Ladies and gentlemen, good day and welcome to the Home First Finance Company India Limited Q4 and FY 2025 earnings conference call. As a reminder, all participants' lines will be in 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 a prayer 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. Deepak Khetan, Head Investor Relations of Home First Finance Company India Limited. Thank you, and over to you, sir.
Thank you, Tejal. Good afternoon, everyone. Welcome to Home First Finance Company's earnings conference call to discuss the financial results for the quarter and financial year ended March 31, 2025. We hope you have had the chance to review our investor presentation and press release, both of which are available on our website and the stock exchanges. Additionally, we have uploaded an Excel fact sheet containing historical data on our website for your easy reference. From the management today, we have Mr. Manoj Viswanathan, Managing Director and Chief Executive Officer, Ms. Nutan Gaba Patwari, Chief Financial Officer. With that, I now invite Mr. Manoj Viswanathan to share his insights on our overall performance. Over to you, sir.
Thank you, Deepak. Good afternoon, everyone, and thank you for joining us today. Before diving into our business performance, I would like to touch upon a significant strategic milestone that we recently achieved. During our previous call, we mentioned about the enabling resolution by the board to raise fresh equity. In April 2025, we successfully raised INR 1,250 crore through a qualified institutional placement, issuing INR 1.3 crore equity shares to market institutional investors, details of which are available on our website and exchanges. The overwhelming response to our QIP reflects the market's strong confidence in our vision, business model, and execution capability. This capital infusion will enable us to accelerate network expansion, enhance operational capabilities, and seize emerging opportunities in the affordable housing space.
Coming back to the business, we are absolutely delighted to share that FY 2025 has been another year of strong and consistent performance for Home First, marked by robust growth, operational excellence, and strategic execution. Let me walk you through some highlights. Our assets under management grew to INR 12,713 crore, registering a 31.1% year-on-year and 6.4% quarter-on-quarter increase while delivering a PAT of INR 382 crore, with an ROE of 16.5% for the full year 2025. We touched an ROE of 17% in quarter four FY 2025. Our disbursements for FY 2025 stood at INR 4,805 crore, up 21.2% year-on-year, in line with our guidance for the year. For the quarter, disbursements grew notably, increasing by 6.7% quarter-on-quarter. Business growth is driven by expansion and distribution strength in large affordable housing markets. During the fiscal 2025, we further expanded our network, adding 40 touchpoints, including 22 branches.
This added our reach to 10 more districts within our 13 states and union territories. As of March 2025, our total touchpoints ran at 361, with 155 branches. As we expand our operations, we also added a net of 385 employees during the fiscal 2025, taking the total employee strength to 1,634. Importantly, despite the continued rise in the MCLR of banks, we were able to leverage our strong balance sheet and well-diversified borrowing mix to maintain a competitive cost of borrowing ex-colending of 8.4% for the fiscal 2025. Our borrowing stood at INR 9,551 crores as of March 2025, and we are carrying a solid liquidity buffer of INR 2,468 crores. Our asset quality remains resilient with sequential improvement in early delinquencies. One-plus GPD improved to 4.5%, and this is a decline of 30 basis points on a quarter-on-quarter basis.
30-plus GPD improved to 3.3%, and it's a decline of 10 basis points on a quarter-on-quarter basis. Growth-stage 3 assets remained stable at 1.7%. Our credit costs continue to be contained at around 30 basis points. We maintain our conservative annual credit cost guidance of 30-40 basis points. Now, turning to technology, which continues to give us a competitive edge. Today, 75% of our sanctions are being facilitated via the account aggregator framework. 80% of our loans are digitally fulfilled through the agreements and e-nudge mandates. 96% of our customers are registered on our mobile app, with 88% of service requests now raised digitally. On the regulatory front, the environment continues to be supportive. With two back-to-back rate cuts of 25 basis points each by the RBI and clear policy focused on promoting liquidity, growth, and governance, the conditions are right for strong momentum in housing demand.
Finally, I'm thrilled to share that our ESG journey is accelerating. We expanded our Green Home initiative during the year with 120 homes certified as of March 2025. Our ESG efforts are being acknowledged and appreciated by independent global agencies in the form of high ESG scores, 46 by S&P Global for 2024 and 16.2 by Morningstar's Western Analytics, indicating low risk. All in all, it has been another exciting year. India's housing story is only getting started, and Home First is uniquely positioned to lead this transformation. With that, I now hand it over to Ms. Nutan Gaba Patwari to take you through the financials in a little more detail. Over to you, Nutan.
Thank you, Manoj. Good afternoon, everyone. Let us start with the key financial metrics. Total income for the year stood at INR 1,539 crore, up 33.1% year-on-year, and our profit after tax increased by 25% to INR 382 crore. This translates into a very healthy return on assets of 3.5% and ROE of 16.5%. For the quarter, we crossed the INR 100 crore mark in profit as we posted a net profit of INR 105 crore with ROE of 17%, demonstrating that even as we grow, we continue to deliver strong profitability. Spreads for Q4 FY 2025, spread excluding co-lending, is at 5.1%, while cost of borrowing excluding co-lending maintained at 8.4%. Net interest margin for Q4 was at 5.1%. It expanded by 20 basis points on a quarter-on-quarter basis, driven largely by better liquidity management. Operating expenses to assets were at 2.7% for the quarter, in line with our expectations.
Moving to provisions and asset quality, credit cost for Q4 and for the year stood at 30 basis points. We continue to maintain our conservative medium-term credit cost guidance of 30-40 basis points. We continue to adopt a conservative approach to provisioning, maintaining a provision overlay above ECL requirements. As of March 2025, our total provision coverage ratio is 46.6%, as against 50.9% as of March 2024. Moving to balance sheet and capital position, our balance sheet remains robust, providing a solid foundation to support the company's growth plans. Our borrowing profile continues to be well-diversified and cost-effective, reflecting our prudent financial management. 60% of borrowing comes from public and private sector banks, 16% from NHB, 17% from assignment and co-lending, and balance from NCBs, ECBs, and NBFCs. As part of our liquidity management strategy, we executed a direct assignment transaction, worth INR 230 crore during the quarter.
We continue to focus on co-lending business and are looking to scale with newer partners. We aim to take co-lending contribution to 10% of disbursements as we scale. Our cost of borrowing is competitive at 8.4%, enabling us to maintain our spreads. Our current rating is AA minus from leading rating agencies. Coming to capital adequacy and liquidity, as of March 2025, prior to April QIP, our capital adequacy stands at 32.8%, with tier one at 32.4%. As of the end of fiscal year 2025, our net worth stands at INR 2,521 crore, with book value of INR 280, reflecting a strong capital position. The capital position looks very robust post QIP. I would like to highlight some proforma key numbers. Given our enlarged equity base, post the capital infusion, our proforma leverage has come down to 3.3 times.
Proforma capital adequacy post capital raise will be 51% and a net worth of INR 3,751 crore. To summarize, our financial position is extremely strong. Our balance sheet is well-capitalized, and we are sharply focused on scaling profitability while maintaining high asset quality. With that, we conclude our opening remarks, and now happy to take your questions.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use hands up while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Renish from ICICI Securities. Please go ahead.
