Ladies and gentlemen, good day and welcome to the Muthoot Finance Q1 FY24 earnings conference call, hosted by DAM Capital. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the call, please signal an operator by pressing star, then 0 on your touchtone phone. Please note that this conference is being recorded. Now I hand the conference over to Mr. Sanket Chheda from DAM Capital. Thank you. Over to you, sir.
Thanks, hello, and good evening to all of you. We have with us the entire management team of Muthoot Finance to discuss their Q1 FY24 results. Mainly, the management, we have with us George Alexander Muthoot, who is the Managing Director. Mr. Alexander George, who is a Whole-time Director. George M. Alexander, Whole-time Director, George M. George, George M. Jacob, both of them are Whole-time Directors. Mr. Eapen Alexander, Executive Director, K.R. Bijimon, who is also an Executive Director, and Mr. Oommen Mammen, who is the CFO. Without further ado, I will hand our call over to Mr. George Alexander Muthoot for their opening remarks, followed by which we'll take Q&As. Over to you, sir.
Thank you. Good evening to all. I am George Alexander Muthoot, Managing Director. Today, Muthoot Finance had its board meeting. The results of the Q1 have been finalized. They have been uploaded to the stock exchange also. I would now like to say a few things about the performance highlights of this quarter. Our consolidated loan assets under management has increased year-on-year 21%, and today stands at INR 76,799 crore. We also had the highest ever quarterly gold loan disbursement of INR 53,600 crore. The all-time high gold loan portfolio growth in any Q1 of INR 4,164 crore.
There is an increase in the consolidated PAT of 27% year-on-year, which is at INR 1,045 crores, and the standalone profit after tax, 22% year-on-year at INR 975 crore, 75 crores. There is also an all-time high interest collection in any quarter, 1st quarter, of 2,600, total INR 863 crores. On a QOQ basis, the gold loan assets have grown by INR 4,420 crores, INR 4,429 crores in this Q, which is up by 7% quarter-on-quarter. The gold loan assets have also grown by INR 4,164 crores, quarter-on-quarter, it's again, 7%. Other key highlights we would like to place here would be, we opened 59 new branches in this quarter.
We received permission from the RBI in July, last month, to open 114 new branches. We have raised INR 179 crores through the 31st publication of secured NCD, mainly from retail investors. As far as the subsidiaries are concerned, the growth revival continues, and for Muthoot Home Finance, the gross, gross AUM stands at INR 1,501 crores, which is with a growth of 4%. The disbursement this quarter is INR 109 crores versus INR 69 crores in the quarter of last year. The interest income has, is up by 10% to INR 37 crores versus INR 34 crores in the last quarter. The profit after tax of INR 4.72 crores versus INR 1.41 crores in the same quarter last year, and INR 2.1 crores in the last quarter.
GNPA and NNPA stands at 3.79% and INR 1.21 crore in this quarter, respectively, against a higher GNPA of 4.01% and 1.39% in the March of last year. The provision coverage ratio in the home finance is INR 70.37 crore, higher than the required provision as per NHB norms. Muthoot Money, there is a continuous decline in the NPA through physical collections, which has consistently throughout the quarter. The NPA decreased to INR 2.46 crore, 4.6%, from 3.72%. The gross loan assets has increased from INR 387 crore to INR 486 crore, INR 496 crore, and the branch network increased to 175 from 149. The Belstar Microfinance has seen an improvement in the disbursement month-on-month to INR 700 crore per month.
The gross loan assets under management crossed the 7,000 mark, and the collection efficiency on regular accounts is 99.4%. GNPA stands at 1.62% and NNPA at 0.21%. There has been improvement in the credit rating and the outlook has changed from AA- stable to AA positive by CRISIL Ratings Limited. We have, they have, Muthoot has also started expansion in other than Tamil Nadu state to reduce the concentration in Tamil Nadu, which is a home state. This has been initiated in line with the long-term strategy to diversify the concentration from INR 49 crore to INR 35 crore, 49%, 35% by FY26. The other results, all details are there in the file.
