Repco Home Finance Limited (NSE: REPCOHOME) Q2 2025 Earnings Call dated Nov. 13, 2024
Corporate Participants:
K. Swaminathan — Managing Director and Chief Executive Officer
M. Raja — Chief Business Officer
Analysts:
Rajiv Mehta — Analyst
Vikas Kasturi — Analyst
Raghav Madhavan — Analyst
Aniket Kulkarni — Analyst
Rudransh Kalra — Analyst
Bunty Chawla — Analyst
Anand Mundra — Analyst
Abhijit Tibrewal — Analyst
Kamal Mulchandani — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to Repco Home Finance Q2 FY25 Earnings Conference Call hosted by YES Securities. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Rajiv Mehta from YES Securities. Thank you, and over to you, sir.
Rajiv Mehta — Analyst
Yeah. Good evening, everyone. Welcome to the second quarter FY25 earnings call of Repco Home Finance. We thank the management for giving us the opportunity to host them once again. From the company, we are joined by Mr. K. Swaminathan, MD and CEO; Mr. T. Karunakaran, Chief Operating Officer; Mr. P.K. Vaidyanathan, Chief Development Officer; and Mr. M. Raja, Chief Business Officer.
I would request Mr. Swaminathan to give us an overview on the company’s performance, post which we’ll open the call for Q&A.
Over to you, Swaminathan, sir.
K. Swaminathan — Managing Director and Chief Executive Officer
Thanks, Mr. Rajiv. Welcome, all. We would like to welcome you all for the earnings call of Repco Home Finance Limited for the quarter ended September 30, 2024.
We are happy to announce that the growth momentum seen in the last few quarters has continued in Q2 FY25 as well. The company is progressing on its business parameters and is positive of meeting its guideline numbers. The profitability parameters have improved steadily in the second quarter compared to the period a year ago. The structural changes that have been brought in the process across the organization, like delegation of power, implementation of new software, verticalization, etc. are yielding results, and we are confident that we will be able to see the combined effect of all these changes in the months and years to come.
Business updates. We have disbursed INR867 crores in Q2 FY25 against INR797 crores in Q2 FY24 and INR680 crores in the previous quarter. Our sanctions stood at INR926 crores in this quarter as compared to INR860 crores in Q2 FY24 and INR727 crores in the previous quarter. The overall loan book at INR13,964 crores at the end of September 30, 2024, as against INR12,922 crores a year back, registering a growth of 8.1%. The ratio of exposure between non-salaried and salaried segment stood at 52% and 48%, respectively. The share of non-housing loan, that is home equity, stood at about 26% of the loan book and housing loans contributed about 74% of the book.
Quality of the bonds. GNPA amounted to INR552 crores as of September 30, 2024, as against INR636 crores as of September 30, 2023, and INR583 crores as of June 30, 2024. Net NPA stood at INR217 crores at 1.6%. We have a total provision of INR489 crores with a provision coverage of 61% for Stage 3 assets. Our systematic and relentless action on NPA accounts is yielding results. As of September 30, 2024, we hold INR485 crores of restructured portfolio outstanding, of which approximately INR154 crores are in Stage 3 and remaining in Stage 1 and 2.
Profitability. Our NIM for Q2 FY25 was at 5.1% against 5.4% in Q2 FY24. The company has been able to maintain a spread of 3.4% by raising yields to 12%, despite facing strict competition at our pricing levels. The net profit grew 15% for Y-o-Y, amounting to INR113 crores for Q2 FY25 as against INR98 crores for Q2 FY24 and INR105 crores for Q1 FY25, respectively. Our ROA stood at 3.3% and ROE at 16% for Q2 FY25 as against the respective figures of 3.1% and 16.1% in the previous — in the year end other quarter. Cost-to-income ratio for the quarter stood at 26.4% as against 23.6% of the previous quarter.
New software. Phase 1 of the project, comprising of LLMS and EGL, is stabilized. Phase 2 of the project, comprising software relating to support functions, are in various stages of implementation and testing. A total of approximately INR27 crores have been spent so far on the new software. As of September 30, 2024, we have 227 touch points across 12 states and 1 union territory, comprising of 184 branches and 43 satellite centers with additional two asset recovery branches. We will be touching approximately 250 outlets by March 2025.
I will summarize the key financial highlights before opening the floor for Q&A. The loan book stood at INR13,964 crores. PAT for the quarter was INR113 crores, which is 15% increase Y-o-Y. ROA and ROE for the quarter stood at 3.3% and 16%, respectively. The core profitability has remained strong with a solid spread and margin of 3.4% and 5.1%, respectively. The gross NPA is at 3.96%, which is Stage 3 coverage of 61% of the principal and the net NPA is at 1.6%.
Way forward. We have recruited people with the experience in sales and collection verticals. With this additional strength, our focus will be on taking the growth numbers to the next level and reducing our overdue numbers, and we are quite positive on this. The company is geared up on achieving the targets set for FY25 in terms of profitability, GNPA reduction, disbursements and AUM.
