Tata Capital Ltd — Q4 FY26

Tata Capital Ltd Q4 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=LPrqdVxv-zw Published: 2 weeks ago

0:01 1 second Ladies and gentlemen, good day and welcome to the Tata Capital Q4 FY26 earnings conference call. 0:10 10 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. 0:20 20 seconds Should you need assistance during the conference call, please signal an operator by pressing star and then zero on your touchstone phone. I now hand the 0:29 29 seconds conference over to Mr. Sepati, head of strategy and investor relations at Tata Capital. Thank you and over to you sir. 0:38 38 seconds Thank you Saga. Good evening everyone and welcome to Tata Capital's Q4 FI26 earnings call. We hope you have had the opportunity to review our financial 0:46 46 seconds results, preies and investor presentation filed with stock exchanges. 0:50 50 seconds Joining me today are Mr. Raji Sabhawal MD and CEO, Mr. Rakkesh Paty, CFO and our senior leadership team. I'll first 0:59 59 seconds invite Rajiv to share his perspectives on our performance for the quarter following which we'll open the floor for questions. With that over to you Rajie. 1:08 1 minute, 8 seconds Thank you Sep. Uh thank you everyone for joining the call. Uh let me start with the macro environment and then I'll move 1:16 1 minute, 16 seconds on to the performance. India's economy delivered steady growth in FI26 with real GDP estimated at around 7.6%. 6% 1:25 1 minute, 25 seconds underpinned by resilient domestic consumption. 1:28 1 minute, 28 seconds Inflation moderated for most of the year with headline CPI averaging below RBI's medium-term target, though price 1:36 1 minute, 36 seconds pressures begin to firm up towards the year end. From a policy perspective, FI26 continued to be RBI's easing cycle, which began in February 2025. 1:47 1 minute, 47 seconds Accumulative 125 basis points of repo rate reduction supported by active liquidity management helped balance growth support with financial stability. 1:59 1 minute, 59 seconds Liquidity conditions tightened towards March leading to some hardening in rates but these pressures have since shown 2:06 2 minutes, 6 seconds signs of easing. March being the end of the year also saw as always peaking of credit demand with system credit 2:14 2 minutes, 14 seconds expanding to 16% yearonear led by steady demand in retail and select wholesale segments 2:22 2 minutes, 22 seconds looking ahead growth momentum could moderate amid a more uncertain external environment geopolitical developments 2:29 2 minutes, 29 seconds particularly the continuing conflict in West Asia carry implications for inflation energy prices and global financial conditions 2:38 2 minutes, 38 seconds and we continue to monitor developments closely. In parallel, evolving El Nino conditions remain an important watch 2:45 2 minutes, 45 seconds point given their potential impact on food inflation and rural demand. Now, let me turn to the key highlights for 2:53 2 minutes, 53 seconds the quarter both on consolidated basis excluding motor finance uh and and excluding motor finance. So we we've 3:00 3 minutes been always communicating both on an overall basis and also excluding motor finance and we will do so in this quarterly call too. 3:10 3 minutes, 10 seconds Uh excluding motor finance business our AUM stood at 2.52 lakh crores growing 28% 3:17 3 minutes, 17 seconds yearonear and 8% sequentially driven by sustained momentum across our core segments. Profit after tax for the 3:26 3 minutes, 26 seconds quarter was 1459 kores excluding non-recurring items up 51% yearonear and 3:34 3 minutes, 34 seconds 14% up sequentially. This was supported by lower credit costs at 0.8% and 3:41 3 minutes, 41 seconds continued improvement in asset quality with net NPA declining by 10 basis points to 0.5%. 3:48 3 minutes, 48 seconds Return on assets improved by 40 basis points yearon year and 20 basis points sequentially to 2.5%. 3:56 3 minutes, 56 seconds Which is at the higher end of our guidance. Return on equity improved by 40 basis points yearon year to 14.6% in quarter 4 of FI26. 4:08 4 minutes, 8 seconds For the full year FI26 profit after tax excluding non-recurring items grew 36% 4:14 4 minutes, 14 seconds exceeding our guidance of 32 to 35% with return on assets improving by 20 basis points to 2.2%. 4:22 4 minutes, 22 seconds Now talking about our performance including motor finance business our assets under management stood at 2.77 4:31 4 minutes, 31 seconds lakh crores up 20% year on year and up 6% sequentially for the quarter credit 4:37 4 minutes, 37 seconds costs improved to 0.9% down 30 basis points from quarter 3 of fi26 4:44 4 minutes, 44 seconds and PAT grew 16% sequentially excluding non-recurring items to 152 kores 4:52 4 minutes, 52 seconds Return on assets improved by 20 basis points quarter on quarter to 2.3% and ROE improved by 80 basis points from 5:00 5 minutes quarter 3 to 13.9% in quarter 4 and FI26. 5:06 5 minutes, 6 seconds Overall, our quarter 4 and FI26 performance is well aligned with our guidance across all metrics. I will now 5:14 5 minutes, 14 seconds walk you through our performance across five key themes followed by updates on our technology and digital initiatives and our housing finance and motor finance business. 5:28 5 minutes, 28 seconds First talking about the book growth I'm pleased to share that we have delivered on our targeted AUM growth recording a 20% yearon-year increase in line with a 5:36 5 minutes, 36 seconds guided range of 18 to 20%. Importantly, this growth continues to be well balanced across segments, products, and 5:43 5 minutes, 43 seconds geographies. Excluding the motor finance business, our AUM growth was even stronger at 28% yearonear, exceeding a 5:51 5 minutes, 51 seconds guidance of 22 to 25%. Within this, our housing finance segment continued its strong momentum with the housing finance 5:59 5 minutes, 59 seconds company delivering a 29% year-on-year growth. Our core focus remains firmly on retail and theme lending which together 6:09 6 minutes, 9 seconds continued to account for 86% of our AUM providing a structurally granular and resilient growth profile. 6:17 6 minutes, 17 seconds We also saw a modest increase in corporate exposures during quarter 4 of FI26 reflecting our ability to selectively participate in highquality 6:25 6 minutes, 25 seconds opportunities within a well diversified portfolio. 6:29 6 minutes, 29 seconds Quarterfor sent a new benchmark with disbbursements crossing 50,000 Kores a first for the company and a testament to 6:37 6 minutes, 37 seconds our growing scale. Yearon year quarter dispersements grew 32% and were 12% higher sequentially. 6:45 6 minutes, 45 seconds Retail momentum remained strong with healthy sequential expansion in the book. Our unsecured retail dispersements 6:53 6 minutes, 53 seconds continued its momentum growing at 50% yearonear in quarter 4 of FI26 on back of improving asset quality trends with 7:02 7 minutes, 2 seconds unsecured retail currently at 10.3% of AUM. We continue to see significant headroom towards our target of scaling 7:09 7 minutes, 9 seconds this to 15% and we remain firmly on track to achieve this. As of March, our 7:16 7 minutes, 16 seconds distribution comprised 1477 branches across 27 states and union territories. 7:22 7 minutes, 22 seconds This combined with our digital capabilities enables us to scale efficiently while deepening our presence across both existing and underpenetrated 7:32 7 minutes, 32 seconds markets serving a growing customer base of 8.4 million now. Overall, our growth remains consistent, well diversified and 7:40 7 minutes, 40 seconds anchored in quality, positioning the portfolio strongly for the next phase of expansion. 7:46 7 minutes, 46 seconds The second theme I want to cover is asset quality. Asset quality in Q4 has been the strongest over the recent quarters. We saw a meaningful 7:55 7 minutes, 55 seconds improvement across metrics. Slippages declined to their lowest levels over the last eight quarters, including that in 8:02 8 minutes, 2 seconds unsecured retail segment, reflecting the continued quality of our underwriting and effectiveness of our collections infrastructure. 8:10 8 minutes, 10 seconds As covered in slide 16 of our investor presentation, slippages in personal loans and micro finance have declined 60% and 70% respectively. 8:21 8 minutes, 21 seconds Excluding the motor finance business, gross stage three assets continue to remain strong at 1.5%, 8:29 8 minutes, 29 seconds net stage three at 0.5% and provision coverage ratio at 61 point 65.1%. 8:36 8 minutes, 36 seconds Credit cost declined to 0.8% for the quarter, reflecting a 20 basis points improvement over quarter 3. 8:43 8 minutes, 43 seconds Including the motor finance business, our gross stage three assets were 2% compared to 2.2% 2% in the previous quarter. Net stage three at 0.9%. 8:55 8 minutes, 55 seconds And provision coverage ratio at 56.2%. 8:58 8 minutes, 58 seconds All showing quarteron-quarter improvement. Credit costs improved by 30 basis points to 0.9% during the quarter. 9:08 9 minutes, 8 seconds The metrics on credit cost and net stage three are in line with our guidance for quarter 4 FI26 and for the full year FI26. 9:17 9 minutes, 17 seconds As far as risk from geopolitical environment is concerned, we have not observed any material stress in our portfolio across commercial vehicle as 9:26 9 minutes, 26 seconds well as MSME segments. That said, we continue to monitor the developments closely. We are virtually spending time 9:33 9 minutes, 33 seconds on this on a weekly basis to see where things are progressing. Overall, we remain confident in the trajectory of our asset quality and are committed to 9:41 9 minutes, 41 seconds sustaining these improvements in the quarters ahead. 9:46 9 minutes, 46 seconds Third theme I want to touch upon today is cost of funds. Our AAA credit rating underpins a well diversified and stable funding profile. 9:55 9 minutes, 55 seconds Though a through a disciplined ALM framework, we continue to optimize our borrowing mix while proactively managing 10:02 10 minutes, 2 seconds liquidity. For quarter 4, our overall cost of funds stood at 7.1% reflecting a five basis points reduction 10:09 10 minutes, 9 seconds from quarter 3 levels. In line with our recent global uh in line with recent global developments, we have seen an 10:16 10 minutes, 16 seconds uptick in funding costs on incremental borrowings. We continue to proactively manage a liability profile and remain 10:23 10 minutes, 23 seconds well positioned to maintain stability in our overall cost of funds going forward. 10:29 10 minutes, 29 seconds We carry a total liquidity buffer of approximately 29,500 Kores and we have ample headroom to pursue growth 10:37 10 minutes, 37 seconds opportunities and absorb market volatility without compromising on financial discipline. 10:43 10 minutes, 43 seconds Next themes is margins. We continue to operate with stable margin corridor with total income in quarter 4 at 6.5%. 10:52 10 minutes, 52 seconds Yields have remained healthy, supported by disciplined pricing and a calibrated shift towards higher yielding segments. 10:58 10 minutes, 58 seconds At the same time, we continue to maintain a balanced mix across higher yielding products, including unsecured retail, affordable housing, and secured 11:08 11 minutes, 8 seconds business loans alongside steady growth in fee based income. Our continued emphasis on portfolio granularity and 11:15 11 minutes, 15 seconds mix optimization has further supported margin stability even as we scale the book. During the last month of the 11:22 11 minutes, 22 seconds quarter, we saw some mark-to-mark movements in our investments reflecting broader market conditions during the 11:30 11 minutes, 30 seconds period. These we believe are temporary valuation adjustments with no impact on long-term view on the investments. 11:39 11 minutes, 39 seconds Now talking about operating leverage, the investments we have made over the last few years across technology, data infrastructure and distribution 11:47 11 minutes, 47 seconds expansion are translating into structural improvements in efficiency and scalability. We are seeing tangible gains in productivity, turnaround times 11:56 11 minutes, 56 seconds and overall operating efficiency and we expect the positive trajectory to continue as these investments scale further. 12:05 12 minutes, 5 seconds Our headroom, our headcount growth has remained well calibrated and aligned with business requirements with 12:12 12 minutes, 12 seconds incremental hiring happening largely in front-end roles in sales and collections. This enables us to support 12:20 12 minutes, 20 seconds growth while continuing to enhance productivity and drive operating leverage across the organization. Our 12:26 12 minutes, 26 seconds onroll employees stood at 29,816 as of March end. For FI26, the cost to 12:35 12 minutes, 35 seconds income ratio stood at 38.3% representing an improvement of 335 basis points over FI25 and remaining 12:44 12 minutes, 44 seconds comfortable within our guided range of 38 to 39%. 