Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
Aditya Birla Capital Ltd (NSE: ABCAPITAL) Q4 2026 Earnings Call dated May. 04, 2026
Corporate Participants:
Vishakha Mulye — Managing Director and Chief Executive Officer
Rakesh Singh — Executive Director and Chief Executive Officer
Unidentified Speaker
Pankaj Gadgil — Managing Director & Chief Executive Officer
A. Balasubramanian — Managing Director and Chief Executive Officer
Mayank Bathwal — Chief Executive Officer
Kamlesh Rao — Managing Director and Chief Executive Officer
Analysts:
Chintan Shah — Analyst
Unidentified Participant
avinash Singh — Analyst
Nitesh Jain — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Q4FY26 earnings conference call of Aditya Birla Capital Ltd. 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 and then zero on your touchtone phone. I now hand the conference over to Ms. Vishaka Molye, MD and CEO Aditya Aberla Capital Ltd. Thank you.
And over to you, ma’. Am.
Vishakha Mulye — Managing Director and Chief Executive Officer
Thank you and good evening everyone and welcome to the earnings call of Aditya Birla Capital for Q4 of FY 2026. Joining me today are senior members of my team, Bala Rakesh Pankaj, Kamlesh, Mayank Singhi, Vijay and he. I will cover our strategy, financial and business performance followed by discussion on performance of our key businesses by our business CEO. Indian economy continues to demonstrate resilience amid heightened global uncertainty and supply chain disruption arising from the war. Underlying growth momentum in India remains strong anchored on domestic demand and investment activities.
While external volatility and energy prices pressures warrant closed monitoring. Inflation remains broadly manageable and policy contentions are safe. At Aditya Birla Capital, we continue to focus on driving quality and profitable growth by leveraging data, digital and technology. I’m delighted to share that in excellence. We concluded our equity fund raise of 2,750 crore rupees in Aditya Birla Housing Finance from Advent International post receipt of all requisite approvals. Now coming to the financial and business performance.
Our consolidated profit after tax excluding the one off item increased by 30% year on year to 1,124 crore rupees in Q4 of FY26. For the full year of FY26, including the one off item, a consolidated profit increased by 21%. Our total consolidated revenue grew by 12% year on year and 14% year on. Sorry. 12% year on year in Q4 of FY26 and 14% year on year in FY26. Moving to growth across businesses during the quarter, we built on our strong growth trajectory across our businesses seen in the previous quarters and further strengthened our market position.
Disbursement in nbsp business grew by 28% year on year to Rs. 24,950 crore rupees and in HFP business by 34 to 7,980 crore in Q4 of FY26. Our NBFC portfolio grew by 27% year on year to around 1.6 lakh crore rupees. Driven by growth in secured and unsecured businesses and personal and consumer loans. SSA portfolio grew by 53% year on year to about 47,450 crore rupees. In insurance businesses, we remain among the fastest growing companies. In FY26 the individual first year premium for our life insurance business grew by 15% year on year and gross return premium for our health insurance business grew by 39% year on year.
In our AMC business, the quarterly average mutual fund AUM grew by 14% year on year to about 4.35 trillion rupees. Moving to profitability the strong growth across businesses was accompanied by increase in profitability. In nbsp business the profit after tax increased by 27% year on year to 825 crore rupees. In Q4 of FY26 the RoA increased by 6 basis points year on year and sequentially to 2.31%. In HSC business the profit after tax doubled year on year to 200 crore rupees in Q4 of FY26 and 647 crore rupees in FY26.
The ROA increased by 63 basis points year on year and 11 basis points sequentially to 2.07%. Despite the changes in GST, there was an improvement in the profitability of of our insurance businesses. In life insurance business our BND margin expanded by 260 basis points year on year to 20.6% and in the health insurance business our combined ratio improved from 105% in FY25 to 103% in FY26. Moving to quality of Portfolio across our businesses At Aditya Birla Capital we follow prudent risk management practices with a strong emphasis of return of capital.
We saw a strong quality trend across our businesses despite volatile market conditions and uncertainties in the operating environment. The GS2 and GS3 loans in NBSC businesses declined by 38 basis points sequentially to 2.42% and HFC business declined by 19 basis points sequentially to 0.76%. We have seen no material impact from geopolitical tensions in West Asia on our portfolio. However, we continue to be watchful and will calibrate our strategy by closely monitoring the ongoing development. In our AMC business, the fund performance remains strong with over 75% of Equity AUM in top two quartiles for one year return.
Moving to digital and technology, we continue to leverage data and technology as a core growth enabler. AI is now becoming a core operating layer for us and we are scaling up its users across various areas such as underwriting, sales, voice calling, audit and compliance, customer service and operations. This will significantly enhance customer experience, reduce turnaround times and improve productivity. Our business CEOs will take you through the select use cases in more in detail. At Avita Birla Capital we remain excited about the long and medium term opportunities in the Indian economy despite the near term uncertainties and volatility.
Our strategy, disciplined execution and building blocks that we have put in place give us the confidence to sustain growth, gain market share and improve profitability while maintaining strong portfolio quality across our businesses. We will continue to closely monitor the ongoing developments in the macroeconomic environment and take appropriate interventions to recalibrate our strategy if necessary. Now I request Rakesh to take us through the performance of NBFC Business. Over to you Rakesh.
