New Delhi, July 17 -- Keertana Finserv Ltd, the non-bank lender started four years ago by Padmaja Reddy after she left Spandana Sphoorty Financial Ltd over disagreements with private equity firm Kedaara Capital, expects to more than triple its profit in the current financial year even as its older peer records heavy losses.

Hyderabad-based Keertana has also grown its loan book at a quick pace, as it shifted its focus to gold loans and began to wind down its exposure to microfinance due to asset-quality concerns, according to its financial statements. Meanwhile, Mumbai-listed Spandana's loan book has shrunk in recent years as it struggled to contain bad loans in its mainstay microfinance portfolio.

Keertana's consolidated net profit rose 16.7% to Rs 77 crore in the financial year ended March 2026 from Rs 66 crore the year before, aided by loan book growth.

Its overall assets under management rose 71% from a year earlier to Rs 4,024 crore as on March 31. The share of gold loans in its AUM rose to 94% from 72% a year before. The company has halted fresh disbursals in the microfinance portfolio and moderated growth in other segments.

Profit growth lagged loan growth because of the increase in the company's credit costs, bad loans and write-offs. Keertana's Gross Stage-3 Asset ratio-which reflects loans overdue for more than 90 days-rose to 1% as on March 31 from 0.8% a year ago. Its credit costs climbed to 4.1% from 2.6% and the return on managed assets moderated to 2.1% in FY26 from 3.0% in FY25.

Write-offs surged to Rs 149.5 crore in FY26 from Rs 38 crore in FY25, as it sought to mitigate microfinance stress in Andhra Pradesh and Telangana, VCCircle has learnt. Excluding these credit costs, Keertana generated a pre-provision operating profit of Rs 248 crore in FY26 and Rs 140 crore in FY25.

"We view FY26 as a clean-up year and do not expect any meaningful credit costs going forward. FY27 should, therefore, reflect the company's underlying earnings potential," Reddy, who is managing director at Keertana, told VCCircle in an interaction.

She said that Keertana posted a net profit of Rs 38 crore in the first two months of the current financial year and that it expects to post a net profit of Rs 250 crore for the year ended March 2027.

Backstory

Before Keertana, Reddy founded the Hyderabad-headquartered microfinance firm Spandana Sphoorty. She left Spandana in 2021 and resigned as managing director, following disagreement with majority shareholder Kedaara over the company's proposed sale to Axis Bank. The deal never went through.

After leaving Spandana, Reddy acquired Keertana at the end of March 2022. Keertana was set up in 1996 as Rajshree Tracom and received its NBFC licence in 2001 but was dormant until Reddy took over.

To kick off its operations, Keertana acquired the gold loan business of Spandana Mutual Benefit Trust for Rs 191 crore and the MSME business of Spandana Rural and Urban Development Organization for Rs 14 crore. Both sellers were part of the Spandana group.

While Spandana continued to focus on the microfinance vertical, which has been under stress for the past few years, Keertana switched its attention to gold loans as a sharp jump in the price of yellow metal boosted demand for such financing options.

Spandana's AUM declined from Rs 11,973 crore as on March 31, 2024, to Rs 3,940 crore as on December 31, 2025, before recovering to Rs 4,420 crore as on March 31, 2026. Its Gross Stage-3 Asset ratio jumped to nearly 6.2% as of March 2025 before moderating to 4.2% this year while net loss narrowed to Rs 699 crore in FY26 from Rs 1,035 crore the year before.

On the other hand, Keertana has been reducing its exposure to microfinance.

Its microfinance loan book fell to below Rs 45 crore as on March 31, 2026, from Rs 706 crore in September 2024. The lender has also reduced exposure to joint liability group loans, MSME loans, loans against property and home loans. JLG loans, loans against property (LAP), and home loans made up just 6% of the company's loan book at the end of FY26.

"By taking an early and prudent approach rather than following industry sentiment, we were able to meaningfully contain our exposure to this stress," Reddy told VCCircle.

"We have moderated growth in our LAP and home loan portfolios because the low-ticket borrower segment substantially overlaps with the microfinance customer base, which is currently experiencing cash flow stress due to overleveraging," she added.

Gold loan push

Reddy said Keertana currently operates 360 gold loan branches and plans to open another 180 branches over the next 12 months. "These additions will strengthen our presence in Andhra Pradesh while establishing a significant footprint in Telangana, Karnataka and Odisha," she said.

"Nearly 150 of our current 360 branches were opened during the past year and, therefore, have a vintage of less than one year. These branches are still in the early stages of portfolio ramp-up and have significant headroom for growth," she added.

Currently, around 98% of the company's portfolio is concentrated in Andhra Pradesh and Telangana.

The company expects its total assets under management to touch Rs 7,000 crore by the end of FY27 and hit Rs 10,000 crore in the next financial year, fuelled predominantly by gold loans. Additionally, branch expansion, lower funding costs, and a potential upgrade in the debt rating will aid growth.

Fundraising plan

Keertana said it is in the advanced stages of discussions with prospective investors to raise fresh equity capital. It said it may raise Rs 200 crore (around $21 million) over the next two months but it did not disclose the names of the prospective investors.

Reddy dismissed a recent media report that stated Piramal Finance was exploring the acquisition of Keertana. She said the company remains focussed on organic growth and was not evaluating any M&A opportunities as of now.

She also said the company will evaluate various strategic options and make a decision at the appropriate time based on market conditions and long-term objectives.

"We are open to considering an IPO once we reach an AUM of around Rs 6,000 crore, which we expect to achieve over the next six months. However, there are no concrete plans at this stage," she added.

Published by HT Digital Content Services with permission from VC Circle.