12:49 12 minutes, 49 seconds On our balance sheet, our balance sheet remains strong, well capitalized, providing a strong foundation to support our growth ambitions. As of March 2026, 12:58 12 minutes, 58 seconds our capital adequacy remains robust at 19% well above regulatory requirements and is supported by strong 13:07 13 minutes, 7 seconds common equity tier 1 ratio reflecting the underlying strength and resilience of our capital position. Our debt to 13:14 13 minutes, 14 seconds equity ratio stood at approximately 5.3x as of March 2026. A quick summary of our AI initiatives. 13:24 13 minutes, 24 seconds Our AI initiatives initially focused on point solutions such as in call center and customer service. We are now scaling 13:31 13 minutes, 31 seconds these capabilities across the lending value chain and moving towards more integrated end-to-end deployment that we 13:39 13 minutes, 39 seconds expect will drive measurable improvements in operating metrics across businesses. We have a number of flagship 13:46 13 minutes, 46 seconds initiatives live today and let me highlight a few of them. Our underwriting assist platform amongst the first in the industry has reduced credit 13:54 13 minutes, 54 seconds memo preparation time from 2 days to 20 minutes in our theme business thereby improving productivity of the underwriting team by 30%. The adoption 14:03 14 minutes, 3 seconds rate of underwriting assist platform today stands at 85%. Our unified voice hub operates across sales service and 14:12 14 minutes, 12 seconds collections in 11 languages. 90% of welcome calls are automated and AIdriven early bucket calling is delivering 30% EMI collection of the allocated pool. 14:24 14 minutes, 24 seconds Our document intelligence engine has processed over 2 cr documents and currently runs with 80 plus operational bots improving productivity of operations team by 35%. 14:36 14 minutes, 36 seconds Talking a little bit about our housing business, TA Capital Housing Finance uh continued its strong performance 14:43 14 minutes, 43 seconds trajectory in Q4 of FI26, delivering healthy growth alongside improving profitability. Our AUM grew 29% 14:52 14 minutes, 52 seconds yearonear to 86,653 crores while profit after tax increased 34% yearonear reflecting both scale 15:01 15 minutes, 1 second expansion and sustained earnings quality. Our strategic focus on affordable home loans, affordable loans 15:09 15 minutes, 9 seconds against property and prime lab enables us to drive margin expansion, portfolio diversification 15:16 15 minutes, 16 seconds and scale. Net AUM of affordable housing segment grew by 25% yearonear. We are 15:25 15 minutes, 25 seconds now operating through a network of 350 branches supporting deeper market penetration. 15:31 15 minutes, 31 seconds A focus on automation, genai and tighter operational control has resulted in improvement of cost to income ratio by 15:40 15 minutes, 40 seconds 320 basis points from 34.3% in FI25 to 31.3 31.1% in FI26. In fact, this cost 15:50 15 minutes, 50 seconds to income dropped below 30% in quarter 4 of FI26. 15:55 15 minutes, 55 seconds Asset quality continues to be our core strength. Credit cost remain stable at 0.1% while net NPA stood at 0.3% 16:03 16 minutes, 3 seconds positioning us amongst the best performing players in the housing finance sector. 16:09 16 minutes, 9 seconds Tata Capital Housing Finance delivered a strong pad growth of 34% yearonear in quarter 4 as FI26 and 23% for the full year of FI26. 16:20 16 minutes, 20 seconds Return on assets for quarter 4 stood at 2.6% and for FI26 ROA stood for the full 16:27 16 minutes, 27 seconds year stood at 2.5% highlighting the strength and sustainability of our earnings profile. 16:34 16 minutes, 34 seconds Little bit about our motor finance business. 16:38 16 minutes, 38 seconds Uh as you would remember, we achieved a break even in motor finance business in quarter 3 of FI26. 16:44 16 minutes, 44 seconds Backed by seasonal strength and lower credit costs, profit after tax for quarter 4 in motor finance business was 16:52 16 minutes, 52 seconds rupees 43 crores. The AUM stood at 25,390 Kores, a sequential decline of 4% reflecting our fitness first approach. 17:02 17 minutes, 2 seconds Even though positive growth in AUM is lagging by about a quarter, underlying momentum is improving. Dispersements 17:09 17 minutes, 9 seconds grew 32% sequentially in quarter 4 and we expect this to build as business stabilizes. 17:16 17 minutes, 16 seconds The integration is on track and signs of progress are now visible in numbers. 17:22 17 minutes, 22 seconds If we talk about our portfolio mix in motor finance business, our non-tarta OEM share in new commercial vehicle dispersements for for quarter 4 has 17:31 17 minutes, 31 seconds reached 26%. Reflecting early success in our multi-OEM strategy. We are increasing exposure to used commercial 17:39 17 minutes, 39 seconds vehicles and small and mid-commercial vehicles while reducing our heavy commercial vehicle concentration. Credit 17:48 17 minutes, 48 seconds costs are declining with fewer slippages driven by tighter underwriting and stronger collections. Ranch rationalization, focused manpower 17:57 17 minutes, 57 seconds deployment, and IT integration are improving efficiency. The business is now aligned to Tata Capital's model with dedicated sales, credit, and collection verticles. 18:06 18 minutes, 6 seconds Strengthened, we've strengthened underwriting and collections, which is showing in the book quality across cycles. 18:13 18 minutes, 13 seconds With these actions in place, we expect growth to resume from the first half of FI27. 18:20 18 minutes, 20 seconds Looking at looking ahead, we expect steady ROA improvement through FI27 and we are targeting to reach an ROA of 18:30 18 minutes, 30 seconds 2% by FI28. As we had communicated before, our focus now is on delivering consistent highquality outcomes as the transformation matures. 18:41 18 minutes, 41 seconds In the end, I would say FI26 reflected disciplined execution and strong fundamentals across growth, asset 18:50 18 minutes, 50 seconds quality and profitability. As we enter FI27, we remain focused on sustainable quality growth supported by our distribution and technology strengths. 19:01 19 minutes, 1 second With momentum in retail and housing, improving motor finance volumes, and a strong capital and liquidity position, 19:10 19 minutes, 10 seconds we are well placed to deliver on our FI28 guidance. We thank our investors, analysts, and partners and teams for the 19:18 19 minutes, 18 seconds continued support. We'd be happy to take your questions. Now, thank you very much. We will now begin the question and answer session. 19:29 19 minutes, 29 seconds Anyone who wishes to ask a question may press star and then one on their touchstone phone. If you wish to remove yourself from the question queue, you 19:37 19 minutes, 37 seconds may press star and two. Participants are requested to use handsets while asking a question. 19:44 19 minutes, 44 seconds Ladies and gentlemen, we will wait for a moment while the questions. 19:52 19 minutes, 52 seconds Our first question comes from the line of Raov from Amit Capital. Please go ahead. 19:58 19 minutes, 58 seconds Hi uh thank you for the opportunity and uh congratulations on the number. I have three questions. One uh I think you just mentioned that there were some slippages 20:06 20 minutes, 6 seconds in the CV finance portfolio in the fourth quarter. Uh when I'm doing my numbers and my calculations uh uh that indicates that there has been some net 20:14 20 minutes, 14 seconds recovery in that portfolio of about 35 crores. Uh can you verify what was the net amount whether it's a net slippage or a net recovery uh in the CD finance portfolio? 20:25 20 minutes, 25 seconds We we've actually slippages have gone down and recoveries have improved and that is the reason if you look at our 20:32 20 minutes, 32 seconds motor finance business I'll just try to point out to that slide um 20:44 20 minutes, 44 seconds actually we mentioned that uh for the motor finance business 20:51 20 minutes, 51 seconds uh our uh Net stage three assets have come down. 20:56 20 minutes, 56 seconds In fact, as far as profitability is concerned for quarter 4 uh in uh motor finance business, we have earned a 21:04 21 minutes, 4 seconds profit of 43 crores. Uh I would say a good portion of that has been contributed by higher recoveries and 21:13 21 minutes, 13 seconds lower slippages and uh uh actually our our credit costs are negative. Net slip net slippages are negative. Sorry. 21:23 21 minutes, 23 seconds That's correct. That's what I was trying to understand that uh negative net slippages means there have been net recoveries, right? In this in this absolutely 21:32 21 minutes, 32 seconds understood. Uh fair. Uh and then can you touch upon we looking at the growth in the CV finance portfolio in FI 27. Uh CV 21:41 21 minutes, 41 seconds volumes have been very good in in the second half. Um and ideally you should be capitalizing on these volumes for the 21:50 21 minutes, 50 seconds industry. Right. So uh just some thoughts on on how do you plan to uh you know capture this this cycle uh from atone 7 onwards. 22:01 22 minutes, 1 second So uh as far as um yeah the coming year is concerned you're right that there is strong momentum in the commercial 22:08 22 minutes, 8 seconds vehicle business. uh in fact uh you know for the first time in March we crossed a 22:15 22 minutes, 15 seconds four figure number as far as dispersements are concerned and uh we expect this momentum to continue. 22:24 22 minutes, 24 seconds However, we do have uh a matured book in the commercial bicycle business on which we have fair amount of repayments happening. 22:36 22 minutes, 36 seconds So uh uh while we will grow our dispersements uh the impact on the overall book growth 22:45 22 minutes, 45 seconds may may be more closer to 10% as far as uh uh uh the book is concerned. Our 22:54 22 minutes, 54 seconds dispersements will grow at uh close to about 80% plus that's what we have planned in next year. But because of the 23:02 23 minutes, 2 seconds matured book there are a lot of repayments also which are happening. 23:06 23 minutes, 6 seconds Consequently the book growth will be lower. 23:13 23 minutes, 13 seconds Going into 28 maybe that 10% can pick up to a higher number. Correct. Correct. Correct. You are right. 23:19 23 minutes, 19 seconds But so while dispersements will grow book will grow slower. 23:26 23 minutes, 26 seconds Understood. Um can I ask my second question? 23:32 23 minutes, 32 seconds Sure. Sure. Sure. So uh see you seem to be pushing a lot more on corporate lending that's visible in the numbers. I 23:39 23 minutes, 39 seconds think last quarter also uh it was there uh and unsecured growth is also coming by. One is low margin product one is the 23:46 23 minutes, 46 seconds other one is a high margin. So for 27 you know what are your thinking on product strategy and what will you guide for in terms of uh spread expansion 23:55 23 minutes, 55 seconds given that the yields have also started to pick up uh you know so so uh one bit on what is your product strategy uh and 24:03 24 minutes, 3 seconds I want to understand that more from a uh yield expansion perspective uh if there's going to be any and then the second one is uh you know how are you 24:11 24 minutes, 11 seconds looking at cost up front uh yes and and that should really answer uh my question on Right. 24:18 24 minutes, 18 seconds So, uh you know foster funds is a I would say a moving uh scale you know tough to predict what is going to happen 24:26 24 minutes, 26 seconds but u uh based on what we have uh seen and our estimate is our cost of funds 24:33 24 minutes, 33 seconds for the next year uh FI27 should be lower than the cost of funds for FI26. 24:39 24 minutes, 39 seconds Now how much lower you know time will tell but we expect it to be lower uh than a 526 on an overall basis because a 24:49 24 minutes, 49 seconds lot of liabilities have got repriced last year. Uh as far as um uh you know 24:56 24 minutes, 56 seconds margins u uh growth and margins both I will talk about. So as far as growth is concerned let me first talk about uh I 25:05 25 minutes, 5 seconds did mention about what's going to happen on motor finance business. Motor finance is also a high margin business for us. 25:11 25 minutes, 11 seconds The uh other unsecured businesses personal loan, business loans and micr finance. Uh we have given it on slide 25:18 25 minutes, 18 seconds 16. What's the momentum on dispersement growth there? Uh while dispersements have started to grow in that business uh 25:27 25 minutes, 27 seconds from over the last uh I would say 6 to 8 months. uh the in personal loans the impact on the book is less visible now 25:36 25 minutes, 36 seconds because there were a lot of repayments also on a matured book but you will see the impact on the book in FI27 25:46 25 minutes, 46 seconds uh where you will see uh significant improvement in book growth also the same is true for business loans business 25:54 25 minutes, 54 seconds loans we expect also the book to grow at a pace better than our overall book growth rate and same is true for microf 26:01 26 minutes, 1 second finance. So for all these three businesses uh the book growth will be higher than the overall growth rate of 26:08 26 minutes, 8 seconds uh data capital. So you will see uh an u improvement in margins and growth there. 