Muthoot Insurance Brokers has, it's a wholly owned subsidiary, has generated a total premium of INR 148 crore premium collection as against INR 131, the profit after tax stood at INR 10 crore versus INR 4 crore in the same quarter last year. Asia Asset Finance PLC, which is the Sri Lankan subsidiary, where Muthoot holds 72.92%. The loan portfolio grew to LKR 2,010 during the year, as against LKR 1,762 last year, which shows an increase of 14%. Year-on-year, revenue has also grown up, the profit after tax stood at LKR 6 crore in this quarter, as against LKR 5 crore in the same quarter last year.
I think with that, I would like to conclude my initial opening remarks. I would now leave the floor open for clarification from the investors. Thank you.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask questions may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets when asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. To ask questions, please press star and one. The first question is from the line of Nischint Chawathe from Kotak Securities. Please go ahead.
Hi, thanks for taking my question. Just trying to get a little bit of sense on your cost of borrowings, which have increased by around 40 basis points quarter-on-quarter. So if you can kind of just explain what exactly happened over here and what will be the, you know, outlook for cost of borrowing going forward?
Nischint, no, the cost of borrowing for the quarter stands at 8.41%. March quarter, it was 8.04%. There is an increase of about 6 basis. As you know, most of the banks, you know, in Sri Lanka is around, you know, 8.6% or, you know, 8.6% or 8.65%. Gradually it will move in that direction, unless there is a, you know, a reduction, which is not likely to happen, I, you know, I feel in the next, you know, six months to one year. You know, it is more moving in that direction.
Sure. You know, on the yield on loans, you know, if I kind of try to see it mathematically, there is, you know, some compression on a sequential basis, not very significant, but some compression. How should we see that? You know, in light of the fact that this cost is going up very significantly, let's say, over last quarter and this quarter, will you kind of, see overall, you know, rates going up?
March quarter, the yield was 18.48%. This quarter it is 18.08%. You know, if you look at the last year, you know, it is 17.3%. You know, compared to last year, you know, certainly it is a higher number. Of course, you know, when you know, gold loan business, you know, that could because it's a short term, there could be always be a fluctuation of 30, 40 or 50 basis points, you know, fluctuation either side. You know, we feel this is a normal thing which can happen because it is a very short term.
No, no, fair point. I think the, the point I'm saying is that, you know, given the fact that if you look at last quarter, which is first quarter and second quarter, we're probably looking at around 60-70 basis points kind of increase in cost of funds. Probably half of it has happened, and maybe, you know, some of it is kind of coming in the next quarter. In light of that, would you sort of, you know, believe that across the board there could be some heights in gold loan rates or is the competitive scenario such that it doesn't make sense?
You're right, because if the gold, borrowing rates are also going up, certainly we will be increasing our, lending rates also. As you said, rightly, we try to maintain our spread and yield to the earlier level so that, that doesn't get affected. If overall, the cost of borrowing is going up, definitely the cost of borrowing for our gold loan borrowers or their other loans also should go up, and, we wouldn't find it difficult to pass on, pass it on to the customer. That's what we usually be doing. Certainly, we'll be taking a call on that also, as the, the rates go on increasing. We'll pass it on to the customers.
Have you seen any, any of this in the ground right now, or you just probably take a call in the next couple of months?
Yeah. Sir, we, we, we review these, like, interest rates maybe on a monthly basis or, once in two months we review. Wherever we feel there's some tweaking to be made, because there are so many, so many schemes, et cetera, we, tweak some of these schemes so that, we get a better yield. If the cost is going up, certainly the, we will pass it on to the customer also. That is, okay, that is, definitely the policy here.
Perfect. Thank you very much. All the best.
Thank you. Before we take the next question, a reminder to participants that you may press Star and One to join the question queue. The next question is from the line of Raghav Garg from Ambit Capital. Please go ahead.
Yes, I, thanks for the opportunity. Just one question from my side. Historically, we've seen that your yields and margins in Q1, they always tend to be lower quarter-on-quarter versus your Q4. Can you help us understand what is the element of seasonality here? My second question is that, though I understand that margins have compressed quarter-on-quarter because of higher borrowing costs, I think you partly answered that. Should we expect margins to expand in subsequent quarters and overall margins portfolio be higher than last year? Yeah, those are my two questions. Thank you.
Okay. we generally we have a NIM of, 7 between 7+ and a spread of around 10%, maybe ±0.5%. I think going forward also, we will be maintaining that. This, as I said earlier, if required, if the cost of borrowing is going up, we'll increase our, cost, cost of lending use. It will increase or decrease also.
