India Shelter Finance Corporation Ltd (NSE: INDIASHLTR) Q4 2025 Earnings Call dated May. 12, 2025
Corporate Participants:
Unidentified Speaker
Rahul Rajagopalan — Head of Investor Relations
Ashish Gupta — Chief Financial Officer
Rupinder Singh — Managing Director and Chief Executive Officer
Analysts:
Unidentified Participant
Renish Bhuva — Analyst
Varun — Analyst
Raghav Garg — Analyst
Shreya Shivani — Analyst
Aman — Analyst
Aditya Pal — Analyst
Sripal Doshi — Analyst
Mithin Latia — Analyst
Sonal — Analyst
Janice Cheddar — Analyst
Mona Kan — Analyst
Chinmay Nema — Analyst
Presentation:
operator
It It. Ram it Sam. Ladies and gentlemen, good day and welcome to the India Shelter Finance Corporation limited Called a conference call hosted by ICICI Securities. As a reminder, all participant lines will be in the listen only mode. And there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Ranish Bhuva from ICICI Securities Limited. Thank you. And over to you sir.
Renish Bhuva — Analyst
Yeah. Hi. Thank you. Good morning everyone. Welcome to India Shelter 24 FA 25. I will now hand over the call to Mr. Rahul for the introduction. Over to you, Rahul.
Rahul Rajagopalan — Head of Investor Relations
Thank you, Ranesh. Good morning everyone. I take this opportunity to thank ICSI. Securities for hosting a call today. I extend a warm welcome to all the participants on our Q4FY25 earnings conference call. I hope everybody had an opportunity to go through our investor presentation and press release uploaded on the stock exchanges. We have also uploaded the Excel fact sheet on our website. With me Today I have Mr. Rupinder Singh MD and CEO Mr. Ashish Gupta, our CFO. I now request Mr. Rupinder Singh, our. MD and CEO to brief you all about the company’s performance. Thank you. And over to you sir.
Rupinder Singh — Managing Director and Chief Executive Officer
Thank you, Raulji. A very good morning everyone. On behalf of the company, I extend a warm welcome to all of you. Thank you for joining us on the call today. Looking back at the past year, I take immense pride in sharing our progress and achievements that have marked our journey towards responsible growth. India remains a land of boundless opportunities with rising aspirations for home ownership and increasing financial inclusion are shaping the affordable housing finance sector. As a company committed making home ownership accessible to underserved communities, we have reinforced our foundation by fostering trust, driving efficiencies and creating meaningful impact.
Demand for affordable housing finance continues to accelerate across Tier 2, Tier 3 and fast growing micro markets. Rising disposable income driven by expanding job opportunities in various sectors are reshaping consumer aspiration in these regions. On that note, let me move towards the quarterly update. We are pleased to announce that the company delivered strong operational performance in the fourth quarter of financial year 25 driven by demand environment. In affordable housing segment we delivered an AUM role of 35% year on year reaching an AUM of Rupees 8189 crores. In quarter four financial year 25, we disbursed Rupees 933 crores registering a growth of 25% year on year.
Whereas in financial year 25 we disbursed Rupees 3355 crore adjusting a growth of 25% year on Year. During the quarter our branch Network expanded to 266 branches in total. And during the year we added 43 new branches. As per the plan, all profitability metrics pat for the quarter came in at rupees 108 crores registering a growth of 39% year on year. It’s the first time that we achieved PAT of more than 100 crore in a single quarter. Return on assets came in at 5.8% and return on equity further improves to 16.3%. Again, this is the first quarter post listing where we deliver the ROE above 16%.
Our net worth now stands at Rupees 2,709 crores. Further, we continue to maintain a guidance of branch addition of 4045 for the year. Margins around 6%, credit cost around 40 to 50 pips. Loan growth of around 33% 30. 35% to reach AUM of 30,000 crores by March 2030. Lastly, as we remain committed towards sustainable finance, the board has approved the ESG policy. Through the implementation of this policy we seek to achieve a sustainable future for our stakeholders and future generations. Now I would like to hand over call to Mr. Ashish Gupta, our CFO to take you through the financial metrics over to Ashish.
Ashish Gupta — Chief Financial Officer
Thanks Supinderjeep. Good morning friends. Let me take you through the key Financial numbers. AUM as of March 25 is 8189 crore year on year growth in AUM is 35%. In line with in line with our guidance, quarter on quarter growth in AUM is 7%. Total income for quarter is up by 34% year on year largely driven by 35% growth in AUM. Quarter on quarter total income is up by 8% at our portfolio yield is stable at 14.9%. Disbursement yield for the year is 15% versus 14.9% in previous year. Our market cost of Fund is down by 10 basis point in Q4 to 8.7% driven by lower marginal cost of fund at 8.6% in Q4 and reset in few of our borrowing linked to repo rate.
