/** blogpostTitle: HomeFirst Q4 FY26: Strong exit quarter, steady margins, improving asset quality blogpostSlug: homefirst-q4 blogpostCoverImageDescription: Ultra-realistic corporate finance scene showing a clean dashboard on a large monitor with a rising AUM line chart from 12.7 to 15.9 (representing INR 12,712.7 crore to 15,877.7 crore), a bar chart of quarterly disbursements ending at 1.57 (representing INR 1,572 crore), and small KPI tiles for PAT 540, spread 5.3%, GNPA 1.8%, and cost-to-income 32.5%. A modern office desk with neutral lighting, calculator, printed financial statements, and a subtle India map silhouette in the background. No logos and no readable text. blogpostShortTitle: HomeFirst FY26 exit quarter performance */

HomeFirst Q4 FY26: Strong exit quarter, steady margins, improving asset quality

Home First Finance Company ended FY26 with a strong finish. Assets Under Management reached INR 15,878 crore as of March 2026, up 24.9% year-on-year and 6.4% sequentially. Q4 disbursements hit an all-time high of INR 1,572 crore, up 23.5% year-on-year. Profit after tax for FY26 came in at INR 540 crore, up 41.4%, while Q4 PAT was INR 149 crore, up 42.7%.

The company used its exit momentum to guide for around 25% year-on-year AUM growth in FY27. Management linked this confidence to improved staffing across senior leadership roles in the branch network, deeper penetration in key markets, and ongoing investment in technology and data-driven underwriting.

Growth: disbursements accelerate while AUM compounds

The disbursement trajectory shows a clear acceleration into Q4. FY26 disbursements were INR 5,424 crore, up 12.9% over FY25, but quarterly cadence improved materially in the last quarter. AUM growth remained strong at 24.9% year-on-year, with the last four years (FY22 to FY26) implying a 31% CAGR in AUM, as shown in the investor presentation.

Distribution expansion supported this growth. During FY26, HomeFirst added 16 branches and 12 touchpoints, taking the network to 171 branches and 373 touchpoints. Headcount increased by 221 employees during the year to 1,855, with additions concentrated in customer-facing roles.

Margins and efficiency: spread guidance anchored, opex stable

Management reiterated a portfolio spread target of 5% to 5.25%. In Q4 FY26, spread excluding co-lending was reported at 5.3%. The company highlighted a fully floating-rate asset book, positioning it to reprice as borrowing costs change.

Cost of borrowing continued to ease through FY26. The presentation shows quarterly average cost of borrowing at 7.9% as of March 2026. Management cited incremental borrowing costs around 7.6% for Q4, and said the Q1 FY27 borrowing cost should remain broadly around Q4 levels.

Operating efficiency stayed stable even while the company invested in distribution and technology. Operating expenses to assets remained at 2.7% for both Q4 and the full year. FY26 cost-to-income improved to 32.5% from 35.8% in FY25, reflecting operating leverage as the book scaled.

Asset quality: sequential improvement and steady credit cost guidance

HomeFirst reported a meaningful sequential improvement in early delinquencies. In Q4 FY26, 1+ DPD declined to 4.7% (down 60 bps QoQ), 30+ DPD declined to 3.2% (down 50 bps QoQ), and GNPA improved to 1.8% (down 20 bps QoQ). Management said April 2026 collections were better than April 2025 and April 2024, and that fresh slippages in April were lower than the prior two years.

Credit cost stood at 40 bps for Q4 and for FY26. Management maintained guidance of 30 to 40 bps as it scales. Provisioning on Stage 3 assets increased to 24% as of March 2026 from 22% in December 2025, while the total provision coverage ratio stood at 44.9%.

Strategy watch: co-lending normalization and AI-led productivity

The company continued to build out its multi-channel sourcing model. In Q4 FY26, connectors remained the largest lead source at 77.6%, with builder ecosystem at 10.5%. Management also discussed Mumbai and Pune as markets where it has expanded builder-led sourcing in more formal apartment markets, particularly in deep-suburb locations.

Co-lending is still a small proportion of the overall book but is positioned as a productivity lever. The company disclosed a co-lending book of INR 593 crore, representing 3.7% of AUM. FY26 co-lending disbursement rose to INR 307 crore from INR 153 crore in FY25. Management indicated co-lending volumes were low in Q4 due to issues tied to regulatory changes, and expects normalization by June 2026.

Technology remains central to the operating model. Management highlighted in-house platforms such as a document management system, an AI conversational platform, and a treasury management system. In the concall, the CEO said AI agents for income assessment and contextual bank statement analysis are already operational, while pilots are underway in lead qualification, legal and technical evaluation, and bureau analysis. Management expects clearer outcomes on cost productivity first, with origination benefits potentially more gradual.

Takeaways

HomeFirst ended FY26 with a strong exit quarter on disbursements and profitability while reporting sequential improvement in asset quality. The company’s FY27 playbook is consistent with past positioning: grow around 25%, protect credit outcomes with tight early-bucket discipline, hold spreads in a 5% to 5.25% band, and keep opex to assets range-bound. The key execution variables to track through FY27 are co-lending normalization, continued performance in new and scaled-up geographies, and whether technology and AI investments translate into measurable productivity gains.