MAS Financial Services Ltd — Q4 FY26

MAS Financial Services Ltd Q4 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=G_XugnrNqe0 Published: 13 days ago

0:03 3 seconds Ladies and gentlemen, good day and welcome to the Q4 FI26 results conference call of Mass Financial 0:11 11 seconds Services Limited hosted by ICIC Securities. 0:16 16 seconds As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. 0:26 26 seconds Should you need assistance during this conference call, please signal an operator by pressing star then zero on 0:33 33 seconds it at stone phone. Please note that this conference is being recorded. I now hand over the conference to Mr. Ranesh Pua 0:42 42 seconds from IC securities. Thank you and over to you sir. 0:46 46 seconds Uh thank you. Hi uh good afternoon everyone and welcome to Mars Financial Q4 FI26 earnings call. On behalf of 0:54 54 seconds ICACI securities, I would like to thank Mass Financial Management Team for giving us the opportunity to host this call. Today we have with us the entire 1:02 1 minute, 2 seconds top management team of Mass Financial represented by Mr. Kamalesh Gandhi chairman and managing director, Mrs. 1:09 1 minute, 9 seconds Dashna Pandya, executive director and CEO, Mr. Danil Gandhi, executive director, Mr. Ankit Jane, CFO and other 1:16 1 minute, 16 seconds senior management team members. I will now hand over the call to Kameshwai for his opening remarks and then we'll open the floor for Q&A. Over to you sir. 1:26 1 minute, 26 seconds Thank you Reish and good afternoon to all of you. I'm very happy to connect to with all of you for uh 1:36 1 minute, 36 seconds for expressing this uh Q4 result of the company and for the whole year for 2526. 1:43 1 minute, 43 seconds So I'll be sharing the result with you. 1:46 1 minute, 46 seconds So I will start with uh the few very important milestones that we have crossed this year. So we crossed around 1:53 1 minute, 53 seconds 15,000 crores in AUM. Very importantly on a concentrated basis we also crossed 2:00 2 minutes 500 crores in PBD that is profit before tax and also 100 crores in profitability for the quarter on a concentrated basis. 2:10 2 minutes, 10 seconds So this were the important milestone which we achieved this quarter. 2:15 2 minutes, 15 seconds In terms of growth if you see the growth on a constituted basis is around close to 19% uh increase in profitability by 2:23 2 minutes, 23 seconds 21% on an yearon-year basis for the whole year and if you take for the quarter performance on a corresponding 2:30 2 minutes, 30 seconds quarter it is the rise in profitability is by 25%. 2:34 2 minutes, 34 seconds So on standalone basis also it reflects in the same uh way that it is 19% growth in AUM uh 20% growth in profitability 2:43 2 minutes, 43 seconds for the whole year and for on a quarter-to- quarter basis it is something like 23% increase in profitability uh while 2:51 2 minutes, 51 seconds maintaining very strong quality of assets too if you see the quality of assets both in our in both our companies 2:58 2 minutes, 58 seconds we have seen that uh in our parent we have maintained uh the NNPA at a level which was earlier maintained at around 3:07 3 minutes, 7 seconds 1.70 70% despite of tremendous headwinds during the year and in our housing 3:15 3 minutes, 15 seconds finance company we continue to maintain an excellent uh quality of assets at less than uh at around 067% 3:24 3 minutes, 24 seconds of net NPA uh while we carry additional buffers in both the companies. 3:31 3 minutes, 31 seconds Now to take you briefly on what we did on the asset size, liability, operations, stack uh and there and take you through very briefly. Uh on the 3:40 3 minutes, 40 seconds asset side, we continue to focus on MSME. uh that contributes more than 70% of our business and that includes MEL 3:48 3 minutes, 48 seconds and SME business that is microenterprise loans given to individuals and the small and medium enterprise loans given to the 3:55 3 minutes, 55 seconds bigger entities and that con constitutes around 70% of our business and our focus will continue to remain on the same as 4:03 4 minutes, 3 seconds we have been doing the same since last 30 years. uh while the increase in the wheels business over a period of time uh 4:11 4 minutes, 11 seconds will slightly add to the diversification of the assets going forward. 4:17 4 minutes, 17 seconds On the distribution side, we continue to have a very strong distribution across our more than 200 branches and 16,000 4:25 4 minutes, 25 seconds centers reach and we'll continue to expand this year also. So we continue to con concentrate our distribution in both 4:32 4 minutes, 32 seconds the channels that is our direct channel through increasing of branches and increasing our cent's reach and also 4:40 4 minutes, 40 seconds through our partners partnership with NBFCs which is now close to a 15 years old proven module. 4:48 4 minutes, 48 seconds So we and on the asset side we continue to have the confidence to grow anywhere between 20 to 25% uh given the positive 4:56 4 minutes, 56 seconds macro situation because we always prioritize risk management and profitability over just the growth and that all of you are aware since overall 5:04 5 minutes, 4 seconds since looking at our performance over all these three years. 5:08 5 minutes, 8 seconds Uh on on the liability side we remain very strongly capitalized. uh we have around close to 23% of capital adequacy 5:17 5 minutes, 17 seconds with a very strong capital T one of around 21.5%. 5:22 5 minutes, 22 seconds And that gives us a very strong balance sheet and we'll continue to maintain the capital uh adequacy of around 20% going 5:31 5 minutes, 31 seconds forward. So that will strengthen that will keep the balance sheet very strong. 5:36 5 minutes, 36 seconds uh on terms of debt raising while Ankit will take you through in detail uh we remain uh very confident and we have 5:44 5 minutes, 44 seconds because of our immaculate track record of for all the times and currently as I talk to you we have a debt tap almost 5:52 5 minutes, 52 seconds for half the year for 2627 and we see no reason why we will not be in a position to tap very soon for the whole year but 6:00 6 minutes the challenge will be mainly how to have a better rate of interest and that we already started uh gaining the momentum 6:07 6 minutes, 7 seconds on that from Q4 onwards. So that is uh the that is where we are going to fo focus on in decreasing the rate of 6:16 6 minutes, 16 seconds interest and impro and uh improving on the diversification of liabilities. Also 6:23 6 minutes, 23 seconds on the ops front we continue to focus on tech uh we as I've shared that we have a 6:30 6 minutes, 30 seconds tech which we have built and op we operate on built and operate model. We have close to 100 people working in tech 6:38 6 minutes, 38 seconds and we are gaining uh good traction in various products. So the loss has been successfully