Summary
Home First Finance Company India Limited - Q3 FY26 Earnings Call Summary Friday, January 23, 2026, 5:00 PM IST
Event Participants
Executives 3 Manoj Viswanathan (MD & CEO), Nutan Gaba Patwari (CFO), Sunil Anjana (Head, Treasury and Investor Relations)
Analysts 10 Abhijit Tibrewal (Motilal Oswal), Adityapal (MSA Capital Partners), Bunty Chawla (Ask Wealth), Chintan Shah (ICICI Securities), Divyansh Gupta (Latent PMS), Maulik Chaudhari (Monarch Networth), Nidhesh Jain (Investec), Prithviraj Patil (Investec), Raghav (Ambit Capital), Rajiv Mehta (YES Securities), Ruhitash (Individual), Shreepal Doshi (Equirus), Shubhankar Gupta (Equitree Capital), Siraj Khan (Ascendancy Capital), Smaran (Money Stories Asset Management)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Assets Under Management (AUM) | ₹14,925 crores | +24.9% YoY and +5.3% QoQ; sustained growth momentum. |
| Disbursements | ₹1,318 crores | +10.5% YoY; monthly disbursements crossed ₹500 crores for the first time in Dec-25. |
| Individual Housing Loans | 83% of AUM | Core focus remains on individual housing; LAP accounts for 15%. |
| Gross Stage 3 (GNPA) | 2.0% | +10 bps QoQ increase; management expects improvement in Q4 as early buckets stabilize. |
| 1+ DPD | 5.3% | -20 bps QoQ improvement; indicating stabilization in early delinquencies. |
| 30+ DPD | 3.7% | Flat QoQ; Stage 2 reduced by 10 bps. |
| Net Interest Margin (NIM) | 6.0% | Increased from 5.4% QoQ; supported by lower borrowing costs and optimized liquidity. |
| Spread (Ex-co-lending) | 5.4% | Maintained healthy spreads; management guides for 5.0%-5.2% long-term. |
| Cost of Borrowing (Ex-co-lending) | 8.0% | -10 bps decrease; proactive liability management and bank MCLR reductions. |
| Profit After Tax (PAT) | ₹140 crores | +44% YoY; impacted by a one-time ₹3.3 crore gratuity provision. |
| Return on Assets (ROA) | 4.0% | Stable profitability; 4.1% excluding one-time gratuity impact. |
| Return on Equity (ROE) | 13.7% | 17.1% on a pre-money adjusted basis (excluding April QIP capital). |
| Capital Adequacy (CRAR) | 49.0% | Strong capital position; increased from 48.4% in Q2 due to lower cash in mutual funds. |
Geographic & Segment Commentary
- Gujarat: Successful recovery from anticipated tariff impacts due to state economic vibrancy; remains the largest market with stable asset quality and strong growth.
- Maharashtra: Re-established strong growth trajectory in competitive markets like Mumbai and Pune, contributing significantly to overall AUM growth.
- Tamil Nadu: Faced delinquency issues related to tariffs and team churn; management has stabilized the team and expects a turnaround in performance by FY27.
- Uttar Pradesh: Adopting a calibrated approach with a new team being established; projected to become a major growth contributor from FY28 onwards.
Company-Specific & Strategic Commentary
- Digital Adoption: 81% of approvals leveraged the Account Aggregator framework, and 96% of customers are registered on the mobile app, with 85% of service requests raised digitally.
- Distribution Expansion: Added 2 branches in Q3 (Karnataka and MP); 6-8 branches in the pipeline for Q4 FY26, with an additional 25-30 planned for FY27.
- Co-lending Strategy: Co-lending book stands at ₹585 crores (3.9% of AUM); strategic goal is to scale this to 10% of total AUM to cater to higher ticket sizes.
- PMAY 2.0: Received ~4,500 applications with initial subsidies credited to 103 customers; expected to gain further traction as processes streamline.
- Productivity: Per-employee disbursement remains static at ₹3 crore per month; management aims for improvement as environmental tailwinds return.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| AUM Growth | 25% for FY26 & FY27 | Driven by distribution expansion and recovery in lagging states like Tamil Nadu. |
| Long-term AUM Target | ₹35,000 crores by 2030 | Implies a sustained growth rate of 20-23% over the next four years. |
| Spreads | 5.0% - 5.2% | Management will pass on borrowing cost benefits to customers to maintain this range. |
| Asset Quality | Improvement in Q4 FY26 | Based on improving collection efficiency and reduction in 1+ DPD buckets. |
Risks & Constraints
| Risk | Context |
|---|---|
| Asset Quality (Stress) | Specific stress noted in Tamil Nadu (Tirupur) due to tariff-related economic pressure and historical team churn. |
| Competitive Intensity | Aggressive balance transfers (BT-out) remain a threat; management is countering this with proactive customer counseling and retention efforts. |
| Liquidity for Borrowers | Management noted that restricted access to personal loans/unsecured credit for lower-income borrowers has pressured their ability to manage home loan EMIs during emergencies. |
Q&A Highlights
Asset Quality & Collections
- Question: What is driving the improvement in early delinquencies? (Abhijit Tibrewal)
- Answer: Collection efficiency has improved as the “MFI stress spillover” tapers off; the company is seeing a divergence where customers might bounce but pay soon after using alternate accounts (Manoj Viswanathan).
Pricing & Spreads
- Question: Will there be further PLR cuts after the 10 bps reduction in Jan-26? (Shreepal Doshi)
- Answer: No further cuts expected in Q4 FY26; future reductions depend on bank MCLR movements and marginal borrowing costs (Nutan Gaba Patwari).
Growth Strategy
- Question: Is the AUM guidance of 25% conservative given the recovery in Karnataka and Tamil Nadu? (Siraj Khan)
- Answer: It is a realistic projection based on current visibility; if market momentum increases significantly in mid-FY27, guidance may be revised upward (Manoj Viswanathan).
Management Continuity
- Question: Can you clarify rumors regarding your potential exit? (Nidhesh Jain)
- Answer: Rumors are baseless; I have no intent to move out and will continue as MD & CEO (Manoj Viswanathan).
Key Takeaway
Home First Finance delivered a resilient performance in Q3 FY26, characterized by record disbursements of ₹1,318 crores and AUM growth of 25% YoY. While Gross Stage 3 increased slightly to 2.0%, the improvement in 1+ DPD to 5.3% suggests that the worst of the credit stress, particularly in tariff-impacted regions like Tamil Nadu and Gujarat, is subsiding. Strategically, the company is transitioning toward a more diversified geographic footprint and enhancing its co-lending book (target 10% of AUM) to manage higher ticket sizes effectively. Financial health remains robust with NIMs at 6.0% and a strong capital adequacy of 49.0%. Management reaffirmed its commitment to a 25% AUM growth trajectory for FY27 and a long-term vision of reaching ₹35,000 crores by 2030, anchored by distribution expansion and deep technological integration. Home First remains well-positioned to capitalize on the affordable housing opportunity as macroeconomic headwinds ease.
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