MAS Financial Services Ltd (NSE: MASFIN) Q1 2026 Earnings Call dated Jul. 24, 2025
Corporate Participants:
Unidentified Speaker
Kamlesh Gandhi — Chairman and Managing Director
Darshana S Pandya — Director and Chief Executive Officer
Dhvanil K Gandhi — Whole Time Director
Ankit Jain — Chief Financial Officer
Analysts:
Unidentified Participant
Shreepal Doshi — Analyst
Hardik Doshi — Analyst
Sarvesh Gupta — Analyst
Sambit Roy — Analyst
Presentation:
operator
ladies and gentlemen, good day and welcome to Mass Financial Services Q1 FY26 conference call hosted by Aquarius Securities. As a reminder, all participant lines will be in 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. This conference call may contain forward looking statements about the company which are based on the beliefs, opinion and expectation of the company as on the date of this call. These statements are not the guarantee of future performance and involve risk and uncertainty that are difficult to predict.
I now hand the conference over to Mr. Sripal Doshi from Equator Securities. Thank you. And over to you Mr. Sripal.
Shreepal Doshi — Analyst
Thank you Bhavya. Good afternoon everyone. I welcome you all to the Q1 FY26 earnings call of Mass Financial Services. Today we have the senior management team of Mass Financial Services represented by Mr. Kamlesh Gandhi, Chairman and Managing Director, Mrs. Varshana Pandya, Director and CEO, Mr. Dhuvanvi Gandhi, Executive Director and Mr. Ankit Jain, Chief Financial Officer. Along with these people we also have some senior management team on the call. I would now like to hand over the call to Mr. Kamlish for his opening remarks post which we can open the forum for question and answer. Over to you sir.
Kamlesh Gandhi — Chairman and Managing Director
Thank you Sripal and good afternoon everyone. I’m very delighted to connect to all of you once again in order to discuss the Q1 result for the financial year 2025 26. Friends, we are aware that we have been going through some tough times and both on the demand side and on the asset quality side as far as lending to the particular sector whom we belong to is concerned. But I’m very happy to share with you the performance of the company. Before that I just want to share with you that we just completed 30 years on the 25th of May 2025.
And this 30 years marks the years of resilience and the years of consistency that we have done over all these years. To share with you, we have done all the hard work. First, we have laid a very strong foundation for making this company a very formidable company based on very strong fundamentals and in such a manner that it can withstand the cycles. Which is the characteristics or which is the part and parcel of the lending business. And if excellence speaks louder than words, over 30 years we have proved the consistency time and again. And friends, this year, this quarter was no different the numbers are well in front of you.
We could grow on a concentrated, on a standalone basis close to 20% in AUM, 20.82%, 21% approximately in AUM and close to 20% in profitability, that is 19.34% rather in concentrated profitability. This is inconsistent to our stated objective and stated intent which has been communicated and shared with all of you from time to time. That company targets a growth anywhere between 20 to 25% with a belief that we prioritize quality of the portfolio. Profitability and the operations is guided by discovering the growth at the marketplace rather than just determining it. So when the things are favorable in terms of risk and profitability, we grew at an highest side of the spectrum.
And if the situation is what we currently face, we go at the lower side of the spectrum. But the priority remains on the asset quality and profitability as we have been doing since last more than three decades. And as I told you, this has laid a very strong foundation going forward to grow this company into a very formidable size. It took us around 30 years for this 13,000 crores. Next 13,000 should come within next three years. In terms of net worth we are close to 2,700 crores in net worth. Next 27,700 crores should come within next 5 years or 6 years.
So this is the power what the company will derive based on the strong fundamentals and the foundations of the hard work done by Team Mass over all these 30 years. In terms of performance, if I start with. In terms of working, if I start with the assets, we continue to focus on MSME. Close to 75% of our assets are from MSME which combines about me and which are products less than 10 lakhs. SME which is from 10 lakhs to 5 crores that contributes close to around 75% of the business. And the rest 25% comes from our Wiz business and personal loan business.
So this gives us a well diversified product range. And across the product we could register a good asset quality. Besides a Y on Y growth. In terms of the asset quality, we could maintain the asset at a net stage three asset at around 1.63% and the gross at around 2.49%. Well within the control and well within the stated objective and the intentions of the company. The assets are created through a robust distribution network. We have now close to 206 branches. While because of the current situation the branch expansion has not been done very vigorously. But I think during Q3 and Q4 we will be once Again on track for branch expansion in order to have the retail business as per plan as compared to our NVFC distribution.
