Aptus Value Housing Finance India Ltd (NSE: APTUS) Q4 2025 Earnings Call dated May. 07, 2025
Corporate Participants:
Unidentified Speaker
M. Anandan — Executive Chairman
P. Balaji — Managing Director
C T Manoharan — Executive Director & Chief Business Officer
Sanjay Mittal — Chief Financial Officer
John Vijayan — Chief Risk Officer
Mona Khetan — Investor Relation
Analysts:
Unidentified Participant
Rajiv Mehta — Analyst
Renish — Analyst
Manika Bansal — Analyst
Kartikeya Kumar — Analyst
Nidhesh — Analyst
Rakesh Kumar — Analyst
Mona Khetan — Analyst
Aman — Analyst
Shweta — Analyst
Kashan Parikh — Analyst
Yash — Analyst
Presentation:
operator
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operator
Ladies and gentlemen, good day and welcome to the Aptis Value Housing Finance India Ltd. Q4FY25 Earnings Conference Call hosted by Dalit Capital. As a reminder, all participant lines will be in listen only mode. And there will be an opportunity for you to ask question after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star Gen zero on your touch tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Mona Ketan from Daulat Capital. Thank you. And over to you ma’am.
Mona Khetan — Investor Relation
Thank you. Sejan. Good morning everyone and welcome to the earnings call of Aptus Value housing Finance India Limited to discuss its Q4 and FY25 performance. We have with us the senior management from Aptis to share industry and business updates. I would now like to hand over to Mr. Anandan for his opening comments. You can open the floor for Q and A. Thank you. And over to you, sir.
M. Anandan — Executive Chairman
Thank you, Mona. Ladies and gentlemen, good morning to all of you. I am Anand, Executive Chairman of the company. I welcome you all to this conference call to discuss the company performance for the quarter we are ending March 25th. I have with me Mr. P. Balaji Chandi, Mr. C. P. Anoharan, CBO and Mr. Sanjay Mittel, CFO and Mr. John Nidane as CRO at uptest. We believe in strong growth without losing focus on the quality of the loan book and good financial metrics. We’re very happy to report that APTX had a very good FY25 supported by Petron growth, stable asset quality, continuous focus on higher productivity and a robust business model with distribution network and penetration in sales market, deep penetration in served markets, Customer centricity along with appropriate initiatives and diversified product and income stream have enabled the company to achieve good business results.
Our network as you are aware stands over 4300 crores and the capital. Adequate capital, adequate capital efficacy. This coupled with good support from banks, MSB mutual funds and BSI on the borrowing side and with strong ongoing demand for both home loans and small business loans gives us confidence to pursue strong growth sustainability in the years to come with sustained profitability. Further, to support the vision. To support our vision of reaching loan book of Rs. 25,000 crores by AIM by FY 2028, we’ve been continuously strengthening the organization by way of investing in new branches, relevant technology and strengthening the company with quality manpower across all functions, more particularly in the middle management.
I would now hand over the line to Mr. P. Balaji MP to discuss the business focus operating financial parameters. Thank you
P. Balaji — Managing Director
thank you sir. Good morning friends. As we have been explaining in the earlier calls, we will continue to focus on our key strategies which are as follows. Growing disbursement and loan book both in housing loan and small business loan considering the large headroom available in the low and middle income segment in tier 3 and 4 cities expanding operations contiguously in the states of Odisha and Maharashtra and increasing penetration in existing geographies by opening new branches, Strengthening analytics and Digital Adoption About 21% of our business in Q4FY25 has come from customer referral, app construction, ecosystem app and social media channels.
Our focus will be to increase the leads through these channels in addition to the leads from the physical branch network. Continue to focus on productivity, collection efficiency, OPEX and cost of funds. The new mobile first lead management software which was launched in April 2020 has settled very well and is bringing in good improvements in terms of streamlining of our processes, service delivery, lesser bounce rates, improved collection productivity, better regulatory compliance and improving overall efficiencies. We are continuously monitoring the functioning of this new system to bring in more improvements. Now coming to the major performance highlights.
Our eam grew by 25% year on year to 10,865 crores. Business grew by quarter, increased by 10% year on year to 1064 crores. Business and growth for the year was at 15%. We have 300 branches as on 31st March 2025. Of this 10 branches are in the states of Maharashtra and Odisha and the balance 290 branches are in the states of Tamil Nadu, Andhra Pradesh, Telangana and Karnataka. Total branches added for the year were at 38. Total live customers crosses 1.6 lakhs. It is 21% growth. Year on year NPA was at 1.19%. Now coming to the asset quality collection efficiencies were at around 101.16% and our 30 plus VPD improved to 5.91% as on 31st March 2025 as compared to 6.21% as on 31st December 2024.
Net NPA was at 0.89%. Provision coverage has been consistently maintained at around 1.03%. We are carrying a total provision of around 111 crores including a management overlay of 55 crores and this when computed as a percentage of NPA brought up to a coverage of 87%. Credit cost for the quarter was at 0.3% which was almost similar to the previous quarters. NIM was at 12.96%. Opex to assets were at 2.63%. Despite investment in new branches, technology and HRP was at 751 crores for the year which is a growth of 23%. Year on year, ROE was at 7.73 and ROE was at 18.76% which is 1 of the best in the industry.
