Manappuram Finance Limited (531213) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the Q2 FY '23 Earnings Conference Call of Manappuram Finance Limited, hosted by ICICI Securities. [Operator Instructions] I now hand the conference over to Mr. Ansuman Deb. Thank you, and over to you, Mr. Deb.

Good morning ladies and gentlemen. We welcome you all to the Q2 FY '23 Results Conference Call of Manappuram Finance Limited. We have with us the management of the company represented by Mr. VP Nandakumar, MD and CEO; Mrs. Bindu A.L., Chief Financial Officer; Mr. BN Raveendra Babu, MD, Asirvad Microfinance; Mr. Rajesh Namboodiripad, Chief Financial Officer, Asirvad Microfinance; Mr. Kamal Parmar, Head Vehicle and Equipment Finance; Mr. Suveen P.S., CEO of Manappuram Home Finance; and Mr. Bikash Kumar Mishra, CFO of Manappuram Home Finance. I now hand over the call to MD Mr. V.P. Nandakumar for his initial remarks, post which we can open the floor for Q&A. Over to you, sir.

Thank you. Good morning, ladies and gentlemen. Welcome to our Q2 FY '23 conference call. As you are aware, the pandemic has subsided and the Indian economy is showing signs of recovery. In the previous con call, I have referred to the uneven nature of the recovery and its impacts on our company's growth, but the graph is now showing a more steady curve upwards and this ongoing revival, coupled with our honest efforts are fighting traction, as reflected in our Q2 results declared on Saturday. India cannot be decoupled from the rest of the world. And macroeconomic developments elsewhere would resonate domestically as well. For instance, in the United States, European Union and the United Kingdom have been tightening their monetary policies and interest rates globally remain elevated. The rupee has also weakened to 83, before recovering to 80.56. As the dollar strengthened, gold prices lost some sheen during the quarter. The demand for this yellow metal has reached pre-pandemic levels and witnessed an annual growth of 14% to the July-September quarter at 191.7 tonnes. Currently, investor confidence in India remains high, as evidenced by the fact that net FII inflows in November so far have touched $2 billion. IMF in its latest world economic outlook forecast India to be the fastest-growing economy globally. Morgan Stanley goes a step ahead to state that. This would be India's baggage. We hope to capitalize on this upbeat move and ensure that our business verticals are focused to translate it to our advantage. For the quarter ended September '22, our consolidated gold AUM was INR 19,190 crores, registering an increase of 2.1% year-on-year. Overall, the consolidated AUM has reached INR 30,655 crores in Q2, representing an increase of 7.9% over the year ago quarter. Consolidated net profit of INR 409 crores in Q2 is an improvement of 45.2% over the preceding quarter, driven by profitability in gold loan and microfinance businesses. To be sure, competition is increasing with the emergence of new players in the NBFC space, including fintech companies. However, India has a huge unbanked and underbanked population, which provides a room for a large number of players to exist, without sacrificing profitability. We've been huge hopes on the long-term prospects of companies, microfinance subsidiary, Asirvad, which has an AUM of INR 7,661 crores, showing a growth of 7% year-on-year. According to a CareEdge report, NBFC MFIs are expected to see a 30% year-on-year growth in their loan book in 2022, 2023 on the back of resurgence in demand for micro loans, especially from Tier 2, Tier 3 cities. I have no doubt that we would be able to tap this sector even more in the days to come. We have seen maximum growth in the vehicle finance business, recording 49% increase year-on-year with an AUM of INR 1,886 crores, followed by home loans with an AUM of INR 922 crores, registering an increase of 25.9% for the corresponding quarter in FY '22. Though primarily a gold loan player, we are slowly, but surely on the path to become an NBFC with a balanced and broad-based portfolio. This rebalancing is already underway, and the share of non-gold verticals in our AUM, now stands at 37%. For instance, in the housing finance business, we see a lot of potential for low ticket housing loans. On the vehicle finance business, we are increasing penetration in rural and semiurban locations, apart from using the digital learning platforms and automated approval processes. Yet another focus is the MSME, and digital personal loan segment. The idea is to arrive at a diversified product portfolio, covering secured and unsecured loans for the salaried and non-salaried employees. For a comprehensive review of our performance, I hand over the floor to our CFO, Mrs. Bindu.

