L&T Finance Ltd — Q4 FY26

L&T Finance Ltd Q4 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=CsKAhjdt3Mg Published: 2 weeks ago

0:01 1 second Ladies and gentlemen, good day and welcome to the LNT Finance Limited Q4 FI26 and full year 26 earnings 0:09 9 seconds conference call. As a reminder, all participant lines will be in the listenon mode and there will be an opportunity for you to ask questions 0:17 17 seconds after the call concludes. Should you need assistance during the call, please signal the operator by pressing star then zero on your Touchstone phone. 0:26 26 seconds Please note that this conference is being recorded. 0:30 30 seconds We have with us today Mr. Sudep Royoy, managing director and CEO, Mr. Satan Jooshi, CFO and Mr. Rajut Dhi, COO and 0:40 40 seconds other members of the senior management team. Before we proceed, as a standard disclaimer, no unpublished price sensitive information will be shared 0:48 48 seconds during the call. Only publicly available documents will be referred to for discussions during interaction in the call. 0:56 56 seconds While all efforts would be made to ensure that no unpublished price sensitive information will be shared in case of any inadorant disclosure, the 1:05 1 minute, 5 seconds same would in any case form part of the recording of the call. Further, some of the statements made on today's call may 1:14 1 minute, 14 seconds be forward-looking in nature. A note to this effect is provided in the Q4 results presentation uploaded. I would 1:21 1 minute, 21 seconds now like to invite Mr. Professor Royo to share his thoughts on the company's performance and the strategy of the company going forward. Thank you and over to you sir. 1:32 1 minute, 32 seconds Thank you. 1:34 1 minute, 34 seconds A very good morning everyone. I welcome you all to the investor call for Q426 and the close of the financial year 26. 1:43 1 minute, 43 seconds Today with me on the call are our CFO Mr. Sachin Jooshi and our chief operating officer Mr. Rajui along with 1:49 1 minute, 49 seconds the senior management team of LG Finance as you have made as you may have gleaned through the exchange notification I'm 1:57 1 minute, 57 seconds pleased to welcome Mr. Sachin Jooshi and Mr. Raju Doti as wholetime directors designate onto the board of L&T Finance 2:04 2 minutes, 4 seconds obviously subject to necessary approvals similar to our previous calls today's call is divided into two sections taken 2:13 2 minutes, 13 seconds up sequentially by myself followed by of our CFO Mr. Suchin Jooshi will be talking about the overall business metrics and financial performance. In 2:21 2 minutes, 21 seconds today's call, we shall focus on the performance update for Q4 FI26 and FI26 alongside sharing our road map for our 5year strategic plan Lakshia 2031. 2:32 2 minutes, 32 seconds Post our commentary, we'll be happy to take questions on the call. 2:38 2 minutes, 38 seconds Before we delve into the highlights of the quarter, I would like to give you some pointers on the current macroeconomic scenario and sectoral 2:45 2 minutes, 45 seconds outlook which becomes important given the volatile global scenario and the ongoing energy market disruptions. 2:53 2 minutes, 53 seconds Amidst ongoing geopolitical tensions and volatile global conditions, India's economic activity continues to be resilient. The economy has performed 3:01 3 minutes, 1 second better than expected throughout the year, laying the groundwork for continuous upward revision to forecasts. 3:07 3 minutes, 7 seconds According to NSO's second advanced estimates, with the new base year being 2022 23, real GDP growth is placed at 3:16 3 minutes, 16 seconds 7.6% in FI26, up from 7.1% in 2024-25. 3:24 3 minutes, 24 seconds The pickup has been led by steady private consumption both in urban and rural and sustain investments in sectors 3:31 3 minutes, 31 seconds like construction, power, production of electronics and capital goods etc. 3:37 3 minutes, 37 seconds Domestic demand remains strong, supported by both rural and urban demand, GST rate rationalization and monetary easing. 3:46 3 minutes, 46 seconds Structural reforms, favorable financial conditions, and the government's thrust on infrastructure spending have aided 3:53 3 minutes, 53 seconds investment activity and bodess well for sustained strength in demand conditions. 3:58 3 minutes, 58 seconds The government's focus on scaling up domestic manufacturing in several strategic and frontier sectors or well for India's long-term growth trajectory. 4:09 4 minutes, 9 seconds Against this broadly resilient backdrop, spillovers from the ongoing West Asia conflict pose potential downside risk. 4:18 4 minutes, 18 seconds However, as per RBI's assessment, strong fundamentals including sustained growth, low inflation and fiscal consolidation 4:26 4 minutes, 26 seconds provides India the wherewithal to withstand the adverse impact of heightened global uncertainties. 4:34 4 minutes, 34 seconds The IMF has also raised India's FI27 GDP growth forecast, highlighting resilience despite global risks and the Middle East 4:42 4 minutes, 42 seconds tensions and high oil prices, keeping India among the fastest growing major economies yet again. While the duration 4:49 4 minutes, 49 seconds and intensity of the West Asia conflict and its broader macroeconomic implications are yet to be fully assertained, we remain hopeful that the 4:57 4 minutes, 57 seconds resilient domestic demand and coordinated polic policy support will provide the wherewithal to withstand the adverse impact of such global uncertainties. 5:09 5 minutes, 9 seconds Coming to this quarter's highlights, I'm pleased to inform you that we have concluded FI26 with our highest ever 5:16 5 minutes, 16 seconds annual profit after tax or rupees 3,03 crores up by 14% yearonear before a onetime impact of labor code or rupees 21 course post tax in quarter 3 FI26. 5:30 5 minutes, 30 seconds Our quarterly profit after tax for quarter 4 FI26 stands at rupees 87 crores up 27% 5:39 5 minutes, 39 seconds yearonear. This has been achieved on the back of highest ever quarterly retail disbbursements of rupees 24,17 5:47 5 minutes, 47 seconds crores up 62% yearonear with contributions received from all our lines of business. 5:54 5 minutes, 54 seconds For context, we had posted retail disbbursements of rups 14,899 crores in the corresponding quarter in 6:03 6 minutes, 3 seconds the previous financial year. The significant thrust of dispersion momentum yearon year has been the result of our continuous focus on risk 6:11 6 minutes, 11 seconds calibrated growth in all lines of business during FI26 duly supported by our nextg credit administration framework cyclopes. 6:20 6 minutes, 20 seconds The retail book now stands at rupees 1 lak 19,58 crores reflecting a growth of 26% 6:28 6 minutes, 28 seconds yearonear while the overall book size reached rupees 1 lakh 21,728 6:35 6 minutes, 35 seconds crores in FI26 and a ROI of 2.4% reflecting a growth of 18 basis points yearonear in quarter 4 FI26. 6:46 6 minutes, 46 seconds This quarter we registered a strong growth in total income which grew 26% yearonear and 4% QQQ with a POP growth 6:54 6 minutes, 54 seconds of 31% yearonear aided by an increase in our names and fees to 10.47% a sequential increase of six basis 7:02 7 minutes, 2 seconds points largely driven by a sharp focus on yield optimization across businesses fee improvement and efficient liability management. 7:11 7 minutes, 11 seconds In the last call, I had emphasized upon our trajectory of pairing credit cost on account of implementation of structural credit policy measures in our businesses 7:20 7 minutes, 20 seconds and the realization of positive dividends of the early implementation of Cyclops in two-heerme and farm 7:28 7 minutes, 28 seconds businesses. I'm pleased to inform that consequently credit costs moderated to 2.64% 7:35 7 minutes, 35 seconds a 19 basis points reduction from the previous quarter. 7:40 7 minutes, 40 seconds I'd like to take I would like to take some time to share a brief update on the broad themes outlined in our guidance last year. In the corresponding quarter 7:49 7 minutes, 49 seconds the previous year when we spelt out the guidance for FI26, I had focused on four broad themes. 7:57 7 minutes, 57 seconds Resumption of the growth trajectory in our rural group loans and FMI business. 8:02 8 minutes, 2 seconds Growth being the primary agenda across all our lines of businesses. granular focus on building opex efficiencies in our collections and create 8:10 8 minutes, 10 seconds administration verticals as a byproduct of Cyclops implementation and enhancing productivity of our sales channels. I'm 8:18 8 minutes, 18 seconds pleased to state that we have tirelessly worked on these four things throughout FI26 and the profitability and the growth that you see today are a result 8:27 8 minutes, 27 seconds of the continuous efforts of our teams making significant progress on these initiatives. Our RGL and MSI business 8:35 8 minutes, 35 seconds has showcased sustained resilience, an uptick in both dispersement volumes and a complete restoration of collection 8:42 8 minutes, 42 seconds efficiencies to the precrisis level of 99.8% plus. 8:50 8 minutes, 50 seconds As far productivity enhancement is concerned, we have granularly focused on improving productivity and throughput 8:57 8 minutes, 57 seconds across all lines of business using digital tracking tools. 9:02 9 minutes, 2 seconds For instance, in our micro finance business, the productivity per field level officer increased to 16.1 lakhs uh 9:11 9 minutes, 11 seconds in quarter 4 FI26 from rupees 11.7 lakhs in quarter 4 FI25 up 38% yearonear. 9:21 9 minutes, 21 seconds While our personal loans business, the productivity has increased to rupees 1.6 6 cr per sales manager in quarter 4 fi26 9:28 9 minutes, 28 seconds from rupees 1 cr in quarter 4 fi25 up by 60%. And the two wheeler business 9:35 9 minutes, 35 seconds displayed an increase of 36% from rupees 14 lakhs to rupees 19 lakhs. Similarly our retail housing business the 9:43 9 minutes, 43 seconds throughput per employee registered an increase of 11% to rupees 1.96 crores in quarter 4526 and our theme business 9:52 9 minutes, 52 seconds registered a productivity increase of 6.6%. 6% to rupees 3.11 cr from rups 2.93 cr in quarter 4 fi25. 10:01 10 minutes, 1 second In the farm business, the productivity increased from rupes 57 lakhs to rupees 63 lakhs up by 11% in quarter 4 fi26. 10:10 10 minutes, 10 seconds We continuously benchmark our productivity ratios with our peer group and while we compare favorably, we will [clears throat] continue to strive to 10:17 10 minutes, 17 seconds improve further. We have taken concerted measures with the help of our digital tracking tools to enhance optimization 10:25 10 minutes, 25 seconds of deployment of manpower while also providing opportunities to use them for cross-selling other products. This 10:33 10 minutes, 33 seconds coupled with the opening of our multi-product and puna branches will help us to augment productivity and bring in operational efficiencies while 10:41 10 minutes, 41 seconds helping us to focus on cross-ell in a concerted manner. 10:49 10 minutes, 49 seconds As all of you are aware, LT Finance as an organization has been investing consistently and building in building 10:56 10 minutes, 56 seconds and deploying proprietary AI tools to help us sell, underwrite, collect and operate more efficiently. 11:07 11 minutes, 7 seconds We consider ourselves as one of the pioneers in adoption of AI at scale in an Indian BFSI sector and we intend to 11:15 11 minutes, 15 seconds keep this strategic lead as the world moves towards increased adoption of AIEL efficiency. 11:21 11 minutes, 21 seconds To this end, we'll continue to invest in the latest AI tools both hardware and software and make an attempt to acquire market leading talent to retain our 11:30 11 minutes, 30 seconds execution lead. Our annual AI conference raise is already considered the most definitive AI conference in the bay 11:38 11 minutes, 38 seconds forai sector in India and we'll continue to strive to maintain the thought and execution leadership in this space 11:46 11 minutes, 46 seconds to substantiate our position as India's leading AI enabled organization in the BFSI sector. We will start giving performance metrics on our AI 11:55 11 minutes, 55 seconds initiatives on a half yearly basis starting with this result cycle. would like to draw your attention to slide 12:02 12 minutes, 2 seconds number 20 on the investor presentation where we have given the early credit performance metric of a Cyclops two-heer 12:09 12 minutes, 9 seconds portfolio benchmarked against industry over a period of 10 months. 12:15 12 minutes, 15 seconds We're pleased to note that Cyclops has outperformed the industry by a wide margin during the aforementioned observation window. Slide number 21 12:25 12 minutes, 25 seconds gives details on the effectiveness of the AI interventions in our collections vertical especially in measurable activities like predelinquency management and selfcure. 12:36 12 minutes, 36 seconds It is to be noted that our successful AIdriven pre- delinquency management and self-care resolution process has 12:44 12 minutes, 44 seconds significantly lowered our cost of collection across all our urban finance products. 12:50 12 minutes, 50 seconds The number of AI co-pilots and tools used by our operating departments have mushroomed and we have given a complete listing of the successful implementations in slide number 22. 13:01 13 minutes, 1 second Our Helios copilot for SM underwriting has significantly reduced the underwriting TAT for our theme clients 13:09 13 minutes, 9 seconds and we expect to improve this even further with deployment of additional modules in QI F Q1 FI27. 