Aavas Financiers Limited — Q4 FY26

Aavas Financiers Ltd Q4 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=TF_MAMfp540 Published: 8 days ago

0:03 3 seconds Ladies and gentlemen, good day and welcome to the AAS Financers Limited FY26 earnings conference call. This 0:12 12 seconds conference call may contain forward-looking statements about the company which are based on beliefs, opinions, and expectations of the company as on the date of this call. 0:22 22 seconds These statements are not the guarantees of future performance and involve risk and uncertainties that are difficult to predict. As a reminder, all participant 0:31 31 seconds lines will be in the listenon mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance 0:39 39 seconds during the conference call, please signal an operator by pressing star then zero on a touchstone phone. Please note that this conference is being recorded. 0:48 48 seconds I now hand the conference over to Mr. 0:50 50 seconds Rakkesh Shinder, head investor relations of AAS Finances Limited. Thank you and over to you sir. 0:58 58 seconds Thank you. Uh good evening everyone and a warm welcome to all participants joining us today to discuss the 1:05 1 minute, 5 seconds financial and operating performance of AAS finances for quarter 4 and FI26 along with our outlook for the business. 1:14 1 minute, 14 seconds The results of the investor presentation have been uploaded to the stock exchanges and are also available on our website. I hope you have had a chance to 1:23 1 minute, 23 seconds review them. We have also uploaded Excel fact sheet containing historical data on our website for your easy reference. 1:30 1 minute, 30 seconds Joining me today is the entire management team of AAS. We will begin this call with opening remarks from our 1:36 1 minute, 36 seconds CEO Manu Singh, CFO Renam Braat and CRO Autumn Shafre. This will be followed by 1:44 1 minute, 44 seconds question and answer session. With that, let me now hand over to Manu. Over to you Manu. 1:52 1 minute, 52 seconds Good evening everyone and thank you so much Rakkesh and Ysef. Before I drill into the water results, uh let me tell 2:00 2 minutes you that it's an absolute privilege to address you first time as the CEO of AAS. I'm grateful to the board and to the entire AAS family for their trust and confidence. 2:11 2 minutes, 11 seconds Myself, I bring over 25 years of experience in lending with track records of scaling lending businesses across both geographies and product suites. My 2:20 2 minutes, 20 seconds experience spans across sourcing, credit operations, collections and a deep exposure to operating in regulated 2:27 2 minutes, 27 seconds environments with very strong focus on risk management, governance and execution discipline. 2:35 2 minutes, 35 seconds Over the years, AAS has built a very high quality franchise defined by prudent growth. disciplined risk management and a strong commitment to 2:42 2 minutes, 42 seconds the communities we serve. This is evident in our consistently pristine asset quality, strong governor standards, rigorous compliance and 2:51 2 minutes, 51 seconds best-in-class underwriting capabilities, particularly in the assessed income segment. As we step into the next phase of our growth journey, our priorities 3:00 3 minutes are very clear to scale the franchise responsibly, enhance operating efficiency and 3:07 3 minutes, 7 seconds continue to deliver sustainable risk adjusted returns. 3:11 3 minutes, 11 seconds We will remain firmly anchored to a customer first and credit first philosophy and strengthen our core fundamentals in each market that we serve. 3:21 3 minutes, 21 seconds We see a significant opportunity ahead in deepening our presence, improving per person productivity, driving profitable 3:29 3 minutes, 29 seconds growth. All of this without compromising on asset quality or our government standards. 3:35 3 minutes, 35 seconds Me and my team are very very optimistic about the opportunities ahead and look forward to working closely. 3:45 3 minutes, 45 seconds Engaging actively with all of you as we build the next chapter of AAS's journey with two very important focal points 3:53 3 minutes, 53 seconds sharper execution and long-term value creation. 3:57 3 minutes, 57 seconds Quickly coming to operations for ours for FI26. This is a year of landmarks and milestones. In the year we saw a 4:05 4 minutes, 5 seconds change of promoters welcoming CBC capital partners, our balance sheet crossing 200 billion and our net worth crossing 50 billion marks. 4:16 4 minutes, 16 seconds We have expanded our reach to the southern markets and our lifetime dispersements have crossed 400 billion mark enabling four lakh customers to 4:25 4 minutes, 25 seconds have their dream aas which is home ownership. 4:29 4 minutes, 29 seconds Further, our credit rating outlook was upgraded to positive by grand care both. 4:35 4 minutes, 35 seconds All of these stand testament to the trust customers and stakeholders place in ours and we know this fiduciary responsibility of continuing to deliver 4:44 4 minutes, 44 seconds on the same quarter on quarter at a very macro level. F26 has seen multiple structural enablers including policy 4:52 4 minutes, 52 seconds reforms, continued FDR liberalization and progress and trade agreements. The focus on tier 2 and tier three markets have also strengthened the ecosystem. 5:01 5 minutes, 1 second Yes, the cumulative 125 basis repo cut by RBI has improved affordability creating strong tailwinds for the segment as a whole which is affordable 5:10 5 minutes, 10 seconds housing demand. [snorts] From a business perspective, Q4 was encouraging. It is worth 23.5 billion 5:17 5 minutes, 17 seconds 16% higher than same time last year and 36% growth quarteron quarter which 5:25 5 minutes, 25 seconds firmly reflects an improving operating rhythm of the business. 5:29 5 minutes, 29 seconds Our revenue at the end of FI26 stood at 234.5 billion registering a Y growth of 15%. 5:38 5 minutes, 38 seconds While disbbursements for the year grew 11% at 67.8 8 billion rupees. 5:45 5 minutes, 45 seconds More importantly, our credit first approach continues to benefit us with best-in-class asset quality. Our OnePlus DPD has shown sharp improvement across 5:54 5 minutes, 54 seconds geographies, resulting in a lower GMP almost tracking close to historical low levels of 1%. 6:01 6 minutes, 1 second During the last quarter, we added 31 branches, taking our total network to 435 branches across 15 states. This is a 6:10 6 minutes, 10 seconds testament to us progressively and continually investing in our business. 