Ladies and gentlemen, good day and welcome to the Manappuram Finance Q1 FY 2027 earnings conference call. 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 touchtone phone. Please note this conference is being recorded. I now hand the conference over to Mr. Abhijit Tibrewal from Motilal Oswal Financial Services Limited. Thank you, and over to you, sir.
Yeah. Thank you, Steve. Good evening, everyone. I am Abhijit Tibrewal from Motilal Oswal, and it is our pleasure to welcome you all to this earnings call. Thank you very much for joining us for Manappuram Finance earnings call to discuss the Q1 FY 2027 earnings. To discuss the company's earnings, I am pleased to welcome Mr. V.P. Nandakumar, Chairman and MD, Dr. Sumitha Nandan, Executive Director, Mr. Buvanesh Tharashankar, Group CFO and CFO.
Mr. Manoj Pasangha, Co-CEO, Asirvad Microfinance, Dr. Roy Varghese, Co-CEO, Asirvad Microfinance, Mr. Mandeep Singh, CFO, Asirvad Microfinance, Mr. Kamal Parmar, Head Vehicle and Equipment Finance, Mr. Rakesh Sharma, Co-CEO, Manappuram Home Finance, Mr. Suveen P.S., Co-CEO, Manappuram Home Finance, and Mr. Robin Karuvely, CFO, Manappuram Home Finance.
On behalf of Motilal Oswal, we thank the senior management and the investor relations team of Manappuram Finance for giving us this opportunity to host you today. I now invite Mr. Nandakumar for his opening remarks. With that, over to you, sir.
Thank you. Good evening, everyone, and thank you for joining us for Manappuram Finance Q1 FY 2027 understanding investor call. It is a pleasure to connect with all of you once again as we discuss our performance for the first quarter of FY 2027 and share our perspective on the opportunities and priorities shaping the year ahead. Operating environment.
The first quarter of FY 2027 witnessed a resilient operating environment for the Indian economy despite persistent geopolitical uncertainties and volatility in global commodity markets. India's macroeconomic fundamentals remained strong, supported by healthy domestic consumption, improving rural demand, sustained infrastructure spending and a stable financial system. Credit demand across the banking and the NBFC sectors continued to remain healthy, while asset quality across secured lending portfolios remained resilient. Consolidated financial performance overview.
Our performance during the quarter reflects the inherent strength of our diversified business model and the resilience of our core gold loan franchise. Consolidated AUM for Q1 FY 2027 was at INR 69,635 crores, up by 9% QoQ and up by 57% year-on-year. Consolidated gold loan AUM for Q1 FY 2027 was at INR 57,006 crores. It is 82% of our consolidated AUM versus 80% for Q4 FY 2026.
Consolidated revenue from operations for the quarter stood at INR 2,033 crores, up by 16% QoQ and up by 34% year-on-year. Profit after tax stood at INR 585 crores, up by 45% QoQ and up by 47% year-on-year. Coming to gold loan business. The gold loan business continued to be our primary growth engine. At the same time, we maintain our disciplined approach towards risk management across all businesses, with asset quality, liquidity and capital preservation continuing to be main key priorities.
With over four decades of experience in secured lending, Manappuram Finance has built one of the country's most trusted gold loan franchises. Stand-alone gold loan AUM for Q1 FY 2027 was at INR 54,655 crores, up by 12% quarter-on-quarter and up by 97% year-on-year. As guided earlier quarter, our gold loan yield has improved by 59 basis points during the quarter. Coming to microfinance business. Our microfinance business under Asirvad continues to operate in a calibrated manner.
Microfinance companies have witnessed industry-wide stress over the few years. However, the strategic measures implemented over the last several quarters are beginning to deliver encouraging outcomes. Our balance sheet remains robust, supported by healthy capital adequacy, diversified funding sources, and comfortable liquidity buffers. This provides us with flexibility to pursue growth opportunities while maintaining financial resilience in an evolving operating environment.
Asirvad AUM stands at INR 7,188 crore, up by 5.8% QoQ and up by 7.2% year-on-year. Asirvad has reported a PAT of INR 21 crores in this quarter, up by 58% QoQ and up by 108% year-on-year. Coming to housing and MSME lending business. Our housing finance and MSME lending business continue to focus on profitable growth while maintaining strong credit discipline.
