Can Fin Homes Limited (511196) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Can Fin Homes Limited Q4 FY '21 Earnings Conference Call hosted by Investec Capital Services. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Utsav Gogirwar from Investec Capital India. Thank you, and over to you, sir.

Thank you, Aisha. Good morning, everyone. Welcome to the quarter 4 FY '21 and full year FY '21 earnings conference call of Can Fin Homes Limited. To discuss the financial performance of Can Fin and to address your queries, we have with us today, Mr. Girish Kousgi, MD and CEO of Can Fin Homes; Ms. Shamila, Business Head; and Prashanth Joishy, CFO of Can Fin Homes Limited. I would now like to hand over the call to Mr. Girish Kousgi for his opening comments. Over to you, sir.

Good morning. Good morning to all the investors. Thanks for this call. At the outset, we feel extremely happy for the way we have done in Q4 and also for the whole year. It was a challenging year. After COVID wave 1, literally 2 quarters, we couldn't do any business. We started business, as I mentioned earlier also, in last week of May. And quarter 1, we disclosed about INR 400 crores. Quarter 2, we did a little more than double of Q1, INR 825 crores. And quarter 3 with INR 1,105 crores. Quarter 4, we crossed INR 2,000 crores. Now this INR 2,000 crores is all-time high in the history of Can Fin. And all-time numbers we did in February and March was far better than Feb. So Feb and March are two high months in the history of Can Fin. So why I'm saying this is that I think there were a lot of concerns in quarter 2, quarter 3 conference calls on the growth. And I always mentioned that when we have an event like COVID, it's very important that we focus more on portfolio, the asset quality, liquidity and cost because business would come in. It's only addition point when we press the accelerator, definitely business is going to come in. And I always mentioned that from Q3 onwards, we will show growth. And accordingly, Q3, we did well. Q4 was far, far, far better than Q3. Q4, if you see on a Y-o-Y, we grew by 44%. Sequentially, we grew by over 80%. If you look at the whole year, we are down by 20%, right, and that's because we got hit with 2 quarters and even said third quarter was suboptimal, considering COVID impact, right? On asset quality, last quarter was 0.99%, including pro forma, 0.68% for NPA, and pro forma was the balance. So we were at 0.99%. Quarter 4, we are at 0.91%. So we reduced by 8 bps. So we feel that the growth is only question of the addition point. So we have to decide when we have to accelerate on growth. And that's the reason we had to time it appropriately last year. Now if you look at the book, we were degrowing. Now quarter 1, quarter 2, quarter 3, if you look at the book growth, it was not there at all. And it was negative [indiscernible] quarters. That is because of high BT because the portfolio was at a high yield. And therefore, all the banks and large HFCs, they were quite aggressive on BT in. And for us, it is BT out before we lost the book. We knew this is going to happen. And therefore, we changed the strategy with respect to pricing on 2 counts, one is to retain our book, a; b, to also try and grow our disbursement, so that we'll be able to grow. Now even this was a big change, what we did last year, and I always mentioned that because if you look at corporate lending amongst all the banks, it has still not taken off. I kept mentioning this in the last 3, 4 quarters that -- and therefore, there will be no focus on banks, especially into consumer loans and within consumer secure, within secure the home and within home as a segment of BT because that's the easiest way of growing book. And therefore, we thought that we need to change the present strategy, and therefore, we changed it not only for incremental business, but also for the book. And therefore, you will some contraction in margins. If you remember, right, I always kept on saying that for a profile like Can Fin, which is largely into affordable, focusing more on salaries, no corporate exposure, no focus on high-ticket loans, no developer exposure for a company of this profile, NIM of 3% instead of 2.4% is what we see in the long run. And therefore, when we want to grow, definitely, it's a trade off between profitability and growth. We will definitely do a fine balance between these, 2 protecting margins and profitability as indicated in my earlier conference call that NIM and spread would come down from the current level. And accordingly, if you see NIM and spread for this quarter, definitely it has come down compared to last quarter. So this has happened over a period of time, and we will offset this with growth in volumes. Now definitely there'll be a question in terms of -- I've already told that we will maintain 3% and 2.4%, so definitely, we'll protect that. We will not go below that. We'll try to balance both business centers. Now there might be certain questions which may come up, maybe after some time with respect to our revenue. So definitely, when we are aggressive on pricing and when incremental book is being sourced at a much lower yield, and some part of the portfolio is getting repriced because we want to retain our customers, definitely there'll be impact on revenue because this is on the portfolio, not just an incremental. We did very well in quarter 4, but no more so in Feb and March. So income won't be that high because we did only for Feb and March, hardly, it will be 1 and 2 months for the four. And therefore, you will see that our revenue was quite low on a -- if I have to compare on a yearly basis, so whole of last year and the previous year. But however, if you look at the margins, both gross and net profit, we have improved. I think most important is that we had set aside INR 76 crores towards COVID. Now out of INR 76 crores, we are holding INR 70 crores. We had plan of writing some of the provisioning back, which would have got added to profit. We didn't do that considering the second wave. So we've just kept that INR 70 crores of provisioning, which is a subset of INR 76 crores, what we had done in last year towards COVID. This apart we had provisioned INR 13 crores, which was partly for restructured provisioning and also partly for the interest write-back, right? So it was a conscious call that we will not write-back, though we had an option of writing it back in the month of March, even if you had written it back, let's say, some amount of INR 70 crores, it could have added to profit directly. In terms of market, market is pretty robust. Now because of second wave, because of lockdown in various states announced by various state governments, definitely in last week or so, there have been some impact, both on business and also on collections in most of the areas where we operate. And this is true for any company in financial space. So this is a good brief on last quarter and the whole year. I would be happy to take any questions which you may have.

[Operator Instructions]

Just one request, just one request. I think I saw the time was from 11:30 to 1:00. I'm saying, Utsav, please extend, even if it is by 30 or 45 minutes, so that everyone gets a chance to raise their query and get response from us.

Sure. [Operator Instructions] The first question is from the line of [ Nitin Jain from Emkay Capital ].

So just 2 questions on the cost-to-income ratio. So have you restated the number for Q3? Because the earlier presentation says 13% and now for December '20, it says 16%. And the second question on the similar topic is we've seen a significant jump in the cost-to-income ratio quarter-on-quarter. So where do we see this stabilizing?

Yes, the figures of 13%, what we've shown in the Q3 presentation is for the 9 months ending because last -- investor conference, specifically it is solicited that better is to give on a quarter-on-quarter basis separately. So if we give only for the Q3, it is 16%; if it's 9 months, it is 13%. And also with respect to cost of funds, if you see for the whole year, it's about 15.5%. So it will be in that range only. Yes.

And on the follow-up question, the jump quarter-on-quarter, where do you see it stabilizing?

So if you look at quarter 4, there was slightly increase in cost because of certain 3 or 4 items. One is they had to -- salary vision is due, and therefore, we had to provide for that. And also because the whole of last year, we had close to about 6, 7 months being impacted by COVID, and therefore, CSR spend got skewed towards quarter 3 and quarter 4. And also, there was some spend on the digitization. And because of this, you will see there a slight increase in the OpEx, and therefore, impacting the costs. But if you look at the whole year, it's about 15.5%, and it will be on both clients in future as well.

