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    Can Fin Homes

    CANFINHOME
    Financial Services·23 Oct 2025
    Management Summary

    Can Fin Homes reported a strong Q2 FY26, meeting its disbursement guidance of INR2,500 crores and showing significant improvement in asset quality with a INR130 crore reduction in delinquency. The company also saw NIM expansion from 2.62% to 2.79% (spread) and successfully implemented the first phase of its IT transformation. However, AUM growth was slightly impacted by higher prepayments, and the company has moderated its Q3 disbursement target to INR2,500 crores due to ongoing IT system changes.

    Highlights

    5

    • Q2 FY26 disbursements reached INR2,500 crores, meeting guidance.

    • Delinquency reduced by INR130 crores to approximately INR3,850 crores.

    • Net Interest Margin (NIM) improved from 2.62% in Q1 to 2.79% in Q2 (spread), crossing 4% (NIM at 4.02%).

    • Secured INR1,500 crores in NHB refinance at an indicative blended rate of 6.8%.

    • First phase of IT transformation (SD-WAN, ALM/Treasury modules) successfully implemented on September 30, 2025.

    Concerns

    3

    • AUM growth slightly dropped below 9% due to higher prepayments, including INR120 crores in loan closures.

    • Telangana continues to show negative growth, though improving from 30% to 27%, with a longer timeline to turn positive (Q4 target).

    • Q3 disbursement target is moderated to INR2,500 crores due to ongoing IT transformation activities and staff training.

    Key financials

    Single quarter

    06 metrics
    1. 01NIM4.0%
    2. 02Spread2.8%+6.5%QoQ
    3. 03Disbursements₹2,500 Cr
    4. 04Delinquency₹3,850 Cr-3.3%QoQ
    5. 05AUM Growth9%

    Capital allocation

    1
    high confidence
    CategoryHeadline
    Liquidity

    Liquidity disclosed

    Secured NHB refinance sanction of INR1,500 crores at an indicative blended rate of 6.8%, with 40% qualifying under affordable housing fund. This provides a rate advantage for borrowing in Q3.

    Guidance & targets

    15
    CategoryTargetPriority
    Asset Quality
    Delinquency (absolute value)
    INR3,750 crores
    		High
    Profitability
    Credit Cost
    Lower than Q2 (INR3 crores)
    		Medium
    Profitability
    Credit Cost (bps)
    Below 15 bps
    		Medium
    Profitability
    NIM
    3.75%
    		High
    Profitability
    Spread
    2.75%
    		High
    Disbursements
    Disbursements
    INR2,500 crores
    		High
    Disbursements
    Disbursements
    Increased from Q3 to meet annual target
    		Medium
    Disbursements
    Total Disbursements
    INR10,500 crores
    		High
    AUM Growth
    AUM Growth
    12-13%
    		High
    AUM Growth
    AUM Growth
    15%
    		High
    Operating Expenses
    IT Cost Increase
    INR40 crores
    		High
    Operating Efficiency
    Cost-to-Income Ratio
    19-19.5%
    		High
    Strategic Initiatives
    Co-lending/DA policy implementation
    Implemented
    		Medium
    Regional Growth
    Karnataka YTD Growth
    3-4%
    		High
    Regional Growth
    Telangana Average Monthly Disbursement
    INR125 crores
    		Medium

    Delinquency Reduction

    Q3 FY26
    CurrentINR3,850 crores
    Target~INR3,750 crores

    Why it matters

    Continued reduction in delinquency is key for asset quality improvement and lower credit costs.

    So we are targeting around 3,750 kind of -- so almost another INR100 crores reduction in SMA in Q3.

    How to verify

    key_financials.metrics[label='Delinquency']

    Risks & concerns

    4
    RiskSeverity

    AUM Growth Moderation due to Prepayments

    AUM growth slightly dropped below 9% due to INR200 crores in prepayments, including INR120 crores in loan closures, with 40% from Telangana due to DSA movements. — Management acknowledged

    medium

    Negative Regional Growth in Telangana

    Telangana's negative growth improved from 30% to 27%, but it will take longer (Q4) to turn positive, impacted by construction activity. — Management acknowledged

    medium

    IT Transformation Impact on Disbursements

    Q3 disbursement target is moderated to INR2,500 crores due to staff training and go-live activities related to the IT transformation. — Management acknowledged

    medium

    Potential Rise in Borrowing Costs

    Management noted that in Q4, liquidity pressure might cause borrowing costs to go up, influencing decisions on rate cuts. — Management acknowledged

    low

    Q&A highlights

    8

    “See, actually, the challenges are, I would say, for this affordable housing business or housing business per se. So I think it is ground presence of feet on street, which is a critical aspect. And so far, Can Fin has not had a sales team or a feet-on-street channel, and it's been more reliant on the DSA channel.”

    Addresses strategic challenges in a key growth segment and highlights the shift from DSA to direct sales and branch expansion.

    asked by Sucrit

    2 min read6 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    06

    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.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.