India Shelter Finance Corporation Ltd Management Discussions

GLOBAL ECONOMY: STABILITY AMID VOLATILITY

The global economy had demonstrated notable resilience despite ongoing geopolitical tensions, evolving trade dynamics and policy uncertainty, with growth expectations previously pointing towards a relatively stable trajectory. Technology-led investments and optimism around AI-driven productivity gains had also emerged as key drivers supporting economic activity and improving long-term growth expectations across several advanced economies. However, this outlook has been disrupted by the outbreak of conflict in the Middle East, introducing a fresh source of uncertainty and testing the strength of the global recovery. Rising commodity prices, firmer inflation expectations and tighter financial conditions are placing renewed pressure on economic activity. Assuming the conflict remains contained in scope and duration, global growth is projected to moderate to ~3.1% in 2026 before improving marginally to ~3.2% in 2027.

Global inflation is expected to rise marginally in 2026 before resuming its downward trend in 2027. Risks, including elevated public debt, financial market volatility, persistent geopolitical and trade uncertainties, along with the crude oil and gas supply shock arising from the Middle East conflict, remain skewed to the downside. Rising energy prices and supply disruptions are intensifying inflationary pressures, tightening financial conditions and weighing on global growth prospects. Divergent growth trajectories and labour market vulnerabilities are further slowing the recovery.

Outlook

The outlook remains uneven across regions, with emerging markets and developing economies expected to face a sharper slowdown alongside greater inflationary pressures. The global environment is increasingly characterised by evolving supply chains, shifting trade patterns and heightened geopolitical fragmentation. While these adjustments have helped cushion external shocks, downside risks continue to dominate. A prolonged conflict, renewed trade tensions, weaker-than-expected productivity gains from technological advancements, or deeper geopolitical fragmentation could further weaken growth and increase financial market volatility. In this environment, adaptability, credible policy frameworks and stronger international cooperation remain essential to navigating uncertainty and building long-term resilience.

Source: R1.1 https://www.imf.org/en/publications/weo/issues/2026/04/14/world-economic-outlook-april-2026

INDIA: SUSTAINED GROWTH ON DOMESTIC FUNDAMENTALS

Despite external pressures, India remains one of the fastest-growing major economies, supported by strong domestic demand and structural growth drivers. While the Middle East conflict has introduced fresh challenges through higher crude oil prices, rising import costs and renewed inflationary pressures, the Indian economy has remained relatively resilient due to its diversified growth base and strong domestic fundamentals. Real GDP growth is estimated at ~7.4% for 2025-26, moderating gradually to ~6.4% over 2027-28 as post-recovery momentum normalises, still well above global averages.

Growth is underpinned by resilient consumption, improving investment activity, and sustained government capital expenditure towards infrastructure, logistics, and urban development. Public capex of ~12.2 Tn serves as a key growth anchor, while the services sector expansion provides broader economic stability.

Structural socio-economic factors, including rising urbanisation, increasing income levels, and continued financial formalisation, support long-term economic expansion and credit growth.

Outlook

India?s growth trajectory is expected to remain stable over the medium term, with GDP growth projected at 6-6.5% CAGR through 2029-30, reflecting a transition from post-recovery acceleration to sustainable expansion.

Continued infrastructure development, fiscal consolidation, and policy stability are expected to support investment activity and economic resilience. Global uncertainties and external headwinds remain key risks. However, India?s strong domestic demand, improving credit penetration, and structural reforms position it favourably for sustained long-term growth.

Sources: https://tradingeconomics.com/india/interest-rate/news/523674 https://www.pib.gov.in/PressReleasePage. aspx?PRID=2220800&lang=1&reg=6&utm

Demographic Impact on Housing Demand

STRUCTURAL FACTOR

Nuclearisation of families Financial formalisation Income growth

STRUCTURAL HOUSING DEMAND DRIVERS

Demographic Drivers

India?s housing demand is structurally supported by favourable demographic dynamics: a growing working-age population and an accelerating household formation. With a median age of ~28 years and ~37% of the population in the prime working cohort (25-29 years), India stands apart among major economies. This points to a sustained pipeline of income-earning households entering the housing market.

The shift towards nuclear families is expanding demand for housing across urban and semi-urban markets. Another key growth factor is the increasing participation of self-employed and informal income groups in formal credit systems. This transition from shared housing to ownership-led consumption, structurally increases the number of housing units required per capita.

