Poonawalla Fincorp Limited (POONAWALLA) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Poonawalla Fincorp Limited Q1 FY '26-'27 Earnings Conference Call. We have with us today on the call Mr. Arvind Kapil, Managing Director and Chief Executive Officer; Mr. Sunil Samdani, Executive Director; Mr. Shriram Iyer, Chief Credit and Analytics Officer; Mr. Harsh Kumar, Head, Artificial Intelligence and CHRO; and other senior management officials. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Shabnum Zaman, Company Secretary of Poonawalla Fincorp Limited. Thank you, and over to you, ma'am.

Thank you. In line with good corporate governance practices, please note this presentation may contain forward-looking statements regarding the company's future business prospects, strategies, estimates, and profitability. But it is important to note that these statements are based on certain expectations, assumptions, anticipated developments and are subject to various risks and uncertainties. The actual results may differ significantly from what is stated in these forward-looking statements. Risks and uncertainties related to these statements include fluctuations in earnings, our ability to manage growth, competition, economic conditions in India and abroad, changes in law, rules and regulations relating to any aspect of the company's business operations, general economic, market and business conditions, attracting and retaining skilled professionals as well as government policies and actions. Now I would like to hand over to Mr. Arvind Kapil, Managing Director and Chief Executive Officer of the company.

