Aavas Financiers Limited — Q2 FY26

Aavas Financiers Ltd Q2 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=myVIRczz3A0 Published: 6 months ago

0:01 1 second Ladies and gentlemen, good day and welcome to the Avis Financial Limited Q2 FI26 earnings conference call. This 0:10 10 seconds conference call may contain forward-looking statements about the company which are based on the beliefs, opinions and expectations of the company as on date of this call. These 0:19 19 seconds statements are not the guarantees of future performance and involved risk and uncertainties that are difficult to predict. 0:25 25 seconds As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. 0:34 34 seconds Should you need assistance during the conference call, please signal an operator by pressing start and zero on the touchstone phone. Please note that 0:42 42 seconds this conference is being recorded. I now hand the conference over to Mr. Rakkesh Shandi, head investor relations of AA 0:49 49 seconds financials limited. Thank you and over to you sir. 0:53 53 seconds Thank you Ruja. Uh good evening everyone. I extend a very warm welcome to all participants and thank you for 1:00 1 minute joining us uh on today's earning call to discuss the financial and operational performance of our company called H1 and 1:07 1 minute, 7 seconds Q2F along with the business outlook going forward. The results and the investor presentation have been uploaded on the stock exchanges and are also 1:16 1 minute, 16 seconds available on our company website. I hope you had a chance to review them. Joining me today is the entire management team 1:23 1 minute, 23 seconds of AAS. We will begin this call with the opening remarks from our MDM CEO Sachinder Binda, CFO Kensham Raat and 1:31 1 minute, 31 seconds CRO Ashoto Chhatri. This will be followed by Q&A session. With that uh let me now hand over a call to Sachinder. 1:39 1 minute, 39 seconds Thank you Rakkesh. Good evening to all. 1:42 1 minute, 42 seconds I thank you all for joining us on this earning call. I hope you had a joyous Diwali and have a prosperous summer 2082. 1:51 1 minute, 51 seconds I am pleased to share that care ratings has revised its long-term rating outlook on aas from stable to positive. This 1:58 1 minute, 58 seconds represents an important step towards a potential rating upgrade to doublea plus which will further enhance our ability to diversify liability profile in a 2:07 2 minutes, 7 seconds costefficient manner. The outlook revision reflects AAS's strong fundamentals, quality growth, robust 2:14 2 minutes, 14 seconds asset quality, sustained profitability, a solid capital position and stability of our management team. As highlighted 2:22 2 minutes, 22 seconds during our last quarter's commentary, we are pleased to share that we have made our entry into Tamil Nadu with opening of eight new branches and we plan to add 2:32 2 minutes, 32 seconds another eight in H2 taking our network to 405 branches across 14 states. 2:39 2 minutes, 39 seconds We will continue to expand in a contiguous clusterbased manner adding 20 to 25 branches in H2 to deepen our 2:46 2 minutes, 46 seconds penetration in the existing markets. As our Tamil base strengthens, Andhra Pradesh and Telangana become natural 2:53 2 minutes, 53 seconds next expansion opportunities under the same disciplined approach. 2:58 2 minutes, 58 seconds On the business front, after the transition to the new dispersement recognition framework in Q1, operations have now normalized, resulting in a 3:07 3 minutes, 7 seconds strong 36%age Q and 21 percentage year-on-year growth in dispersement during Q2. Our sanction to dispersement 3:15 3 minutes, 15 seconds ratio, which was impacted in Q1, has recovered and now stands at over 80%age, demonstrating improved conversion 3:23 3 minutes, 23 seconds efficiency. Entering the second half of the year, traditionally a strong period for us. We expect this momentum to 3:30 3 minutes, 30 seconds sustain and further strengthen on the credit fund. We continue to maintain a cautiously optimistic stance 3:38 3 minutes, 38 seconds in our underwriting approach. While our asset quality continues to show steady improvement, we remain vigilant and are closely monitoring developments across 3:46 3 minutes, 46 seconds specific customer segments, geographies, and risk profiles, especially in light of cautionary signals observed among 3:53 3 minutes, 53 seconds some industry peers. Our calibrated risk strategy remains firmly anchored in prudence and discipline guided by sound 4:01 4 minutes, 1 second underwriting principles rather than any perceived weakness in demand. Our AUM grew by 16 percentage year on year to 4:08 4 minutes, 8 seconds rupees 213.6 billion. Given the current momentum and positive market environment, we now anticipate fullear 4:15 4 minutes, 15 seconds AUM growth of around 18%age. The broad economic backdrop remains supporting the government's continued thrust on retail 4:23 4 minutes, 23 seconds consumption along with structural reforms such as GST rate reduction and income tax rationalization expected to 4:30 4 minutes, 30 seconds further strengthen housing demand in the coming quarters. Additionally, a conducive interest rate scenario continues to support affordability and demand momentum in our core segments. 4:41 4 minutes, 41 seconds Furthermore, government initiatives like the interest subsidy scheme ISS under PMA 2.0 coupled with a stable interest 4:49 4 minutes, 49 seconds environment continue to support home buyer sentiment and affordability. We are pleased to report that over 2,300 4:56 4 minutes, 56 seconds AAS customers have already benefited from these schemes receiving subsidies amounting to more than rupees 75 5:03 5 minutes, 3 seconds million. As we look ahead, our long-term strategic priorities remain clear to fully leverage our strong digital 5:10 5 minutes, 10 seconds platforms, distribution network, further strengthen governance, drive scale efficiently, optimize cost and enhance productivity across the organization. 