Thank you, Ramya. Good afternoon, everyone.

Welcome to the Q4 FY26 earnings conference call of Can Fin Homes Limited, hosted by Investec Capital. As a reminder, all participants will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation conclude.

For Q&A, please raise your virtual hand, and we will unmute you from our side. We will start with the management commentary, followed by a Q&A session.

To discuss the financial performance of Can Fin Homes and to address your queries, we have with us Mr. Suresh Iyer, MD and CEO, Mr.

Sailesh Kumar Singhal, Mr. Prakash, President, Mr.

Uthaya Kumar, President and CRO, Mr. Abhishek Mishra, CFO of Can Fin Homes Limited.

Please note that this call will be recorded. I would now like to hand over the call to Mr.

Suresh Iyer for his opening comments. Over to you, sir.

Thank you, Nidhesh, and good afternoon to everyone, and welcome to this earnings call for FY26 results of Can Fin Homes Limited. I'll just take you through the brief highlights of the performance for the year ended March 31, 2026, and then we can have the question-answer session.

I'll start with disbursements. In terms of disbursements performance, as against the guidance of [unclear] crore, and [unclear] by quarterly performance [unclear] in each of the four quarters in relative quarterly performances, we have each of the four quarters higher [unclear] Q4.

In terms of the areas, Karnataka and Telangana had having issues in the year. Both zones started with [unclear] performance, consistently improved the performance, and by the end of the year ended [unclear] delayed to some extent, but otherwise in most of the urban centers it's coming quite okay.

Therefore, this performance is likely to continue, and in this year we are targeting a 15% growth in disbursement in Karnataka. In terms of the quarterly performance as against a Q1 and Q2 disbursement of average ₹250 crore per month in Karnataka, in Q4 we could achieve about ₹290 crore average disbursement per month in Karnataka.

Therefore, it is a little positive. In terms of Telangana, we started off with a Q1 negative of 33%, and that consistently has been coming down.

Particularly in Q3 and Q4, we've had a very very steady run rate of more than ₹100 crore disbursement. Therefore, we could reduce the gap, but unlike the expectations that we had originally given of that we might also end up with a positive in Telangana, we have almost ended flat against ₹1,198 crore disbursement last year, we've ended up with ₹1,147.

It's a marginal thing. In terms of the current year, we are looking at a positive from day one because we've already reached the consistency in terms of performance, and Telangana now is doing about 100 plus per month.

We've reached that level. Now in terms of the AUM growth, we had originally targeted about 11% to 12% growth.

However, what we had started off with was that we would be having approximately about ₹6,000 crore run-down including the part prepayments, full prepayments, and everything. That was based on the fact that last year we had about ₹1,500 we had about ₹5,400 ₹5,300 odd crores of run-down in the entire year, we had assumed that there would be a ₹6,000 crore run-down.

Q2, Q3, and Q4, we've had a slightly elevated run-down situation, and therefore we ended up with about ₹600 odd crores extra over and above the ₹6,000 that we had targeted. That has actually shaved off some of our AUM growth expectations, we've ended up with around 10.44%.

For the current year, we are targeting that, if this is a present position, then we may have a run-down of about ₹7,000 for the entire year. Based on that, with a ₹13,000 crore disbursement target that we have kept for the year, we should be having a net addition of about ₹6,000 crore to the book in FY27, which would result in about a 14% AUM growth.

In terms of the prepayment intensity for the year, in Q4 actually we've not had much of a BT pressure compared to Q3, or rather I would say it was very static, because as against a run-down totally of we had of about ₹370 ₹380 crore in terms of the BT out in Q3, as against that it has been about ₹400 crore in Q4. Considering that Q4 normally is a very hectic and a very high-pressure kind of a quarter, still the increase in BT outs has been very marginal.

Therefore, it gives us confidence that the shift that we have made from annual reset to quarterly reset will help us. Now with almost 85% of the book having shifted to quarterly reset, the entire 50 basis points has been passed on to our customers, so that should help us in managing our BT outs.

Other than that, in terms of 1,691 was the total run-down including in Q3, including the part prepayments, including the amortization, BT outs, and normal closures, as against that it has been 1,730, which is very much in line. Q4 pressure also we have been able to somehow has been handled well.

Next we come to the delinquency performance. For the fifth quarter in a row, we've had a reduction in our absolute delinquency numbers, and that has helped in ensuring that the credit costs remain low.

Overall in Q4, we have seen a reduction in our overall NPA numbers also. That also has brought down our GNPA number to below the last year number of 0.87, we've ended with 0.85 in terms of our NPA numbers.

Going forward also, we see that there is, even in the month of April as well as in the month of March, in spite of the geopolitical situation, we have not seen any major stress in terms of delinquency, and therefore in terms of our going forward guidance for delinquency, we expect that our credit cost will remain benign, and while it has been about 10 basis points for the current year as a whole, however, on a conservative basis, we would still like to continue with a guidance of 15 basis points, although we don't see any stress, and it could well be below that by the end of FY27. As regards spread, as I mentioned earlier, we had a higher percentage of portfolio which was under annual reset.