Thank you, Shabnum. Good evening, everyone. Thank you for joining us. I hope you all are enjoying the thrilling Football World Cup. I'm looking forward to an exciting finals. Before we get to our results, I thought it might be an opportune to share with you -- I think it's -- we all should draw some inspiration from this an island nation called Cabo Verde. With just about 0.5 million people that walked into first-ever World Cup appearance, walks into a tournament, goals Spain to a draw and fought back twice against defending champions Argentina an extra time, and became the smallest country ever to reach a World Cup knockout ground. They didn't have any star players in the pitch, what they had was preparedness, a game plan built for opponents twice the size, discipline, a defensive shape that never broke under pressure, agility, adjusting tactics match-after-match, and solid determination, twice coming from behind against the best teams in the world. Preparedness, discipline, agility and determination, these are the qualities that they inspire us, and I truly believe on behalf of my team that they are our DNA, and we strive to live by them every day. Now on to our quarter numbers and performance. AUM end of quarter 1 financial year '27 stands at INR 67,054 crores. This reflects a quarter-on-quarter growth of 11%. The new products we've launched contributed to 26% disbursement in this quarter versus 24% in the previous quarter 4, at 20% the quarter before. They have achieved sufficient traction and requires scale to deliver predictable earnings in the future. As mentioned in my previous call, we believe growth isn't just about adding volume. It's about raising the margin per unit. As a result, we track 6 performance vectors very closely, internally, and they continue to follow a sustainable upward trajectory firmly in line with our expectations and our internal plans. Let me begin. Disbursement yield which I believe is a key driver of our future NIM has expanded by approximately 50 basis points over quarter 4 financial year '26. This has been primarily driven by our product mix, adding to the structural strength of our future construct. Quarter 1 financial year '27 NIMs, a key indicator for us, pose ground at 9.10%, up from 9.05%. Our credit cost has declined by 11 basis points quarter-on-quarter from 2.51% to 2.4%. Our GNPA, which in finance companies, we do believe is a lead indicator. So GNPA for quarter 1 financial year '27 stands at 1.37% versus 1.44% in quarter 4. What gives me a lot of confidence is the quality of our incremental cohorts, which will have a downward bias on our future credit costs. The 6 MoB 30-plus of the most recent cohort is approximately 0.64%, which is 41 basis points lower than the previous quarter's origination, which we had shared, which is itself approximately 30 basis points lower than the previous one. We continue to drive efficiency across the organization as well as benefit from operating leverage. Our OpEx to AUM is already declining year-on-year from 4.76% in quarter 4 financial year '25, 4.13% at the end of quarter 4 financial year '26. We have achieved a further reduction of 7 basis points to 4.06% in quarter 1 financial year '27. This is a bucket of improving digital share for businesses, embedded AI into a processes, and realization of operating leverage, is most important. As highlighted in my last earnings call, while the internal benchmark is close to financial year '27 is lower OpEx to AUM ratios, you may see fluctuation quarter-on-quarter [ 10 to 25 ] basis points based on our investment strategies and clustering our branch openings of the Gold branches, which is generally an advise we will always like to partner. As a result, we have achieved an INR 308 crores in profit after tax, recording a 20.8% growth quarter-on-quarter and 391.5% growth year-on-year. Our ROA, which I believe is an important metrics for us internally has moved up to 1.98%, reflecting a 17 basis point improvement over the previous quarter and 130 basis point improvement over quarter 1 financial year '26. But more importantly, quarter-on-quarter, I think it's showing strength. And it's more structural in nature in my assessment. Let me now give you a brief update on the 3 products to give you a sense. Prime Personal Loan continues to demonstrate strong momentum, market acceptance. We ended the quarter with an average monthly disbursement of INR 537 crores compared to probably INR 440-odd crores in quarter 4 on a monthly level, in quarter 1, there's a 38% of disbursals are processed through a fully straight through digital processing, that's on the rise. It's increased from 33% in quarter 4 period. And before that, the same figure was approximately 28%. If I take Gold loans, we've developed -- delivered quarter 1 disbursements of approximately INR 875 crores compared to INR 890 crores this quarter, we currently stand at a total of 460 branches now. Moving forward, we'll be expanding into new states, including Uttar Pradesh, Andhra Pradesh, Telangana, and Madhya Pradesh, while strengthening our presence in existing branches. We plan to add a similar number of approximately 400 odd branches during financial year '27, largely in Tier 2, Tier 3 locations. We are on track to achieve the same, just the way we did last financial year. These branches are increasingly becoming hubs enabling cross-sell of multiple other products as well, while the focus is clearly Gold loans. On Consumer Durable, we're scaling efficiently with quarter 1 financial year '27 disbursements of INR 433 crores. We are onboarded over 17,300 retail outlets across 339 locations on June quarter end. Our digital capabilities are driving execution excellence with over 58,000 plus cases disbursed in a single month. That is the strength we've started developing on Consumer Durable. The FPI and EMI card is seeing strong acceptance with presence across all touch points, including our website is becoming a free driver of repeat usage and customer stickiness with times to come. Commercial vehicles, to give you a sense, we're scaling well. Despite the macro requirement of the fuel prices, we ended June with a monthly disbursement of around INR 104 crores. On the distribution side, we've scaled up over 1,100 channel partners up from 900 in the earlier quarter and expanded our geographical footprint to 70 plus locations across 13 states. This gives us a strong foundation for continued growth in those segments. Both Consumer Durable and Commercial Vehicles are doing a pretty good [ wicket ] even on the initial trends of credit. Education loan, within 1 year of launch, we're excited that we've delivered 55% quarter-on-quarter disbursement in quarter 1, with average monthly disbursement reaching INR 144 crores, which significantly strengthened our origination capabilities expanding from 25 to 50 locations, building as consulting a certain network of over 600 partners. Our instant sanction platforms continue to drive digital adoption with around 30% of sanctions processed digitally. We have a fairly decent strength emerging on all aspects of education loan including the processing time. Before we go into our detailed performance numbers, I want to spend a few minutes on the nature of institute vision we've built over the last 2 years. I believe it is the single most important aspect to understand our company. 2 years ago, we set out to build not just a book for a long-term sustainable franchise with sustainable profits, with a simple conviction. Lasting franchises are built by carefully calibrating risk-first approach. Today, that conviction is visible in our numbers. Our book has grown to approximately INR 67,000 crores of AUM at a GNPA of 1.37% through deliberate and well-placed expansion. And every new business we launched in the spirits has found its footing, achieving the momentum and traction it needs to scale. We did not just launch 6 businesses. We built 6 growth engines mounted on a single chasing. That's important. That's the distinction that matters. I want to explain 3 key differentiators in our approach, which I believe are important at this junction. First, we have built a solid talent, at least 2 levels deep, which all of you are aware. The traditional approach enter a new lending business is by hiring 1 business here and asking me to build a team. We did something fundamentally different. In each of our businesses, we brought in a proven leader from the industry, people who have built these exact loan books and went to 2 levels deep. The business and an entire leadership left beneath them carrying the same pedigree. Why does this matter? Because learning time collapses. They arrived with playbook tested across multiple credit cycles. They know what origination looks letting up scale. And more importantly, they know what goes wrong when the cycle turns because they have collected through the down cycles. It's not just about originating through the up cycles. It is this depth of bin that gave us the confidence to launch multiple business simultaneously. We systematically converted individual expertise, which I truly believe into institutional muscle memory of this organization. I think this is in my limited view very important. I sense to believe is what we have achieved over the last 2 years. Financial metrics as much an outcome of this. Every credit policy, every risk framework, every underwriting and collection process has been documented, codified, embedded into how we operate, framed by leaders who manage the portfolio through multiple financial cycles. Second important point quickly, our businesses are digital and AI native by bots. Sales, underwriting, collection servicing, all of it was architected digital first with AI embedded on day 1, not bolted on later. Technology has been pursued with the same intent. For us, AI is a data advantage. We've used it to create proprietary data assets and to identify accurate entirely new customer cohorts, which we can now underwrite with confidence. For us, this means unit economics that improves naturally with scale rather than requiring a costly conformation to unlock. As a finance company, we believe that this combination, business cycle tested leadership running businesses that I needed from inception is a foundational strength. Third, we have architected a portfolio that draws strength from more than just traditional secured and unsecured access. Our portfolio is deliberately constructed so that each product are exposed to a distinct macro driver -- a distinct borrower segment and a distinct collateral profile. This is important to understand. Commercial vehicle, Gold, LAP, Business Loan, Education Loan, CD, and Prime PL, rise and fall together to blend and smoothens the group's credit losses across time. Let me give you that structure. Commercial vehicles, for example, either economy driven by impact from fright demand, infrastructure activity, full prices, good movement. If you see business loans in SME is driven purely by small business cash flows. Personal loan is driven by salaried income stability employment. Gold driven by gold prices and effective countercyclical. Education driven by long horizon human capital returns and family commitment. If you see loans against property driven by real estate values and secured borrowing. CD is driven by household discretionary spending appetite. Similarly, if you carefully see the tenure and duration, gold, personal loan are shorter, while LAP and education are longer tenure, stable, sticky. Shorter books let you respond faster, longer tenor books give you earnings stability. Thus, this balanced diversification per head for us is not a hedge. It's an active lever for strategy. That's important to understand. To summarize, this order marks another first step in our journey towards sustained, predictable profitability. ROAs has strengthened quarter-on-quarter and asset quality has improved across products, with both credit cost and GNPA are moving favorably on an already solid base. Our investment in new business are translating into strong traction with every business we have launched now scaled to healthy levels. Disbursement yields are on a positive trajectory, reinforcing the strength of our model designed for the future. Our AI brain has moved from build to execution and is beginning to deliver structural OpEx efficiencies. Each of these vectors is improving structurally and not cyclically, underscoring the durability of our earnings trajectory. We are firmly on plan. I'm confident of delivering our predictable sustained profit creation. With that, let me hand over to Shriram to walk you through our credit performance and trajectory.