6:16 6 minutes, 16 seconds This expansion was largely concentrated in focus growth markets such as Tamil Nadu, Uttar Pradesh, Gujarat aimed at 6:23 6 minutes, 23 seconds deepening our presence, improving the reach and driving incremental disersment momentum in areas which have really good high potential. 6:32 6 minutes, 32 seconds As we look ahead, our long-term strategic priorities remain firm and clear to leverage our distribution network 6:40 6 minutes, 40 seconds to take advantage of years of developed local market knowledge which our branches have, 6:48 6 minutes, 48 seconds drive scale efficiently, optimize costs, enhance productivity 6:55 6 minutes, 55 seconds and start leveraging our digital platforms. 7:00 7 minutes With that preamble, I now take you through our quarterly performance. Our net profit for quarter 4 grew by 18% to 7:08 7 minutes, 8 seconds rupees 1.82 billion read by a robust 17% YI growth in NI on account of healthy improvement in our NIMS. 7:18 7 minutes, 18 seconds Our network continues to compound steadily growing at 16% YI. 7:25 7 minutes, 25 seconds Our NIMS expanded 44 bits sequentially to 8.45% 45% during the quarter. Names improved by 29 dips overall in FI26. 7:34 7 minutes, 34 seconds This was supported by improvement in spread coupled with our continuous focus on risk adjusted pricing suiting our 7:41 7 minutes, 41 seconds customer segments. Our asset quality remains pristine with OnePlus DPD well below 4%. Improving 63 bits sequentially 7:51 7 minutes, 51 seconds to 3.17% as of March ending while GMP improved by 14 bits quarteron quarter to 1.05. 05%. 7:59 7 minutes, 59 seconds Credit costs improved to 13 bits driven by lower oneplus flow and improved across buckets. We continue to maintain 8:08 8 minutes, 8 seconds our guidance on keeping credit costs under check below 25 bits for sure on a sustainable basis. Our ROA improved by 8:17 8 minutes, 17 seconds 13 bits to 3.5% and ROE improved 38 bits quarteron quarter to 14.67% 67% in quarter 4. 8:27 8 minutes, 27 seconds Together as a team, we remain focused on delivering quality, profitable growth, strong discipline, getting techled 8:35 8 minutes, 35 seconds efficiencies into our business while creating consistently long-term value for stakeholders. 8:42 8 minutes, 42 seconds With that, ladies and gentlemen, I would now hand over to our CFO, Mr. Gam Ra, to discuss the financials in detail with you. 8:52 8 minutes, 52 seconds Thank you Manu. Good evening everyone and a warm welcome to a running call. 8:58 8 minutes, 58 seconds First uh to provide update on borrowing the improvement in cost of funds continue to underscore the strength and resilience of our well diversified liability principles. 9:09 9 minutes, 9 seconds In line with our strategy of innovation and liability sourcing, we proactively anticipated the potential softening of 9:16 9 minutes, 16 seconds interest rates and strategy a sizable portion of our borrowing to EBL linked instruments and various market 9:24 9 minutes, 24 seconds benchmarks. This forward-looking approach has continued to yield tangible benefit in FI26 as your liabilities are 9:31 9 minutes, 31 seconds repriced faster than those of many peers which led to contain oral borrowing cost. this position as well to maintain 9:39 9 minutes, 39 seconds its competitive cost of funds while supporting sustainable long-term quality growth. During FI26, 9:48 9 minutes, 48 seconds we also successfully secured commitment of rupees 975 cr USD 908 million from a 9:56 9 minutes, 56 seconds mu multinational financial institutions at a very competitive cost. This represent the largest NCD placement in 10:03 10 minutes, 3 seconds the company's history and underscore our position as one of the leading player in affordable finance. It also reflect a 10:10 10 minutes, 10 seconds strong external confidence in a measured quality growth strategy and a long-term vision servicing in affordable housing space. 10:21 10 minutes, 21 seconds The proceed from this financing we deploy to support affordable housing loans to EWS and LI category. promote 10:28 10 minutes, 28 seconds women ownership, scale green certified housing and expand our MSME lending in underserved regions. Further strengthen our development focus lending franchise. 10:39 10 minutes, 39 seconds A well diversified liability franchise linked to various benchmark and competitive price. We were able to deliver 62 basis point improvement in 10:47 10 minutes, 47 seconds overall host of fund for FI26. Our spread remain our spread improved by 31 basis point year on year to 5.20% 20% in FI26. 10:59 10 minutes, 59 seconds We continue to grow deliciously raising around 67.05 billion at competitive rate 11:05 11 minutes, 5 seconds at 7.61% for FI26. As on 31st March 2026, the outing borrowing stood at rupees 204 billion. 11:16 11 minutes, 16 seconds Our tenure borrowing continued longer than the total total of our effects ensuring a positive ALM across all the 11:24 11 minutes, 24 seconds buckets. We have a optimal mix of various benchmark of interest rates such as 40% volume linked to external 11:31 11 minutes, 31 seconds benchmark such as rapport tbour and 33% linked to sub 3month MCN in enabling 11:38 11 minutes, 38 seconds faster repricing of nearly 73% or boring in line with the interest rate movements. We have successfully accessed 11:45 11 minutes, 45 seconds a cost-effective fund raising revenue through the issuance of around 500 million of AAA rated PTC first time in 11:53 11 minutes, 53 seconds AAF history. Lender support remained strong as AAS continue to evolve to maintain access to diversified and cost 12:00 12 minutes effective long-term funding. Our relationship with double funding institutions remain robust supporting our strategic fund funding goals. As of 12:09 12 minutes, 9 seconds 31st March 2026, we maintain ample liquidity includes cash and cash equivalent and unable cash credit limits 12:16 12 minutes, 16 seconds of rupees 19 billion. Documented unable sanctions of rupes 9.75 billions. 12:22 12 minutes, 22 seconds Profitability and capital positions total net total income in absolute terms grew by 18% yearonear in quarter 4 fi 26 12:31 12 minutes, 31 seconds and 18% in full year. Net interest margin named as a percentage total assets expanded by 44 basis point 12:40 12 minutes, 40 seconds quarter of quarter to 8.45% in quarter 4 FI26 and 29 basis point in FI26. We 12:48 12 minutes, 48 seconds remain well capitalized with a net worth of 50.5 billion with a capital to risk weighted assets ratio of 44.6% 12:57 12 minutes, 57 seconds significantly above the regulatory requirement. Net profit for FI totes G by 14% and net worth continue to grow at 13:04 13 minutes, 4 seconds 16%. Now I would like to hand over the light to our CRO Ashoto Shatri to discuss the assets quality. 