Indiabulls Housing Finance Ltd Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS FOR

FINANCIAL YEAR 2024-2025

Global Economic Outlook

In FY2024-25, the global economy maneuvered through a complex and evolving macroeconomic environment, shaped by shifting geopolitical dynamics, fluctuating trade patterns, and persistent inflationary pressures. While challenges remained, proactive policy interventions and continued investments in key sectors lent stability and resilience to the global recovery.

Global GDP growth moderated to 3.3% in 2024, slightly down from 3.5% in 2023, indicating a calibrated slowdown amid tighter monetary policies and supply-side constraints. Advanced Economies grew modestly at 1.8% in 2024, following a similar pace of 1.7% in 2023, as elevated interest rates and subdued domestic demand weighed on expansion. Conversely, Emerging Markets and Developing Economies (EMDEs) remained the primary engine of global growth, expanding by 4.3% in 2024, though marginally lower than 4.7% in 2023.

Global inflation averaged 5.7% in 2024, showing a significant decline from the peak of 8.6% in 2022, as monetary tightening by central banks across the world began to bear fruit. However, the inflation trajectory is expected to ease, with the IMF projecting global inflation to moderate to 4.3% in 2025 and 3.6% in 2026.

The International Monetary Fund (IMF) has revised its global growth forecast for 2025 downward to 2.8%, a 0.5 percentage point reduction from earlier estimates, primarily reflecting the impact of recent trade disruptions and policy uncertainty. The forecast for 2026 stands at 3.0%, with both advanced and emerging markets expected to contribute to this recovery.

Indian Economy

India remained one of the fastest-growing major economies in FY2024-25, supported by robust domestic demand, structural reforms, and a policy environment conducive to growth. According to the second advance estimates by the Ministry of Statistics and Programme Implementation (MOSPI), Indias GDP grew by 6.5% in FY2025, a moderation from 9.2% in the previous fiscal year, reflecting the impact of tighter global financial conditions and external vulnerabilities.

Inflationary pressures persisted through the year, primarily due to global supply chain disruptions and commodity price volatility. The Consumer Price Index (CPI) inflation averaged 4.9% in FY2025, lower than 5.4% in FY2024, aided by proactive monetary policy measures. The Reserve Bank of India (RBI) adopted a calibrated easing stance, reducing the repo rate three times over the year: from 6.5% in February to 6.25% in April and then a significant cut to 5.5% in June 2025; totalling a reduction of 100 basis points, while also lowering the Cash Reserve Ratio (CRR) by 100 basis points in phases to support bank lending and liquidity. This policy easing reflects the central banks response to inflation falling to 3.16% in April

2025, as well as an attempt to spur economic growth amid a fast-changing global environment and ongoing geopolitical risks. The policy framework shifted to neutral, maintaining accommodative support to balance growth and price stability. Retail inflation is projected to moderate further, with the CPI expected to average between 4.0% and 3.2% in FY2026 according to RBI and other analysts, well aligned with the RBIs medium-term target, amid forecasts of benign price pressures and sustained monetary easing.

Despite global risks emanating from geopolitical tensions, commodity price fluctuations, and financial market volatility, Indias medium-term economic outlook remains positive. The economy is expected to grow at 6.5% in FY2026, sustaining its position as a global growth leader. Backed by strong domestic fundamentals, favorable demographics, and a proactive policy regime, India is well-positioned to build on its growth trajectory and emerge as a dominant economic force on the global stage.

Industry Outlook

The Indian housing finance sector continues to exhibit strong fundamentals and is undergoing a multi-decade expansion cycle. As of September 2023, the total housing loan portfolio of Scheduled Commercial Banks (SCBs) and Housing Finance Companies (HFCs) stood at ^30.26 lakh crore, growing at a double-digit annualized rate. Market experts project the sector to grow at a CAGR of 24.1% through 2033, driven by favorable demographics, improving affordability, increasing urbanisation, and robust government support.

Despite this growth, mortgage penetration in India remains relatively low — individual housing loans as a percentage of GDP stood at just over 10.5%, significantly below developed markets like the US (50%+) and China (20%+). This indicates significant headroom for long-term expansion. According to a joint study by CII and Knight Frank, the affordable housing finance opportunity alone is estimated at ^45 lakh crore by 2030, with more than 80% of this expected to be driven by demand in Tier 2, Tier 3, and peri-urban regions.

Strong macroeconomic factors; including rising per capita income, improving employment metrics, and tax incentives under sections 80C and 24, have boosted formal demand. Additionally, regulatory clarity under RERA and digitization of land records have improved developer transparency and consumer confidence.

On the supply side, the housing finance ecosystem is being strengthened by innovations in credit underwriting, digital loan origination, and co-lending models that align NBFC sourcing strengths with bank-grade cost of capital. New asset-light models are enabling faster credit delivery at lower costs.