Thank you, Arvind. Good evening, everyone. Retail loan exposure and the industry have expanded by more than 16% year-on-year as of March 2026, primarily driven by growth in gold loans, unsecured personal loans, and consumer durable financing. Despite prevailing global uncertainties and concerns around crude oil supply, cumulated GST collections for Q1 FY '27 increased by 8.4% year-on-year, underscoring the resilience of former economic activity, sustained consumer demand, and robust business momentum. These indicators further reinforce the strength of the underlying economic environment. For Poonawalla Fincorp, the combination of supportive market dynamics, disciplined execution and the risk-first approach has translated into higher only book additions, reduced portfolio volatility, and consistently improving collection performance across the credit cycle. Focusing on asset quality, let me highlight the key strengths. The GNPA has shown a sequential improvement to 1.37% for Q1 FY '27 versus 1.44% in Q4 FY '26. NNPA has also improved to 0.70% in Q1 FY '27 versus 0.74% in Q4 FY '26. Improving trajectory continues quarter-on-quarter in Stage 1, Stage 2, and Stage 3 composition of assets, emphasizing our calibrated approach to portfolio expansion and strengthened debt management practices. Stage 1 composition of Q1 FY '27 is at 97.6% versus 97.5% in Q4 FY '26. Stage 2 composition in Q1 FY '27 is at 1% versus 1% in Q4 FY '26. Stage 3 composition in Q1 FY '27 is at 1.37% versus 1.44% in Q4 FY '26. There has been continued improvement across all the stages: Stage 1, 2 and 3. Sequential improvement in the 6 MoB 30-plus for the last 4 quarters is a testimony of the risk first framework designed for better quality originations. Our 6 MoB 30-plus for sourcing of Q1 FY '27 is down to 0.64% versus Q4 FY '26 at 1.05% versus Q3 FY '25, which was at 1.66%. Quarterly credit cost has improved to 2.4% for Q1 FY '27 versus 2.51% for Q4 FY '26 versus 2.62% for Q3 FY '26. The above is a structural improvement and gives us the confidence on healthy improvement from here on. The convergence of disciplined cohort selection, sustained collection efficiency gains, and evolving analytic capabilities continue to strengthen our ability to identify, manage, and mitigate risk across a credit life cycle. Our portfolio strategic focus on lower salaried customer segments and secured products is increasingly reflected in the sustained improvement of early risk indicator as 6 MoB 30-plus, which I had already stated about. Through deliberate product mix choices and disciplined risk calibration, we continue to prioritize customer segments characterized by lower risk and more stable repayment behavior. PFL's risk management framework continues to be in alignment with banking standards as reflected in our 30-plus delinquencies, which benchmarks us favorably against peers. Collection efficiency through the credit cycle is a key focus area for us. I would like to share a few performance stats that will give you a glimpse of the impact. Our current bucket flow has shown 15% improvement in Q1 FY '27 versus Q4 FY '26. Stage 1 slippage ratio has improved by 5% in Q1 FY '27 versus Q4 FY '26 and Stage 3 slippage ratio has improved by 13% in Q1 FY '27 versus Q4 FY '26. Slippage ratios have improved due to portfolio calibration and improved collection efficiency across product categories. As a concept, we are strengthening the feedback loop through analytics between collections and calibration. Our continued investments in AI, GenAI and intelligent automation has transformed our collection operations, driving higher productivity, efficiency and scalability. On account of AI-led customer prioritization, digital-first collections and automated workflows, workforce capacity has been optimized. AI-driven pre-due collections led to 15% cost sales by our post-due collection transformation led to 27% cost efficiencies through improved workforce productivity and automation. Our GenAI powered [ Pay Easy ] bot engages customers immediately after payment failures achieving a 42% slippery rate with significantly reducing manual effort and field visit dependencies. Advanced AI capabilities, including automated dispositions, next best action campaigns and personalized digital engagements are driving higher productivity and improved customer outcomes. In addition, our in-house direct collection agent models reduced collection operating costs by nearly 26%. Collectively, these initiatives are strengthening operational resilience, improving customer outcomes, and creating sustainable operating leverage through a scalable technology-enabled collection platform. Risk management today is increasingly a question of speed. With models deployed across a full credit life cycle we have moved from quarterly and semiannual validation cycles to monthly model monitoring, catching early signs of performance drift and recalibration in weeks rather than quarters. The next frontier is building strength to anticipate and improve our capability before it shows up in repayment behavior. Data lens now in development uses AI to immediate the judgment of our most experienced underwriters, flagging cohorts that look healthy on paper, but carry early signals of stream. In parallel, we are closing the loop between collections and credit, live collection trends and AI-driven propensity signals, will feel directly into underwriting, sharpening risk differentiation at the point of decision. Every stage of the credit life cycle now strengthens the next, systematically strengthening every stage of the credit life cycle from disciplined origination and proactive in-book risk management to efficient collection, the organization is creating a virtual cycle of sustainable improvement characterized by cleaner cohorts, lower productive product portfolio volatility and enduring gains in collection efficiency. Thank you, and wishing you all a great weekend. I now hand over to Harsh Kumar.

