Ladies and gentlemen, good day and welcome to Poonawalla Fincorp Limited Q1 FY 2026-2027 earnings conference call. We have with us today on the call Mr. Arvind Kapil, Managing Director and Chief Executive Officer, Mr. Sunil Samdani, Executive Director, Mr. Shriram Iyer, Chief Credit and Analytics Officer, Mr. Harsh Kumar, Head Artificial Intelligence and CHRO, and other senior management officials. 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 this conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Shabnum Zaman, Company Secretary of Poonawalla Fincorp Limited. Thank you, and over to you, ma'am.
Thank you. In line with good corporate governance practices, please note, this presentation may contain forward-looking statements regarding the company's future business prospects, strategies, estimates, and profitability. It is important to note that these statements are based on certain expectations, assumptions, anticipated developments, and are subject to various risks and uncertainties. The actual results may differ significantly from what is stated in these forward-looking statements. Risks and uncertainties related to these statements include fluctuation in earnings, our ability to manage growth, competition, economic condition in India and abroad, changes in law, rules, and regulations relating to any aspect of the company's business operations, general economic market and business conditions, attracting and retaining skilled professionals, as well as government policies and actions. I would like to hand over to Mr. Arvind Kapil, Managing Director and Chief Executive Officer of the company.
Thank you, Shabnum. Good evening, everyone, and thank you for joining us. I hope you all are enjoying the thrilling football World Cup. I am looking forward to an exciting final. Before we get to our results, I thought it might be opportune to share with you, I think we all should draw some inspiration from this, an island nation called Cabo Verde, with just about 500,000 people, that walked into first ever World Cup appearance, walks into a tournament, holds Spain to a draw, and fought back twice against defending champions, Argentina, in extra time. Became the smallest country ever to reach a World Cup knockout round. They did not have any star players on the pitch.
What they had was preparedness, a game plan built for opponents twice their size, discipline, a defensive shape that never broke under pressure, agility, adjusting tactics match after match, and solid determination. Twice coming from behind against the best teams in the world. Preparedness, discipline, agility, and determination. These are the qualities that I hope may inspire us, and I truly believe on behalf of my team that they are our DNA, and we strive to live by them every day. On to our quarter numbers and performance. AUM end of Quarter One, financial year 2027 stands at INR 67,054 crore. This reflects a quarter-on-quarter growth of 11%. The new products we have launched contributed to 26% disbursement in this quarter versus the 24% in the previous quarter four, and 20% the quarter before. They have achieved sufficient traction and required scale to deliver predictable earnings in the future.
As mentioned in my previous call, we believe growth isn't just about adding volume, it's about raising the margin per unit. As a result, we track six performance vectors very closely internally, and they continue to follow a sustainable upward trajectory firmly in line with our expectations and our internal plans. Let me begin. Disbursement yield, which I believe is a key driver of our future NIMs, has expanded by approximately 50 basis points over quarter four, financial year 2026. This has been primarily driven by our product mix, adding to the structural strength of our future construct. Quarter one, financial year 2027 NIMs, a key indicator for us, holds ground at 9.10% up from 9.05%. Our credit cost has declined by 11 basis points quarter-on-quarter from 2.51% to 2.4%. Our GNPA, which in finance companies we do believe is a lead indicator.
GNPA for quarter one, financial year 2027 stands at 1.37% versus 1.44% in quarter four. What gives me a lot of confidence is the quality of our incremental cohorts, which will have a downward bias on our future credit costs. The 6MOB30+ of the most recent cohort is approximately 0.64%, which is 41 basis points lower than the previous quarter's origination, which we had shared, which was itself approximately 30 basis points lower than the previous one. We continue to drive efficiency across the organization as well as benefit from operating leverage. Our OpEx- to- AUM has already declined year-on-year from 4.76% in quarter four, financial year 2025 to 4.13% at the end of quarter four, financial year 2026. We have achieved a further reduction of 7 basis points to 4.06% in quarter one, financial year 2027.
This is a function of improving digital share of our businesses, embedded AI into our processes, realization of operating leverage, most important. As highlighted in my last earning call, while the internal benchmark is close to financial year 2027 at its lower OpEx- to- AUM ratios, you may see fluctuation quarter-on-quarter of 10 basis points-25 basis points based on our investment strategies and clustering of branch openings of the core branches, which is generally an advice we'll always like to park. As a result, we have achieved an [inaudible] of INR 308 crores in profit after tax, recording a 20.8% growth quarter-on-quarter and a 391.5% growth year-on-year. Our ROA, which I believe is an important metric for us internally, has moved up to 1.98%, reflecting a 17 basis points improvement over the previous quarter and 130 basis points improvement over quarter one, financial year 2026.
More importantly, quarter-on-quarter, I think it's showing strength and it's more structural in nature, in my assessment. Let me now give you a brief update on the three products to give you a sense. Prime personal loan continues to demonstrate strong momentum, market acceptance. We ended the quarter with an average monthly disbursements of INR 537 crores, compared to probably INR 440 odd in quarter four on a monthly level. In quarter one, as a 38% of disbursements are processed through a fully straight-through digital processing, that's on the rise. It increased from 33% in quarter four, previous quarter, and before that, the same figure was approximately 28%. If I take Gold Loans, we've developed, delivered quarter one disbursements of approximately INR 875 crores compared to INR 890 crores the previous quarter. We currently stand at a total of 460 branches now.
