Aavas Financiers Limited (NSE: AAVAS) Q4 2025 Earnings Call dated Apr. 24, 2025
Corporate Participants:
Rakesh Shinde — Head of Investor Relations
Sachinder Bhinder — Managing Director and Chief Executive Officer
Ghanshyam Rawat — Chief Financial Officer
Ashutosh Atre — Chief Risk Officer
Analysts:
Renish Bhuva — Analyst
Shreya Shivani — Analyst
Shweta Daptardar — Analyst
Raghav Garg — Analyst
Nischint Chawathe — Analyst
Abhijit Tibrewal — Analyst
Yash Gujarathi — Analyst
Kushan Parikh — Analyst
Rajiv Mehta — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Avas Financials Limited Q4 FY ’25 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 the date of this call. These statements are not the guarantees of future performance and involves 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 then zero on your touchstone form. Please note that this conference is being recorded.
I now hand the conference over to Mr Rakesh Shinde, Head, Investor Relations of Avas Financials Limited. Thank you, and over to you, sir.
Rakesh Shinde — Head of Investor Relations
Thank you. Good evening, everyone. I extend a very warm welcome to all participants and thank you for joining us today on earnings call to discuss the financial and operational performance of our company for Q4 and the full-year FY ’25. The results and the investor presentation have been uploaded on the stock exchanges and are also available on our company website. I hope you have had a chance to review them.
Joining me today is the entire management team of Avas. We will begin this call with opening remarks from our MD, Sachindar; CFO, Rawat; and CRO, Ashutosh Afri. This will be followed by Q&A session. With that, let me now hand over the call to over to your session
Sachinder Bhinder — Managing Director and Chief Executive Officer
Thank you, Rakesh, and good evening, everyone and a very happy new financial year to all of you. Thank you all for joining us this evening. I truly appreciate your presence and continued support. We are proud to share that during this quarter, we achieved a significant milestone crossing the 200 billion mark in AUM.
This is more than just a number. It reflects our unwavering support, guidance and valuable feedback. It also reinforces our commitment to making affordable housing finance and MSME credit more accessible to thousands of families and businesses across. Quarter-four FY ’25 was marked by strong operational performance.
We witnessed healthy traction in customer logins and a robust pickup in the disbursement, which grew 27 percentage QoQ. During the quarter, we achieved our highest-ever volumes crossing INR55,000 in logins and INR20 billion in disbursements for the first time. We have completed upgradation of all major tech platforms, which are now stabilizing.
This was one of the fastest tech implementations in the industry. We believe we have set the foundation for sustainable, scalable and profitable growth. As we step into the new financial year, our focus is clear to fully leverage the state-of-art platforms by strengthening governance, accelerating scale, optimizing cost and enhancing operational efficiencies across the organization.
Ladies and gentlemen, with that, I shall now take you through the quarterly performance and our assessment of the outlook. First, we have delivered AUM growth of 18% Y-o-Y, reaching an AUM of INR204 billion. In-quarter four FY ’25, with disbursed loans worth around INR20 billion, whereas in FY ’25, we have disbursed INR61.2 billion, a growth of around 10 percentage. Our net profit for FY ’25 grew by 17 percentage Y-o-Y to INR5.74 billion.
Our net-worth continues to compound quarter-after-quarter at the rate of around 16 percentage Y-o-Y. Our calculated spread has improved by-15 bps sequentially to 5.87 in-quarter four FY ’25. Our reported NIMs expanded by 37 bps during the quarter to 8.11 percentage. Our focus continues to underwrite quality business with risk-adjusted return.
As a result, our incremental business yield has gone up by 22 bps in FY ’25. At the beginning of the financial year, we had guided that we’ll bring down opex to asset ratio by 25 bps this year, I am happy to report we have delivered a reduction in opex to asset ratio by 26 bps Y-o-Y to 3.32 in FY ’25 as a result of our cost optimization strategy.
Our asset quality continues to be pristine with one plus DPD of less than 4 percentage at 3.39 percentage as of March ’25. Our GNPA was 1.08 percentage, down 6 bps Q-o-Q. Credit costs improved further to 15 bps in FY ’25 versus 16 bps in FY ’24. We continue to guide credit costs of below 25 bps on a sustainable basis.
ROE remained stable at 3.27 percentage and ROE jumped by-18 bps Y-o-Y to 14.12 percentage in FY ’25. We continue to strengthen our distribution network by opening 30 new branches during the FY ’25. Going ahead, we aim to accelerate our branch expansion strategy in the first-half of FY ’26.
The required capacity is already in-place to support this planned scale-up. In addition to expanding our branch network, we continue to prioritize value-accretive partnerships that enhance our digital channels, CSE and imitra ecosystem channel partners, enabling us to tap into new customer segments, particularly new to credit and new-to-mortgage customers.
First, the new 2.0 scheme ensures impact the last mile in more efficient way and benefit our customers in nursely. This scheme aligns well with our mission to provide affordable housing, finance and we expect it to drive higher demand in the products, furthering supporting our growth and expansion across borrowers.
