Ladies and gentlemen, good day and welcome to the Aptus Value Housing Finance India Limited Q1 FY26 earnings conference call hosted by Dolat Capital Markets Private Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star and then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Mona Khetan. Thank you, and over to you, ma'am.
Thank you, Nidheen. Good morning, everyone. On behalf of Dolat Capital, I welcome you all to the earnings conference call of Aptus Value Housing Finance to discuss its Q1 FY 2026 performance. We have with us the senior management from Aptus to share industry and business updates. I would now like to hand over to Mr. Anandan for his opening comments. Thank you, and over to you, sir.
Thank you, Mona. Good morning, ladies and gentlemen. I'm Anandan, Executive Chairman of the company. I welcome you all to this earnings call to discuss our performance for the quarter ended June 2025. I'm joined today by , P. Balaji, MD, C.T. Manoharan, CBO, S. Natarajan, CFO, and Amit Singh, Investor Relations. We are pleased to share that Q1 FY 2026 was a stable quarter for us, marked by continued focus on maintaining consistent growth. We are happy to share that our long-term credit rating was upgraded to CARE AA from AA- , a derecognition of our financial strength, growth, prudent risk management, and consistent overall performance. We continue to enjoy broad-based support from all financial institutions, including banks, NHB, mutual funds, DFIs, and two insurance companies as well.
During the quarter, you must have observed we crossed an ROE in excess of 20%, a milestone, and reaffirming the strength and resilience of our operating model. Our robust sustainable ROEs are supported by a well-diversified product mix and the consumer base with varied income profile, providing stability across market cycles. Aligned with our vision of scaling our AUM to 25,000 crores by 2029, we are steadily investing in branch expansion, digital capabilities, and strengthening the talent pool, particularly in the middle management level, to build capacity for long-term scalable growth. With that, I would like to hand over the call to Mr. P. Balaji to take you through the business focus, key operating, and financial parameters. Thank you.
Thank you, sir. Good morning to all. As we have been explaining in the earlier calls, we will continue to focus on key strategies, namely diversified product and customer mix, ensuring stability. We will continue to grow across housing and small business loans, catering to varied customer base across varied income levels, especially in tier three and four cities. This diversification supports resilience across market cycles. Expansion into the states of Maharashtra and Odisha, this is gaining traction. Strong base in southern markets with early success in Maharashtra and Odisha. We are expanding operations continuously in these states and deepening penetration in existing geographies through new branches. In Maharashtra and Odisha, our loan book has crossed INR 67 crores. The initial experience in these states has been good, and going forward, more accelerated growth will be pursued in the ensuing quarters.
Discipline-led customer acquisition and efficiency gained about 21% of our Q1 FY 2025 business, originated through referral app, construction ecosystem app, and social media, plus complementing our vast branch network. The mobile-first lead management platform, which we launched in April 2024, is streamlining operations, enhancing compliance, and boosting collection productivity. Continued focus on productivity and cost efficiency, maintaining sharp focus on operational productivity, collections, OpEx, and cost of funds, supported by data-driven decision-making and continuous system improvements. Now coming to the major performance highlights for the quarter. On the business growth and scale, AUM grew by 24% year-on-year to INR 11,267 crores. Disbursements for the quarter stood at INR 775 crores, up 15% year-on-year, but down 27%. The reason for which I will explain shortly. Our customer base has crossed 1.65 lakhs, reflecting 20% year-on-year growth. Branch networks stood at 301 branches as of 30 June 2025.
Now coming to the asset quality, asset quality scenario was slightly impacted by seasonality, leading to 19 basis points rise in our GNPA to 1.49%. Net NPA was at 1.12%. Provision coverage on the NPA was at 25%. Now coming to the profitability and efficiency, the net income margin was at 13.4%. OpEx to assets was at 2.7% despite ongoing investment. The credit cost was sequentially up by 8 basis points- 38 basis points, but remained under our 45-50 basis points guidance. PAT for Q1 FY 2026 was at 219 crores, marking 28% year-on-year growth. ROA was at 7.9%, and ROE was at 20.1%, which is unmatched in the segment. On the disbursement side, we experienced a dip in our business activity, largely on account of seasonality.
April and May are typically lean months for construction activity due to a combination of various factors like summer heat, payment of school fees, and vacations. This naturally leads to a slower on-site progress, which in turn affects disbursements, especially for construction limits in the first quarter, especially for the construction-linked products. While these were the challenges in April and May, June and July were normal months, reflecting the resumption of construction activity and stabilization of internal processes. Based on the normalization in the months of June and July, we are confident of growing steadily in the coming months and to be further supported by a steady demand environment. Notwithstanding the above, we delivered a healthy 24% year-on-year growth in AUM. Now coming to the funding side, in Q1, we raised INR 250 crores through NCDs placed with mutual funds, thereby diversifying our funding.