26:16 26 minutes, 16 seconds Similarly in the housing finance business uh we have uh we've grown last year at about uh 29% in the uh housing 26:24 26 minutes, 24 seconds finance company and we expect to grow at a similar place uh pace in the coming year. uh with that we believe that the 26:33 26 minutes, 33 seconds proportion of retail business will marginally improve in our overall uh proportion for the coming year. uh and 26:43 26 minutes, 43 seconds uh this uh retail and theme which forms about 86% uh for FI26 should inch up in 26:50 26 minutes, 50 seconds uh FI27 uh uh in as far as FI26 is concerned uh 26:58 26 minutes, 58 seconds while uh just to give you a sense our housing finance company grew by about 29%. our retail secured grew by about 28%. 27:08 27 minutes, 8 seconds Um and uh so so the these were uh businesses which have shown strong growth. 27:17 27 minutes, 17 seconds Growth picked up in quarter 3 and quarter 4. Uh we did see a degrowth in our book by about 24% in motor finance 27:26 27 minutes, 26 seconds business. uh and part of it was made up by retail and housing and part by the corporate business. So we did see an 27:35 27 minutes, 35 seconds opportunity uh in in the corporate business uh of uh looking at very high 27:42 27 minutes, 42 seconds credit rated uh uh companies and we did uh use that opportunity but an o on an 27:48 27 minutes, 48 seconds overall basis um 86% is retail and which we expect to inch up more so because of 27:56 27 minutes, 56 seconds retail uh and retail includes housing in the coming year. 28:05 28 minutes, 5 seconds Thanks that that's also my friend and thanks for the answer. 28:12 28 minutes, 12 seconds Thank you. The next question comes from the Famil Sha from IIFL Capital. Please go ahead. 28:19 28 minutes, 19 seconds Yeah. Hi, thanks for the opportunity Rajiv. I had two questions. Uh one is if you can uh explain the say relatively 28:26 28 minutes, 26 seconds weaker non-interest income uh in this quarter. uh like what are the internals of it and what drove that uh and 28:34 28 minutes, 34 seconds secondly basically uh I think it's a derivative of uh your response to the previous question uh now currently in 28:40 28 minutes, 40 seconds the rate cycle that we are in uh there will be probably more opportunities that may come up in the sayme and corporate 28:47 28 minutes, 47 seconds segment uh but given that uh we also would want to say from a mixed perspective want to grow the retail book as well what will be your priority uh to 28:56 28 minutes, 56 seconds look at say in terms of overall profitability and uh say nims and spreads or to basically say push up uh further more on growth at an overall level. 29:07 29 minutes, 7 seconds So u as far as uh growth is concerned we've given a guidance of 23 to 25% and we want to remain uh in that range. 29:17 29 minutes, 17 seconds Obviously if we get an opportunity to do better we will look at it but we want to remain uh in that range. uh as far as um 29:26 29 minutes, 26 seconds you know NIMS uh are concerned our strategy has been to grow some of the high yielding products more than the 29:34 29 minutes, 34 seconds others. Uh last year uh we did suffer on that count because our unsecured 29:41 29 minutes, 41 seconds business did not grow uh because we were uh you know we had course corrected 29:48 29 minutes, 48 seconds ourselves uh in FI25 and the impact was visible in book growth in FI26. 29:55 29 minutes, 55 seconds Similarly our motor finance business which is also a high yielding business actually regrow by about 24% last year. 30:03 30 minutes, 3 seconds Uh we believe all of this will get corrected in FI27. We expect in FI27 30:10 30 minutes, 10 seconds motor finance business to grow. Uh it will grow. Um and uh we also because of the disbbursements which have picked up 30:19 30 minutes, 19 seconds in the unsecured business. We expect unsecured business to grow at a faster pace than our overall book growth. 30:27 30 minutes, 27 seconds Similarly, our affordable housing within housing is growing at a faster pace. 30:33 30 minutes, 33 seconds uh and we will see uh you know that also helping us in our names. Uh so it is 30:41 30 minutes, 41 seconds because of all of these products uh you know our names will uh we expect them to 30:48 30 minutes, 48 seconds grow. Last year they did uh get impacted because two high uh name businesses 30:54 30 minutes, 54 seconds unsecured as well as motor finance uh did not see a book growth uh you know I 31:01 31 minutes, 1 second would say but that is u you know has started to change from from the last quarter and and it should uh get better. 31:09 31 minutes, 9 seconds Uh the other thing which I want to point out is sometimes we do not get a true picture of the NIM 31:17 31 minutes, 17 seconds if we look at a twopoint average versus a daily average. Uh while on a twopoint 31:24 31 minutes, 24 seconds average the NIM looks flat. Um you know on a daily average it shows a 10 basis points improvement. So some of these 31:32 31 minutes, 32 seconds figures uh and the run rate for Q4 is even better for us. So to that extent uh 31:39 31 minutes, 39 seconds you know some of these numbers do not come out as clearly but they they do become visible when you see the income growth versus the average book growth. 31:50 31 minutes, 50 seconds Uh pointing out on so so as far as uh margins are concerned we expect them to 31:56 31 minutes, 56 seconds improve in the coming year because quarterf uh also is better for us on margins compared to the full year. 32:06 32 minutes, 6 seconds as far as uh uh you know the your other point Vir on uh non-interest income um 32:14 32 minutes, 14 seconds while on on the core fee side uh that has been showing a good trend for us uh 32:20 32 minutes, 20 seconds both in terms of loan linked fee uh or in terms of u you know insurance cross-ell or syndication all of those 32:29 32 minutes, 29 seconds segments have grown very well for us uh we have seen an impact on mark to market 32:35 32 minutes, 35 seconds on our investments uh and that is more so on the investments on the private equity side. uh as you won't know uh you 32:45 32 minutes, 45 seconds know the uh March actually March end saw um you know a decline on on the stock 32:54 32 minutes, 54 seconds market u and that impact was visible uh on our listed investments and some some 33:01 33 minutes, 1 second of the other investments uh because we do a valuation on a quarterly basis uh and multiples obviously came down for 33:09 33 minutes, 9 seconds the for every industry virtually uh in uh in March and uh we we we are not 33:16 33 minutes, 16 seconds actually perturbed by it uh because we do believe that uh markets will come back. Some of in some segments they've 33:24 33 minutes, 24 seconds already come back for the others we expect markets to improve and this will only give us an upside uh in the coming quarters. 33:36 33 minutes, 36 seconds Got it. This is very clear and Raj if I may can I ask one more question? Sure. 33:42 33 minutes, 42 seconds uh Raj if you can give some uh more color uh from say an uh asset quality perspective uh across some of the other 33:50 33 minutes, 50 seconds segments uh I would say especially how uh the mortgage piece is behaving uh I would say now that the growth rates and 33:58 33 minutes, 58 seconds the book is seasonal even more and uh secondly uh with regards to say the bounce rates uh what was there uh the 34:06 34 minutes, 6 seconds bounce rates that you saw in the month of April I know you said that overall level you don't see any stress but what do you want to uh quantify that and uh is it in within the normal ranges? 34:17 34 minutes, 17 seconds So uh let me let me cover you know segment by segment you'll you'll get a better picture on the same. So as far as 34:26 34 minutes, 26 seconds um corporate andme are concerned there is no challenge which we are seeing in factme is one sector which we 34:35 34 minutes, 35 seconds review every uh week post this whole war issue which has come in. So we we review uh all our clients to see uh whether 34:44 34 minutes, 44 seconds there is any stress. We've not uh observed anything uh which we which will give us or alarm us in any way. So to 34:52 34 minutes, 52 seconds that extent I would say we've seen uh uh no stress buildup or anything happening on corporate and theme and we believe we 35:01 35 minutes, 1 second hardly have any credit cost there and we expect the same to continue in the future too. As far as housing is concerned which is the largest segment 35:09 35 minutes, 9 seconds for us the housing finance company our credit costs for the year have been 10 basis points and u in fact um if I look 35:17 35 minutes, 17 seconds at the trends uh I see no reason why uh things should be any different going forward uh as far as uh retail is 35:26 35 minutes, 26 seconds concerned um you know that's the place on the unsecured side where we had seen stress in FI25 35:34 35 minutes, 34 seconds um and uh And there as we had mentioned before we started seeing a lowering of credit costs happening from Q2. Q2 was 35:43 35 minutes, 43 seconds lower than Q1. Q3 was lower than Q2 and Q4 was lower than Q uh three. Um so in 35:50 35 minutes, 50 seconds in all of them uh we've seen an improvement and uh uh same is true for motor finance. In fact we had a great uh 35:58 35 minutes, 58 seconds quarter uh quarter 3 was good but quarter 3 was even better for motor finance business. Um though in motor 36:06 36 minutes, 6 seconds finance I would only say it's we need to watch for quarter 1 and quarter two because quarter 3 quarter four usually are better. Uh but looking at our early 36:15 36 minutes, 15 seconds indicators of the quality of book we have created we do not foresee um any significant impact as far as your question on bounce rates were concerned. 36:24 36 minutes, 24 seconds We were also concerned about it and we looked at the numbers for the month of April and if I have to be uh very honest 36:35 36 minutes, 35 seconds with you actually we have seen a bounce rate coming down in April compared to quarter 4 of last year. 36:43 36 minutes, 43 seconds So uh there are no signs. If you know as as we had uh communicated before VM our 36:51 36 minutes, 51 seconds approach on collections uh does not start from the stage when the bouncing happens. Our approach on collection 36:59 36 minutes, 59 seconds starts before the banking happens. Uh and from that perspective we are very focused on bringing down bounce rates. 37:08 37 minutes, 8 seconds So uh if um if I have to tell you you know bounce rates have been coming down quarter on quarter and that is uh where 37:16 37 minutes, 16 seconds our focus is because if we can arrest it at the upfront stage uh then I'm in a better position as far as collections 37:25 37 minutes, 25 seconds are concerned to manage the flow forwards. 37:33 37 minutes, 33 seconds Got it. This is very helpful. Thank you so much Radi. All the best. 37:40 37 minutes, 40 seconds Thank you. The next question comes from the line of Nishin Chawat from Kotak Institutional Equities. Please go ahead. 37:48 37 minutes, 48 seconds Uh hi uh thanks for uh taking my question. Uh you know I you know looking at uh you know your growth trajectory uh 37:55 37 minutes, 55 seconds ahead uh the single largest segment is home loans which is you know which has grown grown at around 16% this year. uh 38:05 38 minutes, 5 seconds you know so so you know given the fact that you're looking at around 23 to 25% loan growth next year with uh you know probably the share of retail going up uh 38:14 38 minutes, 14 seconds I would expect that you know home loans being the largest segment uh you know probably needs to grow at a faster pace than where it is today. Uh we we do 38:22 38 minutes, 22 seconds understand that you know personal loans and business loans will probably accelerate given the momentum that we are seeing but uh what what kind of a 38:30 38 minutes, 30 seconds loan do you really see for home loans and uh you know why is it sort of you know in mid levels right now. 38:36 38 minutes, 36 seconds So so uh let me cover it in in uh parts u question um you know we look at uh home loans in uh some distinct segments. 