Ladies and gentlemen, good day, and welcome to Can Fin Homes Q3 FY24 earnings conference call, hosted by Investec Capital Services. As a reminder, all participants' 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 star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Nidhesh Jain from Investec Capital Services. Thank you, and over to you, sir.
Thank you, Rashmi. Good afternoon, everyone. Welcome to Q3 FY 2024 earnings conference call for Can Fin Homes Limited. To discuss the financial performance of Can Fin Homes and to address your queries, we have with us Mr. Suresh Iyer, MD & CEO, Mr. Ajay Kumar Singh, DMD, Mr. Apurav Agarwal, CFO, Mr. B.M. Sudhakar, Business Head, and Mr. Prashant Joshi of Can Fin Homes Limited. I would now like to hand over the call to Mr. Suresh Iyer for his opening comments. Over to you, sir.
Yeah. Thank you, Nidhesh, and good afternoon to all of you, and thank you for taking time out to join the investor call. To start with, I'll just give a brief couple of points or a few points on this quarter performance, and then we can go for question answers. As you all know that the Q3 has been, in terms of the business parameters of disbursement and recovery, there has been a little bit of a setback, but nothing in an instance that was not kind of guided or which was not expected.
In terms of the disbursement, as you all know, in the last quarter we had indicated that we have some process changes and some tightening of processes that we have initiated, namely the centralization of disbursement and centralization of the reconciliation, besides a couple of other things. Because of this, the disbursement, particularly in the month of October, has been a little subdued, and that has hit us in terms of our disbursement. But back in December, we are back to our old numbers of INR 700 crore in terms of our run rate per month disbursement. So in the Q4, we expect that, with the last quarter push also, we should be around INR 2,500 crore to a little above that also.
We should get us in the range of about 13%-14% kind of AUM growth by the end of the year. In terms of the recovery performance, we had again guided that we have about, you know, INR 670 crore of restructured book, of which about INR 450 crore had come out by the end of June. The consequent NPA up to September was already reported of around INR 68 crore last quarter. We had indicated that the balance portfolio also would be coming out of our restructuring in this quarter. As a result, there's some impact we see that, you know, about INR 30 crore would be there.
We had indicated that we had also carried the, you know, management overlay of about INR 34 crores. So additional, you know, provisioning in that regard may not be required firstly, and we should be, that should be able to meet up. And, the results have also been on the same lines, that we have not crossed INR 30 crores in terms of additional provisioning. However, as a proven measure, we have not gone for reversal of the management overlay, and we have continued with the same. As a result, you know, this has, the provisioning number in the Q3 has been high.
In terms of the total NPA in the restructured book, this is coming to a little below 15% of the total book, which is around INR 93 crore, which is, ninety-eight crores, sorry, which is in line with the 15% guidance in terms of the total restructured book of INR 670 crore. In terms of risk, recovery, going forward, the entire pain from the restructured book is almost, now experienced by us. So going forward, we don't expect further pain in terms of the restructured book. In terms of the non-restructured book, our NPAs are still within, you know, are well, within our norms of, the thing, and it is around 6.62%, which is not very different from the 0.55.
This is more seasonal, and by March that also we expect to come down. So in Q4, going forward, we expect some INR 20 crore-INR 30 crore reduction in the absolute recovery figure, that is the gross NPA number. We should therefore help us reach the number of about 0.75%-0.80% gross NPA numbers by end of the year. Third point as regards the yield and cost, we had a ratings upgrade from ICRA for our borrowing program, and now we are rated AAA. Earlier, we were AA+. So that has helped us in terms of some borrowing, and going forward also, we expect that will help us a little bit in our borrowing, particularly our NCD.
In this current quarter, we had, therefore, not a very high increase in our cost of borrowing. As compared to that, the increase in terms of the yield on the loan book, thanks to the INR 6,700 crore of opening book, where one rate reset was yet to be passed on, the yield has improved, and therefore the spread as well as the NIMs have also improved in this current quarter. Going forward, at the end of the Q4 , we expect that we should be able to sustain a spread of about 2.6% and a NIM of around 3.7%-3.8%.
So that's the kind of line, because in terms of the cost, we don't expect much of a increase, because some of it is aided by our ratings upgrade. And second is that we are also hopeful that we might be able to get a NHB refinance, which is our cheapest source of borrowing. In terms of the strategy or the directional movement that we had indicated we are looking at going forward. A couple of points on that. One is that the DSA sourcing which we had, which were upwards of 80%, close to 85% in Q1, we had guided that we want to bring it down, and in the end of about two, three years, we would like to bring it to a 60/40 breakup.
That in the end of the current quarter has come to below 80%. It's about 79%. So from 85%-82% in the Q3 , we have brought it down to 79%. The second, in terms of expansion, branch expansion, we have opened five offices during this quarter, and all the five offices are in the north and western part of the country. This is also in line with the indication we had given, that we would like to strengthen our operations and thereby bring down our, you know, total dependence on the southern geographies. Consequent to this, our disbursement in our, you know, southern geographies, the five states, has come down from 74%-72% in the Q3 .
So that also in terms of the direction is as indicated earlier. And the last point is the ticket size, where also we've seen you know an improvement in our ticket size of loans in the more than INR 20 lakh, 20-30, and more than 30 lakh segment, which is also there as one of the slides in our presentation. So these are some of the you know some of the critical points in terms of our performance in the Q3 . And as indicated, going forward we expect to have a disbursement upwards of INR 2,500 crore in Q4, as we have already reached a INR 700 crore run rate per month. So that would help us you know have a year growth of 13%-14%.
NPA, as I once again summarizing, our NPA, we expect to be down to 0.75-0.80 in the end of the fourth quarter. Spread and NIMs are around 2.6 and 3.7-3.8%. That's the kind of thing. The last point in terms of cost to income ratio, we had guided that our cost to income ratio could go up to around 18% in the year because of our investment in our IT transformation project. But the IT transformation project, because of the number of bidders and some of the queries that have come, has slightly been delayed. So, as a result, you know, some of the expenses that we had anticipated may not happen in the current year.
So the cost income ratio might end around 16%, not the original 18 or 18.5%. However, going forward for the next year, we continue the guidance, and it will be around 18-18.5% as the entire cost will happen in the IT transformation project. So these are some of the, you know, key points in terms of our performance and what we expect going forward in the Q4. I thank you once again for joining us in this earnings call, and maybe we can open, we'll be open to questions. Thank you.
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 touchtone telephone. If you wish to remove yourself from the question queue, you may press star 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. We have a first question from Haresh Kapoor , from Alchemy Capital. Please go ahead.
Hi, sir. Am I audible?
Yeah, yeah, we can hear you.
Right.
Please go ahead.
Thanks. Thanks. Just, just for a little perspective around next year, right? You did mention your range minus trade breakthroughs, and this year at 13%-14% is the growth. But when you're kind of looking out to next year, you know, let's say rate cuts are kind of expected, and you know, you have a reset, which is done on a yearly basis, as well as that kind of resetting lower. There's a risk of BT out next year, right? So how do you optimize between margins and growth, and the yearly reset that you have, and also keeping BT rate possibility in mind if, you know, you're kind of looking at a yearly reset. So how are you kind of approaching this?
Thank you, Harish. Yeah, so, in terms of, you know, this reset clause, we had, again, one of the points raised in a couple of quarters back as well, and we had indicated that, you know, our current reset will all end in the month of December. So from January, we will look at a reset change in our policy as regards reset. So in line with that, in the last month, we have got our board approval for change in our policy to reset into quarterly reset. So this will help us in our ALM position as well as in terms of managing our BT outs, because we will be able to pass on, in going forward also, the rates to the customers, you know, when the rates start going down in the market.
So that is one point. So how it will work is that in the for the new customers, all of them, effective first of January, are on a quarterly reset basis. For all existing customers, we have given an option to reset to a quarterly reset, with a you know we've already informed all our customers, and those who opt for it will also move to a quarterly reset basis. As you rightly said, if going forward the rates come down, I'm sure customers will be more than happy to shift to a quarterly reset basis. So that I guess answers your question.
Sure, sir. And, so the second thing, I just want to understand on the disbursement side, right? You know, you did mention, some around, you know, central, reconciliation and disbursement... but, you know, when we look at your, business here today, 80% largely is coming from DSA, which is, you know, obviously coming to your team and you're kind of, you know, filtering out the cases. But then, that should be easier to kind of, you know, get in from the cases that you want to disperse and centrally disperse. So where is the gap and, you know, where are you kind of finding, you know, work to do so that this is more smoother ahead?
No, I mean, as you are saying, what is the process issue, right? So it was just a shift in the, you know, the branches earlier were having complete power or authority to disburse the loans. So checks were also being prepared at the branches and your signatories were there at the branches. So it's just a process change where we have now added another layer at the head office, where the, you know, disbursements which are scheduled will be verified, and documentation will be once again checked before the instructions are given to the banks to issue the DDs. So all disbursements up to 2:00 P.M. which are scheduled in the system will get, you know, the DDs will be generated and delivered at the branches on the same day by 5:00 P.M., 5:30 P.M.
For cases which are received after 2 o'clock, the DDs will be received in the next day. So, I mean, if that is what you are, you know, trying to understand, that's the process. So now it's almost streamlined, and all the branches are already into that system. There is no, you know, issue in that.
Sure, sir. And, you know, just last thing is, considering where, you know, the reset that you had on a quarterly basis now, do you believe you, you know, in the near term, is there any implication that the customers come and reset their loan in any way? And, do you believe you, you will be able to hold on to your 2.6% spread and, margins even for next year, or do you believe that will reset lower, for next year? Because, for next year, you also will see elevated OpEx.
So in terms of delivery and holding on to these metrics, but also the reset that you're talking about, do you believe the same metrics will be able to deliver for next year, or we should believe that will be a little lower and that's how we should think about it?
No. So in terms of the reset, obviously, it will be passed on as we experience a reduction in our cost of borrowing. And because we have our rates, you know, our card rates, which are there for new customers, and so obviously that will be aligned only as and when we experience the benefit in our cost of borrowing. And the new customers who come for a reset will also effectively get the card rate or the in that line only. So therefore, you know, it will, it will not be a kind of effect where we'll have to pass on to the customer before we actually experience it on our borrowing side. So in that sense, the spread will be, you know, kind of maintained.
However, you know, as in one of the earlier points, we had mentioned that we are looking at a slight increase in our ticket size and moving up in terms of the, you know, ticket size ladder. So that may, you know, have a little bit of impact in terms of the competitive pricing that we will have to offer to the new customers in the higher ticket size segment. So that's why, while we are having 2.66% spread today, we said by 2.6 by the end of the year and, maybe, you know, 2.5+ in a, in a, in a year or two later, in FY 2026 end up.
Sure, sir. Thanks for answering my question. Good luck to you.
Thank you.
Thank you. The next question is from the line of Shubhranshu Mishra from Select Capital.
Hi, Subhash. I wish you a very Happy New Year. 2 or 3 questions. The first one is: Why have we seen a lower OpEx in this particular quarter versus the last quarter? And what you did guide for the cost to income, but then what would be the average quarterly OpEx that we can expect in FY 25? That's on the OpEx. Second would be, on the disbursements: What is the number of loans that we do on a monthly basis? The third part is, you did mention about builder connects and getting the higher ticket sizes, but then these would be more affluent customers and there is a possibility that it can lead to faster rundown of the book because they would be more affluent and they would have higher prepayment capacity.
These are my three questions. Thanks.
Thanks also, and Happy New Year to you and to everyone also. See, in terms of the OpEx, your first question, see, in the Q2 , we had a couple of one-off, one-time, you know, costs that we had, mainly in terms of the, you know, incentive to the staff and annual incentive that we pay out in the Q2 . That was one of the, one of the things. And some of the, yeah, and some of the one-off costs, which we had for the process changes, these payments that we had to make. So that is why we had roughly about INR 42 crores or something in the, in the Q2 , which has come down to around INR 49 crores in this quarter.
So that is the only reason why, compared to Q2, it has come down. Going forward, it would be... We can expect, you know, on a, on a quarterly basis, it should be somewhere around 52-53 crore, for in the next year would be the OpEx in absolute value. Okay? Second, in terms of number of customers, new customers which we add in every month, it's roughly in the range of about 4,000-4,200. That would be the range of new customers we add every month.
And the third is, you know, as we move up the ticket size ladder, whether, you know, there is a profile change in the customers resulting in a higher prepayment, well, it is possible because as you rightly pointed out, with the higher ticket size segment, there's a propensity to prepay or have shorter tenures or, you know, higher incomes which can be prepaid, is always there. But, you know, it's, it's something where, you know, it also, you know, there's these are also customers who keep on coming for other add-on loans, and we have a constant requirement of funds for various purposes. So these kind of customers can also kind of be, you know, offered additional loans and so it can be always, you know, managed in that manner.
It may not affect, you know, the prepayment rate in a big way.
Understood. If I can just squeeze in one last question. If we have to split the OpEx in terms of cost of acquisition, cost of collections, and business as usual, what would be the ballpark percentage?
I'll just give you in two minutes, maybe we can move to the next one. I'll come back and answer this. You wanted the breakup into cost of, acquisition,
Cost of collections and business as usual. Business as usual, OpEx.
I guess we don't have a separate cost, you know, monitoring in terms of the recovery cost, because it's all part of the regular this thing. But acquisition costs or what we pay out to the DSAs, that certainly we can, I'll be able to share. We can probably move to the next question. I'll come back on this.
Thanks. Thanks, Suresh. Thanks.
Okay.
Thank you. And then next, next question is from the line of Anusha Raheja from Dalal & Broacha. Please go ahead.
Yes. Am I audible?
Yeah, a little faint, though.
Is it better now?
Yeah, please go ahead.
Yeah. Sir, I just want to understand the disbursement number that have come for this quarter. If you can just provide us a breakup, how much growth has come in less than INR 25 lakh buckets and more than INR 25 lakh average ticket size?
I think we have a slide in our presentation on this aspect. I'll just tell you the slide number. We have not broken up 25 or 25. I think it's 10, 20, 30 and 30 and plus. That is the breakup we have given. I'll just give you the slide number. It's already given how much of business has come from this particular segment. For the year, it is in slide number 23.
Okay.
The disbursement in the up to INR 10 lakh is around 13%. Last year, which has come down to 12.87. 25% is in the 10-20 lakh segment, 20-30 is around 26%, and more than 30 lakhs is around 36%.
Okay.
That's right, yeah.
Okay. And in terms of, you know, your, you know, if I look at your AUM growth and the loan book growth relative to the peers, if I would say, I think the growth is, you know, slightly on a lower end, so how can we, you know, expect the number to be over the next two years' time? So, I want to understand why is it, you know, at the lower end as compared to the peers? Is it because of the competition or, how do you sense it?
No. I think first of all, in the beginning of the year, we had we began well, and we had a good 18% growth. But in Q2, we had an unfortunate event, a fraud at Ambala branch, one of our branches. And because of that, we had some impact, which has impacted our business, because we had to undergo a lot of process changes, strengthening of the systems and all. So as a result, it is the growth has come down. But you know, this year, whatever we have lost in terms of our business expectation or business disbursement that we were expecting, we would have to you know, cover up a little bit in the coming year.
Going forward, roughly, we would like to have about 20-odd% growth in the... on a consistent basis. So, CAGR of 20% would be what we would look at, because we would like to have a doubling of the book in about 4 years.
Okay.
So next year, we can expect, you know, like as I said, we are around INR 700 crore run rate in the current, present scenario. So about, INR 3,000 crore disbursement on a quarterly basis, on an average, is what we would expect. So, anywhere around close to INR 12,000 crore is what we would target in the next year.
Okay. And sir, on the margin side, you know, you said that it will be close to around 3.6, 3.7. And if I just look at it, large part of incremental growth is coming on the higher ticket size segment, where the competition intensity is high and plus the, you know, where other players are also there, you know, banks and, banks as well. So how do you sense that, you know, with this, if I just look at it, there is also sequential decline in the, you know, your portfolio yields. So how... I mean, you know, because of this factor, don't you think so the margins will remain under pressure for the next fiscal as well?
See, in the current quarter, where we've seen about 35% of the business coming in the 30 lakh plus segment also, our yield on the books is in 9.91%. So if you look at it, that also gives us a spread of 2.6%. So incrementally also, we would not, we would not be comfortable working or operating at a spread below 2.5%. So that's the kind of thing. So therefore, you know, the spread being 2.5% and, you know, NIM also around 3.5% plus, going forward also, we should be able to maintain that is what is our this thing. Because this quarter also, it was 9.91 for the Q3 alone, standalone basis.
Mm-hmm.
The cost of borrowing is around 7.35. That's why it gives a 2.6%, you know, spread even on the incremental lending in the Q3 .
Mm-hmm. And, last thing on the branch expansion side. So, you know, just to get a deep focus from the southern region, I think 72% is coming, loan book is coming from the, you know, southern states. So any strategy there to have a, you know, a pan-India presence and, you know, having relatively more, branch expansion in non-south geographies over a period of time?
... Yeah, definitely. In fact, we have already indicated that even in this quarter, the five branches that we have opened have been in the north and in the western region of the country. And going forward also, we will have a more tilt towards the north and the western region of the country. Particularly, you know, we have Gujarat and Maharashtra, where we have a lesser penetration, and we've not got you know presence much in Punjab, Haryana, and all those places. So these are the states where we are looking at the expansion, and that definitely will help us, you know, slightly tilt the the kind of sourcing towards more of a 60/40, which we are kind of targeting in the next three-year kind of thing.
Okay. Thanks a lot.
Thank you.
Thank you. The next question is from the line of Dhaval, from DSP. Please go ahead.
Hey. Hi, Suresh. Thanks for the opportunity. I just had a couple of questions. First is on growth. I just wanted to probe a little bit more, in terms of, you know, the exit for Q3. What's the kind of run rate growth that you ended with, like YOY or in absolute terms? And this INR 3,000 crore a quarter, I mean, how do you get that confidence? I mean, if you could share a little bit more detail around, you know, ability to generate this on an ongoing basis, on a consistent basis. So that's the first question that I had.
Yeah. Hi, Dhaval. So in terms of the disbursement, we have already given the breakup of the disbursement and, you know, run down during the quarter-wise for the last 11 quarters. So that, that's one of the things that you will find in, slide number 19. Now, however, as you, as I have already explained, that, you know, this current quarter, we've had a bit of a dip in terms of disbursement. But what gives us the confidence that we'll be able to do INR 3,000 crore in a quarter, in the next year, is that, one, we are already back to our INR 700 crore run rate in December. So that's already one of the things. So even if you extrapolate that in the kind...
With a little bit of push in the Q4, we should be INR 2,500 crore plus. And second thing is we are tying up with for a CRM and, which is not mentioned actually in the presentation, but we are also tying up with a CRM and lead sourcing from digital channels, which will, which we are working on, in this current quarter. So that's one of the things which, you know, we are looking at good amount of growth coming or business coming from the digital channel as well. You know, onboarding from, you know, the digital leads that we are getting.
Plus, you know, these branches which we are opening, because we have already opened 3 in the Q2 , 5 in the Q3 , and we have another 6 or 7 lined up in the last quarter. So some, you know, as these branches also stabilize, there will be some business coming from this also. Plus, you know, the third point, which is positive, is that, you know, the push for slightly higher ticket size business is reflecting in the numbers. Because right now, in this current year, if you see, the INR 20 lakh-INR 30 lakh segment has grown from 25% to 26%, and the 30+ has grown from 34 to close to 36%.
So there is almost a 3% increase in the +20 segment, which is what, is also, will also give us a little bit of push in terms of the business. So these are the three, the three points which, we have in mind and on which we are working right now. Hope that answers, your question on, on, on this INR 3,000 crore.
Yeah, yeah, it, it gives perspective. So just one point on the INR 700 crore that you did in December. What was the same number in December 2022? Like, YOY, what kind of growth we were clocking in December?
So last year, of course, it was a push. It was a different push, and there was, of course, a different thing. Last year we had, Q4 was INR 2,500 crore, so that was almost INR 800 crore per month, was the kind of run rate last year. So we are back to the 700 already, and even if you are going back to the last year's number, as you said, so last year was already INR 800 crore.
Understood. So, okay. And so full normalization, in your view, starts from 1Q onwards? This close to, you know, INR 2,500-INR 2,800 crore start of next year, and then we know sort of move to INR 3,000 crore plus by 4Q of FY 2025. So full normalization happens from 1Q next year, or it could take some more time in your view?
Oh, no, it will definitely start happening because, you know, as I said, all the three points, one is, in terms of the ticket size, we have already started seeing. The 15 branches will also start performing, and, some of them have already started the disbursement. And, in terms of the third point, you know, if we are with this, digital channel that we are doing, also will get implemented in this current, quarter itself. So that also should get some results in, the Q1 of next year. So we should definitely kind of, be able to maintain 800+ , 900, close to 900 thousand crore in the Q1 , and then, average it out to around INR 3,000 crore every quarter in the next financial year.
Understood. And just one last thing on growth is, you know, this loss of growth that we saw in FY 2024, do you see a potential sometime in FY 2025 to make up with, you know, slightly higher year-on-year growth? I mean, directionally, you started, you know, FY 2024 with 18%, 18%-20% kind of CAGR in 3-4 years' time. Given that this year we'll end up with probably 12%-13% YOY, do you see a catch-up happening in FY 2025? Or it can -- if it happens, it happens in FY 2026, 2027. Just how do you think about it?
In terms of the disbursement, definitely there will be some catch-up in happening in the next year, because from nine thousand, close to eight thousand seven hundred, nine thousand crores that we'd end up this year, twelve thousand next year will definitely be a very, very good growth. But obviously the, you know, disbursement growth reflecting in terms of the, you know, you know, AUM growth will be sort of spread over a couple of years as we look at it. So next year also, we can look at a 15%+, and then, you know, then consistently around seventeen, eighteen percent plus on a regular basis.
... Oh, got it. Very clear. Just lastly on credit cost, so you know, you explained the flow-through from the restructured bucket and the conservatism that you've built in the provision as well. Just given that bulk of this you know, flow-through has sort of been behind us as I understand, you know, the last part of that was in November or so, so you know, maybe something in Q4, but largely I'm sure you'll have a view of how things are shaping up there.
Should we expect from next quarter normalized, kind of credit cost, you know, somewhere in, in that, low double digit or high single digit kind of credit cost number, or, or do you think it will take few more quarters before you, go back to those, normalized kind of credit cost?
See, this, this, Q4, this last October, November also, we had a very small portfolio of restructured book. Mostly, you know, the major chunk of it, almost 90% plus, has already, you know, came out of the restructuring in the, by, by September itself. So whatever, you know, impact it had to happen, happen in terms of the NPA has already been experienced. So, you know, Q4 also, as, I have indicated in the opening remarks also, that we don't, expect any further pain from this because it will be a small, you know, some, small book only, which is, which has come out in October and November.
In fact, in the Q4, we would probably, you know, we, we are expecting about INR 20-INR 30 crore of a gross NPA coming down in absolute value. So from 309 crore, we would look at somewhere around INR 280 crore is what we would, you know, probably, you know, we can look at by the end of the Q4 in terms of absolute growth NPA. And thereafter, well, I think there will be no additional pain, and the non-restructured book, as has already been experienced, is not having much of a, you know, movement, and it's a very stable book, which has not, there are no spikes. So we should be able to come back, come back to that kind of a credit cost levels as, as before.
Understood. Got it. And there's a possibility of a writeback also in Q4, given that there will be a reduction in gross NPAs. There's that possibility also?
Yes, in terms of the requirement of, as per ECL model, yes, there could be a definite possibility if the, if the NPAs come down. Now, how much we choose to do is up to the board as to whether we will continue and take a conservative call of adding a management overlay, as we have done in this quarter also. Because, INR 34 crore was what we had kept in Q2 for the balance restructured pool to come out and the consequent provisioning. But, we have not reversed it in this quarter, so again, we will take a call in Q4. But at least in terms of the ECL requirement of provisioning, it will probably not be required, if the, as we are expecting as per our numbers in terms of our NPA reduction in gross amounts.
Very clear, Suresh. Thanks, and all the very best.
Yeah, thank you. Thank you, Dhaval.
Thank you. The next question is from the line of Umang Shah from Kotak Mutual Fund. Please go ahead.
Hi, good evening. Thanks for taking my question. Just an extension to what Dhaval was asking: So from a credit cost perspective, how should we look at the provisions which are sitting under management overlay and restructured loans on the balance sheet, given that almost all the loans are out of the restructured pool now? Is there any view that the management has in terms of either retaining or utilizing these provisions over the course of next one to two years?
In terms of the 10% provision that was required for the restructured book as per the COVID restructuring guidelines, we have, which was originally INR 68 crore, that has come down to around INR 60 crore in this quarter. INR 68.87 crore in this quarter, mainly because of the loans which have been completely closed. Since there is no asset, obviously, that we have not carried. But yes, there is some portfolio where more than 25% of the principal amount has been reduced, and where 50% of that could have been reversed, but we have not taken that call to reverse it, so that also is a little bit of a buffer that is being carried in terms of provisioning.
Going forward, as I said, you know, in terms of the current Q4 , we may not require additional provisioning in terms of the ECL guidelines. But again, in terms of the PCR, we may, you know, look to have some number where we would prefer to have some, some, some kind of a buffer in terms of the PCR. To that extent, we will carry. So that, I think, would would be more clear in the Q4, and the board will probably take a call at that point in time. But in terms of the ECL requirement, it may not be required in Q4. That is all I can say right now. The rest, I guess, the board will take a call.
But looking to the kind of, you know, conservative approach that we have taken in this, the first three quarters of this year, we may still carry a little bit of provisioning, definitely to have a stronger PCR.
You, you mean to say carry a little bit of provision over and above whatever the ECL requirement is?
Absolutely. Absolutely. That is in the form of management overlay.
Understood. All right. Perfect. Thank you so much, and good luck. Thanks.
Thank you.
Thank you. The next question is from the line of Jigar Jani from B&K Securities. Please go ahead.
Yeah, hi. Thanks for taking my question. So, like you guided on OpEx of about INR 52-53 crores quarterly next year, would this be inclusive of the IT transformation cost or IT transformation cost of about INR 30-odd crores, which we are expect-
No IT transformation cost. IT transformation cost, you know, will be an extra to this, because this is a pure OpEx, that is, that will be there as-
... and that will be close to INR 30 crore for next year?
Sorry, then how much you said?
That would be close to INR 30 crore for the full year next year, IT transformation cost.
No, actually, it will be an additional INR 15 crore is what we are looking at, because we are already having some OpEx because of our existing routine. So the incremental would be around INR 15 crore, INR 15 crore-INR 20 crore, yeah.
Okay, understood. And, sir, on credit cost, so next year, we would go back to the 10 basis points guidance of credit cost overall, if everything goes as per what we are guided?
Kind of, because in terms of our, you know, NPA, where we are having it, it is roughly in the range of about 0.65%-0.7% is what we would be looking at by the end of next year. I think this year it will be 0.75%. So that way, in terms of that, the actual credit cost would not be very high.
Right.
Yeah.
Right. And just one technical question on the numbers. On your slide 14, we are seeing your yield on loan portfolio and your cost, both yield going down, cost going up, marginally, spread coming down, but your margins are increasing sequentially when you compare on a three-month basis. So what is driving that margin increase?
See, in the beginning of this quarter, we had INR 6,700 crore of, you know. So in the beginning of the quarter, we had, you know, INR 6,700 crore of book, where 335 basis points rate hike was actually passed on. So that is why the yield on the overall book or the closing book has increased from the in the current quarter. However, the incremental yield has slightly come, is slightly lower at 9.91%, because, you know, the current disbursement that we have done, and as was explained earlier also, with a slight change in the mix of the ticket size, is at a slightly lower rate.
So that is what will be the, you know, incremental yield, about 9.91 going forward. So that from the 10, from the current 10.01, would slightly, you know, moderate to by about 5-6 basis points or something like that.
Yes, sir, but your spreads are also coming down, but your yields are going up from 3.8 to 3.9, even on an incremental basis.
No, our spread on the book, entire book, obviously has improved from 2.6 to 2.66. And in fact, we had also mentioned that because we have that buffer with us, that is what is giving us the comfort to offer a more competitive rate and slightly move up, and we'll be able to offset it because that drag rate by the, you know, increase in the overall yield that we are expecting. So that we had also indicated. So that was a conscious call that we have a buffer, because of which we'll be able to offer in competitive rates and able to get some business in the slightly higher ticket size segment.
Sure, sir. Thank you. Thank you so much for answering my questions, and best of luck. Thank you.
Thank you. The next question is from the line of Pawan Kumar from RP Capitals. Please go ahead.
Sir, first of all, on the DSA side, the number of DSA has come down, so I would like to understand, you know, what is the strategy going forward? And number two, of the INR 650 crore of restructuring book that has come out, my understanding is, this book would have, I mean, after coming out, the book would be around six months old. So do you believe that the entire pool of GNPA that might have come out from this particular pool have already, are already there in the system?
The first point about your DSA, see, we have definitely shown our reviewed our DSA portfolio. And some of the, basically, it's mostly the, you know, the non-performing DSAs or those who are not contributing much, who have been removed. And of course, also a few where, you know, the, we had some delinquency in the pool. So where SMAs were high, we had a cutoff, and we have kind of a little cleaner stream then. So mostly it is in terms of the DSAs who are not very performing. So we are mostly sticking to people who are at least having some minimum level of business who are giving. And it is not that it is a kind of a permanent business permanent reduction that is going to be there.
We will also be adding people, but on a regular basis, we'll be churning and removing those who are not performing. Because, you know, there are a lot of other activities also for the DSA, so no point carrying the people, the DSAs, who are not performing. So that's the first part of your question. And second, in terms of the restructure, you are asking whether the entire pool has been with us for more than six months post which coming out of restructuring? Not exactly, but, you know, we had a small portfolio, as I said, up to 90% of our book has already come out up to September, and the three months more than, and three months, or more than that, has already been experienced.
The performance of the pool is very well known to us. There's a small portfolio which has come out in October and November, where one or two months is what we have experienced in terms of the repayment. However, you know, overall, we had anticipated that our even the portfolio which has come out much earlier, general tendency is that about 15% of the pool goes into into NPA, and out of the INR 670 crore, therefore, about INR 100 crore should have gone into NPA, of which already INR 93 crore is there. We don't expect much to happen. In fact, November was the last month where we experienced a fresh flow from the restructured pool into default and into NPA. But, in December, actually, our NPA's absolute value slightly came down.
That indicates that, you know, whatever, you know, even if some small book does come into NPA, we are able to cover it up with more recoveries and higher recoveries than the amount which actually flows forward. So the flow back has been higher than the flow forward... and that we experienced in the month of December itself for the first time after the restructured pool started coming out. First time in the month of December, we saw the NPA numbers, in absolute number, coming down.
Okay. And one final comment on growth rates for FY 25, what would be our understanding?
AUM growth, we would definitely expect or would look at above 15%+. In terms of disbursement, since of course, we will be back to around INR 3,000 crore a quarter, on a higher side, because this year, it will be almost about 30% in terms of the disbursement growth compared to the current year, which, you know, because this current year has been a little on the lower side. So, you know, averaging it out for the standard basis, it should be around INR 12,000 crore for the next year.
That is disbursement?
Yeah. In terms of disbursement, it'll be on the higher side, but in terms of the loan, AUM growth, around 15%+.
Okay. Thank you, sir.
Thank you.
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. Should you have a follow-up questions, we would request you to rejoin the queue. Thank you. The next question is from the line of Mohit Jain from Tara Capital Partners. Please go ahead.
Hello, can you hear me?
Yeah. Yeah, Mohit.
Yeah. Yeah, hi. Welcome, sir. So the... I have a question on the loans with number that we are discussing. So you are saying that we will have an incremental INR 2,500 crores of disbursement in Q4, and, like we- Hello?
Sorry, can you, can you... It's a little, you know, can you be a little more, clearer or closer to the mic, please?
Yeah, can you hear me? Hello?
Mohit, sir, can you use your handset?
Yeah, can you hear me? Hello?
Are you on your handset?
Yeah, hello. Can you hear me?
Yes, we can.
It's a little distant. It's sounding a little distant, so it's not very clear, actually. But please go ahead.
Yeah. Yeah. So, I'll try my best, sir. So you said that we are expecting a disbursement through disbursement number of INR 2,500 crores for quarter four. And sir, assuming the rundown rate of 3.6%, which you have stated in the slide, so we'll have approximately INR 1,000 crores of pre-payment coming into the books. So I think net-net, we have a INR 1,300 crores of AUM increase, which will be taking it to around 12% increase for the entire year. So, my question is, what can we do... What, what is the thing that you will be doing to take it to the 14% upper band, as you suggested?
See, INR 2,500 is a broad number, frankly. I understand it. We will have to do INR 2,800 to do a 13% growth. So we are working on, in fact, a little higher number only, and but, but for the number's sake, I have said INR 2,500. But clearly, you are absolutely right. We will require a INR 2,800 kind of a disbursement in Q4 to maintain a 13% growth.
Okay. Okay. And, sir, just one question on the restructuring portfolio. In Q2, we had almost like, 1,600 crores of portfolio, 160 crores of portfolio, which was out of restructuring. And the incremental increase in NPA on the restructuring portfolio in the current quarter is INR 32 crore. So if I am looking at the incremental amount flowing into the NPA from the restructured pool, it is coming to 20%. So, is it then correct to say that it is not just the incremental pool, but also the old pool, some of which have flown from becoming performing to non-performing in the current quarter?
See, in terms of the portfolio, we had about INR 450 crore, which had come out in the... by the end of Q2.
Mm-hmm.
And that, so sorry, up to the by by June, which on which we had a INR 68 crore kind of an NPA.
Mm-hmm.
By the end of December, that is, we've had almost up to September, we've had another INR 200 crore, which has come out, against which the growth in NPA has been to the tune of about 93, it has reached. So 93 minus 68 would be roughly in the same range of about 15%. It would not be higher than that.
Okay.
But to answer your question as to why, you know, in an absolute value, yes, there is also a growth in our loan book, in our non-restructured book, and there is some NPA also coming from the non-restructured book, which reflects in the total NPA pool. So that is why, you know, the number looks little higher, not entirely attributable to the restructured book. In terms of the restructured book, it is INR 98 crore at the end of the current quarter, and which was in terms of the second quarter, it was 64 crores. 64, 65 crores.
Okay. And going forward, we are not expecting any further pain from this portfolio?
Not really. We are not-
Okay.
- because, you know, even if something is there, we also expect a flow back. So that we should, that will be offset. We don't expect any further, anything coming from the restructured pool.
Okay, sir. Thank you, sir. Thanks for the answers.
Thank you. Thank you. The next question is from the line of Sonal Minhas from Prescient Capital Investment Advisors. Please go ahead
Hi, sir, this is Sonal Minhas. Am I audible?
Yes, yes.
Yes, we hear you.
Please go ahead.
Thanks for taking my question. My first question is with regard to you speeding up the pace of disbursement, and you're talking about using a CRM in a digital channel. Two things around this: First of all, what gives you the confidence of saying that the leads generated and the quality of leads generated by that portal, that, sorry, the CRM, sorry, essentially will be of good quality? So maybe if you can share some understanding behind that. And secondly, any white space you're seeing in the market, given that the competitive intensity in the real estate sector is going up, so what gives you the confidence that overall you can grow at that level? That's the first question.
Sure. See, in terms of the digital, the inquiry would be obviously through the digital channel, but in terms of the appraisal, it would be absolutely within the norms that are being followed for any other customer that we would be onboarding. So we have also the slide where we have mentioned the entire process, how it flows through. Where, you know, we have the KYC verification, we have the... So basically everything, right from the, you know, onboarding of the customer right up to the sanction and disbursement, all the processes will be the same. So effectively, you know, at most it could, you know, have a different ratio of conversion. Maybe it could be a 2.5 instead of a normal 3% that the market experiences.
That could be a different thing depending on our lending norms. But, obviously it will be as per, entirely as per our policies only and processes that we follow. So there would not be any compromise in terms of the sourcing that we do from the digital channel. So that's the first point. Second, as regards the disbursement and competitive environment, I think we know there is obviously competition is there, and Q4 normally there are a lot of offers on by most players, so nothing very different in this quarter. In fact, you know, we don't see the same kind of intensity or the same kind of very lucrative offers as yet in the market.
But, you know, this is something which is, which has been there, in the industry as a normal feature. That Q3, Q4, normally there are offers in the market. So that's, that's fine, nothing very special. As regards the competitors who normally are there in the market with whom we face competition, I would say it's the same names that are there. It could be for us, it could be LIC, it could be PNBHFL, and it could be Bajaj, operator.
Got it, sir. Okay. I'm assuming going forward, the mix remains the same in terms of salaries and expenses, right? Is that how it's largely gonna be, or the mix is also going to be, which we tweaking a little, for the next year or two?
No, it is around 72% salaried and 28% SENP. We would like to probably not go beyond 70%, not go below 70% for salaried sector.
Okay. Okay, so, that's, that's the main. Okay, understand that. Thank you, sir.
Not a major change, and no specific attempt to kind of change it or anything. If it happens on a normal, you know, on-ground kind of thing, it will happen. But, again, we'll... as I said, it will be 70/30 at most. That is where we'll be comfortable, not below that.
Okay. Second question, sorry, sir, if I may have a follow-up, am I allowed to?
Yeah, go. Go right ahead. I mean, I guess-
Sure. Sure. So, in terms of, I think, the IT infrastructure and the digital system, I think you mentioned that, there is a lag, essentially. Just from an understanding perspective, where we are in terms of current, systems, you or let's say the next 10, 15 people, who are, in designation-wise, let's say minus one to you, are their systems will basically throw out things on their dashboard if there's, that, let's say there is a stress building up in certain geographies, certain branch, there is a, mismatch in terms of, disbursement, collection, or any other risk parameters, per se. Do you have dashboards as we speak right now, and your minus ones have those dashboards, where you know what are the actionables...
Just trying to get a sense of your current IT infrastructure at the senior level, essentially, in terms of tracking and monitoring.
See, in terms of the IT infrastructure, one is of course, we are looking at a complete overhaul of the system. But, that is because our existing system is almost, you know, kind of 12 years old. And we've been using the same system. But, we do have a strong, you know, alerts, and we have increased the number of alerts and monitoring and everything post this event also. So there are regular OTMS reports which are being generated by the risk and being monitored by them. We also have a proper audit plan which is in place, which also, you know, covers every branch is covered at least twice during the year.
We have also started this, you know, quarterly cluster level, because we have clusters, where a group of 8-20 branches, depending on the size and location, we form a cluster. So we at a cluster level also, we are doing a cluster monitoring, where there are almost 18 parameters for each cluster, which are being reviewed every quarter. So that also throws up a lot of data in terms of whether there is any pressure building up in any particular area or any particular area amongst those 18 points, parameters, where, you know, some of the areas are lagging behind or some of the clusters are lagging behind. So that quarterly monitoring in terms of this also is coming from the system.
So that way, we have a good monitoring system, and we are also upgrading our existing system. Not to mention that, you know, the new system whenever it comes, will come, but even in the existing system, we are constantly monitoring and upgrading. So that's not an issue.
... Got it, sir. Okay. Thank you a lot, sir. That's it. Thank you.
Thank you. The next question is from the line of Abhijit Tibrewa l from Motilal Oswal. Please go ahead.
Yes, good evening, everyone. Suresh, I had a question. I think, I mean, somewhere during the call, you had guided for INR 12,000 crore of disbursements next year and 20% kind of loan CAGR. So just trying to understand that subsequently, while you were answering other participants in the call, did you say that loan growth of 15%, or are we kind of still trying to say that we are looking at a 20% kind of loan CAGR, so that the loan book doubles in the next 4 years?
Many, you are, very kind, good observation. The point is, what I was saying was that the loan book, even though next year we are looking at about INR 12,000 crore disbursement, and we will have, you know, higher growth rate in the next year in terms of the disbursement. In terms of AUM, there is a little lag that always comes. So 30% disbursement growth will not reflect in a 30% growth in AUM. You know, it's not a straight equation. So there will be a little lag. And, you know, next year, because, you know, this year has been a little lower, there would be an impact in the next year.
But in terms of the longer term story of about 3-4 years, yes, we would be looking at a CAGR of about 20% in terms of our AUM growth. So next year could be a little less, although we'll be doing a little higher growth rate in terms of our incremental disbursements.
Got it. So essentially, next year the growth could be lower than 20%, but over the next three to four years, CAGR basis, you are looking at a 20% AUM CAGR.
Absolutely. Absolutely.
Good. And so, I mean, thank you for that. And just one last question that I wanted to understand. The kind of margins that we are operating at today, they are almost historically high margins that we as a franchise have operated at. In addition to the things that you talked about, which will act as levers for growth, digital lead sourcing, newer branches, almost 15 branches planned in 2024, higher ticket size, contributing to growth. Don't you think we should also maybe start looking at NIM as a lever to spur growth? Because at the end of it, today, we are operating at somewhere around 2.1% kind of RoA.
Even if we are talking about some moderation in margins from here, it is only next year where you are going to see some higher cost to income ratios. So rather than operate at these kinds of margins, sir, is there merit in looking at margin as a lever to spur growth?
No, definitely that's what we have initiated, because, you know, incremental yield, if you see, is lower than the book yield. That clearly reflects that we have looked at you know, slightly moving up in terms of the ticket size ladder, where we will have to be a little competitive. So a couple of you know, bits of impact in terms of the spread could be there, but that will help us in getting the growth in terms of higher ticket size loans and you know, maybe you know, penetrating segments also.
So that's exactly the answer, you know, that's exactly what we are looking at, that even if a 2.66 is not what we have been guiding, in terms of spread or a 3.92 in terms of the NIM, we have been guiding in terms of a 2.5% for spread and 3.5% for NIM in the longer term basis. And the obvious reason is that we are looking at, you know, having, you know, slightly more attractive offers or things or more competitive pricing in terms of our, loans to attract, slightly higher ticket size, customers also.
Got it. This is just one last thing. Sorry for this. Just one last thing I wanted to understand, now that you have two triple A ICRA credit rating agencies giving you a triple A credit rating... Will you now be looking at more debt market issuances going forward, and will that benefit your cost of borrowings?
In the real sense, you know, yes, it should bring us some benefit in terms of our cost of borrowing. But in the present scenario, you know, where the NCDs are going at a rate of around, you know, three-year NCDs are going at around 8.3, 8.4, our bank borrowing is still at a lower rate than that. So while, you know, the rates probably would be about 10 basis points lower going forward from what we were doing, you know, on a similar state basis about 2 months back when our rating was AA+, but still, today, our bank borrowings are at a lower rate than the NCDs, primarily because of the liquidity position.
But, going forward, you know, theoretically speaking, yes, if, you know, liquidity eases, yes, we should be able to have a lower rate of our NCDs, and we may at that, at that time, have a better rate on our NCD borrowing as compared to our bank borrowing. That is possible.
Okay, sir. This is, this is very useful. Thank you so much, and wish you and your team the very best.
Thank you.
Thank you. The next question is from the line of Dhaval from DSP. Please go ahead.
Yeah, all my questions are answered. Thanks.
Okay. Thank you. The next question is from the line of Anusha Raheja from Dalal and Brocha. Please go ahead.
Yeah, thanks for taking my question. So as I just look at your disbursement growth number for the first nine months of FY 2024, that is closer to around INR 6,400. And if I add this to your, you know, loan book of previous nine months, that is still coming to around 20% plus, but your loan growth current is, you know, 13% odd. So what I understand, either the BT prepayments or, you know, that rundown is more on the book, and that is one of the reasons that the loan book, you know, AUM growth is not coming. So am I right?
See, there is a rundown, but if you can just look at slide 19.
So the rundown is closer to around 2,600 odd. So what you are adding also, you know, near to around one quarter's growth is, you know, the rundown is closer to around, you know, closer to around one quarter's growth.
No, that is obviously because this quarter's disbursement has been slightly on the lower side. But if you look at page 19 of the presentation, you know, the prepayment or amortization plus prepayment as a percentage of the opening book has been quite stable for the last 11 quarters. In fact, we've probably in the current 3 year, 3 quarters of this year, we probably have had a lower you know, amortization plus prepayment ratio compared to the previous years. So, I mean, yes, to that extent your observation is correct, that the prepayments and amortization has been almost equal to or maybe 60%-40% of our disbursement. But that is also because in this quarter we have done a little lower disbursement, which is obvious, which is the main reason.