We are committed to deliver quality and profitable business growth driven by tech-led operating efficiency and cost optimization. I’m confident that with our strong risk management practices, diversified distribution reach and execution capabilities of our time-tested team will achieve our milestone and deliver value to our stakeholders.
With that, ladies and gentlemen, I would now hand over to our CFO, Rawat, to discuss the financial in details.
Ghanshyam Rawat — Chief Financial Officer
Thank you, Sachand Raji. Good evening, everyone, and a warm welcome to our earning call. First to provide update on borrowing sites. In terms of liability, we have one of the best well-diversified liability franchise. We have been always borrowing innovative in exploring new avenues for sourcing. This year also, we raised NCD amounting to INR6.3 billion from our two institutional investors.
We will channelize these funds towards retail loans for individuals and the promotion of green home constructions underscoring our unwavering commitment to sustainable and inclusive development. We continued to borrow judiciously and raised around INR61.8 billion at 8.42% for FY 2025.
Our average tenure of borrowing continued to be higher than assets with a positive ALM across the bucket. Total outstanding borrowing as of 31st March those are purchased stood at INR179 billion. Overall borrowing mix as of 31st March 2025 is 51% from term loans, 25% from assignment, 14% for National Housing Bank refinancing and 10% for debt capital market. Lender supports continue To remain extremely strong at Avas. There is access to diversified and cost-effective long-term financing, we maintain a strong relationship with the development furnace institutions. To meet long-term business growth, we have progressed on a co-lending target with the Bank. As of 31st March 2025, we maintained sufficient liquidity in the form of cash-and-cash equivalents, an unaviled CC limit of INR16.52 billion and documented sanction of INR13.47 billion. In terms of financial performance, our net profit for quarter-four FY ’25 grew by 8% year-on-year to INR1.54 billion, led by robust growth in operating income on account of healthy improvement in operating leverage. During the quarter, our spread motivated by-5 basis-points sequentially to 4.89% on account of softening AUM yield by-5 basis-points to 13.13%, while our cost of borrowing remained unchanged at 8.24%. Here 36% of our borrowing are linked to EBLR such as rate, a, my board and 21% linked to Three-Month MCLR, which will allow us faster repricing of 56% borrowing in-line with the interest-rate. Our NIM in absolute terms has increased by 14% year-on-year in-quarter four FY ’25, 13% year-on-year in FY ’25. Our margin NIM as a percentage of total assets during quarter-four FY ’25 stood at 8.11% and at 7.64% during FY ’25. ROA for the quarter stood at 3.37% in-quarter four FY ’25, whereas ROE at 14.4% in-quarter four FY ’25. We are well-capitalized with a net-worth of INR43.61 million and CAR at 44.5%. The total number of live accounts stood at 2,46,000 plus, translating into 13% year-on-year growth. Now I would like to hand over the line to our CRO, Mr Ashutosh to discuss the asset quality.
Ashutosh Atre — Chief Risk Officer
Thank you,. Good evening, everyone. I am pleased to share the key portfolio of parameters this year. Asset quality and provisioning. Avas is strongly positioned to continue delivering industry-leading asset quality. Our asset quality remains within the guided range with one day of past-due, well below 5% at 3.39% in Q4 FY ’25. And gross Stage 3 and net Stage 3 under 1.25% stood at 1.08% and 0.73% respectively. In terms of geography, average 1 plus and GNPA in our vintage state remained within 4% and 1.25% of AUM respectively.
Whereas other emerging states, one BPD and DNK DNPA remained well below 3% and 1% of AUM respectively. Similarly, in terms of ticket size of more than INR15 lakh, one plus DPD and GNPA remain well below 4% and 1%, whereas in case of ticket size less than INR15 lakh, 1 BPD and GLPA remains below 4.5% and 1.5% respectively.
Excuse me, our total ECL provisioning, including that of COVID-19 impact as well as resolution framework 2.0 stood at INR1.01 billion as of 31st of March 2025. With this, I open the floor for Q&A.
Questions and Answers:
Operator
Thank you, sir. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on your Touchstone telephone. If you wish to withdraw yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we’ll wait for a moment while the question queue assembles havea first question from the line of Renish from ICICI. Please go-ahead.
Renish Bhuva
Yeah, hi, sir. On a good set of numbers. Sir, just two questions from my side. One on the asset yields. So sir, when we look at the asset yields, it has been around very narrow range between 13.1% to 13.15 over last 10 quarters despite we’ve been increasing PLR rates, etc. And now since we are entering easing rate cycle and having the 70% floating-rate book, how do you see asset yields settling in near-term? And also as you’ve been highlighting since past many quarters about changing sourcing strategy with more focus on small-ticket loan moving towards pricing, etc. When do you see this sort of reflecting in yields and ultimately be reaching 5% spread. Thank you.
Sachinder Bhinder
Thanks, Renesh. I think as earlier guided by us, our constant endeavor has to increase the disbursement yields and that also structurally by really looking at the risk-assisted returns as we have shared that over the last one year, we’ve increased by around 22 bps. And I think it’s about more the segment rather than the playout on the interest rates which is there.