Congratulations on the good set of numbers.

The next question is from the line of Gurpreet Arora from Aviva Life India.

Can you highlight what will be your sourcing mix for the quarter and for the full year?

Okay. Sourcing mix for the quarter. See, if you look at our sourcing mix over the last few quarters, it's [indiscernible] quarter. It is highly [indiscernible] borrowing. That's only because what really drives us the source is cost. So it so happened that in the last few quarters, we're able to raise from banks at a much better rate. And therefore, we see the bank in the range of about 51%. And then we also saw that the funding from NHC was coming at a lower cost and therefore, [indiscernible] is about 21%. Market is 23%.

I'm sorry, I'm sorry, sir. By sourcing mix, I meant in terms of disbursements, what is the sourcing mix?

Okay, okay, sorry, I thought it's funding. Okay, fair enough. So in terms of sourcing, if you see at a portfolio level, 71% was salaries and 29% was self-employed nonprofessional. And if you look at after COVID, especially after Q2, there was a slight change in the sourcing mix. So the salary portion went up. And if I have to talk about incrementally in quarter 4, 83% was salary and 17% was self-employed non-professional. That is because we don't see too many people now in the SENP segment coming forward to avail the loan. However, we see slight increase in salaried segment. It's also because the recovery time for self-employed non-professional from COVID with respect to business loss could be slightly longer.

Sir, in FY '20, DSAs had mobilized 58% of our total functions. Is it a similar number for FY '21 as well?

No, DSA sourcing would be in that ratio, only 50-50, maybe plus or minus 3%, 4%. Because we -- see there are 3, 4 things. One is, if you see the portfolio performance of DSA and non-DSA source, there is no difference for us. That's because our DSA model is different. For us, DSA model would work only with respect to lead generation or just sourcing the file. Once the file is sourced, we take over the entire case and we own the customer. We own the entire process right from the processing rights to disbursement. Whereas so typically see how it happens in the markets is that DSA would source -- complete the enrollment process would be part of the entire processing, sanction process, then documentation till disbursement. So our model is different. To that extent, even our payout to DSAs is much lower than what the market says. And therefore, we are not really worried about DSA proportion, either increasing or decreasing as long as they're able to do numbers and portfolio being intact.

Sir, my second question is, the Karnataka state government's decision to cut stamp duties on dwellings valued between INR 35 lakhs to INR 40 lakhs. Now if I look at our the incremental ticket size of INR 20 lakhs, and I mean assuming we're 80% to 90% on that, so the stamp duty cut would not benefit us largely. Is that assessment right, sir?

See stamp duty cut, yes, it has definitely benefited. I think more than that, why there was increasing ticket size is because of our aggression and also because of our pricing strategy. So what happened was when we became competitive with respect to pricing, when they able to compete with some of the big banks and getting the newer segment. For example, focusing on business within city limits, earlier we were not. So I think that ensured that we were able to source better profile customers, slightly higher ticket loans and therefore, there was increase in ticket size.

That's fair enough, sir. Sir, my question is that the Karnataka stamp duty cut is for the units price between INR 35 lakhs to INR 45 lakhs. And that's not our large target segment. Or if I can put it this way, if you can highlight what percentage of our portfolio can get benefited by this stamp duty cut?

See, we have diversified across geographies. So our business share from Karnataka is not really substantial. It used to be substantial about a couple of years back, but now we have many geographies contributing. So to that extent, the benefit would be a little less because our -- if you look at the incremental sourcing, Karnataka would be in the range of about 20%, 21%. So the benefit also will be to that extent because we are present in that affordable space.

Fair enough. Sir, my next question is on the OpEx side. I mean, this pertains to the OpEx side. I mean, since -- I mean, we maintained presence in 21 states and UP and while 69% of our business emanates from Southern India. And outside Southern India, I have seen we have a large presence in Rajasthan, Maharashtra, UP, and Haryana with 45 odd branches. So in terms of OpEx or in terms of strategic presence, I mean, how does these 2 things reconcile for us sir?

So if you look at business, south contributes approximately 70%. If you look at number of branches, south will be in the range of 70%. If you look at our employee spreads, south would be almost on similar lines. So in terms of the employee productivity and contribution from each of these geographies, I think there is say bit of balance. Since we also track brand profitability, geographic profitability and inside productivity. So our contribution from South is more, and this will continue in the future as well.

[Operator Instructions] The next question is from the line of Manan Tijoriwala from ICICI Prudential Asset Management.

Sir, I had a question on the liabilities. So I understand around 25%, 26% is market borrowing. Out of this, how much will be commercial paper borrowing?

As of March 10, it is -- 19% is the commercial papers and balance is from the in cities. So what we do is we raise CP only as a backup. So we should have undrawn limits and OD in it. Only against that we take CP. A CP is more for arbitrage with respect to cost and not for funding.

Right, and so this does not cause an ALM mismatch. Is it?

No, no, no. See, whatever the funds we have raised by way of CP will be of a shorter nature. It is supported by the undrawn, your CC limit and OD limits. So in the ALM, the mismatch will not come into picture at all.

Right. So just one question on the [indiscernible]. I think the calculated [indiscernible], they are coming at a lower level around 8.55% to the AUM. Any reason for the liquidity into the reported yield is around 9.45% [indiscernible]?

So it is calculated on the daily product basis on the AUM, on a daily basis. So it's a fractional calculation, which is in order. We take the weighted average concept on the overall base or a quarterly basis, you are going to get this one because this is calculated on the daily product basis on the daily returns.

[Operator Instructions] We would request the management to please go ahead. We would request the participants to please stay connected as we have lost the management.

Hello. We are there, madam. We can hear you.

Okay. Manan, I would request you to please go ahead with your question. The next question is from the line of Siddhartha Bhotika from the Investment Trust of India.

Sir. Just trying to understand is there a...

I'm sorry to interrupt. Siddhartha, we request you to come off speaker.

I am speaking on my handset directly.

Actually, we are not able to hear you clearly.

Okay. I'll try and speak a bit louder. Sir, is there any internal limit in terms of how much CPs you can carry on your book as a percentage of borrowing? Because if I look at the NCD number, which is currently in book, the CP issuance is about 19% of overall bonds.

See as we saw it, we don't have a specific internal limit on the percentage-wise. But size-wise, we have an internal control. As we explained earlier, whatever the CP raise is not for funding, but for the cost leverage. The sale is supported by the undrawn documented financial lines available with us. So if the financial line is more, comfort is there, it will be going for the CP. But the overall borrowing, we have a cap internally approved from the Board. Within that, it will be there.

Sir, as a follow-up to this. Is there any discomfort for using...

Sorry. Your voice is not audible, little louder please.

Yes. Is there any discomfort in using normal debentures, which are like 3-year, 5-year maturity? Because you have issued very few of them and the older ones are maturing now.