Good morning, ladies and gentlemen, and thank you all for joining us today. Coming to the quarter, our consolidated AUM for Q2 FY '23 was INR 30,655 crores, representing a flat growth sequentially, and 7.9% Y-o-Y growth. During this quarter, our all segment AUM has grown, expect gold loan, and the drop in gold loan is on the back of conscious rationalization of low yielding scale. Consolidated profit after tax was INR 409 crores for Q2 FY '23, so it's up by 45.2% Q-o-Q and up by 10.7% Y-o-Y. ROE on a consolidated basis was 18.6% and ROA was 4.6%. Our yield rate is currently only 3 times. Our VNB as on 30th September, at 1.95% versus 1.43% during the previous quarter. Company is currently holding excess liquidity in order to meet the redemption of the 3-year secured fixed rate note issued in the global bond market, which is due in January 2023. Cash and cash equivalents on a consolidated basis was INR 5,633 crores and undrawn bank line was INR 3,316 crores. Our CP portion is only 2.4% of our total borrowing in the standalone entity. Our ALM is well positioned across all buckets, standalone borrowing cost has gone to 7.56% in comparison with 7.47% in Q1 FY '23 after reported high costs of 190 basis points over the period. Apart of the gold loan business, which constitutes 62.6% of consolidated AUM and the remaining 37.4% comprises microfinance, vehicle, housing and SME finance. Gold loan AUM decreased by 6.3% Q-on-Q and up by 2.1 percentage Y-o-Y. Gold loan yield improved to 21.9% in Q2 FY '23 versus 19.4% in Q1 FY '23. The yield improvement, largely driven by rationalization of low-yielding schemes rolled out in H2 FY '22. During the quarter, we were able to add 4.47 lakh new customers. Average ticket size and average duration was INR 54,694 and 68 days respectively. Our gold loan LTV is 65.7%. Our standalone PAT was INR 349 crores, up by 20% Q-on-Q and marginally down by 1.8% Y-o-Y. ROE for this quarter at 16.8% versus 14.4% during 2022. Coming to microfinance business, Asirvad AUM stands INR 7,650 crores, up by 9% Q-on-Q and up by 7% Y-o-Y. During this quarter, our yield improved to 22.1% in comparison with 20.3% in March 2022. We are coming to the end of COVID-related pricing cycle in Asirvad. PAT for MFI business has increased to INR 56 crores in Q2 FY '23, from a loss of INR 8 crores in Q1 FY '23. Expect a further reduction in credit costs, and return to pre-COVID provisioning levels over the coming quarters. Our collection efficiency also improved in MFI business during the quarter stood at 103% and disbursements during the quarter was INR 1,919 crores. In Asirvad, the gold loan AUM as on 30th September 2022 stands at INR 500 crores. Cumulative ACL provision in Asirvad is INR 520 crores, net NPA stands at 1.64%. In September 2022, an equity infusion of INR 250 crores by parent Manappuram Finance through a rights issue, currently, Asirvad CRAR stands at 22.8%. Coming to vehicle finance, we have reported an AUM of INR 1,886 crores, which is up by 7.4% Q-on-Q and up by 49% Y-o-Y. Collection efficiency for the quarter, 101%. GNP has come down to 3.6 percentage from 4%. Home loan business total book of INR 922 crores, it is up by 5.4 percentage Q-on-Q and up by 25.9 percentage Y-o-Y. It operates from 74 branches and reported a profit of INR 4.2 crore during this quarter and INR 9.3 crore for the half year ended 30th September. Collection efficiency for the quarter, 98%. GNP reduced to 5.5%. Loan to MSME and others at INR 1,235 crores, collection efficiency over 100 percentage and GNP at 1.4 percentage. Our lending to NBFC, the AUM stands at INR 272 crores with a disbursal amount of INR 252 crore during the quarter. Provisions and write offs in the standalone entity during the quarter stood at INR 22.1 crore compared to INR 8.8 crore in Q1 FY '23. The board has declared an interim dividend of INR 0.75 for the quarter. Our capital book is strong, and the company is capitalized with a capital adequacy ratio of 31.9%, company's consolidated network stands at INR 8,957 crores. The book value stands at INR 105.2. Thank you. We can now go for the Q&A session.