Share of NHB funding is stable at 15% year on year. We have undrawn sanction of 200 crore to be drawn in Q1FY26. With this our lending margins are about 10 basis points to 6.2% and are consistently about 6% in line with our guidance for medium term. On liquidity side we are comfortably placed with liquidity of 1480 crore including control of about 900 crore. Our ALM is positive across all the buckets. Net income for the quarter is about 33% year on year basis and 6% upon quarter on quarter basis. On interest rate risk side, we have been able to bring down the percentage of fixed rate portfolio funded by variable rate liabilities from about 45% last year to about 18% this year.
We are committed to further reduce this in coming 12 to 18 month time coming to Opex. Our year on year growth in OPEX is lower than growth in AUM resulting in better cost ratios. OPEX to AEM for the quarter is down by 10 basis points quarter on quarter and down by 20bps year on year. On asset quality side, DPD 30 is at 3.1% down by 60 basis point. Quarter on quarter phase three is at 1% down by 20bps quarter on quarter with improvement in asset quality. Credit cost for the quarter is 20 basis point and for the year it is at 40 basis point which is in line with our guidance.
PCR for stage 3 asset is stable at 25%. Our total ECL is 64 crore against the regulatory threshold of 37 crore. Adequate provisioning buffers are in place. If you look at our BPA own rate, it is stable below 6% on PAT. We have crossed the important milestone of 100 crore a quarter on the back of strong volumes, margins and credit cost. Pat for the quarter is 108 crore. Year on year up by 39%. Quarter on quarter up by 12%. PAT for the year is 378 crore. Year on year by 53%. ROE for the quarter is 5.8 and ROE for the full year is 5.6%.
ROE for the full year is 15.1%. During the quarter we have crossed the milestone of 16% ROE for the first time post IPO and entered the quarter with ROE of 16.3% at a leverage of 2.9 times. With this I conclude. And now we can open the floor for Q and A.
Questions and Answers:
operator
Thank you sir. We will now begin with 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 2. 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 comes from the line of Varun from Kotak securities. Please go ahead.
Varun
Hi sir. Congrats on a good set of numbers. Had a couple of questions. The first one is regard to the Karnataka portfolio. There appears to be a decline in the portfolio in Portuguese. Is it because the Ikata issue has not been settled yet or are there any other issues we are seeing? The second is with regard to collections. While overall collections are good and you have reported significant decline in GSP as well. Are there any trends you’re seeing in Karnataka, Tamil Nadu or NP these particular states whether the collections have improved compared to last year or last quarter.
And third, I had a data gating question that you’ve already given the breakup of fixed and floating loans and parking side. Just wanted to break up on the benchmark that they link to. And.
Rupinder Singh
Thank you Varen for the questions. I’ll go one by one and maybe I’ll request a question to repeat in between because there are two three questions together about the Karnataka we have portfolio of around 6 6.5%. There is a slight dip of some 2030 bips. Obviously the reasons which you know very well in the market. Thankfully India Shelter distribution portfolio has been spread across country in a very you. Know. Formative way so that there is no impact in any case. Ups and down does happen basically. So yes these are the few challenges which obviously going to come when you’re in an operational business. But otherwise there’s no major impact on that side. So I think we’ll be able to cover as the time keeps, you know building up in future also. So today we see we have around 6% 6.3% of portfolio Karnataka. You asked some second question regarding some collection fees. Can you repeat it please?
Varun
Yeah, just that overall collections are looking fine. But are you seeing any issues in Karnataka or Tamil Nadu or mp especially given that Karnataka and Tamil Nadu are this ordinance are still coming in. Perfect.
Rupinder Singh
Tamil Nadu piece came very recently. Even in Karnataka if you see overall there is a decent attraction. Yes they may have missed little bit of target then and there as keep closing because there’s always challenges which does happen when any shift happens in the operational activity. But accordingly we keep preparing ourselves and growing around. So nothing to worry on that side like Karnataka where we have 6% of portfolio. Same in Tamil Nadu we have around 5% of portfolio. So we don’t think there is anything which is challenging and worrisome for us on that side.
Ashish Gupta
To come back to your question on this benchmark about the portfolio. Our portfolio is linked to our PLR which is variable rate and coming to the liabilities on liabilities side, 30% of our liabilities are linked to RBI repo rate or the T bill and then about 55% of the borrowings are linked to MCLR. Out of the total 55%, 20% is linked to 3 months and remaining 80% is linked to the 1 year, 1 year or 6 month MCLR and remaining about 15% is fixed.
Varun
Thanks.
operator
Thank you. The next question comes from the line of Raghav Garg from Ambit Capital. Please go ahead.
Raghav Garg
Thanks for the opportunity and come back in this quarter’s number. Just three questions from my side. One is on the fee income part. So apart from the processing fees, if I look at the other fees and commission line item that has grown quite substantially this year. So what is driving that?
