Motilal Oswal Financial Services Limited (MOTILALOFS) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. I am Janice, the moderator for this conference. Welcome to the second quarter and half year ended FY '21 earnings conference call for Motilal Oswal Financial Services Limited. We have with us today Mr. Raamdeo Agrawal, Chairman; Mr. Motilal Oswal, Managing Director; Mr. Navin Agarwal, Director and CEO, AMC; Mr. Ajay Menon, CEO, Broking; Mr. Arvind Hali, CEO, Home Finance; Mr. Shalibhadra Shah, Chief Financial Officer; and Mr. Rakesh Shinde, Investor Relations. [Operator Instructions] Please note this conference is being recorded. I would now like to invite Mr. Navin Agarwal to make his opening remarks. Thank you, and over to you, Mr. Agarwal.

Good morning, everybody. It is my pleasure to welcome all of you once again to the Motilal Oswal Financial Services earnings call for the second quarter and the half year ended September 30, 2020. We hope that each one of you and your families are safe and in good health. To give you an overall number view, our consolidated PAT grew by 108% year-on-year to INR 2.97 billion, including mark-to-market gains of INR 1.7 billion during the quarter. Our operating profit before any mark-to-market gains grew by 33% year-on-year to INR 1.23 billion. The operating profit for the first half grew by 18% to INR 2.26 billion. And our consolidated profits for the first half grew by 70% to INR 4.63 billion, which includes mark-to-market gains of INR 3.03 billion. Our consolidated net worth stood at INR 34.9 billion. Net debt stood at INR 35.4 billion. Ex Home Finance, net debt stood at INR 8.3 billion. Our overall debt is down by 2% year-on-year. Total debt equity is down to 1.3x. Ex Home Finance, it is down to 0.4x, and we are net cash company net of our equity investments that we hold on the balance sheet. Return on equity for the first half for the firm stands at 36%. We have completed the buyback of our equity shares amounting to INR 1.5 billion, including taxes, resulting in increase in the promoters equity by 1.3% to 70.67%. Turning to the highlights for the quarter. During the quarter, we had the highest ever consolidated quarterly revenues and profits. We had strong sequential growth in revenues and profitability across our businesses. Our Broking business charged ahead in terms of performance across all businesses with highest ever revenues and profits. Our market share during the quarter were up by 80 basis points year-on-year and 10 basis points quarter-over-quarter. We have the highest ever quarterly client addition. We made significant investments in the last 12 months in expanding our talent pool as well as our distribution network for the Retail Broking business. Turning to the AMC business. Our AUM is back to pre COVID levels. Our gross sales are gaining traction, and we digitally launched the NFO S&P 500 Fund as well as the multi-asset fund, both of which received good response. Turning to the Home Finance business. There was a sharp reduction in cost of funds, which drove our margins up. We had strong traction in collection efficiency during as well as post moratorium periods. We have made aggressive COVID-related provisions of INR 230 million. We continue to see superior quality of the new book that we have underwritten. And we have industry veterans whom we've onboarded in this business, Arvind Hali, who's on the call today as the MD and CEO of the Home Finance business; and Amar Bahl, who has joined as Deputy MD and Chief Operating Officer for the business. I will now deep dive into individual business, starting with our capital markets business. This business comprises of retail, institutional equities as well as investment banking businesses. The revenues for this segment was at INR 4.24 billion, up by 37% in the quarter and up by also 31% during the first half of the year. Capital market businesses have contributed 57% to our revenues and 27% to our consolidated profit at INR 797 million, which is up by 44% on a year-on-year basis. In the retail broking and distribution business, our market share has improved, as I mentioned earlier, by 80 basis points to 3.1%. We have witnessed strong client addition driven by franchisee and our own brand channels, aggregating to 117,000 clients in the second quarter, up by almost 2 27% year-on-year. Our active clients have registered a 35% year-on-year growth at 450,000 as of September 2020. Our distribution AUM has scaled up to INR 111 billion, up by 9% quarter-on-quarter, with 14% of the 1.65 million broking clients is that, and we expect continued increase in AUM and fees as number of clients to whom we cross-sell and the number of products were cross-sell continue to rise. In the Institutional Broking business, there was continued traction in client addition and revenue growth. We hosted 2 large conferences in September, The Annual Global Investor Conference and the Ideation Conference, where over 200 corporates participated. Frequency of arranging these webinars and expert calls have gone up materially during the COVID period. The Investment Banking business continues to engage on a wide section of mandated transactions across capital markets and advisory. In the second quarter, we participated in 2 large QIPs in the BFSI space. Turning to the Asset and Wealth