Manappuram Finance Ltd (NSE: MANAPPURAM) Q4 2025 Earnings Call dated May. 09, 2025
Corporate Participants:
V.P. Nandakumar — Managing Director and Chief Executive Officer
Bindu A.L. — Chief Financial Officer
Analysts:
Abhijit Tibrewal — Analyst
Shreya Shivani — Analyst
Shweta Daptardar — Analyst
Shreepal Doshi — Analyst
Kushan Parikh — Analyst
Rajiv Mehta — Analyst
Pradeep Agrawal — Analyst
Bhaskar Basu — Analyst
Heli Shah — Analyst
Bunty Chawla — Analyst
Shubham Prajapati — Analyst
Vivek Gautam — Analyst
Mona Khetan — Analyst
Deepak Sharma — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Manapuram Finance Q4 FY ’25 Earnings Conference Call hosted by Motilal Oswal Financial Services 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 the conference call, please signal operator by pressing star then zero on your touchstone phone.
I now hand the conference over to Mr Abhijit Tibrewal. Thank you, and over to you, sir.
Abhijit Tibrewal — Analyst
Thank you. Yes. Thank you, Saisha. Good evening, everyone. I am Abhijit from Motilal Oswal, and it is our pleasure to welcome you all to this earnings call. Thank you very much for joining us for the Manapiram Finance call to discuss Q4 FY ’25 earnings. To discuss the company’s earnings, I am pleased to welcome Mr V.P. Kumar, MD and CEO; Dr Sumita Nandal, Executive Director; Ms Vidhu AL, CFO; Mr Rajun Narayman, Business Head; Mr B.L Ravindra Bapo; MD, Microfinance; Mr Rajesh Namboo Pad, CFO, Ashirbad Microfinance; Mr Kamal Karma, Head, Vehicle and Equipment Finance; Mr Suveen PS, CEO, Mannapuram Home Finance; and Mr Robin, CFO, Home Finance.
On behalf of Motilal Oswal, we thank the Senior management and the Investor Relations team of Finance for giving us this opportunity to host you today. I now invite Mr Kumar for his opening remarks.
With that, over to you, sir. Thank you.
V.P. Nandakumar — Managing Director and Chief Executive Officer
Thank you. Good evening, ladies and gentlemen. It’s a distinct privilege to address you today at this earnings conference call. I am pleased to present a detailed record of our financial and operational performance for the 4th-quarter and the financial year ended ’24 ’25. I appreciate your continued interest and support as we reviewed our progress and strategic direction.
Let me begin by discussing our financial highlights. For the FY ’24-’25, Finance reported a consolidated revenue of INR10,041 crore, representing and 12.Y year-on-year growth. For the quarter ended March ’25, our consolidated profit-after-tax before OCI and minority interest stood at a loss of INR203 crores. And for the financial year, we recorded a profit of INR204 crores while excluding the microvidence subsidiary,, the consolidated PAT for the quarter and the financial year stood at a profit of INR423 crores and INR1,843 crores respectively.
The yearly performance had a growth of 5.9%. In response to increased regulatory scrutiny, we are actively participating for the RBI’s gold loan framework issued on 9 April 2025 and submitted a representation on the say I have confidence that the RBI’s dropped guidelines on gold loans will not disrupt gold loan interest-rate. They are largely aligned with the practices already in-place across NBOCs. I will ensure — it will ensure a level yield for all the entities. It may introduce additional procedures in the areas such as customer verification and gold apprisis. But these are unlikely to present any significant operational leverage.
Moving to our microfinance business, the business reported an AUM of INR70 crore INR107 crore, although the microfinance sector is currently navigating challenges, so that may take time to resolve. I believe it is a face of recovery. We also implemented stringent booms over and above guidelines resulted in a lower sourcing to sanction the rate of 34% in February ’25 and 64% in September ’25 from 64% in September ’24. Disbursements enabled only incentives having a PAR lesser than 2%. With a disbursement fully enabled at branch level based on portfolio quality, improving case load per FTA branch team to handle regular bucket collection and disbursements. Focus collection strategy by having separate team for hard bucket, 100% biometric verification of customers, ensuring a robust onboarding process and unique and enhanced income scorecard. Our vehicle and equipment finance AEM rose by 16.1% to INR4,773 crores with an ROA of 1.2% year-on-year. MSME and allied businesses booked a growth of 5.8% to INR379 crores. Looking ahead to FY ’26, we remain optimistic.
We expect our gold AUM to grow strong, supporting digital onboarding and overall demand. In the backdrop of recent in the past tensions, the remainder of the critical that role of national security plays in rostering a stable economic environment. Geopolitical developments of this nature reminds us of broader environment in which we operate in the bottles of national security. We express our deep respect and gratitude to the for their unwavering commitment to safeguarding our sovereign needs. I would like to express my heartwell gratitude to all our stakeholders for their unwavering trust and continued support. As a company, rooted in tradition yet given by Nove innovation. We remain committed to empowering lives through responsible lending and customer-centric solutions. With a clear vision, strong governance and shared purpose, we will continue to move forward, creating impact, building trust and driving inclusive growth.