Almost 70% plus of our portfolio was at annual reset, and that it was 71.14 at the end of last year, and that has changed drastically, because this year we also sent across communication and sought consent from our customers. In Q4, we've had a major reduction from 48% to below 15%.

Now almost 85% plus of our customers are at quarterly reset, and the entire benefit of the quarterly reset, that 50 basis points, has been passed on at the time of the revision to all of them. Now as on the entire portfolio, after giving the impact of this quarterly reset half 50 basis points to all our converted customers, as well as after considering the 15 basis points that we reduced in January also, the entire book yield will come down to 9.8, and that also excluding any reversal in NPA income and all, but 9.8, so that means that we will be able to retain the spread of 2.8% starting from day one in this current financial year also.

This was one major concern which every time was coming up that what if the portfolio converts from annual to reset, the spreads will come down. That we have taken into consideration, and therefore this one additional slide has been presented in this presentation where we have showed that as on 1st April, after giving the entire impact of conversion to quarterly as well as after giving the benefit of that 15 basis points to eligible customers, the opening yield will be 9.8, and the spread of 2.8 plus will be maintained.

However, again as a conservative basis, we therefore continue the guidance of 2.75% spread and 3.5 3.75% on the NIM for the FY27. That is in a nutshell the entire details of the performance.

As regards the profitability, this year we have had in Q4 two one-time specific events. One was the impact of DTA, wherein earlier we were providing for the DTA on the NPA, whereas in case of standard assets, the DTA was not being provided, so that has been provided from this quarter onwards.

That's a one-time impact, additional impact of ₹46 crore. The normal would have anyway there would have been some impact because of the provision DTA on the NPA, but this additional for the standard assets that has been provided is additional ₹46 crore.

There was also the closure of our income tax refund status, where ₹13.5 crore income tax refund was received, and the matter was closed by the department. That also we have taken into account.

Excluding these two one-time events, also if you look at it, our profit for the entire year would be as against 1.01 as against ₹1,085 crore, it'll be ₹1,027 crore, which is also a 20% growth over the last year profit of ₹857 crore. These are the two one-time events which we have taken into consideration.

I guess with that, that's in a nutshell. Going forward, we would have a little impact next in the current financial year of about ₹40 crore, which we have been talking about on our cost because of our IT implementation.

In fact, ₹6 crore of that cost in the Q4 has already been booked in this year also. While we were saying it'll start from Q1 of FY27, but ₹6 crore has come in this year also, which has been already booked.

Slightly the cost to income ratio next year will be a little elevated, which we have been already sharing. Overall, next year we hope to be able to maintain our ROA of more than 2.3 2.4 in fact more than 2.4, and therefore ROE might slightly be impacted because of the cost, but still we hope to have an ROE of 18 plus.

That's in a nutshell the highlights of the performance. Thank you once again for joining for this earnings call, and I request now to open the floor for questions, please.

Thank you.

Thank you, sir. We will now start the Q&A session.

I will request the participant to introduce him or herself stating your name and the organization name. I will unmute the participant and state his or her name, and then he can unmute himself to ask the question.

First question is from Siddhant. Yes, Siddhant, you can now unmute yourself and ask your question.

Please introduce yourself.

Hi. Am I audible?

Yes, Siddhant. Please go ahead.

Hi. My first question was how helpful have the IT programs been, and could you share any qualitative insight on how it's helping us right now?

Sure. See, in terms of the IT which we have already implemented, we have presented the slides, we have already implemented on the infrastructure side

and

also on the security aspects. Both have been completely done, and of course that is helping us in terms of the speed, in terms of the connectivity, and all those issues.

That has come down considerably wherever there were this MPLS lines, considerable reduction has been witnessed. In terms of security, of course it is just the confidence I can talk about.

I can't obviously say that, but we have our MTTR and MTTDA, that is the time to identify a problem and this, we have been very well within our limits, and it has been giving us a lot of confidence that any kind of attack on the system we have been able to immediately catch and we have been able to handle it also well. That is well within our prescribed or whatever benchmarks we have set for ourselves.

As regards the applications, we have already gone ahead with our deposit application, so that should reduce a lot of our time or that would be going forward would be there. Other than that, in terms of an entire HRMS package has gone online, now there's a lot of saving in that also, whatever manual calculations and impact that were there that is there.

Additionally, what I can say is that some of the upgrades that we have done, we've been able to bring in some AI components also have already come in, like for example, in terms of our digital signatures and everything have been implemented. Our entire DMS has been implemented, search and everything for records has improved.

In terms of our mailing solutions, that has also been completely moved to Office 365, and we also have the benefit of the Copilot and all. In terms of legal, we have implemented a new solution for title search and legal clearance report and all, that has also brought in a lot of efficiencies.

Of course, the main component, which is the LOS and LMS, which is yet to be implemented in Q1 of this year, that will also once implemented will give in a lot of advantages, and so therefore a higher amount of benefit will start coming in at that point in time.

Understood. That's great to know.

