Mumbai, Aug. 28 -- The downgrade follows the company's Q1 FY26 results, which revealed a sharp rise in credit costs, higher than the broker's estimates. Credit costs jumped to 9.6% - the highest in 16 quarters - raising concerns about stressed asset creation.

The company also reported higher operating expenses, which rose 17% year-on-year to Rs 2,123 crore, alongside a 6% increase in finance costs. These pressures have weighed on profitability, with both Return on Average Assets and Return on Average Equity slipping from last year's levels.

According to the brokerage, elevated credit costs remain a structural challenge and could hinder earnings recovery.

As of Q1 FY26, the company held a 19.1% share in cards-in-force, up from 18.5% a y...