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Truhome Finance awaits rating upgrade after doubling AUM to Rs 20,000 crore

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  Published in Business and Finance on Monday, October 13th 2025 at 3:17 GMT by moneycontrol.com
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Truhome Finance’s Assets Under Management Double to ₹20,000 Crore – Awaiting Rating Upgrade

Truhome Finance, the consumer‑finance arm of the Truhome Group, has announced that its assets under management (AUM) have surged from ₹10,000 crore to ₹20,000 crore in the past year, a doubling that has drawn significant attention from investors, rating agencies, and the broader financial market. The company is now anticipating a rating upgrade, a move that could reduce its cost of capital and open up new avenues for growth.

A Rapidly Expanding Portfolio

The jump in AUM is largely attributed to aggressive growth in the unsecured consumer loan segment. Truhome Finance has positioned itself as a leading provider of personal loans, home loans, and other retail credit products across India. According to the company’s quarterly statement, the loan book grew by 35% year‑on‑year, driven by a combination of high demand for personal credit and the company’s focus on digital onboarding and risk‑management technology.

In addition to traditional lending, Truhome has diversified its product mix. The firm offers a range of tailored credit solutions such as installment‑based vehicle financing, education loans, and small‑business credit lines. The digital platform allows the company to process applications quickly, thereby reducing default risk and improving overall portfolio quality. The management has highlighted that the portfolio’s non‑performing assets (NPAs) remained below 1.5% at the close of the quarter, a figure that is considered healthy for a non‑bank finance company in India.

Capital Efficiency and Cost of Funding

Truhome’s capital structure is heavily leveraged through a mix of equity, subordinated debt, and retail deposits. The company’s debt‑to‑equity ratio has hovered around 2.5, consistent with industry norms. However, the cost of raising capital has been a pressing concern. “Our current interest expense on external borrowings is around 7.5%,” said the Chief Financial Officer, Rahul Gupta. “With a higher AUM and a stronger balance sheet, we are optimistic that a rating upgrade will bring that down to the 5–6% range.”

A rating upgrade from major agencies such as Fitch, ICRA, or CRISIL would signal to investors that Truhome’s risk profile is improving, thereby reducing the spread required by bond investors. The company has already met the thresholds for a “BB‑” rating from Fitch and is in negotiations with other rating houses to align its credit profile across the board.

Market Reactions and Investor Sentiment

The announcement of the doubled AUM has already sparked positive sentiment in the market. Shares of Truhome Finance rose by 4.3% in the afternoon session following the release of the news. Analysts from the brokerage firm L&T Finance noted that “the growth in AUM is an indicator of robust demand for consumer credit, especially in tier‑2 and tier‑3 cities.”

While the company’s management remains cautiously optimistic, they also acknowledge that a rating upgrade is contingent on external factors such as regulatory changes, macroeconomic conditions, and the performance of its loan book. “We are focused on sustaining loan growth while maintaining a disciplined approach to risk,” said Gupta in an interview. “A rating upgrade is a natural next step as we continue to build a more resilient capital base.”

Competitive Landscape and Strategic Initiatives

Truhome Finance operates in a highly competitive space, with players like Bajaj Finserv, HDFC, and Mahindra Finance vying for market share. To stay ahead, the company has invested heavily in technology and data analytics. Their proprietary risk‑scoring engine, which incorporates alternative data sources such as utility payments and social media activity, has helped the firm identify creditworthy borrowers who were previously underserved by traditional banks.

The company is also exploring strategic partnerships with fintech firms and e‑commerce platforms to extend its reach. A recent collaboration with a leading online marketplace is expected to bring an additional ₹5,000 crore in AUM over the next 12 months. In parallel, Truhome Finance is planning a potential equity raise of up to ₹500 crore, aimed at bolstering its capital base and further mitigating funding costs.

Regulatory Environment and Compliance

Truhome Finance has maintained a clean regulatory record, with no major compliance issues reported in the last fiscal year. The company has complied with the Reserve Bank of India’s (RBI) guidelines on asset quality, provisioning, and risk‑based capital adequacy. In light of the impending rating upgrade, the company is also preparing for an in‑depth audit of its governance structure and internal controls.

The RBI’s recent directive on the expansion of financial inclusion is expected to open new segments for Truhome Finance. The firm has already begun to pilot a “Micro‑Finance” platform targeting rural borrowers, with an initial target of ₹3,000 crore in new loans by the end of 2025.

Outlook and Future Growth Prospects

Truhome Finance’s dual focus on expanding its loan portfolio and improving its credit rating positions the company for continued growth. The management’s plans for geographic expansion, coupled with an emphasis on digital transformation, signal that the company is well‑prepared to navigate a rapidly evolving financial services landscape.

Key metrics that investors will be watching include:

• Loan‑to‑Deposit Ratio – Expected to stay below 85% as the firm balances growth with liquidity.
• Net Interest Margin (NIM) – Targeting a 3.5% margin in FY25, a modest increase from the 3.2% margin reported in FY24.
• Return on Assets (ROA) – Forecasted to rise to 1.8% by the end of FY25, reflecting improved profitability.

With the AUM doubling to ₹20,000 crore and a potential rating upgrade on the horizon, Truhome Finance appears poised to capture a larger share of India’s burgeoning consumer credit market while keeping its cost of capital in check. Investors and industry observers alike will be watching closely to see how the company capitalises on these opportunities in the coming quarters.