Press Release

Press Release

September 01, 2026

PAHAL FINANCIAL SERVICES PRIVATE LIMITED
Rating Assigned

Product	Quantum (Rs. Cr) (SEBI)	Quantum (Rs. Cr) (Other FSR)	Long Term Rating	Short Term Rating	Regulated By
Bank Loan Ratings	0.00	650.00	ACUITE BBB- \| Stable \| Assigned	-	RBI
Non Convertible Debentures (NCD)	60.00	0.00	ACUITE BBB- \| Stable \| Assigned	-	SEBI
Total Outstanding	60.00	650.00	-	-	-
Total Withdrawn	0.00	0.00	-	-	-

Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available.

Rating Rationale

Acuité has assigned the long-term rating of ‘ACUITE BBB-’ (read as ACUITE triple B Minus) on Rs. 60.00 crore Proposed Non Convertible Debentures facilities of Pahal Financial Services Private Limited (PFSPL). The outlook is ‘Stable’.

Acuité has assigned the long-term rating of ‘ACUITE BBB-’ (read as ACUITE triple B Minus) on Rs. 650.00 crore Proposed bank facilities of Pahal Financial Services Private Limited (PFSPL). The outlook is ‘Stable’.

Rationale for Rating
The assigned rating factors in expectation of equity infusion to the extent of ~Rs. 85.00 crores and improvement in asset quality on account of revival in micro finance segment and improved collection efficiency for the portfolio including the SRs. Acuite takes note of company's demonstrated ability to raise equity capital in the past and maintained diversified funding profile with access to multiple lenders. Despite the challenging operating environment faced by the microfinance industry over the past two years, the company has maintained adequate capital position. The company's capitalisation profile remained adequate, with CRAR improving to 25.14% as on June 30, 2026, from 22.31% as on March 31, 2026. The networth of PFSPL stood healthy at Rs. 333.58 crore as of March 31, 2026. Acuite takes into cognizance the revival in the microfinance sector with regards to the improvement in disbursement volume measured quarter on quarter, sharp improvement in asset quality as indicated through Industry portfolio-at-risk (PAR) at around 2.40% in June 2026 compared with around 7.20% in June 2025, indicating significant normalization in collection performance and borrower payment behaviour. Acuite expects the delinquency levels to significantly improve as the company is now focusing more on building the off book where the delinquency risk is limited to the FLDG of ~5 percent. Further given the on going disbursement in the on book is happening largely under CGFMU scheme, hence the coverage of the on book portfolio under CGFMU is expected to increase to ~90 per cent by March FY2027 from current level of ~68 percent. This provides substantial cushion for recovery in case the stress in the portfolio continues. The rating further factors in company's established presence in the microfinance sector with over 15 years of operating track record, experienced management team, continued support from reputed institutional investors, and improving liquidity profile.

The rating remains constrained by the subdued earning profile which has recovered moderately in Q1FY2027. PFSPL reported a net loss of Rs. 89.47 crore in FY2026 as against a profit of Rs. 6.37 crore in FY2025. The loss in FY2026 was primarily on the account of higher credit cost and ECB hedge unwinding loss. The rating is also constrained based on moderation in asset quality. The company's asset quality indicators improved during FY2026 with GNPA declining to 2.55% as on March 31, 2026 from 6.04% as on March 31, 2025 and NNPA improving to 0.77% from 2.11% during the same period. However, the improvement was aided by ARC transactions and sale of stressed assets undertaken, wherein the company transferred stressed pools aggregating around Rs. 391.23 crore during FY2026. Considering the SR transferred as a part of impaired assets the ratio of impaired assets to total portfolio stood around ~25.00 percent as on March 31,2026. The GNPA and NNPA levels as of June 30,2026 stood at 4.98% and 2.49% respectively. Consequently, recovery performance of the SR and the associated provisioning requirements remain monitorable.

