Spandana Sphoorty Financial Limited (SPANDANA.NS) Q3 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Spandana Sphoorty Financial Limited Q3 FY '26 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Venkatesh Krishnan, MD and CEO, Spandana Sphoorty Financial Limited, for his opening remarks. Thank you, and over to you, sir.

Good evening all. Thank you for taking time out to attend this call. This is my first earnings call at Spandana. So we'll take just a couple of minutes to introduce myself. My name is Venkatesh. People call me Venky. I've been working for about 35 years. 31 out of those 35 years have been in the financial services across banks, both foreign as well as Indian bank, NBFC, insurance, stock broking and now, of course, NBFC MFI. I joined the company exactly 2 months ago, 27th of November from HDFC Bank, where I spent about close to 7.5 years handling both microfinance at the retail as well as the wholesale piece. So back to the earnings call. So thanks once again for joining this call. The winds of change are quite visible both within the industry as well as at Spandana. So we've been having a struggle for the last couple of quarters, which initially people thought it's for a quarter or 2, but then got extended for a variety of reasons. And now things are looking reasonably settled or at least improving. What we have realized at Spandana is the new book, which is sourcing starting 1st of April 2025 after the introduction of the guardrails by the SRO. That book constitutes about 58% of the overall book, which we expect it to be about 90% by end of this financial year. This book has a collection efficiency of 99.8% as of December. We also have a separate team looking after the 90-plus collection since that's a little larger pool. There, the performance in the Q3 was much better than Q2. We did about INR 65 crores of collection in the 90-plus bucket. That team comprises about 800-odd exclusive people, which we wish to take it up to about 1,500 and retain it at that level for the next couple of quarters and then decide how are things moving before we maybe wind up that sort of a segment. The other good thing that happened during the quarter was lenders reposing faith in us, and we managed to raise close to about INR 1,700 crores in Q3. The bulk of the money came in actually December. We also have a new Chief Transformation Officer joining us with nearly 30 years of experience, and he joins us from Chaitanya, where he spent close to 10 years, both in business as well as audit. And we wish to take a relook at how we have been running the business. There are some minor tweaks to be done and which is what he's going to do. We also expect the credit guarantee, the much spoken about credit guarantee scheme to be rolled out in due course of time, whether it comes out in the budget or immediately after the budget, one is waiting and watching and of course, also trying to understand the contours of this guarantee, which I'm told through sources that it might benefit the small and midsized MFIs or it's aimed for this segment of the microfinance companies. So a couple of things that we are working at Spandana now that this quarter, I'm sure my colleague will take you through the numbers. We've been PPOP positive first time in about 2, 3 quarters that we got into the red. So a couple of changes that we are looking at. One, of course, is we are trying to merge some of the nonproductive branches. We have about 1,500-odd branches, trying to bring it down to about 1,250, not shutting down branches, but trying to merge some of the branches which have run into some sort of an issue or wherein the number of people are less. And this 1,250 branches is the number that we are looking at, which is safe enough to sail us through INR 12,500 crores over the next couple of years, looking at INR 10 crores as a sort of a benchmark per branch AUM. We are also delayering -- getting into sort of a delayering of the regions. We had a lot of layers keeping in mind that we want to go to INR 15,000 crores and INR 20,000 crores. Now that, that is some distance away, we are trying to delayer and bring it to the current book size that we have, a little over INR 4,000 crores or close to INR 4,000 crores. The other thing that we are proposing to do is merge our subsidiary, which is the Criss Financial with the parent. Criss has been doing individual loans as also loans against property, which is about a INR 650 crore book. But considering the fact that now with the qualifying asset criteria having come down from 75% to 60% and even if you take about 10%, 15% of cash, we have certain room to do any sort of a business other than the qualifying asset within Spandana itself. So rather than having a separate management with separate legalities and challenges and costs, we are trying to merge it, which might take about 6 to 9 months. But hopefully, that should get completed within the financial year, considering that coming financial year, considering that it's a 100% subsidiary of the parent Spandana. The other important thing which thought of sharing with all of you is we are also planning to move to a new LOS platform. We have the current solutions, and we are planning to move to a platform which is being developed by Perfios. It's a known name in the financial services industry. Their LOS is running in a couple of PSU banks across maybe hundreds of journeys. So we are going to be the first MFI using the platform of Perfios. We are seeing a lot of technological advancements that we have been talking to Perfios. And in this segment, when we are dealing with customers who are largely illiterate, bottom of the pyramid, they keep changing their mobile numbers at frequent intervals, they may be moving away from one place to the other. There are certain technological advancements we see in Perfios, which will help us be in touch with those customers at regular intervals, speak to them, reach out to them as and when it is required. We are also thinking of launching an individual loan product. We are not too sure whether this is the right time or not. But yes, we have drawn the contours of the individual loan offering. And once we have the Perfios platform in place, which, as I said, could be anywhere between 5 to 6 months and if all goes well with the loan against product, we may launch the individual loan as a pilot in maybe 1 or 2 clusters of branches to see how is it working because on any given day, that is also going to be unsecured, but there will be underwriting and there will be more checks and balances as compared to a JLD offering, which is a vanilla product, wherein you just need a handful of women in a group and you lend them after doing the general check and there is no further credit appraisal as such being done. So on that note, I will hand over the mic to my colleague, Ashish Damani, the CFO, who's been in the company for the last 4 years, and I'm sure he will take you through the numbers. post which, of course, we will answer your queries. Thanks once again for joining us on this call and wish all of you a very Happy New Year, though there are about 27 days have passed by, but it's still a new year. So wish all of you and your near and dear ones a wonderful year ahead. Thank you.