We’ve had a mix of adjustment according to the product mix, the loan category type and the — using the state-of-art BRE engines for getting the risk conjusted pricing returns in the right format. So Renish, as you would appreciate that the disbursement yields over the last couple of years have been lower than the AUM yield and catch-up becomes very difficult in such a loan growth AUM, which we have built over the last couple of years.
But our endeavor continues to build across on an incremental disbursement yield. And as we speak, we will take another three, four quarters to really build that in a right framework where we try to be around the AUM disbursement yield on an incremental disbursement yields as we continue to increase and step-up our efforts.
Renish Bhuva
Okay. So I mean, so this is more important from a spite perspective, because 70% floating-rate book will sort of almost will continue to impact our yields going ahead. So strategically, how will you address that?
Sachinder Bhinder
So strategically, I think on a — a — I think it is about the disbursement yields to be really sticking out. I think that will actually help across the spreads where in a low — in the falling rate interest scenario, it’s about whether we’ll be able to source the customer at that interest-rate, the answer is yes.
As a team as management, we are fully confident about the fact of our disbursement yield, so to say. So I think in that even in the falling rate scenario, as you speak, Renesh of the lowering of the cost of borrowings, we will continue to build our disbursement yield as I spoke across on three parameters. One is the product time.
Second is the product segment when we say product segment is less than 10 lakhs, currently at around 323 percentage, an inch-up of around 3 percentage really gets the metrics right for us.,
Ghanshyam Rawat
What said, our entire loan book, which is a 70% order floating-rate is linked to our PLR basically. And our PLR is dependent on our cost of borrowing. If we see cost of borrowing also, 70% liability is on floating-rate. Out of that 56% is a floating-rate which is linked to TP link and less than three-month NCILR.
And the remaining 20% is linked to six to one month — one year NCILR basis NCILR. So as we have a positive impact on cost of borrowing, then it will be, let’s say, will pass-on the — on the floating-rate asset side basically. So we don’t think in a falling market scenario, there will be any negative impact on the spread. In the past also we have seen in-part of the same, it always help us to protect some spreads.
Renish Bhuva
Okay. So maybe just a follow-up on that concern, sir. So I know as you rightly said, maybe on a blended basis, 25% to 30% borrowing is linked to ePLR and maybe Three-Month MCLR. So when we look at 50 basis-point of reported cut and when we look at the cost of borrowing, it remains static on sequential basis. So I’m just wondering why the rate cut is not reflecting on cost of borrowing, let’s say, even of 5 basis-points.
Ghanshyam Rawat
Yeah, let’s say in the first-quarter — in the quarter-four, we see only 25 basis-point repo cut. My repo borrowing immediately got impacted In a positive manner. In the next month, this has came in the month of April, we have seen a positive impact there in that MCLR is bank yet to reduce in this quarter. They will start to reflect the interest-rate scenario in this quarter. So we are very confident in-going forward, it will have a very positive — a trajectory on cost of borrowing side.
Renish Bhuva
Okay. Okay. Got it. And just last question on staff cost. We have seen a sharp increase of more than 20% sequentially. So anything you know specific to reason to this?
Sachinder Bhinder
See, Danish, if you look at it, we have increased 30 branches during the year. The last — 25 branches got operational in-quarter four. So that is the one which has increased the branch strength, the consequent employee deployment in that those branches. And going-forward, we are trying now to get front-loading of the branches in H1. So it’s more to do with resource and capacity planning for the branches which we opened.
Renish Bhuva
Got it, got it. So nothing one-off or anything in next month.
Ghanshyam Rawat
I think whatever you see opex increase including manpower coach increased in the quarter-four is investment in the company for the take care of future growth in the company. In the manpower, expansion of the branches toward the major. Or third, importantly, in this quarter, business has grown by around 30% for quarter three, quarter-four, which has a variable-cost — variable-cost is linked to the business group. I mean, our sales stream incentive and other variable expenses.
Renish Bhuva
Got it. Got it, sir. Okay. Thank you and best of luck, sir.
Sachinder Bhinder
Thank you.
Operator
Thanks. Thank you. Thank you. We have our next question from the line ofShaya Shiwani from CNSA. Please go-ahead.
Shreya Shivani
Yeah, hi. Thank you for the opportunity and congratulations on a good set of numbers. My first question is, if you see your Stage 3 provision coverage, incrementally, it has been rising and this time it was above 32%. So how to look at — how to look at it, where should this number stabilize or some math, if you can help us understand on this number?
My second question is, usually in your 4th-quarter, you have a negative net slippage, either your gross slippages are lower or you have better recoveries which come through. This time, I know it’s not a big positive number, it’s still an improvement Q-o-Q, but it is still — it’s not a negative number. So am I missing something over here or has some recoveries not come through or something has happened on that front? These are my two questions. Thank you.
Sachinder Bhinder
Thank you. Thanks for the questions. First, I’m taking a slippage part. You refer our Stage 1, we have shown a good amount of improvement, which is coming less than 4%. Our guidance is 5%, which gives us a confidence that in another one or two quarters, we will come back to less than 1% of our gross NPA. We are confident.
I think nothing too much read-out of that in overall gross NPA level. That’s one part. Second piece, your Stage 3 increase in the provision. As I mentioned in the last quarter con-call, we have moved to new system bolt-on is an international level computation of mobility of default and methodology in which now we moved to two important change we made in the system.
