Ladies and gentlemen, good day, and welcome to the L and T Finance Limited Q1 FY 'twenty six Earnings Conference Call. 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. Please note that this conference is being recorded. We have with us today Mr. Siddipta Roy, Managing Director and CEO Mr. Takin Joshi, CFO and Mr. Raju Doti, COO and other members of the senior management team. Before we proceed, as a standard disclaimer, no unpublished price sensitive information will be shared during the call. Only publicly available documents will be referred to for discussions during the interaction in the call.
While all efforts would be made to ensure that no unpublished price sensitive information will be shared, in case of any inadvertent disclosure, the same would, in any case, form part of the recording of the call. Further, some of the statements made on today's call may be forward looking in nature. A note to this effect is provided in the Q1 results presentation sent out to all of you earlier. I would now like to invite Mr. Sudipta Roy to share his thoughts on the company's performance and the strategy of the company going forward. Thank you, and over to you, sir.
Thank you. A very good morning, everyone. I welcome you all to the investor call for Q1 FY 'twenty six and the start of the financial year 2025. Joining me today on the call are our CFO, Mr. Sachin Joshi and our Chief Operating Officer, Mr. Raju Dhotti and other members of the senior management team of L and T Finance.
Similar to previous calls, today's call is divided into two sections, taken up sequentially by myself, followed by our CFO, Mr. Sachin Joshi, who will be talking about the overall business metrics and financial performance. Post our commentary, we'll be happy to take questions on the call. Before we delve into highlights for the quarter, I would like to give you some flavor of the current macroeconomic scenario and sectoral outlook. The Indian economy remains one of the few bright spots in an uncertain global economy with a healthy pace of growth of 6.5% in FY 'twenty five.
Concessors' projections indicate a similar growth trend of real GDP at 6.5 in FY 'twenty six as well. Strong domestic growth catalysts, sound macroeconomic fundamentals and prudent fiscal and monetary policy support are driving this overall macroeconomic stability. The monsoon season is progressing well with cumulative rainfall in the country at 10% above the long period average till fifteenth July. 80% of the geographical area has already received normal to above normal rainfall. The water storage level is 83% above normal and 96% higher year on year.
Kharif sowing is at a 7% increase over last year and Mandi arrivals of rubbing crops were 19% higher year on year. Mandi prices are ruling about their respective MSP for many major crops. Strong cash flows from the ruby season and heavy monsoon progression have kept rural sentiment hopeful of another year of bumper harvest. This augurs well for our rural businesses, which constitute a significant portion of our portfolio. Consumer demand signals in quarter one FY 'twenty six remain mixed.
The quarter recorded contraction in passenger vehicle sales and low growth in industrial output on one hand and pickup in retail sales volume, surge in toll collections and strong PMIs on others. Domestic inflation has been steadily declining with the headline CPI inflation recording a six year low of 2.1% in June 2025. The Reserve Bank of India lowered policy rates by a cumulative 75 basis points in the quarter and injected durable liquidity through a set of suite of liquidity measures. These measures have turned durable liquidity into surplus and are also contributing to faster transmission of monetary policy to the financial and credit markets. Easing financial conditions along with restoration of lower risk rates in the quarter should also help improve credit growth prospects further into the year.
Overall, we remain cautiously optimistic about strengthening demand signals, prudent policy support and huge potential for credit growth in the Indian economy. Coming to this quarter's highlights, I'm pleased to inform that our diversified franchises enabled us to achieve a quarterly PHE of INR $7.00 1 crore, up 10% Q o Q and 2% year on year with the highest ever consolidated book of INR 1 lakh 2,334 crores, $3.14 crores, delivering an ROA of 2.37%, up by 15 basis points Q o Q. Our robust business model, coupled with risk calibrated growth across all Retail segments, led to an overall quarterly disbursement of INR 17,522 crores, a healthy growth of 18% year on year, which was driven by a strong performance across all our business lines. The Retail book now stands at INR99816 crores, reflecting a growth of 18% year on year. The growth reflects the strength of the retail franchise aided by our strong execution engine, early dividends from technology investments, proactive portfolio and prudent risk management.
Our rural business finance vertical showed a positive momentum in disbursement growth during the quarter, resulting in a growth of 10% Q o Q on the back of improved collection efficiencies. The collection efficiencies in our operating geographies have been continuously showing signs of improvement and growth in disburse ments. However, in Karnataka, we have seen a gradual recovery from the loads in collection efficiencies of the previous quarter. Full normalcy may take a couple of more months longer than we originally anticipated. On account of flow forwards arising in Q4 FY 'twenty five, the Board in Q1 FY 'twenty six approved an utilization of INR 300 crores of macro prudential provisions.
To speed up the process of normalization in Karnataka, we are currently proactively boosting our collections by bringing down our accounts per collector through Manpower Edition and educating borrowers on the merits of prudent credit behavior through our community outreach programs. We'd also like to add that the Tamil Nadu legislation has had a negligible impact on our business. As an interim update, would like to mention that the month of July 25, we continue to see further improvement to our collection efficiencies, especially in the state of Karnataka. In the last quarter's call, we had announced our foray into the gold loans business through the acquisition of the gold loan business of Pall Merchant Finance Private Limited. I'm pleased to inform that the technology systems and the people integration was achieved in a short time frame of around two months, leading to an amalgamation of almost 130 branches, 700 employees and 1,300 crores of book.
Gold loans, a highly yield secured product, add significant value to our Retail business franchise going forward. We foresee that this business will serve as a big cross sell opportunity to our INR 65 lakh rural group loans and MFI and farm equipment finance active customer base and the customers forming a part of our existing customer database of INR 2 0.6 crore customers who have currently gold loan outstandings of almost INR 16,000 crores. We envisage that our field force of 20,000 plus officers will first multiply the gold loans lead generation process and direct incoming business to our branches. In the coming quarters, we also plan on expanding our Jio presence to branch expansion with 175 additional locations focused on areas with high cross sell potential. By the end of FY 'twenty six, we plan on establishing distribution strength of 300 plus gold loan branches.
Many of these branches will be in our new format, Sampuna branches, which will sell other products like micro lab, SME loans and personal loans apart from gold loans. Apart from North, our expansion locations will be focused in our traditional areas of strength in the Eastern And Southern States. Our digital large partnerships initiatives established with Amazon Pay, Credit and PhonePe has picked up pace in the last quarter with overall personal loan disbursements for the quarter from the aforementioned channels reaching with INR $6.51 crores and about INR $12.36 crores life to date, while keeping a strong focus on credit and risk the address, extensively leveraging the partner trans signals. We'll continue to keep expanding our origination momentum with existing partners while fostering new partnerships, some of which will be announced soon. I would now take some time here to share an update on the various technology initiatives for the quarter.
