Utkarsh Small Finance Bank Limited — Q4 FY26

Utkarsh Small Finance Bank Ltd Q4 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=-x8Bm7dwB50 Published: 2 days ago

0:03 3 seconds Ladies and gentlemen, good day and welcome to the Utach Small Finance Bank Limited Q4 FY26 earnings call hosted by 0:13 13 seconds ICIC ICI Securities Limited. As a reminder, all participant lines will be in the listen only mode and there will 0:21 21 seconds be an opportunity for you to ask questions after the presentation completes. Should you need assistance during the conference call, please 0:29 29 seconds signal an operator by pressing star then zero on a touchstone phone. Please note that this conference is being recorded. 0:36 36 seconds I now hand the conference over to Mr. Chinttona from ICS securities. Thank you and over to you sir. 0:46 46 seconds Yeah. Uh hi. Yeah. Uh thank you. Uh good evening everyone and uh welcome to the 0:53 53 seconds Q4 FYI26 results conference call of Utkash Small Finance Bank. Uh we would like to thank the management for giving 1:01 1 minute, 1 second us the opportunity to host this call. Uh from the management we have Mr. Goen Singh managing director and CEO. Uh Mr. 1:11 1 minute, 11 seconds Sju Kumar Pravin Simaria, chief financial officer. Mr. Amit Achara, chief risk officer. Mr. 1:20 1 minute, 20 seconds uh virend Sharma head micro banking, Mr. 1:23 1 minute, 23 seconds Sorab go head consumer banking uh and Mr. Abayqatara head of assets. Yeah. So now without further ado I would like to hand over the floor to the management. 1:33 1 minute, 33 seconds Uh thank you and over to you go. Yeah. Thank you Shintan. Thanks a lot. 1:39 1 minute, 39 seconds Thanks for hosting this call. Yeah. Uh thank you everyone for joining our quarter 4 FY26 earnings call. The fourth quarter of F26 has been a period of 1:48 1 minute, 48 seconds renewed growth, proof of resilience and cautious optimism and as a part of industry we also went through adverse impact of MFI segment as you are aware 1:56 1 minute, 56 seconds guard rails for a longest period of one and a half years. However, for us, FY26 has been a year of deliberate choices, prioritizing stability over speed, 2:05 2 minutes, 5 seconds quality over quantity, and resilience over short-term expansion, growing so that we emerge with a stronger uh fundamentally stronger, less cyclical uh 2:14 2 minutes, 14 seconds franchise that can deliver sustainable returns over the medium and long term. 2:20 2 minutes, 20 seconds FY26 began under the shadow of legacy stress and a cautious environment. Over the course of the year, we focus on stabilizing collections, tightening 2:28 2 minutes, 28 seconds underwriting and rebalancing the portfolics. These actions were designed to arrest deterioration, reduce fresh 2:35 2 minutes, 35 seconds slippages and created the conditions for a durable recovery. By quarter four of FY26, we begin to see tangible green 2:43 2 minutes, 43 seconds shoots. Dispersement improves meaningfully. SMA pools contracted. F NPS leages decline sharply. Recoveries 2:51 2 minutes, 51 seconds and upgradations increase and collection exchanges strengthen. All of which point to the strategic measures taken taking hold. Concretely, dispersement improve 3:00 3 minutes across both JD and nonJ segment in quarter 4 F26. JD's dispersement grew 58% quarter on quarter and grew 2% year 3:08 3 minutes, 8 seconds on year while non GLD dispersement grew 41% quarteron quarter and 51% yearonear these improvements will expand the 3:16 3 minutes, 16 seconds portfolio base going forward and reflect a calibrated return to lending activity at the same time our x bucket collection 3:23 3 minutes, 23 seconds efficiency in the JD segment improved to 99.7% in March 2026 up from 98.5% April 2025 the highest level in the last four 3:33 3 minutes, 33 seconds quarters a direct outcome strengthen field execution and targeted collection initiative. Stress NP slippages net of 3:40 3 minutes, 40 seconds recoveries and and upgradation need reduced to 170 cr in quarter quarter four of FYI 26 against 710 cr in the 3:49 3 minutes, 49 seconds quarter 4 of FI25 and our GNPA ratio improved by 330 basis points quarter quarter quarter to 77 3:57 3 minutes, 57 seconds 7.7% as on March 26. These are the early measurable signs that our corrective actions are beginning to deliver. 4:06 4 minutes, 6 seconds A central central theme of FY26 has been structured drisking of our unsecured exposure and a strategic pivot toward 4:15 4 minutes, 15 seconds secure and higher yield lower risk portfolios. This is deliberate long-term shift to reduce psychologicality in the 4:24 4 minutes, 24 seconds credit cost and create multiple avenues for growth beyond JD lending. We had consciously moderated our JG exposure to 4:31 4 minutes, 31 seconds around 28% of the gross loan book and around 30 30% including BC JLG as on 4:38 4 minutes, 38 seconds March 2026 down from nearly 88% and and 90% including BC JLG in March 2020. This 4:46 4 minutes, 46 seconds reflection this reduction reflects both selective contraction of the BG book which declined by around 10% 4:53 4 minutes, 53 seconds during the quarter and a and a purposeful shift from new loan new flows into attractive products alternative products. As a result, secured lending 5:02 5 minutes, 2 seconds now comprises 51% of our gross loan book up from 43% a year ago. This structural shift is is already changing the risk 5:10 5 minutes, 10 seconds profile of the bank and will over time enhance stability of margins within micro banking. Our micro banking business loan targeted a at graduated 5:19 5 minutes, 19 seconds GLG customers with proven repayment discipline have shown exceptional traction. MBPL portfolio grew 122% 5:26 5 minutes, 26 seconds yearonear and 40% quarteron quarter and now represent 27% of our micro banking loan book. penetration remains below 5:34 5 minutes, 34 seconds five 15% which gives us significant headroom to scale this product to a much larger share of our customer base while preserving asset quality to further 5:42 5 minutes, 42 seconds deisk incremental flows we have registered with CGFMU for credit guarantee coverage on eligible JG and MBBL disbbursement with effect from 17 5:52 5 minutes, 52 seconds Mars 2025 40 45% of our our micro micro bank finance book