Thank you, Venky. Good evening, everyone. Yes, I'll cover some of the numbers in details, business drivers and financials before we open the floor for question and answers. Let me start with giving you the important aspect that we've been observing on collection efficiencies. All the new book that we have sourced during the financial year has been trending very strong at 99.8% collection efficiency. This has definitely given us confidence to ramp up the disbursements during the quarter. So if you see the disbursements have jumped by 27% compared to the previous quarter at INR 1,188 crores. This also actually on a gross basis has given us a 1.8% on a company level AUM increase before write-off and also 2.5% when we look at microfinance book. However, post write-off, the AUM stood at INR 3,948 crores for 31st of December. Our portfolio quality in the X-bucket is something that we have been carefully monitoring. Across the states, we have seen improving trend. We have detailed it out in our deck for the key states or monitorable states as well. But when we look at the pan-India, we have moved to 99.3% for the December quarter compared to 98.7% when we looked at September quarter. So there has been a good improvement. We hope that as our book, the new book or the book which is originated in the current BRE or the new BRE continues to increase to 90%, like Venky explained, this number will be sustained over 99.5% across the set of loans. Flow forwards in the 1 to 90 book have seen some marginal improvements. About 2.5% of the AUM was between 1 to 90 DPD at the end of December compared to 5.5%, which we have seen in September quarter. The consolidated GNPA is now down to 2.6%. This was at 4.2% the last quarter. Likewise, the consolidated NNPA is at 0.97%, while the stand-alone NNPA is now down to 0.5%. We continue to maintain our provisioning at 80% on an overall balance sheet basis, we have 5.2% that we carry as a provisioning across the buckets. Borrowings and liquidity, I'd like to cover a little bit more detail. We have been maintaining sufficient liquidity on the balance sheet just to ensure all the external headwinds are addressed. INR 1,684 crores is what we have raised during the quarter compared to INR 160 crores in the previous quarter. We are ensuring that the borrowings are in line with the business momentum, and we continue to keep improving on the disbursement trend or maintain the disbursement trend. At the end of December, we had INR 1,626 crores of cash and bank balance, which is very healthy. On the financial performance, portfolio originated, I have already explained that is at 58% of the AUM and is trending very strong at 99.8% collection efficiency. This is likely to go to 90%, as Venky alluded to earlier. Portfolio quality is primarily also driven by this mix and has helping the yield as well. The yield -- reported yield for the quarter is 22.4%, up from 19.6% in the previous quarter. We believe that this will continue to help us in the coming quarters and the yield should improve a little more from here on. Despite having an increase in cost of borrowings by 40 basis points, the NIM has expanded to 11.1% in comparison to 8.4% in the previous quarter. We expect all these improvements in yield and NIM to continue, like I said, as the stronger or the newer book replaces the older book in the coming quarters. Happy to explain the PPOP of INR 8 crores during the quarter compared to the loss of INR 40 crores reported in the previous quarter. This includes the recoveries that we have done during the quarter and excludes the one-off impact of the new labor code cost that we have seen for the quarter, which is about -- roughly about INR 8.4 crores for the -- on a consol basis and INR 7.6 crores for stand-alone basis. So overall, we have reported about a INR 95 crore loss for the quarter, largely stemming from the write-offs or the flows that slippages that we have seen largely from the old book and that one-off impact of the new labor code that was implemented. So we will now like to open the floor for the questions. I just would like to highlight one aspect that we would continue with the pace of disbursement and continue to monitor the strong portfolio quality that is developing in the new book. Thank you very much. And operator, if you can open the floor for the Q&A.

