Manappuram Finance Limited (531213) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q1 FY '25 Earnings Conference Call of Manappuram Finance hosted by DAM Capital Advisors Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Sanket Chheda from DAM Capital. Thank you, and over to you.

A very warm welcome to all of you to Manappuram's Q1 FY '25 conference call. We have with us the entire management team today, starting with V.P. Nandakumar, who is MD and CEO; Sumitha Nandan, who is ED; Ms. Bindu A. L., who is CFO; Mr. Raveendra Babu, who is MD of Asirvad Microfinance; Rajesh Namboodiripad, who is CFO of Asirvad MFI, Basavaraj Shetty, Senior VP and Head IR; Kamal Parmar, Head of Vehicle and Equipment Finance; Suveen, who is CEO of Manappuram Home Finance; and Robin Karuvely, who is a CFO of Manappuram Home Finance. Without further ado, I'll hand the call over to Mr. V.P. Nandakumar for his opening remarks. We will follow that of with question and answers. Over to you, sir.

Thank you. Good evening, ladies and gentlemen. It is my pleasure to welcome you all to conference call to discuss the first quarter FY '25 financials. Amid global uncertainties and geopolitical conflicts, our company remains a standout poised to achieve a sustained real GDP growth rate of 7%. Against this backdrop, I present our Q1 financial results. At a macro level, forward-looking economic agenda and political stability create a conducive environment for building Viksit Bharat by 2047. Several initiatives outlined in the union budget are expected to have a multiplier effect on the economy. The affordable housing scheme, incentives for first-time employees, measures to enhance youth skills and student internships in the top 500 companies will boost employment and income, leading to increased credit creation and sustained aggregate demand. Despite a slowdown in economic activity due to general elections during the quarter, we achieved a substantial growth in both AUM and profits. I'm pleased to report a net profit of INR 557 crores, an improvement of 11.7% year-on-year, driven mainly by the profitability in our gold loan. The stand-alone AUM of the entity at INR 31,035 crores, grew by 20.6% year-on-year, with a consolidated AUM of INR 44,932 crores, an increase of 21% over the same quarter last year. Our gold AUM reached INR 23,647 crores, an improvement of 14.8% over the same quarter last year and 10% sequentially. You may recall that I have been promising just this kind of a growth in our gold portfolio. Our gold holdings increased during the quarter, despite heightened competition. As you know, the union budget slashed the import duty on gold 15% to 6%. As a result, there is an expectation that domestic gold prices may see a moderation, leading to higher retail sales. Though this does not have any direct correlation with our business, an increase in volume of gold with our source would be positive for our business since the gold loans are the go-to sources of our source to meet their emergency financial requirements. Coming to the non-gold segments, our microfinance subsidiary, Asirvad, posted an AUM of INR 12,310 crores, showing a growth of 21% year-on-year, and a profit of INR 100 crores. As in previous quarters, our vehicle finance business continues to show the highest growth, recording 63.4% increase year-on-year with an AUM of INR 4,541 crores, followed by home loans with an AUM of INR 1,587 crores, registering 32% increase over the corresponding quarter of FY '24. We are closely monitoring the affordable housing segment, which holds significant potential. Our non-gold business now account for 47% of the total portfolio. It is true that there is an industry-wide trend of collection challenges in these sectors. We have not been immune to such challenges. But in our case, these are restricted to certain specific quarters. A close examination has shown that climatic challenges, such as floods and heat waves affected the optimum functioning of the establishments. And this in turn caused to delay in prepayments. We are taking all possible steps to identify the bottlenecks and increase collection efficiences. Going forward, we also plan to focus on secured lending in MSME and the allied verticals. Overall, we are well capitalized as per the industry norms with an asset quality in the stand-alone book contained below 2% and we have a consolidated ROA of 4.5% for the quarter. For a more comprehensive review of our financial performance, I now hand the floor to our CFO, Ms. Bindu A. L.