We thank each and every one of you for evincing interest in our company’s growth story. Thank you once again. And we now open for the question-and-answer session.
Questions and Answers:
Operator
[Operator Instructions] We take the first question from the line of Vikas Kasturi from Focus Capital. Please go ahead.
Vikas Kasturi
Yeah. Good evening, sir, and congratulations on a fantastic quarter. Sir, I have two questions. So one is in the presentation that you shared, could you also start sharing some color on how the old portfolio, that is prior to FY22, is performing; and the new portfolio, which is being written after FY22, right? So I think you have already disbursed about INR7,500 crores plus in the last 2.5 years. So it would be good to know how the two parts of the portfolio are performing, sir? That’s one request.
And the second one is, in the month of May, you had shared some goals for this particular financial year with respect to — you have said the AUM of INR15,000 crores, 250 outlets, INR3,800 crores of disbursements and GNPA below 3%. So could you just share your perspective on how are we faring vis-a -vis the goals? Are we likely to reach our goals, overshoot our goals, some color on that, sir? Thank you very much.
K. Swaminathan
Thank you, Vikas. See, out of the INR7,000 and odd crores we have disbursed, INR50 crores is the NPA of the last three years, ’22, ’23 and ’24; INR50 crores approximately is the NPA numbers. So the NPA percentage is around less than 1% so the new book. As far as NPA is concerned, it’s performing reasonably well.
As regards to those, we have also discussed internally. So we still maintain our guidance as far as disbursement is concerned. We have told between INR3,600 to INR3,800 crores. We still maintain that number as far as disbursement is concerned.
But on AUM, as our now, because of the repayment or the run rate that is going up, maybe — instead of INR15,000 crores, maybe that is a likelihood that we may fall short. Maybe instead of INR15,000 crores, we may be around INR14,800 crores or something. This is our expectation. That too, this is an organic growth. If at all we come across any book buying or any DA transaction that we may encompass during the next two quarters, definitely that is added. Still, we will be reaching the AUM number. GNPA, we have totaled INR450 crores as a GNPA number, we still maintain that.
As far as number of outlets are concerned, we had given a guidance of 250. I think we have — already have 227 outlets. We have already opened two branches this quarter. So we are hopeful that by the year-end, we will be anywhere near to 250.
Vikas Kasturi
Great, sir. And thank you for your responses. And if I may ask one more question, sir. On the liability side, we seem to have majority of our borrowings from commercial banks. In the future, is there any plans to add, say, securitization also as one of the means of raising funds? Could you just throw some light on that, sir?
K. Swaminathan
Okay. Maybe as of now, liability, we are also approaching NHB. So the NHB proposal is in the pipeline. So maybe we may get some NHB loans during this current year. We are also thinking of tapping the market through our NCD routes and all. We have got approvals from the AGM as well as our Board. So if time is favorable to us, definitely, we will tap the NCD market. We have not got any fixed plans as far as securitization is concerned. Of course, DA may not be there. We can see any PTC transactions if at all is coming by, we will have a look. But as of now, we do not have anything on the table.
Vikas Kasturi
Okay. Thank you. Thank you, sir. Thank you for the responses. I’ll come back in the queue.
Operator
Thank you, sir. We take the next question from the line of Raghav Madhavan from Kotak Mahindra Bank Limited. Please go ahead.
Raghav Madhavan
Sir, congratulations on the recent results. So sir, I would like to understand in very similar lines of the previous question. So if you can just pick out the last two years’ cohorts and in that what are the early bounces in delinquency, say, part 30, what is the part 30 in the last two years’ cohort?
K. Swaminathan
Thanks, Raghav. I do not have the numbers right away. Maybe we’ll be able to share. But to my understanding, the percentage is lesser than the older book. To that extent I can say, but the exact numbers, I do not have.
Raghav Madhavan
Okay. Sir, if not, some guidance on — typically, after what period of time in your loans you would see increase in stress levels coming up? Some guidance for that, would that be possible?
K. Swaminathan
Raghav, some cross — can you mute?
Operator
Mr. Raghav, can you please mute your line, sir?
K. Swaminathan
Raghav, as of now, I am not seeing anything alarming in the new book, nothing alarming. Of course, overdues are there. But comparatively, as I said, comparatively, the overdues — percentage of these overdues are lesser than the older book. But still, as you would say, that should be at least a three-year seasoning before we can straightaway call that the book is holding well. That three-year period is still not over. But as of now, there’s nothing alarming. I think there is not much of a serious NPAs or early mortalities on NPAs.
Raghav Madhavan
Understood. So, no, definitely put in the same question. So what percentage of your existing NPA — say, your NPA — from your NPA, the recent three years’ NPA will be part of your book on the legacy portfolio, a small percentage of that [Technical Issues]
K. Swaminathan
That’s what I was telling, no. Out of INR552 crores, INR50 crores is of the last three years’ slippages — last three years’ book. So remaining INR502 crores are the old ones. So out of INR7,000 crores, I do not know what is the exact outstanding today, because some repayments also would have happened of the disbursement that we have made in the last three years. So I do not know the exact outstanding, present book outstanding out of this INR7,000 odd we have disbursed in the last three years. Assuming that INR1,000 crores have been repaid, so INR50 crores out of INR6,000 crores of outstanding is the E&P percentage of the last six [Phonetic] years.
Raghav Madhavan
On that stage, what is the total write-off, sir, for the last 12 months?
K. Swaminathan
INR13 crores. In the last one year is INR13 crores. The entire history of the company — this INR13 crores is only a technical write-off. Entire history of the company, actual write-off may be less than INR15 crores or INR20 crores.
Raghav Madhavan
Understood. Thank you, sir. It was very helpful. Thank you.
K. Swaminathan
Thanks, Raghav.
Operator
Thank you, sir. The next question is from the line of Aniket Kulkarni from BMSPL Capital. Please go ahead.
Aniket Kulkarni
Yeah. Good afternoon, and thanks for the opportunity. So to reach our targets of INR3,700 crores disbursement for FY25 as a whole, you have to grow about 30% in the second half on a year-on-year basis, right? So now given the company’s track record on the growth front in the previous quarters, this seems unachievable. So even if you can give a realistic growth target for the second half, and why — if you can tell why are we finding it tough to grow in double digits where other NBFCs are reporting such strong growth numbers? If you can please explain.
K. Swaminathan
Thanks, Mr. Kulkarni. I could not understand the second part of your question. But if the question is related to whether we will be able to reach the number, whether the second half will be better than the first half as well as disbursement, yes, definitely. Two or three reasons, sir. One is we have started recruiting people for the sales vertical. Those people have started joining and some more people are in the pipeline. So these new salespeople, we call them BSM, if new salespeople will be able to deliver because we have recruited them from the market. That is the confidence that we are getting for the improvement in numbers.
And historically, this company, the second half will always be far better than the first half. Especially the first quarter of a year will not be all that good. But the third and fourth quarter should be reasonably good. So based on that and based on the new initiatives that the management has taken, we are quite confident that we will be able to do around INR2,000 odd crores of disbursement in the second half.
Aniket Kulkarni
Okay. Thank you, and best of luck.
Operator
Thank you. We take the next question from the line of Rudransh Kalra from MB Investments. Please go ahead, sir.
Rudransh Kalra
Am I connected?
Operator
Yes, sir. Please go ahead with your question.
Rudransh Kalra
Yeah. Hi. My question to you is what is your strategy going forward? There are so many competitors like Aadhar, Aavas and there is NBFC and small finance banks, MFIs, everyone getting into the housing finance affordable — particularly affording housing finance. And what will — what is your moat? And how do you differentiate yourself from these companies? I would like to particularly mean what the moat is for Repco against Aadhar, say, Aptus, and the other affordable housing finance companies? Thank you.
K. Swaminathan
Thank you, Mr. Kalra. See, the names that you have mentioned, I think the profile of the customers they are targeting is slightly different from our customers. You would have seen most of our customers, I think 50 — more than 50% are all documented income customers. And our CIBIL score on an average itself is around 750 on the new borrowers. So that way, we are totally different.
On the interest rate front, yes, of course, these companies, the names that you have mentioned, their interest rates are higher than ours. So we are in between pure — call it, pure — prime housing finance companies and the companies that you have mentioned. So our average rate is around — minimum lending rate is around 10.10% as of now compared to the interest rates of the other two ends. This is the differentiator between our company and the other companies.
Rudransh Kalra
Okay. The other question is [Speech Overlap] Hello?
K. Swaminathan
Yeah.
Rudransh Kalra
Hello? Just a question on —
K. Swaminathan
Yeah. Go ahead.
Rudransh Kalra
Yeah. The other question is particularly towards your business development head or sales head. You guys have said that 15% would be the disbursements around that. But I don’t think — I’m not sure if I’m wrong. But I don’t think it’s at 15% as of now. So if you could shed light on the strategy and what is — how are you going to go about and reach to the 15% number or somewhere close to that. That will be really nice.
K. Swaminathan
Mr. Kalra, see, I will ask Mr. Raja, our Chief Business Officer, to answer this, because the points I have already mentioned, what are the strategies and all. Anyhow, to reiterate myself, Mr. Raja will also add.
Rudransh Kalra
Yes.
M. Raja
Yes, Mr. Kalra, Raja here.
Rudransh Kalra
Thank you.
M. Raja
See, traditionally speaking in our organization, the H2 numbers have always been higher than H1 numbers.
Rudransh Kalra
Okay.
M. Raja
So even I think though my H1 is not 50%, we normally expect a better business in Q3 and Q4. That is one part of it.
The other part, we are already in the process of recruiting persons and resourcing the hard-core salespersons in the market. So they are all joined or they are all expected this quarter. So our sourcing would get better, and we are also adding multiple sourcing channels like our corporate DSAs, DSAs, my connectors, my traditional walk-ins. So we are focusing on all the sourcing channels. So we believe and we are sure that our business would be better in Q3 and Q4 so that we can meet the committed numbers.
Rudransh Kalra
Okay. Just to follow-up on that. And is this also being done by the other affordable housing finance companies? I’m sure pretty much they must also be doing this.
M. Raja
See, more than me comparing with others, I’m giving out my strategy. Just everybody would be aggressive, and it is a general trend that Q3 and Q4 will be [Technical Issues] and I hope so.
Rudransh Kalra
Cool. Thank you so much. The questions are answered quite a lot of my satisfaction. Thank you so much.
Operator
Thank you. We take the next question from the line of Bunty Chawla from IDBI. Please go ahead.
Bunty Chawla
Thank you, sir, for giving me the opportunity. Sorry, I joined late, if I’m repetitive for that. In this quarter, what we observed, there has been a higher repayment rate or repayment ratio as compared to last few quarters. If you can explain that part what is driving this? And how one should see this rate going forward for next two quarters?
K. Swaminathan
This is a valid point, Mr. Bunty. Unfortunately, nobody else — the others have not asked this particular question. I can agree with you; I concur with you. The repayment rate has actually gone up. We are now getting a repayment of around INR200 crores approximately per month. It was around INR150 crores one year back something per month. This includes a normal repayment of around INR50 crores to INR55 crores as well as prepayments and takeovers. Comparatively, the BT-Outs are slightly increasing on the higher side. Especially in the second quarter, it is on the higher side, maybe because of the competition, especially from bank side. The bank’s rate, we are unable to compete at the rates that we are being offered by banks. That is one reason.
So BT-Outs, in our view, is inevitable, because the rate differential between our rates and the bank rate is too much for us to match such rates. What is the strategy is, one, we have to increase our BT-Ins. That is one thing. We have to increase our disbursement numbers, so that net-to-net, we are a gainer. These are the strategies. And how we are increasing, I think this has already been answered.
So the layout is how to prevent it. Beyond a point, we cannot prevent. Of course, we have got a strategy of calling them, retaining the customers, having our own way of — through a CIBIL check, we are finding out some of the customers likely to go out, meeting them, trying to see whether it is possible for us to reduce interest rate so that they retain with us. All these strategies, we are adopting. But despite that, I should admit that some portion of our repayments are BT-Outs, and we have limited, and we have increased our disbursements to match them.
Bunty Chawla
Okay. So in that case, our target was INR15,000 crores to reach by FY25 AUM. Is it achievable now?
K. Swaminathan
That’s what I said in the initial question. So maybe if the same rate of repayments happen, and if you are going to do around INR3,600 crores, I do agree. Maybe we miss or fall short by around INR100 crores to INR200 crores of our INR15,000 crores of guidance of AUM that we have given. But this is only if it is only INR2,000 crores.
If for some reasons, we are able to increase, say, for example, the government has announced the new scheme — housing finance scheme. So if we are able to get good numbers through this scheme, or by opening new branches, the new branches are contributing more, or things like that, we may be able to even surpass. Again, these are organic growth. There is also possibility that we may come across any inorganic book buying DA transaction and all that. That may also add to our things that we may reach.
Worst case scenario, if we go only on this trend and if the repayments are also at this level, we may fall short by around INR100 crores, INR200 crores as far as AUM is concerned. But disbursements, we have discussed with the team, also. The team is also confident that we will be doing around INR3,600 crores to INR3,800 crores.
Bunty Chawla
Okay, sir. That was very helpful. Lastly, on the margin front, if there is a — though currently, it does not seem to be a rate cut situation. But if the rate cut happens, what will be the impact on our margins for us?
K. Swaminathan
Okay. See, as far as the current rate is concerned, we have also been passing on mostly. In fact, we have increased our MLR by 10 bps from this month. So already one increase we have done in the month of May. So 20 bps, we have already increased in the current year. In case it starts falling, we expect that — we do not expect that to happen immediately. In case of perhaps falling, I do not see any outflow immediately. And not only that, we are also replacing every quarter, so any downward movement also will get replaced in the — within three months. So the customer will be given an assurance that such rate cuts will also be passed on to him. So he will also get that benefit.
Bunty Chawla
Okay. Thank you. Thank you very much, sir, for that.
Operator
Thank you. We take the next question from the line of Anand Mundra from Soar Wealth. Please go ahead.
Anand Mundra
Hello, sir. Sir, congratulations on good results. Sir, one request, can we get the breakup of GNPA on old book and new book as part of quarterly presentation?
K. Swaminathan
Yes, Anand. Yes, Anand. Yes, yes. Suggestion is taken, sir. We will definitely give. But what is new book, what is old book, it’s how to decide.
Anand Mundra
Pre-COVID or post-COVID or when your tenure started, whatever. Because, sir, old GNPA is actually giving a wrong picture with respect to NPA profile of the company.
Sir, second question was…
K. Swaminathan
Okay, sir.
Anand Mundra
…is there any possibility of writing-off GNPA? Though, I know it’s recoverable, but — so that the headline GNPA number reduces and we may have — we may get better credit rating?
K. Swaminathan
See, credit rating is not only dependent only on GNPA numbers. Credit rating, they analyze various other factors. As far as writing-off is concerned, this company has not done any actual write-offs, but technical write-off, yes, we have done. Definitely, we will take a view. May not be in the third quarter. In the fourth quarter, we will definitely take a view on the technical write-offs.
Anand Mundra
Yeah, because there will not be any impact on the P&L, but it will just be a written-off because you already have a provision, sir.
K. Swaminathan
Yeah. It is quite possible.
Anand Mundra
Nex question, the third question.
K. Swaminathan
Maybe the company will take a view in the fourth quarter.
Anand Mundra
Okay, sir. Sir, third question was, what is the reason for increase in depreciation and amortization expenses in this quarter?
K. Swaminathan
There was a small mistake in the first quarter, sir, on the right-of-use assets, okay, that got rectified in the current quarter. That is the only difference. There was a small error that we rectified.
Anand Mundra
Okay. So this number is slightly higher than the normal number, this quarter number?
K. Swaminathan
If you average — yes, yes. You are right, Anand. But if you average, I think it will be the same. See, 5 plus 5 — INR50 lakhs was last quarter. I think 2.75 per quarter. I think if you’re to average, it is same every quarter, more or less same.
Anand Mundra
Okay. Understood. And sir, what is the guidance on credit cost for this financial year?
K. Swaminathan
Credit cost will be marginal or almost nil. It will be very much negligible because of the recoveries we are making. In fact, the write-backs will be more this time, because we have already cemented a write-back of INR50 crores for the current year. We have done around INR13 crores this quarter. So actual credit cost may not be much. I think we should be able to absorb any new NPAs.
Anand Mundra
Okay. And sir, are there any slippages in the NPA in this financial year in the first six months, because of recovery, it may not be reflecting because…
K. Swaminathan
You are right. You are right. See, I do not have for the full year. For the current quarter, I can tell. INR37 crores was the slippage, INR67 crores for the recovery.
Anand Mundra
How much was the slippage, sir, INR67 crores?
K. Swaminathan
INR37 crores was the slippage.
Anand Mundra
Okay. And INR67 crores…
K. Swaminathan
INR67 crores was the recoveries.
Anand Mundra
Okay. And sir, your guidance on disbursement for this financial year, you said, it can maintain at INR3,600 crores, sir.
K. Swaminathan
Yes, Anand.
Anand Mundra
Okay. And sir, any possibility of increasing dividend for the shareholders? The dividend payout ratio is very poor. As such, we have less capital for growth, so.
K. Swaminathan
I think, I am not the correct authority to do that. It will be decided by the Board. But I think 30% is a reasonably good dividend in my view. But still, it will be taken by the Board.
Anand Mundra
Actually, sir, yeah, if you compare it with the EPS, then the percentage number is very low. So it can be with respect to — if the EPS is much higher. So with respect to share price, face value, sir, it is 30% is good. But with respect to EPS, the number is very low, sir. So you can propose this to Board if at all it is accepted. Yeah. Thanks a lot, sir.
K. Swaminathan
Yeah. Your point is taken, sir. When we are proposing, we will say. Yeah.
Anand Mundra
Thanks a lot, sir. Thanks a lot.
Operator
Thank you. [Operator Instructions] The next question is from the line of Abhijit Tibrewal from Motilal Oswal. Please go ahead.
Abhijit Tibrewal
Yeah. Good evening, everyone. Thank you for taking my question. So, sir, first question is, again, I’m just trying to understand because historically, your Q2 disbursements have always been slightly lower than Q — Q3 disbursements have always been slightly lower than Q2 disbursements. So if you could just explain why that is the case for us? We don’t see it in the rest of the mortgage industry. So I mean, anything unique to us with regards to geography, Tamil Nadu, Karnataka, where we are majorly present. And is that the same expectation that you have for this quarter as well, that sequentially disbursements might be a little lower than Q2? That is the first question.
The second one is, OpEx this time was slightly elevated. So I don’t know if you addressed this earlier in the call. Are there any one-off items which are there, which has led to slightly higher OpEx for you in this quarter?
And thirdly, I mean, I’m seeing very good traction on our fee/non-interest income. Anything that you’re doing there structurally, which might improve your fee income or non-interest income profile? Those three questions.
K. Swaminathan
Okay. Thanks, Mr. Abhijit. See, this Q3 slightly lower maybe in the last two or three years. I could not get any reason maybe because of floods, especially in the southern parts, maybe that could be one of the reasons. Second, festival moment, both October, November, around these festive months, October Navratri and November, Diwali. Luckily for us, both the festivals ended in October. So November and December are relatively festival-free. So that way, the number should go up this Q3.