[Operator Instructions] Our first question comes from the line of Rajiv Mehta from Yes Securities.

Congrats on much improved performance. And congratulations to you, sir, on becoming the MD and CEO of Spandana. So I've got 2, 3 questions. First, in January, how are you seeing the X-bucket collection efficiency trending as well as how the disbursements are also playing out in January? And in December collection efficiency of Andhra Pradesh, we saw a little bit of dip. So has that kind of normalized and come back in January?

So I see your first question, January thus far on disbursement and collection efficiency looks better than December. And as far as Andhra Pradesh is concerned, if you look at the numbers, October was something like a little over 97%, which went up to 99% in November, came down to about 98.9% in December. More or less, it's going to be a little around 98.9% or 99% collection efficiency. So things are improving and should improve in the months to come.

And sir, how do you look at your disbursements scaling up? Because there are 2 comments that you made. One is that the new book will become 90% of AUM by March. And then there is a statement in the PPT saying that your loan officer productivity will improve to about 250 customers per loan officer by March. So this is implying a significant scale up in disbursement in Q4, maybe the number could be between INR 1,600 crores, INR 1,700 crores kind of a disbursement in Q4. Would that be correct?

So we are looking at INR 1,500 crores to begin with. It's more important to do a sort of a sustainable business. And we want to stabilize about INR 500 crores a month and then take it to about INR 550 crores, INR 600 crores as the months pass by.

And just one last thing on funding the growth. What has been the traction in mobilization of bank loans since you have come in December and January? And at what rates are the new bank loan coming and whether the kind of growth that we are wanting to achieve, say, INR 500 crores or INR 550 crores per month, would it get fully funded, largely funded by bank loans coming at a more reasonable rate?

The bank loans currently contribute about 42% of our overall borrowings. And should go up as the quarters pass by and the results keep improving, especially considering that the PSU banks are still out of the freight currently. We've been funded by private banks and foreign banks. But should see, again, especially after the credit guarantee scheme is out, we need to see what are those contours. But hope that the PSU banks come into the fray. Once that happens, our share of bank funding, I think, should go up from the current 42-odd percent to about 60%.

[Operator Instructions] Our next question comes from the line of Sarvesh Gupta from Maximal Capital.

Sir, 2 questions. So first of all, on take CGFMU. So what's the sort of plan there? Are you planning to take it? Or what's the -- if you can throw some more light on that?

So CGFMU, the way the scheme is that in a normal environment, in a business as usual environment, when your credit costs are going to be, say, sub 3%, it doesn't make sense because of where it is in this line. And unfortunately, since we went through the rough, there is no point in taking it now, but we are definitely trying to see if it could be studied well and try and take it in the new financial year.

Okay.

And definitely, we also want to see the credit guarantee scheme and then take a call vis-a-vis what are the kind of costs involved and what are the kind of benefits we anticipate.

