Ladies and gentlemen, good day and welcome to Fedbank Financial Services Q4 and FY 2026 Earnings Conference Call hosted by Equirus Securities. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Shreepal Doshi from Equirus Securities. Thank you and over to you, sir.
Thank you, Danish. Good evening, everyone. We welcome you to the earnings conference call of Fedbank Financial Services to discuss the Q4 and FY 2026 performance of the company. Today, we have the entire senior management of the company represented by Mr. Parvez Mulla, MD & CEO, Mr. C.V. Ganesh, CFO, Mr. Jagadeesh Rao, CBO Gold Loans, Mr. Shardul Kadam, CBO ST LAP, Mr. K. Suresh, CBO Medium Ticket LAP, Mr. Vikram Rathi, Chief Risk Officer, and Mr. Lokesh Kumar Pareek, Head IR. I would now like to hand over the call to Mr. Lokesh. Over to you, Lokesh.
Thank you, Shreepal. Good evening, everyone. I would like to welcome all of you for joining our Q4 FY 2026 results earning call. Before we start, I would like to highlight that some of the statements made on this call may be forward-looking in nature, including those related to our financial performance, business strategy and growth plans. These are based on our current expectations and are subject to risks and uncertainties, including broader macroeconomic conditions. These statements reflect our views as of today and may evolve with changing business and market dynamics. With this note, I now hand over the conference to our MD, Mr. Parvez Mulla, for his opening comments. Thank you and over to you, sir.
Thank you, Lokesh. Good evening, everyone. I would like to extend a warm welcome to all of you for joining the Q4 FY 2026 post-results earning call. At the beginning of the year, we had listed our priorities, as follows. One, conserve and allocate capital to businesses with high ROA and ROE. Focus on our twin engine strategy of gold and LAP businesses. Third, to move towards a fully secured lending portfolio. Fourth, expand gold business through branch expansion and increase doorstep coverage. Five, continue to foster synergies between our gold and LAP operations. Six, within LAP, we will concentrate on a combination of high-yield Small Ticket LAP business and the low-risk Medium Ticket LAP business. Seven, expand Medium Ticket LAP with minimal capital allocation. Eight, establish leadership in our ST LAP team and build a team for growth and quality.
We have promised you that FY 2026 will be a rebuild year focusing on correcting our credit cost. Nine, continue strengthening our collection infrastructure to effectively manage the delinquencies which had risen in FY 2025. Ten, aim for increased core income while reducing reliance on DA income. Use DA as a capital allocation strategy rather than an income-generating strategy. Eleven, move towards optimal cost structure. Twelve, ensure that the credit cost remains 1% and below. These were our promises at the start of the year and against that, our year as well as quarter has performed as follows. On the business front, we have experienced a good year with disbursements increasing by 67% to INR 31,410 crore from INR 18,788 crore, primarily due to the rise in our gold business. When excluding business loans, which we exited in first quarter, our disbursements have grown by 75%.
On the AUM front, we have grown 27% with our AUM touching INR 20,000 crore in Q4 this year. This financial year, we have added INR 4,342 crore to our AUM. When excluding BL, we have observed an increase in AUM of 41%. Gold disbursements for the quarter reached INR 10,734 crore compared to INR 7,853 crore in Q3 FY 2026 and INR 4,580 crore in Q4 of the previous year, indicating a growth of 37% and 135% respectively. We have added INR 2,447 crore of growth to gold AUM this quarter. The gold business surpassed INR 10,000 crore, increasing 76% YoY, and tonnage has grown by 12% YoY to 12.6 tons. Our doorstep gold loan business continues to perform with an AUM increasing by 108% YoY to INR 1,730 crore.
As promised, we have opened 34 new gold branches this quarter, bringing our total to 148 new branches this year, and we will continue to expand our branches in FY 2027 too. Despite opening 148 new branches, our AUM per branch has reached INR 16.5 crore, reflecting an increase of INR 4.4 crore per branch during this year. Our LTVs on AUM stand at 60.9% portfolio-level LTVs. In our collaborative initiative involving gold and ST LAP business, we have successfully further merged additional seven branches, taking the total to 70 branches this year.
That means 70 branches of Small Ticket LAP business have relocated into the premises of 70 gold branches, thereby releasing the ST LAP premises. These Vyapar branches will provide both gold loan business as well as LAP business to our customers. At the beginning of the year, our capital adequacy ratio stood at 21.9%. Now it has increased to 22.4%. The measures we have implemented in FY 2026 to conserve and efficiently use capital are as follows. First, we 100% assigned our business loan portfolio of INR 886 crore, which was executed and derecognized from our AUM.
