Home First Finance Company India Ltd (NSE: HOMEFIRST) Q3 2025 Earnings Call dated Jan. 29, 2025
Corporate Participants:
Deepak Khetan — Head, Investor Relations
Manoj Viswanathan — Managing Director and Chief Executive Officer
Nutan Gaba Patwari — Chief Financial Officer
Analysts:
Rajiv Mehta — Analyst
Abhijit Tibrewal — Analyst
Renish Bhuva — Analyst
Kunal Shah — Analyst
Nidhesh Jain — Analyst
Shreepal Doshi — Analyst
Aravind R — Analyst
Raghav Garg — Analyst
Pavan Kumar — Analyst
Krishnan ASV — Analyst
Shailesh Kanani — Analyst
Chinmay Nema — Analyst
Hardik Doshi — Analyst
Jatin Sangwan — Analyst
Jignesh Shial — Analyst
Ravi Naredi — Analyst
Divyansh Gupta — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to Home First Finance Company India Limited Q3 FY ’25 Earnings Conference Call.
As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touchstone phone. Please note that this conference is being recorded.
I now hand the conference over to Mr. Deepak Khetan, Head, Investor Relations of Home First Finance Company India Limited. Thank you, and over to you, sir.
Deepak Khetan — Head, Investor Relations
Thank you, Yashaswi. Good evening, everyone, and a warm welcome to Home First Q3 FY ’25 earnings call. We appreciate your time and participation today. I am Deepak Khetan, and I have joined Home First Finance as Head, Investor Relations with effect from January 25. I’m excited to build a high-quality Investor Relations franchise for Home First Finance.
I hope you have had the opportunity to review our investor presentation and press release, which are available on our website and the stock exchanges. Additionally, we have uploaded an Excel factsheet with historical data on our website for your reference. On today’s call, Home First Finance is represented by our MD and CEO, Mr. Manoj Viswanathan; and our CFO, Ms. Nutan Gaba Patwari. We will begin the call with an opening remarks from Manoj, followed by Nutan, which will be followed by Q&A session.
With that, I now invite Mr. Manoj Viswanathan to share his insights on our overall performance. Over to you, Manoj.
Manoj Viswanathan — Managing Director and Chief Executive Officer
Thank you, Deepak. All the best to you to continue with building a highly respected Investor Relations practice.
Let me start with quarter three performance highlights. We are pleased with the company’s strong performance during the quarter as we continue to maintain strong AUM growth of 30% plus and profitability with an ROE of 16.6%. We continue to expand our distribution footprint deeper into our existing markets as well as new geographies. 69 branches have been added over the last 11 quarters, which is near doubling the branch count in three years from 80 as of March 2022 to 149 as of December ’24. Of these 69 branches, 45 were in new markets and 24 in existing markets.
In quarter three of FY ’25, we have added seven new branches, two in Gujarat, one each in Rajasthan, Telangana, Tamil Nadu, Karnataka and Antra Pradesh and eight touch points with proposed and digital branches, we now operate across 359 touchpoints in 141 districts and spread over 13 states and unit territory. We look-forward to adding around 10 branches in the ongoing quarter.
Quarterly disposals were at INR1,193 crores, about INR20 crores to INR25 crores lower-than-expected. About INR10 crore to INR15 crores of impact is because of the Karnataka issue and another about INR10 crores INR12 crores because of tighter credit filters adopted by us during this quarter. Things are stable now and we are confident about a solid quarter-four. As part of our distribution investment, we have also added to our people strength. Total employee strength has grown from 1,249 as of March ’24 to 1,704 as of December ’24.
Our approach to training right after hiring from campuses continues — continues to get more-and-more robust and we are now able to comfortably hire and train higher numbers of front-end employees. Focus on asset quality remains strong with early-stage delinquencies remaining largely bound. One plus stands at 4.8%, 30 plus at 3.1% and the gross Stage 3 NPA is at 1.7%. Our credit cost stands at 30 basis-points. There is a minor seasonal uptick in early delinquencies and a part of this can also be attributed to the overall macro-environment.
As you can see, our GNP is stable year-on-year as well as quarter-on-quarter and we are confident about the asset quality and there is nothing to be worried about. The profit-after-tax for the quarter stood at INR97 crores, an increase of 24% on a year-on-year basis, delivering an ROE of 16.6%, an increase of 10 basis-points compared to the last quarter. Our well-diversified borrowing profile has enabled us to manage borrowing costs effectively, maintaining spreads at 5.2% in-line with our guidance.
Technology remains central to our strategy. Account aggregated adoption has improved to 61% for new approvals, a significant improvement over the previous quarter. We continue to exploit opportunities in data analytics and keep optimizing and tracking our operational processes and productivity. 96% of our customers are registered on our app as on December 24 and 88% of service requests are being raised on the app. I would also like to inform that the company has now crossed INR12,000 crores in AUM and though the capital of the company is well-above the regulatory requirements, the company is planning the next phase of growth well in advance. And with respect to the same, the Board has approved raising equity capital of up to INR1,250 crores. Since listing, our growth has been non-dilutive so-far and we continue to use the capital judicious team. This decision of the Board reflects strong confidence in our ability to drive growth and gain market-share in the affordable housing finance segment.
Our S&P Global ESG score has also improved significantly from 34 in FY ’23 to 45 in FY ’24, reflecting our dedication towards environmental, social and governance excellence. I’m also pleased to inform you that the Board of Directors has approved the elevation of Ajay Khetan, our Chief Business Officer to the post of Deputy Chief Executive Officer. In this new role, Ajay will assume responsibility over strategic alliances and marketing functions in addition to his current role.
Now, I hand over the call to Nutan to take you through the financials and other highlights. Nutan, over to you.
Nutan Gaba Patwari — Chief Financial Officer
Thank you, Manoj. Good evening, everyone.
Let us start with the key financial metrices. Starting with spreads, our spreads excluding co-lending is at 5.2%. As we had expected, the cost of borrowing excluding co-lending has gone up marginally to 8.4%. Despite continuous increases in deposit rates by banks and consequent NPLRs, the cost of borrowings still remains below 8.5%, which is a reflection of the strength of the funding profile of the company.
Net interest margin for Q3 was at 4.9%. Things have compressed by 24 basis-points on a Q-o-Q basis. About 11 basis-points of this is contributed by increase in ex-co-lending cost of borrowing and the rest on account of higher liquidity levels gearing and realized fees. In-line with Q2, fees and commission income continued to witness good growth. This was driven by a full-quarter effect of the insurance commission. We expect the insurance commission to be in the range of INR15 crores to INR18 crores per quarter going ahead.
Operating cost to assets was at 2.6% for the quarter, in-line with our expectations and marginally lower than the previous two quarters. We expect this ratio to remain range-bound within 2.7% to 2.8% as we focus on growth and expansion. Moving on to provisions and asset quality. Credit cost for quarter three is at 30 basis-points. Nine months FY ’25 credit cost is 26 basis-points. Our Nine-Month FY ’25 credit cost is lower than our Nine-Month FY ’24 credit cost of 38 basis-points despite a 33% higher book. We continue to maintain our conservative medium-term cost — credit cost guidance of 30 to 40 basis-points as we focus on growth. We continue to adopt a conservative approach to provisioning, maintaining a provision overlay or above ECL requirements.
