Aavas Financiers Limited (NSE: AAVAS) Q1 2026 Earnings Call dated Aug. 12, 2025
Corporate Participants:
Unidentified Speaker
Mr. Rakesh Shinde — Head of Investor Relations
Sachinder Bhinder — Managing Director & Chief Executive Officer
Ghanshyam Rawat — President and Chief Financial Officer
Ashutosh Atre — President & Chief Risk Officer
Analysts:
Unidentified Participant
Kunal Shah — Analyst
Shreepal Doshi — Analyst
Chintan Shah — Analyst
Abhijit Cheddar — Analyst
Bhavesh Kanani — Analyst
Raghav — Analyst
Harshit P — Analyst
Ankit Chadha — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to the AWA’s Financials Limited Q1FY26 earnings conference call. This conference call may contain forward looking statements about the company which are based on the beliefs, opinions and expectations of the company as on date of this call. The statements are not. The guarantees of future performance involve risks and uncertainties that are difficult to predict. 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. Should you need assistance during the conference call, please signal an operator by pressing star 100 on attached to phone call.
Please note that this conference has been recorded. I would now hand the conference over to Mr. Akesh Shinde, head investor relation of Awas Finances Ltd. Thank you. And over to you sir.
Mr. Rakesh Shinde — Head of Investor Relations
Thank you, Muskaan. Good evening everyone. I extend a very warm welcome to all participants and thank you for joining us on today’s earning call to discuss the financial and operational performance of our company for Q1FY26 along with the business outlook going forward. The result and the investor presentation have been uploaded to the stock exchanges and are also available on our company website. I hope you had a chance to review them. Joining me today is the entire management team of awa. We will begin this call with opening remarks from our MD Sachinder Bikar, CFO Kinsham Rawat and CRO Ashutoshatre.
This will be followed by Q and a session with that. Let me now hand over the call to Sachinder. Over to you, Sachin there.
Sachinder Bhinder — Managing Director & Chief Executive Officer
Thank you Rakesh and good evening. Thank you all for joining us this evening. I truly appreciate your presence and continued support. Q1 FY26 was a landmark quarter for Awas, marking a pivotal moment in our journey. We successfully concluded the change in the promoter process and are proud to welcome CVC Capital Partners as a new promoter. The trust and conviction shown by CVC in AWAAS is a strong testament to the strength of our franchise and the vast opportunity in the affordable housing finance sector in India.
Their global perspective, institutional depth and strategic insight will position AWAAS to accelerate into its next phase of growth and innovation. I would like to take this opportunity to express my sincere gratitude to the visionary leadership of our former promoters, Kedara Capital and Partners Group. Under their stewardship, what began as an ambitious proof of concept has grown into a scalable institution. One that has transformed lives and made affordable home ownership a reality for thousands of families. The quarter also marked a significant milestone in our commitment to governance, transparency and putting the customer at the center of everything we do.
We’ve taken a historic step by transitioning to a realization based model for disbursement recognition, a forward looking and conservative approach that reflects our intent to stay one step ahead, aligning not just with regulatory expectations but with their true spirit. The change offers a more accurate view of underlying business performance, strengthens transparency and reinforces our long standing focus on quality over quantity. On the demand front, we are encouraged by the strong section login’s volume grew by 17% YoY, indicating a robust underlying housing demand. In markets where we hold a higher share, we’re witnessing a healthy appreciation in real estate prices, further underscoring structural demand strength.
On the credit front, we continue to maintain a cautiously optimistic stance on underwriting. While we have not observed any material deterioration in our own asset quality, we remain vigilant given cautionary signals reported by some peers in specific customer segments, geographies and risk profiles. In this context, drop on our function ratio is a deliberate outcome of our calibrated risk strategy and not a reflection of demand. Our strategic focus remains on optimizing yield and credit quality. We achieved a 35bps yy improvement in the yield this quarter driven by targeted initiatives to enhance portfolio mix and pricing. Recent trends are encouraging Disbursement growth in July reached approximately 16% ROI, demonstrating positive momentum and reinforcing our confidence in gaining further traction in the coming quarters.
We continue to maintain best in class credit metrics and actively evaluating our credit framework to ensure it remains robust and responsive to evolving market dynamics. This disciplined approach helps us balance growth, yield and asset quality, positioning us well for the quarters ahead. Considering the perceived stress in certain sectors of solid class, we remain focused on the self employed segment where we continue to see a better risk reward profile. Additionally, a strategy to focus more on loans exceeding 5 lakh which typically exhibit stronger asset quality trends and portfolio behavior. Government initiatives such as interest subsidy scheme under PMAY 2.0 combined with a supportive interest rate environment continue to bolster home buyer sentiment and improve affordability.
I’m pleased to report that over 450 AWAAS customers have benefited from these schemes, receiving subsidies totaling more than rupees 15 million. We also want to acknowledge the NHB for its continued leadership in promoting transparency, governance, inclusion, diversity and capability building in the sector we are proud to share. AWAAS has won the Product innovation award at NHB’s inaugural Housing Finance Excellence Awards 2025. Returning to our operations. While the transition to realization based accounting has meaningfully impacted our sanction to disbursing ratio, we are now seeing signings of normalization. In fact, July disbursement grew 16% YoY, reflecting a gradual return to our business as usual levels.
