CREDITACCESS GRAMEEN LIMITED (NSE: CREDITACC) Q3 2026 Earnings Call dated Jan. 20, 2026
Corporate Participants:
Unidentified Speaker
Ganesh Narayanan — Managing Director & Chief Executive Officer
Analysts:
Unidentified Participant
Deepak Shinde — Analyst
Shreya Shivani — Analyst
Abhijit Tibrewal — Analyst
Rajiv Mehta — Analyst
Shreepal Doshi — Analyst
Chintan Shah — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to the Credit Access Grameen Limited Q3 SY26 earnings conference call hosted by HDFC Securities. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference, please signal an operator by pressing STAR and then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Deepakshinde from HDFC securities. Thank you. And over to you, sir.
Deepak Shinde — Analyst
Good evening everyone and welcome to the Q3FY26 earnings call of Credit Access Grant. Today we have with us the senior management team of Credit Access Grameen represented by Mr. Ganesh Narayanan, Managing Director and Chief Executive Officer, Mr. Guru Raj Rao, Chief Operating Officer Mr. Nileesh Dalvi, Chief Financial Officer and Mr. Saif Sharma, BGM Investor Relations. On behalf of HJC Securities, I would like to thank the great Access Garmin management team for giving us this opportunity to host the call. I will now hand over the call to Mr. Ganesh Narayanan for his opening remarks and then we will open up the floor for Q and A.
Over to you, sir. Thank you, Deepak. Just checking if it’s audible for everybody once again. Yes.
Ganesh Narayanan — Managing Director & Chief Executive Officer
Okay. Thank you. Thank you. Thank you all for joining the call today. Let me start by wishing you all very happy and prosperous and fulfilling New Year. Today we are here to discuss our third quarter and the first nine months of FY26 business performance. Our performance this quarter reaffirms the strength and stability of our business model. We are witnessing a very clear normalization in the asset quality trends across operating geographies enabling renewed focus on growth. Our expirit collection efficiency stood at 99.71 in December 25 while monthly par 15 accretion declined sharply to 18 basis points in December 25 from 47 basis points in September 25.
January 26 continues to show similar trends. The improvement is visible across our operating geographies with Karnataka showing a notable recovery with asset quality reverting to its historical levels supported by tighter credit oversight. The disbursements for Q3FY26 stood at 5,767 crore increasing by 13.4% YoY with the exit month December crossing 2,200 crores mark. As a result, we’ve seen sequential Portfolio growth of 2.6% to 26,566 crore and 3.3% QoQ adjusted for accelerated write offs at 181 crore borrower acquisition remains central to our growth strategy as we added 2.1 lakh borrowers in Q3FY26 and 6.4 lakh during the nine month FY26 period of which 50% came outside of the top three states.
While October 2025 saw a temporary run in business momentum due to festive seasonality, the momentum accelerated meaningfully thereafter with December 25th recording 90,000 new borrower additions. We continue to maintain a healthy new to credit ratio of 39% which is reflected in the increase in the share of unique borrowers to 43.4% in December 25th from 26.4% in August 24th, positioning us well for quality growth ahead. We added 15 branches in the quarter taking our infrastructure to 2,222 branches. The retail finance portfolio continued to scale steadily with its share now at 14.1% of AM at the end of third quarter versus 11.1% in the second quarter, reflecting structural progress while part of the increase is optically driven by slower normalization in the group lending book.
Importantly, the expansion is driven by a shift of quality vintage customers towards individual business loans to meet their growing credit need. Our employee base remained firm quarter on quarter at 21,701 employees at the end of December 25th and employee attrition moderating to 30.3% in the nine month FY26 versus 35.2% in nine months FY25. As indicated in slide 10 of the Investor presentation, the deleveraging trend has largely played out with MFIN guardrails in place over the last six quarters. The GLP of borrowers with greater than three lenders nearly stood at 4.9% in December 25 versus 25.3% in August 24 while the GLP of borrowers was greater than 2 lakh.
Unsecured indebtedness stood at 7.8% as of September 25 compared to 19.5% in August 24. The average total unsecured debt of cabin borrowers and the average monthly obligation have increased by 3% quarter on quarter. Par 15 in case of borrowers with greater than three lenders stood at 20.4% as of mid December versus 19.5% in mid September while par 15/plus with borrowers greater than 2 lakh. Indebtedness came down to 6.9% in mid December from 9.7% in mid September. The implementation of MFIN guardrails has meaningfully strengthened the overall quality of the microfinance ecosystem as visible in Slide 11 par bucket 0 to 3030 to 6060 to 90 having clearly improved on sequential basis led by lower new PAR accretion while PAR90 witnessed forward flows in Q3FY26.
