Detailed Narrative
Record Disbursements and AUM Growth
Repco Home Finance achieved its highest-ever quarterly disbursement of ₹1,186 Crores in Q4 FY26, contributing to a record annual disbursement of ₹4,148 Crores for FY26. This represents a significant 26% year-on-year growth compared to ₹3,284 Crores in FY25. The total loan book (AUM) grew by approximately 9.6% to ₹15,880 Crores by March 2026, up from ₹14,496 Crores in the previous financial year. The company successfully crossed the ₹1,000 Crore disbursement mark in September, December, and March quarters of FY26.
Significant Asset Quality Improvement
The company demonstrated substantial improvement in asset quality during FY26. The Gross Non-Performing Assets (GNPA) ratio reduced to 2.55% in March 2026 from 3.26% in March 2025. Similarly, Stage 2 assets saw a notable reduction, falling to approximately 7% of the overall book in March 2026 from about 9.5% in the previous financial year. Management has set a target to further reduce Stage 2 accounts below 5% by the end of FY27.
Profitability and Margin Performance
For FY26, the company reported a profit of ₹453 Crores, a slight increase from ₹449 Crores in FY25. The Q4 FY26 profit stood at ₹129.11 Crores, showing an 18.7% sequential growth from ₹108.77 Crores in Q3 FY26. The Net Interest Margin (NIM) improved to 5.38% for FY26, up from 5.15% previously, and the Return on Assets (ROA) was 3%. The cost-to-income ratio stood at 28.71%.
Challenges in AUM Growth and Prepayments
Despite strong disbursements, AUM growth is moderated by significant prepayments and Balance Transfers (BT Outs). In FY26, approximately ₹2,000 Crores were attributed to prepayments, pre-closures, and BT Outs, leading to a net increase in the loan book of ₹1,300 Crores. The average monthly BT Out was ₹30-35 Crores, while BT In averaged ₹45-50 Crores. Management aims to increase AUM to ₹18,000 Crores by FY27 end, acknowledging the natural run-off from its vintage book and prepayments from non-salaried customers.
Funding and Cost of Funds Dynamics
Total borrowings stood at ₹12,215 Crores at the end of March 2026, with 85% sourced from the banking system and 6.2% from NHB. The cost of funds for FY26 was 8.56%, a reduction from 8.75% in FY25. A sanctioned ₹600 Crores refinance facility from NHB is expected to reduce the cost of funds by 10-15 basis points. However, management anticipates challenges in maintaining the cost of funds in the next quarter due to the competitive market environment.
Strategic Expansion and Salesforce Initiatives
While Tamil Nadu continues to be the largest contributor at approximately 60% of disbursements, the company is strategically focusing on increasing contributions from non-Tamil Nadu states such as Karnataka, Maharashtra, Telangana, Madhya Pradesh, and Rajasthan. Management has undertaken a major rejig of branches, implemented a city sales manager profile, and plans to add more 'feet on street' (low-cost grassroots employees) to boost business multifold in these regions, expecting a much higher contribution from non-TN states in Q1 or Q2 FY27.
Dividend Policy and One-off Expenses
The company declared its highest-ever total dividend of 75% for FY26, comprising an interim dividend of 45% and a final dividend of 30%, signaling a commitment to maintaining this trend. Profitability in FY26 was impacted by approximately ₹46 Crores in one-off📎 expenses, including ₹11.53 Crores due to a change in interest calculation method, ₹15 Crores for Labor Code compliance, ₹5 Crores for silver jubilee celebrations, and an additional ₹15 Crores from an increased CSR spending from 2% to 5%.