Good morning, ladies and gentlemen. I am Danish, moderator for this conference call. Welcome to the earnings conference call of Aptus Value Housing Finance India Limited to discuss its results for the quarter ended June 30th, 2026. This conference call may contain forward-looking statements based on the company's beliefs, assumptions, and expectations as of today's date. These statements are subject to risks and uncertainties, and actual results may differ materially. At this moment, all participants are in listen-only mode, and there will be a question- and- answer session.
At this time, if you have a question, please press star followed by one on your telephone keypad. Please note that this conference is being recorded. We have with us today Mr. M. Anandan, Executive Chairman, Mr. P. Balaji, Managing Director, Mr. C. T. Manoharan, Executive Director and Chief Business Officer, Mr. Sanjay Mittal, Chief Financial Officer. I would now like to hand the conference over to Mr. Anandan for his opening remarks. Thank you, and over to you, sir.
Thank you. Good morning, ladies and gentlemen. I am Anandan, Executive Chairman of the company. I warmly welcome you all to this earnings call. As you know, the Indian economy continues to exhibit strong underlying momentum and creates a supportive environment for credit growth, including for affordable housing finance. Aptus delivered a good start to the year with assets under management growing by 21% YoY.
Disbursement reached a good level during the quarter, and the growth was broad-based across geographies and distribution channels with continued demand from our targeted customer segment. Profitability remained healthy during the quarter. Net total income increased, supported by business growth, improving operating leverage. Return on assets remained healthy, while return on equity stood at a little over 20% ROE. Spreads remained largely stable.
Our margins remained resilient during the quarter despite rationalization of pricing of certain lending segments and prudent liability management, including reduction in cost of funds. Asset quality remained broadly in line despite continued business growth. Credit costs broadly contained at 60 basis points during the quarter, reflecting resilience of our underwriting framework and disciplined portfolio monitoring.
Looking ahead, we remain optimistic about the opportunities in the affordable housing finance sector. We are seeing good business momentum across our markets and are confident of delivering 22%-24% AUM growth as guided, while maintaining our focus on operating efficiency. With that, I would now like to hand over the call to Mr. P. Balaji, our Managing Director, to take you through the business focus and key operating and financial parameters. Thank you.
Thank you, sir. Good morning to all. To begin with, I am happy to convey that we have started FY 2027 on a positive note. The strategic initiatives that we outlined during our last earnings call are progressing well and have contributed to the continued improvement in our business momentum. We remain focused on balancing growth with profitability while maintaining our credit discipline. Overall, the quarter reinforces our belief that the affordable housing segment we operate in remains structurally robust and continues to offer a significant growth opportunity.
As outlined during our last earnings call, we continue to make steady progress on the strategic initiatives aimed at accelerating our growth momentum. First, branch expansion. We continue to expand our distribution network, and during the quarter, we opened 33 branches, taking our total branch network to 372. Next is strengthening customer acquisition. We continue to diversify our sourcing channels through the expansion of our connector network and increased focus on digital marketing initiatives. The connector channel contributed 8% of our disbursements during the quarter, and we continue to see encouraging traction from this sourcing channel.
The next one is the increase in average ticket size. Our continued focus on increasing the average ticket size, supported partly by inflation and calibrated customer collection strategy, is helping us onboard higher quality customers while maintaining healthy business momentum. The next one is the customer quality and pricing. A calibrated reduction in lending rates on select loan ticket sizes together with our strategy of increasing the average ticket size continues to support customer acquisition while helping us onboard higher quality customers.
Going forward, we remain focused on the disciplined execution of these initiatives. During the quarter, the last year, whatever was guided has been achieved. In terms of growth, Q1 disbursements grew 36% year-over-year, providing confidence in achieving the FY 2027 AUM growth guidance of 22%-24%. July 2026 disbursement also was good, and that improved by 25% as compared to July 2025 disbursements. Branch expansion, we have added 33 branches during the quarter against the full year target of 60-70 branches.
Spreads, yield modulation remained in line with expectations and was fully offset by a lower cost of borrowing, resulting in stable spreads. Operating expenses to AUM remained at 2.7%, within the guided range of 2.6%-2.8%. Credit cost stood at around 0.6%, in line with the guided range of 0.5% ± 10 basis points for FY 2027. Profitability, ROE remained above 20%, consistent with our profitability guidance.
