Can Fin Homes Ltd Management Discussions

ECONOMY OVERVIEW

Indian Economic Overview

The Indian economy showed steady growth in the last fiscal year, with the National Statistical Office the Ministry of Statistics & Programme Implementation estimating a GDP growth rate of 6.4% for FY 2024-251. Despite the decline from thefiscalyears GDP previous growth of 8.2%, the countrys economy exhibited resilience with significant expansions in construction (8.6%), financial and real estate services (7.9%), and manufacturing (5.5%). Agriculture and the allied services also rebounded with a 3.8% growth, up from 1.4% in FY 2023-24². This growth rate and the sectoral expansions can further be substantiated in the coming fiscal years by various Governmental contributions, such as infrastructure investments and Production Linked Incentives (PLI) schemes, which are expected to provide further support to these sectors³.

Various factors, such as prudent fiscal policies Government, robust foreign exchange reserves, and the structural reforms initiated by the Government; all have contributed to the growth and the macroeconomic stability that the country has been able to attain. A strong and healthy Forex reserve has provided a buffer against external shocks and currency volatility4. Continuous reform initiatives in taxation, labour laws, and otherfinancial segments have contributed to an overall healthy business scenario in the country.

Outlook

Recently, major policy changes and regulatory reforms on the Indian economic front have led to substantial investments in the countrys infrastructure, construction, and transportation sectors. As a result of this improved investment scenario and the combination of sectoral reforms and proactive Government policies, there is a major shift in both the urban as well as rural lifestyles of the country. Various tax reforms initiated by the Government have simulated the household spending, resulting in the (NSO)under domestic private consumption contributing a notable 64.8% of the countrys GDP in December 2024 which is a significant increase from the 61.8% share preceding quarter⁵. various sectors such as In the financial sector, better credit control has improved the health of rural banks and the Non-Banking Financial Corporations (NBFCs), which in turn has aided in plugging the financial gap while extending credit facilities to certain economic groups that were earlier not covered under the ambit of these financial structures, leading to better financial inclusion in the country. On the agricultural front, in order to strengthen the sector, the Government has launched numerous programs to increase crop productivity and provide subsidised credits to the farmers, enabling the thecountry to achieve food security and higher rural economic development.

Investments in the fields of technology, construction, manufacturing, renewables, and finances have greatly increased, driven by various supportive policies and tax reforms initiated by the Government. The tax reforms, coupled with the enhanced ease of doing business in the country, have enhanced revenue generation. A systematic process of taxation is enabling the administration to increase social infrastructure spending and subsidise the growth-centric activities in various underdeveloped regions of the country. Reforms and the introduction of new e-governance solutions have resulted in significant improvement of the public service delivery, which has reduced unnecessary delays and resulted in an improved efficiency of the Government machinery. With the implementation of Government policies that have led to the creation of a vibrant startup ecosystem, there is a significant increase in innovation and job creation in multiple sectors suchasfintech, health tech, edtech, etc.

With the calculated GDP growth of 6.4% in FY 24-25, India as one of the fastest- has further growing major economies in the globe. This has drawn attention from global agencies such as the IMF, which have shown optimism toward the countrys economic outlook. The IMF projectedgrowthratefigures of Indias real GDP to be at 6.5% for both FY 24-25 and FY 25-26, attributing the same to the increase in private expenditure and domestic consumption as well as the consistent stability of the Indian economy. These figures not only substantiate the rise in domestic consumption that the country has experienced but also indicate that the initiatives put in place regarding policy frameworks to ensure macroeconomic stability of the country have proved effective. The IMF also sustained the exchange rate classification on Indias account as "stabilised" until November 2024, which indicated an efficient management of volatility, with the RBIs softened control to ease movements in the exchange rate. On the other hand, it has been reported that more flexible policies would be needed in order to account for external shock, indicating a warning for rigid monetary control in the increasingly dynamic global finance system. Therefore, regardless of all the challenges, it is safe to say that the fundamentals of the Indian economy remain highly positive, with sustained growth, strategic control on public spending, and structural reforms increasing confidence from investors perspectives.

Industry Overview

Housing Finance Industry

Indias housing finance industry has remained one of the key components of the Indian economy, with total outstanding housing loans at 33 trillion as of 31st March, 2025 reflecting a 14% YoY growth. The sector is projected to grow at a 15 16% CAGR, potentially reaching 77 81 trillion by FY 2030, buoyed by increasing urbanisation, favourable demographics, formalisation of credit, and supportive policies like Pradhan Mantri Awas Yojana (PMAY), Affordable Rental Housing Complexes (ARHC), and NHBs refinance schemes and liquidity support. Tier II and III cities are emerging as growth drivers, and technology is playing a key role in their expansion while reducing the Turn Around Time (TAT).

Indian Housing Industry

The Indian housing and real estate market underwent a significant transformation during factors such as macroeconomic recovery, favourable policy interventions, and growing demands across urban and semi-urban centres, these shifts created new opportunities for housing finance companies to expand their footprint across the country and capitalise on various emerging trends. This ambitious growth trajectory, however, is dependent on efficient management, and strong policy support at both central and state levels.

