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    Repco Home Finance Q3 FY26 earnings call

    REPCOHOME
    Financial Services·6 Feb 2026
    Management Summary

    Repco Home Finance delivered a robust Q3 FY26, marked by strong disbursement and AUM growth, coupled with significant improvements in asset quality. The company successfully reduced its cost of funds and maintained stable margins. While facing challenges from high rundown rates and increased operating costs due to strategic investments and one-off events, management remains confident in achieving its FY26 targets and pursuing inorganic growth opportunities cautiously.

    Highlights

    5

    • Strong disbursement growth of 40% YoY to Rs.1069 Crores in Q3 FY26.

    • AUM grew 8.8% YoY to Rs.15,394 Crores, in line with guidance.

    • Significant improvement in asset quality with Gross NPA down 17.51% YoY to Rs.449.53 Crores and Stage 2 assets down 17.4% YoY to Rs.1235 Crores.

    • Cost of funds reduced by 30 basis points to 8.45% by December 2025, contributing to stable NIM of 5.41% and spread of 3.3%.

    • Shift in sourcing mix to 50:50 between DSAs and internal teams, indicating diversified growth drivers.

    Concerns

    3

    • High rundown rate of Rs.170-200 Crores monthly impacts AUM growth, making it challenging to meet targets despite strong disbursements.

    • Increased operating and employee costs due to one-off Silver Jubilee expenses (Rs.3 Crores), new labor code provisions (Rs.5 Crores), and ongoing investments in branches and sourcing.

    • Slowdown in Karnataka disbursements due to the e-Khata issue, which affected Q3 targets.

    What Changed1

    vs Q4 FY26

    Risks discussed4 → 3 (-1)
    Key financials

    Metrics

    13

    Periods

    2

    Headline

    11
    • AUM
      ₹15,394 Cr
      YoY+8.8%
    • Gross NPA
      ₹449.53 Cr
      YoY-17.5%
    • Stage 2 Assets
      ₹1,235 Cr
      YoY-17.4%QoQ-6.7%
    • Cost of Funds
      8.4%
    • NIM
      5.4%

    Q3

    2
    • Disbursements
      ₹1,069 Cr
      YoY+40%
    • Interim Dividend
      20%

    Capital allocation

    3
    high confidence
    CategoryHeadline
    Debt

    Gross ₹11,769 crores

    Cost 8.5%

    M&A

    Undisclosed companies/assets

    acquisition · announced

    Liquidity

    Undrawn ₹1,000 crores

    Adequate liquidity on balance sheet, ALM position comfortable in all buckets. Rs.150 Crores of investment on balance sheet side.

    Guidance & targets

    10
    CategoryTargetPriority
    Disbursement
    Total Disbursement
    Rs.4000 Crores
    		High
    Disbursement
    Total Disbursement
    Rs.5000 Crores
    		Medium
    AUM
    Total AUM
    Rs.16200 Crores
    		High
    Asset Quality
    Gross NPA %
    2.5%
    		High
    Asset Quality
    Stage 2 Assets %
    7.5%
    		High
    Asset Quality
    Stage 2 Assets %
    less than 2% or 1.5%
    		Medium
    Profitability
    Credit Cost
    negative
    		High
    Profitability
    Cost of Funds
    10 basis points reduction
    		Medium
    Profitability
    RoA
    close to about 2.9%
    		High
    Profitability
    Spread
    3.2% to 3.3%
    		High

    What to watch in Q4 FY26

    5

    Asset Acquisition Progress

    Next quarter (Q4 FY26)
    CurrentDiscussions in advanced stage with companies/banks/NBFCs.
    TargetFurther updates on asset acquisition in Q4 FY26.

    Why it matters

    Potential inorganic growth driver and impact on FY26/FY27 disbursement and AUM targets.

    Some of the discussions are in advanced stage. Most probably I will give further updates in next quarter.