Based on the progress made during Q1 FY 2027, we remain confident of delivering our FY 2027 guidance across growth, spreads, operating costs, credit costs, and profitability. Our growth is anchored on the following strategic pillars. One is diversified mix, geographic expansion, productivity, digital excellence. One more thing which is important is product expansion. We are also evaluating opportunities to broaden our lending portfolio beyond Home Loans and SME loans through the introduction of a new lending product.
Together, these pillars continue to strengthen our franchise and position us well to deliver sustainable growth while maintaining our profitability and asset quality. Now moving on to performance. AUM grew by 21% year-over-year to INR 13,648 crore. Disbursement grew 36% year-over-year to INR 1,053 crore. Branch network stood at 372 branches. Coming to asset quality, the collection efficiency stood at 98.52%, primarily impacted to an extent by seasonality and some modulation in collections within the NBFC portfolio.
Consequently, our 30+ DPD stood at 6.87% as against 6.21% in Q4 FY 2026. Encouragingly, collection performance has improved in July with the 30+ DPD declining by nearly 20 basis points. We expect this positive trajectory to continue as our collection initiatives gain further traction. The GNPA stood at 1.7% as against 1.52% in Q4 FY 2026, while net NPA stood at 1.29% as against 1.15%. The credit cost for the quarter remained within our guided range of around 0.6%. The credit cost for Housing Finance company came in at 0.2%, while the NBFC reported around 1.4%. Aptus is one company with two businesses and two benchmarks.
Our Housing Finance business should be compared with HFC peers. Our NBFC business should be compared with the NBFC peers. Each has a distinct operating model and risk profile. Therefore, consolidated asset quality should always be assessed in the context of the portfolio mix. Coming to the profitability. During the quarter, net income margin grew by 19% year-over-year to INR 441 crore. We maintained our spreads sequentially to 9%, driven by declining cost of funds to 8%. Our OpEx as a percentage of AUM remained at 2.7%.
Profit grew 19% year-over-year to INR 361 crore, translating to an ROA of 7.8% and ROE of 20.4%, which is amongst the highest in the industry. Coming to the funding. During Q1, we raised approximately INR 872 crore on a consolidated basis, primarily through a mix of term loans, securitization, and direct assignments. Our liability profile continues to remain well-diversified with 60% from banks, NCDs at 14%, securitization at 18%, and the balance through [NCD] funding. We continue to maintain a strong liquidity position with total liquidity of INR 1,933 crore as of June 26, including INR 1,257 crore of unavailable bank sanctions, providing us ample headroom to support growth. With these remarks, I open the floor for the question- and- answer session.
Thank you so much, sir. Ladies and gentlemen, we will now begin with the question- and- answer session. Anyone who wishes to ask a question may press star and one on your telephone keypad and wait for your turn to ask question. If you would like to withdraw your request, you may press star and one again. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question come from the line of Nischint Chawathe from Kotak Bank. Please go ahead.
Hi. Thanks for taking my question. Just a little bit of a guidance on the way this year is playing out. One is that the disbursement growth is pretty impressive at around 36%. There have been challenges throughout the last, four, five quarters. One is, A, what are the drivers and what is the thought process come forth in terms of how this plays out over maybe the next two, three quarters, if you have some color on July, et c. I think even on the asset quality front, if you could give some color. I know you mentioned that 30 DPD was down around 20 basis points, A, what exactly are the drivers and how do we expect the year to really end? I think those are my two questions. Thank you.
First is on the growth, like what we have explained earlier. First, the growth will come from expansion of new branches in new states and expansion of new branches in the existing states. Plus, the increase in average ticket size by at least 1 lakh as compared to the last year. That is also will provide momentum for the growth. Next thing is the connected channel which we have developed, that has actually gained traction. That, as I told you, during the first quarter, 8% of the disbursements was through connected channel, and this will be augmented in the second, third, and fourth quarter as well.
The other one is we have also optimized the lending rates on certain housing loan ticket sizes. That is also likely to provide momentum for the growth. That's what has actually happened in the sense, if you look at our July 2025 disbursement, July 2026 disbursement, it is 25% more than the disbursement as of July 2025. All these things are likely to result in good growth, and that's what we are pursuing. That is on the growth.
Next thing is, obviously, with this kind of disbursement growth, the AUM growth also will catch up. That's what is giving us confidence that we'll be able to achieve the guided range of 22%-24% AUM growth. Now, coming to the asset quality, as I told you, the credit cost in the HFC was at 0.24%. This is in line with any other housing finance company, and the quality of the book is behaving very well there.