launched for all the 6:46 6 minutes, 46 seconds products and now we are in the process of launching DR with the help of AI and with the with the sufficient data at our 6:53 6 minutes, 53 seconds disposal. I think we'll be in a position to use that very effectively and that will add that will help to be more efficient in terms of providing the 7:02 7 minutes, 2 seconds customer services and also in terms of improving the efficiencies of our employees and that will be complimentary 7:11 7 minutes, 11 seconds to them and at the same time can in the medium to long-term help in reduction in cost. 7:18 7 minutes, 18 seconds uh on HR front we remain to uh uh we continue to pursue the dictim of failing 7:26 7 minutes, 26 seconds and succeeding together and that has kept us in good state minimum or practically no attrition at the middle 7:33 7 minutes, 33 seconds and the top level and while we are now 4,800 strong team with close to 500 of 7:40 7 minutes, 40 seconds them with us for more than five years the the the focus is now how to increase the efficiencies and how to take this 7:48 7 minutes, 48 seconds organization to the next level along with taking the current employees also to the next level. 7:55 7 minutes, 55 seconds On the housing front uh that company grew at around 23% uh we would aspire to grow this anywhere between 30 to 35% given its lower base. 8:06 8 minutes, 6 seconds So we are at a striking distance away from a,000 cr. Ideally we would have liked to touch 1,000 crores by this year 8:13 8 minutes, 13 seconds but it may take a quarter more now. But the silver lining is the very strong profitability. If you say the 8:20 8 minutes, 20 seconds profitability for housing finance on a quarteronquarter basis has been on a corresponding quarter basis has in 40% 8:27 8 minutes, 27 seconds on uh the whole year has been 36% with a very strong quality of assets at around 8:33 8 minutes, 33 seconds 0.68% of net NPA. So without compromising on all such parameters we'll continue to see to that that how 8:41 8 minutes, 41 seconds we can take it to the next level of growth. So before I hand uh and uh before I hand over to Dashan, let me 8:49 8 minutes, 49 seconds share with you and I'm happy to share that we'll be declaring a dividend a final dividend of 75 pesa per share uh taking it to a total dividend of 2 8:58 8 minutes, 58 seconds rupees per share that is 20% on the face value. We continue to maintain the strategy of a 10% dividend payout. So 9:07 9 minutes, 7 seconds the total dividend payout for the whole year will be on a profit of around close to 366 crores will be around 36 crores 9:15 9 minutes, 15 seconds and out of that 1.25 rupees per share has already been declared and paid on after December and the final dividend 9:23 9 minutes, 23 seconds subject to the shareholders approval at the rate of 75 pesa per share will be done uh in due course of time. So this 9:31 9 minutes, 31 seconds this is uh this is on the div on declaration of dividend. So going forward uh once again let me reiterate 9:38 9 minutes, 38 seconds that uh as demonstrated over all these three decades we continue to follow the strategy of a prudent growth a 9:46 9 minutes, 46 seconds profitable growth and that to anywhere between 20 to 25% and we are very hopeful as I shared with all of you on 9:55 9 minutes, 55 seconds the investor day conference on 16th February that we are pursuing our vision 10:01 10 minutes, 1 second of 2036 to be a one lakh crum. So the the way we are going ahead doesn't it it 10:09 10 minutes, 9 seconds is really really ambitious but we don't think that to be far-fetched for team mass. So with support of all of you and 10:16 10 minutes, 16 seconds uh with uh all of us being on the mission mode we are very confident of achieving that in the medium to long 10:23 10 minutes, 23 seconds term. So with this I'd like to hand over the this to Dashen. will take you through the details of the numbers and 10:30 10 minutes, 30 seconds then to anist and then uh it will be for will be open for question and answer. 10:40 10 minutes, 40 seconds Thank you sir. Good afternoon everyone. 10:45 10 minutes, 45 seconds So uh I'm once again I'm very happy to connect to all of you and I'll take you through the key numbers first on 10:53 10 minutes, 53 seconds consolidated basis and then on standalone basis for both the companies. 10:58 10 minutes, 58 seconds So if we look at the AUM uh AUM stands at 15,34 11:04 11 minutes, 4 seconds cr uh as compared to 12, uh 868 cr in last year, which is around 19% growth in 11:12 11 minutes, 12 seconds AUM. And if you look at the quarterly uh P the PA for the last quarter, it is 104 11:19 11 minutes, 19 seconds cr as compared to 83 cr which is 25% growth in uh PAT. And if you look at the 11:26 11 minutes, 26 seconds annual packs uh for the whole year it is on consolidated basis it is 379 cr as 11:33 11 minutes, 33 seconds compared to 314 cr which is uh 21% growth in 11:41 11 minutes, 41 seconds now coming to the standalone number uh if we look at the asset configuration uh to aum grew by 18.71%. 11:52 11 minutes, 52 seconds So uh there is a growth of around 20% in our microenterprise loan from 4793 11:59 11 minutes, 59 seconds cr to 5737 cr. Uh growth of 15.78% inme book from 4500 cr to 5,213 cr. 12:12 12 minutes, 12 seconds Two-wheeler book grew by 35.43% from 785 cr to 1,63 cr. Commercial 12:18 12 minutes, 18 seconds vehicle there is a growth of 111% from 979 cr to uh 1,85 cr and salary personal 12:26 12 minutes, 26 seconds loan there is a growth of around 21% from 1,39 cr to 1,264 cr. 12:35 12 minutes, 35 seconds Our total income uh if we compare the quarter total income grew by 23.86% 86% 12:44 12 minutes, 44 seconds uh from 417 cr to 516 cr. Profit before 12:49 12 minutes, 49 seconds tax uh uh grew by 22.28% from 109 cr to 133 cr. Profit after tax there is a 12:57 12 minutes, 57 seconds growth of 23.39% from 81 cr to around 100 cr. on annual 13:04 13 minutes, 4 seconds basis uh our total income grew by 25% around from uh 1,520 cr to uh 1900 crbt 13:16 13 minutes, 16 seconds grew by 20% from 410 cr to 493 crores and packed grew by uh 20% from 306 cr to 13:23 13 minutes, 23 seconds 367 cr about the quality of the portfolio I s 13:31 13 minutes, 31 seconds shared that it we it remains stable and strong 2.5% is gross stage three asset as compared 13:40 13 minutes, 40 seconds to 2.56% in December 25 and net stage three asset is 1.70% as compared to 1.72 13:49 13 minutes, 49 seconds uh% in December 25 regarding the numbers of our housing 14:00 14 minutes finance company there is a growth in AUM uh of 22.41% from 768 cr to 940 crores. PBT grew by 14:09 14 minutes, 9 seconds around 46.53% on quarterly basis from uh 3 cr to 26 lakhs to 4 cr 78 lakhs and PA there is a 14:18 14 minutes, 18 seconds growth of around 40% from 2 cr 64 lakhs to 3 cr 70 lakhs on yearly basis uh 14:25 14 minutes, 25 seconds total uh pat grew by 39% from 12 cr to 16.8 88 85 cr 14:33 14 minutes, 33 seconds and uh pad grew by 34.88% from 9 cr 56 lakhs to 12 cr 90 lakhs. Here also we 14:41 14 minutes, 41 seconds could maintain the quality of the portfolio. So uh gross stage three asset is 98% as compared to 97% in December 25 14:50 14 minutes, 50 seconds and net stage three asset is 68% as compared to 67% in December 25. 