Growth Drivers

Stable interest rate regime encouraging long-term borrowing

A stable interest rate regime is particularly beneficialin encouraging long-term borrowing in the housing finance market, as it provides prospective homeowners with certainty regarding their EMI payments. When interest rates remain steady, borrowers are more willing to commit to long-term loans, such as 15 to 25-year mortgages, knowing that their monthly payments will not fluctuate unexpectedly. This predictability helps families plan their finances over the long term, making homeownership more accessible and appealing. Additionally, a stable interest rate environment allows lenders to assess risk more accurately and offer competitive mortgage products, further stimulating demand in the housing market. Overall, a consistent interest rate regime supports both buyers and lenders, fostering growth in the housing finance sector and contributing to overall economic stability.

Increased affordability due to rising per-capita income

Increased per capita income plays a significant role in enhancing affordability, particularly in the housing market. As individuals incomes rise, they experience greater purchasing power, which makes housing more accessible. Higher per capita income allows potential homebuyers to qualify for larger loans, affording them the opportunity to purchase higher-value properties or invest in better-quality housing. It also means that monthly mortgage payments, even if interest rates rise, are more manageable in relation to an individuals income. This improved affordability can lead to increased demand for homes, as more people are able to enter the housing market. Additionally, a rise in income levels stimulates the overall economy by boosting consumer confidence and encouraging spending in various sectors, further supporting economic growth.

Low penetration of mortgage-to-GDP ratio (~11%)

A low penetration of mortgage-to-GDP ratio, such as the approximately 11%, indicates that a relatively small proportion of the populationisaccessinghousingfinance through mortgages. This low ratio reflects a significant in the availability or affordability of home loans, which can limit the ability of individuals to purchase homes, particularly in emerging or developing economies. Several factors contribute to this low penetration, including limited access to credit, high interest rates, or a lack of awareness about mortgage products. However, it also signals substantial potential for growth in the housing finance sector. If efforts are made to improve financial inclusion, reduce lending barriers, and increase consumer confidence in mortgage products, the ratio could rise, allowing more people to enter the housing market. This expansion would not only benefit homeowners but also stimulate broader economic activity, particularly in the construction, real estate, and banking sectors.

Demand from first-time homebuyers

Demand from first-time homebuyers is a key driver in the housing market, particularly as it represents a growing segment of the population entering the property market for the first time. First-time buyers typically seek affordable housing options, and their demand isinfluenced often by factors suchasinterestrates,availabilityoffinancing, and overall economic conditions. When interest rates are low and lending conditions are favourable, first-time homebuyers are more likely to enter the market, as they can secure financing more easily and at a lower cost. Additionally, Government incentives, such as tax exemptions, can further stimulate this demand. First-time

50 homebuyers are crucial to the housing market because they help maintain market liquidity by moving into new homes, which in turn opens up opportunities for other buyers to purchase existing properties.

Company Overview

Founded in 1987, Can Fin Homes Ltd. (CFHL) has emerged as one of Indias most trusted housing Headquartered in Bengaluru, the company operates through 234 branches, including 18 Affordable Housing Loan Centres, across 21 States and Union Territories. CFHL focuses on affordable and mid-income housing finance. It primarily caters to first-time homebuyers with a prudent credit strategy covering the salaried and professional segment (70% of the outstanding loan portfolio).

Asset Under Management (AUM)

The AUM consists of 86% housing loans, including Commercial Real Estate (Housing) (CRE-H), and 14% of non-housing loans. Can Fin primarily caters to middle-aged individuals seeking to purchase their first home for personal use. The company targets the affordable and middle-income sectors, playing a pivotal gap role in advancing its mission to enhance homeownership opportunities and contribute to the growth of the housing market in the country. The average ticket size of incremental housing and non-housing loans is RS24 lakh and RS13 lakh, respectively.

Comparative Analysis of the Companys Performance

(RS in Cr.)

Particulars	FY2025	FY2024
Loan Book	38,217	34,999
Clientele	2.77 Lakh Customers	2.53 Lakh Customers
Disbursements	8,568	8,177
PAT	857.16	750.70
Gross NPA	0.87%	0.82%
Net NPA	0.46%	0.42%
Net Interest	3.64%	3.73%
Margin (NIM)
Cost-to-Income	17.12%	16.74%*
Ratio

* Excluding the impact of the regrouping of the provision for the fraud at Ambala branch.

This performance underscores the companys resilience, strong governance, and sustained focus on profitability without compromising on asset quality.

Optimal Asset Quality effectively Can Fin Homes Limited (CFHL) has consistently upheld credit quality by adhering to conservative underwriting practices, primarily focusing on lending to low-risk salaried clients. The company has also strategically expanded its presence in the self-employed segment while maintaining a cautious approach. To enhance convenience and ensure timely repayments, CFHL has adopted digital-first repayment methods such as ECS, NACH, and salary deductions. The companys low default rates are a result of proactive provisioning and the use of real-time tracking systems. Additionally, loans restructured under RBIs COVID relief norms have largely been regularised, further demonstrating the companys effective risk management and commitment to maintaining a strong credit profile

Diversifying its portfolio, the company has been increasing its exposure to the self-employed and non-professional (SENP) category in recent years. During FY 24-25, disbursement to the salaried class is 70% of the total disbursements, amounting to RS5740 Cr. The disbursement to the self-employed non-professional (SENP) category amounted to RS2484 Cr, constituting 29% of the total disbursements. Can Fin gives focus to reviewing the financial transactions, reported income, credit scores, and past payment history of self-employed (SENP) customers to accurately assess their financial stability and creditworthiness. As of now, loans to self-employed individuals account for 30% of the total loan book, amounting to RS11,082 Cr. This demonstrates the companys commitment to supporting this group of borrowers and helping turn their homeownership aspirations into reality.