In addition to improving capital efficiency, it also ring-fences us from further deterioration in the unsecured retail lending market. Secondly, a total of INR 1,694 crore in direct assignment transactions were executed through the quarter, releasing capital. Gold co-lending book increased INR 1,131 crore to INR 2,127 crore and INR 450 crore in subordinate debt was raised in this quarter. These measures will enable us to continue our growth story in FY 2027. As previously stated, the complete allocation of INR 886 crore of business loan portfolio in the first and second quarters of FY 2026 this year now ensures that we maintain a secured on-book ratio exceeding 99.5%.
In line with our priority of increasing core income and decreasing DA income, the net income from DA has decreased by 89% to INR 7 crore for FY 2026 compared to INR 66 crore for the same period last year. We had promised you that we will not rely on DA income for the PBT. Nevertheless, our operating profit has risen by 11%. If we had sustained a similar kind of DA income, the operating profit would have reflected a growth of 22% or 23%. The MT LAP business has demonstrated stability over the course of the year, disbursing a total of INR 2,180 crore while sustaining its yields. in Q4, the MT LAP business has disbursed INR 632 crore, reflecting a 16% increase quarter-on-quarter.
Throughout the last two years, the company has encountered rising credit costs in the ST LAP segment, prompting the org to strengthen its credit policies and shift towards a system-driven BRE. The ST LAP business has disbursed INR 912 crore during this financial year and INR 289 crore in Q4, reflecting a 39% increase quarter-on-quarter. in Q3, in this business, we have moved Mr. Shardul Kadam, our CRO as the CBO in ST LAP business. Over FY 2026, we have hired senior leadership team and stabilized the product. We are seeing improvements in sourcing quality this year. We expect that to continue as we grow. Collections. Senior leadership has been onboarded. Field team has been strengthened. The collection framework has been verticalized. Additional personnel have been recruited. Call center, legal and recovery teams. At the end of 2026, we have almost 2x the collection personnel that we started with.
For shoring up collection within the ST LAP segment and increasing the PCR in Q3 FY 2025 along with exiting the deep bucket NPAs through that ARC sale in Q1 and the work that we have done in Q2 and Q3, we have limited our credit cost for the year at 0.8% and for Q4 at 0.7%. We have raised about $250 million in ECB till date. Finally, the key numbers are as follows. In business, the AUM reached INR 20,153 crore, translating to a growth of 27%. Excluding BL, it is about 41% year-over-year. Gold reached INR 10,352 crore, an AUM growth of 76%, substantiated by a tonnage growth of 12%. Mortgage AUM reached INR 9,362 crore, an AUM growth of 16%.
Disbursals of INR 11,664 crore in Q4 FY 2026 up 109%. On the profitability and asset quality side, the net interest income for Q4 grew 23.1% and for FY 2026 it grew by 14.8%. Operating profit for Q4 grew 24% year-over-year to INR 162 crore, and for FY 2026 grew 10.8% year-over-year to INR 576.3 crore. Our credit cost for Q4 stands at 0.7%, and for FY 2026 it stands at 0.8%. Our net profit stood at INR 100.5 crore in Q4 FY 2026, and for FY 2026 it is INR 343.6 crore. The gross Stage three stands at 1.9% versus 2.1% quarter-on-quarter, and 2% year-over-year. With that, I will now hand over to our CFO, Mr. C.V. Ganesh, to take you through the numbers.
Yes. Thank you, Parvez. Thanks everyone for your participation on the call. I will add to what has been covered this far. I will start with six numbers. PAT of INR 100 crore, 750+ branches, INR 10,000+ crore of Gold Loan AUM, INR 20,000+ crore of entity AUM, 2.6% ROA, 14% ROE. These six numbers sum up the quarter. First, on the AUM growth. We have had a strong AUM growth in Q4 ex-BL. Our AUM grew 15.8% sequential quarter-on-quarter. This was led by a 31% sequential growth quarter-on-quarter in the Gold Loan. Just to amplify that with numbers. In the first nine months of the year, our AUM ex unsecured business loans grew about INR 3,000 crore. Against that, in the three-month period of Q4, our AUM grew INR 2,700 odd crore.
Now, what this means is that if we exclude the roughly INR 900 crore of the unsecured book we sold during the year, the secured book has grown a little under INR 5,800 crore this year. A growth of approximately 41% year-on-year. Within this, our Gold Loan AUM has grown 76% year-on-year. While this has had tailwinds of gold price growth in FY 2026, but we have also been able to demonstrate a tonnage growth of 12% during the year. While gold has been the primary driver, this underlines our twin engine strategy in a year where MSME lending has had headwinds, as well as this buttresses our conviction in investing in the 148 new branches, most of which have turned the corner on profitability within the year itself. Second, on yields and cost of borrowing.
Our yields reduced 12 basis points year-on-year due to a never-before growth in the Gold Loan book. When you grow so much, obviously there is going to be some impact on yield. Also, the back-ended nature of the growth resulted in the average yield optically showing a drop of about 28 basis points. Our weighted average cost of borrowing was marginally lower in the quarter by 4 basis points. However, with the leverage increasing to 4.6x in Q4, in the ROA tree you will see interest expenses optically going up by 10 basis points. On the interest rate outlook, we saw cost of borrowing hardening post-February, as well as hedge rates on our foreign currency borrowing going up materially. With the current geopolitical situation, we remain cautious in terms of outlook. What did we do?
