Spandana Sphoorty Financial Ltd — Q4 FY26

Spandana Sphoorty Financial Ltd Q4 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=F2Ka1F-_BJQ Published: 8 days ago

0:01 1 second Ladies and gentlemen, good day and welcome to Spandasi Financial Limited Q4 and FY26 conference call. As a reminder, 0:09 9 seconds all participant lines will be in the listenonly mode and there will be an opportunity for you to ask questions after the presentation concludes. Should 0:17 17 seconds you need assistance during this conference, please signal an operator by pressing star then zero on your touchdown phone. Please note that this 0:25 25 seconds conference is being recorded. I now hand the conference over to Mr. Wenateesh Krishnan MD and CEO Spandasi Financial 0:33 33 seconds Limited for his opening remarks. Thank you. And over to you sir Pandan Namashkar. Uh welcome to this 0:42 42 seconds call and it's a pleasure to be in your midst yet again. I'm sure some of you must have felt elated looking at the 0:51 51 seconds election results yesterday whilst some of you may have felt gloomy. 0:56 56 seconds But one thing for sure that all of you should feel uh equally happy looking at our results for the last quarter. 1:03 1 minute, 3 seconds Uh we managed to disperse around 500 crores a month uh during the last quarter which was up against the 400 quarters per month that we used to 1:12 1 minute, 12 seconds disperse in Q3 which again was against the 300 crores in Q2 per month. Our AUM 1:19 1 minute, 19 seconds at 4,400 crores showed a 12% growth year quarteron quarter and the share of new 1:27 1 minute, 27 seconds customers last quarter was about 45% which comprised both new to credit as also new to spandana 1:34 1 minute, 34 seconds and our overall customer base stands at little over 11 and a half lakhs. 1:39 1 minute, 39 seconds our Xbucket collection efficiency at 99.7% uh showed a similar trend across the five major states that we are present 1:48 1 minute, 48 seconds which is Bihar, Karnataka, Andra, Madhya Pradesh uh and Odisa. 1:56 1 minute, 56 seconds Our new book which is the sourcing effective 1st of April 2025 stands at 80%. 2:03 2 minutes, 3 seconds And we managed to collect nearly 65 crores uh last quarter from our pool of 90 plus customers. So this was a second 2:11 2 minutes, 11 seconds consecutive quarter wherein we managed to collect upwards of 65 odd crores. 2:17 2 minutes, 17 seconds Uh the lender overlap which is uh spanana plus 3 stood at about 4.8%. 2:23 2 minutes, 23 seconds With 34% uh being only span customers, 37 being span plus one and 25 being span plus 2. 2:33 2 minutes, 33 seconds uh we are adequately capitalized uh capital adequacy at 35%. 2:38 2 minutes, 38 seconds And our cost of uh marginal borrowing you know at 12% for last quarter comprised of 44% bank funding. Our opex 2:47 2 minutes, 47 seconds uh came down to about 161 crores last quarter as compared to 195 crores and uh 2:55 2 minutes, 55 seconds we had for the first time after six quarters had a pat of 5 crores against the loss of 95 crores in the previous quarter. 3:04 3 minutes, 4 seconds uh some of the things that I said in my last call which also incidentally was my first call after joining Spanduna in November that we were planning to move 3:12 3 minutes, 12 seconds to a new LOS platform uh being developed by perfuurs. U it has it has started 3:19 3 minutes, 19 seconds moving and hopefully we should have our first product which is the individual loan product uh either before the end of this quarter or early next quarter and 3:28 3 minutes, 28 seconds the JLG migration might happen sometime in October November types. So it's moving in the right direction. Uh that should give us a lot of flexibility and 3:36 3 minutes, 36 seconds agility in terms of the platform that we have. 3:40 3 minutes, 40 seconds Uh our microlab portfolio in our group company and the subsidiary uh stands at about 322 crores. Uh which we definitely wish to grow in the times to come. 3:49 3 minutes, 49 seconds That's a good portfolio that we have. Uh one of the things which is uh rarely spoken about is the customer satisfaction score. know we started 3:57 3 minutes, 57 seconds focusing heavily on customer satisfaction and our score which was about 22% in Q3 has gone up to 71%. 4:06 4 minutes, 6 seconds Uh we still not very happy. We're aiming for a 95% score either by before the end of this quarter or early next quarter. 4:13 4 minutes, 13 seconds Uh wherein we want to ensure that all our customers who try to reach out to us get the response on time. Uh incidentally in the last quarter there 4:21 4 minutes, 21 seconds was only one case which was resolved outside of TAT of 21 days that RBI speaks you know otherwise all other 4:29 4 minutes, 29 seconds customer complaints queries were resolved uh well within the t on the merger front uh the process has 4:37 4 minutes, 37 seconds begun um might take another five six months we are working on it um so the CFL merger is definitely in due course 4:45 4 minutes, 45 seconds it's going to happen we've been hearing about uh the El Nino and fertilizer issue. So a lot of 4:53 4 minutes, 53 seconds queries keep people keep asking you know how is it going to impact the portfolio. 4:58 4 minutes, 58 seconds Well, it it it's something which is seasonal which is expected, anticipated. 5:02 5 minutes, 2 seconds Uh but we are trying to be cautious uh in terms of how we uh source new customers and especially focus more on 5:10 5 minutes, 10 seconds ensuring that our collection efficiency uh both uh in the X bucket as also in the OnePlus bucket. We uh sharper focus 5:18 5 minutes, 18 seconds so that uh as and when a situation does arise and which should be a passing clown we are adequately prepared. Uh 5:27 5 minutes, 27 seconds with that let me pass on the mic to my colleague Ashish who's the CFO for him to give you further financial details. 