Five-Star Business Finance Limited — Q3 FY26

Five-Star Business Finance Ltd Q3 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=G1La3lF6cV8 Published: 3 months ago

0:01 1 second Ladies and gentlemen, good day and welcome to Five-Star Business Finance Q3 FI26 earnings conference call hosted by 0:09 9 seconds Ambit Capital Private Limited. As a reminder, all participants line will be in listen only more and there will be an opportunity for you to ask question after the presentation. 0:20 20 seconds Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that 0:28 28 seconds this conference has been recorded. I now hand over the conference to Mr. Raabg. 0:33 33 seconds Thank you and over to you sir. Uh thank you and good morning everyone. 0:41 41 seconds On behalf of ambit capital I would like to welcome you all to the third quarter FI26 earnings call for fivestar business finance limited. Joining us from the 0:49 49 seconds management today we have Mr. Lakshati Deinindalan chairman and managing director and Mr. Shikhan Gopal Krishnan joint managing director and CFO. I would 0:57 57 seconds like to thank the management for the opportunity uh to host this earnings call. We can now begin with the opening remarks from Mr. Lakshwati Dinda Alan 1:05 1 minute, 5 seconds and post that we can open the floor for questions. Thank you and over to you sir. Yeah. Uh hi Rao and thank you for that. 1:14 1 minute, 14 seconds Uh good morning everyone. Uh welcome to the five stars earning call. 1:21 1 minute, 21 seconds To begin with, u we all know small ticket loans are uh facing its tough times. 1:30 1 minute, 30 seconds During tough times, we take a three-step approach. 1:35 1 minute, 35 seconds Understand the tough times well or the crisis well. 1:40 1 minute, 40 seconds Second is fix the problems. Third is move ahead. 1:47 1 minute, 47 seconds So FSAR also follows the same three stage approach during the tough times. 1:53 1 minute, 53 seconds We have understood this tough times or crisis very well and we are in the last leg of fixing the 2:00 2 minutes problems keeping long-term perspective in in our mind not short-term. 2:07 2 minutes, 7 seconds Third is moving ahead that is none other than accelerating the growth. 2:14 2 minutes, 14 seconds I'm happy to inform that the actions taken over the last couple of quarters across underwriting and collections have 2:23 2 minutes, 23 seconds ensured continued stability in softer bucket collections in Q3 which is an encouraging trend as it 2:32 2 minutes, 32 seconds would over the time have a positive impact on our portfolio quality. 2:38 2 minutes, 38 seconds We have seen the first reflection of this in Q3 where the current proposition of our portfolio has gone up from 81.67% 2:47 2 minutes, 47 seconds in September to 81.77% in December. Though it is a marginal 2:53 2 minutes, 53 seconds rise, it is a a clear positive signal for us. 3:00 3 minutes Our focus on collections is also reflected in our collection metrics with both unique customer collection 3:07 3 minutes, 7 seconds efficiency and overall collection efficiency remain stable at 95.1% 3:15 3 minutes, 15 seconds and 96.6% respectively compared with last quarter. 3:21 3 minutes, 21 seconds We compute the overall and unique customer collection efficiency in the most conservative manner by including 3:28 3 minutes, 28 seconds the entire stock of stage three or NPA loans into consideration. 3:34 3 minutes, 34 seconds If the NPA loans are excluded, the unique customer collection efficiency goes up from 96.5% 3:42 3 minutes, 42 seconds in Q2 to 97.26% in Q3. Additionally, the unique customer 3:49 3 minutes, 49 seconds collections on the current book, which is the most important bucket for any lender, has gone up from 98.5% 3:58 3 minutes, 58 seconds in Q2 to 99.01% in Q3. 4:03 4 minutes, 3 seconds It is also important to note that these metrics have been achieved without any major addition to the denominator and 4:12 4 minutes, 12 seconds hence these metrics clearly reflect the improvement in the performance of the book in the softer bucket showing a clear signal of revival. 4:25 4 minutes, 25 seconds On the other hand, the slipperages in stage three or NPA continues to remain 4:32 4 minutes, 32 seconds slightly elevated which reflects persistence of some level of stress among our portfolio of borrowers. 4:40 4 minutes, 40 seconds While this has caused some spike in our stage three NPA assets, I don't see any fundamental issue given the secured 4:48 4 minutes, 48 seconds nature of our loans and I'm confident that we will be able to roll back these customers or settle their loans without 4:56 4 minutes, 56 seconds any principal loss through concreted collection efforts and the improvements are expected to be visible in Q4 and thereafter. 5:08 5 minutes, 8 seconds During Q3, our recoveries from NPA or technical write offs amounted to about 5:16 5 minutes, 16 seconds 23 crores in a quarter. And given this trajectory, we are confident of maintaining a healthy recovery trend in quarters to come. 5:25 5 minutes, 25 seconds Despite the slight elevated slippages, the credit cost has only gone up marginally from 1.34% 5:34 5 minutes, 34 seconds in Q2 to 1.44% in Q3. reflecting adequate provision coverage on our loans. 5:45 5 minutes, 45 seconds We do not subscribe to the philosophy of taking huge technical write offs to bring down our stage two or NPA asserts. 5:54 5 minutes, 54 seconds We believe that this leads to a negative borrower behavior and consequently causes a breakdown in the credit culture. 6:04 6 minutes, 4 seconds On the contrary, we believe in taking a prudent level of technical write offs irrespective of some spike in stage 6:11 6 minutes, 11 seconds three or NPA asserts. But at the same level, we would store our recovery efforts to bring down the levels of 6:19 6 minutes, 19 seconds stage three and NPA which will ensure that the borrowers remain serious about paying up on their loans. 6:28 6 minutes, 28 seconds Given our clear focus on collections and controlling the slipperages, we have gone slow on disbbursement leading to 6:35 6 minutes, 35 seconds growth moderating even during the current quarter. 6:39 6 minutes, 39 seconds Our focus clearly is on getting our collection strategy and actions completely in place before moving over to the business acceleration. 6:50 6 minutes, 50 seconds I'm very confident that over next couple of quarters we should be back on track both on growth and asset quality. 6:58 6 minutes, 58 seconds Now moving to the other aspects, we continue to invest in people and in physical infrastructure reflected in the 7:07 7 minutes, 7 seconds additions of 35 branches and 678 business and collection officers during Q Q3 in line with our collections focus. 7:17 7 minutes, 17 seconds The number of collection officers increased to 24,452 as of December as against,329 last year December 2024. 7:28 7 minutes, 28 seconds We are also in parallelling building a full-fledged collection vertical right up to the senior people at HO and this 7:36 7 minutes, 36 seconds once fully set up will have a very positive impact on our collections asset quality going forward. 7:44 7 minutes, 44 seconds Our dispersements during the quarter stood at 976 crores which is about 18% lower compared to the previous quarter. 7:53 7 minutes, 53 seconds This is in line with our strategy of getting our collections fully in place before accelerating our dispersements. 8:00 8 minutes The additional underwriting controls that have been implemented are also helping us onboard the right customers 8:07 8 minutes, 7 seconds who would help maintain strong asset quality in the quarters to come. 8:12 8 minutes, 12 seconds On the borrowings during the quarter we availed incremental debt of 460 crores and the 8:20 8 minutes, 20 seconds cost of incremental debt came at at 8.19%. 8:25 8 minutes, 25 seconds Which is slightly lower than the cost of incremental debt borrowed during the previous quarter. 8:32 8 minutes, 32 seconds Over the over the past one year the cost of funds on the book has dropped by over 50 bips from 9.63% 63% 8:42 8 minutes, 42 seconds to 9.1212% from Q 3 last year to Q3 this year. And 8:50 8 minutes, 50 seconds given our cost of incremental debt, we should see progressive improvement in the cost of funds in the quarters to come. 8:58 8 minutes, 58 seconds This helps compensate for the lower yields and largely protects the spread. 9:04 9 minutes, 4 seconds We continue to have a robust liquidity on the balance sheet of rups 2276 crores. 9:12 9 minutes, 12 seconds For the quarter ended, we achieved a PAT of 277 crores, 3% lower as compared to the PAT for the previous quarter. 