Our AEM grew 16 percentage YoY despite a softer disbursement quarter impacted by a change in disbursement recognition in quarter one. Based on the current trends, we now expect a full year growth in the range of 18 to 20%. While we remain confident of a rebound starting quarter two, we will have better visibility on overall growth as we progress further into the year and continue to pursue our objectives with prudent discipline. In terms of our distribution strategy, we are beginning to see positive results from our diversified approach. We have successfully empanelled digital partners such as cac, Emitra and India Post bank, all of which are contributing to a robust and diverse lead generation pipeline.
I’m pleased to share that within less than a year of onboarding CSE, we are already receiving more than 1,000 plus monthly logins, a strong indicator of potential in this partnership. Additionally, we are continuing to strengthen our distribution network with plans to open 10 new branches in September. As highlighted earlier, our strategy this year is to front load branch expansion in the first half rather than concentrating opening in the second half as in the previous years. I’m also pleased to share that we are entering a new state, Tamil nadu and all 10 of these upcoming branches will be located there.
As we look ahead along, strategic priorities remain clear to fully leverage our strong digital and operation platforms, further strengthen governance, drive scale efficiently optimize cost and enhance productivity across the organization. With that preamble I would like to take through our quarterly performance we have delivered an aum growth of 16% yoy, reaching an AUM of rupees 207 billion. During quarter one FY25 we disbursed loan worth rupees 11.5 billion maintaining our focus on quality origination. Our net profit for quarter one FY26 grew by 10% YoY to rupees 1.4 billion led by Robert 16% YoY growth in NII on account of 35bps increase in the incremental business yields.
The OPEX to asset ratio declined sequentially by 25bps to 3.46 on a wire buy basis. The increase is primarily due to a higher ESWP cost. Adjusted for this the ratio would have been 3.34 percentage. Our asset quality continues to be pristine with 1/GPT of less than 5% at 4.15% as of June 2025 while GNPA’s was 1.22 percentage. The sequential uptick in the delinquency is seasonal and has already moderated with 1 GPT falling below 4% in July. Credit costs remained with a guidance of 24bps. We continue to maintain our guidance of keeping credit costs below 25bps on a sustainable basis.
ROA stood at 2.94% while ROE at 12.56% reflecting the impact of strategic investment and ESOP related investment in talent. We remain committed to delivering quality, profitable and sustainable growth powered by technology, efficiency and cost optimization. With a robust risk management framework, deep and diversified distribution network and the strong execution capabilities of our experienced team, we are confident of achieving our strategic milestones and delivering the long term value to all stakeholders. With that, ladies and gentlemen, I conclude my prepared remarks and I would now hand over to our CFO Ganshyam Rawat to discuss the financials in detail.
Ghanshyam Rawat — President and Chief Financial Officer
Thank you Sachinra Ji Good evening everyone and warm welcome to our earlier call to provide update. First we are covering a borrowing. I am pleased to share that we have received a fresh sanction from National Housing Bank a gap of full one year and we successfully completed a drawdown of 2 billion rupees in this quarter. This will further provide cushion to cost of borrowing and strengthening our funding position. Our ability to reduce cost of fund reflect the strength of one of the most well diversified and resilient liability franchise in the industry. Staying true to our strategy of innovation in the sourcing, we anticipated a potential easing in interest rates and proactively shifted a meaningful portion of our borrowings to EBLR linked instruments.
This forward looking approach is now delivering results with our liabilities repricing faster than those of many peers. As a result, we have already seen a 22 basis point reduction in overall cost of borrowing from EBLR linked borrowings. With incremental borrowing now being raised at even more competitive rates, we expect continued downward pressure downward rate of interest on our overall cost of fund. We scale up borrowing through the channels. We continue to borrow judiciously raising around 17.03 billion at 7.82% for quarter one FY26. In this quarter we raised NCDs amounting to rupees 4 billion from marquee institutions.
Our average tenure of borrowing continued to be longer than that of our assets ensuring a very positive ALM across all the markets. As of 30th June 2025, total outstanding borrowing stood at 182.86 billion rupees. The borrowing mix as of 31st March 0205 comprised of 49% from loan, 25% from assignment, 14% for NHV refinancing, 11% from debt capital market. We have 38% borrowing linked to external benchmarks such as Repo t bill and mybore, 20% linked to sub 3 month NCLRs enabling faster repricing of nearly 58% of our total borrowing in line with the interest rate movements.
Lender supports remain strong as awas continue to evolve. We maintain access to diversified and cost effective long term funding. Our relationship with development financial institutions remained robust supporting our strategic funding goals as of this June 2025. We maintain ample liquidity and including cash and cash equivalent of and unavailed cascaded limit of 18.77 billion rupees documented unavailed sanction limit of 25.98 billion. During the quarter our cost of borrowing declined by 22 basis point quarter over quarter to 8.02 driven by proactive liability management and repricing benefits now profitability and capital position. Our net interest margin in absolute term grew by 16% year on year in quarter one FY26 net interest margin is a percentage of total assets expanded by 17 basis point year on year to 7.48% in Q1 FY26 we remain well capitalized with a net worth of 45.1 billion and capital to risk weighted assets ratio.
CAR is 43.2% significantly above the regulatory requirement. Now I would hand over to line to our CRO Mr. Ashutosh Atri to discuss the assets quality.
