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

Ladies and gentlemen, good day, and welcome to earnings update of Can Fin Homes Limited hosted by Investec India. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Nidhesh Jain from Investec India. Thank you, and over to you, sir.

Thank you, Avirat. Good afternoon, everyone. Welcome to the Q1 FY '26 Earnings Conference Call of Can Fin Homes Limited to discuss the financial performance of Can Fin Homes and to address your queries, we have with us Mr. Suresh Iyer MD and CEO; Mr. Vikram Saha, Deputy MD; Mr. Prakash, General Manager; and Mr. Abhishek Mishra, CFO of Can Fin Homes Limited. I would now like to hand over the call to Mr. Suresh Iyer for his opening comments. Over to you, sir.

Thank you, Nidhesh, and welcome to everyone for today's earnings call of -- for the first quarter results of Can Fin Homes. As just informed, we just want to, first of all, introduce that we have our new CFO, Mr. Abhishek Mishra, who has joined and he is also present in this call today. He's just joined on 30th of June, and as you would recollect that on -- in the month of December, we had put up the notice regarding the resignation of our previous CFO and thereafter, his last day was on 20th of March. So now we have the new CFO, Mr. Abhishek Mishra joining. Now to the certain points about the business. For the first time a few positive points or a few positive things about this quarter. First is that in terms of the disbursement, it is the first time in the Can Fin's history that we have in the first quarter crossed the figure of INR 2,000 crores disbursement. So it's a 9% growth in terms of disbursement. To break it down further into the zone-wise performance, we have the zones of North West and Tamil Nadu which are -- which continue to carry on the momentum from where they left off last year, and they are continuing to be in the positive. North zone is upwards of 40% positive in Q1 compared to Q1 last year, 35% plus is for Tamil Nadu and West zone continues at 15%. Additionally, we have the East zone, which was flat last year, which has also this quarter got into the positive mode and is doing at about more than 40% growth in terms of the disbursement. In terms of the 2 other major zones and key areas where we have business, that is Karnataka and Telangana. Telangana for us has not shown any major turnaround or anything in terms of business and continues to have a negative growth. Karnataka on the other side is almost flattish. We are still doing about INR 200 crores of disbursement, mainly because the e-khata issues pertaining to the Panchayat areas and development authority areas continue. However, on the positive side, the state government had announced that they would be taking some decisions and would be trying to resolve this issue in July, and just a few days back, there was first an announcement that the state will be allowing the B--khata properties to be converted to A-khata. So that is one development. The second development is that yesterday itself, just yesterday for that matter, the state government has released a full page advertisement wherein they have indicated that customers can get the e-khata for their properties from the Seva Kendras by paying INR 45, and they've also come out with a self-help app or a tool which people can download, which will help them on online registration of e-khata that can be done. So the state government is trying to promote and trying to streamline the issues. So hopefully, in this quarter, we should definitely see a positive. In terms of the business in Karnataka, we have had good inquiries, but we are not able to log in because we are facing issues of e-khata. Incidentally, in terms of recovery also, we have had almost close to INR 1.5 crores plus of properties where we have done the SARFAESI sale in Karnataka, but we are not able to execute sales certificate only because of the e-khata issue. So it's -- that also is there. Otherwise, additional INR 1.5 crores of collections would have come. Second, in terms of the second positive in terms of the collection is that the total delinquency, that is SMA 0 plus SMA-1 plus SMA-2 and NPA put together for the 2 positives here. One is that for the first time in the Q1 results, the delinquency, which normally always goes up, has actually come down from the March number. In fact, last year in Q1, there was an increase in the total delinquency by about INR 360 crores from March '24 number, whereas in this quarter compared to March '25 number, the total delinquency has come down by INR 280 crores. The second positive in terms of the collections is that this is the lowest delinquency percentage in the last 5 quarters that the company has registered. So these are in terms of this. However, while the total delinquency has come down, there is an increase in the total NPA, which is actually a sequential thing because, I mean, every year in the first quarter, there is a spike in the total NPA. Last year -- in Q1 last year, there was an increase by about INR 39 crores, the year before that by about INR 32 crores. In this year, it is about INR 45 crores. However, in fact, additional point this quarter is that we have -- as part of our analysis of recovery, we have identified 96 specific accounts which are very, very sticky and totaling to about INR 13.90 crores, which we have allowed to flow to NPA so that we can recover during the remaining 9 months through our SARFAESI actions. So this is in terms of our disbursement and collections aspects. Coming back to the disbursement portion, we have in last 2 years opened 29 branches. This year, we are planning to open 15 branches for which all the 15 branches, the efforts have already been initiated so that in the first half, that is by September 30 itself, we can open all these 15 branches. The other point in terms of disbursement or this -- thing is the sales, which we had started last year with about 39-odd people. During the year, that is effective 1st of July, we have added or increased the strength of the sales team and taken up to 100 people by adding another 63 people. So therefore, that is a major thing. So the additional branches, which will be added during the coming quarters as well as the increase in the sales staff is what we expect to help in pushing business in the coming quarters. Already in this quarter, compared to last year where the sales team was contributing to about 4% of the total business, incremental business, in this quarter, the percentage has increased to 5%. So the same team of 37, 39 people has been able to contribute a little higher in terms of the business. Now to other areas of -- the key aspect, of course, is the cost of borrowing because we've had 3 back to back-to-back reductions in the repo rate. So we have already had a reduction in the repo rate, which is visible in our cost of borrowing. However, the actual going forward rate of cost of borrowing is further lower because what has been experienced is what we have experienced for part of the quarter. Going forward, therefore, the incremental cost of borrowing is -- which was around 7.55% is closer to 7.3%. Therefore, we have already announced a further 15 basis point cut in our rate for existing and new housing customers. So we had already passed on 10 bps in the month of May. Additionally, from July, we have passed on additional 15 basis points to our existing and new housing customers. So totally taking it up to about 25 basis points of rate cut for our customers. Additionally, going forward, we still have about INR 2,500 crores to INR 3,000 crores worth of bank term loans where we expect a further reduction because we are yet to receive that 50 basis points cut of the repo rate of June in those INR 2,500-plus crores of bank borrowings. Plus NHB also has indicated to us that the regulator will also be reviewing its PLR because it has not done so far in the last 6 to 8 months. So we are expecting a rate cut coming from NHB also. So going forward also, there will be some impact. Of course, as and when we experience post that, we will be passing on our rate cut to our customers. In terms of the assets that we have about -- because one key aspect is, if you would recollect, we had in January 2024 moved from an annual reset to a quarterly reset. So all new customers who are onboarded from 1st of January 2024 are on quarterly reset, and we also offer the option to customers to shift from annual to quarterly reset, as of 30th -- as of 31st of March, we had about 72% of the customers who are still on annual reset, and by the end of 30 -- of this quarter, that is on 30th June, we have about 67%. So only 5% of the customers, including the new customers, have actually moved from annual to quarterly. So as on 30th of June, we still have about 67% or 2/3 of our portfolio, which still continues to be at annual reset. So we are sending customers intimation about this shift. So as and when they come, they will be able to do it. However, those who remain on annual reset will continue to get the benefit as and when their reset dates are approaching. So there could be some -- this 15 and 10 bps also that we have passed on. There could be some lag in the way it is passed on to our customers. Now coming to the cost-to-income ratio, the other 2 major aspects during the financial performance is the cost-to-income ratio. There are basically 2 reasons why compared to this, the cost-to-income ratio is slightly being elevated. One is because we opted to -- for a salary revision for our staff to align with the market salary packages. So that is one thing which we came at a very fag end of the quarter, but we have given the impact from 1st of April. That is one of the reasons. And because of this onetime change, there is an impact of about INR 4.5 crores in the actuarial valuation -- actuarial calculation also that has come here. Going forward, since no further increase is obviously there, this actuarial valuation will slightly even out, may not be as much in the coming quarters. So therefore, this cost-to-income ratio on that aspect will get evened out. So as compared to the first quarter results, there is also a 16.5% increase in this staff count because of which some of the increase is there, however, if you compare the cost -- salary cost compared to our March numbers or the Q4 numbers of last year, the increase is not as much. It is mainly because of the salary hike that is there. The second aspect on cost where the increase is witnessed is the rent and taxes, mainly because of the 25 branches we opened last year, the 6 zonal offices because last year, you would recollect, we had added an extra layer to improve the monitoring and oversight of the branches, which was the zonal offices with adequate staff. So we -- 6 zonal offices were also opened after June of last year, which the entire impact has witnessed, and we have also expanded the office space in our corporate office. So mainly the reasons for rent and tax increase is because of this. Going forward in terms of credit cost, the guidance of 15 basis points will continue. We have had a credit cost or the ECL calculation for this quarter. But the way we are looking at the reduction in our overall delinquency going forward, we are -- we feel that there would be a further reduction expected in the overall delinquency even in the second quarter. Therefore, credit cost impact will not be as much. Going forward, our guidance for credit cost ratio continues at 15 basis points. Last year, excluding the management overlay, it was 13 basis points only. So we continue to guide -- to give a guidance of 15 basis points, whereas actually it could be lower than that. Disbursement-wise, in Q2, with Karnataka showing some improvement and other zones also doing there, we expect the -- internally, we are pushing for INR 2,600 crores plus disbursement in Q2. However, as a guidance, we would say it would be around INR 2,500 crores plus in terms of Q2 disbursement. NIM and spread, the guidance continues at 3.5% for NIM and 2.5% for spread and ROA, ROE also of 2.2% and 17%. And so overall, in terms of the overall disbursement, we are quite confident about the INR 10,500 crore disbursement figure for FY '26 that we have been guiding, and we feel in the second quarter onwards, the disbursement will further pick up. So in short, that's the summary of all the aspects. I hope I have covered everything. I now throw it open for any queries.