Rakesh Singh — Executive Director and Chief Executive Officer
Thank you Vishakha and good evening everyone. I’m pleased to report a very strong closing of the financial year 2026. In quarter 4 FY26 our AUM reached to rupees 1 59,916 crore reflecting an 8% quarter on quarter and 27% year on year growth. At this growth rate we would be amongst the fastest growing diversified NBFCs operating at this scale. Bottom line delivery remained robust with profit after tax for the quarter growing 7% sequentially and 27% compared to the same period last year. We nearly doubled our AUM and profits in the last three years, demonstrating a track record of building a franchise that delivers industry leading growth with strong commitment to scale profitably.
This year has been a remarkable journey for us and I would like to share a few milestones achieved. First, our AUM crossed 1.5 lakh crore in Feb with our focus segments retail and msme AUM surpassing 1 lakh crore. We delivered highest ever quarterly disbursement of rupees 25,000 crores up 16% quarter on quarter from an AUM growth standpoint in quarter four. Nearly 85% of the growth came from retail and MSME segments. Udeo plus our proprietor B2B platform nearly doubled in scale this year with its AUM crossing 5000 crore.
From asset quality point of view, our credit cost was at 1.04% in quarter four is our lowest ever. Now coming to quarter performance and starting with the new business sourcing, our disbursement for the year was up 25% driven by strong traction in retail and MSME, our focused segments for growth. Together these Segments accounted for 68% of the total disbursement and grew 33% year on year. This performance reflects sustained improvement in employee and branch productivity enabled by our deliberate re engineering of customer journeys end to end.
Since the start of the year, turnaround time across retail and MSME product journeys have reduced by over 30%. These gains have been powered by deeper integration with digital public infrastructure, efficient file processing and upgrades to our underwriting platforms with best in class rule engines and refreshed scorecards. Collectively this has improved the speed and precision with which we calibrate risk cohorts throughout the year, eliminating the need for manual rework. This year we also expanded our MSME proposition with new product launches which has seen a very encouraging response.
In our personal and consumer business we see steady momentum returning with disbursement growing by 60% for the full year to rupees 18,738 crores. As a result, the AUM grew 8% sequentially and 38% year on year to Rs 21,432 crore. The mix in the total AUM improved by 106 basis points to 13.4%. This portfolio has seen continued cohort corrections throughout the year. Also, initiatives such as use of AI calling bots and behavioral analytics have led to higher front end efficiency and nearly half the flow rate compared to last year resulting in superior asset quality outcomes.
The gross stage 2 and 3 for the person and consumer loans portfolio reduced by 50 basis points sequentially and 260 basis points year only. Gross stage 3 for the segment stands at 1.3% as of March 2026. In quarter 4 we disbursed rupees twelve thousand and twenty three crores to an SME registering at 21% sequential growth. As a result, our MSME book grew by 31% year on year to rupees 91,451 crore comprising 57% share in the overall out of this 81% is secured and 19% is. We continue to be a category leader in secured MSME segment in terms of growth and asset quality.
Our secured MSME aum grew at 27% year on year which is faster than the industry growth. The asset quality for this segment continues to be healthy and best in class on the back of strong cash flows and the collateral. The gross stage three for this segment stands at 1% down 20 basis points sequentially and 50 basis points year on year. In our unsecured business loan segment we saw the disbursement grow at a healthy 28% year on year in quarter four. This growth comes on the back of consistent risk cohort calibration and sourcing undertaken throughout the year.
Growth in this segment benefited from new product launches which now comprise nearly 20% of with our proposition for professionals doing exceedingly well. Our proprietary MSME platform now supports a full suite of trade credit solutions powered digitally and is recognized amongst the top non bank finance on TREADS Exchange. This growth is also supported by strong improvement in asset quality. With GS2 and GST down 90 basis points sequentially. Gross stage 3 for unsecured business loans stands at 1.4%.
Unidentified Speaker
40%
Rakesh Singh — Executive Director and Chief Executive Officer
Of the gross stage 3 book is covered under the Government Guarantee Scheme excluding which the gross stage is at 0.9%. Our corporate segment grew 3% quarter on quarter and 15% year over year. This segment now comprises 29% of our overall portfolio. In line with our strategy to focus on retail and SME business, asset quality in our wholesale business also continued to improve that GS2 +GS3 reduced by 60 basis points year earlier. Coming to portfolio quality at an entity level, our Gross Stage 2 and Gross Stage 3 stands at 2.4% improving by 38 business points sequentially and 136 basis points year on year.
At these levels, our gross stage two and stage three would be our lowest ever in the last five years. I further wish to highlight that about 72% of our book is secured. Our overall stage three book is well provided with a PCR of almost 48% which has improved by 358 basis points over last quarter. The impact of improving asset quality is clearly visible on credit cost as well. Our credit cost for the quarter reduced by 19 basis points to 1.04. The full year credit cost reduced by 13 basis points to 1.18%.
In fact, our credit cost has been one of the lowest among diversified NBFCs and lowest we have seen in the last five years. Moving to profitability, our net interest income for the full year has increased by 18% to 8170 crores. Net interest margin including fee was at 6.08 for the quarter and OPEX to AUM ratio for the quarter was at 2%. In quarter four we delivered profit off the tax of 825 crores registering a growth of 7% quarter on quarter and 27%. The full year profit grew 20% to 3,001 crore.
The ROA for the quarter increased by 6 basis.31. We continue to invest in AI to transform how do we do business and I am happy to share our progress in realizing measurable gains across scale, productivity and customer experience across scale and servicing. AI driven channel intelligence enables more autonomous interactions across voice, email and mobile. By end FY26, 65% of contact center calls and 71% of service emails were straight through past driving a seamless digital experience for our customers.