Now, I invite our President and CFO, Mrs Ayal, for a more comprehensive review of our financial performance. Thank you.
Bindu A.L. — Chief Financial Officer
Thank you, sir. Good evening, ladies and gentlemen. Thank you all for joining us today. Coming to the key highlights, the gold loan portfolio remains our core strength, accounting for 59.5 percentage of consolidated AUM compared to 55.4 percentage in Q3 FY ’25. Consolidated gold loan AUM stood at INR25,586 crores, up by 4.4 percentage quarter-on-quarter and 18.7 percentage year-on-year in-spite of a heightened competition. We added 3.1 lakh new gold loan customers during the quarter, bringing the total active customer-base to 25.8 lakhs. Our average loan-to-value for gold loan is 57 percentage compared to 60 percentage.
Notably 82 percentage of the gold loan book is now sourced through our online gold loan platform. The standalone profit-after-tax for the quarter was INR414 crores versus INR453 crore in Q3 on account of lower yield in gold loan business, which supported a better growth for the quarter. For the standalone — for the standalone full financial year, profit was INR1,783 crores, reflecting a 7.6 percentage Y-o-Y growth. AUM for, including gold loan of INR928 crores stood at INR8,189 crores, which is down by 18.2% sequentially and 31.1 percentage year-on-year. The Indian microfinance sector experienced considerable stress in Q4 FY ’25, primarily due to increased borrower default from over leverage. Interventions by SRO and operational disruptions led to a higher credit cost and negatively impacted the profitability. Our shareworth posted a loss of INR626 crore in Q4 FY ’25 compared to INR188 crore in Q3 FY ’25. Net NPA at 2.46 percentage, which is INR177 crores compared to INR224 crore in Q3. CRAR at 21% before MDT.
Our vehicle finance AUM stood at INR4,773 crores and during the quarter, the business has declined by 6 percentage, but with a growth of 16.1 percentage year-on-year. Considering the asset quality challenges, especially from two-wheeler and farm equipment business, we tightened the underwriting norms during the quarter. GNPA stood at 6.7 percentage. The composition of vehicle finance reflected a well-diversified portfolio with commercial vehicles largest share at 48%, followed by cars at 31%, two-wheeler at 15 and farm equipment 6%. The home loan portfolio reached INR1,824 crores, a growth of 2.6% Q-on-Q and 20.8 percentage Y-o-Y growth. The business reported a profit of INR23 crores during the quarter — during the year. To MSME at INR3,079 crores with a disbursement of INR366 crores, the lending to other NBLCs at INR511 crores. The Board has declared an internal dividend of INR50 INR55 per share for this quarter. Our capital position strong with a CRAR of 30.9 percentage and the net-worth at INR12,432 crores.
Return on assets for the quarter 4.8 percentage and our leverage remains conservative. With standalone GNPA 2.77 percentage and compared to 2.46 percentage in the previous quarter. Liquidating our cash-and-cash equivalents INR3,808 crores with an undrawn bank line of INR2,306 crores, CPE exposure was low at one percentage. And during the quarter, we have successfully raised INR2,547 crore in term loans from.
Thank you once again for your continued support and confidence. We are now open for the floor for questions. Thank you.
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 in one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press 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 Shiwani from CRSA.
Shreya Shivani
Thank you for the opportunity. Yeah. Thank you for the opportunity. I have two questions. First is, first is on the quarterly standalone performance. If you can help us understand with the movement in the net yields, it has declined sequentially, that is on the gold loan standalone book. That would be my first question. And my second question is, congratulations on your deal with. So if you can help us understand your — and strategy around the subsidiary, we have seen documents on the exchanges, which talks about how much of the proceeds from the issue — from the funds will be directed towards subsidiaries. It’s about 60%. So if you can help us understand how much of that would — what is the initial plan or how are we looking at the three different segments that we have and how will that scale-up? Thank you.
V.P. Nandakumar
So Ms Shia will take-up the second part of the question first. In the main capital. It is under the process of approval. We have submitted obligation to various regulatory authorities for approval and we are waiting for the approval. And so the capital 18% number is 9% in the form of Equity and 9% as the convertible debenture, the totally 18% is coming into the parent company. So the capital requirement of the subsidiaries will be met from the parent company depending upon the need. So there is no specific amount. So whatever is required as per the — our projected growth plan. So if and when required, the capital will be infused over the parallel. Second part of your question is quarterly standalone. You can update.
Bindu A.L.
Yeah. On the gold loan, if you compare with the previous quarter, we have seen a drop of almost 55 basis-points in the income. And that is the reason for the drop-in profitability during this quarter.
Shreya Shivani
I’m sorry, I didn’t get that.
Bindu A.L.
We’ve seen a drop-in 55 basis-points reduction in gold loan yield.
Shreya Shivani
So we have — have we offered new products or new plans after our entire branch revision that we had done in last quarter. Is that one of the reasons for the yield declining?
Bindu A.L.
So two reasons. We are analyzing the interest sensitivity and in few branches, we are making the adjustments in the yield by offering new products. The aim is to attract slightly higher-ticket borrowers also with the comparable pricing. So we want to match with the market so that the growth rate will be better.
Shreya Shivani
Got it. So this has selectively happened over few branches or widely happened across our — across our entire system.
Bindu A.L.
So selective branches selective branches.
Shreya Shivani
And would it — would the selective branches be in some particular geographies or any color on that?
V.P. Nandakumar
So we analyzed the sensitivity. Accordingly, these are being done. It is not restricted to a particular geography. So wherever we see across India, wherever see we see the interest sensitivity there we have implemented the schemes to attract our customers, particularly targeting slightly higher-ticket.
Shreya Shivani
Got it, sir. That is — that is very useful. Thank you so much and all the best.
Operator
Okay, thank you very much. The next question is from the line of from Elara. Please go-ahead.
Shweta Daptardar
Thank you, sir, for the opportunity. Sir, a couple of questions. Sir, you mentioned last quarter that you had resubmitted the application for branch opening and you had a very positive response from the senior officials of the RBI. So any progress there? So gold loan branches?
V.P. Nandakumar
Yeah. So we have submitted the application. And the transaction is under process with RBA, RBA has told us to wait until the transaction is over. In the meantime, what I want to highlight is that there is a draft guidelines in the public domain or comments from the in that the guideline indicate that the branch opening prior permission will be taken away.
Shweta Daptardar
Understood, sir. Ma’am second question is for you. So just taking queue from the previous question. So you — did I hear it right that the focus has been on higher-ticket loans on the gold loan side, wherein the existment on yields happened. So if there was a focus on higher-ticket gold loans, then what percentage share of gold AUMs have a tenure of over 12 months and how are we faring or how any systems in-line with the new norms which are put in the draft mode?
Bindu A.L.
Okay. So the higher-ticket would be mandates around 5 lakh and abound because where we felt that our pricing is not competitive. So that is the reason we are adjusting the price in the geography where we felt it is not competitive. And the new guidelines talk about gold etc., which we don’t have many customers. So we are not talking about the new guideline. It is mostly between 5 lakh and above. But the majority of the customers below 50 lakh only.
Shweta Daptardar
And ma’am, how are the tenure what percentage of our book is beyond 12 months tenure?
Bindu A.L.
We don’t have any loan contracts about 12 months. Goal loan 500 okay.
Shweta Daptardar
And ma’am, one last question. So on the MFI business, I mean, I definitely understand that’s a lot of work is going on from our end there, but two observations. One, so is Stage 3 now peaking out at around 8 odd percent that we have seen for this particular quarter? Also, why the opex to AUM had to increase over 400 bps sequentially when the fact that the book has degrown on MFI side, also the loan officer count is down. And I mean it’s — I’m sure collection efforts would have sort of staggered — I mean, would have stacked up more now, but that has also not reflected in the asset quality. So what is leading to continued spike and this meaningful spike now in Q4?
Bindu A.L.
We can say that the Q4 is the worst quarter and we are seeing some improvement. And if you see the net NPA is INR177 crore. So the coming quarters in absolute number, this will be less. Your question on opex, what we did is we had the season resist order and we were recovering from that. We want our employees to focus more on collection. Otherwise, our INR8,000 crore money is with the borrowers. We need a lot of people for collection and we want to maintain the employee strength and that is the reason to compensate them for the drop-in disbursement in.
We increased the collection incentive that helped us at least to maintain the collection efficiency at this level. So the reason for OpEx is a slightly higher incentive to retain employees to improve the collection. I agree that OpEx has gone up and all these ratios are a function of AUM. As the AUM drops these percentages, the GNPA or the opex to AUM has gone up. But in absolute number, it is not very-high compared to previous net NPA of INR224 crores, this is around INR77 crores. So the provision coverage also increased.
Shweta Daptardar
Okay. Fair point, ma’am. And just a request to the whole team, we would greatly appreciate if there is a reasonable interval between announcement of results and conference call, which will allow us some time to review the financials. Thank you and all the best for your future endeavors.
Bindu A.L.
Yeah. Sorry for that. We faced some technical issues in the last-minute. Otherwise, we used to upload in our bag. So sorry for that.
Operator
Thank you. Thank you very much. The next question is from the line of Shreepal Doshi from Equirus. Please go-ahead.
Shreepal Doshi
Hi, sir. Thank you for giving me the opportunity. My question was that you made a — you made a comment in your early commentary that we have submitted some representation to the RBI. So could you please give some like more detail as to what sort of representations have been made.
V.P. Nandakumar
The representations are made through our association primarily claims with the banks and that is to maintain the LTV at 73% level, then run the proposal, what is in the fact that 75% shall include the interest component is the rate of maturity. So the major part of the representation is that, yeah, to maintain the LTV at the present level.
Shreepal Doshi
Got it. And sir, like in our current book, what percent of our customers would be taking bullet repayment as an option in our gold book?
V.P. Nandakumar
In our case, 100% of the customers are taking Vulat 3 payments.
Shreepal Doshi
All right, all right. So I mean — and so during the quarter, the LTV has gone down for the gold business. So what explains that? Have we started while it was just a draft circular, but have we started taking some proactive actions or something like that? And therefore the reduction or what explains the reduction?
V.P. Nandakumar
It is not because of that. See, when the gold — when the gold price goes up, the customer — the — it takes the money what he wants only that just because the gold price has gone up, he will not avail more money. Why? Because people when they pledge have a clear visibility about the cash-flow, the average life of the loan still remains around four to five months and many customers redeem within one or two months there. So they have the visibility and unless they have the visibility, they will not borrow. So this is their family jewelry, which is so close to their heart.
So that’s why even when the gold price goes up, they borrowed or within their capacity. They feel like when the gold price goes up, if they will borrow more, they will not be able to meet their commitments because one thing what should be understood here is he — if he wants more enjoy that and he has no intention to repay, better he can sell-in the market and get more money or should we come for pledge. So that’s the reason why when the goal gold price gold is a huge phenomenon. It comes down and when the gold price goes down, it goes up — goes up.
Shreepal Doshi
Right, right, right. Sir, just one more question here like in link with the draft circular. So if it gets implemented in the current form, then what would be the disbursement LTV that we will have to maintain or we will have to sort of start with because as you highlighted that 100% of our portfolio is a payment. So in that case, what would be the LTV at the time of disbursement that we’ll have to maintain.
V.P. Nandakumar
So see the interest component, whatever it is, still the dates that also will have to be factored while computing as our LTV or and the will still maintain that 75%.
Shreepal Doshi
Got it. Got it yeah. So like given that our gold yield is, I think, closer to 22%. So if we do back calculation, we’d be closer to 60% sort of an LTV?
V.P. Nandakumar
Right, right. So yeah, that would be. We will design, we will design schemes say which is convenient to the borrowers. And we don’t expect but in much — in much disruptions with the introduction of these. And we believe that it will make the industry more robust, et-cetera and there will be a level blame field for the NBFCs and banks also will be more in-line on with this because most of the loans even in the case of banks are availed as bullet loss.
Shreepal Doshi
Got it. Sir, just one more question on the microfinance side. So in that we do have decent exposure in states like Karnataka and Tamil Nadu, where we have seen — in the recent time, the state government has taken some actions from the — from bringing in referent ordinance angles. So how are we seeing at ground level the collections being impacted in these two states, especially in Tamilla, which is very, very decent.
V.P. Nandakumar
So in both the cases, this is the ordinance made it simply clear that these are applicable to unregulated institutions. As we are regulated institutions, initially there are some hiccups. Other than that, we are getting support even with the police as we are regulate once they understand we are a regulated entity working within the guidelines of RBA. So it’s just that there are initially some challenges, but gradually the market understands this our target audience understands that and they cooperate with that.
Shreepal Doshi
Got it. Got it, sir. Okay. Thank you so much sir for answering my question. Good luck for the next question.
Operator
Thank you so much. The next question is from the line of Kushant Parik from Morgan Stanley. Please go-ahead.
Kushan Parikh
Thanks for taking my questions. So I have mainly two questions. So the first question is around the loan growth. Basically, this quarter we have seen loan growth sequentially declined for most of the non-gold sectors. MFI is understandable given the ongoing stress over there. But if you could just help us understand the sequential slowdown in the non — in the vehicle segment or the on lending segment or even the slowdown in growth in the HFCs. So some color around the slowdown and what the future outlook for these segments will look like and what direction the overall loan mix will take-in the near-to-medium term as we transition to the capital management?
And the second question is around the Acevad credit cost. If you could just help add some color to the credit cost in this quarter? I mean, how much of it was pertaining to write-offs? And also if you could give some direction around incremental stress recognition that is left in the loan book and also any additional provisioning requirements. So I mean, what direction should we think about credit costs going-forward? So those are my two questions. And a third data keeping question, if you could just give the number for gold auction business.
V.P. Nandakumar
So loan growth in gold loan is good. It is going strong. The other sectors like vehicle finance, some of the areas like the factors and equipments, we — we slow-down that. And we thought of tightening our operating loans, et-cetera. So consciously, we took a call to slowdown or during the last quarter and this quarter everything is reinstated with a new underwriting norms. HFC also, it is like that. So these segments will grow going-forward. It will be — the growth should be more healthy. That’s why we took a pause, but those will be compensated with the gold — with the growth in gold loan. That is what you see. This is credit cost. Yeah, you can share with that.
Bindu A.L.
Yeah. So when the guardrails implemented from August onwards, we have seen a higher delinquency and those cases lifted to NPA in Q4. So the — these are the flows happened during Q3 and slipped to Q4 as NPA. But the — now we have seen stability in the flows and we expect these numbers to come down in the coming quarters. The write-off number for the quarter 56165 crores and the auction during the quarter rupees INR108 crore thanks.
Kushan Parikh
That was helpful. If you could just give some guidance around the credit cost at going-forward as well. I mean, should we expect that what is — I mean the 4Q credit costs are sufficient and incrementally we should see significantly lower credit costs or there is still some specification left that would come into spillover into Q1 as well.
Bindu A.L.
The credit cost number as the disbursement is very slow the credit cost number will be the percentage will be high but in absolute number this will be much less understood.
Kushan Parikh
Okay. That’s all from my side. Thank you.
Operator
Thank you very much. The next question is from the line of Rajeev Mehta from YES Securities. Please go-ahead.
Rajiv Mehta
Yeah, hi, good evening. Sir, when was this pricing moderation done in-board loans, which was done selectively in certain locations, which month? And post that, have you experienced you know any increase in growth in terms of AUM because when I look at the customer-base in Q4, your customer-base is actually negative — I mean, flat to negative growth, so if you can tell us when was it done and whether — is there any improvement in terms of our new customer addition? It’s not because you’re chasing high-value customer. So maybe not exactly in the customer count, but at least in terms of disbursement number on a monthly basis, is that picking-up and how much it is picking-up? And are you also further you know thinking of taking it further ahead in terms of reduction of portfolio yield or lending rates to spur the growth.
V.P. Nandakumar
So we are targeting slightly higher tickets also, it is with interest rates reduction in that segment, definitely that segment is growing. So this leads to a growth in AUM and we expect good growth in goal — in gold AUM in the coming months.
Bindu A.L.
We started the pilot in Q3 very few branches seeing the result from those branches we extended mainly in February so the high-ticket customers we are able to acquire, that is the reason the number of customers we couldn’t as well. But the average ticket size has gone up to INR5 lakh also from 14% level it runs up to 16%. Above INR5 lakh, increased to 16% from the earlier level of 14%.
Rajiv Mehta
Okay. And so when you’re talking about, you know, expecting growth in gold loan portfolio. But you are obviously factoring in whatever impact has to come from the implementation of draft guidelines. And so what is the — I mean, any range in the growth number if, if you put any range for the growth number for the current year? And if you can also comment simultaneously on the competition intensity from banks and your peers because I think one year back, I mean, you were calling out that the competition from the banks is now kind of stabilizing or receding, but what is it now? And if you can quantify the growth number for the gold portfolio?
V.P. Nandakumar
We expect a growth of over 20% during the current year.
Rajiv Mehta
Okay. And sir, any comment on competitive — competitive intensity?
V.P. Nandakumar
Yeah, see the competition is always there, but still we expect a good growth of over 20% during the current financial year.
Rajiv Mehta
Okay. Okay. And just one last thing I want to check. I mean, sir, if the draft guidelines were to get implemented and you said that it will not have any significant impact on on-the-ground practices and maybe even on growth. But it talks about certain things which we have — which the industry was not doing in the past in terms of LTV monitoring on a more concurrent basis, which may — which may kind of mean that you will have to collect interest from the borrower more regularly so that the LTV is not breached. And hence it also would mean that you will have to change your product structure, in that case, maybe charge a lesser yield since the accrued interest portion will be lesser now. So why do you say that the guideline is implemented in the current form and shape will not be significantly disruptive when there are a lot of things which may need to change on-the-ground.
V.P. Nandakumar
So LTV, many of the things are already implemented by the industry, but particularly by major players, the CLTV, the monitoring on a continual basis and this policy around how to do that is already framed by the Board and it is already in practice now. So yeah, the — see the gold loan industry is also growing as-is seen from the growth in gold loan from the banking industry. So it is growing very fast and we hope we will also enjoy the benefit of that growth of gold loan portfolios so there is lot of migration taking place from the unorganized sector and we are seeing that.
Rajiv Mehta
Okay. Okay. Thank you so much for answering my questions and best of luck.
V.P. Nandakumar
Thank you.
Operator
Thank you. Thank you very much. The next question is from the line of Pradeep Agarwal from B&K Securities. Please go-ahead.
Pradeep Agrawal
Yeah. Hi, sir. My question pertains to the drop guidelines. So while the industry and you have been offering around 12-month tenure of products and if that is implemented in the current form, I believe the impact on the LTV is the highest. So are we evaluating to reduce tenure for newer products so that the impact on the LTV remains less? And if we do so, if we do not do so, do you see that the industry might do that and can impact business for us. We have shortened your schemes in the past. We have successfully implemented that. We are waiting for the guidelines to come. Accordingly, we will act. We don’t — we will not have much problem in offering loans of different tenuous. So in the past, if you can share the experience when we reduce the tenure, is that gave some challenge to customers in terms of convenience what it has versus 12 months product or is it indifferent?
V.P. Nandakumar
So those who to one year will offer one year low, that is lower LTV. So from 2014 13 onwards, till 2023, we were offering a launch of of three months.
Pradeep Agrawal
So will that have an impact on our yields?
V.P. Nandakumar
I don’t expect.
Pradeep Agrawal
Okay, okay. Yeah. Okay. That’s it from my side. Thank you so much. Yeah.
Operator
Thank you very much. The next question is from the line of Baskar Basu from Jefferies. Please go-ahead.
Bhaskar Basu
Thank you. Thank you. I just have a couple of questions. I think few of them were answered. So firstly, on the gold loan yields, while you’ve seen some dip this quarter, what is the outlook and in terms of how much further debt do you expect next year? And given that in the context of additional growth, how should we think about the NII growth with a lower-margin and better growth? And that’s my question number-one.
V.P. Nandakumar
So the — we expect the yield to come down because more-and-more competition yield to come down, we expect the borrowing cost also will go down gradually, so the yield along with the yield. And by targeting growth to cover whatever is the loss in the yield, we expect to maintain the ROE.
Bhaskar Basu
Your yield comes down, your margin comes down, your ROE gets impacted, right?
V.P. Nandakumar
No, sir, we will leverage our — we’ll leverage our capital. Okay. We leverage our capital more to maintain ROE. Okay.
Bhaskar Basu
Okay. And secondly, on your new circular and I think there was some discussion around it. So are you looking at products which kind of have more interest payment upfront, more regular interest payment versus the payments? And secondly, and also from an operational standpoint, some of the things like end-use monitoring, customer verification. Are these things already being implemented or are you waiting for the guideline to come in? And how do you see that impacting costs?
V.P. Nandakumar
So these are already in-place. Yeah, the customer with VK and lot of the LGV monitoring, these are already in-place.
Bhaskar Basu
The and I think it monitoring as well which is in our policy.
V.P. Nandakumar
And use also we are — we will obtain a policy around that. I don’t think it will affect the business. So the customer is pledging loan lot for a purpose only. So that is the end-use. Yeah, we will use — see, this is a we are offering mainly consumption lots. So then regarding the products, we let the guidelines come in order to ensure the result we have the steady business, we will offer the products to customers accordingly to meet their requirements.
Bhaskar Basu
And on the liability side, how should we think about cost of fund going-forward? What is the piece of repricing? How much of it is linked to MCLR I mean if you assume the 50 bps rate cut, when can we start to see some benefit?
Bindu A.L.
See the cost of borrowing, one is the mix of borrowing. So in our case with the bond and the large amount of term loans, the profile — the tenure has gone up and that is that is what happened during this year. And the other thing with the refer reduction, slowly banks started reducing the MCLR. So we are seeing some benefits are coming in the beginning of the ’25, ’26 year. So April, we are seeing some benefit coming in. And CPs also started getting. So we are seeing a reduction in cost of borrowings. So the Q1 FY ’26 we will see some benefit.
Bhaskar Basu
Possible to quantify in the context of correction we’ve seen so-far or any broad guidance around it.
Bindu A.L.
I will not be able to quantify.
V.P. Nandakumar
Yeah, it’s a current some fluidity with regard to the environment in the country now. So maybe any prediction at this moment may not be right?
Bhaskar Basu
Understood. And my last question is on the retail finance mix again, have you seeing meaningful increase in NPLs. So what’s really happening there and what is the thought process going-forward?
V.P. Nandakumar
So we have taken some strategic steps in this regard. So which segment we should go, which should segment we should not be there, et-cetera. And also the — we have strengthened our underwriting as well as our collection measure. So with this, we hope the situation will be — it will improve very fast.
Bhaskar Basu
So just to understand where-is the stretch book segment, is there any specific product there?
V.P. Nandakumar
One is one is your practice and farm equipments. Then some of the makes we have seen a higher delinquency level, which we we will be award now.
Bhaskar Basu
Okay okay. Thanks, and that’s all from my side.
Operator
The next question is from the line of from Pi Square Investment. Please go-ahead.
