KLM Axiva Struggles with Margin Pressure in FY25

17 June 2025

• Financial Performance (FY25 vs FY24): KLM Axiva Finvest reported a 7.8% year-on-year increase in total income to ₹341 Cr in FY25 from ₹316 Cr in FY24, driven by an 8.8% growth in interest income to ₹332 Cr. However, other income declined 20.5% YoY to ₹8 Cr. Operating expenses remained elevated, particularly finance costs, which increased by 12.8% to ₹175 Cr. Additionally, impairment on financial instruments saw a sharp spike to ₹5 Cr from just ₹0.4 Cr in FY24, reflecting tighter provisioning standards. As a result, profit before tax (PBT) declined 34.4% YoY to ₹20 Cr, compared to ₹30 Cr in FY24. Net profit dropped 12.3% to ₹20 Cr, down from ₹23. Cr. Earnings per share (EPS) also contracted to ₹0.85 from ₹1.14, mirroring the pressure on bottom-line growth despite higher revenues.
• Operational Metrics (FY25 vs FY24): The company’s net profit margin compressed to 5.9% in FY25 from 7.3% in FY24, largely due to increased interest expenses and provisioning. The operating margin stood at 5.81%. On the asset quality front, Gross NPA (GNPA) rose to 1.99% from 1.6%, and Net NPA (NNPA) increased to 1.12% from 0.66%, signaling a slight deterioration in credit quality. Provisioning coverage improved marginally, indicating some buffer buildup against asset stress. The company’s Capital Adequacy Ratio (CRAR) moderated to 15.8% from 23.6% but continued to remain comfortably above regulatory minimums. Net worth improved to ₹275 Cr from ₹238 Cr, supported by equity infusion and retained earnings. KLM Axiva’s loan portfolio saw a slight decline to ₹1,656 Cr in FY25 from ₹1,660 Cr in FY24, reflecting a cautious and selective lending approach.
• Strategic Developments: FY25 was a year of transition for KLM Axiva. The company was required to restate its FY24 financial statements following a directive from the Reserve Bank of India (RBI), which called for additional provisioning on certain restructured gold loan accounts under the Resolution Framework 2.0. This framework was initially introduced during the COVID-19 period to provide temporary relief to borrowers by allowing lenders to restructure loans. However, RBI later conducted a review and instructed NBFCs to reassess these accounts and strengthen provisioning where necessary. As a result, KLM Axiva revised its FY24 results to reflect the increased provisions. In FY25, the company raised ₹31 Cr through fresh equity capital, which supported its capital base. It also rebalanced its borrowings during the year. Despite some pressure on margins, the company generated positive cash flow from operations of ₹201 Cr—marking a strong recovery from a negative ₹27 Cr in FY24. Going forward, KLM Axiva aims to enhance credit monitoring, strengthen its risk assessment models, and improve operational efficiency to support profitability and maintain healthy asset quality in FY26.