[Operator Instructions] First question is from the line of Param Vora from Trinetra Asset Managers.

One thing I wanted to ask was what is the progress on the planned means you described the progress on the planned 50 new branch openings. So what are the geographical focus on this expansion? And what is the target number of branches by financial year '28.

Yes, for this current year, we are looking at additional 15 branches. We have 234 branches as of 31st March, and we are looking at 15 branches majorly in the West and North geographies, and that will take our strength to 249 by end of FY '26, and for FY '28, we have a number of 300 branches that we are targeting.

Okay, sir. And one more thing what I wanted to ask was, are you planning to enter any entirely new state or union territory or will the expansion focus will be on the geographies which you already have presence in?

See we are -- sorry, we are already present in 21 states. So by and large, we have at least a small presence or a larger presence depending on the state. We are already there. So we are not planning to open in any new geography or any new state, but existing states, we will definitely be expanding only there.

The next question is from the line of [ Siddharth ] from Goodwill Capital.

Yes, I wanted to know about the competition we are facing from PSU banks. Does it -- has it intensified? Or is it at similar levels? And are our customers looking for EBLR?

Siddharth, so basically, from PSU banks, we are having -- obviously, they have reduced the rates and passed on the entire 1% repo rate cut to all the customers. However, most of the PSU banks, if you see are in the higher ticket size segment, at least the active ones like SBI and Bank of Baroda and all. So we are not facing so much in case of our segment, which is mainly below INR 25 lakhs. Our average ticket size is INR 24 lakhs for housing and INR 14 lakhs for nonhousing. So we are not so far facing. And anyway, what is happening is the rate cut also has put a lot of pressure on the margin. So the aggression, which is otherwise there is not coming more. In fact, it is -- the inquiries are coming more from the customers, not from the banks actually pushing it on the ground. So that is there. Second, as regards the customers asking for EBLR, well, first of all, there is no requirement of EBLR. So customers are asking for a rate cut. So they are not much aware about EBLR or this or that. They are generally looking at repo rate and saying you also pass on some benefit to us, and as mentioned, we have passed on 25 bps to our customer. Just to give you an idea, today, I believe there is only LIC Housing Finance and us who have actually passed on some rate benefit to our existing and new customers. And LIC also, if I'm -- if my knowledge goes right, is about 25 basis points, the same as us. Whereas other players in the housing finance segment or NBFCs have not reduced it for existing customers nor the private sector banks for existing customers.

Okay. When do you think we'll be able to pass on?

So as I said, we've already passed on 25 basis points to our customers, 25 basis points, we've already done, 10 basis points effective May and additional 15 points effective July. But as I explained in my initial message that this will pass on to the customers as per their quarterly or annual reset plan and also as per the month on which they have taken the disbursement.

Okay. What would be our average CIBIL score for our customers just to get an idea?

Today, actually about 80% plus of our customers are having a CIBIL score of 700 plus and about 9% of our customers are having -- are new to credit.

Okay. That's great. Which quarter are we going to have our tech update hit? Is it in Q2 as planned, Q3?

Sorry, sorry, I didn't get your -- in which quarter...

The tech upgrade.

Yes. So see, the tech upgrade is planned in 2 phases. The first one will be in September, August and September, where we'll be moving the borrowings and ALM and that plan because that is something which is not currently linked to our normal LOS, LMS. So we'll be moving our ALM borrowings and that plan treasury module in the month of August and September. But the core, which is the LOS, LMS, the DMS and the deposits will move in the month of November, which is the Q3.

Okay. Just the last question is our dividend policy, is it going to be around 10% in this year?

I think last year, our average dividend payout was around 18% or something. So I guess 20% is something -- we would be in the range of about 18%, 20% is what we would be maintaining.

The next question is from the line of Shweta Daptardar from Elara Capital.

A couple of questions. Sir, for Telangana, in particular, we had mentioned that positive queues are emerging and now we are seeing no major turnaround. So what has changed between Q4 and Q1? That's question number one. Second is, so our DSA dependence reduction strategy have not yet met up a reasonable success, right? So how is the sort of way forward there? And lastly, so while you did mention that sizable amount of transmission on the yield front have already happened and maybe around 15 bps -- 10 to 15 bps is around the corner. So any scope of further improvement of margins, say, beyond 3.5%? So yes, those are the 3 questions.