Project Cyclops, our proprietary AIML based credit underwriting engine that was operationalized in quarter one FY 'twenty five and implemented across 100% dealerships in two wheeler finance business has been upgraded to generation three based on Kubernetes architecture. Today, 100% of our two wheeler disbursement takes place through this engine, and we have been seeing very encouraging trends from this implementation quarter after quarter, with the net nonstarters for the portfolio reducing to 0.34% for June '5 from 2.36% in December 2024, an improvement of 200 basis points in a short period of five months. Project Cyclops, which has been under favorable implementation in the Farm Equipment Finance business, having been extended to 20% of our tractor dealerships with 24 live scorecards, will complete full implementation in the month of August 2025. Similar to two wheelers, the initial performance reads from the pilot in the farm business is extremely encouraging. The full implementation of Project Cyclops in our farm business is expected to be completed by quarter two FY 'twenty six.
Project Cyclops has been simultaneously rolled out in SME Finance during the quarter and full deployment is expected to be completed by '6 as well. We have initiated extension of Project Cyclops to our personal loans business with full implementation by quarter three FY 'twenty six. In the last call, I had spoken about Project Nostradamus, our next transformative technology initiative for FY 'twenty six. It is a state of the art, first in industry AI driven automated real time portfolio management engine, leveraging traditional as well as alternate data. I'm pleased to share with you that the implementation of this engine is on track with creation of multiple data dashboards for early warning and proactive portfolio management.
We expect the beta launch of the product, Doxodamas, to take place in September 2025. Details about the same are available in Slide 31 in the investor presentation. It gives me great pleasure to share that L and T Finance has been assigned its first ever international rating. S and P Global Ratings has assigned LTS BBB minus long term and A3 short term issuer credit rating. The outlook on the long term rating is positive.
Fitch Ratings has assigned LTAB long term foreign and local currency issuer default ratings of BBB minus with a stable outlook rating by reported international with a stable outlook. These long term ratings are investment grade and are at par with India's sovereign credit rating. This opens additional pathways for diversification of liability origination at competitive rates from global markets. Now I'd like to share an update on our quarterly performance against the Lakshay twenty twenty six goals. I'm pleased to share that the retailization has increased from 97% to 98% from last quarter to this quarter against the Lakshay target of 95%.
We had set ourselves a Retail book growth target of 25% CAGR over the four year plan period against which, as of June 3025, our Retail asset book growth stood at 28% CAGR. Given our outlook of the business environment and the less calibrated growth in RBF and two wheeler business, our year on year Retail book growth for the quarter stood at 18%, supported by a strong performance within the Pharma Finance disbursement with a 16% year on year growth, a 65% year on year growth with personal disbursements, a 24% year on year growth in housing loans and a 30% year on year growth in SME finance disbursements. We continue to maintain our focus on sourcing more prime and near prime customers who exhibit credit resilience, which led to the prime customer share in our two wheeler disbursements, increasing to 84% in the month of June 25, which stood at 53% for the month of March 24. Our journey towards building a prime dominant portfolio, which focuses resilience across business cycles continues with a strong focus on credit and risk frameworks. On the third milestone, which is asset quality front, where we maintain retail GFC and NFC levels closer to the threshold levels of 31%, respectively, despite the macro challenges and the segment specific challenges in the microfinance segment.
Our console GHG and NFC stood at 3.310.99%, respectively. On the fourth and last milestone of ROA, we have achieved an ROA of 2.37%, which is an improvement of 15 basis points over the previous quarter. This has been achieved despite microfinance industry challenges and risk calibrated disbursement across all lines of business. We remain committed to continuous improvement in our IoT industry as the segment headwinds in the microfinance sector dissipates. In customer acquisition, the focus continues to be on expanding our customer base, both deepening our reach in existing segments and broadening our geographical footprint.
While our approach in rural business finance was carefully calibrated to the macro environment, we are actively engaging disbursement activities, expecting a gradual return to full momentum as conditions improve. Our tool pillar finance is taking renewed focus with policy changes, expanding to reactivated dealers to better serve prime customers. Pharma Finance is gearing up for increased activity this current season, and our personal strategy is highly risk calibrated, ensuring responsible lending with home loans and loans against property, witnessing a seasonal dip. We also expect our new gold finance vertical to add towards this positive momentum. This quarter, we were able to add a total of 5.5 lakh new customers.
Further details around customer acquisition and repeat share are available on Slide sixteen and seventeen of the investor presentation. In terms of sharpening credit underwriting, project cycles continue to be extended to other products, as I mentioned earlier. Our fully capacitized model risk management team has been set up to mitigate any potential risk arising from over 100 plus machine learning models that are being used in project cycles, and we expect the number of machine learning models to double over the next one year as we rely on the expertise of the model risk management team to ensure continuous monitoring, validation and recalibration of the model. In terms of future futuristic digital architecture, we also have set up an independent machine learning operations team, and we will expand its capacity over the next couple of quarters to ensure smooth build and implementation of additional Cyclops, Nostradamus and collections models. Additionally, in our Bangalore engineering center, we have set up an LCF lab to enable our engineers to experiment on innovative use cases in a sandbox environment.
Our new Home Loans Neo two platform has reduced average data capture time from thirty minutes to ten minutes, and we continue working on optimizing the digital sales interface apps on all lines of business to enhance field executive productivity. During the quarter, the beta version of our AI powered SME underwriting Copilot was deployed, which interprets bureau reports using custom trained in house LLM models, leading to faster and accurate SME loans underwriting turnarounds. On brand visibility, we continue to focus on targeted customer engagement through integrated marketing campaigns, where we launched our business loan campaign feature, featuring iconic Indian cricketer and our brand ambassador Jaspreet Bhumra. Our AI powered digital microsite, ltsgamechanger.in, was launched as a part of the business loan campaign and has received excellent customer engagement stats. We also briefly ran campaigns for personal loans and gold finance during the quarter.
Following our Gold Finance acquisition, we have rebranded all the 130 gold finance branches, and I'm delighted to announce that the second edition of our flagship BFSI AI event RACE twenty five with the theme accelerating financial services with AI is scheduled to take place on the 11/07/2025 at the Jio World Center in Mumbai. On the capability building front, I'm pleased to share that we have been recertified as a great place to work, affirming our commitment to building a high trust, high performance culture. This time, our score improved from 82 in FY 'twenty four to 84 in FY 'twenty five, driven by increased employee participation, which rose from 73% to 89%. We are committed to fostering an environment where every employee feels valued, empowered and inspired, making us truly an employer of choice in the financial services sector. As part of the strategic acquisition of Pall Merchant Finance Limited, gold finance business, we successfully on boarded 700 employees into our workforce.