Now the new system take care of every month slippages roll-back and roll-forward, is due to point of time basically. Secondly, economic changes in the behavior, changes in the economic scenario, basically, this also got factored in the systems. So after putting these two factors in the system, last month also — last quarter also it increased a little bit. Our balance has increased has made in the March ’25 in this quarter.
Going-forward, we see it will remain in the same range of, 32% 33% of a of Stage 3 as a requirement.
Shreya Shivani
Correct. So okay, yeah, that is correct. You had changed the ECL methodology in 3Q. So going ahead on — it should be at — sorry, 33% 34% did you say level of the stay
Sachinder Bhinder
Somewhere between some — you take somewhere between 30% to 34%.
Shreya Shivani
Okay. Okay, okay. Yeah, that is useful. Thank you so much for answering.
Sachinder Bhinder
Thank you.
Operator
Thank you. The next question is from the line of Shweta from Elara Capital. Please go-ahead.
Shweta Daptardar
Thank you, sir for the opportunity. Sir, couple of questions. So now that we are INR20,000 odd crores of overall AUM and you also mentioned in your opening remarks about scalability focus. So definitely it’s presumed that scalability challenges sort of pan-out about INR200 odd billion AUM.
But then if I look at — and the larger part of scalability is determined by branch expansion network. But if I look at new branches that were open for the whole of FY ’25, they were largely concentrated or rather fully concentrated in your existing states, whereas you had mentioned earlier that there will be focus also on entering into newer territories and I think that would be the way forward for achieving further scalability. So if you can elaborate on that?
Second is, have we benefited more from securitization volumes as far as margins are concerned, because that run-rate quarterly basis is only climbing? And third question is, how is the NSME scenario sort of panning out because I remember the micro SMEs because I remember last quarter you sort of had mentioned some cautious — you made a cautious commentary that you’re monitoring train trends and there has been strain on macros per se and you mentioned you have stayed guarded. So any scenario change, especially in the S&P segment? Yeah, those are my three questions.
Sachinder Bhinder
Yeah. Thanks,. I think it’s a great one to have crossed 20,000 crore AUM. So as we build, focus is on risk-adjusted returns. And on the expansion side, highlighted, in the quarter-four, it was within the existing states. Even within the existing states, if you look at it, it was 10 plus branches in Karnataka. And as we have always guided that in a range of three to four years, we open up a new state.
So in the next — in this current year, we’ll have one of the another certain states, Tamil Nadu getting opened up with this and we started one branch last year in Hosu just to understand the periphery of. So that’s about our expansion strategy as we move forward in the southern states and continue to expand in their existing states.
Unlike last year, it was a rare ended, which was in-quarter four, we’ll try to front-end this time in H1. So that’s on the branch expansion side and our confidence to really grow inform from scale and reach about INR50,000 crore mark in the next coming five years. And we are confident with our geography strength, with our liability franchise and with our branch expansion and technology implementation, we’ll be able to achieve this mark.
On MSME and overall HA HL home loan, I think if you look at it, we have been optimistically, cautiously optimistic if you look at it and this stems from the fact that there are certain segments in the industry where we see the rising delinquency in MFI, unsecured and rising over leverage of customers and waterfall effects, which can come across because of certain global changes in the tariff form.
It’s too early today, but we’ve been very cautiously optimistic on those segments and we will watch out for the segments emerging, the area-based on risk-adjusted returns. And then accordingly, what we feel across which is right from an institution per se, they will step-up our accelerator. The case in point, as we highlighted that in the month of — in the last quarter, we were at 55 — overall than 55,000.
When you look at it, we had taken a cautious chance of looking at the underwriting perspective, tighten our credit controls, tighten the segment. Our sanctions — login to sanction ratios are around 38 percentage. So that’s an optimistic, cautious chance which we have taken, understanding the situation which is there at the local markets and the local geographies.
As and when it opens up, we will really like to scan out and accelerate in the chemical. But we are optimistic on the way we’ve underwritten and we will accelerate and in the coming months. On the third question which you had,, will answer question.,
Ghanshyam Rawat
Assignment is once the important funding tool. Whenever we have a fortune time in pricing, we do assignment efficiencies, it helps greatly in the ALM management because entire tenure all loans were assigned to the banks. If you see in-full year basis, last year, we have a net upfronting on unwinding net was INR43 crore. This year it is INR46 crore, just 8%, 9% increase in overall basis on a full-year basis, whereas our total income — interest income has grown almost at 18% to 20%. Our all assignment income is an outcome and main focus was to get a best deal for assignments from the banks and lending big partners and do manage our funding program as per our ALCO management.
Shweta Daptardar
Okay, sure. Thank you and best luck.
Sachinder Bhinder
Thanks, sir. Thanks.
Operator
Thank you. We have our next question from the line of Rakhav Garg from Ambit Capital. Please go-ahead.
Raghav Garg
So hi, good evening and congrats on the — on this quarter’s results. I have three questions. One is your home loan business for the quarter are about 3% lower compared to last year. Why is that the case? Is it because you’ve tightened your underwriting criteria. If that’s the case, then can you just indicate to what extent have your approval ratios come down? That’s my first question. Thank you.
