Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
India Shelter Finance Corporation Ltd (NSE: INDIASHLTR) Q4 2026 Earnings Call dated May. 04, 2026
Corporate Participants:
Rupinder Singh — MD & CEO
Ashish Gupta — Chief Financial Officer
Analysts:
Dhenish Bhua — Analyst
Kunal Shah — Analyst
Shubranshu Mishra — Analyst
Varun — Analyst
Meghna Luthra — Analyst
Mithai Lathiya — Analyst
Sonal Gandhi — Analyst
Darshan Deora — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to India Shelter Q4FY26 earnings conference call hosted by ICICI Securities Limited. As a reminder, all participant lines will be in the lesson 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 UpDater by pressing Star then 0 on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr.
Dhenish Bhua from ICICI Securities Ltd. Thank you. And over to you, sir.
Dhenish Bhua — Analyst
Hi. Thank you. Good morning everyone. Welcome to India Shelter Q4FY26 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. Pinder Singh, MDN CEO Visas Gupta, CFO Mr. Rahul Rajaran heading itself. I will now hand over the call to Rupindi 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. Good morning everyone. On behalf of the company, I extend a warm welcome to all of you. Thank you for joining us on our 10th earning call. Last 10 quarters have been satisfying in terms of our journey. Particularly before we discuss our quarterly and annually performance, let me briefly touch upon the broader macroeconomic environment, the operating landscape and some of the strategic priorities shaping our businesses. For the past year, the Indian economy has continued to demonstrate resilience despite an increasing uncertainty globally and domestic backlog.
Global markets have been impacted by geopolitical tensions due to the ongoing war, supply chain disruptions and slowing growth across developed economy. Ongoing geopolitical uncertainty and volatility in commodity markets have also created pressure on household spending returns and overall consumer sentiments. On the domestic side, rural and semi urban markets have faced tempering stress from uneven and abnormal monsoon patterns across hotel regions impacting agriculture, cash flows and informal income segments.
Recent LPG supply disruptions and related availability issues in some markets created short term operating challenges for households and small businesses. That said, India continues to remain one of the fastest growing major economies supported by strong domestic consumption, infrastructure led growth, formalization of credit and the long term structured demand for housing. At the broader level, several high frequency indicators continue to reflect the underlying strength of the economy. Like GST collection have remained robust consistently averaging around 1.7 to 1.8 lakh crores per month indicating sustained formalization and consumption momentum.
Digital payment quantitative scale rapidly with UPI transactions now exceeding 18 to 20 lakh crores monthly reflecting deepening financial inclusion and formalization across urban as well as semi urban markets. In addition, system credit growth remains healthy supported by demand across retail segment including housing finance. These trends provide a support for sustained economic activities and reinforce confidence in long term prospects. In such an environment the key differentiators remain prudent underwriting strong collections, granular market expansion and consistent focus on return ratios rather than growth alone.
I am pleased to share that we have delivered another year of strong and consistent performance with significant milestone in this financial year like we cost rupees 10,400 a year in this financial year we cost 300 plus branches in existing geographies. In this year’s consistent delivery of ROE above 17% annual profitability crossed 500 crore for the company Forex channel growth remains in a guided range with the EM growth growing at 29% year on year to R11044 crores in quarter four. Financial 26 for the first time our disbursement cost 1000 crores.
In this quarter we added six new branches and for the year we have added 41 branches in line with our branch expansion strategy of adding 40 to 45 branches each year. On asset quality metrics 30 plus has improved by 100bps quarter now quarter to 4% gross stage three improved by 29 dips quartermark quarter to 1.2% and net state fee improved further by 23 pips to 0.9% on profitability metrics. Bad for the quarter came at rupees one hundred and thirty eight crores registering a growth of 27% year on year and 11% quarter on quarter.
Return on equity further improved to 17.6% in this quarter. Our net worth now stands at rupees 3198 crores. On that note let me share the guidance for coming times. Branch addition of around 40 to 45 years 40 to 45 for the year maintaining the stretch of more than 6% in the medium pattern. Credit cost to remain between 40 to 50 pips. Loan growth of 25 to 30% for next three years with the clear goal of reaching rupees 30,000 crores AUM by 2030. Now I would like to hand over the call to Ashishi our CFO to take you through the financial metrics.
Over to you.
Ashish Gupta — Chief Financial Officer
Thanks Rupinderjeep. Good morning friends. Let me take you through key financial numbers. We have ended the FY26 with AUM of more than 11,000 crore year on year growth in EUM is 29%, quarter on quarter growth is 7%. Our portfolio yield is 14.8% down by 10 basis points year on year basis. Our disbursement yield in Q4 was 14.6%. Our bucket cost of fund is 8.2% while our marginal cost of fund in Q4 was 7.9%. Thus our margin at bucket level and incremental level are well above our guided level of 6%.
We had drawdown 378 crore from National Housing bank in Q4 at 7.5% and still we have a balance of more than 300 crore for drawdown in Q1. Our borrowing profile continue to be diversified with more than 30 counterparties. Share of NHP funding is stable at 15%. Average borrowing tenure is more than 8 years. Net interest income for quarter is up by 31% year on year. On the back of strong growth in our EUM and improvement in spreads coming to opet, our year on year growth in opex is 26% which is lower than the growth in total AUM.
Same is resulting in better cost ratios. OPEX to EM for the quarter and year is down by 20 basis point year on year. In line with our guidance, cost to income for the quarter and year is at 36% down by above 100 basis point year on year. On asset quality side stage three is at 1.2% down by 30 basis point quarter on quarter. ECR for stage three asset is stable at 25%. Our total ECL is 87 crore against the regulatory threshold of 47 crore. Considering overall macroeconomic environment, we have applied management overlay of additional 2% provision on staged budgets.
Same has impacted our credit cost by 5 crore in Q4. Including this, our credit cost for the quarter and year is 30 basis point and 50 basis point respectively. In line with our guidance for medium term, BTout for the year is down to 4.5% down by about 80 basis point year on year. Our focused data driven approach of customer retention is helping us to contain BTOUT even in a declining interest rate scenario. 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 33% in March 24 to about 8% this year.
We are committed to further bring this down to about 5% in FY27. On liquidity side we are comfortably placed with liquidity of more than 600 crore and under on sanction of 1400 crore. Our ALM is positive across all the buckets with this I conclude. And now we can open the floor for Q and A.
Questions and Answers:
Operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on their touchstone telephone. If you wish to remove yourself from the question queue you may press Star and two participants are requested to use handsets while asking a question. Please note in order to ensure that the management will be able to address questions from all the participants in the conference, kindly limit your questions to two per participant. Should you have a follow up question, please rejoin the queue.
Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Aditya Pal from MSA Capital Partners. Please go ahead.
Dhenish Bhua
Hello. Am I audible?
Operator
Yes, you are.
Dhenish Bhua
Thank you so much sir. Congratulations, great performance. Delivered whatever you all committed last quarter. Just wanted to know how are we looking at things on the ground because there’s so much news on shortages. Is it impacting credit behavior because of these negative news that is going on.
Rupinder Singh
So I think last year was a year which started with a war with India, Pakistan war and ended with a war again that was again in the Middle east which we all know about it and typically Middle east war has led to the shortage which we all are aware of. So keeping those things we observing the trends typically in quite a few markets where the restaurant commercial gas supply are disrupted which everyone knows around that piece now we see for the set of customers who are there instantly we don’t feel that there is any impact in terms of their behavior particularly.
But still we feel it’s a watchful situation basically because within a month you can’t find any particular pattern coming around that piece. So every there is a different set of news which are coming from globally and sentiments also keep you know coming up and down. Government push whatever they are trying to do, they are trying to do their bit, whatever they can do in certain circumstances. But as of now typically as we close the March month we didn’t find much of the difficulty in terms of customer.
But yes it’s a cautious environment this quarter is going to play give output in terms of that piece. So we are constantly in touch with the ground realities and seeing how the things can be taken care of in kind of any such situation that is there. Hopefully the way the news are coming up and down you might have today morning news also with some proposals are coming on the table. If things work out it can be wonderful for everyone around. But yes we have to keep our fingers crossed and have a Tap on the market instead.
If you ask me that there is some need or reaction or something happen in terms of delinquency I would say instantly today we don’t have answer for that. Please. Things looks okay till month of March.
Dhenish Bhua
All right. All right. And so this quarter there was a bit of softness in the D8 drawdown during the period and Q4 is typically heavy.
Rupinder Singh
So that is our internal strategy basically that we keep working upon depending upon situation. For us BA is majorly for our basically PPC requirement and I think we are holding at 63 64% of PPC that the price is our requirement. So this is we want to be in a range of 15 to 18% and we are maintaining that 15, 16% that is sufficient for us.
Dhenish Bhua
Okay, all right. No makes sense. Thank you so much and wishing you and the team all the very best. Great setup performance sir.
Operator
Thank you. The next question is from the line of Konal Shah from Citigroup. Please go ahead.
Kunal Shah
Yeah, thanks for taking the question. So firstly on the guidance so earlier we indicated 3035 odd percentage maybe over over the medium term. Now we are suggesting that it will be 25 to 3525 to 30 odd percent next year with again a goal to reach like 3 or 30 or thousand crores by 2030 which suggest like another like 28 29% over next three years. So in this what is the kind of disbursement growth that we are looking at how we should see it stacking up. In the last two quarters it’s been at 11 odd percent.
So now what’s the outlook on that?
Rupinder Singh
So the reason for what we are finding the environment to be little cautionary. We don’t want to play around just simply into one more. That is a disbursement. This is a business which is more on a balance side. You have to be optimal on the on aspects basically. But yes we know these times are quite temporary. That way our teams, our energy synergies are lying very well. In fact our logins are increasing day by day. But our business rule engine, the credit engine that has to function that is entitled up purposely keeping in mind all the aspects which is happening there.
So we’ve been a little caution in that way. That is why we are talking about in a range bound of 25 to 30 we are not saying it’s going to be 25. We only will look forward that it should be touching around whatever around 30% around that piece. So that is our thought process particularly. But seeing the environment we don’t want to be something in ignoring those aspects. That is the way having said so, as we progress in our journey. So as the time came back in the conducive form, I think we should pick up our branch expansion model that continue to remain that piece.
Our objective of getting a productivity that has to be remain continuous in that piece and our focus into these two products that continue to remain that piece. So we are positive what in long run that we will be able to maintain this 30,000 growth. So even if we maintain this 27, 28% of growth for next three, four years, we’ll be able to achieve the 30,000 crore. Just to give an idea around that side. Yeah,
Kunal Shah
Yeah, almost. Yeah. 27 to 28 odd percent CAGR suggest that we can reach 30 or 1000 crores.
Rupinder Singh
And that is exactly we, you know, two years back we came with a strategy where you want to be 2030 that looks very well in line even in today’s capital environment also. And we are quite confident about that.
Kunal Shah
Yeah. So in terms of rejection rates, if you can highlight how much could be the in terms of rejection, how much it would have gone maybe gone up compared to that of maybe login. So overall maybe disbursements to login ratio, how it would have changed that would also be helpful. And overall any, any particular number of disbursement growth that we are targeting or maybe in the medium term next 12 to 24 months.
Rupinder Singh
Absolutely. So if you talk about login to sanction ratio during normal days it used to be around 55 58%. That should be the range around depends upon seasonality, quarter and how the business is prospecting in that form. Today that is less than 50%. It has even bottomed down to the level of 40 to 43%. But that’s all what the BRE works on. Give the right input instead of having any bias towards the human understanding. So that is the approach which we rely on. So irrespective those lock ins are going up, we curtail that piece to be little conservative on that side.
So that 43, 45% which has end month of this quarter particularly has slightly inched up to 45 47%. This is the internal piece what we got it. But in a normal circumstances it should be around 55%. So I think even if we are able to disburse say 20% of growth in terms of disbursement here, we’ll be able to achieve the numbers what we are talking about in terms of 25, 28% growth.
Kunal Shah
Got it. Perfect. And other question is on coal lending. So I believe because of the change in the regulations we have hardly seen any coal lending. But how do we pursue it now? When do we seed coming back? How long would it take? Because again like coal ending growth was maybe that’s something which we were targeting to scale it up. So if you can just provide the outlook on that. Yeah,
Rupinder Singh
From beginning we never had a very clear cut focus on a co lending Particularly in two two and a half years of our business around co lending we created a book size of around 450, 460 crore of overall piece what we have it which is approximately 4% of business. And the purpose was basically just to try and test a new set of product what we can do that piece and we felt that this is also with changing time we should be very well adapted to those adaptable to that piece. But in typical this scenario what we see that between CLM1 CLM2 model we adopted CLM2 to try that piece for CLM1.
I think we have to wait some more time. If you ask me exact timelines it will be difficult at this juncture but we are closely discussing with few of the institution banks around that side how it can be taken to the next level. In our plan, in our budget we have not included any of the numbers which is around the core landing. It is again going to be a testing piece for some time before we conclude to the real directional business for us particularly basically for us it is not something which we have to worry about at all.
Kunal Shah
Got it. Perfect. Yeah, thanks. Thanks a lot.
Operator
Thank you. The next question is from the line of Shubranchu Mishra from Philip Capital. Please go ahead. Mr. Mishra, your line is unmuted. Please proceed.
Shubranshu Mishra
Hi, good morning. Thank you for the opportunity. So the first question is what are the split split of the disbursement in FY26 between LAP and home loans and how do we see it growing in 27 each if we can speak about each of the parts? Second is that when I look at the lap proportion it’s gone up from say 43 to 44% versus home loans. Although the home loans which is on book is much higher. I think that is more to do with the pbc. However, how are we looking at the demand and if you can split this into two or three parts.
First is the policy help from CLSS2. Second is the actual demand, the actual down payment capability of the demographics of the customers that we cater to and the supply from various developers if they still find enough margins to build these Kind of affordable houses. Thanks.
Rupinder Singh
Yeah, thank you Shubranshuji. For our business we first and foremost see our PPC requirement and as we met fully PPC requirements then we also realized that we have to maintain other optics which is including your yield, your output, your productivity. So 56, 57% of 1% here there is nothing something which we can be. We can read between the lines that there’s some sudden change which has come up around that piece. So for us the basic principle criteria remains same quite important and that is why we our focus remains particularly first thing that has to work on.
So as in earlier question someone asked why you reduced the da that has been the case also and particularly here if it is 57, 56% it doesn’t matter in much of the way till the time we are maintaining all the optics because same market, same same way of sourcing it almost same kind of customer will not worry in that terms. And it doesn’t give an idea that there’s some outtrend in terms of a housing uptake or housing coming down particularly that is not the case at all. Our prerogative is largely in a self construction and purchase cases which we focus on.
We don’t have a tie with the builders in terms of that affordable segment. Builders are something you know if they are not supplying in market. So our demand is going to affect for me the markets of Tier 3, Tier 4 are extremely important with the construction, self construction, sales, purchase that happens. That is my major portfolio. In fact most of the portfolio went up on the housing per se. So that still is going as per the normal standards. That what we see in our last few years. Obviously we have taken up the norms.
That may be the other aspect but we don’t find the things around that type reason example if you see the login ratio, the login numbers that is compared to pick up basically otherwise there should be a little dried up on that side and those are the factors to keep in mind. So I don’t think that because of those factors that builder is not supplying or something that way that that is not the case in our kind of requirement. Yes, I heard. Keep looking for hearing those things. Particularly that because of builder supplier there may be some disruption in some of the markets but we are not available to those large markets of Tier 1 or Tier 2 with a Tire for the builder particularly we are very well segregated focused into those granule markets where self construction and purchase cases are dominating it.
Shubranshu Mishra
Right. Did you give the split of the disbursement for lab and and HL in 26 and how do we see each portion growing in 27?
Rupinder Singh
In fact in HL percentage has slightly gone up because in quarter two, quarter three we were a little more focused on the actual keeping in mind again the BBC fees and going forward we continue to feel that there should not be much of difference between lap and natural in financial year 27 also that’s going to remain the same ratio.
Shubranshu Mishra
What is the ratio is what I’m trying to ask. That’s possibly not in the ppt. Hence I’m asking what is the ratio between LAP and HL disbursement?
Rupinder Singh
It’s 56, 57% for HL and remaining is lab. That is going to be the same range of.
Shubranshu Mishra
Understood. Thank you so much, this was very helpful and best of luck next few quarters.
Rupinder Singh
Thank you so much.
Operator
Thank you. The next question is from the line of Mayank Mystery from Anti Stock Broking. Please go ahead.
Dhenish Bhua
Yeah, hi sir. Congrats on a good quarter. Sir, I have two questions. First of all, as you already guided for 40 to 45 branches each year and your opex to AUM currently lies at around 3.9 to 4%. So what is the normal run rate we can expect and what are the efforts you are currently putting in? Because across the peers it seems like a higher number. And secondly on the asset quality front. Yeah, so the outcome during the quarter was significantly better. So in last quarter we had led few slippages to take surprise reaction on few of the accounts.
So this quarter seems like good improvement over that and even with the better credit cost this time. So where is this improvement come from? Has the recoveries come organically from these accounts once they into stage three or any other, you know, or maybe some write off from there. So yeah, so these are my two questions. Thanks.
Rupinder Singh
So there are two set of questions you asked me. First is office to AUM particularly. So we feel there is always a scope of improvement and last four to five years we have the strength improving year on year. So the first prerogative which everyone was asking when you are going to bring back less than 4% that this year we are tracking that piece. What is our audit every year it should come down by 15 to 20bps and things look very well on track. So earlier the 40, 45 branches we were opening on a smaller base.
Now on the base of 307 branches which we exist today, the 45 is hardly 13, 14% which is to be say 18, 20% a few years back basically. So this is one of the aspect which is going to support in our journey. Typically on this side, yes, automatically productivity also picks up as your AEM is quickly going on. And I believe that getting those 15 to 20 bps reduction in opex to AEM is not a trivial task which we have to think twice around at least that’s all bound to happen. Particularly second question which was more on a credit costs largely and now the GNP has now come down.
So I think especially when your NPA level goes up at certain level which in our case which was in quarter two particularly your Karpathi action starts coming into picture and that is a some time of six to eight months and as that reach that level then you will realize that your reductions start happening. That is a good part beauty of this product which is a mortgage product and housing finance product Particularly the tool which has been given provided by the ecosystem the government that helps very well into that side.
So most of these resolutions that is purely on basis of that piece in our organic form.
Dhenish Bhua
Okay. So sir, and one more question. I think it was partially answered that the disbursements growth rate of you know, what is disbursement growth rate that we expect. But if we even consider, you know, around 15 to 20% of disbursement growth then if repayment rate will move up sign will have to go down significantly. Right. So how are you planning to, you know, grow at 5 to 7% on a sequential basis that you guide quarterly and I mean on the disbursements. I would just like to know your strategy on how do you plan to retain your customers and lower your BT out so that your prepayment rate goes down.
Rupinder Singh
Thankfully, our BT out is reducing year on year. That’s been a trend. As in early commentary our CFO mentioned that BTout has been the lowest among last 3, 4 years. So our system, what we have created on this set of customers that’s working well for us and that’s going to continue work in that direction in particular time when situation is always alarming and cautionary which we can see across market. You always find for everyone BT is also BTout is always normally on a lower side. Basically that is also the case because every business is every company they try to be a little focused more on the non BT cases.
This has been a trend what we have observed basically. But. But having said so, the system that we have created we feel that effective enough to curtail the customer in terms of engaging and ensuring that customer remains with us as far as possible. That is one piece in terms of disbursement I feel that this year Even we cross 20% of disbursement number which we are quite confident of and will do anyways. Beyond that piece we’ll be easily achieving 27, 28% of AGM growth. And our thought is to continuously, you know, ensure that numbers are very well around that piece.
And we are already on that piece we have delivered in the past. And there’s not something aberration on that piece. Obviously costly environment you have to keep in mind because the Danish business.
Dhenish Bhua
Okay sir, thanks. That answers my question and all the best for the coming year.
Rupinder Singh
Thank you.
Operator
Thank you. The next question is from the line of Varun Palacharala from Kotech Securities. Please go ahead.
Varun
Hi sir. Congrats on a good set of numbers. Just had two questions. First one was on the long term growth guidance that you have given. So are you seeing any?
Operator
I’m sorry to interrupt. Varun, your voice is muffled. We are losing your voice. Can you use your handset mode please?
Varun
Is this better?
Operator
Yeah. Please proceed. Thank you.
Varun
I was just asking regarding the lockdown growth credential. So that 30,000 crore number, it’s almost higher than what the largest affordable housing companies today stand at. So are we finding any pockets of geographies where there’s lower competition, where we are expecting to grow faster or is there something like. Other than the branch expansion, 40, 50 branches which have already been doing something which drives this growth like shift in ticket sizes. Anything else which can explain this? Another thing was regarding margins.
So we’ve seen I think a slight expansion of margins. Largely it’s cost of borrowings may not explain the full extent of it. Is there any difference in yields as well that you’re seeing that
Rupinder Singh
So recipe around in terms of your for loop market, how you have to grow up. It cannot be one single direction. Particularly Varunji like in terms of opening branches or meeting the competition. We exist into the same market where the rest of the folks are doing it. Our largest market continue to remain Rajasthan. And they’re the most of a competition everyone knows relies in terms of affordable housing. And we are very diligently strongly maintaining our numbers around that piece. Thankfully our distribution is spread across 15 states at this scale, at this level, very few companies have experimented to go into those markets at all.
With time the maturity is coming that to density is coming in terms of underwriting as we keep, you know creating our own mintage in these kind of states. So today if there is some kind of disruption. For example if Karnataka is reception in south then definitely AP Telangana and Tamil Nadu is going to support same way if there is some error which happens in some markets like MPs that Rajasthan UP and Gujarat is there to support. So that way distribution is very well spread and that’s firing well for us basically.
So that’s not the case. Additionally the factors which are going to support one is definitely branch opening of 40, 45 branches. Secondly, the protective drive on which we want to focus on per case, per employee number of cases that has to keep improving on that. The focus around that piece in the same set of geographies do exist. Thirdly, we started with our digital journey say year back that is also showing a good positive returns in terms of activities. So year or year and a half back we were disbursing those numbers in a single digit.
Today we are disbursing some 20 to 30 crores out of digital alone. Basically in India shelter we always believe into this technology and digital piece. I think this is something which is again going to fire for so all these three, four items which you together that is a right recipe to come out with the output in terms of disbursement. Thankfully the team stands of 4,500 with a strong collection supported on that piece network in a market which is distributed in terms of 307 branches which is going to reach by 2030 up to 500 branches eventually.
And that kind of technology process improvement has been done and we wanted to do in that piece these all things are going to help in improving the disbursement and the journey going forward. So strategy is very well laid down with all the aspects very clearly broken between the three four items which is going to help us out.
Operator
Varun, does that answer your question?
Varun
Yeah, but on the margins like if you get the reported margin number it’s kind of expanded from 9.1 to 9.5 and cost of borrowings is up is down maybe about 10 to 15 basis points. So the other delta, where is it coming from?
Rupinder Singh
So our first probability on the field if you talk about is always to maintain the spread which is beyond 6%. Thankfully this isn’t a great year in terms of your cost of funding borrowing because of market slashing down in terms of cost and we get a benefit around that piece of but given any circumstances we are committed to maintain the 6% of spread. This further percolated to decent margins that we look into that and continue to maintain the journey for next few years. Obviously this cut into rates that help us out to maintain those margins which you’re talking about in the last
Ashish Gupta
And varun, just to add here in Q4, generally lot of NP resolution also happened. So, you know, while doing the resolution of these npa, we end up recovering a portion of interest which we, you know, which we had not accrued earlier. So this is, this is also, you know, contributing to increase in the NIM growth from 9% to 9.5%. Hope this explained. Yeah, sure. Thanks.
Operator
Thank you. The next question is from the line of Meghna Luthra some inquired equities. Please go ahead.
Meghna Luthra
Yeah, hi. Thank you sir, for the opportunity. Your maturation is on a good set of numbers. So while you’ve indicated that we expect Fed to remain stable and growth to remain strong, there are a lot of conversations around the sharp rise in competition. And specifically is there any state or any pockets that we are seeing a sharp rise in competition? And can you give some color which. Which can impact our yield or growth? And which kind of lenders are these? Private banks, CSE banks, finance companies, or nbfc?
Rupinder Singh
Yeah, thank you. Every market is being, you know, plundered by all kind of competition. Not now, but from beginning, basically. So. But the serious players remain a serious. If you see irrespective competition going and coming and going back physically, the number of set of players who are consistent and continuous, at least that remain there from last five, seven, eight years at least, basically. So any new player which is entering, they have their own hurdles around that piece to enter that market.
There may be a small temporary jerk which someone may get because of the other. But otherwise I don’t think this kind of business, which is considered to be very poor but very complex in that terms, has to get impact because of some competition. We are operating in all the competitive markets which is considered to be competitive not now, but from last many years particularly and performance coming around, that is not a point of concern. It is only your ability to execute in those markets that matters.
And I think not only us, but any serious player, they know their way how to play around in those markets in terms of competition also. So it is not a point of concern at all. Every market, every region have a certain set of dominating players here and there. But that is always which is available and that is business expertise built with the time. So it’s not a point of worry. That is only I can assure you.
Meghna Luthra
Thank you so much. That’s it.
Operator
Thank you. The next question is from the line of Mithin Latia from Fractal Capital Investment. Please go ahead.
Mithai Lathiya
Thank you, sir. So we’ve grown almost 3.5x in the last four years. And yet our concentration of Rajasthan continues to be 30 plus percent. Is that a very conscious thing or how should one really think about it going forward?
Rupinder Singh
So going forward Rajasthan concentration is going to ease down by virtue of other geographies. Their delivery mechanism going to go up. Basically though Rajasthan continue remain the flagship zone for us and their dispersal continue to grow. But thankfully the trend what we are seeing in the other geographies that is giving little more in terms of a percentage growth, higher growth. So today Rajasthan which contributes at 30% will be say five years down the line, maybe 25, 26% that what we look forward and other states like for certain states in south or up you will find a better trends compared to in terms of percentage of AEM going up.
Particularly in that case. Basically this is. I look if you talk about the long term aspects in terms of AEM ratios between the various stages
Mithai Lathiya
And very commendable performance on the reduction in the bto. Do you want to call out any specific measures that you might have taken to achieve that?
Rupinder Singh
I think the strategy which team is able to put all together and engage in the customer. Today we have a strong digital presence. Connect with the customer and continue to engage using their understanding whether they are looking out for any fresh loan or BP loan or some weight deduction. That engagement is helping us out. The application, the app, customer app which have now almost all the customers which is on our board are available on this application. The engagement, the notifications as well as centralized team which is very well working with engaging these customers.
That is helping us out into this vision.
Varun
Sure sir. Thank you. That was a point.
Operator
Thank you. Next question is from the line of Prithviraj Patil from Investech. Please go ahead.
Varun
Mr. Patel. Thanks for the opportunity. So yeah, sorry.
Operator
Thank you. Please proceed.
Varun
Yeah, so thanks for the opportunity. So I just had one question on
Dhenish Bhua
The PBC level that we’re operating on. Because what I see is the home loan share is
Rupinder Singh
Already reached around dropped to around 57. So I
Dhenish Bhua
Just want to know what’s the PBC level there
Ashish Gupta
On the PBC front. You know we are comfortably placed at about 64% though we have a. You know at a EUM level. Our own blown issue is close to 56. But we have a strategy to you know doing a lot of direct assignment transaction. We were you know we were having about 5% of the book in form of co lending which is primarily pertained to left only. So all these you know measures to take lap out book helping us to maintain a you know Fairly, fairly high PBC which is like you know regulatory threshold is 60% and we are currently at 64%.
Shubranshu Mishra
Okay, thank you sir.
Operator
Thank you. The next question is from the line of Aditya Pal from MSA Capital Partners. Please go ahead.
Dhenish Bhua
Hello. Thank you so much for the follow up. So two questions. One is a bookkeeping one and one is a more strategic question. So you highlighted that you want to go in the vicinity of 25 to 30%. Let’s, let’s work with a 27, 28 odd percent and today we are sitting at roughly 55 odd percent of capital adequacy and we are doing, doing a return on equity of 18, 17, 17 and a half percent. And because we are in the secured asset class the the total assets risk assets is lower. So how do you think in terms of consuming this capital of the next day till FY30 your 30,000 per.
Rupinder Singh
So today leverage is 3 times. I think we would like to go to the level of leavage around four, four and a half times basically before thinking upon what to take a next course on that piece. So journey remains in that direction particularly and our objective is today this times may be looking little conservative in terms of the cost cautionary environment but as the things comes in a better form we have to take it up very fast in this set that is always our thought. So I think as we reach around four and a half times in terms of leverage we’ll be then thinking about how to take it to the next level whether to raise the funds UIP or something that will work around that side.
Dhenish Bhua
And sir, this quarter Q4 or I would say even for that other, the entirety of FY26 we’ve seen a good growth in the 25 plus lakh bucket and I would also say 15 to 25 lakh bucket in terms of ticket size. But yet our average ticket size that we show in our presentation that has not budged above 10 lakhs over the last say four or five quarters.
Rupinder Singh
So we were not doing at all earlier these above 25 lakhs and all we try to test these markets and that’s working decently well because you see the growth on a very very low base, almost negligible base, negligible base and that’s why look a growth around that piece. But if you see on these particular ticket size we have done a handful of cases particularly which we the initial was fully stocked around that side. So our large aem, our large disbursement still continue to remain the ticket size that we are into basically so there may be a slight improvement of some 1015bps in terms of average output.
In terms of ATS what you’re talking about.
Dhenish Bhua
That’s what I’m saying that the ATS should start looking closer to 10.2, 10.5 types
Rupinder Singh
Probably this is something which will slightly go up in a coming days basically maybe coming quarters not instantly now basically. So if they’ll be maybe consistent in these sum of volume we’re talking about 25 which we have an intent to do basically because that giving us decent confidence and decent output in that terms if that happens maintaining all the optics. This is slightly inch up. So what you’re showing today that may be and a half in say two, three, four quarters beyond.
Dhenish Bhua
Understood, Understood. No, this. This was about it. This was about it. Thank you so much.
Operator
Thank you. The next question is from the line of Satyam Kumar from JM Group. Please go ahead.
Dhenish Bhua
Hi, good morning everyone.
Operator
I’m sorry Mr. Kumar, we are not able to hear you.
Dhenish Bhua
Hello, Satyam
Operator
Kumar. Yes, yes you are audible now. Please proceed. Thank you. I
Dhenish Bhua
Have couple of questions. First is a bookkeeping question. Just wanted to understand like what percentage of your lab book is like backed by SORP kind of collateral number one. And number two just wanted to understand like as you guided an AUM growth of around 25 to 30% going forward and this movement you said it will be anywhere around 20%. So just wanted to understand how this gap will be bridged like what will be the btout ratio or closers and how these numbers have historically been. So if you can throw some color on it.
Rupinder Singh
So lab we have almost 98% of SORP self occupied residential property where we do the lab. And this is improving as we progress in time. Basically that is all about the lab book. 25 to 30% the growth on AM that we expect and in current scenario we expect 20% and beyond in terms of the disbursement. But that doesn’t mean this 20% is going to remain 20% forever. That is a lot of scope of improvement even in future that we are quite optimist about seeing our past trend as well as the same kind of scenarios that we are building in terms of digital productivity and branch opening.
Basically. So this is a cost free environment that we are talking little conservative on that piece. But as the things progress then we have to open it up. Because 30,000 crore is AEM target. Even if you run it at 26, 27% of EM growth will be able to achieve that piece. But our thought Is this personal growth which is running around 20% of voter that we look forward should automatically fix up as the time progress in terms of 25 and beyond basically.
Dhenish Bhua
Hello? Cracking can you please repeat?
Shubranshu Mishra
Am I audible?
Dhenish Bhua
Yes, but your voice is between s.
Operator
I’m sorry, we are not able to hear you.
Dhenish Bhua
Okay, still I’m not audible.
Operator
Yeah, right now we can hear you. Please proceed. Sure,
Dhenish Bhua
Sure. So just a follow up like just for FY27 if I look at Just wanted to understand the gap between disbursement and AM growth just for FY27 if we look say for example our book is growing around 25, 27, 28 whatever it is and disorient is growing at 20 odd percent. So how this gap between disbursement and aim growth will be bridged like new loans is growing at 20% how book will grow at 27 just wanted to understand from you how this will be based basically.
Rupinder Singh
So first and foremost the BP out percentage which used to be higher earlier that is coming on thanks to the emujf traded number one that worked on that piece and over the mechanism which has worked around that piece and particularly when you are talking about 20% of disbursement growth anything above 20% on that piece is going to fetch you the positive in that particularly but this is something what we usually finding out on that piece. So that number works on Excel, we can give it to you.
Dhenish Bhua
Thanks.
Operator
Thank you. The next question is from the line of Sonal Gandhi from Asian Market Securities. Please go ahead.
Sonal Gandhi
Hey, thanks for the opportunity. Just two questions. I think the viewpoint has been asked. Maybe you know, if you could just help with those numbers like you know, What is the prepayment and what is the normal. I’m sorry,
Dhenish Bhua
Can
Operator
You please use your handset mode?
Sonal Gandhi
Is my voice better now? Hello? Let me try, otherwise I’ll take it offline. So just wanted to check, you know, your repayment rates, you know, what is it that you’re including as ptout normal turnout and prepayments and second is, you know, if you could just help us a bit, you know what population of your book is on fixed ph currently? What is semi variable and variable use? And is it that because of the fixed book, you know we are seeing lower btouts or in general the environment know has become a more conducive
Rupinder Singh
So if you talk about today we have around 13 14% of book which is on floating rest mean into fixed or semi fixed kind of product where the fixation is for three years technically and that book is again now around 10 12% which means approximately 70% 65 to 70% book that quantity remain on the fixed particularly and that is again one of the good factors which support us in terms of BT out. Thankfully conservative environment also supports you. Typically when the environment is very cautionary BTO trans normally goes down basically.
So these are the two factors definitely which is helping us out. And third important aspect engagement of customer which we put a unit around a year back that is also giving a good output in terms of cutting in customer.
Sonal Gandhi
Got it. As for only BP out or else I can visit offline.
Operator
Mr. Onandi, can you repeat your question please
Sonal Gandhi
After the unit what would be proportion of BP out normal runoff and prepayments that you’re building in a new
Ashish Gupta
So out of the total prepayment 2/3 you know goes in the form of BT out and rest is own fund prepayment. And you know answering to your previous question that you know whether it is coming from variable rate book or fixed rate book, you know variable rate book is hardly about two and a half three year old. So it is you know too early to do that kind of analysis. So once the book will start seasoning and it will be you know significant proportion of the total EU will be able to do that analysis at that point of time.
Operator
Thank you. The next question is from the line of Darshan Deora from Invest Group. Please go ahead.
Darshan Deora
Yeah, thank you for the opportunity. Just wanted to recheck what the management said. So to hit this 30,000 crore target we will be sort of targeting a disbursement of disbursement growth of about 20%. Is that what I heard?
Rupinder Singh
That is for the first year particularly. This can’t be the sustainable for long term. We have to definitely pull it up. Basically when someone asks me how you want to deal with this cautionary environment and this is something that we want to maintain as of now but as time progress that has to go up.
Darshan Deora
So are we saying that Q4FY26 was. Was sort of the bottom in terms of the disbursement growth? I think this quarter it was around 11% and so
Rupinder Singh
I am talking about this year we have to show the disbursement beyond 20% which we are positive about. Basically that is what I’m saying is right. If you start we. Please don’t allow me to compare between Q4 and how the Q1 has to work on. Basically that gives you some kind of forward looking. But yes this is something what you. We are looking in terms of long term.
Darshan Deora
Got it. Got It. Thank you. And are you seeing the environment change enough? Because I believe that some part of the disbursement growth was curtailed intentionally in, you know, because of the macro environment. So have you seen the environment change enough? Yeah,
Rupinder Singh
Absolutely. And that’s what we are watching it very clearly and we have prepared very well. As the environment changes, we should be ready to take it off to the next level.
Darshan Deora
Okay, appreciate that. Thank you. And all the best.
Operator
Thank you. The next question is from the line of Kunal Shah from Citigroup. Please go ahead.
Kunal Shah
Yeah, thanks for the follow up. Just wanted to reconfirm, you indicated that the increase in stage two, which is there, and the entire provisioning that is more of a management overlay buffer of 5 odd crores, maybe the CL provisioning in stage 2 is moving up from 10 to 15 odd crores. That’s primarily the management overlay.
Ashish Gupta
Yes. You know, considering the overall macro, macro environment. And we have, you know, also gone through the RBA circular which says that, you know, there is, there should be minimum 1.5% for home loan and 2.5% for lab loan should be the minimum base threshold for ecl. And considering the fact that we are, you know, primarily cutting to self employed people, tier 2, tier 3 job geographies, it is good to keep a good buffer on stage two assets.
Kunal Shah
Okay, so this overlay was only in stage two.
Ashish Gupta
Yes, yes.
Kunal Shah
Okay. And do we plan to create further overlay or we are maybe given that now it’s almost like more than 5% coverage on this. So would there be some increase or catch up in the overlay getting into FY27 and your guidance of 40 to 50 odd basis points, does it take into account the overlay buffer as well?
Ashish Gupta
So frankly, you know, we have reached to a stage wherein now we have, we were waiting for the RBI guidelines on ECLs, so we have got those guidelines, though they are not applicable to us. And we have created a briefly 2x buffer of what the regulatory threshold. And we have always, you know, kept that kind of threshold historically. So now we have built those buffer and, and in case, in case future, you know, like allow us a low credit, low credit cost regime is there probably we may further take up our buffers, but frankly at this point of time we don’t have any plans to, you know, further stack up the buffers.
Kunal Shah
Sure, sure. And just one more clarification both on the asset and on the liability side in terms of the mix of fixed and floating, so last quarter I think you indicated 84% of the borrowing was floating this time. I think I heard maybe you mentioned like fixed rate has come down to 8 odd percent and you plan to bring it down to 5 odd percent. Was it that related to the borrowing? And last time you indicated like almost 85% of the AUM was fixed. I think this time you commented almost like 65 to 70 odd percent is fixed.
So if you can just clarify in terms of both on the asset and on the liability side, how much is the fixed versus floating? Yeah,
Ashish Gupta
Sure. Let me you know, reiterate the how the overall stacked up in terms of interest rate reset. So about 15% of the AUM is there which is variable rate. Then about 37% of the EUM is there which is where in the interest rate is like semi variable structure, fixed for initial three years and variable subsequently. Then about 48% of the book is there which is a fixed rate book altogether. So if you look at how we are funding this fixed rate book of 48%. So out of this 48 about 25% is getting funded through funded through our equity and remaining about 17% is getting funded through our fixed rate borrowings that we have on our book.
Then remaining is percentage is at about 7.8percent which is, you know, fixed rate book which is funded by variable rate liabilities.
Kunal Shah
Okay, perfect. Yeah. This is helpful. Yeah, thank you.
Operator
Thank you. That was the last question for today. I would now like to hand the conference over to the management for 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 require additional information, please feel free to reach us out. Thank you so much and have a great day. Thank you.
Operator
Thank you very much on behalf of ICICI securities limited that concludes this conference. Thank you all for joining us and you may now disconnect your line.