Our loan origination journeys are powered by AI to enable fraud detection by analyzing identity data, digital footprints and behavioral signals in real time, flagging anomalies and strengthening onboarding and underwriting decisions without adding manual friction in credit and underwriting. AI and ML are embedded across decisioning workflows including AI copilots for credit assessment memos. This has improved credit manager productivity, reduce underwriting turnaround time and strengthen consistency, governance and cohort monitoring in connection.
Geni powered bots enhanced contactability, call quality and self care outcome AI LED de delinquency management optimizes engagement, timing and channels supported by 100% call coverage and automated audits across operations. Genius cases span free Vance handling agent upskilling, digital contracting, automated letters and real time service NPAs operating efficiency and scalability going to FY27 retail and MSME segments will continue to pivot our growth strategies. We will continue to deepen our relationship with customers by offering relevant and timely solutions.
We will further leverage our sourcing capabilities to scaling up the new product variants and leverage our proprietary digital platforms like ABCD app and GeoPlus for direct sourcing. Overall, our approach remains consistent, grow responsibly, stay close to our customers and deliver steady long term value for our shareholders. With that I will now hand over to Pansesh Gargil MD and CEO of the Housing Finance Group.
Pankaj Gadgil — Managing Director & Chief Executive Officer
Thank you Rakesh
Rakesh Singh — Executive Director and Chief Executive Officer
And good
Pankaj Gadgil — Managing Director & Chief Executive Officer
Evening everyone. Let me begin with the key highlights for FY26. We recorded our highest ever disbursements of 25,332 crores registering a growth of 44%. Bioi AUM has reached 47,004 kilo crores listing of 53% Byomi contribution of the ABG Co system stood at 17.4% of retail disbursement stage 2 and 3 reduced to 0.76% improving by 63 basis points. YoY EBITDA of rupees eight hundred and thirty two crores increasing 98%, YoY and ROA at 1.88% and ROE at 14.27%. For more detailed financials please refer to slide 31.
Now covering the strategic highlights and initiatives, FY26 has been a pivotal year for the entire housing industry supported by strong structural tailwinds, rising urbanization, improving affordability and an increasing home ownership across income segments. At EBHSL, our guidance at the beginning of FY26 was to achieve an ROA of 2% to 2.2% over the next six to eight quarters. I am pleased to share that we have accelerated this journey with ROA at 2.07 in Quarter 4 FY26 supported by strong operating leverage and disciplined execution.
Our digital transformation journey initiated in FY23 has delivered significant outcomes over the last three years. We have delivered 4x processing scale up in processing capacity, 96% improvement in productivity add improvement from 21 days to 12 days and stage 2 bus 3 has improved from 4.99% in FY23 to 0.76% in FY26. These outcomes strengthen our confidence and position us well to scale sustainably now covering our outlook Given the industry outlook and our performance so far, we remain focused on consistent growth leadership with best in class portfolio quality while remaining mindful of the macro environment.
On distribution, we have undertaken a comprehensive assessment of our branch footprint and identified high potential geographies to enhance both coverage and conversion. Accordingly, we Plan to open 100 plus branches in FY27 with expansion in Tier 2 Tier 3 markets to increase distribution width and deepening penetration in metro and Taiwan cities. This expansion will support us to achieve a 1 lakh crore AUM in the next 24 to 30 months. Tech, digital and AI as mentioned earlier by Vishakha, Tech, digital and AI continue to be core pillars of our strategy.
We are embedding AI across customer and operational journeys supported by structured capability building through global best practices and internal emotion programs. Let me now briefly highlight a few use cases that are being implemented across ABHFL Spinwise for Sales Manager productivity using AI enabled doc assist to ensure the right documents are content upfront for first time rights logins we’re enhancing our industry. First AI copilot Spinwise for contextual objection handling and predictability for our teams.
Finvise plus is being launched for enabling channel partners with instant knowledge access resulting in higher counter share for us. Second finngage this is for top of the funnel engagement. This enables query handling from logging to disbursement, enhancing sales manager facetime and higher productivity. Third fintelect this focuses on back office automation and faster credit decisions, automated sufficiency and completeness checks Example bank statement period unrelation, cross document consistency checks such as dop AI generated insight and digital memos to support faster underwriting decisions.
4th FinServ assist enhancing customer experience. This enables contextual customer interactions varying of 40% reduction in repeat calls and imaginable uplift in net promoter scores. In summary, in FY27 we expect NII and trade costs to be range bound. Growth led by capacity and productivity will continue to drive operating leverage leading to an ROA of 2.1% to 2.2%. Thank you for the attention and with this
A. Balasubramanian — Managing Director and Chief Executive Officer
I’ll now hand over the call to Bala, MD and CEO of our asset management company. Thank you Pankaj and thank you and good evening to everyone at the ABS and amc. Our overall assets and management including alternative assets Our stands at 4.4 lakh 4 lakh 21 crores 70% year on year. Our mutual fund quarterly average assets today at 4 lakh 36 thousand crores representing 14% year on year increase. Within this our equity mutual fund quarterly average aimed at approximately 1 lakh 97 crores 13% year on year growth.
SAP contribution for March 2026 improved 2,200 days of work cross growing by 11% quarter on quarter supported by 40 lakh contribution coming from SAP account. All investor portfolio for March 2026 stood at 1.1 crores, the new SAP registration for the quarter at approximately 6 lakhs going by 16% on a quarter on quarter basis. Over the last year we at AVS LENC have made meaningful progress in further strengthening our investment team and sharpening our portfolio construction process resulting in sustained improvement in investment performance and stronger investor confidence and consistent flows into our flagship fund.
