Revenue
Margin
Demand
Guidance
Tone
Metrics raised 2
- NIM guidance raised to 3.81%+ (from 3.75%)
- Spread guidance raised to 2.83% (from 2.81%)
Event Participants
Executives
5 Abhishek Mishra, Prakash Shanbhogue, Shailesh Kumar Singh, Suresh Iyer, Uthaya Kumar A
Analysts
9 Abhijit Tibrewal, Kunal Dhokas, Nidhesh Jain, Prachi, Rajiv Mehta, Shreepal Doshi, Shubhranshu Mishra, Sonal Minhas, Swapna
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Disbursements | ₹2,609 crores | +29% YoY (vs ₹2,015 crores), surpassing ₹2,500 crore Q1 target; housing ₹1,650 crores (+28%), non-housing ₹958 crores (+32%); salaried +21%, SENP +44% |
| Book rundown | ₹1,857 crores | +₹127 crores vs Q4 FY26 (₹1,730 crores); BT out stable at ₹408 crores (vs ₹400 crores); part prepayments surged to ₹1,072 crores from ₹976 crores as quarterly resets compressed tenures with constant EMIs |
| AUM growth | 10.8% (reported ~11%) | Inched up from 10.4% in FY26; net accretion of ₹755 crores; tracking 14% FY27 target |
| Yield on portfolio | 9.81% | Sustained as guided; reflects annual-to-quarterly reset migration and January 2026 repo cut of 15 bps |
| Cost of borrowings | 6.98% | Better than 6.99% guidance; aided by high-cost NCD repayment and well-timed CP fund raise; new bank term loan at 7.25% |
| Spread | 2.83% | vs 2.81% guided; management confident of maintaining with mix shifts |
| NIM | 3.81% | vs 3.75% guidance; expected to be maintained at 3.81%+ |
| NPA increase (Q1) | ₹17-18 crores | Contained vs ₹41-45 crores in Q1 of prior two years; Stage 2/3 and SMA 1/2 declined sequentially in absolute value |
| Credit cost | 10 bps (guidance) | NACH bounce ratios down for 6 consecutive quarters; delinquent account count stable |
| GNPA by segment | Salaried 0.6-0.63%; SENP 1.45-1.5% | SENP yields ~0.5% higher; accretive net of credit cost |
| ROA | 2.39% | Down from 2.53% FY26 due to IT-related opex; FY27 target ~2.4% |
| ROE | 18%+ | In line with FY27 aspiration of ~18% |
| Cost-to-income | ~19%+ (Q1) | Up from ~18% FY26; FY27E ~19.5%; expected to moderate to ~18% in ~3 years |
Geographic & Segment Commentary
- Zonal Performance: All 6 zones recorded positive disbursement growth; Karnataka was the slowest at 18% YoY while Telangana grew faster. New branches opened post-March 2023 and the sales team contributed meaningfully to Q1 volumes.
- Housing vs Non-Housing: Housing loans grew 28% to ₹1,650 crores and non-housing (LAP) grew 32% to ₹958 crores, with growth across all 2x2 segment metrics.
- Salaried vs SENP: Salaried disbursements grew 21% and SENP grew 44% in absolute terms; SENP customers have documented income with 2-3 years of IT returns verified on the portal, keeping credit quality superior to typical affordable HFC books.
- Karnataka Asset Quality: Karnataka NPA in absolute value was lower as of March 2026 vs March 2025; June saw only marginal sequential uptick (1-3 cases). IT sector exposure is ~6% of customers, predominantly smaller IT entities, with no major stress observed.
Company-Specific & Strategic Commentary
- IT Transformation (LOS/LMS): Pilot implementation across 5 branches went live July 8, 2026, processing all transaction types (sanctions, disbursements, NACH, BBPS collections, closures). Remaining 245 branches to migrate in Q2 FY27 via month-end tranches (July data in August, August data in September); pilot branches returned to normal productivity within 10 days. Q2 disbursement target of ₹3,000 crores unchanged.
- APF (Approved Projects): Approved projects increased from 271 to 331 in Q1 (60 added), spanning CAT A marquee and CAT B builders. Risk cap of 10% per project; up to 100-150 units per project considered. Contribution still small but providing a regular trickle; 15% share is a while away.
- Pricing & Underwriting Tweaks: Special-rate threshold raised from ₹20 lakhs to ₹25 lakhs+ to offset higher incremental borrowing costs (banks quoting 7.25-7.5% vs 6.95% last year). Added EWS signals and OTMS monitoring; 82% of loans now have CIBIL >700 (vs ~75% earlier).