Sachinder Bhinder
Yeah. Thanks,. I was second that despite the logins being at 55,000, our conventional login to sanction ratio which was hovering around 42 percentage, for the quarter, it was around 38 percentage. So this translated into a lower disbursement despite the fact that we had a right income. And as you said that looking at the scenario which is emerging, we were cautiously optimistic what to underwrite in the segment which we saw.
And on your part of HL growth, there has been a growth of around more than 5 percentage on the full-year. On the full-year basis what you were referring, so I think that little two. So if you refeat that I will referring to for the quarter, I was referring to — yeah. So we continue to trend in a way which is cautiously optimistic considering that as you are fully aware about the local scenarios in the geographies and the rising delinquencies in the NFI, we are cautiously optimistic.
So we’ll continue to trend in that in that range. And we continue with our endeavor to be around 20 percentage of AUM, that would be our endeavor in the coming times.
Raghav Garg
On the, sir, will that brings me to my second question. I think this has been partly answered previously. In last six, seven years, barring COVID year, you’ve usually seen net recoveries in the 4th-quarter, but this time there was a of minor one. But also when you look at the stock of GNP in 4th-quarter, it’s usually lower by about 5%, 10% quarter-on-quarter versus 3Q. This time it’s actually marginally up. Can you please talk if there are any collection issues or repayment issues which you are facing or maybe at the industry level and for what reason?
Ghanshyam Rawat
We — as I explained earlier, our bouncing trend is in control. It’s similar to what we see earlier. And our one-day past-due is already came down to less than 4%, which give us a confidence our rollback of NPA will happen in next one to two quarters. We didn’t see any specifically any challenge in any particular state. It’s almost a similar behavior in all — across our states and we are very confident it will come back to less than 1% in the next one to two quarters.
Raghav Garg
Understood. Sir, my last question on funding cost. So incrementally, I think you are raising at 8.5%, probably book cost of about 8.2%. I’m also considering that 70% of the asset stars are right now. Do you think that you know incremental cost being higher than book cost and yields coming down because of the repo rate cuts, your spreads could decline further from here on from I think
Sachinder Bhinder
Incremental cost in the — because last year was interest rising scenario in which a fresh borrowing cost was definitely higher than my own book, let’s say, older liability book, which is seen in the still quarter-four, but we are seeing and observing this trend will get changed in the — in the coming quarter where the new borrowing will be far or lesser than my total liability book and older liability book also get reset in faster mood as we see the repo card and MCLR rate cut, rate cuts, that will give a further positive towards my old liability book. So I hope that clarify your question.
Raghav Garg
Sir, it does, but your assets will also get repriced lower towards.
Sachinder Bhinder
Yeah, as I mentioned earlier, my assets are linked to our PLR. Our PLR is completed based on the cost of borrowing basically. So obviously, there is always a lag impact of what we see our change in the PLR and the change in the cost of borrowing.
Raghav Garg
Yeah. So you on the PLR is linked to funding cost, right? Is that — did I hear that right?
Sachinder Bhinder
Pardon?
Raghav Garg
So did I hear it right that your PLR is linked to your funding cost?
Sachinder Bhinder
Yes. Yes. They are very much high.
Raghav Garg
So eventually then if the PLR, if the cost of fund has to come down, then PLR will also come down, right? And then to that extent the —
Sachinder Bhinder
It’s not — it’s not that 100% linkage. There is always a time lag impact in that — in that in that scenario. See,, there are two points. One is the time lag impact, which was referring. And secondly is the disbursement yields with which you underwrite the business. I think in the earlier conversation also, I guided that we will continue to hold-on to our disbursement yield despite in a lowering rate scenario and that is on account of structural adjustments on the product-type and the product segment per se, as we speak about less than 15 lakh, less than 10 lakhs where you have the yields which are not so interest-sensitive, but it is about how you underwrite and how you manage the risk out on the risk-adjusted returns..
Raghav Garg
Okay. And just one last question, the total employee counts as of mentioned that we both off-road and off-round
Sachinder Bhinder
Yeah. So that is 7,223. And as this is — it is an increase because we had trended branch expansion in-quarter four as a result of which this was addition which was there and the increase in the field force at the front-line, which is our RO because we are dependent on the full hog sourcing from a direct and that had an immediate impact on increase in our logins for the first time we saw the quantum of logic at around INR55,000.
And as we enter into the — as we already entered into the new financial year, the ecosystem tie-ups which we have done would require the field force to complete and execute the leads which get generated from our eco channel partners like CSE, and India Postbank.
Raghav Garg
So for this INR7,200 is the total of plus ongoing or just ongoing.
Sachinder Bhinder
Yeah, this is the one which is the total employee strength, which is there of ours, 7,223.
Raghav Garg
Okay. Thank you.
Operator
We have our next question from the line ofChawat from Kotak Institutional Equities. Please go-ahead.
Nischint Chawathe
Yeah, hi. Just wanted to get a little bit of a sense on growth trajectory. This time we have kind of come off a little bit versus the 20% growth guidance that we have been talking about. So how should we see the trend in disbursements and loan growth going-forward?