Moving to our alternate business, the PMS and AIF category has maintained a strong momentum complemented by comprehensive suit of credit offerings. Our PMS and AIF assets grew significantly from 11,300 crores in Q4FY25 to 3,570 crores in Q4FY26 measuring 3 times growth over the previous year. ESIC Mandate account for approximately 27 crores crore as of March 26 under PMS and AIF AIM including excluding ESIC registered year on year growth of 14% reflecting healthy underlying momentum on the EPFO mandate we have signed all the agreements and are operationally ready to receive the fund flows which will come up very very soon.
On the real estate front, Our AEM grew by 740 crores reaching 14% year on year growth. We currently have fundraising underway for the RGB Real Estate credit opportunities from series two focused on senior secured lending to post approval brownfield related project across Tire One cities. Our passive business is witnessing significant momentum with the Q4FY23 average AEM at 41,200 crores reflecting 25% year on year growth and ATM quarterly average AEM grew at 68% year on year, significant outpacing the industry growth and an expanded base of 16.9 lakh folios supported by a diversified 54 product suite.
We have invested in line with ABC businesses in strengthening our technology and digital ecosystem with the launch of our new Inner App and enhanced Partner Partner App. These platforms reflect our commitment to simplifying how our customers interact with us by making them more intuitive and transparent. Beyond infrastructure, we have built an AI foundation across our customer journey through voice, AI, WhatsApp integration and intelligent chatbots that engage customers in ways that resonate with their preferences.
We’re also happy to announce that we have incorporated our only one subsidiary, IWS Sunlines International IFC Limited at Gibbs City and has subsequently obtained all the retail license to further strengthen our present plan, moving to buying shares Q4FY23 Revenue from operation is 4855 crores as compared to 49 crores Q425. Q4FY23 Operating profit is 242 crores as compared to 233 crores in Q4FY25 and Q4FY23 Profit after tax is 187 crores as compared to 228 crores in Q4FY25. For the full year the revenue from operation is still at 1,840 crores.
I have compared 1,063 crores. Operating profit was 151 crores. I have compared 941 crores in FY25 and profit after tax 975 crores as compared to 913 crores FY25. With this I hand over to Kamila Rahu MD and CEO at the Palakhan Life Insurance Company.
Pankaj Gadgil — Managing Director & Chief Executive Officer
Thank you Bala and good evening to all of you. Quick highlights of the life insurance business at Absli. The overall industry registered a growth of 10% financial year 26 with the private life insurance industry growing at 12%. During the same period, EBSRI clocked a premium growth rate of 15% in the individual life insurance segment. The components of this growth were proprietary business growing at 3% and the partnership business growing at 23%. In the agency business we focused on getting the retail part of our business better and in our direct business we continued our growth back on Productivity in our proprietary business, the product mix is favorable for further growth and in order to scale further we are adding 26 more branches and with this we now have a distribution network of 450 plus branches across the country.
The partnership grew at 23% came across all our existing 12 partner banks. In the Lancashone space we now have a healthy mix of private as well as public sector banks and have banks that have both large national presence as well as ones that dominate the retail space. Mindshare in the large banks have grown and in the large part of the smaller private sector as well as the public sector banks, we continue to have a dominant mind share of their total business. At Axis bank we started with being present in 25% of the total business and by the end of Q3 last year we got access to more zones backed by our good performance in the bank.
Even for this year have access to more than 50% of the business of bank the bank. The partnership business has a balanced product mix with margins going up through the year for all banks. We now have 12 banker tie ups and we will continue to expand our banker presence further going forward. In the product mix of the individual business, traditional business including protection increased to 67% and UNIP came down to 33% helping expand margins. For the year we are seeing a healthy growth in the annuity segment with 10% of our retail new business coming from this segment.
Now in the group life insurance segment the private industry grew by 24% and overall industry grew by 19%. Like we have mentioned in previous quarters too we have had a calibrated approach to interest rate sensitive business this year which saw us degrow in the first half of the year. We are happy to share that for the full year we have grown by 31% enabling us to get back to rank 4 in the group life insurance business. A large part of this business for group has come from the profitable unit lift business.
We continue to be at rank 2 in the ULIP AEM in the industry with an AEM size of 16,000 plus crores in the group business, Credit life business delivered strong growth of 40% during financial year 26 supported by all partners and with 33% now of our business coming from the captive channels of our own NBSC as well as housing finance. In the group terminalized insurance business we continue doing business at 18 to 20% ROE and it is a very healthy annual book. Group aum now contributes 26% of the overall AUM at 29,000 crores.
Our total premium for financial year 26 stands at 24,779 crores up by 20% from last year. The 13 month persistency for us grew in the last quarter reaching a 86.1% for the full year annual premium grew by 17% with growth across individual as well as the group life insurance segment. Our digital collections now account for 83% of our annual premium. We continue to work on customer lifetime value which is reflected in our upsell ratio of 32% on quality parameters. Overall customer NPS now stand at 66 compared to 59 last year.
Our opex to premium ratio stands at 21.2% including the GST and the labor Law impact. For the year total AUM now stands at 1,10,505 crore with a YoY growth of 11%. 22% of this AEM is in equity and the balance 78% in debt on y daily basis. More than 82% of our funds continue to outperform it compared to the respective benchmarks. Our digital adoption across various areas is demonstrated in the Investor deck in slide 48. 100% of the new business customers are onboarded digitally. 83% of all our services are now available digitally, 67% services are SGP and our customer self service ratio now stands at 94% as a sunlight insurance we are bringing our AI initiatives together under a focus program we call SARAS AI designed to improve how we operate across policy issuance, underwriting and servicing.
