MSME-focused lender NeoGrowth slipped into the red in FY26 as a sharp decline in interest income weighed on its financial performance. The company’s revenue contracted during the year, while lower expenses failed to offset the drop, reversing its profitability in FY25 and resulting in a substantial loss in the fiscal year ending March 2026.

The company’s revenue from operations fell to Rs 591.07 crore in FY26 from Rs 750.31 crore in the previous fiscal year, according to its annual financial statements filed with the Registrar of Companies (RoC).

Interest income, the company’s primary revenue source, declined 21.4% to Rs 566.97 crore in FY26 from Rs 721.04 crore in FY25. It accounted for around 96% of its operating revenue during the year.

Income from fees and commissions fell 21.9% to Rs 12.63 crore, while income from the derecognition of loan assets declined 53.2% to Rs 3.14 crore. However, gains from short-term investments in liquid mutual funds rose 40.1% to Rs 7.1 crore during the year.

On the expense side, impairment on financial instruments, which includes provisions for potential loan losses, remained largely flat at Rs 277.32 crore in FY26 against Rs 279.54 crore in FY25.

Finance costs, the company’s second-largest expense, declined 19.5% to Rs 228.88 crore from Rs 284.19 crore. However, employee benefit expenses increased 3.8% to Rs 109.78 crore, while depreciation and amortisation expenses rose to Rs 12.42 crore from Rs 10.71 crore. Other expenses increased to Rs 59.29 crore from Rs 58 crore.

19 crore in FY25. However, the decline was not enough to offset lower revenue, pushing the lender into a sizable loss.

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