Thank you, Shriram. Good evening, everyone. My name is Harsh, I head Artificial Intelligence and Human Resources at Poonawalla Fincorp. Today, I'm excited to report continued momentum in our enterprise AI program. And the simplest way to describe what we are building is that we are building an AI brain for the enterprise. Not a portfolio of disconnected tools, but a single governed intelligence layer specialized agents as its skills, master orchestrator agents as it executive function and our governance framework as its nervous systems. Every project adds a new capability to the brain. That is why our AI capability compounds rather than fragments. Everything that follows is in that -- is that brain getting smarter. In our current state of AI portfolio, as we speak, our AI agenda has expanded substantially. Total AI projects grew by over 30% to 101 projects spanning 21 departments, of which 50 are deployed and 51 are in pipeline. The agent-driven operating model as it speaks is transitioned from isolated AI use case to an agent-driven operating model, the architecture of the AI brain we are building. This ecosystem has reached significant scale, approximately 130 smart agents live in production, automating business processes, enhancing employee productivity, improving decision support, and accelerating operational workflow. Because every agent plugs into the same broader operator framework, each new agent now adds capability to the broader system, not just to its own function. This is the flywheel underneath the program. Every department produces 3 reusable assets, a domain skill, a governance pattern that makes the next approval faster and an organizational trust that actually rates the next adoption. Each turn of the wheel lowers the cost and time of the next. Now let me come to our guardrails. First, of course, is the economic discipline at scale. Our monthly token consumption increased by approximately 18% compared to last quarter, while operating costs remained largely stable. Put simply, the brain is doing 18% more thinking at broadly the same cost. The result of disciplined model selection, infrastructure utilization and workload orchestration with cost monitoring at levels at every session, flagging outlier patterns in token consumption and spend. So we are now tracking token at our session level itself. Second, our governance layer, the nervous system as we speak, again, governance strength, risk and inference control keeps every action within safe, auditable bonds. All our projects, AI projects operate inside RBI 7 Sutras governance framework. And our AI governance and security framework operates across 3 layers. Pre-deployment debt team. So we have now a debt team, which actually figures out vulnerability, stress test, considers attack scenario, security and data risk and business continuity. So that system are resilient and production-ready from inception itself. InfoSec-compliant deployment, comprehensive security checks, regulatory and legal adherance, data privacy and production control with governance checkpoint embed directly into deployment focus. And third is the continuous monitoring. Post deployment, we track performance, uptime utilization and emerging vulnerabilities in real time on a transactional basis with automated incident response and AI agents that monitor AI itself. On top of this, it's a dedicated hallucination containment framework, adversarial input testing, secure data sourcing protocols and robust inference control, ensuring the generate output meet enterprise standards for accuracy, security and compliance. I want to also take you through the key deployment this quarter -- last quarter. Each deployment is a new skill added to the brain as we speak. In journey conversation, video agents to improve funnel conversion. This has been done for instant in Prime peers. To address drop off in our digital loan journey, we have built 2 agents that interact with customers. They simulate EMIs, answer queries, generate personalized video that simplify their offer. When a customer begin to show idle behavior or disengagement, the agent kicks in to engage them, built completely in-house on our Agentic AI platform with the right guardrails knowledge base and journey analytics. We expect on the fence customer to improve offer uptake and lift our disbursement throughput ratios by 5% to 10%. We would be adding another agent this quarter, which should further increase our -- and enhance our throughput and conversion ratio. AI cross-sell intent, this is processed across all voice channels with horizontal capabilities across all products. A significant amount of context is lost in unstructured call recording across services and clients by collaborating with our vendor partners, we have built scalable pipeline processing over 10,000 calls a day to generate over 40 intel signals. We can now identify early predictors of customer dissatisfaction, near-term purchase inflation, income profile, and occupation, signals that digital journeys may not capture. These insights will power our customer-centric recommendation engine improving both customer satisfaction and product per customer mix. Another project is ContextIQ, our centralized document intelligence solution, which uses vision language, AM model to extract, classify structured information from complex enterprise documents, scan files, PDF images with human-loop validation substantially reducing manual processing effort and turnaround time. Last quarter, I had also spoken over MyBot, our Agentic DIY bot builder. This is where the flywheel closes it's loop. The brain now grows its own new skills. Every business need addressed through MyBot adds a reusable agent to the ecosystems, making the next built faster. A key success is our PFL Guru, an intelligent cross-sell support agent, assisting teams, that with policy guidance and sales enablement. Comp Stat is our air-driven compensation intelligence and benchmarking platform, which combines external market data, internal workforce information, and organizational policy framework, which enables data teams to retrieve insights and generate policy recommendation directly through a conversational agent. One of the bigger pieces has been AI-powered marketing transformation. So our AI content factory produced 1,843 marketing asset between April and till date, which covers creatives, ad copy, block translation, images and video. These are supported by 14 specialized marketing agents, further powering several thousand customer engagements. And to cover some bit of outcomes 22% growth in content feed, which is about 7 million plus read, 43% growth in clicks, that's about 346,000 clicks and a 5% CTR across air-driven campaigns and a cost save of more than 60% compared to traditional agency approach. Personalization is compounding these results further with 2x higher click-through rates and on AI personalized WhatsApp campaign, 7.5x growth in content inventory versus agency-led production models and more than 15 lakh leads per month supported through improved campaign conversion. Broadly speaking, together, these deployments demonstrate how our agent-driven AI strategy has moved beyond experimentation to deliver tangible business value, which Arvind also had covered. This further enhances our productivity, improved customer engagement, increases revenue opportunity and substantially improved our operational efficiency. I look forward to reporting further progress in next quarter. And I would like to hand over to Mr. Sunil Samdani, our Executive Director. Thank you.

