Moneyboxx Finance Limited (MONEYBOXX.NS) Q1 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Moneyboxx Finance Limited Q1 FY '26 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Mamta Nehra from the MUFG Intime India Private Limited. Thank you, and over to you, ma'am.

Thank you. Good afternoon, ladies and gentlemen. I welcome you to the Q1 FY '26 earnings conference call of Moneyboxx Finance Limited. To discuss this quarter's business performance, we have from the management, Mr. Mayur Modi, Co-Founder Mr. Deepak Aggarwal, Co-Founder; Mr. Viral Seth, Finance Container. Before we proceed with this call, I would like to mention that some of the statements made in today's call may be forward-looking in nature and may involve risks and uncertainties. For more details kindly refer to the investor presentation and other filings that can be found on the company's website and stock exchanges. Without further ado, I would like to hand over the call to the management for the opening comments and then we will open the floor for Q&A. Thank you, and over to you, sir.

Thank you. Thank you, Mamta. Good afternoon, everyone. This is if Deepak Aggarwal, Co-Founder of Moneyboxx Finance, and I'm delighted to welcome you all to the Q1 FY '26 earnings conference call of Moneyboxx Finance. Joining me on the call today are Mr. Mayur Modi Co-Founder; and Mr. Viral Seth, our Finance Controller. Before we dive into the details of our performance, I would like to begin by briefly touching upon the broad economic environment. India's economy remains resilient and on a strong growth trajectory, with the Asian Development Bank projecting GDP growth of 6.5% in 2025 and 6.7% in 2026, driven by gradual increase in domestic demand, rural recovery, a strong services sector and monetary easing. Despite global headwinds, India continues to outperform major economies. Inflation shows encouraging signs with retail inflation easing to a 6-year low of 2.1% in June, marking 5 straight months below the RBI 4% target, while wholesale inflation dropped to 0.13%. The RBI has responded proactively cutting the repo rate with 5.5% this quarter, a cut of 50 basis points and lowering the cash reserve ratio by 100 basis points, shifting its policy stands from accommodator to neutral. The rural economy is showing signs of revival, supported by surplus monsoon rains and improved agricultural prospects, which are affected to boost Kharif sowing and consumption. Meanwhile, the NBFC sector is stabilizing, aided by RBI's rollback of higher risk rates on bank lending and stronger covenants across the sector, especially in micro finance. At Moneyboxx Finance, our core mission is to support underserved small and micro entrepreneurs. We have slightly -- we have significantly boosted our branch presence within a short time span. We now have a strong pan-India presence with 163 branches across 12 states. Our phygital model, a smart mix of physical branches and digital support, has proven to be both scalable and efficient. Today, we are backed by 32 lenders, including 11 leading banks. I'm pleased to share an exciting update. We have recently launched a new product, Salaried LAP that is loan against properties for salaried individuals. Until now, we have mainly served self-employed and business owners. With this new product, we will also cater to salaried customers looking for secured loans. This marks an important milestone for us, not just to expand our reach, but also to diversify our product base and strengthen our asset portfolio. We are making a strategic shift in our Customer segment to strengthen and diversify our portfolio, and reduce sector specific risk exposure. The share of livestock-based disbursement has reduced from 64% in same quarter of last year to 47% in Q1 FY '26, as we focus more on non-livestock and upper tier micro enterprises. At the same time, there is a clear shift in our ticket sizes distribution. Loans below INR 300,000 have come down from 80% in last -- in Q1 of last year to 50%, while loans in INR 5 lakh to INR 10 lakh range have grown fourfold's, from 5% of the disbursement in Q1 of last year to over 20% of disbursement in Q1 of current year. This reflects our move towards higher value lending, aimed at improving revenue per loan and reaching a more stable creditworthy customer base. These changes align with our goal of responsible long-term growth. Now let's move on to Q1 FY '26 financial performance. I'm pleased to share that our asset under management grew by 23% year-on-year, reaching INR 918 crore, up from INR 746 crore in Q1 FY '25. This includes an on-book portfolio of INR 689 crores, which constitutes 75% of our AUM and a managed book of INR 230 crores, accounting for the remaining 25%. On AUM by states front, Madhya Pradesh continues to lead accounting for 31.3% of our total AUM followed closely by Uttar Pradesh. As Q1 is typically a muted quarter for us, especially in light of new changes, which we have got, we recorded disbursement of INR 92 crores compared to INR 106 crores in Q1 of FY '25, reflecting our continued focus on financial inclusion. Moving ahead, we are strategically shifting our focus towards higher ticket loans of INR 5 lakh and above, while enhancing our portfolio quality. In Q1 FY '26, customers with a credit bureau score of 750 and above made 20.3% of our disbursement versus 5% last year and remaining in the single digits in the earlier quarters. This shows our strong focus on careful lending and improving overall credit quality. Also, the share of customers with credit scores above 650 has gone up from 50% to 70%. This reflects our better credit checks and focus on lending to safer low-risk borrowers. Now speaking about our successful business transformation towards secured lending. I'm happy to share that we have made a significant progress in the strategic shift. Secured disbursement accounted for 64% of the total disbursement in Q1 of FY '26, a substantial rise from 36% in Q1 of FY '25. Our secured loan book now forms 49% of our total assets under management as of June 2025, up from 27% in Q1 of FY '25. This shift represents a deliberate and well-executed move to strengthen our secured portfolio. We are confidently targeting a secured lending share of around 70% by March 2026, which we believe will play