Repco Home Finance Limited (NSE: REPCOHOME) Q3 2026 Earnings Call dated Feb. 06, 2026
Corporate Participants:
Yashpal Gupta — Managing Director and Chief Executive Officer
T. Karunakaran — Chief Operating Officer
Analysts:
Subranshu Mishra — Analyst
Vikas Kasturi — Analyst
Badri Narayan Ravi — Analyst
Sanket Cheda — Analyst
Sourabh Dhole — Analyst
Darshan Devra — Analyst
Varun Dubey — Analyst
Anand Mundra — Analyst
Akash Jain — Analyst
Samir ah — Analyst
Presentation:
operator
[Starts Abruptly] By yes Securities Ltd. Please note all participants are currently in listen only mode. There will be an opportunity to ask questions following the conclusion of the management’s opening remarks. 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.
Yashpal Gupta — Managing Director and Chief Executive Officer
Good evening. Thank you all for joining this Q3FY26 conference call of Rebco Home Finance. From the management side we have Mr. T. Karunakaran, M.D. cEO Mr. A. Palapindi, Chief Operating Officer. Mr. P.K. vaidyanathan, Chief Development Officer. Mr. M. Raja, Chief Business Officer. Ms. Shanti Srikanth, Chief Financial Officer. And Mr. Ankush Tiwari, Company Secretary and Compliance Officer. With this I hand over the call to Mr. Karunakaran for his opening remarks. Over to you sir. Yeah. Thank you Mr. Rajiv. Good evening to you all. I am extending a warm welcome to this earning call of our company to discuss both Q3 results and way forward the numbers already available in our website.
I’m sure we could add a chance to go through the numbers before going to Q and A. I just. I want to walk through the our performance in the Q3. Last con call I said if you look at our growth history or dispersements or particularly disbursements Q1 and Q3 will be always we will have a lesser disbursement. Last con call I said we want to break this trend. Yes, we have changed the trend. During the quarter end December we disposed close 2069 crores which is almost in line with our disbursement of September 2025. Again this current financial year our disbursement has crossed second time thousand crore mark.
If you compare our disbursement of December 2025 versus December December 2024. We have seen 40% year on year growth in the disbursements. If you look at statewide disbursements what is the states are contributing for our disbursements? Almost. We have seen improvement in disbursement of Makarashtra, Madhya Pradesh and Rajasthan. We have seen disbursements improvement in this state. In these three states. In these three states disbursements in December quarter is better than our September quarter disbursements. Tamil Nadu in other states our disbursements are almost flat in Karnataka in last minute we expect the numbers. Our disbursements numbers are not up to the mark.
Actually we set a target of dispersing close to about 1090-1100 crores because of slowdown in disbursements. In Karnataka states we could not achieve these numbers. Finally we ended with 1064 crores disbursements coming to the AEM. Our AEM ascent of the December 2025 stood at 15,394 crores against last year December of 14,155 crores. As we have seen growth rate of 8.8% during the quarter I said 1064 crores we have dispersed of which around 360 crores added to the my loan book remaining thing is gone for principal written off the btout is almost similar with the similar trend is continuing.
We have not seen any increase in BT out of course prepayments rates also in line with what we experienced in the previous quarter. Coming to the recovery side our gross entry as end of the December stood at 449.53 crores as against 545 crores in the last year of the same period. During the quarter ended December 2025 we recovered NPA the extent of 25 crores as end of the September 2025 our gross NP in absolute term it was 475 crores. We brought it down to the last concurrent. I have given you a commitment that we are giving.
We are where our NP should come will come down around 440 crore crores. Yes we have done. We brought it down our NPA from 475 crores to 450 crores in December in the end of the December 2025. Even if you look at our stage 2 numbers which is also we have done a tremendous reduction in stage 2 assets also stage 2 assets as end of the December 2025 stood at 1235 crores Q2 it was 1323 crores almost 100 crores reductions we have seen in this current quarter alone. If you Compare our stage two number year on year December stage two our number was close to about 1500 crores that means 1494 crores.
Now it was 1235 crores almost roughly 250 crores kind of reduction. We have seen in stage two assets also delinquencies in other packets also we have seen lot of improvement coming to the borrowing side. Our Borrowings stood at 711,769 crores as end of the December 2025 out of total borrowings Around 829 crores is coming from National Housing bank by way of refinance banking system borrowing stood at close to about 9893 crores and we are Having facility with Repco bank, our parent bank to the extent of 810 crores as part of diversification we done 1cp at the year beginning which stood at 145 crores again this quarter we have diversified our liability side.
We have raised about 93 crores by way of PTC. Our diversifications will continue in NCDs. Yes, this is also part of our diversifications. We already having discussions with a few investors and bankers. The discussions are in advanced stage. Most probably couple of weeks time we will roll out NCD of about another one. I mean 100 to 125 crores. This is about liabilities coming to the cost of fund. Cost of fund at the beginning it was close to about 8.75%. At the beginning at end of December it was close to about 8.45%. We have experienced 30 basis points reduction in cost of fund in the nine months out of 30 basis points reduction in cost of fund we have passed on 20 basis points to our borrowers in the manner of 10 basis points on it’s effective from 1 July 2025 and another 10 basis points with effective from 1st February 2025.