Rupinder Singh
So the processing fees that we get on our loans disbursement get amortized over the period of the loan and comes under the head of interest income coming to the rest of the, you know, fee and commission income. The larger portion of the income is coming by way of cross sell on the insurance and then you know part of the income is coming from foreclosure of loans and then there’s the routine servicing of the loan. So as you may be aware that during the Q1 we have got the, you know, our corporate agency license. So you know as the license income has got stabilized now so you are seeing some spike in the overall commission.
Raghav Garg
Understood. The second question is on assignment margin. So it appears that the assignment margin dipped this quarter on a quarter on quarter basis. Is that because you may have done more of HL assignment this quarter than non hl?
Rupinder Singh
So as a matter of policy we only do lab direct assignment transactions. But you know, the margins depend on various factors that what is the residual tenor of the loan that we have sold, what is the, what is the seasoning and what is the ROI of that underlying loan? So this is that you know the margin income comes up so it completely depends on the underlying pool but there is no change.
Raghav Garg
And what’s your expectation of reduction in funding costs on a full year basis and FY26 versus.
Rupinder Singh
So. So as we have said that about 30% of our total funding is linked to the repo rate and T bill for that, you know we will keep getting the rate benefit on a immediate basis but for the rest of the, you know, larger portion of the borrowing which is linked to mclr, the benefit will keep coming in a staggering manner. You know and it will depend on how much the pass on that the bank will DO on the MCLR. So you know if the 50 business point rate cut has already happened, we have already got the 10 business point cut so maybe you know another 10 business point may be there in three to six month kind of time and rest will dependent on the cut in MCLR.
Raghav Garg
When you say 30% link to repo or T bill you are still including assignment, right. The funding that you give in the presentation or is it the on book.
Rupinder Singh
Is similar on the on book and. And the deal site.
Raghav Garg
Okay, thanks.
operator
Thank you. The next question comes from the line of Shreya Shivani from clsa. Please go ahead.
Shreya Shivani
Yeah, hi. Thanks.
operator
I’m sorry to interrupt. Shreya, you’re not quite audible. Could you please move to a place where there’s good network? Thank you.
Shreya Shivani
Is this better? Hello?
operator
Much better. Yes.
Shreya Shivani
Yeah. So my question is on the new branch edition and you also give out a metric on AUM per branch of you know, your vintage up to one year, one to three year and all of that. So clearly the new branches that you’ve been adding, the AUM per branches has picked up quite a bit over there particularly in 4Q is this more of a function of the new branches that you’ve owned are more interior 12 cities than in smaller cities. And also. So the reason I’m asking this is because the one year’s AUM per branch has sort of moved remained down in the past six quarters of numbers that you’ve given out.
But the new branch edition seems to have much better AUM outlook. Can you help us understand that?
Rupinder Singh
Yeah. So as an experiment what we did last year, most of our branches got open in the first quarter else itself that I think if you see go back on the data side also water when we try to open the branch as a plan that time and by the time we covered three quarters I think that has picked up. There’s no strategy about opening branches in tier one. We still not very gungo about the tier one market, particularly when we talk about affordable housing. The segments that we are testing are on that side. It’s only that we, you know, preponed the plan instead of studying across the year.
We did this experiment last year and I think it worked a little bit and that helps us around that side.
Shreya Shivani
Sure. Understood. So the new branch. Yes. The new, new 40 to 45 guidance that you’ve given for branch addition that also you’ll do in a similar manner going ahead.
Rupinder Singh
No, no, no. This year we are making some different changes. There is always, you know, every time you have to you know see some, some ways how it can be more effective. That’s the internal strategy. But overall this year again going to open around 43, 45 branches. So different way of setting it. So it’s not like last year but maybe we come up with a better idea system we will convey as in time get progress and the things come into the experimentation form.
Shreya Shivani
Got it, got it. That is very useful. Thank you and all the best.
Rupinder Singh
Thank you.
operator
The next question comes from the line of Aman from Philip Capital. Please go ahead.
Aman
Hello sir. I’m audible.
Rupinder Singh
Yes, yes.
Aman
So sir, congrats on a good set of numbers. So one question is on the repayment rates. So if I looked at your repayments rate they have climbed up sequentially. Right. And you also mentioned of some foreclosures. So could you give us a sense on as to why? I mean, I mean is it because of some competitive intensity doubts we are seeing in or I mean is it something also seasonality? Some clarity on that could be really helpful.
Rupinder Singh
While you know calculating the monetization rate you might not have been considering the impact of polanding that we have done. So co lending portfolio that we, that we like originate for the banks, we don’t consider this as a part of aum so we will have to factor in from the disbursement number while computing the amortization rate. It is better than last year in fact.
Aman
Okay, got it. And so secondly would be on the co lending part of our book. So we are at 57% housing loans on a portfolio level and about 43% on the loan began property. Right lap and that is where we I assume do most of our DA business direct assignment. Now isn’t this a bit aggressive from a housing finance company standpoint? I mean it is that something of a risk that we see down the line where an RBI might come down on you that okay, you’re being too aggressive in the lab portfolio.
