Ladies and gentlemen, good day, and welcome to P and B Housing Finance Limited Q1 FY twenty five 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. Should you need assistance during the conference call, please signal an operator by pressing then 0 on your touch tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Deepika Gupta Padi. Thank you and over to you Ms. Padi.
Thank you, Renzo. Good morning, and welcome, everyone. We are here to discuss T and D Housing Finance q one FY twenty six results. You must have seen our business and financial numbers in the presentation and the press release shared with the with the Indian stock exchanges yesterday evening, and it's also available on our website. With me, we have our management team led by Mr. Girish Korgi, our management liaison team. We'll begin this call with the performance update by the management followed by an interactive Q and A session. Please note, this call may contain forward looking statements, which exemplify our judgment and future expectations concerning the development of our business. These forward looking statements involve risks and uncertainties that may cause actual developments and results to differ materially from our expectations. K and J Housing Finance undertakes no obligation to publicly revise any forward looking statements to reflect future events or circumstances.
A detailed disclaimer is on slide 45 of the investor presentation. With that, I will now hand over the call to Mr. Girish Karski. Over to you, sir.
Thank you, Padi. Good morning, everyone.
Thank you so much for taking your precious time out in the morning. I'm pleased to present the quarter one FY 'twenty six performance. On the industry, this quarter, RGA announced another 50 bps repo cut to 5.5% with immediate effect and reduction in cash to the ratio of 100 bps, gathered in four tranches of subsidiaries, effective from September 2025. This move is timely for the Indian real estate industry and can have deep thinking implications across all stakeholders ranging from the aspiring homeowner to developer and investor. This haptic reduction not only reaffirms the RBI's commitment to supporting economic recovery, but also displaying stability and growth, particularly for interest sensitive industries like real estate.
Talking about the company's performance, the retail loan book grew by 18.1% Y o Y to INR 76,923 crores as of thirty eight June twenty five. The total loan book of the company stood at INR 77,736 crores as of thirty eight June twenty five. The affordable and emerging market segment formed 37% of the retail loans. Our overall collections remained strong in quarter one FY 'twenty six. We had considerable recovery contributing to reversal in trade cost of minus RUB 27,000,000.
The gross NPA at on thirtieth June reached 1.46%. We continue to work towards achieving 1% NPV. Yield remained stable at 3.74% during the quarter, achieved ROA of 2.57% for quarter one on an annualized basis. Let me now talk about in more detail on the performance achieved during the quarter. On disbursement, during the quarter, we focused on high yielding business.
Disbursements in affordable segment grew by 30% Y o Y and emerging market segment by 32% Y o Y. Disbursements in prime segment has considerably been slowed down to avoid pressure on margins. As a result, the overall Retail segment improvement grew by 14% year over year during the quarter to INR 4,980 crores. We will continue to focus on our strategy to grow affordable and emerging market business. Total Pan India branch network of the Company is three fifty six branches.
Out of three fifty six, 200 is unaffordable. This is the quarter, the company had reclassified 20 branches from sectoral regions having a potential of within five yielding business. So these were the 20 branches which were in prime segment as per our classification, but these 20 branches have the potential of generating business at a higher need, and therefore, these 20 branches have been moved to 11. To that extent, all the numbers are post recast. So this is the emerging market branch count has increased to 80 branches.
All the numbers for past periods have been requested for like to like comparison. With such large Land India presence, we are ready to capitalize the opportunity available in Tier two and Tier two cities. We plan to add 40 to 50 countries, that is the plan for this year as well. The gross NPA improved to 1.06% as on thirtieth June twenty twenty five as compared to 1.08% on thirtieth March twenty twenty five and one point three five percent as on thirtieth June twenty twenty six. During the quarter, we recovered INR 57 crores from Retail and Costing together.
The company has a mainly written off food of around INR 700 crores in corporate and INR 400 crores in retail. On borrowing mix, the reduction in the repo rate resulted in eight bps decline in our cost of borrowing to 7.76% in quarter one from 7.8% in quarter four of FY 'twenty five. On an incremental basis, the cost of borrowing declined by 39 bps during the quarter. Resultantly, we have also reduced our P and D credit card by 10 bps, which is applicable from first July twenty twenty five. Mins remained stable at 3.74% for the quarter versus 3.75% in Q4 of FY 'twenty five.