Our spread as end of December stood at 3.3%. Our yield on assets almost flat compared with September. As end of the December 2025 our yield on assets is about 12%. And September it was 12%. And December also it’s also 12%. We are maintaining a spread of 3.3% and our Nimbus closed about 5.41%. As end of the December our Net1 fund stood at 3574 crores. As end of December our return on assets stood at 2.89% and return on equity stood at 13.17%. These are the broad numbers. During the current. I mean December quarter ended we have opened two more new branches.
Our branch found at the end of the December 2025 stood at 236 which is inclusive of about 31 satellite center across the country. These are the broad numbers. Now as I mean. I mean dividend last quarter we have interim dividend of about 25% this quarter. I’m happy to say that. Happy to share and say that our board has declared interim dividend of 20% again totally this current financial year. So far we declare dividend of totally 45% as against 40% in the last financial year. These are the broad numbers from my side. I’m very happy to take it.
Q and A can open the floor for Queenie.
Questions and Answers:
operator
Thank you so much sir. Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask a question may click on the raise and icon from the participant tab on your screen. We’ll wait for a few minutes until the question queue assembles. We’ll take a first question from the line of Subranshu Mishra of Philip Capital. Please go ahead with your question.
Subranshu Mishra
Hi sir. Good afternoon. Here so quickly on the sanctions. They’ve come off, come off very sharply on a QQ basis but the disbursement remained largely similar. So is it because of the unsanctioned disbursements last quarter that we have been able to bridge the gap? That’s first. Second, how do we look at the competitive intensity in Tamil Nadu now that you know we’ve awas also opening up branches there. So what do we think of the growth that will accrue from Tamil Nadu itself And how do we think about growth in terms of disbursement going forward for us in 27 and 28 thirds are we we have given roughly around 45% of dividend.
Would it not be more prudent if we would have deployed this into our business in expansion and you know, paying off employees for their motivation and getting disbursement? I’m not certain. Why are we paying so much of dividends? Thanks. These are my questions.
Yashpal Gupta
I’ll take that question. Yeah. The competitive environment in Tamil nad has blown up. Me being a player for more than 25 years now in Tamil Nadu. We have our roots deep and we have a very very large footprint in Tamil Nadu. So yes we do have competition but not to the extent of it impacting my disbursement or my disbursement plans. And of course we are also concentrating on our growth in non TN states like my most of the branches that we are planning to open in exponentially is going to be in the east and western section of our country. So that is, that is how we are planning and going forward.
We want to reduce the contribution percentage of Tamil Nadu by increasing the disbursement in other states. So that is how we are going to handle the competition there. Yes sir.
T. Karunakaran
Coming to the disbursement for the current quarter in first con call I said 4000 crores of disbursement in the current financial year. Numbers are in line with our expectations. We are targeting 1400,000, 200 to 1200 crores kind of disbursement in the current quarter and we are targeting 16,200 crore AUM coming to the disbursement in next financial year. Yes. We are setting a target of in unclosed about 5000 crores disbursement in the next financial year. These are the. From disbursements things. Dividend. Dividends. It’s. It’s a. It’s a conscious call taken by the board to. I mean what is the impact of that? This dividend is not that much.
What we have given so far is about 20. 25%. 20 and 25%. 45% of the capital. 62 crores. It’s nothing. It will not have any impact on our financials. Of course other salary, salary cost and other things is as per schedules we are going. It will not have a. The payouts of dividends 48% on 60 and the entire capital of 62 crores will not have much impact.
Subranshu Mishra
One last question, sir. Any guidance on credit cost and cost of funds for 27? Thanks.
Yashpal Gupta
Credit cost right now series for the September. I mean December quarter. December nine months ended. The actual credit cost is about negative. It’s about 19.72 crores. It’s a negative. I’m expecting 25 crores reduction in the NPA going forward. 20 to 25 crores of kind of reduction in NPA. NP reduction. I’m expecting. And I’m also expecting we are targeting to reduce our stage two assets also going forward. Right now I wanted to bring it down to stage two assets to close to 7.5% by year end. Keeping. Having said all those things I’m not expecting my credit cost will not go up.
It may negative. Cost of funds. See so far we have seen in this current nine months we have seen. We have experienced 30 basis points reduction in cost of fund during September to December quarter. Yes. We have seen around 10 basis points reductions out of total borrowings about another 4600 crores. Bank borrowings are subject to repricing in current quarter. That means January to March. We have done once PTC at the rate of 7.75. Keeping all those things mind. I’m expecting that my cost of fund. Overall cost of fund may reduce another 10 basis points. We can see reduction in cost of fund to the extent of 10 basis points in the current quarter.
That’s what I want to say.