14:58 14 minutes, 58 seconds So this was about the key numbers. Now I'll request Ankit to take it forward. 15:06 15 minutes, 6 seconds Thank you ma'am. 15:08 15 minutes, 8 seconds Welcome to all on chapter liability management. Uh the company through it effective liability 15:15 15 minutes, 15 seconds management has maintained an average cash and cash equivalent a balance of approximately rupees 1,000 cr 15:23 15 minutes, 23 seconds and along with it unutilized cash facility of more than 200 cr. As on 31st March, the company also holds sanction 15:32 15 minutes, 32 seconds facility of more than 2,000 cr comprising of term loan and CBD direct assignment co- lending etc. 15:39 15 minutes, 39 seconds During the last quarter the company exited direct assignment transaction amounting to 940 cr and further have 15:46 15 minutes, 46 seconds sanctions of more than 500 cr in the form of direct SM lending which we plan to utilize over the current quarter. Our 15:54 15 minutes, 54 seconds strategic goal remains same to maintain 20 to 20 to 20 to 25% of asset under management as of book. 16:04 16 minutes, 4 seconds We have cash facility of approximately 150 cr spread over 14 banks of which we 16:12 16 minutes, 12 seconds maintain utilization level of around 70 75% keeping the remaining portion as liquidity buffer. 16:19 16 minutes, 19 seconds In terms of long-term borrowing, the company raised rupes 750 cr through term loan with an average maturity of 3 to 5 16:26 16 minutes, 26 seconds years. We also have sanctioned term loan pipeline of approximately rupes, 1,300 cr. 16:33 16 minutes, 33 seconds Additionally, rupees 100 cr were raised through NCDS during the quarter. 16:39 16 minutes, 39 seconds We have strongly p positions in terms of structural liquidity. Our liquidity position remains adequate with positive 16:46 16 minutes, 46 seconds cash flows across all commutive plan buckets. 16:51 16 minutes, 51 seconds Our capital HC ratio remains strong at 22.84% with TRM capital at 21.50% 16:59 16 minutes, 59 seconds and other equity ratio of 3.31x. 17:04 17 minutes, 4 seconds The average cost of borrowing for the quarter stood at 9.39% a 42 basis point ded reduction from the 17:11 17 minutes, 11 seconds last year same quarter. I'd like to highlight that this cost of borrowing is calculated on daily average balance and 17:19 17 minutes, 19 seconds also include all cost input again borrowing and not just ROI. 17:26 17 minutes, 26 seconds We in medium term plans to further diversify our resource mix by by press 17:32 17 minutes, 32 seconds fund raise through ECBS FD uh foreign and development finance institutions mutual fund PMS etc at comparative cost. 17:42 17 minutes, 42 seconds Thank you. Now we are open for Q&A. 17:48 17 minutes, 48 seconds Thank you very much. We will now begin with the question and answer session. 17:54 17 minutes, 54 seconds Anyone who wishes to ask a question may press star and then one on the touchstone 34. If you wish to remove 18:01 18 minutes, 1 second yourself from the question queue, you may press star and then two. 18:06 18 minutes, 6 seconds Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question to assemble. 18:20 18 minutes, 20 seconds A reminder to all, you may press star and then one on your touchstone telephone to ask a question. 18:37 18 minutes, 37 seconds We will take the first question from the line of Abi Jan from AJ Capital. Please go ahead. 18:44 18 minutes, 44 seconds Hi, good afternoon. I'm audible. Yes, you're sir. 18:49 18 minutes, 49 seconds Yeah. Hi. Uh, hi Mr. Gandhi. Hi, Miss Dashna. Uh, first of all, I would like to congratulate you on the credit quality improvement that I'm seeing 18:57 18 minutes, 57 seconds across the bucket, right? Your zero DPD or 1 to 30, 31 to 60. If you just leave aside 91 to 120 DPD, you have done a 19:05 19 minutes, 5 seconds phenomenal job over the last quarter. So clearly what you were directing last year uh in the last quarter right that in the next two quarters you will see 19:12 19 minutes, 12 seconds all your credit quality issues and uh you know the NPS subsiding in the micro finance that seems to be taking place. 19:19 19 minutes, 19 seconds So congratulations on that. Uh I'm also happy that uh this year round in this quarter your provisioning uh coverage has gone up. I can see it is at 41.89%. 19:30 19 minutes, 30 seconds uh hopefully sometime in the future you know you can be a leader in this category as well and this you can take it up to 50 subscribers like many other 19:38 19 minutes, 38 seconds NBFC too uh that is uh my hope and hopefully you are on track on that uh so my first question was uh generally uh 19:47 19 minutes, 47 seconds you know in today's scenario of big data and AI right uh so a lot of information a lot of data sets are available uh to 19:56 19 minutes, 56 seconds all the lenders to all the financial institutions I want get some flavor and understanding from you as to how you are leveraging it for your risk adjusted 20:04 20 minutes, 4 seconds growth. uh because if see you see around you right it is the data is so easily accessible uh forget about the 20:11 20 minutes, 11 seconds institutions right even to retailers even to smaller customers and everyone uh so I just want to understand the data 20:18 20 minutes, 18 seconds age of mass uh because I'm happy with your ambition of you know growing up to one lakh cr aum in the next 10 years but 20:26 20 minutes, 26 seconds on a you know kale basis at 20% growth if you look at some of the biggest like just had a con yesterday their ambition 20:33 20 minutes, 33 seconds is to grow at 22 to 24% figure even at a 5 lakhs robot. So just can you help us understand as investors how is data 20:41 20 minutes, 41 seconds helping you or how are you leveraging data because that I think is a necessary ingredient for a financial growth in 20:48 20 minutes, 48 seconds this function right so as far as the data is concerned 20:56 20 minutes, 56 seconds what I would like to share with you is that that the usage of data for every company is unique to them and the 21:04 21 minutes, 4 seconds experience of that data it's very important that how what experience we had from that particular data and how we use it in risk management. If I just 21:13 21 minutes, 13 seconds give you an example that if you just take a generic approach that I have this much of data and then extrapolate it on 21:20 21 minutes, 20 seconds various parameters that is what happened to fintech in their earlier days when their losses were anywhere between 10 to 15%. So when we talk about using our 21:30 21 minutes, 30 