Current borrowing mix are 52% from banks, 14% from NHB, 21% from NCDs, basically issued to insurance companies and mutual funds, and the remaining through securitization. In order to continue the diversification of liabilities, we did direct assignment transaction of INR 135 crores in Q1, helping us manage ALM and strengthen our PBC. We maintained a strong balance sheet liquidity of INR 1,532 crores, including INR 1,015 crores of undrawn bank sanctions. Reflecting the growing scale and self-reliance of our NBFC since March 2024, all fresh borrowings have been raised without support from HFC guarantees. Guarantees on existing loans, starting with the leading private sector bank, have also been removed, with similar steps underway across other lenders. Now, with these remarks, I open the floor for the question and answer session. Thank you.
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 Kunal Shah from Citigroup. Please go ahead.
Yeah, hi sir. So firstly, on the growth side, you indicated the specific reasons for a slower growth in Q1. But if we look at the overall disbursements, monthly disbursement trends where we are currently, and how should we expect to end FY 2026, and you indicated that it will be a steady growth year-on-year. Normally, we used to guide for 25%-30%-odd kind of a growth. We have come down below 25% now. So where should it ideally settle? Would it be at the lower end of the guidance, or maybe even less than the guidance is what we are expecting, looking at the overall operating conditions, or at any point in time, we would again aim for 28%-30%-odd growth as well in the near term or over the medium term? Yeah.
Kunal, it is like this. If you look at the first quarter disbursement, which is slightly subdued, but if you look at my June and July disbursement, it has come back to normalcy. And in fact, if you look at the last year's disbursement, the average monthly disbursement was around INR 300 crores, but in June and July, the average monthly disbursement is almost at INR 340-350 crores, which means that is giving us good confidence of pursuing a very strong growth on disbursement. That is the first thing. And going by this, I mean, if you look at it, normally the second, third, and fourth quarters are more stronger quarters than the first two quarters.
With more branches coming in, with more improvement in productivity in terms of number of files logged in and number of, I mean, increasing the ATS, and also the more contribution from Odisha and Maharashtra, definitely we will be able to clock our disbursement growth of around 22% for the year. If you look at the, if you have our guidance on the loan book, normally if the disbursement growth is around 20%-22%, there will be a 6% more on the AUM growth. That is what we are targeting, which is around 28%-29%. That is what is likely to happen for this year.
Okay, great. That helps. And secondly, if you can just highlight in terms of the collection efficiency seasonally being lower, and even maybe 30 DPD as well as GS3 inching up, more like Q1 phenomena. But any particular trends which you are seeing between the business loans, LAP, and home loans, or maybe the increase is similar across all three categories? So because there are not many players highlighting stress on the MSME side, on the self-employed side, so are we seeing any abnormal increase in the other segments except home loan?
So actually, as soon as after this concern, we are not seeing that kind of what other companies are indicating. We are not seeing that kind of a pressure on the collections. It is basically because the quality of our customers is three or four notches above a median MFI or a small ticket loan providers. And also if you look at it, and the LTV for our loans are only 40%, which means the equity of the customer in the property in which they live is much more, so which is aiding us in the collection efficiency. It is basically April and May. There was a shortfall in collections. That's why our quarterly collection efficiency was at 99.12% as against last quarter of 101%.
But in the month of June and July, the collection efficiencies have come back to normalcy, and going forward, we will be seeing more improvement in that. Moreover, and above that, we also got the SARFAESI benefit, where while repossession under S ARFAESI might be difficult, but at least it makes people come to the negotiation table for getting a settlement in place and getting the NPA settled. So all these things will help in improving the collection efficiencies and also the NPAs.
Okay, thanks. Thanks, and all the best. Yeah.
Thanks.
Thank you. The next question is from the line of Rajiv Mehta from Yes Securities. Please go ahead.
Yeah, hi sir. Good morning. Congrats on resilient performance. But again, just continuing on collections, can you share some data on collections of June and July, or maybe just to understand that whether are we normalizing or have we normalized already in June, July in terms of our collection efficiency, or maybe you can share the bounce rates, have they come back to normal levels?
If you look at it, I cannot, obviously, Rajiv, you know that we cannot share the numbers as of July. All I can say is July collection efficiencies. In fact, June collection efficiencies itself has come back to normalcy, so in June, the collection efficiency was almost at 99.5%-99.75%. So that is one thing which gives us confidence that our collection efficiencies are improving, and that is the guidance we can give as of now, and definitely, we are on the job of improving the collection efficiencies and reducing the NPAs, and over and above that, we are also strengthening the collections team in the sense we are also identifying state in-charges for each of the collections and who will drive the collection officers. That will bring in more productivity in terms of the performance of these collection officers.
Okay, okay, and sir, how would this recent rating upgrade and plus the repo and MCLR cuts manifest in our overall cost of funds in the coming quarters? And what would we do with that benefit? Would we at some point in time, and when would we evaluate cutting lending rate, or would we kind of retain the benefit of the spreads and for how many quarters?