We wrote off 259 crore worth of loans in Q3 which includes 181 crore of accelerator write off pertaining to 180 dpd non paying accounts leading to additional credit cost of 59 crore in Q3FY26. The credit cost for QT FY26 stood at 343 crore which includes 59 crore due to accelerated write off and 37 crore due to additional impact due to increase in ECL rates. The provisioning rates for the past quarter are stated in slide 12 helping quantify quantifying the increase in various stages excluding the impact of ECL provisioning rates. An accelerated write off credit cost non annualized 296 bips for Q3 FY26.
This is in line with our new PAR15 plus accretion of 109 basis points during Q3 FY26. Our FY27 credit cost guidance of 4 to 4.5% reflects a new PAR15 accretion rate of 3035 basis points per month. If we are able to demonstrate a monthly power 15 plus accretion rate of 20 to 25bps it would translate in lower credit costs in the future. We shall monitor the monthly par trend for the next three to four months for revisiting our credit cost assumptions. We continue to hold 132 basis points or 335 crore higher provisions over par 90 and 280 bips and 733 crore higher provisions compared to IRAC prudential los.
Our collection efficiency excluding AR stood at 95.5% in Q3FY26. Par 90 stood at 2.94 GNP of 4.04 and net NPA of 1.36% both predominantly measured at 60 dpd. The operating profitability continues to gain strength driven by improving yields and lower average cost of borrowings. We incurred a one time impact worth 18 crore on account of new labour goods pertaining to the employee benefit obligations. It is important to note that the company actually moved towards this 50% salary levels including VA and basic to meet the guidance proactively leading to very little impact. During this quarter net interest income grew 13.4% year on year to 977 crore with portfolio yield of 21% versus 20.7% in Q2FY26.
Our average cost of borrowings continues to trend lower reflecting disciplined liability management having declined 26 basis points quarter on quarter to 9.4 at the end of Q3FY26. In Q3FY26 we raised 3,917 crore with a marginal cost of borrowing which stood at 8.9%. Our foreign borrowing stood healthy at 24.3% moving closer to the medium term target of 25 to 30% by FY28. As we scale our business we maintain ample liquidity at 2,397 crore amounting to 8.4% of our total assets. Our funding question remains strong with 3,431 crores of sanctions in hand and 5,781 crores sanctions in 5 NIM increased by 60 basis points quarter on quarter to 13.9% in Q3 FY26.
Cost to income ratio stood at 34.1 and adjusted figure at 32.3. Excluding the Labor Code impact P pop stood at 680 crore in Q3 FY26 while adjusted figure stood at 699 crore. PAT doubled quarter on quarter 252 crore while adjusted figures stood at 266 crore translating to an ROE and ROE of 3.5 and 13.8% respectively. If the labor code impact is excluded the ROE would have been 3.7 and Roe will be at 14.6%. We would also like to update you all on our Grameen Mahi, our customer digital handle. With close to 1 million downloads, the platform is seeing strong adoption and reflects a meaningful shift in how our customers choose to engage with us.
It enables instant digital loan eligibility checks for group loans, generates targeted leads for retail offerings, and seamlessly integrates collections into a cashless ecosystem, playing a key role in achieving 20% digital collections at the end of December 25. This also helps us build more trust and transparency amongst our customers. With normalized asset quality, a stronger balance sheet and a motivated team, we are well positioned to achieve robust business growth and improving return ratios. Together we are confident in nurturing business that consistently delivers returns, enhances stakeholder value and sets new benchmarks of excellence in our industry. Thank you for listening.
We will now open the forum for questions and answers. 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 please use handsets while asking a question. Ladies and gentlemen, we will now wait for a moment while the question queue assembles. Our first question comes from the line of Shreya Shivani from Nomura. Please go ahead.
Shreya Shivani
Yeah. Hi. Hi. Good evening. Thank you for the opportunity. I had three questions. There are congratulations on a great set of improvement numbers that we are seeing in the quarter. I was just wondering while Karnataka and Tamil Nadu have done the improvement has been quite good. Can you give some color about trends in Uttar Pradesh, Bihar and Madhya Pradesh compared to the April 24 number that you had given us last year? They are still probably 1520 basis point higher currently. So anything that has what is the trend over there? That will be my first question. My second question is on the state of Karnataka.