We tanked up on liquidity in the quarter to counter volatility caused by the geopolitical situation in the Gulf. While it has optically increased finance cost and optically reduced the net interest income for the quarter, it gives us a hedge against the uncertainty and interest rate volatility in Q1. On asset quality. Asset quality improved quarter-on-quarter with entity 1+ DPD improving to 6% from 7.1% in December, and entity 30+ DPD improving by 70 basis points and entity 60 + DPD improving by 50 basis points over the last quarter. This is driven primarily by an improvement in the mortgage delinquencies, which have improved materially, as we have executed moving away from agency-led collections to in-house collections. GNPA has also declined 20 basis points quarter-on-quarter to 1.9% from 2.1%, and the Net NPA has declined 10 basis points to 1.3% quarter-on-quarter.
We have been able to hold our PCR flat at about 32.3%. On the profit and return metric, PAT was up 14.4% sequentially quarter-on-quarter and 40% year-on-year, boosted by the incremental interest income from the asset growth and lower credit costs. We crossed the psychological milestone of INR 100 crore of PAT. This was an important base camp for us in our onward journey from a year of repair. We are cautiously optimistic of an upward journey from here. Our PPOP for the quarter came in at INR 162 crore, an increase of 24% year-on-year and 9% quarter-on-quarter. PPOP for the year came in at INR 576 crore, an increase of about 11% year-on-year.
However, as articulated earlier, if you exclude the DA income of last year, which we have consciously dialed down, the core PPOP is up 22% year-on-year on a full year basis. The improved delinquencies resulted in credit costs decreasing 10% quarter-on-quarter, 14% year-on-year to 0.7% as a percentage of average total assets. On a full year basis, credit cost as a percentage of average total assets is down from 1.7% in FY 2025 to 0.8% in FY 2026. Our operating leverage is playing out slowly but surely. OpEx as a percentage of average total assets reduced to 5.5% from 5.9% a year ago and 5.7% in Q3, giving us some green shoots on economies of scale playing out on an expanding balance sheet. On a full year basis, FY 2026 has seen a 20 basis points drop in OpEx to average total assets over FY 2025 as a whole.
The ROA also continued its onward climb at 2.6%, up from 2.5% in Q3 and 2.2% a year ago. Our ROE also broke into the teens at 14%. On capital adequacy, a 14% growth in AUM depletes capital adequacy and has resulted in a leverage increasing to 4.6x up from four in December 2025. In the beginning of the year, we had consciously divested our lower ROA unsecured business to release capital for the onward climb in the secured business. In Q4, we have raised a subordinated debt of INR 450 crore, which has supplemented our capital adequacy by 3%.
Consequently, in spite of the healthy asset growth, our CRAR at 22.4% as of March, is up from 20.5% in Q3. This gives us ample headroom for growth in the coming year. As the numbers over the last four quarters of this year show, we have attempted to build resilience and consistency in terms of asset quality, credit cost, and an upward linear trajectory in return metrics. We are deeply grateful for your support in this exercise. With that, I now hand it over to the floor for questions and answers.
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 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 only while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. First question comes from the line of Digant Haria from GreenEdge Wealth. Please go ahead.
Yeah. Hi. Thank you for the opportunity and congratulations for the century. It is the first time you have crossed the INR 100 crore mark. Given that the backend nature of growth and what Ganesh ji mentioned that we have built in some liquidity just for a rainy day in the coming quarter. I think, this century will probably remain our base. So congratulations on that. I have two questions only. One is on Gold Loans. Parvez, you mentioned that second half is generally heavy for us, and it was exactly like that.
The question here is that, we have had such strong growth, but only one thing is that the yields have probably been a little softer in the last two quarters. So I just wanted to know the growth strategy. Is it in the new branches just to ensure that we reach breakeven, we are giving discount schemes in the initial days? What are we doing on the growth front? The top tops versus new customers versus other things, if you can just highlight the color of growth.
Yeah, Digant, thank you so much. Thank you for remembering that we had said that we will grow in Q3 and Q4 differently from what we did in Q1 and Q2 because, that is the way our seasonality plays out. Also, if you remember, I had spoken about tonnage growth. You have seen the kind of tonnage growth that we have delivered year-over-year. It is a 12% tonnage growth, and we are very conscious of that tonnage growth. As far as yields are concerned, there are two factors which are playing in here. So if you take about 30 basis points here and there, which you are comparing, I would break it into two parts.