For the quarter The ROE crossed 19% and was at 19.66%. Now coming to the funding. During the quarter we diversified our borrowings further by issuing NCDs aggregating to 325 crores to mutual funds. Of the total borrowings, 52% are from banks, 15% from NHB, 19% from NCBs issued to ISCs and mutual funds and the balance is in the form of securitization. As on 31st March we had sufficient on balance sheet liquidity of 1,155 crore including unbrand sanction of 678 crores from banks. I would like to highlight one of our strategic shift in the funding approach. This quarter we executed our first direct assignment transaction for a small amount of around 75 crores of non housing portfolio in our housing finance company.
As you are aware, we have historically maintained a conservative stance and stayed away from ba. However, given the evolving funding environment and the long tenure nature of our board, we saw merit in exploring BA which will complement our strategy for both diversification of borrowings and this also helps us to strengthen our PBC criteria. Going forward we will be looking at doing BA transactions on a selective basis. With this I close my remarks and I open the floor for the question and answer. Thank you.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Rajiv Mehta from yes, securities. Please go ahead.
Rajiv Mehta
Yeah, hi, good morning. Congratulations on good performance. My question is on disbursing growth. So while first half of the year was impacted but when you look at second half which was pretty normal even in second half the disbursement growth was 15%. By and by so I mean can. You share disbursement growth figures at the state level? Because when you look at the statewide growth momentum then Tamil Nadu seems to be coming back but AP seems to be losing some steam. So first we can comment on how can we improve the disbursement growth on an overall basis from 15% and are there any geographies which need to be focused on particularly ap?
P. Balaji
Thanks Raju for the question. I’m sure this question might be there with all the people. I’ll just explain it for the benefit of others as well. If you look at our diversion growth, as you rightly said it is 15% year on year. But if you look at our 3,604 crores of disbursement, this is actually 11 month disbursement as against a 12 month disbursement of last year which was at around 3,127 crores. So if you factor in that one month disbursement the disbursement growth would have been around 18 to 19%. And if you look at the year on year disbursement for the last quarter it has grown by 10%.
Basically this because of the base effect. If you look at our disbursement last quarter Q2FY24 was around 750 crores and Q3 was also 750 crores. This spiked up to 968 crores in Q4FY24 but in FY25 the disbursements have actually evened out. If you look at our Q2FY25 disbursement it was 935 crores and Q3 was 930 crores and Q4 it has become 1064 crores. So it is actually because of the base effect the growth is at 10% and it is not because of any market sentiment or market availability. So also as you rightly said, Tamil Nadu is also almost coming back to normalcy with asset general management growing at 14% and Caminodo growth quarter on quarter was 14% and year on year was around 11% on the dispersion.
So actually we are not seeing anything on the ground. It is basically the base effect which has had an impact on the growth.
Rajiv Mehta
Okay sir, basically I was actually looking at the second half only because second half was pretty normal and that kind of adjusts the base for making it more comparable. So even in the second half the disbursement growth is 15%. So the point is if we want to grow at 25 30% in the next year, if that is the aspiration, then given the current runoff rate, we need to grow our reinforcement next year by 2627% on the current year base of FY20 spy. So can we tail up to that kind of disbursement growth in FY26 and what can be the sources of growth improvement? It could talk about branch addition plans.
It could talk about how the productivity at the same document level can be improved. Whether do we need to do more sourcing from alternate channels and how could that be driven? Just wanted to get more clarity on how the growth in disbursement will come about at a much higher level for us.
P. Balaji
If you look at Even at the 15% disbursement growth, the loan book growth has been at around 25%. So for the year FY26 our guidance will be around 24 to 25% of disbursement growth and around 28 to 30% of loan book growth. But how this will be achieved, I’ll give you the following things which will be focusing. One is the first thing is the new business from business from new branches in new states. Basically in Orita and Maharashtra we already have 10 branches. We’ll be opening 10 more branches in this year. So the business from those branches will continue to the growth.
Next one is business from new branches in the existing states. So in this year we are planning to open a total of around 40 branches. So the business from that will contribute to the growth. Then next thing is impact of full year business on the new branches which has been opened. Last year we have opened 38 branches. So the full year contribution of those branches will also contribute to the growth. Over and above that the productivity improvement in the sense the actually increasing the APS. Currently it is around 8 to 8.5 lakhs. We want to increase it to around 9 to 9.5 lakhs without impacting the LTV and the installment to income ratio.
So that should contribute to the growth and also improving the per loan officer productivity which is currently around 3 to 3.2 that we are planning to make it up to 4 per loan officer per month and also having optimum number of people at the branches that will also contribute to the growth. Over and above that we have this digital marketing initiative which is working fine this 21% at least we want to make it up to 25% immediately. And then in the years to come we’ll be making up to 30%. So this is Actually all this has been broken down across branches and also the fields officer wide which gives us the confidence of giving this guidance of around 24 to 25% discretion drop and also loan the growth is 30%.