If you look at the total borrowings, 56% of our borrowings are variable rates, and 44% is fixed rates. Again, out of this 56%, 30% is linked to MCLR, and 26% is linked to the external benchmark rate. So if you look at this 26% of the borrowing which is linked to the external benchmark, we have already got a 0.25% reduction, which translates. I think that's where it is from 8.68%; the borrowing cost has come down to 8.62%. So the balance 0.75% repo rate cut which has to be passed down to us, that will come in the second quarter, which means on a total, it will be 0.2% reduction in the borrowing cost. Over and above that, with MCLR linked to borrowing, it will have a lag of three to six months.
With the result, by the year end, we should get at least 0.4%-0.45% reduction in the borrowing cost on the existing borrowings.
Yeah, I see.
Yeah, that is one. Next thing is, if you look at the incremental borrowings, earlier in the housing finance company, we used to borrow between 8.6%-8.7%. Now it has come down to 8.05%-8.1%. Again, if you look at the NCD borrowing, it was earlier at around 9%-9.25%. That has come to around 8.5% now. So the incremental borrowing, there is a good reduction in the borrowing cost. And of course, I mean, considering the fact that 80% of our customers are next stage on the rating upgrade, obviously rating upgrade will help us because we are also pursuing with ICRA for another, I mean, the rating upgrade from them as well. And also, if that will open up avenues from raising money from insurance companies and mutual funds.
And also, we are also in the process of diversifying the borrowings, and also it is all long-term borrowings. Basically, we are borrowing between five-to-seven years. And the diversification of borrowings from insurance companies, mutual funds, and of course, we are also doing a bit of direct assignment. So all this is going to reduce our borrowing cost. And in terms of passing on the interest rate, if you look yeah, so if you look at it on the total book, 80% is fixed. So as of now, we are not contemplating any passing on of benefits, but maybe variable rate we might consider. So that's the standard as of now.
Got it, sir. Thank you so much, investor.
Thank you. The next question is from the line of Renish from ICICI. Please go ahead.
Yeah, hi sir. Congrats on a good set of numbers. Again, just hopping on this spread thing. So just correct me, you said that our exit cost of borrowing will be 40-45 basis points lower than the current level of 8.62. Is that?
Yeah.
Okay. So then this entire 40-45 basis points of spread expansion, and ultimately it will go into your ROA. But we will not think of passing on anything to customer on the fixed rate side, I mean.
As of now, we have not, Renish, it is actually, I mean, we have still not got full benefit of this cost of funds reduction. We just got 0.06%. So we need to think through. I mean, let's first let the reduction come in. Then we will have to think through on what we need to be passed on the asset side. Yeah, as of now, fixed contract, we might not even consider passing on the benefits.
Got it. The reason for asking this is I'm just looking from a steady state ROE perspective. So we are already more than 20% ROE now, and with this spread benefit coming in, where do you see ROE settling in medium term? I mean, are we aspire to deliver 22% ROE, or will sort of remain at 20, and then incrementally we'll invest?
Our objective is to cross 22% as fast as possible. So that's what we are saying. Let's see what we need to do about that.
Got it, got it. Okay. And sir, just lastly, on this AUM mix side, so if you look at last three, four quarters trend, the insurance top-up loans has been growing a little fast, obviously on a small base. But when we look at in absolute terms, it is now INR 650 crore versus INR 360 crore in Q1 FY 2025 last year. I just wanted to understand sort of what is the underlying thing driving this growth on the insurance and top-up loan? And if you can just briefly tell us the underwriting metrics for the top-up loans.
I'll tell you. So if you look at the percentage of insurance loans on the top-up loan, it has ranged between 2%-3% of the total AUM. So insurance loans, as you all know, it is basically given for the purpose of covering the credit life insurance, which is around 3%-4% of the sanctioned amount, which we paid as premium to the insurance company for the entire tenor of the loan. So it is a situation like since it is 4% of the sanctioned amount, the customer might not be able to bear it, and because of that, we are giving that as a loan. And obviously, that is getting recorded as a non-housing loan. So that is the characteristic of the insurance loan. If you look at the top-up loan, we have a clear set of guidelines on what constitutes top-up loan.
For example, a person will be eligible for a top-up loan only if he has not bounced for the last 12 months. And of course, at the time of giving a top-up loan, we do a credit bureau analysis. Again, the credit at the branch goes and visits the customer to find out his repayment ability. And all those things are taken into consideration before the top-up loan is sanctioned. So it is not that we are just wanting to increase the top-up loan. It is basically the customer has to satisfy the whole lot of conditions before he becomes eligible for the top-up loan.
Sir, when we say 12-month bounce, so basically, even if a customer is in 1 plus DPD, we will not give him a top-up loan, is it?
Yeah, yes, he should not have bounced for the last 12 months, yes.
Okay, and what is the minimum age he or she should be on our platform?
He will become eligible after one year.
