Dar Credit and Capital Q4 FY26 Concall Decoded: Gross NPA at 1.01%, Yet AUM Grew 35%

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1. Opening Hook

The quarter was operationally sound: revenue hit ₹14.23 crore, up 39.6% year-on-year; profit after tax landed at ₹3.07 crore, up 60.7%. The full year showed income of ₹50.05 crore (20.9% growth), EBITDA of ₹34.69 crore (18.6% growth), and PAT of ₹10.13 crore (43.9% growth). Management called it “transformational.” Assets under management stood at ₹229.55 crore—a 35% jump. The GNPA sat at 1.01%, which management presented as “very healthy.” Across 35 branches in 6 states, the company served 22,500 active customers. The story: a small NBFC growing its book while keeping credit cost exceptionally low.

2. At a Glance

• Total Income (FY26) – ₹50.05 Cr, +20.9% YoY; Q4 alone ₹14.23 Cr, +39.6% YoY.
• PAT (FY26) – ₹10.13 Cr, +43.9% YoY; Q4 showed ₹3.07 Cr, +60.7% YoY.
• EBITDA (FY26) – ₹34.69 Cr, +18.6% YoY; margin expanded to 27% in Q4 from 17% a year prior.
• AUM – ₹229.55 Cr, +35% YoY. Management guidance for FY27: ₹260–275 Cr (+13.2% to +19.8% implied).
• GNPA – Hovered at 1.01%. The company maintains 100% provisions for unsecured loan NPAs.
• Capital Adequacy – 40%, “significantly above regulatory requirements.”
• Portfolio Mix – Municipal personal loans (35%), secured MSME (30%), unsecured MSME (35%). Targeted FY27 shape: personal 30–35%, secured 35–40%, unsecured remainder.
• Cost of Funds – Currently operating at ₹14%; management eyes anything below that level.
• Branch Network – 35 branches across 6 states (West Bengal, Bihar, Jharkhand, Rajasthan, Odisha, Punjab). Plan: 5–7 additional branches in FY27, same states only.

3. Management’s Key Commentary

On Transformational Growth and Discipline:

“FY ’26 has been a transformational and milestone year for DCCL… marked by strong business growth, healthy profitability expansion, strengthening of our balance sheet and continued progress in building a scalable and technology-driven lending franchise.”

(Translation: The numbers moved. The label “transformational” remains doing the heavy lifting—20.9% income growth and 43.9% PAT growth are solid, though “transformational” usually connotes something more seismic. The emphasis on tech and scale is real; the drama is marketing.)

On Secured Lending as Strategy:

“Our primary focus will be in the secured loan portfolio, secured MSME portfolio… the loan is backed by the security, the collection percentage and the recovery percentage is very high.”

(Translation: Unsecured loans blow up faster and carry deeper stress. The pivot to secured is defensive repackaged as strategic conviction.)

On Municipal Employee Loans:

“These loans are particularly required a long-term tenures… these borrowers deposit faith on us… So, we have to keep their EMI at a very low level… there is not too much steady growth can be expected on this product.”

(Translation: The product is moat-like but mature. Growth here is a tortoise; MSME is the hare.)

On Cost of Funds and Sustainability:

“We are the players which we do not trust in the leaps and bounds growth. We want a sustainable growth… we grow very, very sustainably… we will grow in a very, very smooth manner without going very, very fast.”

(Translation: We are not chasing scale aggressively. At a 1.01% NPA, the caution is justified; at ₹229 Cr AUM, it is also convenient.)

On In-House Tech and No AI Vendors:

“No AI or any other third-party sources. All the data are transferred to our software which is a very in-house one… we have an in-house team for our data management and data source.”

(Translation: No reliance on third-party AI vendors; everything custom-built. The risk: tech debt and slower iteration. The upside: no vendor lock-in.)

On Government Credit Guarantee Schemes:

“These credit lines, which the government has launched recently, are not applicable to us… But indirectly, as for the industry-wise or for the borrower-wise, it will be the most profitable, because ultimately, the demand will be created in the market.”

(Translation: The scheme targets microfinance, not MSME lending. Still, spillover liquidity in the market helps. The answer is optimistic without committing to impact.)

On Portfolio Mix Guidance:

“Personal loan will be at this par length only. It will be around 30% to 35%. And secured will be around 35% to 40%. And remaining will be the unsecured.”

(Translation: The intended shape is deliberate; execution risk remains.)

4. Numbers Decoded

Key Observations:

• Margin Expansion: Financing margin (interest minus funding costs,