Moving to balance sheet and capital position, our balance sheet remains robust, providing a solid foundation to support the company’s growth plans. Our borrowing profile continues to be well-diversified and cost-effective, reflecting our prudent financial management. 59% of the borrowings come from public and private sector banks, 17% from NHP, 16% from assignment and co-lending and balance from NCDs and ECB. Our cost of borrowing is competitive at 8.4%, enabling us to maintain spreads. Our current rating is AA minus from leading rating agencies. As per our current liquidity management strategy, we executed a direct assignment transaction worth INR170 crores during the quarter. We continue to focus on co-lending as well and looking to scale with newer partners. We expect co-lending to contribute around 10% of disbursements in the medium-term.
Moving to capital adequacy and liquidity. Our total capital adequacy, risk-adjusted assets ratio stands at 33.1% with Tier-1 at 32.7%. We have made some one-time adjustments to this approach in-line with discussions with the new auditors. This is majorly led by BA interest strip, which has impacted by 1.8% and ESOP reserve account, which is impacted by 80 basis-points. Our organic capital consumption led by growth net of capital accretion is 75 basis-points per quarter. As of December ’24, our net-worth stands at INR2,408 crores with a book-value per share of INR269, reflecting our strong capital position. Debt-to-equity is at 3.8 times. Manoj has already covered that our Board has approved the equity raise of INR1,250 crores. I would like to add that our leverage is now nearing 5 times. Internally, we are comfortable around 6 times. Thus, we would need to raise equity funds over the course of next six to nine months as we continue to strive towards a March AUM of INR20,000 crores. I’m excited to work on this very strategic project for the company and support Home First’s future growth trajectory.
Overall, our business remains on a strong round, underpinned by a diverse borrowing portfolio, a robust capital foundation and prudent risk management. We are dedicated to leveraging technology, growing our distribution network and optimizing operational efficiency to achieve sustainable growth and value-creation for our stakeholders.
With that, we conclude our opening remarks and now happy to take your questions.
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 touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles you.
We’ll take our first question from the line of Rajiv Mehta from YES Securities. Please go-ahead.
Rajiv Mehta
Yeah, hi, good evening, Manoj and Nutan. Can you elaborate on the tightening of credit filters you spoke about and shouldn’t it have a more lasting impact on your approval volumes then? And which markets were more impacted by this tightening of underwriting?
Manoj Viswanathan
So tightening of underwriting, you see some product-specific filters we have put, it would be very nuanced to go into the details in this call. But this is something that we implemented a few months ago. So, which is to the — it has impacted our volumes to the extent of maybe around INR10 crores INR15 crores for the quarter. And some of the impact has also come as I mentioned through the — because of the Karnataka issue, about INR1 crore to INR5 crores from there. So that is — this is a number that we should now be able to compensate from the markets and in the coming months. So I think the impact would now taper off.
Rajiv Mehta
Okay. Okay. And one data-keeping question is what is the BP in as a percentage of disbursement and what has been the trend here in recent quarters?
Manoj Viswanathan
BTN is insignificant in our scheme of things. It’s generally less than 1% of our disbursals and that’s generally been the trend.
Rajiv Mehta
And how much of the flows that you’ve seen in this quarter, we have seen you know, some meaningful addition in Stage 2 and even Stage 3 when you add-back the write-offs. How much of these flows can reverse in Q4 and whether have you seen this better collections in January, can you throw some light on that?
Manoj Viswanathan
Yeah. So if you see last year also, in comparison to last year, if you see our 30-day past-due, it is only 10 basis-points higher. So generally there is a movement in-quarter three because partly impacted by Diwali holidays and so on. So some of that impact is there this quarter also. Quarter-four, that is again a good improvement. So it should — as of now, our expectation is it should completely reverse.
Rajiv Mehta
Got it. And the linkage of bank borrowings with various benchmarks? This is the last question. Thank you.
Nutan Gaba Patwari
Yeah. So bank borrowings, the benchmarks could differ between public sector banks, private sector banks. It’s a combination of MCLR and external benchmarks generally repo.
Rajiv Mehta
Sure. Any percentages by any chance?
Nutan Gaba Patwari
So from the bank borrowing, about 20% of it will be on external benchmarks, which will include repo and and the — everything else will be on an NCLR, which will be one-third about three-month MCLR, another one-third on six months and finally on 12 month MCLR.
Rajiv Mehta
Okay. Thank you and best of luck.
Nutan Gaba Patwari
Thank you, Rajiv.
Operator
Thank you. We’ll take our next question from the line of Abhijit Tibrewal from Motilal Oswal. Please go-ahead.
Abhijit Tibrewal
Yeah. Thank you for taking my question question and good afternoon, everyone. Just wanted to understand, while you have already kind of commented on asset quality, part of it explained by macro-environment. I mean, request if you can give some more nuances around it, this 30 basis-points that deterioration in one plus DPD and 30 plus DPD. You also said earlier to the last participant that some of it could have also been because of the festive season and the fact that you expect a good improvement in 4Q. But I mean, have you had a chance to kind of look-through, I mean, mean which are these customer segments, if at all, any geographies where you are seeing this deterioration?
Manoj Viswanathan
There is no geography-specific deterioration. I mean in the sense of at an overall level, specific states, et-cetera. Of course, across branches, there are always pluses and minus between quarters. So see the 300 basis-points — sorry, 30 basis-points movement is comes from basically about 200 — if there are 200 customers who don’t pay at the end-of-the quarter, it impacts us by 30 basis-points. So it’s a number that can be reversed. So it all — it also depends upon the last day, whether it is a holiday and so on and so forth. So some movement is also because of that. Maybe partially maybe out-of-the 30, maybe 5, 10 basis-points can be attributed to a kind of weak environment, etc. also — but and anecdotally or even from our teams on-the-ground, we are really not getting any negative feedback in terms of difficulty in collections, customers going through stress and so on. So that kind of feedback is something that we have not yet got.
And even this month, if we look at the collections, you know, we are to be almost at the near the end-of-the month, it’s all looking pretty good as good as any other good months in the past. So that is why I mentioned that we are not seeing any cause for worry. It’s just a moment of probably 100, 200 customers at the end-of-the end-of-the quarter.
Abhijit Tibrewal
Got it. And have you had the chance to look at data what proportion of our customers would have MFI loan or another retail unsecured loan?
Manoj Viswanathan
Yes, we have. We have done that analysis. So microfinance loans, as we have always mentioned, is a very small percentage. It’s I think 1% or 2% of our 1% — actually 1% of our customers have microfinance loans. Other loans, of course, you know, we have always said that there are customers — now almost 80% of our customers have a bureau score. So they would either have a consumer durable or a two-wheeler or a personal loan. And I think generally, you know, so if you take consumer durables, about 20% of our customers would have a consumer durable loan, same for two-wheeler, same for personal loans. So about 15% to 20% of our customers would have one of these loans. And so — and overall, about 80% of our customers have some loan or the other and that’s how they get a bureau score but those loans, the repayment installment per month is generally in the region of maybe INR3,000 to INR3,000 to INR5,000 rupees a month, which would — which we would have already taken into account at the time the customer came to us for a loan as part of the FOIR. So it should not generally impact the customer’s repayment track.
And these are loans that get paid-off also in-between six to 18 months. So after which the customer’s budget comes back to normalcy. So we have not seen any impact of the other loans customers repayment — repayment. But in any case, in the hierarchy of repayment for the customer, the home loan is always at the highest point. So the default will start at you know for some other loan, but the home loan will always be a priority for the customer.
Abhijit Tibrewal
Got it. And my second question was for Nutan, while you explained that out-of-the 24 basis-point NIM compression, almost 13 basis-points came from higher liquidity. Just trying to understand, I mean, is this the new normal for the liquidity or at some point in time, we will look to kind of run-down this liquidity and come down at lower levels?
