PTC India Financial Services Limited (533344) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q4 and FY '25 Annual Results Conference Call of PTC India Financial Services Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Priya Chaudhary from PTC India Financial. Thank you, and over to you, Ms. Chaudhary.

Thank you. Good morning, everyone. I'm Priya Chaudhary. I'm Head Investor Relations at PTC India Financial. I would like to take this opportunity to welcome all for financial year '25 investor call for a discussion on Q4 and FY '25 annual results of PFS. Now just to set the context of today's discussion, over the past 1 year, steadfast steps have been taken to steer the organization through a phase of stabilization. Significant efforts have been made towards resolving the legacy issues, institutionalizing internal processes and strengthening the leadership and management team. These efforts are evident and are reflected in a qualification-fee balance sheet, improvement in NPAs, division in our rating outlook by ICRA from negative to stable to strengthening our senior management through appointment of MD and CEO, DF and CFO and Company Secretary in financial year '25. These initiatives will act as a stepping stone for a cautious and a sustainable growth going forward. As we look forward to financial year '26, we are guided by a clear strategic focus of delivering customer-centric financial solutions, expanding our presence in distributed infrastructure, diversifying our funding base to build financial resilience and enhancing internal systems for greater agility. All these measures, along with the positive tailwinds in the infrastructure sector and continued focus on sustainability, augurs well for the organization. I would now like to introduce the top management team of PFS present in today's call: Mr. R. Balaji, MD and CEO; Mr. Dilip Srivastava, DF and CFO, Dilip has joined us recently in March 2025; Mr. K. Srinivas, Executive Director and Chief Credit Officer; and Mr. Abhinav Goyal, Senior Vice President, Finance and Accounts. With this, I would now like to invite our MD and CEO, Mr. R. Balaji, to share his opening remarks and insights on the company's performance. Over to you, Balaji.