Management businesses, our asset management business AUM across mutual fund PMS and AIF stood at INR 386 billion, up by 10% on a quarter-on-quarter basis. Our profits for the quarter stood at INR 290 million as AMC profits are impacted on account of lower average AUM post unprecedented market correction in March and also due to a cut in TER in mutual funds. Additionally, there was an impact of an adjustment relating to carryover on the TER in the second quarter, and you will see an improvement in the third quarter as far as the TERs are concerned for the mutual fund business compared to the second quarter. We expect this impact would be neutralized based on the TER revision, as I mentioned in the month of October. Our equity mutual fund AUM stood at INR 222 billion, which is 1.9% of the industry equity AUM of INR 10.2 trillion. Our share of alternate assets, comprising of PMS, AIF is at 42%. Several of our schemes ranked top decile in performance over 1 year and since inception. Our private equity business has committed AUM of INR 65 billion across 3 growth capital, private equity fund and 4 real estate funds. We closed IREF IV with an AUM of INR 11.5 billion in February of this year. The fund has deployed INR 5.8 billion across 10 investments already. The Wealth Management business AUM scaled up to INR 200 billion, up by 13% quarter-on-quarter. Revenues for the business grew by 25% during the quarter and 14% in the first half, led by strong sales, which were up by 317% year-on-year at INR 13.4 billion in the first half, yield has improved by 24 basis points at 78 basis points, led by higher net sales of high-yielding equity products during the quarter. The relationship manager count of this business stood at 128. Our trail revenues predominantly cover all our fixed costs. Overall, for the asset and wealth business, our revenues are at INR 1.78 billion and INR 3.26 billion in 2Q and H1, respectively. This business contributed to 24% of the consolidated revenues and 10% of the consolidated profit. Turning to credit finance business, the home finance business reported a profit after tax of INR 57 million during the second quarter. Reported profit look suppressed due to high tax rate of 59% on account of reinstatement of tax asset post migration to the new regime. Cash tax for the quarter and for the full year will be nil. The Board appointed Arvind Hali as the MD and CEO; and Amar Bahl as the Deputy MD and COO, both are industry veterans in the Home finance business and lending business in general with over 20 years of experience in the mortgage industry. Yield on Advances for the business improved by 10 basis points to 14.2% during the quarter. Cost of funds were down by 50 basis points quarter-on-quarter, down by 120 basis points year-on-year to 9.3%, resulting in an expansion of spread by 40 basis points to 4.9%. We raised INR 10 billion in the first half at an average cost of 7.6% versus our overall cost of funds of 9.3%, and we expect the average cost of funds to continue to trend lower in the third and the fourth quarter of the financial year. Our loan book stood at INR 36.5 billion as of first half. Disbursements were at INR 835 million. New book source from April validates the new credit policy with only one case in NPA out of the 6,700 plus loan cases that we've sourced during this period. Gross NPA stood at 1.6%. Net NPA is at 1.2%. We further enhanced COVID provisioning during the second quarter at INR 230 million by 70 basis points. Our operating expenditure continues to trend down and was at a low of INR 202 million during the quarter, down by 30% compared to the high. And as a result, the cost-to-income ratio is down by 800 basis points from 44% in the same quarter last year to 36% in the quarter that we just reported. Total capital infusion in MO Home Finance by the parent stood at INR 8.5 billion. The net gearing stands at a very conservative 3.1x, and capital adequacy is very robust at 45%. Limited borrowing repayments for the next 1 year, strong undrawn borrowing lines of INR 7.2 billion, cash on the balance sheet of INR 5.1 billion places us in an extremely comfortable liquidity position. Turning to our fund-based activities, which include commitments to our asset management products, private equity products, real estate products and so on, our total equity investments, including unrealized gains were at INR 14.3 billion in the second quarter. Including alternate funds, the total investments stand at INR 21.3 billion, basically manifesting our trend making approach and alignment with the clients that we service. To sum up, our capital market business, which is our oldest business and a cash cow has achieved new highs on all parameters and continue to benefit from industry consolidation led by knowledge-driven phygital offerings of the business. Our asset management business is likely to gain from strong product performance turnaround and its niche positioning as an equity only asset management company. Our Home Finance business with new leadership in place is geared up for profitable growth, lower cost of funds and growth in our AUMs ahead. We remain very excited about the headroom to grow in each of these businesses and our ability to generate cash flow by each of our businesses. We are now open for question and answers. Thank you.

