Concall AI

Can Fin Homes Limited — Q3 FY26 earnings call

Call held 20 Jan 2026

Management summary

Can Fin Homes reported strong Q3 FY26 disbursements, reaching a record INR2,727 crores, driven by robust growth across most geographies. Asset quality continued to improve for the fourth consecutive quarter, with declining delinquency numbers. While NIMs saw a slight increase due to timing, higher prepayments and delays in key IT module implementation pose challenges to AUM growth and Q4 disbursements, respectively.

Highlights

Disbursements for Q3 FY26 reached INR2,727 crores, a 45% increase over the corresponding quarter last year and 7% sequential growth over Q2.
AUM growth inched up from 8.4% to 9.5%+, indicating approximately 10% AUM growth for the year.
Delinquency numbers improved for the fourth consecutive quarter, with SMA numbers decreasing, and Telangana showing improvement for the first time in 6-7 quarters.
Karnataka disbursements moved into positive YTD growth (3%) after being negative 10% YTD in the previous quarter.
NIMs slightly increased to 4.14% in Q3 from 4.02% in Q2, attributed to a timing difference in rate transmission.

Concerns

Higher prepayments and loan closures, totaling INR1,691 crores in Q3, impacted AUM growth by approximately INR400 crores in Q2 and Q3.
Delay in the completion of LOS and LMS IT modules, pushing the deadline to Q1 FY27, potentially impacting Q4 FY26 disbursements by INR250-300 crores.
AUM growth of 11-12% for FY26 is lower than the initial guidance of 12-13% and below the industry average of 13-14%.

Key financials

01 Disbursements Q3 FY26 ₹2,727 Cr +45%YoY
02 AUM Growth 9.5%
03 Total Delinquency Q3 FY26 ₹3,750 Cr
04 Provision Q3 FY26 ₹10 Cr
05 NIM Q3 FY26 4.1% +3%QoQ
06 Spread Q3 FY26 2.9%
07 GNPA 0.92%
08 Bank Borrowings Share 62%
09 DSA Sourcing Share 78%
10 Salaried Segment Share 69%
11 Self-Employed Segment Share 31%

What they filed

Q1 FY27: revenue up 7.5%, net profit up 19.6% against the same quarter last year.

₹ Cr · quarterly

Line item	Q2 FY25	Q3 FY25	Q4 FY25	Q1 FY26	Q2 FY26	Q3 FY26	Q4 FY26	Q1 FY27
Revenue	962	986	999	1,020	1,049 +9%	1,073 +9%	1,074 +8%	1,096 +7%
Expenses	70	78	82	91	75	85	83	96
Other income	0	0	1	0	0	0	2	0
Interest	616	636	634	648	639	642	634	659
Depreciation	3	3	4	3	4	4	5	3
Profit before tax	274	269	279	278	332 +21%	341 +27%	353 +27%	339 +22%
Tax rate	23%	21%	16%	19%	24%	22%	2%	21%
Net profit	211	212	234	224	251 +19%	265 +25%	346 +48%	268 +20%
EPS	15.88	15.93	17.57	16.81	18.88	19.89	25.96	20.11

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.

Segment breakdown

AP and East
11% AUM Growth
Karnataka
8% AUM Growth
North and West
15% AUM Growth
Tamil Nadu
15% AUM Growth
Telangana
0% AUM Growth

Guidance & targets

AUM Growth

AUM Growth FY26 AUM Growth · FY26 · Medium confidence 11-12%

Previously 12-13% → 11-12%

We had indicated that 12% to 13% or somewhere in that range, between 12% and 13% is where we will end up for this year. Next year onwards, we had projected for 15%, not this year. So we will be probably around anywhere up to because INR400 crores we have lost, that is about 1 percentage point in terms of -- because we were INR38,200 crores at the beginning of the year.

— Suresh Iyer
AUM Growth FY27 AUM Growth · FY27 · High confidence 15%

Next year onwards, we had projected for 15%, not this year.