Going forward, we're expanding into new states including Uttar Pradesh, Andhra Pradesh, Telangana, and Madhya Pradesh, while strengthening our presence in existing branches. We plan to add similar number of approximately 400 odd branches during financial year 2027, largely in Tier 2, Tier 3 locations. We are on track to achieve the same, just the way we did last financial year. These branches are increasingly becoming hubs enabling cross-sell of multiple other products as well, while the focus is clearly Gold Loans. On Consumer Durable, we're scaling efficiently with quarter one, financial year 2027 disbursements of INR 433 crore. We are onboarded over 17,300 retail outlets across 339 locations on June quarter- end. Our digital capabilities are driving execution excellence with over 58,000+ cases dispersed in a single month. That is the strength we've started developing on Consumer Durable.
The FPI and EMI Card is seeing strong acceptance with presence across more touch points, including our website. It's becoming a key driver of repeat usage and customer stickiness for times to come. Commercial Vehicle, to give you a sense, we're scaling well, despite the macro environment of the fuel prices. We ended June with a monthly disbursement of around INR 104 crore. On the distribution side, we've scaled up over 1,100 channel partners, up from 900 in the earlier quarter, and expanded our geographical footprint to 70+ locations across 13 states. This gives us a strong foundation for continued growth in this segment. Both Consumer Durable and Commercial Vehicles are doing on a pretty good wicket even on the initial trends of credit. Education Loan.
Within one year of launch, we're excited that we've delivered 55% quarter-on-quarter disbursement in quarter one, with average monthly disbursement reaching INR 144 crore. We've significantly strengthened our origination capabilities, expanding from 25 to 50 locations, building a consultant network of over 600 partners now. Our instant sanction platforms continue to drive digital adoption with around 30% of sanctions processed digitally. We have fairly decent strength emerging on all aspects of Education Loans, including the processing time. Before we go into our detailed performance numbers, I want to spend a few minutes on the nature of institution we've built over the last two years. I believe it is the single most important aspect to understand about our company. Two years ago, we set out to build not just a book, but a long-term sustainable franchise with sustainable profits, with a simple conviction.
Lasting franchises are built by carefully calibrating risk first approach. Today that conviction is visible in our numbers. Our book has grown to approximately INR 67,000 crore of AUM at a GNPA of 1.37% through celebrated well-placed expansion. Every new business we launch in this business has found its footing, achieving the momentum and traction it needs to scale. We did not just launch six businesses, we built six growth engines mounted on a single chassis. That's important. That's the distinction that matters. I want to explain three key differentiators in our approach, which I believe are important at this junction. First, we have built a solid talent at least two- levels deep, which all of you are aware. The traditional approach to enter a new lending business is by hiring one Business Head and asking them to build a team. We did something fundamentally different.
In each of our businesses, we brought in a proven leader from the industry, people who have built these exact loan books and went to two- levels deep. The business had an entire leadership layer beneath them carrying the same pedigree. Why does this matter? Because learning time collapses. They arrived with playbook tested across multiple credit cycles. They know what origination looks like at scale, and more importantly, they know what goes wrong when the cycle turns because they have collected through the down- cycles. It's not just about originating through the up- cycles. It is this depth of bench that gave us the confidence to launch multiple business simultaneously. It systematically converted individual expertise, which I truly believe, into institutional muscle memory of this organization. I think this is, in my limited view, very important.
I sense to believe is what we have achieved over the last two years. Financial metrics is much an outcome of this. Every credit policy, every risk framework, every underwriting and collection process has been documented, codified, embedded into how we operate, framed by leaders who've managed the portfolio through multiple financial cycles. Second important point, quickly, our businesses are digital and AI native by birth. Sales, underwriting, collection, servicing, all of it was architected digital first with AI embedded on day one, not bolted on later. Technology has been pursued with the same intent. For us, AI is a data advantage. We've used it to create proprietary data assets and to identify accurate, entirely new customer cohorts, which we can now underwrite with confidence. For us, this means unit economics that improves naturally with scale rather than requiring a costly transformation to unlock.
As a finance company, we believe that this combination, business cycle-tested leadership running businesses that are AI native from inception, is a foundational strength. Third, we have architected a portfolio that draws strength from more than just traditional secure and unsecured access. Our portfolio is deliberately constructed so that each product is exposed to a distinct macro driver, a distinct borrower segment, and a distinct collateral profile. This is important to understand. Commercial vehicle, gold, LAP, business Loan, education Loan, CD, and Prime PL don't rise and fall together. To blend them smoothens the group's credit losses across time. Let me give you that structure. Commercial vehicles, for example. In an economy driven by impact from freight demand, infrastructure activity, food prices, good movement. If you see business loans and SMEs driven purely by small business cash flows. Personal loan is driven by salaried income stability and employment.