So if you see, if you look at the cost of funds for raising debentures, [indiscernible] was quite high. Okay. Until last year, we had an option of not raising. But however, from this year onwards, we will be -- we have to raise 25% of incremental borrowings. So from this year, we will raise. Why we couldn't raise last 2 years is that it's purely because of the cost. So this year, we have today, so we will raise, even though it will come at a slightly higher cost. Now as far as CP, I want to stress the CP is only raised only if they have a backup of undrawn limits. So CP is used only for cost reduction purpose, not for lending. We don't raise CP and lend because we are very high on liquidity, very, very high on liquidity. As of now, we are covered for next 7 to 8 months. And at any given point in time, now we will have 7 to 8 months of liquidity. During COVID time, we had 1 year, and now we are at about 7 to 8 months. So we are very high on liquidity. And therefore, since we have a huge undrawn limits, we tried to reduce the cost by raising CP.

Okay, sir, if I can slip in 1 more question. What is our back book yield on advances and that now the incremental advances that we are lending -- rates that we are ending at?

Okay, the yield is 9.49%. Spread is 2.78%, limits 3.69%. Now incremental cost of funds is 4.5%. This is for quarter 4.

And yield is 7.32%.

Yield is 7.32%.

2.78% is the spread for the incremental borrowing over incremental lending.

The next question is from the line of Rahul Maheshwari from AMBIT Asset Management.

Am I audible.

Yes. Your voice is breaking.

Is it fine now?

Yes. It is better.

Yes, first of all, hope all well is at your end and your team during such time. Sir, 2 basic questions. Sir, as you mentioned that the yield strategy, I think so 2 quarters back, you had planned to make NIMs at 3% plus and spread at 2.4%. And during these 2 quarters, the balance transfers were very high, looking at the yields where it is today. Are you at an incremental yield at 7.32% where you have said. In current quarter, what could have been the balance transfer as a rate as compared to the strategy? When you started at that time, what was the balance transfer rate at that time and now? And what are you witnessing in the April month and going forward, sir? Are we stabilized in terms of balance transfer for the time being? So this is my first question. I'll ask later on second question.

Sure, so with respect to balance transfer, we saw during COVID time, it was much higher than the BT out rate. So it was significantly higher. I mentioned the reason in the beginning of the conversation. So therefore, we had to come out with this strategy. After this strategy, our BT out has drastically come down, significantly come down. And not only that, we're also able to grow our book by doing more disbursement incrementally.

So it would be very helpful if you can give a range because my question is not only on balance transfer going drastically down because that was the strategy, which you thought and it is yielding. But also, if you can highlight that there is a chance that if there is a balance transfer in is also coming because the rate is now competitive to the banks though 20, 30 points lower, but still.

So just to give you a number, we used to be in the range of INR 250 crores BT out. It is only BT out during COVID time. That number for quarter 4 is INR 90 crores. So 2 things have happened. If you have to compare that with the business what we have generated, it will be approximately INR 90 crores on INR 2,000 crores. Earlier, it used to be INR 250 crores. So BT out has substantially come down. It has helped us to retain the customers and also to grow our disbursements. Three things have happened. One is BT out has come down, BT in has gone up.

How much that would be, sir, any range or percentage?

So BT in -- yes, if you compare it to INR 2,000 crores, may not be substantial, but if you compare to what it used to be earlier, we have tripled that amount.

And how is the April month and going forward, the things are happening, sir? Any not quantitive number, but qualitative highlights or impacts would be very helpful. So whether looking because today, just now the data had come, just to give you on Bombay, there was a record high registration. So once again, how the things are taking place? Again, you are witnessing logistic challenges kicking in because of the Karnataka and other states going locked down? Or the things are going normal, at least on the housing side?

No, see April till about a week back, everything was normal. Okay, now with lockdown announced in literally every state in the country, so there will be impact on business and also on collections, and this is true for the entire industry. April, the start was very good. The first 15 days was really excellent, both on business as well as collections. I think once the lockdown started, definitely, because the SROs would be closed because these run on the state government. So no way the SROs are open. And people -- obviously, mobility of people is a constraint now. So definitely, in April, there will be hit on business and also on collections. I think the good part is that we had significantly covered in the first 15 days of April because of pent-up demand. We'll have to wait and watch how May would pan out. But as I mentioned earlier, with respect to business, it's only a question of time. And with respect to collection, the efficiency might be lower, definitely it's lower, and this is true for everyone. The arrangement has been infected with most of the HFCs and banks are largely into housing. So April definitely would have some impact. It all depends on how May and June would pan out. But yes, as it will be fully a question of time to get back your collection efficiency in place and also business increase.

So sir, business first 15 days, as you mentioned that the things were normal and at a good health. So in last 15 days from 100x as an index, it might have gone down to 90 or 80x as an index in terms of the business?

I didn't get your second question. So see first 15 days was not normal. It was abnormal, substantially high business we did. After there was lock...

Later 20 days, suppose if you did 100 business on first 15 days as an index on an overall basis, the fall has been 20%, 30% in later half of 15 days of April?

So if I have to do April to April comparison, the fall would be, yes, you're right, it will be about 30%.

Yes, okay. And sir, last question, sir, as you mentioned that the strategy is very good on the growth side, and it is to be competitive and all that, but how you look at on a profitable basis? Because now at a lower yield, how the ROA of 0.2%, whether it will kick in to your cost efficiency or the other parts, which is driving the source? Or we shall take a new normal of ROE at a 1.82%, as you mentioned, on the NIM side of 3% and the spread. So how it happens on the profitability side? It would be very helpful if you can give that figure -- that guidance over the year, sir.

So this strategy is not long term. This strategy was required because there was [indiscernible] on the book. Now we have reversed, now it gets reversed. We have disbursed first highest ever number in quarter 4. And also, quarter 3 was very good. So this is a short-term strategy. This may last for another, maybe, 2 quarters or 4 quarters or 6 quarters, depending on until when the strategy is required to be exhibited. The reason is very simple. Unless and until corporate and SME sector fixer, the focus is going to be more on this segment, and we don't want to lose market share. So when we say that, this 3 and 2.4 also would happen over a period of time. And this is not a long-term strategy. So maybe after 4 quarters or 3 quarters, if you feel that there is opportunity to price it differently in certain markets or certain profiles, for example, we would probably get back. However, the gap is not going to be 150 bps. It used to be earlier between us and the best HFC or bank in the country. Maybe it might be 0.5% or maybe 0.75%. So we would very, very carefully tread this balance between the growth and profitability. All I'm saying is that since the growth is going to be substantial and we are high on liquidity, we have the benefit of cost, I think we should be able to manage that. Yes, this is a transition. We are already into it in the last 2 quarters. This may take another 2 or 3 quarter's time. I think there, you'll normally at the end of 3, 4 quarters and you will find that everything falling in place. So maybe in short term, there might be some impact on the margin. And therefore, profitability. I think with the increase in volume, that will offset. And also because of OpEx coming down to a certain extent, this is not going to reduce drastically, but yes, definitely to a certain extent, OpEx also will come down because the employee productivity and business per branch would go up.

And sir, a data question. How many employees, if it is mentioned in PPT, I will go check.

How many employees we have? We have close to 1,000 employees.

[Operator Instructions] The next question is from the line of Ritika from Ocean Dial Asset Management.