The second question is, I think on April 1st we shifted to quarterly reset for the largest chunk of customers, right? After that, would you assume that the BT out rate or the run-down rate has peaked now?

Are you

I would probably assume so, because, as I mentioned, if I look at the data, today our BT outs in Q4 have marginally increased, and that is also probably a function of the increased portfolio. Otherwise, in terms of the percentage, it is almost static, which normally in Q4 witnesses a spike because of a increased competition and everything, but it has almost ₹380 has been just ₹400 crore for us.

That has not ₹370, ₹380, there's a very marginal increase only. I would have therefore assumed that that would be there, because we went across sought the consent from the customers, and we passed on the entire benefit.

Now the customers have got the benefit. We have demonstrated that they will not be negatively impacted.

I guess this should be probably the peak. That's why we have also considered only ₹7,000 crore for FY27 as against ₹6,600 crore approximately for FY26.

Understood. That's great.

Just a follow-up to this is now if there is a rate hike cycle, what lag will we have in our spreads?

See, actually, today almost 85% plus is on quarterly reset, and in terms of our liability side, about 62%, which is the bank-related loans, is linked to repo rate. If there is a repo rate increase, on the liability side about 62% of the liability book will witness an increase immediately or in the coming month, whereas on the asset side, since 85% is quarterly, there'll be about maximum a 1/3 one-quarter delay might be there.

Understood. Perfect.

Thank you so much.

The next question is from Nipun Kinkar. Nipun, please unmute yourself.

I'm unmuting you here.

Hi. Am I audible?

Yes, please go ahead.

Yeah. Sir, how satisfied are you with just under 5% growth in our housing loan book this fiscal?

See, actually, it was a conscious effort to have a increase in our non-housing. To some extent, it was also because we had to focus more on LAP, particularly in Karnataka, where, in Q1, Q2, and almost Q3 also to some extent, we had an impact of our e-Khatas issues, where for fresh sanctions there were issues in getting the registration or the sale deeds and all.

There was a compulsory requirement also where, in one of the most important markets for us, we had to focus more on LAP. That is why if you see our LAP also has gone up to almost two percentage point in this financial year.

Having said that, going forward, we have almost reached the limit that we had set for ourselves in terms of our housing, non-housing. I guess we will see a higher increase in this current financial year.

Sir. Sir, wishing you all the best.

Sir, I had nothing more to ask. Thank you.

Yeah. Thank you.

The

next question is from Praveen Kumar. Praveen, please unmute yourself.

I'm unmuting you from here. Praveen, you can unmute yourself.

Hello. Am I audible?

Yes, Praveen. Please.

Yes. Hi, thanks for the opportunity.

I had a couple of questions. The first one was on the disbursement target and the loan growth target.

If I do the math correctly, then excluding Q1, Q2, Q3, Q4, you need to have around ₹3,400 crore kind of a disbursement that you need to do, right, run rate. Given that, your branch growth has been only to the order of around seven 6% to 7% annualized for the last couple of years, could you throw some light on how do you plan to achieve this higher scale of disbursements?

A related question is that in terms of AUM growth, in the previous couple of quarters for FY27, you were indicating 15%, but I think in your opening commentary, you indicated a 14% AUM growth. Is that a tacit recognition that the BT out and the prepayments are actually much higher than you predicted and that's here to stay?

That's my first question. Thank you.

Sure, yeah. First I'll handle the disbursement aspect of it.

See, actually, the year 23-24 and 24-25 also, from then onwards we've been consistently opening branches. We've opened 54 branches.

The first and the second year, we had most of the branches being opened in Q4 or mostly in the month of March, we couldn't get the benefit of the branch expansion. Whereas last year, we entirely opened all the branches the 20 the branches 15 branches in the first half itself, we were able to get the advantage.

What has happened is in terms of the disbursements growth, we have had two factors which have impacted or supported us in our growth. I'll come to the branches.

As against the last year where in FY25 the new branches which were opened in 23-24 and 24-25 contributed only about ₹128 crore, the last year, because of our change in strategy and also because we could get the full-year benefit of the 24-25 branches also, last year the new branches have contributed ₹863 crore. The new branch strategy that we have done has really helped in the last financial year.

Going forward also, this year we are looking at 28 branches to be opened, which again, we would be opening in the first half of the year. That also should bring in, plus this 54 branches that we have opened will also have some more efficiency improvements, because not all of them have reached their break-even points, there also we are expecting.

This new branch expansion that is there is going to be one key factor pushing or helping us in our growth. The second thing is the sales team that we had.

Last year in FY25, we had only about 30, 35 people in the sales team, and they contributed about ₹183 crore in the full year. Last year post June, that is from 1st July, we increased the team strength, and the whole of this FY26, the team of about 80 to 90 people has contributed around ₹868 crore.

Both these parameters, that is the sales team as well as the branch expansion, is what we are looking at for bringing the growth. Sales team this year we are looking at increasing it from about 80, 90 to about 150 people, which means another 60 odd people we are planning to add to the sales team.

