Detailed Narrative
Q2 Performance Highlights & Disbursements
Can Fin Homes achieved its Q2 FY26 disbursement guidance, reaching INR2,500 crores. This marks the first time Q2 disbursements crossed this threshold, following INR2,000 crores in Q1. The company maintains a positive pipeline, indicating sustained business momentum. Karnataka's September disbursements reached INR270 crores, significantly up from INR78 crores in Q2 last year, contributing to regional recovery.
Asset Quality Improvement
The company demonstrated significant improvement in asset quality, with overall delinquency reducing by INR130 crores to approximately INR3,850 crores. This reduction was broad-based, impacting SMA 0, SMA 2, and NPA categories. Management expects further delinquency reduction of INR100 crores in Q3, targeting approximately INR3,750 crores, and anticipates FY26 credit costs to be lower than the guidance of 15 bps.
Net Interest Margin (NIM) Expansion & Cost of Funds
The company's spread improved from 2.62% in Q1 to 2.79% in Q2, with the current NIM at 4.02% at the end of Q2. This expansion was primarily driven by the full benefit of repo rate cuts and adjustments in bank borrowings. Can Fin Homes secured INR1,500 crores in NHB refinance at an indicative blended rate of 6.8%, with 40% qualifying under affordable housing, which is expected to provide a rate advantage in Q3.
IT Transformation Progress
The first phase of the IT transformation, encompassing SD-WAN implementation across all branches, Active Directory, and ALM/Treasury modules, was successfully implemented on September 30, 2025. The second, more extensive phase, including LOS, LMS, HRMS, and deposits modules, is scheduled for Q3 FY26. This ongoing transformation and associated staff training are expected to moderate Q3 disbursements to INR2,500 crores.
Regional Growth Dynamics (Karnataka & Telangana)
Karnataka showed strong recovery, with September disbursements reaching INR270 crores, up from INR78 crores in Q2 last year. Management anticipates 3-4% YTD growth in Karnataka by the end of Q3 FY26. Telangana, however, continues to experience negative growth, though improving from 30% to 27%, with a target to turn positive by Q4 FY26, contingent on improved construction activity.
Strategic Outlook & Future Growth Targets
Can Fin Homes aims for 12-13% AUM growth and INR10,500 crores in total disbursements for FY26, with AUM growth targeted at 15% for FY27 and FY28. The company guides for a NIM of 3.75% and a spread of 2.75% going forward⏳. Additionally, it expects its cost-to-income ratio to be 19-19.5% next year, with an additional INR40 crores in IT-related costs.