13:13 13 minutes, 13 seconds Thank you Shanji. Good evening everyone. 13:16 13 minutes, 16 seconds I am pleased to share the key portfolio risk parameters with you. Asset quality and provisioning. AAT is strongly 13:24 13 minutes, 24 seconds positioned to continue delivering industry-leading asset quality. Our asset quality remains within the guided 13:30 13 minutes, 30 seconds range with one day pass due well below 4% at 3.17% 13:37 13 minutes, 37 seconds in FY26 versus 3.38% in FY25 and gross state 3 and net state 3 improved to 13:46 13 minutes, 46 seconds 1.05% and 0.68% respectively. During the quarter there was a reduction in 13:54 13 minutes, 54 seconds absolute value of one plus DPD BPD and percentage which improved by 63 uh basis 14:02 14 minutes, 2 seconds points and gross state three by 14 basis point from December 25. From a 14:09 14 minutes, 9 seconds geographical perspective, asset quality in our vintage states continued to remain healthy. The average OnePlus DPD 14:17 14 minutes, 17 seconds and GMPA stood well below 4% and 1.25% 25% of AUM. Similarly, in our emerging 14:25 14 minutes, 25 seconds markets, we are observing healthy credit performance with OnePlus CPT and GNP levels remaining comfortably within 4% 14:34 14 minutes, 34 seconds and 1% of AM respectively. Our total ECL provisioning including that for COVID 19 14:42 14 minutes, 42 seconds impact as well as resolution framework 2.0 O stood at rupees 1.3 billion as of 31st of March 2026. 14:51 14 minutes, 51 seconds Our disciplined underwriting standards coupled with proactive risk management framework have enabled us to stay ahead of emerging macroeconomic challenges. 15:03 15 minutes, 3 seconds We continue to follow a rigorous credit assessment process stress tested across multiple economic scenarios and remain 15:12 15 minutes, 12 seconds selectively calibrated in our exposure to high-risisk segments. This approach has helped us reserve asset quality 15:20 15 minutes, 20 seconds which continues to rank among the best in the industry. With this, I open the floor for Q&A. 15:30 15 minutes, 30 seconds Thank you. 15:32 15 minutes, 32 seconds Thank you very much sir. We will now begin the question and answer session. 15:38 15 minutes, 38 seconds Anyone who wishes to ask a question may press star and one on the touchstone telephone. 15:44 15 minutes, 44 seconds If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. 15:53 15 minutes, 53 seconds Ladies and gentlemen, we'll wait for a moment while the question assembles. 16:02 16 minutes, 2 seconds First question is from the line of Renees Bua from ICICI securities. Please proceed. 16:08 16 minutes, 8 seconds Yeah. Hi sir. Uh prominence is on a good set of numbers. uh just two question one on the uh on the sort of momentum 16:17 16 minutes, 17 seconds strategy right so I do understand uh you might have spent on the 10 15 days but maybe if you can just broadly uh guide 16:24 16 minutes, 24 seconds us you know how do you think about you know the sector's medium-term growth and where does our stand in terms of growth 16:33 16 minutes, 33 seconds outlook and maybe what is your exponential growth target for 27 and 28 that's my first Hi, thank you so much for that question. 16:46 16 minutes, 46 seconds U I'll take them separately. The first I'll take your second question first which is long-term growth strategy. Our aspiration clearly is to consistently 16:54 16 minutes, 54 seconds deliver uh 20% plus AUM growth largely to outperform industry. 17:01 17 minutes, 1 second on your question of uh short and medium-term growth, I think me and the team is very clearly focused on sharp 17:10 17 minutes, 10 seconds execution of our already laid down strategies of growth. When I mean sharp execution, I mean the following two three things which is getting the 17:18 17 minutes, 18 seconds product and customer suite along with its pricing uh right. Second, looking at the channel 17:28 17 minutes, 28 seconds uh composition today in the sourcing funnel and tweaking that for optimization. 17:34 17 minutes, 34 seconds Third, we've invested in geographical expansion and other than Rajasthan getting the high potential states like 17:41 17 minutes, 41 seconds Maharashtra, Gujarat, UP, southern states uh quickly climb up to their potential because they are now well staffed. 17:49 17 minutes, 49 seconds Last but not the least, managing uh leakages. Leakages in funnel which is what do you source as login sanction 17:57 17 minutes, 57 seconds disbbursement and is it weekly disciplined into an order which follows a particular pattern of percentages. So 18:05 18 minutes, 5 seconds all in all sharper execution resulting in consistency of performance and getting both product channel and geographies into their right slots. 18:15 18 minutes, 15 seconds Thank you. 18:17 18 minutes, 17 seconds Got it. Uh so thank you very much. Uh now just a follow up on that right I mean uh so where do you see RO settling 18:25 18 minutes, 25 seconds right I mean the acquisition obviously is also linked to yields opex optimization etc from a exit 15% roe 18:34 18 minutes, 34 seconds where do you see are we also moving uh going ahead so as I mentioned on your second 18:42 18 minutes, 42 seconds question which is long-term growth strategy or if the question still pertains in the fact of long-term indication ations. I think high teams is 18:52 18 minutes, 52 seconds where our eyes are very clearly set on return on equity. 18:58 18 minutes, 58 seconds Okay. Okay. Got it. Got it. Uh I said my second question uh is for so you know so 19:06 19 minutes, 6 seconds we witnessed a yi product function but when we look at the sequential moment which is down 15 basis point uh you know 19:15 19 minutes, 15 seconds largely due to pillar cut in March but now we also intended to further pay cut of 10 basis point maybe in June right so 19:23 19 minutes, 23 seconds why do you see ultimately spread settling right I mean otherwise ROA will again moderate uh in cost of 27. 19:33 19 minutes, 33 seconds Uh uh you thank you for your question. 