Welcome to the Aditya Birla Capital Limited Q1 FY 2026 Earnings Conference Call. As a reminder, all participants' lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. I now hand the conference over to Ms. Vishakha Mulye, MD and CEO, Aditya Birla Capital Limited. Thank you, and over to you, Ma'am.
Good evening everyone and welcome to the Earnings Call of Aditya Birla Capital for Q1 of FY 2026. Joining me today are senior members of my team Bala, Rakesh, Pankaj, Kamlesh, Mayank, Pinky, Vijay, Ramesh and Deep. I will cover our strategy, financials and business performance, and Vijay will cover key financial and business highlights followed by a discussion on the performance of our key businesses by our business CEOs. The global macroeconomic environment continues to remain uncertain due to tariff-related negotiations and geopolitical tensions. In this global backdrop, the Indian economy presents a picture of strength, stability and opportunity. CPI inflation has softened significantly over the last six months and the progress of monsoon shows increasing signs for a strong kharif output. RBI's reduced repo rate by 50 basis points has taken various measures to improve system liquidity and stimulate growth.
At Aditya Birla Capital we continue to focus on driving quality and profitable growth by leveraging data, digital and technology. Our customer-centric approach enables us to provide simple and holistic financial solutions in a seamless way. Prudent risk management practices form the bedrock.
Of our approach.
This has enabled us to protect capital and deliver growth, calibrated and sustainable returns across businesses. We also continue to strengthen our omnichannel-based distribution network. Coming to the financial and business performance for the quarter one. Growth and profitability during Q1 of FY 2026, the consolidated profit after tax grew by 10% year- on- year to INR 835 crore and the total consolidated revenue grew by 10% year- on- year to INR 11,343 crore. In our NBFC business, disbursement increased at 18% year- on- year to INR 15,851 crore. In Q1 of the current year, the NBFC portfolio grew by 22% year- on- year and 4% sequentially to about INR 1.31 trillion.
We have mentioned in our previous quarter's earnings call that we have chosen several proactive interventions over the last few quarters in unsecured loan segments, that is wholesale and consumer loans and business loans to SMEs by tightening the underwriting norms, calibrating the sourcing, and reducing the exposure to the smaller ticket size loan. Now talking about personal and consumer role, the environment seems to have settled. We have put in place several building blocks to pursue growth. This strengthened our internal sourcing channel and our product underwriting, sales and distribution teams, and recalibrated our sourcing from digital partners. I'm happy to share that these steps have resulted in disbursement in the wholesale and consumer segment growing by 28% sequentially and 65% year- on- year to INR 3,947 crore in the current quarter. We will continue to monitor for macroeconomic conditions in this segment closely.
However, there are still uncertainties in the smaller ticket size unsecured MSME segment and we continue with our process approach towards the growth and tighten our underwriting norms in this portfolio. Disbursement in the unsecured loans to SME grew by 1% year- on- year and declined 8% sequentially. The secured SME and corporate and mid- market segment continue to show steady growth. The secured business loan to SMEs grew by 27% year- on- year and 4% sequentially. The corporate and mid- market portfolio grew by 28% year- on- year and 4% sequentially. Our portfolio quality continued to remain stable. Gross stage two and three loans declined by 75 basis points year- on- year and 8 basis points sequentially to 3.7% as of June end. About 74% of our portfolio is secured and the provision coverage on stage three loans is 41.2% as of June end .
Further, about 53% of our stage three loans in unsecured SME business loan segment are covered by the central government's guarantee scheme. Our credit cost in the current quarter is 1.3% and we expect that it will remain in a similar range for FY 2026. The profit after tax for the NBFC segment grew by 11% year- on- year and 6% sequentially to INR 689 crore in Q1 of FY 2026. The ROA of the NBFC segment was 2.25% which is at a similar level compared to the previous quarter. Coming to our HFC business, we have created a full tax franchise, focused on both prime and affordable segment. In Q1 of FY 2026, we continued to deliver on the strong growth momentum and gained market share as seen in FY 2025. Our disbursements grew by 76% year- on- year to more than INR 5,400 crore during the quarter.
This has resulted in our HFC portfolio growing by 70% year- on- year and 11% sequentially to INR 34,605 crore. The credit quality in HFC portfolio is among the best-in-class, with stage three loans declining by 97 basis points year- on- year and 4 basis points sequentially to 0.62%. The net stage three ratio was 0.3%. We are seeing benefits of the investments made in distribution, data, digital and emerging technologies over the past two years in the form of operating leverage kicking in. The OpEx to assets improved by 32 basis points sequentially to 2.59% in the current quarter. The ROA of HFC business increased by 15 basis points to 1.59% and ROE increased by 132 basis points to 12.27%.
Moving on to the asset management business, during Q1 of FY 2026 our average AUM grew by 14% year- on- year and 6% sequentially and crossed INR 4 trillion. Equity AUM increased by 11% year- on- year and 7% sequentially. We have seen a strong momentum in the net sales and an improvement in the performance of funds, with 80%- 85% of the AUM in the top two quartiles for the six-month return. The profit after tax grew by 18% year- on- year to INR 277 crore in Q1 of FY 2026. Moving on to the insurance businesses, the growth in the life insurance business continues to remain strong as in the recent first year premium growth of 23% year- on- year in Q1 of FY 2026 was significantly higher than the private industry growth of 8%. Our market share increased by about 60 basis points year- on- year to 5.1%.
