Ladies and gentlemen, good day, and welcome to the Repco Home Finance Q2 FY 2026 earnings call hosted by Yes Securities Limited. All participants are currently in listen-only mode. There will be an opportunity to ask questions following the conclusion of the management's opening remarks. Please note that this conference is being recorded. I now hand the conference over to Mr. Rajiv Mehta from YES Securities. Thank you, and over to you, sir.
Thank you, Swapnil. Hi, good evening, everyone. Thank you for joining Repco Home Finance second quarter FY 2026 earnings call. From the management side, we have Mr. T. Karunakaran, MD and CEO; Mr. A. Palapandi, Chief Operating Officer; Mr. P. K. Vaidyanathan, Chief Development Officer; Mr. M. Raja, Chief Business Officer; Ms. Shanthi Srikanth, Chief Financial Officer; and Mr. Ankush Tiwari, Company Secretary and Compliance Officer. Now, I request Mr. Karunakaran, sir, to start the call with his opening remarks, post which we can open the floor for Q&A. Over to you, Karunakaran sir.
Thank you, Mr. Rajiv. Good evening to everyone, and warm welcome to the earning call of Repco Home Finance Limited for the quarter ended 30th September 2025. We appreciate your participation and thank you for joining us today. Before we move into Q&A session, I would like to provide a summary of the company's performance for Q2 FY 2026. While the detailed financial results and operational highlights have already been shared in the Investor presentation published earlier . For the benefit of all participants who have not had opportunity to review the financials, I will present a brief update on performance of our company during the quarter before taking Q&A. We are happy to announce that growth momentum seen in the last few quarters has continued in this quarter as well. The company is progressing on its business parameters and is positive of meeting its guideline numbers.
The structural changes that have been processed across the organizations are yielding results. Coming to the business, yes, we have disbursed INR 1,069 crore in the Q2 of current financial year as against INR 867 crore in Q2 of FY 2025 and INR 829 crore in the previous quarter. I am happy to say that this is the highest ever disbursement in a quarter we have achieved in the history of our company. In fact, in the first quarter in this current financial year, we achieved highest disbursement compared to the first quarter of any other year. On an average, we are able to maintain a stable growth of 22% in disbursements in month-on-month. Our sanctions stood at INR 1,206 crore in Q2 FY 2026 as compared to INR 926 crore in Q2 of FY 2025 and INR 907 crore in the previous quarter of the current financial year.
During the current quarter, we have witnessed a marginal reduction in cost of funds. In line with our policies, practices, strategy, we have reduced our benchmark lending rate, it is called marginal lending rate, to 10% from 10.10% with effective from July 1, 2025. Since our assets are repriced on quarterly basis, benefit of MLR cut passed on to all the customers as end of June 2025. This reflects our commitment to ensuring that our borrowers benefits from rate cuts. The overall loan book stood at INR 15,033 crore at the end of September 2025, as against INR 13,964 crore a year back, registering a growth of 8%. Loan disbursement in the second quarters reflect a strong regional engagement with Tamil Nadu contributing to 62% to overall disbursements.
Karnataka accounted for 11%, followed by Maharashtra at 7%, Telangana at 6%, and Andhra Pradesh at 5%, while the remaining 9% was disbursed across the state with notable improvement in Rajasthan, Gujarat, and Madhya Pradesh. Our September 2025 disbursements across all the states where we are present are all all-time high disbursements. The ratio of exposure between the non-salary and salary segment stood at 53% and 47% respectively. The share of non-housing loan, that is, home equity, stood at about 29% of the loan book, and housing loan contributed to about 71% of the loan book. GNPA amounted to INR 475 crore as end of September 2025, at 3.16%, as against INR 552 crore as of September 2024, and INR 485 crore as of June 2025. The net NPA stood at INR 225 crore at 1.50%.
We have a total provision of INR 375 crore, with a provision coverage ratio of 52.54% for stage three assets. Our systematic and continuous action on delinquent accounts yielding results, which is evince from protection in stage two assets. As end of September 2025, our stage two assets stood at INR 1,323 crore as against INR 1,422 crore in previous quarter- end. During the COVID period, we restructured loans about close to INR 790 crore, of which INR 121 crore already slipped in the NPA. Remaining INR 408 crore are various stages of asset. Our NIM for quarter two FY 2026 was at 5.5%. The company has been able to maintain a spread of 3.4% by raising yield to 12.1%, despite the stiff competition at our pricing levels. The net profit amounted to INR 107 crore for Q2 FY 2026. Our ROA stood at 2.9% and ROE at 13.5% for Q2 FY 2026.
