Satin Creditcare Network Limited (SATIN) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q1 FY '25 conference call of Satin Creditcare Network Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. HP Singh, Chairman-cum-Managing Director of Satin Creditcare Network Limited. Thank you, and over to you, sir.

Thank you, Aditya. Good morning, everyone. We thank you for joining to discuss our performance during the first quarter of financial year 2024-2025. Amidst the news of flood and heavy rainfall in few regions, I hope you and your family are safe and keeping healthy. I believe you have had the opportunity to go through our quarterly results and investor presentation. If you have not gone through them yet, you can access them on our website or through the stock exchange. I'll start the call with the announcement that we have released our annual integrated report for financial year '23-'24, and is available on the official website of our company. This year's theme, growing with grid, conquering with capability, captures our holistic view of our organization, providing a thorough dive into our resilient business model and integrated reporting. As we reflect on the performance of the reporting quarter, we acknowledge that it was a challenging period to navigate, marked by the extreme heatwave across regions and disruptions due to long phase of general elections for a large part of the quarter. This, coupled with the fact that a significant portion of our loans are dedicated to agriculture and the allied sectors, and hence, first quarterly typically experiences a slowdown due to the harvesting season, and it made it harder to manage. However, we successfully managed the challenges through proactive measures. We identified stress building up in certain areas and took the necessary steps to address these issues in time, ensuring stability and effective steering through this time. To effectively navigate this seasonally moderate quarter and to proceed cautiously in the upcoming quarters, while maintaining a healthy portfolio quality, we have implemented the following measures. We have instituted a dedicated collection team for different DPT buckets driven by the findings of our data analysis. Initiated from Q4 '24 onwards, this measure is already showing promising results, positively impacting our portfolio quality. During Q1 FY '25, we appointed a Credit Manager for each branch responsible for 100% field verification of all loans disbursed in a month, including existing clients. This measure has enhanced our loan verification process, ensuring accuracy, reducing risk and improved overall portfolio quality. As of now, this initiative is implemented across 100% of our branches. Our average FOIR per customer for existing clients stands at INR 6,400, which is almost half of the RBI prescribed limit of INR 12,500. This demonstrates our commitment to maintaining a healthy credit risk profile by not overleveraging our borrowers. As part of our strategy, we have been disbursing only 1 loan per client to effectively contain and manage our credit risk for clients. Additionally, in an effort to mitigate credit risk, we have decided not to onboard new to credit clients in 15% of our identified branches. This measure was initiated from February '24 onwards. To augment the effectiveness and efficacy of our center meetings, we are calibrating our loan officer's span to ensure better control of center meetings. This move is driven by our commitment to enhancing operational efficiency and delivering improved service to our clients. We have implemented risk-based pricing strategy basis the vintage and credit history of our clients. This means that the interest rates and loan terms are adjusted basis on the client's agreement history and tenure with us. By considering the clients' track record and loyalty, we can offer more competitive pricing to long-standing clients while appropriately managing this for newer clients. This approach not only rewards our loyal clients, but also ensures a balanced and prudent risk management framework. Commenting in the ongoing concern, we state that as of now, we have not encountered any significant stress in UP and Bihar. However, aligned with industry trends, we are observing some challenges in Odisha and Rajasthan, for which we have already taken proactive measures. As a result of the aforementioned measures, we are revising our guidance on AUM growth to 20% year-on-year for the year FY '25 -- sorry, growth of 20% for the year '24-'25. Despite the challenges we face, we remained optimistic and are continuously assessing ground development without revising our guidance on credit costs for now as we witnessed extraordinary events in Q1 as discussed earlier, and there are seasoned shots in our major geographies presently. Basis these events, we shall be able to give credit cost guidance for this -- for the year with Q2 FY '25 results. The guardrails recently recommended by industry body MFIN, which imposes a cap on the microfinance indebtedness per client to INR 2 lakh and restrict the number of microfinance lenders to 4 per borrowers, reflect the industry's commitment to sustainable growth, leveraging the substantial credit while advancing opportunities available through the microfinance channels. Over the years, the SROs have been instrumental in strengthening the sector ensuring its resilience, reinforcing our collective efforts towards a stable and progressive industry. I'm happy to share that our portfolio is well within the guidelines as we are a responsible financial services company. In the last 7 months, we have disbursed 11 lakh loans, which are all in compliance with the guardrails. Our average FOIR per customer for existing clients is 48% below the RBI prescribed maximum limit. Continuing our dedication to excellence and innovation in the microfinance sector, we have consistently strive to empower communities and drive financial inclusion. As an evidence to our efforts and impact, we are happy to share that we have been recognized as The Dominant Microfinance of the Year award at the 17 NBFC and Fintech Awards 2024. Additionally, as part of our commitment to championing a culture of inclusivity, innovation and continuous growth, we were recognized among the Top 100 Companies to Work for in India 2024 across all industries by GPTW, India. Now talking about operational performance during the quarter on a consolidated basis. Our AUM grew by 23% to INR 11,706 crores. On a stand-alone basis, the GLP stood at INR 10,485 crores, up by 25%. The disbursement stood at INR 2,114 crore on consolidated basis and INR 1,997 crores on a stand-alone basis. Our borrower base grew by 15%, while our branch infrastructure stood at 1,447 branches, up by 10% Y-o-Y. We also ventured into a new state Nagaland, making a significant step towards in our mission -- step forward in our mission to fulfill the micro-crediting need of underserved communities. This expansion brings our presence to a total of 27 states and union territories. We have consistently grown our footprint