Ladies and gentlemen, good day and welcome to Muthoot Finance Q2 FY2026 earnings conference call, hosted by Elara Securities. As a reminder, all participants' lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need any assistance during the conference call, please signal an operator by pressing star, then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Shweta Daptardar from Elara Securities. Thank you, and over to you, ma'am.
Thank you, Shweta. Good evening, everyone. On behalf of Elara Securities, we welcome you all to Q2 FY2026 earnings conference call of Muthoot Finance Limited. From the esteemed management, we have with us today Mr. George Alexander Muthoot, Managing Director; Mr. Alexander George, Full-Time Director; Mr. George M. George, Full-Time Director; Mr. George Muthoot Jaikat, Full-Time Director; Mr. Eapen Alexander, Executive Director; Mr. K. R. Bijimon, Executive Director; Mr. Oommen K. Mammen, Chief Financial Officer. We express our gratitude towards the esteemed management of Muthoot Finance for providing us the opportunity today to host this conference call. Without further ado, I now hand over the call to Mr. George Alexander Muthoot, Managing Director, for his opening remarks, post which we can open the floor for Q&A. Thank you, and over to you, sir.
Good evening to all of you. This is George Alexander Muthoot, Managing Director. We have the members of the board also with me because today afternoon we had our board meeting for reviewing the Q2 performance of the company. I'm glad to say that Muthoot Finance consolidated loan assets under management grew 42% year-on-year to INR 1,47,673 crore against INR 1,04,149 crore in the corresponding half-year of last year. During the half-year, consolidated loan assets under management grew by INR 25,000 crore, a growth of 21%. Consolidated profit after tax stood at INR 4,386 crore as against INR 2,517 crore last year, an increase of 74% year-on-year. The portfolio in Muthoot Finance per se, the standalone profit of Muthoot Finance stood at INR 4,391 crore in the half-year as against INR 2,330 crore in the last financial half-year, an increase of 88%.
The profit after tax for the Q2 financial year stood at INR 2,345 crore as against INR 1,251 crore in the Q2 of the last year, an increase of 87% year-on-year. Loan assets under management stood at INR 132,305 crore this half-year as compared to INR 90,197 crore in the preceding half-year of last year, again registering a growth of 47% year-on-year. During this quarter, during Q2 financial year 2026, Gold Loan AUM increased by INR 11,723 crore, registering a growth of 10%. Now coming to the subsidiaries, Muthoot Homefinance, the AUM stood at INR 3,247 crore. Total revenue for the half-year stood at INR 222 crore as against INR 155 crore in the last year, a growth of 44%. Profit after tax stood 10 crore. stage III loan assets stood at 1.69% as of September 30, 2025. Belstar Microfinance is a subsidiary again of Muthoot Finance, where Muthoot Finance holds 66% stake.
Loan AUM for the half-year stood at INR 7,717 crore, and the total revenue stood at INR 840 crore. It incurred a loss of INR 160 crore during the half-year, which is consistent with the adverse environment generally in the microfinance sector. However, the losses have narrowed down from INR 128 crore in Q1 to INR 32 crore in Q2. Stage III loans stood at INR 4.58 crore, which is also consistent with industry peers. Consistent to the RBI allowing microfinance companies to have 40% non-microfinance loan portfolio, Belstar has opened 23 Gold Loan branches in the half-year to diversify the loan product portfolio. Muthoot Insurance Brokers, an IRDA-registered company, has a revenue of INR 70 crore, and it has achieved a profit after tax of INR 23 crore in this half-year.
Asia Asset Finance, a listed subsidiary based in Sri Lanka, where Muthoot Finance holds 72.9% of the stake, the loan portfolio stood at LKR 3,868 crore as against LKR 2,600 crore in the last half-year, again an increase of 48% year-on-year. The total revenue also stood at LKR 440 crore and an increase of 40%, and the profit after tax of LKR 40 crore as against the profit of LKR 30 crore last year. Muthoot Money Limited, a wholly owned subsidiary of Muthoot Finance, is an RBI-registered non-banking finance company. Today, it extends loan against vehicle finance as well as loan against gold loans. The loan portfolio for the half-year stood at INR 6,393 crore as against INR 2,491 crore, an increase of 63%. The total revenue increased to INR 501 crore as against INR 146 crore in the half-year, an increase of 244% year-on-year.
