Bajaj Housing Finance Ltd (NSE: BAJAJHFL) Q2 2025 Earnings Call dated Oct. 21, 2024
Corporate Participants:
Atul Jain — Managing Director
Gaurav Kalani — Chief Financial Officer
Analysts:
Nischint Chawathe — Call Moderator
Raghav Garg — Analyst
Deepak Gupta — Analyst
Viral Shah — Analyst
Piran Engineer — Analyst
Abhishek M — Analyst
Shubhranshu Mishra — Analyst
Kunal Shah — Analyst
Pranav Gupta — Analyst
Jignesh Shial — Analyst
Omkar Khandekar — Analyst
Rahil Shah — Analyst
Jigar Jani — Analyst
Gaurav Jani — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the Bajaj Housing Finance Q2 FY25 Earnings Conference Call hosted by Kotak Institutional Equities. [Operator Instructions]
I now hand the conference over to Mr. Nischint Chawathe from Kotak Institutional Equities. Thank you. And over to you, sir.
Nischint Chawathe — Call Moderator
Hi, thanks, Rio. Good evening. Welcome to the Maiden Earnings Conference Call of Bajaj Housing Finance Limited. We have with us the management of Bajaj Housing Finance today to discuss 2Q FY25 performance represented by Atul Jain, Managing Director; Gaurav Kalani, Chief Financial Officer; Jasminder Chahal, President, Home Loans; Vipin Arora, Executive Vice President, Commercial Real Estate and LAP; and Niraj Adiani, Executive Vice President, Risk.
I’ll now like to hand over the call to Atul for his opening comments.
Atul Jain — Managing Director
A very good — thank you, Nischint, and a very good evening to all the participants on the call. This is our maiden call, the first call. So that’s where a special thanks to all the participants who have joined on this call with us. I’ll take the — the results of the company have been uploaded on BSE, NSE along with the investor presentation deck which again has — like I’m calling out the first equity presentation deck what we’ve uploaded.
I’ll refer in first 10, 15 minutes few salient features of the deck, where I will refer and then leave it for question and answers to be there. I straightaway jump to panel number 3, which is on the quarterly synopsis of the results. For the last quarter, Company crossed two significant milestones, one was listing, of course, and second has been the crossing of INR100,000 crores AUM in 7th year of operation of the company — 8th year of the operation of the company. We continue to add strong growth with the AUM growth of 26%.
Absolute AUM growth was in same range of last two quarters. PBT growth was 23%, PAT was 21% because of a tax adjustment in the previous year versus the current year while risk performance continued to remain strong at GNPA at 29 bps and NNPA at 12 bps.
From an operating efficiency point of view, opex to NTI improved to 20.5% versus 22.1% in the last year Q2. On a scalability metric, AUM has come as INR1,02,569 crore, 26% growth. From a profitability, PBT was INR708 crore and a 20.5% opex to NIM [Sic – NTI], asset quality 0.29% to 0.12% of NNPA. Credit cost was 2 bps which was because of an overlay release, net of overlay release, it could have been 14 bps. Capital adequacy led by because of a public issue in the — towards the end of the quarter, last quarter has been 28.98%.
I’m moving to panel number 4 which is on the business metrics, 26% AUM growth is called out. In between as a sub-component, home loan at 24% YoY AUM growth, loan against property at 18%, lease rental discounting at 28% and a developer finance at 56%.
In terms of a portfolio composition, it remains by and large stable with 57.2% as a home loan and close to 10% as loan against property, 19.6% lease rental discounting, 11.7% developer finance, and 1.7% other. By and large in the same range which had been there.
Disbursements for Q2 was tad lower than Q2 FY24 largely led by a decline in the transactions in the LRD side of the business for the quarter because last year, same quarter, we had two marquee transactions — large transactions in the lease rental discounting business vis-a-vis that is where the disbursement has been a tad below the last year same quarter.
I move to panel number 5. Cost of funds came in at 7.92% which was 5 bps higher than Q1, FY25 at 7.87% and year-on-year 28 bps increase which has been there. Borrowing mix largely 44%, 45%, 11%, 44% to the bank, 45% on the money market and National Housing Bank at 11% as in the mix.
On the gross spread basis, on a Q2 FY25, we had 1.9% gross spread which was stable from the last quarter, which was a Q1, 1.9%. Of course on a year-on-year basis, the gross spread was 2.3% in Q2 FY24.
NIM at 4.1% in Q2 improved marginally from Q1, which was at 3.9%. However, again, a Q2 FY24 point of view, it was 4.4%.
Opex to NTI stood at 20.5%, which is an improvement on 22.1% in like-to-like quarter in the last year.
For the first half of FY25 Opex to NTI stands at 20.7% versus 23% in H2 FY24.
I’m moving to the panel number 6. Our GNPA, NNPA has already called out. Loan loss to average loan assets 0.2% as of 30th September. Our net of overlay release, credit cost is putting this, on a ROA 2.5% in Q2 FY25, nearly same ROA of 2.6% in Q2 FY24. ROE given the capital raise in September, coming down at 13% in Q2 FY25 versus 16% in Q2 FY24. Capital adequacy for the same reason, jumping up to 20 — close to 29% in — on 30th September ’24 against a regulatory requirement of 15%.
Company completed its IPO process. Got listed on 16th September. As of the 30th September, out of IPO proceeds of INR3,560 cores what was for the company primary raise, INR1,500 core was yet to be deployed and they remained in the monitoring account. It’s expected to be utilized during October ’24.
Profit after tax already called up, moved up by 21% against a 23% — 23% improvement in the profit before tax.
I’m moving to the panel number 14. The strategic differentiators of the company. Since this is the first presentation, there are four, five differentiator what we put as a company differentiator. First is a scalable balance sheet because we are constructed for scale and that is where prime housing and lease rental discounting works as a scale builder for the company which is reflected in last 7 years stat record, starting a new company to a INR100,000 crore balance sheet.
We are constructed as a low-risk business model which is underwritten from a robust underwriting. Our risk management performance is also from the type of asset what we choose to lend. We are constructed for medium return which we balance the portfolio mix between operating business segments and sub-segments to deliver medium return to the shareholders. And all for a suit of mortgage and within all transaction types, all subsegments, prime, non-prime, we address while the relative weightage on each segment can be plus or a minus depending upon our risk-return point of view on a segment.
Borrowing mix, a diversified borrowing mix between banks, money market, NHB for — and a focus on enhancing floating rates mix is a strategic differentiator.