Sachinder Bhinder
So Nichard, it was — in the quarter-four, we continue to guide around 20 percentage of the growth. I understand that there is a certain amount of slippage which is there from a growth perspective on the AUM. It is about INR120 crore INR125 crores short to reach that kind of level. But we had in-quarter four, despite that we had stocked, we were very cautious on the kind of underwriting which we have done.
As a result of which there was a — against a normal 42 percentage log into sanction ratio, we were at around 38 percentage. So as we step-in — step into the new financial year, we are confident with the increase in the kind of log-ins and improvement in certain areas where the geographies and the overall credit behavior will show off. We’ll be able to accelerate our path in the this financial year and in the coming quarters actually.
Nischint Chawathe
No. So I was just curious, I mean, how do we sort of reconceal this? I mean, I know we need to sort of protect our spreads because of which we are kind of going a little more granular, going a little bit down the risk curve. But at the same time, probably what you seem to be indicating is that this may not be the best time to do it and your log-in to disbursement ratio has — sorry, login to sanction ratio has come down. And arguably if you kind of continue to go down the curve or go down lower tickets, this ratio will kind of remain low or maybe come off as well. So how do we really reconceal the conflict between growth and margins?
Sachinder Bhinder
So I think from a margin perspective, we are very clear that we want to — whatever we’ve built across in the last year, we want to further scale-up on the margins. And herein, when we talk about, we are confident that we will get across to more than 20 percentage of disbursement growth in the current year. I think that will give us confidence to really get back to our guided 20 percentage CAGR, what we’ve always guided on that path.
Again, in that Nashil, it is about the product segments, which we are focusing on. So. So I think the learning experience which got in the last year will actually reflect across in getting the quality and getting the customer type right which was there, which we’ve learned in the last one year. So we are confident based on our underwriting practices, our distribution strategy and our incoming input which is there, which is more refined are giving us confidence of growth of around 20% plus on the disbursement, finally enabling on the AUM growth on the guided path of 20% growth.
Nischint Chawathe
And finally, quite a few of your peers have focused on fee income, insurance, distribution, etc. So do we see any of those levers that you’ll be working on?
Sachinder Bhinder
Yeah. So we will be on a — from a customer perspective and a fair practice court and what is right for the customer, we will continue to do and play-out on that, which is rightfully securing the customer from a perspective of credit insurance in case of any eventually, the financial burden of paying the EMIs does not do hotel on the other customers.
So certain part of the fee income really gives a little spike when you are there in the less than INR10 lakh, less than 15 lakh income for sure. So we will try and push what is right for us from a fee income perspective and insurance coverage, which covers the credit insurance for the customer more from a production perspective rather than being a pure revenue source.
Nischint Chawathe
Sure. So fair to say that fee income and other income kind of broadly goes on — grows in-line with loan growth.
Sachinder Bhinder
Yeah. And secondly, the ones which we’ve invested in new states and the last couple of branches and the last quarter-four, which was like year ended, 24 of them which came across in the quarter-four, which will start firing in this year. So those are rare ended. So there also we expect that growth to really coming from the additional 30 in the last year, but quarter-four was ’24. So that also will help us to really build the disbursement and the growth momentum.
Nischint Chawathe
Got it, got it. Thank you very much and all the best.
Sachinder Bhinder
Thanks.
Operator
Thank you. Thank you. We have our next question from the line ofAbhijeet Tebrewal from Motilal Oswal. Please go-ahead.
Abhijit Tibrewal
Yeah. Good evening and thank you for taking my question. Sir, I’m just kind of circling back to the provision cover that we have increased in this quarter for a long-time, I mean this number used to be in that range of, I would say, 27% to 30% thereabouts, right? And we did share that we have changed the methodology.
But my question here is today, when we look at the large housing finance companies who are predominantly operating in the prime segment, they are all maintaining provision covers of, I would say, say 40% to 55%, some of them even 60%. But if I look at all the affordable housing finance companies, most of them have until, let’s say last quarter even you had provision cover of 30%.
So today, I mean, I mean I see provision coverage of about 25% to 30% and now with this change in methology, it’s increased to about 32%. Do you think there is a case that over the course of time you as well as all only affordable housing finance peers will have to increase their provision covers towards that 40% 45%, 50%.
Sachinder Bhinder
So Abhijit, this is a — you know we all adopted ECL methodology and ECL methodology is based on your past few year behavior basically. In our model, we took seven-year behavior methodology in Real-time, real — how the asset has flown even various bucket of time, a different point of time. When assets become NPA, how much days it take to roll-back as a standard asset, how much they time take to close that asset basically, what loss we make and when we recover that assets basically.
And always also we get considered net present value of time will value also got also got factored in this value — in this loss report basically. So it’s based on in visual each company, last seven, eight years, our behavioral book didn’t show more than this result. We already built-in and we don’t see it going to be, let’s say, any major change going to see. They don’t behavior. We are confident it will remain between 32% to 34% somewhere — somewhere of my NPA provision.
And an overall basis, it will remain somewhere — like overall today we are at 0.66%, it will remain less than 0.7%. So it’s got expansion.