Nutan Gaba Patwari
So, Abhijit, you know, let me just kind of help you read the breakup again. So out of ’24, 11 basis-points was the increased cost of borrowing. 7 basis-points is liquidity and leverage put together because you know the balance sheet is getting more-and-more levered through debt. So that is the 7 basis-points. The liquidity between quarter two and quarter three has not moved much. So it’s on — there is not much movement. The remaining 7 basis-points, which is 24 minus 11 minus 7 is coming from a lower realized yield. And so essentially what happens is when you calculate the NIM, depending on when the loan has got booked in the balance sheet, the realized yields also move. And so it’s a very nuanced breakup of 11 plus 7 plus 7%.
Abhijit Tibrewal
Got it. And going-forward, I mean, liquidity, I mean, expected to remain at current levels or at some point in time, we will look to…
Nutan Gaba Patwari
March quarter tends to be the quarter as you are aware, where we do take drawdowns as we close the year. So towards the end of March, we should be slightly higher, but through the quarter, we should be able to maintain our previous run-rate.
Abhijit Tibrewal
Got it. And thank you. And one last question for Manoj again. Just trying to understand, I mean, this question around competitive intensity from banks have always been there. I just wanted to kind of pick your brains on the fact that recently, almost all the large HFCs in the country have been talking about entering this affordable and Prime segments. And I mean, at this point in time looks like I mean they are very, very serious about it, right? I mean, have we started seeing some impact of this in the affordable segment? Basically what I’m trying to understand, is there a case that, I mean, mean over a course of time, genes can see some structural compression from where we are today?
Manoj Viswanathan
Actually difficult to say at this point of time, but I mean if I were to just look at some of the two, two or three of the large entities that are talking about affordable housing, it’s actually there is a wide spectrum when they talk about affordable housing. So what we say is affordable housing, we talk about less than INR25 lakhs, average ticket size being 10 to INR12 lakh or 12 to 13 lakhs, et-cetera. But if you see some of their commentary, it’s more like probably closer to 20 lakh is the affordable category for them. And correspondingly, obviously, the yield — yield at which they are operating in that segment will be lesser.
So I think there are different. We are talking about different buckets here so we will kind of wait-and-see you know-how much is — how much is the impact on our bucket, which is, let’s say the 5 lakh to 25 lakh range. As of now, I would say, I mean, I mean the buckets are different. I mean the buckets in which these entities are operating would be probably different and hence, in the zero to 25 lakh bucket, hopefully, there should not be that much impact.
Abhijit Tibrewal
Got it. That’s all from my side. Thank you for taking my questions and I wish you and your team are very interest.
Nutan Gaba Patwari
Thank you, Abhijit.
Operator
Thank you. We’ll take our next question from the line of Renish Bhuva from ICICI Securities. Please go-ahead.
Renish Bhuva
Yeah, hi, team. Congrats on a steady set of numbers. Sir, just two questions from my side. One on the LAB. So we have seen last few quarters lab growth has been sort of much faster than HL. So where do you see a lab share settling in at near-term? And given the current operating environment wherein you also mentioned that now we have tightened filters. So how comfortable we are growing this lab book at a faster pace? So yeah, that’s my first question.
Manoj Viswanathan
So, lab — see lab is looking — growing at a faster pace also because of this very small base. I mean, so we have always been very conservative on lab and it’s always been kind of 10% to 15% of our book. So on a small base, the growth looks faster and the numbers look much bigger. See, our view on LAP is that currently we are at about 15% of AUM and we are comfortable to take it up to 20%. So as we expand that — expand that from 15% to 20, obviously the growth in-lab will look higher than the growth in-home loans. But that is really our appetite currently that we want to — we are comfortable taking it up to 20% in the near-term. So maybe in the next two to three years, we are looking at a 20% lab contribution and an 80% coming from housing.
Renish Bhuva
Okay, okay. And secondly on the disbursement side, so of course, you did mention about INR20 crores INR25 crores of business loss due to a couple of reasons. But even if we look at, let’s say, first 3/4 of absolute run-rate, which is sort of between INR1,150 crore to INR1,200 crore. So what is happening here? I mean also when we bi-calculate, it appears that home loan disbursement is actually degrowing. I don’t know. I mean, that’s my estimate. So correct me if I’m wrong. But yes, so I just wanted to understand what is happening on the disbursement front and more importantly on the HL disbursement front?
Manoj Viswanathan
See, overall disbursement growth is around 20%.
Renish Bhuva
Sir, on sequential — I’m looking at sequential numbers.
Manoj Viswanathan
Yeah. So sequential numbers, as we mentioned, last two quarters have been slightly lower because of — I mean, last quarter specifically or the quarter three specifically was because of — I mean, we were expecting a number which was about maybe INR25 crores to INR30 crores higher, but that did not happen because of the stated reasons. I mean the number was INR25 crore to INR30 crores higher. We would have — it would have been a — I think sequential growth of about 4%, 5%, which finally stood at about 1.5%. So which we think that should get — should get corrected in a quarter or so.
Renish Bhuva
Okay. And any comment on the HL disbursement front?
Manoj Viswanathan
Yeah. So like I said, the average disbursement — so our design is based on AUM growth. So AUM growth of 30% plus is what we are targeting. So to achieve an AUM growth of 30% plus, I think the disbursal growth is working out to around close to 20%. So the HL growth will be maybe 16% 17% and the lab growth is maybe 2023, ’24 thereabouts, giving an average of about 9% to 19% to 20% disbursal growth. So that will in-turn give us a UM growth of 30%. So that is our design and that is the way the plan has been made-for this year.
Renish Bhuva
Got it. And maybe if I can just within last question on the asset yield side. Again, so circling back to the lab product, as we already seen lab product growing from a 10% to 15% now and maybe under two years it will reach 20% and actually the self-employed segment contribution is also inching up. But somehow, this is not getting reflected in the asset yield. So any comment on that?
Manoj Viswanathan
Asset yield, we are trying to maintain it at about 13.5% and see, I think what we will see is that in the next maybe few quarters, as you know, the borrowing cost hopefully as it goes down, the asset deal will not go down to that extent. It’s how we are basically looking at it.
Renish Bhuva
Okay. Okay. Okay. Thank you and rest of luck, sir.
Nutan Gaba Patwari
Thank you, Renish.
Operator
We’ll take our next question from the line of Kunal Shah from Citigroup. Please go-ahead.
Kunal Shah
Yeah. Thanks for taking the question. So when we look at it again on the yield side of it, so we increased the rates in August, but again, that’s not reflecting in terms of the yields overall maybe sequentially when you look at it that is not reflected. And even balance transfer has gone up to upwards of seven-odd percent. So any correlation with the increase in the rates, which have been there that it has led to a slightly higher balance transfer as well?
Manoj Viswanathan
No, the rate increase was — see, we passed on only 35 basis-points to a group of customers who have not actually gone through a rate pre-rate increase previously. So I would not — I would say there was no direct correlation between this minor uptick in-balance transfers to that rate increase. Balance transfer fluctuates in that 6% to 8% range we have seen quarter-to-quarter, it’s largely external factors, you know-how aggressive competitors are and so on and so forth and how effective our own internal retention methodology is going. Not related — at least in this case, not related to the 35 basis-points increase that we carried out.
Kunal Shah
Okay. And this 35 basis-points would be effective for what proportion of the AUM?