9:22 9 minutes, 22 seconds The drop is on the account of oneoff in the last quarter coupled with a marginal impact due to the implementation of new labor code. 9:32 9 minutes, 32 seconds Comparing with last Q3, we have moved up from 274 crores PAT to 277 crores PAT. 9:40 9 minutes, 40 seconds This quarter, our ROA and ROE continue to remain healthy at 7% and 15.8% respectively. 9:52 9 minutes, 52 seconds With our concrete actions both on collections and growth friends, I'm very confident the company would get back 9:59 9 minutes, 59 seconds stronger performance over the next one two quarters. 10:03 10 minutes, 3 seconds Thank you and over to Shriant for more detailed into it. 10:10 10 minutes, 10 seconds Good morning to all of you. 10:13 10 minutes, 13 seconds As Mr. Pati had clearly highlighted the various actions that the company has taken and also in line with what we had 10:21 10 minutes, 21 seconds indicated to you in the previous quarter. Uh our efforts during the current quarter were fully attuned to continuing the stability that we had 10:29 10 minutes, 29 seconds achieved in collections and we are happy to uh inform you that we have managed to keep our collections in the softer bucket stable even during the current 10:37 10 minutes, 37 seconds quarter. uh as was said earlier our current proportion has gone up by 10 basis points during the current quarter 10:45 10 minutes, 45 seconds which clearly shows stabilizing or improvement uh in the collections in the current book despite slight uh elevation in the 10:53 10 minutes, 53 seconds slippages which obviously we will be taking necessary actions to contain them. Our focus has clearly been on keeping the 11:01 11 minutes, 1 second customers in the softer buckets that is the less than the 60-day bucket uh to pay on time because this is what will 11:10 11 minutes, 10 seconds make them less vulnerable from a slippage perspective. 11:14 11 minutes, 14 seconds In fact, one of the data points that we would like to give you is that during the current quarter, our stage 2 assets stood at,249 crores almost the same as 11:23 11 minutes, 23 seconds what was there in Q2. So barring the slip edges that went into Q3, there were no fresh slip edges that came in from 11:32 11 minutes, 32 seconds the uh stage one to stage two in a very meaningful manner which clearly so shows that the slippages in the softer buckets 11:40 11 minutes, 40 seconds are remaining controlled on the yields. uh the yields are moving in the same trajectory that we had 11:47 11 minutes, 47 seconds guided in the past about 20 basis points of drop uh every quarter primarily on account of lower eels on incremental 11:54 11 minutes, 54 seconds dispersements but we have managed to uh counter this well with similar drop in our cost of funds so the spread remains almost stable at about 13.9%. 12:05 12 minutes, 5 seconds There has been a marginal increase in opics due to lower dispersements and lower growth and coupled with credit cost. Uh we have seen our nims 12:14 12 minutes, 14 seconds compressed by about 50 basis points uh on a year-on-year basis and our ROA has come down by about uh 1% from 8% to 7%. 12:24 12 minutes, 24 seconds For the quarter, we clocked a PAT of 277 crores, 1% higher on a year-on-year basis. For the 9 months ended December 2025, our PAT stood at 830 crores. 12:36 12 minutes, 36 seconds That's again 793 crores for the same period a year ago, which is an increase of 5%. 12:43 12 minutes, 43 seconds We managed to get good amount of debt from marquee names even during the current quarter. So we had availed about 12:50 12 minutes, 50 seconds 460 quarters of incremental debt though the sanctions received were almost at,225 crores. Uh and as Mr. pointed out 12:59 12 minutes, 59 seconds it came in at an very attractive all-inclusive cost of 8.19%. 13:04 13 minutes, 4 seconds And uh I'm also happy to inform all the investors in the analyst that during this quarter we have signed the loan agreement with Asian Development Bank, 13:13 13 minutes, 13 seconds one of the largest and most eminent uh global DFIs for a sanction limit of $100 million which will be availed over the 13:20 13 minutes, 20 seconds next couple of quarters. We stand very good from a liquidity buffer and unavail sanction lines perspective. uh liquidity 13:27 13 minutes, 27 seconds buffer was at 2,276 crores and unavail sanction lines were little less than,500 crores. Our net worth as of December 13:36 13 minutes, 36 seconds stood at 7,83 crores crossing 7,000 crores for the first time. Uh even in difficult times we clocked an RO of 13:43 13 minutes, 43 seconds close to 16%. And we would like to assure all of you that we are taking concerted efforts to set our collections 13:51 13 minutes, 51 seconds in place and we believe that we will start seeing the results of these efforts sooner which will give us the confidence to push up growth and lead to 13:59 13 minutes, 59 seconds an optimal level of growth in the quarters to come. Uh with that we will take a pause and uh we'll be happy to 14:07 14 minutes, 7 seconds take any questions that any of you may have. 14:11 14 minutes, 11 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 their touchstone 14:19 14 minutes, 19 seconds telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a 14:28 14 minutes, 28 seconds question. Ladies and gentlemen, we will wait for a moment while the question Q assembles. 14:38 14 minutes, 38 seconds The next question is from the line of Viral Sha from IIL Capital. Please go ahead. 14:44 14 minutes, 44 seconds Yeah. Hi, good morning and uh thank you for the opportunity to uh let me ask the question. So uh I had a couple of 14:51 14 minutes, 51 seconds questions. Uh so uh Mr. Paty, if you can uh say give uh the numbers on the unique collection efficiency on the current 14:59 14 minutes, 59 seconds customers uh right and also without the NPA customers for the last three quarters. 15:07 15 minutes, 7 seconds So we do have the numbers for the last couple of quarters but just bear with us while we get the number for Q1. Uh Mr. 15:14 15 minutes, 14 seconds Pati said I think the current collection efficiency has gone up from 98.5 to 99% in this quarter and the uh overall the 15:24 15 minutes, 24 seconds unique customer collection efficiency excluding the NPA book went up from 96.5 to 97.3 during this uh this quarter. 15:34 15 minutes, 34 seconds I'll just come back to you with the Q1 numbers. 15:37 15 minutes, 37 seconds Got it Shan. Thank you. Uh so secondly uh wanted to check uh uh with regards to the growth. I understand you mentioned 15:44 15 minutes, 44 seconds that now uh after say achieving somewhat degree of stabilization uh on the asset quality front we will uh start focusing 15:53 15 minutes, 53 seconds on growth. Now when we talk about that uh right next year if uh I look at the disbburusment growth uh if I bake in say 16:00 16 minutes 20%, given how sharp the rundown has been uh on the disbburusment front since last one and a half year right uh it's 16:08 16 minutes, 8 seconds uh fair to expect mathematically that at least next year the EUM growth will be more like 20%. And there on maybe of 16:15 16 minutes, 15 seconds course our medium-term target remains but it will be more of a backhanded thing. So just wanted to get a sense on uh that front. uh before I get to my uh 16:25 16 minutes, 25 seconds this last question at this point of time uh you know we will probably come out with our numbers 16:33 16 minutes, 33 seconds post Q4 results because like we said we are also setting up our collections in place and depending on how the collection set up it will give us a 16:41 16 minutes, 41 seconds confidence to uh you know accelerate on the dispersements side see as as all of us know dispersement is the easier part in the lending business while collections is the most difficult part. 16:51 16 minutes, 51 seconds So once we are able to get our collections strategy and actions in place, we'll probably come back to you with a guidance on uh you know the growth for FY27 and years thereafter. 17:02 17 minutes, 2 seconds But at this point of time bear with us uh you know you'll have to give us another quarter for us to come out with exact numbers. 