Ladies and gentlemen, good day and welcome to the Manappuram Finance Q3 FY25 Earnings Conference Call hosted by Motilal Oswal Financial Services 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 this call, please signal the operator by pressing star and then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Abhijit Tibrewal from Motilal Oswal Financial Services. Thank you, and over to you, sir.
Yeah, thanks, Torvil. We have with us today the senior management team of Manappuram Finance to discuss the conference call, to discuss the Q3 FY25 results. I'll briefly introduce the management team.
We have with us today Mr. V.P. Nandakumar, MD and CEO, Dr. Sumitha Nandan, Executive Director, Ms. Bindu A.L., CFO, Mr. Raju Narayanan, Business Head, Mr. B.N. Raveendra Babu, MD, Asirvad Microfinance, Mr. Rajesh Namboodiripad, CFO, Asirvad Microfinance, Mr. Kamal Parmar, Head Vehicle and Equipment Finance, Mr. Suvin P.S., CEO, Manappuram Home Finance, Mr. Robin Karuvely, CFO, Manappuram Home Finance.
With that brief introduction, I think I will hand it over to Mr. Nandakumar and the senior management team of Manappuram Finance for their opening remarks, post which we will open up the floor for Q&A. Thank you, and over to you, sir.
Okay. So thank you. Good evening, ladies and gentlemen. It is always a pleasure to join with this group to share our company's periodical financial result for the third quarter of FY25. I wish and my heartfelt thanks to all of you. Before proceeding, I wish you an upcoming holy festival. Despite global uncertainties and continued strengthening of the dollar, the Indian economy remains strong and resilient. In the words of Finance Minister, it is on a speedy rebound. It is also noteworthy that the NBFC sector has remained stable despite the challenges.
NBFCs are also actively diversifying their funding sources, including increased issuance of listed non-convertible debentures and foreign currency borrowings. This indicates the resilience of the sector and its ability to withstand the macroeconomic headwinds.
Quarterly result. It also used to create satisfaction to mention that 2025 has started on a positive note for our company, with RBI lifting the supervisory restrictions on our major subsidiary, Asirvad Microfinance Limited. The remedial actions undertaken by Asirvad have satisfied the RBI. The company has fully revamped its processes and systems and is fully committed to adhering to regulatory guidelines. I'm pleased to report that the company has posted a profit after tax, excluding Asirvad, of INR 467 crore.
The company's AUM, excluding Asirvad, has risen to INR 34,204 crore, reflecting 18.7% year-on-year growth and 1.9% quarter-on-quarter increase. For Q3, Asirvad's AUM stood at INR 10,013 crore, which includes gold loan AUM of INR 818 crore and net NPA at 2.48%.
Asirvad's profitability has been affected by the collection challenges in the MFI sector due to several factors, including climatic disruption, dilution of joint liability group, JLG model, weakened borrower discipline, and external influences on microfinance borrowers. Asirvad has undertaken comprehensive remedial measures to rationalize the costs and disbursement with strict underwriting. As Asirvad suffered a loss of INR 188 crore during this quarter, the consolidated profit after tax for the quarter declined to INR 278 crore, which is down by 51.3% quarter-on-quarter and 51.6% year-on-year.
It is also pertinent to note that the RBI in its circular dated September 24 issued certain directions, including regarding gold loan practices. We view the regulatory measures as beneficial for the sector's stability. Throughout the industry association, we are actively participating in the development of standard practices. We have executed the mandated review policies and implemented necessary enhancements to our preparation.
The microfinance business has an AUM of INR 5,085 crore, recording a 4.9% quarter-on-quarter increase, while our home loan portfolio has increased in AUM. It has an AUM of INR 1,778 crore, reflecting 5.1% quarter-on-quarter increase. The organized gold loan markets, comprising both banks and NBFCs, have experienced significant growth. According to the rating agency, ICRA, the market is projected to reach INR 15 trillion by March 2027. Companies have also been steadily increasing their online lending process.
In a sustained scale-up, it will improve their operating leverage and expand their customer base. Thank you all for your continued support and interest. Our focus will be on fortifying our core gold loan business and ensuring continued growth across all the secured lending business.
As we capitalize on opportunities created by their economic resilience and prosecute reforms, we remain dedicated to our mission of empowering customers and stakeholders alike through golden sustainable growth and innovation. For a more comprehensive review of our financial performance, I now hand over the floor to our CFO, Ms. Bindu A.L.