Manoj Viswanathan
So largely we did it — we did the increase on in August. So yeah, for this quarter, there is a — there would be a full impact of the 35 basis-points. But the 35 basis-points was only — it was carried out only on a portion of the base. So I think about 40% of the entire customer-base.
Kunal Shah
Okay. Okay. And still like is flat and this would have been effective for full-quarter of this maybe full-quarter of December.
Manoj Viswanathan
Yeah.
Kunal Shah
Okay. And secondly, in terms of the growth in MP and UP in particular, so these have been the newer geographies, we have seen that we have doubled the AUM over past seven, eight quarters and now a sizable one at INR800 crores INR900 odd crores. Do we expect to sustain a similar kind of growth rate looking at the branch presence as well as the district penetration or there is a stiller scope and this segment because a larger part of the growth is also being led by these two — these two states. So do we expect it to continue or there would be more investments required in these states to further at least maintain the momentum of 30% plus AUM growth?
Manoj Viswanathan
Yeah. See, we — I think I think about a year-ago, we mentioned that our new focus states would be MPUP and Rajasthan because these are emerging states, which have crossed a certain threshold of per-capita income and are now showing signs of a becoming large affordable housing markets. So that thought remains and that strategy remains. So we continue to invest in these markets and we want to obviously expand our market-share in these markets. So we have a much stronger presence in MP because we started there earlier and we have a more deeper presence. In UP, it will require more investments because currently we are present only in four cities in UP.
And so, we will require far more investment to penetrate UP, but UP is also a much more fragmented market and we will — we will do it in phases. But yes, we are definitely committed towards investing more in these markets and increasing our presence in these markets.
Kunal Shah
Okay. And just in terms of the rise in OnePlus DPD, any trends across the geography, maybe in the core states of Gujarat, Maharashtra, Tamil Nadu, is it holding on relatively well and our rise, which we had been seeing that is across the newer states, is that the trend?
Manoj Viswanathan
No, there is no state-wise trend. It’s mostly brand-specific.
Kunal Shah
Okay. Okay, but no specific states as such. Yeah.
Manoj Viswanathan
Yeah, no specific states as such.
Kunal Shah
There are higher levels.
Manoj Viswanathan
Yeah. So I mean in the — in the newer markets, Rajasthan MP continue to do much better than rest of India and so we don’t — we don’t have any concern as such.
Kunal Shah
Okay, cool. Yeah. Thanks and all the best. Yeah.
Nutan Gaba Patwari
Thank you, Kunal.
Operator
Thank you. We’ll take our next question from the line of Nidhesh Jain from Investec. Please go-ahead.
Nidhesh Jain
Thanks for the opportunity. First question is on employees count. I observed that employee per branch has increased materially this quarter. So what is going there and how do you see that number tracking going-forward?
Manoj Viswanathan
So again, the employee number moves depending upon the batches of employees who join. So there would be a bunch of employees who would have joined in the quarter. So the number goes up slightly, but kind of gets averaged out over the quarters. So ideally, you should look at it year-to-year because in some quarters, some months, there are more number of employees joining. So there is a increase in employee per branch.
Nidhesh Jain
Okay. Secondly, since we have now cost INR10,000 crore of AUM, is there any update on credit rating upgrade? What are the conversations with credit rating agencies that we are having?
Nutan Gaba Patwari
So, Nidhesh, as you would have seen, we are also thinking about enhancing the capital on the balance sheet. So once we are — the capital is behind us, that would be appropriate time to engage on this and also take it to closure from the rating agency side. So give or take, I would say, six, nine months for both the activities to get closed is something that is a plan that we’re working with.
Nidhesh Jain
Okay. The next question is on co-lending. Co-lending, the momentum that we are showing is has been slowing down. And I think last quarter we have the lowest co-lending disbursements. Yes. So any reason for that?
Nutan Gaba Patwari
So we had done two tie-ups and we were progressing reasonably well. There have been some changes in the policy-related aspects. So we are working with a new partner at the moment and hopefully another two quarters, we should be able to pull-back the losses as well as show growth on this lag.
Nidhesh Jain
Okay. And as we think about next year, if we are planning 30% growth on AUM next year, then disbursement growth should also be upwards of 25%. So because of 20% disbursement growth continuing next year, probably we will not be able to deliver 30% AUM growth. So how are we planning for that?
Manoj Viswanathan
Yeah. So the aim is to deliver, you know say 27% to 30% AUM growth. So accordingly, we will — we have planned the disbursals as well. So aim is to get to — so this year the average disbursal per month is around INR400 crores. Next year, we are looking to average close to INR500 crores. I mean that is that was the original plan.
Nidhesh Jain
Okay. And last question is the count on count of active connectors in the quarter?
Manoj Viswanathan
Count is about 3,600 active connectors, 3,646.
Nidhesh Jain
3,600 active connectors.
Manoj Viswanathan
3,600. Yeah, 3,646 connectors.
Nidhesh Jain
Okay, okay. These were active during the quarter?
Manoj Viswanathan
Active during the quarter, yes.
Nidhesh Jain
Okay. Thank you, sir. That’s it from my side.
Operator
Thank you. We’ll take our next question from the line of Shreepal Doshi from Equirus. Please go-ahead.
Shreepal Doshi
Hi, sir. Thank you for giving me the opportunity. My first question was on this tightening of underwriting norms. So what parameters that did we come across as to sort of tighten this underwriting norms?
Manoj Viswanathan
No. So we basically get — I mean, we have our own early warning signals and analysis of various portfolios, etc. So based on which — based on some inputs that we have got, for certain products, we have tightened the norms, we have tightened or rather we have increased the number of filters for the — in the process to — I mean to basically scrutinize it better and that also results in a bit of slowdown in that — in the disbursal for some period. And after that, it kind of comes back to normal.
Shreepal Doshi
So is it specific to any specific customer profile or that we would have sort of seen these trends?
Manoj Viswanathan
With certain products, so we have like a multitude of — I mean, so we have products like self-construction, resale, apartments, etc., right? So it’s a combination of certain products, LTVs, type of — type of properties, etc., quite. So I don’t want to go into the details at this point, but in certain — for certain categories, we have implemented certain extra filters and more — more exhaustive processes to clear the — clear the approval.
Shreepal Doshi
Got it. Got it. Okay. And sir, second question was the NHB borrowing related. So we would have drawn down our borrowings from our sanction pool from NHB. So what is the rate of interest that we’re able to get from NHB?
Nutan Gaba Patwari
Shreepal, it’s broadly in-line with where the banks are. It’s not significantly different.
Shreepal Doshi
Okay. So the benefit is no more there in terms of the differential between the two.
Nutan Gaba Patwari
For what we are getting now, this should change ideally once the rates go down. But as of now, yeah, you’re right, the difference is not significant.
Shreepal Doshi
Got it. The last question is on the branch expansion strategy. So what would it be in FY ’26 and which states would we be targeting incrementally?
Manoj Viswanathan
So branch expansion, see, largely in a year, we try to target about 30 to 40 branches. So similar number will be there next year as well. So — and as I mentioned, our aim is to penetrate deeper into the three new emerging markets, which is UP, MP and Rajasthan. So we would have a good proportion of branches coming up in those states. Of course, our core markets are also there where there are branches being added in existing locations. So I would say broadly 50-50 in terms of new markets versus existing markets.
Shreepal Doshi
Got it. And sir, just one follow-up there. In the existing market, are we focusing in the same Tier-1, Tier-2 locations or we would — since there is — we are trying to penetrate more, we would also Tier-3 and Tier-4 geographies?
