HOMEFIRST - Home First Finance Company India Limited Share Price

In the Q2 FY26 earnings call, management provided an optimistic outlook driven by several key performance metrics and macroeconomic factors. The Assets Under Management (AUM) grew by 26.3% year-over-year and 5.2% quarter-over-quarter, reaching Rs. 14,178 crores. Disbursements for the quarter were Rs. 1,289 crores, reflecting a year-over-year increase of 9.6% and a quarter-over-quarter increase of 3.7%.

Management emphasized the continuous improvement in operational efficiency and asset quality metrics, with significant progress in digital adoption; 83% of approvals were facilitated through an account aggregator framework. The non-performing loan ratios showed resilience, with Gross Stage 3 at 1.9% and 1+DPD (Days Past Due) at 5.5%.

Looking forward, management expects to maintain credit costs at approximately 30-40 basis points, which they believe is manageable despite some ongoing regional challenges in Surat and Coimbatore-Tirupur. They plan to open 4-5 new branches in the upcoming quarter and anticipate further growth momentum supported by easing interest rates and favorable macro conditions.

Management also indicated that they aim for a target net interest margin (NIM) of around 5% to 5.25% as they leverage improved borrowing costs, with expectations of borrowing costs decreasing further to under 8% by March 2026. Their focus on technology, with 96% of customers utilizing the mobile app and a robust early-stage resolution strategy, is expected to support sustained growth moving forward.

Overall, management remains positive about their trajectory, indicating confidence that current operational strategies will support the company's growth aspirations amidst a stabilizing economic environment.

Here are the major questions and answers from the Q&A section of the earnings conference call transcript for Home First Finance Company India Limited, held on November 4, 2025:

1. Question: "What is happening on the asset quality front regarding the bounce rate data which is 17%?"

Answer: Yes, the bounce rate was slightly higher than expected. However, our recovery during the month didn't reflect that; our first bucket recovery was better than previous months. I think this was more of a seasonal uptick rather than a systemic issue. We expect to maintain our credit cost guidance of around 30-40 basis points for the full year.

2. Question: "Is the asset quality weakness specific to customer segments and geographies, or is it industry-wide?"

Answer: It's more of an industry-wide phenomenon. We do see some impact due to microfinance and MSME segments facing challenges. However, our urban focus insulates us somewhat, even though some smaller location loans are impacted, particularly in the tariff-affected areas.

3. Question: "How do you see your disbursement numbers moving forward, especially with the recent trends?"

Answer: Disbursement growth improved to 10% year-on-year, despite being lower than expected. The conditions in the market remain challenging, but we've made internal adjustments and with potential tailwinds in the second half, we are optimistic about achieving better numbers.

4. Question: "What are your plans to address the higher rejection rates in disbursement?"

Answer: We've observed increased rejection rates, particularly in certain customer segments due to credit quality concerns. While it's a cautious approach, this helps manage risks and ensures we're onboarding resilient segments.

5. Question: "What is your expectation for credit costs for the coming year, and how do you view the asset quality trend?"

Answer: We still expect our credit costs to stay around 40 basis points for the full year. While we face some challenges, we are committed to managing these effectively and believe we can see improvements in the next few quarters.

6. Question: "Is there any concern regarding the performance of the individual housing loan segment, considering the challenges in the lower ticket sizes?"

Answer: We're not facing pronounced difficulties in the lower ticket size segment. The challenges are multifaceted"”related to location, property type, and credit scores. Overall, our performance in higher ticket sizes has been acceptable, reflecting broader market conditions.

7. Question: "What are your expectations regarding your Net Interest Margin (NIM) and plans for managing costs going forward?"

Answer: We expect NIMs to improve, primarily driven by a decrease in our cost of borrowings expected to drop below 8% by March. Our spreads should remain stable, allowing for enhanced operational efficiency moving forward.

8. Question: "What is the strategy for branch expansion in the upcoming quarters, particularly in Uttar Pradesh and Uttarakhand?"

Answer: We paused expansion in UP to understand the market better and consolidate in key cities. For Rajasthan, we plan to deepen our presence in existing markets before moving to expand further.

9. Question: "Given that your collection efficiency has dipped, how do you see this trend improving in the near future?"

Answer: We believe the dip reflects broader market challenges but expect to rebound as we adapt our strategies. Recoveries in certain areas are improving, and we anticipate better collection efficiency in subsequent quarters.

These questions and answers encapsulate the key areas discussed during the conference call, reflecting the company's position, challenges, and strategies moving forward.