After one year. Okay. That's it, sir. Thank you and best of luck, sir.
Sure. Thank you.
Thank you. The next question is from the line of Shailesh Kanani from Centrum Broking. Please go ahead.
Good morning, everyone. And thanks a lot for the opportunity. Congratulations, sir, for a great set of numbers concerning the macro environment. Sir, two questions from my side. One is on asset quality. We have been hearing from a lot of lenders about specific geographies like Andhra, Tamil Nadu. If you can throw some color in terms of any pockets or any region specific where we are seeing any pain points. We also highlighted that we have strengthened the collection team. If you can highlight something on that front. And second, Anandan has talked about adding talent. If you can throw some color, some more depth into how we are seeing the kind of growth we are posting, so how we are trying to build up the management team.
Yeah. If you look at the, I mean, we are now, first, we are not experiencing any kind of problems in any kind of area specifically. So that is one thing which I want to communicate here. So we are not finally experiencing that kind of an issue in any of the areas. It's basically April and May being a lag, I mean, lean month, the collections got impacted. Otherwise, there is no other good thing. And the next question, I mean, collections, in order to prepare the organization for the next level, we are centralizing the collections team. While the collection officers, we have got around 600 people on ground, there should be somebody who closely monitors them. So sitting in head office, the state heads cannot be monitoring all of them.
So that is the reason why we have brought in the middle management in the state in charge category so that they can closely monitor the performance of these collection officers. So that's the whole entire challenge. Yeah. So that is one thing. Now, if you look at the entire talent pool, we have got this management committee who is having the heads of departments of various departments. But below that, we wanted to strengthen the organization to take the organization to the next level. That's why we have identified state heads across, I mean, for the sales. I mean, the responsibility of the state head is to run that state like a CEO of that place. So you have to be in charge of both collections, growth, quality, and also disbursements. So that is one thing is the responsibility of the state head.
And if you look at the credits, there also we have identified state heads who will be responsible for each and every state. And under them, there are four or five or six people who will be processing these files and sanctioning the files. Similarly, we have identified in legal, technical, and collections as well, not only the department heads, but also state heads and also state in charges. So that is on the strengthening of the organization. And in terms of support, whether it is finance, operations, compliance, assurance functions, there also we are strengthening the middle management so that the company can perform well. IT also, including technology as well.
Thanks, Lord. So that is very helpful. So the collection team is business as usual. As we are growing, that is the addition of what we are doing, right? Is that a fair understanding?
Yes.
Yeah. Okay. So one question to Anandan sir. Anandan sir, how satisfied are you with the current performance given the macro? And are any concerns near-term, medium-term, long-term in the business model? If you can highlight anything because our book is quite seasoned. We have seen multiple cycles. Any comments on that point if you can give it? And that's all from my side.
Yeah, let's look at that in two ways. One is if you look at the opportunity and the market size in terms of underserved market, particularly in tier three, tier four cities. So at a broader level, we have got a long way to go and there's a long runway for growth from the demand side. And we don't see, not only after I don't see others also seeing any major issue in terms of the demand from the customers, particularly for the affordable housing finance segments, to service to coming from the tax leadership. So the demand, I would say, continues to be robust. And we believe that we continue to be for quite some time as the development takes place in the tier three and tier four, more development takes place.
But coming to the other part in terms of the challenges for this demand or growth to materialize, there are two aspects, critical aspects which are emerging. One is one of the major challenges, not only for ourselves, but others also, is that our ability is the manpower and the ability to retain the manpower and the growth and quality-wise and without compromising on the productivity. So that's where these attrition levels come into play, particularly at the field office level. So in other words, the HR will be one particular field office level, whether it is in sales or in collection, that will be a challenge that ourselves is really highly focused in terms of while our attrition level is really almost very low at the senior-most level and middle management also is low.
But our attrition level continues to be slightly higher than the field level in our HR standards, particularly sales office function at the level. That's what we are working to retain so that part of the growth has to come from the improvements in productivity, as Valerie also mentioned in terms of the number of files or the quality of collections that we do. So that, I would say, is one challenge that we have to face. Second, we need to face emerging competition because, as you know, the affordable housing finance segment started attracting attention of more players, whether from the banks or from the standalone HFCs or from the emerging small finance banks, given their own focus to shift more towards secured-based product than the unsecured one like microfinance. So the competition will emerge.
This is where ourselves is trying to really play a very important role in terms of our product geographical growth and continuous growth, and then trying to have the early mover advantage, try to be a leadership in the local market, and try to be very these are our IT also comes into play. We want to keep provide the best task, best after-sales service, turnaround time, and other turnaround time, but during the loan period also, resolve if there are any customer support issues. So competition is something which also going forward will emerge in this segment. But then much depends on companies like us whose focus is only in this segment, largely single product, focus on its own segment.