Ashutosh Atre — President & Chief Risk Officer
Thank you Ganjamji. Good evening everyone. I am pleased to share the key portfolio risk parameters with you. Asset Quality and Provisioning Avant is strongly positioned to continue delivering industry leading asset quality. Our asset quality remains within the guided range with one day past due well below 5% at 4.15% in Q1 FY26 and gross stage three and net stage three is under 1.25% stood at 1.22% and 0.84% respectively. We did observe some seasonal uptick in delinquencies during the quarter as is typical in the first quarter. However, one plus EPD levels have already shown normalization trends in July reinforcing our confidence in the stability and resilience of the portfolio.
In terms of geography average 1 GPD and GNPA in our home state continues to remain well below 4% and 1% of AUM respectively. Whereas some emerging states of north continues to be have 1 GPD and GNPA well below 3% and 1% of AM respectively. Similarly, in terms of ticket size of more than 5 lakh, 1 DPD and GNPA remain well below 4% and 1% of KO. Our total ECL provisioning, including that for COVID 19 impact as well as Resolution Framework 2.0 stood at 1.14 billion as of 30th of June 2025. Our disciplined underwriting standards coupled with proactive risk management framework have enabled us to stay ahead of emerging macroeconomic challenges.
While several peers have reported asset quality pressure due to sectoral or regional headwinds, our portfolio has remained resilient. We continue to follow a rigorous credit assessment process, stress tested across multiple economic scenarios and remain selectively calibrated in our exposure to high risk segments. This approach has helped us preserve asset quality which continues to rank among the best in the industry. Barring few isolated pockets, we are not seeing any broad based credit quality concerns. Our early warning systems remain stable and with credit performance well under control, we expect growth to start picking up in the coming quarters.
With this I open the floor to for Q and A session.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask question may press star and one on the touchdown telephone. If you wish to remove yourself from question queue you may press star and 2. Participants are requested to use handsets or luck Sir Question Ladies and gentlemen, we wait for a moment while the question queue assembles. The first question is from the line of Kanal Shah from Citigroup. Please go ahead.
Kunal Shah
So back to disbursements. So you indicated because of change in the recognition the way now we are doing it to the customers. So would this have the recurring effect over next two three quarters and for the entire fiscal as well or do we expect that whatever business maybe we were not able to book it in 1Q that would happen in 2Q and 3Q and we could see a relatively higher run rate of disbursements over next two quarters. And just to clarify this 18 to 20% which you highlighted for FY26 that was with respect to disbursement growth or EUM growth.
Sachinder Bhinder
Yeah thanks Kunal. To answer on the 18 to 20% that is the EUM growth which I referred to. Secondly, you are spot on saying that whatever we’ve had because of this realization as one of the metrics, we will cover that up in quarter two and quarter two. This is a rolling impact which Happens because we had including the check cut, if you would look at we would have had been in a double digit kind of a scenario on the disbursement. But as we trend into the new quarters which is quarter two and quarter three we will see that it’s.
It’s settling down.
Kunal Shah
So when you say like July disbursements have. Are growing at 69%. So what is the run rate now in terms of the absolute number?
Sachinder Bhinder
So on a run rate we are anywhere between close to 600. If I were to really put that in perspective. 550 to 600 is the current run rate which is there.
Kunal Shah
So July we have got to 550. 600 crores.
Sachinder Bhinder
That is a normal range. Yeah, that’s the range. So as we speak we have 16 percentage y1. These are. Kunal. These are fully check realized which we are referring to.
Kunal Shah
Yeah, yeah, yeah. So compared to maybe less than 400 crores which is there on an average for 1q we are back to 550. 600 crores.
Sachinder Bhinder
Yeah, spot on.
Kunal Shah
Yeah. And secondly maybe we saw one of the peers getting the credit rating upgrade. So how are our discussions with the same trader?
Sachinder Bhinder
Hello.
operator
Yes sir, management line has been connected. Yes sir, go ahead.
Sachinder Bhinder
Kunal was there on the call. So we’re referring to Kunal’s question on the rating update. I think Kunal is. Can you connect it to Kunal?
operator
Hold on sir, just give me two minutes.
Sachinder Bhinder
Yeah. In the meantime we can talk about what the question was. It was related to a rating upgrade. We are in discussions and I’ll have Ganshanji really speak on kind of.
Kunal Shah
Check with respect to credit rate. Hello.
Sachinder Bhinder
Yeah, we can hear you now. Yeah, yeah.
Ghanshyam Rawat
As we are almost already close. 200 billion dollar of. 200 rupee of AUM. Basically assets quality is a pristine. We have 1 plus and 90 plus. Our lifetime write off is one of the best in the industry. We have just 11 basis point less in on liability side. We are one of the best franchise. We have the liability side. So by seeing all these things we are quite optimistic and we are engaging with the rating agencies. Our existing rating agencies are CARE and ichra. We are engaging with both of them and we are hopeful they will take up our case positively.
But ultimately we want to say all rating agencies are very independent rating agencies is their own decisions while assessing each and every company. But as a management we feel confident cover case is A. Is a. Is A due for rating positive lookup in the coming quarter.
Kunal Shah
Great. Okay. Yeah, thanks. Thanks.
Sachinder Bhinder
Thanks Kunal.
operator
Thank you. The next Question is from the line of Sripal Doshi from Equities. Please go ahead.
