Home First Finan Q2 FY27 Earnings Call — Analysis (NSE: HOMEFIRST)
Home First delivered 27% YoY AUM growth to ₹18,010 Cr with PAT up 29.1% YoY to ₹170 Cr, while guiding for ₹20,000 Cr AUM by March 2027 and maintaining 5.0-5.2% spreads.
Result quality: strong — Earnings grew. Management sentiment: optimistic.
The take
Q2FY27 Total Income ₹567 Cr ( +18.4% YoY ) . Guidance cut — FY27 roe exit fy27 15% . New story: Technology/AI as key differentiator .
Results
Q2FY27 PAT rose 29.1% YoY to ₹170 Cr on total income of ₹567 Cr (+18.4% YoY); AUM grew 27.0% YoY to ₹18,010 Cr with Gross Stage 3 improving to 1.70%.
Financial highlights
| Metric | Value | Change | Basis |
|---|---|---|---|
| AUM | ₹18,010 Cr | +27.0% | yoy · Q2FY27 |
| AUM | ₹18,010 Cr | +6.3% | sequential · Q2FY27 |
| Disbursements | ₹1,705 Cr | +32.2% | yoy · Q2FY27 |
| Disbursements | ₹1,705 Cr | +4.7% | sequential · Q2FY27 |
| Total Income | ₹567 Cr | +18.4% | yoy · Q2FY27 |
| Total Income | ₹567 Cr | +5.0% | sequential · Q2FY27 |
| Pre-Provision Operating Profit | ₹238 Cr | +26.1% | yoy · Q2FY27 |
| PAT | ₹170 Cr | +29.1% | yoy · Q2FY27 |
| PAT | ₹170 Cr | +6.5% | sequential · Q2FY27 |
| Net Interest Margin | 6.0% | none · Q2FY27 · reported quarter NIM | |
| Spread (ex co-lending) | 5.2% | none · Q2FY27 · portfolio yield 13.0% less borrowing cost 7.8% | |
| ROA | 4.2% | none · Q2FY27 | |
| ROE | 14.9% | +40bps | sequential · Q2FY27 |
| Cost to Income | 30.8% | -190bps | sequential · Q2FY27 · vs 32.7% in Q1FY27 |
| Opex to Assets | 2.6% | -20bps | sequential · Q2FY27 · vs 2.8% in Q1FY27 |
| Gross Stage 3 | 1.70% | -10bps | sequential · Q2FY27 · vs 1.80% in Q1FY27 |
| 1+ DPD | 4.7% | +0bps | sequential · Q2FY27 · stable |
| 30+ DPD | 3.2% | +0bps | sequential · Q2FY27 · stable |
| Credit Cost | 0.40% | none · Q2FY27 · 40 bps annualised | |
| Net Worth | ₹4,665 Cr | point_in_time · Q2FY27 · Sep-2026 | |
| Direct Assignment | ₹281 Cr | none · Q2FY27 · executed during quarter |
Guidance
Targeting ₹20,000 Cr AUM (25% growth) and 15% exit ROE by FY27 (March 2027), scaling to 16% exit ROE by FY28.
What management committed to
- [Home First] is targeting an exit ROE of 15% for FY27. — 15%, FY27
- [Home First] is targeting an exit ROE of 16% for FY28. — 16%, FY28
- [Home First] is committed to reducing opex-to-assets ratio by 10 basis points year-on-year. — 10 bps reduction per year, annual ongoing
- [Home First] aims to maintain gross NPA at around 1.7% and credit cost at around 40 basis points. — GNPA ~1.7%, credit cost ~40 bps, ongoing
- [Home First] expects balance transfer out rate to be in the 4% to 6% range going forward. — 4% to 6%, forward periods
Key themes
Sustained loan growth and operating leverage
How the narrative shifted
- Affordable housing demand remains compelling: Demand narrative reinforced by citing resolution of earlier tariff disruption in key markets.
- Technology/AI as key differentiator: Moved from conceptual discussion to named, measurable tools with clear adoption rates.
- Stable asset quality with granular secured book: No change in framing; consistency stressed.
- CFO transition and succession planning: Narrative dropped as transition is complete; thread no longer active.
- BT out containment via internal processes: Updated target range from 5-6% to 4-6% reflecting success; claim restated with lower floor.
- Geographic expansion towards UP and southern states: Tamil Nadu recovery acknowledged as early positive signal; earlier negative growth reversed.
- Rising rate cycle and PLR management: Management acknowledges rising repo rate and its gradual transmission to borrowing cost; they maintain a floating rate book and plan to adjust PLR in line with RBI guidelines when borrowing cost moves by 10-15 bps.
- Insurance distribution fee regulation headwind: Draft circular could reduce ROA by ~35 bps; management expects partial concession (~10 bps) and plans to offset remaining 20-25 bps through LAP mix, assignment income, and pricing adjustments.
- Co-lending channel operational reset: Co-lending disbursements were low in Q2 due to RBI guideline implementation; infrastructure strengthening underway, expecting uptick in Q3.
Operational commentary
- Added 6 branches in Q2FY27, expanding the network to 181 branches and 379 touch points across India.
- Tamil Nadu market returned to growth with a 12% YoY disbursement increase in Q2FY27 following team restructuring.
- Co-lending disbursements were muted at ₹1.8 Cr during Q2FY27 due to operational alignment with RBI guidelines, taking cumulative co-lending AUM to ₹593 Cr (3.3% of total AUM).
- Rolled out four proprietary AI solutions (Cue, ClariFi, BankLens, DocIQ) across the lending cycle and targeting unified platform integration within 18 months.
- Balance transfer outflows (BT Out) moderated to ~4.5% compared to the historical range of 5.0-6.0%, supported by a structured 4-step retention strategy.
Analyst Q&A
Q. Impact of drought in MP and Gujarat on disbursements and portfolio quality.
Borrower base consists primarily of salaried and services/manufacturing sector workers in urban areas with negligible agricultural exposure, resulting in no noticeable impact on repayments or credit filters.
Q. Transmission of rising borrowing costs to PLR and spread protection.
Borrowing costs have stayed flat QoQ with ~30% external benchmark exposure (every 25 bps repo hike translates to ~10 bps borrowing cost movement). PLR will be hiked once borrowing cost shifts by 10-15 bps, keeping spreads within 5.0-5.2%.
Q. Potential P&L impact from draft circular on insurance distribution fees and mitigation plans.
Gross impact is ~35 bps on ROA, of which ~10 bps is expected via insurance partner concessions; remaining 20-25 bps will be offset by increasing LAP mix, direct assignments, and slight fee adjustments.
Q. Why co-lending dropped sharply to ₹1.8 Cr and timeline for recovery.
Implementation of new RBI guidelines with co-lending bank partners took longer than expected; issues are nearly resolved and volumes will rebound in Q3FY27.
Q. Clarification on CEO succession rumors or strategic shift to Board.
Manoj Viswanathan confirmed his CEO term extends until July 2028 and he intends to seek reappointment, firmly denying any internal discussions of role changes.
Research and educational content only. Not investment advice.