[Operator Instructions] The first question is from the line of Madhukar Ladha from HDFC Securities.

Good morning, everyone, and congratulations on a great set of numbers this quarter. First, on the AMC business, can you tell me what the net flows were in this quarter? And if you could spread them between mutual funds and the alternatives?

Rakesh, do you want to go ahead with that?

Yes. So in mutual fund, we had a net flows of like you know -- one second, yes, so in this quarter, it was INR 3 billion net flows in mutual funds. And in -- yes, and in PMS, we have seen like INR 6 billion of outflow in this quarter.

INR 6 billion, is it?

Yes.

Okay. Got it. That's why ]. Can you provide some commentary around what is actually happening on the PMS side? And why are there outflows? And also, now we have a new set of rules, new upfront commission. So how is the sales process changing over there?

So basically, PMS is a differentiated offering compared to mutual fund in terms of the strategy, the concentration of the portfolio and the limitations of the mutual fund products are not applicable to the PMS products, and that is a value proposition for the high net worth individual or the family offices. So the product will continue to remain relevant. However, there was an arbitrage where there was upfronting possible in PMS products, but not in the mutual fund products, which led distributors to focus on these products over the course of the last few years. And that is what saw the growth in the various PMS products that upfronting is not available from 1st of October. And hence, you're likely to see reduced focus of the distributors on these products. And so the push part of the business -- of the demand is likely to come down, the pull part obviously will remain because of the value proposition of the product. As far as Motilal Oswal Asset Management is concerned, we've seen a lag in some of our products as of -- for the period ending 31st of March 2020, including our PMS products. They had all seen huge inflows in the years FY '16, '17, '18, '19. And so you saw the slowdown in the second half of last year, which has continued into the current year. And so we were not really benefited out of this last minute push by the distributors to take advantage of the PMS upfronting window getting over in the first half of this year. We obviously have -- we had outflows in our PMS products during -- our alternate assets in overall, in the first half of the year. We see, because of the turnaround in the products and our flagship PMS product has been one of the best-performing products for the second quarter and is also performing well on in terms of the trailing 6 months and 12 month performance. So these things do matter to distribution, you're trailing rearview returns do matter, and we expect a greater traction in these products in the coming quarters in the alternate assets business in general and the PMS products for us. But for the industry as a whole, you're likely to see a slowdown -- meaningful slowdown in terms of net sales for these products. So that's really the commentary about how we expect industry relative flows to perform. The second half will definitely be much smaller than first half in the year as a whole, maybe smaller than last year. For us, maybe we had our own performance pangs reflect in the last 4 quarters. We expect some improvement from that base in the coming 4 quarters.

Got it. Got it. Can you put some numbers around how much can be the drop? I know it's difficult to quantify these things, but you're doing the business, so maybe you obviously have a better sense [Technical Difficulty] so that would helpful.

Sorry to interrupt. But your audio is breaking up, we are unable to hear you well.