Thank you, sir. Good evening, ladies and gentlemen. Thank you for joining us for the discussion on our financial results for the last quarter and nine months ended December 2024. Our consolidated AUM was INR 44,217 crore, down by 3.3% sequentially and 9.5% YOY. The decline, as explained by sir, is on account of the challenges in our subsidiary, Asirvad Microfinance. If we exclude the Asirvad portfolio, the growth is 1.9% sequentially and 18.7% YOY growth. That also with the help of the growth in the gold loan portfolio.
Profitability: INR 278 crore for the quarter, which was down by 51%. But if we exclude the Asirvad losses, the Q1 decline is only 2.4%. ROE: 8.9% and ROA was 2.2%. Our leverage is currently 2.9 times. Our standalone NPA: 2.46% versus 2.42% during the previous quarter. Cash and cash equivalents: INR 4,592 crore and undrawn bank line was INR 2,524 crore.
CP exposure: 1% in the standalone entity and our subsidiaries do not have CP exposure. Standalone borrowing cost has gone up by 6 basis points during the quarter. We have raised fresh term loans during the quarter and the liquidity position is comfortable. Gold loan business, the proportion improved to 55.4% of consolidated AUM compared to 53.3% and improvement of 2% compared to the earlier quarter. Consolidated gold loan AUM: INR 24,504 crore, 0.6% Q on Q, but the standalone entity could achieve a 1.9% Q on Q growth and 18.8% YOY growth.
We were able to add 3.3 lakh new customers and the outstanding number of customers stood at INR 24.66 lakhs. LTV at 60%. Online book 79% of the total book, and the standalone PAT was INR 453 crore, which is slightly down sequentially and up by 5.8% YOY.
The decline was on account of a higher provision arising from one of the corporate borrowers and a lower DA income compared to the earlier quarter. Coming to microfinance business, AUM at INR 10,013 crore, including gold loan of INR 818 crore, down by 17.6% Q on Q and 13.4% YOY. Loss: INR 188 crore versus profit of INR 75 crore. CRAR at 23%. Vehicle finance, AUM of INR 5,085 crore, which is up by 4.9% Q on Q and 41.4% YOY growth. And the GNPA increased to 5.2%.
The vehicle finance AUM comprises of commercial vehicle, which is 48%, and passenger vehicle 31%, and two-wheeler 15%, and farm equipment of 6%. Home loan business, INR 1,778 crore, AUM at 31st December, which is up by 5.1% Q on Q and 25.7% YOY growth. Number of branches 89, and they reported a profit of INR 7 crore during the quarter.
GNPA at 3.86%, and the home loan AUM comprises of home loan 71% and LAP of 29%. Loan to MSME and allied activities at INR 3,001 crore, with a disbursement of INR 356 crore. On- lending AUM at INR 653 crore. The disbursement only INR 5 crore during the quarter. Capital position is strong with a CRAR of 29.88%, and the company's net worth INR 12,776 crore. The book value as on 31st December, INR 150.94. Thank you. Now we can go for the Q&A session.
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 withdraw yourself from the question queue, you may press star and two. Participants are requested to please use handsets while asking a question. Ladies and gentlemen, we will now wait for a moment while the question queue assembles. We have the first question from the line of Shreya Shivani from CLSA. Please go ahead.
Hi. Thank you. Thank you for the opportunity. I have two questions. First is on the growth front, on the gold loan business. So while I understand that the Asirvad bit of gold loan business may have seen some challenges, on our standalone book, our gold loan has slightly slowed this quarter versus the last couple of quarters. How much of it does it have to do with competition coming back into this space? Because some of the peers have reported, whether in banks or NBFCs, have reported much stronger numbers. And what is our outlook on the standalone gold book for the coming quarter or for FY26 as well?
That's my first question. Sir, and on the second question, I wanted to understand what has been the provision coverage on Stage 3? I know you've taken about INR 400 crores of technical write-off, but if you can help us with provision coverage on Stage 3, that would be useful. Thank you.
