Repco Home Finance Limited (REPCOHOME) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Repco Home Finance Q3 FY '23 Earnings Conference Call hosted by YES Securities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Rajiv Mehta from YES Securities. Thank you, and over to you, sir.

Yes. Thank you, Raju. Good afternoon, everyone, and thank you for joining the Repco Home Finance's Q3 FY '20 (sic) [ FY '23 ] Earnings Call. Firstly, I would like to thank the management for giving us this opportunity to host them. We have with us the entire top management team, Mr. Swaminathan, MD and CEO; Mr. T. Karunakaran, Chief Operating Officer; Mr. N Balasubramanian, Chief Development Officer; Ms. Poonam Sen, Chief General Manager; Ms. K Lakshmi, Chief Financial Officer; and Mr. Subramanian Balaganapathy, Deputy General Manager. Now I would like to hand over the call to Mr. Swaminathan for his opening remarks on the company's performance, post which we will open the floor for questions. Over to you, Swaminathan, sir.

Thank you. Thank you, Mr. Rajiv. And welcome to the Repco Home Finance earnings conference call for this quarter -- this December quarter and for the 9 months ended December 31, 2022. I would like to extend a warm welcome to all of you for joining our conference call today. First, I'd like to recall the priorities of the current year, mainly bringing back book and growth momentum and bringing asset quality under control for this company. Notwithstanding some challenges, I, myself, am happy to announce that we have carried the momentum gained in the previous quarter forward. In addition to the business momentum, we had also planned to bring positive changes in business processes, systems during the current year so that the next year onwards, the company will be able to take leverage of the base. We are happy to announce that, as we speak, the company's branch-level operation have totally moved to a new IT platform. The migration process started from the third quarter and will stabilize by this quarter end. Because of some disruptions because of these IT changes, there was an impact of about INR 50 crores in our disbursement approximately. Considering this point as well as the Q3 being a seasonally weak quarter, we think the disbursement run rate remained resilient in Q3 when compared sequentially. I have a data for about 6, 7 years for this company [indiscernible] except for 1 year. The December quarter performance of INR 750 crores disbursement is one of the highest, and the highest for the -- INR 696 crores is the highest for this company. We have set up a small team at HO to attract the customers who have applied for a loan elsewhere so that the BT outs are being monitored. Despite that, we are happy that we are able to increase our AUM by around 2% this quarter. We should also mention that there was a subsidy repayment of CLSS subsidy from NHB that have also contributed to a small decline in our AUM. Notwithstanding these issues, the loan sanctions and disbursements recorded a robust year-on-year growth. Loan sanctions increased 51% year-on-year to INR 745 crores from INR 495 crores in Q3. Disbursements increased 57% in the same period to INR 696 crores as compared to INR 444 crores in Q3 FY '22. Starting July '22 until January '23 in 7 months, we have taken a rate hike of 110 basis points on our starting ROI. We call it MLR. As a result, the average yield on loan sanctions rose about 70 basis points from June to 10.7%. We reported loan spreads and margins of 3.3% and 4.8% during Q3, above our guided levels of 3% and 4.3%, respectively. We will continue to monitor the movement in our cost of borrowings. I'm [indiscernible] to pass on the [ change ] to our customers as well as we have a quick control on our other costs. The profit grew 14% sequentially to INR 80.8 crores driven by stable margins and lower credit cost. We earned the ROE of 2.7% as against 2.4% in Q2 and an ROE of 14.7% as against 13.3% in Q2. We attribute the improvement in the profitable ratios to our relentless recovery efforts and strong risk-based pricing. The gross nonperforming asset, GNPA, declined 36 basis points sequentially to 6.2%. The net NPA fell about 40 basis points and now stands at 3.4%. The GNPA [ special ] coverage ratio registered a 3% sequential improvement to 46%. The ECL provisions remained stable at 4.2% of the loan book. The balance being our exposure to the self-employed and the salaried segment stood at 50.9% and 49.1%, respectively. The share of nonworking loans, that is LAP, stood about 20.1% of the loan book. Our distribution network was 185, comprising of 160 branches and 25 satellite centers. The liquidity position has remained comfortable as we carried around INR 300 crores in cash and cash equivalents. In addition, we had INR 1,400 crores of unutilized lines of credit from banks and NHB. I will summarize the key financial highlights for the 9 months ended December '22, before opening the floor for questions and answers. The loan book stood at INR 12,196 crores, registering about 3.5% year-on-year growth. PAT for the 9 months surged 43% to INR 214 crores. ROA and ROE stood at 2.4% and 13.3%, respectively. The core profitability has remained strong with a solid spread and margins of 3.4% and 4.8%, respectively. The gross NPA stood at [ 6.2% ], with the coverage of 46%. Thanks to all of you for joining this call. I'd be happy, along with our team, to answer all your questions.

