Guidance met; opex rising as growth accelerates
The verdict, the claims that held up, the sharpest analyst exchanges, and the risks — the earnings call, decoded from the transcript.
Buy
confidence 7/10
Grade B
Met 25% AUM guidance. Credit costs on track. Opex above guided range; co-lending ramp slower than expected.
Optimistic
next 1–2 quarters
Optimistic
multi-year
Home First delivered on 25% AUM growth guidance with strong PAT expansion (+34.5% YoY) and stable asset quality. Core franchise intact, but opex is rising faster than guided (2.8% vs 2.6–2.7%) and spreads running 5–10 bps above long-term target; both reflect growth-stage hiring and market rate headwinds. CFO transition effective Aug 31 adds near-term execution risk. Maintain conviction on 25% AUM trajectory and disciplined underwriting, but near-term margin pressure warrants caution.
₹538 Cr
Revenue · +18.6% YoY₹159.9 Cr
Reported PAT · +34.5% YoYExpanding
Margins · vs guidance: CorroboratedDid the claims hold up?
AUM 25% YoY growth FY27 (prior guidance)
METQ1 delivered 25.7% YoY AUM growth to ₹16,938 Cr
Spreads maintained 5–5.25% range
OVERSTATEDIncremental spread 5.3%, book spread 5.30%, above guided range but targeting long-term convergence
Credit costs 30–40 bps guidance
METQ1 credit cost 40 bps, at upper end but within range
Strong disbursement growth, largely home loans
METDisbursement +31% YoY, +3.6% QoQ; home loans driving, LAP secondary
Asset quality stable
MET1+ DPD 4.7%, 30+ DPD 3.2%, Gross Stage 3 1.8%, all flat QoQ
Earnings quality
What changed since the last call
25% AUM growth guidance reaffirmed
NeutralQ1 delivered 25.7% YoY (₹16,938 Cr), beating 25% guide by 70 bps. Maintains FY27 trajectory.
Opex to AUM above guidance
DowngradeGuidance 2.6–2.7%, Q1 at 2.8%; up 70 bps QoQ. Mgmt cites hiring, increments; expects range-bound full-year but near-term pressure evident.
Spread above long-term target
NeutralBook 5.30%, incremental 5.3% vs 5–5.25% long-term guided. Mgmt reaffirms convergence over time; fully floating rate means rate-pass-through.
BT out better than expected
UpgradeQ1 BT out 4.5%, lowest in many quarters, vs 5–6% control range. Mgmt uncertain on sustainability; says 5% is baseline expectation.
Co-lending ramp delayed
DowngradeProcess/policy changes caused Q1 hiccups. ₹46 Cr disb this Q. Expects stabilization; no revised growth target yet.
The Q&A
Moderate. Analysts pressed hard on opex trajectory, spread sustainability, NPA reduction feasibility, and tech ROI metrics. Mgmt held line on 5–5.25% spread target (reaffirmed multiple times), but deflected on whether current 5.3% is sustainable without explicitly withdrawing the guidance. Candid on delinquency structural limits (won't drop dramatically without customer/underwriting shift). Q&A credibility high on core metrics, weaker on forward opex guidance and tech differentiation.
Home loan vs LAP mix — Kunal Shah, Citigroup
AnsweredYes, home loan origination higher, LAP secondary. Ticket sizes up in home loans only; LAP stable. LAP not a focus area.
Employee scaling — Kunal Shah, Citigroup
AnsweredNot entirely. Employee per branch ratio rose 1 per branch per quarter. 4 new branches = ~200 staff; remainder scaling existing operations.
Spread trajectory — Renish, ICICI Bank
PartialNo one-off. Cost of borrowing down, but floating rate book. Will pass through to customers. Committed to 5–5.25% spreads. Book will converge.
PLR/rate outlook — Renish, ICICI Bank
AnsweredUnlikely due to West Asia crisis uncertainty. No cut expected.
BT out sustainability — Renish, ICICI Bank
AnsweredInternal processes controlling BT out – branch manager engagement, top-up pitching, waterfall protocols. Whether 4.5% sustains unclear; target 5% range. Processes ongoing 5–6 quarters.
