Keertana Finserv Limited

Bond Opportunities
1

Keertana Finserv Limited is a non-deposit taking NBFC. The entity was originally incorporated years back under a different name and was effectively rebuilt by the current promoter team in recent years. The present avatar is a predominantly gold-loan led franchise with some exposure to JLG (microfinance-style group loans), home/LAP and a small unsecured book.

Operationally, Keertana is mostly a South-focused lender. The branch network spans six states, but the loan book is still heavily concentrated in Andhra Pradesh, with Telangana a distant second and the remaining states quite small for now.

The current promoter has prior experience in building and scaling an NBFC-MFI business, which is a plus, but it also means a lot of comfort is anchored around one team and their execution.

High-level numbers (latest available)

Very roughly, based on the latest rating note and investor material:

  • AUM: around â‚ą2,400 - 2,500 crore

  • AUM has grown from roughly â‚ą620 crore in FY23 to above â‚ą2,300 crore in FY25 (about 3-4x in two years)

  • Product mix (approximate, FY25 range):

    • ~65-70% gold loans

    • ~20% JLG loans

    • balance in home / LAP and unsecured loans

  • Net worth: about â‚ą590 crore

  • Total borrowings: around â‚ą1,900 crore

  • Capital adequacy ratio: ~25–27%

  • Leverage: about 3.2–3.3 times debt to equity

  • PAT FY25: roughly â‚ą65–70 crore, slightly lower than FY24

  • ROA has moderated as credit costs have gone up, especially on the non-gold side

On the rating side, Keertana is currently at IND BBB+ / Stable from India Ratings, with similar BBB / BBB+ band ratings from other agencies. So it is firmly in the lower end of investment grade, not anywhere near AA / AAA.

Asset quality and portfolio mix

Headline asset quality looks fine at first glance:

  • Overall GNPA is reported at around 0.7–0.8%

  • NNPA is close to zero at the consolidated level

This is largely because gold loans now dominate the book and, as usual, behave well on reported GNPA/NNPA since they are backed by collateral and recoveries are strong.

The picture changes once you step away from gold:

  • JLG GNPA is in low to mid single digits

  • Provision coverage there is reasonable but not extraordinary

  • Credit cost for the overall book has moved up meaningfully versus the previous year, driven by stress in JLG and other non-gold segments

Management has already started shrinking the riskier portion. JLG’s share of the portfolio has been cut quite sharply over the last year, with gold loans taking up a larger share of incremental disbursements.

Geographic and funding profile

Geographically, the book is very concentrated:

  • Andhra Pradesh is upwards of 80% of AUM

  • Telangana is in low-to-mid teens

  • The other four states are currently small in the mix

On the liability side, the funding profile is reasonably diversified between:

  • Term loans from banks and FIs

  • Listed NCDs

  • Some securitisation / direct assignment

The promoter has been infusing equity on a regular basis, which is how net worth has scaled up alongside AUM despite fast growth and higher credit costs.

What looks okay

  • The franchise has scaled quickly and is now clearly tilted towards gold loans, which structurally have better recovery characteristics than unsecured/JLG lending.

  • Overall GNPA at the company level is still low by NBFC standards, thanks to the gold portfolio.

  • Capital ratios and leverage are reasonable for a growing NBFC, and the stated intent is to keep leverage within a moderate band.

  • Promoter has prior experience in building an NBFC-MFI and has been consistently putting in capital, which is not something you always see at this size.

  • Security cover on this NCD is via gold-backed receivables, which is preferable to purely unsecured pools.

Key concerns (at least from my side)

  • Size is still small. With AUM of ~â‚ą2,400–2,500 crore and net worth of ~â‚ą590 crore, one bad year or one regional event can move the ratios quite sharply.

  • Rating is only BBB+. At this level, an 11% coupon is less of a pleasant surprise and more of a signal that the market is demanding a real risk premium.

  • Geographic concentration in Andhra Pradesh is very high. Any local disruption, political noise or collections issue in that state will directly reflect in asset quality and cash flows.

  • The non-gold portfolio has already shown stress and pushed up credit costs. If they slip on execution while growing, credit cost can easily eat up the yield advantage.

  • There is clear key-man risk. A lot of comfort today seems to be built around the current promoter’s track record and relationships.

  • The book has grown very fast in a short time and is not fully seasoned, so we do not really know how it behaves through a full credit cycle.

Net take

For me this sits firmly in the “interesting but not straightforward” bucket.

You are effectively lending at ~11.2% to a small, fast-growing, south-focused NBFC that is pushing hard into gold loans while trying to clean up and run down a riskier JLG book. The upside is obvious in terms of coupon; the downside is that the margin for error is not huge at this rating and size.

This looks like the kind of name where position sizing and active tracking matter a lot more than in higher-rated issuers. Definitely not something I would treat as a “set and forget” bond.

Would be keen to hear how others are thinking about Keertana:

  • Does ~11.2% feel like enough compensation for a BBB+ NBFC of this size and profile?

  • How do you weigh the comfort from the gold-backed portion versus the concentration and JLG risk?

  • If you have looked at other BBB / BBB+ issuers in the same yield band, where does Keertana sit on your list and why?

Disc: Not invested. Still evaluating.

2

I went through the rating note as well, and broadly agree with your summary. One thing I’d highlight is that the shift towards gold loans seems intentional and fairly quick. Gold AUM has gone from being just one part of the mix to now forming close to two-thirds of the book. For a small NBFC, that’s actually a sensible direction.

Also, overall GNPA of ~0.7–0.8% is decent for an AUM of this size, especially after such rapid growth. But yes, this is mainly because the gold piece carries the weight. The moment you look below the surface, JLG and unsecured segments show much higher stress.

I think the real question is whether Keertana can keep the gold share high and gradually run down the rest. If they manage that, maybe the BBB+ ceiling can break at some point. Until then, pricing at 11%+ feels fair.

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3

The Andhra concentration is the part that makes me uncomfortable. 80%+ exposure to one state for a lender of this size is a meaningful risk. We’ve seen in the past how quickly things can swing in microfinance heavy geographies when politics or local sentiment shifts.

Also, the fact that PAT dipped in FY25 despite AUM almost tripling in two years says something. Growth is fine, but costs and credit losses need to be under control. The jump in credit cost from ~1% to ~3% is not small for a book growing this fast.

At BBB+, the 11.2% coupon isn’t crazy high, it’s pretty much what the market demands for this band. I wouldn’t take large exposure here personally.

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4

Adding to the points above, I think what makes Keertana tricky to underwrite is the combination of fast growth + limited seasoning + a promoter-led rebuild of the company.
To be fair, gold loans are helping them keep headline NPAs low, and gold is likely what will drive their future. But the JLG book still exists, and as long as even 15–20% of the book sits there, you’re exposed to both concentration risk and segment risk.
Leverage of ~3.2x is okay right now, but if growth continues at this pace, they’ll need either more equity infusion or slower scaling. Otherwise it can creep up faster than expected.
My sense: monitorable name, good for small allocations only

5

I actually liked the structure of the NCD short-ish tenure under 2 years + secured against gold receivables. If this was a purely JLG/unsecured pool, I wouldn’t touch it. But the fact that there’s actual collateral provides some comfort.

Still, I’m not fully convinced about the speed of AUM growth. When AUM jumps from ₹600 crore to ~₹2,300 crore in two years, it’s great in good times but can be painful if anything goes wrong.

For what it’s worth, I might take a very small position not more than 2–3% of overall fixed income just because the tenure is short and collateral is gold. Wouldn’t go beyond that.