Rajiv Mehta
Okay. And just on funding side if you share the incremental cost of borrowings, you know now from for the HFC and for the NBSE from the banks and also please give us some color on how the existing bank loans will be priced down, what is the benchmarking of it and how it can be priced down in the coming quarters. And lastly on NHV funding, is there any sanction in hand or any pipeline for that?
P. Balaji
Yeah, as regards to funding is concerned the rate of interest of housing loan HSP borrowings is around 8.5% it continues and 8.5 to 8.7% and on the non nbsp we are still borrowing between 9 to 9%. But having said that, if you look at the total borrowings, 56% of our borrowings is variable which is linked to external which is linked to a variable rate. Interest rate of that 30% is linked to repo rate which means for that I will get the benefit of at least 0.5% maybe in this quarter itself. Already we have got 0.25% reduction in two or three borrowings which we have taken and this is likely to come in.
And of course the balance 26% on the MTLR which is linked to MTLR, the interest rate reduction can start coming from June to July. So and of course incremental borrowings will be negotiated hard for believing in those kind of interest savings. So that is broadly on the interest rate and MSB borrowings we have got a sanction of 300 crores. We’ll be taking a decision on when to take that money out.
Rajiv Mehta
Great. Thank you so much for asking my question.
operator
Thank you. The next question is from the line of Ranesh from ICICI securities. Please go ahead.
Renish
Yeah, hi sir. Good set of numbers. So just two things. One on this provision, on the stage two, so when we look at stage two assets, you know technically fell by 20 digits. Consequently wherein the PCR actually gone up to 8.5 versus 7.8 sequentially. I just wanted to get a sense that what is driving this high provision in stage two. I mean is it due to we see some stress in some pockets or how one should look at December 3rd.
P. Balaji
Actually speaking, we are not seeing threat in any of the markets or any of the products. See what has happened in the housing finance company, the market recoveries were good. And we have recorded almost 5.5 to 6 crores during the quarter. And we wanted to maintain the provision coverage ratio at around 1.03%. And in the NBSE the loan bid from 1900 crores has gone to 3000 crores. So we wanted to strengthen the provision coverage there. And we are still maintaining at 1.13%. So that’s the whole reason this number is there. And if you look at the credit cost agreement became a 0.3%.
Renish
Correct? Correct. And just to follow up on that. So do we foresee any derailment either on growth or collection due to this.
P. Balaji
Tamil Nadu being this Tamil Nadu ordinance? Yes. It is a fact that it has been announced by Tamil Nadu government that what we feel, I mean it has been clearly stated in the ordinance that it is applicable only to unregistered NFI or moneylenders who are charging the serious rate of interest. The kind of customers whom we serve. Basically with an average ticket price of around 8 to 9 lakhs. Our initial feeling is that it might not be affected very much. We feel that the impact can be made in MFI and also low ticket loan providers.
So of course this is initial date. We are having a very close watch on this. As of now we have not seen that kind of trends. Our collection efficiencies are better. But we are watching this closely.
Renish
Got it sir, answer my last question. Again on this geographical concentration and the growth trajectory. When we look at last five years, you know, sort of we have been able to reduce the dependency on TN market which is share falling to almost 30% in FY 25.4323 four years back. But at the same time EP share is now more than 40% and AUM touching almost 4500 crore. So just wanted to make a sense, you know, on this base whether this 30% plus growth rate is sustainable in EP market. And let’s say if you feel that, you know there is still under penetration in this ticket segment and we’ll be able to provide 30% in EP.
So then in next two years our dependence on AP will further increase. Right. So what is the plan to derisk the growth from over dependence on any one state?
P. Balaji
Actually if you look at it, that’s the reason why we have ventured into this Orica and Maharashtra. So the business which was around 5 crores, the AEM two years back, it has become 55 crores as of now. It is a healthy growth according to me because first year was formative years for these two states. And after that the growth has come. So we will be getting more growth from Orica and Maharashtra this year. So to that extent the AP growth will come down. But having said that, the penetration, I mean still the market availability in AP is quite huge.
So that is also going to contribute. And with Tamil Nadu coming back to normalcy, so the distribution of AAM is likely to improve across states. And of course Karnataka also is likely to chip in more.
M. Anandan
Just to add to what Mr. Banerjee said, While we have another 13 branches in Andhra Pradesh and having a good growth rate as I mentioned. But we see a very good opportunity in Telangana as well where we have currently only about 53 branches. And even the current year the growth rate in Telangana is one of the best. So Telangana, we have grown by 31%, same as Andhra. Well, Andhra base is higher as you mentioned, but Telangana growth is much lower. There is an opportunity, not only Telangana, even Karnataka for that matter, in addition to the Maharashtra and Varisha that Mr.
Baba has mentioned.
Renish
Got it, got it. And maybe just last question on the spread from my side. So let’s say we already seen 50 basis point of prepared cut. And let’s say over the next six to nine months if there is another 50 basis point cut, where do you see these spreads tackling from exit Q4 quarter numbers?
