Repco Home Finance: Steady Growth Amidst Strategic Shifts in Q3 FY26

Repco Home Finance Limited, a prominent player in the Indian housing finance sector, has delivered a robust performance in the third quarter of fiscal year 2026 (Q3 FY26), showcasing significant growth in disbursements and a marked improvement in asset quality. The company, promoted by REPCO Bank, continues to solidify its position with strategic initiatives aimed at geographic diversification, liability management, and operational efficiency. For Q3 FY26, the company reported a total income of Rs. 457 Crores and a net profit of Rs. 109 Crores, demonstrating resilience and strategic execution in a dynamic market.

The quarter saw impressive loan sanctions of Rs. 1,087 Crores and disbursements of Rs. 1,064 Crores, reflecting a substantial 40% year-on-year growth in disbursements. This performance is particularly noteworthy as it marks the second time in the current financial year that disbursements have crossed the Rs. 1,000 Crore mark. The overall loan book expanded to Rs. 15,394 Crores by December 31, 2025, an 8.8% increase from Rs. 14,155 Crores a year prior. This growth was achieved despite a slight miss on the higher end of disbursement targets due to a slowdown in Karnataka, attributed to external factors like the e-Khata issue. The company's loan portfolio remains predominantly retail, with housing loans accounting for 71% and home equity products for 29%.

Strengthening Asset Quality and Cost Management

A key highlight of the quarter was the significant improvement in asset quality. Gross Non-Performing Assets (GNPA) declined to 2.92% in Q3 FY26, down from 3.86% in Q3 FY25 and 3.16% in Q2 FY26. The proportion of Stage 2 assets also saw a healthy reduction, falling to 8.02% from 10.56% in Q3 FY25 and 8.81% in Q2 FY26. This improvement reflects the company's proactive measures, including the introduction of verticalization strategies for Stage 1 and Stage 2 accounts and the hiring of 225 personnel dedicated to recovery efforts. Management is targeting a further reduction in GNPA to 2.5% and Stage 2 assets to 7.5% by the end of FY26, with expectations for credit cost to remain negative for the full financial year.

On the funding front, Repco Home Finance successfully reduced its cost of funds by 30 basis points year-to-date, reaching approximately 8.45% by December 2025. This was achieved through strategic liability diversification, including raising Rs. 93 Crores via Pass Through Certificates (PTC) at 7.75% and ongoing discussions for Non-Convertible Debentures (NCDs). The company anticipates a further 10 basis points reduction in the cost of funds in the current quarter. While operating costs, particularly employee benefit expenses, increased due to new labor code provisions and one-time leave encashment, the management views these as investments that will yield benefits over time, improving the cost-to-income ratio.

Strategic Expansion and Future Outlook

Repco Home Finance is actively pursuing geographic diversification to reduce its reliance on Tamil Nadu, which currently accounts for 57.3% of its loan book. The company plans to open new branches in the eastern and western regions of India in the next financial year. Two new branches were opened in Q3 FY26, expanding its network to 236 branches and 31 satellite centers across 12 states and 1 Union Territory. This expansion, coupled with new programs and schemes, aims to drive growth in non-Tamil Nadu states.

Looking ahead, the management has provided clear guidance, targeting Rs. 1,200-1,400 Crores in disbursements for Q4 FY26 and an AUM of Rs. 16,200 Crores by the end of FY26. For FY27, the company aims for approximately Rs. 5,000 Crores in disbursements, signaling a confident outlook for sustained growth. The focus remains on balancing growth with prudent risk management, leveraging technology for operational efficiency, and continuously optimizing the cost of funds. Repco Home Finance is poised for continued expansion, driven by a clear strategic roadmap and a commitment to improving financial metrics.