for disbbursement is quarter 3 FY26 already covered under the 6:01 6 minutes, 1 second guarantee scheme and counting quarter 4 FY25 dispersement 70 70% of the micro book is covered this coverage material 6:09 6 minutes, 9 seconds that reduces incremental portfolio risk on new dispersments and supports portfolio stability as we scale higher high higher quality secured products 6:18 6 minutes, 18 seconds diversification beyond JLG has been a key strategic priority and FI26 has been has seen healthy momentum across our 6:25 6 minutes, 25 seconds nonG lending businesses these segments not only broaden our revenue base but also deliver attractive yields and more 6:32 6 minutes, 32 seconds resident collateral profiles. MSM loan book expands by 15% yearon year to 4456 6:40 6 minutes, 40 seconds cr supported by the newly started microl segment which is delivering dispersal yield of 18%. Housing loans grew by 8% 6:49 6 minutes, 49 seconds yearon year to 990 cr and our BBG portfolio business banking group uh portfolio fully secured against immobile 6:56 6 minutes, 56 seconds collateral grew by 19% year on year. C and CV and C segment also was indicating the need to look at the mix of new 7:04 7 minutes, 4 seconds versus used vehicles as the forward are signing riskier behavior and therefore the loan group contracted by 1% quarter 7:12 7 minutes, 12 seconds of quarter to 1090 cr and the share of used vehicles grew to 30 almost 30% in FI26 from less than 15% a year ago 7:21 7 minutes, 21 seconds reflecting our strategic tilt toward more resilient asset classes. 7:25 7 minutes, 25 seconds Collectively, these moves are increasing the share of secured assets in the book and improving overall portfolio resilience. On the library side, our 7:33 7 minutes, 33 seconds focus has been on building a granular lowc cost deposit base and aligning deposit growth with disablement. Total deposits were broadly stable with 4% 7:42 7 minutes, 42 seconds yearon-year uh growth and around 3% quarteron quarteron quarter growth while retail deposits grew by 20% yearon year. 7:49 7 minutes, 49 seconds Our CASA deposits increased by 11% yearonear and 13% quarter on quarter lifting the kasa plus RTD ratio to 83% 7:57 7 minutes, 57 seconds as of March 26 from 17% on March 25 and the CASA ratio improved to 24% as on 8:04 8 minutes, 4 seconds March 2026. These improvements reflect better quality of account sourcing and a consious reduction in in reliance on 8:12 8 minutes, 12 seconds bulk deposits. In response to the RBI report rate cuts, we have faced reduction in interest rate on savings and term deposits remain competitive 8:20 8 minutes, 20 seconds while optimizing cost of funds. These calibrated repricing have driven a reduction in our overall cost of funds 8:27 8 minutes, 27 seconds by more than 45 basis point year on year and more than 25 20 basis point quarter on quarter moving from 8.3% quarter 4 8:35 8 minutes, 35 seconds FY25 to 8.1% in quarter 3 FI26 and 7.9% in quarter 4 FY26. We expect cost of 8:43 8 minutes, 43 seconds fund to reduce further as pricing continues to take effect. Repricing continues to take effect. We also maintain prudent liquidity buffer. Our 8:51 8 minutes, 51 seconds CV ratio declined to 83% as a March 2026 from 87% as a March 2025 and we ended 8:59 8 minutes, 59 seconds the quarter with surplus liquidity of almost 30 300 cr 3,800 cr and an LCR of 9:05 9 minutes, 5 seconds 178%. These matrices provide us the flexibility to support calibrated dispersement while preserving balance sheet residency. Income income 9:15 9 minutes, 15 seconds compression led to elevated cost income ratio for the financial year which impacted the POP if adjusted for interest reversal due to first NPS 9:24 9 minutes, 24 seconds slippages then POP would be 140 cr despite pressure from legacy book leading to elevated credit cost and 9:31 9 minutes, 31 seconds hence we los our capital position remains healthy. We reported a net loss of 188 cr for the quarter driven by 9:39 9 minutes, 39 seconds providing the legacy stress uh driven by providing for legacy stress. Our capital equity ratio stood 9:46 9 minutes, 46 seconds at 17.7% as of March 312026 comfortably above the regulatory threshold to strengthen the tier 1 base 9:54 9 minutes, 54 seconds and support growth future growth. We successfully completed rights issue of 950 cr in number 2025 10:02 10 minutes, 2 seconds which uh which has been helping to to for our capital question. In parallel, we proactively address legacy stress 10:09 10 minutes, 9 seconds through the ARC sale of stress BG portfolio. This was a deliberate value enhancing decision that improves balance sheet strength and positions the company 10:18 10 minutes, 18 seconds on a much cleaner footing for sustainable growth. Following creditors and shareholders on the on the reverse merger part following traders and 10:26 10 minutes, 26 seconds shareholder approval obtained in accordance with the process of amalgamation. This the second motion petition was filed with the NCL on April 10:34 10 minutes, 34 seconds 5 2026 for the scheme of amalgamation of holding company UCL with and into the bank. The reverse murder is expected to 10:42 10 minutes, 42 seconds be completed next few few months subject to NCLT proceedings. Operational discipline has been a central pillar of 10:48 10 minutes, 48 seconds our FY26 response. We expanded our collections workforce for JG and NBL to more than 1200 as on March 2026. 10:58 10 minutes, 58 seconds Operationalized a specialized call center for overdue accounts and split larger branches larger micro banking branches to improve oversight and 11:06 11 minutes, 6 seconds control. Training programs for new frontline staff emphasized our core processes such as center meetings and customer onboarding ensuring cons consistent execution across the field. 11:17 11 minutes, 17 seconds These structural investments have contributed directly to the improved collection matrices and reduction in SMA and the fresh slippages we reported in 11:24 11 minutes, 24 seconds quarter 4 FY 26. Technology and process transformation have also been critical. 