Thank you, Swapnali. Good evening, ladies and gentlemen.

Welcome to Home First Finance Company's earnings conference call to discuss the financial results for the quarter ended December 31st, 2025. We hope you have had the chance to review our investor presentation and press release, both of which are available on our website and stock exchanges.

As per our practice, we have also uploaded an Excel fact sheet containing historical data on our website for your easy reference. From the management, we have with us today Mr.

Manoj Viswanathan, MD and CEO, Ms. Nutan Gaba Patwari, CFO.

With that, I now invite Mr. Manoj Viswanathan to share his insights on overall performance.

Over to you, sir.

Thank you, Sunil. Good evening, everyone, and thank you for joining us today.

We are pleased to present the performance for Q3 FY26, which reflects a strong business momentum, robust profitability, along with the stable asset quality, and with improving early delinquencies. Let me share the Q3 FY26 highlights.

AUM growth remains strong, growing at 24.9% year-on-year and 5.3% quarter-on-quarter to reach 14,925 crores. In this quarter, we added two branches, with the latest additions comprising one in Karnataka and one in Madhya Pradesh.

We have 6 to 8 branches in the pipeline, and at least six branches will be added in quarter four. Disbursements for the quarter stood at an all-time high of 1,318 crores, up 10.5% year-on-year and 2.2% quarter-on-quarter.

Monthly disbursements crossed Rs 500 crores for the first time in December 2025. Our origination yield continues to be healthy at 13.1%, with an 83% share of individual housing loans.

Asset quality metrics remained healthy and range-bound. We continue to focus on early buckets and resolution.

1+ DPD is at 5.3%, an improvement of 20 basis points on a quarter-on-quarter basis. 30+ DPD remained flat at 3.7%, with Stage 2 reducing by 10 basis points.

Gross Stage 3 is at 2%. This has increased by 10 basis points quarter-on-quarter, and we are confident that this will improve going forward, as early delinquencies have shown improvement and overall collection efficiency has also improved.

Moving to state-specific updates, starting with our largest state of Gujarat. In quarter one, we had flagged off an anticipated impact of tariffs.

However, we are pleased to report that Gujarat has successfully overcome this on account of the overall economic vibrancy of the state. We continue to witness strong growth and stable asset quality in Gujarat.

In Maharashtra, we have successfully reestablished a strong growth trajectory, especially in the larger and more competitive markets of Mumbai and Pune. This impact can be seen in the strong AUM growth in this state.

In Tamil Nadu, we faced both tariff-related delinquency issues as well as churn in the team. We have made good progress in stabilizing the team, and we expect a strong turnaround in this state in FY27.

Regarding UP, we have adopted a calibrated approach. We are in the process of setting up a strong team in order to capitalize on the large potential in this state in the coming years.

We can expect this state to be a large contributor for us from FY28 onwards. With respect to the other key states, Karnataka is emerging out of the e-Khata overhang and has clocked a strong growth this quarter.

Rajasthan, MP, AP, and Telangana continue to deliver growth as planned. Technology remains the backbone of our company, complemented by a focus on developing in-house solutions that drive innovations and operational efficiency.

To enhance operational efficiency and reduce costs, we have developed an enterprise-grade document management system that enables secure, structured, and scalable document management. This system handles high volumes with robust security, tracking, and safe archival for optimal storage and performance.

Digital adoption continues to be strong and a key area of our focus as we grow. 81% of our approvals in quarter three were facilitated via the Account Aggregator framework.

More than 80% of our loans are digitally fulfilled through e-agreements and e-NACH mandates. 96% of our customers are registered on our mobile app, with 85% of the requests now raised digitally.

In addition, several AI pilots are in progress, and we expect these to deliver results in the coming years. During quarter three, we received certification for 70 additional green homes, taking the total to 310.

The Pradhan Mantri Awas Yojana 2.0 scheme saw further traction. As on date, we have received around 4,500 customer applications.

Of these, 103 customers have already received the first tranche of the subsidy, with an additional 15 cases approved where subsidy will get credited shortly. We expect the scheme to pick up traction with the increase in customer awareness and streamlining of the process.

As we move toward FY27, we are positioned to achieve 25% AUM growth, driven by enhanced distribution, technology adoption, supported by diversified funding and robust risk management. Lastly, I also wanted to address the topic of my continuity at Home First.

There could be some rumors and speculation on this topic, which I want to state are completely baseless. I would like to strongly reiterate that I do not have any plans or intent to move out of Home First.

With that, I now hand it over to Nutan to take you through the financials in more detail. Over to you, Nutan.

Thank you, Manoj. Thank you for that.

Let us start with the key financial metrics. Total interest income for the quarter stood at 429 crores, up by 20.5% YoY and 4.8% QoQ.

Portfolio yields held constant at 13.4%. Disbursement yields for the quarter was at 13.1%.

With proactive management, we were able to contract our cost of borrowing ex-co-lending by 10 basis points at 8%, supporting our ex-co-lending spread of 5.4%. Net interest margin for the quarter was at 6%, up from 5.4% in the previous quarter, supported by gearing, optimized liquidity position, and lower cost of borrowing.

Provisions arising from the implementation of new labor code have been recorded, and these one-time expenses of 3.3 crores on account of gratuity provisions have impacted opex and earnings of Q3 FY26. Reported cost to income was 32%, up by 10 basis points on a QoQ basis.

Ex the gratuity provision impact, it would have been 31%. Reported operating cost to asset was at 2.7% for the quarter.

Ex gratuity provision impact, this ratio stands at 2.6 for the quarter. We expect this ratio to remain range-bound within 2.6 to 2.7 as we focus on growth and expansion.

Our profit after tax increased to 140 crores, up by 44% YoY and 6.3% QoQ, with return of assets of 4% and return of equity of 13.7%. Ex gratuity provision impact, the earnings growth in Q3 FY26 has improved by 46.6% YoY and 8.3% QoQ, with return on assets of 4.1% and return on equity of 13.9%.

We also had a QIP of 1,250 crores earlier in April. Pre-money adjusted ROE for Q3 stands at 17.1%.

Moving to provisions and asset quality. Credit cost for Q3 stood at 40 basis points.

Provision on Stage 3 has increased to 22% as on December from 21% in the previous quarter. We continue to adopt a conservative approach to provisioning, maintaining a provision overlay above ECL requirements.