Yeah, hi. Congress, honorable pleasure of members Manoj Viswanathan, and also congrats for a successful QIP. Just two things. One on the spread side, right? When we look at the incremental spread at 4.7%, and when we look at the last four quarters, trending spread is declining. How confident are we that we'll be able to sustain this 5%-5.25% over medium-term range when it comes to spreads?
If you look at the book spreads, we are above the 5% mark, and we have always maintained that we run a fully floating rate book. So depending upon how the cost of borrowing is moving, we will transmit the difference to the customer. Of course, now we are kind of entering a declining interest rate position, so situation. That is why we have not really embarked on any increase in rate. The trend should reverse, and the margin should get maintained on the book. That is how we are looking at it.
Basically, we don't foresee any pressure on spreads from this level. I mean, is that the assumption? I mean, this is the lower end of the guidance at 5%?
Correct. 5%+ we should be able to maintain because it is, like I said, a floating rate book. If we are going below 5%, we will transmit the difference to the customer.
Renish, just to be clear, the guidance on spreads excluding co-lending book.
Yeah, yeah, but that is only 10 basis points of difference, right?
See, our expectation is that we will be able to hold on to the cost of borrowing moving ahead. We are comfortable with that 5%+ guidance on the spread excluding co-lending.
Got it, got it. Just a hypothetical situation, let's say if there is no rate cut cycle, I mean, how do you see the asset yield moving just from a competitive perspective?
Asset yield, we largely hold in the 13.5% kind of a range. So 13%-13.5%, we normally maintain asset yield. You're talking about the incremental origination yield?
Yeah, yeah.
We should be able to maintain it at that level.
Okay, okay. And the LAP mix, how should it pan out over the next couple of years?
LAP mix broadly in the 15%-20% range. 15% is the current share of AUM, while share of disbursal is slightly higher, 16%-17%. That catch-up is something that we have already communicated that over the next five years, it can move up from 15% to 20%.
Okay, okay. Lastly, on this PCR, on the stage B, last year we were close to 30%, now we are close to 25%. How should one read this data point on the PCR?
Renish, it's essentially an outcome from the ECL model. The only way to read is that the credit cost is improving, and the resultant requirement of provisioning on the book is now kind of coming at around 25%.
How often do we refresh our ECL on annual basis?
Every year, yes. Every March, we do the full activity of refresh. We have just done this exercise in the last two, three months.
Okay, okay. Just to clarify, on stage one, we'll be using 12-month rolling database, right?
No, on stage one, we use 12-month probability of default, but the database is used from business to date.
Okay, got it. Okay, that's it from my side.
Additional comfort, Renish, we've just had new auditors this time for, as we know, that auditors have to rotate every three years. This is BSR's first audit, and they have done a full detailed verification of the ECL model. As you can see, there is no meaningful change to what we were doing in the past.
Thank you. The next question is from the line of Abhijit Tibrewal from Motilal Oswal Financial Services Limited. Please go ahead.
Yeah, good evening, everyone. Congratulations on a good quarter. I'm just nitpicking. I just wanted to understand, bounce rates have inched up a little bit sequentially though it came down again in April. Also, when we look at the asset quality, GS3 for the last seven quarters being in that 1.7% range, I mean, I would admit we are seeing shades of this in other product segments as well, given how the economy was, right? I’m just trying to understand, I mean, today, are there any customer segments, some cohorts, or maybe geography-wise where you're seeing some stress and which is actually leading to this, or is it just a pure weak macro which is leading us where we are today in terms of collections or asset quality?
No, as we have mentioned in the past, you can't read too much into the bounce rate because that is just the data immediately after the first presentation. A large percentage of customers actually make the payments immediately after the bounce. If you see our early delinquencies, it has actually compressed this quarter. I mean, even in spite of the bounce rate being a little high last quarter, you can see that the early delinquencies have come down. The one-plus delinquencies have come down to 4.5%. There is a 30 basis point reduction. Even 30+, 30+ 30 has come down by 10 basis points. I would say we are not seeing anything other than what we are seeing on the asset quality. There is nothing which we are getting from the ground-level data that we are getting.
Got it. Basically, bounce is more like some behavior change that has happened in customers, and which is where maybe they bounce when the national mandate is presented, but play up later when we follow.
That's right. Correct, correct.
Got it. Thank you. The second question that I had was, Nutan, more on the cost of borrowing trajectory in this upcoming financial year. Let's say with a 75-200 basis points cumulative rate cut, I mean, what is the benefit that we are going to see in our cost of borrowings? The related question here again is, now that we've already seen 50 basis points, have there been any changes in our PLR? I mean, lastly, how are we thinking about margins now in this year?
Abhijit, I'll try to go in the sequential order. Assuming a 100 basis points cumulative rate cut, what we have observed generally is that there is a 60% transmission if we take a very long-term 10-year data. The transmission takes about 12 months to happen. By now, 50 basis points have happened and another 50 basis points in this conversation. About 60 basis points, but it will take cumulatively 12 months to come through on the bank borrowing part of it. Logically speaking, it should also happen on the repo book and other EBLR book as well. That is the answer to your first question. PLR, no, no changes have been made. What benefit has come through thus far is that if you remember, our projection was 840 for quarter four. We've been able to hold it at 840.
We have been able to actually hold the cost of borrowing flat for now three quarters despite the MCLR sweep-up because there are some shorter-tenor linked lines which are getting repriced downwards. Moving to margins, I think before margins, spreads are important. Spread is going to be in that 5-520 range that we have guided just now. Margins is an outcome of equity because we have just had an equity raise. The margins will expand for, let's say, next few quarters. Again, as leverage starts to pick up six to eight quarters out, we will see a compression on margins. The right number would be to look at the spread of five plus.
Got it. The last question I had here is, I mean, now that the equity raise is complete, have we or are we at least thinking about engaging with the credit rating agencies once again? That is for you, Nutan. Lastly, again, for Manoj, I mean, from what we picked up from other housing finance companies during this quarter is maybe in the month of March, the PSU banks were a little aggressive in mortgages, but we have not really seen that kind of a competitive intensity from the private banks just yet. If you could just briefly give some color on how the competitive intensity is. Thank you.
Credit rating agencies, yes, we have started doing some work because the results have just got signed yesterday. We are hopeful that in the next few months, we should be—let's put a six-month timeline to this—that we should be able to see initial signs of a credit rating upgrade. From my conversation with the banks here, right, private sector banks are not so focused today on mortgage. In fact, there is a significant sell-down of book from their Southern Secure side. From a more on-ground market feedback, I will just hand over to Manoj to walk you through.
Yeah, on-ground feedback, I think news in the market is that, yes, the private banks are slightly less excited about mortgage, but there is more activity amongst the nationalized banks. Of course, the larger HFCs are also quite active.
Got it. This is all from my side. Thank you for taking my questions. I wish Manoj and Nutan, you and your team the very best. Thank you so much.
Thank you. The next question is from the line of Raghav Garg from Ambit Capital. Please go ahead.