Subranshu Mishra
Thank you, sir. I answer all the questions.
operator
Thank you. We’ll take our next question from Vikas Kasturi of Focus Capital. Please go ahead.
Vikas Kasturi
Good evening, sir.
Yashpal Gupta
Good evening.
Vikas Kasturi
So first of all congratulations on another fantastic quarter, sir. And you almost came close to breaking your previous quarter disbursement record and I also secondly I want to thank you for taking all the inputs that we have provided in the past. So for example we asked you for split of the pre March 22 and post March 22. So you have done that. You have also started providing the numbers in rupees crores. So thank you for taking these suggestions sir. Thank you. So thank you sir. So I had a couple of questions. So first is on a. So you had given some guidance at the start of the financial year. So how, how likely are we to meet that those targets sir, with respect to GNPA as well as with respect to the aum. So that is the first question and my second question is sir, more on a strategy point of view. So it seems that let’s say we are giving out loans at a yield of about 12 to 13%. Right? And so if you, if you increase the growth rate of the company we have only about 1.5% of our, our OpEx is about 1.5%.
Right. So does our OPEX increase if we start to increase the growth? That is number one. And the second thing, second question is like would our credit costs increase if we start growing faster? So I think there is some sort of a trade off that you as a management would do. Right. So for example if you try to grow faster then OPEX and credit cost will also go up. But if you don’t grow then you know, but if you try to keep these costs under control then the growth will be slower. So how do you think about these trade offs? So these were broadly my two questions.
Yashpal Gupta
Coming to the guidance in first con call of this financial year we have guidance of, we have given a guidance of about dispersing 4000 crores disbursement and we have given a guidance uptake into our a to 16,200 crores and we said we want to bring it down our NPA to 2.5% and stage two assets to 7.5%. Our numbers are in line with up to December our performance. I mean in line with our guidance I’m confidence of achieving 4,000 crores disbursements and touching of 16,000 crore, 16,200 crores AAVM and NPA of bringing down to NP of 2.5% and bringing down to stage 2 assets to about 7.5%.
I’m pretty confident that whatever guidance I have given during my first con call at beginning of the year I’m confident of achieving all the guidances. Coming to our other questions. Yes, growth. Growth. Yes, costs really Increase. We have taken a lot of efforts to our reduce our cost of NB. Recently we have done one. We diversified our liability side. We have done one pass through certificate. We got up on 7.75%. We are taking all our efforts and we are exploring the possibilities to reduce our administrative and other cost balance between the growth and other things.
Our objective is to maintain ROE of about close to about 2.9% and we would like we will maintain a spread of around 3.2 to 3.3 kind of spread. We will balance other things according to this.
Vikas Kasturi
Sir, if I may ask a follow up question sir. Q1Q in quarter three you gave out about 1060 crores of loans. But our AUM went up by only about 350 crores. So which means that nearly 600 to 650 crores, you know went down because of say BT out or repayment prepayment etc. Right. So if you give out 1200 crores of disbursement in quarter four we will. Our AUM might go up by only about 400, 500 crores. Even then we will fall short of our guidance. How do you think about this?
Yashpal Gupta
Sir. I will take this. See monthly our Runway our rundown is somewhere between 170 to 200 course which is the average run rate that we have been seeing so far. So in that perspective for Q2 of course the guidance is 4000 crores for the year. But for Q4 we are planning at doing some around 1200 to 1400 so that we equip ourselves to achieve 16,200. So from the perspective of me taking 200 crores as a rundown, if I am going to 2400 then yes I am very much there at 16,200. But that is something we are striving to achieve.
Yes, you are right. We are striving to achieve that. Hope we do that. If you look at our btouts as well as principal rundown we have not seen any significant change or principal rundown rate is high or something like that. It’s almost similar. If you look at December 2025 our principal rundown rate including borrowers own prepayment and balance takeover which is almost similar to previous quarter that comfort we are having. So we are though we have said Rightly Raja said 1200 crores. If you do 1200 crores kind of 1300 to 1400 crores of disbursement 16200 crores. AEM we can easily. We can achieve easily. Second thing, if you look at our performance almost around 35 to 36% of the growth will come from last quarter.
Always last quarter will be the best compared with other quarters. With that we are confident of achieving the 16,200 crores.
Vikas Kasturi
Got it sir. So one last thing sir, I had a couple of suggestions. So one is if you could please provide your asset liability mismatch across the time buckets in the presentation. And the second thing is sir one of the very important aspects about REPCO is that you are actually growing your aim at a pretty fast rate. But because of these rundowns it is not showing up. So I mean this is. This is only if somebody does this analysis it is. It is evident to them. So if you could in your communications could you please highlight this that actually the company is growing pretty fast.
But because of these rundowns the overall numbers are looking at what 7% growth in AUM.
Yashpal Gupta
Yes sir, we have taken note of your points. First thing to alm our ALM question was very very comfortable. We are not having a gap in any ALM buckets. I want to confirm you half the balance sheet. On the balance sheet we are having adequate liquidity. Off the balance sheet we are having close to about thousand crores unutilized sanctions from at least six or seven banks which will fuel my growth and funding requirement for at least another six or seven months. In the of balance sheet side on balance sheet side we are having closed about 152 crores.
150 crores kind of investment. So our ALM position in all the buckets we are comfortable. Anyway we have taken note of your things. We’ll next in the presentations we’ll we will incorporate these details. Yes rundown you rightly point out. Yes rundown rate is little bit but alarming. It’s not alarming kind of thing. If you look at. If you compare our September rundown date and December rundown date is almost similar. It is not going up. Yes, we have taken a lot of efforts. We have articulated customer retention policy wherever it is possible. We are reducing interest rate of existing borrowers and retaining them wherever it is possible.
We are giving the top up loans and returning them. We have done an analysis. Yes going forward this almost the world book is we are a 25 years old company. The rundown rate you know well that the rundown rate in the old accounts will be higher side any any housing loan appropriation towards interest and principal. In the beginning of the loan interest will be high, principal will be low. Going later date principal will be high, interest will be low. Yes. We have done a detailed analysis. We have. Yes. We have taken adequate steps to reduce the rundown rate.
Yes, I’m confident Going forward we can see improvement in loan book also like cover disbursements.
Vikas Kasturi
And my best wishes to Mr. Raja and yourself sir and to the entire team. Thank you, sir.
Yashpal Gupta
Thank you. Thank you.
operator
Thank you. We’ll take our next question from Badri Narayan Ravi of FPS assets. Please go ahead with your question.
Badri Narayan Ravi
Hi sir. Thank you for the opportunity. Sir, my first question regarding in our. P and L year on year so. Our other expense has been price 38% so which is affecting our profit. So what is the reason? Sir?
T. Karunakaran
Yes. Other expenditures has gone up last quarter I so this is silver Jupiter year for us One of expenditure to recognize our long servicing employees we have given rewards and awards incentive to our all our employees we have incurred expenditure to celebrate silver jupia year. This is which is amounting to roughly about 3 crores. Number two if you look at performance month on month, quarter on quarter Our logins are improving, sanctions are improving Disbursements are improving to the extent we have to incur expenditure Our cost of sourcing will go up to getting a legal opinion.
I have to pay peace to lawyer get evaluation report I have to pay fees to engineer to check the credentials of the borrower I need to take various kind of reports all those things we need to incur expenditure because of that our other operating expenditure is going up which is in line with our increase in the disbursements. Sir, next question Regarding of course last 24 years 24 months. If you look at branch expansion last two years we opened around close to about 32 or 32 branches for which we need to incur some initial cost all those things we spend expenditure like this the utilization of expenditures will not accrue immediately it will take.
It will take some more time to give the results.
Badri Narayan Ravi
Got it, sir. Sir, next question Regarding the remedy from operation so toppling road what is your. Guidance on next natural? Thank you. Top line. Yes. If you look at yield on assert advances about 12% we will maintain your same and we got a dividend of about 3 crores from our substrate company which is already we have taken the similar trend will be maintained. Thank you sir.
operator
Thank you so much. We request participants to restrict to two questions and then return to the queue for more questions to rejoin the queue you may click on the raise and icon Again we’ll take our next question from Sanket Cheda of Dam Capital Please go ahead. Mr. Cher, please unmute your Microphone. Yeah. Hi sir.
Sanket Cheda
Congrats on steady set of numbers. What I wanted to know is that after say now five to six years maybe this will be the first year where we able to do 10% on AUM growth and we’ll be able to meet the disbursement guidance. Although for the first time we have clogged thousand plus disbursement in last couple of quarters. Wanting to know that what are we targeting for Q4 and also for FY27 and henceforth do we, do we aspire to grow 12% plus in the next couple of years on that Some outlook please. Apologies if it is repetition.
But yeah, just wanted to know that.
T. Karunakaran
Yeah, I say for Q4 we are planning to dispose somewhere around 1200-1400 crores. That is what is our plan and we are working on the same. And of course yes as you rightly said, we would like to maintain the same kind of a growth going forward for 27. We are setting a target of roundabout 5,5000 crores which is said to be finalized. But this is what we are working on. So that is how we want to proceed. March forward.
Sanket Cheda
Okay. And on the credit cost question earlier did you say that you expect the credit cost to still remain in negative going ahead also?
Yashpal Gupta
Yeah, this quarter I’m expecting a 25 crores. I already briefed 25 crores reduction in NPA around 20 to 25 crores kind of NPA reduction. I’m expecting in current quarter. Of course my stage 2 assets also will come down. My target is to bring in down to 7.5% from a present level of 8.02%. Yes, I will get a reversal. But overall my credit cost, my guidance for credit cost for the current quarter will be negative. I mean and for entire financial is a negative. I’m not expecting any credit cost for the current financial year. The credit cost will be negative.
Sanket Cheda
Okay, sure sir. And while we have done a wonderful job in terms of bringing down the stress with stage two plus stage three quarter after quarter. But if I look at stage two for the housing finance company in affordable space, the 7.5 still looks very high. Can. Can there be some accelerated work or focused work here wherein we could. We could just solve or the underlying asset and say resolve this asset as soon as possible. I. I fail to understand why it is so sticky around 7 7, 8%. So this, this kind of levels are not there in even in case of vehicle financials.
Now as far as the stage two is concerned, we being a housing finance company, it should be Much easier for us to get these assets resolved. Say and this is low hanging fruit in my view wherein the stress improvement can continue maybe for next five, six quarters also. So is. Is that the plan you are working on? How, how. Where do you see that the state should. Should stabilize in what should be the ideal stage two in your business?
T. Karunakaran
This is. See if you see the stage two account, just two to three years back it was around 14%. So we have started to take so many strategies and we have introduced verticalization exclusively to take care of the stage two account Stage one accounts. So because because of this strategy it has come down from 14% to now it is 8% and we have targeted for 7.5% before the end of this financial year. That’s what is a discount as far as stage two account. Stage two accounts, we are planning to reduce month on month basis the opening figures.
Yashpal Gupta
That is what we have given the. Target to the connection vertical as well as to the branches. So it is working well. So going forward every year we are planning to reduce at least 2 to 2.5% in stage two accounts. In another one or two years we will bring down to less than 2% or 1.5%. See right now, in addition to that, right now we employed closed about 225 people to to see that recoveries more specifically stage two assets. We have taken a lot of steps. We are also discussing with the recovery agencies to how we can bring it down this stage two numbers. Further. I’m sure that going forward it will come for the period of time you can see our stage two numbers also in line with industry of course. Other side, we have strengthened our credit appraisal system which is evinced from the performance of new book. Yes, these are the steps we have taken to reduce our stage two numbers.
As you can see reductions going forward very soon our stage two numbers will be in line with industry. One more thing. If we see last 10 quarters, whether the stage two or the stage three it is. It is consistent and it is continuously going in the downward trend. Both stage two or stage three accounts here because we are concentrating on stage two accounts also. Not only npa, we have taken so many strategies. As we already told in the initial the first quarter call we have posted separate General Manager first Tamil Nadu and another GM for non Tamil Nadu. So we are giving more concentration on this and we hope that we will reduce this figure before the end of March 2026 expected level of 7.5%.
Sanket Cheda
Sure sir, that’s. That’s very comforting and wish you all the luck for sustained execution. Thanks a lot, sir.
operator
Thank you. We request participants to restrict to two questions. We’ll take our next question from Sourabh Dhole of Fire’s assets. Please go ahead.
Sourabh Dhole
Good evening sir. Can you hear me? Yes, please go ahead. Yeah. So two questions. One is obviously your target for this quarter ended March 26th of 16,200 approximately of AUM. That is well noted. If that happens, you will obviously enter into the double digit growth trajectory for the first time in many, many years. But what I want to understand is that compared to the last couple of years, what exactly has changed which is kind of changing the growth trajectory of the company.
Obviously in the last few quarters, you’ve added personnel, you added branches. Is it all of the these efforts or these investments kind of paying off? Or have you also re looked at your credit policies?
Yashpal Gupta
Sorry, sorry, sorry. Can you repeat that? We lost your connection. Can you repeat again?
Sourabh Dhole
Hello, can you hear me?
Yashpal Gupta
Yeah. Right now it’s your voice. You are audible.
Sourabh Dhole
Yeah, yeah. So I wanted to know what exactly is the source of this growth? Because you will be, if you are at 16,200 by March 26, you will end up doing about double digit growth rate which we have not seen in the company for a very long time. So what exactly is kind of contributing to this changed growth trajectory at the company? And I think for FY27 also you expect something similar, right?
Yashpal Gupta
Yeah. Varun say the growth in disbursements is happening because of the investments that we have made last year in the sales vertical. So we had though the sales vertical was there. We had created a very, very clear cut sourcing channels like my brand sales manager, my direct sales team and our empowerment of corporate DSAs and all sourcing channels. So those sourcing channels are now delivering the numbers for me. And that is the backbone of our growth. What is being witnessed by you? Yes, we are looking at going in the same lines. And we have introduced a lot of new programs and schemes in line with the market.
So that my sourcing team gets the comfort going down to the market and pitching having a sales pitch against my competition. So that’s how we will be progressing this.
Sourabh Dhole
And sir, in terms of credit policies, underwriting policies, has there been any change in the last say seven, eight quarters?
Yashpal Gupta
Yes sir. Definitely sir. See in two years, three years back, we have followed unredited profit and loss account. Nowadays we introduced so many schemes based on grass district method, gross profit method, banking balance method, average income method, introduced so many methods. So we have improved our Credit policies in coming days. Also we have done lot of. I mean we have reviewed our entire credit policy in line with present recruitment. We have present need. We have done. Of course it’s a market, you know. Well that market. Two wars is going on. One is interest rate war, another one is credit policy and SOP harbor policies robust for the sake of, I mean improve the disbursement or improve the business, improve the aum.
We will not compromise on quality of the asset. That I want to confirm.
Sourabh Dhole
Sure. And so the second question is with respect to the dividends.
operator
Sorry, sorry to interrupt. So we are taking only two questions per participant. You can rejoin the queue for a follow up question, sir. Sure, I’ll do that. Thank you so much. We’ll take our next question from the line of Darshan Devra of Invest Group. Please go ahead with your question. Please unmute your microphone, Mr. Devra. Yes.
Darshan Devra
Yeah. Thank you for the opportunity. And firstly, congratulations to the team for a great performance especially with disbursement as well as controlling the credit costs. My first question was regarding the disbursements. What percentage of our disbursements would have come from DSAs versus sourced internally by own team?
Yashpal Gupta
We are balancing anywhere between 50, 50% between the both. A month it may be 45, 55. The other month it would be 55, 45. But on average we are 5050 as of now. So just to understand, like say if I had to compare this with the same quarter last year like Q3, FY25, what would that split been like? I want to understand that. Say.
Yashpal Gupta
Last year it was 35, 65. Now we are at 50 50.
Darshan Devra
So 35 in the favor of DSAs last year.
Yashpal Gupta
Correct? You are right.
Darshan Devra
Okay, got it. So. So essentially a lot of our disbursement growth is coming with the impediment of DSAs that we have done this year. Basically.
Yashpal Gupta
Also. Also from them. Yes, sorry, yeah. They have also contributed to the growth. It is not that they have only done the growth. They’ve also contributed to the growth.
Darshan Devra
Yes, Any, any growth rate you can give us for the internally sourced disbursement. Like what would that be versus like.
Yashpal Gupta
If you’re saying out of my growth. As I said it is 50, 50, 50 growth has come from my own internal sourcing. That is I have now I have my BSMs and DSTs and 50% has come from my DSA sourcing channels.
Darshan Devra
Got it. And my second question is, assuming we hit the 16,200 and we are able to do this 5,000 disbursement next year. So essentially we could be looking at something like 18,000 for FY27. Right. Give or take in terms of our exit AUM in FY27.
Yashpal Gupta
Approximate.
Darshan Devra
Okay. And last, just one suggestion. You know, so obviously I think the real, you know, the real fruit of, you know, all the, all the efforts the management is putting in would really start coming when the AUM growth starts exceeding the roe. You know, we start consuming capital in our business versus accreting capital. So, you know, again, congratulations on a great disbursement figure. I hope you’re able to keep it up and hope you’re able to cross a disbursement figure which exceeds our roe. So then we can actually start growing our roe, start levering up the business again.
Yashpal Gupta
Yeah, sure.
operator
Thank you so much. We’ll take our next question from the line of Varun Dubey of Share India Securities. Please go ahead.
Varun Dubey
Okay. Thank you, sir. And congratulations on the good set of numbers. Just wanted to understand one thing. I mean your company has got an approval, you know, to acquire assets. And I remember last quarter the company saying that it would acquire some assets going forward in Q4 which would actually add to a little FY20 as well. So any update on the same? And this 5,000 crores of disbursement that you’re eyeing for 27, does it include that acquired asset as well? Can you throw some light on that? Yes, that transactions. Yes. We are discussing with a few companies, bank and NBFCs.
Now the matter, the matter is asset mix, what kind of assets we can take. 80, 28 is a home loan, 20 is the home equity loan. What price. And all for the sake of growth, for the sake of disbursement growth, for the sake of AM growth. We will not land into trouble in the form of taking a bad loan from other companies. We will be very cautious. Yes. We are discussing with leading companies if their, I mean their loans match with our credit policies, their rates match with our expectations. Yes, we will acquire. Some of the discussions are in advanced stage.
Most probably. I will give further updates in next quarter. Coming to the second question. 5000 crores disbursement. Yes. Which is inclusive of some portion of DA transactions also.
Yashpal Gupta
Okay. Okay. Okay. So even without acquiring the assets in Q4, you will reach the 6,000 16,200 crores AGM target. Right? Yeah. That is how we have planned. That is how we have planned. But if at all it comes in, it adds to our efforts.
Varun Dubey
Okay. Understood, sir. Thank you, sir. Thank you for taking my question, sir. And Best of all for the future. Thanks. Thank you.
operator
Thank you. Our next question is coming in from the line of Anand Mundra of Sore Wealth. Please go ahead.
Anand Mundra
Good evening sir. Congratulations on good results. Sir, I have two questions. So what was our BT out this quarter? Sir.
Yashpal Gupta
The video has been at the same rate. It has been at 36 crores this quarter also. And our btins have improved. So we are almost at the same stage. It is in similar with the last quarter. We have not experienced any kind of change in the principal rundown. Including btouts it’s almost any numbers.
Anand Mundra
Any number which you can give BT.
Yashpal Gupta
Out is almost on an average it’s about 30 crores. BTout is 30 crores BT in is about close to 150. 150 crores for the entire quarter. So net in net we are gaining. We gained.
Anand Mundra
BT out is only 30 crores.
Yashpal Gupta
I’m talking about 30 crores is a per month.
Anand Mundra
Per month. Okay.
Yashpal Gupta
Yeah. So water it’s about 90 crores on the BT outside. BT inside is about 150 crores. From 1st October to 31st December. So net in net it’s a gain of about 60 crores.
Anand Mundra
Sir, what is the reason for higher OPEX expenses on quarter? On quarter basis 26 crore has become 32 crores.
Yashpal Gupta
You know well that last two years we opened around 30 to 30, 32 branches. All the branches are now the stabilized. The running cost will be added to OPEX. And last quarter I said this is a 2020 fifth year for us. We have spent honoring long our employees. Those who have put up long services in company. They contributed the growth of the company. They be honored by giving a gift and incentives. Quarter on quarter. If you look at our numbers, quarter on quarter, our disbursements are logging sanctions. Disbursements are going up for which we have to incur substantial expenditure.
Like taking a legal opinion, taking evaluation fee, taking checking his credentials. Whether we’ll fit for loan or those things which need which all the things which all the things are cost involved. Second thing, if you look at recoveries, this quarter alone we have done a 25 crores reduction in NPA. We have seen a reduction in stage two assets. Also to crack old NP accounts we have taken a lot of legal actions. We have issued surface notices. We have issued legal notices. All those things will involve cost. So that because of that all those things. These are multiple item, not a single item.
Because of all multiple items, our apex operating cost is gone up. If you ask me whether we got an entire benefit of the Increase in the expenditure or not? Yes. Going forward you can see the benefit of the expenditure. Our cost to income ratio will improve going forward.
Anand Mundra
So does this include SIR DSA payouts also or that is captured separately?
Yashpal Gupta
Yeah, that. That is also. That is also that you rightly said that is also cost.
Anand Mundra
Okay. Okay. And sir, with respect to our geographical mix, Karnataka and AP are not growing as compared to other geography. Any thoughts on that, sir?
Yashpal Gupta
Yes, sir. Karnataka, we wanted to grow faster but we were not able to do so because E KATA has yet to be resolved in full. Though we are able to maintain our books there and maintain our disbursement levels there. Growing a bit faster is now becoming a problem there because of Ikata. But I think by March the Ikata issue should get sorted out. That is what is the feelings that I’m getting from the ground. So maybe, maybe post that my Karnataka should be doing good. They are going steady next year they should start increasing their percentage of contribution.
That is that. That is what we are planning, sir.
Anand Mundra
Okay. Any update on credit rating upgrade? Because we have started.
operator
Mr. Mundra, sorry. Sorry to interrupt. We are actually restricting to two questions each participants.
Anand Mundra
Was just one comment, sir. Sir, congratulations on good results and also taking the note on dividend and declaring quarterly dividends. Thank you sir. Thanks so much.
Yashpal Gupta
Thank you sir.
Anand Mundra
Thank you.
operator
Thank you so much. We’ll take our next question from Akash Jain of Money Curves Analytics. Please go ahead with your question.
Akash Jain
Yeah, thank you. Sir. I’m apologies for being a little late on the call. There was back to back calls and that is why I joined late. And maybe the question I’m asking has already been answered. So apologies up front for this. Sir, I have two questions. One is obviously we have had great disbursement growth in this quarter. But I think because of our rundown on the legacy book, I think it is not translating to good AUM growth. So I just want to understand when you look at your book today, when do you start seeing this disbursement really kicking in on AUM growth? And when do you see the legacy book impact of that legacy book rundown in the base? So that is the first question, sir.
The second question I think the previous participants anyway asked about the other opex. I also wanted to ask about employee cost. So employee cost has also gone up substantially this quarter and it has been going on for the last two quarters up. So any comments on what is the reason for that please?
Yashpal Gupta
Yeah, last question. I answer first. Yes, if you look at employee cost, it’s slightly gone up Our September employee cost was about 34 crores. Now it was as end of the December it was 42 crores. You know well that the labor code has enacted with effective November 2025. We have done, we have taken as for the labor Code we have to make adequate provision in for leave and terminal benefits. Funds like leave and cashmere, graduate etc. Etc. We have given the data to our actual value valuer. They have evalued and we got numbers based on that.
We have made a provisions for leave and catchment and graduate to the extent of 4 crores. Of course 5 crores. Close to about 5 crores for leave and catchment and graduity on account of labor code implementations. That is a 4 crores is a one off event. And we now in general we used to take a standard insurance policy for all our employees with the minimum benefits. We thought of upgrading to a 1 level above policy for which we paid a extra premium. The benefit will be more which is which cost additional cost of about 1.6 crores to the extent of 1.6 crores as 1.7 crores premium.
