FY25 was a reality check for Hero Fin Corp.
Hero Fincorp clocked impressive revenue growth, expanded its loan book, and continued to penetrate deeper into Tier-2 and Tier-3 markets. But behind the scenes, rising delinquencies, higher finance costs, and a sharp jump in provisions forced the company to put its profit engine in reverse.
In short: growth came at the cost of profitability.
Let’s dive into the key highlights, the story behind the numbers, and what this could mean for Hero FinCorp’s future trajectory.
Hero Fin Corp at a Glance
Founded in 1991 as Hero Honda FinLease, Hero FinCorp Limited has grown into a leading non-banking financial company (NBFC) offering a wide range of products including:
- Two-wheeler loans (primarily Hero vehicles)
- Used car and personal loans
- Loans against property
- SME business loans
- Structured finance and working capital for corporates
Through its subsidiary Hero Housing Finance Ltd (HHFL), the company also provides affordable housing loans across India. HHFL alone disbursed ₹2,556 crore in its first year and has expanded rapidly.
Financial Performance: FY25 vs FY24
Here’s a snapshot of the key consolidated financial figures:
| Particulars | FY25 (₹ Cr) | FY24 (₹ Cr) | Change (%) |
|---|---|---|---|
| Interest Income | 8,588.67 | 7,479.38 | +14.8% |
| Total Income | 9,903.33 | 8,359.72 | +15.7% |
| Profit Before Tax (PBT) | 255.09 | 960.55 | -73.4% |
| Profit After Tax (PAT) | 109.49 | 636.78 | -82.8% |
| Earnings Per Share (EPS) | ₹8.62 | ₹49.94 | – |
Q4 FY25 vs Q4 FY24 Performance
| Particulars | Q4 FY25 (₹ Cr) | Q3 FY25 (₹ Cr) |
|---|---|---|
| Interest Income | 2,186 | 2,188 |
| Total Income | 2,518 | 2,502 |
| Profit Before Tax (PBT) | 80.97 | 2.91 |
| Profit After Tax (PAT) | 40.81 | (17.64) |
Asset Quality Deterioration
| Metric | FY25 | FY24 |
|---|---|---|
| Gross NPA | 5.05% | 4.02% |
| Net NPA | 2.30% | 2.00% |
Observation: Rising delinquencies, especially in unsecured retail segments, led to higher credit costs and pressure on margins.
Valuation Metrics (FY25)
| Metric | Value |
|---|---|
| Market Cap | ₹17,110 Cr |
| P/E Ratio | 26.86 |
| P/B Ratio | 2.97 |
| Return on Equity (ROE) | 1.91% |
| Debt-to-Equity Ratio | 8.33 |
Hero FinCorp’s FY25 performance is a classic case of growing pains. While the company successfully expanded its top line and footprint across emerging markets, it struggled to maintain profitability amid rising delinquencies and a surge in provisioning. The Q4 recovery in profits from Q3 losses is a welcome sign, but sustainability remains key. As the company eyes an IPO and strengthens its digital and retail lending capabilities, it must balance aggressive growth with tighter risk controls. For investors and stakeholders, FY25 serves as a crucial reminder: scaling fast is good, but scaling right is better.