For FY 'twenty six, we expect NIM to be around 3.7%. On profitability, our efforts across parameters created in improving the profitability. Our return on assets on an annualized basis is 2.57% in quarter one as compared to 2.55% in FY 'twenty five. ROE was at 1.39%. With this, I would like to hand over the call back to Deepika.
Thank you, sir. I'll now request Vinay, our CFO, to talk about the financial numbers.
Thank you, Deepika. Very good morning to everyone. As you would have heard from MVPs and you would have seen from the results, our loan book has grown 15% year on year and deferred loan book has grown 18% year on year, in line with our guidance, Driven by the strong performance of asset book growth, P and L also reflects the similar trend. Let me cover some of the P and L highlights in more detail.
So you would have seen yield for the quarter is 9.99 versus 10.03 in Q2. With respect to borrowings, with decline in repo rate, borrowing cost declined by eight bps to 7.76. The incremental cost of borrowing declined by 39 bps to 7.44% in Q1 as compared to previous quarter. Our net interest income during the quarter was INR 60 crores, increase of 17% year on year and 2% quarter on quarter. NIM remained stable at 3.74% in Q1 in comparison to 3.75% last quarter.
With the decline in cost of borrowing, food rate cuts, we have also reduced our P and V HFR by 10 bps effective from July 1. Gross margin now stands at 4.06% versus 4.27% in Q4 and versus 4.03% in Q1 FY 'twenty five. Our operating expenses grew by 12 year on year to INR $2.16 crores versus INR 193 crores in Q1 FY 'twenty five. The increase in operating expenses is much lower than the increase in retail loan book of 18%, driving positive operating leverage for the company. Our OpEx to ATA for Q1 is 1.02%.
We continue to maintain our interest to ATA guidance of around 1% to 1.1% during the year. Our pre provision operating profit has grown 17% year on year to INR $6.32 crores on an overall basis. Credit cost continues to be negative at 27 bps for Q1 FY 'twenty two. During the quarter, we have recovered INR $6.77 crores from the return of two. Happy to report a PAT of INR $5.34 crores in Q1, which is up 23 year on year.
ROA improved to 2.57% in Q1 from 2.55% during last financial year. ROE stands at 12.4% for Q1 FY 'twenty six. With respect to CRAR, it remains healthy at 29.7%, out of which Tier one is 28.96%. Our book value now stands at $6.73. With this, I now hand over back to Deepika for taking this forward.
Thank you, Vinesh.
I'm now with Prajas Dilip, our Chief Sales Officer for Primary Emerging Business to give segment performance update.
Thank you, Gupta, and good morning, friends. Welcome to the call. Appreciate you taking the time out. For the quarter gone by, we managed to do well on growth as well as asset quality. Given the scenario of the rate sensitivity in the market after the repo rate drop, we decided that with growth and margins being a priority, we will choose to grow the prime book at a slower pace and focus more on the emerging markets.
As you can see, the prime and emerging market book together reached INR 71,000 crores, a growth of almost 13% Y o Y. On disbursements, the disbursements in prime market grew by 1%, whereas the emerging market business grew by 32% Y o Y to 2,736 crores. Another margin accretive business is NSL, where we did INR $13.15 crores INR 50 crores of disbursement for the quarter, a growth of 41% Y o Y. A few highlights. The share of emerging markets business is growing up consistently in disbursements contributing to 35% in Q1 of FY 'twenty six.
This was 30 last year Q1. The business in Emerging markets is generated at a yield increment or a premium of 35 basis points over the prime business. NHL also stood at 35% of incremental disbursements in Q1 FY 'twenty six. This was 29% last year in the same quarter. Even in the prime market, the NHL mix has gone up to 30% in the first quarter.