Sure. See, in Telangana, as I was saying, this quarter, we have not seen much of a change. However, the overall reduction in delinquency that we had seen has been witnessed across the board in all the 6 zones. It is not that some zone. So that is one thing where the pressure of the -- so delinquency is one positive, and second thing is that in Telangana, we have also made some changes in the teams and also in terms of the micro focus and micro analysis also we have done. So I think we should now start seeing something going forward in terms of disbursement. We have already started witnessing and the thing in terms of our delinquency. As regards to the main reason why Telangana was not doing well was the HYDRAA project. And of late, the demolitions, as I mentioned in the last quarter also, somewhere in the Q4 somewhere, the government came out with an announcement that they will not make any further demolition. So at least I believe for the last 6 months or something, there has been no demolitions under this HYDRAA. And so that slowly the confidence is also building up in the developer segment and in the people also. Therefore, this is one thing which is slowly now kind of changing things because once demolitions happen or all those things, in fact, it also affects the price. Now that there is no risk of demolition and all, slowly, the prices also are kind of stabilizing and therefore, the customer confidence is also improving. So basically, that is what has changed in Telangana. Second, as regards to the DSA dependence, it has marginally further come down. We were at 85% in -- if I were to say in Q4 of FY '23, okay? From there, it has consistently reduced to 82%, last year to 80%, in this quarter, it has reduced to 79%. And as I mentioned earlier, two things. One, this additional sales staff that we are doing, that is something which is going to bring in more direct business and will slowly help in reducing the DSA focus. And second impact, which I missed to mention is that we have had last year 80 APF proposals. And this year also, we have added additional APF proposals. So now initially, it was more of enrolling the APF proposals or just getting ourselves enrolled as an approved lender. But now with regular contacts and everything, we have started getting good inquiries from the APF projects also directly from the builders or from the sales teams of the project sites. So basically, that is -- these are the two reasons why this would slowly emerge. But as long as the DSAs are there, it is not that we want to reduce the amount of dependence or we want to reduce the DSA number or you want to stop doing DSA business. But it is just that our direct business as it increases, the percentage of DSA business will slowly come down. And the last part as regards to margins, I guess we are already at 3.64%, which is above our guidance that we have been consistently giving of 3.5%. So we have maintained that we will be about 3.5%. And in this quarter also from 3.57%, it has increased to 3.64%. So I guess that will -- what will continue that we will continue to keep it about 3.5%, now 4% and all, I am not sure it is possible any time now. I think it is -- we also have to be cognizant that we have to offer attractive rates to get a better quality customer. So that is one thing. So that's about it.

The next question is from the line of Shubhranshu Mishra from PhillipCapital.

Two questions. So given the fact that we are facing the issues in growth, are we thinking of having any co-lending arrangements with other HFCs or banks, first. Second is, I see a housing CRE segmentation around 11% of our AUM. So is that the construction finance? Or is it the APF sales? And related to this, are we -- do we have any plans to have a construction finance vertical, LRD vertical to prop up the growth? Given the fact that we are optimistic about the second quarter and second half in general, what is the number of home loan contracts we would onboard on a monthly basis? What are we budgeting for? And most of the HFCs have a separate subsidiary for cost measures to onboard the sales staff. Like I'm sure you would be aware of it. For example, HDFC sales was there. So do we have plans to have a similar subsidiary?

Shubhranshu, I'll just respond one by one. See, as regards to co-lending and everything, we have not -- I mean, definitely not with the banks because today, we don't have any pressure of -- so we will actually have to be the majority of the primary lenders. So the 80% has to come to us if it is there. So obviously, we cannot have a co-lending arrangement with banks because they would want to be the major partner. Here, we will have to, if at all, do it with the smaller players where we can get 80% of the portfolio or the pool. And the origination happens at the other end. Now as of now, we don't have any policy for DA or for portfolio buying or co-lending. So we will -- we are actually open to it, but we will take it as we -- once this -- post this IT implementation or something, we will take it because right now, one after the other, we are handling other issues. So we will be taking it up probably after that. As for CF, currently, we don't have a CF position, and we don't intend to also start direct lending to developers. We will be more in the -- purely into the retail segment only as of the moment. Now the next question with regards to number of contracts, we are doing approximately about 4,000 to 4,200 contracts a month, which is approximately around 48,000 to 50,000 in a year is what we are doing. In fact, this number has been a little kind of very steady for the last few years. And the growth, whatever has come has mainly come from the ticket size increase because we were about INR 20 lakhs and moved to INR 22 lakhs and now at around INR 24 lakhs, INR 25 lakhs. So basically, the contract -- number of contracts per month have remained the same, which is something we know with direct sourcing, we expect to increase. Third, as regards to sales staff, there are two points. One, definitely not a subsidiary. We already are -- have a lot of reporting at the -- as part of the conglomerate and Canara Bank Group entity. But we don't intend to have any other subsidiary under us. That is one. But as regards to sales staff, I think you also mentioned there is a cost angle to the sales staff. So you are right in one sense. But there is one option where most players are going for a DSP route or DME route, whatever, where the fixed cost is just INR 16,000 to INR 18,000 and the remaining is entirely on a variable pay. But that we explored rather than -- we said it is still okay from the cost point to take people on roll rather than take it on this kind of a model because when people are taken on this INR 15,000, INR 18,000 thing, the attrition rate is very, very high. In fact, the minimum rate that we understand in the prevailing in the market for these kind of arrangements is about 60% to 65%. That is the minimum attrition rate. There are players who are even experiencing 100% attrition in this kind of a model. So we chose to have a model where we will have them on the full on the roll and they will be coming with whatever lowest even if they come at the lowest entry level, it will be around INR 35,000, INR 38,000 fixed salary. That's the kind of structure we are opting for. So I hope I've answered your queries.

Just one part, Suresh, this housing CRE, this is what APF sales, what is this thing?

Sorry, sorry, I didn't understand. Can you come back?

On Slide #19, we've got housing CRE. These are the APF sales, is it?

No, no, no. CRE, that is different. See, if it is a third house of a person, person buying a third house and they're already having two residential units, then the third will not enjoy the same kind of a risk weightage as the first two. So those will be classified as a CRE, the third and subsequently. Same way, like in Karnataka, there is a particular trend that people may put a house with two floors and they give the first and second floor on rent and there are three kitchens. So those also technically are qualified as CRE because there is also a part element of income generation from these assets. So this is -- basically CRE is housing only. It is dwelling unit only, but they classify for a different risk category, risk weightage. So that's the CRE. The housing, as I mentioned, we don't have a developer finance, and whatever we get from the APF projects, they are normal housing and if it is a third house of a person, it will be classified as a CRE.

Okay. So what will be the risk weight on this?

The risk weightage is higher. I'll share the exact risk weightage for CRE separately. I'm immediately not...

The next question is from the line of Anusha Raheja from Dalal & Broacha.

Am I audible?

