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CIFC reported a weak quarter owing to seasonality, macro headwinds, and elevated credit cost. Asset quality remained under pressure across product segments, driven by early monsoons and some seasonal effects. The management expects this to normalize, assuming monsoons do not extend till Q3 (like last year); it maintained credit cost guidance of 1.4-1.5% for the full year. The management maintains growth guidance of 20-23%, pinning hopes on macro recovery in H2 and festive demand. It expects NIMs to improve by 10- 15bps on the back of rate cuts; while opex would remain stable/moderate given that most of the expansion will be in the gold segment, CIFC plans to leverage existing vehicle finance branches for expansion of product offerings. To reflect the Q1 developments and near-term hope of a recovery led by strong festive demand, rate-cut benefits, and improving asset quality in H2, we lower our FY26-28 estimates which results in ~1-2% reduction in AUM growth estimates, minor increase in credit cost, and 3-4% cut in EPS. We reiterate ADD while trimming Jun-26E TP by ~6% to Rs1,500, implying FY27E P/B of 3.4x.

CIFC reported a weak quarter owing to seasonality, macro headwinds, and elevated credit cost. Asset quality remained under pressure across product segments, driven by early monsoons and some seasonal effects. The management expects this to normalize, assuming monsoons do not extend till Q3 (like last year); it maintained credit cost guidance of 1.4-1.5% for the full year. The management maintains growth guidance of 20-23%, pinning hopes on macro recovery in H2 and festive demand. It expects NIMs to improve by 10- 15bps on the back of rate cuts; while opex would remain stable/moderate given that most of the expansion will be in the gold segment, CIFC plans to leverage existing vehicle finance branches for expansion of product offerings. To reflect the Q1 developments and near-term hope of a recovery led by strong festive demand, rate-cut benefits, and improving asset quality in H2, we lower our FY26-28 estimates which results in ~1-2% reduction in AUM growth estimates, minor increase in credit cost, and 3-4% cut in EPS. We reiterate ADD while trimming Jun-26E TP by ~6% to Rs1,500, implying FY27E P/B of 3.4x.

Guidance: Some moderation in growth and slight uptick in credit cost The management has guided for AUM growth of 20–23%, on strong demand recovery in H2 and supportive monsoons. However, disbursements have been slow in certain stressed segments, particularly CSEL and vehicles. As a result, overall disbursement growth is now expected at ~10% (down from 15% earlier). Margins are projected to improve by ~15bps due to rate cuts. Operating expenses are likely to remain stable or moderate slightly, with most new branches focused on the GL segment while existing vehicle branches are being leveraged for product expansion. The management remains confident about containing credit costs below 1.5% and expects asset quality to improve as macro conditions stabilize. These factors cumulatively are expected to support a nearterm PBT-ROA of 3.3–3.4%.

Maintain ADD with a revised TP of Rs1,500 To factor in the Q1FY26 trends and FY26 guidance, we trim FY26-28 growth and disbursement estimates by ~1-4% and ~4-7%, respectively, and expect credit costs to stay elevated due to ongoing stress in certain segments. We reiterate ADD, with revised down Jun-26E TP of Rs1,500 (from Rs1,600), implying FY26E P/B of 3.4x

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