Cost to income ratio for the quarter stood at 28.4%. We have initiated diversification of our borrowing profile. In June, we successfully issued INR 150 crore of commercial paper. Following our entry into the capital market after a long time, we received a positive response from banks, mutual funds and other institutional investors for both commercial papers and NCDs. In parallel, we continue to engage with our banking partners and are actively negotiating for reduction in rate of interest. Approximately INR 6,000 crore of bank borrowings are scheduled for repricing over the next three months, and as a result, we anticipate further reduction in overall cost of funds. With respect to refinance facility from National Housing Bank, we have secured a sanction of INR 150 crores, and we utilized the entire INR 150 crore.
Additionally, we are in the process of submitting a fresh proposal to NHB in the range of INR 500 crore-INR 750 crore. We will provide an update on the progress of this proposal in the next con- call. Coming to the branch network, as end of September 2025, we have 234 touchpoints across the 12 states and one union territory, comprising of 203 branches and 31 satellite centers, with additional two asset recovery branches. We are planning to open three more branches before end of this current financial year. Looking ahead of Q3 FY 2026, we are targeting disbursement of approximately INR 1,100 crore from INR 1,069 crore of Q2 of FY 2026. We are having a plan to reduce our GNPA from INR 475 crore to INR 450 crore in current quarter. We are expecting reduction in stage two assets to INR 1,275 crore from INR 1,325 crore as end of September 2025.
We intend to maintain our provision coverage ratios, spreads, and NIMs at level what we reported in the current quarter. Our current provision coverage ratio for stage three asset is 52.50%. We remain comfortable with existing provision coverage ratio and confident in the adequacy of the provision frameworks. We have recruited people with experience in sales, recovery, and collections verticals. With this additional strength, our focus will be on taking the growth numbers to the next level and reducing our overdue accounts. We are quite positive on this. The company is geared up to achieve the target set for FY 2026 in terms of profitability, GNPA reduction, disbursement, and AUM growth. We thank each and every one of you for showing interest in our company growth story. Now, I open the session for Q&A. Thank you.
Thank you. We will now begin with the question- and- answer session. Anyone who wishes to ask a question may click on the Raise Hand icon from the Participant tab on your screen. We will wait for the question queue to assemble. We have our first question coming in from Akash Jain of MoneyCurves Analytics . Akash, please go ahead and unmute your microphone.
Yeah. Thank you so much. Thank you for giving me the opportunity. First of all, I think huge congratulations on finally doing more than INR 1,000 crore disbursement, because I think for the last eight to 10 quarters, which is what we have been expecting as investors, and finally, we have been able to cross that number. So huge congratulations to the team on that. I have two questions, sir. One is regarding AUM growth and disbursement. So sir, clearly, we are facing huge rundown on our legacy book it seems, because of the fact that it is obviously an old book as well as probably we are facing significant BT out pressure that even after good disbursement growth, we are still not as strong on AUM growth, which is very important from an income perspective.
Just want to understand what we need to do to really get to this 10%-12% or 12%-15% AUM growth number, because how much do we really need to crank up on disbursement and control BT out to really get 10%-12% AUM growth? That is the first part. The second part is on the cost. It is quite evident that, like you said in your opening remarks as well, that we have increased the cost base by recruiting people across sales and collections. Can you give us a bit of a break up because there has been a big increase in both employee cost as well as other expenses. Can you just take us a little bit into detail in terms of what has led to this increase, both in employee cost as well as in other expenses for this quarter?
Thank you.
I will answer your second question on first. Yes, if you look at employee cost, we have seen increase in current quarter compared with June quarter. Yes, we have realigned our, what do you call, incentive policy in line with industry practices to motivate the employee to do more business, more sales, more recovery, more disbursements, which has resulted in the numbers. This quarter, we disbursed about INR 1,060 crore, which is our all-time high disbursements. On account of payment of incentive, our salary cost has gone up. Of course, which is in line with the industry. We have made a thorough study how other NBFCs or HFCs what are their incentive structures . We collected the information based on that. We have realigned our incentive structure, which is effective from 1st April, 2025, which caused some spike hike in the salary cost. Number one.
