IndoStar Capital Finance Ltd (NSE: INDOSTAR) Q3 2026 Earnings Call dated Feb. 10, 2026
Corporate Participants:
Mamta Nehra — Investor Relations
Randhir Singh — Managing Director and Executive Vice Chairman
Jayesh Jain — Chief Financial Officer
Analysts:
Nakul Doshi — Analyst
Varun Gajaria — Analyst
Danesh Mistry — Analyst
Vignesh Iyer — Analyst
Darshan Shah — Analyst
Hitesh Arora — Analyst
Pratiksha — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to the IndoStar Capital Finance Limited Q3FY26 earnings conference call hosted by MUFG in time. 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 Ms. Mamta Nehra from MUFG in time. Thank you. And over to you ma’.
Am.
Mamta Nehra — Investor Relations
Thank you. Good afternoon ladies and gentlemen. I welcome you all to Q3 9 months FY26 earnings conference call for Indosar Capital Finance Limited to discuss this quarter’s performance we have from the management, Mr. Randeer Singh, Managing Director and Executive Vice Chairman and Mr. 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 risks 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 will open the floor for Q and A.
Thank you. And over to you sir.
Randhir Singh — Managing Director and Executive Vice Chairman
Thanks Amta. Good afternoon everyone and thank you for joining us today. This is Ranjeer Singh, Managing Director of. IndoStar Capital Finance Ltd. I’m pleased to welcome you to our. Q3 and FY26 earnings conference call. We appreciate your support as we continue to build long term value. I hope you got a chance to review our financial results and investor presentation. Which are available on our website and on the stock exchanges. We have added additional information, basic feedback. From some of you and I hope you find the presentation more useful. I will begin with a strategic overview. Of our business and operating performance for the quarter.
Following that our Chief Financial Officer Mr. Jayesh Jain will take you through financial performance. At Indostar, we are pursuing retail led growth by focusing on the credit needs. Of semi urban and rural India. Our core business vehicle Finance and Microlab are designed to focus on underserved and. Under buying borrowers and together drive sustainable growth. With our exit from affordable housing, we will continue scale up disbursements in used vehicle finance and Microlab positioning Indostar as. A secure scalable and growth focused lending platform. From a broader macroeconomic perspective, the Reserve bank of India has revised its FY26 GDP growth forecast to 7.3%. CRISIL has also raised its growth estimate to 7% from an earlier 6.8% supported by strong private consumption alongside growth in the manufacturing and services sector. Inflation remained benign with December 2025 CPI printing at 1.33%. Coming to monetary conditions, the Reserve bank of India’s Monetary Policy Committee in its current meeting decided to keep the repo rate unchanged at 5.25% while maintaining a neutral policy stance. Credit demand continues to show healthy momentum led by sustained strength in retail and MSME lending, both of which are growing at double digit rates.
Reflecting this favorable environment, ICRA continues to project 15 to 17% loan book growth for the NBSE sector in FY26 while Crystal expects AUM growth of around 18 to 19% driven by vehicle finance, MSME and micro lending segments coming to India’s CV sector. ICRA expects the Indian commercial vehicle industry to record 3 to 5% year on year growth in wholesale volumes in FY26 driven by the revival of construction and infrastructure activity and a stable macroeconomic environment. Vehicle financing is set to emerge as a key growth engine for MDSCs with total vehicle loan AUM projected to reach nearly Rs.
11 lakh crore by March 2027. Crystal Rating estimates vehicle finance AUM to grow at a steady 16 to 70% annually with the used vehicle segment contributing a significant share of the incremental growth. NBSTs continue to sharpen their focus on pre owned vehicle financing supported by favorable unit economics and superior risk adjusted returns. Growth in used vehicle loans is expected to outpace new vehicle financing for most large NVSPs. Trisyl ratings indicate that used vehicle loan AUM has grown at a CAGR of approximately 15% between FY20 and FY25 compared with about 11% CAGR for new vehicle loans.