Okay. And secondly, if I look at your NPA numbers, in the subsidiary, it looks like you have hit 10% gross NPA. So if you can throw some light on what is the kind of -- I mean, assets over there? And what is the stress? And how do you see it resolve in the coming quarters?

So that book CFL, which is the Criss Financial has 2 lines. One is the individual loans, which is about roughly INR 300 crores and another INR 300 crores -- rather INR 350 crores is the individual loans and about INR 300 crores is the loans against property. There are 2 things which is causing this so-called the losses that you spoke of. In loans against property, we need to really bring down our cost and improve our productivity. To a great extent, the cost will be taken care of when we do the merger. And in the case of individual loans, the impairment has been relatively high, which again, we are trying to now put a special team and try and ensure that a couple of months, the focus intensifies so that we can improve the collection efficiency and then look at increasing the disbursal. But hopefully, in the coming months, we should address both these, both issues around LAP and also the individual loans.

Okay. And in your network, what part is DTA and what are the time lines to consume that DTA?

So total -- this is Ashish, Sarvesh. So total D8 is roughly about INR 700 crores. The time line, I mean, the tax authorities allow you to consume that in 8 years. We see that we'll sufficiently cover that. That's how it has been recognized.

Okay. And this quarter, we have seen a good TWO recovery of INR 65-odd crores. So what's the pool right now that we have from which we can recover? And what is the expectation for fourth quarter and let's say, next year, how much are we expecting to get out of this?

The overall NPA pool is upwards of INR 2,500 crores, it's about INR 2,700 crores. And we have kept 3 quarters for us between this quarter and another 3 quarters to collect as much as possible. So we are aiming for anywhere between INR 20 crores to INR 25 crores a month.

The next question comes from the line of Rajakumar Vaidyanathan from RK Invest.

Can you hear me?

Yes.

Hello?

Very much. Carry on.

Sir, just 2, 3 questions. So first question is what is the medium-term outlook you have for the next 2 to 3 years, where do you want to take the AUM? And what are the ROA levels that we are looking at?

As far as the business is concerned, in recent times, I'm sure you've been hearing the regulators saying we are not very enthused with institutions in this segment showing upwards of 25%, 30% growth. So whilst owing to the low base, I may end up growing at about 40%, but I'm also keeping my eyes and ears closer to what the regulator is guiding us. So I could see about 25% to 30% growth is there for sure. Anything more than that, we need to wait and watch.

Okay. Okay. And the second question is in the recent credit rating report, the agency has highlighted the frequent changes in the management as a kind of hurdle for normalization of operations. So would you like to comment on that?

I just missed you. If you could just repeat, please?

The recent credit rating given by CARE for Spandana, they have highlighted that there has been significant changes in the senior and medium -- I mean, mid-level management as well as significant attrition at the ground level. And they are saying that, that will come in the way of normalization of operations.

As far as the ground level is concerned, yes, there has been attrition and attrition has been relatively high. But given the fact that things are improving, as I said, both at Spandana as well as in the industry, I'm sure people spending time on recoveries will come down. They will be able to do more business, and it will be more positive. So that should also bring down the attrition. So I foresee the attrition coming down in the months to come. As far as the senior level is concerned, not too sure which are the many attritions you're talking of. There could be some attritions here and there, but otherwise, by and large, the team is intact.

Okay. Okay. And the last question is to the CFO. This is on the DTA number of INR 700 crores that you just mentioned. So that means you are having a loss of almost INR 2,600 crores on which you have set up the DTA. So that loss is almost 1.5x the market cap of Spandana. And also, if you see last 15 years, you have not made cumulatively that kind of profit. So it looks like you guys are kind of a bit aggressive in booking the DTA. I think you may have to probably re-look at that number when you do the March numbers.

Yes. So amount gross profitability required to cover this will be roughly about INR 1,800 crores and not INR 2,000-odd crores. Yes, we will keep evaluating. As I explained that we have 8 years to cover this DTA amount. And given the current projections, whatever we have lined up and reviewed, we see that we will absorb all of this DTA. So yes -- but yes, this is something that we are monitoring very closely, and we'll take call as and when required.