5:20 5 minutes, 20 seconds With that preamble, I will now take you through our quarterly performance. After crossing the 200 billion milestone earlier this year, ARM has now reached 5:29 5 minutes, 29 seconds at 214 billion. During quarter 2 FI25, the dispersed loans worth rupees 15.6 5:36 5 minutes, 36 seconds billion, registering a 36%age sequential and 21 percentage year-on-year growth while maintaining a strong focus on 5:44 5 minutes, 44 seconds quality origination and prudent underwriting. A net profit for quarter 2 FI26 grew by 11 percentage Y to rupees 5:52 5 minutes, 52 seconds 1.64 billion led by robust 18%age Y growth in NI on account of healthy improvement in spread. Our net worth 6:00 6 minutes continues to compound steadily growing at 16%age Y with the strength of our capital position driven by consistent compounding internal acruals. 6:10 6 minutes, 10 seconds Our names expanded by 56 bits sequentially to 8.04 during the quarter. 6:16 6 minutes, 16 seconds This improvement was supported by significant improvement in the spread coupled with our continuous focus on riskadjusted pricing which resulted in a 6:24 6 minutes, 24 seconds 10 bits increase in the incremental business yields over H1 FI25. 6:29 6 minutes, 29 seconds Our operates to asset ratio saw a marginal increase of five bids sequentially to 3.51 percentage while cost to income ratio declined by 260 6:37 6 minutes, 37 seconds bits quarteron quarter to 43.7% reflecting the improved efficiency gains. Our asset quality remains 6:44 6 minutes, 44 seconds pristine with OnePlus DP below 5 percentage improved by 16 bits sequentially to 3.99 percentage as of 6:51 6 minutes, 51 seconds September 2025 while GMPA levels remain stable at 1.24 percentage. Credit costs 6:59 6 minutes, 59 seconds improved sharply by 8 bits sequentially to 16 bits driven by lower oneplus DPD flow and improvement in stage two buckets. We continue to maintain our 7:08 7 minutes, 8 seconds guidance of keeping the credit cost below 25 bits on a sustainable basis. 7:14 7 minutes, 14 seconds Our ROA improved significantly by 46 bits sequentially to 3.4%age and RO improving by 175 bits quarter on quarter 7:23 7 minutes, 23 seconds to 14.31 percentage. We remain committed to delivering quality, profitable and sustainable growth powered by techled 7:31 7 minutes, 31 seconds efficiency and cost optimization. With a robust risk management framework, deep and diversified distribution network and a strong execution capabilities of our 7:40 7 minutes, 40 seconds experienced team, we are confident of achieving our strategic milestone and delivering long-term value to all stakeholders. With that, ladies and 7:48 7 minutes, 48 seconds gentlemen, I would now hand over to our CFO Gancham Raw to discuss the financial in details. 7:56 7 minutes, 56 seconds Thank you Sajim G. Good evening everyone and a warm welcome to our earning call to provide update on borrowing first. 8:04 8 minutes, 4 seconds Our liability to improve the cost of fund continue to underscore the strength and resilience of our wealth diversified 8:11 8 minutes, 11 seconds liability franchise with many long-term partners linked to various benchmarks. 8:18 8 minutes, 18 seconds In line with our strategy of innovation in liability sourcing, we project anticipated a potential softening in interest rates and strategically sifted 8:27 8 minutes, 27 seconds a sizable portion of our borrowings to ABL linked instruments and a short tenure MCL structures. This 8:35 8 minutes, 35 seconds forward-looking approach has continued to yield tangible benefit in quarter two as our libraries are repricing faster than those of many peers. 8:45 8 minutes, 45 seconds This position us well to maintain a competitive cost of fund while supporting sustainable 8:52 8 minutes, 52 seconds quality growth. As a result, we have seen a additionally 17 basis point improvement sequentially in our cost of fund on overall cost of borrowing. 9:05 9 minutes, 5 seconds Our spread improved sharply by 34 basis point yearon year to 5.23% 2 to 3% in quarter 2 while the calculated spread 9:12 9 minutes, 12 seconds increased by 59 basis point year on year to 6.27% in quarter 2 FI26 we continue to borrow judiciously 9:21 9 minutes, 21 seconds raising around 13.96 billion at a competitive rate at 7.83 83 in quarter 2 FI26 9:29 9 minutes, 29 seconds our average tenure of borrowing continue to be longer than that of than that of our assets ensuring a positive ALM 9:36 9 minutes, 36 seconds across all time buckets as of 30th September 2025 total outstanding borrowing stood at 186.87 87 9:46 9 minutes, 46 seconds billion rupees. The borrowing mix as on 30th September 20th comprises of 50% from loan from various banks and 9:54 9 minutes, 54 seconds institutions, 25% from assignments, 14% from national housing bank refinancing, 11% from debt capital market. 10:03 10 minutes, 3 seconds We have optimum mix of various benchmarks of interest rates such as 36% borrowing linked to external benchmark 10:10 10 minutes, 10 seconds such as RAPO T bill my board and 25% linked to sub 3month NCL enabling faster 10:17 10 minutes, 17 seconds repricing of nearly 61% of all borrowings in line with the interest rate movements. 10:23 10 minutes, 23 seconds Lender support remains strong as ours continue to evol. We maintain access to diversified and cost effective long-term funding. Our relationship with 10:31 10 minutes, 31 seconds development funds institutions remain robust supporting our strategic fundraising goals. As of 30th September 10:39 10 minutes, 39 seconds 2025, we maintain ample liquidity includes cash and cash equivalent and unveiled cash credit limit of rupees 10:46 10 minutes, 46 seconds 18.94 billion. Documented unveiled sanction of rupes 21.51 billion. 