11:30 11 minutes, 30 seconds Our Utkash 2.0 Zero technology transformation is delivering tangible benefits in automation, productivity and risk control. Digital underwriting 11:39 11 minutes, 39 seconds capabilities are are helping us avoid lending to over leverage borrowers with 360deree control parameter mapping 11:46 11 minutes, 46 seconds strengthens monitoring across the trade cycle. A bank is also in the process of launching new CBS in quarter 2 of FY27. 11:55 11 minutes, 55 seconds These investments are not only improving the efficiency but also enhancing our ability to underwrite and monitor risk at scale. 12:04 12 minutes, 4 seconds We also recognize the importance of our people. During FY26, we incurred a one one-time impact related to new labor 12:10 12 minutes, 10 seconds codes uh LTIP and ESO grants and other employee benefit obligations in quarter 3 FY26 and its incremental impact in 12:19 12 minutes, 19 seconds quarter 4 of FY26. While this weights on the near-term profitability, it reflects our commitment to compliance, employee 12:27 12 minutes, 27 seconds welfare, and building a motivated, capable workforce to execute our strategy. Training, productivity initiatives, and organizational agility 12:34 12 minutes, 34 seconds will remain central to our transformation journey. Throughout F26, we took a range of decisions, decisive 12:42 12 minutes, 42 seconds actions to address legacy stress and position the bank for sustainable growth. These included tightened underwriting standards, calibrated 12:49 12 minutes, 49 seconds disbburment, targeted recoveries and upgradation, selected portfolio resolutions and measures to improve borrow discipline under the new guards. 12:58 12 minutes, 58 seconds We have also been proactive to derisking incremental flow through as we mentioned earlier through CGFME coverage for 13:05 13 minutes, 5 seconds eligible JG and MBBL dispersment and by shifting new origination towards secured and higher quality products. We also 13:13 13 minutes, 13 seconds have taken steps to improve the quality of new account sourcing and to cross- sell asset products through our liability focused general banking branches thereby increasing product 13:21 13 minutes, 21 seconds penetration per customer and including wallet share. These actions taken together are designed to reduce the reduce the probability of future steps 13:30 13 minutes, 30 seconds and to create a more diversified resident earnings base. Uh we viewed FY27 as a consolidation year, a a period 13:37 13 minutes, 37 seconds to convert the green shoots in seen in F quarter 4 FY26 into sustainable momentum while continuing to strengthen the 13:45 13 minutes, 45 seconds franchise. Our near-term priorities will be to sustain improve collection performance, continued calibrated 13:53 13 minutes, 53 seconds dispersement into higher quality segments, deepen secured lending and accelerate liability me mobilization to 14:00 14 minutes support those in the prudent manner. In the coming years we are aiming to for loan growth of 25 to 30% with secured 14:07 14 minutes, 7 seconds lending comprising around 55% of the portfolio maintaining name of above 8% and delivering a ROE of around 15%. 14:17 14 minutes, 17 seconds Achieving these targets will require steady execution across underwriting collections product diversification library mobilization and technology 14:24 14 minutes, 24 seconds enabled risk management. While sectoral headwinds and regulatory transitions may continue to influence near-term performance, we remain confident that 14:32 14 minutes, 32 seconds strategic direction we have charted will deliver a stronger, more sustainable franchise over the medium-term. In a 14:39 14 minutes, 39 seconds sense, FY26 has been a year of challenge and purposeful transformation. We have moderated risk, strengthen collection, diversified our portfolio, deepen our 14:49 14 minutes, 49 seconds lightly franchise and reinforce our capital base. The quarter has shown that the bank is on on the path of recovery and with increase in quality 14:56 14 minutes, 56 seconds disbbursement, better portfolio and deposit mix, improve asset quality with lesser such slippages and higher 15:03 15 minutes, 3 seconds recoveries, upgradation, decline in SMA pool. We will continue to prioritize operational efficiency, discipline execution and organization's agility. 15:12 15 minutes, 12 seconds Our strategy is not about aging rapid growth at expense of stability. It is about building a fundamentally stronger 15:19 15 minutes, 19 seconds institution that can withstand cycles, deliver sustainable returns and create enduring value for all these stakeholders. Uh we thank you for your 15:28 15 minutes, 28 seconds continued support and confidence. Uh with this I conclude and uh now we are we'll move to question and answer session. Thank you. 15:38 15 minutes, 38 seconds Thank you very much. We'll now begin the question and answer session. Anyone who wishes to ask a question may press star 15:45 15 minutes, 45 seconds and one on the touchstone phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking the question. 15:57 15 minutes, 57 seconds Ladies and gentlemen will wait for a moment while the question cue assembles. 16:05 16 minutes, 5 seconds The first question is from the line of Shagar Sha from Spark Capital. Please go ahead. 16:14 16 minutes, 14 seconds Yeah. Uh first of all uh cong congratulations to the management for posting at least better set of earnings 16:22 16 minutes, 22 seconds as compared to few quarters. Uh sir I I had some few questions. My uh first 16:29 16 minutes, 29 seconds question was uh related to our asset quality. On the asset quality you have mentioned the PCR on the bank level of 16:39 16 minutes, 39 seconds around 59%. Uh I wanted to understand what is the PCR uh that we are holding for secured as well as unsecured u uh both of them individually. 16:52 16 minutes, 52 seconds Yeah sure you can just mention that. 16:59 16 minutes, 59 seconds Yeah, hi Amit this side. So if you see on the overall book uh uh PCR is 59.3% 17:06 17 minutes, 6 seconds as you mentioned on the entire secured book it stood at 38.7% and on entire unsecured 17:15 17 minutes, 15 seconds uh it stood around 65.4%. 17:21 17 minutes, 21 seconds Okay. So 64.5% that you are saying is for uh is it safe to assume that includes MSME unsecured as well as MFI right? 