Housing & Urban Development Corporation Ltd (NSE: HUDCO) Q4 2025 Earnings Call dated May. 08, 2025
Corporate Participants:
Unidentified Speaker
Sanjay Kulshrestha — Chairman and Managing Director
Daljeet Singh Khatri — Director Finance
M Nagaraj — Director Corporate Planning
Analysts:
Unidentified Participant
Rati Pandit — Analyst
Shweta Daptardar — Analyst
Ramesh Damani — Analyst
Akash Goyal — Analyst
Ran Vijay Singh — Analyst
Presentation:
operator
IT. SA. The conference is now being recorded. Sam Saint IT Ladies and Gentlemen, good day and welcome to the Housing and Urban Development Corporation Limited Q4FY25 Earnings Conference Call Posted by Nirval Bank Equities Private Limited As a reminder, all participant line will be in 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 Sadhan0 on your touchtone phone. Please note that this conference is being recorded.
I now hand the conference over to Ms. Rathi Pandit from Nirmal Bank Equities Private Limited. Thank you. And over to you Ma’ am.
Rati Pandit — Analyst
Thank you Sejal. A very good morning to everyone. On behalf of Nirmal Bank Institutional equities we welcome you all to the 4Q FY25 earnings conference call of Housing Urban Development Corporation Limited. We are pleased to host the senior management of the company represented by Sri Sanjay Kuchreshtra, Chairman and Managing Director Sri M. Nagaraj, Director Corporate Planning Shri Daljit Singh Khatri, Director Finance Sri SVA Sudhakar Babu, Executive Director Finance Ms. Shefali Sudhakar, General Manager Finance and Shri Achal Gupta, General Manager Finance. Now I now hand over the call to CMD Sir Shri Sanjay Kulsheeschthra for his opening remarks post which we can have the floor open for Q and A.
Thank you and over to you sir.
Sanjay Kulshrestha — Chairman and Managing Director
So good morning all of you and thank you for joining on the call. So let me start with the journey of Hutco. Hutco is a more than five decade old organization and primarily created by the Government of India to create affordable and houses for the economically weaker factions way back in 1970. So during last 55 years of its journey the company has grown leaps and bounds and a lot of changes in the transitions have been made. Presently the company is a NBFC ifc. It has started its journey as a hfc.
So it’s a huge transformation. That company has grown from housing finance company to the infrastructure finance company in the scheme of things of the Government of India. The HUDCO holds a very strategic role in creation of the infrastructure to create Bharat ambition of the Government of India. So we are under a Ministry of Housing and Urban Affairs.
If you see that this ministry takes care of each thing and everything starting from the housing which is the epicenter of the development of the infrastructure to Metro rail, hospitals, then water, seaways, drainage. So a lot of programs the ministry is undertaking and since we are directly coming under the Ministry so we are taking that complementary complementing position to take these schemes and the programs forward.
Not only in terms of the lending because the counterpart lending has to be done by the financial institution. And Hutco is doing that role. And we have a consultancy arm also which actually handholds our borrower and then we land and then we have a capacity building institution in Delhi. So if you see we furnish a kind of 360 degree kind of solutions to our borrowers. So starting from the handholding to up to the operation and maintenance of these assets. So there is a huge commitment of government of India. We have seen not only the commitment from the political label, the policy level but also from the capital expenditure.
We have seen last three budgets from 2021. Government is continuously infusing more than 10 lakh crores into the capital infrastructure segment. And there is one good thing that now states are also coming forward with a commitment in line with the Government of India commitment that every state is now started talking about say Vixit Maharashtra or Vixit Rajasthan or Vixit Tamil Nadu. So this is creating a very wealthy trend in the country. And we have seen that how these last 10, 15 years have transformed kind of years for the infrastructure growth in the country. If you see the macroeconomic systems also we are very fairly doing in terms of the deficits of the budgets or in terms of the foreign currency deficits.
So in terms of the inflation, I think in all senses and truly this is a way towards the Vixit Bharat. If I talk about my company, we are also traveling with the journey of government. And since it is 75% owned, stakeholding and strategic partner. So we are continuously growing, our sanctions are growing. Now we stand at 1.27 lakh crores during last financial year. Earlier it was more than 82,000 crores. We have started from 24,000 crores in FY23. So now we are at 1.27 lakh crore regarding disbursements. Also last year we had closed slightly more than 40,000 crores.
And the philosophy of the company is that we want to create a viable and sustainable kind of infrastructure. In this scene we are continually working towards reduction of our NPAs. And now we stand at 0.25% net NPA. And we are committed to resolve all these kind of NPAs by 18 months. And all efforts are made. And we are continuously coming out of different model and modalities and the mechanism that how to resolve these kind of assets. Because we believe that this will further increase our bottom line. And this Capital will go and infuse into our business network.