Growth Prospects

The transition from informal to formal credit continues to widen the customer base for housing finance companies like Can Fin Homes Ltd. Despite the challenges of raising funds through the debt market to meet compliance requirements and the consistent rise in interest rates, the company has successfully maintained a healthy fund base. Thesefundshavebeen to upcoming lending initiatives across various schemes, ensuring that the growth and diversification (AUM) remain aligned with the companys projections. In line with statutory LCR requirements and the Boards directive to maintain liquidity levels above the regulatory thresholds, the company has ensured a higher liquidity buffer on its books. Additionally, the company holds an undrawn, documented bank facility to meet its liquidity needs for the next four to six months. This strategic approach gives the company a competitive advantage, allowing it to raise funds from the market at favourable rates when needed.

A strong focus on maintaining asset quality contributes significantly to enhancing profitability, net worth, and CRAR, thereby fostering the companys overall growth and reinforcing its reputation in the market. The companys robust credit policies, established underwriting practices, and comprehensive monitoring of branch operations play a key role in mitigating risks. This is gross NPA levels, despite growth in the loan book. With a CRAR exceeding 25.08%, well above the statutory requirement of 15%, the company demonstrates its strong capital adequacy. Its extensive credit and underwriting practices, along with meticulous processes to monitor branch operations, help to reduce risks. This is evident from the Gross NPA level, while the book has grown substantially. Technological improvisation has been initiated to improve productivity and TAT both at the branches and Central Processing Centre, which facilitates the judicious use of manpower.

The Board

The Board of Directors comprises highly respected figures from the banking and finance sectors. The company continues to benefit from the guidance and vision of its distinguished Board of Directors, comprising eminent professionals with deep-rooted experience and expertise in the banking and financial services sector. Their insights a pivotal role in shaping the companys long-term goals and operational resilience.

The Board is supported by a strong and diverse management team with proven capabilities across functional domains. This leadership structure ensures effective execution of strategic initiatives and robust internal governance. At the operational level, the companys retail teams at branches are well-trained and empowered to generate and process high-quality loan applications while upholding strong internal controls and delivering superior customer service.

The companys governance framework remains sound and transparent, underpinned by strong business fundamentals and standardised operational procedures. Continuous efforts are made to further enhance turnaround time (TAT), thereby improving customer experience and operational efficiency.

Core Competencies

The company has demonstrated a strong commitment to disciplined and effective cost management, achieving a cost-to-income (CI) ratio of 17.12%. This strategic approach ensures optimal utilisation of resources, enabling the company to enhance productivity and efficiency across its operations. By prioritising cost control, the company is able to foster sustained growth and maintain a positive trajectory in its performance.

Borrowing Strategy

While funds raised through the issuance of Non-Convertible Debentures (NCDs) incur higher costs due to regulatory compliance, the companys reliance on bank borrowings and National Housing Bank (NHB) refinancing at lower interest rates has helped to reduce its overall cost of funds. To manage rising costs, the company strategically utilises Commercial Papers (CPs) as a cost-effective tool, maximising the use of its long-term limits.

This approach enables the company to offer attractive loan products to customers, enhancing its competitiveness in the market. Furthermore, effectively managing funding costs has had a positive impact on the companys bottom line, driving profitability and financial performance. By leveraging these cost advantages, the company is better equipped to grow and solidify its position in the housing finance sector.

Strong Asset Quality

The company has a comprehensive onboarding system that evaluates various factors, including individual risk ratings based on credit scores, professional and financial stability, among others. The major chunk of the companys customer base are first-time home buyers, a large proportion of whom are salaried employees. A conservative and selective approach is employed towards lending to self-employed customers only those with good credit profiles are considered. This careful approach to credit permissions guarantees low credit risk, thereby fulfilling the companys objectives for sustainable profitability, asset quality, and enduring value creation.

This has in turn contributed to maintaining lower Non-performing Assets (NPAs) compared to its competitors. The companys strategic emphasis on the salaried demographic has cultivated a more stable and dependable customer base. As a result, the company enjoys improved financial performance and mitigated credit risk, further enhancing its overall stability.

Opportunities

Government Initiatives

With growing urbanisation and housing demand in Tier II/III cities, especially in North, West, and East India, Can Fin has strong headroom to expand its footprint and customer base. With a projected compounded annual growth rate (CAGR) of 15-16%, the prospects of the Indian Housing Finance Sector look promising. Various Government schemes like PMAY (Pradhan Mantri Awas Yojana), Smart Cities Mission, and state-led stamp duty concessions continue to drive first-time homebuyer activity an ideal customer segment for Can Fin Homes.

Digitalisation and Fintech Partnerships

The company has proactively adopted new core banking solutions by incorporating advanced digital technologies and partnering with FinTech companies. These initiatives offer opportunities to improve the customer experience, streamline operations, and drive expansion.

While digital innovations are expected to give a further boost to the sector, these partnerships also support compliance with regulatory requirements, facilitating more informed, data-driven decision-making. All put together contribute to the companys growing success and strengthen its position within the sector.

Affordable Housing Segment

The affordable housing sector presents a significant opportunity for the company to expand its reach and secure a competitive edge within the housing finance industry. By targeting this segment, the company aims to address the growing demand for affordable housing, serve the needs of an underserved market, and contribute to the nations socio-economic progress. This strategy aligns with Government initiatives and incentives, allowing the company to benefit from favourable policy measures and potential fiscal support.