Gold, driven by gold prices, an effective counter cyclical. Education, driven by long horizon human capital returns and family commitment. If you see Loan Against Property driven by real estate values and secured borrowing. CD is driven by household discretionary spending appetite. Similarly, if you carefully see the tenor and duration, gold and personal are shorter, while LAP and education are longer tenor. Stable, sticky. Shorter books let you respond faster and longer tenor books give you earning stability. Thus, this balanced diversification for us is not a hedge. It's an active lever for strategy. That's important to understand. To summarize, this quarter marks another first step in our journey towards sustained, predictable profitability. ROAs have strengthened quarter and quarter, and asset quality has improved across products, with both credit cost and GNPA moving favorably on an already solid base.
Our investments in new businesses are translating into strong traction with every business we have launched now scaled to healthy levels. Disbursement yields are on a positive trajectory, reinforcing the strength of our model design for the future. Our AI brain has moved from build to execution and is beginning to deliver structural OpEx efficiencies. Each of these vectors is improving structurally and not cyclically, underscoring the durability of our earnings trajectory. We are firmly on plan and confident of delivering our predictable, sustained profit creation. With that, let me hand over to Shriram to walk you through our credit performance and trajectory.
Thank you. Thank you, Arvind. Good evening, everyone. Retail loan exposure at the industry level expanded by more than 16% year-on-year as of March 2026. Primarily driven by growth in gold loans, unsecured personal loans, and consumer durable loan financing. Despite prevailing global uncertainties and concerns around crude oil supply, cumulative GST collections for Q1 FY 2027 increased by 8.4% year-over-year, underscoring the resilience of formal economic activity, sustained consumer demand, and robust business momentum. These indicators further reinforce the strength of the underlying economic environment. For Poonawalla Fincorp, the combination of supportive market dynamics, disciplined execution, and a risk-first approach has translated into higher quality book additions, reduced portfolio volatility, and consistently improving collection performance across the credit cycle. Focusing on asset quality, let me highlight the key trends. The GNPA has shown a sequential improvement to 1.37% in Q1 FY 2027 versus 1.44% in Q4 FY 2026.
NNPA has also improved to 0.70% in Q1 FY 2027 versus 0.74% in Q4 FY 2026. Improving trajectory continues quarter-over-quarter in Stage 1, Stage 2, and Stage 3 composition of assets, emphasizing our calibrated approach to portfolio expansion and strengthened debt management practices. Stage 1 composition of Q1 FY 2027 is at 97.6% versus 97.5% in Q4 FY 2026. Stage 2 composition in Q1 FY 2027 is at 1% versus 1.01% in Q4 FY 2026. Stage 3 composition in Q1 FY 2027 is at 1.37% versus 1.44% in Q4 FY 2026. There has been continued improvement across all the stages, Stage 1, 2, and 3. Sequential improvement in the 6MOB30+ for the last four quarters is a testimony of the risk-first framework designed for better quality originations.
Our 6MOB30+ for sourcing of Q1 FY 2027 is down to 0.64% versus Q4 FY 2026 at 1.05%, versus Q3 FY 2026 as well at 1.66%.
The quarterly credit cost has improved to 2.4% for Q1 FY 2027 versus 2.51% for Q4 FY 2026 versus 2.62% for Q3 FY 2026. The above is a structural improvement and gives us the confidence on healthy improvement from here on. The convergence of disciplined cohort selection, sustained collection efficiency gains, and evolving analytic capabilities continue to strengthen our ability to identify, manage, and mitigate risk across the credit life cycle. Our portfolio strategic focus on lower risk salaried customer segments and secured products is increasingly reflected in the sustained improvement of early risk indicator as 6MOB30+, which I'd already stated about. Through deliberate product mix choices and disciplined risk calibration, we continue to prioritize customer segments characterized by lower risk and more stable repayment behavior. PFL's risk management framework continues to be in alignment with banking standards, as reflected in our 30+ delinquencies, which benchmarks us favorably against peers.
Collection efficiency through the credit cycle is a key focus area for us. I would like to share a few performance stats that will give you a glimpse of the impact. Our current bucket flow has shown 15% improvement in Q1 FY 2027 versus Q4 FY 2026. Stage 1 slippage ratio has improved by 5% in Q1 FY 2027 versus Q4 FY 2026, and Stage 3 slippage ratio has improved by 13% in Q1 FY 2027 versus Q4 FY 2026. Slippage ratios have improved due to portfolio calibration and improved collection efficiency across product categories. As a concept, we are strengthening the feedback loop through analytics between collections and calibration. Our continued investments in AI, GenAI, and intelligent automation has transformed our collection operations, driving higher productivity, efficiency, and scalability. On account of AI-led customer prioritization, digital-first collections, and automated workflows, workforce capacity has been optimized.
AI-driven pre-due collection led to 15% cost saves, while our post-due collection transformations led to 27% cost efficiencies through improved workforce productivity and automation. Our GenAI-powered Pay Easy bot engages customers immediately after payment failures, achieving a 42% recovery rate, with significantly reducing manual effort and field visit dependencies. Advanced AI capabilities, including automated dispositions, next best action campaigns, and personalized digital engagement are driving higher productivity and improved customer outcomes. In addition, our in-house direct collection agent models reduce collection operating costs by nearly 26%. Collectively, these initiatives are strengthening operational resilience, improving customer outcomes, and creating sustainable operating leverage through a scalable technology-enabled collection platform. Risk management today is increasingly a question of speed. With models deployed across the full credit life cycle, we have moved from quarterly and semi-annual validation cycles to monthly model monitoring, catching early signs of performance drift and recalibration in weeks rather than quarters.