As of December '25, our total provision coverage is 40.4%. Moving to balance sheet and capital position.

Our funding profile continues to be well diversified and cost-effective, reflecting our prudent financial management. 57% of the funding comes from public and private sector banks, 16% from NHB, 20% from assignment and co-lending, and balance from NCDs, ECB, and NBFCs.

During Q3, we executed direct assignment transactions of 215 crores. Our disbursement under co-lending business increased to 101 crores for Q3, taking co-lending book to 585 crores, or 3.9% of the total AUM.

Co-lending would continue to be an important part of our strategy to strengthen our ability to cater to higher ticket size segments. We aim to take co-lending contribution to 10% of AUM as we scale.

Coming to capital adequacy and liquidity. Our capital adequacy ratio as of December '25 stands at 49%, as compared to 48.4% in Q2.

This increase in capital adequacy is due to lower cash held in mutual funds. Our net worth stands at 4,180 crores, up 73.6% YoY and 4.1% QoQ.

Book value per share as of December is 402. With that, we conclude our opening remarks and are now happy to take your questions.

Hi. Good evening, Manoj.

Good evening, Nutan. Congratulations on a great quarter.

Manoj, first of all, thank you so much for kind of reiterating towards the end of your opening remarks that you don't have any plans to move out of Home First. I think that is very, very reassuring.

Like you said, we also kind of used to get questions around the continuity and your plans. First things first, thank you so much for that.

Now kind of moving to business. Very, very clearly, I think disbursements are starting to pick up.

I have two two questions here. First thing is, disbursements, while they have improved sequentially, maybe they are still a shade lower than what we were expecting.

What is it that is leading to this? Is it higher competitive intensity, or was it in the nature of, I would say, some weakness in asset quality that we were seeing until last quarter, which was making us go a little conservative on more businesses and disbursements?

If you could explain that. The other thing is now that asset quality looks like stabilizing, your 1+ has actually improved sequentially, 30+ is now stable.

To that end, are we getting higher confidence to start accelerating the business from here? We have already put out in the press release that next year we will look to grow at 25% year-over-year.

For the fourth quarter, at least, what are the internal targets that you are working with?

The target is to end the year at 25% AUM growth. Again, for the next year, we have given the guidance of 25% AUM growth on AUM.

As you rightly mentioned, yes, the first half of this year, there were certain issues that we were grappling with because of the environment. As I've mentioned in my detailed state-wise discussion, there are certain states where we were going through certain issues, etc., which are now gradually stabilizing, and which is the reason for the, you can say, renewed confidence in dispersal numbers.

Some of the overhang which was there because of the MFI delinquency, etc., is also now coming to an end. It's kind of tapering off, as you can see in the overall market environment.

These are all the reasons why we are feeling more confident, and we are also seeing that uptick in numbers internally in origination numbers, etc. Which will eventually translate into dispersal.

That is the reason we are feeling more confident about the dispersal numbers for quarter four as well as for next year.

Yeah. I was on mute.

Thank you so much for bringing that up. Manoj, I was just saying that this spillover of MFI stress, like you mentioned, at least in affordable is coming to an end.

Just trying to understand, in your detailed comments, you spoke about maybe three, four states where we are seeing things improve. Gujarat, you mentioned the impact of tariffs, which was earlier anticipated.

I think Gujarat has successfully managed it, Gujarat being one of our top states. Just trying to understand, at least this increase in bounce rates, that doesn't bother us, right?

I think that is a little bit more of a behavioral problem, right, rather than of an asset quality issue.

Correct. Yeah.

We are gradually seeing that divergence between bounce rates and actual collection. If you see last quarter, also the bounce rates were elevated, but then the collection was far better than the previous quarter.

To some extent, it is becoming more of a behavioral issue, where customers have multiple accounts, or they end up missing the payment in one account, then they immediately transfer the payment from some other account. We have been talking about this for the last couple of years.

I think now it's coming out very clearly. Collection efficiency is kind of getting disconnected from the bounce rate itself.

Got it. Lastly, Manoj, on asset quality again, given that you've seen some stability in this quarter, you think 4Q, again, a seasonally strong quarter, and given where we are, you think we can start looking at an improvement in asset quality even in Stage 3 from this quarter onwards?

Yes, we should see that in this quarter. Generally, quarter four is in any case good.

What gives us more confidence is that we managed to bring down our early-stage delinquency also quite substantially this quarter. Whereas, if you see the same quarter last year, that it actually had got elevated.

Better collection efficiencies in Q3 is giving us the confidence that the Stage 3 also should start moving down.

Got it. Have you made any PLR changes in last quarter or effective January?

Yes, effective from 1st Jan, we have reduced our PLR by 10 basis points, and we have passed on that benefit to customers from 1st of January.

Got it. That's all from my side.

Thank you so much for taking all my questions, and I wish you and your team the very best.

Thank you.

The PLR is a function of our own borrowing cost. That will work in sequence.

As our borrowing cost comes off, we should be able to pass on the reduction to customers. As of now, because this decision was actually taken middle of last quarter, hence the board decided that 10 basis points based on the reduction that we have experienced, we have passed on 10 basis points to the customer.

If there's further reduction, yes, the board will decide how much to pass on in the coming quarter. The reduction in PLR is more to be basically fair with the customer.

It is not directly intended to reduce the BT-out. BT-outs generally happen when there is a huge difference in the rate which the customer is getting compared to what they're experiencing with us.

Minor reduction in PLR is not going to really materially impact the BT-out rates.

Okay. Then in that case, to Nutan ma'am, what is the overall cost benefit that we've already seen from the 125 basis point rate cut that we have seen at systemic level, and what is it that is remaining?

Shreepal, I'll take you back to the overall benchmark-led rates that we have. Repo-linked is about 15%, external benchmark is about 30% in total.

To that extent, we've got the benefit out of the 125 basis points in total. We would have now gotten the benefit of about 40 to 50 basis points.

As we all know that the credit-deposit ratio of banks are what they are, and the MCLR of banks are just about starting to come off. Moving forward, we should expect a little bit of reduction, maybe 5 to 10 basis points every quarter for the next two, three quarters is what we expect.

Basis that, we will have to go back to see how these rates are looking like, what we are getting, and eventually look at the PLR. I would think that we will not do any more PLR in this quarter, which is quarter four of this year.