Through SARAS AI we are reducing manual effort, enabling faster underwriting decisions and making policy issuance and servicing more responsive especially through AI led handling of conversations across email calls and WhatsApp. We are also equipping our advisors with better insights and tools to improve productivity and customer engagement. The focus is clear use AI to enhance human judgment, not just replace it and drive greater speed, consistency and quality in everything that we do. On value performance parameters our Solvency stands at 1.78 or 178%.
Embedded value is now at 15,447 crores which grew at 12% with an ROE V of 13.2%. Our net margins like Vishakha mentioned are now at 20.6%, 260 basis points higher than last year at 18%. We observed margin expansion due to a controlled ULIP mix, an increase in protection and annuity mix. Apart from heavy rider attachments, the traditional business did see an uptick in margins on account of favorable interest rate and the steepness of the yield curve in the second half of the year. This partially helped margins and partially helped us offset the GST impact for the year.
Our guidance continues to grow the individual FIP at a cadre of 20% plus for the next three years. While achieving this growth, we intend maintaining our current BNB margins in the 18 to 20% range and in absolute numbers double the value of our net BNB in the next three years time. With this I hand over to Mayak NCO for adventure.
Mayank Bathwal — Chief Executive Officer
Thanks Amnesh and let me now share an overview of the performance of our health insurance business. It was a very interesting year for the insurance sector reduction in gst, New Insurance Act, New Code, the leaders being worked towards transition to rfrs reporting from FY27 our view is that all change is supportive for sector long term growth but with some issues to address in the short term presenting our performance, we continue to build on growth momentum in maintaining our position as a faster and growing SAI player during the entire year.
For FY26 as per the old accounting regulations we achieved a gross figure of 7,292 crores representing a strong 39% YoY growth. Even on a one by n basis our gross figure stood at 6,855 crores reflecting similar 29% growth. Our market share thus in Chinese have improved from 12.6% to 13.7% and yoy increase of 110 basis points. We grew strongly across both retail and group businesses. The retail franchise experienced a large 43% YoY growth and it continues to be diversified across retail distribution channels.
The proprietary channel with an agent base of over 1.86 lakh agents registered at 36% growth. All our major bank and alliance partnerships also expand experience good growth. Our corporate business delivered a growth of 35% in the last year driven by a focus and disciplined strategy to create a sustainable franchise in the segment. As we shared earlier, we have now taken a differentiated health first model to corporates also and we are seeing very positive response from them. The profitability front Our net profit for FY26 stood at 79 crores as per the new accounting regulation could include an impact of new labor code and net GST impact of close to 40/crores as per the old accounting regulation without 1 by n the net profit for FY26 stood at 85crores.
Combined ratio for FY26 under the old accounting regulation was at 102% and under the new accounting framework under 1 by n the ratio was 103% versus a 1.5% on a comparable basis. These improvements underscore our continued focus on unit economics and thus overall profitability ahead of industry. We believe our robust growth and superior unit economics driven by a digitally labeled and distributed Health first model. Please continue to help us grow ahead of the market. Our Health first model is resonating with our consumers with nearly 40 to 45% of our consumers retail consumers engaging with us where we use an AI driven consumer engagement engine, 11.25% of our eligible consumers earn good health based incentives if you call health returns up from 9% last year, reflecting a very deep engagement with our wellness ecosystem.
These consumers continue to exhibit 8% lower loss ratio and 11% better persistency on an absolute basis and these are shown in slices 59. Similarly, investments in managing customers with high health risk through interventions with more than 270,000 lives have led to improvement in their loss ratios of more than 7 to 8% overall. This has helped keep our utility loss ratio well under control. We believe this business model which now other competitors are also trying to look at seriously but needs a large investment commitment.
Efforts over many years to mature gives us a large competitive advantage and we scale further including the corporate side of our business for insurance focuses on claims experience where we have made investments in the state of our AI ML driven claims education engine which continues to enhance both customer satisfaction and also eliminate leakages and wastages. We now process more than 25% of our pre auth registration request straight through with no human intervention. Similarly, we are investing consistently in data analytics capabilities to create efficiencies across the business life cycle.
For example, apart from claims as I shared earlier, usage of gen AI help bring in 35 to 40% productivity improvement in underwriting alone, use agent AI extensively in renewals management leading significant cost to the also better customer confidence leading to very good satisfaction in the renewals. Investment in capabilities across consumer health and insurance life cycle has helped us to use our consumer app Active Health to create very high consumer engagement. It has led to our MoU crossing 6 lakh consumers.
We continue to remain very optimistic for our business and FY27 marks a significant milestone for ADHI. As we enter our 10th year of operations, we will continue to invest more in our proprietary distribution franchise, work towards 100% core and scale our differentiated health first approach and also even more deeply embedding AI in emerging tech in our business. We believe we are well positioned to outperform the market and deliver sustainable value. Thank you and I’ll now hand it back to Vishakha for a closing remark.
Vishakha Mulye — Managing Director and Chief Executive Officer
Thank you Mayank and This concludes our remarks on the Q4 FY26 performance and will be very happy to take if there are any questions.
Questions and Answers:
Operator
Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press STAR and then one on the attached tone phone. If you wish to remove yourself from the question queue, you may press star. And two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Your first question comes from the line of Chintan Shah from ICICI Securities. Please go ahead.