Number two, this is a silver jubilee year for our company. We started this company during 2000. This is a silver jubilee year for us. To honor our employees, we have given honorarium and gifts and all, which costs some expenditure to the salary thing. Of course, last two years, we have opened around 32, 35 branches. All the branches we have provided adequate manpowers. Of course, the business is also coming from these branches. Because of increase in manpower count also our salary cost has gone up. And finally, last two to two and a half years, we have not exercised any promotion exercise. We have not given promotion to our employees. During this current financial year, we have conducted a promotion exercise to motivate our employee, and we elevated a suitable candidate to next higher cadre. Of course, I have been elevated too.
Earlier I was Chief Operating Officer. I have been elevated to MD. Like that, all the cadre, we have done assessment, we have elevated the suitable candidate to next cadre, which has caused some additional cost. All those things caused a spike in the salary cost. Coming to your first question, AUM growth. Yes, disbursements are going up. The branches what I opened in last 24 months started giving substantial amount of disbursements. I am expecting around another 30% of increase in quarter-on-quarter disbursements. Going forward, my disbursement number will go up. Simultaneously, we can see increase in AUM also. For BT, outs are under control. If you ask me, last three months, this quarter, September quarter and BT outs are almost in line with previous quarters. We have not seen any increase in BT outs.
Sir, you covered the employee cost bit. What has also led to the increase in the other expenses for this quarter?
Other expenditures is not substantial. If you compare with June, the other expenditure increase is about INR 60 lakhs or something. Which is in line with the increase in the business, as well as we opened 42 branches across the country in the last 24 months. All the administrative costs are being booked in other expenditure. Another one is a silver jubilee year celebration. This is silver jubilee year for our company. On account of celebrations, we have incurred a certain expenditure, which has resulted in increase in administrative. But this is a one-time expenditure. On account of this, our administrative cost has slightly gone up compared with our previous quarter- end.
Sir, just as an addition, I think as a shareholder, I personally can say I am extremely supportive of all the steps you are doing in terms of salary hikes and promotions. Because, to be honest, I think even earlier, we have been pushing the earlier MD on incentivizing the employees enough, because in a highly competitive environment, you can't grow without incentivizing your employees. We have been pushing for the earlier MD to also go to the board for allotment of ESOP to the employees . I think finally, I don't know whether anything is happening on the ESOP front. But I think unless you pay your employees well and incentivize them well, there is no way we can grow in a hyper-competitive environment like this. So as a shareholder, I am extremely supportive of whatever you are doing in terms of employee motivation.
That's the feedback I want to share with you. Thank you so much.
Thank you.
Thank you, Akash, for supporting us. This ESOP matter also, preliminary discussion started at board level. Let's see how it goes. We'll keep you posted on the update.
Thank you. Thank you, sir.
Thank you so much. We have our next question coming in from Vikas Kasturi of Focus Capital. Mr. Kasturi, please unmute your microphone.
Yeah. Good evening, sir. Am I audible?
Yes, sir. Please go ahead.
Okay. Great. Sir, first of all, once again, from my side, sir, hearty congratulations to you. I was personally very thrilled to see the INR 1,000 crore disbursement number. I had a little bit of an extension to what the previous participant asked. Sir, we saw that you disbursed INR 1,000 crore, but the stage one number went up by only about INR 400 crore. My question is, you have guided for INR 16,000 crore AUM by March 2026, end of this financial year. How much more do we need to disburse to get to that number of INR 16,000 crore AUM, sir? That is my first question. The second is more an observation, sir, more like a request. That in the presentation, could you switch from millions to crores? Because even in the language that we speak, we are only talking about crores and not millions.
It kind of makes it more easy to read the numbers, sir. These are my two points, two questions.
Yes, sir. Thank you for the suggestions. We have taken note of. We note to present our Investor presentations in crores. Coming to questions. Yes, sir, the BT out it is under control. I answered the first participant and question also. BTs are under control. This September quarter, we have done a disbursement of INR 1,069 crore. For December quarter, we are targeting a disbursement of close to about INR 1,100 crore to INR 1,150 crore. March, we are targeting a disbursement of close to INR 1,350 crore to INR 1,400 crore. With that, I am confident of achieving INR 16,200 crore AUM size by this financial year- end.
Okay. Got it, sir. Sir, a follow-up question. You had also guided for financial year 2028 that you will reach, I think INR 25,000 crore, if I am not mistaken, sir. That will be a big jump for you. In two years, you will have quite a bit of disbursements to do. Could you just share what are your initial plans? How are you planning to achieve that big number, sir?