Hey, hi. Thanks for the opportunity and congrats on the quarter and calculated. I have three questions. One is, on the employee part, you hired a lot of people in FY 2025. The employee base is up some 31%. This is the highest growth in any of the last four, five years. What are your hiring plans for FY 2026? Will you continue at this rate or will the hiring tone down materially, say compared to a 31% growth rate in FY 2025? Let me also ask my second question, which is sort of connected to the first one. Historically, you've not seen such a dip in Q4 employee base. This time, it was around 4% lower quarter on quarter. I understand that employee attrition has been a challenge for the sector in general.
In this backdrop, how was attrition in FY 2025 and what do you expect for FY 2026 on the attrition part? Thanks. I have a third question, which I can ask later.
No problem, Raghav. On the employee part, yes, in absolute terms, the increase has been close to 400 employees. This is representative of our branch growth and our overall scale. The right way to calculate and forecast this will be about 10-11 employees per branch at an organization level. Actuals will actually be split between head office and branch, but from our modeling perspective, 10-11 employees per branch is what you should look at. Attrition for last year is 30%. It will be disclosed in our annual report, which we will publish shortly. Year on year, attrition has come down by almost 2%-3%. Those were your two questions.
Yeah, I think he's looking at basically quarter four over quarter three and why the number of employees has gone down. That is largely because the hiring gets bunched up. Quarter one, there would be a large influx of employees. Quarter four, normally there is no influx of, I mean, additional employees because we do campus hiring. The campus season kind of, the hiring season ends in March and then people start joining from April. The number of people joining in the last quarter is a little less. Basically, the attrition catches up and there is a reduction in employee base in the last quarter.
You expect that attrition would continue to come down even in FY 2026, right? That's the expectation right now?
Attrition coming down because between 2024 and 2025, attrition movement is just two to three basis points. Broadly, we think attrition in the segment remains at this level only. 25%-30% attrition is something that is kind of par for the course in our business.
Understood. Understood. Fair enough. The third question is, I was just doing some numbers and whatever hiring.
Sorry to interrupt, sir. Audio is not clear. I would request you to please use your handset.
Is this better now?
Yes, sir. Please continue.
Okay. I was saying that if you look at some of the data points that you provide, then it appears that the file productivity has come down in FY 2025 obviously because of such hiring, which indicates that it's more of a denominator effect. Do you expect that this employee productivity will go up substantially? If yes, can you give a number, say 5%, 10%, or 15% increase over FY 2025? Do you think that the productivity gains will be very limited given that you're already invested in the industry?
Yeah, so gains would not—so I would not project too much increase or decrease in the productivity. Those would be largely, like I said, quarterly movements depending upon addition of new employees, etc. When there's a large influx of new employees, the productivity drops a little bit. Broadly, it will be range bound. We can't expect a substantial improvement in productivity.
Understood. So still, whatever run rate that was there for FY 2025 is maybe a marginal improvement over that, not more than 3%. Is that something that we can assume?
Yeah, broadly, in the same range, you can say last two years, you can average productivity is what we will be able to maintain.
Okay. That's all from my side. Thank you.
Thank you. The next question is from the line of Rajiv Mehta from YES Securities. Please go ahead.
Hey, hi. Congrats on strong results at the CIT. My first question is on two markets, I mean, Tamil Nadu and MP. As I see in the last three, four quarters, the growth in Tamil Nadu on a sequential basis has been coming up, and we have not been adding much branches also in that particular market. Contrary, I think we are growing very fast in MP in the last two years, and we are adding a lot of distribution out there. Just to understand these two trends in.
Hello.
Rajiv?
Hello.
Mr. Rajiv, he can't hear you. I would request you to please use your handset.
I think his call is disconnected.
Yes, sir. We'll move on to the next question. The next question is from the line of Mona Kh``etan from Dolat Capital. Please go ahead.
Hi, good evening, and thanks for picking up my question.
Ma'am, I would request you to please use your handset.
Am I audible?
Yes, ma'am. Please continue.
Yeah. Firstly, was there any element of recovery from return of this quarter? Because I see that net trade costs are higher and yet trade cost is low, just.
Yeah, very minimal, not significant, Mona.
Okay. Just on the co-lending business, wanted to understand if it is ROE accretive. Given that the yields are a tad lower than the overall portfolio yields, where is the attrition coming in the P&L? If you could throw some light there, or is it more like a volume business?
The co-lending structure is ROE accretive because we are able to move away the assets from the balance sheet. That is the main reason why it becomes ROE accretive because, like I just mentioned, in the P&L, it appears in the interest income line and the interest expense line, unlike assignment, if that is your question. Right. Okay. Okay.
ROE-wise, it may be a little diluted, but it's ROE accretive because you use less capital.
Absolutely, yes.
Got it. Just finally, on the OpEx to assets, we did see some improvements last fiscal, and OpEx to assets seem to be at the lower end of your guidance at this point, also the full year FY 2025. Any color on the trajectory as we go ahead?
Broadly, in the same line, the OpEx has a significant contribution of employee cost, and we are assuming the productivity in similar levels. We just touched upon that. Operating costs to assets, we will also want to keep in this 2.7-2.8% range. We are more focused on growth for the next few years now.
Sure. Got it.
Thank you. The next question is from the line of Nadesh from Investment. Please go ahead.
Thanks for the opportunity. First question is on growth for next year. What is the target of disbursement growth that you are targeting in FY 2026? How do you plan that in terms of new branch addition as well as growth from the existing branches?
Yeah. Disbursement growth, we are targeting around 20%+ . Somewhere in the 20%-25% range is what we are looking at for disbursement growth. The trend will be similar. About 20%-25% will come from new locations, branches, expansion, distribution, and 75% will continue to come from existing branches.
Okay. Sure. Second is on co-lending. There have been draft guidelines from the regulator. Do you see any adverse impact of these guidelines on us?
Adverse impact? I think one thing that we are watching out for is basically the—they have not mentioned the modus operandi of how these assets will get transferred. I mean, till now, we were following the co-lending model too, but the draft guidelines do not have mention of that, co-lending model too. I think that is our only kind of thing that we are watching out for. Because if the co-lending model too is not allowed, then how the assets will get transferred to the bank is something that we'll have to see. I mean, if it is asked for model one, then it is a little tedious from a logistics perspective. Operationally, it is a little tedious. We will have to watch out for that.
Sure. Lastly, a data-keeping question is active connectors as of March 2025 and number of RMs as of March 2025, and what percentage of disbursement has come from top 10 connectors?
Yeah. Total connectors active as of now is about 3,800, close to 3,800 connectors, active connectors. Number of relationship managers, that is, sales team would be about close to 1,200 salespeople.
Top 10 is below 4%, Nadesh.
Okay. Thank you. Thank you, Manoj and Nutan. Thank you.
Thank you.
Thank you. The next follow-up question is from the line of Rajiv Mehta from YES Securities. Please go ahead.
Yeah. I'm sorry about last time. I hope I'm audible.
Yeah, yeah.