Otherwise, if in terms of a normal run rate, if you were to look at about INR 3,000 crore or even INR 2,700 crore, you know, on a regular basis, our incremental addition to the book should be much higher. It should be around INR 1,500 crore. Should have been INR 1,500 crore.
So broadly, how do we assume this rundown, in either in terms of BTR rate or prepayments, in the next fiscal? You said that AUM growth could be closer to around 20%, disbursement growth of around, 3,000 odd per quarter. But how do we, you know, what's the assumption that you make, on the prepayments and the BTR rate, the rundown that will happen, you know, next fiscal?
No, I guess the same slide 90 should give you an idea that it normally ranges between 3.5 to around 4. So that would be the range at which we can, at worst case, worst case scenario, you can expect a 4% rundown, and-
Mm-hmm.
Do the math. But basically, it is, you know, on ground, the effort will always be, and attempt will always be to ensure that we retain our good customers. And that is an ongoing kind of activity which is there for everyone. I mean, it's a normal, regular activity.
And more so, I believe that, isn't that, that we are heading for a declining interest rate scenario next fiscal? And, the banks, if they decline their MCLR, I mean, the competitive edge, will decline since, you know, the banks will also be offering the lower interest rates. So in that scenario, the BT rates could be on a higher end, or, that could be the case.
No, I think we've answered it earlier also, that we have also moved to a quarterly reset. So in a, on a quarterly basis, you know, basis on the at the anniversary, or the quarterly anniversary basis, the customers will get a benefit of the lower interest rate as we also will keep reducing our. As our borrowing cost comes down, our card rates also will keep reducing, and we'll pass on those rates to the customers. So, you know, if we, you know, with that kind of fairness to the customer, I guess, you know, BTR will not be impacted as much.
Okay. Fine, sir. Thanks.
Yeah. Thank you.
Thank you. The next... The last question is from Raghav Garg from Ambit Capital. Please go ahead.
Yeah, hi. Thanks for the opportunity, sir. I just had a couple of questions. So if I look at the branch productivity for FY 2023, and I think I've discussed this with you, we were disbursing somewhere around 200 files in a year. I think with the new developer tier that we're targeting, eventually we're targeting some 10%-15% efficiency improvement. Is that correct? So our disbursement run rate per branch would go to some 220-230. Is that understanding correct?
See, normally also, yes, if it is 200 today, it should go up a little bit. That productivity would always, improvement is always there. And, with some, kind of, you know, IT interventions also happening, we are, yes, there is a possibility to slightly improve on the productivity of the branches. So yes, you are right.
Sure. And sir, did I also hear you correctly when you said that you would try to bring down the DSA proportion to 60% and 40% contribution would be direct sourcing?
What I meant was that basically we are going to push for higher direct sourcing and more reference to the digital channel. So while the DSA would probably continue at the same level, our sourcing from our direct and from our the digital channels would increase at a, should increase at a higher rate. That is what we are trying to do, so that eventually the percentages come down.
Understood. So, sir, in that INR 200 crore that we did for FY 2023, 80% was DSA, right? So about 160, 150, 160 was coming from DSA, and the rest, 40, 50 from direct sourcing. Now, if we were to target that, you know, incremental productivity that we're planning to unlock, if we plan to go to 230, that would imply a serious improvement in our direct sourcing productivity or, you know, the productivity of the in-house,
Correct.
employees or branch staff. What gives you the confidence that that can go to 40 to nearly a run rate of 70-80 over the next 2-3 years?
See, we have a lot of this thing possibilities in terms of digital tiers, where we can, you know, source inquiries. And, as I had mentioned earlier also, we are looking at a tie-up with some, you know, with CRM and all those things, where we can have a processing of these inquiries and conversion at a much better rate. So this is basically what we are looking at, so that this will help us, you know, increase the number of, you know, doable leads to the branches could be increased at a much higher level. So if we can outsource the inquiries and conversion could improve, that would bring in a lot more doable inquiries. That is the strategy that we are looking at.
So, you know, basically the branch would be, you know, used more for the strength, which is the credit appraisal, and thereby we could be able to maintain our quality, and the sourcing could be through this CRM module and through this channel that we are looking at.
Understood. And sir, just last question: so I also understand that in the developer channel, our yields would be lower, given the higher ticket sizes, and, you know, the higher competition. But, what kind of commission payout would we be doing, if anything at all, to the developers? And, ultimately, would this be an RO- ROA accretive business, for us?
See, in terms of the DSA channel, our normal payouts are anywhere between 0.3%-0.65%, and for us, this works out to around 0.43%. Sorry. It comes out to around 0.43%, whereas in terms of the developers, you know, depending on the quality of the developer, they expect anywhere between 0.10%-0.25%. So that way, you know, about 15 basis points of a saving in terms of the initial payout will definitely can be saved, even if you are looking at a good quality developer.
Right. But what would be the yield, or how much would the yields be lower, in these developer sourced loans?
See, right now, irrespective of the developer loan or the non-developer loan, we are offering a rate of around 8.95 for a customer in the more than 700 CIBIL score category, where the ticket size is INR 72 crore plus. Okay? And so, you know, in terms of... It's not that, you know, for the developer-generated model, we are offering something more attractive than what we would offer to a normal customer. So this is as a strategy itself, we are offering a rate which is around 65 basis points higher than what, you know, SBI or an HDFC would be offering in the market.
Thanks a lot, sir. That's all from my side.
Yeah. Thank you. Just a second, I think there was one question on OpEx, regarding how much is the cost of acquisition. I'll just answer that in just a second. We have about. See, out of the INR 49-50 crore, that is the OpEx, you know, in a quarter, the average payout to the DSA, which would be around somewhere between INR 6-6.5 crore. The rest of it is the regular business expense, and part of it is the recovery expense. I think there was one question raised earlier, which I said I'll re-answer, respond to later. So about INR 6.5 crore, INR 6-6.5 crore, is the payout to the DSA currently in a quarter. Yeah, so I guess that's it from our side.
Any more questions, or, was this the last question?
This was the last question. I will now like to hand the conference over to management for closing comments.
Yeah. First of all, thank you to all of you for taking the time out, and I hope all the questions have been answered. But in any case, if there are any more questions, feel free to keep or get in touch with us. And once again, thank you for joining this conference.
On behalf of Investec Capital Services, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.
Thank you.