[Operator Instructions] The first question comes from the line of Amit Mehendale from RoboCapital.

Sir, what do you expect the loan book growth to be for next year FY'24 and '25?

Okay. EBITDA?

Sorry? Sir I was looking for loan book growth for the next couple of years.

See interestingly, we are planning to grow around 23% in our disbursement next year. That is '24 and '25. And a 15% AUM growth. This is [ another tentative ]. We have informed our Board, which is once this is approved, more or less, we will be announcing in the next conference call. But tentatively, 15% for next year.

Okay. Great. Sir, I mean, with regard to disbursement, right, the disbursements are growing at a healthy rate, but it looks like the repayment ratio continues to remain significantly high and also maybe the BT outs are also higher. I mean if you -- just to the quote your numbers, right, the disbursement and AUM growth are more in sync. So is there like a management-level strategy to tackle this dimension?

[ See, I must admit ], because we are in a competition environment, and the -- our spread has been 3%, and we are competing with the best in the industry. Some BT outflow is totally inevitable, okay? Despite that, we are taking some measures to cut this BT outflow. We have deals with some agencies to give us some inputs about likely or likely customers who are likely to opt out, and we are paying to contact these customers to prevent such BT outflow. Second, we plan to increase our disbursements as much as possible, including [indiscernible]. I was just telling you, next year [indiscernible]. Just [ 35% ] itself will be a good growth. So BT outflows -- notwithstanding the BT outflows, we will still be able to manage a good growth in AUM.

Next question comes from the line of [ Venket Bajah ], an individual investor.

Congrats to company -- to management of company for [indiscernible] Q3 performance. It's a beautiful turnaround on all parameters. Excuse me, am I audible, sir?

Not much. Can you be a little more clear?

Yes. First of all, congrats to Repco team for the spectacular Q3 performance and its all around improvement in all the parameters. Okay, as a retail investor, I had some concerns. See, in spite of spectacular performance, the stock price is not reflecting that at all, okay? If the entire market or entire sector or entire industry is like that, we will not have all these concerns. But only Repco is being depressed so much in the market, okay? Compared to -- I'm not even comparing with the new-age housing finance companies, where there is no problem of all legacy problems whereas and comparing only LIC Housing Finance or Indiabulls or GIC Housing Finance or PNB or Can Fin Homes. Compared to all these companies, only Repco is staying at very low ROE or even very low addressable price loan book value. So my [indiscernible], even though it is not in your control, can you please appraise FIA or domestic [ interest input ] or [ SNI ] and onboard them so that the stock price will be stable going forward?

Thank you, [ Mr. Venket Bajah ] for your compliments. And as you well stated, see, we are not here to monitor the movement at all of many [indiscernible] moments, and we are not there. And we are definitely confident that the market will understand that based on the steps that is being taken by management, hopefully, in the months and years to come, the market will take a cue and will respond.

Next question comes from the line of Sarvesh Gupta from Maximum Capital (sic) [ Maximal Capital ].

Sir, first question is on the loan book growth. So I think our earlier guidance for FY '23 by you was INR 13,000 crores. And now we have -- so that was around a 10% sort of an increase versus that in 9 months, we have only been able to reach like 2%, 3% from March. So do we still stand by our guidance of INR 13,000 crores? And what are the key reasons? Of course, we can understand BT out, but BT out had become less of a problem in the previous quarters. It seems like we had arrested that problem. And now it seems that it has again become a problem for us. So given that sort of a constant sort of a threat of customers moving out, how do we even plan to sort of grow the AUM by 15-odd percent in next year? So if you can throw some light on these matters, sir.

