Don’t Trade in the Dark—Get Your Pre-Market Report Every Day.Join Now
Search stocks
Repco Home Finance Ltd

| Q2 FY2026 Earnings Call

NEUTRAL SENTIMENT

Report Source

⬤13th Nov 25

Summary : Repco Home Finance achieved record Q2 FY2026 disbursements, targeting significant AUM growth and NPA reduction, while optimizing costs and expanding its branch network.

Management Perspective positive : Management expressed happiness about growth momentum, confidence in meeting targets, and positive outlook on reducing overdue accounts. They stated, 'We are quite positive on this. The company is geared up to achieve the targets set for FY2026'.

Concall Report Analysis & Insights

Business Overview

  1. Q2 FY2026 disbursements reached Rs.1069 Crores, the highest ever quarterly disbursement.
  2. Loan book grew 8% year-on-year to Rs.15,033 Crores as of September 2025.
  3. Gross NPA reduced to 3.16% (Rs.475 Crores) and Net NPA to 1.50% (Rs.225 Crores).
  4. Net Interest Margin (NIM) stood at 5.5%, with a net profit of Rs.107 Crores for the quarter.
  5. Return on Assets (ROA) was 2.9% and Return on Equity (ROE) was 13.5% for Q2 FY2026.

Future Growth Prospects

  1. Targeting Rs.1100-1150 Crores disbursements in Q3 and Rs.1350-1400 Crores in Q4 FY2026.
  2. AUM target of Rs.16,200 Crores by March 2026, including organic and inorganic growth.
  3. Aiming for Rs.25,000 Crores AUM by FY2028 through aggressive growth plans and potential book purchases.
  4. Planning to open 10-15 new branches, primarily in Western and Southern states.
  5. Anticipate 10-15 basis points reduction in cost of funds over the next two quarters due to re-pricing of Rs.6000 Crores bank borrowings.

Management Insights

  1. Growth momentum has continued, and the company is positive about meeting its FY2026 guideline numbers.
  2. Structural changes across the organization are yielding positive results.
  3. Highest ever quarterly disbursement achieved, with stable 22% month-on-month growth.
  4. Committed to ensuring borrowers benefit from rate cuts, reducing benchmark lending rate to 10%.
  5. Focus remains on growth with quality and profitability, without compromising asset quality.

Signs of Skepticism

  1. Analysts questioned why AUM growth isn't stronger despite high disbursements, citing legacy book rundown.
  2. Concern raised about the ambitious GNPA reduction target to 2.5% by March 2026.
  3. Skepticism regarding rising yields in a competitive, declining interest rate environment.
  4. Questions about the impact of US tariffs on Tamil Nadu's export-oriented industries and potential stress on LAP/home equity loans.

Risk Factors

  1. Legacy loan book rundown and significant balance transfer (BT) out pressure impacting AUM growth.
  2. Competitive pressure from banks in a declining interest rate environment affecting yields.
  3. Higher proportion of non-housing loans (classified due to NHB guidelines) leading to increased portfolio rundown rates.
  4. Achieving the guided GNPA reduction to 2.5% by March 2026 is a significant target.

Good To Know

  1. Company is celebrating its Silver Jubilee year, incurring some one-off celebratory expenditures.
  2. Employee incentive policy realigned with industry practices to motivate sales and recovery.
  3. Promotions conducted across cadres, leading to increased salary costs.
  4. Secured Rs.150 Crores refinance from National Housing Bank, with a fresh proposal for Rs.500-750 Crores.
  5. Diversifying borrowing profile, successfully issued Rs.150 Crores of commercial paper.

Key Drivers

  1. Record disbursements drive AUM growth.
  2. Cost of funds expected to decrease.
  3. Aggressive GNPA reduction strategies.
  4. New branch expansion to boost business.

Key Analyst Discussions

Competitive Environment

  1. Management acknowledged competitive pressure but stated they maintain spreads by rising yields and cautious expenditure.
  2. Stated that all loan assets are floating, passing cost benefits to borrowers to remain competitive.

Market Trends & Consumer Behavior

  1. Management stated no concentrated industry-wise exposure and no issues faced due to industry/export market concentration.
  2. Addressed historical Q3 lower disbursements due to inauspicious days, aiming to break this trend with new channels.

Financial Highlights

  1. Management explained the increase in employee and administrative costs due to incentives, promotions, and silver jubilee celebrations.
  2. Discussed strategies for GNPA reduction, including dedicated recovery managers and special OTS schemes.
  3. Addressed the trend of Return on Assets (ROA), expecting slight improvement by December quarter-end.
  4. Confirmed Rs.6000 Crores of bank borrowings are due for re-pricing in the next three months, expecting 10-15 bps cost of funds reduction.
  5. Reported Rs.6 Crores recovered from written-off accounts this year, targeting Rs.8-9 Crores more.

Product Composition

  1. Housing loan to non-housing loan portfolio ratio maintained at 71% and 29% respectively.
  2. Incremental yields are 11.17% for housing loans and 13.55% for non-housing loans.
  3. Average tenure for home loans is 14-15 years (actual life 8.5-9 years), non-HL is 8-9 years (actual life 6-6.5 years).
  4. Average ticket size is 13 lakhs at book level, incrementally 21-22 lakhs for both products.
  5. Non-HL proportion increased due to NHB guidelines reclassifying certain housing-related loans as non-HL.

Strategic Considerations

  1. Confirmed AUM targets include potential inorganic growth through book purchases, though not significant for current FY.
  2. Management noted investor suggestions for higher dividend payout, stating it will be escalated to the board.
  3. Confirmed preliminary discussions for ESOPs have started at the board level.
  4. DSA sourcing channel has performed well, supplemented by building internal teams.
  5. Underwriting standards have improved, with a separate credit review cell ensuring asset quality in new loan book.