SBFC Finance Ltd (NSE: SBFC) Q3 2025 Earnings Call dated Jan. 27, 2025
Corporate Participants:
Aseem Dhru — Managing Director and Chief Executive Officer
Narayan Barasia — Chief Finance Officer
Mahesh Dayani — Chief Business Officer
Analysts:
Renish Bhuva — Analyst
Nischint Chawathe — Analyst
Mayank Mistry — Analyst
Anirudh — Analyst
Himanshu Taluja — Analyst
Shailesh Kanani — Analyst
Kunal Shah — Analyst
Unidentified Participant
Chintan Shah — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to SBFC Finance Limited Q3 FY ’25 Earnings Conference Call hosted by ICICI Securities Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing the star then zero on your touchstone phone.
I now hand the conference over to Mr. Renish Bhuva from ICICI Securities Limited. Thank you, and over to you, sir.
Renish Bhuva — Analyst
Yeah. Thank you, Steve. Good morning, everyone. Welcome to SBFC Q3 FY ’25 earnings call. On behalf of ICICI Securities, I would like to thank SBFC management team for giving us the opportunity to host this call.
Today, we have with us the entire top management team of SBFC represented by Mr. Aseem Dhru, Managing Director and CEO, Mr. Mahesh Dayani, Chief Business Officer, Mr. Narayan Barasia, Chief Finance Officer, Mr. Pankaj, Chief Risk Officer, and Mr. Sanket Agrawal, Chief Strategy Officer and IR.
I will now hand over the call to Mr. Aseem for opening remarks and then we’ll open the floor for Q&A. Over to you, sir.
Aseem Dhru — Managing Director and Chief Executive Officer
Good morning, and thank you. Thank you for the time this early-morning. Since our road shows and in every quarterly call, thereafter, our guidance has been growth at 5% to 7% quarter-on-quarter, a cost-reduction of 50 basis-points year-on-year and credit cost in the region of 80 basis to 100 basis-points. If we compare our December ’24 to that of December ’23 because the longest period to give you a full idea and then I’ll talk about the quarter.
December ’24 to that of December ’23, our AUM has grown by 30% year-on-year, while core operating profit has grown much faster by 38% year-on-year. This was aided by increased operating efficiency because we have reduced our cost-to-income ratio from 45% to 40%. So overall, against an indicated 50 basis-point reduction for the year in nine months, we have delivered about 68 basis-points. As we continue to invest in growth, our costs will be stable this quarter and we will aim for a further reduction of 50 basis-points in the coming year. In a rising interest-rate environment, our cost of funds have reduced by 3 basis-points year-on-year, keeping our NIM steady at 10.26%.
The ROA has expanded from 4.31% to 4.49% despite increase in leverage from 1.5 times debt-equity to 1.84 times debt-to-equity. Credit costs have inched up from 83 basis-points to 97 basis-points during the year. ROEs have expanded by a full 200 basis-points from 10.77% to 12.77%. In terms of quarter-on-quarter, we have grown with our guided — within our guided range at 6% with core operating profit also growing at 6%. Quarter-on-quarter yields have further expanded by 12 basis-points to 17.81% and with stable cost of funds, we have increased our spread to 8.43%.
Credit cost marginally down quarter-on-quarter to 897 basis-points and a flat cost-to-income ratio quarter-on-quarter. Our bank finance is about 60% of our total liabilities. And as the year goes by, over the next financial year, this number will come to under 50%. In April ’24 call, we had called out that we would see the tides of the economy, tightening liquidity and rising consumer leverage and that the year is going to be a challenge on three fronts: growth, NIMs and credit quality. The same was restated in the July and October calls too.
When we — when we called it out, we were the canary in the coal mine alone wise. Now slowing consumption and elevated consumer leverage is common commentary and profitable discussions. We are still a small company and to that extent, the size of the economy and growth does not matter. We stay focused on execution and navigating the currents we find ourselves in. A year back, I said that the industry is too optimistic. Today, I say it has become too pessimistic. The truth is always somewhere in the metal. We continue with our guidance of 5% to 7% quarter-on-quarter growth, annual reduction of operating costs by 50 basis-points and credit costs at the higher-end of our guided range of 80 to 100 basis-points. As always, we remain cautiously optimistic.