Moving to panel number 16 which is a quarterly financial snapshot. We have discussed the prime points. Only point out is on the half-yearly performance at 26% AUM growth, 20% pre-provisioning operating profit growth, profit before tax growing at 21%, PAT growing at 13% and this reminding last year in quarter one and quarter two, we had an exceptional tax release of previous year tax write back. That is where the profit after tax growth is lower than the profit before tax in the first half.
Moving to panel number 18. On the key financial trends, on the gross spreads, gross portfolio yield remains steady at 9.9% from a one-year Q2 FY24 to Q2 FY25. Our cost of funds have eased up from 7.6% to 7.9% over the same period. Our gross spread from the same period 2.3% to 1.9% but stable from last two quarters — nearly stable from last two quarters at a 1.9% to 2% in last three quarters.
Operating efficiencies given from opex to NIM moving down to 20.5% and NIM slightly inching up in last two quarters, going near to the quarter three FY24 at a 4.1%.
Asset quality remains stable from a GNPA and NNPA point of view and return ratios — return on equity coming down because of equity inflation, while return on assets climbing up.
Moving to panel number 19 which is a borrowing mix, 44% as a bank borrowing, 43% as a NCD borrowing and 1.6% as a CP borrowing and 11% as an NHB borrowing is by and large the mix with focus on a longer term funding through money market and NHB refinance and we have a active relationship with 17 banks on the bank line basis.
Moving to panel number 21, the sustainability ratio for the company, on a leverage ratio, our threshold is 8. We are depicting last four quarters. Of course the — right now the leverage ratio has come down because of a right issue in the first quarter and then followed by a public issue in the second quarter. But that’s the ratio we will track at a 8 time leverage ratio as we go on and capital adequacy from a regulatory threshold of 15%, of course, has eased up significantly because of a Q1 and a Q2 capital raise.
I move to panel number 22 which is depicting the portfolio mix over last one year YoY and also between from September ’23 to — March ’24 to September ’24 by and large stable, 1% differential coming in in the home loan mix going down and a 2% growth in the developer construction finance portfolio over the — over a one-year period.
Other assets are lease rental discounting remaining stable as a part of a portfolio. Loan against property going down by around 1% over the period.
Moving to panel number 27. On an asset quality trend. Stage 1 assets remaining by and large stable 99.21% from Q4 FY23 to 99.39%, 99.37%, 99.35%, a stable range over last six quarters. Stage 2 assets coming down from a year-on-year perspective from Q4 FY23 from a 0.57% to 0.32%. Provisioning coverage ratios, PCR on a Stage 3 assets remains range bound on a 57%, 58%, 59%. GNPA, NNPA numbers we have spoken about.
I come to the last slide where I am pointing which is at 29 slide, panel number 29 which gives a asset-wise breakup on the GNPAs, NNPAs on a asset breakup from a home loan to loan against property to the other loans.
This is what I have from my side. Thank you for patient listening. I hand over to you Nischint for….
Questions and Answers:
Operator
Thank you. [Operator Instructions] The first question is from Raghav Garg from Ambit Capital. Please go ahead.
Raghav Garg
Hey hi, Atul and team. Thanks for giving me the opportunity and congrats on the results and the listing as well. I have a few questions. So one is, what was the disbursement growth in the home loan segment for this quarter, for the second quarter and also if you can tell me for the first half.
Atul Jain
So I have readily available on the YoY numbers. On the retail side, the disbursement growth was close to 7% while on the commercial side, the degrowth was of 9% on a YoY number. We can check on the quarter-on-quarter numbers and come back to you. My assumption is it will be by and large stable. By and large stable but we can come back on the specific number. YoY numbers, we have kept ready for record.
Raghav Garg
Right. Home loan, you’re saying 7% YoY disbursement. Right?
Atul Jain
We break it in retail and commercial rather than breaking it on the segment. So on the retail commercial is which is construction finance and your lease rental discounting versus a home loan and a loan against property. But in any case as a AUM growth also YoY is given of all the segments which is by and large stable barring construction finance which has risen more other are 24% is a home loan YoY AUM growth versus 18% loan against property, 26% lease rental discounting kind of 68% there, at a overall company level 26% growth. But we can come back to you on the quarter number if you’re interested.
Raghav Garg
No problem. And how are you looking at the disbursement growth in the retail side for this year as a whole?
Atul Jain
Raghav, we are operating in one, a bit of a construct — because we are yet not out, the publicity guidelines for future looking there. But I’ll say that we are — because we are still in regulatory silent period because this is the 40 days as advised by legal counsel to us. But we will be by and large stable. We are not seeing any major changes in the disbursements as we go forward.
In fact, we — our view that we should be, as our view of a near prime and affordable is kicking in, we should see a growth picking up a bit towards in the retail segment. So far it is largely led by prime. But with the affordable and near prime segment now started delivering numbers, as we go forward, we should have a pickup in the retail numbers.
Raghav Garg
Atul, the only reason I was asking is that you’ve done 7% for this quarter and given the AUM growth has been at around 26%, a single-digit growth would largely mean that the AUM growth slows down for the — that the broad idea that one would get. So hence that question.
Atul Jain
Raghav, that 7% is the past quarter when we are saying YoY on the retail side. But that is already reflected in the AUM growth number what has come because AUM growth numbers also given at a segmental level. So I think that is a reflection.
Raghav Garg
No, fair enough. But as your base grows larger, those concerns is — that’s one of the concerns which may be there. That’s all.
Atul Jain
I think we are making a statement of….
Raghav Garg
I mean….
Atul Jain
As a basis — as a base grows larger, yes, of course, disbursements need to grow faster to maintain the same AUM growth. It’s a mathematically tax statement as opportunity. But that is what we are there for. We are — we’ll try what we are. We have to do what we have to do.
I’m trying to balance the response. Like I said, that since we are under a publicity guideline not to give too much of a specific future, forward-looking numbers we can’t share. That’s why I’m trying to moderate my response.
Raghav Garg
Understood, that’s fair enough. Another question is how much further can the cost of borrowing go up from here? Because I was looking at some of that NCD data when some of your low cost borrowings are maturing in next couple of quarters. So just in that backdrop, what is your expectation of further increase in cost of funds?
Atul Jain
In the cost of fund side, by and large, whatever the — you can say the indication of either the earlier low cost NCD maturing or the pricing, the peaking out, or peaking out of the pass-through in the cost of fund that has happened. Whatever we are seeing a bit of a uptick in the current quarter is largely because of — you can — you are aware in last three, four months, there has been a MCLR increase by the bank. There has been all the banks, most of the banks have increased MCLR.