[Operator Instructions] Our next question comes from the line of Vatsal Parag Shah from Knightstone Capital Management.

Just one question. Can you just quantify the slippages for this quarter?

This quarter. Total slippage for the quarter was about INR 152 crores during the quarter ending. However, the credit cost that we have taken is about INR 58 crores, which is after recoveries and whatever the proceeds we have received from the ERC transaction.

Our next question comes from the line of Abhijit Tibrewal from Motilal Oswal.

Sir, just trying to understand one thing. I mean a lot of MFI that we speak to, right, often tell us that if one were to adhere to the MFIN guardrails, the rejection rates are actually very high. So today, when we look at disbursements, right, there are 2 things which are kind of plaguing the MFI industry. One is obviously availability of capital, I mean, borrowings, the liabilities. And second thing is, I mean, the rejection rates are supposed to be very, very high. So what are our rejection rates like and when we say that we are looking at a 25% to 30% growth and possibly even higher this year given our small base, how are we looking to address it? What part of the growth can actually come from your existing customers, right, basically giving them more loans? And what portion of that growth can actually come from newer customers? That is something I wanted to understand.

The rejections currently hover at around 60%. It is indeed high, and it may remain so for the next couple of months because of the impact of all that has happened over the last 6, 9 months or 12 months. That said, the ratio of new to credit plus new to Spandana on one side and existing customers is about 40-60. And as we go along, there are still -- when I travel, I keep meeting various money lenders, and they're all thriving. So we have not reached a saturation point to say that there are no new customers in the marketplace, but you've got to find them. So there are enough and more customers which are there, at least for the next couple of years, and you got to get them into the mainstream. So effort is required, but a 40-60 or a 50-50 share of existing customers versus new customers, whether to credit or to Spandana is definitely possible.

Got it, sir. And then sir, one last question that I had was around the industry dynamics. Obviously, the fourth quarter comes across as a seasonally strong quarter. We see a very sharp momentum in disbursements in the fourth quarter across a lot of MFIs. Earlier during the opening remarks, I think you made one comment wherein you said that this quarter, we will look at a monthly run rate of about INR 500 crores and then maybe take it up from there to INR 550 crores, INR 600 crores, basically rather than showing a sharp spike, right, we want to gradually build up the business momentum. So to that end, I'm just trying to understand when you look at the industry, do you see everyone -- and on a no-names basis, everyone remaining compliant, right, to guardrails and there is no flow of money again to basically MFI borrowers? Or do you think the excesses in the industry have now started and maybe in the next maybe 3, 6 months, we'll again see everyone starting to disburse just like we did in the past?

The last episode that happened, of course, all the incidents that have engulfed the microfinance industry all are man-made, even COVID was manmade. So people have realized that the flow of funds into the industry is going to be difficult if you are not maintaining a proper books of accounts. So I don't foresee people randomly giving money to customers in spite of, if there are say, breach of guardrails. Secondly, the SRO has become far more active today. They are doing third-party evaluations through consultants like Deloitte and others, CRISIL, to name a few. And they are throwing report of the respective institutions in case they find a breach. They are even writing to the Board if they find continued breach and reporting to the regulator. So if someone is trying to breach the guardrails, they are doing at their own risk and life is going to be short-lived.

The next question comes from the line of Chintan Shah from ICICI Securities.

So congratulations on the improvement in the business momentum. So sir, on the credit cost, firstly, so I think this quarter, we have seen a steep decline, almost 80% sequential. But now going ahead, now given that we are already -- we have a provision of almost 80% on Stage 3 and 45% odd on Stage 2 and incrementally, the book being of a much better quality with higher collections, how should we look at the credit cost for FY '27? Yes. So that's the first question.

So we expect about INR 220-odd crores of numbers, INR 227 crores or INR 225 crores of gross slippages and net of about INR 50-odd crores in FY '27.

So INR 225 crores gross slippage and INR 50 crores net slippages in FY '27, right?

That's correct, yest.