Thank you, Harsh, and good evening, everyone. Let me quickly take you all through the financial highlights for the quarter. The assets under management stood at INR 67,054 crores, reporting a strong growth of 11.1% quarter-on-quarter, driven by continued momentum in retail products. On the liability side, as part of our debt strategy and in line with our projected AUM growth, we continue to diversify our liability book, focusing on long-term borrowings. Hence, the share of long-term borrowings has gone up by approximately 2% from 86.5% to 88.5% quarter-on-quarter. This number was 75.2% in Q1 of FY '26. Our net interest income, including the fees and other income continue to grow healthy, standing at INR 1,415 crores for Q1 of FY '27, which is up 10.9% quarter-on-quarter and 84.3% year-on-year. The cost of borrowing for the quarter stood at 7.72% versus 7.63% in the previous quarter. Our OpEx to average AUM at 4.06% is showing resilience despite ongoing investments in collections, infrastructure, and branch network. The pre-provisioning operating profit during the quarter was INR 785 crores, a 12.9% growth quarter-on-quarter. Asset quality continues to improve sequentially with GNPA declining further by 7 bps, standing at 1.37%, which is a reduction of 47 bps year-on-year and net NPA at 0.70%, a reduction of 4 bps quarter-on-quarter and 15 bps year-on-year. Our provisioning coverage ratio stood at 49.11%. Our profit after tax stood at INR 308 crores during the quarter, which is a 20.8% growth quarter-on-quarter. The debt-to-equity ratio stood at 3.82x at the end of the quarter following the capital raise of INR 2,500 crores through QIP in April of 2026. Capital adequacy ratio continues to remain healthy and comfortably above the regulatory requirements at 19.46%, of which the Tier 1 capital is at 18.37%. This gives us enough headroom for growth. The liquidity coverage ratio stood at 199.62% as of June 30, 2026. On the liquidity front, a surplus liquidity of INR 4,012 crores as on June 30, 2026 keeps us in comfortable position. Thank you. And now I would like to open the floor for question-and-answer session.