Again, it achieved a profit after tax of INR 106 crore in this half-year to INR 5 crore in the previous year. We are delighted to report another strong quarter with standalone loan assets under management rising to INR 132,000 crore. The steady trajectory highlights the resilience of our business model and the continued trust of our customers. Standalone profit after tax also increased 88% year-on-year to INR 4,391 crore for this half-year. In view of this performance, we are upgrading our financial year 2026 Gold Loan growth guidance from 30% to 35%. Favorable regulatory changes in the RBI for Gold Loan sector, higher gold price, and tighter norms for unsecured credit are expected to boost Gold Loan demand. We will continue to expand our non-Gold Loan portfolio also, including personal loan, which today and including microfinance. This non-Gold Loan portfolio is about 12%-15% of the consolidated loan portfolio.
The microfinance sector is showing renewed resilience following the implementation of regulatory guardrails and improved underwriting, auguring well for future performance. We are accelerating our digital transformation to deliver faster, more seamless credit access for millions of customers worldwide. With an enhanced branch network, a trusted brand, and sustained investment in technology and innovation, Muthoot Finance is well positioned to deliver sustained growth throughout the financial year 2026 and beyond. With this, I would like to conclude my short address, and I would be delighted to give clarifications against any of the from any of the investors. Thank you.
Thank you so much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchstone 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 will wait for a moment while the question queue assembles. First question is from the line of Mahrukh from Nuvama. Please go ahead.
Yeah, Mahrukh, we are not able to hear you.
As there is no response from Mr. Mahrukh, we will proceed with the next question from Mr. Raghav from Ambit Capital. Please go ahead.
Sir, good evening and congrats on these results. I just have one question. I wanted some understanding on your yields. So it has moved up again in this quarter versus Q1. Last quarter, I remember you had some INR 350- INR 400 crore of recovery benefit. What is that recovery benefit in this quarter that is leading to a yield expansion again quarter on quarter? Is it somewhere around INR 550- INR 600 crore in this quarter? Is that estimate right? Just wanted some thoughts on this. And then I have another question.
I think the reason why it has increased a bit is probably in the NPA bucket, there has been a liquidation of some old dues, especially in the light of increased gold price. There we have and we have been able to generate a better yield, which should be somewhere around INR 300 crore plus. That should add to the additional yield interest income which has been generated. As you know, on NPA accounts, we do not recognize the interest. That has come in as an additional yield. The rest is probably because of the churn in the book.
Okay. You also, I think last quarter, you had mentioned there was some INR 150 crore that you were to receive from the ARC sale. Has that come in in this quarter?
No. So the collections from remaining portion of ARC is this quarter, it is small.
Very small.
Very small.
Okay. Understood. So you're saying the entire yield expansion that has come, which is from 19.56% to 19.99%, that's entirely because of the INR 300 crore. Is that understanding right?
Yeah.
Because the math doesn't seem to be adding up. The math doesn't seem to add up only about INR 300 crore because I think last quarter when you had 350 crore-400 crore adjusted for that, the core yields were somewhere around 18%-18.5%. Hence the question that if this benefit is only restricted to INR 300 crore or is it more?
Yeah. So roughly around INR 300 crore. The yield should be somewhere between 18.5%-18.75%, somewhere around that range.
Understood. Perfect. That was all from my side. Thanks for answering that. Thank you.
Yeah.
Thank you. Next question is from Piran from CLSA. Please go ahead.
Yeah. Hi, sir. And team, Muthoot, many congratulations on the strong quarter. Just going back to Raghav's question on the yield movement, if I reduce INR 300 350 crore from last quarter and this quarter's interest income, that interest income has still grown 14% versus loan growth of 10%. Are our fresh disbursement yields going up in the last few months?
No. Just interest income is going up because the portfolio also has gone up.
The portfolio is up 10%. Interest income is up 14%, one-fourth, if I adjust for the INR 300 crore.
Okay. So the profit, the known portfolio, so we have a bouquet of products for yield, etc. So we have high yield, low yield. It occasionally sometimes happens that in some quarters, the higher yield portfolio offtake may be higher. That's simply that. It's just not that such a lot of retail loans. Some of it happens like that. It only means that during the quarter or just before the last quarter, more high-yielding loans would have been disbursed. That's it.
Okay. So we should not read too much into it. It sounds like that.
Yeah. Yeah.