5:35 5 minutes, 35 seconds Thank you spend namaskar. Good evening to all of you. Uh thanks for joining the call. Um 5:44 5 minutes, 44 seconds I will cover the highlights. U try to divide it into you know uh sections which are relevant. U uh so let me cover 5:53 5 minutes, 53 seconds some uh business drivers. AUM closing was 4,420 crores uh uh which is uh 6:02 6 minutes, 2 seconds higher uh compared to last quarter 3,948 crores. This is after 8 quarters we have 6:09 6 minutes, 9 seconds seen an increase in the AM and the AUM increase was 12% quarteron quarter. Um 6:15 6 minutes, 15 seconds what is u um uh the uh better part of this is 80% of the AUM now is 6:22 6 minutes, 22 seconds constituted uh under the new uh guardrails under the new B and uh uh giving us a collection efficiency of 99.7%. 6:33 6 minutes, 33 seconds Uh and this is not um uh over a period of 2 months. basis of 8 months of 6:40 6 minutes, 40 seconds seasoning uh with which we are you know looking at this kind of collection efficiency. So that's very um uh heartening to see from the portfolio 6:48 6 minutes, 48 seconds quality. uh getting into some more details. um Xbucket collection efficiency has been seeing improvement 6:55 6 minutes, 55 seconds for us uh month after month for the um quarter ending March 2026 it was at 7:03 7 minutes, 3 seconds 99.7% against 99.3% for the previous quarter um in terms of um our AUM uh 7:13 7 minutes, 13 seconds which is into uh uh 1 to 90 DPD uh that has come down uh now to uh 1.3% % uh 7:21 7 minutes, 21 seconds against the 2.5% which we have seen in the previous quarter. Uh the GNPA stood at 3.8% 7:29 7 minutes, 29 seconds uh versus 4.2% um in in December. The NNPA is now down to 73 against the 92% 7:39 7 minutes, 39 seconds uh compared to you know the December and uh quarter. uh we continue to maintain um uh sufficiently provided in our books 7:47 7 minutes, 47 seconds uh at greater than 80%. Um in terms of uh moving and giving you some highlights on borrowings and liquidity 7:56 7 minutes, 56 seconds we have borrowed 1,272 crores during the quarter. Uh the total borrowings since 8:03 8 minutes, 3 seconds the rights issue we have done is at 3,116 crores. uh this is since August 26 8:09 8 minutes, 9 seconds actually from a liquidity standpoint we've been maintaining very uh sufficient amount of liquidity as at 8:17 8 minutes, 17 seconds March uh 31st 2026 it was at 1,438 crores uh accordingly the capital 8:23 8 minutes, 23 seconds adequacy is also very strong um you know C stood at 35.9% uh with a net worth of 230 crores uh as 8:33 8 minutes, 33 seconds of 31st of March giving you some financial uh highlights on financial performance uh for the Q4 8:41 8 minutes, 41 seconds uh portfolio originated like I have explained is at 80% uh uh uh during the FI26 8:49 8 minutes, 49 seconds uh with a net C of 99.7 uh portfolio quality given the AUM mix 8:56 8 minutes, 56 seconds is shifting towards the uh newly originated portfolio has seen lot of improvement um 9:04 9 minutes, 4 seconds yield for the quarter uh you know got positive uh impact because of this movement into you know better portfolio 9:13 9 minutes, 13 seconds uh mix. So it is at 22.8% compared to 22.4% in Q3. Um we have seen 9:22 9 minutes, 22 seconds marginal cost of borrowing reduce during the quarter uh by 120 basis points. It is uh stacking at 12%. 9:30 9 minutes, 30 seconds NIM uh contracted uh uh uh to 9.9% compared to 11.1% 9:38 9 minutes, 38 seconds uh largely on the impact of cost of borrowings which we have seen in the previous quarter. Uh our POP uh has 9:46 9 minutes, 46 seconds strengthened we were at uh 39 crores for Q4 compared to 8 crores reported for you know Q3 FY26. 9:54 9 minutes, 54 seconds uh like you have uh noticed and uh Minki explained uh this uh quarter we have reported 8 crores of uh uh PBD uh 10:04 10 minutes, 4 seconds compared to the loss of 1 125 crores in the uh last quarter. Uh with this uh we will take a pause and uh you know open 10:12 10 minutes, 12 seconds the floor for any questions or uh clarifications that you may require. 10:18 10 minutes, 18 seconds Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchstone 10:26 10 minutes, 26 seconds telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to please use handsets while 10:35 10 minutes, 35 seconds asking a question. Ladies and gentlemen, we will now wait for a moment while the question queue assembles. 10:54 10 minutes, 54 seconds Our first question comes from the line of Shrial Doshi from Equirus. Please go ahead. 11:00 11 minutes Hi sir. Uh thank you for giving me the opportunity. Uh and congrats on on getting back to the growth path at on 11:07 11 minutes, 7 seconds the loan book side. Uh my first question was on the uh yield side and also on the cost of fund side. Uh given the tight 11:15 11 minutes, 15 seconds liquidity in the market uh how are you seeing the cost of fund moving for us especially I mean while we have gone 11:23 11 minutes, 23 seconds through our own journey as well. So how do you see that cost of fund moving in 207 11:30 11 minutes, 30 seconds uh and what are we sort of estimating that to to shape up during the year? Uh and on the yield side what is our 11:37 11 minutes, 37 seconds incremental yield uh for let's say 4q and and and what is our blended yield target also at book level for f27. 11:49 11 minutes, 49 seconds So u I I'll take that question. um you know the cost of borrowings uh should be 11:56 11 minutes, 56 seconds you know stacking up in the similar uh uh levels uh more more around you know 12.5 uh on a blended basis largely 12:06 12 minutes, 6 seconds because we do u see that you know there will be um uh some impact uh on the um 12:13 12 minutes, 13 seconds on the cost of borrowings because of the liquidity crunch you are explaining. 