If you look at the NBFC, there was a small hitch in terms of collections during the back end of June 2026, and that is what has resulted in the collection efficiency dropping down to 98.5% and 30+ DPD going up to 6.87%. We have already taken corrective steps in terms of the NBFC collections, and we are very happy to tell that in July 2026, the stage two has almost reduced by 15 basis points-20 basis points. This will continue, and going forward, the credit cost range of 0.5 ± 10 basis points will be maintained, and this will be there for the next three quarters.
Any specific factors that you would want to call out because of weakness in collections or what happened really in the first quarter in the NBFC?
Repeat your question, sorry, Nischint.
Any specific factors that you may want to call out which were the reasons for weaker collections in the NBFC in the first quarter?
Actually, first of all, let's be very clear, there is no problem with the quality of the customers whom we have funded in the NBFC. It's basically some commitment which was there at the end of June. June 26, that was the thing. Again, if you look at the credit cost of 1.4%, that compares with other NBFCs in the same line of business. Actually, there is no problem with the quality of the customers. Only thing is some commitment which was there at the end of June, we were not able to meet it, and that is where there is a slight deterioration in the portfolio quality. That is getting corrected in the month of July 26, and we will come back strongly in this quarter.
Just to add, the data company-wise, the parent company in HL business, pursuing HL business, the quality of portfolio, overviews, NPA data, credit cost compares favorably with all other comparable housing companies. Equally, our NBFC data also is comparing well with other NBFCs of similar size or comparable NBFCs. On a combined basis, on a consolidated basis of HL and NBFC, the combined data got increased by just 20 basis points, primarily on account of while it compares well with other NBFC business, but still, on a combined basis, our data-wise, it is higher. That's what we are going to work strongly to reduce it from there.
Probably, this is kind of more of a month-end or a seasonal trend is what you are suggesting. I think that's how I would read it-
Yes.
...rather than saying that the
Absolutely, Nischint . Yes.
Okay. Got it. Thank you very much, and all the best.
Thank you, Nischint .
Thank you. Our next question comes from the line of Umang Shah with Kotak Mutual Fund. Please go ahead.
Hello. Hi, am I audible?
Yes, Umang.
Good morning, and thanks for taking my question. Sir, my question is also related to the asset quality point. We do understand that Q1 is a seasonally weak quarter, but our headline ratios in terms of 30+, 90+ are also higher on a YoY basis. Is there anything lumpy out here which has led to this? The second question is that if you could, while the blended collection efficiency has dropped to 98.5% , if you could just split it out as to how much collection efficiency has dropped in the NBFC business?
If you look at the collection efficiency in the housing finance company, it is around 99.5%, and this one is around 97.5%. That's the difference. Adding up to this on a consolidated basis, it is around 98.5% too. Regarding the increase in the NPA, actually we are not seeing that kind of a lumpiness in this quarter or year-on-year basis. In fact, this is what we have also guided in the sense 1.49% was the NPA as of June 2025. That has become 1.7%. This will definitely be brought down with the kind of efforts that is being done, and this is broadly on account of the NBFC, NPA getting increased.
Sure. This is not specific to any particular region or any particular cohort of customers or anything like that?
No.
Okay, understood. Sir, just one suggestion. I do appreciate that on the call you are trying to emphasize a lot more about the HFC and the NBFC business, where you would want us to sort of compare both the businesses separately. Just a suggestion, if we could also start giving data points for both the businesses separately, it would help us as investors and analysts to kind of compare it in a more meaningful way.
Yes. Umang, we have already decided, we have already discussed from September 2026 onwards, you will get data for both the companies in the investor presentation.
All right. Thank you so much, and wish you all the best.
Thank you.
Thank you. Our next question comes from the line of Amit Khaitan with Yes Securities. Please go ahead.
Hello.
Yeah, Amit.
Yeah. Can you hear me?
Yes, Amit.
Hi. This is Rajiv here. Sorry. Just to clear this point on asset quality, you said that towards the end of June, some of the NBFC customers couldn't pay and couldn't honor their commitment. But in July, they have not only cleared the June dues and they've also honored their July commitment as well. Now they're back to, they have kind of rolled back their bucket, right? On an ongoing basis, your collection efficiency, which was, say, 97.5% in NBFC, now should be coming back to normal of what, 98.5%, 99%, in June, July?