Anything from here on will be next year only.

Got it. The other question, ma'am, again was on the liability side only.

On the NHB borrowing, what is the sanction pool that we have there, and what is the borrowing rates that you're seeing from that avenue?

We got an approval this year of about 900 crores. We've actually put that in the liquidity position slide last quarter and this quarter also.

In terms of pricing, pricing remains pretty comparable to the banks. We are now in that broad region of 7.5%, and it's a good pool of liquidity for us, and we want to expand on that as well as the banks both.

Has there been a PLR cut at the NHB level as well or not yet?

There has been. Yes, there has been.

Okay. Got it.

Thank you, ma'am. Thank you so much, and good luck for the next quarter.

I'll come in the queue for more questions.

Thank you, Shreepal.

Yeah. Hi, good evening.

Congrats on good performance. My first question is on Tamil Nadu.

I think you spoke in initial remarks that the team is in place now. When do you expect the productivity from the team to come through?

Can you also comment about the competitive intensity impacting the volume recovery out there? Are you also budgeting that in FY27 disbursements in Tamil Nadu would outgrow that of the company?

I think the recovery should it will it'll take probably another two quarters, Rajiv. Probably from quarter two of this year, we should expect the turnaround in Tamil Nadu.

The coming year.

Okay. Manoj, was there any underwriting changes done across markets because of the difficult macro that we saw?

Can such changes be released, giving you better approval rates or helping you in recovering your disbursement volumes in FY27?

Not really. Underwriting changes, since it's a home loan product, generally the impact of your underwriting is visible after maybe 18 to 24 months.

Generally, these things become more visible when there is some stress in the economy, like what we saw over the last 12 to 18 months. When we realize that this is likely to happen to a specific cohort of customers, then generally you do not reverse those changes.

To give you an example of let us say customers with let's say certain type of bureau score are going to default in a certain situation. Then you would not reverse that going forward.

Unless there's something really really changes in the environment. These are ongoing changes.

As we keep discovering, let's say new cohorts which may be defaulting, it can happen on both sides, positive as well as negative. When we realize there are certain cohorts which are behaving well, we've kind of doubled down on those.

Certain cohorts which are not doing well, we've kind of restrict those profiles. This is an ongoing process.

There is no immediate knee-jerk reversal that we are going to carry on.

Understood. The last thing is on the origination yield.

As the origination yield has actually come down by 20 basis points on a QoQ basis, now is this largely a function of we incrementally doing higher tickets in our own books as well, or is it also the thought process that whatever decline we are seeing in the marginal cost of funds, we are concurrently passing it on on the new lending?

Yeah. It is more of the latter.

Because the marginal cost of funds has dropped by about 30, 40 basis points, so that is likely to reflect in new originations as well.

Broadly, our book spreads should kind of stabilize around 5.2 to 5.4, and you would want to kind of prioritize growth and push volumes for any incremental benefit?

We have always maintained that the book spreads will be 5 to 5.20 is what we have always maintained.

Right, that's a long-term number, yeah.

Anything more than that, we will basically follow a fair practice of passing that on to the customer.

Got it. Thank you so much, and best.

Thank you, Rajiv.

Raghav, we're not giving a specific number for disbursement for next year because there are multiple levers by which we can reach our AUM growth target. We're not giving a specific dispersal number.

You would have done your budgeting or some sort of numbers, right, for FY27? Is that a fair estimate of around 6,500 crores for next year, or you think that

Raghav, when you do the budgeting, there are multiple scenarios. Multiple scenarios involving a lot of business factors, there could be more than 20 factors contributing to the AUM final growth number.

We want to keep those variables flexible and under control, and what we want to guide the market is to a AUM number and then deliver that number. That's how we are thinking.

Sure,

fair enough. Will reducing the repayment rates be under consideration, say for example, if you want to deliver a 25% growth on the AUM front, then do you also have some strategies around reducing your repayment rates next year?

Yes, it will be. It will be one of those many variables, yes.

Understood. Fair to say that what you're looking at is probably the FY25 repayment rate, the way that we calculate should be lower compared to FY26, right?

That's a fair assumption to make.

I can separately run the model discussion with you, but like I said, we want to stick to the AUM guidance of 25%.

Understood. Then, besides this 10 bps PLR cut, I think you've partly answered that, any further PLR cuts will be considered only from next quarter onwards, if at all, right?

Do you sense that there will be a requirement for you to cut the PLR given the competitive intensity in the affordable home loan segment, the moderation in volume growth, and in this light, do you think that you'll be required to take a PLR cut further?

Raghav, the business is now you have to react much faster. Therefore, it will be very difficult to say what could be reality on the ground 4, 6, 8 months down the line.

Hence, the whole spread guidance of 5 to 5.25, the whole AUM growth guidance as well, we want to stick to that, and then let the rest of the interplay forces be with the internal teams and then deliver on the guidance. Today, it will be very hard to say what could competitive pressure look like in July and October, and how we choose to react to that.

Understood. On another aspect, see, I saw your employee number that's down quarter-on-quarter.

Is that because of high attrition that's continuing for the larger industry as well as for you? What are you doing to control that?

That's my last question.

Attrition has remained in that broad 35% range. What we are seeing, yes, you are right, the overall number quarter-on-quarter is down.

We actually have about 250 people who are joining us. It's just got delayed between December and Jan.

We expect that number should increase in March when you see the next number next time.

Understood. Sorry, one more related question to this.

See, generally, out of this 1,700 crore, sorry, 1,700 employees that you have, there would be different cohorts wherein there is going to be a set of people which is highly productive, and then there is another set of people which is not as productive. Is it usually the ones which are less productive getting weeded out or are leaving to join other companies, and therefore you're left with the more productive ones, and that's something that's going to be an input to your AUM growth or disbursement growth next year?

Is that the right way to think about this or not really?

That's how we think about it, and the aim is to retain the more productive sales people. All our efforts in terms of reward recognition, etc., work towards that, retaining the more productive people.

Some of them also do attrite because of various other reasons. Some of them want to go to a larger brand or they want to take up a more senior role or some other kind of role, etc.

Those factors are also at play. Of course, internally, the efforts are on to retain the more productive employees.

Understood. Thanks a lot, and that is all from my side.

Thanks.

Aditya?

Yes, Aditya, how are you?