[Operator Instructions] We have the first question from the line of Dhaval from DSP Mutual Fund.

Congrats on a decent performance. Sir I had 3 questions, first is relating to margins. Just wanted to understand you know have we seen the full benefit of you know the teaser rate book running down and the gold book yield increase fully getting reflected this quarter? And also correspondingly on the cost of fund side, what is our expectation for the second-half of this year? So your sort of perspective on margin would be useful? The second part is relating to growth specifically in the gold loan portfolio. We've seen you know volume decline and overall, the book has been you know stable for quite a while now. What is our outlook from here on, that would be useful? And the third part is on cost, it still is, you know, quite elevated compared to, you know, what our expectation was in terms of cost rationalization. So some perspective around how we think about absolute OpEx would be useful, especially for the next 3-4 quarters? Those are 3 questions.

So the cost was just normal, the yield rationalization by reducing the dependence on low yield products for growth, it has come down. Low yield product has come down from 35% in Q1. In Q2 it has come down to 23%. So, yes, our high yielding product has increased its share by 10%, to 75%. So that is the reason why there is no improvement in the yield, and that is it around nearly 22%, 21.9% and we believe that it will remain at the -- more or less at this level of 21%. So and the yield growth, we see, it is not growing now because, there is another 25% in this teaser rate. It will have to go down and some -- it takes 1 more quarter to get growth I think so. So regarding the cost [indiscernible] has been mentioned already. See, there is going to be a redemption of the overseas borrowing, and that will bring down the cost. Again, there is enough headroom, as our short-term liabilities is only 2.4 percentage. There is some headroom there and we can use that buffer to a reasonable extent to mitigate that rising cycle of interest rate. And so we believe that it will be somewhere -- stay around this. And at the consolidated level you'll see that it has improved. The Asirvad's yield has gone up by nearly 2% now and it is going to further go up and currently our pricing is at around 24%. So it will move to around 24% now and Asirvad collection and net NPA is steadily coming down. So this will protect our overall profitability, and is expected to grow. And you mentioned about the costs primarily is coming from HR cost, why because there was some increase in salary at the lowest level, and also we are building our MSME portfolio and we are strengthening the disbursals in other non-gold vertical like SEV, car, et cetera. So these have been split and these are showing good traction, as far as growth is concerned. So the results of this costs, the benefit of this costs will accrue in the coming months. So these are growing very fast, both to the gold to secured portfolio like MSME, which are all small ticket loans. Again vehicle finance also is small ticket for us. These are growing very fast. So there will be some cost -- you will see the cost rationalization going forward, when these are in another few quarters you will see the benefit out of that.

Right, right sir. Sir, just to clarify, so you're saying that the absolute cost will remain around these level and grow from here, while you will see the book accretion helping manage the cost ratio, is that correct or you will see absolute cost reduction?

You are right. So, that will be in a higher proportion. The income from these businesses will go up.

Understood, understood, Sir and just lastly on comments on growth, especially in the gold portfolio, that would be useful?

Yes, gold portfolio, as I mentioned, the low yield product itself is around 25% and high yield around 80% to 75%. So we wish to bring down that to around 15% and the share of high yield products to around 85%. So the this will result in some reduction -- some -- the portfolio remaining somewhat flat for some time. Then it will start picking up another 1 quarter.

We have the next question from the line of Abhijit Tibrewal from Motilal Oswal.

Sir just wanted to understand given that our focus has now changed to I mean profitability, and given that, I mean in your earlier response, you guided that we expect gold loan needs to remain at around this 21% levels. Just wanted to understand, given that your other peer, Muthoot is still doing gold loans at -- I mean interest rates, which are I would say at least 200 to 300 basis points lower than the rate at which you are doing. You think we have a gold loan market at 21%, 22% kind of yields even today? That's my first question sir.

So I hope so that the reason is they can't -- rural economy is reviving and activities are on the improve. So that's the reason why, slowly our high yielding products, where every ticket size -- is low, is increasing. So when more customers come from that segment, even if when we lose this low yielding piece of products, we will be able to show growth. At the pre pandemic level, even with the higher yield that we were growing at a higher rate, but we believe that, that has come down, it was around 25% for us, it has come down to around 21.5% et cetera. So at this level, we believe that the small ticket short-term customers can be a [indiscernible] the rural market and as the harvest everything is expected to improve, because of the monsoon et cetera, we believe that the growth is possible to the extent of some 5% to 10% in gold loan in the coming quarters.

