SRG Housing Finance Ltd Q4 FY2026 Concall Summary

Key Takeaways

• AUM crossed INR 1,000 crore, disbursements surged 45%: The milestone was paired with a rating upgrade to A- Stable, signaling the platform is scaling while creditworthiness improves.
• Asset quality improved even as ticket sizes jumped 41%: GNPA fell to 1.77% and NNPA to 0.65%, while average ticket rose to INR 15.44 lakh, driven by construction cost inflation and aspirational housing, not a shift in customer profile or risk appetite.
• NIMs held steady at ~11% as cost of funds eased: Cost of borrowing improved 19 bps YoY to 10.88%, and management expects a further decline toward 10.70% over the next one to two years, supporting NIM stability.
• The southern push is the growth engine: Maharashtra, Tamil Nadu, Andhra Pradesh, Karnataka and Telangana have outpaced legacy markets for 1.5 years, and 10–15 new branches are planned in Tamil Nadu and Telangana this year.
• What to watch next quarter: Whether the INR 600 crore disbursement target stays on track, the pace of cost-of-funds improvement, and any clarity on the equity raise timeline that management flagged for Q4 or early next year.

Growth & Expansion

• Disbursement target set at INR 600 crore for FY27, up from INR 443.5 crore in FY26, implying continued 35%+ growth if achieved.
• AUM guidance firmed up: management is "very optimistic" on INR 1,400 crore and will "definitely target" INR 1,500 crore this year, with a two-year ambition to cross INR 2,000 crore and a two-to-three-year path to INR 2,000–2,500 crore.
• Branch expansion is concentrated in the south: 10–15 new branches planned in Tamil Nadu and Telangana, with no additions in existing states (Gujarat, Maharashtra, Rajasthan, MP), reflecting a deliberate geographic diversification away from the legacy Rajasthan-Gujarat concentration.
• AUM per branch rose 29% YoY to INR 10.86 crore and AUM per employee rose 19% to INR 1.05 crore, so the existing network is generating more output even before new branches open.
• The long-term vision is an order-of-magnitude leap: Chairman Vinod Kumar Jain stated an ambition to build a INR 10,000–20,000 crore book, with clarity on the timeline expected in the next two years.

Vinod Kumar Jain: "In the long term, the vision is that we want to make a growth book of INR 10,000 crores to INR 20,000 crores. That clarity will come to us in the next two years that in how much time we will give you the result."

Asset Quality & Underwriting

• GNPA improved to 1.77% from 1.84% and NNPA stands at 0.65%, supported by a collection infrastructure where 97% of EMI flows through banking channels.
• Cheque bounce resolution is fast and contained: a 14–15% bounce rate is addressed by a dedicated call center team, with 90% of bounced cases recovered within the same month and only 2–3% remaining unresolved, which is why Stage-1 assets sit at 93.05%.
• Underwriting relies on on-ground intelligence, not documentation: the customer base (kirana stores, contractors, dairy and spare-parts businesses) lacks GST, IT returns, Udyam or Aadhar-based credit trails, so the credit team visits locations to assess business cash flows, expenses, purchases and vendor relationships using proprietary profile templates built over 20–25 years.
• LTV rose from 46.6% to 50.7% YoY but management attributes this to the nature of the housing finance product, not a deliberate strategy or risk-profile shift, a characterization that drew analyst pushback.
• Macro shocks are dismissed as immaterial: management said the West Asia crisis and a weak monsoon are "not impacting us a lot" because the customer base operates at too small a scale for geopolitical or weather-driven disruption to transmit, and conservative LTV and FOIR guardrails provide a buffer.

Archis Jain: "We do not believe on assessment. Of course, when you have less documentation, right? Because you are definitely targeting to those particular segments. So, we have an understanding of assessment of profile."

Funding & Liability Profile

• The Acuité upgrade to A- Stable has unlocked three channels: banking relationships that previously would not finance the company, the equity market, and a strengthened NCD market where mutual funds have now invested.
• Cost of borrowing fell to 10.88% from 11.07% YoY, and management expects a further decline to around 10.70% over the next one to two years, though it declined to guarantee the number when pressed.
• An equity raise is on the table: if the year progresses well, the company may consider raising equity in Q4 FY27; otherwise, it will evaluate Q1 or Q2 of the following year once leverage visibility improves.

Margins & Efficiency

• NII grew 33% YoY in Q4 and 31% for the full year, with NIMs holding stable at around 11%, a level management considers sustainable.
• Cost-to-income ratio improved to 63.14% from 67.49%, as operating leverage kicked in alongside the branch and employee productivity gains.
• ROE guidance was contradictory: management first said ROE would be "around 18%," then corrected to "around 12% to 13%" when an analyst pointed out current ROE is in that range, leaving the forward trajectory unclear.

Digital & Operating Model

• The company is pursuing a fully digital transformation, focusing on platform upgrades, ERP systems and customer service improvements in the coming year.
• IT team headcount has increased and AI is being developed into calling and other technology-led initiatives, though management said "there is no cost incurred yet" on the SRG SRAJAN app and did not provide future cost estimates when asked.
• Cash collections are down to 4–5% because UPI adoption has penetrated semi-urban and rural areas, reducing the operational burden of physical cash handling.

Guidance & Commitments

Key Metrics