10:54 10 minutes, 54 seconds Profitability and capital position. Our net total income in absolute terms grew by 18% year on year in quarter 2 FI26. 11:04 11 minutes, 4 seconds Net interest margin as a percentage of total assets expanded by 26 basis point year on year to 8.04% in quarter 2 FI26. 11:14 11 minutes, 14 seconds We remain well capitalized with a net worth of rupees 46.8 8 billion and a capital to risk weighted average assets 11:23 11 minutes, 23 seconds ratio car is 45.9% significantly above regulatory requirement. Now I would like to hand over the line to CRO Mr. Ashoto Adri to discuss the asset quality. 11:35 11 minutes, 35 seconds Thank you Vanjam G. Good evening everyone. I am pleased to share the key portfolio parameters with you. Asset 11:43 11 minutes, 43 seconds quality and provisioning. AAS is strongly positioned to continue delivering industry leading asset quality. Our asset quality remains 11:52 11 minutes, 52 seconds within the guided range with one day pass due well with 5%. At 3.99% 11:59 11 minutes, 59 seconds in Q2 FY26 and gross phase three and net stage three under 1.25% stood at 1.2524% and 0.84% 84% respectively. 12:14 12 minutes, 14 seconds From a ge geographic perspective, asset quality in our home state continues to remain healthy. The average oneplus GPD 12:23 12 minutes, 23 seconds and G&P is stood well below 4% and 1.25% of AM. Similarly, in our emerging 12:32 12 minutes, 32 seconds market, we are observing healthy credit performance with OnePlus GPD and GNPA 12:39 12 minutes, 39 seconds levels remaining comfortably within 3.5% and 1% of AO respectively. Our ECL 12:47 12 minutes, 47 seconds provisioning including that for COVID 19 impact as well as resolution framework 12:53 12 minutes, 53 seconds 2.0 stood at rupees 1.21 21 billion as of 30th of September 2025. 13:01 13 minutes, 1 second Our disciplined underwriting standards coupled with proactive risk management framework have enabled us to stay ahead of emerging microeconomic challenges. 13:14 13 minutes, 14 seconds While several peers have reported asset quality pressure due to sectoral or regional headwinds, our portfolio has remained resilient. 13:25 13 minutes, 25 seconds We continue to follow a rigorous credit assessment process stress tested across 13:32 13 minutes, 32 seconds multiple economic scenarios and remain selectively calibrated in our exposure to higher risk segments. This approach 13:41 13 minutes, 41 seconds has helped us uh preserve asset quality which continues to rank among the best in the industry. 13:50 13 minutes, 50 seconds With this I open the floor for Q&A. 13:56 13 minutes, 56 seconds Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchstone 14:05 14 minutes, 5 seconds telephone. If you wish to remove yourself from the question key, you may press star and two. Participants are requested to use handsets while asking a 14:14 14 minutes, 14 seconds question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. 14:23 14 minutes, 23 seconds The first question is from the line of Res from ICICI. Please go ahead. 14:28 14 minutes, 28 seconds Yeah. Hi sir. Uh congress on a good set of numbers. Uh sir my first question is on uh basically yield. All right. So uh 14:37 14 minutes, 37 seconds while spread expanded for last two quarters but it is largely driven by cost of fund benefit and uh yield 14:45 14 minutes, 45 seconds continues to fall you know. So what extents the drop in yield on sequential basis and where do you see uh yield settling in near term because at some 14:54 14 minutes, 54 seconds point in time we also have to uh you know review our PR and we already get some reduction in cost of fund we might 15:01 15 minutes, 1 second have to lower our PL maybe next couple of quarters. So when do you see the in settling and ultimately spread? 15:11 15 minutes, 11 seconds Thanks Romesh. I think as highlighted earlier our incremental business is still lower than our existing portfolio which naturally pulls on the blended 15:20 15 minutes, 20 seconds portfolio and this has been the key driver of the five bibs compression during the quarter. Additionally, in the current environment of heightened asset 15:28 15 minutes, 28 seconds quality concerns and tighter credit conditions, we believe it is suitable to underrite better quality, lower risk customers, even if uh there is a smart 15:37 15 minutes, 37 seconds uh compression in the uh involvement in sight lower pricing. The intent is to protect portfolio quality and maintain 15:45 15 minutes, 45 seconds long-term risk adjusted uh returns. uh they said uh positive momentum on placement yields with 10 bits y 15:52 15 minutes, 52 seconds improvement in h1 fi26 and gap between incremental yield and portfolio has narrowed meaningfully 16:00 16 minutes again uh just to elaborate that we've taken some structural actions to support yield sustainability sharper focus on 16:07 16 minutes, 7 seconds the lower ticket size and new to credit customers where yields are structurally higher deeper penetration some of the 16:14 16 minutes, 14 seconds underserved geographies and uh higher rating tech segments uh along with the aviation metrices and system based 16:22 16 minutes, 22 seconds guardrails to ensure pricing discipline is there on the ground. I think this all will really help us to do I think the positive part on the list is that we 16:31 16 minutes, 31 seconds have had momentum continue on the uh yield side as we speak. The second 16:39 16 minutes, 39 seconds question on fur was on the PLR. So we are closely