We continue to be in the top quartile in the industry in terms of 13th and 61st month persistency. The high quality of business along with a very calibrated product mix, and product construct and an increase in the ri der attachments have led to 110 basis points year- on- year increase in a net VNB margin to 7.5% in the current quarter. In the health insurance business, we continue to be the fastest growing standalone health insurer our gross written premium grew by 30% year- on- year, driven by our differentiated health first model and data- enabled approach towards customer acquisition, excluding the impacts of multiyear guidelines. The growth in GWP was 40%. Our market share among the SAHIs has increased by around 200 basis points year- on- year to 14.5% in Q1 of FY 2026. A combined ratio improved to 111% in Q1 of FY 2026.
Going forward, we will continue to grow our business driven by our differentiated health first model and gain market form coming to our omnichannel architecture for distribution. Our omnichannel architecture allows customers to choose the channel of their choice and interact with us seamlessly across digital platform, branches and VRMs , fostering the engagement and loyalty. Our D2C platform ABCD went live about a year ago. It offers a comprehensive portfolio of more than 25 products and services such as payments, loans, insurance, investment and helps customers to fulfill their financial needs. ABCD has witnessed a robust response with about 6.4 million customer acquisition till date our comprehensive B2B platform. For MSME ecosystem, Udyog Plus continues to scale up quite well. It has reached an AUM of INR 3,658 crore in two years of its launch.
Udyog Plus now contributes about 30% of a year of unsecured business loans. ABG ecosystem now contributes about 37% of the disbursements on Udyog Plus. We added 67 branches during the quarter and we had 1,690 branches across all businesses as of June end. We are focused on capturing white spaces and driving penetration into tier three and tier four towns and new customer segments. We now have over 1,000 co-located branches across more than one ABC 250 locations. Going forward, we will continue with our approach of driving quality and calibrated growth. Now I request Vijay to briefly cover the financial performance of our key subsidiaries for the quarter. Over to you, Vijay.
Thank you Vishakha and good evening to all of you. Vishakha covered the consolidated highlights. I'll now cover the standalone financials and key business highlight for CBD. During Q1 of FY 2026, the standalone profit after tax grew by 3% year- on- year to INR 676 crore. On a standalone basis, the tier one ratio is 15.62% and total capital adequacy ratio is 18.11%. Standalone return on equity adjusted for investment in subsidiaries and associates is 14.4% in Q1 of FY 2026. In our NBFC business, the portfolio grew by 22% year- on- year and 4% sequentially to about INR 1.31 trillion. NIM including fee income was 5.97% for the quarter. The credit quality of NBFC business segment continues to be healthy with GS2 and GS 3 loans improving by 8 basis points sequentially to 3.7% as of June end. ROA of the NBFC business segment was 2.25%.
Our housing finance business continues to see strong momentum. The loan portfolio grew by 17% year- on- year to INR 34,605 crore during Q1 FY 2026. We further infused growth equity capital amounting to INR 250 crore in our HFC subsidiary. This is done to support the growth momentum and maximizing our share of opportunities which Vishakha mentioned earlier. We are seeing operating leverage kicking in with OpEx to AUM improving by 32 basis points sequentially. The ROA of our HFC business increased by 15 basis points sequentially to 1.59% in Q1 of FY 2026. Coming to our asset management business, 14% year- on- year and 6% sequentially to more than INR 4 trillion, of which equity AUM was approximately 44.7%. Alternate AUM including real estate grew 2.64x year- on- year to INR 39,784 crore in Q1 FY 2026.
In the life insurance business, our first year premium increased by 23% year- on- year. The net VNB margin increased by 110 basis points to 7.5% and absolute net VNB increased by 27% year- on- year to INR 66 crore. In our health insurance business, our unique and differentiated health-first model helps us to deliver a growth of 30% year- on- year in gross written premium during FY 2025. Excluding the impact of multi-year guidelines, the growth in GWP was 40%. I now hand over to Rakesh, Executive Director and CEO of NBFC, to cover the NBFC method.
Thanks Vijay and good evening everyone. The NBFC business grew by 4% quarter- on- quarter and 22% year- on- year, taking the AUM to INR 1,31,227 crore in quarter one FY 2026. Profit delivery was strong, registering 6% sequential growth in the quarter.
The quarterly PAT in quarter one we disbursed INR 15,851 crore, which is 18% higher year- on- year. Of the total disbursement, secured business loans to SME was 38%, personal and consumer segment was 25%, and corporate and mid corporate was 30%. In the personal and consumer loan segment, we have been on the calibration journey since last few quarters. We reached an inflection point last quarter where de-growth was arrested. I'm pleased to share that the disbursement in this segment expanded 65% year- on- year and 28% quarter- on- quarter, and the AUM grew by 6% sequentially to INR 16,446 crore. This was supported by our disciplined approach to customer segment selection, a revamped underwriting policy, and proprietary journey designed to deliver superior customer experience and maintain end-to-end control throughout the lending life cycle from underwriting to collections.