While you guys have reported great numbers etc. Some of the non MFI lenders commentary earlier this quarter or maybe even closer to December was that the credit discipline in the in Karnataka state which got disturbed after the MFI ordinance came into place which impacted our retail loans also is still not back. So I am quite surprised with the with the great improvement that we are seeing in Karnataka. Some comments around that would be helpful. And my third question is while you guys have done quite well on the cost of funds, there was a media article and I can I understand it may may be more relevant for some other NBFC MFIs which did mention that the bank borrowings the lines are drying up for many NBFC MFIs.
Even if the lines are available they are coming at a significantly higher cost of funds. So if you can speak to us about the any challenges or any areas that we are struggling with with our bank borrowings or our bank relationships. Those are my three questions. Thank you.
Ganesh Narayanan
Okay. Thank you Shiha. With respect to trends in states like up, Bihar, fp all states as demonstrated in our slides are continuously coming down. But however we have also earlier indicated that our non core states generally have slightly higher credit score than our core states. Right. So I think this is just playing out. It’s just a matter of time and we are consistently seeing that all states are trending downwards. Just to actually since you referred to the earlier data for the state. So as I see April, May, June 25 up Bihar was around for sorry.
Shreya Shivani
24 data 4-24-Data which used to give in last year you had given those numbers 4-24-Data. So I was just comparing.
Ganesh Narayanan
Yeah. Okay. Okay. Okay. Fair enough. So I think we are very much close to it. But I mean we have come out of a large cycle. So give us some more. Maybe in the upcoming months we should see this trend getting better.
Shreya Shivani
Sure. Okay.
Ganesh Narayanan
Yeah. But if I compare it on a yoy basis, before the crisis those numbers were around 40 to 50 pips in UP Bhar and MB which is now in the range of 25 to 30 bips.
Shreya Shivani
Yeah. Quite good. With respect to April 24, I felt there is still more improvement. That is a possibility in these states.
Ganesh Narayanan
Right? Yeah. So Karnataka spiked up faster. It’s come back faster also. That has also been behavior that we’ve seen because that’s a core state. Other states, I think all of them are trending downwards. It’s just a matter of time. We’ll have to see for the next three, four months where it settles down. And with respect to credit discipline in Karnataka, I think we have strongly come back. We’ll have to watch the next two, three months. January is trending with a similar nature and we are seeing such improvements across microfinance mortgage as well as unsecured lending.
Karnataka is coming back very, very strong to our normal levels. So it’s only a question of time. If others are indicating that it is not come back to normalcy, maybe few more months, the rest of them would also come. You should appreciate that Karnataka is our home state and probably every 30km we have a branch and we’ve been here for the last 20 years and probably we have a little more connect than the rest of them. But I think the industry would follow.
Shreya Shivani
Sure.
Ganesh Narayanan
The third point with respect to bank more and I think when the industry is going through a credit cycle it is natural of the bank banks to kind of pull off a little. But fortunately some of us have never had this situation because our diversification strategy has a very important role to play here. I think we are one of the few NBFCs which has bank term loan borrowing dependency of less than 60% and we’ve been continuously able to access bank funds. It has not impacted us during this entire credit cycle and we continue to access more funds as we move ahead.
Shreya Shivani
Sure. I think this is useful for any follow up question. I’ll get back in the slide. Thank you so much.
operator
Thank you. Our next question comes from the line of Abhijit Tibriwal from Motilal Oswal. Please go ahead.
Abhijit Tibrewal
Yeah. Good evening sir. Hope I’m audible. Yes, Abhijit. Thank you, sir. Sir, first thing on the industry, most other players talk about a very high rejection rate today Especially after the implementation of imprint guardrails. So if you could just help us understand how have our rejection rates trended over the last maybe 2 3/4? That is the first question that I had. The second question that I had was that maybe next year onwards, maybe FY27 onwards we’ll look to start growing at 2021% thereabouts. So within this what will be the split of the growth that will come from MFI and what group can we expect from retail finance? Just trying to understand the way things are today very very clearly.
Like we mentioned earlier December we saw very good improvement in power creation and like you mentioned continues in January as well. I’m hoping that gives you a lot of confidence to start accelerating on disbursements and growth. So which is where that question of how are you thinking about the split between MFI and retail finance or does it still remain fungible in terms of growth? And lastly sir, I mean you just mentioned about Karnataka came back very very strongly and like you rightly said your home state as well. So I just had one observation and just wanted to pick your brains on this yourself as well as other few MFIs have been talking about very strong recovery in Karnataka collection efficiency and the ones who are still not seeing improvement.
Can it be a little bit to do with the fact that MFIs have already written off a large part of the loans which are problematic in nature and which is where on a zero DPD collection efficiency or X bracket collection efficiencies looking very good while for some others right. Who have not written off they still are facing problems in Karnataka.