Rupinder Singh
So if you look at our overall medium you realize that our housing loan portfolio is at 57%. But if you look at the on balance sheet portfolio. So as you have rightly said that for direct assignment we do it for lab portfolio. So at the on book balance sheet level the proportion of housing loan is at about 67%. So we are you know well compliant with the RBA regulation on this particular PVC criteria.
Aman
But any plans on maybe running down this book a bit or maybe you know slowing down disbursements in the lab portfolio?
Rupinder Singh
So I think let’s see that way instead of slowing down lab portfolio we’d always insist on taking up portfolio. So this 57% eventually reach to respected level of some 60, 61% so that things are very well taken care of in full threshold form. So we’re not pulling all that but it definitely will take up a. We have a plan around that time. So as the quarter progress you’ll also see around this please.
Aman
And the one last question if I may. So my last question would be on the competitive intensity. Right. So we have seen a lot of your bigger players also getting into the affordable market, right. So how do you see that affecting you? Or maybe if you could just elaborate a bit more on what is our right to win in such competitive markets and Rajasthan being one of them. So just some clarity on that would be helpful. Thank you.
Rupinder Singh
Well we are a player of tier 2, tier 3 markets basically which is a deep downhill geography. Maintaining our ticket size which is 10 and 11 lakh rupees of ticket size and sourcing is through our direct team instead of depending upon third channel, third party channels. And this is a quite, you know operationally extensive activity on that side. So to build the DNA you require the thousands of people, hundreds of branches and then focusing on this market. So large players who have a, you know the tendency to take the business to next level instantly if they do so replicating this model becomes a little difficult.
So the way we serve you require to come to this level around that time and this is the way we are acting it. We are into business from last 15 years and so many players keep coming around big and small, all kind of that everyone has to find their own forte accordingly. So we have
Aman
got it. So thank you. That answers my question. Thank you.
operator
Thank you. The next question comes from the line of Aditya Pal Jaggi from MSA Capital Partners. Please go ahead. Be considered.
Aditya Pal
Hello. Am I audible?
Rupinder Singh
Yes, you are right.
Aditya Pal
Thank you so much sir. Great set of performance. Just wanted to quickly get a few data keeping questions. That is how much would be our one DPD and what would be a total block write off for FY25 for the whole year for this quarter and the the collections of our earlier write offs for this year and this quarter. Can you repeat the question based on. Hello.
Ashish Gupta
So you know if you look at our DPD1 it is at about 7% and we have done a write off of about 8 crore this year. But however we have parallel recovered about 6 crore from the, from the loans that we have written off in the previous years. So there is no material impact of write Offs in the credit cost this particular year.
Aditya Pal
Understood. And so for the last three years have really performed well for us. So what is the strategy or what is working for us over there? And how do you think about this market say in the subsequent years? And another question on this strategy is that how are you thinking about state wise the year for FY26.
Rupinder Singh
So it’s not a one state specific focus. We have, we have spread across the 15 states being a new geography for Andhra Pradesh, Telangana compared to the other one like Rajasthan or Maharashtra or mp. I think you know being a small base that looks a good output in that sense. If you see in south we have spread across four states. Ap, Telangana, Karnataka and Tamil Nadu Karnataka, Telangana. We are having some AUM of 5, 6% there and here we are currently around 4, 4.5%. So with time you’ll see the progress across there. Basically it is not a state specific.
Yes, there’s a good productivity which is coming from AP Kelangana also. Obviously that is the thing which is pulling up their numbers I think.
Aditya Pal
And what would be a district penetration in states? Rajasthan, Maharashtra, Madhya Pradesh and then what would be a market share? These geographies.
Rupinder Singh
Look, we don’t compare it in terms of what is my market share. And all reason being a mortgage. Housing is a humongous business which is staggered into various sectors, ticket size, various forms and backsides. We play in a ticket size of 1011 lakh rupees. There are competition which are an affordable playing between the other set of ticket size and hmse. And overall housing is a very big gamut around that side. So we see our continuous growth and as we see compared to the last year there’s a continuous growth in Rajasthan and rest of the states.
Also Rajasthan we still have a highest tailwind which is in rate of 30, 31%.
Aditya Pal
And sir, is this last question. So our stage two plus the GNPA does not match a 30 plus DBD. So intuitively the, the the particular DPD should match a stage two and GNPA.
Rupinder Singh
Yes, you are right. So there is you know some impact of the restructured loan that we have done during the COVID 1 and 2 schemes. So impact of the same is about 15 to 20 business point between the stage 2 plus stage 3.
Aditya Pal
That is a restructured book.
Rupinder Singh
Yeah.
Rupinder Singh
Which is like. Which is you know actually stage one asset. But you know, but this is the conservative philosophy. We have considered slightly higher provision on that and consider that as a stage closet. But that book is you know doing fine now.
Aditya Pal
All right, all Right. And so what would be a difference between unique customer collection? Are you given overall collection? What would be a unique customer collection?
Ashish Gupta
So unique customer collection is at about 97% plus.
