Summary
Emerald Finance Limited - Q3 FY 2026 Earnings Call Summary Thursday, January 29, 2026 4:00 PM
Event Participants
Executives 3 Gurmeet Kaur (Chief Risk Officer), Sanjay Aggarwal (Managing Director), Talin Aggarwal (Head of Business Development)
Analysts 7 Abhi Jain, Ankit, Chirayu, Daljit Singh, Harsh, Pratik, Rohit Arora
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Total Income (Consolidated) | ₹21.4 crores | +42% YoY for 9M FY26; driven by digital adoption and vertical expansion. |
| Net Profit (Consolidated) | ₹10.7 crores | +73% YoY for 9M FY26; reflects asset-light model and cost management. |
| PAT Margin | 51.0% | Steady growth QoQ; driven by technology leverage and in-house EWA stack. |
| AUM | ₹103 crores | Majority comprised of MSME business loans; EWA is currently a small portion. |
| Gold Loan Syndication | ₹115 crores | Monthly volume for Dec 2025; Dec 2024 was ₹105 crores. |
| Gross NPA (9M) | 0.25% | Historically <0.50%; Q3 saw one corporate EWA NPA of ₹26 lakhs. |
| Debt-to-Equity | 0.20x | Minimal leverage; management sees ample room for debt-funded growth. |
| EPS (9M) | ₹3.00+ | Target for full year FY26 is ₹4.00+ vs ₹2.57 in FY25. |
Geographic & Segment Commentary
- Earned Wage Access (EWA): Accounted for 4.5% of consolidated revenue with 180 corporate partnerships. Management is focusing on high-quality onboarding (100+ employees) despite market turbulence, with monthly disbursements reaching ₹8.5 crores in December.
- Lending (MSME/Business): Represents 47% of consolidated revenue and the bulk of the ₹103 crore AUM. The company maintains a conservative 0.4%-0.5% historical NPA rate through a proprietary underwriting policy revised in October 2025.
- Debt Syndication: Contributes the remaining fee-based income, primarily through gold loans and mortgages. Aggressive growth in gold loan sourcing (₹115 crores/month) serves as a funnel for cross-selling other lending products.
Company-Specific & Strategic Commentary
- Digital Transformation: Launched a mobile app and became one of the first Indian finance companies to offer disbursements via WhatsApp. This tech-first approach supports a 51% PAT margin by automating processes.
- Credit Rating Upgrade: CRISIL upgraded the company to investment grade (BBB+), which management expects will significantly reduce the cost of funds (currently 10.9% via SBI).
- Asset-Light Model: Strategy focuses on fee-based syndication (no risk) and EWA (short-cycle, 30-day term) to maintain high capital efficiency.
- Corporate Governance: Planning a transition to NSE listing by March 2027 following the completion of FY26 and FY27 audited cycles.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Corporate Clients (EWA) | ~220 by March 2026 | Revised from 250 due to tighter credit norms and 30-40% rejection rates. |
| EWA Monthly Volume | ₹11.5 - ₹12 crores | Target for March 2026 run-rate from current ₹8.5 crores. |
| AUM Growth | +20-25% | Long-term target of ₹300 crores AUM in 5-6 years via prudent leverage. |
| Revenue Mix (EWA) | 6.0% - 7.0% | Target share of consolidated revenue within one year. |
| EPS FY27 | ₹7.00 - ₹8.00 | Based on current growth trajectory and reduced cost of debt. |
Risks & Constraints
| Risk | Context |
|---|---|
| Market Turbulence | MSME space volatility led to a 1st Oct 2025 credit policy tightening, causing higher rejection of corporate applications. |
| Corporate Delinquency | A ₹26 lakh NPA in Q3 arose from a corporate liquidity hitch; although ₹17 lakh was recovered in Jan, it highlights the payroll-linkage risk. |
| Market Awareness | EWA remains a “push” product in India; slow adoption in the public sector and lower general awareness limits rapid scaling. |
Q&A Highlights
Asset Quality & NPAs
- Question: What caused the ₹26 lakh NPA in the EWA segment? (Ankit)
- Answer: A credible corporate faced temporary liquidity issues and delayed bulk payment of salary deductions. We paused disbursements after 5 days of delay. ₹17 lakhs has been recovered in Jan; balance expected by Feb end (Gurmeet Kaur/Sanjay Aggarwal).
Revenue Mix & Cross-Selling
- Question: How do you see the interest vs. fee-based income mix evolving? (Pratik)
- Answer: Ideal mix is 46% interest, 46% fee (syndication), and 8% EWA revenue. EWA is a strategic hook for cross-selling gold loans and MSME products (Talin Aggarwal).
Funding & Leverage
- Question: How much growth can be supported without equity dilution? (Pratik)
- Answer: Debt-equity is only 0.2x. We can legally go up to 6.0x per RBI. We are currently negotiating with SBI and other banks for lower rates following the CRISIL upgrade (Sanjay Aggarwal).
Competitive Landscape
- Question: Who are your main competitors in the EWA space? (Abhi Jain)
- Answer: Primarily Refyne and Jify. Others like Fibe/SalarySe follow an “against-salary” loan model (direct employee repayment), whereas we use a “payroll-linked” model (employer repayment), which is lower risk (Sanjay Aggarwal).
Key Takeaway
Emerald Finance delivered a strong 9M FY26 performance, with consolidated net profit growing 73% YoY to ₹10.7 crores. The company is successfully transitioning into a tech-enabled lender, evidenced by its new WhatsApp disbursement platform and a high PAT margin of 51%. Strategically, management is prioritizing credit quality over raw volume, tightening underwriting norms in the MSME and EWA segments which led to a slight downward revision of corporate onboarding targets (from 250 to approx. 220). With a recent CRISIL BBB+ rating and a low debt-equity ratio of 0.2x, the company is well-positioned to aggressively lower its 10.9% cost of funds. Looking forward, management targets an EPS of ₹4+ for FY26 and over ₹7 for FY27, underpinned by a goal to reach ₹300 crores in AUM within 5-6 years while maintaining NPAs below 0.50%.
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