Yes. Definitely.
Got it. Incrementally, you will not see slow forwards from the NBFC portfolio in July and August?
Yes.
Okay. From a growth point of view, again, you said that July disbursements were higher 25% YoY in your initial remarks. But I think from last July, you also stopped doing below INR 7 lakh loans also. You stopped doing below INR 7 lakh ticket sizes from last July. On an adjusted basis, see, on a like-to-like basis then, how should we look at your disbursement run rate going ahead? See, 35% in 1Q was also because of a lower base last year. July is 25%, but you still have a lower base. When the base normalizes, how should we look at your disbursement growth?
See, this quarter, minimum 25%- 30% increase over the last quarter, year-on-year basis will be happening this quarter.
The impact of lesser INR 7 lakh is coming.
Yeah. Impact of less than INR 7 lakh is also coming down. Yeah. Yeah. First quarter. [inaudible]
The disbursement is also now happening on NBFC. On the NBFC side, you have not kind of calibrated on disbursement, right? Because everything has come back to normal.
Yes. See, that's what it was. Actually, there is no problem with the quality of the customers. It is just one small hit that has happened during the second of June. There is no way that we are reducing the business in NBFC.
Sir, one thing on the funding side, two things. NHB proportion in the funding is at its lowest in many quarters. I don't see any NBFC sanction in the pipeline also. What is the reason? Second is the unavailed sanction from banks, as we see in the liquidity slide. What will be the cost of these sanctions when you draw?
Yeah. First of all, let me talk about this NHB. See, what is happening, we have also applied to NHB for a INR 500 crore refinance facility. The indication from NHB is that the cost of funds that they are going to give will be around 8.2%-8.3%. Whereas in the housing finance company, we are able to raise money from the banks or in terms of securitization or NPAs at 7.8%-7.9%.
It makes more prudent to borrow from these sources rather than going to NHB. If NHB is able to offer competitive rate of interest, then we'll go to NHB, otherwise it will be from the other sources. That is on the NHB borrowing. Next thing is this INR 1,257 crore of sanctions which is there. In the case of HFC, the sanction rate is around 7.9%-8.1%. In the case of NBFC, it is around 8.1%-8.25%.
Got it, sir. Thank you so much. Best of luck.
Thank you. Our next question come from the line of Amit Khetan from Laburnum Capital. Please go ahead.
Hi, sir. Thank you for taking my question. Couple of questions. First is on the, you've talked about getting into new lending segments. Now, there are merits to being a company focused on a single segment and the addressable market for affordable housing LAP is pretty large. What is the rationale for getting into these new segments and which products are under consideration?
See, this new product segment is in the formative stage. We are in the process of discussing on which product we want to get into. We'll be able to give more color in the next quarter con call because this is the thought process which is there in the company. We'll discuss it internally and then give you more color maybe in the second quarter.
Got it. Can you explain what is the rationale for getting into new segments? Because our growth opportunity in the single segment is pretty huge, right? Why now?
Yeah. [Just to add], we are looking at our next level stage of growth, let's say from INR 15,000- INR 25,000 or from INR 25,000 to upwards of INR 50,000 over a period of time. We felt there is a strong need apart from strengthening our distribution, physical, online, associates, et c. There is a need to diversify the product range also. We see opportunity, particularly in the NBFC business, because in the HL we'll continue to be largely in HL and after meeting the basic requirement of HL, the gap available in non-HL in HL company is limited.
In NBFC wise today we are offering to the SME and to some extent to large. There is a large scope to look at the add-on products, particularly even to our existing customers. We have today about 200,000 customers availing the unsecured or security-based or non-security based such products, financial products from other vendors. We have a very good experience with this one set of customers, and we see an opportunity for us to introduce appropriate products in our NBFC to expand. To support our growth apart from the distribution, we are looking at very closely the products also. The income stream we want to augment.
Understood. Does that mean that we'll go slow in geographic expansion and much deeper into our existing geographies with more products?
As I mentioned, the distribution will cover the geographical expansion continuum and our direct sourcing through our branches, through our field staff will continue, online will continue, business associates will continue. That's in terms of largely as you know it is around distribution in some form or the other. Physical, online, offline with their own staff.
