CANFINHOME — earnings call

The transcript as filed. Every paragraph is addressable: its link names the page and the position it sits at in the call.

Prepared remarks

LIMITED · MR. PRAKASH SHANBHOGUE – PRESIDENT – CAN FIN

MR. PRAKASH SHANBHOGUE – PRESIDENT – CAN FIN

HOMES LIMITED · MR. UTHAYA KUMAR A – PRESIDENT AND CHIEF RISK

MR. UTHAYA KUMAR A – PRESIDENT AND CHIEF RISK OFFICER – CAN FIN HOMES LIMITED MR. ABHISHEK MISHRA – CHIEF FINANCIAL OFFICER – CAN FIN HOMES LIMITED

Moderator · Conference Operator

MR. NIDHESH JAIN – INVESTEC CAPITAL SERVICES Can Fin Homes Limited April 27, 2026

The next question is from Abhijit Tibrewal.

Abhijit Tibrewal

In the fourth quarter, we have seen a full momentum terms of disbursements for our -- but for the fourth quarter, we are seeing...

Can Fin Homes Limited April 27, 2026

Suresh Iyer

Voice is very muffled Abhijit.

We are not able to hear you.

Abhijit Tibrewal

Just give me 1 minute.

Sir, is it better now?

Suresh Iyer

Yes, this is better, much better.

Please go ahead.

Abhijit Tibrewal

Sir what I wanted to understand is, this fourth quarter, we have seen very good momentum with disbursements, for us as well as a few other players who might report and once who've already reported.

But fourth quarter after maybe a lull in the first half, third quarter, we saw things picking up.

And in fourth quarter, things really picked up when it comes to housing.

So you think this was just seasonality led?

Or are there, I mean, real structural triggers at play, which is -- are leading to a good demand.

Because, sir, when we hear analysts who are tracking real estate, experts we are tracking real estate, they're all talking about the strong upcycle that we saw in real estate and housing kind of seems to be tapering off now.

I don't know whether this is just applicable to higher ticket size loans on the same comment can be applied equally to affordable housing as well, so that was the first question that I had that what is the outlook on demand.

Sir one thing is we guide for a certain disbursement, certain sanction number, right?

But underlying that is the demand also very strong, which will help us do that?

Or do you think that the demand is weakening and if we have to get to maybe the INR13,000 crores disbursement number that you spoke about earlier, that will require market share gains?

That is the first question I had.

The second question I had, sir, was around margins.

Like you mentioned, almost 85% of our customers are now on quarterly reset effective April 1.

So -- and then I remember you also spoke about a small tranche from NHB, which is expected to get to the price sometime later this year.

So a combination of both these things on one side, you have customers getting repriced because they are now on quarterly reset.

At the same time, there are, I would say, small little pockets on the liability side, which can also get repriced.

So combined together, what would be the outlook on spreads and margins?

And lastly, sir, I just wanted to understand, given that you have a good presence in Bangalore, which is the IT hub, do we have customers who have got impacted by layoffs in the IT sector, or are those predominantly customers who are catered to by the bank?

So those 3 questions.

Suresh Iyer

So first thing about the disbursement, yes, to some extent, that is a seasonality because normally across the year, we have seen that it is a 45%, 55% breakup, H1, H2.

So roughly H1 is a little lower than H2 definitely.

And as in Q3 and Q4, once the festive season starts, the demand picks up and the business also picks up.

So that is mainly the seasonality part of it.

And having said that, we don't see any major impact in our demand side because across our branches, we are seeing a good amount of inquiries coming in still.

Even normally post March, there is a slowdown in people generally.

But that is also -- we are seeing that there is a good amount of demand there.

Good inquiries are coming in, and we are not seeing that much of an issue in terms of -- at least the segment that we cater to.

Can Fin Homes Limited April 27, 2026 Probably, yes, there is a definite slowdown in the affordable segment.

And that is also reflected in the numbers because if you look at affordable, if you look at mid segment and you look at prime, yes, affordable definitely has is now in the mid-single-digit numbers, that growth that we are talking about.

So definitely affordable is impacted in terms of demand.

But in the segment that we are catering to, I think we at least are not seeing any major change or a slowdown or anything in that in terms of the demand.

As regards to the margins, see, what has happened is this entire 45% or 48% of the loans that we had, which were at annual resets, we sent across communication to them, and we got in touch with them.

And because the remaining 15% are those customers to either have opted not to shift to quarterly reset or who have right now not taken a call.

The shift now further from here, to the quarterly reset probably will be a little slow because these are customers who opted for this thing.

The only thing would be in case of rate going up, yes, this 15% will have an impact, where there will be a lag effect in terms of the assets getting repriced.

But on the liability side, I said currently, assuming that this 15% does not move to quarterly reset and remains same, we have taken into consideration the entire impact of the reset as well as the 15 basis points that we passed on in January.

Therefore, no further reduction is expected on the asset side in terms of the yield.

As I said, our incremental yield is also a little higher than 9.8%.

Therefore, even that is not going likely to eat into our overall yield for the -- on the book.

Therefore, whatever we are expecting a reduction in our NHB refinance rates or whatever we are able to get in terms of our better pricing from a bank term loans or repricing or being able to raise the CP at a lower rate.

That will help us actually reducing our costs further, which should actually help us in improving our spread, so the only flip side will be if the rates start going up, then this 15% is where we will slightly get impacted, okay?

So that's as regards margin.

So we are quite confident that the 2.8%, which is there is kind of is there.

We don't have a problem in that.

And -- but we do conservatively talk about 2.75% okay?

