India Shelter Finance Corporation Limited — Q4 FY26 earnings call

So, I think last year was a year which started with India-Pakistan war and ended with the war again that was again in the Middle East, which we all know about it. And typically, Middle East war has led to the LPG shortage, which we all are aware of. So, keeping those things, we are generally observing the trends typically in quite a few markets where the commercial gas supply are disrupted. Now, we see upon the set of customers who are there, instantly we don't feel that there is any impact in terms of their behavior particularly, but still we feel it's a watchful situation basically because within a month you can't find any particular pattern coming around that piece.

Analyst inquired about the on-ground impact of negative news (LPG shortages, geopolitical tensions) on credit behavior, which management acknowledged as a 'watchful situation' but without immediate delinquency impact.

Asked by Adityapal

So, the reason for what we are finding the environment to be little cautionary. You have to be optimal on the all aspects basically. But yes, we know these times are quite temporary that way. Our teams, our energy synergies are lying very well. In fact, our logins are increasing day by day. But our business rule engine, the credit engine that has to function that isn't titled up purposely keeping mind all the aspects which is happening there. So, we have been a little cautious in that way. That is why we are talking about in a range bound of 25% to 30%.

Analyst questioned the revised loan growth guidance (25-30% vs. earlier 30-35%) and the path to ₹30,000 crore AUM by 2030, to which management attributed caution due to the environment but affirmed the long-term AUM target.

Asked by Kunal Shah

Kunalji, from beginning, we never had a very clear-cut focus on a co-lending particularly. In 2, 2.5 years of our business around co-lending, we created a book size of around Rs. 450-460 crores of overall piece what we have it, which is around approximately 4% of business. And the purpose was basically just to try and test a new set of products. And we felt that this is also with changing time, we should be very well adapted to those, adapted to that piece. But in typical scenario, what we see that between CLM 1, CLM 2 models, we adopted CLM 2. For CLM1, I think we have to wait some more time. If you ask me exact timeline, it will be difficult at this juncture. But we are closely discussing with few of the institutions, banks around that type, how it can be taken to the next level. In our plan, in our budget, we are not including any of the numbers which is around the co-lending. It is again going to be testing piece for some time before we conclude to the real direction of business for us particularly. So, basically for us, it is not something which we have to worry around at all.

Analyst asked about the company's co-lending strategy post-regulatory changes, with management clarifying it was a small 'testing piece' (4% of business) and not a core focus for future growth targets.

Asked by Kunal Shah

So, I think structurally when your NPA levels goes up at certain level which in our case which was in Quarter 2 particularly, your SARFAESI action starts coming into picture and that is a sometime of 6 to 8 months and as that reach that level, then you will realize that your reduction starts happening. That is the beauty of this product which is a mortgage product and housing finance product particularly. The tool which has been given provided by the ecosystem, the government that helps very well into that side. So, most of these resolutions that is purely on basis of that piece in an organic form.

Analyst questioned the significant improvement in asset quality and credit cost, with management attributing it to SARFAESI actions and the inherent nature of mortgage products.

Asked by Mayank Mistry

So, recipe around, in terms of your market, how you have to grow up, it cannot be one single direction, particularly Varunji, like in terms of opening branches or meeting the competition. We exist in the same market where the rest of the folks are doing it. Our largest market continues to remain Rajasthan, and there the most of the competition, everyone knows. And we are very diligently, strongly maintaining our numbers around that piece.

Analyst inquired about the ambitious ₹30,000 crore AUM target, asking if it implies less competitive pockets or specific growth drivers, to which management highlighted diversified distribution, productivity focus, and digital initiatives.

Asked by Varun Palacharla

So, going forward, Rajasthan concentration is going to ease down by virtue of other geographies, their delivery mechanics are going to go up basically. Though Rajasthan continues to remain the flagship zone for us and their disbursements continues to grow, but thankfully, the trend what we are seeing in the other geographies, that is giving a little more in terms of a percentage high growth. So, today Rajasthan which contributes, say, 30% will be, say, 5 years down the line, maybe 25%-26%.

Analyst asked about the high concentration in Rajasthan, and management indicated a strategy to gradually reduce this concentration over the next 5 years through growth in other geographies.

Asked by Miten Lathia

Yes. Considering the overall macro environment and we have also gone through the RBI circular, it says that there should be minimum 1.5% for home loan and 2.5% for LAP loan should be the minimum base threshold for ECL. And considering the fact that we are primarily catering to self-employed people, tier 2, tier 3 geographies, it is good to keep a good buffer on Stage-2 assets.

Analyst sought clarification on the ₹5 crore management overlay on Stage-2 assets, confirming it was a buffer applied due to the macro environment and regulatory thresholds for ECL.

Asked by Kunal Shah

Let me reiterate how the overall AUM stacked up in terms of interest rate reset. So, about 15% of the AUM is there, which is variable rate. Then about 37% of the AUM is there, wherein the interest rate is like semi-variable structure fixed for initial three years and variable subsequently. Then about 48% of the book is there, which is the fixed rate book altogether. So if you look at how we are funding this fixed rate book of 48%, so out of this 48%, about 25% is getting funded through our equity and remaining about 17% is getting funded through our fixed rate borrowings that we have on our book. Then remaining percentage is at about 7%-8%, which is fixed rate book, which is funded by variable rate liabilities.

Analyst asked for a detailed breakdown of fixed vs. floating rates for both AUM and borrowings, which management provided to clarify interest rate risk management.

Asked by Kunal Shah