So like I said, the focus continues to be growth along with margins and will continue to be in the quarters to come as well. Keeping this in mind, we had also set up an exclusive NHL team in 10 markets across the country. This is shaping up well, has already started contributing to disbursement and will hopefully contribute INR 100 crores to INR 150 crores of incremental disbursement in the quarter to come. To strengthen our NHL offering, we also launched a fixed rate offering, which has also been received well across markets and will help us contribute further. So to summarize, as we navigate this journey in the coming quarters, we will focus on margin accretive business and rely on our strength across distribution, our strong brand presence, our technology, and make sure that the company manages to prioritize all its imperatives, growth, asset quality and margin. Thank you so much and back to you, Deepika.
Thank you. Deepika, I'll now request Varley as Chief and Chief Collection Officer for a suitable business to update on the segment performance.
Thank you, Deepika. Good morning, everyone.
It's my distinct pleasure to share with you the progress we have made in our Adhoefni business over the last quarter. We have concluded first quarter of the financial year with a remarkable loan book of 5,734 crores, reflecting a phenomenal 143% year on year growth, up from 2,003 and 61 crores of Q1 of this previous year. And we have also doubled the loan book in one year from INR 2,361 crores to INR 5,744 crores in June 2025. Our disbursement performance tells an equally company story. In Q1 FY 'twenty six, we disbursed INR $7.65 crores, delivering 30% growth over INR $5.86 crores in Q1 previous year, demonstrating strong momentum and growing market acceptance.
And our incremental yield has also improved, I think 12.1% this quarter compared to 11.6% last year, driven by our focus on high leasing segments and TSB and TSB markets. Over the past year, we have added 40 branches, taking our total footprint to 200 branches across 130 potential districts in 15 states. I'm happy to report these branches have started operational and started to contribute significantly to our business. We have also forayed into three promising new markets, mainly Punjab, Chandelar and Northeast with plans to deepen our presence in the coming system. Our Pan India operations are well balanced across three zones, North Zone contributing 35% followed by invested 35% again and some of 30%.
The geographical balance ensures resilience and consistency in our growth. Kamil Nadu leads in our AEM followed by Uttar Pradesh, Maharashtra and Madhya Pradesh. Our customer profile continues to evolve. Sales employed rose to 41%, up from 38% a year ago. Informal segment sourcing grew 30.4%, up from 26% last year, now forming a sizable part of our book.
74% of the portfolio is within the ticket price of INR 25 lakhs and 34% of our portfolio remains non housing loans. Importantly, our portfolio quality remains strong. Bounds rates are well controlled at 11%. NPAs are impressively as low as just 0.3%. We are incredibly proud of what we have accomplished with the momentum and strong foundation we have laid.
We are confident of closing the financial year with a loan book approaching INR 9,500 crores. Thank you so very much for the continued support and sir. Over to you, Deepika.
Thank you, Ali. We can now open for Q and A.
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch tone telephone. If you wish to remove yourself from the question queue, you may press and two. Participants are requested to use handsets while asking a question.
Ladies and gentlemen, we'll wait for the moment while the question queue assembles. The first question comes from the line of Ramesh with ICICI. Please go ahead.
Yeah. Hi, sir.
I'm calling a good set of numbers. Sir, just two things. One, on this credit state ROE from f one twenty seven onwards. So currently, some of we are enjoying through you right back end that is supporting our ROE. But once the credit cost normalize to see, let's say, twenty, thirty basis points, obviously, ROE will get impacted by almost 50 basis points, you know, anything.
And cost of 26 plus, but I think we should be out of 20 basis points. So what are the levers do you see which can offset the impact of credit cost normalization going ahead?
Okay. So I think as rightly pointed to you, we would have support from recovery facility for next five or six quarters. And after that, active credit cost is going to be about INR25 crores. While we have few levers on improving margins, which is today at about 3.7% to 3.7% type of thing. So we plan to take NIM to about 4% to 4.1%.
So that will offset. And we are easily trying to increase the share of origination from affordable and emerging. And now we are trending within the segment to the high yielding segment. So we will see improvement in affordable business in energy business. The prime quarter one was little tough because of two reasons, one cyclical and the second because of repo cut almost about 100 bps in about four to five months' time.
So this may not be the case going forward. So we will also try and see if we can slightly increase the ease in our time loop. And as mentioned earlier, this year, we have launched a new vertical called own against property. So these four vertical need implemented efforts to improve our margins. And with repo going down, with the lag effect, we'll also see some benefits on the cost of borrowing.