Rather than pursuing rapid balance sheet expansion, we remain committed to building sustainable businesses that generate healthy risk-adjusted returns over the long term. Coming to priorities for Manappuram Finance. It is remaining unchanged. We continue to strengthen our senior leadership team. Mr. Ashish Singh has been appointed as the MD and CEO and expected to join by January 1st of 2027.
He is a seasoned banker with over 25 years of experience in the retail banking space and his latest experience at the IDFC FIRST Bank has set off retail liabilities. He previously has leading private banking business. Moving forward, we continue to maintain our leadership in the gold loan business through customer-centric innovation and digital capability and operational excellence. Simultaneously, we will focus on improving the performance of our diversified businesses through disciplined underwriting, stronger portfolio quality, and sustainable profitability.
Technology, governance, and operational efficiency continue to remain important pillars of our strategy as we build a more agile and future-ready organization. While the operating environment will continue to evolve, we believe that institutions with strong governance, a disciplined execution, trusted brands, and prudent risk management will emerge stronger over the long term.
With our resilient business model, robust capital position, and diversified financial services platform, we are well positioned to capitalize on the significant opportunities ahead. With that, I now hand over the call to our President and Group CFO, Mr. Buvanesh Tharashankar, who will take you through the detailed financial and operational performance for the quarter. We will then be happy to take your questions. Thank you.
Thank you, Mr. Nandakumar. Good evening, ladies and gentlemen. Thank you for joining us for a discussion on our financial results for the first quarter ended June 30, 2026. In Q1 FY 2027, performance was driven by a strategic focus on gold loan growth, improved gold loan yields, and a greater emphasis on non-gold loan collections and strengthened asset quality.
Our consolidated AUM for Q1 FY 2027 was at INR 69,635 crores, up by 9% sequentially and 57% year-on-year. Gold loan continued to be our key growth driver with an AUM of INR 57,006 crores, up by almost 12% quarter-on-quarter and by about 98% year-on-year, supported by strong customer demand. Gold loan business constitutes 82% of the consolidated AUM versus 80% in the prior quarter and 65% a year ago.
Consolidated profits after tax, before OCI and minority interest was INR 585 crores for Q1 FY 2027, which sequentially was up 44.5%. Coming to the standalone business. Our standalone AUM for Q1 FY 2027 was at INR 60,971 crores, up by 9% sequentially and 70.8% year-on-year. Gold loan AUM in standalone business was INR 54,655 crores, up 12% quarter-on-quarter and 97.4% year-on-year. It constitutes 90% of our standalone AUM versus 87% in the prior quarter and 77% a year ago.
Standalone PAT before OCI was INR 552 crores, up 47% sequentially and 41% year-on-year. Standalone GNPA was at 1.56% versus 1.8% in prior quarter, and credit cost in standalone entity for the quarter was 1%. The standalone borrowing cost has gone by about 10 basis points in the first quarter of FY 2027. Coming to the gold loan business.
During the quarter, we were able to add about 3.2 lakh new customers and outstanding number of customers was 26.5 lakhs. Our average gold loan LTV was at 65.6% in Q1 FY 2027. Online gold loan book accounts for about 86% of the total gold loan book. Coming to microfinance business. Asirvad AUM stands at INR 7,188 crores, which includes gold loan AUM of INR 2,344 crores.
Overall, the growth was 5.8% quarter-on-quarter and 7.2% year-on-year. PAT before OCI was INR 21 crores in Q1 FY 2027 versus INR 13 crores in the prior quarter. In Q1 FY 2026, we had a loss of INR 269 crores. So essentially a swing of INR 290 crores year-on-year. Net NPA stands at 1.4% and Asirvad CRAR as of quarter end was at 31%. Coming to vehicle finance business.
In the vehicle finance business, we have reported an AUM of INR 2,562 crore, down 14.3% quarter-on-quarter and 43% year-on-year. Focus is now on collections as GNPA continues to be elevated at 13.3% versus 10.4% in prior quarter. Loans to MSME and allied was at INR 3,303 crore with a disbursement of INR 191 crore, and GNPA was at 5.9% versus 7.1% in the prior quarter.