Heli Shah
Hi, good evening, sir. I just wanted to understand the status on the open offer that Baying Capital has and certain regulations or certain set of new regulations that we need to comply with and its effect on our current ongoing business, gold and non-going gold.
V.P. Nandakumar
So the — that process is underway. So many regulators from CCI, then BACB CB, then IRDA or there are multiple regulators here. That process is fully-owned. Our lawyers and bankers are taking cap. And we don’t expect any with regard to that other than the natural time it takes usual time it takes. So we expect that to close everything before the end of this year, well before that.
Heli Shah
I’m sorry, what are — what is the timeline expected?
V.P. Nandakumar
Yeah, that’s with well before the end of this year.
Heli Shah
Yeah. All right. Okay. Thank you.
Operator
Thank you. Thank you very much. The next question is from the line of Banti Chawla from IDBI. Please go-ahead.
Bunty Chawla
Thank you for giving me the opportunity. Most of my questions have been answered. One thing, now how one should see the MFR portfolio going-forward and overall pie? And as you said, AUM growth for the gold loan portfolio for FY ’26 will be 20% growth. So on an overall AUM growth on a consolidated basis, how one should see that number.
V.P. Nandakumar
So we expect the portfolio to go down to somewhere around 10% towards the end of this year-on the consolidated book?
Bunty Chawla
Okay. And overall AUM growth on a consol basis.
V.P. Nandakumar
I expect that to be around 20%.
Bunty Chawla
Okay, okay. And lastly, how one should see the ROA on a consol basis as we have — so this quarter will be a one-off in terms of losses, but on a FY ’26 basis, ROA number for the full-year on a consol basis.
V.P. Nandakumar
So we are more than ROA, we are focusing on ROE. So yeah, it has slightly gone down because of microfinance portfolio. The share of that is coming down. And for new lending, we are using the guardrails, the — so the disbursals in the MFI is down. So our target is to reach around 18% and we hope yeah in a few quarters from now, we will reach a level of 18% ROE.
Bunty Chawla
Okay, sir. Thank you. Thank you very much for that. Sure.
Operator
Thank you very much. Participants who wish to ask questions may press star one at this time. The next question is from the line of Subham from IICC. Please go-ahead.
Shubham Prajapati
Hello. Yes. Yeah, thanks for the opportunity. I have nearly two questions. First is on capital infusion. So it is going to be in gold loan business or it’s also going to allocate it to other subsidies business also. So that is my first question. And second one is regarding Ashirvad. So this year, this quarter’s losses are mainly because of the high provisioning. So this is all factored in this quarter or going-forward also there is going to be provisioning also happening in this — so in Ashirvad?
V.P. Nandakumar
The bain capital institution is to the — is into the parent company, Finance. It is not specifically for gold loan, but the — our target is not to grow gold loan and secured loans, particularly a gold loan and the secured MSME, including affordable housing. This is our priority and we don’t ignore vehicle finance. So the idea is, yeah, we want to run the company in the longer-term with almost 90% in secured lending. That’s the idea. So the regarding is the provisioning in, we hope — the indication is that will coming down in the coming quarters okay.
Shubham Prajapati
So after the fusion mostly for the secured business, right?
V.P. Nandakumar
It was for the business joint decision. Yeah, there is focus more on secured business.
Shubham Prajapati
Yeah, okay, okay. Yeah, thank you.
Operator
Thank you very much. The next question is from the line of Vivek Gautam from GS Investment. Please go-ahead.
Vivek Gautam
Yeah. Am I audible? Yes. Yes, sir, you’re audible. So I — this quarter is the worst over for our microfinance and gold loan business. Was it sort of a kitchen sink quarter and the future would improve from here. And but should also improve from here. Yeah. So microfidence we — what signals is the waste time is over. The gold loan business is seeing a robust growth.
V.P. Nandakumar
The last quarter also we have grown and this quarter also we expect a robust growth and we hope that to continue to have a robust — a robust growth this year. Same stands too for other loan business is also vehicle housing and other also. Home housing also, we see all the secured business, we expect the reasonable growth.
Vivek Gautam
The second thing was about this bank capital experience in managing non-banking finance companies, loan companies in India and abroad. If you can some highlight their specialization and how would they add value to our businesses.
V.P. Nandakumar
So they have in — they were the investors in Axis Bank in the past, but then we are the L&T finance. Now they run Tiger Finance, formerly finance, then 360 and wealth, etc, they managed. They have the experience both in India as well as global. So with that experience and our knowledge about gold loan, so if these are blended, we expect to say that to be good for the company.
Vivek Gautam
Thanks a lot. And sir. I saw a machine in China, ATM proper machine wherein the gold loan they were disbursing on the basis of jewelry also and everything in one-go. So it’s some sort of risk of the technological disruption to our gold loan businesses. Manual intervention is required something.
