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Revenue
₹1,298 Cr
verified against source
Revenue YoY
—
reported change
EBITDA
Pending
latest reported figure
Source
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Actual signal trajectory
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Quarter read
What the record says.
Carborundum Universal (Northern Arc Capital) reported Q2 FY26 PAT of ₹92 crore, up 13% QoQ, driven by NIM expansion of 40bps QoQ to 9.3% as cost of funds declined 40bps to 8.5%. AUM grew 15% YoY to ₹14,166 crore, with direct-to-customer segment up 17% YoY and MSME finance surging 42% YoY. Credit cost improved to 2.7% from 3% in Q1, aided by lower MFI provisions and stronger consumer collections. Management guided for FY26 AUM growth of 20-22% and ROA of 2.8%+, with credit cost in the 2.6-2.8% range. The fee-based business (performing credit funds up 14% YoY) remains a key differentiator. Risk: elevated opex from collection infrastructure investments may pressure near-term profitability if credit costs do not decline as expected.
Colored figures show movement against the previous available record.
Guidance to track
- Management expects full-year AUM growth between 20% and 22%, with H2 stronger than H1.
- Return on assets guided to be 2.8% or higher for the full year, improving from 2.6% in Q2.
- Credit cost expected to remain stable between 2.6% and 2.8% in the second half of the fiscal year.
- Operating expense ratio guided to stay in the range of 3.7% to 3.8% for the full year.
Risks flagged
- Opex ratio increased to 3.7% due to investments in MSME sales and collection teams; if credit costs do not decline as expected, profitability could be pressured.
- Credit cost in the intermediate retail segment was elevated due to prudent provisioning; analyst questioned sustainability, management cited management overlays.
- Fee income was subdued at 6% of AUM due to cautious underwriting and slow credit demand; management expects improvement in H2 but risk of delayed recovery.
- MFI credit cost improved but remains elevated at 5.1%; reliance on CGFMU guarantee may not fully offset underlying asset quality risks.
Key quotes
- We believe we should be able to hold on to this momentum and numbers by end of the year and have a credit cost in a range of 2.6 to 2.8%.
- Our direct lending business to MSME, to secured MSME, to the overall MSME as a cohort, consumer as a cohort grew almost 30% plus.
- We have good amount of headroom for further reduction. So we are very hopeful of a good set of numbers going forward as well.
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