As I mentioned, 26 branches 28 branches are also planned to be opened in the first half of this year. Majorly, it is these two aspects which will help.

The third of course aspect is, as I mentioned earlier, that Karnataka, which had a first half slightly negative or whatever because of the e-Khata, is now almost kind of getting resolved, we are looking at a much higher positive coming in from both Karnataka as well as Telangana, which had some impact in disbursements during the current year. Basically, these are the three parameters why I feel they gives us the confidence.

The second, as you rightly pointed out, yes, we have to acknowledge that we have had a slightly higher prepayments, and so therefore we have marginally looked at it. As I said, we have taken the step for conversion, and if therefore we are able to slightly manage our prepayments, this could go up.

In a nutshell, I would say the calculation is that ₹13,000 crore disbursement is what we are planning, and we have projected for ₹7,000 crore prepayments, BT outs, and closures. If that is reduced, obviously the portfolio can even be 15%.

Knowing the current situation, at least we have factored in 7,000 because, unlike last year where we had projected less, but it slightly was elevated, we don't want to give a higher figure and then fall short of it.

Understood. Thanks for the response.

My second question was again on the geographical roadmap that you have presented this time. I noticed that the proportion of the southern states is marginally increasing in FY28 compared to the FY26 levels.

Again, does it again imply that Karnataka and Telangana are expected to continue to drive a higher rate of growth, and hence the south proportion is marginally increasing?

No, two things. One, of course, we had these issues in Telangana and Karnataka, which now are getting resolved.

Obviously their contribution, this ₹290 crore or ₹250 crore, which was the run rate, will go up in Karnataka. Same way if you look at it, the run rate in Telangana will also go up.

Therefore, the contribution from these two states, which was actually slightly subdued, will start to show. The second thing is that now that the situation in both these states has kind of stabilized, in the last three years we have not opened a single branch in either Karnataka or in Telangana, which now slowly we will look at a couple of branches here and there.

That is basically the thing. I think we are targeting three branches in Karnataka and about two branches in Telangana this year out of the 28.

Those also we have factored in, maybe it'll be a marginal increase. Not to mention that we are looking at a slowdown in any of the other markets.

Our other markets continue to perform strong. In fact, our North Zone, West Zone and East including, which is mainly Andhra Pradesh, have almost done a 40% plus kind of growth in this year in terms of disbursement.

Tamil Nadu, which was a high performing even the two years back, continues to grow at around close to 30%. It's just that these two states will also start now inching up in terms of the disbursement.

Therefore, that is what it is planned.

Understood. My last question was on the DSA proportion.

See, in FY26, your DSA proportion of sourcing is somewhat similar to the previous year, a few decimal points here and there, right? However, in your P&L, when I saw the fees and commission commission expense, that's in FY26 seems to have come down drastically compared to FY25 levels.

Could you throw some light on that? Oh

no, actually it is only a impact of the amortization, and it has impacted both in the income as well as on the expense side. On the expense side, because of the amortization it is reduced.

Also on the income side, because it is there. It is nothing to do with that the absolute cash outflow of the DSA expenses has not gone down.

It is just the amortization impact which is there in this year, for which I think there is a note also which we have put in our Q1, because we changed that in our Q1, and in Q1 also we've put that note, and in Q4 also we've put that note. It is impacting both sides, on a net-net impact in terms of our entire P&L, there's only a ₹5 crore difference net of both.

Otherwise, it's an amortization impact, not otherwise.

Thank you.

The next question is from Shubhranshu Mishra. Shubhranshu, you can unmute yourself and ask your question.

Hi, Suresh. Good afternoon.

Thanks for the opportunity.

Good afternoon.

If you can take me through the budgeting per state for the disbursements, how much are we expecting in these large states that we have, which is Karnataka, Telangana, Tamil Nadu, and Andhra. Also if you can talk about North and West as well, in terms of what we have budgeted for in FY27.

Second is how do we look at the opex growth, especially the employee and the non-employee, if you can split it into two parts. The third is about the credit costs.

We have some amount of management overlays, if you can speak about that. Fourth is more macro, if you can speak about we've seen a lot of disturbances because of West Asia crisis, any kind of delinquencies we are seeing in our LAP book, or anything we want to provide for just to increase our management overlay, or any kind of policy support that we are seeing in CLSS 2 or additionally, or demand and supply of affordable housing.

It'll be great. Thanks.

Sure, sure. Yes.

I'll first start the disbursement targeting. See, I will be able to immediately share with you roughly the run rate that we are doing in each of the zones or the states.

Growth next year we are almost targeting an almost similar 25% growth across all the zones, because that is what it is. You can have the numbers.

The exact breakup I don't have right now, but roughly if you look at the current run rate that we are doing, we are doing about 275, you can say, in per month in Karnataka. North Zone and West Zone both are doing about ₹150 to ₹160 crore each.

West Zone includes Rajasthan, Maharashtra, Gujarat, and MP. North Zone covers Punjab, Haryana, Delhi NCR, UP, and Himachal, Uttarakhand.

