Can Fin Homes

Can Fin Homes achieved a significant milestone in Q1 FY26 with disbursements exceeding INR 2,000 crores for the first time in its history, representing a 9% year-on-year growth. This performance was supported by strong momentum in the North, West, and Tamil Nadu zones, which continued their positive trajectory from the previous year. Notably, the East zone also moved into positive growth, recording over 40% disbursement growth in Q1 FY26.

The company reported a positive trend in overall delinquency, with a reduction of INR 280 crores in total delinquency (SMA-0 + SMA-1 + SMA-2 + NPA) compared to March '25. This marks the lowest delinquency percentage registered in the last five quarters. However, total NPA saw a sequential increase of INR 45 crores in Q1 FY26, which is attributed to a typical first-quarter spike. Management has identified 96 sticky accounts totaling INR 13.90 crores that have flowed to NPA, with recovery efforts planned for the remaining nine months.

Can Fin Homes has benefited from repo rate reductions, leading to a lower incremental cost of borrowing. The company passed on an additional 15 basis points rate cut to customers from July, bringing the total reduction to 25 basis points. The current cost of borrowing is around 7.3%, down from 7.42% in Q1 FY26. Further reductions are anticipated on INR 2,500-3,000 crores of bank term loans, where a 50 bps repo rate cut is yet to be reflected. The company maintains its NIM guidance at 3.5% and spread guidance at 2.5%.

The cost-to-income ratio was slightly elevated in Q1 FY26 due to a salary revision, which had an actuarial impact of INR 4.5 crores, and a 16.5% increase in staff count. The company plans to open 15 new branches in FY26, primarily in the West and North geographies, aiming for a total of 300 branches by FY28. The sales team strength has been increased to 100 people, contributing 5% of incremental business, up from 4% last year, indicating a focus on direct sourcing to reduce DSA dependence, which currently stands at 79%.

The IT transformation project is progressing in two phases: ALM and Treasury modules are scheduled for implementation in August-September, while core LOS, LMS, DMS, and deposits modules are planned for November. Regarding PMAY 2.0, the scheme has seen very limited success, with only 70 applications cleared and 7 subsidies received since September last year. This low uptake is attributed to reduced eligible cities and stringent eligibility criteria, leading to a slowdown in the affordable housing segment due to a lack of incentives for both developers and customers.

Karnataka and Telangana continue to be challenging markets. Karnataka's business remains flattish, impacted by e-khata issues, which also hinder SARFAESI sales. Telangana shows negative growth, though management expects improvement following government announcements regarding the Hydra project and no further demolitions. The company's average ticket size is INR 24 lakhs for housing and INR 14 lakhs for non-housing. The strategy includes increasing the non-housing share to 20% by FY28, up from 11% in FY23, through focused efforts on top-up and lap loans.