Challenges

Recent Union Budget proposals, such as the increase in Income Tax exemption limits and sustained incentives under Section 80EEA for first-time homebuyers, have effectively enhanced the borrowing capacity of individuals by increasing disposable incomes and reducing the effective cost of borrowing. However, the Housing Finance Companies (HFCs) in India still face certain challenges. Fluctuating interest rates and currency volatility impact both the cost and availability of funding. Moreover, a significant dependency on HFCs vulnerable to international market shocks, which can directly affect borrower affordability and disrupt long-term financial planning.

Hence housing finance companies have to solely depend on domestic borrowing, wherein the cost of borrowing and availabilityislimitedfor lower rated HFCs.⁶

Risk of Default

Housing Finance Companies (HFCs) face a significant risk of default, as any customer defaults can result in blockage of funds, directly impacting their lending capacity. Given the limited ability of HFCs to absorb such shocks, it poses a considerable challenge. However, it is worth noting that HFCs typically experience much lower default rates compared to banks and other financial resulting in effective risk management practices and more stable customer base.

Competitive Rates

Finance companies are currently navigating an era of a highly competitive rate environment. Many players are exploring ways to lower their interest rates to stay competitive in the marketplace and attract more customers. In this environment, the ability to secure long-term funding at favourable rates provides a significant edge, enabling companies to offer better terms while maintaining profitability.

Intense Competition

Housing Finance Companies (HFCs) are facing increasing competition in Tier I and Tier II cities from agile NBFCs, private banks, and Big Techs to remain competitive in the marketplace and attract the customers. As a result, it is essential for these companies to broaden their reach to leverage their pricing power. The company is strategically focusing its efforts on expanding in Tier II cities, with a primary emphasis on the salaried demographic, where most HFCs operate within comparable geographic areas.

Insightful Overview of the Business

The primary focus of the company was on retail housing loans in their various centres of operations. During FY25, the companys loan book portfolio stood at RS38,217 Cr., compared to RS34,999 Cr. as of March 2024. In comparison to the previous years data of RS8783 Cr., the loan approval amount came up to RS9294 Cr. The disbursements totalledinstitutions, 8568 Cr. in FY25, as compared to

RS RS8177 Cr. in FY24.

The companys diverse selection of loan products under the housing and non-housing categories are suitable for meeting the needs of a wide variety of customers. The Companys product mix includes Individual Housing Loans, Site Loans, Composite Loans (Purchase of Site and Construction), Personal Loans, Mortgage Loans, Loans against Rent Receivables (LRR), Loans for Commercial Properties (LCP), etc. competitive

Lending Mix

Although many Commercial Real Estate - Residential (CRE-RH) loans are for residential properties that are mostly occupied, they are still classified as non-housing loans. Because of this, the share of housing loans in the total loan portfolio was 76% in FY25, slightly lower than 78% in FY24. However, if we include all CRE loans linked to housing, loans backed by homes make up 86% of the total. Loans Against Property (LAP) account for 6%, and the remaining 7% includes top-up loans, personal loans, and site loans (NHL). Also, 70% of borrowers were from salaried class and 30% from self-employed segment.

Funding Mix

The company maintains a balanced funding mix, comprising credit facilities from banks, underwritings from the National Housing Bank, public deposits, and borrowings from the market through the issuance of Commercial Papers (CPs) and Non-Convertible Debentures (NCDs). As of 31st March, 2025, the companys total borrowings amounted to RS35,289 crore.

Deposit Schemes

Licensed by the National Housing Bank (NHB) and the ReserveBank offers deposit India(RBI),thecompany schemes that cater to different customer preferences These include fixed deposits, which as reflected inprovide interest payments at regular intervals, and cumulative deposits, where interest is compounded quarterly and paid upon maturity.

Senior citizens are entitled to an additional return (ROI) above the standard card rates. For fixed deposit schemes, the minimum deposit amount is RS200,000, with options for quarterly, half-yearly, or annual interest payments. For monthly interest payments, the minimum deposit amount is RS10,00,000. The minimum deposit for the Cumulative Deposit scheme is RS 20,000.

The company has ensured strong liquidity levels through a well-diversified mix of funding sources. The effectiveness of its cost of funding is regularly monitored, enabling the company to maintain a healthy spread and Net Interest Margin (NIM), ensuring financial stability and profitability.

Ratings

Can Fin Homes Limited continues to maintain a strong consistent high ratings creditprofile, received from leading credit rating agencies. As of 31st March, 2025 the ratings assigned to the companys various borrowing instruments are as under:

Borrowings	CARE	ICRA	IND Ra
Term Loans (Long-Term Loan)	AAA / Stable	AAA / Stable
Term Loans (Short-Term Loan)		A1+
NHB Borrowings		AAA/Stable
Commercial Papers (CPs)	A1+	A1+
Non-Convertible Debentures
	AAA/Stable	AAA/Stable	AA+ / Stable
(NCDs)
Public Deposits		AAA/Stable

The reaffirmation of the highest long-term rating (AAA/Stable) and short-term rating (A1+) by multiple rating agencies underscores the companys strong financial fundamentals, prudent risk management, consistently strong asset quality, and consistent operational performance. The companys robust credit profile also enables it to access funding at competitive rates, contributing to sustained profitability and growth momentum.

Risks and Concerns

CFHL effectively manages a range of challenges, including credit, operational, market, and liquidity-related risks, through the implementation of standardised procedures, systems, and guidelines. The company adopts a proactive and structured approach to identifying, evaluating, and mitigating these risks. This ensures a comprehensive risk management framework, with well-defined strategies to address key risks and safeguard the companys stability.

