# 1. Financial Performance ## A. Key Figures * Loan Disbursements: ₹11.5 bn (Q1FY26) · Net Profit: ₹1.4 bn (+10% YoY) * NII Growth: +16% YoY · NIM: 7.48% of total assets (+17 bps YoY) * ROA: 2.94% · ROE: 12.56% * **Capital Growth:** **+16% YoY** · **Net Worth:** **₹4,510 Cr** * **Liquidity Buffers:** **₹1,877 Cr** unavailed cash credit · **₹2,598 Cr** unavailed sanction (as of 30 Jun 2025) ## B. Revenue & Profit * **Profitability Momentum:** Net profit growth supported by strong NII expansion and disciplined origination, despite neutral interest treatment during extended disbursement periods. * **Efficiency Challenge:** Employee costs are rising faster than AUM growth, though recent hiring is framed as a strategic investment for channel expansion with expected productivity gains. ## C. Margins & Spreads * **Margin Expansion:** NIM improved 17 bps YoY, driven by a **35 bps YoY yield enhancement** and **22 bps spread widening**, reflecting pricing discipline and portfolio optimization. * **Funding Efficiency:** Improved asset yields and lower funding costs contributed to higher calculated spread, signaling stronger balance sheet dynamics. ## D. Balance Sheet * **Robust Capitalization:** Capital position strengthened via internal accruals, with CRAR significantly above regulatory minimums, supporting future growth scalability. ## E. Cash Flow & Liquidity * **Cost Discipline:** Opex-to-asset ratio declined QoQ by 25 bps to 4.6%, with adjusted costs indicating underlying efficiency; ESOP expenses remain a temporary Y-o-Y headwind. * **Strong Liquidity Position:** Ample undrawn credit capacity provides buffer for disbursement cycles and strategic flexibility. --- # 2. Loan Book & Disbursements ## A. Key Figures * **AUM:** **₹20,700 Cr** (+16% YoY) * **Disbursement Run Rate (July):** **₹550–600 Cr** (+16% YoY) * **Builder Finance Share:** **5–10%** of total disbursements ## B. Disbursement Trends * **Conservative Recognition Shift:** Transitioned to a realization-based disbursement model, recognizing loans only upon fund credit to customer accounts, enhancing governance and transparency. * **Strong Underlying Momentum:** Despite a temporary dip in Q1 due to the new model, July disbursements reflect robust double-digit growth, with a significantly higher monthly run rate versus Q1 average. * **Rollover Dynamics to Boost H1:** Q1’s lower reported disbursements are expected to reverse in Q2 and Q3 due to timing rollovers, making H1 comparisons more favorable and like-to-like post-Q2. ## C. Sanction-to-Disbursement * **Conversion Ratio Normalizing:** Sanction-to-disbursement ratio temporarily compressed by ~10 pts due to 15–30 day realization delays, but recovery is evident with July’s strong disbursement growth. ## D. AUM Growth * **Resilient Portfolio Expansion:** AUM achieved 16% YoY growth despite softer reported disbursements, supported by sustained demand in self-construction and Tier 3–5 markets; full-year growth guidance remains strong at 18–20%. --- # 3. Asset Quality & Credit Metrics ## A. Key Figures * 1+ DPD: **4.15%** as of June 2025 (+76 bps QoQ) · **<4%** in July 2025 * GNPA: 1.22% (+14 bps QoQ) * **Net Stage 3:** **84%** of AUM * **Credit Costs:** **24 bps** (within guided <25 bps) * BT Out: 4.9% (lowest among peers) * **AUM:** **>₹20,000 Cr** * **Lifetime Write-Off Rate:** **11 bps** (industry-leading) ## B. Delinquency Trends * **Resilient Asset Quality:** Despite a seasonal Q1 uptick, delinquencies show rapid normalization, with **July 1+DPD falling below 4%**, signaling strong portfolio resilience and effective collections. * **Geographic & Segment Concentration:** Deterioration primarily confined to **smaller ticket loans (<₹5 lakh)** in **Maharashtra, MP, and Karnataka**, with no broad-based stress or occupation-specific trends observed. * **Outperformance vs. Peers:** Asset quality remains **best-in-class**, with 1+DPD staying below 5% even during peak stress, significantly outperforming industry averages. * **Cyclical, Not Structural:** Management attributes Q1 pressure to **seasonal factors**, not macroeconomic deterioration; early recovery in July supports this view. ## C. GNPA & Net Stage 3 * **Stable Credit Loss Environment:** GNPA and credit costs remain within guidance, supported by **robust ECL coverage of ₹114 Cr** as of June 2025, including buffers for legacy resolutions. ## D. BT Out & Retention * **Superior Customer Retention:** **9% BT out rate**—the lowest in the sector—reflects strong client loyalty and competitive product positioning, despite industry-normal repayment dynamics. --- # 4. Funding & Cost of Borrowing ## A. Key Figures * Borrowings Raised (Q1FY26): **₹17.03 bn** at average rate of **7.82%** (incl. **₹4 bn NCDs**) * **Total Outstanding Borrowing:** **₹18,286 Cr** as of 30 June 2025 * **Borrowing Mix:** **49% term loan**, **25% assignment**, **14% NHB refinancing**, **11% debt capital market** * **Cost of Borrowing:** **8.02%** in Q1FY26 (↓22 bps QoQ) ## B. Borrowing Mix & Funding Access * **Strengthened Funding Profile:** Successful drawdown of **₹200 Cr** from National Housing Bank under government-backed schemes, enhancing low-cost funding access. * **Diversified & Resilient Franchise:** Maintains strong relationships with