    Risks & concerns

    3
    RiskSeverity

    Competitive Intensity in Tamil Nadu

    Increased competition from new players like Aavas opening branches in Tamil Nadu, a key market for Repco Home Finance. — Analyst acknowledged

    medium

    Slowdown in Karnataka Disbursements

    Disbursements in Karnataka state were impacted by the e-Khata issue, causing the company to miss its Q3 target slightly. — Management acknowledged

    medium

    Legacy Book Rundown Rate

    High monthly rundown rate (Rs.170-200 Crores) from the older loan book makes it challenging to achieve higher AUM growth despite strong new disbursements. — Analyst acknowledged

    medium

    Q&A highlights

    8

    “Dividends are a conscious call taken by the Board, the impact of this dividend is not that much, what we have given so far is about 20% and 25%, in total 45% of the capital, Rs.62 Crores it is nothing. Pay out of dividends will not have any impact on our financials.”

    Analyst questioned the prudence of a high dividend payout (45% of capital) versus reinvesting for business growth or employee motivation.

    asked by Shubhranshu Mishra

    2 min read7 chapters

    Detailed Narrative

    01

    Strong Q3 FY26 Disbursements and AUM Growth

    Repco Home Finance disbursed Rs.1069 Crores in Q3 FY26, marking a 40% year-on-year growth compared to December 2024. This is the second time in the current financial year that disbursements crossed the Rs.1000 Crores mark. AUM grew by 8.8% year-on-year to Rs.15,394 Crores at the end of December 2025, up from Rs.14,155 Crores in the prior year.

    02

    Significant Asset Quality Improvement

    The company achieved a substantial reduction in Gross NPA, which stood at Rs.449.53 Crores at December 2025, down from Rs.545 Crores in the same period last year. Stage 2 assets also saw a reduction of Rs.100 Crores quarter-on-quarter to Rs.1235 Crores, and a Rs.250 Crores year-on-year reduction. Management aims to further reduce Gross NPA to 2.5% and Stage 2 assets to 7.5% by FY26 year-end.

    03

    Cost of Funds Reduction and Stable Margins

    Repco Home Finance reduced its cost of funds by 30 basis points from the beginning of the year, reaching 8.45% by December 2025. This reduction was partially passed on to borrowers with 20 basis points effective from July 1, 2025, and February 1, 2025. The company maintained a spread of 3.3% and a Net Interest Margin (NIM) of 5.41% at the end of December 2025.

    04

    Strategic Sourcing Mix and Branch Expansion

    The company's disbursement sourcing mix has shifted significantly, with 50% now coming from DSAs and 50% from internal teams, compared to 35% from DSAs and 65% internally last year. Repco Home Finance expanded its branch network to 236, including 31 satellite centers, and opened two new branches in Q3 FY26, contributing to growth.

    05

    Increased Operating and Employee Costs

    Operating expenses and employee costs increased due to several factors, including a Rs.3 Crores expenditure for Silver Jubilee celebrations, Rs.5 Crores provision for leave encashment and gratuity due to new labor code implementation, and higher incentives for employees. The company also incurred costs related to branch expansion and legal actions for NPA recovery. Management expects cost-to-income ratio to improve going forward⏳ as benefits from these investments materialize.

    06

    Cautious Approach to Asset Acquisition

    Repco Home Finance is actively discussing potential asset acquisitions from other companies, banks, and NBFCs to support growth. However, management emphasized a cautious approach, ensuring that acquired loans match their credit policies and rates to avoid taking on bad assets. Further updates on these discussions are expected in the next quarter.

    07

    Technology Adoption Tailored to Customer Profile

    While acknowledging the rise of tech-driven lenders, Repco Home Finance noted that its customer base, primarily cash-salaried and low-income individuals, requires a 'touch and feel' approach for risk assessment. Therefore, full technology adoption for sourcing is not feasible. However, the company is leveraging technology for collections and has revamped its IT system and introduced mobile apps for various activities.

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