Opex guidance FY27 — Nidhesh Jain, Investec
AnsweredShould expect 5–10 bps YoY reduction. Full year guidance 2.6–2.7%.
Co-lending weakness — Nidhesh Jain, Investec
PartialQ1 process/policy changes caused hiccups. Partner banks aligning. Should stabilize going forward.
Volume vs value growth — Rajiv Mehta, Yes Securities
AnsweredRoughly 50–50. 50% from unit growth, 50% from ticket size. Productivity improving marginally.
Yield stability — Rajiv Mehta, Yes Securities
AnsweredCustomers face same challenges (can't access larger lenders). Willing to pay premium. Longer-term marginal compression offset by opex improvement.
Collections data-driven — Rajiv Mehta, Yes Securities
AnsweredBounce rates marginally improved. Q1 usually tough; this year stable/improved. Data-driven collections, AI interventions, automation easing RM load.
NIM/spread compression — Varun Dubey, Share India
AnsweredFully floating rate book. Pass through cost moves. Committed to 5–5.25% spreads on rate movement.
CIBIL score migration — Shreepal Doshi, Equirus
AnsweredNew-to-credit declining market-wide (more credit access). Philosophy: improve customer profile without sacrificing spreads/yields. Maintain 5–5.25%.
RM KRA metrics — Shreepal Doshi, Equirus
AnsweredBoth factors in KRA. Fairly stable, ~₹3.5 Cr per employee, ~₹5–5.5 Cr per sales employee annually.
Higher ticket size moat — Divyansh Gupta, Latent PMS
AnsweredThreshold has moved up. ₹25–50 Lakh range lacks bank access due to documentation gaps, employment mix issues. Same as ₹15 Lakh segment 10 years ago. Won't face immediate BT out.
CIBIL timing — Divyansh Gupta, Latent PMS
AnsweredAt origination time.
NPA by product — Divyansh Gupta, Latent PMS
AnsweredBroadly same range. LAP ~13–14% of portfolio, not materially different.
Borrowing rate linkage — Divyansh Gupta, Latent PMS
AnsweredExcept NHB 7-year fixed scheme, rest all floating.
LTV increase — Aayush Sharma, Adler Capital
AnsweredApartment segment traction in Bombay, Pune, larger cities Gujarat/Maharashtra. LTV higher at origination.
DPD reduction strategy — Ravi Naredi, Naredi Investments
PartialStructural – based on customer segment, underwriting, collection process. Can't reduce dramatically without changing segment/underwriting. Margin would compress.
Tariff stress resolution — Shubhankar Gupta, Equitree
AnsweredTariff-related stress addressed. Post-war, no stress buildup seen. No war impact on collections. Tirupur improving.
FY27 DPD guidance — Shubhankar Gupta, Equitree
PartialQ1 key barometer. Generally uptick in Q1, few quarters to bring back to March. Q1 excellent, should keep stable across quarters.
BT out range — Shubhankar Gupta, Equitree
PartialIf things go well, yes. Won't commit unless 2–3 quarters sustained. Currently hoping 5%.
Internal process timing — Shubhankar Gupta, Equitree
AnsweredSeveral quarters back, ~5–6 quarters ago.
Origination volume growth — Vijay Sharma, Laxmi Capital
AnsweredOriginations ~10–15% growth. Login to sanction ~40% secular trend. 50% of 31% growth from volume, 50% from value.
Tamil Nadu vs Madhya Pradesh — Vijay Sharma, Laxmi Capital
AnsweredTN: tariff stress, team issues now resolved, should see growth momentum. MP: successful team building contributed. Year-on-year fluctuation.
District exit TN — Divyansh Gupta, Latent PMS
AnsweredOne district has ~100-200 accounts. Sometimes closer to another branch, service from there. No origination, servicing continues.
Ticket size and RM targets — Divyansh Gupta, Latent PMS
PartialKRAs include both volume and value. Expectation is productivity rises. Mix dependent (new vs old RMs). Gradual process.