It is no catching up, whatever increases in the Q2 because whatever quarter has to be happened, has happened. There are very little number of — I’m not even sure it is in single — it will be less than INR300 crore, INR400 odd crore of a kind of a low-cost NCD earlier which are yet to be retired. Otherwise, everything is now — it has got — structurally it has got peaked up. It has structurally got peaked up.
Raghav Garg
Understood. Understood. And I’m assuming since you’re in that 40-day period, you’re also not allowed to speak about your credit cost guidance. Is that correct? Otherwise, my next question would have been on that given that the current quarterly run rate seems too low.
Atul Jain
So quarterly run rate, like we called out the 2 bps is looking like from because of a overlay release and net of overlay release, we are by and large been stable in last four or five quarters of a 14-week to 16-week kind of a credit cost net of overlay release. We don’t see any reason because stage two assets have remained at a low level or have come down over the last one, 1.5 years. We are not looking to — look at a very differentiated or any significant change in the credit cost numbers as we go forward or net of overlay release.
Raghav Garg
That’s all from my side and thanks a lot, Atul. Thanks.
Atul Jain
Thanks, Raghav. Thank you.
Operator
Thank you. Next question is from Deepak Gupta from SBI Pension Funds. Please go ahead.
Deepak Gupta
Good evening, sir. Thank you for taking my questions. My first question is on loan sourcing strategy for the company. If you could give us a sense what percentage of loans on book and incidentally are being sourced from the branches of Bajaj Housing versus DSA. And in DSA, what would be the share of Bajaj Finance?
Atul Jain
Deepak, see what we source there is no — in our kind of sourcing but we are largely in a prime segment. Our is not — branch is not the sourcing there. So branch is largely a front office where our front office sales people come and operate from. We largely source at the counter at the developer counter or through the distribution partner.
So in that sense and we largely in our main cities where we operate larger part of the business. We operate from BHFL branches, not from BFL branches. Both companies have different branches. Only in some places in the rural market, we take space or a subspace from Bajaj Finance branches to operate. But that’s not a BFL branches organization. It is our people who may have been sitting in the BFL branches as a cost-sharing basis where we don’t have number of — sufficient number of people.
So the entire sourcing by BHFL not by BFL. If the question is pertaining to the ETB mix or the Bajaj fix because we get consented customer on the digital leads or on the franchise customer of BFL. That sourcing in the home loan side will be between 12% to 15% kind of a sourcing which remains by and large stable. Out of the home loan dispersals whatever come through 12% to 15% dispersals come from consented customer digital leads basis from what comes from BFL to us.
At a distribution side there is no overlap between two companies, but both companies mobilize business separately. So whatever business we see from distribution for BHFL is a BHFL mobilization, not a BFL mobilization.
Deepak Gupta
Sure, I hear you, sir. And my next question is on the fact that given the fact that now Bajaj Housing is listed and is arm length between Bajaj Finance and Bajaj Housing, can Bajaj Finance also do similar business as Bajaj Housing?
Atul Jain
See, Deepak, Bajaj Finance already does loan against property business because both companies have their own strategic constructs. Bajaj Finance does the LAP business to primarily meet their WAC [Indecipherable] fantasy requirement and to deepen their relationship with these customers. In BHFL, we primarily look at LAP for incremental returns because we are a housing finance company.
Overall construct from a regulatory construct, we have to have a majority of the assets in the individual home loans, 50% plus, plus the residential assets have to be 60% plus. So for us, LAP and LRD are a mix of opportunity base. So it comes as a lower priority for BHFL. BHFL its own space, own priority. BFL has its own priority.
So both companies are not guided by each other priority. So that’s where BFL already does a significant amount of LAP business from quite some time, not from today.
Deepak Gupta
Sure. Great. Thank you so much.
Operator
Thank you. [Operator Instructions] The next question is from Viral Shah from IIFL Securities. Please go ahead.
Viral Shah
Yeah. Hi, Atul, congratulations BHFL team. I had one question, I’ll just ask that and then maybe I’ll come into the queue later on if at all time permits. So I see your employee count has been reducing since last few years and also in the first half it has reduced. So can you tell us like what is the data on the off-roll employee? Are they exclusive to us? And like, what are the roles that they perform?
Atul Jain
Thanks, Viral. Viral, what we — our — in our case, what we have done is that we have changed our strategy of entry-level non-managerial positions. We have shifted to contractual employees around a year, 1.5 year back. That’s why where you see the employee numbers coming down, because all the replacement on all the front-end manpower comes through the manpower through outsourcing arrangements, through a partner.
So if you have to — the employee numbers have come down. But if you look at the total number of people deployed, if I have to add the contractual employees, we would have gone up by almost close to 400 people in between March ’24 to December ’24 because more of a contractual employees, outsourced employees have come in.
So the reduction in the on-role employees have to call out in last six months would be close to 252 because of normal attrition and the — all new rules which get created or get refilled or gets created on the contractual side. While on the contractual side, increase would be 700. So net increase of close to 400-450.
Viral Shah
Got it. And I believe you won’t be able to share the numbers as of now because of that restriction.
Atul Jain
I shared the numbers right now. See the number of employees — when you have asked the number of employees, I said that in last six months, total number of employees including outsourced has gone up by close to 400.
Viral Shah
But you won’t be able to share the absolute number, the off-role numbers?
Atul Jain
Off-role numbers are — we can — you give us some days to share the absolute number. But in any case, if I was calling out the 400 numbers are gone up, you can [Speech Overlap]
Viral Shah
Got it. Makes sense. Makes sense. I’ll come back in the queue. Thank you.
Atul Jain
Thanks.
Operator
Thank you. The next question is from Piran Engineer from CLSA. Please go ahead.
Piran Engineer
Yeah. Hi, team, congrats on the quarter and the successful IPO. Just one question on your floating rate loan. So what percentage would be repo linked versus internal benchmark linked and how are you thinking about pricing in a repo rate cut environment?
Atul Jain
So in terms of our repo rate, I’ll give you the specific number. I think close to INR15,000 crore book would be — INR13,000 crore output asset book would be repo link there, which is match funded by repo link liabilities close to match funded by repo link liability. So there is — if your question is on the spread management as a repo rate cuts down, it’s completely hedged or balanced in that sense from wherever, whatever the repo link book is there, the same is backed by repo link liability largely.