17:08 17 minutes, 8 seconds So Viral uh Pati here let me add to what Shan says. uh in today's earnings call 17:14 17 minutes, 14 seconds there is no uh numbers should be discussed no guidance can be discussed from a growth perspective as I said we 17:23 17 minutes, 23 seconds are in the last leg of stage two where we are fixing our problems keeping long-term in our view so that is our 17:31 17 minutes, 31 seconds focus once that is done I think the rest remaining is just only the uh uh business right we have infrastructure we 17:40 17 minutes, 40 seconds have people we are recruiting people once we put our collections in order and see this for two three quarters stabilizing and improving across all 17:49 17 minutes, 49 seconds fronts then the left out is only business we can talk business little later but no that makes sense I just wanted to 17:58 17 minutes, 58 seconds understand uh from a infrastructure standpoint right over the last I would say one year despite we kind of pulling back in terms of growth we have been 18:06 18 minutes, 6 seconds investing on infrastructure right even x of collection speed uh so which is where I think from Once we see an improvement, what is the extent of improvement that 18:15 18 minutes, 15 seconds we can uh anticipate is what I was trying to get a sense of but fair enough. I I'm not looking for numbers but just more uh qualitatively we are 18:23 18 minutes, 23 seconds very much on uh I would say top of it once we have asset quality under complete control right? 18:29 18 minutes, 29 seconds Yes, exactly. I think uh you you you made a very valid point. Uh we had 35 branches in last quarter also and we 18:37 18 minutes, 37 seconds haded 678 employees in last quarter also. So that clearly shows the business is here to stay for a long period of 18:45 18 minutes, 45 seconds time. When you want to accelerate is is the prudent way any lender has to look into it. As I said we wanted to 18:53 18 minutes, 53 seconds understand fully fix it fully then accelerate the growth. That is what the prudent lenders that we have we have been with. 19:03 19 minutes, 3 seconds Fair enough. I understand and I agree. 19:06 19 minutes, 6 seconds Uh my last question uh Shikant uh is to you uh just on the cost of fund piece. 19:11 19 minutes, 11 seconds Uh Shikant what is the incremental uh room for you to say reduce the cost of funds over the last uh I would say three quarters we have already seen close to 19:20 19 minutes, 20 seconds around 50 bips uh reduction in cost of funds on a overall book basis. So what is the further room that we have on a overall basis? 19:28 19 minutes, 28 seconds So vir I think the last uh repor rate cut which happened of 25 basis points uh I I'm for now I'm not talking about the 19:37 19 minutes, 37 seconds MCLR drops that may happen because that's that's definitely not within anybody's control uh but we have at least uh uh 25 30% of our book which are 19:47 19 minutes, 47 seconds linked to repor rate tables and uh you know external benchmarks so that transmission should start happening which we have not seen it much because 19:54 19 minutes, 54 seconds this repo rate cut itself happened only in November so I If I have to put a number maybe another 10 to 15 basis points benefit should 20:03 20 minutes, 3 seconds certainly be there purely on account of actions taken by RBI. But the good part is also that we are borrowing our trades 20:11 20 minutes, 11 seconds which are much lower than what is the cost of funds on the book which should also give us a kicker in terms of benefit and cost of funds. Uh so again 20:19 20 minutes, 19 seconds obviously we'll be working out a detailed business plan in the next couple of months. uh but for now I would say at least we have another 10 15 basis 20:27 20 minutes, 27 seconds points benefit that will come over the next uh 3 to six months. 20:31 20 minutes, 31 seconds Got it. And just uh on the EDB piece uh Shikant uh if you can just share uh what's the fully loaded cost that we have signed the agreement with. 20:41 20 minutes, 41 seconds So this will be slightly on the higher side. Viral obviously the fully loaded cost will uh will also be determined by the hedge rate when we when we avail the 20:50 20 minutes, 50 seconds facility. uh but I think the number should be anywhere uh you know about uh 25 to 30 basis points costlier than what 20:56 20 minutes, 56 seconds we are uh what we are borrowing. So maybe somewhere around 875 to 880. 21:03 21 minutes, 3 seconds Got it. So makes sense. Thank you so much and all the very best. Thank you. 21:10 21 minutes, 10 seconds Thank you. The next question is from the line of Aijit from Modilal Owal. Please go ahead. 21:17 21 minutes, 17 seconds Yeah. Uh good morning sir. Thank you for taking my question. Uh Latis just one question here. Uh we we went through the opening remarks you shared very detailed 21:26 21 minutes, 26 seconds but I think uh you started with uh saying that we all know small ticket loans are facing tough times and then 21:33 21 minutes, 33 seconds you explained the three-step approach and the fact that we are in maybe the end of the second step which is fixing the problems. So I mean in the 21:42 21 minutes, 42 seconds past we have shared that this this crisis that we are seeing right now is predominantly in the in the small ticket 21:50 21 minutes, 50 seconds size less than three lakh segment. So for the benefit of all of us given that we are at the tag end of the second stage if you could just help us 21:58 21 minutes, 58 seconds understand what actually led to this crisis was it just customer overleveraging and spillover of MFI 22:05 22 minutes, 5 seconds stress which is the crux of this problem and then when we say fixing the problems uh beyond setting up a dedicated collection verticles what other steps are we taking to fix the problem. 22:17 22 minutes, 17 seconds So abid let me go very short on this. Uh we can connect offline for a very detailed discussion about this uh big 22:24 22 minutes, 24 seconds subject. Uh see we all know this crisis started on a overlever but uh today the 22:31 22 minutes, 31 seconds crisis is uh is has moved from overlever to behavioral crisis. That is what I said in my opening comments. Uh there 22:40 22 minutes, 40 seconds are two ways to address this uh uh uh tough times. the the one way is clean 22:46 22 minutes, 46 seconds your group fully and start a fresh. Uh I don't think that is a prudent one. The prudent approach what fivear is taking 22:54 22 minutes, 54 seconds right now is fighting back uh in the stuff uh uh conditions with the customers and explaining the about the 23:02 23 minutes, 2 seconds good credit culture. So that is that is why it's taking little time for fivestar to um show a good revival in collections 23:10 23 minutes, 10 seconds as well as moving towards accelerated growth. Uh so my short answer to this today we are uh uh seeing a behavioral 23:20 23 minutes, 20 seconds crisis. If one lender writes down a loan that affects the other lender psychologically. So it takes some time 23:28 23 minutes, 28 seconds for the lender to prove himself before the customer that uh what kind of uh sec 23:35 23 minutes, 35 seconds security that we have what kind of collections infrastructure we have. So that that seriousness has been slowly steadily has been built in the 23:43 23 minutes, 43 seconds customer's mindset which I said in last uh earning score also and we are doing it uh for the benefit of the small 23:51 23 minutes, 51 seconds ticket lenders because this credit culture should not break down it should continue uh uh going forward. So that's that's why it's taking a little longer time for five star. 24:02 24 minutes, 2 seconds So then what steps are we taking on the fixing front uh except for this uh full-fledged collection vertical that we are now setting up. What are the steps are we taking for fixing the problem? 24:13 24 minutes, 13 seconds See two things are underwriting steps have been taken. Second thing collection vertical step has been taken. Uh we can 24:20 24 minutes, 20 seconds connect offline with Shrihan to go more detail into that. 24:24 24 minutes, 24 seconds Sure sir. And then the last question which I had is u I think I mean what you alluded to in your opening remarks about 24:31 24 minutes, 31 seconds current or the OnePlus DPD right uh which improved about 10 basis points which is actually suggest that the early 24:38 24 minutes, 38 seconds bucket delinquencies are stabilizing. So so two surpass to this question. uh first is uh I mean now that we are 24:45 24 minutes, 45 seconds almost closing January now uh has have the collection trends been stable on a slightly improving trend versus what you 24:52 24 minutes, 52 seconds saw in December and then uh within that I mean are there particular states where the problems are more pronounced uh 25:01 25 minutes, 1 second versus others and where maybe things will recover slightly uh I mean maybe one or two quarters later uh versus a 25:09 25 minutes, 9 seconds broad-based improvement that you might start seeing from this quarter on this. 25:14 25 minutes, 14 seconds So abijit yes January uh uh gives us a very uh uh opening uh month of this 25:21 25 minutes, 21 seconds March quarter is have done well. We have to compare that with October not with December because within the quarter also 25:29 25 minutes, 29 seconds the first month and the last month has a slight difference. So when you compare with October we are really doing well in 25:35 25 minutes, 35 seconds January also in spite of lot of holidays that we had new year republic day Maharashranti Pungal holidays this is a 25:45 25 minutes, 45 seconds holiday month when we compare in south uh I don't know about north but in spite of that we are holding up our 25:52 25 minutes, 52 seconds collections very well in January in terms of some states state specific color if you could share where the 26:00 26 minutes problems are much more pronounced versus the national average. 