Sir, if you could kindly give some more color on the disbursements that we've seen this quarter, in terms of maybe some state-specific color or maybe in terms of while you've mentioned that BT in was tripled, but if you could kindly give some more data points around it, and also some color on salaried and self employed. So where have you -- so my question is, where have you seen this growth from? Is it more state specific, just salary, self employed? And if you can again quantify the percentage of BT in?

Okay. So we have seen actually, it is spread over quarter 3 and quarter 4, not just in quarter 4. We have seen geographies like Karnataka, then Andhra, Telangana, Maharashtra, Rajasthan and Gujarat contributing, Delhi, not to that extent. So it has come from most of the geographies where we are present, right. Because in a large state, we may have very less number of branches. And therefore, I'm just going by what is my number of branches and number of employees in this particular space. So we've got this business from almost all the geographies, maybe barring NCR, right? So in terms of segments, we've seen salaries increasing from about 71% to about 83%. That is the impact of COVID wave 1. So this may continue. So we would see that going forward, also about 80% to 83% was coming from salaried and 18% from self-employed, at least, for next 3 to 4 quarters, which means, in a way, the risk could be lower because salaried would give us better portfolio quality. And if you have to look at segment, for example, within builder, I think builder share has increased. We've been doing refunding for apartments, which used to be 25% on portfolio, I think incrementally that has increased because now we are competitive. And because we are competitive, a lot of new segments have opened up for us. So today, we are able to probably try and fund to a customer who wants to buy from a cat A builder which probably wasn't possible 4 quarters back. So I think these are 3 or 4 things from where now we've got this kind of growth. And in terms of BT, yes, BT out has drastically come down, BT in has increased. As you can see, our -- in quarter 4, our incremental book growth is more than INR 1,000 crores. So that -- this number we used to do probably in 9 months or 10 months earlier, now we've done in 3 months' time. So there's been substantial positive impact on BT out and BT in.

Sure, sir. Sir, on the second question, on the yields front, sir, is it possible for you to help us understand that so while it is very clear -- your strategy is very clear, and that's obviously bearing fruit. Some more color around that, this compression in yields that we have seen on a quarter-on-quarter basis, how much would have been because of repricing the back book and how much would have been because of lower incremental. Is there a way we can get some color around that? Like what I'm trying to understand is that how much of the concern incrementally, we have taken into account by reducing our rates for the back book. So that we are very sure that the prepayment rates, which have come up now are largely where we are going to be in the future.

So for example, if you see this pricing strategy is invoked last year for about 5 months. So we just started in the month of November -- in March. So it's about 5 months, right? So if you see the impact, at least the first 1 year or so, so the impact in margin contraction will be largely from the repricing out of the portfolio than incremental business. So what will happen after 1 year because if you look at any company, 80% of the portfolio would be last 3 year sourcing. So at the portfolio level, we are here at about 22% of the portfolio is repriced.

Sorry, sir, 42%?

22%.

22%, sorry. Okay, sir.

The next question is from the line of Pranav Gupta from Aditya Birla Sun Life Insurance.

Sir, 2 questions, both on the margin front. So firstly, you spoke about this strategy of going aggressive on pricing to get growth. Largely driven by the fact that banks are aggressive in this space now. And you see this strategy subsiding once banks also have other avenues to grow. Just want to understand, sir, that given the current context, a lot of banks have seen a lot of pay in the unsecured books, and they are talking of incrementally doing more secured loans and especially the housing space. See if this strategy from the bank does not come off and they continue to be aggressive, how do we look at the margins on a more longer-term basis probably 2, 3 years? That is the first question.

So assuming that we feel that in next year or so, I think if you get back to the situation which was pre COVID. So if that happens, then we would get back to our earlier way we are doing business. Maybe the gap can not be that much. Assuming that it may take a little longer time, let's say, next 2 or 3 years' time for banks to really pull all focus from mortgage, then we would -- you will see our margins being slightly lower, more than 3%, more than 2.4% NIM and spread from campaign on a large volume. So I think it'll offset there.

Okay. So that I understand this correctly, say this strategy does not come off from the bank. We are looking at a more growth versus a higher level of profitability, sort of a strategy in the longer term?

Absolutely, yes.

Sir, second question is on the funding mix. So we've seen, obviously, bank funding still contributes a large chunk of your overall mix, almost 52%. And just wanted to understand what part of the -- or what percentage of this book would be linked to very low tenure MCLRs, probably 3 months or 6 months.

So most of the loans are term loans, and it is long term. So it will be 7 to 10 years.

No, I was asking about linkages to the MCLR, sir. What percentage would be linked to any short-term MCLRs for the bank funding?

No, all the loans are linked to either MCLR or with our external benchmark. So it depends. So these are long-term loans. The tenure varies between 7 to 10 years. And we have some old loans, which is 15 years from NHB. Now all these loans are either linked to MCLR or repo, but the tenure is long. So whenever there is -- for example, let's say, there is a loan linked to MCLR, so whenever the bank changes MCLR, there is an impact on our portfolio either with respect to rates either going up or going down. But all the loans are long term. And all the loans are either linked to repo or MCLR.

Sir, I understand that, sir. I just wanted to understand that what percentage of the MCLR-linked loan would be into, say, a 3-month or a 6-month MCLR? I'm not talking about the tenure of the loans. I understand that they are long tenure loans.

So MCLR is either 1 month or 3 months. Some banks are at 3 and some banks are at 1.

Okay, none of them -- none of the bank funding would be sort of linked to a 1 year MCLR, if I understand when correctly...

No, no, no, not at all. See because higher the MCLR, obviously the rate will be higher. So today, we are enjoying low cost of funds. So our effort is to ensure that all the banks move to 1-month MCLR, but I think some banks, they have their internal policy. And so therefore, the 3 months MCLR would be quite less, which can be comparable with certain bank 1 month MCLR. So we are actually agnostic with respect to whether it is 1 month or 3 months. We are worried about the lending cost. As to this, it fits into our cost strategy, we are okay with that.

Understood, sir. Sir, just last 1 follow-up on this part only. Right now, [indiscernible] funding, which is why we're able to go aggressive on the yield side as well to get growth. But say, we start seeing some sort of hikes in the interest rates in the more medium term, how do we manage this upward repricing of MCLR or MCLR-linked loans?

One is we'll reprice the portfolio. Number 2, we will also increase our yields by increasing rates for incremental sourcing. See we have done that for many, many years. Now to ensure that we keep growing at a end rate, we have adopted the strategy. So once the time is right, we will get back to our earlier strategy.

Next question is from the line of Piran Engineer from Motilal Oswal Financial Services.

I have a couple of questions similar to what has already been asked. The prior person asked, what is our incremental cost of bank borrowings, if you can just tell us that.

Incremental cost of bank borrowings?

Yes, bank borrowings. Because the reason I'm asking is that we can't always keep incrementally borrowing from CPs. And my sense is that this 4.5% incremental cost of funds is not going to be sustainable. So if you can just guide us as to what your incremental cost for bank borrowings is, that will be helpful.

So incremental borrowing from banks is about 5.5. And I, again, want to reiterate for benefit of all of us. So the way we leverage [indiscernible] CP is only as a backup. For example, if I'm basing [indiscernible] I should have INR 500 crores of unutilized limit in my ODI. If I don't have, I will not raise. So we don't use CP for funding. We use CP only for cost reduction.