We paid X stock compared with the last financial year. And if you see. If you look at performance, yes, our disbursements are month on month increasing, logins are increasing, sanctions are going up. And if you see the NPA NPAs, we have done a reduction, substantial reduction to the extent of 25 crores in the current quarter. All those things happen with the help of our team. We should honor our team members, staff members for which we have paid an incentive in the current quarter, which is also cost. Which is also. These are the multiple reasons our employee cost has gone up in the current quarter.
See on the. On your first part of the question of what is the disbursement level that we should reach to grow faster. As I already said, my monthly runoff is anywhere between 170 to 200 crores. So anything more and above what I disperse adds to my book. So as long as I keep Disposing more than 400 to 500 crores around, my book should grow faster. But the legacy issue will continue because we being a 25 year old company, the loan keeps getting matured every year. So we cannot help it. So that legacy book effect will always be there, maybe to a lesser extent when I start doing higher disbursements.
Believe I have answered you.
Akash Jain
Yeah.
Yashpal Gupta
If you look at. Even if you look at our principal rundown rate quarter and quarter almost similar. If you look at principal rundown date in the December quarter end as well as September quarter end it’s almost similar. It’s not going up. That’s comforts we are having.
Akash Jain
Got it sir. Thank you so much sir.
operator
Thank you so much. We’ll take a last question from the line of Samir ah of Vidura Capital. Please go ahead with your question.
Samir ah
Hello, can you hear me?
Yashpal Gupta
Yes please. Yeah, yeah.
Samir ah
Thank you sir. And congratulations again for, for good performance in terms of AUM and NPA trajectory etc. Sir, you know the performance is in line with your guidance. Once again congratulations sir. My question is while we seem to be doing well from short term and medium term perspective in terms of aum, profitability will follow I’m sure because there is a lot of investment happening which is showing up higher opex. Sir, my observation is more regarding the longer term, especially with one, you know, deal development that I wanted to bring to your notice which you may already be aware.
There is a company called Easy Home Finance which raised about $35 million Series C, you know, so we try to study that company a little bit sir. You know it’s a tech driven home loan company, about nine, eight to nine year old company. You know their USP is, you know, kind of leveraging technology for superior origination of home loans and faster turnaround time and even on collections they seem to be using technology and they call themselves a paperless mortgage, you know, company, I mean home loan company, paperless. While we have our huge advantages as compared to new age home loan companies because our borrowing costs are low, we are more established and you know we have, we can leverage very well on our equity, etc.
But, but just you know, one question sir. In terms of what work we are doing both on leveraging technology, both on origination as well as even on collections. Because there are a lot of interesting fintech companies sir, which are, you know, helping even larger private sector banks with respect to their collections. They are also getting lot of VC funding which means they must be doing something right. So can we use, you know, some of those fintech collection companies to bring down our stage two etc. Just I am placing a thought sir, because you are better placed.
You may already be exploring and studying what is happening in the market because tech is changing so much in every sector. So I thought I will just bring this to your kind attention and seek your inputs and guidance on how we as shareholders should evaluate vis a vis these developments.
Yashpal Gupta
Yeah, on the technology side of it, as you rightly said, EC Home is doing a lot on that area. But due to my customer profile that Is I don’t target a prime customer. For me the a bulk of my customer is either cash lead that is blue collar job or they are a no income group customer. So where touch and feel of the customer is very very critical for my risk assessment. So yes I can use technology but not to the 100% extent as what the others are doing on a prime housing loan kind of thing because there it is a very low profile solid customers so it is very easy to assess.
But for me because of the clients or the customer segment that we have chosen it may not be feasible for US to go 100% technology. On the sourcing side of it we are trying to incorporate a lot of technology driven APIs for verifying and checking the customer credentials. But still yes a personal discussion and the touch and feel of the customer is very very critical for my risk assessment that is on the sourcing side of it. On the collection side. Yes we have done a lot on using technology. Maybe I will ask Mr. Bhai to take it on the technology side for collections.
Yeah. As of now we are having a team collection team of our own employees. As of now they are doing well. On top of that we have. We have what you call. We have introduced a mobile app in a company for activities like collections, field investigations and sourcing. All those things technology side a lot of developments has happened last one to one and a half years. We have revamped the entire IT system. We are trying for end to end solutions. All those things are in place. Yes. Yes. You have advisors we have take a note of. Thank you sir.
operator
Thank you so much. Ladies and gentlemen. Due to paucity of time we will take that as the last question for today. I now hand it over to the management team for their closing remarks. Over to you.
Yashpal Gupta
Yeah. Yes. We thank each and every one of you for showing interest in our company growth story. I believe and hope we have answered all your questions with your satisfactory anything is need other clarifications need we are ready to address I think by offline. Thank you. Thank you for your participations, active participations, the phone call.
operator
Thank you so much on behalf of VS Securities Ltd. That concludes today’s conference call. Thank you for joining us and you can click on the leave icon now to exit the meeting. Thank you all for your participation.