P. Balaji
If you look at this, as I told in the earlier remark, also if you look at the total borrowing, 30% is linked to the forex. So if you factor in a 50 basis point cut on that 30% borrowing, it will be 0.15% reduction that can come in. And of course we don’t know how much more rate cuts are going to come. But if it comes, that benefit also will come in. But also the 26% which is linked to NCLR, the interest rate reduction can start coming in from maybe July or so. That’s what I’m getting to hear from banks.
So if that comes in, that would be another added bonus. The thing is that this is where assets are slightly standing out because we have got this 80% fixed rate loan book. So we are. So spreads are likely to improve. Spreads are likely to improve because of this interest rated action.
Renish
Got it, Got it. So we don’t foresee any pressure on the asset yields at least.
P. Balaji
Yes.
Renish
Okay. Please. Great sir. Thank you. And best of luck sir.
P. Balaji
Thank you very much.
operator
Thank you. The next question is from the line of Kashan Parikh from Morgan Stanley. Please go ahead.
Kashan Parikh
Thank you for taking my question. I just had questions around the credit cost. So there seems to be some reconciliation between the prior quarters essentially when we look at the nine month reported number versus the full year number in the other income line which gets knocked off in the credit courses. You could just help us explain that and also secondly, if you could help us explain the reconciliation between the standalone credit cost and the Access Finance NBSP credit cost which came in higher this quarter whereas the consolidated largely in line with what you had in the previous quarter.
So if you could just help us explain that as well. Those are my two questions. Thank you.
P. Balaji
I’ll explain this question. There have been, I mean, you know, RBI has directed all the NBFCs to. We have to go for a change in auditors every three years. So there are some auditors who are telling that the bandits recovered has to be shown separate but there are some auditors who say that it has to be netted off against the ETL provision. So basically we go by that auditor’s opinion and this quarter onwards we have netted it off against the ETL provision and the credit cost, whatever is the Madrid’s recovery. So that’s the answer to the first question.
Then the next thing is on the reconciliation, if you look at it, what is the process on the reconciliation? I have not believed on.
Kashan Parikh
Sure, I’ll just repeat my question. So essentially we had about 80 million credit costs in the nbsp subsidiary and a small 10 million credit cost in the standalone book whereas the console credit cost has come at around 79 odd million. So could this help us get the reconciliation math on that?
P. Balaji
Yeah, I looked name see what is happening. If you look at it, in the housing finance company the bad debt recovery was high during the quarter so it was almost 5.5 crores to 6 crores which got netted off in the Cambion financials Whereas in the NBSC what has happened is we all know from 1900 crores the book has grown to 3000 crores. So there is a strengthening required on the provision front in that. In that company. So we have provided more there to take care of the 1.03% provision coverage ratio. If I don’t do that then what will happen is I need to write back the pension which will only result in additional profits.
So we wanted to maintain this 1.03%. That is why.
Kashan Parikh
That’S actually quite helpful. Those are my questions. Thank you.
operator
Thank you. The next question is from the line of Yash from Citigroup. Please go ahead.
Yash
Hi sir, thanks for taking my question. So one is on the operating expenses which sees sharp you know, jump quarter on quarter by 11% or so. So is it one of or it is largely volume linked.
P. Balaji
Actually it is volume linked. If you look at our OPEX first, what has happened? If you look at it, we have invested in branches, we have invested in technology, new lead management system. So all this is contributing to this increase. But still ours is one of the best. If you look at the opex to assets it is around 2.63%. And even if you look at the cost to income ratio on the gross income it is maintained at around 14% both for the quarter and also for the last for the full financial year. And if you look at the net income it is around 20%.
I mean after reducing the interest cost it is being maintained at 20%. So this 2.63 to 2.7 cost to assets will continue. That will be the guidance from us.
Yash
2.63. 2. Sorry,
P. Balaji
2.63 to 2.7%. Yeah,
Yash
2.7. Okay. Okay. And so second is on the balance transfer out if you can share the trend on it. Given our housing loan yields are north of the peers at 15.5%. So are we seeing any increase there?
P. Balaji
If you look at the balance transfers we have been consistently around 2 to 2.5%. While our precloses are around 7%. The balance 4.5%. The pre closes are coming from the old source of the customers. If you look at our kind of customers who are self employed, unlike salaried customers, they get some business inflows, bulk inflows from their business. The first thing they do is to close the housing loan. So if you look at our total pre kiosis it is around 7% of that 4.49% is out of home source. The balance transfers are around 2.5%. And this 2.5% has been maintained by it for the last 15 years.
So we don’t see that kind of an impact because of the balance transfer.
Yash
Got it. So no major impact despite higher yields than peers. And so lastly, if you can just share the login to sanction ratio and this for the quarter as well.
P. Balaji
Login to sanction ratio is around 78 to 80%.
Yash
Got it. And that has remained stable through the year.
P. Balaji
Yeah, it does remain stable.
Yash
Thank you. So that’s it for myself.
operator
Thank you. The next question is from the line of Manika Bansal from Master Capital Services Ltd. Please go ahead.