Thank you, sir. Good evening, ladies and gentlemen. Thank you for joining us for the discussion on the financial results for the quarter ended June '24. Restrictions on disclosing Asirvad financial numbers continues as the IPO is in progress. Coming to the performance, our consolidated AUM for Q1 FY 2025 was INR 44,932 crores, representing 6.8% sequential growth and 21.2% Y-o-Y growth. This is with a strong growth in gold loan book. Consolidated profit after tax was INR 556 crores, which was down by 1.2% and up by 11.7% Y-o-Y. ROE on a consolidated basis was 19 percentage and ROA 4.5%. Stand-alone GNPA at 1.96% versus 1.93% during the previous quarter. With regard to liquidity, cash and cash equivalents at INR 5,383 crores on a consolidated basis and undrawn bank line was INR 3,530 crores as on 30th September. Our CP exposure is only 3% in the stand-alone entity. Borrowing cost has gone up by 18 basis points. As you may be aware, we have raised USD 300 million under Reg S in May '24 for the business growth. On the gold loan business, which has improved to 52.6% of consolidated AUM, the AUM stands at INR 23,647 crores, up by 9.7% Q-on-Q and 14.8% Y-o-Y. During the quarter, we were able to add 4.21 lakh new customers and the number of outstanding customers gone up to 24.5 lakhs from 23.76 lakhs. Online gold loan book stands at 70% of total AUM. And the standalone profit after tax INR 440 crores, it is up by 2.9% sequentially and up by 15.7% Y-o-Y. Asirvad Microfinance subsidiary, the AUM stands at INR 12,310 crores, including gold loan AUM of INR 1,016 crores Q-on-Q growth up by 3.6% and 21.4% Y-o-Y. PAT was INR 100 crores versus INR 102 crores in Q4 FY '24, which is marginally down 1.8% and Y-o-Y 10%. Net NPA stands at 1.36% and the CRAR currently stands at 21.81%. Coming to Vehicle Finance, we have reported an AUM of INR 4,541 crores, which is up by 10.5% Q-on-Q and 63.4% Y-o-Y. The GNPA stands at 3.6% and the AUM comprises of CV, commercial vehicles at 56%, passenger vehicles at 28% and 2-wheel 16% of total vehicle finance AUM. The home loan business INR 1,587 crores, which is up by 5.2% Q-on-Q and up by 32% Y-o-Y. Subsidiary reported a profit of INR 6 crores during the quarter, and the GNPA at 2.88%. Home finance AUM comprises of home loan of 72% and lab book of 28%. Loans to MSME and Allied at INR 2,946 crores with a disbursement of INR 311 crores during Q1. GNPA 2.7%, excluding digital personal loan. And this portfolio is largely secured. On lending AUM stands at INR 916 crores with a disbursal of INR 95 crores and the ROA on this book is around 3.6%. Considering the consistent earnings, Board has declared an interim dividend of INR 1 for this quarter. Our capital position is strong at a CRAR of 29.6%. Net worth at INR 12,020 crores and the book value of INR 142.02. Thanks. Now we can go for the Q&A session.

[Operator Instructions] The first question is from the line of Adarsh from Enam Holdings.

Congrats on good numbers. So the question is -- I have two questions. So first is on the gold book. After a very long time in the last few quarters, we are seeing some decent customer additions. So just wanted to understand like what have you done for this trend to change. The customer growth has come after many years. So that and have you benefited from the ban on a competitor? And the second question is many MFIs have reported their first quarter numbers, things seem quite tough for the sector now. Our Asirvad numbers seem okay. So I just wanted to understand what are you seeing on ground on the MFI business?

Okay. Adarsh, about gold loan, I used to tell, post-COVID what has happened is that demand from our target audience went down. And after that, it started coming, that's why the number of customers also have increased. So we have not done anything different from whatever we have been doing. But the demand has gone up. Our average ticket size remains around INR 70,000, INR 75,000. From that class of customers, the demand started coming in. The ban on some of the competition, I don't think the effect is material. Why because even if it is there, it is getting distributed to so many players. And many of these are going to banks only. So it is not because there is the ban on one of the competition. It is because of our sector to the customer requirement has gone up. The demand for some working capital, et cetera has gone up. About Asirvad, we have challenged that at the cost of IPO and DRHP, we are in the DRHP state. But in the sector, yes, you have said is right. It is -- yes, there are some challenges in collection because of factors like Punjab, Rajasthan, et cetera, farmer agitation, general election. And connected with that, there were some rumors spread by the interested party about non-waivers. More than these two, because of climatic reasons such as heat waves, that has led to some of the establishments had to close for so many hours, et cetera, business was impacted. That has lead to the collection. As you know, the sector has some cyclical challenges.

Ladies and gentlemen, please hold while we reconnect the management line.

Adarsh, you got the answer?

Yes, ma'am. Just a follow-up, sir. On our customer growth, what is your expectation now, right? Do you expect now unless the last 3 to 5 years where we didn't have customer growth, we should like the last one year get back to having some 5%, 7% customer growth?