monitoring the rate environment. uh so far we've not seen a meaningful reduction in MCLR from the 16:48 16 minutes, 48 seconds banks and therefore the full transmission of lower rate has not yet taken place on the liability side that said our incremental dispersements are 16:56 16 minutes, 56 seconds already being priced competitively which means our incremental splits are still lower than the reported portfolio spread in fact our effects are already lower 17:04 17 minutes, 4 seconds than the most peers we are also addressing customer level retention selectively and I think we will continue to evaluate the cost of fund range 17:12 17 minutes, 12 seconds uh and based on how the MCL transmission plays out on the coming quarter, the ELCO will review and they take a considered view on revising the PL. 17:22 17 minutes, 22 seconds Okay. So maybe we uh list it till September 25 you know whatever benefit we got on the borrowing side. Uh let's 17:31 17 minutes, 31 seconds say there is no further benefit on the cost of borrowing will keep PR where it is currently. Is that the fair assumption? 17:38 17 minutes, 38 seconds So as I I think at ELCO will at Elco we will review and take a considered call uh on based on uh the scenarios in the coming months. 17:51 17 minutes, 51 seconds Okay. Okay. Uh got it sir. So my second question is on the cost side. You know we've been highlighting that uh we have 17:59 17 minutes, 59 seconds taken many initiatives to improve productivity and uh bring down cost ratios but somehow our income is still 18:09 18 minutes, 9 seconds get around 41 42% even invested for each of cost versus you know peers we have you know below 35% so there is uh you 18:18 18 minutes, 18 seconds know there is a gap so when do you see this cost to income ratio tagging towards industry average 18:26 18 minutes, 26 seconds the moment topics to asset this quarter is largely operational and timing related rather than structural. So this 18:33 18 minutes, 33 seconds reflects the inions which were made as a part of our branch and distribution expansion plan. However, since this since dispersement are relatively softer 18:42 18 minutes, 42 seconds the cost to asset ratio appears temporarily elevated. So if you look at it there is a 14%age Y increase in the 18:49 18 minutes, 49 seconds number of employees. This includes uh 100,150 employees we added. we still have the monetization of that to happen. 18:56 18 minutes, 56 seconds So I think that is one part but this is another part of investment which we look at as as we speak we've added uh branches in Tamil Nadu still they have 19:04 19 minutes, 4 seconds to uh come to a level where it starts being productive as we speak in the coming quarters. So if you exclude at 19:12 19 minutes, 12 seconds eop expense the wild price increase in the offset ratio would have been 16 bit since quarter two of last year had ease of reversals which created a base 19:19 19 minutes, 19 seconds effect. This all being a denominator effect with muted asset growth in the quarter the benefit of operating leverage has still not flowed in. But on 19:28 19 minutes, 28 seconds the positive side as as as I I reflected the cost of income ratio has improved by 20 262 bits sequentially indicating that 19:37 19 minutes, 37 seconds the cost structure is already beginning to stabilize. 19:41 19 minutes, 41 seconds Okay. So this trend will continue going forward. I mean that's what you're trying to help. 19:48 19 minutes, 48 seconds No. So we've actually guided that we are committed to bringing the opex to asset ratio below 3%age over the medium term. 19:55 19 minutes, 55 seconds And as this bonus scale em growth normalizes and technology and transitive benefits continue to improve we expect 20:02 20 minutes, 2 seconds operating leverage to further steadily improve. 20:06 20 minutes, 6 seconds Okay. Okay. Uh that's it sir. Thank you and best of luck. Thanks. 20:13 20 minutes, 13 seconds Thank you. Next question is from the Nina Kuna from City Group. Please go ahead. 20:20 20 minutes, 20 seconds Um yeah. Hi. Uh thanks for taking the question. So firstly on assignment um overall when we look at it compared to 20:27 20 minutes, 27 seconds the assignments which were done in fact uh the run rate just be quite high. So is there anything maybe is it more of a 20:35 20 minutes, 35 seconds demand supply thing or is there any uh anything is hi Kunal uh 20:43 20 minutes, 43 seconds hi Kal uh if you see assignment volume perspective we are I think what we do 20:49 20 minutes, 49 seconds every quarter every H1 is it is not much change as our growing so we generally keep between 15 to 20% growth in the 20:58 20 minutes, 58 seconds assignment in the volume but more particularly now this year our assignment We used to do last year 21:04 21 minutes, 4 seconds roughly 8 and a half% plus now we are doing 7 and a half% plus basically almost 100 bes saving which is giving us 21:13 21 minutes, 13 seconds a better let's say spread and better income generation assignment if we do same transition during this year. So 21:21 21 minutes, 21 seconds that is a positive impact uh uh uh is coming on the uh uh on the income side. 21:27 21 minutes, 27 seconds Okay. And this was not there in first quarter or it was there in first quarter as well? First quarter first quarter it seems to be high. Yeah. 21:36 21 minutes, 36 seconds Yeah. First quarter rate started to falling. So we got some benefit but quarter two we got a very good amount of benefit in the in in the spreads. 21:46 21 minutes, 46 seconds Okay. And this will continue. So now incrementally we will be doing it at this spread only. 21:50 21 minutes, 50 seconds Yeah. Incrementally uh till uh any we see reversal interest scenario till we hope that uh this trend will continue. 