19:37 19 minutes, 37 seconds Thank you for your question. If you see in the full year basis uh we have came down 62 basis point in overall cost of 19:44 19 minutes, 44 seconds borrowing and uh which is largely stabilizing at this level and we reached a spread of 5.2% basically as Manu 19:52 19 minutes, 52 seconds mentioned and along with the all team uh uh we talk about right placement of for right price basically. So that will help 20:01 20 minutes, 1 second us going forward a slight improvement in the il placement of a product and 20:08 20 minutes, 8 seconds costing stabilizer at this level we are very confident to maintain the 5% plus. 20:16 20 minutes, 16 seconds Okay. Okay. Okay. So my observation is sir uh you know with 15 basis point tailor cut you know yields are down 20 20:25 20 minutes, 25 seconds basis point you know which essentially means that the book is actually converging towards disment which is you know lower. 20:33 20 minutes, 33 seconds So just wanted to understand uh you know how your disment yields will move going ahead uh which will ultimately take care of your blended. 20:43 20 minutes, 43 seconds Uh perfect. Thank you so much for articulating that clearly. I think that is well established with us and going back to my previous answer uh I would 20:52 20 minutes, 52 seconds like to repeat it that there is enough headroom to place the product on risk adjusted pricing. See we are in an 21:00 21 minutes income assessment uh assessed income group. Every transaction is a transaction which is unique and hence I 21:08 21 minutes, 8 seconds I'm confident of the fact along with my team that the right placement at the right product will help us bridge this gap. Got it. Got it. This is very 21:17 21 minutes, 17 seconds helpful, sir. Thank you and best of luck. Thank you. Thank you. 21:25 21 minutes, 25 seconds Next question is from the line of Kunal Sha from City Group. Please proceed. 21:31 21 minutes, 31 seconds Yeah. So, so a couple of questions on the uh growth side. video articulated expiration to get towards 20% plus and 21:39 21 minutes, 39 seconds we are seeing the network expansion uh this quarter again larger part of the network expansion was in Gujarat uh 21:47 21 minutes, 47 seconds Tamil Nadu and UP wherein uh we would have added like say 8 to 10 odd branches in each state uh so would that be the 21:55 21 minutes, 55 seconds strategy maybe in terms of expansion and we have seen almost flat branches in Maharashtra MP and Rajasthan maybe 22:02 22 minutes, 2 seconds hardly like 3% maybe three branches is getting added as such. So do we see that a larger part of the expansion would be 22:10 22 minutes, 10 seconds coming in these states in terms of the branches and even in terms of the uh incremental uh uh growth. Uh so so 22:17 22 minutes, 17 seconds that's on uh uh maybe firstly on the geography and secondly on the productivity side maybe what are the initiatives we are taking uh uh 22:26 22 minutes, 26 seconds incrementally just to ensure that the productivity and maybe the uh dispersements uh per sales officer that 22:34 22 minutes, 34 seconds also increases up uh so if you can highlight in terms of what would be your near-term strategy in terms of increasing the productivity up. 22:41 22 minutes, 41 seconds Thank you so much uh for those two specific questions. To answer your first question on geography, yes uh we are 22:50 22 minutes, 50 seconds continuously focused on adding branches in states like Maharashtra, Gujarat, Tamil Nadu where we find a perfect 22:57 22 minutes, 57 seconds balance of potential as well as uh risk which we are ready to underride. So that's a balance to look at. So we will 23:04 23 minutes, 4 seconds continue doing that. And the second question of productivity, I'd like to answer that in my fourth approach of two 23:10 23 minutes, 10 seconds uh points. The first is is the arrow enabled and understands what to source 23:19 23 minutes, 19 seconds sources first time right is assessed based on a risk adjustment assessment and then 23:27 23 minutes, 27 seconds any flow through which is from login to sanction sanction disjustment those handover gaps uh at efficiency levels 23:35 23 minutes, 35 seconds today can be moved up 15 20% uh by concentrating on every branch productivity end to end and not purely 23:44 23 minutes, 44 seconds looking at a bucket which is only either login or end result of uh dispersement. 23:50 23 minutes, 50 seconds Secondly, it is important for us to rebuild the muscle which is that I mentioned in the previous question about channel 23:59 23 minutes, 59 seconds management. Where is this sourcing coming from into the funnel? And hence in a branch network where there is 10 12 24:07 24 minutes, 7 seconds years of experience available for local market expertise the muscle of direct business is a focus that all of us 24:16 24 minutes, 16 seconds together as management team are going to continuously work upon which reduces 24:22 24 minutes, 22 seconds dependency or uh if I can say it it kind of gives more control on consistency of what comes in and hence what goes out. 24:32 24 minutes, 32 seconds So those two would be my specific answers to these questions. 24:36 24 minutes, 36 seconds So in terms of indirect sourcing, would we want to take that proportion up or maybe still the focus will be more on direct sourcing as you mentioned like since we have the control out there? 24:46 24 minutes, 46 seconds Uh I'll answer that by saying and I'll give you an analogy on say for example Rajasthan being our uh primary state. 24:54 24 minutes, 54 seconds when we say that we are investing in other state does not mean I'm disinvesting in Rajasthan and hence similarly when I look at uh and the team 25:03 25 minutes, 3 seconds looks at channel management it does not mean we degrow some channel it's about uh rebuilding muscle into channels where 25:11 25 minutes, 11 seconds we have direct control so uh it it's largely about being very clear about focusing on direct and getting that 25:18 25 minutes, 18 seconds muscle built up again indirect continues the way it continues it's an important part of the eosystem system. We value 25:26 25 minutes, 26 seconds that part of the ecosystem. Uh we just want to continue building on our own strength which is the direct sourcing 25:32 25 minutes, 32 seconds through channels like CSC develop our digital uh avenues which is the website our own app which is a referral pro 25:40 25 minutes, 40 seconds program. So it's a stepbystep continual journey but yes I would pause the answers there for further questions. 