No, no, I agree with that. And the second question is what percentage of our back book or rather over the last 2 quarters, how much have we reduced yields on the back book?

So for example, use our portfolio cost of funds was in the range of 8%, up to 6.87%. So incremental is 4.5 cost of funds on portfolio to 6.87%. So every -- so we have repriced most of the loans.

No, no, no, sorry. I meant when I said loans, I meant your loans to customers, home loans, home loans, lap, et cetera. In the last 2 months, our incremental loans have been at 6.97%. But in the back book, how much have we repriced them downwards over the last 2 quarters?

Our incremental is now at 6.95. We have increased the rates from it out to 7.25. So I mean but different probably is different. So we actually haines wage from April onwards, right? So if you look at last 2 quarters, definitely, see, it was an offer. So our rack rate was different and we had an oper limited period. And therefore, that would have an impact on the margins for 1 year and then it will get repriced to the rack rate. So if you see the impact, impact wouldn't be much.

No, sir, I think I'm not being clear. My limited question is, you say the loans that were originated 1, 2, 3 years back, have they been repriced down to the rate of 7.25 also? Or are they significantly higher than that.

No. As I mentioned, at a portfolio level, 22% of the portfolio is repriced. And 22% of portfolio is repriced at what rate it depends on what is the risk rating of the customer and what is the type of project. For example, if it is self-employed customers with high rates, the rate may not be 6.95. The rate could be 7.5. So yes, we have repriced 22%, but all 22% is not at 6.95, that's the question. All 22% of portfolio is not repriced at 6.95, that's the answer. I hope I was able to clarify your doubt.

Yes, no, now it does. So then what is the risk when the remaining 78% also slowly reprices, and given the fact that we don't have much downside benefit on cost of funds anymore. I think cost of funds have bottomed out. Do you think there is a risk that our incremental spreads actually come below 2% compared to the guided range of 2.4%?

No, we would not. I think that is what I have mentioned. So if the rates start increasing, then the BT pressure will come down. You would not face that challenge at all. We also would try to reprice, do on the higher side.

The next question is from the line of Abhijit from Sundaram Mutual Funds.

Sir, I have 2 questions. First 1 is -- I'm not asking about very, very near term question. If the current restrictions, economic restrictions or activity restrictions were to continue. Do you think any changes to underwriting policies will happen from banks and institutions like Can Fin in the terms any tightening? Also second point is on the same thing. If the demand were to -- demand some borrowers were to recover, will the -- in your opinion, will there be some reluctance still the time situation were normalized in terms of business activity coming back. Till then, when we -- the resistance from the lender side to sort of source these loans and also sanction our disbursal. What's your opinion? Let me get the near term question. And I have 1 more question. I will follow up. Yes.

Yes, sure, so if you see after COVID wave 1, we had not changed anything to the policy, but we had tightened up process. So what we had tightened that we have restored it back. Now we will see if it requires to again tighten the process after second wave, we would do that. But that would not impact customer either with respect to eligibility or the loan tenures. So it could not impact at all. See the only thing is we will do certain, little more due diligence on the customer. So it will not really impact. Say if demand is back, we'll be able to grow our business very well. And because of COVID, second wave, if the lockdown continues, the impact is going to be for us, which is true for the entire industry.

So just to clarify, even if the demand from borrowers were to be back, there might be some reluctance until the activity comes back to normal.

So which we have seen already because self-employed as a mix has come down, so salaried has increased. So we feel that this would continue to another 3 to 4 quarters. Till we are completely out of COVID, we will see this trend. So what we are trying to do are decrease in efficiency share, we are trying to cover that by increasing the sharings, salaries.

Sure. Sir, second question, sir, is on the incremental loans, which are getting closed. How is the credit profile of these borrowers versus the ones which you have raised, before the competition from the bank intensified.

So the book which we were losing earlier, now we are not losing that kind of book, right? Yes, we lose, but the number is very small. So the profiles, obviously, it ranges from very good to good to average kind of customers. So this is a mix of all the 3. Because now since there was pressures due to COVID, and I think it was generally, BT out is the only good set off customers. But this time, we have seen a trend that it will -- it is not just very good customers. It is very good, good and average. When I say very good customer repayment track record is excellent. When you talk about good customers, you can see 1 or 2 bonds in last 12 months. When I say average, you can see those kind of cases either getting into SMA 0 or 1 once in last one month. So we have seen little change in last 1 year that BT out was in all these locations.

So let me just rephrase the question. If we were to look at this risk based at one side, after assuming the potential credit cost and slippages, et cetera, versus the threat. Are you satisfied with the new loans which you are originating, what usually happened pre-COVID in FY '19, et cetera, FY '19 and '20. Or I mean these things, where the returns are getting squeezed.

I will be happy if my investors are happy. So basically, it's a call. I need to balance. If my growth is moderate, I will be high in profitability, if my growth has to be high, I'll have to align with some of the big players. And therefore, my profitability will be moderate. So as of now, we have chosen the path of high-growth and moderate profitability. And when it is conducive and if we have to definitely will I feed this to my investments, then we can see that we need to get back to moderate growth and high profitability, we would not hesitate to do that.

Okay. Sure, sir. One last question sir, sorry for this. Can you comment from the collection efficiencies in April, in the early trend? Any concerns we are having on the collection efficiencies?

I would not be able to give the numbers, but yes, collection efficiency compared to Jan, Feb or March. April was less, definitely less. This was also true in quarter 1 and quarter 2 of last year. So I think April collection efficiency has come down. So we should see how it will be in the earnings. And this true for all the companies that you must be hearing this all over. So definitely, because 15 days of lockdown across the country, even the announced by state governments will definitely have impact on collections.

[Operator Instructions] The next question is from the line of Sayantan Bhowmick from PineBridge Investments.

I had a few questions. So first thing I wanted to understand, you mentioned -- and then the beginning, and then answer to some other questions that this quarter's expenses were higher due to some investments in IT. If you could just elaborate on what are we doing with respect to spendings on IT? And what -- are there any further gaps we think we need to spend in the IT segment? That's my first question. Second question is, if I remember correctly, last year, our spending on CSR was lower than the required or the 2% that is what is prescribed. Are we -- have we spent sufficiently in March, in the financial year 2021. And what are we doing with respect to supporting the community or the industry with respect to COVID. Is the company doing anything special or different in this segment? Yes, so these are my 2 questions.

Okay. In terms of absolute numbers spend on IT is INR 2.5 crores.

So it's not so much put the money? I'm just trying to understand what are we doing with respect to the spend? As in what is it? What are we doing different in terms of the IT spend?

No. No. See I think there are 2 things. One is we have strengthened our lease land capacity. That's one. And number two, some bit spent on digitalization. Now with respect to CSR, last year, we spent the entire amount, and if you see close to 45% to 50%, we've spent on COVID supporting state government, supporting central government, in terms of supporting other than these two governments to various hospitals, which would indirectly or directly support the COVID patients.

Okay, would that be the same thing this year as well?

