Muthoot Finance Limited ($MUTHOOTFIN)

Ladies and gentlemen, good day, and welcome to the Muthoot Finance Q4 FY '26 Earnings Conference Call hosted by DAM Capital Advisors. [Operator Instructions] I now hand the conference over to Sanket Chheda from DAM Capital Advisors. Thank you, and over to you, sir.

Yes. Hi, and very good evening to all of you. We have with us the entire management team of Muthoot Finance today to discuss their Q4 results. I'll hand the call over to Mr. George Alexander Muthoot for opening remarks. We'll follow that up with question and answer. Over to you, sir.

Okay. Thank you, Sanket. And also welcome to the conference call of Muthoot Finance and Subsidiaries for the Quarter 4 and the Full Year 2025-'26. We just concluded our Board meeting. That was the reason the accounts -- the results were uploaded maybe 1 hour back or 1.5 hours back only. Sorry for that. But otherwise, commenting on the business, I will start with the gold loan business. We have the highest ever consolidated gold loan AUM. Consolidated gold loan AUM of Muthoot Finance and its subsidiaries at INR 1,65,000 crores, which is a historic growth, and has a growth of INR 57,000 crores or 54% last year. The full year, our growth was INR 57,000 crores. And the AUM consolidated stands at INR 165,000 crores. Looking at the stand-alone business without the subsidiaries, the stand-alone loans stands at INR 1,64,000 crores. And the highest ever stand-alone profit after tax of INR 10,134 crores. It is up by 95% year-on-year. Coming to the consolidated AUM, the consolidated AUM of Muthoot Finance and all its subsidiaries stands at INR 1,81,916 crores as of March, which shows a growth of INR 59,000 crores or 49% last year. And the consolidated profit after tax stands at INR 10,607 crores, again, up by 98% year-on-year. Now a few other highlights I would like to add here. Muthoot Finance declared the highest dividend of 300% or INR 30 per share, and this is the 14th year of consistent dividend declaration since our IPO in 2011. During the year, we opened 177 new branches by the group, and we also have received multiple industry recognitions, as Muthoot Finance is certified as India's most trusted financial services brand for 10th year in a row by TRA Brand Trust Report 2026. Also, Muthoot Finance has been certified as a Great Place to Work by Great Place to Work Institute for the 5th year in a row. Coming to the subsidiaries, there has been stable performance across the subsidiaries. In Belstar Microfinance, just as we had guided last year, we have started opening -- started venturing into the gold loan business, and we opened 81 gold loan branches last year to diversify the loan portfolio. The total branches, including the Microfinance, stands at 1,300. Collection efficiency in the Microfinance increased by 0.69% and now stands at 99.85%, which was 99.16% last year. During the year, we disbursed INR 7,500 crores as against INR 6,000 crores in the previous year. And Muthoot Home Finance, the loan AUM stands at INR 3,485 crores versus INR 2,900 crores in the last year, a growth of 17%. Disbursed loan of INR 999 crores last year. Interest income increased by 36%. Profit after tax stands at INR 45 crores. GNPA stands at 2.63% and NNPA at 1.94%. Now coming to Muthoot Money. Muthoot Money, which is doing vehicle finance, has been running down its vehicle finance business and has gone into the gold loan business. And the gold loan -- the AUM stands at INR 9,794 crores versus INR 3,900 crores last year, a growth of 151%. There has been a share capital infusion of INR 1,000 crores being a 100% subsidiary. It is infused by the parent Muthoot Finance. And today, the capital base stands at INR 2,357 crores. Total income increased to INR 1,294 crores. Active customer base has shown a consistent growth from 2.74 lakhs last year to 4.6 lakhs this year. The credit rating has been upgraded to AA stable from -- AA+ stable from AA stable by CRISIL for long-term borrowings. The profit after tax stood at INR 338 crores this year versus INR 12 crores last year. So these are the main highlights of this year. We are happy to present -- or we are glad to present good financials for last year and definitely thanking the stakeholders, including our customers, our lenders, regulators and of course, our valued shareholders and also the bankers who have been funding us and certainly all the analysts also for your guidance. So I think I will stop here and maybe wait for the clarifications and Q&A from the investors.

[Operator Instructions] The first question is from Shubham Gupta from Pros Wealth.

I have 2 questions. First is basically, what is the like expected guidance of top line revenue and the margins for the next year? And the second is, like, how will the recent -- like, our PM recently said not to buy gold. So how will it impact the Muthoot Finance overall revenue going ahead in the next year?