So the gold loan that used to be a little slow. That quarter used to be a little slow because of festivals, etc., etc. Yeah, we expect the gold loan to grow at a rate of 15%-20%. And it will be. That is the expectation for the future. We are earlier; we were telling everyone 10%-12%, and now we believe that around 15%-20% is possible because the customers are more and more customers are coming in, and we see some increase in the ticket price, etc., etc., going forward.
So this is our VC's opportunity for gold loan growth. Quarter to quarter, there may be some difference. Yeah, regarding the second part, Bindu can answer.
Yeah. So the question on the Asirvad provision coverage, Stage 3 will be 59%.
59%.
And then, what was it last quarter, the Stage 3?
It will be 55%.
Yeah. Okay. So we've taken about 4% increase over there. And what about the standard asset provision? How much has that moved on Asirvad book?
Standard asset provision, Stage 2 will be having?
14%.
14%. And Stage 1 will have 1.25%.
1.25%
How much was the 14% and 1.2 last quarter?
Similar.
That is, yeah, similar.
Okay. Got it, and okay, so this answers my question. Thank you so much.
Thank you. The next question is from the line of Shweta from Elara. Please go ahead.
Thank you, sir, for the opportunity. So I have a couple of questions. So if I look at gold tonnage, both sequentially and year on year, it has declined. So clearly, that is the outcome of also gold price increase and festival season in the quarter gone by. But then what gives you confidence going forward to resume growth at 15%-20%? Because both the branches as well as customers have sort of are lurching. So the productivity gains are going to be lower in the interim periods at least, right?
That's the first question. And just the allied question to that, so what is the RBI communication now in terms of opening of gold branches? So I'm not talking about MFI-led gold or MFI branches, the standalone gold branches. That's the question.
Second, so just coming back to the bit of first participant question, so you have technical write-offs of INR 400 crore, right, this particular quarter. Just a bookkeeping question, what was this number previous quarter and a year ago, corresponding quarter year ago? Thank you.
Regarding tonnage growth or decline, all depend on the gold price. See, when the higher amount is available with a lower quantity, people will bring only lower quantity. They borrow for meeting their requirement and not because there is, yeah, gold value is higher, LTV is high. They don't borrow like this. See, one thing which you should appreciate is gold loans without any compulsion, even without sending any SMS or anything, around within three, four months, almost 70%-80% of the loans are getting repaid in.
So when somebody pledges their gold, they have some clear anticipation of their forthcoming cash flow. Only on the basis of that, they borrow. So you will see when the gold price goes down, also you can see growth at the same time. Then at that point of time, you can see the growth, tonnage growth higher.
So this is simply because of the function of LTV, gold value. And regarding RBI permission of opening the branches, yeah, today we had a meeting. I am in Mumbai because we had a meeting with RBI Governor. Larger NBFCs were invited, and I had the opportunity to raise this question to the governor. And also, I had a forum and outside also during lunchtime, I had discussed with him and deputy governor. And the governor also wondered why only for gold loan companies this restriction is. He said, "I don't see any reason."
He asked the deputy governors to examine and if there is no genuine reason, remove that branch opening restriction only for gold loan company. And after that, I had the opportunity to discuss with senior officials, and they were positive, and they asked us to resubmit application. This is where it is.
This is in the open discussion we had when the meeting was invited by the RBI governor to understand the challenges of companies. We explained to him. I explained to him how this can help in weeding away customers from various lenders, etc., which was appreciated. I hope we'll get permission for opening branches without much delay. And the other part, Bindu can answer.
Yeah. For Q2, last this Q2, it was 40, and previous Q3, it was nil. We did not do any write-off in the previous Q3.
The corresponding quarter last year?
Yeah, that was nil. That was nil.
Okay, and as well in Q2 FY25?
40.
40.
Okay. Okay. So coming back, sorry, I'm just harping on the same thing. So coming back to the first question, the first point which you made, so it's understandable that in a price rise scenario, tonnage would look lower. And like you rightly pointed out, you have been communicating with RBI for acquiring the branch opening approvals, which is very positive. But in the interim period, so as we move ahead saying Q4 and Q1, what brings the confidence to put up a 15%-20% growth? Thank you.
Its annual growth in some quarters because of the demand from the target audience grows because, for example, sowing season or school college admissions, etc. Then harvest season, etc., it goes down, etc. But we believe that 15%-20% is possible. And this year also, we expect to get around to grow around 15%. So that's the expectation. It is all dependent on the demand only, not because of the gold price as it is mistakenly the impression of the markets.