Chintan Shah
Yeah, thank you for the opportunity and congratulations on the quarter. So this first question on the margins. So margins on the nbsp business, the margins have actually compressed like almost four bits and this is despite like strong growth seen in the unsecured business as well. And this unsecured growth has been kind of continuing since the last two quarters. Now where do we see, when do we see the margins improving? So also can you give the delta between secured and unsecured is. Yeah, that’s the first question.
Rakesh Singh
So Chintan, if you look at the margins have been more or less stable over the previous quarter. You see from quarter one, the quarter one of last financial year, the margin was 5.97 which is around 6.08, as you rightly mentioned, slightly 4 basis point down because there were some MPM losses which were there. As we grow our unsecured business, you’re right that last couple of quarters the unsecured business is growing. Our unsecured personal and consumer is still 13.4% of our overall product mix which used to be 19%.
Our unsecured business, which is also higher compared to the overall portfolio that is at 11%. So combined together unsecured business and personal and consumer is around 23.4%. But if we improve both these segments, even by 200 basis points in the next 2, 3 quarters, we will see expansion of margins by almost 25, 30 basis points. So that’s how we are really looking at in terms of improving and we did this calculation in terms of if the growth sustains at the current level, then what is the kind of margin we can look at?
Chintan Shah
Sure, but correspondingly with the rise in margins also I think credit cost seems to be at almost historical low. So there could be also some normalization expected. Your plus growing in the unsecured fees would also entail a higher credit cost requirement. So probably means. I’m just trying to understand in terms of ROA expansion. So as you already mentioned, 2430 on the margin front and somewhat probably normalization of the credit cost front. So what could be the ROA which would be we could be looking at in 27
Rakesh Singh
We are looking at by end of this year we are looking at 2.5% ROE. This is what we are looking at and as I said the margin expansion is the one way in terms of achieving that. And your point on credit cost? Yes, credit cost of 1.04% is the lowest for us and as we grow our unsecured business so we expect this to we have always guided that it will be in around 1.21 point. So I think 1.1 to 1.2 kind of a range it will remain in the similar range is what even if the secured business grows.
Chintan Shah
Okay, sure. And lastly on this AI front I think we have we talked a lot about AI and we probably seems to be making a sizable investment. So ultimately means what is the probably result kind of expected from this. So I think margin credit cost is already at historical low so probably won’t Delta won’t come much from that front. Also NIMS we are expecting it to improve. That is largely due to change in the mix. So OPEX is likely to further monitor due to AI or is it the customer quality which is likely to improve.
So yeah some thoughts on that would be helpful. Thanks.
Rakesh Singh
In terms of if you look at underwriting I think stages can come down. In terms of earlier if there were multiple stages that can come down and that has improved our turnaround time which I spoke about in my opening remarks. Clearly the customer experience these things will improve significantly and which is improving. We are seeing our net promoter score both on onboarding and service going up. Self care on collections has significantly improved in terms of because of the usage of AI and bots. So across we should see branch productivity and employee productivity improving customer experience improving.
In terms of your OPEX if you see for the full year it’s 1.93 for the quarter it’s 2%. So it’s 1 of the better cost income ratios in the industry. We will see that what efficiency we can draw on this line as well.
Chintan Shah
Sure. This is really helpful. I’ll get back in the queue of further questions. Thank you and all the very good.
Rakesh Singh
Thanks gentlemen.
Operator
Thank you. The next question comes from the line of Sichuan Gao with Sean Field. Please go ahead.
Unidentified Participant
Your line
Operator
Is quite muffled. May I request
Unidentified Participant
You to use.
Operator
Sorry, it is still not so. Your line is muffled. This is slightly better management. Are you able to hear the participant clearly?
Unidentified Participant
Not with Absolute clarity. Okay, please go ahead.
Unidentified Participant
Yeah, So you know, Have run up to percentage point year on year, but the margin is almost, you know, year on year. I just want to understand why hasn’t the increase in the mix actually resulted in the margin improvement?
Rakesh Singh
Yeah. So I think if I understood your question right, you are talking about that unsecured has grown and our margins, in terms of reflection on the margin, what I mentioned for my earlier question response also is that the overall product mix, if we look at that is still at 13.4%. Personal and consumer was at 13, 13% is still at 13.4%. So all other segments have also grown quite well. So still product mix is earlier we used to have 19%. Our personal and consumer used to be 19% of our overall portfolio, which two years back we had calibrated, we are coming back with the growth.
So in the next 2, 3/4, as it keeps growing, as I mentioned, by every 200 basis point improvement, there will be a margin expansion the way we see it in this business. So I think if it continues to grow at the current rate, if you see last quarter, we have grown by 8% quarter on quarter and if that continues in the next 2, 3/4, we will see the margins expanding.
Unidentified Participant
Thank you so much.
Rakesh Singh
Thank you.
Operator
Thank you. The next question comes from the line of Avinash Singh from MK Global. Please go ahead.
avinash Singh
Hi, good evening. Thanks for the opportunity. A couple of questions. The first one is on your credit cost. I mean performance. FY26 has been very great and you are guiding again, despite increasing unsecured, keeping it 1.1 to 1.2%. Can you just help us? I mean, what is your kind of a base case assumption behind this 1.1 to 1.2% guidance in terms of the current conflict? Because this current conflict is of course on certain scenario and that sort of is dragging on. So based on your kind of assessment, what is your basic assessment where you are guiding for this 1.1 to 1.2%.
