Aditya Birla Capital Limited — Q2 FY25
Aditya Birla Capital reported a strong Q2 FY25 with consolidated PAT of INR 1,001 crore (up 42% YoY), including a one-time gain of INR 167 crore from the sale of its broking sub...
bullish
high
✓ Verified against BSE filing
Claim Ledger
Did management answer the analysts?
Every material analyst question, graded on whether management actually answered it — with the verbatim exchange and quantitative claims checked against filed numbers.
82%Questions answered1Evaded / deflected11Questions audited
Answered
High priority
Why has PCR declined and will it continue?
Asked by Puneet Balani, Macquarie Capital
Management directly explained the reason for PCR decline and confirmed levels can continue.
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Question
So your PCR has declined, while your credit costs have also declined. PCR has declined, and especially when I look at secured segments, they are close to 30% now. So what's the reason here? Any guidance here like you are comfortable with these levels?
Vishakha Mulye, CEO
So Puneet, if you look at our secured book has grown from 67%-74%. So now, of the total loan book, 74% of our loans are secured by real estate collateral or listed security. So that is the reason why the PCR has dropped marginally, because the change in the product mix.
Answered
High priority
Why divergent PCR movements between NBFC and HFC secured books?
Asked by Avinash Singh, Emkay Global
Management explained the ECL model logic and differences in security cover and LGD.
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Question
On one hand, Aditya Birla Finance stage three PCR has been taken down to 30%. I mean, overall PCR down to 46%, particularly sharp drop in secured... But on the housing finance side, you are taking it higher to close to 40%. I mean, that's secured. So what is sort of, I mean, the change that your ECL model is showing just in that quarter?
Vishakha Mulye, CEO
The reason in NBFC, what happens is, what is the security? We have EAD exposure at default into LGD loss given default, which is based over the last 5, 10 years of our recovery rates on the security. So it depends on what is the security cover I have...
Partial answer
High priority
How will life insurance VNB margin rise from 7% to 17%?
Asked by Avinash Singh, Emkay Global
Management gave qualitative reasons but no concrete numbers or timeline for margin improvement.
no specific margin trajectoryrelies on future product mix shift
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Question
Now, if I see this kind of a margin uplift had happened in April 2023, then the equation was different... But here, if we look this time, your ULIP continues to remain flavor of the season... So what is giving you the confidence that the margin can go up by 10% in the second half?
Vishakha Mulye, CEO
All the new products that are getting launched in the second half of the year are non-ULIP products. Protection, we have launched a suite of two new products... Typically, the margins which accrue from our agency business is significantly higher...
Declined
Medium priority
What is total ECL for NBFC for both quarters?
Asked by Subramanian Iyer, Morgan Stanley
Management did not provide the number, offered to share offline.
deferred to offline
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Question
Can I get the total ECL for the NBFC for both the quarters?
Vishakha Mulye, CEO
So we can share that. I don't have it readily available. I can share that offline.
Answered
High priority
What is AUM growth guidance for housing business?
Asked by Mayank Mistry, JM Financial
Management reiterated doubling book in 18-24 months and addressed regulatory concerns.
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Question
So what is our AUM guidance over there? And second, also, there had been announcements; there had been concerns on aggressive lending in the housing space by RBI recently. So has there been any communication with the regulator as such?
Pankaj Gadgil, MD and CEO of Housing Finance Business
The focus is on building the book in the next 18-24 months. That has been the guidance that we've been giving... doubling the book in the next 18-24 months, and that kind of stays on course.
Answered
Medium priority
How much capital allocated to NBFC and HFC?
Asked by Chintan Shah, ICICI Securities
Management provided specific allocation numbers.
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Question
So firstly, on the capital allocation, so when we have after the latest fundraise of roughly INR 3,000 crores, which we have completed, so how much of that has been allocated to NBFC and HFC?
Vishakha Mulye, CEO
Out of the total, we raised about INR 3,000 crores of capital in June 2023... So far, we have invested close to about INR 2,100 crores in the NBFC and about INR 600 crores in the housing finance business.
Answered
Medium priority
How much capital went into digital arm?
Asked by Chintan Shah, ICICI Securities
Management gave specific spending figures.
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Question
How much of this would have gone into the digital arm, digital company?
Vishakha Mulye, CEO
As we had mentioned during March, till March, we had spent about INR 100 crores. And we would have additionally spent about INR 50-75 crore during the year in the digital proposition.
Answered
High priority
Is unsecured lending now entirely internal sourcing?
Asked by Chintan Shah, ICICI Securities
Management confirmed tightening and shift to internal sourcing.
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Question
So how does it go now? Is it entirely internal sourcing for the unsecured, and have we tightened the filters, or how is it given that the current environment, unsecured, probably is not the flavor of the town right now?
Vishakha Mulye, CEO
We have tightened underwritings, whatever cohorts, which was showing any performance which was not in line... majority of our loans are coming through our direct acquisition channel...
Answered
Medium priority
Under which segments are the stressed HFC accounts?
Asked by Chintan Shah, ICICI Securities
Management gave specific quantum and said it's spread across segments.
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Question
So under what segments these accounts would cater into? Affordable or prime? And given that we already have the security, then probably why would we be so I would probably say concerned on the asset quality on front for these accounts?
Vishakha Mulye, CEO
The quantum is very minimal. We're talking about 8-9 crores in overall... it is spread across all the three segments, but the quantum itself is very, very small.
Partial answer
High priority
Why are NBFC margins declining and where will they settle?
Asked by Kishore Agrawal, Bajaj Finserv AMC
Management explained cause but did not give a specific margin level or timeline.
no specific margin targetdeferred to future quarters
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Question
We have seen the second quarter of sequential decline in margins. So is it primarily because of the increase in secured mix, and where do you see the margins settling?
Vishakha Mulye, CEO
Margins, if you look at, that's on the backdrop of change in the product mix. Our secured business going up from 67% to 74%... It might take a quarter or two because I think the shift will have to because the product mix is still in terms of also looking at the environment.
Answered
High priority
Can asset quality improvement continue in H2?
Asked by Kishore Agrawal, Bajaj Finserv AMC
Management gave a clear guidance on credit cost range.
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Question
Do you think that this improvement in asset quality can continue even in the second half?
Vishakha Mulye, CEO
Yes, it will be range-bound. Our guidance has been that the credit cost will be around 1.5%. We have come down to 1.25%. We expect it to be in the same range, and we don't see this going up.