There could be a 5 basis points to 10 basis points, which we could have done on the yield front, but the balance is because of the back ending of the disbursements. When you have such a large number of disbursements which are happening in the last quarter and there is a back end, that is the effect. So the yield effect is hardly 10 basis points, and I think Q1 that we will cover back. When you are playing in a market which is competitive and when you are pressing the pedal for Q4, and when you are trying to get the tonnage growth, a 10 basis points here and there is okay because we will cover it in Q1.
Right. So it is only 10 basis points. I just thought, the yields at origination, I understand that optically the reported yields may not reflect because of the back ended nature, but at origination, have we seen any meaningful pressure on the yields and, is it because maybe we are doing slightly larger ticket sizes or, but there is absolutely nothing like that and the yield at origination still remain healthy?
Yeah. So in the quarter four, there tends to be that tendency to play with the origination yield in the sense of different geographical markets. We do that, but overall level it is steady. What we did in last quarter, that is exactly last Q4, FY 2025, we did exactly the same thing in FY 2026. It is a seasonality play.
Okay.
You will see us Q1 back to the same pockets. The competition pressure that you are talking about is yet to play out, is the way I would put it.
Okay.
The competition is yet to get those branches in the spaces that we are operating, and we are yet to see that pressure play out. Although it might, but it has not yet played out, and that is not what has happened. This is unprecedented disbursements. I think we are in the same zone where we wanted us to be.
Perfect. Great for that detail. Second question is that, now we have this new guideline of 75% LTV across the life of the loan. So just internally, what are the process level changes we have done? Because if we don't do any changes, then optically the NPAs might go up because some customers may just go higher than 75%. So there is no credit cost risk at all. But still, optically the NPA in the coming quarter for the industry might go up because of this guideline thing. So how have we as Fedfina decided to tackle this or any insights there?
Yeah. See, these guidelines have come effective this April. There are two sets of guidelines. The guideline that you are talking about that we have to maintain 75% across the loan, that was an earlier guideline. The revision in guideline which will happen from April 26, we are executing it, and I will request Jagadeesh to elaborate it for you. He will give you all the details that we are doing and how we are de-risking what we need to do on the operations side.
Perfect.
Hi, Digant.
Yeah.
Look, even—
Hello.
Yeah. Hi. This margin breach has nothing to do with the delinquencies of the book. That is the first point. On the margin breach regime, last year we were following 75% regime. Now it is changed to 85% for exposure up to INR 2.5 lakh and 80% for exposure up to INR 5 lakh. Anything above INR 5 lakh, it is 75%. There is room given by the regulator for playing on the LTV while 90% of the book is less than 25% of Fedfina. We do not see any impact coming out. Like I said, margin breach, even if there is a margin breach, there is no need of any provisioning or no need of treating it as a delinquent book other than initiating for margin collections with the customer.
Okay. It will not impact the NPA expectation. That is good to know, sir.
No impact.
Right. No. Perfect. That is very helpful, sir. Last question is on the Small LAP piece. I see that we have recruited some really good people on the collection side. Maybe this year we have built the collection team. Do we have a little more confidence than last year that FY 2027, this portfolio might actually grow and deliver maybe positive kind of ROAs also?
Yes, Digant. Definitely, I am much more confident than what I was one year ago when we were giving you a guidance that there will be a GNPA number which will increase and we will hold the credit cost. Definitely the collection efficiencies have improved. What we have also changed is, the ST LAP business had a percentage of collections happening through agencies. We have now moved it to our own people. Our own people have joined us last year and now have spent about three to six months vintage and have started giving us results. Definitely we are positive on the ST LAP business in terms of the past GNPA also. We are also confident about the new book that we have written in the last one and a half years.
I think that piece, definitely we are confident about. What we are now working on is picking up the growth story. You would see that last year we were hovering around INR 200 crore. March definitely is a good momentum quarter for everybody. We did clock INR 290 crore, but definitely that is where we are working on to pick up the business. Even on the business front, we have hired new people who have come in last year and the productivity will start jumping up there too. Although we are taking it under the new credit BRE that we have done. It will pick up steadily and we are happy with that.
Okay, perfect. Thank you. Thank you everyone for these detailed answers. Thank you and all the best.
Yeah, thank you.
Thank you, Digant.
Thank you. Ladies and gentlemen, anyone who wishes to ask a question, now press star and one. Our next question come from the line of Meghna Luthra from InCred Equities. Please go ahead.
Hi, sir. Thank you for giving me the opportunity and congratulations on a good set of numbers. A few questions. One is, since our average ticket size in Gold Loans is on the INR 2.7 lakh mark, how has the new KYC rule impacted disbursements? Has it impacted disbursements at all?
No, there is no any KYC rule as far as we know. Can we move?
Okay. Sir, my understanding is that loans above INR 2.5 lakh have to go through a KYC and most likely the customers who are coming for a Gold Loan do not prefer going through KYC, say, on the CIBIL or based on Aadhaar card and other details.
This is actually with effect from 1st of April 2026, the new regime.
Yes.
