Hero FinCorp Q3FY26: Losses Deepen Amid Elevated Credit Costs

10 February 2026

• Financial Performance (Q3FY26 vs Q3FY25): ​In Q3FY26, Hero FinCorp reported a YoY decline in total income, driven by pressure on interest income. Total income stood at ₹2,160.05 Cr, compared with ₹2,306.4 Cr in Q3FY25, reflecting moderation in lending yields amid a tight interest rate environment. Interest income declined to ₹1,837.6 Cr, while total revenue from operations was largely in line with total income during the quarter. Operating performance weakened significantly, with Profit Before Tax (PBT) widening to a loss of ₹103 Cr, compared with a loss of ₹11.9 Cr in Q3FY25. The deterioration was primarily driven by higher impairment on financial instruments, which increased sharply to ₹604.5 Cr, alongside elevated finance costs of ₹807.01 Cr. After tax, the company reported a Net Loss of ₹121.7 Cr, versus a Net Loss of ₹32.4 Cr in Q3FY25. Consequently, Earnings Per Share (EPS) declined further to ₹(9.4) from ₹(2.55) in the corresponding quarter last year. For 9MFY26, total income stood at ₹6,634.13 Cr, marginally lower on a YoY basis, while Net Loss widened to ₹284.2 Cr, compared with a profit of ₹33.6 Cr in 9MFY25, underscoring sustained profitability pressure through the fiscal year.
• Operational Metrics (Q3FY26 vs Q3FY25): ​Profitability metrics remained under stress, with net profit margin at -8.0%, reflecting sustained pressure from credit costs and funding expenses. Asset quality weakened further, with Gross NPA (GNPA) rising to 5.89% (vs 4.98% YoY) and Net NPA (NNPA) increasing to 2.67% (vs 2.36% YoY), largely driven by stress in the MSME and unsecured personal loan segments. On a positive note, the Provision Coverage Ratio (PCR) improved to 58.42%, up from 54.61% YoY, strengthening loss absorption capacity. The company maintained a comfortable capital position, with CRAR at 17.29% (vs 16.54% YoY), while Liquidity Coverage Ratio (LCR) improved sharply to 153.8%, indicating strong liquidity buffers. Leverage remained stable, with total debt to total assets at ~86.7%, while Net Worth increased to ₹5,812.4 Cr, supported by retained capital and improved provisioning buffers.
  
• Strategic Developments: During 9MFY26, Hero FinCorp continued active balance-sheet churn, acquiring selective loan pools while transferring stressed accounts to improve portfolio quality. The company also raised ₹500 Cr through NCD issuances during Q3FY26, with proceeds fully utilized as per stated objectives, supporting liquidity and refinancing needs. Q3FY26 remained a challenging quarter, with losses deepening due to elevated impairments and high finance costs amid persistent asset quality stress. However, strong capital adequacy (17.3%), improving liquidity coverage, and a rising provision buffer provide downside protection. While near-term profitability remains under pressure, the declining resolution book, expected IPO-related capital infusion, and potential CCPS reclassification into equity are likely to support balance-sheet strength and moderate leverage over the medium term.