While we believe the environment is attaining stability, we will continue to monitor the trend in macroeconomic environment. As Vishakha highlighted, there are still some uncertainties in the macro environment in the small unsecured MSME segment where we continue with our cautious approach towards the growth and tighten the underwriting norms for this portfolio. Disbursement in unsecured loans to SMEs declined 8% sequentially. The AUM for secured business loans to SME grew 4% sequentially and 27% year- on- year. The growth has been largely driven by scaling direct sourcing efforts through a branch network. Talking about credit quality, our GS2 and GS3 books declined by 8 basis points quarter- on- quarter and 75 basis points year- on- year to 3.70%. About 74% of our book is secured and our stage three book is well provided with the PCR of 41.2%.
About 55% of our portfolio comprises of business loans to SMEs of this, 46% is secured while the asset quality continues to be robust on the back of strong cash flows and collateral in the SME secured segment and is amongst the best in the industry. The unsecured SME business loans portfolio is around 9% of our overall NBFC portfolio, of this supply chain financing with the underlying trade is about 1.6% of the overall loan book, business loan is 6.5%, and small ticket unsecured loans is 1.3%. The credit quality of the supply chain and business loans continues to be resilient in terms of bounce rate, forward flows, and delinquencies.
As we have highlighted in our previous calls, we have taken several proactive interventions in the small ticket unsecured loan segment, that is, personal and consumer loan and business loans to small and micro businesses over the last few quarters, which Vishakha also highlighted in the opening remarks. We have been preemptive in making these interventions and will continue to have a positive approach in the small unsecured business loan segment, which we would like to reiterate and is less than 1.5% of the total portfolio. The gross stage three loans in the unsecured business loan segment was at 5.4% and the provision coverage is 35.7%. Further, about 53% of our stage three in this segment is covered by central government guarantee scheme. As a result, we believe stage three loans in this segment are adequately provided for.
In the personal and consumer segment, we have largely run down our legacy portfolio sourced from the digital partners. The credit quality indicators such as bounce rate, forward flow rates, and delinquency rate in the portfolio are now stacking up well. Stage three for personal loans and consumer loan segment has improved by 30 basis points sequentially and 70 basis points year- on- year to 2.5% as of June 2025. The overall credit cost has reduced by 13 basis points year- on- year to 1.3% and we believe that credit cost for FY 2026 will be in the similar range. Moving to profitability, our net interest income has increased by 9% year- on- year and 4% sequentially to INR 1,859 crore. Net interest margin including fee was at 5.97%.
In the current quarter, our OpEx to AUM ratio improved 18 basis points sequentially and 23 basis points year- on- year to 1.74%, and this has largely been driven by operating leverage as we continue to spread out our new branches opened over the last 12-18 months. In quarter one, we delivered profit after tax of INR 689 crore, registering a growth of 6% quarter- on- quarter and 11% year- on- year. The ROA for the quarter was at 2.25%. Moving forward, we expect the mix of retail and MSME segments to improve and we will continue to leverage our proprietary digital platforms, which is ABCD app and Udyog Plus, and invest in branches to further improve share of direct sourcing as we scale up, strengthen our capabilities, and invest in technology. Our primary commitment remains to deliver sustainable returns in the upcoming quarter.
With this, now I will hand it over to Pankaj for housing finance business.
Thank you Rakesh and good evening to everyone on the call. I am pleased to share that Q1 FY 2026 is yet again a strong quarter for us in terms of disbursements, good growth, and asset quality. The key highlights for Q1 FY 2026 are disbursement for the quarter stood at INR 5,404 crore, a 76% YoY increase versus INR 3,068 crore in Q1 of FY 2025. Now we are amongst the top three private housing finance companies in terms of disbursements. The ABG ecosystem accounted for 15.4% of retail disbursements in Q1 FY 2026. AUM as of June 2025 reached INR 34,605 crore, reflecting robust growth of 76% YoY and 11% QoQ. Profit before taxes was INR 154 crore, up 82% YoY and 27% QoQ.
Stage two and three assets reduced to 1.34%, improving 129 basis points YoY and 5 basis points QoQ. ROA stood at 1.59% and ROE at 12.27% for the quarter. As communicated earlier, last year was a year of strategic investment for us and we are now beginning to see the operating leverage play out. This is reflected in a 32 bps sequential improvement in operating expenses as a percentage of average loan book. Our cost to income ratio reduced by 530 basis points QoQ and ROA improved by 15 basis points QoQ. With this, we remain well on track to achieve an ROA of between 2%- 2.2% over the next three to eight quarters in line with our guidance . For more detailed financials, please refer to slide 30. Let me now provide a quick update on a few aspects of our growth during the quarter.
AUM growth is at INR 3,553 crore versus INR 1,979 crore in Q1 FY 2025. This growth has been well balanced across both the prime and affordable segments. Our portfolio remains well diversified with retail home loans at 55%, LAP at 30%, and CF at 15%. We expect to maintain the construction finance book within this range. Our average retail ticket size stands at INR 30 lakh, reflecting the granularity of the portfolio. Happy to share that as of today we have crossed 1 lakh active retail customers. On asset quality, gross NPAs have improved significantly from 1.6% in June 2024 to 0.62% in June 2025, which is a reduction of 97 basis points. Our stage three provision coverage ratio stands at 52.4%. Proactive pre-delinquency management measures powered by analytics and strengthened by digital collection infrastructure continues to support improvements in asset quality. Next, moving to the liabilities side.
