Ladies and gentlemen, good day and welcome to the Housing and Urban Development Corporation Q1 FY26 earnings conference call, hosted by DAM Capital Advisors. 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. Sanket Chheda from DAM Capital Advisors. Thank you, and over to you, sir.
Yeah, hi. Very good evening to all of you. We are here to discuss Q1 results. We, from the management side, we have with us Mr. Sanjay Kulshrestha, who is the Chairman and MD, Mr. M. Nagaraj, who is a director of corporate planning, Mr. Daljeet Singh Khatri, who is a director of finance, Mr. V. Sudhakar Babu, who is executive director of finance, and Mr. Achal Gupta, who is a general manager of finance. Without further ado, I'll hand the call over to Mr. Sanjay Kulshrestha for his opening remarks. We'll follow that up with Q&A. Over to you, sir.
Thank you, Sanket. Good evening, everyone, and thank you for connecting to the call. I will start from the story of the HUDCO, and we are continually outperforming the expectations of our investors and the stakeholders. The company is in a very healthy kind of journey, and we are continuing our journey towards the financing of the infrastructure across the country. During this journey, we had started exploring new areas, new segments, new infrastructure segments. We had also explored new states and other entities for which we can lend. We had customized our product. We had come out with new policies also. We had corrected ourselves. We had revised, reformed, and started performing, and this is a transformational time for the country in terms of the infrastructure. We had aligned our objective in line with the Viksit Bharat theme of Government of India.
Since we are under the administrative control of MoHUA, which takes care of housing and urban affairs, so we had expanded our products, starting from the metros to rapid rail in the mobility side, besides the Road Transport Corporation, the mobility, e-mobility, so all these things we had started. At the same time, we are also working in the water side, a lot of water projects, a lot of rejuvenation projects of the water that we are funding. A lot of demand is coming from the counterpart requirement of the states to make the AMRUT 2.0 successful. We are also advising them as a consultant so that we should understand their project and see the impact of these kinds of works across the country. We are into the roads also, starting from the state HAM models to state-owned EPC projects also.
A lot of capital-intensive requirements are coming across the country, and you can see in our sanctions that is the commitment for financing of the infrastructure projects, which is coming, and on a year-on-year basis, we are working as high as more than 30%-35% across the sanctions, which you see. Financial year 2023, we had ended with around INR 25,000 crores of the sanctions, and financial year 2024, we had closed at around INR 83,000 crores. Last financial year, we had closed at INR 1.27 lakh, 1.27 lakh crores of infrastructure funding, which is on year-to-year, this is more than 55%-60% of the CAGR. On quarter-to-quarter basis also, if you see from the last quarter, our sanctions have raised from INR 14,000 crores to INR 34,000 crores, which is a jump of around 1.43%.
On year-to-year basis, if you see the loan disbursements also, we had in 2023, it was INR 8,400, and in FY24, it was INR 17,000 or INR 18,000 crores, and FY25, we had ended at around INR 40,000 crores. So clearly, we are doubling our impact, doubling our disbursements, which is actually improving our bottom line. On year-to-year basis, if you see the loan outstanding, the loan assets, which are actually creating revenues for us, they had increased. In FY23, it was INR 80,000, then FY24, it was INR 92,000, and FY25, it has raised to INR 1.24 lakh crores, and we had ended our quarter one at INR 1.34. So you can see a very clear roadmap, very clear loan outstanding, which is increasing. The sanctions are increasing. The disbursements are increasing. The net worth are increasing.
I'm sure that you will be happy that we are continuously growing at the rate of around 30% or so during the last two financial years. So this year, sanctions also at around 34,000 crore, we had already sanctioned in quarter one, and we are targeting more than what we had done in last financial year, which was around 1.24 lakh crores. Similarly, the disbursement we had achieved around 12,800 crores, which is an all-time high for the company. We are targeting around 30% of the growth, if you see, from the last financial year of 40,000 crores. Similarly, on the loan book side also, we had grown by 30%. Now we are at 1.34 lakh crores. All these things are happening, one, because of the opportunity which is available in the market.