22:00 22 minutes Sure. Got it. And uh secondly on the dispersement side uh so this entire impact of uh uh maybe the change in the 22:09 22 minutes, 9 seconds recognition which was there has it played out in u uh Q2 itself the entire rollover effect or there will be something which will flow through in uh 22:18 22 minutes, 18 seconds Q32 we've regained healthy momentum delivering 36%age Q and 21%age Y growth and dispersement. 22:29 22 minutes, 29 seconds See over the last five months uh our monthly dispersement run rate has remained above 500 crores and with H2 being seasonally strong for us we are 22:36 22 minutes, 36 seconds working towards taking this run rate to 650 to 700 cr kind of a range on the demand side monthly login volumes have remained robust at 15,000 plus 22:45 22 minutes, 45 seconds reflecting about 23%age y growth so in in that sense uh we work towards 22:53 22 minutes, 53 seconds achieving our EM growth aspiration we want to be clear that the portfolio quality remains good but I think whatever was on the Q1 the it has played 23:01 23 minutes, 1 second out in Q2 and we don't see any of that really coming in the coming quarters so to say so it's as as I stated that we 23:08 23 minutes, 8 seconds have stabilized and we are there on the normal uh pace which is required at a normal steady state 23:17 23 minutes, 17 seconds got it got it and lastly on repayment rate and VT out so VT out is now 5.7 and uh if you look at across the product 23:26 23 minutes, 26 seconds segment it seems like it has gone up a bit on the home loan while maybe I think the mortgages and all have almost remained the steady in fact mortgages 23:34 23 minutes, 34 seconds also it's uh up slight bit uh so maybe any pressures in any particular uh states or with any particular customer 23:42 23 minutes, 42 seconds profile if you can highlight that yeah thanks so BT uh our BT out rate for H1 stands at about 5.3% which is around 10 23:52 23 minutes, 52 seconds bits higher than the same period last year see specifically in Q2 BT out was at around 5.7 71 5.7 percentage compared 24:00 24 minutes to 4.9 in Q1 if you are comparing that is indicating a normal seasonal variation uh we've actually deployed predictive 24:09 24 minutes, 9 seconds analytics to ensure that we engage with potential BT out customers that is what we really continue to do so we will 24:16 24 minutes, 16 seconds continue our retention is at this time we don't see anything this is on alarming side what actually we seen other than the PT was the repayment rate 24:24 24 minutes, 24 seconds this increased by around 200 actually these are repayments that had around uh uh this this was driven by more higher 24:33 24 minutes, 33 seconds repayments and this was incrementally high outflow which happened uh this quarter. 24:39 24 minutes, 39 seconds So note if I were to look at there is increase in the part payment is also reflective of improved credit behavior and liquidity 24:48 24 minutes, 48 seconds which continues to be a positive indicator on asset quality. Got it. Got it. Thanks and uh the list. 24:56 24 minutes, 56 seconds Yeah, thanks for Thank you. The next question is from the line of from please go ahead. 25:06 25 minutes, 6 seconds Uh yes uh good evening sir. Thank you for taking the question. So firstly on asset quality uh by plus has improved 25:15 25 minutes, 15 seconds about 15 basis points which is appreciable. um in your opening remarks and in opening remarks I remember 25:23 25 minutes, 23 seconds hearing uh we speaking about what has helped us achieve uh this this asset quality. Uh but at the same time you 25:31 25 minutes, 31 seconds also acknowledge in your opening remarks that you remain cautious because of what you are seeing in some of the industry peers. So some of the industry players 25:40 25 minutes, 40 seconds have called out localized pain in various pockets right uh some calling it some spillover from MFI microlap into 25:48 25 minutes, 48 seconds affordable housing some saying it's more to do with a US tariffs which has impacted a few industries right is very 25:56 25 minutes, 56 seconds the diamond jewelry textiles leather right is there anything that we are 26:03 26 minutes, 3 seconds seeing at our end right which you are monitoring now right your asset quality is holding up right but something that you are monitoring at your end. 26:13 26 minutes, 13 seconds So thanks a I think overall as a as you are talking about the tariff impacted I think if you look at at the entire 26:19 26 minutes, 19 seconds portfolio level less than uh 1.8%age 28%age of IM would be impacted by those uh tariff related items because we are 26:27 26 minutes, 27 seconds in an un ans and uh those segment of customers which are there. So we are seeing pockets of stress but not 26:35 26 minutes, 35 seconds material at the portfolio level in certain geographies and we've taken corrective actions and this is where typically states like Karnataka Maj 26:43 26 minutes, 43 seconds Pradesh had seen and Gujarat had some part of tariff industry related disruptions in Surat but we have a limited impact on that as far as this is 26:52 26 minutes, 52 seconds concerned and the Karnataka the MFI related disruption because of the ordinance we acted early by tightening the credit filters slowing down 27:00 27 minutes disposement in affected micro markets and uh strengthens field verification. 27:06 27 minutes, 6 seconds The situation is stabilizing and we continue to operate with the rightful cautious mode in these in these specific pockets. As far as Madhya Pradesh is 27:15 27 minutes, 15 seconds concerned, there is a stress which is localized to the eastern belt of MP. We have selectively tightened our underwriting and adopting a stance which 27:23 27 minutes, 23 seconds is with sharper credit and income assessment standards. As highlighted, the workers DPD continues to remain 27:32 27 minutes, 32 seconds contained at less than four around 4% which is encouraging and reflects a low opening flow of new new uh cases and 27:41 27 minutes, 41 seconds we've also seen an improvement in space to indicating better stability in early delinquency uh buckets. 