[Operator Instructions] The first question is from the line of Chintan Shah from ICICI Securities.

And congratulations on another strong quarter. So sir, firstly, on the ROA. So ROA has kind of moved around 130 bps year-on-year. So from 68 bps to 1.98% currently, which has the growth has been kind of quite phenomenal. So which is largely you can attribute to OpEx to AUM and the credit cost moderation. But now OpEx to AUM also seems to be around now 4%, which is largely where the most of the diversified players are here and there. So now what are the kind of ROA levers going ahead, which I was just trying to understand that. So credit cost, probably how much delta is there? Or if you have to move from 2% to 3%, what could be the incremental ROA levers from that? That was the question.

No, I think if you -- the most important is NIM. If you see last 12 months, the NIM has moved a substantial level. That's point number one. Second important point, Chintan, I would urge to look at is disbursement yield. Last quarter, over the previous quarter, we had grown. I think if I'm not mistaken, by around 40 basis points in the disbursement yield due to product mix. Over that, our disbursement yield has moved by approximately 50 basis points. Now when you look at the ROAs of the future, you look at our portfolio yield has moved up by probably 17 to 19 basis points. And if you look at our disbursement yield is moving up at a very healthy rate. So structurally, you are in a sweet spot in terms of if I were to assess the future NIMs, purely as a strength of interest income increase. That's the fundamentally first point. Second is, credit cost is presently declining, but it's reached 2.4%. We see that structurally improving quarter-on-quarter for a couple of quarters. Let me park it there for you. And that confidence of our customer cohorts and our collection strength is giving us a fair amount of confidence there. As far as OpEx to AUM concerned, I have actually said that you should be prepared for a 15 to 25 basis point upside as well. But despite that, we are confident of ROA is moving structurally strength-to-strength. And the increase in OpEx to AUM we might see, if it all, we club in a few branches growth in a certain quarters, which is also something as a precaution I'd like to give. I also gave it last quarter, but you saw finally, we improved by basis points. So I would rather approach it conservatively and over deliver. But I think there is enough structural strengths for a company of our type, which is growing disbursal yield where there's a pricing power and the product mix a fairly visible on one side, and you've got a credit cost, which are the fairly decent runway for structural improvement. And you go, if I take a year's time, our guidance is that structurally, OpEx cost will come down. So if I take a 2-year window, I think we should be structurally giving enough confidence now that if you see our guidance, we have given a guidance of probably June exit of '28, which is 2 years from now, and you're already at 1.98%. So I think it should inspire adequate structural strength and confidence from now on.

