90 plus for cohorts originated post September 24th has seen an improvement of over 50% compared to the cohorts originated 12 months prior to September 2024.
The company is undergoing a fundamental strategic pivot towards a future ready portfolio by gradually shifting its asset mix towards higher velocity low probability of default segments such as loan against property, personal loans to salary profiles of top corporates, gold loans and education loans to insulate the book from cyclical volatility. The front end asset selection is bolstered by a transition from traditional recovery to a predictive AI driven collection engine which is creating significant operational leverage and a continuous feedback loop with underwriting for real time risk calibration.
By prioritizing quality at risk approach at the ground level, the firm is successfully stabilizing credit cost at a new lower baseline to deliver sustainable portfolio. It gives me confidence to share with you all that the seasoning of our portfolio is to our satisfaction and we expect with fair confidence that from here on we’ll move strength to strength on our portfolio growth and quality. The second key strategic focus is on enhanced collection efficiency. Over the last financial year our investments on enhancing the tech stack used by collections and manpower investments to be ready for scale across products and buckets have shown positive returns.
I would like to share a few performance stats that will give you a glimpse of the impact of these investments. Our current bucket flow has shown quarter on quarter improvement and we have achieved a 2x improvement compared to the previous financial year. The above has led to Sequential improvement in stage 1 portfolio to 97.5 in Q4FY 26 vs 97.4% in Q3FY 26 vs 96.3 in Q4FY 25 reflecting strong early stage collection and disciplined credit sourcing. There has been a quarter on quarter improvement in slippage ratios since September 24th.
Sequentially stage one slippage ratio has improved by over 15% in Q4FY26 versus Q3FY26 and stage slippage ratio has improved by Over 11% in Q4FY26 versus q3FY26. Slippage ratios have improved due to a portfolio calibration and improved collection efficiency across product categories. As we further prepare for scale, the team is focusing on Genai voicebot led calling with intelligent human handoff, behavioral AI nudges, speech to text, AI integration for allocation optimization and agentic workflows to auto trigger events.
Few of the other AI, gen AI and automation use cases like multilingual voice bots for digital communications, copilot based insights for collection manager, humanless allocation management, campaign strategy builder and call quality monitoring are supporting smarter day to day operations for continuous improvement cycle. Third key focus area is on continuous enrichment of our in house proprietary models that used across the digital and non digital journeys. As we speak, 18% of the A is via digital journey driven by AIML models used across the different credit swim lakes.
The multi layer AIML risk models leverage the volume, velocity, variety and veracity of data to enable early risk detection, industry level risk representation and vintage level structuring. Usage of these risk models also augment the physical underwriter decision process across diverse models Consumption Use Cases we have started our journey with implementation of Gen 2 models for credit risk and Gen 3 model versions for debt management to dynamically optimize calibration in response to shifts in portfolio mix.
The credit AI for underwriter focuses on productivity improvement, enhancing accuracy and standardization. The Q4 FY26 marks implementation at scale for credit AI projects across all major products covering personal loans, business loans, professional loans, pre owned car loans and equipment loans. For example, in personal loans, the current installed capacity of a headcount as of March 26 will now be able to process 1.2 times the files, methodically strengthening each stage of the credit life cycle from origination discipline to on book risk management and collection.
The organization is creating a sustainable improvement cycle building AEVO with better cohorts, lower portfolio volatility and sustainable gains in collection efficiency. Thank you so much and I’m handing over to Khash Kumar.
Harsh Kumar — Chief Human Resources Officer and Head Artificial Intelligence
Thank you Sriram Good evening everybody. AI continues to be our core driver for the operating model for transformation that we have taken up A key source of long term differentiation for Kunal of involvement. Before I take you through the specifics of this quarter, I want to set up three things that in our assessment define an inflection point in our AI journey. First, the sale of AI usage across organization has crossed an important threshold. It is now meaningful to be measured across multiple matrices.
Second, several of our AI platforms we have spoken about in earlier calls have moved to full production. They are now generating measurable outcomes, not just productivity increase and I’ll walk you through a few of them. And third, our AI architecture has begun a clear strategic shift. We are moving from point solution to agentic system AI that does not merely assist user but reasons executes monitor improves outcomes within governed boundaries. Let me start with scale. Enterprise wide AI token consumption has increased more than 100 times year on year and now stands approximately at 30 plus million tokens per month.