Sir Vikas, I will take this question. Raja here. Yes, we have aggressive growth plans on both disbursement and AUM. That is on the organic side. We are also looking at going ahead with some book purchases, which is in the early stages. By and large, we should be reaching the guidance of 2028. But for this year, maybe it is safe for me to stick on with my current guidance of INR 16,000 crore. Of course, we are working on that, and we will work towards that very aggressively, and we should be able to delight the Investors. Yes.
Fantastic to hear, sir. One last question, sir. Our GNPA number for the first half is almost at the same level as where we were at the end of March. You were also again guided for 2.5% GNPA by end of March, which actually we need to bring it down to INR 400 crore, sir. It just looks like a very big target to me, but I think you have it under control. Could you just mention a few things that you're working on that?
Yeah. This is Vaidyanathan, CDO. Sir, what you said is correct. We are maintaining the same figure as of March, even in September. We have taken a lot of strategies. We have a lot of steps to reduce the GNPA. As we already told in the last quarter, we have posted once a General Manager exclusively for, say, overseeing the Tamil Nadu branches, and another GM posted for other than Tamil Nadu branches. We have also created a separate layer. These are recovery vertical managers during this quarter. They are exclusively monitoring the NPA accounts in all regions. They have been allotted at least 100 accounts. So far, we have posted 25 RVMs. In the last quarter, we have also introduced a special OTS scheme for the financial year 2025-2026.
Because of these strategies, we are able to reduce GNPA of INR 450 crore by the end of this quarter, and also we are able to reach the 2.5% as promised by us before March 2026.
In addition to that, we have also strengthened our recovery review mechanism. On weekly basis, we are conducting review meetings specifically on NPA reductions. We are confident of achieving the numbers that we have given in the guidance.
Fantastic, sir, and wish you all the best to you, Raja sir, and Vaidyanathan sir, and the entire team of Repco, sir. Thank you.
Thank you so much. We have our next question coming in from the line of Anand Mundra of Soar Wealth. Mr. Anand, please go ahead.
Yeah. Thank you, sir. Thank you. Sir, congratulations on crossing INR 1,000 crore number and congratulations on completing the silver j ubilee also, sir. Sir, just a small request, sir. We have INR 3,500 crore of network, and we are generating INR 400 crore of PAT. Our dividend payout should be much higher than INR 20 crore, what we are distributing every year, sir. We don't need so much capital, so why we are holding, and why you're keeping such a high capital and our ROE is suffering, sir. The return on equity ratio, if it crosses 17%-18%, it will be very attractive from an investment perspective. That's a small request. Your thoughts on this, sir.
Hi, Anand. Ankush. For dividend sequentially, every year we are increasing our dividend payout. On this expectation on higher dividend, I will certainly convey it to the board, and we'll consider in next board. Whatever in future, of course-
Ankush, our payout is only how much? Out of INR 400 crore PAT, we are distributing only INR 20 crore. At least we should distribute 25%-30% of our PAT generation every year.
Certainly, we take note of your suggestion.
We have so much capital.
Yes, sir. We have taken note of your suggestions. We will escalate to the board. Coming to the business, yes, you have seen our disbursement in last couple of quarters. Quarter-on-quarter, our disbursements are going up. BT outs, prepayments are under control. NPAs are coming down. Our stage two numbers are coming down drastically. Going forward, our profitability will improve. You can see improvement in return on equity also.
Okay, sir. Sir, another question is, what is the strategy of buying a portfolio, sir? Organic growth is much better than buying a portfolio. From that perspective, I wanted to hear from you.
Yes, sir. We are not basing our growth on inorganic purchase, but yes, that is also under consideration. We will be going basis the guidance on our organic growth. That is going to go strong. This will be an add-on to whatever we are trying to do. Let us see how the future takes us through, sir.
A couple of years before, we have done three tranches of this kind of assignments. All these books are doing well. We are having experience, expertise on selecting loan books from other HFCs and NBFCs.
Okay. Sir, one question, sir, which I wouldn't follow. Sir, what is our AUM target for this financial year, sir?
INR 16,200 crore, sir.
INR 16, 200 crore
INR 16,200 crore. Yeah.
So we will add INR 1,200 crore of book in the next six months, sir?
Yes. We are confident, sir.
Okay. Sir, that's a very high number. That will translate to disbursement of more than INR 1,300 crore to INR 1,400 crore per quarter, sir.
If you see that disbursements month-on-month, quarter-on-quarter, this is increasing. This will give a confirm that INR 16,200 crore is easily doable.