38:49 38 minutes, 49 seconds One is obviously the prime uh loans both home loan and prime lab. The other is u 38:58 38 minutes, 58 seconds affordable housing and the third is micro housing. Uh and uh if we look at 39:05 39 minutes, 5 seconds uh these products are uh prime home loan and lap is growing at 21% plus our micro 39:14 39 minutes, 14 seconds housing is growing at over 50%. and our affordable housing is growing at close to about 25%. So these are very healthy 39:23 39 minutes, 23 seconds rates uh for us. In fact uh over the last uh I would say 6 months and also as 39:31 39 minutes, 31 seconds per our plan for next year we are adding a fair number of granch or going to more locations I would say for affordable 39:38 39 minutes, 38 seconds housing and micro housing and we expect these segments to grow more. uh our approach as far as housing is concerned 39:48 39 minutes, 48 seconds uh to also look at a new segment which uh we have got we're getting into which is the near prime segment uh because we 39:57 39 minutes, 57 seconds do not want to compete at the 7.25 and 7.2% rates being offered by other players. Our approach is to make the 40:05 40 minutes, 5 seconds near prime bigger grow uh you know make the affordable housing even bigger and make the m micro housing also bigger so 40:13 40 minutes, 13 seconds that uh we can get the right names along with the right uh costs uh right credit 40:21 40 minutes, 21 seconds costs. Uh anyway the operating efficiency is kicking in you know virtually every year and you're seeing 40:28 40 minutes, 28 seconds an improvement and we we do believe that we an opportunity to further improve it using uh all our init in initiatives uh on technology. 40:39 40 minutes, 39 seconds So you will see a bigger uh increase uh in each one of them. Uh and that's our plan for the next year. 40:50 40 minutes, 50 seconds Uh got it and within the uh you know within the housing finance subsidy what would be the ratio of home loans and lap 40:58 40 minutes, 58 seconds I believe uh you know we need to have around 60% home loans. 41:02 41 minutes, 2 seconds So we are uh uh the the ratio is 60% so we are closer to about 61 62% in that 41:10 41 minutes, 10 seconds little over 61 61 uh we are between 61 to 62%. 41:16 41 minutes, 16 seconds So, so I I I I believe that you know incrementally the the the growth in home loans and labs should be you know at a similar proportion when I you know 41:25 41 minutes, 25 seconds assuming that you need to maintain the you know same 60 61% going forward now this year growth in home loans was around 16% lap was 36 so you know 41:35 41 minutes, 35 seconds probably need to catch up on this right I think that's what that's what I was kind of coming to correct correct you are right you are right you are right and they within that 41:44 41 minutes, 44 seconds also uh effort will be to grow affordable housing more. 41:49 41 minutes, 49 seconds Let's see what's the only other point but I take your point on on on the first thing which you mentioned I was only clarifying where we want more growth. 41:57 41 minutes, 57 seconds Fair point. No I think the point I was coming to is that is it something that you are seeing more BTO house which could be arrested or is it something that you probably need to expand more to really scale that up. I think that's what I was coming to. 42:07 42 minutes, 7 seconds So uh nation what happens and and you know this market well you've seen this for a very long period of time. Whenever 42:14 42 minutes, 14 seconds the rate drops happen uh the pressure on BTS increases 42:20 42 minutes, 20 seconds and when the rate drops are not there or rate movements are less the BT pressure reduces. So last year the BT pressure 42:28 42 minutes, 28 seconds was very high. Uh while we lost uh you know portfolio also we did gain a portfolio where BTS came to us. 42:37 42 minutes, 37 seconds uh so uh it it it was true on that but what we have uh what we are looking at in FI27 one we do believe that the BT 42:46 42 minutes, 46 seconds pressures will be lesser in FI27 uh and the other thing is uh we are very 42:52 42 minutes, 52 seconds focused on uh doing our bit of on uh originating more so we are expanding to 43:00 43 minutes more branches uh because today while at data capital we may have 1400 branches uh within In housing finance we are 43:09 43 minutes, 9 seconds there in in in just short of 400 locations. Uh so we have ample opportunity for us to also you know 43:17 43 minutes, 17 seconds geographically expand which we are doing. The work started 6 months back and uh we will see the results of the 43:24 43 minutes, 24 seconds same started to show in March and they will continue to show more in future. So it will be more through geographical 43:31 43 minutes, 31 seconds expansion and also we believe less pressure on BT in FI27. 43:38 43 minutes, 38 seconds Got it. This is helpful. And just uh you know on you know as you move move ahead you know from April to May and uh you know so on uh are we sort of you know 43:47 43 minutes, 47 seconds seeing any tightening uh you know in in the screens uh you know the the way the the overall macro is and I think I think you pretty well uh you know highlighted 43:55 43 minutes, 55 seconds some of the challenges in your opening comments. are you sort of you know tightening the screens uh you know would would you kind of say that maybe for a quarter or so the pace at which uh you 44:04 44 minutes, 4 seconds know your unsecured book is going you may want to kind of you know mellow down a bit or or or I mean I I understand the data points are very clear they're not 44:12 44 minutes, 12 seconds showing anything but given the way the the overall micro is are you sort of you know taking a pause before looking ahead or business just flows as it is so nent 44:21 44 minutes, 21 seconds our our approach is as follows uh one we look at what's happening in the market As I mentioned to you, uh our risk, uh 44:30 44 minutes, 30 seconds credit and business team virtually spend every week time on reviewing how things are progressing. Uh the the biggest 44:38 44 minutes, 38 seconds segments which we are looking at is theme segment and the commercial vehicle segment uh how they pan out especially 44:46 44 minutes, 46 seconds if the fuel rates also go up claiming impact commercial vehicle segment. So what we have done uh right uh I would 44:54 44 minutes, 54 seconds say a month back or so is uh looked at in which subsegments of this we should 45:03 45 minutes, 3 seconds tighten our approach meaning either look at lower leverage or look at higher 45:10 45 minutes, 10 seconds credit score or look at tighter scorecard so we've we've looked at in within MSME in which subsegments we 45:19 45 minutes, 19 seconds should do So and that is that communication has gone to the credit 45:24 45 minutes, 24 seconds team. Uh so the approach is that we should tighten our norms in these sub 45:33 45 minutes, 33 seconds segments. For the others we should continue to watch but continue to also grow. So uh at the moment very difficult 45:42 45 minutes, 42 seconds for me to say whether we will see an impact on on on on the overall growth or not because we are also expanding 45:49 45 minutes, 49 seconds geographically. So we are hoping that if we do lose out because of tightening we will also gain because of geographical expansion. 46:00 46 minutes Got it. This is helpful. And just last one even on construction equipment I think I think you seem to have tightened a bit right this quarter. 46:07 46 minutes, 7 seconds So or is that just uh too much? 46:10 46 minutes, 10 seconds See when I when I uh nish say commercial vehicle for me I look at commercial vehicle and construction equipment 46:17 46 minutes, 17 seconds together in a similar with a similar lens uh because there's a fair amount of overlap between the two um and uh so we 46:27 46 minutes, 27 seconds look at that segment because both are earning assets uh and uh both there's a fair amount of overlap in customer segments also there. 46:39 46 minutes, 39 seconds Sure. Got it. Got it. This is this is very helpful. Thank you very much and all the best. Thank you Nish. 46:46 46 minutes, 46 seconds Thank you. The next question comes from the line of Shria Shivani from Nura. Please go ahead. 46:53 46 minutes, 53 seconds Yeah. Hi, thank you for the opportunity and congratulations on a good set of numbers. Um I had two questions. Uh my 47:01 47 minutes, 1 second first question is on the personal loan and the business loan segment. Um uh so the GS3 numbers that we've uh shown in 47:08 47 minutes, 8 seconds our um table over there um uh exactly going back to the point sir was making that there are certain subsegments 47:15 47 minutes, 15 seconds probably are uh looking to be uh looking to probably be slower in uh fair to say that probably PL and BL would be one of 47:22 47 minutes, 22 seconds those segments. Um qualitatively if you can uh make comments around which kind of customer segment or business profile 47:30 47 minutes, 30 seconds are we seeing stress uh or are we continuing to see stress on and my second question is on the um um sorry 47:39 47 minutes, 39 seconds it's on the fee income just a clarification over here uh your fee income for the corporate book would obviously be at a lower rate versus say 47:47 47 minutes, 47 seconds if your theme and your retail book uh would have grown right correct but uh uh the corporate book fee 47:55 47 minutes, 55 seconds not only comes from the loans but also comes from syndication so uh I won't say that it is better 48:06 48 minutes, 6 seconds right right because it seems like that has slowed down a bit for fourth quarter so I just wanted to understand is it because the corporate so the retail 48:14 48 minutes, 14 seconds probably didn't grow as fast or uh how should I understand the fee and commission line item 48:20 48 minutes, 20 seconds sometimes what may happen is You may if you have uh you know some 48:28 48 minutes, 28 seconds uh some amount of peaking which may happen that may also lead to as a percentage uh into a different number. 48:35 48 minutes, 35 seconds But uh if I look at our overall fee uh it is the same in quarter 3 versus 48:43 48 minutes, 43 seconds quarter 4 it was about 1.1 1% and still remains 1.1%. So it is the same the 48:50 48 minutes, 50 seconds trend is the same as far as fee is concerned. Uh so we've not seen a drop. 48:57 48 minutes, 57 seconds Uh now what would your first question was build subsid so you know our PL and BL are two 49:06 49 minutes, 6 seconds distinct segments. BL is largely to salaried uh employees and BL is to 49:11 49 minutes, 11 seconds self-employed uh segment and uh in each one of them uh actually we have seen a 49:20 49 minutes, 20 seconds drop in slippages and if you notice our slide 16 it actually shows that the slippages in PL are much more because PL 49:28 49 minutes, 28 seconds is a segment which had suffered more uh as you would remember two years back uh than the BL segment. uh so the uh 49:37 49 minutes, 37 seconds visible more visible improvement is in PL also uh so as far as subsegments within that 49:46 49 minutes, 46 seconds are concerned uh you know we have a huge number of subsegments which are risk tracks on a regular basis u as I told 49:56 49 minutes, 56 seconds you nothing at the moment is showing but segments like portals and a few others where we have tightened or travel 50:04 50 minutes, 4 seconds related did these are the areas where we have tightened a little bit on our policy as I was mentioning to you in the 50:11 50 minutes, 11 seconds MSME segment. Um and you know it's it's it's always a moving thing because uh 50:18 50 minutes, 18 seconds it's not only uh we need to watch out for the primary impact but the secondary and the tertiary impact which is there 50:26 50 minutes, 26 seconds because of the uh this war uh also keeps surfacing uh as time progresses. So it's 50:35 50 minutes, 35 seconds it's uh it's something uh which we anticipate but we also look at what is happening on the ground and if there's 50:42 50 minutes, 42 seconds something more to be done uh the whole idea is how quick can we be in communicating and taking an action on that 50:50 50 minutes, 50 seconds right that makes sense. Um just one follow up on on your u uh branch strategy and your dispersals per branch. 50:58 50 minutes, 58 seconds Obviously with the kind of addition that you had done over the past three years it was on a declining trend. Um optically it looks that it has picked up 51:06 51 minutes, 6 seconds this year but uh is it fair to say that the retail dispersements as uh uh per 51:13 51 minutes, 13 seconds retail branch uh has picked up or this is just looking optically better because your corporate and other book has uh 51:20 51 minutes, 20 seconds scaled up quite well. Will the trend are you still increasing on the retail uh dispersement per branch? 