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    Home»Finance»Inside Truhome Finance’s Rs 3,000 crore IPO: Assessing peer leverage trends, 59% floating rate vulnerabilities – IPO News
    Finance

    Inside Truhome Finance’s Rs 3,000 crore IPO: Assessing peer leverage trends, 59% floating rate vulnerabilities – IPO News

    June 29, 20264 Mins Read


    Truhome Finance had assets under management (AUM) of Rs 21,124.33 crore, making it the third-largest affordable housing finance company in India by AUM among its identified peer set. The company had filed its DRHP with SEBI in March 2026 and got approval on June 01 to launch its issue. The approval is valid for 12 months. 

    Truhome Finance IPO: Issue size

    Truhome Finance IPO wants to raise a sum of Rs 3,000 crores, consisting of a fresh issue of shares worth Rs 1,500 crores and an offer for sale (OFS) of Rs 1,500 crores.

    JM Financial is the book-running lead manager to the issue, and KFIN Technologies is working as the registrar for the company. 

    Truhome Finance IPO: Key risks

    However, the housing finance companies pose a set of risks that investors need to be aware of. Here are four key risks around capital borrowing and adequacy for Truhome Finance and the industry – 

    High Debt-to-equity ratio

    The requirement for substantial financing and the associated capital structure risks are central to Truhome Finance’s business model as a rapidly growing HFC. As of December 31, 2025, the Debt-to-Equity Ratio was 3.22 times, as per the data on DRHP.

    Time Debt-to-equity
    9MFY26 3.22x
    FY25 3.30x
    FY24 5.00x
    FY23 4.84x

    As per the data, the reduction in leverage since 2024 is largely due to significant equity infusions by their Promoter, Mango Crest (Warburg Pincus Group), and the conversion of compulsorily convertible debentures into equity. The IPO proceeds are intended to further augment this capital base to support future lending.

    The Promoter, Mango Crest, strengthened the company’s capital base through a Rs 1,200 crore infusion in late 2024 and a subsequent Rs 417.12 crore infusion in 2025 to support business expansion. The promoter also converted 40,000 compulsorily convertible debentures into equity shares in December 2024.

    However, Truhome Finance maintained a higher debt-to-equity ratio than all listed peers till December 31, 2025.

    Company 9MFY26 FY25
    Truhome Finance 3.22 3.3
    Aavas Financiers 3 3.18
    Aadhar Housing Finance 2 2.56
    Home First Finance Company India 2 3.79
    Grihum Housing Finance 2 2.49
    India Shelter Finance Corporation 2 1.83
    Aptus Value Housing Finance India 2 1.59
    Vastu Housing Finance 1 1.43

    Diversified sourcing of capital

    The company maintains a diversified liability profile with 48 different lenders to mitigate the risk of disruption from any single source. Their borrowing mix as of late 2025 included:

    • Term Loans from Banks: 36.40% (the largest single component).
    • NHB Refinance: 17.61% (lower-cost funding from the National Housing Bank).
    • External Commercial Borrowings (ECBs): 16.65% (syndicated loans from international banks).
    • Secured NCDs: 12.66% (listed on the BSE debt segment).
    • Securitisation (PTCs): 11.53% (off-balance sheet funding).

    Vulnerability to interest rate volatility

    Volatility in the cost of capital poses a significant risk because finance costs are the company’s largest expense, accounting for 60.26% of total expenses for the third quarter of FY26.

    Floating Rate Risk: The company’s 59.52% of borrowings are linked to floating interest rates. If market rates rise, their interest expense increases immediately, potentially squeezing their “Spread”. It is the difference between the earnings on loans and the money paid for debt.

    Recent Costs: The average cost of borrowings was 8.85% on an annual basis for 2025, though their average cost of incremental borrowings (new debt) was lower at 7.86%.

    Regulatory and liquidity constraints

    Housing finance companies are required to maintain a minimum capital-to-risk-weighted-assets ratio (CRAR) of 15%, which is also known as the Capital Adequacy Ratio. Truhome’s CRAR was a healthy 37.76% as of December 31, 2025, but continuous growth requires constant capital supply to stay above regulatory floors.

    Capital Adequacy Ratio (CRAR) Comparison (%)
    Company 9MFY26 FY25 FY24 FY23
    Aptus Value Housing Finance India 70.50% 71.31% 73.03% 77.38%
    India Shelter Finance Corporation 56.87% 60.55% 70.91% 52.66%
    Grihum Housing Finance 52.49% 48.83% 47.31% 34.83%
    Home First Finance Company India 48.97% 32.84% 39.48% 49.38%
    Aavas Financiers 46.39% 44.50% 43.99% 46.96%
    Aadhar Housing Finance 44.06% 44.61% 38.46% 42.73%
    Truhome Finance 37.76% 36.28% 24.38% 26.14%
    Vastu Housing Finance NA 59.35% 63.76% 67.62%

    Asset liability mismatch: The housing finance companies face fundamental risks because housing loans have long tenors, while borrowings are often shorter-term. A mismatch can lead to liquidity crunches if they cannot “roll over” their debt.

    Also, the companies’ ability to borrow cheaply depends on their AA (Stable) rating. Any downgrade would trigger immediate increases in borrowing costs and could potentially cause lenders to call off existing loans.

    Conclusion

    All in all, the company’s debt-to-equity ratio stood higher than its competitors, and its capital adequacy ratio stands at the lowest level among its peers. This shows that the company aggressively expanded its loans or assets using debt, but is likely to bring it into structure via IPO money. 



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