Home First Finance Company India Limited — Q3 FY26 earnings call

Call held 23 Jan 2026

Management summary

Home First Finance delivered a strong Q3 FY26 with robust AUM and disbursement growth, coupled with improved asset quality in early buckets and expanded NIM. Despite a slight increase in Gross Stage 3 and one-time provisioning, profitability remained strong. The company is confident in its growth trajectory, supported by digital adoption and strategic branch expansion, with a focus on stabilizing operations in previously challenged states like Tamil Nadu.

Highlights

  • AUM grew 24.9% y-o-y and 5.3% q-o-q to Rs. 14,925 crore, demonstrating strong business momentum.

  • Disbursements achieved an all-time high of Rs. 1,318 crores, up 10.5% y-o-y and 2.2% Q-o-Q, with monthly disbursements crossing Rs. 500 crores for the first time.

  • 1+ DPD improved by 20 bps Q-o-Q to 5.3%, indicating stable asset quality and improving early delinquencies.

  • Cost of borrowing (ex-co-lending) contracted by 10 bps to 8%, supporting a healthy spread of 5.4%.

  • Profit After Tax (PAT) increased to Rs. 140 crores, up 44% Y-o-Y and 6.3% Q-o-Q, reflecting robust profitability.

Concerns

  • Gross Stage 3 increased by 10 bps Q-o-Q to 2%, though management expects improvement.

  • A one-time expense of Rs. 3.3 crores for gratuity provisions impacted OPEX and earnings for Q3 FY26.

  • Employee numbers were down Q-o-Q, attributed to delayed joining of approximately 250 people, expected to normalize by March.

Key financials

  1. AUM ₹14,925 Cr +24.9%YoY
  2. Disbursements ₹1,318 Cr +10.5%YoY
  3. Total Interest Income ₹429 Cr +20.5%YoY
  4. PAT ₹140 Cr +44%YoY
  5. NIM 6% +0.6%QoQ
  6. 1+ DPD 5.3% -0.2%QoQ
  7. Gross Stage 3 2% +0.1%QoQ
  8. Cost to Income 32% +0.1%QoQ
  9. RoA 4%
  10. RoE 13.7%
  11. Capital Adequacy Ratio 49% +0.6%QoQ

What they filed

Q1 FY27: revenue up 18.5%, net profit up 34.5% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue373 406 415 454 477 +28%482 +19%501 +21%538 +19%
Net profit92 97 105 119 132 +43%140 +44%149 +42%160 +34%
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.

Capital allocation

high confidence
  • Liquidity Liquidity disclosed Capital adequacy ratio as of Dec'25 stands at 49%, up from 48.4% in Q2 due to lower cash held in mutual funds. Net worth is Rs. 4,180 crores, up 73.6% Y-o-Y and 4.1% Q-o-Q. The company executed a QIP of Rs. 1,250 crores earlier in April. Funding profile is diversified with 57% from public and private sector banks, 16% from NHB, and 20% from assignment and co-lending. NHB approval for Rs. 900 crores was received this year.
    Our capital adequacy ratio as of Dec'25 stands at 49% as compared to 48.4% in Q2. This increase in capital adequacy is due to lower cash held in mutual funds. Our net worth stands at Rs. 4,180 crores, up 73.6% Y-o-Y and 4.1% Q-o-Q. Book value per share as of Dec'25 is Rs. 402. We also had a QIP of Rs. 1,250 crores earlier in April. Our funding profile continues to be well diversified and cost effective, reflecting our prudent financial management. 57% of the funding comes from public and private sector banks, 16% from NHB, 20% from assignment and co-lending, and balance from NCB, ECB and NBFC. We got an approval this year of about Rs. 900 crores.

Guidance & targets

AUM

  • AUM Growth AUM · FY26 · High confidence 25%
    The target is to end the year at 25% AUM growth. And again, for the next year, we have given the guidance of 25% growth on AUM.

    — Manoj Viswanathan

  • AUM Growth AUM · FY27 · High confidence 25%

    — Manoj Viswanathan

  • AUM AUM · March 2027 · High confidence Rs. 20,000 crores
    The guidance we had given was Rs. 20,000 crores by March 2027. With 25% growth, next year, we will hit about Rs. 19,600-Rs. 19,700 crores.

    — Nutan Gaba Patwari

  • AUM AUM · by 2030 · Medium confidence Rs. 35,000 crores
    or our vision or projection for 2030 is Rs. 35,000 crores.

    — Manoj Viswanathan

  • AUM Growth AUM · Y-o-Y (to 2030) · Medium confidence 20%-23%
    That will be in the region of around 20%-23% AUM growth Y-o-Y if we have to get to Rs. 35,000 crores.

    — Manoj Viswanathan

Co-lending

  • Co-lending contribution to AUM Co-lending · as we scale · Medium confidence 10%
    We aim to take co-lending contribution to 10% of AUM as we scale.

    — Manoj Viswanathan

Branches

  • Branch additions Branches · Q4 · High confidence 6-8
    We have 6-8 branches in the pipeline and at least 6 branches will be added in Q4.