12:17 12 minutes, 17 seconds However, we believe that as our business, you know, kind of strengthens and improves, uh, we should not see a large, uh, amount of, you know, 12:25 12 minutes, 25 seconds escalation in the cost of borrowing. So, overall for the year, we believe it should be, you know, uh, below 12.5%. 12:32 12 minutes, 32 seconds From a yield standpoint, uh, the current um, uh, pricing that we have on the loans is uh, ranging between 23% to 26%. 12:42 12 minutes, 42 seconds uh depends on you know where the customer is uh in the vintage uh with us. Uh my disbbursement yield if I have 12:51 12 minutes, 51 seconds to you know give you uh that number that is uh around 25.25%. 12:56 12 minutes, 56 seconds Uh however it is presently at 22.8 date largely because of uh there is a GNPA and there is a book uh which is flown 13:04 13 minutes, 4 seconds into GNPA or whatever. So it gets impacted but as we progress uh I believe we should inch up closer towards the uh 13:12 13 minutes, 12 seconds ideal um um uh during FI27. 13:19 13 minutes, 19 seconds Got it. Got it. Thanks for that detailed answer. The second question was on the customer base. So uh that has been 13:26 13 minutes, 26 seconds shrinking for us uh you know the last you know last almost six seven quarters. 13:32 13 minutes, 32 seconds So uh what has been our new customer acquisition during 4Q and where do we see that customer base uh you know 13:41 13 minutes, 41 seconds ending for FI27 end because uh I mean while we have seen unique customer share increasing and also we we are aligning 13:49 13 minutes, 49 seconds ourselves with the guardrails requirement when do we see this this customer base growth coming back. 14:02 14 minutes, 2 seconds So um you know if you look at and um if you go back to our commentary we've been uh explaining that the focus would be to 14:10 14 minutes, 10 seconds you know add uh new customers uh to the spandana base and improve the productivity at a loan officer level. Um and there is a headroom which is 14:18 14 minutes, 18 seconds available which we will you know kind of continue to chase. Uh if you uh would have noticed we have added about 1.2 2 14:26 14 minutes, 26 seconds lakh uh new borrowers during the quarter uh against uh 63,000 14:33 14 minutes, 33 seconds uh odd in the last uh quarter. So uh there has been a clear focus uh on this aspect. I think by uh the next financial 14:43 14 minutes, 43 seconds year end our goal is to add another uh 7 lakh new borrowers uh during the financial year which should take us 14:51 14 minutes, 51 seconds after the let's say dropouts or whatever to closer to you know 1.6 6 million borrowers from the present uh 1.1 14:58 14 minutes, 58 seconds million that we have. So I think that's the largely the um uh trend that is likely to play out. 15:06 15 minutes, 6 seconds Got it. Okay. That's that's very helpful. And thirdly, last question on the growth side. Um so if you could 15:13 15 minutes, 13 seconds highlight where do we see the FI27 uh loan book shaping up in terms of the growth as well as what sort of a 15:22 15 minutes, 22 seconds profitability should we see like we have seen PBT at least coming in green. So where do we where do we see where do we 15:31 15 minutes, 31 seconds see that you know also you know at at FI27 end level. 15:37 15 minutes, 37 seconds So uh last quarter as I said we averaged about 500 crores of dispersal and we want to retain at that level for at least next three four months uh and then 15:47 15 minutes, 47 seconds aim for about 550 to about 600 crores as we progress uh and keep a sharper eye on 15:53 15 minutes, 53 seconds the collection efficiency as well. So if all goes well, we should be closer to about 6 and a half thousand crores amum 16:01 16 minutes, 1 second by FI27 and for profitability no guidance but yes we aim to be in the 16:09 16 minutes, 9 seconds black and then with this 6,500 cr disbursement in terms of loan book absolute like we 16:18 16 minutes, 18 seconds are at closer to 4, 400 K. So with this 6,500 cr where do we see uh the the the 16:26 16 minutes, 26 seconds closing loan book or let's say the loan growth for the full year I spoke of you know March 27 we are 16:33 16 minutes, 33 seconds likely to exit at 6 and a half,000 crores of AUF okay okay sorry I thought that was sorry my bad okay got it sir got it thank you 16:41 16 minutes, 41 seconds so much sir for answering my question I'll come in the queue for more thank you thank you ladies and gentlemen if you 16:49 16 minutes, 49 seconds wish to ask questions you may please press star and one. 16:53 16 minutes, 53 seconds Our next question comes from the line of Pratush the money, an individual investor. Please go ahead. 17:01 17 minutes, 1 second Hello. Audible. You are audible sir. You may proceed. 17:07 17 minutes, 7 seconds Yeah. So my question is uh like one year back the industry entirely had faced the challenge. So I want to understand uh 17:15 17 minutes, 15 seconds what kind of entity level measures and what kind of industry level measures have actually led to the new portfolio 17:23 17 minutes, 23 seconds uh giving a collection yield of more than 99% tax bucket. That's my first question. 