Okay. Thank you, sir. Wish you all the best.
Thanks a lot, sir.
Thank you so much. We will take our next question from Prithviraj Patil of Investec. Mr. Patil, please go ahead and unmute your microphone.
Thank you for the opportunity. My first question was, what are the incremental yields that we have in LAP and HL? That was the first question.
Sir, your voice is not audible.
Yeah. Am I audible now?
Yes, please.
Yeah. My first question was, what was the incremental yield in LAP and HL segment? The second question was on the write-off pool. You had negative credit. I just wanted to know what is the pool that we have from which we can expect recovery, the quantum of pool that we have. These are the two questions I have.
Yields, housing loan, we are getting a yield of about 11.17%, and non-housing loan, we are getting a return of 13.55%. What is your second question?
My second question was the credit costs are negative since the past few quarters. I just wanted to know if we have a return of pool from which we can expect recoveries, and if so, what is the quantum of that pool?
This year we have got close to about INR 6 crore from return of accounts. We are more aggressive on recoveries. We have formed a special cell in corporate office to monitor this written-off accounts . I am expecting another, say, INR 8 crore or INR 9 crore from current year from written-off accounts.
Sure, sir. One last question, if you can just repeat the amount of floating rate borrowings that are coming due, which would be replaced.
All the borrowings are floating rate, Prithviraj .
Yes, sir.
Person is not clear.
Sir, in our opening comments you had mentioned that certain amounts of borrowings were coming due. If you could just repeat that number.
Yeah. It's about INR 6,000 crore. Out of total bank borrowings, around INR 6,000 crore are due for reset in next three months. It's first due for reset in next three months.
Okay, sir. Thank you.
Thank you so much. We will take our next question from Abhijit Tibrewal of Motilal Oswal. Please go ahead with your question.
Hi, am I audible?
Yes, we can hear you.
Yeah. Thank you. Sir, I just wanted to ask one question. I remember hearing earlier in the call you said that disbursement momentum has been improving, and every month you are doing higher disbursements than the previous month. Somewhere, I think you also guided on what we are expecting in terms of disbursements in Q3, Q4. The question here is that historically, if I look at the last four years, and then maybe except COVID period, even before that, Q3 always used to be a relatively lower disbursement quarter for us, because as you will appreciate, we have days in end November, early December, which are considered inauspicious in Southern India, and people don't buy or invest in a property. So what is giving us confidence today that sequentially also from Q2 to Q3 disbursements can be higher?
Yeah, Abhijit, you are right.
See, historically, Q3 has been lesser than Q2, but that is exactly what we are working on breaking the trend. We have introduced a lot many channels from the market, wherein we want to break from the shackles of first 12 years and go on with then consistent growth. Yes, that is a challenge for us, but we are working on it and we are confident that we can do it.
To supplement, Mr. Raja. See, during the September quarter ended, our sanctions was close to about INR 1,206. Whereas we have done only disbursement of about INR 1,070- odd crore. So there is a gap of about INR 150 crore gap is there. Sanctioned but not disbursed in September quarter alone. In June quarter also, we are having sanctioned but construction phases loans, some disbursements are pending.
With those numbers we are confident that achieving of whatever the guidance we have given.
Got it. Just a follow-up here, sir. Congratulations to you and your team for demonstrating a healthy momentum in disbursements. What maybe a little bit worries me, is that in that zeal to get to a certain target in terms of disbursements and growth, hopefully we are not having to compromise on the underwriting and asset quality. Now why I ask this is, so your yields have actually improved in a declining rate environment.
Every other HFC that we speak to acknowledges that, hey, there is a lot of competitive pressure from banks. Despite that, in an environment like this, if our yields are going up and our disbursements are improving, I'm just kind of trying to say that even the underwriting and the asset quality are in place on the incremental book that we are building.
Yeah, suitable underwriting. Of course, we have improved a lot in the underwriting standard, which is evidenced from the performance of new loan book. If you look at delinquencies NPA in the new loan book, its gross NPA in the loan book is close to about 1.2% where compared with the old book NPA, it's very minimum. So we have improved a lot in underwriting standard in last couple of four or six, seven quarters.
In addition to that, we formed a separate cell in corporate office. It is called a credit review. Once sanctioned is happened, the credit review team review the sanctions and after getting a clearance from the review team, only the disbursement will happen. We are having a proper checks and balance. There will not be any dilution in the quality of the asset. No doubt we want to grow, but at the same time, we will ensure that quality in the growth, also profitability in the growth. That is our primary objective. Growth with quality and profitability. We will not compromise quality for the sake of growth. That is damn sure.