Aditya Pal
Understood. Thank you so much and best of luck to the team.
Ashish Gupta
Thank you.
operator
Thank you. The next question comes from the line of Sripal Doshi from Aquarius Capital. Please go ahead.
Sripal Doshi
Hi sir, Good morning and thank you for giving me the opportunity. I’m conference on a good quarter and really appreciate the detailed presentation. My question was on GS3 coverage. So if you look at that number is closer to 25%. However, as we deepen our penetration in the existing and the newer states, do you see this 25% inch upward? Because if you look at some of the larger guys are having a much better PCR on GS3 ranging within 50 to 60, 65%. So do you see this 25% inching upward? And are we, and what is the credit cost that you’re comfortable with?
Ashish Gupta
So you know, you need to differentiate between, you know, us and any other, you know, prime housing finance company. So you know, while we underwrite the loan, we underwrite the loan only against the self occupied residential property. And average LTV of the portfolio is close to 52%. So if you go over the historical number which are available for, you know, more than 12 years now, so the LGD that we have seen on our portfolio is close to 1112 percent including principal and interest. So the PCR of you know, 25% that you are seeing on stage three assets is actually 2x of what the actual provision is required.
So based on the management overlays and all that, we have been able to pull up this PCR to about 25% that we feel is sufficient for this kind of business that we are doing. And on the overall great cost, you know, including the like growth on the stage one stage, stage three set which is currently running at about 30, 35% we are comfortable with about 40 to 45.
Sripal Doshi
I mean your LGB of 11% is, I mean seems much controlled than for the peers. But the idea that as we scale up and deepen our penetration. Do you see this in Singapore as a business model? You believe that this is what it should be closer to 25%.
Ashish Gupta
So we, so we have seen the, you know, last, you know, 5, 7 year trend in the LGD this remain broadly in the range of 10 to 12%. So in case that actual trend reflect some, you know, some uptake, then probably we will increase our ECL provision as well. But in case not then probably we will continue with the current numbers that.
Rupinder Singh
Will go as per the model on our ECL which works around that side.
Sripal Doshi
Got it, Got it. So in terms of customer profiles, heavy sort of value. Are we also able to see more customer profiles being onboarded in our system in terms of underwriting them or in terms of filtering? Yes and no. In those customer profiles we are largely.
Rupinder Singh
Getting the self employed customer in these markets of tier 2, tier 3 and which includes all set of gamuts on the customer who are serving this vicinity. Obviously we also have a list of negative profiles which we don’t to want to touch basically and that you can get as and when you want. So this is a matter of policy for us. So we are very clear this is the market which we have to serve it. If you see we have not changed any large ticket size or things on that side. We continue to work between 5 to 30 lakh rupees of ticket size and majorly into affordable mortgages.
So it’s nothing new that which has come up around this basically because a set of customers who have, who should have a selection of property to offer in the same vicinity. So I think that gives a clear cut visualization of the questions that you asking for.
Sripal Doshi
That is. Thank you and good luck with the next question.
Rupinder Singh
Thank you.
operator
The next question comes from the line of Mithin Latia from Fractal Capital Investments. Please go ahead.
Mithin Latia
Good morning sir. The, the broader cohort that you mentioned sticking to tier 2 tier 3, maintaining a 10 lakh rupee ticket size, direct sourcing. Is that maintainable all the way to 30,000 crore of AUM or do you think along the way we’ll have to tweak this to get to that number.
Rupinder Singh
So there’ll be always a, you know, as the market is growing, inflation is growing, the cost of construction is growing. This 10 lakhs will obviously go up. But the step by step it’s not an overnight change of shift of gear around that side. If you see 6, 7 years back the ticket size used to be 6, 7 lakhs. Today it is 10 lakh rupees. As we reach towards this another 4, 5 years you can see that this is going up and this may therefore I said I will go to the 14,15 lakh rupees of ticket size also.
But yes, we want to continue to work in the affordable housing segment. Any new opportunity in terms of product opening we are, we always you know welcome into that piece. But it has to be very well taken care of. Risk adjustment businesses basically not like just for the sake of doing it. So we’ll be cautious but yes, we’ll be eager for going up.
Mithin Latia
So sorry to reemphasize but up to 30,000 it will still be a direct sourcing model. You don’t see a need to change that.
Rupinder Singh
That will be about prime model in case if you have to come with the new models then definitely we’ll not be able to disturb the current one. We’re not going to overload our current set of teams who will be basically going shifting from a direct sourcing model to some new models because of the expertise which this team has developed with time.
Mithin Latia
Great sir. Thank you.
operator
Yeah, thank you. The next question comes from the line of Sonal from Asian Market Securities. Please go ahead.
