# 1. Financial Performance ## A. Key Figures * **Assets Under Management (AUM):** **₹12,330 Cr** (+21% YoY / +4.8% QoQ) * **Net Income Margin:** **₹406 Cr** (+26% YoY) * **Profit After Tax (PAT):** **₹239 Cr** Q3 (+26% YoY) · **₹685 Cr** 9M * **Spreads & Cost of Funds:** **8.9%** Spreads · **8.3%** Cost of Funds * **Return Metrics:** **7.9%** ROA · **20.2%** ROE ## B. Revenue & AUM Growth * **AUM Dynamics:** Robust double-digit annual expansion is partially offset by a **15.9%** total rundown rate, comprised of principal repayments, preclosures, and balance transfers. * **Disbursement Velocity:** Quarterly disbursements remain healthy at a high single-digit percentage of total AUM, though sequential growth is moderated by portfolio runoff. ## C. Profitability & Margins * **Best-in-Class Returns:** Sustained high profitability with ROE exceeding the **20%** threshold, underpinned by a diversified product mix and broad customer base. * **Spread Expansion:** Margin profile improved as the reduction in borrowing costs outpaced asset pricing adjustments. ## D. Cost of Funds * **Interest Savings Outlook:** Management anticipates further interest cost tailwinds of **10-15 bps** following recent repo rate cuts, adding to significant savings already captured. * **Aggressive Liability Management:** Active negotiations with lenders have secured sharp rate reductions, notably lowering an SBI facility from **9.25% to 8.4%**. * **Incremental Borrowing:** New funding costs have trended significantly lower, with HFC incremental rates dropping to a **7.85%–7.95%** range. ## E. Opex & Efficiency * **Operating Leverage:** Opex-to-assets is projected to remain stable near **2.7%–2.8%**, successfully absorbing a **2x** increase in IT spending and aggressive physical footprint expansion. * **Network Expansion:** Growth strategy includes the addition of **60 to 70 new branches**, focusing on operational efficiency to drive shareholder value despite recent stock price stagnation. --- # 2. Loan Book & Asset Quality ## A. Key Figures * **Disbursements:** **₹2,768 Cr** 9M FY26 (+9%) · **₹1,030 Cr** Q3 FY26 (+11%) * **Asset Quality:** **1.56%** Gross NPA · **1.18%** Net NPA · **6.48%** 30+ DPD * **Credit Cost:** **50 bps** 9M FY26 * **Impairment Charges:** **₹13.8 Cr** standalone (vs. ₹4.6 Cr QoQ) ## B. Disbursement Trends * **Strategic Pivot:** Management intentionally moderated disbursement growth to prioritize portfolio quality, specifically exiting the **under-₹7 lakh** segment due to observed stress in MFI and small-ticket LAP. * **Guidance Revision:** Annual growth outlook revised down to **22%–24%** (from 25%–28%) as the company offsets a **₹283 Cr** gap created by the discontinuation of smaller-ticket loans. * **Segment Rationalization:** The shift away from low-value loans is a defensive move intended to persist until broader asset quality in the micro-segment returns to normalcy. ## C. NPA & Credit Costs * **MSME Stress Factors:** Asset quality saw a slight uptick in NPAs and lower collection efficiency in the MSME book, attributed to seasonal festive volatility and customers diverting funds to consumption (healthcare/weddings). * **Write-off Policy Impact:** The sharp sequential rise in impairment charges was driven by a policy change to write off assets exceeding **500 days**, a delayed impact now hitting the housing finance entity. * **Credit Cost Outlook:** Despite the MSME "blip," management maintains a steady credit cost guidance of **0.5%**, asserting that underlying customer cash flows remain intact. ## D. Collection Efficiency * **Recovery Efforts:** Intensified collection activity is underway to counter elevated bounce rates seen in early Q4; management expects a recovery rebound in the **Jan–Mar** period. * **Risk Mitigation:** Confidence in long-term recovery is supported by conservative Loan-to-Value (LTV) ratios and healthy installment-income ratios. --- # 3. Product & Pricing ## A. Key Figures * **Average Ticket Size (ATS):** **₹10–10.5 Lakhs** Target range (Up from **₹8–9 Lakhs**) * **Discontinued Segment (<₹7L):** **10%–11%** of