Good morning, all. I am happy to be here sharing with you what happened in quarter 4 and the full year FY '25. First of all, I would like to again introduce Dilip Srivastava to you. He's joined us as Director, Finance and CFO on March 28. And with this, one of the things which we have been seeing earlier, right, our leadership team is getting strengthened. This is a significant addition to the team. And another senior person will be joining shortly. So with this addition, the leadership bandwidth is completely filled up. And going forward, this will give us the necessary wherewithal and management bandwidth to focus on the transformation journey that we have embarked on in this organization. The 2 things what I would like to say upfront is the fourth quarter could be divided into 2 parts: Dilip and his team would be taking you through the financials. One is we continued on the process of transformation. We have restructured the organization into more agile. So the roles and responsibilities have been defined to ensure that our ability to serve the customers is enhanced. Two, keeping with our moto of enhancing systems and controls, we have created a separate operations department to ensure that post the sanctions of the loans, the monitoring and the regular covenant monitoring happens in a regular manner without any conflict of interest. So that's one thing which we have done. And three, whatever systems and controls, which we have improved in other areas, which was I think we continued to focus on those to strengthen it. And this is evident by the fact that, if you look at our annual results, the qualifications, which further come down, and there's no qualifications and even the emphasis of matter has come down significantly. This is what. Now as far as the areas that could have been better, if you look -- when we spoke to you in the last week of January, after Q3 results, we said we've got a strong pipeline. The pipeline was there, but possibly, I overestimated the amount of business that we would do as one was not from the infrastructure finance industry, we thought certain things would happen. We evaluated close to INR 1,400 crores of proposals. Out of the INR 1,400 crores, a couple of proposals have got spilled over to the first quarter of this year. One proposal, which is a significant value, there was a delay in the processing Consequently, the customer went with another leading bank of the country, although it was sanctioned at our stage. And finally, some of the proposals which we have sanctioned, which we are pending for disbursement, they got therefore to quarter 1. So because of that compared to the figures that we had set in the quarter 4, in disbursements, we could not proceed. That's substantial underdelivery compared to that. But on the other aspects, organization, we have progressed well. And more importantly, as far as the stressed asset is concerned in terms of the resolution of the stressed assets, one happy news is that one of the key asset is IL&FS Tamil Nadu. In the IL&FS Tamil Nadu, we are happy to say that the project has got investment grade rating from 2 rating agencies and the lead bank for this project that is Punjab National Bank has written to RBI for their approval for converting to a standard asset. So once that -- we expect that approval in the next few weeks. And once that comes, that will go away from the stressed asset at the Stage 3. Secondly, one of the other stressed assets went to, we are proceeding on the resolution plan. In fact, initially after the thing, we received 18 expressions of interest. And finally, on the 8th of May was the closed final date for submission of the bids. We've got a significant number of bids. We expect the process to identify the winning bidder in the next few weeks. And therefore, in the quarter 2, the entire proceeds would come in the quarter 1 apart from finalizing of the winning bid. The winning bidder would also bid a EMD of 20%. Therefore, that would also go away. So with these 2 out of our gross Stage 3 of close to INR 700-odd crores, the important thing that could happen is with these 2 cases alone, there will be a significant reduction in the NPA in the sense that straight away close to around INR 280 crores would go away. That would be a significant thing. And as far as the NSL is concerned, we are happy to say that while we got a successful resolution applicant in the form, there wasn't multiple legal challenges against the award. The NCLT has heard it and possibly the judgment will be given in the next few weeks. So out of the INR 686 crores of the total 4 accounts, which accounted for close to 96% of total INR 710 crores of gross Stage 3, close to INR 405 crores is sorted out by September, and that's a very, very significant cleanup as far as we are considering. And the next thing going forward would be the only key one that is Danu and which we expect it to be resolved in the second half of this financial year. So that's what we are doing. And the other critical thing which has happened in the last few weeks is that to strengthen our IT capabilities, a new Chief Information and Digital Officer has joined, Sidhartha Dutta. Sidhartha comes with a significant experience. He was earlier the IT Head of Fincare Small Finance Bank and also the IT Head of North East Small Finance Bank. So coming from a banking background, he would be able to add a lot of value towards overall of our IT system to make it more user friendly at the same time ensuring that the information security is highly maintained. Plus, we are also adding a few more key people in line with our focus on going into smaller loan sizes. So we are creating -- like what was shared earlier, we are creating a new vertical, SME lending. Basically, this would focus on products in the range of between INR 30 crores to INR 70 crores. The head of that business is expected to join in the third week of May. So with this addition, plus also a new director in charge of projects and operations in terms of lending, that person will be coming in the first week of June. The entire management overall would be complete. In the sense, we got a full-fledged CFO, we've got full-fledged Director for Operations. Anyway, we have -- already, we have got a Chief Credit Officer, we've got a Chief Risk Officer, plus a Head of SME Lending, and a new Head of IT has come. With this, the entire management overall is complete. Going forward, we are also recruiting at the junior levels in the credit risk and business development function, so as to boost our revenue-generating capability. So with this, we are strongly poised to go forward. And I will leave it to Dilip to take you through the financials.

Mr. Dilip, you can go ahead. Sir, are you there, Mr. Dilip?

He must be muted.

No, sir, he's on...

Hello. Yes. So I would like to highlight at this time in our financials, there is no qualification. Last year, qualifications were there. But this time, there is no qualification from the statutory auditor. That is a good achievement by the company. And in terms of total income, this year, we had INR 638 crores against previous year of INR 776 crores. PAT has been INR 217 crores and against previous year of INR 161 crores, that is a 35% positive increase, I mean that is additional PI fund. In terms of return of assets, it has been 3.56% comparison to previous year of 2.27%. So that is an incremental 129 basis points. And gross Stage 3 assets, again, that there is a reduction from INR 769 crores, it is now INR 711 crores. And capital adequacy ratio also it's improved say 59.65% as against previous year of 43.07%. That is an additional incremental positivity of 16%. And net worth of the company has been improved, and it is now INR 2,754 crores against INR 2,538 crores in the previous year. So it's an incremental growth of 9%. So that this -- and loan assets is INR 4,746 crores. So that as Priya Chaudhary already explained that our rating has also been improved, and we are taking up with the rating agencies as well. We are expecting that it will be further improved. And regarding that lending part, we have been taking up with the multiple lenders and things are in the positive direction. We are expecting that we will be closing financing with the multiple banks very soon. And this, our AUM base will also be increased. So Priya, over to you.

Yes. Thank you, Dilip. I think I will now like to circle back with Balaji.