51:27 51 minutes, 27 seconds So uh if you look at uh the year which just went by, we did not add too many 51:33 51 minutes, 33 seconds branches on the retail side and that will obviously with with our dispersements growing it will always 51:41 51 minutes, 41 seconds mean that per branch our numbers have uh gone up. Our approach over the last year 51:49 51 minutes, 49 seconds uh which we had stated before was that our we may not have all products present in all branches. So our effort before we 51:57 51 minutes, 57 seconds add new branches would be how can we populate more products in each branch so 52:03 52 minutes, 3 seconds that we can uh I would say leverage on the cost which we've already incurred for the branch going forward also uh 52:13 52 minutes, 13 seconds while we are expanding we first look at can we get uh in in the branches more 52:20 52 minutes, 20 seconds products uh before we physically expand but we still uh you know we didn't add 52:27 52 minutes, 27 seconds new branches in any significant way in FI26 but in FI27 we will it will not be uh the pace which 52:36 52 minutes, 36 seconds we had done uh over the last 3 years but it will be uh a reasonable number of 52:42 52 minutes, 42 seconds addition uh to our uh branch network uh I would say going forward so uh we can 52:49 52 minutes, 49 seconds expect a 10 to 15% increase in our branch network right and sir in your branch uh in your branches your 350 home has housing 52:58 52 minutes, 58 seconds branches and the remaining 1477 total branches the products can overlap right some of the retail products can be 53:06 53 minutes, 6 seconds present in the housing loan branches right oh yes this is exactly what I'm saying other than going to new locations we are adding more product in each branch which 53:14 53 minutes, 14 seconds is also helping us on the operating efficiency right correct yes this is very helpful um thank you and all the best thank you so pressure. 53:25 53 minutes, 25 seconds Thank you. 53:27 53 minutes, 27 seconds Ladies and gentlemen, we request all the participants to limit their questions to one each per participant and rejoin the queue for any follow-up questions. 53:36 53 minutes, 36 seconds Our next question comes from the line of Ain Singh from MK Global Financial Services Limited. Please go ahead. 53:44 53 minutes, 44 seconds Yeah. Hi, good evening. Thanks for the opportunity. uh Raju uh I mean uh if I look at like 28 profitability 53:53 53 minutes, 53 seconds let me just like 61%. That's a 60 basis point uh you know movement from where we are today. Now broadly 25 30 basis point 54:02 54 minutes, 2 seconds it seems you are explaining from the cost to income uh and where today our trade cost is flat. So that leaves kind 54:10 54 minutes, 10 seconds of a nearly 50 basis point to be explained by the uh you know uh margins uh and that is where you are kind of 54:17 54 minutes, 17 seconds also leading to the uh unsecured product increasing. Uh now here a couple of questions I mean if you look at the 54:25 54 minutes, 25 seconds credit cost side today I mean our housing is at 10 basis point. Now if you go more into you know the affordable and 54:33 54 minutes, 33 seconds near prime uh is that 10 basis point looks kind of a sustainable. Of course there is a going to be overall benefit from your the motor vehicle side but 54:42 54 minutes, 42 seconds then when you are going to increase this unsecured piece that kind of a will start to balance uh out so then at the 54:49 54 minutes, 49 seconds aggregate level when you the direction you are taking I mean the in the housing as well as in the unsecured side it's uh kind of a uh you know cost is that kind 54:58 54 minutes, 58 seconds of a you know manageable because that's kind of a even for a diversified lender like you pretty pretty under 1% is kind of a 55:07 55 minutes, 7 seconds seen uh in you know the non-banking financial side and secondly related to that only uh your opex I mean if you 55:14 55 minutes, 14 seconds kind of for the area you want to grow more whether it's a housing or unsecured again these are relatively more opex intensive so uh I mean so you're already 55:23 55 minutes, 23 seconds pretty efficient in cost of income you still think that okay uh this improvement is uh kind of a doable 55:31 55 minutes, 31 seconds so um ain let me uh cover this so uh what what we try to do is uh get into as 55:40 55 minutes, 40 seconds much detail as possible. Uh so if we give out a number we have very strong basis on which uh we are giving out 55:48 55 minutes, 48 seconds those numbers that that is all that is where our you know effort goes in. So uh let me cover each of the points which 55:56 55 minutes, 56 seconds you mentioned about. I think if you look at our history um and uh you know you 56:03 56 minutes, 3 seconds look at before this uh unsecured uh increase in unsecured credit costs went up our credit costs were always in the 56:12 56 minutes, 12 seconds range of about 70 basis points or so. Uh so despite uh you know all of what used 56:20 56 minutes, 20 seconds to happen uh you know it it may be 10 basis points or here or there but they were in that range. 56:28 56 minutes, 28 seconds uh it did increase uh one because uh we saw higher costs in the industry 56:34 56 minutes, 34 seconds happening on unsecured and two because of the merger of to data motor finance and data motor finance had higher credit 56:43 56 minutes, 43 seconds costs. So even if you look at the FI26 numbers our credit costs are 1.2% 1 uh 1.2%. 56:56 56 minutes, 56 seconds Now based on the nature of portfolio which we have uh the high amount of 57:04 57 minutes, 4 seconds mortgages uh the low amount of unsecured book which we have we do believe that uh the 57:13 57 minutes, 13 seconds right credit cost for us would be sub 1% and which is the guidance which we have 57:18 57 minutes, 18 seconds given. So that means 20 to 25% we can still shave off and still that 57:27 57 minutes, 27 seconds credit cost will be higher than what we used to have earlier of closer to about 70 basis points. So we we do not believe 57:36 57 minutes, 36 seconds that uh we uh there is there is a number which we can't achieve. So so that gives us an opportunity to bring down trend 57:44 57 minutes, 44 seconds caused by that much number 20 to 25 basis points. As far as operating cost is concerned, you are seeing the 57:52 57 minutes, 52 seconds advantage which is coming because of scale and because of use of technology. 57:57 57 minutes, 57 seconds I did mention that we are very focused on using AI. In fact, our approach is this that virtually we want to train 58:05 58 minutes, 5 seconds almost all of our manpower to understand the advantage manpower and women power to understand the advantage of uh AI and 58:15 58 minutes, 15 seconds uh if you would talk to our team everybody does believe that uh AI can make a huge difference and because of 58:24 58 minutes, 24 seconds digitization AI and other things we do believe that uh the estimate which we have taken on operating costs. If all 58:32 58 minutes, 32 seconds goes well, we may be able to do even better than that. But at least I'm sticking to only what we have communicated. So we believe there is an 58:40 58 minutes, 40 seconds opportunity uh for us to bring down our costs by further from where we are by about 15 58:48 58 minutes, 48 seconds basis points or so. So if you factor in the impact of credit cost and the impact 58:55 58 minutes, 55 seconds of operating cost that itself is about 40 basis points or so. Um and uh the 59:03 59 minutes, 3 seconds balance will come from NI plus fee. Uh and for NI plus fee it is happening 59:10 59 minutes, 10 seconds because of uh the mix of products rather than us taking more risks in each 59:18 59 minutes, 18 seconds business. I know uh you did speak about uh you know if you go to uh more 59:25 59 minutes, 25 seconds unsecured or if you go to more uh affordable housing even if I go you know 59:31 59 minutes, 31 seconds uh talk about more unsecured actually u you know we are today at closer to about 59:38 59 minutes, 38 seconds 10%. Even if I increase it by another 2% it will not be large. It will just be 12%. Which will be lesser than what I 59:47 59 minutes, 47 seconds used to have in in my peak. So the opportunity for me to grow without impacting tread cost exists. Uh and uh 59:55 59 minutes, 55 seconds second is on affordable. If you uh would remember we've always said for us we are 1:00:03 1 hour, 3 seconds looking at the better quality of affordable. Uh we are in terms of origination among among the top uh in in 1:00:12 1 hour, 12 seconds terms of different affordable housing companies and we do originate at a slightly lower cost pick up a better quality because our cost of fund and our operating leverage allows us to do so. 1:00:28 1 hour, 28 seconds So I I hope Avin I answered your question. Yeah. Yeah. Thank you. 1:00:36 1 hour, 36 seconds Thank you. 1:00:38 1 hour, 38 seconds Your next question comes from the line of Shabbanu Misha from Philip Capital. Please go ahead. 1:00:44 1 hour, 44 seconds Uh hi, good evening. Thank you for the opportunity. Uh so uh the question is around uh the reconciliation of the lap 1:00:52 1 hour, 52 seconds number. When I look at the lap number above, it is somewhere uh in one of the slides above it's at around 38,000 crores and the uh when I look at the 1:01:01 1 hour, 1 minute, 1 second Tata uh capital housing, it's at around 17 18,000 crores. So just wanted to understand what is the difference between the two and why are we running 1:01:10 1 hour, 1 minute, 10 seconds two different lap books. Uh second is uh uh uh you did mention about the OPEX but 1:01:16 1 hour, 1 minute, 16 seconds uh we're guiding around 23 24 uh% kind of a growth levels in 27 28 or in the medium-term. How do we look at OPEX 1:01:25 1 hour, 1 minute, 25 seconds growth uh or maybe OPEX 2 assets uh going forward in the next 1 two years time? 1:01:32 1 hour, 1 minute, 32 seconds So u if you would uh uh you know look at our lab book we do loan against property 1:01:39 1 hour, 1 minute, 39 seconds in both the books the NBFC and the housing finance company uh we feel it's a large market um and um in terms of uh 1:01:49 1 hour, 1 minute, 49 seconds portfolio quality u both the portfolios have done very well u and um we we do 1:01:56 1 hour, 1 minute, 56 seconds believe that both these entities have an opportunity to do so there are two separate teams which work on it. We just 1:02:03 1 hour, 2 minutes, 3 seconds ensure that credit policies uh on trade policies we don't compromise. So we want to stick to that strategy and want to continue to to do so in the future too. 1:02:13 1 hour, 2 minutes, 13 seconds As far as um your question on uh uh opex to assets is concerned. uh if you 1:02:23 1 hour, 2 minutes, 23 seconds look at our guidance for FI28 we have said that cost to instruction 1:02:29 1 hour, 2 minutes, 29 seconds between 33 to 34%. And we do believe uh that is achievable. See what is happening if you look at NBFC's 1:02:38 1 hour, 2 minutes, 38 seconds u or banks also I I think but in NBFCs 50% of the cost close to 50% of the cost is people cost and the balance is uh the 1:02:48 1 hour, 2 minutes, 48 seconds other cost as you know uh other costs uh are obviously uh a lot of efficiency is 1:02:55 1 hour, 2 minutes, 55 seconds coming in in them because of uh you know I would say digitization automation robotization uh using 1:03:04 1 hour, 3 minutes, 4 seconds robotics or uh genai. So you you're clearly seeing the benefits. As far as people is concerned, what we are 1:03:11 1 hour, 3 minutes, 11 seconds realizing that increasingly the only two places where we feel any significant addition on people will 1:03:18 1 hour, 3 minutes, 18 seconds happen will be on sales and collections rather than all functions because a lot 1:03:24 1 hour, 3 minutes, 24 seconds of automation is happening in the other areas. So uh that's that's the reason 1:03:32 1 hour, 3 minutes, 32 seconds which we believe will drive uh these benefits on cost to income or cost to average assets. 1:03:40 1 hour, 3 minutes, 40 seconds If I can just have one follow-up question and the lap if we were to book a a lap today uh how would we decide 1:03:47 1 hour, 3 minutes, 47 seconds whether it uh gets booked on the NBSC book versus the SSC book and the way I look at it this is a duplication of box 1:03:56 1 hour, 3 minutes, 56 seconds and team at both the places right in two separate teams having two separate uh uh policies 1:04:03 1 hour, 4 minutes, 3 seconds so if you could just pop so uh so so you As far as policies are 1:04:11 1 hour, 4 minutes, 11 seconds concerned, u you know the overall risk team at Tata Capital also oversees the 1:04:19 1 hour, 4 minutes, 19 seconds risk at Tata Capital Housing Finance. Uh while there are dedicated people for risk in Tata Capital Housing, but Tata 1:04:26 1 hour, 4 minutes, 26 seconds Capital, the risk team oversees that. So we do ensure that there's no arbitrage on the policy side. As far as booking is 1:04:35 1 hour, 4 minutes, 35 seconds concerned, we have two separate uh sales team and two separate credit teams. Uh even the ops is separate. So completely 1:04:43 1 hour, 4 minutes, 43 seconds distinct operations. So what is originated by one is booked by one. What is originated by the other team is 1:04:50 1 hour, 4 minutes, 50 seconds booked by the other team. Uh and uh so to to that extent uh as far as training 1:04:57 1 hour, 4 minutes, 57 seconds is concerned we ensure that similar training is imparted. So uh from a risk and the credit side we we we try to 1:05:06 1 hour, 5 minutes, 6 seconds ensure uniformity there but in terms of origination these are two separate teams. 1:05:12 1 hour, 5 minutes, 12 seconds So in Bombay both the teams are operating or maybe in Gumour the same team as both the teams are operating or we have distributed geographies. 