# Sammaan Capital: Strategic Cleanup or Structural Risk? Analyzing the 8,101 Crore Q4 Loss

> This investment thesis examines Sammaan Capital following its massive Q4 FY26 net loss and the subsequent plan to raise 10,000 crore in fresh capital. The analysis investigates whether these financial results represent a necessary one-time legacy asset cleanup to strengthen the balance sheet or indicate deeper systemic issues within the company's lending model and asset quality. By evaluating management's turnaround strategy and future growth scenarios, this research provides a comprehensive outlook on the housing finance company's path to recovery.

**Companies**: Sammaan Capital
**Sectors**: Lending & Banking
**Published**: 2026-05-21
**Last Updated**: 2026-05-21
**Source**: https://thesisloop.ai/thesis/284674a3-92e5-4a5e-a36c-e1cdc6e4f615

## Score Overview

| Company | Management | Business Model | Future Growth | Risk |
|---------|-----------|---------------|--------------|------|
| Sammaan Capital | 77/100 | 65/100 | 62/100 | 49/100 |

## Sammaan Capital (BSE:535789)

**Sector**: Lending & Banking | **Industry**: Housing Finance Company

### Management Credibility

- **[METRIC] Cost to Income Ratio** (NEUTRAL, IN_PROGRESS): The consolidated Cost to Income ratio for SCL stands at 20.8% in Q1FY26, nearing the FY27 target of <20%. (1 in progress across 1 tracked commitment)
  > FY27 Targets Cost to Income (%) <20%
- **[METRIC] Disbursement Growth Rate YoY** (NEUTRAL, IN_PROGRESS): The company reports a Growth AUM of ₹ 38,897 Cr as of Q1FY26, showing progress towards the FY27 target of ₹ 1 lakh crore. (2 in progress, 1 exceeded across 3 tracked commitments)
  > on a goal of reaching a Fiscal ‘27 growth AUM of Rs. 1 lakh crore, we are at Rs. 37,452 crores, still a long way to go.
- **[METRIC] Net Interest Margin** (POSITIVE, EXCEEDED): The company recorded INR 468 crores in net gain on derecognition for the quarter, significantly exceeding the previous guidance of INR 150 crores. (1 exceeded across 1 tracked commitment)
  > Aiming for a Standalone Growth AUM of ~₹15,000 Cr by FY27 and a steady-state RoA of 4%+
- **[METRIC] Gross and Net NPA Ratio** (POSITIVE, EXCEEDED): The company has achieved a Net NPA of 0.8% (80 bps) in Q1FY26, which is significantly better than the target range of 120 bps. (3 exceeded across 3 tracked commitments)
  > we would still like to stick to the 120-basis points type of range and not over commit ourselves
- **[PRINCIPLE] Asset Liability Maturity Matching** (NEUTRAL): Expect direct assignments to rise to 40% of the mix by Fiscal '27. — target: 40%
  > And by Fiscal ‘27, I expect direct assignments to rise to 40%.
- **[PRINCIPLE] Geographic and Ticket Size Diversification** (NEUTRAL): Management plans to expand the branch network to 400 to 500 cities over the next two financial years. — target: 400 to 500 cities (+4 more commitments)