26:05 26 minutes, 5 seconds No. So, uh Aij, I think the good part that we are seeing in January is that the slippages are a lot more muted compared to let us say October which was the first month of the previous quarter. 26:15 26 minutes, 15 seconds So, I think uh that well from a stage three perspective on uh stage one the 26:22 26 minutes, 22 seconds numbers are fairly in line. uh but then if the first month especially a month riddled with holidays can give this kind 26:30 26 minutes, 30 seconds of a result. I think Feb and March should should be more exciting months and we should uh you know we should see a better trajectory. So I would say 26:37 26 minutes, 37 seconds across all the stages things are uh things are looking up. 26:42 26 minutes, 42 seconds Got it. Thank you for patiently answering all my questions and I wish you and your team very well. Thank you. 26:50 26 minutes, 50 seconds Thank you. 26:52 26 minutes, 52 seconds The next question is from the line of Chentan Sha from ICS securityities. Please go ahead. 26:58 26 minutes, 58 seconds Uh yeah. Hi sir. Uh this is radish from ICI. Uh just two things. So one to Mr. 27:05 27 minutes, 5 seconds Prati uh you know so let us say whatever uh initiatives we have taken in last 6 12 months you know in terms of 27:12 27 minutes, 12 seconds tightening the curry filters uh beefing up the collection vertical. uh so any I 27:19 27 minutes, 19 seconds mean let's say initial indicators that whatever loan we have dispersed in past uh 6 12 months uh the credit behavior of 27:28 27 minutes, 28 seconds those customers are far better than the uh book customers I mean any qualitative uh understanding around that 27:37 27 minutes, 37 seconds re for sure uh the behavior is better but I think the way you know I do understand that some of these things stem from loans which are for much 27:46 27 minutes, 46 seconds shorter tenor uh see for us we generally don't see much delinquencies in the less than 12 month bucket we also track this very closely what we call as an earlier 27:55 27 minutes, 55 seconds year uh uh report so you will generally not see that much but I can say that relatively the last 6 8 months the loans that we have given post additional 28:03 28 minutes, 3 seconds filters being put in uh are looking a lot better people are paying uh you know on on or before the due dates people are 28:11 28 minutes, 11 seconds paying a lot more through uh Nash uh you know which are also you know qualitative coins that will help us ease the 28:19 28 minutes, 19 seconds connection pressures when let's say delinquency hits and all that. So the short answer is yes we are seeing good improvements in the uh in the recent 28:27 28 minutes, 27 seconds book that we are on boarding and just a follow up on that so it is try to assume that I mean earlier we 28:34 28 minutes, 34 seconds used to have 25 30% overlap with customers and I'm assuming under new regime that overlap will be minimal or 28:42 28 minutes, 42 seconds maybe uh n as well it's reducing reish uh but not in very meaningful uh numbers see the way you 28:50 28 minutes, 50 seconds also need to look at it is we are the next level of uh you know reach for the 28:59 28 minutes, 59 seconds MFI customers while MFIs cannot go beyond let's say one lakh one and a half lakh when the MFI customers want a 29:07 29 minutes, 7 seconds higher loan they come to institutions like fivestar so you will always see that overlap you know being a lot more pronounced compared to many of the other 29:14 29 minutes, 14 seconds lenders so Romesh uh let me be very clear with you and uh everyone who's listening this uh see in earlier Earlier 29:21 29 minutes, 21 seconds days we call MFI lenders lending to productive poor. 29:26 29 minutes, 26 seconds That is where MFI culture started in our country. 29:29 29 minutes, 29 seconds But today I think uh MFI lending equal or even one leg above where fivestar lends. 29:37 29 minutes, 37 seconds So except you and you and me uh everyone gets a loan from a mfi customers right. 29:43 29 minutes, 43 seconds Uh I think there is no more productive poor or middle class or lower middle class people only get mfi. that that's 29:51 29 minutes, 51 seconds the trend that I'm seeing right even a customer has a one lakh earning as a mfi loan what does this mean 29:58 29 minutes, 58 seconds right uh nowhere mfi's uh philosophy what we have been talking for decades have gone see I think they 30:06 30 minutes, 6 seconds have we have not moved up the ticket size but they have moved up that uh uh customer segment and they are equally 30:13 30 minutes, 13 seconds lending to the uh small business and small tickets uh loans uh so you you will not see m MFI overlap with small 30:21 30 minutes, 21 seconds ticket lenders. Maybe you will see more MFIs uh uh lending to small ticket business customers like Fivestar. 30:33 30 minutes, 33 seconds Okay. So basically you're saying that MFI will now become a competition for uh you know our product. 30:41 30 minutes, 41 seconds No MFI I have I have I have told in detailed maybe we can connect offline for detailed. We have three hurdles. 30:49 30 minutes, 49 seconds Sure sir. 30:50 30 minutes, 50 seconds They have three hurdles uh to cross before lending to a uh uh loans like uh small ticket loans like fivestar. The 30:58 30 minutes, 58 seconds first hurdle is the ticket size. Second hurdle is the underwriting. Third hurdle is the tenure. I think uh people who 31:05 31 minutes, 5 seconds want working capital loans their first preference may be the gold loans and mfi loans. But people who wanted to set up a 31:13 31 minutes, 13 seconds shop, set up a infrastructure and wanted that loan to be a longer tenure, there is where fivestar and other small ticket 31:21 31 minutes, 21 seconds uh secured loans come into picture. So it is the induced that differs between MFI gold loan and fivestar. 31:28 31 minutes, 28 seconds So Res, I think the point that Mr. was trying to make was not from a competition perspective. It is from an overlap perspective where we believe 31:36 31 minutes, 36 seconds that the overlap will continue to be pronounced because NFIs are also reaching out to those customers who probably in the past they would not have 31:44 31 minutes, 44 seconds reached out to but they can never give the quantum of loan or the type of loan that fivestar gives. So competition is not the problem but overlap will always be there. 31:54 31 minutes, 54 seconds Got it. Got it. I know this is very very helpful and very clear. Just the last thing Shikhan uh I I know you know you are not giving guidance at this point in 32:03 32 minutes, 3 seconds time but maybe just need a qualitative comment around it. uh so let us say uh you know when we look at the uh the incremental cost of borrowing versus a 32:12 32 minutes, 12 seconds book cost right I mean there is a uh huge uh you know 1800 basis point gap there uh which fairly means that maybe 32:20 32 minutes, 20 seconds uh over next three four quarters uh the name expansion will continue and uh as you said you know uh December has been 32:28 32 minutes, 28 seconds fairly good month and when we look at the numbers as well you know stage one uh has come down stage two is flat and obviously stage three that because there 32:37 32 minutes, 37 seconds might be higher growth hours on stage two. So in that sense if your early buckets are taken care of maybe by Q4 32:44 32 minutes, 44 seconds things will be much better. So uh in in nutshell uh it is fair to assume that 32:51 32 minutes, 51 seconds the ROA and ROE has bottom out in this quarter and maybe next quarter onwards though there might be a further uh 32:59 32 minutes, 59 seconds increase in credit cost but the name expansion will sort of offset that impact and hence uh the profitability will remain intact and it should ideally 33:08 33 minutes, 8 seconds improve from FA27. Is that the fair assumption? 