Home loan business had a total book of INR 1,847 crore, flat QoQ and down by about 3% year-on-year. The board has declared an interim dividend of INR 1 for this quarter. Our capital position is strong and company is well capitalized with a capital adequacy ratio of 21.29%. The company's consolidated net worth stands at INR 16,552 crore as of June 30th, 2026, and book value per share stood at INR 176.20. We can go now for the Q&A session. Thank you.
Thank you, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on your touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question comes from the line of Shreepal Doshi with Equirus Securities. Please go ahead.
Hi, sir. Thank you for giving me the opportunity and congrats on a good set of numbers. My question was firstly on the recent implementation of RBI's new framework on the NDT side. So what all changes have you made in terms of product tenure? Have you launched income-generating products as well during the quarter? If yes, could you please throw some light in terms of the interest rate as well as tenure and underwriting practice that we have in that category? Thank you.
From the recent RBI circular guideline issued from April 1st onwards, we implemented in across in the recent period by considering the interest also while calculating that. There is a major change happened and also the ticket size also came in the picture, like up to INR 2.5 lakh, INR 2.5 lakh to INR 5 lakh and above INR 5 lakh. That is implemented from April 1st onwards.
According to the new circular guideline and they given some options or some various different kind of product offering options also given. According to the customer requirement and request and all, some of the products like monthly EMI, monthly interest payment, or monthly EMI scheme category products also we launched as a part of that. There are some acceptance from the customer also, earlier also requesting, sir, now we got that option.
These are all the changes done, and some of the customer segment, like business class customer or business segment is there. Those who are regularly getting income on their business and related operations. In that also, a small segment of income-generating loan also started after this April.
How is this income-generating loan different from the vanilla gold loan that we were doing, consumer gold loan that we were doing, except for the bullet repayment part? Is there any other difference apart from having the option of bullet repayment in consumer loan versus in the income-generating loan, we have the EMI option. Apart from these two, is there any other difference?
The income-generating asset, like income-generating gold loan, is given based on the cash flows. We have for that, for assessing the cash flow, etc. Whether it is the EMI product or quarterly AI product, interest installment is based on the cash flow. The LTV is also based on that. If it is an equated monthly installment, the LTV is higher. This gives us an option. If nobody, here we can send the due notices, and the recovery process can start as specified by the regulator. You had a question?
No, on the interest rate.
Yes, the interest rate on this scheme, it ranges from 14%-16%.
14%-16%. Okay.
14.
Got it. Got it, sir. Got it. Sir, when you say income evaluation or cash flow evaluation is lost when you are doing income-generating loan, so we have created a bandwidth there in terms of hiring staff over the last three, six months, and how is it?
We have hired staff, and also, we have our own people in the cash flow-based products like MSME and vehicle loan, etcetera, who have the capacity or the knowledge of assessing the cash flow of the customer, etcetera, intending borrower, etcetera. Sufficient training has been given at various levels. We started this training much before the implementation. We started this training at least three months prior to the implementation on April 1st. These income-generating schemes were implemented subsequently only. So we had the time to train our staff for six months. They are adequately trained now.
Got it, sir. Just one follow-up there. Even in the income-generating product, right?
I am sorry to interrupt, Mr. Shreepal. Could you please repeat your question? You were not audible.
Yeah. My question was that even in the income-generating loan, we follow the similar LTV norms as we follow in the consumer loans, right?
No. Income-generating loan based on the cash flow, we go up to 85%. If it is monthly EMI, 85%, and if it is quarterly, the sub-use is lesser to that. The LTV is higher. But at the same time, I can tell you the overall average LTV remains at 64%. This is the last week's price. Now, the average LTV would have come down further because the price has gone up during the last one week.
Got it, sir. Thank you so much for answering your questions. Good luck.
The next question comes from the line of Rajiv Mehta with YES SECURITIES . Please go ahead.
Yeah. Hi, good evening. Congratulations on good numbers. Sir, firstly, I want to understand this movement of 60 basis points improvement in the portfolio yield. What drove this? Is it the new products which you introduced under the new regulations?