Piran Engineer
Got it. And your internal benchmark moves, is that timed with repo or how does it typically move?
Atul Jain
Internal benchmarks are linked to our cost of fund movement. Internal benchmarks are linked to our cost of fund movement.
Piran Engineer
Got it. Got it. Could I squeeze in one more question?
Atul Jain
Yeah, please go ahead.
Piran Engineer
Yeah. Okay. Just on the disbursement growth being only 7% in retail, is that more of conscious decision with regards pricing or asset quality or is it a genuine end investor sort of — or end home buyer slowdown?
Atul Jain
No. So there is no concern on the credit cost side or the credit side. The numbers are there. There is no — nothing. What we are envisioning or seeing as a or to go down in terms of are there. Disbursements rather — so my request to you would be to look at because the earlier question was also towards the disbursement growth, probably the portfolio AUM growth is the larger number to look at in the — as far as mortgage business are concerned.
Disbursements grow sequentially or at a number wise mean is in our sense less important than the AUM growth. I’ll say at a AUM growth level in the retail also at a YoY and a home loan at a 24% AUM growth level is a significantly okay number. So we don’t see — so there is no conscious decision to slow down or not — It’s not being slowed down whether from a credit point of view or from….
Piran Engineer
No like competition. Like that’s what I meant. Pricing. Competitive, intense.
Atul Jain
It’s very intense. Competition in the home loan, in the prime home loan remains very intense which all of us remain. But that had been the status from last six, seven years ever since we started the business and expected to remain intense. We don’t see any change in the competitive stance or our competitive stance or our appetite to grow or our ability to grow.
Piran Engineer
Got it. Got it. Okay. That’s it from my end. Thank you and wish you all the best.
Atul Jain
Thanks. Thank you.
Operator
Thank you. Next question is from Abhishek M from HSBC. Please go ahead.
Abhishek M
Yeah, hi, thank you for taking my question. Sir, two questions. One on provision. So just back calculating I think the current run rate of overlay utilization is around INR30 crores a quarter. If we just go by this then maybe in the next one, one and a half quarters, the existing overlay gets exhausted. So suffice to say that next year we should be around this 14 bps, 15 bps kind of run rate of provisions that should — that is a normalized run rate of provisions that should continue. Right?
Atul Jain
Yeah. So. Abhishek, rightfully because the overlay now remains only INR10 crores because INR44 crores is inclusive of macro overlay till that. Because as an ECL policy, that is not a — INR34 crore is a part of a macro overlay at overall ECL policy. So that discretionary overlay remains only at INR10 crore. At a INR25 crores release last year — last quarter it has meant 14 bps of a credit cost, if we normalize that.
If you look at last four or five quarters that other than the period when we had used the overlay release to increase stage one non-bearing point coverage point of view, the credit cost has been by and large in range of 14 bps to 17 bps, hitting 14 bps to 17 bps in last four, five quarter and that’s what normally we should be looking at because as an overlay release is max remaining of a INR10 crore which is available now.
Abhishek M
Okay. Okay. So that normalization may happen quicker maybe by next quarter itself because the remaining overlay is just INR10 crores.
Atul Jain
Remaining overlay is only INR10 crores. So 14 bps to 17 bps is the by and large the credit cost corridor [Speech Overlap] for last four quarter, five quarter normalizing. Overlay release normalizing any enhancement in the stage one asset cover which is — which comes at the credit cost. But we strengthened in lot of places of stage one cover as we had the overlay. As we had the overlay we used that overlay release in — at in few quarters to strengthen stage one coverage.
Abhishek M
Got it. Got it. That’s clear. The second question is just some data keeping questions. Can you share the disbursement mix in the quarter? And just a request, just maybe if you can include it in your deck for future quarters, that will be very useful. But can you share it for this quarter the INR12,000 crore? How is it split between HL, LAP, LRD and Developer Finance?
Atul Jain
Abhishek, we’ll take a call on inclusive of the data point. Right now I’m not having the data point right now ready, because like I said in the earlier question also, we largely go by more by AUM growth whether when we look at a monthly internally or a quarterly internally less of a disbursement. But if that is a requirement from most of the analysts, we start having the data ready when we come.
Abhishek M
Sure. Because the flow helps us understand the direction actually. It’s actually slightly more important the stock we can sort of derive. But just to get a sense, if I look at the AUM mix, would the retail disbursements be lesser than the mix of AUM and the corporate developer Finance LRD would be higher than the percentage mix of AUM? That is how it should play out. Right.
Atul Jain
Because the AUM mix is also published, which is from a one year to six months to now. AUM mix is by and large stable 1% drop in home loan mix, which is on the panel number 22, if you refer which is September ’23, March ’24 and December ’24. AUM mix at our home loan is dropping by 1%, but LAP is also dropping by 1%. LRD remains stable and the developer finance has gone up by 2% from a AUM mix point of view.
But the majority of the book still 57 plus 10 LAP remains retail. So it cannot be — commercial cannot have the more share, right? Because 57.2 plus 9.8, which is 67% of the book is still retail in that sense.
Abhishek M
Right. Right. So instrumentally growth is happen. How long can this growth happen from commercial or rather developer finance and LRD? Or when does growth in home loan disbursement loan against property? When do you have to start growing it at par with LRD or developer finance? That’s my basic question because right now it seems to be growing slower.
Atul Jain
So Abhishek. Home loan in the — again at a AUM level, if we have grown 26%, home loan has grown by 24%.
Abhishek M
No, I’m asking about disbursement actually.
Atul Jain
For disbursements, okay. Like I said that [Indecipherable] disbursements because disbursement more than disbursement AUM is the relevant number, but we’ll start putting a disbursement numbers on that because disbursement numbers are an indicator for AUM growth number. Because eventually earnings is on AUM for the company. But we’ll start putting out the disbursement numbers from next quarter onwards.
Abhishek M
Sure. Okay, thanks. I’ll come back in the queue.
Atul Jain
Thanks.
Operator
Thank you. [Operator Instructions] The next question is from Shubhranshu Mishra from PhillipCapital. Please go ahead.
Shubhranshu Mishra
Hi Atul. Hi Gaurav. Congrats on the successful IPO. The first question is about the developer finance book and the LRD book. When we talk about the active customers or active developer relationships, are these unique corporate houses or how many unique corporate houses would we have in each of the books? That’s the first.
Second is what is the exposure of our home loans and the developer finance book for luxury housing, which will probably run INR4 crore plus in MMR and maybe INR2 crore plus in rest of India.
