Research Report

The profitability of HFCs is expected to remain resilient (RoMA of 1.8-2.0% in FY2027) despite a likely pressure on margins and macroeconomic uncertainties. The funding costs are expected to increase amid heightened geopolitical uncertainties in West Asia and persistent inflationary pressures. Nonetheless, the increasing share of the relatively high yielding of the non-housing loan (NHL) segment is likely to provide some cushion.

• The AUM of HFCs reached Rs. 11 lakh crore as on June 30, 2026, up by about 15% YoY. ICRA expects a stable growth of 14-16% during FY2027, supported by higher growth in the NHL segment.
• ICRA also anticipates some uptick in NPAs amid macroeconomic uncertainties and the seasoning of rapidly expanded books of medium and small sized HFCs. Nonetheless, the industry-wide GNPAs are expected to remain in a healthy range of 1.5-1.7% during FY2027. Further, the sector is expected to maintain adequate capitalisation for its projected growth and returns.