Shreepal Doshi
Hi sir, Good evening and thank you for giving me the opportunity. My question was on Quality Friend. So while there are some highlighted visible in the month of July, but if you look at the 1Q performance versus the other 1Q performances, the DPD deterioration has been much higher. So what would you attribute this relatively higher deterioration in the DPD movement or even let’s say GST plus GST numbers. And I think you also highlighted there. Are some pockets where relatively the GPD depreciation has been much higher.
Sachinder Bhinder
So thanks SRIPAL. There is a 15 bip sequential increase in the GA pay and this is largely seasonal in nature. So historically Q1 tends to show some movement in delinquencies due to timing factors and typically we see recoverings starting in Q2 with normalization by Q3 and Q4 well within our guided range. As for the OnePlus GPT, it has risen approximately 75bps which is 50bps yoy. But again this is a primarily season. Encouragingly we’ve already seen a reversal in July which has closed below the 4 percentage mark indicating the trend is stabilizing. From a geographic lens we had highlighted a few markets where delinquency showed some spike.
In response we have proactively tightened credit norms in those areas. I would like to emphasize that there’s nothing alarming. We understand these markets well and are familiar with their cyclical patterns. Furthermore, we already seen early resolutions happening in the current quarter and are confident of a rollback in delinquencies in quarter two. Lastly, since we report GNP on a loan book and given that the book size doesn’t grow meaningfully this quarter, there is also there’s a 2 to 3 bips impact from a denominator effect which has slightly exaggerated the GNPA ratio.
Shreepal Doshi
Which pockets are these? If you highlight that will be very helpful.
Sachinder Bhinder
Yeah, on the pocket specific as earlier spoken by our CRO we are seeing some part of that in Maharashtra and MP and a little bit on Karnataka.
Shreepal Doshi
Got it, got it. And my next question was to Bencham sir, what percentage of our bank borrowing is linked to Repo and tbil? I said it’s higher percentages but what percentage is it?
Ghanshyam Rawat
38% linked to repo and let’s say TBIL and other EBLR link benchmark which is truly driven by the how the rate of interest is moving interest rate scenario.
Shreepal Doshi
So 62% with the NCLR not 100%.
Ghanshyam Rawat
In 32 in out of that balance is roughly 24 25% linked to up to three month NCLR basically one month. Those are a faster moving bucket when interest rate bank start to passing on the transition rapport link on the McLR front basically
Sachinder Bhinder
38% is linked to EBLR. 22% is a fixed and 40% is linked to MCLR.
Shreepal Doshi
Okay, okay, got it. And one last question on the NHB borrowing side what was the rate that you were able to garner the funds?
Sachinder Bhinder
Generally NHB is when they give the loan There is a various schemes under they provide for the their women ownership empowerment fund they have basically but on an average it comes roughly 7% or some 7% depending upon the what rate they are giving that quarter.
Shreepal Doshi
Okay. Because like I think last quarters you and I liked that there was not material difference between let’s say market link borrowing versus the NSV because the NSB itself did not have much of the funds from the under schemes. So I think now you are saying that there is some benefit under 4G schemes is it?
Ghanshyam Rawat
Yeah, NHP borrowing is always a important piece of funding. It is a long term borrowing. Yeah. But in, in after reduction before rate all these things 3, 3 year, 7 year double A, double A plus rated paper is also brought down to 7 and a half percent in the market basically.
Shreepal Doshi
Okay, this is very helpful, thank you. Good luck for the next.
Ghanshyam Rawat
Thank you.
Sachinder Bhinder
Thank you.
Mr. Rakesh Shinde
Thank you.
operator
Thank you. The next question is from the line of Tintin Shah from ICIC Securities. Please go ahead.
Chintan Shah
Yes. Hello. Yes. Yeah. Yeah. So firstly sir, on the disbursement front. So given that we have moved to a realization based model, had we not moved to this model then what would have been the disbursements for the quarter?
Sachinder Bhinder
As highlighted in my opening remarks, the primary reason for the impact the quarter has been the operational shift and how we recognize the disbursement. Starting Q1 we had moved to check realization based recognition process which means as we now record disbursements only once the funds are actually credited to the customer’s account rather than at the time of check issuance. This change has led to the significant drop in ascension to disbursement conversion ratio which declined 10bps by 275 percentage. Typically once a check is handed over to the customer it takes about 15 to 30 days to get credited depending upon the specific cases and specific geographies and the type of transaction.
As a result, any check which is issued close to 15th or 20th of the month may get realized within the same month effectively pushing the month end for Recognition purpose earlier than actual calendar month end. Having said this, if we would have. It is also important that certain product categories such as MSME and Lappender and NHL segment were not impacted. They operate on 100% RTGS. Disbursement in home loan products like self construction, plot plus construction also saw a limited impact. However, categories like builder purchase, resale purchase were more severely affected due to the check based disbursement structure.
From a business activity perspective, if we would have had the same one, we would have been in a double digit growth and. Yeah,
Chintan Shah
sorry, double digit growth on the. Disbursement versus 5% y decline.
Sachinder Bhinder
Right? Yeah. Right.
Chintan Shah
So that’s on yy basis. Okay. Okay, sure. And so on this builder finance, so how much contribution in our diversion disbursement would be from the builder finance.
Sachinder Bhinder
So this is not about builder finance. It is a purchase where the person is buying based on the allotment by the builder or a resale purchase. And as you would appreciate, this takes its own time and by the time the check realization happens, it has a definite period of anything where it ranges from 15 to 45 days depending upon the geography, the location and the type of transactions.