Since your portfolio tenure is generally short, is that helping you in maintaining now the yield at a much better level than the earlier products? Or has there been any underlying shift in the customer segment mix, meaning that more high-ticket customers or has there been any change in the customer mix as well? If you could just answer, and whether are we able to maintain the same yield in July, August as well with the same momentum of business?
Hi, this is Buvanesh here. The yield movement is largely, in last quarter, I think we were to the point that we had over-corrected in terms of the pricing that we had. We were taking some pricing actions to ensure that we are able to enhance the yield. So in Q1, essentially, we had taken some pricing actions, which are beginning to kind of yield results to us, which is what you see in the Q1 numbers. We see similar trends going forward as well.
From a pricing perspective, we will probably be in this broad band, around the 18% handle. Basically that's where we will be. It's not on account of any shift in terms of a disbursal mix or any segmentation mix. It's basically a set of actions that we have taken from a pricing perspective to be in line with our peer group, and we continue to monitor that pretty closely.
With this, holding on to the yield of around 18-odd%, have we seen the velocity of business in terms of tonnage growth, customer growth continuing in July and August as well?
Q1, if you look at the growth in one year back, I think it was from a tonnage perspective and a customer perspective, it was a bit weak. In fact, on the tonnage side, I think we had gone down last year first quarter. This first quarter, despite seasonally being slow, we had a good momentum, and we continue to build on that momentum in July and August as well. Both from a customer perspective and from a tonnage perspective as well.
Just one clarification. When you report LTV as of June end at 65.6% and as of March at 57.3%, this June LTV will also have LTV defined as per the RBI's new regulation. Or is it like-to-like comparable? It's not including interest.
No. To some extent, it will include interest. But in terms of largely the LTV movement that you see from 57 to 64 is driven by the price of gold. You see that the price of gold has dropped by about 8.5%. Consequently, you see a similar movement on the LTV side. It is more of a denominator effect, I would say.
There is no numerator change you are saying. Numerator computation change.
No
It is not there. Yeah. Okay.
No.
Okay. Got it. I will come back in the Q&A. Thanks.
Yeah.
The next question comes from the line of Piran with CLSA. Please go ahead.
Yeah. Hi, team.
Hello. Piran, you are not audible. Can you please speak a bit louder?
Okay. Is it audible now?
Yeah. Perfect.
Yeah.
Thank you.
Yeah. Just going back on the earlier question, where can LTV settle, assuming gold prices are stable here?
On an average, this will be like 64%, 65%, even 66% level only. March end, 57% came mainly because of the price point. INR 14,161 was the price. Now, Friday, June that price is at INR 12,954. That is why this is coming at a 66%. But normally in this level, if it is continuing, 64%-67% is the average LTV range in the normal scenario.
Understood. So LTV should be range bound out here.
The average this range will be there. If price increase there because it is on the last day price we are calculating according to the calculation. Everybody is everywhere following that last day's price.
Understood. Secondly, we are seeing a lot of competition on the ground in gold loans. But you all have done pretty well. Just wanted to understand conceptually if competitive intensity remains strong or even rises, what would you prefer? Holding on to margins or sacrificing margins but pushing growth?
You see, we maintain a balance. Currently our pricing is at the lowest range in the NBFC industry. With the market, we cannot be totally away from the market. We have to move according to the market. But I hope we will be reasonably balanced in that.
Okay. Lastly, just a question for Bindu, if she is there. This net loss on de-recognition of financial instrument of INR 30 crore, just can you explain what exactly that is? Is that a write-off?
Yes. It is a write-off. We can get back on more specifics on that.
Okay. It is a loan write-off, basically.
Yeah.
Understood. Okay. That is it from my end. Thanks, and wish you all the best.
Thank you.
Thank you. The next question comes from the line of Prithviraj Patil with Investec. Please go ahead.
That's a good opportunity. I just had one question of the new guidelines that Reserve Bank of India has given, the draft guidelines about the export facility. I just wanted to know if there are any such facilities or online gold portfolio.
Can you repeat the question?
Yeah. There's a new draft guidelines on the revolving facility. I just wanted to know if there's any such facility on the online gold portfolio that you have.
Online gold loan doesn't come under the overdraft. It is a normal loan only. It's just been lettered in the revised instructions.
Okay. How does the functioning of this loan work once the principal is run down? Do we give the customer a top-up loan then?
When the principal is run down, he has the facility if the LTV permits. He has the facility in the online gold loan to repledge that at the LTV he wants within the range permissible. That's all.
Okay. Thank you.
It is not an overdraft. [Non-English content]
Good. Thank you.
Mr. Prithviraj, is there any other question?
Yeah, that is. Thank you.
Okay, thank you. The next question comes from the line of Bhaskar Basu with Jefferies. Please go ahead.
Yeah. Good evening. I had three questions. Firstly, on the LTVs again, how are the origination LTVs? Do you have any loans which are originated at around 85% LTV post the new launch?
First of all, I can say we are working within the regulations.
Yeah.
If consumer loan is up to INR 2.5 lakhs, there is a regulation. Similarly, beyond that also there are certain caps. The interest also is factored while calculating that.
Okay.
Let me say that. For income generating assets, we go up to 85%, this is the maximum, 85%. These are EMI products or the IGA products.
Right.
Here, even though we have the gold collateral with us, most stress is given to assess this cash flow. These are all from the business people.
Yes
who will even otherwise qualify for EMI products based on the cash flow, based on whatever securities they pledge their business upon.
Okay. But that income generating product, actually, my understanding is there is no required LTV cap for that, right? I mean, you can-
Yeah, there is no, as per the regulation, there is no LTV cap. But internally, we have fixed up the cap to be 85% maximum. That is the maximum.
Got it. And what portion of your book will be, say, originated at that 75%-85% band? And what proportion would be the income generating loan in the book?
That can be shared separately.
Yeah.
We have to take that separate.
Okay. What would be your branch expansion plans for this year? Any acceleration expected?
Now, one good news for us is the requirement of prior approval from Reserve Bank of India has been removed, which facilitates the opening of the branches. So we have the plan to open around 500 branches now. We are at stream now already, progressing in that stream.
Sorry, 500 branches for this year?
Yes. That is what is planned.
And would this all be in standalone or would this also include Asirvad?
No, this is for Manappuram. For other businesses like Home Finance or MFI, they have their own plans.
No, I mean within the gold loan branches.
Yep. Yes.
So Asirvad gold loan branches expansion will be on top of this, or this is part of that 500 for the group?
Yeah. All these Manappuram Finance and Asirvad, all these will come under this 500. This is the plan.
Okay, got it. On the cost of fund. Sorry. Please go on.
Yeah.
This is for gold loan.
Yeah.
Yeah, got it. My last question is on the cost of fund. We have seen about 20 basis points increase in standalone. Where do you see this settling? Does it go up further in the next quarter?
Buvanesh here, in terms of cost of fund, given the overall environment where we have seen spikes in terms of the rates in the short way, and we have seen a spike in the rates, we have seen MIBOR also at all-time high levels.
Despite that, first quarter, we have been able to manage from a cost of fund perspective, we have been able to keep it fairly under control. We continue to monitor and see in terms of opportunities that will arise in future, and we will work on that. It is very difficult to put a number in terms of where this will settle in. But having seen that these are elevated currently, we could expect some of this coming into our cost of fund as well. But it is very difficult to predict where this will be.
Okay. But some sense on where your marginal funding cost is versus the average of about 8.8. Incremental basis.
On an incremental basis, I would say, we will be around the 8.8, 9 handle, is what I would look at.
Okay. Thank you. That's all from my side.
Thank you. The next question comes from the line of Kushan Parikh with Morgan Stanley. Please go ahead.
Thank you for taking my question. My first set of questions is on the gold loans, please. Going forward, we have the branch addition plan for gold loans. But gold prices have been pretty muted in this year. Keeping that in mind, what is the gold loan growth guidance that you would like to give for FY 2027? Also on the yields. We have seen yields declining consistently, but this quarter they have come back up. What is the steady state gold loan yields that we should think about going forward from here on? Those are my two questions on the gold loan.
