India Shelter Finance Corporation Ltd (NSE: INDIASHLTR) Q3 2026 Earnings Call dated Feb. 09, 2026
Corporate Participants:
Unidentified Speaker
Rupinder Singh — MD & CEO
Ashish Gupta — Chief Financial Officer
Analysts:
Unidentified Participant
Sonal Gandhi — Analyst
Shubranshu Mishra — Analyst
Adityapal — Analyst
Meghna Luthra — Analyst
Presentation:
operator
Ladies and gentlemen. Good day and welcome to India Shelter Q3FY26 earnings conference call hosted by ICICI Security Limited. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing Star with zero on your touchstone phone. Please note that this conference has been recorded. I now hand the conference over to Mr. Ranesh Bhuba from ICICI Securities. Thank you. And over to you sir.
Unidentified Speaker
Yeah. Thank you Shubham. Good morning everyone. Welcome to India Shelter Q3FY26 earnings call. On behalf of ICICI Securities, I would like to thank India Shelter management team for giving us the opportunity to host this call. Today we have with us the entire top management team of India shelter represented by Mr. Upinder Singh, M.D. cEO, Mr. Asish Gupta, CFO and Mr. Rahul Rajagopalan, head Investor Relation. I will now hand over the call to Mr. Rupinder for his opening remarks and then we’ll open the floor for Q and A. Over to you sir.
Rupinder Singh — MD & CEO
Thank you and thank you. Iman. Good morning. On behalf of the company, I extend a warm welcome to all of you.
Thank you for joining us on the call today. I’m pleased to share our quarter three and nine month financial year 26 performance update along with a brief overview of industry developments. During the quarter, the RBA announced a further 25bps reduction in the repo rate bringing it down to 5.25% with immediate effect. This takes the cumulative rate cuts in 2025 itself to 125bps making one of the most significant easing cycle in the recent years. We view this move as a clearly supportive of the financial service sector as we approach year end. The latest rate cut builds on early reduction and improves housing affordability particularly in affordable and mid income segments.
Lower EMIs are expected to bring back hesitant bias and helping sustain demand momentum. Lower financing costs sustained by confidence and steady macroeconomic conditions together place the housing market in a good position as we head into 2026. Particular moving on to the performance of the company. Annual growth remains in the guided range with the gross manager asset growing at 31% to rupees 10,365 crores. In quarter three financial of 26 we disbursed 977 crores registering a growth of 11% year on year. Assets and disbursement growth have been at a softer end as we continue to monitor the situation on the ground with respect to improvement in asset quality trends.
Affordable housing market continues to remain robust as visible from early indicators like login rates, login quantities to grow month on month. In this quarter we added two new branches. We will add another four to five branches in quarter four in line with our branch expansion strategy of 4045 branches each year. Further, we have introduced digital sourcing as one of the additional channels. This will help us in advance our digital journey. Currently around 4.5percent of disbursements are coming from this digital channel and going forward our plan is to reach to 10% of disbursement on asset quality metrics.
Gross Stage 3 and Net Stage 3 came in at 1.5% and 1.2% as of 31 December 2025 on profitability metrics, profit after tax for the quarter came in at rupees 128 crores registering a growth of 33% year on year and 5% quarter on quarter. Return on equity stood at 17.1%. Net worth now stands at rupees 3048 crores, crossing the 3000 crore mark. The PMAY 2.0 scheme saw further traction as on December 25th more than 2000 customers have already received the subsidy and journey looks continued and more attractive now. The scheme is expected to pick up traction with an increase in customer awareness and streamlining of the process.
On that let me reiterate the guidance that we provided earlier. Branch opening 4045 for the year of which we had already opened 35 maintaining spread of more than 6% in the medium term. Credit cost for the year to be around 40.50bps loan growth which we projected 30 35%. Our intent is to close this year around 30% though it was a muted year. If we see the particular last two quarter of results now I would like to hand over call to Ashiki our CFO to take you through the financial metrics. Over to you Ashish Bhai.
Ashish Gupta — Chief Financial Officer
Thanks Arpinderji. Good morning friends. Let me take you through key financial numbers. We have ended the Q3 with gross managed assets of 10,365 crore. Year on year growth is 31%. Quarter on quarter growth is 7%. Our portfolio yield is 14.9% which is stable year on year basis. Our disbursement yield in Q3 was 14.6%. On funding side we have diversified borrowing with more than 30 counterparties. Average borrowing tenure is about 8 years. Our bucket cost of fund is down by 20 basis point in Q3 to 8.3%. It is down by 50 basis point year on year basis.
Our marginal cost of fund in Q3 is 8.1% down by 70 bps year on year basis. We had undrawn sanction of 550 crore from NHB at the end of Q3. We have drawn 2/3 of the same in Q4 and we will draw the balance amount in Q1 next financial year. Cost of fund from NHP is lower by about 60 basis point as compared to the bank funding. Our lending margins at portfolio level and disbursement level are consistently about 6% in line with our guidance for medium term. Net interest income for quarter is up by 31% year on year on the back of strong growth in our managed assets and improvement in spreads coming to OPEX.