13:17 13 minutes, 17 seconds We also intend to embark on a pan organization tech DNA upgrade exercise this year where our operating managers 13:24 13 minutes, 24 seconds and distribution workforce would be equipped with AI productivity tools and training to use the same efficiently. 13:33 13 minutes, 33 seconds Project Nostradamus, LNT Finance's AIdriven automated real-time portfolio management engine that went completely live in the two wheel of finance 13:42 13 minutes, 42 seconds business in November 25 has started delivering measurable outcomes in predicting and containing portfolio risk 13:49 13 minutes, 49 seconds at a granular micromarket level and we expect to implement it in our personal loans business in Q1 FI27. 13:58 13 minutes, 58 seconds This will be followed with implementation of Nostradamus in the rural business finance vertical in Q2FI27 and subsequently inme and farm businesses. 14:11 14 minutes, 11 seconds As we have concluded lecture 2026 and now embarking on luxure 31, we would like to give you a final update on luxure 26 metrics and the aspirational goals for luxure 31. 14:23 14 minutes, 23 seconds Against the target of utilization of greater than 95% by FI26, we have achieved a utilization of 98% at the end 14:31 14 minutes, 31 seconds of the plan. We have outperformed the retail book growth target of 25% CAGGR across the plan by clocking a CAGGR of 14:41 14 minutes, 41 seconds 28% across the luxury 26 plan. The organization achieved the asset quality goals with our console GS3 and NS3 14:50 14 minutes, 50 seconds standing at 2.88% and 96% respectively against our target of GS3 of less than 3% and NS3 of less than 1%. 15:01 15 minutes, 1 second With regard to the last goal of achieving ROA of 2.8 to 3%, we achieved an ROA of 2.4% in quarter 4 FI26. 15:12 15 minutes, 12 seconds During the large part of the strategic plan's tenure, we remain on track to achieve our luxury ROA target of 2.8 to 15:20 15 minutes, 20 seconds 3%. However, we face [clears throat] certain headwinds on account of the micro finance coaxis which set us back on this front by a few quarters. We are 15:30 15 minutes, 30 seconds hopeful that we will achieve this ROA goal by the exit of Q4 FI27. 15:36 15 minutes, 36 seconds I would now like to share our Lakshia 2031 goals which will serve as our northstar for our next phase of institutional transformation designed to 15:45 15 minutes, 45 seconds establish LNT finance as India's premier AI enabled risk first tech first multi-product retail financier of 15:54 15 minutes, 54 seconds choice. This plan is a result of rigorous bottom ofout granular business analysis and exhaustive peer 16:01 16 minutes, 1 second benchmarking ensuring that our growth opportunities are risk calibrated while taking advantage of the market share 16:08 16 minutes, 8 seconds gain in the opportunities that we have identified. 16:13 16 minutes, 13 seconds We are focusing on tech enable granular execution to sharpen our competitive edge allowing us to maintain dominant market leadership in our fulcrum 16:21 16 minutes, 21 seconds business segments while developing sufficient market presence in our new business lines. 16:28 16 minutes, 28 seconds The measurable goals for luxure 31 are as follows as shared in slide number nine of the analyst presentation. 16:36 16 minutes, 36 seconds We will attempt a book growth CAGR of 20% plus over the Laksha period. We'll endeavor to drive credit cost down to a 16:45 16 minutes, 45 seconds level of 2% or less. We will target to achieve a return on assets in the range of 3 to 3.2%. 16:54 16 minutes, 54 seconds We will strive to deliver a return on equity in the range of 16 to 18%. 17:00 17 minutes The successful achievement of the stretch targets of luxury 2026 plan period gives us the confidence of achieving the goals we have set for 17:08 17 minutes, 8 seconds ourselves in the 5year luxury 31 plan period. 17:13 17 minutes, 13 seconds I would also like to take this opportunity to brief you about the go forward plan of FI27. 17:19 17 minutes, 19 seconds As we enter FI27, the first year of our 5-year strategic plan lecture 31, we expect the momentum gained in FI26 to 17:27 17 minutes, 27 seconds sustain with AUM growth of over 20% supported by robust consumer demand in urban finance, gold loans, and our rural 17:35 17 minutes, 35 seconds franchise while maintaining a calibrated and quality approach to expansion. From a profitability and RO standpoint, the 17:43 17 minutes, 43 seconds investments that we have made over the last few quarters position as us per operating leverage to play out meaningfully in FI27. 17:52 17 minutes, 52 seconds We expect our NIMs and fees to remain stable in our guided range of 10 to 10.5% while credit costs should trend 17:59 17 minutes, 59 seconds lower in the range of 2 to 2.2% by Q4 FI27 as newer portfolios season and our 18:07 18 minutes, 7 seconds AIEL underwriting frameworks mature further. At the same time, we'll continue to add rapidly to our gold 18:14 18 minutes, 14 seconds loans distribution footprint and our multi-product sampun branches while deepening cross-ell opportunities across our customer base of close to 3 crore customers. 18:24 18 minutes, 24 seconds We will also expand our two-heer and far farm equipment distribution footprint by covering our hitherto uncovered dealer 18:31 18 minutes, 31 seconds base. We'll build and operationalize an AI based costill and service engine this year, thus completing the modular 18:39 18 minutes, 39 seconds intelligence framework for our technology architecture as first detailed during the investor digital day in November 2024. 18:48 18 minutes, 48 seconds Overall, we see FI27 as a year where the foundation built over the last 12 to 18 months begins to deliver consistent 18:56 18 minutes, 56 seconds highquality growth with lower credit cost profiles leading to improved profitability and return metrics. 19:03 19 minutes, 3 seconds As I mentioned earlier, in the by the last quarter of FI27, we are targeting to achieve an ROA of at least 2.8%. 19:13 19 minutes, 13 seconds As announced through our exchange declaration on Friday, the board approved the setup of a payments platform by LNT Finance to take 19:21 19 minutes, 21 seconds advantage of the rapidly evolved digital payments and commerce landscape in India and to build a responsive and a 19:27 19 minutes, 27 seconds personalized payments framework for our rural and urban customers. The focus will be to infuse the strong AI 19:35 19 minutes, 35 seconds expertise gathered by Lent Finance into the payments domain through an agentic commerce paradigm. The organization has 19:43 19 minutes, 43 seconds already started laying the blueprint for the same and expects to operationalize the platform by Q2 FI27. 19:51 19 minutes, 51 seconds The payments business will strategically serve as a catchment for new customers acquisition, diversification of fee revenues and simultaneously will capture 20:00 20 minutes rich transaction data for use in our lending businesses through our proprietary AI tools. We'll keep you 20:07 20 minutes, 7 seconds periodically updated on the progress of this initiative. 20:14 20 minutes, 14 seconds As mentioned earlier, I would now like to give you a brief update on the five pillars of execution that we had enumerated in October 2023 and continue 20:21 20 minutes, 21 seconds to be in implementation mode against the same customer acquisition. The focus continues to be on maintaining customer 20:29 20 minutes, 29 seconds acquisition momentum both vertically and horizontally while proactively implementing credit adjustments to ensure sustained portfolio quality. To 20:38 20 minutes, 38 seconds ensure focus on acquiring new non-leveraged MFI customers, the team focused on deepening reach into new non-covered villages. Hence the number 20:47 20 minutes, 47 seconds of new villages zero disbbursement villages activated for the rural group loans and the MFI vertical stood at 28,35 20:56 20 minutes, 56 seconds villages in Q4 FI26 as against 27,146 villages in Q3 FI26. 21:04 21 minutes, 4 seconds We're also expanding our geographical footprint to New Maharashtra Andhra Pradesh and FM. 21:11 21 minutes, 11 seconds This quarter we have added a total of 8.3 lakhs new customer which is the highest ever and with this our overall 21:17 21 minutes, 17 seconds customer franchise stands at about 2.8 cr unique customers at the end of FI26. 21:24 21 minutes, 24 seconds The two wheel finance segment also saw renewed growth by reactivating dealers to target prime customers. Further details around customer acquisition and 21:33 21 minutes, 33 seconds repeat share are available on slides 27 and 28 of the investor presentation. 21:41 21 minutes, 41 seconds Sharpening credit underwriting. I've already spoken at length on the impact of a proprietary credit underwriting engine project Cyclops which is now live 21:49 21 minutes, 49 seconds in two wheeler farmme and personal loans and will be further extended to home loans and rural business finance in FI27. 21:57 21 minutes, 57 seconds Futuristic digital architecture we continue working on upgrading our technical capabilities and our focus on continuously strengthen our IT framework 22:07 22 minutes, 7 seconds remains unabated. I've already spoken about the project Cyclops and project Nostradamus. 22:12 22 minutes, 12 seconds This year we saw the launch of 20 plus new digital journeys among which the HL Neo2.0 journeys led to 2x productivity 22:21 22 minutes, 21 seconds and the 3x performance in our farmoffs portal as well. 22:26 22 minutes, 26 seconds We enhanced credit governance through the Sachet app and an EWS investigation portal for early warnings. These 22:34 22 minutes, 34 seconds advancements have built a highly efficient, scalable and secure digital infrastructure for our retail future. 22:40 22 minutes, 40 seconds Brand visibility. We continue to focus on targeted engagement through multi- channelannel and multi-product brand building with Jasp Bumra as our brand 22:48 22 minutes, 48 seconds ambassador. We expanded brand visibility through targeted branch initiatives and event participation including the 22:55 22 minutes, 55 seconds branding of 200 new gold loan branches and the presence at a flagship business loan industry event to also reach 23:03 23 minutes, 3 seconds captive audiences. We also have implemented airport branding across multiple cities. 23:09 23 minutes, 9 seconds Capability building. On the capability building front as you are aware we have taken a series of measures during the year. During the quarter, we have 23:18 23 minutes, 18 seconds completed our annual long range planning cycle across all verticals, reinforcing the alignment of function level talent strategies with our overarching business 23:26 23 minutes, 26 seconds objectives. On the employee initiative front, we launched the employee engagement service, including the third edition of the great place to work 23:34 23 minutes, 34 seconds survey to enable the management to effectively listen to the voice of its employees. Additionally, golden expansions remains on track with 330 branches live as of quarter 4 FI26. 23:46 23 minutes, 46 seconds Notably 30 of these new locations are integrated into a multi-product Sunda branch network. We intend to deploy 400 23:53 23 minutes, 53 seconds plus new gold branches this year of which at least 100 would be Sunda branches. This reflects to fostering 24:01 24 minutes, 1 second this reflects our commitment to fostering a high performance culture and scaling our physical presence to serve our customers better. 24:10 24 minutes, 10 seconds Now I would like to give you an update on the wholesale business and the related investments and security receipts with the ARC's. 24:17 24 minutes, 17 seconds The wholesale book has been reduced from 2582 crores in FI25 to 2220 crores in FI26, a 24:26 24 minutes, 26 seconds reduction of 14% yearonear. The net security receipts book has also been reduced from 5,862 24:33 24 minutes, 33 seconds crores in FI25 to 4,88 crores in FI26 down 18% year on year mainly due to 24:41 24 minutes, 41 seconds monetization of assets driven by active stakeholder negotiation completion of projects and subsequent sale of constructed units and recovery measures implemented through legal legal action. 24:53 24 minutes, 53 seconds Details of the same are available on the slide number 15 of our investor presentation. 24:58 24 minutes, 58 seconds With wholesale arc book reduction progressing satisfactorily, we'll continue to work with the arc's focusing efforts towards further reduction in outstanding SRS. 25:09 25 minutes, 9 seconds I will now request Mr. Suchin Jooshib CFO to take you through the financial updates. 25:15 25 minutes, 15 seconds Thank you Suritta. As always, I'll be walking you through the financial performance of the company for the quarter. Uh first talking about the 25:23 25 minutes, 23 seconds quarterly performance. Consolidated NIM plus P for the quarter stood at 10.47% 25:29 25 minutes, 29 seconds versus 10.15% for Q4 FI25 and 10.41% for Q3 FI26. 25:36 25 minutes, 36 seconds Console PAT for the quarter was rupees 87 crores up 27% yearonear 25:44 25 minutes, 44 seconds quarterly retail disbbursement stood at 24,7 crores up 62% y 25:51 25 minutes, 51 seconds retail book stands at 1 lakh 19,58 crores up 26% YI and our consolidated 25:58 25 minutes, 58 seconds book stands at 1 lakh 21,728 crores up 25% yearonear console ROA stands at 2.5 40% up 18 26:08 26 minutes, 8 seconds basis points year on year. Consolidated ROE stands at 11.71% up 158 basis points YI. 26:17 26 minutes, 17 seconds Now coming to annual performance consolidated PAT at rupees 2981 crores up 13% YI. If we exclude the one-time 26:27 26 minutes, 27 seconds impact of labor code which was there in quarter 3 FI26 PAD showed at 33 crores 26:34 26 minutes, 34 seconds our highest ever consolidated NIM plus fee at 10.33% [clears throat] versus 10.59% 26:41 26 minutes, 41 seconds for FI2 highest ever annual retail dispersements of Rs 83,213 26:48 26 minutes, 48 seconds crores up 39% yearonear consolidated ROA after one time exceptional items stood at 2.37%. 