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1. At a Glance
The quarter ends with Arman stuck between a recovery narrative and a profitability problem. AUM hit ₹2,728 Cr, up 21.5% year-on-year, and Q4 PAT reached ₹41 Cr—respectable on its surface—but full-year profit sat at ₹56.6 Cr, down 8.7% from ₹62 Cr in FY25.
The real tension: credit costs boiled down to ₹148 Cr for the year (from ₹264 Cr), management claims collections improved, and GNPA fell to 3.43%, yet earnings remain pinched. ROE is 6.26% across the trailing year.
The business is growing, the company is not in distress, but the returns are thin and the path to 4-5% post-tax ROA that management promises remains heavily mortgaged to asset quality staying put.
Does a 3.43% GNPA and ongoing write-offs represent a base-case for earnings, or just a temporary reprieve before the next shoe drops?
2. Introduction
Arman Financial was founded in 1992 by Jayendra Patel as a lending shop in Gujarat. Over 34 years, it built a network—microfinance through its subsidiary Namra Finance, MSME loans, two-wheeler financing, and latterly, loans against property and solar loans.
Listed on BSE in 1995, it floated on NSE in 2016. The company sits in a peculiar position: it is a category-A NBFC with ₹2,728 Cr on the books, operating across 529 branches in 11 states, serving ~6.3 lakh active customers.
In February 2026, Jayendra Patel stepped back from MD to become Whole-Time Director; Aalok Patel, his son, was elevated to Vice Chairman & MD (shareholder approval given April 2026). Vivek Modi, the CFO, was elevated to Executive Director. The transition was framed as “smooth,” though transitions in family businesses never read that way to the market.
The credit environment was punishing through much of FY25 and into early FY26—rural income stress, MFI collection chaos, regulatory uncertainties. Acuité downgraded the company in September 2025 from A | Stable to A- | Stable. By January 2026, they flipped the outlook to Negative, then (four months later) back to Stable. The volatility is the message.
3. Business Model: WTF Do They Even Do?
Arman holds five loan products, each a different risk-return texture:
Microfinance (47.1% of AUM, ₹1,286 Cr): Women’s JLG loans under ₹54k-₹75k. Run through subsidiary Namra Finance across 404 branches. Income-generating activities—livestock, dairy, kirana stores, agriculture. Yield 22.72%, NIM 13.68%, GNPA 3.4%. The soul of the original business, though it blew up in FY25.
Individual Business Loans (26.1%, ₹712 Cr): Still MFI but unsecured, individuals not groups. Avg ticket ₹98k. Yield dropping as portfolio seasons.
MSME Loans (20.3%, ₹554 Cr): Enterprise and working-capital loans for small rural businesses. ₹81k avg ticket. Yield 33.58%, GNPA 3.84%—the highest-return product and getting focus.
Loan Against Property (2.9%, ₹80 Cr): Launched Q4 FY24, avg ticket ₹5.4 lakh, 36–84 months. GNPA 0.74%. Scaled from ₹28 Cr last year. The company calls it strategic.
Solar Loans (0.08%, ₹2 Cr): Pilot since Nov 2025, ₹1.8 lakh avg, government subsidy angle. Disbursed ₹56 lakh in two months; target ₹1 Cr/month by March.
The pitch: diversification. The reality: still ₹1.3 Cr in JLG alone. The company is neither a secured-lending franchise nor a genuine MSME lender yet—it is in between, which means it pays the cost of both operational models while the yield of neither.
4. Financials Overview
Figures are consolidated, in ₹ crore.
Metric
Q4 FY26
Q4 FY25
YoY
Q3 FY26
QoQ
Revenue
175.6
199.4
-12%
160.1
+10%
EBITDA
122.8
147.6
-17%
109.3
+12%
PAT
41.0
12.8
+221%
22.2
+85%
EPS (annualised)
₹39.01
₹12.16
–
₹21.10
–
Full Year FY26:
Revenue sat at ₹645.9 Cr (down 12% from ₹730 Cr). EBITDA fell to ₹440.4 Cr (down 10%). PAT came in at ₹56.6 Cr (down 8.7% from ₹62.1 Cr). Full-year EPS: ₹53.85. The company annualised Q4 earnings because Q4 is the full fiscal year close (March).
Concall colour (Feb 2026):
Management credited tighter underwriting, separated recovery teams, Branch Compliance Monitoring in MFI achieving “~50% lower default rates on BCM loans vs non-BCM” in one anecdote. Gross credit costs dropped sharply—₹264 Cr in FY25 to ₹148 Cr in FY26 (write-offs accelerated, provisions restructured). Impairment costs in Q3 FY26 fell to ₹26 Cr from ₹76 Cr in Q3 FY25.
The subtext: profitability is hostage to credit. When provisions fall, earnings jump. When they rise, the floor opens.
5. Valuation Discussion: Fair Value Range (Educational Only)
What follows is a walkthrough of how three valuation methods work, using this company’s numbers as the example—not a target, not a forecast, not advice.
Method 1 (P/E multiple): Annualised EPS from Q4 FY26 is ₹39.01. The peer median P/E (from Screener data) is ~21x. At the 12-month peer
