Ladies and gentlemen, good day and welcome to the Manappuram Finance Q1 FY 2026 Conference Call hosted by DAM Capital Advisors Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sanket Chheda from DAM Capital Advisors Limited. Thank you, and over to you, sir.
Yeah, thanks. Hello, and very good afternoon to all of you. We have with us the entire management team of Manappuram Finance to discuss their Q1 FY 2026 results, starting with Mr. V. P. Nandakumar, MD and CEO, Sumitha Nandan, ED, Mr. Deepak Reddy, sir, who has newly joined as a CEO, Ms. Bindu A. L., who is a CFO, Raju Narayanan, Business Head, Dr. Roy Varghese, who is CEO of Asirvad Microfinance, Mr. Rajesh, who is CFO, Mr. Kamal Parmar, who is Head of Vehicle and Equipment Finance, Mr. Suveen P. S., who is the CEO of Manappuram Home Finance, Robin Karuvely, who is the CFO of Manappuram Home Finance. Without further ado, I will hand the call over to Mr. V. P. Nandakumar and then maybe Mr. Deepak Reddy, sir, for their opening remarks. We'll follow that up with Q&A. Over to you, sir.
Thank you. Good evening, ladies and gentlemen, and thank you for joining us on this earnings call. It's an honor to connect with you as we share a comprehensive overview of our financial and operational results for the first quarter of fiscal 2026. We value your ongoing engagement and support as we reflect our performance and outline our strategic priorities moving forward. Today, we would also like to share a snapshot of the gold loan and microfinance industries in India and Manappuram Finance's standing in them. We will also address the effect of recent regulatory changes and macroeconomic headwinds on the industry. At the outset, I would welcome Mr. Deepak Reddy as the new CEO of Manappuram Finance. He brings with him over three decades of extensive experience in leading diverse business verticals and managing human capital across prominent financial institutions.
As CEO, he will be responsible for steering Manappuram Finance through the next phase of growth and innovation. This includes strengthening the company's core businesses of gold loans, vertical loans, housing finance, and digital lending, while enhancing organizational culture, leadership, governance, and customer centricity. Let me provide an overview of the macroeconomic scenario. Global growth is expected to remain steady at 3% in 2025, supported by easing inflation, a weaker U.S. dollar, and fiscal support in major economies. However, macroeconomic risks persists in terms of unresolved trade tensions, geopolitical tensions, and regional conflicts affected, which would undermine the growth projection. In India, economic activity in India is showing at a trending up, driven by government recovery, urban spending, and stronger credit transmission, and is on track to meet the projected GDP growth of 2.5%.
Inflation has reached a six-year low, prompting the RBI to cut the repo rate and CRR in the last two months to boost the liquidity and support consumption. The recent U.S. tariff announcements on Indian imports is expected to cause limited GDP impact but add to external uncertainty, keeping the INR under pressure until trade clarity emerges. Given this backdrop, credit growth is expected to improve further as lower interest rates and better system liquidity for lending across retail, MSME, and vehicle finance segments, and we remain optimistic on the evolving macroeconomic scenario. Let me start with an overview of our financial performance. Manappuram Finance, on a standalone basis, recorded a revenue of INR 1,744.5 crores, marking a quarter-on-quarter growth of 0.2%, and standalone company earned a PAT of INR 392.1 crores against a PAT of INR 414.4 crores in Q4 FY 2025.
The consolidated company's revenue in Q1 stood at INR 2,265 crores, compared to INR 2,329 crores of the previous quarter. Our consolidated profit after tax before other comprehensive income and minority interest for the quarter stood at INR 132.5 crores, compared to the loss of INR 203.2 crores of the previous quarter. For Q1 of FY 2025-2026, the board has declared an interim dividend of 50%. Profitability of the consolidated company impacted mainly on account of stress in the microfinance sector. Our gold loan business remains a core strength of our portfolio, delivering consistent margins and stability. We propose to increase the gold loan portfolio at a consolidated level of 75% of total loan portfolios in a phased manner. To attract more borrowers, we have introduced various gold loan schemes at comprehensive prices to drive our gold loan growth strategy.
We also augment additional gold loan customer base through Asirvad, leveraging the relaxations in the qualifying criteria of MFIs. The proposal of co-lending will increase further the share of our gold loan in the consolidated AUM as well as our fee income. We continue to strengthen our governance structure to ensure compliance with the regulations and provide better customer satisfaction. Along with increasing the share of gold loan in the portfolio, we plan to grow our housing loans, secure the MSME lending business, and commercial vehicle and auto loan portfolios in a prudent manner within an overall ceiling of 90%. Gradual decline of microfinance portfolio in the consolidated company will be reduced to 10%. Prospective fee and regulatory guidelines are favorable for the sustenance and growth of NBFCs in general.