Understood. Fair point. Thank you so much and best of luck.
Thank you.
Thank you. The next question is from the line of Rajiv Mehta from Yes Securities. Please go ahead.
Yeah. Hi. Good evening. So firstly, you spoke about RBI directions on gold loan practices, and then you said that we've also responded and we've done some enhancements in process, yeah, in operations. Can you elaborate on any specific changes that we would have implemented on the ground from, say, December or January?
See, this was a discussion point by the major companies in the gold loan sector today with RBI Governor and Deputy Governor. So they promised that.
The question on the 30th September circular, can I answer for that or?
Yeah. Yeah.
Okay. On the 30th September circular, two important points. One is the LTV monitoring and the other thing on rolling over of the pledges, the repledge, etc. On the LTV monitoring at specific LTV ratios, we are sending SMS letters, etc., and there will be an accelerated auction. That is one change we have implemented. During the tenure of gold loan, the rollovers with partial servicing of interest, that is also we have introduced. Beyond the maturity, repledges only with the full repayment, yeah, full repayment of interest. These are the changes we have implemented.
Then NBFCs, we are capturing in the pawn ticket more clearly acknowledged by the borrower. These are the three points applicable to NBFCs which we have implemented.
On top of that, I want to add a few more things. So some of the practical challenges in the proposal have been discussed with the governor and the team today. He said, "Yeah, we are consulting with you." Then on the basis of this understanding the practical challenges and the customers face, etc., etc., we will come out with a draft guideline. Then we can have another round of discussion. It appeared that the governor is very positive. The RBI setup today is very positive, and we expect positive outcomes.
Go back. In the standalone company, the other Opex has increased Q on Q. Any particular reason why the non-employee expenses have gone up by 7-8%?
It is we had some unsecured loans which we have stopped in the past, like digital personal loan which we have stopped already, and some MSME lending which we have already stopped. So that is the past buying up, and we have completely moved to secured lending in the standalone entity. About the numbers, Bindu can, yes.
Yeah. So the Opex has gone up around INR 7-INR 8 crore because of the employee cost. And the other one in the admin expenditure, it is on account of the increased IT costs, the cloud usage, etc. There is some overusage, and we paid some extra amount. And a lot of automation is also happening. So our change request, that expense is also gone up. That is the.
Sure. Just one follow-up. Bindu and I spoke about a couple of changes that have been implemented in the process for gold loans with regards to LTV monitoring and rollover of loans. Presuming that it would have been implemented from December or January, incrementally in January and February, are we seeing any impact, negative impact on growth because of that? Or are we seeing the AUM growing? So maybe in terms of customer volumes, because I think the customer base had declined in Q3. That can be attributable to pledges being released.
But in January, February, for the implementation of the new discipline, are we seeing that customer bases further going out?
So for any changes, there will be resistance. So in the first few days, we have seen some impact. Now customers also adjusted to that. And I think the quarter we expect similar to our last year quarter.
Okay. Thank you. I have more questions. I'll come back and let you.
Thank you.
Thank you. The next question is from the line of Kushan Parikh from Morgan Stanley. Please go ahead.
Hi, sir. Thanks for taking my question. My question was on Asirvad Microfinance. So given that we have restarted disbursement after the RBI clearance, this would be at a lower interest rate as well as we had alluded to previously. So wanted to get your take on what will be the rephasing strategy for the subsidiary in terms of the growth that we will be pushing for, as well as from a margins and ROI perspective for this entity. That's one question. My second question is a housekeeping question. If you could give us the outstanding number for the quarter for gold loans.
So the Microfinance Indistry was reporting a reporting a reasonable profit even when there was a cap on the net interest margin, It was 10%. It was a little bit earlier removed, etc. What has happened is with removal, almost all the companies raised the price and thinking that some additional rules can be taken in the pricing, some 2%, 3% or 4%, etc., etc. Accordingly, every company has hiked the interest rate. And but actually, that has led to the indiscriminate lending from all the lenders. Multiple which was earlier, the number of lenders was restricted.
That has gone up. And that has led to a situation. Because of the regulatory changes, now all the companies understand that, and it will gradually come. But this transition is definitely painful because earlier, with these changes, the loans were repaid using another loan, etc. That rule has come down.