With that, I hand it over to Narayan.
Narayan Barasia — Chief Finance Officer
Thank you, Aseem. Hi, good morning, everyone thank you. Good morning everyone thank you. Our AUM for December ’24 is INR8,148 crores with a growth of 30% on a Y-o-Y basis and 6% on a Q-o-Q basis with 99% of our book being secured by properties and gold. This growth is in-line with our guidance even earlier. We added about five branch during this quarter and the total branch count now stands at 197 as of 31st December 2024. Our borrowing cost has remained stable at 9.31% given the stress in the liquidity in the market, this is a good achievement. The yield and the spreads continue to remain stable at 17.81% and 8.5% respectively for the quarter. Our opex continued to reduce and is at 4.62% for the quarter due to improved operating leverage, which is again in-line with our guidance of reducing opex as a percentage of AUM.
Our return on average AUM for the quarter is 4.49% with the return on average equity further improving to 12.75%. In terms of asset quality, our GNPA remained stable on a Q-o-Q basis at 2.7%. Our 1 plus DPD portfolio for secured MSME increased marginally to 6.52%. Our credit cost is at 0.97% for the quarter, again in-line with the guidance. We remain healthy at a PCR of 40.2% as of December 2024. In terms of capital and return ratio, our capital adequacy ratio is at 38.4%. Tangible net-worth is INR2,820 crores as of December ’24. We made profit of INR88 crore for the quarter. They were reporting a profit growth of 38% on a Y-o-Y basis and 5% on a Q-o-Q basis. Our nine months profit for the year exceeded the 12-month profit of FY ’24.
With this, we open the floor for questions.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and 1 on your touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Thank you. The first question is from the line of Nischint Chawathe from Kotak Institutional Equities. Please go-ahead.
Nischint Chawathe
Hi. Two, three questions from my side. One is you kind of said that your yield on loans has gone up marginally maybe around 12 basis-points quarter-on-quarter. So just curious what is driving it, whether there is a change in the lending rates or you know, the mix or what is it? And the second one is on gold loans. Your book is sort of flattish or probably gone down a little bit this quarter, despite the fact that there are fair amount of tailwinds for gold load companies.
Mahesh Dayani
Hi, Mahesh here. So responding to your first question on the yield, so in the mix, the ME yields have largely been stable. So the bump-up that you see in the yields is largely on account of gold, which has come in. So the yields on the gold portfolio have moved up at a consolidated level, the 12 13 basis-points increase that you see is largely contributed from gold. That’s one. Second, I guess quarter three, the growth in gold was relatively lower. Obviously, it was coming off from a higher base in Q2 and Q1. But the run-rate that’s been there in Q3, we expect that the same momentum of that run-rate is going to continue in-quarter four without compromising on the yields.
Nischint Chawathe
Sure. Just extending the — the first question, what is your view on the pricing environment at this point of time? Do you see with whatever is happening around, do you really see the rates going up or given the fact that we are kind of probably looking at a rate cut in the near-future, would you kind of expect the rates to go down? We have seen competition tightening rates a little bit, so.
Mahesh Dayani
So I don’t think the rates specifically on the gold are going to go up from where they are. The range is anything between 18 to 21%. So I guess that’s going to be extremely range-bound. So there is very limited room that’s going to be available to increase the pricing there. Maybe on the lower-end where probably the yields are in the range of 11% 12% or 13-odd percent, maybe there’s going to be some movement there. But the ones which are already priced in and fully priced in, I guess there’s going to be very little headroom available.
Nischint Chawathe
So on the MSME side?
Mahesh Dayani
On the MSME side, I guess we’ll be largely stable. I don’t think that there is opportunity to increase or up beyond from what we are already charging.
Nischint Chawathe
Sure. And just one last one, if I can squeeze in. I believe you have been sort of tightening your screens and so do we see the process further continuing or do you think we are now done? And in that sense, maybe on a — on a sequential or probably maybe on an annual basis, we’ll start seeing disbursements growth kind of leaping up from here on.