The recent regulatory guidelines on gold loans is expected to provide a level playing field for all the regulated entities. The latest harmonized RBI guidelines on co-lending will bring in harmony between the banks and NBFCs who are operating at the grassroots levels. Moreover, Manappuram Finance now has the advantage of leveraging Bain Capital's extensive expertise in financial services within India, alongside our impressive track record. The Bain Capital investment will be aimed at facilitating the growth of all our non-banking financial services business. Dr. Shailesh J. Mehta, Chairman and Independent Director, will be completing two terms as per the provisions of the Companies Act, 2013 and SEBI Listing Regulations effective from 27 August 2025. Accordingly, the board at today's meeting decided to appoint Mr. V. P. Nandakumar, MD, as the Chairman with effect from August 28, 2025. Now, I invite Mr. Deepak Reddy, CEO, to say a few words, and thereafter, Mrs. Bindu A. L., President and CFO, to provide a more comprehensive review of our financial performance, including detailed segment analysis of the quality metrics and key financial pursuits. Thank you for your attention, and we look forward to addressing your questions during Q&A session. Thank you.
Thank you, Chairman, and good evening to all of you. It's indeed a privilege to be speaking to you all, and thank you for joining this call. It's been only a few days since I joined the company, and hence it will be premature for me to comment on company performance, current or go-forward strategy, or to give any sort of guidance. You can expect that from me in the quarters to come. Having said that, I must state that I feel privileged to lead the company into its next phase of evolution and growth. This feeling has only grown stronger since I formally joined the company last Friday. I'm very excited and confident of future performance and possibilities of the company.
At this stage, I can only state that you can expect me to run a transparent and forward-looking company that is growth-oriented and with a strong culture of risk prudence, operating rigor, and managed by strong and enthusiastic teams. Thank you all very much, and I look forward to interacting with all of you going forward and also looking forward to all your support. Thank you, and once again, thank you for joining this call.
Thank you, sir. Good evening, ladies and gentlemen. Coming to the key highlights of our operational performance across the businesses, gold loan portfolio remains our core strength, accounting for 65% of consolidated AUM compared to 59.5% in Q4 FY 2025. Consolidated AUM stood at INR 28,802 crores, Qo Q growth of 12.6% and 21.8% YoY in spite of heightened competition. We added 3.58 lakh new customers during the quarter, bringing the total active customer base to 25.9 lakhs. Average LTV at 57% and 85% of the loan book now goes through online gold loan platforms. Our standalone PAT for the quarter was INR 392 crores versus INR 414 crores on account of lower income from the non-gold, mainly from the non-gold businesses. AUM for Asirvad, including gold loans, of INR 1,111 crores, stood at INR 6,705, which is down by 18% sequentially and 45% YoY.
As you are aware, the microfinance sector experienced a considerable stress, primarily due to the increased borrower defaults from over-leveraged and led to higher credit costs, which negatively impacted the profitability. Asirvad posted a loss of INR 267 crores in Q1 compared to a loss of INR 624 crores in Q4 FY 2025. The net NPA at 1.4%, that is INR 84 crores, compared to INR 177 crores in Q4 and the CRAR at 23.6%. Our vehicle finance AUM at INR 4,492 crores, which represents a decline of 5.9% Q o Q and up by 1.1% YoY. Considering the asset quality challenges, especially from the two-wheeler and farm segment, we tightened the underwriting. With low disbursement, the GNPA increased to 9.2% as on 30 June 2025. The home loan portfolio reached INR 1,901 crores, reflecting a growth of 4.3% Q o Q and 19.8% YoY increase.
This business operates from 89 branches and reported a profit of INR 7 crores during the quarter with a GNPA of 2.87%. Loans to MSME and allied sectors stood at INR 3,105 crores, with a disbursement of INR 346 crores. For Q1 FY 2026, our consolidated AUM stood at INR 44,304 crores, reflecting a sequential growth of 3% and 1.4% decline on a YoY basis. Consolidated PAT INR 1,132 crores, an increase of 165% over the previous quarter, and a decline of 76% YoY. Capital position remains strong at CRAR of 28.71% and the net worth at INR 12,504 crores. Book value per share stood at INR 147.7, ROA of 3.8% on the standalone AUM, and the leverage remains conservative at 2.5x . Standalone GNPA at 3%, and the liquidity position as on 30 June INR 4,047 crores, with underwriting bank lines of INR 3,220 crores.