Sir, could you help us understand why your margins are always lower in Q1 versus Q4 of last year?
I, I don't know. I have never thought like that, why quarter one is so... Yes, it's much more around, you know. Your, your question was on the seasonality. I don't think now, since we are spread out across the country, there is any specific seasonality in terms of it is all about the schemes you drive. You know, as I said to Nischint, you know, because it's a short term, there could be always be, you know, different schemes run parallelly at different locations. You know, there could be always be a fluctuation of 30, 40 basis points between quarters or, you know, any time. That is a, a, a normal thing. You know, compared to last year, we have already taken a call that, you know, we should increase the interest rates.
That's why the rate has gone up during last year, because, you know, first quarter, you can see that, you know, it was 17.3%. As you know, that is more because of the impact of the teaser scheme. Subsequently, we revised the interest rates, you know, continuously in the subsequent three quarters, which now helped us to, you know, reach 18% or 18.4% last year in the subsequent quarters.
Sure. Thank you. Just another question. Sorry. So you've delivered about 18% gold loan growth. You know, your guidance has always been about 15%. Is there a chance that you would like to revise your guidance, given, you know, the positive momentum that we've seen in this quarter?
Yeah, you're right, anyway, we would like to stick to what we said earlier. We will try our best to deliver more than what we have promised for this.
Sure. That's all from my side. Thank you.
Thank you. Participants who wish to ask questions, please press Star and One on your touchtone telephone. The next question is from the line of Piran Engineer from CLSA. Please go ahead.
Yeah. Hi, sir. congrats on the quarter. Just wanted to clarify one thing. Now, with our loan-to-value ratio at 68%, it's fair to assume that this ratio does not go up much more, and whatever growth come should come from tonnage growth, right?
What is that you're assuming that it is just that the 68%, 70% is the average, the loan which people take average. Some people take 60%, some take 65, and majority of them take INR 70,000. The 68% is a function of that the rate, the amount which people take on their loan. It's not that we are going to maintain the LTV at 68%. It's just, it just happens, happens that people don't need more money, they don't take more money. If they need more money, they take more. There's no relation that we should, we cannot do. We are permitted, and we would like to do, give it up to 35%, but if people don't want it, we don't give.
Got it. Got it. Okay, so that, that was all from mine. Thank you.
Thank you. Participants who wish to ask questions may press Star and One on their touchtone telephone. The next question is from Pratik Kothari, from Unique Portfolio Managers. Please go ahead.
Hi, good evening, and thank you, sir. One is to then qualitatively comment, in the past quarter, we had mentioned that the rural demand seems to be picking up for the kind of products and customer segment that we cater to. One qualitative is still comment, and we are seeing there is numbers, too. You can comment how is the demand shaping up, and also the competition that we saw six, 12, 18 months back, just some update on that.
No, the, the business for us comes in, comes from all the areas, and we have, we have been confident of maintaining our NIM et cetera. I think, our non-gold loan segment also continues to grow. We witness improved business performance. So far, we have seen that, gold loan also is driven by strong domestic demand. I, I, I feel that, going forward, the demand will be there both in the rural as well as the semi-urban and urban areas also.
Right. Sir, any comments on the competition? How is it shaping up currently?
As you, as you know, we are, competition has been there, and probably, from the banks, et cetera, has been there for the last one or two years. We have, nevertheless, we have also been able to grow our book. Competition is there. As I said earlier, when people feel this is a good sector to be in, more and more people are coming. The, and the players, the focused players will continue to, do, do better, and I think, our results in the last two quarters also prove that, we have been able to maintain our, our position as a leader in this segment.
Right. If, if, if the competition is increasing, I mean, at one point of time, we used to make 12%, 13%, 14% spreads. Maybe it might be one-off, but we used to do 12% spreads for quite some time. Your comment today that we will be in the 9.5%, 10.5% range. What has changed then in the industry?
The, the, the 12%, et cetera, I think that is very, we should say, one-off, one-off time when we did more, what should we say, options at that time, and our realizations were better, et cetera. It's a time when we got more yield at that time, that was a one-off. Generally, we, we also should be, tend to be happy with the spread of around 10%. I think we should be able to-- we should attain that going forward also. 12 was, 12, et cetera, came one or two years or so, I, I don't think that can be something which we also feel that it can be sustained and continued.
