Q1 21/22

Jul 23, 2021

Ladies and gentlemen, good day, and welcome to the Tanfeng Homes Limited Q1 FY22 Conference Call hosted by Investec India. As a reminder, all participant lines will be in the listen only mode, And there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Mr. Ujjal Gogirwal from Investec. Thank you and over to you, sir. Thank you, Rituja. Good afternoon, all. Welcome to the quarter 1 FY22 earnings conference call of KensiRome's Limited. To discuss the financial performance of Kenshin Homes, I'd like to address your queries. We have with us today Mr. Girish Hosky, MD and CEO of Kenshin Homes Limited Mr. Amitabh Chaitanya, Deputy Managing Director Ms. Shailena, Business Head and Prashanth Joshi, CFO of SantiRao Limited. I would now like to hand over the call to Mr. Birish Pulsky for his opening comments. Over to you, sir. Good afternoon to all the investors. Welcome to quarter 1 earnings of This year, it was a fruitful quarter in many sense that after the lockdown in April, We had tough time managing our book and also to get that business with whatever 45 days available in the quarter. So even that, I think, eventually, it was a good quarter. I'll talk about the numbers getting later. So let me start with last year, quarter 3 after In quarter 3, we came back with good growth of 12%, and quarter 4 was all time high. We did deposit of INR 2,000 crores, which is all time high ratio of Kansans, and our NPL was at 0.91%. So if you look at June, 0.91 has come down to 0.9. And in terms of business, because of 2nd wave, we got impacted, But we're able to manage on the collection front. We improved our efficiency, which was quite low in April. Newer's bond rate. JUV picked up very well. And we were able to know the birth which was equal to 123% on a year over year basis. Now in last few quarters, we've been maintaining that our margins will come down Because we changed our pricing strategy, and that change was warranted because of heightened activity, especially in the mortgage Yes. Both home and non home, largely driven by all the banks to focus On retail because corporate and SME was not taking off due to COVID. And this was the fastest way of Anurag to build the book and especially by doing balance transfers. So in order to protect the customers and save the book unless to grow over on, So we had to change the pricing strategy. We changed the pricing strategy and that lasted till about last year on March, that is the quarter 4. So if I have to talk about quarter 4 pricing, the lowest was about 6.95 And we also went up to 6.75 for some time on a with an offer. Now what we have done is we have increased the rates. Now our rate is 7 point Right. And also to talk about the entire portfolio, 70% of the portfolio is repriced. So we have only 30% left And in any pricing in future will happen at a higher rate, which means I think bottoming out of both rent and NIM has already happened. And from this quarter onwards, quarter 2 onwards, you will see improvement in both NIM and SPECT. In terms of business, outlook is very good. We actually started in the quarter 3 of last year. Quarter 3 was good. Quarter 4 was very good. Quarter 1 would have been very good, but for COVID second wave, which actually put brakes on Because it impacted mobility of both customers as well as our employees. And therefore, we had to curtail our Plan in terms of business. We'll be very high on liquidity. I think there is no need to talk about that because we always are in excess of about 3,000 plus growth, which will last for another 5 to In terms of profitability, it's quite moderate. In NII, In terms of revenue, revenue has come down. That's only because of the falling rate interest scenario. No, where the fees will come down. And we also were also able to manage its lower cost. So I think this really helped us. And so now If you have to talk about spread, it is 2.4% and NIM is 3.31. So I think going forward, you will see both these going up. I think you know all the numbers. I'll just Thank you very much. We will now begin the question and answer session. Please press star and 1 on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking the question. The first question is from the line of Dhaval Dada from DST. Please go ahead. Yes. Hi, sir. Thanks for the opportunity. Sir, the first question I had was on business momentum. If you could talk about how Situation was in June and also how you're seeing the situation in July in terms of Fresh inquiries and overall, just given the trend that you've seen in the last few quarters, How do you see the rest of the year pan out on the business front? Would you start with that? So actually, if you see from last year, Quarter 3 onwards, business trend is very good. Market is very robust. And in quarter 1, we did business only for 45 days. So whatever business they have done is only for 45 days. Within quarter 1, June was very good, and the June also is pretty good. So On quarter 2 onwards, business outlook is very good as long as it doesn't hit us. So it's pretty robust. Actually, quarter 3, honestly, it's good. Only thing is quarter 1, we have to take a break because of COVID. Otherwise, the trend is very Sir, when you say June July were very good, just if you could put that in context of, let's say, what you did in 2019 June July, how would that stack up? Like if you would just sort of last year base would not be comparable. So I'm just saying The year before that, how would the current numbers stack up with that? Yes. If I have to compare with last to last year also, Only thing is in quarter we lost 45 days. So had we done business for 9, 5 days? No, no, I was referring to say June and July only, so yes. July is very good. July is very good. In fact, this quarter, we'll be doing very good numbers. Understood. So basically, like the INR 30 minute crores plus divestment that you did in 20 FY 'twenty, we took you FY 'twenty. So do you think that that should be that run rate or more than that run rate should be doable In the coming quarters. So just It will be far better than that number. Okay. Okay. Yes. That's what I wanted. Yes. Okay. The second thing, sir, which I was looking for is on the asset quality front. So now we've had 3 quarters where we've gone back to the pre COVID credit constraint. How do you see the rest of the year pan out? And also, if you could just quantify the excess provision that you carry on top of the free provisioning And standard of approval, is there any buffer that is there? And how do you intend to utilize that for the rest of the year? So in terms of asset quality, I think assuming that there is no 3rd wave, I think we are pretty comfortable on asset quality. And we are holding about INR 33 crores now, additional provision, so which we can utilize if need be. So we're pretty comfortable in asset quality. And if there is 3rd wave and if it is not CEDIA, we'll be able to very easily manage. So the current credit cost trajectory should be the consistent trend that once you look like? Yes, it will be consistent. Understood. Understood. Yes, that's it, sir. Thank you and all the best. Thank you. Thank you. The next question is from the line of Amit Jantra from HDFC Asset Management. Please go ahead. Hello. Yes. One question is that your excess provision, has it come down Q In quarter 2, what we have done is we have just set aside against some of the restructuring in the pool. Can you quantify the restructuring pool then? Actually, we are in the process. So I think by next quarter, we'll be able to Exactly. Talk about that. See, we were holding about close to 70% of provisioning. Correct. It's still higher than excess on that. So we have earmarked some amount. So there will be a restructured pool. And also going by the trend, what we feel is that once the term gets over, about 15% of the restricted food would Actually, not going to become nothing here, but we are very covered for that. What you are saying is that 70 crores of excess provisions you are carrying, and Out of that 37 crores, ma'am, you have earmarked towards restructured pools? Approximately. Okay. And that's why now you're getting 33 crores of excess provisions? 2nd question is that, now see what has changed in the environment that You are now confident that you should get higher yields as well as higher growth because in the past, I mean, post Q3 of last year, the strategy that we adopted was to try and get higher growth because maintaining both yield and growth was It's turning out to be tough. So is it that the competitors have also increased rates and that's why we are able You know increased rates or now this is a conscious strategy that we are seeing growth anyways and that's why we can maybe get higher yields? Our growth story is intact. So we had an outlook of growing much faster than marketing that is still intact. So we will definitely grow at a faster pace. Now we had changed our pricing strategy because of intense competition, No, largely because of COVID, because of COVID economy was down and the second segment didn't take off for the banks and therefore All the banks, they were focusing on mortgage, right? So now we see that market is quite robust. And slowly, other segments are picking up, which means the intensity in market business by large banks will Come down gradually and therefore we thought we see an opportunity. While we grow at a faster pace, we can also Try and improve on margins, which is in fact, even earlier I said that 2.43, so now we see some opportunity where we can try and improve Okay. And one last question from my end is So if you look at the cost, QoQ, it has once again come down sharply. How should we view at your overall OpEx? Well, just talking about cost to income, so what happened was last year, COVID was there for quite a long time and therefore we had to Q4 Q3 and Q4. Other ways, what you see from last quarter is an ambition. So what we see now is the right costincome ratio. Okay. Okay. Thank you. I'm done. Thank you. Thank you. The next question is from the line of Anand Gharzani from Weidtok. Please go ahead. Thank you for the opportunity. I have two questions. The first question is on the yield. Sir, what would be the yield that you'll be adding on incremental lending in Q1? So incremental EBIT is about 7.23 and incremental cost is 4.87. 4.87. Okay. So the interest of spread comes out to around 4.36. Yes. So this is obviously lower assets. So Do you anticipate that spread to remain at this level, incremental spread for rest of the financial year? That's what I mentioned. From this quarter, both spread and nimble increased. Okay. Okay. And this will be driven by lower cost of funds or both? This will be driven by 1 is lower cost of funds number 2, higher business and number 3, higher yields. Okay. And sir, in terms of your stake to assets, it will be What will be the phase 2 assets as of Q1 and the number for the current and also the restructured book? You need to give us some time to get back to you on the restructure pool because it is still working progress, right? Yes. Page 2 assets put together somewhere around INR 400 crores. And what was the figure at the end of 2017? This is the new figures. I'm asking for math, but I don't see how has it changed. Pardon? Your voice is breaking. Yes. I wanted to understand how was this figure at the end of March so that I can compare the sequential figure Thank you. The next question is from the line of Srita Jain from ANSWELS. Please go ahead. Hi, sir. Thank you for giving this opportunity. So I have a couple of questions, which is just 2. The first question is, sir, if we see the disbursement for this quarter has been INR 800 crores, while our loan book has just expanded by INR 100 crores. So I just wanted to understand, I know we've consciously taken the strategy of reducing the rate with respect to the competition. But I did see the loan book growth has been written on the lower side. So just wanted to understand how this strategy is panning out for us. I mean, is it working for us? Can I just put some light on it? No, it's working for us. What happened in quarter 1 was, as I told you, that we were not able to do business for 45 days, okay? Now every month there are repayment which happens. Now definitely your book will go down because of that, which will come to close to about INR 370 crores per month, Right. So these are the normal repayments, which happens month on month. Since we were not able to disperse In quarter 1, because of COVID, you will see even the book growth slightly lower. Okay. From this quarter onwards, since there are no challenges, the book growth should be pretty good The way we've shown in quarter 4 of last year and partly in quarter 3. Okay. So my second question is also around the disbursements. Like you said, you had Q2, I think you disbursed INR 1200 crores last And that was the highest investment all time high, right? So just wanted to understand now going forward, assuming We don't have the 3rd wave or the impact of the 3rd wave is less. And like you're saying on the ground, the momentum is really picking up. In fact, it started picking up since last year Q3. So can we take a benchmark Far better than that. Better than that. Okay. Far, far better than that. Okay. Would you be able to give a ballpark number, sir? I don't think so. I can only say that No, quarter 4, we did 2,000 crores, right? So I think if you look at the average for next 2, 3 quarters, I think, slightly above that. So I mean the market is really robust. The only thing is we were not able to do business in quarter 1. This is true for the entire Industry will be far, far better than the numbers which you quoted. Just to give the additional information for the earlier question regarding the Phase 2, the Phase 2 assets were INR 1184 crores as on March 31, 2021. And June, it is 1200 crores. So there is a healthy increase of around 16 crores from March to June in the Phase 2 accounts. Thank you. Ladies and gentlemen, in order to ensure that management is able to address questions from all participants, Please limit your question to group of participants. If you have a follow-up question, you may rejoin the queue. The next question is from the line of Shivran Sameshwar from Systematics. Please go ahead. Hi, sir. Thank you for the opportunity. A couple of questions. I wanted to understand what was the rejection ratio in this quarter Also, what was the entire rejection ratio in FY 'twenty one? And the second question is what percentage of our book Is domiciled in Karnataka? And further, what percentage of our book is domiciled in Bangalore also? Okay. So if I have 2 last financial year, which ratio was about 15%, and now it is 11%. Historically, it used to be around 10% to 11%. Because of COVID, we had made small changes. We had put additional filters. And therefore, it went up to the 15%. Now it is back because we have normalized all those changes. So now it is 11, back to normal. In terms of Karnataka, Karnataka contributes close to about 30 6%. And out of, listen Karnataka, Bangalore accounts to almost 80% to 82% of the book. 80% to 82% of Sumativar, right, sir? Exactly. Yes, yes, yes. Right, sir. And sir, just one last question. What is your normalized run rate in terms of number of loans per quarter or even on a per month basis, if you discuss? So it will be approximately about 12,000 to 13,000 per quarter. 12 quarters. Sure, sir. Thank you, Welcome. Thank you. The next question is from the line of Sanjay Seda from VNTech Securities. Please go ahead. Yes, my question was on disbursement only. So I thought that Disbursements going ahead would be at least RMB80 1,000,000,000 to RMB20 1,000,000,000 is what you are indicating, right, RMB800 1,000,000 to RMB2 1,000,000 or more than that? Yes. That is on the same line. Yes. Sure, sir. Thank you. The next question is from the line of Sunil Manoj from CFCM Capital. Please go ahead. Hi, sir. This is Sonal Dhanas. I wanted to get a heads up update on Last thing we talked about, you are relating the moves on the quality of the customers who Would be getting added in the loan book and hence deliberately getting A new set of customers with a higher yield and maybe a higher risk profile as well. So just wanted to get a projected update from you as to how is that turning out and What all things have the company done in the last quarter or maybe 6 months to make sure that we are on track on that? So what did it go us? Since we changed the trading strategy, we had the ability now then to focus on slightly Better profile rather than think better maybe high decays, slightly higher decays, so that we can grow a bit faster. And all these are salary, and therefore the risk is lower. So our ticket size went up from R18 to R20. So that's the case. So we also had to reorganize some of the strategies to ensure that we start putting more from Cat A and Cat A and Cat A and Cat A operates in some of the midterms and major cities. Right? So we had the pricing fast, right? So even now, going forward, we will have the pricing part. We will not be on par with the best banks in the country Because we also need to maintain a margin. At the same time, we won't also get back to our pricing strategy, which was there 2 years back in a way The differential between the best bank and us was about 150 to 200 bps. So going forward, we will have a difference of about 75 to 80 bps. So we will have that extension. Since we are widely spread, we'll be able to generate that kind of business and maintain higher yields. Okay. And so in terms of internal processes, to assess, let's say, Customer who is applying for a second house or a model or let's say a top up loan or a 3rd house, what additional Things have been reinforced in the company to make sure that this is a watertight process and maybe the approvals for that are I've looked at in a tighter manner because it's a new business that or a new business that you're trying to get into. I just want to understand that common operations perspective, internal operations perspective. So if it is a second loan and if it's a top up, then actually the process is Right. So that the tax is better and customer experience is good because we have customers' written and track record And we have all the details of the customer now, including the repayment, and therefore, we have simplified the process. However, is it easier because you have an existing customer? But for a new customer, the same Process continues where we check on the customer profile, Check the property, Checkers cash flows, banking and income levels. We are little tighter in terms of calculating the 4 year because this is second property, so we have all student credit checks which we apply and apply various details because It's just the other set of default, higher set of default, and then we take a call. So I think these loans have really Worked out to be good for us in terms of delinquencies. The customer with the better repayment track record behaves well in our book. Understand. And in new way, a customer who has, let's say, less credit history or So, Mr. Nee, adequate back record on the credit, get through the system because of this being a new Product segment or category we're getting into? No. We have a mix. We also created the 1st time borrowers. I mean, it's a 1st time borrower's home because Customer might have a credit card or maybe a small M PQ, so we should not give us the credit history in spite of referring to Biro. So we have a lot of customers now who will be 4th time into major exposure. And therefore, our internal risk assessment becomes the key. We have a scorecard to assist our scorecard is nothing but a mini bureau. So we apply these parameters No. And then there is scoring done and then there is tagging gets done. So based on that, we price and we take exposure on the customer Because of our internal DISC assessment and underwriting, we are able to control that. But we have good 41% in the portfolio, which is doing very well. Thank you. The next question is from the line of Shalini Ratimpak from the SE Mutual Fund. Please go ahead. Hi, sir. Sir, I wanted to know the amount of your PPP borrowing. And also you have mentioned that the incremental cost of borrowing is around for 48%. So how much of this would be coming from the CP? CP. CP. CP. See, actually Yeah. Yes, yes. So CT, we take only as a backup. We don't waste CT for funding. So only if you have internal policy, Only if you have unutilized food and sanctioned unutilized term loan limits, only then we take CP. So CP is used more to leverage and cost and not to funding. Okay. So as a policy, you would have unutilized bank limits against all the city boroughs? It is unutilized policy. It's not a documented policy, but since we are We have to keep our cost low. Since we are high on liquidity, I think it is it is best to keep our cost low by raising CP as well to leverage on cost. Sure. That helps. And how much would that number be, if you could give us a number? CT number? Yeah. It's about INR 4,200 Thank you. Thank you. The next question is from the line of Manantu Gurdiwala from ICICI to Financial Asset Management. Please go ahead. Hi, sir. I have a couple of questions. Yes. So for example, we have repriced 70% of our portfolio. We do annual refits. So now It works in both of these. When the rate goes down, our portfolio will get repriced on the lower side. When rate is going up, it will get repriced on the higher side. So now, for example, interest rate started moving up. So you will see in next few quarters, the better Hopefully, it will be refreshed in the higher side. So it helps in both sides. So now it's almost at the back end of the falling rate scenario. And so next one to one and a half years time, we will see good lift in the fees on portfolio. Because that is you're saying that 70% gets repriced annually. So is there a quarterly repricing as well, which is why you expect the yield to go up? It's done on a monthly basis. It's done every month. So a certain set of customers would fall due for conversion every month. So in 1 year, we would have covered the entire cycle. Okay. Sorry, sir. So for example, now, if you I generated a loan which was at around 6.9 or whatever was the teaser rate at that point. So how much would that get repriced this year? It will be at the card rate. For example, now, any repricing now will happen at 7.5. So any repricing in March, it will happen at 6.95. So whatever is the card rate at that given point in time, let's say in that particular amount, for example, let's say 2 quarters later, If my card rate is 8%, any return will have an 8%. Right. So mainly the lowest rate, the highest rate now. So now we have seen almost end of the downward rate scenario, which is that we also increased rates from 6.9% to 7.5%. So I think going forward, we can see upside on Very much, sir. And sir, how much of your portfolio would be, say, probably below 7% in the entire portfolio right now? You're saying less than 10 or more than 10? Less than 7. Less than 7 May not be much, but for the origination what we did in the part of quarter 4, So that will be, let's say, about 1,000 odd crores. Not 1,000,000,000, yes, I think 1,000 odd crores. I would say that you will 1,000 and000 crores max. Because we changed the pricing now somewhere at the mid of the quarter. So if you take that into account, even the repricing and this, all applicable, it will be about not more than INR 2,000 crores. Okay. One last question. So as you're borrowing, so whatever is above 7%, how much of it would come for repricing in this year? Linked to the repo discipline. All the borrowings are linked to the repo discipline whatever we have from the nationalized bank and from other banks. Whatever we follow from the restructuring line is bring to their lending rates. CP as well as NCDs are at the market rate. So as and when the report changes, the rates will get cheaper. So one is that number 2, we also proactively engage and negotiate with all the bank service. We've been doing it for last few quarters in order to get our return loan reprice on the lower side. The next question is from the line of Agal Dara from BSE. Please go ahead. Yes. Sir, just one clarification. So on the you said that we'll use a restructured number in the next quarter, But just the amount that you sort of set aside, INR 37 crores, and if I assume 10% coverage on that, that amounts to like 1.6%, 1.7 Is that broadly where we should be approximately? Yes. It will be less than 2%. Yes, indeed. Okay, got it. Thank you. Thank you. The next question is from the line of Amit Zhanendra from CAC Asset Management. Please go ahead. Can you provide the total borrowing number for this quarter? What is the total borrowing Incremental borrowing you're referring to? No, not incremental. Total, it was 18,000 to what it is, closed in the Q4. What would it be in the Q1 of this year? It is 19,275. And out of that, you mentioned that some INR 4,000 crores is CP. Is that correct? Yes. See, if you want to know the bucket, we think bank 42% to 47%, NHP is 25%, Market borrowing consisting of CP and NCD 26 and balance 2 percentage from the public deposits. Thank you. The next question is on the line of Anand Bhargani from White Oak. Please go ahead. Thank you for the opportunity. Sir, my question is more from a strategy perspective and more of the previous 2 5 years. I have a question. So Apologies, if you can find it for the particular quarter. The question is, we hear a lot about fintechs coming when there is this question Whereby people have an account with NBFC account aggregator and they can easily share data with many lenders. And it will be equivalent of you say it's for credit. For payment, So, Sadhguru, we'll have a hand sanitization. So, in that Bank for a better rate and they will go out. So, need to find us out, how would Samsung You know, Sanche, we are building towards that sharp deterioration in I think very good question. See, As long as there are banks in this country, as long as there are securities in India, there's going to be differential in pricing. And therefore, it becomes very critical to keep our cost low and also ability to generate business at a higher ease. Today, if you look at market, there are so many NBFCs and HFCs, which are in a position to In their business at a much higher yield, today we have mortgage book at 16% yield at 18% yield So market is quite big. And I don't I think that should be a worry. As long as the company is able to manage on both sides, one is Trying to generate business at a higher rate and also control cost in terms of borrowing. So fortunately, we are in a position to keep our costs low, and we have the ability to generate business at a higher yield. We have done this for almost 31.5 years because only in last 1.5 years, you could see some change in the pricing strategy. There is always our pricing was about 1 50 bit higher than banks in general. So market is quite big And we are also tuned now to raising and doing business at a higher rate by keeping our costs low. So I know that there are a lot of fintechs which are emerging, but I think at least for next few years, FinTech would probably enable faster disbursement or maybe automated sanction, automated disbursement as well as Small ticket personal loan is concerned, largely unsecured. But for sure, the exposure is because there is a property And therefore, there is a legal and technical angle. And currently, if you see in media, both legal and technical are not automated. So there is no one repository that we can refer to and then take a call. And therefore, it will be difficult even for a sanction. So pre approval would be difficult whereas pre qualified is a way out. We're also working on that, that we can just And then give us prequalified limit to the customer subject to verifying asset and other So definitely going forward, the company has to be assigned and aligned to What the market needs in terms of automating, so we are on that path. Only thing is that because this is home loan, long term product, more of And there is one more leg of property. This might take much longer compared to other loans. And second reason is that This is a high value loan. So we talk about 15 lakhs, 18 lakhs, 30 lakhs, whereas small ticket personnel were hardly about 1 or 2 lakhs. Even high ticket Thank you. The next question is from the line of Abhijit Debraval from Motira Linked. Please go ahead. Yes. Thank you for taking my questions. Sir, I have 2 or 3 questions. Maybe I can ask all of them now and then you can answer them 1 by 1. First of all, congratulations on a very strong asset quality during such difficult times. What I was trying to understand is, in which stage have you classified your restructured loan And what's the pipeline like for your restructured book now? Understandably, what you suggested sometime back that you have taken The INR 37100 crores of provisions and assuming you have made 10% provision cover. Other than that, that is the relationship that you have Already restructured. I mean, the loan we have already restructured. What's the pipeline looking like now because I mean people can still apply for a restructuring Yes, the first question that I had. The other question, sir, that I had is, sometimes that you shared The your stage 2 numbers and I mean very heartily, it's kind of just moved by about 16 crores of Q2. So what is the provision cover that you are carrying on these Stage 2 assets? And so lastly, your incremental cost of On borrowings during the quarter, it was 4.87%. Is it largely because during the quarter, you raised money in the form of CP And in it, we borrowings and going forward, when we would have to borrow from, let's say, a debt market and from banks, The incremental cost of borrowings can go up when we don't have enough and more available from the National Housing Bank. The last question is, in the past, you've guided on spreads of 3% and NIM of 2.4%. Given that during your opening remarks, you alluded that the spreads in NIMs have now bottomed out, where is your what is your guidance now? Thanks. Those are my questions. Okay. So on the restructuring, we have Identified, some are done, some are in the process. So we have identified and therefore we have provided. So but I think the overall number is going to be about 2%, as I indicated, on the restructuring part. This is an approximation number. And based on the graph trends, about 12% to 15% of this School has probability of moving into NPA, right? This is on the restructuring part. And on I'll come back to, if you may. On cost of 20, this quarter, incremental cost It's because of many factors. One is, we tried to leverage by raising CP, that is number 1. Number 2, We availed the loan from MHV at a much cheaper rate. Number 3, even from all the banks, both private And the PSU, we are able to raise it a very, very competitive rate. In fact, some of the rates are around 5%, sub-five percent, Right. So it's not just 1. It's not just CPO, not just MHP or not just brand. I think blended is able to manage this. Even going forward, we'll be able to manage costs. So this trend will continue. Suppose if the interest rate starts going up, so this 4.87 might go up. It might go to 4.9, maybe 5. So in that sense, we'll also try to increase the yield to maintain the margins. Lastly, on margins, we had told that Margins will come down and that is for a reason and the reason was that we want to grow our book during COVID. Since opportunity available for all the banks and the financial institutions, so Shindim the book was less Due to COVID, GPT was an easy kill. And therefore, we wanted to retain a book and whatever business we generate, We wanted to be competitive in the small market available because of COVID, largely impacted due to mobility, Not in terms of your potential, at least in on the affordable space, right? So Why I'm saying that margins will improve over a period of time is only because we saw 3 quarter 4, we were dropping rates. Now we have increased it and we see that this trend will continue, though it will not be substantial. I think quarter on quarter, you will see Both margins and both Fred and NIM will start inching up. I won't be in a position to give guidance at this point in time, But yes, 2.4% at a portfolio level, 2.4% and 3% would be something which we will protect. Having said that, I think from now onwards, you will be margin's capability. Regarding the Phase 2 accounts, As you know, as far as the NHP or revised RPA guidelines, HFCs has to calculate the provisioning both as per the IVAC norms as well as the ECL model adopted by the Board and higher amount that has to be provided. In the ECL model, we are authorized to collect The market integrity of the security discount at a particular level and on the balance amount provided for. Generally, DCL model is going to be come down value what provision is required as retail model is going to be the rest on account of equity value consideration. So that is why whatever the provision has been held for the Stage 2 accounts will be as per the Iraq norms. And Stage 2 account consists of SMA 1 and SMA 2 that is 30 to 60 to 60 to 90 days budget and the provisioning Generally, it will be as per the standard of provisioning to be carried, it should be around 0.40% on a weighted average basis. Apparently, the company holds the provision in the books both as well as Q4 in as well as Q1 in the current financial year. Thank you. Participants are requested to please limit your questions to 1 per participant. The next question is from the line of Dhruvish from Hidawani. Please go ahead. Yes. Hi, sir. Thanks for the opportunity. Just one quick question. So our BT out was INR250 crores and then it went down to INR90 crores when we reduced the rate in Q4. So now That we have increased the rate again, what was the DT out in Q1? In quarter, it was 57 crores. So we're able to manage that because see, what happens is that when the distinction is very big I know that even customers will be motivated to switch doors. And if the decision is not masked, then the cost of switch In terms of time, energy and money, it seems to be partially and therefore, we will be able to manage that. Okay. Got it. Just if I can squeeze in a quick question, if you allow. Please go ahead. Yes. So sir, in the last call, you had mentioned that our DSA payout is much less than the industry. So won't that can be considered as a business risk? I mean, let's say the competitor increases their DSA payout by, let's say, 20 basis points, then the spread will be spread will increase and as a DSA will prefer to Source other NDSCs and not prefer canceling. So how do you see that? Since 55% Yes. 55 percent of our sourcing comes through DSA. So it is a substantial thing to look at. No. See, this differential existed since decades. Yes. So it's not now. So the difference In the breakout, in the day of the class, I think more than 20% is less. The set of DSS who do business for us, It's largely because of customer pull. Because it is customer pull, I don't think there is a big impact because if at all this hacker impact, which Must have impacted last one and a half years because that's your tough patch you've gone through in last many, many years, right? So I don't think so. I'll tell you why it may not impact because we are making payout to the DSS for the Work work he or she does, which is less than 50% of the work work typically a DSA would do for any other institution. Because our DSA sourcing model is different. It's only origination model and not full premium model. Whereas for any other institution, it is origination and processing. And before, I guess the part 1 and part 2, we only get part 1 done and make the also part 2. Okay. Okay. Got it. Thanks. Thank you. The next question is from the line of Rahul Maneshwari from Ambed Asset Management. Please go ahead. Yes. Good afternoon. Am I audible? Yes. Please go ahead, sir. Yes. So Sifel, congrats on some asset quality front. A couple of questions is that, sir, firstly, as you wanted from the start of And then with the strategy of lowering so that you can compete with the large banks. So you just incrementally, no doubt 1st quarter was hit by 2nd COVID deal, but once the unlocking has taken place, how the trend has been? And as you are at the bottom end of your guidance even in terms of the lending rates And plus, on top of that, you were being aggressive in terms of the second home buyers and In terms of higher ticket size, so can you give some color on July trends or going forward how confident you are, Keeping in mind that the target doesn't exist, how for the full year you're confident on the guidance which you have made? Looking at the trend, the July is better than June, and I'm sure August and September is better than the previous month. The trend is pretty strong. I think every passing month, The month will be better than the 2nd month in terms of trend unless and until the day 3 hits. I think trend is quite robust. In terms of the outlook, we are pretty pretty we are well covered and there is no issue at all. In terms of pricing strategy, it was only for short term because we had to protect our book and also be competitive in the market. And now we've seen no end of that. And before, I mentioned earlier that you will see quarter on quarter will be improving our margins. I would not be in a position to give guidance, but definitely we are seeing because we are increasing rates. We are increasing rates now, right? So I don't see any issue with respect to that. We'll be able to manage. Did I answer your question? Thank you. Have you missed anything? Sure, sir. Just give me a moment. Just give me a moment. Sir, just As we mentioned that we have taken a rate hike in the current quarter. And previous quarter in quarter 4, we have seen a record disbursement in where the balance 1 off balance transferring because of the lower yields which you are charging and how confident you are in terms of balance transferring apart from the normal trends which is Because of the pricing strategy which you mentioned earlier. So in quarter 1, our meeting was INR 57 crores. So this was much lower than what used to happen earlier. So we have very well controlled that. So going forward, we see good No uplift in those names. And we'll be able to manage BT of at least less than INR 100 crores. So what was balance transfer in? This was BT out, I think, sir, for 57 per month. BT in in quarter was not great because of mobility for almost 40 odd days. So BT is generally below about 12% to 15% and quarter 1, it was less than 10%. Okay. And this which one rate will continue to maintain despite your operating ROE type, yield type, which you are taking? Going forward, see, we have to make note of one thing. We will not probably go back to our earlier levels of Pricing in terms of strategy, now we'll be slightly higher than some of the big banks just to keep our yields higher and maintain our margins. In terms of book protection, we'll be able to protect because the difference is not going to be matched. And in terms of meeting in, we will have a better Thank you. The next question is from the line of Santosh Cheah from VLT Securities. Please go ahead. Hello. Sir, my question was largely on And maybe heading more into affordable housing. Right now, we are doing an average ticket size of about 18 to 20 lags. And in the higher ticket size, mostly the players like HDFC, LIC also have a lower cost of funds, whereas So do we and also a point that most of the bigger NBFCs are present where the banks are present mainly We are in a unique position of a TRTC rescue study wherein we can Yes. Amongst all the HSTs, we have lowest churn costs. I think we will continue to enjoy that advantage. And what we will do is we will have a differential pricing where we'll be able to attract slightly better ticket profile And also focus on Aphrobubble just to have a blend of both of the clients as a mix to ensure that we have a higher yield. So I don't see that as a term because we are best in the industry with respect to cost. And in terms of profile, we have just upgraded to the next two levels In terms of generation, so in terms of risk, it will be lower. In terms of yield, it will be slightly less than earlier, but of course, Compared to our revised strategy few quarters back, it will be far better than that. So it will be a win win, so now we have taken a mid path with keeping very aggressive growth plans. So, we are looking into maybe slightly lower ticket size also. No. Ticket size will increase. So it was 18. Now it is 20. So ticket size will go. Okay. So it will be a mix of both affordable and also big ticket loans. So big ticket, I'm talking about 40, 50, 60, NQT lakhs, solid profile. Yes. So because we are in that position of having the cost leadership, we will be able to do that. Yes. Yes. Okay. Thanks. Thank you. The next question is from the line of Ashwini Baraswagerman from HSBC. Please go ahead. Hi. Just wanted to know in terms of the asset quality value of the H2 and Gross NDA numbers, which are being more or less stable. Just wanted to understand in terms of collections, what's the kind of impact That you saw, let's say, in terms of collection efficiency during the 2nd wave, and how is that kind of normalized? And In general, what's been the impact in terms of the 2nd wave on asset quality as compared to the sort of first wave? And second question is, you indicated that demand is quite robust. So I mean, is it something which you are seeing Across markets? Or it's more in like Karnataka, Bangalore, that's it? Thank you. Okay. So in terms of connection efficiency, I think 2nd wave was more severe in terms of efficiency In compared to 1st grade, even though 1st year lasted for about 5, 5.5 months, 2nd year lasted for about less than 68. And the impact was more in 2nd wave because in 1st wave there was new rate and there was restructuring. Whereas in 2nd wave there was new rate and it was So we had a lot of in terms of managing the collections in the month of April. Efficiency dropped to low, it was probably the lowest last few quarters, I must say, last 6 to 7 quarters. So we had very tough time managing that. However, we were able to pull it back in May June was very good. I think we averaged it out very well at the end of the day for the whole quarter. But yes, Q2 was pretty bad, especially in the month of April because Our entire April was hit in terms of mobility and before we had an impact. But fortunately, we took pull back in March Sorry, in May June. So overall, if you see now, we don't see any impact on asset quality because of Either 1st wave or 2nd wave because even in 1st wave, if we remember, we spoke about the MORAD percentage. Yes. We were in the highest rate. That's because we gave that option to the customer. We had given a default option to customer. Therefore, we had slightly higher number. And eventually, it turned out to be pretty working pretty well because our NPS didn't increase compared to what we thought It was in chapter 2. Similarly, even 2nd wave has spanned out very well so far. [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] And from this quarter, I think you're pretty stable. So to be very honest with you, you're able to manage both wave 1 and wave 2 pretty well, especially on the Thank you. Ladies and gentlemen, this was the last question for today. I would now like to hand over the conference over to Mr. Jidesh Ghodsi for closing comments. Thank you, investors, for spending your valuable time with us. Going forward, we'll be keeping a very fine balance Thank you. On behalf of Investor Capital Services, that concludes this conference. Thank you for joining us, and you may now disconnect your line.