Whalesbook
Home First Finance Company India Ltd. has concluded fiscal year 2026 with a significant jump in profitability and assets under management. The company reported a consolidated Profit After Tax (PAT) of ₹540 crore for FY26, marking a 41.4% increase year-on-year. Assets Under Management (AUM) also saw robust growth, reaching ₹15,878 crore, up 24.9% from the previous fiscal.
The strong year-end performance was driven by record quarterly disbursements of ₹1,572 crore in Q4 FY26. Management attributed this success to overcoming internal operational challenges faced in the first half of the fiscal year, including staffing and attrition issues. This recovery signals a solid rebound in operations, with improved asset quality also noted, as the 1+ day past due (DPD) ratio fell to 4.7% and gross Stage 3 assets stood at 1.8%.
This operational resurgence supports sustained demand and effective risk management, according to the company. Home First Finance projects continued growth, targeting a 25% AUM increase for fiscal year 2027.
Historically, Home First Finance has leveraged digital customer acquisition and operational efficiency, particularly within the affordable housing segment. The company previously strengthened its financial foundation by raising capital through a Qualified Institutions Placement (QIP) in January 2023.
Looking ahead, the company aims to maintain stable net interest margins (NIMs) between 5% to 5.25% and plans to expand its branch network by 30-40 locations annually. Credit costs are expected to remain managed, guided between 30 to 40 basis points (bps). The adoption of artificial intelligence is also anticipated to boost operational productivity.
However, the company is navigating certain challenges. A 10 basis point reduction in the prime lending rate (PLR) in Q4 FY26 had an estimated impact of 80 bps on interest income. Home First Finance also wrote off ₹36 crore in bad debts during FY26. Furthermore, regulatory developments concerning co-lending arrangements are ongoing and are expected to normalize by June.
In the competitive affordable housing finance sector, Home First Finance's 24.9% AUM growth for FY26 and its 25% target for FY27 position it favorably. Peers like Aavas Financiers and Aptus Value Housing Finance also focus on this segment. The company's emphasis on digital sourcing and efficient operations, targeting a cost-to-income ratio near 30%, serves as a key differentiator.
Investors will be tracking Home First Finance's performance in Q1 FY27, its progress on the FY27 AUM growth target, and its management of credit costs. The effectiveness of new branches in driving growth and the impact of AI on efficiency will also be key areas to monitor, alongside the normalization of co-lending regulations.