Right. Right. The last, what will be the auction numbers for this quarter?
It's INR 110 crore. INR 110 crore, yeah.
Thank you, and all the best.
Thank you. The next question is from the line of Bunty Chawla from IDBI Capital. Please go ahead.
Yeah, sir. Thank you for giving me the opportunity. Sir, why we have not focused on stage three assets? It has still increased from March 3.79% to 4.26%. Because if you think, if you compare the last year, still gold prices are still higher, and we can go for collection efficiency or auction and decline or arrest the increase in the asset quality. Any specific reason we are still allowing the customer to hold the asset, though it is above 90 days, after the 12 month also? Any specific reason?
Yeah, yeah, yeah, yeah. We have actually been quite supportive of the customers, and we have been collecting its part interest from many of these customers. All the customers, some of the customers pay part interest, and those which have gone into the 3, stage 3 category, also have accounts. Many of them have accounts which have already paid interest, or most, most of them would have paid part interest also. When they are paying part interest, it shows that they have not abandoned the gold. They would like to keep their gold. They need little more time.
When the, when these customers approach our bank and request that, "Please do not auction these gold," we keep, tend to keep it for some more time, because that definitely endures well with our customers, and they are also quite happy. Finally, the company does not lose money here. If you look at the NPA, the NPA amount of INR 2,878, that if you look at the tonnage of that, it is only 60%. The LTV at today's price is only 60%. Even if we add all the interest on that, even then, we are still in the money.
The point is, as long as we are in the money, customer has paid part interest, he has shown his interest to his commitment to pay more and he doesn't want to lose the gold. We don't want to auction. We can auction the gold, then we'll be unfair to the customer who has... Since we can safely carry some of this NPA in our books, we tend to not even to support the customer, so that customers don't go away. Because once you auction, the customer is definitely unhappy. Those who have paid part interest, et cetera, many of them-... and requested for extra time, we are giving them.
This has been our position, and finally, over the last decade, we have not lost any money in this through NPA. None of these NPAs result in a loan loss for us.
Yes, out of this INR 2,900 crore, if you can share, how much % of customers would have not given a single penny? Is it all the customers have cleared some bit of interest?
Well, we have not got any such number, et cetera, but many of them pay money, and that is why we give them more time. It is the branch managers. The data also shows that we are not losing money.
Yes, sir. That was great. That was very helpful, sir.
Yeah.
Sir, if you can share 1 data point, interest accrued, what will be there as of March 2023, and similarly, Q1 FY 2024 numbers, sir?
June, it is INR 1,836 crore. INR 1,865 crore, March, it is INR 1,853 crore.
Okay. Okay, sir. Thank you. Thank you very much, sir.
Thank you. Before we take the next question, a reminder once again to participants that you may press star 1 to ask questions. The next question is from the line of Rajagopal Ramanathan from Sada khush. Please go ahead.
Just two questions, sir. One is, you... I don't know whether you normally disclose this, but do you disclose NIM for your vehicle financing business and your microfinance business? If not, can you indicate what they could be, or a range at least?
The vehicle finance?
Yeah.
Vehicle finance.
The Muthoot Money, the Muthoot Money business.
The yield on the two-wheeler portfolio we have, roughly about 22%-23%.
Okay.
That is on the yield side.
Okay.
The cost of, cost of borrowings.
Yeah.
Yeah, cost of borrowings would be roughly about 8.5, 8.3%.
8.3. What would it be for the Belstar book?
It will be just 24-25, and the cost would be 10%.
Cost is around 10. Could you also just, sort of, explain, what led to a significant pickup in NPAs in the vehicle financing business, and what have you learned? Because, You intend to, infuse, equity into this, business, what is your strategy going forward? Some strategy would always help us.
Yeah. So, you know, we had seen a spike in the NPA for our vehicle finance business, because about three years back, we were funding commercial vehicle construction equipment, both new and used. Those are product lines that we have hitherto stopped about two years back. Today, we are focusing purely on the retail customers that are aligned with our gold loan customer base, and focusing only on two-wheelers and used cars. Our NPAs quarter-on-quarter for the last three quarters has been coming down in Muthoot Money.
You know, I think our learning was that, you know, probably on the commercial vehicle, construction equipment sort of product lines, it requires a little different sort of a skill compared to the retail franchise that Muthoot has.