27:50 27 minutes, 50 seconds Got it. Got it. Thank you for that. also the second question I had is this quarter this first half right and the EM 27:59 27 minutes, 59 seconds growth is starting around 16% Y and uh I think what you started seeing in the 28:07 28 minutes, 7 seconds last two quarters is in your presentation you started sharing uh your aspiration of where you want to scale up your Indian by FI30 which is about 28:16 28 minutes, 16 seconds 55,000 and this kind of translates into almost a 26% kind of a union candle so now to 28:22 28 minutes, 22 seconds FY30. So I'm just trying to understand now that CBC is is clearly working along 28:29 28 minutes, 29 seconds with you uh in addition to expansion in southern India and the digital transformation now complete what are the 28:37 28 minutes, 37 seconds other changes that you are making right uh which kind of makes you put out that uh aspirational target of getting to 28:45 28 minutes, 45 seconds 55,000 cr on a 20%age plus annual growth over the next 28:53 28 minutes, 53 seconds 5 years is driven by lot combination of following factors if I were to really point out. One is the geographic 29:00 29 minutes expansion. Second is the employee productivity enhancement and investment in technology and sourcing channels. So 29:07 29 minutes, 7 seconds I'll give you a broad break up. Uh 18 8%age will be driven by branch expansion in our existing footprint and the new 29:14 29 minutes, 14 seconds states. 7 to 8%age comes from our productivity enhancement and 5% is expected from a inflation increase in 29:21 29 minutes, 21 seconds the ticket size. So as we enter so as we speak uh uh Abujit we have as I spoke 29:28 29 minutes, 28 seconds that Tamil Nadu, Andhra Pradesh and Telangar these are three open states which are available for us to uh really 29:35 29 minutes, 35 seconds uh venture in and bring our footprint available. So that is a open landscape available. I said that from a digital 29:43 29 minutes, 43 seconds sourcing perspective we had diversified our mix by having digital like CC with and other volumes also we start seeing a 29:50 29 minutes, 50 seconds steady increase in the uh volumes month on month and quarter on quarter basis. 29:56 29 minutes, 56 seconds So we are optimistic with these implementations and with uh with some of the projects which we have worked across 30:02 30 minutes, 2 seconds to really get in in motion. We're confident as a management team that uh we will be able to deliver on the guided 30:11 30 minutes, 11 seconds level of 20% plus annual growth over the next five years. 30:26 30 minutes, 26 seconds uh somewhere around 5.7% for the second quarter. So I mean there are other players who has now started working out 30:33 30 minutes, 33 seconds that's the PT outs or the portfolio efficiency elevated primarily because I mean in addition to banks being 30:41 30 minutes, 41 seconds aggressive now there are a lot of balance transfers which are happening to other pure affordable HFCs as well. So is that not something which is kind of 30:49 30 minutes, 49 seconds worrying us? So I think uh we were very proactive Abij if uh if you look at our we've deployed predictive analytics to 30:57 30 minutes, 57 seconds really identify and engage with the potential BT out customers proactively and the other part AJ is that inhouse sourcing model unlike the others where 31:06 31 minutes, 6 seconds it is either a channel or uh uh led by the partners I think we our in-house sourcing model also enables us that we 31:14 31 minutes, 14 seconds have deeper customer relationships and stronger retention. So I think these are the two parts which which really uh flew out for help us in in this scenario. And 31:23 31 minutes, 23 seconds uh for strong credit customers we offer selective rate specializations or top off wherever we feel. Again if you 31:30 31 minutes, 30 seconds really look at it the customer uh uh behavior wherever there is a BT out performance we let the customer uh exit 31:38 31 minutes, 38 seconds are the one historically the portfolio we let go performs 3x worse when that was in our books. validating that the 31:45 31 minutes, 45 seconds disciplined approach to the portfolio quality over volume is what we really embark upon actually. So I think when there is a a possibility of holding the 31:54 31 minutes, 54 seconds customer rightfully so on his cash flow based underwriting stuff we continue to hold whenever we let go the performance 32:03 32 minutes, 3 seconds really deteriorates and historically that is what we've seen but we are mindful of the fact that uh whatever our 32:10 32 minutes, 10 seconds predictive our efforts will continue to hold this in coming times. 32:17 32 minutes, 17 seconds Got it. Thank you. And sir, I wanted to sneeze in one last question while I I don't feel too good asking you this right but somewhere during the quarter 32:26 32 minutes, 26 seconds right it has had an impact on the stock price uh as you'll appreciate right there have been speculations and media 32:32 32 minutes, 32 seconds articles right uh so just trying to understand I mean is is everything okay uh when it comes to our our promoter 32:42 32 minutes, 42 seconds everything going in the right direction yeah so vijit let's not mull on pure or market speculations. All I can say is 32:50 32 minutes, 50 seconds I'm here and fully committed to AAS and its performance and so is the AAS board and the promoter group. 