V.P. Nandakumar
I don’t expect that in the immediate future. So I don’t know in five years or 10 years time what will come because these involve multiple technologies like is a methodology then the many other technologies to be blended here. Many have tried in the past. See, in a jewelry, this can be done because whatever — whenever they purchase something, then they have the time to verify each piece, et-cetera, et-cetera. And whatever is available in the — even in the jewelry that the testing will be only — it can be only. So on pre-coated ornaments, so it is very difficult. It has to be actually broken for verification in testing, et-cetera. In the non industry, go loan industry, this cannot be broken open. So I don’t think in the present situation, anybody has that. So it is very difficult and that is — that is as far as NBRCs are concerned. They have the people across all the branches who have the capability to assess the purity to a higher degree of accuracy by the mere feel and touch of tournament. That is our strength. And I believe that will continue to be our strength.
Vivek Gautam
But last queries on the gold loan prices, if you do this, the gold loan prices are expected to remain high only as most of the countries like China, Russia have started investing in gold loan direct gold-only instead of the treasuries of US government and Western government post-Ukraine war and because of that, that, because the Ukraine and the Western government is those treasury bond made investment made by Russia. So as such, the prices of gold are expected to remain high only.
V.P. Nandakumar
So I don’t take it all while. So that there is — yeah, I prescribe the ELDV fixing model. Even the — even the regulation has mandated that we go by that. We don’t try and take any prospective view about gold prices. But personally, I believe that the chances of the gold price are only two — it is only for going up.
Vivek Gautam
That’s my personal that, sir. Okay, sir. Got it. Thank you, sir. Okay.
Operator
Thank you so much. The next question is from the line of Mona Khetin from Dolat Capital. Please go-ahead.
Mona Khetan
Yeah, hi, sir. Good evening. Firstly on growth. So you mentioned that you’re looking for you consol AM growth of about 20%. So do we expect vehicle SME housing portfolios to pick-up materially and given the underwriting changes you’ve undergone or there could be some more you know consolidation in these books before growth picks up?
V.P. Nandakumar
So that consolidation phase is already achieved. Now we are targeting growth., we are expecting this growth of other segments also, we expect that to grow around 20% secure.
Mona Khetan
And could I know the Stage 3 ECR in-vehicle and MSME book in your case? Provision coverage?
Bindu A.L.
Yes, yes. Provision coverage for the secured book is around 10% range. For the unsecured we are we are writing-off beyond 90%.
Mona Khetan
So 10% is for the entire standalone book, if I’m correct, right?
Bindu A.L.
No, no. See, gold loan, the provision will be very less because we are following the LGD, the historical data shows a low LGD for gold loan. That is around 34 percentage only for gold loan business. For the MSME and vehicle finance also based on the historical data, we are creating LGB.
Mona Khetan
Okay. And we have not really increased coverage during this quarter to that extent. It remains in the same line as last quarter or so. In MSME vehicle, et-cetera.
Bindu A.L.
March ’25 numbers recalculated the LGD model, we will compute annually. So March ’24 numbers and March ’25 numbers, there is some change. But in-vehicle finance, as soon as the elect vehicle is and sold, actual loss will be written-off. Only the ENPAs we are creating the provision, but all write-off also factored in the LGD computation.
Mona Khetan
Also, if you could just share the Stage 3 PCR for vehicle and MSMEs with Handy at end.
Bindu A.L.
So it’s around 20% for vehicle fillers. So I will come back to you.
Mona Khetan
Sure. And just finally, on the Ashirvad book, one plus TPD, where does it stand?
Bindu A.L.
It is given in the presentation, one plus.
V.P. Nandakumar
Yeah, that’s 30 plus, I think that 30 plus. 30 plus is 17.22%. Right, I could also one plus so one plus is 20%,
Mona Khetan
Thank you. If you could just share the PCR on MSME vehicles. Thanks so much. That’s all from my side thank you very much.
Operator
The last question is from the line of Deepak Sharma, an individual Investor. Please go-ahead,
Deepak Sharma
Thanks for the opportunity. It’s my question from the — the impair impairment. Can you give some hint about the age bracket of persons or demography where these impairment has been done?
V.P. Nandakumar
You’re asking about.
Deepak Sharma
The impairment, impairment part, the impairment part which segment the MFI for some vehicle or which portfolio customer, customer mainly the average ticket size say average ticket size, average air age bracket and the demography. Impairment that yeah, so the impairment which geography Rajesh can answer.
V.P. Nandakumar
Yeah, we will share the data. Okay we had some recent review Tamil Nadu, but these are are slowly improving so these are the places where we see maximum impairment.
Deepak Sharma
Okay, okay. Okay.
Operator
Thank you. As there are no further questions from the participants, I now hand the conference over to management for closing comments.
V.P. Nandakumar
So thank you for the active participation and we look-forward for your support. Thank you.
Operator
Thank you on behalf of Motilal Oswal Financial Services Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.