Sure. So just tapping on the margins part which you mentioned, margins will be structurally improved. But if you look at the secured and unsecured mix, so which is like currently secured as 53%, and I think we have guided a 50-50 would be the ratio of secured and unsecured. So in terms of mix, we are largely done. So probably it is just that we are probably moving into more high-yielding segment. So how is -- I mean, what is driving the rise in the disbursement yield here?

See, ROAs, by the way, there are, for example, our PL Prime. If you see our business loan, we are actually not growing more than probably 15%, 16%. But if you see our PL Prime, which is a top corporate of India, if you see carefully the level is in the detail, we're already 36% to 38% digital now, which is growing every quarter for the last 2 quarters. And the digital is very fairly priced. People pay for convenience. It's 24/7. It's adding a lot of structural strength to us, both from vendors and our website. So I think even if you take products like education loans, goal. Gold, we have launched 400 branches. If you see our portfolio yields, it's moving at a very healthy level of that. I think the portfolio yield must be close to INR 1,800 crores, INR 1,900 crores already. If I'm not mistaken, it should command healthy, probably anything in the range of INR 1,700 crores plus already. So there's a fair amount of strength on all businesses and yields, which could be going up. And remember one thing, even if you take our unsecured, our bias would be within unsecured higher to Prime PL and Education. So it is more structural to moderate risk. So it is every single thing, even this time when I spoke, I explained why multiple products will give us a structural strength versus probably what we have seen across the industry, is because you have multiple businesses which take care of different economic cycles. So as a company we probably are on a much solid foundation -- on each of the businesses and the combined strength actually smoothens out any cyclical risk that you land up seeing.

Sure, sir. And just one last thing on the capital front. So we've kind of taken the approval for INR 5,500 crores against which there is a raise of INR 2,500 crores. So are we building in any further capital raise in this year? Or we are largely done, yes?

I think we raised INR 2,500 crores in the first week of April or second week of April. We're pretty much comfortable for the 4 quarters to 5 quarters, and we'll see as we go along. In terms of -- we are more focusing on more structural strengths of all the vectors. And as you can see that the business is moving into a much more solid phase.

Next question is from the line of Abhijit Tibrewal from Motilal Oswal.

Congratulations on a good quarter. I just wanted to understand, asset policy for us continues to improve, which I think is impressive. But can you share some early delinquency trends across some of the key products like PL, business loans, LAPs and commercial vehicles? Just trying to understand is there any segment where you are still exercising caution. Now the reason I asked this is, only yesterday, one of the peer NBFC shared that they have started seeing some early trends of higher bounces coming from salaried customers, salaries customers in the IT sector in Southern India. So are there any such trends that you are seeing in any of your product segments? That's the first question.

Fair enough. First of all, thanks a lot. I think, before I hand over to Shriram to give you a first-hand sense across products between calibration, collections, on IT sector because you specifically said outside IT sectors on salaried, there is absolutely no reason for us to worry at all. As a matter of fact, I have already in my first answer and in my brief, given a guidance -- not a guidance, but probably given you a sense that from the lens today, if you look at it, internally, we see a lot of strength in our quality of calibration. You can see the numbers. These numbers are our facts. And we don't see any emerging trends of any nature of these stuff at all. And if you see our 6 MoB, that's a good early indicator. It's gone down to almost, I think, 6.64% from approximately from 1.05%. I think this, if you see carefully the minute details of Stage 2, Stage 1 and if you see GNPA, GNPA is a pretty decent indicator of how you could see the future from here. That's the stage 3. It can't be a better indicator of any company than the GNPA levels. So from all perspectives, we look like -- from our lens, I think if anything calibrated well, there's absolutely no reason to worry. But Shriram, do you want to add anything that I'm missing?

To add to what out MD just spoke about, even as I told, the slippage ratios have improved by around 5% in Q1 FY '27. And Stage 3 slippage ratios have also improved by around 13%. And you kind of look at every quarter, we have been improving even on the slippage ratio. That also kind of gives you sense on how the portfolio is trending. Bounce rate have been stable or it's also coming down, which in turn, you can see that in even your 6 MoB, that's a kind of correlation. If you try to correlate your 6 MoB, it can give you a sense that bounce rate versus even my collection efficiency, which you can see in the deck, which is around 99.6%. If you try and look at each of these from a lens, then I don't see any stress building up. In fact, the portfolio is as per our expectations because all of this, we have kind of engineered at almost 2 years in advance in terms of how we are building up portfolio and calibrating it.

Question I had is for Arvind sir. Sir, just trying to understand, I mean...

Abhijit, I'm really sorry, we lost your audio in between. Can I request to repeat your question once again?

Sure. Am I better now? Is my line better now?

Your voice is a little unclear, but if you can be a little louder, I think one can hear you.

Sure. I'll try. So the second question that I had was, I was just trying to understand that among these 6 newer businesses that we have launched over the last 18, 24 months, is there any business which has positively surprised you? Or is there any business which has taken longer than expected to scale? And if that's the case, has your strategy changed in any of these businesses?

I think the only one which we probably did not accelerate is the Shopkeeper loans, which we came across in the earnings call in the first one and I shared with you. And right now, that we're not accelerating. And for all our decision basis is between credit cost environment and also on the ROA. So -- but every other business, gold is a fantastic 400 branches launched. We're already 60 branches up this financial year. We are moving on close to probably 400 and maybe more depending on how it goes. We -- our yields are going pretty good. Productivity per branch is moving very well. If you look at PL Prime, our digital was our strong construct from 28% 2 quarters back, probably it's down to 38% approximately. And that is structurally is moving very well. We're able to price the best quality customers. If you look at Consumer Durable, I shared with you, we have approximately 50,000 customers a month capacity to process. The number of customer franchise that is increasing is moving very well. You'd be surprised that commercial vehicle and CD loans, we have trends of people who have launched historically and we have a very positive portfolio performance in the first 12 months. Substantially better than probably historical data indicate. That's just because you ask me, I'm giving you a sense. We have, I think, on every single business, education loans reaching INR 144 crores and INR 180 crores, somewhere in that trajectory. This quarter is a season of education. If you check in the market, we are pretty much the second name that's moving on education loans. So I think the reason why you find our strike credit has low errors and is consistently building strength-on-strength, because nothing we launch is not adequately designed, planned, and executed. We don't do anything which is off the cuff. People who are handling have seen price cycles. We only keep match winners in adequate quantity with every business. Otherwise, I don't want to launch a business. So some of these are very fundamental to our DNA. And that's why you see clinically in an engineering step-by-step will move forward. Risk is something which we are very, very proud of and extremely important for us. But our abilities to calibrate, our abilities to back test, our abilities for analytics to use for risk management, even I mentioned for AI, our biggest gain is not about the cost efficiencies, not just the OpEx part. That's a low-hanging one. Actually, the biggest gain of AI is finding the customer cohorts with accuracy. It's not the quantum of customers. It's the accuracy of customers that you can strike. So there is many moving parts, which are structurally designed with all our experiences and the clinically sticking to plan, which is why you see outcomes could be substantially looking more robust because it's in line with the engineering plan that you will find us clinically going one after the other. And on the credit cost, I can assure you that we are looking on a very decent and solid wicket. Our seasoned data internally is also showing a fair amount of positive strengths.

Got it, sir. That's useful. And I just wanted to squeeze in one last question. This quarter, when we look at cost of borrowings for the NBFC reported, we see mix -- some of them have actually been able to keep the cost of borrowing stable. For someone like us, it's gone up and about 9 basis points thereabouts. It is not really an aberration given how -- I mean, bond yields were given how -- I mean, the cost of borrowings extended given the geopolitical environment. But from here, would you expect stability or would you expect cost of volumes to inch up a little further in the coming quarters?

Yes. I think cost of borrowing of 9 basis, 5 basis, or 7 basis or 10 bases, I wouldn't be too worried. I think, for me having NCDs at anything in the range of 25% to 30% and a diversified borrowing, I think what we've achieved, which we shared in the last 2 earnings is the more structural strength. And if you see carefully our disbursal yields are going up so substantially in terms of the construct that originally, we had planned. Of course, we have not declared or given guidance around it, which I respect. But it's moving critically as per plan. And that, I think, has enough and more strength. I mean just this quarter has gone up by 50 basis points. Last quarter went up by 40 basis points over the previous quarter. I think we could be very comfortably NIM accretive. And if you look at the way we've raised NCDs and the term loans from wider spectrum of participants, we have substantial strength of long-term funding that we have raised. And that is the strength that this company has. So I wouldn't be too worried on the net trade-off. It should be comfortable for the year.