Aadhar Housing Finance Limited (AADHARHFC) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Aadhar Housing Finance Q1 FY '26 Earnings Conference Call hosted by ICICI Securities Limited. [Operator Instructions] I now hand the conference over to Renish from ICICI Securities Limited. Thank you, and over to you, sir.

Yes. Thank you, Vinay. Good evening, everyone, and welcome to Aadhar Housing Finance Q1 FY '26 Earnings Call. On behalf of ICICI Securities, I would like to thank Aadhar management team for giving us the opportunity to host this call. Today, we have with us entire top management team of Aadhar, represented by Mr. Deo Shankar Tripathi, Executive Vice Chairman; Mr. Rishi Anand, MD and CEO; Mr. Rajesh Viswanathan, CFO; and Mr. Sanjay Moolchandani, Head, Financial Planning. I will now hand over the call to Mr. Rishi, sir for his opening remarks, and then we'll open the floor for Q&A. Over to you, sir.

Thank you very much, Renish. Very good evening, ladies and gentlemen. On behalf of Aadhar Housing Finance, I extend a very warm welcome to all of you. We are pleased to begin FY '26 on a very strong and promising note. This quarter has been a continuation of our disciplined execution and strategic focus, and I am proud to share that our AUM has reached an all-time high of INR 26,524 crores, reflecting a remarkable year-on-year growth of 22%. This achievement is more than just a number. It is a testament to the trust of our customers, the dedication of our teams and the strength of our business fundamentals. It also reinforces our leadership position in the affordable low-income housing finance space, a sector that continues to gain relevance in India's evolving financial ecosystem. The affordable and low-income housing finance segment has been -- has seen renewed momentum over the past year, supported by proactive regulatory measures, improved credit demand and growing aspiration of homeownership, especially among first-time and low-income buyers. These macro tailwinds have complemented on our ground efforts, enabling us to scale responsibility -- responsibly and sustainably. Moving on to Aadhar's performance for this quarter. As mentioned earlier, in quarter 1 FY '26, our AUM grew by 22% Y-o-Y at INR 26,524 crores, with disbursements standing strong during the quarter at INR 1,979 crores, reflecting a 32% Y-o-Y growth. Over the past year, even as we scale our lending operation, our focus on preserving asset quality remains unwavering. To ensure this does not get compromised, we have continued to fully concentrate on retail secured lending with no exposures to corporates or developers. Our asset quality remains healthy with gross NPA stable at 1.3% and collection efficiency consistently above 98%. The portfolio continues to be well secured with an average loan-to-value ratio of only 59%. Notably, the salaried segment now represents 56% of our overall portfolio, reflecting our focus on stable income profile. The average ticket size on AUM remains steady at INR 10 lakhs only. Home loan continues to form the core of our business, accounting for 73% of our AUM, while the balance 27% happens to be microloan against property. As a part of our commitment to inclusive and efficient growth, we are focused on expanding into high-potential underserved regions, especially in smaller districts and talukas through our Deeper Impact strategy. This targeted approach has enabled us to deeper our outreach while maintaining a lean and agile operational model. It has also helped us strike the right balance between scale and sustainability, aligning well with our long-term goals of impactful expansion and optimal resource allocation. This has helped us expand our reach to pan-India -- reach pan-India through 591 branches, serving more than 3 lakh live customers across 22 states and 547 districts. Our network continues to grow in alignment with the strategy. And during this [ said quarter ], we have added 11 new branches. Our portfolio continues to be geographically well diversified with no single state contributing more than 14% of our AUM, a testament to our calibrated and disciplined risk management framework. This diversification also marks a significant milestone in our broader mission to expand access to housing finance in under-penetrated regions. It aligns closely with the government's Housing for All vision and National Housing Bank's mandate to drive financial inclusion across the country. This mission has led us to the birth of our strategy of urban and emerging. We have, based on our internal classification, selected approximately 130 branches that is top 15 cities as urban and the balance as emerging. We spoke about this strategy in the last call as well. The quarter in discussion was effectively our first quarter under this new strategy, and we seem to be going in the right direction with broadly aligning separate focus for urban and emerging with regard to ticket size, potential yield and manpower. Moving on, we have mentioned in multiple intervals that for us as an organization, technology is central to how we operate and scale efficiently. Our TCS-enabled core system has helped digitized key processes across loan life cycle, improving turnaround times and customer experience. Over the past 4 years, we have built a strong -- we have built strong data capabilities, moving from basic reporting to advanced analytics. We are now leveraging AI and machine learning to enhance decision-making, strengthen governance and support future-ready operations. As FY '26 takes shape, we are seeing steady improvement in the economic environment. The first quarter reflected a gradual pickup in the market sentiment, supported by RBI's rate cut, stable macro indicators and support global context. The affordable housing finance sector in India continues to be the cornerstone of inclusive economic growth, deeply aligned with country's vision of becoming a developed nation by 2047. With urbanization projected at -- to rise at 40% by 2030, affordable housing is emerging as a critical bridge to address the growing needs of migrant population across Tier 2 and Tier 3 cities. The sector continues to gain momentum driven by sustained urbanization, rising demand from first-time low-income homebuyers and a consistent policy support. Additionally, government initiatives like PMAY 2.0, revival of interest subsidy scheme, a credit guarantee program and continued support for the SWAMIH Fund, amongst others, will give additional boost to the segment. A key macro development this quarter was RBI's third consecutive repo rate cut, lowering it by 50 bps to 5.5% in June 2025. which has further improved housing affordability ahead of the festive season. We remain optimistic that these combined actions will accelerate formal credit penetration and sustained growth in the affordable housing segment. I am pleased to share that Care Rating has revised our rating outlook upward to AA+ from the old AA. This recognition reflects our consistent loan book growth, robust capital adequacy, strong asset quality. Our collection performance remains stable, and we continue to benefit from the well-diversified funding mix. These strengths, along with our strong internal controls and governance framework, have reinforced CARE's confidence in our ability to sustain both our business momentum and financial resilience over the medium term. We would also like to highlight a few important recognitions and accolades received recently. Aadhar enters the 22nd state in the [ said quarter ] with a branch in Guwahati, Assam. We received the NBFC of the Year award under PMAY Affordable Housing. We received the prestigious NHB Excellence Award for Product Innovation. We received the Gold Award from CSR Times for our Clinic on Wheels initiatives. I'm also immensely proud to let the audience know that Aadhar under its vision of empowering women colleagues has launched its first-ever all-women branch in Indore, and we continue to look for more opportunities across the country. Lastly, I would want to conclude by saying that Aadhar Housing Finance is well positioned to sustain its growth trajectory backed by strong operational foundation, expanding reach and robust technology infrastructure. With continued policy support, a stable macro environment and rising demand for affordable housing, we are confident in our ability to maintain leadership in the sector. As we move forward, our focus remains on creating long-term value for stakeholders while deepening our impact on underserved communities. Now I would like to hand over to our CFO, Rajesh Viswanathan, to take you all through the financial performance of the quarter.