  > We've made a blueprint as to how do we get to about 400 to 500 cities very, very quickly over the course of the next 2 financial years.
- **[PRINCIPLE] Incremental Cost of Funds vs Yield** (NEUTRAL): The company aims to reduce the overall cost of funds by approximately 270 basis points by March 2027. — target: 270 basis points reduction (+2 more commitments)
  > On an overall stock basis, we would expect that in about 9 months to 12 months, the cost of funds should go down by about 270 basis points. That's what the goal is that by the end of March '27, assuming that we are able to get this done very quickly by the end of March '27, the stock of borrowing sh
- **[PRINCIPLE] Regulatory Classification and Compliance** (POSITIVE, MET): The company is preparing for the new guidelines and plans to start parallel decisioning in December 2025, ahead of the formal January 2026 kick-in. (2 in progress, 2 met across 4 tracked commitments)
  > And come January, we should be able to, without any issue, migrate to the new system of co-lending.
- **[TREND] Affordable Housing Boom Tier 2/3** (NEUTRAL): Sammaan Capital will focus on providing affordable housing finance and mid-market mortgage solutions under IHC's parentage. (+1 more commitment)
  > Under IHC’s parentage, we will continue to focus on providing affordable housing finance and mid-market mortgage solutions to our customers
- **[TREND] Digital Underwriting for Informal Income** (NEUTRAL): Management targets that up to 60% of customers will be onboarded through the paperless eMortgage channel by the end of FY26. — target: 60% (+4 more commitments)
  > eMortgage offers paperless loan fulfilment up to disbursement. BRE [Business Rule Engine] AI integration automates credit decisioning. Up to 60% of customers will come through this channel by end of FY26
- **[METRIC] AUM Growth** (NEUTRAL, IN_PROGRESS): The legacy loan book has been reduced to ₹ 20,162 Cr as of 9MFY26, down from ₹ 24,894 Cr in FY25. While progress is being made, the book remains above the ₹ 15,000 Cr target with one quarter remaining in the fiscal year. (1 in progress across 1 tracked commitment)
  > Legacy Run-Down ... 24,894 [FY25] 20,162 [9MFY26]
- **[METRIC] Gearing Ratio** (POSITIVE, MET): The company has successfully maintained its gearing at 2.2x for Q3FY26, which is exactly within the guided range of 2x to 2.5x. (1 met across 1 tracked commitment)
  > Gearing 2.2x [Q3FY26] 2.2x [Q3FY25]
- Legacy loans currently stand at ₹ 23,481 Cr out of a total AUM of ₹ 62,378 Cr, representing approximately 37.6% of total AUM. This is a reduction from 39.9% in Q4FY25. (2 in progress, 2 met, 1 revised across 5 tracked commitments) (NEUTRAL, REVISED)
  > So we would be looking at getting to a teen-ish kind of -- low teen-ish kind of ROE by fiscal '27. That's the projection that we have given.