Understood, understood. So is it fair to say, that I mean going forward even if some of the other peers start concentrating on growth and do gold loan disbursements at much lower yields, we will still stick to these 21%, 22% kind of yields, even going forward? Basically there is no risk of introducing any of those teaser rate gold loans again in the future again?

See when during this -- just after the COVID pandemic or during the difficult times, we were not getting the -- our conventional customers. Then we thought of attracting them, better customers through low yield products and we were successful in that. So now we think that, having the market of this -- bottom of the pyramid started improving, our focus from that low yielding product will be shifted to this high yielding product, and we were growing that during the pre-pandemic level. We believe that as some market widens, as I mentioned in our opening remarks, the goal to sale also has picked up. It has reached the pre-pandemic level. We believe that with the -- as projected the revival will continue, the situations will grow. So as our focus is on high yield products, we hope that we will be able to go back to that segment soon.

This is useful sir. Just one last question, again going back to the OpEx. Sir I'm just concentrating on the standalone, I mean P&L or the standalone OpEx that we have published. Sir wanted to understand, I mean if I look at the OpEx that we were doing maybe last year, we used to say that this is predominantly driven by a very high gold loan disbursements that you are doing. And I would say incentivization which was required and that, and the promotion expenses which we incurred last year, particularly I would say in Q3 and Q4. Now I mean flash forward now, one is, will you just help me understand what was the gold loan disbursements that we did in this quarter? And against that is it predominantly salary increases which has kind of led to this kind of operating expenses, or are there any one offs there? I'm just talking about the standalone business.

So during the quarter, our gold loan disbursements consolidated INR 35,762 crore compared to INR 30,000 crore. With regard to costs, we have not added much manpower in gold loan, as we did -- some time back we added one manpower across the branches for our marketing activities. So during the quarter, the increase was on account of 2 reasons, and it is purely -- that the overall admin cost increase is purely salary cost. So at the end of June, we have given an increase to the lower level employees. So the full impact has come during this quarter. And the other thing is, we added almost 1,500 average number of employees to increase our non-gold businesses, in the standalone entity, non-gold both vehicle finance and MSME is growing and per employee productivity is what we are monitoring, through the added manpower added to the cost in this quarter, but we expect improvement in productivity -- further improvement in the productivity in the coming quarters.

We have the next question from the line of Shubhranshu Mishra from PhillipCapital.

Sir one is on the cost, you are increasing the salaries to...

Mr. Mishra, there is a muffled voice which we can experience. Can you please use your handset to ask a question?

Yes, please. So during the quarter, we have increased the salaries to arrest the attrition, because if I look at the employee expense run rate, it was fairly lower post COVID, so if you can throw some light there. What kind of attrition have we seen in the last 1, 1.5 years, especially post COVID? Second is on the secured PL, there's this particular product that we are doing secured PL. So we're doing it at a fairly high yields from 19%. So if it is a secured PL, the yield is around 19% versus the unsecured PL which is at around 22%. If you can throw some light there, what kind of security are we taking for the secured PL, and why is it such high yielding loan? And sir, also if we can speak a little bit more on the growth, because if we are going to do higher yielding products, we are essentially saying that the volumes would be lower. Hence, the growth should be flat. Is that a fair understanding?