Our year on year growth in YTD OPEX excluding one time impact of labor code is 26% which is lower than the growth in our managed assets. Same is resulting in better cost ratios. OPEX to manage assets without impact of Labor Code for The quarter is at 4% down by 20bps year on year. On asset quality side our stage 3 is at 1.5%. Our credit cost for 9 months is at 0.5% in line with our guidance for medium term. ECR for stage 3 is stable at 25%. Our total ECL is 79 crore against the regulatory threshold of 48 crore.
Our BTout rate is down by 4.3%. Our focused data driven approach for customer retention is helping us to maintain BTOUT even in declining interest rate scenario. PAT for the quarter without impact of labour code is at 128 crore year on year up by 33%. ROA for the quarter is at 5.8% up by 30bps year on year basis. ROE for the quarter is at 17.1% up by 200 basis point year on year. On liquidity side we are comfortably placed with liquidity of 486 crore and untround sanction of 1300 crore plus. Our ALM is positive across all the buckets.
With this I conclude and we can open the floor for Q and A.
Questions and Answers:
operator
Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press STAR and one on the Touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use answers while asking a question. Ladies and gentlemen, we will wait for a Moment While the question queue assembles, the first question comes from the line of Varun Panchara from Kotak Securities. Please go ahead.
Unidentified Participant
Hi sir. Hope I’m audible. I had a question regarding the asset quality metrics. So there’s a sharp rise in gross stage three loans this quarter. Is there any pocket of stress that we’re seeing? Especially because our growth is slow in MP and Karnataka. Are those portfolios showing any stress? Second, last quarter you had highlighted that 85% of the NPAs get resolved through an agreement with the borrower instead of going for an auction which leads to lower losses. Are we waiting for the resolution process and that’s why the cross safety has increased or has there been any change? And with regard to lap versus Home note, is there any sharp difference in how the delinquencies are playing out over there? Please, this is my question.
Rupinder Singh
Okay, fine. I’ll start from the, you know, last question that you asked between natural and lab. If you see there’s a star difference, if we see our numbers, the NPA numbers for both LAB and HL remain same within same range. In fact there is a hardly a gap of one or two bits between the two. When we talk about if the geography per se, there is any particular geography where there’s a challenge, I feel we have seen certain trends which were happening in last couple of quarters. We were trying to hold it in a various buckets but at a certain juncture we realized it when the customer is not able to pay more than one EMI and creating a trouble at the last bucket of 60 90.
So there was the only intent which is basically either, you know, get it rolled back or take a relief by ensuring that you can go for the next step of legal, you know, action against that piece if it is not getting resolved. Unless until we move to the next bucket the legal actions doesn’t come into force to that extent because surface if has to be enforced, it has to be only once the case cross 90 NPS. So this was not initial thought to have basically. But seeing that you know, bucket is bulging at that time and customer is not payback, I think then there is a some harsh call which has been taken to let it go to the next level basically.
So that pressure starts coming up. If we see November month particularly has peaked out. November was a certain level which has slightly come down in December and yes that trend is going to remain in coming quarter looks. So as we are forwarding it basically in this quarter itself. So I think now going forward we’ll see the traction will Come up after the action which we start taking November onwards on these set of accounts particularly so it will take a couple of months to come on a table and settle it down and very few will further continue to remain there till the time you possess the property.
So this has been more like a thought where we have to not continue with that piece which is getting stuck at certain level and giving a more trouble in collecting and ensuring that it becomes stabilized. So we felt that it is a time to take it up because quarter four, if it become a bad it would have been difficult for this quarter particularly so that was a little more on a actionable height that would take it up. So in fact if we not have taken this plan still it has gone by maybe 10, 15 bits.
But with this action it has gone back 25, 30 days. So this was a thought on that basis which we have taken action going forward. We feel the quarter four should definitely give a better result as we see we are almost 40 days in this quarter and as we are seeing the result particularly so I hope and I am sure that the effort the team we are putting as such will be able to get the result back. That is expected by market as well as organization management. If you talk about states particularly you ask any particular geography there are inch up in most of the geographies.
I won’t say that it’s the one geography which is burnt out which was the fake two year pass in NP. In fact NP NPA ratio is little improved by 5, 7 bits compared to what it was say 3/4 back or 4 quarter back. But there is slight inching up across that piece which has impacted particularly in every geography there are at least 3, 4 branches which are little troublesome There we are putting our control impetus control through the business ruling gear and scorecard mechanism how to make sure that the things are getting tightening up. So this is the overall scenario on the ground and this is the way that we looking forward how to make sure that this remains under you know, requirement of some 40, 50bps in terms of build cost and another reduction that we plan for the quarter four we should be back on the level of 1.2 or around 1.2, 1.3 somewhere between as we close the March number.
I hope I answer your question.
Unidentified Participant
Yes, answer the question. And the NI growth, our interest income. Growth has been a bit lower than our overall AUM growth in that sense. Is this just that ending balance or ending the business pushed a lot to end of the quarter or has there been any lower yields or shift in Mix that has impacted overall.
Rupinder Singh
So basically when situation is set on ground, we have to monitor and we have to put a lot of controls around that piece. So when we are putting it keeping in mind that situation overall market looks has to be little controllable instead of going a business at norm. So there’s a dip of these two, 3% which has come up in terms of EU growth, what normally used to have this, you know, around 30 to 33% it is hovering around 30%. So that is the impact altogether. But as we see after GST implementation, Diwali has also gone.