See, for the current year, let me be very clear. Sir, even though we said INR 13,000 crores, our intention was more [indiscernible] INR 15,000 crores may be difficult. Let me be very frank, it maybe difficult. But this fourth quarter will be an important quarter for us. We plan to do but not less than around INR 800 crores of disbursement this quarter. This is -- and that is minimum but to an organic, supposed of around INR 800 crores. Based on that, we expect the book to move around INR 12,500 crores to INR 12,600 crores, let me be very clear. But as far as next year is concerned, now that the new IT platform is there. We are confident that we will be able to do better both digitally as well as organically. See, in organization also, we may be doing some changes. Maybe some of the resources will be given exclusively for sales mobilization and all that. And now that I'm 1 year and hold the experience in this particular industry and the company, we are fairly confident that we will be able to have the growth that we set, mainly 15% growth, I think, in the industry. That will be in a favorable environment, so that is there, the whole economy. We are confident that we will be able to have this 15% growth. We are pretty confident, let me be very clear. This particular quarter, maybe we will not be able to reach INR 13,000 crores. But definitely, INR 12,500 crores to INR 12,600 crores is possible.

Yes. And can you explain, sir, BT out because in the previous quarters, it looked like it has become less of a problem and now it seems that again, that problem has become for us? Because as someone also alluded to that disbursement growth is very strong. But despite that, our AUM has not meaningfully increased.

Okay. BT out actually has -- it's not all that much. The last quarter, that is the September -- October to December quarter, our problem was somewhat because of the CLSS subsidy. CLSS subsidy of around INR 40 crores, INR 50 crores came during last quarter. Let me say that the same problem is prevailing this quarter as well. So the BT out is -- maybe it should be less. I do not have the number exactly now. But I'll give you the number in due course of this. But definitely, BT out is under control. And as I told in the previous questioner, see, some BT outs is inevitable for this company, let us be very clear, because at the 3% spread and I am competing with the best in the industry as well as the bank who are also in the same bracket. So some BT out is inevitable. Notwithstanding the BT outs, this can be managed to ease our disbursement and increase to a larger extent. That, we are trying. Definitely, in the coming quarters and coming years, definitely, this will happen. That will more than offset the expected BT outs.

Understood. The second point, where we have suffered this year majorly is cost to income, sir, where both your employee cost and OpEx is increasing at a disproportionate base vis-à-vis the -- vis-à-vis your loan book growth, which is very, very small, like 2%, 3% growth versus 20%, 30%, 40% growth. So how do you sort of think about this problem wherein ideally you should bring it down, but instead of that, it's actually inching up?

Thanks, Sarvesh, for bringing this. See, let us first understand. See, as far as the base effect is concerned, there were COVID-related issues in the previous year, okay? So some of the costs like traveling and all that, they are not there in the previous year, whereas this year, this has increased. And we are moving people out traveling for business but also for recreative one. That is one. We also have got out of the areas where our costs have gone up. [indiscernible] on sales. See, for example, DSA business has improved [indiscernible]. So DSA increase is one issue. We also done a branding exercise, especially in the South, if you see more branding exercise there. So we are expecting a better businesses in the years to come, second. Third one on recovery. Let me say, nearly some 2,500 [indiscernible] have been issued in the last 9 months itself. So there is a legal cost that has increased at the quarter compared to the previous year. Actually, it's a 200% to 300% increase in the legal cost. See, all these are inevitable because we are trying to control our NPAs. So we're actually trying to bring down the NPAs to the maximum, so such things are unaffordable. As far as employees cost is this concern, let me also say, this employee cost also includes the incentives that we are paying to our people. See, the incentives we are paying only because of it, the book is also growing, which are more than earlier. So we are incentivizing our staff. So the book is growing. So these are all areas, which will have a result over a period. Maybe for the current year, it will be more. But definitely, the company will reap the benefits over a period. And I'm confident that these things will happen. And for the current quarter, that is this October to December quarter, there were some small issues like consultancy payments and all. See, I was telling you that the IT platform was implemented in the last year -- started implementing in the last quarter. So we had to make some small payments to the contracted IT consultants and the testing agencies and all that. So these are some onetime expenses. We could have capitalized, but we prefer to take it over the year then. So these are some onetime costs. These things may not be there in the next year. So the cost to thing is under control. For your information, we are also having a specific business company and [indiscernible]. Each and every department is asked before spending anything, they are supposed to get clearance before spending. So we are having a tight leash on the cost. Hopefully, when the numbers start increasing, this cost-to-income ratio percentage will also come down. That much, we are confident.