Ganesh Narayanan
Yeah. Okay, so let me try and answer all the three. So I think the first and second one are also slightly linked to each other. So so rejection rate definitely yes, they have gone up current approval rates for new borrowers.
So that is new borrower entrance cabin is around 55 60% and our existing renewal rates are around 45 50%. Just for comparison this used to be around 65% before the garden rates so it has fallen significantly. That also means that you will have to put more effort on acquiring customers to maintain some amount of growth rate in microfinance. And yes, since we are coming out of the cycle and another quarter of performance will give us the confidence to accelerate in the next year for sure. However, as we had indicated in our medium term goals, the growth rate of microfinance would be lingering early teens and the rest of the growth will come from retail.
And we are also seeing that retail we are actually outperforming our guidance a little bit. We are growing a little more faster than what we anticipated. So it’s possible that retail will have a little more share than what we anticipated in the growth trajectory. But that’s something that we will see you on the next few quarters I think. And with respect to Karnataka, what was the question?
Unidentified Speaker
I’ll just add it. So Abhishit, on Karnataka you were saying that there are other players who have not done write off, that’s why the collections are looking lower. I believe that was your question.
Abhijit Tibrewal
Listen, so all I was just trying to understand is I mean there are today players who are there in predominantly the small ticket lab segment who still talk about weakness in Karnataka while if I look at ours and a few other players who are present in MFI segment, they have been talking about Karnataka having come back in a big way. Can it so happen that a lot of the problematic pool for us in Karnataka has already been written off. So on an X bucket basis collections are indeed looking good. While for some others. Right, because the problem pool is still there.
This will not able to see that.
Unidentified Speaker
I get your question but I think you may also have to see what is the new car addition there? Again I’m not sure. I don’t have the data right now. For us, like I said, across retail including mortgage as well as unsecured business loans, Karnataka is showing us sharp reversal. So like I said, if it’s taking time for some people probably it’s just a matter of time. But it does look like at ground things are coming back to normal.
Abhijit Tibrewal
Got it. And just one last clarification on your opening remarks. You had shared that this FY27 credit course guidance of 4 to 4 and a half is factoring in monthly power 30, 35 basis points. Right. In case like you mentioned if the power is lower than that then then there are downside risks. Right. To this credit for sciences.
Unidentified Speaker
Yes. So it’s possible. So. So we’ll need to watch it for a few more months and probably by along with May we will try and come back with a more clearer guidance. So it’s too early. So it held good in Jan, Feb.
Sorry in December and Jan we’ll have to watch it for a few more months to ensure that the pattern is stable. And it’s going to remain that way. It looks like that but we’ll have to come back with some guidance in the May.
Abhijit Tibrewal
Got it. This is useful. Thank you very much and I wish you and your team the very best.
Ganesh Narayanan
Thank you Abhijit.
operator
Thank you. Our next question is from the line of Nadesh from Investech. Please go ahead.
Unidentified Participant
Thanks for the opportunity sir, can you give some more details?
operator
Sorry to interrupt but your volume is very low. Request you to please come closer to the mic.
Unidentified Participant
Yeah. Hello sir. So my question is on retail finance, can you give some more color on retail finance that how much of the book is secured and how much is unsecured?
Ganesh Narayanan
Sure.
Unidentified Participant
And we have seen very strong growth in this business. If you can also share some data about client profile, how much is unique to Cladag and what is the total, let’s say sector outstanding on those customers etc.
Ganesh Narayanan
Sure. So the retail finance portfolio today roughly comprises of around 3,780 crores of which we have two types of unsecured loans extended to customers, graduating customers. One book is our product called Unati Loan which is profile of customers are significantly higher income earning.
They are able to demonstrate better cash flow. We are able to visibly see proper business premises, the scale and size, etc. So that book is around 1700 crores. We also have a lighter version of the individual lending product which is 1600 crores. They could have higher income but if we have certain difficulties in ensuring that it is demonstratable or the size of the income is not clear or it’s not visible to the level that the customer is saying, we graduate to a slightly lower ticket size. So that is around 1600 crores. So both these books put together is around 3300 crores.
Both these books, part 30 is well under control, under 2% as we speak. We have 266 crores of mortgage business loans. We have a home loan book of roughly around 200 crores or a two wheeler book of around 13 crores. So in secured loans we are at a par 30 lower than 2% once again. Right. So these books, while they are new, they have done around two, three years with this. They’re holding good so far. Yes.
Unidentified Participant
Secured portfolio will be around 500 crores.
Ganesh Narayanan
Yes, it’s 500 crores.
Unidentified Participant
And secondly, can you give some guidance on the margins? I think margins should keep on improving. What is the trajectory that you foresee for next year in terms of margins?
