ICICI Securities Recommends Buying India Shelter Finance Corporation, Targets Price of Rs 1125

India Shelter Finance Corporation's Q4FY26 Performance Reinforces Investment Thesis

India Shelter Finance Corporation (ISFC) has reported a strong Q4FY26 performance, reinforcing the investment thesis of ICICI Securities. The company's return on equity (RoE) reached 18% in the quarter, marking a sustained year-over-year (YoY) growth of 29%. This growth effectively neutralises investor concerns regarding margin compression from competition and the sustainability of its asset under management (AUM) growth trajectory, which has been steadily increasing by more than 25% YoY.

The company's asset quality faced a transient impact during the first half of FY26, but Q4FY26 data confirms that the impact was cyclical rather than structural. This is also in line with the management's proactive 14% YoY calibration in FY26 disbursements to navigate stress in small-ticket loan against property (LAP) and localised tariff uncertainties. Despite geopolitical headwinds from the West-Asia conflict, the combination of a low FY26 base, stabilising credit metrics in small-ticket LAP segments, and ample white-space could drive 30% YoY AUM growth in the near term, as per management.

Outlook and Recommendation

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In light of ISFC's strong Q4FY26 performance, ICICI Securities maintains a BUY recommendation with an unchanged target price of INR 1,125. This valuation is based on a price-to-book value per share (BVPS) multiple of 3.2x for the company's March 2027 estimated BVPS.

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