MAS Financial Services Limited (MASFIN) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to MAS Financial Q2 and H1 FY '23 Earnings Conference Call hosted by Motilal Oswal Financial Services Limited. [Operator Instructions]. Please note that this conference is being recorded. I now hand the conference over to Mr. Abhijit Tibrewal from Motilal Oswal Financial Services Limited. Thank you, and over to you, sir.

Yes. Thanks, Kevin. Good afternoon, everyone. Welcome to the Q2 FY '23 earnings call of MAS Financial. We have with us today the management team represented by Mr. Kamlesh Gandhi, Chairman and Managing Director; Mr. Darshana Pandya, Director and CEO; and Mr. Ankit Jain, Chief Financial Officer; and other members of the senior management team. On behalf of Motilal Oswal, we thank the management for testis opportunity to push their earnings call today. Let me now hand over the virtual mic to Mr. Gandhi who'll post the opening remarks, we will open up the floor for Q&A. Thank you, and over to you, sir.

Thank you, Abhijit, and good evening to all of you. I'm very happy to connect to all of you once again. And before we start, I wish all of you a very happy year and we appointed a beginning of the new year. So I wish all of you a very happy as a healthy new year. While the results in front of you and all of you must have gone through that. I'll just give you a heads up on what we did in Q&A. As you are aware that we could register a very robust financial performance resulting into a 30% Y-o-Y growth in AUM and profitability close to 27% and maintaining the quality of the assets, high capital adequacy of 34% and a good liquidity. So all around, it was a performance, which we have used to were altos 2.5 decades. If you brought our performance to last 2.5 decades, we're bearing that overview where we had calibrated approach on growth. And in the hindsight, we all agree that rightly so. We have registered a growth of 25% plus. And this quarter was no different post-normalization.  So this strong quarter, it gives us more confidence on the fundamentals that we have followed over all this 2.5 decades that we focus on the quality, the asset quality prediction 2020 view, the understanding that the markets are there, will be there. It is very important for us to be very strong and to be there. And the consistent of the strong supplement over all these 2.5 decades is a function of this using this basic fundamentals. If you see the growth, it was across all the product lines we operate while Russian will do the number ratify. But across all the product lines that is annual SMB 2-wheeler, commercial recall, and we are facing to elate also we have right segment to be served. All those segments asset a good growth this quarter, resulting into our overall business and growth of 53% Y-o-Y and AUM growth of close to 3.13% this year.  On the distribution front, we continue to expand our distribution, which is close to around 150 branches and 6,250 centers. and also with a strong network of NBF is more than 150 of them. They contributed very positively and efficiently during the quarter. But the mix between 50% of the portfolio being through our direct retail distribution and the 40% to our NUF distribution, which is also working very, very efficiently. And as I've always said, that this shift in mix of direct versus the retail asset channel is a function of the growth in our retail asset dissolution. And we have very high desire and we have very high confidence in the distribution channel through our NBFCs also.  On the technology front, I think it's very important to share with you that we are in an advanced stage of digitizing our processes within next quarter we'll be seeing all the product sale and digitized processes, bringing about more efficiencies and will bring a lot better customer services and at the same time, will help us to have a better control on the assets we create, along with our tie-up with the fintech of the fintechs of the country that gives us the complete understanding of the working of the technology and how we should from time to time, adapt and adopt the same. In terms of the team, this is going to respond an integral part of any organization. As you know, that we have a very strong and a solid top and the middle management team at complete by close to 500 people working with us for more than 5 years, that we have talk to you, the team currently has in excess of 2,200 and it will get further strengthened as we grow from quarter-to-quarter. If I talk about the housing finance subsidiary. This quarter, I'm happy to report a growth of AUM by 28% or 27% on a Y-o-Y basis. And as I've always as was shown the confidence that this company will also wanted it very meaningfully going forward, and we see this company growing anywhere between 20, 30% in the coming quarters. So all in all, we are back on the track cost of calibrated approach potholder. If you see right from Q3 last year, we started growing, and now we have a full flow growth while maintaining the fundamentals of asset quality, capitalization level currently, we are at around more than 4% of capital adequacy. And it is very important to note that the high level of capital adequacy is based on a nondiluted growth, whereby the contribution to the capital has been mainly through internal accruals. And as we completed 5 years of capital days through IPO, we have doubled -- we have more than doubled our AUM profitability and all the employed -- all the important parameters, but it has been fueled through internal actuals. And under the current business model, we are very confident that we'll be in a position to grow anywhere between 20% to 25%. Going forward, if there is an opportunity the way we could do it in Q1 and Q2, it can be even more. But we are built on enablers and our conviction is based on those enablers. -- namely the fact referring category model, the mix expertise the large market. And last but not the least, the attitude and the attitude of the team of being a loving organization and be confident that never be complacent. So all in all, we are happy to report this number, and we are seeing very strong traction for the coming quarter also. And we are very confident of a very strong performance coming to [ Opet ]. With this, I would like to hand over to Darshana to provide the numbers are in front of you, Varian to the headline numbers for the dedicated to win both that will replace those numbers.