    — Manoj Viswanathan

  • Branch additions Branches · FY27 · Medium confidence 25-30
    FY27, again, we are looking to add about 25-30 branches.

    — Manoj Viswanathan

State Contribution

  • UP as large contributor State Contribution · from FY28 onwards · Medium confidence large contributor
    We can expect this state to be a large contributor for us from FY28 onwards.

    — Manoj Viswanathan

Spreads

  • Book spreads Spreads · long-term · High confidence 5.0%-5.20%
    Yes. We have always maintained that the book spreads will be in 5.0%-5.20% range.

    — Manoj Viswanathan

Cost Efficiency

  • Operating cost to asset ratio Cost Efficiency · ongoing · High confidence 2.6%-2.7%
    We expect this ratio to remain range bound within 2.6%-2.7% as we focus on growth and expansion.

    — Nutan Gaba Patwari

Asset Quality

  • Gross Stage 3 Asset Quality · going forward · Medium confidence improve
    Gross Stage 3 is at 2%. This is increased by 10 bps Q-o-Q, and we are confident that this will improve going forward, as the early delinquencies have shown improvement and overall collection efficiency has also improved.

    — Manoj Viswanathan

  • 1+ DPD Asset Quality · next quarter · Medium confidence start moving down
    Yes, we should see that in this quarter. Generally, Q4 is good. But what gives us more confidence is that we managed to bring down our early-stage delinquency also quite substantially this quarter...

    — Manoj Viswanathan

Balance Transfers

  • BT-out rate Balance Transfers · ongoing · Medium confidence 6%-6.5%
    Yes, our aim is to kind of continue this success that we have had in this quarter. If the effort that we have put in this quarter continues to give us results, then it will stabilize around 6%-6.5%.

    — Manoj Viswanathan

What to watch in Q4 FY26

Tamil Nadu Business Turnaround

From Q2 FY27
Current Still growing but muted, team stabilized
Target Good traction / turnaround

Why it matters

Tamil Nadu has been a challenging state; its recovery is key for overall growth and asset quality improvement.

I think the recovery will take probably another 2 quarters, Rajiv. Probably from Q2 of the coming years, we should expect the turnaround in Tamil Nadu.

Risks & concerns

  • Tamil Nadu asset quality and team churn

    medium

    Tamil Nadu faced tariff-related delinquency issues and team churn, impacting growth and asset quality, but is now stabilizing.

    Management acknowledged

  • Competitive intensity and PLR pressure

    medium

    High competitive intensity in the market, particularly on interest rates, leading to pressure on PLR and balance transfers.

    Both acknowledged

  • Shrinking market for lower ticket size affordable housing

    medium

    The market for ticket sizes below Rs. 10 lakhs is shrinking due to increasing incomes and inflation, requiring a shift in focus to higher ticket segments.

    Management acknowledged

  • Unforeseen customer events leading to defaults

    medium

    Customer defaults are often triggered by unforeseen family events like medical emergencies, accidents, or job/business losses, exacerbated by liquidity problems.

    Management acknowledged

  • Employee attrition

    low

    Overall employee numbers were down Q-o-Q due to delayed joiners, but 250 people are expected to join in March.

    Management acknowledged

Q&A highlights

7 direct
Disbursements and Asset Quality Confidence Direct
The target is to end the year at 25% AUM growth. And again, for the next year, we have given the guidance of 25% growth on AUM... we are feeling more confident about the disbursal numbers for Q4 as well as for next year.

Analyst questioned if disbursements were lower than expected, and management reaffirmed confidence in achieving 25% AUM growth for FY26 and FY27, citing stabilizing asset quality.

Asked by Abhijit Tibrewal

MFI Stress, Bounce Rates vs. Collections Direct
we are gradually seeing that divergence between bounce rates and actual collections... collection efficiency is kind of getting disconnected from the bounce rate itself.

Clarifies that elevated bounce rates are more a behavioral issue rather than a true asset quality problem, as actual collections remain strong, indicating effective recovery mechanisms.

Asked by Abhijit Tibrewal

PLR Reduction and Competitive Intensity Partial
The PLR is a function of our own borrowing cost. So, that will work in sequence. As our borrowing cost comes off, we should be able to pass on the reduction to customers... Minor reduction in PLR is not going to really materially impact the BT-out rates.

Explains the company's approach to interest rate adjustments, linking PLR changes to borrowing costs and downplaying the direct impact of minor PLR reductions on balance transfer rates amidst market competition.

Asked by Shreepal Doshi

Tamil Nadu Recovery Timeline and Strategy Direct
I think the recovery will take probably another 2 quarters, Rajiv. Probably from Q2 of the coming years, we should expect the turnaround in Tamil Nadu.

Provides a specific timeline for the turnaround in Tamil Nadu, a state that has faced challenges, indicating management's plan to stabilize and grow the portfolio there.

Asked by Rajiv Mehta

Employee Attrition and Productivity Direct
Attrition has remained in that broad 35% range... We actually have about 250 people who are joining us. It just got delayed between Dec and Jan. So, we expect that number should increase in March when you see the numbers next time.