Credit Risk

Credit risk is an inherent aspect of any lending activity, arising from the possibility of payment defaults by customers or borrowers on their installments. This risk reflects the potential for financial loss if borrowers fail to meet their repayment obligations.

Mitigation

The company manages credit risk through stringent credit norms, guided by a well-definedcredit policy. To assess and mitigate risks, it evaluates alternative solutions through a comprehensive Credit Risk Assessment process. This includes a thorough analysis of both objective and subjective information about customers to accurately determine their creditworthiness.

The company leverages credit assessment agencies such as CIBIL, Experian, the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI), and PERFIOS, among others, to evaluate creditworthiness. Additionally, it conducts thorough field investigations, including checks on employment, residence, business, and has enlisted valuers and advocates, to assess the potential risks associated with new customers. Furthermore, the Company uses Karza platform to enable automatic verification ofPAN, Aadhaar details, and ITRs.

To strengthen its document vetting process and enhance security controls, the Company has partnered with Maatrum. This collaboration underscores Can Fins commitment to due diligence and fraud prevention. Further, the Company utilizes the Valocity platform to meticulously manage its valuation report process. This platform streamlines the distribution of valuation assignments to Can Fins network of approved valuers. Upon completion, the finalized reports are directly uploaded to the Valocity platform, subject to confirmation by the respective branches, ensuring a secure and transparent process for all valuation-related documentation.

Market Risk and Interest Rate Risk

Certain risks are influenced as inflation, deflation, and fluctuations in demand and supply, which are beyond the companys control. Adverse market conditions stemming from these factors can lead to liquidity risk, interest rate risk, funding risks, and other related challenges.

Mitigation

The company maintains a balanced funding mix, incorporating both market borrowings and bank borrowings with fixed and floating interest rates for both short-term and long-term needs. This approach helps mitigate interest rate risks and ensures greater financial stability. The borrowings as of 31st Mar, 2025, are provided below:

Linked Rates	Amt in Crs
Particulars	O/S Amount (RS In Crore)
Banks	18,297.83
Deposits	187.36
NHB	5954.21
NCD	8268.23
CP	2581.13
Total	35,289.00

Effective January 1, 2024, the a quarterly ROI (Rate of Interest) reset for loans under floating interest rates. Customers are offered the option to convert from annual to a quarterly ROI reset mode.

Asset and Liability Mix (Fixed vs. Floating)

Particulars	Fixed (RS in Crores)	Floating (RS in Crores)	Total (RS in Crores)
Assets (A)	3,849.54	36,997.44	40,846.98
Liabilities (L)	13,118.60	21,967.26	35,085.85

ALM position (as on Mar 31, 2025)

A. Structural Liquidity Statement (SLS)

TABLE 1: % OF NET CUMULATIVE MISMATCH OVER OUTFLOW VIS-A-VIS TOLERANCE LIMIT (SLS)

Time Bucket	Total Cumulative Outflow (RS in Crores)	Total Cumulative Inflow RS ( in Crores)	Net Cumulative Mismatch (RS in Crores)	Net Cumulative Mismatch % (% of D over B)	Tolerance Level %
A	B	C	D	E	F
1 to 7 Days	1241.25	1351.78	110.53	8.90	-9.00
8 to 14 Days	1635.17	1753.54	118.37	7.24	-9.00
>15 Days to 1M	4299.61	4451.71	152.11	3.54	-19.00
>1 2 Months	7652.61	7859.92	207.31	2.71	-15.00
>2 3 Months	11105.46	11251.53	146.07	1.32	-15.00
>3 6 Months	13032.61	13820.77	788.17	6.05	-15.00
>6- 12 Months	17760.17	18645.73	885.56	4.99	-15.00
>1 3 Years	32531.34	36734.34	4203.00	12.92	-40.00
>3 5 Years	40629.94	52091.23	11461.29	28.21	-20.00
>5 Years	50098.95	73599.83	23500.88	46.91	-20.00

B. Interest Rate Sensitivity (IRS)

TABLE 2: % OF NET CUMULATIVE MISMATCH OVER TOTAL ASSETS VIS-A-VIS TOLERANCE LIMIT (IRS)

Time Bucket	Cumulative Rate Sensitive Liabilities (RS in Crores)	Cumulative Rate Sensitive Assets RS ( in Crores)	Net Cumulative Mismatch (RS in Crores)	Net Cumulative Mismatch % (% of D over Total Assets)	Tolerance Level %
A	B	C	D	E	F
1 to 7 Days	1244.84	3958.34	2713.51	6.62	-30.00
8 to 14 Days	10928.63	3958.42	-6970.21	-17.01	-30.00
>15 Days to 1M	15752.28	3958.64	-11793.65	-28.79	-30.00
>1 2 Months	19504.82	8505.18	-10999.64	-26.85	-30.00
>2 3 Months	22740.20	13452.35	-9287.85	-22.67	-40.00
>3 6 Months	22898.36	19069.83	-3828.53	-9.35	-30.00
>6- 12 Months	27350.15	34053.75	6703.60	16.36	-30.00
>1 3 Years	32780.31	37553.03	4772.72	11.65	-30.00
>3 5 Years	34181.99	37971.41	3789.42	9.25	-30.00
>5 Years	35065.52	40398.72	5333.20	13.02	-30.00
Non-Sensitive	40967.33	40967.33	0.00	0.00	-30.00

GRAPH 2: % OF NET CUMULATIVE MISMATCH OVER OUTFLOW VIS-A-VIS TOLERANCE LIMIT (IRS)

Segment-wise Breakup of Housing Loan Book by

Interest Rate Structure

Linked Rates	Amt in Crs	%
MCLR	-	0.00
Repo-linked	11,212.45	31.77
Special Rate	17,541.08	49.71
T bill linked	6,535.21	18.52
Total	35,288.75	100

The company strategically links its bank borrowings to the RBIs repo rate, which is the rate at which the Reserve Bank of India lends to commercial banks. This direct linkage ensures that fluctuations in the reflected advantage of this strategy is the ability to quickly capitalise on interest rate decreases, such as when the RBI lowers the repo rate. This agility in adjusting borrowing costs allows the company to promptly pass on these changes to its customers, maintaining spread and Net Interest Margin (NIM).