development financial institutions and marquee investors, ensuring scalable, long-term funding capacity. * **Rate-Sensitive Liability Structure:** **58% of borrowings** are rapidly repricable, with **38% linked to external benchmarks** and **20% to sub-3-month MCLRs**, positioning the company to benefit swiftly from rate cuts. ## C. Cost Optimization * **Proactive Liability Management:** Strategic pivot to EBLR-linked borrowings has accelerated cost reduction, delivering a **22-bps QoQ decline** in cost of funds with further downward pressure expected. * **Favorable Market Dynamics:** Post-rate cuts, **3-year and 7-year AA/AA+ market paper rates** now at **~5%**, improving competitiveness vs. NHB funding and expanding financing options. * **Rating Upgrade Momentum:** Active engagement with **CARE and ICRA** reflects confidence in a near-term positive rating action, supported by best-in-class liability franchise and strong fundamentals. * **Tech-Led Efficiency Gains:** Completed tech transformation is enabling sustainable cost optimization, with early benefits emerging and guidance expected as improvements crystallize. --- # 5. Branch & Distribution Expansion ## A. Key Figures * **Logins Volume:** **+17%** YoY * **CSC Monthly Logins:** **Over 1,000** (achieved in <1 year) ## B. New Branch Rollout * **Front-Loaded Expansion:** Strategic acceleration of branch network with **10 new branches** planned in **Tamil Nadu** during September, marking state entry and H1-focused rollout. * **Manpower Build-Up:** Rising employees per branch to **18** reflects upfront staffing for new branches, particularly in Q4 and upcoming Tamil Nadu additions. ## C. Direct Distribution Model * **Model-Driven Staffing:** Higher employee strength per branch—**18 vs. peers’ 11–12**—is structural, driven by the **direct distribution model**, enhancing service quality and business tracking control. * **Channel Management Costs:** Additional manpower deployed to manage new digital fulfillment tie-ups with **CSC, eMitra, and India Post Payment Bank**, supporting integrated channel growth. ## D. Digital Channel Growth * **Robust Digital Demand:** 17% YoY login growth reflects strong underlying housing demand, supported by real estate price appreciation in core markets. * **Diversified Lead Pipeline:** Digital partnerships are scaling rapidly—CSC alone generating **over 1,000 monthly logins**—reducing reliance on field forces and improving operational efficiency. --- # 6. Credit & Underwriting Strategy ## A. Key Figures * **Incremental Business Yield:** +35 bps (improvement) ## B. Risk Framework * **Cautiously Optimistic Stance:** Maintains best-in-class credit metrics and proactive risk management, ensuring portfolio resilience despite macro challenges and peer sector warnings. * **Credit Discipline Driving Quality:** Recent improvement in 1+ DPD reflects tighter underwriting, stricter eligibility, and a deliberate shift toward **quality over quantity**. * **Framework Evolution:** Actively reviewing credit policies to balance growth, yield, and asset quality amid evolving market dynamics. ## C. Portfolio Focus * **Strategic Sanction Discipline:** Decline in sanction ratio is intentional, driven by credit quality prioritization and yield optimization, not weak demand. * **Targeted Segment Allocation:** Focused on self-employed borrowers and loans above **Rs. 5 lakhs** due to superior risk-reward and asset quality performance. --- # 7. Regulatory & Repricing Risks ## A. Key Figures * **Bank Borrowing:** **38%** linked to repo/T-Bill/EBLR · **62%** to MCLR ## B. Interest Rate Sensitivity * **High Repricing Sensitivity:** Significant portion of assets and liabilities exposed to short-term rate movements, particularly through 1-month MCLR and EBLR-linked instruments. * **Stable Pricing Framework:** No adjustments to Prime Lending Rate during the quarter, indicating pricing discipline amid rate volatility. --- # 8. Guidance & Outlook ## A. Key Figures * **AUM Growth Guidance:** **18%–20%** for FY26 (AUM, not disbursement) * **Subsidy Benefit:** **₹15 Mn+** disbursed to **450 Aavas customers** under PMAY scheme ## B. AUM Growth Target * **Guidance Clarified:** FY26 18–20% growth target applies specifically to AUM, reflecting disciplined expansion focus. * **Confidence Reiterated:** Management expresses strong conviction in achieving guidance, supported by sustained operational momentum. ## C. Disbursement Recovery * **Near-Term Momentum:** Expects **double-digit disbursement growth** in July–September, driven by rollover activity and robust pipeline. ## D. Long-Term Outlook * **Growth Catalysts:** PMAY 0% interest subsidy and favorable rates are boosting homebuyer sentiment and affordability. * **Acceleration Expected:** Credit metrics and early warning systems remain stable, paving way for **growth acceleration in coming quarters**. * **Next-Gen Guidance:** Anticipates returning to **20%–25% long-term growth** trajectory post-stabilization, starting next fiscal. * **Strategic Pillars:** Focus on digital platforms, governance, cost optimization, risk management, and execution efficiency to drive scale. * **PLR Review Timing:** Potential review by **end of Q2 or during Q3**, contingent on cost of borrowing trends.