It is slowly growing. So this -- before COVID, we were growing at around 10%, 15%. That was then demonetization had some impact. Then after that, we have come back, et cetera, et cetera. So I have been maintaining that this year, we may grow 12%, 15%. So judging from the current trend, we hope we may grow around 15% this year. The growth in the number of customers also.

The next question is from the line of Piran Engineer from CLSA.

Congrats on the quarter. A few questions. Firstly, this INR 20 crores exceptional item. Why have we added it to our profits instead of deducting, I didn't get that logic in the stand-alone financials?

This fraud is on account of unauthorized access by our subsidiary employee. And as it is an outsourced vendor, we are in the process of recovering from the subsidiary, as it is committed by the subsidiary employee. So the loss is already factored in our financials over the years. And now this is coming as an income to the quarter financials.

But this is like some insurance income?

Consolidated, there is no difference. Consolidated the subsidiary, it has come down and the parent company, it is gone up, which is totalized.

So in the consol numbers, this INR 20 crores is part of the OpEx?

So this INR 20 crores, in consol, this will be a group adjustment because in a subsidiary, this is booked as an expense, claims payable. And in the main entity, it is booked as a receivable. So in group adjustment and in the consol, only the tax impact. Because in Manappuram Finance, the tax liability is there, but in the subsidiary, there's no tax. So in consol, tax impact of INR 4 crores. Standalone, it will be...

Sorry, Bindu, I'm confused. The employee has done a fraud of INR 20 crores, but there is no impact on the financials?

Yes. Because this -- she has done the adjustment from the interest income, which is already factored in the financials over these years.

Okay. Okay. So it comes in the interest income. Okay. Fine. Fair enough. Secondly, just on microfinance, I know you can't talk a lot about Asirvad, but broadly talk about which geographies are stressed? Any particular ones?

Yes, yes. So places like Punjab, Gujarat, Rajasthan, Madhya Pradesh, these are the main states. While saying so, I also -- I wish to add another -- one more thing. In these places also there are branches which are showing good collection. So these are -- even though these are mainly in the states, all the branches in these states are not affecting. Some places like where the heat wave conditions were more, or farmer agitation was more, et cetera, et cetera. And the spread of false news like farm waiver, et cetera, loan waiver, et cetera, et cetera, these places were affected. Now having seen that the rest of loan waiver and good monsoon, et cetera, hopefully, as we have witnessed in the past over these years, these may slowly come back.

Okay. And what is our portfolio in these states, sir?

So the full details we are -- whatever is disclosed in front of the public domain only can be discussed because of our constraints of DRHP.

But, these are not our main concentration. As you're aware, Tamil Nadu, these are our main states, but the states where we faced the collection issues were not bigger states for us.

Okay. Okay. Fair enough. And just lastly, on Slide 18, you mentioned that you've taken some cost rationalization measures for the gold loan business. So can you just elaborate on that, please?

It is not cost rationalization. What we were discussing, as the gold loan brand set up or those costs are fixed. Additional business will help us in to reduce the OpEx to AUM.

The next question is from the line of Rajiv Mehta from Yes Securities.

Congrats on good numbers. I've got few questions on the gold loan business. So we are talking about demand having increased for gold loans. But when I look at the customer acquisition number or volume, it is 4.2 lakh customer acquired in Q1. And it was -- it is pretty similar to Q4. Q4 was 4.1 lakh customers that we had acquired. So it doesn't show up in volume. And the math behind the gold customers growing by 4% Q-on-Q because when we had a similar addition in the previous quarter, the customer base did not grow as much. So was it that auctions were 0? Or was it that releases of the gold pledged were much, much lesser in the quarter?

So the life...

Apart from the new customer, what we feel that 4.2 lakh is new customer number only. But apart from that existing customers are also started coming back. That is what is still customer addition happened during this quarter compared to the previous. And on the auction side, it is not large policies and all, similar to last quarter only the auction is there. But that is not the exact reason for this. Existing customers also come back apart from new customers.

Also, can you share that number? Can you share that number of old customers reactivating in this quarter? And what was it in the previous quarter?

We will come back. Yes, we will send it you because these details are not there. The new customer acquisition remains the same, but the overall like customer base has gone up.

