Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
Laxmi India Finance Ltd (NSE: LAXMIINDIA) Q4 2026 Earnings Call dated May. 14, 2026
Corporate Participants:
Deepak Vaid — Managing Director and Chief Executive Officer
Gopal — Chief Financial Officer
Kuldeep Singh — Chief Business Officer
Analysts:
Dipesh Sacheti — Analyst
Rachna Mehta — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Lakshmi India Finance Limited Q4FY26 earnings conference call hosted by COIND Advisors. 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 operator by pressing star then zero on your touchstone phone. I now hand the conference over to Mr. Deepak Bhait from Lakshmi India Finance Ltd.
Thank you. And over to you sir.
Deepak Vaid — Managing Director and Chief Executive Officer
Yeah. Good afternoon everyone and thank you for joining us. Lakshmi India Finance Limited Q4 and FY26 earning call. On behalf of entire management team, I extend a warm welcome to our investors, analysts, lending partners and stakeholders. Today in this quorum, here we have Myself, Deepak Vaid, M.D. CEO, Lakshmi India Finance Limited CFO Mr. Gopal, Treasury Head, Mr. Piyush Somani, CBO, Mr. Kuldeep Singh and Collection Head Mr. Sanjay Oja is here with me in this call. FY26 has been an important and transformation year in the journey of Lakshmi India Finance.
During this year we strengthened our scale, improved our operating metrics, enhanced our capital position, diversified our liability franchisee and continued building a stronger institutional foundation for long term sustainable growth. Most importantly, FY26 was also our first year as a listed company following as the successful completion of our IPO in August 2025. We believe this transition is not merely a capital market event, but an important milestone in building a stronger, more transparent and institutional governed organization.
As we entered this next phase of our journey, our focus remains firmly centered on creating a scalable resisting and sustainable franchisee that can compound constantly over the long term. The broader environment of secured MSME and retail lending in India continues to remain structurally favorable. Increasing formalization of small businesses, improving rural and semi herbal economy activity. Government focus on financial inclusion, rising infrastructure development and growth. Credit Penetration across Tier 2 and Tier 3 market continues to create significant long term opportunity for organization like us.
From the beginning, our objective has never been growth at any cost. Our focus always remain on building a high quality lending institute with strong governance standards, disciplined risk management, sustainable profitability and long term customer relationship. We believe this philosophy become even more important as we continue scaling the business. Today our franchisee has stronger presence across Rajasthan, Gujarat, Madhya Pradesh, Chhattisgarh Uttar Pradesh and recently we started with Maharashtra also.
With the deep penetration across semi urban and rural market, we continue focusing on underserved borrower segments including small businesses owners, traders, transport operators, self employed borrowers and first time credit customers who often remain outside the formal lending ecosystem. FY26 also marked another important phase in strengthening our institution capability along with expanding the businesses, we continue investing in technology, infrastructure, operating processes, collection architecture, risk controls and management bandwidth in building a strong and more scalable operating platform for future.
As we move into FY25 and beyond, our strategy prioritize remains very clear. First, we will continue focus on calibrated and profitable growth across our secured MSME and retail lending portfolio. Second, we will continue our geographical expansion strengthening in measured manner with increasing focus on strengthening density with existing market while selectively entity adjacent geographies. Third, we remain focused on future improving operating leverage and branch productivity as our distributed network matters matures.
Fourth, we will continue strengthening and diversifying our liability franchisees while improving our overall cost of fund over time. And finally, we remain fully committed toward maintaining strong governance, standard prudent underwriting practice and disciplined risk management as we continue scaling the organization looking ahead with our strengthening capital base, expanding distribution network, improving funding profile and scalable operating platform. We expect a compound growth of AUM at around 30 to 35% annually over the medium terms as operating leverage improves and branch productivity matures.
We believe profitability growth can remain stronger with pat expected growth at around 40 to 45% in coming years. In current year FY26 will be continues to be an important year in this long term growth journey as we focus on scaling the franchisee in a calibrated, profitable and sustainable manner. Now I request Mr. Gopal, Mr. CFO to take through the financial and balance sheet performance in a greater detail. Gopal, over to you.
Gopal — Chief Financial Officer
Thank you sir
Deepak Vaid — Managing Director and Chief Executive Officer
And good afternoon everyone. Financial year 26 has been a healthy year for the company from both growth as well as profitability perspectives. Our assets under management increased to R16.26 crore as of March 26th reflecting a strong year on year growth of over 27%. Our on book also expanded to approximately 1519 crore demonstrating healthy organic growth across our core operating markets. Investment during the year cross rupees 821 crore while our customer base expanded to more than 42,800 customers.
