Aditya Birla Capital Limited ($ABCAPITAL)

Ladies and gentlemen, good day, and welcome to the Q4 FY '26 Earnings Conference Call of Aditya Birla Capital Limited. [Operator Instructions] I now hand the conference over to Mr. Vishakha Mulye, MD and CEO, Aditya Birla Capital Limited. Thank you, and over to you, ma'am.

Thank you, and good evening, everyone, and welcome to the earnings call of Aditya Birla Capital for Q4 of FY 2026. Joining me today are senior members of my team, Bala, Rakesh, Pankaj, Kamlesh, Mayank, Pinky, Vijay and Deep. I will cover our strategy, financial and business performance, followed by a discussion on performance of our key businesses by our business CEOs. Indian economy continues to demonstrate resilience amid heightened global uncertainty and supply chain disruption arising from the war. Underlying growth momentum in India remains strong, anchored on domestic demand and investment activity. While external volatility and energy prices pressures were in close monitoring, inflation remains broadly manageable and policy contentions are stable. At Aditya Birla Capital, we continue to focus on driving quality and profitable growth by leveraging data, digital and technology. I'm delighted to share in that [indiscernible], we concluded our equity countries of INR 2,750 crores, and Aditya Birla Housing Finance from Advent International, [indiscernible] of all requisite approvals. Now coming to the financial and business performance. Our consolidated profit after tax, excluding the one-off items, increased by 30% year-on-year to INR 1,124 crores in Q4 of FY '26. For the full year of FY '26, including the one-off items, our consolidated profit increased by 21%. Our total consolidated revenue grew to 12% year-on-year and 14% year-on-year -- sorry, 12% year-on-year in Q4 of FY '26 and 14% year-on-year in FY '26. Moving to growth across businesses. During the quarter, we built on our strong growth trajectory across our businesses, seen in the previous quarters and further strengthened our market position. Disbursement in NBFC business grew by 28% year-on-year to INR 24,950 crores. And in HFC business by 37% year-on-year to INR 7,980 crores in Q4 of FY '26. Our NBFC portfolio grew by 27% year-on-year to around INR 1.6 lakh crore, driven by growth in secured and unsecured businesses and personal and consumer loans. [indiscernible] portfolio grew by 53% year-on-year to amount INR 47,450 crores. In insurance businesses, we remain among the fastest-growing companies. In FY '26, the individual first year premium for the life insurance business grew by 15% year-on-year and gross written premium for our health insurance business grew by 39% year-on-year. In our AMC business, the quarterly average mutual fund AUM grew by 14% year-on-year to about INR 4.35 trillion. Moving to profitability. The strong growth across businesses was accompanied by increase in profitability. In NBFC business, the profit after tax increased by 27% year-on-year to INR 825 crores in Q4 of FY '26. The ROA increased by 6 basis points year-on-year and sequentially to 2.31%. In HFC business, the profit after tax doubled year-on-year to INR 200 crores in Q4 of FY '26 and INR 647 crores in FY '26. The ROA increased by 63 basis points year-on-year and 11 basis points sequentially to 2.07%. Despite the changes in GST, there was an improvement in the profitability of our insurance businesses. In Life Insurance business, our VNB margin expanded by 260 basis points year-on-year to 20.6%. In the Health Insurance business, our combined ratio improved from [ 105% ] in FY '25 to 103% in FY '26. Moving to quality of portfolio across our businesses. At Aditya Birla Capital, we follow a prudent risk management practices with a strong emphasis of return of capital. We saw a strong quality trend across our businesses despite volatile market conditions and uncertainties in the operating environment. The GS2 and GS3 loans in NBFC businesses declined by 38 basis points sequentially to 2.42%, and HFC business declined by 19 basis points sequentially to 0.76%. We have seen no material impact from geopolitical tensions in West Asia on our portfolio. However, we continue to be watchful and will calibrate our strategy by closely monitoring the ongoing development. In our AMC business, the fund performance remained strong with over 75% of equity AUM and top 2 quartiles for 1-year return. Moving to digital and technology. We continue to leverage data and technology as a core growth enablers. AIF is now becoming a core operating layer for us, and we are scaling up its uses across various areas such as underwriting, sales, voice calling, audit and compliance, customer service and operations. This will significantly enhance customer experience, reduce turnaround times and improve productivity. Our business CEOs will take you through the select use cases in more than detail. At Aditya Birla Capital, we remain excited about the long and medium-term opportunities in the Indian economy despite the near-term uncertainties and volatilities. Our strategy, disciplined execution and building blocks that we have put in place give us the confidence to sustain growth, gain market share and improve profitability while maintaining strong portfolio quality across our businesses. We will continue to closely monitor the ongoing developments in the macroeconomic environment and take appropriate interventions to recalibrate our strategy, if necessary. Now I request Rakesh to take us through the performance of NBFC business. Over to you, Rakesh.