HOUSING IMPLICATION

Higher dwelling unit demand per household Financial formalisation Income growth

India?s Demographic Comparison with Other Economies

19.94%	36.02%	38.45%	40.59%	36.22%
37.07%	33.28%	32.52%	33.34%	35.85%
17.93%	13.10%	11.62%	10.56%	11.35%
25.06%	17.59%	17.41%	15.51%	16.59%
India	United States	United Kingdom	Europe	China

Urbanisation

Urbanisation remains a primary demand catalyst, driven by economic concentration and employment-led migration. Urban centres account for ~3% of land area, yet contribute ~60% of GDP, reflecting a strong correlation between economic activity and housing demand. Rising urban populations point to sustained migration towards cities and peripheral urban clusters. This is expected to drive incremental housing demand, particularly in Tier II and III cities and emerging urban corridors where affordability constraints and supply shortfalls remain pronounced.

Housing Shortage

India?s housing demand is reinforced by a persistent supply-demand imbalance. The shortage is concentrated in lower-income segments. The Economically Weaker Section (EWS) and Low-Income Group (LIG) together account for 95% of urban housing shortage, indicating that demand is end-user driven, not speculative. The scale and persistence of this gap provide multi-year visibility for housing development and mortgage growth, reinforcing the sector?s structural growth trajectory.

Estimated Shortage In 2025 And 2030 Housing shortage in India in 2025 and 2030

In Mn	CY 2025E	CY 2030E
Population	1,408.00	1,525.10
Household size	4	4
No. of houses (A)	290.5	317.3
Required houses (B)	352	381.3
Overall shortage (B-A)	61.5	64
Note: E: Estimated; Required houses = Population/household size
Source: Census 2011, RBI, Crisil Intelligence
Housing Loan Demand in rural and urban areas in 2025E	Rural	Urban
Total shortage of houses (Mn)	36.7	24.4
Average value of house	2,706,825	4,392,754
LTV	70%	75%
ATS of housing loans	1,894,777	3,294,566
Credit Penetration	8.50%	12.60%
Total addressable demand (in Tn)	6	10

Note: Total Housing Loan Demand = ATS of housing loan*Total shortage of houses; Source: Crisil Intelligence

MORTGAGE PENETRATION AND CREDIT OVERVIEW

Mortgage penetration and household credit levels are key indicators of the depth and maturity of a country?s financial ecosystem. They provide insights into borrowing behaviour, access to formal credit and the extent of financial inclusion within an economy. India?s relatively underpenetrated credit landscape reflects substantial headroom for future expansion, supported by economic growth, rising incomes and improving access to formal finance. As of March 2025, India?s household debt-to-GDP ratio stood at 42%, significantly lower than most developed economies. India also trails Malaysia (~70%) and remains marginally below Singapore and the European Union. The comparatively low level of household debt highlights the structural underpenetration of India?s credit market and significant long-term growth potential in housing finance and retail lending.

Mortgage-to-GDP: Profile and Positioning

India?s mortgage market remains at a relatively early stage of development compared to global benchmarks. As of 2024-25, the country?s mortgage-to-GDP ratio stood at 12.18%, reflecting the scale of mortgage penetration within the economy. While this marks a gradual increase from 11.81% in 2020-21, the ratio continues to remain significantly below that of developed economies and several emerging markets, indicating scope for further deepening of housing finance adoption.

Credit Penetration in India

India?s credit market continues to expand, supported by economic growth and improving financial access. Retail credit remains a key driver, propelled by growing consumption, increasing urbanisation, and rising disposable incomes. Credit is broadening across housing, mobility, education, and personal finance, reflecting deeper integration of formal finance into everyday economic activity. Additionally, financial inclusion efforts are unlocking new borrower segments, further strengthening demand.

Still, credit penetration remains below that of many developed economies. India?s bank credit-to-GDP ratio stood at 93% in CY 2024, significantly below China (198%) and the United States (143%). This underscores the structural headroom for financial deepening across the country.

India?s Credit Growth Snapshot

	2018-19	2024-25	CAGR	Outlook 2025-27
Total Systemic Credit	101 Tn	202 Tn	12%	12–14% CAGR
Retail Credit Size	–	82 Tn	16% (2019-25)	13–15% CAGR; 108 Tn by 2026-27

NBFCs continue to play a critical role in bridging the credit accessibility gap, particularly in underserved segments and geographies. NBFC AUM grew from 23 Tn in 2018-2019 to 48 Tn in 2024-25, at a CAGR of 13.2%. NBFC credit is expected to grow at an 18-20% CAGR between 2024-25 and 2026-27, outpacing bank credit growth of 11-13%. The NBFC share in systemic credit has risen from 22% in 2018-19 to 24% in 2024-25 and is projected to reach 26% by 2026-27. Digital lending adoption, financial inclusion initiatives, and a supportive regulatory environment are expected to sustain this expansion across the retail and MSME segments.