Manoj Viswanathan
So there again, it is the strategy is kind of 50-50. 50% of the branch expansion happens or 40% happens in existing markets where we already have branches. So addition of new branches in a larger city and about 50% of the branches get opened up in new locations, new cities.
Shreepal Doshi
Got it, sir. Got it. Thank you, sir. I have more questions. I’ll come in the queue. Thank you.
Operator
Thank you. We’ll take our next question from the line of Aravind R from Sundaram Alternates. Please go-ahead.
Aravind R
Thank you so much for the opportunities and congratulations on the good set of numbers. So you mentioned about early warnings signals that led to like credit, you know underwriting that have been tightened. I would like to understand what kind of early warning signals you can give brief about it, like whether it is income levels growth is lower or a higher leverage among the customers or is it like any particular cohort which is showing any like a troubling signs?
Manoj Viswanathan
Yeah. Generally it is because of you know, some early, let us say, signals that we get on certain pools of portfolios and also sometimes we get information from the market so say some other entity being impacted by something etc. So we pick-up clues from those and then implement you know, implement these changes.
Aravind R
So even though we don’t see any issues in our portfolio, we are seeing like a customer similar to us but you know being serviced by other lenders, lenders, there we are seeing some signs of…
Manoj Viswanathan
Both. Yeah, both. Yeah, so see, so the occurrences in our portfolio are not significant enough to impact the portfolio, but there would be sporadic one-off instances that have happened somewhere, which gives us give us clues or give us signals. And plus like I said, we listen to you know things that have happened to others in the market as well.
Aravind R
And so do you see like especially in the geographies, geographies we operate like a — do you see like either real income growth being impacted or higher leverage among the customers in the geographies we operate?
Manoj Viswanathan
No, we are not — we are not getting inputs from the ground teams related to this or they are not any difficulty in collections because customers are over-leveraged. So yeah, so as of now, those — we have not — nothing like that has percolated to us at this point.
Aravind R
Sure. And the fee income growth has been like very good. Even though the disbursement growth has been slightly lower and like I would like to understand what is it being contributed by, like is it insurance brokerage which is helping here or something else?
Nutan Gaba Patwari
So we had started the entire insurance partnerships mid of last quarter. So this quarter, we’ve got the full benefit of that. So that’s what you see in the fee and commission line. So this number is now a more stable number going ahead quarter-on-quarter.
Aravind R
Can you like — I can tell me what is the number from insurance?
Nutan Gaba Patwari
Around INR15 crore to INR18 crores per quarter.
Aravind R
Okay. Yeah, yeah, sure. Sure. Yeah. Thank you. Thank you so much.
Operator
Thank you. The next question is from the line of Raghav Garg from Ambit Capital. Please go-ahead.
Raghav Garg
Hi, thanks for the opportunity and congrats on your results. I just have one question. So when I look at the longer-term trends on your gross Stage 3 ratio, right, since FY ’18, the ratio has always increased Y-o-Y, except maybe in FY ’23 when it declined. And then I assume that this trend would feed into your PD and LGD calculations. But when I look at the trend on your Stage 3 coverage over last several quarters, right, say, about eight, 10 quarters, the Stage 3 coverage has been coming down. But normally, I would think that because the trend has been adverse, the ratio — the coverage ratio should increase or at least not decline. So can you help me understand how to read this? That’s the only question that I have.
Nutan Gaba Patwari
No problem. Raghav, when you look at the state from FY ’18, like you mentioned, there are various things happening. We are discussing seven years or eight years. So one, the Stage 3 calculation itself change in December ’21 when the RBI came up with the, always NP classification. So the numbers prior to that are not like-for-like to that extent. That’s one. So in the new computation, you also have a large bucket sitting there, which is less than 90 DPT where you don’t have to take a full provision, you have to take a part provision. That’s number-one reason. The second reason is the composition of the book. When you calculate PDL, you calculate based on your past performance. So the PD portion, COVID times show a different outcome. And finally, the LGDs vary depending on your product.
So if you have an apartment product with a 90% LTV, your LGD is higher versus if you have a lab with a 30% LTV. So your LGDs are very different. As we have been discussing all through the call today that the LAP has been increasing, the self-construction has been increasing where the LTDs are very low because the LTVs are low-to begin with. The mixed or the — let me say, the weighted-average LGD of the book has been coming down and that is what is reflected in the provisions. So this is the whole signs behind these numbers. I hope this is your question.
Raghav Garg
Yes, that’s very fair. That was all from my side. Thank you.
Operator
Thank you. We’ll take the next question from the line of Pavan Kumar from RatnaTraya Capital. Please go-ahead.
Pavan Kumar
Hi, team. I wanted to understand what is the kind of debt-equity that we are looking-forward maybe two or three years hence since we are trying to raise money? And also this INR20,000 crore target by when we are trying to hit? And also are we comfortable lending in the current environment in terms of — I’m talking about in terms of almost doubling the book maybe next two to three years, how do we look at that overall? And any — I mean, I just wanted to understand the rationale — your rationale behind raising this new incremental market equity?
Nutan Gaba Patwari
Yeah, sure. So INR20,000 crores is a number that we’re looking to hit by March 27. That’s about nine quarters from now. In terms of the debt-equity, we are at 3.8, 3.9 depending on you look at average or closing. We are — we, let’s say, rating agencies are comfortable with five. So what we have done is to take enabling resolution from the Board, which allows us to raise this capital in the next 12 months such that depending on the advice from the investment banks, depending on the conversation with investors, we have enough time to take this money in.
As far as lending in this environment is concerned, maybe I can request Manoj to share his views on that.
Manoj Viswanathan
Yes. As we have been discussing, so we are not seeing such a major adverse trend as far as lending is concerned and we are not getting any such a ground level feedback also from our teams. So we are fairly optimistic in terms of, you know, the our ability to grow and build market-share in this — in this affordable housing segment.
Pavan Kumar
Okay. One more thing. And what do we think are the normalized BT out rates because since this quarter, I think there was a good amount of jump there?
Manoj Viswanathan
Yeah, it moves between 6% to 8%. So that’s generally the range we have seen. The maximum that we have seen is 8%, I think few quarters ago when there was a series of rate changes that were done or rate increases that were done. But. But broadly it’s in the 6% to 7%, 6% to 8% range. So we should — it should remain in that in that range only.
Pavan Kumar
And since we are planning to raise money, is there any chance of NIMs going up maybe not in one year, but in a two-year kind of horizon or would it be neutralized by whatever the yield decline we might take?
Nutan Gaba Patwari
Sorry, can you repeat your question?
Pavan Kumar
Since we are planning to raise new money, would there be any chance of saying seeing the NIMs or NIMs and NIMs going higher or what we would pass-on the whatever benefit we might get from raising new money to go through decline in the yields?
Nutan Gaba Patwari
No, absolutely, the NIM will definitely go up and the ROA should also go up with the leverage coming down. I think the way to look at yield and cost of borrowing for this company is looking at spreads. So the spreads will remain in the 5% to 5.25 range that we have been guiding all along. The outcome of NIM depends on how the balance sheet is structured from an equity perspective. So that is just a calculation and we will continue to keep guiding back to spreads as far as the business or portfolio conversations are concerned.
Pavan Kumar
Okay. And have we looked at by when we can hit this current ROE back since we are raising the money?