This momentum is expected to persist over the medium term given the lower total cost of ownership and affordability advantages associated with used vehicles. The loan against Property and secured MSME segment which accounts for around 15% of NBFC AM is expected to normalize while remaining healthy with growth projected at 26 to 27% over the current and next fiscal year. However, lenders continue to exercise caution in smaller ticket size loans due to early signs of repayment distress. Now coming to our Q3FY26 performance, our total loan portfolio stood at Rupees 7,692 crores and disbursements for the quarters were Rupees 11.
17 crores compared to Rupees 927 crores in Q2FY26. The 20% overall growth in disbursement reflects improving business momentum in our vehicle finance business where disbursement grew by 21%. In our investor calls during the last year, we had shared that the company is pursuing very deliberate strategy and of strengthening our credit underwriting framework while simultaneously enhancing the attractiveness of our products and services for customers and channel partners. This had temporarily led to decline in volumes in H1. However, I’m pleased to share that these actions in the last few quarters are now delivering clear and consistent results.
First on asset quality, the improvements we have made are visible and encouraging. Delinquency levels in the calendar year 2025 cohort are nearly 50% lower than earlier cohorts on a like or like basis. We are also seeing a sharp reduction in both non starters and early delinquencies. We have added a graph to our misrepresentation on slide number 19. This gives us strong confidence in the quality of our book and pursue growth. Second, on growth enablement, we’ve taken several steps to broaden our customer reach and strengthen our distribution engine. We’ve added Pine segment which we’re not serving earlier, thereby expanding our addressable market.
The yields and credit cost on loans to this segment would be lower. We have introduced risk based pricing which allows us to grow while maintaining or even improving risk adjusted yields and NIMs. We have aligned channel partner payouts across the yield spectrum to ensure better engagement and productivity. And we have upgraded our distribution footprint by converting micro branches into full fledged branches improving both reach and service capability. Third on digitization and process excellence, we continue to make strong progress in digitizing the customer journey and strengthening our credit positioning. Our scorecards based credit approval process being rolled out for select loan categories.
Our digital stack is scaling well. E Application, E Agreement and E NAT are already live and EKYC will go shortly. Adoption has been very strong. Over 80% of our cases now come through E Agreement and enatch and 50% of applications this quarter are through E Application and these numbers are improving month on month. We’re also expanding our physical presence selectively and added seven new branches during the quarter. Taken together, these initiatives for better underwriting, sharper risk selection, strong distribution and a more digital operating model are positioning us well to drive sustainable high quality growth. To strengthen our momentum further in vehicle finance business, we took significant steps of investing and upgrading talent in last quarter Mr.
Amandeep Singh Sandhu joined us as Chief Operating Officer Vehicle Finance Business. Amandeep is a senior business leader with 25 plus years experience in DFSI managing portfolios exceeding rupees 22,000 crore and leading 1200 plus employees across multiple zones. Prior to this Mr. Sandhu was associated as Executive Vice President in in Chola Mandalam Investment and Finance company and he has also previously worked with SDFC bank and Mahindra and Mahindra Financial Services. During his various stints Mr. Sandhu has worked in several states across the country. Turning to Micro Lab segment which is key step towards diversification of our business, disbursements are gradually scaling up through a structured rollout across tier 3 to tier 5 downs.
We are offering loan tenors of up to 10 years with average ticket size of 6 to 7 lakhs and yields of about 22%. In those starts, Microlab portfolio recorded disbursements of 30 crore with AUM reaching 128 crores in Q3FY26, 74% of our borrowers are self employed and in 99% of cases we have residential properties as a collector. While this business is in semi urban rural areas, we have reached significant digitization. Close to 100% of customer onboarding is now being done through E Applications and E agreement. Our collection in this segment is also. Close to 100% digital without any cash collection. The rollout has been supported by company’s existing distribution footprint and robust credit processes resulting in a healthy early repayment trends. And a sound risk profile. In the current portfolio of 2215 customers having AUM of rupees 128 crores build up till end of December 25. Only six customers are in one DPD which shows the excellent quality of the book achieved via robust credit and collateral underwriting framework. This has given us the confidence to invest further in this business and in the last quarter we also rolled out MLAD business in Gujarat on a pilot basis in five branches in last one year we improved count of our branches where MLAD business is operational from 40 to 75. While there is an opportunity to launch Micro Lab business across our sole 48 branches, we have chosen to expand in a calibrated way.
