Arohan Financial Reports Weak FY25 Performance
- Financial Performance (FY25 vs FY24): Arohan Financial Services reported a total revenue of ₹1,695 Cr in FY25, reflecting a modest 3.7% year-on-year (YoY) growth from ₹1,635 Cr in FY24. The growth was primarily supported by an 11.6% increase in interest income, which rose to ₹1,582 Cr from ₹1,418 Cr. However, overall revenue expansion was tempered by a sharp 42.8% decline in fee and commission income, which fell to ₹97 Cr from ₹169 Cr, alongside a 71.7% drop in income from derecognition of financial instruments, which decreased to ₹12 Cr. Total expenses surged 27.3% YoY to ₹1,557 Cr, up from ₹1,222 Cr in the previous year, largely driven by a 122.5% increase in impairment on financial instruments, which rose to ₹398 Cr from ₹179 Cr. Finance costs also climbed to ₹632 Cr from ₹592 Cr. As a result, Profit Before Tax (PBT) declined sharply by 66.5% YoY to ₹138 Cr, compared to ₹412 Cr in FY24. Profit After Tax (PAT) dropped 65.1% YoY to ₹110 Cr, down from ₹314 Cr in the prior year. Correspondingly, Earnings Per Share (EPS) also fell significantly to ₹10.0 (basic) from ₹26.6 in FY24.
- Operational Metrics & Key Ratios (FY25 vs FY24): Arohan Financial Services saw a decline in profitability, with the Net Profit Margin falling to 6.5% in FY25 from 19.2% in FY24. Asset quality weakened during the year — Gross NPA increased to 2.77% from 1.67%, and Net NPA rose to 0.47%, compared to almost zero last year. However, the company improved its risk coverage, with the Provision Coverage Ratio (PCR) rising to 83.42%, showing a good buffer for possible loan losses. The Capital Adequacy Ratio (CAR) remained strong at 34.09%, reflecting a healthy capital position. The loan book declined by 13.8% year-on-year, from ₹6,616 Cr in FY24 to ₹5,705 Cr in FY25, mainly due to the impact of earlier regulatory restrictions.
- Growth Outlook: Arohan Financial Services faces challenges in the near term due to declining profitability, rising NPAs, and a shrinking loan book. The sharp fall in fee income and higher impairment costs have impacted earnings. However, the strong capital base (CAR of 34.09%) and high provision coverage (PCR of 83.42%) provide a cushion for recovery. With regulatory restrictions now lifted, the company can focus on rebuilding its loan portfolio. Going forward, growth will depend on improving asset quality, controlling costs, and restoring customer confidence.
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