SRG Housing Finance Q4 FY26: Crossing INR 1,000 Crore AUM with stable asset quality

SRG Housing Finance ended FY26 with a clear scale milestone: Assets Under Management (AUM) crossed INR 10,000 million, reaching INR 10,422 million. Growth remained strong through the year, with FY26 disbursements at INR 4,435 million and profit after tax (PAT) at INR 325 million.

In Q4 FY26, momentum continued. AUM increased to INR 10,422 million, up 37.2% year-on-year and 10.4% quarter-on-quarter. Net interest income (NII) for the quarter stood at INR 280 million, up 33.3% year-on-year. PAT was INR 93 million, up 50% year-on-year.

A key theme in management commentary was that growth is being pursued alongside discipline in underwriting and collections, especially given the company’s focus on rural and semi-urban, largely self-employed borrowers.

Growth and profitability stayed aligned in FY26

FY26 net interest income rose to INR 983 million from INR 751 million in FY25, while total net income reached INR 1,220 million from INR 925 million. PAT increased to INR 325 million from INR 244 million.

Margins remained high for an affordable housing lender. FY26 gross yield was reported at 19.53% and cost of borrowing at 10.95%, resulting in a NIM of 10.91%. In Q4 FY26, gross yield was 20.40% and cost of borrowing 10.88%, translating into a NIM of 11.28% (annualised).

Cost ratios improved gradually, though they remain elevated. Q4 cost-to-income reduced to 63.14% from 67.49% in Q4 FY25. For the full year, cost-to-income was 64.56% versus 65.77% in FY25.

Portfolio mix and operating model

SRG Housing Finance reported a product mix that remains primarily housing-led. The FY26 AUM mix was 72% housing loans and 28% loan against property (LAP). As of FY26, housing loans AUM was INR 7,502 million and LAP AUM was INR 2,920 million.

The company also positioned itself as a rural and semi-urban specialist. It disclosed that about 94% of the loan book is rural, around 79% of customers are self-employed, and more than 95% of borrowers have women co-borrowers.

Management commentary in the earnings call highlighted the on-ground approach to underwriting informal income borrowers. It described assessment through field visits and profile-based templates, given many borrowers may not have formal documents such as GST registrations or income tax returns.

On productivity, the company reported improving metrics. AUM per branch increased to INR 108.56 million in Q4 FY26 from INR 84.38 million in Q4 FY25. AUM per employee increased to INR 10.54 million from INR 8.77 million over the same period.

Asset quality, collections, and geographic concentration

Asset quality remained stable in the disclosed metrics. In Q4 FY26, GNPA was 1.77% and NNPA 0.65%. The stage-wise asset table showed Stage 3 assets at INR 185 million, or 1.77% of gross assets. Provisions were INR 151 million, equivalent to 1.45% of gross assets.

On collections, SRG disclosed that nearly 97% of collections are routed through automated banking channels. In the call, management also stated cash collections are around 4% to 5%. The managing director shared that cheque bounce rates can be around 14% to 15%, followed by call-centre based follow-ups, with the company claiming the majority is recovered within 30 days.

Geographic concentration is still meaningful. State-wise AUM distribution as of Q4 FY26 showed Gujarat at INR 4,162 million (39.93% of AUM) and Rajasthan at INR 3,845 million (36.90%). Rajasthan also had the highest GNPA in the state table at 2.74%.

Management was asked about the Rajasthan GNPA. It did not cite a specific issue, and said the larger base in Rajasthan compared to other states can make the number look higher.

Funding profile and management guidance

SRG highlighted a diversified borrowing profile, supported by 36 lenders. As of Q4 FY26, lender mix was reported as 53% banks and NHB, 39% financial institutions and NBFCs, and 8% NCDs. Product-wise borrowing mix was 90% secured term loans, 8% NCDs, and 2% refinance.

A key development during FY26 was the rating upgrade. The company stated that Acurite Ratings and Research upgraded its long-term rating to ACUTE A- (Stable) from ACUTE BBB+ (Positive). Management said this should improve lender access and broaden funding options. The transcript also includes a note clarifying that the cost of borrowing for Q4 FY26 is 10.88%, and management expectation is that it may decline toward about 10.70% over the next one to two years.

On forward plans, management gave explicit guidance for FY27. It said it is targeting approximately INR 600 crore of disbursement for the year, and expects AUM of around INR 1,300 to INR 1,400 crore, while also stating a target of INR 1,500 crore.

It also spoke about geographic expansion. The CEO said SRG expanded in Maharashtra, Andhra Pradesh, and Karnataka over the last 1.5 years, and is researching entry into Tamil Nadu and Telangana, aiming to be present by the end of the year with about 10 to 15 new branches planned.

The managing director also addressed capital planning. He said that while NHB guidelines allow higher leverage, banks typically restrict to lower levels, and the company may consider raising equity once leverage rises, potentially around Q4 of the current year or Q1 to Q2 of the next year, depending on progress.

Takeaways

SRG Housing Finance delivered a high-growth FY26 with improving profitability and stable asset quality, while crossing the INR 1,000 crore AUM mark. The company is also signalling a deliberate push to diversify beyond its core Gujarat and Rajasthan base, with new-state expansion plans and a stated disbursement target of about INR 600 crore for FY27.

The key monitorables from the disclosures remain geographic concentration, the ability to scale new branches without diluting underwriting standards, and whether borrowing costs trend down after the rating upgrade. The company’s FY27 guidance provides a clear near-term yardstick for tracking execution.