01 — At a Glance
The NBFC That Lost Its Way. Then Started Climbing.
- CMP₹198
- Book Value Per Share₹247
- P/B Ratio0.83x
- Q3 Revenue (₹ Mn)346.39
- Q3 PAT (₹ Mn)8.30
- AUM (Total Portfolio)₹7,692 Cr
- Q3 Disbursements₹1,117 Cr
- Gross NPA4.06%
- Net NPA1.76%
- Debt / Equity1.43x
The Auditor’s Hot Take: Indostar Capital reported ₹8.3 crore PAT in Q3 FY26 (vs ₹10.5 Cr in Q2). Revenue ₹346 million. ROCE of 6.79% — lower than a government savings account. Stock down 34% in one year. Yet every metric that matters for a turnaround is improving. Profitability is *supposed* to be temporary pain. The question: is management walking the walk, or just talking the turnaround?
02 — Introduction
Who Is Indostar, And Why Is It Still Here?
Founded in 2009, incorporated as a systemically important NBFC in 2016, Indostar Capital Finance is basically the “second chances NBFC.” Brookfield (global alternative asset manager, NYSE listed, $750bn+ AUM) bought in with 56% stake in 2020. The company focused on SMEs, housing finance, and wholesale lending for a decade. Then housing crashed. SME portfolio went sour. Wholesale book became a graveyard. By 2023-24, the stock had tanked 60%. The auditor was seeing red.
Management’s response: “We are exiting everything that’s broken and pivoting to used commercial vehicle financing.” Used CVs are unsexy, repetitive, lower-margin work. But they have unit economics. And they scale. Management started tightening credit from Q1 FY26, admitted it would hurt volumes short-term, and promised that by Q3, you’d see the benefits.
Q3 arrives, and lo and behold — disbursements jump 20% QoQ to ₹1,117 crore. Non-starter rates (early delinquencies on new loans) fell from 5.2% to 2.08%. CIBIL mix improved from 82% to 89%. Legacy book still bleeding (Gross NPA 4.06%), but trends are reversing. The stock hasn’t rallied. But every single thing management said would happen, happened.
The question isn’t whether Indostar is profitable. It’s whether it’s becoming *competent*. Let’s find out.
Concall Quote (Feb 2026): “Delinquency levels in the calendar year 2025 cohort are nearly 50% lower than earlier cohorts (like-for-like).” Management presented data showing non-starter improvement from 5.2% to 2.08%. This is the kind of specificity that gets auditors to listen.
03 — Business Model: What the Hell Do They Do?
Lending To CV Operators. In Rural India. At 17% Yields.
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