So it is not only the business side, we are also continually working towards how to cut down the cost of funds. And you may have seen that in last year we had been able to reduce our cost of fund by around 35 basis point. And in last year’s market it was a very herculean task. But tapping different sources, timing it, the tenure. So all these things has made it possible to cut down this kind of cost of funds. And at the same time we had worked towards the internal governance of managing our funds also be it LCR or hp.
So all these things had been worked out. And so it is a composite effort of the external and internal internal measures that we had taken. So the NIMS and spreads we are continually improving. At the same time we are not compromising on our asset quality. Company is starting, will be starting very soon. A PPP model or HAM model kind of private sector funding with a very selective approach to have good entities, best entities, best product with a good cash flow back to back through the concessionary agreements. So all these things we are working and in the meantime we had taken around 63 new employees to create that kind of capacity and capability within the company.
So now we are becoming a paperless office and we are continuously reducing our turnaround time. So I think we are at the right place, right time and because right opportunities are there in the market. If you see our balance sheet size, it is slightly 1.25 crore. So there is a huge scope and potential for growth of the company from the prior organization which are plus 5 lakh crores. So we can have a 4x kind of growth which is available in the market. Our financial ratios are very strong. Our CRAR is slightly around 50%. Then our debt equity ratio is less than 6%.
So if you see all these parameters, all these permutation and combination gives a good opportunity for the company to grow in times to come. We had kept a long term target of 3 lakh crores loan book by 2030 and 1.5 lakh crores loan book by FY26. So if you look at the opportunities available starting from the PMAY to Metro and lot of opportunities. And now in the last budget the government of India has launched Urban Challenge fund also which is around which will be projecting around 4 lakh crores of the investment. And 1 lakh crores will come from the government of India as a subsidy or Grant.
And another 25% will be coming from the state government. So there will be PPP model for this 2 lakh crore project which is 50% of the total project cost to make it bankable. So I think we are best placed with good ratios, financial ratios, with good opportunity, with policy or good policy advocacy. And we are also well equipped and we are all prepared to take that leap towards the Vixit Bharat. Thank you.
Questions and Answers:
operator
So should we begin the question and answer session? Should we begin the question and answer session? 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.
The first question is from the line of Shweta from Elara Capital. Please go ahead.
Shweta Daptardar
Thank you sir for the opportunity and congratulations on a good quarter. I have couple of questions. The first pertains to your growth target. So why you mentioned around 1.5 lakh at odd crores of loan book by FY25. Sorry, FY26. But then if I. If you look at the current trajectory. So this quarter we posted almost 35% growth and overall FY25 to grow this. So don’t you think highly likely you might Even surpass this 1.5 lakh out cross of target? That’s. That’s the first question but just follow up there. So your disbursement run rate has been pretty strong.
But Q4 saw a slight decline in disbursement. So what is the normalized run rate going forward? Yeah, that’s. That’s my first question.
Sanjay Kulshrestha
Okay. Good morning Swetha.
Shweta Daptardar
Good morning. Sir.
Sanjay Kulshrestha
This is a very relevant question regarding the growth targets. We had kept a target of 1.2 lakh crores for the last financial year and we had achieved 1.25 lakh crores. So the target will remain 1.5 lakh crores for the next financial year. And because you see we are into a segment which is very very competitive and we are with a commitment that we will not compromise on the asset quality. So all these two parameters are prime for us to come out of any number. So very safely. And we are very, you can say we are cautiously aggressive.
We are not too aggressive. But at the same time you can say we are a cautiously aggressive company towards the funding of the infrastructure project. So 1.5 lakh as of now. You are right that it seems to be an achievable but let’s see, let’s cross the second quarter then if there is something to update then we are ready to update that thing because there is something which is in which is in preparation including the Urban Challenge Fund or PMAY 2.0. So all these opportunities are there in the market. We have not factored these kind of opportunities because we don’t know whether this disbursement will be coming in this financial year or next financial year.
So that’s why we had kept this 1.5 lakh crore or so. And regarding disbursement, I think we are doing pretty well on year to year we had more than doubled our disbursement from 1718,000 crores to 40,000 crores. And if you see they are spreadly factored into the quarters rather it is slightly equal also. But since you know that we disburse fund on a reimbursement basis we want to see that assets are created. So there is slightly up and down on that side on quarter to quarter basis. But it is not fair to work out these kind of figures on quarter to quarter basis.
I think the year target is more prudent for a financial institution and we had achieved 40,000.