This is not about KYC, it is about the assessment. When the exposure increases INR 2.5 lakh, we need to do a basic assessment on the income and basically the cash flow of the customer to understand the profile a bit more in detail.
Oh, okay.
We are prepared and after April 1st, we are completely on, we are live with our systems, our integration with the credit bureau to understand the existing obligations and we do not see much of an impact. But yeah, there is an impact on the practice of our branches, our staff servicing because that is a new journey for them. But yeah, over a period of a month or so, we expect stability there. Yeah.
Okay, got it. And sir, another question was on the co-lendings. What is the co-lending spread in the Gold Loan book?
Sure. So our overall book under CLM is 21%, which is around INR 2,100 crore.
Okay.
That gives an AUM level spread of around 4%.
Okay. Got it. Another question, sir. On other income, we are seeing that the disbursal growth was very strong during the year. However, our fee and commission income declined year-on-year basis. Sir, would you like to highlight that? How do we see that moving ahead?
The other income, Meghna, is actually coming from the LAP business. The LAP business disbursals, they have not been as strong as the Gold Loans business disbursals. So that is where you are seeing that piece.
Okay.
One more element I think is also about business. You might be seeing if you are looking at FY 2025, there is business loans through which I had the fee income coming in, which is not there in the year now.
Sir, how do you see this line going forward? Do you think we could see a reasonable amount of growth?
Yes, it will because, as I said, I am picking up the disbursements and the disbursements on the ST LAP business will pick up on the Medium Ticket LAP business will pick up, and it is a direct correlation there. On the ROA tree also we are expecting 0.8%-1% coming from the fee income side.
Okay.
This should pick up going forward. Also BL won't be in the base of FY 2026.
Right. Got it. On AUM growth, we understand that gold prices, you would be building in some sort of gold prices in the growth strategy. How do we see the gold loan book growing during the year and also the LAP book, the MT and ST LAP book?
Meghna, we have been giving an overall guidance last year also, and we said we will be a 20%-25% AUM growth company.
Okay.
We will continue with that.
Lastly, what would be the incremental cost of funds during the quarter?
C.V. Ji?
Yeah.
The incremental—
Right now, it is as I said, it's an uncertain environment. Right now.
Right.
It would be hazardous to sort of have a guess around that. We are watchful, as I said, we have banked upon liquidity. We do not foresee us needing too much as money in the markets, at least till the geopolitical situation cools down. And then we are hoping Q2 is a new quarter.
Okay. Cool.
Thank you.
Thanks for taking my call.
Our next question comes from the line of Chintan from ISecurities . Please go ahead.
Thank you for the opportunity and congratulations on the strong set of numbers. Just diving deeper into this Gold Loan. So, disbursements for Gold Loan, if I look at the number, they have almost doubled in FY 2026 versus FY 2025. So, what is the kind of key vectors which would have contributed to this loan as in branch expansion plus I think we also have doorstep banking. So, what would be kind of the mix? How much would be from doorstep banking and how much could that be attributed? Just trying to understand what could be the run rate which could sustain going forward. That is the first question.
There are multiple drivers. Obviously, the first driver is the new branch and the existing branches giving more productivity in the existing book. So, from INR 12.5 crore we have reached around INR 16.5 crore average per branch book size. The another driver is the doorstep gold loan. Doorstep gold loan stands at around INR 1,730 crore AUM, which is 17% on the overall AUM. So, these are the two major drivers, and as we already promised, we concentrated on the tonnage and the tonnage has grown around 2.5% for this financial year. These are the three major drivers at the end.
Sure. So, sir, but in terms of this AUM per branch, so it is almost INR 16.5 crore. So, probably peers could be somewhere around, at my best peers, I think like around INR 18 crore-INR 20 crore or so. What is the maximum stretch, I think, which we believe could we stretch to on AUM per branch? And what is the branch expansion idea for the next year, particularly for Gold Loans?
Just to detail there, we have opened 148 branches. Even after opening branches, our overall average is INR 16.2 crore. But when you see the branches which were there in FY 2025, we reached around INR 20 crore of average per branch there. So we are at par with the market as we speak. So the capacity of every branch, we have this to accommodate at least INR 60 crore-INR 65 crore of portfolio. That is the size of the safe room. That depends on the locker, how much lockers we can keep it in the branch. So we are capacitized to reach around INR 60 crore-INR 65 crore per branch book.
But Chintan, one way of looking at that also will be to look at each of the competition and look at what is the vintage of the branches you have. So you will have certain branches which are in the range of INR 20 crore-INR 25 crore. They will grow at a particular rate. The INR 15 crore -INR 20 crore will grow at a particular rate, the INR 5 crore to INR 10 crore will grow, and the new branches will grow at a particular rate. Depending on the geography that you have these branches, you will have a kind of growth because there will be white spaces available in the Western and Northern geographies, and the Southern geographies will be a little dense. Plus, we add the doorstep. That is how we model our growth story.