Also, if you see our loan book, it is not so, the volumes are not so high, and there are ample opportunities to fund big projects, big capital projects. There are exposures available. The financial ratios are very, very strong. If you see our debt equity ratio, it is only 5.93x. So this is a very, very healthy kind of debt equity ratio, and which actually gives us the driving force to make more disbursement, to make more borrowings. From the last 10 quarters, there is no new NPA, and I'm very happy to inform that we are going towards, we are reaching towards a zero NPA company, and now our net NPA has reduced to slightly less than 0.1%, which I think is the best in the market. Liquidity buffers are very strong.
We had a lot of sanctions from the banks, and we have a very strategized course of action for borrowing, be it the bank loans, repo-linked loans, bonds, or international commercial borrowing, or FCNR. So all these things are very judiciously decided, and as a result, we had been able to reduce our interest rate. In the last quarter, we had borrowed around 20,000 crores at around 6.32%, which is a remarkable achievement in the market, and thanks to the RBI for reducing the 100 basis points and by judiciously using our loans from the banks, which were repo-linked, and all these things are reset. So all these things are contributing towards the revenue also. Our revenue is growing more than 34% on a year-to-year basis. The net profit is continuously increasing by, it has increased by 13% on a year-on-year basis.
The asset quality, even the gross NPA, reduced from 1.67%- 1.34%, and within 16 months of time, we are trying to make the HUDCO net NPA zero NPA company. So our ratios are very strong. If you see the spreads, we are continuously maintaining around 3%, NIM of 3%, and spreads of around 2%, 2.2%, 2.3%. So we will continue to make our efforts to maintain these kinds of levels, and at the same time, we will be working with the speed without taking any risk on our asset quality, without compromising on the asset quality. If you see, there are a lot of potential which are coming in the way of the company, and now we will be opening up towards the urban infrastructure also.
Now, the government has already announced the Urban Challenge Fund, and we are continuously working with the ministry on that. Very soon, we will be opening our offices, dedicated offices for urban financing in the regional offices, in our regional offices. That window will identify big projects and take care of the advantages under the Urban Challenge Fund. So there are a lot of things which we are expecting within a quarter to come, including the VGF. At the same time, we are working with the metros also for refinancing kind of product that let the foreign currency loan be replaced by the domestic loan.
Now, since these loans are coming at a very competitive pricing, so I can only say that HUDCO enters into the remainder period of FY26 with a well-capitalized balance sheet, with the strong sanction pipelines and the diversified funding avenues, and we will continue to sharpen our infrastructure-led development. So this is from my side as an opening remark. Thank you so much.
Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. A reminder to all participants, you may press star and one to ask any questions. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. A reminder to all participants, if you wish to ask any questions, you may press star and one. We have our first question from the line of Shweta Daptardar from Elara Capital. Please go ahead.
Thank you, sir, for the opportunity and congratulations on a great quarter. So a couple of questions. So if I look at disbursements for the Q1, the 12,800 crores, so of course, Q on Q basis, we have done really great. But if I look at year-on-year basis, then it has remained flattish. So do we have to read your, or can you elaborate and throw some color on the momentum here? And so just a follow-up there. So if I look at the entire FY25, so the run rate, which we have maintained quarterly basis, wherein Q1, Q2 looks slightly, Q1- Q3 looks slightly stronger, and Q4, we are somewhere around 8,000+ crores. So is that the trend formation now on the disbursement front? Yeah, that's my first question.
Okay. So I think from last year, we had taken an effort that all our disbursements will be regularized or uniform across the quarters. And in that effort, last financial year, in the first quarter, we had achieved 12,000 crores. This financial year also, we had already done more than 12,000 or 12,800. So generally, in financial institution, the quarter one is a bit slow, and the acceleration starts from quarter two, then quarter three, and then quarter four. So we had successfully reversed this exercise, and because of that, the turnover is continuously increasing, and they are actually improving our bottom line. So 12,800 crores is a very satisfying figure for us, for which we were targeting. And with these figures also, if you can directly multiply it by four, we will be overachieving 50,000 crores of the disbursement.
So this is an indication that what's there for this year in terms of the disbursement.
Okay, that explains. Yeah, yeah, that explains, sir. Thank you. So second question, what is the lag between sanctions to disbursement?
I think generally, we are working with the capital-intensive infrastructure project, where the construction time starts from as low as three years to four years of the time. So sanctions to disbursement, in a broader sense, you can say it is around 35%, but you cannot match it from the sanction to disbursement because we are now disbursing whatever sanction before one year or two years or before three years as well. So it cannot be mapped on project-to-project basis, but generally, it is around 35%. So here also, in the first quarter, we had sanctioned around 32,000 crores, 34,000 crores, and disbursement is around 12,000 crores, so around 35%.