Shweta Daptardar
Fair points. So just follow up there because you mentioned PMAY2 and I was looking at the government website so there is no press release per se on any kind of PMAY2 dispersals going through this year. So can we assume that pney disbursement might not happen in FY26 and therefore then you know your growth run rate would remain in the range of what we are seeing currently today.
Sanjay Kulshrestha
PMAY 2.0 it starts from the government of India, go back to the state government, then the work will start. So that’s why we had not factored in. But I’m sure that some disbursement will come in times to come. But since there is very little clarity on the states that’s why we had not factored that PMAY 2.0. So if it comes and there is a visibility we will be able to revise our target upward from 1.5 lakh crores.
Shweta Daptardar
Sure. So my second question is on NI and cost of funds. So was there a one off element there because your NI sequential basis have dropped. And also I was looking at certain components of liability mix. So correct me if I’m wrong. Is it that the government bonds which are which you mentioned last quarter, they are retiring in 2829. So are these EBR bonds pressurizing a bit on cost of funds also? One or two components like taxable bonds. FCR incrementally is looking down. But the existing ones have seen certain spike on cost of funds. So can you just elaborate on what was the one off element in NI and also cost of funds a bit?
Sanjay Kulshrestha
We had improved our total cost of fund from 7.25 to sorry 7.1 to 6.75. So it is a reduction of 0.35 basis point. But at the same time EBR is a pass through kind of arrangement. And government is taking care of the repayments of the ebr. But yes, you are right in arithmetics. If you see because the total borrowing, those bonds were borrowed slightly more than 88% of the cost. So in a weighted average they are factoring in and slightly higher weighted average cost is coming. That’s why we had shown in two ways. That is including EBRs and excluding EBR.
So to make it more fair and information to the market.
Shweta Daptardar
Okay, so are you giving a NIM guidance basis, NII and cost of funds going forward? That’s my last question.
Sanjay Kulshrestha
We are maintaining our NIM rather improving from 3.18 to 3.22% during last financial year. And I think we will be remaining around this figure from maybe around 3.25%. So we will be making a sustainable kind of NIM and yield. We had improved drastically from 9.04 to 9.5%. Similarly we had improved on ROE also. It has now grown from 2.42 to 2.44. And on Roe as we had last time also communicate that we we will be working around 15%. So we had achieved 15% in last financial year. So the guidance will remain the same. But on the borrowing side we will be trying because we are hoping some more repo cuts also in this financial year and some dollar will go down.
So that may be a possibility that we will be further cutting down of the cost of fund. And now the government has given a window of 54 EC. So all these things if you factor in. So we are hoping that another 1015 basis point on weighted average cost can be reduced during the financial year.
Shweta Daptardar
That’s very helpful, sir. I’ll join back with you. Thank you so much.
operator
Thank you.
Sanjay Kulshrestha
Thank you.
operator
The next question is from the line of Ramesh Damani from RSD Finance Ltd. Please go ahead.
Ramesh Damani
Good morning, sir. Thank you so much for the chance and congratulations for a good set of numbers. I just wanted to understand some color on accounting. Sir, in your consolidated results that you sent to the stock exchange, there are two items That I just wish if you could add some color to it. 4, 3, which is the net loss on fair value changes is there based on the bond value, interest rate and 8B. Could you explain the accounting behind that? Just those two questions.
Sanjay Kulshrestha
Okay. I think our director of finance will be answering this question. Mr. Kathi.
Daljeet Singh Khatri
Yeah. Good morning. There is increase in the MTM valuation fair value changes and that is primarily because of the hedging which we have done and the movement of dollar in favor of inr. So on account of that only we have MTM valuation losses in this quarter.
Ramesh Damani
I mean for the whole year it’s about what? 400 crores. For the whole year it’s been 400 crores MTN losses.
Daljeet Singh Khatri
Yeah. That is because the dollar moved. I mean from 88. The dollar came at around 85% as at the close of the financial year. So it has broker impact on the MTM gain or loss. Right. When the dollar goes up there is an MTM gain. And when the dollar comes down as visa vis inr there is a MTM loss.
Ramesh Damani
So. That is why. Yeah.
Daljeet Singh Khatri
Okay. Are happening because of global uncertainties and the currency fluctuation. So no directly contribution of the business of the company. But yes, these are the things that they are beyond our control.
Sanjay Kulshrestha
Sure. Actually notional as there no cash out involved on this notional calculations.
Ramesh Damani
Correct, sir. And 8B. Sir.
Daljeet Singh Khatri
B part 8B in your notes, in your email.
Ramesh Damani
8B. Can you just give us some color on that? I’m not understanding the accounting behind it.