Understood. Understood. And this increase in ticket size, average ticket size by 6% Q-on-Q. Can you explain this? I mean, is it more driven by the LTV headroom being availed by some of the existing customers basis their incremental need for money? Because I also see LTV going up. Or is it also driven by the fact that the customer mix has changed that you acquired slightly more -- slightly higher value customers? What has kind of driven this increase in ticket size on Q-on-Q basis?

The number of -- details we have?

It is a mix of both. One is that LTV, some percentages increase and also the portfolio mix also. About 2 lakh customers, percentage is increased from 33% to 35% during this period. So it's a mix of both. One is that LTV, slightly increase is there. Second is that a slightly bigger ticket -- 2 lakh above ticket size we started getting more.

Okay. So which is why your net yields on the gold loan portfolio has also come off from 22.5% to 22.2%?

Yes, marginal.

Marginal decrease is because of this one.

In gold loan, the customers are coming, they are pledging gold -- they are having mind this has to be redeemed within 1 month, 2 months, 3 months. The average life is around 100 days. They don't simply pledge because the LTV is high, because they have a bunch of performance that they have. They come with the necessary quantity of gold just to have the loan of their requirement because they are very clear that this should be redeemed. They are getting more money on the same collateral. It's not a big attraction for them to for an increased borrowing. Why? Because they are sure that they have to be redeemed in a short time.

And just lastly, sir, what can be the likely impact of one of your competitors coming back or restarting their operations?

Yes, yes. Let them come back. See, earlier, the old players didn't have a level playing field with them because they have their own practices, which are seen, which are -- whatever is that we have seen the reports such that I relay on the reports. When they come back, they are coming with the necessary practices, fair practices as laid down by the Reserve Bank of India's fair practices code. Then there will be level playing field for them as well as for us because still more than 60%, 65% of our loan is for the informal sector. This informal sector transition will happen. It is the natural process of transition which is happening now. Then again, as I mentioned earlier, India is reporting 1,000 tonnes of gold every year. These are -- major portion of these are going for jewelery, that means the jewelery sale is also increasing. That means people have more gold with them to -- for availing loans at the time of their emergency requirements, et cetera, et cetera.

And sir, this customer acquisition trends and this existing customer reactivation trends, which were very good in Q1, are they continuing in July and August as well?

Yes. See, there will be some seasonal changes, some seasons will this happens because of the harvest season or school reopening season, there will been an increased demand. Some -- there has to be some cycles. But compared to the same period during the last year, we see the demand is better.

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

The first question is more of a data keeping question. What was the gold loan disbursements in this quarter? And what proportion of those gold loan disbursements were top up loans?

We don't have the details right now. So if you want, we can share it later.

Sure, sir. The second question, again, on gold loans was, sir, in the last question itself, you kind of referred to seasonality, which is typically there. So from what we understand, typically 4Q, 1Q -- 4Q and 1Q tend to be seasonally stronger quarters because of reasons that you yourself have explained multiple times on these earnings calls. Now 2Q, 3Q, I mean, just trying to understand, are we kind of heading into slower growth for the next 2 quarters before it kind of picks up again in 4Q?

Yes, we feel like it will be slightly lower than the peak period which is over now. But still, the growth will be there.

Got it. And then just one last question on micro finance. So while we touched upon some states where problems are there and we kind of attributed it to a lot of things, Punjab farmer agitation, general elections, rumors about loan waivers, heat waves as well. So I mean there are MFIs today who have started acknowledging the problem of customer over-leveraging that has happened. So what is our view on this problem of customer over-leveraging, which could lead to more stress in the coming quarters? And two related questions on microfinance only. I mean in terms of the asset quality stress credit cost in micro finance, are we kind of done taking the hit? Or you think there are a couple of more quarters ahead, we will see? Because in this quarter also, we did an ERP transaction of almost INR 200 crores in the microfinance business. So are we kind of going to be seeing that stress pan out over the next couple of quarters? Or do you think things will start improving from second quarter itself? And sir, lastly, if you can share that data on microfinance [indiscernible] have started sharing about customers you need to Asirvad, Asirvad Plus 1, 2, 3 and 4.

