💰 Financial Performance

Revenue Growth by Segment

Total income grew by 30% YoY in Q2 FY26, reaching approximately INR 370 Cr. Net Interest Income (NII) increased by 33% YoY and 5% QoQ, driven by a 31% YoY growth in Assets Under Management (AUM) which reached INR 9,252 Cr as of September 30, 2025.

Geographic Revenue Split

The company is heavily focused on Tier II and Tier III cities, which contribute 91% of the business. Operations are spread across 15 states with a network of 299 branches as of Q2 FY26.

Profitability Margins

Net profit (PAT) for Q2 FY26 was INR 122 Cr, a 35% YoY increase. Return on Equity (ROE) improved to 17.0% from 14.8% YoY. Return on Managed Assets (RoMA) stood at 4.8% for H1 FY26. Spreads remained healthy at 6.4%, consistently above the medium-term guidance of 6%.

EBITDA Margin

Operating efficiency improved as Opex to AUM ratio decreased by 30 bps YoY to 4.1% in Q2 FY26. Cost to Income ratio also improved, falling 170 bps YoY to 35%, indicating that AUM growth is outpacing operating expense growth.

Capital Expenditure

The company added 9 new branches in Q2 FY26 and a total of 33 branches in H1 FY26. The strategy involves adding 40-45 branches annually to support the target AUM growth of 30-35%.

Credit Rating & Borrowing

The company holds an AA- (Stable) rating from CARE, ICRA, and India Ratings. The average tenure of borrowings is 8 years, with a diversified funding profile including Term Loans (54%), Direct Assignment (22%), and NHB refinancing (14%).

⚙️ Operational Drivers

Raw Materials

As a financial institution, the primary 'raw material' is capital. The borrowing mix consists of Term Loans from Banks (54%), Direct Assignment (22%), NHB Refinance (14%), PTC (6%), ECB (3%), and NCDs (1%).

Import Sources

Capital is sourced domestically from 32 key lenders including Public Sector Banks, Private Banks, and the National Housing Bank (NHB), with a small portion (3%) from External Commercial Borrowings (ECB).

Key Suppliers

Key financial 'suppliers' include the National Housing Bank (NHB), Kotak Mutual Fund, SBI Life, Goldman Sachs, and various public and private sector banks.

Capacity Expansion

Current branch capacity stands at 299 branches as of September 2025. The company plans to expand this by 40-45 branches per year to deepen penetration in adjacent markets and Tier II/III cities.

Raw Material Costs

Cost of borrowings is optimized through a diversified lender base. Interest expense is the primary cost, with the company maintaining a spread of 6.4% and a lending margin consistently above 6%.

Manufacturing Efficiency

Branch productivity is a key metric; the company aims to improve efficiency by leveraging technology for lead sourcing and customer fulfillment, reducing turnaround time (TAT).

Logistics & Distribution

Distribution is handled through an in-house sourcing model (100% of loans) and a physical branch network across 15 states.

📈 Strategic Growth

Expected Growth Rate

30-35%

Growth Strategy

Growth will be achieved through a three-pronged strategy: expanding the branch network by 40-45 units annually, increasing penetration in Tier II and Tier III cities, and leveraging a tech-backed underwriting model to serve first-time mortgage borrowers (71% of AUM).

Products & Services

The company provides affordable housing finance products including home construction loans, home extension and improvement loans, home purchase loans, and Loans Against Property (LAP).

Brand Portfolio

India Shelter Finance Corporation Limited (India Shelter).

New Products/Services

Focusing on scaling co-lending opportunities and diversifying into adjacent markets to maintain the 30-35% AUM growth trajectory.

Market Expansion

Targeting deeper penetration in South India and expanding the existing footprint in 15 states, specifically focusing on the periphery of urban and suburban areas.

Market Share & Ranking

Positioned as a leading player in the affordable housing finance segment with a specific focus on the self-employed (75% of borrowers) and low-income groups.

Strategic Alliances

The company utilizes co-lending models and direct assignments (22% of borrowing mix) to optimize the balance sheet and improve return on equity.

🌍 External Factors

Industry Trends

The affordable housing sector is growing at a robust pace, supported by urbanization and government incentives. The industry is shifting toward digital-first underwriting and co-lending partnerships to manage capital more efficiently.

Competitive Landscape

Competes with other affordable housing finance companies (HFCs) and small finance banks. Competitive advantage is maintained through a 100% in-house sourcing model and a low LTV of 52%.

Competitive Moat

The moat consists of a deep-rooted branch network in underserved markets and a proprietary tech-enabled credit appraisal process for customers with undocumented incomes. This is sustainable due to the high entry barriers in physical collections and localized credit assessment.

Macro Economic Sensitivity

Highly sensitive to the Indian housing market and government policies like PMAY. Economic growth in Tier II/III cities directly impacts the repayment capacity of its 75% self-employed borrower base.

Consumer Behavior

Increasing demand for formal credit among first-time borrowers and women (99% of borrowers are women, often as co-applicants), driven by rising aspirations in smaller Indian towns.

Geopolitical Risks

Low direct impact as operations are 100% domestic; however, global inflationary pressures could indirectly affect domestic interest rates.

⚖️ Regulatory & Governance

Industry Regulations

Regulated by the Reserve Bank of India (RBI) and National Housing Bank (NHB). Complies with LCR requirements (144% vs 85% required) and maintains a high CRAR of 57.1%.

Environmental Compliance

The company has initiated ESG reporting with its first Business Responsibility & Sustainability Report (BRSR) for FY25, including Scope 1, 2, and 3 emission disclosures.

Taxation Policy Impact

Subject to standard corporate tax rates in India. Effective tax rate impacts the final PAT, which was INR 122 Cr for Q2 FY26.

Legal Contingencies

The company maintains an Expected Credit Loss (ECL) buffer of INR 73 Cr, which is significantly higher than the regulatory threshold of INR 43 Cr, to cover potential credit defaults.

⚠️ Risk Analysis

Key Uncertainties

Portfolio seasoning is a risk as the AUM has grown at a 41% CAGR over 5 years; the long-term performance of recent vintages is yet to be fully tested. 30+ DPD has seen a slight uptick to 4.7% from 3.1% in March 2025.

Geographic Concentration Risk

While expanding, the company still has significant concentration in its initial markets like Rajasthan, though it now operates in 15 states.

Third Party Dependencies

Low dependency on third parties for business as 100% of sourcing is in-house. Dependency exists on external rating agencies for maintaining the AA- rating to keep borrowing costs low.

Technology Obsolescence Risk

The company mitigates this by continuously upgrading its in-house Business Rule Engine and digitizing the end-to-end business process.

Credit & Counterparty Risk

Credit risk is mitigated by a 100% secured portfolio with a low Loan-to-Value (LTV) ratio of 52% and a Provision Coverage Ratio (PCR) of 25% for Stage 3 assets.