33:13 33 minutes, 13 seconds That's a fair assumption. But the one point which we are also you know contemplating at this point of time is also on the opex which is something that 33:21 33 minutes, 21 seconds we have kept extremely tight uh over the last many years. uh but you know with many companies coming into this segment 33:29 33 minutes, 29 seconds and there is a there is a competition that is uh you know that is coming in with attrition going up I think it will 33:36 33 minutes, 36 seconds also be uh imperative for us to you know spend a little more in opex to retain the right kind of employees uh for the 33:45 33 minutes, 45 seconds kind of growth that we want. So the only point that we need to keep in mind is how this opex is going to sort of eat into some of the benefits that we'll get 33:52 33 minutes, 52 seconds either on account of the cost of funds and all that. Uh so which is why you know we will also have to you know delve a little more deeper into that uh 34:00 34 minutes subject before we can give you an answer. Maybe uh over the next 2 three months I think we'll probably be in a better position to give you you know give you a sense on this. At this point 34:08 34 minutes, 8 seconds of time there are quite a bit of moving parts and uh we are trying to set those which are most important right first and then we'll come back to the others 34:17 34 minutes, 17 seconds possibly we could connect after uh you know a couple of months and then uh see how Q4 or FY27 sort of shape up 34:27 34 minutes, 27 seconds and just the last last clarification uh so uh you did mention about you know current bucket collection efficiency in 34:34 34 minutes, 34 seconds the month of December uh so uh Incremental stress asset formation at least in the month of December uh is lowest in last 6 months. 34:46 34 minutes, 46 seconds Sorry, I didn't get it. 34:49 34 minutes, 49 seconds Uh so did mention about Yeah. Yeah. Yeah. Sure. Sure. So Patricy did mention about the you know 34:56 34 minutes, 56 seconds collection efficiency being improving to 99.05 uh you know I think it was 98.5 in last month or last quarter. I'm not too clear 35:04 35 minutes, 4 seconds about it. uh so uh which means uh you know the incremental stress asset formation is coming down and uh if let 35:13 35 minutes, 13 seconds us say this 19% uh so ideally it should be lowest in now 6 months 35:20 35 minutes, 20 seconds yes it is the lowest in the last uh I would say it is even the lowest in the last three four quarters because if you look at the addition to the stage two 35:30 35 minutes, 30 seconds assets uh in absolute terms I'm not talking in percentage terms this quarter has probably seen the lowest addition to stage two assets in the last maybe four 35:38 35 minutes, 38 seconds to five quarters what used to be about 130 140 crores this quarter I think is almost like 70 80 crores so it it seemed 35:46 35 minutes, 46 seconds the lowest tradition and that's where our focus is also to keep the customers in the softer buckets 35:53 35 minutes, 53 seconds yeah so I was actually trying to uh you know uh highlight that only said so that you know entire quarter obviously it has 36:00 36 minutes become half at 80 k but I'm sure December uh it would be the lowest at least in this 3 months as well. 36:07 36 minutes, 7 seconds That's right. You're right. 36:10 36 minutes, 10 seconds Okay. Okay. This good enough. Thank you and best of luck. Thanks. 36:20 36 minutes, 20 seconds Thank you. The next question is from the line of Kunal Sha from City Group. Please go ahead. 36:27 36 minutes, 27 seconds Yeah. Uh hi. Uh a couple of questions. 36:29 36 minutes, 29 seconds Uh so firstly, as you mentioned like now it's becoming more of a behavioral problem. earlier it was more of a overleveraging. So when I look at it 36:37 36 minutes, 37 seconds both in terms of the repeat customers u are we getting uh more prudent in terms of underwriting to this uh repeat 36:45 36 minutes, 45 seconds customers given the behavioral issue and how about the rejection rates how they have uh uh gone up uh uh over past three 36:53 36 minutes, 53 seconds quarters is it stabilized has it gone up uh in Q3 compared to where we were in Q1. 37:00 37 minutes Our repeat customers proportion or our repeat customers process tend to be the same. So we are not uh we have never 37:08 37 minutes, 8 seconds been and we are not in a hurry to give repeat loans. So the customers should have spent 2 years of uh you know they should have had two years of track 37:16 37 minutes, 16 seconds record with us before they can even come for a repeat loan and there is a completely fresh underwriting that we do before giving a loan to the customer. So 37:23 37 minutes, 23 seconds we have always been extremely prudent in terms of repeat customers and typically you don't see too much of a behavioral issue in repeat customers because we 37:31 37 minutes, 31 seconds have seen their behavior with fivestar for 2 years. So they know what the company expects from them and we know how their behavior is going to be. So I 37:39 37 minutes, 39 seconds don't think we are seeing much issue from a repeat customers perspective. On your question on rejection rates yes the rejection rates have gone up in the last 37:48 37 minutes, 48 seconds uh you know couple of quarters but it is not consistently going up. it is probably staying somewhere at around the 37:54 37 minutes, 54 seconds 38 to 40%. Uh this number used to be closer to 30% or so uh prior to maybe Q2 or thereabouts but in Q2 and Q3 we are 38:03 38 minutes, 3 seconds seeing fairly stable rejection rates at about 38 to 40%. Our belief is maybe we will see few basis points drop over the 38:11 38 minutes, 11 seconds next few quarters once our people start understanding the kind of files that the company is comfortable lending to and then they will start onboarding the 38:19 38 minutes, 19 seconds right files. Today it's still at a little early stage from an onboarding uh files perspective but that should get settled. Uh so we are not really uh worried about that. 38:30 38 minutes, 30 seconds Sure. And uh second question was with respect to the overall ACL provisioning when we look at it across the buckets there is a sequential decline out there 38:40 38 minutes, 40 seconds in terms of stage three stage 1 as well from 26 to 21 and u maybe as uh uh maybe 38:47 38 minutes, 47 seconds the last two years uh pool would fall uh maybe into this and the earlier maybe better behaving pool would uh move out. 38:55 38 minutes, 55 seconds Uh how should we look at the overall coverage? Will there be a requirement for the higher coverage? uh uh maybe from the current levels of 1.83 of the 39:03 39 minutes, 3 seconds EUM as we go forward in next uh 3 to four odd quarters. 39:10 39 minutes, 10 seconds No gal I think while you're talking about stages separately uh the way you also need to look at it is what is the overall coverage like you touched at the 39:18 39 minutes, 18 seconds end see whenever we are having a write offs these are loans which are fully provided and if you would recall you know at one point of time we were 39:26 39 minutes, 26 seconds carrying almost a 50% uh provision coverage on the stage three assets which was largely through overlays and where 39:33 39 minutes, 33 seconds we have been conservative today the provisions are getting used for the writeoffs so it is not like we are bringing down the provisions that That is why despite stage three coming down 39:42 39 minutes, 42 seconds from 45 to 40, stage 2 coming down from 4.9 to 3.9 and stage 1 coming from 26 to 21 our overall coverage has just dropped 39:51 39 minutes, 51 seconds by six basis points. So our belief is that at an overall level we should probably be and if you just go back one 39:59 39 minutes, 59 seconds year this number was at 1.66%. So we are already carrying almost 17 18 basis points higher on a you know on a overall 40:06 40 minutes, 6 seconds book level and this is something we have also told you in the past our belief is that maybe you know around 1 and a half to 1.6% is probably the appropriate 40:16 40 minutes, 16 seconds level of provision for a for a secured book. Uh you know most of our peers who are operating in secured assets don't even carry you know this kind of 40:24 40 minutes, 24 seconds provisions. Uh but we'll keep taking a look at this and ensure that we carry an appropriate level of provision for the foreseeable future. you will see this 40:32 40 minutes, 32 seconds number hovering maybe around 1.7 to 1.8%. 