And the third is a subset of this question, what is your view going forward on luxury housing growth? Because we’re seeing a lot of launches in this segment.
Atul Jain
Sorry. So Shubhranshu, I got your first question, which was on you are wanting to know the corporate developers, whether developer and the LRD book is there. So I’ll answer that question. And third question I’ve understood. In second question, I was not able to hear correctly. But the first question, which remains, which is our — what we have given as a number of projects and also developer relationships as well, which is given out on the deck in terms of the developer finance book is represented by how many numbers?
Generally, lease rental discounting and developer book is not much of over 20 — panel number 26, which gives an active developer relationship to 451. So 693 projects represented by 451 developers. So it is in that sense.
Shubhranshu Mishra
No, no, what I’m asking is out of this 450 developers, how many are unique corporate relationships? I mean, do we have your three or four Raheja exposure?
Atul Jain
No, no. So when we call a developer relationship, that means if there is one person who owns multiple entities, it’s called as one. So 451, when we are seeing developer financing, that is then in that sense, in your question, you can say it’s the 451 corporate relationship for the developer relationships, which [Speech Overlap]
Shubhranshu Mishra
Okay, this are unique in that case.
Atul Jain
Yeah, 451 is unique. That’s where, say 451 representing 693 projects. So that’s how. So there can be multi — people having multiple projects or the same person in the same entity executing multiple projects where we have a exposure, 451 are unique developers.
Same way in the lease rental discounting, 264 are the unique relationships. So there in your same example, if one corporate house has three entities, wherever three relationship it is counted as one. 264 is counted as one.
Shubhranshu Mishra
Understood. My second question was what is our exposure of luxury houses, roughly around INR2 crore plus in rest of India and INR4 crore plus in developer financing and home loans.
Atul Jain
So largely in terms of a dispersal side, in the home loan side, generally INR2 crore and plus would be constituting maybe around 15% odd. I don’t have a specific number right now. I think that’s the approximate number but we’ll check that number. INR2 crore plus, but largest number of dispersals. Our average dispersals in the prime housing space because there are various pieces of business, there is affordable near housing at the rural where the ticket prices are low.
But if you have to talk about the prime housing, their average dispersals size comes at close to INR70-odd lakhs where the larger part of the customers remain between INR40 lakh, INR45 lakh to close to INR2 crore, INR2.5 crore. Above INR4 crore would be very minor part in the retail side, very, very minor part.
And in the developer finance as well, largely the customers who would have funded above INR4 core unit size would again be very, very marginal. We are largely because we do developer finance for two purpose. First purpose is to act as a funnel for home loan. Largely in luxury housing, it does not act as a funnel for home loans. So that’s where the portfolio mix would be very, very marginal for luxury housing above INR4 crore if you’re talking about of luxury housing.
Shubhranshu Mishra
About INR2 crores in construction plans, what would be the exposure?
Atul Jain
I won’t have the ready numbers right now for me to answer. So you should assume majority of the book is towards less than INR2 crore.
Shubhranshu Mishra
And my last question was around your view on luxury housing growth going forward.
Atul Jain
I would — we are very small compared to the industry. So I will desist from giving an industry view in terms of how the industry is going to grow. We believe as of today in a general view, what my personal view would be that all segments of industry have large leeway to grow, but I will resist from making up industry comments.
Shubhranshu Mishra
Sure, sure. Thanks, Atul. Best of luck.
Atul Jain
Thanks
Operator
Thank you. Next question is from Kunal Shah from Citigroup. Please go ahead.
Kunal Shah
Yeah, congratulations for the listing, and thanks for taking the question. So with respect to the lease rental, the way the ticket sizes have been going up now we are almost 103 compared to like less than 60 few years back. So now what size, is there any particular ticket size we would be comfortable with? Developer housing we have managed at less than INR50 odd crores in terms of ATS. So anything out there?
And related to that, when we look at it, almost zero stage two, stage three and developer finance also hardly anything. But when we look at the history, maybe the players in this segment, asset quality has been quite patchy in terms of the — when the cycle turns. So any plan to create provisioning at any point in time because today it’s almost like a zero provisioning on this INR25,000 crores, INR26,000 crores of the book. So now what would be your view in terms of provisioning in these two segments?
Atul Jain
So there are two questions what you have asked, Kunal. First is on the LRD average ticket size versus developer finance average ticket size because in lease rental discounting it’s largely marquee customers and a very large fund and even the REITs which are the customer — the ticket sizes are significantly higher than the construction finance because in construction finance there is an execution risk versus in lease rental discounting. There is no execution risk.
We don’t have a particular ticket size in mind which we target in lease rental discounting, but of course, since we target the upper end of the customers because majority of our portfolio is in a Grade A commercial which is leased out to largely whether a Fortune 500 MNC companies or a large Indian corporate. So the ticket sizes tend to be higher because of the type of collateral and the type of customers we target. The number of average ticket sizes and outcome, we remain open to very little — large ticket size also and lease rental discounting.
In the developer finance, in the construction finance, given there is a construction risk also which gets embedded in the system, we try to be as granular as possible, which is reflected in the average ticket size and average outstanding per quarter because of the method the way we underwrite and the way we disperse which is on link to the stage of construction and also the street courses start from the day one.
That’s where at the outstanding level, at the project level you will see it at a INR17 crore, at a developer level INR26 crore versus even a sanction amount of a INR46.6 odd kind of a crore number.
That is — on the EPS — on the history of the asset quality and the provisioning what you’re talking about, see, lease rental discounting at a INR14,000 crore book, the provisioning in the stage one is INR85 crore which is from a historic point of view since we do not — never had any stage two or a stage three asset. I think 0.61% kind of a ECL provisioning is significantly higher provisioning than whatever ECL model do that.
What I was calling out in earlier question that whenever we used in two quarters to strengthen stage one provisioning because of our overlay release, we use that here because there is — while as a historical on a ECL model there is no loss number or a loss percentage which will calculate on lease rental discounting. But the 0.61% what you can see from panel number 28.
Kunal Shah
Yeah.
Atul Jain
The provisioning is 0.61% on entire stage one asset. There’s no stage two and stage three assets. It’s more than adequate in our assessment. Same in the developer panel. It’s a 0.62%. We carry that. We believe 0.61% and 0.62% at a stage one asset provisioning is a reasonable bit.
On the asset quality cycle, Kunal, I have to call out that we believe the way we have done construction finance in terms of the granular book, we will — we can’t say that in any downturn there will be no — nothing will happen.