Addresses concerns about a Q-o-Q decline in employee numbers, attributing it to delayed joiners and providing a timeline for headcount normalization, which is crucial for operational capacity.

Asked by Raghav

GNPA Increase and Collection Efforts Direct
No, both will happen. The absolute value should also come down and because of the denominator going up, there will be some impact on that as well... In some markets where delinquencies are elevated, obviously, there is a greater collection effort.

Clarifies that GNPA reduction will be a combination of absolute value decrease and AUM growth, and highlights targeted collection efforts in specific markets with elevated delinquencies.

Asked by Divyansh Gupta

Affordable Housing Market Dynamics and Ticket Sizes Direct
the lower ticket sizes in affordable housing, if you look at ticket sizes less than Rs. 10 lakhs, there are markets where that is shrinking. And the growth has moved to the ticket sizes between Rs. 10-40 lakhs, which is a natural progression of country progressing, incomes increasing and so on.

Provides key insights into the evolving affordable housing market, indicating a structural shift towards higher ticket sizes due to rising incomes and inflation, which influences product strategy.

Asked by Maulik Chaudhari

Customer Default Reasons and Macro Impact Direct
Most of the customers default because of some unforeseen event in the family. It could be largely medical events, accidents, some major illness... That is something that when it changes and we know that it has changed over the last 3-4 months, customers find it a little easier to tide over that phase, of 2-3 months when there is a liquidity problem for them.

Explains the primary drivers of defaults in their customer segment (unforeseen personal events and liquidity issues) and how recent macro improvements are positively impacting customers' ability to manage these situations.

Asked by Adityapal

3 min read 7 chapters

Detailed narrative

Q3 FY26 Performance Overview

Home First Finance reported strong Q3 FY26 results with AUM growing 24.9% YoY and 5.3% QoQ to Rs. 14,925 crore. Disbursements reached an all-time high of Rs. 1,318 crores, marking a 10.5% YoY and 2.2% QoQ increase, with monthly disbursements crossing Rs. 500 crores for the first time in December 2025. Profit After Tax (PAT) grew 44% YoY and 6.3% QoQ to Rs. 140 crores, with a Return on Assets (RoA) of 4% and Return on Equity (RoE) of 13.7%.

Asset Quality and Delinquencies

Asset quality metrics remained healthy, with 1+ DPD improving by 20 bps QoQ to 5.3%. However, Gross Stage 3 increased by 10 bps QoQ to 2%. Management expressed confidence that Stage 3 will improve going forward due to better early delinquency resolution and overall collection efficiency, which is showing divergence from bounce rates. The company maintains a conservative provisioning approach with a total provision coverage of 40.4%.

State-Specific Performance and Strategy

Gujarat successfully overcame anticipated tariff impacts, showing strong growth and stable asset quality. Maharashtra re-established a strong growth trajectory. Tamil Nadu, which faced tariff-related delinquency and team churn, is stabilizing, with a turnaround expected from Q2 FY27. Uttar Pradesh is being approached with a calibrated strategy, aiming to be a large contributor from FY28. Karnataka is emerging strongly, while Rajasthan, MP, AP, and Telangana continue to deliver planned growth.

Technology and Digital Adoption

Technology remains a core focus, with in-house solutions driving efficiency. A new grade document system was developed for secure document management. Digital adoption is strong, with 81% of approvals via account aggregator, over 80% of loans digitally fulfilled, and 96% of customers registered on the mobile app, with 85% of requests raised digitally. Several AI pilots are in progress, expected to yield results in coming years.

Financial Metrics and Funding

Total interest income for the quarter was Rs. 429 crores, up 20.5% YoY. Portfolio yields remained constant at 13.4%, while cost of borrowing (ex-co-lending) contracted by 10 bps to 8%, leading to a Net Interest Margin (NIM) of 6.0%, up from 5.4% last quarter. The funding profile is diversified, with 57% from banks, 16% from NHB, and 20% from assignment and co-lending. Co-lending is expected to contribute 10% of AUM as the company scales.

Growth Outlook and Long-Term Vision

The company targets 25% AUM growth for both FY26 and FY27, aiming for Rs. 20,000 crores AUM by March 2027. The long-term vision is to reach Rs. 35,000 crores by 2030, implying a 20%-23% annual AUM growth. Branch expansion plans include 6-8 additions in Q4 FY26 and 25-30 in FY27, focusing on states like MP, Andhra Pradesh, Tamil Nadu, and Maharashtra.

Customer Behavior and Market Dynamics

The affordable housing market is seeing a shift, with lower ticket sizes (below Rs. 10 lakhs) shrinking, and growth moving to the Rs. 10-40 lakhs segment due to increasing incomes and inflation. Management noted that customer defaults are often triggered by unforeseen family events (medical, job loss) and a lack of immediate liquidity. Recent improvements in the macro environment are helping customers manage these liquidity challenges, contributing to better collection efficiency.

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