Repco Home Finance: Q2 FY26 Performance Highlights and Future Outlook

Repco Home Finance Limited, a prominent player in the housing finance sector, has delivered a robust performance in the second quarter of the financial year 2026 (Q2 FY26), demonstrating sustained growth momentum and strategic execution. The company reported its highest-ever quarterly disbursement, alongside significant improvements in asset quality and stable profitability metrics. This quarter's results underscore the effectiveness of the structural changes implemented across the organization and its positive trajectory towards meeting key business parameters.

For Q2 FY26, Repco Home Finance disbursed an impressive Rs.1,069 Crores, marking a substantial increase compared to Rs.867 Crores in Q2 FY25 and Rs.829 Crores in the preceding quarter. This represents a stable month-on-month growth of 22% in disbursements. Loan sanctions also saw a healthy rise, reaching Rs.1,206 Crores in Q2 FY26, up from Rs.926 Crores in Q2 FY25. The total income for the quarter stood at Rs.4,457 Crores, reflecting a 4% year-on-year growth. Net profits for Q2 FY26 were reported at Rs.1,069 Crores. The overall loan book expanded to Rs.1,50,334 Crores as of September 30, 2025, an 8% increase from Rs.1,39,644 Crores a year prior. The Assets Under Management (AUM) stood at Rs.1,46,899 Crores as of June 30, 2025.

Asset Quality and Portfolio Composition

One of the most encouraging aspects of the Q2 FY26 results is the significant improvement in asset quality. The Gross Non-Performing Assets (GNPA) for Q2 FY26 stood at 3.16%, a notable reduction from 3.96% in Q2 FY25 and 3.30% in Q1 FY26. Furthermore, the proportion of Stage 2 assets declined to 8.81% in Q2 FY26, compared to 10.96% in Q2 FY25 and 9.67% in Q1 FY26, signaling an overall enhancement in the asset quality. The net NPA was 1.50% (Rs.225 Crores), with a provision coverage ratio of 52.54% for Stage 3 assets. The company's management emphasized that robust underwriting standards and dedicated recovery mechanisms for new loans have contributed to minimal delinquencies in the fresh loan book.

The loan portfolio composition as of September 30, 2025, indicates a balanced mix. Loans to the non-salaried segment accounted for 53% of the outstanding loan book, while the salaried segment comprised 47%. Housing loans continued to be the dominant product, making up 71% of the total loans, with Home Equity products accounting for the remaining 29%. All loans provided by the company are retail loans. Geographically, Tamil Nadu remains the largest contributor to the loan book at 57.1%, followed by Karnataka (12.3%) and Maharashtra (9.7%). The company operates across 12 states and 1 Union Territory, with 203 branches and 31 satellite centers.

Strategic Initiatives and Future Outlook

Repco Home Finance is actively pursuing several strategic initiatives to sustain its growth trajectory and enhance operational efficiency. The company has initiated a diversification of its borrowing profile, successfully issuing Rs.150 Crores of commercial paper in June and receiving positive responses from institutional investors for commercial papers and NCDs. With approximately Rs.6,000 Crores of bank borrowings scheduled for re-pricing in the next three months, the management anticipates a further reduction of 10-15 basis points in the overall cost of funds over the next two quarters.

To further strengthen asset quality, the company has deployed dedicated General Managers for recovery efforts in key regions and established a separate layer of recovery vertical managers. A special One-Time Settlement (OTS) scheme has also been introduced for FY2025-2026. Employee motivation is a key focus, with realigned incentive policies and recent promotion exercises. The company is also planning to expand its branch network by opening 10-15 new branches this financial year, strategically targeting western states and Karnataka. Additionally, Repco Home Finance is exploring inorganic growth opportunities through small book purchases, with a pilot acquisition of Rs.30-40 Crores planned for the current fiscal year.

Looking ahead, Repco Home Finance has provided optimistic guidance. The company targets disbursements of Rs.1,100-1,150 Crores for Q3 FY26 and Rs.1,350-1,400 Crores for Q4 FY26. It aims to achieve an AUM of Rs.16,200 Crores by the end of FY26 and Rs.25,000 Crores by FY28. GNPA is projected to reduce to Rs.450 Crores in Q3 FY26, with a target of 2.5% by March 2026. Despite some concerns raised by investors regarding AUM growth lagging disbursements due to legacy book rundown and increasing portfolio rundown rates, management remains confident in its strategies to achieve growth with quality and profitability. The company's proactive measures in asset quality management, borrowing diversification, and employee engagement position it for continued performance in the dynamic housing finance landscape.