Daljeet Singh Khatri
Actually the two. There are two parts in the mtm. I mean MTM gain and losses on fair valuation on foreign exchange transactions. And these detailed calculations are done by the bankers and vetted by our consultant which is Deloitte. There are two components. One shows the MTM gain or loss on account of the movement in the dollar VISA vis inr. And the B part that is derived assuming if the entire transactions are unwinded today and if we have to again enter into those transactions or contracts what is going to be the gain or loss on that?
Ramesh Damani
Okay. Okay.
Sanjay Kulshrestha
But both are notional. As of now
Ramesh Damani
it’s notional but it kind of affects the pnl. So I just wanted to understand that. Thank you, sir.
operator
Thank you. Before we take the next question, a reminder to all the participants that you may press Star and one to ask a question. The next question is from the line of Shakti from LKR Advisors. Please go ahead. Ms. Shakti, I would request you to unmute your line and speak please. Due to no response from the Current participant. We will move on to the next participant. The next follow up question is from the line of Shweta from Ilara Capital. Please go ahead.
Shweta Daptardar
Thank you sir. For the follow up. Sir, you made comments in the opening remarks mentioning that there are 2000 odd crores of NPA, right? And you expect these to get resolved over next 18 months. So can you just spell out the names of these six, seven accounts? That will be very helpful.
Sanjay Kulshrestha
Yeah. We have around 2000 crores of the NPA accounts. And out of that around 1100 crores are under NCLT. And out of 1100 crores the orders of the NCLT has already been received for around 800 crores. So most of the assets which are under NCLT they are resolved, either liquidated or resolved. So NCLT has came out with the order. So. So you wanted some names also.
Shweta Daptardar
Yes. Those loan accounts, names of those loan exposures.
Sanjay Kulshrestha
Yeah. There is one KVK in Elantal Power Private Limited. So total NPI amount is 348 crores. Then Kona FEMA is there. It is 102 crores. In first case PFC is the lead. In second case IDBI is the lead. Then there is one Sri Maheshwar Project in Madhya Pradesh where the PFC is the lead. It is also resolved and things are going ahead. Then there is one Nagarjun Oil Corporation Limited so we are exposed to 350 crores. IDBI is the lead for that. Also the liquidation order is approved by the NCLT. So it’s the total sum of around 800 crores.
Resolution or liquidation has already been received from the NCLT. And we are hopeful that within a year for the time we will be getting whatever our portions are. So the next, next is the other, other assets other than these nclt we are in DRT or DRAT and we are resolving through our various OTC OTS or revised OTS kind of schemes. And now we are ready to discuss on one to one basis. Also because these cases are lingering in legal battles from last 20, 25, 30 years. So now we are coming out with a policy to resolve and make a commitment that we will be resolving all these 2,000 crore assets within 18 months of the time.
And at the same time we will not compromise on the quality and we will make all out efforts that there will not be any new npa.
Shweta Daptardar
Right sir. So while you continue we are emphasizing that you know asset quality will take precedence. But simultaneously you also mentioned in your opening remarks that you will be participating more so now in PPP and private Sector projects. And we have already seen over the years the NPAs were cladded because of these private sector power assets and others. So how do you, given that private sector exposure or component might go up. So how do you see the NPA cycle panning out going forward?
Sanjay Kulshrestha
See while starting this PPP or HAM or bot, whatever the models are. So we will be very, very selective in terms of the entities, in terms of the project or segment and in terms of the concessionary agreements and the comfort that how the revenue flow will come and what will be the fallback arrangement. So it will not be a kind that we will be doing in consortium. The the mistakes that we had done last time and we had taken a lot of lessons from that. And now things are settled up, the policies are in line, there is a commitment, there is a framework, regulatory framework also.
There is a market framework also to oversee and monitor these kind of models. If you start with power, there is a SECI based where the PPA PSAs are in place and the discomforts, that kind of fund flow arrangement. If you go for nhci, the HAM model has that kind of pooled fund kind of repayment arrangement. In case of real estate, there is a RERA which is set up. So we will be going with most of the listed entities or a rated kind of entities only. The a related kind of projects also only. And there will not be any target for the private sector project.
So we may be starting it up further. But at the same time I can assure you that there will not be any compromise on the, on the quality and at the same time there will not be any target to do so. And thirdly, initially we will be very, very cautious and maybe some third party external agencies will be there to appraise along with our own staff also. So that in the meantime the capacity and capability will further increase. So all these cautions, all these risk mitigation measures, all these compliance measures, all these things will be taken whenever we will start this private sector.