As regards IT impact, our IT impact has been very, very less, in fact I don't think our -- in fact, our delinquency ratio in Karnataka is the lowest among all our 6 zones.

And we have not seen that impact.

In fact, our absolute value of NPA in Karnataka in March '26 is lower than our absolute value of NPA in Karnataka in March '25.

So I think that should give you the confidence that we have not had the impact of the IT job losses and everything in this.

So I guess that's what.

Anyway, our IT salaried segment coming from IT segment is only about 6% of our book.

It's not very high.

Abhijit Tibrewal

And then, sir, just one follow-up where you mentioned, right, that margins can be maintained at, marginal spreads for that matter, where you said spreads can be maintained at 2.8% in you conservatively guided for 2.75%.

So sir, then when we look at the entire business model, the only risk that is left then is basically a rate upcycle, where the rates start going up.

And this 15% Can Fin Homes Limited April 27, 2026 who have still not opt for the quarterly reset, they are the ones you think are the only risk including?

Suresh Iyer

I guess in term for the spread component, yes, and therefore -- I mean, we don't see any major change in that because our current incremental spread also will not eat into our overall spread.

Abhijit Tibrewal

And sir, lastly, cost of borrowings, while you spoke about NHB, but when we are speaking to other NBFCs, other HFCs, all of them were acknowledging and while we don't borrow too much from the debt markets.

But debt market borrowings had gone up significantly, especially in the month of March, and they have subsequently pulled off a little bit in the month of April?

Do you think that the cost of borrowing bottoming up has now come to an end and from here, cost of borrowing figure remains stable or inch up or do you think there is some more leg, some room left except this NHB volume that you spoke about, that costs could further come down, remain sideways or inch up from here?

Suresh Iyer

See, today, if you would see our presentation from 55%, which was our bank borrowing, it has gone up to 62%.

So basically, we have relied more on bank borrowings where we have got rates at below 7% and below 7% and raised that funding rather than depend or go to the debt market. okay?

That is the 1 point.

Second thing is in Q4, some of them, I'm sure the rates are very much there for everybody to see.

The debt market rates, even CPs actually had gone up considerably post the shift the geopolitical situation and all those things.

But we had, if you recollect, we had indicated that we were sitting on a INR1,000 crores of unutilized NHB sanction in -- at the end of Q3. And that was also because we had total INR1,500 crores.

We had planned wherein we could drop INR1,000 crores in the Q4 where normally, the rates because of a tighter liquidity are on the higher side.

So we had planned our liability side accordingly.

And therefore, we were obviously benefited, which is there.

Going forward, other than this NHB, I mean the only thing would be that we have about -- today, our NCDs are at the highest cost of funds for us, which is on a blended outstanding portfolio in NCDs is around 7.67%, 7.66%.

So there, in fact, if we are able to, as and when the maturity happens, we'll be able to replace them with a lower cost NCD because today, the rates are at a lower than the 7.67%.

So that is one thing.

Plus, as I mentioned, CPs.

CPs in Q4 had gone up, 90 days CP had gone up to almost 7% and a little above 7.35% also.

Whereas now today, you are -- we raised in the month of April, we raised CP fresh CP at 6.45%.

So -- these are some of the sense, the timing differences where we have to be careful and see if we can draw at the right time, we will use those opportunities.

Nidhesh Jain

There is a follow-up question from Andrey Purushottam.

Andrey Purushottam

Just you mentioned that your prepayments, you're largely losing out to LIC Housing and to Bajaj Finance, right?

Can Fin Homes Limited April 27, 2026

Suresh Iyer

Correct.

Andrey Purushottam

Now LIC Housing, I can understand that they will be basically luring customers by virtue of price.

I was a little surprised to hear that about Bajaj Finance.

I thought their plan would be mostly convenience, ease and quickness of this thing.

But since the person has already been sanctioned the loan by you, that cannot be an advantage for Bajaj Finance.

So can you just throw some light on that, [inaudible 0:57:00], behaviour?

And why do you think they are behaving the fact that they want?

Suresh Iyer

Absolutely right.

LIC because they offer a lower rate.

In fact, they were also offering 7.15% at a point in time for new business, and that is one thing.

But in case of Bajaj, what happens is it's normally a takeover plus top up.

And many times, we are not able to match the kind of top up that they are able to offer.

So that is some area where we lose sometimes to Bajaj.

That is one aggressive they -- I mean, I wouldn't want to get into that.

But yes, sometimes we are not able to match the top up.

So it's usually a BT plus top-up where they are able to offer the same rate on a takeover probably.

But on the top they are able to give a much higher amount.

Andrey Purushottam

So any thinking on how to counteract that?

Or you think that we just live with that?

Suresh Iyer

No, I guess we are a little more conservative in our LTV values when it comes to takeover out of top of loans and all those things.

So I guess, it has helped us in the past, and we would like to maintain that conservative approach.

So sometimes, yes, it hurts, but I think the conservatism has helped.

Nidhesh Jain

As there are no further questions from the participants, I now hand over the conference over to Mr. Suresh Iyer and the team for his closing comment.

Suresh Iyer

Sure.

Thank you, Nidhesh and thank you to once again to all of you for joining this earnings call of Can Fin Homes for Q4 FY '26.

And I hope we have been able to answer all the queries.

In fact, 1 of the queries, we couldn't answer them, but it subsequently came up, and I guess we've been able to answer that also, so on the cost breakup.

So if there are any further queries, of course, you can please feel free to get in touch with us.

And once again, thank you very much.

Nidhesh Jain

On behalf of Can Fin Homes Limited, we conclude this conference.

Thank you for joining us, and you may disconnect your lines now.

Thank you.