Sure. Also, sir, considering over 70% of our book is either guaranteed by state or through budget provisions, so we do not suffer directly credit losses, but does project implementation delays or government CapEx momentum delays and execution, especially from the central government-led projects, do these or does this impair our loan growth momentum or disbursement structure? If not, asset quality?
I think this is a very pertinent question, and that's why you can see our sanction pipeline. So whatever we want to achieve, now we are taking that into the sanctions also. If you see, last year, sanction was 127 lakh crores, and before that, it was 83,000 crores. This year, around 34,000 crores, all put together, we have a sanction pipeline available at hand, more than 1.5 lakh crores. At the same time, we have signed MOUs in the multiple states ranging to around 7- 8 lakh crores. So we will be doing at this pace only the disbursement. I have no doubt that we will be overachieving our disbursement schedule.
And at the same time, whatever the RBI guidelines are there for the DCCO, we are complying to those guidelines, and all the DCCOs are being earmarked in the sanction letters only, and they are continuously being monitored so that there should not be any slippage. And I think our borrowers are also well-versed with all these kinds of guidelines.
Right, sir. And just I'm squeezing in very last question on forex losses. So I understand that there has been a good amount of volatility, especially in past one quarter, which has led to foreign exchange losses. So how are we hedged? What is the breakup of dollar versus Japanese or any other currency denomination-led exposure? And yeah, so how are we tackling this? Thank you.
The company has a very clear thought-out kind of hedging policy, and whatever we are doing is as per hedging policy. I can give you the example. Generally, we go with the data of 10 years of the currency movement, and we will be very, very conservative while deciding our levels. And we take the one-year forward levels, and whatever loss we had done, you are right, it is only because of the one-day movement of the CHF. This is only, there is only one reason, and which was not in our hand, and it has crossed the 10-year cycle of the CHF. Our hedging was done well within the ranges. Rather, our forwards are very well. Even we had over, we had taken much ahead of one-year forward levels. The protection levels were very, very high.
But as you have also mentioned, it is only because of the global economic scenario. Because of that, all these losses are there. But I am sure that now we have learned our lesson, and we have to live with this all global facts that are happening and evolving. And for all future things, we are correcting our course of actions, and we are monitoring on a day-to-day basis so that these kinds of phenomena should be avoided, or if at all something goes bad, it should be as less as possible.
Right, sir. Thank you for answering all the questions patiently. I'll join back the queue. Thank you.
Sure. Thank you.
Thank you. A reminder to all participants, if you have any questions, you may press star and one. We have our next question from the line of Sumit Rohra from Elara Capital. Please go ahead.
Hi, sir. Very good evening to you and your entire team. Firstly, sir, many congratulations on a fantastic loan book growth of 30% and 8% quarter- on- quarter. Very, very heartening to see that. Sir, there's just two questions. One is that you already touched upon the aftermarket foreign exchange loss.
Hey, sorry to interrupt you. Can you please be a bit louder?
Sure. Be louder.
Firstly, sir, yeah, sure. Firstly, many, many congratulations on a fantastic loan growth of 30% year on year and 8% quarter- on- quarter. Now, sir, just two things I wanted to check with you. Is that you spoke a bit about this mark-to-market loss on this forex borrowing? So is my understanding correct that this is about INR 100 crore? And sir, secondly, if you can just talk a little bit about your NIMs because your NIMs, which were at about 3.2, have come down to about 2.94. So how do you basically see NIMs shaping up from year till the end of the year, sir?
You are right. It is mark-to-market loss because of the currency fluctuation. It's a one-time phenomenon that had happened. Regarding NIMs, you see, most of the disbursement in this quarter had happened in the last 15 days. They had not converted into the NIMs. They had not converted into the income. I think we will successfully be able to maintain our NIMs for more than 3% during the financial year. You will see the corrections because this income will come in the second quarter. We will be crossing 3% figure. This is a slight variation in the NIM that had come because of the last fortnight disbursement, high volume of the last fortnight disbursement. I am sure that it will be recovered in the quarter two.
