PNB Housing Finance Ltd (NSE: PNBHOUSING) Q4 2025 Earnings Call dated Apr. 28, 2025
Corporate Participants:
Unidentified Speaker
Deepika Gupta Padhi — Investor Relations
Deepika Gupta Padhi — Investor Relations
Deepika Gupta Padhi — Investor Relations
Deepika Gupta Padhi — Investor Relations
Girish Kousgi — Managing Director and Chief Executive Officer
Vinay Gupta — Chief Financial Officer
Vinay Gupta — Chief Financial Officer
Dilip Vaitheeswaran — Chief Sales Officer
Valli Sekar — Chief Sales & Collections Officer
Jatul Anand — National Head – Credit Underwriting
Anubhav Rajput — Chief Technology Officer
Anubhav Rajput — Chief Technology Officer
operator
Analysts:
Unidentified Participant
Abhijit Tibrewal — Analyst
Nishant Shah — Analyst
Viral Shah — Analyst
Tawa Shawarma — Analyst
Presentation:
Unidentified Speaker
IT SA.
Questions and Answers:
Unidentified Speaker
Ladies and gentlemen, good day and welcome to PNB Housing Finance Limited Q4 and FY2425 earnings conference call. 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 Stardom zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Deepika Gupta Badi, National Head, treasury and ir. Thank you. And over to you Ma’am.
Deepika Gupta Padhi
Thank you.
Deepika Gupta Padhi
Neeraj. Good evening and welcome everyone. We are here to discuss CMP Housing Finance Q4 and FY Qualified Business. You must have seen our business and financial numbers in the presentation and we press release shared with the Indian Stock Exchanges and are also available on our website. With me we have our management team led by Mr. Girish Kausi, our managing director and CEO. We’ll begin this call with the performance update by the management team followed by an interactive Q and A session. Please note this call may contain forward looking statements which exemplify adjustments and future exceptions concerning the development of our business.
These forward looking statements involve risks and uncertainties that may cause actual development and result to differ materially from our expectations. PNP Housing Finance undertakes no obligation to publicly revise any forward looking statement to reflect future events or circumstances. A detailed disclaimer is on slide number 53 of the investor presentation. With that I will now hand over the fortune for the company.
Girish Kousgi
Hi, good evening to all the investors and thanks for taking time out. It’s my pleasure to address you today as we review the dynamic developments in India’s housing finance sector and share an update on our performance during the quarter and the year.
Housing finance industry has shown remarkable resilience and growth. Where regional disparities remain, there lies a tremendous opportunity in expanding deeper into further Government support has been a strong enabler with initiatives like CNY 2.0 Interesting Momentum into the affordable housing space. Housing finance companies have responded proactively offering customized products and flexible solutions to meet the aspirations of a broader spectrum of customers. As per icra, the housing finance industry is expanding to continue its growth momentum with 13 to 15% ongoing growth expected for FY25 22. The profitability of the HSE is projected to remain healthy supported by low freight costs.
Coming to PND Housing, we had a tender run in the current financial year and achieved significant milestones during the year. Let me talk about them and update on the performance of our guidance shed last year despite the challenging operating environment, we achieved retail loan book growth of 18.2% YoY surpassing a guidance of 17% to INR 74,802 crores as of 31st March 25th. The total loan assets of the company crossed 75,000 crores after 23/4 to reach INR 76,765 crore as on 31st March 2025. The affordable and emerging market segments continue to increase the shares in the retail loan effect and is at 26% as on 31st March 2025 from 21% on 31st March 2022.
Our affordable segment loan asset has performed phenomenal and crossed a significant milestone of 5000 crores on March 45 despite being a late entrance in the affordable segment. This achievement is a testimony to our conviction in the available opportunity, ensuring right execution and driven across time, Retail business increased by 26% y o y with affordable and emerging segments contributing 40% during the quarter. Recoveries from return of pool grew to X from 100 crore to 336 crore. In the current year the gross NPA reached close to 1%. It is at 1.08% by end of the financial year.
Ensured stable living of 3.7% during the year achieved ROE of 2.55% for FY24.25 versus 2.2% in FY 2024. With the strong performance of the company, I am pleased to announce that the board of directors recommended a dividend of INR 5 per equity share for FY25. This is subject to the shareholders approval. Let me now talk about a few details on the performance achieved during the year. Our Disbursement grew by 25% during the year to INR 21,972 crore. The disbursement during quarter four grew by 23% YUI and 27% quarter on quarter to INR 6,854 crore. Affordable and emerging market segments contributed 40% in quarter four and 36% in FY25 of total retail diversion.
As planned, we opened 51 branches in quarter four FY25 for affordable and emerging market segments. The total Pan India branch network of the company stands at 356 including 200 profitable to capitalize the opportunity available in affordable and emerging market techniques. In tier 2, 3 and 4 figures on asset quality, the gross MPA improved to 1.08% as on 31.03.25 as compared to 1.5% on 31.03.2024 and 1.19% as on 31.12.2024. During quarter 3 FY25, one corporate account is flipped into stage 2 has now been rolled back to stage 1 with focused collection effort. We sold five hundred and thirty seven retail properties as compared to two hundred and sixty eight in FY24.
We recovered 336 crores from written of pool which includes 178 crore from retail and 158 crore from corporate pool. During FY25 the company has a remaining return of food of around 1000 crores in corporate and around 400 crore in retail. To further our commitment to the vision of housing for all, we are proud to share our partnership with MAWA and MHP to share in the intersectivity of PMIY initiatives. The scheme was applicable from 1st September 2024 and since then the company has sourced over 5500 applications amounting to over 750 crore which are eligible under CMY scheme.
Our diversified liability profile, improved credit rating and continuous engagement with the lender enabled us to reduce the cost of borrowing by 15 during the year versus 8.01 in FY24. In FY25, PAT increased by 28.4% by URI to 1,936 crores leading to an ROA of 2.55% and ROE of 1.19%. The Capital Adequacy Ratio is 29.38% and Tier 1 is 20%. 28.39 as on 31st March 2025. Given the industry outlook and the business performance so far, sharing our FY26 guidance with you all. Prepaid loan growth 18% affordable loan book on 31st March 2026 will be 9500 crore.
Corporate disbursement will be in the range of 1500 to will be stable craze cost remains benign due to recovery from recurrent pool. Roe would be in the range of 2.5 to 2.6%. As we progress, we will continue to focus on profitable growth while sustaining the asset quality. With this I would like to hand over the call back to Deepika.
Deepika Gupta Padhi
Thank you sir. I’ll now request Vinay our CFO to talk about our financial performance.
Unidentified Speaker
Good evening everyone and a very warm welcome to our earnings call. I am pleased to announce strong Q4 and FY25 financial numbers driven by robust company performance.
I will now cover some of the financial parameters in more detail with growth in retail loan book by 18%. Our retail interest income has grown 17% year on year. Our total interest income grew 13% year on year to INR 1906 crores in Q4FY 2020. Coming to borrowings company continues to have diversified and cost effective long term financing sources which resulted in a declining Cost of borrowings by 15 bids to 7.86 in FY25. Cost of borrowing for Q4 was at 7.84% 1 bip higher than Q3 FY20%. This is on account of higher cost of deposits and it’s been almost similar lines that we have been in previous quarters.
During the year company has received 5000 crores from MHP and has sourced 350 million USD from ECB. With improved liquidity in the market and rate cut, we expect the borrowing cost to reduce from this quarter onwards. Net interest margin improved by 5 bips in Q4FY25 to 3.75% in comparison to 3.7 in the previous quarter. The increase in margin includes temporary gains due to higher disbursements and loan assets in March 25 without corresponding increase in borrowings. This will normalize next quarter. Gross margin improved to 4.27% in Q4 versus 4.1 in Q3 driven by 27% higher disbursements during Q4 and and it also includes one off on account of interest received on income tax refund.
Our operating expenses grew by 18% year on year to 208 crores versus 176 crores in Q4FY24 and 203 crores in Q3FY25. This increase is largely on account of new branch additions that we have done in affordable and emerging world market vertical. At the beginning of this month we have added another 50 branches in Q4 which will start reflecting in Opex in Q1. However, we would be able to offset this with economies of scale in investing businesses. Our OPEX to ATA guidance remains in the range of 1 to 1.1%. Led by strong revenue growth, our pre provision operating profit has grown 14% year on year to 646R.
At a overall level, operating profit for Retail has grown by 16% year on year. Credit cost stood at 32bps negative for Q4 and 21bps negative for FY25. Happy to share that we have recovered INR 336 crore from ton of coal during FY25. Happy to share. We have also reported a PAT of 530 crores in Q4 which is up 25% year on year and 14% quarter on quarter. For FY25, PAD grew by 28% to 1936 crores. ROI improved to 2.55% for FY25 versus 2.2 in FY24. ROE stands at 12.2 in FY24. Coming to capital, our total CRAR is at 29.38 with Tier 1 at 28.39.
Debt to equity is stable at 3.7 times. Our March 25th net worth stands at 16863 crores and our book value is now at 649 rupees with this. I now hand over that to Deepika for taking this book.
Deepika Gupta Padhi
Thank you Vinay. I’ll now request Dilip, our Chief Skills Officer for prime and Emerging business to give segmental performance.
Dilip Vaitheeswaran
Thank you Deepika and good evening friends. Welcome to the call. Appreciate you taking the time out. I’m delighted to share with you that we had another very good quarter on the prime and emerging markets businesses. To give you a color on disbursements, we disbursed about 5,500 plus crores across both these businesses.
A growth of 17% year on year and a sequential growth of 25 plus percent quarter on quarter. The NHL business where we are trying to increase our growth rate, we managed to disburse 1800 plus crores here in the quarter y o y of 40 plus percent over last year’s default. Let me now give you a color of both businesses. I will start with emerging markets first. Disbursements in emerging markets grew at 33% yoy for the entire FY25. In fact for Q4 they grew at 40% y oi the share of emerging markets business like Mr. Kausgi explained along with Roshni is going up at an enterprise level.
This business now is being generated at a yield increment of 41 basis points over the prime business. Even within emerging markets, NHL is growing up strongly. NHL as a share of overall disbursements in emerging markets stands at 42% for Q4 of FY25. Now in the emerging markets business we opened a few more new branches along with the new branches and a set of existing branches which are now being redesignated as emerging market branches. The total distribution size in emerging markets goes up to 79 branches as compared to 50 branches at the beginning of FY25. This just goes to show that we are more and more focused on growing this segment which is more margin aggressive for the enterprise.
Now Coming to the prime markets here also we had a very good quarter on all fronts. We managed to increase our disbursements by 13% year on year. For all of FY25. The prime book grew by 11% to about 55,600 plus crores. Another key agenda here is to restrict runoffs. Runoff for entire FY25 stood at 17%. This is down by 80 plus bips YY here also the NHL mix has grown against 26% in Q4 of FY24. The NHL mix in FY25 for Q4 was 30 plus percent. We had opened 35 new branches across prime and emerging markets in this year.
Happy to update that. They contributed to 13% of overall disbursements in Q4 of FY25. Now, in line with our focus on profitable growth and margin accretive businesses, we have also set up a dedicated NHL team. This team Will source exclusive NHL business starting with 10 clusters in top cities as we speak. In fact, we have also come up with a new customer offering a complete full tenure fixed rate offering for non housing loans. This is a one of a kind product which currently is not available across the industry. We believe this will be a game changer for increasing our NHL mix further.
So to summarize, we have sustained the growth in business momentum through geography or managing channel partnerships, retention asset quality. We have had a good quarter on all these fronts and we are now ready to increase our business further in the coming years. We believe that FY25 overall has been a testimony to the fact that our core business franchise is in very very good shape and we will only move forward on growth on margins and asset quality. Thank you. I hand the call back to Deepika.
Valli Sekar
Thank you Dilip. I’ll now request Vanvil Shekhar, our Chief Sales and Collection Officer for Affordable Business to update on the business performance.
Thank you Deepika. Good evening everyone. It’s my distinct pleasure to share with you the exceptional progress we have made in our Roshni business over the last quarter of the year. We concluded the year with a remarkable loan book of 5070 crores representing a phenomenal year on year growth of 183% up from 1790 crores as on 31st March 2025. This also reflects a robust 32% growth over the preceding year. Our disbursements tell an equally compelling story. In Q4 of 18 alone we dispersed 1291 crores delivering 100% growth over 645 crores in Q4 of the previous year on sequential basis we saw a 40% increase up from 920 crores in the previous quarter, demonstrating a strong momentum and a market acceptance.
Over the past year we have added 40 new branches taking our total footprint to 200 branches across 130 plus potential districts in Sukim State. I’m happy to report you that these branches are fully operational and already started contributing significantly to our business. We have forayed into two promising new markets namely Punjab and Northeast with plans to deepen our presence in the coming fiscal. We have since opened our first branch of PNB Housing Finance in Northeast at Dohati. Our Pan India operations are well balanced across three zones, north zone contributing 36%, west zone contributing 33% and south zone contributing 30%.
This Dropbox balance ensures resilience and consistency in our growth. The State of Tamil Nadu posts the highest AAM followed by Uttar Pradesh and Madhya Pradesh. To further strengthen our reach, we have empanelled over 2,100 connectors under our SARTI program and partnerships with more than 500 channel partners who are all powered by 1200+ vendors who handle the legal, technical, FI, FCU related activities. On the technology front we have implemented advanced digital solutions to enhance our operational agility and scalability. The last quarter was the best ever in terms of logins, sanctions, disbursement and the foundation for continued growth.
On the portfolio front we have made significant headwinds. Self employed sourcing rose to 44% up from 42% last quarter and 37 a year ago. Informal income segment sourcing grew to 30% up from 26% last year, forming a sizable part of our book. Now 73% of the portfolio is within the ticket size of 25 lakhs and 30% of our portfolio remains non housing loan on incremental yield at 11.7% this quarter sequentially down the previous quarter however higher comparatively to the last year. Generally competition is higher in the last quarter which results in lower incremental yields which focus on higher yielding products and from tier 3 and tier 4 markets we will increase the yield in the coming quarters.
Importantly, portfolio quality remains very strong. Bounce rates are well controlled at 11% and NPAs are impressively as low as 0.21%. We are incredibly proud of what we have accomplished with this momentum and strong foundation we have laid. We are confident of closing the upcoming financial year with with a loan book approaching 9500 crores. Thank you all for your continued support and trust. I’m handing over back to Deepika.
Valli Sekar
Deepika,
Jatul Anand
thank You Ranil. I’ll now request Jatul, our Chief Credit and Collections Officer Retail Business to talk about the performance. Yeah. Thank you Deepika. Good evening everyone. So credit underwriting has been a driving force towards building a healthy portfolio followed by sustainability growth.
The company has a well diversified book exposures across all industries with majority cases having low and mid ticket size and a healthy mix of salaried and self employed profiles. During Q4.25 the company witnessed an upward take in onboarding, sanctions and divestments across all verticals. Prime emerging and notioning. With all the checks and balances in place, the company has been able to calibrate the portfolio quality. The delinquency booked during the last few quarters is well within the tolerable limits and is one of the critical monitoring parameters for the company at all intervals. Last 12 months onboarding witnessed 30 plus of 0.13% and negligible NPA at 0.03% going to last 24 months disbursements the 30 plus range at 0.48% with 90 plus of 0.14%.
Now taking over more on retail collection, the company continued its pattern of sequential reduction in gross NPA quarter on quarter reaching nearer to 1% by end of FY25. Similar positive results were also replicated across other buckets through a focus approach on granule field college performance plan, focus on rollbacks and normalization of cases in early buckets. Efficient leverage of legal Machinery to reduce NPAs by higher number of possessions through surface and other legal actions available on parallel basis. Now taking over to the dual success stories of right of recovery and distressed property disposal. It gained further impetus in Q4FY25 recording newer hikes.
Recovery from bidden off pool in retail was 49 crore for the quarter taking the annual recovery to 178 crore as compared to 68 crore last year. Same time disposal of repurchased properties also witnessed staggering performance with 174 properties sold through auction in Q4 taking annual disposal to 537 as against 268 properties of last year same time so doubling the numbers. So taking the Q forward. As we step into the new financial year, the plan for retail collections is to capitalize and build on successes of the last financial year. Further uplift performance through rigorous reviews of the portfolio, tighter control of flows and faster resolutions.
Thank you. And now I like to hand over back to Deepika.
Deepika Gupta Padhi
Thank you Jatil. I’ll now request Anubhav, our Chief Information Officer to talk about our initiatives and progress.
Anubhav Rajput
Thank you Deepika. A very good evening to all. PNB Housing Finance continues to move forward and strengthen its technology landscape and foundation to drive business and modern tech capabilities. Our long term technology vision is to be recognized in a large tech led digital player in the housing finance ecosystem, partnering with various fintechs, banks, aggregators through scalable digital platforms and technology services which are integrated into bank Our technology transformation agenda that was initiated in Quarter 42024 is in the final stages of completion Now.
In the quarter four of FY25 we have launched the new deposit code platform for sourcing, servicing, renewing and managing of our term deposits for customers. This system replaces our legacy core deposit system and delivers improved performance, API integration capabilities and additional workflow controls. The new platform is under stabilization and user adoption in quarter 4 FY25 we have also successfully set up a full scale disaster recovery setup on client and the same was tested successfully. This setup will ensure IT resilience and failover capability and enhance our business competitive posture. The new cloud based GR setup was successfully tested in this quarter for all systems and applications in scope.
The overall scalability and performance of the new platform that have been implemented as part of transformation in the last 12 to 18 months was successfully demonstrated with the higher transaction volume that was handled in quarter four which was done in a seamless manner. Pilot launch of the new LOS prime and Energy business will now be announced and rolled out across branches during Q1 and Q4FY26. Lastly, we remain focused on the threat of cyber security and have set up a 247 information security monitoring capabilities center and continue to build resilience in our technology platforms. In line with new and emerging cybersecurity information access for all users is also controlled using relevant tools which work purely on a zero trust architecture model.
We have recently further augmented our information security capabilities by introducing additional AI based monitoring capabilities for our email landscape as well as for our internal network traffic monitoring.
Anubhav Rajput
Thank you very much. Handing it over back
Deepika Gupta Padhi
to thank you Anubhav Neera we can now open the floor for the Q and A.
Unidentified Speaker
Thank you very much Ma’am. Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask a question may press RN1 on their Touchstone telephone. If you wish to remove yourself from the question queue, you may press RN2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. You may press STAR and one to ask the question. The first question Is from Nana Frenish from icici. Please go ahead.
Unidentified Speaker
Two questions. One on these affordable wheels.
Unidentified Speaker
Sorry glimpse.
Unidentified Speaker
Can I request from the beginning please?
Unidentified Speaker
Yeah. Is it better now?
Unidentified Speaker
Yes. Okay.
Unidentified Speaker
Yeah. Hi sir Congressional. Great set of numbers sir, just two things. One on this affordable yield side we have seen a pretty sharp fall on sequential basis to 40 basis point. Is this due to some seasonality or sort of how one should read this drop in yield on a sequential basis.
Unidentified Speaker
So in quarter four we had focused more on volume and also with this PNRI ISI coming into picture. So because of these two reasons this is slightly lower and I would say in a sense this is seasonal and from quarter one if we pick up sir our ideas to take it to about 1.65 in effect 26.
Unidentified Speaker
Okay. Okay.
Unidentified Speaker
I mean so is it fair to assume that let’s say anything about thousand odd crores yields will be very competitive to achieve that volumes or I mean wanted to get a sense how one should read this data point in terms of thousand 400 curve of businessman and a 40 basis point of view in.
Unidentified Speaker
Top
Unidentified Speaker
if you look at any quarter four of the year it will be slightly seasonal because of the. Because of too much of focus on everyone on trying to build up volume. So in that sense it is seasonal. Otherwise we are very clearly focused on increasing yield. So our plan is to take Yield to about 12.65 in affordability.
Unidentified Speaker
And last question from my side on this. The disbursement momentum. Right. So just wanted to have the share. I mean what would be the share from VT in of Q4 disjustment and how much it would be from let’s say core volume increase.
Unidentified Speaker
So for us I think we are into three different businesses. So let me try to address this business side. If you look at prime I think the BT in and BT out is almost similar on emerging the BP in is slightly more about 50% more than the BT out and in affordable I think largely it is between BT outreach.
Unidentified Speaker
Okay okay. Any numbers you want to put it.
Unidentified Speaker
Overall out of 17% what we talk about closure B would be about 5 and a half to 6% 1 and.
Unidentified Speaker
A half to 6% BT in on that basis BT out. Okay.
Unidentified Speaker
Okay.
Unidentified Speaker
And BT in BT would be about 8% at overall basis, right?
Unidentified Speaker
Yeah. Overall.
Unidentified Speaker
Okay. That’s it for thank you.
Unidentified Speaker
Next question is from the line of viral. Please go ahead. The line for the part has been dropped. We move on to the next question. Next question is from line of Abhijit from Othilal Oswal. Please go Ahead.
Abhijit Tibrewal
Yeah. Good evening everyone. Thank you for taking my question. So first things first. Just trying to understand. You said that BTIN was 8% at the overall level. If you could also share the number in the affordable book, what proportion of the disbursements in Q4 and full year FY25 came from details in the affordable book.
Abhijit Tibrewal
So on on this I said it is 8% is BT in and BT out is 6%. So we get less close to about 2%. So talking about business success, affordable BT is about 12%.
Abhijit Tibrewal
Is 12%. This was for 4Q disbursements.
Unidentified Speaker
Yeah.
Abhijit Tibrewal
Okay. And for Pulmier FR25.
Unidentified Speaker
No, I was talking about the. See, if we talk about Overall affordable, the BC in is about 21 22%. And in affordable what BC out is hardly about 1 to the 10. If you take prime it’s about 20%. And emerging also will be on similar lines. Only thing is In prime, the BT in is equal to BT out. So we don’t gain anything on BD on emerging, we gain about 3% on affordable. Largely it is BT in. BD out is very good. Overall on the book, what we lose is about close to 6% of BD out and BD in the rating.
Abhijit Tibrewal
Got it. This is clear. So the second thing I wanted to understand is how should we look at margins in FY26? The reason I ask is when you look at large HFCs like you in a declining rate environment, they speak about transitory compression. In our case because we are also matching it up with the product mix change in favor of emerging and affordable. How are we kind of looking at NIMs evolve over the next couple of quarters as well as this full year.
Abhijit Tibrewal
FY26.
should be stable.
Unidentified Speaker
When I say stable, if I have to give you a range, it will be between 3.6 to 3.65. The reason for that is very clear. Even in spite of cut in policy rate because of mix change and also because of corporate business and costs would slightly go down because we are expecting maybe FAG end of this year, maybe a rating up to rates. Because of these reasons, our cost would go down because of mixed gain. That means would go up because of corporate restart. It will help us on the yield and margin and they put margin.
Abhijit Tibrewal
Got it. And so lastly, I mean if I recall correctly during your pre remarks, you guided for a retail loan growth of 18% year over year and ROA of 2.5 to 2.6% in FY26. Is that right? Got it. And so I mean Just, just trying to understand this better. Maybe 3, 4/4 back you had suggested that this provision write backs will continue this this year for almost all of this year. We saw those provision write backs continue. Earlier in the call during your open remarks you spoke about a thousand crore corporate right of pool. 400 crores of retail right of pool.
Now I mean are we looking for another maybe three, four quarters of these write backs provision write backs continue.
Unidentified Speaker
Yes, yes. Whole of FY26 will be right back and.
Abhijit Tibrewal
Got it. This is useful. Thank you so much. And sir, congratulations again on a very, very strong quarter. Wish you the very best.
Unidentified Speaker
Thank you. Next question is from nanof. Nishant Shah from mlp. Please go ahead.
Nishant Shah
Hi sir. Congrats for the good set of numbers. So just elaborating on the previous question on like the headwinds from the repo rate cut. So like fair play we have like some levers from product mix change. But. But do you see some headwinds to just growth itself? Because while yet there’ll be margin compression or yield compression on incremental book, does that kind of also result in lower growth? Because you’re seeing some of your large HFCs also start to cut rates in line with the repo rate cuts of the large banks.
So should we think about growth probably in the prime segments or in the corporate segments tapering down a bit and probably affordable, trying to pick up the slack. How should we think about that?
Unidentified Speaker
I think two things. If you look at our strategy, our strategy has been to grow the prime book floor and much faster affordable business. So with the rate going down, demand will further go up. So we see volumes will increase. So for us certain policy rate would not impact us for two reasons. One, our focus is on margin. So when the rate goes down we would fine tune the yield in such a way that the margin is protected. Adding to this the product mix change and also corporate. So this would lead us to maintain margin.
We should further propelled demand and this. But our focus is very clear. Our focus is on all the three but trying to grow at a source affordable and emerging at a faster pace.
Nishant Shah
Okay, fair enough. So what should we think of like the blended company growth to kind of like come in at for this year?
Unidentified Speaker
So we have guided retail growth of about 18%. Retail book growth 18% and corporate we plan to do about 1500 to 2004.
Nishant Shah
Got it.
Unidentified Speaker
And that 18% incorporates the slowdown in the prime book as well as the acceleration affordable book.
Unidentified Speaker
In fact FY25 there’s a lot of Talent which I’ve spoken in my previous earnings call. In spite of all the challenges we had guided for 17% retail growth, we end up with 18.2% retail growth. FY26 is going to be far, far better than FY25 for the industry.
Unidentified Speaker
So just to double click on that point, FY26 we still had broadly rate discipline being maintained by a lot of the large banks. But now it’s like when, when there’s like say a hundred bits rate cut cycle, it’s, it’s compulsory. Right. Everything will have to compulsorily kind of like flow through. Does that kind of like create. So I’m just trying to understand how is the environment in FY26 easier than in FY25 when FY26 is the one which is going to see the brunt of the rate cuts.
Unidentified Speaker
See in FY26 definitely there’ll be cut in policy dates and it could be 50, it could be 75, could be 150, it could be anywhere between 50 to 100 right now. This would definitely have an impact because of the lag effect. Now we have baked this, you know, into our business plan and this is that we are saying that we’ll be able to protect the margin on one side. On one side this would impact the margin because of the lag because everyone, including PNB housing, we have our own plr. That is broadly the general interest rate scenario in the market.
So whenever policy rate goes down, sooner or later then our cost goes down be passed on that benefit to our customers. Right. However there’ll be a bit of lag to offset that we have planned in place in terms of mixed paying and. Okay, fair enough.
Nishant Shah
I’ll make more questions offline.
This is very useful. Thank you.
Unidentified Speaker
Thank you.
Unidentified Speaker
Thank you. Next question is from Nana Viral Shah from IFL Capital. Please go ahead.
Viral Shah
Yeah, hi. Thank you, sir. So to do three questions. One is you mentioned on the possibility of a rating upgrade towards the end of the year. Can you tell us like what gives you that confidence?
Viral Shah
Say have you interacted with the credit rating agencies? I’m asking this in the context that of course there is also the October 4th circular of RBI. If it comes through, then maybe potentially PNB may have to reduce the stake to say 20% odd levels. Of course there is probably could be a glide path.
Again not sure whether even that circular is coming or not. But given that uncertainty, what gives us that confidence and most of the rating agencies, that’s one.
Unidentified Speaker
We got the last upgrade in quarter four of last year and quarter one of FY25. Okay. So generally there is a cooling period and if you see the company’s performance, you know, in last five quarters, this quarter included, I think all the performance metrics have improved. Right. And we are sure that this performance will continue for next two quarters. So basis this we see that billion rating. Update commenting on para 4 I think it’s too early because even the Cesseller is not rolled out yet. So I think that is too premature to discuss on that.
I think looking at the short to medium term view, I think very clearly we have a handle on our yield and margins and we expect that end of this financial year we should get an update on the.
Viral Shah
Okay sir, so second question is with regards to I would say the management kind of say continuity beyond say when the PE presence kind of goes away more. So from the perspective, again from a longer term perspective, how does the governance and all those things kind of play out in that scenario?
Unidentified Speaker
PM Housing is a professionally managed organization. So manage is quite strong. We have a very strong bench. And today if you look at CME is a promoter, they sold about 28%. The next highest is by a private equity share which is about 10%. So I don’t think anything has changed at all.
Viral Shah
No sir, but like once say if the PR goes away then basically does like what. What’s the view of say the parent because how do they then want to run it? Just if you can comment.
Unidentified Speaker
No, we have no view on that. I think as of now we are focused on operational things and in last few quarters, you know the stake has been changing and we’ve seen that, we witnessed that. But nothing really has changed the performance of the company. So it will continue.
Unidentified Speaker
Got it sir. So and last is on the PLR rate. So you haven’t taken any PLR rate cut as yet, right? For the total 50bps cut that has already come?
Unidentified Speaker
Not yet. Yeah.
Viral Shah
Do you have any plans and if at all like say over what period you may want to consider that. I know it’s an alcove decision but just some thoughts if at all we keep reviewing.
Unidentified Speaker
I think whenever it is now the right time then we.
Unidentified Speaker
Okay sir, fair enough. Thank you so much and all the best.
Unidentified Speaker
Thank you.
Unidentified Speaker
Thank you. Next question is from the line of AWA Swarma from East Green Advisors. Please go ahead.
Tawa Shawarma
Yeah.
Tawa Shawarma
Am I audible? Yes. Good evening sir. Thank you for the opportunity. I have two quick questions. My first question is going forward, what steady state mix between salaries and self.
Tawa Shawarma
Employed customers do you see on the.
Tawa Shawarma
Loan portfolio, any broad guidance would be helpful. So that’s my first question.
Unidentified Speaker
At a disbursement level again we have three different businesses. So if you have to talk about prime it will be 6545. Emerging would be 60 and 40 and upper double 50. 50. This is at the origination stage, development stage. At a portfolio level it will take lot of time because today you know the mix is about 70 and 30. Take time to.
Tawa Shawarma
Okay, thank you so much. And my second question is for the corporate loan book that we build from.
Tawa Shawarma
Here on what will be the average.
Unidentified Speaker
Ticket size and the ease on that if you could.
Unidentified Speaker
Average ticket size should be in the range of 175 to 200 crores. So we started off the last financial year with a small tension. We will continue and this year we plan to diverse about 1500 to 200.
Unidentified Speaker
Okay. And about the yields, is it like what sort of yields are you expecting on the first. Sorry.
Unidentified Speaker
Yield should be about 12%.
Unidentified Speaker
12%
.
Unidentified Speaker
Okay, thank you so much. That’s it. From myself.
Unidentified Speaker
Thank you. Next question is from the line of Siraj Khan from Accident Capital Partners. Please go ahead.
Unidentified Speaker
Hello, I’m audible.
Unidentified Speaker
Yes, you’re.
Unidentified Speaker
A couple of clarification before I ask my question for affordable book. In the opening remarks it was said 9,500 crores is the target for FY26. Is that correct?
Unidentified Speaker
That’s right.
Unidentified Speaker
Okay. And so that would imply we would want to. So in for FY25 we did approximately 3400 crores of disbursements. And that would mean we have to do somewhere in the region of more than 5000 crores considering the BTN etc. So would that be a fair assumption?
Unidentified Speaker
No, in affordable BT out is hardly anything as I mentioned. So as of March25 the book is about 5700. Plan to take it to nine and a half thousand. So this version should be about close to 5,000.
Unidentified Speaker
5,000.
Unidentified Speaker
Okay. And the data keeping question and then I’ll come to the main question. So in the past quarter we were showing also a slide in the slide the sanctions that we did in the quarter. So what are the Q4 sanction?
Unidentified Speaker
Just to identify the sanction to disbursement ratio for the quarter.
Unidentified Speaker
Generally the. The ratio between disbursement to sanction is about 66, 67%. So we have dispersed little over.
Unidentified Speaker
So the sanction rate is somewhere in the region of 66% for Q4.
Unidentified Speaker
Yeah.
Unidentified Speaker
66%.
Unidentified Speaker
Okay, great. And so now my question comes with respect to the branch Expansion. So in the in last quarter we added a significant amount of branches to reach 200 branches for the for the year. What is the number that we plot for q fr25 and h? And how will be distributed?
Unidentified Speaker
Will it be again like this this year rear ended maybe towards H2 or will it be spread out? That is first.
Unidentified Speaker
So we are at now 366 branches as of March 25th. The plan is to take to 500 by March 22nd to affordable which is now 201 will take it to about 300 branches and the rest will be largely emerging. So all the branch expansion happen in affordable and emerging. So close to 150 branches is open in next two years. That is FY26 and 27 that would largely be in affordable and emerging.
Unidentified Speaker
So would that be like say for affordable specifically would that be 50, 50 in each year or will it be more in the next year?
Unidentified Speaker
It will be almost 80 80% in affordable and the BAL.
Unidentified Speaker
Understood, understood. And sir, with respect to the pricing now I think many of the previous participant have done this. My, my question is slightly different on the yield. So the yield, average yield for the whole book in specifically the affordable was approximately 12% 11 point something percent on an average basis. So as and when the yields do come down with the rate cuts, how do you think that it will sustain? Will it go above 12% and or will it be somewhere in the region of 11 and a half? 11 to 11 and a half it.
Unidentified Speaker
Will go over 12%. Because if you if you remember our earlier yield was target was 13%. So with the policy cut. No, we have now revised that to about 1.65. So at least we’ll go up to 12.65. So we have taken that into account.
Unidentified Speaker
Okay then basis that the overall book yield would then I think grow somewhere north of 10.2. 10.5. The incremental yield I’m talking about.
Unidentified Speaker
Yeah, because emerging the yield what we’re targeting is 10.25. Let me talk about FY26 because we really believe not know to what extent there be a swing in policy rates. Right. And therefore let’s talk about FY26. FY26 the target for affordable list 15 to 12.65 emerging is 10.25 and prime will be about 9.5 to 9.6. So if you take disbursement blendedly it should be in excess of about 10 point to 10 point.
Unidentified Speaker
Understood? Understood. Thank you. I’ll turn back in with you for more questions. Thank you. Next question. Is from the line of Abhishek Jain from Alsacred Advisors. Please go ahead. Thanks for opportunity and congratulations for a strong set of numbers. Sir, my first question on the change in the business mix in this quarter. In this year we have done around 26% from emerging and affordable housing. So how do you see the change in the business mix in FY26 and 27 and how much improvement is possible in the ROA and ROE front?