Thank you. Good evening, everyone. I'm happy to connect to all of you once a day. To start with, as shared by [indiscernible] that we can see the growth across the product -- so if you look at the AUM, overall AUM has increased by 3.13%. And if we look at the product configuration, micro enterprise loans has increased by 24.7%, -- that is from INR 2,893 to INR 2,590 crores. SME loans has increased by 33.4% INR 7, crores to INR 4,672 crores. 2-wheeler loan has increased by 30.16% from INR 561 crores to INR 470 crores. Commercial vehicle loan was the growth of 19.91% from INR 28 crores to INR 273 crores. Salary partial loan is a new segment. So the portfolio as on September 22 is INR 133 crores. If you look at the income and PBT by years, total income on Q-on-Q basis has increased by 36.73% from INR 156 crores to INR 30 crores. PBT has increased by 27%. That is from INR 51 crores INR 55 crores, INR 43 lakhs. Part has increased by 28% from INR 38.42 crores to INR 49.7 crores. If you look at the half yearly figures, after performance, income has increased by -- an increase by 40.3% from INR 305 crores to INR 428 crores. PBT has increased by 26.5% from INR 101 crores to INR 127 crores. And PAT has increased by 27.2% from INR 75 crores to INR 95.4 tons. Regarding the quality of the assets, we could maintain the quality during this quarter, also gross state at 32.6% and net Stage 3 of peas on September is 1.60% and some time to 2.27 gross stage 3 and 1.63% at as on June 22 and we still hold around 0.37% of our on book as such as our management overlap.  So before regarding the parent company. Now coming to the housing finance performance. AUM has increased by share it has increased by 27.8% from INR 300 crores to INR 382 crores. Total income has increased on a quarterly basis, it has increased by 13.7% from INR 92 lakh to INR 15 less profit before tax has increased by 13% from INR 18 to INR [ maths ] increased by 13.4% from INR 148 to 1 crore INR 8 lakhs. On half yearly with numbers are -- total income has increased by 7.07% from INR 18 crores to INR 39 crores. PBT has increased by 20%. That is from INR 295 lakh to INR 3 crores 54 less. Tax has increased by 19.2% from INR 231 75 lakhs. Here also, the silver line is the quality of the portfolio. As of September, as a gross rate, we were 3.9% and net sales per 3.42% as compared to 2.54% to Phase 3 and 0.38% by season June 22. And here also, we hold around 0.98% of our on book asset as a management overlay is was regarding the performance of both the company. Now Ankit will take you through the capital and liability management during the quarter.