40:36 40 minutes, 36 seconds Yeah, sure. No, so that's where the question was like this quarter also appears more than 60 crores has been written off because any which way on the 40:43 40 minutes, 43 seconds ECL side it's been down and um overall provisioning number is 57 odd crores. Uh so uh maybe wouldn't we wouldn't it be 40:51 40 minutes, 51 seconds prudent to maybe utilize uh this write offs and at least try to maintain the coverage in that uh band rather than getting the overall coverage down on every write off. Yeah. 41:03 41 minutes, 3 seconds Uh but kunal then that's a double-edged sword right you are also writing off and then see because today we have probably written off all loans which are more 41:10 41 minutes, 10 seconds than 450 days and then you start creating more provision on a less than 450day asset. You're also setting a precedent which at some point of time 41:18 41 minutes, 18 seconds the auditors are going to hold against us saying that you know during this quarter you maintain so much you continue to maintain. So I think the 41:25 41 minutes, 25 seconds question is as and when you know you have the deeper delinquent loans go away from your book uh the provision coverage 41:34 41 minutes, 34 seconds will naturally come down but at an overall level we are still you know at a very healthy provision and that is something that we'll continue to carry 41:41 41 minutes, 41 seconds between stages you know it will be a question of how the move happens uh from a book perspective you know what kind of 41:48 41 minutes, 48 seconds writeoffs are we doing so you will see some movement so I think I wouldn't give too much of importance to uh you know difference within the stages rather than being at an overall book level. 41:59 41 minutes, 59 seconds Sure. Got it. Yeah. Thanks. That's helpful. Yeah. 42:06 42 minutes, 6 seconds Thank you. The next question is from the line of Parag from White Oak Capital. Please go ahead. 42:15 42 minutes, 15 seconds Yeah, thank you. So I have uh two questions. one uh with respect to uh you know the you mentioned in the call that 42:23 42 minutes, 23 seconds basically you are trying uh to you know even improvise the behavioral of the customers uh because now the micro 42:32 42 minutes, 32 seconds finance problem has become a behavioral problem as well. Uh so I just want to know that what methods uh currently are 42:39 42 minutes, 39 seconds we employing? I mean is it uh you know educating the customer and all is is the primary focus or we are also going for 42:47 42 minutes, 47 seconds repossession uh or you know some kind of a other harsher way like giving the legal notice and all uh and if we have done any 42:55 42 minutes, 55 seconds repossession during last 6 n months I just want to know what is the success rate of selling down or uh recovering. 43:03 43 minutes, 3 seconds So that's the first question. Secondly, in terms of u you know in last few calls you highlighted that you know you want 43:10 43 minutes, 10 seconds to slowly build the uh affordable housing book as well. Uh so what is the status there or you want to you know 43:18 43 minutes, 18 seconds kind of wait for uh uh you know this quality problem to settle down before uh uh you know throwing that book. So these are my two questions. Thank you. 43:29 43 minutes, 29 seconds Yeah. Yeah. I'll go from second. Uh yes uh affordable housing has been foot in stage from last quarter onwards but as I 43:37 43 minutes, 37 seconds said uh even in the lab book we are not in a hurry of accelerating things and for sure for the new product we are not at all in hurry in accelerating things. 43:46 43 minutes, 46 seconds I think we have uh uh dispersed close to or we we gave sanction close to 100 files of housing uh which has given us a 43:56 43 minutes, 56 seconds encouraging uh uh uh feedback. So we'll when we accelerate the lab book, we'll be also accelerating the housing uh 44:04 44 minutes, 4 seconds book. Maybe we be we may think of even putting up a separate teams to make it more serious from a growth perspective 44:11 44 minutes, 11 seconds on the new product. Uh that's from the second question. On the first question, uh there are a lot of things that we can 44:18 44 minutes, 18 seconds explain but we can take offline for for what all efforts that we have put in place. See the behavioral aspect what I 44:25 44 minutes, 25 seconds said I I never meant on a stage three or NPA customer. I meant on a uh standard 44:32 44 minutes, 32 seconds customers. See in in a village or in a town for a for a for for example a lender has written down a loan and a 44:40 44 minutes, 40 seconds lender has not turning up on collections that has the effect on the next house right where some other lender would have 44:47 44 minutes, 47 seconds lent right. So that is the behavioral aspect uh that is causing uh causing the 44:54 44 minutes, 54 seconds uh other uh most importantly the secured lenders in that locality. So it is taking more time for us. Obviously I 45:01 45 minutes, 1 second told it in last quarter itself and uh the encouraging signs are people are uh uh behaviorally people are behaving very 45:10 45 minutes, 10 seconds well now. Uh and uh the simple method is keep connecting with the customers very often. Maybe meet them four times in a 45:18 45 minutes, 18 seconds month. Continuously meet them and explain them about uh the other lenders versus fivear the secured nature and how 45:28 45 minutes, 28 seconds important the the the the the credit score is for you uh as you move up in the later uh for your uh business 45:37 45 minutes, 37 seconds growth or a housing need. So all these things take uh much uh longer time uh for customers to understand uh that uh 45:46 45 minutes, 46 seconds differentiating between one lender and another lender. So now you will see the efforts what we have been putting in for last 6 months have come have shown the 45:55 45 minutes, 55 seconds results for us. So I think mostly we are uh good to go with the behavioral uh crisis. It is it should be behind us 46:02 46 minutes, 2 seconds after this quarter. Uh that's why I said once we fit in we are in the last leg of fitting in the problems. Once we fit in 46:09 46 minutes, 9 seconds the problems the the next uh stages just uh uh uh growing or accelerating our growth. 46:24 46 minutes, 24 seconds Yeah, we'll move ahead. Yeah, thank you. The next question is from the line of Nishjan from KOTC Securities. 46:32 46 minutes, 32 seconds Please go ahead. 46:42 46 minutes, 42 seconds Mr. Nin, please go ahead. 46:46 46 minutes, 46 seconds Yeah, sorry. Uh, sorry. Uh, I hope I'm audible now. 46:49 46 minutes, 49 seconds U, yes. 46:51 46 minutes, 51 seconds Thanks. U, so maybe you answered this, but um, you know, how long do you really wait uh, you know, before writing off a loan if the customer is not delinquent? 47:00 47 minutes I know you I I think I think you just mentioned 450 days but uh given the way where we are probably in the cycle and probably way the customer is behaving 47:08 47 minutes, 8 seconds would you really want to wait for that long or or maybe make some on a secured loan it's uh it's quite uh 47:16 47 minutes, 16 seconds soon nish in fact in the past we used to write off you know beyond uh 24 months of NPA you know beyond 18 months of NPA 47:24 47 minutes, 24 seconds and all that we've actually brought it down to 15 months right now which is quite soon So I think it'll be I don't think at this point of time we will look 47:33 47 minutes, 33 seconds at uh you know accelerating this but again it'll be determined by uh you know what we want to do uh on a quarter-on 47:40 47 minutes, 40 seconds quarter basis but from a from a principal perspective I think we are comfortable with uh you know 450 days where we are writing off and 47:48 47 minutes, 48 seconds incidentally in the state of Karnataka we have been a little more uh aggressive also it's even less than 450 days where we have written off some of the loans so 47:56 47 minutes, 56 seconds it's a it's a casetoase state specific call also that we could take. 48:02 48 minutes, 2 seconds Got it. And and would you prefer to sort of just make some you know higher buffers or provisions and clean up the books? Uh maybe not not a write off but 48:10 48 minutes, 10 seconds uh you know just keep a buffer and sort of move on with uh you know business as usual. 48:16 48 minutes, 16 seconds Our our belief is that our provisions are still quite high given the write offs that we've been doing because these writeoffs also have an impact on the 48:24 48 minutes, 24 seconds lawgiven default that you have. So uh that's why I was telling we believe a prudent provision cover for a secured 48:31 48 minutes, 31 seconds book will be more around a 1.5 1.6 level. We're already at 1.8. I think the buffer is already inbuilt into this. Uh 48:39 48 minutes, 39 seconds depends on you know how things pan out whether we would want to release more provisions or keep it at this level is a call that we will take in the quarters 48:46 48 minutes, 46 seconds to come because the incremental trends are looking fine. So it's probably just a decay which which kind of increases 48:53 48 minutes, 53 seconds right. beyond the point you just maybe provide for it and and ensure that the P&L is insulated. 