1:05:21 1 hour, 5 minutes, 21 seconds Correct. Correct. No uh there are over lapping markets. Uh there are distinct 1:05:27 1 hour, 5 minutes, 27 seconds markets also which exists. uh because the two teams may be present uh the number of locations they are present in 1:05:35 1 hour, 5 minutes, 35 seconds could be different for the two teams u but uh yes in uh certain locations they 1:05:42 1 hour, 5 minutes, 42 seconds will be there in both the areas I have a few other questions I'll take this off time thank you so much best of luck for quarters 1:05:51 1 hour, 5 minutes, 51 seconds yeah just a minute I think my colleague ro who heads the housing finance company wants to add yeah just one thing I would like to mention out here that when we uh in the 1:06:00 1 hour, 6 minutes housing finance company the team which uh sources the home loans uh is the same team which sources the lap also so there 1:06:08 1 hour, 6 minutes, 8 seconds is you know uh you have a very strong productivity improvement uh when you because at times uh you have a 1:06:16 1 hour, 6 minutes, 16 seconds self-employed customer you have a salaried customer and uh at that point of time you you your productivity 1:06:23 1 hour, 6 minutes, 23 seconds improves because you can go in for multiple loans for a particular customer. So from that perspective also 1:06:30 1 hour, 6 minutes, 30 seconds and what Rajiv added it makes a lot of sense to for the same team which sources the home loans to also look at lap 1:06:38 1 hour, 6 minutes, 38 seconds because it improves the productivity on the field. 1:06:42 1 hour, 6 minutes, 42 seconds This is really great. Thanks. I'll take a few questions offline. Best of luck. Thanks. Sure. Sure. 1:06:49 1 hour, 6 minutes, 49 seconds Thank you. The next question comes from the line of Aijit Tal from Motila Losal. Please go ahead. 1:06:58 1 hour, 6 minutes, 58 seconds Yeah. Uh hi uh good evening. Uh am I audible? Yes. Yes. Yes, you're audible. Yeah. Thank thanks. 1:07:06 1 hour, 7 minutes, 6 seconds Hi Rais. Just just two followups on what you have shared with us in this running call. Uh firstly is I mean a couple of 1:07:14 1 hour, 7 minutes, 14 seconds times you mentioned that we've not seen anything alarming um in either uhme 1:07:21 1 hour, 7 minutes, 21 seconds CV or unsecured PLBL segments uh in the month of April uh which is which is very good to hear but just wanted some more 1:07:30 1 hour, 7 minutes, 30 seconds nuance around this u when when you speak to the field teams are they telling us that uh the customers the businesses 1:07:40 1 hour, 7 minutes, 40 seconds themes that we serve uh they're not impacted by the war at all. Their businesses are not impacted by the war at all or is it that there 1:07:48 1 hour, 7 minutes, 48 seconds are uh already some impact first second order impacts that have started coming now but just that uh the customers are 1:07:57 1 hour, 7 minutes, 57 seconds maybe resilient and they've been paying their EMIs in the month of uh April just like we saw in the month of March as 1:08:05 1 hour, 8 minutes, 5 seconds well. So that was my first question and yes sir you want to go ahead please tell. No uh what what I wanted to say is 1:08:13 1 hour, 8 minutes, 13 seconds that um you know the way to look at it is uh two ways. One is uh where certain 1:08:20 1 hour, 8 minutes, 20 seconds markets you see you hear about whether it was mori or whether it was suras or or certain markets which come into the news where you look at uh those things. 1:08:30 1 hour, 8 minutes, 30 seconds The first thing is to uh talk to those uh business as well as collection team in those markets to see whether we've 1:08:37 1 hour, 8 minutes, 37 seconds had any impact and two is to look at generically on the portfolio what are you seeing uh when you're getting a 1:08:46 1 hour, 8 minutes, 46 seconds feedback from your own teams who are talking to the clients. Uh there are obviously customers which me or my 1:08:53 1 hour, 8 minutes, 53 seconds colleagues also meet on a regular basis to get a sense from them. So uh based on 1:08:59 1 hour, 8 minutes, 59 seconds the feedback from all of them uh the the the view which we have assertained one 1:09:06 1 hour, 9 minutes, 6 seconds is this that uh all entities you know allmemes have a linkage to 1:09:14 1 hour, 9 minutes, 14 seconds large companies and u in uh almost all of them uh they 1:09:23 1 hour, 9 minutes, 23 seconds have been supported by the larger company in terms of helping them out in sourcing of raw material and 1:09:30 1 hour, 9 minutes, 30 seconds so on and so forth. Uh and that has not led to a situation where your businesses 1:09:38 1 hour, 9 minutes, 38 seconds have shut or anything of that nature has happened. What has happened in certain cases is depending on the product the 1:09:46 1 hour, 9 minutes, 46 seconds raw material cost have moved up but wherever raw material costs have moved up what people are saying is that they 1:09:54 1 hour, 9 minutes, 54 seconds are able to pass on those costs. So you will obviously see an impact on the inflation side because of all of that. 1:10:02 1 hour, 10 minutes, 2 seconds As far as those specific markets for Sura and Modi uh which came in the news which we have looked at there we looked 1:10:10 1 hour, 10 minutes, 10 seconds at uh you know both our bond rates or our collection as I mentioned to you in April actually we have not seen any 1:10:18 1 hour, 10 minutes, 18 seconds impact and the way things are moving April is looking almost as good as March. 1:10:27 1 hour, 10 minutes, 27 seconds You got it. So this is useful. And then the other followup I had is earlier in the call you had uh kind of shared and 1:10:34 1 hour, 10 minutes, 34 seconds guided that FI27 you expect uh your cost of funds to be lower than in FI26. So 1:10:42 1 hour, 10 minutes, 42 seconds I'm just trying to understand you also acknowledge this and a few other large NBFCs that we speak to have acknowledged 1:10:49 1 hour, 10 minutes, 49 seconds that uh March particularly the cost of borings were significantly higher than the portfolio cost of borings. Uh so do 1:10:57 1 hour, 10 minutes, 57 seconds you think March was an aberration of sorts and because of some tightness in liquidity the cost went up and then in 1:11:06 1 hour, 11 minutes, 6 seconds April have they reverted back or in April the cost of borings are at similar levels as in March uh and and 1:11:13 1 hour, 11 minutes, 13 seconds subsequently if incremental cost of borrowings are coming in higher than what we saw until let's say Jan Feb then 1:11:22 1 hour, 11 minutes, 22 seconds then what is it that is telling us that cost of funding FI27 can bring the war but then FI26. 1:11:32 1 hour, 11 minutes, 32 seconds So uh you know I I'll say uh we should break it up into two parts. the stock and the incremental. 1:11:41 1 hour, 11 minutes, 41 seconds Uh if you look at u the uh you know stock per se uh when the interest rates 1:11:50 1 hour, 11 minutes, 50 seconds started dropping uh the benefit started acrewing over the 1:11:56 1 hour, 11 minutes, 56 seconds year. It is not that every lender's or every borrower's cost of fund is linked 1:12:04 1 hour, 12 minutes, 4 seconds to 100% to repo rate and it changes immediately as repo rate changes. Uh so there is for example if you have already 1:12:13 1 hour, 12 minutes, 13 seconds raised threeear NCDS uh then you will replace them with a fresh set of NCDs 1:12:20 1 hour, 12 minutes, 20 seconds when the previous ones mature. So that is when the in on maturity the incremental cost will determine your 1:12:29 1 hour, 12 minutes, 29 seconds cost of fund. Uh so that is one. So based on the same uh we do believe that 1:12:37 1 hour, 12 minutes, 37 seconds uh monies which have been raised in uh FI26 or some part of FI25 1:12:44 1 hour, 12 minutes, 44 seconds will keep running for FI27 and may not need to be fully replaced and they will remain at the lower cost 1:12:53 1 hour, 12 minutes, 53 seconds because they are big straight borrowings. 1:12:56 1 hour, 12 minutes, 56 seconds Okay. So, so one is this whole stock versus incremental uh logic uh and what 1:13:03 1 hour, 13 minutes, 3 seconds will change for you is incremental and not the stock. Uh the second is uh as far as your other question on March uh 1:13:11 1 hour, 13 minutes, 11 seconds yes March did see an increase. However, when we talk about April, uh in April, the short-term costs have come off while 1:13:18 1 hour, 13 minutes, 18 seconds the long-term costs have still uh not come off compared to what they used to be in December, January. So, that's the 1:13:27 1 hour, 13 minutes, 27 seconds way I will put it. Uh now, how they will shape up in the coming months, uh you 1:13:34 1 hour, 13 minutes, 34 seconds know, we will need to watch. But based on what we have as of now and uh based 1:13:41 1 hour, 13 minutes, 41 seconds on our uh assessment that's the number I gave to you uh because of the stock and 1:13:49 1 hour, 13 minutes, 49 seconds incremental also um and however we continue to watch as as I as I said 1:13:56 1 hour, 13 minutes, 56 seconds always that u you know the uh if we feel that cost of fund will grow or cost of 1:14:03 1 hour, 14 minutes, 3 seconds funds will come down uh we will also have to pass it on or take it or increase uh from our borrowers. 1:14:17 1 hour, 14 minutes, 17 seconds Got it. So that's all from my side. Uh thank you very much for patiently answering my questions and I wish you nothing. 1:14:25 1 hour, 14 minutes, 25 seconds Thank you so much. 1:14:27 1 hour, 14 minutes, 27 seconds Thank you. The next question comes from the line of Kunal Sha from City Group. Please go ahead. 1:14:34 1 hour, 14 minutes, 34 seconds Yeah. uh thing. So most of the questions have been answered. Uh just a couple of uh thing firstly in terms of the corporate lending if you can just let us 1:14:43 1 hour, 14 minutes, 43 seconds know the profile of it at what yield it is happening compared to that of the overall book and what would be the 1:14:50 1 hour, 14 minutes, 50 seconds average maturity of this uh uh portfolio. Uh that would be helpful. And uh secondly as you indicated maybe any 1:14:57 1 hour, 14 minutes, 57 seconds which ways uh uh there were some of the industries which you are closely monitoring but if you can quantify in terms of maybe there would have been the 1:15:05 1 hour, 15 minutes, 5 seconds red uh uh amber and green and what would be that proportion within the overall pool which is getting closely monitored 1:15:14 1 hour, 15 minutes, 14 seconds or which are vulnerable to some of the uh higher input prices or the energy related uh sensitivities or uh the 1:15:22 1 hour, 15 minutes, 22 seconds exchange uh volatility that would be really helpful within the overall uh theme portfolio as well as the other portfolio. Yeah, thank you. 1:15:31 1 hour, 15 minutes, 31 seconds Uh thanks as uh Kel as far as corporate is concerned, corporate has uh three parts to it. 1:15:38 1 hour, 15 minutes, 38 seconds Uh one is uh clean energy business which we do. Second is uh the opportunistic 1:15:46 1 hour, 15 minutes, 46 seconds corporate lending which we do and the third is uh some part of developer funding which we do there. So u uh if I 1:15:55 1 hour, 15 minutes, 55 seconds have to talk about uh this uh then uh as far as u quality of portfolio is 1:16:03 1 hour, 16 minutes, 3 seconds concerned whether it's developer funding uh whether it's uh clean energy or uh you know incorporate what we do when I 1:16:12 1 hour, 16 minutes, 12 seconds say opportunistic uh we do not u you know look at uh plain 1:16:19 1 hour, 16 minutes, 19 seconds vanilla funding in corporates where we will be competing ing with banks. Uh we 1:16:25 1 hour, 16 minutes, 25 seconds look at uh you know lending to very high rated corporates. They may be a uh AAA 1:16:32 1 hour, 16 minutes, 32 seconds or uh double A sort of corporates where we may have an opportunity to lend. It could be uh short-term which could be 1:16:40 1 hour, 16 minutes, 40 seconds one year. It could be long-term which could be 3 to four years uh typically. 1:16:45 1 hour, 16 minutes, 45 seconds Uh so that is what uh we look at there. 