25:47 25 minutes, 47 seconds Sure. And one last one with respect to IL. So you also indicated in terms of uh uh risk adjusted uh pricing to be 25:55 25 minutes, 55 seconds optimized. So have we started increasing in any of the product segments any of the particular profile? How we are 26:03 26 minutes, 3 seconds looking at it and when would that journey starts in terms of the yield optimization? Has it been rolled out on uh say a pilot basis and uh when do we 26:11 26 minutes, 11 seconds see the full-fledged uh roll out of that happening? 26:16 26 minutes, 16 seconds A as we speak there is no better day to start a good deal than today. So it has already started in the financial year. 26:23 26 minutes, 23 seconds As I mentioned it's a progressive journey. Uh but we have the expertise of underwriting risk very well. We have 26:30 26 minutes, 30 seconds seen in the last many years that the quality of the book is pristine and hence our ability has to build that 26:39 26 minutes, 39 seconds muscle on this suggested pricing across 435 branches. There's a journey which is already on its way. It's it's not 26:46 26 minutes, 46 seconds something which has to be taught very differently. It's just about those uh boundary cases which need to be uh 26:54 26 minutes, 54 seconds looked at, paused and focused to be caught on to back to the core area that you serve. It's always the distraction 27:03 27 minutes, 3 seconds of a business which becomes the attraction and that is what me and my team is going to kind of uh we don't want to be distracted by attraction. We 27:10 27 minutes, 10 seconds have core strengths. We have to deepen them. Got it. Thanks. Thanks and all the rest. Yeah. Thank you. 27:19 27 minutes, 19 seconds Thank you. 27:21 27 minutes, 21 seconds Next question is from the line of Abijit Debal from Motil. Please go ahead. Thank you. Am I able? 27:30 27 minutes, 30 seconds Yes, you are. Proceed. 27:32 27 minutes, 32 seconds Yeah. Yes sir. So just just one question and maybe just going to paraphase what some of my friends earlier in Discord 27:39 27 minutes, 39 seconds have asked. U if you look at the last two years we were growing below 20%. Uh so if you could first articulate uh 27:47 27 minutes, 47 seconds where was the problem uh when uh peers with larger balance sheets were able to grow upwards of 20%. Uh why were we not 27:57 27 minutes, 57 seconds able to grow was it an execution problem uh was it a competition problem uh that is the first thing I wanted to 28:04 28 minutes, 4 seconds understand is you have articulated about uh product placement geography. So if you could add some nuances around it in 28:13 28 minutes, 13 seconds terms of channel are we going to do more of DSA sourcing going forward when you speak about geography uh what are the 28:20 28 minutes, 20 seconds plans to maybe add more states in southern India uh if you could just start with that 28:28 28 minutes, 28 seconds sure I'll take the two questions one by one the first is on about your question about the past uh you know every human 28:37 28 minutes, 37 seconds being including me becomes wiser in hindsight So I would start answering by saying at every point in time and my 28:45 28 minutes, 45 seconds predecessors and the management team have done their best uh in those times. 28:49 28 minutes, 49 seconds Times are different, variables are different. looking progressively ahead on growth. 28:55 28 minutes, 55 seconds My response would go back to the earlier two questions that we are focused on not only looking at sustainable growth. 29:07 29 minutes, 7 seconds We are also investing continually in geographies like South 29:15 29 minutes, 15 seconds Gujarat, Maharashtra, UP where we see potential balanced with quality of the book. So my answers very clearly remains 29:21 29 minutes, 21 seconds this is a vastly untapped market. Uh growth rates are there. We have to make 29:28 29 minutes, 28 seconds sure that we assess it right, price it right uh for our growth. Also a second question of sourcing 29:37 29 minutes, 37 seconds largely between direct and indirect sourcing as I mentioned earlier direct sourcing has always been the branchdriven model and it has been our 29:46 29 minutes, 46 seconds strength. We are attempting very quickly to rebuild. You don't forget uh cycling even if you pick it up after many years. 29:53 29 minutes, 53 seconds So it's a strength that we have and we are just going to polish it and double down on it. The second is it's not about reducing channel partners. Channel 30:01 30 minutes, 1 second partners are an important source of the ecosystem. We value them. We continue doing that. As I mentioned if there are 30:08 30 minutes, 8 seconds uh if there ever have been when I look at hindsighting if there are cases which are external to boundaries uh cases 30:16 30 minutes, 16 seconds which don't suit our limb profile we will try and make sure that we are not attracted by distraction. 30:24 30 minutes, 24 seconds I hope I answered your question and I'm happy to have uh the question again. 30:30 30 minutes, 30 seconds Yes. Yes. that answering the question and just one last thing you talk about right product at the right price and and 30:37 30 minutes, 37 seconds maybe earlier in the call you also said that there will be a network to uh improve the the yields at which we 30:44 30 minutes, 44 seconds operate. Uh so just trying to understand AAS for at least the all of its listed history uh has been a franchise which 30:52 30 minutes, 52 seconds has been very strong on asset quality credit costs have remained benign. Are we now planning to move to a slightly 31:00 31 minutes different uh customer segment or a product segment? This would mean uh while the risk adjusted deals go up or 31:09 31 minutes, 9 seconds the yields go up commensurately the risks also go up and at the same time I mean we might see credit costs also in 31:16 31 minutes, 16 seconds now why I ask this is in your refugees I remember reading that we still continue to guide for a 10 25 basis points in 31:24 31 minutes, 24 seconds credit costs wherever we talk about a yield increase there is a common rate is in risk as well so just trying to 31:31 31 minutes, 31 seconds understand that tradeoff I'm I'm I'm very thankful to you uh for having uh picked this question. It gives 31:40 31 minutes, 40 seconds me and my team uh a big opportunity to vehemently assertively mention that 31:47 31 minutes, 47 seconds increase of yield by no manner suggests increase of risk. 31:53 31 minutes, 53 seconds I will repeat that increase of yield by no uh standards equals mathematically 32:00 32 minutes to increase of risk. We take pride in the fact that our micro market knowledge is exceptional is a muscle exceptionally 32:09 32 minutes, 9 seconds built over time. We continue to be very vigilant about it. We are not overconfident but we are confident in the fact that our placement pricing 32:18 32 minutes, 18 seconds based on every individual case has scope of improvement and we have already started that in practice and are seeing 32:25 32 minutes, 25 seconds some early results. Having said that, this is a journey. Nothing changes overnight. Uh overnight always has 32:34 32 minutes, 34 seconds problems of breakage or the engine jamming. It's a journey. But yes, answering the question once again, we 32:42 32 minutes, 42 seconds are not going to get into more riskier segments. We continue to maintain our guidance on trade costs. 