Star Housing Fin — Q1 FY26 earnings call

Call held 20 Aug 2025

Management summary

Star Housing Finance Limited reported a quarter of continued growth in AUM and disbursements, alongside stable asset quality. The company is actively pursuing capital market initiatives, including an NSE listing and authorized capital increase, while navigating a CFO transition. Management expressed optimism for H2 FY26, anticipating a ramp-up in operations and improved financial performance.

Highlights

  • Asset Under Management (AUM) stood at INR 546.58 crores, marking a 16% YoY growth.

  • Disbursements for Q1 FY26 aggregated to INR 24.41 crores.

  • Total Income for the quarter was INR 21.81 crores, with Net Interest Income at INR 8.25 crores.

  • Profit After Tax (PAT) for Q1 FY26 was INR 1.38 crores, resulting in a Return on Equity (RoE) of 3.83%.

  • Asset quality metrics reported Gross NPA at 1.65% and Net NPA at 1.13%, with Portfolio at Risk (PAR) at 5.18%.

  • The Board recommended a final dividend of INR 0.10 per share and approved a fundraise of up to INR 50 crores via non-convertible debentures.

  • Authorized share capital is set to increase from INR 50 crores to INR 125 crores, subject to shareholder approval.

  • The company applied for direct listing on the NSE platform on July 16, 2025, and initiated co-lending partnerships with Vastu Housing Finance.

Key financials

  1. Asset Under Management (AUM) ₹546.58 Cr +16%YoY
  2. Disbursement ₹24.41 Cr
  3. Total Income ₹21.81 Cr
  4. Net Interest Income ₹8.25 Cr
  5. Profit After Tax (PAT) ₹1.38 Cr
  6. Return on Equity (RoE) 3.8%
  7. Gross NPA 1.6%
  8. Net NPA 1.1%
  9. Portfolio at Risk (PAR) 5.2%
  10. Total Borrowings ₹391.91 Cr
  11. Debt-to-Equity Ratio 2.69×
  12. Net Interest Margin (NIM) 6.6%

What they filed

Q3 FY26: revenue up 7.4%, net profit down 76.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ4 FY24Q1 FY25Q2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26
Revenue16 19 22 24 28 +70%22 +15%25 +15%26 +7%
Net profit3 3 3 2 3 +9%1 −54%2 −42%0 −76%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

high confidence
  • Dividend ₹0.1/share (final)
    The Board has recommended a final dividend of INR 0.10 per share, subject to shareholders' approval in the upcoming Annual General Meeting.
  • Liquidity Liquidity disclosed The liability pipeline, comprising committed limits, undrawn facilities, and partners' proposals, remains robust to support planned asset growth. The company also approved a fundraise through issuance of non-convertible debentures of up to INR 50 crores. The borrowing limit was also approved to be increased from INR 700 crores to INR 1,000 crores.
    In the liability pipeline comprising committed limits, undrawn facilities and partners proposals, remain robust and calibrated to support our planned asset growth. On shareholder front, the Board has recommended a final dividend of INR 0.10 per share, subject to shareholders' approval in the upcoming Annual General Meeting. The Board has approved fundraise through issuance of non-convertible debentures of up to INR 50 crores and also approved the increase in authorized share capital of the company to INR 125 crores from current INR 50 crores, subject to shareholder approval in the upcoming Annual General Meeting. In fact, we have also taken an approval from the Board to increase in our borrowing limit from INR 700 crores to INR 1,000 crores.

Guidance & targets

Growth

  • Disbursement Rate Growth · Upcoming quarters · Medium confidence Ramp up
    This is going to ramp up. Yes. This is going to ramp up because of the reason, if you have heard our CEO, Kalpesh Dave's remarks, so there were some issues in terms of debt rates, specifically conditions related to market conditions. Now since those conditions are over, we have raised funds from financial institutions as well as from the regulator, and we are trying to ramp up the rate.

    — Anoop Saxena

Capital Structure

  • Authorized Share Capital Capital Structure · Upcoming AGM · High confidence INR 125 crores

    Previously INR 50 crores → INR 125 crores

    The third thing is increase in the authorized capital. We have increased authorized capital in the last Board meeting and now the authorized capital subject to shareholder approval in place will get increased from current INR 50 crores to INR 125 crores.

    — Kalpesh Dave

  • Equity Raise Capital Structure · This financial year · Medium confidence Some kind of equity coming in
    Hopefully, we should see some kind of equity coming in on to the balance sheet in this financial year, subject to all approvals in place.

    — Kalpesh Dave

  • Borrowing Limit Capital Structure · High confidence INR 1,000 crores

    Previously INR 700 crores → INR 1,000 crores

    In fact, we have also taken an approval from the Board to increase in our borrowing limit from INR 700 crores to INR 1,000 crores.