Sammaan Capital is well-positioned to capture this opportunity. With a differentiated origination strategy, asset-light business

model, and proven co-lending execution across affordable housing and MSME segments, the Company is poised to be a key enabler of inclusive credit penetration across Indias emerging geographies.

Regulatory Environment

During FY25, regulatory emphasis on governance, transparency, and risk management in the NBFC sector was further intensified. Sammaan Capital continues to be classified as an Upper Layer NBFC (NBFC-UL) under the RBIs Scale-Based Regulation framework, upholding robust compliance through the adoption of key policies such as the Internal Capital Adequacy Assessment Policy, Large Exposure Policy, Compensation Policy for Key Managerial Personnel, and enhanced public disclosure standards. The RBI issued new Master Directions for NBFCs, including harmonized consumer protection measures—such as updated EMI reset guidelines and the removal of penal charges on overdue payments from June 2025-reinforcing sector stability and strengthening customer rights. Sammaan Capital remains fully compliant and continues to proactively invest in advanced risk and compliance systems.

In August 2025, the RBI announced revised Co-Lending Arrangements Directions, broadening joint lending to include both priority and non-priority sector assets. The new rules allow banks, NBFCs, HFCs, and All-India Financial Institutions to participate and enable NBFC-to-NBFC co-lending, while reducing the minimum loan retention by co-lenders from 20% to 10%. Mandatory escrow accounts, unified asset classification, enhanced disclosure requirements, and the introduction of a Key Facts Statement for customers signify a further push towards transparency, better risk sharing, and wider access to credit, all while safeguarding governance and customer protection.

Business Overview and Operational Highlights

Strategic Transformation: From Stabilization to Scalable Growth

FY25 marked a transformative year for Sammaan Capital as the company moved decisively from a phase of consolidation to one of focused expansion and strategic clarity. With the successful completion of de-promoterization and rebranding, the organization now stands as a board-run, professionally managed, diversely-held platform with clear focus on profitability and governance.

This transformation was underpinned by significant milestones. The Company raised around ^5,000 crore in equity capital through an oversubscribed Rights Issue and a successful QIP, a strong validation of investor confidence. Sammaans liquidity and capital buffers were fortified, with gearing stabilizing at

1.9x and shareholders equity reaching ^21,822 crore, further enabling business scalability. With a high-quality retail engine founded on co-lending and assignment-based origination, the Company has set a foundation for sustainable growth.

Growth Engine: Asset-Light and Earnings Accretive

FY25 saw Sammaan Capital doubling down on its retail-centric, asset-light strategy. The growth AUM increased to ^37,452 crore, comprising around 60% of total AUM of ^62,346 crore.

Legacy Book Resolution

Legacy book resolution remained a key strategic priority in FY25. The legacy book was down to under ^25,000 crore, a significant reduction from ^37,386 crore.

Sammaan Finserve Performance

Sammaan Finserve, the Companys 100% subsidiary focused on affordable mortgage finance, continued its trajectory of scale and profitability. The subsidiary ended the year with an AUM of ^7,125 crore.

The Company continued to expand its presence in deeper Bharat, enabling credit access in underserved regions. The fully owned and independently managed subsidiary leverages technology-enabled sourcing and centralized risk management, positioning it as a nimble and high-growth platform within the Sammaan ecosystem.

Technology and Digital Transformation

Recognizing the critical role of technology in credit delivery, Sammaan Capital has significantly invested in its digital architecture. Key initiatives include full integration with partner banks for seamless co-lending, advanced analytics for underwriting, and AI-driven customer engagement platforms.

In line with the RBIs Core Financial Services Solution (CFSS) mandate, the Company is on course to integrate accounting, customer lifecycle, and risk modules onto a single enterprise platform.

Credit Rating and Capital Position

Sammaan Capital retained its strong domestic credit rating of AA/Stable from CRISIL and ICRA. Internationally, the Companys ratings were upgraded by S&P and Moodys changed the outlook to positive from stable.

The Companys standalone capital adequacy ratio stood at 29.5% with Tier 1 capital at 29.4%, comfortably above regulatory norms. The Company remains intentionally overcapitalized during this phase of business model transition to enhance investor confidence and support future scalability.

Outlook

Sammaan Capital enters FY26 with strategic clarity, operational strength, and a scalable platform. The Companys four-pillar strategy remains focused on:

1. Continued Institutionalization: Building a diversified and governance-led business

2. Digital Transformation: Leveraging tech for scale and efficiency

3. Strategic Partnerships: Expanding co-lending platforms

4. ESG Alignment: Growing responsibly with environmental and social consciousness

With a stable macroeconomic backdrop, a favorable policy environment, and a differentiated asset-light model, Sammaan Capital is well-positioned to lead the next phase of growth.