As we see the December numbers picking up compared to the previous quarter, previous month number, I feel this is going to keep building momentum now. I would say now there are certain re shoes which are giving some kind of confidence that going forward you will find that traction around that side. And this is the reason though with a muted two quarters that happened in last couple of quarters, we feel that we should be able to come back in quarter four itself instead of waiting further.
Unidentified Participant
On. Quarter credit is about 6% but an interest income growth is only 4%. So it appears in terms of calculated yields there’s a decline. So has there been any reduction in yields that we have taken in terms of PLR cuts or are the incremental rates that we are offering a bit lower than what we are doing earlier? Is there any impact of that?
Rupinder Singh
So we try to maintain the spread which is more than 6% and we are maintaining the spread of 6.6%. Our cost of fund has also come decently low and this is something which we always keep mentioning that as the cost of fund comes down for the new acquisition of customer, we’ll definitely pass on certain bids around that side. So where the cost of fund has come up from 8.8% to 8.3% our that piece has just come by around 2025. This is what we were disbursing a two quarter or three quarter span. Basically. If we talk about disbursement yield for the quarter it is 14.6.
And if you talk about cost, cost of borrowing for this piece it is 88.2% somewhere which is again maintaining what we expect around more than 6% of spread. And we continue to maintain that piece and overall book size. That spread is anyway in the same range that we keep giving awareness.
operator
Thank you. The next question comes from the line of Sonal Gandhi from Asian Market Securities. Please go ahead.
Sonal Gandhi
Thanks for the opportunity. So if you could just give us some sense on how is the one GPD trending currently. And if you could, you know, you’ve also mentioned that things kind of peaked out in November and December. On what you’re seeing better than just let us know what the current, you know, collection and.
Rupinder Singh
One plus beam TPD remain. Yeah, Sorrel. Yeah, I heard that you’re talking about. One plus TPD trend physically. Am I right to hear that?
Sonal Gandhi
Yes sir, yes.
Rupinder Singh
So one plus DCD remains same. That is same range what it was around 8.7, 8.8%. There is no difference into one plus CPP. Our challenge is always there. This kind of customer when they moved into the higher bucket. Bringing them back is actually takes lot of time and unless until we put a certain certain, you know, impact on legal side the things become little difficult and start getting delayed. So if you talk about collection efficiency that’s also range point the same level what we did, you know, happening say three, four quarters back. In fact the if you talk about collection efficiency in fresh bucket that is even better than the previous one because the higher bucket where the customer is regularly bouncing the things are a little difficult.
Because of that we have taken this action otherwise in the fresh bucket, the selection efficiency there is no much difference around that. That remains same particularly.
Sonal Gandhi
And sir, any trend that you could give between salaried and self employed or is it across the customer cohort?
Rupinder Singh
So our maximum customer is self employed. More than 80% customer is self employed. So the trend remains same for us basically. So no much difference between the two. That was the reason when someone asked me that how the GNP behavior between natural and lab. So there the behavior remains same for us. Not much of difference because people distinguish that actual is being taken by salary employees and LAT is taken by self employed. In our case we didn’t find much of the difference around that. In fact there is a dot to dot comparison between lap and sl when you talk about NPAs of these two categories.
Not able to hear you. I have to. I think.
operator
Sorry to interrupt ma’, am. Your voice is not clear.
Sonal Gandhi
Is my voice better now?
operator
Yes, please.
Sonal Gandhi
Yes, sir. So just wanted to understand, you know, if you could just give us some disbursement trend in January and how do we see Q4 and FY27 panning out in terms of dispersion?
Rupinder Singh
I mentioned that in November we peaked out in terms of delinquency and obviously when there is a green shoot that also give a. You know, trends after GSP and things getting improved. December was much better than October, November and September effect. And as we move into new quarter January though it’s the 1 first month of the quarter January is better than December this is the indication which I can give it so between October, November, December if we see in October November we were around 300310 crore of disbursement whereas in December we were around 355360 quote of disbursement.
That was the things which has come up and January is brighter than that basically so we feel that way the quarter four coming up and as we go into the next financial year I don’t think that there should be a challenge on that piece because if things are settling down and we have also put our course correction that way so it will give a good relief in the next year financial year and we will remain in the same range bound of 30% around 30%, 31% for the next financial year that is our plan, that is our thought which will keep working on basically.
Sonal Gandhi
Thank you and all the best.
operator
Thank you. The next question comes from the line of Shubran Shumishra from Philip Capital. Please go ahead.
Shubranshu Mishra
Hi, good morning. So I’m not sure if this question. Has been asked before Just wanted to understand what is our guidance for disbursement as well as am growth for 27 and how do we split it between lap and home loans. Also have we done any exercise to. Understand what is the, you know the overlap of microfinance customers with our customers across lap and home loans. Thanks.
Rupinder Singh
So actual to lap ratio which we always plan to do 6040 that is going to remain the same way and the factor between them in our case the behavior of the both side of customer there is no much difference between the two and as I don’t know Subranshu were there or not? This is a question being asked by one of the analysts and I mentioned that the NPA number in our case remains same between the both of them these categories. So for us there’s no differential. In fact LAT is always better in terms of giving a better yielder on that side so we are not going to change some trends around that piece.