across the country, harnessed numerous prospects for business growth and invested in decisive actions that deliver greater shared value for multiple stakeholders that is a strong regard for customer needs. Coming to the asset quality, we observed a temporary increase in delinquency during the first quarter. This was due to the severe heat wave across several regions, operational constraints during the general election, which impacted regular collections and follow-ups in the delinquent buckets. On-book GNPA stood at INR 219 crores, which is 2.7% of the on-book portfolio. The company has sufficient on-book provisions amounting to INR 200 crores as on Q1 FY '25, which is 2.5% of the on-book portfolio. Provision required as per RBI regulation is INR 150 crores. We have adequate measures in place and are working to ensure that delinquency trend should stabilize in the coming quarters. Maintaining a good collection discipline, our collection efficiency stood at 97.9% and the collection against write-off pool stood at INR 6 crore in Q1 FY '25. Coming to our financials now, the company's consolidated net interest income grew by 38% to reach INR 383 crores, in line with the loan portfolio growth in the quarter. The pre-provisioning operating profit stood at INR 213 crores, registering a growth of 60% on a consolidated basis. The net interest income and pre-provisioning operating profit on a stand-alone basis is INR 353 crores and INR 207 crores, respectively. Our NIM for the quarter stood at 13.4%. The consolidated PAT for the quarter grew by 20% at INR 105 crores, resulting in an ROA of 4% and ROE of 17.2%. This marks the sixth consecutive quarter in which we have achieved an ROA of over 4%, reflecting our strong cross-cycle performance and sustainable profitability. In line with our steadfast dedication to optimizing operational efficiency and the resource allocation through our -- throughout our operations, our OpEx to average AUM ratio witnessed a consistent improvement, dropping to 5.5% on a stand-alone basis, decreased by 27 basis points on a year-on-year basis. Likewise, our cost-to-income ratio improved to 41.4% as against 48.9% on a stand-alone basis. On the borrowing front, during Q1 FY '25, the company secured debt funding of total INR 467 crores from OEB, the Dutch Development Bank of Austria and FMO, Dutch Entrepreneurial Development Bank. Such partnerships ensure our continued ability to provide critical financial services to underserved communities and support our mission to drive sustainable economic growth. The company has ample liquidity of around INR 1,400 crores and a healthy CRAR of 27.9%. I'm also happy to share that -- with you that we have welcomed Mr. Joydeep Datta Gupta, former Partner of Deloitte India; and Ms. Jyoti Davar, Director General at FICCI to our Board as independent directors. We are confident that their extensive experience and deep expertise will be invaluable as we continue to strengthen our governance and pursue our growth ambitions. As mentioned earlier, this quarter presented several challenges, however, with prudent strategies in place, we did our best to navigate these difficulties effectively. We focused on optimizing our operations, maintaining strict financial discipline and enhancing our customer engagement, which allow us to achieve stable performance and lay a strong foundation for future growth. Both of our subsidiaries are profitable and are creating the path towards future growth. With a substantial support from the government for the MSME and housing sectors in the Union Budget 2024, we are well positioned to capitalize on these opportunities. This boost will further accelerate our efforts, enabling us to expand our reach, enhance our offerings and drive sustainable growth across our operations. Now let me run through financial and operational highlights of the company, starting with consolidated highlights. We have a customer base of 35.1 lakh customer as on 30th June 2024, with presence across 1,447 branches and 425 districts of India. Our top 4 states contribute to 56% of total AUM in Q1 FY '25, and the states are UP, Bihar, West Bengal and Madhya Pradesh. The total revenue for the quarter stood at INR 634 crores, up by 37% Y-o-Y. Coming to stand-alone highlights, our average ticket size of MFI lending for the quarter stood at INR 49,000. We have a well diversified customer base of approximately 34.1 lakh clients with 76% rural exposure, 55% of our clients belong to first cycle as on June '24. Pan India presence with 1,301 branches across 419 districts. PAT for Q1 FY '25 stood at INR 103 crore, ROA at 4% and ROE at 15.1%. The network stood at INR 2,770 crores as on 30th June 2024. GNPA as on June '24 stood at 2.7%. The overall provision coverage ratio increased to 91% versus 66% at June '23. Total borrowings stood at INR 7,403 crores as on 30th June, 2024. Debt-to-equity ratio as of 30th June stood at -- 2024 stood at 2.7x. As on 30th June 2024, 96.7% of our districts have less than 1% of portfolio exposure. In our constant endeavor to enrich our customers' life, we provide financing of various products, which include loans for bicycles, solar products, home appliances, consumer durables, water and sanitation facilities. An update on subsidiaries. Through the collective efforts of our subsidiaries, we aim to extend our spectrum of financial services to our clients. By harnessing the strength of our microfinance outreach, we endeavor to extend affordable housing and retail MSME loans specifically to clients who have completed more than 2 loan cycles with the company and have higher credit requirements. Satin Housing Finance Limited has now reached an AUM of INR 769 crores, which grew by 50% year-on-year, having presence across 12 states with 7,645 customers. SHFL has a 100% retail book. The quality of the portfolio remains intact with GNP of 1.4% as on June '24. The company has 27 active lenders, including NHB Refinance, CRAR of 49.8% and gearing of 2.4x. PAT for the quarter stood at INR 51 lakhs, credit rating of A- stable from ICRA. Satin Finserv Limited, the company's MSME lending arm, has reached an AUM of INR 452 crores. We are running down the business correspondent book and focusing on building retail MSME going forward. MSME book grew by 41%, CRAR of 44.9% and gearing of 1.4x. PAT for the quarter stood at INR 1.7 crores. Credit rating of A- stable from ICRA. I'm pleased to share with you that we are adding a new wholly owned subsidiary to our offerings in the technology space. This company will aim to provide technological solutions to the financing services sector. This is with our vision to leverage our technological prowess and also diversify our revenue streams. In closing, as we forge ahead on our journey of growth and innovation, we are confident in our ability to achieve greater profitability while ensuring operational efficiency. Our strategic vision and dedication to excellence position us -- bodes us well for a prosperous future. Thank you for your time. With this, I would like to open the floor for questions.

