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Aptus reported a steady 1QFY27, with PAT up 19% yoy to Rs2.61bn aided by stable margins, robust 21% AUM growth (Rs136.48bn), and a 36% yoy jump in disbursements, while credit cost and asset quality saw a blip. Spreads were resilient at 9.0%, with yield optimizations on lower-ticket loans effectively offset by improved borrowing cost. To maintain momentum, Aptus is driving a contiguous expansion into new markets like Maharashtra and Odisha, alongside introducing new lending products in its NBFC arm to leverage its large customer base. Asset quality faced a seasonal blip (NBFC) with GNPA ticking up, to 1.70%, and 30+ DPD edging to 6.87%. Consequently, credit cost stood elevated in 1Q at ~64bps (NBFC at 120bps), mainly on account lower collection efficiency in Jun. However, Management expects collections to rebound, and has guided to 22-24% FY27 AUM growth, an accelerated 25-30% disbursement growth in 2Q, and credit costs normalizing to ~50-60bps. Factoring in the 1Q performance and product as well as geographical expansion plans, the company appears well-positioned to deliver on its medium-term growth guidance and sustain a top-tier ROE of >20%. We maintain BUY on Aptus and Jun-27E TP of Rs360, implying FY28E PBV of 2.6x

Lower collection efficiency in Jun-26 impacts credit cost and asset quality

Aptus reported 1QFY27 disbursements of Rs10.53bn, up 36% yoy, while PAT grew 19% yoy to Rs2.61bn. AUM stood at Rs136.48bn, registering a robust 21% yoy growth. The portfolio spread was resilient at 9.0%, supported by COF of 8.0% and portfolio yield of 17.1%. Profitability remained top-tier, with ROA strong at 7.8% and ROE at 20.4%. Operating expenses were tightly managed at 2.7%, with an elevated credit cost (~64bps) acting as the only near-term drag. Overall asset quality credit cost was elevated due to impact on collection efficiency in Jun-26 and a slight seasonal blip; this resulted in GNPA increasing by ~18bps qoq to 1.70%

Growth outlook intact; strategic expansion to sustain spread

Management remains confident of achieving 22-24% AUM growth in FY27, supported by a strong disbursement trajectory aiming for 25–30% yoy growth in 2Q and target of 60– 70 new branch additions for the full year. To protect margins amid competitive pricing, Aptus is effectively executing its contiguous expansion into new markets like Maharashtra and Odisha, alongside evaluating new non-housing lending products, which will support growth and help sustain portfolio spreads at 9.0%. These strategic shifts are reinforced by the deep digitization efforts designed to boost operational productivity and maintain cost-to-AUM of 2.6–2.8%. With full-year credit costs guided to stabilize at ~50bps (+/- 10bps) and collection efficiency rebounding to normal levels, the company is on track to deliver steady asset quality and sustaining its top-tier mid-term ROE target of >20%

Factoring in the 1Q performance, we adjust estimates; maintain BUY

Factoring in the 1QFY27 performance and management commentary, we marginally adjust our FY27-29 estimates (Exhibit 2), while keeping earnings estimates largely unchanged. We maintain BUY with unchanged Jun-27E TP of Rs360, implying FY28E PBV of 2.6x.

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