Sure. So, sir, hypothetically assuming if there is decline, say 10%-15% in the gold prices. So in that kind of scenario, what could be the growth we should be targeting as overall AUM growth for Gold Loans?
Yeah. See, when we do our budgeting exercise with Gold Loan, we start with the tonnage growth irrespective of the price. So we will be budgeting for 10%-15% tonnage growth. Our branches are modeled for tonnage growth in terms of the KRAs as well as the drivers, as well as the support that we give them. That is how we drive our branches, and we take price as a bonus. Depending on each of the quarters, there could be ups and downs which could happen. But overall level, even if you have a flattish kind of a price play next year, we still should see a 20%-22% growth on the AUM on the gold side if for a flattish price.
Sure. On gold loans now. On the overall AUM trend, what would be our guidance? 20% odd guidance remains, right, on the overall AUM growth?
Yeah, 20% - 25%.
Sure. Lastly, on the margins front, I think if you could just help me with the breakup of the fixed and floating book on the asset and the liability base. Just wanted to understand if there is a rate hike kind of scenario, how are we placed on that front here?
Really? Fixed and floating?
Yeah. No, roughly about a quarter of the book is on fixed. Here I am excluding the commercial papers we take. Commercial papers, we would have six months, one year also. If you factor commercial paper of a longer duration also, roughly 30%-35% would be fixed. So there is some insulation there.
Okay. Yeah. On the overall borrowing. So it is kind of 30%-35% is fixed, including CPs.
That is correct.
Yeah. On the asset side though, largely gold will be entirely fixed and LAP portfolio?
See, I think the way you will have to look at it is that in gold because of the shorter tenure, we have the opportunity to reprice on maturity.
Right. Understood.
I think we have the opportunity and we have the insulation.
Understood. Fair enough. Okay, sir. Thank you. I think that's it from my side. Thank you. I come join back in the queue and all the very best for the future quarter.
Thank you. Our next question comes from the line of Shreepal Doshi from Equirus Securities Private Limited. Please proceed.
Hi, sir. Good evening. My question was pertaining to the growth side. As you said that even if the gold price remains steady, we would be growing at 20%-22% on the gold side, which will be on the back of 10%-15% gold tonnage growth. But if you look at next year when our
Sorry to interrupt you, Mr. Doshi, but your voice is breaking.
Am I better now?
Yes.
Okay. Next year, how are you looking at the mortgage segment growth coming back? Because next year we might not see similar level of gold business growth. On the mortgage side, if you could give us some clarity on the Small Ticket LAP segment growth or how we are seeing the trends emerging there in terms of not only asset quality related trends, but also how our newer framework is helping us on a better growth trajectory going ahead.
Yeah. I mean, Shreepal, whatever questions I have answered, I have answered the overall growth. I have answered the gold growth. Now, the only thing remaining was the mortgage growth. It is a subtraction, right? Arithmetic.
But sir, that MTLAP as a segment, it was a challenging segment for the industry at large as well. Then while the industry has started to showcase some signs of recovery, at least on the bounce rate as well as forward flow rate, are we also experiencing the same? Because on the disbursal side, when I look at the numbers, it still is broadly sticky on a quarterly run rate level of INR 300 crore now.
Yeah. No, I understand your question. See, what I am saying is at a mortgage level, we look at that growth. Within the mortgage team, we have the Medium Ticket LAP and the Small Ticket LAP. So that we will leave it for the year to play out. So at an overall mortgage level, we will still do that growth.
Okay. So we would try to maybe cover up if there is continued slowdown, we would try to cover up with MT LAP doing relatively better than ST LAP.
Yeah, that is how we will. As a strategy, the advantage of having multi-products is that, right? When you have an injured product which has come out of an injury. I agree with you, it will take some time to get into the 20% growth story. Although we will try it, but we will also be cautious of the quality that we want.
But at an overall level, first we will get the mortgages to be at that growth. If the gold supports, then we deliver the AUM growth of 20%-25%. Within the mortgage, we see how ST LAP plays out in Q1, Q2, and then pick up MT LAP accordingly.
Got it. Why I was asking this question is because that ST LAP as a product also helps us on margin side, given the relatively better yield versus MT LAP. But yeah, got the answer for the same. And sir, for next year, with respect to, while I heard that you had prejudged about it, but on the, let's say, credit cost and ROE front, what is the, let's say, FY 2027 and FY 2028 target that we have from a range bound perspective you could highlight?
See, FY 2026 was a rebuild year for us. We had told you it will be a rebuild year, and we will work on the credit cost, and that was our single biggest promise that on FY 2025 you will see the credit cost being shaved off. And that's what we wanted it played out. In FY 2027, the credit cost should remain range bound. We should work on the OpEx, and between the OpEx and credit cost, we should get the upside to see an ROE better, approximately about 20 basis points- 30 basis points betterment of ROE from the average ROE that we have delivered this year.
