Arman Financial Services' Profit in FY25 Down by 70%
By Ankur Chandra | Updated at: May 31, 2025 10:41 PM IST
Arman Financial Services Ltd reported a significant decline in profitability for the fiscal year ended March 31, 2025, with consolidated profit after tax (PAT) plunging 70% year-on-year to ₹52 crore from ₹174 crore in FY24. The drop was primarily attributed to higher provisioning and write-offs amidst sectoral stress in microfinance lending.
Key Financial Highlights (Consolidated)
| Metric | FY25 | FY24 | YoY Change |
|---|---|---|---|
| AUM | ₹2,245 Cr | ₹2,639 Cr | -15% |
| Disbursement | ₹1,713 Cr | ₹2,297 Cr | -25% |
| Total Income | ₹730 Cr | ₹661.5 Cr | +10% |
| Profit Before Tax | ₹69 Cr | ₹228 Cr | -70% |
| Profit After Tax | ₹52 Cr | ₹174 Cr | -70% |
| GNPA | 3.37% | 2.9% | – |
| NNPA | 0.55% | 0.3% | – |
| ROAA | 2.13% | 2.9% | – |
| ROE | 6.17% | 8.0% | – |
Despite a 24% rise in net total income (₹491 Cr to ₹730 Cr), the profit erosion stemmed from a nearly four-fold jump in provisions and write-offs, which reached ₹264 crore in FY25, compared to ₹65 crore last year.
Segment-wise Performance
Namra Finance (Microfinance)
Namra Finance, the wholly owned subsidiary offering microfinance services, bore the brunt of asset quality stress:
- AUM fell to ₹1,686 crore, down from ₹2,193 crore
- FY25 PAT declined to ₹7.8 crore from ₹138 crore in FY24
- GNPA stood at 3.36%, while NNPA was at 0.37%
- Return on Average AUM fell to -0.1%, and ROE dropped to -0.2%
The company reported aggressive write-offs of ₹105.56 crore and maintained a provisioning buffer covering 5.23% of consolidated AUM.
Standalone Business
The standalone entity reported stable performance:
- AUM stood at ₹560 crore
- MSME loans formed the bulk (₹454 crore), followed by 2-Wheeler (₹78 crore) and LAP (₹28 crore)
- FY25 PAT rose to ₹43.2 crore from ₹37.9 crore, with pre-provision operating profit at ₹86.9 crore
- GNPA stood at 3.62% for MSME and 0.17% for LAP
Collection & Asset Quality
Collection efficiency for FY25 averaged 95.3%, with MFI at 95.5%, MSME at 95.7%, and 2W at 95.8% in March 2025. However, portfolio at risk (PAR 31–90) rose across segments due to borrower overleveraging and field staff attrition in the industry.
Capital and Liquidity Position
The company maintained strong capitalization:
- Shareholders’ equity at ₹874 crore
- CRAR: 37.34% for Arman standalone; 48.37% for Namra
- Liquidity buffer of ₹268.6 crore as of March 2025
Debt-to-equity ratio remained comfortable at 1.3x on a consolidated basis, supported by a diversified borrowing mix and relationships with over 40 lenders.
Management Commentary
Commenting on the performance, Aalok Patel, Joint Managing Director, stated: “FY25 was a reset year for us, especially in microfinance. We proactively recognized stress, took accelerated write-offs, and fortified our balance sheet. The standalone portfolio remains resilient and positions us well for calibrated growth in MSME and secured segments like LAP.”
Strategic Outlook
Arman aims to pivot toward a more balanced loan mix, targeting a reduction in MFI share to 60% while scaling MSME to 35% of the portfolio. The company plans deeper penetration in Tier 3/4 markets through its LAP product and to strengthen underwriting via digital transformation.
About Arman Financial Services
Arman Financial Services Ltd is a diversified NBFC operating across 11 states. Its wholly owned subsidiary, Namra Finance, offers microfinance loans. Arman also lends in MSME, 2W, and LAP segments.
Dividend History:
The company has not declared any dividend for FY25.
REF:https://nsearchives.nseindia.com/corporate/ARMANFIN_30052025152851_Presentation_Covering.pdf
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