Summary
Repco Home Finance Limited - Q3 FY2026 Earnings Call Summary Friday, February 6, 2026, 4:00 PM
Event Participants
Executives Ankush Tiwari (Company Secretary), A. Palpandi (COO), M. Raja (CBO), P. K. Vaidyanathan (CDO), Shanthi Srikanth (CFO), T. Karunakaran (MD & CEO)
Analysts Akash Jain (Moneycurves Analytics), Anand Mundra (Soar Wealth), Badhrinarayanan Ravi (FPS Assets), Darshan Deora (Invest Group), Rajiv Mehta (Yes Securities), Sameer A H (Vidura Capital), Sanket Chheda (DAM Capital), Saurabh Dhule (Fyers Assets), Shubhranshu Mishra (PhillipCapital), Vikas Kasturi (Focus Capital)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Disbursements | ₹1,069 crores | +40% YoY; Crossed ₹1,000 cr mark for the second time this fiscal. |
| AUM | ₹15,394 crores | +8.8% YoY; Net addition of ₹360 cr in the quarter after principal run-offs. |
| GNPA | ₹449.53 crores | -17.5% YoY; Absolute reduction from ₹475 cr in Q2 to ₹450 cr in Q3. |
| Stage 2 Assets | ₹1,235 crores | -17.4% YoY; Significant reduction of ~₹100 cr during the quarter. |
| Cost of Funds | 8.45% | -30 bps since start of year; Yield on assets maintained at 12%. |
| Spread | 3.3% | Maintained within target range of 3.2-3.3%. |
| NIM | 5.41% | Consistent margin performance despite competitive pressures. |
| ROA | 2.89% | Target is to maintain ROA close to 2.9%. |
| ROE | 13.17% | Management aims to grow ROE through increased leverage and AUM growth. |
| Branch Count | 236 | Includes 31 satellite centers; 2 new branches opened in Q3. |
Geographic & Segment Commentary
- Tamil Nadu: Remains the core market with a 25-year footprint. While competition from players like Aavas is increasing, the company is focusing on deep-rooted customer relationships while gradually reducing TN’s percentage contribution by growing other states.
- Karnataka: Performance was hindered by the “e-Khata” regulatory issue, leading to a slowdown in disbursements. Management expects resolution by March 2026, which should normalize growth in the state.
- Expansion States: Strong disbursement improvement noted in Maharashtra, Madhya Pradesh, and Rajasthan. Future branch expansion will prioritize the Eastern and Western regions of India.
Company-Specific & Strategic Commentary
- Liability Diversification: Successfully raised ₹93 crores via PTC at 7.75% and ₹145 crores via CP. Plans are in advanced stages to issue NCDs of ₹100-125 crores within weeks to further diversify the liability mix.
- Verticalization of Recoveries: Employed 225 dedicated personnel for recovery, specifically targeting Stage 2 assets. This verticalization has reduced Stage 2 assets from 14% two years ago to ~8% currently.
- Sourcing Channels: Shifted from a 35:65 DSA-to-internal sourcing ratio last year to a 50:50 split. The empanelment of corporate DSAs and new direct sales teams (DSTs) are primary drivers of disbursement growth.
- Silver Jubilee One-offs: Incurred ~₹3 crores in celebration costs and ₹5 crores in employee benefit provisions (gratuity/leave encashment) due to new labor code implementations, impacting opex this quarter.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| FY26 Disbursement | ₹4,000 crores | On track; requires ₹1,200-1,400 cr in Q4. |
| FY26 Exit AUM | ₹16,200 crores | Confidence based on Q4 typically contributing 35-36% of annual growth. |
| FY27 Disbursement | ~₹5,000 crores | Target includes organic growth and potential Direct Assignment (DA) transactions. |
| Asset Quality | GNPA 2.5%; Stage 2 7.5% | Targets for March 2026; backed by ₹20-25 cr expected NPA recovery in Q4. |
| Cost of Funds | -10 bps in Q4 | Driven by repricing of ₹4,600 cr bank borrowings and new low-cost PTCs. |
Risks & Constraints
| Risk | Context |
|---|---|
| Portfolio Run-off | High principal repayment/BT-out rates (~₹170-200 cr monthly) limit net AUM growth despite record disbursements. Management is using retention policies and top-up loans to mitigate this. |
| Asset Acquisition | While evaluating portfolio buys to boost AUM, management cautioned that they will not compromise on credit quality or asset mix (80:20 Home Loan to Equity). |
| Tech Disruption | New-age fintechs offer faster TAT; however, Repco’s focus on non-prime/cash-salaried segments requires “touch and feel” risk assessment that cannot be 100% automated. |
Q&A Highlights
Asset Quality Trajectory
- Question: Why is Stage 2 still high at 7.5-8% compared to industry peers? (Sanket Chheda)
- Answer: It was 14% three years ago. We have verticalized collections and expect to reduce it by 2-2.5% annually to reach 1.5-2% in two years (P.K. Vaidyanathan/T. Karunakaran).
Employee Costs & Opex
- Question: What caused the sharp rise in employee and other expenses? (Akash Jain/Anand Mundra)
- Answer: Provisions of ₹5 cr for the new Labor Code and ₹1.6 cr for upgraded insurance are one-offs. Increased legal/valuation fees are linked to higher disbursement volumes (T. Karunakaran).
Balance Takeovers (BT)
- Question: What is the trend in BT-out vs BT-in? (Anand Mundra)
- Answer: BT-out is steady at ~₹30 cr/month. BT-in was ~₹150 cr for the quarter, resulting in a net gain of ₹60 cr (T. Karunakaran/M. Raja).
Growth Strategy
- Question: Is growth coming from relaxed credit standards? (Saurabh Dhule)
- Answer: No. Growth is from new sourcing channels (DSAs/DSTs) and revamped credit methods (gross profit/banking balance methods), but we will not compromise on quality (A. Palpandi/T. Karunakaran).
Key Takeaway
Repco Home Finance delivered a strong operational quarter, achieving disbursements of ₹1,069 crores, a 40% YoY increase, and signaling a shift toward double-digit AUM growth. While the high legacy book run-off continues to mask disbursement gains, the company is successfully diversifying its liability base through PTCs and NCDs, leading to a 30 bps reduction in cost of funds. Strategically, the firm has verticalized its recovery process, reducing Stage 2 assets significantly and guiding for a negative credit cost for the full year. Management remains confident in reaching an AUM of ₹16,200 crores by FY26 exit and a disbursement target of ₹5,000 crores for FY27. Key watch points include the resolution of Karnataka’s “e-Khata” issue and the successful integration of potential portfolio acquisitions without diluting asset quality.
Want more insights like this?
Subscribe to get deep dives delivered to your inbox.
More Earnings Summaries
Explore more Q3 FY26 earnings call analyses: