Aditya Birla Capital Limited (ABCAPITAL.BO) Q3 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q3 FY '26 Earnings Conference Call of Aditya Birla Capital Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Vishakha Mulye, MD and CEO of Aditya Birla Capital Limited. Thank you, and over to you, ma'am.

Thank you. Good evening, everyone, and welcome to the earnings call of Aditya Birla Capital for Q3 of 2026. Joining me today are the senior members of my team, Bala, Rakesh, Pankaj, Kamlesh, Mayank, Pinky, Vijay, Ramesh and Deep. I will cover our strategy, financial and business performance followed by a discussion and performance of our key businesses by our business CEOs. The Indian economy has maintained a strong growth momentum despite of the challenges and challenging external environment. Rural consumption has benefited from a good monsoon and improved agricultural output. While urban spending surged during the festive season, which has further facilitated the rationalization of GST rate. Inflation remains well contained. The government in the union budget has announced investments for electronic, textiles and many other industries to boost the manufacturing tourism, youth skilling and medical tourism to further improve the economic growth. At Aditya Birla Capital, we continue to focus on driving quality and profitable growth by leveraging data, digital and technology. Now let me talk about our financial and business performance. Consolidated profit after the tax, excluding the exceptional and one-off items, increased by 41% year-on-year and 15% sequentially to INR 983 crores. The total consolidated revenue grew by 30% year-on-year and 14% sequentially to INR 14,181 crores. On a stand-alone basis, the profit after tax, excluding exception and one-off items, grew by 24% year-on-year to INR 749 crores. We saw a strong momentum in our lending businesses. NBFC portfolio grew by 24% year-on-year to INR 1.48 lakh crores, and HFC portfolio grew by 58% year-on-year to INR 42,204 crores. We continue to see strong asset quality trends in both our lending businesses with an improvement in GS2 and GS3 ratios. In our AMC business, we continue to see an improvement in the fund performance, along with a healthy growth in AUM. In insurance businesses remains among the fastest-growing companies. The individual first year premium for the life insurance business grew by 19% and the gross written premium of the health insurance business grew by 39% year-on-year. Despite the changes in the GST, we saw an improvement in the profitability of our insurance businesses. In life insurance businesses, our VNB margin expanded by 380 basis points year-on-year to 14.2%. And in the health insurance business, we saw an improvement in our combined ratio from 111% to 114% for the 9 months. I'm happy to share that the Board of Directors of ABC and Aditya Birla Housing Finance at their meeting today approved the proposal for primary capital in future of INR 2,750 crores, in ABHFL from one of the entities of Advent International, subject to the requisite approval. The transaction announced today values ABHFL at INR 19,250 crores on a post-money basis. Upon completion of the transaction, the ABCL withholds 85.7% and Advent International will hold 14.3% stake in ABHFL. As we had mentioned in our earlier calls, we had identified housing finance as one of the major drivers for growth for ABCL given the opportunities in the sector. Over the past few years, at ABHFL, we have created a full stack franchise, focusing on prime and affordable segment and construction finance. We have made significant investment in technology, digital properties, people and distribution. We have built a strong finance -- strong distribution fully if deeper penetration. To date, we are one of the fastest-growing HFCs in India and among the 3 players in terms of incremental loan growth book. Our monthly disbursement has grown by more than 6 times in June 2022 to more than INR 2,250 crores in December 2025. Our portfolio has grown by CAGR of 48% over the last 3 years to INR 42,204 crores as on December 31. Our asset quality remains best in class with a gross Stage 3 ratio at 0.54% and net Stage 3 ratio at 0.23%. We had indicated in our earlier call that we would be seeing the benefits of operating leverage this year and a gradual expansion in ROA on the back of strong growth in AUM. I'm delighted to share that the OpEx to loan book has improved by 51 basis points year-on-year to 2.37% in Q3 of FY '26. The ROA has increased by 54 basis points year-on-year and 14 basis points sequentially to 1.96%. We believe we are now fully geared up for the next phase of our growth. Going forward, we believe our strengthened balance sheet will enable us to sustain the current growth momentum, gain market share and improve our profitability while maintaining the best-in-class asset quality. Now I request Rakesh to talk about the performance of the NBFC business. Over to you, Rakesh.

And 24% year-on-year, taking the AUM to INR 1,48,182 crores in quarter 3. Profit delivery for the quarter was healthy registering a growth of 8% sequentially and 29% year-on-year. Our strong business momentum continued in quarter 3 with quarterly disbursement of INR 21,417 crores, up 41% year-on-year. Of the total disbursement secured and unsecured business loans to SME was 46% personal and consumer segment was 23% and corporate and mid-corporate was at 31%. We continue to see the momentum in our personal and consumer loans business, both strategic calibration. For quarter 2, the disbursement in this segment was INR 4,900 crores, which was largely driven by improvements in branch business and scale-up of direct digital business through proprietary journey. The AUM grew by 9% sequentially and 28% year-on-year to INR 19,918 crores. As one of the leading lenders to the MSME, we continue to strengthen our position in the NBFC space and consistently outpace the industry growth in this segment. Our expansion in this segment is driven by offering carefully chosen business expansion and working capital solutions for different profiles of MSME. The recent measures announced in the union budget to enhance liquidity support for MSMEs through the TReDS platform position us well to capture large and growing opportunity in this segment through our holistic suite of supply chain finance solutions comprising of invoice discounting, channel financing, merchant cash advance, et cetera, spreading across the MSME value chain. Supported by a robust underwriting framework powered by a new age scorecard and rule engine, we have enabled faster credit decisioning and reduced disbursement timelines while maintaining one of the best-in-class asset quality in the industry. About 56% of our portfolio comprises of business loans to MSMEs, which has grown 7% sequentially and 26% year-on-year to INR 82,809 crores. Out of this, 82% is secured by collateral and 18% is unsecured. The unsecured business loan portfolio grew 12% quarter-on-quarter and 36% year-on-year and comprises about 10.3% of the overall NBFC portfolio. The disbursements for secured business loans to SMEs grew 6% sequentially, resulting in AUM growth of 6% quarter-on-quarter and 24% year-on-year. The growth has been largely driven by scaling direct sourcing efforts through our branch network. Talking about portfolio quality in personal and consumer loan segment, we continue to see a sustained improvement in asset quality parameter. The gross Stage 2 and 3 reduced by 60 basis points sequentially and 220 basis points year-on-year. The GS3 for the segment stands at 1.7% as of December 2025. The GS2 and GS3 of the unsecured business loan portfolio improved by 20 basis points sequentially and 300 basis points year-on-year. Gross Stage 3 of this portfolio stands at 1.9%, of which 40% of the GS3 book is covered under the government guarantee scheme. The asset quality of the secured loan business segment continues to be healthy and best-in-class on the back of strong cash flows and collateral. GS3 for this portfolio stands at 1.2%, down by 50 basis points year-on-year. Asset quality in our wholesale business also continued to improve where GS2 and GS3 reduced by 100 basis points year-on-year. As a result of improving portfolio quality trends in each one of our segments, overall GS2 and GS3 book declined by 20 basis points quarter-on-quarter and 150 basis points year-on-year to 2.8% about 73% of our book is secured, and our overall Stage 3 book is well provided with a PCR of 44.3%. Our credit costs have reduced by 13 basis points year-on-year to 1.23% for the quarter, which is well within the guided range of 1.2% to 1.3%. Going forward, we remain confident to maintain the credit cost in the same range at the company level. Moving to profitability. Our net interest income has increased by 23% year-on-year and 7% sequentially to INR 2,127 crores. Net interest margin, including fee was at 6.12% in the current quarter, up by 6 basis points sequentially and 13 basis points year-on-year. Our OpEx to AUM ratio reduced 8 basis points sequentially despite the impact of the new labor code. In quarter 3, we delivered profit after tax of INR 772 crores, registering a growth of 8% quarter-on-quarter and 29% year-on-year. The ROA for the quarter increased by 15 basis points year-on-year to 2.25%. Moving forward, we expect the mix of retail and MSME segments to improve, and we will continue to leverage our proprietary digital platform, which is ABCD app and Udyog Plus to invest in and also invest in branches to improve share of direct sourcing. As we scale up and strengthen our capabilities and invest in technology, our primary commitment remains to deliver sustainable returns in the coming quarters. With that, I will now hand it over to Pankaj, MD and CEO of the Housing Finance business.

Thank you, Rakesh, and good evening to everyone on the call. Q3 FY '26 has been a landmark quarter for ABHFL and a defining step forward in a long-term strategic journey. During the quarter, we have successfully signed one of the largest capital infusion deals in the Indian housing finance sector and I'm pleased to welcome Advent International as a new shareholder. Advent's investment reflects their strong conviction in ABHFL's business model, governance framework and execution capabilities as well as the structural growth opportunity in the Indian housing finance market. The global experience, institutional depth and strategic organization will significantly strengthen our ability to kill responsibly and accelerate the next phase of our growth and innovation agenda. On the performance front, Q3 FY'26 has been yet another strong quarter, marked by healthy disbursements, robust book growth and continued improvement in asset quality, reflecting consistency of execution across all key business levers in line with our guidance of consistent growth leadership with best-in-class portfolio quality. Let me take you through the key highlights for the quarter. We recorded highest-ever disbursements at INR 6,165 crores registering a growth of 30% Y-o-Y and 7% Q-o-Q. ABG ecosystem contribution is now at 17.6% of retail disbursement. AUM crossed the INR 40,000 crores milestone to reach INR 42,204 crores, registering of 58% Y-o-Y and 10% Q-o-Q growth. Stage 2 and 3 reduced to 0.95%, improving by 82 basis points Y-o-Y and 15 basis points Q-o-Q. PBT of INR 229 crores, increasing 109% Y-o-Y and 18% Q-o-Q. ROA's at 1.96% and ROE for the quarter at 14.94%. For more detailed financials, please refer to Slide 31. Let me now provide a brief update across our key strategic pillars, digital data and analytics. Digital and AI continues to be a core pillar of our strategy. We are witnessing encouraging traction from our AI-enabled copilots across sales, underwriting, customer service and audit. Additionally, the AI usage is now at 62% from 39% in FY '25 These initiatives have clearly resulted in a 1.3x increase in sales manager productivity Y-o-Y. I would also like to highlight that during the quarter, we migrated to the ABG Stellar platform, which is a next-generation channel onboarding and engagement platform. This is further expected to enhance turnaround time scalability and partner experience. On asset quality, we have successfully implemented multiple analytical models across the customer's journey from demand generation and underwriting to collection. Our application scorecard and collection scorecard are already delivering tangible outcomes reflected in improving portfolio quality. FinCollect, our end-to-end digital collections and management platform is driving an effective collection strategy resulting in a reduced Stage 2 plus Stage 3 from 1.77% in December '24 to 0.95% in December 2025, which is a reduction of 82 basis points. The liability franchise. On the liability side, we continue to strengthen and diversify our funding profile. The share of NCDs in the borrowing mix increased to 48% in Q3 from 39% in Q3 of FY '25. Our cost of borrowing further improved by 11 basis points Q-o-Q and stands at 7.41% for the quarter. To conclude, we have delivered consistent performance across growth asset quality and profitability. Thank you for your attention. With that, I will now hand over the call to Bala, MD and CEO of our asset management company.

Thank you, Pankaj. Just to highlight the big performance update on ABSLAMC for the quarter ending November '25. ABSLAMC our overall average assets under management, including alternate assets stand about INR 4.81 lakh crores, growing by 20% year-on-year. Our mutual fund quarterly average AUM has reached INR 4.43 lakh crores, representing 15% year-on-year growth. Within this, our equity mutual fund quarterly average AUM stood at approximately INR 2 lakh crores growing by 11% year-on-year. As an AMC we continued to stay focused on SIP -- building SIP book. We have about INR 1,080 crores of SIP book coming from 40 lakh SIP accounts. Total number of investor portfolio stood at 1.08 crores witnessing 3% year-on-year growth. And driving growth momentum, building scale through increased market traction as well as adding new customer base. Improved fund performance has strengthened market perceptions and driven higher inflows into our core products. Building on this momentum of priority remains to scale our equity offerings through consistent SIP flows, a broad-based distribution and participation and sustained performance and deeper market engagement plan. Turning to alternative business the PMS and AIF equity segment has demonstrated robust momentum, supported by steadily expanding suite of credit offerings. We continue to enhance and refine our solution to address the evolving needs of the HNIs and family office investment needs. Our PMS, AIF advisory assets under management stood about INR 3,853 crores -- from 3,853 crores it has moved to 32,663 crores which includes ESIC mandate that we won last quarter. During the quarter, we also received our EPFO, allocation letter for fixed income mandate appointing as one of the portfolio managers. We are now in the process of completing the regulatory formalities and expect the assets to be onboard sometime in the next quarter. On the fixed income credit side, we completed the final close of ABSL India Special Opportunities Fund and received a commitment of about INR 500 crores. And fundraising, of course is underway in our second series of fund launch is the Structured Opportunity fund #2. Our real estate fund continues to build momentum, supported by strong investor interest and a healthy deal pipeline. The real estate portfolio stood about INR 700 crores representing approximately 40% year-on-year growth. During the quarter, the offshore we set up our wholly owned subsidiary and GIFT City as well as ABSLAMC International Private Limited. As we expand our GIFT City operation and in the process of securing regulatory approvals during the quarter. However, in the current existing fund flows that we have for inward and outward remittance, we continue to see flows coming in, both for inward remittance as well as outdoor remittance. Our passive business continues to gain strong momentum with quarterly average asset INR 30,600 crores, up 28% year-on-year and growing customer base about 15.1 lakh portfolios. Our ETF quarterly average AUM grew about 40% year-on-year. Significant outpacing the industry growth of 24%. Our focus remains on delivering superior long-term outcomes through tighter tracking differences and lower tracking errors. Additionally, sustained investment interest in precious metals such as gold and silver has reinforced realization value for our passive offering in this segment. As for the financial performance, the Q3 FY '26 total revenue stood at INR 562 crores, up 16% year-on-year. Q3 FY '26 profit before tax was INR 358 crores, up 19% year-on-year and Q3 FY '26 profit after tax stood at INR 270 crores up by 20% year-on-year. With this, I'll hand it over to Kamlesh Rao, Aditya Birla Sun Life Insurance, MD and CEO.

Thank you, Bala. The overall life insurance industry registered a growth of 10% in the first 9 months of this year. With the private life insurance industry growing at 13%. During the same period, ABSLI clocked a premium growth of 19% with proprietary business growing at 8% and the partnership business growing at 26%. In our proprietary business, we are growing in line with the market. The product mix is favorable, and we are now planning to scale this business even further. During the first 9 months of this year, we have added 24 branches, continuing our focus on expanding the proprietary business, with this we are now at 425-plus branches across the entire country. The partnership growth of 26% came across all our existing partners as well as the new partnerships in Bank of Maharashtra, IDFC Bank and Axis Bank, wherein we now have reasonable mind share. In the existing bank partnerships, we have gained a reasonable mindshare consistently through the 9 months of this year. At Axis until now, we were present in selective zones, which contributed to 20% of their total business. We now have access to 3 new zones. And with this, we will be presenting 50% of their business going forward. The partnership business has a balanced product mix with margins going up through the year. We now have 12 banca tie-ups and like I mentioned, we will expand our presence at Axis Bank going forward. In the product mix of the individual business, traditional business, including protection increased to 70% and ULIP came down to 30% as being expand margins for the 9 months of this year. We will continue calibrating our product mix in line with customer demand as well as the need to optimize margins at the front. In the Group Life Insurance segment, the private industry grew by 17% and overall industry grew by 15%, like we mentioned in previous quarter, we have had a calibrated approach to interest rate-sensitive business. We are happy to state that we have moved from a de-growth for the first half of the year to a 8% growth for 9 months YTD December enabling us to reclaim the rank 4. And a large part of this growth has come from the market-facing ULIP business. We continue to be at rank 2 in the ULIP AUM in the industry with an AUM size of INR 15,000-plus crores Credit Life business registered a growth of 37%, with attachment ratios going up in all large counters and even more significantly in our own NBFC as well as housing finance business. Our group term life insurance business, we continue to remain focused on expanding the margins. Group AUM contributes to 26% of the overall AUM and stands at INR 28,218 crores. Our total premium for the first 9 months stands at INR 15,471 crores growing by 14%, with a 13-month persistency at 84.4%. Renewal premium grew by 18%, with growth across individual and group segment, our digital collections account now account for 83% of our renewal premium. We continue to work on customer lifetime value, which is reflected in our upsell ratio of 32%. On quality parameters, our overall customer NPS now stands at 62% as compared to 57% last year. Whilst the 13th and 61st-month cohorts have seen the marginal dip, all other cohorts are growing compared to the same time last year. Our OpEx-to-premium ratio stands at 22.9% and adjusted for lower group business, GST impact and the labor laws impact, the retail OpEx to premium ratio is progressing well in line with plan. ABSLI crossed AUM of INR 1 lakh crore in April '25 and now stands at INR 1,10,048 crores, with a Y-o-Y growth of 13%, 25% of this AUM is in equity and 75% in debt. On YTD basis, 100% of our funds continued to outperform as compared to the respective benchmarks. Our digital adoption across the various areas is demonstrated in the deck of the slide 47. 100% of the new business customers are onboarded digitally. 83% of all our services are now available digitally. 67% services are STP and our customer self-service ratio now stands at 93%. Our solvency continues to remain healthy at 210%. Our net margins are now at 14.6%, 380 basis points higher than last year's time at 10.8%. We observed margin expansion due to a controlled ULIP mix, increase in protection, value-accretive growth in partnership business, along with rider attachment strategy. The expansion in net GST margins is despite the GST impact in the second half. As we speak, we have resolved 40% of the GST impact through our commercial arrangements with the distributors and the balance going forward will be managed through both product strategy and relevant management actions. We will continue to focus on increasing productivity across all cohorts in our proprietary business. For partnership business, we will continue to invest in our bank partners to increase both our mind share and drive better productivity across all the partners that we have. Our guidance continues to grow individual FYP at a CAGR of 20% plus for the next 3 years. Whilst achieving this growth, we intend expanding our current VNB margins of 18% plus. And in absolute numbers, double the value of our net VNB in 3 years' time. With this, I hand over to Mayank, MD and CEO of our Health Insurance.

Thank you, Kamlesh, and let me now present the performance of our health insurance business. With a strong quarter 3, we continue to build on the first half FY '26 growth momentum, maintaining our track record of consistently growing faster than the market, while also continuing to improve profitability metric. For the first 9 months of the year as per old accounting regulation. We achieved a gross premium of INR 4,956 crores, representing a strong 41% Y-o-Y growth. On an end basis, our gross premium stood at INR 4,651 crores reflecting a healthy 39% growth vis-a-vis the market growth of 21%. Our market share has increased from 12.1% to 14.2%, a Y-o-Y increase of 210 basis points. We registered strong growth momentum across both retail and group businesses. The retail franchise experienced a 42% Y-o-Y growth, and it continues to be diversified across retail distribution channel. The proprietary channel with an agent base of about 1.6 lakh agents has registered a 35% growth. All our major bank and digital alliance partnerships also experienced impressive growth. Our corporate business delivered a strong 41% growth in the 9 months of FY '26, driven by our focused and disciplined strategy to be the sustainable franchise in the segment. We have now also taken our differentiated and first insurance model to corporate, and this will only further improve our competitive strength here. On the profitability front, our net loss for the 9 months stood at INR 178 crores as per the new accounting regulation. The loss includes an impact of the implementation of the new labor code. As for all accounting regulation, the net loss stood at INR 146 crores compared to a loss of INR 195 crores last year. Our combined ratio for 9 months under the old accounting regulation stood at 108%. And under the new accounting framework at 111% versus 114% on a comparable basis. These improvements underscore our continued focus on unit economics and thus overall profitability ahead of market. We believe our robust growth and superior unit economics are driven by our digitally enabled and differentiated health first model, which gives us a selection advantage with a larger share of more health-conscious consumers. And then based on a hyper-personalized health engagement model, access to a deeper understanding of the health profile of our in-force base. Our health first model is resonating with our consumers with 40% of our customers engaging with us for their health. 9.9% of our eligible customers earn good health incentives in the first 9 months, up from 8.4% last year, reflecting a deep engagement with our wellness ecosystem. These customers then contribute to 8% lower loss ratio and 11% better persistency in absolute terms. This is shown in Slides 57 and 58. Similarly, our investments in managing customers with higher health risk for more than 210,000 lives have led to an improvement in the loss ratio by more than 9%. Overall, these have helped us keep our retail loss ratios well under control and ahead of market. Our promise of insurance is centered around providing industry-leading experience and we have made continued investments in state-of-the-art AI/ML-driven claims auto mitigation engine, which further enhance our customer satisfaction, but more importantly, also reduce claim costs. We continue to adopt a digital-first approach across revenue, engagement and claims, driving higher renewals, stronger customer engagement and greater self-service through our active health app. Given our data focus -- large data focus, we are investing consistently in data and analytics capabilities to create efficiencies across the entire business life cycle. And we will continue to embed Gen AI capabilities across key processes, the sales governance, claims, underwriting, customer engagement and we've explained that in our review deck. Looking ahead, we remain very optimistic about the long-term growth prospects of the health insurance sector with our differentiated health first model and sharp execution focus and we believe ABHI is well positioned to grow ahead of the market. Thank you, and I'll now hand it back to Vishakha for our closing remarks.

Thank you, Mayank. This concludes our remarks on Q3 FY '26 performance, and we'll be happy to take any questions.

[Operator Instructions] Our first question comes from the line of Chintan Shah from ICICI Securities.

Congratulations on the quarter and on the deal -- HFC deal. So just on the HFC deal, one thing for now, what are the time lines when can we expect the money flowing. Firstly, on that? And secondly, for now, HFC seems to be now well capitalized at least for the on next few quarters. But in terms of NBFC, are we also looking to include any capital in the NBFC? yes, that's the first question.

Thank you, Chintan, Vijay here. So first, on the time line for the deal completion, today, both the Board and the shareholders of Aditya Birla Home Finance, which is 100% owned currently by ABCL have approved the transaction. It will be subject to CCI approval for the investor that application will be filed subsequently in the next few days. We believe that CCI will take about 45 days or to grant the approval and the approval should come by end of March. And once the CCI approval comes, the transaction will be closed. So that from the time lines. At the same time, I mean, whether it comes end of March or it comes in the week of April, we are sufficiently capitalized for the time being in the housing finance company. For the second question about, yes, you're right, the INR 2,750 crores in the housing finance will take care of our growth capital requirements for the next 2 to 2.5 years. For rest of the businesses, on a stand-alone basis, our total CapEx right now is at 17.34%. Our AMC business continues to pay dividends. It does not need any capital. In the insurance business, as we have said earlier, we have a JV partner who is equally committed to supporting the growth need. We will keep evaluating our capital requirements and take suitable actions in due course, keeping in mind the interest of all the stakeholders.

And on the margin piece, so for the NBFC business, I think the overall margins have ended up including the fee income. But also, could you -- like margins are up almost 6 bps, but any ballpark number on what could be the yields? What could be the fee income component in the overall average yield. So excluding that, have you seen an uptick because it looks like despite those and unsecured, it is not translating into a meaningful uptick in the end. So I just wanted to understand on that, piece.

Chintan, it's the product mix, which will drive the yields and the margins until quarter 1, we were calibrating our personal consumer and unsecured business. Post that, if you see the growth has come back quite strongly. It will take a couple of more quarters for the yield to improve at a company like level and the portfolio level and that should result in the improvement in margin as well. So it will take a couple of quarters before you will start seeing it because in a large portfolio of almost INR 1.5 lakh crores, I think it will take some time to reflect.

Understood. Understood. And just one last thing on the credit cost. So we have seen a benign credit cost for us as well and the environment also, I think, remains favorable for us but given that in the context of the global uncertainty of the macros, are we looking to make any provision buffers or I think probably or there could be any reset in an ECL model or it looks adequate as of now, yes.

So Chintan, I mean, if you look at in our growing book, if you look at both Stage 2 and Stage 3 has come down significantly. If you look at Page 2 has come down from almost INR 2,229 crores to INR 1,819 crores. a drop of INR 510 crores and in Stage 3 from INR 2,674 crores to INR 2,140 crores. And I think the business has scaled up quite well in the same period year-on-year and our Stage 2 and Stage 3 have come down significantly. So I think that credit profile and the credit performance looks quite stable and good. We don't think we need at this point in time. And also, as you know, 73% of our exposures are secured by collaterals and majority of our SME loans are backed by on, as I mentioned in my opening remark, 82% of our exposure to MSMEs are secured by collateral. So we don't think we need any enhancement and provision at this point in time.

Your next question comes from the line of Gaurav from MLP.

Congratulations on the housing finance deal and the quarter. I have 3 questions. And just taking forward Chintan's question earlier regarding margins. If I look at the yield profile, yields have remained broadly flat in the last 2 quarters despite the mix change being favorable. If I look at the mix of unsecured business loans and personal loans have moved up every quarter in the last couple of quarters. So when do we start seeing the impact on yields, the entire NIM expansion that we've seen in the last couple of quarters are largely driven by the cost of funds benefit that you got. So when do we start seeing the yield kind of moving up? Is it next quarter because the 200 basis points of improvement in the mix have already happened?

So as I mentioned, a couple of quarters it will take seen within the personal and consumer -- within unsecured business also, we have been cutting down a high risk and wherever the portfolio has not been stacking up. As you know, we have been recalibrating our unsecured portfolio over the last 18 months or so. So high-risk segment across our personal and consumer and unsecured business, we are cutting off. . So as I mentioned, and the credit quality and if you look at the Stage 1, Stage 2 is stacking up quite well the bounce rates and everything else is stacking up quite well at this point in time, and that's the reason why we are growing these segments. But it will take a couple of quarters at least to see improvement in yields. And improvement in margins.

Sure, sure. And on the other side, the cost of funds in the fourth quarter, where do you see the cost of moving in the next couple of quarters? Have we kind of repriced borrowings completely? Or there's still some juice left?

So again, cost of borrowing, we look at -- we are one of the most efficient borrowers in the market. And we look at all the opportunity in terms of bringing our cost of funds down. We are looking at the liquidity in the market and everything else, we will see how it goes forward. So can't comment at this point in time the way the liquidity is there in terms of how much and by when the cost of funds will come down. But as you know, we are, I think, almost 70% of our loans is floating. So even if the cost of funds comes down, I think we need to pass on that to our customers. So I think we will -- as you have seen in the last 2, 3 quarters, the cost of funds have been coming down. It will continue to -- we will continue to leverage the opportunity in terms of bringing the cost of funds down.

Got it. And can you highlight the delta between the stock cost of fund and the incremental cost of funds? What's the delta?

Cost of borrowing on the stock and the incremental. Can I come back to you on that?

Sure, sure. And my next question is on the Stage 1, Stage 2 and Stage 3 ECL. Now I understand you've given the Stage 3 PCR. But can you give me what's the total ECL breakdown into Stage 1, Stage 2 and Stage 3 maybe for this quarter and in previous quarters? This is just to understand the overall movement in ECL and perhaps back calculate the write-offs.

So far, we have not shared this and we will see at what point of time in terms of this information can be shared. But I think you can clearly see it that staging has improved in terms of -- and we refresh. This is all basis the portfolio performance, so basis the ECL model. So I think that's what...

Understood. So because one of your competitors have taken an ECL reset and I think Chintan alluded to that question earlier. In terms of the ECL, how should we look at incrementally, are there any sort of changes on PD or LGD assumptions that you are undertaking?

So again, if you look at our portfolio quality, it's very, very stable. And if especially the MSME segment where the issues will raise our 82% of our exposure is secured. This is secured by cash flows and the collaterals. So we don't expect anything at this point in time. We don't see...

Understood. Just last question, if I may squeeze in. Any growth guidance for F '27 given that this year, you're already on a strong footing. The asset quality, you mentioned is looking good. So just to ask what kind of growth can we expect? .

NBFC you're asking?

Yes, NBFC.

NBFC, if you look at, we have grown 24% year-on-year. Our guidance is in the similar range of 24%, 25%. And we have all we have committed or we have guided that we will double our loan book in 3 years. So that means 25% growth is what we're looking at.

Your next question comes from the line of Abhijit Tibrewal from Motilal Oswal .

Congratulations on the good quarter. So just trying to understand, I mean, you would have seen right previous 2 participants, what were kind of passing you about the provision cover and particularly in the unsecured businesses, your unsecured business loans as well as your personal and consumer segment. Just trying to understand, we have today earlier seeing a sudden increase in provision cover from one of the peers who reported earlier today. So just trying to understand this better that at least from the regulator, there has been no nudge, right to kind of increase the provision cover, especially on your unsecured business and including your personal incomes?

If you look at our personal and consumer segment, we have a provision cover of almost 70%, 68.1%. Our unsecured business is almost 45%. And here, we have almost 40% of this portfolio is backed by the credit guarantee, taking so this into account, both unsecured portfolios are well provided...

Got it. And this unsecured business that you spoke about this 45% cover, that is a little lower than peers predominantly because what you mentioned and what you also shared in the PPT that 40% of the Stage 3 book is actually covered in the different government schemes.

Yes. That's the credit guarantee, which we have on this unsecured business. .

Got it. Got it. And then just kind of operation on the disbursements. If you look at your disbursements in NBFCs across different products this quarter sequentially seeing a moderation in your unsecured business, personal loans slightly flattish sequentially. I'm just trying to understand, is this some kind of an internal recalibration or some seasonality that you see in this quarter? Or how should we interpret.

So Abhijit, if you look at our disbursement has grown 41% year-on-year. So very strong momentum on disbursement. To your question on unsecured business sequentially I think if you look at -- also, we should look at the AUM growth in the same segment. The AUM growth in this segment is 12% quarter-on-quarter and 36% year-on-year. . The reason why sequentially is looking slightly down is because we don't take the line of credit products or supply chain where there's a high churn. So that is not included here. If we include that, I think our disbursement will be much higher sequentially as well. But you should look at AUM growth .

Got it. Got it. And on the housing business, just wanted to understand one is in the [Technical Difficulty]

Sorry? Sorry to interrupt. Your voice was breaking. We could not understand the question. If you can please...

Is this better now? .

Yes, sir, please go ahead.

Yes. So just last question on the housing business. What is the LTV that you are doing in the housing business today? Basically, your portfolio LTV in the home loan book and what are the incremental LTVs that you do? And lastly, out of total home loans that you source, what proportion of that actually comes from the construction finance business, basically where you had given a construction finance loan?

As you will know, LTVs in the housing business are regulated for housing purpose and that guidance is around LTV. But overall, to answer your question, we are at the average LTV of between 50% to 52% on the portfolio after that pull together. On construction finance, as you will see, we have also given this breakup in the slide that we have presented. 15.8% of portfolio is the construction finance portfolio in overall INR 42,204 crores of AUM.

No sir, my question was a little different. What I was trying to understand is out of the total home loans that you source across both prime and affordable, what proportion comes from those projects where you have given construction finance.

So that -- so currently, that proportion is low. In fact, that's a potential area for us. And we have more than 400 developers relationships and we are present in almost most similar amount of projects. We've started this journey where we are trying to leverage the developers also working for retail penetration. So that's the focus area for us. Currently, those numbers are in the -- they are very, very -- not so meaningful.

[Operator Instructions] Our next question comes from the line of Nidhesh Jain from Investec.

My first question is on sourcing mix in the and NBFC book. If I look at personal and consumer loan, there is a sharp increase in digital sourcing. So what is driving that? And how are we looking to increase the share of direct sourcing because that still remains a bit low in both personal and consumer and unsecured business loan? That is the first question. And second question is ROAs in housing finance, we have seen pretty good ROAs of 2%. We have guided a range of 2%, 2.2%. We have already reached that number. How do you see ROA in the housing finance business going forward? And similarly, ROE guidance for the NBFC business?

So your question on Nidhesh, your question on personal and consumer, higher on digital personal consumer business is getting completely digitized in terms of the way it's being driven to the score card and the analytics and the campaigns which we run. So clearly, that's what is showing here that we have installs journeys, which we have built for our business. So that's driving the digital sourcing here. In terms of the unsecured business, you mentioned our direct here, a lot of customers depend on their chartered accountants and to really help them source the funding. And that's the reason why you see sourcing of DSA slightly higher. Direct is lower because if the charted accountant and DSA who really helped the customer's fund.

Just a follow-up on -- just a follow-up on the sourcing thing that the digital sourcing, it is on fintech partners, right? The 66% digital sourcing that we are showing in personal and consumer, it's fintech partners?

We have our own journey. So we source not to our customers. Wherever we have fintech partners, option, which is selective. I think the scorecard is ours, sourcing is ours, process is ours, collection is ours. So completely, it's just the sourcing, which is there and not. But this is not reflection of sourcing through the digital partner. We do a lot of business through ABCD app, which is in-house app. We have the campaigns which we run on our existing ABC customer base, all of that. So insta PL journey which we have built, it's not a reflection of only the partnership business.

On the question that you asked on housing, I think your observation is right in March 2025, we had all guided towards reaching our targeted ROA of between 2.1% and 2.2% in 6 to 8 quarters. But I think given the progress that we've made both on scale and profitability, and you would have seen the numbers, the ROA has grown consistently 1.46% was the ROA for FY '25. And right throughout the 3 quarters, we have been consistently moving this up. And now we've reached 1.96% on Q3. But overall, for the year basis, we at 1.8%. But like I said earlier, I think given the progress that we've made on both scale and profitability, I think we believe we could achieve this slightly earlier than the guided timestamp.

And ROA for the NBFC business, I think we look at excluding the one-off of the labor code impact, it's almost 2.28%. We are looking at expanding it closer to 2.5% in the next 4, 5 quarters.

Ladies and gentlemen, due to time constraint, that was the last question. I would now like to hand the conference over to Mr. Vishakha Mulye for closing comments.

Thank you, everybody for joining us so late. And if there are any questions, all of us are available. Kindly reach to Vijay, Pramod or me. Thank you.

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