Fedbank Financial Services: AUM Up 36.6%, Gold Book Up 77%

FEDFINA Fedbank Financial Services (NSE : FEDFINA) is a Kochi-based NBFC promoted by Federal Bank. It lends to self-employed individuals and micro and small businesses in semi-urban and emerging markets, primarily through gold loans and loans against property. Gold loans account for 54% of its total assets under management. What happened: In Q2 FY27, AUM grew 36.6% year on year to Rs 22,035 crore. Net interest income rose 40.9% to Rs 404.8 crore. Profit after tax grew 63.1% to Rs 130.8 crore. ROE improved to 17% from 12% a year earlier and ROA rose to 2.8% from 2.4%. The gold loan book grew 77% to Rs 11,917 crore. Gold tonnage rose 16%, indicating the growth was volume-driven and not price-driven. Why it matters: Credit costs declined to 0.6% of average total assets, with the mortgage book recording its lowest-ever net slippages in the quarter. GNPA stood at 1.8%, broadly stable year on year. FII ownership rose sharply from 0.66% in March 2026 to 9.69% in September 2026. Management has guided for 20-25% AUM growth in FY27 and is targeting 25-30% growth in the gold loan book. What I am watching: Whether GNPA remains controlled as the gold loan book scales rapidly. GNPA rose from 1.6% in Q1 FY27 to 1.8% in Q2 FY27. LAP disbursements are expected to accelerate in Q3 FY27, which management has described as its strongest quarter for small-ticket LAP in eight to nine quarters. My stance: Fedbank trades at 1.89 times book value, above the industry average of 1.67 times but well below Tata Capital at 3.10 times. ROE at 17% is a record high. The combination of rapid gold loan volume growth, improving returns and rising FII ownership makes it worth watching. I do not hold a position in Fedbank Financial Services Ltd at the time of writing. This is not investment advice.