Manika Bansal
Thank you. Thank you for taking my question. So my question is on branches, right? So you have opened 10 branches in. Maharashtra and Odisha, Right. So what Is the plan and opportunity do you see over there?
P. Balaji
If you look at our strategy, we have always been growing on a contiguous basis. And that’s why we chose Orita and Maharashtra. Because it is closer to the states of Telangana and Karnataka. And the initial experience has been very good. The people there are good, the credit quality is good. And of course we are a credit driven organization. So we choose our priority customers properly. And these two states are offering good scope for increasing the disbursement and also the consequent loan book. So with that in mind, we’ll be opening 10 more branches in this current year and then increasing the loan book there.
Manika Bansal
Okay, and one last question. What is the one DPD
P. Balaji
one plus BTB is around 7.5%.
Manika Bansal
Okay. Okay, thank you.
operator
Thank you. The next question is from the line of Karthikin Kumar from Ashika Stockbroking. Please go ahead.
Kartikeya Kumar
Hello. Yes. Yeah, so congratulations on healthy numbers. So most of my questions are answered. I just wanted to understand this presentation that you have made. Like if we come to page number eight of your PPT investor presentation. So here you have taken your total income for calculating nims. So is there any reason for including fees and commission income in the line item As I just wanted to understand the perspective on this.
P. Balaji
No. Whatever is as per the clause 41 that is being computed in the class 41 interest interest on FD, all those kind of income is getting added. So that is how the names are computed. If you specific to Rachel’s computation, I can. I can take you offline and then see I can give you a full explanation.
Kartikeya Kumar
Okay.
operator
Thank you. The next question is from the line of Amit Javi. From Javi. Then par. Please go ahead. I would request you to unmute your name and speak please.
Unidentified Participant
Understood sir.
operator
Hello. Due to no response from the current participant, we will move on to the next participant. The next question is from the line of Nadesh from Investech India. Please go ahead.
Nidhesh
Thanks for the opportunity and conversations for a good set of numbers. And it’s heartening to see that Tamil Nadu growth has come back which I. Think is quite good for the subject. What is the guidance for next year in terms of disbursement? Overall disbursement growth and AEM growth for FY26.
P. Balaji
The A growth we are guiding around 28 to 30% disbursement growth will be the result around 24, 23, 25% or maybe 25 as well.
Nidhesh
Sure, sure.
P. Balaji
And secondly I noticed that we have done some assignment. I explained the strategies on how the growth is going to come.
Nidhesh
And second is this assignment income. I think this is the first time we have done assignment income. So why there is a change in strategy and how should we model it? What percentage of AUM will be assignment done on an annual basis going forward?
P. Balaji
Actually, the thought process of direct assignment came in first. We wanted to test this transaction because we have not done this for years and we wanted to do that and test how the portfolio of actors is being felt by the persons who are buying the portfolio. That is the first thing. And also considering the evolving funding environment where RBI has also been interested on diversifying the borrowing. And so that is one thing which has triggered this thing. Third thing is of course it is ALM management tool. That is also the third one. The fourth thing, the major more important thing is improve on the principal business criteria.
If you look at our principal business criteria, as of 31 March it has improved to 64.3%. So that is more of a thing. So going forward also we’ll be doing selectively. I mean it is not that we’ll be going widely aggressively on this assignment because so maybe 150 crores every quarter we might be considering doing this.
M. Anandan
Just to add to what Mr. Balaji said. I mean this thought process in terms of, you know, when all of us are aware that the financial metrics of Aptex is one of the best in terms of ROA ROE and our roe in the fourth quarter crossing 19%. Despite this attractive financial metric when it comes to interfarm comparison with other housing companies, other NBFCs who have been pursuing joint assignment system for almost three to four years. Somehow in this interim comparison, in our view it’s already been out in the sense our numbers are always concerned with all the other companies who’ve been doing booking the assignment income thereby their NIM and roe whatever reported incorporates income arising out of the assignment.
Our income is not, our returns are not. So we would also want to. In the end of the day, when the investors and analysts look at the interval comparison, we are really at a disadvantage. And that’s also a factor which we have been taking into consideration in addition to the various other elements like diversification of resource principle, principal business and things like that. So this is something which we are, you know, we have discussed it with detailed and taken the business
Nidhesh
in this segment. Are we doing housing loan or non housing loan?
P. Balaji
We did the 75 crore assignment of non housing loans in the housing finance company.
Nidhesh
Okay. And the cost of fund from this.
P. Balaji
No, sorry. That’s where the issue of principal business comes in, you know, in terms of. In housing company.
Nidhesh
Yeah. And lastly, what will be the cost of funds from this source of funding assignment? Is it better than our overall cost of funds or.
P. Balaji
It is around 9% foreign yield which is giving us around 18.5%.
Nidhesh
Okay. Okay, great. That’s it for one second.
P. Balaji
Thank you.
operator
Thank you. The next question is from the line of Rakesh Kumar from Valentine Advisors. Please go ahead.
