Home First Finance Company India Ltd (HOMEFIRST) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day, and welcome to Home First Finance Company India Limited Q2 FY '27 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sunil Anjana, Head, Treasury and Investor Relations of Home First Finance Company India Limited. Thank you, and over to you, sir.
Sunil Ranpara (Home First Finance Company India Ltd): Thank you, Iqra. Good evening everyone, and welcome to Home First Finance Company's earnings conference call for the quarter ended September 30th, 2026. Our investor presentation, press release, and historical Excel fact sheet are available on our website. The presentation and press release are also available on the stock exchanges. We hope you have had the chance to go through them. Joining us today: Mr. Manoj Viswanathan, MD and CEO, Mr. Ajay Khetan, Deputy CEO and CBO, and Ms. Rinku Somani, CFO. I now invite Manoj to take you through our performance and outlook. Over to you, sir.
Manoj Viswanathan (Home First Finance Company India Ltd): Thank you, Sunil. Good evening, everyone. Before we begin, I would like to welcome Ms. Rinku Somani, our new CFO to Home First, and we look forward to her contributions to the company's continued growth and success. With that, let me turn to our performance for the quarter. Home First second-quarter performance reflects our focus on growing the franchise while strengthening its earning capacity. AUM increased by 27% year-on- -year while profit after tax grew by 29.1%. This growth was accompanied by stable early delinquency indicators, an improvement in gross stage 3, and lower operating cost ratios. At the end of September '26, AUM stood at 18,010 crores, up 27% year-on-year, and 6.3% sequentially. Quarterly disbursement reached 1,705 crores, an increase of 32.2% year-on-year and 4.7% sequentially. This expansion in the business translated to profit after tax of Rs. 170 crores, a growth of 29.1
Manoj Viswanathan (Home First Finance Company India Ltd): percent year-on-year and 6.5% sequentially supported by a 31.9% growth in net interest income and improved operating efficiency. Return on assets remained healthy at 4.2% while return on equity improved by 40 basis points to 14.9%. The relationship between growth, portfolio quality, and profitability is central to how we assess our performance. I will take you through each one of these, along with the investments and funding capacity supporting the next phase of growth. We continue to build distribution capacity during the quarter, adding six branches and taking our network to 181 branches in 379 touchpoints. As the network expands, our focus remains on combining customer reach with branch productivity and disciplined execution. Individual housing loans accounted for 84% of the portfolio, while origination yield, excluding co-lending, was 13%. Our key markets of Maharashtra, Gujarat, and Madhya Pradesh continue to deliver strong growth compared to previous year's first half while maintaining healthy portfolio quality. UP, Rajasthan, NCR, and Karnataka recorded strong year-on-year growth. Tamil Nadu, which is marginally down on a year-on-year basis in H1, returned to growth with a 12% increase in Q2, reflecting early signs of a strengthened team. Overall disbursement grew 32% year-on-year in H1 and 5% quarter-on-quarter in H in quarter two. Overall, the network remains well-positioned to drive profitable growth while maintaining a strong focus on portfolio quality. Portfolio growth continued to be accompanied by stable asset quality. Both, both early delinquency indicators were unchanged sequentially, with one day past due at 4.7% and 30 plus at 3.2%. Stage 3 improved by 10 basis points sequentially to 1.7%. Credit cost for the quarter was 40 basis points. Stage 3 provision coverage was 23.6% at the end of September. We also continue to hold management overlays about ECL requirements. Including these overlays, total provision coverage to Stage 3 was 46.4% as of September '26. As the portfolio scales, preserving underwriting standards and collection discipline remains a priority. The combination of stable early delinquencies, lower gross Stage 3, and contained credit cost provides the context for this quarter's growth. On technology and productivity, technology remains a key differentiator for Home First. It is lifting lifting productivity, sharpening underwriting, and supporting scalable growth. Our digital-first foundation and structured data have prepared us well to apply AI across the lending life cycle. Four in-house developed capabilities are live today. Q records and analyzes 95% of customer calls. Clarifier prepares a single case page for underwriters on 100% of the loan files. BankLens turns a bank statement into a cash flow view in about a minute. And DocIQ reads all documents that form basis for underwriting and other operational activities. Together, they are shortening turnaround times and lowering document handling cost while every credit decision stays with our underwriters. Over the next 18 months, we will move from these three-point solutions to one shared data and decision platform and extend AI into sourcing, collections, and servicing in phases. Let me now take you through the financial performance for the quarter. With respect to income, yields, and margin, the total income for the quarter stood at 567 crores, registering a growth of 18.4% year-on-year and 5% sequentially. Both portfolio yields, excluding co-lending, and disbursement yields stood at 13%, reflecting consistency in pricing discipline and quality customer acquisition. On the liability side, our cost of borrowing remained at about 7.8% while incremental borrowing cost remained at 7.5%. Consequently, our spread, excluding co-lending, remained healthy at 