Well, the increase in salary, the reason is already mentioned. We have hiked the salary to retain talent and attract talent, better qualified employees. So the attrition level has gone to around 8% to 9% during COVID days. Now it has been brought to around 5% per month. We hope it will further go down. The second thing is -- your second question is, secured PL 19%, but these are small ticket loans, where the average ticket size is around -- it is around INR 4 lakhs to INR 5 lakhs, and in that the bounce rate is around 6%, the NASH bounce rate is around 6%. and the NPA is already mentioned, it is around 1%. And short term, that's obvious, the unsecured -- the securities, 19% is the gross yields, and the unsecured the digital personal loan, it is around 22%. the difference in the gross yield is only that. But these are offered to our own customers who have a good track record. But it is very easy -- 24 hours, 365 days long, totally digital. So we are disbursing around INR 25 crores per month -- INR 20 crores, INR 25 crores per month now, and quarter-on-quarter we are expecting it in -- disbursal per month by INR 15 crores to INR 20 crores, so that we believe that we will be able to reach INR 100 crores disbursal, around INR 100 crores disbursal towards the middle of '23 calendar year. That's our expectation. And there also you see the bounce rate is around 7%. The credit cost is around 2%, 2.5%. So that difference is -- and this adjusted return remains the same and these customers are mostly our own existing customers who have a good track record. We have several millions of customers with us, who are live as well as -- who have been transacting with us for the last 2 years. So we are targeting them. The growth is the currently the -- in the non-gold I will come to the gold. Non-gold currently we are disbursing around 1,100 to 1,200 loans per month. Loan includes the microfinance, this MSME, then vehicle finance, including car finance et cetera plus some NBFC loans. So we are disbursing, and we hope to improve that to around the INR 2000 crores in another 4 quarters by a steady growth over quarter-on-quarter. So you know the trend is showing that, steadily increasing the -- and these are -- other than MFI, we are targeting mostly on our existing customers. So large segment of our borrowers are these. That's the reason why the VNB in vehicle loan has come down below 4 percentage. About gold loan, as I mentioned, we are moving out from the low yield product, which is around 25%. We believe that the low yield product for the current level, it should be contained around 15%. And so there will be some middle yield product also in between. So we hope that phasing out that, and adding the middle level product as well as high yielding product, will be more suited for us to maintain a yield of around 21%. That's our strategy and we believe that with that, our ROE can be further improved going forward.

Sure sir. Just 2 data keeping questions, Sir, what is the proportion of AUM less than 3 months tenure? And what was the amount of auctions done in this quarter?

Auction during the quarter, INR 190 crores. And on the -- tenure wise, 80% of the book, 3 month product.

8-0 ma'am?

8-0.

We have the next question from the line of Shreepal Doshi from Equirus Capital.

Sir my question was pertaining to the average ticket size and also the loan book split in terms of ticket sizing. So what would be the book which would be say below INR 3 lakh, and INR 3 lakh to INR 5 lakh, and more than INR 5 lakh in the gold segment?

Yes, on the total INR 2 lakh above only, we kept it like INR 3 lakh. INR 2 lakh above, we have around 22.6% on the total. Below INR 2 lakh is 78%.

Okay, could you also provide something -- like above INR 5 lakh ticket size loan book...

That is around 7%, INR 5 lakh.

7%?

7%.

And the second question was with respect to -- like in the MFI segment, at Asirvad level, we are also doing gold financing. So what is the yield that -- yield range that we have for gold financing product at Asirvad level?

The product structure everything is similar to that of the parent. So the yield is somewhat similar only, as far as gold loan is concerned.

Okay. Got it. And just one last question...

At this point, that above INR 5 lakh, as on 30th September, 2021, it was 7.3%, and in between we have increased the ticket size, and then it has come down -- as on 30 September, 14.5% on the portfolio ticket.

Okay. So ma'am, since you've given a Y-on-Y number, so what was this, say INR 2 lakh ticket size number in September 2021? Which right now is 22.6%? Can you share?

So based on -- like we have done between INR 1 lakh and above INR 1 lakh, where the yield sensitivity also different? So up to INR 1 lakh we were at 77% of the customers, and we are at 80% percentage now.

Okay. This is in terms of customers and not loan book? Or is it the same?

Yes. So this is based on the customers. 80% of our customers are below INR 1 lakh in terms of the portfolio as on 30th September, it was 45% below INR 1 lakh and 55% above 1, above INR 1 lakh.

We have the next question from the line of Vivek Ramakrishnan from DSP Mutual Fund.

The first question was, on the proportion of gold loans and you had mentioned you are broad basing, what is the minimum percentage you would keep? And given the fact that the other businesses are seen as relatively volatile, would there be some kind of adjustment you'd do on debt equity, if you grow the more risky business, if I can call it that?

