KUBERGROW TEAM Hero FinCorp H1 FY26 Results: A Quick Review for Unlisted Share Investors
Hero FinCorp H1 FY26 Results are out, and the company has reported a loss of ₹163 crore, compared to a profit of ₹66 crore in the same period last year. The performance highlights the pressure NBFCs are facing due to rising funding costs, asset quality stress, and a strategic shift away from unsecured lending. For investors tracking Hero FinCorp unlisted shares, this review provides the factual breakdown and the implications ahead.
Key Financial Metrics – What Changed
| Particulars (₹ Cr) | H1 FY26 | H1 FY25 | Change |
|---|---|---|---|
| Interest Income | 3,840 | 3,905 | -1.7% ❌ |
| Finance Cost | 1,726 | 1,637 | +5.4% ❌ |
| Net Interest Income | 2,114 | 2,268 | -6.8% ❌ |
| NIM (%) | 8.98% | 9.66% | -68 bps ❌ |
| Provisioning | 1,385 | 1,429 | -3.1% ✅ |
| Profit After Provisioning | 729 | 839 | -13.1% ❌ |
| Fair Value Loss | 255 | 156 | +63% ❌ |
| PAT | -163 | 66 | Loss ❌ |
What this shows:
Earnings have fallen, while funding and operating costs have risen.
Margin pressure and fair value losses played a major role in pushing profits down.
Asset Quality – The Core Pressure Area
| Ratio | H1 FY26 | H1 FY25 | Change |
|---|---|---|---|
| GNPA (%) | 5.41% | 4.63% | +78 bps ❌ |
| NNPA (%) | 2.41% | 2.22% | +19 bps ❌ |
| ROE (%) | -2.70% | 1.15% | Negative ❌ |
| ROA (%) | -0.30% | 0.13% | Negative ❌ |
| Loan Book (₹ Cr) | 47,086 | 47,000 | +0.2% ⚠️ |
Rising GNPA above 5% indicates meaningful stress, particularly from unsecured loans, which the company has now decided to pause.
What Drove the Loss
Revenue vs Cost Squeeze:
NII dropped 6.8%, while finance cost rose 5.4%. Lower lending yield + higher borrowing cost = margin compression.Rising NPAs:
Unsecured portfolios showed weakness, pushing GNPA to 5.41%.Fair Value Loss Hit:
A ₹255 crore mark-to-market loss added to the drag.Higher Operating Expenses:
Employee and administrative costs rose while business slowed.Flat Growth:
Loan book grew just 0.2%, reflecting strategic tightening.
Hero FinCorp’s Strategic Pivot
The company is shifting gradually towards secured lending:
Two-wheeler loans (leveraging Hero MotoCorp ecosystem)
Loans against property
Secured MSME loans
Management is targeting ~14% disbursement growth in these secured categories in FY26. However, this transition will take 2–3 quarters to show financial impact.
Valuation Snapshot for Unlisted Shareholders
| Parameter | Value |
|---|---|
| Book Value per Share | ₹450 |
| Unlisted Market Price | ₹1,275 |
| Price to Book (P/B) | 2.83x |
Positive Factors Still Supporting the Business
Hero MotoCorp brand backing & ecosystem
Reduction of unsecured loan exposure = long-term risk control
PAN-India distribution strength
Maintains AA+ credit rating
Management proactively addressing challenges
What Investors Should Track Next
Will GNPA stabilize or rise further?
Can PAT return to positive territory?
Will NIM hold near 9%, or compress more?
How fast can secured loan book scale?
Are funding costs being negotiated lower?
Bottom Line
The Hero FinCorp H1 FY26 Results reflect a transition phase. The business is correcting past unsecured lending risks and repositioning toward secured, asset-backed lending. Near-term profitability may remain soft, but the business model shift is strategically sound.
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Disclaimer: This article is for informational purposes only and does not constitute
investment advice. Investors should conduct their own due diligence and consult
financial advisors before making any decisions.