So I think, generally, we don't give a guidance on the margins and the profit. It's -- when the AUM grows, there will be definitely profit growth also. So generally, we wouldn't -- we have not been giving the guidance of that in the previous years. Now your second question was about the gold -- not to import gold. So I think the government of India has said that you should reduce the import of gold, and they have actually increased the tax also from 6% to 15%. So because we don't finance any gold purchase, we don't finance any gold bullion, et cetera, it actually doesn't affect Muthoot. As we have always been saying, we finance only the household used ornaments of the public, which is what, we don't take coins and bullion and bars, et cetera. So ornaments -- only the household ornaments, which is still intact, and there is reportedly about 25,000 to 30,000 tonnes of gold with us. So I think, there is good scope -- good prospects for this business going forward also in spite of new gold or new import of gold being restricted.

The next question is from Rushabh Doshi from Nirmiti Investment Advisory LLP.

Congrats on a great set of numbers. So I've noticed that you've changed the presentation this time. So in your last presentation, there was a slide which used to give the average monthly disbursement and the average monthly collection for the quarter. So if you could just please help me with those numbers? And my second question is that, I'm noting that the yields have gone up again this quarter, so are there any NPA recoveries or ARC income, which we have booked in this quarter?

So disbursement, it will be something similar. We have not looked at exact numbers. The second question, was there any additional income? So there was an auction income of about INR 50 crores. ARC, I think it is around INR 35 crores. So totally INR 85 crores. And there was some increase in the pricing also in the last quarter.

Okay. Could you share the disbursement number for the quarter?

I think it will be almost similar to previous quarters, the trends.

Around INR 18,000 crores or...

I don't have the numbers exactly, so I'll not be able to share right now.

The next question is from Abhijit Tibrewal from Motilal Oswal.

Sir, if you could just help us understand how is the competitive intensity in the gold finance sector trending? Now the reason for asking this is, in the past, you have explained to us so many times that whenever gold prices go up, the tonnage will come down, something we have seen maybe this quarter as well. Having said that, we have also had other gold-financing NBFCs, obviously, much smaller than you, but we are still seeing tonnage growth come through for them. So if you could first help us understand how are the competitive dynamics? And why I ask this again, sir, is that in the past, you've always said competition will come and go but not everyone is very serious about gold financing, they do it very opportunistically. But this time around, sir, maybe for the first time, we are seeing a bunch of all AAA-rated NBFCs who are themselves deep pocketed, can raise liabilities at finer rates than us and at some point in time, can also build the distribution muscle, which is very important in gold financing. So if you could just put some of those pieces together for us, sir?

Thank you. And you actually asked the question and also gave the answers also. The competition is there, new and newer people are coming. Fine. I think I would repeat what I said earlier also. We are a gold company, which -- focused on gold loan. The new players who are coming, maybe deep pockets, maybe the lesser cost of funds, they are not focused gold loan players. Focused gold loan players and also gold loan players have a difference, which people will realize after some time only because this is a very operationally challenging, operationally intensive business, and I'm sure people will realize that going forward. So competition will come after some time. Again, I'm repeating, some of them will lose interest. Some of them who stay focused will definitely be able to do this -- do better. So they are all opportunistic people. So we don't find any people -- anybody taking away our business also because in spite of all this, we have been growing reasonably well, if not better than the previous year. So we see continuous growth in this in this sector, and we see better things to happen. Now if you look at our Slide #19, you will see, when you compare, we have a second company, which has started gold loan business maybe 1.5 years back, Muthoot Money, row #2. See, Muthoot Money, the tonnage has increased considerably. So because the tonnage, which was 7, has gone up to 12. So that will be the same for any new player. So you consider this also as a new player. The new player, you compare with Muthoot Money, so Muthoot Money, the tonnage has increased from 7 to 11. Whereas in Muthoot Finance, we are an established player. We are having old legacy accounts with us. And there, the tonnage definitely will be in proportion to the new loans. So churn in the loans. The churn in the loan is actually, every 4 months, it is churned. So when every time a 4-month churn happens, the new loans are created at a higher LTV. That means they need to give only lesser gold. So that is why you see the tonnage coming down. Say, a person who had taken 1 lakh, would have given me 10 grams last year. When he comes this time, instead of 10 grams, he need to go to 6 grams for the same loan. So that is why the tonnage is coming down, that I've been explaining always. But when you said about the new companies, in the new company, you just compare Muthoot Money, where the tonnage has also gone up. The AUM, which was about INR 3,700 crores has gone to INR 9,700. So tonnage has gone up. The AUM has also gone up. And the number of customers, the number of customers in Muthoot Money was 2.74 lakh in the last year. Today, it is 4.64 lakh. So both are growing because it's a new company, a young company. For Muthoot Finance, the big company, the number of customers, not that easy to grow. There is something else also there because in Muthoot Finance, that old account, the smaller accounts, up to INR 10,000. And accounts from INR 10,000 to INR 30,000, actually, we have lost about 15 lakh customers there. But we have added the same in the higher tickets of INR 50,000, INR 1 lakh and INR 2 lakh. So overall, that is the churn which is happening. Smaller loans, people -- somebody who took a INR 10,000 loan last year, today, he doesn't need INR 10,000. The money value also has gone up. So he is coming for a INR 50,000 loan today or INR 20,000 loan today. That is why the number of customers are coming down. So these are our views about the customers and about the tonnage and also I said about the new players and competition.

