Summary
Can Fin Homes Limited - Q3 FY26 Earnings Call Summary Monday, January 19, 2026 4:00 PM IST
Event Participants
Executives 5 Abhishek Mishra (CFO), Prakash Shanbhogue (President), Suresh Iyer (MD & CEO), Uthaya Kumar A (President), Vikram Saha (DMD)
Analysts 11 Amit Thawani, Chinmay (Prescient Capital), Jay Thakkar (Eastlane Capital), Mohit (HDFC AMC), Nidhesh Jain (Investec), Nipun Kinkar (CD Research), Prithviraj Patel (Investec), Raghav Garg (Ambit Capital), Shreepal Doshi (Equirus), Shreyans Gathani (SG Securities), Sonal Minhas (Prescient Capital)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Disbursements | ₹2,727 crores | +45% YoY; highest ever quarterly disbursement in company history. |
| AUM | ₹40,100 crores (est) | +9.5% YoY; growth impacted by elevated prepayments of ₹1,691 crores. |
| NIM | 4.14% | +12 bps QoQ; benefited from timing lags in rate transmission to customers. |
| Spread | 2.93% | +10 bps QoQ (incremental); 9-month spread stands at 2.84%. |
| GNPA | 0.92% | Stable QoQ; management notes improvement in delinquency across all zones. |
| SMA-0 | < ₹3,750 crores | Improved QoQ; reduction in early-stage stress allowing focus on SMA-1/2. |
| Cost-to-Income | ~18.5% | Stable; expected to rise by ~100 bps in FY27 due to IT transformation. |
| Credit Cost | ~10 bps | Below 15 bps guidance; expected to remain stable/improve in Q4. |
Geographic & Segment Commentary
- Karnataka: Returned to growth with ₹740 crores in Q3 disbursements (₹250 crores monthly run rate). The YTD growth turned positive at 3% after being -10% in the previous quarter.
- Telangana: Witnessed first improvement in delinquency in 7 quarters despite past DSA issues and macro stress. Disbursement grew 30% YoY in Q3, though YTD AUM growth remains flat to slightly negative.
- North & West: Remained high-growth drivers with 15% AUM growth. North zone notably maintains the highest percentage of salaried customers within the portfolio.
- Product Mix: Salaried segment comprises 69% of the book (GNPA ~0.6%), while Self-Employed Non-Professional (SENP) has increased to 31% (GNPA ~1.5-1.7%).
Company-Specific & Strategic Commentary
- Rate Transmission: Passed on 50 bps cumulative rate cuts to customers (10 bps in Dec, 15 bps in Jan) against RBI’s 100 bps repo cut. Management is aggressively moving the book from annual to quarterly resets (currently 54% annual) to align asset-liability repricing.
- IT Transformation: Implemented HRMS, DMS, and Aadhaar Data Vault in Q3; the Los/LMS module implementation is pushed to Q1 FY27 to avoid March year-end disruption. The goal is to enable 100% digital onboarding and improve operational productivity by 20%.
- Sourcing Strategy: Direct marketing executive (ME) team size remained at 90, contributing ₹250 crores in Q3 sourcing. Strategy involves increasing MEs to 150 in FY27 and 250 by FY28 to reduce DSA reliance.
- Vision 2028: Aiming for a 300-branch network (from 249 currently) and a shift in segment mix toward 65% Salaried / 35% SENP to optimize yields.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| FY26 Disbursements | ₹10,500 crores | On track; requires ~₹3,200-3,300 crores in Q4. |
| FY27 Disbursements | ₹13,500 crores | Driven by normalized operations and new sales team productivity. |
| AUM Growth | 15% (FY27) | Assuming ₹7,000 crores annual prepayments/amortization. |
| Spreads | 2.75% - 2.80% | Long-term target after full rate transmission and IT opex impact. |
| NIMs | 3.75% | Expected to stabilize as annual reset book moves to quarterly. |
Risks & Constraints
| Risk | Context |
|---|---|
| Prepayment Pressure | Higher-than-expected prepayments (₹1,691 crores in Q3) are cannibalizing AUM growth. Management attributes this to a lag in communicating rate benefits to annual-reset customers. |
| IT Implementation | Moving to new LOS/LMS in Q1 FY27 is expected to cause a 4-day downtime and a volume impact of ₹250-300 crores in that month. |
| Yield Compression | As the book moves to quarterly resets, the temporary “timing benefit” that boosted Q3 NIMs will dissipate. |
Q&A Highlights
Pricing Strategy
- Question: Are peers following similar rate cut trajectories? (Shreepal Doshi)
- Answer: Can Fin moved all bank borrowings to repo-linked, experiencing immediate liability-side benefits. 50 bps has been passed to customers to stay competitive and curb BT-outs (Suresh Iyer).
Prepayments
- Question: Why are prepayments elevated and who are we losing to? (Sonal Minhas)
- Answer: Annual reset customers (54% of book) don’t see immediate rate benefits, driving them to move. We lose some to banks offering higher top-ups, which is a conscious risk-management call (Suresh Iyer).
IT Transformation
- Question: What is the competitive advantage of the new stack? (Nipun Kinkar)
- Answer: Current system dates to 2011. New stack adds Document Management, automated API integrations, and digital onboarding, reducing turnaround time and improving security (Suresh Iyer).
Profitability Outlook
- Question: Will PAT growth fall to single digits due to higher opex and lower NIMs? (Sangeeta Purushottam)
- Answer: Credit costs might stay below the 15 bps guidance, and AUM growth of 15% should support double-digit PAT growth despite IT-related opex increases (Suresh Iyer).
Key Takeaway
Can Fin Homes delivered record quarterly disbursements of ₹2,727 crores in Q3 FY26, signaling a strong recovery in Karnataka and stabilization in Telangana. While AUM growth lagged at 9.5% due to heightened prepayments of ₹1,691 crores, NIMs expanded to 4.14% on the back of favorable borrowing costs and timing lags in asset repricing. Strategically, the company is transitioning its loan book to quarterly resets and expanding its direct sales team to 150-250 members by FY28 to reduce DSA dependence. Management maintains a cautious yet steady outlook, targeting 15% AUM growth for FY27. Key monitoring areas include the upcoming LOS/LMS migration in Q1 FY27 and the ability of the company to contain prepayments through faster rate transmission to existing borrowers. Forward-looking guidance suggests spreads will stabilize near 2.75% as the credit cost remains benign at ~10-15 bps.
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