Buy India Shelter Finance Corporation; target of Rs 1125 : ICICI Securities

ICICI Securities's research report on India Shelter Finance Corporation

India Shelter (ISFC)’s Q2FY26 financial performance is testament to its business resiliency and niche in the AHFC space. The company has sustained its 17% RoE and flat credit cost QoQ at 50bps (within guided range of 40–50bps in FY26). Gross-stage 3 was flat QoQ at 1.25% and NS 3 at 0.94%, with PCR at 25%. We believe the better-than-industry asset quality performance is due to its lower exposure in stressed states like Tamil Nadu (TN), Gujarat (GJ) and Karnataka (KTK) [6% in each state] coupled with stringent underwriting and robust collection mechanism.

Outlook

We expect a higher proportion of LAP portfolio (40% of AUM), resulting in better spreads than peers and the ~85% of fixed-rate loans (of which 35% is semi-variable) to help ISFC sustain a better RoE figure than peers. Retain BUY with an unchanged TP of INR 1,125, valuing it at 3.5x Sep’26E BVPS.