And on the NPA side, sir, I think there we have been able to achieve the guidance. I think we had guided for INR 700-odd crores, and we are at INR 750-odd crores right now. So I mean, any thoughts on how these things -- of course, Q4, I'm sure that you would be able to sort of bring it down to the guidance number. But beyond that next year, how are we looking at the gross NPA profile that we have? Do we expect a significant lowering? Or are there some chunky NPAs out there? So how are we looking at our NPA profile and recoveries?

See, on the NPA front, as you have said, thank you for that, we are doing very well. Definitely, we are confident that we will be able to reach the number of INR 700 crores for this quarter, and the NPA percentage is below 6% [indiscernible] that's possible. As far as next year is concerned, this same hike against NPA will start increasing. We will see to it the percentage goes below 4% or something by March 2024. We are pretty confident. See, please also understand that this particular year, management with our existing NPA stock, we also had a problem of the -- this thing with the [indiscernible] from INR 700-odd crores was added during this current year. Despite this, we were able to bring down the NPA numbers as well as NPA percentage. That is -- that is good achievement as far as this company is concerned on the NPA side. Going forward, we do not have here other [indiscernible] that takes any overhead in the form of a [ framework of cost ]. [ Framework of cost ] are being monitored almost on a weekly basis with the entire top management. Yes, there may be overdues in the [ framework of cost ], but the payments are coming. Slowly, the NPA numbers under the framework is coming down as well as the [ all ] numbers are also coming down. So in the next year, definitely, there can be a percentage as well as the quantum, will definitely be very much within manageable levels and in line with our peers.

[Operator Instructions] Next question comes from the line of Amish Thakkar from Siguler Guff India Advisers Private Limited.

Sir, I just want to talk about AUM growth. In your investor presentation, you mentioned that you've not acquired any loan pools during the quarter. So is there a strategy to do that going forward given that BT out is going to be a problem in a competitive industry? So how do we think about acquiring loan pools from players?

[indiscernible] the commercial call, we will take if rates and the quantum are all out, so first, we just take a call. We have not clearly decided that we should go ahead or not. But if opportunities are there and if rates are favorable, definitely, we will have a look.

Okay. But there's no guidance in terms of -- there's no...

I don't want to give a wrong detail. Definitely, based on commercial, we will take a call.

Okay. And in terms of GNPA, sir, for the quarter, what's the fresh slippages and recovery for the quarter?

For the quarter, the slippage is around INR 88 crores, and we had recovered [ INR 134 crores ].

Next question comes from the line Bunty Chawla from IDBI Capital.

If you can share the restructured assets number because it is not visible in the presentation. If it is any outstanding standard restructured assets. And also how they are performing, is the moratorium over for all the borrowers?

Okay. See, as of now, I think restructured asset, all these restructured assets have also been impacted. Either they have been declared a NPA or not at all, we do not have any more restructured assets in our book, technically speaking. So the restructured assets, there is those of us which have not been taken as either NPA not. As of December quarter, the total book is around [ INR 645 crores ], of which, the NPA is around [ INR 190 crores ] in the restructured portfolio. In fact, the NPAs have come down compared to the previous quarter. And there has been an improvement also in the total restructured book in the previous quarter.

Okay. And sir, if you can share Stage 1 and Stage 2 number. You have given the joint gross Stage 1 and gross Stage 2 number.

Stage 1, I do not have. Stage 2 had around [ INR 100 crores ]. See, we are around INR 1,600 crores in the previous quarter. Now the number should be around INR 1,500 crores.

Okay. Okay. And sir, can you share the -- your outlook on the net interest margin as the cost of funds seems to be rising every quarter?

I think we will be able to maintain our guidance, 4.5. So definitely, we will be able to maintain that.

And sir, lastly, in the presentation, Slide 15, you have shared the movement in the borrowing cost. Sir, it seems that weighted average borrowing rate has increased from 7.2% to 7.7% from September to December. But if I see the cost of borrowing made during, so my sense is that incremental credit cost or incremental cost of borrowing, which we are doing has not much changed from 7.2% to just 7.3%. So how come the movement in the weighted average has increased by 40, 50 bps kind of a thing? Any specific reason behind that?

Yes, we have a calculation. But as you will read that during the current quarter, we had the bank increase the MCLR. See, most of our borrowings are MCLR-based at the exact numbers under the calculation amount, but during the current quarter, because of the MCLR increase of various banks, our cost of borrowing [indiscernible]. And we were able to pass on most of the cost of borrowings. And as I told in the previous conference call also, see, we reset other interest rates every 6 months as far as the bulk of the asset. Around 40,000 under our accounts, we reset. All other assets, we are just resetting every 6 months. So definitely, all this increase in cost of borrowing will get repriced in our advanced portfolio in the coming months. So the cost increase of this current quarter will get repriced in our book in the coming quarters in full.

