Poonawalla Fincorp Ltd (NSE: POONAWALLA) Q1 2026 Earnings Call dated Jul. 25, 2025
Corporate Participants:
Arvind Kapil — Managing Director and Chief Executive Officer
Shriram Viswanathan Iyer — Chief Credit and Analytics Officer
Sunil Samdani — Executive Directior
Analysts:
Chintan Shah — Analyst
Abhijit Tibrewal — Analyst
Mohit Jain — Analyst
Kaitav Shah — Analyst
Unidentified Participant
Nischint Chawathe — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Fincorp Limited Q1 FY ’25-’26 Earnings Conference Call. We have with us today on the call, Mr Arvind Kapal, Managing Director and Chief Executive Officer; Mr Sunil Samdani, Executive Director; Mr Shriram Ayal, Chief Credit and Analystic Officer and other senior management Officials. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal the operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr Arvind Kapal, Managing Director and Chief Executive Officer of Poonawala FinCorp Limited. Thank you and over to you, sir.
Arvind Kapil — Managing Director and Chief Executive Officer
Thank you. A very good evening to all of you. It’s always a pleasure to interact and maybe the right time looking at the excitement today, I think the best would be to start with our take on the industry and how the best way to welcome the first earnings call probably for the financial year ’25-’26, let me begin by sharing an industry perspective from our lens and how we’re building the Poonawala FinCorp in the context of the way industry is behaving. Firstly, we witnessed a few bullet points so that all of us are on the same page the way we see it. We have witnessed a robust demand for retail loans. We see a strong consumer confidence in spending, which supports the economic growth outlook. So we are very positive on it. Secondly, we see we are sensibly using this opportunity to build our secured book as of now. And at the same time, we are also building an unsecured in a well calibrated way to follow it. So it will be — you will see a substantially more secured book for the next financial — for this financial year, followed by an increasing unsecured book as a broad approach. This is exactly in-line with our approach of our building blocks. So we see a huge role and usage of tech and AI the way we see it in the industry. I think that’s been the game-changer vectors on which we are working, whether it’s risk calibration as a value-add over traditional techniques for more accuracy of a fraud detection plus quality assessment in underwriting. We have the approach, which means if we have to choose between risk and growth ever without a blinking an eye, we will choose risk as an option. We don’t see that time. We see a very optimistic road ahead for the country. We also see immense value getting added to the — from the credit bureaus. And the name of the game will be risk calibration and one of the cornerstones for any company in my limited view will be strong risk analytics. Let me begin by few comments on the strategic front, the development of the strategic funds as follows. This quarter, for us, I would use the word marks a significant milestone in terms as we completed a full-year of successful execution of especially the building blocks, the strategic roadmap, you may Call-IT. The results are very clearly right in front of all of us. Over the past one year, our priority has been on laying robust foundations and building scalable systems. Over the next four quarters, three to four, our focus remains on building the AUM, pulling on all the levers that we have set-in place. I’m happy to share that we are already seeing a very healthy credit calibrated growth in the existing products and a very strong momentum in the newly-launched businesses that we have over this quarter. Other than AUM, we’ve also got a clear focus on AI, risk calibration and credit costs, which is now lower compared to the previous quarter and are probably a noteworthy number. I’ll cover that in detail as well. We’ve also substantially strengthened our long-term liabilities through raising entities. I’ll cover that in detail as well. So that’s a quick area that I’ll cover. Let’s start with performance update. Next, I’d like to give a quick update on the first-quarter stuff, on the results. Our AUM grew at 53% year-on-year, 15.8 quarter-on-quarter standing at around INR41,273 crores as of June 30, 25. Total disbursements in the quarter grew by around 13.6% quarter-on-quarter at around INR10,651 crores. We expect healthy AUM growth in the financial year, which will likely be not just better, I believe our guidance for this financial year of around 35% to 40%. During this quarter, we witnessed a moderation in our net interest margin, which was anticipated as part of our ongoing portfolio calibration, particularly — particularly with the erstwhile STBL book transitioning to low-yield coupled with low contribution in the overall book. This recalibration is a deliberate and strategic move to improve risk-adjusted return of our portfolio. As we actively scale-up disbursements of the newly well-calibrated high-quality book of STPL and other new products, which we’ve already kickstarted and gradually reduce the share of the erstwhile STPL book, we expect NIMs to be back at around 9% within the next three to four quarters. Next, I want to highlight the risk-first approach in the organization, maybe a minute or two here. Let me give you a glimpse of our trends in credit cost, which will be later covered at length by Sriram. Here’s a quick snapshot. Our first EMI balances have improved by over 25% compared to our last quarter. And there has been a sequential improvement in credit cost during the quarter. The credit cost improved by 53 basis-point to 2.61 for all businesses. Another important point here now that I’m going to cover is the credit cost for 12 core products, which excludes STPL, which is a new disclosure we’re doing this time, improved to 1.43%, driven by around 80% of risk-calibrated AUM. So let me just explain this to you. So on an overall basis, we’ve come down by 53 basis-point to 2.61. If I exclude STPL, we have approximately 12 products and the credit cost of that is close to 1.43, which I would tend to believe is in the range of relatively the best-in the industry so-far. And this would be approximately 80% of your 41,000 odd total. So you can calculate that. This adds, I believe, considerable strength and solidity to our approach and understanding of our credit portfolio. And this additional disclosure that we’re doing the first time should give adequate visibility to investors on what road are we walking, what quantum of stuff we’re working on, how rich our analytics is, how effective we could be on scale., as we assess our credit cost outlook, we anticipate some quarter-on-quarter variability in these building blocks due to changes in composition mix as our consumer durable, for example, goes up and stuff like that. We internally are focused and confident that our disciplined approach of credit calibration plus collection and will translate into a year-on-year improvement in credit cost metrics with a noteworthy reduction in two to three years for sustained profits. So basically, what I’m trying to allude to is that forget the variability a little bit here and there. Broadly, if I were to take a big-picture of a year-on-year, we see a declining trend on the two figures I shared with you overall, plus excluding STPL for the visibility and we see noteworthy improvements on these levels in two to three years. And rest I’ll leave it when Shriram kind of covers it at greater length. I’ve shared a quick snapshot so-far the robust AUM, just a quick summary, so that we’re all on the same page, reduction in credit cost, including a new disclosure of excluding STPL and let’s move on from here to the borrowing part. Let me give you a color on the borrowing mix. I think in the last three to four months, predominantly last quarter, on the borrowing side, which is the liability side, we are making noteworthy improvements in NCDs. So the share of NCDs in our total borrowing has increased from approximately 7% as of March ’25 to approximately 24% as of June ’25. So you can well imagine in three to four months, we’ve already added — additionally, we’ve already added another INR1,000 odd crores in July, which is in public domain. So this cost is fairly noteworthy reduced compared to the term loans we were getting from banks. So I think it’s a significant positive step-in terms of ’24 to probably 26%, 27-odd percent as I speak to you maybe, but it’s a noteworthy area that we’ve picked-up within the first 12, 13 months and especially significant over the last three months., most importantly, the Board of Directors have approved the raising of the funds by issuance of share equity on a preferential basis to the promoter at the meeting concluded today, very significant step-in my view. Subject to all requisite approvals, the promoters shall infuse INR1,500 crores equity capital on a preferential basis at a price which we have disclosed in a public domain of INR452.5 per share. This I believe will strengthen our capital base, infused further and confidence in our long-term sustainable strategy from a product update, we’ve launched couple of businesses, six to seven businesses. Let me give you a quick sense between existing and new businesses, what’s the kind of momentum. We’ve tried to give some numbers here to give you a color on what quantum of numbers so that every quarter you could get a sense there. Our lab book grew by 128% year-on-year and 22% quarter-on-quarter. Similarly, business loans grew by 57% year-on-year and 10% quarter-on-quarter. On new businesses, the first, let me cover prime personal loans that was launched in August ’24. It’s exhibiting a very healthy pace of growth, incremental disbursals of more than INR300 crores in the month of June ’25, which highlights healthy traction in the market. This number reflects the credibility that we have with our channel partners and institutionalized turnaround times that we have built at the back-end for quick response to the market. Just to reiterate, through the door quality of prime PL customer profile is substantially better as incremental sourcing is skewed towards better income profiles, best-in-class company categories. And our risk analytics is playing a key role. The strength and quality of our customer-base is looking very encouraging. This is a clear indication that we are attracting financially better profiles. These are individuals who have capacity and also the intent to repay. These metrics are clearly a reflection of our unwavering commitment to riskfirst. On our industry-first PL Prime Digital 24 hours by seven, we’ve started to clock healthy run-rates there by the way, both on the website where customers are directly coming to us as well as from our fintech partners who are creating embedded journeys of us. We have created embedded journeys which will strengthen us with the first right to refusal. Imagine a fintech who comes to me because we have the digital journey of a prime customer, white-collar employee and he chooses to give me my kind of pricing, just because I give a 24 hours by serving convenience. We believe that this will be cutting-edge in the next four to six quarters. We’ve maintained that on a daily run-rate, we have started every week moving upwards and it’s a very healthy rate of growth. A quick snapshot of the gold loan. As our digital products are scaling rapidly, we’re also doubling down on our physical presence, especially through gold loan branches. Gold loan adds trends to our secured bouquet of products. It’s a very healthy ROA business in a seasonal state. Our customer journey is settled and our product is also well-received in the market. Initial feelers are very positive. We already have disbursed around INR31 crores in the month of June. And through the set of branches that we launched in Phase-1, we continue to scale-up the business momentum across the set of new branches as well. We are receiving a very fantastic initial response on the productivity per branch. We’re happy to share with you that out-of-the 400 branches we committed, 80 branches as we speak are already operational and it could be across Gujarat, Haryana, Rajasthan and Maharashtra. We are on-track to meet our objectives of launching 400 branches by March ’26. 95% of these branches have covered with Tier-2 and Tier-3 cities. Moving on to consumer durable, we officially launched it, I think on 22nd April this year. And the earlier momentum is quite promising towards the end-of-the last quarter, we have already signed-up with 3,000 dealers to give you a sense, 160 locations. We plan to be present at 210 locations across 12,000 dealers, Boeings by the end-of-the financial year. So from 3,000 dealers, we’ll probably go for 12,000 dealers by end of this financial year. The business traction is building well. We’ve already acquired 15,000 customers, INR34 crores in the month of June in a short span. And I think we — every quarter, we’re looking at a very decent momentum here. We introduced the PFIN EMI card, which is designed to give customer access to pre-approved customer — consumer durable offers that they can utilize at their convenience at any of our dealer touch points. This product is also getting well-received in the market and the penetration of PF EMI card on our consumer durable customer-base is much higher than our expectations. Our next newly-launched business, commercial vehicle loan, we launched the business on the 17 March and already disbursing INR92 crores. Our disbursement trajectory is on an upward trend with of 47 in the month of June. We commenced CV business in Mahaistra, West Bengal and expanded into three geographies like NCR, Haryana, Gujarat, Tamilano, Andhar Pradesh, Matt Pradesh. As of now, we’re present across 27 locations in 10 states. We are activating, Telangana, Karnataka in the upcoming months-to continue increasing the geographical footprint. By the end-of-quarter one, we completed onboarding of approximately 200 plus distribution partners in India. And we intend to double this over the next 1/4. The hiring plan for expansion also remains on-track. We have onboarded 50-plus relationship managers, zonal, regional area, all the levels. As mentioned on last call, about our plan to roll-out mobility solution, we have successfully launched a comprehensive digital solution in the current quarter, a digital customer onboarding platform with 25-plus API integrations of frictionless customer onboarding experience. This has gone live in June this year. Till now, the emphasis are entirely on the used CV segment. We are happy to share that to further strengthen our presence in this space, we’ll be launching given the new commercial vehicles at our appropriate pricing. Now on education loans, a quick sense, we’ve launched education loans in the mid of March and in just 90 days, we’ve logged-in 4,000 plus education loan files. Till-date, we already onboarded approximately 100 partners. Now remember in education loans, you’ve got counselors as your partners and some of them are very large-scale companies. These are key education consultants and experience over 100 members dedicated sales teams. By end of ’25, ’26, we will scale-up our network to 500 plus education consultants that will sanction approximately closer to 4,000 students within the financial year. We are offering an industry-first initiative on providing digital instant sanction in the educational industry. The team has crossed their first disbursement milestone of INR56 crores in the third month itself, that’s June ’25 that gives a sense of kind of momentum or ground level feels of these businesses. Let me give you a quick sense now change our course to digital marketing and AI. Let me move on the most important vectors that give us the cutting-edge as we scale. These are digital transformations. These are digital marketing and AI. I’ll cover each one of them with a bit more granularity because we’re investing time and effort on it, and we see a huge amount of correlations with our strategy on the digital journeys as well. The digital transformation, the first vector for building a future-ready