Revenue
Margin
Demand
Guidance
Tone
Event Participants
Executives
3 Manoj Viswanathan, Nutan Gaba Patwari, Sunil Anjana
Analysts
11 Ayush Sharma, Divyansh Gupta, Kunal Shah, Nidhesh Jain, Rajiv Mehta, Ravi Naredi, Rinesh, Shreepal Doshi, Shubhankar Gupta, Varun Dubey, Vijay Sharma
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| AUM | ₹16,938 crore | +25.7% YoY / +6.7% QoQ; 83% individual home loans, LAP ~13-14% of portfolio |
| Disbursements | ₹1,628 crore | +31% YoY / +3.6% QoQ; ~50% from unit growth, ~50% from higher average ticket size |
| Co-lending Book | ₹617 crore | 3.6% of AUM; Q1 co-lending disbursements ₹46 crore; ₹285 crore direct assignment executed |
| GNPA (Stage 3) | 1.8% | Flat QoQ; Stage-3 PCR at 23.4%, total coverage including management overlays at 45.3% |
| 30+ DPD | 3.2% | Flat QoQ; 1+ DPD flat at 2.7%; Q1 seasonally weak quarter remained stable |
| Credit Cost | 40 bps | Q1 annualised; management overlays maintained over and above ECL requirements |
| Net Interest Income | Growth +38.2% YoY | Outpaced AUM growth; aided by stable yields and lower borrowing costs |
| Pre-Provision Operating Profit | ₹224 crore | +32.9% YoY; operating leverage visible as balance sheet scales |
| Profit After Tax | ₹160 crore | +34.5% YoY / +7% QoQ |
| ROA / ROE | 4.2% / 14.5% | ROA +10 bps QoQ; ROE +50 bps QoQ |
| NIM / Spread (ex-co-lending) | 6.0% / 5.3% | NIM +10 bps QoQ; spread at higher end of 5-5.25% guided band |
| Portfolio Yield (ex-co-lending) | 13.1% | Disbursement yield at 13.0%; pricing discipline intact |
| Cost of Borrowings | 7.8% | -10 bps QoQ; incremental borrowing cost at 7.6%, no one-off benefit |
| Cost-to-Income / OpEx-to-AUM | 32.7% / 2.8% | C/I +70 bps QoQ on increments and fresh hiring; FY27 OpEx guide 2.6-2.7% |
| Capital Adequacy | 42.6% | Tier-1 at 42.2%; compares with 44.1% / 43.8% as of March 2026 |
| Net Worth / BVPS | ₹4,483 crore / ₹429 | Strong capital position supports sustained growth without external capital |
| Network | 175 branches / 373 touchpoints | +4 branches in Gujarat, AP, Tamil Nadu, MP; 1,988 employees (+133 net) |
Geographic & Segment Commentary
- Home Loans & LAP: Home loans account for 83% of AUM and drove Q1 growth; LAP remains a deliberately lower focus at ~13-14% of the book. Housing loan ticket sizes moved up marginally; LAP ticket sizes stable.
- Core Markets (Maharashtra, Gujarat, MP): Largest markets by AUM contribution, delivering healthy growth with stable asset quality; MP book has grown ~4x in two years on the back of a strong regional team.
- Emerging Markets (Rajasthan, UP, South): Rajasthan, UP and southern states gained traction; Telangana building growth momentum with stable asset quality. Management targets UP, Tamil Nadu, AP and Telangana for more aggressive growth over the next 1-3 years, with UP viewed as the highest penetration potential.
- Distribution & Productivity: Four branches added during the quarter, taking network to 175 branches and 373 touchpoints; 133 net employees added, largely customer-facing, taking headcount to 1,988. Employee-per-branch at 11; AUM per employee tracked at ~₹3.5 crore annually.
Company-Specific & Strategic Commentary
- AI & Technology: Operationalized Q, an in-house AI-orchestrated omnichannel customer communications platform; bureau analyzer and contextual bank statement analysis model deployed in production, improving underwriting efficiency and turnaround. Pilots underway in lead qualification, legal/technical valuation and income analysis. Management cites low OpEx ratio and NPS of 79 as early proof points.
- BT-out Retention: A retention protocol (branch manager outreach, top-up pitching, waterfall of activities) implemented 5-6 quarters ago brought BT-out to 4.5% in Q1 - first sub-5% quarter. Management expects ~5% going forward.