Abhijit Tibrewal
Thank you. The second question that I had is sir, I mean, if I look at I mean the runoff in the book looks slightly elevated by you did acknowledge that there is an endeavor to maintain the disbursement yields by capitizing on the product-type, the product segment. Just trying to understand, I mean, having seen already two rate cuts, maybe a third one in the offering in the near-term. Has anything changed in terms of aggression of your HFC peers or PSU banks, which would warrant that maybe going-forward there could be either higher BT pressure or pressure on yields to retain customers.
Ghanshyam Rawat
So I think, there are two-parts to it. One part is that in the segments which we serve, we do not have PAC and others really competing in. As we speak, we are around 20 percentage of new to credit and 92 percentage is new to mortgage customers. So I think from a segment perspective, from a competition perspective and the market perspective, the PSUs and the bigger range housing finance companies do not really compete in this segment. That’s one.
Second is the segments which you serve have an average EMI range of INR12,500 and an average ticket size of 11.545 lakh to INR11.75 lakh in that a marginal increase in the EMI doesn’t have such a big bearing cost when it comes to the rate increase or being such so much of interest-sensitive in the segments which we serve.
Thirdly, from a perspective of having already being there on the rate cycle and the yields which are already low, I think the chances of probability of the BT actually reduces. That’s one. Secondly, I think we work very intensely on our models to really predict the customer behavior from a perspective of the customers’ chances of doing a balance transfer. So the customer behavior earlier the model was reactive, then we got it to a steady-state model.
Now it is proactive really giving us 30 to 60-day period before the customer really thinks about looking at BT. As a result of which if you look at our BT outs have been steady and not gone beyond 6%. Soon that is resulting in the higher run-off in the book I think there may be some gap. Otherwise overall basis if we see run-off is a — last year was 17.2% of our opening AUM. This year also it is 17.4% of opening AUM.
I don’t think so. Is there any change in obviously, assets are getting older, so normal EMI in EMI, the principal components get increases. Beyond that, we didn’t see any change in our prepayment behavior in the — in overall book.
Abhijit Tibrewal
And then the last question that I had, while you already discussed a lot on spreads, I’m just trying to understand going-forward, I mean, are we going to work with the base-case spreads of 5% or is there at least an internal target to increase further in the coming quarters and yes.
Ghanshyam Rawat
Our first target and first our efforts are there to go back to 5% plus spread that we are Are working around that. As Sachander jee mentioned, our disbursement yield has already got improved 25 basis-points. We are making continuous efforts there to increase our disbursement yield. And Abhijit, you are doing analyst of this space last so many years and you will appreciate that in Avas also if you refer my earlier falling market interest-rate scenario in which in 2019, we were at a 5% spread when interest-rate falling market we able to have an increase in 50 basis-point. I’m not concerning, I’m not committing this same level will be in the coming year falling market, but generally, it gives a positive impact on the spreads that we want to mention.
Abhijit Tibrewal
Got it. Got it. Yes, sir. That is very appreciated. Thank you so much,. That’s all from my queue.
Ghanshyam Rawat
Thank you. Thanks,.
Abhijit Tibrewal
Thank you. Thanks, sir.
Operator
Thank you. Thank you. We have our next question from the line ofYash from Citigroup. Please go-ahead.
Yash Gujarathi
Hi, sir. Thanks for the opportunity. Sir, on the login to sanction ratio, which you mentioned, which has come down from the 42% to 38% level. So any specific geographies contributing to it? And what trends or indicators would suggest it normalizing up to, say, maybe to 40% in the couple of quarters or something like that?
Sachinder Bhinder
So on this, yes, these are couple of states which are in the western part of India, specifically where we see this. And some part where we were cautious on the MFI kind of exposure and where we see the whole leveraging happening. So I think these are the broad segments and the states where we felt that it is the time to really to look at it what is right to be underwritten with a risk-adjusted written. So as we move into the coming months that we see the behavior to be right, we will accelerate and we will step-up okay.
Yash Gujarathi
Got it, sir. And sir, on the margins front again, just to check, so about 36% of the book is linked to repo, which would have faster repricing, but fair to assume the — are there rest of the almost 50% book will take — there would be some time lag and yields — sorry, margins could be under pressure in 1H because of the time lag and eventually the catch-up.
Ghanshyam Rawat
Yeah, yeah. Yeah, your assessment is looks — looks okay. But we have almost 40% borrowing — 50% borrowing. In fact, fact, 56% borrowing is linked to, debuilding, Three-Month MCLR where we see faster impact and then remaining borrowings will eventually when banks will start to translate that book at in their MCL asset will have a positive impact on it.
Yash Gujarathi
Got it. And sir, lastly on the opex bit, fair to assume that it will again be elevated in the 1H as well. And just wanted to check if you have called out any specific number of branches for the full-year or for the — for 1H.
Ghanshyam Rawat
I think is it more or less at a stabilization level of OpEx to AUM on a full-year basis, as you mentioned, there will be growth impact on opex side and there will be the technology transformation will also have positive impact. So in-full year basis, definitely we will have a saving 10 to 20 basis-point.