So that would help us to maintain our area of 2.5%, you know, beyond 27 actually.
Got it. So sir, just a follow-up on that too. Even as in today, you know, on a stock basis, our non actual portfolio is, you know, 1330%, I don't think it's 29. So to what level you would like to expand this, you know, mix in terms of NHL and HL. Because then, obviously, under SEC guidelines, you know, there is some limited even to the extent we can scale on it. No.
I think the increase is going to be by two and a half to 3%, not beyond that. But I think the idea is not that. The idea is that we are focusing on market where this is an initial we can try and get good profile customer that is slightly better fee. So it is, you mix of two. One is likely increasing in the mix. Number two is also trying to increase the fee.
Got it. Got it. Sir, just the last thing on this, you know, asset quality based on the. So, obviously, you know, the cost in here has been rising from last three to four quarters, and still it is, you know, when compared to here, you know, thirty first 50.
But sequentially, know, the quarter by quarter, how does one should reduce data point? Obviously, you know, one thing is that the seasonal impact Might be kicking in. But is there anything else which is sort of driving this higher drop in quarter by quarter, or it is just the thing?
No. See, actually, if you look at quarter one, it's cyclical, and this is true for all the segments, not just a particular reason, time and energy, and this is across the the industry. So for us, after the book is. If you look at the bonds, you know, which is a starting point. You know, it's just really, you know, below the industry average, it's about 11.5%. Right?
Yeah.
So the I think if you compare, you know, with some of the players, you know, obviously, the boundaries are in a highest, I think, not close to 19%. So I think portfolio is behaving there, getting us under control. See, now we started this business in that 02/2023. So now it is almost no more than two and a half years.
So the book business savings, obviously, we will see some delinquency even 30 plus 60 plus 92, but I think overall, we would always be much lower than the industry average and overall as an enterprise, as an organization, we want to keep the entry at 1%. No. And even in a quarter, I know we would not now, I think, in the quarters to come, we would ensure that, you know, I'll be getting less than 1%. I think that's the plan. So we don't want to be at all because even in quarter one even in quarter one, a bond basis, you know Yeah.
It's 28. Okay.
Absolutely. Yeah.
Okay. Okay. That is more from my concern. Thank you.
Thank you.
Thank you. Next question comes from the line of with Sundaram Mutual Funds. Please go ahead.
Yeah. Hi, sir. Thanks for the opportunity. Sir, one question I think you alluded on the margin part of but the question is, I mean, despite favorable movement towards the higher yielding portfolio, you're it is not getting reflected in that yield part. Your yield has not changed, let us say, of revenue to the other parts four to six quarter. Despite, you know, your favorable loan mix moment towards emerging and affordable, which are relatively high yielding versus prime. And prime, as I said, is right now, I think, 60 to 64%. So the question is, sir, what would be the inflection point when it will get reflected in the in the past? And the related question to that is, sir, in terms of assignment income, where to in the p is it in the interest income or is it in the non interest income? Yes, I think that is my question one.
So the way we look at it is that, we are very clear on our margins, right? With the repo going down, so obviously, repo also would get moderated to a certain extent. So we are very clear on the margins, what we need from each of these segments. So because this is going down even as cost will go down, maybe it is a, you it's little bit of a lag, right?
And therefore, we don't have too much of control on the cost of borrowing or on the deal, but we have good control on the margin, right? So it was almost about 100 bps in last six months' time. To that extent, if you look at the yield, it is still very stable compared to quarter four and quarter one, yield is still very stable. So I think the way to look at it is we should look at how is the margin lending. So last quarter it was 3.75%, this quarter it is 3.74% and we are guiding that this year NIM will be around 3.7%.
So earlier I had guided between 3.6% to 3.65%. So now we are cutting the NIM guidance to around 3.7%. So we are very, very clear on the margin. Yeah. There could be slight variation in the yield, slight variation in the cost.
I think that is the way how we look at it. Yeah. And on the securitization income, it is part of interest income.
Okay. And sir, you have not taken any TLR rates, right? I mean, like, whatever the charge on. I mean, what is your plan on passing on the interest rate, but on the planning shipment side, do you intend to take any TLR rates within the So two things happen when there is a repo fund.