- Green Homes Initiative: Certified 100 additional homes in Q1, taking cumulative certified homes to 550 as of June 2026.
- Co-lending Infrastructure: Investing in enabling infrastructure to scale co-lending; Q1 disbursements at ₹46 crore, book at ₹617 crore. Partner banks are aligning with revised process/policy framework; expected to stabilize going forward.
- CFO Transition: Nutan Gaba Patwari will step down from executive responsibilities effective August 31, 2026; the board is evaluating candidates for CFO reappointment.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| AUM Growth | ~25% (FY27) | Reaffirmed; demand healthy across markets, supported by branch expansion, disciplined underwriting and stable asset quality |
| Spread | 5%-5.25% (long-term) | Fully floating book; cost of funds movement passed through to customers. PLR cut unlikely near-term amid West Asia uncertainty; Q1 book spread at 5.3% |
| OpEx / AUM | 2.6%-2.7% (FY27) | CFO expects ratio to remain range-bound; increments and hiring offset by lower administrative expenses; 5-10 bps YoY improvement |
| BT-out Rate | ~5% (FY27) | Q1 at 4.5% was extraordinary; management not committing below 5% until trend sustains for 2-3 quarters |
| Repayment Rate | 16%-17% (planning assumption) | Q1 actual ~14.3%, lower due to exceptionally low BT-out; no behavioral change in customer prepayments |
| Credit Cost | ~40 bps pace (Q1) | No explicit FY27 guidance; overlays retained; Q1 stable collections support flat asset quality trajectory |
Risks & Constraints
| Risk | Context |
|---|---|
| Rate & Macro Uncertainty | West Asia crisis dampens near-term PLR cut expectations; tight liquidity and rising bank MCLRs could pressure funding costs. Fully floating book allows pass-through to customers, but competitive constraints may limit repricing |
| BT-out & Competitive Intensity | Competitive intensity unchanged; banks target mid-ticket customers with better bureau scores. Q1 4.5% BT-out may not sustain; ~5% expected. Higher credit-quality customers become "easy prey" for lower-cost lenders over time |
| Ticket-Size Migration | >₹25 lakh ticket share rose from 14% to 18% YoY. These customers are more rate-sensitive; gradual yield compression is expected over a longer period, which management plans to offset via OpEx efficiency |
| Pockets of Stress | Tariff-affected pockets (e.g., Tirupur) are on an improvement mode; no visible war impact on collections yet, but monitoring continues. New districts with weak early trends get curtailed until understood |
| CFO Transition | Nutan Gaba Patwari steps down August 31, 2026; CFO reappointment pending. Transition risk is mitigated by institutionalized processes, but leadership gap remains a near-term watch point |
Q&A Highlights
Loan Mix and Ticket Size Growth
- Question: Is Q1 growth primarily from home loans, and is the ticket-size increase home-loan-led? (Kunal Shah, Citigroup)
- Answer: Yes, disbursements and growth are largely from home loans; LAP remains a lower focus area with stable ticket sizes. Housing loan ticket sizes moved up marginally. (Manoj Viswanathan)
- Question: Of the 31% disbursement growth, how much is volume vs value? (Rajiv Mehta, YES Securities)
- Answer: Roughly 50/50 - about 10-15% unit growth and the balance from higher average ticket size; login-to-sanction ratio stable at ~40%. (Manoj Viswanathan)
Spread Sustainability and Rate Path
- Question: Is the 7.6% incremental borrowing cost sustainable, and will spreads converge to the incremental level? Any PLR cut? (Rinesh, ICICI Bank)
- Answer: No one-off - NHB drawdown was deferred to Q2; book spread is 5.3% vs long-term guided 5-5.25%. PLR cut is unlikely near-term due to West Asia uncertainty; the fully floating book allows pricing to move with cost of funds. (Nutan Gaba Patwari, Manoj Viswanathan)
- Question: Should NIM/spreads compress 5-10 bps like peers given MCLR hikes? (Varun Dubey, Share India Securities)
- Answer: Improvements in borrowing cost have already been passed on (visible in slightly lower yields over two quarters); commitment is to maintain 5-5.25% spreads. (Manoj Viswanathan)
BT-out Control