Mahesh Dayani
So I would say that we’ve — so you’re right, we’ve further tightened the screens. And as we reiterated in the last call that obviously the log into disbursal numbers have been impacted because of it. But that’s what we see on-the-ground where on account of higher leverage, probably we’re not able to underwrite as much as we could. We expect this to continue and probably we’ll be watchful for at least a quarter more before we slightly open the gate.
Nischint Chawathe
Sure. And just sorry, just last one, since you mentioned this, when you say higher leverage, a, how do you look at it if you could kind of give some data point or a portfolio cut on how you have looked at high leverage and where you have really cut the…
Mahesh Dayani
Yeah. So Nikhil, so our customers largely borrow a — against their property. So these are largely driven by institutions who lend to them against the property. But there are only one odd loans are probably at two. What we meant is that the amount that they have already borrowed with in addition to the secured is a little too high, which impact their or their repayment capacity. So if we’re not very comfortable on the amount that an individual is seeking that then we try and stay away because we feel that he is not going to be in a position to probably service the loans in the near-future.
So that’s a cautious call, that’s a pretty guarded call that we’ve taken. And this is something that probably we initiated almost three, four quarters back and that probably also explains why the disbursals have been slowly inching up despite the opportunity still existing. So we feel that we will probably wait for at least a quarter more before we actually go back and revisit the underwriting.
Nischint Chawathe
So quantitatively it means that you brought down your or something?
Aseem Dhru
Yes.
Mahesh Dayani
Yes.
Nischint Chawathe
Okay. Got it. Thank you very much and all the best.
Mahesh Dayani
Thanks.
Operator
Thank you. Participants who wish to ask a question may press star and one ladies and gentlemen, if you wish to ask a question to the management, you may press star and 1 at this time you. The next question is from the line of Renish Bhuva from ICICI Securities. Please go-ahead.
Renish Bhuva
Yeah, hi, sir. Sir, my question is on the, let’s say, the current scenario in the small-ticket lab segment. So of course, you will be the first one to highlight that there are some sort of stress building up or maybe our customers are going through some sort of seasonal cash-flow mismatch. So sir, where do we stand-in terms of that cycle? Do you feel that things have started improving or it’s too early to call that we are at the, let’s say, pick the cycle.
Aseem Dhru
See, this is not — I mean, these are economic wins. They move, they move the way they move. It is not about that all customers are in trouble or that there is a major crisis. It is just that a certain segment of customers have got overfunded by the industry where and those are the problems that are coming home to rose. So at the very lower-end of the spectrum, we are seeing the problem the highest. So when you are going at the lowest end of lending, that’s when we are seeing the problem highest, which is why we have not gone below those ticket sizes of lending yet. And the — at the middle segment, you would be watchful. There is nothing — nothing dramatically that is changing. We are financing bread-and-butter businesses. We are not financing manufacturing, we’re not financing any exotic businesses. These are trade and services basic B2C businesses. So you have to go it borrower by borrower.
So there are equal number of good borrowers, but there are also some borrowers where — so it’s the marginal increase that is actually what can cause the concern. So I mean in 100, you make two mistakes, it’s okay. If you make five mistakes, then that becomes a lot. So those additional three is where the problem is. So you just have to be watchful, nothing — nothing dramatically different. These cycles keep coming and one has seen many, many cycles come and go. You just have to do the right thing and watch your watch the wins and play accordingly.
Renish Bhuva
Got it, got it. So nothing alarming as of now at least in terms of cycle.
Aseem Dhru
Now you see the problem is this only that we get either too enthusiastic or we get too pessimistic. This is our problem as a nation. We are emotional people and also 3/4 back, I had a problem telling anybody that there is a problem, nobody wanted to hear it. And now everybody has gone the other extreme saying the whole world is coming to an end. I said what cycle, I have cycle guy. You have to keep playing your game. And some damage will come and you will take the damage and move on. And as long as you are delivering a profitable outcome, it’s par for course.
Renish Bhuva
Got it, sir. Got it. And maybe just a bookkeeping question. So credit cost assumption, et-cetera will remain intact, right, sir.