We expect the yield to be somewhere around 18%. It may go down by 25 basis points or go up by 25 basis points. Beyond that, we do not expect anything. It will be around 18%. The branch expansion plan and price may remain stagnant. The price is not a factor which is determining our branch expansion. Branch expansion, the scope is there because there are many places where we are not represented, and we have potential for growth. Those places are identified and selected for branch office.
Understood, sir. What is the gold loan growth guidance that you would like to give for FY 2027?
We have grown around nearly 12% at Q1. Our expectation for growth of gold loan this year is around 30%, because some quarters are per season, some quarters are off seasons. We expect that to be some between 25%-30%.
Understood, sir. Thanks, sir. Just one more question on the non-gold businesses. The vehicle finance, MSME, and home loan businesses have been in a growth moderation phase for a few quarters now. When should we expect them to turn towards growth, and what are our plans for those segments?
We have temporarily stopped the vehicle lending, vehicle finance. We are focusing on collection. Our collections are improving because of the improved focus, et cetera. The other businesses like mortgage-based loans, et cetera, it has started picking up, and the asset quality is the more focus. Microfinance also, our focus is on the quality. Yes, we are complying with the SRO norms, et cetera. The growth will remain at a level of, I feel like INR 400 crores to INR 500 crores disbursement in MFI.
Understood. Thank you, sir. Just one last data keeping question. If you could provide the gold loans by ticket size, that would be helpful. I'll just stop here.
Up to INR 1 lakh, it is 21%. INR 1 lakh -INR 3 lakh, it is 30%. Above INR 3 lakh, it is 49%.
Thank you, sir.
Thank you. The next question comes from the line of Gaurav with Capital Farming Consultants. Please go ahead.
Yeah. Hi. Thanks for the opportunity. I have questions, one on the gold loan segment and another one on the microfinance. On the gold loan, if I heard correctly, we are expecting to open 500 new branches during FY 2027. Is that the correct statement?
Yes.
Okay.
Yeah.
When I was just going through the presentation, I noticed that I think in Q1 we have added 10 branches, if I am not wrong. Considering that 10 branches in Q1, is the remaining 490 branches across three quarters, is it officially feasible or am I reading something wrong?
The circular has come. After the circular, removing the prior approval requirement, we initiated the process. During the initial months, it will be low, but it will pick up. It is steadily picking up. You will see a good improvement during the second quarter. We are confident of reaching that target of 500 branches, full branches.
Okay, that's great. 500 branches is a feasible number of fresh branches.
Yeah
That's it. On the microfinance side, when we look at the quarter-on-quarter numbers, Q4 of FY 2026 versus
Yes
Q1 of FY 2027. I hope I'm audible. Right?
Yeah, audible. You're audible.
So it seems that, again, our losses and provisions have increased in Q1 of FY 2027 versus Q4 of FY 2026. Any specific reason why, again, the provisions have increased in microfinance or, I would say, Asirvad Microfinance?
Buvanesh here. In Q4 there were one-timers in terms of releases. I think Q1 is more representative of a normalized provision cycle. This would be where the provisions are. Q4 had a one-timer. Obviously, it was in single digits, I think 9 crores or something. There were some one-off credits that we had, which is why the Q1 is a more normalized number that you see.
That's great. And within microfinance, or I would say Asirvad, cost of borrowing seems to be on a little bit on the higher side vis-a-vis cost of borrowing that we have in Manappuram as a standalone entity. Now considering that the kind of loan book, or I would say the asset side that we have, that is drastically changed. Now we have almost 30%+ in the gold loan in Asirvad Microfinance side. Is there any opportunity that we can further negotiate with our lenders or there is a scope of a reduction in cost of borrowing considering our lending profile in Asirvad now onwards?
Yes. Certainly, there is a window of opportunity, and you rightly pointed out when we have over 30% of our books in the secured gold loan, it gives us definitely an opportunity to go back to our lenders and negotiate prices for a better cost of borrowing, which we are actively in place.
Okay. If you allow me one more question. In presentation, we have mentioned that in Q1, we have started lending in Manappuram Home Finance also. Is it a pure play like it will be sitting on the books of Manappuram Home Finance, or it is again kind of a co-lending model like we have between Manappuram Finance and Asirvad Microfinance? What would be the target of having the gold loan book in Manappuram Home Finance going forward?