a critical role in ensuring more stable asset quality, stronger risk mitigation and reduced default rates. Moving to our total income, which grew by 29% year-on-year, reaching INR 59 crores in Q1 of FY '26, up from INR 46 crores in Q1 of FY '25. Our net interest income also witnessed healthy growth, rising by 26% to INR 39 crores compared to INR 31 crores last quarter same year. Talking about our net interest margin, which is now around 14.36% for this quarter. That said, our profit after tax for Q1 of this quarter was INR 24 lakhs as compared to INR 4.30 crores in Q1 of last year. This dip in profitability was mainly due to muted disbursement growth during the quarter, but largely because of operating core profit being absorbed by higher credit costs. Turning to cost efficiency. our operating expenses as a percentage of AUM stood at 13% in Q1 of this year, slightly higher than 12.8% in FY '26. Again, this increase was mainly due to lower-than-expected disbursement growth during the quarter and last year as such. However, cost optimization is a key priority, and we are targeting to bring OpEx below 10% over the next few years, supported by stronger AUM growth in coming quarters. Let's take a look at our lending and borrowing spreads. Our average lending IRR per quarter stood at 26.12% compared to 29.03% in same quarter last year. Effectively, this is the real number of average spending IRR stood at 28.50%, but the dip is because of nonrecognition of interest income on the GNPA portfolio. On the borrowing side, we have made a good progress. Our average borrowing IRR has reduced to 12.48%. As a result, interest spread came at 13.65% and NIM stood at healthy 14.36%. In Q1 of FY '26, our average cost of funds stood at 12.5%, while the marginal cost of funds was at 12.1%. You will see that over a period of 5 years, every year, we have reduced the average cost and the marginal cost by approximately 1%. Looking ahead, we expect our cost of funds to gradually decline and move into single digits in the medium term, supported by favorable regulatory environment, which is cut in the repo rates, improvements in our credit rating and increasing scale of operations. Lastly, speaking about our returns, our return on equity stood at 0.1% and return on asset at 0.4% for the quarter, largely due to higher credit costs, which is declining every quarter. We believe profitability will improve as credit costs start to normalize and a growth and operational efficiency pick up in coming quarters. In Q1 FY '26, our on-book GNPA rose to 7.28% and our on-book net NPA increased to 3.78%, largely driven by flattish AUM growth, but increase in NPA, though at a decreasing rate. This rise in stress is largely due to ongoing credit cycle, but we expect asset quality to improve as slippages begun to normalize in coming quarters. Our provision coverage ratios remained steady at 50%, which reflects our cautious and balanced approach to risk management. Our credit cost for the quarter increased to 3.65%, in line with the increased risk level. Talking about collections. Our efficiency in the current and up to 30 days due bucket is 97.2%. Though there are some minor fluctuations, we have worked hard to improve our collection system to keep things stable and ensure better recovery. After 9 months of effort, we now have a dedicated team of 103 staff and 50 tele-callers focused only on collections. We have also set up a legal team, which has already filed 226 cases in FY '25 compared to none in FY '24. This year, we'll see a very, very significant jump in the legal cases. All these steps clearly show our stronger push towards recovery and legal action to maintain good asset quality. Additionally, hiring leadership at all levels and a strategic shift in manpower reflects enhanced organizational structuring to support new business goals and operational efficiencies. Now talking about capital raise initiatives. In Q2 FY '25, we announced a total equity raise of INR 176 crores, comprising INR 63 crores in equity and INR 113 crores through volumes. Of this, INR 91 crores has already been received in September 2024, and remaining INR 85 crores is expected to come by March 2026. This has helped us maintain a strong of CRAR 28.4%. Our liability mix is now well diversified with 42% from debt capital markets, 33% from domestic institutions and only 25% from banks. We also maintain a very strong liquidity buffer of INR 165 crores as of June 30, 2025. This reflects strong confidence from self-secured lending's -- lenders, including debt capital markets and banks. In addition, we raised INR 82 crores via NCD, arranged by Wint, in Q1 of FY '26 bringing our total NCD raise to INR 237 crores in just 4 months, which effectively shows the confidence of the market on the debt side. This reflects strong market confidence in our model and fuel our mission to expand access to credit for micro entrepreneurs across rural and semi-urban India. I'm pleased to announce that we have successfully launched our proprietary cattle AI solution in March 2025. This cutting-edge technology is a major step forward in digitizing and automating cattle verification for secured rural lending. It helps us uniquely identify cattle, prevents duplicate funding and even predicts animals age through images captured right in the field. What's more, our real-time app works even in off-line environment, making it faster and more efficient for field teams and ensuring quick loan approvals for our customers. This innovation not only enhances accuracy, but also strengthen risk control and improves the overall lending experience. As we move forward, we remain focused on navigating an evolving global and domestic environment, strengthening collection efficiency and increasing AUM is a key priority, supported by rural recovery and potential tailwinds like income tax exemptions that may boost consumption. Our strategy centered on strong underwriting, increased secured lending, exceptional lender support, higher loan sizes, risk diversification, enhanced leadership team and a broader product portfolio is building a more resilient and balanced business model. These pillars are set to enhance asset quality, strengthen risk management and drive growth. With this, we can now open the floor for Q&A. Thank you.