I think so because looking at wave two. I think so we would at least -- we'll be committed to spending about 35% to 40% for COVID, may be it could be even more, it depends on how serious this would be in future as well.

The next question is from the line of Sanket Chheda from B&K Securities.

Sir, my question was that as of last quarter, our overdue accounts other than the NPAs were about INR 400 crores. So where that pool stands, it has reduced from there?

See generally, we don't share details, less than 90 degrees. All I can say is that as you have seen for last 1 year during COVID, after COVID, how our asset quality has changed, right? And you also last time, in last couple of conference calls, we also give you an indication as to what is the total delinquent pool of the industry given a certain mix. All I can say is that we are the lowest, and we will ensure that we will maintain asset quality going forward as well.

Sure, sir. So my next question is on growth again, not particular to quarter 2 or 3. What would be our growth that is 3, 4 -- say, next 3, 4 years. Are we looking to continue at that 18% to 20% run rate? And within that question on our yield for margins on that we are adopting just...

Yes, just to answer your question, definitely, we will be -- we want to grow 20-plus percent. It all depends on COVID second wave. Otherwise, our growth plan is intact, and as far as margins have already indicated, we will protect 3% and 2.4%.

Yes. Yes. No. So my question was, but -- so on margin, I was asking that whether the cost of funds goes up, it is likely to go up systematically. So on a relative basis in HFC space , we -- our cost of funds are now almost identical to a DSA and much lower than all the other HFC. So that relative advantage is likely to continue. Is that understanding correct because of the NHB benefit. And on bank side, the change, a change that has happened is, as you had highlighted earlier, that we are getting funds almost at a rate at which a AAA-rated profit would get. So 1 is that relative advantage will continue. Is that the right understanding? And second, since we are in the sweet spot, are we looking to target a slightly higher ticket size portfolio wherein based on the cost leadership, we could acquire some quality customers and also the entire higher growth without taking too much of a risk?

Your understanding is right. Yes, that is our plan. And if you see a ticket size has gone up from 18 lakhs to 20 lakhs. So because we are now focusing on few other segments which will help us to grow our book much faster without taking any incremental risk on our base rate.

Okay. And sir, last question, again, on the balance between growth and return ratios. So currently, this year, including the Q4 impact, we did ROA 2.2%. Now going ahead for at least FY '21 and some bit of FY '20 -- FY '22 and some bit of FY '23. Do we see ROAs stabilizing at 2% from 2.2% or going down from there also. How do we see that?

That I will leave it to you for calculations. So I've given you the growth rate, I've given you some kind of guidance on the asset quality. I think you are expert on calculating those ratios.

[Operator Instructions] The next question is from the line of Jigar Mistry from Buoyant Capital.

I had 1 clarification. So if I understand the chronology right, then there were BT outs which actually forced Can Fin Homes to reduce the rates. After the 22% of the portfolio back book has been repriced. The question, sir, is that why is the other 78% not repriced and why are they not beating it out if the rate are significantly higher than what the incremental risk-adjusted rates would be?

If you look at any company, you would have a portfolio at different ease. Some of the customers would come forward to reprice their loans. Some of the customers, the repricing happens automatically because we have both the options. So just to answer that question, this happens over a period of time. It will not happen in a span of 2 to 3 months time, it will take time. But eventually, I think most of the portfolio will get repriced. In the meanwhile, if the rate goes up, then the repricing may not happen or if the rate goes up substantially, it can happen on the higher side. Because we also reduced the portfolio and the rate of the -- of all the customers at a portfolio level. We have to do that. So that happens on a default mode. So beyond that is -- yes.

No, no, sir, that is amply clear. The only other follow-up is that on a risk-adjusted basis for that 78%, the portfolio yields versus the incremental yields, how much would that difference be? Again, everybody would be at different risk. But if you adjust for that risk, on an incremental basis, what is the difference between the portfolio back book versus the incremental rate?

So portfolio yield now is 9.49%. And incremental is a little less than 8%.

For that 78%?

Exactly. So this 9.49% is yield on the portfolio.

Because that would include the 22% that has been repriced as well?

This would include, yes.

So my question is that for the people who have not yet sort of adjusted their books, for them, it's over the course of the next few months. Let's take out the interest rate increase or decrease from the picture for now. If those 2 were to over the course of next 3, 4, 5 quarters reprice their book, what would be the downward revision for that 78% that we would expect based on what the current incremental lending rates are?

So basically, that is what we have calculated. And therefore, we said we will protect margin of 3% and 2.4% because this has happened over a period of time. And this -- when we talk about 9.49%, it used to be 10.17%. So 10.17% came down to 9.79%. So gradually, this ease also would come down. But we are also sure that this will not last for too long. Maybe after a few quarters, rates will start inching up. So we would -- see if the rate goes up, we will reduce our -- because our cost will go down. Our yield also, we will ensure that we will price it appropriately to maintain the margins. If rate goes up, we'll increase the rate. The rate goes in, we decrease the rate.

Only thing, sir, is that it's a little bit counterintuitive because if the incremental spread or incremental NIM is 2.4%. It would stand to reason that for the back book that has not been repriced, it would not have the same 2.4% NIM. It would actually have a much higher NIM, which would tend to go down as the asset gathering price. But you are saying that, that inventory are duplicates?

So today, if you look at our yield on portfolio, it is 9.49%, if you look at cost on portfolio to 6.37%. We have at least to track it going forward. So we will see, what is the cost on portfolio and what is the yield on portfolio. Not just incremental ,even on the portfolio.

The next question is from the line of Nirmal Bari from Sameeksha Capital.

So my first question is actually on the 87% salaried customer base that we have acquired in the previous quarter or so. So if you can describe how similar or different is this customer base from the customers that we were acquiring, say, a year back and so. In terms of their credit score, either this in terms of their income ranges and all.

So it's not 89%. It is 83%. 83% was from salaried incrementally in quarter 4. So if I have to compress the profile, earlier, we were sourcing valid customers from private and government whose average income was in the range of INR 40,000 to INR 42,000 per month. Now the change is that the income would go right up to INR 1 lakh, INR 1.5 lakhs, and which would typically be from a, Cat A or Cat B corporate. Going in for a Cat A or Cat B developer properties. So that's the difference.

Sir, the second question is slightly related to this. Given that most customers would be coming to us, I mean, because of our led only. So now when 4 quarters or 6 quarters down the line, we think of increasing the rates and when the market environment becomes such and all, increasing this rate to 50 bps of the lowest HFC, the largest HFC. What intent would this customers will have to stay with us. So why won't there be higher BT outs going forward?

So basically, if the difference in rate is up to 0.4%, 0.5%, customers would not do BT out. So once the rate crosses 0.5%, that is when customer would do because the cost of moving also would be substantially high. So we will try and balance that.

Okay. Second is on the digital spend. You gave some discussion to a previous participant. But I would like to know in further detail, like the kind of customer base that we are now targeting. It's very digital savvy and tech savvy. And wouldn't like so much of a physical interface is tactically here with pension. So what are we doing on the digital side to ensure a smoother customer journey, as well as to take some of the processes that are being handled physically to take them online?