I'm good, all well. Thank you so much, and good performance.

Just a couple of questions to you and Manoj. Over the last couple of quarters, we've gone from saying 27% to 30% AUM growth to 26%, and now today we're saying 25% odd AUM growth for '26 as well as '27.

Now this is the guidance I agree, and the branch additions are also not keeping up the pace to what we had said a couple of quarters back. What are we seeing on the ground as in is there any change because now the cycle has turned somewhat, the credit cycle?

Do you see any green shoots now going forward, maybe say exiting December?

Let me just straightaway take the question on the guidance that you've referred to. The guidance we had given was 20,000 crores by March '27.

With 25% growth next year, we will hit about 19,600 to 700 crores. Essentially, the overall impact in a medium term is about 300 crores of AUM.

We all know how the credit cycle has been in the last 12 months. It would not be very fair to say that we are dropping numbers quarter-on-quarter.

I think we need to look at numbers in the medium term and whether the business is geared to take on challenges and do the right things when the cycle is difficult. I think that's how I would like to address the first part of your question.

The second part, we talked about the branch addition. Branch additions again take place on a regular basis.

Yes, this particular quarter we had two branch additions, but come March, we are expecting six to eight branch additions. Again, it's not a linear number.

Aditya, I would request you to consider that. On

the last part, I think you were talking about green shoots. Yes, I think the aim is to convey that yes, we are seeing those green shoots.

We have got over some of the challenges that we had in some of the markets, and we are seeing green shoots. We are feeling more positive about our origination as well as dispersal numbers for the coming quarters.

Definitely want to put it out there and convey that.

Understood. Thank you so much for this detailed answer.

The other part is asset quality. I definitely understand that last quarter we tightened our credit filters, and even after tightening our credit filters and which would have definitely led to higher rejection rates, we've posted this good disbursement growth.

Now because of a tightening of credit filter, do you see that this is the peak in terms of 1+ DPD as well as the GNPA?

Yes, 1+ DPD already has turned around, and the GNPA also should start moving down in the coming quarters.

Perfect. Wishing you and the team all the very best.

Again, great set of performance. Congratulations.

Thank you. Thank you.

We give two lines, Prithvi. One is the total cost of borrowing.

It includes the total bank borrowings, the assignment transactions, the co-lending transactions. Because the optical spread in a co-lending book is low, we started giving the cost of borrowing excluding co-lending and the spread excluding co-lending as well.

What we basically do, for that 530 crore pool, whatever the cost of borrowing is, we take that out, and recompute the cost of borrowing, and we put it in a separate line for full disclosure. Okay.

Thank you. We have the next question from the line of Divyansh Gupta from Latent PMS.

Please go ahead.

Hello. Hey, I'm audible?

Yes. Yeah.

Hey, hi Nutan and Manoj. A couple of data keeping questions.

What will be our LAP AUM mix, and what would be the NPA for the two respective line of businesses? Your question is LAP AUM is 13%.

What is your second question? The NPA mix between the HL NPA and LAP NPA.

LAP would be about 1.4%. HL will be about slightly above two.

Just because it's a higher book. Sorry, higher book as in?

It is higher. Sorry, I didn't get.

Can you repeat? LAP basically to answer your question, LAP NPA will be slightly lower than the HL NPA.

Ha, got it. Understood.

The second question was any early read on the CLM 1, how is it impacting us or the customer experience and from a industry as well as Home First specific? You're referring to the new co-lending guidelines, if I'm right?

Yeah. The co-lending guidelines have become effective 1st January 2026.

We are in this transition mode as we speak. Some banks are ahead, some banks are taking some time.

In my view, we will take another two weeks to fully settle the process, but it is a matter of transition, and we will rather be done with it quickly. As we speak today, we are still undergoing conversations with some banks.

We do expect that one out of the three banks, we will do a transaction this month as well. Does it mean that, let's say, at least in the first month, our co-lending disbursal is a bit slower, and we expect to ramp it up in the next two months?

I also have to add that some variations on a month-to-month basis are normal. Got it.

Understood. This is helpful.

The next question was that if I remember, last concall only, we said that UP, there are four or five big cities, and mota-mota, market is not as big. In the opening remarks, we mentioned that we expect to make UP a big business by FY28.

Has there been a change in strategy or product or some light if you can shed on that?

No, UP was part of our plan. If you see last two years ago, when we started our expansion into North, UP was part of our plan.

Some of our early experience in UP was not so good, and hence, we kind of decided to take a more careful approach. In terms of size of the market, it is large, and yes, as you're mentioning, it is right now there are three or four large cities which have a larger amount of business, and then it is more fragmented.

However, that will not deter us from going into UP. It is one of our key markets which we have for future.

It's just that by the time we kind of put together the team and create the foundation for expansion to UP, it could take us another few quarters, which is why we have mentioned in the call that in FY28, it would start becoming a large contributor.

Got it. Just two more questions.

First is, I think in the deck, we mentioned that our average CIBIL is around 750, 747. This is at the time of origination or after?

Because once someone takes a home loan, then CIBIL score anyways goes up.

Correct. This is at the time of origination.

Got it. Understood.

The last question was that the increase in GNPA, let's say, looking at the Stage 3 absolute growth year-on-year has been faster than the increase in the AUM, which is also therefore reflecting in the higher NPA percentage. Now given that let's say some green shoots and let's say overall, let's say, pain being done, how should we expect, let's say, in the next few quarters should we expect GNPA to come down with some flow backs or it's just that the growth of the book will more or less make the denominator big and therefore the percentage will come down?

No, both will happen. The absolute value should also come down and because of the denominator going up, there will be some impact on that as well.

Got it. Is it through any specific collection effort or just generally reduction in stress, and therefore, people are expected to pay back and expecting it to revert, or we are doing much more for collections?

Or anything specific move for collections?

No, in some markets where delinquencies are elevated, obviously, there is a greater collection effort. For us, collection is the entire team is tasked on collections.

It's kind of their part and parcel of the day-to-day activity for every branch, every employee in the branches. Also to some extent because of the, you can say, green shoots in the economy and the overhang of all this delinquency going away, some customers also kind of proactively come forward to settle their accounts and repay and come back to normal.

Got it. Understood.

I'll join back the queue for any further questions. Thank you, and all the best.

Hello. Thank you for the opportunity.

