JSFB Q1 FY27 earnings call.

Guidance to track

• Management reiterated guidance for gross loan growth of 19-21% for the full year, driven by secured assets (affordable housing, gold loans, two-wheelers, MSME) while MFI book targets 10-12% growth.
• Target deposit growth of 20-25% for FY27. CASA grew 7.1% QoQ and retail term deposits grew 31% YoY. Management expects healthier deposit growth in Q2 after rate increases in June.
• Management targets PAT of 80%+ for the full year. PAT was 155 crore in Q1. The guarantee commission expense of 80-100 crore is now factored into cost base.
• Cost-to-income ratio currently at ~66.7%. With nominal expense growth (only 10 crore increase Q4 to Q1) and ~20% asset growth, management expects ratio to reduce to 63-65% range during the year.
• Credit line on UPI has been tested for over a quarter and will go public in Q2. This is designed as a mass-scale product for small-ticket needs like consumer durables, education loans, and emergency medical expenses.

Risks flagged

• Analyst asked about potential impact of Iran war and El Nino conditions on the portfolio. Management stated no material impact seen but acknowledged close monitoring of MFI portfolio (27% of book) with early warning indicators and stress testing. Collections as of July 15 are tracking well.
• Microfinance growth turned negative in Q1 due to shift toward direct sourcing over DSA channels. Management expects recovery in Q2 but acknowledged this is a work in progress. The transition could impact near-term disbursement velocity if execution falters.
• Overall deposits remained flat in Q1 due to 6% decline in bulk deposits. CASA grew 7.1% QoQ but total deposit growth lagged. April-May liquidity tightness required deposit rate increases in June. Achieving 20-25% deposit growth target for FY27 depends on successful retail deposit mobilization and government account recovery.
• Jana Holding and Jana Capital (promoters, holding 16.9% stake) faced technical default after NCD holders sought 6-month extension to sell shares. Management clarified no cross-default linkages exist and RBI took no action on bank rating. However, the TVS Motors 4.99% stake sale is pending RBI approval for the next tranche of capital.

Key quotes

• It kind of cemented quarter 4 because quarter 4 was a really... MFI is behind us. We have a very strong secured book and first time we saw the PAT really come through. This is second quarter following that and it's a very important quarter from that perspective and being the first quarter of the year where things get a bit difficult that this is ending like this gives us great confidence.
• The big change has already happened which is the unsecured book is no more a problem. Secured book is never a problem. So as long as we just keep our head down and execute, you'll absolutely be fine.
• We will claim 65 crores in Q3 itself... Our NNPA is 214 cr against which the covered portion which is the guaranteed portion is 196 cr. So which leads to uncovered portion of only 18 cr. So we are mostly covered in terms of either we have provided or it is covered.
• We are seeing stable because of our focus even on bulk wherever we have bulk is one year and above. Our retail continues to 1 year plus. We have some work to do here because we would like to continue to maintain our 23-24% year-on-year growth in the total liability franchise.