Hi. Congrats on strong results in QIP. My question is on Tamil Nadu. If I were to calculate growth on a sequential basis, there has been some moderation in the growth of the Tamil Nadu market. We also have not been adding many branches in the last few quarters out there. How should we read this? I mean, are we seeing any competitive pressure, pricing pressure out there, or is it a liquidity issue? The reverse question is for Madhya Pradesh, where we have been growing very fast and by adding a lot of branches. I mean, is that market—I mean, besides the opportunity, is that market behaving well in terms of early delinquency trends, and hence, that is giving us confidence to grow out there? Yeah.
As far as Tamil Nadu is concerned, we already have about 20+ branches, about 24 branches there. We are just kind of taking a step back to see where we can expand, etc., and some leadership changes and those kind of, I mean, kind of a recalibration over there. In MP, you're right. I mean, our initial calculations have gone right, and we are able to expand and do well over there. We are kind of investing more there. These kind of, you can say, opportunistic movements will be there. There will be some states where we are kind of taking a step back, whereas in other places where we are expanding, etc. This will continue. I mean, it's not that we have kind of capped out in Tamil Nadu. We are looking at making some changes, and we'll come back stronger.
Okay. Okay. Nutan, about this borrowing mix, when I look at from a lender's profile, it gives basically reduced our dependence on private banks and increased our dependence on PHB banks pretty significantly over the last seven, eight quarters. How does it help us in a rate-increasing cycle? I mean, does it help us in terms of benchmarking of loans or negotiations or each kind of thing like that?
It could not have so much specifically like that, Rajiv. It is largely driven by relationship depth, size. For example, one of the reasons I can call out for the public sector bank expansion in March quarter is a large line from SBI. It just happens to be bunched up in a particular quarter. That would expand substantially. If you—I mean, broadly, it is 30, 30 , ± 5% between either of the two pools.
If I were to ask you that, the borrowing from PSU banks, say, the stock and even incremental are becoming at a finer rate than private banks?
Yes. At part, I would say. That would be one of the key considerations for us to move ahead.
Got it. Got it. Just one clarification about just the way you report collection efficiency, and then you also give collection efficiency for unique customers. The difference will be your OD collections and MP recovery, right?
No, no. It is basically the number of collections over the same customer, for example, makes two payments in the same month. Okay. That will get counted in the first bar, the higher one. In the other one, it will be counted as one.
Okay. So it can also be an advance and not just OD or?
No, no. We don't take advance. It will be basically customers, for example, who are overdue by, let's say, two or three payments.
Yeah, exactly. Exactly. Okay. OD collections and MP recovery. Yeah. There can also be overdue and NP recovery as well?
Yeah. Overdue and NPA, yes. Overdue and NPA recovery.
Correct. Correct. Okay. Okay. Yeah. Got it. Thank you, Ananda. Yeah.
Thank you. The next question is from the line of Anusha Raheja from Dalal & Broacha. Please go ahead.
Yeah. Thanks for taking my question. My question is basically working on the margin side only. Out of the total borrowing, 60% comes from bank or rents. If you can just tell us how much is repo rate linked or the MCLR rate linked. Secondly, our NSB drawdown, if I'm not mistaken, is close to around 16%. How do we see this number in FY 2026? More drawdowns if it is expected. Thirdly, again, on the margin side, the origination yield in Q4 is 13.3% versus 13.5% of your blended yield. That is lower around by 20 basis points what the blended average yield is. On the borrowing side also, I think incremental marginal cost of borrowing is at 8.6% versus 8.4% blended cost of borrowing.
If you need to throw some light on all these things and how this could impact the margins, I understand that you said that you will be maintaining 5%+ , but if you can also throw some light on all these things.
Yeah. Sure. Starting with the first question on the repo and short-term link borrowing, that is about 18%-19% that is already there. I also mentioned to one of the previous questions that we have already started getting some benefit through that, and that is one of the primary reasons why we have been able to hold the cost of borrowing flat. Your second question was on NSB mix. NSB mix is about 16%. NSB mix is in that range of 15%-20%, which we feel is appropriate for the size of our company.
We will continue to try to maintain in that particular range. On the last question that you had around yields, yields will be right now, it's about 13.3%. Like we mentioned just a few minutes ago, the origination yield is range-bound between 13%-13.5%, and we have a fully floating book. If we have an origination yield in that range, and when we start seeing the cost of borrowing moving downwards, we have the flexibility to pass it on to the borrower. That gives us the confidence why we will be able to maintain this 5%% spread on an ex co-lending basis.
Okay. Ma'am, you also mentioned the disbursement run rate of around 20%-25%. Is that sufficient to maintain the AUM growth of 30%? What is the broad assumption in the runout of the book that you would have assumed at this?
The runout we have assumed is around 17%-18%. With the 20%-25% disbursement growth, we should be able to get to about 26%-27% to about 30% in that range of AUM growth.
In that 17%-18%, how much is the BTR rate?
BTR rate is about 7-ish, 7.5%
I'm sorry. I did not understand. 17%-18% is the total run-down or 20%-25%?
17%, 18% is the total runout.
The run. Okay. Okay. Thank you, sir. Thanks.
Thank you. The next question is from the line of Sanjay Rane from Avendus Capital. Please go ahead.
Hello. Yeah. Thank you for t`aking my call. My first question is on the AUM. As for the future guidance by the management, the AUM was INR 20,000 crore for FY 2027. How comfortable are we to achieve that in the next two quarters?
Two quarters for you.
Sorry. Into financial years. Are there any hindrances or risks that we may be facing to achieve those numbers?
No, we are fairly confident of achieving the INR 20,000 crore mark in the next two years. We do not see anything at this point. We do not see anything which could be a hindrance to achieving the INR 20,000 crore.
Okay. Could you give me any guidance on the 35,000 AUM as guided bar for FY 2030?
Yeah. There again, we do not see anything that is seen as a major hindrance to reaching that number. Overall, we seem to be on track to achieving those numbers.
All right. Thank you very much.
Thank you. The next question is from the line of Shreya Shivani from CLSA. Please go ahead.
Hi. Thank you for the opportunity and congratulations on everything. I just have only one of my questions is unanswered. It's again on the cost of funds. You have reduced the liquidity buffer this quarter. You mentioned 18-20% is your repo linkages, right? Shouldn't the cost of fund reduction, shouldn't that have been a little more? If you can quantify the breakup of how much benefit came in from repo, how much came in from lower liquidity, or something like that, that would be a little useful.
No problem. Lower liquidity benefit will not come in the cost of borrowing line. It will come in the NIM line. When we focus on the cost of borrowing line, essentially what we are talking about is just the repo link. When we talk about repo EBLR and short-term, it also includes, for example, a three-month T-bill. A three-month T-bill has not got repriced substantially. There is a repricing date. Everything has to be in order for it to become effective. What has become effective is broadly just the repo rate. You start slicing the 18% down to somewhere, let's say, 10%. That is why you see a significantly or rather flatter curve. Let's take a hypothetical situation. If this policy rate had not happened, we would have been at 850.
The delta really is about 10 basis points, right? We can look at the double decimal to come at that exact number. The second question which you had was around liquidity. Liquidity is now giving an effect on the net interest margin line. Net interest margin has improved from 490 to 510, largely contributed by liquidity. I would say you can consider about half of it that has come through the liquidity line. There are some other accounting entries that we have to take on mark-to-market transactions that form part of the bor rowing cost. Those two have contributed to the expansion of NIM.
Got it. Of the 20 basis points, 10 basis points is just from the liquidity benefit that has flown into the margins, right? That broadly. Has there been a pickup in the cost of borrowing for any other lines that we have? You mean most?
Yeah. Yes. Whenever there is a historical, like a six-month MCLR or a 12-month MCLR, because the bank MCLR has not come down yet, especially for public sector banks, as and when they are coming on the repricing date, they will increase. If you're asking me from a marginal cost of borrowing, no. We have been able to maintain in the broad range of INR 8.40-INR 8.60. We are hopeful that now we should start improving on that starting this quarter.
Got it. Got it. This is very useful. Thank you for explaining. All the best.
Thank you.
Thank you. The next question is from the line of Arvind from Sundaram Alternatives. Please go ahead.
Hello, team. Thank you so much for the opportunity and congratulations on the good set of numbers. Sir, the BTO rate has been going up for a few quarters now. Is there any competition increasing? What to rate there? That is my first question. The second question is on the co-lending norms which came out. What do you see as opportunities or the headwinds or drivewinds from that to our existing co-lending model in terms of either for margin impact or for the growth opportunities, whatever you would like to call out in terms of very important takeaways from there. Yeah.
On the BTO rate, it is largely range-bound. We normally see last two quarters is slightly higher, first two quarters is slightly lower. That kind of trend continued last year also. If you actually see quarter four versus quarter four, it is a little lesser compared to last year quarter four. FY 2024 quarter four was 8.3%. This time it is 7.5%. Slightly lower the BTO rate is. We expect it to be largely in that range-bound between 6%-8% only. As far as co-lending was your second question, right?
Yes, sir. Yes, sir.
Yeah. On co-lending, new guidelines have been released, and we have to kind of wait. I think they are still under discussion. We have to wait and watch. On certain areas, it is definitely beneficial because now there is no ticket size cap on the co-lending part. That is actually beneficial. Of course, as I mentioned earlier in the call, there is no mention of the co-lending model two in the draft guidelines. That is something that we need to watch out for because if co-lending model two is eliminated from co-lending, from the co-lending process, it will make the co-lending process a little tedious. That is a thing that we need to watch out for. Otherwise, the guidelines are beneficial in the sense that it expands the addressable market for us.
Sure. Sure. Thank you.
Thank you. The next question is from the line of Bhavan from Ratnakar Capital. Please go ahead.
Hi, team. Congrats on the results. I just wanted to understand the growth of this particular quarter has been pretty good. Actually, it has been much better than last two to three quarters. What has changed in this quarter? There seems to be a spike in disbursements, not only in Home First, but almost all the Home Finance lenders. I just wanted to understand, is there any structural change, or is this a seasonal kind of thing that happens in Q4?
Generally, Q4 is always a big quarter for all the companies. I think it's the same trend that we are seeing this year also. In our case, generally, Q4 is not such a big quarter. There is no major jump in Q4. It's slightly better than the other quarters, but there is no major jump. The same trend continues for us as well. That is broadly what it is. We were, like we mentioned in last quarter call also, broadly on track to achieve the annual numbers. There was a slight increase in the quarter four, which helped us meet the annual numbers.
Okay. On the assignment book, do we have any targets on direct assignments per year, or how do we look at it overall?
Overall, largely driven by liquidity needs, relationship with the bank, pricing, some of those factors. No targets per se.
Okay.
No targets per se, but broadly it's range-bound. Sorry. No targets per se, but broadly it's range-bound if you see as a percentage of AUM.
Yeah. Okay. Last question on the leverage side. Now, since we have raised money, how do we think about the leverage in, let's say, two years ahead? I mean, what is the kind of leverage we would like to operate on? Yeah.
See, right now, immediately after the fundraise, we are at 3.3%. We can easily go up to 5%+ . We are good for four years thereabouts.
Okay. You are saying until next four years, you might not need to raise again?
That's right. See, because right now, we will have an optical reduction in ROEs. Eventually, that will also start catching up. Equity will start accruing, and that will also further support the growth on the AUM. FY 2030, probably until that, we are good. Unless, of course, we grow faster than our projections, then it's another story.
Okay. As per your projections, when will we get back to the ROE of, let's say, around 15%-17% that we currently have?
Our first milestone is to get to 15 plus, which is in about six to seven quarters from now.
Okay. Got it. Thank you, guys.
Thank you.
Thank you. The next question is from the line of Ravi Naredi from Naredi Investments, please go ahead.
Thank you very much. Manoj, you are really doing great. My question to Gaba ji, our borrowing rates are 8.4%, which is higher than other reputed NBFC. They borrowed at 7.2%-7.4%. Why you pay higher rate? This rate of interest came down to us in 7.2% in financial year 2022. Again, it has risen.
Yes, sir. Sir, I think the larger NBFCs that you're comparing us with will be likes of Bajaj Finance and PNB Housing and perhaps some of the other names. Sir, their credit rating is AAA. We are a professionally set up entity. Our credit rating is AA minus. The big difference is scale. Sir, we are hopeful that one day we will definitely get to AAA, and then we will match those rates. We need some time to get there, sir.
In how many years will we attend AAA?
Sir, right now, we are AA minus, and we are hopeful that with this capital raise that we have done recently, we should be able to get one notch improvement, that is, move to AA. After that, there will be AA plus, which should probably take it would take several years to get to AA plus. After that, we can look at further increase.
Yes, sir. Sir, again, this Gaba man, as we maintain liquidity INR 2,700 crore, almost equal to one year AUM, why we maintain such a higher liquidity buffer when we have unavailed bank credit limit?
Sir, the INR 2,500 that you are seeing, it's not on the balance sheet. Out of that, INR 1,200 is on the balance sheet. The rest is on unavailed lines only.
Okay.
Yes, sir.
Okay. Okay. Okay. Understood. The INR 28.7 crore we write off this year, how much recovery of earlier year write-off we received during the year?
Sir, you are looking at the credit card line, right?
Right.
Sir, it's not full write-off. The write-off portion of that number is about INR 17 crore. And the recovery that we've had is about INR 2 crore.
INR 2 crore.
Yes, sir.
INR 15 crore is net loss.
That's right.
Net write-off. Yes, sir. Net write-off.
Yes, sir.
Okay. Okay. Thank you very much. Carry on. Yes, sir.
Thank you.
The next question is from the line of Subrato Sarkar from Mount Intra Finance. Please go ahead. Sir, I would request you to unmute your line and speak, please. If we do not respond from the current participant, we will move on to the next participant. The next question is from the line of Abhishek Jain from Alf Accurate Advisors Private Limited. Please go ahead.
Thanks for the opportunity and congrats for strong setup number. Sir, my first question on the invested growth in the affordable housing segment. What is your expectation for FY 2026? We have seen that many financial institutions are increasing their presence into this space. How do you see competition over there?