Yes, you're audible. Please go ahead.

Yes. So on the spread side, sorry if I'm being rigid with this, you said that till the time it gets affected with the customers who are on annual reset and that share is closer to around 72%, so can we expect in the near term margins or the stretch to improve?

Yes. Currently, it is 67%, 72% was in March. So I said only 5% have moved. But yes, actually, what we have seen a slight improvement in margin is mainly because of the delay or the lag effect of the PLR benefit is going to the customers because after we experienced -- when we experienced 10 basis points, we took out after the February rate cut, when we experienced it by 31st of March, we had in our April ALCO, witnessed 10 basis points, which we passed on effective May. Obviously, now we have already experienced it in our liability side, and then when it goes to the customers, it will pass in maybe next month or 2 months later or 6 months later or 8 months depending on the thing. So that is where this increase in spread has slightly happened. So going forward also, this 15 basis points plus any subsequent rate cut that we offer will also go with a slight lag effect. So maybe it can be possible that a little bit of increase in spread might be there going forward also, but I'll not be able to quantify it, but I guess it is possible. Yes, you're right.

And secondly, what is the incremental cost of borrowing currently? And assume that if there is any further reduction expected over the next 6 months' time? And so will that also be passed on to the customers?

See, incremental cost, of course, different, different products have a difference. So it depends on which segment we would want to go to. Like, for example, we are getting bank borrowings at around 7.25%, anywhere between 7% to 7.25%. NCD rates are also at the same rate. CPs are below 7 -- below 6 for us actually. In fact, today only, we've raised at around 5.92%. That is a 90-day CP. NHP, as I said, going forward, where the reduction is expected is that, one, we have certain term loans where that 50 basis point reduction, which happened in June is yet to be passed on. So that amount is around INR 2,500 crores to INR 3,000 crores between that. That term loans will experience a reduction in the coming couple of weeks. Another thing is NHB, which is about 15% to 17% of our entire borrowing pool, there no reduction has happened and the regulator has not announced any reduction in the PLR. So as and when that is announced, we will also start getting that benefit. So there is some further reduction possible in our borrowing costs. As I mentioned, today, the mix is such that today, we are right now taking mainly from the banks and also a little bit up there. But NCDs we will mostly take after August because we have also extinguished our approval limit that our shareholders have given for the last year about INR 4,000 crores. So when we get the new limit, we'll again go for NCDs, which again could be a little lower than banks also possibly.

And what would be the quantum of benefit that we might get in terms of -- on the term loans and NHP, you said that there can be rate benefit. So both put together, can you quantify on this?

See, our total NHB borrowing is already given in our presentation. So on that, we don't know how much is the rate cut that NHB will announce. And what are the terms, whether that will be immediate, whether that will be on a quarterly basis or whether they will immediately impact it because already it's been more than 6 months that the rate cut has started, but they have not done anything. So it is quite -- so I'll not be able to quantify as of the moment. It all depends on how much NHB passes on and on what terms it passes on to us. But I would say if at all it comes, today, 50% of the NHB or I think about 45% -- 40%, 45% of the NHB borrowings are on fixed rate because these are under the special AHF line of funding where the rate is fixed. So even if at all we get, it will be again on the balance about INR 3,500 crores kind of thing that we will get. Currently, our NHB refinance is INR 5,800 crores. About 40% of this, as I said, is fixed, the AHF. So the remaining 60%, which is around INR 3,000 crores, INR 3,200 crores or something is where we will get the rate benefit when NHB passes.

No, sir, my thought process -- I mean, your thought process here is that you will continue to have 3.5% margins. So irrespective, if you get high benefit, that will be passed on to the customers. Is that the thought process?

Yes. I mean we have been very transparent in that sense that whenever we experience a benefit, we do pass on to our customers. And of course, when it increase also, we are passing on to it, so that is the...

On the IT transformation, what is the status currently? Where are we?

In the IT transformation project, as I mentioned, there are two phases in which we are going to be implementing. So on both the things, we have our governance structure where we have a daily standup meeting, we have a weekly and fortnightly meetings and all and once in 45 days meeting for update to our IT strategy committee. As of now, the project schedules are going as per the time lines, which were given or drawn up at the beginning. So we are very much on course for August end implementation of our ALM and treasury modules, and borrowing module and November 1st week for our LOS, LMS, DMS and everything.

And if I'm not mistaken, the quantum is around INR 35-odd crores projected for your right?

[Operator Instructions] We have the management line reconnected. Ms. Anusha, please go ahead with your question.

We had a small issue here. Yes, I guess -- I was just mentioning that Shubhranshu to your last question the CRE risk weightage is 100%.

Anusha, please go ahead with your question.

Yes, yes, just one last question from my end. Sir, can we expect the assets growth to pick up the pace, we can switch the pendulum there more once the IT transformation is done?

Please stay connected, we have the management's line disconnected. Yes, sir, please go ahead.

Yes, AUM growth, I think you were asking for. So yes, going forward, definitely with the increase in our growth, disbursement growth, the AUM growth should also pick up. Normally, it comes with a lag. So this year, if we are doing about INR 10,500 crores at the current rate, we should be able to add about INR 5,000 crores to the AUM, which should be around 12% to 13% approximately growth in the AUM, and with the same kind of growth in the coming year in terms of disbursement, the next year growth should actually increase or move up to around 15%.

The next question is from the line of Pavan Kumar from RatnaTraya Capital.

One thing I wanted to check was nonemployee expenses, there has been almost like a INR 10 crore decrease. I just wanted to understand what is it and is that sustainable? And secondly, what are the kind of growth drivers we are looking at going forward? What will change for us to actually achieve this particular growth because -- yes.

So as I mentioned, I think other than the salary cost, the major area where the cost has gone up is mainly the rent and taxes because last year, whatever we added the 25 branches as well as the 6 zonal offices and extra space that we have taken or increase in our head office, all that has come post June. So in the first quarter, all these expenses were not there. So that is actually quite a large component. The second component is about INR 1 crore additional distinct provision we have made for our CSR expenses because with the increase last year, we had a CSR target or budget of INR 16.12 crores. This year, it is INR 19 crores plus. So therefore, about INR 75 lakhs is the extra CSR portioning that has happened in this quarter. These are the two major expense on the expense side. As regards growth drivers, one, of course, is the branch expansion that we are doing. The last -- in fact, 29 branches that we have opened net in the last 2 years. In fact, they have also started contributing. Last year, the total additional business that these 29 branches brought were about INR 101 crores, mainly from the 14 branches that we opened in FY '25 because -- sorry, FY '24 because FY '25 branches were mostly opened in the last quarter, therefore, could not actually have not contributed much last year. So this year, again, the entire -- all these 29 branches will be there. Plus this year, we are front-ending the branch expansion, and by 30th September itself, we plan to open all the -- make all the additional 15 branches operational. So branch expansion is one area which will bring. The second growth driver, of course, is the sales team. Last year, we got about 39-odd people to -- in a sales team, and they were able to contribute about -- in Q4, about 4% of the incremental business. This quarter, the same team has done about 5% of the incremental business, and effective 1st of July, we have increased the strength from 37 -- two people left, so 37 plus we have added 63 people. So as of now, we have 63, plus 37, that is 100, and we plan to add a few more in the coming weeks. So that is -- these are the two major drivers for growth. Of course, there will be a little bit of increase in the ticket size, and actually, Karnataka and Telangana, both are zones where actually our ticket sizes are a little higher than our overall company average, and these two markets are presently also slightly weak for us. So as and when they pick up also, the ticket size over there will also pick up. So basically, it is the branch expansion and our sales team.

