1. Opening Hook
Just when the microfinance cycle decided to test everyone’s patience, ESAF decided to change the syllabus mid-exam. While peers are still arguing about recoveries, ESAF calmly pivoted to gold, mortgages, and anything that shines or has collateral.
Management sounds confident, almost suspiciously so, talking about “derisking” like it’s a lifestyle choice. GNPA is high, but hope is higher. CASA is rising, micro stress is “bottoming out,” and ROA positivity is now apparently a quarterly event waiting to happen.
The call felt like a mix of confession, optimism, and subtle chest-thumping about secured loans. Read on—because the real story hides behind gold yields, Tamil Nadu stress, and a very ambitious turnaround timeline.
2. At a Glance
- Advances up 4% YoY – Growth took a chai break, not a vacation.
- Deposits up 6% YoY – Retail money stayed loyal, unlike fickle markets.
- CASA at 26.4% (+180 bps) – Small finance, big savings energy.
- Disbursements up 119% YoY – Gold loans clearly had a great quarter.
- GNPA at 8.5% – Asset quality still sweating, despite yoga and discipline.
- Secured loans at 61% – Microfinance officially demoted from main hero role.
3. Management’s Key Commentary
“Financial inclusion remains the cornerstone of our purpose.”
(Translation: We still love microfinance, just not blindly anymore 😏)
“Secured assets now constitute 61% of our gross advances.”
(Translation: Collateral is the new comfort blanket.)
“We are on track to reach 70% secured by March 2027.”
(Translation: Microfinance will behave, whether it likes it or not.)
“Gold loans have more than doubled YoY.”
(Translation: When in doubt, lend against jewellery.)
“We expect positive quarterly ROA in FY26.”
(Translation: Losses are on notice, profits warming up.)
“Provision coverage has improved to 74.4%.”
(Translation: We brought extra umbrellas for the storm ☔)
“Tamil Nadu remains an area of cautious progress.”
(Translation: Still scary, still watching closely.)
4. Numbers Decoded
Metric | Q2 FY26 | What It Really Means
---------------------------|------------------|-----------------------
Total Business | ₹42,031 Cr | Scale improving, slowly
Gross Advances | ₹19,137 Cr | Growth with handbrake
Deposits | ₹22,894 Cr | Liability engine stable
CASA Ratio | 26.4% | Cost relief incoming
GNPA / NNPA | 8.5% / 3.8% | Stress visible, capped
NIM | 5.9% | Secured mix doing its thing
Disbursements | ₹8,913 Cr | Gold loans stole the show
Margins softened, but opex and funding costs are lining up to compensate—eventually.
5. Analyst