Sir, as far as the overall market is concerned for FY 2026, we think it should be another year of good or decent demand because affordable housing demand has largely been secular. The growth has been secular in the range of 10-15% a year. We are expecting some kind of a growth rate this year as well. As far as competition is concerned, it has been, again, very uniform across several years. Every year, there are some new players entering this business. At the same time, there are some of the larger entities who move up in terms of the ticket sizes and customer profiles. In some ways, they kind of exit this segment. From a competition perspective, we expect it to be another year of similar competition. Nothing very different.
What is your current market share in this space, and how do you see the market share going ahead?
Sir, market share, if you look at it as a percentage of the overall affordable housing segment, we are at about 2% share of the market. Our ambition is to reach somewhere between the 4-5% market share in the medium term. That is maybe in the three to five-year kind of horizon.
Okay. In terms of the ticket size, what kind of growth are you looking in the coming years in average ticket size?
Sir, average ticket size has been growing at about 3%-4% every year, and we expect a similar kind of increase in the coming years. Every year, maybe around 3%-4%, 3%-5% increase in ticket size.
Okay. My last question on the delinquencies side. Are you seeing any increase in the delinquencies in a few states in your quarters? Would like to give some comment on that part?
No, broadly, at least last several quarters, we have seen most of the states moving together. That is, when there is increase, there is an increase across the board, and there is a decrease across the board. Largely, it is seasonal. We are not seeing anything specific to any market or any particular state or region where there is an increase or decrease for any reason.
Okay, sir. Thanks. That's all from me, sir.
Thank you. The next question is from the line of Aditya Pal Singh from MSA Capital Partners. Please go ahead.
Hi. Thank you so much for the opportunity. Congratulations, Nutan and Manoj, sir, for the great set of great performance. I wanted to quickly understand that when we look at the branches which have a vintage of more than two years, what would be the profile of these branches in terms of AUM per branch, OpEx to AUM, ROA, and head office?
Two plus years, generally, the branches reach AUM of between INR 30-50 crore. In terms of OPEX to assets, they would be, I mean, if the country is at 2.7%, these would be slightly higher than country because they still have not reached kind of a mature level. Maybe around 3%-4% OpEx to assets would be the broad range. I mean, we would call these kind of just pre-mid size. The mid size would be around INR 50 crore-INR 70 crore of AUM. Pre-mid size branches in the two-year time frame. By the time they reach about three to four years, they reach the mid size, which is about INR 50 crore-INR 75 crore.
Understood. If you have the number handy with you, would you know vintage-wise number of branches? Today, we have total branches of 155. How many would be less than one year, one to two year, and then two to three, and then three year plus?
Yeah. Not at such a granular level. I mean, we can give you that. Broadly.
We can categorize it in three buckets.
Yeah. Broadly, we categorize in three buckets. There are smaller branches which are less than INR 25 crore AUM. Then there are INR 25 crore-INR 75 crore, which would be the mid size branches, and INR 75 crore plus branches. Generally, the ratio is around 1:3:0. You can say 50-60 branches in the smaller category, about 50 branches in the mid size, and about 50 branches in the larger category.
Understood. Another question was that now that we raised INR 1,250 crore in QIP, many congratulations on that. Do we see our branch expansion, that is, number of branches per year, increasing from what the status quo was, 22-25 branches per year? Another question would be that our target of INR 35,000 crore in FY 2030, would we need another fundraise in the interim before we reach that?
Branch expansion, yeah, the number of branches will increase because of the base being higher. We would like to expand it about 20%-30% every year. They are expanding it about 25%-30% every year. The branches also will expand in the same phase. We were growing at about 20-25 branches every year. That number will go up slightly, maybe to 30%-35%, or 35%-40%. As far as capital is concerned, we are good for about four years now. Maybe by 2030 is when we will need to look for fresh capital.
Understood. Understood. Just one last question. This is more to do with the thought process. When we see statewise AUM per branch, they are quite different. For example, there are states with 65-70 crore AUM per branch, like Maharashtra, Tamil Nadu. Then there are states which have an AUM per branch of 100 crore plus, like Gujarat, Karnataka, Telangana. Just trying to understand, is there any different strategy we are deploying in these states, or the states which have 100 crore AUM per branch will have more high conviction state for Home First?
No. Maybe I mean, it will be largely to do with the vintage. Where we have started the branches a little earlier, the size would have become bigger. The AUM per branch would have become larger. There would be newer states like Madhya Pradesh, etc., where we started the expansion over the last two, three years. There we would have a lower AUM per branch.
Understood. A state like Tamil Nadu also or Maharashtra, which we've been there for a very long time, but they have a same, I would say, somewhat similar AUM per branch to or lower than Madhya Pradesh?
Yeah. Because if you see this, I mean, it will also go in line with the growth rate in that particular state, right? Some states are growing faster. Some states are growing at a slower pace. AUM per branch also would reflect that.
There's no different strategy that we are deploying that these states will have larger AUM per branches?
No, no. Nothing of that sort. There's nothing of that sort. Our general position is that irrespective of where the branch is located, it should be able to run at about INR 200 crore per branch.
Understood. Last question was for Nutan. So Nutan, when I calculate the yield, I am getting 13.2% as my portfolio yield. This is including the co-lending piece. So is it a timing difference that because we would have disbursed a lot at the start end of March?
Not start end of March, but when you look at a monthly disbursement, it will be about. The first half to second half, about 40/60, maybe in some months 35/65, which will lead to the disbursement that you just mentioned. Like you just mentioned, it is a timing difference.
Understood. Okay, so Madhya, thank you so much and wishing the team all the very best.
Yeah. Thank you.
Thank you. The next question is from the line of [Nupur Kotha from Nirivi Investments], please go ahead.
Yeah. Hi, team. I have.
Sorry to interrupt, ma'am. I would request you to please use your handset.
Yeah. Hello. Am I audible?
Yes, ma'am.
Yeah. Good evening, team. I have two questions. First one is we could see a good AUM growth of 31% and interest income growth of 32%, but growth in profits is 25%. Further looking into this, I got to know that there was an increase in our overall interest cost by 43% year- on- year, despite our cost of borrowing rising only marginally to 8.4% vis-à-vis 8.2% last year. Can you throw some light on this increase in interest cost?
Right. When you look at the fact sheet and you analyze the P&L, the total income has gone up by 31%, but the net interest income has gone up by 26%, which is broadly where the overall profit increase is also. The cost of borrowing rise has been slightly higher. The question that you're asking is on year on year or quarter on quarter?
Year on year.
When you look at the fact sheet, the interest expense has gone up by 43% because the cost of borrowing has and the total income has gone up by 33%.
Exactly.
Yeah, that is the most important reason.
Yeah. What is the reason behind the rise in interest cost by 43%?
Okay. So the cost.
Because our cost of borrowing is almost at the same level of 8.4%.
No. If you look at year on year, it has gone up from 8.2%- 8.4%. That is a 20 basis point increase on a sharply increasing growing borrowing book. That is the contributor to the difference.
My question is how much commission do we give to our connectors? Also, do our connectors help in recovery?
No. Commission we give about 40-50 basis points to connectors. Helping in recovery is more ad hoc. It is not part of their contract or part of their agreement with us.
Okay. All right. Thank you and all the best. Thank you. The next follow-up question is from the line of Anusha Rehija from Dalal & Broacha. Please go ahead.
