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    Home First Finan

    HOMEFIRST
    Financial Services·7 May 2026
    Management Summary

    Home First Finance Company delivered a strong Q4 and FY26, marked by robust AUM and profit growth, record disbursements, and significant asset quality improvements. The company successfully navigated H1 challenges and is confident in sustaining a 25% AUM growth trajectory for FY27, driven by rebuilt teams, enhanced distribution, and strategic technology adoption, while maintaining strong spreads and controlled credit costs.

    Highlights

    5

    • Assets Under Management (AUM) reached INR15,878 crores, growing 24.9% year-on-year and 6.4% sequentially.

    • Profit After Tax (PAT) for FY26 was INR540 crores, marking a 41.4% year-on-year growth.

    • Q4 disbursements were the highest ever at INR1,572 crores, increasing 23.5% year-on-year and 19.3% quarter-on-quarter.

    • Asset quality showed significant improvement with 1+ DPD at 4.7% (down 60bps sequentially) and Gross Stage 3 at 1.8% (down 20bps Q-o-Q).

    • Cost-to-income ratio improved to 32% in Q4 and 32.5% for FY26, reflecting robust operating efficiency.

    Concerns

    3

    • The first half of FY26 experienced weakness in demand, elevated delinquencies, and internal staffing/attrition issues, though these have since been resolved.

    • Tamil Nadu saw muted growth in FY26, causing a slight drop in market share for the company.

    • NIM experienced a modest sequential compression of 10bps in Q4, though it remained robust at 5.9%.

    Key financials

    Metrics

    8

    Periods

    3

    Headline

    4
    • AUM
      ₹15,878 Cr
      YoY+24.9%QoQ+6.4%
    • 1+ DPD
      4.7%
      QoQ-0.6%
    • Gross Stage 3
      1.8%
      QoQ-0.2%
    • CRAR
      44.1%

    Q4

    3
    • PAT
      ₹149 Cr
      YoY+42.7%QoQ+6.6%
    • NIM
      5.9%
      QoQ-0.1%
    • Cost-to-Income
      32%

    FY26

    1
    • PAT
      ₹540 Cr
      YoY+41.4%

    Guidance & targets

    5
    CategoryTargetPriority
    Volume
    AUM Growth
    around 25% year-on-year
    		High
    Margin
    Spread at portfolio level
    5% to 5.25%
    		High
    Operating Efficiency
    Operating cost to assets ratio
    2.6% to 2.7%
    		High
    Asset Quality
    Credit cost
    30bps to 40bps
    		High
    Network Expansion
    Number of new branches
    30 to 40 branches
    		High

    Co-lending business scale-up

    Next quarter (June normal month)
    CurrentINR593 crores (3.7% of AUM), Q4 low due to issues being addressed.
    TargetNormal run rate, similar or better than last year, issues addressed by end of May.

    Why it matters

    Co-lending is a key productivity enhancement tool and strategy for wider customer reach, impacting AUM growth and returns.

    It should get addressed this quarter. Some progress has been made in the first month of April. And by the end of May, hopefully, all the issues should get addressed. So I think June should be a normal month.

    How to verify

    key_financials.metrics[label='Co-lending Book']

    Risks & concerns

    3
    RiskSeverity

    Impact of Middle East war on collections/demand

    Management stated no significant impact observed yet, and early April indicators are positive for collections. — Management downplayed

    low

    Interest rate hardening leading to margin pressure

    Management is confident in maintaining its target spread of 5%-5.25% due to its fully floating rate book and ability to reprice, expecting cost of borrowing to remain stable in Q1 FY27. — Analyst acknowledged

    medium

    Internal challenges (staffing, attrition) impacting performance

    Challenges faced in H1 FY26 related to credit issues, sluggish demand, and internal staffing/attrition have been resolved, with teams rebuilt and positions filled, contributing to improved H2 performance. — Management acknowledged

    low

    Q&A highlights

    8

    “So, looking at the first half, so there were two or three things that were happening simultaneously. One was that we were just coming out of the whole overhang of the credit issue. So the delinquencies were elevated and the collection was a bit difficult, also impacted by tariffs etc.. There was a bit of sluggishness in demand as well at that point in time. And we were also internally going through some issues. Some of the locations were not staffed properly. There was some attrition and so on. So, all of these things were happening simultaneously at that point, and hence, a little bit of weakness or sluggishness.”

    Provides a clear explanation for past underperformance and confirms resolution of internal/external factors leading to current strength.

    asked by Abhijit Tibrewal

    3 min read6 chapters

    Detailed Narrative

    01

    Strong Q4 and FY26 Performance with Robust Growth

    Home First Finance Company reported a strong Q4 and FY26, with Assets Under Management (AUM) reaching INR15,878 crores as of March 26, marking a 24.9% year-on-year growth and 6.4% sequentially. Disbursements in Q4 were the highest ever at INR1,572 crores, increasing 23.5% year-on-year and 19.3% quarter-on-quarter. For the full year FY26, Profit After Tax (PAT) grew by 41.4% to INR540 crores, with a reported Return on Equity (ROE) of 15.7% and a pre-money adjusted ROE of 16.8%.

    02

    Significant Improvement in Asset Quality

    The company demonstrated pronounced improvement in asset quality during the quarter. The 1+ DPD (Days Past Due) reduced by 60 basis points sequentially to 4.7%, while 30+ DPD improved by 50 basis points to 3.2%. Gross Stage 3 assets also saw a 20 basis points sequential improvement, reaching 1.8%. Early indicators from April 2026 show better collection outcomes and lower fresh slippage compared to April 2025 and 2024, with management expressing confidence in good credit quality for the year.

    03

    Strategic Investments in Technology and AI Adoption

    Technology remains a key differentiator, with the company leveraging its deep-rooted digital DNA for accelerated AI adoption across its value chain. Proprietary AI agents have been operationalized for income assessment and contextual bank statement analysis. AI-led interventions in lead qualification, legal and technical evaluation, and bureau analysis are currently in pilot, aiming to enhance customer experience, employee productivity, and drive structural cost efficiencies, with strong outcomes expected on the cost side.

    04

    Disciplined Growth and Distribution Expansion

    The company is positioned for around 25% year-on-year AUM growth in FY27, driven by rebuilt teams and an improved value proposition to distribution channels. The network expanded with 6 new branches and 5 touch points in Q4, bringing the total to 171 branches and 373 touch points. Branch expansion will continue with 30-40 new branches annually, strategically placed only if they have the potential for INR2-3 crores per month in disbursal, with a focus on increasing density in larger existing cities.

    05

    Stable Margins and Cost Efficiency

    Despite a 10 basis points sequential compression, Net Interest Margin (NIM) for Q4 stood at 5.9%, with the full-year FY26 NIM at 5.7%. The company aims to maintain a portfolio-level spread of 5% to 5.25%, supported by a 100% floating asset book that allows repricing. The cost-to-income ratio improved to 32% in Q4 and 32.5% for FY26, with operating cost to assets remaining stable at 2.7% for both the quarter and full year, expected to remain range-bound within 2.6% to 2.7%.

    06

    Diversified Funding and Capital Adequacy

    The funding profile remains diversified and cost-effective, with 59% from private and public banks, 15% from NHB, and 20% from assignment and co-lending as of March 2026. The Capital to Risk-weighted Assets Ratio (CRAR) stood at a robust 44.1% as of March 2026, with Tier I capital at 43.8%. This strong capital base, coupled with a net worth of INR4,357 crores and a book value per share of INR418, positions the company well for future growth without immediate need for further PLR cuts.

    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.