And the first question is on if you were to look, I mean at the margins, the kind of diversified business you have, of course, I mean, you are the leader in opex and trade. Cost is really impressive. And that’s why of course you allowed me to operate a slightly lower margin. But when you are talking of margin expansion, largely due to my product mix, so based on the market dynamics in competitive analysis, can you sort of indicate where are you versus competition in terms of, you know, your ease?
Is it, I mean that you are pricing it lower or it is kind Of a parity to some of the, you know, mid size bank or the large NBFC that operates. So I mean how are you place versus competitive dynamics in this segment in terms of each you are offering? Because the kind of you know one of the best copper fund you have. The margins are kind of slightly. It looks like they have moderated. Thanks.
Rakesh Singh
Your first question was how are we giving what is our base case in terms of the trade cost which we are giving a guidance for. The reason for that is almost 70 to 73% of our loan book is secured. And when I say secured is secured by a collateral which is not depreciating in nature, which is appreciating in majority backed by real estate collateral primarily the SME owners, self occupied residences, offices. So that’s how and in terms of pricing, if you look at and you mentioned we compare quite well with the other NBFC in this segment.
Our yield in this segment is almost 12.2 12 are 12.2 odd percent. So I think quite well priced. What was the other question?
Mayank Bathwal
So this is what
Rakesh Singh
In the secured. If you look at is. I think our pricing is quite well priced compared to the industry. And in terms of how the margins. Yes, we have one of the best cost of borrowing credit costs. I think from here on as we still are personal consumer is pretty small in the overall product mix. And so as I have been saying, 13% is our personal consumer which is a high yield product for us. And that is the moment it improves improves every 200300 basis point you will see a margin expansion in this for us and credit cost because still even 200300 basis point we go up still 70%.
Close to 70% of our loan book will be secured. So that’s the reason we are quite confident on the credit cost. And with that change in the product mix expansion of margin.
Kamlesh Rao
Okay, thank you.
Operator
Thank you. The next question comes from the line of Arun Anthony from GM Financial. Please go ahead.
Kamlesh Rao
Hi, thank you for the opportunity. Just a couple of questions. So one, when I see look at the numbers for this quarter, the OPEX growth has sharply outpaced the AM growth and this is for the last three quarters as well. If you could give some light on why this OPEX growth has been increasing and specifically for this quarter. And another question would be despite increasing the PMC exposure, the AUM numbers have been increasing but disbursement figures have been broadly flat for the PMC as well as the unsecured space.
So why is this also happening? So these are my two Coastals
Rakesh Singh
OPEX has been. We have been seeing our investment in our retail businesses and MFME business which we have been doing over the last few years and few quarters as well. So that’s the only reason which on the OPEX side we can do this as I mentioned, if there will be some normalization which, which will happen. So that’s the reason on the opex.
Kamlesh Rao
But is there any specification for a sharp price in this quarter?
Rakesh Singh
No, there’s no specific reason for that.
Kamlesh Rao
Okay. Okay, Thank you. Disbursement piece.
Rakesh Singh
Yeah. So disbursement piece. I’ll tell you on the personal and consumer, as we have been saying, we are quite calibrative in terms of how much we will disperse. So the disbursement is flattish. Yes. And we are looking at a very, very calibrated growth in the current environment on the unsecured business. This last quarter also had mentioned that there is a supply chain business and line of credit which we don’t include in our disbursement numbers because those are churning portfolios and that’s the reason you don’t see that kind of numbers in terms of disbursement.
But that adds to the aum.
Kamlesh Rao
Okay, okay. Some
Rakesh Singh
Segment and some products which we don’t count in our disbursements.
Kamlesh Rao
Okay, okay. Excellent. Thank you.
Operator
Thank you. The next question comes from the line of Mitesh Jain from Investec. Please go ahead.
Nitesh Jain
Thanks for the opportunity. In housing finance also we have seen margin compression on a Q on Q basis. So what is the reason for that and what is the outlook for margins and ROA in the housing finance business for FY27?
Pankaj Gadgil
Yeah. So here. So if you see the NII for Q3 Q3NI was 5.22 for us and Q4NI 5.03 observation in the 19 has gone down. If you build on it a bit deeper you see that the NIM actually is 4.13 for quarter three and it is 4.07 for quarter four. So there’s a six basis point difference in NIM largely I would say seasonality and also the competitive pressures on that side which has actually led to a few bits decrease in quarter four. If you look at the other income element, there is 1.09% that we got in Q&Q4 you got 497 other income typically is a function of three important parameters.
One is of course the direct assignment that you do. Second is the insurance attachments that you make and third is any repricing that you have to do. You know, for any btout that happen. So I’m happy to share that the btouts are very consistent for us. So Q3 and Q4, there is no, you know, broad difference. The DA is slightly lesser because DS typically you do for capital conversation typically and also for sometimes ensuring that your PPG mix is up to scale. Both these funds, they’re compatible.
So DAS was slightly lower as compared to Q3. So that was, you know, therefore there was, you know, some kind of a, kind of a gap. The insurance, you know, business attachment. So the reason of the other income being down is essentially because the DA has been low. And last but not the least mark to market in Q4 was also there because, you know, some maturities are held to maturity and this others are also linked to market. So all of us know how the G6 actually moved and there was, you know, some loss that we also had a market to market.
So that is basically the reason why we see, you know, the overall NI being 5.03 versus 5.22. As I mentioned earlier, you know, in my opening remarks, we are estimating the NIM to be NII to be rangebound in this year. So they should be in the range of about 5.10 to 5.13. There will definitely be some compression in spreads, but as you would know, the capital has come in. So there will be some support that we have on the COG side of it. So that should help us, you know, in maintaining the NII at the current levels that we are, you know, talking.