Okay. Okay. Understood. And sir, what has been -- what is the write-off policy? And what was the write-off number for the current quarter, if you can say, current quarter and for 9 months?

See we have detailed this on Slide #... So for the quarter, we have write-off of INR 214 crores. The approach has been similar to what we have followed earlier, which is 180 days plus. And although this is not the policy, policy stands at 455 days. However, we've been trying to look at how the engagement has been with the borrowers and accordingly, we have taken these measures. Probably this will be the last quarter in which we take this approach. So yes, 180 days plus and engagement during the quarter is what we have looked at.

Okay. So going ahead, probably that you will again be writing it off at INR 450 crores. So we won't be seeing much elevated write-off going ahead. Is that a fair assumption? Yes.

That's a fair assumption, yes.

Understood. Understood. Yes, sir. And on margins front, actually, margins have seen a sharp uptick. I think this largely -- the yield rise is largely on account of lower interest reversal. So if you could also quantify the interest reversal number for Q2 and Q3, yes, that would be helpful.

So for the current quarter, Q3, it is INR 14 crores. For the last quarter, it was INR 33 crores. For Q1, it was INR 50 crores.

Q3 it was? Sorry.

INR 14 crores.

INR 14 crores versus INR 33 crores Q-o-Q.

I think you mentioned margins will see further uptick. So now going ahead, this will be largely driven by decline in the borrowing cost, right? So borrowing cost like looks relatively higher compared to our peers. So post the credit guarantee scheme, how much are we seeing some reduction in the borrowing cost? Any ballpark number on which it should settle around?

So the reason why I said there will be expansion in the NIM further is largely because the top line has been muted. If you look at our lending rates, we are -- a blended lending rate on our new book is about 25.3% However, the yield is stacking up at 22.4% right now. So there is a gap, which will build over a period of time with the new book, the stronger performing book becomes a larger percentage of the balance sheet. So the yield will move from 22.4% to very likely closer to 25% over time. And accordingly, what we believe is will help us have a better NIM going forward. The cost of borrowing is at 12.6%. In fact, there has been an increase of 40 basis points. We see that it will hover between 12.5% to 13% in terms of cost of borrowing. So we don't see much immediate improvement there because our reliance has been on both current markets as well as bank funding, which is more or less 50-50 like Venky was explaining earlier.

Sure. And these gross slippages which you mentioned for FY '27, that would be on the consol book as we might be also looking -- we are looking for a merger only before the end of the year. So that will be on the consol basis, right?

Yes, that's right.

That's right.

The next question comes from the line of Ankur Kumar from Alpha Capital.

Sir, just on previous participant question on this technical write-off of INR 214 crores in this quarter, how much do you expect this number to continue going forward? Or like is it like most of it is already done?

So yes, most of it looks like it's done. We have to now look at the business from a more BAU standpoint. Like Venky was explaining, we are likely to have a 2.5% to 3% kind of a credit cost is what we are assuming in future.

2.5% to 3% next year is what our estimate is?

Yes.

But you also said that there is INR 20 crores, INR 25 crores per month, which we expect to come back. So this is including that or that is excluding that, that we got?

That is recovery. I'm saying on a business-as-usual basis. If one has to look at what kind of credit cost we have built into the pricing and what do we expect, then it's 2.5%, 3%.

But given we have such a large pool, next year, credit cost could be quite lower than this business-as-usual number?

So on a net basis, I think we also give the number. It should be INR 50 crores or around that number like that.

So only INR 50 crores of net slippage we expect in the next year?

Yes.

Got it, sir. And sir, in terms of book reduction as in from peak, our AUM has reduced to like 1/3 from INR 12,000 crores at the time of peak to now around INR 4,000 crores. So how soon do we expect things to -- as in business to improve, grow fast?

So as I said, we have to be watchful in how we grow. We want to grow sustainably. So whilst we grow, I need to ensure that my cost and my collection efficiency remains steadfast. So if you ask for a ballpark figure, we are expecting about roughly about somewhere close to between INR 9,000 crores to INR 10,000 crores of AUM by FY '28.