Currently in terms of asset configuration, in terms of distribution, around 65 to 66% of the business is through our 206 branches spread across more than 14,500 pin codes and the rest comes through our very robust NVFC partnership which is now 12 years old module and has shown an exemplary result across cycles. But as we go forward, as I’ve shared number of times, the retail distribution will grow at a faster pace depending upon the opportunity and the macro environment. And going forward what looks at around 6535 should look anywhere between 70 to 75 in favor of our retail distribution.
While we hold our NBSA distribution in very high esteem and regard of what it has contributed to the overall growth of the company, on the distribution side we continue to pursue the strategy of extending credit where it is due. We are quite circumspect as to how we lend and more precisely we lend to the borrowers who in a sense are dependent on our financial prudence to extend them credit. So as we customary feel as our customary what we have been doing that we don’t want to just create borrowers but we are in the business of creating successful entrepreneurs and that ideology continues to drive as far as the asset creation is concerned, in terms of profitability, we could maintain our ROAS of around 2.84% and this was reflected and this was derived by the fact that our yields have also inched up because of our retail distribution increasing and also the operational cost is increasing in the same vein.
But as I have said a number of times that even though with the rise in operational expenditure we will be in a position to maintain our ros. And that stated objective has already been met this quarter with around 2.8% at ROAS and on an expanded capital base that is we raised 500 crores last June. On an expanded capital base we are close to 14% on ROEs. So on the profitability and on the NIMS side we are well on track and the traction will continue on the positive side as we go ahead and as we gain on volumes.
If I take you through liabilities while Ankit will take you through in detail, we are well capitalized and we are well funded and if you ask me we are almost funded for the year right now. But we will draw our sanctions depending upon the rates we get from time to time and the institutions who we would like to align in terms of operations. We still believe that Technology plays a very important role. The technology team is growing stronger and stronger. The LOS are now BRE enabled But having said that this is a task to be worked upon can be worked out.
There is a continuous improvement changes for the good for better efficiencies being undertaken and we are very confident that technology will play a very important role in enhancing efficiencies and delivering.
operator
Dear participants, the management line has been disconnected. Please stay connected while we try to reconnect them. It’s. Yeah participants, our management has been joined and we will starting. We will start with the.
Kamlesh Gandhi — Chairman and Managing Director
From where I got disconnected. Any idea so
operator
I can disconnected just a minute back.
Kamlesh Gandhi — Chairman and Managing Director
Okay so just sorry for the inconvenience. I’m told that I was disconnected. So coming coming back to. And if I think that I’m picking up from where I left I was talking about the operations part that technology plays a very important role and we continue to pursue that. We have a very strong in house team and with VRE enabled alloys we will gain on more efficiencies and hence that should reflect in better profitability going forward. In terms of hr we have a very strong team with very less attrition at the middle and the top level.
With no attrition at the top level and the middle level the attrition is very less. We recently celebrated as I shared in my opening remarks 30 years of endeavors whereby there are more than 600 people working with us for more than three years. That is the testimony to the fact that we have robust HR policies and with our policy of succeeding and failing together. So that was on the operation distribution assets liability and if I take you briefly to the working of our housing finance company. Housing finance company we are at a striking distance from thousand crores now we were around 795 crores.
We are confident to touch 1000 crores this year with once again very robust figures in terms of. In terms of profitability. In terms of the assets quality. The asset quality has been around less than a percentage in gross net stage three assets. And if share with you even in Housing Finance Co. There is so much of commonalities as far as the borrowers are concerned in terms of the middle income and the lower income group borrowers. But with our strong credit due diligence we are in a position to maintain the quality of the assets. I agree that we have taken a long time to reach to this level.
But I personally believe that as a lender we add value when we create quality assets and not just the top line. And inconsistent to that belief Housing Finance company will also keep on growing. The growth in Housing Finance Company was at the rate of 28% in AUM and 25% in profitability. So with this I will hand over to Darshavin to take you very quickly through the numbers so that you have sufficient time for Q and A followed by Ankit who will quickly take you through the liability numbers for your better understanding. What is.
Darshana S Pandya — Director and Chief Executive Officer
Thank you sir. Good afternoon everyone. Once again I’m happy to share the key numbers of our 121st quarter. I’ll give you the comparative number as well for better understanding of the performance of the quarter. So to start with as Commissioner shared our AUM as on June 25 is 12,504 crore as compared to 10,303 crore which is 20.43% growth in AUM. Total income grew by around 28% from 347 crore to 444 crore. Profit before tax grew by 19% from 94 crore to 112 crore. Profit after tax grew by 19% from 70 crore to 84 crore. Now coming to the configuration of the portfolio out of 12,500 crore, 5,008 crore is micro enterprise loan which has there is a growth of 10.73% from 4523 crore to 5008 crore.
SME loan there is a growth of 19.61% from 3783 crore to 4525 crore. Two wheeler growth is around 30.37% from 668 crore to 871 crore. Commercial vehicle loan grew by 18.63% from 817 crore to 967 crore. And salaried personal loans grew by 91% from 590 crore to 1131 crore which is. Yeah. So this is Y1Y growth and this is in the confidence with our Planning to have 10% share of this product in our total which is still below 10% of our total AUM. So majority of the growth is coming from our MSME segment which is 60%. Now coming to the quality of the portfolio as shared that we could maintain the quality broad stage 3 asset as on June 25 is 2.49% and next gross stage 3 is net stage 3 is 1.63% as compared to 2.44 gross stage 3 and 1.62% net stage 3 as on the March 25 we still hold on to 17 crores.
17 crore. 60 lakhs of management overlay which is 0.17% of our on book assets. Regarding the performance of housing finance, our AUM stands at 794 crore as compared to 623 crore which is 27.40% growth. Total income grew by 23.41% from 19 crore to 23 crore. Profit before tax grew by 26% from 2 crore 80 lakhs to 3.53. Profit after tax due by 27% from 2 crore 17 lakhs to 2 crore 76 lakhs. Here also the quality of the portfolio is excellent. So our gross stage 3 asset is 0.92% as compared to 0.94% as on March 25 and the net stage 3 is 0.64% as compared to 1.65% as in March 25.
Here also we carry a management overlay of 3 crore 29 lakhs which is 0.57% of our on book assets. So this was regarding the performance of both the companies. Now I’ll hand over to Antik for liability management updates.
Ankit Jain — Chief Financial Officer
Thank you ma’. Am. Good afternoon to all on the liability capital and liability management. This quarter through our effective liability management we have maintained an average cap rate, cash and CAF equivalence of approximately 1000 crores along with an unutilized tax based facility of 250 crore as on June 30th. The company also holds sanctioned facilities totaling to 2,200 crores comprising of term loan, direct assignment, co lending and other facilities. During the last quarter the company exited direct assignment transaction amounting to more than 700 crore. Furthermore, we currently have sanctions of approximately more than 1500 crore in the form of direct SMN coal lending which we plan to utilize over the next two quarters.
Our strategic goal is to maintain 20% to 25% of assets under management as out book to direct FMN and coal lending transactions. We have captured facilities of approximately 1400 crore of which we maintain utilization levels at 70 75% keeping the remaining portion as a liquidity buffer. In terms of long term Borrowings, company raised 835 crore in term loans during the quarter with an average maturity of three to five years. We also have sanctioned term loans. Term. Loan pipeline of approximately 680 crore. Additionally we raised 175 crore through non committable debentures and we further plan to raise around 400 to 500 crores this quarter. We are strongly positioned in terms of structural liquidity as on June 30th. Our liquidity position remains adequate with positive cash flows across all cumulative time buckets. Our capital risk adequacy ratio remains strong at 25.22% with tier 1 capital law at 33.19% and a debt to equity ratio at 3.36x on the cost of borrowing for the quarter which stood at around 9.80% with an incremental borrowing cost of 9.25%. In light of the multiple depot rate cut and as communicated in the last quarter call, we anticipate a reduction in borrowing costs by 25 to 35 basis points during the year.
So this is on the liability management and now we are open for Q and A.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on their touchdown telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets when asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is on the line of Hardik from White Whale. Please go ahead.
Hardik Doshi
Hi, thanks for taking the question. So on the you know op tech side that was up about 46% year over year. I know the last few years we were moving towards mondirect lending vs nbsc but if I look year on year now that ratio has stabilized. So can you just talk about, you know what, what is driving this high growth and our you know, OPEX to asset ratio now probably at all time high. We want to understand where this investment is.
Kamlesh Gandhi
So as I shared earlier that we are moving aggressively to build up our retail infrastructure. And when you build up a retail infrastructure the OPEX is little upfronted. But in our case if you see that we have been doing it in a very planned manner so as not to disturb our roas and roes on an overall basis. So this is the result of the upfront expenditure that we incur to build our retail base. Because anywhere where we built up the team they take around a quarter or two to get the business desired. So initially there will be more expenditure incurred on the branch setup and also the manpower cost. So as we as we increase our retail infrastructure this will happen.
Hardik Doshi
But then is it fair to assume. That like as you go forward the mix of direct lending will increase even further or will it remain in the same ratio?
Kamlesh Gandhi
It will increase further gradually. So as I shared in my opening remark that the stated objective is to bring it anywhere between 70 to 70 between 70 to 75% over next six to 12 quarters and that should happen because when we do retail business we need to be very circumspect on the quality of the assets. Also it’s not only just building up the top line, but this is in line of that stated objective that the configuration between our NBFC distribution and retail distribution may be around 70, 30.
Hardik Doshi
Okay, got it. The second question I have is, you know, in terms of the salary, personal loans, I think in the past we stated that we want to keep at this at about 10%. We are getting close to the 10% level. This has been a major driver of this overall loan book growth at 20%. So what I understand as this kind of now slows down which are the areas will it mainly the SME that will be driving the growth faster.
Kamlesh Gandhi
So what I would like to state. Here is that SPL cannot be the major driver is one of the driver but because it’s on a lower base. So if you see our increase in AUM over last year, 60% of the increase is coming from our MSME business, that is the main business and the rest from Wheels and then from SPL. So with increasing AUM and maintaining SPL at around 10% plus contribution from our main business which is MSME and SME, presuming that the economic conditions will improve and we’ll get more chance to cater the eligible demand, I think we will be we are well placed for a 20, 25% growth depending upon the macro situation from time to time maybe a percentage here or there on a quarter to quarter basis.
But as you know that we don’t measure our growth and measure our success on a quarter to quarter basis but on a yearly basis. We are very confident that we’ve been a position to achieve the stated object.
Hardik Doshi
Got it, Got it. And you know the RBI came up. With these new norms regarding provisioning for the FLDG loan. Can you just talk a bit about any change that that has had or impacted us and our partners in our business.
Kamlesh Gandhi
These are still draft guidelines. The final guidelines are yet to be out. But the good thing is that that what all the NBFC to NBSP partnerships were there and there were no guidelines at all. With RBI coming with guidelines, there will be a lot of clarity and happy to share that majority of the suggestions given by the industry has been well taken by the regulator. So I think that this is a positive development for the industry and the step in the right direction to get this partnership business to give this Philip to the partnership business.
And I would like to share with you that recently we had a meeting with Finance Minister of all the NBSs and that is where the statement is in the public domain that she is very optimistic that the share of NBS in the overall credit will increase. And there was more stress on partnership and creating value chain that every lending institute is not in a position to do all the work. So the people closest to the ground are the strongest is what was discussed there also. And happy to share that we had identified this way before.
All these things are well known. So happy to share that we are on the right lines. Fundamentally.
Hardik Doshi
I was actually referring to, you know, the sourcing from fintech companies. Right. Because we do that sourcing for the salary personal loan there now there is a change in the provisioning. So any change in the way we are dealing with them.
Kamlesh Gandhi
I said we were following that norms right from the beginning. We were the recent norms which have been implemented. We are following that right from the beginning in the same manner that it has to be built up in ECL irrespective of the guarantees given by them. And on the right of this is it will be profitability neutral because we have the fidg.
Hardik Doshi
Okay, okay, understood. Great. Thank you. And you know, congrats on the 30 years completion.
Kamlesh Gandhi
Thank you so much.
operator
Thank you. Before we take the next question, we would like to remind participants to press star and one to ask a question. The next question is from the line of Madhu chanda de from McPro. Please go ahead.
Unidentified Participant
Hi, good afternoon and congratulations on very steady and profitable 30 years. I have three questions. The first question is there is a sequential improvement in net interest margin this quarter as well. So my question is in light of this 100 basis points cumulative rate cut. Have you passed on any of the rate cut to your borrowers? As Ankit pointed out that you are expecting a further 25 to 35 basis points lowering of borrowing cost. Where do you see the margin headed from here on? That’s my first question.
Kamlesh Gandhi
So to answer that the increase in the NIM as I shared earlier is because of the shift in the asset configuration and within the retail assets. Also we are doing good on bills. We have introduced a product where we give loans to SMEs which are collateralized based. So all these things are helping us to improve our needs and at the same time our operational cost is also increasing. So the net roas are maintained in the trajectory what we intend to. So this has no impact of any reduction in cost, so to say, because that is there to kick in.
Majority of our borrowing is mclr. Based so now the MCLR rates have been slashed by say anywhere from 5 0.5 bids to 10 basis point fortnight or a month ago and MCLR3 will set in anywhere between three to six months. So we are yet to experience the reduction in cost and hence there has not been any passing of the cost reduction to the borrowers. This is because of the internal realignment of the portfolio within the retail assets and increasing of retail assets from time to time.
Unidentified Participant
Do you expect further upside to the MIN once you know this MCLR benefit kicks in?
Kamlesh Gandhi
It should because there is always a time lag on at the ground level by the time we get and by the time we pass on and it stabilizes over a period of time later on. But on a steady state basis we stick to our guidance that will maintain means anywhere between 7 to 8% and ROAS anywhere between 2.75 to 3% rest will be balancing each other.
Unidentified Participant
Okay, I also wanted to understand from you if there is a change in the ground that you have seen in the past three months compared to the say the previous six months in terms of borrower behavior, asset quality, particular segment where there’s still stress, any segment where there is a little easing of the stress situation. If you could take us through those details.
Kamlesh Gandhi
We can see slight improvement, not that cognizable yet because of two factors that the borrowers are yet to come out of their financial and liquidity stress. Given the over leverage that they had done in the past that is not going to be wished away soon. And secondly, still the steady state consistent economic growth is yet to achieve and yet to reach to the borrowers whom we serve. So but having said that there is slight improvement over what it was six months back if you talk about last year, three months, but not that cognizable. And we foresee that still it will take a quarter or two for us to see a marked difference whereby the eligible demand picks up and overall the portfolio quality improves and there is sufficient liquidity for the borrowers to fund their businesses.
We still see that to be a quarter or two away.
Unidentified Participant
I mean I’m asking this question more because I just observed this data point that on a sequential loan growth basis you were kind of little sluggish on the micro enterprise loan in the previous quarters, but this quarter I see a pickup in migrant price loan. Is it because of some improvement on the ground situation or. Nothing much can be read from here.
Kamlesh Gandhi
We got a good opportunity within our scopes of credit parameters given the fact that so many other borrowers also when the other lenders slow down, they don’t only slow down funding risky assets but even they slow down on funding good assets. So that is where we find good opportunity to serve our existing borrowers and other borrowers and hence they could register that this quarter.
Unidentified Participant
Okay, and my last question is on your geographical expansion beyond your core markets. Any update on that? I think that has taken a little bit of a backseat in light of the, you know, the difficult environment. Are you on track or what is the thought process there?
Kamlesh Gandhi
See, we are because of a very torrid time that we had last year. The number of branches are less than what we would have liked to have. I would have been close to. I would have liked to be at close to around 235 to 240 branches there around 206. So the geographical expansion has taken a little backstage backstep because of this situation. But I think we will with another 3/4. And if we take another 2/4 of working from Q3 and Q4 we will be in a position to expand our branches in our areas of operation that is where north and south.
And it will be penetrating on those areas rather than taking up more territories. So we’ll be working in the geographies that we are working but we have some deeper penetration in all those geographies.
Unidentified Participant
Okay, so no new market is being contemplated at this point in time.
Kamlesh Gandhi
No, we’ll penetrate it. We would, we would like to have a critical mass within the existing geographies will benefit deep there and then we’ll explore new markets.
Unidentified Participant
Thank you and all the best.
Kamlesh Gandhi
Thank you so much.
operator
Thank you. A reminder to the participants, you may press star and one to ask a question. The next question is from the line of Mr. Sri Pal Doshi. Please go ahead sir.
Shreepal Doshi
Hi sir. Thank you for giving me the opportunity. I just had a few questions. So firstly on the data keeping side, so we started using the standalone disbursement number. Wanted to get this number for 4Q FY25 and 1Q FY25. If you could provide that.
Kamlesh Gandhi
Standalone 4Q match quarter.
Darshana S Pandya
That was 2994 crore. In Q4 it was 2994 crore.
Shreepal Doshi
Okay. And for 1Q25
Darshana S Pandya
1Q25 was 2725 crore.
Shreepal Doshi
Got it. Thank you. The second question was to was on the finance on the. On the liability side. So on the bank borrowing, what percentage of our bank borrowing is linked to T bills, repo and NCLR for like.
Ankit Jain
15% of the loan is linked to T bill external banks. Now if I divide all 10% is fixed which is majorly capital market. Around 15% is linked to immediate rates like mel like and this repo rate or T bill and apart from that risks are MCLR which can be three months, six months or 12 months.
Shreepal Doshi
Okay so basically for us 75% is MCLR.
Ankit Jain
But that can be six or 12.
Shreepal Doshi
Okay, okay, got it. So and basically for us in the cost of fund we have not seen any, any material benefit of the rate cut at systemic level coming in so far. So probably 2Q we should expect or will it be more in the 3Q in on a full fledged basis?
Ankit Jain
Yes. So now it will kick in. Yeah, sorry, we accept. So we expect from this quarter it will start. So as I told for the whole year we expect this to be between 25 to 35 basis point. So we’ll start from this quarter.
Shreepal Doshi
Okay. So 25 to 35 basis point of benefit is what we are expecting on the cost of fund. Okay. Okay. And so are we, are we seeing any benefit of the, you know the, the, the rating change? So basically the RBI has also changed the risk weights. Right. So have we seen any benefit of that flowing in or there was not. Much benefit of the same
Ankit Jain
that, that, that last year? Only if you see despite of ancilla increase last year from various banks our cost of borrowing remain at the same level. And this is also healthier apart from rating increase this weightage is also reduced further this year from first upsell. So that will help in terms of bank borrowing our majority of the loan of psl.
Shreepal Doshi
Right, okay, got it. So the next question was to Kami Sir. Sir. So as you highlighted to the earlier participants that you know in the next couple of quarters we should see stability sort of coming back. So what is it that is giving us this comfort? Like are we like what sort of data points or trends are we sort of getting to understand which is giving us this comfort. Because if I recall last quarter we had highlighted that you know, some of the segments FMCG textile in terms of geographies were still creating issues. So just an update on that as to how these segments are doing and also with respect to like you know, what data points or trends we are tracking that is giving us the comfort.
Kamlesh Gandhi
See for us we draw the comfort from the logins and the disbursement we do from time to time. So when we, when we see our logins and disbursement and the rate of sanctions while it is not improved substantially but we don’t see that deteriorating. So the cycle starts that once the things are going bad, the, the deterioration stops and after the deterioration stops, the thing starts improving. So we draw the comfort from the fact that the deterioration has stopped. Say for example among FMCG and textile, we are seeing some stability in textile. Fmcg we are yet to see stability in fmcg.
So these are all good signs, so to say. So that is why I told that it is not cognizable at all. But from the experience of the data, what we collect from the ground level across our products, we see that the deterioration has stopped. First, it used to happen that month on month there was deterioration in terms of repayments and month on month deterioration in terms of login to disbursements and the quality of the borrowers. You get eligibility of the borrowers. Now that has stabilized. So deterioration has stabilized and now we should see some uptick from here.
That is what my assumption is.
Shreepal Doshi
The last question was on our key segment which is SME and mel. So in that segment, are you seeing any, any particular customer profile or let’s say industry profile wherein you know, the credit demand is pretty good and even the credit, even the credit asset quality is pretty good and some of the industries where it is not. So like if you could just, if you have, if you could just give us some color on that part.
Kamlesh Gandhi
If you got to tell that in. Mel because they’re all very small enterprises loan run by proprietors and also difficult to mark that industry wise. But as far as SME is concerned, as I shared with you, Textile is stabilizing. FMCG is there to stabilize. We have been doing reasonably well on engineering and all once again we are seeing not that great results in Agree. So it’s a match and mix between few of the things stabilized, few of them yet to stabilize, but yet to see a clear winner among all these things that these are the sectors where. Which can be funded the way they need or they can or there is an eligible demand.
Yet to. Yet to see the. That’s all from any of the sector.
Shreepal Doshi
Okay. Okay, got it. Helpful. Thank you for giving me the opportunity. Thank you.
Kamlesh Gandhi
Thank you.
operator
Thank you. The next question is on the line of Pawan from Edelweiss. Please go ahead.
Unidentified Participant
Thank you for the opportunity. So on this easy side, how are you seeing the income of the borrowers and ability to repay? Number one. Number two, can you also give a comparison of your work on cv?
operator
Sorry to interrupt sir. Can you please use a handset? Yeah, so it’s basic.
Unidentified Participant
Thank you so much. So thank you for the opportunity. Basically. Question Is about the CV portfolio. Can you give the composition of the portfolio? What, what part of it is used and what part of it is new. And fleet versus independent operators etc. Color on the book. Second thing is how are you seeing the incomes of the operators? Number one. Number two, the credit stress in the portfolio. Yeah. Thank you.
Kamlesh Gandhi
So as far as our product line is concerned we are into used commercial vehicle typically with a ticket size ranging from 3 lakhs to 6 lakhs. That is MCV is what you call it. MCVs and LCV that are into last mile delivery of logistics. There also if you see on a quarter to quarter basis we have kept the EU UN stable because there also we witnessed some stress in terms of their eligibility. Not really in the portfolio but in the eligibility calculations and on their credit score track records. We were not very comfortable. So there the disbursement was little slow in this Q1.
Difficult to predict about the coming quarters. But as in Q1 we were not very aggressive. Rather we were not very comfortable picking up numbers there. And in terms of the quality of the portfolio it is maintained. The stage three as far as our CV portfolio is concerned is around 4%.
Unidentified Participant
How much would be stage two plus stage three. Stage two plus. How much. Is the stage two plus stage three? Stage three you mentioned is 4%. Right. Stage two would be how much
Darshana S Pandya
would be 9%.
Unidentified Participant
Is there any geographical concentration in this. Portfolio or is it across the entire. Portfolio Entire geography that you are present. In Northwest and south.
Kamlesh Gandhi
We are more present on the western side and Rajasthan in the north.
operator
Thank you. The next question is from the line of Sanctis from Dam Capital. Please go ahead.
Unidentified Participant
Yeah. Hi sir. Good afternoon.
Kamlesh Gandhi
Good afternoon.
Unidentified Participant
So my question was mainly on TA now that TL accounts for about 90% of your on book and about 11% of wanted to understand how much it how much of it would be.
Kamlesh Gandhi
How. Much would be for them 20, 25% of the total to PL book is or total EM is DA which you have done to DA to various banks and BFC the peer book.
Unidentified Participant
Okay. Okay. And this has been constant in last few quarters.
Ankit Jain
Yeah. Yeah. So we have been doing continually doing D of PL book also. So it’s not plb. It is salvage personal loan. There is a good demand for that.
Unidentified Participant
Okay. Earlier suggested that maybe 9 to 10% is matched that will go on TL. Now that we have reached that, how should you see growth going ahead in your guidance of 50 to 75% on the overall incremental growth will be mainly from which segments that you see.
Kamlesh Gandhi
I. Think that should come from our other two segments, MSME and Wheels. While we have, as we grow our aum, we have some room for PL to contribute. But if you see the Overall growth contributor, 60%, 65% to 70% is coming from our Amiel and Wheels business. And still with the increase in our book, PL can contribute to the extent it could within the parameters of 10% on AUM. But the rest will come from our flagship product, that is MSME. And also apart from Will.
Unidentified Participant
Sure, that was.
Kamlesh Gandhi
Thank you.
operator
Thank you. The next question is from the line of Shirvesh Gupta from Maximal Capital. Please go ahead.
Sarvesh Gupta
Good afternoon sir and congratulations on a steady set of numbers. So just one question on the growth part. So I think last 3, 4/4 we have been trending at around 20 odd percent on the lower side of our guided range. So now with the conditions slightly improving, do we expect to move into a slightly higher number on the growth? Do we see that the environment is enabling us to do that? And secondly, are there some new products or new segments that we would want to open? Because as some of the participants have asked that HPL has already reached the sort of limit.
So that may not be the major driver.
Kamlesh Gandhi
Hi, Tuvani here. So on the second question, so we are not expecting to open any new product segments as of now. We want to consolidate on these segments that we have currently. That is those are enough in our. View to grow the book till at. Least 20, 25,000 crores. And maybe after that we can take a fresh cut to see that if we want to add any other segment or not. But for now we think the segments are enough. Mel, MSME have good opportunities. So even though SPL has grown faster on a lower base and has reached the 19% kind of number on the overall AUM, we think that other products can also contribute. We are piloting with used cars in some time. We have done some business, which is which we are classifying it under the CV portfolio. Right now we have not hired it.
Off because the numbers are small over there. But in the wheel segment or two wheeler, commercial vehicle and used car, these could be the three good products to have. And we already started tinkering with used cars. So this is on the product side. On the growth side, I think Q2, looking at the market situation, will be careful in Q2 to achieve the overall 20 to 23 kind of an average number. I think Q3, Q3, Q4 can be the contributor where it will be slightly higher than the Q1, Q2 average. That is what we anticipate as of now difficult to predict beyond the point. But what we anticipate now is that. Q3 Q4 can be better and hopefully Q2 because of some early festival seasons. Also hopefully we see some good traction in September. Maybe, but Q3 Q4 can be expected to be much better than Q1. What we have seen in Q.
Sarvesh Gupta
Okay, and on the product wise stress. So is there any particular segment where we have seen higher slippages than the ratio of that in terms of the overall A1 and what may be the reason behind it?
Kamlesh Gandhi
So I think CV is the only. One where slightly higher than the book average slippages we might have seen. Other than that more or less everything has been online. Mel SME Pl we have been pretty tight in terms of the underwriting since quite some time now. So that has stayed steady. CV because of the nature of the business there is some volatility from time to time. Currently it is slightly volatile. That is why as earlier also shared that sequential. If you look at Q1Q disbursement AUM numbers on CV it has been steady, it has not increased and that is the reason for that.
So CV can be slightly volatile but other than that all the other segments have been okay.
Sarvesh Gupta
Okay, thank you and all the best.
Kamlesh Gandhi
Thank you.
operator
Thank you. A reminder to the participants, you may press Star and one to ask a question. The next question is from the line of Sambit Roy from INR Bonds. Please go ahead.
Sambit Roy
Hi, congratulations on the quarter. I would have some questions on your. Resource profile moving forward, how your resource. Diversification would look and any plans for N series in the coming few quarters.
Ankit Jain
Yeah, so we are already in tribe of further diversifying our resource mix. So already you could see around 18 19% is our capital market which is NCD. We see that this number in next two, three years will be around 25%. Also we will adding after the ECB borrowing which can be DFIS and even foreign commercial banks that will add up around 10% next to three years. Apart from that we will also commence for this PTC transaction because majorly we. Have been doing B and co lending. So that will also add up. So the mix will further change and we will further diversify the recruitment going forward which will help us to maintain our good. Mix.
Sambit Roy
Okay, thanks.
Ankit Jain
Okay.
operator
Thank you. The next question is from the line of Mr. Sripal Doshi. Please go ahead.
Shreepal Doshi
Hi sir, thank you for giving me the opportunity. Once again just a doubt. I think there is some change in the reporting of coal ending led expenses during the quarter. So could we just throw some light as to that reporting for the benefit of of the larger investor pool on the same.
Kamlesh Gandhi
So for better control we are in terms of co lending we are taking the entire entire cash flow first on our books and then the cash flow is distributed to the partner as for the aggregate terms as against the formal norms where the each partner would take their share. So that is, that is, that is changed slightly because and this is stemming out of the fact for better control on the partners.
Shreepal Doshi
So we are paying the we are paying and then get that payment gets reflected in the opex while we are booking the entire team on the. On the other income.
Kamlesh Gandhi
Yeah, yeah, yeah. Yes, yes.
Shreepal Doshi
Got it, got it. While the next business we will be making the same money. But the reporting has change.
Kamlesh Gandhi
Yeah. Reporting has changed in consonants to the business model because we firmly believe that the numbers should reflect the business model we follow. So that is doing that that way.
Shreepal Doshi
Got it. And this is, this is basically the co lending that we have wherein we will be working with other partners.
operator
Yeah, yeah, yeah, yeah.
Shreepal Doshi
Okay Got it. So this is helpful. Thank you, sir.
Kamlesh Gandhi
Thank you.
operator
Thank you.
Shreepal Doshi
I think this is the last question as well. So thank you for giving us the opportunity to host this call and thanks to all the participants for being there on the call. Thank you.
operator
Thank you. Thank you on behalf of the queries securities. That concludes this conference. Thank you for joining us. And you may now disconnect your lines.