01 — At a Glance
Fedbank: The NBFC That Sold Its Business Loan Book and Found Gold
- 52-Week High / Low₹178 / ₹80
- Q3 FY26 Revenue₹555 Cr
- Q3 FY26 PAT₹88 Cr
- Q3 EPS₹2.35
- Annualised EPS (Q3×4)₹9.40
- Book Value₹72.4
- Price to Book1.81x
- Debt / Equity3.83x
- ROE (3-Yr Avg)12.1%
- Fed Bank Holding60.8%
The Setup: Fedbank Financial (Federal Bank’s NBFC arm) spent FY25 like a person trying to quit smoking—painful, messy, and you weren’t sure if they’d succeed. Q3 FY26 shows something that looks almost like stability. AUM hit ₹17,500 crore. Gold loans (45% of portfolio) are scaling at 52% YoY. PAT margin at 16% despite previous chaos. The promoter (Federal Bank) still owns 60.8%, so essentially this is a bank’s sub-scale credit arm learning to walk again. The walk-through shows improvement. Whether it’s a limp or a stride depends on which numbers you squint at.
02 — Introduction
From “Please Don’t Collapse” to “Maybe We Have a Strategy”
Once upon a time—last fiscal year, actually—Fedbank Financial was the textbook case of “what happens when you lend to everyone, realize half your borrowers are lying, then panic.” FY25 saw credit costs spike to 1.8% of average managed assets. Asset quality metrics went sideways. The management, at that point, was basically playing corporate triage—cut off the gangrene, stabilize the wound, hope the patient doesn’t die before the ICU clears up.
Enter FY26. New strategy: “Forget unsecured loans. Gold and LAP only. Very secured. Very boring. Very good.” By Q3, they’ve unloaded their entire ₹976 crore unsecured business loan book via 100% assignment/derecognition. Tamil Nadu (their mess state) is recovering. Collections teams are being in-housed instead of outsourced. And gold loans? Gold loans are scaling like a Bajaj two-wheeler in rural India—fast, unstoppable, and somehow people still want more.
This article is about a company learning from its mistakes in real-time. Not all learning curves are smooth. But at least this one’s moving upward on the graph again. The concalls from January 2026 tell a story of management that knows exactly where they went wrong and is—hear this carefully—actually fixing it, not just talking about fixing it. Novelty in Indian NBFC-land, frankly.
CEO’s Jan Concall Quote: “We will focus on gold loan growth… unconstrained… we will continue to grow on a faster momentum.” Translation: they’ve figured out what they’re good at and stopped trying to be everyone else’s bank.
03 — Business Model: WTF Do They Even Do?
Lending Money Against Stuff. That’s It. Beautifully, Boringly.
Fedbank is a subsidiary of Federal Bank (60.8% stake). It takes deposits from the parent bank and corporate borrowings, packages the cash into three simple products, and lends to retail customers who either have gold in their locker or a property document. Three products. That’s the business.
Gold Loans (45% of AUM, ₹7,905 crore Q3): Customer brings gold, company values it (70-71% LTV typically), hands cash, keeps the gold. When customer pays back, gets gold back. Customer can’t pay? Company melts it and recovers. It’s idiot-proof. Yields: 18.3%. Average ticket: ₹2.4 lakh. Growth: 52% YoY. Branches: 113 new ones added YTD. This is where the breakout is happening. Gold prices are high (customer advantage, company disadvantage on LTV), but volumes are insane.
Mortgage Loans – LAP (51.9% of AUM, ₹9,084 crore Q3): Split into two buckets. MT-LAP (medium ticket, ₹65 lakh average) and ST-LAP (small ticket, ₹15 lakh average). Both secured by property. MT-LAP: yields 13%, low stress, boring, beautiful. ST-LAP: yields higher, but stress is real—Tamil Nadu had collection issues, older vintages have delinquencies. Newer books performing 100-150 bps better than old ones (management confirmed). Disbursal Q3: ₹753 crore. This segment is rebuilding, not rocketing.
Business Loans (1.6% of AUM, ₹285 crore Q3): Unsecured lending to small business owners. Company stopped disbursing in this segment mid-year. They even sold off ₹976 crore of existing book to an ARC (asset reconstruction company). Effectively, they’ve exited this business. Good riddance.
Gold Loans45.2%of total AUM
Mortgages51.9%of total AUM
Growth YoY+17%AUM ex-divested
Total Branches730Q3 FY26
The Question Nobody’s Asked: If gold prices stay this high, Fedbank’s LTV (loan-to-value) goes down because the same gold is now worth more. Company can lend less. But customer can refinance elsewhere at lower loan amounts and deploy the cash difference. Will this kill growth? Management says they’re “conscious of gold price momentum” but not capitulating on LTV. Watch this space—it’s a silent time bomb if gold drops or stays high for too long.
04 — Financials Overview
Q3 FY26: The Numbers, Without the Drama
Result type: Quarterly Results (Q3 = Oct-Dec 2025) | Q3 EPS: ₹2.35 | Annualised EPS (Q3×4): ₹9.40 | FY26 9M EPS: ₹6.60 (6.01 + 1.92 + 2.35 + 2.14 + 2.01 + 1.89…)
| Metric (₹ Cr) |
Q3 FY26
Dec 2025 |
Q3 FY25
Dec 2024 |
Q2 FY26
Sep 2025 |
YoY % |
QoQ % |
| Revenue | 555 | 530 | 535 | +4.8% | +3.7% |
| Financing Profit | 132 | 36 | 120 | +266% | +10% |
| Financing Margin % | 24% | 7% | 22% | +1700 bps | +200 bps |
| PAT | 88 | 19 | 80 | +363% | +10% |
| EPS (₹) | 2.35 | 0.50 | 2.14 | +370% | +9.8% |
Wait, What Happened in Q3 FY25? See that “19 Cr PAT” in the same quarter last year? That was the quarter where unsecured business loans imploded. Credit cost hit 7% (insane). This year, they made ₹88 crore in the same quarter. The YoY growth looks sci-fi because the base was a disaster. But the actual story—363% profit growth, 266% financing profit growth—shows the cleanup is real. Financing margin expanded from 7% to 24% because they finally stopped lending to moonlighting poets trying to start a restaurant empire.
05 — Valuation: Fair Value Range
What’s This Turnaround Story Worth?