49:02 49 minutes, 2 seconds This the call that board and management uh will take like I said we will we will ensure that we continue to create an appropriate level of provision. 49:09 49 minutes, 9 seconds Got it. We we'll leave it at that. Thank you very much. Thanks. 49:13 49 minutes, 13 seconds Thank you. The next question is from the line of Cherab from MS Capital. Please go ahead. 49:21 49 minutes, 21 seconds Hi, good morning. Thank you for the opportunity. uh Shri Khan and Mr. 49:25 49 minutes, 25 seconds Just two questions. One uh just keep in mind what was the write off that was taken this quarter? Could you just help us with that number? 49:33 49 minutes, 33 seconds About 63 crores. 49:36 49 minutes, 36 seconds Understood. 63. Thank you so much Shikhan. The second uh maybe slightly uh you know unfair sort of a question but 49:45 49 minutes, 45 seconds of the GNPA pool today the 400 odd crores 10 12,000 customers uh just could you give us a qualitative sense on what 49:54 49 minutes, 54 seconds proportion of these do you think uh you know will become a D1 C1 kind of a regular paying from here on might still 50:02 50 minutes, 2 seconds stay in G&PA but still have to you know you can still collect versus what proportion do you think you'll have to take legal recourse or you'll have to 50:09 50 minutes, 9 seconds sort of go into repossession. Is there any sense of of the stress pool? How much is it where you can sort of start collecting versus uh where you'll have 50:17 50 minutes, 17 seconds to go for a regal vehicle since my question was clear? 50:21 50 minutes, 21 seconds Yeah. Uh see uh once the customer has moved to stage three which is which we call NPA uh we don't get into a concept 50:29 50 minutes, 29 seconds of D1C1 at all. uh because we go and uh ensure that whether we do a partial 50:37 50 minutes, 37 seconds settlement or a full settlement thereafter. So there is no concept of collecting one due from a NPA customers 50:44 50 minutes, 44 seconds because then again the behavior aspect changes there. So once a customer behaves becames NPA uh we uh strongly 50:53 50 minutes, 53 seconds believe that there's no concept of collecting a due from him. we have to be very clear on settling the loan or 51:00 51 minutes partly uh uh paying the uh uh maybe uh five six installments together. So then only the behavioral uh from from a NPA perspective uh uh is is been maintained. 51:12 51 minutes, 12 seconds Once the account becomes the NPA, it's been taken over from the legal recovery team. Uh as I said they two they do two 51:19 51 minutes, 19 seconds aspects. One is they continuously start the uh uh legal recovery process. uh fixing a arbitrator, taking an 51:28 51 minutes, 28 seconds arbitrator uh uh degree, then going into a EP and bringing the property to auction. Um simultaneously, hello, can you all hear me? 51:41 51 minutes, 41 seconds Yes. 51:41 51 minutes, 41 seconds Yes. Yes. Okay. Okay. So simultaneously the legal recovery team continues uh to 51:48 51 minutes, 48 seconds have a dialogue with the NPA customers uh to either make partial payment or full settlement before any kind of court 51:56 51 minutes, 56 seconds holder comes in uh because that puts them in real shame at the local village or a local town. uh so there is no in 52:05 52 minutes, 5 seconds short there is no concept of B1 C1 in uh stage three assets either we prefer to settle the loan or uh accept the part uh 52:15 52 minutes, 15 seconds and legal records doesn't stop it starts from the day when it becomes the uh become a NPA 52:22 52 minutes, 22 seconds understood no uh sorry and just to be clear so you're saying the partial payments that happen right at that point in time obviously the loan will move 52:30 52 minutes, 30 seconds away from being a GNPA to being a standard loan. That's kind of what you're trying to that's what you mean by partial settlement that it should be large enough. 52:39 52 minutes, 39 seconds Yeah, you're you're right. Uh uh that there are many cases or many instance where the customer pays all the uh areas 52:48 52 minutes, 48 seconds at one go. So he comes to the current uh bucket. Uh but once uh taken over by a legal recovery team, it doesn't uh that 52:57 52 minutes, 57 seconds account doesn't uh form a part of the collection or the business team. uh once gone to the legal recovery we even 53:05 53 minutes, 5 seconds customers are in current buckets they stay in the legal recovery team itself but as I said the the moto of our legal 53:11 53 minutes, 11 seconds recovery team is not to collect emis from even current accounts they they push them for the settlements 53:19 53 minutes, 19 seconds understood sorry just on this so the 400 crores what is your sense in terms of uh how 53:26 53 minutes, 26 seconds much of it is like a behavior problem where probably you know 3 4 year legal recourse is not what will end up happening but what will end up happening 53:34 53 minutes, 34 seconds will be a earlier settlement or do you think this is all extremely stressed will take three to four years to get sort of cleaned up uh I'm just talking 53:42 53 minutes, 42 seconds about the G&P pool right now so it started as a stress uh three quarters before uh maybe last last March 53:51 53 minutes, 51 seconds quarter and uh this uh June quarter it started as a stress in the customer's uh uh uh family because the cash flows are 54:00 54 minutes intact but the overleverage and the EMI capability of that family has shooted up five 10 times more than what they are 54:08 54 minutes, 8 seconds meant to do. So it started a crisis uh debt crisis in the family. But when other lenders doesn't get into a 54:17 54 minutes, 17 seconds collection mode rather than they go into a cleanup mode then it slowly moves into a behavioral aspect. So that is where uh 54:25 54 minutes, 25 seconds we we came across two quarters down the line that behavioral aspect is more pronounced than the uh over leverage 54:33 54 minutes, 33 seconds issues. So that we are setting uh uh setting things right. Uh we are in control of our customers at least for 54:40 54 minutes, 40 seconds our customers and we are bringing back a good behavior and good credit culture. 54:45 54 minutes, 45 seconds That is where you see across buckets except that uh slipperages except that all buckets are behaving better. I think 54:53 54 minutes, 53 seconds going forward this behavioral aspect to our customers we are very in a strong belief that uh uh they have been uh 55:01 55 minutes, 1 second rectified and they have recovered from the behavioral aspect. 55:06 55 minutes, 6 seconds Understood. Thank you so much for the opportunity. Wishing you all the very best. Thank you. Thank you. 55:13 55 minutes, 13 seconds The next question is from the line of Aditya Pal from MSA. Please go ahead. Right. Am I audible? 55:21 55 minutes, 21 seconds Yes. Are you audible? 55:22 55 minutes, 22 seconds Yeah. Thank you so much for the opportunity. Uh just uh want to double click on the curing bucket. I I I think 55:30 55 minutes, 30 seconds the last participant was also asking about that. uh if if I were to look at all the buckets uh what would be the 55:37 55 minutes, 37 seconds curing rate what would be the because the reason I'm asking asking this is that if I look at over the last four 55:44 55 minutes, 44 seconds quarters the proportion of your 30 30 DPD has actually tilted more towards the 55:52 55 minutes, 52 seconds later end of the buckets which is which which is causing concerns to me that because your this is what I I think that 55:59 55 minutes, 59 seconds the credit cost will has not bottomed out will go up maybe in the next couple of quarters. Uh Sigant, you can you can if if if I'm wrong with that, you can please correct me. 56:10 56 minutes, 10 seconds I these are certain housekeeping questions that we can probably take it offline. Uh you know, we we'll connect at some point of time maybe after the call and then I'll clarify to you. 56:21 56 minutes, 21 seconds All right. And yeah, so that's about it. 56:27 56 minutes, 27 seconds Thank you so much and wishing you all the very best. 56:29 56 minutes, 29 seconds Yeah, we'll we'll move ahead. We'll move ahead to the last question for the day. 56:33 56 minutes, 33 seconds Thank you. The next question is from the line of Sanjay from Bastian Research. Please go ahead. 56:41 56 minutes, 41 seconds Yeah. Hi sir. Thank you for the opportunity. So just wanted to check uh you know as you have highlighted in in 56:49 56 minutes, 49 seconds the call as well but over the last six seven quarters our uh stage two and greater than that NP has been uh 56:58 56 minutes, 58 seconds increasing trend and this is not settling of because as as we are a secure lender and what we are hearing from the industry you know players is 57:07 57 minutes, 7 seconds that the stress is going down in the MFI sector overall but in our case the things is prolonging uh over a couple of 57:16 57 minutes, 16 seconds quarters more. Uh how should we read that and could you give the how why is the diversion 57:24 57 minutes, 24 seconds between you know the unsecured part of the book which is cleaning up right now but the secured part is still going up or something sort of that if my 57:32 57 minutes, 32 seconds understanding is right and please clarify on that as well. 57:36 57 minutes, 36 seconds Sanjay I think you also have to go to the genesis of this problem. The unsecured lenders started facing this problem beginning of last financial year 57:46 57 minutes, 46 seconds that is June uh you know June of the June quarter of 2024 which is when they started seeing this problem. Fivestar as 57:54 57 minutes, 54 seconds an institution we never saw this problem even during the entire financial year of FY25. 57:59 57 minutes, 59 seconds the the problem for us you know was more tail ended and it started uh you know creeping up only in the June quarter and 58:08 58 minutes, 8 seconds uh while while uh you know maybe the other lenders like Mr. Fati said had resorted to certain cleanup of their books. Fivestar does not believe in 58:17 58 minutes, 17 seconds doing that because that impacts the credit culture impacts the borrower behavior. So from that perspective we are still taking a lot of efforts to you 58:25 58 minutes, 25 seconds know collect from these customers and as we speak the efforts are actually bearing fruit. So the question is we saw 58:32 58 minutes, 32 seconds this problem for us much later than uh you know when the unsecured lenders started seeing this problem for them and 58:39 58 minutes, 39 seconds even for us the timeline or the horizon of this problem will be much protracted as compared to the other uh lenders. So 58:46 58 minutes, 46 seconds like we said we have seen problems for two to three quarters and we believe that you know we are probably at the like in the three stages that Mr. party 58:54 58 minutes, 54 seconds outlined in his opening remarks. We are at the end of uh you know getting our uh actions right and from here onwards we should start seeing improvements coming 59:03 59 minutes, 3 seconds through. So one we saw the problem much later than the unsecured lenders and it has been for a much shorter duration as compared to the unsecured lenders. 59:12 59 minutes, 12 seconds So why why am I asking is in the past uh what I've uh looked for the book and what I know from uh you know in the 59:20 59 minutes, 20 seconds numbers on your side uh there is no period of time which you know you have taken three four quarters over a long period of time. So the the stress is 59:29 59 minutes, 29 seconds continuing for a longer period of time compared to the history which we have in the past. So therefore the because as as 59:37 59 minutes, 37 seconds you speak rightly said that we are as a secured lender. uh so the problem is not that vague but uh this time the stretch 59:45 59 minutes, 45 seconds has been longer than you know uh in compared to our history. 59:51 59 minutes, 51 seconds Yeah, you are right. Uh which we have told uh two quarters before itself. This is the uh lenders made crisis. This is 59:59 59 minutes, 59 seconds the first lender made crisis ever any lender would have seen. The earlier crisis was not lender made crisis. It's 1:00:08 1 hour, 8 seconds a health crisis and economy crisis and demon uh was was a short-lived crisis. 1:00:15 1 hour, 15 seconds So this is a lender mate crisis. If you want to be shortlived, as I said, the 1:00:22 1 hour, 22 seconds only way for shortlived this crisis is clean up the entire book and start a fresh. We don't want to do that. We 1:00:30 1 hour, 30 seconds don't want to do that. I said in the opening remarks itself, it's a very easier way to answer your question. This quarter you will see thousand crores of 1:00:39 1 hour, 39 seconds write off and we start a fresh. We don't want to do that because that has a not P&L implication that also has an 1:00:47 1 hour, 47 seconds implication in the crypto and the behavior of the customers whom the others are going to lend in the future. 1:00:53 1 hour, 53 seconds So we want to be a very prudent and a straightforward lender educating the customer that how important the EMI is 1:01:01 1 hour, 1 minute, 1 second is has to be paid back and how important your credit score is for you you to go up. So it takes little bit more time. Be 1:01:08 1 hour, 1 minute, 8 seconds patient with us. As I said uh the fruits are uh uh were able to see in the current quarter itself. Maybe one two 1:01:16 1 hour, 1 minute, 16 seconds quarters we will see back our uh good quality as well as the good growth. 1:01:23 1 hour, 1 minute, 23 seconds Sir uh my my last question would be on that that as you uh you know in in the call you said that we have taken a 1:01:31 1 hour, 1 minute, 31 seconds larger steps we have you know doing all the right things which we have to do and uh from that perspective I'm asking that 1:01:39 1 hour, 1 minute, 39 seconds uh since the industry is growing at a healthy healthy pace and uh you know we see the disbburment growth is going down 1:01:47 1 hour, 1 minute, 47 seconds you have rightly said that you already alluded that you know you will see the growth going forward but uh since all 1:01:55 1 hour, 1 minute, 55 seconds the steps has been taken did we see from a couple of quarters away did we see the past growth which we used to do at 30 1:02:03 1 hour, 2 minutes, 3 seconds 30% is the yeah yeah yeah 1:02:13 1 hour, 2 minutes, 13 seconds like see at this point are you able to hear us see at this point of time like what we 1:02:21 1 hour, 2 minutes, 21 seconds have been telling We are setting our connections in place. You know, we can we can keep talking about why we are facing this stress for maybe one more quarter than what you know others faced. 1:02:31 1 hour, 2 minutes, 31 seconds But yes, we started seeing this late and we have uh we have taken cognizance of the problem. We know why the problem was caused. We have taken the necessary 1:02:40 1 hour, 2 minutes, 40 seconds actions to address this problem. The actions are already showing us the results. So we are almost at the end of you know getting our uh strategies 1:02:48 1 hour, 2 minutes, 48 seconds and actions in place. Now post this I think we will definitely start accelerating on dispersements and growth. What that number will be like we 1:02:56 1 hour, 2 minutes, 56 seconds said we'll probably come back to you over the next one or two quarters. This is probably not the right time for us to give you a number uh because we also 1:03:04 1 hour, 3 minutes, 4 seconds need to get the complete confidence that uh this entire stress is behind us and then it'll give us the confidence to push up on the growth. So you know 1:03:12 1 hour, 3 minutes, 12 seconds you'll have to wait for maybe another quarter for us to come back to you with what our growth plans can be for the future. 1:03:18 1 hour, 3 minutes, 18 seconds Thank you so much for answering the question. Thank you. Now, thank you 1:03:25 1 hour, 3 minutes, 25 seconds ladies and gentlemen. That was the last question for today. I now hand over the conference to Mr. Lakshmiati sir for closing comments. Thank you and over to you. 1:03:35 1 hour, 3 minutes, 35 seconds Yeah. Uh yeah, thank you all for patiently listening our voices which we uh reflect from the ground level 1:03:43 1 hour, 3 minutes, 43 seconds activities what we have been doing. So let me repeat what I said in the opening remarks. Uh uh look, [clears throat] we don't look for a short-term uh recovery. 1:03:53 1 hour, 3 minutes, 53 seconds We want to be a long-term uh and fully recovered uh lender uh from this uh uh 1:04:00 1 hour, 4 minutes debt crisis and behavioral crisis. So we are very confident in saying that we are at the fat end of setting all the uh 1:04:08 1 hour, 4 minutes, 8 seconds putting all right things and seeing all uh uh right results in in in our favor. 1:04:14 1 hour, 4 minutes, 14 seconds Uh the last but the most easiest is to accelerate the growth. Uh let me not comment on numbers. Let me not comment 1:04:21 1 hour, 4 minutes, 21 seconds on guidance on that. As I said in the opening remarks itself, maybe next quarter we will start uh uh working on accelerating the growth. So thank you 1:04:30 1 hour, 4 minutes, 30 seconds with you all. So see you soon on the Q4 uh uh best collections numbers and with a very optimistic note. Thank you. 1:04:42 1 hour, 4 minutes, 42 seconds Thank you. 1:04:43 1 hour, 4 minutes, 43 seconds On behalf of Ambit Capital Private Limited, that concludes this conference.