So one is the origination fees will go down, this is for all, including P and D housing. Second is the benefit was the company approved because of the repo rate cut.
So we have got the benefit of Aclip, and we will be passing on 10 bps from July 1.
Okay. So and the last question, I think it's sending the registration, but in terms of the the affordable housing, while the numbers are still muted. But let us say, whatever customer segment that you are serving, according to you, what would be the latest specific number where this 30 bpb or 90 bpb or even downstudy stabilized? What is that level?
So we are as mentioned earlier as well, within affordable, there are three sub segments, high risk, medium risk, low risk. And our risk is going to be 20%, 6020%. So 20% of origination will be from high risk segment, 60% from medium risk segment and 20% from low risk segment.
So given this mix, we see the peak of NPS for us is going to be somewhere around one percent to one point one percent.
Thank you. Next question comes from the line of Abhishek Kumar jain with Alhakarik. Please go ahead.
Thanks for the opportunity and congrats for a strong set of numbers. Sir, my first first question on the client segment.
In this quarter, we have seen very muted growth of just 1%. So what is your target for the development growth in the client segment for FY 'twenty six?
So the quarter one, as I mentioned, was little unusual this time because quarter one being cyclical also got added with the rate cut, right? We are as I mentioned, we are very, very clear on margins. And we are doing two things. One, we are increasing, if you look at our disbursement share in quarter one, emerging and affordable is 50%.
So 50% origination is from affordable and emerging. So we are trending more towards origination from affordable and emerging. So the growth in prime is going to be a balanced number. So we have guided book growth of 18% for this year and that would definitely be net. So if you look at the book growth in prime, it's going to be around it's going to be in single digit retail business as per plan.
And this is our strategy not to grow the prime book faster. It will always be a balancing number. So the growth in book and prime is going to be around 8%, 9%. And the disbursement should be around 12%, 13% for the full year.
Okay. And my second question on the ROE side, is moving between five to 5.5 And just wanted to understand what
is your role made for achieving teen ROE in the medium term? See, I think we all should understand that the MOVI raised capital recently and because of that, there is a drag. Otherwise, all of the parameters are in line as per the projections and as guided. So we are also trying to look for opportunity where we can try and increase the pace of growth on book in all the segments. So I I think in about, let's say, three years or so, we should get to around 14 or 15.
Okay. I said that's all from my
Thank you.
Thank you. Next question comes from the line of with Financial Services Limited. Please go ahead.
Yeah, thank you. Am I audible?
Yes, sir. Are you? Yeah sir, hi, good morning. Sir, just two things, while I mean, congratulations on on first quarter results and also happening to see that you've increased your main guidance for the full year to 3.7% now. But just trying to understand, given that you've seen a 15 basis points rate cut last month, reported cut last month, And what could mean credit to look like for the next two to three quarters now?
Why I ask this is I mean, what is 3.74 that we reported in the first quarter if we are guiding for full year of 3.7? That essentially means that we're not looking at any margin compression in the coming quarters. So is that the right way of looking at it? I'm just trying to understand what could mean trajectory look like in the second and third quarter. That's my first question.
So definitely, if you look at next two to three quarters, this could be further cut. I I would not get that how much it's going to be, that's the fee cut. Right? But at the same time, we also have a very clear plan to increase our margins in all the segments. And therefore, we are very confident that lean is going to be around 3.7, give or take, let or manage to this table there.
Got it, sir.
And sir, then the second thing I wanted to understand is, I mean, you have yourself kind of passed on 10 basis points effective July. Most of the other, I would say, it is fees, right, have passed on in that same board tax, some money that can, like, you, some other direct 20, someone less at 25 basis points, PLR tax that we have seen. So there are two parts to that question that I wanted to understand. First thing is, I mean, what's our kind of strategy around these meetings and PLR? That's what I'm trying to understand.
Is it the quarterly calibration in PLR that we do or can it be done even during the middle of the quarter? And secondly, despite these these large excesses not passing any PLR cuts, Despite that, we are not seeing any significant increase in VP out. So so so where is the disconnect? I mean, to past cycles, there used to be a big pressure on balance transfers, you know, declining rate cycle and which essentially meant that large SSDs had to pass on. I would say, it's pretty close even before their liabilities got repriced. So you could just help us understand this better.