Yes. So now Srinivas, our Chief Credit Officer, will speak to you all about the efforts we are putting in to ramp up our business and build up a high-quality portfolio.

Thank you, Balaji. Good morning, everyone. Srinivas here. Just to give a brief overview in terms of the efforts that we are putting in to improve the credit pipeline, as of March 31, 2025, we are happy to share that while it's work in progress, there has been a healthy increase in terms of the number of proposals that we are evaluating. We have evaluated in terms of detailed due diligence from 10 to 12 proposals of which a few have gone for sanctions. The sanctions and rather the commitments that we have as of today are roughly about INR 500 crores, of which we hope a significant amount of it will be disbursed by this quarter. Going forward, we will continue through our efforts to improve the pipeline of sanctions. We are currently in the process of evaluating INR 1,000 crores plus of proposals, some of which will definitely be going for sanctions in the coming months. So whatever commitments we have today, while we hope that they will be disbursed by this June end, it will be an ongoing effort to continue to replenish this -- the commitments that we have in terms of lending. The mix of proposals that we have are across different sectors, which include renewables, roads, conventional thermal and of course, inquiries are there in -- across in terms of what treatment plants or in terms of solar projects or in terms of corporate banking proposals, [indiscernible] proposals, the ticket sizes as consciously we -- Balaji has been mentioning from over the last couple of calls. We are trying to consciously reduce our average ticket size, keeping in line with our reduced loan book in order to ensure that our exposure size is [indiscernible] till we reach a level where our loan book increases significantly and thereby a single-ticket exposure can also ramp up in relation to that. So we -- on, I think, the NPA issue, Balaji has already given a detailed explanation. So there is nothing more to add to that from my side. Thank you.

We will now be opening the floor for Q&A session, please.

[Operator Instructions] The first question is from the line of Vishal Mehta from Oaklane Capital.

Can you hear me? Am I audible?

Yes.

Just wanted to check what has been the revision in terms of our outlook towards our loan book targets and disbursement targets for the next 2 years?

Like what we would do is we got a very aggressive plan for disbursements of this year. And what we expect to do sequentially, right, we expect on a quarter-on-quarter to have a 7% to 9% growth in AUM on a sequential basis, quarter-on-quarter. So currently, if you can see our year ending March 25 is INR 4,745 crores is the AUM. And every quarter, our AUM will increase by 7% to 9% going forward.

Okay. So sir, just to follow that up. Our disbursements are just INR 50 crores for the quarter. So are we confident that we'll be able to achieve that kind of growth every quarter because I mean even when sir said that the pipeline is having -- it's not a very long pipeline, right? So are we confident of getting to that number every quarter?

First of all, thanks for asking this question. It's a very important question. See, if you look at the fourth quarter, right, we disbursed INR 50 crores. There was a particular case we were supposed to give to a state utility, but then we did not disburse because they wanted renegotiation of rates. We did not want to compromise on our margins while lending. And third, like one of the case, which was in the final stage since we took delay in processing, we lost out that case. So if you had added all these 3 things, instead of the INR 50 crores, would have come up close to our disbursements have been close to INR 400 crores to INR 450 crores. And like what I said a couple of cases which were there in the fourth quarter has...

Pushed to the first quarter.

Pushed to the first quarter. So what we could say is in the next -- by the end of next week, by, say, for example, 17th or 18th of May already we would have been disbursing close to INR 200 crores for the quarter. And in the first quarter, we'll be looking at close to INR 600 crores to INR 650 crores. So what we are saying is 7% to 9% on a quarter-on-quarter is confident for 2 simple reasons. Last quarter, we made a significant shift. We started the shift from the third quarter of last year where we started focusing more on private sector. Obviously, this is a new for the company to work on this, evaluate this, it took some time, and now the pipeline is strong. That's what is happening. And two, once the new person comes on board, the Head of SME, a new channel also gets activated, that will also start contributing. So with this, we are confident that it will happen. I just -- just wait and watch, when we are in July to see how our first quarter has been, we'll be completely confident about it. And more importantly, it's not just what we are doing on the ground, there's a greater managerial bandwidth. If you had taken -- actually, if you've looked till March of last year, there were only Srinivas and me as a part of the senior management to look at all aspects of the organization. Now today, going forward, at this point of time, there is Srinivas, Dilip and myself. And in the next few weeks, there will be 2 other senior people also joining the organization. So our ability to look at all facets of the business, right, from resource mobilization to garnering business, generating leads then evaluating proposals and taking them through to the logical conclusion, it is a significant increase in the end of quarter 1 compared to what was there in the fourth quarter. That gives us the confidence. And finally, most important thing, right, there was a lot of legacy issues in the organization. We have been settled properly and we are moving about in a coordinated manner, in a systemic manner. So therefore, the overall efficiencies and effectiveness will also be enhanced significantly.