customer-first lending institution, we’re working on three key strategic initiatives, aimed at driving business impact and future readiness within the organization. Each of these initiatives are anchored in the core priorities of a modern lending institution like us, improving our efficiencies, enhancing customer engagement. Our first initiative is sales efficiency and customer acquisition cost optimization, one of the most critical focus areas of any lending business is these two. We are currently undertaking a comprehensive three-pronged initiatives that aims to streamline sales workforce workflows, leveraging digital tools with performance visibility, enhancing conversion effectiveness. This project is designed to create leaner, smarter and more accountable sales ecosystem. So the rapid — these initiatives are like rapid response sales deployment using location intelligence. We are building an agentic assistive intelligence at point-of-sale. What will set us apart is our contextual feedback system, which actually gives us discrete prompts to executives during live customer interaction. This enables AI-driven comprehend real-time recommendations. Performance KPI-linked nudging engines that is a nudge IQ that we like to call. The second initiative is unified customer experience. This initiative is centered on unifying and elevating the overall customer experience. In today’s competitive financial landscape, customer experience encompasses every interaction a customer has with our brand. Our approach involves integrating touch points, reducing friction and delivering consistent personalized experience, which is why we call this experience and not just service and our approach will be intelligent omnichannel, humanoid response layers. The third initiatives in our digital journey is a next-gen digital journey that focuses on the creation of complex multi-layered digital journeys tailored to the diverse evolving needs of our customers. These journeys are designed to offer seamless navigation to contextual interactions and intelligent decisions across multiple products. The goal is not just digitization, but the differentiation that we create, positioning us ahead of the curve, role-based app interfaces that work seamlessly and orchestrated by an overarching system. For that matter, multi-layered verification with inbuilt APIs that we are creating. Automatic dispersal pathways. Let me pivot now towards the next most important vector for us and where a lot of work is happening internally. It is expanding our digital reach. While everyone is building the top of their physical footprint, let me tell you that we are not just building the footprint, but also accelerating our digital reach. It’s being achieved by building best-in-class digital marketing capabilities and interventions which are focused on creating robust scalable and data-driven ecosystem. Let me highlight our progress in few key items. First is the significant progress that we made in scaling our digital, marketing interference, marketing initiatives, leveraging AI, both effectiveness and efficiency. On AI-driven experimentation, over the past six months, we’ve conducted more than 500 experiments across various vectors, including location, audience segmentation, creative personas and end-to-end funnel optimization. These experiments have enabled us to scale our digital marketing effects by 5x, which is why I’m making the effort of sharing this with you because making a lot of difference to the customers who are moving to us on the website. That’s the key takeaway. Imagine a company that had nothing on the customers coming on the website or app and today on a daily basis or weekly basis, we have significant increase. Now to diversify and strengthen our acquisition strategy, we’re moving towards an omnichannel engine to expand our digital presence and reach target customers via various channels. We’ve achieved channel diversification towards app. Today, 44% of digital marketing disbursals are coming from app, results of our strategic transition from a web-only source model to a more diversified web plus app sourcing strategy. We are in the process of scaling our presence beyond Google and meta ecosystem across multiple digital affiliates with publishers networks enabling us to access and inventories across thousands of platforms with AI-led time binding at lower-cost of acquisition. This is a pretty significant step because this will start creating a cutting-edge for us in attracting customers. And these acquisition costs start getting lowered with times to come. Third, we’re investing in optimizing the entire customer journey to improve conversions and manage acquisition costs. We conducted an in-depth analysis to understand our customer behavior and key motivation factors, driving them to take action in utilizing the insights to get them back on their journey. We’ve established early warning mechanisms to identify and address potential breakages in the funnel in the Real-time. This proactive approach has helped us improve end-to-end funnel convergence. Fourth, we are focusing on building capabilities that help enhance our visibility on AI power answers. On search engines, AI platforms as of today, a large part of Google search results is driven by AI. Fifth, we are investing in AI-led market for growth, onboarding industry best tools to manage our own channels such as WhatsApp, SMS, rich communication service, you could Call-IT, which offers unpalleled opportunities for high conversion campaigns. Six, we are revamping our app to drive engagement. Our monthly app installation has grown by 10x in the last three months and depicting the growing importance of mobile platforms. So these are a fair amount of effort and time and investing happening in this area. With this, I’ll now cover the next important vector, the key emerging strength for us is AI. We’ve launched the long-term initiatives to predict customer health through a unified risk and revenue lens. We are creating a dedicated innovation space that brings analytics and AI together. We believe this fusion could create the magic and excitement that creates a set of new products, fostering rapid and iterative learnings. That’s important, right, for a company to kind of generate something on a constant basis. And that’s the kind of machine we are trying to build-in our heads and in reality. By bearing this fusion of technologies into our customer onboarding processes, we gain a 360 view of each customer’s profile accessing — assessing credit risk, revenue potential and overall health in the real-time. It’s a long-duration project and we are working with IT all this. It’s a very rich project and fair amount of work required on it. Let me give you a quick update. Now we’ve already announced AI projects that are running in the organization. And additional to that, we’ve identified 10 incremental projects now. This is just to give you a sense that now we are scaling a total of 35 projects of relevance, of which eight are already completed by the way and executed. Let me give you an update on the incremental projects. A quick snapshot, I’ll run-through it just to give you a sense. For in HR, for candidate search, we are building a sourcing engine that uses job portals for identifying ideal candidates, leveraging AI to streamline and enhance the recruitment process. By adopting AI-driven algorithms, system can analyze job roles, requirements automatically source candidates profile. This enables the creation of an active and dynamic candidate pool. This gives us the strength to pick and choose at the right time with speed. Another one in HR is the integration of employee relationship here into the complaint resolution management, CR, which aims to automate a current manual workflow. The idea is whether it’s a support function like AI, finance or various others, we are reaching a level where every department is working around creating projects which could solve the problem using AI and iteratively get better over the next two to four quarters. In finance, for example, we’ve identified three AI projects to give you guys a sense, finance bot, payment operations, invoice auto verification. The first one will create and implement the finance bot for analyzing competition, financial reports and internal financial data. It is designed to profile real-time insights, trends, comparative analysis through intelligence by leveraging natural language processing and enormous egenic AI-driven solutions. The Bot can interpret user queries, extract relevance, financial metrics and generate meaningful visualizations and summaries for the users. For payment operations, the automation of the approval, invoice management and tagging process is aimed at streamlining financial workflows and reducing manual intervention by implementing intelligent automation, the system can efficiently root invoices for approval, manage records with minimum error. This enhances operational speed and shows compliance with internal policies overall leads to faster processing, better audit readiness and of course, productivity. Another AI project that has worked on in finance is invoice auto verification, which where invoice will be read and verified based on the policy. This process of reading and verifying based on predefined policies and use cases designed to enhance accuracy and efficiency by automating invoice validation. In treasury, for example, we are implementing a querybot for live monitoring and analysis of market movements that’s designed to deliver real-time insights into the financial trends, news and media events that impact market positions. Powered by AI and natural language processing, the Board continuously scans enterpress market data, news articles, and social media to identifying emerging patterns. It enables users to perform deep dives in the specific sectors and companies. In operations, for example, we’ve identified three additional projects being rolled-out,, off, waiver, in matured contracts,, stamp verification to give you a few ideas. The AI-enabled console for stamp paper reconciliation is designed to automate and optimize the entire lifecycle of stamp paper management. It leverages the artificial intelligence to predict procurement needs-based on historical consumption data. The system fetches statewise and value-wise stamping charges to allocate appropriate digital stamps. The idea is that whether it’s finance, treasury, operations, whether it’s as simple as a REKYC, be using AI or at least building the blocks. So it’s the mindset of the organization that’s moving towards a certain quality of efficiency. So for example, take REKYC. It’s a simple item, but the implementation of AI-based automation communication system aims to transform customer engagement and compliance management by leveraging intelligence automation. These systems enable timely personalized outreach. Stamp verification, for example, a console for overall stamp paper reconciliation. By integrating AI, the console can streamline the reconciliation process and provide valuable insights to optimize procurement strategies. Imagine an agmin and infrastructure, we’re taking up travel booking automation,, flights, hotels. So the chat bag interacts with the users to collect their trip details and then processes the booking through integrated sense of platforms. So it’s not about how big or small it is, it’s about the message I want to leave is that the AI that we started-off three, quarters ago, we are building it and trying to transform, I think we have managed to get the mindsets changed. The whole organization is talking a certain language of innovation, re-engineering of processes and getting smart because we want to create a smart organization. So before I end the AI piece, let me give you an update on the snapshot of the work we’ve done on AI for this approach and credit underwriting. That’s one of the big ones for us. On our AI-led transformation is not just a technology upgrade for us, it’s a strategic evolution how we underwrite credit, manage operations and analyze portfolios. Several high-impact initiatives are currently under develop — he’s designed under development, sorry, he is designed to unlock scale, precision and of course agility. Our upcoming enhancements in commercial and consumer loan underwriting will bring sharper customer insights, faster decisioning, setting new benchmarks in the turnaround and accuracy. See for us, it’s not just about using AI and technology and analytics for turnaround times. We are looking at very-high level of accuracies. Luckily, whether it’s technology and analytics or technology on an overall basis, there is fair amount of options to actually upgrade even the traditional methods to be more accurate. And that’s what our experiences are teaching us. Another key capability slated for release in the second-quarter is our AI Credit bureau Analyzer. This solution will enable sharper visibility to borrowing behavior, delinquency patterns and credit exposure. We are also building intelligent agents that have streamlined document workflows, data entry, reduce operational lags and improve free underwriting readiness. These systems are expected to significantly lower processing costs while enhancing compliance, speed and customer experiences. Deployment is expected by late quarter three, but we are very excited about it. As you can hear me covering these details is important because this could be pretty significant G from an industry point-of-view as well, both on accuracy first and the turnaround time and the speed of automation in terms of how fast we can move forward across products. We — our work-in portfolio intelligence is equally exciting. We are developing advanced ML and LLM-based analyzers that will identify risk signals early, monitor behavioral trends and generate actionable insights. These tools are designed to simplify month-end reviews, prioritize high-impact segments and eliminate bias through data-driven clarity, all using natural language interaction with AI. Rollout is planned between quarter three and quarter-four. Our direction is clear. We are bearing AI AIFirst approach into a problem solving ability. We believe that institutions that integrate strategy and user centricity into their core will lead the next wave of financial innovation. A quick snapshot on the debt strategy I covered earlier. We continue to optimize our cost of borrowing. We’re broadening our lenders investor base. As part of our long-term debt strategy, we aim to achieve the share of entity of around 35% of our total borrowings in the next couple of years. We shall be following highest standard governance. We’ve already achieved 24% as of June, in-line with the guidance provided in the last call, we’ve successfully raised about INR5,200 crores through the secured entities and INR250 crores from subordinate Tier-2 capital debentures INR54 crores during quarter one. As a result, our share of entities from INR7, as I said was moved to 24, plus we’ve added around INR1,44 crores in July itself. Finally, to summarize and put all perspectives, whatever has been said over the last 12 months has been clinically executed with proper planning in every vector of business with every word of our commitment. So be it new business launches, be it the timeline, be it AUM growth, base risk, be it AI, be it analytics, be it liabilities, be it, be it credit cost. That’s another one, this one, credit cost. This gives us the conviction that our strategy is professionally on the right track, delivering the intended objective. Our strategy focused on driving innovation through AI, digital journeys and risk analytics is gaining very healthy momentum. Yes, we have managed to get ET Now’s most innovative organization of the year 2025. Additionally a commitment to enhance customer experience was acknowledged in the Express BFSI Technology Awards. We’ve also won the Technology Award of AI by the Indian Express Group and we continue to maintain our confidence on the higher-growth trajectory, maintaining a balanced and sensible risk level and we are very, very conscious of the commitments we make. With this, I’d like to hand over to Shriram to give you a color on the risk management.
Shriram Viswanathan Iyer — Chief Credit and Analytics Officer
Thank you. Thank you,. Good evening, ladies and gentlemen. The government’s vision of Dixit Bhara underscores the pivotal role of NBFCs in driving economic momentum. The recent regulatory measures reaffirms the strategic emphasis on NBFC led credit expansion as a key lever of stimulating growth. The Union budget further highlights — highlights continued focus on strengthening the NBFC regulatory framework, aiming to improve governance, risk management and financial stability. A significant change to the new income tax regime by increasing the tax repay threshold and adjusting the SLAP structure, resulting in zero tax liability for incomes up to INR12 lakhs is a strong stimulus to the consumption lending. Further, the retail lending trends from the bureaus reflect a healthy growth of 27% from NBFCs year-on-year. Full level of FINCO, strategic investment in the last few quarters of being ready with multiple product lines across the retail lending space aligns with the market potential coupled with the current industry momentum. We are well-positioned to capitalize the opportunity with a well-calibrated credit mix. The secured product launches have ensured a balanced AUM mix along with diversification. Our secured mix to the AUM was 49% for the quarter one FY ’25 to now 57% for the quarter one FY ’26. Focusing on the asset quality, let me give you a glimpse on our key trends. Our GNPA has remained stable at 1.84%. Our first EMI balances have improved over 25% compared to last quarter. There have been sequential improvement in the annualized and quarterly credit cost. The annualized credit cost improved by 288 basis-points as from 5.49 in FY ’25 to 2.61% for the quarter one FY ’26. The quarterly credit costs have improved by 53 basis-points from 3.14 for the quarter-four FY ’25 to 2.61% for the quarter one FY ’26. Please note the detail share is for the overall PFL book. We are doing an additional disclosure of 12 businesses without STPL, therein the credit cost is 1.43%. This 1.43% is driven by approximately 80% of the risk-calibrated AUM, reflecting PFL’s robust credit underwriting, collections and portfolio management practices, positioning it favorably within the industry landscape. As we assess our credit cost outlook, we anticipate with composition mix changes in the building blocks phase, we maintain a guidance of 1.5% to 2%, but internally, we are committed and confident that our disciplined approach of credit calibration plus collections will translate into improved credit cost metrics year-on-year with noteworthy reduction in two to three years for sustained profits. A quick snapshot of the Earthwhile STPL portfolio, which was at 8% of the total on-book AUM as of March ’25, we are down to about 4% as of June 2025. Our credit cost for Earthwhile STPL book has come down to INR64 crores for the quarter one FY ’26 as compared to INR137 crores in the quarter-four FY ’25, which is a reduction of 53% over the previous quarter. We are actively monitoring the rollout of our digital lending products across both salaried and self-employed segments. Our strategy focus — focuses on expanding credit swim lanes to capture business opportunities while maintaining prudent risk controls. Teams are continuously refining the decision engine framework, leveraging diverse data sources to enhance credit assessments. Further, let me give a short deep-dive on key drivers the team focuses on supporting the calibrated risk framework as we build our AU. On the design recalibrations, the diversification in the business strategy leads to a shift in-sourcing mix, aligning to the change requires a continuous risk calibration process. In-house models go through a continuous evolution focusing on building sharper cohort level models driven by varied sources of information. With the increasing complexity and variety of data coupled with the new product launches, multi-layered model strategies are being designed. The risk strategies driven by the model support, data-driven decisions, focusing on operational efficiency of the credit processes, addresses through auto rejection, augmenting the risk framework via deviation level, risk mitigation, exposure limitation and pricing. Our pivotal transformation quarter-on-quarter in debt management practices and initiatives shoulder a strategic business growth and providing the confidence to scale. This is powered by advanced analytics, Gen AI and best-in-class digital collections infrastructure, right KPIs at the fingertrips on-the-ground level collection team support to influence a data-driven decision and optimize performance at every stage. In-quarter one FY ’26, we have implemented a humanless field agent allocation system that reduces the time taken from three to four days to under a few hours to complete allocation enabling faster customer engagement post delinquency across digital, telecalling and field channels. Centralization and standardization of the processes has reduced subjective decision-making and human errors, thus ensuring fairness and consistency. This data-driven approach blended with digital process adoption has led to optimized resource utilization and efficiency. As I conclude, we are energized by the opportunities ahead and deeply confident in our team’s capabilities and steadfast commitment to excellence. By harnessing our technological edge and staying anchored to a risk-first approach, we remain focused on consistently delivering remarkable results. Over to you Sunil.
Sunil Samdani — Executive Directior
Yeah. Thank you, Shriram, and good evening, everyone. Let me quickly take you through the financial highlights for the quarter. The assets under management stood at INR41,273 crores, reporting a strong growth of 53% year-on-year and 16% quarter-on-quarter. With continued momentum across all our products. In-line with our debt strategy, the projected AUM growth, we have further diversified our liability book with a focus on long-term funds. The share of long-term borrowings have gone up 14% quarter-on-quarter to six — from 61% to 75% on the overall borrowings. As of June of 2025, we increased our NCD mix including the sub to 24% of the overall borrowings from about 6% in March of 2025. Further, in July 2025, we raised additional INR1,005 crores. With this, the total YCYTD NCD raise goes to INR6,463 crores. Going-forward, we will continue to focus on raising long-term funding through NCDs and maintain a prudent balance of long-term to short-term funds. The share of variable-rate borrowings stood at 56% with another 11% of capital market borrowings with an average tenure of approximately three months puts us at an advantageous position with declining interest-rate environment envisaged. Our net interest income, including the fees and other income continued to grow healthy, standing at INR768 crores for Q1 of FY ’25, ’26 pardon, up 7% quarter-on-quarter. This is despite an increase in share of secured assets book, recalibration of erstwhile portfolio and higher debt-to-equity ratio. The cost of borrowing lowered to 8.04% for the quarter versus 8.07% in Q4 of FY ’25. This again is despite increase in share of long-term borrowings. Our OpEx to average AUM stands at 4.8% as we continue to invest in new businesses and distribution. In-line with our growth strategy, during the quarter, we increased our employee base to 4,685 and expanded our branch network. Our pre-provisioning operating profit, the PPOP during the quarter was INR325 crores. As mentioned, the asset quality remained stable with gross NPA at 1.84% and the net NPA at 0.85%. The provisioning coverage ratio stood at 53.93%. Our profit-after-tax at INR63 crores during the quarter as the company is making significant investments in new businesses, branches, AI and technology. The debt-to-equity ratio stood at 3.72 times, which gives us enough headroom for growth. The capital adequacy ratio continues to remain healthy and comfortably above the regulatory requirement at 20.55% for the quarter as of 30th of June. Of which the Tier-1 capital is 19.302%. Liquidity coverage ratio stood healthy at 130% as of 30th of June 2025. On the liquidity front, we remain comfortable with positive cumulative mismatch across all buckets and the surplus liquidity of INR4,465 crores as of June 30, 2025. Thank you for your patient hearing.
Questions and Answers:
Operator
And now I would like to open the floor for question-and-answer session. Thank you. [Operator Instructions] The first question comes from the line of Chintan Shah from ICICI Securities. Please go ahead.
Chintan Shah
Yeah, thank you for the opportunity and congrats on the quarter. So, sir, firstly, on our MSME book, so like it is around one-third of the total book. So could you help me with the split into secured and unsecured for our MSME book, which is 36 percentage of the overall book? Yeah. So that was the first question.
Shriram Viswanathan Iyer
Yes. So start. So if you ask me the MSME book around 65% to 70% of my business is mortgages, which is lab, of which 75% to 80% are all self-owned properties. So to that extent it is — the lab book is behaving extremely well for us. Overall, I think it was like this year. Sorry, carry it. So it’s secured, if you ask me, overall, it is around 63% to 70% is what the range which I could give you.
Arvind Kapil
But overall MSME for us is going to be a very robust growth engine and I don’t see — I see a great opportunity both on the business side as well as I don’t see any concerns on the risk-on the portfolio, even our new calibrations and the way 30, 60 90 is going, my assessment is it’s a fantastic opportunity in terms of well-calibrated risk. And as a matter of fact, if you look at our GP NPA on that, it’s fairly low right now and we are — and it’s not a small-size. So we are — and we are very focused on it being very well calibrated. We’re not in any hurry. So we are following our philosophy that it should be good-quality and that’s what we’re doing. And so in our case, MSME, whereas this or where we double on this, the quality will be well calibrated. You can be rest assured. The GNPA on that is really low right now.
Chintan Shah
Sure, sure. And so on this 20% SCPL book, which entirely is the book is erstwhile or is it new? And so in what time is it expected to run-down the book? By what time will it entirely run-down?
Shriram Viswanathan Iyer
So we — our STPL book, as I had said it is around only 4%.
Arvind Kapil
We talking about 4% is your old STL. Old wanted a breakup. So the old STPL is around 4%, the rest of it which you see is new, well calibrated and there it’s almost really, really very good and solid business that we are growing in a conscious manner and we see a huge upside there. That’s what I said. In the whole construct, I deliberately had a very-high proportion of secured businesses first, followed by unsecured businesses. That’s the model. So your old STBL is around 4% left. That’s about it. That’s about it. Out of which also I think you have a decent proportion zero.
Shriram Viswanathan Iyer
Absolutely.
Chintan Shah
So and just lastly on the capital raise. So now with this 1,500 promoter capital raise, so that would be it or would we also be looking to do any second round of current base or any other capital being expected.
Arvind Kapil
I want to understand your question. What is the question?
Chintan Shah
Is there any further so on the — hello.
Arvind Kapil
This INR1,500 crores which the promoter has put in, we welcome it as this confidence in growth capital. We’ve always maintained that external raise, we would want to look at anything in the range of debt-to-equity of around 475 to 5. Ballpark, that’s what we have because I want this with our ROE projections, I want to look at healthy ROE as we proceed ahead, three years down the line. That’s — I mean that’s the line of thinking.
Chintan Shah
Sure, sir. And sir, on a just steady-state basis, once the opex normalizes and credit cost, as you already mentioned, it would stabilize around 1.5 to 2 percentage range is what our guidance is. So any ballpark steady-state ROI, which we could be looking at, probably from two year down the line.
Arvind Kapil
See, we always have very stretched internal targets, but let me stick to our guidance. Our guidance is June 28, we said 3%, 3.5%. Internally, we always love to scramble to beat expectations. By now you’ve seen us over the last four quarters. So I’ll leave it at that. I think we always better to be conservative and overachieved. We’d like to do that if we can.
Chintan Shah
Sure, sure. I’ll jump back-in the queue for follow-up questions. Thank you.
Operator
Thank you. The next question comes from the line of Abhijit Tibrewal from Motilal Oswal Financial Services Limited. Please go ahead.
Abhijit Tibrewal
Yeah, thank you for taking my questions. So two things. One is NIMs for us continue to contract. So if you could just explain what is sort of resulting in this NIM contraction? And somewhere during your opening remarks, I also heard that we spoke about getting to steady-state margins of 9%. So by when can we kind of reach that 9% margins and this margin comparison that we have seen for the last two quarters for how long is that going to sustain before we stabilize and the margin starts inching up towards 9%? That’s my first question.
Arvind Kapil
Thank you. See, you got to see the environment when you’re building block, understand the philosophy, I’ve given a very clear guidance where within four quarters, we, in our internal assessment see a 9% and to give you guys a sense, the compression is because the old STBL book had to be reduced, we had to clean that up and the new STBL book has started to rise. Our digital journey is on very healthy ROAs, they have started to rise. But as they start rising every quarter, they will start adding positive value to the NIMs. But the reason I’ve given you a four-quarter kind of outline is so that allow us to very sensibly build the model. I’m not so worried about NIMs. Please understand that as the company starts growing from here, we’ve launched multiple products. We’ll have a substantially increased customer franchise. So as your cross-sell starts increasing next year from April onwards as well, you will get not only the unsecured piece sensibly well calibrated rising, you also have your cross-sell piece rising, which you will see in the first year of operation, cross-sell is very, very low. And as the company starts expanding on its customer franchise, we come with very strong experiences there. We also have digital journeys, which are one of its kind in the industry. So both on new acquisition as well as cross-sell, we could make a significant progress. And both are extremely positive for the NIM in terms of a structural construct. But when you build a business, it’s more important to build solid business first rather than NIMS first. And that’s the — that’s important to understand as a philosophy, because we’ve taken a position of risk first and this is what we are walking right now. But I’ve given you a clear visibility to NIM, so that I’m not too worried about NIMs, by the way.
Abhijit Tibrewal
So just to sum that up, sir, basically, it will take four quarters thereabouts, is it? So for the next few quarters, we might see a NIM compression before it stabilizes and then gradually start compression.
Arvind Kapil
See, hear me very clearly. I said 12 quarters, you’ll — sorry, four quarters, which is 12 months, you’ll hit approximate figure of nine, all right. So that’s exactly what I’m saying. I’m not saying it’s going to compress till then. That’s your assumption, not mine.
Abhijit Tibrewal
Yeah. Got it. This is clear now. Thank you so much.
Arvind Kapil
When you’re building our business, it’s very important to bias towards solidity first. NIM is a much easier part from our perspective to achieve. Remember, we’ve launched two major digital journeys, STBL, we’ve recalibrated it. Things are positive and is on the rise here. So we’ve managed to get our cost-down, we get our secured up and we wanted the risk calibration of unsecured to get a little more time, which is what it’s done. So that it’s more seasoned before we start scaling it up at a much decent rate and that’s what we are entering now. So things should only look up. But we’ve given you a broad guidance in terms of so that you have that clarity. Sorry, over to your next question. Yes.
Abhijit Tibrewal
Got it, sir. This is useful. The second thing was on credit costs. While you guided for steady-state credit cost of 1.5% to 2%, I mean, what we’ve seen now remains significantly elevated. So what will the trajectory be like, right? Again, like you explained margins will get to 9% in next four quarters, 12 months. Likewise, if you could just give out the trajectory on credit costs as how they could trend over the next four quarters?
Arvind Kapil
We have said what we had to say. Our limited point is there are two figures we have done this time. One is an additional disclosure. So let me reiterate that for everybody’s consumption. So your 3.14 or something, right? What was that earlier? That’s gone down to 2.61 on an overall level. That’s level one, 53 basis-point reduction. So that’s not elevated if I see all the NBFCs by the way, just for my kind of acknowledge. The second one is, if I remove ACPL from there, we’ve done an additional disclosure that 12 of my businesses, which is approximately 80% of 41, which might be what 34,000 odd or 32,000, 33,000, whatever it is, that is a decently sized book, which is a credit cost of 1.43, even if it goes up by-10 20 basis-points hypothetically on a quarter-on-quarter basis or you even vary that slightly and in year-on-year, we’ve given a projection of both these figures will come down and noteworthy in next two, three years. So this is important to absorb and understand what I’m seeing. If you look at 12 businesses and you compare it with, these are almost projections of 12 businesses out of my 13 businesses, which is very close to banking kind of NCL. I have not seen this in the NBFC world, by the way. So these are not significantly elevated anymore. These figures, please get these figures absolutely clear what I’m saying. These are precise disclosures, which should have no doubts what I’m talking. All right.
Abhijit Tibrewal
Thanks. Got it, sir. And then last question, as you’ll acknowledge, MSME has been in the IFR storm since yesterday. So if you could just help us understand your statement. No, sir, all I’m kind of — yeah, yeah, that’s what I’m saying. But sir, what I’m trying to understand is, if you could help us understand our MSME business a little better, right, because I got little confused when we said that the 60% 70% of our MSME is secured against property. I was under the impression our lab book that we report separately, right, that is the loans that we give out against a property. So MSME, I mean, is it secured, unsecured? I’m just trying to understand that a little better. And also within MSA unsecured that we do, I’m assuming we also do business loans. So what kind of ticket size do we do in business loans? What’s the usual turnover of the micro enterprises that we cater to in our MSME business?
Arvind Kapil
Yeah. So MSME for us, I think what Shriram was alluding to, and he can chip-in if he likes, is 63% of whatever MSME we do happens to be secure. So that’s point approximately ballpark what I heard him say. But more importantly, whether it’s secured or it’s unsecured, whether it’s loans against property, whether it’s business loans or any other versions of MSME that we do, what I can assure you is extremely well calibrated on the risk side. Now industry mind going through its various. I don’t think there’s anything too unusual about when I was handling a very large before my previous assignment, a very large portfolio as well, I think we’ve always had the situations of MSMEs always have to be very well risk calibrated. I don’t see any storm in the industry in my assessment. These terms have always existed if you don’t calibrate it well. So to blame the industry is not something I see it that way. I see it that if you’ve got to be well risk-calibrated and the industry is what it was. I don’t think there’s a deterioration in the industry level and I’m at a large-enough size to comment on it. So I don’t see it that way. And so that’s what I’d like to share with you. As far as the book is concerned, it’s behaving really well right now. So that’s all I can share with you. Our new calibration will be extremely well calibrated because that’s what we’re here for. But I don’t even think industry is at any concerned level to be honest with you. If you don’t calibrate yourself well, it’s very easy to blame the industry.
Abhijit Tibrewal
Yes. That’s fair. That’s fair. I mean, thank you for the detailed explanation and that’s all from my side. Congratulations and best wishes to your team. Thank you.
Arvind Kapil
Thank you.
Operator
Thank you. [Operator Instructions] We take the next question from the line of Mohit Jain from Tara Capital Partners. Please go ahead.
Mohit Jain
Hello. Yeah, can you hear me well hello. Yes, please go-ahead. Yeah, hi. Good evening, sir. Sir, this is regarding the STPL portfolio. I guess it was 8% in last quarter and right now, I think it’s down to 4% and you had earlier said that 80% of this portfolio is well calibrated with zero DPD and you don’t expect any slippage from that. So for the remaining 20% of the portfolio, right now, I think you have said that the figure for the STPL provision is INR67 crores. That seems to be pretty high NPA we are having in that portfolio. Is my — can you just clarify on this one, sir?
Shriram Viswanathan Iyer
See, if you look at even the balance book, as I said, yeah, we have a substantial amount as last-time disclosed, it’s a zero DPT book. Second is we are carrying sufficient provisioning, okay? So to that extent, I don’t see any kind of an issue out there. Second is from a collection efficiency standpoint, we have significantly improved our collection efficiency. So with a 4% with a zero DPD book, which is substantial enough and we have a sufficient provisioning around it, I don’t see any issue and the — and if you ask me, the problem is actually doesn’t exist now anymore. Is it just over next seven to eight months, it may kind of run-off. And we have sufficient provisioning around that.
Arvind Kapil
[Foreign Speech]
Mohit Jain
Just to just to clarify, sir once just to frame the question. Sir, right now the STPL book is the old STPL is around INR1,700 crores, like 4% roughly. We — and if you say 80% is, so the remaining 20% is around INR500 crore INR600 odd crores on which we already had a quarterly provision of INR60 crores to INR70 crores.
Arvind Kapil
So that number seems to be very-high on a — like this. So is it fair to say that 80% of the book is completely clean and this 20% is almost going to be a written on sort of a book which is gradually we don’t expect much recovery there. We need to be honest, better to be conservative on that and we like to believe the same but it’s better to be watchful till it’s gone, alright.
Mohit Jain
Okay, okay. Thanks, sir. That was it from the question. Thank you.
Operator
Thank you. The next question comes from the line of Kaitav Shah from Anand Rathi. Please go ahead.
Kaitav Shah
Yeah, good evening, sir. Just one question on the MSME book. In terms of credit underwriting, we have always hopped on stronger credit underwriting. If you can tell us a bit more about the book in terms of leverage, financial leverage of your customers, what proportion of the book would be to more than three or four lenders, something like that just at least at the start of it.
Shriram Viswanathan Iyer
Yeah. So, this is Sriram here. In fact, that’s a great question and I kind of — you actually answered my point. The biggest challenge today in the MSE book was the leverage part of it. And that’s where we look at the number of inquiries in those set of customers and the inquiries are more than two to three even inquiries. Forget about even having being a third or the fourth lender, we don’t even look at those kind of transactions. That’s one of our gatekeeping criterias and that’s one of the reasons where our MSAP book is fully under control.
Arvind Kapil
Yeah, that’s a good question. And actually it answers what probably maybe we should have answered them first time. So it’s a good question. And that’s why you see that our quality of the book always remains a little more risk-calibrated because some of these things we don’t get very tempted to kind of walk something which we’re not very comfortable with.
Kaitav Shah
Sure. Thank you. I think that was my only question.
Operator
Thank you. The next question comes from the line of Sanjay Chawla from Investment Managers. Please go ahead.
Unidentified Participant
Good evening. Thank you for the opportunity. Sir, my question is, you mentioned that know ex STPL. Ex on your core book, the excess TPL credit cost is 1.43%. Can you give a sense of what is the — what has been your credit cost experience on the new STPL book so-far, especially in this quarter?
Shriram Viswanathan Iyer
So on the new STPL books, I can say that my check balances have come down significantly by around 70% and my collection efficiency has significantly improved by 40%. So we are still at a building block stage, the seasoning of the — of those loans yet to be seen, but it is by the check bounces being down by 70% itself gives us — it’s a very encouraging result for us and we don’t see any challenge in terms of portfolio quality on that book.
Arvind Kapil
As a matter of fact, after adequately seizing and waiting for it patiently, last quarter, we’ve started scaling it up. And that’s why I wanted the secured books to be of a certain size before we start scaling it up and I think it’s we are very excited about it as a matter of fact, if I can use that word because it’s very decently well calibrated.
Unidentified Participant
And if you were to give a sense or quantitative you there but…
Arvind Kapil
Your audio is not coming through.
Unidentified Participant
So am I audible now?
Arvind Kapil
We can hear you now.
Unidentified Participant
So my question was to quantify it, the credit cost on your new STPL book, would it be higher than the blended 2.61% this quarter?