Rakesh Kumar
Yeah. Hi. Hi sir. So just firstly one question. On the LM side I was looking at the average tenor of the borrowing is around seven and a half years and average loan book tenure is around 9 to 11 years. So interested cycle would not, you know, just the LM positioning would help on the margin expansion. If you look at the alm, what we need to look at is what, what you rightly said is the. On the asset side it is around 10 to 11 years. On the borrowing side it is around 7 years. So there is a small gap. But if you look at the leverage again our leverage is very low. So to that extent we are comfortable on the airline and even as of today and going forward also all the buckets, it is surplus. That’s because our spreads are around 9% and the NIM is around 11 12%. So we don’t see a problem there.
And we want to limit the leverage to maybe four to five times. So that’s how the whole ALM issue also will be managed. And secondly, sir, you know, with reference to, you know, borrowing, equity breakup and you know, floating rate loan, around 19%. So in this interest rate cycle, you know, 38% kind of funding part of floating rate loans. So how much would be the drag in terms of, you know, the margin, you know, because of the rate cycle?
P. Balaji
Actually we stand to benefit. Right. See what is happening to you on the asset side if fixed rate borrowings is 80%, I am not under pressure to pass on the interest rate benefit which is going to come in on the borrowings on that 38% borrowing to that customers. So as compared to other companies, we are at a slightly advantageous position in terms of spread improvement and NIM expansion.
Rakesh Kumar
No, what I’m trying to say that 19, approximately 18.6% of the loans are floating rate. Right. So anyway, anyway, you know that rate is going to come down and that is being funded by the equity which is 38% of your total borrowing and borrowing mix or which you’re using in the business. So basically on the asset yield side, your, you know, your yield is coming down which is being funded by the fixed rate kind of equity though it has a cost of equity but just from the, you know, from the accounting perspective it will compress the margin.
Right.
P. Balaji
But on 19%, even if I have to reduce it by 0.25%, what will be the compression that will come in?
operator
Sorry, sorry, I missed. There are some overlap. Could you come again Sir?
P. Balaji
On the 19 of the loan book, even if I have to reduce by 0.25% because of the interest rate benefit that I’m getting, what is going to be the impact? Because 80% I’m not going to reduce at all. So that is the offset. That’s what we are trying to explain.
Rakesh Kumar
Correct. But I understand it will be marginal. But just thinking that how much could be the marginal.
P. Balaji
We can discuss the top line for this specific.
Rakesh Kumar
Thank you. Thank you sir.
operator
Thank you. The next question is from the line of Mona Kirtan from Dalit Capital. Please go ahead.
Mona Khetan
Yeah, hi sir. So firstly. Yes. Yeah. Is it better?
P. Balaji
Yes, yes.
Mona Khetan
Yeah. So in your PPT you’ve given this time the address ticket size in housing book, it’s about 9.2 lakhs. So this is an incremental aggregate ticket size. Right. At the portfolio level it should be a tad lower. Is that a fair understanding?
P. Balaji
It is on the. On the. It is not at the portfolio level, it is on the sanctions.
Mona Khetan
Sure. And when it comes to your bank borrowings, what is what share is fixed rate bank borrowings? If I’m correct, you do borrow at fixed rate from banks. And what is the typical tenor in those borrowings?
P. Balaji
44% is the fixed rate and typical tenor is if it is bank borrowing it is around five years. If it is from NHB, obviously it is 10 to 15. 10 years or 15 years.
Mona Khetan
So of the total borrowing, 44% is fixed rate. But of the bank borrowings, how much is fixed rate versus the borrowing?
P. Balaji
I don’t have that number. I’ll communicate to you. Yeah.
Mona Khetan
Okay. And within that what is the typical tenant when it comes to bank fixed rate borrowings, is it also five years typically or lower?
P. Balaji
We don’t borrow lesser than five years. So that is very clear. But this basic number I’ll get back to you.
Mona Khetan
Got it. And on the when I look at your self employed versus salaried make, if I look at the last couple of quarters, the share of self employed has increased. So how do we read this? Is it driven by some regional factors or any change in lending approach? You know, a few quarters back it was almost self employed share was almost 71.72. It increased to 78. So how do we do this?
P. Balaji
It’s not a major increase, Mona. The thing is 72 to 71 to 3 70. But see our kind of customers are self employed customers. That philosophy doesn’t change for actors. The target customers are basically they are cash target customers plus one member in the family will be running a business or something like that. So that is what is getting classified as target customers. So the underlying for any of our customers is mostly self employed people and mostly giving essential services.
Mona Khetan
Got it. And just one thing. On the assignment portfolio that you did so incrementally also we plan to do only non housing portfolios to benefit from the loan mix requirement.
P. Balaji
Yes.
Mona Khetan
And how, how large could this share? Could this be as a share of the eum?
P. Balaji
No, actually I told you we are not going to be very aggressive in this run. Maybe 100 to 150 crores a quarter. We’ll be able to do this.
Mona Khetan
Sure. Thank you so much.
operator
Thank you. The next question is from the line of Aman from Philip Capital PCG. Please go ahead.