Okay. Understood.
That's what I think that's what Oommen was also trying to say.
Okay. Okay. Now I understand. Sir, and also in your opening remarks, you mentioned about favorable regulatory tailwinds. I think you're referring to the LTV. You can give at a higher LTV for lower ticket loans. Have we started doing that for loans less than INR 250,000?
What I meant by regulatory tailwinds is mainly the clarifications, what is the clarifications and what should I say, confusions being set at rest by the RBI. I think that is what I meant by the regulatory tailwinds. Of course, we have not started the new, what should I say, less than INR 250,000 loans and 85%, etc. We have not started, sir.
Do we intend to start before April 1st? Or do we just wait for the market to do and then we follow?
We'll take some decisions. I think usually we do and others follow.
Okay. Okay. Fair enough. Good. And sir, just lastly on cost of funds, how much more benefit can we expect to see over the next two-three quarters?
I think it has started. Cost of funds, cost of borrowings has started declining. I think last quarter it was 8.99%. This quarter, I think it is 8.78%.
Yeah.
Last time 8.88%. Now it is 8.78%. I think it should come down. I think banks themselves are also started declining. We should see that. Domestic NCD market, also the rates have started falling. I think the peak level of interest has already reached and I think it started declining. We should get benefit in the coming quarters.
Like 30-40 basis points sounds reasonable? Like 8.78% becoming 8.38%?
Yeah. Probably by the end of the year. Not end of the year. It's another two quarters. We should see some decline. Maybe another 15-20 basis point decline should happen from first quarter of next year.
First quarter. Okay. Okay. Yeah. So that answers my questions. I'll get back in the queue and congrats once again.
Thank you.
Thank you.
Thank you. Next question is from Mahrukh from Nuvama. Please go ahead.
Hello. Congratulations. I have two questions. One is on yield. Do you have any plans to cut your yields given that competition is at very varying levels of yield, right? There are gold finance companies such as you, which are at 18%-20%. Then there are SFBs and other NBFCs at around 15%. Then banks are lending at lower. Maybe they are all different segments. Are there competitive pressures enough to suggest a yield drop or it will just track the interest rate cuts?
Mahrukh, see, our lowest interest rate will be around 10%. Our highest rate will be around 21%. We keep tweaking with these schemes depending upon how the business scenario is. That is why sometimes the rates go up, sometimes rates come up. We generally try to remain somewhere around 18.5% kind of a level because we try to cater to different segments depending upon how the market is. To answer your questions, we have low-rate products. We have not done any across-the-board reduction in interest rates.
Competition from all the banks and NBFCs which you mentioned, they are there for the last several years. There is nothing new. Nothing new. Banks are there. SFBs are there. NBFCs are there. Nothing new. We try to give the best for the customer and probably see that we grow a portfolio also side by side.
If the rate is too high, etc., people may not come. If it is too low, our yield may come down. So we do a balance.
Okay, sir. Thank you. Thanks a lot.
Thank you. Next question is from Abhijit from Motilal Oswal. Please go ahead.
Yeah. Thank you for taking my question, sir. I mean, while you've already answered, right, that competitive intensity has remained for the last many years. And despite that, we've done so well. I'm just trying to understand, especially in Southern India, right, where we kind of keep hearing that there are other NBFCs who have entered into gold loans and who poached employees from Muthoot, right? I'm just trying to understand, despite so many NBFCs now announcing their foray into gold loans and now starting to build teams in gold loans, it still is not really prompting you to rethink your strategy anywhere, right?
Thank you. I think there is competition always. This is not the first time. Others are also planning to enter.
There is, again, I remember in 2011, 2012, there was again a rush of all NBFCs and non-NBFCs also wanting to enter the gold loan sector. After some time, after a year or two, most of them lost interest. At this point of time, there are people coming in. Focused players, people who are focused, we were also focused at that time. We are focused today also. We are focused on gold loans. I think there is always space for us. We did not take any knee-jerk reactions when such things, some people come. No need for any knee-jerk reactions. We are there. We have branches. We have our customers. Those customers definitely value the service and the products which we give. I think to answer your point, no need to take any knee-jerk reactions to some people saying that we are.
People poaching from Muthoot always has been there. Anyway, people think that by poaching a few managers or some senior managers from Muthoot, they can start a gold loan. They will start, but afterwards, they will find that the operations, the challenges in the operations will catch up with them. We will wait and see. It is one point, one word. There is no need to take any hasty or knee-jerk reactions. People will come and go. We have been there, focused on this.