Next question comes from the line of Sanket Chheda from DAM Capital.

My question was again on disbursements. That -- one reason that you mentioned, the subsidy that you received, then is that amount -- so if we can repeat that? And what were the other reasons for disbursements to be slightly lower this quarter? Because as far as I see total drawdowns have not changed. So relative to competition [ is not through ] last 3 quarters, total drawdown has been around INR 550 crores versus INR 630 crores in Q4. So it is -- that is mainly because disbursements have slowed down sequentially. So what led to that other than the subsidy and the technology integration that we were doing? And how do we see it in coming quarters?

See, the subsidy was not a factor as far as disbursement is concerned. Subsidy was a factor for our AUM, okay?

So I'm saying AUM growth is lower. So one reason was subsidy that you have received? And...

Sir, I will not say this is bad. See, this INR 50 crores are something that I'm talking as far as this IT replacement is concerned. Okay. The other thing, I think around [indiscernible] there are some disruptions. I think we will admit that. We are comparing with the 20-year legacy system, slowly when we are moving to a new system overnight. There will be some disruptions because we need to train our staff. We need to train our entire system, all people, and there will be some problems when systems get moved and all that. Because of this, there were some disruptions. Other than that, I don't find any reason. Definitely, we should have and something around INR [indiscernible]. This could be one of the reasons. But as I said, this first quarter is a relatively weak quarter for the company also. I was telling you on for the last 6 or 7 years, I have data. It's up to a [indiscernible] year all other years despite of our IT issue, this particular quarter disbursed about INR 696 crores is the highest. So that's not a big issue as far as we are concerned.

The one-off problems that you are saying, sir, so I suppose it would be beating when you are guiding now from here on, for not just next quarter, but for FY'24 as a whole, where you're guiding 15%. So is this one of things would be baked in, right, in your estimate while guiding it?

Yes, sir. Sir, you correctly said. So definitely, this IT platform then will be definitely a game changer in the disbursement in the coming years. And the first year we see, for example, mobile applications, where we heard additional add-on applications will be possible [indiscernible]. So the company will definitely benefit because of these things. That's why I'm saying for the next year almost this may be a one-off issue. But next year almost definitely, company will be benefiting both in AUM growth as well as in disbursement.

Okay. And sir, on margins, we get to you clearly, we are currently doing about 4.8% since 2, 3 quarters, you mean it would stay here or maybe a marginal moderation around 4.5% is what you were guiding in terms of margin?

Yes, yes. Now we are around 4.8%. And we have graded around 4.8%. Definitely, we will be around 4.5%. Definitely, there will not be a big as far as margin is concerned.

[Operator Instructions] Next question comes from the line of [indiscernible] from Investec.

I just missed on the subsidy numbers. So can you please repeat the subsidy number that you are receiving?

Subsidy amount was around INR 40 crores last quarter. This quarter also, we have received some odd INR 50 crores so far.

INR 50 crores, sir?

Yes. This quarter, that is January to March quarter. This fourth quarter also we have already received around INR 50 crores.

Next question comes from the line of Praveen Kumar from Equitas Capital Advisors.

In your data on the mix of the loan portfolio, we observed that the proportion of loan against property has gone up from 18.8% last year to about 20% this year. So my question was, do you expect -- I mean, given your guidance of strong growth for next year, do you expect this proportion of loan against property to grow further from this point onwards, given that your asset quality experience in that segment hasn't been so good?

Thank you Mr. Praveen. See, we said -- as far as our internal budgeting is concerned, we can go up to 25% [indiscernible] property is concerned. And just around 20.1% as of now. And let me also make it clear just, because we are moving slightly higher in the loan market portfolio. There will not be any compromise as far as the quality of [indiscernible]. See, even for a loan against property, we will see the similar scope, we will see the repayment possibilities. All other issues will be taken into consideration before giving the sanctioning loan against property. Even loan against property, the quantum is also determined. We will add the [indiscernible] INR 10 crores, INR 20 crores [indiscernible]. So the quality as well as quantity are being checked when [indiscernible] is being given. And even in interest rate, that's because the loan against property, I cannot charge anything extraordinary high interest rate and it is not possible also, because the market will not take it. So all said and done, even if you have loan against property, [indiscernible] maybe slightly higher than the salary segment or the standard segment. It's not that a loan against property, there will be a compromise on quality. Maybe there is some cross-subsidization happening because as far as the loan holding on portfolio is concerned, we are moving more and more to the best to quality portfolio. So there will be some cross-subsidization that we are going in the loan against property portfolio. But let me make it very clear, even in the loan against property portfolio, we will not be going beyond 25% [indiscernible] cost.