The share of NCDs in our funding mix will increase from 27% in Q1 FY 2025 to 45% in Q1 FY 2026. Term loans correspondingly reduced from 37% in Q1 FY 2025 to 31% in Q1 FY 2026. Our cost of borrowings has improved by 11 basis points QoQ and now stands at 7.69% in line with reduction in cost of borrowings. We have passed on a 15 basis point rate cut to our retail customers effective from July 2025. On the digital front, we continue to see higher adoption of our digital platforms by employees, customers, and channel partners. We're also seeing early traction in adoption of AI copilot for employees resulting in higher productivity. In summary, we have delivered strong consistent performance across all business segments supported by growth in AUM, improved asset quality, advancing digital capabilities, and increased profitability. Thank you for your attention.
With that, I will now hand over to Bala, MD and CEO of our Asset Management Company.
Thank you, Pankaj, and as I present, the AMC on this call the ABSLAMC has witnessed healthy business momentum in Q1 FY 2026 with the net sales for the up quarter exceeding the total net sales for FY 2025 driven by improved fund performance across categories and various ongoing initiatives to increase the engagement of the market participants we have also maintained our overall market share over the last two quarters. We have achieved a significant milestone by crossing INR 4 lakh crore in mutual fund AUM during the quarter with our quarterly average AUM reaching INR 4.03 lakh crore, a robust 14% year- on- year growth that demonstrates our unwavering commitment to sustained growth . Our overall assets under management including alternate assets stood at INR 4.43 lakh crore growing by 21% year- on- year, the quarterly equity average AUM stood at INR 1.80 lakh crore growing by 11% year- on- year.
Our SIP contribution for June 2025, was at INR 1,140 crore with 38.6 lakh account. Our SI P AUM contributes around 45% of our total AUM reflecting the stickiness of the assets. The total number of investor folios for June 2025 stood at 1.06 crore witnessing 14% year- on- year growth and equity investment trend. We are expecting a consistent improvement with strong return delivers across multiple categories. While seasons and performance continues to be robust across the categories, we continue to focus on expanding our product offering to meet the investment needs of our diverse and growing investor base. The alternate stage, we are continuously enhancing our CMS and AIF offering across equity and fixed income segments to serve HNIs and family offices.
Strong interest in our AIF product offering at the growth summit events that we have been doing across the country giving along those good opportunities, collective opportunities all in the state of the ESIC mandate. We commenced managing the debt portfolio and its AUMs are at INR 24,060 crore for the quarter ended June 30, 2025. Continually, our PMS/AIF assets witnessed an impressive 8x growth rising from INR 3,360 crore in Q1 FY 2025 to INR 28,657 crore in Q1 FY 2026. As we present, we have completed the first quarter for ABSL Structured Opportunities Fund Series II fixed income credit and also preparing to launch ABSL India Equity Innovation Plan, building a comprehensive product portfolio rather than evolving client needs and accelerate our PMS/AIF business growth. Our offshore assets stood at INR 10,588 crore in Q1 FY 2026.
Under the GIFT City platform, we have fundraising underway for the India ESG Engagement Fund, ABSL Flexi Cap Fund, and ABSL Global Blue Chip Fund. On the passive fronts, we have yielded INR 36,400 crore growth in AUM as of June 2025, 27% year- on- year growth with 12.30 lakh folios across 22 distinct products. The continued building scale in innovative ETF Index Fund-of-F und launches while driving acquisition via digital platform and distributors. Moving on to the financial Q1 FY 2026. R evenue from operations is at INR 447 crore, up 16% year- on- year. Q1 FY 2026 operating profit is approximately INR 254 crore, up 21% year-on-year Q1 FY 2026. Profit before tax INR 372 crore, 22% year-on- year, and for Q1 FY 2026 the profit after tax was INR 277 crore, or 18% year-on-year, with this I'll hand it over to Kamlesh Rao MD and CEO of Aditya Birla Life Insurance .
Thank you, Bala, and good evening to all of you.
The individual new business treatment for the life insurance industry grew by 5% and for the private players by 8%. AB SLI clocked the highest individual premium growth of 23.4% in Q1 of financial year 2026 among the top 10 players and expanded market share by about 60 basis points. Growth for the first quarter was across channels, with the proprietary channel showing a growth of 9%, while the partnership business grew at 34%. The global business growth across all our existing partners as well as the new partnerships with Bank of Maharashtra, IDFC Bank, and Axis Bank, where we have increased our mind share in the current quarter. Agency business had a slow start in April and then gradually caught up with double-digit growth in the next few months.
Our growth was slightly better as compared to the agency performance for the entire industry for Q1, which remains largely flat during this period. During the quarter, we have added 17 branches, continuing our focus on expanding the proprietary business. On the partnership side, we now have 12 banker tie-ups and the most recent one, Equitas. Small Finance Bank started business setup from June 2025 onward in the product mix of the individual business. Traditional business including protection contributed 69% and ULIP cost 31%. We launched two new products during the quarter, one in the participating portfolio called Akshaya Plan and second in the protection segment named the Super Term P lan. Akshaya PAR Plan contributed to 20% of our mix in the individual business portfolio while the Super Term Plan which was launched in June took our protection mix to 4%.