Apart from that, the other way in terms of our helping the company to scale up further is really product expansion, and that's where we are looking at an opportunity could be there in our NBFC company to augment the products in the NBFC business. Particularly to leverage our existing customer base, which is also growing at almost about 20% per year. Our customer base itself is growing. That we should be able to leverage with our new products as well.
Understood. My second question is on asset quality. If you could give some color in terms of ticket sizes, how the asset quality varies, say between you have some book on sub INR 7 lakhs and maybe INR 7 lakhs- INR 10 lakh and INR 10+ lakh . Is there a difference in the credit behavior and how are the NPAs between the different ticket sizes?
We are not seeing that kind of a differential behavior in terms of ticket sizes except for the bounce rate. As we already communicated, when we less than INR 7 lakhs, the bounce rates were 2%-3% more as compared to the greater than INR 7 lakhs. Other than that, we are not seeing the kind of difference in the asset quality when you look at the ticket sizes.
Got it. Lastly, our OpEx hasn't gone up a lot while we've added 33 branches this quarter. Is that because these branches were added towards the end of the quarter?
Yeah, to a certain extent, yes. Of these 33 branches, 10-12 branches were opened before May 31st and the balance was opened in the month of June. The rent and all those costs will get reflected in the second quarter. We have a track record. Even last year, we added about-
39.
...39 branches and that has not really resulted in our OpEx going up in any significant way. In fact, current year, we are planning around what, 60?
60- 70.
60- 70 branches. We've already added 33 in the first quarter and plan to add another 20.
35.
35 in the second quarter as well. The balance will get added subsequently. Some of these branches get added to the newer states like Bharat and whatsoever. Despite this, given our conscious efforts in terms of operating costs, in fact, not only the investment in the branch network, we're also enhancing our investments in the IT. Despite that, we are very conscious of our cost of operations, both as a percentage of AUM as well as a percentage of the income. That way, we have a very clear advantage in the competition today that we will continue to maintain despite these investments in branches and IT.
Got it. Lastly, if I can just ask you, can you give some color on how the attrition in the industry is evolving? Has it improved or does it continue to remain the same?
If you look at the attrition at the senior level, absolutely there is nothing. In the case of middle management also, it is only maybe 5%-6%. In the case of a branch manager, it is around 10%-15%. At the field level, i t is around 40%-45%. Earlier it was around 50%-60%, it has come down to 45%, but still this is high.
We have introduced retention incentive insurance schemes for these employees and all those kinds of things to retain people. Still, if people come and open branches in the states where we are operating, the first thing they do is to poach our field officers. That's a challenge which we need to wrestle with. That is why we are also launching the alternate channels, so that there is less dependence on people as such.
Understood. Thank you, and all the best.
Thank you. Our next question comes from the line of Renish Patel from ICICI Securities. Please go ahead.
Yeah. Hi, sir. Thanks for the opportunity.
Hi.
Sir, just one question on the strategy side. Last year same time, we sort of exited below INR 7 lakh product. Now when we are thinking for the product function strategies, naturally, we have to calibrate growth in some of the existing products to meet NHB criteria. How one should think about the AUM mix shaping up in near term, and is there any impact on ROA at all when you start expanding new product lines?
If you look at the product mix, currently in the housing finance company, 67% is housing loan and the balance is the non-housing loans, either in the form of quasi-home loans or a topper or insurance loans. This is likely to continue because we still have to maintain this principal business criteria. At this level of product mix, we are comfortably meeting the principal business criteria, the mix will remain the same. If at all any other business will be done, it will be done in the NBFC.
Yeah.
No, one second. This is not likely to impact the ROA. Yeah.
Okay. No, the point is.
Unless the borrowings increase on the leverage increases.
Got it. Sir, my point is in this 33% mix which we have currently, when we start adding new products to maintain this mix, naturally the new product lines will grow at a faster pace because of low base. Hence, some of the existing product lines in NBFC should see lower growth at blended business. Otherwise, we'll miss NHB criteria. Strategically, let us say, which product do you think will go slow in near term or maybe will be offset by new product lines?
No, I think we need to be clear here. See, the mix which I was talking was on the housing finance company. That mix will continue. Any new product that will be done will be done in the NBFC.
NBFC company.
Okay? While the consolidated mix might change, but on the housing finance company, this will be the mix. There will not be any impact on the principal business criteria or on the ROA or on the ROE.
Okay. Naturally, even if we go for this product function, broadly, there will be no impact on the profitability.
Yes.
Okay.
In fact, it can be more.
Got it, sir. Just this last clarification on, again, this 30+ DPD moment. Given we sort of exited that ticket size a year back, I'm sure incremental growth would have been towards better customer pool. Logically, at least the early bucket should have YoY improvement, right? Sequentially, I can understand there is a seasonality. If we are exiting this, let us say, the challenging segment last year, 12 months [MOB] I'm sure should perform better than a vintage book. In that sense, why 30+ is not coming down on YoY basis?
Correct, Renish. What you're asking is very logical. The thing is, this is not because of the deterioration in the asset quality of the customers or this thing. It is just that it was a temporary glitch during the fag end of June 2026 where some commitments were not delivered.
Okay.
That has happened in July. That's what I'm saying. Whatever commitments didn't happen as on June 20th, that has got honored in the month of July.
Got it. It's just a day effect maybe.
With the result, there is improvement in July.
Got it.
This improvement will continue in the month of August and September as well.
Yeah. Got it, sir. Okay. Got it, sir. Sir, thank you and best of luck, sir.
Yeah. Thanks, Renish.
Thank you. Our next question comes from the line of Raghav Garg from Ambit Capital. Please go ahead.
Hi, sir. Thanks for the opportunity. I have a few questions. One, your tax rate has been lower for the last two quarters, around 20% versus, I think if you look at the previous trend, that was around 23%. Why is that? Going ahead, what should be the normalized run rate on the effective tax rate?
I didn't get your question correctly. I understand. Why is it not clear, Raghav?
Are you able to hear me now?
Yes, much better.
I'm saying that your effective tax rate has been 20% for the last two quarters, Q4 and Q1.
Yeah.
Versus 23% before that. Why is that? Going ahead, what should be the normalized run rate on the effective tax rate?
The tax rate is basically because of the benefit we are getting because of the aggressive write-off policy which we are following, and that's the tax benefit we are getting. That's what has resulted in this, and this will continue. The credit cost is largely on account of write-off rather than provision. Write-off, as you know, is eligible for the tax allowance.
Understood. You're saying this will continue, is it?
Yeah.
Understood. For July, you said that your disbursements are up 25%. What is the YoY growth in volume terms for the month, like in terms of number of loans?
These are very specific questions. I will answer when we meet up. I don't want to reply here.
Sure.
Largely, our growth in loan number of customers will be around.
It will be the same.
Yeah.
Sorry, how much?
No, it will broadly be the same. Specific, we'll discuss when we meet.
Sure. Last question, the assignment income, that run rate in absolute value term, that run rate seems to be stabilizing. If I look at that as percentage of the off-book AUM, the margin is normalizing lower. Where should this margin settle on a steady-state basis? When I look at other housing finance companies, the assignment income as percentage of off-book assets seems to be somewhere around 11%-12%.
Yours is currently at 23%, and it's been coming down from as high as 40%. Should it, say, settle somewhere closer to 12%-15% mark or maybe lower, assuming that you probably have a higher yield off-book versus others or a higher yield product. I just wanted to get some sense around the margin.
It should come down to around 12%-15%.
Understood. Thank you a lot. That was all from my side.
Thank you. Our next question comes from the line of Sucrit D. Patil from Eyesight Fintrade Private Limited. Please go ahead.
Good morning to the team. I have two questions. My first question to Manoharan is, beyond the regular outlook, what are the top two to three execution priorities you are focusing on in the next few quarters? Alongside that, what do you see as the biggest risk in borrower demand shifts, interest rate movement or competitive pressure, and how are you preparing to manage them while strengthening Aptus' position in affordable housing finance? That's my first question. I'll ask my second question after this. Thank you.
Once again, we didn't understand the question. Can you please repeat it? Sorry about it.
I'm asking about a concrete plan of action that you may be implementing, like expanding branch networks, strengthening digital lending, or diversifying borrowing segments, and also the risk you see in borrower demand, interest rate cycles or competition. I just want to understand both on how you plan to grow and how you are preparing to handle challenges that could slow down the growth process. Thank you.
First of all, the competition that we cannot rule out. Branch expansion will be happening as guided. We have guided about 60- 70 branches this financial year, of which already 33 have been opened, and another 20 or 23 will happen in this quarter and rest will happen in Q3. Branch expansion, we do not have any challenges. The growth will come. Whatever branches we are opening, obviously new sales officers will be joining there. To that extent, number of sales officers will go up and to that extent, business will also go up. We don't find any challenges in the growth from the new branches. That will go as per plan.