Can you also just give me an idea of what do you expect the cost to income be this year and next year?

See, this year, it will -- we expect, as I mentioned, there is an actuarial impact, which has come entirely in the Q1. In the next 3 years -- quarters, the actuarial impact may be a little more subdued. Therefore, by end of the year, I guess our cost-to-income ratio should stabilize around 18%.

Okay, and next year the IT...

Next year with the IT cost coming in, I think it will be around closer to 19% because earlier, we had expected it to be 17% and 18%. But with the salary hike, which is almost impacted by 1%, we revised our targets to 18% for current year and 19% for next year.

The next question is from the line of Siraj Khan from [indiscernible] Capital.

Am I audible?

Yes, you're audible. Please go ahead.

A couple of clarifications before I ask my question. The FY '28 target for branches was 300 branches, was that right?

Yes, that is correct, 300 by FY '28.

Okay, and the ATS that you mentioned to responding to the previous question, for HL, it is INR 24 lakhs and NHL it is INR 14 lakhs, was that correct?

Yes, average ticket size is INR 24 for HL and INR 14 for non-HL.

So now coming to the questions. Firstly, I'm just seeing that there is a trend of increasing share in the more than INR 30 lakh ticket size in our AUM, and that is coming at the cost of the INR 20 lakhs and lower taking a back seat. So the question here is, are we seeing a higher demand or a better demand in the upper bracket or more competition in the lower bracket and therefore, it not being that attractive? How is that dynamic in this ticket size brackets?

See, actually in the less than INR 20 lakhs or rather less than INR 15 lakhs, which was mainly a large chunk for us earlier, there, definitely, the supply issues are there, and I've been saying that affordable housing is slightly going down, and now in fact, it is also reflected in all the numbers. So that is definitely there. But yes, this INR 20 lakh to INR 30 lakh segment is something which this quarter we have gone down is something which does worry for us. We will work on it this quarter. Definitely, we will be working on that because that is definitely not the intention. Our average -- our core constituency is definitely INR 20 lakhs or INR 15 lakhs to INR 50 lakhs. So definitely, this INR 20 lakh to INR 30 lakh segment, which has gone -- slightly been affected, that we will correct going forward.

Understood, because I think that is where you will get the better yields, so...

Yes. But coming to your question, it is not because of any demand issue or something. I think we have -- this APF and all those focus has slightly shifted the focus. I think we would like to also focus on this INR 20 lakh to INR 30 lakh. We will definitely see the correction in the coming quarters.

Understood and what is the average LTV of the portfolio as a whole?

Average rating?

LTV, LTV, loan to value.

LTV, ours is roughly if you look at the -- we give up to 80% of the cost, but if you -- we also have this thing of taking a valuation at the time of the loan, and obviously, the realizable value and market values are higher. So if you look at the realizable value, it would be -- I would be somewhere closer to 60%.

Understood. Understood. Now coming to the login growth. So our approvals have been kind of 4.5%, 4.6% growth Y-o-Y to [indiscernible] and the disbursement ratio -- approvals to the disbursement ratio is 98%. So it's at one of the highest levels. I wanted to know with respect to the log-ins, what is the log-in number? And how is that improving? Are we seeing better traction in the log-in?

See, firstly, one thing I would like to share that in the log-in, we have a 30-day validity for the sanctions. So automatically, the sanctions which are done get -- if they are not disbursed in the 30 days period, then the sanctions lapse. That is one thing. And second thing is particularly now in the recent couple of quarters, because of this Karnataka issue, our log-in slightly in Karnataka, we have not been logging in because unless we get the e-khata because otherwise, it is unnecessarily taking the processing fee from the customer, but we have not been logging it. So these are the two issues, I would say. But otherwise, generally, because our 80% business comes from a DSA, I would say the actual percentage that we have calculated will not be a correct representation because many cases which the DSAs bring, if they are not doable, they are not logged in also because the DSAs already know that what kind of cases are doable. Therefore, we don't get all the inquiries that are coming are actually not logged in also. So that is one small thing, which once the IT thing comes in and we come up with a CRM module, we will be changing that. So that will, I think, give a better and more clearer picture. I would assume that in the industry, the login to sanction and sanction to disbursement, the funnel, that should be at least a 20% fallout in the log-in to sanction, which is not reflective in our numbers because of this DSA focus.

Sir, I was actually looking at the NHB data. So I just wanted the statistic with respect to the ISL book. What is our individual housing loan outstanding as on 30th June, if that could be shared?

Individual housing loan.

Yes, individual housing loan book because the NHB publishes a data point. So I was just wanting to know what is our specific number.

I'll give you the breakup, our pure housing loan -- we'll be able to give you the breakup separately. But if you look at it, excluding CRE today, it is 74% is our housing.

Okay. So of the total book, what would be the approximate percentage ballpark number of individual housing loans, ballpark would also suffice.

No. See, our -- okay, I'll give you the breakup of housing, non-housing, everything separately. But today, our -- first of all, we don't have any corporate book. So everything is retail.

Understood.

Within that housing, non-housing, I will give you the separate numbers. I'll just -- give me...

No worries, and just finally, on the book rundown. So we've been under 4% for the last 5 quarters and annualized it comes around to 15-odd percent. What would be BT out of this? So like what would be the annualized BT out that we are targeting and the overall annualized rundown rate for the year?

Sure. See, annually, if you look at it, the 15% that you are talking about, 15% to 15.5%, out of that, less than 4% is the BT out, because we have about 3.75% is the amortization, then we have a huge amount of part payments coming in, which is almost around 8% or thereabouts, where people only make part payment, but the case is still live, so which is basically just to reduce their liability or reduce their EMI. They just look at it. So our actual BT out or loan closure is only about 4% out of the total.

The next question is from the line of Shreepal Doshi from Equirus.

So my first question was on what percentage of our borrowing -- bank borrowing is linked to T-Bills and repo?

Sorry, can you come again? What is the...

What percentage of our bank borrowing is linked to T-Bills and repo?

Approximately 20%. So 80% is linked to repo and 20% linked to T-Bills.

Okay. So we do not have anything like -- we do not have MCLR linked, so entire bank borrowing is shifted towards T-Bills and repo is it?

Yes, yes, yes.

Okay. Okay. And sir, you were highlighting about NCD borrowing. So what was our incremental borrowing rate during the quarter for NCDs?

During the quarter, just a second, I'll give you, NCDs, actually, we raised one NCD around 7.24%, that was the rate at which we raised for the NCD.