But by and large, if you look at what you are referring for the people who have the problem during the industry down cycle, I only request you to compare the average outstanding per project and the average ticket size per project and number of projects they had for the size of the book will be a rightful reflection because we believe the way we do granular disbursement — dispersal is linked to the stage of the project and not overwhelming concentration.
We should be better off even in the industry down cycle and we have tested the industry down cycle earlier as well, while we were smaller at that time. But our — in history of our — we have funded more than 1,000 odd projects in our history. So far there had been only four projects where we had encountered troubles and in the entire history of a seven year out of that, one or two we recovered later on and one or two which are reflected in the stage two or stage three even as of today. That’s what Kunal I had to tell.
Kunal Shah
Okay, got it, got it. Thank you.
Operator
Thank you. Next question is from Pranav Gupta from Aionios Alpha Investment Advisors. Please go ahead.
Pranav Gupta
Yeah, hi, and thanks for the opportunity. Congratulations on the successful listing. Sir, just one question, which is a more longer term question. With no large changes that we can expect in the asset mix, how should one think about long term ROA and think about optimal leverage over a three, four, five year period?
Atul Jain
So Pranav, that is what we have put in our presentation in the panel number on — when we use the sustainability metrics at our latest panel number 21, we believe it is the leverage which is a sustainable leverage metric. And that where as we go forward — as we utilize the capital what has been there, we can see that. Before rate is when we look to raise the excess [Technical Issues]
Pranav Gupta
Right. And just on the ROA bit, with leverage going up, capital getting utilized and no major changes expected in the asset mix, how should one think about ROA going forward?
Atul Jain
So in the last quarter ROA, the capital raise has — had a very meniscal impact because we got listed only on 16th September. So 16th September and that also like we have called out in the presentation, 16th and before, as of 30th September also was unutilized.
Pranav Gupta
Right.
Atul Jain
So there was a minor impact of a ROA in the capital raise in the last quarter. So it’s not that the last quarter ROA is driven by the capital raise of last quarter.
And if you look at the overall broader number as well on the trajectory of ROAs over the period, I think that ROAs had been in the range of between 2.3% to 2.5% by and large over the various — FY23.
Excluding, if I exclude FY23, it is largely in the stable range of between 2.3% to 2.5%, 2.6% gross spread ranging between in a quarter going up or going down slightly a bit. It has been largely stable in last two, three years.
Pranav Gupta
Sure, sir. Thank you so much.
Operator
Thank you. Next question is from Renish from ICICI. Please go ahead. Renish from ICICI, you may go ahead with the question. There seems to be no response from the line of Renish. We’ll move to the next question.
Next question is from Jignesh Shial from InCred Research. Please go ahead.
Jignesh Shial
Yeah, hi, and thanks for the opportunity, and congratulations for the successful listing. I only had one question. Bajaj Finance has a particular product called Flexi Loan which is an OD facility which has been provided personal loan — as a personal product. Do in a home loan we do a flexi loans. And if yes, then what will be the proportion of it just — that’s the only question.
Atul Jain
So Jignesh, in home loan as a regulatory construct, you cannot do flexi because if you — if the customer pays back to you, then it is not — it gets to be classified as a non-home loan. Only in few of the loans if it is a balance transfer and you are opting for a top up, in a top up, you — it can be offered as a ODP. This thing which is not classified as a home loan because that’s classified as a top-up. It will be a very meniscal part of the portfolio because only the few customers who would have — had some top-up, they may have some amount of a flexibility. It will be negligible as a flexi in the home loan side.
Jignesh Shial
Okay. So my understanding is that then all our home loans are pure term loans — term loan kind of product. I mean your…
Atul Jain
It should be, it has to be term loan, Jignesh.
Jignesh Shial
Okay. And no, no Flexi in LRD and corporate also, right?
Atul Jain
No, flexi, Dropline Flexi would be there in loan against property because there’s no regulatory standing there. Regulatory in — I specifically called it in a home loan and a construction finance with a residential finance book because that’s a — there will be no flexi or a very meniscal flexi in the top-up portion within the — out of 57% of the book, I think less than [Speech Overlap] [Foreign Speech] very, very meniscal piece in the home loan side. No, nothing in construction finance.
In lease rental discounting there will be some piece of a Dropline Flexi which will be available to the customer because it a non-home loan asset. You are regulatory allowed to do that. Same in loan against property as well.
Jignesh Shial
So LAP will be — what portion would be then Flexi and any rough cut idea?
Atul Jain
I’ll have to check, but majority….
Jignesh Shial
Would it be very high or a small portion?
Atul Jain
Majority would be term loan. That I’ll say. Majority would be term loan.
Jignesh Shial
Okay. That’s it from my side. Thank you and all the best, sir.
Atul Jain
Thank you.
Operator
Thank you. [Operator Instructions] The next question is from Omkar Khandekar, who is an Individual Investor. Please go ahead.
Omkar Khandekar
Hello. am I audible?
Atul Jain
You are audible. But there is a background announcement or a noise which is making — now it is fine. Now it is fine.
Omkar Khandekar
Yeah. So first of all, I wanted to ask, what is your definition of affordable, I mean, with respect to affordable housing loans?
Atul Jain
See, Omkar. the definition of affordable, there is various definitions. That’s why we call prime and non-prime. That’s why we call it a near prime and affordable because the definition there’s no standard definition of industry or players. So we follow a simplistic rule. Whatever is not prime is near prime or affordable. There is a wide variety of definitions of affordable it is used by. There is no standard definition what we can refer.
So prime is easier to define. The customer who is easily bankable by all banks and largely salaried, a good salaried with a good power and buying a very good collateral. And rest of the market is in a spread between various parts. That’s why we prefer to call it a prime and a non-prime rather than terming it anything else. So the definition varies
Omkar Khandekar
Understood. So actually I was asking from the perspective of the PMI guidelines. So if we do go for the growth for the affordable housing sector and — in that segment, so do we look at the same guidelines, the same way that it is defined by the government in the PMI schemes. So that was the reason behind that question.
Atul Jain
So last time also when the PMI CLSS credit link subsidy scheme was there, we were a participant. We may not have a very large participant because by definition our larger amount of customers are above the INR25 lakh loan criteria what are there. But all governments schemes we participate happily and we try to mobilize as much as possible because that we take it as an opportunity to grow a part of the business and also we feel it is our responsibility to take the schemes coming from government or the regulator or supervisor to convey to the market.