We we we manage the cost very efficiently. We fast the borrower will quickly. And whatever benefits we get, we pass on to the customer. Now you can come with three to four months life and you'll also follow the same time schedule. So that is the reason you will see no difference on group, you know different, you know, some five days, some nothing at all, some ten, some fifteen, right?
I think we need to decide what works for P and D housing and P and D housing customers, number one. Number two, we have a very strong retention team. We always believe that retaining the customer is most profitable than acquiring a new customer. And therefore, we have a very good handle on our total closure. If you look at total closure for quarter one, it is 16%.
So if you remember, it used to be about 21%, 22%, I think, this lower maybe seven, eight quarters back, and we had brought it down to 17% and now further down to 16%. So if you look at DTE out, DTE is at 6%. Quarter. And we a this quarter being a
very little bit of exception. Quarter. So for this quarter, on prime business, BP in is slightly lower than BP out. On emerging business, BP in and BP out is almost similar. And on aperture, we have significantly higher B2B compared to B2B.
So we have a very good handle on customer retention. And eventually, B2B is going to be a much stronger number for us. And that is why we are reducing this.
Got it. And so just one last data keeping question, you shared it in the earnings call. So in our affordable business, this quarter, whatever disbursements that we did, what was the proportion of BT in in the affordable business?
So BT, this is on So b p was about one percent, and b p out is hardly anything because it's a.
And so b p in, you said, was 1%?
Thank you. Next question comes from the line of with IIM Kozhikode. Please go ahead.
Yeah.
Hi. Good morning, and I would say congratulations on a good set of numbers. So two questions. One is you have reclassified 20 of your prime branches to emerging segments. I know, historically, that is how we started, say, building out this segment.
But what this also means is that our share of, say, affordable plus emerging, which was 25% until last quarter, goes up by close to 11%. Right? So does that, say, target mix for FY twenty seven or by end of FY twenty seven of 40% also correspondingly rise to 50%? Because this this 10% kind of shift, inherently, the profitability of the business currently doesn't change. Right? So there are two things At an overall level, can't be said.
There are two answers to this question. So this moment of branches, you know, from trying to emerging or emerging to affordable is more market driven and segment driven. So we are doing this for last year, right? So when we started emerging the business, so we carved out certain bit of branches in the prime, which will be rational, these branches, which has moved to emerging segment. And therefore, it was almost about 2327.
So this is a continuous exercise because our strategy, our focus is to completely move towards up to a level and definitely in the next two to five years' time. This will be an ongoing process. It will be a. So answer your second question here, the 40% will now obviously go up definitely. Because when we had planned 40%, we have not taken into account the movement of the 20 branches. So that we get a profit in there.
Okay. So that's 40 goes to 50% now. Is that right?
I thought yeah. So we need to work the we need to work on the math. Maybe we will take one or 2%, but definitely 40 will go.
Got it, sir.
So my second question was on the second question. Going forward also going forward, depending on the opportunity, we would so we would convert prime into emerging.
The way we would convert is that from wherever we think the branches are more closer to emerging market, we move that from prime to emerging and we will be charged so that we have a asset to asset comparison. We might take a decision to close a prime branch in the location and open branch and moving branches in the same city, the segment is different. So this is not happening.
Got it. That's very clear. Sir, my second question is on the asset quality piece. Now I understand because our business is now gradually getting seasoned on the affordable side, which is why on a sequential basis, we see these numbers. Can you give some sense on what is the rollback rate?
Because as you mentioned, see, bounce rate, I think, is controlled and is materially lower than the peers. So then if you can book for them. But then I look at, say, one and a half year, let's say, on a net basis of 30 plus number, I think we are still probably somewhere in line with what peers are there on the seasonal book. But on a sequential basis, that number has increased. So while the bounce rates are controlled, what is the kind of, say, rollback rates that we see after the any missing on a, say, one plus DPD or 30 plus DPD, if you can use those numbers?