During the quarter, we have seen a minor decline in the cost of borrowing by 2 basis points. Thank you. Thank you once again for your continued support and confidence.
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 the touch-tone 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 the line of Digant Haria from Green Edge Wealth. Please go ahead.
Yeah, hi. Thanks for the opportunity. The first question is that in the gold loan space, we have seen good growth Q2, but I see that our yields have dropped from, say, 22%-20.5%. So is this like a conscious strategy, or is it because of competition, or if you can just give some idea on what's happened here?
So it's a conscious strategy to bring it on par with the leading players in the NBFC industry slowly. So that is yielding results. And so that is not, as per our assessment, that is not going to impact our gold loan income during the current year because of the depression in the yield. The depression in the yield will be compensated by the growth. So in the coming quarters, it will be reflected in the results.
Got it, sir. Got it, got it. And I know just we are at 20.5%, maybe 200 basis points more versus competition, we are higher. So you are saying that we will eventually reach that 18%-19% with the general market, is that right?
Definitely, with the growth slowly we are bringing down. We are trying to protect our budgeted income from gold loan also fairly.
Right. Okay, sir. And secondly, on the microfinance, have we seen the worst or maybe one or two more quarters of pain? Because some states are doing okay, some states are still not doing okay.
The last quarter, also I told you the worst is over. Now things are coming back. And we are hoping things will improve towards the last quarter. Should turn green . That is our expectation.
Okay, okay. Losses would be stopped in Asirvad also, right, from next quarter, or maybe later.
Join? Again?
The losses in microfinance, sir. Losses in microfinance.
It will come down, definitely. It is coming down.
Okay. Okay, sir. Thank you so much and all the best.
Thank you, sir.
Thank you. The next question is from the line of Shreya Shivani from CLSA. Please go ahead.
Hi. Thank you for the opportunity. I have three questions. My first question is on the gold loan book. So we had indicated in the last quarter itself that we are cutting rates so that we can acquire more customers, particularly in the high ticket size. Now, the customer count growth has been fairly limited. Majority of the AUM growth has come from higher ticket size. So have we just cut lending rates in the higher ticket size, or is it across bucket cutting rates? Is it not helping us acquire more customers? Because one would have expected the volume growth also to be contributing to the overall AUM growth. That's my first question. My second question is on the MFI book, Asirvad book.
So I understand we want to make this book 10% of our overall mix and all that, but somehow your customer count for the past two quarters has been revised downwards. Can you help us understand what has been the reason for that? And my third question is obviously on the deal, what all approvals are left? Any update that you can give us on that would be useful. Thank you.
So first question about gold loan. The customer growth, because we are started reducing the rate, we plan to reduce across the board gradually, so in a very calibrated manner. So gradually you will see the volume growth also, customer count also. Because the communication in the community takes a little time, right? So the first response comes from the existing customers and some high-volume customers. So slowly you will see these actions resulting in better gold loan growth in the coming quarters. Regarding MFI book, yes, we are strictly following the guardrails set by SROs. Initially, we have improved our system, and to the systems completely in place, the computer systems, it took some time. So gradually the business is increasing, and we are very tight in underwriting the SRO mentioned. Regarding the main deal, it is progressing smoothly as expected.
CCI approval is already we got, and next we are expecting the NSE/BSE approval. We expect maybe through in a fortnight. So also the most important approval, the principal regulator, RBI, that is expected within another one month. Everything is going smoothly. Thank you.
Got it, sir. This is very useful. Just to follow up, the MFI customer count you said because you have upgraded your computer system, that's why it has been an update to the earlier count. Is that the reason? Is that what you said?
Yeah, yeah, yeah. Yeah.
All right. Thank you. Thank you so much for your answers.
Thank you.
Thank you. The next question is from the line of Kushan Parikh from Morgan Stanley. Please go ahead.
Thank you for taking my question. So just to hop on the previous participant's question, in the past, we have not seen for assets or for the industry that cutting prices, cutting lending rates has helped gold loan growth. Just wanted to understand why are we more confident of getting growth by cutting yields this time around. And secondly, if you could just share the gold loan yields for 1Q and the gold loan auctions as well. And lastly, if you could provide some guidance towards the trajectory of credit cost moderation at Asirvad, that would be helpful. Yeah, those are the questions for myself.