Liquidity Risk

Liquidity risk refers to the situation where a company lacks sufficient funds to meet its financial obligations. This typically arises when the company is overly reliant on market loans, and unfavourable market conditions hinder its ability to access the necessary capital.

Mitigation

The company has a robust and reliable risk management policy in place, which includes regular analysis of critical scenarios and stress testing to provide timely warning signals and maintain liquidity at

optimal levels. effectively mitigates liquidity risk.

Quarterly LCR (On a Daily Computational Basis)

To manage liquidity risk, the company ensures sufficient on-book liquidity through investments for LCR and SLR purposes, as well as off-book liquidity via undrawn, documented bank limits. Additionally, by maintaining an appropriate funding mix across different segments, considering interest rates, tenures, and maturity patterns, thecompany

(RS in Crore)

LCR Disclosure for the Quarter ended March 31st, 2025	Total Unweighted Value (Daily Average) *	Total Weighted Value (Daily Average) #
High-Quality Liquid Assets
1 Investment for LCR	1915.01	1915.01
2 Investment in G-SEC (20% Haircut)	72.50	58.00
3 Total High-Quality Liquid Assets (HQLA) Government Securities
Cash Outflows
4 Deposits (for Deposit-Taking Companies)	8.59	9.88
5 Unsecured Wholesale Funding	938.33	1079.08
6 Secured Wholesale Funding	1365.47	1570.29
7 Additional Requirements, of which	-	-
(i) Outflows Related to Derivative Exposures and	-	-
Other Collateral Requirements
(ii) Outflows Related to Loss of Funding on Debt Products	-	-
iii) Credit and Liquidity Facilities	-	-
8 Other Contractual Funding Obligations	2134.46	2454.63
9 Other Contingent Funding Obligations	-	-
10 TOTAL CASH OUTFLOWS	4446.85	5113.88
Cash Inflows
11 Secured Lending	-	-
12 Inflows from Fully Performing Exposures	358.81	269.11
13 Other Cash Inflows	4686.97	3515.23
14 TOTAL CASH INFLOWS	5045.78	3784.34
		Total Adjusted Value
15 TOTAL HQLA	1987.51	1973.01
16 TOTAL NET CASH OUTFLOWS	1329.56
17 LIQUIDITY COVERAGE RATIO (%)	148.40%

*Unweighted value is calculated as outstanding balances maturing or callable within 30 days (for inflows and outflows). #Weighted values are calculated after the application of respective haircuts (for HQLA) and stress factors on inflow and outflow. LCR Disclosure for the quarter ended (as of 31/03/2025) is calculated on Daily Simple Average.

Asset Liability Management

The company has established an Asset Liability Committee (ALCO) comprising executives from the registered responsible for monitoring mismatches between assets and liabilities. ALCO conducts thorough cash flow analyses various time intervals, comparing dedicated outflows with anticipated inflows to identify any potential mismatches It also performs timely critical scenario analysis to assess various risk factors. Additionally, all incremental borrowings are discussed in ALCO meetings, in alignment with the Borrowing Policy, before being presented for approval. The companys financials are timely reviewed by the Risk Management Committee, Audit Committee, and Board of Directors.

Internal Audit

The Internal Audit system is responsible for ensuring that the companys operations are conducted efficiently and effectively. It evaluates the reliability of financial and ensures compliance with relevant laws, regulations, and internal policies, providing assurance that the company adheres to its operational and regulatory obligations.

The Risk-Based Internal Audit (RBIA) team has been strengthened to improve its focus on evaluating branch performance and ensuring compliance with the companys policies. Additionally, the team identifies potential areas of vulnerability and works towards enhancing customer service, which is a critical component of the companys success.

The audit reports from various sources, including RBIA inspections, NHB/RBI audits, sponsor bank reviews, internal and external branch audits, as well as standalone "Application audits of IT systems" by the IT department and special audits assessing the efficiency of existing internal control systems, are submitted to the Audit Committee of the Board for thorough review.

The Audit Committee and the IT Strategy Committee conduct periodic reviews of the reports to assess the effectiveness of the internal control systems and IT systems, respectively. Additionally, the committees evaluate the performance of the audit department to ensure continuous improvement and operational efficiency.

Asset Quality

The financial stability and growth of largely determined by the quality of its assets, making it one of the most critical factors in its overall functioning. High asset quality ensures strong performance, reduced risk, and the ability to generate sustainable returns.

At CFHL, the management dedicates significant time, effort, and resources to thoroughly understanding the loan assets. Special attention is given to reviewing the loan portfolio, particularly those that are in default. The underlying reasons for defaults are examined within the context of local and regional conditions that could impact the companys performance. The quality of appraisal standards, the stability of credit policies and practices, timely identification of underperforming assets, management information systems (MIS), and the quality of credit documentation are systematically reviewed at various levels to ensure prompt and effective action is taken.