17:32 17 minutes, 32 seconds Yeah right but for 65.4 uh sorry when I mentioned 17:38 17 minutes, 38 seconds unsecured 65.4% 4% it includes all un total including right sir 17:45 17 minutes, 45 seconds so only for MFI what is the PCR that you holding sir now only for JG if you think it would be 17:52 17 minutes, 52 seconds 66.3% only for JG and for MBBL uh MBBL as well as JG mix then 18:01 18 minutes, 1 second more or less on the same side 66.3% because uh for MBBL and for GLG we do the same kind of rupees. 18:11 18 minutes, 11 seconds Okay. So, is it safe to assume that still some sort of provisioning is still left in the next two quarters for 18:20 18 minutes, 20 seconds especially for MBBL and uh uh JG is concerned because even if you want to recognize 80% provisioning aging aging 18:27 18 minutes, 27 seconds provisioning so still some sort of provisioning is left uh in the next quarters right for MBL as well as in JZ. 18:37 18 minutes, 37 seconds Yeah, it is there. So uh on 85% provisioning and uh some portion on 70% is still remaining. 18:47 18 minutes, 47 seconds Okay. So uh now next from FI28 onwards we are migrating to ECL based provisioning. So 18:56 18 minutes, 56 seconds what I wanted to understand that how well are we prepared for actually model our asset quality towards that um 19:05 19 minutes, 5 seconds because uh over in the ECL model our provisioning has to be more aggressive especially on the SM2 assets. So how 19:14 19 minutes, 14 seconds ready are we have we figured out a model how ready are we for the ECL ECL transition sir? 19:22 19 minutes, 22 seconds uh well uh this index beginning is from 1 April is actually SMBs are exempted so you know we still don't have to follow 19:30 19 minutes, 30 seconds that I guess it'll be sometime before RBI brings us into the uh having said that uh you know while uh we have 19:39 19 minutes, 39 seconds performance that we do and given uh you know honestly uh uh the provisioning for the last year uh in terms of uh CPGs 19:48 19 minutes, 48 seconds that has happened I guess our EC provisioning perhaps uh you know the accounting IT provisioning will be equal to or maybe 19:55 19 minutes, 55 seconds higher but your question to be preparedness for India next year doesn't apply to us uh you know in terms of statute uh requirement 20:05 20 minutes, 5 seconds okay okay fine sir my my second question sir was related to the MSN portfolio our G&PA uh in the last quarter you 20:13 20 minutes, 13 seconds mentioned was uh upwards of 12.5% G&P on the MSN front so now it considates 23% % 20:21 20 minutes, 21 seconds of your total lending portfolio. So uh what is the GMPA right now and how is 20:27 20 minutes, 27 seconds the something like uh still now uh the real impact of the uh geop the west as 20:34 20 minutes, 34 seconds the west Asia actually conflict is going to have is going to reflect in the coming quarter. So u how what is the G&P 20:43 20 minutes, 43 seconds right now and how well are we prepared to actually face that are we facing stress in some of our existing portfolios. 20:53 20 minutes, 53 seconds So see if you talk about retail MSB portfolio the gross NPA stood as on March 26 at 3.4%. 21:01 21 minutes, 1 second And if you see we do fund to a very you know normal ticket size. So we do not fund uh like uh 20 cr or 30 cr kind of 21:10 21 minutes, 10 seconds borrowers who have some export or larger export limits or the foreign currency exposure. So the as far as geopolitical 21:19 21 minutes, 19 seconds situation is concerned. Uh there has been no you know uh uh abnormal behavior in our portfolio so far which we have 21:27 21 minutes, 27 seconds been monitoring for last two and a half months. Uh when uh Iran US situation got worse. uh so we have a close monitoring 21:36 21 minutes, 36 seconds on it. Uh as far as uh it is concerned there has been no issue or portfolio behavioral change in our portfolio as far as MSME is concerned. 21:48 21 minutes, 48 seconds Okay. So MSME the JNPA has come down to 3.5 sir 3.4%. 21:55 21 minutes, 55 seconds 3.4 it was it was at 12.2% you mentioned in the last quarter. 22:01 22 minutes, 1 second Yeah. And this uh when we talk uh I just wanted to add uh one more point when we talk about this MSME portfolio largely 22:08 22 minutes, 8 seconds it is secured by hard collateral like a residential or commercial property. So there is a uh you know security 22:15 22 minutes, 15 seconds available to the bank in case of any defaults. 22:19 22 minutes, 19 seconds Okay. So just uh one suggestion sir from my point of my end within the MSNE you have around three segments. 22:28 22 minutes, 28 seconds uh within the MSNE you have um uh you have the secured business loans. So you have unsecured business loan and you have multiple app also. So if you can 22:37 22 minutes, 37 seconds just uh give the break actually within your 4,456 cr worth of portfolio that would be very 22:44 22 minutes, 44 seconds helpful sir to understand that what uh at what uh direction the bank is going actually that would be very helpful. Uh 22:52 22 minutes, 52 seconds now my third question sir was related to the disbbursements. So disbbursements in JCG have actually are going up for the 22:59 22 minutes, 59 seconds first time in almost I think in last many quarters actually. So what is the reason behind the same because the 23:07 23 minutes, 7 seconds dispersements have uh three consecutive quarters of decline. Now it has moved up to 1310 crores. So where are we exactly 23:16 23 minutes, 16 seconds finding the value? Have we actually found uh something like still have you gone tough through the underwriting or 23:24 23 minutes, 24 seconds what is the uh new portfolio? How's the new portfolio doing actually and what changes have you made in your existing underpinning systems? 23:32 23 minutes, 32 seconds Uh thanks uh this is Va just to answer your concern there has been uh as you know that uh in April 26 2.0 Zero guardrails were implemented. 