But now from last one year we are only working it out what will be what, who will be the entities, what will be our guidelines, what is the segment and all these things we are working also there is no set timeline also to start this ppp. So there will be very robust monitoring also there also we will take support of the third party, there will be robust monitoring of the tra. So whatever we had not done in last cycle of npa, I think all these policy measures of the government, government of India and the regulatory framework we also have, we also put in some regulatory and monitoring framework to see that our money will go towards the project and our the cash flow should come back to the company.
Shweta Daptardar
Understood, sir. So last question, your OPEX saw a meaningful spike and also in the opening remarks you mentioned you sort of boosted your capacity building by adding 63 new employees. So can you just sort of throw some color what actually led to this significant spike in opex?
Daljeet Singh Khatri
Yeah. Good morning. I mean if you see the total expenses, whether it is employee related or it is establishment related expenses, if you compare with current figures with FY20, 23, 24 net net, they are more or less comparable. But there is some reclassification of expenses between establishment expenses and for employee related expenses that there is some difference between which is visible in the financials.
Shweta Daptardar
So but then if you say that staff expenses have been reclassified into other optics, but then okay, so I understand other OPEX was up 65% quarter on quarter and almost 500% year on year because of this reclassification. But even your staff expenses were sort of on the higher side. So is it because of those recruitment. See, because overall OPEX still remains higher. Right? I mean so I’m, I’m not sort of clear. Although there is a reclassification, overall OPEX component still continues to look elevated.
Daljeet Singh Khatri
Yeah, but as you said, one of the reason is because of the recruitment of another 63 executives in the company because of which the employee related expenses as well as establishment related expenses also rise to that extent.
Shweta Daptardar
Okay, that’s that answered. Thank you. Thank you so much sir.
operator
Thank you. Ladies and gentlemen, you may press star and one to ask a question. The next question is from the line of Sumit Rorat from Smartson Capital Private limited. Please go ahead.
Unidentified Participant
Yeah. Hi sir, very good morning to you and very good and congratulations on a very good set of results. So you know, I just wanted to understand, you know, I’m seeing page number 28 on your presentation and you know you have signed you know some very strong MOU which is the MMRDA for one and a half lakh crore with you know, MoU for Rajasthan, for housing for one lakh, you know, etc. Etc. So can you just throw some color on, you know, how much are the MOUS today what we have signed. And secondly, you know, you know is we are to become a 10 trillion economy by 2030.
You know, my sense is that you know you’ve set a very conservative loan book of about you know, 3 lakh crore because you know already you know you’ll be 1 lakh 50 by the end of this financial year. So can you just throw some light on, you know, on the MOU sign or the potential MOU which can come up and also on, you know, realistically. Because I’m, I’m assuming that the 3 lakh is a base target that you have. But where do you think actually, you know, we can be if all these things were to happen of we, you know, reaching the 10 trillion according to Mark sir.
Sanjay Kulshrestha
Yeah. Good morning. So regarding mou, this is our continual affair that we engage with the states and try to support them in identification of the project and come out with a financial model which will support them. MOU doesn’t mean that the projects are sanctioned. So it is the first step towards the understanding that HUTCO will be the partnering lending agency for funding these kind of projects. So there may be some time because some projects may come in first year, then second year and then the third year. These MOUs are generally for next five years of the time.
So this is a business development exercise that we does with the states and it gives comfort to both the sides because whenever there is a project they will directly come to the HUT Co and we will stand by the terms and conditions so that at that point of time there will not be any waste of time in discussing these kind of things. So this is number one and number two you had told that 3 lakh is very optimistic and looking at the 10 trillion economy. You are very right because these numbers were we had calculated last year, last financial year, before last financial year.
So still we are keeping these 3 lakh crores because we have to see our CRAR and debt equity ratio and all the financial ratios. But yes, definitely looking at the opportunity we need to revise this number. But I think the time of revision is still to come and there are so many things which are opening up from the government of India side also. And now we are into the era of urban reforms and a lot of things we are working with our ministry including how to come out of with this program of Urban Challenge Fund.
So all these things will are the potential business development programs as far as HUTCO is concerned. So I think maybe next financial year if the things unfold we may be working out some figures more than this 3 lakh crores. But as of now we will keep our 3 lakh crores.
Unidentified Participant
Sure. Thank you so much and wish you all the best.
operator
Thank you. The next question is from the line of Akash Goyal from Tara Capital Partners. Please go ahead.
Akash Goyal
Hello.
operator
Yes sir. You’re audible.
Akash Goyal
Yeah. Yeah. Hi sir. Congrats on a good set of numbers. Sir, I just wanted to get some clarity on a statement you just made in a recent interview. You were talking about the RBI giving us advice to become a 75% infra lending company. And I think currently as per your ppt, I can see that the urban infrastructure is roughly around 61% of the mix. And you’re talking about reaching that 75% mark by FY26. So does that mean that this year we’ll see a significant shift in the mix in terms of affordable housing and urban infra? And if so then how does it impact your margins?