At the same time for bunch network IN increased to 176 branches across six states reflecting our continued investment towards strengthening distribution reach and improving customer access across semi urban and rural markets. From a profitability standpoint, our net interest income for financial 26 increased by nearly 39% year on year to rupees 161 crore. The improvement was supported by healthy portfolio growth including branch productivity, better portfolio mix and stronger operating traction across mature branches.
Profit after tax for financial 26 increased by over 38% to rupees 49.7 crore. Despite continuing investment toward branch expansion, technology, infrastructure, manpower and operating capabilities, our profitability metrics also remain healthy during the year with return of assets at 3.08% and return on net worth at approximately 13.7%. One of the encouraging development during the year was the continuing strengthening or borrowing profile or average cost of borrowing reduced to 10.8% from 11.48% in financial 25.
At the same time, NIM expended to 11.26% reflecting improving lender confidence, better pricing discipline and gradual improvement in our funding profile. During the year we continue diversifying our borrowing mix across banks, small financial bank, NBFC and financial institution. Incrementally bank borrowers contributes a large share of the sanction and disbursement which was believed is an important indicator of improving institutional confidence in our organization. Another inform Another important milestone during Financial 26 was upgraded in our external rating excellent credit rating by Acute rating from acute A minus positive outlook to a stable outlook.
We believe these reflect our strong capitalization profile post ipo, LP operating performance and prudential risk management practice. Today we maintain relationship with more than 40 lenders across public sector bank, private bank, small financial banks, NBSC and financial institutions. This positioning us will for further diversification of liabilities and gradual reduction in borrowing cost over the medium term. Our capital position also improved significantly during the year. Net worth increased sharply to approximate 465 crore following the IPO and internal while our capital AD grew to over 26% providing us with adequate headroom to support future growth from an asset quality perspective.
While the broader industry environment witness some modulation in collection efficiency across certain borrower segments or portfolio performance continue to remain reasonably stable and controlled considering the scale of achievement during the year gross NP stood at 2.13% and net NP stood at 1.09% as of March 26, we continuing maintaining the potential Prof. Buffer and remain focused on early warning, identification, discipline, underwriting and collection efficiency improvement. Our balance sheet continue to remain adequately captured with comfortable liquidity and has a well matched LLM profile which we believe position us well for future growth opportunity.
With this I would now request for our business head to discuss operational education, customer segment and business initiative in greater detail. Thank you. Thank you Gopal and good afternoon everyone. Our operating model continues to remain deeply focused on local execution, customer relationship and disciplined sourcing across semi urban and rural markets. Unlike standardized lending models, our approach combines technology enabled process with deep local market understanding. A branch team maintains close engagement with borrowers and enabling stronger sourcing quality, better collections, improved customer retention and more effective underwriting outcomes.
Today our Franchisee operates through 176 branches across six states with strong presence in Tier 2 and Tier 3 markets. We continue following a cluster based expansion strategy that help us building local market understanding, operating efficiency and stronger customer connectivity. A branch led model remains one of the key strength of the organization. Branches functions not only as a sourcing center but also as a local underwriting servicing collection hubs. These create stronger accountability and improves borrower engagement throughout the loan life cycle.
Our customer focus continues to remain centric and around underserved and under penetrated borrowers including MSME, small traders, transporters, self employed customers. First time borrowers with nearly 37% of our borrowers continues to be first time borrowers reflecting our positioning within financially underserved customers. At the same time we continue maintaining a second secured and conservative portfolio profile supported by collateral backed lending and prudent loan to value ratios. Over the last few years we have also invested significantly towards strengthening our technology operating infrastructure.
Today our sourcing, underwriting, servicing and collection ecosystem increasingly digitalized through integrated with lose, LOS and LMS platforms, TKYT integration, automated workflows, CRM systems, digital collections infrastructure and real time monitoring capabilities. These investments are helping us improving turnaround time, strengthen risk monitoring, enhance customer experience pending long term operating scalability and our underwriting framework continues to remain conservative and highly process driven.
We combine centralized credit assessment with local market intelligence and field level verification processes. This hybrid approach help us evaluating borrowers cash flows more effectively particularly with informal and semi formal customer segments. From a collection perspective, our model continues to remain field intensive and relationship driven. We maintain frequent borrower engagement through branch level monitoring, field follow ups and early warning systems. We believe this operating model remains an important differentiator in managing portfolio quality across semi urban and rural borrower segments.
During financial year 26 we also continued selected expansion into newer markets including Maharashtra while continuously strengthening density within our existing operating geographies. Going forward our focus will remain on improving productivity across mature branches, maintaining underwriting discipline, enhancing operating efficiency and scaling the franchisee in the calibrated and sustainable manner. With this I would now request moderator to open the floor for questions and answers. Thank you.
Thank you everyone.