17:32 17 minutes, 32 seconds So as far as the industry is concerned, the uh guardrails uh issued by the SRO's are being followed in to um effective 17:41 17 minutes, 41 seconds 1st of April which is also reflecting in how the industry book is behaving uh whether it is a free lender norm or the 17:47 17 minutes, 47 seconds two lakh independence F and more importantly one of the SRO is also doing a third party evaluation of various 17:55 17 minutes, 55 seconds lenders to ensure that they are well within the guardrails and any any uh diver convergence uh is getting reported 18:02 18 minutes, 2 seconds to the company for action and no response getting reported to the board and in some cases even getting reported to the regulator. As far as uh uh 18:12 18 minutes, 12 seconds Spanella is concerned we went little stringent as compared to the uh guardrail itself. So today for instance 18:19 18 minutes, 19 seconds uh uh 98% of the dispersements that I did uh the customers were regular. So I 18:26 18 minutes, 26 seconds I don't lend to customers who are 30 plus on the day of dispersal uh and ensuring that uh uh the the focus 18:35 18 minutes, 35 seconds remains tight on only giving to those customers who are exhibiting uh adequate behavior that we we believe is very 18:43 18 minutes, 43 seconds important. And uh of course we all keep talking about sharper focus on uh recoveries but uh we are also going a 18:51 18 minutes, 51 seconds one step forward trying to do something which uh uh which is difficult to do but we have started doing it. For instance, 18:59 18 minutes, 59 seconds if a customer were to not honor their uh uh installment on the demand date, the very next day, we are trying to reach 19:07 19 minutes, 7 seconds out to the customer saying that uh you need to honor or we try and meet the customer and we trying to ensure that this is uh regimented as a as a process 19:16 19 minutes, 16 seconds so that I I I know of what's happening on the ground on a daily basis in terms of recovery that's which is more important because dispersals will keep 19:24 19 minutes, 24 seconds happening not to worry. So this this these two controls at our end should help us ensure that we build a very robust book as we go along in this journey. 19:33 19 minutes, 33 seconds Uh sure. So if I were to compare these current measures to uh maybe March 25 uh how how is it broadly different? 19:45 19 minutes, 45 seconds Uh as in terms of disbbursement uh as you said right now if it's a 30-day plus customer then you're avoiding dispersing 19:53 19 minutes, 53 seconds to them. So uh was this a practice which was also followed in March 25 or what increments from March 25 or prior to the entire crisis were uh implemented? 20:08 20 minutes, 8 seconds Uh hi Pratkish this is Ash's side. So uh see the question is you know whether the industry was uh following the norm or 20:17 20 minutes, 17 seconds not. We have adopted this sometime in January in terms of you know not dispersing to a 30 plus. However, uh if 20:25 20 minutes, 25 seconds the customer was getting loans from let's say the industry uh at large irrespective of their uh you know 20:33 20 minutes, 33 seconds staging with uh across the loans uh then you know the behavior could not have been uh improved uh which is what SRO 20:42 20 minutes, 42 seconds have done stepped in and made it uh uh uh a full-blown uh you know a guardrail uh which has to be adopted by each and 20:50 20 minutes, 50 seconds every lender in the space and uh today nobody is lending beyond 60 days. 20:55 20 minutes, 55 seconds However, Pandana follows 30 days. Uh so that's that's where we are right now. 21:01 21 minutes, 1 second Okay. Got it. So one last question. So uh in terms of AI implementation, is there anything that has come up like for 21:10 21 minutes, 10 seconds example L&T Finance? Uh I think they speak about implementing AI in uh determining customer cash flows and all 21:18 21 minutes, 18 seconds of that. But there are few other MFI companies which are not yet comfortable. Uh so where are we among them? 21:27 21 minutes, 27 seconds So there are two three areas wherein we are exploring at this point in time the larger energies towards migration of our LOS platform to the current one to 21:35 21 minutes, 35 seconds perfuse which which when implemented is definitely going to make a difference. 21:40 21 minutes, 40 seconds uh MIS automation is something wherein we are looking at and second is uh the customer satisfaction you know the calls call center inhouse call center that we 21:48 21 minutes, 48 seconds have uh there is a scope for uh doing an AI project uh very simple one but uh in our quest to reach to a 95% seat that's 21:56 21 minutes, 56 seconds an area again we are looking at apart from that there could be one or two areas in IT wherein we could explore 22:03 22 minutes, 3 seconds some of those AI initiatives but largely this year is going to be the migration to the new platform So actually I meant in terms of 22:12 22 minutes, 12 seconds analyzing cash flow like for example is it possible or like I'm just I'm generally asking that since there's so 22:19 22 minutes, 19 seconds many online uh UPI transfer companies right now PTM etc and they have database of so many uh MSMES etc is it possible 22:29 22 minutes, 29 seconds to legally purchase data from them and kind of process that in the AI system and then decide whether lending to them 22:38 22 minutes, 38 seconds is profitable or not. Is that a practice that's happening? 22:44 22 minutes, 44 seconds If you're if you're talking from a lending perspective, the kind of controls that we have is more than sufficient. We don't need to have any 22:52 22 minutes, 52 seconds buying of data. Uh so for instance, one of the other things that we are doing is bot calling. Today when when uh 22:59 22 minutes, 59 seconds customers bounce or we are in the 90 plus, we are using a bot call uh which is quite advanced and uh that itself is helping us. And then of course over and 23:08 23 minutes, 8 seconds about the bot call you can always reach out to customers through the manual calling but for the dispersal purposes I don't think we need to buy anything from 23:16 23 minutes, 16 seconds the marketplace. There are enough and more customers available in the marketplace today. Okay. Go ahead. Thank you. 23:26 23 minutes, 26 seconds Thank you ladies and gentlemen to ask a question you may please press star and one. 23:32 23 minutes, 32 seconds Our next question is from the line of Aviral Chen from a singular Gulf. Please go ahead. 