Okay. So I got that question. So Madhukar, I must confess to you, much as being the management, you may believe that our fiscal ball gazing capabilities of net sales is better. But when we were getting huge inflows, we had actually not estimated the size of the inflows for the 4 consecutive years ending March 2019. And so I mean, really, from a management point of view, it's quite futile really to focus on what the -- or trying to predict and getting right the numbers. What we do know is that there is a very strong rearview performance-based bias of the entire Indian distribution, closely talking to every bank and wealth management firm and ISA and national distributor. I think all of the metrics are really substantially focused on rearview returns, right? And so when the rearview returns are exciting for any asset management company, they end up getting huge flows far in excess of their expectation and vice versa is also true, no matter what your brand, no matter what your distribution network and so on. So really speaking, we have to focus on our investment performance, which is what we are totally focused on. We believe that is a 90% rule for the asset management business. So as you see our performance turning around like you're seeing in the last quarter and the last 6 months, hopefully, the flows too will turn quite favorable. The good news is that we are very focused. We are a niche player. We are differentiated in the minds of our distributors and investors as a equity specialist and so as and when growth in the economy, growth in corporate profits and growth in sales turn around, combined with our own performance with a 1.9% share, really, in the mutual fund business, the headroom to grow for us is enormous as we see it.

Right. On the capital markets, in the broking business, you added substantial branches this quarter. You've also added about 600 employees. So is the scale-up complete? Or are we going to see more admissions? And maybe helpful to get a sense of what are the fixed costs and variable costs of this business?

So hi, this is Motilal Oswal. We added a huge number of people in this quarter. I think, more or less, I would say the hiring for this year actually finished by 80%. Now we are in the process of making sure that the productivity gains are achieved, you have seen in terms of number of accounts kind of being opened. We also have opened lot of new branches. Now incrementally, very few new branches will be opened. The idea will be -- the effort would be to consolidate those branches and make them profitable. As far as the costs are concerned, Shalibhadra you can share some numbers. I think the numbers are already there, but I don't know what exactly numbers you want.

So I think we have -- people cost is around 35% of the overall top line. So that includes...

Hello?

Am I audible?

Yes, a little better. Sorry.

Yes. So people cost in this business are at 35%. This includes the figures and overall category market isn't there. And on the other cost, so basically, the other costs for the full year is about INR 200 crores, as a fixed cost on the ventures and branches.

Actually, I'm sorry, sir, the line is not clear and I did not get the answer. So maybe my line or is it for everyone, I'm not sure.

Mr. Shalibhadra Shah, can I reconnect you sir, since your audio is not very -- okay. Just allow me a minute. Requesting participants to please stay online.

I think we can go on to the next question.

Yes. And we can have sir -- so, okay, sure.

I have one last question, actually. On the mark-to-market gains, they've been really high this quarter. Can you tell me what is the main reason for it? Because we have about INR 132 crores of add. So yes, if you like...

Madhukar, I can answer that. There was a huge drawdown in the markets, right? Nifty closed at 8,500 as of 31st of March, right? And now we are up by 30%, 40% from there. So we had reported a huge drawdown in fourth quarter of last year, right. And then what you saw in the first half is really a reinstatement of that. There is no -- actually, the overall value has not gone up. It's come back to the same level where it was on 1st of February.

Yes, I understand that sir. But my expectation was not that high for this quarter. Is there any particular asset class that maybe a PE revision, can you split it between MF PE and other alternatives?

Yes. So Rakesh can comment on that, but we have a private equity valuation that happened 6 monthly, right, based on which all the transactions in the private equity funds also happen. That is a reference point. There was a valuation exercise that was unusual. Let me highlight to you that the private equity valuations done are also baking in market comps and the discount to the market comps. They're done very conservatively. But still, when markets are at a certain level as of 31st of March and then they change as of 30th of September, the market comps change, and so there is a change in the valuation there also. But there's a meaningful markdown that is taken to the market comps to derive the portfolio valuations there. So you are absolutely right. It's not just public markets. It's also private markets that have contributed, and Rakesh will come back to you on that one.

Yes. So actually, both of these are equal during the quarter, if you see the total gain. So on the MF and the alternate side and on the private equity side. So they're about 50%, 50% of the total mark-to-market during the quarter.

Understood.

Yes. See, actually, the mutual funds have appreciated by about 9% during the quarter. And on the private equity side, we've seen a higher jump in the valuation, especially our third growth fund, which had about 13% to 14% increase during the quarter.