Thank you. My second question.
We are not seeing.
No, sorry. Please continue.
Regarding the risks we are seeing for the growth, we are not seeing that kind of a risk because we always believe there is good opportunity for growth in the affordable housing segment and also in the NBFC where we are located.
In the new geographies.
In the new geographies, also in the existing geographies. Of course, competition is there, but still the market is there and we still believe that we can still grow. To have this sustainable growth, as explained by chairman, we are also getting into the new products. Definitely growth is not an issue considering the fact that we are guiding 22%-24%. I hope I answered your questions on these risks. Also the competition, again, as Manoharan told, there are people, there are companies who are opening branches in the states where we are operating.
What we are doing is when somebody comes and tells that people are opening branches, we also say that there is business opportunity available in these existing states. We are also getting into states where the competition is not very intense. For example, Odisha and also in Maharashtra, the locations where we have opened branches, the competition is not very intense. This is how the progress will happen. Of course, we will be following this contiguous branch expansion strategy and going deep into a particular state.
Thank you. Can I ask my second question?
Yeah, please.
Yeah. The second question is to Mr. Mittal. Along the similar lines, while the business guidance is just now mentioned. To understand from a financial point of view, what key risks or challenges you anticipate in the coming quarters and what specific measures are being taken to manage margin, liquidity, and balance sheet strength, especially in areas like borrowing costs, asset quality and regulatory compliance? Thank you.
First, coming on the margin front. As we have little bit reduced the rate of interest income, that we are protecting by effective borrowing. We expect the [gross space] to remain at 9%, and since our leverage is also being stable around, we expect the NIMs to be around 13%, 12.5%-13%. Our NIMs are protected from that perspective. In terms of operating costs, we are very frugal. We have consistently delivered 2.7% and in spite of increasing banks, the way we manage the operating cost, I think there might be a 2.7%-2.8% range.
We are very strongly managing our operating costs and that we are very constant on managing that. Regarding the credit cost, that is one little aspect where we are working on. Definitely, Balaji sir also emphasized that collections is one of the key things which we are trying to manage, and we expect that to also range in between INR 0.50-INR 0.60. These are the things or aspects in the financial which we are looking into.
In terms of liquidity, what we have been doing is, we have been keeping enough liquidity for two, three months and since our leverage is very low, we are able to negotiate with the bank and bring them to our price, what we want and what rate of interest we want. We are not in a hurry. We are not levered. That is the most important aspect of our balance sheet. We can wait and bring the lenders at our terms and at our rates rather than asking or offering rate what banks are asking. Yeah.
Thank you and best wishes.
Just to add to what Sanjay said, you are also asking about the risks that can come in the second quarter or third quarter. The one thing which I am seeing is if you look at our total borrowings, 66% is variable and 34% is fixed. Of this 66%, 35% is linked to repo rate and 31% is linked to MCLR. Basically, there is an increase in the repo rate. There can be some impact, but we have also computed it. It is just the impact is likely to be 0.06%. That also will not be a major impact in terms of maintaining the NIMs or the spreads.
Thank you and best wishes to you.
Yeah, thank you.
Thank you. Our next question comes from the line of Ankit Shah from White Equity Investment Advisors. Please go ahead.
Thank you for taking my question. Sir, our quasi-home loan LAP has been growing faster than the Home Loans over last year or so. Have we optimized lending rates more in that segment, or what is the reason for this higher growth rate?
You are talking of the Home Loans?
Yeah.
Yeah.
On the optimized rates.
Yes, we have optimized for certain ticket sizes and that too in HL only. In HL only and that too only incremental Home Loans.
The question was, our LAP is growing faster than Home Loans. What could be the reason for that?
If you look at it, last year, our HFC loan book grew by 18% and NBFC loan book grew by 29%.
Okay.
Now in this quarter, HFC loan book has grown by 20% and NBFC loan book has grown by 24%. We would like to concentrate more on the Housing Finance and grow that book. Also concentrate on the NBFC by introducing new products and also the existing products growth.
Sir, my question was on the parent company side only. Within the parent company, between the Home Loans and the quasi-home loans or LAP. LAP has been growing faster than the Home Loan product. I am asking for the reason for this difference, not the NBFC.