23:41 23 minutes, 41 seconds Can I add it? Uh, sir, you sound muffled. Uh, is it better? 23:49 23 minutes, 49 seconds A little, sir. 23:52 23 minutes, 52 seconds So, thank you. Uh, I'm Ash. Uh, thank you for taking my call. 23:57 23 minutes, 57 seconds Question. I have a fundamental question given what whatever the industry has gone through in the last two years and 24:05 24 minutes, 5 seconds what we observed was that JG attendance discipline had gone there was a lot of door knock and frontline attrition was 24:14 24 minutes, 14 seconds very sky-high four to 5% or sometimes 6 to 7% a month how do you see the body of behavior and fundamentally scalability 24:23 24 minutes, 23 seconds of the micro finance model basis which fundamental has been built and there are many other companies. uh 24:32 24 minutes, 32 seconds so what is uh obviously lot has gone through in the last two years but uh 24:38 24 minutes, 38 seconds since end of FI24 versus as you see the ongo situation today is there fundamental changes that you need to 24:46 24 minutes, 46 seconds make in terms of loan officers coverage per borrower borrower selection and what is the borrower behavior on the ground 24:54 24 minutes, 54 seconds in terms of adhering to the best practices as laid out by the borrower uh or for from the windows. 25:03 25 minutes, 3 seconds The business has been evolving over the years and and what held good a couple of years ago uh is no longer valid uh and 25:12 25 minutes, 12 seconds may not be valid 3 years down the line and it's a very dynamic world. Uh we did not talk about digital repayment 3 years 25:19 25 minutes, 19 seconds ago. Today for instance at Spanana my average is about 22% 20 to 22%. Now if customers are paying me online and if I 25:27 25 minutes, 27 seconds expect them to attend meeting center just for the sake of attending it's not going to happen. So uh there is always going to be a conflict between meeting 25:34 25 minutes, 34 seconds center and digital repayment. Uh what we need to uh think through is how do we engage with our customers be in touch 25:43 25 minutes, 43 seconds with them and money comes through online because we have to increase this. If we have to be more agile and we have to be 25:50 25 minutes, 50 seconds more opex uh optimization, we can't be doing all these things you know of going meeting center collecting cash. So we 25:59 25 minutes, 59 seconds have to educate the customers. We have to ensure that the customers money remains in the bank account because 100% of our customers have a bank account that's for sure because we are 26:07 26 minutes, 7 seconds dispersing the money into their accounts. So if the they have a bank account then why should they pay cash okay so that that's an education series 26:14 26 minutes, 14 seconds we are thinking you know we are also been discussing with the uh SRO to say that can we have some sort of a target aim to take it to about 50% 26:24 26 minutes, 24 seconds uh to ensure that as a industry we stand to gain so meeting center will undergo a change the way we have been um assessing 26:32 26 minutes, 32 seconds our customers will also undergo a change for instance uh we've been talking about using data analytics to say or data science So understand uh what sort of a 26:40 26 minutes, 40 seconds customer we need to lend to otherwise it becomes very simple you know this is the age group um hardly any income that we are talking of uh group so on and so 26:49 26 minutes, 49 seconds forth is there some smart analysis we could do to say that this sort of borrowers tend to repay much better than the others so that over the next 3 four 26:58 26 minutes, 58 seconds months we're going to work on certain data science to understand how does it fit into our existing uh database and which will help us decide what sort of 27:06 27 minutes, 6 seconds customers we need to source going forward or which markets for that matter or for that matter different markets may have different policies or processes. 27:17 27 minutes, 17 seconds So are you saying that the joint liability group sort of no longer it's it's just for the name sake because uh 27:26 27 minutes, 26 seconds it's in it's it's actually coming out to individual borrower behavior and how they how you're able to engage with them and how they hopefully repay digitally. 27:39 27 minutes, 39 seconds See it was always like this. It is now getting a little more pronounced being talked about. Never for once you know 10 27:46 27 minutes, 46 seconds years ago when I was handing this I've seen customers the group repaying one or two installments of the defaulting borrower. But I've never seen a group 27:55 27 minutes, 55 seconds even 10 years ago which said okay for the next 18 months or 24 months we will honor just because this lady has migrated or she's not in a position to 28:02 28 minutes, 2 seconds repay. So it was never there but uh it's now getting more pronounced more being talked about. uh yes still the women are 28:10 28 minutes, 10 seconds coming together uh they will help you to say that this lady has migrated to this village I know her contact number so those things remain the fabric remains 28:19 28 minutes, 19 seconds but see the ability of one member or other members to pay for the defaulting member also is beyond reach today 28:27 28 minutes, 27 seconds because the the EMI have gone up because of the ticket sizes what used to be a 400 500 rupee EMI today is about 1,800 28:34 28 minutes, 34 seconds 2,000 rupees so if a lady has not paid for three installments and to three different institutions expecting others to pay u is highly improbable. 