Weak Profitability in Q1FY26 for KLM Axiva

18 August 2025

• Financial Performance (Q1FY26 vs Q1FY25): KLM Axiva reported a 0.9% YoY decline in total income to ₹82 Cr in Q1FY26 from ₹83 Cr in Q1FY25, as interest income remained nearly flat at ₹80 Cr (vs ₹81 Cr). Other income, however, rose 22.4% YoY to ₹2 Cr from ₹1.7 Cr, partially offsetting weaker lending yields. Total expenses grew 4.9% YoY to ₹81 Cr (vs ₹77 Cr), driven mainly by higher finance costs (+12.1% YoY to ₹45 Cr). Impairment charges fell sharply to ₹0.5 Cr (vs ₹1.5 Cr), offering some relief. Profit Before Tax (PBT) declined 80.8% YoY to ₹1.1 Cr from ₹5.7 Cr, reflecting pressure from rising costs. Profit After Tax (PAT) dropped 75.1% YoY to ₹1 Cr from ₹4 Cr. Earnings per share (EPS) stood at ₹0.04 in Q1FY26, compared to ₹0.21 in Q1FY25.
• Operational Metrics (Q1FY26 vs Q1FY25): Net profit margin contracted sharply to 1.3% in Q1FY26 from 5.3% in Q1FY25, highlighting reduced profitability. Gross NPA (GNPA) rose to 2.29% from 1.90%, while Net NPA (NNPA) increased to 1.37% from 1.20%, reflecting some deterioration in asset quality. The Provision Coverage Ratio (PCR) remained moderate at around 40.2%. The loan portfolio remained largely flat at ₹1,656 Cr compared to ₹1,660 Cr in Q1FY25, indicating a cautious lending approach. The Capital Adequacy Ratio (CRAR) stood at 16.4%, comfortably above regulatory requirements.
• Strategic Developments:Q1FY26 was a steady quarter for KLM Axiva, with income growth remaining flat and profitability moderating due to higher funding costs and narrower spreads. Asset quality showed a marginal weakening, with both GNPA and NNPA rising slightly but staying within manageable levels. On the positive side, impairment charges declined significantly on a year-on-year basis, and capital adequacy remained comfortably above regulatory requirements. The loan book was largely unchanged, reflecting a cautious and selective approach to disbursements in a tighter credit environment. Looking ahead, the company aims to focus on optimizing funding costs, improving lending margins, strengthening credit underwriting practices, and gradually accelerating loan growth while maintaining asset quality.