Based on our current deployment pipeline usage trend, we expect the number to grow multifold over the next year and AI deepens into daily workflow decision making across the organization. Additionally, we now have 76 AI projects identified, 42 deployed with 34 under development across business and functions. Each of these projects may have multiple digits acting in concept. We are introducing token consumption as a metric because in our assessment it’s the cleanest measure of how AI is actually being used inside the organization.
The infrastructure cost of running these tokens model inference compute cloud is a non assessment materially small related to the scope scale of measured business saving or productivity gains that these platforms are now generating. The ratio of measured business benefit to AI infrastructure cost is decisively positive and we expect that ratio to expand as scale increases because inference costs are largely fixed at the platform level while application across more workflows is incremented. Saathi is one of the credit AI platform that Shiram has already elaborated on and thank you Sriram for that.
So I’ll not take you through that, but we had also announced customer service part that I wanted to cover. Having gone live in FY26, I’m pleased to confirm that the platform is now live in production. The platform’s design capacity is to autonomously resolve 80 to 85% of customer interactions. That remains the steady state target and we expect to reach that level over the course of next two quarters. Customer wait times have already reduced by approximately 35 to 40%. This single platform when at design capacity will materially reduce our cost of serve by improving customer experience beyond just credit and customer service.
Their internal productivity platforms have moved to full production at scale in this quarter. Build Buddy and Data Engineering Copilot enabled our IT teams to deliver 16 product builds within single quarter with major productivity uplift of 70 to 80% across development workload. The more important benefit however is the compression of release cycles which directly accelerates time to market for the new businesses we are scaling. We continue to maintain high levels of governance and oversight to mitigate the risk of vulnerabilities for code breaks.
DAR genie, our natural language insight engine is now active use across operation HR and finance. It is saving approximately 400 man hours annually in analysis time that was previously spent on manual dashboard ad hoc reporting request. We expect adoption to expand significantly in coming quarter as we extend the platform into customer service and risk by hr. Our AI powered employee assistant is constantly growing and is now autonomously resolving close to 90% of HR queries. Average resolution time has compressed from 24 hours to under 10 seconds to give context to the 90% employee interaction per month which vast majority would have previously required.
HR team intervention, high volume operational tasks like cab booking, key employment letters are now executed with zero human Our AI led hiring platform has compressed offer release to now an average of under one minute and scaled monthly hiring capacity not dependent on computer. We have already pushed the system and without increasing further Compute improved on 68% increase in capacity with 81% touch in hiring related operational cost and importantly no compromise on candidate quality as we continue to expand our branch network the new product teams.
This platform is what allows us to hire at scale without proportionate operational drive. In March 2026 we launched an AI content factory, a design creative studio where prompt engineers creative special work closely to create hyper personalized communication creatives and media. Within a few weeks we have witnessed a 12x increase in our communication output with significant cost saves. This will enable us to run multi segment campaigns across media types across cohort at scale. This brings me to what I described as an important strategic shift of the quarter.
Our move from point a aspiration to just to explain. A point solution executes a single defined task for a person. An agentic RPA which is what we have launched, works across multiple people, context takes sequence of action, monitors those outcomes and actions, ensures that system and agents built to work are governed within the boundaries itself. This is a shift that allows AI to scale beyond individual use case and become operating infrastructure, not a tool but a substrate on which workflows run.
Similarly, we have launched autonomous API testing agents. This embeds agentic intelligence into our engineering life cycle. It independently generates test kits, validates API behavior, proactively identifies anomalies. This will improve release quality, accelerate development cycles and reduce manual testing effort, directly reinforcing the engineering productivity gains we are seeing from buildby DIY bot creation tool. This we launched primarily as a no code platform that allows business team to independently build deploy domain specific conversational agents for their teams.
It has already begun to drive bottom up innovation across enterprise, improving query turnaround time and democratizing access to institutional knowledge. We believe this will be one of the highest leveraged platform over the coming year because it shifts AI from centrally built capability to one that organization can extend organically on the Agentic roadmap for FY27 these three platforms are foundational, they’re not totality of our agentic strategy. Every one of these platforms with multiple agents will operate within seven SUTRAs governance framework within our existing model risk discipline.