32:58 32 minutes, 58 seconds This is useful. Thank you so much. 33:04 33 minutes, 4 seconds Thank you. The next question is from the line of GKA from ASK investment. Please go ahead. Yeah, I think congrats on the set of numbers. I have two questions. 33:15 33 minutes, 15 seconds First, I want to understand your thoughts on diving ownership that happen and the second 33:22 33 minutes, 22 seconds question was with regards to you told that you built of MPing problem. So, can you like why why are we facing that problem? Thank you. 33:34 33 minutes, 34 seconds Uh yeah uh obviously your question is valid to ask from shareholder side and 33:42 33 minutes, 42 seconds what about the dividend but you know affordable housing uh all all stack whether we are all peer group is growing 33:50 33 minutes, 50 seconds at a good pace and as you mentioned uh I think we are embarking 20% to 20% growth rate in next five year so keeping that 33:59 33 minutes, 59 seconds thing in mind I think uh we we will need whatever we have excess capital as of now to meet our growth plans but once we 34:07 34 minutes, 7 seconds reach at a level where uh roe versus growth is a good uh uh uh let's say crossing to at a good level a steady 34:15 34 minutes, 15 seconds state basis we will start to pay back the duty to shareholders 34:22 34 minutes, 22 seconds and as regard to NP I think Ashto is I think is right to answer 34:30 34 minutes, 30 seconds so hi Vishal This is regarding see we have a uh process of understanding the portfolio based on various cuts 34:39 34 minutes, 39 seconds geographically ticket size wise and various other cuts. So in that comparative study within Madhya Pradesh 34:48 34 minutes, 48 seconds we we founded that in the eastern belt we had few cases going bad. So that is 34:55 34 minutes, 55 seconds the reason Sajindi mentioned that within MP one bank is was showing some kind of a stress in the in few cases and we have 35:04 35 minutes, 4 seconds taken corrective actions we have brought senior people in credit and uh taken the 35:11 35 minutes, 11 seconds learnings from this. So it is a comparative uh statement when we when we were talking about statewide and then 35:18 35 minutes, 18 seconds further zonal and state further uh cuts on the state. So that's it. But but as overall I think as a company we are we 35:28 35 minutes, 28 seconds are very comfortable on assets quality uh either bouncing rate or oneplus or 90 plus bouncing rate steady state basis uh 35:37 35 minutes, 37 seconds I think we didn't see any much change uh oneplus improved in in last but I think we we gain back our momentum and 35:45 35 minutes, 45 seconds touching less than 4% now uh and in next two quarter it is start to show in the results in the 90 plus also 35:52 35 minutes, 52 seconds and just to add on there uh just to add on there has been no meaningful increase in our bounce rate they continue to 35:59 35 minutes, 59 seconds remain stable at around gross of 18% is net at 13.5 which is broadly in line with the level seen in quarter 2 and H1 36:06 36 minutes, 6 seconds of last year got great s I just had one more question uh we keep hearing we keep what you call reading the healthare report which 36:14 36 minutes, 14 seconds generally highlightes that uh employee iteration challenge given that uh uh we are very tight credit filters which is very good in long term but in near term 36:22 36 minutes, 22 seconds What do you call it affects the it increases the employee attrition. So how would you like to address the challenge for employee attrition on all 36:30 36 minutes, 30 seconds the attrition for FI25 has come down by 7 percentage points from FI24 36:37 36 minutes, 37 seconds and during quarter 2 FI 20 uh 26 is further reduced by 100 to 17% in Q2 versus 18% last year. 36:46 36 minutes, 46 seconds So what we've done is we are benefiting out of a regional HR strategy where we have ensured that HR person presence in leverage region to address ground 36:54 36 minutes, 54 seconds employees concerns motivate them engage them and train them. So I hope this really helps us to maintain the levels at uh which we really are desirable. 37:06 37 minutes, 6 seconds Wishing you all the best at our future quarters. Thank you. Thank you sir. 37:11 37 minutes, 11 seconds Thank you. The next question is from the Rhino Shaloshi from Securities. Please go ahead. 37:19 37 minutes, 19 seconds Hi sir. Uh thank you for giving me the opportunity. Uh so my question was pertaining to lending rate. So what is our incremental lending rate in HL and MSN? 37:32 37 minutes, 32 seconds At the overall mix level uh as simply mentioned and we are almost 25 basis point lower than our overall portfolio 37:40 37 minutes, 40 seconds is at this moment which is very much in line with our strategy because cost of borrowing is continuously falling. Our incremental cost of borrowing is almost 37:49 37 minutes, 49 seconds 60 basis point plus better than the last year. So it is affordable to us in our growth as well as maintaining the uh spread strategy. 38:01 38 minutes, 1 second Got it. And so has so with with with the cost of fund benefit flowing in uh what 38:07 38 minutes, 7 seconds is our PLR uh strategy in the second half? uh uh we we are 38:16 38 minutes, 16 seconds I think this question I again I will elaborate we are let's say in the in the in the banks and all over my large lending 38:25 38 minutes, 25 seconds partner the short-term NCLR got readjusted but still 6 month and above MCLR yet to pass the benefit we are closely watching the interest rate 38:34 38 minutes, 34 seconds scenario uh if we see steady state basis our cost of borrowing is falling so definitely we will think uh to reduce 38:42 38 minutes, 42 seconds our PR uh and we will consider this in next uh however our new uh uh uh we 38:50 38 minutes, 50 seconds already passed a few benefits to the new acquisition of customers so that we we'll remain in the in the in the uh 38:57 38 minutes, 57 seconds competitive got it got it suing this question again because I don't the 39:04 39 minutes, 4 seconds the little thank you for answering question thank you thank Thank you. Participants who wishes 39:11 39 minutes, 11 seconds to ask a question may press star and one. The next question is from the line of Mr. Chumat from Port of Securities. 