Synopsis: An ace investor and domestic institutions have both raised their stake in this NBFC during the June quarter, reversing months of selling. The move follows an improved FY26 performance, with better margins, a ratings upgrade and a stronger balance sheet.
Stake changes by seasoned investors often say more than the numbers alone. When an ace investor and domestic institutions buy into a stock in the same quarter, after having trimmed positions for months, it usually points to a shift in how the business is being read. This lending company’s latest shareholding data shows exactly that kind of turnaround in investor sentiment.
Shares of Laxmi India Finance Limited, with a market capitalization of Rs.675 Crore, closed at Rs.129.12 i.e. around 0.19% below its previous closing price of Rs.129.37. It trades at a P/E ratio of 13.62.
Why The Stake Increase May Be Happening Now
Laxmi India Finance Limited is a Jaipur-headquartered, RBI-registered non-banking finance company that offers a diversified lending portfolio including MSME loans, business loans, loan against property, vehicle loans, tractor loans, and two-wheeler and electric vehicle financing. The company primarily serves small traders, self-employed individuals, MSMEs and vehicle owners across Tier II and Tier III markets, with a branch-led, relationship-driven operating model.
Mukul Mahavir Agrawal’s holding in Laxmi India Finance stayed flat at 3.83% for three straight quarters before jumping to 4.58% in June 2026. DIIs mirrored this move, rising from 4.34% in March 2026 to 5.32% in June, reversing a three-quarter decline. This shift coincides with the company’s FY26 results, which showed a marked improvement across nearly every operating metric.
One likely driver is the sharp expansion in profitability. Net Interest Margin rose to 11.26% in FY26 from 10.47% a year earlier, while spreads widened to 10.50% from 10.29%. This was helped by the cost of borrowing falling to 10.80% from 11.48%, even as the company scaled up its loan book. For lenders, a falling cost of funds alongside a growing book is usually read as a sign of improving credit standing and lender confidence.
The external credit rating upgrade to “A/Stable ” from “A-/Positive” during the year likely reinforced this. Rating upgrades typically open up access to cheaper and more diversified funding, and the company’s incremental borrowing mix during FY26 shows a clear tilt toward banks and NBFC/FIs, which together made up over 62% of fresh borrowings.
Asset quality trends may have added to the comfort. While headline Gross NPA rose to 2.13% in FY26 from 1.07% in FY25, the company disclosed that without accounting for “up-money default” cases, GNPA would have been just 0.80%. This distinction, if investors are pricing it in, suggests the underlying loan book may be healthier than the headline number implies.
Capital adequacy also improved meaningfully. The Capital Adequacy Ratio rose to 26.12% in FY26 from 20.80% a year earlier, and the Debt-Equity ratio eased to 2.87 from 4.41, following the company’s IPO completed in August 2025. A stronger capital cushion generally gives an NBFC more room to grow its loan book without immediate need for fresh external capital, which can be a positive signal for investors evaluating growth runway.
Foreign institutional investors have moved in the opposite direction, cutting their stake from 4.61% to 1.40% over the same four quarters. This divergence between FIIs exiting and domestic-facing investors buying is worth watching, since it may reflect differing views on near-term risk versus the company’s medium-term growth targets, which include a targeted AUM CAGR of around 30% and ROE of 13.50-14.00%.
What’s Next For The Company?
Going forward, the company has laid out four medium-term priorities. On profitability, it is targeting a Return on Assets of 3.50-3.75% and Return on Equity of 13.50-14.00%, to be driven by scale benefits and improved operating efficiency. On growth, it plans calibrated branch expansion into new and adjacent markets to support an AUM CAGR of around 30%.
The company also intends to diversify its borrowing profile further by exploring new funding avenues such as External Commercial Borrowings (ECBs) and deepening ties with larger private and public sector banks, aimed at improving cost of funds and tenor mix. Alongside this, it plans to continue investing in technology across sourcing, underwriting and servicing to cut turnaround times and improve operating scalability.
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