Home First Finance Q1 FY27 Earnings Call: Reaffirms 25% AUM Growth Target, NIM Improves to 6% (HOMEFIRST)

Home First Finance Company India Ltd held its Q1 FY27 earnings call on July 27, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Headline Financials & Profitability

• AUM of Rs.16,938 Cr as of Jun 2026, growing 25.7% YoY and 6.7% QoQ (Q1 FY 2026-2027).
• Total income of Rs.540 Cr in Q1 FY 2026-2027, up 18.6% YoY and 7% QoQ.
• PAT of Rs.160 Cr for Q1 FY 2026-2027, up 34.5% YoY and 7% QoQ, driven by 38.2% growth in net interest income.
• ROA improved 10 bps QoQ to 4.2%; ROE improved 50 bps QoQ to 14.5%.
• NIM of 6% (up from 5.9% in Q4 FY 2025-2026); spread ex-co-lending at 5.3%.
• Cost-to-income at 32.7% for Q1 FY 2026-2027 (up 70 bps QoQ); operating cost-to-assets at 2.8%.
• Capital adequacy of 42.6% (Tier 1 at 42.2%); net worth Rs.4,483 Cr; book value per share Rs.429 as of Jun 2026.

Disbursements, Geographies & Ticket-Size Migration

• Disbursements of Rs.1,628 Cr in Q1 FY 2026-2027, up 31% YoY and 3.6% QoQ, with ~50% from higher loan volume and ~50% from higher ticket sizes.
• Origination volume grew 10-15% YoY in Q1 FY 2026-2027; home loans grew 11% QoQ, outpacing LAP at 5% QoQ.
• Share of loans above Rs.25 lakh rose from ~12% to 18% of portfolio over the three years ending Q1 FY 2026-2027; approval rates for higher-ticket loans remain similar to the overall portfolio.
• Madhya Pradesh book grew nearly 4x over two years; management identified Uttar Pradesh as a key state for aggressive growth over the next 1-3 years due to low current penetration.
• Added 4 branches in Q1 FY 2026-2027, total network of 175 branches and 373 touchpoints; headcount of 1,988 (net addition of 133 employees in Q1).
• Average ticket size is gradually increasing; management expects productivity (AUM per employee, disbursements per branch) to improve as ticket sizes rise, though impact is gradual.
• Districts served in Tamil Nadu reduced from 25 to 24 due to early portfolio monitoring; origination in the exited district paused until conditions improve.

Delinquency, Stress Pockets & Underwriting Trade-Offs

• 1+ DPD at 4.7% and 30+ DPD at 3.2% in Q1 FY 2026-2027; gross stage 3 flat at 1.8%.
• Credit cost of 40 bps for Q1 FY 2026-2027; provision coverage on Stage 3 at 23.4%; total coverage including overlays at 45.3%.
• Average credit bureau score improved to ~750 from ~730-738 three years prior; customers with credit history rose to ~88% (from ~74%), while new-to-credit customers fell to ~12%.
• BTR out rate fell to 4.5% in Q1 FY 2026-2027, the lowest in several quarters, driven by internal retention processes; management expects it to stay in the 5-6% range going forward.
• Stress pockets in Surat and Tirupur are now improving; the ongoing war did not affect collections in Q1 FY 2026-2027; collections were described as excellent.
• Reducing 30+ DPD below 2% would require changing customer segment or underwriting methodology, which management noted would “drastically” reduce interest margin.
• Repayment rate of 14.3% in Q1 FY 2026-2027, below the ~16% average in FY 2025-2026, driven by lower balance transfers out; management models a 16-17% repayment rate with quarter-to-quarter variability.

NIM, Borrowing Cost & Rate-Pass-Through

• Portfolio yield at 13.1%; disbursement yield at 13%; cost of borrowing reduced to 7.8% (down 10 bps QoQ); incremental borrowing cost at 7.6%.
• Book spread at 5.30%; marginal spread at 5.4% in Q1 FY 2026-2027; management reiterated long-term spread guidance of 5-5.25% and committed to a 5% blended spread for FY 2026-2027.
• Fully floating rate book allows the company to pass changes in borrowing costs to customers; management has passed on some benefit from improved cost of borrowing, leading to a small reduction in yield over the last two quarters.
• NCD drawdown of Rs.354 Cr planned for Q2 FY 2026-2027.
• Funding mix: 57% banks, 14% National Housing Bank (NHB), 21% assignment/co-lending; co-lending book at Rs.617 Cr (3.6% of AUM).
• Management sees no near-term RBI rate cut due to uncertain real estate prices and remains committed to maintaining spreads by adjusting customer pricing in line with borrowing costs.
• Total provision coverage including overlays at 45.3%; provision coverage on Stage 3 at 23.4% (vs 23.9% in Q4 FY 2025-2026).

Tech Deployment, NPS & Operational Metrics

• NPS of 79 for Q1 FY 2026-2027, cited by management as a key quantifiable metric for tech-driven customer experience.
• Three high-level tech metrics tracked: customer experience (turnaround times), efficiency (cost improvement), and quality (delinquency).
• Management noted it is “too early” to attribute improvements directly to AI/tech; benefits are expected to be gradual.
• Employee-level annual disbursement at ~Rs.3.5 Cr; sales employee-level disbursement at ~Rs.5-5.5 Cr (Q1 FY 2026-2027), both stable.
• Active connectors count of 4,200 at the end of Q1 FY 2026-2027.
• Opex-to-AUM guided for a 5-10 bps YoY reduction; full-year FY 2026-2027 guidance of 2.6%-2.7%; management expects cost-to-assets to remain range-bound between 2.6% and 2.7%.
• Login-to-sanction ratio consistent at ~40% in Q1 FY 2026-2027, with 60% of cases declined.

Guidance, Outlook & Key Risks

• 25% AUM growth target reaffirmed for FY 2026-2027, with management expressing confidence in delivering on profitability, portfolio quality, and operating efficiency.
• Stress metric (“yield outs”) guided at ~5% for FY 2026-2027, with potential to move to ~4% if the positive trend continues for 2-3 quarters.
• Delinquency expected to remain stable across remaining quarters of FY 2026-2027; management expects 30+ DPD and GNPA numbers to hold.
• Cost-to-assets guided at 2.6%-2.7% for FY 2026-2027; opex-to-AUM reduction of 5-10 bps YoY.
• CFO Nutan Gaba Patwari will step down effective August 31, 2026; board is evaluating candidates for CEO reappointment.
• Co-lending experienced hiccups in Q1 FY 2026-2027 due to process and policy changes; issues are being resolved as partner banks align, and management expects volumes to stabilise.
• Long-term spread guidance of 5-5.25% reiterated; management committed to maintaining yields within this range by adjusting customer rates in line with borrowing costs.