Okay. Going forward, you will continue to focus on segments like two-wheeler financing and what else, sir?
as of date-
Used vehicles.
Financing and used cars, et cetera.
Used cars, okay.
For the next 10 years, we'll do only that. We year-on-year, we will look at what is the better one, and then change and tweak according to the requirement.
Safe to think that this would at least be your strategy for the next three years, right?
Don't put words into our mouth. Let us do the business and the strategies.
Great. What about Belstar? Now, what is the capital adequacy at Belstar?
Currently, it's 20%.
20%, is it?
Yeah.
Would you need to increase capital adequacy there, or would you need to go out and raise money?
Currently, I drove, this thing here. There is a thinking of some, about some, some fund-raise options we are thinking. I think completely finalized, but some fund-raise options also which are we thinking.
Okay. The reason for asking is, are the rating agencies mandating any minimum threshold from a capital adequacy standpoint for the credit rating that you are currently at?
Now we are at 30. This year, growth that is done last year. When next year you are coming, before that, a committee has been formed to find out what should be possible.
Okay, thank you very much.
Thank you. The next question is from the line of Shweta from Elara Capital. Please go ahead.
Thank you, sir, and congratulations for good set of numbers. A couple of questions from my end. Firstly, year-over-year basis, we have seen rise in bank borrowings. Is it the spike, incremental spike in cost of funds, which will come by, should definitely come from here? What sort of repricing you're seeing on this book, and how would the mix shape up ahead?
... Secondly, because you clearly mentioned that, you know, I mean, you admitted that competition sustained, and with this, and defying that, we have posted, over 20%, growth this particular quarter. How sustainable is this? Since you mentioned that focused players will continue to do well, how are we doing differently today, you know, now that even trigger loan schemes are behind? Can you please address that? Thank you.
I think our bank loans have gone up. If it has gone up also, it has gone up because our AUM is also increased. There was a growth of INR 4,600 crore in this quarter. It should be compensated by some sort of borrowing, and their bank borrowings would have been one of that. Then we also repaid some of our ECB loans, so that, this has brought down the other than bank borrowings. Bank borrowings are a part of our, our yearly, and we need to do bank borrowings, et cetera. Your next question was about whether the 26% or 25% is sustainable, et cetera. I think I answered earlier also. We have given a guidance of 10%-15% for the year, and I'm sure we should be achieving that.
We don't want to change our guidance now just based on the good performance of Q1. We'll try our best to do the best and probably do better than what we have promised, and that one. Remember, what was your second question? What was your second question now?
The same, it was a follow-up. You, you mentioned that focused players will continue to do well. What differently you're doing now that even trigger loan schemes are behind? So to sustain this growth, define competition.
Okay. Actually, we are not doing anything differently. We are continuing to do what we are doing. It is only the new players who come and start doing different things. We continue to service our customers, we continue to do the, do the good service. We continue with what we are doing. Some of the... That is because we said we are focused. Some of the other players come, they do something, they get some business, after some time, they lose interest, et cetera. Okay, only time will tell. For us, we are focused, we are continuing, we will continue on focus on more loans, et cetera. I'm sure going forward, the focused players, I would think, will definitely do, be doing well going forward.
That helps, sir. Thank you, and all the best.
Thank you. The next question is from the line of Pranay Khandelwal from Alpha Invesco. Please go ahead.
Hello, sir. Am I audible?
I already answered your question. Can you be louder? We can't hear you.
Hello? Am I audible?
Yes, you still more louder, please.
Pranay, if you're on a hands-free, we request you to use the handset. It's not very clear.
Hello, am I audible now?
Yes. Okay, we can manage. Okay, please go ahead.
Yeah. I'm sorry if I missed this information. I think I joined a little late. I just wanted to know, what's your outlook on the yield going forward? Are you looking to maintain the yield, or, will you be looking to increase the yield on the gold loan side?
I said, I already said that the yield will be a function of the borrowing cost also. Borrowing cost what?
Yield.
Yield, yield. The yield will be a function of the borrowing cost. If our borrowing cost is going up, our yield or the lending rate also will definitely go up. It's not that we are going to maintain the yield, we will try to maintain the NIM and the spread.
Okay. In the same respect, I think if banks keep on their foray into gold loans, I think, wouldn't it be harder to pass on that borrowing cost? Because there they will still probably look to maintain them at a lower interest. Will we be able to pass on cost easily if that happens?