1:16:52 1 hour, 16 minutes, 52 seconds uh on the corporate side in terms of uh yields or so uh uh so just sorry just the question was 1:16:59 1 hour, 16 minutes, 59 seconds yeah maybe I understand in terms of the segments which we operate I just wanted to know which uh segments are driving this growth if there is like say uh the 1:17:07 1 hour, 17 minutes, 7 seconds increase which has happened in the overall portfolio of say almost 15,000 crores over last one year or say 5 or 1:17:16 1 hour, 17 minutes, 16 seconds crores in this quarter which particular segment is driving this growth So it it would be well spread out. I 1:17:23 1 hour, 17 minutes, 23 seconds would say it's there in clean energy uh where we are seeing uh there is a demand lot of demand for credits where new projects are coming up. It's there in 1:17:32 1 hour, 17 minutes, 32 seconds developer finance and it is there in uh you know you name the probably the top 1:17:39 1 hour, 17 minutes, 39 seconds 10 corporates of the country and half of them uh will be there. uh so I I don't 1:17:46 1 hour, 17 minutes, 46 seconds want to name clients but u you know there is growth happening in in all of 1:17:52 1 hour, 17 minutes, 52 seconds these uh areas as far as yield is concerned uh our approach is slightly different there 1:18:01 1 hour, 18 minutes, 1 second what we look at is return on assets rather than yield uh while um you know 1:18:09 1 hour, 18 minutes, 9 seconds any other business may give us a higher yield uh incorporates The yield may be more closer to maybe 1:18:17 1 hour, 18 minutes, 17 seconds 11%, in developer it may be more closer to 12 13%. But more important you know their return on assets 1:18:26 1 hour, 18 minutes, 26 seconds is very good. They are all sort of 2 and a half and above. So above can be much 1:18:33 1 hour, 18 minutes, 33 seconds higher also depending on the opportunity and the turn on and the fee which you get on the transaction. So our approach 1:18:41 1 hour, 18 minutes, 41 seconds is to look at ROAs which are strong there and and that is how we measure it rather than just looking at the rate. Uh 1:18:48 1 hour, 18 minutes, 48 seconds because the opex is uh pretty low in in these businesses. 1:18:54 1 hour, 18 minutes, 54 seconds Uh as far as your other question on um 1:19:00 1 hour, 19 minutes on red and amber and this uh actually everybody defines uh red amber uh very 1:19:08 1 hour, 19 minutes, 8 seconds very very differently. It's just that when we reviewed it and if red means do we if we expect this client uh to move 1:19:18 1 hour, 19 minutes, 18 seconds to a delinquent uh position when I say delinquent uh I'm not talking about uh you know just 90 plus even if when it 1:19:26 1 hour, 19 minutes, 26 seconds moved to a 30 to 60 or 60 to 90 we did not see because of what any such client in our book however you know there are 1:19:35 1 hour, 19 minutes, 35 seconds clients uh which we want to watch more closely but we do not expect uh at the moment based on our assessment any of 1:19:44 1 hour, 19 minutes, 44 seconds those clients in theme sector uh to move forward on uh you know on on the I would 1:19:52 1 hour, 19 minutes, 52 seconds say the budgets okay so in quantification that would not be large out of this 75,000 crores ofmemes what we are watching closely 1:20:00 1 hour, 20 minutes that would not be a big pull no no see because the biggest segment for us is supply chain for example which is uh you know uh 60 to 120day funding. 1:20:15 1 hour, 20 minutes, 15 seconds Got it. 1:20:17 1 hour, 20 minutes, 17 seconds Got it. Yeah, that that that answered the question. Thank you. 1:20:23 1 hour, 20 minutes, 23 seconds Thank you. Your next question comes from the line of Gor of Purohit from systematics. Please go ahead. 1:20:31 1 hour, 20 minutes, 31 seconds Hi, good evening sir and thank you for the opportunity. Uh my question is around the note of finance. So uh there 1:20:38 1 hour, 20 minutes, 38 seconds was a legacy borrowing of around 25 26,000 cr in FI25. I want to understand how much of that has already been 1:20:46 1 hour, 20 minutes, 46 seconds repriced and what preparation is spending after the merger. Uh that is question number one. And second question is uh around the underwriting changes 1:20:55 1 hour, 20 minutes, 55 seconds that you have made uh in the motor finance for the merger particularly around risk filters and maybe the rejection that you're seeing there 1:21:03 1 hour, 21 minutes, 3 seconds because of the changes the size and discipline uh that you're trying to invite there and if you have made any dealer uh change changes in the dealer 1:21:12 1 hour, 21 minutes, 12 seconds in front structure. So uh these are the two questions. Thank you. So uh so Gorav 1:21:18 1 hour, 21 minutes, 18 seconds um as far as u both the questions are concerned uh one as far as rebringing is 1:21:26 1 hour, 21 minutes, 26 seconds concerned uh you know that activity we completed in the first few months of the merger for that uh we didn't uh need to 1:21:36 1 hour, 21 minutes, 36 seconds we didn't take much time the only place where I would say it took maybe 6 to 8 months was where the reset date was 1:21:44 1 hour, 21 minutes, 44 seconds after that period But wherever we didn't have challenges on the reset date, either we repriced or we repaid it and 1:21:52 1 hour, 21 minutes, 52 seconds borrowed a fresh from someone else at a lower rate. So repricing is uh all done during the last financial year FI26 or I would say 95% would have been done. 1:22:03 1 hour, 22 minutes, 3 seconds Anything which is left would be only because the reset date is different. 1:22:07 1 hour, 22 minutes, 7 seconds Otherwise it's all done. As far as underwriting is concerned, a lot of changes were made in the underwriting 1:22:14 1 hour, 22 minutes, 14 seconds policy in number of ways. Uh the policy changed. Uh we looked at scorecards. Uh 1:22:22 1 hour, 22 minutes, 22 seconds we u you know got certain uh people from uh outside also on the credit uh underwriting side. 1:22:33 1 hour, 22 minutes, 33 seconds So yeah, we uh ensured that uh uh credit and sales were made distinct so that uh 1:22:41 1 hour, 22 minutes, 41 seconds you know the uh purity of the function uh is respected. So plus um you know we 1:22:49 1 hour, 22 minutes, 49 seconds we introduced a fair amount of analytics so that we can detect things early if there is any challenge. So um you know 1:22:58 1 hour, 22 minutes, 58 seconds while delinquencies may take a longer time to come but we monitor everything. 1:23:03 1 hour, 23 minutes, 3 seconds We monitor right from bound rates uh the average score at which we originate uh the 30 plus and 3 months 6 months 9 1:23:12 1 hour, 23 minutes, 12 seconds months 60 60 plus at 12 months and so on and so forth. We we do a fair amount of monitoring on this which makes us feel 1:23:21 1 hour, 23 minutes, 21 seconds good about what we have originated over the last I would say 15 to 18 months. 1:23:27 1 hour, 23 minutes, 27 seconds uh as far as rejection rates are concerned actually I'm not we are not a big fan of this whole thing called rejection rate because it really depends 1:23:36 1 hour, 23 minutes, 36 seconds on how you measure it our whole objective is at the front end can we put in certain controls that things which 1:23:45 1 hour, 23 minutes, 45 seconds are definitely going to get rejected we don't even allow them to come into our system uh so that the seing happens at 1:23:52 1 hour, 23 minutes, 52 seconds the front end and if the seing happens at the front 10 then your rejection rates could be different from the overall rejection rates. So our effort 1:24:01 1 hour, 24 minutes, 1 second of the team there is to put a se as early as possible and uh measure it more 1:24:08 1 hour, 24 minutes, 8 seconds by what you are seeing on the book in terms of bounce rates or uh early 30 plus and so on and so forth. 1:24:20 1 hour, 24 minutes, 20 seconds Uh if I can squeeze in one more followup question. Yeah. 1:24:27 1 hour, 24 minutes, 27 seconds So this here has been uh basically you've deown the motor man. So what is the kind of message that you're passing 1:24:35 1 hour, 24 minutes, 35 seconds through the dealers or the sales people are talking to the dealers given that a lot of churn would have also happened in 1:24:42 1 hour, 24 minutes, 42 seconds the front end team after merge like you said you man. So uh in terms of market 1:24:49 1 hour, 24 minutes, 49 seconds share uh uh how do you see that progressing because there's already a lot of competition at the dealership uh a lot of the peers are also giving trade 1:24:58 1 hour, 24 minutes, 58 seconds finance to support uh their volume. So how do you see the entire situation and uh would you be doing trade finance too uh just to gain market share? 1:25:10 1 hour, 25 minutes, 10 seconds So uh uh Gorov uh you know I completely admit the market is very competitive 1:25:18 1 hour, 25 minutes, 18 seconds actually there is no product in India in financial services where you don't see competition 1:25:24 1 hour, 25 minutes, 24 seconds u our approach is very simple that uh look uh as far as risk and credit is 1:25:31 1 hour, 25 minutes, 31 seconds concerned we will decide what we want to keep on our books and what we want to originate uh the sales team will have to 1:25:40 1 hour, 25 minutes, 40 seconds work harder to originate based on that qualities which we want. Uh for us uh in 1:25:48 1 hour, 25 minutes, 48 seconds the motor finance business actually our volumes had gone down uh even when before the merger had happened and uh if 1:25:57 1 hour, 25 minutes, 57 seconds you look at from the last April May we have only been growing now. So what 1:26:03 1 hour, 26 minutes, 3 seconds dealers are seeing that the phase of uh the uh uh the volumes going down on 1:26:10 1 hour, 26 minutes, 10 seconds monthly volumes going down is over. Now for the last 6 8 months they are only seeing incremental increase in volumes. 1:26:20 1 hour, 26 minutes, 20 seconds So to that extent we you know what you were saying is history for us. Now the the current new history is that we are 1:26:28 1 hour, 26 minutes, 28 seconds growing. U as far as uh our approach towards uh you know dealer finance or uh you 1:26:37 1 hour, 26 minutes, 37 seconds know giving credit to channels are concerned. Uh we do it purely based on merit. We've been in uh this business of 1:26:46 1 hour, 26 minutes, 46 seconds providing credit to dealers for the last 10 years plus. Even when we were not large in commercial vehicles, we still 1:26:54 1 hour, 26 minutes, 54 seconds were providing uh dealer financing. It's a business. Supply chain financing is a is is a strong business for us. So we 1:27:03 1 hour, 27 minutes, 3 seconds basically are leveraging the same to do more of retail business. Uh so if it 1:27:10 1 hour, 27 minutes, 10 seconds merits that we support retail business by providing trade finance which we believe is also profitable for us we 1:27:19 1 hour, 27 minutes, 19 seconds will definitely look at those opportunities too. 1:27:24 1 hour, 27 minutes, 24 seconds Uh but that would be slightly margin dilutive right sir. 1:27:29 1 hour, 27 minutes, 29 seconds No, that it's a see if you look at the channel finance business uh our current channel finance business gives us an 1:27:37 1 hour, 27 minutes, 37 seconds yield of 11% plus uh and that is usually uh I would say 60 to 90day uh business. 1:27:48 1 hour, 27 minutes, 48 seconds So if you look at the margins in that business or liabilities of that profile, there's no reason why we will not make very healthy. 1:27:59 1 hour, 27 minutes, 59 seconds See, it's a portfolio yield. There will be dealers whom you will be offering a slightly lower rate. There will be dealers from whom you will be offering a slightly higher rate also. 1:28:11 1 hour, 28 minutes, 11 seconds Got it, sir. Thank you for patiently answering my questions and all the best of you. Thank you so much. 1:28:19 1 hour, 28 minutes, 19 seconds Thank you. Your next question comes from Adit from Go Digit Life Insurance. Please go ahead. 1:28:28 1 hour, 28 minutes, 28 seconds Uh hi. Uh can you hear me? Yes. 1:28:33 1 hour, 28 minutes, 33 seconds Uh most of my questions has been answered. Uh just uh one question on our FY28 guidance. uh so for uh FY28 we have 1:28:42 1 hour, 28 minutes, 42 seconds uh guided for an uh ROA band of 2.5 to 2.7%. 