SBFC Finance Ltd (NSE: SBFC) Q4 2025 Earnings Call dated Apr. 28, 2025
Corporate Participants:
Aseem Dhru — Managing Director and Chief Executive Officer
Narayan Barasia — Chief Finance Officer
Mahesh Dayani — Chief Business Officer
Pankaj Poddar — Chief Risk Officer
Analysts:
Renish Bhuva — Analyst
Nischint Chawathe — Analyst
Devesh Kayal — Analyst
Shreya Shivani — Analyst
Kamal Mulchandani — Analyst
Kunal Shah — Analyst
Satish Kumar — Analyst
Mayank Mistry — Analyst
Vignesh Iyer — Analyst
Harshit Toshniwal — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the SBFC Finance Limited Q4 FY ’25 Earnings Conference Call, hosted by ICICI Securities. As a reminder, all participant lines will be in listen-only mode and there will be an opportunity for you to ask question after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing start and zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr Renish from ICICI Securities. Thank you and over to you, sir.
Renish Bhuva — Analyst
Yeah. Thank you, Sanjesh. Hi, good morning, everyone, and welcome to HDFC Finance Q4 FY ’25 earnings call. On behalf of ICICI Securities, I would like to thank every finance management team for giving us the opportunity to host this call. Today, we have with us the entire top management team of Finance presented by Mr, Aseem Dhru Managing Director and CEO; Mr Mahesh Dayani, Chief Business Officer; Mr, Chief Finance Officer; Mr Panke Gupta, Chief Risk Officer; and Mr Sanch Agarwal, Chief Strategy and IR Head. I will now hand over the call to Mr Aseem Dhru for his opening remarks and then we’ll open the floor for Q&A. Over to you, sir.
Aseem Dhru — Managing Director and Chief Executive Officer
Thank you. Thank you, Anish, and good morning, everyone. Thank you for being on this call. This is our 30th quarter result since start of HBFC and the eighth post listing. The amazing thing about being a financial services company is that being a proxy of the economy, we are affected by every breeze that blows in every sector. From the macros like fiscal and trade deficits, interest rates, liquidity situation, GDP growth, money moving digitally,
Currency movements to the micros like the economy shifting to being more organized, individual balance sheets moving up-and-down, velocity of money in small businesses, working capital cycle, everything. There are multiple forces at play right now. Finance is a derived demand and to understand its strength, we have to look at the primary demand in the economy. Economic growth in India chugs along, albeit at a slower pace. What we have seen is that all the consumer staple companies have reported flattish quarter.
So whether it is HUL, Nestle, Dabur, et-cetera, at 2% year-on-year growth, it’s anemic. But look what’s happening to the discretionary. So when you’re looking at airlines, hotels, you are able to see that where spending is going. So spending is changing. We’ll have to change our lens of focus to arrive at where the consumer spending is heading. So no longer looking at consumer staples may be a right barometer to look at. Inflation is in a tolerant zone and the regulator has shifted his lens on growth.
Two rate cuts have been delivered in rapid succession. And looking at the inflationary trajectory and softening of the USD, more rate cuts look to be on the minim. Durable liquidity has been promised and is being delivered. Banks have begun to cut savings rates, deposit rates have been able to soften after peaking in March. Looks like MCLR reductions around the corner. Banks are the wells from where the NBFC fields are irrigated and so it’s great to see they are well hydrated versus the challenge last year.
On product design of gold loans, there was ambugity and interpretation issues. The new draft circular provides immense clarity and the regulatory risk-on the business continuity, which was a concern all of last year is now off the table. The draft co-lending circular may make CLM2 on which the industry is operating challenging. We are probably the only lender operating on CLM1. So we should be fine and that is our current understanding. Deep Seek has done a number on ChatGPT.
One of the most difficult things to achieve is the balance between technology and cost. Achieving frugal tech scale is a challenge we have taken. We have built some very effective tech stacks on cloud using vendors and self-development mix and built over 200 APIs to draw from the best. The benefits of these have begun to roll. We have just gone live with a paperless gold loan. When a customer visits from a branch today, just with our IRIS scan, we have EKYC, e-sign done and money is the customer’s account, an agreement on our WhatsApp.