[Operator Instructions]. The first question is from the line of Mihir Shah from Riddhi Enterprises.

Sir, my first question was that we've been saying that we have tightened the collection guidelines and everything and we are working -- we are focusing a lot on that. But sir, why does the 30-plus bucket still keep on increasing month-on-month, even though like 60% of our -- 50% of our portfolio is now in secured?

Thank you, Mihir. The reason is that the -- see, because the bucket is increasing because, one, on the denominator side, the AUM has not increased. So that's one of the reasons. But you still have incremental cash bounces, which move towards NPA. So that number is decreasing. Every quarter, that number is coming down from INR 18 crores in December to INR 13 crores in March to INR 10 crores in last quarter. Although that number is decreasing towards NPA, but you will always have fresh flows to some extent. Having said that, as -- so one is that the team has improved so versus the worst scenario in September and October. Things are much better now. But having said that, Q1 is generally a weakest time for our portfolio, which has been historically built that way. We feel that going forward, things are starting to improve. And as AUM also grows, you will see, especially starting Q3, that GNPA number will start decreasing.

Got it, sir. And do we have a breakdown for secured versus unsecured on these numbers?

In terms of NPA?

Yes. Yes.

It's about 80-20. So I mean, in terms of overall GNPA, 20% is coming from the secured book and 80% is coming from the unsecured book.

Got it. And sir, how does the write-off start kicking in for this year? And what will -- what are your expected credit losses for this year -- credit cost for this year?

So in terms of percentage, we are looking at around 3% credit cost this year.

And like the write-off start kicking off this year and like -- do we have like -- I mean we have a 50% provision. But after NPA, do we have a collection rate -- like we -- that matches that or is it slightly higher or lower?