Overall as a company we remain very liquid and under levered with consistent improvement in incremental cost of borrowing. We have a strong ALM profile and have positive cumulative mismatches across all buckets. In closing, growth and risk management will continue to remain the two core pillars of how we operate. We adhere to a well defined and comprehensive risk framework encompassing credit liquidity, alm, operational, regulatory and information security risk with a strong oversight from our Board and senior management. As we look ahead, our focus remains expanding disbursements of vehicle finance and microlab business while maintaining portfolio quality and profitability.
Let me now hand over the call to Mr. J.S. jain for an overview of our financial performance.
Jayesh Jain — Chief Financial Officer
Thanks Ranjit Good afternoon everyone. Let me begin with a brief update on a one time corporate action completed during the quarter. We concluded the preferential allotment of 1.4 crore shares to our holding company BCPV Multiple holdings and 1.1 crore shares to Florin Tree on conversion of the outstanding warrants issued in FY25. DCPV and foreign pre now holds 55.98% and 6.753% of equity share capital respectively. Let me now move to the operating performance for the quarter. Our retail disbursement for the quarter stood at 1,117 crore as compared to 927 crore in the previous quarter and 1,291 crore in the same period last year.
Our disbursement yield for the quarter was 17.2%, broadly stable compared to 17.1% in Q2 and higher than 16.5% last year. We expect disbursement to continue improving sequentially as we deepen our footprint and benefit from rising demand across our core segments. During the quarter we expanded our network to 448 branches across 23 states. Our A1 stood at 7,692 crores compared to 7,564 crores in the previous quarter. Of this the on book portfolio was 7219 crore and the off book portfolio was 473 crore. We remain focused on scaling the business in a calibrated and sustainable manner. In the vehicle finance segment which remains our key growth driver, disbursement increased to 1,087 crore in Q3 up from 900 crore in Q2 supported by the deeper penetration and healthy demand in the used vehicle category.
Our microlab business also continued to gain traction with disbursement of 30 crores during the quarter. The steady progress here reflects disciplined underwriting and encouraging early portfolio behavior and we see this as an important growth engine going forward. For the quarter, net interest income was around 209 crore, a 16.1% increase from 181 crore in Q3FY25 and a 10.2% increase from 190 crores in Q2FY26 our operating expenses continue to remain stable and were at 124 crores for the quarter as compared to 121 crores last year. Q3 includes a one time one off impact of 4.8 crore due to the change in the wage code during the quarter.
We also sold a stress pool of 135.73 crores for a consideration of 108.55 crores. Our EMI to EMI collection efficiency remained healthy at around 90% supported by stronger underwriting and tech enabled collection processes. Gross stage 3 stood at 4.06% and the net stage 3 stood at 1.76%. We closed the quarter with a net profit of 8.3 crore compared to 10.5 crore in Q2. As mentioned earlier, the quarter includes a 4.8 crore one time impact from the wage code changes. Our balance sheet remains strong Capital adequacy at 14.4% providing ample headroom for growth. Debt to equity at 1.2 times reflecting a resilient capital structure, a positive ALM position across all buckets.
Cost of funds have eased to 10.3% down from 10.8% last year and incremental borrowing costs reduced to 9.1% from 10.2% in Q3. FY25 we are making steady progress on all the building blocks of profitability, maintaining and improving yields and NIMs, driving operating leverage and improving OPEX ratios and strengthening asset quality and credit cost through discipline, underwriting and collections. As we look ahead, our focus remains on growing the business responsibly while continuing to enhance profitability and maintain strong asset quality. Our shift towards the retail centric model is progressing well, supported by operational discipline, prudent risk management and a more diversified portfolio.
With the momentum we have built, we will continue to scale the book responsibly, supported by tighter credit norms and stronger underwriting standards. Overall, we remain confident of delivering sustainable business growth along with a steady improvement improvement in profitability over the coming quarters. Thank you for being on the call. I now hand over to the moderator for question and answer session.
Questions and Answers:
operator
Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press STAR and one under Touchstone Telephone. If you wish to remove yourself from the question queue, you may press STAR and two participants are requested to use hand search 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 Nakul Doshi from Sankhaila Investment Advisors, please go ahead.
Nakul Doshi
Thank you for the opportunity. My first question was with the non performing assets showing an upward trend, could you elaborate on the immediate sales? Management is seeking to contain this rise and improve overall asset quality.
Randhir Singh
Thanks Nikhil. I think like we mentioned in opening remarks, we did take a significant policy tightening exercise proactively last year. And as the book is growing, especially the component of book which has originated after January, the delinquency is down almost by 50%. If you see a presentation which will show you on non starter as well as early Delinquencies, slide number 19, you would see that the new origination after the policy tightening the delinquency is almost 50% lower. So over a period of time as this, the loan book after which is created after January becomes higher percentage of the overall book, this number will automatically come down because the new book is after January 25th has just about 50% delinquency than the previous period.
Nakul Doshi
Understood. And additionally when it comes to any particular long term measures. So what are the long term measures being implemented to prevent similar stress in future portfolios?
Randhir Singh
Nicole, I didn’t get your question. Can you just repeat the last bit?
Nakul Doshi
Additionally, what long term measures are being implemented to prevent similar search and future portfolios?
Randhir Singh
Okay, so few things that we have. You know, very recently did two important things. One one is we have put a very comprehensive early warning system which has been implemented after six months of lot of work looking at the data. And that gives us very early warning signals across geographies as well as across product. So that should obviously help. We also significantly invested in our collection infrastructure and these two things together will ensure that we react quickly to any deterioration portfolio quality.
Nakul Doshi
So will this proactive measures help us immediately or it will take some time to actually materialize?
Randhir Singh
They’ve already. I will just again bring you back to slide number 19 which does show a non starter coming down from 5.2% to 2.08%. So it’s less than 50%. You would also in our slide 13 it will show you how we have strengthened our customer quality and profile. You will see our higher stabilization CIBIL score customers are growing in proportion. From December 24 to December 25 the. Increase is almost from 82% to 89%. So you would see that our customer credit profile has improved significantly with higher scores now having higher percentage of the book.
Nakul Doshi
Got it. Thank you. That’s it from my side.
operator
Thank you. The next question comes from the line of Varun Gajaria from Omkara Capital. Please go ahead.
Varun Gajaria
Thank you for Taking my question, just wanted to understand. So on the, on the earlier point that one of the participants made, if you could just spell out what were the pain points during this quarter with the LTAs, with the NPAs, you know, rising a bit. And how do we see this, how do we see these, this trend continuing in the coming quarters?
Randhir Singh
I think with the decisive actions we have taken, we would see significant improvement. Over the next two quarters. As you can see from slide and on page number 13 and 19, we have given fairly detailed information. Those are the actions we’ve taken.
Varun Gajaria
Okay. And what were the key pain points that you may have recognized in this quarter?
Randhir Singh
So essentially it’s really some of the profiles where we witnessed softness and many of these have been corrected obviously long time back at the beginning of the year itself. But we still have obviously assets from the previous period. But most of the softness that we saw, we have taken very strong corrective action. And you would recall that policy threatening. We did sacrifice volumes because we wanted a very good quality of very good portfolio quality. So we remember our previous discussion in the previous quarter where we said we proactively tightened our policy, which led to drop in volumes.
We have already weeded some of those weaker profiles.
Varun Gajaria
Okay. And are current level of yields for new disbursements are there, are they in line with the earlier disbursements? They slightly on a higher scale.
Randhir Singh
In the last two, three months, as our own funding cost has come down, we have started catering to prime segments where the yields are low. But of course the credit cost is also low. Net. Net. Basically we have, we’ve been able to. Cater to the prime segment at a slightly lower rate. So all in yield, which used to. Be around 18%. You know, 2.5. Right. That has come to about 17.25. But unnamed has broadly remained same because. Our own cost of fund has come down.
Varun Gajaria
And how will we see these events going forward? Because now the portion of micro labs will also come into play. Right. Micro so far has been. The exposure has been limited. Now that we expand, how do you see this yield mix going forward?
Randhir Singh
So I think on the vehicle finance. 17% is where we intend to operate for the near term. Unless until we see obviously more reduction in our own interest cost, we want to ensure that our rim remains protected. So the that is in the vacant finance. And we think that 17% is something that we would like to maintain for a few more quarters on the micro lab business. Like you said, right now it’s a. Small percentage, but the yields, they are very significantly higher than Vehicle finance there we are maintaining about 22% plus. And even on a go forward basis, it’s fair to say that we will have yields in excess of 20% for a long time. So as that business grows, maybe the net effect would be for yields. So at least in the net 17% if not go up.
Varun Gajaria
Okay, so 20% plus should hold up for now even in wake of the competition. That comes.
Randhir Singh
Not buffer because right now we are at almost 22%.
Varun Gajaria
Okay, thank you.
operator
Thank you. The next question comes from the line of Dinesh Mistry from Invest First Advisors. Please go ahead.
Danesh Mistry
Yes, good afternoon and thank you for taking the time off to talk to us. Congratulations on a great set of numbers. I mean it’s shaping up well. You know, you can see incremental cost of borrowings come down. I just had a few questions. The first question is that, you know, I think we raised about 150 to 200 crores in this final warrant conversion. So does that feature in the treasury asset of 487crores?
Jayesh Jain
Yes, this money had come in and this would be part of the treasury asset and would have been deployed also. So our cash and cash equivalent at the end of the quarter was around 22 crores only. And there was a mutual fund investment of around 277 crore. So this would be part of the treasury assets.
Danesh Mistry
Got it sir, got it. And just secondly, see we are doing, I mean as of this quarter we did a run rate of about thousand crores disbursement. If you see our leverage, we are now at 1.2 debt equity. How do you see that kind of, you know, moving for us? What level of leverage would we be comfortable with over the next two, three years?
Randhir Singh
Okay, so Dinesh, you know we are, we are under levered and obviously the reason for that is, you know, sale of subsidiary which obviously led to significant correct cash infusion. I think if you look at most. Of peers in the industries are operating somewhere between 3.5 to 5. Right. So that’s really been where most of our peers are. And it’s fair to say that that is quite an acceptable level which is something that we will also reach with the growth that we’re pursuing. You can see that we grew significantly last quarter of about 20%. We have taken significant actions to boost that growth, not just the number of branches. We have taken a significant hiring drive in the last quarter and that will increase number of our frontline salespeople by 30% in next quarter compared to the quarter.
So all these things obviously will lead to higher AUM increase in leverage, but we will be nowhere close to the leverage that many of us here have. So I think we have a lot of headroom to grow without the need for equity, if that’s what your question is.
Danesh Mistry
Yeah, absolutely. Because your car is also 41%. So I think you’ve got. I was trying to understand how much growth can be possible. Just one last question is that if you see this time provisioning was up, you talked about the fact that, you know, you’ve done some further, you know, tightening around the norms, but are we past that phase or are we still incrementally tightening the norms?
Randhir Singh
We’re not tightening. We tightened in January last year. That was the most significant tightening. And then few small refinements in Feb and March, but nothing since then. So no more tightening required because the portfolio is actually behaving well. In fact, we took some of the restrictions out of the smaller ones because we got significant comfort from the portfolio quality, like you can see from the non starter and early delinquency trend. So it’s been very encouraging trend there.
Danesh Mistry
Got it. Understood. And last question, your incremental cost of borrowings have come down reasonably well. It’s featuring in your NIMS as well. But are you seeing any further improvement there as some of the kind of roll over? Yeah.
Randhir Singh
Absolutely. So, I mean, you, you would see. There is a gap between incremental cost of borrowing, which is at about 9.1. Yeah. What is our, you know, cost of borrowing? The book, you know, that is at 10,
Danesh Mistry
120 bits. Yeah.
Randhir Singh
So very clearly, you know, what a period of time these two will converge and that’s obviously the opportunity for us to save on the interest cost.
Danesh Mistry
Got it, got it. Understood. But you don’t see any improvement beyond 9.1 on the incremental?
Randhir Singh
I think we could. We’ll have to see. We have seen a significant reduction already. We do think that further refinement is possible.
Danesh Mistry
Got it. Interesting. Okay, thank you so much and, and wish you the very best of luck. Thank you so much.
Randhir Singh
Thank you.
operator
Thank you. A reminder to all participants. Anyone who wishes to ask a question may press star and one on the Touchstone telephone. The next question comes from the line of Vignesh Iyer from Sequence Investment. Please go ahead.
Vignesh Iyer
Thank you, sir, for the opportunity. So my first question is on our, you know, AEM Growth. Hello. Am I audible?
Randhir Singh
Yes, yes, you’re audible.
Vignesh Iyer
Yeah, yeah. So we are as of now having a quite favorable debt to equity and wanted to understand how do we see our AM growth when it comes to quarter four and more like FY27 and which category or the segment would we see majorly the growth coming from?
Randhir Singh
Yes, so Vignesh, we have, I mean, you know, I would just point you towards the trend that we have over the last quarter wherein our total growth in disbursements were about 20%. And while for this quarter, obviously while typically January is slow because of many holidays, we do think there is a strong momentum in the last quarter as well. Some of our peers have also pointed to that strong trend. Over and above. We have, like I just pointed in the first, in the previous question, we are investing significantly in our frontline sales team and that number would go by 30%. So we also added, also started adding branches after a pause. So a lot of these actions that we’re taking are towards maintaining this growth momentum of 20% that we saw in the previous quarter. So we’re taking lots of steps and while they may come with lag, but you know, a very strong foundation is being created to support the growth.
Vignesh Iyer
So if I understood it right, 20% on disbursement. Right. Is what you are saying on the growth part.
Jayesh Jain
Okay, so this was the number on quarter growth last quarter.
Vignesh Iyer
Right.
Jayesh Jain
Q3 over Q2.
Vignesh Iyer
Right. Okay. Okay, got it. Yeah, that’s all from my side. Thank you.
Jayesh Jain
Thank you,
operator
thank you. The next question comes from the line of Darshan Shah from MNF Associates. Please go ahead.
Darshan Shah
Hi sir. Thank you for this opportunity. My first question was on the micro lab. Micro lab disbursements. If I see we’ve been broadly stable at 30 crores for the last few quarters. So my first question is how, how do we plan to scale this business in the next financial year? FY27.
Randhir Singh
Okay, so. We are, like I mentioned in the opening remarks, we are investing in this business. While there is an of course an opportunity for us to launch this business in about four branches that we operate in. What we’ve done is we have done the rollout, keeping an eye on the portfolio quality and which so far has been very, very good. We just have about six delinquent customers out of about 2,000 plus customers. So this is the business that we are investing in and growing. And I think it’s fair to say that next year we would try and double our AM from this year’s level.
So that’s really the plan that we are working on.
Darshan Shah
Okay. Regions or customer segments that we are targeting to drive growth.
Randhir Singh
Yeah, so we had done the full fledged launch in Tamil Nadu in the last two quarters. We started rolling out this business in AP in Telangana as we speak. And while that rollout happens in all the branches in parallel, we started rolling out this in Gujarat on a pilot based in five branches. So we have now Tamil Nadu, we have AP, we have Telangana and we have Gujarat TN fully operational. AP in Telangana, almost 50% done. Gujarat on a pilot basis. I think it’s fair to say that in the next six months we would like to add one more state for our MLAB business.
Darshan Shah
And just if you could also highlight the, you know, your underwriting or your credit process and how, you know, what are the synergies that you employ from your other housing finance business into this specific product category in terms of, you know, you would have credit buckets or vintage of customers or something that you analyze. So between the products, how does that help you?
Randhir Singh
Yeah, sorry, I just want to clarify. There is no housing finance business we have anymore. You mentioned housing finance because we obviously as you know we sold that business. Right.
Darshan Shah
So yeah, but we know experiences and all would still remain within the company in terms of the.
Randhir Singh
Of course. So obviously it is essentially this business is obviously loans against property. It’s a mortgage business. And in our case too, 99% of the cultural that we have is residential property and almost 95% of that is self occupied residential property. So you know the entire business in terms of credit is fully secured. We do not do anything else unsecured and we have kept our LTVs low. So it’s a fairly low LTV business. It’s always been below 40%. Third is in terms of our approach, every customer is met by a credit officer. So there’s a personal discussion with every customer before we provide credit facilities.
