Arohan Financial Q3FY25 Result Update

17 February 2025

• Financial Performance (Q3 FY25 vs Q3 FY24): Arohan Financial Services reported total revenue of ₹402 Cr in Q3 FY25, reflecting a 5.5% YoY decline from ₹425 Cr in Q3 FY24. Though interest income increased to ₹396 Cr from ₹365 Cr last year but, non-interest income, including fees and commission, declined significantly to ₹5 Cr from ₹41 Cr in Q3 FY24. Due to decline in revenue, Profit Before Tax (PBT) also declined sharply by 95.8% YoY to ₹5 Cr from ₹118 Cr in Q3 FY24, mainly due to elevated finance costs and a substantial increase in impairment losses on financial instruments (₹105 Cr vs ₹44 Cr in Q3 FY24). Consequently, Profit After Tax (PAT) also fell significantly to ₹3 Cr, marking a 95.7% YoY decline from ₹81 Cr in Q3 FY24.Earnings Per Share (EPS) for the quarter stood at ₹0.23 (basic and diluted), a steep drop from ₹6.91 in Q3 FY24.
• Nine-Month Performance (9M FY25 vs 9M FY24): For the nine-month period ended December 31, 2024, Arohan Financial posted a total revenue of ₹1,338 Cr, up 12.8% YoY from ₹1,185 Cr in 9M FY24. However, PBT fell significantly by 31.5% YoY to ₹202 Cr from ₹295 Cr in 9M FY24, primarily due to higher impairment losses, which surged to ₹244 Cr compared to ₹139 Cr last year. PAT declined by 27.8% YoY to ₹152 Cr from ₹211 Cr in 9M FY24. The EPS for 9M FY25 stood at ₹9.98, compared to ₹18.02 in 9M FY24.
• Operational Metrics & Key Ratios (Q3 FY25 vs Q3 FY24): Net Profit Margin declined to 0.9%, compared to 19.0% last year, indicating significant profitability challenges. Gross Non-Performing Assets (GNPA) increased to 2.86%, up from 1.44% in Q3 FY24 & Net Non-Performing Assets (NNPA) improved marginally to 0.52%, compared to 0% last year, highlighting asset quality concerns. Provision Coverage Ratio (PCR) strengthened to 82.35%, showing a better buffer against credit losses. Capital Adequacy Ratio (CAR) remained robust at 36.63%, ensuring a strong capital position.
• Growth Outlook: Arohan Financial Services continues to witness revenue growth, but profitability remains under pressure due to rising impairment costs and finance expenses. The increase in NPAs indicates stress in asset quality, though a strong provision coverage ratio reflects proactive risk management. Notably, the Reserve Bank of India (RBI) lifted its lending restrictions on Arohan in January 2025, allowing the company to resume loan disbursals after addressing regulatory concerns. This development is expected to boost loan book growth and revenue recovery in the coming quarters. However, Arohan must focus on rebuilding customer trust, ensuring regulatory compliance, and managing costs effectively to sustain long-term profitability and operational stability.