[Operator Instructions] Our first question is from the line of Sameer from JM Financial.

Just 2 questions, right? One is on the operating expenses front. Is it fair to assume that the investments that you have made on collection teams, et cetera, have led to a sequential uptick in OpEx? And secondly, on yields, how do you think of yields? Would you have reduced interest rates in the last couple of quarters? That's it from my side.

So, Sameer, the yield will remain stable where we are. They could probably be just, I think, in a band of about 0.2% or 0.3%, which will oscillate, but we won't have any kind of a dip in the -- in our yields. That's point number one. Point number 2, in terms of...

The sequential increment of OpEx.

So OpEx, our sense is that we've put in our collection team during this quarter. So whatever little increase had come has also been factored in. Our own sense is as we go forward, I think this will not have too much of a bearing in our OpEx. I think if you really look at the cost-to-income, I think, ratio, we've gone down substantially from a 48.9% to about 41.4% right now. So our sense is the OpEx to average AUM in terms of even the denominator base increasing will probably remain stable. There's no significant increase on those. I think there will not be kind of an increase in this OpEx to AUM also.

Sure. And just one final thing. The 20% growth guidance is on a consolidated basis. Is that correct?

Absolutely, yes. Yes.

Our next question is from the line of Agastya Dave from CAO Capital.