Alongside these foundational platform Several focused AI solutions have been deployed over the quarter to strengthen frontline execution, sales and decision support. Over the next few quarters we will deploy agentic AI across our funnels to improve relevance and guide customer appropriately through their loan journeys. Three agents are in pipeline to be delivered in June to FY27 are expected to improve our digital loan conversion rate by over 15%. Our data foundation across structured unstructured signals will be closely coupled with our journey on the cloud and this will significantly improve AI experience delivery to our sales channel and customer by keeping a tight control on our cloud cost for our sales and credit Legal Technical teams we have launched multiple bots ask for Education Loan for BL Buddy for business loan and LAP Assistant for loan arranged property deals.
We standardize the interpretation of policies and process across frontline, reducing operational risk in precisely the product that are scaling fastest. For tax workflow we have deployed SEC assist and taxation work. They reduce friction in the back office workflows that are critical to running regulated lender at scale, speed, consistency and compliance has improved measurably and for leadership development scale we launched Lean Forward, an AI powered coaching assistant that provides our managers personalized on demand guidance for feedback people decision and development plan Before I close Because AI skills governance is what underwrites the credibility of entire program, all our AI projects incorporate inside the seventh root of governance framework and of course we are further strengthening our AI governance processes which we have adopted earlier in alignment with the principle laid out by the regulator.
FBADP deployment, including three platforms that I described in previous section operate with an explicitly defined boundary scope of action escalation trigger. Even the loop checkpoints or any decision that affects credit collection, customer or stakeholder opens on model risk. Specifically a 50 plus AI model which Sriram has already spoken about support rate decisioning sitting inside a model risk framework. On data privacy and DBTP Act, Our architecture is designed with explicit data classification data localization principle sensitive customer data is handled within governed environment.
We have control in place to manage exposure to external model provider and those controls are reviewed by information security team. On vendor concentration, architecture is deliberately multimodal, we are not building dependency on any single large language model provider. The agentic platform and DIY bot creation tool are dependent designed inherently to be model agnostic at the orchestration level. This protects us against vendor pricing changes, capability gaps and continued risk and on auditability every agentic action is locked and is reversible.
To summarize the point, we see government governance not as an overlay on AI but as a precondition for scale. Thank you. I’ll now hand over to Mr. Sunit Samdani, our Executive Director.
Sunil Samdani — Executive Director
Thank you Harsh and good evening everyone. Let me quickly take you all to the financial highlights. For the quarter the asset under management stood at 60,348 crores. On the liability side as part of our debt strategy and in line with our projected AUM growth, we continue to diversify our liability book focusing on long term borrowings. Hence the share of borrowings from long term sources has gone up by approximately 3% from 83.42% to 86.50%. Quarter on quarter this number was 61% in Q4 of FY25.
Our net interest income including the fees and other income continued to grow healthy standing at 1276 crores for Q4 of FY26 which is up 18.2% quarter on quarter and 78.5% year on year. On a full year basis for FY26 our NII including the peas and other income stood at 4029 crores which is a growth of 49% year on year from 2708 crores last year. The cost of borrowing for the quarter stood at 7.63% versus 7.65% in Q3 of FY26. The OPEX QEM stood at 4.13% reduction of 28 bids quarter on quarter. The pre provisioning operating profit during the quarter was at 695 crores, a 31.6% increase quarter on quarter.
For the full year of FY26 the PPOP is 1934 crores which is a growth of 36% from 1417 crores per year earlier. The asset quality improved quarter on quarter with GNPA at 1.44%, a reduction of 7 bips quarter on quarter and 40 bps year on year and net NPH stood at 0.74%, a reduction of 6 bids. Quarter on quarter. Our provisioning coverage ratio stood at 49%. Our profit after tax stood at 255 crores during the quarter 69.6% growth quarter on quarter. This is despite company making significant investments in new businesses, branches, AI and technology.
For the full year of FY26 the profit after tax is 542 crores. Our debt equity ratio stood at 4.67 times. This is before the capital raise of 2,500 crores which we did in April of 2026 through the QIP route post capital rates and basis March 26 balance sheet the pro forma debt equity would stand at 3.78 times on the capital adequacy ratio. We continue to remain healthy and comfortably above the regulatory requirements at 16.83% of which in tier 1 capital is at 15.90%. With successful 2,500 crores of capital raise.