I had a question on the AUM growth. On the disbursements, we have clocked around 500 crore disbursements per month.

I just wanted to understand that in terms of the tariff-impacted states, which was Tamil Nadu and Gujarat. Had we tightened our underwriting filters or had we done any changes to our underwriting policy due to the problem related to tariffs?

Now have we loosened the filters? Also, what is actually driving this 500 crores and makes us confident that this will be sustainable?

Yeah.

No, so as I mentioned, the tightening of filters is an ongoing process. It's just that when there is a event in the environment, economy not doing well, some of these trends emerge much faster, and it helps us to take those decisions on which segments to tighten and so on, which we did over the last few quarters.

The growth is not coming from relaxing those norms. The growth is coming from increased distribution and maybe just a bit of better momentum in the environment.

Not from relaxing of credit filters.

Sure. Are we also planning to relax those filters, and if we do, then could it further accelerate the growth then?

No, we are not looking to relax those credit filters because the credit filters, as I mentioned, the impact of the credit filter comes only after 18 to 24 months. Once we have already realized that a certain cohort will not behave, then it doesn't make sense to kind of relax the criteria on that cohort.

Sure. Do we have any limit on our maximum exposure to a single state, any internal ceiling or limit?

No, at the moment, we have not set any limit for a particular state because if you see our market share in each state, it is still in low single digits. Which is why we have not set any cap for any state.

In any state where we are present, there are obviously other players who have much larger share, including banks. Which is why we have not at this point put any cap on any state.

Sure. One last question.

In future or in the coming years, do we intend to reduce ticket size at any point of time or to just get out into a higher yielding segment like 6 to 8 lakh ticket size, or the current ticket size will only continue? Yeah.

No, our proposal always has been that as the country grows and incomes grow in most of these states, the availability of housing in this lower ticket sizes is shrinking. We have always said that every year, the ticket sizes will grow by 3% to 5% as a natural progression.

We continue on that path. We are not going into lower ticket sizes.

Sure. Got it.

Thank you, and all the very best for the future quarters. Thank you.

Thanks for the opportunity, and thanks for the clarification on rumors around management changes. First question is on management change only that to Manoj that you will be continuing as executive role as MD and CEO going forward as well, right?

Absolutely.

Thank you for that. Second is how is the approval rate has changed, let's say, last year to this year?

Is there a drop in approval rates that we have witnessed?

Not significantly, because the way we operate is that if new credit screens have to be implemented, we convey that to the front-end teams, and a lot of that, you can say elimination happens in the front end itself. By the time the proposal comes for underwriting, it's already gone through those screens.

At the head office level, there is no significant change in approval levels.

Sure. What are the plans for branch addition in FY27, and which are the states which you are looking to add branches?

We have about 6 to 8 branches in pipeline. It's kind of spread across several states.

I think there are couple of branches coming up in the North: Uttarakhand, Delhi. I think they're basically split across the various states.

I think one or two branches across four, five states.

That is for Q4. Any planned addition for FY27?

No, FY27, again, we are looking to add about 25 to 30 branches. It will again follow the same path, where we are concentrating.

MP will be one of the states, MP, Andhra Pradesh, Madhya Pradesh, Tamil Nadu, Maharashtra. I think these would be front-runners next year in terms of branch additions.

Sure, and UP will pick up in FY28, is that?

That's right.

Lastly, a data-keeping question on what is the count of active connectors for the quarter?

Count of active connectors is around 3,600.

3,600. That's it from my side.

Thank you.

Thank you, Mitesh.

Yes.

Yes. I just have a one broad question.

There was an article in Economic Times four days ago stating that sales in affordable housing has declined. Just wanted to know your take on the overall loan demand momentum.

See, affordable housing, we'll have to kind of narrow down the definition to understand where it is shrinking and where it is growing. As we have always said, the lower ticket sizes in affordable housing, if you look at ticket sizes less than 10 lakhs, there are markets where that is shrinking.

The growth has moved to the ticket sizes between 10 to 40 lakhs, which is a natural progression of country progressing, incomes increasing, and so on. Of course, different states are in different stages of this evolution.

There are some states where they're already at average ticket size of 15 or 20 lakh plus. In some states, there are still properties available between 10 to 15 lakhs.

State-wise there are differences. Yes, if you want to look at an overall commentary, the ticket sizes below 10 lakhs are shrinking, that's because of the increase in incomes in most of the pockets in the country.

I think, in order to keep track of affordable housing, we will have to index the ticket size by about 3% to 5% every year to account for inflation. Okay.

Thank you so much. That is all.

Thank you.

Thank you.

Thank you, sir. Thank you for giving me the opportunity.

Actually, I have joined late. If I am repetitive, sorry for that.

What is the situation in Tamil Nadu as such as we have seen one of your peer has said that there has been some issue from the ordinance point of view. How you are seeing the situation currently and any changes in terms of disbursement and all we have taken there?

The ordinance issue it's several months old now, and of course, it had some temporary impact on collections, besides various other issues which Tamil Nadu was going through including tariffs, some overhang of microfinance delinquency, etc. As I mentioned in my opening speech, we have stabilized the team, which we had a challenge with last year.

Now gradually we are building the portfolio over there. We should start seeing good traction in Tamil Nadu from quarter two of FY27.

During this quarter, how was the growth in Tamil Nadu if you can say stabilizing down or up, something like that?

It is still growing. Tamil Nadu is still growing, but obviously not at a pace that it used to grow earlier.

Growth has been very muted.

Okay. Now situation has been under control means has changed from last year?

That is right. From last year, there is a, you can say substantial difference at least in terms of stabilizing the teams.

Okay. Any change in terms of focusing on different ticket size or in different areas in Tamil Nadu where the situation is much better?

Is it a thought process or is it completely on now the team is stable, now we can grow again?

Now that the team is stable, we are looking to again reestablish our growth. Ticket sizes in any case we were not focusing too much on the lower ticket sizes below 10 lakhs.

Largely the focus will be on core affordable housing the way we see it, which is between 10 to 40 lakhs.

Okay. That was very helpful, sir.

Thank you very much.

Bounce rates, yeah, if you see last two, three, four quarters, they have moved up by about 1, 1.5%. At least last quarter, we had the collection efficiency was much better.

That is why we are slowly starting to see a divergence in the bounce rate versus the actual collection efficiency. Customers have other accounts where the money is parked, etc.