Sorry, 7...

7.24% was what we raised the NCD.

Okay. Got it, and last quarter, it would be higher, right, like...

Sorry, in last quarter -- I'm talking about last quarter, as I said, after that, we have exhausted our limit of INR 4,000 crores for NCD borrowing from the other thing. So we have not done for the last 1.5 months or something.

Okay, okay, got it, got it, and sir...

This quarter we will go to NCD market after the AGM.

So we will do that in August is what you highlighted, right?

Yes, correct.

Sir, just wanted to understand this -- I mean, the PMAY CLSS is 2.0. How is the momentum there for us? And how are you seeing that benefiting the industry at large?

See, this interest subsidy scheme 2.0 or PMAY 2.0, it is definitely nowhere close to the kind of euphoria that we saw in PMAY 1. In fact, to be very clear, so far, only 70 -- of course, we've received many inquiries for the PMAY 2.0, but the number of cities that are eligible under PMAY 2.0 is substantially reduced compared to PMAY 1. Second thing is the requirement in terms of the customer credentials like the Aadhaar of all the family members and all those details are such that there is a huge amount of data entry and data capture that is required. And basically, it is so that the government can based on all that data, do an elimination so that customers don't take benefit under multiple schemes of the government. So because of that, there's a huge amount of elimination which is happening where customers apply for PMAY, but because they are already, say, not qualifying in the one of the 1,100 towns or under the selected PIN codes or because some family member, a brother or a father has already taken a benefit under some other scheme of the government. Therefore, the eliminations are very high. And as of today, only 70 applications in our case have been -- have become eligible after all these clearances for PMAY 2.0, okay? And out of that 70 cases, as of today, only 7 cases, we have actually got the claim subsidy from the government.

Okay. So this is since...

Sorry.

This is since September last year, right? September 2024, when it got implemented basically?

Yes. Actually, they implemented it from September, but by the time the portal was ready and everything, it was almost November. But anyway, the point is from September till today, only 70 applications have come. That is in the month of -- in about 10 months from 1st September to today, only about 70 applications have cleared and are eligible. Now out of this also, customers, some of them could drop out and may not avail the loan. But in only 7 cases, we have got the subsidy.

Okay. Okay. And the ticket size here, I mean, of course, it would be the maximum that has been -- the ticket size of this customer would be what?

I will have to check up for the 7 customers, I'm not...

Okay. Okay. Got it, sir. Sir, just the last part was on something that you highlighted that for us, the number of contracts have not seen significant rise in the last few years, and the growth has been driven by ticket size broadly, and you also alluded that at system level growth in affordable housing is seeing some slowdown. So just wanted to get some more sense on the slowdown in the affordable housing. So is it very geography centric? Or is it any ticket size centric or customer profile centric or at broad level, you are seeing these trends?

It's more of a broad level kind of a thing because incentivization, which was -- the incentives which are there for developers to bring in the supply under this affordable segment is not there. So like this particular -- this PMAY thing, which was a very major boost for the affordable segment earlier, now is not so very attractive because the customers cannot claim the entire subsidy upfront. The subsidy will -- and secondly, as I said, the number of cities have been reduced. The elimination criteria is also there. So in fact, the actual trickle, whatever inquiries are there, it becomes quite a bit of a trickle subsequently by the time it is converted. So therefore, the incentive for the developers to come in and construct low-cost housing is not there. And obviously, compared to premium housing or mid-segment housing, affordable housing is a slower moving product. So unless the incentives are there, this segment will not see the supply coming in. And that is one of the major reasons I strongly believe that affordable housing is slowing down across the board. And of course, earlier, if you look at PMAY, all of PMAY, the maximum the states which are doing where obviously, there were select 5 or 7 states who are doing more under PMAY. So there, the slowdown would be more pronounced because the -- they were also more active and the supply and the quantum was also much higher in those states.

So these states were broadly, I think, Gujarat or if you can just name like the Gujarat, Karnataka belt, like...

Correct, the same, Gujarat, Maharashtra, Tamil Nadu, Karnataka, MP. MP was also quite strong in this thing, PMAY. So these are the states where the slowdown will definitely be there in affordable.

The next question is from the line of Vishal from Bandhan Asset Management.

Sir, a couple of questions. Would it be fair to assume that the 25 bps rate cut that is currently that you've implemented, but is practically availed by less than 1/3 of the borrowers?

Approximately 1/3 of the borrowers would have availed it. You are right, because at least the 10 basis points of May would have happened in May, June and July, almost mid-July. So at least some rate benefit for all the quarterly customers would definitely have been translated. For the annual customers also, some of them who have probably fallen -- whose rate reset clause has fallen in the month of May, June or July, they also would have experienced it. But by and large, you can say that, yes, 1/3 of the customers have got this benefit. The remaining 2/3 have not, are yet to experience that.

Fair enough. And on the liability side, could you give us a perspective on the what is the kind of decline in cost of funds that you would see, say, by September quarter or by December quarter, what would be the -- if you could say in terms of bps or whichever metric you find feasible?

See, at least as of the moment, I can definitely say that a 50 basis point cut in approximately around INR 3,000 crores of book -- liability book is definitely on the cards because that is the one portion of the bank portfolio where we have not experienced the rate cut. Other than that, in terms of the entire CP portfolio, which was there in the last quarter or in the -- of last financial year or in the last quarter or Q1 of this year, that anyway is getting repriced as it is and the entire impact has already come into the CP portfolio. NCDs are fixed, so that is not a question. And probably our NCD overall, we had a cost, has not changed much. In fact, it has only increased because one of a very low cost -- INR 750 crores of low-cost NCD, which has matured in the Q1. So that is not actually majorly impacting in NCD cost, and going forward also with the kind of rate that we are seeing, I think it has kind of stabilized unless there is a further rate cut. So 7.24% is what we will probably get today also. 7.2%, 7.24% is what we might get today if we go to the market. So that is what is the rate. So NCDs, I don't expect any further rate cut. As I explained earlier, NHB is definitely likely, but I cannot quantify. If at all, it comes, it will come on approximately INR 3,000 crores to INR 3,200 crores of portfolio of NHB, which is under fixed floating rate. So there some reduction is possible, but that depends on how much NHB reduces. But -- so as of the moment, the only thing I can say with confidence is that approximately INR 300 crores of bank borrowings, a 50 basis point cut is definitely pending and should come in a couple of quarters -- a couple of weeks.

But sir, I mean, looking at 53% of your borrowing is from banks and 80% of that is linked to repo. So the quantum of decline that we should see should be much higher, right? I don't know if I'm missing something.

So actually, today, if you see the cost of borrowing, which is there in Q1 is 7.42%. But that is because some of the rates we got the benefit in April, some we got in May and some we got in June. So effectively, the 7.42% is what we have experienced in the book. However, going forward, if you look at my liability profile, my current rate -- coupon rate or the -- would be around 7.3%. So going forward, my cost will be 7.3%. Same way, my 7 -- however, on my asset side, what is 7 -- sorry, 10.09%, it will see a reduction. But again, it will not go to a point below 2.6% spread. That's the point. I mean I hope I've explained the difference between what is experienced in the book and what is my coupon rate.