seconds data it is more on our experience on the data that we already have with us. We would we would we would not just presume 21:37 21 minutes, 37 seconds basis the uh just the credit score is good. So that means that the the quality of the asset or the risk management has 21:44 21 minutes, 44 seconds to be seen that way. So what we do is that that with the available data with us back testing our risk models on those 21:51 21 minutes, 51 seconds data we will take the we take the decisions and that is how uh technology will help us in our risk assessment and 21:59 21 minutes, 59 seconds with by using this technology what helps us is that that we get very consistency in assessment. So once we have put 22:07 22 minutes, 7 seconds certain score models at the scoring models at place there'll be a lot of consistency the way we assess the borrowers. So that will not only reduce 22:15 22 minutes, 15 seconds that but that will bring about assess consistency in assessment also. So the use of data will proh progressively 22:22 22 minutes, 22 seconds increase as we have more and more data points which have been used and which have been which have demonstrated 22:28 22 minutes, 28 seconds certain characteristics for us. No I I might be I am not going to draw data 22:35 22 minutes, 35 seconds only from all the sources and then judge the risk model or prepare the risk model. So these models are prepared 22:42 22 minutes, 42 seconds based the data experience we have from time to time. So as and when we have more and more data this will progressively get improved. Just for 22:51 22 minutes, 51 seconds example we just started with Alos then we have our business rule engines. Now this business rule engines once they 22:58 22 minutes, 58 seconds once they are around six or 9 months old now we are we are shifting to AI based risk management. So gradually we will be 23:07 23 minutes, 7 seconds using uh technology the the way we have the data at our uh disposal and the characteristics of the data that we examine from time to time. 23:22 23 minutes, 22 seconds Yeah that helps. Second is sir uh just uh you know staying on data and understanding data uh I wanted to 23:31 23 minutes, 31 seconds understand that uh do you also have an early warning uh early warning system in place uh which helps you with your risk 23:38 23 minutes, 38 seconds management and can you throw some flavor around that I mean uh is it is it more uh ad hoc you know has it helped you in 23:46 23 minutes, 46 seconds the past in this mfi cycle that you were seeing did your early warning signal uh help you to you curtail your book, curtail 23:55 23 minutes, 55 seconds your uh lending practices and that helps you manage risk because obviously now we are at the end of the cycle but I just want to understand from a future 24:03 24 minutes, 3 seconds readiness perspective uh how is NAS differentiated from other financial players in terms of risk management your 24:11 24 minutes, 11 seconds tracks for itself and there is no doubt about it uh and we can see the quality but just uh give us some flavor around 24:19 24 minutes, 19 seconds what these early warning signals might be within the company if you See the most potent early warning system 24:28 24 minutes, 28 seconds is your ears very close to the ground because when the early warning signal uh starts appearing on the data that means 24:37 24 minutes, 37 seconds the things have already started going bad for us. So the biggest thing what we do is that that have our ears very close to the ground assess the ground level 24:46 24 minutes, 46 seconds situation talk to various borrowers. I just give an example that uh soon after the middle uh middle is med crisis 24:55 24 minutes, 55 seconds kicked in. We talked to as many as more than two to three thousand borrowers in our commercial vehicle segment took the feedback from them that how they are 25:03 25 minutes, 3 seconds affected and what they think they will be affected in the future and taking the feedback from our feet on street not just sitting in the uh in the conference room and understanding bases our wisdom. 25:15 25 minutes, 15 seconds So the first thing is that that having ears very close to the ground. Secondly obviously uh from the data that that what are what are the non non-starter 25:24 25 minutes, 24 seconds cases which are the early deloquent cases and what are the characteristics of all those type of cases and since we 25:31 25 minutes, 31 seconds have 100% banking based or EN based collection the bouncing is also an early warning signal. So based on the bouncing 25:40 25 minutes, 40 seconds and the data that we collect from the ground, we frame our credit screens from time to time and the risk management is done accordingly. 25:50 25 minutes, 50 seconds Yeah, fair sir. Thank you. And um yeah, I know that one lakh cr aum is a target risk adjusted growth but I hope that the 25:59 25 minutes, 59 seconds company ends up achieving a bit more ambitious target a bit more ambitious. Congrats and best luck for that. 26:06 26 minutes, 6 seconds Thank you. 26:09 26 minutes, 9 seconds Thank you. We will take the next question from the line of David Modi from Air Deco. Please go ahead. 26:17 26 minutes, 17 seconds Yeah, thank you sir for the opportunity and congratulations on a consistent set of numbers. Uh firstly wanted to check that the greater than one DPD trend 26:26 26 minutes, 26 seconds seems to be showing early signs of improvement and very sharp improvement in the 1 to 90 DPD crack at probably the best absolute level since March 24th. So 26:34 26 minutes, 34 seconds could you share any flavor on this and what on ground signs we are seeing that could play out ahead going ahead also the backstatia crisis and the general 26:42 26 minutes, 42 seconds inflationary trend that would be there because of higher crude and other input sizes would it affect the incremental lending environment and would there be a possibility of some reversal of this 26:51 26 minutes, 51 seconds trend or higher NPS also how do we price this risk in an appropriate manner? 