Sanjay Kulshrestha
Yeah Kash, there are two things. One is the RBI 75% guidance that that has been given as a part of the IFC. Second is the harmonized list. So what RBI is saying that out of total lending the 75% is to towards the infrastructure side. So and as per the harmonized list, the affordable housing is under the infrastructure category. So regardless of this urban infrastructure, presently we are just, just touching 70%. So the RBI mandate is only for the 75%. So in 70% it is urban infrastructure 60% that you are told. And another 10% is coming from the affordable housing which is also under the harmonized list of the infrastructure.
So we had already achieved 70%. So this year I think we will be easily achieving this 75% as advised by the RBA.
Akash Goyal
Okay, and can you give some sense about how the spreads are between the infra category of loans and the general affordable housing side?
Sanjay Kulshrestha
I didn’t get the question.
Akash Goyal
The spread difference like what we are saying the 70 will go to 75.
Sanjay Kulshrestha
Yeah. So the major spreads are coming from the infrastructure financing only. And since we are a government of India company, so. And we also want to support the affordable housing and economically weaker section housing through this pmay. So our rates are minimum for that category. But at the same time we also understand these houses are the epicenter of the infrastructure growth. If we are talking about 30 million households to be created under PMAY 2.0 then at least 5x kind of infrastructure growth will come into the states. So it may be minimum spread for these kind of loans but it is cross subsidized through the infrastructure funding to maintain the links and spreads as per the guidance.
Akash Goyal
Got it. Got it. And so my next question was on the cost, on the cost side, the funding side. So you have mentioned about the 54 EC, the capital gain exempt bonds and the zero coupon bond. So any, any plans that we have. So like how much are we looking to source from these bonds and say and of course like the. It might not get into our costs immediately in the next one year. But like if I were to take a medium term horizon, say from a two, three year perspective, how much do you think these bonds can come in and benefit our cost of funds?
Sanjay Kulshrestha
54 EC we had just launched yesterday, we had launched this 54 EC and the market is very supportive because you know these proceeds are coming out of the housing sector only. So Hutco is a natural choice and it’s a good brand name across the retail segments also. So I think we have a very good taker. But as you have rightly pointed out in first year we are not expecting too much because the existing players are also there. But since we are starting from the clean slate our domain will be the customer service paperless kind of working and reaching out to them which are missing out this opportunity of 54 EC.
So there are lots of. Lots of leakages which is limiting the market. So I think we are working on a clean state with no target on this for first year. But we will be very very aggressive to take these kind of funding. But yes, within two to three years of the time we are very hopeful that we will come out with a good figure because I don’t know what can be the figure but. But we will be. We will be more aggressive towards this window bond also this year. So it is around 5000 crore zero coupon bond.
So this will be further add to contributing towards this reduction in cost of fund.
Akash Goyal
Sorry, did you mention 5,000 crosser?
Sanjay Kulshrestha
Yeah, 5,000 crores zero coupon bond.
Akash Goyal
Okay. Okay. Okay. Got it. Got it sir. Okay. All right. Thank you so much and best of luck.
operator
Thank you. A reminder to all the participants that you may press star and one to ask a question. The next question is from the line of Vijay Singh from Meer Sh Chair Khan. Please go ahead.
Ran Vijay Singh
Hi, good morning sir. This is Vijay here. Congratulations on good set of number. Just could you color on the net interest margin how it is likely to be in next two years While you know the rate of interest is going down.
Daljeet Singh Khatri
We will be maintaining these levels. We had improved from 3.18% to 3.22%. So 4 basis points we had improved. So we are expecting some rate cuts. So another few points increment will come towards the NIM also. And I think it will be around 3.25 or 3.3% not more than that. Because we want to create a viable and sustainable kind of infrastructure. So the basic is the viability so we don’t want to load with extra interest cost on the projects. And at the same time we want competitive to become the competitive and no compromise on the asset.
So I think it is within the 3.25 to 3.3% levels.
Ran Vijay Singh
Okay. Thank you. Thank you. That’s it. From my side.
operator
Thank you. Ladies and gentlemen. You may press Star and one to ask a question. A reminder to all the participants that you may press Star and one to ask a question. The next follow up question is from the line of Ramesh Damani from RSC Finance limited Please go ahead.
Ramesh Damani
Yeah, so it’s me again. So I just want to ask you two quick questions. You said that you don’t have any targets for private sector lending. But what do you expect to say at the end of this year? The end of 2030 will be as a percentage of your loan book will be 5%, 10%. Do you have any idea about that? And secondly, have we written back any amount of the NPAs this year on that? Please. Thank you.