Got it, sir. Sir, there is then a related question again, saying on the same thing. Even despite so many other large NBFCs entering into gold loans, no one is at this point in time introducing any teaser rate schemes, right, just to kind of entice customers, right?
I mean, given how yields have been, right, what I'm trying to understand is the pricing discipline in gold loans is still very much there, right? Everyone is able to grow without really having to do too much on yields and pricing.
I think you put the question, you answered it also. I think I should agree with that a little bit.
All right, sir. Then the last question again I had is, sir, I mean, while you explained that there were some one-offs in interest income in the first quarter, second quarter, right, which is why maybe the yields are higher. From a second-half perspective, if you could help us understand what are the recoveries which are expected, either from NPA resolutions or from the ARC transaction that we in the first quarter called out that INR 100 crore-inr 150 crore we are expecting. What are the recoveries which are expected which will reflect in interest income in the second half? What are the blended steady-state yields we should expect going forward?
I think yield is what Oommen also mentioned, 18.5%.
18.5%.
18.5%. That is the rate which we would, ±0.5% , is what we would be expecting. Maybe 18%-18.5%. That should be the steady-state. Occasionally, some of these comes because, as Oommen said, when there is a churn in the NPA, the old loan NPAs with a lot of interest embedded in them gets replaced by a new NPA with much lesser interest. All the interest which we had actually deregularized will become recognized. When this churn happens, some of these things happen. Our NPA as of this quarter is, I think, little less than 3000 crore. i think it has continued to be there. That is because we give more time to the customers to take the loan. That is the NPA. Regarding the ARC, yes, some of it, people have come and taken back their gold.
Now the gold price is also high. Probably more and more people will come and take back their gold. In fact, in the ARC also, all the customers who are able to take back the gold are very, very happy because we did not auction their gold. There are some little bit ARCs left, and we are definitely in the money. We are not hard-pressed to auction it quickly. As and when they come, they'll be able to take it back. Answering the question, the yield should be in the 18%-18.5% range going forward also. This, of course, occasionally this churn in the NPA, etc., happens and some extra interest coming.
Got it. Sir, Oommen, sir, if you could just answer that question, what are the expected recoveries in the second half?
Expected recovery is what is, there's no particular customer who we should recover. It's just such a lot of small loan portfolios. So it is just people coming and taking back their gold. There is no one big customer or some big loans which have to be recovered. There's nothing like that in this. In the gold loan, it's all average INR 150,000, and INR 100,000 loans. They come, they close, and they go. That's all.
Got it, sir. This is useful. Thank you so much for patiently answering all my questions. I wish you and your team the very best.
Thank you. Next question is from Love Sharma from JPMorgan. Please go ahead.
Yeah. Hi. Thank you, management, for taking the question. Three questions from me, if you can. Help me with those. So first one, I think on the ECB side, on the dollar-bond borrowings, of course, they have grown to quite a decent portion of the overall funding, about 15% now. If you could just share some insight, where do you think your target or any steady-state number you have in mind as a percentage of your funding for the ECB borrowings? Second question would be around the new RBI guidelines. If you can share what has been the changes since they have been implemented in October. And I believe some of those measures would likely be implemented from April onwards. Just to get a sense of what you expect in terms of changes, in terms of growth, competitive scenario, or anything else which you could highlight.
Just lastly, I think you made some announcement around this particular case about some retail investors having some complaints or some issues. If you could just share where that case is or what is the any quantifiable impact you could see there, if at all. That's it from me. Thank you.
ECB borrowings is around 16%. I believe we should have a stable source of funding. If it is a stable source of funding, it should constitute around 25%-30%. On ECB borrowings, now we have focused only so far on bonds. There is also a larger ECB loan market, which probably we'll be keen to look at.
Yes, yes. Regulatory changes. Regulatory, actually, it's all clarifications. There's not much change that's happening. We have not started implementing the new regulations. It is coming, kicking in only from 1st of April next year. I think there is nothing now to be done on that. We have not made any changes. There are no big changes necessary from this regulatory guidelines.
The only thing which is there is the new loans which we are permitted to do, loans up to INR 250,000 with 85% NCV, etc., that we will consider from next April. The board will have to take a decision or the credit department will take a decision on that. Regarding the.
Sir, the last point, I think we have already filed an exchange filing, which is quite detailed. So we do not have anything to add more than that.
Is it possible to give any quantifiable amount? How much are the retained assets, or asked? What kind of losses they incur, etc.? Any, just from basic to.
No, please go through that exchange filing. This has nothing to do with Muthoot Finance or the loss incurred by the investors.
Okay. Okay. Thank you.
Thank you. Next question is from Shreya from Nomura. Please go ahead.
Yes. Thank you for the opportunity. Congratulations on a great set of numbers. I have two questions. I wanted to understand our average ticket size is now more than INR 117,000. I wanted to understand at what point or at what ticket size will this start plateauing? Because obviously, at the higher end, your competition from banks will become aggressive at maybe beyond INR 200,000 or INR 250,000 or INR 150,000. If you can help us understand, beyond what ticket size do you feel for your book you see far higher competition from the banks? My second question is on the number of customers. Obviously, there was a very strong growth in the number of customers in the slide that you've given of customers coming back with fresh collateral, etc. In this quarter, that number seems to have plateaued a little bit or declined in certain segments.
It seems a little counterintuitive because we thought that a lot of customers who are not getting MSME loans, not getting MFI loans, would still be coming to you all. Has there been some slowdown in the number of people walking into your branches? Those are my two questions. Thank you.
Okay. Regarding the competition from banks or the average ticket size, etc., there is space and room for everybody today. As you said in the last line, more and more people are now thinking of gold loan. More and more people are now comfortable to take a gold loan with their jewelry. We do not see competition that somebody is taking away our customers or we are taking bank customers or banking. There is space for everybody. The total business is really growing. Today, the banks have a huge gold loan portfolio. They have a portfolio of about INR 13 trillion. The NBFCs have a portfolio of little less than INR 3 trillion. There is a lot of business being done by the bank. People may go to bank, maybe they come to NBFCs.
It is not that, my point is, it is not that somebody is taking our business and we are taking somebody else's business. There is business for everybody. Now, about this number of customers.
Shreya, the number we are showing, it's actually the incremental number of new customers. Every quarter, if you are able to bring in 400,000 + new customers, that is a big thing. What you are thinking is probably the outstanding number of new customers. It's not. Every quarter, we have added around 420,000, 420,000.
Ms. Shreya?
Yeah. Yeah. Sorry, I lost that. Understood. I get the part that it's addition of new customers and every quarter it has been.
Sorry for interrupting you. The line for management has been dropped. Please stay connected while we reconnect the management. I repeat, the line for management has been disconnected. Please stay connected while we reconnect. Ladies and gentlemen, thank you for waiting patiently. The management is back online with us.
Yeah. So answering Shreya's question on number of customers.
Are you there?
Yes, yes. I'm there.
Every quarter, we are adding a new set of customers, which is around 420,000. Sometimes there could be small variation. Sometimes it could be higher than the previous quarter. The important thing is that every quarter, we are adding a similar number of new customers. We are making fresh disbursement to those customers.
Got it. So that answers my question. Thank you and all the best.
Thank you very much. Next question is from Sameer from Dymon Asia. Please go ahead.
Yeah. Hi. Thanks for the opportunity. Just to kind of harp on this point of competition, while I agree that Muthoot has been there across cycle and probably one of the most long-standing players, just wanted to pick your brains on the fact that this time the new competition is AAA rated, especially from the NBFC side. Large NBFCs who are AAA rated want to scale this product. Also, seemingly more invested in technology. How are we trying to kind of stay at the forefront in the product? As well as, do you see any risk to, say, pricing or yields? Yeah. That's my question.
I think I had answered a similar question a little earlier also. There are people coming, AAA or AA or whatever A rating, etc., with a deep focus, maybe coming into the business. We have been focused on this business. We are focused on gold loan. Our branches are also focused on gold loan. We have seen similar people coming and probably after some time losing interest also. Whatever it is, people come to a sector when they see a lot of growth potential. It definitely answers one question. There is growth potential in the gold loan sector. Now, whether somebody is coming and taking away our business, that question, I do not think it has happened. It is happening. Till now, we have not seen anything like that. We will see.
We will wait and see what is happening in the market, and we can always make changes if necessary. To me, if you ask me, I do not think we need to do anything, any knee-jerk reactions today.
Sure, sir. Thank you and all the best. Yeah.
Thank you. Next question is from Harshit from Premji Invest. Please go ahead.
Hi, sir. Am I audible?
Yeah.
Yeah. Yeah. Sir, I had a few questions. First, I'll put it all together itself. One is on the LTV piece itself. This time, I think we have consciously or probably because of the market factors, we have kept the LTV much lower than what it was running till last quarter. It's right now about around 57% versus 60%-61% we had earlier. Wanted to get your thoughts, is it a conscious decision from our end given the heated prices right now? The second question was, sir, on the branches, we saw a very good branch addition this quarter. If you can throw some light on the targets and what are the limits which we have unused at this point of time. One last question is that when I look at the stage III reduction, last quarter it was INR 700 crore.
This year it was 100 crore. despite that, our interest income recoveries this time seemed very strong. Just wanted to double-check that 350 crore odd number which you said last quarter was regarding probably the INR 600 crore of stage III reduction. This time that number was 100 crore. yet the number was very strong. If you can give some color on how should we look at the yields?
About the branches, yes. We have been opening branches regularly. We again give request to RBI for permission to open branches. As soon as the permission is received, we will keep on opening branches. We had about 100-200 branches every year. Probably this year also, we will look at that number or a similar number of new branches this year also. Regarding the NPA, I think Oommen had clarified earlier in the first or second call that it is because of the churn in the old NPA accounts. The old NPA accounts which were really old and had a lot of embedded interest which was deregularized earlier, when it was got renewed or closed, those interests, a big chunk of that interest came. The new NPAs which came did not have that much of accrued interest to be deregularized.
That is the reason for that.
Got it.
On LTV, the 43% you see is the average LTV. The portfolio will have old loans which is because of the increase in the gold price. Currently, if you look at it, it will be at a lower value. It is merely because of the average LTV. Otherwise, we are lending at 75% of the gold price as per RBI notes.
Okay. You are saying that probably the older customers who we have let at, who are obviously the LTVs are lower, they have not come and taken extra money on the same gold, which is why they.
If they need, they will come and take additional money if they need it.
If they need, they will come. If they don't need, they won't come.
The reason I asked that, sir, if I look at from 1Q to 2Q, the drop was actually a bit sharp. That 38% moving from 4% to 43% was actually a lot sharp. Probably is it also linked to the stage III reduction?
In the second quarter, there is an increase in gold price.
It is all purely depends on the gold price increase. When the gold price goes up, the LTV also comes down.
Typically, by when, sir, in your experience, does the customer come and take relatively higher amount or take some of the gold back?
See, if you look at daily disbursement, we give maximum of 75% LTV. The average will be still somewhere around 70%-71%. Not all customers will go for 75%. Now, later, the same customers, when the gold price increases, their LTV will come down from 70% to, say, 65%, 60%, depending upon the increase in the gold price.
Yeah. No, sir, I understood that. I am saying that behaviorally, what have you seen that customer typically in 3-4 months, again, we should see either the LTV moderation, the customer taking more money or taking some of the gold back? That depends on the need of the customer.
See, sir, there is one thing which people should really understand. It is not that somebody has pledged gold and he'll take all the maximum loan every day. He actually wants the gold back. He will take only an amount which he feels he will be able to repay. If not one month, two months, three months. If he feels that he will not be able to repay that loan, he will not take it on the gold. Because if he really wanted the full money, he would actually have sold the gold and got all the 100% instead of coming to financial and taking only 75%. He is a person who needs temporary money, and he feels that after one month, two months, three months, etc., he will be able to take it back.
He will take loans only up to the amount which he feels he will be able to repay. Otherwise, he will lose the gold. Those are people. Somebody will not come just because the gold price has gone up. He will come if he really needs the money.
Sure. Sure. Perfect. Thank you, sir. All the best.
Thank you. Next question is from Rajiv Mehta from YES SECURITIES. You may go ahead.
Yeah. Hi. Good evening. Thank you for taking my question. And congratulations on very strong profitability. Sir, my question is we are earning very strong ROI, ROE right now. Where do we plan to reinvest for maintaining our customer base growth and our market share? If not cutting the yields, then would it be in advertisement and marketing, or would it be in more employee incentives? Can you share some thoughts on your growth strategy going ahead to ensure that we keep on growing our customer base?