23:43 23 minutes, 43 seconds After 25 the guardrails were implemented and there was a sudden uh what you call increase in power which led to our focus 23:52 23 minutes, 52 seconds of more onto the collection side uh side and focusing on winning up the collections. By third quarter or October 24:00 24 minutes November we had nearly stabilized on our collections. We always had the what you call distribution and the people to do 24:08 24 minutes, 8 seconds that part. Once the collection in early bucket bucket started stabilizing we started uh putting the trust on sales 24:16 24 minutes, 16 seconds back and we are adhering to all the guidelines as specified in Mr 2.0 guideline even industry had seen a 24:24 24 minutes, 24 seconds upward trend towards the dispersal uh and uh our two FY25 26 portfolio after 24:32 24 minutes, 32 seconds that and this is be behaving very well with respect to collections also. So uh 24:39 24 minutes, 39 seconds it is uh I will say key still we are only at a 70% optimum capacity of dispersal and uh we should be 24:48 24 minutes, 48 seconds stabilizing in the same ranges right now. 24:53 24 minutes, 53 seconds Okay. Father sir, uh lastly, what is the steadystate credit cost that's that we are eyeing for FI27 and FI28? FI27 sir. 25:03 25 minutes, 3 seconds So I target. 25:05 25 minutes, 5 seconds Oh yes I in the previous call uh we had mentioned about 2.5% steady state 3.5 3 to 3.5 for 27 and two to 2.5 in FI28. 25:17 25 minutes, 17 seconds uh with this uh trajectory of CPG's uh being arrested significantly in terms of SMA going down significantly with the 25:25 25 minutes, 25 seconds background that the new disbururments are happening under the new guard rail with the background that we have a CG if you cover uh you know I guess this is a 25:33 25 minutes, 33 seconds very conservative uh you know number but we will still stick to the fact that it'll be around 3% for FI27 to two to 25:41 25 minutes, 41 seconds two two and a half in FI28 we will do better than that assume uh you know the trajectory the way we are looking at and the industry as well is endorsing coming 25:50 25 minutes, 50 seconds back of the disbburment and the collection being 995 plus I guess this is a conservative number that I'm giving you 25:58 25 minutes, 58 seconds okay okay fine sir thank you thank you so much and all the best sir thank you thank you a reminder to all the 26:07 26 minutes, 7 seconds participants that you may press star and one to ask a question the next question is from the line of sham sing an individual investment please go ahead. 26:19 26 minutes, 19 seconds Good evening sir. 26:21 26 minutes, 21 seconds Sir I wanted to ask what is the amount that we are going to get back in CG MQU cover in the last one years that insurance that we have taken for NFI. 26:34 26 minutes, 34 seconds So uh uh the way it happens that you know I would say uh you know the maturity of NPA as we speak uh I I think 26:44 26 minutes, 44 seconds you know still uh it's no not an NPA that the disbburment that we have started while our portfolio as of 31st 26:50 26 minutes, 50 seconds March 70% is covered under CGMU but the maturity of claim has yet not arrived uh I guess you know I mean I would hope it 27:00 27 minutes doesn't arise frankly but uh Every year and a half it takes you know the claim and the settlement but we are also not 27:07 27 minutes, 7 seconds even wanting to account this credit and therefore the entire numbers that we have said is without even considering the credit at this point because that's 27:15 27 minutes, 15 seconds kind of a experience and we don't want to set into a windfall gain at the moment the cost of premium is embedded in my P&L and since we don't have the 27:23 27 minutes, 23 seconds NPA you know from the new book uh well it appears to be a cost of premium but we just you know protecting our future 27:30 27 minutes, 30 seconds in terms of any uh adverse development for future. So for your question to say that is anything matured under CGM the 27:37 27 minutes, 37 seconds answer is probably too early to you know give a number on that. Just to summarize that you know we have taken the cost of CSU for last more than a year now since 27:46 27 minutes, 46 seconds last quarter four of last year but uh we have neither taken accounting benefits and now we have got any claim so far so 27:54 27 minutes, 54 seconds only expense have gone part but in case something goes you know to that extent in future we'll get the benefit but in current one we have not taken any 28:01 28 minutes, 1 second benefit only expense have been taken out taken into account and how much of our capital got freed up because of that as I know that the risk 28:10 28 minutes, 10 seconds weightage which is adjusted if we take the cover. No, even that has not been done by us. 28:17 28 minutes, 17 seconds So as I mentioned we have not taken any benefit of any these guarantee scheme the accounting we have done a very plain accounting where we have not taken any 28:24 28 minutes, 24 seconds benefit of this. So as I mentioned whatever is there only expense part have been taken no benefit either in terms of getting any claim or any uh any 28:32 28 minutes, 32 seconds adjustment in the NPA or capital has not been done by us. 28:39 28 minutes, 39 seconds Okay sir and sir regarding our prime minister's comment in the previous few days what is our chance like we are 28:47 28 minutes, 47 seconds trying to grow at 30%. And given the nature of the geopolitical situations are we see like what is the segment that 28:55 28 minutes, 55 seconds we are targeting and how do we ensure that our credit cost will increase. 29:00 29 minutes So you see I mean you are aware that last year has been a year where we could not grow. So we are at the almost same level. So we have a real low base waste 29:08 29 minutes, 8 seconds right now from that perspective and we have got a full infrastructure in terms of manpower in terms of number of branches and uh the lines of products 29:16 29 minutes, 16 seconds and our channels. So I think around 30% growth should not be a problem in the normal one and our focus remains on the one obviously we understand macro as 29:24 29 minutes, 24 seconds well. So that remains our focus area and besides that as you mentioned there are you know various types of lab products which we have been focusing upon 29:32 29 minutes, 32 seconds including the uh small ticket lab and we and normal lab as well as the BBG products. So I think LAP and JG will 29:39 29 minutes, 39 seconds still remain our key products for for going forward. Also we have all obviously we done something like you know gold loan which we think that we'll 29:46 29 minutes, 46 seconds be able to grow bigger this year. There are some of the new new area also which