Key Drivers of Retail Credit Growth

Retail credit growth in India is underpinned by six structural drivers.

(1) Economic Formalisation: GST adoption, digital payments, and expanding bureau penetration

(2) Demographics: India has the world?s largest youth population, with 381.5 Mn individuals aged 15-29

(3) Increasing Urbanisation: Urban population projected to rise from 37% in 2025 to 41% by 2031

(4) Digital Adoption: In 2024-25, UPI transactions reached 185.9 Bn; e-KYC transactions stood at 4.4 Bn

(5) Financial Inclusion: 89% of Indian adults now hold a financial account, up from 53% in CY 2014

(6) Rising Disposable Income: Per capita NNI expanded 5.5% in 2024-25

Credit Growth in the NBFC Sector

NBFCs continue to deepen credit access across underserved borrower segments and geographies. The easing of monetary policy, including repo rate cuts to ~5.25%, has improved liquidity and reduced funding costs. This has enabled NBFCs to expand credit availability and offer competitive lending rates, supporting loan demand in retail and MSME segments.

NBFCs also benefit from flexible underwriting models and the ability to serve borrowers with informal income profiles, making them key drivers of credit inclusion. As financial ecosystems formalise and digital infrastructure strengthens, NBFC-led credit expansion is expected to remain central to overall financial deepening.

INDIA?S HOUSING FINANCE SECTOR

Structure and Trends

India?s housing finance sector has emerged as a key component of the financial ecosystem, supported by steady mortgage lending growth and expanding credit access. The broader mortgage finance industry has grown consistently at ~15% during the past decade, driven by rising home ownership aspirations, urbanisation, and improving affordability. Growth is now transitioning towards a more stable trajectory, with expansion expected to remain to 18–20% in the medium term.

The sector is increasingly influenced by shifts in ticket size and borrower mix. Higher-ticket housing loans have grown faster than lower-ticket segments, reflecting rising property values and evolving customer preferences. At the same time, structural tailwinds such as urbanisation, rising disposable incomes, and improving access to credit continue to sustain long-term demand.

Note: P: Projected; Source: CRIF Highmark, Crisil Intelligence

India?s Housing Finance Sector: Key Growth Drivers

Cross-asset Capital Flows:

01 Gains from equities, gold, and mutual funds are increasingly being channelled into housing down payments

Demographic Tailwinds:

02 Young population, rising nuclearisation, and earlier household formation continue to drive structural demand

Evolving Preferences:

03 Shift towards larger homes and ownership-led consumption, especially in peripheral and non-metro markets

Improving Aordability:

04 Rising incomes and easing interest rates are enhancing loan eligibility and incremental housing demand

Technology Enablement:

Digitalisation and data availability are 05 improving underwriting and expanding access for informal borrowers

Policy Support:

Initiatives like Pradhan Mantri Awas Yojana

06 (PMAY) and Special Window for Affordable and Mid-Income Housing (SWAMIH) Investment Fund are strengthening aordability, enabling supply completion, and boosting credit flow

Growth Prospects in the Housing Finance Market

India?s housing finance sector is expected to maintain stable growth, supported by favourable macroeconomic conditions and expanding formal credit channels. While growth is moderating from earlier highs, it remains robust relative to the broader financial sector, driven by sustained housing demand and improving credit access. The sector is likely to benefit from ongoing digitisation, enhanced underwriting capabilities, and deeper market penetration. However, rising competition, evolving borrower profiles, and the need to balance growth with operational efficiency will remain key considerations as the sector matures.

AFFORDABLE HOUSING FINANCE

Structure and Trends ~312 Lacs units Housing shortage (2030)

~ 14.1 Tn

AHFC market size (2026-27E)

India?s affordable housing finance segment is anchored by a substantial and persistent demand–supply gap, creating a long-term structural opportunity for credit expansion. The projected housing shortage, combined with high loan dependency among lower-income segments, represents a significant financing opportunity of 44-45 Lac Crs for lenders. Demand remains largely end-user driven, with limited speculative activity, providing resilience across economic cycles.