It will certainly be within the limits of qualifying assets. Qualifying asset will always be maintained.
Will it be kind of a co-lending model or you will be underwriting on the books of Manappuram Home Finance only?
We will resort to co-lending model also, not only with the parent company, with the banks also. We have approached the banks also in Manappuram Finance also for co-lending with the banks.
Thanks a lot, sir. Thank you.
Thank you. The next question comes from the line of Anuj Jain with ValueQuest Capital. Please go ahead.
Hi, sir. Thanks for the opportunity. I have one question, what is your new management's long-term strategy with respect to microfinance business? Do we intend to grow its share of the portfolio like it was a few years earlier or to maintain at the current levels? Or do we have any strategy or any thinking to reduce the exposure going forward? What is the long-term strategy for microfinance business?
I will tell at the group level, we want to contain microfinance at below 10% at a consolidated level. We want to grow that along with our overall growth, but it is a stable manner where the asset quality is the prime concern. We stick to the asset quality, and we always wanted to have volume growth in MFI portfolio.
Understood. Thank you.
Thank you. The next question comes from the line of Ansuman Deb with ICICI Securities. Please go ahead.
Yeah. Hi, good evening, and thanks for the opportunity. I have two questions. One is on the branch opening. I think in the past we have seen branches has been one of the big levers of volume growth. With 500 branches, if you can share some color on in terms of where these branches will open and any view on branches opening possibility in the next one, two years.
That will be the first question. The second is on the strategic priority, which was set two, three quarters back. If you can give us any progress that has been done till now. I am sure there would have been lots of work which was done, but some discussion around that would be very helpful. Thank you.
The branch opening, we have accessed where the growth possibility is higher. I can say yes, around 60% will be in South and Central India. That is five states of South India plus Maharashtra. And some 38% will be in eastern states like Bihar, West Bengal, Odisha, et cetera, where we are seeing good potential. And the balance in rest of India.
And sir, on anything beyond that 500, is it a one, two year thing, we expect more branches to continue to open?
Yeah. So our present target is around 500 branches. After that, we'll examine and proceed.
Thanks. On the second question?
What was your second question, sorry?
My question was on the strategic priorities. I think we have expect some priorities that you already mentioned that one of MFI business being less than 10%. That was one of the things.
I am very happy to say that our focus will be more on gold loan. We want to maintain around 75%-80% of the consolidated AUM in gold. The balance would be either our prime trust would be secured lending, like the mortgage-based MSME lending, plus affordable housing.
This will be case. We are not giving any priority during this year. We do not want to disburse any more vehicle loans during this year. After one year, that probably in FY 2028, we may consider whether to restart or not. As I said, the microfinance will be contained between 8%-10%. That will be the cap on a consolidated basis we will put.
And sir, on the OpEx efficiency, you also had some, I think, digital division OpEx. Will we expect some efficiency on those front?
Totally. Our AUM per branch is growing. It has grown considerably high. You can see the OpEx to AUM is also steadily coming down. We hope to improve that going forward.
Great, sir. Thank you. Thank you so much. I appreciate that information.
Thank you. The next question comes from the line of Pradeep Agrawal with 360 ONE CAPITAL. Please go ahead.
Yeah, hi sir. Congratulations on good set of numbers. I have couple of questions. One, as we have seen the gold loan market has evolved manifold over the last four to five years. Have you seen any change or drastic change in the customer profile? Earlier we used to comment that about one-third business used to come for emergency use, one-third for agri and one-third for business. Are you seeing any change in that end use proportion? Because what we have seen is the proportion of higher ticket size customers have increased significantly, not only for us, but for the industry as a whole. First question on that. Yeah.
Earlier, these were seen as a distress product. Now, with the publicity given by all institutions, including banks, more and more business people, particularly MSME, they are availing the loan. The government's intention and also regulator's intention is to encourage the MSME lending using gold as collateral. Because otherwise, the gold is lying idle with them in their lockers, et cetera. To bring that idle gold into the MSME funding is a priority of the policy thinkers.
