Earnings Call Transcript for Q1 FY 2026-27

Registered Office: 502-503, SAKAR III, OPP. OLD HIGH COURT, OFF ASHRAM ROAD, AHMEDABAD-380014, GUJARAT, INDIA PH.: +91-79-40507000, 27541989 E-mail: finance@armanindia.com CIN: L55910GJ1992PLC018623 August 20, 2026 To, To, BSE Limited National Stock Exchange of India Limited P. J. Tower, “Exchange Plaza” C-1, Block G, Dalal Street, Bandra Kurla Complex, Mumbai–400001 Bandra, Mumbai- 400051 Script Code: 531179 Symbol: ARMANFIN ISIN: INE109C01017 Series: EQ Dear Sir, Subject: Transcript of Conference call with Analysts / Investors on Financial Results for the quarter ended June 30, 2026. In continuation of our letter dated August 07, 2026 and pursuant to Regulation 30(6) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, we hereby submit the transcript of the Conference Call with Analysts/Investors held on Thursday, August 13, 2026 in respect of the Financial Results of the Company for the quarter ended June 30, 2026. Kindly take it on your record. Thanking you, Yours faithfully, For, Arman Financial Services Limited Uttam Patel Company Secretary & Chief Compliance Officer “Arman Financial Services Limited Q1 FY27 Earnings Conference Call” August 13, 2026 “E&OE - This transcript is edited for factual errors. In case of discrepancy, the audio recordings uploaded on the stock exchange on 13th August 2026 will prevail.” MANAGEMENT: MR. AALOK PATEL – VICE CHAIRMAN AND MANAGING DIRECTOR – ARMAN FINANCIAL SERVICES LIMITED MR. VIVEK MODI – EXECUTIVE DIRECTOR AND GROUP CHIEF FINANCIAL OFFICER – ARMAN FINANCIAL SERVICES LIMITED MODERATOR: MR. SHREEPAL DOSHI – EQUIRUS SECURITIES Page 1 of 16 Arman Financial Services Limited August 13, 2026 Moderator: Ladies and gentlemen, good day, and welcome to the Q1 FY27 Earnings Call of Arman Financial Services, hosted by Equirus Securities. As a reminder, all participant lines will be in the listen- only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchtone phone. I now hand the conference over to Mr. Shreepal Doshi from Equirus Securities. Thank you, and over to you, sir. Shreepal Doshi: Thank you, Sumit. Good evening, everyone. I welcome you all to the earnings conference call of Arman Financial Services to discuss the Q1 FY27 financial performance and business update. Today, we have Mr. Aalok Patel, Vice Chairman and Managing Director; Mr. Vivek Modi, Executive Director and Group CFO. I will now hand over the call to Mr. Aalok Patel for his opening remarks, post which we can open the forum for question-and-answer. Over to you, sir. Aalok Patel: Yes. Thank you, Shreepal, and a very good afternoon to everybody, and thanks to everyone for joining us today for the Arman Financial Services Q1 FY27 Earnings Conference Call. As Shreepal mentioned, I'm joined on the call by Mr. Vivek Modi, our ED and Group CFO, along with the Investor Relations team. I hope all of you have had an opportunity to review our financial results, the investor presentation and also the press release. So let me start first with the operating environment. So Q1 of FY27 has been an encouraging start to the year and more importantly, the improvement that we started seeing during the second half of FY26 has continued into this quarter. Collection trends have remained stable, fresh delinquencies have moderated and borrower behavior has continued to improve across most of our operating geographies. That said, I would still hesitate to say that the sector has completely normalized. We are clearly operating from a much stronger footing than we were a year ago, but there continues to be uncertainties in the broader economy, and we remain watchful. Volumes have been a bit lower than expected in Q1, but that is not unusual in the first quarter of the fiscal year, particularly given our continued emphasis on quality over quantity. I made a point on our previous call, which I think continues to remain relevant. The improvement that we are seeing should not necessarily be interpreted to mean that the ground level environment has suddenly become easy. A meaningful part of the improvement is because we are selecting better, monitoring better and also collecting better. That is obviously encouraging, but the macroeconomic environment continues to remain complicated. For us, the important thing is not to conclude that the cycle is behind us and simply go back to business as usual. At the same time, let me also say that cycles come and go, and they are part of the business that we have chosen. The important thing is to learn, monitor, adapt and to move forward. Page 2 of 16 Arman Financial Services Limited August 13, 2026 Against this backdrop, I am pleased to share that our consolidated AUM reached a record high of INR2,925 crores as of June '26, representing a growth of 36% year-on-year. Consolidated disbursements during the quarter were INR686 crores, up 76% year-on-year and represented our highest ever first quarter disbursements. Despite the strong AUM, I want to make it clear that it does not represent a change in our risk posture. Our rejection rates continue to remain relatively high, and we are comfortable with that. We continue to see healthy traction in our individual loan portfolio, which now accounts for 33% of our overall book and is becoming an increasingly important part of our microfinance business. The objective here is not simply to increase ticket size or move away from traditional JLG-based group lending. The objective is to move progressively towards more individualized credit assessment where we understand the customers' household cash flow, credit behavior and repayment capacity more closely and structure the loan accordingly. As this portfolio scales, the underwriting architecture becomes even more important. Wherever applicable, we are increasingly relying on, of course, credit history and bureau behavior, but also customer level cash flow assessment and digital repayment mechanisms such as UPI mandates and e-NACH. We believe that gives us a much better understanding of the individual borrower than relying purely on group behaviors or standardized one-size-fits-all credit filters. Overall collection efficiency for Q1 stood at 96.6%, and we saw a steady improvement throughout the quarter. By June, overall collection efficiency had improved further, which gives us comfort on the behavior of the more recently originated portfolio. Our asset quality has continued to improve over the past four quarters with consolidated GNPA now at 2.76% and NNPA improving to 0.84%. Early-stage delinquencies have also remained largely stable at approximately 99.5% zero DPD flow forwards. One of the biggest changes that we have made over the last few quarters have been to bring greater independence and accountability into our credit and collection processes. We have strengthened the credit function at the point of origination and separately built dedicated collection teams. This has helped us become more disciplined in borrower selection and bring greater focus to collections. When we introduced these changes, they came with a meaningful increase in operating cost. We had said at the time that the asset quality had to take priority over near-term operating expenses. I think we are now beginning to see the other side of that investment. The new structure is now pretty well embedded across the organization, and we are seeing better accountability, sharper credit decisions and more focused collection execution. At the same time, as the portfolio has started growing again, our operating cost ratios are beginning to improve as well. Apart from improving asset quality, the independent credit structure has also given us greater confidence to scale the individual loan portfolios. Our consolidated pre-provisioning operating profit increased to INR77 crores during the quarter [Showing first 8,000 characters — download PDF for full document]