But now the discipline will come, and things will go back to the post-liberalization environment. And even with that, with the cost everything contained, etc., I hope the microfinance industry will go to that level where even Asirvad was reporting around nearly 5% ROI. So with the discipline and more and more encouragement will be there for group meetings, etc., etc. So this transition phase for every microfinance company will be a little difficult. So I feel like in two, three quarters, things will come back.
The AUM number 124 is the AUM amount you referred to. So if you could just guide on the growth for the MFI business as well going forward.
So, what we plan to have is to contain the growth, and gradually, we plan to increase our secured lending business in the overall consolidated book. So gold and other non-gold secured business. So, in a phased manner, we plan to bring it down to within 15% now. Even it may go down gradually. So other businesses will prioritize the opportunity, and we hope we can open branches also that will be greater emphasis in growing gold.
Understood. That's all from my side. Thank you.
Thank you. The next question is from the line of Love Sharma from JPMorgan. Please go ahead.
Hi. Thanks for taking the question. Just a couple of questions from me. I think more as a follow-up on the previous question first on Asirvad. If you could highlight what is the growth you are looking at on AUM side for Asirvad in the next one or two years, and any sense of how the asset quality is likely to evolve over the next few quarters as well within Asirvad.
And another question related to Asirvad again would be, given some of the commentary around the covenant breaches there, could you just highlight what is the discussions with lenders as of now, and any sense in terms of fresh lending or borrowing rates which have gone up for you within Asirvad especially?
In Asirvad, we have tightened the underwriting process. We have capped the maximum number of lenders that could be, and we have reduced the loan size also, cycles also at a longer period. And from one cycle to the next cycle, the increase also is reduced. This way, we have tightened the processes. We are giving loans only to our good customers now who have a good track record all these years, etc., etc., through branches which are seen safer, etc. This way, we expect the growth of Asirvad; the amount will come down to around 10%, 10-12% annually.
I don't expect that to be more. And we expect the collection efficiency to go up to around 99% because of the tighter underwriting. And we will bring down the employee costs and the other costs by year.
So we clearly planned cost reduction plan which is being worked out. The employee productivity has to be improved, and the branch size also, branch number also will have to be evaluated, etc. We are working out a strategy, and we are, as I said, the next two, three years, we expect a growth of 10%-12% for MFI with a collection efficiency of 99%.
Could you just comment on the governance side for the Asirvad? Any impact on borrowing cost or fresh lending.
Rajesh?
Look, right now, we had had some disbursements against which we could not give the, I mean, the assets. So we are in discussion with them. Because of this current situation of the, I mean, which we had this seasonal disease impact as well as the overall microfinance sector issues, so we are in discussion with the banks, and we are very hopeful we will get some solution for this.
Do you mean that that's essentially more about higher borrowing costs which banks could lead to for Asirvad or any other impact you see?
Not much.
Not much. Not much.
Okay. Okay. Thanks. That's it from me.
Thank you. The next question is from the line of Shreepal Doshi from Equirus Securities. Please go ahead.
Hi, sir. Good evening, and thank you for giving me the opportunity. Sir, my question was on something that Bindu ma'am alluded to in her answer to one of the participants when she highlighted that there has been some process policy changes in line with the RBI circular. So ma'am, I just couldn't understand that. Do you mean to say that we will be maintaining 75% LTV throughout the loan tenure, or will we be closely monitoring it for each of the customers in the gold segment? And also, you highlighted something on the auto-renewal of the loan. So if you could just explain both these aspects again, please.
Okay. So on the LTV monitoring, we are strictly ensuring that at the time of disbursement, this is within 75% as permitted. And then the interest accrual will also be added, and we will monitor the LTV position. And if it is a small variation, maybe up to 5%, we will not act on those cases. Above 5%, we will start sending SMS. Then we will do at 85% letter, 90% auction notice, etc. Like that, there will be a continuous monitoring and activities which will ensure a better discipline from the borrowers. And on the yeah, that is one point on the LTV monitoring.
And second, on the rollover of loans during the tenure within the permissible LTV, borrowers may need additional working capital, so they used to avail the loan. So during the tenure, now it should be with the cash flow coming in. So the 50% interest should be serviced during the tenure if they rollover the loan. Then after maturity, they should service 100% of the interest. So these are the few changes we made.
