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Aditya Vision Ltd

| Q3 FY26 Earnings Conference Call

BULLISH SENTIMENT

Report Source

⬤2nd Feb 26

Summary : Manba Finance delivered strong Q3 FY26 results with robust AUM growth, stable asset quality, and strategic initiatives in new products and partnerships, despite some EV three-wheeler collection issues.

Management Perspective positive : Management consistently expressed confidence in growth, asset quality, and strategic initiatives, using phrases like 'strength and resilience,' 'healthy growth,' and 'constantly growing company.'

Concall Report Analysis & Insights

Business Overview

  1. Manba Finance is an NBFC offering diverse financial solutions, primarily two-wheeler and three-wheeler loans.
  2. Reported Q3 FY26 AUM of Rs. 1,631 crores (25% YoY growth) and PAT of Rs. 13 crores.
  3. Achieved record Q3 disbursement of Rs. 347 crores, driven by festive demand and network expansion.
  4. Maintained strong asset quality with Gross NPA at 3.38% and Net NPA at 2.57%.
  5. Secured over 95% of its portfolio, with two-wheelers comprising 85.91% of the product mix.

Future Growth Prospects

  1. Targeting 25%-30% year-on-year growth, aiming for Rs. 1,700-1,750 crores AUM by FY26 end.
  2. Launching a new MSME LAP product in February, starting in Mumbai and Pune.
  3. Expanding deeper into existing high-growth states like Uttar Pradesh and Madhya Pradesh.
  4. Strategic MoU with TVS Motor Company to enhance three-wheeler financing reach and disbursement.
  5. Planning equity fundraising in Q2/Q3 next year to support continued growth.

Management Insights

  1. Q3 performance reflects a strong and resilient business model with healthy growth and stable asset quality.
  2. Confident in delivering sustainable and profitable growth, supported by disciplined risk management.
  3. Borrowing costs are decreasing, which is expected to drive NIM expansion going forward.
  4. Strategic focus on NCDs aims to diversify funding sources and increase exposure to retail investors.
  5. Will maintain capital adequacy ratio around 4-4.25x leverage before raising new capital.

Signs of Skepticism

  1. Initial confusion regarding analyst's question about rising borrowing costs versus stable yields.
  2. Detailed explanation needed for why finance costs increased despite a quarter-on-quarter reduction in borrowing.
  3. Management acknowledged PCR is below industry average but stated it is gradually increasing.

Risk Factors

  1. Collection issues observed in EV three-wheeler passenger vehicles after one year.
  2. Intense competition in the used four-wheeler segment makes growth challenging without co-lending partners.
  3. Market conditions for equity fundraising are currently unfavorable, potentially delaying capital raise.
  4. Potential for higher OPEX to AUM ratio with new location additions and employee hiring.

Good To Know

  1. Secured funding from 3 public sector banks, 10 private sector banks, and 23 NBFCs.
  2. Credit profile is strong, supported by CARE BBB+ (positive outlook) and ACUITE A- ratings.
  3. Company policy is to maintain 25%-30% of total borrowing through fixed-cost PTC transactions.
  4. Average cost of borrowing is 10.12%, with NCDs at 10.65% and term loans around 11%.

Key Drivers

  1. Strategic MoU with TVS Motor.
  2. Launch of new MSME LAP product.
  3. Declining borrowing costs improving NIM.
  4. Deepening presence in high-growth states.

Key Analyst Discussions

Competitive Environment

  1. Questions about competition in the used two-wheeler market, identifying key players.
  2. Inquiries about the competitive environment for used four-wheeler financing.
  3. Discussion on the company's stance on entering the commercial vehicle financing segment.

Market Trends & Consumer Behavior

  1. Questions about the impact of festive demand on disbursements.
  2. Inquiries regarding the market scenario for future equity fundraising.
  3. Discussion on the current share of EV loans and their asset quality compared to ICE vehicles.

Financial Highlights

  1. Questions on borrowing costs, NIM outlook, and current NPA levels.
  2. Inquiries about the discrepancy in finance cost increase despite reduced borrowing.
  3. Questions regarding the incremental cost of borrowing and expectations for future decreases.
  4. Discussion on why profit growth lagged net interest income and total income growth.

Product Composition

  1. Questions on the evolving mix between new and used vehicle loans.
  2. Inquiries about the launch of the MSME LAP product, its target yield, and initial states.
  3. Discussion on the strategic focus on used two-wheelers to improve average yield.

Strategic Considerations

  1. Questions about the strategy for geographic expansion: deeper penetration versus new states.
  2. Inquiries into the capital deployment plan and target leverage ratio.
  3. Discussion on the contribution of business corresponding partnerships to profitability.
  4. Questions regarding the disbursement potential and product mix impact of the TVS Motor MoU.