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    Home First Finance Company India Q1 FY27 earnings call

    HOMEFIRST
    Financial Services·28 Jul 2026
    Management Summary

    Home First Finance Company reported a strong Q1 FY27, driven by healthy AUM growth of 25.7% YoY and a 34.5% YoY increase in PAT to ₹160 crores. Margins expanded with NIM at 6.0% and RoA/RoE improving to 4.2% and 14.5% respectively. Asset quality remained stable, and the company continued its investment in distribution and technology, despite a slight increase in cost-to-income and weak co-lending momentum.

    Highlights

    5

    • AUM stood at ₹16,938 crores as of Jun'26, growing 25.7% year-on-year and 6.7% sequentially.

    • Profit after tax increased by 34.5% year-on-year and 7.0% sequentially to ₹160 crores.

    • Net Interest Margin (NIM) was 6.0%, up from 5.9% in the previous quarter.

    • Return on Assets improved by 10 basis points sequentially to 4.2%, while Return on Equity improved by 50 basis points to 14.5%.

    • Cost of borrowing reduced by 10 basis points sequentially to 7.8%, with incremental borrowing cost at 7.6%.

    Concerns

    3

    • Cost to income increased by 70 basis points sequentially to 32.7% due to increments and fresh hiring.

    • Provision coverage on Stage 3 assets slightly decreased to 23.4% as of Jun'26 from 23.9% in Q4FY26.

    • Co-lending momentum was weak in Q1 FY27 with disbursements of ₹46 crores due to process and policy changes.

    Key financials

    Single quarter

    06 metrics
    1. 01AUM₹16,938 Cr+25.7%YoY
    2. 02Disbursement₹1,628 Cr+31%YoY
    3. 03PAT₹160 Cr+34.5%YoY
    4. 04Net Interest Margin6%+0.1%QoQ
    5. 05Return on Assets4.2%+0.1%QoQ

    Capital allocation

    1
    high confidence
    CategoryHeadline
    Liquidity

    Liquidity disclosed

    As of Jun'26, Capital Adequacy Ratio was 42.6% (Tier 1 at 42.2%), compared to 44.1% (Tier 1 at 43.8%) as of Mar'26. Net worth stood at ₹4,483 crores, and Book Value per Share (BVPS) was ₹429. The funding profile is diversified with 57% from private and public banks, 14% from NHB, 21% from assignment and co-lending, and the balance from NCDs, ECB, and NBFC.

    Guidance & targets

    7
    CategoryTargetPriority
    AUM Growth
    AUM Growth
    25%
    		High
    Operating Efficiency
    Operating Cost to Assets Ratio
    2.6%-2.7%
    		High
    Operating Efficiency
    Opex to AUM reduction
    5 to 10 basis point reduction
    		Medium
    Profitability
    Spread (Ex co-lending)
    5%-5.25%
    		High
    Asset Quality
    BT Out Rate
    5% ballpark range
    		Medium
    Repayment Rate
    Repayment Rate
    16%-17%
    		Medium
    Geographical Growth
    Target States for Faster Growth
    UP, Tamil Nadu, Andhra, Telangana
    		Medium

    What to watch in Q2 FY27

    5

    AUM Growth

    next quarter / full year FY27
    Current25.7% YoY
    Target25% for full year

    Why it matters

    To verify if the company is on track to meet its annual AUM growth target.

    We remain confident of delivering 25% AUM growth while maintaining our focus on profitability, portfolio quality and operating efficiency.

    Risks & concerns

    3
    RiskSeverity

    Uncertainty of PLR cut due to geopolitical events

    Management does not expect a PLR cut due to the West Asia crisis, impacting potential for lower borrowing costs. — Management acknowledged

    medium

    Weak co-lending momentum

    Co-lending disbursements were weak in Q1 FY27 due to process and policy changes, but are being addressed. — Management acknowledged

    low

    Stress from tariffs and team-related problems in Tamil Nadu

    Past challenges in Tamil Nadu related to tariffs and team issues have been resolved, and growth momentum is expected to resume. — Management acknowledged

    low

    Q&A highlights

    8

    “No, there is no one-off, but the cost of borrowing has come down to some extent in the last couple of quarters. But we are in a fully floating rate book. If there is any increase in cost of borrowing, we will increase the pricing accordingly. We are committed to maintaining that 5% to 5.25% basis points spread. Depending on how the cost of borrowing moves, we will move the rate to the customers as well. PLR cut is unlikely, I think, at this point because the whole West Asia crisis, etc, is still uncertain. I don't think there will be a cut. At least that's not our expectation.”

    Analyst questioned if the current incremental spread was sustainable and if a PLR cut was expected, which management clarified is unlikely and that spreads will be maintained by passing on costs.

    asked by Renish

    2 min read6 chapters

    Detailed Narrative

    01

    Strong Financial Performance and Growth

    Home First Finance Company commenced FY27 with robust financial results. Assets Under Management (AUM) reached ₹16,938 crores by June 2026, marking a 25.7% year-on-year and 6.7% sequential growth. Disbursements for the quarter stood at ₹1,628 crores, up 31.0% YoY. Profit After Tax (PAT) increased by 34.5% YoY and 7.0% QoQ to ₹160 crores, supported by a 38.2% growth in Net Interest Income. Return on Assets (RoA) improved to 4.2% and Return on Equity (RoE) to 14.5%.

    02

    Improved Margins and Cost of Funds Management

    The company demonstrated strong margin performance, with Net Interest Margin (NIM) improving by 10 basis points sequentially to 6.0%. This was aided by proactive management of borrowing mix, leading to a 10 basis point sequential reduction in the cost of borrowing to 7.8%. The incremental borrowing cost for the quarter remained favorable at 7.6%, resulting in a healthy spread (excluding co-lending) of 5.3%. Management reiterated its commitment to maintaining a spread of 5% to 5.25%.

    03

    Stable Asset Quality and Prudent Provisioning

    Asset quality remained stable during the quarter, with 1+ DPD, 30+ DPD, and Gross Stage 3 remaining flat at 4.7%, 3.2%, and 1.8% respectively. Credit cost for Q1 FY27 was 40 basis points. While provision coverage on Stage 3 assets slightly decreased to 23.4% from 23.9% in Q4 FY26, total provision coverage, including management overlays, stood at a prudent 45.3% as of June 2026, providing strong balance sheet protection.

    04

    Distribution Expansion and Employee Growth

    The company expanded its distribution network by adding four new branches in Gujarat, Andhra Pradesh, Tamil Nadu, and Madhya Pradesh, bringing the total to 175 branches and 373 touch points. A net addition of 133 employees, primarily in customer-facing roles, increased the total headcount to 1,988. This expansion supports continued growth and market penetration, with employee per branch at 165.

    05

    Digital and AI Adoption for Efficiency

    HomeFirst continues to leverage technology and AI to enhance customer experience, employee productivity, and cost efficiencies. Key initiatives include the operationalization of 'Cue,' an AI-orchestrated omnichannel customer communications platform. The company has also deployed a bureau analyzer and a contextual bank statement analysis model, improving underwriting efficiency and reducing turnaround times. AI-led interventions in lead qualification, legal, technical valuation, and income analysis are currently in pilot phase.

    06

    Geographical Expansion and Performance

    Maharashtra, Gujarat, and Madhya Pradesh remained the largest markets, contributing significantly to business. Tamil Nadu, which faced past challenges related to tariffs and team issues, is expected to regain growth momentum. Uttar Pradesh, along with southern states like Tamil Nadu, Andhra Pradesh, and Telangana, are identified as key targets for more aggressive growth in the medium term (next 1-3 years), leveraging their significant potential.

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