[indiscernible] to have agreed on the liability management, the company through its additional ability management was able to maintain the agility buffer of around INR 600 crores this quarter and unutilized cash subsidy of around INR 500 crores. In addition, the company has sanction hand to the tune of INR 2,000 crores with -- under various facility in the form of term loans, the direct assignment colitis. In the last quarter, the company did around REIN 255 crore direct ascension. The company has more than INR 1,100 crores sanction on hand, which will be utilized during the quarter and the coming quarters. The company aimed to maintain around 20% 35% of as our book to direct [ arsenides ] and co-lending. In the last quarter, company be around INR 45 crores in transaction. The company has tied up with 3 bigs, Bank of India, Bank of Maharashtra and Sainik.  Further, we are in process of colon tire with few other banks, which we see as a renin proposal for both entities. Company has cash security of around INR 1,875 crores, out of which 20 maintain level of 65% to 70%, and that proportion is capital. We successfully rolled over around to INR 450 crores atom working capital this quarter, which is a sub limit to Cassis limit. It is around INR 722 crores to loan during the quarter. This helped us to further strengthen the apelin Matti partner. We further have more than INR 700 crores enteron hand, which will utilize during the current year. As we have assessed the structural liquidity for the period ending 30 September 2022. And based on the assessment, there is no negative impact on the liquidity and the cap in all the committed budget remained positive.  The agent remains strong at 24.4% with Tier 1 capital 1.24 and debt equity of 4.2x. Also to add on, we gave around INR 245 crores subordinate debt during the quarter. This qualifies Tier 2 capital for the company and thereby further spending the cap structure. Lastly, the cost of borrowing for the quarter has been stable at 8.3%. And the current increase in rate scenario, we are trying our best to hold on it at a comparable level. So this is on the capital liability management, and I hand the mic for closing remarks, and then we can open for Q&A.

Thank you, Ankit. And now we have opened for taking questions for better understanding.

[Operator Instructions] The first question is from the line of [ Shreepal Doshi from White Whale Partners ].

I just wanted to ask about the operating expense ratio, right? It's gone from 1.5% to 2.4%. And then the same power of it is the expansion of the branches and employees, et cetera. How much of this movement of almost 90 basis points, right? So much of it is timing and will be actually absorbed over a period of time? And how much of it is like maybe permanent meta given that you want to move more of the assets on book versus off book and also these tie-ups with context, et cetera.

So on that, Hardik, we always maintained that our focus has been on ROE, which is a function of the and retake and then the cost of the funds and the cost of operations in the credit cost. So the cost of operations will depend upon the growth in Lagos product factories what we are into and also the form of distribution. As I shared in the bile that we increased our branches to increase our distribution to 6,200 centers. But at the same time, that increases our end when we direct when we was directly as compared to our NBFC distribution channel. So the right way to answer your question is that our focus will be to maintain ROA anywhere between 2.75% to 3.25%. And the operational costs were deferred upon the growth in the various products and the distribution model as we pursuing forward. So the ROA will reflect the arrows will reflect the real intention of the company to maintain a certain yield and a certain operational cost.

Okay. Okay. Got it. So basically, you're saying that the increase in NIM is being offset by the increase in the OpEx as a percentage and so on a lending basis, keep up as a percent Okay. And this INR 133 crores of AUM that is on the Satori personal loan. Is that all entirely with the relationships with Fintech or are you going to our branches were can you just -- and also like can you give a profile of the sand employees that we're getting with a little bit more color.

It's a combination of both. Because if I can to fundamentally interacting this product that we have already into the major segment of the economy, is SME, micro enterprise loans we fees, including 2-wheeler commercial vehicles, and we are also working hard to gain some momentum in used cars. This was the elution segment, which we are missing in long according to us. So we are trying to take baby steps there. So the portfolio, what we see is a combination of both through our path with fintechs and through our branches.

Got it. Got it. And then these are sale private sector any personal loans, it...

We have shared that in brief in our presentation. But basically, these are the are belonging to the accrued companies, having a permanent bonus size and based on the repaying capacity, the loans are extended.

The next question is from the line of Rahul Jain from Credence Wealth.

Sir, just to understand the salary part more in detail, you have mentioned in your PPT about approved companies. So typically, 2 things. There are these loans going in terms of approved companies would mean what? And this is for what purpose? And secondly, how do you plan to grow this book over next 12 to 24 months? How do you plan to grow this book further?