— Suresh Iyer
AUM Growth vs. Industry AUM Growth · Ongoing · Medium confidence 2 percentage points above industry

Ideally, we would want to grow at about 2 percentage points above the industry level. So today, if it is at 13%, we would be happy with about 15%.

— Suresh Iyer

Disbursements

Disbursements Q4 FY26 Disbursements · Q4 FY26 · High confidence INR3,200-3,300 crores

Going forward, in terms of disbursement, we anticipate or we are hopeful that we should be able to do about INR3,200 crores to INR3,300 crores of disbursements in Q4 in line with our Q2 numbers, 45% in Q1 and 55% in Q2.

— Suresh Iyer
Disbursements FY26 Disbursements · FY26 · High confidence INR10,500 crores

So that should take us to our guidance number of INR10,500 crores disbursement for the entire year, which we are positive we should be able to maintain we will be able to do.

— Suresh Iyer
Disbursements FY27 Disbursements · FY27 · High confidence INR13,500 crores

But next year, we are looking at about INR13,500 crores.

— Suresh Iyer

Profitability

NIM Profitability · Ongoing · High confidence 3.75-3.80%

But going forward, now that with the additional 15 basis points, we expect that the rates would the spreads will kind of stabilize around this number of about 3.75% to 3.80% in terms of NIM and spread around 2.75% to 2.80%.

— Suresh Iyer
Spread Profitability · Ongoing · High confidence 2.75-2.80%

— Suresh Iyer

Asset Quality

Credit Cost Asset Quality · FY27 · High confidence 15 bps

But we will say it will be 15 basis points you can consider for the credit cost guidance.

— Suresh Iyer
GNPA Asset Quality · Ongoing · High confidence Below 1%

So we are confident that, that will not be reached. We are confident of keeping it below 1%.

— Suresh Iyer

Operating Efficiency

Cost-to-Income Ratio Operating Efficiency · FY27 · High confidence 19.5%

So around 19.5% would be the cost-to-income ratio.

— Suresh Iyer

Branch Network

Total Branches Branch Network · FY28 · High confidence 300

From 249 today

See, in terms of the branch expansion, we our vision documents did, we need to we plan to have about 300 branches by FY '28. We are currently at 249. So next 2 years, we plan to open 25 branches in each year.

— Suresh Iyer

Headcount

Marketing Executives Headcount · FY28 · High confidence 250

From 90 today

And again so by FY '28, end of FY March '28, we at least expect to have about 250-odd people in the sales team.

— Suresh Iyer

Loan Mix

Self-Employed Segment Share Loan Mix · FY28 · High confidence 35%

From 31% today

So by FY '28, we have indicated that we would like to -- we are okay to take it up to 65%-35%. So that is the thing where we have now from a 73%-27%, we have moved to 69%-31%. And by FY '28, we are okay to move it to 65%-35%.

— Management

Sourcing Mix

DSA Contribution Sourcing Mix · Long-term · High confidence 60%

From 78-79% today

So actually, when we are saying we want to bring it down to 60% the DSA contribution, we are not actually saying that the DSAs will -- numbers will go down.

— Suresh Iyer

What to watch in Q4 FY26

LOS/LMS IT Implementation Status

Q1 FY27

Current Testing almost done, expected Q1 FY27 go-live

Target Go-live and stabilization of LOS/LMS modules

Why it matters

Completion is key for digital sourcing, operational efficiency, and achieving higher growth targets.

So that leaves only the LOS, LMS, where the deadline was January, and 19th of January was what has been given by our partner, but there are some delays in the deadline. So I expect that it might end up around February end or something. In which case, we are inclined to actually push it into Q1 of next year.

Risks & concerns

Higher prepayments impacting AUM growth
medium

Prepayments of INR1,691 crores in Q3, impacting AUM growth by INR400 crores in Q2 and Q3, attributed to annual reset customers not benefiting immediately from rate cuts and some customers seeking higher top-ups elsewhere.