The next frontier is building strengths to anticipate and improve our capability before it shows up in repayment behavior. DataLens, now in development, use AI to emulate the judgment of our most experienced underwriters, flagging cohorts that look healthy on paper but carry early signals of strain. In parallel, we are closing the loop between collections and credit. Live collection trends and AI-driven propensity signals will feed directly into underwriting, sharpening risk differentiation at the point of decision. Every stage of the credit life cycle now strengthens the next. Systematically strengthening every stage of the credit life cycle, from disciplined origination and proactive in-book risk management to efficient collection, the organization is creating a virtuous cycle of sustainable improvement characterized by cleaner cohorts, lower product portfolio volatility, and enduring gains in collection efficiency. Thank you, and wishing you all a great weekend. I now hand over to Harsh Kumar.
Thank you, Shriram. Good evening, everyone. My name is Harsh. I head artificial intelligence and human resource at Poonawalla Fincorp. Today, I'm excited to report continued momentum in our enterprise AI program. The simplest way to describe what we are building is that we are building an AI brain for the enterprise. Not a portfolio of disconnected tools, but a single governed intelligence layer. Specialized agents as its skills, master orchestrator agents as its executive function, and our governance framework as its nervous system. Every project adds a new capability to the brain. That is why our AI capability compounds rather than fragments. Everything that follows is that brain getting smarter. In our current state of AI portfolio, as we speak, our AI agenda has expanded substantially. Total AI projects grew by over 30% to 101 projects spanning 21 departments.
Of which, 50 are deployed and 51 are in pipeline. The agent-driven operating model, as we speak, is transitioned from isolated AI use case to an agent-driven operating model. The architecture of the AI brain we are building. This ecosystem has reached significant scale. Approximately 130 smart agents live in production, automating business processes, enhancing employee productivity, improving decision support, and accelerating operational workflows. Because every agent plugs into the same broader orchestrator framework, each new agent now adds capability to the broader system, not just to its own function. This is the flywheel underneath the program. Every department produces three reusable assets: a domain skill, a governance pattern that makes the next up tool faster, and an organizational trust that accelerates the next adoption. Each turn of the wheel lowers the cost and time of the next. Let me come to our guardrails.
First, of course, is the economic discipline at scale. Our monthly token consumption increased by approximately 18% compared to last quarter, while operating costs remained largely stable. Put simply, the brain is doing 18% more thinking at broadly the same cost. The result of disciplined model selection, infrastructure utilization, and workload orchestration. With cost monitoring at levels at every session, flagging outlier patterns in token consumption and spend. We are now tracking token at a session level itself. Second, our governance layer, the nervous system. As we speak, again, governance sense risk, enforces control, keeps every action within safe, auditable bounds. All our AI projects operate inside RBI 7 sutra governance framework, and our AI governance and security framework operates across three layers. Pre-deployment red team.
We have now a red team which actually figures out vulnerability, stress tests, considers attack scenarios, security and data risk, and business continuity, so that systems are resilient and production-ready from inception itself. InfoSec compliant deployment, comprehensive security checks, regulatory and legal adherence, data privacy and production controls with governance checkpoint embedded directly into deployment workflows. Third is the continuous monitoring. Post-deployment, we track performance, uptime, utilization, and emerging vulnerabilities in real time on a transactional basis, with automated incident response and AI agents that monitor AI itself. On top of this sits a dedicated hallucination containment framework, adversarial input testing, secure data sourcing protocols, and robust inference control, ensuring AI-generated output meet enterprise standards for accuracy, security, and compliance. I want to also take you through the key deployments last quarter. Each deployment is a new skill added to the brain as we speak.
In journey conversation, video agents to improve funnel conversion. This has been done for Instant PL and Prime PL. To address drop-off in our digital loan journey, we have built two agents that interact with customers. They simulate EMIs, answer queries, generate personalized video that simplify their offers. When a customer begins to show idle behavior or disengagement, the agent kicks in to engage them, built completely in-house on our agentic AI platform with the right guardrails, knowledge base, and journey analytics. We expect on-the-fence customer to improve offer uptake and lift our disbursement throughput ratios by 5%-10%. We would be adding another agent this quarter, which should further increase and enhance our throughput and conversion ratios. AI-processed intent. This is processed across all voice channels with horizontal capabilities across all products. A significant amount of context is lost in unstructured call recording across services and franchises.
By collaborating with our vendor partners, we have built scalable pipeline processing over 10,000 calls a day to generate over 40 intent signals. We can now identify early predictors of customer dissatisfaction, near-term purchase inclination, income profile, and occupation, signals that digital journeys may not capture. These insights will power our customer-centric recommendation engine, improving both customer satisfaction and product per customer metrics. Another project is Context IQ, our centralized document intelligence solution, which uses vision language AI models to extract, classify, structure information from complex enterprise documents, scanned files, PDF images. With human-in-the-loop validation, substantially reducing manual processing effort and turnaround time. Last quarter, I had also spoken about MyBot, our agentic DIY bot builder. This is where the flywheel closes its loop. The brain now grows its own new skills. Every business need addressed through MyBot adds a reusable agent to the ecosystem, making the next build faster.