Free and seamless employee transition across 130 acquired branches ensured zero disruption to operations. We continue to standardize our branch infrastructure, and this quarter, we inaugurated new revamped regional offices in Kolkata and Rajkot. These efforts also underscore our dedication to providing a modern and an efficient workspace that supports our expanding operations and talented teams. I will now request Mr. Sachin Joshi, our CFO, to take you through the financial update.
Thank you, Sushita. As always, I'll be walking you through the financial performance of the company for the quarter. So coming to quarterly performance, the consolidated NIM plus fee for the first quarter stood at 10.22% as against 10.15% in the previous quarter, that is, Q4 FY 'twenty five. Consolidated PAT for the quarter stood at INR701 crores, up 10% Q o Q and 2% Y o Quarterly Retail disbursements stood at INR1752 crores, up 18% Y o Y. Retail book stands at INR99816 crores, again up 18% Y o Y.
Our consolidated book standard, 102,314 crores, up 15% year on year consolidated ROA standard, 2.37%, up 15 basis points Q o Q and consolidated ROE at 10.86%, up by 73 basis points quarter on quarter. Talking about Retail businesses. Rural Business Finance registered quarterly disbursement of INR 5,618 crores, delivering a strong momentum with 10% growth quarter on quarter with focus on acquiring lower leverage customers and geo diversification. The book size reached INR 26,616 crores, up 3% year on year in the first quarter. In the Pharma Finance vertical, quarterly disbursements stood at INR 2,200 crores in the first quarter, up 16% Y o Y.
Increased crop yield and favorable monsoon is fostering positive user sentiment and resulting in improved retail demand. The book size reached INR 15,756 crores, reflecting a growth rate of 11% year on year. Urban Finance, which comprises of two wheeler personal loan and home loan labs. Starting with two wheeler, this business registered a quarterly disbursement of INR 2,128 crores in the quarter, down 19% year on year. The book size increased to INR 12,331 crores, up 3% year on year.
Notably, 84% of two wheeler disbursements in June were from the prime segment, which reflects our focus on quality growth and risk adjusted returns. Personal loans business, we achieved quarterly disbursement of INR $19.42 crores, translating into a growth of 65% year on year with the book size at INR 9,382 crores, an increase of 41% year on year. The double digit growth is aided by scale up of fintech partnership. Homegrown and LAP. Here, we achieved quarterly disbursement of INR 2,780 crores, up by 24% year on year with a book size of INR 26,464 crores, an increase of 33% year on year.
Growth in the segment supported by newer partnerships and strong network of distribution channels. In SME business, the quarterly disbursement stood at INR1273 crores, up 30% year on year. The book stood at INR 6,964 crores, up 56%. The growth in business volumes was driven by an increase in direct sourcing and existing strong network of distribution channels. During the quarter, we acquired gold loan portfolio of INR $13.35 crore.
This was done on June 9. And in the following twenty days, we disbursed further amount of INR195 crores. The closing book stood at INR1360 crores at the end of fourth quarter. Let me now hand over the call back to Prasipa to make his closing statement.
Thank you, Sachin.
In closing, I would like to state that we expect the pace of disbursement to accelerate in the remaining quarters of the year along with our focused execution on all risk and technology initiatives. Our investment in our state of the art credit union project backlog, which has already started giving early dividends, is will continue. And I am confident that this will solidify as we complete implementation across all lines of business. Project Nostradamus is nearing an advanced stage of completion, and we are confident of deploying the beta version in quarter two FY 'twenty six. As an organization, we have already started working on the Lakshay 2031 plans, and we'll be sharing the same at the start of FY 'twenty seven.
We are focused on transformation of the organization towards a technology first, risk aware, bottom line driven culture with a heads down execution mentality. We are hopeful that this will translate into a consistently positive outcome trajectory in the years to come. I thank you all for taking time to join us today, and I would like to throw the floor open now for questions.
Sure. Thank you very much. We will now begin the question and answer session. If you wish to remove yourself from the question queue, you may press and two. Participants are requested to use hands as well asking questions.
Also, we would like to request participants to please limit your questions to one per participant. For follow-up questions, we request you to rejoin the queue. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from Maru Kadajanya from Nuwama. Please go ahead.
Yeah. Hello. Congratulations. I have a couple of questions. Firstly, where do you now expect credit cost to stabilize?
As in that or put it the other way around, the 3,000,000,000 of drawdown that happened this quarter, was it all towards Karnataka? Is that issue behind us? So now you can continue to see gross and net credit cost come down sequentially because we are also moving to prime and I mean, is the Karnataka paying now fully behind? Because we don't have additional buffer now to draw down. That's that's right.
So that's the first question. And secondly, where do you see long term e stabilizing? Because Cyclops is doing very well. It's been extended to many products now. So, obviously, we are moving prime.
We are shifting customer segments. So where would you settle? What would be the maximum downside to yield from these levels?
Okay. Thanks, Farooq. On the first question, you know, Karnataka is stabilizing fast. You know, with every passing month, you know, collection efficiencies are ranging from our gradual 20 to 30 basis improvements with every passing month. And you're right, you know, a large amount of the sort of flow forwards that was accounted for by the macro prudential provisions this quarter came in from Karnataka, which was obviously, you know, an event that the industry had not planned for.
Right? I think, overall, the Karnataka sort of collections sluggishness will take another, according to me, another three to four months to fully stabilize. Right, which brings us to about October 2025. Right? I do believe that Karnataka should have stabilized October 2025.
As I said in my call, we are putting in additional collectors in Karnataka. We are trying to bring down the accounts for collector in Karnataka. And overall also, we are trying a lot of community outreach programs and, you know, sort of telling our borrowers about the need to maintain good credit score, so that, you know, their access to credit is not hampered in any way. All of those results are bearing fruit, but I do believe that that, you know, that should happen sometime around September, October is what my sort of sort of estimate is. And also, you have to note also, keep in mind one thing that the MFIN radar guardrails, which went into full implementation, the industry is also trying to settle to that.
Right? So, you know, the industry has seen the long tail of that settlement. And given the fact that monsoons are good and we expect a good credit crop, I do believe that H2 will be a more of a normal quarter, more of Q4. But in Q3, we'll see signs of normalcy coming in, in this business, right? As regards to your question on the macro potential provisions, yes, our objective is to use as less as possible.