Aseem Dhru
We are not changing any guidance.
Renish Bhuva
Got it, sir. Yeah, that’s it from my side. Thank you, sir.
Operator
Thank you. Ladies and gentlemen, if you wish to ask a question, you may press star and 1. The next question is from the line of Mayank Mistry from JM Financial. Please go-ahead.
Mayank Mistry
Hi, sir. Sir, I wanted to know what would be our floating-rate mix in the borrowing side? And secondly, I would like to know, I mean, since you have highlighted there are some of some of the stress building out in the small digital SME segment. So I would like to know whether this is specific to few regions, few — few geographies or this is like a pan-India situation that we are seeing.
Narayan Barasia
Let me answer your first question. So we don’t take interest-rate risk. On the asset side, we have all the assets which are variable floating-rate. So on the liability side also, 99% of our loans are on a floating-rate basis.
Mayank Mistry
Okay. And related to the geographical, I mean the stress, whether it is concentrated to few geographies or how is it — I mean, how are you seeing the trend?
Narayan Barasia
So there is no geographical concentration, some geographies here and that keep happening, but it’s a general credit cycle, we would say which you are watching and will manage it accordingly.
Mayank Mistry
Okay.
Operator
Does that answer your question, Mr. Mayank?
Mayank Mistry
Yes, yes. Thank you.
Operator
Thank you. The next question is from the line of Hrishikesh Thakker from ValueQuest Investment Advisors. Please go-ahead.
Anirudh
Yeah, thanks for the opportunity. Anirudh from ValueQuest. My first question was on the moderation in OpEx. So obviously, you’ve been achieving the opex moderation target that you called out earlier, but does that at some point have a correlation with growth? And do you believe that in the interim with the challenges that we’re seeing and this moderation in opex growth could slow-down in the medium-term, obviously, next quarter you retain your guidance, but in medium-term growth, is there some implication slowdown?
Aseem Dhru
So I think you know, as a company, we started with a significantly higher opex to begin with. And I think now is the time where probably you see it sliding down, but I think a couple of quarters back, the questions were as to why the opex was high. But thankfully, now the distribution is beginning to sweat and that’s how you see the opex moving down. What we’ve always guided is we will grow, we will consolidate and we will grow again. Our guidance on adding 25-odd branches in a year continues intact irrespective of the market, irrespective of the cycles. And that we feel is going to give you a good risk-adjusted return on an overall front. So if our guidance is anywhere between 5% to 7% growth on an AUM and to deliver the required ROE, I feel a lot of those investments have already done in and incrementally these investments will continue to trigger in.
The reason that you won’t see the significant uptick in opex is largely because most of the heavy-lifting on the high costs have already been done and they were done in upfront because you were laying distribution across the country in each of those states, which is extremely expensive. Now the incremental investments are more to do in scopes in smaller cities and in variable costs with respect to employees at the front-end. So you won’t see a significant opex getting added. So on a marginal costing basis, I feel that it’s going to be a lot more accretive and that’s the reason we said that we are more than confident of meeting our opex outcome without compromising on any of our AUM growth or credit cost outcomes.
Anirudh
Got it. Sir, my second question related to this was the new client addition in this quarter in particular seems to be slightly muted. Anything to read into that number?
Aseem Dhru
No, so let me just put some probably numbers in perspective. As we had mentioned earlier that we did tighten up our underwriting screens at the beginning of the year. So just to give you a sense that earlier if I was originating close to around 100 odd customers, 50 odd customers you would pass-through the door. Now that number has drop to roughly around, say, 45 or below. And that’s roughly a 5%, 6% impact.
We originate close to around 20,000 odd customers and out of which probably currently 7,500 pass-through the door, which is less than 40%. So if you just put your numbers and say that if you were to go back to our original numbers of efficiency of going back to 5% or 6%, that’s at 1,000-odd customers and average ticket size of INR10 lakhs is almost INR100 crores delta that you would otherwise get-in a quarter. So this we feel is a result of what is consciously by design being implemented at SBFC.