Management acknowledged
AUM growth lagging industry average
medium

AUM growth of 11-12% for FY26 is below the industry average of 13-14%, partly due to INR400 crores lost to prepayments and a conscious conservative growth strategy.

Analyst acknowledged
Potential NIM/Spread compression
medium

Concerns raised about PLR cuts, asset repricing, and borrowing mix, but management expects NIMs to stabilize at 3.75-3.80% and spreads at 2.75-2.80% due to liability side benefits and rate transmission.

Analyst acknowledged
Delay in LOS/LMS IT module implementation
low

LOS and LMS modules expected to go live in Q1 FY27 instead of January 2026 due to delays, with a potential impact of INR250-300 crores on disbursements in the implementation month.

Management acknowledged

Q&A highlights

8 direct

Lending Rate Strategy and Prepayment Issues Direct

Because if it was because at least when our customers do appreciate that we have passed on 50 basis points and we have regularly -this is the fourth rate cut that we are passing on to the to our customers. But what has happened is the annual customers don't get the entire benefit. They have to wait for that 1-year period.

Explains the rationale behind aggressive rate cuts (50 bps cumulatively) and the challenge of high prepayments from annual reset customers who don't immediately benefit from rate reductions.

Asked by Shreepal Doshi

AUM Growth Underperformance and IT Transformation Impact Direct

So in terms of disbursement, I don't think that is a major issue. But as I mentioned earlier, our AUM growth is slightly lagging, one, because it always -- it of course, comes with a lag, and it will take -- maybe the next year can be a little better. And two, we have lost about INR400 crores because of higher prepayments this year.

Acknowledges that AUM growth is lagging the industry and attributes it to higher prepayments, while also highlighting the long-term benefits of IT transformation for efficiency and security.

Asked by Nipun Kinkar

Maintaining Spreads Amidst Rate Changes and Asset Repricing Direct

So therefore, we feel for the entire year also, we should be somewhere close to 2.75% plus spread and 3.75% plus NIM. So that is the first part of it. I hope that answers your query.

Addresses concerns about NIM/spread compression due to PLR cuts, asset repricing (moving to quarterly reset), and borrowing mix, with management confident of maintaining spreads around 2.75-2.80% and NIMs around 3.75-3.80%.

Asked by Rajiv

PAT Growth Outlook with Revised Guidance Direct

See, actually, it would not come down to single-digit numbers if the growth -- AUM growth is around 15%. What we are saying is we have already seen at around 3.75% NIM and 2.75% spread is something with that, if you look at your two-point analysis, whatever you see, our credit cost at 15 basis points and 19.5% also, if you look at it, I think it will still be higher than that, and it will be -- it should be in double-digits.

Clarifies that despite slightly lower NIM guidance, higher credit costs, and increased cost-to-income, PAT growth is still expected to be in double digits, not single digits, given the 15% AUM growth target.

Asked by Sangeeta Purushottam

Capital Adequacy and Aggressive Growth Direct

Ideally, we would want to grow at about 2 percentage points above the industry level. So today, if it is at 13%, we would be happy with about 15%. I think that would be a very conservative approach.

Explores the company's capacity for more aggressive growth given its capital adequacy, with management indicating a preference for a conservative approach (2% above industry growth) to maintain book quality, rather than chasing higher numbers.

Asked by Siddhant

Diversifying Sourcing Mix (Reducing DSA Reliance) Direct

So that we will once start by so what we plan to do is onboard various lead aggregators from the market and also do a lot of digital onboarding through links and all those things so that the customers' experience is purely digital.

Details the strategy to reduce reliance on DSAs (currently 78-79%) by increasing the in-house sales team and leveraging digital onboarding and lead aggregators once the IT transformation is complete.