[Operator Instructions] The next question is from the line of Hitesh Gulati from Haitong Securities.

Sir just wanted to get an update on the broking and distribution, the updated margins and then some norms and the upfront money that the customer has to bring in? Can you provide some more update on that on how it is impacting our business?

Yes. So starting December 1 of this year, so where we have new SEBI circular which [Technical Difficulty] clients actually have to bring in the margins for their intraday trade which is for whatever the trades they do in the cash and the F&O side, today the client brings margins at the end of the day business. However the change is that the client has to bring margins for their intraday trades as well on the end of their peak overall trade, and that is what is the change which has come into place. And it is coming in a phase wise manner. So in December, we have 25% that the client has to bring the margin, and it is to completed by August 31 of next year. So that is how these changes will come. And overall, as we see, so SEBI has [Technical Difficulty] intraday margins. Definitely, there will be some implication in terms of the overall collateral [Technical Difficulty] as far as the overall trading is concerned. So there will be some impact coming on account of that revenue for us. But I think they are various alternative ways which are being discussed out in terms of how those margins can be funded.

And is it something related to capital adequacy norms for brokers [Technical Difficulty] regarding that as well.

Sorry, could you repeat that.

There was actually a news article which talks about capital adequacy requirements for brokers [Technical Difficulty].

Hello? Can you come in on that, Charlie. So basically, we couldn't hear you very clearly, I understand correctly about the capital adequacy norm for the broking business. I think there's a series of things that have changed from a regulatory perspective for the business over the last few years, and all of that has led to consolidation in the retail broking business in favor of fewer and fewer hands. And based on the experience that we have seen in the markets over the last couple of years, where at least 2 out of the top 10 players have gone through various issues and there are other issues that have been detected with many other brokerages with decent size, we believe that tightening compliance, greater regulation will only ensure that the top 4, 5 brokers see bulk of the incremental new client addition. And more importantly, even the existing client base starts shifting to them. So basically, that is how we see it. We see -- as you know, we are quite well capitalized as a firm. And the broking business now resides in the parent company. So basically, the well-capitalized firms, the top 4 or 5 broking firms, you will see probably an accelerated pace of consolidation in their hands. I don't know whether that answers your question, if that is what you were asking.

The next question is from the line of [ Rashid Shah ] from [ Equentis Investment ].

Good morning. Sir, first thing I wanted to understand is that what is this TER revision, which we are expecting in October? And how much it will impact us?

There is no TER revision from a regulatory perspective. But as you know that there are under recoveries, over recoveries scheme-wise that keep getting adjusted, which impacted the TERs from the month of May third week, which got fully reflected in the second quarter and got completed in the month of September. So these are more internal calculations across schemes, but you will see more than a 10% improvement in the mutual fund TERs on the active side from 1st of October. You may have if you analyze all the other asset management company TERs, you will see there are changes there also and you will see more than a 10%. So basically, you should go back to 2-quarter old TERs. So the impact that you saw in terms of reduction should come back. So it should be more than 10% broadly in the active MF effective TER.

Okay, sir, got it. Yes, sir. Sir, my question -- second question is basically, we had this huge gain and share of profit from associates and joint venture. Can you please elaborate over there? What is that exactly? And how much is our ownership there?

Yes. So actually, this pertains to our investments in our private equity funds, which we as a sponsor commit to those institutions so which we disclose it as a part of our fund-based revenues and profitability. So this -- because you have a joint decision making in some of those funds under management. That is the reason as per the accounting standard, we have to disclose them as funds which are our associate based on the overall control that you have. So it is -- as we hold about 10% to 15% of the overall corpus of those funds under management, which is done on a mark-to-market basis, the profits are already accounted during the quarter, and that gets reported as the fund-based line item for us. It's nothing but a fund-based segment.

Okay. And sir, my last question is, I want a update on this MCX oil case which is going on. So is there any significant update now?