So as PMI guidelines execution start, we will be doing our best to mobilize what we can mobilize. But by nature or by definition, today our mix is significantly lower in the segment where PMI guidelines are applicable, the new CLSS guidelines are applicable.
Omkar Khandekar
Understood. And just two final things. How much of scale up do you think as a total percentage of AUM would be affordable be in the next three to five years? That’s one.
And lastly on the LAP vertical, with respect to the RBI being tight on the NBA monetization of the LAP vertically. So what I wanted to understand, how are we monitoring and what is the [Indecipherable] with respect to making sure that the provisions that you use are well ahead of the regulatory guidelines.
Atul Jain
I did not fully clearly understood your question, Omkar, but I’ll answer on what I could a bit make out. One, your question was on the forward-looking mix in terms of a prime and a non-prime home loan mix. Like I requested earlier, we are since in a silent period, we’ll resist from making any future-looking statement as of now. But…
Omkar Khandekar
No issues.
Atul Jain
Our — that is on the second part. If I got it — got you correctly, it was on your LAP, utilization of funds and the monitoring of funds, is that right? I heard you right?
Omkar Khandekar
Yes. Yes. So RBI is more stringent about trying to identify how the funds for the LAP are specifically unsecured? So we don’t have unsecured. But the end-use monetization for the LAP business once again. And most of it — the business that we do in the LAP, is this more towards consumption, so like for business entities and et cetera. How is that vertical in that respect?
Gaurav Kalani
The utilization, is the LAP loan required for consumption.
Atul Jain
So LAP, see, if it’s largely — most of the LAP loans go towards a self-employed segment which is towards as per the declared end use funds, is whether for business purposes, which can be gross capital and working capital. Of course, the tracking is through — as from a self-declared kind of a thing. It is individual, it’s not very high-ticket kind of a loan. Average ticket size is close to INR80 lakh to INR1 crore kind of a number.
From the individual salaried people who are using it, I’ll assume that largely while they — that it’s going from a consumption or the personal usage of the account and that — this is a declared purpose, what they give, because these are individuals who are borrowing. So this is a declared purpose and that’s where we track it.
But largely, most of it would be going towards — in the small micro and mid micro, medium and the small sector, their business requirements. To the salaried individuals who are taking the LAP loan would largely be towards consumption with a reduction.
Operator
Thank you. Next question is from Rahil Shah from HSBC. Please go ahead. Rahil Shah from HSBC, you may go ahead.
Rahil Shah
Hello. Am I audible?
Operator
Yes, sir, please go ahead.
Rahil Shah
Yeah. Thank you for taking me on the queue. Sir, I just wanted to understand the indicative yields on your different segments. So home loan LAP, construction finance, can you give a sense of like a range?
Atul Jain
Sorry. Per — indicating range on what?
Rahil Shah
Yield, lending rates on home loan LAP and construction finance and LRD?
Atul Jain
I — sorry, cannot share this data. But broadly, I can say, on the yield would be in the home loan between close to 8.8% to 9.2%, on a loan against property between 10% to 10.5% broad. And lease rental discounting between 8.5% to 9%. That was — in developer finance between 11.5% to 12.5% or 13%.
Rahil Shah
Okay, sure. And just between LRD and construction finance, given — like, what would be your — like, based on your risk tolerance, the mix, till what share between these two you would be comfortable? I’m just trying to understand whether the share of LRD can increase further or this is something where the company would be comfortable managing the [Indecipherable].
Atul Jain
We remain bullish on lease rental discounting because in our assessment this has remained always a very low-risk business and a scale business delivering optimum kind of a returns to the company and with risk profile being very low given the choice of the customer. And since it is in a way double — doubly secured, both cash flow secured because cash flows are excellent along with the executed property or executed the project or executed building which is there.
So there is no cap we have as far as we are — as we look at from a lease rental discounting. But there is a different kind of a cap which comes for us because as a regulatory norm, 60% plus of our assets — total assets, which means close to 62%, 63% of our lend assets have to be in the residential space. Because 60% of total assets, then there is a liquidity buffer which also gets included as an asset.
So the balance assets is only what we can lend for. This is the opportunity or risk-return metric, whether loan against property or lease rental discounting or some other what we can do. So the cap can come from that point of view. Because if we continue to feel — as of today, our view had been that between loan against property and lease rental discounting, risk-return metrics had been better for lease rental discounting. So we have chosen to grow lease rental discounting more.
However, one, from an upper cap point of view, from the regulatory concept. Second, if loan against property in future becomes much more attractive. It can have some mix change. But from a business concept point of view, we remain very bullish on lease rental discounting.
From a construction finance, we largely do construction finance for a funnel for our home loan business, which is close to now 11.7%. Our internal view as of today would not to exceed 15% odd kind of a mix in this business as we even go forward. That is what I will be [Indecipherable]
Rahil Shah
Oh, sure. This was very helpful. Thank you.
Operator
Thank you. The next question is from Jigar Jani from B&K Securities. Please go ahead.
Jigar Jani
Yeah. Hi. Thanks for taking the question and [Technical Issues]
Atul Jain
Jigar, we are sorry. I’m not able to — your voice is breaking quite significantly. If you are using a speaker, I’ll say if you can use a handphone.
Jigar Jani
Is this better, sir?
Atul Jain
Yeah, this is better. This is better.
Jigar Jani
Yeah, sorry about that. So I was asking regarding the provision coverage ratios. Sir, so we have seen from Q1 FY23 the PCR from Stage 1 dropping from about 0.6% to now about 0.34%. So do we have a minimum criteria beyond which we will not drop the Stage 1 ECL or we will be driven by the model itself?
Similarly, on the Stage 3 assets as well. So it has fluctuated between, say, 58% at max 66% also also. So any internal limits beyond which you will not drop the PCRs on Stage 1 and Stage 3.
Atul Jain
Yeah. So first on the Stage 1, it is driven by largely ECL model. The level you are saying dropping is because of we were carrying the overlay. As the overlay is getting consumed, it is coming as a normal Stage 1 provision. So there is no model fluctuation which is happening here. It is only as the overlay is coming down because overlap sits as a part of Stage 1 coverage.
So there is no otherwise model changes or a model coverage change or a dropping of the coverage. It is absolutely in line with whatever is from a — excluding overlay, ECL comes as a model which gets refreshed every year and there has not been any changes in the scheme.