It looks like a fairly decent set of numbers given the problems that cropped up this quarter. Sir, I had 3 questions. One was, can you go into like the states which are facing trouble? So there was some trouble in Punjab in 2 districts. So what is the status there, Amritsar and, I believe, Jalandhar? Then you mentioned that there are problems that even we are seeing in Rajasthan and Odisha. So can you go into some details whether these are a few districts? Are these related to some local political issues? Or is there something else going on? What is the actual nature of the problem and how big the problem is? And then you also mentioned that UP, Bihar, you are not seeing anything. I don't know whether you included those 2 states because they are substantial for us? Or is there actually some problem that somebody else is seeing? So that is my first question, sir.

Okay. So let me start from the major one. The UP and Bihar, why we specifically mentioned about that because there was a lot of talk going on basically that there was a news item where you have to go slow on the RBI's this thing that I think it was some advisory or something that we have to go slow on UP and Bihar. That is the reason why we wanted to specify our stand in what is going on in UP and Bihar. That's the reason why we give it, not because we are seeing any kind of a stress across over there. So that answers probably your third question on this. Regarding Punjab, I think we've -- as we said earlier, we have very, very stable across over there. Our collection efficiency even now is about 91%. The districts, which were there, have probably stabilized. In fact, we started a little bit of our disbursements across over there, which gives us that kind of impetus that we are able to -- we've been able to navigate the crisis to a large extent. And I think it is slowly and steadily coming up the curve right now. So that answers your question on Punjab. And Odisha and Rajasthan, I think we've heard about in various quarters in the sector in itself that, yes, there is some stress which is building up in a few pockets of Odisha and Rajasthan, it's not entirely, but just to give you the scene, we already were under -- we were already taking those corrective measures, which we enumerated to you during the opening of my earnings call. We've done that. We are looking at it far more diligently, and we have a handle on it. Our own sense is, I think that it will probably be contained by us. We are probably at it, but it's not something which is probably significant. We just wanted to highlight it so that we want all our stakeholders to be a little bit aware of where there is a slight stress, which is coming in. So that is what probably answers your Odisha and Rajasthan. I think all the 3 we've been able to answer.

Yes, sir. Sir, my next question is, there are a lot of regulatory noises, especially from the Governor himself about the interest rates that -- the sector as a whole is charging. So are these noises now becoming threats because they are sounding like it? What exactly is the backdrop which is prompting the regulator to use such like a fairly -- I don't know what adjective to use for it, but it looks like regulator is really worried? So what's the background?

Agastya, don't use adjectives. Adjectives don't probably give you the right picture. So as you said, there is no threat as such. I think it's probably somewhere when you are serving the underserved communities, you definitely would like to give them probably the best out of the terms of the interest rates which is charged. And we've also brought it down to our vintage clients. As we said, we've done risk-based pricing across over there. But I think what is more important for us to probably look at it and I think, this is like an ongoing thing, which will probably go on. As we've seen our cost of funds go down, as we remain stable on our NIMs, we feel that I think that increase or maybe the better performance in terms of our cost of funds should be given back to the borrowers as such. But you have to look at the holistic view of complete picture as such. It's not just the interest rates. It's also how you are able to drive your credit cost and all the factors put together, you've got a cost of services to drive collections, to reach out to them. This is a doorstep service, which is a process. I think you have to keep everything in mind. So my sense is I think all the stakeholders are aware of this. And I think everybody is taking due steps to make it far and far more affordable for our borrowers across and we've also done the same.

Right, sir. Sir, because Governor Das is a very conservative central banker, and he is a very reasonable man as we have seen over the years. If he is pointing out something then, I was just wondering what exactly -- I mean, what exactly are they seeing. Final question. In this quarter, consolidated numbers, other expenses, there is a quarter-on-quarter jump as well as a fairly substantial year-on-year jump. So this INR 41 crores, is there anything which is one-off here? What exactly is the -- why exactly is there such a big, big jump? It's like sticking out.

I told you I don't know what number are you talking about.

This is the other expenses. This is INR 41 crores compared to INR 33.5 crores of previous quarter and then INR 31 crores last year. It's fairly substantial jump.

Branch expansion, this thing. So we're opening close to about 300-odd branches this year. And we've opened about -- close to about 70, 80 I think in this quarter. So I think...

Nothing extraordinary you say?

No, no, no. Natural course of business.

No one-off, nothing extraordinary?

No, no, no. No one-off.

[Operator Instructions] Our next question is from the line of Amit Agarwal, an individual investor.