5.2% while net interest margin remained at 6%. Moving to operating efficiency and profitability, our cost to income ratio improved to 30.8% compared to 32.7 in the preceding quarter, reflecting continued improvement in operating productivity as we scale our business. Operating cost to assets stood at 2.6% compared to 2.8% in the previous quarter. Pre-provision operating profit grew by 26.1% year-on-year to 238 crores, reflecting the operating leverage of our business model as the portfolio scales. PAT increased to 170 crores, registering a growth of 29.1% year-on-year and 6.5% sequentially. ROA stood at 4.2% and ROE improved to 14.9%. Overall, we continue to focus on improving operating efficiency while investing in the capabilities required to support our next phase of growth. Moving to provisions and asset quality, credit cost remained contained at 40 basis points. Provision coverage on Stage 3 assets stood at 23.6%. In addition to provisions required under ECL framework, we continue to maintain management overlays. Including these overlays, our total provision coverage to Stage 3 stood at 46.4% as of September '26,
Manoj Viswanathan (Home First Finance Company India Ltd): portfolio to ₹593 crores or 3.3% of the AUM. Along with partners, we are strengthening the infrastructure and operational capabilities to unlock the full potential of the co-lending channel, enabling wider customer reach, capital efficient growth, and enhanced operating productivity. Turning to capital adequacy, our capital position provides capacity to support the business as it expands. Capital to risk-weighted assets was 39.8%, with Tier-1 capital at 39.4% compared to 42.6% and 42.2% at the end of June. Net worth stood at ₹4,665 crores, and book value per share is at ₹446 as of September. Our capital position continues to provide a strong foundation for pursuing our growth plans. We certified a further 100 homes in our Green Homes initiative during the quarter, taking the cumulative number of certified homes to 650. HomeFirst also received the ESG & Financial Inclusion Award in the NBFC category at ASSOCHAM's 21st Annual Summit and Awards for Banking and Financial Sector Companies. Looking ahead, our focus is on converting the capacity we are building into sustained portfolio growth and earnings. This means maintaining underwriting and collection discipline as we expand, managing margins through asset pricing and funding decisions, and improving productivity while continuing to invest in the franchise. As we progress on our growth journey, our priorities remain clear, delivering consistent, profitable, and risk-calibrated growth while strengthening our franchise and creating sustainable long-term value for our stakeholders. Lastly, I would like to reiterate what I stated during our January 26 earnings call. I remain fully committed to HomeFirst and its long-term future. My current term as CEO extends till July 2028, and I intend to remain available for reappointment beyond that, subject to the requisite approvals. My priority continues to be execution on our strategic objectives and creating sustainable long-term value for our shareholders. With that, we'll be happy to take your questions.
Moderator: Thank you very much, sir. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press "*" and "1" on their touchtone telephone. If you wish to remove yourself from the question queue, you may press "*" and "2". Participants are requested to use headsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Renish from ICICI Securities Limited. Please go ahead.
Renish (ICICI Securities Limited): Yeah, hi sir. Congrats on a good set of numbers. Sir, just two things. So, one on our MP and Gujarat exposures, right? So, many lenders have highlighted that some districts in MP and Gujarat are affected by drought. So, just wanted to understand what is our exposure in this drought-declared areas and also how do you see disbursement and asset quality spanning out during particular for this area?
Manoj Viswanathan (Home First Finance Company India Ltd): So, asset quality in Gujarat and MP have been fairly consistent and very good you know compared to our national numbers. See, as far as drought-related issue is concerned, our business is largely I mean it's basically our is serving customers in the you know, manufacturing and service sector service-related segments. So, our customers don't have too much of an overhang or involvement or any dependence on the agricultural sector. So, you know, things like drought or monsoon do not have that much of an impact on repayment track of our customers. I mean, that's what we have seen over the last several years. So, so we don't see as such any significant impact of the drought on our customer segment.
Renish (ICICI Securities Limited): Got it. So, just for the I can understand, but let's say on the disbursement front, would you want to tighten your credit filters for some time in those areas and in that case, do you see any impact on the disbursement trajectory getting into second half?
Manoj Viswanathan (Home First Finance Company India Ltd): See, on credit filters you know, it's a it's a it's ultimately a you know, individualized approach, right? Each customer is going through filters and we are taking a customized call on each customer. So obviously, if you know customers are you know If any customer, we find any customer who's got let us say involvement in agricultural sector or any dependence on that, then we will take appropriate calls but as of now, we are not seeing anything of that sort.
Renish (ICICI Securities Limited): Got it. Last clarification, while calculating FOIR, do we consider agri income for any of the customer or we just don't give any weightage to agri income?
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