Thank you, Rishi. Good evening, everyone, and thanks for joining in late on a Friday for this call. I would like you to take you through some of the financial numbers. Bear with me while I repeat some of the highlights that Rishi has pointed out. In quarter 1 FY '26, our AUM has grown 22% on a Y-o-Y basis. Our overall borrowings as at 30th June 2025 stood at INR 16,876 crores compared to INR 14,019 crores as at 30th June 2024. The current borrowing mix stands at 48% from banks; NHB share is 24%; NCD share is 23%; and ECB and others make up 4%. As highlighted by Rishi, one big achievement for the company was an upgrade of our rating to AA+ by CARE during the quarter and an upgrade to a positive outlook from a stable outlook from ICRA. Our incremental borrowings for quarter 1 FY '26 stood at INR 1,165 crores, which came in at around 8.1%. Currently, we have about 43 borrowing relationships. We have drawn INR 300 crores from NHB in quarter 1 FY '26. The cost of funds as we exited quarter 1 FY '26 stood at 8%. In terms of fixed and floating nature of the asset and liability side, 75% of both our assets and borrowings are floating in nature. Undrawn sanctions as at 30th June 2025 is around INR 1,500 crores. Liquidity as we ended quarter 1 FY '26 was INR 2,181 crores. The exit portfolio yield is 13.8%. In terms of spread, the exit spread was 5.8%. Overall NIMs for quarter 1 FY '26 was 8.8%. Our cost-to-income ratio, where we had seen more than 100 bps improvement in last financial year, happy to state that we have managed to even drop it further in the current quarter. And compared on a Y-on-Y basis, the quarter 1 FY '26 cost to income has come in at 36.1% compared to 36.7% in quarter 1 FY '25. GNPA, 1.34% compared to 1.31% in quarter 1 FY '25. This is a seasonality impact over here. Capital adequacy as at end of 30th June 2025 stood at 44.1% Tier 1 and 0.5% Tier 2. And last but not the least, on quarter -- for the first quarter FY '26, the PAT came in at INR 237 crores compared to INR 200 crores in quarter 1 FY '25, rendering a 19% growth on a Y-on-Y basis. With that, we can open up for questions. Thank you.