The stimulated capital adequacy ratio stands at 20.74%. This is basis the March 26 balance sheet and the capital rate that we talked about. And this gives us enough headroom for growth. Our liquidity coverage ratio at 181% is comfortable on the liquidity front a surplus liquidity of 7590 crores at the end of March 31st, 2026. Thank you. And now I would like to open the floor for question and answer session.
Questions and Answers:
Operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on the Touchstone telephone. If you wish to remove yourself from the question queue you may press star and 2. Participants are requested to please use handsets while asking a question. Ladies and gentlemen, we will now wait for a moment while the question queue assembles. Our first question comes from the line of Chintan Shah from ICICI Securities. Please go ahead.
Chintan Shah
Yeah, thank you for the opportunity and congratulations on another strong quarter. Firstly on this yield. So yeah, we have started giving the disbursement yield range also. Sir, could you help me with the water? Be our disbursement yield for the quarter and what would be our book yield for the quarter? Just trying to understand the difference between the. Oh yeah, that’s the first one. And secondly on this asset quality. So yeah, the asset quality has been continuously improving. But given the geopolitical situation do we emphasize any risk to that?
And particularly are we looking to make or did we think of making any overlay or provisions just to strengthen our provisions in terms of any risk if it emerges given that we are also almost 50% portfolio is unsecured. So in that context. Yeah,
Arvind Kapil
Yeah, thanks Chandan. I think. Let me address your second point first. I think on the credit side if you look at Europe and Sriram. But you know our exposure in my limited view remains well within the defined risk tolerance. We do a lot of internally we do a lot of worst case scenarios stress test modeling across not just the portfolio but across liabilities and a whole lot of dispersal yields. Which is why if you notice normally a liability yields in the industry changes fast and asset repricing power is very tough to get.
But in our case if you notice the way we build the model structurally to make it stronger, of course we didn’t know the world was going to come in but we wanted to fundamentally make it stronger. And for that intention you start seeing that our dispersal Yield in quarter four has gone up by 40 basis points and your portfolio yield will gradually do the catch up. But the more your dispersal yield goes, what does it show? It shows that if you were Approximately at say 15.56 was your dispersal yield a quarter before?
Approximately. And if it goes to a 15.96 and next quarter it goes inching higher. That means you have the pricing power in a business which is not a very easy visible side across the industry, across any company normally it’s a strength of the construct which it indicates in my limited view and I think that’s the way I would read it. We see a lot of promising increase in our disbursement deal leading to subsequently obviously the portfolio will catch up but we have a healthy pace of growth in this financial year plan.
And as far as the calibration is concerned, see the very fact we diversified across consumer durable gold. These are investments. And if you look at PL prime, the digital side is giving us the first right to refuse despite our size. Look at loans against property, we’ve structurally do over 50 lakhs. We don’t do microlaps, we’ve kept ourselves disciplined on the credit calibration. If you look at education loans, commercial loans, even if you look at business loans and pre owned cars, you’ll be surprised.
Unlike our overall growth rate looks very high. There are products like business loan where we’ve asked the team to operate right now on low teens to mid level teams on that msme. But if you look at lab we are doing at a healthy robust growth because it’s over 50 lakhs. And if you look at pre owned cars which is also an industry relatively more riskier, we’ve again said low teens. So we’ve calibrated ourselves in investments and balancing off the profits so that you can sustainably grow faster. But Sriram, would you like to add something on the war side which he’s asking and impact that you see?
As said, if you look at our assets under management, the focus is on the low risk assets like loan against property, personal loan against property. We don’t do less than 50 lakhs and we see that the portfolios below 50 lakhs tend to be higher portfolio at least at that, that is a portion which we don’t do. And we also focus on Gold loans. Our exposure is only to the top corporates employees where we give personal loans, education loans. So all of these assets in my view is that these are very less vulnerable to the headwinds in the external environment.
I don’t see any risk. And even if you look at your gnpa, quarter on quarter has improved, the slippage ratios have improved. My 6 mob has significantly improved. Even my 90 plus 12 mob if you see there has been a significant improvement of 50% over. So if you look at overall from a portfolio point of view, I don’t see any risk here. Hence these assets are less vulnerable to headwinds in the external environment and we have, hence the management maintains a cautious optimism and continues to focus on managing and recalibrating our portfolio.