Aman
Hello. Am I audible?
P. Balaji
Yes.
Aman
Hello Mr. Balaji. And congrats to the management team on a strong quarter and good results. So my question is specific to Odisha. So I think one of your peers also, I mean the bigger peers also tried going into the street but didn’t really have much business there. So is that something that is sort of, you know, slowing down our expansion plans in any way because. I see. So if I remember correctly you mentioned about 10, 15 branches every year and. And potentially 10, 15 matches in Radish and Maharashtra over the next couple of years. Right.
So I mean is that something that is weighing in on you?
P. Balaji
No. What I mentioned was 10 branches in both Udita and Maharashtra. So that means five branches more in Udita this year. And if you’re asking specifically about Odisha, we are actually having very positive response. And the loan book which we have built is very strong and the repayment patterns are very good and we will continue. See the thing is how we select the customers is the differentiator. See if some other company has ventured into this state and they were not successful, that doesn’t mean that we will not be successful. So the thing is like we are a credit driven company.
We will be funding the same profiles like what we fund in the other states. So this will continue and we will continue to choose our customers correctly. So that is how the Orissa portfolio will grow. And we are very confident about that state.
Aman
No, I get your point sir, but so of course, I do not want to comment on the competitor, but I would like to know what is working for you really. Because you have the option of choosing the borrower. Right. But the borrower of course has many other options. You know, your bigger lenders and you know, some regional players. So what is working for you that is driving the borrower sort of, you know, to come to actors for a loan.
M. Anandan
You know, just to add a point here, you know, we can look at the as a state, Maharashtra state, that’s one thing. But our. As Mr. B explained, our strategies continue to continuously expand and meaning that we are already present in Telangana and Narasta and we are starting our entry into the Orissa and Narasta in the adjacent districts. Only the adjacent district of example Orissa, which is connected with Sripathalam in Andhara and Vijayanagaram in Andhara. Now the adjacent districts culture of the people, the culture learning is almost same as the Ander. The adjacent, you know, say, you know, statistics like similarly in terms of maras also we are present in TAM and Karnataka and we are really starting with the adjacent system and progress will build it up, you know, over time in the state.
That’s one element. So in other, they are not really. Totally, totally new and start five branches that we start started last year. They are really serving the adjacent districts of the Andhra Pradesh. Okay. And now going forward also, you know, we one as element second is really our credit underwriting is. Is lot more. We believe is lot more relevant and deeper and with the philosophy that, you know, whatever business that we do is going to be, you know, credit driven rather than disburs.
Aman
Okay, got it. I think that broadly answers my question. And so my last two questions would be on disbursements and the India. So a couple of quarters back I remember Mr. Balaji mentioning a bit about some issues in Karnataka with response with. With. With respect to the eata. Right. And one of your peers again mentioned that to an extent these, these issues have been solved. So have we seen any disbursement pickup in the state of Karnataka?
P. Balaji
Definitely there is a good disbursement pickup. If you look at last year also I think there has been a good growth.
Aman
Okay. And sir, one last question would be in the Maharashtra disbursement. So are you seeing any service compared in terms of the rates? Because I think Maharashtra is a fairly competitive state with a lot of lenders. Right. So are we seeing any pressure on our incremental disbursement lease?
P. Balaji
No. But as Mr. Anandan also explained, again, we are in this contiguous expansion mode where Maharashtra, just to give you a broad guideline on the Karnataka, it is around 26% growth has come. So the EATA issue has got solved and the growth is coming back in Karnataka, that is one now coming to Maharashtra. Again this continued growth is being followed and most of the branches are close to Telangana state where the credit culture of these people still spills over to these branches. So we are not seeing that kind of pressures on the yields and we still continue, we will be continuing this kind of growth in this state as well.
Aman
Okay, so just to conclude your explanation, so you are sticking to the border states where the culture is pretty similar to the current states and of course the base is fairly small for us that we do not see much of EU pressure.
P. Balaji
Yes, absolutely. Yes.
Aman
Okay, perfect. Thank you sir. That answers my question. All the best for the next year. Thank you.
operator
Thank you ladies and gentlemen. You may press star and one to ask a question. A reminder to all the participants that you may press star and one to ask a question. The next question is from the line of Shweta from Elara Capital. Please go ahead.
Shweta
Thank you sir for the opportunity and congratulations on a good quarter. So a couple of questions. Can you provide some color on gross stage two because sequentially the absolute has remained slightly sticky. So should we attribute this to a particular geography or say concentration of quasi home loans or business loans which are contributing to this even though ECL has sort of gone out there. So yeah, that’s my first question.
P. Balaji
Now basically stage two, we are not seeing any stickiness across products or across states. If you look at 31st December it was around 504 crores. It has gone up to 507 crores. Of course on percentage terms it has reduced from 4.93% to 4.72%. So we are not seeing any kind of thing pressures on the stage two and slightly better in this quarter as compared to the last quarter.
Shweta
Okay, okay. So it’s, it’s broad based, so basically no concentration.
P. Balaji
Yes, yes.