Got it. Got it. And just one more point here. So sir, as you highlighted, you met the governor recently. So was there any discussion on these regulatory frameworks, sir, wherein they are highlighting these aspects to be covered in the processes and policies incrementally?
For the first time, we are getting a meeting from the governor. The initiative was taken from the governor's office. And what he has said is this will continue. This will continue region-wise. His office will take the initiative and follow it critically and sector-wise. So he says, yes, he was very positive in this thing. Yes, the regulation will be successful only when they understand the regulator and detailed challenges also. So how to do business, the ease of doing business is very important. The words he used there, ease of doing business is important.
And the challenges in each sort of business, the regulatory environment will look at it. That's why he plans to hold such meetings periodically at the national level as well as regional level and sectoral level and banks also. He believes in understanding the stakeholders in ensuring an effective regulation. So he's very positive.
He sat with us for almost four hours. We had a coffee break with him. We had the opportunity to discuss. And also, there's a lunch meeting, one-to-one meeting. And every participant was given enough time to raise their concerns. This is something very positive. This is the words we heard from the RBI governor.
Got it. Got it, sir. Thank you, sir. So just one last question. So with this, what Bindu ma'am highlighted on the process policy front, so do you see that while we want to implement that and ramp it up, so do you think that can hamper or have some impact on our business momentum, at least from the medium-term perspective?
This is what, yeah. In the forum itself, open forum itself, I raised the question when too much of regulation, this is going to benefit the unorganized sector where the major portion of the gold loan is still ruled by them, etc., etc. So the customer's convenience and comfort in this regard has to be taken into consideration, etc., etc. So then he said, yes, our people had a discussion with a few people, and we are framing a draft. So you can respond to each of these points.
So then only we'll come out with the final. So some of the things which we were asked to implement, if these are found difficult as far as the customer service is concerned, I hope there may be some changes.
Got it, sir. Got it. Thank you, sir, and good luck for the next quarter to the team.
Thank you.
Thank you. The next question is from the line of Pranuj from JPMorgan. Please go ahead.
Hello. Thank you for taking my question. So a couple of questions. One is on the cost of funds that continues to inch up for you. So what segment is actually driving the rise over there? And also, I think 18% is ECB borrowing. So are these 100% hedged from your end?
Yeah. ECB is 100% hedged. And on the cost of borrowing, there is a small change in the bank cost of borrowing. It is six basis points during the quarter, overall cost of borrowing increase.
Okay. So this is essentially MCLR repricing that tracks too?
Yeah. Yeah.
Okay. Okay. Got it. And second is on if I look at your housing finance and your vehicle finance, GNPA, they have risen quite substantially despite the loan book also displaying a healthy growth. So what segments are actually seeing higher stress in these two particular subverticals?
Kamal?
Yeah. Thank you for the question. We are basically catering to the bottom of the pyramid profiles. And the recent issues that we have seen in the market, at the micro level and also in terms of weather conditions, plus the other challenges that the retail profile has faced, they generally tend to get impacted the earliest. So that's one reason why we've seen this GNPA going up. But from this month, we have started seeing a positive collection. So we are definitely hopeful that things would look better from this quarter onwards.
So sir, one follow-up. In vehicle finance in particular, there's been a very sharp rise. So within your subsegments of PV/CVs, what is actually driving the highest stress over here?
We have faced with higher increase in delinquencies in the two-wheeler and the farm equipment segments. But now, there is improvement seen from January onwards.
Okay. So it's mainly two-wheelers and tractors that have driven the rise.
Yeah. Yeah. Immediately, yes.
Okay. Got it. Thank you. That's it from my end.
Thank you. The next question is from the line of Shubhranshu Mishra from PhillipCapital. Please go ahead.
Hi. First of your housekeeping questions, what were the auctions in this quarter? What was the LTV in rupees? You gave in percentage. And what is the interest accrued? Those are housekeeping questions. I'll come to the second question after this is answered. Thanks.
INR 120 crores is the auction amount, right?
Yeah. Not audible, sir. Say that again.
INR 120 crores.
INR 120 crores?
Yes.
Okay.
The price is taken for average LTV of 60%. Price is INR 7,110.
Sir, it is not clear. Say again.
INR 7,110 crores. And 60% is the LTV as on 30%. And INR 120 crore option. Interest receivable, INR 1,094 crores.