32:52 32 minutes, 52 seconds What this answers my question. Uh thank you very much and I wish you and the team of the very best. Thank you. 33:01 33 minutes, 1 second Thank you. 33:03 33 minutes, 3 seconds Next question is from the line of Gorav Kandelwal from JP Morgan. Please go ahead. 33:09 33 minutes, 9 seconds Hi. Uh good evening. Thanks for taking my questions. I've got a couple of those. First one is a follow up on the yield part. So 20 basis points decline 33:18 33 minutes, 18 seconds in yields in fourth quarter, 15 basis points in back of uh the the the PLR cut. Uh but can I also understand the 33:27 33 minutes, 27 seconds competitive dynamics in that is it largely a function of the other 33:34 33 minutes, 34 seconds part of the yield declining because of competition being too high. That's that's one. And the other part to this question is are you seeing some of the 33:43 33 minutes, 43 seconds bigger HFC's now trying to enter into some of the ticket sizes zip codes that 33:50 33 minutes, 50 seconds you operate in primarily also because they are being pushed out from the prime mortgage site. So they wanting to come 33:56 33 minutes, 56 seconds into your uh zip code. Uh any thoughts around that please? 34:02 34 minutes, 2 seconds uh uh uh I think quarter four quarter 4 the number which you are refering has a impact of we are reduced 15 basis point 34:11 34 minutes, 11 seconds PLR uh which is effective on the 1st March so you can see a large impact what 34:18 34 minutes, 18 seconds is resting the number is on account of that basically and uh rest obviously uh uh this JSON quarter is a good number 34:27 34 minutes, 27 seconds quarter basically where where definitely competition comes in that quarter because everybody in competition want to underwrite maximum business in that 34:36 34 minutes, 36 seconds quarter. So we also we also fall in the same category. But if you see larger picture for the full year basis or 34:44 34 minutes, 44 seconds coming year uh we are deep market presence and we don't see a a a competition which has a uh let's say 34:52 34 minutes, 52 seconds impact on on ill placement. It's more largely as Vanu said uh we we have to be 34:59 34 minutes, 59 seconds uh conscious uh while underwriting the case uh to have a right placement of yield on that assets. 35:08 35 minutes, 8 seconds Got it. Thank you. And my other question is on your OPEX if I look at cost to assets or costs to AUM in last three 35:17 35 minutes, 17 seconds years that had been declining but FI26 it's moved up again year on year. uh where do we see this settle? I 35:25 35 minutes, 25 seconds understand you are still investing in some of the new states and there's some branch [clears throat] expansion uh but 35:32 35 minutes, 32 seconds uh where do on the steady state where do we see this number settling and also could you highlight some of the use 35:39 35 minutes, 39 seconds cases on tech techled efficiencies that you've been talking about? 35:46 35 minutes, 46 seconds Yeah. Uh yes, we agree with you. Uh our opex efficiency in two year continuity we shown an improvement. This year uh we 35:55 35 minutes, 55 seconds had uh uh higher opex than the last year is a is has two factor basically 36:02 36 minutes, 2 seconds largely. Uh we have invested uh uh in the branch expansion which has led to higher manpower because we we we we we 36:11 36 minutes, 11 seconds we are firmly believe that we have to invest in the branch expansion which will give us a better growth momentum 36:18 36 minutes, 18 seconds than the uh uh what we had done in the past. So we have invested there basically and those grantes will start to give the result uh uh in the next 36:27 36 minutes, 27 seconds full year cool year basis and apart from that uh uh then CBC came and we we brought a long-term retention plan of a 36:35 36 minutes, 35 seconds new and estim basically which has also given us some extra cost in the last year basis but uh and and secondly 36:44 36 minutes, 44 seconds thirdly what we thought of the growth for which we have invested uh we have missed that growth uh during that year 36:51 36 minutes, 51 seconds basically that has also has a impact on because denominator is what is not there what to be thought of basically uh invested in the grant expense and people 36:59 36 minutes, 59 seconds investment uh we are hopeful we are confident uh along with entire team and uh manu is also on the board now so we 37:07 37 minutes, 7 seconds we we hope we will grow back in the next year that we'll bring down our opex to am ratio and we maintain that once we 37:15 37 minutes, 15 seconds reach the double size of the balance sheet it will be somewhere 2.75 5% op to ratio. 37:24 37 minutes, 24 seconds Got it. Thank you. Those are all my questions. Thank you and good luck. Thank you. Thank you. 37:31 37 minutes, 31 seconds Next question is from the line of Raja from Ambbit Capital. Please go ahead. 37:38 37 minutes, 38 seconds Hi, good evening and thanks for the opportunity. Uh I have a few questions. 