These two are doing about ₹150, ₹160 per month. Tamil Nadu does about ₹180 to ₹200 crore per month, that is the contribution.

Telangana now is almost doing ₹110 to ₹120 crore they are doing per month. East Zone, which is mainly Andhra Pradesh and other states of Chhattisgarh, Orissa, Bihar, and West Bengal, is doing about close to ₹100 crore a month.

That's the current run rate, and next year we are projecting almost a uniform 25% kind of a growth. Marginal would be some where expansion is a little higher, it will be going up to some extent that way.

This is the present breakup that we are having. In terms of our opex, I think I'll just give you, just one second.

In terms of the credit cost, in fact management overlay, I don't think we will be adding any more management overlay in the sense of a management overlay per se, but yes, you would have seen that our PCR has slightly gone up from 49% to 56% this year. That is a little more conservative in terms of our valuations and all those things we have taken, but otherwise in terms of management overlay per se, we will not be adding anything over that.

Credit cost per se, as I mentioned, we are having a 10 10 basis points credit cost in this financial year, which includes higher PCR that has been there. Otherwise, next year we don't expect any major increase, while we are projecting for 15 basis points, I am quite confident it'll be well below that only.

As regards our CLSS and under the PMAY, the PMAY 2.0, there in fact now some traction is slightly happening. In fact, NHB is also making attempts to tie up with state governments to come up with some construction and providing support.

There are some states particularly last quarter there was a meeting with the UP and then now with Orissa. There are some each state by state the NHB is also trying to tie up and provide that support so that there is more supply coming into the CLSS or the PMAY funding and all.

We are hoping that slightly that impact will stay, but it's not a very major kind of a number that we're talking about. In fact, it's been almost one year and one and a half year six months that we've done, September to now.

In six months, it's just been about 1 lakh the crore only 1 lakh numbers that have been happened in terms of the PMAY numbers across all the HFCs, all the NBFCs who are claiming and whoever is registered with the primary lending institutions, HUDCO and NHB. It's not a very great number that we have, but yes, some traction or some improvement is there, and hopefully if the states other than the couple of states who are doing it can also start stepping in, it might go up a little bit.

We are not very very very positive or gung-ho in that the numbers will jump up in a very drastic manner in terms of our PMAY contribution. As regards the geopolitical impact and all those things, currently there is no impact.

We are not witnessing anything in our either bounce rates or in our delinquency or any customers talking about it so far. It's been just two months, but even April we've not witnessed that kind of a pressure.

That's the situation. I hope I have covered all your questions.

Just one last question. One last question if I can squeeze in, in terms of prepayments.

If we get 100 applications, how many applications are to foreclose or do a part payment versus how many are actually going out to a competition, and what is this percentage which really goes out to the competition as a percentage of if there are 100 applications for prepayment? Who are these competitors, basically?

I'll give you my Q4 numbers, so that should give you some idea. Out of ₹1,730 crore, which is the BT out, prepayment, part prepayment, amortization, and everything, ₹400 crore is what is the BT out, okay?

That is ₹400 crore. There are customers who have closed their loans which either because they've sold the property, or they have made other closures because with some other thing, but purely from their own funds, that is something around ₹350 crore, ₹360 crore, okay?

Then there are about ₹970 crore odd, which is includes part prepayment and amortization, that is the principal component of the EMI and part prepayments. This is the breakup.

₹400 crore is BT out. ₹360 crore is where customers have closed their loans from their own funds, or they have sold the property and then taken another loan or moved to another property and stuff like that, or properties which have got closed because of our SARFAESI actions, and third, ₹970 crore approximately is part prepayment and amortization.

That's the kind of number you can say. I would say out of ₹1,800, ₹400, that's about 25% of the loans probably are so one in four is where it is coming for a BT out.

The key players who are doing the BT out is LIC Housing and Bajaj. These are the two major ones.

Of course, region specific, there are some local banks and stuff also doing it, but majority of the branches will have LIC as the first competitor, and the second would be Bajaj.

Understood. This was very helpful, Suresh.

Thank you so much.

The next question is from Henry Pushottam. Please unmute yourself and ask your question.

Hello,

hi. Can you hear me?

Yes.

Yeah. Please go ahead.

Congratulations for a very strong set of results, and I also wanted to appreciate, having been a shareholder for a long period of time, there has been a remarkable degree of consistency in the professionalism and the transparency with which you communicate with us. We really appreciate it.

Now, my question was a follow-up from what previous people had asked. You had indicated that in terms of a LAP percentage, the increase in 2% now you're quite happy with the risk-profitability equilibrium, to speak, right?

I'm also assuming that you might be doing the same thing with your target groups, which means there are some which are more profitable, but a little riskier, and that in a sense cup you have already drank from. If that is true, are there any significant levers for you to improve your profitability in the next 12 months or so, given the fact that there is an understandable increase in your IT expense to the extent of ₹40 crore, or whatever you mentioned?

How do you look at improving profitability, and how should we look at it? Should we think in terms of your ability to improve profitability, or should we assume that your profitability will be roughly at levels that you currently have?