Nutan Gaba Patwari
So once we raise the capital, let’s say, you know, just as a scenario discussion, let’s say, six months time, we are coming close to 17% ROE as we speak, we should go down to 15.5% and then aim to pick-up back to, 17% 17.5% in about eight to 10 quarters. So an average three-year ROE for an investor should be in the 16% to 16.5% range. So that’s the model that we are looking to work with. What we have done to arrive at this model is it’s also important to discuss. So we’ve looked at Bajaj, Hub Finance and Chola as an institution — two institutions for the last 20 25 years and how they have managed their growth and how they have come to the market every three years and raise capital three to four years broadly speaking and that’s the model we hope to work with.
Pavan Kumar
Okay. Thanks so much. That was very useful.
Nutan Gaba Patwari
Thank you.
Operator
Thank you. We’ll take our next question from the line of Krishnan ASV from HDFC Securities. Please go-ahead.
Krishnan ASV
Yeah, hi. I think many thanks for taking my question. Couple of things. One, there was something you mentioned about having seen a spike, about a 30 dip spike as far as your — as far as your 30 DPDs are concerned. I just wanted to understand what are you hearing from the ground in terms of what are the reasons why people are defaulting? Is it cash-flow? Is it seasonality in cash flows? Is it because there is leverage building up elsewhere? Because you seem to indicate that’s not what you’re hearing. But I just wanted to understand when you have been with conversations on-ground, what are your — especially because you also said in terms of the hierarchy of repayment, this up top. So if you could just throw some light on what insights you are getting closer to ground?
Manoj Viswanathan
So, jump back to questions, generally the reasons our customers default are largely you know sometimes there are mismatches in cash flows. Somebody has not got salary for a month they’ll get it the next month or they are between jobs. So that month the cash-flow is a bit impacted or there are some emergency expenses that have come up, so school fees time or there is some medical expense, etc. So generally, these are the reasons customers delayed. So what we normally see in the one DPD or let us say, between zero to 60 days kind of a default is largely because of these cash mismatch — our cash-flow mismatch reasons. Beyond 60 days, of course, there could be more serious reasons like a permanent impact to the income, a permanent impact to life, etc. So those are generally the reasons our customers default.
But you know, like I said, off-late, since this whole macro issue has started happening. You know, our teams have still not come back and said that customers have are over-leveraged or overburdened with existing EMIs and they’re not able to pay, etc. That kind of anecdotal information or anecdotal you know, news is not something that is still come to us.
Krishnan ASV
Understood. Understood. The other question I had was around lab, given that that’s incrementally a segment where you are likely to build build more presence and if you take the share up from 15 to 20, that will grow faster than the rest of your home loan book. How is the competitive dynamics, especially in the geographies where you’re targeting to grow your lab?
Manoj Viswanathan
Labs, because of our limited presence in-lab and lower share of lab, actually, you know, first of all, our performance in-lab is much — it’s very good. The repayment track-record on lab has been very good. Also for us to incrementally change that ratio from 15 to 20% is not a big deal because we are operating on a low-base. And I think because many, many of the players in the market have already matched out their capacity, we are still in a position to continue and choose our customers.
Operator
Krishnan?
Krishnan ASV
Thanks. Thank you. Thank you. I’m done.
Operator
Thank you. We’ll take our next question from the line of Shailesh Kanani from Centrum Broking. Please go-ahead.
Shailesh Kanani
Good afternoon, everyone. Thanks for the opportunity. My other questions are answered. Just one question, one. In earlier calls, we always have guided for a growth — AUM growth of 30% plus. Did I hear you correctly when you said 27% to 30%, are we lowering the guidance on the AUM growth front?
Manoj Viswanathan
The plan that we mentioned, which is a INR20,000 crore plan as of FY ’27, that actually works out to a between 27% to 30% growth for this — for this period between 24 to 27. So…
Shailesh Kanani
For ’26 per se?
Manoj Viswanathan
Sorry?
Shailesh Kanani
So it was not for particular FY ’26 per se, it was in general for the next two years?
Manoj Viswanathan
Yeah, next three — yeah, next two to three years average from that perspective is how I mentioned it.
Shailesh Kanani
Okay. Okay. Thanks a lot. Sir, just one more thing on disbursement front, here we had guided that we are ramping-up the capacity with the addition of branches and employees. We were expecting somewhere in the range of INR2,500 crores to INR3,000 crores of disbursements in the second-half. So that — that guidance still holds or that is going to be revised downwards considering the macro-environment?
Manoj Viswanathan
So our target for the year was about INR4,800 crores. So we are broadly in track — on-track for that.
Shailesh Kanani
Okay, sir. That’s all from my side. Thanks a lot and best of luck.
Operator
Thank you. Next question is from the line of Chinmay Nema from Prescient Capital. Please go-ahead.
Chinmay Nema
Good evening, team. I wanted some color on the asset quality of the co-lending book and the direct assignment side, if you could share the Stage 3 numbers for the same?
Nutan Gaba Patwari
So co-lending book is fairly new. I don’t think there is any meaningful Stage 3 sitting there. Assignment we’ve been doing for a long period of time, it will be way below our own balance sheet numbers, probably two-third of where our current own balance sheet numbers are, broadly speaking.
Chinmay Nema
Got it. So the Stage 3 number is lower than that of what we have on our book, is that understanding correct?
Nutan Gaba Patwari
That’s right.
Chinmay Nema
Got it. And on the — on the SMA side, behaviorally, do you see something different on these books compared to what we have on our book?
Nutan Gaba Patwari
Look, the co-lending book works within a product that we have decided together with the bank, which arguably could be slightly better in terms of profile.
Manoj Viswanathan
I mean, by design, the co-lending book should perform better. I mean, it’s still — as Nutan said, it is still early days for us to reach a conclusion. And also as of as of now, the delinquencies are very low there. But by design, because these are formal customers and with a higher — in a higher income bracket and higher-ticket size. So ideally, they should perform better than the core affordable housing or traditional affordable housing portfolios. But it’s still early days to reach that conclusion, but it should ideally, technically it should do — that’s how it should go — it should go. And same for the assignment book because assignment is actually — I mean the assignment happens after a certain you know minimum holding period during which the repayment track is observed and then the assignment is done. So it is definitely — generally marginally better than the affordable housing portfolio.
Chinmay Nema
Got it, sir. And secondly, just wanted to understand what is the right printage to look at in terms of assessing the gross NPA. So typically after how many months do they peak out on average or in general?
Manoj Viswanathan
They peak out after 36 — 36 to 42 months.
Chinmay Nema
Got it, sir. Thank you.
Operator
Thank you. Next question is from the line of Hardik Doshi from White Whale Partners. Please go-ahead.
Hardik Doshi
Yeah, can you hear me?
Nutan Gaba Patwari
Yes, Hardik.
Hardik Doshi
Yeah. Hi. So I just wanted to ask a bit of a longer-term question. You’ve given the target INR20,000 crore. Once you get to the kind of a scale the affordable housing growth can get challenging just looking at other companies within affordable housing space that are working at-scale. How are you thinking beyond FY ’27, let’s say, FY ’27, FY ’30, would you look to diversify into other products or what is the plan?
Manoj Viswanathan
We are working on a long-term strategic plan. So we do a three-year — three-year kind of a plan and discuss with the Board. So broadly, our aim is to get to — I mean, so like you rightly said, yes, we have to relook at what the product mix will be and certain other strategies, et-cetera. Still in-kind of discussion stage, but broadly we are looking at a 35,000 crore kind of a number by 2030.
Hardik Doshi
35,000 by 2030. Okay. That would include. Yeah. And that would include, I guess introduction of new products.