Yeah. In the newer geographies that you have catered to, for example, in Madhya Pradesh or Uttar Pradesh, how has been the asset quality performance in these newer states? How is the credit discipline?
Credit discipline has been fairly good. In Madhya Pradesh and Rajasthan, I mean, if you see the three new states or four new states where we are present, Madhya Pradesh, Rajasthan, Uttarakhand, Uttar Pradesh, I would say in Madhya Pradesh, Rajasthan, and Uttarakhand, the performance has been better than what we expected. Uttar Pradesh has just what we expected.
Okay. In Gujarat, which is the domain state, the growth is coming down in that state relatively on a YOY basis. Is it because the other states are growing at a higher rate, or demand per se in that state is relatively lower, or you would choose to grow at lower rates there?
No. We are still growing at about 21%-22% in Gujarat. We have some plans to kind of re-energize, etc. As I mentioned earlier in the call, there are some states where we are kind of restructuring the team, and we will come back more strongly. There are some places where we're growing by 20%. There are places where we're growing by 30%-40%. There is a range. There will always be that strategy of kind of going very strong in a particular state in a particular year. In other states, we are kind of regrouping or consolidating.
Okay. Lastly, you said that co-lending model two is eliminated from the new RBI guidelines, and co-lending model one is tedious. In what way is that tedious?
Yeah. What I mentioned was they have actually omitted mention of co-lending model two. Everybody is still wondering whether it is allowed or not allowed. I think there are still discussions going on on whether this will be allowed. We are hoping that the co-lending model two will be allowed. If it is not allowed, then yes, we have to go to co-lending model one, which is a little more tedious. Why it is tedious is because as for co-lending model one, the disbursal of the loan has to be done simultaneously by both the entities. Primarily, that makes the process more tedious because when the loan is onboarded, the 20% sits on our book, and 80% will sit on the bank's book. The disbursal also has to be then proportionately done by the respective entities.
Currently, the disbursal is done by us, and then it is kind of paid back by the bank to us, which is an easier model. If all disbursals have to be made simultaneously by the two entities, it makes it more tedious.
Okay. You follow co-lending model too, right?
Correct. We follow two.
Okay.
Does that answer your question, ma'am?
It's largely answered. Thanks.
Thank you. The next question is from the line of Divyansh Gupta from Latent Advisors. Please go ahead.
Hi. A couple of questions around the LAP book. Would you be able to break up our NPAs between LAP and home loan separately? Last time we discussed the ECL is coming down because LAP is going up, and we end up incurring a lesser loss there. What would be the NPA trajectory for LAP versus home loan, and what would have been this number in FY 2024?
Yeah. I can tell you the March 2025 numbers right away. LAP is around 1.2%-1.3% NPA, and home loan is about 1.9%. Actually, the numbers are disclosed in our QIP placement document, and it is already published on the stock exchanges. You will get the full details with a three-year comparison there.
Got it. I missed it, so I'll check back.
No worries.
Typically, LAP would have a higher NPA, and home loan would have lower NPAs. Our numbers are a bit different from the general expectation. How should we read into it?
The way we are reading it is that because we have a lower proportion of LAP, our teams have the luxury of selecting better customers. We do not have aggressive targets for LAP, so they have the luxury of selecting better customers for LAP. This is the reason our NPAs are slightly lower compared to the market as well as compared to our own other products.
Got it. When you say LAP, it is not a top-up on a home loan, right? Because then you can get that advantage on a home loan. You are giving a top-up, and then it is considered LAP. This is pure play LAP.
It's pure new customers. These are new customers we are acquiring from the market.
Got it. Understood. Second question related to LAP. Our presentation shows that our LTV at origination, less than 80%, is going down, which can also be a factor because of LAP going up, right? Because LAP, I do not think you will do at 80% LTVs. What would be our more than 80% LTV at origination for home loan business?
LAP forms a smaller proportion. I would say because LAP is only 15% of the AUM. To that extent, it should not impact the ratios too much.
Yeah, that's right.
What do you think?
Does it mean that effectively LAP is also given at 80% LTV? That would be very, that way is a risky thing, no?
No. LAP would not be given at 80% LTV. LAP LTV will be generally or rather in almost all cases, it will be less than 60%.
Right.
If you can ask me the question again because the. In that. LAP LTV at origination, right? LTV at origination is what you're talking about.
LTV at origination, yeah. If I look at the more than 80%, they have been consistently coming down, which makes sense if you are giving LAP loans because they will be at lower LTV.
You're talking about more than 80%, correct?
Yes.
Yeah. Yeah. More than 80 coming down, the explanation is that our basically, see, the more than 80% LTV actually is in the apartment seg%ment, developer-led apartment segment. Over the years, our exposure to apartment segment has been coming down because we are doing more of self-construction, more of loan against, more of, sorry, resale and other products compared to apartment products, compared to new apartments. That is the reason for the marginal decrease in LTV, which is above 80%.
Understood. The last on the LAP is that if I look at the mix of self-employed and salaried and LAP and other LAP and home loans, would it be a fair statement to say that salaried LAP is going up?
Why would you say that? I mean, we don't have any such direction internally.
It might be not deliberately, but just happening. Because if I see the self-employed mix that is going down, but LAP is going up and self-employed is largely similar at whatever range it was. It's not falling down. So then it implies that LAP would be taken up by self-salaried also.
Yes. Yes. LAP is taken by salaried also. We have, I think, at the moment, we have an equal mix of salaried and self-employed as far as LAP is concerned. That ratio has been largely constant across the years.
Got it. The question was that what would be the purpose? Is it loan consolidation or?
The purpose is threefold. There are basically broadly three purposes of LAP, why people take LAP. There are some customers, about 30% of the customers, who have actually started their construction by borrowing from others and would have kind of finished the construction. Now they want to repay those loans. That is one reason. It is like a delayed housing loan. That is one key reason for LAP. The other reasons are the normal traditional reasons where it is used for consumption or it is used for business purpose.
Got it. Got it. Understood. The second question for LAP questions are done. The other one was that last time we mentioned that we studied Bajaj and Chola, and we figured out that let's say we will come back to the market every two to three years to raise equity. Now in this call, we said that this equity raise will suffice for us for at least four to five years. Is there a change in thought process of the growth assumptions that let's say we had earlier versus now, or how should we read into that?
The change is in the amount of equity that we raised. When we were on the call last time, the number that we had in mind was INR 1,000 crore. We had taken an enabling resolution for INR 1,250 crore, but because of the response, we actually ended up raising the full INR 1,250 crore, which has added the additional year.
Understood. Understood. The next question was the digital partnership. Sourcing through digital partnerships saw a big raise from 1. something to 2.2. Is it a one-off? Is it some structural changes that we have done, let's say, which has taken this to this level? Just trying to see how is it a one-off or some structural changes that we have introduced?
Not a one-off. We had the, we see, I think, last couple of quarters back, a new partnership was added, which is CoinPay. That is giving us a slightly increased number for the digital partnership.
Got it. Understood. I'm assuming given the franchise that they have, we should, but is it a BT product or it's a fresh new home loan kind of loan that we are looking at?