Sure. Thank you for appreciating our efforts and our performance.

In terms of our portfolio mix and our yield and everything, currently after having passed on the entire benefit, today our entire portfolio yield is around 9.8. Actually, it's 9.84, or maybe there are some portfolio which we have not considered for the NPAs and all those things, therefore we have given a conservative 9.80.

Our incremental yield is also 9.80 plus, because that's the breakup post our change in our mix from housing to a little bit of non-housing, LAP increased, and all those things, and also increased slightly from our self-employed segment, which has happened from our salaried, which has come down from about 89% has come down to now close to around 84%, 83%. That impact what we have seen, that is ensured that our incremental yield is also around 9.8 plus.

Therefore, in terms of our current yield and everything, we should be able to maintain even if we don't change our mix. Having said that, as our roadmap 2028 shows, there is a scope for slightly increasing our non-housing as well as our SENP category, which would slightly give us a little slightly higher or a little improved yield if we work on that a little more.

That is one thing. The second thing is in terms of our cost, we have given that our present borrowing cost is at 6.99 to start with as on 1st of April.

However, on the liability side, there is some small book which is of NHB where we are yet to get benefit of the rate cut, because as and when the particular tranche of NHB comes for a rate revision or which is on annual reset, at that time they give in the PLR impact to us. There is still some component of NHB portfolio, which not a very large one, but there some portion is there where we are yet to receive that, probably our cost might slightly come down, plus the fact that Q1 we have already got sanctions on hand where the highest cost from banks is at 7%, we are already getting something which will be lower than 7 is what we will be raising the funds from banks in the coming quarters.

Currently the CP rates also compared to Q4 have come down, if there's opportunity, we may raise some little bit, because already CP proportion has almost come down to below 3%, which used to be at a point in time 6%, 8%, and so on. Therefore, we have some scope on the liability side to slightly reduce further, and on the asset side to slightly improve if we continue with a little increased SENP and a little more higher percentage of non-housing portfolio.

These are the two things in terms of the mix. I guess that's what it is.

In terms of the cost, as I mentioned, yes, there is a little extra cost that will come, but the other area that we have seen is last year you would have noticed that our bad debt recovery has also increased slightly, there is some scope probably we will be able to do some recovery and keep the credit cost also lower, although we have projected for 15 basis points, it'll be definitely below that. That should help.

I'm just wondering whether you have two additional maybe small levers of profitability. One is the revenue kick from the increased positivity of Telangana and Karnataka, and the second is the decreased cost of sourcing through increased digitization.

Would these be significant contributors to some extent, or do you think these are margins that are already baked in?

No, they will definitely contribute. In fact, as I had mentioned earlier, the LOS LMS once it is introduced, we will be able to bring in a lot of efficiency in terms of our delivery and we are also increasing the percentage of our business coming through our direct sourcing, through our own sales team.

That will obviously help us in managing our or reducing our DSA costs. These will not be adding to too much, maybe a few basis points definitely yes, but maybe that would be what it is.

The true impact of our IT transformation probably we will be able to gauge and come back in FY28 more than in FY27.

Thank you very much, and once again appreciate your team hugely.

Thank you. Thank you.

Thank you. Thanks.

The next question is from Pavan Pawan Kumar. Pawan, I am unmuting you.

Please unmute yourself and ask your question. Pawan, please unmute yourself.

Can you hear me?

Yes, yes. Yeah.

Okay. I just wanted to understand the cost structure, especially in terms of two things.

One is the employee cost, which has gone up significantly this particular year. What is our expectations going forward?

Secondly, Suresh did mention that ₹40 crore incremental expenses will come in next year. For the year it is ₹40 crore extra on IT infrastructure, is it?

I just wanted to clarify. Can you just clarify is it ₹40 crore for the entire year, or ₹40

Yeah, that ₹40 crore is for the entire year, because currently the entire IT project has a total outlay of ₹300 crore, of which ₹100 crore was capex, ₹200 crore was opex spread over 5 years. If the depreciation will kick in mainly from this financial year, that is FY27, the depreciation component of the capex and the opex, which will be there, the total cost in one financial year will be about ₹60 crore, whereas currently we are paying about ₹20 crore total cost for our IT in a financial year.

The net impact will be ₹40 crore for the full year. Okay?

In terms of the full-year opex, it's about ₹311 crore, of which ₹177 crore is for the employee cost, and the other cost is about ₹134 crore. The employee cost will probably go up by about 10%, 12% because we are also adding staff and there'll be some increments and all, and the other cost, which is ₹134 crore, will probably go up to about ₹175 to ₹180 crore.

Okay. Okay.

This ₹40 crore incremental, does it also include the amortization of ₹100 crore capex that we have done, or that is separate?

Yes, that is included. As I said, the ₹100 crore is a capex, the depreciation will also start.

I said that's what the depreciation of the capex plus the opex will be about ₹60 crore and net ₹40 crore.

This ₹100 crore capex has already been done, or it will be completed in the next 6 months? How does that work?