Yes. So actually, in terms of the update there, we have -- so it is, we have already filed a suite, an arbitration suite in Bombay High Court against [indiscernible] client. And there actually, the court had asked the client to sell off his assets. So he has to earmark his assets separately for us. And at the same time, we have filed a suite against the client for arbitration under the exchange tribunal as well. And the hearing for that is expected to happen in the course of quarter 3. But as we have earmarked assets for that client, so overall, we feel like a good chance of recovery of that amount.

The next question is from the line of [ Shanti Patel ] from Investment Advisers. [Operator Instructions]

Good morning to Motilal Oswal team. My simple -- only one question. We had some problem in housing finance loans. And last year, I was told that we are trying to recover that. What is the position as on today in respect of the loan?

So I couldn't hear the last part of your question. Could you be more audible?

You see, we had some problems in housing finance sector loans. Are you getting it?

Yes. Yes.

Yes. In the last -- not this season, last season because this time I couldn't attend. I was told that they are trying to recover as much as they can. Now what is the position as on today in respect of those loans, which we were sticky.

Yes. So if you see our position today in terms of the overall nonperforming assets that we have on the balance sheet, we have a gross NPA of 1.6% and a net inflow 1.2%. So where whatever was the earlier provisioning that we did in FY 2018 and 2019, we have already completed the provision on account of those loans, which had term increased. So by virtue of this, as we stand, our gross and net NPAs are very much comparative to the industry levels. As in terms of the overall recent commission efficiencies as well during the [indiscernible] very strong. So if you see our numbers, we have already reported of the collection efficiencies in our presentation and collection efficiencies in the month of -- recently in the month of September also is greater than 3%, that is the cash [indiscernible]. So in terms of that on the asset quality...

One minute, one minute. Let me -- a short question. How much will return back in respect of the provision which we made in the previous years? How much is returned back if you can quantify?

Yes. So we already recovered the money, right? Because if you [indiscernible] last year first half presentation also, so we had actually sold off this book to ARC, and we have record cash. The cash recovery was about 52% of the total principal outstanding. So that recovery of the earlier and the change has already happened as far as the housing finance business is concerned.

[Operator Instructions] The next question is from the line of Roshan Chutkey from ICICI Prudential Mutual Fund.

Firstly, this upfronting [Technical Difficulty] was it April 1? Or [Technical Difficulty]

It was originally supposed to be April 1, which got postponed, so it finally got effective from October 1.

Yes. Okay. Okay. And in the [Technical Difficulty]

Sorry to interrupt, but your audio is not audible, sir. It's not clearly audible. We are unable to hear your questions well.

Okay. Is it better?

Is this speakerphone or are you talking into the phone? You seem to...

Okay. Okay. Let me try it again. In the Home finance business, wanted to understand what is the new deals which you have done, what is the average ticket size, has there any change in the average ticket size on the book overall over the last quarter -- over the last couple of quarters, sorry?

So the average ticket size continues to be about, some, INR 9 lakhs in our case, and implementing. So the loans that we are doing is of a ticket size of around INR 10 lakhs. And so there is no material change in the average ticket size, we continue with the same average ticket size as well.

[Operator Instructions] The next question is from the line of Preity [indiscernible] from UTI Mutual Fund.

This is Preity. So my question is either to Motilal sir or Raamdeo sir. Sir, we are now seeing there is this disruption in the brokerage business by the discounted brokers or the flat pricing model. So -- and this is a cash cow business for us. So how do you view this space spanning out in the next 5 years? And how do you plan to prep for this because we're already seeing the incremental client addition trends. It's very different from how the outstanding client market shares are. So if you could share your broad thoughts on this, that would be helpful.

Yes. Preity, this is Motilal Oswal. See, our kind of value proportion is only on the basis of research and advisory services. We are not in the game of kind of, I think, discount broking or kind of I think, no brokerage. So -- and on that basis, only you're seeing at least 120,000 customers we've added in this quarter. And we feel that with the expand -- market expanding in a big way, there's a huge amount of need for the customers whether they are old or new customers, truly, I think, get the right advice and the right product. So we feel that we are in a unique position to really, I think, give them, I think, very high level of value addition, and that's what our positioning is. And I'm very, very confident about our positioning. And we are not going to change that positioning based on the pricing factor. And I think I remain quite confident about the number of clients addition, I think the number of new people joining in. And I think we must be very unique from where at least there are 1,000 customer-facing guys who are only advising the customers, be it online customers or offline customers. Having said that, we have invested a huge amount of kind of I think money and time and technologies. So our technology also will be at par with best of the industry kind of I think players, so we have taken a very unique physical positioning, where there's a physical well trained relationship manager and also the best of technology capabilities added by very strong research and trained manpower.