Second one, floods, of course, that is not in our hands. Let us hope that despite floods, we do better numbers this year. Then OpEx is elevated is only because of depreciation, which I explained last — in the previous caller, solely because of depreciation that was on the right-of-use of assets. Only because of that reason, there is an elevated depreciation in the current quarter.
Third one, in the non-interest income, luckily, we had some advantages this quarter. One is on the insurance. See, insurance commission has gone up. I think you may be knowing the commission being charged by the insurance companies to finance companies like us, percentage is going up. That is one of the reasons. Other than that, in the current quarter, we had a recovery from technically written-off account. It was INR8.43 crores against INR2.83 crores in the last year. Same way in FD, we had some surplus funds, which we deposited in fixed deposits. That gave us a good income of around INR15 crores this quarter.
Abhijit Tibrewal
Got it. So sir just a follow-up on that. So basically, the non-interest income component, which is a combination of insurance commissions and recoveries, they are a little lumpy this quarter and will not recur unless, of course, if we are able to continue the same level of recoveries from written-off accounts that we’ve seen in this quarter.
K. Swaminathan
Okay. See, insurance definitely will go up, because it is also dependent on the disbursements. So the more disbursement I make, I may get more insurance income. So insurance, I don’t think there is any reason that it may drop. Recovery from technically written-off accounts, yes, last two quarters, maybe we had a big recovery in some of the accounts. The same, we still have nearly INR100 crores of technically written-off accounts. So any recoveries we are making in those accounts will help us.
So we are quite hopeful that because of the recovery efforts that we are making, we will be able to maintain, if not INR8 crores, definitely, there will be a sizable income from these written-off accounts. At fixed deposits, we have now decided as a policy to keep around 1 month to 1.5 months of disbursements in fixed deposits, so more or less, the income will continue.
Abhijit Tibrewal
Got it, sir. And sir, sorry to kind of labor upon this, while you said you explained it to the previous participant, why is the depreciation you said, has moved up from INR4 crores to INR9 crores sequentially?
K. Swaminathan
I could not get you.
Abhijit Tibrewal
Sir, you said, right, I mean, the depreciation is higher this time around. So you…
K. Swaminathan
Yeah.
Abhijit Tibrewal
…gave a reason for that. What was that reason?
K. Swaminathan
Right. There was a mistake. There was an error in the first quarter on the amortization of these right-of-use assets. So that got rectified. So the next quarter…
Abhijit Tibrewal
Got it.
K. Swaminathan
…there will be a dip in the depreciation, okay?
Abhijit Tibrewal
Understood, sir. Understood. Great. Thank you so much. That’s all from my side. All the very best.
K. Swaminathan
Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Raghav Madhavan from Kotak Mahindra Bank Limited. Please go ahead.
Raghav Madhavan
Thanks, again. Sir, I just wanted to have two questions from my side. On the asset quality part, can you give guidance, what percentage of restructured book is at NPA now? And how is the performance of this book? That’s one.
And second, in general, I want to understand in the geographies and markets that you are present, how do you see the sector evolving considering the larger view on the NBFC sector itself of over leveraging, etc.? Do you see such similar issues among your borrowers as well?
K. Swaminathan
Okay. See, out of about INR550 crores, the NPA from restructured book is only INR150 crores as of now. Because once upon a time, it was around INR200 odd crores. It is now only INR150 crores in September ’24. Out of this INR550 crores, INR150 crores is from the restructured book. Okay. It is coming down. It’s coming down slowly. It was INR168 crores in June. It is now INR150 crores.
On the geography, see, the areas where we operate, competition is tough, I think I need not explain. Both in South and the West, almost all the housing finance companies are there. So competition-wise, it is okay. It is tough. But as regards to the other issues that the industry is facing, especially the NBFC and MFI industry is facing, HFCs are not affected. I think you may be knowing. So the competition will continue as far as HFCs are concerned since we are the HFC sector. The other — these clean loan issues and all that are not applicable for HFCs.
Raghav Madhavan
Understood. Thank you, sir. That’s it from my side.
K. Swaminathan
Thank you, Raghav.
Operator
Thank you. We take the next question from the line of Rajiv Mehta from YES Securities. Please go ahead, sir. Rajiv sir, your line is in the talk mode. Please go ahead with your question.
Rajiv Mehta
Yeah. Can you hear me now?
Operator
Yes, sir, we can hear you. Please go ahead.
Rajiv Mehta
Sure. Sir, I have a few questions, and I’ll just quickly cover them. In terms of sales and collection manpower, can you quantify what is the strength of sales now and collection now? And what is the additional planned in the next six months?
K. Swaminathan
Okay. Sales is 172 as of now. Collection is 180 as of now. Sales may go by another 20, 30 a year. Collections may not be much.
Rajiv Mehta
Okay. Understood. And you spoke about engaging with DSAs corporate, DSAs and connectors of late. What is the current share in the disbursement, in Q2 disbursement? And what is the aspiration of what share they can become?
K. Swaminathan
It’s going up. It was around 30% earlier. Now it is going up. In the last month, it was around 40%. But overall, I think it — but we may end up around 40% by year-end.