Sure. And sir, just, I mean, if I can ask you one more thing. So now we have 45 days into quarter two broadly. So as we see today, is the foreign exchange kind of stuff stable? I mean, are the mark-to-market variations stable now in this quarter, at least?
Yeah, yeah. They had been stable as of now, but things are very, very volatile, and we all are waiting for the 15th August meeting. But as far as HUDCO is concerned, CHF is well within our protection labels as of now. Dollar is going as high, but our protection labels are very high. So on dollar side, I don't see any issues there. But we have to see what happens on this 15th of August, and we have a very close watch on these kinds of global developments.
Sure, sir. And sir, I mean, if I just may ask one very quick thing. So sir, I mean, you are growing at a fairly fast clip, as evident of the 30% growth. So sir, this loan book guidance of 150,000 honestly seems to be very conservative. So are you going to revise it upward now? I mean, when could be something on that?
Yeah, as per arithmetic, we will be crossing 150, maybe lending at around 155-160, something of that kind. So revision we have not done, but I think as per the arithmetic is concerned, you are right. We will be crossing this figure. And after quarter two, we will be revisiting, and we'll see if the guidance needs to be changed. But yes, you are right. We will be crossing 150, maybe in the quarter three or sometime before that.
Okay. Thank you, sir. Thank you so much, sir. I wish you all the best, sir.
Thank you.
Thank you. We have our next question from the line of Arman from Blue Sky Fintech. Please go ahead.
Yes. First of all, my congratulations from a good side of the world, especially the loan book side. My first question is on Return on Assets.
Can you please be a bit louder?
Hello. Yeah. Am I audible? Hello.
Yeah, you're audible now.
Yeah, yeah. First of all, congratulations on great set of results, especially going on the outstanding book side. My question is regarding return on assets, like NIMs. The previous question we answered, return on assets also seen a clear dip in Q1. So what will be the guidance for return on assets, especially for FY26? And what will be the trajectory going forward for FY27 and FY28?
So I think you are talking about ROA. It had come down a bit because of the last fortnight disbursement. It's a temporary phenomenon. It will be corrected in quarter two. But if you see our return on equity, it is already more than 14.28. So it will be corrected. So it's only an arithmetic ratio. So in quarter two, I think we will be again coming back to the same terms of maybe 2.2 or 2.3 kind of figure. So it is a temporary phenomenon, and the only reason is the last fortnight disbursement.
Okay. And, sir.
I will just like to extend the question. If you see, our main objective is to grow our loan book now. Because whatever we can do in the quarter one to enhance our loan book, all measures were taken so that all these income and all these ratios will be improved in this financial year only. So because of this, this dip is there, which is a temporary affair. But if you see the loan book, the kind of loan book which we had successfully increased is around 8% in one quarter. So multiplication can show it is around 32%. So our main objective is to enhance our loan now.
Okay. Okay. Got you, sir. And my next question is regarding already the loan book guidance, which we have already told. And how much percentage of our borrowing is floating borrowing?
Around one-third of my borrowing is floating, and around two-thirds of my borrowings is fixed-rate borrowings of the total borrowings of INR 116,000 crores.
Okay. And for the fixed-rate borrowing, when is the reset? Is there a bifurcation for the fixed-rate borrowing, reset timing?
I mean, basically, all these bond market borrowings, domestic or, no, interest rate-based borrowings, bond market borrowings are normally fixed. And the borrowings of short-term loan borrowings and medium-term loan borrowings from banks which we are taking, they are basically floating-rate borrowings.
The bifurcation, sir, on the.
Floating-rate borrowings.
Yeah, yeah. Please, sir.
Bifurcation is around 40% is from bonds, and then another 20% is External Commercial Borrowings, and the remaining is short-term, medium-term, and long-term borrowings from the banks.
Okay. Got it, sir. And the semi-bifurcation on the asset side, floating as well as fixed?
My asset side is semi-fixed-rate borrowings, semi-variable, you can say, or semi-fixed, you can say. Because all my, I mean, asset side, all my lendings is semi-fixed. Semi-fixed in the sense that they all have the option of reset either after one year or after three years, barring a loan book of around 2,000 crore, which is floating-rate borrowings, I mean, floating-rate assets. The rest of the borrowings are semi-fixed. Most of them are having one-year reset.
Okay. So the majority of our lending is having a one-year reset, right?