26:56 26 minutes, 56 seconds M so uh as you rightly told that uh the quality of the asset has been very steadily improving and all the steps 27:04 27 minutes, 4 seconds that you take uh post any of the stress or so-called stress it was not a stress as far as we were concerned but the market was in stress it takes time to 27:13 27 minutes, 13 seconds show results so that results are now showing off that since 24 what one steps were taken in order to extend credit 27:21 27 minutes, 21 seconds when it is due or to tighten the credit screens that that was evident uh in the numbers this quarter and secondly these 27:29 27 minutes, 29 seconds are all dynamic situation uh I hope that uh this crisis does not spiral out of control and the borrowers whom we are 27:37 27 minutes, 37 seconds funding will be in a position will be in a good financial position as they are right now so that that is what we 27:43 27 minutes, 43 seconds presume but if something goes out of uh out of their control that can slightly reflect once again on the asset quality 27:51 27 minutes, 51 seconds because there is something that is beyond our control once we have already dispersed But what keeps us in good speed on asset 27:58 27 minutes, 58 seconds quality is being agile. As I uh answered to the earlier query is that that we have our ears very close to the ground and we say to that that we act 28:07 28 minutes, 7 seconds proactively rather than active rather than act rather than reacting to a situation. So as of now as I talk to you 28:15 28 minutes, 15 seconds we we think that this asset quality should be maintained. uh but keeping a a close watch uh on uh the current 28:21 28 minutes, 21 seconds situation where we all know that uh there is a potential inflationary trend setting in and we need to see that how 28:29 28 minutes, 29 seconds exactly that spans out for our borrowers but we are we are quite agile if you just give an example that we are quite 28:37 28 minutes, 37 seconds agile in how we lend to the borrowers who are energy dependent who are into logistics so there if you can see that 28:44 28 minutes, 44 seconds our CV portfolio we are cautiously been growing at a lesser uh lesser pace. So these are all the precautions that we 28:52 28 minutes, 52 seconds have taken and we would we would like to say to that that this uh the quality trend which is set in that continues. 29:03 29 minutes, 3 seconds Okay. Sure. But on ground basically because of whatever developments you are not slowing down your uh growth rates as of now as yet in terms of the asset uh advances growth rates. 29:14 29 minutes, 14 seconds No uh not now. 29:17 29 minutes, 17 seconds And just one more uh question what would be the further room of improvement on the current quarterly cost of borrowing of 9.39% annualized which we have shown 29:25 29 minutes, 25 seconds in this quarter is there further room of improvement there and uh in how many quarters one can expect that to play out 29:34 29 minutes, 34 seconds I think uh for 9 from 9.39 we can see this going down to around say 9.20 to 9.25 25 over next two three quarters. 29:46 29 minutes, 46 seconds Okay. This is the incremental quarterly cost of quantity. Yeah. 29:51 29 minutes, 51 seconds And yeah and if we can squeeze in one more question the basically we have this uh additional we have this cost of uh 29:58 29 minutes, 58 seconds basically the origination of around 36 crores which has gone up unduly on a year-on-year basis. However, it does seem that it is a cost related to the 30:07 30 minutes, 7 seconds other income that we have. So how do we see that and this is one of those quarters where in the other income of is relatively lower at around 20 crores 30:15 30 minutes, 15 seconds while this cost is around 50 crores. So any explanation of name and how why and how that is screwing skewing our operating expenses per se. 30:26 30 minutes, 26 seconds There are two part to it on on the fees and income on the uh on the in fees and commission on the income side uh it 30:33 30 minutes, 33 seconds depends upon the dispersement in a particular product that how we are doing a dispersement in a particular product that whether the portion of the interest 30:40 30 minutes, 40 seconds is charged up front as fees or commission or it has been built up in the interest yields. If you see for this quarter our yields have increased by almost 0.5%. 30:51 30 minutes, 51 seconds So that is more of uh more of the marketing strategies that a company uses that whether we are going to build up in 30:59 30 minutes, 59 seconds the interest rates or we are going to charge as fees and commission that was on the income side. Uh on the expenditure side uh while it will 31:08 31 minutes, 8 seconds correspondingly grow along with the growth in the asset side. The next the other component in that is that that we 31:16 31 minutes, 16 seconds have been sourcing business through fintech whereby for a better control on the transaction we will be 31:23 31 minutes, 23 seconds we'll be booking the complete interest in the book at the same time whatever the interest has to be paid as that is 31:30 31 minutes, 30 seconds being booked as commission to them. So around 10 close to 10% of our business 10 to 12% 31:38 31 minutes, 38 seconds of our business is from fintech. So depending upon that business uh the fees and commission is structured from time to time. So this is these are the 31:47 31 minutes, 47 seconds components but as far as the opex is concerned what I would like to draw the attention is that that since we are a multi-product multi-distribution company 31:55 31 minutes, 55 seconds the right way of looking at it is that whether we are in a position to maintain our ros or not. So the the complete uh 32:03 32 minutes, 3 seconds the hierarchy works like this that that we charge a yield and then we we have to bear the cost of interest then we get our needs and from that opex and the credit cost is uh being uh appropriated. 32:16 32 minutes, 16 seconds So in case where the fees and commission as an expenditure increases our income also increases at the top and that is 32:24 32 minutes, 24 seconds the that is what allows us to maintain the RO is anywhere between 2.75 to 3%. 32:31 32 minutes, 31 seconds Perfect. That's it for my thank you sir. 32:36 32 minutes, 36 seconds Thank you. Before we take the next question, ladies and gentlemen, in order to ensure that the management should be 32:44 32 minutes, 44 seconds able to address all the questions from the participants in the question queue, we request you to kindly limit your questions to two per participant. If you 32:53 32 minutes, 53 seconds have a follow-up question, please rejoin the queue. Again, we will take the next question from the 33:01 33 minutes, 1 second line of Isham Gupta from Choice Institutional Equities. Please go ahead. 33:07 33 minutes, 7 seconds Yeah, good afternoon sir. Uh so my first question was uh despite our direct sourcing still remaining at 64%. Our 33:15 33 minutes, 15 seconds sequential growth uh in the segments like uhme has increased. Uh despite that our average yields uh sequentially has 33:23 33 minutes, 23 seconds moved higher by around 40 bits. So what is the reason attributable to that? 33:33 33 minutes, 33 seconds Can you come again? I could not really understand your question. What? What are you trying to ask? 33:38 33 minutes, 38 seconds My question was our uh average yields on loans have increased around 40 bit sequentially despite our direct business 33:47 33 minutes, 47 seconds staying at around 64% and the least yielding product that isme grew fastest sequentially. So what was the reason for increase in yields sequentially? 34:00 34 minutes So that was one of the one of the reason as I as I told that the yield also reflects our partnership with FinTech 34:08 34 minutes, 8 seconds plus the growth in the two-heer business. Two wheeler business the yields are anywhere between 19 to 23%. 