We have bundled all desirable features in one term plan including health management services and have launched our digital campaign for this product. We will continue recalibrating our product mix in line with customer demand and our exclusive product fees will ensure that the demand of the customer are well catered to. In the group life insurance segment, while both the private and the owner industries saw much growth of 3% , ABSLI reported a 51% decline. This was largely strategic for the traditional fund business wherein we have decided to slow down the momentum on account of the reducing interest rate scenario as large acquisitions now would bring down the YTM of this portfolio. The group fund business across the industry remained largely flat during this period.
In the group business we continue to be at ranked number two in the ULIP AUM in the industry with an AUM size of INR 13,500+ crore. Credit life business also had a growth of 20% with attachment ratios going up in all our counters. On the group term life business we continue remaining focused on expanding the margins and have done well in this quarter. Group AUM contributes to 27% of the overall. AUM at ABSLI renewal premium grew by 18% with growth across individual and group segments. Our total premium for the quarter stands at INR 3,594 crore, down 10% from last year again on account of lower group traditional fund business. As planned and mentioned earlier, our digital collections now account for 81% of our renewal premium. We continue to work on customer lifetime value which is reflected in our upstand ratio of 30%.
There on quality parameters overall trustable NPS now stands at 62 compared to 55 last year same time whilst the 13th month and 61st month cohorts have seen a marginal dip. On other cohorts of persistency of 25th, 37th and 49th have gone up. We continue being in the top tier in terms of persistency for the quarter. Our OpEx to premium ratio stands at 27.6%, which is higher than last year, again due to the lower risk traditional fund business that's planned . ABSLI caused a total AUM of INR 1 lakh crore in April 2025 and now stands at INR 13,817 crore with a YoY growth of 14%. 25% of this AUM is in equity and the balance 75% in debt.
We continue to outperform in our investment performance in a selective benchmark across all three categories of equity, debt, or even balance funds, either from a one-year or a five-year perspective. Our digital adoption across various areas is demonstrated in the investor deck in slide 46. 100% of new business customers are onboarded digitally, 83% of all our services are now available digitally, 67% of our services are SCP, and our customer self-service ratio now stands at 93%. As we go ahead, we will continue to be best in class, contributed to the infrastructure across prospecting and onboarding and sales, underwriting and customer service as well as clear during the quarter we reached INR 200 crore via subject our business growth. Our solvency continues to remain healthy at 192%. Our net margins are now at 7.5%, 109 basis points higher than last year's.
Same time, we observed margin expansion due to a controlled ULIP mix, value accretive growth in our partnership business as well as increased rider attachment. We maintain our guidance to expand net VNB margins through this year to achieve an 18%+ for the year. We also maintain our guidance to grow individual FYP on a schedule between 20% and 25% for the next three years and in absolute numbers double the value of our next VNB in the same time period. With this, I'll hand over to Mayank, MD and CEO, of our health insurance .
Thank you.
Kamlesh and I will now share an overview of the performance of our risk insurance business. We had a very strong start to the financial year 2025-2026 in the first quarter, maintaining our track record of consistently outpacing the market growth while sustaining the momentum to improve profitability. The Q1 FY 2026 is now the multi-year accounting norm. We achieved a gross premium of INR 1,461 crore, delivering a strong 40% YoY. On a one-by-one, one-by-n basis, our gross revenue stood at INR 1,357 crore, which is a 30% growth. The market share among SAHI cos life has increased from 12.5%- 14.5%, an increase of 200 basis points, including the multi-year accounting impact of multi-year accounting non-sales. On a housing basis, we achieved the highest market position as shown in slide 53, amongst all SAHI players in Q1 FY 2026 highlighting our underlying growth momentum. We registered a strong growth momentum across both retail and group businesses.
The retail business registered a growth of 39% in the first quarter. The growth in retail franchise is driven across all our retail channels. The proprietary channel, with an advisor count of over which 1.5 lakh agents, experienced a 26% YoY growth. All our major banks and digital life partners have also experienced firm growth in a 15x above 50%. To further expand our PSU bank distribution, we have now successfully onboarded Bank of India in Q1. Our corporate business delivered a strong 41% growth since Q1, driven by our focus and disciplined strategy in this segment. At times, they are asked on a relatively higher proportion of group business. This, I like to reiterate, that our strategic choices in this segment are to create a very suitable business, we are as we understand amongst the very few players, we are a profitable group business in the industry.
We do this by playing in very specific corporate segments like mid-corporate or SME and out of specific industries, more so in the colossal sector. As we now take our differentiated health-first insurance model to corporates also , we will only further improve our competitive strength here. We are also pleased to report our net loss for the fourth quarter is INR 36 crore as per the new accounting norm. As per the old norm, the net loss stood at INR 24 crore, which is a 50% low er than same period loss of INR 51 crore last year. A combined ratio for the first quarter at current accounting regulation is at under 107% compared to 112% on a comparable basis.
These improvements underscore our continuous focus on unit economics and their overall profitability ahead of market as we demonstrated last year that it was a fastest break even the scale we are operating. We strongly believe our over growth and superior user promise are driven by our digitally enabled and differentiated end for business model which are consumers experience for flashing product Activ One. This model gives us a selection advantage with larger share of the more health conscious customer and then based on very hyper-personalized but scale health engagement access to a deeper understanding of the health profile of our inforce base. In Q1 FY 2026, 9.1% of eligible customers earned good health-based incentives, up from 6.6% last year reflecting deeper engagement with our wellness ecosystem, these customers have continued to exhibit 4% lower loss ratios and 10% better persistency.