See, the unsecured business is mainly microfinance. The others are secured like microfinance, which include to commercial vehicle, car, tractors and 2 wheelers. And MSME also, secured against the land and property. So these are mostly secured. Asirvad also, it is risky. Now it has been -- that risk has been mitigated by the -- through the new regulation. The new regulation provides the support in 2 areas to mitigate the risks, to have the inner position, as far as the yield is concerned. Based on our assessment over these years, we thought there should be a risk premium built in the yield, which should be around 4%. So now our yield would come to around 25%, because including the charges. So it would come to -- even though the yield is around 21% and the service charge is around -- yield would come to around 25%, there is it an increase in the yield of over 4% from the previous one. So enough cushion has been built in there. So the share as of now, I mentioned is non gold, has come to around 37% and gold is 63%. So we are trying to grow gold and we believe that gold also will grow. The ticket size below INR 50,000 -- ticket size below INR 1 lakh, the share was far higher during pre-pandemic, but it is truly coming back, with the demand coming to that segment. We believe that, that segment will grow and we are focusing more on that. Even before the pandemic, the competition was there, but the -- yes the problem is more than the competition, the challenge is, those segments' requirement for money has come down, but because of that social functions are were not happening so far, it started slowly picking up. So the risk mediations have been done, even in the non-gold product. So the products -- the quality of assets we have mentioned in other asset classes, non-gold asset class other than microfinance, either VNB in commercial vehicle segment is below 4% and VNB in MSME et cetera, around 1.5% only. So this shows the portfolio is good, and why -- because we are primarily targeting our own customers, whose real number is running into crores.

Sir I had 2 questions. What I'll do is, I'll just ask them sequentially. In the microfinance and home loan business, your GNP numbers, you've shown us 8.8% and 5.5%. Are you still collecting from the clients whom you classified as GNP, is question #1? And question #2 is to Ms. Bindu, given the fact that the high proportion of your loans are short term in nature, your CP proportion seems extremely low. Would you be looking at higher CP proportion going forward? That's it from my side.

Yes, see this MSME and home loan portfolios are 2 different portfolios. MSME, I will come to that. MSME, I meant the MSME. In the MSME portfolio, where the portfolio is around the INR 1,200 crores, INR 1,300 crores now, going to around INR 1,400 crores now, where the growth in NPAs is on the upside. In home loans as you said, the NPA is high, but it is coming down, and net NPA has reached around 5% and we hope that in this year itself, we will be able to further bring it down. Because the rural home demand is slowly increasing, and many of these assets are backed by -- these are backed by -- these are real estate assets, which are mostly of housing nature. And the rural housing is slowly picking up. We hope we'll be able to liquidate that and bring net NPA to around 3% towards the end of this fiscal. Now, over to Bindu.

So on the CP proportion, you are right that it is very low compared to a larger [indiscernible] products in the asset side. So one reason we were cautious on [indiscernible] because the dollar bond is getting matured in Q4. So we accumulated as much as through long term, term loans et cetera from banks. And the other thing with the increase in repo rate, there is not much difference. In the current scenario cost wise, the benefit is not that great. So once the rate improves for the city market, we will tap that, because that buffer is there. So that will help us to reduce the cost also in future. So we are keeping that as a buffer in the current environment.

We have the next question from the line of Pratik Kothari from Unique Portfolio Managers.

Sir just one clarification, is any of our incremental lending happening in this low yield bucket of below 12%?

No. We have completely stopped lending below 12%.

Okay. So this book should run down pretty quickly, right, because most of our loan is anyways...

Yes, it will run down very quickly.

We have the next question from the line of Nihar Shah from New Mark Capital.

My questions have been broadly answered. I just had one question which was on the new branch expansion. You know we have been anticipating that you know, we should get that permission from RBI at some point of time. Is there any update on the same, and you know what -- your peer had been given some branches, so you know what's the challenge there and how are you going about resolving it?

We hope will also get soon. So far we couldn't get and we are hopeful about that in the coming quarters. But one thing I can tell you, at the consol level is now, we can earn up to 25% of the loan book, the loan amortized in Asirvad. And Asirvad branches have started pushing gold loan. So in some unrepresented area, our subsidiary would be able to lend gold loan, because there is headroom there. But in the meantime we are addressing, and we are pursuing our branch opening request with the regulator.

Okay. And one other question is on the Asirvad book, you know the yield increase was pretty sharp. Was there any sort of securitization or you know one off transactions in that, or is this you know -- what can be expected going ahead?