Sanjay Kulshrestha
So our director Corporate planning will be.
M Nagaraj
Good morning, Rameshi.
Ramesh Damani
So good morning sir.
M Nagaraj
Number one. Yeah. Good morning. So with regard to private sector lending. So we are very, very cautious and careful. To begin with we will go with the reputed rated agencies only at the beginning. Based on our past experience where we burnt our fingers. We would not like to commit the same kind of mistakes. So without any targets we will be cherry picking some good projects. So that portfolio will get added. And also margins will also be improved. We’ll be going in pricing depending upon the viability of the project. Project to project will be pricing it.
It will be very competitive in the sector.
Ramesh Damani
Okay, no targets at all. And what is your NPA right back this year? Is there any NPA right back.
M Nagaraj
Right now? My directive finance will answer.
Daljeet Singh Khatri
During the previous financial year we had a write back of around 600 crore as part of recovery from the NPAs.
Ramesh Damani
And how do you account for that? Sir, could you tell me that. How. Is it accounted for? Where do you account this for in the pni?
Daljeet Singh Khatri
Yeah, it is by way of write back. I mean write back of the provision which we have made as part of provisioning. Because almost 100% of my private sector NPAs have been provisioned. Whatever principle which I recover out of the resolution of these nps they are taken to the profit and loss account by way of decrease in the ECL provisioning.
Ramesh Damani
Okay. So it’s about 600 crores this year, right?
Daljeet Singh Khatri
Total was 358 crore. Out of which I mean total of 600 crore out of which 350 crore was principal and 300 crore was towards the interest.
Ramesh Damani
Okay. And do you have any idea what it should be this year if there should be write back or write offs extra?
Daljeet Singh Khatri
Current financial year we are expecting a recovery of around 400 crores. Out of which one major recovery has already been done in the. I mean current quarter. I should not be in fact sharing with you. But yes, one major account has been resolved in the current ongoing Q1. And we are optimistic that we will recover around 400 to 500 crores from the resolution of the NPS during the current financial year.
Ramesh Damani
Thank you sir. Very helpful. Thank you sir.
operator
Thank you. The next question is from the line of Rati Pandit from Narmal Bank Equities Private limited. Please go ahead.
Rati Pandit
So I have a couple of questions. First is what is our current order book? By order book I mean the outstanding sanctions and in what period it is expected to get disbursed. And also usually what part of sanctions are converted into disbursements. This is my first question.
M Nagaraj
Good morning ma’ am. Very right question. Actually if you see the financial figures as on 31st March 2025 we have done a sanctions of 1.27 lakh crores whereas a disbursement of 40,000 crores. That shows that almost three times of what we normally do at disbursement. And on average madam, project life is around two years. If you sanction in the first quarter of financial year the amount that will get dispersed over the next two years. So depending upon the milestones that project progress we keep on dispersing. We also ensure that the company which is borrowing will also invest in their share.
So in fact we have a very good pipeline. So I would like to give one small example of Maharashtra is a very progressive. Next is Uttar Pradesh. The kind of progress is happening especially in road sector plus also urban mobility plus sectors like airports and seaport. Tremendous potential is there man.
Sanjay Kulshrestha
So I’ll just give you the figure. We have a committed pipeline of slightly more than 2 lakh crores which we had sanctioned in last financial year and this. So it’s a very committed kind of pipeline. And we are continually working to create this pipeline through this MOUs or through one to one interactions or through the counterpart funding required from the Government of India project. So the pipeline is not a problem. There is a lot of potential in the infrastructure segment across the country. So now we have a 2 lakh crores more than more pipeline and around 8 lakh crores MoU we had already signed so which will be coming up within a year or two years of the time.
Rati Pandit
And my second question is regarding the capital equity. It has been around 46.6% as per your disclosure for March. So given the present high loan growth rates, when do you think we will need to aid capital?
Sanjay Kulshrestha
I don’t think so madam, because whatever ratios or whatever projections that we are making, we are keeping this in our thoughts that we should not because government will not infuse generally it is not a trend. This is a profit making company. So. So I don’t think that infusion will be required at any point of time. And in case it is required then there are several other ways also to to infuse the capital in the company.
Rati Pandit
Okay, and my third question is on the borrowing repricing. I mean what part of our borrowings are on NCLR and what will be the repricing of asset and borrowing side in the next one to two years?
