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