Yeah, majority, yes.
Okay. Exactly. Thanks a lot, sir, for answering all the questions, sir. Thanks a lot.
Thank you. We have our next question from the line of Gaurav Kochar from Mirae Asset Capital Markets. Please go ahead.
Yeah. Hi, sir. Good evening. Thanks for the opportunity. Sir, I have three questions. First is on the sanction pipeline. You indicated that you have currently a sanction pipeline of INR 1.5 trillion, which has not been disbursed yet. So just wanted to understand, by when do we expect this to be disbursed? I understand there will be further sanctions that will come through the year. But on this INR 1.5 trillion stock of the sanctions that we have, by when do we expect this to get disbursed? Or what is the timeline by which sanctions get disbursed?
So it is around three years. So three- four years of the time, the complete disbursement out of this INR 1.5 lakh crore will be there. And in the meantime, we will create the further strong commitment of the sanctions.
Sure, sure. Understood. So theoretically, even if you don't sanction anything from here on, this 1.5 trillion is good enough to give you a 50,000 crore kind of disbursement every year for the next three years, theoretically.
That's true.
Okay. Okay. Sure, sure. And, sir, second is on the size of the opportunity. Now, infra, power, and all these sectors, I mean, there are a lot of players, both government and private, including banks. So if you can just highlight on what is the size of opportunity. And for us, there would be two scenarios. One would be where most of the government agencies, banks, all of them are competing. And there would be certain projects where the competition is very little, and we have some unique positioning over there. So if you can highlight both these aspects as to what would be the size of the opportunity where we are uniquely positioned, maybe over the next one or two years, and the size of the opportunity where there is intense competition from banks.
See, I can give you only one example. There was a program of Government of India, the National Project Pipeline, which was created in 2019 till 2024. Now, it was 1.11 lakh crore pipeline. It is revised by 1.6% recently. So this is the one guidance that I can give you in terms of the creation of the infrastructure. But if you see the CRISIL and the McKinsey report, they are talking about total investment of more than $300 billion across the different sectors. So the pipeline is very high, and I think all the lenders have a space to better. The only thing is that some of the institutions are segment-based. They are working for one segment or two segments. HUDCO is a company which is not agnostic to any sector, and we are funding each and every sector. We are serving the requirement of state government.
In some states, the roads may be the priority, but in other states, river linking is a priority. In some states, new towns are coming, and in some states, satellite towns are coming. So all these things are giving a clear arbitrage and clear roadmap for the HUDCO business model. But I'm sure that all the institutions, be it the energy transition or be it the mobility, all these things are contributing, and the main driver is the urban. So all these things are created and starting from the HUDCO. And since we are funding from the housing to all the entire gamut of the urban infrastructure without having bar on any sector, so we are, I think, very comfortably positioned, and we can choose our right to select good projects, good entities, good asset quality. And that's what we are doing.
Understood. So, sir, in that context, if last year's sanction was INR 1.27 lakh crore, this year, can we expect INR 1.5 lakh crore plus kind of sanctions? INR 34,000 plus is already done. So is that a fair ask that maybe INR 1.5 trillion is where we should be in terms of total sanctions for this year?
Yeah, it will be something more than 1.27. That's what I can say. We have not devised any figure as of now. We are working on a lot of opportunities. Our main target is the disbursement. We generally target our disbursement. So that is already decided. And it will come out of the pipeline. Our directors are.
I just would like to add one sentence here. So if you see that in line with Viksit Bharat, most of the states, majority of the states are also coming back, like Maharashtra, for instance. I would like to give a small example. Recently, they have come out with Vision Maharashtra 2047, Viksit Maharashtra. So most of these big, big towns, especially Nashik, Nagpur, Pune, these towns, they are coming up with a beautiful project. Let me give you only one example of Nagpur. They're creating a new city called Navin Nagpur, just on the outskirts, which is on the way, the main highway of Nagpur to Mumbai Expressway. Plus, Golden Arc Ring Road is being created. Like many examples, we can quote the state of Maharashtra. Similarly, Tamil Nadu recently had Invest Tamil Nadu, again, Invest Karnataka. So each state is competing with each other.
So there is a huge potential like this. So HUDCO continues to get tapped by, especially in infra. Thank you.