The segment has demonstrated strong growth, with AHFCs delivering 20-25% AUM CAGR over the past five years, materially outpacing overall housing credit growth. Expansion has been supported by deeper geographic penetration, improving borrower accessibility, and sustained demand from EWS and low-income households.

Government Support: Key Policy Initiatives

Government initiatives continue to strengthen the affordable housing ecosystem by improving both demand and supply-side dynamics. Flagship schemes such as PMAY have improved affordability through interest subsidies and targeted incentives for lower-income households. SWAMIH has facilitated the completion of stalled housing projects, restoring buyer confidence and enabling credit flow. Together, these measures, underpinned by a continued ‘Housing for All? focus, have expanded access to formal housing finance and reinforced long-term demand visibility.

PMAY–U Budget Allocations (in Crs)

2021-22	8,000
2022-23	28,000
2023-24	25,103
2024-25	30,171
2025-26	23,294
2026-27	21,625

Source: Budget

Competition

Competition in the affordable housing finance sector remains structurally favourable, with inherent entry barriers. Banks and large housing finance companies (HFCs) continue to prioritise higher ticket size loans due to lower operating intensity and standardised underwriting. In contrast, affordable housing lending requires a high-touch, branch-led model with field-level verification and cash-flow-based income assessments, resulting in higher execution complexity. This has enabled specialised Affordable Housing Finance Companies (AHFCs) with strong local distribution networks and underwriting capabilities to establish a differentiated position, with competition remaining disciplined and largely concentrated among specialised players.

Loan Against Property (LAP)

LAP has gained traction as a key secured lending product. This has allowed borrowers to unlock the value of residential and commercial assets for business expansion, working capital, and consumption needs. The collateral-backed structure gives lenders stronger recovery visibility and a favourable risk-return profile. It also offers borrowers lower interest rates and longer repayment tenures compared to unsecured financing.

The LAP portfolio expanded at a CAGR of ~21.46% between 2020-21 and 2024-25, growing from ~7.4 Tn to ~16.2 Tn, and reaching ~18.2 Tn as of H1 2025-26. Growth has been driven by rising property ownership, increasing credit demand from MSMEs, and improving financial penetration across Tier II and III markets.

The LAP segment is expected to grow at 18-20% CAGR through 2027–28, supported by increasing lender focus, digitalisation of land records, and enhanced underwriting. Growth in lower ticket-size segments has moderated due to tighter underwriting and asset quality considerations. However, overall demand remains resilient, with lenders increasingly prioritising calibrated, risk-adjusted expansion.

GEOGRAPHIC OPPORTUNITY

India?s affordable housing segment presents a compelling geographic opportunity across both established and emerging markets. Leading states, such as Maharashtra, Gujarat, Tamil Nadu, and Uttar Pradesh, continue to anchor a significant share of the housing finance portfolio. Growth is increasingly broad-based, with Madhya Pradesh, Telangana, and Andhra Pradesh witnessing accelerated expansion. Even within large states, loan penetration remains concentrated in a few districts, indicating substantial headroom across underpenetrated regions. This opportunity is further reinforced by the structural shift towards Tier II and Tier III cities. These cities now account for the majority of affordable housing demand, supported by improving infrastructure, urbanisation, and income formalisation. Rural and semi-urban markets are also emerging as additional growth engines, driven by first-time homebuyers and rising aspirations.

Mortgage Penetration: Semi-urban and Emerging Markets

Mortgage penetration remains significantly lower in semi-urban and Tier II and III markets relative to metros. Mortgage-to-GDP ratios by state range from below 7% in states like Jammu & Kashmir and Bihar to nearly 20% in Maharashtra and Telangana. Banking credit allocated to rural areas stood at just 9% in 2024-25, while semi-urban areas held 14%, underscoring the untapped opportunity for HFCs with deep local distribution capabilities. In the affordable housing segment specifically, Tier III and beyond cities account for 48.10% of outstanding loans as of H1 2026. They have also recorded the highest growth rate at 10.04% CAGR between 2020-21 and 2024-25.

Non-metro Disbursement Growth

Among the top 10 states, faster-growing markets: Telangana (18.50% CAGR, 2021-25), Andhra Pradesh (17.02%), and Rajasthan (17.02%) are outpacing the 14.48% national average. This reflects structural acceleration of housing credit in underserved geographies. The top 10 districts account for approximately one-third of total outstanding housing loans. Districts beyond the top 200 show the highest growth rates, highlighting opportunities for lenders with last-mile presence. Similarly, in the LAP segment, Tier III and beyond cities now account for 50.82% of the sub-3.5 Mn LAP portfolio, recording a CAGR of 27.70% between 2020-21 and 2024-25.

REGULATORY FRAMEWORK AND POLICY DIRECTION

The regulatory environment for HFCs has evolved significantly. The RBI assumed regulatory oversight of HFCs effective 2020, following the transfer from the National Housing Bank (NHB). This transition aligned HFCs more closely with the broader NBFC regulatory framework, strengthening governance standards and risk management norms across the sector.

Scale-based Regulation and Capital Adequacy

The RBI?s scale-based regulation (SBR) framework for NBFCs introduced a tiered regulatory architecture aligned with size and systemic risk. It has increased expectations around capital adequacy, internal controls, and public disclosures for HFCs. HFCs must meet principal business criteria requiring at least 60% of total assets in housing finance, with a minimum 50% to individual borrowers.

Effective November 2024, this data must be submitted to the RBI monthly (previously quarterly), reflecting heightened supervisory intensity. Risk weights on housing loans remain favourable relative to other asset classes. They can be as low as 35% for loans below 7.5 Mn with LTV at or below 80%. This enables efficient capital deployment for lenders focused on the affordable segment.

Priority Sector Lending and PSL Eligibility

The RBI has revised the Priority Sector Lending (PSL) eligibility criteria for housing loans effective April 2025, raising loan limits as listed in the table below.

PSL Eligibility Increased In Housing Loans

Population limit for centres	Loan limit	Maximum cost
50 Lacs and above	50 Lacs	63 Lacs
Between 10 Lacs and 50 Lacs	40 Lacs	57 Lacs
Below 10 Lacs	35 Lacs	44 Lacs

Source: RBI

This expansion is likely to attract increased capital into the affordable housing segment by incentivising bank lending and widening borrower access to subsidised credit channels.

RERA, SARFAESI, and Market Formalisation

RERA, implemented in 2017, has materially improved transparency, delivery accountability, and buyer confidence in the housing market. The act mandates that 70% of buyer funds be held in escrow, requires quarterly project disclosures, and makes developer registration compulsory. These requirements collectively reduce fund diversion and project stalling. As of December 2025, 91% of Smart Cities Mission projects valued at 1.48 Tn have been completed.

Amendments to the SARFAESI Act have enabled NHB-registered HFCs to accelerate collateral recovery, particularly in lower-ticket-size segments where conventional legal routes are cost-prohibitive. The NHB established RMBS Development Company Limited (RDCL) in January 2025, signalling a policy push towards deepening the mortgage-backed securities market. This is expected to provide HFCs with additional long-tenure funding avenues and support the sector?s growth.

COMPANY OVERVIEW

India Shelter Finance Corporation Limited (‘India Shelter? or ‘The Company?) is a purpose-driven technology-led housing finance institution focused on bridging the credit gap in affordable housing. We expand access to housing finance, especially for self-employed individuals and first-time homebuyers across India?s Tier I to Tier III cities. This supports upward mobility for the low- and middle-income segments. Since our inception in 2010, we have evolved into a national player with 307 branches across 15 states. Our competitive edge lies in our ‘Phygital? ecosystem, a seamless integration of an expansive physical network and a scalable digital backbone. This end-to-end in-house approach ensures comprehensive control over the customer lifecycle, enabling us to minimise transaction costs and turnaround times. Our proprietary digital suite, comprising Sales (iTrust), Credit (iCredit), Technical (iTech), Collections (iCollect), and Customer Service (iServe) drives operational efficiency and data-driven risk management. We remain committed to responsible governance and sustainable value creation for our stakeholders.

Strengths

• Geographic footprint: An expanding footprint across 15 states with 307 branches and deep penetration in Tier II, III, and semi-urban markets. This reach enables access to a large and underserved customer base.

• Technology ecosystem: Proprietary technology platforms, including iTrust, iCredit, iTech, iCollect, iServe, facilitate end-to-end digital loan processing. This integrated stack improves loan origination speed and the overall customer experience.

• Underwriting excellence: Differentiated underwriting, using cash flow-based assessment and surrogate income models, enables credit extension to self-employed and informal-income borrowers who lack traditional documentation.

• Capital position: A positive Asset-Liability Management (ALM) profile, diversified funding, and strong credit ratings support sustainable long-term capital access at competitive rates.