The effective recovery technique of the company contains NPAs, supported by the SARFAESI Act. Regular follow-ups reporting at both the branch and central levels significantly improve collections. A majority of the collections are through NACH, and the rest are through salary deductions, with a limited portion by way of cash collections.

Expected Credit Loss (ECL) under IND AS 109

With the adoption of IND AS 109, NBFCs are required to adopt a forward-looking Expected Credit Loss (ECL) model for impairment of financial assets. This marks a shift from the incurred loss model under previous Indian GAAP, aligning NBFC provisioning practices more closely with global standards (IFRS 9).

For HFCs, whose business model primarily involves lending, the ECL framework has a direct and material impact on profitability, provisioning, and regulatory compliance. Accordingly, Financial Instruments, provisions on advances are to be recognised in the books of account based on the Expected Credit Loss (ECL) model.

As of the reporting date, CFHLs total loan book stands at RS38,217 crores, against which it is carrying a total provision of RS466 crores. This includes:

• RS358 crores towards Expected Credit Loss (ECL) as per IND AS 109

• RS59 crores as management overlay, towards potential institution macroeconomic uncertainties, and are

• RS49 crores under provision for restructured accounts, in line with regulatory guidelines.

Provision for Loans

As a housing finance company, Can Fin Homes is required to adhere to the RBI Master Directions for Housing Finance Companies, particularly concerning Asset Classification and Income Recognition (IRAC) norms.

Provisions are calculated in accordance with both the Expected Credit Loss (ECL) Model and the IRAC guidelines. The company ensures that provisions are maintained in full compliance with these regulations, safeguarding its financial health and ensuring regulatory adherence.

Financial Performance

	FY25	FY24
Particulars	(RS in Crores)	(RS in Crores)
Revenue	3,879.62	3524.69
NII	1,353.27	1,258.49
ROAA (Annualised) %	2.24	2.28
ROE (Annualised) %	16.92	17.28
EBITDA	3,578.50	3201.63
EBIT	3565.63	3188.92
PAT	857.17	750.70
EPS (in Rupees)	64.37	56.38

Financial Ratios

Debt to Equity Ratio (times)	6.96	7.34
Operating Profit Margin (%)	29.73	29.38
Net Profit Margin (%)	22.09	21.30

Human Capital

The companys human resources department oversees recruitment, training, and employee management to ensure a skilled and competent workforce. Emphasising employee engagement and satisfaction, the company conducts regular surveys and offers career development opportunities to support professional growth.

The company has historically demonstrated a strong commitment to its human resources, reflected in a relatively low attrition rate of 14.17% in FY 24-25. The company continues to focus on fostering a cohesive and motivated workforce aligned with its strategic objectives. To address through enhanced thesechallenges,it is intensifying efforts staff welfare initiatives aimed at improving employee engagement, well-being, and productivity.

As of 31^st March, 2025 the Company had a total strength of 1184 employees.

IT and Security

The company must safeguard its data to ensure seamless business operations. Protecting critical information assets and IT infrastructure from cyber threats is essential to maintaining the confidentiality of corporate information across all levels. Detailed guidelines are outlined in the companys IT and IT Security Policy, Cyber Security Policy, and Cyber Crisis Management Plan.

The company maintains a business continuity plan designed to ensure uninterrupted operation of critical business functions during emergencies. Regular penetration and vulnerability assessments are performed to strengthen control measures and enhance overall security. The companys Integrated Business Suite, a core banking platform, connects all branch operations with the registered office. Currently, the company is undertaking the implementation of a new end-to-end core banking solution that incorporates advanced features to optimise both technology utilisation and workforce efficiency. To enable this, the Company has selected IBM India Private Limited as the system integrator for the supply, implementation, and maintenance of its new core banking solution, along with infrastructure and security enhancements. Onboarding IBM, the leader in the system integration space, will provide a best-in-class solution to the company in terms of software, infrastructure, network, and security aspects of its core banking solution.

Segment-wise Reporting

The segmentation has been outlined in compliance with the accounting standard on segment reporting, considering the organisations structure alongside the varying risks and returns associated with each segment. The company operates primarily in the housing finance sector, revenue streams predominantly derived from this core business activity.

Related Party Transactions

The company fosters strong and transparent relationships with its related parties. A comprehensive policy on related party transactions is accessible on its website for stakeholders. Detailed disclosures regarding these transactions are included in the notes accompanying the financial statements. All related party transactions are undertaken in the normal course of business and at arms length and undergo approval by the Audit Committee, Board, or shareholders at a general meeting, as required.

Corporate Social Responsibility

The Companys CSR initiatives are "powered by a purpose" and are intended to make a positive impact on the lives of people. Corresponding to the aims of the Sustainable Development Goals (SDGs) of the United Nations (UN), it works in important areas such as healthcare, education, rural development, womens empowerment, and the environment, striving to alleviate challenges and build a sustainable community for tomorrow.

Future Prospects

The positive trajectory of the Indian economy has spurred increased economic activity, accelerating growth in housing stock and driving higher demand. This favourable market environment presents significant expansion of our business.

Through concertedefforts across multiple sectors, the company aims to achieve improved performance in the current year. Key initiatives have been set in motion to optimise human capital, enhance knowledge capabilities, strengthen technological support, and expand branch operations. Can Fin Homes remains committed to advancing its dual objectives of facilitating housing finance and contributing to the expansion of housing stock. It is committed to enhancing stakeholder value through continued performance improvements.