We continue to remain there focus that is one piece and if you talk about micro finance piece earlier it used to be around 5% it is slowly coming down because we have also taken some proactive actions around that piece when taking a bureau if there’s a micro finance company we are a little more cautious around that so it’s slightly dipping up. So you still assume that it is around 4 to 5% of micro finance fees which is a part of Our overall book which may be LAC and Natural both in that case possible. So going forward if you talk about our guidance on the loan growth we feel this slide 10 piece coming as you keep growing it.
But for next financially particularly we are Targeting ourselves for 30% growth or not on the AM side.
Shubranshu Mishra
30% on AM and disbursement. How much?
Rupinder Singh
Look, disbursement can move here and there basically because you have to keep keep in mind the trend. How is impacting the market? What is the situation? There are seasonal factors also. But yes, we will reach what is more important. Our major product is by 2030 to cross to reach a 30,000 crore of AUM which will be there basically. So that thing is very well in line and we don’t see that we have to deviate from that in the current set of scenarios. That is a very clear thought.
Shubranshu Mishra
Understood. And if I can just ask one last question. What is the FOIA that we maintain in our HL and LAB at origination?
Rupinder Singh
So fi both products for us also remain same because it’s a self employed customer. We don’t differentiate that way. So 50 to 55% of FYR is there in both of the categories. What is the differential between the 2? Is the NTVs on the LTV side? Home loan is around 55, 57% and LAT is around 47, 48%. That is a point of difference between us.
Shubranshu Mishra
Understood. Thank you so much. This was really helpful. I’ll come back in the queue.
operator
Thank you. The next question comes from the line of Aditya Pal from MSA Capital Partners. Please go ahead.
Adityapal
Hi. Thank you so much for the opportunity. Good set of numbers. A lot of my questions have already been answered but just wanted some nuances on the collection efficiency in the DPD book. So now we’ve seen our 30 basis points increase of in NPA and we’ve also seen a 30 basis points increase in our 30 plus DBD. You’ve already answered that there’s no geographical or product nuances. But if I were to look at from a month on board nuances which are those. Which are those vintages that are not behaving well for us.
Rupinder Singh
If we see on the fresh side, our collection efficiency is in fact improving. We see the quarter one to quarter three or quarter two to quarter three in the fresh side there’s a slight improvement. Basically this is a point which is giving us confidence to convey a message that now things looks little more improved. We try to curtail this piece and that’s why quarter one, quarter two remain muted. At 1.2%. But we realized that since this 30 plus is moving on and that is creating a good pressure on entire system. So it’s a point that you do take a certain call either to allow it to move or bring it back.
Bringing back was finding it a little difficult because customer is very clear that one EMA you can take but not beyond that. That was always we were finding a challenge and at one point of time we didn’t have a choice but to raise the bar to let it move out of this funnel. And let’s say. So this was the point. Particularly if you see typically efficiency which remains would be 98, 99%. There is no cost change around that piece.
Adityapal
My question is more to do. I understand that what is the situation now? It is a macro situation that also understand and you all will come come outside of it that also understand. But I’m just trying to understand is there a particular book that we would have raised maybe say 18, 24 months back. That is, that is that particular cohort of customers are not behaving well. That is what I’m trying to understand.
Rupinder Singh
So more than a cohort, we have realized that the ticket size where the impact is more than the cohorts. So lower ticket size is definitely a more impact than the average ticket size of which is 10, 15 lakhs basically. So if we see the bucket from 1 to 5, 5 to 10, 10 to 15 and 15 and above, obviously our range is anywhere majorly around 10 lakhs. So up to 5 lakhs has definitely a little more problem in terms of increasing delinquency. Particularly if you talk about cohort on the basis of mobs, then there is no much difference around that piece.
Definitely the first 12 months the cohort looks very, very different and it looks very positive picture. So but the cohort between 18 to 24 or 24 to 30, there’s not much of difference between the two.
Adityapal
Understood, understood. So there’s no, there’s no particular behavioral differences that, that that should be called. Out between the code
Rupinder Singh
size what I mentioned. Basically there you’ll find definitely a difference between the two.
Adityapal
Understood, understood. So and, and also now, now that we know that there’s a. There’s a structural issue going on in the, in the sub 5 lakhs. So I would even say that sub 10 lakhs do we see our average ticket size moving upwards from 10 lakhs going towards say maybe 12, 12 to 13 lakhs in the next two to three years.
Rupinder Singh
So we will put curves which we can improve the quality there basically. You know, when you have a certain set of customer in that particular cohort, you also go deep check how we can improve there basically. So in this category of cohort we will improve the scorecard score little higher. VRE will work in that effectiveness. It is not that we are going to leave this customer. This is a customer which gives a very good yield also. This is a customer which also when you talk about most of the customer bring almost 200 bits of advantage compared to the rest of the customers.
So instead of leaving that cohort entirely or something like that, we will be little more choosy and keeping sure that we maintain the scorecard model at the best of prudency around that side. So that will be the action that we have taken which we already started couple of months back.
Adityapal
Understood. Just one last question before I come back in the queue. So you mentioned that you’re seeing a good turnaround in Jan and December exit and you’re calling November to be the asset quality peak in terms of the worsening impact. But I’m just trying to understand that what gives us the comfort that we are seeing the turn, Is it a momentary turn or is it a structural turn on the ground? Because a lot of people had called that the credit cycle has turned a couple of quarters back, but evidently so it is not the case.