We are demonstrating operating efficiencies, as you would have noticed, versus last full financial year against 2.94. We’ve closed the year on OPEX to average loan at 2.4%. So it is about a 54 basis points decrease. So this year also we anticipate that number to be closer to about 2.10. And this is coming at the back of the 100 plus branches that we are opening. So actually we are building an operating efficiency. The net of increase in the branches we have. We expect the OPEX average loan book to be in the range of about 2.13.
So that leaves us with 5.13 less, you know, 2.13, that is 3%. And with the grade cost being at 28 basis points, we should have ROI of 2.72 which should translate to an ROI between 2.10 to 2.15. That is, you know, what we are targeting, you know, right now. And on credit costs we are finding, you know, confident. Because if you would look at the trajectory of the grade cost both in absolute and in percentages. We have come down. So stage two plus stage three for us is amongst the top two in the industry.
It is currently pending at 76 basis points, 44 basis points of stage three and 32 basis point of stage two. So having a very strong stage two performance gives a lot of confidence that the credit cost will be normalized. And therefore our confidence of being in that ROI trajectory of between 2.1 and 2.15 is, you know, where we are. Along with a very, very robust, you know, growth. And that’s why I spoke about the 1 lakh crores of AUM in the next 24 to 30 months. So very focused on, you know, asset quality and also growth.
Nitesh Jain
Sure, sure. And from medium term perspective, how do you see ROA ROE for housing finance business?
Pankaj Gadgil
So ROA I mentioned for FY27 the ROA will be in that range of 2.10, 2.15 because currently the capital is, you know, has come in, you would have noticed 2050 was, you know, coming in already. So naturally the rougher than the last financial year, it will be in that range of 12% currently. Right. 1427. At the end of the financial year the DY is becoming better and it continues to continue to rise because as you would have seen, we have always been in the dy for about 6.5, 6.4, 6.5. So as the years in progress in the next, you know, 2024 months you will see the ROE crossing 15%.
That is, you know, our trajectory.
Nitesh Jain
Sure. Now in on life insurance there is a negative operating variance and assumption change variants. So what are the reasons for that?
Pankaj Gadgil
So in the bridge that you see which are we are on the verge of 50 from the Igaas regime to the IFRS regime. And typically in an IFRS regime the conservatism that you have in your valuation interest rate actually does not unwind for you. So what we’ve done is we revisited some of our assumptions as we build in for moving into the IFRS regime in the next one one and a half years. It’s supposed to be 26 or 27 because we asked for a forbearance to say we will go to IFRS in financial year 27. We had some change in assumptions on the reduced paid up benefit from some of our products.
So that has got built in as we speak. So we are showing operating reliance negative on account of these factors. But like I said, the large part of the reason is on account of Q of the assumptions which we think when we move into from a IGA world to an IFRS world, it may be a prudent step to do at this point in time.
Nitesh Jain
Sure. And these assumptions are on which parameter largely
Pankaj Gadgil
Or on parameters related to basically your portfolio getting a little better. So for the lapses that he assumed, if they are lesser, some of it because it is lesser than what you planned for, you obviously need to bring in better reserving. So some of the assumptions that you make if the experience does not turn out to be the same but in a way on a long term basis it is good for the portfolio because you are seeing less lapses. So obviously it will contribute to the embedded value growth in future times to come.
So you do this on an annual basis and we did this in the month of January. We do this every year.
Nitesh Jain
Sure. And in life insurance we have also been growing pretty well versus industry growth. How do you see growth next year? FY27
Pankaj Gadgil
So like I said, we’ve said maintain that we will definitely want to grow at 20% plus look at the CAGR of the LUG insurance business the last two years in individual we’ve been at about 2324. It’s been our CAGR for the last two years and in group we’ve been at about 2627. Like I said, as you get new banker infrastructure, like I said axis we are present in only about 20 25% of that business for the whole of last year it will be close to about 50%. So all of this will help us maintain that CAGR for sure in the next two, three years to come.
Nitesh Jain
Sure, sure. And last question is on nbfc. So have we seen a spread compression on a line of business basis because of overall margins have there’s a marginal decline in margin this quarter. Last quarter also I think margin there was like
Unidentified Participant
There
Nitesh Jain
Has been a mixed shift towards high rating portfolio but that is not visible. Probably the numbers have been marginally shifted. But on a line of business basis have we seen a spread compression basically in secure business are we seeing a spread compression?
Rakesh Singh
No nitish, we haven’t seen any compression. It’s primarily the outcome of the product mix is what it is. And if you see from in quarter three it has not compressed. The quarter two was 6.06, it improved to 6.12. It’s 6.08 in this quarter. And the reason I mentioned one is yes quarter four is slightly more competitive and everything else but there was an MTM loss because of the G sec on the which had gone up. That has impacted our margins by 3, 4 basis points. We believe it’s quite stable and we should be able to improve from here.
Nitesh Jain
Sure. Thank you. Thank you. That’s it for my side.
Operator
Thank you. Ladies and gentlemen, due to time constraints, we will take this as our last question. I now hand the conference over to Ms. Vishaka Molye for closing comments.
Vishakha Mulye
Thank you again for joining us today evening. And we look forward to keep in touch. If there are any more questions, feel free to get in touch with any of us. Thank you.
Operator
Thank you. On behalf of Aditya Birla Capital limited that concludes this conference. Thank you for joining us. And you may now disconnect your