Great, sir. That's very encouraging. I also had one more question regarding the spreads. As we've seen the spreads have kind of tapered off from about 2.5% to almost 1.5%. So one question is where do you see this settling? And if you -- if there are any initiatives that we've taken to kind of improve this? I understand that we are looking at a rating upgrade and diversifying our borrowings. You've highlighted that earlier. But is there a number which we believe that we want to kind of maintain below which we are not okay to give out loans? And just if you could share some light on that as well, please.

On this, we have guided by 3 things. First is our emphasis is to build a high-quality, low-volatility book. So to that extent, while we are focusing on building such a business, automatically, the spreads will be lower. Two, if you look into this, the key reason behind the low spreads is the fact that our cost of borrowings is very high. And that cost of borrowings would come down once our rating upgrades happen. So this would start coming down progressively over the next few quarters. But the third thing, which is in our control, which we are focusing upon is to look at the yield on our portfolios. And that's the reason we are focusing on smaller projects wherein the risk-adjusted return on capital would be significantly high, therefore our spreads. So answering your question directly, going forward, right, our spreads would be in the 1.75% to 2% range for the next few quarters, but this should not be a hindrance because our leveraging is very low, therefore we'll be able to add significantly. The primary metric that we'll be looking at is our return on asset, which would be closer to 3%, 2.75% to 3%. That's what we'll be doing. We expect the benefits of a cleaner balance sheet with a significantly lower NPA and the larger book size to manifest into better credit rating coming through a lower cost of borrowing. The benefits of it would start accruing from the second half of this year. So the spreads for next year FY '26 will be higher than this year. But for this year, we'll be looking at a spread of 1.75% to 2%. That could be our spread.

[Operator Instructions] The next question is from the line of [ Jana Manu ], an individual investor.

Am I audible, sir?

Yes, you're audible.

Sir, I'm a very serious investor in this company. I'm holding more than 120,000 shares. Since I am interested to get good dividend yield every year, I invested in this company. Since 2 years, you have not paid any dividend to the investors. That is a very serious matter. Previously, this company was giving very good dividend. And one more question, what is the present status of the new credit line from the different banks because the loan book size is continuously decreasing every year. In the 2 quarters back only, you said the loan book size will be increased by 15% by the end of this financial year. But what happened, sir, again, it is reduced. What it happened, sir, why you are not serious about this?

First of all, thanks for being an investor of our company. So to summarize, you have asked 3 questions, one is dividends. What is the status as far as resource mobilization is concerned? And third is the AUM buildup. As far as dividend is concerned, that we would like to offer dividends to our shareholders because it's a way of rewarding them. And more importantly, apart from rewarding the shareholders, it is also -- giving dividends will also give a signal to the market about our future prospects. This year, we were actively contemplated it. But in the light of what has been happening in the recent past few days, yesterday in the meeting, the Board took a decision that let's be conservative about it, because there's a lot of uncertainty in the marketplace. And since our resource mobilization has still not got back on to track, it's better to conserve the cash to meet the growth requirements of the organization. So that was the call. But if things change going forward, we'll review the thing. As far as the resource mobilization plan is concerned, I will leave it to Dilip to explain what efforts are we doing to bolster additional resources. Dilip?

Yes. Thank you. Mr. Janu Manu, so at this -- you are right, the dividend has not been declared by the company, but you will see that as we discussed the performance of the company that earning per share that has been improved. So being a shareholder that value is already increased at your end. So maybe due to because we have been planning for that further expanding our this AUM base and accordingly we are taking up with the multiple lenders, right, in different mix of borrowings as well. So the things are very advanced stage. So everybody was waiting for this. Now results has come and there is a qualification-free balance sheet. So things are improved, right? So capital adequacy ratio, our -- this net worth, everything has been improved. So we are expecting that we will be getting good amount of credit line during this quarter, so that we can expand our business, right? AUM base would be increased.