You want us to spend all the money?
I think that, sir, for maintaining growth at the customer level of 10%-12%, we would appreciate that if something has to be reinvested, it happens. Yeah.
I think we have given a higher guidance this time. We are expecting the business to grow maybe 30%-35%. We need all the cash with us.
No, but that is a value growth. I'm talking about more customer-level growth of 8%-10% being maintained despite more number of players joining the industry.
Our major expenditures are on employees as well as on advertisement. That's where we are going to spend amount.
Okay. Because I've seen in this quarter that your AUM spend has actually increased in this quarter. And your even employee cost has been growing well, which is a good thing. So these are clearly the two areas where you will keep on reinvesting for growth.
Yeah. I think this is a bonus season. So on-arm bonus, etc., payments come, incentives are paid. Of course, increments are also paid. I'm not sure. That may be one of the reasons. Of course, we are adding people also. The branch business is growing. We are adding some people also here and there. I don't know the exact numbers. It's a general ballpark. I will from a ballpark.
You can see the expense numbers break up in the presentation.
Yeah. I know. I've already seen. On Belstar, I mean, the losses have come down. Now even the book has stopped the degrowing. What is the outlook on growth and profitability in the next three-four quarters? How quickly can we come back to that 15%-20% growth, 3%-4% ROE? What is the assessment basis, the current loan stages, the current collection efficiency? How quickly can we come back to normalcy?
I think probably next two quarters will also be quarters for consolidation. Probably we may not see big growth there. Consolidation and maybe making the portfolio better quality would be the focus for the next two quarters. Probably after that, after two or three quarters, we should see business growing also. Again, it will always be on a calibrated scale only, not something which is, what should we say, very high-powered growth, etc., may not be there. It will take two quarters for it to stabilize. Maybe this quarter, the losses come down. Probably by next two quarters, we should see a zero loss, etc. Then probably we will slowly see business also going up.
Okay. Thank you and best of luck, sir.
Thank you very much.
Okay. Okay.
Next question is from Shreepal Doshi from Equirus. Please go ahead.
Hi, sir. Congrats on a good set of numbers. My question was pertaining to the ARC transaction. What is the quantum left that came flowing in the second half from the transaction of ARC transaction that we had done earlier?
another INR 90 crore is left. So that should come. We are not very aggressive in terms of the recovery funds.
No, it is a we are in the money. If you want to know that, we are definitely in the money. The principal and interest definitely will come. We can expect something more than INR 90 crore also. Maybe INR 30 crore-INR 40 crore more also from that.
Oh, okay. Okay. Got it. The second question was pertaining to the auction during the quarter. What would be the loan book split in terms of below INR 250,000, INR 250,000 -INR 5 00,000, and above INR 500,000 ticket size?
Auction is just very minimal.
INR 10 crore or something.
INR 10 crore. very minimal, minuscule. Because the gold price is there. Nobody would like to send this for auction. People will come and take.
It was just INR 5 crore
INR 5 crore this time. Okay.
Okay. Okay. And the loan book split in terms of the ticket size, below INR 250,000 - INR 500,000 and above INR 500,000?
Above INR 300,000 is 44%. INR 100,000-INR 300,000 is 33%.
Okay. Okay. The last question was pertaining to the, let's say, the NPA resolution that we saw during the quarter. Just wanted to understand that at a blended level on 3000 crore of NPA pool that we have, what would be the overall interest outstanding? Is it fair to assume that it will be more than 30% sort of a number?
Yeah, probably there. Yeah.
Okay. I mean, sir, if you could give some, let's say, closer specific number, that would be very helpful.
Yeah. Yeah.
No, you can take approximately 30%. One and a half years. If it is more than one and a half years, it could be higher also.
Because, sir, as one of the earlier participants said, the reduction was this 100 crore. the benefit on the interest income has been pretty lumpy 350 crore. so yeah.
I think we are repeating again on this. When there is a churn, you recover the earlier NPA accounts, the new loans get matched. The thing is that because gold prices have been high, some of these customers might renew the loan or maybe take out the NPA accounts to sell the gold. The newer accounts, because there is a churn which is happening at a higher level, the interest dues will be lower. When you collect on the old loans, you get a higher income, but the new NPAs might be the interest dues will be lower.
Right. Right. Got it. This is just last question I wanted to squeeze in.