Rajiv Mehta
For the whole year?
K. Swaminathan
Yeah. For the current year, we may end up, because that percentage is going up because connectors we have added in the current year. So slowly connectors…
Rajiv Mehta
Okay.
K. Swaminathan
…percentage is also going up. And DSAs are also going up. So overall, by year-end, both DSAs, connectors DSAs, all put together maybe around 40% compared to around 30 and odd percent last year.
Rajiv Mehta
Understood. And sir, can you comment on the reduction that we have also seen in Stage 2 in this quarter? So this quarter was not really very conducive, but still we have been able to reduce Stage 2. So how do we look at Stage 2 number because it’s still elevated at 10%, at 11 odd percent. So what is the aspiration of taking the Stage 2 number by this March and maybe by next March also now that we have added a lot of collection people for the buckets?
K. Swaminathan
So our focus now, especially by the collection team is only on Stage 2 rather than even on Stage 3. Stage 3 is separately being followed. So Stage 2 is our focus area. Whatever reduction has happened, in fact, personally, we want to do — the team wants to do still better. So we are focused. And this 10%, we are confident that we will be able to achieve this 10% of AUM. But still, it is on an elevated level compared to all the other peers in the industry. We are hopeful that in the next one or two years, we will be on par.
Rajiv Mehta
Sure. And then one last thing on the incremental lending rate. So while you gave out the profile of the customer from a credit score perspective being average 750. So can you give us the incremental lending rate for home loan as well as for home equity and the incremental ticket sizes for both home loan and home equity?
K. Swaminathan
Our incremental ticket size, I can say, it is 20%. One minute. The interest rate only I’ll give you. Home loan is 11.2% in September, home equity is 13.8%. Average is 11.8%.
Rajiv Mehta
Okay. And incremental ticket size, you said, INR20 lakhs for both?
K. Swaminathan
INR20 lakhs. 20 point — I do not have separate thing. Overall, it is INR20.3 lakhs.
Rajiv Mehta
Okay, sir. Thanks. Thank you so much.
K. Swaminathan
Thank you. Thanks, Rajiv.
Operator
Thank you. We take the next question from the line of Kamal Mulchandani from Investec Capital Services. Please go ahead.
Kamal Mulchandani
Hello, sir. Just a follow-up question on the previous participant. Did you say that the employees in the sales are only 170?
K. Swaminathan
Yes.
Kamal Mulchandani
Sir, if I’m not wrong, the total employee strength is around 1,325.
K. Swaminathan
Yeah. Correct.
Kamal Mulchandani
So can you give the overall break up as well as…
K. Swaminathan
Yeah. I can tell you, sir. See, sales, what we call salespeople, the foot on street sales team is 170. It is not only that, the branch head is also doing. So branch head is around 200. So 200 plus 170, that is around 370 people are there for sales. But sales vertical, that is the junior level people who will be in the seat is 170. The branch head also will do. In addition, we also have DSAs for our off-roll that is separate. So all these people will be on sales. Collection is around 180. We also have credit people. We also have operations people, and we also have administrative level at head office, regional office and all that. All put together, it’s 1,325.
Kamal Mulchandani
Okay. So DSTs are some separate numbers. So how many are the DSTs?
K. Swaminathan
That is not within this 1,325. 4-0, 40. That is apart from 1,325.
Kamal Mulchandani
Okay. Got it. Sir, I may have missed it, but did you just tell what was the BT-Out rate for the quarter?
K. Swaminathan
In the quarter, it is INR65 crores. BT-In was INR121 crores.
Kamal Mulchandani
Okay. Got it. And sir, any like specific targets because like you said that you would fall short of INR100 crores to INR200 crores for the AUM guidance of roughly INR15,000 crores. So are there any strategies if you would be able to meet this AUM growth target maybe or some strategies to reduce the repayment rate, which the team is undertaking?
K. Swaminathan
Definitely, sir. So there are so many activities going on to stop this repayment as much as possible. We have engaged — there is one CIBIL connector. So we get triggers, we pass it on to branches so that branches as well as from head office, we talk to the customers. We keep on engaging with the customers through various call centers and all that, we keep on engaging to get their feedback and all to satisfy them.
And we also have our own retention policy, whereby wherever interest rate reductions are requested, we are trying to meet as much as possible the request of the borrowers. With all that, we are hopeful that the repayment numbers will come down. But that said, some of the BT-Outs are inevitable. So the way out is to increase our numbers — disbursement numbers as much as possible to meet the repayments as well.
Kamal Mulchandani
Okay. Sure. That’s it for me, sir. Thank you so much.
K. Swaminathan
Thank you. Thanks, Kamal.
Operator
Thank you. The next question is from the line of Vikas Kasturi from Focus Capital. Please go ahead.
Vikas Kasturi
Hello, sir. Sir, in one of the earlier calls, you had mentioned that the people in Stage 3, you were going to auction the properties, and that was going to force them to come and do the repayment. So any updates and progress on that activity, sir?