37:42 37 minutes, 42 seconds One uh see when I look at your number of loans in first data, right? That's disbursement value divided by the disbbursement ticket size uh for full 37:51 37 minutes, 51 seconds year and even for the last three quarters which is a cumulative of Q2 Q3 Q4 because I think you had some problems in Q1. uh the volumes have not exactly 38:00 38 minutes grown on a full year basis the total number of loans are flat uh uh and in home loans in fact you've declined on a 38:07 38 minutes, 7 seconds y basis in terms of volume uh what are you doing to uh improve that uh because I see that your employee base has 38:14 38 minutes, 14 seconds expanded your branch network have expanded and certainly volumes are down uh I just want to get some hints uh 38:22 38 minutes, 22 seconds there yeah hi thanks for that uh observations 38:28 38 minutes, 28 seconds Uh it is very clear to us that uh this is an area of 38:36 38 minutes, 36 seconds uh immediate attention for all of us on which as we laid down our FI27 plans 38:43 38 minutes, 43 seconds we've taken uh numbers in April has been uh for us uh quite uh effective. There 38:51 38 minutes, 51 seconds is also a slight change uh in the sense that realization of an instrument uh in 38:59 38 minutes, 59 seconds the customer's uh banking account is now uh the order of 39:06 39 minutes, 6 seconds the day rather than the previous uh regime of where demand drops used to be cut. Uh some of these have now settled 39:15 39 minutes, 15 seconds down very well. uh and hence we see that progressively the investments having been done in both 39:22 39 minutes, 22 seconds people as well as branches along with our technology efforts as I mentioned in the call earlier sharper execution focus 39:31 39 minutes, 31 seconds should start sweating these assets out and productivity per person as well as revenue per person deployed on the field 39:39 39 minutes, 39 seconds is going to be a matrix that we will fat hawkishly ourselves against as we move quarter to quarter 39:49 39 minutes, 49 seconds Understood. So you know as you're saying that your volume should increase and volumes either per person or on per 39:57 39 minutes, 57 seconds branch basis should increase ideally that should lead to better cost absorption right from a unit cost economics point of view. 40:06 40 minutes, 6 seconds Yes. 40:06 40 minutes, 6 seconds Uh so then uh uh you know what are you guiding for in terms of uh opex to assets or opex to a whichever way you 40:14 40 minutes, 14 seconds want to guide for. Sorry if I've missed that guidance but uh generally uh you know what kind of levels do you see uh 40:22 40 minutes, 22 seconds yourself achieving there not just for FI27 but you know on a steady state basis uh can it go below 3%. 40:31 40 minutes, 31 seconds Uh I think on a two two to three years uh platform yes we will we are shooting for something 40:39 40 minutes, 39 seconds below 3%. uh however as I mentioned it's a journey uh and this journey both in terms of 40:46 40 minutes, 46 seconds market as well as uh either tailwinds or headwinds will have some nuances quarter 40:53 40 minutes, 53 seconds to quarter and would you also uh be uh or how do 41:01 41 minutes, 1 second you think about your you know size five strategy or pick five segment because uh say when I look at other mortgage loans 41:08 41 minutes, 8 seconds uh which is essentially all the non on home loans where the ticket size has increased by substantially quarter and 41:14 41 minutes, 14 seconds quarter even on a year basis. Uh so how are you feeling about your ticket size strategy uh going ahead? 41:22 41 minutes, 22 seconds So from a strategic perspective I don't think we are changing our customer segment or geographical segment by by anything including I am repeating at the 41:31 41 minutes, 31 seconds cost of repetence our our credit understanding and credit cost guidance 41:39 41 minutes, 39 seconds uh both tactically and strategically ideally should be moving only from an inflation perspective. The productivity 41:46 41 minutes, 46 seconds lever is to be applied on number of customers coming in and growth there. Uh 41:53 41 minutes, 53 seconds the advantage of the ATS should just flow into the P&L. 41:57 41 minutes, 57 seconds That's not a that's a consequence not a strategy. 42:02 42 minutes, 2 seconds Understood. Very clear. Uh just one more thing. Uh why are your overall repayment rates higher even though your uh your DP 42:10 42 minutes, 10 seconds rate DT out rate has declined? uh uh you know why is that happening? 42:17 42 minutes, 17 seconds Sorry, I missed the question please if you could repeat. 42:20 42 minutes, 20 seconds So I'm asking uh when I look at your calculated repayment rate on an overall basis uh about almost 20%. Uh versus say 42:30 42 minutes, 30 seconds 17 and a half% uh in Q4 of last year and 16 and a half% in Q3. 42:35 42 minutes, 35 seconds Uh even though your BP out has declined, why have the repayment rates gone up? 42:39 42 minutes, 39 seconds Yeah. Uh yeah, thanks. uh if we this has uh three component basically uh one important component which we keep 42:48 42 minutes, 48 seconds monitoring month after month uh uh balance transfer to the lex peer group which is which is less than uh we have a 42:56 42 minutes, 56 seconds guidance as a management team we want to keep control at less than 6% this year also we have closed 5 uh 5.5% for full 43:07 43 minutes, 7 seconds year basis no doubt customers uh uh Sometimes they get extra money uh uh uh 43:14 43 minutes, 14 seconds and they pay back the part closer or let's say extra EMI they pay only largely on that account we have slightly 43:20 43 minutes, 20 seconds higher repayment during this year otherwise balance transfer to VT very much in control which is less than 6% very precise for this year 5.5%. 43:32 43 minutes, 32 seconds Understood. So essentially it's just [clears throat] customer prepayment. Uh that's why yeah there some customers can get extra money that they want to pay more excess 43:40 43 minutes, 40 seconds more emis or part payments which which is which we accept. 43:48 43 minutes, 48 seconds Okay. Thank you lot. Thank you. 43:52 43 minutes, 52 seconds Thank you. Before we move to the next question, a reminder to the participants to ask a question you may press star and one. 44:01 44 minutes, 1 second Next question is from the line of Sri Palooshi from IQira Securities. Please go ahead. 44:07 44 minutes, 7 seconds Hi sir. Uh thank you for giving me the opportunity. Uh my first question is on u technology and digital platform that 44:15 44 minutes, 15 seconds we have developed over the years. So do you feel that there is further investment required on that front uh to 44:22 44 minutes, 22 seconds make it more aligned with the industry requirement uh and also to bring down that and and also smoothen the overall functioning? 