Total AUM · **₹432 Cr** 9M FY25 Disbursements * **Incremental Rate Reduction:** **50–75 bps** Housing loan disbursements * **Yield Impact:** **<10 bps** Estimated consolidated loan book impact * **Product Mix (Combined AUM):** **48%–49%** Pure Home Loans (+2-3% QoQ) * **MSME/SME Metrics:** **35%–40%** LTV ratio · **17%–20%** SME interest rates ## B. Ticket Size Strategy * **Strategic Upscaling:** Management is intentionally increasing ticket sizes to capture higher-quality borrowers and offset rising construction costs, with a hard cap maintained at **₹15–18 lakhs**. * **Segment Exit:** The company has phased out the sub-₹7 lakh category to improve customer profile, despite noting that asset quality (NPA levels) in this segment was not significantly different from larger loans. * **Growth Offsets:** While the exit from small-ticket loans creates a **₹163 Cr** disbursement gap in Q4, the company expects new geographic expansion in Maharashtra and Odisha to mitigate the shortfall. ## C. Interest Rate & Competitive Landscape * **Tactical Pricing:** Significant rate cuts on incremental housing loans were implemented to drive growth amid intensifying competition from PSU and Small Finance Banks. * **Yield Resilience:** Despite aggressive pricing in the housing segment, the overall impact on portfolio yields is expected to be negligible due to the higher-yielding SME/MSME mix. ## D. Product Mix & Portfolio Quality * **Reporting Realignment:** Recent shifts in product mix data reflect a transition to entity-based reporting (HFC vs. NBFC) rather than a fundamental change in business strategy or underlying yields. * **MSME Structural Strength:** The MSME portfolio remains insulated by conservative underwriting, including low LTVs and security via self-occupied residential properties. * **SME Opportunity:** The SME product (loans of **₹5–15 lakhs**) faces limited direct competition, providing a high-yield growth lever for the consolidated book. --- # 4. Geography & Distribution ## A. Key Figures * **Disbursements:** **₹1,030 Cr** Q3 FY26 (+11%) · **₹2,768 Cr** 9M FY26 (+9%) * **Branch Network:** **335 locations** as of Dec 31, 2025 * **State Growth (YTD):** **23%** Andhra Pradesh · **25%** Telangana · **15%** Tamil Nadu * **Expansion Markets (Odisha/Maharashtra):** **₹109 Cr** Loan Book (vs. ₹54 Cr FY24) ## B. Core Market Performance * **Strategic Pivot in AP:** Robust double-digit growth in Andhra Pradesh was maintained despite a high base and a deliberate shift away from loans under **₹7 lakhs**, successfully driving an increase in Average Ticket Size (ATS). * **Tamil Nadu Recovery:** Momentum in the core state improved significantly; management is targeting a further lift to **17%-18%** growth following cluster-specific corrections, despite intense competition from peers like Aavas. * **Rural Focus Advantage:** Minimal exposure to PMAY incentives persists as the company’s rural footprint sits outside the government's primary "PMAY Urban" eligibility criteria. ## C. Expansion States & Branch Network * **Accelerated Physical Footprint:** Following the near-completion of **40** new branches in FY26, management plans to accelerate expansion with **60 to 70** additional branches in the next fiscal year. * **Scaling New Geographies:** The loan book in Odisha and Maharashtra has doubled YoY; branch counts in these states are projected to reach **10 each** by year-end using standardized in-house sourcing. * **Growth Levers:** Beyond physical expansion, the company is utilizing higher ATS and strategic interest rate reductions on home loans to capture market share. ## D. Sourcing Channels * **Hybrid Lead Generation:** While maintaining a primary in-house sales model, a new "connector" channel was piloted in January across Tamil Nadu and Andhra Pradesh to diversify lead sources. * **Digital Integration:** Sourcing is increasingly supported by a centralized digital team and a construction ecosystem app that pre-screens leads against credit norms before branch hand-off. --- # 5. Funding & Capital ## A. Key Figures * **Quarterly Fundraise:** **₹902 