Correct. So we’re closely watching, I mean it’s not to say that war should be ignored. Without a doubt we’re closely watching the environment. But consciously somehow we wanted to make a more moderate risk model. So our kind of vulnerability probably index if it’s not the right word. Our portfolio could be a little more crafted in a manner which looks more solidity. But we’re closely watching the environment.
Chintan Shah
So that is very detailed. Thank you for that. And also sir, just one last question. If I could squeeze in in terms of this mob 30 plus it has been continuously on a declining mode and that is around 1.05%. So what could be a steady state number here which we would be looking at probably at this level it could settle down.
Arvind Kapil
Yeah. So if you look at it’s coming down quarter on quarter as you see the numbers it would be range down the range bound. But if you actually look at the products such as gold loans, personal loans, prime, all of these assets, when we start having a larger share into the overall aum these numbers will trend downwards. So that is something which I can tell you. But I think you must remember one thing like I said in the conversation which I was speaking GNPA normally in my limited view and experience normally shows you the lead indicator of what’s coming ahead.
So add your mix of gold will increase. You had for example, barely I think, I don’t remember the exact number but let’s say 900,000 crore book but you have 400 branches so obviously your March number would have been close to a substantial number. And you can well imagine how the contribution of gold will go up now you know the industry cost of gold. So with these are strategies we shared with you every word of what we said shared over the last 23 months in my limited view has been executed precisely before or on the time and that credibility, you can trust us that we normally keep adequate margin of safety when we talk.
And of course we’re moving steady and steady. The credit cost and the portfolio. The way we stand for multiple reasons gives us fair confidence that the portfolio strengths should get stronger and stronger from here.
Chintan Shah
Sure. This is very helpful. Thank you and all the very best. Thank you.
Operator
Thank you. Ladies and gentlemen, to ask a question you may press star and 1. Our next question comes from the line of Kitav from Anand Rathi. Please go ahead.
Chintan Shah
Good evening. Congratulations on a good set of numbers sir. Number one question is on the fee income trend that has been trending very robustly. So if you have some guidance around that, that would be the first question.
Arvind Kapil
On the fee income side we all as a management team comes from we’ve handled fairly large businesses. So we understand the various vectors of fee income. Whether it’s your processing charges, whether it’s your insurance businesses, whether it’s various cross sell businesses or we plan to launch some new stuff. So I think you will see a fair amount of strength coming in this year as we’ve already done a lot of effort in launching all our businesses. Things are stabilizing, distribution is stabilizing.
It’s becoming more a regular calibrated growth from here on instead of massive amount of launches that if it went in. So a lot of focus will go on to roas. And I think all of us are well aware that a fee income is a very important component of ROAS and roa. Fundamentally for any company, valuation professionally has to be given the due respect of being a North Star. I mean I just used it to say that in our heads a lot of our decisions will be based as ROA because the company also we do robust profits plus investments.
So that’s the way we believe sustained profits get created. You cannot lower investments just to further boost profits because that’s not the way sustained profits happen. But fee income between various vectors is, I’ll be honest with you, it’s very strongly under our focus and the entire team is working on it. But there’s no guidance cater we give on these things. Let me have something in the back of my pocket. Second question
Chintan Shah
Was we have always focused on technology and AI,
Arvind Kapil
Right? Yes sir. Sorry, we can’t hear you.
Chintan Shah
How, how AI and tech has been progressing so far to the best of your knowledge, where you are in that journey. If you can spend, you know, two, three minutes on that, that would be grateful. On what we can look forward to in the next couple of years
Arvind Kapil
For us AI and digital. Let me put it as two vectors which could give you value on the digital side. If I share the figures with you, we are well over 30% of our entire business. Like a 480 kind of 500 kind of number that we are looking at now. Imagine a 30% or 40% of that gradually becomes fully digital of this scale in a personal loan. Prime corporate India taking from us can give you a sense of the stuff we are planning to this is something which we’ve executed. This is not something which we are trying to execute.
But now how does the scale over the next few years? Business loan is calibrating SME ticket sizes and right now we are very, very strict on its calibration. But within six, nine months, once we are very solid on that stuff, we will come up with some interesting turnaround times on the digital side of the business loan as well. We’re looking at digitizing a lot of business even if it’s halfway through on the front side with the customer. We all come with distribution backgrounds so turnaround time for us is going to be key.