Fair enough, sir. So I understand that there's a difference between stock and flow and your focus on the spread. But my question was more from the cost of fund like I mean, looking at the way rate cuts have happened and all and your exposure to the -- on the liability side, it seems like the 7.4% instead of 7.3% we thought could be slightly lower than that as well. But -- so 7.3% we should get by December or by...

No, 7.3% is what we are already having in the books right now. Of course, incrementally, the cost of borrowing will be, as I said, NCDs are at 7.24%, Bank borrowings are all coming at 7.25% and below. NHB, if at all it comes, it will be, in fact, sub-7% because last time when we got it, it was at around 6.5% or something was the average rate, 6.5% or something was the total blended cost of the NHB borrowing. CPs, of course, are coming at sub-6%. So effectively, my incremental borrowing cost is definitely below 7.3% plus the fact that on my 7.3% is considering that my INR 3,000 crores of bank borrowing is still at a higher rate and 50 basis points is yet to be translated. So I guess once that INR 3,000 crore portfolio also gets repriced by 50 basis points, my cost of borrowing would be around 7.25% or 7.26%, which will be in line with what the incremental bank borrowing or incremental NCD I might be raising.

Okay. Sir, my last question is on the growth front. I mean when we...

Sorry to interrupt Mr. Vishal, may we request you return to the question queue for a follow-up question as there are several participants waiting for their turn. [Operator Instructions] The next question is from the line of Kushan Parikh from Morgan Stanley.

I have two questions. One is on the OpEx side, if you could just help us understand the differentiation between the recurring and the non-recurring part of the employee cost, so out of the INR 42 crores how much would we expect to recur in the next quarter given the several changes that we have had in terms of team size et cetera and also the second question is around the asset quality, so we maintain our 15 basis points credit cost, if you could just elaborate on that as in where do you see the GNPA ending up at exit F26 and what is the provision coverage that we would like to maintain and also on the sticky accounts that we allowed to slip to NPA what is the current provisioning against those accounts?

Yes, sure. In terms of the OpEx cost, this INR 42 crores that you have mentioned, as I said, there's about INR 4.5 crores, approximately INR 4.5 crores to INR 5 crores, which is mainly on account of the actuarial cost, which is almost onetime, you can say. Going forward, that may not be there. Around INR 36 crores, INR 37 crores is the cost, which is the continuous cost, which will be there on the existing -- because approximately INR 12.2 crores or something is the annual salary expense that is coming out for us. So in a quarter, that will be around INR 36 crores, INR 37 crores. So that is the one which will continue in the remaining 3 quarters as well, barring, of course, the additional which will be for whatever additional staff we will be taking. But by and large, it will be around INR 37 crores is the actual fixed cost, which will now continue in the remaining 3 quarters as well. Second is as regards 15 basis points credit cost guidance that we have given. So last year, when we had about a total of about INR 75-odd crores of total provisioning that we did for NPAs and everything, that was approximately working out to around 13 basis points. In this quarter, as you have already seen, we have a INR 280 crore reduction in our gross delinquency in absolute value also, INR 280 crores, and going forward also, some of the steps that we have taken and some of the things the way that we are experiencing even in this month, we expect that to further come down a little bit. That is in terms of the overall delinquency. And particularly in terms of the NPA, which is around INR 378 crores, we expect it to close somewhere around 0.80 by the end of the year because assuming around INR 42,000 crores or INR 43,000 crores of book that will be there, in which case 0.80 will work out to around INR 340-odd crores of NPA, which is another INR 38 crores reduction that we are seeing in the remaining 3 quarters. This particular INR 13.9 crores of sticky accounts that we classified as -- which we allowed to flow, obviously, as for the ECL model, they are -- the working is there. We have to follow the ECL model. So based on that, the provisioning is coming. And overall, as you know, for Stage 3, our provisioning is roughly around 47%, 48% is what is our normal provisioning percentage.

Got it. So we should not expect any additional provisions coming in for these specific sticky accounts, right, going forward?

No. So as per ECL model, whatever will be the calculation because it works on a scientific 5-year trend of the analysis and all. So if the NPAs are coming down, obviously, there will be some reduction in the provisioning, and like we had last year in Q4, where about a INR 10 crores of reversal was there. So if actually we are able to bring it down to INR 330 crores, INR 340 crores kind of an NPA by the end of the year, there will be quite a bit of the provisioning that will get released in Q3, Q4.

The next question is from the line of Damodaran Kutty from Acuitas Capital.

Just one question from my side. On disbursements, can you break out the impact of Karnataka and Telangana in this quarter in terms of the decline in percentage and the contribution to the overall disbursement?

Sure. See, in terms of disbursements, Karnataka for us is about INR 600 crores -- approximately INR 600 crores of disbursement, which should be around 30% for us incrementally. And Telangana is much less. In fact, the negative over there has been quite higher, closer to 30% like last year. And Telangana has been that much, whereas Karnataka has been -- almost close to INR 600 crores is the disbursement in this thing. So about 30% business is from this, whereas Telangana contributes just about 1/3 of it. It is just about INR 200 crores plus, INR 225 crores or something is the disbursement there.

Sure. And in terms of the percentage decline for these two states?

As I said, 29% is the decline for Telangana and Karnataka in this percentage terms is around 12%.

The next question is from the line of Abhijit Tibrewal from Motilal Oswal.

Sir, just two clarifications. First thing is, you said that 67% of the customers are still on an annual reset. Suffice to say, right, that in the next maybe 9 months or so, I mean, on a rolling basis, all the customers will get benefited to the extent that we have taken the PLR rate cuts?

Correct. That is correct. There will be a flow. As I mentioned, about 5%, we were 72% on annual as on 31st March. Now it is around 67%. So there is a 5% reduction. But yes, more and more customers will now -- in fact, I was expecting a higher flow from annual to quarterly because the repo rate cut has been quite substantial at 1%. So I was expecting it to be higher, but only 5% have converted. But yes, going forward, this entire portfolio will also shift, should shift.

Got it, and sir the other thing I was just trying to understand, just going to Slide 25 of your presentation where you gave the rundown ratios every quarter, right, so while I understand we are in a very different rate cut cycle, we are in a declining rate cut cycle now, but typically if you look at the slide every 1Q there used to be a dip in the rundown rate compared to 4Q. We have seen that consistently for the last 3 years, this year it has marginally inched up, right, So basically, what I'm trying to understand is, is there a rate through for balance transfers here because earlier in the call, you had shared that out of the total rundown of 15%, 15.5%, just about 4% is basically out. So what I was just trying to understand is that 100 basis points repo rate cut has already happened. Most of the PSU banks, right, at least from the back book has passed on 100 basis points and are also doing similar or a slightly lower cut in the newer disbursements that they are doing. And despite that, I mean, across the industry, I'm talking about the HFC industry, a, like you had mentioned earlier, except we and LIC, none of the other HFCs have taken that kind of a PLR cut as yet. And despite that, the balance transfers are not inching up. So how should we read these two things is what I was trying to understand.