Chintan Shah
Yeah, so I mean to say that builder finance only means wherever you are financing to the customer who has purchased it from the builder. Like typically this reimbursement would be like 15, 20% of the total dispersants
Sachinder Bhinder
or 5 to 10%. It’s not more than that because we are there in self construction, individual house and primarily in tier 3, tier 5 market. So this is not one of the builder supply led kind of market that we focus on.
Chintan Shah
So I probably. I just missed that number. 5 to 10%.
Sachinder Bhinder
Yeah. Okay.
Chintan Shah
Okay. That’s it for my time. Thank you.
Sachinder Bhinder
Thank you.
operator
Thank you. The next question is from the line of Abhijit Cheddar from Motilal Oswal. Please go ahead.
Abhijit Cheddar
Yeah, thank you for taking my questions and good ignition. Two things. Some of my questions could be a repetition because the line dropped a couple of times. So please excuse me in case it’s a repetition. So first thing is I’m just trying to understand from what you have reported in terms of yields, looks like we have not done any PLR changes during the quarter. So just trying to understand in July and August have we made any PLR changes?
Sachinder Bhinder
We have not made any PLR changes in the quarter.
Abhijit Cheddar
Got it. And what’s the thought process like now? I mean, will we also be reviewing sometime in the third quarter? Is what most of your peers have shared is that the same thought process we also have that PNRs will be reviewed sometime in the third quarter.
Sachinder Bhinder
As you see our cost of borrowing we have seen 22 basis point improvement and we want to see another one more quarter how the pain out entire cost of borrowing then accordingly I think we will take as you rightly said, somewhere second quarter end or in third quarter we will see how it is overall transition of reduction in interest rate by RBI is panning out in overall lending profile. We will decide at that point of time.
Abhijit Cheddar
Got it. And then the only other question that I had was on asset quality. But what I’m trying to understand sir, I mean we have always come across as affordable housing franchise which has the best collection infrastructure. Collection franchise and despite that, I mean a 75 basis points deterioration in OnePlus DPD if my memory serves me right, only during the second COVID wave did we see some such kind of deterioration. So beyond the seasonality. Right. And you also shared that things are looking better. The one plus DPD number has declined below 4% in July. But we’ve seen this kind of deterioration which was more pronounced than just seasonality in this quarter. So can you share with us in this broader forum what is it your what what is it that exactly led to this in your view and what is now kind of leading to recovery? Because a lot of times we hear this is because of macro economy, a weak macro, right. But macros have not really improved in the last maybe one or two months.
So what is it that led to this and in your view what is kind of leading to the recovery?
Sachinder Bhinder
See on the part of one person referring to the COVID it had range beyond 78 percentage. So you never cross 5 percentage on our side as far as the OnePlus is concerned. And as we speak I already highlighted in the month of July which have gone on record to say that we’ve actually pulled back and OnePlus DPT levels have really shown normalization in July. So there is a confidence in stability and resilience. That’s point number one. Point number two in some of the geographies which I have highlighted are average, which is our home state which is a bulk of our AUM plus the northern states where 1 plus is below 4 percentage, GNP is below 1 percentage of this.
Some of the states which I earlier highlighted in the call which is Maharashtra, some parts of MP and a little bit of Karnataka have really shown the spike and some part was season and some part where we’ve actually pulled back on the credit side and really tightening our norms to the segment which we serve actually and specifically if I were to talk about it, this is below in less than 5 lakhs below segment which we’ve seen the elevated levels.
operator
Got it. And so just a follow up there in the state of Gujarat, particularly Surat or somewhere, we’re not seeing anything unusual.
Sachinder Bhinder
No, we’ve not seen any unusual or material deterioration as far as that is concerned or whether it is any of the locations in Gustav. And these also we are cognizant of the fact and we are confident of really pulling it back as we trend in this quarter. And some of the green shoots as already highlighted are the one plus drawback which has happened. And quarter one typically seasonally actually had moved up. So two or three factors which led to that. But July ish really the data and our numbers really talk about what we’ve really put in and the efforts really fructifying into crystallizing the efforts and pulling it back as a credit first and as a risk first institution.
We always believed quality over quantity. So if you look at on the perspective of these states where sanction ratios will be well below the other home state and the states where we have functioned. So we tightened our credit bucket, we tightened our qualifiers when it comes to the segments, the geographies and the products.
Abhijit Cheddar
Got it sir. And so lastly if I can ask you shared that this is a one time impact and we understand something similar in one Q of last year where RBI had come out with a circular right Wherein we said that only after the check is handed over should we recognize disbursement. I’m glad this is one step forward now where we say only when the money gets credited to the customer’s account is where we will show it as disbursement. But just trying to understand on a rolling basis, right. I mean while 2Q 3Q will be better but whatever we lost out in 1Q how will they be made up? Because whatever you maybe hand over in terms of checks in the month of February or March, they will eventually get encashed or credited only in April next year.
Sachinder Bhinder
So I think as you build start building upon that kitty of check which is depending upon the transaction there is a rollover period which start moving across. It’s not that the disbursement is lost when we say that there’s already a check that the transaction which has to be completed depending upon the type of transaction as resale as a builder purchase as a part of those transactions it takes its own time. So unlike the normal time we would have been wary of the fact that there were no check cuts if there were no disbursements. Really on the level of check not happening would have been a concerning fund.