Manoj Viswanathan
Yeah. So, I think broadly — I mean, broadly without getting into too much detail, it will — it will basically be a higher share of — there will be a higher share of co-lending compared to what we are talking about now. A slightly higher share of LAP and slightly higher share of co-lending is the — is the way I would put it right-off.
Hardik Doshi
Got it. Okay. Thanks so much.
Operator
Thank you. We’ll move on to the next question from the line of Jatin Sangwan from Burman Capital. Please go-ahead.
Jatin Sangwan
Hi, thanks for taking my question. My question is around co-lending. If I look at co-lending transactions, they once reached 7% to 8% of disbursements. Now they are back to 2.5% to 3% of disbursements and they’re continuously falling down sequentially. So are there any issues that we are facing with the current partner? And when do we expect these co-lending transactions to pick-up?
Manoj Viswanathan
Yeah. Co-lending because we have to work with the work with the banks and the partner lending banks. There are always some push and pull-in terms of their product policies and changes in — because it also — it’s not just our changes, they also change their product policies from time-to-time. So that impacts the volume from time-to-time, but these are these are hiccups that will be there and we will line them out and we will again pick-up the volumes.
Jatin Sangwan
Okay. Thank you. And just one bookkeeping question. Our effective tax-rate in this quarter was around 25%. So what actually would be our effective tax-rate going-forward for the next year?
Nutan Gaba Patwari
So just to cover the reason behind the higher tax-rate, see, as we discussed that there is an insurance commission which is higher. So as the non-housing linked income goes higher, the exemption that we get on maintaining the provisions for NHP also reduces. So when you do all of these calculations, going-forward, we expect this to be around 24.5%.
Jatin Sangwan
Got it. Thank you.
Operator
Thank you. Next question is from the line of Jignesh Shial from InCred Research. Please go-ahead.
Jignesh Shial
Yeah. Hi. Sorry, I logged-in a little late. So I don’t know if in the case if I’m asking the same question again. But if my first question is more on margins, if I see it, but our spreads has basically had seen a decline of roughly around 10 bps sequentially. So there is a a higher dip in margins. So anything that — that I’m missing out here, what could be the reason for it? That is one.
And second, obviously, though we are aspiring to grow pretty decently, 27%, 30% you’re talking about next two to three years and raising money and all, but technically our disbursement had remained more or less flat if I see last 3/4. So anything that we are getting concerned about or any specific reasons for it? That is the second.
And third, obviously, you highlighted that basically the primary reason you’re still not seeing over leveraging for the NPAs, but bounces have seen a sequential kind of a rise. So it’s purely — still you are seeing it’s only because of shortage of liquidity or shortage of cash-flow that is causing it and you are still not seeing anything different than this. So I still want to get a little bit more color on it that what could be the reason behind it? These are my three questions.
Manoj Viswanathan
Yeah. So take the first question on margins, so the NIM compression of 24 basis-points, I think you’re referring to. So it has multiple components. Part of it is also because of the leverage increase, so 4.8 going up to 4.9 partly because of cost of borrowings. So broadly you can divide it to three parts. So about 7 to 8 basis-points each. So there is a cost of borrowing impact, there is a yield, I mean slight margin, slight yield, actually compression of about 7, 8 basis-points and the cost of borrowing movement of about 8 to 10 basis-points. So that is the reason for the 24 basis-points movement.
On the disbursal, like I said, the first — first-half is something that we were very — we were very pleased with because first-quarter we actually had a much higher jump-in disbursals compared to previous — previous years. The first-quarter is generally muted, but this time the first-quarter was good. So we had about 5% plus — quarter-on-quarter jump-in disbursals compared to the last quarter of last year. And as a result of which quarter two was a bit muted because already quarter one, there was a jump. Quarter three, of course, as we already admitted that you know we had — we have done some changes and there was an impact of over INR30 crores because of that, which would get rectified in the coming quarter. So nothing which is long-term, it is would be, I would say, just a temporary blip and we should be on-track as far as are concerned.
As far as the delinquencies are concerned, again, we are really not seeing any structural issue on-the-ground. Collections, if we actually track day-to-day — daily collections throughout the month-in how the collection is moving, you know, moving every month. We are not seeing any difference in the way customers are paying. And we are getting — still getting the same kind of traction across months. I mean, collection in January this month is as good as any other previous month. The slight movement in delinquency happens because maybe a few extra customers won’t pay at the end-of-the quarter or end-of-the month. But otherwise, structurally, we are really not seeing any stress at all.
Jignesh Shial
Look, I mean on disbursement, firstly, what you’re highlighting that obviously 1Q you’ll see the jump and then second and 3rd-quarter had been more or less track. Even if I see for your — I’m just purely adding up our last 3/4 and then comparing it with FY ’24, our growth had been — generally we tend to grow in the range of somewhere around 30% plus. But if you see it somewhere in ’22, 2023, if I see it up correctly. So do you think so by the year-end, we’ll be going back to 30% kind of a disbursement growth number or you think this will be the similar range where we’ll be growing for this particular financial year? And then, again we can see a rise probably next year? That is one.
On asset quality, although I — if you can just give me a color on the defaults what we are seeing it up. Is it coming up more from the new geographies, which is — which we have built-in or it is still from our old markets where we had a significant — stronger presence like Western states and all. A little bit more color on it, if we can give it up?
Manoj Viswanathan
Yeah. So delinquencies, see, as I said, state we’re not seeing any state-specific problem or state-specific issue. For us generally because we are fairly diversified across states. I mean, if you see states, our distribution of AUM is between 5% to 15% across 12 states and only one state Gujarat actually contributes to about 30%. So we don’t have a new concentration. It is fairly diversified presence. So we don’t really have a state-specific issue at this point. It is largely — there are sporadic or isolated branches in certain states, which give trouble. So there is really a state-specific issue that is there at this point of time.
Jignesh Shial
Coming up from the new book more compared to the older book or any vintage, if you can give color on that? Or it is again old book and new book also?
Manoj Viswanathan
Yeah, vintages are actually holding. So the trends are the trends are the same, which is why you’re seeing our GNPA trends are also fairly static. See, our growth has been around 30% consistently for the last 16 quarters. The GNPA has also been in that 1.61% to 1.8% range for the last 16 quarters. So no real — I mean, vintage wise, there is really no change that we are seeing and as far as the disposal is concerned, you were talking about 30%. So 30% is — we are — see, we are — the design is for a 30% AUM growth. So the disbursal growth will be slightly lower, maybe between 20% to 25%.
Jignesh Shial
Understood. Understood. Right. Yeah, that’s quite helpful. Thank you and all the best.
Operator
Thank you. The next question is from the line of Ravi Naredi from Naredi Investments. Please go-ahead.
Ravi Naredi
Manoj, you are — you and your team doing fantastic. Insurance commission income is also fantastic and you have started new one. Sir, what is the cost of connectors to home first as a whole. Can you tell that figure?
Manoj Viswanathan
The cost of paying the connectors?
Ravi Naredi
Yeah.
Manoj Viswanathan
So, we pay about 0.4% to 0.5% of the disbursed amount to the connectors.
Ravi Naredi
And can you give in nine months how much we charge bad debts from profit and loss account and how many homes we auction in nine months?
Manoj Viswanathan
Sorry, sir, what was the first question?
Nutan Gaba Patwari
Write-off.
Manoj Viswanathan
Write-off.
Ravi Naredi
In nine — write-off, how much we write-off in from profit and loss account and how many homes we auction?
Manoj Viswanathan
Write-off was about INR8 crores in the first-nine months.
Nutan Gaba Patwari
711 accounts.
Manoj Viswanathan
Right. And…
Nutan Gaba Patwari
711 accounts.