### Business Model

- **[METRIC] Cost to Income Ratio** (POSITIVE, Change: EXPANDING): The company is leveraging technology to maintain a low cost-to-income ratio of 27.9%, with a target to drop below 20% by FY27 through digital scale. (2 expanding)
  > Cost to Income (%) FY25 27.9%; FY27 Targets <20%
- **[METRIC] Disbursement Growth Rate YoY** (POSITIVE, Change: EXPANDING): Processing fees are becoming a more structured revenue stream, currently running at 1.25% of retail disbursals (approx. Rs. 5,000 crores per quarter). (5 expanding)
  > The processing fee that we get on the loans that we disburse is approximately 1.25% of the retail disbursals. Currently, that is running at about Rs. 5,000 odd crores per quarter.
- **[METRIC] Net Interest Margin** (NEGATIVE, Change: CONTRACTING): Interest income grew by 5.8% year-on-year as the company transitioned its business model, though it remains the dominant revenue driver at 83.2% of total revenue. (2 expanding, 1 contracting, 2 shifted across 1 engine)
  > (i) Interest Income: 1,500.16 (Q3FY26); 1,890.25 (Q3FY25)
- **[METRIC] Gross and Net NPA Ratio** (POSITIVE, Change: EXPANDING): The company has significantly deleveraged, with gearing reducing to 1.9x and a successful equity raise of Rs. 3,700 crores, though it remains 'over-capitalized' to ensure free flow of debt capital. (1 shifted, 1 stable, 1 expanding)
  > The gearing has reduced to 1.9x. Gross NPA is down to half at about 1.3%. Net NPA is at 0.8% and the credit rating is stable.
- **[PRINCIPLE] Asset Liability Maturity Matching** (POSITIVE, Change: STABLE): The company is managing a significant rundown of its legacy loan book, collecting INR 5,000 crores this year while maintaining asset quality. (1 contracting, 1 stable)
  > Liquidity Coverage Ratio [LCR] as on Dec 31, 2025, stands at 211% against regulatory requirement of 100%
- **[PRINCIPLE] Geographic and Ticket Size Diversification** (POSITIVE, Change: EXPANDING): Geographic concentration in Maharashtra has significantly reduced from nearly 40% to 19.4%, indicating a much more diversified national footprint. (2 shifted, 1 stable, 1 expanding)
  > Geographical Distribution: Maharashtra 39.2%
- **[PRINCIPLE] Incremental Cost of Funds vs Yield** (POSITIVE, Change: EXPANDING): Management is maintaining a low-leverage strategy (gearing at 2x) while focusing on increasing yields rather than just rapid AUM expansion. (1 stable, 2 expanding)
  > Leverage, which is around 2x should remain in the same range of 2x to 2.5x. ... The focus right now is more than rapid expansion to focus on how to increase yields
- **[PRINCIPLE] Regulatory Classification and Compliance** (POSITIVE, Change: EXPANDING): The company significantly deleveraged, reducing its gearing (debt-to-equity) from 2.4x to 1.9x, creating a much safer 'fortress' balance sheet. (3 expanding, 1 shifted, 1 stable)
  > Gearing Q4FY25 1.9x; Q4FY24 2.4x... Fortress Balance Sheet through disciplined de-leveraging
- **[TREND] Affordable Housing Boom Tier 2/3** (POSITIVE, Change: SHIFTED): The core lending business is shifting focus toward affordable housing and mid-market mortgage solutions under new promoter ownership, aiming to leverage lower cost of funds to drive profitable growth. (1 shifted)
  > Under IHC’s parentage, we will continue to focus on providing affordable housing finance and mid-market mortgage solutions to our customers
- **[TREND] Rising Competition from Banks** (POSITIVE, Change: EXPANDING): The asset-light distribution moat is being reinforced through a target of 350 branches by FY27 and a shift toward a mix of 40% co-lending, 40% direct assignment, and 20% PTCs. (3 expanding)
  > the performance of the pools that we have sold down... of roughly INR1 lakh crores... And the 90 days past due is all of 0.54%. This is a brilliant moat that the company has created for itself. It has done this at scale with a large number of players.
- **[TREND] Digital Underwriting for Informal Income** (POSITIVE, Change: EXPANDING): The digital platform is evolving into an 'End-to-End Online Loan Fulfillment system' that automates underwriting and reduces fraud by integrating directly with government and bank data sources. (4 expanding)
  > eMortgage offers paperless loan fulfilment up to disbursement... Up to 60% of customers will come through this channel by end of FY26
- The asset-light model is expanding, with management expecting net gains on de-recognition (upfronting prospective income from loan assignments) to be approximately 4.5% of the value of loans sold. (3 expanding, 2 contracting across 3 engines) (POSITIVE, Change: EXPANDING)
  > (iii) Net gain on fair value changes: 518.70 (Q3FY26)