So a combination of partial discussion, credit assessment and obviously low LTV is really something that we are following for each case to make sure that our portfolio quality remains strong.
Darshan Shah
Sorry if I would have missed it earlier but your biggest segment, the use take finance segments, how is that doing your outlook and for FY27, what is the growth that you’re expecting? Like for Microlab you said you want to target doubling the aum, so any such targets for used vehicle finance also.
Randhir Singh
We typically do that in the last. Quarter, the budgeting exercise and we will try and give you an estimate in the next call. But right now like we said, we do have a strong momentum on disbursement. Last quarter we did grow about 20%. We do feel good about this quarter as well and we have taken a lot of steps incrementally on new branch Opening and significant addition to our sales force. Now these steps should lead to good growth outcomes on disbursements.
Darshan Shah
Okay, got it sir. Thank you so much for the answer. We’ll join back in the queue for any follow up. Thank you.
operator
Okay, thank you. The next question comes from the line of Hitesh Arora from Abacus Asset Manager. Please go ahead.
Hitesh Arora
Hello.
Randhir Singh
Yes,
Randhir Singh
earlier on the call also ran did mention about lot of interventions we have done in terms of the portfolio which has been originated since January 25th. And we did mention about the recent trends on the NSED non starter and Edinburgh portfolio recently. It wouldn’t be appropriate for us to give any guidance as of now considering that a lot of interventions have been done and a lot of changes are being done also. So this should remain well under control. But we would as Ranjir mentioned on the previous question also we would give guidance on this in the next quarter call.
Randhir Singh
But just an estimate, you know when you say under control is like 2%, 3%, 5%. What is your model? Yeah, can you hear us?
Hitesh Arora
Yes.
Randhir Singh
Is your question on the credit cost or your line is not very clear. Okay, so. Okay, so let me take that question.
Randhir Singh
If you see that I mean obviously credit cause the function of segment that one operates in. We have obviously chosen a segment which is a mix of largely used, you know, where obviously the yields are high but the credit cost is also higher compared to the new segment we would. Target from a business plan perspective. We would target credit cost of about 2% plus minus few basis points here and there. That is really our plan. That’s how we are planning our business.
Hitesh Arora
I mean this quarter was higher but we have a glide path for that to get to this number.
Randhir Singh
So this quarter was higher. But you would see that as then you know, obviously the book after January 25, after the title underwriting is growing, that cost is coming down quite significantly. It would come down. It’s only a matter of time. Basically there are averages at play. Once the book after January 25 becomes higher in proportion, the cost will automatically come down.
Hitesh Arora
And this is something called billing efficiency. This chart on billing efficiency, what is that? Slide 29.
Jayesh Jain
Sorry, your question if you can articulate that again please.
Hitesh Arora
Slide 29. You got a chart on billing efficiency. So what does that mean?
Jayesh Jain
The billing efficiency would mean the EMI collection to collection the EMI which are due for the month and out of that what has been collected from that. So that’s
Hitesh Arora
90 of the portfolio on day zero. Okay.
Jayesh Jain
Yeah.
Hitesh Arora
Okay,
Jayesh Jain
thank you.
operator
Thank you. The next question comes from the line of Pratiksha from Investing Alpha. Please go ahead.
Pratiksha
Hello. So thank you for the opportunity. I only have one question and it. Is about the disbursement. Like disbursements have increased quarter over quarter. So is this the current run rate sufficient to Support growth in FY27 or should we expect sharper acceleration on it?
Randhir Singh
Yeah. So Prateek, our amount of disbursement that will grow up, right? So if your question is will this grow further in this quarter, that really is the trend that we’ve seen, you know. So from about 1117 is what we dispersed in the last quarter. We will surely see a growth on December in this quarter. So this would grow. And we’ve taken as I described, we’ve taken few more steps to support this growth in coming quarters as well by increasing our frontline sales number by about 30%.
Pratiksha
Got it, sir. Okay. Thank you.
Randhir Singh
Thanks.
operator
Thank you. That was the last question for today on behalf of IndoStar Capital Finance Ltd. That concludes this conference. Thank you for joining us and you may now disconnect your line. Thank you.
Jayesh Jain
Thanks everyone.