Ganesh Narayanan
Yeah. So Nilesh, we should see some improvement in margins because even as you saw in third quarter the NIMS have improved because of, I mean there has been around 30 pips improvement in yield on account of lower interest reversals and the cost of borrowing is down by 20 pips. So maybe for next year we should see the Nims anywhere between maybe 14, 14 and half in that rate, in that range for some time because borrowing cost incrementally we do see dropping by 10 lips every quarter for at least next two to three quarters, then it should settle down.
And also one thing we need to understand is the current NIM profile is basis, the current credit cost trend. What we are seeing because we had taken a pricing increase in third quarter basis, the current credit cost trend. So maybe going forward, if we are able to see a relatively lower credit cost trend, then obviously it will translate into a lower pricing benefit to the customer. So from that perspective, we will try to maintain our roas in four, four and a half percent range. And nims will vary depending upon how the underneck risk is shaping up. But as of now, considering the current trend, we believe NIM should be around 14% range for some time and then they may again revert basis or change in pricing.
Unidentified Participant
Understood. Thank you.
operator
Thank you. Our next question is from the line of Rajiv Mehta from yes, securities. Please go ahead.
Rajiv Mehta
Yeah. Hi, good evening. Congrats on very strong performance. Sir, my first question is on the new customer acquisition. You know, that count is slightly Even lower than Q2 and the industry has been, you know, continuously deleveraging. So when do we see this any customer acquisition picking up for us? Because eventually that number has to go up and keep growing for us to even grow higher in the GNG model. Because I mean, as we see that the ticket sizes of the portfolio is increasing largely because of bulk of the growth coming from the renewals of existing customers.
But eventually in the longer run, you know, this lever has to pick up of new customer acquisition. So what is the outlook on that?
Ganesh Narayanan
Okay, so I think new customer acquisition will pick up traction in Q4 itself. So we believe we should see some significant improvement as we move ahead. Because you have cleared historical power now and the field level sentiments are a lot more positive now and people have more time to do new business. There are specific efforts that are targeted towards increasing these numbers. And I think in Q4 itself we should be able to demonstrate that the run rate is picking up.
Rajiv Mehta
And can you segregate, you know, December disbursement number and can we further build upon that number as a run rate in Q4?
Ganesh Narayanan
Yeah, so we did 2200 in December and we should hopefully do slightly better in Q3, sorry, in Q4 because Q4 generally comes with our best performance. So. So we will try and see if we can meet our historical Q4 numbers similar to those.
Rajiv Mehta
Okay. And just lasting on the credit cost. So this quarter’s credit cost did have some impact because of higher ecl, you know, provisioning Rate which I believe will remain. But you also had some, you know, balance or residual accelerated write off of 180,000 crore which will not repeat in Q4. Right. So that impact will not be there in Q4.
Ganesh Narayanan
Yeah. So we did actually write off only in October. So it stopped from there. Right. So we’re not anticipating anything in Q4. However we will have
Rajiv Mehta
leftover. Yeah. Then the implied write off for November, December. Would that be the normal right of run rate now?
Ganesh Narayanan
Yes, so. So we should see probably Q4 will have similar. Right. Similar credit cost as that of Q3 and it may take some more time to see where it stabilizes.
Unidentified Speaker
Yeah. So Rajiv, maybe I’ll add a couple of points here. So largely whatever new delinquencies which came up in the first quarter, that is month of April, May, June, those delinquencies will come for write off in the fourth quarter because we do the write off after nine months. So you may get some indicative trend. It may be in line with whatever new part. I mean the new power which came out in the Q1, maybe 70, 80% of that may come for write off in fourth quarter. But I mean anyways we have 70% provisions on that. So the residual will commit to the PN.
And yeah, on the ECL front maybe we should see as we had indicated in the second quarter call, we should see the stage one provisioning inch of closer to 1.5. So that should happen in fourth quarter.
Ganesh Narayanan
Got it. Perfect. Thank you so much.
operator
Thank you. Our next question is from the line of Sripal Doshi from Equirus. Please go ahead.
Shreepal Doshi
Hi sir, thank you for giving me the opportunity. My question was on the.
operator
But your line is not clear in between.
Shreya Shivani
Yeah. Am I audible now?
Shreepal Doshi
Yes, please go ahead.
Shreepal Doshi
Yeah, so my question was on the retail portfolio. So that portfolio is quite diverse in terms of the product bouquet. So what is the kind of, let’s say the dew point in terms of margins and credit cost and ROA on a BAU basis that we’re trying to sort of reach to over the next two to three years time period.