And as far as the AUM was concerned, you are right. When I say we'll expect a 15% growth in our AUM, now instead of the growth, we have had a decline. I would like to just correct you only one thing what you have said, when we'll be serious. Let me assure you the team, the entire PFS is serious about growing the book. Now like what I explained earlier, we lost out on a few business, one, because we did not want to compromise on our margins; two, there was some internal glitch, which caused the delay in the processing. So we lost a certain amount of business of close to INR 400-odd crores. That was one. And two, more importantly, what has happened has been a surge in prepayments in the fourth quarter. There has been quite a few prepayments in the fourth quarter. As far as this line of business is concerned, while we finance for projects in the infrastructure space, while we originate the loans, it's for 12 to 15 years. But once the project gets commercialized, they start prepayments. And therefore, whatever prepayments which we are witnessing is of the financing that was in a few years back. And since in the preceding 2 years, our disbursements were low, our book has come down. What I would urge you to look at is while the numbers are low, like in the last year, that is FY '25, our total disbursements were close to 60% higher compared to the previous year. And going forward this year, if you look at the guidance that we gave, every quarter, we'll have a 7% to 9% growth on AUM. If you can work out the numbers, this disbursement numbers of this year will be significantly more than last year. So what I would like to assure you as a valuable shareholder of this organization is that the bottom of the AUM has been seen. And from now going forward, quarter-on-quarter, there will be a significant increase in AUM.

Okay, sir. What is the fresh loan sanctions for any banks, sir?

Dilip explained it you. Dilip, please reiterate?

Yes. So as I already explained to you that things are very advanced stage with the multiple banks. But due to this because right now financials have been audited and that has been available to us and the qualifications are not there, we are expecting very soon that disbursement will happen.

Previously, you said, sir, one of the NBFCs sanctioned INR 500 crores, want to follow up on that, sir?

That's right. IIFCL has sanctioned this. Now if you look into it, once if we complete the entire process, we need to draw down upon it. As it is, if you can see in our balance sheet, we have already got some INR 1,200 crores of capital and on which we are getting a negative carry. So as soon as we exhaust this, we will draw down upon it. But apart from that India Infrastructure Finance Company, we are at heightened stage like what Dilip is talking with at least 2 other public sector banks, country's leading banks are there in those. So that we'll start seeing this after June. Now the reason is in the fourth quarter, since we have come through a tough time, the financial institution, the banks wanted to see the annual results completed. And based on the audited balance sheet, they'll be taking a call. So that would happen in the next few weeks.

[Operator Instructions] The next question is from the line of Amey Chheda from Banyan Capital.

Just wanted some clarity on -- we are having a 30% increase in the loan book in FY '26, right? So how much OpEx increase are we baking in because of that?

I think, Amey, you're using the lower end of 7%, okay? So if you take the 9%, it would be different. See, basically, this year, right, the way we are looking at this, we need to fill the key gaps in our manpower. Our primary objective is to look at significant investments in credit, risk and business development, that is one. Two, more importantly, having a full-fledged management team. As Dilip has joined in March, a new Director of Operations will be joining in early June, and Head of SME will be joining towards the end of May. So there will be some increase. What I would like to assure you and all the other stakeholders is that we are not a very, very manpower-intensive company. So if you actually look into it, while in percentages terms, it could be this high. The overall overhead increase would be around some -- all put together increments for existing employees, other office overhead and each of these things. So overall overhead increase would not be -- and employee expenses would not be more than some INR 8 crores to INR 10 crores. The way to look into it is with all these things, even if we are able to generate an incremental INR 400 crores, INR 500 crores of disbursements for the year, it will be revenue neutral. But obviously, our disbursement plan is significantly high, if you're looking at a 30%, 35% growth in AUM. And then obviously, the earnings on that would be significantly much more than this, but also for us on a perpetual basis, we'll be having a significant higher earnings.