Unidentified Speaker
So on a long term basis we have guided that this mix should touch by 40% by FY27. Right now we are at 26. Next year should be around 22 to starting quarter and then it will reach to 40%.
Unidentified Speaker
And at that point what would be the ROE? In this quarter we have seen a very good improvement on the roe. What is your medium term target for roe?
Unidentified Speaker
Right now ROE or ROA has upside on account of recoveries from return of pool which is to the extent of around, you know, 40 basis points. So excluding that we are at 2.2 to 2.25. So by FY27 on a steady state we want to reach to around 2.5 to 2.6 without the support of recovery.
Unidentified Speaker
Okay and my last question on the outlook for the affordable housing industry. What are the key levers of the growth in FY26 and how do you see competition over there.
Unidentified Speaker
For affordable?
Unidentified Speaker
Especially now there is lot of focus from government as well. CNRI 2.0 subsidy. Still there’s a lot of demand for that Inter subsidiary and even otherwise from EWS and Lit and part of MIT result. So affordable industry should do well. The growth should be much higher compared to emerging and prime. And since our focus is more on affordable, that’s the reason we are planning to take a book from this level of 5000 crores to about 9000 which is almost about 80 to 90% growth in book.
Unidentified Speaker
In the next two years.
Unidentified Speaker
No, by March 26th affordable book to 9500 crores. By March 27th our affordable book will be 15,000 crores. So March 27th I reiterate our retail loan book is going to be 1 lakh crore out of 1 lakh crore. Affordable will be 15,000 crores. Emerging will be 35,000 crores and the balance 60,000 crore will be finding.
Unidentified Speaker
Okay, thanks. That’s all for my time.
Unidentified Speaker
Thank you.
Unidentified Speaker
Thank you. A request to all the participants. Kindly restrict to two questions per participant and join the queue again for a follow up question. Next question is from land of Aditi Nagal from RSPN Ventures Please go ahead.
Unidentified Speaker
Yeah, hi sir, thanks for taking my question.
Unidentified Speaker
I just have one question.
Unidentified Speaker
In the affordable segment, so the bounce.
Unidentified Speaker
Rate sequentially over the last few quarters.
Unidentified Speaker
Have been inching up.
Unidentified Speaker
So what is the bounce rate that we are comfortable with in this particular segment?
Unidentified Speaker
So I think even though if you look, if you look at the industry bounce rate is in the range of 15 to 16%, we are at about 11%, 10 and a half to 11%. So I think this portfolio we are very comfortable as long as it is. But today it is done better. We will take a lot of time because we also have built a book largely from low risk and medium risk. So as we increase our business change segment we will be in line with the market. Today we are much below market in terms of bounce rate.
I think give or take another 18 months. I think we can get close to that. But we’ll be very comfortable at one that it is below 50. Thank you.
Unidentified Speaker
Thank you. Next question is from land of Harsh Shah from Rara Holdings. Please go ahead.
Unidentified Speaker
Yeah.
Unidentified Speaker
Hi, good evening sir. So my question is on the credit cost. So this year we had around 160 crores of negative credit cost because of the recoveries. And next year also you’re guiding that recovery could be higher than the credit cost. My question is this year we had almost 35 bips flow through to the ROA because of savings in the credit cost. But if I look at FY27 we might end up at our usual 2025 bips kind of a credit cost. So that means it would be a negative Delta of almost 50 to 60bps in couple of years.
My question is how do we get from that, how will we recover that 50 to 60 bits of negative impact that our ROA will have from the credit cost? So currently we are at 2.75 ROA which could go down to maybe 2.25, 2.3 because of this negative credit cost. Turning to credit for expense.
Unidentified Speaker
So if you look at our recovery pool, I think whole of FY26 the trade cost is going to be negative because of the recovery. In FY27 we will not get that much support because we won’t have really cool available. In the meanwhile we would have built our corporate book, we would have increased our share of affordable and emerging. And also finally we are trying to increase yield in all the three segments. I think bar and quarter four. Right. So today the limb is about 3.6 to 3.7. By FY27 name will go to over 4.1. So with that standalone, the credit score is going to be about 25 bits and RA will be 2.22.
Unidentified Speaker
Okay. Okay. That is what I wanted to. So you are working towards getting that name to 4 above 4. 4.1% kind of a number. All right, so thank you so much. Thank you. Thank you. Next question is from man of Siraj Kram from Accident Capital Partners. Please go ahead. Thank you very much for the follow up with respect to the pricing strategy. And again this is kind of related to both the emerging and affordable segments. Again the affordable segments are drop in the yields for Q4 because of seasonality and competition across the board. In other HSEs and even your affordable HFCs we have seen the incremental yields dropping.
So although you are saying that the yields will be above 12% but my question was would it be in our benefits to not go too much ahead and stay like a cost leader? Are we doing this by design or are we happening by default? That kind of. We are getting the benefits of being like a low cost leader in the space. With respect to the.
Unidentified Speaker
I think we are very, very clear in our strategy. If you look at affordable business, there are three segments, Low risk, medium risk and high risk. So the strategy for us is going to be focus on 20% from high risk, 60% from medium risk, 20% from low risk. So this would give us a yield of about 12.65. So we would neither be at the bottom income terms of pricing nor at the top will be somewhere in between and our yield is going to be 12.65. So that is a strategy.
Unidentified Speaker
Understood, Understood. So I was just wanting to understand whether this was my design or something. And any specific buckets of ticket size, say for example, I can see from the presentation that the legacy 35 lakhs ticket size is the predominant one. But even in the specific sub segments with respect to the 10, 15 or 15 to 25, any specific band of ticket size that you see is showing good growth in the specific sub segments of this ticket size. And secondly, any specific geography that you see that we are, that we are seeing any early signs of, you can say with respect to asset quality troubles or any specific region even with the ticket size and the geography.