No, correct. That quasi-home loan has a lower base. That base effect will always be there, right [inaudible]
Okay. My second question is a simple bookkeeping question. We've in the past been giving the advances split in the IP in absolute numbers. This time you have changed it to percentages. Because of this, Odisha and Maharashtra numbers are looking a little off. Can you give the absolute split of the advances?
I can ask Amit to contact you and give you the exact number on the statewide loan book. Actually, if you just work out the percentages, it will come. What is the loan book in Maharashtra and Odisha? INR 162 crore.
Yeah.
It will be there.
Good to hear.
INR 60 million Maharashtra and Odisha now we have touched about INR 160 crore. Which is about 1.2% probably, yeah
Okay, this is helpful, sir. Sir, my last question is, difference between the AUM and the advances has dropped by INR 115 crore in this quarter. What could be the reason for this?
What? Difference between?
The difference between AUM and the advances book. That used to be INR 1,175 crore.
AUM is assignment.
Yeah.
Basically, INR 13,648, [audio distortion ] it's almost INR 957 crore. Basically the assignment which we have done.
Yeah. If we do assignment to
Yeah.
If we do assignment to
Yeah. Okay.
Because of the assignment
One second. Let me clearly tell you. If you do a direct assignment, that gets added in the asset under management, but it gets out of the balance sheet assets first.
Right.
Next thing is, the balance sheet asset also gets reduced by the ECL provision, and also the processing fees that is yet to be recognized as per the new rules. Okay? Those are the causes for the difference.
Got it. Thank you for taking my question.
Thank you.
Thank you. Our next question comes from the line of Rajiv Mehta from Yes Securities. Please go ahead.
Yeah. Hi. Thank you for allowing my follow-up. Sir, just two questions. First, on credit cost, your guidance of 50 basis points, 60 basis point for the whole year. I just want to understand from two perspectives. One is this write-off. You said that you have started doing aggressive write-off, is this an acceleration of policy, and would this remain an ongoing policy of write-off? Second is, when you look at stage one provision also, you've drawn down from that provision of stage one, and now it is 24 basis point. It used to be 40 basis point six, seven quarters back. How should we look at your credit cost guidance in view of how the write-off policy will happen, and how the stage one provision coverage will be maintained going ahead?
What is happening, first of all, this credit cost at 0.6% will be maintained for the year. Regarding the stage one provision which has got reduced, basically, the behavior of the customers in terms of repayment in the stage one category has been very good as per the ECL model, and that's why this percentage coverage had got reduced from, say, 0.3%- 0.2%. Whereas since we saw some deterioration or some increase in the stage two assets, we increased the provision coverage there. That's the whole logic.
On the write-off, have you switched to a policy of doing
Write-off, this policy will continue. Anything more than 500 days will get written off.
Okay. 530 DPD, right? Okay.
Yeah.
Got it. Just on collectors, you said 8% contribution in disbursement. Two things, what is the number of collector right now? What can the number go to? Also their proportion in disbursement, maybe say next year.
Actually, we have got right now, across three trajectory branches, we have around 1,000 connectors. Average three to four connectors per branch.
Okay. Thank you.
Thank you. Our next question comes from the line of Shubhi Gupta from Trinetra Asset Managers. Please go ahead.
Hi, sir. Thank you for taking my question. I'm sorry if this has already been answered. Sir, if you could just give me the breakdown of the slippages that have occurred.
What is the slippage? I'm not able to understand your question.
Sir, any slippage that has happened in this quarter, if you could give me any breakdown for this.
No, slippage is that what we have told. Stage two from 6.21% in March has gone up to 6.87%. NPA has also gone up from 1.52%-1.7%, increase in NPA, which increase in credit cost or net fund regards to slippage. I will give the number to you, maybe through Anandan.
Sorry, sir?
No, the numbers will be given to you. You may contact our investor relations with Amit. He will be able to give the numbers.
Okay, sir. Thank you.
Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for the closing remarks. Thank you, and over to you, team.
Yes. Thank you, everyone, for attending the con call. I would like to pay my sincere gratitude to all analysts, investor friends for taking time out to listen to us today. Please feel free to contact us if you have any further queries. Thank you.
Thank you so much, Mr. Anandan. Ladies and gentlemen, thank you for being a part of the conference call. If you need any further information or clarification, please email at amit.singh@aptusindia.com. Ladies and gentlemen, this concludes your conference for today. Thank you for using Chorus Call conferencing services. You may now disconnect your lines. Thank you and have a pleasant day.
Thank you.