[Operator Instructions] We have a first question from the line of Varun from Kotak Securities.

Congrats on a good set of numbers. With regard to the seasonality that you just mentioned, that the slippages between 4Q and 1Q this quarter appear to be a bit higher than what it was last year in the same period. Are you seeing any heightened stress that is local like anyway in some particular region, state or in a particular cohort of customers that you see the stress peaking out? Or is it a broad-based thing? And the second question is with regard to the repayment rate. Calculated repayment rate appears to be low at about 15%. Is this just some seasonal effect here as well? Or are you seeing lower BT outs, which is a bit surprising because other players have called out higher competition. So can you just call out the BT out rate as well?

Great. Yes, Varun, thank you so much for your questions. So Varun, part one of your question was with regards to the stress. If I look at our numbers on quarter 1 Y-o-Y basis, we were GNPA of 1.31%, moving to 1.34%. So I would not say that there is any movement, it is more flattish and it is actually seasonality effect. Are we seeing any impact on any region, state, et cetera? I would say no because our portfolio remains to be constant. The second part, I will hand over to Rajesh, please.

Yes. In terms of asset rundown, you are right, the BT out has come in at 5.3% for this quarter. Typically, in our business, we have seen that BT out it actually spikes in quarter 4 when there is very high competition. So 5.3% was for this quarter. And just to put it in context, quarter 1 FY '25 last year was around 5.9%. So 5.3% versus 5.9% same time last year. Does that answer that question, Varun?

Yes.

The next question is from the line of Manan Tijoriwala from ICICI Prudential.

Yes. Just in light of some of your larger peers giving some commentary on MSME being stressed. Just wanted to understand if there is any color that you can provide on the same? And how do you see the credit cost for this year, for the full year? And how should it trend across the quarters? That's the first question.

Manan, MSME, we'll have to look at what our portfolio is. Our portfolio is actually not the MSME portfolio. I was -- these are -- we do microloan against property, which is about 25% of my portfolio. Are we seeing any stress? No, we are not seeing any stress. Our bounce rates on a Y-o-Y basis are steady state, exactly same, I would say. Our GNPAs and delinquencies are same if I do a data cut on -- specifically on the loan against property that I do. So good news is that we are not seeing any stress on that portfolio.

And Manan, on the credit cost, typically, if you look at it last time also, we had ended up with a credit cost of approximately INR 57 crores or INR 58 crores for the whole year and approximately INR 19 crores, INR 20 crores had come in quarter 1. And approximately, if you take quarter 1 and quarter 2, H1 put together, it was about INR 35 crores, INR 36 crores. So in that sense, I think if you look at the slight growth that we have in the AUM, I think it will be better to extrapolate the INR 57 crores. So we believe that overall credit cost for the whole year will be trending in the range of about 25 to 27 bps. In terms of current quarter, obviously, because the seasonality, it looks high at 40 bps odd. But we believe that we should be able to hold it within a range of about 25 to 27 bps as we exit the year.

So basically, the operating environment is not materially different from what it was in the last year. That's what you're saying.

No, I agree with your point. It is not different at all, in fact. In fact, it's better, meaning if you look at the numbers that we spoke about incrementally, the growth numbers, et cetera, so it's kind of better. But from a pure asset quality perspective, it remains steady state.

Right. Fair enough. Sir, could you give us some color on the average ticket size that you have between home loans and LAP segment?

Yes, just give me one second. Okay. So our home loan ticket size on AUM -- on disbursement, sorry, is 15.7 lakhs, and non-home loans, as I said, micro LAP is about 9 lakhs. Total average at the company level incrementally is 12.7. And on AUM, I indicated it is 10 lakhs on AUM.

Okay. Okay. Fair enough, sir. And could you explain how we should think about the spreads going on a quarter-on-quarter basis for the year?

