- India Shelter Finance Corporation Ltd (ISFCL) FY25 Results: Strong Growth and Solid Foundation
- Business Growth and Disbursements
- Strong Profit and Return Ratios
- Future Plans and Guidance
- Asset Quality and Risk Management
- Loan Mix and Risk Control
- Strong Liquidity and Borrowing Profile
- Focus on Cost and Operating Efficiency
- Expanding in New Regions
- Target Customers and Loan Sourcing
- Fee Income and Insurance Cross-Selling
- ESG and People Practices
- Strategic Position and Market Edge
- Capital Planning and Compliance
- What Management Said
- Conclusion: ISFCL’s Foundation Looks Strong
- Frequently Asked Questions (FAQ)
India Shelter Finance Corporation Ltd (ISFCL) FY25 Results: Strong Growth and Solid Foundation
India Shelter Finance Corporation Ltd (ISFCL) delivered a solid performance in Q4FY25 and the full financial year. The company showed strong growth in its business, better profit numbers, and good asset quality. It continues to expand in affordable housing finance across Tier 2 and Tier 3 cities.
Let’s look at the key highlights of ISFCL’s recent performance and what lies ahead.
Business Growth and Disbursements
ISFCL continued its strong business momentum. The company’s assets under management (AUM) rose to ₹8,189 crore in FY25, marking a 35% jump compared to last year. It also grew 7% over the last quarter, showing consistent progress.
In terms of disbursements, ISFCL disbursed ₹933 crore in Q4FY25, a growth of 25% year-on-year. For the full year, total disbursements stood at ₹3,335 crore, also up 25% compared to FY24.
Table: Business Growth Snapshot
| Metric | Q4FY25 | FY25 Total | YoY Growth |
|---|---|---|---|
| AUM | ₹8,189 crore | – | +35% |
| Disbursements | ₹933 crore | ₹3,335 crore | +25% |
| Branches | 266 | +43 branches | – |
ISFCL added 43 new branches in FY25, bringing the total to 266. This shows their aim to reach more people in smaller towns.
Strong Profit and Return Ratios
The company posted its highest profits since its listing. Q4FY25 profit (PAT) came in at ₹108 crore, up 39% from last year and 12% from the last quarter. For the full year, PAT stood at ₹378 crore, a 53% increase over FY24.
Return ratios also improved:
- Q4FY25 Return on Assets (RoA): 5.8%
- Q4FY25 Return on Equity (RoE): 16.3%
- FY25 RoA: 5.6%
- FY25 RoE: 15.1%
Leverage stood at 2.9x, which is safe and gives enough room for future growth. The company expects this to rise to around 4x in the next 2 years to support expansion.
Future Plans and Guidance
ISFCL has shared clear growth targets for the coming years. The company plans to add 40 to 45 new branches in FY26.
Some other guidance includes:
- Margins are expected to stay around 6% (Q4FY25 margin was 6.2%)
- Credit cost guidance is 40–50 basis points
- Targeting 30–35% AUM growth (CAGR) to reach ₹30,000 crore AUM by FY30
- Equity fundraise likely within 3 years to support long-term goals
This shows that the company is planning responsibly, keeping risk in check while aiming for strong growth.
Asset Quality and Risk Management
ISFCL continues to manage its loan book well. The share of bad loans (Stage 3 assets) fell to 1%, down by 20 basis points from the previous quarter.
- 30+ days overdue (DPD 30+) also improved, falling to 3.1%, down by 60 bps.
- Provision coverage ratio (PCR) remained stable at 25%.
- ISFCL’s expected credit loss (ECL) provisions stood at ₹64 crore, well above the ₹37 crore regulatory need.
The company also recovered ₹6 crore during FY25, against write-offs of ₹8 crore. Collection efficiency stayed above 97%, showing healthy customer repayments.
Loan Mix and Risk Control
ISFCL has kept its loan portfolio balanced and safe. Here’s the breakup:
- Housing loans: 57% of total AUM
- Loan Against Property (LAP): 43%
The company doesn’t give loans above 80% loan-to-value (LTV) ratio. The average LTV is around 52%, which reduces the risk in case of defaults.
Co-lending is limited to just 4% of AUM, and it’s only in the LAP segment. ISFCL bears all operating costs, giving it better control.
Strong Liquidity and Borrowing Profile
ISFCL has maintained a healthy liquidity buffer and low-cost funding:
- Cost of funds: 8.7% (new borrowings at 8.6%)
- Yield on portfolio: 14.9%
- Yield on disbursements: 15%
The company had a liquidity buffer of ₹1,480 crore, and its Asset-Liability Management (ALM) is positive across all buckets, showing no mismatch.
National Housing Bank (NHB) accounts for 15% of total borrowings. ISFCL also has ₹200 crore in undrawn sanctions available.