A key success is Ask PFL Guru, an intelligent cross-sell support agent assisting teams with policy guidance and sales enablement. CompStrat is our AI-driven competition intelligence and benchmarking platform, which combines external market data, internal workforce information, and organizational policy framework. Which enables HR teams to retrieve insights and generate policy recommendation dynamically through a conversational agent. One of the bigger pieces has been AI-powered marketing transformation. Our AI content factory produced 1,843 marketing assets between April and till date. Which covers creatives, ad copy, blog translation, images, and video. These are supported by 14 specialized marketing agents, further powering several thousand customer engagements.
To cover some bit of outcomes, 22% growth in content reads, which is about 7 million+ reads, 43% growth in clicks, that's about 346,000 clicks, and a 5% CTR across AI-driven campaigns, and a cost save of more than 60% compared to traditional agency approach. Personalization is compounding these results further with 2x higher click-through rates and on AI-personalized WhatsApp campaign, 7.5x growth in content inventory versus agency-led production models, and more than 15 lakh leads per month supported through improved campaign conversion. Broadly speaking, together these deployments demonstrate how our agent-driven AI strategy has moved beyond experimentation to deliver tangible business value, which Arvind also had covered. This further enhances our productivity, improves customer engagement, increases revenue opportunity, and substantially improves operational efficiency. I look forward to reporting further progress next quarter, and I would like to hand over to Mr. Sunil Samdani, our Executive Director.
Thank you.
Thank you, Harsh, and good evening, everyone. Let me quickly take you all through the financial highlights for the quarter. The assets under management stood at INR 67,054 crore, reporting a strong growth of 11.1% quarter-on-quarter, driven by continued momentum in retail products. On the liability side, as part of our debt strategy and in- line with our projected AUM growth, we continue to diversify our liability book, focusing on long-term borrowings. Hence, the share of long-term borrowings has gone up by approximately 2%, from 86.5%-88.5% quarter-on-quarter. This number was 75.2% in Q1 of FY 2026. Our net interest income, including the fees and other income, continued to grow healthy, standing at INR 1,415 crore for Q1 of FY 2027, which is up 10.9% quarter-on-quarter and 84.3% year-on-year. The cost of borrowing for the quarter stood at 7.72% versus 7.63% in the previous quarter.
Our OpEx- to- average AUM at 4.06% is showing resilience despite ongoing investments in collections, tech infrastructure, and branch network. The pre-provisioning operating profit during the quarter was INR 785 crore, a 12.9% growth quarter-on-quarter. Asset quality continues to improve sequentially with GNPA declining further by 7 basis points, standing at 1.37%, which is a reduction of 47 basis points year-on-year. The net NPA at 0.70%, a reduction of 4 basis points quarter-on-quarter and 15 basis points year-on-year. Our provisioning coverage ratio stood at 49.11%. Our profit after tax stood at INR 308 crore during the quarter, which is a 20.8% growth quarter-on-quarter. The net equity ratio stood at 3.82 x at the end of the quarter following the capital raise of INR 2,500 crore through QIP in April of 2026.
The capital adequacy ratio continues to remain healthy and comfortably above the regulatory requirements at 19.46%, of which the Tier 1 capital is at 18.37%. This gives us enough headroom for growth. The liquidity coverage ratio stood at 199.62% as of June 30th, 2026. On the liquidity front, a surplus liquidity of INR 4,012 crore as on June 30th 2026, keeps us in comfortable position. Thank you. Now I would like to open the floor for question- and- answer session.
Thank you very much. We'll now begin with the question- and- answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants, you may press star and one to ask the question. The first question is from the line of Chintan Shah from ICICI Securities. Please go ahead.
Thank you for the opportunity, and congratulations on another strong quarter. Sir, firstly on the ROA. ROA now has kind of moved around 130 basis points year-on-year. From 68 basis points to 1.98% currently, which has the growth has been kind of quite phenomenal. Which is largely we can attribute to OpEx- to- AUM and the credit cost moderation. Now OpEx -to- AUM also seems to be around now 4%, which is largely where most of the diversified players are, here and there. Now what are the kind of ROA levers going ahead, which I was just trying to understand that. Credit cost probably how much delta is there? If we have to move from two to three, what could be the incremental ROA levers from that? Yeah. That was the question. Yeah.
No, thanks, Chintan. I think the most important is NIM. If you see last 12 months, the NIM has moved a substantial level. That's point number one. Second important point, Chintan, I would urge to look at is disbursement yield. Last quarter, over the previous quarter, we had grown, I think if I'm not mistaken, by around 40 basis points in the disbursement yield due to product mix. Over that, our disbursement yield has moved by approximately 50 basis points. Now, when you look at the ROAs of the future, you look at our portfolio yield has moved up by probably 70 or 90 basis points. If you look at our disbursement yield is moving up at a very healthy rate. Structurally, you are in a sweet spot in terms of, if I were to assess the future NIMs, purely as a strength of interest income increase.
