Berar Finance Limited: Steady Profits, Margin Pressure, Asset Quality Improving

Berar Finance Limited operates as a regional NBFC focused on lending-led growth. A look at its 9M FY26 numbers shows a business that is profitable and growing, but with some pressure on margins and costs. A) The Big Picture (9M FY26 vs 9M FY25) B)  Lending Engine: Growth Continues Interest income grew from ₹199 Cr to ₹233 Cr, driven by a 26% YoY expansion in the loan book to ₹1,644 Cr. This indicates steady demand and effective loan disbursement during the period. However, the growth came at a cost. C) Margins Under Pressure While Net Interest Income (NII) increased to ₹118 Cr, NIM compressed from 7.97% to 7.18%. Rising finance costs (₹115 Cr vs ₹95 Cr last year) suggest higher borrowing costs, which limited margin expansion. This trend mirrors what many mid-sized NBFCs are facing in a high interest rate environment. D)  Cost Structure: Expenses Rise Faster Than Profits Operating expenses increased sharply from ₹65 Cr to ₹85 Cr. As a result, despite higher revenues, PBT dipped slightly to ₹31 Cr, and PAT remained flat at ₹24 Cr. In simple terms: Berar Finance is growing, but efficiency gains have not yet kicked in. E) Asset Quality: Improving, But Still Elevated The positive highlight lies in asset quality: GNPA improved to 4.12% from 4.98% NNPA declined to 2.67% from 3.07% Provisions remained stable at ₹27 Cr, indicating controlled credit costs and better collections compared to last year. F)  Valuation Snapshot (Unlisted Market) Current Unlisted Valuation: ₹337 Cr Share Price: ₹225 Book Value: ₹480.9 Cr Book Value per Share: ₹320.6 P/B Ratio: 0.7x At 0.7x book, the stock trades at a deep discount, reflecting concerns around margin pressure, scale, and operating efficiency—but also offering potential upside if profitability improves. G) The UlistedZone Take Berar Finance Limited presents a mixed picture: Strong loan book growth Improving asset quality Margin compression Rising operating expenses Flat profitability At current unlisted valuations, the market appears cautious. Sustained margin stability and tighter cost control could be the key triggers to re-rate the stock going forward. For now, Berar Finance remains a steady but watchful NBFC story—one where execution over the next few quarters will matter more than growth alone.

Berar Finance Limited operates as a regional NBFC focused on lending-led growth. A look at its 9M FY26 numbers shows a business that is profitable and growing, but with some pressure on margins and costs.

A) The Big Picture (9M FY26 vs 9M FY25)

B)  Lending Engine: Growth Continues

Interest income grew from ₹199 Cr to ₹233 Cr, driven by a 26% YoY expansion in the loan book to ₹1,644 Cr. This indicates steady demand and effective loan disbursement during the period.

However, the growth came at a cost.

C) Margins Under Pressure

While Net Interest Income (NII) increased to ₹118 Cr, NIM compressed from 7.97% to 7.18%. Rising finance costs (₹115 Cr vs ₹95 Cr last year) suggest higher borrowing costs, which limited margin expansion.

This trend mirrors what many mid-sized NBFCs are facing in a high interest rate environment.

D)  Cost Structure: Expenses Rise Faster Than Profits

Operating expenses increased sharply from ₹65 Cr to ₹85 Cr. As a result, despite higher revenues, PBT dipped slightly to ₹31 Cr, and PAT remained flat at ₹24 Cr.

In simple terms: Berar Finance is growing, but efficiency gains have not yet kicked in.

E) Asset Quality: Improving, But Still Elevated

The positive highlight lies in asset quality:

• GNPA improved to 4.12% from 4.98%

• NNPA declined to 2.67% from 3.07%

Provisions remained stable at ₹27 Cr, indicating controlled credit costs and better collections compared to last year.

F)  Valuation Snapshot (Unlisted Market)

• Current Unlisted Valuation: ₹337 Cr

• Share Price: ₹225

• Book Value: ₹480.9 Cr

• Book Value per Share: ₹320.6

• P/B Ratio: 0.7x

At 0.7x book, the stock trades at a deep discount, reflecting concerns around margin pressure, scale, and operating efficiency—but also offering potential upside if profitability improves.

G) The UlistedZone Take

Berar Finance Limited presents a mixed picture:

• Strong loan book growth

• Improving asset quality

• Margin compression

• Rising operating expenses

• Flat profitability

At current unlisted valuations, the market appears cautious. Sustained margin stability and tighter cost control could be the key triggers to re-rate the stock going forward.

For now, Berar Finance remains a steady but watchful NBFC story—one where execution over the next few quarters will matter more than growth alone.