It is slightly -- in terms of collection, it is slightly lower. But having said that, these are very recent measures in terms of stepping up, one, is that the legal recovery team, which we have very, very recently done. So as I said that till December of last quarter, we only had 10 cases filed; last quarter, we had 216 cases filed; and this year, the target is to reach 3,000 to 4,000 cases filing, especially on the higher cost amount. So that gives a lot of benefit in terms of collection, and we are already seeing that where we are reaching available warrants level, those customers are coming and paying us money, although the number is very small. Plus, we have very recently built on 90-plus collection team. And that is still coming up. So going forward, we expect that the numbers will improve in terms of post NPA collection.

Got it. Sir, do we have a number on that, so that it will help us approximate the write-offs for the year?

In terms of write-off?

Yes, I mean, post-NPA how much are we able to get back, like what percentage of -- in terms of amount, what percentage are we...?

So that's what I'm saying that it keeps on changing. So like in the month of March, we could recover about INR 2.5 crores of the INR 60 crores in NPA. And the number is around -- post-NPA is definitely in crores, but it keeps on fluctuating. But the expectation is that as we go for legal measures and as we strengthen our team in the 90-plus bucket and agencies are getting employed, Rajasthan, we started with the agency last month. So this month, we started with MP. So as the team comes in place, the efficiency there will improve. And on the overall basis, as I said, that take a few weeks here and there, but the costing on the overall credit cost, so like this quarter we took about INR 5 crore-plus of write-off and balance is the ECL provision. So -- but in total, expect a cost of around 3% for the current year.

Got it. And sir, if I have none of our -- like most of our recent has not being from banks. Are we seeing lesser interest from the bank side?

So the -- okay, the thing is that, one, whatever we have raised from NCD recently has been at a very reasonable price. So we raised INR 83 crores in Q1 through NCDs, which is at 12% -- 12.1% to be exact. And even in the March that we raised at -- it was at around 12.5%, but very at a 4-year range with 18-month moratorium. So one is that NCDs are not coming expensive. The second is the bank's portfolio will increase because Q1 banks are relatively slow to lend. In the second quarter, we really expect bank funding to increase. So we never had so much discussion with banks in terms of lending, what we have now, despite some elevation in the credit cost. So -- because relatively, we are still better. And we are really seeing that Q2 will see a lot of bank funding coming in.

Got it, sir. And sir, lastly, like, do you have any targets for ROE and AUM for this year?

In terms of AUM, I can tell you that we are targeting at least INR 1,400 crore for this year. And we will have a positive ROA and ROE. Let's see how the quarters proceed.

The next question is from the line of Sunidhi Joshi from [ KP Capital ].

Yes. You mentioned the marginal cost of funds at 12.1% with expectations of it dropping to single digits. So can you help us understand the key drivers behind this expectation?

Sunidhi, first, you will notice that every year since inception. So like in first year of operation, we borrowed at 20%, 18% rate of interest and [ 20% ] FLDG, so every year cost has been continually coming down even in -- if you see the last 4-year trend every year, the incremental cost of borrowing is coming down. So this year, we have already -- with one bank, we already have 11%. And we are in this month or next month, we are expecting that rate to come down to 10%. So I'm seeing that range that now banks are coming in the range of, say, 11.5%, 11.7%, incrementally, we will be getting that rate even in this year, even when the rating doesn't improve this year. This year, I mean, at least in H1. So this is as you grow your AUM, as you achieve scale and improved credit rating, so pricing has to come down. With all the peers at the relatively larger bucket, the pricing is in between -- incremental pricing is in between 9% and 9.5%. So this is the way it comes down. And you will see that every year, we have a track record of bringing the cost down. So incrementally from banks, I believe, that we should be able to get maybe less than 11.5% for this year as well. And as the earlier high-cost debts get repaid and new loan starts coming, so the costing will decrease. So over 2 to 3 years, on an average lending borrowing, we expect to go to single digit.

Okay. Understood. And another question, Q1 disbursements declined year-on-year from INR 106 crores to INR 92 crores, so what disbursement growth do you anticipate for the rest of FY '26, and what sectors or geographies will drive it?