We hope we will be able to do much better than others who are multi-product on the liability side, on the asset side, on the advisory side, like a typical bank. For them, various type of customers, for us, it's a monoproduct. So that's all we wanted to. But these two we see as the challenges going forward.
Thanks a lot, sir. Thanks a lot. That was very useful and best of luck.
Thank you. The next question is from the line of Kushan Parikh from Morgan Stanley. Please go ahead.
Thank you for taking my questions. I just have one question and two data-driven questions. So the first one is essentially on the assignment. So over the past two quarters, we've started doing direct assignment. So just wanted to understand, I mean, how we are looking at this piece going forward and what should we expect from a steady-state basis in terms of the pace of direct assignment going forward because quarter on quarter, that has nearly doubled in 1 Q. So just wanted to understand on that, the income from the assignment. And secondly, a couple of data-keeping questions. If you could just repeat the incremental borrowing cost that you are seeing at the NBFC and HFC level. Sorry, I missed that number.
Thirdly, the reconciliation on the operating cost between the NBFC subsidiary and the consolidated level because at the NBFC subsidiary, over the last two quarters, we have seen higher operating costs. However, at the consolidated level, that remains pretty much in line with the historical trends. Just wanted to understand if there is some reapportionment to the NBFC. That's all.
[audio disortion] Thanks, Anand. On the direct assignment, we have decided on the direct assignment as a revised funding strategy in the sense that one thing is diversification of funding. The other one is it is meeting the ALM criteria. And third one is it will improve our principal business criteria. So if you look at our direct assignment, it is only the non-housing loans that gets done as a direct assignment that gets sold to the investors. And if you look at our policy, it will be around 10%-15% of our disbursements will be done as direct assignment, which will come to around 2%-3% or 4% of our loan book. So that is the strategy which is the DA will be continued over the quarters. Now, the next question is on the what was your next question? On the incremental cost of funds.
Yeah.
Incremental cost of funds, if you look at the HFC, earlier, before the reported cut, we were getting loans at around 8.6%-8.7%. Currently, we are raising funds at 8.05%-8.1%. And if you look at the NBFC, earlier, before the reported cut, it was around 9%-9.25%. Now, we are raising funds at 8.5%-8.6%. So that is our incremental cost of funds. Next thing is what was the next question?
Yeah. The next one is on the OpEx between the NBFC and the consolidated level. But just before that, one follow-up on the incremental borrowing cost. The reduction in the incremental borrowing cost is purely due to the reported cut. So we are yet to see any benefits from the rating upgrade. Is that a fair understanding? And that will also come in going forward.
The rating upgrade came very recently. We are also approaching the rate cut, so the benefit of the rate cut, sorry, rating upgrade will have to accrue in this quarter. We are also negotiating hard with the banks on that. Just to add a point on the counterparties, we are seeing, given the macro situation in terms of liquidity and lower retail credit growth by the banking system, there are now realizations in certain quarters in some banks of offering at a very, very common rate. In fact, last week, we did quote a loan of almost INR 300 crore from one bank at a rate of 8.05% for the whole company. And it is a long-term loan, and so we are now starting to see 8% and maybe going further, slightly sub-8% as well for the HFC segment.
That's helpful.
Just lastly, on the operating cost. Yeah. The operating cost, basically, we have a clear apportionment policy. Basically, it is based on the AUM that gets apportioned. And there is a slight more increase in the AUM in the NBFC and then the HFC. That's why the costs are getting more absorbed there. Regarding the nitty-gritties, I can share the computations maybe later with you. Then we can talk on that.
Sure. This is excellent. Thank you.
Thank you. The next question is from the line of Amit Jay from Javeri Partners. Please go ahead.
Thank you for the opportunity, sir. I have a fairly basic question, and allow me some room here. This is regarding the asset quality. On slide number 34, so we have mentioned gross NPA and 30-plus DPD rates. I was trying to correlate these two and trying to make sense of it, so let me just take broad numbers, so 30-plus DPD as in Q1 FY 2026 is 6.45%, so let's say 6.5%. And gross NPA is 1.49%. That is 1.5%, so to my understanding, 30+ DPD is like people who have not paid the due amounts in the 30 days, and gross NPA is like people who have not paid beyond 90 days.
So is this understanding correct that out of this 6.5%, those who have not paid within 30 days, 5% of those will pay up in the next 60 days, and that's how our gross NPA is around 1.5%? So is that understanding correct, sir?
Yes. In the sense, see, 30+ is 6.46, and NPA is 1.49, which means the balance 5%, they pay before it becomes an NPA. And also under the RVA rule, once an NPA, unless all the ODs are cleared, then the NPA doesn't get cleared. So what happens is either they pay either one EMI to not flow into that greater than 90 days or maybe two EMIs to stay in the 30- 60 bucket.
Okay. And one follow-up on that is that when our 30+ DPD is pretty high, 6.45%, and still our collection efficiency is 99%+ . So how is I'm not able to relate that, sir?