See, I had partly addressed this question earlier. So I had also told maybe next four to five quarters, we would see an NPA in affordability, let's say, close to, know, maybe point 75.8% and eventually, we could it above 1.1. So given the mix of the segment, we are within the profitable segment, we are looking at the peak of about 1.1%. And if you look at our balance, it is still at 11.5% very much in the control because at least the balance the book is Sure, sir.
Thank you. And just one clarification, sir. When you said that you will be better than the peer, you need to stay on a seasoned book. Right? Say, maybe a year or two years after that.
Yeah. Yeah. So I'm I'm only saying like to make comparison. On a like to like comparison, we would be better than, you know, the competition. We'll be better than the industry.
Got it, sir. Thank you so much, and all the best.
Thank you.
Thank you. Next question comes from the line of Induginal sir. Please go ahead.
Hi. Good morning.
I have a question on the affordable housing segment. One of your prior peers mentioned that the their team developers filling back supply in the segment as a result of difference in the new PMI scheme. So are you seeing going forward that the system level growth in the affordable housing will slow down? And how has been the on ground implementation of the PMI y two point o?
I didn't hear the first part of the question. I heard the second part. So could you please repeat the first part?
Yes.
So one of your peers mentioned that the developers are pulling back supply in the affordable housing segment as a result of the difference in the new peers of. So are you also seeing that?
No. See, I tell you. So it is not the right comparison. So our interest activity is the earliest.
Now for many reasons, due to costly of time, I just mentioned three reasons. Now in terms of quantum, so this time the interest subsidy amount might be little less. But I think for the lending institution and for the customer, it is a big win for three reasons. One, the subsidy what the customer did is in five annual installments. So within those five years, customer won't be allowed to switch.
The customer switches the infusion, then the subsidy stops. So this is a big flex for the lending infusion because customer would remain on book for at least five years, number one. Number two, customer cannot be delinquent. If customer becomes delinquent, then the subsidy stops, which means customers are motivated to keep their prepayment track record satisfactory. So these are the benefits.
And number three, this time, as a lending institution, we also get affordable funding from the regulators industry so that we can lend to our customers. These are also benefits. So it can't be exactly compared with the last team. This team has taken off well and we are seeing good traction and this will gain more traction in the coming quarters. So we see this team as very, very attractive and this is going to propel growth in the profitability.
Okay. Thank you.
Thank you. Next question comes from the line of Gujmal Handu with Goldman Sachs. Please go ahead.
Hi. Good morning. Good morning, team. My question is on emerging markets.
Your voice is very easy. Can explain a little bit louder, please?
Are you able to hear me better? Yeah. Slightly better. Yes. So, my question is on emerging markets.
The book has grown quite nicely and and therefore, wanted to ask a question on asset quality here. How are the early indicators stacking up for this part of the book? If you have some numbers that you could also share, any color as well on balance sheet or 30 d b t, etcetera. That would be very helpful.
See, in terms of segment, time and energy, it is very less different. And surprisingly, for us, emerging market, the delinquencies are not better than prime. So that may be because of legacy book, but even on the new origination, we have seen no difference between prime and So in terms of credit first, you know, I had mentioned earlier on the prime, we expect a credit cost of about $18.19, everything about 20 to 22. So that's the difference between prime and.
Okay. Okay. That helps. Thank you so much.
Thank you.
Thank you. Next question comes from the line of with MIT. Please go ahead.
Hi. Am I audible?
Yes. You're audible.
And also my questions are answered, but minor clarification.
I just wanted to understand what are the KPIs that are being tracked internally that allow you to switch a prime branch into an emerging market branch? Like, what are the things that they have to achieve internally for this reclassification to happen?
There is nothing. You know, it is it is market driven. So if you feel that in a particular market offers opportunity, to originate at a higher fee, we need to understand. So if the market would have multiple segments, certain segments would be dominated. So we identify locations where the potential for emerging is slightly higher than prime. But we have a prime branch. In those cases, we migrate the branches from prime to emerging.
So this transition will take about three months time. And after three months time, we we let go of prime business, and we completely focus on energy. So that is the approach what we think. It is more market driven and more, you know, Okay.
Got it. Congratulations on the detailed numbers. Thanks.
Thank you.
Thank you. The next question comes from the line of Omkar Shinde with Ascendancy Capital. Please go ahead.
Hello. Am I audible?
Yes. You're audible.
Yeah. Thank you. So a few statistical questions, then I'll and this is then I'll come to my questions.
So so what is the overall LTV of the book, and what is the LTV in the affordable segment?
Overall, LTV should be around 66, 67%. And in affordable, it comes down to about fifty three fifty four.
Sorry. Affordable one?
Fifty three fifty four.
Fifty three fifty four. Okay. And, sir, I have a certification on what is that individual housing loan book?
The on overall basis.
Okay.
Got it. And finally, what is the number for the sanctions for this quarter? Number of sanctions that we all amount and count?
We generally don't change that because what happens is that for a sanction, really, you know, beyond the point, it doesn't really matter because there will be a lot of cases which we might lose the competition and we might so if you look at on an average, let's say, last year, four quarters, we would be sanction to disbursement ratio should be somewhere around 64 to 65%.
Okay. Okay. So actually, because we are trying to.
Why we don't get this number? Is that no. We can't assume that 30% is there for me in the next quarter. Because in that, we might end up losing maybe three, four, 5%, and then we might also gain similarly.
Understood. So sir, and how going to the yield on the question part? So the yield we have been to buy, like in the affordable segment, it's to 12.1. Given that we have already started taking a few cuts in the rate, where do you see the yields in affordable segment, you know, stable and again? Because as you're saying that margins are going to be up up up area.
And if I'm right, you said that we'll be trying to reach over the medium term 4% of the API means. So what is the outlook there?
So let's say this year, the yield should be about 12.6 to 12.65, and next day, getting close to that.
Okay. Close to 30 next year?
Yeah.
Understood. Understood.
And with respect to the, what you say, asset quality, is there any specific reason, like, example, in Karnataka or anything where the audience is there or any specific reason of outside where we are seeing any, you know, asset quality issues because one of our peers is saying that they're telling that they are taking a lot to do. So some color on the on the Southern region or any any cases where we are seeing any early study or we're saying that it's for the asset quality because although the quality hydro is improved, downgrades are in control. Are you, you know, it it feels like calm before the storm.
No. We have very less overlap between our affordable customers and, you know, the customers, and therefore, we don't see any stress anywhere.
So not from any size, so this is, your your affordable affordable housing or your housing HFCPX, like, so one of the. Is there any asset quality issues that you are seeing early warning or anything of that sort of thing?
Not at all. So why I mentioned them as I said, if you see in last four to six quarters, there were threats in MSI and also in the small ticket and secured segments. So if they have to talk about only after the, we don't pay any fees.
Okay. Okay. And finally, on the sales sales rating, so we are at a double net loss. We are seeing a few of our peers getting credit rating improvement. What is the our annual or or or, you know, stated on that, can we expect the rate rating to
We are also hoping an upgrade in next few quarters.
Okay. So so any any any connections or or, you know, talks with the.
The second the second is around, so we are hoping the next few quarters we should also get updated.
So maybe by end of the '26, we could see. So would that be possible?
I I can say next maybe four to five quarters then.
Okay. Okay. Okay. Thank you. I'll turn the call.
Thank you.
Thank you. Next question comes from the line of Kumar with Shake Capital. Please go ahead.
Thank you for the opportunity. Am I audible?
Yes. You're audible.
Yeah.
So my first question is regarding the deal decision between primary margin in roughly 20 to 30 basis point. Would that increase going forward?
It will increase.
Okay. Certainly, like, as you're saying now, you're more focused towards emerging market. Are we getting to softening of supply side in terms of, like, kind of, like, those we are looking for in the prime, or is it just like we are we can be getting towards emerging at the.
No. There is lot of demand in all the segments, whether it is super prime, prime, emerging, or affordable. We want to do best on prime because prime comes at a very thin margin, and therefore, we want to do best of prime and more of.
Thank
you. Ladies and gentlemen, due to time constraints, we have reached the end of question and answer session. I would now like to hand the conference over to the management for closing comments.
Thank you, everyone, for joining us on the call. If you have any questions unanswered, please feel free to get in touch with Investor Relations. The transcript of this call will be uploaded on our website. Thank you.
Thank you. On behalf of P and B Housing Finance Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.