26:58 26 minutes, 58 seconds Down seven basis points year on year. 27:01 27 minutes, 1 second Before onetime exceptional item, it is 2.39%. 27:06 27 minutes, 6 seconds Consolidated ROE at 11.25% up 38 basis points yearon year. Before onetime exceptional item, it is 11.33%. 27:16 27 minutes, 16 seconds Now before I move on to our retail business performance, I would like to briefly talk about our annual ECL model refresh. 27:24 27 minutes, 24 seconds We have already provided a detailed impact of annual ECL model refresh in slide 13 but would like to just reiterate the same. 27:33 27 minutes, 33 seconds The company undertakes refresh of the ACL model annually including recalibration of probability of default 27:40 27 minutes, 40 seconds that is PD as well as loss given default LGD methodologies across stages. The model refresh also incorporates updated 27:48 27 minutes, 48 seconds assumptions and forward-looking risk parameters. 27:52 27 minutes, 52 seconds This year's uh ECL model refresh has resulted in release of ECL provisions of 27:59 27 minutes, 59 seconds 301 crores. These were carried as management overlays over and above the provisions required as per ECL model. Uh 28:07 28 minutes, 7 seconds 300 uh 290 crores were in stage three and 11 crores in stage two. There is a corresponding increase in ECL provisioning of 301 crores in stage one. 28:20 28 minutes, 20 seconds Additionally, as part of this exercise, 125 crores of macro potential provisions have also been subsumed within the ECL 28:27 28 minutes, 27 seconds model. This leads to improved provision coverage on performing stage one book which constitutes a substantial around 28:36 28 minutes, 36 seconds 96% of the total exposures from 0.52% in Q3 FI26 to.80% in Q4 FI26. 28:47 28 minutes, 47 seconds The PCR on stage 2 assets improves marginally from 23.23% in quarter 3 FI26 to 23.59% in quarter 4 FI26. 28:59 28 minutes, 59 seconds Correspondingly, the PCR on stage 3 assets comes down from 73% to 68%. 29:06 29 minutes, 6 seconds Which is an adequate level of coverage and does not in any way diminish or impact existing coverage requirement as 29:13 29 minutes, 13 seconds per model within stage three. Overall, this does not have any P&L impact which 29:20 29 minutes, 20 seconds exhibits structural consistency and balance sheet resilience. This exercise strengthens the company's credit risk 29:28 29 minutes, 28 seconds framework and reflects its continued focus on prudent credit risk management. 29:35 29 minutes, 35 seconds Talking about retail businesses now. 29:37 29 minutes, 37 seconds First one is rural business finance which registered quarterly disbbursements of 7,28 29:43 29 minutes, 43 seconds crores up by 41% yearonear and annual disbbursement stood at 25,882 29:50 29 minutes, 50 seconds crores up 24% yearon year mainly on account of improved collection efficiencies and sectoral trends. The 29:58 29 minutes, 58 seconds book size reached Rs 30,85 crores up 6.3% quarteron quarter and 17% yearonear in Q4 FI26. 30:08 30 minutes, 8 seconds In the farmer finance vertical quarterly disbbursement stood at 237 crores in Q4 FI26 up 16% YI while the annual 30:18 30 minutes, 18 seconds disbbursement stood at 8,674 crores up 9% YI. The book size reached 30:25 30 minutes, 25 seconds 16,970 crores reflecting a growth rate of 12% year on year. 30:33 30 minutes, 33 seconds Talking about urban finance which comprises two wheeler personal loans and home loan lab business uh saw a 61% 30:41 30 minutes, 41 seconds year-on-year jump in overall dis quarterly disbbursements rups 9,850 growth and a 38% jump in 30:49 30 minutes, 49 seconds annual disbbursements totaling to 34514 cr as a result the overall book size increased to rups 59,048 30:59 30 minutes, 59 seconds crores in Q4 FI26 translating into of 29% year-on-year growth. 31:06 31 minutes, 6 seconds The two-heer business registered quarterly disbburments of 2,930 crores in the quarter up 58% YI and annual 31:13 31 minutes, 13 seconds disbbursement stood at 10,787 crores up 16% Yi. The book size increased to rups 14,372 31:23 31 minutes, 23 seconds crores up 17% Y with 90% plus of March 26 two wheeler disbbursement 31:30 31 minutes, 30 seconds in the prime segment. We continue to prioritize highquality growth and optimize risk adjusted returns. In the personal loan business, we achieved our 31:38 31 minutes, 38 seconds highest ever quarterly disbbursement of 3,786 crores translating into a growth of 98% YI and annual disbbursement stood 31:47 31 minutes, 47 seconds at 12,220 crores up by 100% YI with the book size of 14,666 31:56 31 minutes, 56 seconds crores an increase of 70% yearonear. The double-digit growth is attributed to the 32:03 32 minutes, 3 seconds scale up of digital channels. In the housing loan business, we achieved quarterly disbburments of rupees 3,134 32:11 32 minutes, 11 seconds crores, up 34% yearonear, and annual disbbursement stood at 11,57 crores, up 20% yearon year. The book 32:20 32 minutes, 20 seconds size reached 30,9 crores, an increase of 20% yearonear. In theme business, 32:26 32 minutes, 26 seconds quarterly dispersement stood at 1,838 crores, up 20% yearonear and annual disbbursement stood at 6,130 crores, up 32:35 32 minutes, 35 seconds 23% year on year. The book stood at 8,57 cr up 30% yearonear. The growth in 32:42 32 minutes, 42 seconds business volumes was aided through an increase in direct sourcing and an existing strong network of distribution channels. 32:50 32 minutes, 50 seconds In the gold loan business, quarterly disbbursement stood at 2779 crores, up by 97% quarteron quarter and 32:58 32 minutes, 58 seconds the total annual disbbursements for FI26 reached 6,700 crores. The closing book reached 2,845 crores at the end of the 33:06 33 minutes, 6 seconds year representing a significant growth of 63.7 quarter on quarter. Let me now hand over the call back to Siddipa to make his closing statement. 33:17 33 minutes, 17 seconds Thank you Sin. In summary, our performance in quarter 4 FI26 has been satisfactory and overall performance for 33:24 33 minutes, 24 seconds FI26 has been up to our expectations despite a difficult start due to the Kataka micr finance ordinance issue. 33:32 33 minutes, 32 seconds We have started the new financial layer on a strong footing with disbbursement momentum keeping pace with the previous month and we are reasonably confident of a strong growth trajectory in FI27. 33:44 33 minutes, 44 seconds As we go forward in FI27 with the backdrop of the West Asia geopolitical tensions and the possibility of Elino conditions later during the monsoon 33:52 33 minutes, 52 seconds season, we are hopeful that we can maintain the upward momentum in risk calibrated growth and profitability in FI27 and beyond as we continue our 34:01 34 minutes, 1 second journey of executing the Laksha 2031 plan. I thank you all for a patient hearing. The floor is now open to questions. 34:12 34 minutes, 12 seconds Thank you. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their 34:21 34 minutes, 21 seconds touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants 34:29 34 minutes, 29 seconds are requested to use their handsets while asking a question. 34:33 34 minutes, 33 seconds Ladies and gentlemen, please note in the interest of time and fairness to others, we request you to restrict to one question per participant and rejoin the 34:41 34 minutes, 41 seconds question queue. One moment please while the question Q assembles. 34:47 34 minutes, 47 seconds We take the first question from the line of Shria Shivani from Numura. Please go ahead. 34:53 34 minutes, 53 seconds Yeah, thank you for the opportunity. Uh congratulations on a good quarter, a good year. Uh so my one question is 35:00 35 minutes actually going to be about um the impact of the West Asia war in terms of we have all these AI capabilities and are 35:08 35 minutes, 8 seconds probably be are probably able to see the data quite upfront versus many other players. Is there any areas of concerns 35:16 35 minutes, 16 seconds that you can highlight whether it be across your theme book whether it be across your personal loan book. Um also going ahead this year there are a couple 35:25 35 minutes, 25 seconds of headwinds in terms of the rural economy can face because of El Nino. Um there are headwinds of um the war 35:33 35 minutes, 33 seconds continuing to cause disruption or maybe causing inflation later in the year etc. 35:37 35 minutes, 37 seconds So how are we thinking about the full year across certain critical segments uh which which are susceptible to um uh the 35:44 35 minutes, 44 seconds monsoon impact for for example. So that's my one question. Thank you. 35:48 35 minutes, 48 seconds Uh thank you so much uh for the question. Uh so at the outset let me tell you that though the West Asia 35:55 35 minutes, 55 seconds crisis continues to go on uh the domestic consumers have been largely shielded from any energy shock as of now 36:03 36 minutes, 3 seconds barring the little disruption on LPG supplies that we saw. However there are uh there have been sort of tightened uh 36:12 36 minutes, 12 seconds uh supply of industrial gases etc which has also impacted some of the thememes. 36:17 36 minutes, 17 seconds uh as of now we really do not see any uh significant worsening either of our any 36:24 36 minutes, 24 seconds or impact rising out of the West Asia crisis on any of our portfolios whether be it SME or any other portfolio like 36:32 36 minutes, 32 seconds rural business in vertical tractors or two wheelers as of now there is no visible impact however we continue to be cautious one of the things that we 36:40 36 minutes, 40 seconds remain want continue to be cautious is the fertilizer supply uh because the curry season is down the corner and and 36:48 36 minutes, 48 seconds many of the input stock for fertilizer production as well as uh you know some of the uh some of the commonly used 36:54 36 minutes, 54 seconds fertilizers originate in uh and and and transit through the middle east middle 37:00 37 minutes eastern corridors. So if the uh if if the uh crisis does not resolve in time 37:09 37 minutes, 9 seconds for the karif sewing season then we might see some uh sort of constriction of supply fertilizer availability there 37:16 37 minutes, 16 seconds which might have downward impact on yields on some of the agricultural produce later during the during. So these are all second order or third 37:24 37 minutes, 24 seconds order impacts. Obviously we are cognizant of the energy shock that might come at some point in time uh because 37:31 37 minutes, 31 seconds the f prices the the the oil prices continue to be at a higher level. So we obviously are looking at being cautious 37:41 37 minutes, 41 seconds in our approach to uh the urban unsecured lending especially uh in the SMB business as well as in the personal loans business. But I would like to 37:49 37 minutes, 49 seconds point out that our focus for the last two years have been more of prime customers and we do believe that our prime customers have a larger factor of 37:58 37 minutes, 58 seconds safety uh in terms of dealing with uh the vagaries of economic cycles uh than 38:05 38 minutes, 5 seconds the more sensitive below prime or nearpime customers. However, we remain vigilant. Our uh portfolio management engine Nostradamus which is in two wheel 38:14 38 minutes, 14 seconds is already giving us measurable benefits. we're implementing it in personal loans as well. So we will probably be able to see any risks pocket 38:22 38 minutes, 22 seconds developing uh much much earlier than uh maybe maybe others. So you know in conclusion we 38:29 38 minutes, 29 seconds remain vigilant as of now there is no uh immediate signals that we are seeing of worsening of credit parameters that is 38:38 38 minutes, 38 seconds directly related to the West Asia crisis but we will have to monitor the space continuously. 38:43 38 minutes, 43 seconds Right. Just to follow up here your your 20% plus 20% AUM growth guidance for FI27 is inclusive of all these risks 38:52 38 minutes, 52 seconds that you all these concerns that you've talked about right we have we have taken everything into concern see the fact is that 38:59 38 minutes, 59 seconds as of now you know we remain committed to that 20% plus growth guidance u however if there are unseen geopolitical 39:08 39 minutes, 8 seconds shs that might happen you know later during the year those are not factored into the guidance However, as of now, we stand by the 20% plus guidance. 39:17 39 minutes, 17 seconds Okay, that's that's very helpful. Uh, thank you and all the best. Thank you. 39:23 39 minutes, 23 seconds Thank you. We take the next question from the line of Kunal Sha from Cityroup. Please go ahead. 