Yes, I think to be -- we have seen some benefit that has come in the current quarter on account of a drop in the cost of funds for us. We are -- we will be assessing, as banks start passing on MCLR, we believe that, that should happen somewhere in quarter 2 and quarter 3. And since a percentage of our book is floating, we will also be obliged to pass it on to our borrowers. So the way of looking at spreads over year is currently, we are at 5.8%. We were about 5.7% as we exited the last year. So the exit spread was 5.7% March, 5.8% quarter 1 FY '26. So it should be -- they're about in the same range of 5.7% as we look ahead here.

Sure. And could you talk about how the disbursements are picking up under the PMAY scheme?

So see, Manan, I explained last time also, so there is -- I would not say disbursements are picking up because of PMAY, disbursement comes and then it goes to the regulator to tag it as PMAY. So it's the other way around. But having said that, we were fortunate enough to be the first ones to draw down subsidy for our consumers under the PMAY 2.2. And our customers -- the first set of customers were called by the regulator, and they were given out letters. As we stand today, close to about INR 10 crores of subsidy is already disbursed to our consumers, and the journey continues.

Right, right. Fair enough. And any guidance on growth for this year?

Yes, I will give you. But coincidentally, on PMAY, we get to get the data of the industry. We happen to be the #1 leading player on PMAY subsidy. On growth guidance, we continue to maintain our growth guidance of generally at around 20%, 22% of AUM, 18% to 20% on disbursement.

The next question is from the line of Abhishek Jain from AlfAccurate Advisors Pvt. Ltd.

Congrats for a strong set of numbers. Sir, my first question on the AUM growth, you have guided around 21% AUM growth in FY '26. So which are the key states which will drive this growth? And how much it will be sustainable?

So Abhishek, I would -- it is not fair on my part to say particular state we guide more growth. And you'll have to go back to my statement saying that we are now driving urban and emerging, right? So emerging is -- in this particular year, emerging will give me slightly higher growth than my urban locations because urban locations are steady state. We are not adding more branches, et cetera. It is -- the focus is more towards emerging. A combination of both will give us the desired 21% average growth that we're talking about.

And how is the BT out range across urban versus emerging branches? [ Where does it create more visible ], urban or emerging?

So generally, while I don't have the data cut right away, but generally, urban will have a slightly higher BT out rate. And I will ask Sanjay to come back to you on that urban, emerging data.

Okay. And my last question on that, many peer companies are indicating that they have a lot of the competition on the prime segment. So just wanted to understand that how is the growth potential and the risk-reward dynamics of the prime housing segment versus the affordable segment at this point of time?

Abhishek, I don't think it will be fair on my part to comment on prime because we are not a prime player at all. We are in the bottom of the pyramid, which is affordable. So affordable, whatever, you talk about competition, you talk about people operating in the affordable space, they continue to be the same set of people. And we are -- all of us are expanding reach and growth. So prime, I will not be able to comment too much.

The next question is from the line of Nidhesh from Investec.

Congratulations for a good set of numbers. The first question is can you share 1 plus DPD data for the quarter -- at the end of the quarter?

Yes. So 1 plus for us, end of quarter in question is 7.1%.

And how is the trend in this number? Is it stable Y-o-Y?

I would say it is exactly the same as we've been talking about, seasonality impact in quarter 1. Y-o-Y, we were close to about 6.2%, 6.4%. In a Y-o-Y basis, we are 7.2%, but currently under control.

Got it, sir. And if you can also share the sourcing mix in terms of connectors and own employee, that would also be useful for the [indiscernible].

Yes, sure. Sure, Nidhesh. So Q1, the direct mix has jumped from 57%, 58% to 61% and the balance is DSAs.

Okay. That's quite good.

Yes. So as I told you, our emerging strategy starts to play around the proportion of direct mix will slightly start inching up.

And what is the definition of emerging?

Yes. We have not gone by scientific definition of emerging. As I indicated in my opening call, that we have internally said that top 15 cities of the country, which contributes close to about 132 branches, and the top 15 cities will be top metros are all urban for me and rest balance India is emerging for me. And if I can give you a few examples, if that helps, let us say, pick up APTL. In APTL, Andhra Pradesh, Telangana, Hyderabad would be urban. Wanaparthy and Kurnool will be emerging for me. If I pick up Rajasthan as an example, then Kota would be urban, Jaipur would be urban, but Bundi, Deoli, Bhilwara will be emerging for me. And in emerging, I have 3 categories, A,B, C, so they're accordingly divided based on potential and what kind of spreads that I can derive from that location.

So the top 130 cities are urban and rest of them are emerging?

No, no, not 130 cities, 130 branches, 15 cities.

15 cities, 1-5, okay.

That's right, Nidhesh.

Okay. And then the last question is on what are the plans to add branches this year?

So as we indicated in the beginning of the year also, we will keep adding about 50 to 60 branches year-on-year basis. And we are on track. We've already in quarter 1 launched 11 new branches, including 1 new state, which is Assam. I'm sorry, I would want to add -- Nidhesh, I would want to add here in the branches, when I say 50, 50 branches, 15 branches, 1-5, will be in urban location and about 35 branches will be in emerging locations.

The next question is from the line of Sanket Chheda from DAM Capital.

Yes, this is Sanket here. So congrats on good set of numbers and particularly on the 30-plus DPD, which has stayed steady quarter-on-quarter. Just wanted to understand within that, say, Stage 3 has moved up by 31 bps and Stage 2 has come down by a similar quantum, so apart from, say, usual Q1 specific [indiscernible], were there any specific accounts which were moved to Stage 2 plus Stage 3? Just wanted to understand better on that. Sorry if you have already alluded on earlier.

No, I think that was a direct question. I think the flow from Stage 2 to Stage 3 is a normal phenomenon which has happened during the quarter. And so whatever was an opening Stage 2 during the quarter may have slipped into a Stage 3. And hopefully, during the year, we will be working on this and getting it out of NPA. That is the normal process, which we run with. So this is a pure seasonality where Stage 2 flows to Stage 3. And then typically, what happens is once it flows into Stage 3, it also allows us to start surface the action on the customer. Rishi, if you can add on that.

Right, correct. So generally, that is what you see. When we say seasonality, it's a very broad-based word. What we do is some accounts are allowed to be flowed in quarter 1 so that you can go ahead and start doing your legal process, right, which is typically called surfacing. And that can happen only when the account flows to 90 plus. These will be typical sticky accounts as we call them, who continuously are delinquent, then they try to be only in 60 or 90 buckets. Such accounts generally would flow, and that's the seasonality we talk about. And then we do surfacing, which is a 6 months process, and then you see -- start seeing downward trend on NPAs.

Sure, sir. Perfect. And since you indicated that maybe the SME or MSME specific thing would not be say that in our case, we operate in a different segment, do we expect this 5% 30-plus DPD as a pool to sustain and not go beyond that maybe throughout the year? Or you expect it to come down?

No, we definitely expect it to come down, Sanket, because if you look at on an FY basis also, we've always been in the range of about 3.5% to 4%. So we are today -- we today stand at about 4.65%. With the efforts that goes around the next 9 months, it is bound to come down.

The next question is from the line of [ Yash ] from Citigroup.

Sir, one question on this differentiated strategy on urban and emerging locations since this is the first quarter. So how different is the underwriting infrastructure in both? And since we believe that we could extract benefit on the growth side from emerging, would this differentiated strategy also lead to some extract -- help us extract benefits from the asset quality as well by focusing solely on emerging?

Okay. [ Yash ], when it comes to the back-end functions, which is underwriting, operations, collections, technical visit to the property, everything remains common for urban and emerging. As earlier indicated, we have a hybrid underwriting mechanism. All the salaried profiles are underwritten centrally at something called digital processing centers, whether it is for urban or emerging, that happens. For both urban and emerging, it is the same process. The self-employed consumers are underwritten from the branch network, and it continues for urban as well as emerging. So the underwriting standards, underwriting process, even operation process, technical process, everything remains common. As far as leveraging the emerging, yes, when you focus more on certain locations, your asset quality, one is growth is bound to come in and asset quality is bound to improve. So that's what -- I think the agenda of the company is to realign our focus. Today, as I indicated, to the first question, we spoke to 55% of my incremental business was coming from urban. And the intent is to change this 55% from emerging.

Got it. And sir, second is on this MFI exposure-related customers, which you had shared last time as well, which I believe had dropped to around 7,000 customers. So any meaningful impact we saw in the -- obviously, it is seasonality in 1Q, but any meaningful impact we saw from Tamil Nadu, Karnataka as well or?

Not specific to Tamil Nadu, Karnataka. The number of customers remain more or less same, 7,077 customers. Delinquent more broadly has dropped to about 2,000 customers, from a 2,600 customers, it dropped to about 2,100 customers. And NPAs out of which -- and when I say delinquency, across the bucket, NPAs will be around close to about 550 customers. So I would say there is a slight improvement rather than deterioration.

Okay. Slight improvement in the -- or sort of this MFI customer?

Performance of the MFI-exposed customers, yes.

Okay, MFI exposed.

And nothing very specific in Karnataka and Tamil Nadu.

Got it. And lastly, sir, if you could just share the incremental yield in 1Q.

Incremental yield stands at 13.45%.

Okay. So it's slightly dropped from 13.5%, is it?

No, it was 13.5%, which is full year. So 13.43%, more or less there.

The next question is from the line of Lalitabh from Antique Stockbroking.

Congratulations on your number results. Two brief questions. Your gross Stage 3, if I see as a percentage, has actually improved on a sequential basis. Generally, it is seen that there is some seasonality impact in the first quarter, which is not visible this time. So one thing that, that could be that the book is behaving really well? Or is there some kind of a spillover or late spillover of that aspect that can be seen in Q2? Just your sense on or thoughts on that, sir? And secondly, overall, our self-employed LAP category loans. Particularly, are you seeing any change in the environment? Or have you done any changes in your credit tightening or things like that? How are you reading the situation, sir?

Thank you, Lalitabh. I will answer your second question first. As I indicated, we are not MSME LAP consumers because our ticket size remains very, very small. We are incrementally only 9 lakh ticket size. On the book, it's about 7.8 lakhs. So we do microloan against property. No stress observed even on a Y-o-Y basis. And even on a sequential basis, our bounce rates, our NPAs, our delinquency remains steady state. Hence, we don't want to change our approach whether on underwriting or on property. One thing I would want to add is close to about 95% of our consumers in LAP are self-occupied residential property. The only change that we have done in approach recently is we wanted to take only residential properties, which will mean that new incremental business will be 100% residential property. But that is -- only temporarily, we have taken that decision, but we will continue to focus only on micro LAP.

And on the first part of your question, the seasonality that we keep talking about is a comparison of as we end year-end, which is March '25 versus June '25. So March '25 when we ended, our NPA on AUM was around 1.05%, which has moved to 1.34%. And this is the movement of anywhere between 25 to 30 bps, which is always visible between quarter 4 and quarter 1 of the next year. And that is a seasonality impact, which basically stems down during the year. And as we end the year, again, we'll probably go back to the 1.10% type level.

The next question is from the line of Faraz Motani from Paragon Partners.

I have a couple of questions on geographical expansion. So I see that we have entered a new state in the Northeastern region, Assam. So the first question is that, is this more of a pilot expansion, wherein we are opening a couple of branches? Or is this a full-blown expansion by opening, say, [ adjoining ] state and potentially other adjoining states? Second question on the similar lines is that what kind of competition are you seeing in our affordable housing finance products, maybe from other ASFCs that are already present in those states?

Okay. Great. Thank you, Faraz, for asking those questions. So when it comes to geo expansion, when it comes to new states, the strategy is very clear. First is we identify the relevant cities and branches -- cities where we can go and open branches. So we identified a step 1, Guwahati in Assam. Given the dynamic, geopolitical dynamics that operate around the Northeast states, we have not wanting to go full-blown, but we have identified 4 or 5 branches or cities which makes business sense to be in, and we will take calibrated steps as we move ahead. Right now, it is going to be Guwahati. We are going to be settling down in Guwahati, understanding the dynamics of Northeastern states and then expand thereon in relevant cities. Your second question was with regards to competition. As I said in one of the discussions a little while ago, we are not seeing any fierce competition because the number of players broadly remain the same. There is a little more than opportunity available in the market. We are all operating in the same market. We have created our own niche. But we happen to be -- as in the opening statement I said, we happen to be the largest in terms of AUM, largest in terms of incremental disbursement, largest in terms of our distribution network in the segment that we operate.

The next question is from the line of Darshan Deora from Indvest Group.

Just a question on the ROA and ROE. Can you give some guidance on what we plan to achieve in terms of ROA, ROE for FY '26? And also what would be our aspirational ROE for this business?

