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Quick Pointers:

* Q3 disbursements pick up, expect 15%/ 16% AUM growth in FY26/ FY27E

* Maintain reported spread of ~5%; asset quality trend stable

3Q disbursements/ AUM grew 8%/ 15% YoY. Commentary indicated a pick-up in disbursements post the festive season and expects the momentum to continue to FY27. We remain wary of high competitive intensity and build an AUM growth of 15%/16% in FY26/ FY27E. Expect FY26 spread to be in-line with guidance at 5.25% aided by a lower cost of borrowing. However, expect a moderation in FY27 as the book reprices with the PLR cut. Expect an improvement in opex as productivity benefits flow through; credit cost likely to be benign. We tweak our FY26/ FY27E estimates factoring recovery in growth and improved opex. We roll-forward to Dec-27E P/ABV with a multiple of  2.1x and an unchanged TP of Rs 1,700. Maintain BUY.

* Expect AUM growth of 16% in FY27E: Q3 disbursements saw a growth of 8% YoY/ 10% QoQ to Rs17.2bn while AUM grew 15% YoY/ 4% QoQ to Rs222.0bn. Housing Loans/ MSME/ LAP contributed 66%/ 21%/ 13% of the portfolio. The AUM mix for <1.5mn, 1.5-2.5mn, 2.5-5mn and >5mn ticket sizes stood at 84%/10%/5%/1% while the AUM mix in terms of salaried/non-salaried borrowers stood stable at 61:39. Commentary indicated a pick-up in sanctions to disbursement ratio (80%+) post the festive season and expects the momentum to sustain in Q4. It is targeting disbursals of Rs20bn and plans to add ~20-25 new branches in the quarter. For FY27, it expects disbursements to rebound with 25% YoY growth driven by (i) increase in contribution from new branches by Rs2-3bn per month (iii) Rs5bn monthly business sourced from digital channels and (iii) inflation-led growth of ~Rs 2-3bn. Company plans to open ~50 new branches in FY27 and is targeting a loan growth of 17%-18%. We build an AUM growth of 15% in FY26 due to weak disbursement growth in 9MFY26 (8% YoY). For FY27, we remain conservative due to high competitive intensity and factor a growth of 16% YoY.

* Guiding for spread at 5% over the medium-term: 3Q reported yield saw a slight moderation QoQ to 13.02%, while CoF improved to 7.68% (vs. 7.85% in Q2FY26). Consequently, reported spread grew 11bps sequentially to 5.34% driven by lower CoF. Company raised funds through the issuance of NCDs of Rs9.8bn at a competitive rate and has taken a PLR cut of ~15bps from 1^st March 2026. It reiterated its guidance to maintain spread at ~5.25% for FY26; we see a similar margin trajectory, aided by a lower CoF. However, expect it to moderate in FY27 as the book reprices with the PLR cut. Opex ratio stood at 3.4% in Q3FY26 reflecting ESOP cost and impact of new labor code. While the company plans to add ~25 branches in Q4 and 50 branches in FY27, it expects ~25bps improvement in opex ratio due to productivity benefits. We expect an improvement of 20/10bps in FY27/FY28E.

* Asset quality improves; credit cost benign: Asset quality sees improvement in Q3FY26 with GNPA/NNPA at 1.19%/0.79% vs. 1.24%/0.85% in Q2FY26. Asset quality across geographies (vintage + emerging) remained healthy with 1+dpd and GNPA below 4% and 1.25%. The company reiterated its guidance of maintaining credit cost below 25bps over the medium-term; we build a similar range.?

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