I think we have crossed that bridge of almost two years back. Two years back, since banks started this, and we have been able to maintain our business and our position, and maintain at least, good part of our NIM, et cetera. I think going forward also, we'll be able to do that. It is nothing new, sir. It is last two years, three years, banks have been doing the same thing, and we have been... Our strategy has been to grow, and we have been able to maintain reasonable, NIM and spread.
Okay. Also, do you have any, how, how, what do you think about the impact OCEN will have on our business, Open Credit Enablement Network?
I did not understand, sir. What is Open Credit Network?
The, the government is coming up with a new initiative, OCEN, Open Credit Enablement Network, and that is supposed to unlock a lot of. That is supposed to help a lot of underbanked and unbanked areas be reachable by financial services company. Do we have a view on that, if that will be a threat to our business?
No, in fact, we are actually embracing these things and building it into our business models for unsecured loans. Muthoot Finance, as you know, has an unsecured salary personal loan product, as well as unsecured business loan products also. These are, these are the new initiatives and, you know, public infrastructure that the government is building. We are also embracing that into our business models.
Okay. All right. Thank you. That's all.
... Thank you. Next question is from the line of Abhijit Tibrewal from Motilal Oswal. Please go ahead.
Yeah, hi. Good evening, everyone. Sir, two questions. First one for, for a moment, sir. Sir, I mean, I mean, at the beginning of the call itself, you have guided that cost of borrowings, which are at about 8.4%, can stabilize around this 8.6, 8.65, which is where bank and AAAs are. Just wanted to understand, sir, almost all of last year, we've been seeing an increase in the cost of borrowings. Now that we started seeing that increase, you think with, with repo rates remaining here, the cost of borrowing should peak out around that 8.6, 8.7%?
As it stands now, it, no, it should be around 8.6, 8.65. We don't have a visibility in terms of, you know, whether there could be a right above that.
Got you. The second question that I had was within on basic quality, partly answered it. Sir, I mean, just trying to understand, this, the NPA going up is, is appreciable. You are giving more time, to your customers, people who request you not to auction their gold jewelry. What is it indicative of? Why is it that, I mean, people are not paying their, their interest? Why is it that people are not renewing their loans? Is it indicative of, of some stress somewhere, that people are not coming forward and paying their, interest, renewing their loans? Because you've seen multiple cycles, multiple gold price cycles as well, gold prices moving up and down. At this point in time, where gold prices are higher, what is this indicative of, I mean, this increasing NPA, customer not paying their interest?
I mean, first thing is you to understand this, this is not an EMI loan. We have given it for a 12-month loan, and it's to people who do not have a regular cash flow. This has been taken by somebody. Somebody has a regular cash flow monthly expense, he would take an EMI loan or a personal loan, et cetera. Here, he is expecting some money from somewhere, it has not reached. Secondly, the number of loans which goes here, it is not even 2% of our portfolio. If you have lent 100 people, only 2%-3% of them come into this bracket. All the balance, 97%, 98% people have already taken it back. It only doesn't show that there's a big stress in the market. There's some individual people who has some stress.
That is why they are coming for a gold loan also because they don't have monthly, monthly repayment capacity, monthly source. They're taking a loan, paying higher interest than any other loan. Because of the comfort they will see, because there is no EMI pressure. This is just natural, nothing great in this. As I said, if we are definitely in the money, the, the principal plus interest, if we auction the gold, we can definitely get it, but then people have paid some part interest. They have shown their commitment to commitment to the borrowers that he's keen to take it back. He just needs more time, and we have got to give him more time, and they request for it, and they request the branches to give more time.
Some customers, we give the time. Even if after some time they are not coming forward, we have to auction it. Just giving a helping hand or an adjustment to the customer so that we don't need to auction. It's definitely a customer-friendly measure, and that is one of the reasons why most many customers come, choose Muthoot over many other companies. You should see that has always been said, Muthoot Finance has all the other NBFCs right from the branch, right from any branch. Any branch of Muthoot has at least four or five NBFCs giving gold loan. Still, many customers come to us because of some of these things. We have been more reasonable and more accommodating of the customer, and we have never lost any money also on this account. We only gained the customers.
That is why we give little more time to these customers. Finally, we don't lose money. That's also, as an investor, you'd like to know that.