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 the 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. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Dipesh Sacheti from Manya Finance. Please go ahead.
Deepak Vaid
Hi, am I audible?
Operator
Yes sir, you are. Please go ahead.
Deepak Vaid
You guidance towards sustained 30 to 35% AUM growth given given the current operating environment and increasing competition in MSME lending, what gives you the confidence of maintaining this growth trajectory without diluting any underwriting
Kuldeep Singh
Standards?
Deepak Vaid
So actually if you want to see our footprints in Lakshmi India we have presence in only five states in Bharat. So we believe that we can grow, we can have more branches in other states where the requirement or where the businesses requirement is there. So the business loans requirement is secured. MSME loans and requirements are there. So we can open more branches over there and we can maintain this disbursement pace and maintain the growth in an Asian size being seeing of course this market scenario, that war and all but that is a little bit challengable.
But yes, we believe that this will be, this should get over very fast and we should be in a clear stage to do a business as regular we were doing as before.
Kuldeep Singh
So we already have predominantly in Rajasthan and
Deepak Vaid
Somewhere also have a presence in Gujarat and Madhya Pradesh which are the other states which where you’re trying to expand. And won’t that carry a risk of you know getting into a new state? Because in the same state you have, you, you know, you know how the demographic is. So actually we have presence in six states right now. So that is Rajasthan is a mother state of course having a bigger portfolio. Beside that Gujarat mp MP is the second and third will be the Gujarat. But we have, we have a presence in Uttar Pradesh also Chhattisgarh also and recently with Maharashtra.
So two of the major states we have recently opened. We have recently we have come up and before going into the any state we do a lot of R&D’s cross check comparison, peer comparison and all. So we are comfortable, we have seen the comfortable disbursement pace. We have seen the comfortable connection in this state, Uttar Pradesh and Maharashtra. So that is why we have entered and we have opened a few branches in Maharashtra and and moving ahead we will be adding more branches in this These states only enter.
I want to add here.
Kuldeep Singh
Yeah, please.
Deepak Vaid
So our expansion model is very robust actually. So we are not just like opening a branch of anywhere wherever the competition is. So we first evaluate in terms of the collection, in terms of the risk, in terms of the negative areas, negative customers. So all these reports are being submitted by everyone and then after there is a collective decision on the branch opening. So first we are not just opening the branches, we are opening with cautious approach.
Kuldeep Singh
Right. So what is the break even of each branch? If you can let us know that you know, opening a new branch what AUM it breaks even.
Deepak Vaid
So there are categories of branches. So we have differentiated into three categories. Tier 1, Tier 2 and Tier 3. So some resource and some premise area and everything is defined as per the. As for the the prospect at the that particular place. However, there is around seven to eight months is the time to take the break even where the expenses in the branch and the. And the income at the branch level set of each other.
Dipesh Sacheti
But what is the loan, how much loan does the branch have to disburse to actually break even? You might be having a figure around.
Deepak Vaid
Around 1.5 to 2 cr is the. Is the range where we we come up with the break even.
Dipesh Sacheti
Okay, so once the branch reached around 2cr the break even happens quicker, right?
Deepak Vaid
Yeah. Yes.
Dipesh Sacheti
Okay. So a large part
Deepak Vaid
Of your customer base consists of semi urban and underbanked borrowers. How vulnerable is the portfolio to local economic disruption, rural slowdown or political events at the regional level. Also
Kuldeep Singh
Now with El Nino coming in, how much of your portfolio is actually dependent on the agricultural sector? If you can also mention that
Deepak Vaid
See these natural calamities, natural problems actually impact all the sectors. But everywhere there’s a pros and cons. So the broader market scenario, the broader prospect doesn’t impact the smaller customers immediately. So that is the benefit where we are serving to the rural and semi rural urban, semi urban areas customers and small ticket size customers, small MSME customers like traders, like manufacturers, like service providers. So these are those those borrowers who are not directly impacted through the bigger calamities.
Like. Like a war is happening and all these things. But yes vulnerable these, these customers are. This segment is vulnerable. So that’s why the rate of interest is there. And we have the robust mechanism for the underwriting. So every customer is being visited by the credit manager. He. He talks with the customer as well as the neighbors as well as the two references in the nearby area. And he visit to the business premise visit to the customer where the customer that the property which he’s giving us as a collateral.
So by visiting, the mandatory visit with the RCU process, with the audit process, technical, legal, everything is happening with as per the industry norms. So by this we are mitigating this risk which you are talking about. I would like to add one thing in this, that in a area where we are operating still there is a joint family system. So in a family, let’s say five, six people are staying together. Father, mother, father, two son and their wife. So everybody is contributing and everybody is contributing towards the, towards the emi.
Like in rural areas you will find housewives also working either at home or cattle or at farm or whatever. So everybody is contributing, everybody is aware of the loan. So that is the best part, that the number of hands are more to pay the emi.
Dipesh Sacheti
Right. So how do you balance your growth versus asset quality in the market where competitive intensity is increasing and the pricing discipline is weakening? Also when you said that, you know you’re in the same family, a lot of people are contribut to the emis.
Deepak Vaid
How
Dipesh Sacheti
Do you avoid loan evergreening or in that case.
Deepak Vaid
So by taking all into the deal. So we are fetching the bureau reports also with all the family members. So we are taking the income as well as the liability of all the family members. So by this we are, we can avoid the liability part after, after the deduction of liability we can count for the loan eligibility.
Dipesh Sacheti
No, I’m talking about loan evergreening or as well as, you know, how are you maintaining your asset quality where you’re you know, trying to grow.
Deepak Vaid
So generally what customers does customer do ever gaining by taking other loan actually from where they have not not taken the loan currently. So for that I explained that we are taking all the family members we had patching all the civils of all the. All the borrowers and finding out how much is the current liability. So, so that customer cannot be over leveraged. Second thing by, by doing the credit underwriting with such a, such a robust like mechanism we are maintaining very healthy asset life.
Asset quality.
Dipesh Sacheti
Right. Thank you.
Deepak Vaid
Yeah,
Dipesh Sacheti
Yeah, please.
Deepak Vaid
And yes in this retail, retail segment if you are targeting a small ticket size customers so there is no asset quality kind of risk.
Operator
Thank you. The next question is from the line of Majid Ahmed from Pinpoint X Capital. Please go ahead.
Dipesh Sacheti
Am I audible sir?
Deepak Vaid
Yes.
Dipesh Sacheti
Thank you for the opportunity. So my first question is as larger banks and fintechs aggressively target MSME customers, where exactly do you believe your competitive mode lies today?
Deepak Vaid
Competition is definitely there but competition is healthy. So we are also learning from the market, how the market is doing, how the underwriting is. So there’s a difference in five years back and now. So five years back there was no process, there was no, no underwriting standard even in the industry also. So this competition is healthy and everyone is learning because of that and improving themselves. So that’s. I can say that that the competition never actually hampers you. This motivates you to do the business because MSME is anyways growing.
So everyone is having their particular target segment and the
Dipesh Sacheti
Space in that segment. So as and when the MSME is growing definitely everyone will participate in this growth.
Deepak Vaid
This I would like to add that as you said bank or fintech. So banks generally these customers who are we call them the NIP customers. So non income proof customers. So generally banks or fintech companies you can say can’t and don’t take, don’t take calls on such customers because they need a proper, proper documentation like proper income proof and all. So basically here what we are different from others is like we evaluate, we go to their shops, cross check with their businesses and then we evaluate their.
Their income. So this is a total. You can say lot of technology we are using here to evaluation of the for their income. So that that is can be done. That is done. That can be done. NBFC like us if you compare with Fintech. So Fintech generally are taking more into unsecured site. So we are 198% book is secured. So we are 100, we are doing that. And the banks, if you say so they. They read the documents. And also where these customers are not able to provide a documents which. Which is required.
So being such a field we are more. You can say that we have a more better cover towards these customers.
Dipesh Sacheti
Do you have your own personal in your company or the branches who go and do the physical visits or how does you make sure that before you give loan to such customers.
Deepak Vaid
Yes, physical visit is compulsory to everyone. Every customer we are considering for the. For the underwriting as well as we are doing the FIs also and RC also we have a separate crate team who’s underwriting this each and every case. So each and every case is visited cross checks and everything is done.
Dipesh Sacheti
Got it sir. And now as you expand geographically, how are you ensuring underwriting consistency across branches and avoiding local level credit dilution?
Deepak Vaid
So actually if you. If you talk about the state level every state is having a difference in terms of the customer segment as well as the asset also. So we we used to formalize a local Level policy. Like we have entered into into Maharashtra recently. So Maharashtra is having a different property papers which. Which is coming. So Rajasthan is different, Gujarat is different, MP is different, UP is different. And Maharashtra is also different as of now. So we used to make a localized policy with the competition feedbacks, competition interviews.
So by this we are actually entering into the new market. And we are operating as. As. As. Like as per the local expertise. So when we are entering into Maharashtra we are adding local people. We are. We are. We are building a local level policy there. Local level acceptance of the property papers. Legal also we are, we are localized there. And technical also we are localized. So everything is as per that state.
Dipesh Sacheti
Like what proportion of your portfolio today would consist of cash flow assist borrowers versus fully documented income borrowers.
Deepak Vaid
See, as of now we have mostly customers with the assessment income. Only recently we have started with a with a prime product of MSME where we are taking the this documents for the at least for applicant OR CO applicant 1% documented income must be there. But other person can be added on the basis of assessment. So I can say the major portion is of assessed income program only.
Dipesh Sacheti
Finally like in case if some of the loan payers are unable to pay or something and it gets into np, how do you recover those? How do you manage that in case?
Deepak Vaid
See we have a different collection team and litigation team also reports to the collection. So once the heart. Once the case moved to the hard bucket there’s a separate team who moves to to collect the amount. And then after if it is harder then it goes to the litigation team and we start the legal process immediately. So we have a complete framework for the legal initiation process. So when and how this legal can be initiated and what level and at what MPA stage this legal can be initiated. There’s a complete framework for that.
Dipesh Sacheti
Also.
Deepak Vaid
We used to take a lady as or a guarantor mandatorily as a. And we take the SPDC either of a lady or external guarantor. So we also utilize that tool to recover the amount.
Dipesh Sacheti
Okay. Thank you sir. All the very best. Thank you. Thank you.
Operator
Thank you. The next question is from the line of Vinit Sharma from Param Capital. Please go ahead.
Deepak Vaid
Thank you for the opportunity. I had questions principally around the OPEX and the borrowing cost. Firstly on the borrowing cost. I understand our current cost has improved over the year. And presently it stands close to 10.8% on a blended basis. But what would be the incremental borrowing cost and how do we see the overall blended cost moving over the course of FY27.
Kuldeep Singh
So basically. Hi, this is. I’m heading the treasury vertical. So basically our cost of borrowing for the last year was 11.48. That has been came down to 10.80. But the incremental cost stood to around 10.25 to 10.30. So ideally we are more focusing towards the bank borrowing. So the last year, that is the last close financial year we have borrowed majorly from the banks, PSU banks, private banks and small finance bank at least from the NBFCs. So the major focus area is to build up the borrowings from the larger PSO and private banks.
Deepak Vaid
Got it? Understood. Secondly, on the operating expenses and this ties in with the growth strategy which was mentioned. We presently would be having a cost income ratio of say around 50% or so. And the growth that we are targeting going forward. We had mentioned earlier that it is going to come from adding new branches. But given the expansion that we have done during the course of last year there would be a lot of headroom in the existing branches. Also just wanted to understand that what kind of growth potential in the overall AEM can we see from the existing branches and how much of that like also if you could layer your response with what is the current mix of
Kuldeep Singh
AUM from top state, top three states and how do we see that evolving going forward?
Deepak Vaid
Yeah, so actually we have 176 branches in which 18 we have added last year only. And we have started operation in Uttar Pradesh last year and Maharashtra also. So we we will be open. We are having a now these branches which we have opened in Uttar Pradesh is now getting a matured and of course we have. We have done expansion in existing Gujarat MP and Chhattisgarh also. So there also we have done expansion. So we believe that these branches are now ready to. Ready to earn now and position like they are.
They are having a good manpower, good now strength. Local people are aware of the company now they have good logins and all. So we believe that this 30 35% growth what I have told we can be will be able to achieve from the existing. And yes the branches which are getting mature and plus we will as. As we have added to major straight Maharashtra also. So we will be adding some more branches over there also in the same urban and semi urban areas. And from there also we they will be also contributing towards the growth and to touching this target.
So this is a plan what we have said so for the coming years and what was next another question.
Kuldeep Singh
So basically states if
Deepak Vaid
You go on, if you want to say so Rajasthan is of course having a maximum branches. So Rajasthan has a maximum AUM percentage. Then second will be Madhya Pradesh and then third will be Gujarat. And broadly what would be the composition if you don’t mind sharing composition for
Dipesh Sacheti
The. I mean what would be the percentage of AM in these states?
Deepak Vaid
Percentage of aum. So
Dipesh Sacheti
Yeah. And how would that evolve going forward?
Deepak Vaid
One thing. Percentage of AUM. How much? 82% is from Rajasthan. Around 11 is from MP and 7% is from Gujarat.
Kuldeep Singh
And that is
Deepak Vaid
From other trade.
Kuldeep Singh
Thank you so much.
Operator
Thank you. The next question is from the line of Arya Najmera from Holani Venture Capital fund. Please go ahead.
Gopal
Good afternoon sir. First of all congratulations for your amazing financial results. So first my question is your NIM has expanded meaningfully despite portfolio seasoning and competitive intensity. How sustainable are current spreads over the medium term spreads?
Deepak Vaid
Can you repeat your question please?
Gopal
Sir, your NIM has expanded meaningfully despite portfolio seasoning and competitive intensity. How sustainable are current spreads over the medium term spreads?
Kuldeep Singh
So basically. Hi. This had piyush. So basically the yield is any which way is in the same lines. You can see in the last three, four years we are not reducing majorly into the yield portion. Secondly there is a decline in respect to the inward cost of borrowing. So this is one of the catch that the NIM will be on. I can say that same level or it may be increasing going forward as well. So other fees income. We are more also focusing on getting the things into the top lines to be added into that way.
So apart from them. So we are more focused toward other income as well going forward.
Gopal
Okay. So so sir, does that mean your loans volume is increasing?
Deepak Vaid
Yeah.
Gopal
Okay. So my. Okay sir, so my second second question is while comparing this quarter with corresponding pdfs period of this year only 9 months the company part has increased from 29.10 crore to 49.68 crores. And revenue has grown from 226 crore to roughly 320 crores. But sir, your customer base has increased only by 4.8% during the same period compared to quarter three to quarter four. Could the management explain the key factor driving such strong growth in revenue and profitability despite relatively modest customer growth.
Operator
Sorry to interrupt. We are unable to hear you. Sir,
Deepak Vaid
If we compare quarter quarter increase in name that is one impact. In quarter four we have done DSO around of rupees 41 crore. So on the count of eight crore 66 lakh are included in NIM. That is why our name is increasing quarter quarter basis quarter three to water four despite of a page of customer base.
Gopal
Sir. Can you repeat sir, because do any new orders or what? Sir, I didn’t get it. Exactly.
Deepak Vaid
In quarter four we have done a dear transaction. We have sold around 41 crore pool under dear transaction. And on account of this we recognize upfront profit on account of 8 crore 66 lakh rupees. This is included in our revenue name. That is why our name is high in compare than customer base.
Gopal
Oh okay sir. So sir, but my question is sir, how is your PAT has increased above 4, 40% roughly only compared to this quarter.
Deepak Vaid
This is PAT including the impact of also upfront profit on the arrangement. That is why Pat is showing 38% growth.
Gopal
Okay sir. Thank you sir.
Operator
Thank you. Participants who wishes to ask a question please press star and 1. The next question is from the line of Rachna Mehta from SK Advisor please.
Rachna Mehta
Hi, Good afternoon. Am I audible?
Deepak Vaid
Yes. Yes
Operator
You are. Please go ahead.
Rachna Mehta
Hi. Hi. Thank you for giving me this opportunity. Also many congratulations on a great set of number. I joined the call bit late so apologies if my questions are a bit repetitive. So my first question is which specific borrower segments or geographies are witnessing higher stress currently and how much of the stage two portfolio do you expect could potentially migrate into stage three over the next 12 months?
Deepak Vaid
Imam, our major portfolio is in Rajasthan so that is almost 80%. So if you’re going to see number wise of course Rajasthan number will be higher as compared to. But if you want to see the security which we are having the LTV when with which we are maintaining on NPA cases is around almost 35 to 38%. So we are very much in a good position to recover it. And as these all asset what we are having as a security is an appreciable asset because we are in we takes property which is self consumed either a residential or a commercial property we are taking from the customers as a security.
So these customers are doesn’t leave this property any cost. So they take this property back and all. So we believe that we have a handsome recovery on our bed dates also. So we have a strong LTV and we have a strong collateral with us. So we believe that our post Ross will not be there any at any time in past also and in future also.
Rachna Mehta
Okay. And sir, your PCR on stage three assets appears relatively moderate at about I guess 49%. How comfortable are you with the current provisioning buffers given the pace of the portfolio growth.
Deepak Vaid
So as we are having, as I told we having a secured Portfolio and with a ltv. As I told overall LTV on the book stands for around 45% and on NPA 3235 to 38%. So we have. We have very strong, strong feelings that we will be able to receive the catch the money back. And if you want to see the comparing with the PR companies also the 49% is a very healthy PCR what we are maintaining on this secured asset because our 98% book is almost secured. So that is why why if you want to see with other compared companies also we are healthy in pcr.
Rachna Mehta
Okay. Okay, thank you. And also you mentioned about increasing participation from banks in incremental borrowings. Could you discuss how lender conversations and sanction terms have evolved post IPO and rating upgrade? Also, how much further room do you see for reduction in cost of borrowing over the next next two to three years?
Kuldeep Singh
I had the treasury vertical for the company. So basically previous to I can say that the IPO the challenge was the debt to equity is the one of the factor which was there that now it has become ease off of taking the borrowings. So banks and other lenders were adding the risk premium before than that more risk premium. I can say that post IPO that has become easier. So post IPO I can see that all cost of borrowing has been in the range of 10 to 10.25. In between of that that we are raising as of now and the blendedly for the year stood to 10.80.
Secondly we are more focusing towards the bank borrowings. So previously before reading upgradations. So there are certain limitations. I can say on the per bank on AUM basis what they can extend to us. So with the rating upgradation so we can get an ample of fund what we will be requiring for this year. So I can say that we are DEC plays in respect of getting the funds on a 10 to 10 and 0.25% rate of interest. And going forward I can see the rating applications that has happened in the later week of March 26th only.
So this year we will be getting an eventually benefit of around 20 to 25 bips. Keeping the global scenarios in place as well. If in case there is no rate hikes. That is from my side.
Rachna Mehta
Okay. Okay. Thank you so much for detailed answers. I’ll join the queue in case of more questions. Thank you and all the best. Thank you.
Kuldeep Singh
Thanks. Thanks a lot.
Operator
Thank you. Participants who wishes to ask a question, please press star and 1. The next question is from the line of Parash from purple one vertex Ventures. Please go ahead.
Deepak Vaid
Yes sir. Thank you for the opportunity and congratulations for a good set of details. Just I joined a little bit late so sorry for being repetitive. Sir. Sir, you clarified this UP money issue was a one off and a secured one. Now what is the expected timeline quantum of recovery for FY27 sir. I mean and what steady said credit cost should we assume?
Kuldeep Singh
So basically this Upani
Deepak Vaid
There was a balance of 19 crores and we have made a provision of almost 11 crore. So and we are in a healthy talk with the management and we believe that we will be able to get some good orders from the court also in our favor as our peer companies have already got a order in their favor. So we are expecting that within the coming quarters we should be able to receive get this money back from these from up money and the provision amount what we have created that is 11 crore will be directly added to the pad once we receive the
Kuldeep Singh
And there is no such you know DA so now in in our system anymore beyond it
Deepak Vaid
No if you want to see DA all across India. So it’s a very normal transaction and is like every NBFC banks and everyone is do this transaction and there’s a. If you were to see the default ratio that is also very minimal in a D. So but this is a. This is special you can say that because DA is very secure. It is a very very much secured thing. So but this is a like exceptional. You can
Kuldeep Singh
Say that this event has happened in India and through which we have. We have also got a hurt
Deepak Vaid
What kind of you know sort of growth rate now. You know you are sort of looking at for FY27 28. I mean in terms of the near term trend now for advances.
Kuldeep Singh
So if you want to see the past trend we have growth. We have shown we have given a growth of 33%
Deepak Vaid
CAGR to here from last four to five years. So and now though we have after getting after getting an IPO listed we have the capital raise also we are now more stronger more better position now visibility is good. The rating has got upgrade. The cost of fund has gone down the we know we have. We have open our branches in other states also. Now we are visible on footprints and other branches. So we believe that we will be able to maintain a better position that what we are doing at like 30 35%. I believe that with this growth rate we can expect in coming years.
And we have still so many untouched states are pending. So we can have our footprints over there and we can have make a great business
Kuldeep Singh
So think it’s a branch led model of lending. I mean physically that is still sort of manageable to. I mean continue this kind of approach.
Deepak Vaid
Yes. So we are. So this business what we are doing is. Can be done by the team, by the team support only and with the brand support. Because these customers are an IP customers, non income proof customers. So we believe we. We whenever, wherever we start operating start dispersant. So where. Where we open up branches first and then we evaluate their income and then on the process of that we do it. So for this all they do required a manpower. So basically this is little bit the main opex cost is a manpower cost.
But yes the per per person employ productivity is good over there and good the demand is there and less being less competition in specifically this product what we are doing. So we. We believe that it’s a good potential market for us.
Kuldeep Singh
I mean which new states do you now intend to expand to?
Deepak Vaid
So recently we have added Maharashtra. So six states we are already in. And. But we have a lot of opportunity in Maharashtra and up there. But yes, slowly, gradually we will be coming up with more states where we can have a potential lend customers for us.
Kuldeep Singh
Now the cost of borrowing
Deepak Vaid
Has come down, you know quite interestingly to 10.8 now. And so what realistic funding cost trajectory do you see over the next 12 to 24 months?
Kuldeep Singh
Yeah. Hi Hi Paris this site Piyush I had the vertical so we are trying harder so that the cost of borrowing can be declined by another 2025 PIPS going forward as well. But you can see that since from Last year that is 11.48 was the cost of borrowing that that has been reduced to 10.80. And post IPO the leverage is one factor which is become ease off for the company where there is premium that is being inculcated in the rate of interest that seems to be in favor of the company going forward basis as well as the rating upgradation was also one of the factor that will be factoring into the rate of interest for this year.
So I believe that we will be able to convert and translate into the rate of interest going forward by another. I can say 2025 bips on a minimum side and depends upon the scenario also in place.
Deepak Vaid
Interesting. Understood. So the ROE is also improved. I mean the return on equity to 13.7 despite the up money issue now. So what is the sustainable medium term ROE we should work with sir without compromising let the underwriting quality.
Kuldeep Singh
So basically I can say since last four, five years in the peak ROE that we have reached to 15 plus, that is 15.7273 odd percentage. And in the medium terms I can say that we believe that it will be above 12%, 12 and a half percent on a minimum side.
Deepak Vaid
So this sort of 13.7 that we’ve hit now, I mean give and take, this is what we can on an average basis expect going forward to continue.
Kuldeep Singh
Yeah. So basically the since the equity infusion has recently done so the translation into the return on equities is not very faster. But you can see the rota is there. The return on Asset is above 3 so we will be trying and harder to maintain the ratios above 3 in a going forward basis. So that translation from the return on asset to debt to equity will be translated factoring to that, to that return on equity on a maximum note that we see. So.
Deepak Vaid
Right, so now you know, given a little bit of this uncertain situation on you know, energy and you know this entire geopolitical stuff etc, are you seeing any sledge trends in the you know, core msme, the self employed borrower, you know, based across geographies that you are operating?
Kuldeep Singh
So precisely we are in a geography or I can say the customer segment that we are Getting to tier 2, tier 3 Cities of India where the customers are not dependent upon majorly on. I can say that the factors that are involved into this scenario that is oil or other things because we are catering to a customer for cash flow driven businesses and businesses are majorly into the rural segment which has not primarily dependent upon the oil other things or since our vehicle portfolio is 9% that is very minuscule and so I can see that the going forward basis as well.
So this scenario will not impact our kind of business as of now.
Deepak Vaid
Yeah. So the loans book stress also may not prop up and at the same time we’ll be able to grow as well.
Kuldeep Singh
Yeah. If in case that, if in case the oil prices are higher maybe there may be a slightly slowdown in there or business segment as well. I mean to say the customer segment that we are catering but not on a harder note that that is there.
Deepak Vaid
Right. And so just last query my end now you know we are trying to scale towards 3,000, 5,000 crore AUM. What operational or underwriting controls are being strengthened to ensure you know, the growth quality
Kuldeep Singh
Remains intact. Yeah. Over to, over
Deepak Vaid
To Sir. Currently the underwriting is happening on the application where everything is, is in control and can be monitored. Secondly we have also introduced the RCU process last, last to last year and so every document which other than See first we are fetching all the details of KYC through the integration and verifying that online. Also doing the banking verification. Other than that if any document like salary certificate which is not which cannot be verified online can be verified through rcu.
Then after CQIC is having then sursey is having so every every aspect which has to be covered under the underwriting process with legal technical. So legal we are having external vendors. Then again that legal is being vetted by the internal legal team technical. Also the valuation part is also happening through the external vendors. Then there’s internal team of civil engineers who are vetting the valuation, checking the valuation amount. Also four boundaries. Everything is being as per the industry norms and everything is on a digital mode.
So customer application is happening on the on the mobile application. Then after PD is happening so credit manager is mandatory going to the customer’s place for the PD widget. So then PD is happening on the mobile application. Then the case is moving on the on the on the system to the next next authority for the decision making. Then the disbursement is also processing through the system. The only which is left is the signing of E signing of the agreement which is happening on a manual basis physical mode.
As of now and very very recently we will be coming up with the agreement signing process to the E mode also electronic mode also. So the complete infrastructure is already being developed as and when if there is any requirement as per the industry or as per the new learning, we will also implement that.
Kuldeep Singh
Thank you so much.
Deepak Vaid
Thank you.
Operator
Thank you ladies and gentlemen. Due to time constraints that we will take that as the last question for today. With that I now hand the conference over to management for closing comments.
Deepak Vaid
Yes, any more questions?
Operator
No sir, I have handed over to you for any closing comments if you have.
Deepak Vaid
Okay, so what I believe that we have. Thank you first of all for all the joinees and thanks for questions. And we believe that in Lakshmi we have very. We have made a very robust Systems, lot of AIs, we are using a lot of technology we have using so and due to that we are able to grow. We are able to grow and we will be able to grow in a good, good pace and fast pace keeping all the compliances and keeping all the risk ahead and taking care of the portfolio numbers and all. But yes, this is all because of all the team members, all who are working hard with us and due to all these and thanks to our investors also who have made a trust on us and because of all these factors we are able to come to this stage and the future also we will be I can say that we will be able to achieve the numbers what we are committing here and we will work hard and we will be able to make good numbers, good packed, good aum size and good presence in across Bharat so that all from my side and if anything is left you can mail us we’ll be happy to reply on it.
Operator
Thank you very much ladies and gentlemen. On behalf of Goinde advisors. That concludes this conference. Thank you for joining us and you may now disconnect your lines.