# 1. Financial Performance ## A. Key Figures * **AUM:** **₹27,554 Cr** (H1 FY'26) (+21% YoY) · **₹266 Cr** Q2 AUM (+17% YoY) * **PAT:** **₹504 Cr** (H1 FY'26) (+18% YoY) * Cost to Income Ratio: 36.1% (H1 FY'26) (-30 bps YoY) * **Liquidity:** **₹2,270 Cr** (~10% of loan book) * **OPEX:** **₹201 Cr** (Q2 FY'26) (+34% YoY/QoQ) ## B. Revenue & AUM Growth * **Sustained Portfolio Expansion:** AUM growth remains robust with strong double-digit YoY momentum, driven by consistent demand in low-income housing finance. * **Organic Growth Trajectory:** Sequential AUM increases reflect disciplined underwriting and **healthy loan book** quality without reliance on one-off factors. ## C. Profitability & Margins * **Margin Resilience:** Exit spread improved to **9%** amid stable yields, supporting profitability despite rising operating expenses. * **Cost Discipline Intact:** Significant reduction in cost-to-income ratio continues, with management on track for **40–50 bps full-year improvement**, signaling operating leverage. ## D. Balance Sheet Strength * **Conservative Underwriting:** Portfolio characterized by low average ticket size (**₹5 lakh**) and prudent **60% LTV**, reinforcing asset quality and risk resilience. * **Strong Capital Base:** Tier-1 and Tier-2 capital ratios remain healthy, supported by **strong internal accruals** that enhance financial flexibility. ## E. Liquidity & Cash Flow * **Robust Liquidity Coverage:** Liquidity buffer maintained at a solid **~10% of loan book**, ensuring ample capacity to fund ongoing organic growth. --- # 2. Loan Book & Disbursements ## A. Key Figures * **Disbursements:** **₹4,089 Cr** (+16% YoY) * **H1 Disbursement Contribution:** **42%** of annual total * **Product Mix:** **73%** home loans, **27%** loans against property * Yields: **12.15%** on home loans, **15.75%** on non-home loans ## B. Disbursement Trends * **Strong H1 Momentum:** Robust year-to-date lending performance driven by **32% YoY growth in Q1**, partially offset by seasonally muted Q2 activity. * **Regulatory & Seasonal Impact:** Q2’s low sequential growth reflects a high base effect from prior-year regulatory shifts and **extended monsoon disruptions in North India**, particularly affecting self-construction home loans. * **Full-Year Confidence:** H1 disbursements at **42% of annual volume** align with historical patterns, supporting visibility into achieving the **18–20% full-year growth target**. ## C. H1-H2 Seasonality * **Seasonal Pattern Intact:** Despite a slightly front-loaded year, disbursement cadence remains consistent with the typical **40–60 H1-H2 split**, with **Q3 and Q4 historically delivering 57%** of annual volume. ## D. Product Mix * **Secured Retail Focus:** Portfolio remains fully secured and retail-centric, with home loans as the dominant segment. * **Yield Enhancement:** Disproportionate contribution from **non-home loan yields**—significantly above home loan returns—is lifting overall portfolio yield. --- # 3. Asset Quality & Collections ## A. Key Figures * Gross NPA: 1.4% as of Sep-25 (+10 bps YoY) · Stage-II assets improved by ~20 bps YoY * Collection Efficiency: >99% (reported) · 98.96% (current) * Stage-III Provision Coverage Ratio: 34.3% * **30+ Days Past Due (TDPD):** **~4.6%** in Q2 FY26 (–5 bps QoQ) * **Balance Transfer-Out Rate:** **5.4%** in H1 FY26 (–50 bps YoY) * **Recoveries from Written-Off Portfolio:** **₹6–8 Cr** (quarterly, one-off) · **₹25 Cr** potential future recoveries ## B. NPA Trends * **Asset Quality Improvement:** Despite a sequential uptick in Gross NPA, underlying trends show strengthening, with Stage-II assets improving YoY and early delinquency buckets showing better resolution. * **Credit Quality Outlook:** Lower construction costs expected to enhance loan affordability and support incremental demand via formal housing finance channels. * **Provisioning Adequacy:** Stage-III coverage at **3%**, indicating conservative stance on stressed assets despite low recoveries to date. * **Portfolio Migration:** Recent Stage-III NPA increase driven by **8 bps movement from Stage-II**, reflecting forward flow rather than new slippages. ## C. Collection Efficiency * **High Retention & Collections:** Balance transfer-out rate improved on centralized retention and data science initiatives, with **27%-30% of at-risk customers retained** through targeted efforts. * **Stable Bounce Rates:** Bounce rate remains in the **early 20% range** for six consecutive quarters, indicating stable customer payment behavior. * **Operational Rigor:** Collection performance attributed to dedicated delinquency bucket teams, in-house legal enforcement (SARFAESI, Section 138), and **~1,500 frontline staff**, not isolated external factors. ## D. Delinquency Metrics * **Flat Near-Term Delinquency:** One-plus DPD stable at **~17-18%**, signaling no deterioration but limited near-term improvement in initial payment delays. --- # 4. Funding & Cost of Capital ## A. Key Figures * **Total Borrowings:** **₹17,600 Cr** (Sep 2025) (+21%) · **₹1,800 Cr** incremental in Q2 (<8%) * Cost of Funds: 7.9% exit rate (Sep 2025) · 73% floating-rate liabilities · 75% floating-rate assets * Leverage Ratio: 2.5–2.6x current · target range of 3.5x to 4x * **Borrowing Mix:** **50%** banks · **21%** NHB · **22%** NCDs · **7%** ECB/others * **Undrawn Sanctions:** **₹2,381 Cr** total · **₹1,250 Cr** from NHB ## B. Cost of Funds * **Favorable Repricing Outlook:** Cost of funds expected to decline to **8% by year-end**, supported by MCLR pass-through and ALCO-guided timing, despite no RPLR pass-on to customers. * **Gradual Deleveraging Path:** Current leverage above typical AA-rated peer comfort but within range for AA+; management plans **slow, measured increase** toward target, prioritizing stability. * **Partial Rating Benefit Realized:** AA+ upgrade has delivered initial cost reduction, though **full funding advantage not yet reflected** in incremental borrowings. ## C. Borrowing Mix * **Diversified & Resilient Funding Base:** Broad lender network with **44 active relationships** and substantial undrawn capacity, enhancing liquidity resilience. * **Strategic Access Expansion:** Awaiting formal upgrades from agencies like ICRA to unlock **longer-tenor flows from insurance and pension funds**, boosting maturity profile. ## D. Rating Impact * **Positive Outlook as Catalyst:** Shift to positive outlook signals momentum toward broader upgrades, positioning for **incremental NCD cost savings of 20–25 bps** as market recognition improves. --- # 5. Branch & Distribution Network ## A. Key Figures * **Branch Count:** **611** total branches (+20 in quarter) across 22 states, 549 districts * **AUM Mix:** **26%-27%** non-home loans · **45%** business from emerging markets * **Expansion Plan:** **50–55** new branches targeted by FY '26 (**15 urban**, **35 emerging**) ## B. Branch Expansion * **Accelerated Growth:** Robust branch rollout continues with **20 new locations** added in the quarter, fully expensed with no one-off costs, signaling sustainable scaling. * **Strategic Focus:** Expansion prioritizes **top 10 high-potential states** guided by delinquency analytics and market data, with final site selection driven by Zonal and Business Heads. * **Profit Contribution:** Non-home loans represent a **disproportionately high share of profits** (35%-40%) due to superior ROA, despite elevated NPAs. * **Customer Retention:** Dedicated **16-member central retention team** leverages data analytics to curb attrition, enhancing lifetime value. ## C. Urban vs Emerging * **Balanced Portfolio:** Geographic diversification limits concentration risk—**no state exceeds 15% of AUM**—supporting stable asset quality. * **Strategic Equilibrium:** Business mix progressing toward **50-50 urban-emerging balance**, with emerging markets currently contributing nearly half of originations. --- # 6. Credit & Regional Risks ## A. Key Figures * **Geographic Exposure:** **≤15%** of AUM in any single major state * **Stressed Market Exposure:** **1.6%-1.7%** of total AUM in Tirupur, Surat, and Coimbatore * **Salaried Borrowers:** **55%** of portfolio ## B. Stressed Markets * **Risk Mitigation via Diversification:** Stable credit costs and improving asset quality supported by geographic diversification, with no dominant regional concentration. * **Declining Stress in Key Clusters:** 1+ DPD levels improved or stabilized in Tirupur, Surat, and Coimbatore, reflecting better collections and resolved local issues. * **Residual Pressure in East & Kerala:** Portfolio stress persists in Eastern states and Kerala due to **inadequate legal infrastructure**, not borrower default behavior. * **Limited Growth in High-Risk Regions:** Incremental expansion curtailed in stressed areas; operations maintained at **flattish levels** to preserve market presence. ## C. Sector Exposure * **Portfolio Resilience:** Majority salaried borrower base (**55%**) enhances repayment stability amid sectoral volatility. * **Underwriting Discipline:** Cautious lending in gems & jewellery, pharma, and textiles temporarily slowed disbursements, but sectoral headwinds are now largely resolved. --- # 7. Guidance & Outlook ## A. Key Figures * **Disbursement Growth Guidance:** **18%–20%** FY'26 · **20%–22%** Aadhar Housing FY'26 * **AUM Growth Guidance:** **20%–22%** FY'26 * **Profit Growth Guidance:** **18%–20%** FY'26 * **October Performance:** **100%** of budgeted disbursement targets achieved ## B. Strategic Growth & Market Positioning * **Confident Guidance Retention:** Full-year growth outlook maintained across disbursements, AUM, and profit, underpinned by disciplined execution and **strong October performance**. * **Affordable Housing Leadership:** Positioned to capitalize on 'housing for all' mission via **technology-led efficiency** and network expansion in low-income segment. * **Emerging Segment Leverage:** **ABC segment** expected to play a pivotal role in future growth, with minimal competitive pressure. ## C. Macro & Policy Tailwinds * **GST 0 Reform Catalyst:** Rationalized rates on key construction materials to **lower housing costs**, significantly boosting EWS/LIG and rural/semi-urban affordability. * **PMAY & Seasonal Momentum:** Projects under **PMAY and Agnicart 2025** to accelerate execution, supported by festive demand, strong monsoon, and robust GST collections in H2. * **Favorable Macro Backdrop:** Low-income housing sector benefits from sustained government support and **positive Q2 economic trends**, reinforcing growth trajectory.