You yourself have mentioned that we are in the DRHP stage. We have constraints in giving you all the numbers other than the published numbers. So the MFI industry has challenges and I am talking something general, as we cannot disclose more in our case because of obvious reasons. So some states, the heat wave conditions, farm laws, et cetera, et cetera, was high. And thereafter, the rumors of loan waiver, et cetera, was also -- it densely spread, et cetera. Because of the heat waves, I also told, the productivity lost -- demand -- days were lost, et cetera. That is the challenge. And that is what is seen in the industry. As I said, these are not completely in states, these are -- the states like Punjab, Rajasthan, Madhya Pradesh, et cetera -- Gujarat, et cetera, where some parts of the states are doing pretty well. So these are where these issues are impacted. And these issues the industry has seen in the past. And after realizing that the news spread were false and also because of the monsoon coming, et cetera, et cetera. As these people will come and repay because this microfinance is helping them to manage their cash flow to meet some requirements, et cetera, et cetera. The history shows that they will not completely ditch, when the problems were there, cyclical challenges were there, their repayments are affected, but still come back. Then coming to our leverage, the SROs guided us to reduce the -- to ensure that our leverage is not promoted. They have said, yes, the maximum income per the family to be capped at this thing and maximum lenders to be capped at this. We've already implemented that. And you see that if you take our growth compared to some of the peers where the reports were already published, our growth was relatively lower during the last quarter.

Got it, sir. And sir, just one last question for Bindu ma'am. But before that, sir, earlier during the call, you kind of guided for 15% gold loan growth this year and the same number for growth in customer acquisitions as well?

Yes, yes. We expect 15% -- somewhere around 15-plus percentage growth this year, gold loan.

Okay. And sir, Bindu ma'am, now looking at where we are and the expectations that rate cuts might also start happening in the near future. How should we look at your borrowing costs going ahead?

Borrowing cost, at this stage, it is continuing at a similar level only. So once I think we are also looking at the -- like expecting rate reduction. Let us see, I think in September, what is happening.

The next question is from the line of [ Gaurav from Capital Farming ].

I just have a question on -- first on the Asirvad Microfinance. It has been observed that the provisioning for bad assets has been increasing consistently, right? And similarly, it has been observed with the other microfinance listed entities as well, there has been a significant increase in the spread assets across the category. So what's your opinion as management that how far it can go? Is it the peak of the provisioning? Or there is still some room left, which we can see in the coming quarters that this provisioning can increase from here onwards?

Again I repeat because of the DRHP, we cannot disclose beyond whatever is disclosed. But I'll tell you a few things, where Asirvad is better risk managed. One, in no state we have an exposure of 10% of the total AUM. And then in no district we have an exposure of more than 1% of our AUM. The second thing, the gold loan also is coming to around 10% of the portfolio, where you cannot expect, because that's why the regulation also has facilitated that non-gold lending that has been enhanced from -- the limit has been enhanced from 15% to 25%. So we have 520 branches as disclosed earlier. And that's doing pretty well, along with the gold loan segment, et cetera. We hope because of the rerisking like this, the company will be able to perform better compared to the previous one, the geographical concentration is not there. It is spread across the country with the norms -- the biggest risk here is the geographical concentration. Second, gold loan will definitely support. Asirvad is unique as far as risk management is concerned.

Yes. And my second question is on the other segments other than the gold loan, like we are into the affordable housing finance, commercial vehicle finance. Now we are also talking about lending to the MSME, which I think in the last couple of annual reports also we have been mentioning, right? So -- but lending to these segments require different skill set in terms of the underwriting team, recovery team, right, and the entire infrastructure. So how Manappuram at a consolidated level, the management is bringing in the expertise on the board, right from the ground level to the mid and senior management level? How you are ramping up those teams so that the -- what you are talking in the annual reports as well as these quarterly calls is actually getting implemented on the ground also> So your views on that, please?

These are -- whether it is vehicle finance or MSME, these are especially trained people who are exclusive for that from top to bottom. Their underwriting requirement, these are all -- if you take the MSME, 95% of these are micro lab where the average ticket size is around INR 5 lakhs, INR 6 lakhs. So these are used by small businesses. Our check bounce is around 7% only. That means 92%, 93% is collected by nearly presenting the NACH or a check. The balance 7% we are collecting. So around 5%, we have unsecured lending to MSMEs. These are all small ticket lending up to INR 3 lakhs, INR 4 lakhs. Now the stress is at that segment only, if at all any stress is there, I think in that segment only. But now we have reduced that further. And gradually we are making these to 97%, 98% secure. So we have a team for each of these. Our business model is slightly different. Yes. We are not sourcing customers through DSA much. Some percent, some small percentage has been sourced through DSAs. But our branches are flat, nearly 50,000, 60,000 customers have retained gold loans. And these businesses are colocated along with the gold loan business, even though done by separate teams. So when there is so much of footfall by simply presenting some banners, et cetera, et cetera, attention is caught by the customers. And we are acquiring majority of the customers direct from them or through them in their communities, et cetera, et cetera. This is our major channelizing of customers. So that's why these customers have been with us for some time in gold loan. Now these are being done by a separate team who are highly skilled in this regard.