So the trajectory will be in that direction. So if you're seeing a 20 basis points, 30 basis points improvement on ROE, then at a PBT level, if I say 40 basis points, that should come from credit cost or OpEx. Since it's a year after the rebuild year, we will toggle between these two and figure out where it has to come from with the rest of the ROA tree remaining the same.
Got it, sir. Thank you so much for answering my questions, and good luck for the next quarter.
Thank you.
Thank you. Our next question comes from the line of Devansh Dhruv from Equentis Wealth Advisory. Please go ahead.
Hi, sir. Thanks for the opportunity. Am I audible?
Yeah, Devansh.
Yes, you are.
Congratulations on the good set of numbers. My first question was, where do we see our yields settling in FY 2027? I am talking about the origination yields. Where do we see them settling? Will they be at these levels or will they improve?
See, as far as yields are concerned, I think, the LAP yields have held. There could be 10 basis points here and there, but they have held the Medium Ticket LAP as well as the Small Ticket LAP business, and they will continue to hold in the next year also. The gold business is where you have seen some yield play out in Q3 and Q4. By Q1, you should see some bit coming back and if the competition is not active and there is a steady state, then the gold yield also should come back to the Q2 levels that we have seen in FY 2026.
Okay. That is helpful. My second question is, I think we have not mentioned our active customer base in our new presentation this quarter. What would that be? If not that, I think we were giving a run rate of customer acquisition every month. What is that exactly right now?
On gold, last year when we closed, we were at an average customer base of INR 2.56 lakh. This year we are crossing INR 3 lakh active customer base, recording a growth of 17% on YoY basis.
Okay. INR 3 lakh active customer base. I think Q3 we were at INR 2.7 lakh, right?
INR 2.67 lakh. Yeah. Around INR 2.7 lakh.
Q4—
So that means 12% active customers will increase in Q4.
In Q4.
Yeah.
Okay. That is quite a healthy run. What could we attribute that to?
Yeah.
Sorry.
New customer acquisition of around 60,000 in Q4.
60,000?
Yeah.
We have actually doubled. We were adding around 30,000 customers per month, if I am not wrong, and now we have added 60,000 this month. This quarter, right?
60,000?
Yep.
In quarter, yeah. That is right.
But—
That has been happening in Q4.
Okay.
If you see, this is a result of around 148 new branches, where new branches contributes to whatever disbursal that we do, that's new customers. Right?
Okay. We would attribute that to the new branches that we've added. Any other strategy change that you have done?
Percent of that will get attributed to the new branches. Rest of it is coming from the existing branches.
Okay. Fair. My other question was, are we seeing any asset quality stress in the month of April? How was April for us on the side of asset quality and on the side of growth?
See, as far as quarter one is concerned across the industry, the collection efficiencies are very different in quarter one. These kind of collection efficiencies play out across the industry. But if you are asking me as far as the industry is concerned, and if you are talking about the environment, whether it is affecting, the businesses that we are in, we get a lag effect. The banks will see that kind of effect first. Then it will come to the larger players, and then we in the affordable segment will see it, because our customer is in the supply chain slightly two, three links away. We will see it later. So right now we are not seeing anything from the customer side.
Okay. Fair. The average ticket size that we have right now, where do we see that going? I think we are at INR 2.7 lakh. Do we keep on continuing to increase that for our tonnage growth? Or where do we see that going?
No, we see it to flatten. It is actually depending on the gold prices. If you see, the average ticket has grown from INR 1.5 lakh to INR 2.5, INR 2.6 lakh. This is basically a price growth scenario. We have seen similar kind of growth in the gold prices. If you compare the April 25 price of gold per gram and March 26 price, similar kind of growth we have observed. That has reflected in the average ticket size.
Okay.
If price stabilizes, average ticket sizes will also stabilize.
Okay. So if price stabilizes, ATS stabilizes.
Correct.
Okay, fair. I think, yeah, that was quite helpful. Thank you so much.
Thank you. Our next question comes from the line of Aravind Ravichandran from Sundaram Alternates. Please go ahead.
Hi. I hope I am audible. Thank you so much for the opportunity. I have two questions. One is, I see your delinquencies improving according to the presentation. Can I safely assume that it is primarily because of the mortgages and Medium Ticket LAP segment? Sorry, Small Ticket and Medium Ticket LAP segment. That is my first question. My second question, we have built a capacity in the mortgages segment over the last five, six years, and especially your disbursements have obviously come down because of whatever reasons. Can we expect growth to come back without meaningfully increasing cost? Sorry, that is my second question, sir. For H2 years at least.