Tech leadership metrics — Shubhankar Gupta, Equitree
PartialDeployment improves turnaround, cost, delinquencies. Track opex, delinquencies, NPS. Disbursal per branch, AUM per employee/branch. Too early to attribute AI gains quantitatively.
NPS customer experience — Shubhankar Gupta, Equitree
AnsweredYes, NPS is quantifiable metric. Overall experience more anecdotal (branch/customer visits).
Peer NPS benchmarking — Shubhankar Gupta, Equitree
PartialCustomer experience not very quantifiable. More anecdotal on turnaround, experience vs market. Nothing quantified.
Repayment rate trend — Vijay Sharma, Laxmi Capital
PartialHard to predict. Assume 16–17% in calcs. This Q exceptional on BT out. Otherwise normal.
Prepayment behavior change — Vijay Sharma, Laxmi Capital
AnsweredNo behavioral change.
State expansion strategy — Vijay Sharma, Laxmi Capital
AnsweredUP largest potential (long-term 1–3 years). Rajasthan already well-penetrated. Southern states TN, Andhra, Telangana for growth.
Guidance
AUM growth ~25% FY27 (reaffirmed)
HighQ1 delivered 25.7% YoY. Branch network, disbursement momentum, market demand support target. Affordable housing opportunity compelling.
Portfolio spread 5–5.25% (maintained long-term)
MediumQ1 book 5.30%, incremental 5.3%, running above. Mgmt says market-driven, NHB drawdown timing; floating rate pass-through. Convergence expected over time.
NIM 6.0% Q1 (no forward guidance given)
MediumUp from 5.9% prior Q. Fully floating rate book allows pass-through. No FY27 NIM target stated.
30–40 new branches FY27
LowQ1: 4 branches added. Pacing implies ~16/year annualized if continued, well below guidance. Expansion states: UP (medium-term 1–3 years), southern (TN, AP, Telangana).
Risks the call surfaced
Cost inflation
MediumCost to income 32.7% (+70 bps QoQ). Opex to AUM 2.8% vs guided 2.6–2.7%. Increments, hiring for growth, admin expenses offset. Mgmt expects full-year "broadly range-bound" but near-term pressure evident.
Spread/NIM sustainability
MediumBook spread 5.30% vs long-term 5–5.25% target. Incremental spread 5.3%. Running 5–10 bps above guidance. Mgmt attributes to cost of borrowing dynamics and pending NHB drawdown. Fully floating rate book mitigates, but competitive intensity or rate environment shift could compress margins.
Credit quality
MediumGross Stage 3 1.8%, 1+ DPD 4.7%, 30+ DPD 3.2% flat. Credit cost 40 bps at upper end of 30–40 bps guidance. Portfolio composition shifting to higher ticket sizes (₹25+ Lakh now 18% vs 14% year ago). Geopolitical risk (West Asia), tariff tail risk. Mgmt constrained on improving DPD ratios without changing customer segment.
Co-lending channel
LowQ1 co-lending disbursements ₹46 Cr vs ₹617 Cr book. Process/policy changes caused Q1 hiccups. Important for capital-efficient AUM growth and customer reach. Ramp uncertain if partner bank integration delays persist.
Management transition
MediumCFO Nutan Patwari stepping down Aug 31, 2026 (announced on call). Successor appointment pending. 8-year tenure, integral to financial architecture, governance, capital strategy. Near-term execution and investor relations continuity risk.
Management
Score 7/10. Data-driven, process-oriented. MD articulate on strategy (AUM growth, AI adoption, customer segment evolution). CFO clear on financial metrics. Candid on challenges (opex, co-lending, delinquency structural limits). Declined to quantify tech ROI prematurely (honest). Met 25% AUM guidance (25.7%). PAT +34.5% YoY strong. Cost-to-income up 70 bps QoQ (miss on opex guidance 2.6–2.7%, at 2.8%). Co-lending ramp slow (process issues). BT out beat (4.5% vs 5% expected, but sustainability uncertain). Branch pacing slow (4 in Q1, implied 16/year vs 30–40 target).