we start around one to two years time. 29:53 29 minutes, 53 seconds Uh we think that there should be you know further growth in that part. As far as the trade cost is concerned, we do understand you know the statement from 30:01 30 minutes, 1 second the prime minister but I don't foresee any challenge because I think most of our portfolio uh is for income generation and smaller ticket size. Uh 30:09 30 minutes, 9 seconds we don't foresee much challenge and uh anyway I think we are we are in recovery path and we have got a good machinery as far as collection is concerned. So we 30:17 30 minutes, 17 seconds don't foresee any major uh impact because of that. 30:23 30 minutes, 23 seconds Okay sir, that was really helpful and sir in the secure segment like if there is a default what is the timeline in 30:30 30 minutes, 30 seconds which we can uh get physical control of the asset and auction at all and what is 30:37 30 minutes, 37 seconds the LTV value of the secured asset that we are lending to. 30:42 30 minutes, 42 seconds Oh hi Amed. So normally you know the when we assess the NPA case and bank decides that we'll have to go on the 30:50 30 minutes, 50 seconds surface route from there uh various processes are involved and it takes around uh 6 to 8 months is a period. So 30:58 30 minutes, 58 seconds somewhere 6 months somewhere 8 months uh depending on the situation but that's the normal scenario 6 to 8 months you are able to dispose of the property 31:06 31 minutes, 6 seconds completely by inviting the bids under the surface fee. So that is one. Second is uh uh the normal LTV if you will see 31:14 31 minutes, 14 seconds on the portfolio side it would be uh less than 65% around it should be there because uh 31:21 31 minutes, 21 seconds mostly we do residential property on a loan value at 70%. So on outstanding portfolio basis and including our all 31:29 31 minutes, 29 seconds portfolio uh like microl we offer only 50%. We do not go beyond that also. So overall it should be below 65 to 60%. 31:40 31 minutes, 40 seconds And sir, what is the average tenure of these loans? 31:44 31 minutes, 44 seconds Average tenure, you see the uh because the ler borrowers opt for a longer tenure. So the average tenure would be 31:53 31 minutes, 53 seconds around uh you know 12 to 13 years would be the average tenure given. But if you see the entire portfolio uh largely 32:02 32 minutes, 2 seconds insecured in housing and MSME customer uh you know takes this loan on an average of 8 to 9 years and dispose of 32:10 32 minutes, 10 seconds or foreclose the loan within this particular period sir what would be the risk weightage for this loan? 32:19 32 minutes, 19 seconds So this is uh uh when we talk about lap it is uh 75% uh is the risk weight larely. 32:28 32 minutes, 28 seconds Okay sir. Thank you so much. I'll turn back in the queue. Thank you. 32:35 32 minutes, 35 seconds Thank you. The next question is from the line of Rahul Kumar from Varia fund. Please go ahead. 32:43 32 minutes, 43 seconds Yeah. Hi. Uh thanks. Uh just one question. uh what are our capital raise plans? 32:50 32 minutes, 50 seconds So immediately we are not having any plans for capital raise. I know it is 17.7% but this year this year we should be able to sail 32:59 32 minutes, 59 seconds through on this capital base. Our idea is to first you know focus more on uh uh at least when I'm talking when I say capital raise means I'm not talking of 33:07 33 minutes, 7 seconds the equity capital obviously we have other means of taking capital like tier to capital and sometime you know offloading some of the balance sheet items also. So idea is not to go to 33:15 33 minutes, 15 seconds capital market this on immediate basis and uh raise through tier 2 or some other means this time in case there are any shortfall or you know immediate 33:24 33 minutes, 24 seconds requirement is there but not to capital market. Okay understood. Understood. 33:32 33 minutes, 32 seconds Yes sir. Thank you. Thank you. 33:36 33 minutes, 36 seconds Thank you. The next question is from the line of sika from as an individual investor. Please go ahead. 33:45 33 minutes, 45 seconds Yeah, thank you for uh taking my question. Actually my question only is that in the last phone call uh the management has mentioned key uh we are 33:54 33 minutes, 54 seconds targeting for 15% RO in FI28. I want to I want to know only are we in in line on 34:02 34 minutes, 2 seconds that part and also now see what I hope to what is behind that is the only question from my side. 34:11 34 minutes, 11 seconds Yeah. as I'll confirm that you know 15% if you're looking FI28 ends certainly we are there we'll exit FI28 you know above 34:19 34 minutes, 19 seconds 15% capital uh sorry the ROE and as far as work is behind yes work is behind us I mean you must have seen you know type 34:26 34 minutes, 26 seconds of provisioning what is even we have to take for quarter 4 also it was largely of the legacy portfolio so I mean we are getting a we are creating a new good 34:35 34 minutes, 35 seconds portfolio because of guard rails also and also we have got a guarantee cover issued so we don't foresee much challenge you know going forward and 34:42 34 minutes, 42 seconds whatever provisioning you have seen of late or maybe this quarter also is largely on account of the legacy portfolio. 34:51 34 minutes, 51 seconds Thank you. Thank you. 34:57 34 minutes, 57 seconds Thank you. The next question is from Bumin Sha from Aquarius AMC. Please go ahead. 35:06 35 minutes, 6 seconds Uh hi. Uh so by then we are planning to uh reach uh net MP ratio of less than 1%. 35:14 35 minutes, 14 seconds And uh uh uh M how are we planning to provide provisions for testing? 35:22 35 minutes, 22 seconds Can you repeat the question? It not hear it properly. Can you just repeat a little louder please? Yeah. Can you hear me? 35:30 35 minutes, 30 seconds Uh now it's better. 35:31 35 minutes, 31 seconds Yeah. By when are we planning to reach a net MP ratio of less than 1%. Uh because before the crisis I think we had operating in the range of.3 to.5%. 