As and when we feel a little confident that the market is beginning to open up or probably the credit risk is beginning to get a lot better, we will accelerate. So I think the good part for us is that we have all our ammunition ready. We have the distribution, we have the people on-the-ground. It’s on us to decide how much do we want to accelerate without compromising on any of our other credit parameters.
Anirudh
Got it. Final question was on this other income line-item. So other income slowdown is on account of the slowdown in disbursements route or is there anything else?
Narayan Barasia
So the — there was a — so we have a business where we do a servicing to the — to institutions, there has been a slight slowdown in that income. So that is what we call LMS fee income, a slight slowdown there. Other than that, as a percentage of disbursement, percentage of AUM, all other numbers remain the same.
Anirudh
Got it. Thanks. Thanks a lot and all the best.
Operator
The next question is from the line of Nischint Chawathe from Kotak Institutional Equities. Please go-ahead.
Nischint Chawathe
Hi. This actually — sorry, this actually pertains to the liability side. What we can see is that there is a little bit of an inch up on liquid investments on-balance sheet over the last 1/4. Apart from that, what we can see is that the share of bank borrowings has actually been going up. You know is it kind of some reading that probably will be a little bit more you will probably be a little bit more cautious on liquidity at this point of time.
Narayan Barasia
Yes. So I’ll take this question. So listen, liquidity is certainly tied-in the market. But the good thing is and the MCLR is also going up. The good thing is we have been able to contain the cost of borrowing, right? We generally keep a liquidity buffer in a range. And so in September, it was slightly lower in December, slightly higher, but it is in still the same range where we maintain the liquidity. So liquid is actually not very-high. But yes, we continue to maintain a high liquidity given the tightness in the market.
To your next question, whether the bank borrowing is going up, actually, no. So we are diversifying a lot. For instance, in this financial year, we added — so if you compare the data versus March, you will actually realize the journey we are into in terms of diversification. We added a lot of money from NCD investors. We are now moving towards DFIs and you will very quickly hear that. So there is a diversification happening. As we go along more-and-more diversification will happen. But as of now, if you have to look at all the bank borrowings we have, it is almost about some 60-odd percent. Including the FCNBs, et-cetera, we borrow from the banking system.
Aseem Dhru
The nature in the liquidity day is the price of a good night.
Nischint Chawathe
That’s true. But you’re not kind of…
Aseem Dhru
Let us be there by…
Nischint Chawathe
Fair point. But you’re not seeing any tightness by any of the banks.
Aseem Dhru
We are sitting on a — on a large pipeline of approved credit, the problem is rate of interest. So it takes us longer to arrive at an acceptable rate of interest rather than absolute amount of liquidity.
Nischint Chawathe
Sure. And what would be the difference in your average…
Aseem Dhru
You guys keep needling the banks saying your net interest margin is falling, so then they keep needling us.
Nischint Chawathe
Sure, what is the difference in incremental and weighted-average cost of funds as we speak?
Narayan Barasia
So we are borrowing at the same average cost of borrowing what is there today. So our cost of borrowing, incremental cost of borrowing and the bidded average cost of borrowing remain the same. The idea that the challenge is to really hold this at this price. So that’s the reason you will see over the last 3/4, even though LCLRs, et-cetera would have gone up, the cost of borrowings remained the same or slightly coming down. So it is almost at the same level. Incremental cost borrowing is the same.
Aseem Dhru
But having said that, it’s going to be tough to hold.
Nischint Chawathe
Okay, with the MCLRs going up.
Aseem Dhru
Yeah, yeah.
Nischint Chawathe
Got it. Got it. Thank you very much.
Operator
The next question is from the line of Himanshu Taluja from Aditya Birla Sun Life. Please go-ahead.
Himanshu Taluja
Hi, sir. Thanks for thanks for the opportunity and congrats for the quarter in your elaborative commentary and at least showed our narrative of questions the optimistic stance as well. Sir, just few questions. Firstly, in this environment, what growth do you envisage for FY ’26 where you see that FY ’26 can head towards from a growth standpoint? Second, from an question, any particular sweet-spot in the ticket size where you are very comfortable to land in the current environment and which ticket size where you think that there is an increased delivery or any customer segment which is showing the vulnerability?
Also in this, if you can add, what is your thoughts because although you don’t do less than 5 lakh ticket size loans category, but any particular read-through for this ticket size, how that segment is behaving, less than 5 lakhs? And last — and last question and last question is around, what is your — when you expect to reach the path of the 15% ROE, return on tangible equity by when one — yeah, thanks. These are all my questions. Thank you.
Aseem Dhru
So from a growth perspective, you know, I think we don’t want to bore you, but nothing changes. We continue to maintain a 5% to 7% even for the coming year as well, irrespective of how the cycles move. And that’s a growth that we feel is comfortable both on dollar and sorry, sorry, sir. That’s something that we feel is comfortable both on our financial capital and human capital and will give us the required outcomes in terms of profitability. I think your second question was related to the sweet-spot on the ticket sizes. I think we lend out to customers who — where the pricing is anything between 12% to 21%, and that’s a large range of customers that we cover.
In the current context, I think it’s more to do between 11% to 17 is what probably we’re looking at. The lower-end or the extreme low tickets is something that we are extremely watchful for. So we stop pedaling that particular segment. But as and when the market tends to open up, then probably we are going to start expanding there. But you know, we’ve seen these cycles come in our professional careers over a longer period of time and nothing lasts forever. So I guess that it’s a quarter or a couple of quarters before it seasons in.
Himanshu Taluja
Sure. Sir, any particular read-through for less than 5 lakh tickets how that segment is behaving in the current times?
Aseem Dhru
That I don’t think we’ll be able to comment. That’s not our domain. So we would have very little commentary to talk about that particular market.
Himanshu Taluja
Sure, sure, sure. Sure. And lastly on…
Aseem Dhru
Yeah. 15% ROE is what your question was. So what we are looking at is the last quarter of next financial year or the first-quarter subsequent to that is where we will land at a 15% ROE aware of us.
Himanshu Taluja
Sorry, I missed out. Sorry, I missed out.
Aseem Dhru
The last quarter of next financial year.
Himanshu Taluja
Clear. Sure. Thanks a lot, sir.
Operator
Thank you. The next question is from the line of Shailesh Kanani from Centrum Broking. Please go-ahead.
Shailesh Kanani
Good morning, sir, and thanks for the opportunity. So given the current situation and tightness in liquidity, how do we see evolving competitive landscape in MSME Financing? Has it been lower? And since we are at a strong footing vis-a-vis our peers, are we thinking to push our growth more and increase the market-share. Anything on that front, sir?
Aseem Dhru
Strategies don’t change as far as what the wind changes. So we are doing nothing new. We are doing nothing different. We will keep doing what we are doing, the same ticket size, the same customer segment and they’re growing at the same pace of growth. So there is enough for us to do right there. We have enough challenges. There is also going to be a challenge to both maintain the profitability as well as maintain the credit quality. We have enough challenges. We will try our best to meet those challenges. There is nothing new that we would wish to do at this point of time. We just wish to keep steady, we have to deliver better cost efficiencies. We have to deliver — we still have a long road to get to where we wish to see the organization at. We are still an early sales organization. We’re just not even seven years old. We have a long path and we have to work hard to get to that part. So nothing — there is no great change. We will keep doing what we are doing and hopefully, keep getting better at it with time.
Shailesh Kanani
And any color on competition? Has it kind of subsided? How it is?
Aseem Dhru
No, competition is always there. The shape and form keeps changing. Sometimes some players get active, sometimes some players cool off. So competition in India is always there, and that’s a segment that we are doing. Technically, in financial services, there is no moat in any segment. So all players end up doing everything. It is just that the beauty of financial services is that everybody does the same thing, but they don’t get the same results. So we have to just focus on our execution. And if we execute it right, we’ll get the results. If we don’t execute it right, we’ll not get the results. Competition doesn’t matter. We don’t need competition really in the field as much. It is more a conceptual than thinking on Excel sheet. The reality is that we have to work harder to execute well on the ground. That’s what our job is, and that’s what we’ll stay focused on.
Shailesh Kanani
Fair enough. You, I think — answers my next question, but still, any plans to enter into any other segment or increase the ticket size as of now it doesn’t seem like, right?
Aseem Dhru
No.
Shailesh Kanani
Okay, sir, that’s all from my side. Thanks a lot, sir. Best of luck.
Aseem Dhru
There’s nothing really exciting that we have to say. We would hope to continue on our boring journey.
Shailesh Kanani
Best of luck, sir.
Operator
A reminder to all participants that you may press star and one to ask a question. The next question is from the line of Kunal Shah from Citigroup. Please go ahead.
Kunal Shah
Yeah. Hi. So I joined the call late, so sorry if I’m being repetitive, but just one thing in terms of any of the segments wherein you would have made the credit filters slightly stronger, no doubt it’s evolving based on the macro and the operating environment. But any changes either on the credit side, on the underwriting side, on the collection side that you would have — maybe you would have done over past three to six months looking at the environment? Yeah.
Narayan Barasia
Yeah. So last two, three quarters we actually, we’ve been little more cautious. Some underwriting parameters which we can specifically say, but some underwriting parameters we have tightened around the eligibility and the onboarding, so that we can take care of some of the emerging aspects which — including the leverage aspect. So parameters around that we have become a little more cautious.
Kunal Shah
And should that reflect in terms of the overall approval rates, what we are disposing and the files which we are evaluating or logging in? So is it like very well reflective of that? And would it mean that maybe either we need to strive more to get a similar disbursement run rate or maybe we should be satisfied with a slightly lower growth?
Aseem Dhru
Yeah. Hi, Kunal. So I guess if I were to summarize the last three quarters, I think we did two, three things at the beginning of the financial year when we announced that we could probably see the orange light or the green turning into orange One was largely on the credit filter that Pankaj articulated. Then there were certain geographies that we had paused in some of the markets where we saw that the overall delinquencies was moving up independent of the SBFC’s portfolio behavior. So that’s something that we paused. Third, I guess we invested…
Kunal Shah
These geographies would be…
Aseem Dhru
There’s one state in the East and one state in North. And you know, in some of these markets we’ve decided to go a little slow. Also in terms of our collections infrastructure is something what we strengthened during the course of the year. So that was — these were the conscious investments that we made. What I can tell you is from an overall login perspective, the logins obviously is a lot higher. As I had reiterated earlier I’m not too sure whether you were there in the call then, but I was just giving a perspective that obviously what we were logging in earlier and what is going through the door is probably 6% to 7% less. So if we’re originating close to around 20,000 applications in a quarter, a 6% is roughly around, say, 1,200, around 1,000 to 1,200. So that’s the delta of almost INR100 crores to INR120 crores in a quarter. That’s something that we feel could have been accommodated. We could have done it.
But given the market, we’re trying to leave that on the table which is on account of either we feel the leverage is a little too high or the pricing probably is not to the effect that we would want. These are the kind of cycles where we feel that we’ve seen that in the past come through. But it’s just a matter of a couple of quarters here or there before it just comes back to normal. What we remain committed is that we remain committed to investing in the businesses, investing in the distribution. As far as the catch up to where probably the original metrics were is just a matter of time. Having said that, we are not changing any of the guidance. Our guidance for growth continues to be intact irrespective of the cycles and irrespective of the outcomes that you see.
Kunal Shah
Okay. And despite this, I think there are enough levers on the opex efficiency side, productivity side, wherein we are not worried even in terms of opex. I think on the earlier question you answered that still you seem to be confident in terms of the cost ratios. So when we are seeing these investments being slightly stringent, I would say like more volumes getting into the logins but not getting approved, still not impacting the cost ratios as such.
Aseem Dhru
On a variable cost structure, part of that is funded. So that’s not so much, you know going to have a bearing on the overall structure. As I’d also covered earlier in the call that most of the heavy fixed costs have already been accounted for are already penciled in. Incremental costs are very, very marginal which will literally have no bearing on the overall cost structure.
Kunal Shah
Okay. And proportion of fixed vis-a-vis a variable in the overall cost would be.
Narayan Barasia
You’re talking about the opex?
Kunal Shah
Yeah, opex. Yeah.
Narayan Barasia
So largely everything is fixed, right. Because the rentals and the salaries etc. of its nature. Also in a way it is variable because every front end team gives us incremental business. So for instance when we added five branch in a way that five — the cost of five branch is variable to the extent that this five branch would give us more business, right. So in a way everything is fixed, but yes, it’s variable because it’s about productivity at the end of the day.
Kunal Shah
Okay. Okay. Yeah. Thank you.
Operator
Thank you. The next question is from the line of Shweta from Elara. Please go ahead.
Unidentified Participant
Thank you sir for the opportunity. Sorry even I joined late so this might be a repeat question. So you mentioned that this range now at least in near to medium term would be around 11% to 17% as against 20% plus on the higher side earlier. So do we change our credit cost targets going forward? Like do you — now do you see the agreeable range could be closer to 1% or higher one in the near term given the glitches currently in the system and two across cycles. Thank you.
Aseem Dhru
So what we’ve maintained on our credit cost outcomes is being 80 basis points to 100 basis points. In the current cycle, we’ve been guiding that it’s going to be towards the higher end, could be probably a 10 basis point here or there. But given the current cycle that we are in, we’ve adjusted our origination also accordingly. If we were not to adjust the origination accordingly, then probably these credit outcomes were difficult to achieve.
When I maintained that your — our range is anything between 11% to 17% is what we are currently focusing on, but your credit cost is on your overall portfolio. So currently, what we originate, the color of that portfolio comes in only with a lag. So it’s a little difficult for us to juxtapose the credit cost in the next quarter versus what we are originating currently. So — but what we’re currently doing is within — will help us to be within a guided range of what we’ve been projecting of 80 basis points to 100 basis points.
Unidentified Participant
Sure, that helps. Thank you.
Operator
Thank you. The next question is from the line of Chintan Shah from ICICI Securities. Please go-ahead.
Chintan Shah
Yes, sir. Thank you for the opportunity and congratulations on the quarter. So sir, so just as we mentioned, we have tightened the underwriting standard at the beginning of the year. So probably would there be a case of relaxing the same and how far that would be as of now? So what could be the triggers for relaxing those standards? So any thoughts there? Yeah.
Aseem Dhru
I think a little too early for us to say that we are going to be relaxing any of those parameters. The current trend, what we are seeing doesn’t seem to suggest that it’s time as yet. So what we are going to be doing is going to be watching for another quarter before we revisit any of those filters that we’ve implemented.
Chintan Shah
Sure okay. Okay, sure. So the main parameter would be the consumer leverage part. So if that probably cools down a little bit, then there could be some relaxation. Is that correct or not?
Aseem Dhru
Yeah, I think there are multiple things you could have a customer where the civil score is upwards of 700, but we feel that the leverage is high, the inquiries are high. The LTV is probably not to the acceptable level that we would want. I mean, there are multiple variables that go in before we actually take a call on the customer. So currently, we’d like to hold-on to whatever filters that we’ve done it. Maybe at the end of probably or probably the next quarter call, we can give you an update as to how comfortable we are. But currently, the status quo remains.
Chintan Shah
Sure, sure. And also secondly, so once as you told the market opens up probably we could further accelerate on the growth momentum. So could there be a case also for 8% to 10% Q-o-Q growth for some quarters or we would restrict ourselves to 5% to 7%.
Aseem Dhru
We will, as of now commit ourselves to 5% to 7%. We will see how the probably the market opens up, probably at that point of time, we can be in a better position to comment on it. But as of now, as what we see, our guidance remains the same.
Chintan Shah
Sure, sir. But in case the market opens up to probably one, two quarters down the line, if we relax or also underwriting, that would be a case for even higher-growth than the guided one, right?
Aseem Dhru
Could be, but I’m not going to fall in for that as of now.
Chintan Shah
Sure, sir, sir. Fair enough. Yeah, thank you, sir. That’s it from my side and all the best. Thank you.
Operator
Thank you. As there are no further questions from the participants, I now hand the conference over to the management for their closing comments.
Narayan Barasia
So thank you. Thank you. That’s it from our side.
Operator
On behalf of ICICI Securities Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.