39:19 39 minutes, 19 seconds Please go ahead. Uh hi uh thanks for taking my question. 39:23 39 minutes, 23 seconds This is actually just a follow up. U you mentioned that your incremental cost of funds is 60 basis points lower and 39:32 39 minutes, 32 seconds incremental spread is around 25 basis points lower. Does it mean that the incremental lending rate is around 100? 39:37 39 minutes, 37 seconds If you want lower than the book, rate my incremental lending rate is 25 lower 39:46 39 minutes, 46 seconds than my total rate that is within our that is within our strategy because my incremental is almost 60 better than the last year. 39:58 39 minutes, 58 seconds So your incremental are I mean technically better than a better spread. 40:05 40 minutes, 5 seconds No no no. So what it means is that your incremental spreads are actually better than the book spreads. 40:14 40 minutes, 14 seconds Yeah. Incremental incremental. Yeah right. Incremental to incremental. 40:19 40 minutes, 19 seconds Yes. No I'm trying to say that the incremental spread is today higher. 40:24 40 minutes, 24 seconds If I compare incremental incremental is right. 40:27 40 minutes, 27 seconds So I think since we highlighted there is a improvement in the in the space what we in in the kind of events which we are 40:34 40 minutes, 34 seconds doing and we highlighted that uh the sequential improvement uh quarter on quarter and year on year. 40:43 40 minutes, 43 seconds Yeah got it got it. Okay thank you very much. Nice question. 40:48 40 minutes, 48 seconds Thank you. Next question is from Julian of Mona Fen from Capital. Please go ahead. 40:56 40 minutes, 56 seconds Rah and thanks for taking up my question. So I have two uh two questions. Uh firstly um uh in your 41:05 41 minutes, 5 seconds closing is there any contribution of DSA uh if any? 41:12 41 minutes, 12 seconds I think uh as a part of automate strategy we have CAC emit and others which really come across and uh build 41:20 41 minutes, 20 seconds across from a pure perspective of DACA I think it is not meaningful at this period of time from we continue to do it 41:27 41 minutes, 27 seconds more from a direct source channel through an allied channels which are CAC emitra mitra and which are around our 41:34 41 minutes, 34 seconds ecosystem uh so to say okay so it would be fair to say that it's sub 5% or Um 41:44 41 minutes, 44 seconds yeah it is less than 10 percentage less than 10%. Okay and secondly um if you could share the mix based on ticket 41:52 41 minutes, 52 seconds size less than five lakhs 5 to 15 and about 25 lakhs. 41:58 41 minutes, 58 seconds That's great if you get the presentation that's available on the that's on the number of loans I was 42:05 42 minutes, 5 seconds looking for a mix that's based on the number of loans. 42:12 42 minutes, 12 seconds Rakkesh in this relation we contact you on a specific data if you are really referring to on the side. Yeah. 42:20 42 minutes, 20 seconds Sure. Sure. Thank you. 42:24 42 minutes, 24 seconds So just to just to give you a broad scale uh uh around uh between less than 25 uh less than uh 25 lakhs we are in 42:33 42 minutes, 33 seconds around uh 76 uh 76.7 around 77 percentage is below 25 lakhs. 42:44 42 minutes, 44 seconds Okay. So uh okay about 23% of the AUM is about 10 five lakhs right that's and anything on less than 5 lakhs as 42:53 42 minutes, 53 seconds well less than five lakhs is around it's around 11 percentage 43:02 43 minutes, 2 seconds 11% of yeah right okay and you also have between 5 to 15 43:09 43 minutes, 9 seconds or sub 15 work those are those are very those are very fine details. I think these are the business 43:16 43 minutes, 16 seconds intelligence. I think we don't share all this much details. Sure. Thank you and all. Thank you. 43:25 43 minutes, 25 seconds Thank you ladies and gentlemen. That was the last question for today. I would now like to hand the conference over to Mr. 43:32 43 minutes, 32 seconds Sachinda Binder for closing comments. 43:36 43 minutes, 36 seconds Ladies and gentlemen, as we conclude today's earning call, I would like to extend my sincere gratitude to each of you for your time, engagement, and 43:45 43 minutes, 45 seconds continued support. The progress we made is a testament of our unwavering dedication of our team, the trust placed 43:52 43 minutes, 52 seconds in us by our shareholders, and the enduring loyalty of our customers. 43:57 43 minutes, 57 seconds Looking ahead, we remain optimistic about the opportunities that lie before us. We are confident that our strategic initiatives underpinned by prudent risk 44:06 44 minutes, 6 seconds management and a customercentric approach will continue to deliver sustainable growth and long-term value for all our stakeholders. If you have 44:14 44 minutes, 14 seconds any further questions or require additional information, please feel free to reach out to Rakekesh Shindi our head 44:22 44 minutes, 22 seconds of investor relations. Thank you once again and wish you all the best in the days ahead. God bless. Thank you everyone. 44:32 44 minutes, 32 seconds Thank you ladies and gentlemen. On behalf of Ang that concludes this conference. Thank you for joining us and you may now disconnect your lines.