Ganesh Narayanan
Okay, so I think we discussed this earlier. Thank you for the question. So. So most of these products are very close to the pricing of microfinance. Right. So except for housing where the average interest rate is around 16.7% and mortgage is anywhere north of 21 cents. Similarly two wheeler. So all of them should have similar margins as that of microcurrents. But as we discussed over a period of time they could actually be a little more contributing once it Reaches certain amount of scale and we are able to kind of see the benefit of its rate.
Shreepal Doshi
Got it, got it, got it. I’ll just look at that aspect in the call. The other question was on the microfinance side. So what is the range of ticket size disbursement that we are doing for more than six years and three to six years customer vintage.
Ganesh Narayanan
Product range starts anywhere from 2535000 depending on geography and it can go all the way up till 1.75 lakhs depending on the vintage of the customer and the credit history.
Shreepal Doshi
Got it, got it, got it. I’ll, I’ll, I’ll. I have more questions. I’ll come in the queue. Thank you so much.
Ganesh Narayanan
Yeah, but, but I would also like to add customers is greater than outstanding is less than.
It’s almost a single digit percentage. It is generally not that high.
Shreepal Doshi
So more than 1 lakh tickets as customers would be as you. As you said.
Ganesh Narayanan
Yeah, yeah. So would be under 10% max. It will be in single.
Shreepal Doshi
Got it, Got it sir. Thank you.
operator
Thank you. Our next question is from the line of Chintan Shah from ICICI Securities. Please go ahead.
Unidentified Speaker
Yeah. Hi sir, this is of numbers. Good evening sir. Just two things. So one on the credit cost side. Right. So if I refer to slide number 12, our credit cost adjusted for accelerated write off and high resale provisioning is 0.96. Right. So very close to 4% which may have been timing for FY27. Right. Earlier.
Ganesh Narayanan
Right, Right.
Unidentified Speaker
But this is again I’m assuming this will be more because of the higher delinquency in October, November and December. Credit cost ideally should have been much lower. I mean that’s what our par 15 accretion. So in that case our FY27 credit cost ideally should be lower than what you have guided for. Right?
Ganesh Narayanan
Yes. So that’s what we want it to be. But I’m just saying it’s too early. It’s just December, January we’ve seen we’ll have to maintain the trend. So if you’re able to maintain the trend in February, April will come back with a better guidance in May.
Right. So it gives us a few moments of visibility to ensure that we are trending on the right direction. But it does look like there is a possibility that it can be lower than that at this point.
Unidentified Speaker
Okay, got it. So it is fair to assume that at least the 1-1-2 trend is as good as December.
Ganesh Narayanan
Yes, it is as good as December.
Unidentified Speaker
Got it, Got it. And lastly again on the, on the AUM growth side. So obviously Q4 should be a strongest quarter and in this quarter as well, book growth. Right versus the book decline last three quarters.
So what is the aspiration level for us in 27? And if you have to break that into, let’s say JLD versus non jld, what are our internal plans in terms of behavior mix and growth for FY27?
Ganesh Narayanan
Okay, so like I said, when we look at microfinance growth early days maybe 10, 11, 12. So we’ll have to finalize our business plans a few months from now. But it does look like retail will have a stronger growth momentum, probably contributing. So we should be able to reach, you know, something over 20% that we want to grow to meet our medium term goals.
So that’s something that we are working on. It will be a good mix of both retail and microfinance. But microfinance will be lower compared to historical levels for sure.
Unidentified Speaker
Got it. And may I ask one last question if possible?
Ganesh Narayanan
Yes. Yes sir.
Unidentified Speaker
Yeah. So again on the this retail finance slide, right. So I was just looking at the outstanding per borrower which is steadily coming down, right? I mean by 40, 50% to 92,000 odd one 68000 earlier. So just wanted to understand what what have we changed in last three, four quarter which is leading to this of steep fall in the outstanding per borrower in the retail finance.
Ganesh Narayanan
Right. So it’s basically because of the second variant that I spoke about which is called Vishesh individual loans where we are seeing that the income has gone up beyond 3 lakhs. But we are not seeing the level of demonstrate demonstrability of the income by the customer. So that means we looked at size of business, we looked at cash flows, we look at whether we are able to see cash flows in bank statements. So we underwrite about 3 lakhs in individual loans but a smaller ticket size. So average there is around 80,000 rupees because of which your average has fallen.
Otherwise if you see our main graduation product which is Hundati, the average ticket is still around 1.7 lakhs. And mortgage loans average ticket size is around 6 and a half 7 lakhs.