Sure, sir. Sure. Sir, just to understand your margin dynamics, you said once you typically, because the disbursements were toward the fag end of the quarter, that resulted in yield moderation, it will improve going forward. Sir, just to understand, what would be the incremental yield that we would be sanctioning or disbursing at? Let's say of the amount that you have sanctioned or of the amount that you have disbursed, what would be the blended yield, and whether that yield would be similar to what our book yield is?
See, we are into the era of discounting on repo rates, and this can be clearly seen and visible from the borrowing. So I think at this point of time, talking about the yield of, say, 9.5% may not be right. But yes, keeping our spreads and the NIM constant or healthier, that is more important for us. So since we are also reducing our cost of funds, and at the time of reset, we are passing to our borrowers also. Because we firmly believe that whatever infrastructure is created in the country, it has to be paid by our citizens also. It should be more viable, more sustainable. Then only the assets are fruitful. They will be good for the country. So here, the yield may be corrected because of the reduction in the repo rate. Maybe around 9.1%-9.2% will be the yield.
That's what I can foresee as of now. We are also expecting some rate cuts on repo, which will further redefine the yield. We are also expecting something from the Fed side, U.S. side, because we are planning our MTN program. So all these things are dependent on such kind of tack.
Understood. So sir, if I just said it correctly, the spread is still maintained. So whatever benefit we get on our cost of fund, that we pass on to our borrowers. So sir, you mentioned.
Unlike the bank's pass on the date of reduction of the repo, we pass it on the one-year reset, on the basis of one-year reset.
One-year reset. Got it.
So it's not the income for the time.
Right. Understood. Understood. And sir, on our cost of fund, I think you mentioned 6.32 as the incremental borrowing for INR 20,000 crore. Did I hear that correctly?
6.32 is yes, you are correct.
This is for the first quarter, the average rate that we borrowed.
Yes, you are right.
Okay. Okay. And sir, the second Repo rate cut happened in June. So is it fair to say that the incremental borrowing cost would further come down? The 6.32 was average for the quarter. So this number would have even fallen to a slightly lower number in July-August. Is that a fair understanding?
Actually, transmission, if you see, on a long-term basis, it has not happened. For 10-year bond, we had made a study. The past discount is only 20 basis points as of now. But as you know, the CRR is reduced after September, and other forms of liquidity will come to the market. We are also expecting that some correction in the bond market will happen.
Sure. Sure. Got it. And sir, what percentage of your borrowings would be linked to G-Sec, 10-year G-Sec, and what percentage would be repo in your floating-rate liabilities? And second, derivative to this is, what would be the average duration of your liabilities?
So we didn't go for the G-Sec. We only go for the repo because strategically, we had decided that since the loans are linked with the repo, so on the day of the reduction, they will be reset. And what was the second question?
Percentage. Around 15%.
Percentage of.
Repo linked.
Yeah. I am Daljeet Singh Khatri, Director of Finance. Your second question was perhaps regarding what percentage of my borrowings is linked to Repo Rate. So around 20% of my borrowings represented by bank term loans is linked to Repo Rate.
Okay. And on your fixed-rate borrowings, what would be the average maturity rate?
Average maturity is five years. We normally rate three years, five years, and 10 years. But the average remaining maturity on my fixed-rate borrowings is around 5, 5.5 years.
Understood. Thanks so much. Sir, just last question on the target of zero NPA or net NPA. And we still have some pool of NPA. So in terms of resolution, maybe in the next one or two quarters, do you see any resolution in advanced stages? We saw some recoveries in this quarter. So do you expect some recoveries in the second quarter as well?
Yeah. We are working on that. Definitely.
Okay. And any sort of amount that you can quantify? What kind of recoveries we can expect in the second quarter?
See, all these NPAs are more than 20 years back. So I cannot say what will happen for this quarter. But I can tell you for the financial year that the figures are very, very healthy. Because if you see, around INR 1,157 crores of our NPA loans are under different stages of the NCLT only. And for most of them, either the liquidation or the resolution orders have already been passed. Only thing is that we are waiting for the approvals of the lenders and the bankers. There are some minor issues. So I cannot describe in the timelines. But yes, of course, within six months, I think a lot of things will be coming on board.
Understood. Thank you so much, sir, for answering all my questions, and all the very best.
Thank you.
Thank you. We have a next question from the line of Naimin Doshi from 901 PMS. Please go ahead.