There are a lot of asset quality issues panning out in other companies balance sheet. So just trying to understand that what gives us that this is a structural turn and this is here to stay now.
Rupinder Singh
So if you see there is always a matter of timing for whatever how you control it. We were always very hard and sure that we have to make sure that these are remain controlled and the intensity of collections follow up that remains strong across. Basically we didn’t wait for that even two quarters back. But we realized that which is bulging out. There is no point of holding it and ensuring a cutting pressure on us that way release it. That is one piece. Secondly, what gives you confidence even in fresh efficiency? We said a certain improvement which is coming basically that gives confidence.
Plus when we do the analysis of a login, particularly the percentage of logins which were coming earlier at a bad score is now coming down. Now it is logins which are coming at little improved and better scores. And if your login is improving to that extent automatically that output is also going to improve accordingly. So these are the two, three parameters which give you some bit checker on before thinking about it. And anyway we have not changed the BI rule. In fact for the month of December or something that remains same. So for us it is a situation where the say earlier, if you are logging a hundred files and out of 150 were coming back and getting rejected because that 50 is coming down automatically by virtue of selection with the level of 40, 45 and that’s the improvement which is coming up according.
Adityapal
Understood, understood. Makes sense. Wishing you and the team all the way best. Thank you so much for answering all my questions.
Rupinder Singh
Thank you. Thank you.
operator
Thank you. The next question comes from the line of Kunal Shah from Citigroup. Please go ahead.
Unidentified Participant
Yeah, hi sir. So few questions. Firstly, on the overall now PD assumption, you mentioned that there have been challenges in terms of pulling back from maybe the higher bucket. So would that eventually lead to some kind of a change in PD assumption and slightly higher stage two provisioning compared to where we are currently at 3.4 odd percent, would that happen with this kind of a challenge which is coming up?
Ashish Gupta
So the overall PCL front, if you look at the PD calculations, so PD calculation, one factor is that obviously historical trend and another factor is macroeconomic overlays that we, that we apply to that. So if you look at the macroeconomic overlay that we apply to our PD is the interest rate. So if we, so our PD has an inverse correlationship with the overall interest rate environment. If the interest rate goes down, PD slightly goes up and that we have seen historically during, you know, during demonetization, during COVID GST cycles and all that. So as the, you know, interest rate cycle is coming down, our ECL model is throwing slightly higher PD which is getting factored in our overall ECL provisions that we are making.
Unidentified Participant
Okay, but incrementally this trend which was reflected in terms of GS3, that wouldn’t change much in terms of our PD assumption.
Ashish Gupta
So you know, if you look at the overall overall LGD model, so our actual LGDs are you know, close to 11 12% while you know, is close to 25%. So stage three will not be reflecting the, you know, actual LGD which is there on the ground. It is because it is with the management overlay that is there.
Unidentified Participant
Okay, got it. And secondly, with respect to employees, so almost 400 odd employees addition during the quarter. So is it more of upfronting or we have strengthened the collection infrastructure? What is happening? Is it more on the collection side? We have added more people.
Rupinder Singh
Yes, these people largely start coming from quarter two onwards and you know, as time progress we also realize that that’s an important thing. That we have to be always, you know, preemptive on these kind of actions. So most of the people joined majorly into the collection field. If you talk about two particular. Yes, there were certain other department where the people joined for them. It’s like, you know, as for the plan that we planned for the year particularly. But additional resource on. On the higher side which will rely that’s more on the collection in. In the field particularly.
Unidentified Participant
So almost like 200, 250 people who. Have got added on to collections
Rupinder Singh
approximately 200 plus years.
Unidentified Participant
200 plus. Okay, got it. And lastly maybe on the previous question whether you have actually changed or tweaked the lending rates. I understand in terms of your guidance on spread of 6% plus. But any revision to lending rates either on home loan and lab for existing or for incrementally for incremental loans that you have done. Hello.
Rupinder Singh
Am I audible?
Unidentified Participant
Yes.
Rupinder Singh
So point is we keep mentioning that if we are getting a benefit rate for the new acquisition since our most of the book is fixed particularly for new acquisition, we will give certain rate benefit to the customer. So our lending rate has coming now which has done thanks to you know what happened in last one year in terms of a rate cut. So we have passed for acquisition of new set of customers again between the two home loan and lakh home loan definitely get a little more advantage around that side particularly. So that is where we’re going to pass on.
And that is the reason which we used to disburse a 14.8, 14.9 earlier. That has come down to 14.6% in average.
Ashish Gupta
And like you know, even if you see that, you know our cost of fund, which is a margin cost of fund is at 8.1%. So incrementally we are onboarding about 6.5% spread on the. On the franchisement. So we are not.
Unidentified Participant
Yeah, no, no. That I understand in terms of. We are not compromising on spreads but just wanted to check. So we would have revised the lending rates by 2530 basis points till date and any. Any further rate cuts maybe obviously you. If you get the further advantage on the funding cost side you might further tweak it. But on existing there is no change. Only on incremental we have done by 25:30.
Rupinder Singh
So. That. That is not even required in that case.
Unidentified Participant
Yeah, yeah, yeah, okay, got it.
operator
Thank you. The next question comes from the line of Mike Mistry from Antique Shock Broking. Please go ahead.
Unidentified Participant
Yeah, hi sir, thanks for the opportunity. Am I audible?