That's good to know. But could you specifically talk about compared to the previous credit cycle when you -- the company suffered some higher delinquency in the loan against property segment. What are the things -- what is the underwriting differences that you are employing this time around to kind of avoid that?

See all the risks that we had [indiscernible] previous things have all been factored in our lending platform as well. Like from the quality of customers and the type of customer we're taking, [indiscernible] that all customers are being taken out. The CIBIL score, the interest rate, see, that's because it is a loan against property -- just because [indiscernible] we will not take the average indicate [indiscernible]. See, for example, even in -- even though we have increased our loan against property portfolio, our average ticket size remains same. So that's what I was saying. See, even in the LAP portfolio, we are having tried [indiscernible] quality of the customer before agreeing for that. And just for information, the fair quarter, that is the third quarter, there are not even one proposal, which we into the Board level. The Board is a whole briefing. So we have not taken even one proposal to the board, which means the quantum of such portfolio is also being monitored. So I will make it clear. But yes, there is a slight increase in the LAP portfolio compared to the previous quarter. But let us make it very clear that quality is not at all compromised. I do not want to talk about the past, what happened in the past and all that. But present management is very clear on the quality of such portfolios.

The next question comes from the line of Amit Mehendale from RoboCapital.

I would like to discuss about BT out again. See, typically a lot of time -- am I audible?

Yes, yes, it is.

Okay. Great. Typically, a lot of times, a large portion of BT out could be, I mean, several reasons, but it could also be due to data security, where our loan book data is compromised or leads to outsiders and the competitors may be calling our customers and switching with a lower rate. So that is one possibility. The other possibility could also be DSAs or employee incentive policy maybe such that minimum holding period is not there or the minimum holding period is lower. So DSA may give kind of a file. And then once the incentive is paid out, the same loan book will move out after a year or so. So in the DSA makes money and the file goes from one [indiscernible] to another every year. So I mean, some of these teams have been prevalent in the market in the past. I would just like to know your view on this for Repco in particular.

See, some of the things are there. These are all [indiscernible] issues, we cannot correct like we were the -- you view from the DSA [indiscernible]. I think as an organization, we cannot prevent these things, because [indiscernible] [indiscernible] that we can do. But we are trying to prevent. As far as interests are concerned, we are now somewhat agreeable for any interest rate deduction if the customer is good. We see the CIBIL score and all that. We have our own parameters. If this particular customer fits within all our parameters, we do not mind reducing our interest rate so that the customer doesn't go. That is one issue. Then we are also -- how much the customers move for us on top of products. So we are also giving some top-ups for our existing customers, so that they do not move out. All these are there and we -- for exceptionally good quality customers, we are also offering interest rates even below our [indiscernible]. So with all this, we are trying to retain our customers risk. But [indiscernible] BT outs are not totally possible. Some will have to happen, maybe because of some other reasons, maybe the same property, we will use it for these other business requirements. That things maybe there. Some of the banks defer some [ low rate ] costs, they maybe able to increase these customers. So such things are there. But despite that, I'm glad to say that these BT outs are under control. We are monitoring it. And we are [indiscernible] we have got a product of course some costs. We have got a product where we know the customers who have a tendency, who are likely to move out and all that. So we ask our people to talk to such customer to see whether it is possible we can retain and all that. So we are taking our own steps.

Great, sir. My just another question is that we look at our internal data, we may find some interesting data points on how the files are moving out and then may allow us to take action around that. Thanks for your comments. That's it for me.

We are monitoring that.

Next question comes from the line of Sarvesh Gupta from Maximal Capital.

I just wanted to understand is the new IT system that you had mentioned about, how will that sort of help you gain higher disbursement? And what sort of disbursements are we looking for this quarter? Or is this IT system not yet implemented for this quarter? Or will it be implemented for the next quarter?