The aspirational is -- okay, I'll come to aspirational. I think we will be targeting an ROA in the range of about 4.2% to 4.3% as we exit current year or current financial year. 4% is obviously because of the credit cost, which gets baked in quarter 1. See, aspirationally, if you look at the way the business is -- or this is more of not a long-term guidance, but more of the way the math stacks up is that if you look at where the ROA and ROE will happen is that 2 years back, we delivered ROA between 4.2% to 4.3%, which also translated to around 18% ROE. So to be very honest, on a long-term sustainable basis, that is a sort of ROE that we would like to hit. Whether it's going to happen in 2 or 3 years, I don't want to comment on that. But typically, anywhere between a 4.2% ROA and anywhere between a 17% and 18% ROE is a sort of a good sort of a math for the business that we run. Current year, we would like to end between 4.2% to 4.3% ROA.

Got it. And the second question I had was regarding the loan book. What percentage of our loan book would be self-construction, where the customer, the applicant is self-constructing his home, vis-à-vis purchasing a ready flat or either resale or a builder flat?

Darshan, I'll give you the complete breakup. So self-construction happens to be 25%; purchase of ready-built property is about 43%; P+C purchasing a plot and constructing thereon is about 7% and the balance is microloan against property.

The next question is from the line of [ Dixit Shah from Ascent Capital ].

So my question was, firstly with respect to a statistical one. What is our -- of the total AUM, individual housing loan book as a percentage of the number?

You want pure home loan, right?

Individual housing, right.

73%. Individual housing is 73%, and the balance happens to be loan against property.

Understood. Understood. Now coming to a question with respect to the strategy. So with respect to the urban and emerging strategy that we have, what will be the approximate rate differential with respect to the yields that we could say that emerging location will have over your urban location?

So if I can indicatively tell you, urban typically gives about 12%, 12.5% yield, incremental yield. Your emerging will range between 14.5% up to 16%.

14.5% to 16%, understood.

Right.

And with respect to a question on our underwriting. So typically, with respect to what our [indiscernible] one of our peers, not in exactly in the segment that we have, but the peer that is more focused in the southern region, they had practically called out that they are seeing a little bit of a slowdown, specifically in the sub-20 lakhs segment of the ticket size. They are not seeing enough demand or the PMAY 2.0 has not seen as euphoric as the demand that we have seen in PMAY 1.0. What is your sense in that space with respect to in the southern markets? Because from the data that I have seen with respect to your -- in the southern region, you are a good player and leading in some of the states. So what is the sense of the competition in that segment? And how would you look at the demand environment in that region for that segment?

Right, [ Dixit ]. So yes, you are right. We happen to be a relevant player in the southern market as well. In fact, one of the largest markets in the top 3 markets is Andhra Pradesh, Telangana. And while he was making the statement, I was thinking, I don't know why the statement has come in the industry that there is a slowdown. There seems to be no slowdown. In fact, our quarter 1 numbers are -- have moved positively across the 3, 4, 7 states. So I don't see any slowdown happening there. I missed the second part of your question, but we don't see any slowdown.

So with respect to that, because how is the credit culture? Is there like -- because of the MFI audience in the state of Karnataka, the Telangana also having a few bills being passed. So is there any materially different credit behavior because some of the peers were saying that they are seeing a bit of a spillover impact in their books?

No. So if I can give you top 5 states in best credit culture, out of the top 5 states, 2 states are from South, which is Andhra Pradesh, Telangana and Tamil Nadu. So again, I fail to understand why people are making such statements. These are good states. I think this is eliminating from the fact that the MFI issue and which happened in the ordinance that was passed in Karnataka and Tamil Nadu. Fortunately for us, we are a secured loan product, so we are seeing no impact. In fact, these are pristine locations.

Understood. And just a final one. What would we look at with respect to like branch addition with respect to long term? Like the 50 to 60 branches that you had said, will that be steady state, say, like for 2, 3 years? Or this is like year-by-year, you might revisit and then [indiscernible]?

No. So when we say 50 to 60 branches year-on-year, this is for 3 years from now, we'll keep [indiscernible] branches year-on-year, yes.

Are we -- so probably by FY '28 will be around 700-plus branches, that will be...

No, no [indiscernible].

Okay. 750 branches, okay.

As there are no further questions from the participants. I now hand the conference over to the management for closing comments.

On behalf of the other management, thanks a lot to all the participants on this call for taking time out on a Friday evening and joining the call. I'm sure that this has been a very eventful quarter for the company, and hope we have similar results to share with you in the forthcoming quarters of the current financial year. Thank you, and good evening.

On behalf of ICICI Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.