    — Kalpesh Dave

Shareholder Returns

  • Dividend Payout Shareholder Returns · Upcoming AGM · High confidence INR 0.10 paise per share

    Previously INR 0.075 paise per share → INR 0.10 paise per share

    Dividend payout, we have agreed to have a dividend payout given to our shareholders. This time, it has increased as well from INR 0.075 to INR 0.10 paise and that also is subject to shareholder approval in the coming AGM.

    — Kalpesh Dave

Cost of Funds

  • Borrowing Cost Cost of Funds · Upcoming quarter or H2 · Medium confidence Slight decrease
    Though, since now regulator funds has been availed plus equities also on the verge of closing, if I may quote that. So, we can see a slight decrease in upcoming quarter or in H2 per se, in terms of cost of borrowing.

    — Anoop Saxena

  • Borrowing Cost Reduction (post rating upgrade) Cost of Funds · Post rating upgrade · Medium confidence 25 to 50 basis points
    So, the trigger would be having a rating upgrade. And once that happens, we should aim for a reduction of around 25 to 50 basis points in terms of borrowing cost.

    — Kalpesh Dave

What to watch in Q2 FY26

NSE Listing Status

Optimal time (next quarter)
Current Application submitted, replied to two query sets
Target Onboarding onto NSE platform

Why it matters

Successful listing on NSE could enhance liquidity and visibility for the company's shares.

We applied formally to get direct listing on to the NSE platform of 16th of July 2025. We got two rounds of queries, which we have replied to. And we continue to engage with the NSE team, for further resolution of queries and we see that we get onboarded onto the NSE in the optimal time, subject to all approvals in place.

Risks & concerns

  • Macroeconomic conditions impacting liability pipeline

    medium

    The company faced headwinds in the last financial year, particularly in H2, due to macroeconomic conditions affecting the liability pipeline for smaller HFCs and NBFCs.

    Management acknowledged

  • Senior management transitions

    medium

    The CFO and other directors have departed, requiring succession planning and new appointments, though the CFO's exit was due to personal exigencies.

    Management acknowledged

  • Lag effect in reducing borrowing cost

    low

    Despite potential repo rate decreases, there is a lag effect in reducing the company's borrowing cost, and its size/scale means it's often last to benefit.

    Management acknowledged

  • Impact of RBI circular on asset quality

    low

    A recent RBI circular regarding due dates and EMI receipt dates led to a slight increase in PAR and NPA in Q3 FY25, though numbers are now back on track.

    Management acknowledged

Q&A highlights

6 direct
Disbursement run rate and future ramp-up Direct
This is going to ramp up. Yes. This is going to ramp up because of the reason, if you have heard our CEO, Kalpesh Dave's remarks, so there were some issues in terms of debt rates, specifically conditions related to market conditions. Now since those conditions are over, we have raised funds from financial institutions as well as from the regulator, and we are trying to ramp up the rate.

Clarifies management's expectation for accelerated loan disbursements after overcoming previous funding challenges.

Asked by Vinil

Geographic and product-wise contribution to AUM growth Direct
So up to now, my majority of portfolio comes from the state of Maharashtra, followed by Rajasthan, then followed by Madhya Pradesh and rest other regions are contributing approximately equally in terms of portfolio. In terms of the strategy, we are trying to ramp up our business in National Capital Region and Tamil Nadu, which is deep South. So these 2 states are there, wherein we are trying to ramp up business more efficiently and effectively. ... approximately 95% portfolio comes from individual housing loans only.

Provides insight into the company's current portfolio concentration and strategic expansion areas, confirming focus on affordable housing.

Asked by Natasha Shetty

NIM sustainability given rising borrowing costs Direct
Because of that reason, we can see a slightly increase in my cost of fund, cost of borrowing. Though, since now regulator funds has been availed plus equities also on the verge of closing, if I may quote that. So, we can see a slight decrease in upcoming quarter or in H2 per se, in terms of cost of borrowing.

Addresses concerns about margin pressure and indicates potential for cost of funds reduction in the near future due to improved funding access.

Asked by Natasha Shetty

Reasons for declining profitability and disbursement, and asset quality outlook Direct
So, profitability decline, as I said in my talk also that there was a one-time income, which we had booked in Q1 last year, which we have not done this time. ... So, our focus is right now getting back on track, not running, not sprinting, but basically walking slowly to get back on track. ... In terms of the asset quality, there has been an improvement if you compare it with respect to the Q4 numbers and we are hopeful to maintain these particular levels.

Explains the profitability dip as a one-off effect from the previous year and outlines a cautious, calibrated approach to growth to maintain asset quality.

Asked by Ganesh Kumar

Liability pipeline and types of funding institutions Partial
So, liability pipeline is developing. Again, the focus is to have a blend of funds from financial institutions, public sector banks, different type of instruments, including NCDs to raise the funds. That mix will continue to happen. Okay. I cannot tell you right now as to which proposals are there because it would not be rightful of me to disclose at this point of time.