INR 1,094 crores. Okay. Sure. My next question is on Asirvad. We've seen multiple cycles, and there has been management change. There has been some degree of attrition at the branch levels. Do we really intend to build this business for the long term, or we want to sell it out after some point in time? Because clearly, we've had multiple issues running this. At a point in time, there was no convergence of gold loans there. I think four, five years ago, we were doing barely 2% of the book was gold loans. Then we had management change, and we started doing more of gold loans versus MFI.
So what do we think of this business? Do we really want to run this in the long term, or we want to just do some bit of restructuring and sell it off? Will that make more sense?
See, we are doing the business of running it long term. So we'll do that business with a prudent practice and manage the cost also very prudently. And whatever is our policy with regard to risk-based secured and unsecured lending, all these are going by our policies, which will evolve from time to time. Now, it is too premature to talk about that.
Right. Because we have been speaking about this non-gold loan book when a gold loan was not in favor. Now, we are talking more of gold loan when it is in favor. So the strategy gets a bit haywire in an investor's mind. So just wanted to understand what is the clarity there?
See, gold loan, we have said at any point of time, yeah, the gold loan is today our flavor. No, we are not told that. So what we told is we also wanted to grow non-gold business. So non-gold also, we have repeatedly said our priority would be secured lending, like mortgage, mortgage-based MSME, then vehicle finance, etc., etc. So these would be the two segments, and earlier also, I have told our capital allocation will be limited to 10% of the net worth. So we plan to contain the MFI book within around 10%-15% of our total AUM going forward.
We expect the MFI to grow at around 10%-12%, as I mentioned earlier, with our first very strict underwriting, etc. So that's the scenario we expect.
Just one last question. Given the fact that in my previous answer, it was said that we generally cater to the bottom of the pyramid in vehicle financing. So we are not getting to choose a customer. Hence, we are always doing a higher risk segment, which could be beneficial when the rates are coming down. But when the rates are hardening, again, we'll face these kind of issues, right? If you're not able to choose a customer segment, or is it a strategy to cater to the bottom of the pyramid all the time?
See, we are serving the customer through our products like affordable housing, gold loan, or commercial vehicle where the ticket size is around INR 10 lakhs, etc., etc. These are the products used by the common man.
Understood. Thanks. I'll take a few questions offline. Best of luck for ensuing quarter. Thanks.
Yes.
Thank you. The next question is from the line of Mona Khetan from Dolat Capital. Please go ahead.
Yeah. Hi. Good evening and thanks for the opportunity. So firstly, on the Asirvad book, could I know over the last nine months, how much of loans have been added to Stage 3, that is, the gross additions to Stage 3 over nine months?
We will take up the question offline.
Okay. And do we have the PAR 0 in the Asirvad book?
PAR 0 is there. It is there in the presentation.
Slide 25.
Slide 25?
Stage one.
Yeah.
Stage one.
Stage 1 is 88.3%.
So that will include up to 30 days, right?
Yeah.
Yeah.
Yeah. So I'm looking for 1+ DPD or PAR 0, whatever.
16.96%.
Okay. I mean. Sure. Got it. On the gold loan book, can you share the loan mix by ticket size?
Yes. Up to INR 1 lakh, 41.7%; INR 1- INR 2 lakh, 22.1%; INR 2- INR 3 lakh, 11.5%; above INR 3 lakh, 24.7%.
Okay, and just finally, so sir mentioned at some point about doing some of the unsecured lending, so is it fair to say that apart from MFI, incrementally, we are not taking up any of the unsecured lending?
Still, you are right.
Okay. Okay. Got it. Thank you so much.
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 question. My question was around the standalone asset quality. Just trying to understand the Stage 3 provision coverage. We have seen that moving from 15% in one year to now less than 10%, while the GNPA numbers have been increasing over the last two, three quarters. So just trying to understand why that is the case. And also, if you could help us with the provisioning policy for the gold loans as well as the non-gold portfolio in the standalone business.
Okay. So the main business, gold loan, is the credit cost is negligible, and we are following in the years and the provisions based on the historical data. So on the gold loan business, the overall provision on the total book is around 0.4%. On the vehicle MSME, etc., this is also again based on the in-day working, based on historical record. And we are doing based on the segment-wise. So for vehicle finance, it is ranging between 15%-25%. And for the MSME, it is around 27%. All put together, secured and unsecured, it is 27%.