1 · Q2 FY27
NHB drawdown (₹354 Cr planned), co-lending stabilization post-process fix
2 · Sep 2026
CFO appointment conclusion; Nutan Patwari exits Aug 31
3 · Q2–Q4 FY27
AI/tech pilots move to production (underwriting, collections automation), expense leverage
Maintain conviction on 25% AUM trajectory and disciplined underwriting, but near-term margin pressure warrants caution.
Home First Q1 posts standalone PAT ₹160 Cr, up 34% YoY on NIM expansion; beats Street
PAT +34.4% YoY · revenue +18.6% · margins expanding · beat vs street
₹538.01 Cr
+18.6% YoY
₹159.85 Cr
+34.4% YoY
29.61%
+3.5pp YoY
₹15.31
Home First Finance opened FY27 with a clean beat. Standalone PAT rose to ₹159.85 Cr, up 34.4% year-on-year (and 7.0% sequentially), well ahead of revenue growth of 18.6% YoY (₹538.01 Cr) — the classic sign of margin expansion. Net profit margin widened to 29.6% from 26.1% a year ago (flat versus Q4's 29.6%), and basic EPS of ₹15.31 came in above the ~₹14.43 the Street was modelling, an ~6% earnings beat. There are no exceptional items; the print is fully operating, with a modest ₹2.25 Cr deferred-tax credit trimming the effective tax rate to ~23% (from ~24% YoY).
Q1 FY-2027 vs prior quarters
The margin story sits on the funding line. Interest income grew ~17% YoY to ₹461.97 Cr, but finance costs rose only ~4% to ₹208.45 Cr — the rate cycle and a fully floating-rate book are feeding spread, exactly the 5–5.25% portfolio-spread target management set on the Q4 call. That confirms rather than contradicts the confident, optimistic guidance from May: ~18.6% revenue and ~17% interest-income growth are consistent with the ~25% FY27 AUM-growth trajectory management is chasing, though AUM itself is not disclosed in this P&L. The one line to watch is credit cost — impairment on financial instruments climbed to ₹15.90 Cr from ₹11.68 Cr a year ago (+36%), still a small share of income but rising faster than the book, against management's stated 30–40 bps credit-cost band.
The stock went into the print at ₹1,182.5, down 0.8% over the past month of trading.
For context: this is the highest quarterly PAT in the last 6 quarters on our records; PAT has now risen for 5 consecutive quarters; revenue is at a 6-quarter high.
What the summary numbers don't show
Revenue from operations ₹538.01 Cr, +18.6% YoY (+7.3% QoQ) — total income ₹539.84 Cr
Management is guiding for approximately 25% year-on-year AUM growth for FY27, driven by strong exit momentum and rebuilt distribution channels. The company aims to maintain its portfolio spread within the 5% to 5.25% range, supported by a fully floating-rate loan book. Credit costs are expected to remain stable at 30-4
— This quarter: met
On corporate developments, the quarter carried a management overhang the numbers can't speak to: the CFO resigned (announced 25 June) and new auditors were appointed alongside a director departure — governance items investors will probe on the 28 July earnings call. Operationally the company also paid its ₹5.20/share FY26 dividend during the quarter and issued ~1.97 lakh ESOP shares. No formal quarterly EPS/PAT guidance is given by management; the read-across is the AUM/spread/credit-cost framework, all of which this print keeps on track.
W1
AUM growth print vs management's ~25% FY27 target (not disclosed in P&L; expected on 28 July call)
W2
Credit cost trajectory — impairment run-rate against the guided 30–40 bps band after +36% YoY rise
W3
Portfolio spread holding in the 5–5.25% range as the rate cycle turns; sustainability of the NIM expansion
Source in Rs. million (÷10 to Cr); figures Reviewed (limited review, unmodified). Standalone only — Note 7 states no subsidiary/associate/JV, so no consolidated statement exists. No exceptional items. Effective tax ~23% aided by ₹2.25 Cr deferred-tax credit; OCI +₹6.14 Cr (incl. ₹8.79 Cr hedge gain) sits below PAT and does not affect it.