Unidentified Speaker
So in terms of average ticket base today we are at about 1516 lakhs. So I think once we increase volumes it will be around 14 lakhs. Now in terms of geography I think south is doing well for us, north is doing well, west is doing well. So I think our strategy would continue. We don’t have any pocket or a geography which is a clear no go for us. So we are pretty much comfortable because we have our experience, we have industry experience. So as of now all the geographies are doing pretty well in terms of fulfilling quality and we remain focused on all these geographies and in future if there is a need there might be a small team here and there.
But I think by and large.
Unidentified Speaker
Understood because because looking at some of the results of some of the HFCPs they were speaking about a few issues in the southern region and a bit of issues in the Bandar region. So I was like because we have a good presence in these areas. So are we seeing any, you know, risks or are we seeing anything on ground in these specific reasons in our book or maybe not at all.
Unidentified Speaker
This is doing well, not is doing well. So we have not seen any.
operator
Thank you. Next question is from Naino Khashid Toshnival from Premji Invest. Please go ahead.
Unidentified Speaker
Hi sir, congratulations on good sir, the question is the cost of funds this quarter. So I think when we look at the sequential decline, is it that a lot of the cost benefits has passed on or what has led to this decline? If you can help us know and given our mix if you can help us that within the bank loans how much would be NCLR link and how much would be repo EBLR linked and if you can also that how should we expect the cost of funds to pan out next year?
Unidentified Speaker
So there is no sequential decline but year on year we have seen a decline of 15bps and this is largely you know has happened post the rating upgrade for us in Q4 and Q1 of the commentary. So more or less we have now received the benefit of the rating of grade which is in the range of 15 basis points as of now out of the total loan book. The I mean the term loans that we have around 40% of it is linked to repo and rest is linked to MCLR which are also short term in mission roughly mostly some month agreement.
Translation again you know depends because you know we are also watching while repo is obviously being reprised immediately in some cases and some cases it takes, you know two to three months. But on the MCLR side there is still, you know no action as such from banks. So depends on the when we see that transmission to start happening. But we are expecting somewhere around 10 to 15 basis point reduction over a period of next 2 3/4 in our cost of borrowing.
Unidentified Speaker
Sir, just on one thing I think when we look at this 40% maybe I think 50 basis points reduction. If I take then I think 20, 25 basis points of reduction in my overall cost of funds can be from this. But and on the public deposits also there should be. So I’m just wondering that when you are saying a 15 basis points reduction on a full year basis are we being conservative here? No.
Unidentified Speaker
See 40% or 40%. So overall term loans are 40% of our total borrowings. Within that term loans 40% is linked to racism. On an overall basis it is 16% roughly not 40%. So on that also transmission comes with a lag. Maybe it takes two to three months for certain banks to reprice so it will come. But yes, the impact is 15 to 16 basis points which is direct remaining is linked to MCLR which will be over a period of time and they.
Unidentified Speaker
Should call it so in that context when we look at our margins this year to next year given the fact that in the prime also we have not yet taken PLR cut anything right now but there will be an increased competition and obviously as you said corporate loan etc and mix it will help but still maintaining the margins do you think that it would be the best case scenario for a 15 basis points decline only and still for our climate emerging the rate cut and the competition cycle will play out in the next two, three quarters.
Just wanted to get your sense on that piece itself that when you will the offset elements will be so effective that the corporate mix and the mix change is going to offset the entire impact.
Unidentified Speaker
We have multiple levers to increase our visually compared to the impact because of qualification and thereby impact on customers and therefore transition to the customer. Right. So there you know, as I mentioned to you, whatever is the benefits we get because of quality they discuss that so that extreme important to our customers. At the same time we are working on multiple things from this year we have started lakh vertically so that will be at a higher yield. Number one. Number two, all the three segments prime, emerging and affordable we are increasing yields. Number three, we start corporate.
So these three things will ensure that our yield will go up and there’ll be some impact because of the quality rate cut. I think that can easily be offset with this initiative.
Unidentified Speaker
Okay, and sir, on our credit cost if I exclude the write off then it’s a 46 basis points this quarter. If I’m not wrong, 45 basis points. If you can help us that X of the recoveries. How should we look at the credit cost given the book fees Book will see them over time.
Unidentified Speaker
Specifically the affordable credit cost will be about 35.
Unidentified Speaker
Okay. Got it. Sure. Thank you sir. Thank you. Next question is from man of Ravi Naridi from Naridi Investments. Please go in. Thank you very much to give me the opportunity to ask the question greasy. You and your team are doing a very good job in housing finance company. And we salute you. To use doing such a fantastic work for PNB Housing at this stage. Can you tell on 25 number page of investor presentation. You sold 537 properties. So out of selling of this property, how much we lose or how much we gain. Can you tell the figure?
Unidentified Speaker
When we actually sell property on the retail side, we hardly lose anything, sir. We don’t lose at all. At times it will be no loss, no profit on principal. So if we talk about corporate, there could be a haircut of about 20, 30, 35%. But when it comes to retail, there is no haircut. So whatever property we have sold through purchasing action, legal initiation. So the loss is hardly missing. But enterprise will be at an account level. You might have lost in few accounts but you will also get more in other accounts. And therefore it just gets netted off.
So there is no loss.
Unidentified Speaker
Okay. And you had given very fantastic projection. One leg crore AUM by next two years. It is really fantastic. And we hope you will attend this AUM figures. Thank you very much. And give me. Thank you very much to give me the opportunity to ask the question.
Unidentified Speaker
Okay.
operator
Thank you very much, ladies and gentlemen. We’ll take that as a last question. And now hand the conference over to Gupta Padi for closing comments.
Vinay Gupta
Thank you everyone for joining us on the call. If you have any questions unanswered, please feel free to get in touch with the investigations team. The transcript of this call will be uploaded on our website. Thank you.
operator
Thank you very much on behalf of PNB Housing Finance limited that concludes this conference. Thank you for joining us. And you may now disconnect your lines. Thank you.