So you build across a pipeline and you build that pipeline and the pipeline has a rollover impact coming across depending upon when it gets credited and when it gets realized in customers account. So yeah the quarter one has an impact but quarter two, quarter three onwards it will have a rolling impact which would be there on AWAAS is always believed on governance and quality first. And I think this is a historical, historic step to really go across and get this on a rig. It’s a big change for the distribution, for the team and for us as well.
But we believe what is right from an institutional perspective, from a governance perspective, from a fair practice for a customer transparency. It’s a bold step by Hawas as an institution.
Abhijit Cheddar
Yes sir. That’s all from my side. Thank you very much for patiently answering my questions and I wish you and your team thanks.
operator
Thank you. The next question is from the line of Bhavesh Karani from Estrom Investments. Please go ahead. Yes, Mr. Bhavish, go with the question please.
Bhavesh Kanani
Am I audible?
Sachinder Bhinder
Yeah, yeah.
Bhavesh Kanani
But I just curious on this realization impacting the disbursements while we are using check as an instrument to disperse the money, any reason why we are not pushing out disbursement through let’s say neft imps so that the credit is faster and even the period that you mentioned 10, 15 days before which the check is credited that sounds unusually longer than one would expect. So this is one. And second more of a clarification. You mentioned that the 1/tpd sequential increase. We have seen is already normalizing in July. So should we expect Q2 1 +. DPD number to be flat year on year say?
Sachinder Bhinder
I’ll answer your two questions. The first question is on the type of transaction. If you look at I highlighted. But when the transaction type is typically an MSME or a LAP or a top up wherein the RTGS place or where the construction is there, self construction, the first disbursement tranche is happening, those are the ones which will go through. As far as RTGS is concerned, the nature of transaction when it is a resale and as you will appreciate resale at its own time between the buyer and the seller negotiating the time when he gets a token for registration and all that.
It’s a long drawn process which really build across when it comes to building the check, getting issued, getting realized, it is subject to the transaction really going through. So that is the nature of the transaction of resale or in the case of fresh builder purchase. So these are typical two transactions where you have to really hold on to the tank and certain geographies like Gujarat, Maharashtra and other places like Karnataka was there where E. Katas and others had long standing queues when it came to completing the transaction. So those are very nature of the geographies and the nature of the places which you really operate in.
But primarily the type of transaction and the nature of the normal sub registrar office really defines how much time it will take. But the positive side if you look at it even with that neither do we charge any interest to the customer nor we realize that for on a disbursement perspective. So we are neutral on that actually.
Yeah. Second question of yours on one day DPT one day DPT July is lower than the last year Q2 and already highlighted that it is below 4 percentage and with our efforts and understanding of risk and credit and part of we are confident of rolling it back and being in a guided range of less than 5 percentage.
Bhavesh Kanani
And I appreciate the confidence you have of rolling it back. Just want to get it specific that when we say roll back are we confident of back to Q2 last year?
Sachinder Bhinder
Yeah that’s what we. Yeah we said that we remain in the guided range of less than 5 and 1 of the one of the green shoots clearly talked about the July numbers have gone across on record to tell the July numbers of already already being there on record. So that gives us a confidence on the part of effort.
Bhavesh Kanani
Sir, last one on the same point while you explained the geographical perspective of where this one plus equity deterioration is coming from any common thread from borrowers profile perspective you know which could have led to this sequential movement.
Sachinder Bhinder
I think one thing which is clear kit spanning out is less than 5 lakhs. If I were to look at in these geographies but that’s not the case in the other geographies like Rajasthan, Haryana, Delhi and UP which I mentioned. These are the geographies in Maharashtra MP and Karnataka. So to say which is less than 5 lakhs which we’ve seen the spike and elevated levels when it comes to the ticket size.
Bhavesh Kanani
Any comments said on occupation type of the borrower which may be more impacted than the others?
Sachinder Bhinder
Nothing as specific which we really have been able to figure that out. So it is actually less than 5 lakh segment which is getting and and smaller cities in that smaller ticket size which is there.
Bhavesh Kanani
Got it sir. Wonderful. Thank you for the Answers and wishing you best of the day.
Sachinder Bhinder
Thanks.
operator
Thank you. The next question is from the line of Ragha from Amit Capital. Please go ahead.
Raghav
Good evening and thanks for the opportunity. I have two questions. One, I noticed that your employees for branch, that number has been going up since last two quarters which is leading to higher growth in employee expenses also. So I wanted to understand what is your strategy in terms of branch staffing and why have you increased people at the branches since last two, three quarters. That’s my first question. And then my other question, you know, in the same backdrop how do you continue to deliver? Now you’re seeing 18, 20% AU on growth but it’s probably a higher employee growth.
Those are my two specific questions. Thank you.
Sachinder Bhinder
So thanks Thakur. See on your question of the employee increase, if you look at quarter four we added branches in the last quarter four that had increase in our employee strength and going forward we will add new branches in Tamil Nadu. As I spoke on the call. So this front loading of the thing is not where we’ve already had the branches so we had to put the manpower in place. So it really aligns with our.
Raghav
Sorry to interject you but you know I have been looking at this trend of employees for branch which is a simple calculation of employees divided by branches. Some quarters ago that number used to be say 15, 16. Now it has come up to 18 and hence the question on.