### Future Growth

- **[METRIC] Cost to Income Ratio** (NEUTRAL): Management expects to save 15% to 18% in operating expenses by fully integrating their digital lending and e-mortgage platforms.
  > And once all of the tech kicks in, we expect on an operating basis, something like a 15% to 18% cost saving in the business that we do on an opex basis.
- **[METRIC] Disbursement Growth Rate YoY** (POSITIVE, Trend: ACCELERATING): Growth AUM (new high-quality loans) is showing strong upward momentum, now making up 60% of the total portfolio compared to roughly 40% a year ago. (2 accelerating, 3 steady across 5 signals)
  > Growth AUM [₹ Cr] 44,038 Q3FY26 34,952 Q3FY25
- **[METRIC] Net Interest Margin** (POSITIVE, Trend: STEADY): The company is accelerating its shift toward an asset-light model, specifically targeting a significant increase in Direct Assignments (DA) to 40% by FY27 to improve capital efficiency. (1 accelerating, 3 steady across 4 signals)
  > The performance of the pools that we have sold down either under direct assignment or pass-through certificates or co-lending arrangements of roughly INR1 lakh crores. That INR1.03 lakh crores now stands at about INR17,000 crores.
- **[METRIC] Gross and Net NPA Ratio** (POSITIVE, Trend: ACCELERATING): Legacy book rundown is steady and meeting targets, with the highest ever annual collection in FY25 and a strong Q4 performance. (3 steady, 2 accelerating across 5 signals)
  > On a net basis, over the next 3 years, once we are done with all of these provisions and the legacy book has run down, we should be able to cash recover about INR4,500 crores.
- **[PRINCIPLE] Asset Liability Maturity Matching** (NEUTRAL): The company maintains a very high liquidity cushion, holding more than double the cash required by regulators, which protects them against market shocks but can limit maximum growth speed.
  > Liquidity Coverage Ratio [LCR] as on Dec 31, 2025, stands at 211% against regulatory requirement of 100%
- **[PRINCIPLE] Geographic and Ticket Size Diversification** (POSITIVE, Trend: ACCELERATING): The company is expanding its product suite to include higher ticket sizes (INR 2-3 crores) while maintaining its core focus on the underserved self-employed market. This geographic and product expansion is supported by a plan to grow the branch network to 500+ locations. (1 accelerating across 1 signal, 1 leading indicator)
  > We've made a blueprint as to how do we get to about 400 to 500 cities very, very quickly over the course of the next 2 financial years.
- **[PRINCIPLE] Incremental Cost of Funds vs Yield** (POSITIVE, Trend: ACCELERATING): The company is seeing an accelerating trend in lowering borrowing costs, with incremental rates already 35 bps lower than previous levels and a 5x increase in capital flow in the first 45 days of the current quarter compared to last year. (5 accelerating across 5 signals)
  > On an overall stock basis, we would expect that in about 9 months to 12 months, the cost of funds should go down by about 270 basis points.
- **[PRINCIPLE] Regulatory Classification and Compliance** (POSITIVE, Trend: STEADY): The company is currently in a de-leveraging phase to strengthen the balance sheet before re-leveraging for growth, as evidenced by the drop in gearing to 1.9x. (2 steady, 1 new trend across 3 signals, 2 leading indicators)
  > the leverage, which is about 2.2x, should settle in the range of 4x to 4.5x. That is the go-to long-term for the company, which I believe we should be hitting sometime around 2030.
- **[TREND] Affordable Housing Boom Tier 2/3** (POSITIVE, Trend: ACCELERATING): The strategic focus remains on affordable housing and mid-market mortgage solutions, now accelerated by IHC's technology and AI capabilities. (1 accelerating, 4 new trend across 5 signals, 2 leading indicators)
  > Affordable Home Loans: Average Loan Size [₹ lacs] 15; Yield [%] 11.5%
- **[TREND] Rising Competition from Banks** (NEUTRAL): Sammaan is aggressively using a 'Co-lending' model, where they partner with banks to fund loans, allowing them to grow without needing as much of their own capital.
  > AUM Funding Mix: 75% CLM; 25% DA [for Prime Home Loans]
- **[TREND] Digital Underwriting for Informal Income** (NEUTRAL): Sammaan Capital is shifting to an 'eMortgage' platform, a fully digital way to process loans from start to finish, which is expected to handle the majority of new customers soon.
  > eMortgage offers paperless loan fulfilment up to disbursement. BRE [Business Rule Engine] AI integration automates credit decisioning. Up to 60% of customers will come through this channel by end of FY26
- **[TREND] Other Findings** (POSITIVE, Trend: ACCELERATING): The co-lending model is accelerating due to new RBI guidelines that reduced the minimum retention ratio from 20% to 10% and expanded the scope to non-priority sectors. (5 accelerating across 5 signals)
  > In August 2025, the Reserve Bank of India revised the co-lending arrangement directions... Key changes also include a reduced minimum retention ratio from 20% to 10%.