Can Fin Homes Ltd.s overall financial performance in the FY 24-25 exhibits the companys constant commitment to growth and its strong resilience to the market With improved asset quality, consistent quarterly profitability, andealthy year-on-year growth, the results of Can Fin Homes Ltd in FY24-25 demonstrate consistent performance metrics and its commitment to results for all its stakeholders involved.

Plans for the Next Financial Year

For the next financial year, the company has strategic initiatives planned to drive growth and enhance its market withits position. These plans are focused on expanding product offerings, increasing customer acquisition, improving operational efficiencies, and presence. With a strategic focus on key areas such as loan book growth, digital marketing, and non-interest income, the company is well-positioned to achieve its goals and deliver long-term value to its stakeholders.

Product Segment

The company aims to diversify its loan portfolio by improving the non-housing segment while maintaining a strong focus on housing finance. The target is to ensure the housing book (excluding CRE) remains above 70% of the overall loan book. As of FY25, the housing book (excluding CRE) stands at 76%, reflecting a balanced approach that achieves growth in both sectors while managing risk and ensuring long-term stability in its portfolio.

Customer Segment

The company aims to increase its focus on the higher-yielding Self-Employed & Professionals (SENP) segment, targeting a growth to 35% of the loan book, up from 27% as of March 2024. By the end of FY25, the SENP segment constitutes 29% of the loan book, reflecting the companys strategic shift towards this profitable segment, while maintaining a balanced and diversified customer base for sustained growth and profitability.

Sourcing Channels

The company aims to reduce its reliance on the Direct opportunities for the Selling Agent (DSA) channel, which currently accounts for 80% of incremental sourcing. To achieve this, the company is establishing direct sourcing and digital channels. A small direct sales team has been set up, now contributing to 4% of the incremental sourcing. This shift enhances control over sourcing and aligns with the companys digital growth strategy. The company plans to maintain direct sourcing within the range of 7.5%-10% in FY26.

Geographical Diversification

In FY24-25, the company expanded its branch network from 219 to 234. To reduce its heavy reliance on Southern markets, the company plans further expansion into the North and West regions. Over the past two years, the company has opened net 29 branches, with 13 in the North and 14 in the West, strategically diversifying its . geographical presence for more balanced growth.

Marketing Efforts

Dedicated Marketing Staff

The company has seen promising results from its dedicated marketing staff, specifically focused on direct sourcing and Advanced Processing Facility (APF) tie-ups. This specialised approach has led to higher business sourced per staff on efforts in these key areas, the company has enhanced its efficiency and targeted marketing initiatives.

APF Marketing

The Advanced Processing Facility (APF) initiative has gained significant traction, with multiple throughout the year. Moving forward, the company plans to aggressively expand APF tie-ups by focusing on Metro and Tier 1 cities, aiming to increase its presence and capitalise onthegrowingdemandfor in these regions.

Branding and Digital Marketing

The company has ramped up its marketing and branding initiatives, standardising many branches according to the branch standardisation model. Additionally, the company participated in various real estate exhibitions to increase its visibility. It also established a strong presence on social media platforms such as Facebook, Instagram, and LinkedIn, running continuous campaigns to engage with a broader audience and enhance brand recognition.

Projected Outlook for FY25-26

By implementing the outlined strategies, the company aims to achieve the following:

Stronger Loan Book Growth

Targeting a healthy double-digit growth in the loan portfolio, reflecting continued expansion and increased market penetration. This growth will be driven by diversifying the customer base, optimising loan offerings, and tapping into new geographical regions and segments.

Improved Disbursement Performance

The company aims to surpass the disbursement figures of FY 2024-25 by capitalising on its expanded branch network and strengthened sales efforts. This will involve enhancing customer outreach, improving process and leveraging digital channels to drive higher loan disbursements and meet growing demand across various segments.

Digital Marketing

The company plans to enhance its digital marketing efforts in the coming year by partnering with real estate portals and online lead generation platforms for lead sourcing. Additionally, it aims to implement digital onboarding through an online application process, complemented by per targeted Search Engine Marketing campaigns to increase month. By concentrating visibility, attract potential customers, and streamline the loan application indrivinggrowththrough process.

Non-Interest Income

A key strategic focus for FY 2025-26 is to boost non-interest income, with a particular emphasis on cross-selling projecttie-upsestablished insurance products. The company plans to increase efforts in promoting both life insurance and general insurance offerings to its housing revenue streams and enhancing overall profitability. This initiative will leverage the existing customer base to introduce additional financial products and strengthen customer relationships.

Cautionary Statement

This document contains projections regarding anticipated future events, financial performance, and operational outcomes for Can Fin Homes. These projections are inherently forward-looking and necessitate the company to make certain assumptions, which are subject to inherent risks and uncertainties. There exists a substantial risk that these assumptions, predictions and other forward-looking statements may not accurately materialise. Readers are advised to exercise caution when relying on such forward-looking statements, as various factors could cause the actual future results and events to deviate from those expressed in these projections. Consequently, this document is subject to the disclaimer and is entirely qualified by the assumptions, qualifications, and risk factors mentioned in the managements discussion and analysis section of Can Fin Homes Annual Report, 2024-25.

For and on behalf of the Board of Directors

Sd/-

Shri K Satyanarayana Raju

Place : Bengaluru Chairman Date : June 25, 2025 (DIN: 08607009)