That's the fundamentally first point. Second is, credit cost is presently declining, but it's reached 2.4%. We see that structurally improving quarter- on- quarter for a couple of quarters. Let me park it there for you. That confidence of our customer cohorts and our collection strength is giving us fair amount of confidence there. As far as OpEx- to- AUM concerned, I have actually said that you should be prepared for a 15 to 25 basis point upside as well. Despite that, we are confident if ROA is moving structurally strength to strength and the increase in OpEx- to- AUM, we might see if at all we club in few branches growth in a certain quarter, which is also something as a precaution I like to give. I also gave it last quarter, you saw finally we improved by certain basis points.
I would rather we approach it conservatively and over-deliver. I think there is enough structural strengths for a company of our type, which is growing our disbursal yield where there's a pricing power in the product mix, fairly visible on one side, and you've got a credit cost which has a fairly decent runway for structural improvement. You've got, if I take a year's time, our guidance is that structurally, OpEx cost will come down. If I take a two-year window, I think we should be structurally giving enough confidence now that if you see our guidance, we have given a guidance of probably June exit of 2028, which is two years from now, and you're already at 1.98%. I think it should inspire adequate structural strength and confidence from now on.
Sure. Just harping on the margins part, which you mentioned, that margins will be structurally improved. If you look at the secured and unsecured mix, which is like currently secured is 53%. I think we have guided that 50/50 would be the ratio for secured/unsecured. In terms of mix, we are largely done. Probably it is just that we are probably moving into more high-yielding segments. What is driving the rise in the disbursement yield? Yeah.
You see, ROAs, by the way, there are, for example, our PL Prime. If you see our business loan, we are actually not growing more than probably 15%- 16%. If you see our PL Prime, which is the top corporate of India. If you see carefully, the devil is in the detail, we're already 36% or 38% digital now, which is growing every quarter for the last two quarters. The digital is very fairly priced. People pay for convenience. It's 24 / 7. It's adding a lot of structural strength to us, both from vendors and our website. I think even if you take products like education loan, gold loan, we launched 400 branches. If you see our portfolio yields, it's moving at a very healthy level of that.
I think the portfolio yield must be close to INR 80 crore-INR 90 crore-INR 100 crore already, if I'm not mistaken, and it should command a healthy, probably anything in the range of 17%+ already. There's a fair amount of strength on all businesses and yields which could be going up. Remember one thing, even if you take our unsecured, our bias would be within unsecured higher to Prime PL and education . It is more structural- to moderate- risk. It is every single thing. Even this time when I spoke, I explained why multiple products will give us a structural strength versus probably what we have seen across the industry, is because you have multiple businesses which take care of different economic cycles.
As a company, we probably are on a much solid foundation on each of the businesses, and the combined strength actually smoothens out any cyclical risk that you'll end up seeing.
Sure. Just one last thing on the capital front.
Yeah.
We kind of taken the approval for INR 5,500 crores against which there is a raise of INR 2,500 crores. Are we building in any further capital raise in this year or we are largely done? Yeah. Thanks.
I think we raised INR 2,500 crores in the first week of April or second week of April, and we're pretty much comfortable for the four quarters to five quarters, and we'll see as we go along. In terms of, we are more focusing on more structural strengths of all the vectors, and as you can see that the business is moving into a much more solid phase.
Sure. Thank you for the detailed answers and wish you all the best. Yeah.
Thank you so much.
Thank you. Next question is from the line of Abhijit Tibrewal from Motilal Oswal. Please go ahead.
Good evening. Thank you for taking my question. Congratulations on a good quarter. Arvind, sir, I just wanted to understand, asset quality for us continues to improve, which I think is impressive. Can you share some early delinquency trends across some of the key products? It could be like PL, Business Loan, LAP, and Commercial Vehicle Loan. Just trying to understand, is there any segment where you are still exercising caution? The reason I ask this is only yesterday, one of the peer shared that they've started seeing some early trends of higher bounces coming from salaried customers in the IT sector and in southern India. Are there any such trends that you are seeing in any of your product segments? That's the first question I have.
Fair enough. First of all, thanks a lot. I think before I hand over to Shriram to give you a firsthand sense, across products between calibration, collections on IT sector, because you specifically said outside IT sectors on salaried, there's absolutely no reason for us to worry at all. As a matter of fact, I have already in my first answer and in my brief, given a guidance. Not a guidance, but probably given you the sense that from the lens today, if you look at it internally, we see a lot of strength in our quality of calibration. You can see the numbers. These numbers are hard facts. We don't see any emerging trends of any nature on this stuff at all. If you see our 6MOB, that's a good early indicator. It's gone down to almost, I think, 6.64% from approximately, I think 1.1%.
1.05%.
I think this, if you see carefully the minute details of Stage 2, Stage 1, and if you see GNPA. GNPA is a pretty decent indicator of how you could see the future from here. That's the Stage 3. It can't be a better indicator for any company than the GNPA levels. From all perspectives, from our lens, I think if anything calibrated well, there's absolutely no reason to worry. Shriram, you want to add anything that I'm missing?
No. To add to what the MD spoke about, even as I told, the slippage ratios have improved by around 5% in Q1 FY 2027, and Stage 3 slippage ratios have also improved by around 13%. You kind of look at every quarter we have been improving even on the slippage ratio. That also kind of gives you a sense on how the portfolio is trending. Bounce rate have been stable or it's also coming down, which in turn you can see that in even your 6MOB. That's a kind of a correlation. If you try to correlate your 6MOB, it can give you a sense that bounce rate versus even my collection efficiency, which you can see in the deck, which is around 99.6%. If you try and look at each of these from a lens, then I don't see any stress building up.