Sonal
Yeah, thanks for the opportunity and congrats. A good set of numbers. So I had two questions. One is on this fee and commission income. So if I look at it as percentage of assets or you know, on disbursements, this number has inched up quite significantly. Now just few questions. If you could just help us with the recap. You know, how much is the insurance income, you know, in this pn commission income and second is how many insurance companies have you tied up with? Do you also provide any insurance loan to the end customer? That is my first question and second is with focus shifting to floating rate advances, how do you see yields moving from here?
Ashish Gupta
Yes, Anand so you know, if you look at the breakup of the total other income or the fee and commission income, so about 50% of the income is coming by way of cross sell and while giving the, you know, you know, insurance we also fund the customer loan in case we want to do that. And remaining about 20% of the income come by way of, you know, foreclosure charges on the loan and remaining 20% comes on the, you know, loan servicing fees in the form of bounce charges, cash handling charges, etc. And remaining 10% of the income comes from the co lending piece that we are doing.
So on the co lending loans we get upfront fees share on the processing fees that we charge from the customer.
Sonal
Sure. And so just one more clarification here. So you said that 50% income is coming from cross sell of insurance. So you know, I mean whatever loans we’ve disbursed during 4Q so if you could just indicate how many, you know, customers or borrowers have kind of opted for insurance and probably how many of them have been funded during the quarter.
Rupinder Singh
Sure. So you know we do primarily two types of insurance. One is property insurance, wherein you know, we see a good penetration rate wherein more than 90% of the customer go for the insurance. And another is credit life insurance wherein we see a penetration of upward of 80% wherein you know, customer go for the credit life insurance for about five to seven years. This is their behavioral expectation of the loan. And you know, coming back to your old question, so we are working with about four insurance companies for the life and the property insurance.
Sonal
And sir, on the floating rate advances, I understand you’ll be able to maintain your 6% plus spreads but how do you see the yields moving from here?
Rupinder Singh
So floating rate loan that we have said that is constituting about 45% of the portfolio. So on that portfolio, you know there is a structure that, you know the loan is like semi, very kind of structure wherein it is fixed for some initial three years like period and then it is variable. So these loans are linked to our own plr, you know, basis, the cost up front and the opex of the company. So as and when that will change in the future, probably we may pass on some benefit to the customer as well.
Sonal
But just an initiation of the contract. Could you just help me with the you know, different between what will be charged during the fixed rate period and what will be charged during, you know, when it becomes floating rate or variable rate.
Rupinder Singh
So you know the rate is similar. It’s not a teaser loan like kind of product wherein the like initial rate is slightly lower and the subsequent rate will be higher. It’s a, you know, flat rate of product wherein customer rate remains fixed for initial three years. And this is the moment after three years the customer rate might change in future.
Sonal
Sure. Thank you sir.
operator
Thank you. The next question comes from the line of Janice Cheddar from Kempfin family office. Please go ahead.
Janice Cheddar
So good morning sir and congrats on the good set of. Sir, when you Talk about this 30,000 crore event by March 30, what will be the ROI by by then? Since on scale do we expect a dip in the RS?
Ashish Gupta
Yes, our ROA is currently like about 5.6% like for the year. But our leverage is close to 2.9 10 2.9 tons. So as the leverage will increase from here, our ROA will moderate from here. So we expect that down the line, you know, two years from here we will be touching close to 4x kind of leverage. At that point of time you will, you will see some moderation in RoA. Close to 4, 2.5% that you could expect.
Janice Cheddar
Okay. And I’m assuming this 30,000 crore will.
Rupinder Singh
Be or will not require any additional equity raise. It would require eventually, I think. But I think it will take another three years to reach there. You’re talking about 30,000 in five years of time.
Janice Cheddar
Understood. Yeah. Thank you so much. That’s all for.
operator
Thank you. A reminder to all participants. You may press Star and one to ask a question. The next question comes from the line of Rohit, an individual investor. Please go ahead.
Unidentified Participant
Hi.
Rupinder Singh
Yes you are.
Unidentified Participant
Hi. Good morning, sir. Congratulations on a great set of numbers. I had just one question. What can be the trajectory of Roe going forward, sir, for the next two financial years? FY26 and FY27. That’s my question. Thank you.
Ashish Gupta
So as we have said that you know, so in the previous question that currently our ROE is at about 5.6%. This is the low leverage of the company. So ROE is a function of your ROA under leverage. So as we will progress, our leverage will be increasing and ROA will be moderating. But as we have ended the, you know, Q4 with about 16% plus Roe, you can expect the similar trajectory or the upper trajectory in the coming quarters.
Unidentified Participant
Okay, sir, thank you. Thank you.
operator
Thank you. A reminder to all participants, please press Star and one to ask a question. The next question comes from the line of Ranesh Bhuva from ICICI Securities. Please go ahead.
Renish Bhuva
Yes. Hi sir, there’s two questions from my side. So one on this lab portfolio. Right. So of course we’ve been growing this portfolio at almost 30, 35% plus over last two to three years. And given this audience in TN and Karnatak, do you foresee any disturbance in collection in lab portfolio? At least as of now?