These are shown in slide 56 and 57 similarly . When we invest in managing our customers with high health risk their loss ratios improved by more than 4.9% overall. This has kept our retail loss ratio well in contro l. In our bid to expand the scale of impact of the model, we continue to innovate. For example, in our recent collaboration with a leading wearable brand in India we now have customers who get access to wearables as part of our product offering and this is further helping of getting access to larger field of customer. We have the personalized scale when it's engaging with our customers routinely enabled by industry using software app Activ Health and this now provides an opportunity for non policyholders also to experience our comprehensive health and wellness eco systems.
Given our large data process we have now we have been investing consistently in our data and analytics change so consistently create efficiencies across the entire business life cycle. We have given some examples of the key use cases across sales, customer engagement and claims in slide 62. Looking ahead we remain optimistic about the long term growth process of the health insurance sector. We continue to have large tailwinds. D ifferentiated business models will help us grow well ahead of the market as we have guided earlier we will continue to strive 100% COR as per the old accounting regulations in the current year itself. Thank you and I now hand it back to the Vishakha for her closing remarks.
Thank you Mayank. This concludes our remarks for the Q1 FY 2026 performance and we would be happy to be to take any questions.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their 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'll wait for a moment while the question queue assembles. The first question is from the line of Mr. Chintan Shah from ICICI Securities Please go ahead, sir .
Thank you for the opportunity and firstly congratulations on a good set of numbers. Of course, on this unsecured MSME piece where we have told that there are some uncertainties at the portfolio and we are seeing some kind of stress and adopting a cautious approach. I just wanted to understand what is our customer profile here? Typically, how much would be the unsecured self-employed profile mix in the total pool? Secondly, on the guarantee scheme which we are highlighting, 53% of the portfolio is covered under guarantee. How does this guarantee actually work and what is the capital timeline to get the money, and what is the final cost which we have to bear in case of the guarantee? That's the first question.
Your first question on the unsecured SME, if you look at our total book, it is INR 12,000 crores.
Out of that, 1.6% is supply chain, which is short term on underlying treat or invoices, so very low risk. Then we have 6.5% which is business loan, where the portfolio performance is very, very good in terms of bounce rate or forward flows of any currencies are looking pretty good. The more ticket unsecured loan, we call it STUL, that is around 1.3% of our overall loan growth. We had started taking action some two, three quarters prior and we have tightened our underwriting and underwriting collection scorecards. All of that, we took a proactive action on this portfolio. That's the only portfolio where we are slightly cautious at this point in time. In terms of your second question, how much is the guarantee portfolio?
If you look at the stage three portfolio in unsecured business, close to , 53% of the stage three is guaranteed by the CGT SME government guarantee which we spoke about. How much of that gets covered? 75% of the principal gets covered by the guarantee and timeline is it takes between 12- 18 months in terms of getting the refund and all that time. I think our track record has been pretty good on this and we have been getting the refund and the claims from the CGT SME.
When can we see normalization of disbursement or where do you see the kind of picking out of normalcy kicking in for this portfolio?
If you look at our business loans, we will continue to grow our business loan in our portfolio in that segment.
That's holding up very well and is performing and that's quite an old portfolio. We have been doing that business for the last eight years or so. That's holding up quite well from our bounce rates, forward flows, and then in currency. We will continue to grow that business loan portfolio. We will continue to grow the short-term unsecured business. What we are tightening is the small, ticket unsecured load, and we will continue to watch that and see how it really performs.
The small ticket LAP is how much of the total unsecured MSME?
That's close to INR 1,700 crore, which is there on the total portfolio. It's not that the performance is—we are watching it. We have taken all the corrective action in terms of tightening, and we have slowed down the sourcing of that segment .
Basically, the risk is only on that INR 1,700 crore portfolio where we envisage some uncertainty or where you are cautious. Right?
From a sourcing point of view, yes. In terms of portfolio, this is the portfolio that would have been underwritten 12, 18 months back or three to four months back. Yes, we are watching it very closely.
Tenure would be three years typically. Right?
Yes. Yes
Now, on the housing part, just one last question actually at exceptional performance on the housing portfolio, and the growth has been quite robust. Now, given the repo rate cut and probably some players have also highlighted there are higher instances of BT out, particularly in the prime portfolio. How are we seeing the competition panning out? I think the growth for us is also led by the developer pool rather than the prime pool.
Any thoughts that growth could slow down over the remaining part of the year, and what growth kind of trajectory could we be looking at for the housing portfolio? Thank you.
For us, growth is coming in all the three segments, affordable, prime, and developer. Yes, you're right, with the repo rate going down, naturally some elevation—you see foreclosures that we call in the prime segment, and those ratios overall are in the range of about 14% of the opening book. Since we are a full stack player, the balancing act also happens in the affordable. Therefore, we don't see very significant changes as far as the workloads are concerned. Also, BT outs are concerned. In fact, till the BT in that we track versus BT out ratio, the ratio remains quite similar to where we were in the month of quarter three.