Got it, sir. And then the last question, sir, I had this -- I mean [Technical Difficulty].

I can't hear you. We can't hear you.

Sir, your voice is low. Mr. Abhijit?

Is it better now?

Yes.

Yes. So sir, the last question I had was on employee attrition. I mean, given that there are so many other NBFCs who are also looking to start gold financing, obviously, they'll want to hire people from the best gold financing company in India. So how are [indiscernible]?

Thank you for branding Muthoot Finance as the best gold finance company. Okay. There is always some people going away, but nothing of any alarm because our numbers are also steady. If somebody goes, we take a new person. And again, with competition, some people think that just by taking a few managers or staff from Muthoot, they can start a gold loan business, then maybe start branches. Okay. I'm not -- referring your comments now. Let us see what will happen, what they will be looking after 2 years and 3 years. But we have not lost any attrition. We have not lost any customers -- staff, sir. We still have about 30,000 staff. We still have that.

Got it, sir. And earlier, Oommen sir, had mentioned that the higher interest income that we saw was also because of some higher pricing or pricing changes that we have done.

Yes. So last quarter, we increased our rates by about 0.5% to 1% over certain types of loans. So that is why we see the yield has gone up.

The next question is from Piran Engineer from CLSA.

Congrats on the quarter. Just sort of going back to the earlier question, this yield movement from 20.34% to 20.76%, does this include one-off the interest recovery number? Or is this just core?

No, there could be the regular churn which happens. Previous occasions, what happened is our NPA has come down. This time, NPAs have gone up. But the one-off cases will be -- one is the auction income, INR 50 crores. And what is the other thing?

ARC.

ARC, that is INR 35 crores. And the yield increase also has happened...

During the quarter.

During the quarter.

Okay. So sir, Oommen sir, the last quarter, we also had a INR 500 crore interest write-back from GNPA recoveries. That would be part of this 20.34% yield number of last quarter, is it?

Last quarter, yes. But this quarter...

This quarter, no, that is not part of -- no, that happened last quarter?

Correct, correct.

Q2.

So if I adjust for that, our yield improvement is very sharp.

Yes, 0.5% to 1%.

[indiscernible] more than 100 bps.

No. We don't want to get into the specifics of the yield increase. So last 2 quarters, there have been a lot of increase in the gold price, especially in the fourth quarter. So we have charged some extra for those disbursements. To that extent, we got some extra benefits.

Understood. And sir, is there -- now that we are anyway earning a pretty solid yield of 20.8%, is there a thought that we can maybe cut yields a bit and increase our customer count? Because our customer count has also gone down a bit.

Piran, this is something which we have always discussed. We have the luxury to reduce the rate. So that's why we always used to give a guidance of a medium-term ROA of around 3.5%. So if the yield reduction adds a lot of customer base, certainly, we would like to do, which we are already doing. Last several years, we have been -- we have raised schemes at lower rate.

We have different schemes. We have yield for 22%, 23%, yield for 18%, 15%, 14%, 12%, we have different. So at some point of time, when we feel that we need to step up the lower yield portfolio, we'll do that. So as of date, we don't see any need for that now.

Understood. Understood. And sir, just one last question. It's just a technical thing, on Slide 28, where you talk about the margin of safety on loans from the lenders' perspective. The market price of the gold [Technical Difficulty].