### Risk Assessment

- **[METRIC] Disbursement Growth Rate YoY** (POSITIVE, Risk: MODERATE): The risk is easing as the company has established 24 ongoing relationships with major banks and financial institutions, demonstrating strong partner acceptance. (1 easing, 1 stable)
  > The first 2 quarters would be relatively slow as we continue to successfully operationalize the co-lending arrangement framework with a variety of banks.
- **[METRIC] Net Interest Margin** (POSITIVE, Risk: MODERATE): STABLE. While incremental rates are easing, the blended borrowing cost remains high at 'a little over 9%'. However, NIM has improved to 6.2%. (1 stable, 2 easing)
  > NIM % 5.3% Q3FY26 5.2% Q3FY25
- **[METRIC] Gross and Net NPA Ratio** (POSITIVE, Risk: MODERATE): Gross NPA (Stage 3) has increased from 1.3% in Q4FY25 to 1.5% in Q1FY26, confirming a slight uptick in bad loans, although Net NPA remains stable at 0.8%. (1 intensifying, 4 easing)
  > The other priority that the company has had is the rundown of the legacy loan book... This year, we've already done net collections of about INR5,000 crores while maintaining the overall asset quality.
- **[PRINCIPLE] Asset Liability Maturity Matching** (NEUTRAL, Risk: LOW): STABLE. Reliance remains high with 95-96% of new loans partnered with banks, but management views this as a strength for ALM stability. (1 stable)
  > Liquidity Coverage Ratio [LCR] as on Dec 31, 2025, stands at 211% against regulatory requirement of 100%
- **[PRINCIPLE] Geographic and Ticket Size Diversification** (NEUTRAL, Risk: MODERATE): The risk is stable but being managed through the overall reduction of the legacy book; MMR and NCR still represent over 52% of the legacy geographical distribution. (2 stable)
  > Geographical Distribution MMR 28.2% NCR 24.1%
- **[PRINCIPLE] Incremental Cost of Funds vs Yield** (NEGATIVE, Risk: MODERATE): EASING. Domestic ratings are stable at AA (CRISIL/ICRA) and international ratings were upgraded. Incremental borrowing rates are 35 bps lower than previous levels. (5 easing, 1 high-severity)
  > Credit Rating AA/Credit Watch CRISIL/ICRA
- **[PRINCIPLE] Regulatory Classification and Compliance** (NEGATIVE, Risk: HIGH): EMERGING. Management acknowledged that the current structure of an NBFC owning another NBFC (Sammaan Finserve) is not long-term enabled by RBI and requires a firm plan for de-subsidiarization or listing. (1 emerging, 4 easing, 2 high-severity)
  > We await RBI approval for the preferential allotment and SEBI approval for the open offer. Post that, it will take about 15 days to post the approvals to be received.
- **[TREND] Affordable Housing Boom Tier 2/3** (NEUTRAL, Risk: MODERATE): The risk is stable as the company continues to expand into this segment via Sammaan Finserve, maintaining a median CIBIL of ~675 for these borrowers. (2 stable)
  > Median Transunion CIBIL ~750 (Prime) ~675 (Affordable)
- **[TREND] Rising Competition from Banks** (POSITIVE): The company has expanded its partner network to 24 ongoing relationships with major banks, reducing the risk of dependency on any single partner. (1 easing)
  > SCL has 24 ongoing relationships with banks/ financial institutions for sell down
- **[TREND] Digital Underwriting for Informal Income** (POSITIVE): The risk is easing as the company has expanded its partnerships to 24 banks and financial institutions and is integrating deeply with RBI's new co-lending guidelines. (1 easing, 1 stable)
  > Today, we are perhaps one of the largest loan originators in the country... working with close to 24 banks and financial institutions.
- The risk is stable. Management acknowledges ongoing litigations related to NPA recoveries but maintains they are 'fictitious or fallacious' and will not derail operations. (1 stable) (NEUTRAL, Risk: MODERATE)
  > I would also like to address the issue of the ongoing public interest litigation... The matter is sub judice... The allegations are against Mr. Gehlaut. They cannot be attributed to Sammaan Capital.

### Scenario Analysis

- An Iran conflict would initially hit Sammaan through first-order rupee depreciation and higher dollar-bond servicing costs, but the entry of Abu Dhabi-based IHC acts as a powerful counter-force, already compressing yields. The second-order impact of 'higher-for-longer' interest rates—driven by fuel inflation—is mitigated by the company's high Liquidity Coverage Ratio (211%) and its transition to fee-based income which reduces sensitivity to interest rate spreads. Ultimately, the third-order shift toward higher risk premiums for domestic cyclicals is offset by Sammaan's new status as a 'reputed promoter' entity, allowing it to maintain ALM stability while competitors face liquidity crunches. (POSITIVE)
  > Right at the start of the quarter we did a large dollar bond issuance... Right now, we are borrowing at, give or take 9%.
- By integrating AI into its 'eMortgage' platform and Business Rule Engine, Sammaan achieves immediate first-order gains in underwriting speed and accuracy. This leads to a second-order structural reduction in operational costs (15-18% savings) and a shift away from expensive physical branch expansion toward a scalable digital-first model. Ultimately, this allows the company to dominate the third-order shift by becoming a technology-led distribution hub for partner banks, scaling its loan book without the traditional capital constraints of a legacy NBFC. (POSITIVE)
  > And once all of the tech kicks in, we expect on an operating basis, something like a 15% to 18% cost saving in the business that we do on an opex basis... what we have functional is a complete digital lead onboarding system, a digital KYC and document upload system, digital banking for bank statemen

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