You have to be as user prudent as possible. And believe though that there are conditions precedent, which satisfy that usage exists even in Q2, which is primarily you know, the Kanata coordinates and and some flow forward from the previous year's events as well. However, as a management, it would be our objective to be as prudent as possible in in in in using that. On your guidance of long sort of where do we see credit cost cutting, our objective is to get to a trajectory of about 2.3% to 2.5, right, towards Q4 of this year is what we intend to get to. And given the fact that the outcome of project Cyclops is very, very encouraging, and we expect that, that should be achievable unless there are any unforeseen shocks in the middle.
In terms of the in terms of the sort of the yields, etcetera, the way we look at it is a little different. You know, I I I get asked this question that saying that, you know, you're going prime, so will it be will it have an impact on on your yields? Yes. Going prime will have some impact on yield. But the fact is that I look at overall risk adjusted yield as a as a as a guiding factor.
And I do believe that risk adjusted yield will continue to remain stable or probably improve as our risk cost starts bearing down. In terms of yields, though there might be a couple of, you know, notches, maybe thirty, forty, 50 basis points, you know, tempering of yields over a period of time. But our risk adjusted will our risk cost will improve further, probably giving rise to a 50 to 100 basis points improvement in risk adjusted yields. So that is the way I look at it. Right?
And, you know, frankly, as an organization, we are moving away from the practice of, we look at yields, obviously, definitely, and our objective is to improve yields. But as an organization, we are also looking at risk adjusted yields very, very carefully. And the entire philosophy of the business teams have been moved towards improving the risk adjusted yield rather than focusing on yields alone.
Thank you. The next question is from Kunal Shah from Citigroup. Please go ahead.
Yes. Thanks. So firstly, again, coming on to contingency buffer, looking at the collection efficiency trends across the product segments, maybe there is not a significant improvement which is happening compared to that of fourth quarter. Then is it fair to assume that the balance to INR 75 crores will also get utilized given this collection efficiency trend? As maybe managing credit cost in 2.3, 2.5% would be difficult.
And second question is, in terms of the repeat customers, particularly in MFI, that is continuously increasing up, like, there is, like, almost five percentage points increase in count as well as, say, in terms of the value term. So and and we are the only player in the MFI segment that has grown the book over past couple of quarters. So is it like more kind of a refinancing which is happening to the existing customer? And if you can highlight in terms of the time lag which is there between the repayment and the disbursements because I think the general concern is whether like maybe the repeat disbursements is leading to improvement in the collection efficiency. Yeah. Thanks. Yeah.
No. Okay. First, I would like to dispel that notion because we do not, you know, give first and foremost thing, we give only one loan to an existing customer. Right? And that too after nine or twelve months of seasoning.
Right? So for us, that question does not arise. For us, one customer is one node, right? It's very, very clear. The second thing that you should note in mind that we have a very strong LTF, only LTF customer base, which is almost close to 48% right now, Right?
Now the fact is that in the event that our portfolio quality has been outsizedly better than the industry, there is a lot of attention on our customer pools. There's a lot of attention on our customer pools from our from our competitors. Now if I have to frame that, I have to reach my customers earlier than, you know, from a strategic point of view, to reach my customers a creditworthy customer, a little earlier than our our competitors reach. And to a certain extent, you know, if one of if our LCF exclusive customers once repeat top up, right, we are rather better off it in giving, you know, to that customer much faster than anyone else, so that, you know, the associations don't increase and, you know, know, sudden leverages don't increase, right, from a strategy point of view. But also, that has also see, I if you see our last eight quarters trajectory, actually, we have been trying to bring down our repeats now.
No. Repeats actually came down for a couple of quarters, right, because we are focusing on much more of new customer additions. It is only in the last two quarters that we have seen a slight uptick in repeat, which will again we'll try to normalize as the the conditions of the microfinance industry improves. And as we sort of step up our distribution in the new geographies, which is AP, Telangana, Western UP, Maharashtra, and we have recently entered reentered Assam as well. So as new customers start flowing into a post, the repeat also will start going down.
Right? So that is I consider that as a temporary phenomena, and and and it should normalize within the next one or two quarters. The first question that you asked is in terms of macro potential provisions and footprint of effort, etcetera. And as I said, as an answer to Maru's question, as a management, you know, our objective is to be as prudent as possible. You know, we really want to make sure that our collection efficiencies are pushed up this quarter, and we really do not need to use macro potential operations to a significant extent.
However, as I said, certain amount of the conditions precedent, which has led to some of those flows exist. And frankly, at this stage, it is too premature to indicate on possible utilization in q two and can be only ascertain in the quarter end in consultation with the board and the auditor. Right? However, as I said, our July collection efficiencies continue to trend upwards across all regions, including Karnataka. We are having good monsoons.
We are hopeful that, you know, good credit crop will add to more amount of liquidity and the sort of the last sale of disruption because of the full implementation of the MFIN guidelines will settle this quarter. So, and we are increasing collector workforce across many of our large markets just to bring down the accounts per collector, so that an average collector is able to focus on a smaller number of accounts and reach higher efficiencies. So overall, we are working on all fronts, and we are very, very hopeful of reasonably good outcome by the end of next quarter and the quarter.
Thank you. The next question is from Bharat Dallek from Nippon Mutual Fund. Please go ahead.
Hi, sir. Hi, sir, on this number. Just three questions, sir. One is on your cycle implementation, right? Like, we've done that partially for Farmers for Farmers and Personal Loan.
But we haven't seen a material drop in your disbursement. Right? So just wanted to understand, will there be some discussion in terms of disbursements in these two products as the entire cycle of gets implemented? Because we've seen that during the two year loan implementation. Just wanted to understand what is different this time around wherein the disbursements are still holding up.
Yeah.
Thanks, Vivek. Is that your only question or is there a follow-up question as well?
No. Sorry.
I yeah. So second second question is on on the on the personal loan. Right? We will start to finish up in terms of the partnerships, the various partnerships that we have. Just wanted to understand how the economics different from, like, doing this maybe via DSA or in house versus doing it via DSA partner, right?
Because my guess is that you're trying to maybe make this a larger part of the deal. Just wanted to understand from an economic perspective in the sense, the cost of acquisition and also the credit cost. I'm sure credit cost early days, but how would you want to maybe look at profitability in this individual acquisition that we do implementation that we do? And the last question is on the micro credential provisioning, right? I just wanted to understand, at what point do you start building buffers in terms of micro credential, right?
Maybe we utilize most of it that is left over the over a 5,000,000 quick. But I I what profitability do you think we will want to maybe build those up? Because the in good times, we're gonna build it and maybe utilize it when times turn bad, right, that we have in the passenger side. Just wanted to understand what is your thought process in terms of building deals in the future, what will you need to build on? Thank you.
Yes. Okay. Thank you. So first question on Cyclops. Cyclops has been fully implemented in two wheeler, fully implemented in December, and we have now almost six months to 100% operational Cyclops in two wheeler.
Cyclops and two wheeler and and I think all businesses will go through this trajectory. The first three months, which is implemented, we see a different approval rate because it cleans out the sort of the dirty burgers, right? But over a three month period, the system understands and system compensates. So if you see in and and and then we slightly fine tune also because we continuously watch it as we go along. This quarter, our two wheeler business actually went up compared to, you know, q four.
And the early start to, you know, q two also has been strong. Right? So in terms of cyclops, in two wheeler, it's fully stabilized, and we are getting incredible benefits out of the tool in terms of leading indicators pointing towards much, much more lower risk costs. In SME in tractor business, it has been implemented in about 20% of the volumes. And the leading indicators there also are very, very encouraging.
It will be fully completed by end of q actually, are targeting August 10, filling with, you know, probably by September, middle, we should be able to sort of implement fully in firm. Again, there has been a 17% increase in reaction rates. However, the team is compensating by, you know, moving into a larger number of dealerships and trying to make sure that sort of the throughput remains higher. So, again, here, we will we will sort of compensate. What happens is, typically, also, Cyclops actually boost LTVs also because we are far more confident in, you know, taking certain calls, which we are not able to do previously.
And some of the LTV boosting data, have put in our investor presentation as well. So overall, on an overall basis, I think it remains even even with the sort of the bad borrowers cut out. And over a period of a quarter or a quarter or two, the volumes build up, and we are very, very confident that as Diwali comes, which is also a big market for big period for the sector business, I think the volumes will shoot at that particular point in time with fully stabilized cycles. Personal loans and SME are getting implemented. SME, it has been implemented in five markets.
You know, we are learning from it. We are fine tuning it. I do not foresee much of a drop in SME volumes because in SME business, just like we have done on the personal loans business, we are implementing the digital partnerships in large partnerships. And as you can see, the large partnerships are given as a massive kicker in the personal loans business. Our personal loans business because our digital partnerships have grown up grown 65% year on year.
And to a certain extent, we expect that strong growth trajectory to continue both in personal loans and SME as well, even with implementations of Cyclops. So yes, from a growth point of view, even with Cyclops implementation, we are very, very confident that the growth trajectory will continue and the growth trajectory will continue in a very recalibrated fashion. In fact, the successful implementation of Cyclops has given us a lot of confidence actually to scale up in the market that we were previously hesitant to scale up because we were not sure of the risk outcome, especially in the two wheeler business. Two wheeler business, traditionally, we have not been present in Rajasthan. In tooler business, we have not been present to that extent in Madhya Pradesh because we are not completely confident of the outcomes in these two markets.
After Cyclops has come in, we are significantly sort of expanding in these two markets, and we are very, very satisfied with the results that we are having. So overall, Cyclops on the long term will boost disbursements rather than curtail disbursements in a very, very risk calibrated fashion. In terms of personal loans economics, the personal loans economics to the large partners, with each partner, we have a different model of economics. Some of the our objective in most of these partnerships is outcome based economics. That means you know, we set targets of disbursements and and we set targets of risk.
So it's not that it is only a disbursement only, it's a risk plus disbursement sort of calibrated outcome and basis certain of those thresholds, the economic setup. So overall, see, in our DSA channel, your cost of acquisition remains around 3% to 3.5. What I can say without going into exchange specifics because it is very specific for each and every partner, the origination costs and the economics are far lower than what we would do in a through our DSA channel. In fact, as a matter of principle, we run the business on what we call a three to one metric. That means channels that have 3% acquisition cost, channels that have 2% acquisition cost, channels that have 1% acquisition cost.
And our objective, overall, the period of time is to get to 50% of our acquisition volume from the 12% channels. Right, especially in the SME business, which has got a very, very large DSA component. So overall, our focus is to make sure that all these channels are as efficient as possible. And the initial leading indicators of the volumes arranged to these channels is that risk is holding, yields are holding, right? So and we are now building volumes.
So overall, we'll continue to build on this. As I said in my call, in my opening comments that we'll announce a few more large partnerships this quarter, right, which has significant potential to scale up on whatever we have already done. And I do believe in in in in in the period to come, large large deal partnerships will contribute to about 50 to 60% of our personal loan origination. In terms of the macro financial buffers on building them up, we would like to build back the macro financial buffers as fast as possible, probably but that depends on, you know, sort of a you generally build macro potential buffers in a situation where we you have probably, you know, an extra dollar of profitability. Right?
Because, you know, that's when you look at doing that or when you get, you know, when you get some extraordinary gains, which you have probably not accounted for. As you are aware that we have a large amount of wholesale business, which is currently in the process of resolution, especially in the commercial real estate, and many of them are in advanced stages of resolution, right? So what we have decided as an organization that the cash flows that we approve from the resolution of those assets, right, post sort of the SR SR structures structures resolving, the the the extra cash flows, which we we are very certain according to calculations we'll get from it, will go back to build a macro potential buffer, right, at an organization level. One of the other thoughts that we have is that, if this time we build macro potential buffers, we'll not build at a business specific level, but we'll build it at an umbrella broker level at an organization level with a large focus on unsecured businesses. So that is what our strategy is.
So obviously, yes, across FY 'twenty seven and FY 'twenty eight, our focus will be to build back those micro potential provisions as fast as possible.
Thank you. The next question is from Avina Singh from MK Global. Please go ahead.
Yeah. Hi. Good morning. Thanks for the opportunity. So just, I mean, referring to your media interaction, I mean, a 2.8% kind of a exit ROA you were referring to. I just wanted to clarify if that 2.8 kind of a thing corresponds to the 2.37% number for this quarter. The question coming that because of Cyclops implementation and also that, you know, lap on home loans increasing, And also, are alluding to the fact that the new Yeah.
That 2.8%, you know, I meant here 2.8% in FY twenty seven. So I'd like to clarify that. You know, quarter four exit, we should be around anywhere between the corridor of 2.5% on.
Right? So the 2.8% trajectory will probably be achieved sometime around FY twenty seven.
Yeah. Yeah. This kind of a clarify because I was a bit confused that 10 to 10 and a half percent, meaning you were alluding to you know, that 4.22% looks stable. And on a, you know, after macro, the credit cost is close to 2.23%. That also is a kind of a near term, I would say, like, stable rate to go. So then the 2.8, yeah, because that there were some concerns. Thank you. That also, Vikram. Thank you.
Thank you. The next question is from Shweta Dakhdar from Elara Capital. Please go ahead.
Thank you, sir, and congratulations on a good quarter. I have two questions. So while if I look at repeat disbursement share, which is steady now at 49% and even at value term around 35%, and you just alluded to the fact that in the earlier question that microfinance could be the largest share there. But going forward, how are you marrying the fact that, you know, this also forms the base for growth as well as you are curbing the the risk emerging from overlap across the businesses such as microfinance or unsecured lending? That's one question.
Second is considering we have sizable presence in Bihar. So are we building in any kind of traction on macro prudential provision? Or maybe that will that be part of our discussions whenever the board meeting or that happens? Although past precedences do not trigger a worry, but currently, the dynamics are definitely slightly distinct. Thank you.
Thanks, Shweta. You know, on the repeat, I I obviously, the repeat overall, you know, overall retail repeat is currently, if you see the numbers, you know, last quarter, it was at 49% overall, and this quarter also, it has remained at 49% overall. However, in rural group loans, it has gone up by about 5% on in terms of in terms of, you know, count and in terms of, again, in terms of value also, it has also gone up by about 55%. I, obviously, our objective is that, and as I explained in detail in my previous answers as to, you know, why why that has happened. Right?
However, what we intend to do is that we, over the period of time, as situations normalize, as new sort of customers from the new markets like Western rupee, Eastern Maharashtra, IP, Telangana, Assam, etcetera, you know, start flowing in, you know, I see that proportion start reducing. We're still building our distribution in these new locations where we are distributing, and these are relatively lesser leverage locations. So I do believe that over a period of time over the next two quarters, we will see the repeat going down, right? So that is what I would like to give an answer to the first question. As an answer what was the second one?
Yeah. Bihar. On Bihar, again, you know, Bihar, you know, collection efficiency is pretty, pretty stable. Right? You know, though we are keeping a close watch, it's pretty stable.
And, you know, overall, as an organization, we have certain thresholds of exposure in one single market. So we are very, very careful that the loan is we do not break those thresholds. Right? So and as and and and and, frankly, in Bihar also, over the last couple of quarters, we have slowly increased our manpower strength to bring down our accounts per collector. And this quarter also, we'll be, you know, continuing that trend to bring down our accounts per collectors much even further.
So that there is a very granular and and and focus on maintaining the collection efficiencies. So Bihar continues to be very, very stable for us. But, yes, we always want that. But, Bihar, traditionally, we have got more worse from natural calamities and floods, etcetera, than any other any other thing. And and we are hopeful that at least this year because last year, there was a bad flood in Bihar, we are hopeful that at least there won't be a repeat of the same this year as well.
Just wanted to add, Sachin, yes, Sweta and Kunal, I don't think you should be really worried about increase in repeat because these are the times when the Ampin guardrails have actually got implemented on three finance years, right? So the repeat customers, especially the exclusive customers, 48% of our total INR26000 crores. These are the customers who have been with us for second, third, fourth cycle and all. So we have enough information on them. We have enough behavior.
There is a lot of goodwill among these customers. And till the time we maintain the guardrails, which we have been since April 2020, I think we would not want to give up on our base, huge customer base, which we have created with a lot of pain over the last ten to fifteen years. And this is the time to ensure that this customer base, which has been loyal with us, should remain with us. And new customer, you try to go for at this point of time, unless it's a new geography or geographies which have very little leverage, the risks are very high in ultimately getting into the same customers who have been perhaps delaying and defaulting you with other financiers. So I think the strategy at this point of time is to ensure that our customer base does not get disintegrated in any manner.
Thank you. The next question is from Nishant Chawate from Quota. Please go ahead.
Yeah. Hi. Just two questions. You know, one is on security receipt.
We almost have five thousand hours last Listen. We can't hear you very clearly. If you could speak a little louder.
We expect to kind of monetize that. I believe the the deduction last year was around 13%.
So is that the base or the tax rate or, you know, how how we do think think about about it? It? And the other one was on disbursement where this quarter, if you look at ex of gold loan book purchase, disbursement growth was around 8%. Is this disbursement yeah. Am I audible now?
Yeah. Yeah.
I'm audible now.
Yeah. Yeah. Sure. So is this, you know, decline in disbursement oh, sorry. This weakness in disbursement, is this because of company specific factors in terms of the migration of portfolio?
Or is it because you can see some general weakness in the economy? So, Nishanth, on the first point on SRs, we had mentioned on our earlier calls also that the resolutions of these SRs, which are currently around 60% provided for, the book is right now 5,500. It has been coming down. But I think significant resolutions are in advanced stages with NCLT. And the resolutions are expected in FY 'twenty seven and 'twenty eight.
Significant part of these projects will actually see the completion, and we should be able to and we had also mentioned, Prudhika in the earlier one of the conversation also mentioned that we expect certain projects to be resolved in our favor, which means that the provisions which have been taken against such projects may get released only to be utilized to rebuild our macroprudential provision. So yes, the progress has been there, but a bit slow at this point of time. 'twenty seven will see a significant amount of development.
Yes. On disbursements further, let's take the question.
You're right because, you know, the disbursements, you know, growth this quarter this if you look on a q o q basis, actually, the the disbursement of firm was very good on a q o q basis. That has grew quite well on a q o q basis. Even, you know, Microfinance also grew reasonably well on a q o q basis. If I were to look at, you know, on a q o q basis, Pharma Finance grew by 25%. Even the Microfinance business grew by about 10%.
So, you see, same time last quarter, which is the quarter previous to this quarter, we were averaging around 1,500 crores per month in in rural business finance. This quarter, we have averaged around 1,800 crores per month. Right? And we are hopeful that as and when the collection efficiencies, you know, move upwards as they are with every passing month, you know, we should be able to get back to a 1,902,000 crores trajectory, Right? So 1,900 to 2,000 crore trajectory as soon as possible, preferably, you know, towards the near near near term towards the festival season.
In tool of finance, if you see on a q o q, we have grown by about 15%. So that growth has been pretty strong. The reason you probably see a dip in the overall growth rate is that personal loans actually this quarter was, you know, probably a little lower growth rate, primarily because we had a very good growth rate in in the in the in in q four of f I twenty four. But with with Amazon and PhonePe now, the volumes now stabilizing, this quarter, we are also looking at a strong growth rate in personal loans as well. So overall, I do believe that the situations in the market are slowly improving.
So sort of the mini cycle we saw in some asset classes, especially unsecured and microfinance, you know, show signs of dissipation. Have they fully dissipated yet? No. I think it will take another two quarters for the industry to see full dissipation. Anyway, credit was also squeezed, as you can see from all the civil dashboards that, you know, credit disbursement across the industry had got squeezed.
So I do believe that the restoration of that is a two quarter process for us. We have seen good momentum this quarter. I expect Q2 to continue that momentum. Though Q2 has some seasonal fluctuations in the offshore, etcetera, that happened in September before the festive season puts in Q2 normally is a tight quarter for most lenders. However, I do believe that we will see decent growth in Q2 as well.
But I do believe that H2 will be very, very good, especially starting with the festive season and in Q4. That is the that is the way I look at it. I see a more of a level out Q2. I see good acceleration in Q3, and I see, you know, pickup pace in Q4, if that answers your question.
Thank you. The next question is from Abhijit Debrawal from Motilal Oswal. Please go ahead.
Yeah. Hi. Am I audible?
Yeah. You're audible.
Yeah. Now, thank you for taking my question. So firstly, sir, on on on equity and credit cost, if you could just help us understand how is the two wheeler and the tractor portfolio kind of behaving now. That is one. And somewhere earlier during the call, you spoke about credit cost declining to 2.3 to 2.5% by the exit quarter four q.
So, just trying to understand, I mean, earlier in the past earnings calls, we've spoken about benefits from Cyclops leading to structural improvement in credit cost for us. So what could that credit cost look like from FY twenty seven onwards? Also, we have discussed a little bit on SR earlier. So, sir, since I just wanted to understand you gave out the number of 5,500 crores in the 50% provision. So, you said gross SR outstanding roughly around 11,000 crores now.
And also, spoke about FY 2728, where we can see some resolutions happening in our favor and which will subsequently be utilized for macro conditions. So, any any ballpark estimates of what recoveries we are expecting from SSR over FY 2728? And lastly, with regards to gold loans, I think, as you discussed, spoke about setting up branches and we expiring to get up to 300 branches. So, I mean, over what period this will be done and will this mean that at least in the near term OpEx will be eliminated? So just some of those questions. Thank you, sir. Okay.
I'll I'll take the two wheeler and go along and then Sachin can give the additional details in the, for the SR, right, in terms of numbers. Right? So let me tell you the onset that I'm very happy with the way that two wheeler and the tractor sort of risk numbers are are panning out.
In two wheeler, especially, as I said, you know, our prime share has reached 84%, right? And the two wheeler gross nonstructure rates as well as net nonstructure rates have gone down. We have given an index representation of the bounces in, I think, slide, it will be on slide 15 or 16, I think. It will be on slide 15 or 16, yes. So two wheeler, we have given it, sorry, slide 27.
27.
Slide 27 in the Investor Day.
You can see that if indexed on April was 100, you know, 18 or the thousand customer, you know, 100 customers are bouncing, now only 72 are bouncing. So, this is portfolio bounce, that means, you know, and still, if you see, we have some portion of the, sort of the legacy portfolio left, which will probably, you know, become much smaller in volume by, say, q three of this year. So overall, two wheeler, you know, this cost is progressing very, very well. And I do believe that, you know, we will see probably a very low risk cost regime in two wheeler to set in post Q3 for us as the legacy portfolio is still doing this in size. For tractors also, similar trajectory.
You know, tractors, if you see our net nonstarters in tractors are at a historical low. Actually, in the Cyclops portfolio, we have seen net nonstarters as low as 0%, actually. Right? So so tooler or in tractor also, you know, the overall sort of cleanup has happened. And if you see slide 28, you know, in terms of in index representation of net loss status, in April 24, if it was 159%, we are down to 38%.
So that will tell you the extent of improvement that has taken in the two wheeler business. And if you see the two wheeler sort of charts in terms of, you know, collection efficiencies as well, in chart 38, is it 38 or 37? Yeah. Sorry. 37.
No. Chart 38. Right? You can see the collection efficiencies now. You see in June, we are at about 98.1910.8% collection efficiency, which has gone up to a 93% collection efficiency.
You can see that it has significantly gone up. And this we expect that this trajectory to continue. And on a almost a 15,000 crore book, right, a 120 basis points improvement collection efficiency is significant in terms of credit cost. So we expect that both the two wheeler business and our tractor business to have significant contribution to profitability in terms Yes, the two wheeler is the next page. If you can see two wheeler also, you know, collection efficiency in two wheeler is at 38.
38, 98.5, right, which is in slide 39, top up and which is which was 98% same time last year. And this number is actually going up quite steeply. So April is a seasonal dip because what happens is that many of the outsourced collection agencies actually post the and the FSA industry sees this April what I call the April dip. But overall, I'm very, satisfied with where where this two are progressing. In terms of the gold loans, the 135 branches, which I said, new branches, will happen before March 31, right, of this financial year.
We are working on that. We have a fair amount of we have figured out see, you know, understand that, you know, we acquired a business which had actually fine tuned the process of branch addition. Right? So the branch cost, the cost of branch addition is not really extremely expensive, but it's quite economical because the process has been fine tuned by the by the team which was managing this business in for merchants over a period of years. So obviously, yes, the 135 branches will take a little bit of the cost, but we do not expect that to be significant enough to show up materially significantly in our cost numbers.
Overall, as an organization, we are also running a massive productivity as well as a cost improvement exercise internally. And we are hopeful that we should be able to absorb this cost quite effectively. Right? So our focus is that we expand very, very quickly in our markets of strength, especially where we can use some of the feet of the street that we have, especially in the MSI business as well as in the tractor business to sort of cross sell gold loans to our existing pool of customers, either existing customers or our customers who have been previously with us and sort of build in a new model where we sort of lead generate in the field and send the customer for fulfillment towards the near tranche. So that is what we will be wanting to do.
And we are reasonably confident that we should be able to do that.
Before that, I think, Abhijit also wanted to know the fraction of how credit costs will pan out between 2.3 to 2.5. So see, the credit costs, the first quarter, of course, we have used. And when we talk about this range, this is, of course, after taking into account the macro prudential provision. During our earlier couple of calls, we had mentioned that the two wheeler PL and tractor businesses, for specific reasons, the like, for example, we had stopped the repo ing of 90 plus for tractor.
Similarly, two wheeler and PL for the challenges which were faced from the urban side had led to increasing credit costs. And we had mentioned that this will last for at least two to three quarters. We are seeing some kind of stabilization as far as PL is concerned. Tractor has actually started showing an improvement after last two to three quarters. Two wheeler, we, I think, have still a quarter or two to go.