35:44 35 minutes, 44 seconds And uh how are we planning to provide uh provisions to reach this ratio if you can? 35:53 35 minutes, 53 seconds Yeah sure sure sure. I think FY28 is what we expect that we should be you know reaching this range and one obviously through you know you know 36:00 36 minutes reduction in the overall NPA recovering you know whatever are the NP of past whatever is percent is possible and certainly as you can see that we have 36:08 36 minutes, 8 seconds been providing also for the NPA in past also and now we have gone to almost below 3.5% also so idea is to recovery 36:17 36 minutes, 17 seconds as well as providing for during you know next whatever is the balance NP are there in next few quarter. So our 36:24 36 minutes, 24 seconds estimate is that you know quarter FY2 should be uh NP net NP in the range you just mentioned 36:33 36 minutes, 33 seconds uh of 32.5 or no less than 1% within 1% yeah okay 36:41 36 minutes, 41 seconds we already 3.3 is our FY 28 you know net increase 36:47 36 minutes, 47 seconds FY 26 is 3.3 and idea should reach around below 1% FYI 28. 36:56 36 minutes, 56 seconds Thank you. Thank you. Yeah. 37:01 37 minutes, 1 second Thank you. The next question is from the line of Kiran Roy, an individual investor. Please go ahead. 37:12 37 minutes, 12 seconds Ken sir, please go ahead. 37:21 37 minutes, 21 seconds Kiran sir, can you hear me? 37:27 37 minutes, 27 seconds Kiran, sir, please unmute yourself and go ahead. 37:38 37 minutes, 38 seconds As there is no response, you move ahead. 37:47 37 minutes, 47 seconds Reminder to all the participants that you may press star and one to ask a question. 37:55 37 minutes, 55 seconds The next question is from the line of MB Mah from COC Securities. Please go ahead. 38:02 38 minutes, 2 seconds Um one question on the non slippages. Uh it has been running still high 4 odd%. 38:10 38 minutes, 10 seconds If you could just kind of tell us uh what is driving this number? 38:20 38 minutes, 20 seconds Yeah. Yeah. Hi. Hi. Ah. Hi Mahes. Amit. Our CR is just about to respond to you. Yeah. 38:26 38 minutes, 26 seconds Yeah. Yeah. No, it's if you see the uh non MFI space or retail space wheels has been uh you know 38:36 38 minutes, 36 seconds one of the problem area for us in the past uh which we we are trying to address. And if you'll see uh the 38:43 38 minutes, 43 seconds collection efficiency or the resolution percentages across the buckets in the last 3 four months uh since November 38:51 38 minutes, 51 seconds onwards uh we have controlled the NPA percentages but yes uh we need to bring it down uh drastically uh but the 38:59 38 minutes, 59 seconds resolution in the earlier buckets so flowing into NPA bucket the SMA 1 and two we have tried to arrest it and uh 39:06 39 minutes, 6 seconds which we have done successfully. Uh second is that the portfolio mix movement. So the past uh more than 12 39:13 39 minutes, 13 seconds months we are trying to move away uh from new and uh doing more of the used. 39:19 39 minutes, 19 seconds So if you see the disbburment percentage contribution of the used on the overall portfolio you will see it hovers around 39:26 39 minutes, 26 seconds 12% whereas from last 7 to 8 months diseasement you will see the native has moved to close to 30%. So 30% around the 39:35 39 minutes, 35 seconds used business is being done and also uh we did lot of portfolio analysis last year and we did lot of policy loans and 39:44 39 minutes, 44 seconds other parameter intervention. This is the portfolio analysis and if you'll see the last 18 months uh disbbursement 39:50 39 minutes, 50 seconds including new or used whatever the bank has done the disbustment post October 24th the last 18 months uh the new 39:59 39 minutes, 59 seconds portfolio is performing pretty well as compared to the earlier portfolio. uh the NPA levels hovers below 2% post 24 40:07 40 minutes, 7 seconds portfolio created. So uh we major contributor in the overall otherwise if you see the other portfolios like your 40:15 40 minutes, 15 seconds housing or uh lab or even microlab portfolio uh or our BBG which is a working capital portfolio again all 40:23 40 minutes, 23 seconds these backed by hardcore like residential or commercial properties uh so they are uh under you know tolerance 40:31 40 minutes, 31 seconds level uh these has been the contributor in the overall retail lending which uh you will see in uh at least 40:39 40 minutes, 39 seconds another two quarters this would also be uh in a very very under control. 40:45 40 minutes, 45 seconds Perfect sir. Um going in your opening remark you had mentioned uh a PPOP number uh which is adjusted for I think 40:53 40 minutes, 53 seconds the the skippages in terms of uh the interest income reversal that number was 140 crores. 41:00 41 minutes Did I hear that correctly? 41:02 41 minutes, 2 seconds That's right. That's right. We had a 59 K of FOP and we had a reversal during the whole year all four quarters 41:09 41 minutes, 9 seconds combined of 81 that adds up to 140. This is pure real uh reversals on the slip edges that happened during the quarter 41:17 41 minutes, 17 seconds on interest on interest reversal due to slip edges that go into the quarter and you reverse the last three years a three month. That's right. 41:25 41 minutes, 25 seconds So that that number is 140 crores for a quarter if you have just for interest. Uh no no it is 140 cr for the full year. 41:34 41 minutes, 34 seconds Okay, okay, perfect okay perfect okay perfect okay perfect okay perfect okay 41:36 41 minutes, 36 seconds perfect okay perfect okay perfect okay perfect okay perfect okay perfect and your assment this number for next year how are you looking at it if you have some sense of it 41:44 41 minutes, 44 seconds no uh uh if if uh you know the trajectory of collection efficiency as we are seeing uh you know uh remains and 41:52 41 minutes, 52 seconds uh the dispersment going around you know uh uh in the new guardrail I guess this uh reversal should be arrested it's a 42:01 42 minutes, 1 second combination of your standard book going to G&PA which you lose is the interest which sure sure so by and large I guess your steady 42:09 42 minutes, 9 seconds state interest income though not visible now but that should find its revival in the in the in the coming quarters uh uh 42:16 42 minutes, 16 seconds next four quarters so uh the reversal by by by you know the nature will be less we will see that as actual uh you know 42:24 42 minutes, 24 seconds the book that the interest approval actually has to happen will will be returning back okay perfect and and what will be 42:32 42 minutes, 32 seconds outstanding talk uh if you look at your correction that you're seeing today u if you could just kind of give them color on how much of recovery that you 42:41 42 minutes, 41 seconds currently see of the stock of bad which has been written up 42:49 42 minutes, 49 seconds uh written off collection if I really and I've done this back of the envelope try to say that you know in my P&L 42:56 42 minutes, 56 seconds whatever is the credit for uh right of is uh you know the right of number on on inventory um it works out to 12 to 14% recovery. 