Somewhere around 30%-35%. We can't say. We don't have the exact numbers.
Just the last question was pertaining to the business strategy. So we have gold business being done under three companies now. What is the thought process going ahead? Will we continue with this structure or there could be some change there?
We'll continue with this structure. Yeah.
Got it. All right. Thank you for answering my question. Good luck for the next one.
Thank you. Next question is from Mona from Dolat Capital. Please go ahead.
Yeah. Hi. Good evening. Congratulations on a good set of numbers. Firstly, if I look at your stage III levels on the standalone book, which have come down sharply over the last 2-3 quarters to about 2.25%, what will be the target, if any, for the end of year at your end on the NPA levels, given the kind of price we have and given that people are coming back to repay the NPA?
Actually, we support our customers who ask for more time. When a customer comes and says he wants one month more, two months more, three months more, or four months more to take back the loan, we look whether we are in the money or we are a loser. If we are in the money, we do not mind giving him more time for that. That is how these things remain as an NPA. As and when they get the money, they will take it back. There is no hard and fast rule that we should. A very high NPA number in our books always causes some doubts on people. Although it is fully secured, we will not lose any money. Nevertheless, people will ask so many questions. Why is your NPA higher, etc.? For a gold loan company, NPA is not an issue.
It should not actually be an issue. We should not compare the NPA of a gold loan business to maybe the NPA of a personal loan or such other loans where NPAs result in loan loss. No NPA till now has ever resulted in a loan loss or interest loss for any gold loan company, including NPA. When we hold something as an NPA, it is only to see that the customer does not lose his gold through auction. It is only to support the customer. Otherwise, we do not need to keep an NPA. We do not need to keep it. We do it so that customers will not lose their gold because it is a precious ornament for them. That is the reason for this NPA. Finally, we do not have a target for NPA.
We only see whether we can maybe the gold within the money, we will retain it in the books.
Okay. Given the environment, is it fair to say that the NPA levels will continue to decline by 30-40 basis points like we have seen in the last two quarters?
I think it's around 2%-3% will remain in that level only.
Okay. Okay. Sure. Secondly, what would be our incremental cost of borrowing from banks as of today?
I think most of the banks' MCLR, one-year MCLR is around 8.65%-8.75%, 8.8%. That will be the, because we are taking term loans, it's all linked with one-year MCLR.
Okay. What percentage of your book is linked to MCLR? The borrowings are linked to MCLR?
Yeah. All borrowings are linked to MCLR.
Okay. Okay.
All bank borrowings are linked to MCLR.
Noted. And just finally, so under Belstar, you recently opened 23 branches in H1. Is that the total gold loan branch count we have under Belstar?
Yeah. As of September, it is that one. We are still opening more branches.
Okay. Okay.
We have to open about 150 branches by this year.
Sure. At this point of time, the gold loan AUM under Belstar is not meaningful. Is that a fair assumption?
Yes. Not meaningful. Correct.
Sure. Noted. Thanks so much and all the best.
Thank you. Next question is from Bunty Chawla from ASK. Please go ahead.
Thank you, sir. Thank you for giving me the opportunity and congrats on a good set of numbers. Just one data point, if you can share. Sorry if I'm repetitive. Can you share the auction number for this quarter as well as Q1 FY2026?
This is INR 5 crore. q1 also. Q1, I think around.
Q2 is INR 5 crore.
Q1 is INR 13 crore
INR 13 crore INR Q1, INR 5 crore Q2.
Okay. Okay. Thank you and congratulations.
Thank you very much. Ladies and gentlemen, in the interest of time, that was the last question for the day. I now hand the conference over to management for closing comments.
Again, George Alexander Muthoot, the Managing Director here. We had our head office team here. Many of the directors, including our Executive Director, Mr. K. R. Bijimon, and the CFO, Mr. Oommen. All the other directors are also here. We are happy about the results. We are also pleased that we had a good set of deliberations. I'm sure we would have answered many of your, clarified many of your questions, etc. From our side, we will try our best to perform as well in the coming months and coming years also so that we deliver best results to all our stakeholders, whether it is the investors, the bankers, or our customers and our employees. On that note of good performance and good performance, what should I say? Good performance, which we assure for the next years, I would like to hang up. Thank you.
On behalf of Elara Securities, that concludes this conference call. Thank you for joining us. You may now disconnect your line.