- Customer Retention: Management working with credit bureaus to get alerts when existing customers make enquiries, and exploring conversion of prepaying customers into deposit customers; earlier loan closures and BT outs remain manageable at ₹408 crores.
- Competitive Positioning: Main BT-out competitors remain LIC and Bajaj, not banks. Bajaj's technology first-mover advantage cited; Can Fin's IT transformation is expected to enable faster product launches (including higher-yield products) and a push for sustained 20%+ disbursement growth to close the AUM growth gap.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| FY27 disbursements | ₹13,000 crores (could rise to ₹13,200-13,400 crores) | Q1 at ₹2,609 crores vs ₹2,500 crore plan; Q2 target ₹3,000 crores; may push higher to offset elevated rundown and achieve ~₹6,000 crores net accretion |
| AUM growth FY27 | 14% | Maintained despite Q1 rundown of ₹1,857 crores exceeding the ₹1,750 crore quarterly plan; requires consistent incremental disbursements |
| NIM | 3.81%+ | Supported by product/segment mix shift; incremental borrowing cost increase is marginal and only on new loans |
| Credit cost FY27 | 10 bps | Confident - NACH bounce ratios declining 6 straight quarters; Q1 NPA addition contained at ₹17-18 crores |
| ROA / ROE FY27 | ~2.4% / ~18% | Q1 at 2.39% / 18%+; opex impact already reflected in Q1 |
| Cost-to-income | ~19.5% FY27; ~18% in ~3 years | IT AMCs and depreciation stabilizing; ratio will decline as book grows |
| Tax rate FY27 | 21% | Stable due to DTA benefits; no major surprises expected |
| IT implementation | All 250 branches live by September 2026 | Month-end phased migration; management to issue an update in mid-September on progress and disbursement performance |
Risks & Constraints
| Risk | Context |
|---|---|
| Elevated book rundown / part prepayments | Q1 rundown of ₹1,857 crores exceeded the ₹1,750 crore quarterly plan; part prepayments of ₹1,072 crores (vs ₹976 crores in Q4 FY26) are the main driver as quarterly resets shortened customer tenures. Rate differential versus banks/large HFCs widened from 55 bps to >100 bps (8.4% vs 7.15-7.25%), making retention harder unless repo rates move up. |
| Rising incremental borrowing costs | Bank quotes moved to 7.25-7.5% from 6.95% last year; existing loans unaffected (all linked to T-bill/repo, not MCLR). Partially mitigated via asset-side pricing tweaks (special rate threshold raised to ₹25 lakhs) and mix shifts. |
| IT migration execution risk | 245 branches to be migrated in Q2 FY27 in monthly tranches; larger tranches may require more handholding. Management confident based on 5-branch pilot (no showstoppers, 10-day normalization), with a September update planned. |
| Competitive pressure | Bajaj Housing growing at 25-30% with technology advantage; Can Fin AUM growing at ~11%. Management acknowledges need for sustained 20%+ disbursement growth and faster product development post-IT transformation to catch up. |
| Macro / IT sector disruption | ~6% of customers employed in small IT entities (top-tier IT firms largely absent from book); Karnataka growth at 18% is the slowest zone. No asset quality impact yet, but small IT entities are first to face stress if hiring disruptions deepen. |
Q&A Highlights
Asset Quality & Underwriting
- Question: How do macros play out over the next 3-6 months, and what underwriting/process changes have been made? (Shreepal Doshi)
- Answer: No slowdown in demand - 60 new APF projects added (271→331), liquidity support from partner banks strong. Key tweaks: special rates now only for loans >₹25 lakhs (was >₹20 lakhs), additional EWS parameters and OTMS monitoring added, and customer re-rating with refined risk parameters. CIBIL >700 now at 82% of loans. (Suresh Iyer)
IT Sector Exposure
- Question: Any disruption in IT sector hiring impacting Bangalore/Telangana home loan offtake, and any policy changes? (Shubhranshu Mishra)
- Answer: IT exposure is only ~6% of customers, mostly small IT entities - top-tier companies rarely take loans from Can Fin. Karnataka NPA was lower in absolute value YoY as of March 2026; NACH bounce ratios down 6 straight quarters. No policy changes needed so far. (Suresh Iyer)
IT Transformation Progress
- Question: When will complete LOS/LMS implementation happen, and will it impact disbursement targets? (Shreepal Doshi, Rajiv Mehta)