K. Swaminathan
So it is an ongoing project. It’s not that we will do it only in 1 quarter. It’s an ongoing thing. So whenever any NPA account reaches that auction stage, we will immediately go for auction. I will tell you how many auctions we did last quarter. 490 — see in the current year, so far, we have issued 500 auction notices alone. In addition possession notice, is another 447. So almost 1,000 notices we have issued in the current year itself — in the current six months. In addition to the demand notices of another 1,700. So almost 1,700 notices we have issued in the first half year itself, so this is an ongoing thing. It’s not that we do it one month and stop next month, and we also plan to do it aggressively. In December, we want to do a mega auction and all that. That way it is happening.
So as I was telling in the previous call, the auction success is not only how many properties we sell, we auction. It will also depend on how many borrowers come to us for negotiation and how we are able to renegotiate and get the accounts closed. That way, if you see, the numbers will keep increasing. We have to — the only thing is we have to keep on mounting pressure on the borrowings.
Vikas Kasturi
Sir, if I may ask — thank you for that explanation. But a follow-up would be, sir, now a lot of customers would be in the NPA bucket for many years, right? So are they still such people who have been in that NPA bucket for over say two, three years?
K. Swaminathan
Yeah. As I was telling, out of INR550 crores, the recent NPAs are of only INR50 crores, which means pre-COVID is around almost INR500 crores. So these borrowers, in addition to the recovery actions that I have already told, we are also offering them some carrot in the form of a special OTA scheme. So in the current year, we have formulated a scheme so that these customers come to us for negotiation. They are also getting satisfied that they are getting some discounts in their schemes. In interest, we are giving some discounts, penalty waivers, things like that, that we’ll do.
Vikas Kasturi
Sir, the part that I’m not able to understand is you said you have sent, so say, 1,000 notices. So — and there are still more customers who have been in their NPA bucket for many years. So my question is like what is stopping you from sending notices to all of them, say, increase the number of notices to say, 2,000 or 3,000, depending on how many of them there are cases?
K. Swaminathan
Yes, Mr. Vikas, see it is a process. See, I cannot expect that today I issue a demand notice; tomorrow, I issue possession notice. There is a time line under SARFAESI Act. This is one thing. So if I issue demand notice, at least I need to wait for not less than 60 days. So it may be anywhere three months before I issue the second notice. And another one or two months before I go for auction. This is first part.
Second point is there is a possibility that the customers go for any order that is not to get a stay in that. So that way, also there is a delay in the processes. So these are the things which are delaying. But despite all that, we are also taking a bit through our lawyers to see that these — any stays and all are getting passed so that we go ahead with our recovery action.
And the auction successes will be more when we take a physical possession, okay, compared to — I think you may be knowing there are two things. So physical possession is more effective. So for physical possession, again, we have to go through a different administrative route before we take a physical possession. So that too takes time.
Vikas Kasturi
Got it, sir. Well, thank you for the explanation, sir. Thank you.
K. Swaminathan
Thank you.
Operator
Thank you. [Operator Instructions] We’ll take the next question from the line of Anand Mundra from Soar Wealth. Please go ahead.
Anand Mundra
Sir, just a follow-up question. I missed the point about the other income. One was the insurance, other is the recoveries on the write-off assets. Is this correct?
K. Swaminathan
Yeah. Recovery from technically written-off assets.
Anand Mundra
And what is the amount of technical write-off assets, sir?
K. Swaminathan
What is it?
Anand Mundra
What is the total amount which we are estimating approximately?
K. Swaminathan
Technically written-off total in our book is around — total technically written-off accounts is approximately INR100 crores today.
Anand Mundra
INR100 crores. So whenever we are recovering something, it will come as part of other income?
K. Swaminathan
Right. Correct.
Anand Mundra
Okay. Thanks, sir. Thanks a lot.
K. Swaminathan
Thanks.
Operator
Thank you, sir. The next question is from the line of Raghav Madhavan from Kotak Mahindra Bank Limited. Please go ahead.
Raghav Madhavan
Sir, in the restructured book, what will be your Stage 2, sir?
K. Swaminathan
Raghav, Stage 2 is approximately INR200 crores.
Raghav Madhavan
INR200 crores?
K. Swaminathan
Approximately INR200 crores. [Technical Issues] Okay?
Raghav Madhavan
Okay, sir. Thank you.
Operator
Thank you. Ladies and gentlemen, we take that as the last question for today. I would now like to hand the conference over to the management for closing comments.
K. Swaminathan
Yeah. I think almost all the participants, I think the questions we have answered. I think it has covered almost all the points. Once again, thank each and everyone of you for showing interest in this company. As we told in the initial beginning, the company is on the growth path. We are quite confident in the coming years the company will reach the heights which got there a few years back. I thank each and every one of you. I also thank YES Securities as well as Chorus for making all the arrangements for this conference call. Thank you once again.
Operator
[Operator Closing Remarks]