Rupinder Singh
Yes, you are.
Unidentified Participant
Yeah. So sir, my question Is mainly mostly on a long term view. Now today if you look at our peers who are you know having a size of around 12 point more than you know, 13000 crore, their growth has slowed down to 25. So should we consider the same in your case or should we see at 8 like more scalable, you know and and sustainable model of you know 30% A on growth, that’s one. And secondly, what are you planning on the geographical expansion side? We have, we are present right now in 15 states. So any expansion plans there? And this last question on on the OPEX side.
So our OPEX 2am is ranging around 4.2% today. What are the efforts we are taking, you know to you know improve this. Thanks.
Rupinder Singh
So you know OPEX side as you have seen that you know gradually say like every year we are, we are adding about 4045 odd branches and the proportion of new branches that are coming is gradually, you know like reducing. So that will help us, you know bringing down the overall OPEX ratio. And secondly as we have mentioned in the very initial commentary that you know we are focusing on digital sourcing of leads now. So as of now, you know about 4 to 5% of our leads are coming by way of digital means. And we are looking forward to increase this proportion to about 10 12% from here.
So this will further help us to bring down the overall opex. So we feel that in terms of overall OPEX to EGM ratio we will continue with our guidance of 15 to 20 basis point reduction year on year basis from here as well.
Unidentified Participant
And anyway heading to 4045 branches remain same. That will be the plan. Last year in one of the investor day presentation we mentioned to investor body that our plan is to take it to AUM at 30,000 crore by 2030. That again remains same. And adding 4045 branches there will be no change around that site that is also remain same. These are the total typically long term strategy which you’re talking about particularly. And on the opex side, yes, 1520 bids as Ashiji mentioned that is the progressive going forward and we’re taking the necessary steps that keep improving it.
Rupinder Singh
In terms of state wise geographical this thing we are already there in 15 states which contribute about more than 90% of the total housing finance market. So at this point of time in the medium term we are not looking to add any further states.
Ashish Gupta
Correct.
Unidentified Participant
Okay sir, thanks. Thank you. Thank you so much.
operator
Thank you. The next question comes from the line of Bunty Chawla from Ask. Please go ahead.
Unidentified Participant
Yeah, thank you sir. Thank you for giving me the opportunity. Just one clarification. You said gross NPA should decline in Q4 to 1.4% versus 1.5%. Is it right?
Rupinder Singh
I think we are more optimistic. The baselines are still more open.
Unidentified Participant
Okay. So on that basis what should be the credit cause? Because as we have seen the credit causes inched up in Q3 versus Q2. So how one should see the Q4 credit cost.
Rupinder Singh
that will be again as for the our guidance, it is going to remain around 50 days. 40 to 50, somewhere between.
Unidentified Participant
Okay. Okay. First that remains same for FY27 as well.
Rupinder Singh
Yes, that is, that’s a focus. In fact. Yeah, that is a focus. You’re right. I think there’s no point of giving a very long haul. Yeah, correct.
Unidentified Participant
Right. So secondly, on the disbursement as you have slightly given the throughput by improvement in December and January. But if I see if we are still sticking to 30% AUM growth. So it seems to be a tall task in Q4 disbursement of 30% plus kind of a growth on a yoy basis. So are you still confident that we will be able to achieve seeing the run rate in December as well as in the January.
Rupinder Singh
Quarter two Quarter three largely was muted. If you say in quarter only the correction starts coming in month of December, right?
Unidentified Participant
Yes.
Rupinder Singh
And as you see December, January is again I’m giving you some indication that has improved further. Basically that is giving a confidence that this should now coming to the situation. That is, that is as per the expectation. So we are expecting you know, 30%, 31%, 29% it should not be beyond that please because we just completed a month of January. But that that looks more clearer now as we are progressing basically.
Unidentified Participant
Okay. And one data point, I, I, I.
Rupinder Singh
I’ll not be in position because we just completed January. But as you see the login trend coming in a few first few days of February that is also giving a good positive indication.
Unidentified Participant
Okay, that was very helpful sir. Just a data point comparison. What we were seeing 30 DPD plus if you it seems to be stage two plus stage three coming towards 30 plus DPD. But if I see the increment or I add the both the two it’s come to 5.2% versus you have reported 5% is calculation something I am missing in this part.
Rupinder Singh
So you know during the, during the COVID period. So we have restructured about 1% of the total portfolio at that point of time. And as per the RBA guidelines and the ACL methodology, we have classified the entire portfolio into stage two categories. Though the DPD may be maybe like 0 DPD 1 DPD. So that’s why you know that portfolio is still, you know, still running on the balance sheet and overall exposure to that restructured is restructured assets is about 0.15% of the total EUF. So if you add the 30 plus as well as this 0.15, you will get the similar number.
Unidentified Participant
Okay. Okay. That is the calculation as I understood that. But lastly from my side, provision coverage ratio which has slightly increased from 25.24.6 to 25 on a sustainable run rate for FY27. What should be the provision coverage ratio we should assume for Stage 3?
Ashish Gupta
Stage 3 provision provision coverage ratio is like pretty much consistent and last, you know, two to three years that we have seen.
Unidentified Participant
Yes, yes.
Ashish Gupta
Historical trend. And it will continue in a, in a similar direction of about 24, 25%.
