ICICI Securities has maintained its 'Buy' rating on India Shelter Finance Corporation (ISFC), setting a target price of Rs 1,125. While reported loan disbursements fell 28% due to an accounting policy change, the company reported a 20% rise in net profit for the first quarter of FY27. Investors may monitor asset quality and loan growth in the competitive affordable housing segment.
Brokerage firm ICICI Securities has reaffirmed its optimistic view on India Shelter Finance Corporation (ISFC) by maintaining a 'Buy' rating and setting a price target of Rs 1,125 per share. The report comes on the heels of the company's financial results for the first quarter of fiscal year 2027, which ended in June 2026.
A key point for investors to understand is the reported 28% year-on-year decline in loan disbursements during the quarter. While this headline figure might appear concerning, the brokerage clarified that it was primarily due to an internal change in accounting policy. The company moved from recognizing disbursements at the time of cheque handover to recognizing them only upon cheque realization. Because of this timing difference, some loans that were processed were not yet accounted for in the quarterly report, causing a temporary dip in the official figures.
Despite this accounting adjustment, the company's financial health showed positive momentum. ISFC reported a 20% year-on-year growth in Profit After Tax, reaching Rs 143 crore. Additionally, the Gross Assets Under Management—the total value of loans the company is managing—grew 24% to reach Rs 11,284 crore as of June 30, 2026. The company remains confident in its ability to achieve annual growth in its loan book of 25-30% for the full fiscal year, supported by a rebound in disbursements reaching Rs 4 billion in July 2026 alone.
While the growth outlook remains strong, there are risks that shareholders should track. The affordable housing finance sector is highly competitive, and keeping interest margins stable while fighting for market share can be challenging. Furthermore, asset quality saw a slight shift, with Gross Stage 3 assets—a measure of loans that are overdue—inching up to 1.5% in the recent quarter, compared to 1.2% in the same period last year. While management indicated these figures are within their expected range and are normal for seasonal fluctuations, any significant rise in these numbers could impact profitability.
Investors may also want to keep an eye on how the company manages its loan collection processes. As ISFC aims for aggressive growth, maintaining strict underwriting standards is essential to prevent a rise in bad loans. The company’s Return on Equity, which stood at approximately 17.5% for the quarter, will be another key metric to watch as it reflects how efficiently the company is using shareholder capital to generate profits.