IndoStar Capital Finance Ltd (NSE: INDOSTAR) Q1 2026 Earnings Call dated Aug. 14, 2025
Corporate Participants:
Unidentified Speaker
Randhir Singh — Managing Director and Executive Vice Chairman
Jayesh Jain — Chief Financial Officer
Analysts:
Unidentified Participant
Aryan Sumra — Analyst
Vivek Ramakrishna — Analyst
Hitesh Agarwal — Analyst
Shubhranshu Mishra — Analyst
Rahul Kumar — Analyst
Raj Patel — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to IndoStar Capital Finance Limited Q1FY26 earnings conference call hosted by MUFG in Time India Private Limited. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Aryan Sumra from MUFG In Time India Private Limited. Thank you.
And over to you sir.
Aryan Sumra — Analyst
Thank you. Good afternoon ladies and gentlemen. I welcome you all to the Q1 and FY26 earnings conference call for IndoStar Capital Finance Limited to discuss this quarter’s performance. We have from the Management Mr. Ander Singh, Executive Vice Chairman and Managing Director and Mr. Jayesh Jain, Chief Financial Officer. Before we proceed with the call, I would like to mention that some of the statements made in today’s call may be forward looking and may involve the risk and uncertainties. For more details kindly refer to the investor presentation and other filings that can be found on the company’s website.
Without further ado, I would like to hand the call over to the management for their opening remarks and then we’ll open the floor for Q and A. Thank you. And over to you sir.
Randhir Singh — Managing Director and Executive Vice Chairman
Thanks Aryan. Good afternoon everyone. I’m Randhir Singh, M.D. Of IndoStar Capital Finance. I welcome you all to the Q1 FY26 earnings conference call for IndoStar Capital Finance Limited. I truly appreciate your continued support and engagement as the company moves forward on its value creation journey. I trust you had the opportunity to review the company’s financial results and investor presentation which are available on its website. And the stock exchanges. Joining me today is my colleague Mr. Jain, Chief Financial Officer of the company. Let me start with an important update. On June 24th the company successfully completed all the conditions required for the divestiture of its 100% subsidiary Nivas Housing Finance Private Limited. Sale proceeds were received on July 17, 2025. Following completion, the company has derecognized its investment in Niva’s housing finance and recognized a one time gain of 1,176 crores in Q1 which is 1,007 crores on a post tax basis. Indostar now operates as a focused stand alone in BFC with two core segments of vehicle finance and micro loans against property. This strategic transition marks a new chapter in our value creation journey enabling sharper execution, deeper market penetration and agile capital allocation across its core lending businesses.
Going forward, indoor SaaS, investor communication and performance updates will pertain exclusively to standalone business. Let me begin with a quick look at the macroeconomic backdrop. India’s economy continues to demonstrate resilience. FY25 GDP growth came in at 6.5% and Crystal projects a similar trajectory for FY26. Inflation is easing, the monsoon outlook is normal and monetary policy remains supportive. The RBA has delivered a cumulative 100 basis points of reported cuts this calendar year, bringing the rate down to 5.5%. These cuts are expected to transfer to borrowers over the next few quarters supporting consumption and credit demand. The outlook in the commercial vehicle segment is improving after two muted years.
New vehicle sales are expected to grow by 5% this fiscal supported by easing interest rates and infrastructure momentum. This is attributed to replacement demand, fleet modernization and anticipated repo rate transmission. Used CV demand remains robust aided by the scrappage policy and elevated cost of new vehicles. EMIs for used CVs continue to be 40 to 50% lower making them attractive for small fleet operators and first time buyers. CRISIL notes that asset economics remain favorable in semi urban freight corridor where utilization is high and cost sensitivity is critical. In microlab, demand remains resilient, especially in same urban rural pockets where informal income streams dominate.
Kristel highlights that the segment is benefiting from improved borrower awareness, digitized sourcing and deeper digital distribution networks. Moving on to the stand alone business performance we had previously highlighted during our Q4 running calls about the proactive credit policy adjustment undertaken in response to collection softness observed both within our own portfolio and across peer industries. These measures was aimed at strengthening asset quality and ensuring tighter underwriting discipline in a challenging operating environment. This policy tightening and usual softness in Q1 has led to a short term moderation in our disbursement volumes. Loans originated under the revised policy framework are showing Significantly lower delinquency rates.
30 plus DPDs are tracking at nearly half the level seen for corresponding period in the last year. To offset the volume impact of policy tightening and leverage our continuously improving cost of funds, we are targeting to onboard higher percentage of higher credit quality customers and have introduced pricing flexibility and revised incentive plans for sales team and for our channel partners. These steps are expected to improve disbursement traction in the coming quarters while maintaining asset quality and profitability discipline. The company continues to strengthen its boring profile to active treasury management and strong lender relationships. As a result, the incremental cost of funds in Q1FY26 was lower by 60 basis points compared to Q1FY25.
Further, during the quarter the company replaced high cost loans of approximately 870 crores of legacy long term debt which had an average cost of about 12% with fresh borrowings at about 9.5% resulting in annual interest saving of about 21 crores. We expect to replace another 1480 crores of higher cost debt over the next three quarters. The company is making steady progress in making its branches multi product. After successfully launching Microlab in Tamil Nadu last year, we now plan to introduce the product in Andhra Pradesh. These new micrelab offerings will be co located within existing vehicle finance branches to maximize reach and efficiency.
To support this rollout, we have extended offers to senior professionals with relevant experience in Microlab across micro markets in AP, the initial launch will cover 16 branches. The model remains same. Loans typically will have average ticket size of about 6 lakhs, loan to value below 40%, tenants ranging from 5 to 7 years, yields of approximately 22% self occupied residential property as a collateral in 95% plus cases and 100% origination. Through our in house team in quarter one, we revised our technical right of policy to to 200 days past due. This change reflects a more conservative approach to asset recognition.
Based on this framework, the Company did a technical write off of 161 crore of loans that had crossed the 210dpd threshold. As in the past, the company will continue to pursue recovery efforts and legal. Actions for these technical write off cases. Additionally, we also made an incremental provision of 255 crores on select security receipts where near term recoveries look uncertain. This dual action of policy tightening and incremental provisioning will be long term positive as this will help strengthen the balance sheet by recognizing stress exposure in a conservative manner. As shared in his previous earning call, we have launched the Focus Internal Cost Optimization initiative to address its historically high cost income ratio. By closely reviewing every expense line and tightening controls, the company expects to achieve annualized savings of 8 to 10% compared to last year’s operating cost.
These savings will begin to reflect over the next 12 months. The goal remains clear to become leaner, more efficient and move steadily towards a cost to income ratio in the 50% range in few years. Looking ahead, the Company’s focus remains firmly on disciplined execution, operational efficiency and portfolio quality. The company continue to strengthen its multi products branch model, deepen its rural reach and embed digital processes across the value chain. Our leadership team is closely engaged across zones to ensure sharper monitoring, faster feedback loops and tightly controls on collections. The credit policy refinements initiated last quarter are showing very good early signs of impact and the Company remains committed to a cautious and data driven approach.
With a strong capital base, robust systems and a clear strategic direction, the company is well positioned to navigate the evolving market landscape and capture emerging opportunities with confidence. Based on the feedback received from many of you on the call, the Company has enhanced its investor disclosure this year, adding additional information like ALM maturity buckets, sales security receipts and granular breakdown of ECL provisioning. The Company remains committed to improving on these aspects further. Let me now hand over the call to Jayesh to walk you through the financial performance in detail.
Jayesh Jain — Chief Financial Officer
Thank you Randir Good afternoon everyone. Thank you for joining us today. As shared by Randir earlier on the call, we shall be discussing the standalone numbers. Let me begin by sharing an overview of our Q1 FY26 number. Disbursements for the quarter amounted to approximately 858 crore compared to 1081 crore in the prior quarter and 1416 crore in the same period last year. We expect disbursements to pick up sequentially in the coming quarters as we continue to deepen our presence and tap into growing demand. Across our focus segment, average disbursement Yield stood at 18.4% supported by continued focus on Tier 3 and Tier 4 towns along with an expanding mix of secured lower ticket sized vehicles including cars, pickups, light trucks and small commercial vehicles.
Our asset under management stood at 7,783 crore reflecting a 9% year on year growth compared to 7,170 crore in Q1 FY20 file. While there is a slight dip from the previous quarter’s 7,963 crore on account of write offs as mentioned by Randir, we remain focused on scaling our core business with discipline and strategic intent. For the quarter, our net interest income stood at approximately 158 crore marking a 10% year on year increase from 144 crore in Q1FY25. This was supported by an improvement in our net interest margin which rose from 6% to 6.2%. The yield on loans improved to 16.8% as compared to the same period last year.
The operating expenses for the quarter were around 139 crore as compared to 112 crore in Q1FY25 as mentioned by Ranbir earlier. During the quarter the company recognized gain of 1176 crore on sale of Niva’s housing finance. The company amended its technical write of policy for loans over 210 days past due. As a result of this change, the Company has written off loans of 161 crore. The company will continue to pursue recovery efforts and legal actions for these technically written off cases. Additionally, the Company has also made an incremental provision of 255 crore on select security Receipts where the near term recovery remains uncertain.
As a result of these efforts, our gross stage 3 now stands at 4.04% and net stage 3 set is at 1.68%. Notably, we reported a net profit of 535 crore, a sharp increase from 12 crore in the previous quarter and 11 crore in Q1 FY25 reflecting the impact of exceptional gains. In terms of collection, the EMI to EMI collection remains at 89% while EMI plus overdue collection stands at 94% compared to 97% in the previous quarter. Our capital adequacy remains Strong at around 32.7%. This strong capital position gives us ample headroom to fund future growth while maintaining financial stability.
Our debt to equity ratio is around 1.7x providing ample room for future expansion. As a consequence, our overall cost of funds which was around 11% in the previous quarter is expected to moderate further. Our incremental cost of borrowing is already in the range of 9.2 to 9.5% compared to 9.7 9.8% in the previous quarter which is equivalent to similar rated companies. We remain optimistic that these financial indicators will support sustained and profitable growth in the quarters and the years ahead. In the upcoming quarter, our strategic focus will be to continue to improve our cost of funds by paying down our high cost debt and drive growth while maintaining profitability and asset quality discipline.
As the macroeconomic landscape remains positive, the company intends to lean into the growth in the larger economy by focusing on the growth of the book whilst maintaining its book quality under our Titan norms, we have also been leveraging our decreasing cost of funds to open up the prime segment allowing us to broaden the base of customer and market segments that were out of reach until now. With this, I hand over the call to the moderator for initiating our Q and A section.
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 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 is from the line of Vivek Ramakrishna from DSP Mutual Fund. Please go ahead, sir.
Vivek Ramakrishna
Thank you for this opportunity. We laud the company’s efforts in being more conservative and having greater disclosures. So my questions are two can you give some color on the kind of loans that went over 210 days past due where you had a technical write off and the expected recovery on such loans? So that’s question number one and question number two is related to that and looking at growth going forward after recalibrating your credit risk appetite, do you see any pickup in growth returning in the current quarter or would you think that will take a little longer for the system to get used to the growth pattern? Thank you.
Randhir Singh
Thanks Vic. So wait, I’ll take the second question first. Yes, I think we will expect. Better momentum on the disbursement. I will take you through why. In fact we’re already seeing that in July and August. So this quarter is looking better for I think it’s fair to say that we should see about 15% increase in this quarter on disbursement over last quarter. So the momentum is very key there. Let me just take you through the refinement that we’ve done. So essentially a lot of this is related to some of the choices we can make which were not available to us earlier. So you would have seen how our cost of fund has come down significantly and that has allowed us to target a customer base which earlier we could not target.
Right. So and that’s likely more premium segment, prime segment as it’s called, you know, by many of ps. So that is where we will make up for these volumes. In fact, we are making up these volumes already. I did cover in my initial commentary that we have refined our incentives to our channels. We onboarded some of more channel partners who cater to the prime segment. So yes, the plan remains same that we obviously would keep focusing on growth by finding newer segment. So we just refined this little more. Because today we have a choice to do segments which we didn’t have earlier. So we already seeing significant drop in our borrowing cost. So that is really what is driving this subtle change.
On your earlier questions. On the policy refinement. And essentially where we have written up a significant amount it is across few profiles. So one is we have increased our CIBIL score requirement. So one is we saw some softness in lower CIBIL scores. So we are now essentially trying a higher Sibil score of 700 plus. We also saw softness in few models, vehicle models in certain geographies we made those changes. We also saw some softness in some of the rental profiles and so it’s. A fairly detailed data driven refinement that. We’Ve done by analyzing last three years data.
And, and the early trends of that approach are sort of showing in our portfolio. Which means of course that portfolio is much smaller percentage of our current portfolio. But what will be dispersed from January 1st 25th to June 25th. If we compare that with our previous quarter, our delinquencies are showing almost half of what they were. I hope that answers your question.
Vivek Ramakrishna
Yes, indeed. Sir, can you just repeat the guidance for the disbursements for the current quarter? You said it will be higher than the last.
Randhir Singh
I said we targeting about 15% plus.
Vivek Ramakrishna
Okay, fine. I wish you all the best.
Randhir Singh
Thanks Vivek.
operator
Thank you sir. The next question is from the line of Hitesh Agarwal from NKV Capital. Please go ahead.
Hitesh Agarwal
Hello sir. Am I audible?
operator
Yes sir.
Hitesh Agarwal
Yeah, thanks for the opportunity. Within a vehicle finance, which product segments are currently showing the strongest growth in disbursement and what are the underlying demand drivers for this segment and how sustainable are this trend over the next few quarters?
Randhir Singh
Hi. So if you see our investor presentation this time, we have actually provided you fairly granular details of our disbursements across products. You would see we are actually very, very well diversified now. Right. And so basically from not just mnscv, lcv, scv, you would see significant volumes in car farm equipment, construction equipment. So it’s really not just one product. Today we have the opportunity to target pretty much all segments in the market. So all used vehicle finance obviously is open to us. And it’s not really just one segment which is driving. What we want to do is have a fairly diversified and granular book as a strategy.
That’s what we’re focusing on.
Hitesh Agarwal
Okay, so thank you. That’s all. Thank you.
operator
Thank you sir. The next question is from the line of Subranshu Mishra from Philip Capital. Please go ahead.
Shubhranshu Mishra
Hi, good afternoon. Thank you for allowing me this opportunity. Two or three questions. The first one is when I look at the GS3 PCR, that’s roughly around 53, 54% ballpark. So, so is that the LGD or our LGD is lower and we are carrying extra provisions? That’s first. Second is other vehicle financiers have been talking about stress, especially in small commercial vehicles, light commercial vehicles. How are we dealing with that? If we are looking at stress, any specific geographies, any specific use cases which are reflecting that. And third is how do we look at the festive season? How’s our freight movement going a lot of our customers would be working in the spot market.
So it’ll be a great, great thing to understand these things. Thanks.
Randhir Singh
Thanks Sudan. So I’ll just, you know, cover your fate and the CV and light one. First and we’ll let Jayesh answer your LG question. I think like we said that what. We’Ve done is within each segment and this is just really not a scv. We have done fairly detailed analysis on various cuts which includes not just the SIBIL score but the age of vehicle, the geography, the resident stability, the ownership, et cetera. And it’s fairly refined process where we are able to see which pockets sort of not performing in a particular cv. May perform in. Is actually not may is actually performing in some geographies, not performing certain geographies. And that is really the approach that we have taken. Wherever we see early warning sign in terms of higher bounce rate or higher rule forward rates, we take very quick action. So it’s not really. It is not performing across. It is in few pockets and those. Are the pockets we want to target so that we are very sharp in our targeting and don’t lose disbursement on quality customers. Same thing even for the essentially because we are operating the used segment we have not seen any freight impact on our. On our customers per se. Yes, you want to take that LGD.
Jayesh Jain
Subramshee, the LGD experience over last few quarters remains the same. We have been able to recover around 55 to 60% on the bad loans. So that way it remains same. And there has been no change in the ECL model for us. So we continue to follow our consistent ECL model over the last few quarters. And PCR difference reflects the adequate provisioning considering what we experience on our lgd.
Randhir Singh
Hi Subranshu, does that answer your question?
operator
Subranshu. Sir.
Randhir Singh
Sorry, we’re not able to hear you.
operator
We can’t hear you sir.
Shubhranshu Mishra
Okay, I’ll come back to Nikki. No, no worries.
operator
Okay sir. Thank you. Sir, the next question is from the line of Rahul Kumar from Vairakya. Please go ahead.
Rahul Kumar
Yeah, hi sir, the question what’s the disbursement target for FY26 and FY27?
Jayesh Jain
So in terms of a disbursement target maybe rather than disbursement let me address it in the form of a EUM because disbursement is affected of lot of other things. Also what we are targeting, the aum growth for FY26 is around 12 to 15% and for 27 also it would be around 15, 17% AUM growth which is what we are aiming at. And disbursement would probably work around this. And for the current year it could be in the same ranges as last year or around that.
Rahul Kumar
Okay, okay. Because last year we had I think. Disbursement of close to I think 5000 crore kind of.
Jayesh Jain
Yes.
Randhir Singh
Yeah. So we will, I mean obviously what we are trying to fine tune is. As we have seen the softness across. We obviously just want to make sure that we are absolutely tight on risk reward. Right. And that’s why much closer monitoring and much closer sort of much tighter action if at all that we need to take. But essentially we are in 23 states, we have 450 branches. So we have all the firepower and distribution needed to build volumes. Right. We have you know, cost effort advantage now. And we are not in just one segment but multi product. Right. So whether it’s vehicle finance, within vehicle finance we cater to five, six segments.
Then we have micro labs. So the whole idea is obviously to grow and grow with portfolio quality and profitability. Right. But we have do have all the building blocks. Right. To to amp up the growth. Right. But we just want to do a good job by balancing in a slightly challenging macro environment which is what it is today.
Rahul Kumar
Fair enough. Second question, more of data keeping number. What has driven the sharp increase in the employee costs I think versus last quarter.
Jayesh Jain
So in terms of the last quarter there was a reversal of the provisioning which had happened on the employee cost into certain ESOP cost because of the attrition of few of the employees. So that has led. Otherwise in terms of absolute thing there has not been a significant increase quarter on quarter.
Rahul Kumar
Okay, okay, got it. And third question, what was the total. Write off in this quarter? I mean apart from this 150 crore. On the change in GMPA provisioning.
Jayesh Jain
Sorry, come back again, I didn’t catch your question please.
Rahul Kumar
I was saying what is the total. Write off in this quarter?
Jayesh Jain
So the one time technical write off is 161 crore where we see lesser chances of the recovery. So that has been written off where we will continue to do the efforts which is there. And considering overall ECL cost we had a one time settlement losses of around 45 crore where we have processed the vehicle or the settled the loans with the customer which was around 45 crore. And incremental ECL provision on the book of around 29 crore. So that’s a breakup of the credit cost.
Rahul Kumar
Okay. Okay, thank you.
operator
Thank you sir. The next question is from the line of Raj Patel from RK Securities. Please go ahead.
Raj Patel
Yeah. Hello. Am I audible?
operator
Yes sir.
Randhir Singh
Yes Raj,
Raj Patel
thank you for the opportunity. So I wanted to know about the disbursement. So as we look in Q1FY26 our disbursement have been dropped to 858 crore as compared to 1081 crore in Q4FY25. So what are the key reasons behind this decline and how do we see the disbursement trend in the upcoming quarters?
Randhir Singh
Sure Raj, so a few reasons. One is obviously the Q1 has been soft right in general for not just for us but I think industry in general. But like I mentioned in response to the previous question, we are seeing much better traction in Q2 and we would expect around 15% plus growth in disbursements in Q2 over Q1. So that’s one second one of the. Besides being general softness in the market, I think what also led to a drop which was like I explained a conscious effort on our part to tighten our policy filters. And that is again in response to general market conditions collection softness not in just our portfolio but across the peer indices.
We took a conscious call to tighten our policy parameters and these two are the reasons which have led to the drop. But like I explained, we obviously want to make sure that we make it up by targeting newer segments and which is what we’ve done. So essentially we have tightened our parameters so we will let go of some of the lower credit customers and add replace that with a better quality customers and that you would see that change over a few quarters that adjustment. And I think we should able to get there because we already seen that in Q2 that our disbursement are trending almost 15% over Q1.
We will have. Some of the. We’ll see the results of some of the actions we’ve taken about one, two, three months back on adding some of these prime customers, Prime Channel and Prime Channel partners. So you would see, you should see a clear uptrend on this. And like I explained in the earlier question that obviously remains our focus area and we do have all the tools. Right. So we do have significant presence in the market. Not just across our, you know, not just by having these 450 branches but a significant, you know, sales. Sales force. Right. So it’s been conscious but we can amp it up which is what we are already doing.
Raj Patel
Okay, fair enough. Understood. Now my second question was that the vehicle finance continue to dominate our AUMs with 93 percentage. So are there any plans to diversify into the other secure retail segment beyond Micro lap in order to reduce our concentration risk.
Randhir Singh
Suraj, we will have one is vehicle finance like you said. Second is Microlab. Beyond these two products we have no plans to launch anything in the near term. And the reason for that is very simple. I think one is both of our products have a fairly large addressable target market. So both vehicle finance al result Microlab are fairly large sort of segments of the market. And you can see that with many of our larger players in both segments there’s a huge scope to grow. And I think we are fairly well diversified already by being present in these states.
So we don’t run any geographical concentration risk. In any case, we only offered secured loans. So that itself kind of adds to the portfolio stability. So we do not see any reason. To sort of consider launch of a third product right now. We will continue to grow both Vehicle finance as well as LAP LAP does present a significant opportunity. Because we have launched only in one state, Tamil Nadu over the last one year. And because we saw significant traction, very good profitability and portfolio quality, we are obviously planning to launch it many other states. We gave guidance of launching it in few states this quarter this year. And we are well on a plan. We have made offers to senior team members for ap. So ap, we will start within next two months.
We should be able to book our first loan in the next two months and after that would be Telangana. So I think these two products do represent a significant growth opportunity given our significant distribution strength in 23 states and 450 branches.
Raj Patel
Okay, understood. That was all from my side. Thank you.
Jayesh Jain
Thank you.
operator
Thank you. The next question is from the line of Hitanshi Patel from ABS Investments. Please proceed.
Unidentified Participant
Hi. Thank you for the opportunity. So my first question is can you elaborate on your competitive positioning in the used vehicle financial market?
Randhir Singh
Okay, so I mean essentially today we. Are targeting. Sort of various slices of that used CV segment, right? So from essentially being a new car, new CV to used, we are obviously present in all segments. What we do see is obviously a different kind of competition in various segments that we are present in used in certain geographies. They’ll become correct in some places. Why? But essentially the basics remain same which is essentially around provide around having strong presence on the ground. That does bring in a competitive advantage. Being present in tier 3, tier 4 towns in semi urban rural markets. So our reach is another competitive advantage that we have faster tact again is something that helps us.
We also aligned our incentive with the market for our channel partners. So these are things which provide us advantage in the last but not the least. And I think we would talk about a little more in subsequent quarter. We have digitized a lot in terms of both onboarding as well as subsequent top ups. Today we are able to do everything on our apps that sales team has. And customers also have the opportunity to do the transaction digitally, including signing all the papers. So a lot of that. We will provide the data on this journey in the next quarter.
On how much of our transactions are now happening totally digitally. What are the percentage of the agreements? We will launch a lot of this over the last one to three months, but that is turning out to be again a significant competitive because we are able to offer a significantly smoother experience to our customer base.
Unidentified Participant
Okay, that’s great.
Randhir Singh
Just one last bit of data as you would, you know, you would see that there’s a fairly large, you know, large market on the used segment. Right. And you know, for someone like us, with the 450 branches in 23 states, there are enough and more opportunities to grow. The only thing we obviously want to consider as a management team is how do we make sure that when we grow we also maintain our profitability and portfolio quality. And if that requires some adjustment in few quarters, we are more than happy to do that to maintain our long term portfolio quality and growth.
Unidentified Participant
Okay. Okay, just one last question. The weighted average cost of borrowing has reduced to 10.5% from 10.8% in Q4. So what’s the sustainable level going forward and is there any scope for further reduction given the current interest rate trends?
Jayesh Jain
Hi, Jayesh here. So a wonderful observation. And we are today borrowing in the range of around 9.5%. And our rate of borrowing currently is largely aligned with our rating and is almost equal to what peers are borrowing money from. So largely whatever the delta which had to come because of increase improvement in the quality of the book and the growth which has come in and way forward, our cost of borrowing would kind of align with the industry and depending on the macroeconomic sectors and the decline in the overall interest rate, that would be reflective. So maybe in fact in my speech also I mentioned that around 1400 crore of a book is to be repriced in next three quarters.
So that benefit would come in. So that delta roughly could be between the current cost of borrowing which is in the range of that particular 1400 crore which is around 11%, 11 and a half percent would go down to around 9 and a half percent. So that way probably 20 to 25 basis point of increment or improvement in the cost of borrowing you would see in next three quarters.
Unidentified Participant
Okay. Okay.
Randhir Singh
Yeah. Essentially our incremental cost is much lower than the cost of the book. Right. So as the time progresses and we replace it the you would see a significant reduction in the overall borrowing cost as we replace over a period of time.
Unidentified Participant
Okay. Got it, sir. Thanks a lot.
Randhir Singh
Thank you, Tanshit.
operator
Thank you, ma’. Am. Ladies and gentlemen, due to interest of time, that was the last question for today. I now hand the conference to Aryan sir for closing comments.
Aryan Sumra
I would like to thank the management for taking your time out for this conference call today. And I would also like to thank all the participants for joining the call. If you have any further queries, feel free to contact us. We are MUFG in Time India Private Limited Investor Relations Advisors to Industar Capital Finance Limited. Thank you so much.
operator
Thank you.
Randhir Singh
Thank you everyone.
operator
Ladies and gentlemen, on behalf of MUFG in Time Private Limited, that concludes this conference call. Thank you for joining us. And you may now disconnect your lines.