- Question: 4.5% BT-out is the lowest in many quarters - one-off or structural? (Rinesh, ICICI Bank)
- Answer: Retention protocol (branch manager meetings, top-up pitches, waterfall of customer activities) was implemented 5-6 quarters ago; Q1 was an extraordinarily good quarter; expecting ~5% range going forward. (Manoj Viswanathan)
- Question: Could BT-out fall to ~4%? (Shubhankar Gupta, Equitree Capital)
- Answer: Only if the trend sustains for 2-3 quarters; not committing below 5% now. (Manoj Viswanathan)
Ticket Size, OpEx and Co-lending
- Question: With >₹25 lakh ticket share rising from 14% to 18%, what happens to spreads/ROA? What is FY27 OpEx/AUM guidance? Why is co-lending weak? (Nidhesh Jain, Investec)
- Answer: Same customer segment - incomes and aspirations moved up; no material spread differential by ticket-size band; committed to 5-5.25% spreads. OpEx/AUM full-year guidance is 2.6-2.7% with 5-10 bps yearly improvement. Co-lending had process/policy changes in Q1; partner banks are aligning, numbers should stabilize. (Manoj Viswanathan, Nutan Gaba Patwari)
Higher-Ticket Customer Positioning
- Question: Who are these higher-ticket customers with good CIBIL scores, and won't they be BT-out targets for larger lenders later? (Divyansh Gupta, Latent Advisors)
- Answer: Banks have raised their threshold to ₹50L-75L+; Home First serves the ₹25L-40L segment facing documentation complexity (fragmented salary slips, missing Form 16, informal co-borrowers). Strategy is to improve customer credit profile (bureau scores 738 → ~750, NTC down to 12%) without sacrificing yields. (Manoj Viswanathan)
Asset Quality and Stress Pockets
- Question: Can 1+/30+ DPD be brought below 2%? Are Surat/Tirupur pockets normalizing? FY27 asset quality outlook? (Ravi Naredi, Naredi Investments; Shubhankar Gupta, Equitree Capital)
- Answer: DPD trends are a function of customer segment and underwriting methodology; dramatic reduction would require changing customer mix at the cost of spreads. Tariff impact has been addressed; no war impact visible on collections. Q1 (seasonally weak) remained stable/improved - expect stability across quarters. (Manoj Viswanathan)
LTV >80% Share
- Question: Why is the share of >80% LTV loans rising? (Ayush Sharma, Adler Capital LLP)
- Answer: Driven by increasing apartment-segment originations in Bombay, Pune and larger Gujarat/Maharashtra cities; origination LTV reflects this property mix. (Manoj Viswanathan, Nutan Gaba Patwari)
Tech Differentiation and Geographic Expansion
- Question: What metrics prove tech leadership vs peers? (Shubhankar Gupta, Equitree Capital)
- Answer: Track OpEx, delinquencies and customer experience (NPS 79); disbursement per branch and AUM per employee are indirect tech-led efficiency metrics. Improvements from AI will be gradual but should show across these three dimensions. (Manoj Viswanathan)
- Question: Why is MP growing fast while TN slowed? Which states are next? (Vijay Sharma, Laxmi Capital)
- Answer: TN faced tariff-related stress and team issues, now resolved; MP benefited from a strong team build-out. Medium-term growth targets: UP (highest penetration potential), Tamil Nadu, AP and Telangana. (Manoj Viswanathan)
Key Takeaway
Home First Finance Company delivered a strong Q1 FY27: AUM grew 25.7% YoY to ₹16,938 crore, disbursements rose 31% YoY to ₹1,628 crore, and PAT increased 34.5% YoY to ₹160 crore with ROA at 4.2% and ROE at 14.5%. NIM expanded 10 bps QoQ to 6.0% and ex-co-lending spread held at 5.3%, aided by a 10 bps sequential drop in cost of borrowings to 7.8%. Asset quality remained stable - GNPA at 1.8%, 30+ DPD at 3.2%, credit cost at 40 bps - even as BT-out fell to a record 4.5% on retention initiatives. Management invested ahead of growth, adding four branches and 133 employees, while advancing its AI stack with Q, a bureau analyzer and bank-statement model now in production. FY27 guidance was reaffirmed: ~25% AUM growth, 5-5.25% spreads and 2.6-2.7% OpEx/AUM. Watch items include the CFO transition effective August 31, 2026, rate direction amid West Asia uncertainty, and gradual yield pressure from rising ticket sizes, which management expects to offset via operating efficiency.