Unidentified Participant
Okay. Okay. That was very helpful, sir. Thank you and best of luck, sir.
operator
Thank you. The next question comes from the line of Meghna Luthra from Incur in. Please go ahead.
Meghna Luthra
Hi, am I audible?
Rupinder Singh
Yes.
Meghna Luthra
Hi. Thank you for the opportunity, sir. So I just wanted to understand what. How has our login to sanction ratio and a sanction to disbursement ratio moved from November and say in, in January or February since we are seeing an improvement.
Rupinder Singh
So earlier the login to sanction ratio fall drastically down because BRE was you know, curtailing most of this customer. Whichever bad bureau score what BRE picks up basically as with the rules that particularly. But I think with time two things has happened. One behavior of customer improving as you know, economy terms, things are looking little better on that side. That giving some kind of traction. So you can see slight improvement around that side. So which was following month on month has now start stood up in month of December and slight improvement has come in month of January.
So that is what we can see that piece. So login to sanction ratio which falls down to the level of say 45% is coming back to around 50% back.
Meghna Luthra
Okay. And the sanction to disbursement ratio, sir, how would that be?
Rupinder Singh
Pension to disbursement ratio for us is around 70%. So that keeps moving 70, 71% because main challenge is always getting a right pension basically right. And sanction at a time of disbursement. Most of the customer, sometimes they could not finalize the property or sometimes they change their, you know, plan of getting a loan or something that keeps happening around. But that is 7071 which is more or less consistent across the 10 years.
Meghna Luthra
And so you mentioned that we will be increasing our digital sourcing. So can we highlight how are these working around them?
Rupinder Singh
So we have set up a in house digital team at the head office with the senior leader on that side who is expert into, you know, getting a leads by social media impact and various alternates which can give a quality leads so that that brings a better control and a driver on that side. So we started this activity a few quarters back. But what we’re realizing now it starts picking up because some initial days it was more on setting up the entire system process around that site. And now these are set of leads which are, you know, start building up and the conversion there at times also start improving basically.
So typically last quarter it has contributed around 4, 5% with us. And what we feel the way the pipeline is getting built up, I think in couple of quarters we should be touching around 9, 10% which is coming around at least. So this will give more boost in terms of improvement in productivity of employees on the field. That is one piece and momentum into business side also in one way or other way. So this is something that we set up. So we have a team of around 40, 50 people who are totally dedicated round across country.
And this is a purely in house.
Meghna Luthra
Okay, got it. And lastly sir, a little on the macro front, what would, what would be our PMAY contribution and how is it that we are moving with the PMAI files?
Rupinder Singh
So in PMI in last PMI schemes got implemented last year in October, few quarters majorly for the system improvement by both side, by Mohua and company side that took toll and time around that site. But it starts picking somewhere at the end of quarter one. And if we see the last two quarter, quarter two, quarter three, it has actually picked up well. And in both of the quarters we have dispersed more than 500, 600 customers each in a quarter. And today we have more than 2,000 customers where we have funded PMRI. And this pipeline is building up.
The message is going on the ground and the technicalities which are always a hiccup on that that is also start getting eased out. There are more for the scope around that piece which I think is well committed and I think shortly they should be able to solve those problems in terms of technicalities. And I think it should continue. It should give some better direction as we move into the new financial year.
Meghna Luthra
Those are my questions. Thank you.
operator
Thank you. The next question comes from the line of L from IECH pms. Please go Ahead.
Unidentified Participant
Yeah. Hello sir. Thanks for giving an opportunity. Just wanted to understand, sir, in the current scenario where it seems that the cycle might have, you know, bottomed out, what is your outlook on the cost of funds and the margins going forward? And would you, you know, it seems that our overall GSC has slightly inching up. What is, what is our assessment of the situation and how, what is your outlook on the normalization on the asset?
Rupinder Singh
So you know, like on the overall cost of fund side, say if you see, you know our bucket cost of fund is at about 8.3% while our marginal cost of fund is 8.1%. So though we have seen, you know, about 50 business point reduction in the last 12 month period, but still, you know, our cost of fund is slightly higher than our, than our peer. And this is purely a function of the scale as well as credit rating that we have currently. So we feel that this is our FY26. This is our FY26 financial results.
We will be approaching to the rating agencies for it like for a rating upgrade. And we feel that, you know, if we get a rating upgrade there will be a scope of further, further reduction in the cost of fund from here by about 20 basis point. So we are looking forward to that. Hopefully, you know, the overall overall financial performance is justifying a rating upgrade. We look forward to the favor of rating agencies as well.
Unidentified Participant
So just to understand it better, sir, assuming that there is still some time for us to get that rating upgrade, what is the outlook that you have on, you know, the margins for say FY27?
Rupinder Singh
So you know, so you know, if you see that, you know say like our marginal cost of fund is at about 8.1% and bucket cost is 8.3%. So even if we, you know, go on that particular phase, there is a scope of improvement in spread by improvement in cost of fund by about 10 to 15 basis point in next three to six month kind of period. So as you have seen that we are already on the fresh disbursement, we are onboarding a spread of about 6.5%. We feel that we will continue to do the same what this, what is current interested cycle.
Unidentified Participant
Yeah, okay sir. And maybe you know on the asset quality and the growth outlooks at times.