- Answer: Pilot of 5 branches went live July 8 with all transactions processed (sanctions, disbursements, NACH, BBPS, closures). Remaining 245 branches migrate in Q2 FY27 via month-end tranches; completion before next earnings call. Pilot branches normalized within 10 days; staff took 3-4 days to adapt. Q2 target of ₹3,000 crores stays. (Suresh Iyer)
Pricing & Ticket-Size Mix
- Question: What is the pricing on growing higher-ticket loans (₹30-100 lakhs)? (Rajiv Mehta)
- Answer: Blended yield is 9.81%, largely stable YoY (9.82% last year). Range: ~8.4% for salaried customers with CIBIL >725 and ₹25 lakh+ loans, up to ~12.5% for non-salaried, non-housing S3-rated customers. (Suresh Iyer)
Competition & Growth Gap
- Question: How does Bajaj grow at 25-30% while Can Fin grows at ~11%? What trade-offs are competitors making? (Sonal)
- Answer: Bajaj has a technology first-mover advantage - Can Fin is catching up via IT transformation and will push for 20%+ disbursement growth. LIC faces high prepayments in the pure home loan segment against banks on larger tickets. Can Fin's BT outs are stable (₹408 crores vs ₹400 crores QoQ). (Suresh Iyer)
Rundown Sustainability & Retention
- Question: Is the elevated rundown the new normal? What are near/longer-term targets? (Sonal)
- Answer: Breakdown: ₹408 crores BT out (stable), ₹377 crores other closures (sale of property/SARFAESI), ₹1,072 crores part prepayments (main driver - customers repaying faster with quarterly resets). Rate differential widened from 55 bps to >100 bps vs banks (8.4% vs 7.15-7.25%), making retention harder. Efforts include bureau enquiry alerts and converting prepayers to deposit customers. (Suresh Iyer)
Credit Culture & Write-offs
- Question: Is it correct that only ₹20 crores have been written off cumulatively since 2001? How is that possible with DSA sourcing? (Kunal)
- Answer: Yes, ~₹20 crores of actual credit write-offs (excluding the ₹40 crores Ambala non-credit issue). Frauds are kept on books as NPAs with 100% provisioning instead of write-offs (would add ₹50-60 crores if written off) - this keeps reported write-offs low. Conservative customer selection and tight policies have at times constrained growth. (Suresh Iyer)
Return Ratios & SENP Economics
- Question: Are 2.4% ROA and 18% ROE still achievable given softer Q1 and higher opex? (Prachi)
- Answer: Q1 delivered 2.39% ROA and 18%+ ROE; opex impact already reflected. NPA increase contained at ₹17-18 crores vs ₹41-45 crores in Q1 of prior two years; credit cost of 10 bps achievable. SENP yields 0.5% higher than salaried; GNPA at 1.45-1.5% vs 0.6-0.63% for salaried - accretive net of credit cost. (Suresh Iyer)
Cost-to-Income Trajectory
- Question: How does cost-to-income play out over the next few years with technology transformation? (Kunal)
- Answer: FY27 will hover around 19.5%; AMCs and depreciation are now stable. As the book grows, the ratio will decline - targeting ~18% in about 3 years. IT transformation should start yielding staffing benefits this year itself (no new sales headcount additions planned). (Suresh Iyer)
Key Takeaway
Can Fin Homes delivered Q1 FY27 disbursements of ₹2,609 crores (+29% YoY), surpassing its ₹2,500 crore internal target with growth across all six zones (Karnataka lowest at 18%) and both segments (salaried +21%, SENP +44%). Book rundown rose to ₹1,857 crores from ₹1,730 crores in Q4 FY26, driven by ₹1,072 crores of part prepayments as quarterly resets compressed tenures, yet net AUM accretion of ₹755 crores kept AUM growth at 10.8%, tracking toward the 14% FY27 target. NIM of 3.81% and spread of 2.83% exceeded guidance, with cost of borrowings at 6.98% and yield sustained at 9.81%. Asset quality remained resilient - Q1 NPA additions of just ₹17-18 crores versus ₹41-45 crores in prior years, six consecutive quarters of declining NACH bounce ratios, and credit cost guided at 10 bps - supporting ROA of 2.39% and ROE above 18%. Strategically, the LOS/LMS platform went live across 5 pilot branches on July 8, with full rollout across 250 branches targeted by September and the ₹3,000 crore Q2 disbursement target intact; management may raise FY27 disbursements to ₹13,200-13,400 crores to offset higher prepayments. Key watch points include a widening >100 bps rate differential versus competitors (8.4% vs 7.15-7.25%), elevated part-prepayment trends, and execution risk across the remaining 245-branch IT migration.