That’s it. No documents, no friction. The challenge now is that the transaction is over before the customers key arrives. So we have a problem of a different time. We have rolled-out account aggregator and we are seeing increasing adoption, helping us speed-up decisioning time as well as end-to-end monitoring, end-use monitoring. We have been working on a project with Amazon Web Services. It’s a generative AI assisted credit assessment.
The virtual credit underwriter should roll there in this year. We’ve been piloting it softly and we’ll roll it once we see the results. Our assumptions for the year ahead are as follows: one, we will endeavor to grow at 5% to 7% quarter-on-quarter. There will be quarters like the quarter-four, one where we will surprise ourselves, but this continues to be our guidance. Two, we have been guiding a 50 bps reduction on in operating year-on-year due to the design of taking a fully-loaded opex of 16 states to listing.
And then benefiting from scale and efficiency. Three, last year against the guidance, we have delivered a 69 basis-point reduction. In the coming year, we will endeavor to deliver another 50 basis-points cost-reduction. Four, we will put out 20 to 25 branches this year as well. Five, we are not penciling in any reduction in cost of funds. If it happens, we will take it as a bonus. Usually what happens is that on Excel sheets, we take the good news in, but bad news always arrives from where you can’t see.
So we’ll keep this passed aside. Six, co-origination will remain at the 20% of our incremental origination, nothing changes there. Goal will remain 15% to 17% of our book, no change. Eight, we will be holding on to a view of closely watching our credit cost and it should move-in the 1% plus-minus 10% — plus-minus 10 basis-points range. It’s funny how humans think in terms of adding zeros to scale. When you start the company,
The milestones you think of INR10 crores to be INR100 crores, INR1,000 crores this year, we are looking-forward to us crossing INR10,000 crores of an AUM number. While one notes that the top-line is vanity, bottom-line is sanity and cash-flow is reality, the ultimate measure of an MDFC will always be scale, profitability and governance and we will strive towards that. So to conclude, we have put ourselves in a position where good things can happen to us.But we know that while that is a good condition precedent to have, it is only through disciplined execution that we can get to where we want. So as I’ve got and now over to Naran for more detailed commentary.
Narayan Barasia — Chief Finance Officer
Thank you,. Good morning, everyone. Our AUM for March 2025 is INR8,747 crores with a growth of 28% on a Y-o-Y basis and 7% on Q-o-Q basis with 100% of our AUM now secured by properties. Our MSME AUM, which is 83% of our AUM, grew by 27% Y-o-Y and 7% Q-o-Q to INR7,249 crores. We added 22 branch during the year, eight brands during the last quarter. The total branch count now stands at 205 as of 31st March ’25.
In terms of yield spreads and OpEx, the yield spreads continue to remain stable at 17.8% and 8.53% respectively for the quarter. Our borrowing cost has reduced 5 basis-points Y-o-Y and is at 9.33% for the full-year in-spite of contiguous increase in MCLR during the year. Our OpEx is flat compared to previous quarter and is at 4.62% for the quarter, but improved by 39 basis-points from Q4 of previous year due to operating leverage increased in the organization.
This is in-spite of a consistent increase in the branch network. In terms of asset quality, our GMPA rained bound in Q4 to 2.74% with PCR increasing to 45.69%. Our credit cost is 1% for the quarter, which is in the range of our guidance. In terms of capital and return ratios, our capital adequancy ratio is 36.1% with tangible net-worth of INR2,900 crores as of March ’25. Our return on average AUM for the quarter is 4.52% with return on average tangible equity further improving to 13.14% for the quarter. We made PAT of INR94 crores for the quarter, thereby reporting a growth of 29% on a Y-o-Y basis and 7% on Q-o-Q basis. And the PAT for the full-year Is at INR345 crores, which has grown at 46% on a Y-o-Y basis. With this, we open the floor for questions also.
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 one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press start and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles the first question is from the line of Nishan Chawathe from Kotak Institutional Equities. Please go-ahead.