So basically, if you look at the collection efficiency computation, it is how it is computed that month's collection against that month's billing, which includes the OD collection also in the current collections. So that's how this 99.12% is arrived at.
So I'll just add that actually, the challenge here is really in terms of while the customers are paying the one EMI, our ability to make them to pay more than one EMI becomes somewhat difficult. So there is a cash flow of one EMI from the customers. But the moment they cross that one EMI, let's say they become two EMIs, which comes into a category of 30-60, then what happens is it continues to be a category of 30-60 because they're not able to pay more than one EMI. It does not mean it moves into the NPA, but we continue to be in the 30-60, or some of them even 30 to 60 to 90 also.
So in other words, but our challenge for us is really. I agree with your observation that for us, the challenge is really to reduce that soft backend collection between 30 to actually less than 90. So that will happen only if we're able to collect more than one EMI. And that's what we're trying to do. Understood, sir. One last question. Sir, you have given some visibility in very near term, this financial year and next. I just wanted to have your aspiration in the, let's say, next three, four, five years and beyond. Maybe chairman's up, MD's up, you can make some comments. How do you want Aptus to look like in the next five years or so? Maybe if you can just throw some aspiration, what you may have in your minds.
Fine. If you look at it, the market opportunity for either the affordable housing or the small business loans in which we are in is very huge, and it is promising a huge runway for growth. But considering the fact that these guys are more kind of, at least the perception-wise, the more risky customers, the credit underwriting has to be very, very strong. So to that effect, Aptus will be a credit-driven company rather than a very high-level growth-driven company. So that is why if you look at our original guidance, even in Chairman's remarks, we had guided a INR 25,000 crore AUM getting reached by FY 2028 or FY 2029. So obviously, for us, the quality of book comes first rather than the growth. But at the same time, it is not that we will not be pursuing a good growth, but this is what is the growth guidance.
So maybe by FY 2028 or FY 2029, two years down the line or four years down the line, we'll be reaching this INR 25,000 crore, but impeccably good results, good performance numbers, good operating numbers.
Thanks, sir. The average ticket size will also have to increase, right? Even if we just take inflation into account, that average ticket size should go on increasing. Am I right? Or you also have a vision to include larger ticket sizes, or you want to stick with the current inflation-adjusted?
Definitely, we want to increase the average ticket size in line with the inflation, but not to the extent of going up to maybe 16-20 lakhs kind of an average ticket size. So this is the sweet spot that we are in. So we will be increasing the average ticket size. In fact, that is one of the growth levers that is coming in for us. So we will be increasing the average ticket size by 50,000 to 1 lakh every year. So that is going to contribute to our growth of at least 10%-11%.
Thank you, sir.
Thank you. The next question is from the line of Manik Bansal from Master Capital Services Limited. Please go ahead.
Hi, sir. Thank you for the opportunity. And congratulations on good set of numbers. So our ROA has improved from 7.7% - 7.9%. And there is this gain on sale of financial instrument as well. So how much of it is this increase of 20 basis points attributable to, say, improvement in the cost of borrowings and attributable to this gain on financial instruments?
We are not clear on your question, Manish. I was not able to hear you properly.
Okay. Just wait. Hello. My voice is. Hello?
Hello?
Yeah?
Yes, sir.
Yeah. So I just have a basic question. The ROA has improved from 7.7%-7.9% Q- on- Q, right?
Correct.
And that is attributable to, say, there is a gain on sale of financial instrument as well. So how much of this improvement in ROA is attributable to that gain on sale of financial instrument? And how much is due to that improvement in cost of borrowings?
Basically, it is explained in the ROA Tree of our investor presentation. So basically, it is explained in the ROA Tree , where the revenue from operations, which was earlier at 17.8%, it is at almost the same level as 17.7%. If you look at the gain on the recognition of financial instruments, that is around 1.1%. The other income has remained stable at 0.4%. And if you look at the interest cost on the AUM, earlier in the last Q1 FY 2025, it was at 5.4%. It has increased to 5.8%, resulting in NIM from 12.8%, it has become 13.4%. OpEx has remained constant at 2.7% in both quarters. Of course, credit cost has gone up from 0.2%- 0.4%. And the after-tax impact of all this has increased from 7.7%- 7.9%.
So the participant has got disconnected. Can we move to the next participant?
Yeah.
The next question is from the line of Aman Vishwakarma from PhillipCapital. Please go ahead.
Yeah. Thank you for the opportunity. And congrats on a good set of numbers in the Q1. I just had one question for the management, which is on the competitive intensity in Odisha and Maharashtra. So as of FY 2025 closing, we were at INR 54 crores of AUM there. And in Q1, we are at INR 67 crores, right? So I just wanted to understand, is there a reason why we have kept the disbursement rates at the lower end, considering we have also done INR 700 crores of disbursement in the entire quarter? So just sense or some color on what's happening on the ground in Odisha and Maharashtra would be helpful. Thank you. That's my question.
If you look at our expansion strategy, it is always a continuous expansion strategy, and when we venture into a new space, we don't want to grow very aggressively. We would like to understand the market, understand the people, understand the culture of the people. Even if I have to spend one, two years on that, I will want to invest in that, and then once I get good confidence, then I will grow fast in these states, so that is what has happened. If you look at it, of course, the loan book is at 67 crores, but the thing is, we have got now good confidence in these states with the cluster managers more promising, with the people in our company also more promising to perform. We will be opening more branches and also recruiting more people.
Considering the low book price, the competition is not a big problem there. We just have to grow our book. That will be continued from the second quarter onwards.
Okay. And sir, just one follow-up question here. Could you just give us a sense on what the collection efficiency has been in these two states? And is it any different than what we are experiencing in Andhra or the other states?
Oh, it is not typically different across states. It is almost, it can be 0.1%-0.2% here or there, but it is almost the same.
Okay. Got it. Thank you, sir.
Thank you. The next question is from the line of Mona Khetan from Dolat Capital. Please go ahead.
Yeah. Hi, sir. Good morning. So two questions, two, three questions from my side. Firstly, you have always maintained the BT out rate of about 2.5x of own money coming in, right? So I'm guessing the number is similar, correct?
What is your question?
The BT outstanding balances, yeah?
Yes.
Yeah. So the question is, is there any geography-specific bias in terms of it coming from tier one cities and also where does it go? So whom does it go to in terms of which financier and also where in terms of tier one, tier two, where does these transfers typically go to? Yeah.
As you rightly said, it is still between 2%-2.5% only. And I mean, we are not seeing any specific locations where the balance transfers are happening slightly on a higher note as compared to other places. So it is almost even across states. So that is not the thing. But if you look at the loans that are getting taken over, it will be either a small finance bank or an NBFC. Those are the companies who are taking over. Maybe they are giving a higher loan at a lesser interest rate. That is what is the thing which we are observing. But considering the fact that it is just 2.5% and this has remained stable over the last 10, 15 years, so we are not too much concerned about that.
Sure. Got it, but even in terms of the so I'm not referring to statewide bias, but in terms of tier one versus tier three, tier four cities, is there any bias that it happens more in tier one locations? Anything on that?
If you look at, I mean, we are not primarily in tier one. Even in tier one, it is basically outskirts. So we are not seeing that kind of an impact in either of these places.
Just to add to what is available, Mona, basically, we are not really seeing any profile like geography-wise or the customer end-use-wise or service availability, customer income source-wise or geography-wise or in terms of loan size, lower loans or versus higher loans-wise. We are not really seeing any pattern of these preclosures of 2%-2.5%. So as of now, we don't really see any specific workable concentration that way.
Got it. That's one aspect. Another aspect in terms of the takeover loans also goes to largely not to the bigger banks, either it is the small finance banks or the larger HF, some of the larger HFs. So that is the big banks are not in the picture yet.
Got it. Got it. That's helpful. Secondly, I just want to touch a bit on the CAC recovery. So if I have to look at your history of the last 12 years, if you could just throw some light on how many loans have gone through and what is the history on recoveries we've had around that. That will be helpful. Yeah.
Actually, if you look at SARFAESI, anything beyond 90 days, we initiate SARFAESI action for our housing finance company customers, so that is a normal process which our legal recovery team takes care. And we initiate the process, and as you know, it is a time-bound process. I think the minimum time to get an order is six months, but of course, on ground, it doesn't take six months. It takes more than that. But one big thing is, I think within one or two months, we can issue a symbolic possession notice. And using that symbolic possession notice, we talk to the customers who are coming to the negotiation table. And based on that, we might give some waivers on the charges or the overdue charges or preclosure charges, while we might not give waivers on the principal or the interest.
And based on that, the settlements happen. So basically speaking, SARFAESI recoveries will not be that great. But using SARFAESI, the recoveries using negotiation with the customers are much more. So that's the scenario.
Got it. And also, if I have to look at your portfolio, from just trying to understand when it comes to this small ticket segment, what has been your experience between salaried and self-employed? In this segment, which is in the seven lakh kind of ticket size or eight to nine lakh kind of ticket size, has your experience been better on the self-employed side versus salaried or any differentiation you see, or there's none in your particular portfolio? Any color will be very helpful.
If you look at our self-employed customers' proportion, it is almost 78% of our total customers. And 22% is salaried. Again, this 22% salaried is what? I mean, if you look at that family income, one person will be earning a salary by getting maybe a cash salary or maybe working in a small establishment. The other person will be doing a business. It's basically the income of these two combined, and then that gets classified as salary. So basically speaking, we are not seeing that kind of a variation in terms of repayment, whether it is on a self-employed or a salaried kind of a thing.
Okay. So no differentiation in your portfolio as such.
Yes. Yes. Yes.
Okay. Just two housekeeping questions. What was the quantum of assignment during the quarter? And what is the 1+ DPD as on June? Yeah.
