Geographic expansion into new states may strain asset quality
Branch expansion into Bihar, Jharkhand, and Rajasthan for secured MSME lending could face underwriting challenges in unfamiliar markets.
DARCREDITCAPITAL / Q3-FY26 / risks
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Dar Credit & · Material risks, their source context, and severity in the latest available quarter.
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Material risks this quarter
medium
High customer dropout rate of 40%
Management disclosed a 40% dropout rate due to deliberate pruning of over-leveraged customers, which could limit growth if new acquisition slows.
ROE remains compressed at 7.5% despite high CAR
Analyst noted ROE is low relative to capital base; management did not provide a clear path to improve ROE, indicating potential inefficiency.
No AI adoption may limit scalability
Management stated they do not see need for AI in underwriting, relying on personal touch; this could hinder cost efficiency and scalability vs peers.