About the company

Ahmedabad based, Pahal Financial Services Private Limited was incorporated in 1994. The company is non deposit accepting non banking financial company registered with Reserve Bank of India under section 45-IA of the RBI Act, 1934 and has got classified as a Non Banking Financial Company – Micro Finance Institution with effect from 29^th January 2014. The company is engaged in the business of providing micro finance services to women who are organized as Joint Liability Groups and individuals in the urban areas of multiple states of India. The company provides loans such as Joint Liability Group, Individual loan, vehicle loan, supplementary products, digital products Mrs. Purvi Jayendra Bhavsar, Mrs. Purvi Jayendra Bhavsar, Mr. Saurabh Baroi, Mr. Kartik Shailesh Mehta, Mr. Satish Mehta, Mr. Guillaume Jean Barberousse, Mrs. Alpana Indrajit Killawala, Mr. Vaibhav Suhas Joshi, Mr. Luca Torre, Mr. De Silva Niroshani Sawanawadu are directors of the company.

Unsupported Rating

Not applicable

Analytical Approach

Acuité has considered the standalone financial and business risk profile of PFSPL to arrive at the rating.

Key Rating Drivers

Strength

Experienced Management Team and Institutional Investor Support

PFSPL has an operating track record of over 15 years in the microfinance sector and has established operations across multiple states. The company is led by Managing Directors Mr. Kartik S. Mehta and Ms. Purvi Bhavsar, who possess over three decades of experience in banking, treasury, retail finance, credit and microfinance operations. Their experience has supported the company's expansion across multiple geographies and management of its microfinance operations. Further, the shareholding profile comprises of institutional investors including Proparco, GAWA Capital, Base of Pyramid Asia and Dia Vikas Capital. The company has established a sizeable business with a total AUM (On book + Off book) of Rs. 2,056.28 crore as on March 31, 2026, compared to Rs. 1,722.04 crore as on March 31, 2025. The AUM comprised an on-book portfolio of Rs. 817.71 crore and an off-book portfolio of Rs. 1238.57 crore as on March 31, 2026. The growth in the managed portfolio is supported by the acquisition of the microfinance business correspondent portfolio of Sub-K Impact Solutions Limited of approximately Rs. 787.00 crore during FY2026.

Adequate Capitalisation

PFSPL benefits from continued support from reputed institutional investors which has enabled the company to maintain an adequate capitalisation profile despite the challenging operating environment in the microfinance sector. During March 2025, the company raised equity of Rs. 147.32 crore from Proparco and GAWA Capital, which supported its capitalisation profile. Despite reporting losses during FY2026, the company maintained a tangible net worth of Rs. 333.58 crore as on March 31, 2026 against Rs. 407.89 crore as on March 31, 2025. The capital position remained above the regulatory requirement, with CRAR at 22.31% as on March 31, 2026. Further, the company's CRAR improved to 25.14% as on June 30, 2026, Acuité believes that the company's adequate capital buffers, shareholder support and its ability to raise anticipated capital in the FY2027, will continue to support business growth and absorb potential asset quality-related contingencies over the medium term.

Weakness

Deterioration in Asset Quality

PFSPL reported GNPA of 2.55% as on March 31, 2026 as compared to 6.04% as on March 31, 2025, while NNPA improved to 0.77% from 2.11% during the same period. However, the improvement was largely supported by ARC transactions and portfolio write-offs undertaken during FY2026. Asset quality moderated in Q1 FY2027, with GNPA increasing to 4.98% and NNPA increasing to 2.49% as on June 30, 2026. The company has undertaken ARC transactions aggregating around Rs. 518 crore since FY2023 as part of its portfolio resolution strategy. Consequently, PFSPL continues to carry Security Receipt (SR) exposure arising from these transactions. As on June 30, 2026, the company had outstanding SR exposure across multiple ARC pools and had created impairment provisions of Rs. 6 crore, which management intends to increase to around Rs. 9 crore by September 2026. Recovery performance across the earlier ARC pools has remained moderate, with collection rates ranging between approximately 22% and 48%, while recoveries from the FY2026 ARC pool are yet to season.

Moderation in Earnings Profile

PFSPL reported a net loss of Rs. 89.47 crore in FY2026 as against a profit of Rs. 6.37 crore in FY2025. Total income (including Net interest income) declined to Rs. 179.74 crore from Rs. 216.47 crore, while interest income declined to Rs. 296.57 crore from Rs. 387.76 crore during the same period. The loss was impacted by lower business volumes, higher credit costs, additional ECL provisioning of Rs. 14.25 crore, write-offs of Rs. 33.40 crore, ARC transaction loss of Rs. 9.52 crore and ECB hedge unwinding loss of Rs. 28 crore. The company reported a marginal profit of Rs. 0.40 crore during Q1 FY2027.