28:45 28 minutes, 45 seconds Sure. Fair enough. And is there further coming back to spa's operations two more 28:53 28 minutes, 53 seconds sessions I have uh is there further uh opex uh opex optimization that is 29:01 29 minutes, 1 second possible in your operations you are from 195 crores and last quarter you're down to 160 odd crores but obviously this is 29:09 29 minutes, 9 seconds a distributed borrower base that you have so you cannot really look at u loan officer sort of efficient from a loan 29:18 29 minutes, 18 seconds under management perspective but given the size and scale and the dispersement that you are targeting what's the optimal opex that you would want to work 29:27 29 minutes, 27 seconds with uh on an absolute number basis and then two years 3 years down the line as a percentage of a basis 29:35 29 minutes, 35 seconds okay in the in the medium term it should come down to about 7 8% of x2 a year uh and in the near term can 160 come down 29:44 29 minutes, 44 seconds that's what we are aiming for I can't say no. Uh definitely there is a room. 29:49 29 minutes, 49 seconds Uh but I need to ensure that I don't cut corners. Uh these are optimization in the normal course. Uh without 29:56 29 minutes, 56 seconds compromising on efficiency and growth and other factors but there is room which we will also ensure that uh it'll be seen in the quarters to come. 30:06 30 minutes, 6 seconds So if such time will reach almost 8 8,000 cr aum as in I'm just taking off a 30:13 30 minutes, 13 seconds 78% opx would mean 660 650 odd crores of opexics annually. So your system is 30:20 30 minutes, 20 seconds today built for say 8,000 cr aum where till such time you would have to increase your opex and maybe try to 30:27 30 minutes, 27 seconds optimize from where you are today downwards. Is that a fair assumption? 30:33 30 minutes, 33 seconds uh the opex up to 8,000 cr opex in terms of some people in the front line I may have 30:40 30 minutes, 40 seconds to add other opex I don't need to for instance head office is adequately cap capacitized uh I don't need to open branches because 30:48 30 minutes, 48 seconds I've got 1250 branches in a steady state and even if I take a 10 crore assumption you know I'm well equipped for 12,500 30:56 30 minutes, 56 seconds crores of aum but I may accelerate more headcount in the front line in my quest to increase my volumes or reach certain 31:05 31 minutes, 5 seconds numbers much before time. So otherwise I don't need to add on to any fixed cost um at the head office levels. 31:15 31 minutes, 15 seconds And finally on the on the new borrower acquisition either new to credit or new to fund now or existing how is the 31:23 31 minutes, 23 seconds rejection rates now it used to be as high as 70 80% till about two quarters back. So are there is there overall 31:32 31 minutes, 32 seconds landscape uh getting better that you are able to source better customers who are able to pass through the credit filters. 31:38 31 minutes, 38 seconds So what has changed from your working style and also from a macro environment perspective that you that keeping the 31:47 31 minutes, 47 seconds quality of the book as good you'll be able to accelerate your dispersals. 31:54 31 minutes, 54 seconds the rejections continue to be uh in the range of 60 to 65%. And it may remain so for a while. Now what will happen is 32:02 32 minutes, 2 seconds some of these customers who for whatever reasons could not pay defaulted uh with no adverse intent you know it it 32:10 32 minutes, 10 seconds was their capacity uh may come back into the mainstream in about 2 three years uh like it happens in the stock market as 32:17 32 minutes, 17 seconds well. So like for instance customers who defaulted in in during covid times many of them have got regularized and uh they 32:25 32 minutes, 25 seconds are even paying uh to most of the institutions. So as I said you know the market has got a lot of customers of course most of the players are going to 32:33 32 minutes, 33 seconds be focusing on these customers who are still availing of finance through um in the inorganized unorganized sector but 32:42 32 minutes, 42 seconds we'll also have the the core core and of customers who went out of the system in recent times. Many of them will come back at a later point in time through 32:50 32 minutes, 50 seconds some behavior which gives us a confidence that we can again look at them 32:58 32 minutes, 58 seconds and uh given your rejection rates are still 62 65% are you able to source more 33:04 33 minutes, 4 seconds with the same u same u frontline u 33:11 33 minutes, 11 seconds loan officer network that you have. So last quarter as I said you know our sourcing of new customers was 45% 10% 33:18 33 minutes, 18 seconds was NTC another 35% was NTS uh NTC requires a little more efforts so that's what we are now promoting our people to 33:26 33 minutes, 26 seconds say that focus on those customers what are the different ways of acquiring new new credit customers uh but 50 55% of 33:34 33 minutes, 34 seconds the customers have to be new uh in our quest to build a portfolio okay 33:42 33 minutes, 42 seconds and on the ticket side size uh ticket sizewise what changes have you made? Uh what we realized is cycle three or cycle 33:51 33 minutes, 51 seconds four borrowers or borrowers who've been there for with you for 3 four years and have been good in their prepayment behavior certainly you should play big 33:59 33 minutes, 59 seconds with them. I'm just making a very general statement. So what have been the learnings and what has been implemented born out of those learnings? 