Came across Western Capital recently while looking at smaller NBFC NCD issuers on BondScanner. Didn’t see a thread on it, so putting down what I found from their rating note and hoping others who’ve tracked them can add more colour.
This is a fairly young NBFC (started 2019), backed by the Kejriwal Group. Initially they were into FI(Foreign Institution) lending and supply-chain financing, but they’ve now pivoted quite aggressively into their branch-led MSME retail product called Prabhaav Loans. These are basically LAP / affordable home-loan-type secured loans in Tier-2 to Tier-6 towns with ticket sizes roughly in the ₹8–9 lakh range.
From the latest rating report:
AUM has grown from ₹526 crore in FY24 to ₹701 crore in FY25.
Out of this, Prabhaav loans contributed ~₹123 crore in FY25, and as of Q1 FY26 they already form ~23% of the book.
Rating Report -
They’ve expanded to 53 branches across Rajasthan, Gujarat, Maharashtra and MP by June 2025. More branches coming in FY26.
Capital adequacy is strong — CRAR at ~39.66% as of Mar-25.
Net worth is ₹288.5 crore vs total debt of ₹489.9 crore (gearing ~1.70x).
Profitability, however, has been sliding: PAT fell from ₹33 crore (FY23) → ₹20.5 crore (FY24) → ₹16.8 crore (FY25).
Return ratios reflect this — ROAA down to 2.33%.
Asset quality was good in FY25 (NNPA 0.08%) but has deteriorated in Q1 FY26 (NNPA 1.34%).
They also have ~₹27 crore of stressed exposures to four entities which they expect to resolve.
Rating Report -
Ratings: ACUITE A-, Negative outlook on bank lines & NCDs.
The negative outlook is mainly due to declining profitability, stressed exposures, and uncertainty around scaling this new retail model.
A few initial thoughts:
This pivot from supply-chain finance to secured MSME retail is pretty major. The old book shrank sharply in FY24, and they’re now rebuilding AUM through a completely different branch-led model.
The retail push seems expensive — the report mentions heavy operating costs for the new branches affecting FY25 results.
Asset quality creep in Q1 FY26 is something to watch closely. Jumping from 0.08% to 1.34% NNPA in one quarter raises questions about new-vintage behaviour.
On the positive side, capital buffers look solid and promoter support seems strong so far.
Questions for the forum:
Does anyone here track their Prabhaav branch rollout on ground? Are these LAP/affordable-home borrowers stable in the geographies they target?
The rating note mentions 23% of AUM now Prabhaav loans — is this pace of shift too fast?
Any insights on the ~₹27 crore stressed exposures? How significant is this in context of their ₹700+ crore AUM?
For NCD investors: the A- rating with a Negative outlook — would you consider this investible or is the trajectory too uncertain?
How do people generally evaluate such “pivoting” NBFCs? The track record in the new asset class is limited.
Just adding some context on what these Prabhaav loans actually are. From everything in the rating note, this seems to be WCAPL’s version of a secured MSME / LAP product targeted at the lower-income end of the small business segment. Basically small shopkeepers, traders, micro-enterprises, semi-formal family businesses in Tier-2 to Tier-6 towns. Ticket size seems to sit around the ₹8-9 lakh mark, secured by residential or mixed-use property.
This is a very typical LAP-for-MSME product that many regional NBFCs have been scaling in the last 2–3 years. Demand in this segment has grown steadily because banks are still slow with underwriting informal income, and NBFCs have stepped into that gap.
On whether WCAPL’s pace of growth is in line with the industry that’s the tricky bit. Industry growth for secured MSME/LAP in the semi-urban belt is healthy but not explosive. Most established players are growing this segment in the 15–25% range. WCAPL’s Prabhaav book, on the other hand, has gone from almost nothing to ~₹120+ crore in FY25 and already ~23% of overall AUM in Q1 FY26.
That’s a very fast ramp-up and probably faster than the underlying market itself is growing. Nothing wrong with that if underwriting is strong, but whenever a lender scales a new product faster than the industry average, it does raise the question of how much early-vintage stress might show up later. The jump in NNPA from 0.08% → 1.34% in just one quarter could be an early signal that they’re still figuring out collections and customer selection in this segment.
So yes, Prabhaav loans fit into a well-established industry, but the speed at which WCAPL is pushing into it does look ahead of the natural absorption capacity of the market. If they can stabilise asset quality as the book seasons, then it’s fine but the next 2–3 quarters should tell us more.
Compared to other A-rated small NBFCs like Five-Star, Dvara KGFS, Vistaar, and Sindhuja, the ones with a consistent product for years tend to be more stable. WCAPL is different because it’s in the middle of a portfolio transition, which usually brings some volatility.
On the plus side, their capital adequacy, leverage, and geographic familiarity are similar to A-rated peers. On the downside, their NNPA spike is higher than most peers, so asset quality is okay but not top tier.
For bond investors, pricing matters. If WCAPL offers a 75–100 bps premium over other A-rated secured MSME issuers, the risk-reward looks reasonable. If it’s priced the same as stronger A issuers, I’d probably skip.
I think the shift towards Prabhaav loans makes sense for Western Capital. The older FI lending model had low yields, while Prabhaav loans are secured, slightly higher ticket and generally offer better yields and more stable borrowers.
The quick scale up is not necessarily a red flag. Since they already operate in these smaller towns, it could simply be cross selling to customers they already know rather than risky expansion.
The main things to watch are LTV discipline, clean property documents and how NPAs behave over the next few quarters. Their track record in this segment is still short, and profitability has been slipping, so the next few results will show whether this shift is working or not.