Fedbank Financial Services Ltd: ₹14,220 Cr AUM, 665 Branches – And a Borrowing Habit That’d Make Your Credit Card Blush

1. At a Glance

Fedfina, Federal Bank’s retail-focused NBFC child, runs a neat three-item menu: mortgage loans, gold loans, and secured business loans. It has one of the lowest borrowing costs in its peer set (9%) but still rocks a debt-to-equity of 4.1. Sales up 23.5% in FY25, PAT up 6.8% last quarter, but ROE is stuck under 10%. Share price has sprinted ~50% in the last 6 months — clearly the market loves a leveraged charmer.

2. Introduction

In a country where gold is religion, property is obsession, and small business owners live on loan rollovers, Fedfina has found its sweet spot. Backed by Federal Bank (61% promoter holding), it lends money mostly against things it can seize if you ghost them — gold chains, family homes, or shop premises.

Its selling point? Cost of funds that’s almost as low as the smile on a PSU banker’s face. Yet, it’s not exactly a profit monster — ROA is just 1.85%, and cost-to-income ratio sits at 58.6%, meaning for every ₹100 it earns, ₹59 is eaten by expenses before taxman even enters the chat.

3. Business Model (WTF Do They Even Do?)

Core Lending Segments (Q2 FY25 AUM mix):

• Mortgage Loans (50.5% of AUM): ₹7,175 Cr, avg ticket ₹31.7 lakh, yield 13.3%.
• Gold Loans (34.7% of AUM): ₹4,934 Cr, avg ticket ₹1.2 lakh, yield 15.8%.
• Business Loans (13.6% of AUM): ₹1,932 Cr, avg ticket ₹23.4 lakh, yield 16.9%.

Geography:
665 branches across 18 states/UTs, South India dominant (44.2% of AUM), then West (34.6%), North (21.2%).

Their edge? Secured lending with 86.4% AUM backed by collateral. Their weakness? Low interest coverage (1.36) — that’s like having rent just ₹500 less than your monthly salary.

4. Financials Overview

*Here “EBITDA” = financing profit before other income & depreciation for NBFC context.

P/E = 135 ÷ 6.17 =