34:09 34 minutes, 9 seconds It's a very apt statement that you've made u as we go along in our sixth cycle sixth or seventh cycle we give as high as 1 lak 70 but that's a very small 34:17 34 minutes, 17 seconds share of our overall portfolio maybe 2 three 4%. But average ticket sites continues to be 60,000 rupees. Uh but 34:24 34 minutes, 24 seconds yes as as we go along you know when you acquire new customers new to credit it's always going to be 50 60 types. When you acquire new to span or existing customers the ticket sizes will go up. 34:35 34 minutes, 35 seconds So it's always going to be hovering between say 60 and 8085. 34:40 34 minutes, 40 seconds Okay, that is from uh from my side. Thank you so much. Thank you. 34:48 34 minutes, 48 seconds Thank you. Ladies and gentlemen, you may press star and one to ask a question. 34:52 34 minutes, 52 seconds Our next question comes from the line of Rudra Raha from I thought Financial Consulting. Please go ahead. 35:01 35 minutes, 1 second Yeah, thank you for the opportunity sir. 35:03 35 minutes, 3 seconds Sir, I wanted to ask on the individual loan portfolio under Chris Financial. Uh how are we doing uh on that sir? 35:13 35 minutes, 13 seconds So Chris Financial has uh two portfolio. 35:15 35 minutes, 15 seconds One is individual loans and the other is uh microlab. Microlap I said is about 322. This will be about 260 odd. uh but 35:24 35 minutes, 24 seconds we are launching a different uh individual loans in the month of June or July which is going to be a better underwritten product wherein there'll be 35:32 35 minutes, 32 seconds a personal visit by a credit officer uh questions being asked band being collected 100% enash repayment so on and 35:41 35 minutes, 41 seconds so forth. Uh so once that is launched uh we will do a pilot uh in certain states uh or certain branches within uh 35:50 35 minutes, 50 seconds Spandana and these are setting certain milestones. Once those milestones are reached we will give it to Chris as well 35:58 35 minutes, 58 seconds and they will then start sourcing individual loans as per the new criteria. 36:06 36 minutes, 6 seconds Understood. And what about the existing uh GMPAS in that book in the the Chris financial book? 36:17 36 minutes, 17 seconds Yes. Yes. 36:21 36 minutes, 21 seconds So the numbers have uh come down. Last quarter it was about 11.45 the G&PA. 36:26 36 minutes, 26 seconds This quarter it is at 6.5. uh yeah we've done one arc transaction in the entity 36:33 36 minutes, 33 seconds and uh uh also you know the collection efficiencies have started improving so leading to both these things you know 36:41 36 minutes, 41 seconds the current GNP is at 6.5 understood sir understood and sir where do you see this number going like 36:49 36 minutes, 49 seconds stabilizing now I think the right way to look at it is how is the new book behaving because 36:57 36 minutes, 57 seconds uh we have uh made just do the underwriting and we are likely to make more changes on the underwriting like Winky was just explaining. Uh and the 37:06 37 minutes, 6 seconds new book is performing uh pretty u uh under the new underwriting uh this thing it is performing pretty strongly. Uh 37:15 37 minutes, 15 seconds however the changes were made sometime in November. So uh going forward uh you know this number should obviously you 37:23 37 minutes, 23 seconds know start coming down uh to much uh manageable levels. 37:28 37 minutes, 28 seconds Understood sir. Answer if I recall correctly uh microlap was somewhere around 1% on GMP PA levels. Uh are we 37:37 37 minutes, 37 seconds still around those levels or something has changed there? 37:41 37 minutes, 41 seconds That's correct. Uh so microlap is still around 1.2% uh in terms of GMPA. Uh that's the number. 37:51 37 minutes, 51 seconds Understood sir. Understood. Uh and sir you mentioned that we'll uh launch a pilot for individual loan where a 37:59 37 minutes, 59 seconds officer will go and uh evaluate and all uh in this model sir uh from uh my limited understanding the problem arises 38:08 38 minutes, 8 seconds due to uh additional operational expenditure uh because of catering each and every customer on a one-toone basis. So sir 38:17 38 minutes, 17 seconds how do we plan to control that part of this product? 38:23 38 minutes, 23 seconds So you see the individual loans is still going to be offered between 23 and 26%. 38:28 38 minutes, 28 seconds Okay. And and uh so at this point in time the initial uh workings that you have done uh if you're able to keep our 38:36 38 minutes, 36 seconds delinquency or the collection efficiency at 99.5% also it is still profitable. 38:44 38 minutes, 44 seconds Understood sir. Understood. And and ticket price is going to be between one and four lakhs. 38:56 38 minutes, 56 seconds Got it sir. So are we targeting some different income class with this product because 39:03 39 minutes, 3 seconds so we are targeting customers who who have an enterprise who are running a business. We are not going to fund for starting a new business. We are going to 39:11 39 minutes, 11 seconds fund for working capital. So a person needs to have a definitely a shop or something which is visible which has stock which has sales. 39:22 39 minutes, 22 seconds Understood. And we'll be targeting tier 2, three cities under this or would it still be rural? 39:30 39 minutes, 30 seconds Okay. Where wherever we have branches in the same branch, we are going to offer them the facility to say when you u 39:38 39 minutes, 38 seconds graduate either you can go in for a group loan or you can go for individual loan if you have an enterprise. And then you'll also over time look at new to 39:46 39 minutes, 46 seconds spanana customers who have got a track record elsewhere to be offered an individual loan again basis the criterias that we have defined. 39:58 39 minutes, 58 seconds important. 