Got it. So sir, we are eyeing, say, 30%, 35% loan book growth. OpEx will increase by around 20-odd percent. So then why are we expecting ROA to come down? Currently, it is what, 3.5%, 4%.

Currently, it's not 3.5%, 4%. Like last year, if you look into it, based on our net worth, it's closer to 7.5%, right?

ROA, sir, ROA, return on assets.

2.75% to 3%. See, what would happen is when our loan book increases, since the cost of funds is high, so on the incremental leveraging whatever you do, it will be a lower amount, right? So that is the reason. We consistently maintain 2.75% to 3%. That is the target. Sometimes, we will be able to get more than that, that will be fine, but it's not come to 2.75% to 3%.

Got it. And what kind of ROE would it translate into?

A finance company is pretty easy, right? You know our net worth, you know our ROA, you can work it out. So let's put it this way, our entire thing would be 2 things: build the book to a significant size, have high quality so that what track record the company has had in the sense, in the last 7 years, whatever we have lent has not even INR 1 has become an NPA. We will focus on that, continue the same rigorous credit evaluation in lending and moving forward, that will ensure that the ROE comes increase. The ROE would be depressed for FY '26 and FY '27 because of our large capital base, but it will be sequential year-on-year and ROE would be increasing by at least 1% year-on-year.

[Operator Instructions] The next question is from the line of V.P. Rajesh from Banyan Capital Advisors.

Most of the questions have been answered. So just a clarification on the commitments that have to come through from the 2 banks you mentioned...

Sorry to interrupt you, sir, but your line is not clear.

Is it better now?

If you're using a headset, please use a handset. No sir, still not clear.

Is it better now?

Yes, sir, this is better. Please go ahead.

Okay. So my question was regarding loan sanction from the 2 PSU banks that you mentioned. What is the timing on that? Will it be [ dispatched ] by the end of this -- before the end of this quarter? Or do you think it will go into the next quarter?

See, we are not in control of that. It will be -- definitely, it will be before end of July. Whether it happens before June or not, we cannot say with certainty. But the only thing what we could say is it's gone up for -- with one bank, it has gone up from the branch office to the red office. Another bank, we already had heightened engagement with at the director levels. So definitely before July, but we expect at least one to happen in the month of June itself. Within the 2 PSU banks, at least one would happen in June.

Got it. Got it. And then in terms of the prepayments, what is your sense, given you understand the book and some of the projects will be getting commercialized. So in that sense, when you're talking about a net growth of 7% to 9%, presumably, you have to disburse even more. So if you can just give some color on what kind of prepayments you are planning to see during this year.

Srinivas, could you just eliminate on what will be the expected prepayments for this year?

Yes. Thanks, Balaji. See, essentially, the prepayments that we are witnessing is part of a normal business cycle that happens. I think Balaji had outlined that when we explained the entire position. But today, if we are looking to estimate the prepayments that are likely during this financial year, I would assume that it could be in the vicinity of anything between INR 200 crores to INR 600 crores. We hope it is on the lower side, but it is -- I would also request you to kindly appreciate that it would be very difficult to estimate with certainty the likely prepayments, but we have a generally broad assessment in terms of our interactions with our borrowers and the likelihood of prepayments based on the project completion and the maturity of the cash flows. So only a broad range can be indicated and we would hope that they are on the lower side. And to the extent possible, we'll try to minimize the extent of prepayments from our side also.

Right. So that's helpful. Yes, I was just trying to get a sense. So it sounds like up to 15% could be something that may get. And to that extent, your loan growth has to be right, so that's what I was trying to get a sense of.

Yes. Essentially, yes, that's right. To that extent, we have to assume higher increase in sanctions to take care of the prepayments. So there may be a little lag between the prepayments and our -- and fresh sanctions. But then, yes, since we have resumed the normal cycle of sanctions documentation, disbursements, so as -- and this ramp-up is taking place what -- from the last 6 months onwards, so we are hoping to ensure that while prepayments happen, we don't lag behind the extent of sanctions also. So that way, this coming year, hopefully, it will be a much better scenario than what we have witnessed in the recent past.

Right. Just finally, the 2 people you are expecting to join in this quarter, after that, would you still have some other roles to fill at the senior level? Or it will be just pretty much done after that -- after those folks join?