Sachinder Bhinder
Yeah right. Rather I really appreciate your question. See if you look at we never had the earlier types of digital fulfillment like cac EMIT and India postpone. The CAC is the one which is a new type which is there and which is started giving us green shoots. So that requires for a fulfillment perspective the staff to be there to handle that channel and to engage and to get the business out of that channel. So I think that’s one part as far as digital channels are concerned. Addition of the manpower secondly is on the brand side.
So these two cumulative added actually has increased the manpower and we have not added manpower compared to life. If you look at last two years we never added manpower. Rather if we continued the one, this is a time when the channel addition happened and the branch addition happened and last two years we’ve been into a transformation and transition phase. We completed with that. Now with growth and expansion of the states and geographies in place that should be going to be our focus areas. Sir.
Raghav
Understood. But coming back to the original question, while good to see that you’re adding employees and you’re adding channels but it is also resulting in A higher growth in the employee cost versus the UN growth which is negating the OPEX efficiency narrative that we understand. Right. So I wanted to understand from that perspective also that guiding for growth but also with a higher employee base and probably higher in.
Sachinder Bhinder
Yeah. So Rajesh, we will really appreciate when you put across a branch we should as a franchise in the last two years we were flat on the employee side. Once we’ve added the channels, we have added the branches, we’ve added the employees as a result of it and their conversions or their really protection productivity doesn’t set in in the first couple of months. Right. So I think we’ll have to give the time really for the channel as well as the branches really to complete and increase the productivity range. While we. I look at it as an investment in our employee base which we will be able to monetize in the in the coming quarters.
We are pretty confident on that. And we continue our view of cost optimization which we’ve extended, continued monitored across saying that we’ll try to be operationally efficient. So this is the current investment which is there to support the business growth.
Raghav
Thank you sir. That answers my question. Thank you.
Sachinder Bhinder
Thanks Radha.
operator
Thank you. The next question is from the line of Harshit P from Team G Invest. Please go ahead.
Harshit P
Hello. Hi sir. Am I audible?
Sachinder Bhinder
Yeah.
Harshit P
Hi. Thanks a lot. Sir, I think just had one question to understand it better that there would be a time point of time from which we would have changed the disbursement recognition say somewhere in the start of the 1Q. If I assume then am I right in the assumption that our 2Q number will be higher than a regular because there will be some flow through from the 1q end of the 1q flows and 2q will remain the way it is. And in that context should we assume that if we say for example look the H1 dispersal approach to Q versus the H1 dispersal last year then it will be a like to like comparison itself.
And am I reading it right that that is just a Q1 dispersal shifting to Q2 that is the only impact of the change and H1 versus H1 will be same comparison.
Sachinder Bhinder
Yeah, you are spot on and you articulated it very well. The one which is rollover of quarter one will have an impact and ruling positive impact on quarter two and the real comparison would be H1 versus H1. So spot on on your value of evaluation and articulation of the quantum of the rule over and the shift.
Harshit P
So sir, just on the July number which you said 600 crore, right. So that is Having that advantage of some flow through from June.
Sachinder Bhinder
Yeah, right, right.
Harshit P
Okay, got it. Good. And the second yeah sorry.
Ghanshyam Rawat
So see as you rightly pointed out there is some part of check cut as I talked about it takes somewhere between 1515 to 30 days and some transaction 30 to 45 days. So some which got in the month of May got in June, some part of letter end of May got in the first week of July and the June really transformed and rolled back to the the month of August. So there is a loading impact which really comes in.
Harshit P
Got it. Even though I’m I just trying to see that clarify myself itself and bio y basis will it be like to like comparison or not is what I’m thinking because will it be or not is the one question and second side also to add to it that if we look at the industry, other players itself, I’m not asking names or etc. But are we the only one who are following this right now or has the industry already shifted to a large extent? I’m not sure if some other player would have commented on this point itself but just wanted to get your understanding.
Ghanshyam Rawat
We can’t comment on the industry. I think everybody has their own way but as AWAAS we always believe in best level of governance and fair practice when we deal with the customers. So we discuss at a board level and board has also guided us it’s better to transit from check to real money when we put in the pocket of a customer on that day we did a disbursement as well as we charge the interest from that day.
Harshit P
Okay.
Ghanshyam Rawat
It has definitely impact on the business as Sachin the JI I think mentioned and I think one or two, three, four questions has came on this topic and I think we tried this from outside to answer that questions but definitely it has impacted our business in this quarter and and then after it created a opening buffer then it keep rolling buffer will help us to to maintain our business in quarter or quarter every.
Harshit P
Got it. Got it. Sir, one final thing is. Sorry if I may ask just one last question that our employee per branch of 18 there is slight increase but I am saying that if I compare it to any other peer that number is around 1112 at best. I think even for the peers also that 1112 number is anching is at the highest one. Why would it be that? I’m just trying to understand that is there a rationalization program or what could be the reason that our employee per branch is so high to that extent.
Sachinder Bhinder
So if you look at it ours is a direct distribution Model majority is direct distrib. In the direct distribution model the employee on roles would be higher than what typically intermediate LED or channel LED kind of distribution would happen. So that’s a primary difference when you compare to the cohort which you are really comparing with. So this has a positive impact. If you look at from a perspective of two things I will create really highlight is the quality which we demonstrate over a period of last 13 years. Second is on our btout because it’s direct source.
The control of the customer is much more pronounced with us. So as a result of which our btout percentage is the lowest at 4.9 percentage. So I think something.