40:00 40 minutes Uh, another question on the guidance part. So, you said uh 6,500 crores by year end FY27. 40:08 40 minutes, 8 seconds Uh, if I recall correctly, uh, some calculations indicated that we could reach 9 to 10,000 crores by FY28. 40:17 40 minutes, 17 seconds Uh, would that still be a correct assessment? Yes. 40:24 40 minutes, 24 seconds Okay. Okay. Uh so so that translates into more or less like 40 45% uh book 40:31 40 minutes, 31 seconds growth on an annual basis. So keeping that in mind what are the levels of Xbucket collection efficiency that we 40:40 40 minutes, 40 seconds are targeting that we will be comfortable along with this level of growth. 40:46 40 minutes, 46 seconds Any level of growth I can't compromise on collection efficiency especially in the X bucket. It has to be 99.5. I can understand some months hovering between 40:54 40 minutes, 54 seconds 99.3 and 99.5 some months going up to 99.6 six right irrespective of the book size you know no I can't compromise on 41:02 41 minutes, 2 seconds collection efficiency so 99.5 is uh what we would like to 41:10 41 minutes, 10 seconds maintain going forward that's right so which means that 5% flows yearly 6% flows even if you collect 50% back your 41:18 41 minutes, 18 seconds credit cost can hover between 2 and a half to 3% which is acceptable understood sir perfect thank you so much 41:27 41 minutes, 27 seconds sir You're welcome. 41:31 41 minutes, 31 seconds Thank you. Our next question is from the line of Aira Jen from Sigular G. Please go ahead. 41:43 41 minutes, 43 seconds Yeah, just on that uh individual own product. uh there there I'm just assuming that you would still have a 41:52 41 minutes, 52 seconds stronger filter of the customer not having total indebtedness or not having any loans other than okay and would that 42:00 42 minutes be also uh backed by some collateral or it will be a uncolateralized loan unsecured mode 42:09 42 minutes, 9 seconds unsecured fully unsecured and customer indebtedness in terms of uh 42:15 42 minutes, 15 seconds having other lenders because uh so overall it remains within the two lakh guideline that uh Min has uh fixed 42:24 42 minutes, 24 seconds but uh as I said you know a product offers one to four lakhs so we will see but as of now for the pilot we are ensuring that we maintain the 42:32 42 minutes, 32 seconds intelligence gap of two lakhs but this would not qualify as an MFI loan I'm assuming that's true yes 42:41 42 minutes, 41 seconds so you you need not adhere to the SRO guidelines I'm just saying that the discipline will break right once uh 42:49 42 minutes, 49 seconds obviously you will have your internal underwriting benchmarks and and rules but uh there is 42:56 42 minutes, 56 seconds no SRO uh oversight right on such kind of loans absolutely so here the income levels are likely to 43:05 43 minutes, 5 seconds be higher than three lakhs also because such customers uh we will evaluate from a perspective of you know what kind of businesses what kind of cash flows do 43:14 43 minutes, 14 seconds they have uh So they may to start with they may not fit the uh definition of you know micro finance of household 43:22 43 minutes, 22 seconds income. So these are slightly more u uh let's say affluent compared to you know the customers we service in the micr 43:30 43 minutes, 30 seconds finance space and what would be the uh loan tenency in 43:36 43 minutes, 36 seconds terms of doortodoor and average I think the maximum is 3 years uh 3 to 43:44 43 minutes, 44 seconds four years but average should be about 24 months. Okay. 43:51 43 minutes, 51 seconds And is there some any other player that you have modeled yourself after for this sort of loan? Um I know as in without uh 44:01 44 minutes, 1 second calling it out but who does this on an individual basis and these are Google customers assuming because you would use your existing branch network to source 44:10 44 minutes, 10 seconds these customers but is that very prevalent amongst organized lenders or this is largely been catered to or 44:17 44 minutes, 17 seconds higher ticket requirement by money lenders amongst your borrowers quite a few institutions have started on a low key 44:26 44 minutes, 26 seconds we are not the first uh but has it gained a lot of momentum? The answer is no. 44:34 44 minutes, 34 seconds Yeah. As in so would it be fair to say that the overall organized industry size for this segment may not be even 10,000 crores across lenders today? 44:44 44 minutes, 44 seconds 10,000 crores is too big a number. Yeah, I I I don't think so. 44:52 44 minutes, 52 seconds Sure. Thanks. 44:56 44 minutes, 56 seconds Thank you. We have no further questions ladies and gentlemen. I would now like to hand the conference over to the management for closing comments. Over to you sir. 45:07 45 minutes, 7 seconds So thanks a lot once again for participation and it feel really feels nice uh to be in your midst. Uh the 45:14 45 minutes, 14 seconds efforts are on to ensure that after six quarters of uh painfully uh painstaking uh efforts you know we we are back in 45:23 45 minutes, 23 seconds the black and from here on we should retain the momentum and and grow the book sustainably which is very important 45:30 45 minutes, 30 seconds and ensuring that uh we stick to all the guidelines and um and Spanana is again back in the reckoning you know people 45:38 45 minutes, 38 seconds start respecting Spana of course the respect was always there the lenders have been very supportive even during trying times but it should move couple 45:46 45 minutes, 46 seconds of notches up in terms of how it has been doing business in recent times. Thanks a lot. 45:54 45 minutes, 54 seconds Thank you on behalf of Spandasi Financial Limited. That concludes this conference. Thank you all for joining us. You may now disconnect your lines.