39:30 39 minutes, 30 seconds Yeah. Uh, thanks. So, a couple of questions. Uh, firstly, you have spoken about uh the AI and uh efficiencies 39:37 39 minutes, 37 seconds which it can uh uh bring in. uh just if you can touch upon within the overall guidance uh both near-term as well as uh 39:45 39 minutes, 45 seconds maybe 2031 guidance with respect to how the cost ratios uh should pan out bit in terms of cost to income as well as cost 39:52 39 minutes, 52 seconds to assets uh uh that would be helpful and second question is on u ECL model refresh uh so the contingency buffer has 40:00 40 minutes been subsumed and I presume it it was in the uh stage two so ideally when we look at the release from the stage two then x 40:08 40 minutes, 8 seconds of contingency. It wouldn't have been anything related to PD or LGD. If that can be clarified, that will be useful because there is hardly 11 odd crores 40:17 40 minutes, 17 seconds and 125 crores was contingency and so we don't carry any contingency as of today uh within the ECL. Uh that clarification would also be helpful. Yeah. Thank you. 40:28 40 minutes, 28 seconds Yeah. Hi Kunal, thank you. Uh so so let me take the second question first. uh on the microp potential provisions 40:36 40 minutes, 36 seconds utilization uh the stage 1 2 and three you know the uh when the recalibration has been done 40:44 40 minutes, 44 seconds anyways uh when we uh show the slide on stage 1 2 3 yes you're right 125 crores 40:51 40 minutes, 51 seconds was part of stage 2 itself uh as we have recalibrated this the you know 125 crores has been 40:59 40 minutes, 59 seconds subsumed primarily taking in account the last four to five quarter challenges that have happened at at the m you know 41:08 41 minutes, 8 seconds microloan sector uh the requirement naturally increases because ECL model 41:14 41 minutes, 14 seconds runs it runs at a lag uh we have actually this quarter come out of this whole challenge with March ending at 41:23 41 minutes, 23 seconds 99.80% 8 0% collection efficiency right but uh the 125 cr which was remaining is 41:30 41 minutes, 30 seconds anyways part and parcel earlier it was separately available now it is part and parcel of stage one and two as part of the ECL model itself so it's not gone 41:39 41 minutes, 39 seconds anywhere anyways it would be it is just strengthening the same piece it's just changed the color that's it uh going 41:45 41 minutes, 45 seconds forward as uh we step into the next financial year uh whenever there is a possibility and a requirement we will 41:53 41 minutes, 53 seconds anyways continue building micro potential provisions which will take care of the future events. So this is this is as far as the uh you know macro 42:02 42 minutes, 2 seconds potential is concerned in terms of the uh luxure 31 uh you know the opex to 42:10 42 minutes, 10 seconds book range I think we are looking at a range of 3.75 to 4% range uh primarily 42:16 42 minutes, 16 seconds keeping in mind the investment that will be required because over the next 5 years there will be uh further investments in technology which will be 42:25 42 minutes, 25 seconds required investments in setting up branches uh you know gold loan, microl loans, microl lap, these are the 42:33 42 minutes, 33 seconds businesses which we will continue investing in and the branch network you know setting up the branch network comes at a cost. Uh so we have continued to 42:42 42 minutes, 42 seconds factor these in when we uh build the 31 projections. So I hope I have answered yeah near-term cost uh ratios 42:51 42 minutes, 51 seconds maybe near-term cost ratios will be yeah it will be same or maybe some positivity. 42:57 42 minutes, 57 seconds Yeah. So, so as far as the operating expenses are concerned, we this if you talk about FI27, 43:05 43 minutes, 5 seconds uh we intend to assuming that the you know external uh conditions remain normal. uh we continue to uh uh we 43:14 43 minutes, 14 seconds continue to plan setting up uh about 150 to 200 uh microloan branches further 150 43:21 43 minutes, 21 seconds to 200 micro lab branches and about 400 to 500 gold loan branches now these will come at a cost and hence we said that 43:30 43 minutes, 30 seconds the credit cost trajectory uh you know coming down uh exit we are expecting exit Q4 FI 27 we are expecting it to 43:39 43 minutes, 39 seconds come down to a range of 2 to2 2.2%. So uh keeping keeping uh the reduction in 43:45 43 minutes, 45 seconds credit cost in mind and the investments to continue in FI27 I think uh we are 43:52 43 minutes, 52 seconds looking for an ROA target of 2.8% to be achieved by uh exit FI27. 44:01 44 minutes, 1 second Uh basically uh the Laksha 26 target of 2.8 to three uh you know we expect to 44:09 44 minutes, 9 seconds achieve with a lag of about four quarters because you know we are out of the crisis now and we should start moving towards achieving that target. 44:18 44 minutes, 18 seconds Perfect. Thanks. Yeah, that's helpful. Thank you. 44:23 44 minutes, 23 seconds Thank you. We take the next question from the line of Pranoj Sha from 3P Investment Managers. Please go ahead. 44:31 44 minutes, 31 seconds Hi, thank you for the presentation and taking my question. So first of just on the fee income it is relatively tepid if I compare it to your disbbursements 44:38 44 minutes, 38 seconds growth of 61 and 6%. So is this M2M losses that is pulling this down or what is this exactly? 44:46 44 minutes, 46 seconds No fee uh fee income does not include any MTM losses primarily there is an amount of uh 44:54 44 minutes, 54 seconds liquidity income. So depending on the liquidity that is kept we have the income coming in uh as part of the 45:02 45 minutes, 2 seconds interest cost and uh if there is a negative carry on that that comes over here. So otherwise the disbbursement 45:09 45 minutes, 9 seconds trajectory you know uh the processing fee and the CLI income remain you know rangebound in that uh but do you expect 45:18 45 minutes, 18 seconds this to grow in that 20% range in line with your AUM and dispersement target for next year the fee income I I think fee see fee income has 45:26 45 minutes, 26 seconds continued to remain in the range of about 1.7 to 1.8 8 1.9 uh there are there are uh you know uh quarters where 45:35 45 minutes, 35 seconds we act we receive something more quarters where we receive something less so I think the range rather than looking 45:42 45 minutes, 42 seconds at uh standalone fee income we always give a uh range for the n plus fee uh because ultimately it's a part and 45:51 45 minutes, 51 seconds parcel of whatever fee income that we garner uh depends ultimately on disbbursement on a specific business uh 45:58 45 minutes, 58 seconds microloan will give a particular ular range of fee gold loan will uh gold loan financing gives some something else. So 46:05 46 minutes, 5 seconds uh to remain within the trajectory of 10 to 10.5 is what we have assured and uh we have been maintaining that this 46:13 46 minutes, 13 seconds quarter we've done 10.47 47. So some plus minus uh you know few basis points here and there will keep happening. We 46:20 46 minutes, 20 seconds can't really uh monitor on exactly what will be the fe income but broadly this range should continue. 46:28 46 minutes, 28 seconds Understood. Thank you. And lastly just on clarification like uh your reported ns versus the calculated based on period and averages there's quite a bit of 46:36 46 minutes, 36 seconds delta. So your reported is on daily average assets. Am I correct there? 46:42 46 minutes, 42 seconds Uh no reported what we do is we do a uh uh end of the period uh averages. 46:51 46 minutes, 51 seconds Uh okay. I'm getting a bit del but I'll take this offline perhaps. Sure. Thank you. 46:59 46 minutes, 59 seconds Thank you. 47:01 47 minutes, 1 second We take the next question from the line of Avina Singh from MK Global Financial Services Limited. Please go ahead. 47:09 47 minutes, 9 seconds Yeah. Uh thanks uh good opportunity. A couple of questions. First one is more on I mean AI of course you are kind of uh uh leading there and leveraging it. 47:20 47 minutes, 20 seconds My question is more on the you know that medium-term impact of AI and the job markets uh I mean uh the hiring scenario 47:29 47 minutes, 29 seconds in it looks muted at the moment uncertaintity is there and even if you have to look at financials uh as a sector world the wage growth has been 47:38 47 minutes, 38 seconds slowing and hiring is also relatively slowing. Now these two sectors typically will be very very key for your uh you 47:45 47 minutes, 45 seconds know uh targets of uh you know the two wheelers as well as the PL. Now if these two sectors h are kind of a bit clouded 47:54 47 minutes, 54 seconds here. Now how do you see this risk in terms of your growth as effectuality over the medium term because these two 48:01 48 minutes, 1 second are kind of very very critical to your growth. Uh the two wheelers and personal non growth are very very critical to your uh growth trajectory and plans. But 48:10 48 minutes, 10 seconds we have this big sort of uncertaintity coming in. So I mean on one hand of course AI is helping on the operation side but this is kind of for creating a cloud. So that's one. Second again I 48:19 48 minutes, 19 seconds guess uh this has been discussed and you answer uh from this FIA 31 uh so broadly if I see I mean if I were 48:27 48 minutes, 27 seconds to remove this drag on earnings from the security receipts and uh see the credit cost improvement by and large it looks 48:35 48 minutes, 35 seconds like that okay in terms of even over the medium-term four five years your play is like mean plus fee changes and opex 48:43 48 minutes, 43 seconds changes basically offsetting I mean there's very little play from these two part the large play is from credit cost uh and some per a drag going on. So now 48:51 48 minutes, 51 seconds if you were to continuously invest in technology I mean why it is so that even exit I mean after you for five years you do not see that opex play to come into 49:00 49 minutes pictures and this branch 150 each for micro finance uh microlap and 400 for gold uh is uh to be open in how many 49:09 49 minutes, 9 seconds years and will there be some overlap in the branches? Thanks. 49:15 49 minutes, 15 seconds Okay, I'll take the first question. And the first question is that you know the fact is that yes there are a lot of 49:21 49 minutes, 21 seconds headline uh moderation in hiring by some of the uh some of the sort of the bigger 49:30 49 minutes, 30 seconds Indian IT firms as reported in the media. However, one of the things we should be cognizant of that that much of that slack is also being picked up by 49:38 49 minutes, 38 seconds the huge expansion of GCCS in India. So the fact is that and we are in the hiring market almost every day. Uh it's 49:47 49 minutes, 47 seconds still as difficult to get qualified talent uh as it was 2 years back right. 49:52 49 minutes, 52 seconds So uh maybe you know there might be a little bump in the uh freshly minted engineers getting hired into some of 50:01 50 minutes, 1 second those uh the big uh Indian IT services firms but the the hiring by the GCC's uh 50:09 50 minutes, 9 seconds expanding is uh quite strong. So according to our assessment, we really do not expect the IT staffing or hiring 50:19 50 minutes, 19 seconds industry to completely fall off a cliff at least for the next 12 to 18 months. 50:24 50 minutes, 24 seconds And the fact is that because we have been very uh 50:31 50 minutes, 31 seconds early in adopting in adopting AI based tools and now we have a significant AI 50:38 50 minutes, 38 seconds uh development team as well. Our realization is that uh the front end of 50:45 50 minutes, 45 seconds AI development is only 15%. To make AI solutions useful for use in the front 50:54 50 minutes, 54 seconds line or for use by operating managers, you require a heavy engineering wrapper around it 51:03 51 minutes, 3 seconds and that requires software engineers and developers to put it together in a usable format. So I do believe that and 51:11 51 minutes, 11 seconds this is obviously this is my own personal opinion you know some of the 51:18 51 minutes, 18 seconds gloom and doom regarding job losses from AI uh like you know being a unstoppable 51:26 51 minutes, 26 seconds stream has been probably a little overblown right yes there will be some losses because of efficiency gains etc 51:35 51 minutes, 35 seconds but I do believe that some of those will be deployed into uh tools uh 51:42 51 minutes, 42 seconds manufacturing uh of of AI enabled solutions. So 51:49 51 minutes, 49 seconds overall I do believe that there'll be a marginal impact and not a massive impact. But again the caveat is that 51:56 51 minutes, 56 seconds we'll have to see as it plays out. You know my guess is as good as yours and you know no one can predict with 100% certainty as to what will happen. Uh 52:05 52 minutes, 5 seconds having said that we are cognizant of wherever there are like large scale job losses of late there was a large scale 52:12 52 minutes, 12 seconds job job cuts by one large global US player right in the IT segment and so 52:18 52 minutes, 18 seconds you know our uh underwriting sort of paradigms as well as underwriting processes especially inme or personal 52:27 52 minutes, 27 seconds loans etc remain cogent to such risks right and and we incorporate such things into our decisioning process For 52:34 52 minutes, 34 seconds example, if you get advanced news of a particular large heavy amount of job losses in a particular uh IT services 52:41 52 minutes, 41 seconds company, right? Uh or or downsizing in an IT services company, automatically any application coming from that company 52:48 52 minutes, 48 seconds for a personal loan or for a credit facility goes through an additional amount of security. Right? So those things are built into the underwriting process. 