New Delhi, June 15 -- Orange Retail Finance, which is backed by the private equity firm Granite Hill Capital Partners, is focussing on ramping up its gold, secured MSME and affordable housing loans in the near-to-medium term, pivoting away from its initial proposition of financing two-wheeler buying.

Over time, the non-bank lender is looking to reduce its exposure to the two-wheeler loan segment to keep bad loans in check.

"Our near-to-medium term portfolio mix is expected to shift meaningfully - MSME LAP [loan against property] will remain our anchor segment and gold loans will become a significant growth driver, and affordable housing will be a meaningful part of the book by FY2029," Saravanan Kandan, chief financial officer, Orange Retail Finance said in an interaction.

The MSME loan against property and gold loan segment will make up nearly 80% of the company's loan book in the next five years, while the remaining 20% will comprise affordable housing loans. Meanwhile, the two-wheeler book will shrink gradually as fresh disbursements are halted.

Orange Retail Finance has already reduced its two-wheeler mix to below 50% as on March 31, from 73% at the end of FY24.

Background, financials

Orange Retail Finance India was set up in 2014, by former Fullerton India executives Ebenezer Daniel and Magesh Sheshadri.

The company is backed by Balamurugan IAS and Ashvin Chadha, co-founders of Anicut Capital LLP. Other backers include Sara group; Sanjeev Bikhchandani, founder and executive vice-chairman of Info Edge; and Jupiter founder Jitendra Gupta.

While the Chennai-headquartered NBFC began with two-wheeler financing, it gradually expanded its product offerings to other products including loans to micro, small and medium enterprises, affordable housing loans and gold loans, with a focus on small business owners in semi-urban and rural areas.

Additionally, it has strengthened its leadership team. Notably, it roped in former Samunnati official Kandan as chief financial officer in early June. The company similarly appointed former Samunnati official Kiran Vedula has joined as chief business and operations officer.

The company's posted net profit of Rs 7 crore in the first nine months of FY26, after posting a profit of Rs 4 crore in FY25. Its asset under management stood at Rs 397 crore as on December 31.

The company has been running down its two-wheeler book in recent years owing to an uptick in asset quality stress in the segment.

"The two-wheeler segment showed higher-than-expected stress during and after Covid. The unsecured nature of vehicle-backed lending in the semi-urban segment creates collection volatility that is difficult to manage at scale," Kandan said.

"We took the view that our long-term competitive advantage lies in secured, property-backed and asset-backed lending - MSME LAP, gold loans and affordable housing - where collateral provides a meaningful buffer, yields remain attractive, and the credit quality is structurally more stable," he added.

Orange Retail Finance's gross non-performing asset (GNPA) ratio has improved to 2.9% as on March 31, from 5.7% a year ago.

The company expects the asset under management to reach over Rs 3,000 crore in the next five years, even as it aims to bring its GNPA ratio down to below 2.2% of the on-book portfolio over the next two years by FY28. The improvement in asset profile may be aided by the shift in the product, tighter underwriting standards for new disbursements, and the gradual resolution of legacy two-wheeler stress.

Funding plan

Additionally, Orange Retail Finance is also looking to raise fresh equity to fuel expansion of the loan book.

"We are at a stage where the foundation has been rebuilt and the trajectory is clear - and we believe this is the right moment to bring in the right capital partners to accelerate that journey," Kandan said, adding that the company is in the process of appointing a banker for equity raise.

However, the company did not disclose any specific details on quantum of the fund raise.

The company is actively engaging with private equity funds that have experience in the financial services sector, along with development finance institutions and impact investors. Specifically, the company is eyeing impact investors who focus on financial inclusion, women's economic empowerment and last-mile credit access.

The company had last raised Rs. 30 crore of capital through compulsorily convertible preference shares (CCPS) in the financial year ended FY24. However, the names of investors have not been disclosed.

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