34:16 34 minutes, 16 seconds So if you see the two wheeler business grew by 35% this year. So this this where the this two combination helped us 34:26 34 minutes, 26 seconds to increase the yield by 0.4%. 34:32 34 minutes, 32 seconds Okay. U my second question is regarding the higher credit cost observed during the quarter. So was it due to the impact 34:39 34 minutes, 39 seconds of West Asia conflict or some stress in certain pool accounts? 34:45 34 minutes, 45 seconds No, nothing like that. uh we as a as a forward-looking uh uh reason we have 34:54 34 minutes, 54 seconds this year little aggressively written off uh the 90 DPD 90 DPD assets. So 35:02 35 minutes, 2 seconds ideally we would lose like 2.57% we have written off more than 10% of the assets aggressively rather than showing higher 35:09 35 minutes, 9 seconds profitability. So we in a in a in a sense this is a sort of a buffer write off that we have done while we are 35:16 35 minutes, 16 seconds expecting recovery but we have uh aggressively return off because we had that profit on the books to do that so 35:24 35 minutes, 24 seconds we we have utilized that profit rather than showing more profitability we opted for more write offs got it got it and then last one if I can 35:33 35 minutes, 33 seconds squeeze in in the Gujarat state we have observed that there's a decline in number of branches by two so what would be the reason because Gujarat remaining 35:40 35 minutes, 40 seconds the source of failure and what what h how do we plan to grow our branch network in the upcoming two years 35:49 35 minutes, 49 seconds this recalibration of branches across states is a very dynamic process that this happens because we don't open branches just for the count of it we 35:57 35 minutes, 57 seconds need to see that how the branches are contributing and what is the potentiality so in order to see to that that the opex does not go absolutely out 36:05 36 minutes, 5 seconds of hand such decisions are taken from time to time where certain branches are merged or certain certain new branches are 36:13 36 minutes, 13 seconds opened. So that reduction of two what you see is because of that fact and that that's a very continuous process. But if 36:20 36 minutes, 20 seconds you see overall this year we did not increase much branches because we were in uh process of sweating our existing branches. So we 36:29 36 minutes, 29 seconds we believe in building up squares rather than just doing a linear expansion. We want our branches to sweat and to contribute to the profitability. And 36:38 36 minutes, 38 seconds having done that in the last year, this year we should see the increase in branches from anywhere from uh 30 to 35 36:45 36 minutes, 45 seconds branches this year uh across our area of operations. 36:52 36 minutes, 52 seconds That's it from Thank you. We will take the next question from the line of Magna Lutra from Incred Equities. Please go ahead. 37:04 37 minutes, 4 seconds Yeah. Hi sir. Thank you for giving me an opportunity to ask question. So like you mentioned that two wheeler book and the 37:12 37 minutes, 12 seconds Per book was one of the two main reasons for uh the boost in yield. So but last quarter two wheeler book grew at a 37:19 37 minutes, 19 seconds higher pace on a sequential basis than this quarter. 37:24 37 minutes, 24 seconds Um so on a sequential basis sir what would be the reason for yield I mean uh 37:31 37 minutes, 31 seconds moment so in we being a multi-product company and depending upon the opportunity and 37:39 37 minutes, 39 seconds the products offered to the markets from time to time even within what I what I alluded to was that this might be the 37:47 37 minutes, 47 seconds two major reasons but even within we operate various segments right from uh say tying up with likes of phone pay uh to giving a loans right up to 5 crores. 37:59 37 minutes, 59 seconds So depending upon the configuration of the business within segment also within the annual segment also can also have 38:06 38 minutes, 6 seconds the impact but the major impact can be uh because of uh the increase in our fintech business and the two-heer 38:14 38 minutes, 14 seconds business and accompanied by the yield uh increase in our theme business maybe because of the different type of products that we operate in. So that 38:23 38 minutes, 23 seconds might have resulted into a slighter higher yield and in the in the last quarter it might not have it might have been offset by certain type of products 38:31 38 minutes, 31 seconds which are low yield taking the precision over the the over the products which have lower in. So this calibration of 38:39 38 minutes, 39 seconds various products happens over a period of time and hence the is the range bond. 38:44 38 minutes, 44 seconds So that is that is what we call it that we keep a range bond yield anywhere between 16 to 17%. 38:51 38 minutes, 51 seconds Got it. So we could see this level of yield the sustainable level for FI27 as well right 39:00 39 minutes that is anywhere between 16 uh yeah 16 to 17 okay thank you sir and another question 39:07 39 minutes, 7 seconds would be on how do we see uh credit cost to pan out for fi 27 and 28 and the same 39:16 39 minutes, 16 seconds thing for uh cost to asset or cost to income ratio the credit cost I I think we we always 39:26 39 minutes, 26 seconds maintain that it will be anywhere between 1 to 1.25% a few basis here or there because if we if we have the room 39:34 39 minutes, 34 seconds we believe in writing off aggressively within our NPA assets this is how one way we create buffers on the balance sheet but uh ideally on a statistical 39:43 39 minutes, 43 seconds basis it can be anywhere between 1 to 1.25% 25% on our closing annual and on cost to income uh ratio I think 39:52 39 minutes, 52 seconds currently we at around 35 a range bond between 35 to 37%. I would once again reiterate that that should not be seen 39:59 39 minutes, 59 seconds in isolation it should be seen on the overall metrics that if the yields are higher the opex can also be higher 40:06 40 minutes, 6 seconds because those products are s which are having higher OPEX and higher yields. So at the end of the day we would like to 40:13 40 minutes, 13 seconds maintain that the ROS after OPEX credit cost uh appropriated from our names it will be anywhere between 2.75 to 3%. 40:23 40 minutes, 23 seconds Got it. Got it. That's very helpful. Thank you. 40:29 40 minutes, 29 seconds Thank you. We will take the next question from the line of Sri Paloshi from Equir. Please go ahead. 