Indostar Growth: Asset Quality & Branch Expansion
- Indostar Capital,a mid-tier nonbanking financial company (NBFC),has seen its stock climb 21% since its March quarter results were announced April 29.
- The company's strategic sale of stressed loans to an asset reconstruction company (ARC) during the quarter is projected to maintain high asset quality into fiscal year 2026.
- Historically,Indostar's cost-income ratio has hovered around 70%.
Indostar Capital‘s stock has surged, and this report unveils the strategies driving its notable growth. Discover how the non-banking financial company is targeting cost optimization and asset under management (AUM) expansion, particularly through branch network growth, with over 150 new locations in the last two years. The company’s retail focus and strategic loan sales point towards maintaining strong asset quality. Simultaneously, Indostar plans to refinance high-cost debt, aiming for enhanced financial efficiency. We explore the impact of these decisions on key financial metrics, including net profit and net interest income, and how they are reshaping the company’s trajectory. this is where financial news and analysis from News Directory 3 come to your aid. Discover what’s next for Indostar.
Indostar Capital Aims for Growth Thru Cost Optimization,AUM Expansion
Updated June 26,2025
Indostar Capital,a mid-tier nonbanking financial company (NBFC),has seen its stock climb 21% since its March quarter results were announced April 29. This compares favorably to the ET NBFC index’s 4.5% increase. The company reported strong net interest income growth and improved asset quality, results of its tightened lending policies.
The company’s strategic sale of stressed loans to an asset reconstruction company (ARC) during the quarter is projected to maintain high asset quality into fiscal year 2026. Indostar Capital is focused on strategic financial management.
Historically,Indostar’s cost-income ratio has hovered around 70%. To combat this, the company has initiated a cost optimization drive to streamline operating expenses. The goal is to reduce the cost-income ratio to approximately 50% in the coming quarters, enhancing their financial efficiency.
Over the past two years, Indostar has concentrated on expanding its reach, adding over 150 branches, bringing the total to 587 by the end of March 2025. The company also significantly increased its workforce by 1,764 employees,reaching a total of 5,763. Management anticipates these expansion efforts will contribute to a 12-15% growth in assets under management (AUM). In fiscal year 2025,Indostar’s AUM grew by 26.1% to Rs11,053 crore.
The retail share in AUM reached 99% in fiscal year 2025, a significant increase from 26% in fiscal year 2018. the company specializes in commercial vehicle financing, small and medium enterprise (SME) lending, and loan against property (LAP).
Indostar’s net profit increased by 2.6% to Rs36.2 crore in the March 2025 quarter.Though, net interest income (NII) fell year-on-year by 22% to Rs181 crore, attributed to a high base from a one-time gain in the previous year’s comparable quarter. Disbursements were 13% lower year-over-year at Rs1,535 crore, reflecting the company’s stricter lending policies. Gross non-performing assets (NPA) decreased to 4.5% from 5% on a standalone basis.
What’s next
looking ahead, Indostar plans to replace high-cost debt of Rs 800 crore, wich carries a 12% interest rate, with new borrowings at a 10% coupon rate in the June 2025 quarter. This refinancing strategy is expected to lower debt servicing costs. In the past two fiscal years,the company has spent over half of its revenue from operations on interest payments. Motilal Oswal projects a 94% growth in Indostar’s net profit between fiscal years 2025 and 2027 and has a buy rating on the stock with a target price of Rs360.