Rupinder Singh
So on the stage three asset, as we have said that, you know, the like stage three asset have largely peaked out in the month of November and December and January. We have seen some, seen some positive improvement in that. We feel that by end of Q4 we should be again bringing it back May not be like to the normal level of 1% but say like you know, close to 1.3, 1.4%.
Unidentified Participant
And what is our assessment of, you know, how things should pan out in FY27 in terms of asset quality? What are the normalized or levels that we are looking for? 27.
Rupinder Singh
We normally take a target of around 1.2, 1.25. That is the target we normally take which we drive it physically. So I think that is not going to change what the next financial year. 27 also for us.
Unidentified Participant
Okay, thanks. Thanks a lot for taking.
operator
Thank you. The next question comes from the line of Amansoni from Invest Analytics Advisory. Please go ahead.
Unidentified Participant
Hello. Am I audible?
Rupinder Singh
Yes.
Unidentified Participant
We have observed that the company’s GNP. Has increased from 1.2 to 1.5 and NNPA has risen from 0.9 to 1.2 during the same period. Could you please explain the primary reasons behind the increase at a group level. Are customer facing any specific prepayment challenges Or stress that is leading to higher delegates? .
Rupinder Singh
So I think you have seen the trends which were in market in particular last one year. There’s a challenging market and typically for the segment of customer we deal into, there is always some heat around that side which we also find out that the customer even moving to next bucket which is taking lot of time to come back to the normal position. Because in this scenario giving two EMIs or more than two EMIs was a little challenge around that piece. So that is a typical challenge though on the fresh side, the collection efficiency remains intact particularly.
But the way the behavior was say one year or two years back where the customer moved to the next bucket can easily come back to the bucket once with a little effort around that piece. That is not a scenario as of now the tough situation which the market was facing. So that’s why once it moves into this bucket, it was getting gold and stuck around that side. So we have option either to bring it back or to take some legal course action on that side so that you know, we neutralize it or we paralyze this kind of situation particularly.
So we try to tweak between the two. And here, you know, instead of allowing only sitting at there and that bucket keep bulging it, we took this decision to flow little 20, 30 bits around that piece. And now action also starts happening around that piece particularly. And as we see, I think we’ll be able to get the result out. What is expected from this kind of situation particularly.
Unidentified Participant
Understood, sir. Thank you.
operator
Thank you. The next question comes from the line of Aditya Pal from MSA Capital Partners. Please go ahead.
Adityapal
Hello, I’m Audible.
Rupinder Singh
Yes.
Adityapal
Yeah, thank you so much for the opportunity. Thank you so much for taking up my follow up. Just one bookkeeping question sir, if you can help me. Over the last four quarters, how have been, how have the attrition rate trends been for us? And if, if, and if you can call up, call out certain geographies where there are anomalies that you’re facing.
Rupinder Singh
So iteration we normally split into two pieces. One is a regrettable and one is a non regrettable attrition.
Adityapal
So depending on the branch, branch attrition.
Rupinder Singh
So branch attrition is around 35% for us basically which is recorded 35, 34.8 that keep hovering quarter to quarter. Basically this is range bound particularly and that remains almost same level. Basically every quarter you’ll find a gap of you know, 0.51% here and there, some quarter you’ll find it’s coming to 34 and a half, some quarter, maybe 35 and a half, 36%, no drastic change around that piece. And that’s a process which is running from now multiple quarters around that time.
Adityapal
And any, any geographical nuance to that, that certain geographies have higher attrition. Certain geographies have low attrition. The geographies that are having low attrition, what is the attribute that they have low attribution? Something, something of this kind.
Rupinder Singh
Geographies which have a more vintage, definitely the attrition is low because employees get set very well set into the system, they understand process technology very well and that gives them boost and the productivity starts building on that piece. And that can happen in any of the geographies with the vintage branch particularly where the vintage branch is new, you know, and the young, young guys, they feel that they are not getting set into that piece then they like to move on basically. And here also as you start a new branch there is always a focus and drive on the productivity to meet the parameters of the existing one.
So definitely those parameters also try to put a board right and easily curve between regrettable and non regrettable there. And accordingly there the non regrettable, you know, start, you know, moving out earlier than the other one because there the vintage and scope they definitely support employee to continue their task.
Adityapal
Basically understood, understood. And the Madhya Pradesh branch that last year that our team had moved out, it has now come up and performing well and the asset quality issue that we were facing over there has been completely cleaned.
Rupinder Singh
It has not completely cleaned. Otherwise I think the number would have been little more better but yes compared to last year whereas rest of the geographies have gone up. Madhya Pradesh is the exception where that remains same and even in month of December they reduced by some tendency basically around that side. But yes for complete cleaning I think will take some more time for which I think things are on your on the job.
Adityapal
Perfect. Perfect. Wishing you all the very best. Thank you.
operator
Thank you ladies and gentlemen. That was the last question for today. I now hand the conference over to the management for closing comments. Thank you. And over to you sir.
Rupinder Singh
Thank you everyone for taking your valuable time for attending our earning call. An audio recording and the transcript of this call will be uploaded on our website in the due course. Looking forward to hosting you all in the next quarter. If you have any questions or queries or required any additional information, please feel free to reach us out. Thank you so much and a great day. Thank you.
operator
Thank you. On behalf of ICICI securities limited that concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you. Thank you.