So yes, businesses have declined. A large fact is, one is the subdued market environment. Also, is that our strategic shift towards -- you would see that like livestock disbursements have decreased from 64% to 47%, that higher credit bureau score customer have been increased, higher ticket loans have been increased. So there is a strategic shift in how we are building our portfolio going forward. So that requires some changes at a field level, at a ground branches level. So some shift in thinking. In the month of May, the discontinued loans below INR 3 lakhs for a new customer, other than where we have some guarantee from Rabo Foundation to build a cattle book. Other than that -- so those changes also because these are the hard decisions we have taken. So they also impact the AUM growth. Having said that, the way we are seeing the logins coming even in the month of July, we believe slowly and steadily, these numbers will improve and that's where we are saying that -- because the ground team is very large with us now with 163 branches presence and 1,000 people in the direct sales, we believe that INR 1,400 crores will be achievable. So that number in terms of disbursement will increase every month.

The next question is from the line of [ Hitanchi Agarwal ] from ABS Investments.

Sir, my first question is, with overall 20% of Q1 FY '26 disbursements going to customers with credit score above 750, so how are you building your scaling -- how are you building and scaling your credit sourcing framework to continue attracting such profiles in like semi-urban and urban rural markets?

So one thing here is that is a shift of mindset, which helps. So all -- I mean, the way some of the new branches are changing. So if you see the 6 new states like Gujarat, Bihar and 4 states in South, they have built with that mindset only that we have to secure only secured customer with a better credit ratings. So now on the ground, that shift is coming also with Salaried LAP coming in. So these customers have a better, higher credit score. So I think there are multiple steps which we take in terms of adding the field staff, which are from the secured background; the BMs, which are from the secured ground. So you start from the ground level, from the relationship manager and going up to the highest level. The guys have to be working from the secured background. So next is in August, we will have a Field Business Officer also joining. And for almost 2.5 decades, we have worked only on the secured loans. So it's the -- to answer your question, it's a change which we require at the organization level at every level to take place. And that's showing up. So when you compare the disbursements of last quarter same year versus this year, they are very, very significantly different.

Okay. Okay. That's great. Sir, just one last question, like the gross NPAs have risen to 7.28% and net NPAs to 3.78%. So what are the key reasons behind this increase? And how do you plan to bring them down? And just a follow-up to this one, like how does your asset quality is in comparison to your peer's NBFCs in rural lending space?

Okay. To answer your first question, see, why the number is increasing. See, suppose you will have every month, you will have some amount of incremental NPA, some customers flowing into NPA, which increases that number. And when the AUM has been not growing as much, so you will see that -- as a percentage, you will see that rise. So had the AUM been increasing, you will see the same percentage, which we expect that going forward as we grow our AUM, so that percentage will stabilize and then starts declining. So that's one area. Second is that incremental NPA is decreasing. As I said that once we see what was the flow in December quarter, March quarter and June quarter. So every quarter, that flow in terms of absolute amount is decreasing. The third is that in terms of recovery, we are bringing new changes. So as you hire telecallers, as you hire field staff, the first focus becomes that -- so now when I say 100 people, there are 40, 45 people in the x bucket itself. And the large part of it is in 30 to 90-bucket. So you first try to control that and then the recovery side. We have started appointing agencies, state cluster and collection managers, cluster collection managers to improve the collection there and freshly going legal. I think as market improves, especially with the secured because a very large part, although these -- whether secured or unsecured, we have seen that once at certain level, say, at a billable warrant level, people really come to the branch and pay. So that number will increase. And more so, the way we analyze 97% of our customers who are in the NPA bucket are still there in their homes. So we have always taken a strategy earlier that we are funding to customer who is at his residence only. So those customers are available there.

Okay.

So that I believe will help us because it is not a digital lending per se where we have not -- we are not able to reach, or branch doesn't have a connect. So as market improves with monsoon, as the crop environment improves, the agri income improves, these loans will come back. Especially when you have -- see in -- maybe in around 80%, 90% of my loans, 80% of my NPAs, our funding cost is about INR 1 lakh, INR 110,000. So these customers will pay up and will not remain like to go to jail or get into issues. And ultimately, they will come up and pay.

The next question is from the line of Varun Mishra from [ AH ] Investments.

