Repco Home Finance Q4 FY26: Record Disbursements, Better Asset Quality, and the AUM Run-off Puzzle

Repco Home Finance ended FY2026 with a familiar mix of progress and frustration. The progress showed up in origination momentum and asset quality. The frustration, repeatedly raised on the earnings call, was that AUM growth continues to lag disbursement growth due to a high run-off from prepayments, full closures, and balance transfer out.

In Q4 FY26, loan sanctions rose to 1,320 crore and disbursements to 1,186 crore, both higher than the year-ago quarter. Operating revenue for the quarter was 454 crore and PAT was 129 crore. For the full year, operating revenue was 1,796 crore and PAT was 453 crore, broadly flat year-on-year. The company’s loan book stood at 15,880 crore at March 31, 2026 versus 14,492 crore a year earlier.

The year’s core operating story: disbursements up, net book accretion muted

FY26 disbursements grew 26% year-on-year to 4,148 crore. Management highlighted this as the highest annual disbursement in the company’s history. But the net addition to the loan book was much smaller. On the call, management explained that from the 4,148 crore disbursed, about 700 crore went towards regular repayments and roughly 2,000 crore plus reflected prepayments, pre-closures, and balance transfer out. The net increase in the loan book was described at about 1,300 crore.

This mismatch between origination and AUM growth became the central theme of investor questioning. Management attributed it to the company’s borrower profile and a seasoned book. The company’s portfolio is meaningfully self-employed, with non-salaried borrowers forming 53% of the loan book as of March 2026. Management said these borrowers tend to prepay when they have surplus cash flows. Some also pre-close loans after selling properties purchased for investment.

Balance transfer out was another contributor. Management said BT-out has been brought under control and now averages about 30 to 35 crore per month. For the year, BT-out was indicated at about 400 crore. Management also stated BT-in averages about 45 to 50 crore per month, leaving a net positive of 15 to 20 crore per month.

Financial snapshot (as disclosed)

Asset quality: GNPA and Stage 2 both improved

Asset quality metrics improved meaningfully through FY26. Management reported GNPA at 2.55% for Q4 FY26 versus 3.26% in Q4 FY25, and also noted the improvement in Stage 2 assets to 7.02% from 9.73% a year earlier. The investor presentation showed Stage 3 principal outstanding declining to 405 crore at March 2026 from 473 crore at March 2025.

The stage-wise movement table in the presentation shows:

• Stage 1 at 90.4% of AUM at March 2026 (14,359 crore)
• Stage 2 at 7.0% (1,115 crore)
• Stage 3 at 2.6% (405 crore)

A split of overdues by sanction vintage also highlighted a sharper stress profile in older vintages. Loans sanctioned till March 2022 had Stage 2 at 12.7% and Stage 3 at 5.5%, while loans sanctioned from April 2022 had Stage 2 at 3.9% and Stage 3 at 1.0%.

Provisioning numbers were also disclosed under ECL. Total ECL provision was 343 crore at March 2026 versus 433 crore at March 2025. Stage 3 coverage ratio stood at 54.9% at March 2026.

Margins and costs: stable NIM, but cost-to-income rose

From a profitability lens, the company reported a steady NIM profile but a slightly weaker spread in FY26.

• FY26 NIM was 5.4% versus 5.3% in FY25
• FY26 spread was 3.3% versus 3.5% in FY25
• ROA was 3.0% (FY25: 3.2%)
• ROE was 13.0% (FY25: 14.7%)

Operating costs increased. Employee cost rose to 149 crore in FY26 from 120 crore, while other opex rose to 110 crore from 89 crore. Cost-to-income ratio increased to 28.7% from 26.8%.

On the call, management pointed to multiple specific items that affected profitability in FY26. These included a reported 11.53 crore impact from the shift to daily balancing method for interest calculation, a 15 crore labour code related charge, about 5 crore of silver jubilee related expenses, and higher CSR spend. Management described the combined impact as about 46 crore.

Funding and cost of funds: diversification efforts and NHB refinance

Borrowings stood at 12,215 crore at Q4 FY26. The borrowing mix remains bank-heavy, with commercial banks at 10,440 crore in Q4 FY26, and NHB at 758 crore. The company also added newer instruments during FY26 including commercial paper (148 crore), pass-through certificates (85 crore), and non-convertible debentures (125 crore).

The monthly table in the presentation showed weighted average borrowing rate declining from 8.74% in March 2025 to 8.35% in March 2026. Management also highlighted that National Housing Bank sanctioned a 600 crore refinance facility, and estimated an immediate benefit of about 10 to 15 basis points, subject to the nature of the pool provided. The CFO also cautioned that overall cost of funds may not decline materially because bank borrowings form the bulk of funding.

Geography and mix: Tamil Nadu remains dominant

The company’s footprint spans 12 states and 1 Union Territory, with 210 branches and 32 satellite centres, plus two asset recovery branches. Total network points were 242 as of March 2026.

Tamil Nadu continues to dominate the loan book. At March 2026, Tamil Nadu accounted for 57.4% of the book. Karnataka was 11.7% and Maharashtra 9.7%. Management also stated on the call that about 60% of disbursements come from Tamil Nadu, though it expects stronger contributions going forward from Karnataka, Maharashtra, Telangana and Madhya Pradesh.

Portfolio mix was stable:

• Non-salaried: 53% of outstanding loan book
• Salaried: 47%
• Housing loans: 71%
• Home equity: 29%

Guidance: 5,000 crore disbursement target and 18,000 crore AUM goal

Management provided explicit guidance for FY27, with a target of about 5,000 crore in disbursements and an AUM target of about 18,000 crore by year-end. The MD also confirmed that the earlier aspiration of reaching a 25,000 crore loan book would likely be delayed by about one year.

Inorganic growth is expected to be minimal. Management indicated any book buy in FY27 would be small, about 25 crore to 30 crore.

Takeaways

Repco Home Finance is showing clear operational traction in originations, along with improving asset quality and better stage distribution. The challenge remains structural: high prepayments and closures cap the pace of AUM growth even when disbursement growth is strong. FY27 guidance is ambitious on disbursement, but the market will likely judge success by whether the company can translate that into sustained book compounding while holding underwriting standards steady and reducing Stage 2 below the stated target levels.