It's not a BT product. We need new home loans. I mean, BT product is not a focus area for us. It is a very insignificant portion of our business. In all these digital partnerships, also, the focus is on new acquisition only.
Got it. Because for them, it becomes a very easier sell. Hey, sir, I have a home loan and we can give it at a cheaper one. That's why I asked you.
It is not, I mean, that is more of a strategy by some of the larger lenders because they have a cost of borrowing advantage and they can pass it on to the customers. We do not have that advantage, so we only focus on new ones.
Understood. Understood. Two more questions. The INR 300 crore of net gain on DA.
Yes.
If I look at our CPOP or even PBT, right? Around 20% of our profit is coming from this upfronting of DA sales, which does not necessarily lead to the profit being grown, right? 300 crores.
Even 30.
30 crores. 30 crores. Sorry, my bad. PBT net is still 20%, right?
Yeah.
The question was that how should one is if you can break this split into what was the net gain from fresh DA done and the earlier ones would have been some assumption change. If you can just give a breakup of this.
Right. The breakup largely is not more than 10%, which will be there from the old one. I want to address the more important points of whether this is sustainable. See, the thing is that we are upfronting the income because it is a requirement. Now the question is, if I did not upfront it and if I drew up my P&L and looked at the profit after that for the net worth in the old IGAP method, what would be the difference? Because either I can do IGAP accounting or I can do in-depth accounting. On a net worth basis, because it is a tiny difference at the end of the day, I'm still going to recover the same amount of money from the customer and my spread is not going to change.
From a net worth basis, the difference is not more than INR 30-INR 40 crores. From an annual profitability perspective, the difference is less than INR 10 crores. It fluctuates depending on whether the assignment proportion, the AUM, is increasing or decreasing. Because the gap is so narrow, we have chosen to kind of focus on more why DA needs to be done rather than the contribution to the income because either we come through the net gain line in India's accounting or we come through the interest income and expense line in IGAP accounting.
See, this quarter, it says it was INR 30 crore, and you said for the year it is around 10. How, sorry, am I missing? Did I misunderstand something?
No. For the year.
Basically, there is a net gain, right? If I just cumulatively look at it, it would be a higher number.
No. If I did not do a net gain, I have a DA book on which I would earn the spread.
Yeah.
My DA book will be.
That would have been INR 10 crores. That would have been INR 10 crores is what you are saying.
No. No. No. My DA book is about INR 1,500 crore on which I would earn a 5% plus spread.
You think done in that way, it would be INR 10 crore less than the total profitability.
Yeah. Profitability would be in that range of INR 7 crore-INR 10 crore difference, yes.
Got it. Got it. What is the overlays that we are carrying in our resale?
INR 13 crores.
INR 13 crores. What would be the write-off in this quarter and for the whole year?
I'll just tell you. Give me a moment.
Whole year is INR 17 crore approximately.
Just the gross write-off, right? Not net of recovery.
That's right.
This quarter, I think it's INR 4 crore or INR 5 crores. I'll just tell you in a moment.
Sure.
Yeah. About INR 5 crore.
Got it. Got it. Yeah. That's all that I had. Thank you and all the best.
Thank you.
Thank you. The next question is from the line of Siraj Khan from ACN Capital Partners. Please go ahead.
Hello. Thank you for the opportunity and good set of numbers. I have two questions. One with respect to the data that is given in the tax return new to credit loan accounts. From FY 2024 to 2025, that has reduced. Is this by design or by default? I mean, are we actively going toward having credit information customers or are the number of customers in the new-to-credit segment reducing? How is that?
Yeah. The number of customers in the new-to-credit segment are reducing. We are not actively seeking out customers with credit history. It's just that in the market, such customers are reducing because credit is easily available now.
Okay. On a similar line, the self-employed AUM is constant. I mean, it's picked up very moderately. What is the split that you see, say, FY 2026 or ahead?
Broadly, in the same range only. I think right now it's 68, 32. One or two percentage points we can't say, but broadly, 65, 35, 270, 30 is the range that we see.
Understood. What will be the incremental ticket size of loans? Because what I also see in the facts sheet is the proportion of the AUM in the 1.5%-2%, 2%-2.5% has jumped by 2%-8% each. Is the incremental ticket size higher than, say, close to 18, 20 or above? 18 lakhs, 20 lakhs or above?
No. Sorry.
No. The growth zone for us is now INR 1 million crore-INR 1 million. Sorry, INR 10 lakh- INR 25 lakh, right? Below INR 10 lakh, it is not a very large growing segment. There, between INR 10 lakh- INR 25 lakh, you will see larger, more growth.
Okay. What will be the incremental?
Yeah.
Incremental disbursement?
Ticket size is INR 1.17 million lakh.
I think that is the average. What will be the incremental disbursement that would have happened in FY 2025?
INR 13 lakhs.
INR 13 lakh-INR 14 lakhs.
INR 13 lakh-INR 14 lakhs. The final one on the promoters. With the capital raise, each of their holdings has come down below 10%, 7%, 5%. Now Warburg remains the single largest holder at approximately 11%. What will be their role going ahead? How will there be any specific change in the management or anything of that sort with respect to the direction? That is a question.
No. There is no change. I mean, the promoters have largely functioned like public market shareholders over the last three, four years also, since the time we live, say. We do not anticipate any change as such as far as management or company functioning is concerned because we have been led by the independent board also these years. No change anticipated.
No specific change in strategy or anything with respect to sourcing or anything of that sort?
No. Absolutely not. Like I said, we have been led by the independent board even over the last four to five years. We do not expect any changes. Largely, it has been management and independent board-led strategy. The promoters or large shareholders have not played a role in that. Nothing is expected to change.
Okay. Thank you. Just the final one on the state-wise asset quality. We have seen good growth in Madhya Pradesh and in some states of Karnataka. What I want to know is, are you seeing any kind of early stress maybe in the CITEVALA TPD or VANKAS TPD? It has been inching up. Although it has been controlled, it has been inching up year over year. Is there any specific state or any specific product or customer type that is seeing any early kind of a warning? For example, Madhya Pradesh has grown approximately 72% YOY as far as I see. Tamil Nadu and other states have grown slightly lower. Is there a region-wide issue or some state-wide issue, anything of that sort?
No. The growth pace of growth is not directly linked to the asset quality experience that we are facing in the state. It is more related to various other things like getting the right people, expansion of branches, and various other factors. Yeah. It is not, like I said earlier, most of the locations have a similar profile as far as the credit behavior is concerned. We are not seeing any dramatically different behavior.
Understood. Just a clarification, the active connector account that was shared earlier was?
3,800.
3,800 active connector accounts. Thank you.
Fantastic. Ladies and gentlemen, that was the last question for today. I now hand the conference over to Mr. Manoj Viswanathan for closing comments. Over to you, sir.
Thank you everyone for participating and engaging in the call. We hope that we have been able to answer the questions to your satisfaction. In case you want to reach out for further questions, you can always reach out to Deepak Khetan or write to us on investor.relations@homefirstindia.com. Thank you very much.
Thank you. On behalf of Home First Finance Company India Limited, that concludes this conference. Thank you for joining us and you may now disconnect your line.