And as Sudipta mentioned, Q4, we will start having the seasoning of the book, which has come through Cyclops, will start showing its impact. So Q4, we will start seeing the full benefits of Cyclops on the two wheeler portfolio. Till that time, the book which was generated through our source through the earlier models will also become very insignificant. So keeping these in mind, I think we should for the full year, we are expecting that we should be somewhere in the range of about 2.3 to 2.5. We should exit, I would say, by with 2.5, but with the average for all the four quarters, we should be somewhere around 2.4, 2.5 for the full financial year.
On the SRCs, the overall book which was sold off to ARCs post receipt of cash was about INR 14,000 crores over a period of time. And against that, we have, during various points of time, created provisions at the time of transfer. Also, we had announced about a year back, setting aside about INR $7.29 crores. All that put together, we have about INR 8,400 crores, which is set aside, which comes about 60%. So the INR 5,500 crores is the net carrying value as of June 30, if that clarifies.
Thank you. The next question is from Chintan Shah from ICHN Securities. Please go ahead.
Yeah. So thank you for the opportunity. So sir, one question on the MSI part portfolio. So our part 31 to 90 portfolio, so that has been more than one percentage since the past three quarters. So current quarter and it it it has been actually increasing since the past six quarters.
Only for this quarter, it has declined to 1.2 versus 1.4 previously. And simultaneously also, we have utilized the micro credentials since the past three quarters wherein the part 31 or 90 has been about one one percentage. So when do we see this portfolio coming down below one percentage? I understand it could be due to Karnataka or Vihar, etcetera. And this used to be 0.5% is almost a year ago in Q1 FY twenty five.
So, yeah, when when this could normalize by the year end? Yeah. That's the first question.
Yeah. So, you know, if you see thanks, Shantan, for the question. If you see, we already saw the inflection point of the curve between power one to 90 this quarter. Right? If you look at at all the buckets up. Right?
Yes.
So, and I just first, like, I like to say that there is no issue in Bihar. Right? Bihar is normal.
There is no issue in Bihar. Right? So Karnataka, yes. Karnataka, the speed at which we thought it will improve probably did not happen in q one. But, again, we we are seeing it picking up pace.
We are seeing it picking up pace. And as I said, our objective has been to bring down the account per collector ratio in Karnataka as well. So there are people who are more focused. So, you know, we have increased the number of people, so that the account for collector has also come down. So that the the same number of because what has happened is the Karnataka window collection has reduced because there is some time till sometime to sometime you calculate, you cannot go beyond 5PM, etcetera.
So we need the larger number of collectors to reach the same amount of customers within that period of time. So that is what we have been focused on, and that's what currently work is going on. So I do believe that this quarter, we'll see further improvement. And again, you know, Infin card rates came into being, you know, in the first quarter fully. So obviously, that took the market is taking time to settle as well, right, on that.
So overall, I think q two will be the settling period, and in q three, we'll see the normalcy. So the curve which you saw the inflection point in q one will continue to trend downwards in q two. And probably by middle of q three, it will probably come close to normal. Right? Again, you know, I'll I'll I'll be I'll put a caveat here, you know, in the sense that, you know, all these are sort of in the place, and we are hopeful that, you know, you know, the event came in a short period of three weeks.
And, frankly, the industry was not prepared for. Right? And in a short period of three weeks, we saw our collection of expenses tanked. So all these numbers in the cave cave, the things are settled. Right?
And there are no more sudden surprises. Right? That is the first caveat. Right?
So just to add, only positive thing we can share is that the debt, which went down to almost 200 basis points plus in the month of February, the recovery has been there.
Maybe from the, you know, pre pre February times when the collection efficiencies were 99% plus, I think we would be about fifty, sixty basis points away. And as we speak, July also has been trending positively. So yes, I think we'll have to just wait and watch what the other geographies have already stabilized. So we should not see any reversal of what what you were pointing out, the in terms of the past, you know, zero to thirty, thirty to 60 beyond this in a very significant manner. That's that's right.
Yeah. So so just to follow-up on that. So, typically, do we have any ratio? I as in this month is the part that you own 90 percentage of the portfolio, so how much typically that flows into 90 plus or how much can be rolled back? So any data points to share that?
See, actually, this works only in a normal, you know, environment. In today's environment, like Sudipta mentioned, if the collection efficiencies are slowing down, we'll just put more people to see that the collections are done. So it will it will right now, the challenges are in only specific pocket, specific states. We will have to address it by using different different techniques. So there is no specific time that, okay, if, you know, if 31 to 50 under normal circumstances, we can possibly mention about, you know, what what will be the reverse flow which will happen.
But roll forward, right now, the moment they touch 90 plus, 100% gets provided for. So that and that ensures that whatever is is seen already get captured in terms of provisions. One thing which we can say is that Karnataka challenge is not in terms of ability to pay, but the intent to pay. And a time will surely come when these customers would need money and they're looking at their bureau scores getting worsened. They will not get money anywhere.
And the chances of recovery will be high when they come back asking for cash loans. This is the expectation we have.
Thank you very much. We'll take that as the last question. I would now like to hand the conference back to Mr. Sudip Kar Roy for any closing comments.
Thank you. You know, I thank everyone who has joined us today. So it has been a it has been a q one has been a supporter for all around for the industry as well as well as for us. And but what we we are reasonably satisfied with the outcome. Obviously, a lot of work remains to be done, which will be done across the rest of the year.
One thing I would like to assure is that we are focused on making sure and as I've mentioned in, you know, many of my media interviews that we are building a risk first organization. Right? So and many of our technology sort of investments in the initial phase has been focused towards making sure that our risk guardrails are strong and bulletproof. So now that we are reasonably confident of some of the efficacy of the early technology steps that we took last year. This year, we will as and as the conditions improve, I think, you know, we will have the confidence enough to be the first of the block in terms of growth, right?
And all the growth drivers, all the growth clusters are now being positioned into place for that event to happen, right? We are seeing very fast improvement in the operating environment in all lines of business, both rural as well as urban. And I am very, very confident that Q2 will be the inflection point in terms of the risk outlook of the industry, and we will see better outcomes in Q3 and Q4. Right? With that, I would like to wish you a very good remaining part of the day.
And will, me and my management will be very happy to give you, interact with you when we meet one on one, and probably give provide more flavor of our execution story. Thank you so much. And with that, we will end the call.
Thank you very much. On behalf of L and T Finance Limited, that concludes this conference. Thank you for joining us. Ladies and gentlemen, you may now disconnect your lines.