See I would not say that the balance transfers have not inched up, probably they have, and -- but we also do -- if I look at the number of customer requests that are coming for rate reduction, the customer -- the branch feedback that I'm taking, regularly, there is a slight increase or a definite increase in the number of customers who are asking for a rate cut, and so there could be -- have been definitely a slight segment where they would have already moved more than the normal, but it would be more to the PSU banks. But coming back to the PSU banks, as I mentioned, the margins, their margins are also now getting squeezed, so the pressure would be more from the customers wanting to shift away rather than the banks trying to pull the customers away. So the pressure is more from that, like a customer who definitely doesn't want to continue here. So he will go to a bank and make an application rather than a bank now aggressively coming and doing campaigns to poach customers from PSUs -- I mean from NBFCs and HFCs. So that is what it is. But I mean, I guess this is one of the reasons why we have not, because we have at least been able to pass on 25 bps. And in fact, we have seen that many customers are also understanding that, yes, we are the only ones who at least passed on. So that transparency has helped to some extent in doing it. Maybe if we were to have an aggressive BT in strategy, we might probably have been able to pull from other NBFCs and HFCs also, but we don't have any major such strategy.

Got it. Got it. And sir, lastly, just trying to understand, you guided for a INR 10,500 crores in disbursements, 12%, 13% kind of a growth. But that would mean, like you said, right, INR 2,500 crores, INR 2,600 crores of disbursements in this quarter. So just trying to understand from almost INR 2,000 crores in this quarter, I mean, how do we see this run rate improving to INR 2,500 crores in the second quarter? I mean I acknowledge you spoke about adding another 67 thereabout direct sales staff. You spoke about APX, right? So are those things and branch expansions, I think I recall you said will be front-ended until December. So are those things you're seeing will help you get to that INR 2,500 crore disbursements in the second quarter? Or are there other things beyond what I just mentioned?

No. Just one other thing I would mention is that April month particularly is one month where we always see a huge drop, okay? So roughly like around INR 800 crores if we are doing actually in the month of April, we had just -- we had less than INR 500 crores of disbursement. It's only in May and June that we have picked up, and we have done it, which is a normal thing which happens every year in the month of April, there is a huge drop. So effectively, if you look at what we have done in the month of June also, it is almost around INR 800 crores. It is INR 800 crores. So therefore, that INR 800 crores into 3 would be INR 2,400 crores is something which is built in. We just have to avoid that April is one thing which always is there where the drop happens. So that is why INR 2,500 crores plus is what we are targeting for this particular quarter.

Got it. And sir, just one last clarification during your opening remarks.

Mr. Abhijit, may we request that you return to the question queue for a follow-up question. The next question is from the line of Siraj Khan from [indiscernible] Capital.

Two quick ones. One with respect to the loan asset bifurcation with respect to fixed and floating, how much of the total portfolio is fixed rate? And what are the kind of products? Like are we doing also HL at fixed rate? Or is it primarily the PL and other non-HL products?

Currently, only 1.3% of our portfolio is fixed, which could be mostly our term loans and stuff like that. Other than that, practically nothing is fixed. We have the breakup where, as I said, 67% is approximately annual reset another 32% is -- 31-point-something percent is quarterly reset, and the remaining 1.3% is the one which is not under floating.

Understood, and within the AUM share, with respect to the purpose, the slide that is shared on Slide #19, the mortgage LAP and top-up has gone up by 2%. So like are we trying to increase that? And what is the general rate of interest that we get in this product?

See, actually, we have a strategy where we had in the vision, 5-year strategy, before said that by FY '28, we want to increase the non-housing, which was at that point in time around 11% to take it up to 20% -- sorry, 89% was at that point in time in FY '23 was housing, including CRE and 79% was core housing, 10% was CRE and the remaining 11% only was nonhousing. So by FY '28, we have taken that we would be open to taking it up to 20%, that 11% to increase to 20%. So that's why a conscious decision to slightly increase our top-up and LAP.

Understood. And what would be the general interest rate in the LAP and top-up accounts?

Yes. Yes, you asked that. I missed that. So we have about 1 percentage point higher than we charge in case of our LAP. Our LAP card rate starts from about 10.75% -- 10.7%.

10.7%. Understood. Understood. And just a final one on the branch expansion. In West -- I believe you said the branch expansion will be focused more on the West and the North regions. Any specific state are we targeting? Because you have a lot of other affordable players and also your other normal HFC and NBFC is also present in those regions. So any specific states and what are the -- are we doing -- going to try with any differentiated product strategy? Or any color on with respect to how are we looking to expand in these specific regions and the name of the state, if it is possible?

No, we don't have any specific state. It will be spread across all the states. In fact, in North, we are there in Punjab. We are there in Haryana, Delhi and UP. So we will be opening a couple of branches, 1,1, 2, 2 branches in all these states. It is not there any specific. Same also for the West, if you see, we have Gujarat, Maharashtra, MP and Rajasthan. So all the states we will be opening branches, maybe 1 or 2 in every state. So that's how it is. There is no specific focus on anything. As for the product strategy, no, we don't have any exclusive new branch, we are going to focus on any new thing. But the same product line will be there. But yes, North and West generally have a slightly tendency to have a -- and Tamil Nadu for that matter, have a slight tendency to have a higher SENP category. So that would probably be one of the things which would emerge. But otherwise, no specific products that we are going to launch or any special offering we are going to give.

The next question is from the line of Rakesh Kumar from Validus Advisors.

Sir, just one small question. So of the resources, 17% is from NHB and you said the rate has not been revised there. So that is firstly quite surprising that RBI is putting so much of effort in terms of liquidity to reduce the short-term rates. But still the thing is, I just wanted to understand that as per the terms of business, do we have any obligation that if the NHP is reducing the rate, we also have to pass on it in the same proportion as soon as possible?

Not in that sense, but there are certain lines of refinance where there is a cap on the spread that we can maintain something like 4.5% spread above what rate they have lent. So if it is within that spread, then we don't need to pass on or it is our policy to how much we pass on or things like that. But otherwise, there is no such back-to-back kind of arrangement or a compulsion or anything. Having said that, in fact, NHB has not reduced. We have actually gone ahead and reduced 25 basis points for our customers. So even the customers whose loans are -- have been financed by NHB refinance or back-to-back refinance has been taken, availed from NHB for those loans, those customers have already got a rate reduction, whereas the borrowing for those specific loans from NHB has not come down.

As there are no further questions, I would now like to hand the conference over to the management for closing comments.

Yes. Thank you to everyone and to Investec for organizing this earnings call and to all the participants for very detailed questions and taking interest. Thank you very much. And in case there are any follow-up questions, you can always contact Investor Relations that is either to Abhishek Mishra, who is the CFO or to any of the other members who are present here, the DMD, the GM or myself. Thank you so much.

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