Risk inherent to the Microfinance Segment
PFSPL operates in the microfinance segment and remains exposed to risks associated with unsecured lending to low-income borrowers. The portfolio continues to have concentration in key states such as Gujarat, Bihar, Madhya Pradesh and Uttar Pradesh, making the company susceptible to region-specific events, borrower overleveraging, climatic disruptions, local socio-political developments and changes in the regulatory environment. Further, the microfinance sector witnessed elevated stress during FY2025 and FY2026, which impacted collection efficiency and borrower repayment behaviour across the industry. However, the sector started witnessing gradual signs of revival from the latter part of FY2026, supported by improving collection trends, moderation in delinquency levels and recovery in disbursement momentum.

Rating Sensitivity

Potential triggers (individual or collective) for an upward rating action:

Consistent improvement in collection efficiency for the portfolio including SR pools
Significant improvement in profitability parameters; RoAA above 2.50 Percent.

Potential triggers (individual or collective) for a downward rating action:

Any delay in capital infusion beyond October 2026 and its impact of liquidity profile
Deterioration in collection efficiency and its impact on delinquency levels reflected through GNPA percentage of over 6.00 percent on sustained basis.

Liquidity Position

Adequate

PFSPL’s overall liquidity profile remains adequate with positive cumulative mis-matches in near to medium term as per ALM dated March 31, 2026. As per ALM statement dated on 31st March 2026 PFSPL's debt repayment obligations stood at Rs. ~543.95 Cr. for one year period as against receivables of Rs. ~546.60 Cr. over the same period. The company has cash and bank balances of Rs. 167.38 Cr. as on March 31, 2026. As on March 31, 2026, the company had funding sources diversified across term loans, ECBs, NCDs, DA and PTC transactions.

Outlook:

Stable

Other Factors affecting Rating

None

Key Financials - Standalone / Originator

Particulars	Unit	FY26 (Actual)	FY25 (Actual)
Total Assets	Rs. Cr.	1528.17	1890.95
Total Income*	Rs. Cr.	179.74	216.47
PAT	Rs. Cr.	(89.47)	6.37
Net Worth	Rs. Cr.	333.58	407.89
Return on Average Assets (RoAA)	(%)	(5.23)	0.33
Return on Average Net Worth (RoNW)	(%)	(24.13)	1.89
Debt/Equity	Times	3.45	3.46
Gross NPA	(%)	2.55	6.04
Net NPA	(%)	0.77	2.11

*Total income equals to Net Interest Income plus other income.

Status of non-cooperation with previous CRA (if applicable):

None

Any other information

None

Applicable Criteria

• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm
• Default Recognition: https://www.acuite.in/view-rating-criteria-52.htm
• Non-Banking Financing Entities: https://www.acuite.in/view-rating-criteria-44.htm

Note on complexity levels of the rated instrument

In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’s categorisation of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in.

Rating History :

Not Applicable

Annexure - Details of instruments rated

Lender’s Name	ISIN	Facilities	Listing Status	Regulated By	Date Of Issuance	Coupon Rate	Maturity Date	Quantum (Rs. Cr.)	Complexity Level	Rating
Not Applicable	Not avl. / Not appl.	Proposed Long Term Bank Facility	Unlisted	RBI	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	650.00	Simple	ACUITE BBB- \| Stable \| Assigned
Not Applicable	Not avl. / Not appl.	Proposed Non Convertible Debentures	Proposed to be Listed	SEBI	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	60.00	Simple	ACUITE BBB- \| Stable \| Assigned

Contacts

Mohit Jain
Chief Analytical Officer - Rating Operations

Yash Dharmale
Analyst - Rating Operations

Contact details exclusively for investors and lenders

Mob: +91 8591310146
Email ID: analyticalsupport@acuite.in

List of instruments and names of regulators of the instruments

As required by SEBI Circular (SEBI/HO/DDHS/DDHS-PoD-2/I/4685/2026) dated February 10, 2026, a list of activities or instruments falling under the purview of various Financial Sector Regulators (FSRs), along with the names of respective FSRs, is being disclosed below:
A. Rating Activity:

Sr. No.	Instrument / activity Name	Regulator of the instrument
1	Listed/Proposed to be listed Bonds/Debentures/Preference Shares (all securities)	SEBI
2	Unlisted/Proposed to be unlisted Bonds/Debentures/ Preference share (all securities)	MCA
3	Listed PTCs / Securitisation Notes (originated by entities regulated by RBI)¹ ⁶	RBI
4	Listed PTCs / Securitisation Notes (originated by entities not regulated by RBI)¹	SEBI
5	Unlisted PTCs / Securitisation Notes (originated by entities regulated by RBI)¹	RBI
6	Listed Commercial Paper and NCDs with original maturity less than 1 year	RBI
7	Unlisted Commercial Paper and NCDs with original maturity less than 1 year	RBI
8	Loan Facilities (Fund/Non-Fund Based) from Bank / NBFCs/ NHB/ FIs ²	RBI
9	External Commercial Borrowings and other similar borrowings	RBI
10	Certificates of Deposit	RBI
11 a	Fixed Deposits raised by NBFCs, HFCs, FIs	RBI
11 b	Fixed Deposits raised by Banks ⁷	+
12	Fixed Deposits raised by corporates other than NBFCs, Banks, HFCs, FIs	MCA
13	Inter Corporate Deposits/Loans extended by Corporates	MCA
14	Borrowing programme ³	-
15	Issuer Ratings ⁴	-
16	Credit Ratings for Capital Protection Oriented Schemes (by Mutal Funds and AIFs)	SEBI
17	Credit quality ratings (CQRs) for Mutual Fund Schemes and Schemes of AIFs	SEBI
18	Listed Security Receipts ⁶	RBI
19	Unlisted Security Receipts	RBI
20	Independent Credit Evaluation (ICE)	RBI
21	Expected Loss Ratings (For Loan Facilities [Fund/Non-Fund based] from Banks/NBFCs/NHB/FIs) ⁷	+
22	Expected Loss Ratings (Listed / Proposed to be listed Bonds / Debentures / Preference Shares (all securities))	SEBI
23	Expected Loss Ratings (Unlisted / Proposed to be unlisted Bonds/ Debentures / Preference Shares (all securities))	MCA
24	Unlisted PTCs / Securitisation Notes (originated by entities not regulated by RBI) ¹	Investor-side Regulator such as IRDAI, PFRDA ⁵

¹Includes securitisation transactions involving assignee payout, acquirer's payout.

² Includes bank facilities such as liquidity facility, second loss facility that are part of securitisation transactions.
³The rated instrument may involve issuance of different instruments such as debt securities (listed or otherwise), bank loans, commercial paper (listed or otherwise), etc. The regulator of the instrument may accordingly be SEBI, RBI or MCA and can only be determined upon issuance. In Press Release(s) subsequent to issuance(s), Acuite shall separately capture the rated quantum details along with names of respective regulators.
⁴ There is no instrument being rated and hence, Regulator of the Instrument is not applicable. The rating scale and definitions are being followed as stipulated in SEBI Master Circular for CRAs.
⁵ These ratings were assigned during regulatory regime prior to the introduction of SEBI CRA Circular dated Feb 10, 2026 and accordingly, investor side regulators have been included.
⁶ By virtue of the instrument being listed, SEBI acts as the regulator for listing and related issues.
⁷ To be finalized following a discussion with the regulatory authorities.

B. Other activities:

Sr. No.	Activity Name	Regulator of the activity
1	Monitoring Agency	SEBI
2	Research activities, incidental to rating, such as research for Economy, Industries and Companies ⁸	Not applicable

⁸ permitted by SEBI vide SEBI Master Circular for CRAs.

Disclosure on instruments / activities and names of regulators:

A list of products/activities or ratings of instruments falling under the purview of various financial sector regulators (FSRs) along with the names of respective FSRs has also been duly disclosed by Acuite on its website. A link to the same has been provided below for ready reference:

https://acuite.in/Activities-and-Regulators.html

About Acuité Ratings & Research

Acuité is a full-service Credit Rating Agency registered with the Securities & Exchange Board of India (SEBI). The company received RBI Accreditation as an External Credit Assessment Institution (ECAI) for Bank Loan Ratings under BASEL-II norms in the year 2012. Acuité has assigned ratings to various securities, debt instruments and bank facilities of entities spread across the country and across a wide cross section of industries. It has its Registered and Head Office in Kanjurmarg, Mumbai.

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