Your voice has cut off.

Mr. Engineer, your voice has cut off.

Am I audible?

Yes, now you're audible.

Yes. Sir, in that chart, where you show the market price of gold ornaments, which is INR 2,634 billion for March '26, is it as of 31st March? Or do you take a monthly average number?

No, no. So we have put the price also on the table above INR 13,441.

As of the date or...

As of 31st March.

The date, sir, that date.

As of the date, not monthly we average.

The next question is from Rajiv Mehta from Yes Securities.

Congratulations on good numbers. Again, just looking at the customer metrics, I mean, while the acquisition this quarter is better, reactivation of customers is better, we have still kind of degrown at the customer base level by 2%, so which means we are also seeing slightly accelerated attrition. So I mean, is there any observation around it that the customers already with us are also moving to competition in the quest for better rates? Or the high-value customers are moving out, which is impacting not just the customer number as well as it is also impacting the tonnage growth as well? Is there any observation like that of the management?

So I think I just -- 5 minutes back, I explained even somebody did not ask that specifically, but we explained, that we have the customers up to INR 0 to INR 10,000 customers. We have lost about 5 lakh customers, and between INR 10,000 to INR 30,000, maybe another 8 lakh customers have gone out. But then if the customer total count is remaining same, it only means that the customers in the other segments, maybe INR 50,000, INR 1 lakh, INR 2 lakhs, have grown. See, very small customers or ultra-small customers, they may tend to leave or maybe go away also. But that doesn't matter much to us, because a customer of INR 10,000 or INR 30,000 leaving us, maybe he takes it off, either he comes again for a bigger loan or he does not come again. But I don't know whether somebody is taking away the INR 30,000 customer or INR 10,000 customers. I don't think anybody would like to take such a small customer. So the point I was saying was very ultra small customers, ultra small loan customers would have left, but the medium and the good -- the better customers are still growing at Muthoot.

So to give you an example, so suppose if less than INR 50,000 customers, say 10 lakh customers have left, you would have added another 10 lakh customers in the higher bucket. So net-net, if you see, because the smaller ticket size customers would have closed their loan, which are large in number, we will not be able to match the exact amount. So this happens for a large portfolio company, and new company, you'll not face. That's why we, in the previous question...

Slide 19.

Yes, we explained how Muthoot Money has grown. So we just want to bring a comparison to the new players. If it is a matured company, large portfolio, the churn will happen in the portfolio, which will be there, a shift in customer basis from low ticket size customers and higher ticket size customers. So this plays an important role. And in spite of this, we have grown a little bit in terms of outstanding number of cases. This is a natural phenomenon, which will happen in any portfolio which has become mature.

And just coming back to the yield thing because the movement is so sharp and last quarter, you had a major interest recovery as well, which you don't have this quarter, even you have raised the price. So I mean, this NPA increase, which has happened in this quarter, which is, Stage 2 has increased, Stage 3 has also significantly increased, that would have given you some more interest income recognition maybe in this quarter. But why did this -- why did we see an increase in Stage 2 and Stage 3 and so much in this quarter? Is there any peculiarity around it in terms of customer profile, occupation or any geography?

No, no. So the Stage 3 increase has happened primarily because RBI has advised us to do a borrower-wise classification. So earlier, we were doing this classification at the loan level. So today, we have -- this time, we have done at the borrower level. So to that extent, there is an increase in the NPA. So that's why there is a jump in the NPA. But if you look at percentage-wise, it is much lower than what was there in the March '25. So March '26, it is 2.34%. I think, last year, March, it was 3.35%. So the NPA absolute amount has increased because of the borrower-wise classification. And when you do a borrower classification, a lot of these Stage 1 and Stage 2 customers also will be classified as an NPA, where there are, probably the interest servicing is done, so the interest reversals will be much lower. If you look at the LTV, including on this NPA bucket, including the interest accrued, it is only around 58% on Stage 3.

On Stage 3, where we show as an NPA, the interest plus principal is only 57%. So we are in the money. Technically, we are still -- or maybe regulatory-wise, we have to show it as an NPA, but it is 100% recoverable with interest. It's just the customer has not come forward to maybe close the loan or renew the loan, et cetera. That is why it is seen as an NPA.