Yeah. Hi, sir. Thanks for the opportunity. Firstly, sir, any update on our PMAY 2.0 disbursement side that we'll be seeing the growth in disbursement in this financial year or in the coming financial year?
Yeah. Actually, PMAY 2.0 has been designed in such a way that all the states have to identify under two, three verticals, especially BLC, beneficiary-linked one. Second one is in CLSS. So majority of the states are now they started sanctioning. Maybe in Q2, Q3, we will have major sanctions on disbursements. As of now, it is yet to pick up. So gradually, it is progressing. So if you see, PMAY, around 7 lakh households are already sanctioned by the Ministry, MoHUA. And the applications of around 50 lakh households are pending with them. Maybe within this month, these will be sanctioned. And after sanctioning, it will go to the state. And then they will come out with their counterpart requirement. At the same time, they have to come out with the beneficiary contribution also.
So see, under PMAY, this is the most vital thing that is there now in the guidelines that beneficiary also needs to contribute for creation of that house. So to state, these figures are different. They are working on that, what kind of beneficiary contribution will be there. But from the Government of India side, INR 2.5 lakh has already been sanctioned for 7 lakh households, and 50 lakh households are under the pipeline of the sanction. So I'm sure that by quarter three or quarter four, the states will start identifying their counterpart requirement and coming back for funding from HUDCO.
Got it, sir. Sir, with respect to this PMAY, so can we assume, can we say that the growth in the disbursements, if at all the PMAY disbursements happen in this financial year, our growth of the given guidance of the current rate of disbursement would surely exceed is excluding the PMAY disbursements, if any?
We are excluding the PMAY disbursement because PMAY disbursements is dependent on many factors. So we have not taken into account. So whenever they get caught matured and whenever the states are coming, then only I think we will be factoring in. But as of now, we have not factored into our figures.
Fair enough, sir. Sir, last question from my side, sir. With respect to our liability side, do we see any further benefit coming in towards the tail end of this quarter or next quarter with respect to cost of borrowing side, especially with respect to our addition since our loan book is growing so far? So do we see any further capital raise at low cost? And at what levels will we be comfortable on our debt-to-equity side?
I think 6.32 figure is quite competitive to achieve, and we had already achieved. Now we will be competing with ourselves only. We are talking with other banks also regarding the squeezing the spreads also. There is some bottom line. I think we are very nearing to our bottom line at this phase. If the repo rate is reduced, which is I foresee that it may come, or this direct settlement had happened, then of course, there is always a space of correction. All these things need to be settled first.
Got it, sir. Thank you so much, Darshan from my side. Thank you so much.
Thank you.
Thank you. We have a next question from the line of Raghu from Travis Capital. Please go ahead.
Hi. Thanks for the opportunity. I was just having a look at your presentation in which you had mentioned earlier also the incremental cost of borrowing is 6.32% for the quarter. I just have a small doubt because in the section of bank loans, the short-term INR 11,992 crores, the average cost is 6.24%. Please correct me if I'm wrong. The bond yield presently is something around 6.2%-6.3%. How are we getting a bank loan of INR 11,000 crores at 6.2%? Am I missing something here?
No, no. You are not missing anything. Because the repo has reduced. Now the repo is around 5.5. So we are getting at a very competitive term from the banks. So it is only the skill of the negotiation that we had achieved this kind of short-term rates from the banks. And see, if you see from the banker side, they have a lot of exposure left with the HUDCO, which is not there with other institutions. So we are taking that kind of advantage of the exposure limits which is available with the bankers.
No, but please, sir. Really, the question I was having was the Government of India is paying 6.3% to borrow for its loans. The bank is lending at 6.24%. It almost seemed odd to me. So that is the reason I'm asking. Is there a fixed percentage a bank should lend for this priority sector? And HUDCO comes under that. That's why they are giving us this loan? Or what is the reason?
No, no. I think there is slight correction. These are short-term loans for one year, right, and Government of India is taking the SDLs, which are of around five years or ten years of the time, so their rates cannot be compared with these rates. So our long-term rate, if you see, if you compare the bond rates, we had taken a five-year loan, bond at around 6.64%, so it can be compared with the five-year borrowing of the state government.
Okay. And the reason for taking the short-term bond, is there any specific reason? Why are we doing that? Will it cause any?
Actually, we are doing our treasury management, and we are looking at the markets to settle down so that these can be converted into the long-term loan. So whatever advantage we can take during this time gap, that's what we are taking.
Sure. Sure. Thank you so much. Thanks for the clarification.
Thank you.
Thank you. A reminder to all participants, if you wish to ask any questions, you may press star and one. Anyone who wishes to ask a question may press star and one on their touchtone telephone. We have a next question from the line of Parth from DAM Capital. Please go ahead.
Thank you, sir, for the opportunity. Am I audible?
Yes, Parth.
Yeah. Sir, sir, my question is on growth again. So, sir, as you rightly mentioned that we are sector agnostic, there is abundant opportunity. We would be financing even in urban financing and PMAY 2.0. So with a large time available, unlike many other peers here in the same sector or in the government undertaking, sir, do you think there would be an upside risk to our growth projections for FY 2030 as well? So we target INR 3 trillion by FY 2030. But do we think we would achieve much before FY 2030 since there is a huge opportunity available, and we expect our disbursement and sanctions to remain very healthy from here on?
Yes. That's what I was talking that for this year, we will be overseeing the targets which we had set around 1.5 years back. So I think there is still some time left till 2030. So we will be revising in the third quarter, looking at the pace of the PMAY. Because under PMAY, we are still to confirm what kind of disbursement the states will be taking. So that is only the question that is unanswered. Otherwise, our sheets are fully filled, and we are ready to come with the targets. Only we need to fill this PMAY figure. So even though the PMAY figures in the late 2027 or 2028, even though we will be achieving that 3 lakh crores, and the corrections will be made looking at the PMAY progress.
Okay. Got it, sir. Sir, I just one more thing. You mentioned that there is a lot of opportunity opening up in the urban financing sector. So what are the kind of projects you would typically target, and how would that opportunity be for you?
So till now, also, whatever we are doing, it's in the urban segment only. But now this opportunity of Urban Challenge Fund is coming up. Honourable Finance Minister has announced during her budget speech, which is a subsidy of 1 lakh crores will be extended by the Government of India to the states. The 1 lakh crores has to be arranged by the states either through loans or their own accruals or through FDI or some municipal bonds or HUDCO loan or multilateral loan. And for 2 lakh crores, they have to identify the PPP players. So the private sector will also be there. So it's a unique kind of model where the state government, Government of India, and the private player will be there. And for this 50%, they have to make the project bankable so that the bank loan or the lender's loan will come to that segment.
We had started the private sector funding also. We had made our guidelines for entity as well as the sector. We had already approved the guidelines for road and real estate. In times to come, we will be sanctioning our guidelines for port, airport, and energy transitions also. I think this is the apt place because under VGF, the state government will be requiring some funds that we will be doing. At the same time, the private player to make that project bankable, that bankable project we will be funding may be a private sector project. It is a very huge opportunity that will be coming in next three to four years of the timeline, so that's what I was talking about.
Got it, sir. That's really helpful. Thank you. That's it. And all the very best, sir.
Thank you.
Thank you. A reminder to all participants, if you wish to ask any questions, you may press star and one. As there are no further questions from the participants, I now hand the conference over to the management for closing comments.
Thank you, Sujit. And thank you, dear friends, for joining. So I hope that we had been able to answer your queries to your satisfaction. Only thing is that I can assure you that we will be correcting ourselves during this financial year only. So whatever guidance that we had made to the market, we will try to oversee that kind of guidance. And looking at the opportunities available across the country and the kind of business model and the kind of confidence of the stakeholders, I'm sure that we will be overseeing. And regarding NPA, we are very serious that we need to resolve all our assets which are under NPA. Even though the figures are very, very less, but at the same time, we want our books to be cleaned up. At the same time, we will continuously yield towards reducing our cost of funds.
Maybe different currencies will be there. We will continue to review our hedging policies, and the monitoring will be on the day-to-day basis to avoid all such kind of things, even though the global uncertainties will be there, and the compliance will be the most relevant part that we will not compromise on the compliance of the RBI or SEBI or whatever security agencies are there, so this is all for first quarter, I think, and let's wait for the second quarter to come, and I can assure you that second quarter will be much better than whatever we are discussing for now. Thank you so much.
Thank you, sir. On behalf of DAM Capital Advisors, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.