43:07 43 minutes, 7 seconds That has not changed as yet. It it continues to remain in the same range. 43:11 43 minutes, 11 seconds That is right. But I just want to add Mahes here that uh know we have this uh headcount for collection that we rammed up primarily to arrest from X to SMA. 43:22 43 minutes, 22 seconds Now that normalization has already happened or maybe a quarter more to watch than that. If that actually goes the way we are looking at then the the 43:30 43 minutes, 30 seconds allocation of that headcount at least you know some recent 30% kind of an headcount will then be shifted for collecting the right for NDA and 43:39 43 minutes, 39 seconds therefore I I presume in the sense that in the exhibition plan the right of collection should be better off in the coming year because that extra 43:47 43 minutes, 47 seconds collection force should now get be get allocated to to collect the the legacy the NP or the right of 43:54 43 minutes, 54 seconds perfect and just one last question Um assuming that you are able to grow next year at 25 to 30%. 44:01 44 minutes, 1 second adjusting for the collection machinery that is sitting there. Uh any sense on how much of opex would be required against it? 44:11 44 minutes, 11 seconds How much of opex opex the operating expenses? 44:16 44 minutes, 16 seconds Uh only for the collection team you're saying? No, no. I'm just saying in your sense given that you have built some missionary around all the other assets, 44:25 44 minutes, 25 seconds it is is it is it safe to assume that the opex is going to be mutually lower than the loan book just trying to understand some direction between the 44:34 44 minutes, 34 seconds past investment made versus the growth that you're likely to see in the book next year. 44:41 44 minutes, 41 seconds So u you know whatever the I mean as I said that one way to look at is this correction force one normalization happens you tend to Yeah. But I guess 44:49 44 minutes, 49 seconds the idea is to go on the right of collection. So even if it were to continue the cost, I guess the delta will be in multiples in terms of 44:57 44 minutes, 57 seconds retaining them, taking that cost and getting a uh credit on the P&L line for the NPA collection that I just mentioned to you. Right up 45:05 45 minutes, 5 seconds so I may not have exact numbers but it will happen in two parts. First part is that I have got a cost and I expect that I should be able to raise you know 20 to 45:13 45 minutes, 13 seconds 30% growth in the in the portfolio with the same cost. So that is one thing will happen. Second, suppose I have around 1200, 1300 people who are hardcore 45:22 45 minutes, 22 seconds collection people only. Our expectation and that is what is happening right now. 45:26 45 minutes, 26 seconds The cost may be around 25 to 30%, you know, whatever the amount they bring. So suppose they bring in one lakh rupee, their cost may be around 30,000. I'm 45:33 45 minutes, 33 seconds again a ballpark number. So and because we have a large pooling even you know which needs to be recovered and we have seen in first two three years time I 45:41 45 minutes, 41 seconds mean you're able to recover the chunk there after it is 1% 2% only. So idea is that at least for next one one and a half years let us keep this team there 45:49 45 minutes, 49 seconds and whatever you know is there cost at least three times of that I'll be able to recover from this collection team. So these are two number I don't know the 45:56 45 minutes, 56 seconds exact number the way you expect but this is I think how it will happen where you want to add yeah so as in the last 46:03 46 minutes, 3 seconds quarter we were we collected close to 50 crores from this NPI and write off pool with this 900 odd people in the at that 46:11 46 minutes, 11 seconds time in the field. So uh and uh which is close to some 20% of the collected value 46:18 46 minutes, 18 seconds uh uh from this pool. So this uh this uh vertical or this connection will continue to be stable for at least next 46:27 46 minutes, 27 seconds couple of quarters uh which will give us an upside on that side and in the other side because our you know the case load 46:36 46 minutes, 36 seconds has actually gone down significantly in the range of now 330 to 350 our expectation is I'll be able to build as I mentioned additional 25 to 30% 46:44 46 minutes, 44 seconds portfolio with the same cost. So I may not my cost may not go down but my income and my top line will go up around 46:51 46 minutes, 51 seconds but you have to 30% with the same cost that is what happen. Yeah, that's that's what we have. Thanks a lot. Thank you. 46:59 46 minutes, 59 seconds Thank you. 47:04 47 minutes, 4 seconds In the interest of time, we'll take that. That was the last question for the day. I now hand the conference over to the management. Closing comments. 47:13 47 minutes, 13 seconds Yeah, thank you. Thank you team for this and thanks all the investors for your continued support. As you have seen I think things have changed significantly 47:20 47 minutes, 20 seconds during last few quarters and we expect that you know next few quarters should be a significant improvement in the trajectory and as we have mentioned that 47:28 47 minutes, 28 seconds for FI28 at least in the next two years time we should back to 15% ROE and you know good return you know overall good 47:35 47 minutes, 35 seconds uh all KPR KPIs so thank you for your support and keep exploring and keep talking to you thank you thanks a lot 47:45 47 minutes, 45 seconds thank you on behalf of ICIC CI Securities Limited. That concludes the conference. Thank you for joining us and you may now disconnect your lines.