Last question, if you allow me to ask. With respect to -- if it is not violating any guideline of Asirvad Microfinance listing. But there was some news that you have appointed a new CEO for Asirvad Microfinance. And within a very short span of time, I think, CEO resigned. So is the listing getting delayed just because we do not have a CEO in place or is it something else?

See, we have the MD in place. Yes, just to support him, we appointed a CEO, who -- he is a Bombay-based person. He has his family connections in Kerala. He thought of coming over here just to support his aging parents. Then he has health problems. His family is in Mumbai, they have challenges. So his plan didn't workout as the family challenges were there, et cetera, et cetera. That's the reason why he thought of going back to Mumbai. But the company has MD, who is also the CEO.

Okay. Okay. But not having a regular CEO is not the reason of not going with the IPO listing. Because I think SEBI has given an approval, but there has been a significant delay in getting the company listed, right?

It is not because of that. There were other issues like the election -- general election. Then outcome of the election just after that, there were some uncertainty. So then everything has come back. Then we have started the roadshow. So this is how it is moving. It is not because the CEO has come and gone back.

The next question is from the line of Bunty Chawla from IDBI.

First one on clarity. Sorry, I missed that. Gold loan group guidance, have you revised to 15% for the year -- for full year FY '25?

Yes. So in the current month, we expect the gold will grow, beyond...

Okay. So for overall consolidated AUM growth guidance will be now?

Gold will grow 15%. The others will grow in a similar way, other non-gold like vehicles, MSME, affordable housing, et cetera, whatever is the trend during the first quarter, that may continue.

Okay. Okay. And a few data points. One auction during this quarter and as well as it seems to be higher write-offs we have taken in the MFI portfolio. So can you share both the data, auctions and write-offs in MFI?

MFI, whatever it is, can only be disclosed now because of the DRHP stage. Auction retail, probably we can -- is at INR 12 crores.

And one more, what we have observed during this quarter, in non-gold portfolio, vehicle financing, MSME and standalone, there has been an inch-up in the gross NPA levels. Though I agree it's a seasonality, but if we compare on a Y-o-Y basis, there has been a huge rise in NPA. For example, MSME and personal loan, there has been almost doubling of the gross NPA numbers. Vehicle financing also on a Y-o-Y basis increased by 70, 80 bps. So any specific reason behind that? And how one should see next 3 quarters for these NPAs?

The climatic reasons like heat wave have affected the productivity of the people. The loss of man days, this has affected across all the sectors, particularly in the lower end of the [Technical Difficulty]. So the middle class, lower middle class are generally affected. So that is the reason why -- that doesn't mean that they will not pay, they delay some payments. So as I mentioned, in MSME, et cetera, we have around 5%, 6% unsecured loans. So the [indiscernible] was around INR 3 lakhs, INR 4 lakhs, et cetera. So we have used that personnel. So we are gradually bringing -- our intent is to make sure that the entire lending under MSME is secured over a period of time [Audio Gap] coming to that level gradually.

So can we say there should be a decline in NPA from Q2 onwards as these factors have been out of the picture now?

Yes, yes, yes. Gradually, gradually. There will be some delay. So they have to remit the regular installments plus old installment. So these are all genuine customers who have been paying promptly, but because of this loss of man days, et cetera, the situation has changed. They will come back slowly.

And lastly, on the cost of borrowing, if we see, on a consolidated basis, it remains stable. But in a stand-alone basis, there has been an increase in the cost of borrowings. So how one should see the cost of borrowing? Can we say that this 9% should move to 9.3% for stand-alone as well? And ultimately, what will be the margin impact then for us?

See the cost of borrowing depends on the source of borrowing. During the quarter, we have done Eurobond where the maturity is 3.3 years. And that money, we -- as a diversification and that they are also helping us to grow the business. So that is the reason it came at a slightly higher cost. So that is the main reason for the increase in cost of borrowing during the quarter. So we are not expecting it to go to 9.3% on the stand-alone level, and we are hearing about possible rate cuts, which should help us. But we are not seeing much change. It is currently running at a similar level.