Rupinder Singh
I think not exactly as of now. You talk me. We are just taking the talk of situation regularly on that side. So if you see current state of affair, we can’t see instantly some action, some kind of jet reason on that side. So. But yes, we are cautious about if anything happens. We’ll be first to come back to you on this.
Renish Bhuva
Okay. And sir, would you like to share the overlap of live portfolio with identify customers?
Rupinder Singh
I think it’s around three and a half, 4%. But this is a very old customer we’re talking about. We did our stuff done basically a quarter back or so. Basically and largely when we see the delinquency ratio. Also there’s no very large quarter on that side. It’s a range loan again.
Renish Bhuva
Okay. So three and a half to four percent of netbook or a total book?
Rupinder Singh
It is a total book.
Renish Bhuva
Okay. It is of total Book. Okay, okay.
Rupinder Singh
Yes for it.
Renish Bhuva
And secondly, you know, in this next phase of growth wherein we are sort of Planning to reach 31,000 crore by March 30 and when we look at the geographical concentration or presence, you know, we are still a 30% plus in Rajasthan. So going ahead, you know which are the key states which will sort of drive the growth for us and where do you see the share of Rajasthan threatening maybe over next two to three years?
Rupinder Singh
I think with the progress of time every state starts performing in that sense. And Rajasthan is still a flash of zone for us and delivering a wonderful numbers in that sense though they’ll continue to maintain their momentum typically in a disbursement site. But that definitely because of the impact of other states going and they settling down. There’ll be a, you know, more growth coming from those states. I feel this will start settling down and another four, five years will come less than 25% if you talk about Pakistan per se. Basically if you ask the other state which is coming around, I feel good scope in south all four markets typically as we see that consistency, you can see both in Maharashtra and NP and new things green shoot.
You can see coming from other states like UP or Haryana in some cases that you can see around.
Renish Bhuva
But okay, so would you like to spell out any let’s say two, three markets where we are focusing more incrementally.
Rupinder Singh
I think we should not discredit because of we are focusing in one market or the other. For us all are the creates a distinction. We chose the market keeping in mind the objective of, you know, giving this affordable housing. Obviously quadrat will be. And because of that, when we focus it, if you see the India Shelter philosophy always is there any branch which has to be open it should be very good control from the central. So we have spread our distribution such a way and the system works in such a way that there is no should be distinction between the two markets because of the, you know, reasons that we feel that this is a good market or the people are not good or something like that.
So we are quick around at least where the changes are need to be required to bring the opportunities enough in the market which are available there.
Renish Bhuva
Got it. And just the last bookkeeping question. So what is the disbursement yield and incremental cost of fund?
Ashish Gupta
So disbursement yield are currently at about 15% and our incremental cost of fund for Q4 was about 8.6%. So that was having some element of NSP funding as well. But on a stage you can say that our incremental cost of fund is also at about 8.7% excluding NHP, which is similar to our average cost of fund.
Renish Bhuva
Got it, Got it. And maybe just the last question on the sourcing side. Let’s say as of March of what percentage of disbursement is through branch sourcing and what percentage would be non branch sourcing? When I say non branch is basically connected BSA, digital marketing, etc.
Rupinder Singh
So if you see entire things act from branch in terms of servicing the customer people is going up basically since we keep working the venues but ultimately all these leads and customers has been passed on to branches basically. So branches are there to serve the customer. So digital speech is picking up for us. Basically these are new venues which are coming along that side and still in the experimental phase. So we are not commented much of the numbers around that side. So there’s definitely not to start building around that piece.
Renish Bhuva
And DSA connector is practically zero for us as of now. Right.
Rupinder Singh
So from granted it is not but yet through digital if we have a certain aggregator who accordingly that helps us out.
Renish Bhuva
Okay. Okay. Thank you sir and best of luck.
Rupinder Singh
Thank you. Thank you.
operator
Thank you. The next question comes from the line of Mona Kan from Dollar Capital. Please go ahead.
Mona Kan
Hi, good morning and congratulations on a strong set of numbers. I have two clarifications. So firstly, what is the share of cash salary if at all we have any exposure there?
Rupinder Singh
I think the recent recent disbursement of cash salaries is quite minimal. But overall if you see among the salad profile what we have Today we have around 20% of salary profile around 8, 9% constituted as cash salad out of adversity. But as of now we are majorly focused on, you know, formal selling wherever we are going in a smaller markets also.
Ashish Gupta
Okay, so 8, 9% of the AUM.
Mona Kan
Okay.
Ashish Gupta
Of the 25% of salary.
Rupinder Singh
Yes, yes,
Mona Kan
okay, okay, got it. And secondly just on the co lending bit. So just wanted to understand this piece a little more. So it’s the 20 of the book that comes at your end. Is it really dilutive or is it at the same yield? And also on the OPEX but does the entire OPEX for the 100% of the loan from at the NDFC’s end or how is it sort of distributed.