So the gold loan cutting price, we have been doing consistently. We want to map that to the market along with the leading players in the NBFC industry. We are doing it gradually, as I said, in a calibrated manner, ensuring that the projected income from gold loan is also achieved even though the yield reduction is there. It is done in a phased manner, piloting at various places. I've seen success. It is slowly getting expanded. To give wider publicity, we are using social media and better CRMs, et cetera. The results will be available in the coming quarters. Asirvad, the NPAs are showing reduction. We have seen that. The tempo is getting slowly improved. Also the quality disbursals with tight underwriting using the SRO guidelines, et cetera, that is already implemented. The collections are improving slowly.
So you will see the better results in the coming quarters than we hope. Towards the end of this year, the last quarter, we'll be able to turn around. To share some.
Questions during the quarter? Q1 group.
The gold loan yield for the quarter?
20.7%. Average yield of 20.7%.
Understood. This was really helpful. Thank you. That was my question.
Thank you. The next question is from the line of Abhijit Tibrewal from Motilal Oswal. Please go ahead.
Yeah, thank you for taking my questions. Manappuram, you just said gold loan yields of 20.7% in 1Q. If you could also remind us what was the yield in the fourth quarter. And the related question here, so while Nandakumar sir said that the idea is to bring down the gold lending rates to be on par with the leading gold NBFC players, right? So I think today the leading gold NBFC players are all at around 17.5%-18%. So are we saying that over a period of time, our gold loan yields will also gravitate towards 18%? If the answer is yes, over what period, over how many quarters can we expect this gold loan yield to gravitate towards that 18%?
So we are planning to bring it to similar to the market in a phased manner. So in three, four quarters, around six quarters, we are planning and we are expecting the yield reduction matching with the growth will not impact our budgeted income from the gold loans over the current year. So that's why I am repeatedly telling this is done in a very calibrated manner. When I was saying what is the impact on the projected income and actual income, realized income, how is it going to be? So on the basis of that, the reduction is happening slowly. So I hope in four to six quarters, we'll bring that more or less on par with the leading players.
Got it. And sir, just a related question. Yeah, yeah, ma'am. Please go ahead.
Last quarter, the yield was 22.2%, and this quarter, 20.7%.
Got it. So ma'am, almost 2.5% have been shaved off in one quarter. And then ma'am, why should it take four to six more quarters for us to get towards 18%? 150 basis points. 150 basis points have been shaved off.
That's what I told. Yeah. On the one side, we have some projections for the year with regard to gold loan income. So we are able to assess whether we are in the right direction to achieve that budgeted income. Accordingly, we reduce.
Got it, sir.
Yes.
Sir, what is the?
In addition to that, we expect the reduction in borrowing costs. So that also will be passed on to the customers so that even before the expected period, we'll be able to match our rates with the leading players.
Got it, sir. Got it. And then, sir, I mean, given that we've already seen a very strong first quarter, now internally, what are we targeting for the full year gold loan growth?
We feel like this year will be better than the previous year.
Got it, sir.
Yeah.
Then I had one question for Deepak sir. Sir, you already spelled out in your opening remarks that you don't want to be speaking about the strategy going forward, given that it's early. But sir, given that whenever leaders like you join a company, I'm sure they have something in mind with regards to how they want to shape the company. One thing very clearly, right, what we have articulated as a strategy already is over a period of time, we want to bring our gold lending rates on par with the leading gold NBFC players. And to that end, what I assume is even if that would mean the margins and the ROEs are lower, we want to bring higher leverage on the balance sheet so that we can maybe deliver the same ROEs.
So just trying to understand, sir, from you, what is it that you have in mind? Are there people that you'll be looking to onboard in your leadership team, people who will be reporting into you? And just at an overall level, right, I mean, how are you thinking about the company going forward?
Okay. Thanks for your question. I want to duck the question, and I'll tell you why. Do I have some thoughts of what we need to do? Do I have some thinking around it? Is there a plan that's shaping in my mind? The answer is yes. But it's definitely premature for me, this is five days experience in the company, to state at this A ugust forum what exact strategy going forward. You can be rest assured that when once I get a better feel of the company, I go further down, I travel, I meet people, and validate some of my hypotheses and what I want to do, we will share a strategy at the appropriate time. Very strong thoughts and exciting thoughts, but I'm sorry, very, very premature for me to comment on that at this stage.
Sure, sir. I understand that. And lastly, one question for Bindu ma'am. Ma'am, you said that this quarter, the cost of borrowing has declined by two basis points QoQ. Just trying to understand how is our liability mix positioned, particularly on the bank borrowing side. So do you expect that in the coming quarters, right, second quarter, third quarter, when banks start passing on MCLR cuts, that's where our cost of borrowings will start benefiting, or how should we think about it? And also a related question, while the portfolio cost of borrowings are down two basis points QoQ, where are we stacking up on the incremental cost of borrowings?
Okay. So on the cost of borrowing, what you said is exactly what we have seen from the banking system. So we are seeing slowly banks are reducing the MCLR, which is beneficial. But at the same time, the mix of borrowing, we are trying to have, or the banks also want to have long-term facilities. So the short-term mix is coming down. It is only 26% you see, working capital demand on CPs around 4%, et cetera. So in the coming quarters, we can see the reductions in the MCLR rates, which will give us benefit. And I think with the capital coming in, all those things, we can see a better negotiation with the banks.
Got it, ma'am. This is useful. Thank you, and I will come back to the question.
Thank you. The next question is from the line of Pratik Kothari from Unique PMS. Please go ahead.
Hi, good evening, and thank you. And welcome to Mr. Deepak Reddy in the company. So my first question on MFI. I mean, we have gone through this cycle multiple times in the past. So has anything changed structurally or on ground that we intend to now cap this at 10%? I mean, we have seen the ebbs and flows multiple times. So why this change now?
So the change is in the underwriting policy. So with the change in regulation, we have been following the assessment policy and other regulatory guidelines. Now, this post-scenario of bad performance of MFI, the SROs have come forward and advised some guardrails. So we are strictly following that. Then other than that, we are not done anything. So we see a lot of opportunity there also because the MFI with the new underwriting standard, we feel like the asset quality will remain high. It may go to somewhere near to pre-COVID asset quality. And secondly, where we see opportunity there is gold loan. We are in discussion with banks for the opportunity for co-lending. And a few of the banks have come forward with a lot of enthusiasm.
And now the revised guidelines, as I mentioned earlier, have come, which are seen very positive with regard to co-lending. So that gives the company a wonderful opportunity to grow gold loan. And so this will definitely reshape the company in the coming quarters.
Correct. And, sir, second clarification on the gold, what you are saying is it's to attract the high-ticket 5 lakh plus customers to whom we have to give lower yields, right? It's not for those 50,000 ticket size where we have lower yields.
So we are gradually introducing across the board for all tickets. Our idea is to be customer-friendly with regard to pricing in comparison with the market.
Correct. So this five lakh plus share, which I think last quarter we had shared was 15%-16%. So where is it now? I mean, where are we benchmarking this to? Say four-six quarters out.
We are benchmarking with other players. So as I have been telling, this is done in a phased manner, in a calibrated manner. And on the one side, we want to ensure that the budgeted income is achieved and we are able to achieve leverage our capital better. So the pricing depends on the market conditions. So we see some stability there amongst the top three, four players. So gradually, as I mentioned earlier, we plan to reach that level.
So, where have we reached and what is the plan four, six quarters out? I mean, this 5 lakh plus ticket size, what is the mix in our portfolio right now? And what does it have to be? What does the two, three other players have it at?
It's 19%, I think it's 15% in the last quarter.
Yes. And this peers that we want to achieve, this is what, 25%, 30%?
From the market, we came to know that they are at 30%.
Basically, basically.
Fair.
Fair.
And sir, you said our plan is to match the budgeted numbers for this year. So on the gold loan side, this was on the revenue or on the profit?
On the revenue as well as profit.
Fair enough. Sure. And sir, last, if you can, one comment on our vehicle and MSME. I mean, in case there have shot up through the roof, I mean, we have kind of curtailed lending also there. At least quarter on quarter, the growth is not coming or there's a degrowth. If you can, some comments there, I mean, what kind of pain we are seeing, where in the cycle are we?
In MSME, we had around 5% property which was unsecured, so the major challenge has come from that in MSME, and another thing, this quarter, it gives some ARC outflows that also has a bearing on the profitability, but now we have consolidated many things, and we are hopeful of bringing down the OPEX also by 2% towards the end of this year gradually, so the more focus is on the asset quality, so we are refocusing our business to take the average ticket size, which is currently around 5 lakhs to around 8 lakhs-9 lakhs towards the end of this year. We have devised strategy for that, and we hope that this will improve. Our strategy will improve performance. With regard to portfolio, we had challenges in some of the segments we were in, like farm equipment, which we thought it is not our cup of tea.