To answer your second question first, as I told, we are seeing the smaller set as usual the way we do for any product. So we have not tagged a percentage contribution of this product was to a total. We'd like to discover that. We are not tagged it. So it all depends upon what is the personal quality we get and what is the opportunity we get in the market. On the acute companies, there are certain parameters on which we will accrue a company such as the revenue that is kind of the organization in terms of the employees employed, their compliant. They've been take their compliance on the basic parameters. So we have a few -- 5, 7 basic parameters on which we would approve a company. I mean those are the themes in those companies on will be extended to...

And because typically a small ticket because the average ticket size is roughly around INR 24,000...

So this is start like that only. I told that when we start, we start very in a very calibrated manner. So the digit price will also to 5 months, we gain the confidence and better understanding. But as of now, the sites will gradually increase. And the current exercise is also the function of forcing our business through certain fintechs where the service is small.

And sir, out of the AUM of INR 7,500 crores per day, how much of that is through the fintechs?

Se -- last quarter, we did a disbursement of close to INR 230 crores, right? -- crores, INR 235 crores through fintech and cumulated in terms of AUM, fintech otitis less than 10%, which we 78% at total...

One last question on the AUM segment. So 2-wheelers have done exceedingly well in the current quarter, but the series continues to lag behind. Anything specific to read into both of these particular things that 2-wheelers is doing very well and savings do not -- or continue to not to do well.

I think there's 2 different products altogether. So 2-wheeler growth has to grow is not given. It all depends upon the opportunity we get at the ground level and our team and its origination team and systems and operations and the confidence we get an even market to extend more loans. So there's a function of so many parameters. But going forward, it gives you a medium-term reason. And do you see that this quarter is around 1% to 11% currently, should compete around 20%.

And just one last question, sir. In the growing interest rate scenario, how do you plan to -- or what is your confidence level on maintaining NIMs?

[indiscernible], 2 aspects to it that our capabilities to get the more competitive rates because of the fact that the rates have increased and secondly, our capability to pass it on to the borrower. So as I shared last time also that coming on the second point that we have 70% to 75% of the loans that potentially we can pass on the interest rate hike to the borrowers. And in terms of our borrowing, majority of our borrowing is LCR lease, so we get a benefit of a again the increase in the rate -- and also because of our nuclear track record, we can also bargain on the premium that the bank has over from time to time. So with all these factors and given the intake in the track record and our capabilities to pass on to the borrowers. I think we are pretty confident of making the need in the medium to long term.

The next question is from the line of Harshvardhan Agrawal from IDFC.

Just wanted to understand, among the segments that we report, which have floating interest rate loans and which are fixed on a connected question to that is how much interest rate you increase in the floating book? And what's the frequency of repricing?

So whether I talk about 70% is a potentiality to convert them into higher rates as is practically bearing, I think to... Commercial beta 10% to 15% of the portfolio were enabling agreement with the borrowers to increase the rate. So you can consider around console I'm talking about 70% to 75% of the borrowers where we can potentially have a floating rate. And from title, we have raised the rate which on an average basis, the rate go by 0.3%.

So this 20 basis point rate increase you have taken in the past 3 months or over the past 6 months?

Over the overall increase of 1.9% from June onwards or may onwards during those periods. -- compensating with the repo rate rates to tilt, we have reset...

Right. And sir, one last thing that I wanted to understand was how does the repricing occur?

So let's just say you decided that for a particular loan, the interest rate will be increased today. So is it applicable for the next year or next month? Or it will be like after a quarter or some time period? There is a cutoff date. So you say, for example, last time in interest was effective 1st October. So on the loan outstanding from 1st October, those rates will increase.

So because 4th October is also start of the quarter. So is it fair to assume that the cutoff dates are at start of the quarter?

It all depends upon the our maximum effort is to absorb those rate and loan asset. So it all depends upon what are the rates right at in turn. So there we don't fix the timing of a quarter or a month. It all depends upon how we fare on raising the liability and how we managed not to get at the increased rate. If it manage it, not to get it improve it, we have absorb it for a longer period. But the effort is that how we can be stable on the interest rate to the borrowers.

