MSME-focused lender NeoGrowth FY26 results show a Net Loss of Rs 72.34 crore after a profitable period of Rs 9.02 crore in FY25 due to a fall in interest income. Lender's revenue has decreased by 21.2% to Rs 591.07 crore for the financial year ending March 2026 as against Rs 750.31 crore during the same period of the previous year.
Key highlights
- NeoGrowth FY26 results show s 72.34 crore lossas operating revenue fell 21.2% year-on-year.
- In FY26, the interest income dropped by 21.4%, and total expenses decreased 6.8%.
The revenue loss was despite lower overall expenditures. NeoGrowth's total expenses in FY26 decreased by 6.8% to Rs 687.69 crore compared to Rs 738.19 crore in FY25, but this was not enough to compensate for the drop in income. The outcomes emphasize that there was an impact on the profitability of the lender where its core income in interests has gone down.
NeoGrowth FY26 Revenue Falls to Rs 591.07 Crore as Interest Income Declines
NeoGrowth's main source of revenue is interest income, which fell by 21.4% to Rs 566.97 crore in FY26 compared to Rs 721.04 crore in FY25. It accounted for approximately 96% of the company’s operating revenue during the year, making the fall a key factor behind the overall revenue contraction.
Income from fees and commissions dropped 21.9% to Rs 12.63 crore, while income from the derecognition of loan assets declined 53.2% to Rs 3.14 crore. In contrast, gains from short-term investments in liquid mutual funds increased 40.1% to Rs 7.1 crore.
The figures indicate that growth in investment-related gains was not enough to compensate for the decline in interest income and other operating revenue streams.
NeoGrowth Expenses Fall 6.8% to Rs 687.69 Crore in FY26
NeoGrowth’s total expenses declined to Rs 687.69 crore in FY26 from Rs 738.19 crore in the previous fiscal year. Some significant expenses, however, remained to be a drag on the lender's bottom line.
Financial instruments impairment loss, which comprises provisions for potential losses on financial instruments, also stayed largely the same at Rs 277.32 crore as compared to Rs 279.54 crore in FY25.
The second largest expense was finance costs which dropped 19.5% to Rs 228.88 crore from Rs 284.19 crore. The cost of employee benefits, on the other hand, increased 3.8% to Rs 109.78 Depreciation and amortisation expenses jumped to Rs 12.42 crore from Rs 10.71 crore, and other expenses to Rs 59.29 crore from Rs 58 crore.
While the lower finance costs and minor drop in impairment costs lowered the overall expense base, the savings are not enough to compensate for the loss of revenue.
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NeoGrowth Net Loss Reaches Rs 72.34 Crore as Margins Weaken
The financial results of NeoGrowth have changed from a net profit of Rs 9.02crore in FY25 to a net loss of Rs 72.34crore in FY26. The negative revenue change and relatively high expense levels were what led to the change in profitability.
The indicators of operating efficiency declined for the lender, as well. In FY26, NeoGrowth earned every rupee for every rupee of operating revenue, whereas in FY25 it was Rs 0.99 per rupee of operating revenue.
Net interest margin (NIM) fell to 17.11% from 17.52% and EBITDA margin fell to 24.33% from 40.79%. These adjustments are a result of pressure in the company's conversion of revenues into earnings from operations.
NeoGrowth Raises Rs 85 Crore from FMO and LeapFrog Investments
Digital lender NeoGrowth has recently raised Rs 85 crore in debt plus equity funding, with the Dutch development bank FMO as the lead investor, and an existing investor LeapFrog Investments.
The capital injection follows a rough year for the lender as it tries to help its lending arm as it deals with a challenging year. But the company will have to make a comeback to its revenue growth and to control its credit costs and profitability if a sustained recovery is to be achieved.
NeoGrowth Competes with Lendingkart, FlexiLoans and Kinara Capital
Some of the competitors in the MSME lending market in India where NeoGrowth plays are Lendingkart, FlexiLoans, Kinara Capital and Aye Finance. Based on the provided data, Aye Finance achieved operating revenue of Rs 1,567 crore and a profit of Rs 194 crore during FY26.
NeoGrowth FY26 performance highlights the difficulty in maintaining profitability in MSME lending given that interest income continues to be low and credit related expenses are still high. It has recently raised funds which add to its financial capital, but financial recovery will come from better revenue performance and cost control, and it will be important for it to keep the quality of its loan book.