But on the Stage 3, as per ECL model, the number is already significantly lower, but we generally provide for higher kind of a number as the vintage goes up because all are secured loans. But we still try to do that. But again, the range bound will be 50%, 60%. 50% to 60% is what against a model of close to around 40% odd. But 50% to 60% is a PCR on a Stage 3 asset what would largely be there.
And for Stage 1, like I called out, the number remains stable. It’s only the overlay adjustment is what is making you look like the Stage 1 provision coverage is going down.
Jigar Jani
So now since the overlay is almost diminished, this should be steady state, basically what we have seen in the quarter.
Atul Jain
This will be a steady state, depending on the asset mix because ECL Stage 1 is different for each — different asset for — like we provide for much higher Stage 1 for — if it is a commercial asset, whether lease rental discounting or a construction finance versus a Stage 1 asset provisioning for, let us say, a home loan, and which is visible if you look at the Panel number 28, Stage 1 provisioning for each asset is different for loan against property to lease rental discounting, to developer finance.
So a mix of a — mix change can result into — so, for example, if home loan has to grow much faster than other assets, you can look like at a console level Stage 1 coverage going down, but not others around. So it’s a product mix-driven Stage 1 output. I hope I’m able to explain.
Jigar Jani
Yeah, yeah. Understood, sir. This was very helpful. Thank you.
Operator
Thank you. The next question is from Gaurav Jani from Prabhudas Lilladher. Please go ahead.
Gaurav Jani
Thank you, and congrats on the listing. So we just wanted your outlook on the business side, right? So — I mean, Q2 of last year till this year, till this quarter, I mean, the disbursements have been flattish, right? First half, we’ve done about INR24,000 odd crore. So what’s the outlook for the second half? That’s number one.
And secondly, our retainment rates are sort of falling drastically over the last few quarters. Anything to read out there and is this a structural that are already out there? Thanks. So that’s the first one.
Atul Jain
I was not able to understand your questions very clearly.
Gaurav Kalani
Disbursement H1 versus H1 is [Indecipherable] so H2 [Indecipherable]
Atul Jain
Yeah.
Gaurav Kalani
And second one I [Indecipherable]
Atul Jain
Second — so like I had called out, Gaurav, for the first question that we are resisting from giving a forward-looking, but we called out in a roundabout way saying that we feel with a affordable and a near prime — non-prime vertical which has gone live, so we should be okay as far as retail disbursements are concerned.
The second question even Gaurav could not get. Can you just repeat?
Gaurav Jani
Sure. So what I was trying to ask is the retainment rates are drastically falling over the last two quarters. Anything to read out here or is this a structural thing or just this is the reason probably they’ll get back to normal?
Atul Jain
Yield — you are referring to yield curve? Again, I’m sorry, we’re not….
Gaurav Jani
No retainment rates.
Atul Jain
Retainment rate.
Gaurav Jani
Yes.
Gaurav Kalani
Portfolio attrition?
Atul Jain
You’re talking about portfolio attrition?
Gaurav Jani
Yes, correct.
Atul Jain
Okay. So portfolio attrition, like what you see from a — when you try to do this is a mix of various portfolios. Like if — in case of overall portfolio attrition, when you look at a DF portfolio, construction finance portfolio has a much higher portfolio attrition because — which drives the total attrition because you will not be able to do a simple mathematics of a disbursement minus AUM growth to arrive at the attrition. Because in each of the products, because we are a diversified HSC, having a various product mixes and at various assets and have a various kind of attrition driving there.
That — for the retail portfolios, the attrition rate remains by and large stable. The larger part of attrition uptick in last one year has been driven by the construction finance portfolio because the residential sales has been very high and there are pre-agreed strip ratios on each project at every stage. So that’s where it has been more coming through the construction finance portfolio in terms of an attrition.
Gaurav Jani
No, sir, just an extension to that. So last two quarters we have seen a fall in the attrition rate. I just want to understand anything to reduce it.
Atul Jain
The attrition rates in the retail side are by and large stable. The plus and minus of the attrition rate, what we have — would have seen would be driven by — in the construction finance portfolio at some point of a time if the strips are at a — in a quarter, if the attrition is lower, the attrition overall might — you may calculate in a reverse rate, but at a retail portfolio in the home loan side, it’s by and large stable over the last three, four quarters.
Gaurav Jani
And sir, just last question that I missed is on — we haven’t seen a drastic improvement in the margins despite of you raising money in Q1, and Q2 I think will come in — the benefit may come in Q3. But what I wanted to understand is have you sort of matured borrowings on a back-ended basis or how do you look at margins from here on?
Atul Jain
The margins do not change by reason. One that, public issue has been raised only on 15th September and we have called out already the money has not been utilized even as of the 30th September, because 16th September we got listed. So the partial utilization of money has happened only between 16th September to 30th of September. So it cannot have made any impact on ROA.
But the margin when we call about the gross spread which we said is stable between in last three quarters from 2% to 1.9% to 1.9% has nothing to do with the capital infusion. That’s our — your lending rate minus borrowing rate.
The capital adequacy, capital being higher would result into ROE going up for a while, which may result — which will mean consequently ROE going down, but has no impact on the spread on the capital. Capital does not have a impact on the spread in any manner.
Gaurav Jani
No, sir. Sir, basically your borrowing base would sort of change, right, once we raise capital. But I was just trying to understand that we also raised money in Q1, so did we get any benefit of that, sir.
Atul Jain
But Q1, we raised INR2,000 crore as a rights issue. We — on an average, I think Q1, we grew by close to INR5,000 odd crores. So that was — that meet — but from — probably I’m not able to get your question in a rightful manner. Because the rights — capital raise has nothing to do with the spread. This capital raise means that your leverage is low. So your absolute profit can go up or ROE can go up. But spread does not change because of a capital. Only at a NTI level, it….
Gaurav Kalani
Even on the net spread, if you compute basis your interest income to AR and interest cost to AR that also remained flat at 2.2% Q1 versus Q2 of current year.
Gaurav Jani
No, sir, I meant the margins. Surely, I’ll take it offline. There’s a difference between the calculation of margins and spread, right? So anyway, that’s fine.
Gaurav Kalani
Sure.
Gaurav Jani
I’ll take it offline. Thanks.
Operator
Thank you very much. We’ll take that as the last question. I would now like to hand the conference back Mr. Nischint Chawathe for closing comments.
Nischint Chawathe
Thank you, everyone, for joining the call today. We thank the management for providing us an opportunity to host the call. Thank you very much and have a nice day.
Operator
[Operator Closing Remarks]