• Operational efficiency: The Company continues to demonstrate strong operating leverage, with a steady decline in Opex-to-Gross AUM as scale deepens. This reflects a structurally efficient model where incremental growth is supported by a relatively lower cost base, enabling further operating leverage.

Weakness

• Funding sensitivity: Access to funds at competitive rates remains susceptible to market fluctuations and the interest rate environment. This can influence the overall cost of funds and impact margin stability.

Opportunities

• Structural urbanisation: Rapid urbanisation and rising middle-class aspirations are driving housing demand. This is particularly evident in Tier II and Tier III cities where India Shelter already has a strong local presence.

• Policy catalysts: Government initiatives such as PMAY 2.0, SWAMIH Fund 2, revised PSL norms, and GST rationalisation on construction materials are driving growth. These measures create significant growth potential for specialised affordable housing lenders.

• Financial formalisation: Rising income formalisation among self-employed individuals and deepening credit bureau penetration are expanding the eligible borrower base for HFCs.

• LAP growth: Increasing demand for LAP from MSMEs and self-employed individuals in smaller markets is driving growth. Limited formal credit access in these areas makes collateral-backed lending a superior risk-return proposition.

Threats

• Global volatility: Global economic uncertainties, including geopolitical conflicts and trade tensions, could indirectly impact domestic economic activity and overall credit demand.

• Aordability constraints: Interest rate volatility and property price appreciation in key markets may affect housing affordability. Such shifts could moderate near-term demand, particularly within lower-income segments.

• Regulatory landscape: Regulatory changes, including evolving guidelines on PSL classification, capital adequacy, and risk weights, may impact lending operations or increase compliance costs.

Outlook and Future Strategy

India?s housing finance sector is positioned for sustained expansion, propelled by rising homeownership aspirations and demand for accessible credit in underserved markets. We aim to capitalise on this momentum through a balanced expansion strategy, combining branch growth, direct customer engagement, and digital-first solutions. This ‘Phygital? approach aims to further reduce turnaround times while maintaining superior credit quality across our portfolio.

Our roadmap for the coming year is built on system-driven automation, risk-intelligent lending, and operational excellence. By integrating advanced analytics into our decision-making, we are strengthening our market position and ensuring rigorous financial discipline. Our commitment to sound governance and customer empowerment allows us to unlock new growth opportunities, bringing formal housing finance to the heart of India.

Operational Performance: 2025-26 Gross AUM

As of 31 March, 2026, our Gross AUM stood at 11,043.6 Crs, compared to 8,534.7 Crs in the previous financial year, reflecting a growth of 29.4%.

Disbursements

As of 31 March, 2026, our total disbursements stood at 3,833.7 Crs, compared to 3,355.1 Crs in the previous financial year, reflecting a growth of 14.3%.

Financial Performance

We delivered steady financial performance in 2025-26. Total income saw a 30.0% year-on-year (Y-o-Y) growth, rising to 1,528.6 Crs in 2025-26 from 1,175.9 Crs in 2024-25. Finance costs increased by 25.6% Y-o-Y, reaching 443.8 Crs from 353.4 Crs. Net total income witnessed a 31.9% Y-o-Y increase, climbing to 1,084.8 Crs from 822.5 Crs in 2024-25.

Operating expenses stood at 391.2 Crs compared to 306.9 Crs in 2024-25, driven by continued investment in branch expansion, workforce, and technology. Pre-provisioning operating profit increased 34.5% Y-o-Y to 693.6 Crs from 515.6 Crs. credit costs stood at 40.3 Crs compared to 26.4 Crs in 2024-25.

Profit before Tax stood at 653.3 Crs. After accounting for income tax of 150.1 Crs, the profit after tax increased 33.2% Y-o-Y, reaching 503.1 Crs in 2025–26, up from 377.9 Crs in the previous year.