Nischint Chawathe
Hi, thanks for taking my question. Just a little bit qualitative. I think you mentioned that you be a little bit more cautious in the current environment. Now is it just kind of a fear of unknown, unknown or is it something that you’re tangibly able to see at the ground
Aseem Dhru
So see, Nishin, you are the only man who is, all of us have a lot of. So that was on a lighter note. But basically see the way the way we see it is that if you look at the last few years, there has been a lot of volatility that has happened. One, some came from liquidity events, some came from nature like COVID, some came from — some came from man-made events and crisis and some came from regulatory pressures that built and some have come from on-ground issues that what we have seen in Karnataka and now what we are seeing in Tamil Nagu.
So there have been a series of events that have happened and every year, there has been something that has disturbed the flow. So one needs to be careful and one needs to be watchful. We don’t know what the future entails. And the fact is that when we are — we are lending to a customer segment, which is a higher-risk segment and therefore, we have to be a lot more watchful always. So I don’t think our commentary will ever change whichever year you will hear the call-in because it is easy to — see,
It’s a difficult business apart from a one player, there has not been anybody who has been able to build scale in this business over-time. So it’s a difficult business. We recognize that. And we know that we have to be watchful. It’s a slippery slow. We will have to be watchful, nothing that there is an event right now, but every year some event seems to be coming that we can’t see.
Nischint Chawathe
Got it. Just a little bit of — again a little bit of quantitative maybe. On the asset side with rates coming down, how fast do you think you need to transmit? And any specific reason why you said that you don’t want to bend down any cost of benefit this year.
Aseem Dhru
So see the — it takes time to translate, even this while the rate cuts happen, incremental borrowing costs have already begun to come down. But the book doesn’t reprice until MCLR moves then or Beno, et-cetera, which will take time. I mean, there is a pressure on banks also on-net interest margin maintenance, et-cetera. So I don’t see that a transmission of rate cuts with — and durable liquidity is going to immediately come to us.
So it may come by the second-half of the year and it may come in small spots, so 5 basis-points here at 7 basis-points there. We don’t see a material reduction in cost this financial year is the base-case. If it comes, we’ll take it with both hands. And the transmission only happens when our cost of fund moves and our other parameters have move. So transmission or so there’ll be a delay and a lag between transmission of what happens with the regulator and what happens at the banks. Similarly, there will be a lag at what happens to us and what will ultimately get transferred to the customer. So I don’t see any rate reduction possibility for customers this financial year at least.
Nischint Chawathe
So because between ’22 and ’24 when rates were rising, you actually did see a spread expansion. So I’m just trying to understand the behavior.
Aseem Dhru
So see, what happens is that the rise was very sudden there. It was at one stroke, you had a 250 basis-point increase. It was a very abnormal rise. So everyone had to react and respond to something that was the abnormal event. This year, I mean, nobody — this nobody’s case that we are looking at that kind of a rate reduction. And also where the — when it is — when it is — when it is big, the shock and the reaction is instant, when it is in small spurts, it takes time to translate through.
Nischint Chawathe
Got it. Any change in outlook for gold business after the draft regulation from RBI?
Narayan Barasia
No. So from — hi,. So there is nothing materially changing for us. In fact, we’d like to welcome the draft circular, which is in circulation as of now. So nothing changes for us. So for last year, on an average, while there was volume growth of 15%, the price movement of almost close to, 24% 25% took our average growth to 40% in gold. So clearly, nothing changes for us either operationally or otherwise?
Nischint Chawathe
Got it. And just one tiny one — last one if I can squeeze. On the — on the co-origination side, I think as rates go down, do you kind of tend to benefit? I mean, I’m just curious how the pricing is off for you.
Aseem Dhru
So it’s zero-sum game because that the rates are linked to repo both ways.
Nischint Chawathe
Both ways. Okay, got it. Perfect. Thank you very much.
Operator
Thank you. The next question is from the line of Renesh from ICICI Securities. Please go-ahead.
Renish Bhuva
Yeah, hi, sir. On two things. So one, on this one plus trend, right? So we have been witnessing a steady increase in plus, but at the same time, of course, we’ve been also able to contain close to 90 plus. I think that’s what our gross NPA against. So just wanted to get a sense which geography or pocket is sort of driving this higher flows into early buckets? And do you see any risk to the pace of from this one plus to 90 plus in coming quarters maybe because of this change or any other micro event that’s in-place?