Focus on Cost and Operating Efficiency
ISFCL has been controlling its expenses well. The operating expense (opex)-to-AUM ratio dropped by:
- 10 basis points quarter-on-quarter
- 20 basis points year-on-year
This improvement shows the company is gaining from scale and staying disciplined with costs. It also indicates better profitability in the long run.
Expanding in New Regions
The company continues to expand its reach beyond its base in Rajasthan.
- Rajasthan still contributes 31% of AUM but will fall below 25% as other regions grow.
- South India now contributes about 22% of AUM, with strong performance in Andhra Pradesh and Telangana.
- No major collection issues have been reported in Karnataka and Tamil Nadu.
ISFCL’s strategy is clear: grow beyond traditional strongholds and enter high-potential states while keeping collection discipline intact.
Target Customers and Loan Sourcing
ISFCL mainly serves Tier 2 and Tier 3 cities and focuses on self-employed people.
- Average loan ticket size is ₹10–11 lakh. This is expected to grow to ₹14–15 lakh in the next 4–5 years.
- Self-employed customers form the majority.
- Only around 20% are salaried, and of these, 8–9% are cash salaried.
The company prefers direct loan sourcing. It uses minimal third-party agents (DSAs), giving better control and reducing costs.
Fee Income and Insurance Cross-Selling
ISFCL has grown its fee income sharply by cross-selling insurance and related products.
- 50% of fee income comes from insurance sales
- 20% from foreclosure charges
- 20% from loan servicing fees
Insurance coverage among customers is high:
- Over 90% have property insurance
- More than 80% have credit life cover
The company has stabilized its corporate agency license for insurance. This adds a steady income stream and increases customer stickiness.
ESG and People Practices
ISFCL’s board approved a formal ESG policy in FY25. The company is also taking steps to improve staff retention.
- The company has expanded its ESOP (Employee Stock Ownership Plan) to include frontline workers. This will help reduce attrition and build long-term loyalty.
- The branch expansion in FY25 was frontloaded, and a fresh strategy is now in the works for FY26.
Strategic Position and Market Edge
ISFCL has built a strong presence in the affordable housing finance space, especially in smaller cities.
Its direct sourcing model helps keep costs low and ensures better credit checks. Management believes this model is difficult to copy.
Though the company offers LAP loans, it doesn’t see it as risky due to its strict underwriting. Housing loan share is also expected to grow to meet regulatory comfort.
The overlap with microfinance institution (MFI) customers is limited to just 3.5–4%, and no major stress has been seen from this segment.
Capital Planning and Compliance
ISFCL is well capitalized. It maintains a comfortable leverage position, with space to go up to 9x under regulatory caps, though its own internal limit is 5x.
- Equity raise is expected before hitting these internal caps.
- The company follows conservative ECL provisioning, which is more cautious than its actual loan loss history.
This shows the company is planning ahead and not taking unnecessary risks.
What Management Said
The tone from management remains positive and confident. They believe the company is in a strong position to keep growing while maintaining quality.
- No concerns were raised regarding regulatory changes.
- The focus will remain on growing responsibly, improving customer engagement, and managing risks properly.
Conclusion: ISFCL’s Foundation Looks Strong
India Shelter Finance Corporation Ltd (ISFCL) has shown strong financial and operational results for FY25. With solid AUM growth, healthy profits, good asset quality, and controlled costs, the company looks well prepared for the future.
Their clear focus on Tier 2/3 markets, strong customer selection, and direct sourcing are working well. With plans to expand further and maintain credit quality, ISFCL could continue its upward journey.
Frequently Asked Questions (FAQ)
What does ISFCL do?
India Shelter Finance Corporation Ltd (ISFCL) provides home loans and loan against property (LAP) to customers mainly in Tier 2 and Tier 3 cities.
How much did ISFCL grow in FY25?
ISFCL’s AUM grew by 35% to ₹8,189 crore. Disbursements grew by 25% year-on-year to ₹3,335 crore.
Is ISFCL profitable?
Yes. ISFCL posted a ₹378 crore profit in FY25, up 53% from last year.
What is the company’s main focus area?
ISFCL focuses on affordable housing finance, serving mainly self-employed customers in small towns.
Does ISFCL have strong asset quality?
Yes. Stage 3 assets are just 1%, and collection efficiency is above 97%. The company also has higher-than-required credit loss provisions.
What is ISFCL’s future growth plan?
ISFCL aims to grow its AUM by 30–35% annually and reach ₹30,000 crore AUM by FY30.
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I’m Rahul Chaudhary, and I write about everything related to the Share Market. From Stock Trends and Share Prices to the Latest News and IPO Updates, my articles aim to provide you with valuable insights to help you navigate the world of investing. Stay tuned for expert tips and updates to keep you informed!