Balance Sheet ( in Crs)

Particulars	2025-26	2024-25
Sources of Funds
Share Capital	54.4	53.9
Reserves and Surplus	3,143.7	2,654.8
Borrowings	6,246.0	4,969.1
Other Liabilities and Provisions	170.8	69.7
Total	9,615.0	7,747.5
Application of Funds
Loan Assets	8,568.5	6,859.5
Investments	395.2	315.3
Fixed Assets	29.2	29.4
Cash and Bank Balance	304.9	343.4
Other Assets	317.1	200.0
Total	9,615.0	7,747.5
P&L Summary ( in Crs)
Particulars	2025-26	2024-25
Total Income	1,528.6	1,175.9
Finance Cost	443.8	353.4
Operating Expense	391.2	306.9
Pre-provisioning Operating Profit	693.6	515.6
Credit Cost	40.3	26.4
Profit Before Tax	653.3	489.2
Tax Expense	150.1	111.3
Profit After Tax	503.1	377.9
Basic EPS	46.5	35.18
Diluted EPS	45.0	33.93
Key Ratios
Particulars	2025-26	2024-25
Net Interest Income to Average Total Asset	9.1%	8.9%
Non-interest Income to Average Total Asset	1.7%	1.8%
DA Upfront Income to Average Total Asset	1.7%	1.4%
Net Interest Margin (NIM) to Average Total Asset	12.5%	12.1%
Operating Expenses to Average Total Assets	4.5%	4.5%
Credit Cost to Average Total Assets	0.5%	0.4%
PBT to Average Total Assets	7.5%	7.2%
ROA (PAT to Average Total Assets) (Excl. One-Time Impact)	5.8%	5.6%
Leverage (Average Total Assets to Average Net Worth)	2.9	2.7
ROE (PAT to Average Net Worth)	17.0%	15.1%
CRAR (%)	56.4%	60.6%
Book Value per unit	294.1	251.1

RESOURCE MOBILISATION

Net Worth

As of 31 March, 2026, the net worth of India Shelter stood at 3,198.1 Crs, compared to 2,708.7 Crs as of 31 March, 2025.

ESOP Allotment

During the year, we issued and allotted 8,63,162 equity shares under our Employee Stock Option Plan (ESOP), following the exercise of stock options by eligible employees.

Term Loans from Banks and Financial Institutions

In 2025–26, we raised 1,695.0 Crs in funding from banks and financial institutions, with a weighted average tenure of more than five years. As of 31 March, 2026, the undrawn sanctioned amount stood at 615.0 Crs. Term loans from banks and financial institutions constituted 42.2% of total borrowings.

Refinance from National Housing Bank

Under the NHB refinance scheme, India Shelter received a fresh sanction of 550.0 Crs in 2025–26. During the financial year,

579.0 Crs was availed. As of 31 March, 2026, the outstanding NHB refinance stood at 14.7% of total borrowings, with an undrawn sanctioned amount of 172.0 Crs.

Refinance from SIDBI

Under the SIDBI refinance scheme, India Shelter received a fresh sanction of 500.0 Crs in 2025–26. During the financial year,

497.0 Crs was availed. As of 31 March, 2026, the outstanding SIDBI refinance stood at 5.8% of total borrowings.

Non-convertible Debentures

In 2025–26, we issued 150.0 Crs in Non-convertible Debentures (NCDs). As of 31 March, 2026, the outstanding proportion of NCDs was 2.1% of total borrowings.

External Commercial Borrowings

India Shelter continues to utilise its External Commercial Borrowing (ECB) line. The total outstanding foreign currency loan exposure in ECBs constitutes 2.8% of total borrowings, fully hedged through cross-currency swaps to eliminate forex risk.

Co-lending

Through strategic co-lending partnerships with well-established banks, we have continued to diversify our funding channels and expand credit access. In 2025–26, 239.0 Crs was disbursed under co-lending initiatives, with partner banks retaining 80% of the disbursed amount in their own portfolios. The co-lending portfolio constitutes 4.8% of Gross AUM.

Direct Assignment from Banks and Financial Institutions

During 2025–26, we received a purchase consideration of 1,022.0 Crs through the Direct Assignment (DA) of LAP assets to banks and financial institutions. These transactions were executed in compliance with RBI guidelines on the Transfer of Loan Exposure of Standard Assets. DA as a percentage of Gross AUM stood at 16%.

PTC from Banks

During 2025-26, we received a purchase consideration of 81.0 Crs through the Pass Through Certificate from banks.

HUMAN RESOURCES

Our workforce is central to our long-term success. We cultivate a high-performance culture rooted in collaboration, inclusivity, and continuous learning. Structured development initiatives, employee well-being programmes and active engagement across all levels support professional growth and capability building. This focus on performance recognition creates a resilient, future-ready talent base aligned with our strategic priorities. Reflecting our steady expansion, the Company?s total workforce stood at 4,800 employees as of 31 March, 2026.

For more detailed information, please refer to page 62.

