Repco Home Finance reported improving lending momentum in Q2 FY27, with loan sanctions rising sharply and asset quality strengthening. The quarter highlighted a recovery in lending activity, although growth in the overall loan book remained more moderate.

Loan sanctions reached ₹1,359 crore, increasing 44.8% quarter on quarter from ₹938 crore. Compared with the corresponding quarter, sanctions increased 12.7%, indicating stronger sequential momentum than annual growth.

Loan disbursements increased to ₹1,205 crore from ₹843 crore in the previous quarter, representing 43% sequential growth. On a year on year basis, disbursements increased 12.7% from ₹1,069 crore.

The improvement in disbursements is particularly important because sanctioned loans do not automatically translate into outstanding business. Actual disbursements provide a clearer indication of lending activity that can contribute to future interest income.

Repco Home Finance reported total income of approximately ₹481 crore, compared with ₹445 crore in Q2 FY26. This represented 8% year on year growth, supported by its existing lending portfolio.

Net interest income increased 10% year on year to ₹220 crore, compared with ₹200 crore in the corresponding quarter. Sequentially, net interest income increased approximately 1.8% from ₹216 crore.

The company’s net interest margin improved to 5.5%, compared with 5.4% in both the preceding quarter and the corresponding quarter. This indicates relatively stable lending profitability despite changes in funding and borrowing conditions.

The interest spread also strengthened to 3.7% from 3.4% in the previous quarter. Maintaining healthy spreads remains important for housing finance companies because borrowing costs directly influence lending profitability.

Profit after tax reached approximately ₹116 crore, compared with ₹107 crore a year earlier. This represented 8.4% year on year growth, while sequential profit growth remained relatively modest.

Profit before tax increased 5% year on year to ₹149 crore, compared with ₹142 crore. The difference between profit growth and lending activity highlights the importance of funding expenses, operating costs and credit provisions.

The outstanding loan book reached ₹16,425 crore, compared with ₹15,033 crore in the corresponding period. This represented approximately 9.3% annual growth, below the quarterly growth rates reported for sanctions and disbursements.

Sequentially, the loan book increased from ₹15,990 crore. The expansion suggests that stronger disbursement activity is beginning to support portfolio growth, although repayments and prepayments continue to influence the outstanding balance.

Asset quality was another important positive development. Gross non performing assets declined to approximately 2.4%, compared with 2.7% in the previous quarter and 3.1% a year earlier.

The improvement indicates that a smaller proportion of the loan portfolio was classified as gross non performing. However, investors should continue monitoring overdue accounts, recoveries and potential future credit deterioration.

Stage 2 assets declined to 7% of the portfolio, compared with 7.2% in Q1 FY27 and 8.8% in Q2 FY26. This provides an additional indicator of improving borrower repayment behaviour and portfolio quality.

The company’s loan portfolio remained entirely retail focused. Housing loans represented approximately 71% of outstanding loans, while home equity products accounted for the remaining 29%.

Non salaried borrowers contributed 53.6% of the loan book, compared with 46.4% from salaried borrowers. This customer mix makes borrower assessment, income verification and collection efficiency particularly important.

Repco Home Finance reported net owned funds of ₹3,875 crore and a capital adequacy ratio of approximately 37%. The capital position provides a foundation for lending expansion, subject to regulatory requirements and funding availability.

The company operated through a network of 242 locations and served approximately 1.16 lakh active loan accounts. Its established distribution presence supports customer acquisition, particularly in regional and relatively underserved housing finance markets.

Operating efficiency remains an area to monitor. The cost to income ratio increased to approximately 29.7%, reflecting pressure from operating expenses even as the lending business expanded.

For the first half of FY27, profit after tax reached approximately ₹230 crore, compared with ₹215 crore in the corresponding period. Net interest income also improved, reflecting growth across the six month period.

Repco Home Finance’s Q2 FY27 results show stronger loan sanctions, accelerating disbursements and improving asset quality. The key question for coming quarters is whether this momentum can translate into faster loan book growth while maintaining margins, controlling operating costs and preserving credit quality.