Coming to your next question, which is, you know, how do you see growth panning out? What we have been articulating earlier is in the last eight quarters, what we have done is we've built capacity, and with the advent of six digital platforms that we have across the customer life cycle, we are seeing, in combination, the capacity that we have built. Productivity is, you know, significantly coming up. As you would have noticed, 15.5% of our business that we do disbursements are also from the ABCL and ABG ecosystem.
I think we are very well placed to take advantage of, clearly, the market share gain is what we are getting, so riding on the 14%, 15% growth which is here in the industry, and with the capacity and productivity moving up for us combined with the ABG ecosystem and with the right eye on portfolio quality, I think we can see the growth momentum remaining quite consistent for us.
Sure. This is very helpful, and thank you and all the best. I en joyed my interview. Thank you.
Thank you. The next question is from the line of Avinash Singh from Emkay Global. Please go ahead first.
Yeah, thanks for the opportunity. Two questions. The first one is on, you know, NIM in the lending business, the NIM is still falling. Now, based on what is happening on your borrowing side and how your kind of business mix is changing, can you provide some kind of guidance that if this NIM has bottomed out and what sort of trajectory could we expect? I mean, as we exist in this financial year and in that context only, the question is that now you have tried to increase, you know, or rather that your disbursement in consumer finance and PL bottomed out. What about the starting to increase? There remains some bit of a debate here among various lenders that the consumer leverage is still higher. How do you feel your path going forward in this consumer and PL? The second question is, your current capital adequacy is, I think, near 18%.
Tier one would be slightly lower. At what kind of growth are you envisaging and at what juncture will you be looking to raise capital?
Thanks.
Thanks. Avinash, your first question was on the NIM. If you look at NIM, it is an outcome of the correct mix which we have. The mix of higher yielding unsecured loan, that is personal and consumer loans and business loans to SME, was at 22% as of June 2025 and this was at a similar level as March 2025. The personal and consumer business, as we just mentioned, has grown well in quarter one and the consumer segment grew, if you look at, 28% frequency and the portfolio has grown by 6%. We expect that as the portfolio grows and our unsecured business, because business loans growth, our margins should start improving. In the next few quarters, you will see margins improving from here on. Your second question was on PLC, personal loans and consumer loans, and the leverage at a client level still high.
I think, Avinash, we were ahead of the curve in terms of tightening, recognizing that there is a leverage which is going up. We build the leverage in our underwriting and all our metrics in terms of tracking and unsecured inquiries, all of that we build it over the last four, five quarters and we track customers' leverage very, very closely. In this segment, if you look at our, we have largely run down our legacy portfolio sourced from the digital partners. We have tightened our underwriting norms, as I mentioned, and reduced the exposure to small ticket size segment in this portfolio. Given that the environment in this segment is stabilizing and we are seeing that the credit quality indicator, which I had mentioned in my opening remark, that bounce rate, forward flow and delinquency rates are catching up quite well.
We track in terms of FEMI, which is first EMI default, second, third. We really track this portfolio very, very closely and we will continue to watch this portfolio as we grow our capital.
Vijay here on the capital question. Yes, our tier one ratio is 15.62% and total cap add is at about 18.11%. During the quarter, we infused INR 250 crore in our HFC subsidiary, which is the only company which in a way needs capital infusion because asset management company returns dividend and in our insurance companies we have JV partners and if at all there will be very minimal capital requirements. I would say that looking at the overall capital plan for us, we are sufficiently funded for our growth requirement for next nine to 12 months and to look at any capital situation post that.
Thank you.
Thank you. The next question is from the line of Abhijit Tibrewal from Motilal Oswal. Please go ahead sir.
Yeah, thank you for taking my question. Congratulations on good quarters. The first thing is a clarification where you said that there are three products that we are doing in unsecured MSME, which is your supply chain finance. Then we do business loans and then we called out a small ticket unsecured loan. I'm just trying to understand, it is only in this small ticket unsecured loans where we are seeing some stress building up. Otherwise, in business loans that we do in unsecured MSME, we are not seeing any stress building up, is it which you called out is about 6.5% of the portfolio?
Yes, Abhijit, you are right. We are not seeing any stress in any other portfolio.
In this portfolio, Rakesh mentioned that whatever it is, it is anticipated, there is nothing which is out of the way and the portfolio is well within our controls, adequately provided, so we don't see any undue worry here. It's in control. We are very cautious.
I think on one of your slides and also in your opening remarks, you spelled out that close to 5 2% of your stage three in unsecured MSME is covered in the government schemes. At the overall portfolio level, what is covered under the finance scheme?
Similar, upwards of 50% is covered on the overall portfolio on the business and STUL.
Got it. One last question is that if I look at your secured businesses, close to 60% of your secured business has LAP. I was just trying to understand what are you seeing in the LAP portfolio today because given how things have moved in the last 12-18 months from credit cards to PL to MFI to micro LAP to unsecured MSME, just trying to understand is there anything that you are seeing today in the LAP segment? And sir, why I ask this LAP as a segment over the last 12-18 months has seen very, very strong growth across the industry. So that is one. And the related question in our HFC business, are we doing micro LAP or in the NBFC are we doing micro LAP ? And if yes, how big is that protfolio, micro LAP?
This is first your question on LAP. If you look at touchpoint, I think the performance is very, very strong both in terms of the overall performance, and this is our oldest portfolio.