40:37 40 minutes, 37 seconds Hi sir. Thank you for giving me the opportunity and congrats on a good good quarter. So my first question was on the update on loss and B. So while we had 40:46 40 minutes, 46 seconds rolled out that uh in in in the last quarter itself for all the products uh just wanted to understand how is the how are the trends with respect to rejection 40:56 40 minutes, 56 seconds rates? uh any any uh any other update are we able to sort of godge in terms of 41:02 41 minutes, 2 seconds uh any industry facing issues because we had highlighted earlier also that textile FMCG 41:11 41 minutes, 11 seconds were were couple of IND along with along with agro linked MSMES were couple were a few industries which had got impacted 41:18 41 minutes, 18 seconds so anything that our B and tech initiatives also helping us in terms of picking up some more let's say ground 41:25 41 minutes, 25 seconds level updates and just update on the on the implementation of LOS and B. 41:33 41 minutes, 33 seconds Hi, so LOS implementation as you as you mentioned has been done across the product. Now it is all about 41:39 41 minutes, 39 seconds enhancements and adding the B from uh the the B across to all the products. So 41:46 41 minutes, 46 seconds we have we have uh as as mentioned in the opening remarks as well that uh two-heer is one product where we have 41:53 41 minutes, 53 seconds made good progress in terms of uh faster processing faster dispersals 42:00 42 minutes uh automated rule engines uh so so so good progress has been made there on the MSME side overall um I 42:09 42 minutes, 9 seconds think uh those are the those those sectors that you mentioned textile agro stay cautious for us still for this 42:16 42 minutes, 16 seconds quarter as well. And additionally in the last month in February, end and March, mid of March, we added 42:26 42 minutes, 26 seconds uh petrol pumps, gas agencies, transporter profiles, certain chemical related industries also into caution 42:32 42 minutes, 32 seconds profile. So as a as a cautionary mechanism we added those because we wanted to see that what effect uh does 42:41 42 minutes, 41 seconds this middle east uh you know supply of gas and all of those things have an impact on on on on on these sectors. So so we are a little bit cautious on that. 42:51 42 minutes, 51 seconds Other than that it is things as normal. 42:53 42 minutes, 53 seconds uh the approval rates have uh uh h have been uh decently uh maintaining a very 43:01 43 minutes, 1 second steady uh percentage wherein uh we are happy with those numbers and we would want to see those numbers getting 43:09 43 minutes, 9 seconds continued in the new financial year as well. So post the Diwali and the GST cut what exuberance that we were seeing I 43:17 43 minutes, 17 seconds think Q4 is also seasonally stronger. So we saw that good momentum of business. 43:24 43 minutes, 24 seconds Uh hopefully after these election results and all there are no very massive negative surprises on uh 43:32 43 minutes, 32 seconds inflation and all. If if that doesn't happen then we see the good momentum going into new financial year as well. 43:38 43 minutes, 38 seconds So uh no new additions per se on the except for the ones I mentioned on the caution or the negative list as of now. 43:47 43 minutes, 47 seconds Got it. Just a bit on the approval rate. 43:50 43 minutes, 50 seconds So is post the implementation of this B are we seeing what is the kind of change that we have seen in in terms of what 43:58 43 minutes, 58 seconds the approval rates earlier versus now for let's say some of our key products such as MS such as MEL and SM and MSN. 44:08 44 minutes, 8 seconds H Mhm. So what happens is that earlier we had policy parameters which would get 44:15 44 minutes, 15 seconds uh uh which would which would get verified by our credit managers manually. Now that uh that manual 44:25 44 minutes, 25 seconds intervention of uh checking the correct parameters has been given to the system where system will run those algorithms 44:35 44 minutes, 35 seconds and then give a score and based on that score risk pricing and approval or rejection will happen. So currently the 44:43 44 minutes, 43 seconds first step is automizing the process and second uh step is that how can uh the process automization also lead into uh 44:52 44 minutes, 52 seconds us getting more insight that how exactly the rules should be framed. So currently we have not tinkered a lot in terms of 45:00 45 minutes rules framing. We have we have kept the rules more or less the way we used to do them earlier. We still want to run this 45:08 45 minutes, 8 seconds uh scorecard for another one or two quarters and then see the output coming out uh on on on u the the score the 45:17 45 minutes, 17 seconds scores and then uh maybe run some statistical models on those and then come out with uh maybe newer policy 45:25 45 minutes, 25 seconds parameters. So this is a this is a continuous exercise that we keep on doing uh and and uh we have we have 45:33 45 minutes, 33 seconds successfully achieved the first step and and we are working towards the next steps as well. So appro so meal is still 45:41 45 minutes, 41 seconds little meal is little bit difficult to convert to absolutely score based because of the physical assessment and 45:50 45 minutes, 50 seconds requirement of physical visit and all but at least inme where formal data is more reliably available uh we are able 45:59 45 minutes, 59 seconds to do this more effectively. So, so MEL I would say is still more of um uh 46:07 46 minutes, 7 seconds manual in terms of underwriting and rules and all but we are we are exploring ways to automize that as well because we feel that optimization of 46:16 46 minutes, 16 seconds credit resources uh sales resources is required to to to get OPEX under control. So we are exploring MEL maybe 46:25 46 minutes, 25 seconds we can do more of automization through B but is a very ripe product to do it. 46:33 46 minutes, 33 seconds Got it. Got it. Thank you so much for that detailed answer. Just a just a second question was on the credit cost front. So I suppose post the ECL review 46:42 46 minutes, 42 seconds the the the credit cost requirement has gone up. Incrementally uh we should see the credit cost at closer to 1.5 1.6%. 46:51 46 minutes, 51 seconds Is that a fair assumption to move ahead with? 46:56 46 minutes, 56 seconds See huh on closing how you take the denominator on the closing aum we should see that at around anywhere between 1.25 47:03 47 minutes, 3 seconds to 1.3 or something like that. But as I said earlier that if we opt for uh some aggressive write offs during the quarter 47:12 47 minutes, 12 seconds profit per meeting. So uh that that should see us uh anywhere between 1 5% as you told. But uh without uh 47:21 47 minutes, 21 seconds disturbing much on our ultimate ros and roe. 47:26 47 minutes, 26 seconds Got it. Go ahead sir. Thank you so much sir for answering my question. Good luck for the next quarter. Thank you. Thank you. Thank you. 47:34 47 minutes, 34 seconds Thank you. 47:35 47 minutes, 35 seconds Before we take the next question, a reminder to all the participants. You may press star and then one to ask a question. 