I had a couple of questions. So like you mentioned the 23% growth in the AUM that with a clear shift towards the secured and higher loan tickets. So could you elaborate more on the strategy and like how are we expected to see that in the long-term profitability? Like we see the below INR 3 lakhs -- the segment has seen a degrowth, which is good, as we move towards the higher ticket size. So could you elaborate on that, that would be great?

So it's largely a change in the overall strategy. See, one is that you keep on pivoting as you grow. So as I said that first year, we borrowed at 20% IRR, now incrementally, we are borrowing at 12% from NBFCs and at around, say, 11.5% from banks. So one is, as your cost of borrowing declines, you have far better option to move to a customer, which will give you a better security, which will have a better security -- credit bureau score and a larger ticket size. And with the secured loans, you have a higher sustainability because it's a 7 -- more than -- so from 5 to 10-year kind of loan. So the sustainability is more foreseeable. So that's the part which we are doing that as the balance sheet is becoming stronger, we are able to raise lower cost of funds. We are improving the debt in terms of customers. So now a lot of customers. So we have done a few cases as high as INR 25 lakh loan to a customer, wherein his GST sales stood at about INR 6 crores in a year. So we never had that portfolio 2 years back because it's a large part of it is cattle. Now even with the cattle thing, we are moving towards high ticket. So there is a part wherein we are saying that we have some first loss fees guarantees wherein we are doing less than INR 3 lakh ticket. But largely, we are moving towards large ticket, which is visible. So more and more of SME kind of lenders well diversified in terms of their -- and especially in last 2 years, there has been some rural stress because of floods and all. So these customer in semi-urban areas are in that sense, better off. And so you will see that all the rural lenders, I mean, in the last 1-year specifically, and especially which is MFI, they have won a decline of by almost 30% for most of them. And also, overall credit cost, which includes the GNPA write-off and standing at almost 30%, wherein we are at 10% for a country the last 1-year, including everything, what has moved to GNPA and everything. So that way, I'm saying that one, our portfolio was much better than MFI. But yes, because of the rural exposure, and especially to the agri space to some extent, there has been a bit of higher delinquencies, which I feel now improved. But on this quality of customer portfolio, as I explained with the last question that we are moving ahead with a better customer. So you will see now more and more -- so as we've already saying that for July itself, we had a 70% disbursement in secured portfolio and maybe cattle will constitute 40% this month. So that shift will continue. And in next 2 years, maybe say, next year, it will be more like a secured lender. Earlier, people were looking at it as more of MFI plus. So that scheme of things is changing. So it is more secured, and higher ticket size and with the customers having no exposure to MFI. I mean at least majority of customers will have no exposure to MFI over a period of 2 to 3 years.

All right, sir. And sir, like, as you mentioned, the cost of borrowing has been like declining for us. So like would we see this upward trajectory in terms of the higher ticket sizes?

The cost of borrowing?

You mentioned the cost of borrowing is coming down, which leads us to having a -- like to move towards the higher ticket sizes. So can we see this like going further? Any improvement in the higher ticket sizes?

No, no, no. For sure. You will see this every quarter on quarter. Q1 is very, very significantly if you see our presentation, we have specifically mentioned how the book is behaving now. So on the Slide #13, you will see that in terms of disbursement, wherein we disbursed only 19% in INR 3 lakh and above. So every quarter, we have improved it. And this quarter, from 19% to 50%. So every quarter, we have changed it. So this will continue. This will continue.

All right, sir. And sir, I had one more question regarding the launch of a new app, the cattle AI. So it has been like the -- could you throw in some light about what the app does, and how can we see that let us improving our business in terms of disbursements and everything?

This is a cattle AI app. We have been working for almost a year now on this. We have already captured almost more than 2 lakh cattle's in our portfolio. So what it does is, one, it creates a unique ID for all the cattle, which we have funded historically and which the new customer new borrowers. So it's a -- uses the mobile technology to make a identification of cattle. Right now, it has capability, one, to do a unique identification. So if there is same cattle in my existing portfolio, it will show up. So what could happen in -- there are a couple of things we noticed, which happens in a cattle portfolio that some kind of duplication happens. So maybe if you have given one brother and next time his brother shows the same cattle or within the neighbor show the same cattle. So this application will help us, one, identify the unique cattle. Currently, it is also giving a guideline on the age of the cattle. And going forward, as we develop it, it will also show if the cattle has any visible disease, which can be seen through skin, through teeth so by looking at this. So this will help us because it's a large portfolio and the customer will also be happy seeing the report in terms of identification of disease, et cetera and definitely, in terms of credit quality, it will help us a lot.