Thank you, Vishakha, and good evening, everyone. I'm pleased to report a very strong closing of the financial year 2026. In quarter 4 FY '26, our AUM reached to INR 1 lakhs 59,916 crores, reflecting a 8% quarter-on-quarter and 27% year-on-year growth. At this growth rate, we would be amongst the fastest-growing diversified NBFC operating at this scale. Bottom line delivery remained robust with profit after tax for the quarter, growing 7% sequentially and 27% compared to the same period last year. We nearly doubled our AUM and profits in the last 3 years, demonstrating a track record of building a franchise that delivers industry-leading growth with strong commitment to scale profitably. This year has been a remarkable journey for us, and I would like to share a few milestones achieved. First, our AUM crossed INR 1.5 lakh crore in Feb with our focus segments, retail and MSME AUM surpassing INR 1 lakh crore. We delivered highest-ever quarterly disbursement of INR 35,000 crores, up 16% quarter-on-quarter. From an AUM growth standpoint in quarter 4, nearly 85% of the growth came from retail and MSME segments. Udyog Plus, our proprietor B2B platform nearly doubling scale this year with AUM crossing INR 5,000 crores. From an asset quality point of view, our credit cost was at 1.04% in quarter 4, is our lowest ever. Now coming to quarter performance and starting with the new business sourcing. Our disbursement for the year was up 25%, driven by strong traction in retail and MSME, our focus segment for growth. Together, these segments accounted for 68% of the total disbursement and grew 33% year-on-year. This performance reflects sustained improvement in employee and branch productivity enabled by our deliberate reengineering of customer journeys and doing. Through substantial year turnaround time across retail and MSME, product journeys have reduced by over [ 20%. ] These gains have been powered by deeper integration with digital public infrastructure, efficient processing and upgrades to our underwriting platforms with best-in-class [ rule engine ] and refreshed score card. Collectively, this has improved the speed and position with which we calibrate risk cohorts throughout the year, eliminating the need for manual labor. This year, we also expanded our MSME proposition with new product launches, which have seen a very encouraging response. In our personal and consumer business, we see steady momentum returning with disbursement growing by 60% for the full year to INR 18,738 crores. As a result, the AUM grew 8% sequentially and 38% year-on-year to INR 21,432 crores. The mix in the total AUM improved by 106 basis points to 13.4%. This portfolio has seen continued cohort corrections throughout the year, also initiatives such as use of AI calling bots and behavioral analytics have little higher front-end efficiency and nearly half the flow rate compared to last year, resulting in superior asset quality outcomes. The gross Stage 2 and 3 for the personnel consumer loans portfolio reduced by 50 basis points sequentially and 260 basis points year-on-year. Now Stage 3 for the segment stands at 1.3% as of March 2023. In quarter 4, in bulk, we disbursed INR 12,023 crores to MSME registering a 21% sequential growth. As a result, our MSME book grew by 31% year-on-year to INR 91,451 crores, comprising 57% share in the overall premium. Out of this, 81% is secured and 19% is unsecured. We continue to be a strategic leader in secure MSME segment in terms of growth and asset quality, are secured in assuming AUM growth at 28 -- 27% year-on-year, which is faster than the industry growth. Asset quality for this segment continues to be healthy and best in class on the back of strong cash flows and the collateral. The gross Stage 3 for this segment stands at 1%, down 20 basis points sequentially and 50 basis points year-on-year. In our unsecured business loan segment, we saw the disbursement grow at a healthy 28% year-on-year in quarter 4. This growth comes on the back of consistent risk cohort calibration and sourcing undertaken throughout the year. Growth in this segment benefited from new product launches, which now comprise nearly 20% of full year disbursement with our proposition for professionals doing exceedingly there, plus our proprietary MSME platform now supports a full suite of trade credit solutions or digitally and is recognized amongst the top nonbank finance on [ Fed ] exchange. Sales growth has also supported a strong improvement in asset quality with GS2 and GS3 down 90 basis points sequentially. Gross Stage 3 for unsecured business loans stands at 1.4%, 14% of the Gross Stage 3 book is covered under the government guarantee fee, excluding which the gross stage is at 0.9%. Our corporate segment grew 3% quarter-on-quarter and 15% year-over-year. This segment now comprises 29% of our overall portfolio in line with our strategy to focus on retail and MSME business. Asset quality in our wholesale business also continued to improve, where the GS2 [indiscernible] reduced by 60 basis points year-on-year. Coming to portfolio quality at our entity level. Our gross Stage 2 and gross Stage 3 stands at 2.4%, improving by 38 basis points sequentially and 136 basis points year-on-year. At these levels, our gross Stage 2 and Stage 3 would be our lowest ever in the last 5 years. I further wish to highlight that about 72% of our book is secured. Our overall Stage 3 book is well provided with a PCR of almost 48%. This has improved by 358 basis points over last quarter. The impact of including asset quality is clearly visible on credit costs as well. Our credit cost for the quarter reduced by 19 basis points to 1.04%. The full year trade costs reduced by 13 basis points to 1.18%. In fact, our credit cost has been one of the lowest among diversified NBFC and lowest we have seen in the last 5 years. Moving to profitability. Our net interest income for the full year has increased by 18% to INR 8,170 crores. Net interest margin, including fee was at 6.08% for the quarter and OpEx to AUM ratio for the quarter was at 2%. In quarter 4, we delivered profit after tax of INR 825 crores, registering a growth of 7% quarter-on-quarter and 27% year-on-year. The full year profit grew 20% to INR 3,001 crores. ROA for the quarter increased by 6 basis points to 2.31%. We continue to invest in AI to transform how do we do business, and I am happy to share our progress in utilizing measurable gains across scale, productivity and customer experience. Across scale and servicing, AI-driven channel, intelligence enables more autonomous interactions across voice, e-mail and mobile. By end FY '26, 65% of contact center calls and 71% of service e-mails went straight to bot, driving a seamless digital experience for our customers. Our loan origination journey are powered by AI to enable fraud detection by analyzing [indiscernible] data, digital footprint and behavioral signals in real time, dragging anomalies and strengthening onboarding and underwriting decisions without adding manual friction. In credit and underwriting, AI and ML are embedded across decisioning workflows, including AI Copilots for credit assessment memos. This has improved credit manager productivity, reduced underwriting turnaround time and strengthen consistency, lower risk and cohort monitoring. In connection, [indiscernible] powered bots enhanced contactability, call quality and [ self-cure ] outcomes. AI-led pre-delinquency management optimizers, engagement, timing and channels, supported 100% call coverage and automated products. Across operations, Gen AI used [indiscernible], revamp handling, agent upskilling, digital contracting, automated letters and real-time service NPAs entering operating efficiency and scalability. Going to FY '27, retail and MSME segments will continue to pivot our growth strategy. We will continue to deepen our relationship with customers by offering relevant and timely solutions. We will further leverage our sourcing capability to filling up with new product variants and leverage our proprietary digital platforms like ABCD App and Udyog Plus for direct sourcing. Overall, our approach remains consistent, grow responsibly, stay close to our customers and deliver steady long-term value for our stakeholders. With that, I will now hand over to Pankaj Gadgil, MD and CEO of Housing Finance business.