In fact, the portfolio is as per our expectations because all of this, we have kind of engineered at for almost two years in advance in terms of how we are building our portfolio and calibrating it.
The question I had is sort of in, Arvind, sir.
Abhijit, sorry to interrupt you. We lost your audio in between. Can I request to repeat your question once again?
Can you be a little louder on the radio? Yeah.
Sure. Am I better now? Is the line better now?
Yeah, your voice is a little unclear. If you can be a little louder, I think then we can hear you. Yeah.
Sure. I'll try. The second question that I had was, I was just trying to understand that among these six newer businesses that you launched over the last 18- 24 months, is there any business which has positively surprised you, or is there any business which has taken longer than expected to scale? If that's the case, has your strategy changed in any of these businesses?
I think the only one which we probably did not accelerate is the shopkeeper loans, which we came across in the earning call in the first one, and I shared with you. Right now that we're not accelerating. For all our decision basis is between credit, cost environment, and also on the ROA. Every other business, gold is a fantastic 400 branches launched. We are opening 60 branches up this financial year. We are moving on course to probably 400 and maybe more, depending on how it goes. Our yields are going pretty good. Productivity per branch is moving very well. If you look at PL Prime, our digital was our strong construct from 28% two quarters back, probably it's down to a 38% approximately. That is structurally, it's moving very well. We are able to price the best quality customers.
If you look at Consumer Durable, I shared with you, we have approximately 50,000 customers a month capacity to process. The number of customer franchise that is increasing is moving very well. You'll be surprised that Commercial Vehicles and CD loans, we have trends of people who have launched historically, and we have a very positive portfolio performance, in the first 12 months. Substantially better than probably historical data indicate. That's just because you asked me, I'm giving you a sense. I think on every single business, education loans reaching INR 144 crore and INR 180 crore, somewhere in that trajectory. This quarter is a season of education. If you check in the market, we are pretty much the second name that's moving on education loans.
I think the reason why you find our strike rate has low errors and is consistently building strength on strength because nothing we launch is not adequately designed, planned and executed. We don't do anything which is off the cuff. People who are handling have seen credit cycles. We only keep match winners in adequate quantity with every business. Otherwise, I don't launch a business. Some of these are very fundamental to our DNA, and that's why you see clinically in an engineering step by step, we'll move forward. Risk is something which we are very, very proud of and extremely important for us. Our abilities to calibrate, our abilities to back test, our abilities for analytics to use for risk management. Even I mentioned for AI, our biggest gain is not about the cost efficiencies, not just the OpEx part. That's a low-hanging one.
The biggest gain of AI is finding the customer cohorts with accuracy. It's not the quantum of customers, it's the accuracy of customers that you can strike. There are many moving parts which are structurally designed with all our experiences, and we're clinically sticking to plan. Which is why you see outcomes could be substantially looking more robust because it's in line with the engineering plan that you will find us clinically going one after the other. On the credit cost, I can assure you that we're looking on a very decent and solid wicket. Our seasoned data internally is also showing fair amount of positive strengths.
Got it, sir. That's useful and just wanted to squeeze in one last question. This quarter, when we look at cost of borrowings for the NBFC which have reported, we are seeing mixed trends. Some of them have actually been able to keep their cost of borrowings stable. For someone like us, it's gone up about 9 basis points thereabout, which is not really an aberration given how bond yields were, given how, I mean, the cost of borrowings tended given the geopolitical environment. From here, would we expect stability or would we expect cost of borrowings to inch up a little further in the coming quarters?
I think cost of borrowing of 9 basis points, 5 basis points or 7 basis points or 10 basis points, I wouldn't be too worried. I think for me, having NCDs at anything in the range of 25%-30% and a diversified borrowing, I think what we've achieved, which we shared in the last two earnings, is a more structural strength. If you see carefully, our dispersal yields are going up so substantially, in terms of the construct that originally we had planned. Of course, we had not declared or given guidance around it, which I respect. It's moving clinically as per plan. That I think has enough and more strength. I mean, just this quarter has gone up by 50 basis point, last quarter went up by 40 basis point over the previous quarter. I think we could be very comfortably NIM accrete them.
If you look at the way we raise NCDs and the term loans from wider spectrum of participants, we have substantial strength of long-term funding that we have raised, and that is the strength this company has. I wouldn't be too worried on the net trade-off. Should be comfortable for the year.
Got it, sir. Thank you for answering all my questions, and I wish you and your team the very best.
Thank you so much.
Thank you. Next question is from the line of Pranay Mehta from Investec. Please go ahead.
Hi, Arvind sir and team. Congratulations on a robust set of numbers. As always, delivering above what we expect. Wanted to ask you two quick questions. One was want to understand growth and your profitability going-
Pranay, sorry to interrupt you, we are losing your audio in between. Can I request you to come in a proper reception area, please?
Can you hear me now?
Yeah, much better.
Yes, little better.