Based on this encouragement, that's why the RBI has gone a little liberal in permitting the gold loan companies to open more branches without any prior approval, which was the case earlier, et cetera. Also promoting, encouraging the IGA gold loan, where there is no LTV, even though we have capped at 85% based on cash flow, et cetera. All these initiatives are from the regulator side. Yes. Slowly the profile of the customer is moving to the business class.
Does that mean that about 49% of the attrition into more than 3 lakh ticket size? What would be the yield difference between, say, in that segment, say, above 3 lakh ticket size customers and, say, in 1 to 3 lakh ticket size? Because I'm assuming that this higher 3 lakh plus ticket size would be largely business use, right?
Yes. The mix remained more or less the same. Consider the mix only, we expect the yield to be around 18%.
Okay.
We know the trend. We have the mix also. With the volume mix also, this is the expectation, at least during the next one year.
Okay. Secondly, as the competition has increased manyfold, are we facing any challenges on the employee side? Has the attrition increased or how that has moved over the last, say, two, three years? Some color on that.
We are not facing any challenge in that recent times. Actually, the attrition has come down. Because many policy changes we made, et cetera, the attrition has actually come down. We are not seeing any attrition at the top level who are handling gold loans.
Okay. Any number you would like to give at the branch level?
Our attrition level remained around 2% to 2.5% per month. Yeah. It is not rising even now.
Okay. Lastly, any guidance you would like to give in terms of ROA and ROE? Once our business stabilizes in terms of, since on the yield side it has largely stabilized. Where do you see your ROA, ROE stabilizing, say, over the course of next few years?
We are targeting an ROA of around 3.5%-4%, and targeting an ROE of 15%-18%, which is the ROE target.
Okay. Any timeframe you would like to give, by when you would-
Yeah, we expect the ROAs and ROEs to consistently grow. In three years, our expectation is to take that ROE to around 18%.
Okay. Good to hear that. That's it from my side. Thank you so much, and best of luck for the next quarter.
Okay. Bye.
Thank you. The next question comes from the line of Shreepal Doshi with Equirus Securities. Please go ahead.
Hi, sir. Thank you for giving me the opportunity again. Sir, I just had a question that what is the yield differential at blended level for income generating loans and for the consumer gold loan?
The income generating-
I would like to know ticket wise 50 basis points -7 5 basis points higher in income generating loan.
Okay. It's higher once it's a consumer loan, right? Or the income generating loan, 50 basis points - 75 basis points.
Yeah.
50 to-
As a thought process, what percentage of our portfolio would we want to have this coming from income generating loan as a segment that's in the next one year time period, as that is a newer segment which is scaling up.
All depends on the comfort we are getting. We are continuously watching this portfolio. We are now, whatever we have given, the experience is very good. In spite of that, we have not gone beyond 18%, even though we have seen some lending institutions lending even more than that. We have restricted to that. The LTV there also ranges from 75-85 based on the assessment of the party and the cash flow, its creditworthiness, everything, just like any other loan which are granted based on the cash flow.
Okay. We don't have any clear thought process as yet on intermixing.
Yeah, because these products are just started. We are continuously watching. Our experience remains very good. Also, we have not strictly fixed anything because the portfolio is still very small compared to the overall portfolio.
Got it. Okay, sir. Thank you so much for answering my questions.
Thank you. The next question comes from the line of Sanket Chheda with DAM Capital. Please go ahead.
Yeah, hi sir. Congratulations on good set of numbers. I just wanted to check on the new CEO, if you can just elaborate on which all segments he has looked after in his last 10 - 15 years or the 10 years of stint at IDFC FIRST Bank. We have just written retail liability, but what we found common or suitable experience in the candidate that could really help us. So just wanted to get a sense on which all segments he has looked after in his previous stints.
He has wide experience, 25 years with multiple lending institutions. He has both worked on the liability side as well as the retail lending side. His experience is good. He has worked in Fullerton India as in the NBFC. He has worked in the other NBFCs and banks. His experience in retail lending is good.
Okay, sure sir.
Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for their closing comments.
Thank you so much. You have asked many relevant questions, which we try to insert the data itself. Those who wanted more detail, you can remain in touch with us. Thank you.
Thank you, sir. On behalf of Manappuram Finance and Motilal Oswal, that concludes this conference. Thank you for joining us, and you may now disconnect. Thank you.