Arvind Kapil
Yes, because high ROA and I — that’s a different one. That’s why I’ve given you details of — if I give you the rest of the book at 1.43 and I give you this at 2.61, that answers your question, my friend. No, that’s a 25% yield it’s a very distinct different business. That’s the reason I said all other businesses being in a certain price range, we singled out one business — I’m not singled out consumer durable. We’ve kept it as part of the regular retail chain. But all regular consumer businesses of 12, we’ve just put it together as an additional disclosure to give exactly the sense which you’re asking.
Unidentified Participant
Yes, got it. So the other question is what kind of outlook do you have on the opex increase now having completed 1/4 for the rest of the year?
Arvind Kapil
We expect that our opex as a percentage will go up, it hasn’t gone up by the way. So we’ve done some bit of hard work. But I think when you increase 80 branches, you increase around 1,000 plus people, we are building that up. While on one-side, we are working a lot on AI projects, a lot of them will get commissioned in the 3rd-quarter end, a lot of efficiencies will start building in the quarter-four, which will obviously have annualized impacts. So plus we have aggressive plans on growth as well because our risk calibration is looking pretty good. Imagine 12 business at 1.43% is almost like banking level there. This is not what I get to see in the NBFC world. So I think we’ll keep our options open to what’s the best optimization. I’ve given you enough guidances to get a sense, but I think we are in-full control of the ship now. This looks like from here on, things look on a very good note, but we will obviously — it is a finance business, so we always have to keep ourselves.
Kaitav Shah
Okay. Thank you.
Operator
We take the next question from the line of Nischint Chawathe from Kotak Institutional Equities. Please go ahead.
Nischint Chawathe
Hi, thanks for taking my question. Two questions actually. If you could give some color in terms of the segmental yield for at least the key lines of businesses?
Arvind Kapil
And the other thing is some sense in terms of sourcing mix that you’re looking at versus you know, which is basically broken up into in-house versus a 3rd party sort of a distributor either digital or physical. I think our bias is all our businesses have been designed keeping in mind 3%, 3.5% ROAs. Now I don’t think on an earnings call, I can summarize all yields, but these are obviously healthy yields. You know our cost of borrowing, if I have my opex cost, you know, if I have to make a 3, 3.5, all six businesses that I have launched with a bias towards healthy because that’s what we’ve given the commitment we want to reach or exceed whatever. So with that, we also have SUPL that we have managed to reduce our bounce rates, get the thing recalibrated. We have a lot of digital journeys that we will run on higher pricing than regular businesses that we run for price for convenience, whether it’s personal loans and we are surprised positively to see that our daily run-rate seems moving on a healthy level at very decently high yields. Some of them are even at a 4% ROAs. So I think that’s how I normally like to answer these questions sort of giving our competing strength sort of what pricing each business I do. But it’s all healthy pricing. We’re in this business to make money. So we’re very clear, risk-calibrated and we want to make money on this. So this has to be on healthy ROAs, which is why you see some of the businesses which are low ROAs are not launched only because it much easier to do.
Nischint Chawathe
It’s essentially 5% pre-tax ROAs is what you’re looking at?
Arvind Kapil
I mean, we have given a post-tax kind of guidance of 3%, 3.5 maintain that at the right time. So most of the guidance is, 30% 35, we beat it, we kind of exceeded that. We said second year 35 to 40. We’ve given you guidance and we not just whether our risk cost has come down. We have given you additional disclosure on credit basis. Investors have been asking you needed. It was a fair point. I’ve given you 12 a percentage with none of the NBFCs have right now. And this is a, 35,000, 33,000 watt book, which is not like some INR8,000 crore book. So it’s — I think it’s got enough on the table for you to do the maths and figure out what’s the post-tax ROA pre-tax. Sure. Allow me to stick to the guidance we’ve so-far given here, because I think quite a bit before I take any different line. That’s the reason I’d like to speak to what I said.
Nischint Chawathe
Yes. Fair. And if you could give some color on sourcing in terms of how much of it could be in-house versus which could be — where you could use some channel partners.
Arvind Kapil
See, if you — I must-have been a little complex, but I’ll give you a sense. I covered something called digital marketing. The reason I covered that was to give you guys a sense, while it sounded a little complex or it sounded fury, the real reality is between Meta, Google and a whole lot of other channels that we are activating. This company never had direct digital business or PL Prime or business loans coming and closing end-to-end digitally. To create that market is what we are working on. And as you create the first level, the second level becomes much lower-cost every year because the cross-sell goes up. The net impact starts getting positive and positive. So what happens, a company acquires 100 customers and next year, 20% 30% of them come in as cross-sell and your overall cost starts actually becoming extremely advantageous. So if you see the whole model is fairly thought through, my sourcing is through DSAs. My sourcing is creating two industry-first digital journeys, which we are very both for business loans as well as white-collar personal loans. We’re going to price for convenience and we have made it successful in the personal loan side already, by the way. We haven’t disclosed the daily run-rates, but it’s on a healthy level already. And that the beauty is that keeps increasing. Even every two weeks, we find that level is going up because that’s how the word-of-mouth in that spread. So we are investing a fair amount of time and effort to develop that ecosystem. I think that will also give us a cutting-edge in terms of first right to refusal. Look at it simplistically, imagine a fintech who is giving business to your top banks today, why shouldn’t you embed my journey and give me the business that we approve at my pricing? He doesn’t have to do anything, but there’s a huge amount of customers who want the loans at 5 in the morning and 11 or 11:30 sitting in their house and they don’t mind if the EMI is a — are what they can afford. I mean, the profiles are right. Convenience, pricing for convenience is a very dumb thing in the world. And we get the good customers, we get the first right to refuse. So you have digital journeys sizing up in a big way. You’ve got physical journeys also we are investing. For example, on one-side, we are coming up with industry-first digital journeys. On the other side, I’ve said 400 goal branches. Why? Because if we had a breakeven in 13 months and my guys tell me we could be breaking even 11 months hypothetically or earlier, let’s see how it goes quarter-on-quarter. It could be early to come in. But let’s say then you can size up both opportunities. And in a seasoned state, gold could be a 4% ROI business. Why shouldn’t we set that up? So we are here to make money in terms of professionally on the company, it’s very important that we build bother on the franchise of physical and digital as long as it makes good ROAs. And like I said, we will raise external capital at 475 and with our ROA projections, why shouldn’t we aspire for a 20% ROE in the third, fourth year?
Operator
Thank you. Ladies and gentlemen, we take that as the last question and conclude the question-and-answer session. I now hand the conference over to the management for their closing comments.
Arvind Kapil
From here on, and thank you so much for such a large audience showing interest. We truly honor. Thank you so much.
Operator
[Operator Closing Remarks]