Can Fin Homes Q4 FY26: Profit crosses INR 1,000 crore as growth pivots to FY27 targets

Can Fin Homes ended FY26 with a headline milestone: profit after tax crossing the INR 1,000 crore mark. The investor presentation shows FY26 PAT at INR 1,086 crore versus INR 857 crore in FY25. The company also closed the year with an outstanding loan book of INR 42,209 crore, up 10% year-on-year, and quarterly profitability that remained strong in Q4.

In Q4 FY26, the company reported net interest income of INR 422 crore, profit before tax of INR 353 crore and profit after tax of INR 346 crore. The quarter also carried one-time items, including a deferred tax asset impact of INR 46 crore and an income tax refund of INR 13.5 crore, as disclosed in the presentation and reiterated by management on the earnings call.

Q4 FY26 performance: profitability stayed high, asset quality improved

The company’s Q4 ratios were strong on most lines. The presentation reports Q4 FY26 RoAA at 3.29%, RoE at 23.12%, NIM at 4.19% and cost-to-income at 19.84%. For the full year, the ratios reported were RoAA of 2.58%, RoE of 18.16%, NIM of 3.93% and spread of 2.86%.

Asset quality improved sequentially through FY26. Q4 FY26 GNPA ratio reduced to 0.85% from 0.92% in Q3 FY26. Net NPA ratio (excluding management overlay) reduced to 0.37% from 0.49% in Q3 FY26. The company also highlighted a fifth consecutive quarter of reduction in absolute delinquency amounts.

Portfolio mix and sourcing: DSA heavy, but roadmap signals diversification

Can Fin Homes remains largely a retail housing lender, but the portfolio is gradually diversifying.

The product-wise AUM mix (as shown in the presentation) shifted from FY25 to FY26 with housing loans reducing from 76% to 72%, housing CRE increasing from 11% to 12%, and LAP and mortgage increasing from 6% to 8%. Top-up loans increased from 5% to 6%, while the Others category stayed at 2%.

The company also provided detailed lending basket numbers, showing salaried and professional borrowers at 68% of the March 2026 loan book and non-salaried borrowers at 32%. Management explained on the call that part of the FY26 non-housing growth was influenced by Karnataka documentation friction, where e-khata delays pushed the company to focus more on LAP for part of the year.

On sourcing, the presentation indicates continued dominance of the DSA channel. For Q4 FY26, DSA-sourced disbursements were INR 2,618 crore, or 81% of total disbursements. The top 20 DSAs contributed 9% of total business in Q4 FY26.

However, the company’s Roadmap 2028 slide signals intent to diversify sourcing. The projected mix for Mar-28 shows lower DSA contribution and higher shares for direct walk-ins and a marketing team, alongside digital sourcing.

Reset conversion, BT-outs and FY27 guidance: managing rundown while scaling disbursements

A central management talking point in the earnings call was the conversion of a large share of the loan book from annual reset to quarterly reset. The investor presentation shows annual reset loans at 71.14% of AUM in Q4 FY25, reducing to 48.34% in Q4 FY26. It then shows a position as of 1 April 2026 where annual reset share is 14.16%, following the conversion exercise.

Management stated that the entire 50 bps benefit linked to the reset conversion was passed on to customers, and after also accounting for a 15 bps reduction in January, the opening yield was calculated at 9.80% with an opening spread of 2.81% as of 1 April 2026.

This matters because rundown and balance transfer outflows were a clear headwind in FY26. Management said the company assumed about INR 6,000 crore of rundown for FY26 but ended up with an elevated rundown that reduced AUM growth to about 10.44%. For FY27, management guided to INR 13,000 crore disbursements with roughly INR 7,000 crore rundown, translating into about 14% AUM growth.

In Q4 FY26, management provided a practical breakdown of runoff drivers: out of INR 1,730 crore of rundown in the quarter, BT-outs were about INR 400 crore, self-funded closures about INR 350 to 360 crore, and the remainder largely amortisation and part prepayments.

On competition, management named LIC Housing and Bajaj as the key lenders driving BT-outs. LIC was described as competing on lower rates, while Bajaj was described as offering takeover plus higher top-up amounts, which the company does not always match due to conservative LTV preferences.

Management also offered explicit FY27 guidance:

• Disbursement target of INR 13,000 crore
• AUM growth expectation of about 14%
• Credit cost guidance maintained at 15 bps, despite FY26 being around 10 bps
• Conservative spread and NIM guidance of 2.75% and 3.75% respectively

Technology transformation and cost outlook: near-term pressure, longer-term payoff

The presentation includes a detailed status update on IT transformation. Multiple modules were implemented through FY26, including risk management and ALM, treasury, finance and accounting, HRMS, Aadhaar Data Vault, document management and deposits. Reports, loan origination system and loan management system are planned for go-live in Q1 FY27. The company also disclosed supporting partners: IBM as system integrator, PwC for consulting and KPMG for implementation support.

Management explained that the larger operational impact is expected after LOS and LMS go-live. At the same time, it guided to higher costs in FY27 due to this program. On the call, management described an incremental cost impact of about INR 40 crore in FY27, and noted that cost-to-income may rise. The company also guided for FY27 RoA of around 2.4% and RoE of 18% plus, acknowledging that RoE could be slightly impacted by higher costs.

Takeaways

Can Fin Homes ended FY26 with strong profitability, stable spreads and improving asset quality. The company met its full-year disbursement guidance and crossed INR 1,000 crore PAT, while maintaining GNPA at 0.85%.

The near-term investor debate is likely to center on two moving parts: managing rundown and BT-outs while scaling disbursements to INR 13,000 crore, and absorbing higher IT-related costs while executing the LOS and LMS go-live in Q1 FY27. Management’s guidance indicates confidence in sustaining spreads and keeping credit costs benign, but also acknowledges that growth delivery will depend on controlling runoff and executing operational upgrades on time.