Quantum of assignment was INR 135 crores during the quarter. 1+ DPD is 8.5%.
Thank you. That's very helpful. Yeah. All the best.
Thank you. Ladies and gentlemen, please limit to one question for participants and rejoin the queue for the follow-up question. Thank you. The next question is from the line of Dixit Shah from Ascendancy Capital. Please go ahead.
Hello. So I'm just going to share a number. Am I audible?
Yeah.
Yes, sir.
Yeah. So first question was about data-keeping point. What was our individual housing loan proportion as on Q2?
Not clear. Your voice is not clear.
Audible now? Hello?
Slightly better, but you go ahead with the question.
What was the percentage of the AUM in individual housing loans?
Individual housing loan is 61% on a consolidated basis.
Individual housing?
Individual housing or NDU?
Individual housing loan on a consolidated basis?
It is 61%.
Okay. And on the HFC side?
On the?
HFC side. On the HFC side.
72%.
Okay.
HFC 72.
Okay. Sir, one housekeeping question also I wanted to know, just a clarification. The BT out rate, what was said was 2%-2.5%. Was that right?
Yes.
Okay. Now, with respect to the growth on Maharashtra and Odisha, what will be our branch additions that we are planning in the, say, current year and, say, in the next two, three years? And what would be the proportion of the AUM that we would want to look at, say, maybe two years down the line, three years down the line?
If you look at the current network of branches in these two states, it is around 10. In this year, we'll be opening 10 more. That is 5 each in Odisha and Maharashtra, and going forward, another 10 or 15 will get opened maybe next year, so that is the growth path we have got for these two states because the experience has been good as of now, so we'll be more aggressive in these states. As regards to the AUM percentage is concerned, it might not be very material because it is still in the growing phase, so it depends on how much that is coming in over the thing. However, the productivity and the ATS parameters, everything will be monitored very closely in these things so that the disbursements and the AUM are maximized to the maximum possible extent.
Wonderful. Wonderful. Sir, also can you please share the.
I'm sorry to interrupt, but I request you to come back for the follow-up question.
Okay. Okay.
Thank you. The next question is from the line of Jainis Chheda from Kemfin Family Office. Please go ahead.
Good morning, sir. Sir, in terms of continuing with the previous question in terms of BT transfer, what is the reason that you see that our BT transfer will not go up going forward?
No. If you look at it, BT out. See, if you look at our preclosures, it is around 7%-7.2% on the opening loan book. Of that, 2.5% is the BT out. So the balance, if you look at, this is where our kind of customers, we need to look at the kind of customers whom we are serving. These are the customers who run businesses. They are not in the salaried segment. So whenever they get the cash surplus out of their business, they use that.
Example, why do you want to go up to this?
So when they get the cash surplus from the business, first thing they do is to settle the loan. And so that's why if you look at our total out of the total preclosures, only 60%-70% is coming out of the own source of these customers. So the balance only gets transferred to the other customers. So these are the customers who doesn't go, I mean, every year. And also another thing is that is where our sourcing strategy which is coming in. So if you look at, if a customer is sourced by a DSA or a connector, what he does is every year he shifts the customer from one company to the other company. Whereas in our case, it is being sourced by our own internal people.
So these are the two things which is helping us control the BT out while we encourage own source customers because actually they are good customers. We might also consider another loan for them. So that is what is giving us confidence that this 2.5% will not go up.
Also, 10 years almost.
Sorry, I'll miss the last part.
No, also for the last 10 years, it has remained the same at 2.5% despite various business cycles.
Understood. And secondly, in terms of our.
Sorry to interrupt, but I request you to come back for the follow-up question.
Just one question, please.
Yeah. In terms of other issues, as you have mentioned that.
Please, we request you to come back for the follow-up question. Thank you. The next question is from the line of Kushan Parikh from Morgan Stanley. Please go ahead.
Thank you for taking my questions again. So just one question. So we have seen across the quarters that growth in Tamil Nadu has been improving steadily. If you could just share some updates on how that geography is performing and where do you see the steady-state loan growth for this state? Yeah.
If you look at it, I think this has been a topic of discussion for the last three, four quarters, but actually, we have been very concentratedly working on this to improve on that. If you look at our loan book growth earlier, it was around 8, 9% that has been brought up to 15% as of now, and going forward also, I mean, still one or two pluses need to be corrected there, but definitely, we can pursue a stronger growth in Tamil Nadu. We can look at at least from 15%, at least 18-20% in the coming quarters.
Understood. That's it.
Thank you. Ladies and gentlemen, we'll take this as the last question for today. I would now like to hand the conference over to the management for closing comments.
Thank you, Mona, for organizing the conference call. I would like to pay my sincere gratitude to all analysts and researcher clients for taking time out to visit us today. Please feel free to contact us in case you have any further queries. Thank you.
Thank you very much. On behalf of.