Rupinder Singh
So in case of Colantine, you know we are doing like CLM2 wherein you know the customer is getting the same yield as we are doing it on it on our own book loans. But having said this, you know we are booking only 20% of the, of the loan portion wherein we are getting slightly higher interest income. So but you know, one side there is a higher, higher interest income but correspondingly on the expensive side we are also getting the expenses to the extent of 100% of the share. So that is matching at the path level.
So, so the path is similar whether we do the co lending or whether we do, whether we not do the. So you know, it’s one of the avenue of, of funding that we, you know, like that we do. So at this point of time co lending is at about 4% of our total AUM. So that’s how the position is.
Mona Kan
And so the effective yield, I, I understand it’s higher than the overall but the effective yield, is it higher than your 14 or so of yield on the book or is it lower?
Rupinder Singh
So ultimately so like we do only the lab loan, so this particular polanding product, so our average LAP yield is at about say like 15.5% and the lab yield to the polanding loan is also will be in the similar range of 15 to 15.5%.
Mona Kan
Got it. And just finally in your loan mix, what percentage of loans will have above 80, 80 kind of LTV.
Ashish Gupta
We don’t do 80% like above LTV. So there will not be any loan wherein the sanction LTV is above 80%.
Mona Kan
Okay, so it’s almost nil or so at your end. Yeah, got it. Thank you. Thank you so much.
operator
Thank you. The next question comes from the line of Chinmay Nema from Present Capital. Please go ahead.
Chinmay Nema
Good morning sir. I just wanted to follow up on the previous questions related to leverage. You guided that leverage could go up to four times in two years time. I just wanted to understand if there can be any regulatory challenges in increasing the leverage. And also from a long term perspective, how do you see leverage increasing or where do you see it peaking out as the AEM grows?
Ashish Gupta
So, so you know, there is no regulatory challenge on the leverage side. Regulation allows you to know, you know, maintain 15% CRR. That effectively means, you know, leverage upward of nine times as such. So but you know, when we speak to the credit rating agencies, the bankers and all that, they are comfortable with an average of 2.5x kind of number. So our brief thought process is that you know, once we start touching forex kind of leverage then we start working on like equilaterals and probably try to close the equity before touching the 5x kind of leverage.
Chinmay Nema
Thank you.
operator
Thank you. The next question comes from the line of Raghav Garg from Ambit Capital. Please go ahead.
Raghav Garg
Thanks again for the opportunity. Just two more questions. One is on attrition. How is it for you in FY225? Has it come down compared to last few years or is it still a problem and what are you doing to control it?
Rupinder Singh
So compared to last year there is a improvement in attrition but not to the our level of section. That is one thing. Attrition is still a challenge on that side, particularly for controlling the saturation. I think board has been standing up. They have just approved the next branch of stock options which is going to cover the large set of people. And I think to the extent which is earlier we were having around 25% of the employees above frontline as who are covered into that side. This will take to the next level basically. So this is.
This is something board had come come up and we’ll bring this as a traction for the people to run long with us basically. So we are just going to formalize it and once it is done we’ll also convey you around that.
Raghav Garg
Understood, thanks. And I’m also trying to understand your launch, expansion and hiring strategy. So when I look at FY24, right. These activities appear to have been developed through the year. In FY25 you have planted branch openings and hiring during the year in the first half. Can you share some thoughts on how you’ll execute in FY26 and why you believe it’s the better strategy?
Rupinder Singh
I think since it doesn’t execute it, I won’t say better strategy or not. I simply said that there’ll be a new experimentation that will come back to you basically. So we are just in a process. As it completes, we’ll definitely showcase ourselves how it works like as what also. But yet that what I can assure is we’ll be again opening around 40, 45 branches this year.
Raghav Garg
Just one more follow up to the previous question on attrition. So you said you you plan to give ESOPs at the branch level. Is it an effective retention you think? Because I would assume generally you know, salaries and something which is more tangible appeals more to the staff at the ground level. But happy to share your thoughts on this.
Rupinder Singh
So best practices in the industry with the stalwart of the industry leaders you talk about in the history. I think this has been a good tool for retention typically for the quality resources in the system. I think that worked well in the past. That has a history towards that basically. So yes, retention is something which you can’t ignore it and you can’t say simply because it can be built at one point of time. But these are the objectives, these are the tools which actually definitely pull the right set of people. The quality people who look for a long term and can align with the vision of company.
So this is an important piece, but this is one of the important tool what we feel confident about that should help us some way. But one side the board is also kind enough and other side this is basically look as we do the you know what you said feedback from the employees on the line. And we align, try to align together. I think let’s see how it turned on that piece. But we look optimist as of now.
Raghav Garg
Thank you.
operator
Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. Rupinder Singh for the closing remarks.
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 due course. Looking forward to hosting you all in the next quarter. If you have any further questions or required additional information, please feel free to reach out to us. Thank you so much and have a nice day.
operator
Thank you, sir. Ladies and gentlemen, on behalf of ICICI Securities Limited that concludes this conference. You may now disconnect your lines.