Thank you, Rakesh, and good evening, everyone. Let me begin with the key highlights for FY '26. We recorded our highest ever disbursement of INR 25, 332 crores, registering a growth of 44% Y-o-Y. AUM has reached INR 47,452 crores, an increase of 53% Y-o-Y. Contribution of the ABG ecosystem stood at 17.4% to retail disbursements. Stage 2 and 3 reduced to 0.76%, improving by 63 basis points Y-o-Y. PBT of INR 832 crores, increasing 98% Y-o-Y. And ROA at 1.88% and ROE at 14.27%. For more detailed financials, please refer to Slide 31. Now covering the strategic highlights initiatives. FY '26 has been a pivotal year for the entire housing industry, supported by strong structural tailwinds, rising urbanization, improving affordability and an increasing ownership across income segments. At ABSL, our guidance at the beginning of FY '26 was to achieve an ROA of 2% to 2.2% over the next 6 to 8 quarters. I am pleased to share that we have accelerated this journey with ROA at 2.07% in quarter 4 FY '26 supported by strong operating leverage and disciplined execution. Our digital transformation journey initiated in FY '23 has delivered significant outcomes over the last 3 years. We have delivered ForEx processing scale up in processing capacity, 96% improvement in productivity and improvement from 21 days to 12 days, and Stage 2 and 3 has improved from [ 4.9% ] in FY '23 to 0.76% in FY '26. These outcomes strengthen our confidence and position us well to scale sustainably. Now covering our outlook. Given the industry outlook and our performance so far, we remain focused on consistent growth leadership with best-in-class portfolio quality while remaining mindful of the macro environment. On distribution, we have undertaken a comprehensive assessment of our branch footprint and identified high-potential geographies to enhance both coverage and conversion. Accordingly, we plan to open 100 plus branches in FY '27 with expansion in [indiscernible] markets to increase distribution [indiscernible] and deepening penetration in metro and [indiscernible] cities. This expansion will support us to achieve of INR 1 lakh crore AUM in the next 24 to 30 months. Next, digital and AI. As mentioned earlier by Vishakha, tech, digital and AI continue to be core pillars of our strategy. We are embedding AI across customer and operational journey, supported by structured capability building through global best practices and internal immersion programs. Let me now briefly highlight a few use cases that's being implemented across ABSL. Starting by for sales [indiscernible] productivity. Using AI-enabled doc assist to ensure the right document that are [indiscernible] upfront for first-time right logins. We're enhancing our [indiscernible] first AI corporate invites for contextual objection handling and predictability for our teams. [indiscernible] is being launched for lending channel partners with instant knowledge access, resulting in higher counter share products. Second, [indiscernible]. This is for top of the funnel engagement. This enables query handling from login to disbursement, enhancing sales manager face time and higher productivity. Third, reconnect. This focuses on back-office automation and faster grade divisions. Automated [indiscernible] and completeness checks, for example, bank [indiscernible] validation, call document consistency check such as [indiscernible], AI generated [indiscernible] to support faster and [indiscernible]. Fourth, [indiscernible] services, enhancing customer experience. This enables connection, customer interactions, [indiscernible] a 40% reduction in repeat calls and a measurable uplift in Net Promoter Scores. In summary, in FY '27, we expect NII and trade costs to be range bound. Growth led by capacity and productivity. We'll continue to drive operating leverage, leading to an ROA of 2.1% to 2.2%. Thank you for the attention. And with this, I'll now hand over the call to Bala, MD and CEO of our Asset Management company.

Thank you, Pankaj, and thank you, and good evening to everyone. At ABSL AMC, our overall assets and management in putting our trend assets out and at [indiscernible], growing about [indiscernible] year-on-year. Our mutual quarterly average assets stood at INR 4 lakhs 70,000 crores, [indiscernible] year-on-year increase. And then there's our equity, which has been quarterly average AUM, and that approximately INR 1 lakhs 97,000 crores, [ 7% ] year-on-year growth. Our SIP contribution for the quarter '26 improved INR 1,204 crores, growing by 11% quarter-on-quarter, by INR 40 lakh contribution coming from SIP accounts. [indiscernible] FY 2026 stood at INR 1,051 crores [indiscernible] for the quarter at approximately [ INR 6 lakhs ], growing by [ 16% ] on a quarter-on-quarter basis. Over the last year, AMC have made meaningful progress in further strengthening our investment team and championing our portfolio [indiscernible] process, resulting in sustained improvement in investment performance and some industrial confidence and consistent improvements into our flagship funds. Going to our alternate business, the PMS and AIF category has maintained a strong momentum complemented by a comprehensive suite of credit offering. Our PMS and AIF asset grew significantly from INR 11,330 crores in Q4 FY '25 to INR 32,570 crores in Q4 FY '26, a 187% growth from the previous year. The SIP mandate account for approximately [ INR 20,400 ] as of March 2026, [indiscernible] excluding [indiscernible], registered year-on-year growth of 14%, [indiscernible] a healthy underlying momentum. On the [indiscernible] per mandate, we have signed all the agreements and are operationally ready to receive the fund flows, which will come up very, very soon. On the real estate front, our AUM grew by INR 740 crores, reaching 15% year-on-year growth. We currently have a fundraising underway for the Aditya Birla Real Estate Credit Opportunities Fund Series 2 over our senior secured lending deposit approval, brownfield real estate projects across [indiscernible]. Our passive business is witnessing significant momentum with [indiscernible] average AUM at INR 41,165 crores, reflecting 25% year-on-year growth. And ETF quarterly average AUM at grew [ 68% ] year-on-year, significantly outpacing the industry growth and an expanded base of 16.9 lakhs folios, supported by a divested [indiscernible] product suite. And we have invested in line with ABC businesses in strengthening our technology and digital ecosystem with the launch of our new investor app and enhanced partner -- partner app. This platform reflects our commitment to simplifying how our customers interact with us by making them more intuitive and transparent. And beyond infrastructure, we have built an AI foundation across our customer journey to voice AI, WhatsApp integration and intelligent chatbots that engage customers in ways that resonate with their preferences. We're also happy to announce that we have incorporated our wholly owned subsidiary, Aditya Birla Sun Life AMC International AMC Limited, at GIFT City and has [indiscernible] our retail license to further strengthen our presence. Moving to financials. Q4 FY '26 revenue from operations of INR 458 crores as compared to INR 429 for Q4 FY '25. Q4 FY '26 operating profit of INR 252 crores as compared to INR 233 crores in Q4 FY '25. And Q4 FY '26 profit after tax is INR 187 crores as compared to INR 228 crores in Q4 FY '25. For the full year, the revenue from operation stood at INR 1,845 crores as compared to INR 1,685 crores. Operating profit was INR 1,051 crores as compared to INR 944 for FY '25. And profit after tax, INR 975 crores as compared to INR 931 crores in FY '25. With this, I hand over to Kamlesh Rao, MD and CEO, Aditya Birla Life Insurance Company.

Thank you, Bala, and good evening to all of you. Some quick highlights of the Life Insurance business at ABSLI. The overall industry registered a growth of 10% in the financial year '26, with the private life insurance industry growing at 12%. During the same period, the ABSLI locked a premium growth rate of 15% in the individual life insurance segment. The components of this growth of proprietary business growing at 3% and the partnership business growing at 23%. In the agency business, we focused on getting the retail part of our business better. And in our direct business, we continued our growth back on productivity. In our proprietary business, the product mix is favorable for further growth. And hence, in jorder to scale further, we are adding 26 more branches. And with this, we now have a distribution network of 450 plus branches across the country. The partnership business grew at 23%, came across all our existing 12 partner banks. The bancassurance space, we now have a heavy mix of private as well as public sector banks and have banks that have both large national business as well as one that dominates the regional space. Mind share in the large banks have grown and in the large part of the smaller private sector as well as the public sector bank, we continue to have predominant mind share of their total business. At Axis Bank, we started with being present in 25% of the total business. By the end of Q3 last year, we got access to more zones backed by our good performance in the bank. We will for this year have access to more than 50% of the business of the bank. The partnership business has a balanced product mix with margins going up through the year for all lines. We now have 12 Banca tie-ups and we will continue to expand our Banca presence further going forward. The product mix of the individual business, traditional business, including protection increased to 67% and ULIP came down to 33%, helping expand margins for the year. We have seen a healthy growth in the annuity segment with 10% of our retail new business coming from this segment now. In the Group Life Insurance segment, the private industry grew by 24% and overall industry grew by 19%. Like we have mentioned in previous quarters, too, we have had a calibrated approach to interest rate sensitive business this year, which saw us degrow in the first half of the year. We are happy to share that for the full year, we have grown by 31%, enabling us to get back to rank 4 in the Group Life Insurance business. A large part of this business for group has come from the profitable unit linked business. We continue to be at rank 2 in the ULIP AUM in the industry with an AUM size of INR 16,000-plus crores in the group business. Credit life business delivered strong growth of 40% during financial year '26, supported by all partners and with 33% now of our business coming from the captive channel of our own NBFC as well as housing finance. In the group term life insurance business, we continue doing business at 18% to 20% ROE and with a very healthy renewal book. Group AUM now contributes 26% of the overall AUM at INR 29,000 crores. Our total premium for financial year '26 stands at INR 24,779 crores, up by 20% from last year. The 13-month persistency for us grew in the last quarter, reaching a healthy 86.1% for the full year. Renewal premium grew by 17% with growth across the individual as well as the group life insurance segment. Our digital connections 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 66 compared to 59 last year. Our OpEx-to-premium ratio stands at 21.2%, including the GST and the labor law impact for the year. Total AUM now stands at INR 110,505 crores with a Y-o-Y growth of 11%, 22 of this AUM is in equity and the balance 78% in debt. On a YTD basis, more than 82% of our funds continue to outperform as compared with respective benchmarks. Our digital adoption across various areas is demonstrated in the investor deck on Slide 48. 100% of the new business customers are onboarded digitally. 83% of all our services are now available digitally, 67% of services are [indiscernible] customer self-service ratio now stands at 94%. At Aditya Birla Sun Life Insurance, we are bringing our AI initiatives together under a focused program we call [indiscernible], designed to improve how we operate across policy issuance, underwriting and servicing. Through [indiscernible], we are reducing manual effort, enabling faster underwriting decisions and making policy issuance and servicing more responsive, especially through AI-led handling of conversations across e-mail, call and WhatsApp. We are also equipping our advisers with better insights and tools to improve productivity and customer engagement. The focus is clear, use AI to enhance human judgment, not just replace it, and drive greater speed, consistency and quality in everything that we do. On value performance parameters, our solvency stands at 178%. Embedded value is now at INR 15,447 crores, which grew at 12% with an ROE of 13.2% for the year. Our net margins, like Vishakha mentioned, are now at 20.6%, 260 basis points higher than last year at 18%. We absorbed margin expansion due to a controlled ULIP mix, an increase in protection and annuity mix apart from healthy rider attachment. The traditional business did see an uptick in margins on account of favorable interest rate and the steepness of the yield curve to the second half of the year, which partially helped margins and partially helped us offset the GST impact for the year. Our guidance continues to grow the individual SIP at a CAGR of 20% plus for the next 3 years. While achieving this growth, we intend maintaining our current VNB margins in the 18% to 20% range, and in absolute numbers, double the value of our net VNB in the next 3 years' time. With this, I hand over to Mayank, MD and CEO of Health Insurance.

Thanks, Kamlesh. And let me now share an overview of the performance of our Health Insurance business. It was a very interesting year for the insurance sector. Reduction in GST and then New Insurance Act [indiscernible] work transition to IFRS reporting from FY '27. Our view is that all changes are supportive for sectors long-term growth, but with some issues addressed in the short term. Presenting our performance, we continue to build on growth momentum in maintaining our position as a fastest-growing SAHI player during the entire year. For FY '26 as per the old accounting regulation, we achieved a gross written premium of INR 7,292 crores, representing a strong 39% Y-o-Y growth. Even on a 1/n basis, our gross premium stood at INR 6,855 crores, reflecting similar 39% growth. Our market share thus in SAHI have improved from 12.6% to 13.7%, a Y-o-Y increase of 110 basis points. We grew strongly across both retail and group businesses. The retail franchise experienced a large 43% Y-o-Y growth, and it continues to be diversified across retail distribution channels. The propriety channel with an agent base of over 1.86 lakh agents registered a 36% loan. All our major bank and digital alliance partnership also experienced good growth. Our open business delivered a growth of 35% in the last year, driven by our focus and disciplined strategy to create a sustainable franchise in the segment. As we shared earlier, we have now taken a differentiated health first model to corporate also, and we are seeing very positive response from them. On the profitability front, our net profit for FY '26 stood at INR 79 crores as per the new accounting regulation. Profit includes an impact of new labor code and net GST impact of close to INR 40-plus crores. As per the old accounting regulations without 1/n, the net profit for FY '26 stood at INR 85 crores. Our combined ratio for FY '26 under the old accounting regulation was at 102%, and the new accounting framework under by 1/n ratio was 103% versus 105% on a comparable basis. These improvements underscore our continued focus on geoeconomics and thus, overall profitability ahead of the industry. We believe our robust growth and superior unit economics driven by our digitally enabled [indiscernible] health first model will continue to help us grow ahead of the market. Our health first model is resonating with our consumers with nearly 40% to 45% of our consumer retail consumers engaging with us for their help where we use an AI-driven consumer engagement engine, 11.25% of our eligible consumers earn good health based incentives, -- which we call Health Returns, up from 9% last year, reflecting a very deep engagement with our wellness ecosystem. These consumers continue to exhibit 8% lower loss ratio and 11% better persistency on an absolute basis, and these are shown on Slide 59 and 60. Similarly, investments in managing customers with high-end risks through interventions with more than -- of more than [ 70,000 ] lives have led to improvement in their loss ratio of more than 7% to 8%. Overall, this has helped keep our retail loss ratio well under control. We believe this business model, which now other competitors are also trying to look at seriously but needs a large investment commitment and persistent efforts over many years to mature, gives us a large competitive advantage as we scale this further, including the corporate side of our business. We have promise for insurance, we will focus on claims experience where we have made investments in the state of the art AI /ML driven claims adjudication engine, which continues to enhance both customer satisfaction and also eliminate leakages and wastages. We now process more than 25% of our [ pre-order] requests straight to no human intervention. Similarly, we're investing consistently in data and analytics capabilities to create efficiencies across the business life cycle. For example, apart from claims, as I shared earlier, usage of Gen AI help bring in 35% to 40% productivity improvement is underwriting a loan. We use agentic AI extensively in renewals management, leading to significant cost reduction, but also better customer confidence leading to very good traction in the renewals. Investment in key capabilities across consumer health and insurance life cycle has helped to use our consumer app, Active Health to create very high consumer engagement. It has led to our [ MOU ] crossing 6 lakhs consumers. We continue to remain very optimistic for our business, and FY '27 marks a significant milestone for ABHI, and we entered our 10th year of operations. We will continue to invest more in our proprietary distribution franchise, work towards 100% core and scale our differentiated Health First approach and also even more deeply embedding AI and emerging tech in our business. We believe we are well positioned to outperform the market and deliver sustainable value. Thank you, and I'll now hand it back to Vishakha for closing remarks.

Thank you, Mayank, and this concludes our remarks on Q4 FY '26 performance, and we'll be very happy to take if there any questions.

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

Congratulations on the quarter. So just first question on the margin. So margin on the NBFC business , the margins have actually compressed like almost 4 bps. And this is despite like a strong growth seen in the [ unsecured ] business as well. And this unsecured growth has been kind of continuing since the last 2 quarters now. Where do we see -- when do we see the margins improving? Also, can you give the delta between secured and unsecured yields? Yes, that's the first question.

So Chintan, if you look at the margins have been more or less stable over the previous quarter. You will see from quarter 1, the quarter 1 of last financial year, the margin was 5.97%, which is around 6.08%, as you rightly mentioned, slightly 4 basis points down because there were some [ MTM ] losses and all, which were there. As we grow our unsecured business, you're right that last couple of quarters, the unsecured business is growing. Our unsecured personal and consumer is still 13.4% of our overall product mix, which used to be 19%. Our unsecured business, which is also higher yield compared to the overall portfolio, that is at 11%. So combined together, unsecured business and personal consumer is around 23.4%. But if we improve both these segments even by 200 basis points in the next 2, 3 quarters, we will see expansion of margins by almost 25, 30 basis points. So that's how we are really looking at in terms of improving, and we did this calculation in terms of the growth sustained at the current level, then what is the kind of margin we can look at.

But sir, correspondingly with the rise in margins also, I think credit cost seems to be at almost historical low. So there could be also some normalization expected plus growing in the unsecured fees would also entail a higher credit cost requirement. So probably, I'm just trying to understand the case in terms of ROE expansion. So as you already mentioned, 25, 30 bps on the margin front and somewhat probably normalizing on the credit cost front. So what could be the ROE, which we could be looking at in '27?

We are looking at by end of this year, we are looking at 2.5% ROA is what we are looking at. And as I said, the margin expansion is the one way in terms of achieving that. And your point on credit cost, yes, credit cost of 1.04% is the lowest for us. And as we grow our unsecured business, we expect that to -- we have always guided that it will be around 1.2, 1.1. So I think 1.1 to 1.2 kind of a range, it will remain in the similar range is what we will have done in the unsecured business growth.

And lastly, in the AI front. I think we have -- we talked a lot about AI and we probably seems to be making a sizable investment. So ultimately, what is the probably result kind of expected from this? So I think our margin or the credit cost is already at historically low. So probably won't -- data won't come much from that front. Also NIM, we are expecting it to improve that is largely due to change in the mix. So OpEx is likely to further moderate due to AI? Or is it the customer quality, which is likely to improve? So yes, some thoughts on that would be helpful.

In terms of -- if you look at underwriting, I think the stages can come down in terms of earlier, if there were multiple stages that can come down and that has improved that turnaround time, which I spoke about in my opening remarks. Clearly, the customer experience, these things will improve significantly and which is improving. We are seeing our Net Promoters Score, both on onboarding and services going up. [ Self-cure ] on collections has significantly improved in terms of -- because of the usage of AI and bots. So across, we should see branch productivity and employee productivity improving, customer experience improving. In terms of your OpEx, you've seen for the full year, it's 1.93%, for the quarter, it's 2%. So it's been one of the better cost income ratios in the industry. We will see that what efficiency we can draw on this line as well.

The next question comes from the line of [indiscernible].

Thanks for the opportunity and congratulations on a good set of results.

Sir, your line is muffled.

Am I audible now?

Slightly better. Management, are you able to hear the participant clearly?

Not with absolute clarity.

Am I audible?

Go ahead, [indiscernible].

Yes. On the margin, I just want to [indiscernible] on that. So [indiscernible] mix has gone up 2 percentage points year-on-year. But the margin is almost flattish based on year-on-year. I just want to understand why has been the increase in the [indiscernible] mix actually resulted in the margin?

Unsecured and personal loan.

Yes. So I think if I understood your question right, you are talking about that unsecured has grown and our margins in terms of reflection on the margin. What I mentioned from my earlier question response also that the overall product mix, if we look at, that is still at 13.4%. Personal and consumer was at 13% and still at 13.4%. So all other segments have also grown quite well. So still product mix is -- earlier, we used to have 19%. Our personal and consumer used to be 19% of our overall portfolio, which 2 years back, we had calibrated. We are coming back with the growth. So in the next 2, 3 quarters, as we keep growing, as I mentioned, by every 200 basis point improvement, there will be a margin expansion the way we see it in this business. So I think if it continues to grow at the current rate, as you see last quarter, we have grown by 8% quarter-on-quarter. And if that continues in the next 2, 3 quarters, we will see the margin expanding.

The next question comes from the line of Avinash Singh from Emkay Global.

A couple of questions. The first one is on your credit cost, I mean, performance, FY '26 is very great and you're guiding again despite increasing unsecured, keeping it to 1.1% to 1.2%. Can you just help us, I mean, what is your kind of a base case assumption behind this 1.1% to 1.2% guidance in terms of the current conflict because the current conflict is, of course, uncertain scenario and that sort of is dragging on. So based on your kind of assessment, what is your base case estimate where you are guiding for this 1.1% to 1.2%? And the first question is on if you were to look, I mean, at the margins, the kind of diversified business you have, of course, I mean, you are the [indiscernible] OpEx and credit costs is very impressive, that's why, of course, you are allowed to operate in a slightly lower margin. But when you are talking of margin expension, is it largely driven by product mix? So based on the market dynamics and competitive analysis, can you sort of indicate where are you versus competition in terms of -- is it, I mean, that you are pricing it lower or is it kind of a parity to some of the midsize bank or the large NBFC that operates? So I mean how are you placed versus competitive dynamics in this segment in terms of yield you are offering because the kind of one of the best cost of fund you have, but the margins are kind of slightly it looks like a [indiscernible].

So Avinash, your first question was how are we giving for the base case in terms of the credit cost, which we are giving a guidance for. The reason for that is almost 72%, 73% of our loan book is secured. And when I say secured is secured by collateral, which is not depreciating in nature, which is appreciating in nature, majority is backed by real estate collateral, primarily the SME owners, self-occupied residences, offices. So that's how -- and in terms of pricing, if you look at and you mentioned, we compare quite well with other NBFC in this segment. Our yield in this segment is almost 12.2-odd percent. So I think quite well priced. What was the other question? In the secured, if you look at is -- I think our pricing is quite well priced compared to the industry. And in terms of how the margins, yes, we have one of the best cost of borrowing, best credit cost. I think from here on, as we still are personal consumer is pretty small in the overall product mix. And so as I have been saying 13% is our personal and consumer, which is a high-yield product for us. And that is still 13%. The moment it improves every 200 to 300 basis points, you will see a margin expansion in this for us. And credit costs because still even 200, 300 basis points, we go up still 70%, close to 70% of our loan book will be secured. So that's the reason we are quite confident on the credit cost and with that change in the product mix, expansion of margin.

The next question comes from the line of [indiscernible] from JM Financial.

Just a couple of questions. So one, when I see the numbers for this quarter, the OpEx growth has sharply outpaced the AUM growth, and this is for the last 3 quarters as well. If you could give some light on why this OpEx growth has been or specifically for this quarter? And another question would be, despite increasing the P&C exposure, the AUM numbers have been increasing, but disbursement figures have been broadly flat for the P&C as well as the unsecured space. So why this also happened? So these are my 2 questions.

OpEx has been -- we have been seeing our investment in our retail, retail businesses and MSME business, which we have been doing over the last few years and few quarters as well. So that's the only reason, which on the OpEx side, we can -- we will -- we mentioned, there will be some normalization, which will happen. So that's the reason on the OpEx.

But is there any specific reason for a sharp price in this quarter?

No, there is no specific reason for that.

And on the disbursement piece?

Yes. So the disbursement piece, I'll tell you, on the personal and consumer, as we have been saying, we have quite calibrated in terms of how much we will disclose. So the disbursement is flattish, yes. And we are looking at a very, very calibrated growth in the current environment. On the unsecured business side, this last quarter also, I had mentioned that there is a supply chain business and line of credit, which we don't include in our disbursement numbers because those are churning portfolios. And that's the reason you don't see that kind of numbers in terms of disbursement, but that adds to the AUM, some segment and some products which we don't count in our disbursements.

The next question comes from the line of Nidhesh Jain from Investec.

In housing finance, also, we have seen margin compression on a Q-on-Q basis. So what is the reason for that? And what is the outlook for margins and ROA in the housing finance business for FY '27?

Yes. So Pankaj here. So if you see that for Q3, Q3 NII was 5.22% for us and Q4 NII was 5.03%. [indiscernible] in the 19 bps has gone [indiscernible] You will see that the NIM actually is [indiscernible] for quarter 3, and it is 4.0% for quarter 4. So this point different on NIM. Largely, I would say, seasonality and also the competitive pressures [indiscernible] in quarter 4. If we look at other income, [indiscernible] Q3 and Q4 [indiscernible]. Other income [indiscernible] a function of 3 important parameters. One is, of course, the data [indiscernible]. Second is [indiscernible] that you make. And third is that any repricing that you have to do for any [indiscernible] that to happen. So an activation of the [indiscernible] are very consistent for us. So Q3 and Q4, there is no [indiscernible], was slightly lesser because [indiscernible] simply and also for sometimes [indiscernible] mix is up to scale. [indiscernible] were slightly lower compared to Q3, so that was -- there was some kind of a gap. The insurance, this is a [indiscernible]. So the reason of the other income being down is essentially because the [indiscernible] and last but not the least, mark-to-market in Q4 was also there because some majorities are into majority and less others are also linked to market. So all of us know how the GST actually moved. And there was most that we also have mark-to-market. So that is basically the reason why we see the overall [indiscernible]. As I mentioned earlier in my opening remarks, we are estimating the NIM -- NII to be range bound in this year. So they should be in the range of about 5.10, 5.13. There will definitely be some compression in spreads. But as you will know, the capital amount has come in. So there will be some support that we have on the corp side of it. So that should help us in maintaining the NII at the current levels that we are in the talking. We are demonstrating operating efficiencies as you would have noticed, versus last full financial year against [ 2.94, ] we've closed the year on OpEx storage loan book at 2.2%. So it is about a 50 basis point decrease as we go. So this year also, we anticipate that number to be closer to about 2.10, and this is coming at the back of the 100-plus branches at the opening. So actually, we are building our operating efficiencies and net OpEx increase in the branches. We expect the OpEx storage loan book to be in the range of [ about 2.13. ] So that [indiscernible] That is 3%, and with the rate cost being at 28 basis points, we should have a [indiscernible] 2.72, which should translate to an ROA between [ 2.10, 2.15. ] That is what we are targeting right now. And on credit costs, we are fairly confident because if you look at the trajectory to credit cost, both in absolute and in percentages, we have come down. So Stage 2 plus Stage 3 for us is among the top 2 in industry, it is currently trending at [ 70 basis points ] [indiscernible] of Stage 3 and 32 basis points of Stage 2. So having a very strong Stage 2 performance, there's a lot of confidence that the credit cost will be normalized. And therefore, in our confidence of being in the ROA trajectory of between 2.1 and 2.5, I think, is where we are along with a very, very robust growth. And as I spoke about the INR 1 lakhs crores of AUM in the next 24, 30 months. So very focused on asset quality and also growth.

Sure, sure. And from a medium-term perspective, how do you see ROA/ROE for housing finance business?

So ROA, as I mentioned for FY '27, the ROA to be in that 0venue of 2.10, 2.15 because currently, the [indiscernible] happens has come in, you would have noticed [indiscernible] crores coming in already. So actually, the ROE is lesser than the last financial year. It will be in that range of over [indiscernible]. Currently, at [indiscernible] at the end of the financial year. So [indiscernible] is becoming better. It continues to rise because as you would have seen, we have always been in the [indiscernible] of about 6.5%, 6.1% and 6.5%. So as the year progress in the next 12 to 24 months, you will see the ROEs costing 15%. That is our trajectory.

Sure. Now in life insurance, there is a negative operating brands and [ changing ] brands. So what are the reasons for that?

So in the bridge, you see the 2 assets, which are -- we are on the verge of shifting from the IAS regime to the IFRS regime. And typically, in IFRS regime, the conservatism that you have in your valuation interest rate actually does not unwind here. So what we've done is we've repeated some of our assumptions as we build it for moving into the IFRS regime in the next 1, 1.5 years. It's supposed to be '26 or '27 because we asked for a forbearance to say we will go to IFRS in financial year '27. We've had some change in assumptions on the reduced [indiscernible] from some of our products, so that has got built in as we speak. So we are showing operating reliance negative on account of these factors. But like I said, the large part are easily on account of change of the assumption, which we think will be moving into from an IAS to an IFRS world, it may be a prudent step to do at this point in time.

Sure. And do you see redemptions are on which parameters? [indiscernible]

Largely on parameters related to basically your portfolio getting a little better. So for the last [indiscernible], they are lesser, some of it because it is lesser than what you plan for, you obviously need to bring in better reserving. So some of the assumptions that you make, if the experience does not turn out to be the same. But in a way, on a long-term basis, it is good for the portfolio because we are seeing less lapses. Obviously, it will contribute to the embedded value growth in future times to come. So we'll do this on an annual basis, and we did this in the month of January, we do this every year.

Sure. And in life insurance, we have also been growing pretty well versus industry growth. How do you see growth next year, FY '27?

So like I said, we've said maintain that, we will definitely want to grow at 20% plus. Look at the CAGR of the life insurance business the last 2 years in individual, we've been at about 23, 24 has been our CAGR for the last 2 years. And in group, we had about 26, 27. Like I said, as we get new banca infrastructure, like I said, Axis, we are present in only about 20%, 25% of their business for the whole of last year, it will be close to about 50%. So all of this will help us maintain that CAGR for sure in the next 2, 3 years to come.

Sure, sure. And last question is on NBFC. So have we seen a spread compression on the line of business basis because the overall margins have -- there's a marginal decline in the margin this quarter. Last quarter also, I think margins, there has been a mix shift towards high yielding portfolio, but that is not visible, probably the numbers have been marginally shifted. But on a line of business basis, have you seen a spread compression basically in secured business, are we seeing a spread compression?

No, Nidhesh. We haven't seen any compression. It's primarily the outcome of the product mix is what it is. And if you see from -- in quarter 3, it has not compressed. In quarter 2, it was 6.0, it improved to 6.12. It's 6.08 this quarter. And the reason I mentioned one is, yes, quarter 4 is slightly more competitive and everything else. But there was an [ MTM ] loss because of the [indiscernible] on the -- which had gone up, that has impacted our margins by 3, 4 basis points. So because we believe that it's quite stable and we should be able to improve from here.

Ladies and gentlemen, due to time constraints, we will take this as the last question. I now hand the conference over to Ms. Vishakha Mulye for closing comments.

So thank you again for joining us today evening, and we look forward to keep in touch. If there are any more questions, feel free to get in touch with any of us. Thank you.

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.