Sure, sir. Sir, but you wouldn't think that the new clients who are added on these platforms, be it Zerodha or Upstox, research will be an added on service and eventually the growth that can come in is actually -- I mean, they can actually also deliver a similar kind of growth, right?

Yes. Every organization would have their own positioning, and we invest a lot in, as I said in research and advisory capabilities of the people. So the physical kind of, I think, unique positioning is what really we will pursue.

[Operator Instructions] The next question is from the line of Sunesh Khanna from IIFL AMC.

Congrats on the quarter. My question is on the housing business. With the new top management in place, so 2 questions. Do we have any renewed strategy or thought processes in terms of the overall business? And also wanted to get some sense on the housing per se as we have done pretty well, especially for some of the smaller companies as the affordable housing is doing pretty well both in terms of the business as well as collections. So just your thoughts on these 2 things?

I would request Arvind Hali, our new CEO and MD, to respond to this question, please. Arvind?

Yes. Good morning, to all of you. So I sort of missed your second question. Can you please repeat that?

Yes, I mean, post the lockdown has opened up, we have seen a lot of housing finance business has come back to almost pre-COVID level. So where do we stand? What are we seeing within our segment that we operate in? And how are the things looking for us particularly, industry seems to suggest that there is a lot of demand, and they are doing pretty fine.

Right. So to come back to your first question, as far as our strategy going forward is concerned, so in the last couple of years, we have done a lot of consolidation in terms of our processes, in terms of our risk management, in terms of building our collection team and in terms of collection architecture. So all that with a huge focus on the technology as well, we are quite well placed to actually take the housing finance business forward as we see the impact of pandemic to wane. As far as our strategy is concerned, we are already present in 9 states, and we have 100-plus locations. We don't really foresee any further geographical expansion or addition of any branches. We will obviously be increasing our feet on street, the foot soldiers on the sales side as well as on the branch credit side. Our collection strengths are more or less in place. So not much addition in terms of the manpower other than, as I mentioned, on the field force. There is no much requirement required in terms of the supervisory staff. The idea would be to focus in certain states by -- in terms of densification and increase in terms of penetration. Likely focus would be on Rajasthan, North Gujarat and South states, Southern states, like AP, TL and Tamil Nadu and Karnataka. We will continue to consolidate our huge distribution presence in Maharashtra and Madhya Pradesh. So that's as far as the distribution is concerned, you are absolutely right. We are obviously seeing renewed traction in terms of the business opportunity on the affordable housing side. We have also, in terms of disbursals, reached to pre-COVID levels. We have reached about INR 20 crores, INR 25 crores of disbursals per month, which is in line with the kind of feet on street that we have for now. Almost about -- touching almost about 800, 900 log-ins, applications in the month of September and October, and we see this doubling in the next 3 to 4 months. And with the conversion of about 50%, we believe that we should be able to reach about INR 50 crores by the end of this financial year in terms of disbursals. So the market is there, potential is there. And obviously, there is enough space for us to grow. And we are pretty much in line in terms of infrastructure and in terms of capacity to actually be able to reach to the INR 50 crores disbursal level by March. There is going to be no change in terms of our customer segments or in terms of our average ticket size.

[Operator Instructions] Well, ladies and gentlemen, that seems to be the last question for today. As there are no further questions, I would now like to hand the conference over to Mr. Shalibhadra Shah for his closing comments. Over to you, sir.

Thank you, every participant, for attending our Q2 FY '21 con call. In case of any further questions or clarifications, please do get in touch with me or our Investor Relations desk. Thank you, and have a good day.

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