And any ground level changes...

Sorry to interrupt, Ankur sir, may we request to return to the queue for follow-up questions. Our next question comes from the line of Sagar Shah from Spark PWM.

Congrats, sir, for showing good set of results. My first question was the figure that you told about the disbursements of INR 1,500 crores by Q4 FY '26. So I wanted to understand are we eyeing weekly or monthly payment model in that disbursement model? And secondly, in state -- which are the states actually are we eyeing for a growth of almost 30% quarter-on-quarter in disbursements, which states are we eyeing? That is part of the first question.

So let me take your second question first. Our top 6 states contribute about 60% of our AUM, which is Odisha, Madhya Pradesh, Bihar Karnataka, West Bengal and one more state. So we will continue to grow in these states. And there are states like Tamil Nadu, wherein our presence is very limited. We are planning to grow there. Kerala, we want to be a little watchful. We are present in Jharkhand and Chhattisgarh. So typically, if you look at the microfinance industry, the top 10 states contribute about 80% of the business. Now in our case, the top 10 states don't feature in the industry, doesn't feature Jharkhand and Chhattisgarh. So we'll also try and grow in those 8 or 9 top states wherein our presence is -- there is scope for us to grow and our presence is also limited to a certain extent.

Disbursement presently is roughly 20% in weekly business. I think that is in line with the number of branches we have in the weekly format, and it just continues that way.

We will neither change the monthly branches to weekly nor the weekly to monthly. So the 80-20 ratio or 85-15 will continue to remain.

Okay. So 80% will be monthly and 20% will be weekly going ahead as well that we can say. And my next question was on the loan officer count and the employee count. The loan officer count, we saw almost a reduction of almost 900 officers in this quarter as well. So where do we see this number stabilizing, sir, because we are eyeing a very aggressive AUM outlook in FY '27 and '28 and as well as for exit Q4 FY '26. So where do we see this number stabilizing?

So on the loan officer count, we are looking at somewhere between 4,800 to 5,500 as a stable factor. And in the interim, there could be some officers who may move into the so-called 90-plus collections pool. Once that stabilizes, they may come back. So they're all fungible. These are all frontliners who can either do collections or business or both. But 4,800 to 5,500 is the number we are aiming for on a steady-state basis.

And that is -- that will be visible in the next quarter, the number that you just stated?

In the coming 1 or 2 quarters, yes.

Okay. So basically, we can expect some healthy productivity from -- at least from the remainder of the loan officers count. The productivity will almost double as per the metric that you just stated, if I'm not wrong.

So since we are taking away the 90-plus collections from our regular officers, we expect the business productivity to improve.

[Operator Instructions] Our next question comes from the line of Shreepal Doshi from Equirus.

I was looking at one of the slides wherein you have highlighted that 86% of our customers had less than INR 1 lakh of household outstanding. And I mean, apparently, we've seen significant rundown in terms of customer base, of course, given the kind of industry stress as well as the write-off that we have seen. But with this number of 86% of the customers below INR 1 lakh household credit, doesn't it give us an opportunity to sort of scale up our size or our share in their pocket and grow? So is that how we are trying to strategize and give more disbursements to the existing customers than to go and acquire customers from the open market?

So it's a combination of both, as I said a little while ago. These are all customers that you're referring to the slide is outstanding loan of less than INR 1 lakh. So definitely, of course, you can give a top-up loan or a higher loan to these women. At the same time, you have to keep identifying new customers because your new customers become your existing customers over time. So it is not either or, it has to be both.

So to take it other way, what is the disbursement ticket size that we have for our, let's say, peers and new customers currently?

So the new customers would get about INR 50,000, whereas existing customers, depending upon their vintage can even go up to INR 1,10,000 if they have been with us for about 5 years plus.

Got it. Got it. And sir, the second question was pertaining to the pricing. So I mean, have we taken any price hike in the last 6 months? And if yes, what is the sort of range that we have taken?

Currently hovers between 23% and 26%, 26% being in the first cycle, keeps coming down.