Unidentified Speaker
Okay, got it. So basically you are highlighting that incremental growth in retail finance is actually coming from JG Customer. But for all regulatory purposes,
Ganesh Narayanan
so around 10, 10% of our customers every year will move or graduate into retail finance is our estimation at this point,
Unidentified Speaker
nobody in that graduated customer ticket size will be higher.
Ganesh Narayanan
Yes, there are two types of graduation. One is where there is Clear demonstrability of the customer with respect to the cash flows.
Business has to be visible, has to be certain size. The living standards should be certain of certain categories. There are a few other credit parameters that are important where you underwrite a larger ticket size. If some of these are not available but we still see the income is greater than 3 lakhs then that’s a smaller ticket. So we do graduate them but with a smaller ticket size role. That’s the reason.
Unidentified Speaker
Got it. Got it. But then in that case the customer will stay come in center meeting or I mean how you will
Ganesh Narayanan
for individual unsecured products the customers have access to the center meeting as a payment point but they are not a part of the JD structure.
Unidentified Participant
Got it. So basically you will move out from the JNT part.
Ganesh Narayanan
Yes.
Unidentified Speaker
So just to add. So see largely. Hello.
Ganesh Narayanan
Go ahead.
Chintan Shah
Yeah, yeah, yeah,
Unidentified Speaker
yeah. So Ranish, what we assess is basis the customer profile. Maybe every year around 4 to 5% customers we move into the mid ticket individual loan which is the Vishesh loan. And maybe 2 to 3% moves into the high ticket unity loan market. So we should see that 5 to 6% or 5 to 7% transition happening from JLG to retail.
Ganesh Narayanan
Yeah.
Unidentified Speaker
So that’s where the balance 10 to 12% growth comes from retail. And overall we cross 20% growth. So that’s the scheme of things.
Chintan Shah
And I’m assuming interest rate will be about 20%.
Unidentified Speaker
Yeah, it will be.
Chintan Shah
Got it. Okay, cool. Okay, thank you and best of luck sir.
operator
Thank you. Our next question is from the line of Manav Bhavan Shah from Spiral Consultancy. Please go ahead. Manav, your line has been unmuted. You may proceed with your question. As we’re not receiving a response from the current participant we will move to the next participant. Our next question is from the line of Jinmai Nema from Prescient Capital. Please go ahead.
Unidentified Participant
Hi sir. Good evening. She just wanted to confirm firstly did I hear FY27 would be 20%.
Ganesh Narayanan
So. So like I said, maybe we will give some more clearer guidance in May. However we need to do at least the 20 growth every year to reach our medium term goal. And hence things getting to normalcy. We believe that even next year we should be able to. But we’ll have to come back with a confirmed guidance in next.
Unidentified Participant
Understood. And secondly sir, just wanted to understand if I look at the quarter on quarter Trend in part 90+. So while 0 to 90 has come down quarter and quarter there has been some stickiness in 90 plus.
So basically how should one interpret this increase in slippitus in Q3.
Ganesh Narayanan
Okay. So basically it means that customers who are going to stage two and stage three that flow forward rate is more or less remained same. Right. So however the new power accretion is reducing. Hence what will flow forward going forward will also reduce. I hope so. New power accretion rate is important to note because even if you see our par 15, we provide quite heavily after par 15. Right. So that is basically a historic experience that once a customer does not pay for 15 days then it does move to the next stage predominantly.
That’s why you provide around 60, 65% in that case. So that means that so far par acquisition rate was also quite high. So all those things are moving forward. But the new bar acquisition for the last two months is quite stabilizing. So that means going forward it will stabilize. And that is what we tried to show in the second graph in the power sheet you will see that the early buckets have started dropping. So hence going forward you also be drop in the late buckets.
Unidentified Participant
Got it, Got it. Thank you.
operator
Thank you. The next question is from the line of J from nbie. Please go ahead.
Unidentified Participant
Hello. So thank you for the opportunity and congrats on the good set of numbers. So just one, one question on the retail book. So can you just help me. What is the percentage of your loans coming from tier. Coming from below tier, ect,
Ganesh Narayanan
you know tier two, tier three below predominant. Because we, yeah we, we are doing business only in our catchment. Right. So we are not in any tier one, Tier two, we’re not even present Martin Taluk headquarters. So we’ll be even below that. So most of our business will be in tier three, probably some bit in tier two and lesser.
Unidentified Participant
Okay. And so one more follow up on the same. So where do we see retail finance going? So currently we are at 14%. So do we see somewhere around 16 to 18% in the medium term or this is where you would like to be
Ganesh Narayanan
see at the current growth rate it does look like that. But then like I said earlier it is also looking at looking at 14% now because your micromanage book has dropped. So once you start showing my finance growth moderate a little but like I said we had guided around 15% for 28 but I think we will inch up a little further to that is what we believe.