44:33 44 minutes, 33 seconds Now we we have done I think a good investment in the sales force uh as well as the life cycle management Oracle flex 44:42 44 minutes, 42 seconds cube then we have bestin-class Oracle ERP ERP system with the future all I think most of the capitalization has 44:49 44 minutes, 49 seconds been done we are not seeing any any further any further investment in the 44:56 44 minutes, 56 seconds entire entire model yes uh our one of the collections is one of the best and uh we We we we see in last so many years 45:04 45 minutes, 4 seconds when they passed due and as well as a as well a collection but we want to be as a more technologydriven collection which 45:11 45 minutes, 11 seconds will bring down our one per unit cost down. So we had some investing we do in the in the collection software but which 45:19 45 minutes, 19 seconds is a which is not so material amount which is not so material which is not so material which is not a material amount. 45:25 45 minutes, 25 seconds Yes. uh uh we whatever we invested it will need some some small investment every year like AI geni need to go 45:33 45 minutes, 33 seconds further sharpen our underwriting acquisitions collections and and which will save us other cost also basically 45:41 45 minutes, 41 seconds opex which you invested years some of that will save other our opex manpower opex manpower efficiency will bring the 45:49 45 minutes, 49 seconds saving uh uh in the company so nothing majors on the tech and digital side with the majority of our 45:57 45 minutes, 57 seconds effects will be towards branch expansion and network expansion broadly. Right. Yes. Yes. 46:04 46 minutes, 4 seconds Got it. The second question was pertaining to uh you know how are you seeing the ground trends in terms of business momentum as well as bounce 46:11 46 minutes, 11 seconds rates delinquency in the early part of one Q and how are we sort of planning or positioning ourselves to uh face 46:20 46 minutes, 20 seconds unfolding situation because the Middle East war and the impact of inflation going ahead for our customers. 46:28 46 minutes, 28 seconds Yeah, thank you. Uh I am Ashto. I'll answer this question. uh yeah we we are 46:34 46 minutes, 34 seconds also keeping very no close watch on what is happening on uh on the equality or 46:41 46 minutes, 41 seconds maybe market trends based on this Middle East war. But thankfully as of now we are not seeing any kind of a trend 46:50 46 minutes, 50 seconds either in bouncing or in our collections. And uh uh meaning in number 46:58 46 minutes, 58 seconds of in fact uh bouncing in the month of April was less than the previous month 47:06 47 minutes, 6 seconds and uh this year April is better than the previous year April. So and at the same time we are also keeping an eye on 47:16 47 minutes, 16 seconds ground feedback that if some checks is getting getting bounced and if it is from a profile where we envisage that it 47:24 47 minutes, 24 seconds might have been affected because of the this war or anything and the reason or a PTP or the reason for the delay or 47:32 47 minutes, 32 seconds reason for you know if it is linked with the the macroeconomic challenges but so 47:41 47 minutes, 41 seconds We are we have not seen anything. Of course we are keeping an eye very close watch because ultimately all of us are 47:48 47 minutes, 48 seconds going to get affected if the petrol prices has gone up by 10 10 rupees or something. So it is going to get affected but as of now thankfully 47:56 47 minutes, 56 seconds nothing has happened. There any profiles that we have filtered which we will uh 48:02 48 minutes, 2 seconds let's say not uh do or maybe do more checks in in in certain profiles any any 48:09 48 minutes, 9 seconds profiles that you have filter uh keeping in mind the current situation. 48:15 48 minutes, 15 seconds Yeah, it is but see it is it is as your guess as as mine. So the immediate 48:23 48 minutes, 23 seconds visibility comes to say travel tools and travels and the hotel restaurants and uh 48:31 48 minutes, 31 seconds uh maybe even uh so so anything which is related to uh energy related things are directly getting affected but one thing 48:39 48 minutes, 39 seconds I can tell you that we aren't the profiles which we are financing if you we the profiles we are not financing 48:47 48 minutes, 47 seconds which are directly affected like chemical factory or anything who is into energy. Our clients are the tier 2 kind 48:56 48 minutes, 56 seconds of a person who are getting affected will get affected as of now not but yes we have kept some 56 profile which are 49:04 49 minutes, 4 seconds as per our general guess might get affected and we are keeping track on their bouncing oneplus or whatever. So 49:12 49 minutes, 12 seconds uh that is what we've been doing as of now. 49:15 49 minutes, 15 seconds Go to my question. Yeah, just to add it's a very very well 49:22 49 minutes, 22 seconds diversified book over a period of time and and hence that's the you know strength of the retail business. There's no concentration risk at all. 49:35 49 minutes, 35 seconds Right. 49:37 49 minutes, 37 seconds Yeah. Thank you. Thank you for answering my question. Thank you so much to the next question. Thank you. 49:44 49 minutes, 44 seconds Thank you ladies and gentlemen. We will take this as the last question for the day. I now hand the conference over to the management for the closing comments. 49:55 49 minutes, 55 seconds Thank you. Ladies and gentlemen, as we conclude today's earnings call, I would like to sincerely thank each one of you for your time, continued engagement and 50:02 50 minutes, 2 seconds support. The progress we have made reflects the strong execution by our team, the trust of our shareholders and the confidence our customers place in 50:10 50 minutes, 10 seconds us. I must also thank our regulator NHP for always being with us, guiding us, 50:19 50 minutes, 19 seconds strengthening us as we progress into the growth journey. Looking ahead, we remain optimistic about the opportunities in front of us. With our focus on 50:27 50 minutes, 27 seconds discipline growth, brutal risk management, and customer first credit approach, we find ourselves well positioned to deliver sustainable growth 50:35 50 minutes, 35 seconds and consistent long-term value for our shareholders. 50:38 50 minutes, 38 seconds Should we have any other questions that require additional information, please feel free to reach out to Rakkesh India, our head of investor relationships. 50:45 50 minutes, 45 seconds Thank you once again for your continuing trust and partnership. Thank you and have a very good day ahead. 50:52 50 minutes, 52 seconds Thank you very much sir. On behalf of AAS Finances Limited, that concludes this conference. Thank you all for joining us and you may now disconnect your lines.