They end up bouncing the payment, but then they pay up immediately. Bounce rate is no longer a strong reflection of how the collection is going to go in that particular month.

As far as fixed versus floating is concerned, our entire book is floating rate. We don't have fixed-rate loans for the customers.

How will it affect in terms of our borrowing and lending? On the borrowing side also, we have floating rate borrowing.

It's a back-to-back floating only. Got it.

Thank you.

Login growth.

Origination, you mean. Yes, origination has also been growing.

We don't normally mention that number in the discussions. Ultimately, there is a certain dispersal rate.

If 100 cases get logged in or originated, there is a certain dispersal rate which is kind of constant. If the dispersal goes up, that means origination also has gone up.

Okay. If you could give me the funnel then, what would be the login to dispersal funnel?

If 100 were logged in, what would be the dispersal rate? Just to get a 80% is the dispersal rate, typically.

Sorry? 80% is the dispersal rate dispersal to origination.

We are not talking about logins, we are talking about origination, number of loans that get sanctioned or approved. Understood.

The 250 number of employees that was been mentioned that are going to join in Q4, which particular cohort is this, mostly sales, collection, what is this? What I'm trying to understand is, over the last three, four quarters, what we've seen is the per employee disbursement number has been around the 30 million mark.

If the number will add up, that will get impacted. Is the 30 million number the peak number, or is there aspiration something higher that we target for per employee disbursement for us?

The aim is always to improve on that number. It has been static at least last five to six quarters.

Of course, last five, six quarters have also been difficult from an environment perspective. Definitely, I think if there are tailwinds and the environment improves, that number can also improve.

As of now, we are budgeting on the basis of the 30 million number. Understood.

Just a quick one. With respect to the growth that we're seeing in MP, it's been one of our fastest growing states, Tamil Nadu is coming out of, as you're saying, from the MFI issue and other Southern states are also recovering from, say for Karnataka, coming out of the e-Khata thing.

The 25% that you're looking at is a conservative piece, because what I want to understand is in the growth wave, are we entering towards the trough of the wave at the bottom of the wave, or we are coming out of the trough and going up towards the growth wave? I'm trying to understand how the swing might happen.

See, we are giving a projection or a guidance based on how we are seeing it today. Of course, if, let's say, 6 months down the line, there is more bullishness in the market and there is a greater momentum, then of course we will revise our guidance at that point of time.

Understood. A quick one.

We have seen approximately a 2.1% drop in our approximately 3% drop in our less than 15 lakh portfolio on ticket size basis. It has correspondingly increased in the more than 20 20 lakh.

Is this more so driven by on the ground, or part of it is down to the natural inflation? Because the 25% growth rate that we're targeting, I think you said 5% would be from ATS.

Then what will be the balance 20% coming from in respect to this whole See, we are open to customers coming in all of these segments, right? We are not declining customers from any of these segments.

This is more of a natural phenomenon that we are observing in the market. As you see across the years, the lower ticket sizes, the proportions are reducing, and it's increasing in the medium or higher ticket sizes.

It's more of a natural phenomenon of what is coming through the door. We don't have any particular policy which says that below a certain ticket size, you have to decline the loan, etc., etc.

It is, like I mentioned, natural progression. In some states, incomes have arisen, customers are aspiring for larger ticket size or larger homes.

It's just what is coming through the door. Understood.

I was not saying that you are declining, but is it you are not categorically pushing for higher ticket size. It is just whatever is on the merit, if it is even though if it is higher ticket size, you're going with it.

Absolutely. See, we are not competitive in the extremely high ticket sizes where banks are active.

We don't actively pursue those ticket sizes. What is broadly, let's say if we go by the RBI definition of affordable housing, which is all the way up to 55 lakhs in metros, we are open to customers in that entire range, right?

Customers who are facing a difficulty in getting a loan from larger lenders is whom we are facilitating. We are open to all of those customers, and so typically now the customers are coming from slightly higher ticket sizes.

Lower ticket sizes, the market is shrinking. Understood.

I'll jump back in the queue, but your outlook on the yields, how do you see the yields moving? Thank you very much.

Yields, as we mentioned, we should be able to maintain the spreads at between 5% to 5.2%. Yields of course will move depending upon the rates in the market, but spreads we should be able to maintain between 5% and 5.2%.

Oh, okay.

Hi, am I audible?

Yes.

Sure. I'll continue.

I think two, three questions from my end. I'll make it quick.

Just want to understand, MP actually has gained a lot of share, nearing 10% of overall gross loan book. Just want to understand what is enabling this sort of growth in MP?

Is it a model which we can learn from and apply to, let's say, states like UP?

Sorry, which state did you refer to? We could not hear you properly.

MP, you mean? MP,

yes. MP has gone to around 10% now, 9.6%, 9.7%.

Yes. See, this is, when we are operating in multiple states, we always have certain growth drivers.

Certain markets are going through some challenges. Which is the whole advantage of diversification.

This is why we are present in 13 states. Other than Gujarat, and most of the states are kind of equal contributors to our business.

This is the advantage of the diversification. We find that certain states, there is more industrialization, or urbanization happening at a rapid pace, incomes are going up rapidly, overall law and order situation is improving more rapidly.

The demand for affordable housing also kind of goes up fast. It also to some extent depends upon the team.

We may have a stronger team in one state versus another state. The things go better in a particular state.

There will be a few states which are firing this year, some state is firing next year. That's the whole advantage of diversification.

Sir. Actually, I get that point.

Just wanted to understand, one is external elements which are, as you mentioned, not in our control. I was talking more from the internal elements like that, okay, is there a stronger team, is it the product in the state, or some other factors which have contributed to, let's say, this state gaining more than others was my key question.

What we have realized over time is that each state has its own characteristics. When we try to kind of cut paste something that has happened in one state into another state, it never works.

Achha, okay, got it. That's fair, that's helpful.

My second question is on the lead generation strategy bit. I saw that builder ecosystem has gained a bit there.

I just wanted to understand, is there some cohorting within the Pareto of lead generation, which is connectors, and how do you strategically look at cohorting within this and then kind of using it to increase lead generation?

Our aim is to have a very granular connector network. When we are analyzing connectors, our main focus is to drive to two metrics, which is that the number of connectors which are handled by relationship manager, can we drive that number up?