This is helpful. If you could just also give some guidance around the standalone credit cost going forward, given that we are seeing improvement in the non-gold asset quality in general.
We had one corporate borrower default. That is the reason it has gone up. Otherwise, it would have been in the range of 0.5%-0.6%.
Understood. Thanks for taking my question.
Thank you. Ladies and gentlemen, to ask a question, you may please press star and one. We have the next question from the line of Gaurav from Capital Farming Consultants . Please go ahead.
Yeah. Good evening and thanks for the opportunity. I hope my voice is audible.
Yes.
Yeah. Thanks. So my first question is on Asirvad Microfinance since that seems to be one vertical which has given the maximum pain in this particular quarter, right? So in that, I think as per the last concall, the data set has given almost 10% is in gold loan AUM and rest majority is in the microfinance only, right, within the Asirvad book.
So if you can just give the updated number that as per Q3 FY25, what is the AUM split between MFI, gold loan, and MSME within the Asirvad Microfinance book? And correspondingly, the GNPA and Net NPA number for Stage 3 segment within the Asirvad Microfinance. That is my first question.
So in slide nine, we have given the microfinance AUM split up. So the MFI book is INR 9,133 crore and gold loan INR 818 crore, and MSME is INR 61.8 crore. Of which, the maximum NPA coming from microfinance book is around 5.8%.
5.8%.
5.8%. Gold Loan is below 200.
Okay. Okay. Second question is there were some media articles, some talks in the online platforms also that some private equity investor is willing to take some stake in the listed entity, right, Manappuram, right? So are there any serious discussions where promoters are looking to exit or they want to onboard some strategic investor within the listed entity, Manappuram Finance?
See, it is quite common to have discussions. But discussions doesn't mean that we have reached anywhere.
No, sir. Question or intent behind asking that question was because when you look at your nearest peer within the gold loan industry, quarter on quarter, they are just growing like anything, right? and they are establishing, yes, they are the market leader, and that's what they are doing as a leader. The performance of Manappuram doesn't seem that good. To be very honest, right, even you will appreciate that the performance is not at par what a second-largest player must display vis-à-vis when the number one player is displaying, right?
So either there is not much interest from the management to grow the business or things are not working in line, or there needs some fresh blood, right, some new generation leaders within the business that they want to upgrade the business and take it to the height where Manappuram deserves it, right? So that was the intent. Maybe your thoughts on that line, if you would like to share, will be a great help to the investor community.
See, the pricing has an advantage as far as the customer is concerned, so there is a pricing difference. We are trying to gradually match that. We can't do that all of a sudden, so gradually, it takes some time, so the difference in pricing between them and us, it is getting gradually narrowed down. You can see that narrowing down going forward. Even now, you will see gradually, so that will help us definitely to grow at their rates. It's only a question of time, so our improvement, now whatever is the difference, it will narrow down gradually.
Sure. Sure. Last question, if you may allow me. Considering the intensity of competition, one of the players who was again devoured by the RBI has now revived their gold loan lending operations. And some of the other NBFCs like Bajaj Finance Group, Aditya Birla Capital, right, and recently L&T Finance also acquiring some of the gold loan portfolio from one of the another NBFC, right? So how do you see the intensity going forward in a couple of next quarters, right? Specifically, if we look at our position as the second-largest gold loan provider in the Indian NBFC space.
See, whichever sector is seen attractive, there are many players who would like to enter. In the past, also, there had been many attempts, but only very, very, very few could succeed in that. Because here the challenge is, see, either how to manage the risks, which are entirely different from the other NBFCs. So we need to have the branches. We need to have very skilled, highly skilled people to appraise gold, etc. These are all done physically without any technology support. So it's a highly skilled job. So aggregating everything is the challenge. How much time it will take, that was the challenge for the players who intended to start this business even 10 years back.
Thanks a lot . Thank you.
Thank you. Ladies and gentlemen, we have no further questions. I would now like to hand the conference over to the management for closing comments. Over to you.
Thank you so much for your questions. Very good question. We expect that we have answered to your satisfaction. We tried to do that. And we look forward for your cooperation and support. Thank you.
Thank you.
Thank you. On behalf of Motilal Oswal Financial Services, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.