This tool on portfolio, so very vintage portfolio and this portfolio has seen difficult cycles, whether it was demonetization or the NBFC crisis or COVID, and it has stood the test of time and is very, very strong in terms of the performance. Even if you see the time period which you just mentioned, both our stage two and stage three has come down significantly. So very, very good. This is backed by the cash flow of the customer and the collaterals of the customers. Very good performance and has been stacking up very, very well.
On the HFC question, LAP engine, as I mentioned, the ticket size for LAP is about 51 lakhs, so we say it's a very small proportion of that is the micro LAP and if you see the slide which is there, which depicts the composition of LAP that we got, you would see that the affordable segment LAP is about 9.6%, so very small subset of 9.6% is the micro LAP . To also speak on how we are seeing this, of course the growth is being strong, but we monitor the portfolio both on onboarding in terms of the goal score, in terms, we monitor the portfolio and we've created our own proprietary score, which ensure that right quality of customers are voted in .
Then, of course, back that up with a very strong off-us analysis, not only for our own portfolio, also look at what portfolio we have created as to how the customers are behaving outside. I also spoke about the pre-delivery landmark and also digitalization, also post-delivery management, which is overall helping in managing the portfolio. We are not seeing any different trends in the LAP portfolio of ours in the housing segment .
Got it. Sir, if I can just squeeze in one last question, if you could also share what is the write-off that we did in the quarter in NBFC and HFC, and if you just answer that, then I had a follow-up question on this.
We do not disclose write-off as of now. I think, we will stay with that.
Sure. Lastly, how much have you recovered in CGT SME scheme so far? In other words, how much have the claims so far and how much has been the recovery?
I think this is an ongoing exercise depending on every quarter, whatever claim which we put up. It goes through its own verification and everything. I think we see it over the period of full year and full cycle. We can say that later, with you , sometime.
Sure. And like you suggested, it typically takes between 12- 18 months. Right?
Yeah. Yeah.
Thank you.
Thank you. The next question is from the line of Kushan P arikh from Morgan Stanley. Please go ahead, sir.
Thanks for taking my question. Just a data question. If you could share the differences during the quarter for the NBFC as well as the total stage one, two, and three ECL, that would be helpful. Yeah, thank you.
Stage one, two, and three, segment wise, we provide that and we have provided this time as well.
Sorry, I'm talking about the provisioning against stage one, two, and three. Right?
We do not, as of now we don't publish that. I think what we have given is the stage-wise, whatever are the stage one, stage two, stage three across various segments, and also the provision cover that we carry at those funnel segments.
Thank you. The next question is from the line of Mr. Punit Bahlani from Macquarie. Please go ahead, sir.
Yeah, just firstly on the NBFC, bit the unsecured business NPAs have increased and the PCR at 35% appears to be low. I know like over 50% is government guaranteed, but my understanding is it might require some. Hello? Yeah. My understanding is. Hello?
Yes, sir please go ahead.
Yeah, my understanding is it would require some level of provisioning, right? Even if it's government guaranteed. So 35% for even the, you know, for the unsecured appears to be a bit low. Over time, like if I look at FY 2024, it was at 2.9% the NPAs, it has gone up to 5.4% now. Also, what is the tenor of, you know, receiving these claims so that, you know, when we can remove this from our NPA pool, as in does it take 12- 18 months or more than that? If you could give any comment on that. Thirdly, on the housing finance bit, there has been a big improvement in OpEx this quarter. Is it primarily driven by operating leverage or is there any component that is like, you know, we have saved on some OpEx components? If anything, you could highlight on that.
Yeah, thank you. That's all.
Punit, your first question was on the provision coverage on the unsecured business. As I mentioned, 75% of the principal is guaranteed. We believe that 35.7% or 36% PCR is quite sufficient in this work. At some point in time, we believe that the claim is delayed or claim is not coming in. We will have to evaluate. At this point in time, because 75% of the principal is guaranteed, I think this provision coverage is sufficient.
Right. How much time does it take for the claim to come in?
It's anywhere between 12- 18 months.
Okay, got it, got it.
On the question on housing finance, as you rightly said look at the operating expenditure. For quarter four and quarter one, in absolute amount, it is INR 194 crores, INR 190 crores, so four additional.
As you will know, in the last year, the book grew from INR 18,500 crores close to about INR 31,000 crores. The expenditure for generating the business, most of it gets booked in the year in which the disbursement happens. As you will see, the proportion of new disbursements to the overall book, because the book is also increasing, as the proportion keeps reducing, you will start seeing operating leverage kicking in even more. That is the reason why earlier as well, when we've been thinking about how the ROAs will stack up, we've been speaking about this 2.91%, which was the earlier OpEx per added earned book in quarter four. How that we foresee will come down to 1.6% in the next eight quarters which is 130 basis points of reduction. A nd we've already seen a shift in one quarter itself to about 31-32 basis points.
That is how it will stack up.
Got it, got it, got it. Thank you so much.
Thank you. Due to time constraints, we will face this as the last question. I now hand over the conference to Ms. Vishakha for closing comments.
Thank you very much for all to join the call, and if there are any other questions, all of us are available. Please reach out to us. Thank you.
Thank you so much Ma'am. On behalf of Aditya Birla Capital Limited, that concludes this conference. Thank you so much for joining us, and you may now disconnect your lines.