The next question is from the line of [ Ankita Deshpandya ] from [ VSH ] Advisory.

Am I audible?

Perfect.

Yes. So I have a question. Like we have observed a significant decline in the share of livestock-based loans from 64% to 47%. So could you kindly elaborate on the specific challenges within the livestock sector that may have been contributed to this shift? And additionally, what measures have been implemented to mitigate risks as you expand into newer customer segments?

So one is that currently, the portfolio has not shifted. So earlier, we used to have about 66% of the portfolio into cattle space. Now it is 63% at the portfolio level. So what has declined from 64% to 47% is the disbursement in the last quarter, which will continue. And so -- one reason is definitely is that building a more diversified portfolio. So earlier for our lender, although you would see that every year, there's a lot of contribution, there's a lot of support. But what we thought that sticking to one particular segment with 2/3 of the portfolio is not the great strategy. So we had to diversify. So that's one idea is coming from the diversification of the portfolio. Second is that in the last -- specifically in the last 1-year. So if you see our track record in COVID 1, COVID 2 lumpy skin disease, we have not seen any major delinquency in the cattle portfolio. It continued to do well each year. Only the last year, what we have seen because of the floods and impact of MFI, which is also other than some over leverage, it is also driven by RBI. So there have been new guardrails, which you know that -- so MFIs are not able to lend to that extent, which was earlier happening, although some signs of improvements are seen now. So that customer was getting impacted. So one also that shift is that because in this livestock portfolio, there is MFI lending, which is prevalent also that will help. So we are taking multiple steps. As I said, there is somewhere below INR 3 lakhs for a marginal customer who has 4, 5 cattle, we are working under a guarantee program, wherein a part of our loss can be covered. And then at a higher ticket size, now we are taking -- there are salaried customers who have like salary also with cattle also. So we are moving also towards the -- so from 5 cattle to 10 cattle, 12 cattle with stronger agri base kind of customers. So it will remain [Technical Difficulty] and then you said about -- so I'm saying that cattle will remain a good part of our portfolio. But on a prudent basis, we wanted to bring down the concentration towards cattle portfolio. So that's one area. And even in the cattle, as I said that cattle AI, we are doing, we are taking multiple steps. We now have a very high-level veterinary services guy to ensure this asset portfolio tracking and productivity improvement. The second on your side that in terms of other portfolio, so what you will see is that we are moving towards better asset -- better collateral value, better quality of assets, which we get and better customer in terms of CIBIL score as well. So NTC has declined with us. Earlier, we used to have 30% NTC. Now it's about 20% NTC. So that has declined. And the bureau score is quite visible, especially if you see the quarter 1 data, we have really made a significant effort in terms of securing higher credit bureau customers.

The next question is from the line of Darshan Shah from [ M&S Associates ].

My first question is regarding your AUM concentration. I see Madhya Pradesh is the highest at 31%. So are there any new geographies pan-India that you are targeting to diversify your portfolio and reduce the concentration risk?

So we have a very, very -- in terms of geographic diversification now, we are a very well diversified. So we have presence in 12 states. And incrementally, you will see that the share of Madhya Pradesh declining. So as South takes up shape. So just to tell you that out of 163 branches, about 25% in -- are in MP. So one is directionally quarter-on-quarter, the share of MP will come down. So it will happen organically. Right now, we don't have that plan of further diversification for this year. But yes, incrementally, you will saw this decline to 25% over the year.

Got it, sir. And sir, second was on this collection efficiency. So it was a 2-part question in collection efficiency when I look at your presentation. One is what happened around September-October to like peak of March '25, where it almost peaked from 96.5 to 99.4 your 30 DPD? That was my first question. The second question was the follow-up there, obviously, would be that what is then happens if it's come down from the peak, from 99.4, it's now to 97. So I just wanted to understand these 2 phases in the collection efficiency, what happened, what measures that you deployed there. So that it increased a lot in now that you've also seeing it come down?