We exited. Similarly, in two-wheeler also, we have remodeled to an automated underwriting system. That reduces the people cost. This has brought down our disbursal, but it will gradually become. Now, renewal strategies focus on secured asset tickets, both on the used commercial vehicle as well as used car segments. This is our strategy. There also, the average ticket size remains around 6 lakhs-7 lakhs, and we intend that to be taken to INR 10+ and attract customers of a relatively higher profile. That's the strategy.
Fair enough. No, great. Thank you and all the best, sir. Thank you.
Thank you. The next question is from the line of Rajiv Mehta from YES SECURITIES. Please go ahead.
Yeah. Hi, good evening. Sir, my first question is on the gold loan industry itself. So sir, are we seeing that the competition has again is going up in the market now post the RBI guideline and the clarity from the regulator about the regulations? Are we seeing that more players coming into the market, the existing players intensifying their strategy and game? And on the other side, are we also seeing that the demand for gold loan is suddenly rising across ticket sizes because the other avenues of loans are not freely available, so much available as before? So how do you assess the demand and supply side of the gold loan market playing out and whether lowering the yield, then in that case, should get us the desired volume growth?
Because I think volume growth is right now, but if the gold price were to stabilize in the future, does lowering the yield will give us the desired volume growth? And what will be that desired volume growth that we would want to be at?
So the smaller ticket size that is below 1 lakh, there because of the regulatory changes like transferring money into bank account, et cetera, et cetera, is showing some negativity there because and these small borrowers, borrowing up to INR 10,000, INR 20,000, INR 50,000, there is a tendency for going to the unorganized sector borrowers, money lenders. But more and more customers are coming from the higher ticket size. So now, with the new regulation concerning gold loan, has definitely created a level playing field with the opportunities there. And of course, the opportunities for borrowing unsecured loans, that is coming down, which actually is positive for gold loan. Regarding competition, any business which is attractive will have the competition.
But the thing is, for any new player to create an infra like us or some leading players, with so many employees, very well trained, who can assess that variety by mere feel and touch. And also, the security infrastructure, creation of large security infrastructure across India would take time. I'm not saying that it is impossible. It is possible, but it takes time. And that's where we stand to gain with the pricing strategy and other strategies in the gold loan.
Sir, if, say, for example, if the gold price is stabilized with this pricing strategy that we are executing, what kind of growth we can maintain?
So it will be on par with the markets, on par with the markets. Yeah. When we grow with the larger ticket size, we need to understand the attitude of such customers who are of a better profile. So we need to reset our infrastructure, everything. So parallelly, we are doing all these. So the momentum which will be seen in the large players with regards to the gold loan growth, we are confident of achieving that level going forward.
Okay. Got it, and just a few data points on Asirvad.
Sorry to interrupt. May I request you to please follow up the queue? There are several questions.
Sure. I'll come back.
Yeah. Thank you so much. The next question is from the line of Abhijit Tibrewal from Motilal Oswal. Please go ahead.
Yeah. Again, thank you for taking my question. First thing is, Rajiv sir, every earnings call you share the split of gold loans by ticket size. If you could just help us with that.
Yeah. Up to 1 lakh, 36.5%; 1-2 lakh, 21.3%; 2-5 lakh, 23.1%; above 5 lakh, 19.1%.
Sir, above 5 lakh, what did you say?
19.1%.
Okay. Great. The second question that I had was for Bindu ma'am. Last quarter also, you had guided that the peak is now behind. And in this quarter also, we saw credit costs coming down in microfinance. So while a couple of participants have already asked this, but for the benefit of all of us, if you could just guide on maybe the full year credit costs in microfinance in this year that you are expecting?
So what we have seen, Q4, that was the highest credit cost, and it is almost half in this quarter. I think, as already mentioned by sir, last quarter, we are expecting a profit from the microfinance business. So in the coming quarters, we will see at least 30% reduction from the credit cost to what we reported in Q1.
Got it. Got it. This is useful. And lastly, ma'am, in the standalone notes to accounts, I was seeing that we have done an assignment transaction and ARC transaction in the quarter. So if you could just help us understand this assignment transaction was in which product? And likewise, the ARC transaction, which pool of NPAs have we sold?
The ARC and the DA, we are done in MSME secured book. The DA transaction, which is coming at a better pricing. The net income is only INR 5 crore from that. We did a INR 150-INR 160 crore DA. ARC is INR 50 crore, INR 50 crore, again, from the secured book. As these are small ticket loans, NBFCs can get the RCC proceeding started with the ARC sale. The idea is to have a more rigorous follow-up with the borrowers to collect the money through SARFAESI proceedings.
Got it. And last question for Nandakumar sir. Sir, earlier during this call, you said that we are in discussion with banks for opportunities in co-lending. I just wanted to clarify these opportunities that you're talking about. You're talking about co-lending opportunities in gold loans, right?
Yeah, yeah.
So one of Asirvad.
In Asirvad because Asirvad has around 1,600 branches. Out of that, 500 branches are exclusively gold loan branches. Then that 1,100 branches are offering microfinance. This infrastructure can be upgraded and utilized for gold lending also through co-lending mode. So that is a relaxed qualifying asset criteria. We'll be able to mobilize a good amount of gold loans there also. Asirvad has a large network or expanded network and very large customer base and community connection. That situation can be taken advantage.
Got it, sir. This is very, very useful. Thank you for patiently answering all my questions. I wish you and your team the very best.
Thank you. The next question is from the line of Gaurav from Capital Farming Consultants. Please go ahead.
Yeah. Hi. Thanks for the opportunity. I hope my voice is audible. Yeah?
Yes.
Yeah. So my first question is on gold loan AUM on our standalone entity, parent level Manappuram Finance. Yeah. So on quarter-on-quarter basis versus Q4 of FY 2025, AUM has increased by almost double digit, that is 12%. Whereas in tonnage, growth is hardly there, just 1%. Number of customers also almost flat, just 0.4%. So if you can give some colors on that, what exactly were the factors which helped the company to grow this AUM by 12%?
Our LTV remains around 58%. So when the gold price goes up, the people simply won't borrow because the gold price has gone up. Because while borrowing, they have the clarity about the inflow of cash, cash flow, that way they can redeem within four or five months' time. So if it fits into their cash flow, only they borrow. So what actually happens is when the gold price goes up, the security they're bringing collateral, that quantity they reduce. And when the price goes down, just the opposite happens. Actually, price has so much bearing with regard to the AUM. AUM growth is driven by the demand. The opportunities because the unsecured borrowing, the opportunities have come down. So there's an opportunity for gold lending too.
Also now, with the more players coming in, and the banks also, another advantage is the popularity of this gold loan is also increasing. That's why the customers from the middle class and upper middle class also started using that to meet their business requirements and other requirements.
Sir, but within this, just a follow-up, because I'm unable to digest that, just because the price of the gold has moved up, and that has helped the AUM growth by just 12%, whereas the number of customers has remained flat. If CFO ma'am can help me understand, if the number of customers, gold customers has remained almost flat, somewhere around 26 lakh, right? So within that, what percentage of customers were new to Manappuram in Q1 of FY 2026 in terms of percentage, right? And what were our existing customers to whom the loan was renewed? Because if I recollect it correctly, that we have a short-term tenure gold loan, which we extend every three months or six months, right? So what percentage of our customers within this was new to customer to Manappuram?
So before that, I will say I told you one thing. The smaller ticket size, because of the regulatory challenges these customers have, there is a tendency to move into one bucket, that's up to one lakh. So the growth is coming mainly from one lakh plus. So this segment is growing, and it will grow. That's why the number of customers, even though the number of customers remained at that level, we are able to get to grow because of that, not because of the price has gone up. Yeah, next.
So during the quarter, we added 3.5 lakh new customers. And the reason for less number of customer addition in the outstanding is because the customers mostly we were able to attract in the high-ticket segment. But the small-ticket customers, we have seen a reduction. So that is the reason. Net outstanding number of customers has not changed much. But we were able to add 3.5 lakh new customers. Any other data points we can take offline if that is fine.
Thank you, Laura. My second question is, our gold loan branches are stagnant at 4044, whether it is Qo Q basis or YoY basis. So is there any regulatory restriction in opening the gold loan branches, or we are not keen in expanding the gold loan branches across the length and breadth of the country?
For gold loan companies, there is a restriction in opening branches beyond 1,000. The restriction is we need to seek prior approval from RBI for every branch. We have submitted application for opening branches, and we hope to get it soon. But now the main transaction is under processing by the RBI. So until this transaction is over, they don't take up these things. So we are expecting the RBI approval to be received by probably by the next month. And without much delay, we expect the new branch applications also to be sanctioned.
Thank you.
Thank you. The next question is from the line of Aagam from Aagam Investments. Please go ahead.
Thanks for the opportunity. Question. I mean, in this market, give a color again. I mean, on a non-gold portfolio, especially on the MSME side and the vehicle finance, I mean, for the last few quarters, we have been not growing much in the asset quality, which has been worsening. So what is the thought process here going ahead? How are we shaping our book AUM here? And then can we see a, let's say, growth firing across all our constituent level book going ahead? So if you can throw color on all of it. Thanks.
We are restrategizing our business plans. Now, Bain Capital also has joined. Their knowledge in the industry also would help. The growth strategy is to use the opportunities to grow gold loan. As I mentioned, we are matching the pricing gradually with the markets and attracting higher ticket customers like others. The second, yeah, using co-lending models. We gradually plan to expand the gold loan business in our subsidiaries also. First, we are trying to do it in Asirvad. There is an opportunity for.
Non-gold.
In non-gold. Asirvad is non-gold branches. There are 1,100 branches. Later, after testing the success, we may extend the gold loan business to other subsidiaries also gradually. So this way, we expect our branches to grow, gold loan branches to grow to around 5,000 plus towards the end of this year. So that's the expectation. It's an opportunity for growth. As I said, pricing, matching the market, plus the geographical expanse of this business to our non-gold branches through quality. These are the opportunities we see. The other businesses are in a consolidation phase. One in affordable housing, et cetera. The average ticket size is around 5 lakhs. So we are moving to around average ticket size of around 8 lakhs-15 lakhs. So with improved underwriting. So that when the business is refocused, we believe the asset quality will improve. So also, the employee productivity will improve.
So we have brought up a definite plan to improve the productivity month on month. And we are confident that it will improve the profitability of this gold loan, I mean, this housing finance, as well as the MSME vehicles. So we are again consolidating in the sense that we are moving out of this risky segments line. We are already moved out of farm equipment. And the bringing down the OpEx by automated underwriting systems, et cetera. So that reduced number of people and also the asset quality is improved because the underwriting is automated. So this way, the non-gold businesses are in a very consolidated phase. And we are confident that these are going to be the opportunities for both the infrastructure as well as business. These are going to be the opportunities going forward.
So broadly going ahead, the more focus will be on the gold loan side. We need to understand this.
That's what's planned. That doesn't mean that we are ignoring the other factors, but we are restrategizing. The strategy I told you to move up from five lakhs to 10 lakhs. Because then the employee productivity will improve, so the operations can be brought down, then the asset quality will be naturally better because the underwriting standards are better, then another thing, one challenge we face is even with the takeover, these small houses that they borrowed around 4 lakhs-5 lakhs, the salability is very low. There is a salability as well as the people's fear of losing home. That pride, that also will be better, so this way, by improving the ticket size, improving the asset quality, improving our automated underwriting systems, using various technologies, derivative various technologies, these are in place.
Let's say, by this year and maybe the 35% non-gold which is there, should this number go down below 20%? How should one look at this?
It's expected to go down, and gold is expected to okay.
So currently 80/20? Anything you can share?
Now it is 65, and 65/35 gradually will reach to 75/25.
So 25 will be the rest. So that would be majorly microfinance housing or?
In my opening remarks, already I mentioned we intend to increase our secured to 90% and bring down the unsecured microfinance to below 10% of our consolidated.
Okay. And in terms of on the Asirvad side, in terms of write-off and impairment, are we done with this quarter? Or there is yet some loss to be provided to hold for?
So the provisions are based on the slippage during the quarter. So based on the slippage, 70% is the provision coverage ratio. Continuously, we are monitoring the collection. And based on the slippages, we have to create a provision. But maximum effort is going through collection.
Are we there in terms of meeting the previous levels in terms of collection efficiency and credit cost?
I couldn't get that.
So let's say year by year when things were good in our segment, are we there? Are we meeting those times? And can you get that?
So we started this burst month with the tightened underwriting norms. But as the disbursement is lesser than the rundown, the book is running down. And wherever collections are showing better, we are focusing more on the disbursement in those states. In difficult places, we are focusing more on the centers where the collection is better.
Okay. Okay. Thank you so much. This helps.
Thank you. The next question is from the line of Kushan Parikh from Morgan Stanley. Please go ahead.
Thank you for taking my follow-up. Just a data keeping question. You shared the mix by ticket size for this quarter. Could you share the same for 4Q, FY25? Thank you.
140.2, 1 to 2, 21.75, 2 to 5, 22, above 5 lakh?
Okay.
15%. 16%.
Sorry, above 5 lakh was?
15. 16.
Got it. Thank you. Thank you so much.
Thank you. That was the last question for the day. I now hand the conference over to the management for closing comments.
Thank you for the active participation and questions, which were all very relevant. We look forward to interacting with you. Whoever wants to have the data, we are ready to share with you. Thank you so much.
On behalf of DAM Capital Advisors, that concludes this conference. Thank you for joining us, and you may now disconnect online.