Yes. So I had a question on written-off assets. What kind of written-off asset pool we have as of June 2024? And I can see that we are not able to recover much from the written-off assets that happened during COVID and post that. So what options do we have to recover those assets like selling it to ARCs or giving higher timelines to those borrowers? So I think I just want to have an understanding that what happens when the assets are written-off. And does it just go away or we get chance to recover in future timelines?

So I think, Amit, you'll have to understand one thing. So our written-off pool is written off only in our account books. But for the operational field, it's never been written off. So we've got pool starting from demonetization, which was what, about 7 years ago, which my boys still are able to bring somewhat a little bit from there. So for us, as a company, we believe that till the time I think we exist and the borrower exists, if we're able to touch base upon them and get back the money, that is what we know. And that's probably the most soundest of policy, which we've been able to adopt for the last 7, 8 years. The written-off pool starting from demonetization till date would be close to about INR 1,200-odd crores, which is there. Now getting money from this kind of a pool, which is 7 years old, 6 years old, 5 years old, 4 years old, is a very tough task. Half the time you will not find a borrower, the addresses will not be there, it will be very difficult to take them out. But in spite of that fact we've got our dedicated teams, which I think, if I remember correctly, last year we've brought in about INR 48 crores to INR 50-odd crores from that pool. This year, we've started on a lower note, but we still brought in about INR 6 crores total from the write-off pool. Our sense is if we just keep at it, at some point of time, the borrowers get motivated to probably bring it back till the time we are able to find them, but that's the policy which we follow. And I think it has paid us good dividends across the years for us to bring in money from the write-off pool.

So can we not sell it to ARCs, like are there not ARCs who are buying those distressed pools?

Well, they will not have the collection mechanism. We would have to do that ourselves. So might as well when we are doing it ourselves, let us do it by ourselves and why pay an additional cost or something like that. But...

But that's costly. Collecting money from the old pool, it's very costly also, right?

No, it's not costly. So we've got separate benchmarks for us. We see in a different fashion. So let me just give you a very small example how to do it. We pay a certain amount of salary to our boy. For us, if we get 3x post that, that's the best we can do across it and we try them to get 3x of what their salary is and their operating cost is. So it's never out of pocket for us, and this has always helped us in terms of how we look at our P&L based on these dedicated people to do collections in the buckets.

That's helpful. Sir, my next question is on our subsidiaries like these housing finance in particular. So housing finance is a big area and big opportunity. Recently, Shriram Housing Finance sold their housing subsidiary. So my one question is -- question one is like, when can we expect to have a INR 5,000 crore AUM in Satin Housing Finance? And how are we going to unlock the value from this subsidiary in future?

Yes, I think this is a question which probably we've been saying, but I think it has probably not found real penetration in a lot of people to probably understand. I think, probably you are another person who's probably saying it in the same way. Yes, there is a huge opportunity in housing finance for us, including the MSME lending, which you're talking about. Definitely, yes, I think we would probably be crossing the second milestone of ours for INR 500 crores to about INR 1,000 crores this year in housing finance. We are looking at when you said INR 5,000 crores, for us, our bench strength where we are working on is that we are able to reset in the next 3 to 4 years, definitely, yes. And yes, we'll monetize it at a certain point of time. Definitely, yes, we'll do that because that's what we have brought these subsidies up. One, to hedge our risk. Two, because we're moving from unsecured to secured to look at the cost of capital for us and also use our capital efficiently, so we are able to leverage 2 of these businesses in a separate subsidiary. And three is, yes, at a certain point of time, definitely, we would monetize these assets to bolster our capital strength on the parent company. When and which I think probably I can't give you a definitive answer, but yes, that is what our thought process is.

So what kind of NIMs we have in this business?

Well, as you would have it, we do a lot of piggybacking on our microfinance clients in the rural housing, which probably is our core area and which we've got a USP. Our NIMs average is close to about 5% to 7%, that is where it is. And we feel that's probably pretty good enough for our housing finance company to really look at.

Our next question is from the line of Rajiv Mehta from YES Securities.

Congratulations on very good set of numbers. Sir, first to understand how the delinquency pool will move from where it is right now. So firstly, if I can know what is 1 to 90 dpd pool as of June versus what was it as of March? And where do you see it settling in the next 2 quarters basis your assessment of the situation?

So 1 to 90 pool is close to about 4.5%. There is 1 plus. Out of that 2.7% is 90-plus and the rest is between 1 and 90.