So if I were to look at your yield on a sustainable basis, I just need to subtract INR 50 crores of auction and that INR 35 crores of ARC as being one-offs. But otherwise, what you reported 20.2% yield should be largely sustainable unless you make some pricing changes, right?

Yes. The pricing changes can happen because it's a short-term loan [indiscernible]. So this pricing increase in between happened because when there was a sudden price increase, we thought we'll take some benefit out of the increase in the gold price.

Increase in demand.

The next question is from [ Sanskar ] from Elara Capital.

Sir, you touched upon the difference between, like, operational challenges that a newer player would face. If you can share just a brief color around, in terms of examples. I understand that there is, like, handling goals and everything. But apart from that, is there any historically from your experience, what are the major challenges?

Actually, why we want to go into all these details, sir, anyway, all the nuts and bolts of it that I told you, the new players will understand after 1 year or so, let us wait for -- why we should put words into their mouth? Let them understand it that...

Okay. Understood. And if you can share some color around the growth, as you said that you gave guidance around AUM. So if you can share growth guidance on that...

Always in the first quarter, we have always been giving a guidance of 15% only. So as usual, last 10 years, we have been giving 15% guidance in the first quarter. So, let's say, in quarter 2 or quarter 3, we will see how it is panning out and probably revise it.

The next question is from [ Jyoti Khatri ] from AMBIT Wealth.

Just wanted to know one thing. This Stage 1, Stage 2, Stage 3 increase that you said that it is because of borrower-wise classification. Is that the only reason? Apart from that asset quality is Q-on-Q is stable?

That's why we said, no, on Stage 3 assets, including the interest dues, it is only 60 percentage, maybe 58 percentage.

Receivable, including principal interest is only 58% of the present market value of the book. So it is not because of any impairment in the loan, et cetera. It is only because of the regulatory guidance that it should be shown as an NPA.

So I'm saying excluding that factor, the -- I mean, otherwise, the asset quality performance is stable.

100%, 100%. Or we'll do -- we have our audit team also. So asset quality has always been stable. Wherever there is anything else, we just write off at that time.

And secondly, sir, how do you see AUM growth as a stand-alone entity and consol AUM? Any guidance that you would like to put for next fiscal broad range, how do you anticipate how AUM grow to -- AUM to grow next fiscal?

So for the stand-alone Muthoot Finance, we've always been giving a guidance of 15%. Last 10 years, the first quarter, we have always been giving a guidance of 15%. We'll continue to do that. We will relook at it in Q2 or Q3 -- Q1 or Q2, after Q1 or after Q2, we look at the same.

The next question is from Nischint Chawathe from Kotak.

A couple of questions actually. Any strategy or any guidance on branch expansion this year and after?

Yes. Okay. So probably last year, we opened 170 branches also. This year, maybe 200, 300 branches. That's it.

Okay. Maybe 200, 300 versus 170, and this will be at the -- at Muthoot Finance level, right? I mean, would you -- I mean maybe if you could give some guidance on consolidated gold branches across all the companies?

I think Belstar, we were thinking of opening another 200 branches or also because it is only about 100 branches. So Belstar, which is a microfinance company. And Muthoot Money, I don't think we are aggressively looking at just because the branches are quite young. So we are waiting for it to mature a little more before opening many branches there.

And Belstar, this 200 will be gold branches?

Yes, gold branches. Sorry, sorry, gold branches. Gold branches.

Okay. Got it. So essentially around roughly 200 in Muthoot Finance and roughly 200 in Belstar, I think that's the way to think about it

Something like that.

Got it. The other thing is increase in Stage 2 loans would also be similar reasons in terms of the borrower classification or any other reason?

Yes, yes. Yes, Nischint. Primarily that's because of borrower classification. And again, it is not a much of a concern because it's a 12-month bullet repayment loan. As and when the disbursal keeps increasing, naturally after 12 months, there will be a corresponding jump in the stages.

But all the increase is in gold loans, right, Stage 2 and Stage 3 quarter-on-quarter increase that we see is in gold loans, right? I mean not the non-gold.

Yes.

And anything specific that's growing in non-gold loans, I think which is also up around INR 3,000-odd crores in a year. So anything specific that you are doing over there? These are unsecured loans or what are these loans?

These are unsecured personal loans, salaried personal loan and unsecured personal loans, which are doing actually quite well. We have about INR 4,000 crores of portfolio...

Cross-sell.

It's mainly a cross-sell to our existing gold loan base. We have a gold loan base. We have -- we give personal loans to them cross-sell.

Got it. And just finally, on -- coming back to the yield part, you always kind of maintained that 18%, 18.5% is probably a more normalized yield. And obviously, we have done almost 150 or 200 basis points higher this quarter. So would you kind of incrementally say that the 20% plus is a new normal? Or would you probably say that next year, you would settle somewhere between 18.5% to 20%?

I think finance -- treasury finance says that the borrowing cost is looking north -- up north. So probably we expect borrowing costs also may go up in the coming. So probably we may not be able to reduce any more. We may be able to maintain at this rate.

On a more normalized level, yes.

The next question is from Vikram Subramanian from Marshall Wace.

Congrats on a good set of numbers and on the strong yields. I just wanted to get a clarification on the yields based on all that you have been commenting till now. So for the past 3 quarters, we have had a few one-offs in the yield, some INR 300 crores to INR 600 crores per quarter based on NPA recoveries and ARV sales. You used to say so the sustainable level of yield was something around 18.5%, while the reported yields were 20%, 20.3%. Would you upgrade that 18.5% now for the next year or for a sustainable basis? Is that 18.5% now closer to 20.5%?

It's not -- this number is not that particular. It's not like a long-term loan where we are giving a loan for 10 years or 5 years or 20 years. See, this is a very short term. Tomorrow, if we want to increase it, we can increase it. We may also reduce it. What is the impact because of such things? We have a comfortable margin. This quarter, I think we have generated an ROA of around 7.5%. So it doesn't matter much in terms of the ultimate impact on the return on asset. So we don't want to give a view that the same rates will continue because, again, to be very frank, some of the analysts have just asked on the competition, the customer base acquisition, et cetera. So we, as an institution might take calls in different points of time. So we don't want to give a commitment that the same yields will be maintained.

Understood. Understood. But at least to clarify on that, the pricing increase that you took at some point in time in the past few months, which has resulted in this yield. As we speak, as of mid-May, that pricing has not reverted back to the previous lower pricing. Am I right in this understanding?

Think from our point, we don't want to give out our strategy in terms of approach because it's -- as everyone says, it is a highly competitive market. So what we roll out, probably we can tell you after we execute it.

We generally have to play by the ear also. That means -- ear means, e-a-r.

Understood. Understood.

That thing coming. It's all very short-term loan. We can -- it always can be dynamic. We can reduce, we can increase, et cetera, as required so that we maintain a good growth as well as maintain a good profit.

I think that decision, you should leave it to us. Every quarter, you look at the numbers, we can explain what has happened and take a view based on the performance in the last several quarters.

Understood. Got it, sir. Just another clarification. This is on the competitive landscape, which has again been discussed and you were very clear in your answer, and it is very clear that you are the market leader. And you have done this for multiple decades. So that experience definitely helps over cycles. But in the immediate near term, are there any specific efforts to stop this? So I see a 3% reduction in loan count, 2% reduction in active customers. Are there any specific efforts to stop this? Or is the approach more long term and that competitive intensity would just course correct over the long term?

So let me -- yes, I'll clarify. See, what we were trying to explain is, being a large portfolio company, been in existence for several decades, we have customer base across various ticket sizes. Now what happens is the small ticket size customers vanish over a period of time. Now at the same time, we are creating higher ticket size customers also, probably because the small ticket size customers were initially larger in number, where the liquidation brings down the customer number, has a larger impact, whereas the higher ticket size customer, the number may not be correspondingly the same, which we call it as a churn in the customer base. So that number has not much of a relevance. Ultimately, it depends on how much a customer wants, et cetera. So incrementally, this phenomena will happen for all companies which will stabilize their business operations after some time. That's why we said you look at Muthoot Money's case, tonnage is...

Slide #19.

Muthoot Money, the AUM is almost doubled. There, you are seeing an increase in the tonnage. There, you are seeing an increase in the loan account numbers. There, you are seeing increase in the customer base. But the same percentage increase you will not see happening in Muthoot Finance. It is the same group, the same management, 2 different, which is what we are trying to educate the investor community, how this business functions.

The next question is from Shreepal Doshi from Equirus.

My question was firstly on the -- what is the interest accrual number during the quarter?

Any other questions?

The other question is that how many Muthoot Money branches overlap with Muthoot Finance in terms of, let's say, having it in 1-kilometer or 2-kilometer radius. And the other follow-up there or addition there is that now since there is no cap in terms of Muthoot being allowed to -- or let's say, needing to take approval from RBI in terms of branch expansion, then why are we thinking to do gold business in the subsidiaries that we have? Can we -- I mean, what is the thought process there? Because now we can scale up the Muthoot Finance franchise itself, right? So just your thoughts there.

That's an advice on a policy decision, I think we will have to discuss it internally only. You want to say...

No, I mean just wanted to understand like what's the thought process there actually?

I think that's a Board decision and that company's individual decision, let's just leave it to them. And your question about the...

Interest accrual, it's INR 963 crores.

INR 963 crores.

And the branch overlap within 1 kilometer radius for both the entities, Muthoot Finance and Muthoot Money, broader if you can give some color...

I don't know where you got this...

We have branches where we have Muthoot Finance, we have gold loan NBFC # 2, gold loan #3 in the same building. So...

Same building, you will have all the competitors. Whenever Muthoot Finance opens a branch, all the competitors open branch side by side. If possible, next door or if possible, 20 feet, 30 feet, 50 feet. There is nothing like a 1 kilometer, 2 kilometer, et cetera. Where Muthoot Money saw an opportunity, they opened the branch, irrespective of whether Muthoot Finance is there or competitor #1, competitor #2, competitor #10 is there. There are so many competitors today.

Got it. Got it, sir. And sir, just one last question was on this -- the newer framework by RBI in terms of the gold financing -- for the gold financing players. So from 1st April, we are supposed to maintain or monitor the LTVs more closely. So what are the -- what are the challenges are we facing at ground level? Or what are the deviations that we've made in terms of our processes, policies or operations standpoint at branch level?

So I think the policy has been quite good. The LTV maintaining has been from the last 10 years or 15 years back only the LTV came. From that date till today, we are always maintaining the LTV at the RBI regulated rates only. Now they have given an option of getting 85%, 80%, et cetera. So that gives us a little more room for giving different types of LTVs and loan products to the customer. That's the only advantage. Now the processes for that, the software for that is not easy. We are also in the process of doing it. We have rolled out some products also. So going forward, we can -- what should I say, tailor-make more products for the customers. So just like Muthoot, everybody else is also coming out with newer loan schemes, et cetera, in line with the new regulations. But your first question, we always -- whether it is now or before this new regulation or previously, we've always been maintaining the LTV at the regulated rates only.

Got it. Got it. Sir, can I just squeeze in one more question here, if you don't mind. Yes. So sir, the last question was if we have taken an interest rate increase during the quarter and since we are also following the final framework by RBI, our disbursement yields would have -- our disbursement LTVs would have declined on a sequential basis, right? Because if we've taken an interest rate increase, then the actual disbursement LTV typically would have come down. So is that a fair understanding? And incrementally, if we follow this, our LTV will continue to be sticky with rates tweaking happening at your level?

The new regulations allows you to follow 2 structures. If you are following a bullet repayment, you have to reduce the interest accrued. There are also various options available. If you are following an EMI structure, you can give up to 85 percentage. I'm talking about INR 250,000 -- so we have made some changes. But at the end of the day, it is in our interest to protect our interest, right? So we'll take care of that. We'll discuss after first quarter on that. The strategy is...

Come to terms with the new regulation.

Take it offline with you, sir, if you don't mind.

The next question is from [ Shil Kumar Shah ] from [ Sameeksha Capital ].

Yes. So in continuation to LTV, on an average, what's our gold loan LTV today? And what LTV range we consider comfortable from a risk management perspective?

So today, our gold loan LTV is 57%. The average gold loan in our books is [ 57%. ]

Okay. And what range do we consider comfortable?

Range comfort to the higher end or lower end?

On a higher end, I mean...

So RBI regulations allow up to 85 percentage, no?

Yes. But from a risk management, I mean...

We don't see much risk in giving at the 85% currently.

Okay. And historically, how much high we have given on an average?

I think for the last 10 years, it is 75 percentage. Right now, RBI allows up to 85%.

The next question is from Rakesh Kumar from [indiscernible].

So just a small question. So if we see loan AUM per loan account with reference to the Slide #19, the number has gone up for Muthoot Finance as well as for Muthoot Money by around 48%, 49% year-on-year. So is it that -- is that rise is due to the -- that customer borrower appetite just because of the gold loan price has gone up. And so what is the basic reason for such a sharp rise in the loan AUM per loan account?

If you look at the same, similar account, similar statistics for any NBFC, it will be the same because the loans are given for a very short period. Every 3 months to 4 months, the loan gets churned and new loans are priced at the new LTV. So somebody who had taken INR 50 -- INR 1 lakh last year, when he comes after 1 year for a INR 1 lakh, instead of 10 grams, he need to give only 5 grams because the price has gone up. So definitely, the grammage will be lesser and the LTV also will be higher. Not LTV, the loan amount will be higher. So small customers, people take -- tend to take more loans also.

No, that point is taken that since the gold price is rising, so obviously, he can avail higher amount of loan for the same gold quantity. But why should he take that much of loan? Is there a need basically?

So, you answered it. See, what happens is Muthoot Money is a new company. What happens is you are adding more and more new customers. So number of customers have increased from 2.74 lakhs to 4.68 lakhs. Now a lot of these new customers are looking at a higher-ticket-size customers. So Muthoot Finance has -- if you look at more than 3 lakh ticket size customers, we have 32% of the total book. So as and when the company increases its footprint as well as attracts more and more customers, people from higher ticket size also might come in, so which elevates the average ticket size number. But ultimately, why should somebody pledge more jewelry with a 25% margin? He has a requirement. So finally, this business is driven by his working capital funding requirement. So if he has a need, he will take a higher-ticket size loan. Somebody who has a lower need, he will take a lower loan.

Why is he taking a loan, it is up to him because anyway he has to repay the loan. If he takes INR 1 lakh, he will pay 1 lakh plus interest. He has taken only INR 50,000 -- so there is a need for them. That is why he's borrowing. Otherwise, why should you borrow?

So basically, this business, you are dealing with a large number of customers with varied needs from different funding requirements. So that's why you see all these numbers. So it's very difficult for us also to explain it at a granular level. But this requirement is large, which elevates the ticket size.

Got it. So but like setting aside Muthoot Money, if you look at Muthoot Finance also, the similar thing is happening. There also the growth is around 48% year-on-year.

Average ticket size has been growing up over the last 5 -- 10 years. Maybe 5 years back, average ticket size was INR 15,000. Then it became INR 25,000, then it became INR 30,000. Today, I don't know how much it is. I think it is...

May be 1.3 lakhs...

1.5 lakhs. It has increased to 1.5 lakhs from 1 lakh. So basically, you would also be trying to assess that what is -- what they are doing with the loan amount, you would have also kind of looked into it.

What we asked them. So they say that somebody -- some people will say that they have for business requirement, et cetera. So the new guidelines kicking in, there is some assessment about his income, et cetera. But beyond that, customer may not cooperate. Customer may say that he's using it for business purposes, et cetera. At the end of the day, because he has to pledge jewelry, only if he has a need, he will pledge. Otherwise, why should he part with a margin of 25% and pledge his jewelry?

Margin of 50%...

Yes, if you include the making charges, the borrower is parting with almost like 40%, 50% of the value of the jewelry.

Considering the inflation rise or considering the credit growth in the system -- entire system, the entire lending ecosystem, if this kind of a growth is there per customer or per loan account, that looks very surprising.

So see, people are not using this money for making an investment. These are all called working capital requirement. See money lending activity is short term. Somebody has a short-term requirement he is taking that funding, either you can borrow from your friend or your relatives or you can pledge with the jewelry after 2 weeks, he will repay it, which is why we are talking about the churn in the portfolio.

Got it. So he might be rotating also this like...

See, today, somebody coming and taking loan; 2 weeks later, he will close it. Then he might come after maybe 1 month.

Ladies and gentlemen, we will take this as the last question. I now hand the conference over to management for closing comments.

Okay. From the management side, very happy that we have had a lot of queries and questions and probably we hope that we have answered your questions. We are always grateful to the investor community as well as to the analysts who actually get clarification from us. It keeps us also well maybe on our toes. And from the management side, as a company, we would like to grow the book, grow the company, give better results, which will help customers to get more money for their needs, for the investors to get more returns and maybe for the company and the staff also to do well. So with all your cooperation, with all your support, we assure you that going forward also, Muthoot Finance will put in all efforts at the top manager up to the lowest level to see that the interest of all our stakeholders are well taken care of. So with that, thanking all of you and also the people who participated from here for what should I say, a very enriching conversation. Thank you, and goodbye.

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