Mahesh Dayani
Yeah. So on the zero plus, basically that we are seeing impact of Karnataka portfolio because of certain events. And due to that, we are seeing an impact on zero plus. We are not seeing any material movement at this point in time due to the same. So forward-looking for full-year, we are not changing our forecast.
Renish Bhuva
Okay, okay. Okay, got it. So incremental close to early buckets is mainly because of Karnataka issues.
Mahesh Dayani
It is only 50 basis-point is due to same.
Narayan Barasia
So, all other states have been constant in the quarter and only impact that has come in is coming from Karnataka. We have a material portfolio there and therefore that in the bucket one has got impacted and therefore, zero plus is to that extent. But in all other states, we’ve been able to contain the asset.
Renish Bhuva
Okay. And maybe if you can just share the ground correctly. I mean things have stabilized in terms of flows or how is it?
Pankaj Poddar
So obviously, this started somewhere at the beginning of the last quarter and all I can mention is that sequentially we are seeing improvement month-on-month. So Feb — was better than Jan and March was obviously better than Feb. So obviously, sequentially we’re seeing it better.
Renish Bhuva
Got it, got it. Okay. And maybe slightly weighted to that also is on the disbursement side. So on full-year basis, how we saw our is secured SME is actually down. And now sort of when we are saying some of able to maintain a sustainable 5% to 7% growth, if I just bi-calculate the numbers for the ask rate for quarterly dissessment would be roughly INR850 plus crores. So are we confident of sustaining or achieving those numbers and a new issue in TM?
Pankaj Poddar
Yeah. So probably I’ll just break-up the numbers for you. So what you see on a full-year basis is largely because of a one-quarter impact, which was the quarter one impact where the total numbers had dropped to closer to INR550 crores. And then thereafter there was a sequential uptick in it. If you were to just pencil in a number of anything between 4% to 5-odd percent, you would continue to grow upwards of 20% in disbursals, up closer to 25% of disbursals.
And also in terms of your AUM growth is going to be more than 25% and that clearly mirrors our 5% to 7%. We were averaging close to around INR255 odd crores a month of last quarter and that’s going to take us to more than INR300 crore or closer to INR300 crores by the end-of-the year. So that’s not a very large ask that we have before us. So if we were to go with your number, it seems To be largely within our range.
Renish Bhuva
Got it. Got it. Okay. That’s it. That’s all my side.
Operator
Thank you. The next question is from the line of Devesh Kayal from Monarch AIS. Please go-ahead.
Devesh Kayal
But just one question. So our growth on the Western region has been kind of muted at around 8%. So if you can give some color on this. Thanks.
Aseem Dhru
A top pocket for us and some part of it is by design. Some of the states we had last year consciously had slowed down because we weren’t very comfortable on the numbers that were coming up from the industry perspective. The numbers seem to be looking a lot better. So moving forward, we would see an accelerated ramp-up and that’s where the opportunity for us to hit our required on the disbursal also comes.
Operator
Sir, does that answer your question?
Devesh Kayal
Yeah, that’s it from my side from my queue. Thank you.
Operator
Thank you. Ladies and gentlemen, you may press star and one to ask a question. The next question is from the line of Shreya Shivani from CLSA. Please go-ahead.
Shreya Shivani
Yeah. Thank you for the opportunity. I just wanted to understand, you talked about opening 22 to 25 branches in the coming year. How do you — how do you decide on which geographies to expand? Is it district by district expansion? Can you talk a little bit on that? And there was a media article yesterday which talked about certain regulation coming in Tamil Nadu, which may try to you know, formulate rules around collections. I see you have lesser number of branches in Tamil Nadu than Karnataka, so I can understand the impact could be restricted. But if you can help us understand if what are the stress — if there is any stress in that state going ahead?
Aseem Dhru
Yeah. So answering your first question with respect to branches. So if you would have looked at our number of states, we’re not adding any state. What we’ve been constantly maintaining is that we’re going to get deeper into every state depending upon the experience that we have on origination, on underwriting and on the profitability for those states. And the way it works for us is that we get deeper at a district level as we move into each of these states.
So our existing states are going to get stronger. You would see better outcomes coming in from the states where we are already present. Some of them, we are the flag bearers in those particular states where we have a significant market-share and we will continue to strive deeper in those particular markets. Answering your second question in terms of the Tamil Nadu exposure, we have a 3% overall exposure. We’ll be a little watchful as to how the situation unfolds in this particular quarter before deciding to significantly ramp-up.
Shreya Shivani
Got it. And sir, one thing that I wanted to understand, you mentioned how the environment in the country has been volatile in the past so many years. So within the segment, how do you maneuver around sub-segments? I’m not talking in terms of if you’re doing secured MSME, not in terms of one state has more stress, so I move to other states, that is understandable. But do you choose the kind of MSMEs that you are lending to or you move that around also? And are there any sub-segments of MSME where you see there is bigger stress right now?
Aseem Dhru
Okay. So in our previous commentary, we’ve said that our decision to lend or go slow is a function of multiple things. It’s not really related to an event. You know, probably something would happen in Karnataka, Tamil Nadu is probably a situation which is solving for excesses. But our decision is largely more credit-driven and how is the market being driven in those particular states. So a couple of states we had slowed down last month that was largely driven because of the delinquencies going up in that particular segment.
Not necessarily with us. And also the entire efficiency of login to approvals to disbursal ratios, if that’s not really favorable, then it’s a high-cost impact for us. So independent of these particular spurt of events because these will ultimately settle down. But our decisions to grow, accelerate is dependent upon a lot of other functions, which also mirrors up your question saying that what is it that we look at the segment.
So when we look at segments, we look at how are the big tickets doing, how the mid-ticket is doing, how the low ticket is doing, how is the zero plus moving, how is the 90 plus transition happening? How the disbursal is moving. So a lot of those considerations come into play before we decide what the plan for the quarter and the full-year is going to be.
Shreya Shivani
Understood. Understood. Thank you so much. This was very useful.
Operator
Thank you. The next question is from the line of Kamal Mulshandani from Investec Capital Services. Please go-ahead.
Kamal Mulchandani
Hi, sir. Thank you for the opportunity. My first question is like with respect to the increase in one plus EBITDA in the recent quarters, have we put in some incremental credit filters and what are we doing extra in terms of collection efficiency — improving our collection efficiencies.
Aseem Dhru
One plus, as we articulated earlier in the question that it is — we have seen the impact of Karnataka is coming in one plus in last quarter and that has impacted us zero plus by 50 basis-points. We are seeing this to stabilize in coming quarters and for full-year, we are not expecting any material impact of the sales. From a credit side, we continue to watch the space and internally we have been strengthening our collection processes in past couple of years. So basis the same, we are not changing any guidance for full-year.
Kamal Mulchandani
Okay. Okay. And secondly, for your goal finance book, if you could just highlight the number of branches from where we are sourcing this book? And incrementally, are we seeing some growth in the tonnage as well or it is purely related to the increase in gold prices?
Mahesh Dayani
Okay. So in terms of the tonnage, we saw — so in terms of volume growth, the split is 15% is largely driven because of volume and 25% is the benefit that we got in terms of the price increase, average price increase and that’s how it sums up your 40% growth in the gold business.
Kamal Mulchandani
Okay. And branches from where we are sourcing the gold alone, if you could just tell the number?
Mahesh Dayani
165 branches?
Kamal Mulchandani
Okay, cool. Thank you so much. That’s all from my side.
Operator
Thank you. The next question is from the line of Kunal Shah from Citigroup. Please go-ahead.
Kunal Shah
Yeah. Hi. So firstly, with respect to the overall ECL provisioning and particularly on Stage 1, so that has got reduced by almost like 20-odd basis-points. While we have seen the coverage increasing both for Stage 3 as well as Stage 2. So not very sure in terms of what is leading to change. Obviously, you also indicated that the environment is uncertain. Then this would be on a back pool, but still do we plan to increase the coverage or something and what could be the reasons for this decline?
Aseem Dhru
No, no. So see, we refreshed our ECL model and this has come out of that model. We’ve had — I mean, probably we were overproviding — even now we are providing higher than anybody else. So this is just when what’s come out was — we have completely automated our ECL provisioning. So there is no manual intervention. We do management overlays over and above this wherever we deem fit. So — but this number that’s come out-of-the model.
And even after reduction, it is still highest compared to anybody else you would see.
Kunal Shah
Okay. And management overlay, what would be a — what would be that number today, if there is any? Yeah.
Aseem Dhru
INR4 crores.
Kunal Shah
INR4 crores. Okay. Okay. And secondly, when you indicated with respect to the cost of funds remaining stable, so that comment is only on cost of funds. It’s not say with respect to spreads. So looking at maybe the overall funding cost environment, there could be some lag, but we should have that advantage. And given that the proportion of maybe more than 700 customers is also rising, okay, would there be further pressure on yields and margins could come off or would that be the case, be the case?
Aseem Dhru
You have seen us over eight quarters even increasing cost of funds, our spreads have only go up.
Kunal Shah
Okay. Okay. Okay. So still maybe even though funding cost remains similar, then no much — not much pressure on spreads would be there. That’s what the indication is.
Aseem Dhru
I had already laid out in my guidance, nothing changes. Everything remains what we had said in the also?
Kunal Shah
Thank you. Okay, got it It. Got it. Thanks. Thanks.
Operator
Thank you. The next question is from the line of Satish Kumar from Mir Asset Capital. Please go-ahead.
Satish Kumar
Yeah. Thanks for the opportunity. So two questions from my side. First one is related to the cost-to-income ratio. As the cost of income ratio is to around 40% and the company has adequately invested over the past few fiscal. So would we expect the same trend going-forward or the cost of ratio runs? And the second one is the MSME segment. So what is the growth guidance for the segment for the MSME credit growth given the competition is rising for these segments.
Narayan Barasia
So with respect to the MSME segment, I think the overall market, if you look at it, that’s close to around INR3.5 lakh crores in the category of INR5 lakh to INR30 odd lakhs and that’s growing in the range of 20 odd percent. So with a lower base, if we are projecting 5% to 7% on a quarter-on-quarter basis, that is something which is achievable. And that’s something that we’ve been maintaining for the last couple of years. We don’t see any of those variables changing.
We’ve invested in our distribution across the country. So some here or some event here or there is not going to probably change the guidance in any form. So clearly, while the competition could be getting intense, but I guess there’s — the market is also growing enough and there is adequate and enough and more opportunity for most of the players to grow.
Satish Kumar
Okay. And on costly in commercial, sir.
Narayan Barasia
On the opex side, I think what we’ve always guided is that we will reduce our OpEx by largely 50 basis-points as the distribution tends to spend. Last year, our opex went down by almost 70 basis-points. Our next year guidance also for the same — remains the same that we will reduce it by 50 basis-points. So it is going to be a downward sloping curve that you would see on our opex to AUM or the cost of income, whichever way you could.
Satish Kumar
Okay. Thank you.
Operator
Thank you. A reminder to all the participants that you may press star one to ask a question. Thank you. Ladies and gentlemen, you may press star and one to ask a question. The next question is from the line of Mayank Mistry from JM Financial. Please go-ahead.
Mayank Mistry
Hi, sir. Thanks for the opportunity. Sir, I have two questions. First is a basis on the gold drop that has came in. So do we have any consumption-led loans in our portfolio? And if yes, then how should we see the growth going-forward given that it is said that the growth is going to be impacted for gold loan going-forward. So although we are at the higher-end of our guidance, should we see this move below 15% going-forward? And secondly, secondly, what would be our Tamil Nadu exposure because again the same regulation, same audience has been passed by Tamil Nadu as well, which has been passed during Karnataka. So that are my two questions. Thanks.
Narayan Barasia
So with respect to the Tamilado exposure, it’s close to around 3% of our AUM. So the exposure is not very large significant. As I had maintained earlier in the call that we will be a little watchful as how the events turn out. And then depending upon those, we will decide our acquisition in that particular state. So as of now, it’s not a very large material event for us, which will impact our overall momentum. So your question on gold with respect to consumption, I think let me break this into two-parts.
What you see consumption-driven loans are largely small-ticket loans in gold. What we typically see is more than average ticket size is slightly more than a lakh, closer to probably to 1,20 odd thousand. These are largely business owners are used for business purposes. So the impact towards the drawing towards consumption-driven loans is also going to be limited.
Mayank Mistry
So what would be the currently mix of income generation and consumption loans in our book?
Aseem Dhru
Yeah. So it will be mostly consumption. So like will be loans for which we would be offering in gold. Gold is a very small portion of our book. We are an MSME lender. That’s focus. Our goal will remain at this 15% 17%, no change.
Mayank Mistry
Okay, sir. Thank you. And all the best.
Operator
Thank you. The next question is from the line of Vignesh Iyar from Sequent Investments. Please go-ahead.
Vignesh Iyer
Hello. Thank you for the opportunity. Sir, my question is on so can you give us some idea on how the balance sheet has been like in the current quarter? And I mean with your initial commentary on some elevated risk in few states, how do you see — I mean how do you think it will pan-out in next two or 3/4?
Mahesh Dayani
Is usually track zero plus as a metrix in this segment and bounce rate for the last one year has remained flattish in from our portfolio perspective. Zero plus has been one of the tracking point that we are looking at and that’s where our collections have been driven.
Vignesh Iyer
Okay, okay. And sir, what is what is the — I mean, what do we have as an internal estimate for a steady-state ROA on our AUM?
Narayan Barasia
So ROA has been ranging around 4.5% from the last six-odd quarter and as we lever up, there will be some compression in the ROA, but we would want to hold it on for the next one year between 4% to 4.5%. Right.
Vignesh Iyer
Got it, sir. That’s first.
Operator
Thank you. The. The next question is from the line of Harshit Toshiwal from TMG Investments. Please go-ahead.
Harshit Toshniwal
Hello, sir. Hi, am I audible?
Operator
Sir, I would request you to please use your handset.
Harshit Toshniwal
Hello. Hello. Yes. Is this better?
Operator
Yes. Sir,
Harshit Toshniwal
The question was on the gold loan piece itself. But I think specifically on these two that how is our structure of the gold loan in terms of bullet repayment or? And with the LTV norms changing, how should we look at that piece itself, maybe for you and also for the sector, if you can help us, right? And the second is on the increasing intensity of requiring to document the purpose, et-cetera, how should that be looked at?
Thank you, sir. So,
Narayan Barasia
Yeah. So from an LTV perspective, our overall LTVs on the gold portfolio is close to around 50-odd percent. So at a portfolio level, obviously, we have a required margin of safety. So that’s not an issue. With respect to the new draft circular, which has come into play, we are already following that circular. So for us, there is no material change that we see with respect to the LTVs which is in which is in play. So what was your third question?
Harshit Toshniwal
On the increasing documentation piece, sir, if I think you said given most of our loans are income generation, but do we now need to put in some additional efforts in terms of documenting the end purpose of practically, how is that possible?
Narayan Barasia
So I think that was a soft nudge, which was always there from the regulator to monitor the end-use for the gold loans for a particular ticket sizes and above. So that was already into play. We will just have to see that whether it is for the entire spectrum or is it for certain ticket sizes? If it’s for certain ticket sizes and above, then there is no change for us.
In case it is for the entire spectrum, that’s the only incremental or marginal effort that will be required from our side. But on an overall impact basis, we really won’t have to turn the entire tumblr up-and-down on this one. Whatever changes are going to be there are going to be marginal and not really extremely — it’s not going to impact our cost in any way.
Harshit Toshniwal
Okay, Sir, one last question that our repayment structure in the gold loan, is it a bullet-based repayment?
Narayan Barasia
And see, if you look at the circular, what it tends to say is that if you have a ballooning structure where you balloon all your interest and everything is there ended. There is — there could be an event risk in case the gold price falls and that’s rightfully done in. Thankfully, we are largely on a monthly servicing that we do it or on an EMI basis. So again, to that particular the portfolios that have been mentioned and we don’t have a share in that particular bucket or that Particular product in our overall portfolio. So again, the impact assessment on that particular point is also minimal for us.
Harshit Toshniwal
Got. Thanks a lot, sir.
Operator
Thank you. Ladies and gentlemen, you may press star and one to ask a question. A reminder to all the participants that you may press star and one to ask a question during the. As there are no further questions from the participants, I would now like to hand the conference over to the management for closing comments.
Aseem Dhru
Thank you. Thank you. That’s it from me. From our side.
Operator
Thank you. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us and you may now disconnect your lines