See, one is that, obviously, March becomes a better quarter every time. And we introduced -- from February, we introduced telecalling efforts across all buckets and it really helped bringing to almost a U-turn. Having said that, yes, quarter 1 has suffered a bit. We really don't have a very, very clear answer to that, how it happened. But what we are seeing is that each quarter, the number is declining, the absolute number. So what I had a flow in NPA [Technical Difficulty] versus in June it's kind of 45% less than that flow to NPA in December quarter versus June quarter. So that number is declining. You still have that portfolio of buildup earlier. So there have been some pain around that. But we really feel the way things are happening. Rural marketing is showing signs of improvement. So that money will come up. A lot of that will come up and scenario will improve. For the first time in July, the number of logins, which we have seen is really, really high. Although I would say that because our processes have become very hard, and there are they are new, so people are adjusting to that RCU visit in every case, which is INR 5 lakh and above. So every process has been a little more cautious, but the way now the logins are coming, we believe that things will improve in coming quarters and very significantly improve in coming quarters. So I think it is 1-year, which was -- we started seeing things starting July last year. And I think going forward, things will move an upward side So I'm not saying that in terms of GNPA, it has peaked maybe 1 quarter more. But as we grow the AUM and collection starts falling in place, things will improve. But we are taking a lot of steps, which are in the right direction. As I said, ticket size, the bureau score, the kind of customer which we are picking up. So everything is moving in the right direction. And these things you will know it take time. It's not a 1-month job. But every month, we are making significant changes to improve this.

Got it, sir. And sir, lastly, finally, on the cost-to-income part, usually, your cost-to-income is around the 70, I think in Q1, if I see your operating expenses around 22 and net income, if you see, 31. And now this is now 30 and 38, it's around 70%, 80%. So I just wanted to check in. I read articles on your company with you having bets in the branch and has a lot of support that you give over and above your financing, livestock, artificial insemination, vaccination at 0 cost. So I just wanted to understand, besides your traditional operating costs, how much do these additional kind of helping and services build up in that amount -- in that cost? And that is why are we seeing that the cost-to-income is elevated? And secondly, all of the additional help that you give to your lenders, but ultimately, does it translate to you getting lower GNPAs or better stickiness from a similar payer because then the customer is also much more appreciative of that fact. So just these 2 questions from my end on this part.

Okay. So you see the 1 part is that in terms of cost. So this year -- for this veterinary services, I see a cost of around INR 1.5 crores; last year, it was about INR 1.2 crores. So one is that impact is there, but not a very large impact. But you -- but when I see that kind of -- say, for example, what we got from Rabo Foundation in terms of almost INR 2.25 crores of first loss guarantee as a grant, it happens because of these initiatives which we take. So we had some study from Dell, which helped us. There is something which is very close in terms of Gates -- Bill Gates Foundation, which is happening. So these things, one is that in future, it will help on the ESG part of it, getting -- because when you're doing these kind of activities, there's a lot of support. So I'm not seeing that cost to increase further. So now on if we increase that veterinary base, it will largely be supported through some of the other grants or funds. So that's one part of it. Obviously, you can -- you are able to track it more. So like the cattle AI app, if we did not have the presence of veterinary doctors in our branches, it would have been very difficult to build this database. So this machine learning thing required us to take images of 2 lakh cattle to reach this stage. So in terms of -- you can also -- because if you have to deliver an IT product, we need people. So that ways also it helps. And obviously, [Technical Difficulty] when you have these guys. And also, yes, there are a lot of customers now when we had a 2/3 of cattle base. So it's a lot of -- wherever the veterinary doctors are there, customers would like to take a long, but these services are complementary. So it increases AUM and that has been helping us. It helps us a lot during the lumpy skin disease, wherein customers could have been guided about what steps to take. So one is on the ESG side, which is a very, very large domain area in terms of how we do business. But also these have -- these definitely have potential economic benefits as well, the way we do it. On the agri side, there are a lot of things. Now we have one guy who is very, very senior and to drive to customers on what to grow, which to grow, which is [indiscernible] grow, how to improve the productivity. So that will definitely help.

Thank you. We will take that as a last question for today. On behalf of Moneyboxx Finance Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.