Yash Gujarathi
Okay. So 10 to 20 basis-point saving on the opex for the FY ’24.
Ghanshyam Rawat
On full-year basis?
Yash Gujarathi
Yeah, OpEx to assets. Got it. That’s it from me. Thank you.
Operator
Thank you. We have our next question from the line of Kushant Parik from Morgan Stanley. Please go-ahead.
Kushan Parikh
Thanks for taking my question. This is more on-again the margins. Just wanted to understand what is the current differential between the disbursement yields and the book yields? And also, I mean, I understand that we probably bridge this gap in the next three to four quarters, but is there — is there a strategy to increase the disbursement yield over the book yield? And I think what would our threshold be? I mean, will we just look for 5% plus kind of spreads or can we go even higher than that?
Sachinder Bhinder
So there are two-parts to it. We continued our approach to increase our disbursement yield. And as you spoke we increased by 22 bps in the current year. Again, this is a mix of both risk-adjusted returns on the product segment. The customer type and I talk about less than 10 lakhs, less than 15 lakhs, that’s where we are trying to step-up where you get risk-adjusted returns at a higher-rate.
So this inch up on the disbursement yields really to help us to get to a level where we will be nearing our AUME that’s been guided and our endeavor is there and we’ve seen that marginal increase by about 25 bps actually happening this year. Now this is aided by — again, we talked about that certain of our BRE related stock there.
We are able to get the pricing risk right based on the customer type and the risk which we are underwriting. So the mix of these three things actually have helped us and we will continue to build-on those segments and those areas where we are able to inch a price with the right kind of risk-adjusted returns?
Kushan Parikh
Understood. So that should mean that these spreads will continue to increase even beyond 5% or probably the mix will be stabilized at around a 5% threshold.
Sachinder Bhinder
So we’ve guided for the 5%. We will — our endeavor is based to really inch up our disbursement yields in the right proportion with risk-adjusted returns. Any fallout or any momentum which we get because of cost for bearing would be an added advantage, which will be there as what earlier than talked about in the falling rate scenario. We had some spikes which happened because of the lower-cost of borrowings.
Kushan Parikh
Understood. Okay. Thank you. That’s all. That was my question.
Sachinder Bhinder
Yeah. Thanks.
Operator
Thank you. We’ll take our last question from the line ofRajiv Mehta from YES Securities. Please go-ahead.
Rajiv Mehta
Yeah, hi, good evening. Just a couple of things. Sir, you spoke about incremental business yield being higher 22 basis-point in FY ’25 versus previous year. But this will also have a product mix benefit in play. So if I were to ask you about incremental business yield in pure home loan, how much has that improved in FY ’25 versus, say, say FY ’24.
Sachinder Bhinder
I think sequentially on the different product mix, the product-type we had an inch up. So this average out to really increasing in the overall yield. So it was around 17 bps, if I to talk about on a normal SL portion, which had an increase in index. Yeah. So the mix, the one is the mix and second is about the incremental increase in the segments of HL which really helped us to get the yields up?
Rajiv Mehta
Correct. And are you seeing right now competition moving down their incremental lending yield as yet either in-home loan or lap or do you believe that they will only move down once they see their own cost of funds going down?
Sachinder Bhinder
I think in that segments which we operate, we are primarily new to credit segments and new to mortgage segment in this segments, we don’t see it unlike a prime segments where you have the rate and rate being — the rate-sensitive customer and being the playout which happens in that market.
I think we are in the segments which we serve, still we are — the space is good enough and the segment is good enough that you don’t see that kind of competition, which you see in the normal prime markets where it becomes interest-sensitive or a rate-sensitive customer depending upon the areas where they operate into your own markets.
Rajiv Mehta
So your pricing, your VRE led efficient pricing of segments should not mean that you lose some incremental market-share if there is an opportunity, right?
Sachinder Bhinder
Yeah. No, it will actually further add-up. See, it will help us to do the right risk-adjusted return at the right kind of inching up the disbursement in and building up or the or the momentum on the disbursement with increased disbursement yields?
Rajiv Mehta
Okay. And just one last thing, are we targeting any specific disbursement growth for home loan just for home loan? I mean You said that you want to grow disbursement by 20% for next year, the ballpark. But if I were to ask you within 20% ballpark number, what is the target for home loan?
Ghanshyam Rawat
In the entire loan book and the assets and mix basically, we have our endeavored to maintain at a home loan between MSME and LAP loan mix is a 65% 35% ratio at a loan book level.
Rajiv Mehta
Okay. Get that. Thank you and best of luck, sir.
Sachinder Bhinder
Yeah, yeah.
Operator
Thank you. Ladies and gentlemen, this would be the last question for today. And I now hand the conference over to Mr Sachendra for closing comments. Over to you, sir.
Sachinder Bhinder
Thank you. 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 loyalty of our customers has been instrumental in our growth.
We aspire to reach a milestone of INR500 billion in assets under management and in the coming five years and broaden our horizon as a pan-India player. I express my deepest gratitude to all our regulators, stakeholders whose constant faith and support has 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. And thanks, God best.
Operator
Thank you. Thank you, sir. On behalf of Avas Finances Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines