MAS Financial Services Ltd (NSE: MASFIN) Q4 2026 Earnings Call dated Apr. 30, 2026
Corporate Participants:
Renish Bhuva — Moderator
Kamlesh Gandhi — Chairman and Managing Director
Darshana Saumil Pandya — Director and Chief Executive Officer
Ankit Jain — Chief Financial Officer
Dhvanil K Gandhi — Whole Time Director
Analysts:
Abhi Jain — Analyst
Ishank Gupta — Analyst
Unidentified Participant
Shreepal Doshi — Analyst
Aditya — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Q4FY26 results conference call of Mass Financial Services Limited hosted by ICICI Securities. As a reminder, all participant lines will be in the listen only mode. And there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing Star then zero on it at stonephone. Please note that this conference is being recorded. I now hand over the conference to Mr.
Ranesh Bhuva from ICICI Security. Thank you. And over to you sir.
Renish Bhuva — Moderator
Thank you. Hi, Good afternoon everyone and welcome to Mass Financial Q4FY26 earnings call. On behalf of ICICI Securities, I would like to thank Mass Financial Management team for giving us the opportunity to host this call. Today we have with us the entire top management team of Mass Financial Represented by Mr. Kamlesh Gandhi, Chairman and Managing Director, Mrs. Darshana Pandya, Executive Director and CEO Mr. Daniel Gandhi, Executive Director, Director, Mr. Ankit Jain, CFO and other senior management team members.
I will now hand over the call to Kamlesh Bhai for his opening remarks. And then we’ll open the floor for Q and A. Over to you sir.
Kamlesh Gandhi — Chairman and Managing Director
Thank you and good afternoon to all of you. I’m very happy to connect to with all of you for expressing this Q4 result of the company and for the whole year for 25, 26. So I’ll be sharing the result with you. So I will start with a few very important milestones that we have crossed this year. So we crossed around 15,000 crores in AUM. Very importantly on a consolidated basis we also crossed 500 crores in PBT that is profit before tax. And also 100 crores in profitability for the quarter on a concentrated basis.
So this was the important milestone which we achieved this quarter. In terms of growth. If you see the growth on a concerted basis is around close to 19%. Increasing profitability by 21% on an year on year basis for the whole year. And if you take for the quarter performance on a corresponding quarter it is the rise in Profitability is by 25%. So on standalone basis also it reflects in the same way that it is 19% growth in AUM, 20% profitability for the whole year. And on a quarter to quarter basis it is something like 23% increase in profitability while maintaining very strong quality of assets too.
If you see the quality of assets both in our in both our companies we have seen that in our parent we have maintained the NNPA at a level which was earlier maintained at around 1.70 despite of tremendous headwinds during the year and in our housing finance company we continue to maintain an excellent quality of assets at less than at around 0.67% of net NPAs while we carry additional buffers in both the companies. Now to take you briefly on what we did on the asset size, liability operations stack and then take you through very briefly on the asset side we continue to focus on MSME that contributes more than 70% of our business and that includes MEL and SME business that is micro enterprise loans given to individuals and the small and medium enterprise loans given to the bigger entities and that constitutes around 70% of our business and our focus will continue to remain on the same as we have been doing the same since last 30 years while increasing the wheels business over a period of time will slightly add to the diversification of the assets going forward.
On the distribution side we continue to have a very strong distribution across our more than 200 branches and 16,000 centers reach and we’ll continue to expand this year also so we’ll continue to consolidate our distribution in both the channels that is our direct channel through increasing of branches and increasing our centers reach and also through our partnership with NBFSYS which is now close to a 15 years old proven module. So on the asset side we continue to have the confidence to grow anywhere between 20 to 25% given the positive macro situation because we always prioritize risk management and profitability over just the growth and that all of you are aware since looking at our performance over all these three years on the liability side we remain very strongly capitalized.
We have around close to 23% of capital adequacy with a very strong capital tier 1 of around 21.5% and that gives us a very strong balance sheet and we’ll continue to maintain the capital adequacy of around 20% going forward. So that will strengthen, that will keep the balance sheet very strong on terms of debt raising. While Ankit will take you through in detail we remain very confident and we have because of our immaculate track record of for all the times and currently as I talked to you we have a debt tap almost for half the year for 26, 27 and we see no reason why we will not be in a position to tie up very soon for the whole year.
But the challenge will be mainly how to have a better rate of interest and that we already started gaining the momentum on that from Q4 onwards. So that is where we are going to focus on decreasing the rate of interest and improving on the diversification of liabilities. Also on the OPS front we continue to focus on tech. We, as I’ve shared that we have a tech which we have built and we operate on built and operate module. We are close to 100 people working in tech and we are gaining good traction in various products.
So the Alois has been successfully launched for all the products and now we are in the process of launching dre. With the help of AI and with the sufficient data at our disposal, I think we’ll be in a position to use that very effectively and that will help to be more efficient in terms of providing the customer services and also in terms of improving the efficiencies of our employees. And that will be complementary to them and at the same time can in the medium to long term help in reduction in cost.
On HR front we remain to we continue to pursue the dictive of failing and succeeding together and that has kept us in good state, minimum or practically no attrition at the middle and the top level. And while we are now 4800 strong team with close to 500 of them with us for more than 5 years, the focus is now how to increase the efficiencies and how to take this organization to the next level along with taking the current employees also to the next level. On the housing front, that company grew at around 23%.
We would aspire to grow this anywhere between 30 to 35% given its lower base. So we are at a striking distance away from 1000 crores. Ideally we would have liked to touch thousand crores by this year, but it may take a quarter more now. But the silver lining is a very strong profitability. If you see the profitability for housing finance on a quarter on quarter basis, on a corresponding quarter basis as in 40% on the whole year has been 36% with a very strong quality of assets at around 0.68% of net NPA.
So without compromising on all such parameters, we’ll continue to see to that that how we can take it to the next level of growth. So before I hand, and before I hand over to Dashaban, let me share with you and I’m happy to share that we’ll be Declaring a dividend, a final dividend of 75 paisa per share, taking it to a total dividend of 2 rupees per share that is 20% on the face value. We continue to maintain the strategy of a 10% dividend payout. So the total dividend payout for the whole year will be on a profit of around close to 366 crores.
Will be around 36 crores and out of that 1.25 rupees per share has already been declared and paid on after December. And the final dividend subject to the shareholders approval at the rate of 75 paisa per share will be done in due course of time. So this is on declaration of dividend. So going forward once again let me reiterate that as demonstrated over all these three decades, we continue to follow the strategy of a prudent growth, a profitable growth and that to anywhere between 20 to 25%. And we are very hopeful as I shared with all of you on the investor day conference on 16th February that we are pursuing our vision of 2036 to be a 1 lakh crore AUM.
So the way we are going ahead it is really ambitious but we don’t think that we far fetched for Team Mass. So with support of all of you and with all of us being on the mission mode we are very confident of achieving that in the medium to long term. So with this I’d like to hand over this to Darshrab and she’ll take you through the details of the numbers and then to Ankit then it will be for question and answer.
Darshana Saumil Pandya — Director and Chief Executive Officer
Thank you sir. Good afternoon everyone. So once again I’m very happy to connect to all of you and I’ll take you through the key numbers first on consolidated basis and then on standalone basis for both the companies. So if we look at the Aum aum stands at 15,304 crores as compared to 12,868 crore in last year which is around 19% growth in AUM. And if you look at the quarterly PAT for the last quarter it is 104 crore as compared to 83 crore which is 25% growth in patients. And if you look at the annual PAT for the whole year it is on consolidated basis it is 379 crore as compared to 314 crore which is 21% growth in PAT.
Now coming to the standalone number, if we look at the asset configuration AUM grew by 18.71% so there is a growth of around 20% in our micro enterprise loan from 4793 crore to 5737 crore. Growth of 15.78% in SME book from 4500 crore to 5213 crore. Two wheeler book grew by 35.43% from 785 crore to 1063 crore. Commercial vehicle there is a growth of 11% from 979 crore to 1085 crore and as salaried personal loan there is a growth of around 21% from 1039 crore to 1264 crore. Our total income if we compare the quarter total income grew by 23.86% from 417 crore to 516 crore.
Profit before tax grew by 22.28% from 109 crore to 133 crore. Profit after tax there is a growth of 23.39% from 81 crore to around 100 crore. On annual basis our total income grew by 25% around from 1520 crore to 1900 crore. Pvt. Grew by 20% from 410 crore to 493 crore and packed grew by 20% from 306 crore to 367 crore. About the quality of the portfolio I saw shared that it remains stable and strong. 2.5% is gross stage 3 asset as compared to 2.5% 6% in December 25 and net stage 3 asset is 1.70% as compared to 1.72% in December 25.
Regarding the numbers of our housing finance company, there is a growth in AUM of 22.41% from 768 crore to 940 crore. PBT grew by around 46.53% on quarterly basis from 3 crore to 26 lakhs to 4 crore 78 lakhs and PAT there is a growth of around 40% from 2 crore 64 lakhs to 3 crore 70 lakhs on yearly basis pad PBT grew by 39% from 12 crore to 16.85 crore and PAT grew by 34.88% from 9 crore 56 lakhs to 12 crore 90 lakhs. Here also we could maintain the quality of the portfolio so broad. Stage 3 asset is 0.98% as compared to 0.97% in December 25 and net 3 as 0.68% as compared to 0.67% in December 25.
So this was about the key numbers. Now I’ll request Ankit to take it forward.
Ankit Jain — Chief Financial Officer
Thank you ma’. Am. On capital Liability management, the Company through its effective liability management has maintained an average cash and cash equivalent balance of approximately rupees thousand crore and along with it unutilized cash flow facility of more than 200 crores as on 31st March. The company also holds sanction facility of more than 2000 crore comprising of term loan, NCB, direct assignment co lending etc. During the last quarter the company exited direct assignment transaction amounting to 940 crore and further have sanctions of more than 500 crore in the form of direct assignment Co lending which we plan to utilize over the current quarter.
Our strategic goal remains same to maintain 20 to 25% of asset under management as out book. We have cashed the facility of approximately 1550 crore spread over 14 banks of which we maintain utilization level of around 70 75% keeping the remaining portion as liquidity. In terms of long term borrowing, the company raised rupees 750 crore through term loan with an average maturity of three to five years. We also have sanctioned term loan pipeline of approximately Rupees thirteen hundred crore. Additionally Rupees one hundred crore were raised through NCDS during the quarter.
We have strongly pulled positions in terms of structural equity. Our liquidity position remains adequate with positive cash flows across all cumulative time buckets. Our capital HFC ratio remains strong at 22.84% with TM capital at 21.50% and a debt equity ratio of 3.31x. The average cost of borrowing for the quarter stood at 9.39%, a 42 basis point reduction from the last same quarter. I’d like to highlight that this cost of borrowing is calculated on daily average balance and also include all costs incurred against borrowing and not just roi.
We in medium term plans to further diversify our resource mix by press fundraise through ECBs, foreign and development financial institutions, mutual fund, PMS etc. At competitive cost. Thank you. Now we are open for Q and A.
Operator
Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press Star and then one on the Touchstone telephone. If you wish to remove yourself from the question queue, you may press Star and then 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. A reminder to all. You may press Star and then one on your Touchstone telephone to ask a question.
We will take the first question from the line of Abhijain from AJ Capital. Please go ahead.
Questions and Answers:
Abhi Jain
Hi, good afternoon. Hope I’m audible.
Operator
Yes, you’re audible sir.
Abhi Jain
Yeah. Hi. Hi Mr. Gandhi. Hi Ms. Darshana. First of all I would like to congratulate you on the credit quality improvement that I’m seeing across the bucket. Right your 0 DPD or 1 to 30, 31 to 60. If you just leave aside 91 to 120 DPD, you have done a phenomenal job over the last quarter. So clearly what you were directing last year in the last quarter that in the next two quarters you will see all your credit quality issues and you know the NPA subsiding in the micro finance book that seems to be taking place.
So congratulations on that. I’m also happy that this year round in this quarter your provisioning coverage has gone up. I can see it is at 41.89%. Hopefully sometime in the future, you know you can be a leader in this category as well and you can take it up to 50 to 5 like many other nbsp too. That is my hope and hopefully you’re on track on that. So my first question was generally, you know, in today’s scenario of big data and AI, right. So a lot of information or data sets are available to all the lenders, to all the financial institutions.
I want to get some flavor and understanding from you as to how you are leveraging it for your risk adjusted growth. Because if you see around you the data is so easily accessible, forget about the institution, even to retailers, even to smaller customers and everyone. So I just want to understand the data edge of marks because I am happy with your ambition of going up to 1 lakh crore AUM in the next 10 years. But on a CAGR basis at 20% growth, if you look at some of the biggest year like Baja had a con call yesterday, their ambition is to grow at 22 to 24% CAGR even at a 5 lakh crore book.
So just can you help us understand as investors how is data helping you or how are you leveraging data? That I think is a necessary ingredient for a financial growth in this function.
Kamlesh Gandhi
Right? So as far as the data is concerned, what I would like to share with you is that that the usage of data for every company is unique to them and the experience of that data, it’s very important that how what experience we had from that particular data and how we use it in risk management. If I just give an example that if you just take a generic approach that I have this much of Data and then extrapolate it on various parameters. That is what happened to Fintech in their earlier days when their losses were anywhere between 10 to 15%.
So when we talk about using our data it is more on our experience on the data that we already have with us. We would not just presume basis the just the credit score is good. So that means that the quality of the asset or the risk management has to be seen that way. So what we do is that with the available data, with us back testing our risk models on those data, we take the decisions and that is how technology will help us in our risk assessment. And by using this technology, what helps us is that we get very consistency in assessment.
So once we have put certain score models, that scoring models at place, there will be a lot of consistency the way we assess the borrowers. So that will not only reduce that but but it will bring about consistency in assessment also. So the use of data will progressively increase as we have more and more data points which have been used and we shall demonstrated certain characteristics for us. No, I might be, I am not going to draw data only from all the sources and then judge the risk model or prepare the risk model.
So these models are prepared basis the data experience we have from time to time. So as and when we have more and more data this will progressively get improved. Just for example, we just started with alloys. Then we have now business rule engines. Now this business rule engines, once they were, once they are around six or nine months old. Now we are shifting to AI based risk management. So gradually we will be using technology the way we have the data at our disposal and the characteristics of the data that we examine from time to time.
Abhi Jain
Yeah, that helps. Secondly, sir, just you know, playing on data and understanding data. I wanted to understand that. Do you also have an early warning, early warning system in place which helps you with your risk management? And can you throw some flavor around that? I mean, is it more ad hoc? Has it helped you in the past in this MFI cycle that you were seeing, did your early warning signal help you to curtail your book, curtail your lending practices and that helped you manage to risk? Because obviously now we are at the end of the cycle.
But I just want to understand from a future readiness perspective how is NAS differentiated from other financiers in terms of risk management you’re tracking on speaks for itself. I mean there is no doubt about it and we can see the credit quality. But just give us some flavor around what these early warning signals might be within the company. If you can
Kamlesh Gandhi
See the most potent early warning system is your ears very close to the ground. Because when the early warning signal starts appearing on the data that means the things have already started going bad for us. So the biggest thing what we do is that have our ears very close to the ground, assess the ground level situation, talk to various borrowers. I just give an example that soon after the Middle east mid crisis kicked in, we talked to as many as more than 2 to 3,000 borrowers in our commercial vehicle segment.
Took the feedback from them that how they are affected and what they think they will be affected in the future. And taking the feedback from our feet on street, not just sitting in the conference room and understanding basis our wisdom. So the first thing is that having ears very close to the ground. Secondly obviously from the data that what are the non starter cases which are the early delinquent cases and what are the characteristics of all those type of cases. And since we have 100% banking based or ensch based collection, the bouncing is also an early warning signal.
So based on the bouncing and the data that we collect from the ground we frame our credit screens from time to time and the risk management is done accordingly.
Abhi Jain
Fair sir, thank you. And yeah, I know that 1 lakh crore AUM is a target risk adjusted growth but I hope that the company ends up achieving a bit more ambitious target. A bit more ambitious target. Congrats and
Kamlesh Gandhi
Thank you.
Operator
Thank you. We will take the next question from the line of Devin Modi from Edeco. Please go ahead.
Abhi Jain
Yeah, thank you sir for the opportunity and congratulations on a consistent set of numbers. Firstly wanted to check that the greater than 1 DPD trend seems to be showing early signs of improvement and very sharp improvement in the 1 to 90 DPD track at probably the best absolute level since March 24th. So could you share any flavor on this and what on ground signs we are seeing that could play out ahead? Going ahead? Also the West Asia prices and the general inflationary trend that would be there because of higher crude and other input prices.
Would it affect the incremental lending environment and would there be a possibility of some reversal of this Trend or higher NPAs? Also how do we price this risk in an appropriate manner?
Kamlesh Gandhi
So as you rightly told that the quality of the asset has been very steadily improving and all the steps that you take post any of the stress or so called stress, it was not a stress as far as we were concerned but the market was in stress. It takes time to show results. So that results are now showing off that since 24 what one steps were taken in order to extend credit where it is due or to tighten the credit screen. That was evident in the numbers this quarter. And secondly, these are all dynamic situation.
I hope that this crisis does not spiral out of control and the borrowers whom we are funding will be in a position, will be in a good financial position as they are right now. So that is what we presume. But if something goes out of their control, that can slightly reflect once again on the asset quality. Because there is something that is beyond our control once we have already disbursed it. But what keeps us in good stead on asset quality is being agile. As I answered to the earlier query is that our ears very close to the ground and we say to that, that we act proactively rather than, rather than act, rather than reacting to a situation.
So as of now, as I talk to you, we think that this asset quality should be maintained. But keeping a close watch on the current situation where we all know that there is a potential inflationary trend setting in and we need to see that how exactly that spans out for our borrowers. But we are quite agile, if you just give an example that we are quite agile in how we lend to the borrowers who are energy dependent, who are into logistics. So there if you can see that our CV portfolio we are cautiously being growing at a lesser pace.
So these are all the precautions that we have taken and we would like to say to that this the quality trend which are set in that continues.
Abhi Jain
Okay, sure. But on ground, basically because of whatever developments, you are not slowing down your growth rates as of now, as yet in terms of the asset advances growth rates?
Kamlesh Gandhi
No, not now.
Abhi Jain
And just one more question. What would be the further room of improvement on the current quarterly cost of borrowing of 9.39% annualized which we are shown in this quarter. Is there further room of improvement there? And in how many quarters one can expect that to play out?
Kamlesh Gandhi
I think nine points. From 9.39 we can see this going down to around say 9.20 to 9.25 over next two, three quarters.
Abhi Jain
Okay. This is the incremental quarterly cost of volume.
Kamlesh Gandhi
Yeah,
Abhi Jain
And, yeah, and if we can squeeze in one more question, basically we have this additional. We have this cost of basically the origination of around 36 crores which has gone up unduly on a year on year basis. However, it does seem that it is a cost related to the other income that we have. So how do we see that? And this is one of those quarters wherein the Other income of work is relatively lower at around 20 crores. While this cost is around this is crores. So any explanation of him and how, why and how that is skewing our operating expenses per se.
Kamlesh Gandhi
There are two part to it on the fees and income. On the. On the income, fees and commission. On the income side it depends upon the disbursement in a particular product that how we are doing a disbursement in a particular product that whether the portion of the interest is charged upfront as fees or commission or it has been built up in the interest yields. If you see for this quarter our yields have increased by almost 0.5%. So that is more of more of the marketing strategies that the company uses that whether we are going to build up in the interest rates or we are going to charge as fees and commission that was on the income side on the expenditure side.
While it will correspondingly grow along with the growth in the asset side. The next the other component in that is that we have been sourcing business through fintech whereby for a better control on the transaction we will be. We will be booking the complete interest in the book at the same time whatever the interest difference is to be paid as that is being booked as commission to them. So around 10, close to 10% of our business, 10 to 12% of our business is from fintech. So depending upon that business the fees and commission is structured from time to time.
So this is these are the components. But as far as the OPEX is concerned, what I would like to draw the attention is that since we are a multi product, multi distribution company, the right way of looking at it is that whether we are in a position to maintain our arrows or not. So the complete hierarchy works like this that we charge a yield and then we have to bear the cost of interest. Then we get our NIMS and from that OPEX and the credit cost is being appropriated. So in case where the fees and commission as an expenditure increases, our income also increases at the top.
And that is where allows us to maintain the ROAS anywhere between 2.75 to 3%.
Abhi Jain
Perfect. That’s it for my sir. Thank you sir.
Operator
Thank you. Before we take the next question, ladies and gentlemen, in order to ensure that the management should be able to address all the questions from the participants in the question queue, we request you to kindly limit your questions to two per participant. If you have a follow up question, please rejoin the queue. Again. We will take the next question from the line of Ishan Gupta from Choice Institutional Equities. Please Go ahead.
Ishank Gupta
Yeah. Good afternoon sir. So my first question was despite our direct sourcing still remaining at 64% our sequential growth in the segment like SME has increased. Despite that our average yields sequentially has moved higher by around 40. So what is the reason attributable to that?
Kamlesh Gandhi
Can you come again? I could not really understand your question. What are you trying to ask?
Ishank Gupta
My question was our average yields on loans have increased around 40bps sequentially despite our direct business staying at around 64%. And the least yielding product that is SME grew fastest sequentially. So what was the reason for increase in yields sequentially?
Kamlesh Gandhi
So that was one of the. One of the reason as I as I told that the yield also reflects our partnership with FinTechs plus the growth in the two wheeler business. Two wheeler business, the yields are anywhere between 19 to 23%. So if you see the two wheeler business grew by 35% this year. So these two combination helped us to increase the yield by 0.4%.
Ishank Gupta
My second question is regarding the higher credit cost observed during the quarter. So was it due to the impact of West Asia conflict or some stress in certain pool accounts?
Kamlesh Gandhi
No, nothing like that. We as a forward looking reason we have this year little aggressively written off the 90 dp 990 dpd assets. So ideally we would lose like 2.57%. We have written off more than 0.10% of the assets aggressively rather than showing higher profitability. So we in a sense this is a sort of a buffer write off that we have done while we are expecting recovery. But we have aggressively return off because we had that profit on the books to do that. So we have utilized that profit. Other than showing more profitability we opted for more write offs.
Ishank Gupta
And the last one, if I can squeeze in the Gujarat state we have observed that there’s a decline in number of branches by two. So what could be the reason? Because Gujarat remains a code focused area and what how do we plan to grow our branch network in the upcoming two years?
Kamlesh Gandhi
This is recalibration of branches across states is a very dynamic process. This happens because we don’t open branches just for the count of it. We need to see that how the branches are contributing and what is the potentiality. So in order to say to that the OPEX does not go absolutely out of hand. Such decisions are taken from time to time where certain branches are merged or certain new branches are open. So that reduction of 2, what you see is because of that fact and that’s a very continuous process.
But if you see overall this year we did not increase much branches because we were in process of sweating our existing branches. So we believe in building up squares rather than just doing a linear expansion. We want our branches to sweat and to contribute to the profitability. And having done that in the last year, this year we should see the increasing branches from anywhere from 30 to 35 branches this year across our area of operation.
Ishank Gupta
That’s it. From inside.
Operator
Thank you. We will take the next question from the line of Meghna Lutra from Incred Equities. Please go ahead.
Unidentified Participant
Yeah, thank you for giving me an opportunity to ask question. So like you mentioned that two wheeler book and the peer book was one of the two main reasons for the boost in yield. Sir. But last quarter two wheeler grew at a higher pace on a sequential basis than this quarter. So on a sequential basis what would be the reason for the yield? I mean moment.
Kamlesh Gandhi
So we being a multi product company and depending upon the opportunity and the products offered to the markets from time to time, even within. What I alluded to was that this might be the two major reasons. But even within SME we operate various segments, right? From say tying up with likes of phone pay to giving a loans right up to 5 crores. So depending upon the configuration of the business within the SME segment also within the Neil segment also can also have the impact. But the major impact can be because of the increase in our fintech business and the two wheeler business and accompanied by the yield increase in our SME business maybe because of the different type of products that we operate in.
So that might have resulted into a slighter higher yield. And in the, in the last quarter it might not have. It might have been offset by certain type of products which are low yield taking the precedence over the. Over the products which have a lower yield. So this calibration of various products happens over a period of time and hence the is the range bond. So that is. That is what we call it that we keep a range bond yield anywhere between 16 to 17%.
Unidentified Participant
Got it. So we could see this level of yield at a sustainable level for FY27 as well, right?
Kamlesh Gandhi
16 to 17%.
Unidentified Participant
Okay. And another question would be on how do we feel credit cost to pan out for FY27 and 28 and the same thing for cost to asset or cost to income ratio.
Kamlesh Gandhi
The credit cost I think we are. We always maintain that it will be anywhere between 1 to 1.25%, a few percent basis here or there. Because if we, if we have the room we believe in writing off aggressively within our nps. This is how one way we create buffers on the balance sheet. But ideally on a statistical basis it can be anywhere between 1 to 1.25% on our closing AUM and on cost to income ratio I think currently we are at around 35 range bond between 35 to 37%. I will once again reiterate that should not be seen in isolation.
It should be seen on the overall metrics that if the yields are higher the OPEX can also be higher because those products are sold which are having higher OPEX and higher yields. So at the end of the day we would like to maintain that the ROAS after OPEX credit cost appropriated from our NIEMS it will be anywhere between 2.75 to 3%.
Unidentified Participant
Got it. That’s very helpful. Thank you.
Operator
Thank you. We will take the next question from the line of Sripal Doshi from Equiris. Please go ahead.
Shreepal Doshi
Hi sir, thank you for giving me the opportunity and congrats on a good quarter. So my first question was on the update on LOS and bre. So while we had rolled out that in the last quarter itself for all the products just wanted to understand how is the, how are the trends with respect to rejection rates. Any other update are we able to sort of gauge in terms of any industry facing issues? Because we had highlighted earlier also that Textile FMCG along with agro and linked MSMEs were couple were a few industries which had got impacted.
So anything that our BRE and tech initiatives also helping us in terms of picking up some more let’s say ground level updates and just update on the, on the implementation of LOS and bre.
Dhvanil K Gandhi
Hi. So LOS implementation as you as you mentioned has been done across the product. Now it is all about enhancements and adding the BRE from the BRE across to all the products. So we have, we have as mentioned in the opening remarks as well that two wheeler is one product where we have made good progress in terms of faster processing, faster dispersals, automated rule engines. So good progress has been made there on the MSME side overall I think those are the those sectors that you mentioned. Textile Agro stay cautious for us still for this quarter as well.
And additionally in the last month in February end and March, mid of March we added petrol pumps, gas agencies, transporter profiles, certain chemical related industries also into caution profile. So as a cautionary mechanism we added those because we wanted to see that what effect does this Middle east supply of gas and all of those things have an impact on these sectors. So we are a little bit cautious on that. Other than that it is things as normal. The approval rates have been recently maintaining a very steady percentage wherein we are happy with those numbers and we would want to see those numbers getting continued in the new financial year as well.
So post the Diwali and the GST cut what exuberance that we were seeing. I think Q4 is also seasonally stronger. So we saw that good momentum of business. Hopefully after these election results and all there are no very massive negative surprises on inflation and all. If that doesn’t happen then we see the good momentum going into new financial year as well. So no new additions per se on the except for the ones I mentioned on the caution or the negative list as of now.
Shreepal Doshi
Got it Just a bit on the approval rate. So is post the implementation of this bre are we seeing what is the kind of change that we have seen in terms of what the approval rates were earlier versus now for let’s say some of our key products such as ms, such as MEL and msme.
Dhvanil K Gandhi
So what happens is that earlier we had a policy parameters which would get which would get verified by our credit managers manually. Now that that manual intervention of checking the credit parameters has been given to the system where system will run those algorithms and then give a score and based on that score risk, pricing and approval or rejection will happen. So currently the first step is optimizing the process and second step is that how can the process automation also lead into us getting more insight that how exactly the rules should be framed.
So currently we have not tinkered a lot in terms of rules framing. We have, we have kept the rules more or less the way we used to do them earlier. We still want to run this scorecard for another one or two quarters and then see the output coming out on the scores and then maybe run some statistical models on those and then come out with maybe newer policy parameters. So this is a continuous exercise that we keep on doing and we have successfully achieved the first step and then we are working towards the next steps as well.
So Mel is still little Mel is little bit difficult to convert to absolutely score based because of the physical assessment and requirement of physical visit and all. But at least in SME where formal data is more reliably available, we are able to do this more effectively. So Mel I would say is still more of manual in terms of underwriting and rules and all. But we are, we are exploring ways to optimize that as well because we feel that optimization of credit resources, sales resources is required to get OPEX under control.
So we are exploring mel maybe casse we can do more of automization through bre. But SME is a very right product to do it.
Shreepal Doshi
Got it. Got it. Thank you so much for that detailed answer. Just a second question was on the credit cost front. So I suppose post the ECL review the credit cost requirement has gone up incrementally. We should see the credit cost at closer to 1.5 1.6%. Is that a fair assumption to move ahead with?
Kamlesh Gandhi
See on close how you take the denominator of the closing AUM we should see that at around anywhere between 1.25 to 1.3 or something like that. But as I said earlier that if we opt for some aggressive write offs during the quarter, profit permitting so that that should see us anywhere between 1.5% as you told but without disturbing much on ultimate ROAS and roes.
Shreepal Doshi
Got it. Got it. Thank you so much for answering my question. Good luck for the next quarter.
Kamlesh Gandhi
Thank you. Thank you. Thank you.
Operator
Thank you. Before we take the next question, a reminder to all the participants. You may press STAR and then one to ask a question. We have the next question from the line of Aditya from Securities Investment Management. Please go ahead.
Aditya
Yeah. Hi sir. Thanks for the opportunity. So I just wanted to understand what is the right of policy which we have for our different loan segments and in this quarter the loans which you have written off are these more pertaining to unsecured or secured loans?
Kamlesh Gandhi
The write off policies that we write off post 360 days and this year what we have return of not. Not off the cuff data I have but it might be a combination of secured and unsecured. More in unsecured.
Aditya
Understood. And this post365 days it is applicable for all product segments or it is different for different products.
Kamlesh Gandhi
It is applicable on all products.
Aditya
Understood. And sir, on recovery. So do you expect these loans to get recovered and how do you account for recovery? So is it. Is it accounted in the credit cost itself or it’s part of other income?
Ankit Jain
So what all amount is recovered from this account are written back. So the figure which is in the PNL will be the net figure.
Aditya
And next was net interest income growth. So if I look at sequentially your NII growth is around 7% as against our AUM growth of 4%. So you mentioned some of the reasons were because of improved product mix and lowering of borrowing cost. But how big the assignment book plays a role in this? Because when I look at the amount quantum of assignment incurred this quarter it is almost doubled from last year. So just wanted to get a sense how big a role does assignment play in your higher NII group? Because I believe there is some upfronting of income because of assignment.
Kamlesh Gandhi
If you, I don’t whether you recollect we were the ones who always advocated that we would not like to upfront but amortize the income. So the other way around in order to calibrate that we do sufficient provisioning that it is very close to an amortized income only. So we don’t, we do not upfront income in order to improve the profitability or the NII growth. So this is very very close to an amortization levels only. And the the reason for the NI rise this year this quarter was because of the interest cost.
If you see the interest expense for Q3 and Q4 were saying almost same. If you see the the interest expense for Q3 was close to 18081 crores that that remained right? In short it remained, it remained same for both the quarter to 219 and 221. And that was because the incremental cost of borrowing is now the 9.39% what it used to be around 9.75 to 9.8%. So this is. This resulted in higher NII. And secondly this happened in this quarter because there was a lot of MCLR reset this quarter because we have an MCLR reset every year.
So there was an MCLR reset this quarter and hence this impact.
Aditya
Thanks for that clarification. And also going forward now NII, so you are expected to get further benefit of 15, 20 weeks on your borrowing side. So are we passing on this incremental rate benefits to our customers or we are keeping the yield?
Kamlesh Gandhi
It all depends upon the market situation. As of now, the way we are operating, we are operating at a competitive rate. So if this rate reduces more it will be a combination of both that we’ll be keeping it something for ourselves and something might be passed on to the borrowers but difficult to predict right now. It all depends upon the market situation going ahead.
Aditya
And the last question was on a CV book. So we have been a little slow in viewing our CV book and I think for the last many quarters now as against when I look at the industry growth, the CV industry is doing pretty well. So just wanted to get a better sense from you. What are you seeing in your segment which is restricting you to grow a CV book
Kamlesh Gandhi
That is all about the perception of the quality of the assets that will happen over the next few quarters depending upon the current situation. So we see that whenever there are any sort of abnormal situation which we are going through right now, the first casualty is the logistics and the transport. So looking at that, we internally from the risk perspective understand that this book should grow at a slower pace for coming one or two quarters before we really pick up the pace in parallel to the overall growth of the aum of the company.
So our perception right now is that we like to wait and watch and we like to grow slower for coming one or two quarters.
Operator
Aditya, does that answer your question? Do you have any further questions?
Ankit Jain
No.
Operator
Thank you very much ladies and gentlemen. We will take that as the last question for today. And with that concludes the question and answer session. I now hand the conference back to the management for closing comments.
Kamlesh Gandhi
So thank you everyone for sparing your valuable time and attending this analyst call. And as I shared in the beginning that we remain confident of growing steadily anywhere between 20 to 25% towards our mission which we have set for ourselves for 10 years of reaching a lak crore without compromising on the quality of the assets and profitability and that you demonstrated over last three decades. So thank you for joining and look forward to being touched. Thank you.
Operator
Thank you members of the management, on behalf of ICIC securities that includes this conference. Thank you all for joining with us today. And you may now disconnect your lines. Thank you.
Kamlesh Gandhi
Thank you.