So this is work in progress. So we are in a transition stage. It will take some more time, but we are on with respect to automation and digitalization. Some of the processes we will decide, and some of the sourcing, we'll try to strengthen, for example, we will eventually get into online sourcing and tax sourcing. We will integrate if there is API. So we will strengthen our digital space with respect to sourcing. We can't really get to pre-approved, but we will definitely reach a stage where I can approve on a pre-qualified basis.

Okay. And my last question is on this 22% of the book. It's actually a clarification that you said that 22% of the book has been repriced. So when we talk of this 22%, so the total book that was outstanding as of November. Of that 22% has been repriced. Is that correct?

No, this is the total book as of March end, and we saw what is the percentage of books which got repriced.

The next question is from the line of Sonal Minhas from Prescient Capital.

Sir ,am I audible?

Yes. You are audible.

Yes. Sir, just carrying forward on the last question on the profile of customers you mentioned, moving from the salary limit that you were talking about. I also wanted to have a clarificatory question on are we sticking to customers who for whom this is the first home loan or that limit is also getting relaxed? Just trying to understand, this is the first home loan for those customers.

No in an earlier model, we were sourcing slightly higher proportion of customers who were new to company for home. So now since we become aggressive on pricing, and we are driven till most of the bigger geographies, so we will have customers, for them, it will be a second property. But for self use, for some, it could be even third. So when I say second, third, it seems that in a customer has bought a property, sold again would have come for loan, may be 2 or 3 transactions. So now you will see this mix, which would be in line with most of the other HFCs, but the proportion would change.

Got it. And sir, a follow-on question on this. I know this is difficult to answer or put a number to. Earlier, in our earlier model of 15%, 18% growth, we used to be in an NPA of -- gross NPA of around 0.5% and an ROE of, I think, north of 18%, risk adjusted. I just wanted to know, is this 0.5% now would be tending to more 1%, if I were to look at 1 year, 2 years down the line, and our yields would be higher, and hence, the ROEs would remain at the same rate? Just maybe -- because there will be some internal calculations on strategy on what would this lead to in 2, 3 years from an NPA perspective, from an ROE perspective. Just trying to understand that.

See, since we are in to secure and especially in large case, we have various legal recourse. Right. It's only a question of timing. So to answer your question, if we will be able to reach to our earlier NPL levels? The answer is yes. May be with an exception of 10% to 20% being higher, but it is a question of time because maybe in next 3 years' time, any company for that matter, would be at about 20%, 25% higher than the earlier NPL level. This is that -- why I'm saying this is that it also differs from company to company. It also depends on how well you are secured. See because now when we underwrite, we predominantly look at 2 things. One is, see if customer is capable -- one is capability. And second is what is the connection value. Now there is some kind of hit on capability because of COVID, right? However, as long as you are covered on the property value side. So eventually, the company would not make any loss. And therefore, I'm saying it's only a question of time. And if the company now gets into legal recourse, then the company will be able to recover most of its loans, NPLs and assets. And therefore, I said that you will see a spike of 25% from the earlier level. And this could be true for any company, right?

Got it. And sir, just from an organization perspective, because I think these are, if I may, just generalize, these are territories where you've not operated in the recent past. Is your mid- to senior level management geared to, first of all, manage this kind of a growth? And also understand from a process perspective, what is the risk involved in this? Because I think we all love what Can Fin has achieved in the last I think 7, 8 years. Just trying to understand from bottoms up perspective that what is it that is happening from a bottoms up perspective? Have you recruited somebody who understand this business of giving loans to, let's say, somebody who's the second property owner, third property owner or giving collaterals, maybe some more top of loans. So there is a little bit of a different mindset that is required. I understand -- so that just want to understand that from an all perspective for you, what has happened inside in terms of key people or org changes?

So if you look at this change, the change is not now. The change has started about 1.5 years back. Now it only accelerated because of a change in pricing strategy now. So if we talk about employee mindset to deal with profile of customers, we can probably bucket this into 3 buckets. So 1 is in the upfront in locations, could be Tier 3 or 4, kind of checking, is number two in main cities within the city and in the outskirts. So for example, let's say, a city branch manager would be competent enough to deal with high-profile customers. Onboard customers into a fold. And so with the branches, which are in the outskirts, or branches which are in small towns, would have a profile such that they will able to delete those kind of customers. So basically, it all depends on the seniority and maturity of the branch managers to deal with these kind of customers. So our hiring strategy also is aligned to our sourcing strategy.

Got it, okay. So that is the transition that you're basically talking about for the last 1.5 years, we've been waiting.

Yes. Yes.

And sir, just -- I think you mentioned that you were aligning yourself more to your -- what your investors want you to do. I think maybe that was -- I just want -- I just picked it up in the call. Just want to know what is the reason for this transition? Is this something you see your turf being questioned? And hence, you've moved on -- being on the call for the last 1.5 years? Just trying to understand, to be very honest, a little bit provocative also, why listen to investors? Like it's your business, you're running it, why listen to investors at all? I think investors are usually very short-term oriented in their mindset, so including us. So why have that mindset at all? I think just trying to understand why do it at all?

So basically, we believe in adding value to our customers and investors. Now from an investors point of view, I think there should be value accretion for quarter-on-quarter or maybe year-on-year. See that has to happen, definitely, company has to do well. And when we say a company has to do well, the company has to do well on increased -- regularly increase in the book. So we found that whatever investors certainly gave us feedbacks is a lot of value in that. And before we aligned to that. So definitely, we also want to add value to our customers.

And it is -- sorry, you continue, I will...

There is no -- see, there is nothing called as a good model or a bad model right? It all depends. For example, a company with a yield of, let's say, 14% or 15% can afford to have 2.5% of NPA. So coming to the yield of, let's say, 9%, can afford to have more than 1% of NPA, right? So there's nothing called is good or right or wrong model. But we thought as a company, we thought we were short of growth. We also realize that. It's a fact that we are short of growth. And therefore, we wanted to grow. And therefore, we have changed -- we have aligned the strategy, which also coincided with now what the investors felt and therefore it's -- I would say it is a collaboration effort in terms of thought process, so that we also want to grow, which also probably is like the most of our investors.

Got it. Understand. And there is no doubt around growth being funneled for stake is still out in the next 1 or 2 years or something aligned on strategic front in the company. There's nothing aligned on that, which is leading to this aggressive mindset.

I can only tell that we are not heavy to that stake sale transaction after a second stake sale or even panned out. So our strategy is both from operations point of view and adding value to all the stakeholders, which is regulators, customers and investors. So this growth strategy has got nothing to do with no stake sale.

The next question is from the line of Gurpreet Arora from Aviva Life India.

My questions have been answered. Thank you so much.

Thank you. The next question is from the line of Sakshi Goenka from Alchemy Capital.

Yes. Am I audible?

Yes. You are audible.

Sir, just 1 clarification. So could you explain what -- so you said that your yield on portfolio is about 9.5%. So if I calculate the yield, it comes to about 8.5%, just wanted to understand this 1 percentage point discrepancy. Any thoughts -- is there any interest reversal, which is happening on the interest income side this quarter which is leading to such a big gap? Generally, the gap is not so big between your stated yield and your calculated yield, sir.

