ARAsset Reconstruction Company (India)544921Earnings call transcript

Q1 FY27 earnings call transcript: management sizes the stressed-asset pool and outlines growth track record

Transcript of the Q1 FY27 earnings conference call submitted to the exchanges; call held on October 07, 2026, covering the quarter ended June 30, 2026.

By ScoutQuest · Tue 13 Oct 2026, 5:42 PM IST · 3 min read

Stressed-asset pool

around INR24 lakh crores, of which about INR12 lakh crores is written off

AUM growth

INR15,230 crores (March 2024) to INR20,150 crores (March 2026)

Profit after tax

INR239 crores (FY23) to INR408 crores (FY26)

What this update is

It is the transcript of the Q1 FY27 earnings conference call held on October 07, 2026, in relation to the quarter ended June 30, 2026, submitted to the stock exchanges. On the call were Mr. Phanindranath Kakarla, CEO and Managing Director, and Mr. Pramod Gupta, Chief Financial Officer. The transcript is stated to be edited for factual errors, and the audio recording prevails in case of discrepancy. Management noted this was the first earnings call since the equity shares were listed in September 2026.

The opportunity management described

• Total stressed assets across banks and NBFCs, including special mention accounts, NPAs and written-off loans, are around INR24 lakh crores, as per a CRISIL report cited on the call.
• Of this, around INR12 lakh crores is written off books, no longer appearing in lenders' reported NPAs but still holding recovery value.
• Retail stress has roughly doubled from about INR3.5 lakh crores in FY20 to about INR7 lakh crores in FY26. MSME stress is about INR9.2 lakh crores, and the corporate pool is about INR7.6 lakh crores.
• Special mention accounts accounted for about 30% of new ARC acquisitions in FY25, up from about 14% in FY24.
• ARCs acquire below 10% of this pool each year, as per management estimates.

The platform and the track record

• More than 3.29 million retail borrowers are managed on the company's technology platform.
• The company has worked with more than 140 lending institutions over the years.
• As of June, the company's own investment in its AUM was about INR4,200 crores, roughly 22% of AUM.
• AUM grew from INR15,230 crores in March 2024 to INR20,150 crores in March 2026, about 15% a year, while its own investment in that AUM grew about 26% a year.
• Share of industry AUM rose from 11% to 15% over the last two years. Share of new acquisitions went from 6% in FY24 to 10% in FY25 and 17% in FY26, a year in which it acquired close to INR6,000 crores.
• Assets were acquired at about 26% of their outstanding dues, and AUM today represents around 14% of the INR1.4 lakh crores of dues managed.
• Recoveries were more than 20% of opening AUM every year, between 21% and 25%, and the cumulative SR redemption ratio stood at 52.5% in June.
• Profit after tax grew about 20% a year over three years, from INR239 crores in FY23 to INR408 crores in FY26, with acquisition cost holding at 26% to 27% of dues each year.

Direction and intent as stated

• The company intends to offer its collection capabilities to banks and NBFCs through a collection-as-a-service business, built on the same platform used for its retail portfolio.
• Management summarised its approach as buying with discipline, resolving with urgency, and deploying capital with a clear focus on returns.

How the business works

• An ARC acquires stressed loans from banks and financial institutions, usually at a discount to the dues outstanding, and each acquisition is held in a separate trust that issues security receipts to fund the purchase.
• The ARC must invest in a minimum share of these security receipts, with the selling lender or other investors holding the rest.
• Loans are resolved through settlement, restructuring, enforcement of security, or proceedings under the insolvency framework, and recoveries are used to redeem the security receipts.
• Income comes from management fees and recovery incentives, returns on the ARC's own investment in security receipts including upside income once they are fully redeemed, interest income, write-backs on amounts written off in earlier years, and mark-to-market changes on SR investments.

Nothing here is a view, opinion or recommendation of ScoutQuest, its parent, directors or employees. ScoutQuest is a technology company: this page was assembled automatically from public sources using artificial intelligence, and may contain errors or omissions. Confirm everything against the original source before you act on it. Any use of this page is at your own risk, and neither ScoutQuest nor its parent, directors or employees accepts liability for it.

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