Okay, sir. Last question, just a follow-up here. just trying to understand when you said that, I mean, and we wait for a certain time, and then, and eventually if the customers do not come, that is where you auction the gold. Obviously, I understand we don't lose money somewhere. Earlier, you also said that, some of these customers who are there in still see their effective LTVs are around 60%. So even if you add the interest, you will still be in the money. I mean, internally, what is it that you track? How many... For how many months or quarters do you wait before you eventually decide that, okay, let's auction the gold that we are discussing?
I think, I think that is a function which at the field level, the managers take. The managers come back and say, "Sir, there is no point giving him any more time. Let rather we auction it off." That's a decision taken at the branch level individually.
Okay, sir, that's all from my side. Thank you, and best wishes to you.
Thank you. Next question is from the line of Jigar Jani from B&K Securities. Please go ahead.
Yeah, hi, sir. Thank you for taking my question. Basically, your active customer base has gone up by almost 2% in the quarter of Q1Q. Do you expect this trend to continue going ahead for the rest of the quarters? Are you confident of having a similar sort of range every quarter going ahead?
Yeah, I think we have taken quite a lot of initiatives. We have given, I think you will also see that we have put lot of advertisements. Other than Amitabh Bachchan, we have also brought in Madhuri Dixit also as our brand ambassador. Lot of advertisements are going, that is the on the media side. We have, we have also started or rather get doing more of this local road shows and initiatives. That definitely is bringing in more customers. Going forward, we should see more customers coming in. As you also know, there's a big churn here. Customers come, customers go, 100 customers come, 80 customers take back their gold, another 100 can come next year, another 100 go away. It's a churning, quick churning there.
Our job, our effort is to see that those who have taken a gold loan earlier, either come back to us or new customers also come. Those who've taken a gold and taken it back, we would expect them to come back maybe after three months, six months, eight months. It's a treadmill like. We are on a treadmill. Yeah.
Sure. And sir, so considering you are investing in marketing and so are we, kind of confident of maintaining our earlier guidance of OpEx to average assets of 3.5%, or if you, will we see an increase?
What is that, I didn't hear you? What is the %?
OpEx. OpEx to asset, I think last quarter you had guided about 3.5%.
Yeah. There is not very much drastic in increase or decrease in the OpEx exercise. It will be the almost the same lines only. Not that we are going to invest thousands and thousand crores on these things.
Okay.
It will be reasonably good, investment we make year on year.
Right. Sir, last question: Can you share your revenue by ticket size, less than INR 50,000, INR 50,000-INR 100,000, and above INR 100,000? In million.
Let's see, some... Give us a few minutes. Let us look it up. Any other questions we can take somebody else, which we'll try to do shortly. Yeah.
Sure. Thank you. Thank you so much. Okay.
hold on.
Yes.
Above INR 3 lakh is 27%, between INR 1 lakh and INR 3 lakh is 38%, and less than, less than, INR 1 lakh, it is 37%.
Okay, got it.
Thank you.
Thank you so much, sir. That's all my questions. Thank you.
Thank you. The next question is from the line of Arul Selvan from Independent Advisors Private Limited. Please go ahead.
Hello, am I audible?
Yeah. Yes.
Good evening, sir. Congratulations on a, on a great set of numbers. I had just a few questions. I was actually going through the performance of your microfinance subsidiary, one thing that really stands out here is that over the last two, three years, there has been a substantial, you know, improvement in, in the quality of your microfinance loans and the asset quality. I was just wondering, you know, have, have there been some learnings? Have there been some changes in your strategy? You know, is this kind of the quality that you expect to kind of, you know, maintain going forward?
You, you have put a right ques- right, question. Yes.
Uh-huh.
We would like to maintain this as, as this, but then these are the lowest, lower end of the pyramid, lower end of the this.
Right.
As long as there are no big hiccups coming in the market, I think we should be able to maintain this.
One differentiation is the SHG model. That is our. Unlike the other microfinance companies, the focus is here more on the SHG model. That group are SHG model. Otherwise, normally, other microfinance companies are from the JLG. That's one, one thing which is working. There's the, the thickener as well as the retail habits of SHG groups are better than JLG model. That's, that's one reason. Of course, the other some few things and digital models, because all those things we have helped us to move the collections also.