Sure. And sir, just one last thing that I wanted to mention, sir, we have taken a 30 basis point increase in interest rate over the last 6 months, so maybe from a or June onward, we taken 30 -- is that correct? If I were to look at we calculated they have increased by a higher rate. So is it because of a function of our loan book growth into higher eyeliner, which is maybe salaried loans or something like I just wanted to understand that would increase essentially more than 30 basis points.

The 30 basis points was not at one go. It was a different point of time, depending upon the product segment and the borrower. So it will not be fair to extrapolate very simply. But overall, the average rise what we have given is...

The next question is from the line of Madhuchanda Dey from moneycontrol.com.

I have a couple of questions. The first one is as you share the disbursement figure of INR 2,250 crores, of which you mentioned about INR 235 crores to fintech. So if you could just elaborate on the other channels in this assortment mix...

Our retail channels to our NBFC partners, the dissent total disbursement is later than INR 82 crores. And through our direct channel is INR 1,380 crores.

And the rest was to the...

So this INR 230 crores is a part of this INR 1,379 crores.

Okay. Okay. Got it. Got it,. My second question is a bit of a reputation, if my understanding is correct. You mentioned that, of course, the OpEx has increased now to a level of more than 2% of total assets. So is this the trajectory going to be for the foreseeable future given that the business is...

So that will be the trajectory. Once again, I'd like to reiterate that our focus is on -- so the -- just so you give a head-up on trajectory, it will be 3 or even higher. But depending upon the retail assets we create, it will not impact our ROE.

Okay. I got it. The focus will be to maintain the 2.75 to 3.25...

That's right.

Got it, sir. And sir, my third question is on the NIM. You have managed to maintain the NIM despite the rising cost of borrowing? And what are the levers which are available at your end, which gives you confidence that even should the interest rate rise from here on, we will be comfortable in maintaining the name at this level.

So if you take 2 sides of the balance sheet, that one is how we raise the fund. So majority of the funds we raised is MCLR debt. So we get a time like the impact of the MCLR cases, whereby they can raise the rate. The very strong track record, whereby we can impress upon the bank to reduce the premiums, what they were normally used to what they normally used to charge. So on the liability side, we'll try to be as efficient and we'd like to prolong the impact of the interest rate hike as well as possible. This is on the liability side. And on the asset side, as I said, we have more than 70% of the portfolio, whereby in a situation where it is inevitable for us to raise the rate to maintain the given leads. We are in a position to do that. And as I shared in the earlier query that we raised 0.3% from leaving the duration of the rate hikes of total of 1.9% in the report. So these are the strong on the asset is an average side, which gives us a reasonable confidence to maintain the mean and we demonstrated that in Q1 and Q2, both.

Sir, a very last question. It's a very general question on it is long term. We are increasingly seeing banks penetrating into the so-called Harris banking getting into the top which was originally foretake of NDAs like you. So how do you comment on that? And how do you see your business shaping up in light of this competition?

Okay. We are flagged to be in a country which has enormous potentiality. When we talk about banking or rural banking, NBFC or even the regional rural banks locally banks, whatever you call it in the contrast. Altogether, still are not at the scale to satisfy the massive exclusions that this country has. And when we are talking about extending credit in the segment where we were very actively, we all are talking about just the top 15% to 20% of the segment, we at 80% has to see the light of the day on the formal credit. So what we have seen through our experience that more the players, the better it is in terms of otherness. -- and it helps to expand the market size.  And at the same time, the sensitivity of the dynamics of the business as the interest is among the lenders. So there are multiple advantages of more players being entering the area where the market sales are huge. And having said that, we are a lead player over all these years, we have a high level of efficiencies. So we do have the wart to stand the competition also. But I think competition still 2 years or a decade away when it will be just be played on the interest rates. Currently, it is all about how you identify the demography, how you identify your customers, how you give them better services -- and last but not the least, how you can maintain the quality of assets while extending the loans and bringing millions under fine for ePlus. So my take on this is that more the players and the better it is for companies like us.

The next question is from the line of Amarnath Bhakat from Ministry of Finance, Oman.