So the new IT so I don't want to name the vendor at all. The new IT system is Oracle based, okay, compared to the previous one, that is one. Second one, as far as this quarter is concerned, there may be some disruptions, which will continue. See, last quarter, we introduced the system, in December month we introduced the system for all new sites. From the current performance, everything is superbly on this, our existing accounts from the legacy system are also moving. That is the migration has taken place in full. So as far as this quarter is concerned, there might be some disruptions because of this IT system. But next year onwards, because of the new platform, we are trying to use this platform for moving out to the customers. Moving out to E&T and digitalization, the mobile banking app, which will facilitate the customers to [indiscernible] from his place itself [indiscernible] DSA -- for facilitating our DSAs to log in the details, some key space, of course. So the pay-forwards will be less, more movement will take place digitally. These are all our plans. So we will be competing with best in the IT system in the coming years. That is our plan. We did see hope to increase our numbers as well.

Understood. And sir, on the BT out. So are there any terms and conditions, which we normally put for our loan customers because of which it creates some sort of frictional cost for them to move out? Or is it like for the customer, who wants to move out, there is no other sort of fees or any penalty that they have to pay?

As of now, because of regulatory units, we cannot charge any customer for moving out, okay? This prepayment penalty is not available upon. And as our terms and conditions are concerned, it is lying within the [indiscernible], we are not stipulating any term, which is at variance with or industry practicals. But people move out mainly because of commercial consideration. See, I don't see customer when it comes to our particular company, there is CIBIL score maybe minus 1 or maybe even less than 750 and all that. But based on this payment track record, it is CIBIL score we definitely move up. So based on the new CIBIL score, he gets a better rate for organizations including banks and all that. So that is the main reason why people move. The 2 things here in the competitive environment with a split of nearly 3%. So we are not in a market where competition is less. We're in a market where we are competing with the best. So that is one of the reasons why people move out.

Sir, on the board level changes, we have seen quite a lot of changes in the past. So is it all done? Or there's something left there? Or what's happening if you can throw some more light on that?

Old level cases are all over, sir. We now have a 12-person board in our [indiscernible]. Our promoters, they have 5 people, independent directors are 6 in our board. So we have a [indiscernible] personalities, including [indiscernible] in this household finance companies. [indiscernible] executive senior, executives from banks, from private financial institutions, all people are there in our Board. And the Board is giving me good guidance to the [indiscernible] management on how to go about and [indiscernible] and we [indiscernible] a lot from other Board competition.

Next question comes from the line of Himanshu Taluja from Aditya Birla Sun Life AMC Limited.

Most of the questions have been answered. Just a few ones from my end. Sir, on the new tech platform, which you have installed, what was the total approximate cost of this? And how one should see the P&L impact of this basically cost? If you can throw some light on this? Also one should look at your other OpEx basically in the near term. Second is -- yes, probably if you can answer this project, then I can ask the second one.

See the total cost we estimate is around INR 50 crores, including the security cost, IT security costs. The direct cost is around INR 40 crores and INR 10 crores is security cost, okay? That is under implementation. Around INR 20 crores we have already spent that has been capitalized, okay? I think that answers your question right.

Sorry?

See, total cost is INR 50 crores, including a security related cost of INR 10 crores. So INR 40 crores is a direct cost for the product. It is still at implementation, premiums are being made in stages. So far payments paid to vendor are around INR 28 odd crores.

Okay. So we have taken the P&L impact of INR 28 crores, if I understood correctly?

[indiscernible]

Sir, your voice is not audible. I can't hear you.

So this INR 28 odd crores is already capitalized. The P&L cost is, see, there are some [indiscernible] in the [ NTR ] process. Some of which could not be -- some of which we have not capitalized. Some of the payments to these consultants or the testing agencies and all, we have not capitalized the payments, which we made during the last quarter, we had not capitalized. It is not that the capital expenditure has not been there.

Sir, second question is on the asset quality front. On the current stress pool, how one should have expect the recovery on this stress pool? And secondly, your provision coverage has improved from last year, 30% to 46%. At what level you wanted to or what is your endeavor to keep the provision coverage on your stage [indiscernible]

Let me assure you because in our view, the most [indiscernible] as far as the slippages are concerned. And the provision coverage ratio, we don't have a specific target number. We are adequate -- we have got adequate provisions. I think people should be happy that we have a better provision coverage ratio. Because this is a buffer that we have for any future eventualities.