Unidentified Participant
Okay, thank you. Thank you so much.
operator
Thank you. Our next question is from the line of Rajkumar Vaidyanathan from RK Invest. Please go ahead.
Unidentified Participant
Hello, can you hear me?
operator
Yes sir. You are audible you may proceed.
Unidentified Participant
Thanks for the opportunity. Sir, just a couple of questions. First one is on the ROA guidance of 4 to 4 and half that you mentioned. That is the annualized ROA we are looking at for FY27. Or it’s going to be more an exit ROE.
Ganesh Narayanan
Yeah. So. So we talking about annualized guidance for next year should be nice. Sorry. So. So the indicator is somewhere around that. So we will come back with guidance in May is what we are saying. But at least it looks like a stable period for credit for stabilizing our. Our normal guidance is also that we will be in that range.
Right. So. So with no extraordinary event present, we should be in similar range. But we will have to come back to you in May.
Unidentified Participant
Yeah. Sir, but you had already done 3.8 in current quarter. So your guidance looks very conservative given that you know you will not be having a significant credit cost go forward. So it’s a conservative number or you want to kind of grow your volume rather than the roe. So we absorbed like that. What like what Neelage answered we want. Am I audible?
Unidentified Speaker
Yeah.
Unidentified Participant
Yeah.
Ganesh Narayanan
Okay. So. So I. What we are saying is that our principle is that our ROE will be around four and a half percent. Right. So hence even though there’s an opportunity there could be a momentary increase for a quarter or two more than you know, the estimated return. But if you’re actually making more returns, we would moderate our pricing is what we are saying. Right. So. So you should assume that as a company we’ll be in the range of around 4 and a half percent ROA even in a good time.
Unidentified Participant
Okay. Yeah. Sorry to labor on the same question. So my question is you want to have a kind of fix the ROA between four to four and a half but then have a larger volume. Is that. Is that the preference you would want or you would still shoot for a higher roa?
Ganesh Narayanan
I didn’t understand the question. Can you just help me understand this a little more?
Unidentified Participant
No, I’m. I’m. I’m asking the question is you want to improve the absolute bottom line number. Higher bottom line number. But how would maintain ROA of 4 to 4 four and half.
You don’t want that ROE number to go up 6 significantly.
Ganesh Narayanan
See Rajkumar, the way we are looking at it is that if you see historically we have done a cross cycle ROA of 3 and a half and ROE of around 14 15%. So going forward with a better ability to price the risk, we would want to do a cross cycle ROA of 4 and ROE of around 1617 on a cross cycle maybe in a good year it may cross four and a half and Roe may inch closer to 20. And in a bad year like what we have seen in this year and the previous year it may be in the range of around 2.5%.
So if the ROAS cross certain range lights like for example you may see couple of quarters wherein it reaches closer to 5% then obviously we have to revisit our pricing because at any point in time we always ensure that we give the best pricing to our. So from that perspective pricing is always a derivative of our credit cost, operating cost and borrowing cost. So that is what it will keep hovering. Now growth is a different parameter. We have already defined the that we will be looking for 20% plus growth. So both the parameters will go hand in hand.
And yeah, as of now we have not reached a stage wherein we have to cut pricing to do higher growth. Because the segment where we are operating there is already lot of, there is a lot of scope to provide a formal source of credit. So we do see there is good potential for growth with whilst maintaining our margins and profitability.
Unidentified Participant
Okay, thank you so much. Sir, if you permit me, can I ask one more question? Yeah. This question is on the unique customers that you added. You have added significant customer. That’s what the presentation states. So my question is what is what would be the age profile of those customers? Are they very young customers? Are they are middle aged? Because the reason for asking this question is if they are really unique, I mean, you know, new to credit, then they should be really young people. Right?
Ganesh Narayanan
Yeah, I understand but unfortunately I don’t have this data in hand. We’ll share it across with you.
Unidentified Participant
Yeah. Okay, thank you so much.
operator
Thank you. Participants, you may press star and one to ask a question. Ladies and gentlemen, we have no further questions at this time. I would now like to hand the conference over to the management for closing comments. Over to you general.
Ganesh Narayanan
Thank you. Thank you. Thank you all for being a part of this discussion. And we are hopeful of closing Q4 once again with a strong performance and move towards good normal year next year. And we’ll see you in the next December. Thank you so much.
operator
Thank you on behalf of HDFC Securities. That concludes this conference. Thank you all for joining us. You may now disconnect your lines.