Okay. So we can say that margins at least should remain stable now?

Yes.

The next question is from the line of [ Mohit Jain ] from Tara Capital Partners.

I just wanted to know if you are looking at the different segments in which we are operating. The overall NPA has increased in all the segments apart from the MFI. Is it purely because of the fact that we have written off the portfolio? I agree that you [Audio Gap] written off the MFI portfolio?

Yes. MFI, I cannot give you more details then saying that there were some challenges in some places, but we are spread across the country, no states has 10% -- more than 10% of AUM. No district has 1% of AUM. So this way we are spread across. But the sector because of the heat waves and so many other conditions like farm loan waiver, false messages such as farm loan waiver, et cetera, general election, et cetera, has affected the loss of man days. About rather MSME, et cetera, it is because of the delay on account of the same reason. As I told you, yes, it is going to come down only because earlier, we had around 5% of unsecured portfolio in MSME. Now that is being reduced.

Because principally like, obviously not asking for the figures but principally had we not written the portfolios in MFI, the NPA would have been slightly higher than what we have reported?

MFI, whatever is there, it is as shown, it is already there. It is already out of...

INR 71 crores of write-offs.

INR 71 crores write-off.

Whatever can be disclosed, INR 71 crores write-off, this is already disclosed.

The next question is from the line of [ Darshil Jhaveri ] from Crown Capital.

A lot of my questions have already been answered. So I just had like one question, like on a broad basis, like I think we're seeing good loan growth and maybe stable cost of borrowing. So what kind of like ROA will we target like for the full year, sir?

So we are at an ROA of 4.5%. So we are bringing down the OpEx to AUM gradually because of the growth in AUM, it could come down. In the next one year, we hope that it will go down further, so that there will be an improvement in the ROA. We expect -- our target is to -- we are targeting 5% ROA. It takes a few quarters to reach that level.

So it's a 5% ROA by end of the year, right?

Yes. It may take another one year -- 4, 5 quarters.

Okay. Okay. Fair enough, sir. And I just wanted to know like at least I think on the consol level, there has been an increase in provisioning. So I just wanted to -- like pick your brain like so you're saying the GNPA will decrease, but then -- are you seeing structurally, this might be more sticky that you might have more provisioning or something like how would you see the credit cost going forward?

The stand-alone book, it will gradually come down because as I mentioned, because of the climatic situations and other situations, whatever has been told already, the man days lost, et cetera, et cetera. So we believe that it has picked up with and it should come down eventually.

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

The first question is around the auctions that we have done in gold loan, what is the quantum of that? And what is the gold price per gram that we had in the quarter? And when we look at the AUM split, what percentage of AUM is less than INR 1 lakh, INR 1 lakh to INR 3 lakh and more than INR 3 lakhs in first quarter? And when we look at the growth, sir, you mentioned that this really have come from one of the competitors going off, so not competent. So what is the organic growth that we have had in this particular quarter from our own sources? And if we have the split of South versus non-South, sir?

See this micro details would be sent to you. But I can tell you one thing. This competition -- one of the competition of a most larger player, banned for some time, they may come back. But as I told earlier also when they come back, they will come with whatever guidelines have been issued by the regulator. Then we'll have -- all will have level playing field. So when somebody does something, beyond that, we are losing level playing field. Now even when they come back, we welcome that. We will also have the same level playing field. We don't have much worry. But this is mainly due to the demand from our target audience is slowly showing improvement, which is slowly getting back to the pre-COVID level now gradually. That is actually driving growth. The other details, Mr. Mishra will share with you.

Sir, if you can give me the auctions and the AUM split on the call, I'll come back for the rest, sir?

INR 12 crores auction.

The ticket size up to INR 1 lakh is 42%; INR 1 lakh to INR 2 lakh, 23%; above INR 2 lakh, 35%.

You are not audible, sir. Say that again?

Up to INR 1 lakh, 42%; INR 1 lakh to INR 2 lakh, 23%; above INR 2 lakh, 35%.

The price between two quarters has gone up by 5%. It was INR 6,275 as of 31st March. And as on June, it was INR 6,625.

So from last quarter's average, it has gone up by 5%?

Yes.

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

So thank you so much for the active participation in our investor call. And anybody want details about whatever can be disclosed, meaning Asirvad probably have limitation, other places, whatever can be disclosed, please feel free to ask, we are happy to share. Thank you.

Thank you.

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