Harshit P
So I’m just. Looking at the calculated repayment rate sir, if I just do a basic calculation then that 16, 17% of annualized run rate repayment rate is something which is very similar across all players. And. And so I’m just trying to differentiate so I am not sure within that repayment obviously it will be some BT out some regular payments. But I am just trying to understand that then. And even if you look at the other peers there the intermediate channel would be a part but direct would be a larger part of the sourcing is what our understanding was that. So I’m just trying to understand that from your perspective is this 18 just a matter of the the business model or there is more to do it with it and more related to efficiency which we have room to improve in that case.
Sachinder Bhinder
So I think there are two points. One point is on the BT out if you compare it with the cohort which is there I think and you would really have the numbers and I can really tell you with confidence that we would be the lowest at 4.9% of the BTout. Secondly, I think from a perspective of referring about 18% of that that’s a function of how much is the part prepayment on those really happening fast. But the comparison is the normal rundown which is on the tenure. Second is the part prepayment and third is a btout.
I think that component which we are very watchful and we are mindful is the lowest it is at 4.9 percentage and as you really build digital channels others which are direct source but source through what requires manpower and requires a field force really to complete that and certain part of it really starts investing earlier than finally giving you that productivity.
Harshit P
Got it, got it, got it, got it. Third point, sir, Thanks a lot. Thanks a lot for your time.
Sachinder Bhinder
Thanks.
operator
Thank you. The next question is from the line of Ankit Chada from Bram Capital, please go ahead.
Ankit Chadha
Yeah, just to argue on the previous question that this Q1 investments are weaker than last year. If you put together first star for last year and this year you mentioned that it would be similar, is that right?
Sachinder Bhinder
What similar? Come again.
Ankit Chadha
So first quarter, first quarter disbursement slightly lower than last year. First first quarter. But as Hareed highlighted that GB Q2 if you include Q2 then first half of this year will be similar to first half of last year in terms of this was ninth.
Sachinder Bhinder
No, no, we talked about that comparable funds will come across where you have the rollover of the first quarter coming to quarter 2. We not told that quarter H1 will be equivalent to H1 of the last year. So if that is the impression which you are holding H1 to H1 will be higher. And one we gone out and told about July to July comparison which was there. So I, I went on 550 to 600 crore is the disbursement which is there, which is 16 percentage compared to the previous July. Actually if you were to really look at it.
Yeah.
Ankit Chadha
Okay. This July the disbursement have grown 16% over last July.
Sachinder Bhinder
Yeah. And we are confident because of this rollover and others in July, August, September, we are confident of growth which is in in range of double digit growth. Okay.
Ankit Chadha
And the full year loan growth guidance you alluded to would be 18, 20% the singular one that we should assume on the disbursement.
Sachinder Bhinder
Yeah, see we have guided the EM growth and we are confident with our kind of efforts at quarter two really giving us a good upside. We will continue to be in the range of 18 to 22, 18 to 20% of the EVM side.
Ankit Chadha
Okay. And this is for this year or maybe going ahead also this is a new normalized level of growth guidance that you would carry.
Sachinder Bhinder
So I think once we stabilize, if you look at the quarter one, so quarter one really cover up doesn’t happen. As you really would appreciate. As we cut into the next financial year we come back to our guidance out between 20 to 25 percentage once everything settled down. So I think if you look at it last couple of years, the tech transformation, the transition and this bold step of doing what is right from a fair practice code and customer transparency, all that settling down, that impact would get finally over in the current financial year and the next financial year we will look at 20 to 25 percentage of even growth.
Ankit Chadha
And lastly last year went into say our tech upgradation and we did expect some operating efficiency to kick in. Maybe going ahead do you see that coming anytime soon in this year or if yes, how much of OPEC benefit that we should assume maybe this year or next year?
Sachinder Bhinder
I think we continuously focus and guide across getting the tech transformation and something which we’ve done over a period of time. You look at the three clear cut, demonstrable ones words or the tag which has come down from 13 days to 6 days normal had this tech transformation not been there doing this online disbursement realization, disbursement would never have been possible for us. I think that is a move forward which is helping us to do what we are doing at this period of time because of the underlying tech which is available to us, giving us good governance, compliance and customer transparency for transitioning.
With everything done and dusted with us from a tech transformation perspective, from a perspective of transition, we are there to really get that growth coming back and going and again doing whatever is required. From a cost optimization perspective, as we start seeing that green shoots really coming across, we will continue to guide that, we will work across towards the cost optimization there which is led by technology keeping risk and quality intact.
Ankit Chadha
That was helpful.
Sachinder Bhinder
Thanks Ankit.
operator
Thank you ladies and gentlemen. As that was the last question for the day, I would now hand the conference over to the management for the closing comments. Over to you, sir.
Mr. Rakesh Shinde
Ladies and gentlemen, as we conclude today’s earning call, I want to express my heartfelt gratitude to each one of you for your participation and engagement. The dedication of our team, the trust of our shareholders and the loyalty of our customers have been instrumental in our growth. I express my deepest gratitude to all our regulators and stakeholders whose constant faith and support have been the wind beneath our wings. We remain optimistic about the future and are confident that our strategic initiatives will continue to drive sustainable growth and shareholder value. If you have any further questions or require additional information, please feel free to reach out to Rakesh, our head of Investor relations.
Thank you and have a wonderful time ahead. God bless.
operator
Thank you on behalf of AWA’s Finances Limited that concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you.