47:45 47 minutes, 45 seconds We have the next question from the line of Adita from Securities Investment Management. Please go ahead. 47:52 47 minutes, 52 seconds Uh yeah. Hi sir, thanks for the opportunity. Uh so I just wanted to understand uh what is the write off policy which we have for our different 48:00 48 minutes uh loan segments and in this quarter the loans which we have written off are these more pertaining to unsecured or secured uh loans. 48:11 48 minutes, 11 seconds The write off policy is that that we write off post uh 360 days and this year what we have 48:20 48 minutes, 20 seconds return off not off the cuff data I have or it might be a combination of secured and unsecured secured more in unsecured. 48:32 48 minutes, 32 seconds Understood. And this post 365 days it is uh applicable for all product segments or it is uh different for different uh products? 48:41 48 minutes, 41 seconds No, it is it is it is applicable on all products? 48:47 48 minutes, 47 seconds Understood. And sir on uh recovery uh so do you expect uh these loans to get recovered and how do you account for 48:54 48 minutes, 54 seconds recovery? So is it uh uh is it accounted in the credit cost itself or it's part of other income? 49:04 49 minutes, 4 seconds 8%. 49:07 49 minutes, 7 seconds So uh what all amount is uh is recurred from this uh account are written back. 49:14 49 minutes, 14 seconds So the figure which is in the P&L will be will be the net figure. 49:20 49 minutes, 20 seconds Unless understood uh and uh next was net interest income growth. So if I look at 49:27 49 minutes, 27 seconds sequentially your Mi growth is around 7% as against our A1 growth of 4%. Uh so you mentioned some of the reasons were 49:36 49 minutes, 36 seconds because of improved product mix and delivering of boring cost but how big the assignment uh book plays a role in 49:43 49 minutes, 43 seconds this because when I look at the amount quantum of assignment uh uh incurred this quarter it is almost doubled from 49:50 49 minutes, 50 seconds last year. So just wanted to get a sense how big a role does assignment play in your higher NI growth because I believe there is some upfronting of income because of uh assignment. 50:04 50 minutes, 4 seconds If you I don't know whether you recollect we were the ones who always advocated that we would not like to offer but amotize the income. So the 50:11 50 minutes, 11 seconds other way around in order to calibrate that we do sufficient provisioning that it is very close to an amotized income 50:18 50 minutes, 18 seconds only. So we do we do not upfront income in order to improve the profitability or 50:25 50 minutes, 25 seconds the NI growth. So that is very very close to an amotization levels only and the uh the reason for the NI rise this 50:34 50 minutes, 34 seconds year this quarter was because of the interest cost if you see the interest expense for Q3 and Q4 were same almost 50:43 50 minutes, 43 seconds same. If you if you see the the interest expense for Q3 uh was close to 1808 81 crores that that remained uh right 50:52 50 minutes, 52 seconds 290 huh. 50:57 50 minutes, 57 seconds So in short it remained it remained same for both the quarter 2 219 and 221 and that was because the incremental cost of 51:05 51 minutes, 5 seconds borrowing is now the 9.39% what it used to be around 9.75 to 9.8%. 51:13 51 minutes, 13 seconds So this is this this resulted in uh higher NI and uh secondly this happened in this quarter because there was lot of 51:22 51 minutes, 22 seconds MCLR reset this quarter because we have an MCR reset every year. So there was an MCL reset this quarter and hence this 51:29 51 minutes, 29 seconds impact thanks for that clarification and now sir going forward now NI so you are 51:38 51 minutes, 38 seconds expected to get further benefit of 15 20 on your borrowing side. So are we passing on this incremental rate benefits to our customers or we are keeping the yields uh stable? 51:51 51 minutes, 51 seconds It all depends upon the market situation. As of uh as of now the way we are operating we are operating at a 51:57 51 minutes, 57 seconds competitive rates. So uh if if this rates reduces uh more it will be a com 52:05 52 minutes, 5 seconds combination of both that we'll be keeping it something for ourselves and something might be passed on to the borrowers but difficult to predict right 52:12 52 minutes, 12 seconds now it all depends upon the market situation going ahead. 52:17 52 minutes, 17 seconds Understood. Understood. And so last question was on our CV book. Uh so we have been a little slow in growing our CV and I think for the last many 52:26 52 minutes, 26 seconds quarters now uh as against when I look at the industry growth the CV industry is doing pretty well. So just wanted to get a better sense from you what are you 52:34 52 minutes, 34 seconds seeing in your segment uh which is uh restricting you to grow a CV book. 52:43 52 minutes, 43 seconds that is all about uh the perfection uh of the quality of the assets that will happen over the next few quarters depending upon the current situation. So 52:52 52 minutes, 52 seconds we see that that whenever there are any sort of abnormal situation which we are going through right now the first casualty is the logistics and the 53:00 53 minutes transport. So looking looking at that we internally from the risk perspective um understand that this book should grow at 53:09 53 minutes, 9 seconds at a slower pace for coming one or two quarters before we really pick up uh the pace in uh parallel to the overall 53:16 53 minutes, 16 seconds growth of the AUM of the company. So our perception right now is that we like to wait and watch and we like to grow slower for coming one or two quarters. 53:35 53 minutes, 35 seconds Does that answer your question? Do you have any further questions? 53:49 53 minutes, 49 seconds Thank you very much ladies and gentlemen. We will take that as the last question for today. And with that concludes the question and answer 53:57 53 minutes, 57 seconds session. I now hand the conference back to the management for closing comments. 54:05 54 minutes, 5 seconds So thank you everyone for sparing your valuable time and attending this uh analyst call and as I shared in the 54:13 54 minutes, 13 seconds beginning that uh we remain confident of growing steadily anywhere between 20 to 25% towards our mission which you have said for yourself for 10 years of 54:22 54 minutes, 22 seconds reaching a lore without compromising on the quality of the assets and profitability and that we have demonstrated over last three decades. So 54:31 54 minutes, 31 seconds thank you for joining and look forward to uh the touch. Thank you. 54:37 54 minutes, 37 seconds Thank you members of the management. On behalf of IC securities that concludes this conference. Thank you all for 54:44 54 minutes, 44 seconds joining with us today and you may now disconnect your lines. Thank you. Thank you.