Okay. So with vintage, it will keep coming down. Okay. The third question, sir, last question was on the -- so while we are looking at acquiring -- I mean, rather merging our subsidiary, but what is the kind of mix that we plan to sort of achieve in -- by FY '28 in terms of loan book mix? I'm sorry if you've answered this question because I joined the call a little late.

The qualifying assets has to be always at 60%. And if you believe that 15%, 20% will be in cash, so you will have a wee bit to the extent of 10%, 15% being in nonqualifying assets. And as the GLP book grows, your ability to do more of nonqualifying assets also improves.

So are we targeting that sort of a percentage in the loan book mix? Or I mean, I understand from the opportunity point of view or from the regulation point of view, but are we strategizing our loan book mix to reach that level?

We are looking at today, my loans against property is about INR 300 crores. trying to see if I can take it to about INR 1,000 crores in the next couple of years.

Got it. Got it. Got it, sir. So that is like 10% by FY '28 sort of a number is what we are looking at. Is that fair assumption?

Absolutely.

[Operator Instructions] Our next question comes from the line of Rajiv Mehta from Yes Securities.

Firstly, sir, I just want to check on a few things. Can our absolute OpEx fall further for the next few quarters given the fact that we have kind of calibrated employee count and loan officer account? So that's one check. Second is, I mean, should we breakeven or can we breakeven on a consolidated basis by second quarter of FY '27? Is that also a possibility on the table given the way our disbursement and credit costs could play out? And third is in Criss, has the credit cost peaked out? Because when I look at the credit cost of Criss in the last 2 quarters, it's very high on a relatively small book. So are we behind in terms of the peak of the cycle of recognition there? Or would more credit costs come from that book?

So to answer your query, we should try and break even next quarter. That's our immediate objective considering that this quarter or the last quarter was PPOP positive. As far as Criss Financial is concerned, as I said a little while ago, our focus on individual loans is to focus more on collections over the next 1 or 2 quarters, try to get the book back on track before we start disbursing all over again or going about a little aggressively. The LAP book is behaving very well with a GNPA of a little over 1%. So no worries on that. We are trying to see how to grow that book more, as I said, from the current INR 300 crores to about INR 1,000 crores. I think you had a third question as well.

No, it was on the OpEx. So when you're talking about breaking even, do you mean that you'll break even in the current quarter, which is fourth quarter? And would it also imply that the absolute OpEx will fall given the fact that the adjustments you have done in employee base and loan officer base?

[Foreign Language] So OpEx has been coming down INR 884 crores 2 years ago to came down to about INR 790 crores last year to about INR 720 crores this year, trying to bring it down further. There is scope. So it's a combination of increasing your revenue and bringing down your cost and your credit cost. That's how you bring in profitability.

The next question comes from the line of Chintan Shah from ICICI Securities.

So sir, just on the AUM growth. So I think this quarter, if we exclude the write-off, then we have seen a sequential uptick in the AUM. So -- but now the repayments were relatively elevated in the past. But given now the AUM is INR 4,000 crores, the repayments also would be less. So going ahead, can we expect sequential growth in disbursements to continue -- sequential growth in AUM to continue in the coming quarters as well, given that write-offs also would be lower?

Very much, very much. With the kind of disbursals we are expecting, with the kind of write-offs which we are expecting to bring it down, there should be growth.

And repayment, so what sort of steady state repayments could we assume on the AUM on the closing -- opening AUM? Any ballpark number there?

INR 900 crores.

INR 900 crores. Okay.

Ladies and gentlemen, we will take that as our last question for today. I would now like to hand the conference over to the management for closing comments.

Thanks a lot all for participating and asking those relevant questions. And we at Spandana stand committed to delivering the results. Yes, there have been a couple of quarters which did not go our way. But as I said, more focus is on to get back on track, as I said, both on the revenue as well as on the cost as well as on the credit cost front. So with that, I want to thank all of you once again from all of us out here at Spandana and see you in 3 months from now. Thank you.

Thank you. On behalf of Spandana Sphoorty Financial Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines. Thank you.