Got it. Yes. Okay. And sir, where do we see this settling basis your assessment of the situation on the ground, whether the improvement will come through immediately or would it take some time? If you can just comment from what you see on the this now?

See, Rajiv, as I said, first quarter was a lot of factors, which actually externally jumped in. I think this is, again, a quarter -- I won't say a quarter, but the month where we are seeing a lot of rains and a lot of flooding across over there. So these are not normal nuances of business which we are encountering right now. That is the reason why we said we will have probably a better handle on all this by, I think, August end or so, and we'll give our guidance across over there. Our own sense is that there is nothing in the business, which probably demonstrates maybe an elevated -- a highly elevated credit cost. It's only once we are able to settle down these seasonal disturbances which have occurred and then we'll get a clearer picture. But our own sense is what we are seeing on the ground and the way we are handling it, I think we feel that it is no cause of concern where there would be very high delinquencies or very high credit cost. Let the issues of flooding and everything settle down. I think that's why we said we want to give you and everybody a clearer picture, and we'll be able to do that maybe in 1 month, 1.5 month time.

Understood, sir. And just to again slightly check on UP and Bihar. So whatever delinquency increase you saw in the first quarter for all the reasons that you mentioned, we did not see much of an increase in the delinquent pool for UP and Bihar as such. We're not seeing any stress at this point in time.

We're not. I said this is exactly what is happening. So there has been, again, floods in border areas of Uttarakhand adjoining UP. There has been flood in Bihar also, Muzaffarnagar, of course, specifically. So UP, Bihar is basically when we are talking about it, again, issues like we've got, I don't know whether you guys would know or not, but this Kawad Yatra going on for the last 5 days. The roads are closed, the schools are closed, things are there. So these do have a momentarily effect on our collections. But that is what I said. We're not seeing circumstances in businesses which probably permit to say that we have elevated credit costs, it's related to these factors. When these factors settle down, I think we'll have a far more clearer picture moving ahead. I don't want to comment on anything beyond this. So let this settle down. And I hope once it has settled down, we'll be far more -- we'll be able to address it also much better of the proactive measures, which we've already set in, in place.

Just one last thing I wanted to check was on this MFIN guardrail. And I think you just clarified right upfront in the call that for us at the portfolio level, there shouldn't be much of an impact in terms of...

That's why I've given you 11 lakh clients in the last 7 months, we're following guardrails before they even set in. And so 7 months, we started to do that. And the FOIR, which is also this thing, our FOIR is half of what we have prescribed. So we always take proactive measures as an institution always. For us, the key question is always portfolio quality. That's what we always emphasize upon.

So my second level question on this MFIN guardrail was on the industry and not specifically with Satin because there are -- maybe there could be certainly your customers who were being supported by certain lenders by being -- by committing additional lenders and they used to hold themselves as a regular or a current customer. But now with these guardrails being implemented in spirit by the other lenders in the system, can it happen that certain strata of customers will start to default because they are not getting that additional [indiscernible] which they were kind of driving?

I don't think so. I think it -- it's again a factor which we'll all have to see. We've been following it. So for us, we feel that it hasn't happened to us and so I will not have any comment on this, to be very honest.

Our next question is from the line of Ritika from Bandhan.

One is on the MFIN channel, obviously...

Ritika, sorry, your voice is very feeble. Can't hear a thing.

A little louder please.

So, I saying, ma'am, this -- sir, this 2 new things which MFIN mentioned on the number of lender exposure and also on the ticket size, it may be if I could put it that way, how are we looking to deal with the same? Where are we today in terms of what number of our customers are actually -- we are #4 or #3 for them. So that's the first question. And second, I understand you will be obviously sharing the credit cost guidance a little later, but just if you could still broadly reiterate the guidance, which is as of today for FY '25 and break the loan growth into MFI and non-MFI.

So I'll answer the first part of the question, Ritika, for you first, which is the guardrails. So first of all, for everybody's benefit, whatever MFIN has done is more of a supplementary or classificatory to whatever the RBI had actually guided us in terms of the household income of INR 3 lakh in terms of the fire of maximum INR 12,500. Even if you look at the INR 2 lakh indebtedness, it roughly translates to a fire INR 11,500. So whatever MFIN has done is to simplify it and make it more as a bite size for everybody. So that is what it is. This is why the INR 11 lakh loans that sir had just mentioned, we disbursed and they are all within the guardrails without them being announced. Now to answer the other question about the number of lenders. In our presentation, we have mentioned we are the only lender to [ 31% ] of the borrowers. For 55% of the -- so for the next 25%, we are the second lender, and for another 20%, we are the third lender. We are looking at our data scrub. We are not the fixed lender for anybody of any of our clients.