It is part of CWIP, capital work in progress. We'll capitalize once the

Has the entire ₹100 crore

has been spent? ₹90 crore has been spent.

Almost the entire component has already been taken into it. Yeah.

Okay. Thank you.

The next question is from Abhijit Tibrewal. Abhijit, please unmute yourself.

Abhijit, I think we're not able to hear

you. Abhijit, please unmute yourself and ask the question.

Am I audible now?

Yes. Yes, yes.

Abhijit.

Hi, sir. Thanks for taking my question.

First quickly in this fourth quarter, we have seen good momentum in terms of disbursements for us. Talk about the fourth quarter.

Fourth quarter we have seen good

Sorry, your voice is very muffled, Abhijit. We are not able to hear you.

Just give me 1 minute. Is it better now?

This is better, much better. Please go ahead.

What I was trying to understand is this fourth quarter we have seen very good momentum in disbursements for us as well as a few other players who might report, and once who've already reported. Fourth quarter, after maybe a lull in the first half, third quarter we saw things picking up, and then fourth quarter, things really picked up when it comes to housing.

You think this was just seasonality-led, or are there real structural triggers at play, which is leading to a good demand? Because, sir, when we hear analysts who are tracking real estate, experts who are tracking real estate, they're all talking about the strong upcycle that we saw in real estate and housing kind of seems to be tapering off now.

I don't know whether this is just applicable to higher ticket size loans, or the same comment can be applied equally to affordable housing as well. That was the first question that I had, that what is the outlook on demand.

Sir, one thing is we guide for a certain disbursement, certain sanction number, right? Underlying that, is the demand also very strong, which will help us do that, or do you think that the demand is weakening, and if we have to get to maybe the ₹13,000 crore disbursement number that you spoke about earlier, that will require market share gains?

That is the first question I had. The second question I had, sir, was around margins.

Like you mentioned, almost 85% of our customers are now on quarterly reset effective April 1st. Then I remember you also spoke about a small tranche from NHB, which is expected to get repriced sometime later this year.

A combination of both these things: on one side, you have customers getting repriced because they are now on quarterly reset, at the same time there are, I would say, small little pockets on the liability side which can also get repriced. Combined together, what would be the outlook on spreads and margins?

Lastly, sir, just wanted to understand, given that we have a good presence in Bangalore, which is the IT hub, do we have customers who have got impacted by layoffs in the IT sector, or are those predominantly customers who are catered to by the banks, sir? Those three questions.

Sure. First thing about the disbursement, yes, to some extent it is a seasonality, because normally across the years we have seen that it's a 45%, 55% breakup, H1 and H2.

Roughly H1 is a little lower than H2 definitely, and as in Q3 and Q4, once the festive season starts, the demand picks up and the business also picks up. That is mainly the seasonality part of it.

Having said that, we don't see any major impact in our demand side, because across our branches we are seeing a good amount of inquiries coming in still, even normally now, post March there is a slow down and people generally, but that is also we are seeing that there is a good amount of demand there. Good inquiries are coming in, and we are not seeing that much of an issue in terms of at least the segment that we cater to.

Probably yes, there is a definite slowdown in the affordable segment, and that is also reflected in the numbers, because if you look at affordable, if you look at mid segment, and you look at prime, yes, affordable definitely has is now in the mid-single digit numbers that growth that we're talking about. Definitely, affordable is impacted in terms of demand.

In the segment that we are catering to, I think we at least are not seeing any major change or a slowdown or anything in the in terms of the demand. As regards the margins, see, what has happened is this entire 45 48% of the loans that we had which were at annual reset, we sent across communication to them and we got in touch with them.

Basically, the remaining 15% are those customers who either have opted not to shift to quarterly reset, or who have right now not taken a call. The shift now further from here to the quarterly reset probably will be a little slow, because these are customers who opted for this thing.

Only thing would be in case of a rate going up, yes, this 15% will have an impact where there'll be a lag effect in terms of the assets getting repriced. On the liability side, as said, currently assuming that this 15% does not move to quarterly reset and remains same, we have taken into consideration the entire impact of all the reset as well as the 15 basis points that we passed on in January.

Therefore, no further reduction is expected on the asset side in terms of the yield. As I said, our incremental yield is also a little higher than 9.8.

Therefore, even that is not going likely to eat into our overall yield on the book. Therefore, whatever we are expecting a reduction in our energy refinance rates, or whatever we are able to get in terms of our better pricing from bank term loans or being able to raise CP at a lower rate, that will help us actually reducing our cost further, which should actually help us in improving our spread.

The only flip side will be if the rates start going up, then this 15% is where we will slightly get impacted. That's as regards margin.

We are quite confident that the 2.8, which is there, is kind of is there. We don't have a problem in that.

We do conservatively talk about 2.75. Okay?

As regards IT impact, our IT impact has been very very less. In fact our delinquency ratio in Karnataka is the lowest among all our six zones, and we've not seen that impact.

In fact, our absolute value of NPA in Karnataka is in March 26 is lower than our absolute value of NPA in Karnataka in March 25. I think that should give you the confidence that we've not had the impact of the IT job losses and everything in this.

