SRG Housing Finance: Building Homes and Trust in Rural India's Q2 FY26 Performance

SRG Housing Finance Limited, a prominent player in India's affordable housing finance sector, has reported a robust performance for the second quarter and half-year ended September 30, 2025. The company, known for its deep penetration in rural and semi-urban markets, continues to demonstrate strong growth, driven by strategic initiatives and a focused approach on underserved populations. The latest financial disclosures highlight significant advancements in its loan book, disbursements, and overall profitability, reinforcing its position as a key enabler of homeownership in India's heartland.

For Q2 FY26, SRG Housing Finance reported an impressive 33.21% year-on-year growth in Assets Under Management (AUM), reaching INR 867 crore. This growth is complemented by a substantial 85% year-on-year increase in disbursements, totaling INR 117 crore for the quarter. The company's Profit After Tax (PAT) also saw a healthy rise of 25%, reaching INR 8 crore. These figures underscore the effectiveness of its business model, which prioritizes small ticket loans and caters to the 'new-to-credit' segment with a localized approach. The half-year performance further solidifies this trend, with H1 FY26 AUM matching the Q2 figure at INR 867 crore and disbursements at INR 196.59 crore, indicating consistent operational momentum.

Strategic Pillars for Sustainable Growth

SRG Housing Finance's success is deeply rooted in its strategic pillars, which include a robust digital ecosystem, geographic expansion, and a diversified funding strategy. The 'SRG SRAJAN' project, a business process reengineering initiative, has transformed the company's operations into a fully digital platform. This system facilitates 100% online loan applications, quick approvals within three days, and efficient loan management and collection processes. This digital prowess not only enhances operational efficiency but also improves customer experience, making financing accessible even in remote areas.

Geographic expansion is another critical growth driver. While Rajasthan remains a significant market, the company is actively diversifying its loan book by expanding into Maharashtra, Karnataka, and Andhra Pradesh. These new regions have already contributed significantly to the loan book, with Maharashtra adding INR 34 crore, Karnataka INR 18 crore, and Andhra Pradesh INR 20 crore in the last six months. This expansion strategy aims to reduce concentration risk and tap into new growth opportunities, with a target of 100 branches by the end of FY26, up from the current 93.

Asset Quality and Funding Landscape

Despite operating in potentially higher-risk segments, SRG Housing Finance has maintained strong asset quality. The Gross NPA (Non-Performing Assets) stood at 1.88% and Net NPA at 0.64% in Q2 FY26. While there was a slight increase in 0-30 DPD (Days Past Due) from 3.26% to 4.65% year-on-year, management views this as normal fluctuation and remains confident in its risk management framework. The company's focus on low LTV (less than 50%) and a high percentage of borrowers paying through banking channels (97%) further mitigates risk.

On the funding front, the company has successfully diversified its sources, including banks, NHB, and Non-Convertible Debentures (NCDs). The recent issuance of INR 50 crore NCDs on a private placement basis, with investment from mutual funds, underscores growing investor confidence and provides stable, long-term capital. The company's credit rating has also improved from Triple B Plus Stable to Triple B Plus Positive, which is expected to further reduce borrowing costs and enhance access to capital markets. Management aims to achieve an 'A' rating once AUM crosses INR 1,000 crore.

Outlook and Management Commentary

Management remains optimistic about future growth, targeting an AUM of INR 970 crore and disbursements of INR 400 crore for FY26. The long-term vision includes reaching INR 1,500 crore AUM by 2028. The company is also focused on improving its cost-to-income ratio, expecting a reduction of 2-3% in the next 2-3 quarters to around 62%, and maintaining a Net Interest Margin (NIM) of approximately 9%. The loan mix is projected to stabilize at 70% housing loans and 30% LAP, aligning with NHB guidelines.

SRG Housing Finance's Q2 FY26 performance reflects a company that is not only growing rapidly but also strategically adapting to market dynamics and regulatory changes. Its commitment to financial inclusion, coupled with robust operational and risk management frameworks, positions it well for sustained growth in India's burgeoning affordable housing market. The management's clear vision and disciplined execution instill confidence in its ability to continue building value for its stakeholders.