Yes. So, Ritika, this is what we -- what Aditi has just mentioned. And in terms of our credit costs, so as I said, let the parent issues settled down. As I said, we do not foresee any or maybe significant elevation on our credit cost because we feel that this is due to these factors which have kicked in for the last 3 to 4 months, flooding, seasonal harvesting, heatwave, general elections, let this all settle down, we'll be able to give you a far more clearer picture. But as I said, we really feel on the ground that yes, we are not facing that elevation, what I think probably which is not there. And what was your other question in terms of -- I think this is what it was.

I think this answers her questions.

Yes. Just the second one was on the -- if you could just reiterate the growth guidance and maybe break it up into MFI and non-MFI.

We've not done this thing. We've taken our overall picture, consolidate is what we always talk about. Our own sense is that for us, it could probably overall on the customer...

And because of any which way the base effect, MFI being the largest piece, it will always override whatever growth the subsidiaries do. So even for now, the subs have grown by 50% and 41% to pick up, but since still 88% of the business lies in microfinance. So if we grow 20% here, it's consolidated also, it will be 20% or 21% only at the current pace. So majorly, it will be driven by the core SCNL business.

Our next question is from the line of [ Rahil Shah ] from Crown Capital.

Sorry, but I joined the call 10 minutes late. So have you shared any guidance for '25 on ROE and cost to income?

No, we've not shared any guidance in terms of our ROA and cost to income. I think you can probably take heart from what we've shown in the first quarter and maybe extrapolate whatever you have to do. We've not given any guidance. We've just given our guidance for our growth that we'll be doing 20% consolidated growth for this year.

Okay. And credit costs, you will be sharing later. With respect to this growth, so which particular segments and/or regions are supposed to drive it?

I think it's overall. We are not doing segmentation as such basically because normally, we grow our existing book by about 10% by the loan number. So I think...

And in regions, you are saying like we are saying we are going to be slow in Odisha and Rajasthan, but we have entered 2 new states, AP and Telangana, then deep diving in the existing states where we are strong, Northeast is where we are strong, et cetera. So these are going to be the major drivers for the growth for us.

And lastly, any branch addition target for the year?

Yes. So we are doing about 300-odd branches for this year. I think we've already deployed about 100-odd branches, close to about 100 branches.

200 more to come.

Our next question is from the line of [ Jai ] from IIFL Securities.

My first question is, how does the stage 2 change Q-o-Q and what is the GNPA and the loan exposure in Punjab and...

Jai, you have to be louder. We can't hear you.

Yes. So can you give the number on your change in stage 2 loans Q-o-Q? And what was your exposure in Punjab?

Sorry, it's not clear, Jai. It's still not clear.

I'll get back in line.

No, if you can, I don't know, try to be louder or else.

Yes. Can you give the number of the Stage 2 loans Q-o-Q?

Which loans Q-o-Q?

Stage 2.

Stage 2 loans Q-o-Q. So Stage 2 will be 3 in the half...

So Stage 2 is broadly between 31 and 90 days. It is close to about 1%, 1.25% of the total book.

Okay. And what will be your Punjab portfolio currently? And what is your coverage ratio on Punjab portfolio?

In Punjab, the on-book portfolio is INR 336 crores, and the impacted branches are only 10, which are around Amritsar.

Okay. And the exposure in the same branch is what?

The exposure on these branches is INR 43 crores. Collection efficiency from the overall state is 91%.

Ladies and gentlemen, that was the last question for the day. I now hand the conference over to Ms. Aditi Singh, Chief Strategy Officer from Satin Creditcare Network Limited, for closing comments.

Thank you, everyone, for taking out time and attending our call and all the questions that you asked. We have tried to answer each and everything. I will still wrap up by saying that we have always been very responsible and very much driven by tech and sources, always prioritize the quality of our portfolio over growth and other factors. So this has actually helped the sale better or sales pretty decent in this quarter. Still, if you want to discuss anything, you can reach out to us, me and my colleague, Shweta Bansal. You have our e-mail IDs also and the details are there on the website. Thank you so much. Have a great day. Bye-bye.

On behalf of Satin Creditcare Network Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.