I have to say some questions. First of all, we know this Reserve Bank of India in the last few months itself increased by cost increased by 1.9%. And you say, it is all your borrowing. Most of them are Clothes. Then how the 22, your cost of borrowing is around 8.75%. But by end of Q2, it's just 8.83% and just 2 basis points increase in your cost of borrowing, how this actually happen then?

See, as I said, when we have a ancillar-backed donate a record base that it is when we are ML-borrowing 6 months of solar. So we are bipart MCLR and the term growth. So with the recent price we have had the advantage, as I said in the earlier query also that we have an advantage to draw on those drive rising interest rate because of that period figures. The sector example, I have a majority of them and have 1 year in C&R. So the as they can raise the rate is after 1 year. So this is the advantage of having an MCLR-based borrowing. So it is the... I understand sustained in this real for a very sustained period of time, then our rates will also increase.

Yes. That means... Am I understanding that this is -- at the moment is not reflecting because you got this advantage. But over, say, 2 quarters down the line, which has been not increased, now it will come to increase into the next 1 quarter or 2 quarters line and your cost of borrowing will proportionately increase more...

As I shared, if there's a sustained increase, then definitely, we are also exceptions from those cycles. So once it increases on a sustained basis, our rates also go up. But during that period, we have a lot of opportunities to streamline our liability and manage our liability more efficiently so as to have the interest rate within the even target to range...

So this is something very exceptional happened at your company compared to the similar side, NBFC, what we have seen that we have declared so far. Anyway, my second line of the question is now new time gap between increase of your cost of borrowing and increase of your yield or the interest rate for your customers, if there is a gap that means your liability costs come at a later stage, whereas you increase the cost to the cost of your borrowing to the others at a faster space and that gap generally give you a better need for the short period of time.

As I showed, we ceased on an average basis around 0.3% for our borrower -- so that is almost equivalent to the rate we got on the liability side. So as such, it is not a pleasant experience with the customer to raise a test in the retail segment to raise the rates often. So our endeavors are to have a very stable rate. But as I said, multi- once we reach a situation whereby it is inevitable to raise the rate, we start raising there. So the extent it doesn't hamper our means or it is not -- if it is beyond our capabilities to absorb that given our targets of me, we transfer those rates to the borrowers. So we try to match the rise and raise the right we debt and the right we do...

And your unsecured loan partner. I'm sure for the last 2 quarters, you've given focus on that particular part as well. Now as of today, what is the status? I mean how much of your total percentage I'm sure is steel. How much of your total percentage is really an unsecured loan? And if you can give us some kind of an outlook that how you are seeing this unsecured part of your portfolio is growing. Will it be growing faster than the growth of your other part of the portfolio? Or it will be a part of that.

The micro enterprise loans where the prices are less as metal unsecured loans. And the other are all secured, if it is secured, 2-wheeler is there any services against wheeled how much are we [ curings ] car against the asset and what we do in unwant -- so AML micro enterprise loans forms approximately 30%, 35% of our AUM configuration. And going forward, we see this contribution to be maintaining the same proportion.

And you want to increase your -- the leverage more than --

This is the last of it, is relating to that one only. So just want to know about this leverage part, which has been increased quite a bit comparity compared to the previous part. Is there an intention to increase this leverage more than 4.2% because this 4.2 itself is last 4 years or 3 years, highest.

So we don't plan to increase more than that. And it might be higher, but it is well within the industry norms and it is booked from the angle of the capital adequacy we maintained. So at the capital adequacy of 24%, the lenders are more than comfortable with delta. So I think we'll be entering. And as we grow our balance sheet size, it will not be possible for us to maintain low liveries because that will not -- that will be hurting our ROE. So I think this is an optimum level is what we have reached maybe something in the range of 4 to 4.5x and the capital adequacy of 24% more than 80%, that would land or support.

[Operator Instructions] The next question is from the line of [ Subhash Mishra ] from Philip Capital.