Cr** via NCDs, term loans, and securitization * **Borrowing Mix:** **59%** Banks · **17%** NCDs · **11%** NHB * **Debt Structure:** **61%** Variable-rate · **39%** Fixed-rate * **Total Liquidity:** **₹1,877 Cr** (incl. **₹1,387 Cr** undrawn sanctions) * **Direct Assignment:** **~₹165 Cr** executed in Q3 ## B. Borrowing Profile & Strategy * **Diversified Liability Base:** Maintained a balanced funding mix across banks and capital markets, with variable debt primarily linked to EBLR and MCLR benchmarks. * **Cost Optimization:** Leveraging a recent credit rating upgrade to evaluate refinancing high-cost debt and optimizing the fixed-to-variable borrowing ratio. * **Competitive Benchmarking:** Secured fresh credit facilities at a competitive rate of **7.95%**, reflecting improved market standing. ## C. Liquidity & Capital Allocation * **Robust Liquidity Buffer:** Significant headroom for growth maintained through substantial undrawn bank sanctions and strategic direct assignment transactions for ALM. * **Shareholder Returns Policy:** Initiated dividend payments as the primary mechanism for capital return, noting that regulatory constraints prevent NBFCs from conducting buybacks in India. --- # 6. Regulatory & Operational Risks ## A. Key Figures * **Labor Code Impact:** **₹3.85 Cr** P&L debit (**₹3 Cr** net of tax) * **Opex-to-AUM Ratio:** **2.7%** stable ## B. Human Capital & Competitive Landscape * **Attrition as Primary Risk:** Management identifies the poaching of field-level, customer-facing staff by competitors as the most significant threat to operations. * **HR-Centric Competition:** Competitive intensity in the affordable housing segment is viewed primarily as a personnel retention challenge rather than a threat to market demand or business volume. ## C. Operational Resilience & Macro Factors * **Macro Volatility Mitigation:** Despite broader economic fluctuations, the firm has maintained consistent growth in revenue, margins, and ROE through disciplined risk management. * **Strategic Balancing:** Current initiatives focus on scaling disbursement volumes while prioritizing risk resilience over aggressive growth rates. ## D. Regulatory & Cost Drivers * **One-time Regulatory Costs:** Current operating expenses reflect the financial impact of the New Labour Code implementation. * **Infrastructure Expansion:** Opex remains stable despite the integration of **40 recently opened branches** and investments in collection and sales teams. --- # 7. Guidance & Outlook ## A. Key Figures * **AUM:** **₹12,330 Cr** Current (+21%) · **₹25,000 Cr** FY29 Target * **Growth Guidance:** **22% to 24%** Long-term Sustainable Target * **Credit Cost Guidance:** **0.5%** Projected through FY27 ## B. AUM Growth Targets * **Strategic Portfolio Rebalancing:** Management is intentionally exiting the sub-₹7 lakh loan segment to improve book quality; the run-down is expected to conclude within **15 to 18 months**. * **Target Timeline Sensitivity:** While the long-term AUM objective remains intact, achieving the milestone may see a **one to two quarter** delay due to macro conditions and the shift away from smaller ticket sizes. * **Growth Levers:** To offset the exit of smaller loans, the company is utilizing price optimization and a **connector channel** to capture higher-quality customers and larger ticket sizes. ## C. Long-term Projections * **Credit Cost Stability:** Despite an aggressive write-off policy, credit costs are expected to remain steady at guided levels through FY27. * **Guidance Calibration:** Management has moderated growth expectations from previous **28%-30%** levels to a more sustainable mid-20s range to prioritize organizational health over aggressive expansion. ## D. Strategic Growth Pillars * **Operational Roadmap:** Future scaling is anchored on geographic expansion beyond South India and a focus on self-employed borrowers in **Tier 3 and Tier 4** markets. * **Margin Preservation:** Sustaining NIMs will be driven by calibrated pricing on incremental home loans and enhanced data-driven productivity in sourcing and collections.