Yes. In the Asirvad books generally, we have some DA transaction happening. This quarter we had a slightly higher number on that, that is the reason for this difference.

Okay, fair enough. That's fine.

Sir, the question was on the GNP?

No this is on the yield.

DA securitized.

Yes, it was on the yield because you know is there any sort of securitization or any of those things that were happening. That's it.

The yield increase is on account of the new regulations. We changed it earlier because of the new cap, we were charging 20.3%. And under the new regulations, we changed the yield from 1st April onwards. So that will put us to improve the yield by 2% during this quarter. It is not because it's one off related.

We have the next question from the line of Aalok Shah from MNC.

Congrats on a great set of numbers. Sir, just 2 questions from my side. Would you like to kind of give us some thoughts on...

Sorry to interrupt, your audio is not clear. Yes, please proceed.

Sir, can you give us some thoughts on what's the consolidated and the standalone ROEs that you're looking, you know from the mid term and long term perspective? And also some sense on what's the consolidated AUM growth that you're looking on the overall book?

So I have been repeatedly stating that, our targeted growth, on the consol book is even -- yes, standalone book is around 20% CAGR and ROE is also 20% CAGR. So we are slowly coming out. So we hope that it will happen. All our non-gold segments are also doing well, and also we hope that by setting this lower yielding product so we will witness growth there also and I believe that we are -- at the consol level we are getting an ROE of 20%, we are very near to that. And in other 2 quarters, I believe that we will touch that point, 20%. This is our plan.

We have the next follow up question from the line of Abhijit Tibrewal from Motilal Oswal.

Thank you for allowing me a follow up question. For the benefit of everyone if you could firstly please repeat the split that you gave by -- split of your gold AUM by ticket size? Then maybe I'll ask my question.

On the ticket side sir, as on 30th September, above INR 1 lakh, it is around 56%, 57%, below INR 1 lakh, 44% in gold loan.

And sir you also gave some split above INR 2 lakhs and above INR 5 lakhs right?

So the number clarified. Again I will tell, above INR 5 lakh [Technical Difficulty].

Ladies and gentlemen, the line of the management has been connected. Thank you for being online. Please proceed, sir. Please proceed.

Sorry for the disturbance. Above INR 5 lakh, I already told earlier, 14.5%. INR 4 lakh to INR 5 lakh around 18%, INR 1 lakh to INR 2 lakh, 22%, so total together above INR 1 lakh, it is around 56% and below INR 1 lakh 44%, that is as on 30th September.

Understood. So now my question was we have published a very interesting slide where we have shared the AUM split by yields. So just wanted to understand from peaks of let's say Q3 and Q4, where gold loans below less than 12% actually peaked at 47%, 50% in Q3 and Q4. Now that they have declined to 25%, we have not seen a proportionate reduction in your average ticket size. So would it then be fair to say that large part of this change in AUM split by yields, was driven because of the migration of teaser rate customers to higher interest rate gold loans? And maybe over the course of time, you will see this higher ticket goal loans maturing, which will then lead to a proportionate decline in your average ticket size?

On this maturity tranche, we have a peak period, like Q2, Q3, Q4 during this period, most of the disbursement happened, part of the segment, Q2 also. The maturity time, of course some customer may be migrated towards the existing scheme, but majority of them were -- may not continue that. That's why the percentage is not sharply 100% reduced to this level. Some of the migration happened, and they were continuing with the new rate, whatever we are offering, and the others were -- of course they may be quitting from our side, that is there. But on the other side, you can see that the customer increase or net reduction in the customer, that is happened only 1.5% to 1.6%. So the movement is mostly from the bigger ticket size, where the predominantly -- that yield is in the range of 10% to 12%.

But it's successful which means that -- I mean ticket prices will remain at these levels, or do you think that with these higher ticket size...

Yes. Some reduction in the ticket says already happened also. It may reflect in the coming quarter, around the INR 3000 per ticket is already -- reduction happened. That way so further -- some INR 2,000 to INR 3000, further may reduction happen. But some of the customer with the bigger ticket also will be there. But predominantly in the below -- below INR 1 lakh range only, mostly it will come.

Understood sir. This is useful.

Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to the management for closing comments. Sir, any closing comments?

Thank you so much all the investors and analysts who have attended this conference and arrangers. Thank you.

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