Coming to the question. Sir, the first one is on the contribution from our NBFC partners. We generally use to put this out on our PPDs earlier. I wanted to understand what portion of our AUM are we generating from our NBFC partners. Also, I wanted to understand in the credit costs that we have seen this quarter was the write-off proportion. Also, if you can talk a little bit more about our collection architecture for micro enterprise loans and SME. -- how many people are deployed in various geographies? What are the kind of incentives that are given any collection agencies if they are deployed.

Happy we go to the answer in the order of the question, but the way it comes to the mind in terms of the number of persons employed predate will be shared off-line by 6. But for -- just to give you the fundamental profit that all our businesses backed up by 19 days collections and banking to businesses. So we just had to address the issues where there is rehone of the RTGS or NH on type. And the number of people employed in house and through agents will be shared for your offering. The contribution, I think we have mentioned in our presentation around 40% is through NBFCs and 60% is a direct cans.

Understood, sir. And going forward, this contribution will keep follow?

Yes. One thing I'd like to reiterate that we are very happy and satisfied with both the distribution model. But the only thing is that since our retail distribution grows at a faster pace as compared to our NBFC distribution, the conservation looks more leaned towards the retail distribution. And as I see that I think on few water basis on a year or 2 years as you see this setting anywhere between 30% to 35% through NDF 60% to 70% in favor of our retail distribution.

And just one clarification, sir, credit costs that we see on the P&L. That's only from our originations, not from our NBFC partner origination. Is that correct?

Credit cost. Credit costs you're talking about?

Yes, yes. The provision impairment on financial instruments that we see that's the credit cost on the P&L.

Because that is on both because even we have to have a standard asset provision also. So when you talk about provisioning, is for the complex on this poor...

Right. So as for both our litigations as well as our NBFC partner is.

Yes.

The next question is from the line of Deepak Sonawane from Haitong Securities.

My question on fintech disbursement in the quarter. As we can see that currently, we discussed around INR 235 crore as compared to last quarter of around INR 300 crores. So we have seen kind of deep advancement. Any specific reason behind this?

There is a lot of regulatory overhang you say are supposed to come out with the guidelines and then the guidelines coming the interpretation of the guidelines and then how they have to structure our business in compliance with the guidelines was very important. So we took a cautious decision to accelerate the disbursement unless we are clear on the guideline. So now the guidelines are pretty clear, there are guidelines and then care when they're cured by RBI. So now we are very clear on how we should conduct ourselves in terms of doing business with various intact.

Okay. And what is the average that we are offering to our customers through salaried personal loans?

Salary question on ranges according to the customer profile. It ranges from 14% to 9%.

Okay. And the last question, just a deep-data keeping question from my side. If you can give us the safety asset percentage as of September for all 2-wheelers, microenterprises and SMEs, it is a great...

Back, we will share it with you offline or an to them. So 2-wheeler, Page 3 percentage -- it's 1.6% is 1.54. CL 0.47 at on? A semi loan is 1.1% and SR2.47.

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

So sir, first one thing which I wanted to just clarify is against the secure rise of 1.9%, so we increased the rate by around 30 basis points only. So is it sort of -- I mean this is very different from other NBFCs, of course. So does it also lead us to getting a lot of balance transfer or something like that from our existing customers because they would have seen that your rates are much lower than what is being offered in the market because, obviously, for the other NBFCs, rates would have increased, especially in this period.

If you see, the borrowers in the deal with for them, interest sensitivity is not that high for them getting the loans at the right time and relation to an crore. So we are not practically seeing a lot of balance transfer happening because of this -- and at the same time, for the new borrowers, the rates are increase. And what I'm talking about the rate rises of the existing borrowers for the existing borrowers, we try to maintain on an average. If -- what I'm talking 0.3% is on an average for the whole AUM. There might be cases where we might have raised 0.5% more 0.6%, depending upon the borrower profile and the basic interest rate, we used to catch to that. If the basic winter trade that is less, we had more room to increase. So we could manage on an overall basis at 0.3%. And the new risks have already increased. It's also the legacy portfolio. So we do practically go have questions or much of this opportunity in the market.