Hi, team. Congratulations on a robust set of numbers and always delivering above promise. Wanted to check on two quick questions. One was in terms of growth and profitability for the next maybe eight, 10 quarters going forward, as well as any more new products coming, as well as Yeah, if we can take this for now, and then I can come back with one more question.
See, Pranay, we've given, if you see eight quarters, that's two years from now, we've given an exit of June 2028 at a 3%-3.5% ROA. That itself could give you a sense from where we are today, of 1.98%. I think across products, our yields are moving up. Our credit cost by design has two aspects. One is our calibration is rich, our collection strength is moving substantially better than our internal plans, and our strength of product mix of better quality products and the yields going up is also adding value to it. I think from a profitability, we could be very excited from here on. That's the only kind of confidence that I can share with you.
If you look at every word of what I have said in the last two years, where we kind of were faced with substantially more uncertain times, I can assure you from here it looks much more predictable and sustainable, a profit trajectory which I can see.
Thanks for that, sir. I know and I've been in touch and understand that you've come a long way and congratulations on that again. Second question was in regard to the IT sector. I think some of the NBFCs are talking about a little bit of pain within that sector that they are seeing in regards to distribution there. Would you like to comment on that or have anything to say around that?
Pranay, I think one of the things which I shared is that as a construct, we just didn't launch six businesses. We launched six different businesses which different economic cycles get affected. Whether it's business loans, whether it's commercial vehicles, whether it's gold, whether it's consumer durable, it's Prime PL. We also have the wisdom to go gradual on used cars and business loans to the level of 10 and 13, 14% or 16%, while we are probably growing well over 40%. I think the whole construct is fairly strong in terms of the whole robustness. As far as the industry is concerned, I think it's fair to be very, very watchful of the macro indicators.
I can assure you that as management and as a finance company, we are fully cognizant that economic cycles and different challenges are constantly there, which is why your internal systems of very strong cohort groups are very important. It's very important to have product designs which can handle and attract the right profiles. Very important to have digital, even if you do businesses which are, for example we have structurally not touched the agri products. Just to give you some conviction. I have run these businesses in HDFC Bank when I was there. I've not touched maybe the microfinance. Nothing wrong with these businesses. It's just that some of these businesses could be border of the pyramid, gets affected substantially more with economic cycles and the best of underwriters I don't think can control this across industry. Nothing wrong with it.
I'm sure we respect all players who master this art. I'm saying this is just to give you a color that everything that we've designed is adequately fleshed out, thought through, and calibrated. We are using our experience to it, and we are very watchful of the environment. We have wisdom to slow down stuff. We've ourselves shared with repeated earnings call that wherever I find a certain calibration level needs a certain growth rate, we have absolutely no qualms about going at a lower growth rates on certain products. The multi-product scenario helps us with keeping the growth momentum.
Perfect, sir. Thanks so much and more strength to you and wish you all the best for your-
Thank you so much.
Forward quarters. Thank you.
Thank you.
Thank you. Next question is from the line of Nischint from Kotak Securities. Please go ahead.
I have two questions. First one was, on the write-offs for the quarter, can we sort of now say that this number of would be your sort of more stable from here on or-
Nischint, sorry, but we are losing your audio. Can you please come in a better reception area?
Yeah, I got your answer.
Yeah. Okay, I'll just repeat myself. The current quarterly run- rate of write-offs, which is around INR 280 crores or so, is this something which is now recurring or is there a legacy element of it which will run down and bring this number lower?
Sure.
Write-offs have been reducing quarter-on-quarter. Control over [audio distortion] because of the better collection efficiencies. So i don't see write-offs going up from here on. Also going to the point on the legacy portfolio [audio distortion] so the legacy portfolio is behind us. We will not see write-offs coming in incrementally much. It will be a natural policy kind of a write-off which will happen [audio distortion] collection effiencies. And my current bucket flows containing my flow from Stage 1 to Stage 2 which is also very encouraging so i don't see much in terms of [audio distortion]
so these numbers are more of a stable trend within the last two, three quarters [audio distortion]
[audio distortion]
Got it. Just a little bit on cost of funding. We've seen a small inch up. I know the liquidity and the interest rate environment is changing by the day. Any guidance that you would want to probably give for cost of funding for the year?
Yeah, Sanjay.
Cost of borrowing, if you see the past trend also despite whatever increase which we had seen in the system, I think we were able to with dynamic treasury management and the mix and the flexibility to move from one instrument to other, I think we have been able to contain our cost of borrowing. In future, this is the environment, this is the interest rate scenario, there can be a small uptick here and there. Like Arvind alluded earlier, the product mix is changing, our disbursement yield is changing, and we will be more than able to offset this impact. We don't see any challenge at NIM level.
I think on the NIM side, our strength of business that we had originally planned, which is probably more visible now, is playing out strength to strength and quarter-to-quarter. That gives us substantial confidence as a trade-off. I think we should be fairly in a comfortable zone in line with our plans.
Yes, of course. Just the last one, LTV of gold loans, if you could share if it's readily available.
LTV of gold loans. You want to know what is the LTV?
75%.
Yeah, around 75%, I think.
Got it. Thank you very much and all the best.
Thank you so much.
Thank you very much. Ladies and gentlemen, we will take that as our last question. With this, we conclude today's conference call. On behalf of Poonawalla Fincorp Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you.