Manoj Viswanathan
711, yeah, about 711 accounts have been optioned.
Ravi Naredi
Okay. Sir, last one. ECB borrowing we are hedging foreign currency and if it is okay, how much borrowing cost we assume to company?
Nutan Gaba Patwari
So, the that we have is hedged fully for currency and fully also for interest-rate fluctuations at the moment. The current landed cost of borrowing to the company is slightly lower than where the banks are.
Ravi Naredi
Okay. Okay. Thank you very much.
Nutan Gaba Patwari
Thank you, sir.
Operator
Thank you. We take the next question from the line of Divyansh Gupta from Latent Advisors LLP. Please go-ahead.
Divyansh Gupta
Yeah. Hi. A question that someone also had asked. So the trend for Stage 3 ECL coming down was mentioned that the LGD is coming down because the LTVs are coming down, right?
Nutan Gaba Patwari
Because the mix is improving towards lower LTV loans.
Divyansh Gupta
But if I see the investor presentation and LTV on-book, I see the LTVs are going up. So if I see, let’s say March 20 first-quarter of FY ’22 was where it was 47.4%. We are at 47.1% and March of ’23 was, let’s say where it was 45.7%. So let’s say, last 1.5 or eight quarters, the LTV has been going up. So I could not get that relation of how we are saying that LGD is going low because LTV is going low.
Nutan Gaba Patwari
No. So when you actually look at the LGD, you have to look at the LGD on the losses that you’ve actually incurred, not what is on your book. So when you have a higher proportion, so naturally speaking, your losses will be higher from your higher LTV book. And that is what is already coming through the LGD calculation.
Divyansh Gupta
So I didn’t get. So you are saying that the loans that were given earlier were of a lower LTV and they are going into NPAs and therefore the LGD is going down?
Nutan Gaba Patwari
No. So let me say five years ago, what is now, let’s look at that time period and then you should be able to appreciate the point better. So let’s say if I had only three products and I was doing apartments, self-construction and lab and the mix was 50, 30, 20, right? And that mix has changed today to say, 30 40 and 30, right? So there is a change in mix. But what will come through my LGD calculation is that I incurred higher losses in the past than today, because the LGD book has a different mix compared to the book that I’m seeing in the portfolio.
Divyansh Gupta
So it’s no more — it’s not only LTV, but it’s also, let’s say, the change of collateral mix is what you are saying?
Nutan Gaba Patwari
Yeah, and many other factors, yes.
Divyansh Gupta
Got it. And that you gave it given as an example, but if you can just, let’s say, give me with a concrete view that, let’s say, what has changed because LTV is not the reason. So then what is the actual change that we have seen that we are giving more apartments, we are doing more self-construction.
Nutan Gaba Patwari
We’re doing more self-construction, we’re doing more lab.
Divyansh Gupta
Lab typically has a higher NPA is what I understand, they have a lower NPV.
Manoj Viswanathan
NPA but lower LGD.
Nutan Gaba Patwari
Lower LGD.
Manoj Viswanathan
So the NTV is lower, the LTV is low, so we recover the entire amount.
Divyansh Gupta
Got it. Understood. And the second was on Stage 1 ECL. So Stage 1 ECL is basically saying that in the next 12 months, what we see is loans which will go into NPAs. Now if, let’s say we say that economy is in more stress and let’s whatever the narratives are being mentioned, then ideally our Stage 1 ECL rate should go up. But if I see it, let’s say, from first-quarter of March ’25, well, let’s say or even March 24, 3rd-quarter — FY ’24 3rd-quarter, it was 0.27. It has come down to 0.24.
Nutan Gaba Patwari
It has come down. The reason for it count to come down is we used to have a lot of overlay on Stage 1. So what we had done through COVID is to take a significant amount of overlay and we would take it on particular cohorts of customer irrespective of the stages they were sitting in. So you would see a higher provision in Stage 1 as well. But as better times have prevailed maybe in the first — last quarter of last financial year, first-quarter of this financial year and now there are Stage 1 performance has improved in terms of the flow rates, our auditors are of the view that this should reflect entirely from what’s coming to the model and overlays on Stage 1 is something that they are not comfortable with.
So we have moved away from the overlay on Stage 1, which we were carrying in the past to either Stage 2 or Stage 3 or rather reduced the overlay and trying to build the ECLs with the model directly.
Divyansh Gupta
Got it. And what would be the reason for volatility on Stage 2 ECL, 7.85% in first-quarter, 10.1%, 9.6%. And just others are directionally going down and Stage 2 is swinging.
Nutan Gaba Patwari
Between Q1 to Q2, there has been a change in the discounting assumption that we took in Q1 to Q2 and Q2 to Q3 is a reflection just of the higher base of Stage 2 loans. This should go back to where it were in Q2 over-time.
Divyansh Gupta
Understood. Understood. And just a couple of more questions. So the QYP amount that we are raising INR1,250 crores, whenever we raise, it is for what period of time from our visibility, is it, let’s say, three years as you mentioned for Chola or Bajaj or is it like no longer…
Nutan Gaba Patwari
Three to four years.
Divyansh Gupta
Three to four years. Got it. Understood. And what would be the current fire for our fresh disbursals?
Nutan Gaba Patwari
40%.
Divyansh Gupta
40%. And this I’m assuming is coming down from…
Nutan Gaba Patwari
No, this is held pretty much constant.
Divyansh Gupta
Got it. Understood. Understood. Got it. That’s all the questions that I had. Thank you.
Operator
Thank you. The next question is from the line of Pavan Kumar from RatnaTraya Capital. Please go-ahead.
Pavan Kumar
Hi, team. I just wanted to understand, in co-lending, specifically, what is the kind of portion of the book we plan to retain and are the yields on the co-lending book higher — higher than what we actually do in our own book, how does that work? And do we also introduce plan to introduce — I understand we have currently two or three partners. Any targets on the number of partners we intend going-forward, anything of that?
Manoj Viswanathan
Co-lending book basically 20% of the book we retain, 20% of the loan we retain and 80% of the loan is passed on to the partner — co-lending partner. So margin is — see, the margin on the entire loan generally tends to be around between 1% to 1.5%. So for example, the rate on a co-lending loan will be around 10%, which will give us about 1% to 1.25% margin because we are paying our cost of borrowing is, let’s say, 8.5% or 8.75% on the co-lending piece. So 1.25% is what we earn. But we own the 1.25% on the entire loan, whereas only 20% of the loan sits with us. So effectively we get a multiplier effect on the 1% or 1.25% that we are earning. That’s how the co-lending — co-lending piece works.
As far as partners are concerned, we already have two partners and we are working with a third one. So we don’t have a target in terms of number of partners. It’s — we want to make sure that whichever partners we’re working with, we have a substantial share and share of business going with them.
Pavan Kumar
And what are most of these partners which we would target would be the PSPs or I mean, is there any specific preference in that particular nature?
Manoj Viswanathan
Yeah, we have two PSPs and one private bank.
Pavan Kumar
Okay. Thank you.
Operator
Thank you. As there are no further questions from the participants, I now hand the conference over to Mr. Manoj Viswanathan for closing comments. Over to you, sir.
Manoj Viswanathan
Thank you. Thank you everyone for participating and engaging in the call. We hope you have been able to answer all the questions to your satisfaction. In case you want to reach-out for further questions, you can reach-out to Deepak Khetan or write to us on investor.relations@homefirstindia.com. Thank you very much.
Operator
Thank you. On behalf of Home First Finance Company India Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you.