The delinquency question, it is at an entity level that you are seeing, but we also have our delinquencies on the mortgages level coming down. But that delinquency at a 1+ level, yes, we have mortgages which has come down. But the entity level that you are seeing, it has all the three businesses which is showing. As far as growth is concerned, yes. Our growth had got stunted in the Small Ticket LAP business because of the issue which we faced one and a half years ago. It was our issue, and which we have resolved and are moving forward. Unless there is an environment challenge, we should continue on the same trajectory that the market is operating at. The disbursal should take the trajectory how the market takes.
Sure. My question was also on, can we see revenue growth here without meaningful improvement in OpEx growth in this particular segment? What kind of ROA expansion it could lead to, let us say, next two to three years? That is what I was trying to understand.
The ROA expansion which I guided was about 20 basis points, 30 basis points on the FY 2026 ROA. The FY 2027 ROA, you will see a 20 basis points, 30 basis points expansion. That expansion, as I said, could come with the reduction in both the OpEx as well as the credit cost. It could be a play between these two, and that is how we will continue in FY 2028 also.
Aravind, I will just add on to what Parvez said on that. The Medium LAP for us is a variable cost business. It is accretive as soon as we get the business. Also, we recovered more fees than the origination cost. All of that, we see the more Medium Ticket LAP we do, the more profitable it is. On the Small LAP, if you see the volume this year, our belief is it can only get better because the infrastructure is there, the people are there, they are gaining vintage, the leadership is there. It is a matter of the execution kicking in. It is not a matter of whether, it is a matter of when. Obviously the reason we have invested so much is with the optimism that it will supplement our return ratios. I think the answer to both is of course, yes.
Sure. Thank you. Thank you so much.
Thank you. Our next question comes from the line of Rahul Kumar from Vaikary a. Please go ahead.
Hi. Can you help us, the numbers of write-offs for the business and in the mortgage business?
You are talking about the quarter?
Yeah. This quarter and the previous quarter as well. Yeah.
Previous quarter, I don't think we had anything. This quarter—
Okay.
—we would have had about maybe INR 14 crore, INR 15 crore roughly.
Okay.
But the credit cost line reflects the impact of all of these items. Right?
Yeah. The second question would be, would it be fair to say that now we are at the past point of maximum slippage in the mortgage business and then surplus service, I think, the credit quality in this segment should improve from now onwards.
Yes. See, the incremental slippages should show a declining trend if the environment remains steady. Because we went through our own challenging situation and our slippages were because of our own reasons. Once we put down those own reasons behind us, the rest of the things should fall in just the way it is operating for the market. So we should align ourselves with the market in terms of the slippages. So we should see a recent story going forward.
Okay. So Ganesh, can you help us with the figures of mortgage slippage in this quarter and the previous quarter?
We do not put it out by segment, but if you see the—
Right.
—obviously the delinquency metrics improving means that there has been a material improvement.
Okay. Got it.
Thank you. Our next question comes from the line of Aditya from Securities Investment Management. Please go ahead.
Hi, sir. Thanks for the opportunity. Firstly, on the Small Ticket LAP, the book we have of INR 3,800 crore, are we making money currently on this considering the credit cost which we have incurred this year and the investment in collection in a sense building the teams. So this INR 3,800 crore book, are we making money on this currently?
See, as we said, we are reviving, we are very bullish on this particular business. It will be unfair of us to answer that question right now when we have told you that we have gone through a tough period on that and we have rebuilt that book. Maybe a year later, we should be in a better position to answer that question.
Understood, sir. But sir, going forward now, this growth in Small Ticket LAP, is it more dependent on how the external environment is for you or it is more on further internal restructuring which we have to undertake? So the growth is going to be dependent on which of those two factors?
External environment will always play out for every company. As far as we are concerned, we are behind with our internal issues. We have already structured the STLAP business. Our leadership team in each of the state is present. They have vintage in those states and they have started delivering decent productivity and that productivity needs to move up. We know the tracking that we are doing state-wise for the disbursals to pick up on the STLAP side. And we are monitoring our collections team.
As you know, we had invested into the collection side for the STLAP business, verticalized it, looked at the collection efficiency. All those things are behind us now. We should align with whatever happens in the market because, see, we are operating in a volatile environment as far as the world as well as India is concerned and those kind of things I can't give a guidance on. But the rest of our internal issues, I'm telling you that it's behind us.
Understood, sir. Asking, sir, on fund raise who are debt equity now 2.6x, any particular level, beyond which we wouldn't be comfortable and then would we be looking for a fund raise?
See, what you are talking about is an area of competitive advantage for us. We have room there for expansion. I think you should sit back and enjoy the leverage increasing and the ROE increasing. Okay? Now, we have comfortable governance. I think I'll just leave it there. Yeah.
Sure, sir. Thanks for answering my question.
Thank you. Ladies and gentlemen, that was the last question for today. I would like to hand the conference over to the management for the closing remarks. Thank you and over to you, team.
Thank you so much for joining in. Really appreciate. Thank you so much for supporting us.
Thank you so much, sir. Ladies and gentlemen, on behalf of Equirus Securities Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you.