Madam, as is the yield calculation I explained earlier, it is on the actual loan for a given rate, for a given period. It is the system we did calculation, areas will not come into picture. It is -- you cannot take the portfolio on quarter-on-quarter basis or anything. It's a particular loan wise calculation, and the calculation is correct at the calculate statement. 9.45% is the actually yield.

The next question is from the line of Bhavya Sanghvi from Fortress Group.

Yes. My questions have been answered. Thank you.

Thank you. The next question is from the line of Sarvesh Gupta from Maximal Capital.

Sir, first thing is for the Q4, if you can give the breakup of BT Out, BT In and the natural rundown on the portfolio?

So as I mentioned, our BT Out is INR 90 crores. In quarter 4, we have done INR 2,000 crores of business and BT Out to INR 90 crores.

Yes. And what would be the natural rundown on your portfolio in quarter 4?

I mentioned, it was about INR 250 crores per quarter, not natural, BT Out.

INR 250 crores. And sir, second thing on this strategy of being content with a slightly lower spread, so 1 downside of that, sort of a strategy is that while you lose your margins on probably the entire book over time, the growth is something that is -- that may or may not come. So 1 part of that growth is market share, relative gains in market share with respect to the banks who might be charging a little bit lower. But the other part is the market growth itself. So if you want to comment something on your market as you are looking at where the things stand right now, if you're seeing some changes, tangible changes in terms of how your customers are behaving towards buying off real state properties and how you expect that to pan out.

So if you talk about revising that portfolio, so till now the rate is not 6.95, it is 7.25. So if any customer wants to reprice, the rate will be 7.25, not 6.95. So already there is a 30 bps higher for repricing. So all I want to say is that irrespective of the repricing rate or the repricing rate -- rate of repricing or the repricing rate, we will always maintain what margins we have told, that's 3% and 2.4% because probably next quarter, the repricing rate could be 5% or 7%. And repricing rate of interest could be much higher than 7.25, right? So the 6.95 is now 3% and the 6.95 I think probably the percentage what was reprice will be 20%, assuming that 2% would have happened in April this is a guess. Total, 22% is right. And how much in Q4, how much in April, that number I need to see, but I'm just giving an approximation. Out of 22%, 2% would have got repriced at a much higher rate than what it was in Q4. So I think it's a balancing act, and it's in a continuous process. So we will always watch out for portfolio yield, portfolio cost and then therefore, the margins what we need to maintain. So there are both pros and cons in both the models, whether it is the high growth, moderate profitability or high profitability model growth. So we'll try and balance that.

Sure, sir. That I understand from a market share perspective vis-à-vis your competitors. My question was more related from a market -- overall market perspective itself. So your core market has been, say, Karnataka salaried. So either you are seeing much higher growth rates in the overall market. Are you seeing some signs of it, which is different from the last few years? And second is, there can be other growth engines, which is outside of salaried and outside of Karnataka. So are you seeing some more traction? Or you have some strategy to sort of tap outside of your core segment. So wanted color on the market perspective, not from a market share perspective, which is dependent on how you price your loans.

So we have seen that the market is quite robust. We have seen that in Q3 and Q4, the market is very robust. So only thing is now, it all depends on for how long wave 2 will last. However, there'll be pent-up demand. What we've seen in wave 1, immediately after wave 1, market came back quite well. So the same thing is going to continue after wave 2 as well. So market is very, very huge. We have enlarged our segment. So I don't see any challenge in terms of growth at all. Yes, it may so happen that for the next 15 days, you're not able to do much business because of lockdown. Once the lockdown is lifted, then we will see normal business coming back. So I don't see any issue on the demand per se.

Okay. And similar to last year, we expect that the lost business, which may accrue during the lockdown period, should come back to us with equal vigor once the lockdown phase is over, especially in Karnataka.

Exactly, we see that happening in Q3 and Q4. So same thing would continue. So yes, it may get phased out between 3 to 4 quarters, but we will see that coming back. So there'll be a deferment of buying a property, but I don't think so it may get sanctioned, even if it sanctioned, it will be a very small villa for us.

The next question is from the line of Gaurav Jani from Centrum Broking.

Coming to the growth bit. I just want to thrust a bit on that. So if you look at the disbursements from FY '18 to '20 with that typically bit about INR 5,500 crores to about INR 5,700 crores also factoring in the sort of loss reimbursements that would have happened in FY '20, right, in the last 15 days of March. So to tie that up with the second wave, and how do you look at FY '22. So what sort of a disbursement number should we look at? If you could just touch on that? And how can we achieve that number?

Our plan is about 20%, as I mentioned. So if there is lockdown month, 1.5 month, I don't think so it is going to impact, especially on the business front because we can definitely cover that. If it lasts beyond 1.5 months and then probably there will be a slight moderation in the number.

So you mean 20% on the original base right?

No, 20% I'm comparing with not last year because last year was not normal. Last to last year.

Last to last year. Perfect. Perfect. So last question is on the Stage 2 numbers, although, obviously, you mentioned that we cannot disclose the numbers. But has it tendered lower than, for example, in FY '20, I mean, the outlook mentioned about a 6% number. So has it gone lower than that?

I'm not very sure where the 6% came from. All I'm saying is that the collection efficiency in April is definitely lesser than March, lesser than February, lesser than Jan.

And also I meant for the entire of '21, I mean, so versus as you ended FY '20. So I just want to have a sense of that.

Sorry, I didn't get your question. I thought your question was that 6% SMA, correct?

Yes, SMA 2 numbers were mentioned for FY '20. My question is, how would that have trended for the entire of FY '21 as we close FY '21? Has it trended lower?

FY '21, we did extremely well. FY '21 was great. See that also reflects in our NPA number -- GNPA number. So compared to Q3, which was 0.99. It came to 0.91.

We take the last question from Avinash Tanawade from Dalal & Broacha.

What is our -- how many branch -- how many branches you are looking to add for next 2 years?

I think see every year, we have planned to add about 15 branches. So maybe this year, we'll add more because last year, we couldn't add what we had targeted. So we can take the number as about 18 to 20.

And sir, when I compare -- when we have compare with some companies like our standpoint they are charging the yield of over 12% to 13% and they are able to maintain the asset quality. And we have over the years of experience in terms of home -- housing loans. While we are not targeting that kind of customers who can pay us higher yields? Or what is your thought process in that?

See, basically, our customer profile cannot be compared with the company you mentioned. Because our mix is different. And for salaried we assessed based on documented income. So we take slippages, we take bank statements, we take ITR. As far as the non-salaried is concerned, we go by only declared income. So it is not an assessment model. So these 2 are not comparative. So we can be more compared with likes of HDFC, LIC Housing, so because all these subsidies would assess based on documented income.

That was the last question. I would now like to hand the conference over to Mr. Utsav Gogirwar, for closing comments.

Thanks, everyone. Thank you.

So thank you all the investors for attending this call. It's really encouraging with your ongoing support. With all your support and encouragement, I think we were able to trip to last year, which was the most difficult year, at least in my experience of last 25 years in this industry. We look forward to do well in the coming quarters. Thank you, and all the best.

Thank you. On behalf of Investec Capital Services, that concludes the conference. Thank you for joining us, and you may now disconnect your lines.