That’s where the digital paths rest on AI. You have to appreciate that the idea of giving you these 75, 76 projects is to give you a sense that we haven’t launched two businesses or four businesses which only did credit underwriting today, for example, to give you a sense of the output a single product like a personal loan Pl. We’re not hiring new underwriters despite our growth rate being substantially robust this year. So we’ve kind of frozen a man bar of last year. And because of our ability with AI and the way our credit is calibrated, we have successfully managed to grow the operating leverage there.
Similarly, one by one, all credit products will start seeing that value. You’ll have to take a product at a time and start doing it. And if you look at across the organization, whether it’s a small initiative or large, you’ll find me 76 bringing in a culture where whether it’s a finance department doing automation, operations trying to do automation plus AI or a department like business trying to figure out which parts of it can use AI. There’s a cultural focus on the fact that we’ve got to create an operating leverage with both AI and digital.
So it has to be net impactful. I’m not into technologies which don’t change my life kit. So for me every step that we take either culturally builds the efficiency of innovation and there’ll be some Products which could far exceed the others on the impact but we are very clear that we keep moving forward in this. All these projects I think should give you confidence that culturally we are extremely rich and agile as a company in these areas.
Chintan Shah
Sure, thank you. Those are my questions.
Arvind Kapil
Thank you.
Operator
Thank you. Our next question is from the line of Jay Betai with nbie. Please go ahead.
Unidentified Participant
Thanks a lot for the opportunity and congratulations on the good set of numbers. So my question pertains to AI AI and the return what we are generating but if you can share some color that how are we focusing on increasing our ROE going ahead first three and second question is on disbursement. I would like to know the businessman number for the full year itself.
Arvind Kapil
All right, let me start with. I think the most interesting One is the ROA. I think we’ve taken a 1.81. I see if I look at the NIMS in my limited assessment looking at the environment I think on mins in my assessment overall looking positive and accretive. So I think that’s a strength which gives me confidence. There’s we are very confident as I see through the future of the next few quarters right up to the four quarters of ROA should gradually start moving strength to strength. We don’t give any intermediary guidances but like you can see we never gave a guidance of 1.81 either.
But step by step we are building on the businesses. I keep balancing investments and profits but I see the roas from here on moving strength to strength for probably a couple of quarters or probably couple of years and I think we reached that point that our strength is emanating out of our pricing power. You can see our disbursement pricing 40 basis points you’re well aware is not easy to increase on the NIM side on the disbursement yield side and with the growth rate that we have probably this year’s dispersal will be one third of our book.
I think that will also give substantial strength to the NIMS adding to the roas. We are also fairly positive despite our investments with minor fluctuations in quarter on quarter as you cluster the branches. But I think structurally on the OPEX to AUM we should read we are hoping to reach a lower level by March end despite the fact that our pictorial is actually substantially improved than even we had anticipated to be honest and the productivities are kicking in and stabilizing giving us the confidence credit cost Also one of the vectors which adds to the ROA is looking from here on looking fairly robust both by design and by calibration and I must mention by collections.
We are making substantial investments in collections both in terms of focus and technology for us to see the results. Jan to March has seen a substantial strength on the collections and we are hoping to keep it robust. That’s I think one part of it you’d asked. I think we’ve given a guidance of AUM of 35 to 40. It could be probably a notch better, but it depends. We’ll watch closely how this environment plans out but directionally I think we would like to look at a 35 to 40 and commensurate disbursements along with it.
And that’s the balance that we like to keep. There’s something else. Oh, okay.
Unidentified Participant
Thank you so much for the detailed answer. Just one more thing. If we see on Slide 22 we for, for a longer term horizon we have some negative alm. So, so if we, if we factor in the amount raised of 2500 crores. So do we see, how do we see that gap bridging out
Harsh Kumar
The capital race? It has got breached.
Unidentified Participant
Okay, sir. Okay. Thank you. Thank you so much. And best of luck.
Operator
Thank you. That was our last question. Ladies and gentlemen, on behalf of Poonawala Fincorp Ltd. That concludes our conference. Thank you all for joining us. You may now disconnect your lines.