And now that we are almost on a 30% sort of growth trajectory versus maybe ROE of around 15-odd percent -- so we will be consuming capital quite fast. So are there any thoughts around the equity fund raise, if not this year than next year?

So 30%, as intense last 2 quarters, we still stick on to our target as a company target anywhere between 20% to 25%. But because of the coal situation, we had got room in having extra capital has buffer. So we are seeing strong traction this year to grow at 25% plus. And the 25%-plus growth rate derisking it to the extent of 20%, 25% and are between 2.75% to 3%. I think we'll see our growth for actually the next 2, 3 years at the same rate.

The next question is from the line of Shweta Daptardar from Prabhudas Lilladher.

Sir, and the cost of borrowing on assuming the NCLR hasn't put us as of now the rate hope. So assuming over the next 3 to 4 quarters, when this MCLR is, where do you see your cost of borrowing in Q1 or Q2 of next year.

All right. As I answered in earlier to an earlier question, that is on a very sustained basis, we have no exception that our rate will not increase. But we get time to create the assets accordingly. And ultimately, we will be in a position to maintain our NIM at the same level which we are operating right now. So this is what we as of now. that in are that we get some time to recalibrate our assets and large use. So our rates might increase, but will be maybe in a potion to maintain our lead that is what we see.

Sure. So for the new customer acquisition for the new loans that we are thanks, have we also taken the 3 big size or we are giving them loans at higher rate of cost?

Is at higher -- so we have a factor in that what the marginal costs are borrowing for us also will increase. So we have a factor in that and we tuning up on the product and what that the market can have to be coming up on the product, those rates are...

Sure, sure, sure. And sir, I think Sales also asked about capital adequacy ratio, we have almost 24%. And we are targeting, let's say, INR 1,000, INR 10,000 crores of as bend of FY '24, new plans of fundraising as of now?

The way we have designed our model for roughly INR 10,000 crores, we don't see any requirement of funding presenting the capital credit post around 20% plus. And beyond that, it all depends upon the growth purse and the opportunity we get in terms of category. So there's never been ever to capital risk. But what on we have done trying to drive home is that to grow at 20%, 25%, it will not be imperative for us to raise capital to grow at those rates. And we already have a capital broker currently. And we also have the potentially to raise that capital from time to time. So a combination of all those things will help us to take around 20% of capital adequacy ratio and can grow anywhere between 20 to 25.

Sure, and just last question, if I may, just on -- so last 2 quarters, we have also seen significant growth in our macro enterprises loan and all the openings, as we have guided earlier, continues to be the major growth driver for us. So given in the current scenario, how do you see the growth in segments where we lend to SMEs, NL and -- so over the next year or 2, how do you see the growth in all these segments panning out for us? -- and our strategy for growth in this...

So on the small enterprises, the growth rate is pretty high. If we the 2 years of COVID, and that is what I said with all of you in the opening remarks that growing or AUM at around 25% plus has been our kind of working on the way of working or all this 2.5 DK. And the same was the function of the borrower so we got it. So they grew in size and that gives an opportunity to sell them, and we would also continuously grow at around 20%, 25% along this tone. So I think with things normalizing, we see this enterprise is not for only a year or 2, but for a very sustained period of time, we'll be in a portion to register a very healthy growth rate. And at the same time, they will give us a good opportunity to grow along with them. This is what we have experienced over 25 years.

Sure. And on deal side, how do you see growth of CVs and wheelers?

If we have a stable GDP growth of anywhere around 6% to 7%. We think this over the next 2 to 3 years is contributing progressively from 12% to 15% to 20% basis whatever endeavors will be, maybe a few percentage here or there or a few quarters here of them. But in long term, we anticipate this to contribute around 15% to 20%.

Ladies and gentlemen, that was the last question. I now hand the conference over to the management for any closing comments.

So thank you, all of you. I think you were in a position to answer your queries. And in case if you have further plans, you can be in touch with our IR team, and you can get the reference that right. And I wish you all the best, and thank you for patiently hearing to us.

Thank you. On behalf of Motilal Oswal Financial Services Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.