Okay. Could you just explain a little bit more about the difference between, I'm guessing when you say SHG, you mean self-help group versus, you know, joint lending groups, right?
Yeah. SHG actually is a group of, a bigger group of people, and they will be trained a little bit on how they're making and how to make an earning, as well as savings, et cetera. They only the money is lent. After six months, pay work by the hand in hand, the group only the money is lent. The other one is just a borrower directly come, borrower or a loan library. The number of team also is less as means they have 3,007 members, but the SHG is having 50 members. There is a difference. The, the, the thickness as well as the push, the, the lending, first one is not a lending, it's a saving lender will be there, consumption.
Something like a few months seasoning is there.
Yeah, seasoning is there.
Before the loan is given. That is the difference between SHG and this is.
We thickener the collection. We have another differentiate also, unlike other microfinance companies, we have a branch model where people have to come and visit. Other, most of the other microfinance companies, they don't have a, their collection is good, we just go to the field and collect it. That, I think those two are the one differentiator with the other microfinance companies.
Okay, okay. Any, any learnings in the last two, three years? I mean, anything differently that you've done, you know, which could, you know, kind of indicate that, you know, there's improvements and, you know, it'll sustain, this sort of levels will sustain?
Yeah, yeah.
Okay, okay, I understand. Actually, that brings me on a, on a slightly related question. I also noticed that the AUMs of your housing and your two-wheeler portfolios have, you know, shown a substantial improvement, increase. Is there any guidance that you would like to give in terms of how much of a, of a, increase that you, I mean, you expect for FY24 in these portfolios?
In the housing finance, I think we have given a guidance of INR 1,800 crore-INR 1,900 crore by the end of the year.
Okay. microfinance and two-wheeler, sir?
Two-wheeler, I think it will be very, very modest, sir. Very modest.
Okay, okay. And microfinance, sir?
Microfinance, I think they want to reach about INR 9,000 crore.
Yeah.
It's about, instead of INR 1,000 crore, we would like to reach about INR 30. That's something the guidance they are good. By the end of the year, INR 9,000 crore.
Okay, okay, okay. And one last question, sir. Not that I'm complaining, but any particular reason for the cash levels to have decreased to these levels?
Yeah.
I think two, three years back, the, the total amount of cash that you maintained was much higher. Now, you know.
Everyone was complaining about excess liquidity, we also, you know, wanted to reduce. Of course, you know, the loan has also, loan growth has also, started coming in. Look at the last two quarters, we have grown almost like, INR 9,000 crore-INR 10,000 crore. That reduced the excess liquidity.
I understand. My larger question here is that are you comfortable with the liquidity levels at where they are currently, or do you plan to kind of get back to-?
No, this is a, you know, a liquidity level, which is comfortable. We keep on raising funds-
Mm-hmm.
You know, which should meet the growth requirement.
Okay. No, I mean, I was more wondering whether at, at these levels, you know, you're able to be comfortable. Because the last time, I think what sir was saying was that, unless you have a, a, a substantially higher amount of, of cash available, it gets difficult, the bargaining power is not very high with the banks. I was wondering whether if you're able to continue borrowing, you know, from other sources at, at these levels. That was.
Yeah, not an issue. It's also a good level, very, very decent level, because I don't want to name. There are some reports of some companies who are having almost similar AUMs, et cetera, with a very low cash in hand.
Uh-huh.
Still, we are much better.
Mm-hmm. Okay, okay. That's it from my side, sir. Thank you very much, and all the best to you.
Thank you very much. A reminder to participants that you may press star and one to join the question queue. Ladies and gentlemen, to ask questions, you may press star and one.
Probably, all the questions may have been answered by now.
Right. Actually, that was the last question in queue.
Okay.
There are no further questions. I'd like to hand the conference back to the management team for any closing comments.
From the management side, thank you. Probably, we will continue. We'll put in our best efforts to do better and better quarter on quarter. We value your suggestions. We value your comments. Please keep us well informed of such things, and we will, from our side, see that we do, we do the best for the company and the best for our your investors also, and so all your stakeholders. We'll be doing our best going forward. Thank you for the support, and thank you for your patience.
Thank you, Sanket, for organizing the call. DAM Capital.
True.
Thank you very much.
Thank you. Shall we switch off?
Yes, sir. On behalf of DAM Capital, that concludes the conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.