The number of active connectors. These are two metrics that we drive actively.

We are not really interested in trying to maximize the business from a connector, because then that leads to aggregation and a different model, which is an aggregation model. We try to increase the number of connectors which are handled by relationship managers, the capacity of a relationship manager to handle more connectors, and the number of active connectors, overall number of active connectors.

Sir,

what would be the key, let's say, steps or acquisition strategies to increase this number of active connectors or even connectors?

One is that just addition of the denominator itself, which is just adding the total number of connectors. The second part is the activation.

Activation is the process of identifying who is dormant, somebody who has given us a loan or referred a loan to us in the past, but has gone dormant. How do we activate that person?

What has stopped him from referring cases later on? That is the whole science behind it.

Sir. Actually, I'm getting you're saying that there is a whole funnel for connectors: acquisition, activation, and probably retention also.

What I'm asking is within the acquisition funnel or the bucket, cohorting, what is the strategies or what are the ways you're looking to acquire these connectors? Is it digital mediums, physical mediums, and within that also is there further segmentation?

What is acting well here?

The acquisition is largely physical. Each relationship manager is tasked with acquiring connectors.

That is something that we have found to be most effective at this stage. At some point, if there is a digital or centralized process, we will adopt that.

Some pilots are going on. At the moment, physical acquisition by the relationship manager is the most active channel, most active method of acquiring connectors.

Got it. One last question for you, sir.

There is a change in early delinquencies as mentioned. Just want to understand what are the major steps you have taken over the last two, three quarters, which have led to this change in early delinquencies?

When the environment is tough, we basically try to increase the collection intensity, we step up the monitoring at a relationship manager level, number of visits, and so on and so forth. Some of those steps have paid off, and improvement is also a reflection of how the environment is easing off.

Yes, our efforts were elevated for a couple of quarters, but then the environment easing off combined with our efforts has helped to reduce the early delinquency.

All right. Thank you so much, sir.

Thank you for answering so patiently.

Thank you.

Thank you.

Yeah. Ravi ji, for the quarter of December, we have not done any write-off, which is a complete write-off.

For the first two quarters, we have done. My sense is it is in the range of 4 to 5 crores, but allow me a minute, and I will confirm that number to you.

Okay. 3

3.3 crores in quarter one. 10 crore total?

Total is? Yeah.

Total 10 crore for the year. Yeah.

Okay. Thank you very much, and all the best.

Thank you, Ravi ji.

Yes, we can hear you. Sir, what are the dispersal trend in January month?

Sir, January is still not closed. Current trend matlab 20 days trend?

Strong, sir. Thank you.

Are there any specific states which are contributing for the NPA and GNPA? Yes, so as we discussed in the past, Tamil Nadu has been one of the more difficult states for us last year.

Other than that, at a state level, we don't have any challenges. There would be obviously specific branches where there are challenges in some states, but as a whole, we faced a challenge last year in Tamil Nadu.

No, this quarter only matlab GNPA are increased from last quarter and in this quarter, which state are having a higher stress? Sir, the stress continues in Tamil Nadu.

The stress that we had which was building up, the higher delinquency is some of it is coming from Tamil Nadu only. Is the stress due to tariff issues?

Yes.

Yes, tariff issues have also contributed to it. Okay.

That's it from my side.

Thank you.

Thank you.

Hi. Thanks for allowing me another question.

Just one question I had. Let me know if my understanding is not correct.

Typically, home loans will have a higher LTV compared to a LAP. Given our NPAs are higher in home loans on a, let's say, even historically as well as let's say as the stock right now, the simple mathematical assumption would be that the Stage 3 LGD or ECL numbers should go up.

Yes, but what we will have to do is not look at a single year. We will have to look at a one cycle trend, which is at least seven years.

When you look at that, ultimately, it depends on what the equity of the customer is. It's not a very mathematical formula on one year basis or a one quarter basis.

Also, within housing loans, there are different products which are at different LTVs. LTVs are high in certain apartment products.

Then when it comes to resale or self-construction, the LTVs are actually low. They could be as low as LAP itself.

Yep, yeah, let's say if you're doing a PPC, plot purchase plus construction or construction on plot. My understanding was that we had more or less exited from the apartment-led credit, right?

Matlab, we were not doing apartment-led.

The entire Gujarat is largely apartment-led only.

Got it. Then understood.

Basically is there is no change in ECL model or any assumptions which might be leading, it's just purely driven by various factors of the proper loan characteristics. Is then that a fair understanding?

All of that gets reflected in the ECL model.

Absolutely.

The changes in the portfolio, the changes in the LGDs, from time to time, all of it gets reflected in the ECL model.

Got it. Just one last question.

What would be, matlab, GNPA on a managed book? Because the GNPA that we report is more on the on-book GNPA.

1.8.

0.8?

1.8. 1.8,

1.8. 1.8.

On the AUM, yeah. 1.8, which means that then it's a fair assumption that mostly home loans are taken away in DA and also probably more premier or better profile customers are in the managed?

It's a vintage issue also. What happens is the lower vintages go off in the assignment and higher vintages remain with us, so that difference also comes through.

Got it. You are saying new fresh vintages goes away,

and

the old vintage. Over a period of time, though, it will equalize only, no?

Matlab, jitna aapke paas aa raha hai, you are also DAing it away.

Correct, but it will take some time, because the assignment started after COVID. Probably it should get normalized in maybe next two years.

Got it. Then, ideally, 1.

then we should see a 1.8 kind of number is that the correct understanding, or this 1.8 will become 2?

At some point, there should be a convergence. There will still be some difference because of the quality of the book, because by definition, the assignment book is taken away after a certain seasoning.

Right? In that seasoning, the quality is already checked in that seasoning, and then the book is then assigned.

That difference will still remain, but yes, there will be a greater convergence in couple of years.

Got it. Understood.

Thank you.

Thank you for the follow-up. Can you just give me a breakup of the AUM with respect to apartment, how much is apartment, how much is P+C, how much is self-construction?

Would that be possible to provide?

Sure. We can give you that.

Apartments on AUM is around 16%, right? Self-construction is around 26%.

Anything else you wanted to know?

Plot plus construction, and Only plot or only construction?

Plot plus construction, self-construction will be part of the self-construction group, which is 26%. Yeah.

Only plot?