Confirms a diversified funding strategy but management refrains from disclosing specific ongoing proposals, indicating sensitive negotiations.

Asked by Ashish Wanjari

Rural/semi-urban borrower repayment discipline and asset quality protection measures Direct
So in terms of asset quality, if you look at my PAR and NPA number, so my PAR and NPA number was slightly increased during quarter 3 of FY '25. There was slightly increase on account of recent circular at that point of time, circular issued by RBI in terms of due date and receive date of EMI. That was the specific reason there. Our PAR number was slightly increased. But due to efficient collection strategy as well as monitoring calls in terms of collection, now those numbers are coming back on track.

Details the impact of an RBI circular on asset quality metrics in Q3 FY25 and highlights effective collection strategies to bring them back under control.

Asked by Ashish Wanjari

Plans for NSE listing, current status, and timeline Direct
And accordingly, on the 16th of July, we submitted our application for getting directly listed on to the NSE platform. Post that, NSE team has been very quick in terms of responding. We have received two sets of queries till now, which we have duly replied and again, it is not under our control in terms of when this will get consummated. But we are hopeful that we should be able to reply to all the queries and all the requirements in an optimal time and should be able to bridge that turnaround time to get onto the NSE platform.

Provides an update on the NSE listing process, indicating progress and the company's commitment to completing it.

Asked by Ashish Kumar

Plans for raising capital and senior management departure (CFO/Director) Partial
So equity, as I said, it's an ongoing process, okay. We have been engaging with different prospects. ... Hopefully, we should see some kind of equity coming in on to the balance sheet in this financial year, subject to all approvals in place. With respect to exit of Natesh, as I said, he had a family exigency, which required him to basically be away from professional endeavors and focus on his family-run business.

Addresses the ongoing equity raise efforts and provides clarity on the CFO's departure, attributing it to personal family exigencies while noting continued advisory role.

Asked by Umesh Singh

2 min read 5 chapters

Detailed narrative

Q1 FY26 Financial Performance Overview

Star Housing Finance Limited reported an Asset Under Management (AUM) of INR 546.58 crores as of June 30, 2025, reflecting a 16% year-on-year growth. Disbursements for the quarter stood at INR 24.41 crores. The company recorded a Total Income of INR 21.81 crores and a Net Interest Income of INR 8.25 crores. Profit After Tax (PAT) for Q1 FY26 was INR 1.38 crores, translating to a Return on Equity (RoE) of 3.83%. The decline in PAT compared to Q1 FY25 was attributed to the absence of a one-time income recorded in the previous year.

Operational Highlights and Growth Strategy

The company's live customer base expanded to over 5,400 borrowers, served through a network of 37 branches across Maharashtra, Gujarat, Madhya Pradesh, Rajasthan, National Capital Region, and Tamil Nadu. The average incremental loan size remained around INR 10 lakhs in semi-urban markets and INR 8 lakhs in rural centers. Star Housing Finance continues its focus on first-time homeownership for Economically Weaker Sections (EWS) and Low-Income Groups (LIG), with approximately 95% of its portfolio comprising individual housing loans. Strategic efforts are underway to ramp up business in NCR and Tamil Nadu.

Capital and Funding Initiatives

Total borrowings for the company reached INR 391.91 crores, resulting in a debt-to-equity ratio of 2.69 times. The Board approved a fundraise of up to INR 50 crores through non-convertible debentures, for which India Ratings affirmed a 'BBB stable' rating. Furthermore, the authorized share capital is set to increase from INR 50 crores to INR 125 crores, pending shareholder approval. The company also secured approval to increase its borrowing limit from INR 700 crores to INR 1,000 crores, indicating a robust liability pipeline and plans for diversified funding.

Asset Quality and Credit Discipline

Asset quality metrics for Q1 FY26 showed a Gross NPA of 1.65% and a Net NPA of 1.13%, with Portfolio at Risk (PAR) at 5.18%. Management noted an improvement in asset quality compared to Q4 FY25. A slight increase in PAR and NPA in Q3 FY25 was attributed to an RBI circular regarding EMI due dates and receipt dates, alongside macroeconomic factors. The company emphasizes financial education for customers and employs efficient collection strategies to maintain asset quality.

Management Transition and Future Outlook

The company announced the departure of its Chief Financial Officer, Mr. Natesh Narayanan, due to personal family exigencies, though he continues to advise the company. Other director transitions are also underway, with plans to appoint suitable replacements. Star Housing Finance has applied for direct listing on the NSE platform on July 16, 2025, and is actively responding to queries. Management expressed confidence in rebuilding momentum lost in previous quarters and anticipates a strong financial year ahead, particularly leveraging the H2 festival season.

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