INFORMATION TECHNOLOGY

The financial services ecosystem continues to evolve, with increasing adoption of digital and branchless lending models. Our technology framework is focused on enhancing operational efficiency, strengthening risk management, and delivering a seamless customer experience. The integration of AI, automation, and advanced analytics has enabled a shift to agile, data-driven workflows, supporting faster decision-making and improved turnaround times.

Proprietary platforms such as iTrust (digital loan origination), iServe (customer service), and iCollect (collections) drive end-to-end process efficiency across the value chain. The stack is further supported by cloud-native architecture, robust cybersecurity frameworks, and predictive analytics capabilities, ensuring scalability, data security, and regulatory compliance. We continue to invest in technology to build a resilient, future-ready operating model aligned with evolving customer expectations and industry dynamics.

For more information, refer to page 54.

RISK MANAGEMENT

A strong and dynamic risk management framework remains central to our financial soundness and growth strategy. Our integrated three-tiered defence structure, comprising operational management, risk oversight, and independent audit governance, facilitates comprehensive, real-time risk monitoring.

During the year, we sharpened our focus on granular asset quality tracking, monitoring 30 days past due (DPD) levels and Stage 2 to Stage 3 migrations. As the regulatory environment evolves, our commitment to digital risk controls and the continuous refinement of underwriting tools ensures resilience and maintains stakeholder trust.

Risk Type	Description	Risk Mitigation Measures
Credit	Potential loss arising from borrower default or declining asset quality	Comprehensive credit evaluation (income, credit history, demographics); stage-wise monitoring (Stages 2 and 3); 30 DPD tracking; and region-specific risk management
Operational	Loss resulting from inadequate internal processes, people, systems, or external events	Robust internal controls with clear demarcation of duties; continuous refinement of underwriting tools; sanction-to-disbursement ratio monitoring; and dedicated Risk Containment Units to minimise manual errors and fraud
Market	Loss from fluctuations in market variables affecting assets and liability values	Regular assessment of maturity profiles and ALM; portfolio stress testing to ensure resilience against market volatility
Interest Rate	Risk to earnings or capital arising from interest rate movement	Interest rate sensitivity gaps evaluation; balanced mix of fixed and floating rate instruments; and active management of cost of funds to protect yields
Liquidity	Risk of being unable to meet financial obligations as they fall due	Adequate liquidity buffers; diversified funding sources (banks, NHB, ECBs); unused credit lines for urgent needs
Forex	Risk of loss due to currency fluctuations on international borrowings	Full hedging of foreign currency exposures, including our USD 30 Mn ECB line, through cross-currency swaps and derivative instruments
Technology and Cybersecurity	System failure, data breaches, or unauthorised access to information assets	Security Operations Centre for 24/7 monitoring; ISMS aligned with ISO 27001; use of Multi-factor Authentication (MFA) and Endpoint Detection and Response (EDR) tools; Board-level cyber-resilience oversight
Regulatory and Reputation	Legal sanctions and reputational damage due to non-compliance	Strict adherence to RBI and NHB guidelines; integrated governance framework; transparent financial reporting and stakeholder communication

INTERNAL CONTROL SYSTEMS

We have established a robust internal control framework commensurate with the scale and complexity of our operations. The Internal Audit function conducts periodic audits across key business areas, ensuring compliance with internal policies, regulatory requirements, and standard operating procedures. The Audit Committee reviews observations and corrective actions each quarter, evaluates the effectiveness of internal controls, and monitors the implementation of recommendations. The Board remains committed to maintaining a strong control environment that ensures the integrity of financial reporting, operational efficiency, and regulatory compliance. During the year, no material weaknesses or significant control deficiencies were identified that could adversely impact our internal financial controls.

CORPORATE SOCIAL RESPONSIBILITY

Our CSR initiatives are focused on creating sustainable and inclusive impact across communities. Key areas include affordable housing, financial inclusion, community development, and critical social challenges such as healthcare, poverty alleviation, and rural upliftment. These initiatives aim to deliver long-term value and contribute meaningfully to societal well-being.

For more information, refer to page 68.

CAUTIONARY STATEMENT

This document contains ‘forward-looking? statements and information. Such statements are based on our current expectations and certain assumptions. Therefore, they are subject to specific risks and uncertainties. Should one or more of these risks or uncertainties materialise, or if underlying assumptions prove incorrect, actual results may differ. Our Company does not intend to assume any obligation to update or revise these ‘forward-looking? statements in response to developments that differ from those anticipated.