I guess that's what. Anyway, our IT salaried segment coming from IT segment is only about 6% of our book.

It's not very high.

Got it, sir. Then, sir, just one follow-up, where you mentioned, right, that margins can be maintained at margins or spreads for that matter, where you said spreads can be maintained at 2.8%

in

you've conservatively guided for 2.75. Sir, then when we look at the entire business model, the only risk that is left then is basically a rate upcycle, where the rate start going up, and this 15% who have still not opted for the quarterly reset, they are the ones, you think, are the only risk today?

I guess in term for the spread component, yes. Therefore, we don't see any major change in that, because our current incremental spread also will not eat into our overall spread.

Got it. Sir, lastly, cost of borrowings.

While you spoke about NHB, but when we are speaking to other NBFCs, other HFCs, all of them are acknowledging and while we don't borrow too much from the debt markets, but debt market borrowings had gone up significantly, especially in the month of March, and they have subsequently pulled off a little bit in the month of April. You think that the cost of borrowings bottoming out has now come to an end, and from here cost of borrowings either remain stable or inch up, or do you think there is some more leg, some room left, except this NHB borrowing that you spoke about, where cost could further come down, remain sideways, or inch up from here?

See, today if you would see our presentation, from 55%, which was our bank borrowing, it has gone up to 62%. Basically, we have relied more on bank borrowings, where we have got rates at below 7 7% and below 7%, and raised that funding rather than depend or go to the debt market.

That is the one point. Second thing is in Q4, some of them I am sure the rates are very much there for everybody to see, the debt market rates, even CPs actually had gone up considerably post the shift in the geopolitical situation and all those things.

We had, if you recollect, we had indicated that we were sitting on a ₹1,000 crore of unutilized NHB sanction in at the end of Q3, and that was also because we had total ₹1,500. We had planned wherein we could draw ₹1,000 crore in the Q4, when normally the rates because of a tighter liquidity are on the higher side.

We had planned our liability side accordingly, and therefore we were obviously benefited, which is there. Going forward, other than this NHB, the only thing would be that we have about today our NCDs are at the highest cost of funds for us, which is on a blended outstanding portfolio of NCDs is around 7.67 or

7.66,

67. There, in fact, if we are able to, as and when the maturity happens, we'll be able to replace them with a lower cost NCDs, because today the rates are at a lower than the 7.67.

That is one thing, plus as I mentioned, CPs. CPs in Q4 had gone up.

90-day CP had gone up to almost 7% and a little above 7.35 also, whereas now today we raised in the month of April, we raised CP a fresh CP of 6.35. These are some of the timing differences where if we have to be careful and see if we can draw at the right time.

We will use those opportunities.

Got it, sir. This is useful.

Thank you very much, and I wish you and your team the very best.

Thank you.

There is a follow-up question from Henry Pushottam. Henry, you have a follow-up question?

If you have, you please ask your question.

Can you hear me?

Yes, please go ahead.

Just you mentioned that your prepayments, you are largely losing out to LIC Housing and to Bajaj Finance, right?

Correct.

Now, LIC Housing, I can understand that they will be basically luring customers by virtue of price. I was a little surprised to hear that about Bajaj Finance.

I thought their plank would be mostly convenience and ease and quickness of this thing. Since a person has already been sanctioned a loan by you, that cannot be an advantage for Bajaj Finance.

Can you just throw some light on competitor behavior and why do you think they are behaving the fashion that they are?

You're absolutely right. LIC, because they offer a lower rate.

In fact, they were also offering 7.15 at a point in time for new business, and that is one thing. In case of Bajaj, what happens is it's normally a takeover plus top-up, and many times we are not able to match the kind of top-up that they are able to offer.

That is some area where we lose sometimes to Bajaj. I wouldn't want to get into that, but yeah, sometimes we're not able to match the top-up.

It's usually a BT plus top-up where they are able to offer the same rate on a takeover probably, but on the top-up they're able to give a much higher amount.

Any thinking on how to counteract that, or you think that we'll just live with that?

No, I guess we are a little more conservative in our LTV values when it comes to takeover or a top-up loans and all those things. I guess it has helped us in the past, and we would like to maintain that conservative approach.

Sometimes yes, it hurts, but I think the conservatism has helped.

Thank you. Thank you very much, yeah.

Thank you. As there are no further questions from the participant, I now hand over the conference over to Mr.

Suresh Iyer and the team for his closing comment.

Sure. Thank you, Nidhesh, and thank you once again to all of you for joining this earnings call of Can Fin Homes for Q4 FY26, and I hope we have been able to answer all the queries.

In fact, one of the queries we couldn't answer then, but it subsequently came up, and I guess we've been able to answer that also. On the cost breakup.

If there are any further queries, of course you can please feel free to get in touch with us, and once again, thank you very much.

On behalf of Can Fin Homes Limited, we conclude this conference. Thank you for joining us, and you may disconnect your lines now.

Thank you.

Thank you.