Only plot will be very small. It is about 1% of the pool of the AUM.

Okay. Just a quick one on the BT-out rate.

QoQ, we can see that the number has fallen, last quarter it was 7.6, now it is 6.6. What do you look at the number with respect to the BT-out, the overall run-off?

Because what I've seen from the ground, speaking with some of the people on the ground, some of the affordable housing and some housing finance companies are doing 12% or sub-12% rates in this quarter, and parts of, a little bit in last end of the last quarter. The yield outlook question was purely because of that, because if you're seeing less than 15 lakhs or less than 20 lakh customers being offered 12, maybe even sub-12 rates, then that creates a question mark with respect to the whole spread and the entire RoE theme.

This is something that we have been also flagging off since last several quarters that balance transfers are fairly aggressive even in the affordable segment now, and the rates being offered by various affordable housing players are also fairly aggressive. It's something that we had flagged off.

However, we have also, you can say, reinforced or renewed our efforts for retention in order to prevent balance transfers. Hopefully, at least in this quarter it has yielded some results, and we have managed to reduce the balance transfer.

This effort will be on to speak and counsel the customers and reduce the balance transfers. A

steady-state BT-out rate that you feel safe for FY26, FY27?

Our aim is to kind of continue this success that we have had in this quarter. If the efforts that we have put in this quarter continue to give us results, then it will, yes, stabilize at around 6%, 6.5%.

Okay. Finally, an aspirational overall thing.

Like we've seen some of our peers slowing down post nearing the 20,000 crore mark. You're saying that you will be reaching the 20,000 crore mark in a couple of years time.

Because the base is higher, the growth rates moderate. What do you think is a sustainable steady-state growth for you, what you're looking like a longer term frame?

This is a question, where do you see the book, and what is the sustainable growth rate, and sustainable RoAs that you see? It's a big picture question.

Yes. As we had mentioned, the 20,000 crore number by March of '27, and as we discussed earlier in the call, we may only miss it by maybe one or two months.

Similarly, our, you can say, guidance or our vision or projection for 2030 is 35,000 crores. That is where we want to get to.

That will be in the region of around 22%, 23% AUM growth year-on-year if we have to get to 35,000 crores.

Understood. Thank you very much, and this is great.

A couple of suggestions on the fact sheet, if you could start giving the statistics with respect to the numbers of some sanction ratios, etc. It's a very useful number that usually as analysts see, if you could add that number into the fact sheet would be great.

Number of approvals?

Yes, the approval ratio like login to sanction or sanction to disbursement, that ratio would be really helpful. Thank you very much.

Thank you.

Thank you, Siraj.

Just wanted to understand the qualitative aspects of 1+ DPD as well as GNPA. You answered a few data points to previous participants.

The nature of these customers, is there any commonality between these customers that are not paying? It can be either vintage, it can be income profile, it can be state level.

See, most of the customers default because of some unforeseen event in the family, okay. It could be largely medical events, accidents, some major illness, so that is a big contributor.

Another contributor is, of course, losses in business, loss of job, and so on. These are the key contributors to the default.

If this is combined with, let us say, some weakness in the property value, that's where the NPA and losses take place. If the property is strong and there is a lot of equity for the customer in the property, then they typically either sell the property or settle and square off the loan.

If there is a weakness in the property plus there is obviously the weakness in the income, then we end up with NPA. No,

I I understand that as well, but the reason and that is something which is business as usual. My my my question is more to do with if you look at from a one-year one-year basis, obviously, there has been a macroeconomic and we all know that the country went through a rough economic or credit patch over the last 18 to 24 months, over the last 15 to 18 months.

Is there as as in the for the company, for Home First, now our 1+ DPD over the last, say, 12 months went from 4.5% in FY25 Q1 to 5.5% last quarter and 5.3% this quarter. Who are these customers, and when the what is it what is it that the economy or the customer profile that needs to turn for you to come back to say a closer to a 5% or sub-5% range that we were doing historically?

Same color for NPA. NPA, there has been a 30 basis points jump over the last 12 months.

I think so a large part of that chunk would be Tamil Nadu, if I'm not wrong. You can you can correct me if my understanding is wrong.

That is what I wanted to understand. I completely agree on the on the that that there would be family issues, there would be medical emergencies, there would be decrease in house prices.

Those are business as usual, and that is something that all the affordable housing finance across cycles will go through. This cycle was a bit different, so that is why I wanted to know the color.

What will change things is basically, one important thing is easy availability of credit, right, which is important for a customer in the lower income segments. Typically, when there is a stress in the family, like somebody has lost a job or there is a sudden medical expense that has come up, they need immediate cash flow from some other source.

If you are expecting them to continue to pay the home loan EMI, then, in order to you can say attend to their other problem, they will have to get immediate cash flow from somewhere, which was earlier available because there were a lot of companies providing quick personal loans and so on. That dried up over the last 12 to 18 months, and as a result of which, some of these customers were kind of left high and dry, you can say.

When there is a sudden crisis, they don't have anywhere to turn, anywhere to go to. They had to then stop their home loan payment and kind of dip into that as a last resort for their emergency needs.

That is something that when it changes, and we know that it has changed over the last three, four months, customers find it a little easier to kind of tide over that phase of two, three months when there is a liquidity problem for them. That is one of the important things that can change in the economy.

What can obviously change at a macro level is obviously there is more job creation, there is higher income or wage inflation or income inflation. That then helps the customer to create a financial cushion for difficult situation.

Understood. Out of this 255 crores of gross NPA that we have, how much would be because of Tamil Nadu, or for that matter, because of tariff-related stress?

We have already commented that we are seeing good turnaround in Gujarat. Now Tamil Nadu and the state in Tamil Nadu is the only pinpointed pool.

See, Tamil Nadu is as a percentage of the AUM, it is about 12%. The ratio of the NPA will be slightly higher, probably around 15% 15% to 18% of the NPA cohort.

At least in some pockets, it's largely because of the tariffs. For example, Tiruppur has a much higher NPA ratio because the economy there has been under stress.

Understood. Thank you so much, and wishing you all the very best again.

Thank you, Aditya.

Thank you. Thank you

Thank you everyone for participating and engaging in the call. We hope we have been able to answer the questions to your satisfaction.

In case you want to reach out for further questions, you can always reach out to Sunil Anjana or write to us at [email protected]. Thank you so much.