Okay. Okay. So from the next year once -- now we have the normalized slippages and your provision coverage is also adequate on the current set, so one should expect a normalized credit cost going ahead?

Definitely. Definitely, sir. That is our expectation.

Next question comes from the line of Rajiv Mehta.

Can you hear me?

Yes, yes.

So sir, a couple of questions from my side. Firstly, I wanted to get some picture on disbursement. So can you give us some flavor in terms of what is the average CIBIL score of the new accounts being onboarded? What is the -- has there been any shift in ticket size incrementally from what it was at the portfolio level? Is there any change in property profile being funded now? And lastly, what has been the changes in the sourcing mix? So if you can just answer the profile of new business in these 3, 4 dimensions.

As far as sourcing is concerned, there is a slight change. The DSA percentage might have gone up from around 20-odd percent. Now it will be around 25%. I don't have the exact number now. Maybe I can give you offline. The DSA -- that is sourcing through your DSA would have gone up couple of percentages, that have gone up to around 25% overall. As far as ticket is concerned, there is not much change quarter-on-quarter. But year-on-year, there is a change. See, quarter-on-quarter, 18.5% was ticket size. December quarter it's 18.4% -- sorry, INR 18.4 lakhs. Year-on-year, it was early at [ 15.3 ]. That is for quarter, I'm saying. And now it is [ 18.4 lakhs ]. So from 3 lakhs increase is there in the per ticket size. This is for the quarter. Company as a whole has not much change. Company as a whole is at 14.9%, is the total. So the incremental portion, it is 18.4 lakhs. Company as a whole, the average ticket is 14.9% as against 14.6% year-on-year.

And about the credit profile of customers in terms of Euro score?

I think you would have seen in our presentation, we -- as far as the home loan is concerned, we are moving slightly in favor of salary price. Salary price is slowly improving compared to non-salaried decline. And the CIBIL score is now improved. It is averaged 750 -- 740 now. The incremental CIBIL score is 740 now. So to that extent our future is safe.

And in terms of property profile and underwriting, there is no change in policy, right?

No.

Next question comes from the line of Rupen Shah, an individual investor.

Can I have a provision figure on our Stage 2?

[indiscernible]

Provision figure on Stage 2 assets?

Provision on Stage 2, one minute. We have INR 113 crores, sir.

INR 113 crores. And How do you see this Stage 2 moving forward now onwards?

Stage 2 is under control. In fact, it is coming down slowly. And we see to come down below 10% of our [indiscernible] that is our expectation.

Because compared to rest of the housing finance company Stage 2 are way ahead of those -- your competitors are quoting 2%, gross 2% and 3%, and we are having a 10%, 12% growth in Stage 2.

I'm not here to comment on the competitors. But as far as we are concerned, yes, definitely, we are closely monitoring our overdue portfolio. All the [indiscernible] are being monitored almost on a daily basis. And [indiscernible] to bring it to below 10% even by the end of this current financial year. Going forward it will be in line with the industry. That is for sure.

So now my only worry is now its from Stage 2 to Stage 3, are there any danger of we are not being able to achieve what we want to achieve for FY'24?

Nothing of that. You can have some confidence on the present management. Stage 2 to Stage 3 [indiscernible]

[indiscernible] 5 years and actually the performance of the last 5 years, okay, there was a COVID. But the performance of the management is not up to the mark compared to the competitors. That's why the question. That's it.

So I do not want to comment on the past, sir. As far as the asset management is concerned, the entire management inter-field everybody is geared up as far as [indiscernible]. Movement from Stage 2 to Stage 3 may be inevitable, but there are very high numbers from Stage 2 to Stage 1. I can give you that assurance.

Ladies and gentlemen, due to time constraints, we have reached the end of question-and-answer session. I would now like to hand the conference over to Mr. Rajiv Mehta for closing comments.

Yes. Thank you, everyone, for joining. Thank you to the management of Repco for giving us this opportunity. And sir, would you like to make any closing remarks before we end it?

Thanks, Rajiv. Thanks all the people who have come to this conference call. I'm very much thankful for all the questions. On the [indiscernible], I would like to give on the present management, the entire present management as well as the entire field staff, everybody is aware, geared up and whatever reasons we have given, we will -- we are striving our hard impression to agree on the numbers, okay? Thank you very much. Thank you for the opportunity.

On behalf of Yes Securities, that concludes this conference. Thank you for joining us. You may now disconnect your lines.