52:57 52 minutes, 57 seconds Uh the second the as part of the second question you were asking whether you know uh on the gold loan branches uh the 53:05 53 minutes, 5 seconds gold loan branches 400 plus gold loan branches is for deployment only in this year that means from 1st of April till 53:13 53 minutes, 13 seconds 31st March of 1st of April 26 to 31st March 20 27 in between this period we'll deploy this microlab branches and we'll 53:21 53 minutes, 21 seconds deploy this 400 plus gold loan branches so the rate of deployment of gold loan branches will be at a rate of almost 1 53:28 53 minutes, 28 seconds to 1.2 a day right and uh so so that is you know so to answer the question the 53:35 53 minutes, 35 seconds third thing is that obviously you know the the the opex and the and the uh the credit cost trajectory will evolve over 53:45 53 minutes, 45 seconds the uh period of the luxure 31 uh framework so [clears throat] you know currently we are at about 2.64 64. You 53:52 53 minutes, 52 seconds can see that our slippages, our slippages have been coming down. Our slippages same quarter last year were about 900 crores plus this quarter it is 54:00 54 minutes 42 crores. Right? We have given in slide 20 the impact of cyclops on our two-wheer uh portfolio where you can see 54:09 54 minutes, 9 seconds our 30 plus number at 10 months from the observation period is 2.8% with the industry average is 7.1%. So actually 54:17 54 minutes, 17 seconds our site loss portfolio two wheeler portfolio which is like almost 11,000 crores right now is but the observation window book which is about 3,250 crores 54:26 54 minutes, 26 seconds is outperforming the industry by almost a factor of you know you know almost a factor of two right so 54:34 54 minutes, 34 seconds uh we remain very very confident on the trajectory of pairing our credit cost during the luxury cycle to sub 2% that 54:42 54 minutes, 42 seconds is why we felt confident enough to put it that part of the luxure guidelines And the fact is that you are right to a certain extent the ROA expansion will 54:50 54 minutes, 50 seconds come from uh some part of the efficiency that is arising out of opex as well as we will build headline efficiency in our 54:59 54 minutes, 59 seconds opex plus credit cost as you if you had been part of the analyst call previously at one point in time we used to guide saying that OPEX plus credit cost will 55:07 55 minutes, 7 seconds be in the corridor of 6 and a half to 7%. Now we have moved that to a corridor of 6 to 6 and a half%. And during the laksha period we expect that to be in 55:16 55 minutes, 16 seconds the corridor of 5.75 to 6%. So that is where we expect that to be in the corridor of so obviously there will be efficiencies build in the opex line. 55:24 55 minutes, 24 seconds There will be efficiencies build in the credit cost line and and obviously we will try to hold on nent fees in the corridor of 10 to 10.5%. 55:33 55 minutes, 33 seconds Uh there was a question on fees. We have launched the payments business primarily because we want to diversify our fee revenues. Right? We are cognizant of the 55:41 55 minutes, 41 seconds fees that you know our primary fees comes from insurance revenues as well as from origination fees. Uh so we want to diversify our fee revenue pipelines. So 55:49 55 minutes, 49 seconds that is why with the reason the payments business has been launched or payments business is proposed to be launched. So we are working on diversifying our fee 55:57 55 minutes, 57 seconds revenues as well. So that is why you know uh for the near term our guidance on nim plus fees remain at 10 to 10.5 56:05 56 minutes, 5 seconds for the near term right. So uh we are very very confident that given the fact that the structurally the changes that 56:13 56 minutes, 13 seconds we have done to the businesses and the way we do our businesses right will help us uh navigate the luxura 31 period and 56:21 56 minutes, 21 seconds deliver those metrics that we have put on put on the on the paper. Thank you very clearly. 56:32 56 minutes, 32 seconds Thank you. We take the next question from the line of Chintan Sha from ICA Securities. Please go ahead. 56:43 56 minutes, 43 seconds Uh yeah uh thank you for the opportunity and uh congratulations on the quarter. 56:48 56 minutes, 48 seconds Uh so sir firstly on this uh Laksha 2021 ROE guidance of 16 to 18 percentage. Uh 56:55 56 minutes, 55 seconds so in that are we considering any benefit uh from the SR portfolio as in any provision reversal which we are uh 57:02 57 minutes, 2 seconds which we could expect from that or uh what is kind of the recovery rates on the SR port. So this quarter I think we have uh this year we have a reduction of 57:10 57 minutes, 10 seconds almost 1,000 crores in the SR book so has that gone anything towards the provision and any uh addback on the capital front. Yeah that's the first question. 57:20 57 minutes, 20 seconds Yeah. So, so first thing is yeah, we have not taken taken into account any gains coming out of SR portfolio because 57:28 57 minutes, 28 seconds earlier we had guided that as and when such gains come in we will actually utilize the uh those credits to take 57:35 57 minutes, 35 seconds care of the you know further micro potential provisions uh to be created and uh you know once we have sufficient 57:43 57 minutes, 43 seconds provisions created for microloan we may also consider creating provisions for the unsecured portfolio overall. 57:50 57 minutes, 50 seconds So uh so that's a top up which has not been factored in over here and uh the as far as the current credits are concerned 57:59 57 minutes, 59 seconds you would have seen that the overall portfolio used to have the SR portfolio used to have about 59% 58:06 58 minutes, 6 seconds uh provisions uh that has now gone up to 64%. So till the time the ARC has more 58:13 58 minutes, 13 seconds than one asset uh the the uh release of these credits to PNL is not possible. So 58:21 58 minutes, 21 seconds whatever credits have been received have actually just gone to uh you know create more buffer for the balance assets which 58:28 58 minutes, 28 seconds are uh currently going in for resolution. So we will uh you know over a period of time there will be a redemption of SRS and at that point of 58:37 58 minutes, 37 seconds time the uh credits will come in and we will uh like uh had guided earlier we will utilize the monies to take care of 58:45 58 minutes, 45 seconds the in creation of additional macro potential provision. 58:48 58 minutes, 48 seconds Yeah but this question is that is uh is that 3 to 3.2% 2% it does not does not include it. 58:55 58 minutes, 55 seconds It does not include also but one of the important points to note is that the SR portfolio still gives us a drag right because uh you 59:04 59 minutes, 4 seconds know we have to still provide for the uh funding cost for the portfolios with ASC. So as an as and when the portfolio 59:11 59 minutes, 11 seconds is resolved the drag resolves to a larger extent which releases a uh a marginal ROA into our entire uh earning 59:20 59 minutes, 20 seconds stream. Now if you were to look at so if you were to look at standalone basis our retail portfolio is actually at 59:27 59 minutes, 27 seconds exhibiting ROS level at a level higher than our consolidated ROS right so as the drag reduces yes there is a secular 59:36 59 minutes, 36 seconds benefit that will come into the ROA profile as well right so to that extent yes the resolution of the SR portfolio 59:43 59 minutes, 43 seconds will aid our ROA uh expansion definitely sure so just on that retail portfolio 59:51 59 minutes, 51 seconds ROA standalone RO which you mentioned is higher in the overall so how much would be the delta uh which retail portfolio RO would be having over the console ROA 1:00:00 1 hour so rather than talking about the delta on retail I would like to just talk about what is the money that is stuck we have 1:00:09 1 hour, 9 seconds [clears throat] 2,200 crores of portfolio on the book the loan book uh the wholesale portfolio and about 4,800 1:00:17 1 hour, 17 seconds crores uh of SR portfolio 28 200 plus 4,000. 1:00:21 1 hour, 21 seconds So, so, so, so totally uh about uh 7,000 crores, right? 1:00:27 1 hour, 27 seconds 6 7,000. Yeah. 7,000 crores is the is the money which will get released over a 1:00:34 1 hour, 34 seconds period of time and right now the 4,800 does not give me any in interest income 1:00:40 1 hour, 40 seconds because they are part of SR. 2,200 must be giving me around 11 to 12% kind of yield. You can do the calculation there. 1:00:49 1 hour, 49 seconds You know this money will get released and we'll get redeployed in a high yielding retail business. 1:00:57 1 hour, 57 seconds Understood. Fair to expect that this will get resolved in 3 years timeline at least. 1:01:02 1 hour, 1 minute, 2 seconds Uh yeah 3 to four years. uh so that may be a long tail but uh yeah larger resolutions uh you know that there has 1:01:09 1 hour, 1 minute, 9 seconds been a moment positive moment which we are seeing ultimately it's with NCT so it's anyone anyone's guess but yes next 1:01:17 1 hour, 1 minute, 17 seconds two to three years significant part of the assets will come up for resolution yeah you know let me add to what such said chintan you know in many of the 1:01:26 1 hour, 1 minute, 26 seconds assets you know there has been significant progress over the past one year uh and uh and And we we we are we 1:01:34 1 hour, 1 minute, 34 seconds are reasonably positive about the trajectory of that. Uh but you know it will take another 3 to four years. It 1:01:43 1 hour, 1 minute, 43 seconds will take another 3 to four years because you know for one of the assets for example you want to give an example you know the JD has just been signed you 1:01:51 1 hour, 1 minute, 51 seconds know last quarter. Now once the JD has been signed last quarter the construction period is at least two two and a half years right you know and so it will take about four years for the 1:01:59 1 hour, 1 minute, 59 seconds four four to four and a half years for the full project to get delivered. So the delivery will come across the next 3 to four years is what we what we uh look 1:02:08 1 hour, 2 minutes, 8 seconds at uh and so we have a team we have a reasonably focused team that keeps on working on this and so far the outcome has been positive. 1:02:19 1 hour, 2 minutes, 19 seconds Uh fair enough that not very helpful. 1:02:21 1 hour, 2 minutes, 21 seconds Just one last question on the free income part. So I think in order to boost free income so are we looking at uh any opportunities to further expand 1:02:28 1 hour, 2 minutes, 28 seconds into co-ending or and are we doing any co-ending as of now? So what are the thoughts on that? Yeah. 1:02:34 1 hour, 2 minutes, 34 seconds See co- lending we do on the personal side but on a very selective basis with only a couple of partners. Uh co- 1:02:42 1 hour, 2 minutes, 42 seconds lending always remains on the plan for us on the table for us. uh you know there can be opportunities in uh home 1:02:51 1 hour, 2 minutes, 51 seconds loans uh to do co- lending there can be opportunity personal loans obviously the opportunity arises inme there can be an 1:02:58 1 hour, 2 minutes, 58 seconds opportunity to do co- lending you know uh uh uh on uh a product like warehouse receipt finance there can be opportunity 1:03:05 1 hour, 3 minutes, 5 seconds to do co- lending so uh the only thing about this is that co-ending frameworks are slightly uh complex to implement as 1:03:15 1 hour, 3 minutes, 15 seconds well as it requires a little bit of tech integration as well as monitoring. So if we find the co co- lending see we are 1:03:22 1 hour, 3 minutes, 22 seconds not starved of capital right. So we will do co- lending wherever we get access to newer customer pools right and the 1:03:30 1 hour, 3 minutes, 30 seconds partner also wants the wants say in the control of the customer experience process. Right? So there are various 1:03:37 1 hour, 3 minutes, 37 seconds considerations that go into co- lending or the partner does not have enough capital to deploy to you know to do a certain amount of product to its 1:03:46 1 hour, 3 minutes, 46 seconds customer base. So uh there are houses for courses. Yes, we remain open to doing co-ending frameworks but obviously 1:03:53 1 hour, 3 minutes, 53 seconds at terms which you know we think are favorable to our business uh philosophy. 1:04:01 1 hour, 4 minutes, 1 second Uh that's it from my I'll come back in. Thank you. Thank you. Thank you. 1:04:06 1 hour, 4 minutes, 6 seconds Thank you. We take the next question from the line of Anoj Singla from JP Morgan. Please go ahead. 1:04:13 1 hour, 4 minutes, 13 seconds Yeah. Uh good afternoon sir. Sir my question is on the ECL refresh uh while uh you have elaborated quite a bit on that on the stage three PCR cut. Is 1:04:21 1 hour, 4 minutes, 21 seconds there a change in LGD or uh PD assumptions there in the PD LGD? There are two ways uh you 1:04:30 1 hour, 4 minutes, 30 seconds know within the industry. There are certain players who have PDS which uh which keep uh increasing which have an 1:04:38 1 hour, 4 minutes, 38 seconds increasing tread trend as they move stages. Uh and there are some players who also have the LGDs uh moving you 1:04:46 1 hour, 4 minutes, 46 seconds know showing an increasing trend. There are other players in the industry who have a moving PD but the LGD is static 1:04:55 1 hour, 4 minutes, 55 seconds which means that LGD is decided at a portfolio level and accordingly uh the overall LGD is applied to every asset 1:05:04 1 hour, 5 minutes, 4 seconds right from so it's fixed for all the three stages. So uh you know when we have done this exercise over last two 1:05:12 1 hour, 5 minutes, 12 seconds years we have actually uh been recalibrating the stage you know stage 1 2 and three PDLgs. 1:05:20 1 hour, 5 minutes, 20 seconds uh this quart this year for the uh based on the uh impacts of FI26 1:05:27 1 hour, 5 minutes, 27 seconds uh we have re revisited this and accordingly the stage one if you look at what has actually happened is that the 1:05:34 1 hour, 5 minutes, 34 seconds overlays which were kept in stage three which were over and above whatever was requirement as per ECL model uh you know 1:05:43 1 hour, 5 minutes, 43 seconds the difference of PCR between 74% and 68% that differential was nothing but the 1:05:51 1 hour, 5 minutes, 51 seconds management overlays they have got released as part of this whole exercise and the uh the 96% of the portfolio 1:05:58 1 hour, 5 minutes, 58 seconds which is in stage one uh there we have actually enhanced the overall PCR plus 1:06:04 1 hour, 6 minutes, 4 seconds from 0.52% to 80%. So, so right on day one as the loan gets sanctioned and 1:06:12 1 hour, 6 minutes, 12 seconds dispersed uh 80 basis points is set aside uh in if you if you are aware in 1:06:18 1 hour, 6 minutes, 18 seconds the uh RBI credential norms this used to be a minimum requirement of 40 bips uh it it's actually uh double that number 1:06:28 1 hour, 6 minutes, 28 seconds and uh the LGD across the stages has been fixed that's the result why you see that uh right from day one the stage one 1:06:37 1 hour, 6 minutes, 37 seconds carry is 80 basis points. Stage two also there is a small increase which has happened from about 2.23 to 2.47 1:06:45 1 hour, 6 minutes, 45 seconds and uh stage three there has been a release. So uh this release of provisions out of stage three does not 1:06:52 1 hour, 6 minutes, 52 seconds in any way bring down the provision coverage in terms of what is required 1:06:59 1 hour, 6 minutes, 59 seconds for that portfolio. Uh I hope I have I'm clear on that. So, so my question is if there is a LGD or PD change for stage 1:07:07 1 hour, 7 minutes, 7 seconds one, so let's say for the incremental portfolio build up in FI27, do we take uh will you be providing it 80 basis funds incrementally as well or 1:07:16 1 hour, 7 minutes, 16 seconds it will be 50? So you have created a buffer between this 30 basis points of incremental buffer but that's a one time buffer or have you changed the assumptions that every incremental asset 1:07:24 1 hour, 7 minutes, 24 seconds build up we now need to be provided of 80 basis points for it will be it will be it will be okay it will change there's a permanent 1:07:32 1 hour, 7 minutes, 32 seconds change in assumption then so does that any yeah also uh you know there there there are 1:07:39 1 hour, 7 minutes, 39 seconds still uh certain overlays continuing in stage three so we have not fully exhausted uh the the overlays which are 1:07:47 1 hour, 7 minutes, 47 seconds part of stage three. Okay. Number two, number two uh if you have seen that last 1:07:54 1 hour, 7 minutes, 54 seconds four to five quarters the whole uh rural business loans uh uh business has gone through a crisis. Okay. So just simple 1:08:03 1 hour, 8 minutes, 3 seconds arithmetic if you if you exclude one good year and you add one difficult year to the overall ECL model you will find 1:08:11 1 hour, 8 minutes, 11 seconds that the PDLgs will increase. Okay. Now the actual behavior of our portfolio if QC has only been improving. We have 1:08:18 1 hour, 8 minutes, 18 seconds actually gone back to uh the pre-crisis levels. Our collection efficiencies are back to 99.80%. 1:08:25 1 hour, 8 minutes, 25 seconds Which means the actual requirement uh as part of the credit cost will come down significantly whereas the 1:08:34 1 hour, 8 minutes, 34 seconds ECL model requirements will continue for some time. Yeah. 1:08:38 1 hour, 8 minutes, 38 seconds Just as a pure arithmetic. So, so that that's also one of the factor which uh leads to this increment in a way it 1:08:45 1 hour, 8 minutes, 45 seconds actually creates if if my uh you know uh asset book is going to be improving with 1:08:53 1 hour, 8 minutes, 53 seconds every quarter this will actually create only cushion in the system and that's what we ultimately intend to we used to 1:09:01 1 hour, 9 minutes, 1 second hold 975 crores of macro potential provision at at one point of time and uh in a way by uh you know the acceleration 1:09:10 1 hour, 9 minutes, 10 seconds of stage one provisions it only helps us uh create that cush cushion at the early stages of life. So the standard asset 1:09:18 1 hour, 9 minutes, 18 seconds you know gets a higher coverage by the time some roll forwards happen. We have also shared the role you know how the 1:09:25 1 hour, 9 minutes, 25 seconds role forwards have been slowing down and uh that actually shows very clearly that the overall portfolio across all 1:09:32 1 hour, 9 minutes, 32 seconds businesses is only improving and uh the the uh you know the overall uh 1:09:38 1 hour, 9 minutes, 38 seconds requirement for uh provisions will go down in reality but uh when we look at 1:09:46 1 hour, 9 minutes, 46 seconds the uh provisions uh to be created it is purely dependent on the ECL model the 1:09:53 1 hour, 9 minutes, 53 seconds cyclops impact partial impact through the segmentation and all has been already considered as we move into uh 1:10:02 1 hour, 10 minutes, 2 seconds the next financial year uh you will see the further impacts coming in and which will help us uh improvise on the overall 1:10:10 1 hour, 10 minutes, 10 seconds credit cost and that's why we we are pretty uh you know bullish on how we will end this financial year FI27 1:10:19 1 hour, 10 minutes, 19 seconds uh and you know we've taken a aggressive target I would say in terms of bringing down the credit cost to a range of 2 to 2.2%. 1:10:29 1 hour, 10 minutes, 29 seconds Okay. So just to clarify this does not the change in this quarter does not have a impact on the next quarter next year 1:10:36 1 hour, 10 minutes, 36 seconds credit cost outlook because mathematically it should I just want to clarify if the the stage one you are now factoring at 80 basis points versus 50 1:10:44 1 hour, 10 minutes, 44 seconds basis points till 3Q. Now we have increased the positioning on stage world buildup uh which will incrementally we'll be adding in FI27. Does it change 1:10:52 1 hour, 10 minutes, 52 seconds in any way the outlook of credit cost for FI27? 1:10:55 1 hour, 10 minutes, 55 seconds No no see the reason for that is the actual uh actual role forwards if they 1:11:02 1 hour, 11 minutes, 2 seconds slow down the hit to PNLV is expected to come down significantly. So the the provisions requirement uh you know uh 1:11:10 1 hour, 11 minutes, 10 seconds based on the book increase will go up but more than compensated by the reduction in the role forwards. Got it. Got it. Pretty clear. Thank you. 1:11:19 1 hour, 11 minutes, 19 seconds Thanks a lot. 1:11:22 1 hour, 11 minutes, 22 seconds Thank you. We take the next question from the line of Abijit Draal from Modilo Fal Financial Services Limited. Please go ahead. 1:11:30 1 hour, 11 minutes, 30 seconds Yeah. Uh thank you uh for taking my question. Uh good afternoon sir. Uh uh just to clarify what you just answered 1:11:38 1 hour, 11 minutes, 38 seconds that uh we now plan to keep stage one uh provision cover at 80 basis points. Um I 1:11:46 1 hour, 11 minutes, 46 seconds was under the impression that this quarter because we have had a release from stage three rather than taking the 1:11:53 1 hour, 11 minutes, 53 seconds benefit of that uh in the PL uh we chose to be prudent and we parked it in stage one. But if we start providing on stage 1:12:02 1 hour, 12 minutes, 2 seconds one at 80 basis points, it essentially means that our PD and LGD assumptions 1:12:09 1 hour, 12 minutes, 9 seconds are now telling us to provide on stage one at 80 basis points. So this is not 1:12:16 1 hour, 12 minutes, 16 seconds just a ECL model refresh. In other words, sparking whatever release we had from stage three in stage one. This is 1:12:24 1 hour, 12 minutes, 24 seconds our ECL model now telling us that provisions on stage one is required at basis points. Is that understanding correct? 1:12:32 1 hour, 12 minutes, 32 seconds No. No. So Abijit the way it works is that the if the if the LGD is like I was mentioning earlier either you have an 1:12:40 1 hour, 12 minutes, 40 seconds increasing trend in the uh loss given default the way you have it for PDS then you will have a lower provision created 1:12:48 1 hour, 12 minutes, 48 seconds for stage one slightly higher in stage two and then finally higher in much higher in stage three. The way uh the model was worked out was stage three. 1:12:58 1 hour, 12 minutes, 58 seconds Actually uh the ECL model used to give a particular result and the incremental provisions. If you look at our PCRs uh 1:13:05 1 hour, 13 minutes, 5 seconds historically also you would see that our PCRs for stage three assets have been always on the higher side. we have in 1:13:12 1 hour, 13 minutes, 12 seconds been in that 70 to 75% range when uh you know other ind other peer group you will 1:13:19 1 hour, 13 minutes, 19 seconds see that similar uh businesses the PCRs have been kept in the range of 50 55 to for some time uh and you know they have 1:13:29 1 hour, 13 minutes, 29 seconds now been increased to 60 65%. So 68% PCR like I was mentioning also includes uh 1:13:36 1 hour, 13 minutes, 36 seconds some parts of the overlays. So we believe 60 to 65% is a reasonable requirement which comes in and which 1:13:44 1 hour, 13 minutes, 44 seconds with cyclops implementation uh and you know we have also shared some early results on that the expectation is 1:13:52 1 hour, 13 minutes, 52 seconds that the ECL models will naturally be recalibrating once again uh in September and next March and we will we will be 1:14:01 1 hour, 14 minutes, 1 second revisiting this because see I don't think uh anyone else in the industry is currently working on the uh credit cost 1:14:10 1 hour, 14 minutes, 10 seconds piece through implementation of a tool like Cyclops which had started giving early results. We are we will possibly 1:14:18 1 hour, 14 minutes, 18 seconds see the full-fledged results in FI28 because the full book would have moved into through the Cyclops underwriting. 1:14:25 1 hour, 14 minutes, 25 seconds So uh there are early uh uh you know results which have come in which very clearly showcase Sudupta earlier 1:14:33 1 hour, 14 minutes, 33 seconds explained uh on one of the question how the two-wheer piece has been working out. Similar thing we have been noticing 1:14:40 1 hour, 14 minutes, 40 seconds on farm as well as personal loan. But the full full effect of it naturally will happen only after the book get the 1:14:48 1 hour, 14 minutes, 48 seconds new book gets seasoned and the ECL model refresh we do once in four quarters. As 1:14:55 1 hour, 14 minutes, 55 seconds we revisit the ECL model next time, you will naturally see that there is an improvement in that and for next four quarters is what you know we will 1:15:04 1 hour, 15 minutes, 4 seconds continue with this 80 basis point if there is a need in September we will see because it's up to us if the results are 1:15:12 1 hour, 15 minutes, 12 seconds really good and we can uh recalibrate the models in September end of September we will do that. 1:15:21 1 hour, 15 minutes, 21 seconds I hope I have clarifies. 1:15:24 1 hour, 15 minutes, 24 seconds So, so basically speaking till the time we do our next model refresh which could happen in September or March. We'll continue with stage one at 50 basis 1:15:32 1 hour, 15 minutes, 32 seconds points and and maybe potentially in September or March stage three depending on uh how we see Cyclops uh benefiting 1:15:41 1 hour, 15 minutes, 41 seconds the asset quality. The stage three PCR could further come down to 60 65 because like you mentioned you're still carrying some overlays in stage three. 1:15:50 1 hour, 15 minutes, 50 seconds Repeat it. 1:15:52 1 hour, 15 minutes, 52 seconds No, no, one second. The last part uh if you have noticed over almost 2 to 3 years we have been carrying PCRs in the range of 70 75%. 1:16:03 1 hour, 16 minutes, 3 seconds So the recalibration exercise once it has been done uh it it was right now 1:16:09 1 hour, 16 minutes, 9 seconds just you know significant part of stage one provisions moving to stage or stage three provisions moving to stage one. 1:16:18 1 hour, 16 minutes, 18 seconds But this whole exercise now is not going to have such significant impacts and if like on one side I am talking about 1:16:26 1 hour, 16 minutes, 26 seconds creating additional macro credential provisions. So the intent is not to really bring it down further from here. 1:16:32 1 hour, 16 minutes, 32 seconds We will be in the r in this range only the PCRs will will be kept in the same range. 1:16:40 1 hour, 16 minutes, 40 seconds Got it s that is useful. And then I had one last question for sir. Uh hi sir good afternoon. Uh so just one thing uh 1:16:48 1 hour, 16 minutes, 48 seconds this luxury goals uh are very very aspirational. It's very heartening to see that uh we are at least aspiring to 1:16:55 1 hour, 16 minutes, 55 seconds get to credit costs which are less than 2%. uh will uh a change in the product 1:17:02 1 hour, 17 minutes, 2 seconds mix have a bigger role to play uh in bringing down credit cost to below 2% 1:17:09 1 hour, 17 minutes, 9 seconds because the way we are thinking about it is by the exit quarter FI27 we were thinking of bring of taking down credit cost to 2 to 2.2%. 1:17:20 1 hour, 17 minutes, 20 seconds uh which essentially means that uh this this less than 2% credit course that we are thinking about as part of luxury 1:17:28 1 hour, 17 minutes, 28 seconds 2031 is not very far away could come in FI28 or by FI28N. 1:17:34 1 hour, 17 minutes, 34 seconds Uh so just trying to understand will it be more a function of the product mix changing or or like such was mentioning 1:17:42 1 hour, 17 minutes, 42 seconds uh the full impact of of cyclops will start uh showing up from FI28 onwards will will that play a major role or will 1:17:51 1 hour, 17 minutes, 51 seconds product mix play a bigger role in getting us to less than 2% credit cost because the way the mix is today some of 1:17:58 1 hour, 17 minutes, 58 seconds these products tractors two wheelers PL including MSME these are inherently If I look at the industry higher credit cost 1:18:07 1 hour, 18 minutes, 7 seconds segments. So if you could just help us understand this. Thank you so much. 1:18:12 1 hour, 18 minutes, 12 seconds Yeah. So uh see one of the things which is there is that uh the impact on credit cost will be primarily driven by 1:18:20 1 hour, 18 minutes, 20 seconds customer selection through cyclops. So and as you the way we have implemented cyclops is that we have implemented 1:18:28 1 hour, 18 minutes, 28 seconds cyclops in the credit aggressive segments earlier. So you know two-wheeler followed by you know tractor 1:18:35 1 hour, 18 minutes, 35 seconds followed by theme. So as you rightly said you know these are the what I call the aggressive credit products and so obviously we wanted to implement cyclos 1:18:44 1 hour, 18 minutes, 44 seconds first on this just to make sure that we are very very certain about the credit cost trajectory of this business going forward and the early indicators we have 1:18:52 1 hour, 18 minutes, 52 seconds given the 30 plus numbers out we see the 90 plus numbers on astronomous they are very very encouraging which gives us the confidence that you know if you see a 1:18:59 1 hour, 18 minutes, 59 seconds prime throughput on a two-heer business prime throughput on a two-heer business while we are two-heer business monthly origination have grown from 650 crores 1:19:08 1 hour, 19 minutes, 8 seconds to almost 1,000 crores. My prime contribution has gone up from about 65% to almost 90%. Right? So I'm able to 1:19:16 1 hour, 19 minutes, 16 seconds pull at that scale also. So we are reasonably confident about the credit cost directory which we primarily 1:19:23 1 hour, 19 minutes, 23 seconds cyclopsdriven uh customer selection. Uh so uh uh so in a way you are right you 1:19:32 1 hour, 19 minutes, 32 seconds know some of this might happen you know the if everything goes well this is a caveat is everything you know uh you 1:19:39 1 hour, 19 minutes, 39 seconds know sometimes you know we we hope for the best uh but sometimes you know there is a spanner in the works uh the 1:19:47 1 hour, 19 minutes, 47 seconds karnataka micr finance industry ordinance issue was nowhere in the blue you know nowhere it came out of the blue right in the month of February last year 1:19:56 1 hour, 19 minutes, 56 seconds and it was nowhere factored into any of our plans, right? Which delayed the recovery of the entire micro finance industry by almost uh 6 months, right? 1:20:04 1 hour, 20 minutes, 4 seconds So, uh set per [clears throat] things remaining uh normal uh which is a tough 1:20:11 1 hour, 20 minutes, 11 seconds ask these days, right? So, you know, we are reasonably confident that you know even within those you know jigsaws etc. 1:20:20 1 hour, 20 minutes, 20 seconds in terms of environment we reasonably confident of reaching that less than 2% trajectory by FI28 as rightly pointed by 1:20:27 1 hour, 20 minutes, 27 seconds by you now which quarter that might happen is something that I can't point out right but sometime during FI28 we 1:20:34 1 hour, 20 minutes, 34 seconds should be in touching distance of that 2% or below credit cost right after that you know it's a question of maintenance 1:20:43 1 hour, 20 minutes, 43 seconds and see how far we can optimize it even further so that is why we have stuck out our neck and said that it should be less than 2%. Right? So that is what what we 1:20:52 1 hour, 20 minutes, 52 seconds are stuck on net. How much less than 2% is a matter of execution and full maturation of a cyclass portfolio but a 1:21:00 1 hour, 21 minutes mix of economy, geopolitical factors etc. Everything thrown in right but we are reasonably confident of getting to 1:21:06 1 hour, 21 minutes, 6 seconds that 2% or below trajectory by somewhere in FI28. 1:21:15 1 hour, 21 minutes, 15 seconds Got it sir. This is very very useful. Uh thank you so much and I wish you very best. Thanks. Thanks. 1:21:25 1 hour, 21 minutes, 25 seconds Thank you. 1:21:26 1 hour, 21 minutes, 26 seconds We take the next question from the line of Deep Fakil from Bandan AMC. Please go ahead. 1:21:33 1 hour, 21 minutes, 33 seconds Hello. Good afternoon sir. Am I audible? Yeah. Good afternoon. Yes. 1:21:38 1 hour, 21 minutes, 38 seconds Sir, one quick thing I think uh the main uh moto that I could understand is branches. So does this have something 1:21:46 1 hour, 21 minutes, 46 seconds deep? I'm sorry to interrupt you there but there seems to be some background noise coming in. Yeah this is it better now. Hello. 1:21:55 1 hour, 21 minutes, 55 seconds No there seems to be some ring phone ring in the background. 1:22:08 1 hour, 22 minutes, 8 seconds Hello. 1:22:11 1 hour, 22 minutes, 11 seconds I think you will have to uh call back again. is uh yeah okay sure 1:22:19 1 hour, 22 minutes, 19 seconds thank you we take the next question from the line of Hardik Sha from MLP please go ahead 1:22:28 1 hour, 22 minutes, 28 seconds uh thank you for the opportunity congratulations uh Sudto on good set of numbers my only question is on the uh credit cost assumption so what are we 1:22:37 1 hour, 22 minutes, 37 seconds assuming in terms of through the cycle credit cost for two-wheeler and personal loans for us to go from 2.6 to less than 1:22:45 1 hour, 22 minutes, 45 seconds 2%. From a structural standpoint, see we don't give uh business-wise credit cost estimates. We don't give out 1:22:53 1 hour, 22 minutes, 53 seconds because uh you know this is like too dependent on market conditions etc. So what we have given out is a 30 plus 1:23:01 1 hour, 23 minutes, 1 second number as part of our Cyclops uh 3,250 cr book. So you might want to calculate it from there. 30 plus number on 3M the 1:23:10 1 hour, 23 minutes, 10 seconds the 10 month observation window is about 2 2.8. 8%. So you know uh u 1:23:18 1 hour, 23 minutes, 18 seconds there's an assumption of a 90 plus from there and there's an assumption of a loss given default from 90 plus right. 1:23:24 1 hour, 23 minutes, 24 seconds So uh basis this chart on that 3,250 cr portfolio you know probably at this 1:23:33 1 hour, 23 minutes, 33 seconds point in time the caveat this is not a fully mature portfolio yet it has to go through 24 months for it to fully mature you know it has gone through only 10 1:23:40 1 hour, 23 minutes, 40 seconds months by now right at a full scale cost you probably looking at a in this portfolio you're probably looking in the two wheeler port you're probably looking 1:23:48 1 hour, 23 minutes, 48 seconds at a sub 2% credit cost but again these are not mature portfolios so you know But uh you know uh uh we we obviously 1:23:58 1 hour, 23 minutes, 58 seconds there are certain businesses which are lower credit cost businesses like mortgage etc gold loans there are certain businesses where slightly higher 1:24:05 1 hour, 24 minutes, 5 seconds credit cost business like you know uh MFI as well as uh two-wheer overall at a 1:24:12 1 hour, 24 minutes, 12 seconds balanced level we we still we still sign up to that 2 to 2.2% 2% corridor by quarter 4 FI27 and uh over the Laka 1:24:21 1 hour, 24 minutes, 21 seconds period sub 2% is what we are firing upon but having said that the initial trends 1:24:28 1 hour, 24 minutes, 28 seconds on uh the Cyclops portfolios especially in theme tractors and two-wheeler are very very encouraging which gives us a 1:24:36 1 hour, 24 minutes, 36 seconds confidence to stick out our neck and give the compliment. 1:24:40 1 hour, 24 minutes, 40 seconds Got it. And how about personal loans given that our incremental share is increasing from the partnership loans? 1:24:46 1 hour, 24 minutes, 46 seconds Uh so see for it's a prime it's a see the personal loans industry loss rate especially for players uh you know 1:24:54 1 hour, 24 minutes, 54 seconds especially for players uh who have a large amount of salaried customers in their portfolio will range in the 1:25:02 1 hour, 25 minutes, 2 seconds corridor between 2 to 3%. Right? So our our objective will be to land in that corridor as well. 1:25:12 1 hour, 25 minutes, 12 seconds Okay. Perfect. Thank you. That's all. 1:25:16 1 hour, 25 minutes, 16 seconds Thank you. We take the next question from the line of Aishek Moraka from HSBC. Please go ahead. 1:25:24 1 hour, 25 minutes, 24 seconds Yeah. Hi Sudto Sachin and team. 1:25:26 1 hour, 25 minutes, 26 seconds Congratulations for the quarter. Uh so can you give a sense of at least your key segments like farm equipment, 1:25:33 1 hour, 25 minutes, 33 seconds two-wheeler, micro finance, consumer is the disbbursement yield higher than the portfolio yield at this point of time. 1:25:43 1 hour, 25 minutes, 43 seconds Thanks Aishek. uh micro finance all of you guys know that the disbburment is 1:25:49 1 hour, 25 minutes, 49 seconds more than finance but other stuff uh other stuff see I I'll tell you uh 1:25:57 1 hour, 25 minutes, 57 seconds other stuff you know personal loans uh we continue to have see we don't give individual business wise deals uh but I 1:26:06 1 hour, 26 minutes, 6 seconds I I'll give you some pointers right personal loans we are higher than industry salaried average by almost two 1:26:14 1 hour, 26 minutes, 14 seconds to two and a half percentage points primarily because uh uh of the online 1:26:20 1 hour, 26 minutes, 20 seconds origination uh we able to get uh a little bit higher E this I maintained earlier and I stand by it uh two-heer 1:26:29 1 hour, 26 minutes, 29 seconds you know the industry operates between 16 to 18% overall E levels so you know we are still at that levels you know and 1:26:37 1 hour, 26 minutes, 37 seconds we are able to maintain those levels uh uh in one dealership with a very large prime you know very very high ticket 1:26:45 1 hour, 26 minutes, 45 seconds bikes you know it might be slightly lower you know one dealership with a slightly lower ticket bikes it will be slightly slightly higher uh theme also 1:26:55 1 hour, 26 minutes, 55 seconds continues to yeah sorry just broadly would it be higher than your portfolio even if it is 1:27:03 1 hour, 27 minutes, 3 seconds not uh I mean I just wanted to get that range even if you don't give a number is it higher or lower at this point of time 1:27:11 1 hour, 27 minutes, 11 seconds yes it is higher just trying to see where where your if if there is any portfolio where there can be an yield 1:27:17 1 hour, 27 minutes, 17 seconds improvement as you build the book. Uh so that is what I'm trying to the yield improvement the yield improvement we are all continuously 1:27:26 1 hour, 27 minutes, 26 seconds trying yield improvement in personal loans. Uh we are trying home loans we got hammered quite a bit last year. Home 1:27:33 1 hour, 27 minutes, 33 seconds loans we got quite hammered a bit last year. Home loans the you know we have moved quite a bit to loan against property. So if you look at our sort of 1:27:42 1 hour, 27 minutes, 42 seconds uh mix of home loans to lap we were about 80/20 about you know 12 to 18 months back right now we about 60 we are 1:27:49 1 hour, 27 minutes, 49 seconds about 6040 maybe 55 45 right 55 45% home loans 45% LAP so we are trying to push 1:27:57 1 hour, 27 minutes, 57 seconds yields up right microlap is a business where we have reasonably high yield and microlap you know you know book size has 1:28:05 1 hour, 28 minutes, 5 seconds crossed thousand crores as you have we have disclosed for the first time this time Right. And we are setting up almost uh 200 microlab branches this year. So 1:28:13 1 hour, 28 minutes, 13 seconds we need we focusing on microlab and in microlab our collection efficiency continues to hold at you know 99.5 1:28:21 1 hour, 28 minutes, 21 seconds 9% plus right. So that portfolio is doing very well. Uh even in tractors right we are trying to push our yields 1:28:28 1 hour, 28 minutes, 28 seconds upwards in in in two wheeler. We have been able to improve our yields uh slightly upwards over the last quarter 1:28:36 1 hour, 28 minutes, 36 seconds right. uh so overall the pushes on improvement of across 1:28:43 1 hour, 28 minutes, 43 seconds okay because I think using Cyclops and uh uh all your you know customer selection tools you're getting into 1:28:51 1 hour, 28 minutes, 51 seconds better quality customers even within those portfolios. So then to push up your yields uh how do you do that? Is it 1:29:00 1 hour, 29 minutes uh I mean I'm just trying to connect the dots there. 1:29:04 1 hour, 29 minutes, 4 seconds Yeah. Yeah. So, so basically uh the only way you can do that is by changing the mix in the right manner, right? And that 1:29:13 1 hour, 29 minutes, 13 seconds is the reason why gold loans was introduced. Uh gold loan we expect uh so if if we look at uh how do how will we 1:29:22 1 hour, 29 minutes, 22 seconds fare in terms of our bookm say by FI31 our our microloans you know the whole 1:29:28 1 hour, 29 minutes, 28 seconds rural business finance piece will will be somewhere in the range of about 20%. 1:29:34 1 hour, 29 minutes, 34 seconds uh 15% uh of the total mix will be for uh businesses like personal loans, gold 1:29:42 1 hour, 29 minutes, 42 seconds loans which is a very small piece right today. Uh uh and uh you will have farm 1:29:50 1 hour, 29 minutes, 50 seconds and two wheeler uh somewhere in the 10 to 12% kind of range. Uh then you will have uh you know what is leftme is again 1:29:59 1 hour, 29 minutes, 59 seconds going to be about 10 odd percent. So uh you know the mix itself is going to uh really do the work and it's already 1:30:08 1 hour, 30 minutes, 8 seconds doing to your question on whether the disbburment yields are higher. It is yes it is higher because of the change in mix which is happening and as the higher 1:30:18 1 hour, 30 minutes, 18 seconds yielding book starts growing uh proportionately the overall yields will start moving up and that's that's where 1:30:26 1 hour, 30 minutes, 26 seconds that's where you see that uh you know our ability to manage the overall N plus fee within the 10 to 10 and a half% 1:30:34 1 hour, 30 minutes, 34 seconds corridor is not just a function of uh lowering of weighted average cost but also managing to stabilize the yields 1:30:43 1 hour, 30 minutes, 43 seconds uh through acceleration of higher yielding businesses. So uh we had challenge uh in four to five quarters 1:30:50 1 hour, 30 minutes, 50 seconds when the rural business finance had to be slowed down. But with that coming into play and gold loans getting accelerated, microlap will uh get a big 1:31:00 1 hour, 31 minutes push. Personal loans you have already seen 98% uh growth you saw. So these are all pieces which are naturally higher. 1:31:08 1 hour, 31 minutes, 8 seconds Mortgages will grow perhaps. you know we we saw 20% growth over there uh and that 1:31:15 1 hour, 31 minutes, 15 seconds was one piece which used to actually we had to do it because it was secured uh but the yields over there uh you know 1:31:25 1 hour, 31 minutes, 25 seconds especially now in the reducing interest rate cycle the yields come under pressure uh that also will once the interest rate cycle changes that will be 1:31:34 1 hour, 31 minutes, 34 seconds an advantage on mortgages also and we are also talking about uh getting into economical housing. So all in all the uh 1:31:41 1 hour, 31 minutes, 41 seconds there is always uh you know an attempt to ensure that we we have the right kind 1:31:48 1 hour, 31 minutes, 48 seconds of mix for book growth uh so as to ensure that the overall yields don't really get uh come under pressure that 1:31:56 1 hour, 31 minutes, 56 seconds we we have to we are forced to u again look at subprime kind of customers. It's very clear that we change that 1:32:04 1 hour, 32 minutes, 4 seconds trajectory and we will continue to uh be in the prime space and uh ensure that the collections cost as well as credit 1:32:12 1 hour, 32 minutes, 12 seconds costs uh don't go back to the older levels. 1:32:18 1 hour, 32 minutes, 18 seconds Got it. Got it. And uh just uh the slippage number that you've disclosed 400 crores for the quarter how much of it would be mfi uh right now? 1:32:29 1 hour, 32 minutes, 29 seconds uh we don't we don't give a break up but I it has been coming down significantly. I 1:32:36 1 hour, 32 minutes, 36 seconds mean you you can actually look at uh we had Jan and Feb 99.7 99.75 1:32:43 1 hour, 32 minutes, 43 seconds 99 and 99.8 is in March so the corresponding number I think uh December was 99 1:32:53 1 hour, 32 minutes, 53 seconds 99.6 six. So the the roll forwards are the differential of what about 40 45. 1:33:02 1 hour, 33 minutes, 2 seconds Right. Right. No, because I was just thinking that at 400 crores for the quarter the [clears throat] annualized you know number works out to 1:33:10 1 hour, 33 minutes, 10 seconds approximately 1.6%. Looks like a very good number and probably with the kind of bookmix you have and you know looking 1:33:18 1 hour, 33 minutes, 18 seconds forward uh uh with you know Cyclops implementation catching up in more more you know a larger part of the book would 1:33:26 1 hour, 33 minutes, 26 seconds this 1.6 come down or is it like cyclically a very low number very strong number already? No. So Abishek one one 1:33:34 1 hour, 33 minutes, 34 seconds thing which you should keep in mind is that there has been also a big thrust there is a project on the collections 1:33:42 1 hour, 33 minutes, 42 seconds piece as well and there is being you know every chief executive is currently pushing for recoveries of whatever 1:33:51 1 hour, 33 minutes, 51 seconds monies were provided for. So we may write off in the books it's a technical write off but every chief executive is 1:33:58 1 hour, 33 minutes, 58 seconds painstakingly trying to get the every rupee back. So the collections of the older receivables are also part and 1:34:06 1 hour, 34 minutes, 6 seconds parcel of the final role forward right because they get netted off against the monies that uh we have to finally uh 1:34:13 1 hour, 34 minutes, 13 seconds provide for. So so there is uh you know uh there are targets taken by every 1:34:19 1 hour, 34 minutes, 19 seconds business and uh you know we are we have been very successful in terms of uh doing the collections as well. 1:34:29 1 hour, 34 minutes, 29 seconds Yeah. Having said that, yes, the trajectory is very encouraging for us. Uh and uh let's see how FI27 pans out. 1:34:38 1 hour, 34 minutes, 38 seconds We we remain see the the the customer selection for the last 24 months has been of a order of magnitude better 1:34:47 1 hour, 34 minutes, 47 seconds quality, right? And that is what is flowing in terms of the credit numbers. 1:34:53 1 hour, 34 minutes, 53 seconds And the fact is that we are we are not even even diluting the customer quality that we have been acquiring uh over the 1:35:02 1 hour, 35 minutes, 2 seconds last 24 months even a wee bit. In fact, we are trying to see if there's an optim opportunity to optimize that even further, right? While while doing 1:35:11 1 hour, 35 minutes, 11 seconds volumes, right? So, and and and and the tools that we have, Nostradamus, for example, now on on two wheels helps us 1:35:19 1 hour, 35 minutes, 19 seconds to pinpoint one dealership in a district which is going bad. It is so precise. 1:35:25 1 hour, 35 minutes, 25 seconds Right. Right. and and so it helps us to attack it much faster and address it much faster before it it even become 1:35:33 1 hour, 35 minutes, 33 seconds becomes a problem. So in a way things are moving in the right direction. Uh the geopolitical headwinds is a flying 1:35:42 1 hour, 35 minutes, 42 seconds environment. So you know we are being cautious. Let's see where it takes us in FI27. 1:35:49 1 hour, 35 minutes, 49 seconds Sure. Sure. Thanks for answering my question Suditu and Sajin. Thank you and all the best. Thank you. 1:35:55 1 hour, 35 minutes, 55 seconds Thank you. We take the next question from the line of Suraj Das from Sundalam Mutual Fund. Please go ahead. 1:36:03 1 hour, 36 minutes, 3 seconds Yeah. Am I audible? Yeah. Yes, you are audible. 1:36:08 1 hour, 36 minutes, 8 seconds Yeah. Hi. Hi, sir. Thanks. Uh most of my questions have already been addressed but a couple of follow-ups. Uh you mentioned that your LGD assumption are 1:36:16 1 hour, 36 minutes, 16 seconds consistent across all stages. Did I hear that correctly? Yeah, that's right. Yes, that's right. 1:36:22 1 hour, 36 minutes, 22 seconds Okay. Sure. Can you share the LGD assumption for stage three and the number? 1:36:27 1 hour, 36 minutes, 27 seconds No, no, no. We can't. We we don't share all those details. 1:36:30 1 hour, 36 minutes, 30 seconds See, ECL models are proprietary to every organization. So, we just can't dulge those details. 1:36:36 1 hour, 36 minutes, 36 seconds Sure. So, just you know directionally if I look at your stage 2 and stage three PCR over the last 2 three years that number is coming down very 1:36:44 1 hour, 36 minutes, 44 seconds significantly. I think stage 3 PCR has come down to 67 68 and you are saying that you also have some additional 1:36:51 1 hour, 36 minutes, 51 seconds buffer there over and above. what is required. So does it mean that your LGD number uh is also coming down because of 1:37:00 1 hour, 37 minutes maybe project Cyclops and and so and so forth whatever you are doing uh but your LGD number is also coming down so you 1:37:06 1 hour, 37 minutes, 6 seconds you are recovering much higher now versus what you used to recover two three years back would that be a fair assumption because that's how the ECL 1:37:14 1 hour, 37 minutes, 14 seconds model will work right so Suraj uh I I think what you should do is you should also look at making peer 1:37:22 1 hour, 37 minutes, 22 seconds group comparison as to what is the actual loss given default uh business by business that is required uh you know 1:37:32 1 hour, 37 minutes, 32 seconds which will itself uh you know enable you in concluding that the PCR that we have been holding for so long have always 1:37:40 1 hour, 37 minutes, 40 seconds been higher in fact when we you know uh when we kept it at those 70 75% levels 1:37:48 1 hour, 37 minutes, 48 seconds there have been conversations which I have personally had where People used to question that are we expecting some challenges because of which we are 1:37:57 1 hour, 37 minutes, 57 seconds keeping the PCRs very high and my response to that used to be that we always have been conservative. we would 1:38:03 1 hour, 38 minutes, 3 seconds set aside in bad times so that whenever there are any or in good times so that whenever there are any challenges in bad 1:38:10 1 hour, 38 minutes, 10 seconds times it comes in handy and uh you know the micro finance uh crisis is a very 1:38:16 1 hour, 38 minutes, 16 seconds good example of how uh setting aside uh you know the uh provisions micro 1:38:24 1 hour, 38 minutes, 24 seconds potential provisions helped us in uh difficult times. uh same thing same thing comes in as far as the stage three 1:38:32 1 hour, 38 minutes, 32 seconds uh provisions are concerned which is the PCR which everyone usually looks at. So across the industry uh the actual the 1:38:41 1 hour, 38 minutes, 41 seconds the money which is required as per the ECL model is in that range of about 60 to 65%. 1:38:48 1 hour, 38 minutes, 48 seconds And hence the incremental is nothing but the overlay. But as we move forward these uh all these assumptions also keep 1:38:56 1 hour, 38 minutes, 56 seconds changing depending on the quality of book that you're building. Right? So, so uh our expectation is that the uh 1:39:04 1 hour, 39 minutes, 4 seconds cyclops underwritten portfolio will actually only keep improving the portfolio quality and hence the stage 1:39:11 1 hour, 39 minutes, 11 seconds three percentages have to come down and once the roll forward slow down even the stage one stage two requirements will 1:39:19 1 hour, 39 minutes, 19 seconds come down. There are if you look at uh there are players in the market who have a very secured book and who are very comfortable with say 40% PCR. So it all 1:39:29 1 hour, 39 minutes, 29 seconds depends on the kind of mix and how you have created a track record for yourself. We are right now in the process of creating that track record 1:39:37 1 hour, 39 minutes, 37 seconds and hence uh the uh plus the change in the assumptions. Uh so we are at a juncture where there are certain 1:39:46 1 hour, 39 minutes, 46 seconds segments of portfolio we have which have already moved to Cyclops and created through that underwriting. there are 1:39:54 1 hour, 39 minutes, 54 seconds older portfolios and then there is a portfolio which has recently come out of a crisis. So it's a because it's a mix of all these. This is just the result 1:40:03 1 hour, 40 minutes, 3 seconds that you're looking at. Simultaneously we have been focusing on collections like I mentioned uh earlier. So 1:40:10 1 hour, 40 minutes, 10 seconds ultimately ECL model you're right it's a function of what you lend and how much at uh you know you end up spending to 1:40:18 1 hour, 40 minutes, 18 seconds recover it which comes in the form of collection cost and if the roll forward slow down the collection cost goes down and even the credit cost improves. So 1:40:27 1 hour, 40 minutes, 27 seconds directionally that's why we believe that the if you if you just look compare uh last four to five quarters you will see 1:40:35 1 hour, 40 minutes, 35 seconds that the credit cost has started coming down directionally and this quarter again about 10 basis points uh lower 1:40:42 1 hour, 40 minutes, 42 seconds compared to the previous quarter and we believe that we have a journey to uh to 1:40:49 1 hour, 40 minutes, 49 seconds complete we are at 2.64 we have to go to uh a range of 2 to 2.2 to by end of FI27 1:40:56 1 hour, 40 minutes, 56 seconds and uh I I think we are fairly comfortable at this point of time based on the book that we have and the uh the 1:41:03 1 hour, 41 minutes, 3 seconds uh you know uh what do you say the three pages that uh we are actually uh being able to factor in for the next four to six quart. 1:41:15 1 hour, 41 minutes, 15 seconds Sure. Thank you sir. Yeah that's on my side. Thank you. Thank you. 1:41:21 1 hour, 41 minutes, 21 seconds Thank you ladies and gentlemen. We take that as the last question and conclude the question and answer session. I now hand the conference over to Mr. Sudip Taroy for his closing comments. 1:41:34 1 hour, 41 minutes, 34 seconds Thank you. I thank all of you for a patient hearing and participating in our quarterly results call. I trust we have been able to address all your queries. 1:41:43 1 hour, 41 minutes, 43 seconds As always, please do reach out to our investor relation teams in case any of your questions has been left unanswered. 1:41:50 1 hour, 41 minutes, 50 seconds We'll be happy to discuss the same with you. Thank you again and wish all of you a good financial year 27. 1:41:59 1 hour, 41 minutes, 59 seconds Thank you. 1:42:01 1 hour, 42 minutes, 1 second On behalf of L&T Finance Limited, that concludes this conference call. Thank you for joining us and you may now disconnect your line. 1:42:10 1 hour, 42 minutes, 10 seconds Thank you.