Asked by Prithviraj Patel

Self-Employed Segment Growth and Asset Quality Direct

So by FY '28, we have indicated that we would like to -- we are okay to take it up to 65%-35%. So that is the thing where we have now from a 73%-27%, we have moved to 69%-31%. And by FY '28, we are okay to move it to 65%-35%.

Discusses the conscious decision to increase the self-employed segment (SENP) to 35% by FY28 for better spreads, while maintaining that this segment's GNPA (1.5-1.7%) is manageable and overall GNPA will stay below 1%.

Asked by Shreyans Gathani

IT Transformation Timeline and Business Impact Direct

But what we expect is that the way all our other modules have gone and also in the sense and the way we have seen the customization aspect to it, I think it will be about 3 to 4 days of downtime. Beyond that, I think it will be some 1 or 2 weeks for the teams to get accustomed to it because basically, since customization is less, it's mostly the UI UX, which is going to change and some process flows will change.

Provides a realistic timeline for the remaining IT modules (LOS, LMS) and quantifies the potential short-term business impact (3-4 days downtime, 1-2 weeks adjustment, INR250-300 crores disbursement impact in the implementation month).

Asked by Raghav Garg

2 min read 6 chapters

Detailed narrative

Q3 FY26 Performance Highlights

Can Fin Homes Limited reported its highest-ever quarterly disbursements in Q3 FY26, reaching INR2,727 crores, a 45% year-on-year increase and 7% sequential growth. This strong performance contributed to an AUM growth of over 9.5% for the year, despite challenges. The company also noted a fourth consecutive quarter of improved delinquency numbers, with SMA figures decreasing across all geographies, including Telangana which showed improvement after 6-7 quarters.

Asset Quality and Delinquency Management

The company's total delinquency reduced to below INR3,750 crores in Q3 FY26 from INR3,860 crores in Q2 FY26, primarily driven by improvements in SMA-0. Current GNPA stands at 0.92%, with management confident of keeping it below 1% and expecting further reduction in Q4. Salaried segment GNPA is maintained at 0.5-0.6%, while the self-employed segment is 1.5-1.7%. A provision of INR10 crores was made in Q3, mainly due to book size increase.

Interest Rate Transmission and Margins

NIMs for Q3 FY26 increased to 4.14% from 4.02% in Q2, attributed to timing differences in rate transmission. The company has passed on a cumulative 50 basis points rate benefit to customers, with 10 bps in December and 15 bps in January, following RBI rate cuts. Management expects NIMs to stabilize around 3.75-3.80% and spreads around 2.75-2.80% going forward, factoring in liability side benefits and NHB refinance.

IT Transformation Progress and Impact

Can Fin Homes has completed and implemented several IT modules, including HRMS, DMS, and Aadhar Data Vault. The Deposit module is expected to go live by the end of January, while the critical LOS (Loan Origination System) and LMS (Loan Management System) modules have seen delays, with the deadline pushed to Q1 FY27. This delay is anticipated to cause a 3-4 day downtime and a potential impact of INR250-300 crores on disbursements in the month of implementation.

Growth Strategy and Sourcing Mix

The company aims for FY26 disbursements of INR10,500 crores, with Q4 expected to contribute INR3,200-3,300 crores. For FY27, the disbursement target is INR13,500 crores, leading to an AUM growth of 15%. To diversify its sourcing mix and reduce reliance on DSAs (currently 78-79%), the company plans to increase its in-house sales team to 250 by FY28 and leverage digital onboarding and lead aggregators post IT transformation. The self-employed segment is targeted to increase to 35% by FY28 from 31% currently.

Branch Expansion and Geographic Focus

Can Fin Homes plans to expand its branch network to 300 by FY28 from the current 249, opening approximately 25 branches annually. The expansion will primarily focus on North, West, Tamil Nadu, and East zones, with some potential for Karnataka. The strategy involves going deeper into existing geographies, with new branches typically within 60-70 kilometers of an existing one, rather than entering entirely new regions.

This is an AI-generated summary of a publicly available earnings call transcript.

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