Daljeet Singh Khatri
Yeah, as you see my borrowing mix is most of the most of my borrowing is fixed rate borrowing. I mean 50% of my borrowing is fixed rate borrowing by way of domestic bonds and 50% of my borrowing is kind of variable which is linked to repo or which is linked to the MCLR of the concerned banks. So presently the interest rate scenario is very comfortable and favorable for the lenders like NBFCs like us. And going forward we are expecting that there will be another one or two repo rate cuts. So we intend to raise more of fixed rate bonds in such a scenario and retire some of the high interest rate bearing term loans which we have taken from banks as there is no prepayment premium for that.
So we’ll try to rationalize our cost of borrowing and reduce look forward to reduce our borrowings by way of paying off those high cost bearing term loans which we have raised.
Rati Pandit
So now bank borrowings, all of it is on NCLR or some of it is on eblr as well.
Daljeet Singh Khatri
EBR is going to mature in 2028, 29 madam.
Rati Pandit
No, I’m talking about external benchmark link loans, I mean repo link loans.
Daljeet Singh Khatri
Benchmark loans, those are mainly from the loans which we have taken from the banks, whether those are medium term loans or short term loans and those are variable rate borrowings. So we are examining those and we look forward to retire some of those term loans which are still carrying high rate as compared to the market today’s market borrowing rate from domestic bonds.
Rati Pandit
And on the asset side our reset period is one to three years, right?
Daljeet Singh Khatri
Yeah.
Rati Pandit
Okay. So will this benefit the NIM in some ways because the part of borrowing will be repricing downward and asset side will take time to reprice. So what are your thoughts on this?
Daljeet Singh Khatri
Yes, there is always a slight time lag between the. I mean passing on the increase, I mean increase in cost of borrowing or decreasing cost of borrowing scenario. There is a slight time lag in that. But yes, we quarterly monitor our internal time lending rate and we decide whether to slightly increase or slightly decrease our lending rates which are applicable for new lending as well as the loans which are coming up for reset in the next one year. And yes there is slight time lag but in that case in a decreasing interest rate scenario we stand to gain and increasing rate scenario we slightly stand to lose on that count.
Sanjay Kulshrestha
So just to supplement, see there is a difference between the retail loans and the bulk loans. So repo on a real time it may affect the retail loans like personal loans or home loans or vehicle loans. But for bulk loans since there is a reset of one year, we are definitely going with the reset of one year. So even though we will cut down our cost in line with the market and in line with this bond yields and the bank loans but the transfer will come on the reset date only. So this is a normal NBFC practices, best practices that we had adopted.
So even though we will cut down our cost of funds so it will be less cost for the new project or greenfield project. So initially and at the time of reset it will be transferred to the old assets also.
Rati Pandit
And my last question is on the asset quality in third quarter earnings call. You have mentioned about the JNK State and Ahmedabad Municipal Corporation. The NPAs are expected to get resolved in Q4. So what is the status on those accounts?
Sanjay Kulshrestha
So Ahmedabad is one time auction has already been happened. So it is in the advanced phase. So we are expecting that by second or third quarter the receipts will start coming to the company. So it is the second round of the auction is going on regarding the jnk as you know the loan is very very less. It is only 2829 crore and it is slightly sensitive state as of now. So we are holding our discussions with the government here in Delhi and we are hopeful that it will be resolved. It’s a very small amount because they also want to resolve.
Only thing is that they are slightly engaged in other parts which are more sensitive, more important. So we have no doubt that we will be resolving during this financial year. But since JNK is slightly different stage so we are trading cautiously on that front. But Ahmedabad will be resolved. One option has already been done.
Rati Pandit
So Ahmedabad, what is our exposure over here?
Daljeet Singh Khatri
125 crores. Around 124 crores only. And the value of the asset is good. We are expecting good return. And that’s why we are telling them to go out for second round of the auction to announce the prices.
Rati Pandit
Okay. Okay. So that’s it from my side. Thank you.
operator
Thank you.
Sanjay Kulshrestha
Thank you.
operator
As there are no further questions from the participants, I would now like to hand the conference over to Mr. CMD, Mr. Sanjay Kulshestra for closing comments.
Sanjay Kulshrestha
So thank you so much for all the participants and asking us the questions. Because these questions will work as inputs for us that whatever market is thinking so that we will align our thoughts on that. And I’m very thankful that you had looked at our presentation and you had appreciated the result of the company. And I can assure you that you will not found any stone unturned. And we will be keeping this pace of progress including the NIMS or spreads. And we will be continually improving on all financial parameters at the same time. We will not compromise on the asset quality and we will be tapping different markets to cut down cost of our funds.
And there will not be any compromise on the the compliance part or the risk part. And the company will remain highly governed kind of best practices standard. So with these words I remain thankful for your support and cooperation. Thank you so much.
operator
Thank you on behalf of Nirval Bank Equities Private Limited. That concludes this conference. Thank you for joining us. And you may now disconnect your lines.