1:28:48 1 hour, 28 minutes, 48 seconds Uh I understand that the cost to income uh would play a crucial role uh in us uh meeting that value. So uh in that 1:28:57 1 hour, 28 minutes, 57 seconds context uh just uh wanted to understand if you could give some color on the levers uh that uh we are looking to bank 1:29:05 1 hour, 29 minutes, 5 seconds on you know to bridge the gap between uh the current cost of income versus the target uh biocycle 1:29:13 1 hour, 29 minutes, 13 seconds you know one is uh we've mentioned that we want to leverage our existing branch infrastructure more efficiently to get 1:29:21 1 hour, 29 minutes, 21 seconds more products in per branch which will help us Uh two is uh which uh you know 1:29:28 1 hour, 29 minutes, 28 seconds is something which we religiously drive within the organization is to look at how we can digitize more, how we can use 1:29:36 1 hour, 29 minutes, 36 seconds data more, how we can use unstructured data more and now it is all getting ingested more through Genai. So a lot of 1:29:46 1 hour, 29 minutes, 46 seconds projects on that side which we are doing which are helping us. And third is clear benefit of scale. uh as your scale 1:29:55 1 hour, 29 minutes, 55 seconds improves uh that also leads to benefit on our cost to average assets. So it's 1:30:02 1 hour, 30 minutes, 2 seconds it is going to be all of them but I would say the biggest is obviously technology digitization and now increasingly more AI being used. 1:30:16 1 hour, 30 minutes, 16 seconds Got it. Got it. Uh that's helpful. Uh and just one quick uh followup. Uh so uh initially you gave uh you know some 1:30:25 1 hour, 30 minutes, 25 seconds important color on uh our loan book mix and uh how we are uh looking at respective uh chunks of our books in 1:30:34 1 hour, 30 minutes, 34 seconds terms of uh you know asset quality and all. Uh just one uh slightly forward-looking question uh if uh one 1:30:42 1 hour, 30 minutes, 42 seconds observes uh in the past few months uh you know there is some uh fair degree of 1:30:48 1 hour, 30 minutes, 48 seconds uh uh you know layoffs in uh IT services space. So uh in that context uh from our 1:30:56 1 hour, 30 minutes, 56 seconds uh prime to semi prime uh home uh book I wanted to understand uh if uh we are 1:31:04 1 hour, 31 minutes, 4 seconds tracking any particular uh the early warning indicators or uh you know how we started to uh price in uh this 1:31:12 1 hour, 31 minutes, 12 seconds particular uh risk while doing incremental dispersements how uh we are looking at it. 1:31:18 1 hour, 31 minutes, 18 seconds So uh if you look at u you know our you know our approach there one is uh this 1:31:26 1 hour, 31 minutes, 26 seconds is something this is not something new this is something which has been spoken about for the last I would say 12 to 18 1:31:32 1 hour, 31 minutes, 32 seconds months and uh right from that stage we had put some enhanced due diligence for this segment and uh we've been following 1:31:41 1 hour, 31 minutes, 41 seconds that. Uh the other is uh you know a lot of the I would say uh whatever word you 1:31:49 1 hour, 31 minutes, 49 seconds use or what whatever we call that prime um has been there for larger companies 1:31:58 1 hour, 31 minutes, 58 seconds uh I would say prime companies um where probably uh you know loans have been given out at a single digit or close to 1:32:06 1 hour, 32 minutes, 6 seconds single digit and uh we do not have a very high presence in that segment. per 1:32:12 1 hour, 32 minutes, 12 seconds se. Uh that is where I would say most of the larger banks would be presenting. Uh 1:32:20 1 hour, 32 minutes, 20 seconds so when we have looked at uh our personal loan portfolio which would include all salaried employees that's the number which uh that's where I had 1:32:28 1 hour, 32 minutes, 28 seconds referred to earlier also that uh our bounce rates uh have been coming down u and that's the first indicator of what's happening. 1:32:51 1 hour, 32 minutes, 51 seconds Thank you. Your next question comes from the line of Omar Shindai from a capital. Please go ahead. 1:32:58 1 hour, 32 minutes, 58 seconds Hi, thank you for the question uh uh opportunity. I just have one clarification and one question. Uh first thing is regarding the average yield 1:33:07 1 hour, 33 minutes, 7 seconds that is given in the NX that is the AUM AUM yield or the disease yield 1:33:16 1 hour, 33 minutes, 16 seconds a year. So the AM has dropped by say 90 in the year. So the question related to 1:33:24 1 hour, 33 minutes, 24 seconds that is I mean you mentioned that uh we are uh we we saw a little bit of uh you know tightness in the market during 1:33:32 1 hour, 33 minutes, 32 seconds April and early parts of May early parts of uh March and because of the incremental borrowing costs are high but 1:33:40 1 hour, 33 minutes, 40 seconds um the regulator RBI MSV they are all behind uh HFC's NFCs to pass on the 1:33:47 1 hour, 33 minutes, 47 seconds rates and you know move uh move that move the you of cost towards the customers. So my question is twofold. 1:33:57 1 hour, 33 minutes, 57 seconds One is how much of the book is fixed or floating because if if it is external benchmark link floating book then we can 1:34:04 1 hour, 34 minutes, 4 seconds easily move the needle on the pricing and therefore not get impacted too much by the cost of borrowing uh by the smart 1:34:11 1 hour, 34 minutes, 11 seconds one and what is giving us the customer because for example if even our affordable housing book is at slightly 1:34:18 1 hour, 34 minutes, 18 seconds better customers of the affordable segment then with one of the peers that had recently announced results was 1:34:26 1 hour, 34 minutes, 26 seconds somewhere in region of 11.5% incrementally yields which is are we in that same ballpark or are we slightly 1:34:34 1 hour, 34 minutes, 34 seconds higher because uh structurally if the yields are going down then how do we see how will it be possible for us to 1:34:42 1 hour, 34 minutes, 42 seconds maintain better ROS and or even increase the yields if there is a requirement 1:34:49 1 hour, 34 minutes, 49 seconds uh so as far as yields are concerned uh two things here that uh 1:34:57 1 hour, 34 minutes, 57 seconds one you you know one should look at yield as well as the drop in cost of funds. So both both should be looked at together. 1:35:08 1 hour, 35 minutes, 8 seconds Um and uh what we are seeing there is while cost of funds are also coming down we are passing on the benefits. So the 1:35:15 1 hour, 35 minutes, 15 seconds yields are also coming down. But the other point uh which which I had mentioned to it uh earlier uh which u 1:35:25 1 hour, 35 minutes, 25 seconds probably comes out more clearly is uh this that when you look at uh the twopoint average versus daily average. 1:35:37 1 hour, 35 minutes, 37 seconds On a daily average we are seeing that the drop in yields is 1:35:46 1 hour, 35 minutes, 46 seconds the drop in yields is not more than the drop in cost of funds while on a twopoint average it looks more than 1:35:55 1 hour, 35 minutes, 55 seconds that. U and uh that's the reason your uh income will increase at a net income 1:36:03 1 hour, 36 minutes, 3 seconds will increase at a faster pace than your average book. Uh so yes the there is a 1:36:10 1 hour, 36 minutes, 10 seconds pass on of uh yield which is happening because of interest rates coming down but so is uh our uh you know cost of 1:36:20 1 hour, 36 minutes, 20 seconds funds that is also coming down. Uh sometimes the daily average gives a better picture than the twopoint average. 1:36:29 1 hour, 36 minutes, 29 seconds So that's on uh margins. But uh the other point which I want to say is that 1:36:36 1 hour, 36 minutes, 36 seconds what we had mentioned earlier that we are in trying to increase the mix of products towards more high yielding 1:36:44 1 hour, 36 minutes, 44 seconds products which I would say would be very different in FI27 over FI26 because in 1:36:51 1 hour, 36 minutes, 51 seconds FI26 our unsecured book did not grow any significantly but since the dispersements have started to grow you will see the book growth 1:37:00 1 hour, 37 minutes happening in FI27. 11 uh and uh uh the second thing is motor finance also which 1:37:08 1 hour, 37 minutes, 8 seconds is a high yield book was degrowing in FI26 which will not happen in FI27 1:37:18 1 hour, 37 minutes, 18 seconds I could just add that in the in the housing finance the and particular the affordable uh uh more than 98% of the 1:37:26 1 hour, 37 minutes, 26 seconds book is floating u one thing which I would like to uh speak about is uh the yields that you spoke about on our 1:37:34 1 hour, 37 minutes, 34 seconds affordable segment is um for the last financial year is around 12.10 1:37:40 1 hour, 37 minutes, 40 seconds um uh on the book and our Nim plus fee um which was um in the region of 6.7 1:37:49 1 hour, 37 minutes, 49 seconds has improved to 7.6 in this financial year. So we've been only uh we've been only able to grow our N plus fee in the 1:37:56 1 hour, 37 minutes, 56 seconds affordable housing finance business. So and uh to to just to add on to what Sos mentioned, if I look at my greater than 1:38:06 1 hour, 38 minutes, 6 seconds one year liabilities uh which have 10 hours of balance 10 or more than one year and we looked at look 1:38:15 1 hour, 38 minutes, 15 seconds at the uh you know proportion of that and the proportion of uh our assets 1:38:22 1 hour, 38 minutes, 22 seconds basically they are more or less same on fixed and floating. 1:38:29 1 hour, 38 minutes, 29 seconds Understood. Understood. But that's good to hear that I mean both the interest and the 1460 is is good and and our yields are also materially higher compared to the peers. 1:38:40 1 hour, 38 minutes, 40 seconds Okay. Yes, that brings me a great clarity. Thank you. 1:38:48 1 hour, 38 minutes, 48 seconds Thank you. 1:38:50 1 hour, 38 minutes, 50 seconds Next question comes from the line of Vikram Subraman from Marel. 1:38:57 1 hour, 38 minutes, 57 seconds Uh hello uh am I audible? Yes, you're audible. 1:39:02 1 hour, 39 minutes, 2 seconds Uh hi hi sir. Um uh thanks for taking the question and congrats on a good set of number. Uh very glad to see the 1:39:11 1 hour, 39 minutes, 11 seconds growth and the uh asset quality turnaround. Um most of the questions have been answered. Just wanted to uh 1:39:20 1 hour, 39 minutes, 20 seconds clarify a little bit more on yields. uh specifically because you mentioned the uh dailies uh and the viewpoint average 1:39:29 1 hour, 39 minutes, 29 seconds a couple of times. Uh just to clarify um on both uh eels and on cost of 1:39:36 1 hour, 39 minutes, 36 seconds borrowings the daily um uh or or on eels the daily average is a materially higher 1:39:45 1 hour, 39 minutes, 45 seconds number than the twopoint average. This is what you are mentioning right? Yeah. Yeah. 1:39:53 1 hour, 39 minutes, 53 seconds While on cost of borrowings it is not as much of a delta. Is that the right understanding? 1:40:01 1 hour, 40 minutes, 1 second No no no. There is obviously on yield the delta is higher than cost but the delta exists in both places. 1:40:08 1 hour, 40 minutes, 8 seconds Yeah. Exactly. So so on a daily average basis the yield fall is much lower than the cost of waring fall. 1:40:16 1 hour, 40 minutes, 16 seconds Correct. Correct. No. Uh so then yield for yeah yield fall is lower than the cost effect. 1:40:26 1 hour, 40 minutes, 26 seconds Got it. Got it. So uh just extrapolating that mathematically I know it will be difficult to quantify and but just 1:40:34 1 hour, 40 minutes, 34 seconds asking directionally if I extrapolate that just mathematically one Q or 1 1:40:41 1 hour, 40 minutes, 41 seconds yields should see a reversal immediately just based on that. 1:40:48 1 hour, 40 minutes, 48 seconds Is that the right understanding? 1:40:50 1 hour, 40 minutes, 50 seconds The gap will reduce between the two point. 1:40:53 1 hour, 40 minutes, 53 seconds Can you come back uh on the question once more? It's not very clear. 1:40:58 1 hour, 40 minutes, 58 seconds Because the daily average of yields is higher than the twopoint average of yields. 1:41:05 1 hour, 41 minutes, 5 seconds 1Q yields on a twopoint average basis should be better than 4q yields. Right? 1:41:13 1 hour, 41 minutes, 13 seconds So meaning I'm saying there should be a reversal in the twopoint average number immediately assuming everything else remains the same. Obviously we've just 1:41:21 1 hour, 41 minutes, 21 seconds started one but assuming everything else remains the same that's how it should move right. 1:41:27 1 hour, 41 minutes, 27 seconds Yeah yeah yeah got it got it. So just just wanted that clarification uh because there is just 1:41:35 1 hour, 41 minutes, 35 seconds quite a bit of movement but also your explanation was quite concrete on that but just wanted to clarify it a second time. Thank you. Thanks. 1:41:45 1 hour, 41 minutes, 45 seconds Thank you. Thank you. 1:41:49 1 hour, 41 minutes, 49 seconds Thank you ladies and gentlemen. We'll take that as a last question for today. I now hand 1:41:57 1 hour, 41 minutes, 57 seconds the conference over to the management for closing comments. Sir, thank you so much uh and and thank you 1:42:04 1 hour, 42 minutes, 4 seconds everyone for joining the call. I think uh from our perspective uh you know a 1:42:12 1 hour, 42 minutes, 12 seconds lot of good things happen in uh FI26 u and we were happy that we could meet 1:42:19 1 hour, 42 minutes, 19 seconds uh all all of the guidance which we had given. In fact, the way we ended uh the 1:42:25 1 hour, 42 minutes, 25 seconds last uh couple of quarters uh we do believe that the opportunity uh for us 1:42:33 1 hour, 42 minutes, 33 seconds to grow and to move towards our guidance in FI28 is very strong. Uh in between 1:42:40 1 hour, 42 minutes, 40 seconds this whole uh you know thing of on the war has happened. Uh we do believe that uh in certain segments we need to be 1:42:48 1 hour, 42 minutes, 48 seconds more cautious and we are already doing so. Uh but despite that we believe because of our presence in all uh almost 1:42:58 1 hour, 42 minutes, 58 seconds all products and opportunity to add some new products too plus uh uh the opportunity to add uh expand 1:43:07 1 hour, 43 minutes, 7 seconds geographically. we are well pleased uh to meet the guidance which we have given. So thank thank thanks everyone 1:43:16 1 hour, 43 minutes, 16 seconds for the faith which you've placed on us and um we just want to tell you that we are all working uh towards uh keeping up that faith. Thank you so much. 1:43:28 1 hour, 43 minutes, 28 seconds Thank you on behalf of Tata Capital that concludes this conference. Thank you for joining us and human out is