Shweta
Okay. Okay. So my second question is. So who are the takers of our BD out cases?
P. Balaji
There are some MBSP who take us, take our, take our loans, maybe banks, small finance banks, hand some of the NBSes. I don’t want to name them but it is that way. But the amount is very small.
Shweta
Yeah, sure noted sir. And lastly, what is our employee attrition run rate and how are we in terms of incentivization vis a vis industry standards? Thank you.
P. Balaji
If you look at attrition at the top management level there has been nil. And at the middle management level comprising of cluster managers and everybody area managers it is around 4 to 5% and at the branch manager level it is around 10%. Of course on the field level, as compared with the other companies our attritions are also slightly high, around 40 45%. So one thing is we are giving, we have introduced experience scheme on retention incentive and of course handholding them for first three months to perform better. And if there’s a person stays in the company for first six months and is able to contribute to the company with two logins or one login per month, we try to incentivize them by way of a fixed amount and of course our disbursement and login incentive policy per month if they’re able to do more business, their income levels are also going up.
So those are some of the things which we are taking care to control the attrition and hopefully that will improve in future as well.
Shweta
Okay, so just a follow up question. So what is helping us driving down our OPEX on the cost front? So I’m not talking about cost income ratio or OPEX to asset in general we’ve been doing well on OPEX driving down. So which are the key components which are aiding that?
P. Balaji
It’s actually everything if you look at it. If you look at our salary and incentive structure, it is more driven by productivity rather than the increase in the cost. So we demand productivity in whatever we do. And similarly if you look at other expenses, even if it is it, we don’t go for many big names, we just have persons who would develop it for us and at a maybe really reasonable cost. But it has the same features as anybody else is having. So that is one thing. Then the next thing is we are wired that we are frugal and we don’t want to spend very much on our branch infrastructure because we strongly believe that the people at the branches have to be on the field, be it sales or credit or collections, where to do more business or more collections.
So we have a basic infrastructure which provides basic furniture, Internet and telephone connectivity and computers. So these are all the things. So it is not one thing which is driving the cost down. It is basically all round things.
Shweta
Sure sir, that’s helpful. Thank you so much and best luck for your future endeavors.
P. Balaji
Thanks via.
operator
The next question is from the line of Amit Javed from Javed and Partners. Please go ahead. Amit, I would request you to unmute your line and speak please due to no response from the current participant. We will move on to the next participant. The next follow up question is from the line of Rajiv Mehta from yes, securities. Please go ahead.
Rajiv Mehta
Yes, thank you for allowing a follow up, sir. Just wanted to check on a couple of things. So I think circling back to the cost. So we are confident about, you know achieving the dispersal growth and the Indian growth numbers that we’ve spoken with the same cost structure in terms of say employee salary incentives, locations where we are present.
P. Balaji
Definitely if you look at it, I explained the strategies on how we are going to. Basically we are. I mean all this the categories which I told has the productivity element imbibed in that. So there is no compromise on the productivity. So definitely we will be able to achieve this at these cost levels.
Rajiv Mehta
And one thing, I mean the rejection rates for the logins in FY25 versus FY24 were stable or higher. Because I think in one of the previous answers you said that long term sanctions ratio has been stable implying that rejections have also been stable.
P. Balaji
Yes. Yes, absolutely. It has been stable all through the years.
Rajiv Mehta
Got it. Yeah, that’s it, sir. Thank you.
operator
Thank you. The next follow up question is from the line of Kashan Pari from organization. Stanley, please go ahead.
Kashan Parikh
Thank you for taking my follow up question. I just had one question. Help us refresh your credit cost guidance. I see that we have put out the press release at 40, 45 basis points. But just wanted to understand this a little bit more and contextualize it in light of the accounting change that we had with the auditor change that we are now making of the recoveries from a side cost and also from a point of view of provision cover that we would like to maintain on the book.
P. Balaji
We are not able to hear you properly that there was an echo. But what I understand is you want some guidance on the credit cost, correct? Yes. In.
Kashan Parikh
In context of the fact that we have this accounting changes the new auditors with netting off of Magdalene recoveries now within the credit cost.
P. Balaji
That is just an accounting treatment. So the accounting treatment will not have any distinct on the credit cards. See what our guidance on the credit cost is around 40 to 45 basis points. So that is the guidance. While we want to better that. But because by way of more bandit security or something like that. But. But the guidance will be around 40 to 45 basis points.
Kashan Parikh
Understood. And that would be drawn of back debt recoveries, right?
P. Balaji
Yes, yes, absolutely.
Kashan Parikh
Okay. All right. Thank you.
operator
Thank you ladies and gentlemen. That is the last question for today. I now hand the conference over to the management for closing comments.
M. Anandan
Yeah. Thank you, Mona, for organizing this conference call. I would like to pay my sincere gratitude to all the analysts and the investor friends who have taken time out. To participate in the call today. Please feel free to connect with us in case you have any further questions. Thank you.
operator
Thank you. On behalf of Dalit Capital. That concludes this conference. Thank you for joining us. And you may now disconnect your lines.
P. Balaji
Thank you.