By and large, the senior -- basically, we already have a full board. So after that, we'll be having only at the middle and the junior levels. Basically, like what we will be focusing upon is credit, risk and business development. Because these 3 roles are critical to generating more revenue by sourcing more cases, assessing them. And we would be adding another 8 to 9 people in the course of this year, the junior levels in these 3 functions.

The next question is from the line of Vishal Mehta from Oakland Capital.

Sir, in terms of the stressed assets, we spoke about getting some resolution done by H1 of the next year '26. I had just a question, how do we plan to utilize the provision? I mean what would be the impact of that on the financials? Because almost INR 275 crores of provisions that we've already made will probably become good again. So how is the treatment going to be for the same?

See, one of the things what we do is be very, very conservative as far as provisioning is concerned because this is an industry wherein whatever we do, the good or bad of it would be reflected 3, 4 years down the line. So we'll be having a very, very conservative accounting policy. Now coming specifically to your query, now what would happen? Let's take, for example, IL&FS per se. Now whatever some of these provisions would come down, it will get reversed. It will possibly add to the bottom line. That's one. And we'll also ensure that if it's there, we would see this increased money that comes as a fresh unstated sanction sort of a thing. So through this, in this year, we hope to get at least incremental INR 200-odd crores, which will go to deployment in future business. But from an accounting perspective, it will be translating into higher profitability for this year.

The next question is from the line of V.P. Rajesh from Banyan Capital Advisors.

Yes. I wanted to ask you about the time line of the rating update. So if you can just comment on that.

See, rating upgrade, if you -- all of you are aware that ICRA retained it, changed the outlook from negative to stable in the month of February. Now we have had our full quarter results. So the rating agencies have acknowledged the improvement we have done in multiple areas. There are 2 critical things. Having said that, while we have progressed on resolution of the NPAs, the final resolution will start happening from -- in this quarter, that is the June quarter and the September quarter. So what we expect, like what we were saying once this June quarter results come out, NPA would have reduced, the book would have increased and also the sanctions would have been -- which have not just sanctioned, possibly drawn down from one bank, that will lead to a rating upgrade. So post the June quarter results, in July, we expect a rating upgrade. And this is what we have been informally engaging with them, and that's what we are seeing. It depends on 2 specific things, which we are focusing upon, increase in the book, which we are confident of and improvement in NPAs, which again, we are confident of. So in July, we should see the rating upgrade. Anything if it happens prior to that, it's a bonus.

Got it. And lastly, I assume you're not looking for equity raise? Or is that still something folks are thinking about?

See, that's something on our mind because if at the end of the day, like it's one of the things which we are evaluating to see because that could possibly give the confidence to the various lenders. So that's something which we are still contemplating. So if any, it would be in a small amount of around INR 300 crores to INR 500 crores. And anyway, that would be at a premium to the current market price, significantly premium to the current market price.

As there are no further questions from the participants, I now hand the conference over to Mr. R. Balaji for closing comments.

Thank you all. Basically, we would like to reiterate 2 things. If you had looked at what we said in the Jan con call, we have made progress on significant activities in terms of processes, in terms of credit evaluation, in terms of organizational transformation. But the one key metric where our delivery was significantly below what we had communicated was our disbursement figures. Now what I would like to assure you on behalf of my team is that the disbursement figures have also started going up. When we see the June quarter results, we'll be -- I hope all of you will be presently surprised to look at the quantum of business that we have done. But more importantly, the one key messaging that we would like all of you to have this, I will go back to the call in October, wherein we said the focus is to shift away from individual capability to shift towards in building institutional capability. As all of you can see, the management bandwidth has increased significantly. That gives us the ability to focus on multiple issues raised from resource mobilization to garnering more business. So you would be able to see a new more aggressive, at the same time, very, very conservative with respect to credit PFS going out into the market to garner business. This is the beginning of a multi-quarter transformation. And what we had said, right, we'll be looking at a 7% to 9% sequential quarter on growth AUM. It's not for only the first quarter, this is something you would like to take the organization through over the succeeding few quarters, around 8 to 10 quarters, this would be the plan that would be guiding us going forward. And I look forward to interacting with all of you in July or even earlier when you got some significant updates as far as PFS is concerned. Thank you very much.

Thank you. On behalf of PTC India Financial Services Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.