Got it, sir. This is useful and that is all from my side. I wish you and your team the very best.
Thank you.
Thank you so much. We have our next question coming in from the line of Kiran D from Tabletree Capital.
Thank you, sir. Thank you for the opportunity. Sir, many congratulations on a milestone quarter. I echo all the participants' enthusiasm in crossing INR 1,000 crore. Sir, a couple of questions. One more strategic and the second more financial. The more strategic question is around, we've had a lot of U.S. tariff situations. Tamil Nadu is a massive exporter to the U.S. kind of state. We are 56%-60% exposed to Tamil Nadu, and most of our customers might be working in one of these textile companies or the engineering companies who are exporting to the U.S. In this context, if you could just tell me, in H1 we disbursed totally about INR 1,900 crore. Of this disbursement of INR 1,900 crore, could you tell us how much was home loan and how much was home equity? Because LAP/home equity is when the stress levels are a little higher.
That's the reason why I'm asking that question. If you could just explain the overall scenario, what you're seeing on the ground. Obviously, we are reading newspapers, but you will know much more on the ground, so that will be very helpful.
Yeah. Kiran, on my housing loan to non-housing loan portfolio, we are maintaining the same ratios of 72% and 28%.
Sir, that's the overall loan book, sir. I'm asking of the last H1 we disbursed INR 1,800 crores, how much was home loan and how much was home equity?
It is more or less on the same ratios. Anyway, I will give you the exact numbers. Maybe post-call I will ask my team to share it with you. But I have gone through the numbers, it is more or less the same. A tad here or there, but it is on the same ratios. That is one. Second is, we do not have any concentrated industry-wise exposure. Because of our branch network in Tamil Nadu and our wide footprint here, we are very distributed and so far, touch wood, we have not faced any issues, as mentioned by you, because of a concentration of industry and export markets.
Got it, sir. That is very helpful. Second, sir, I know we have kind of raised cost to income last couple of quarters, but our return on assets fell from 3.2% to 2.9%. Do you see this going back above 3% in this declining interest rate environment or do you continue to see this trending down to 2.5% over the next year to 18 months?
Sir, this return on asset thing for the major assets which we have—
Disbursed
procured in the last quarters, it started earning revenue only in the next quarter because the majority of the assets added in the final month of September. Return will be visible in the month of November and December. So the return on asset, we are giving the same guidance, which will be with 2.9% to 3%.
Okay. For this year, ma'am? I mean, generally-
For FY 2026.
For this year. This quarter we had some one-off expenditure like celebration of Silver Jubilee-
Right
and all. Going forward, right now our return on assets is at 2.92%. We can expect it may go up by another one or two basis points, not more than that immediately.
Got it, sir. Sir, generally, if I may ask, the return on assets is a combination of many variables. Given the interest rate continues to decline, GST and all that bonanza coming through, if interest rates continue to decline, and given the competitive scenario is like this, should we expect the ROI to climb up ? How does it work?
See, all my entire loan assets are floating. Wherever I got a cost benefits, it will be passed on to borrowers to retain a good customer. To keep our rates competitive, we have to reduce the rates and all. Expenditure side, yes, we are exercising more cautious and economy in expenditure. Keeping all those things, another, we can see slight improvement in ROI in coming December quarter- end. This number may go up from 2.92% to 2.95% or something like that in December.
Got it, sir. Thank you so much, sir. Congratulations and look forward to the INR 16,000 crore milestone this year.
Thank you.
Thank you so much. We have our next question coming in from Varun Dubey of Share
Thank you, sir. Thank you for giving me time to ask you question and congratulations on your silver jubilee. Sir, just wanted a clarification on the total AUM. You said that INR 16,000 crore is the amount for FY 2026 and INR 25,000 crore is for FY 2027, and your company is also going to do some book purchases. Just wanted to understand whether this figure includes the book purchases or this is excluding the book purchases.
Yes. Yes. For this financial year, the guidance is INR 16,000 crore. For the financial year of FY 2028, we are looking at the said milestone of INR 25,000 crore. Whatever number we are talking about is inclusive of organic and inorganic. Any other question?
For FY 2026, the INR 16,000 crore, that excludes the inorganic, right?
No, that also includes inorganic as well.
We are not going for any book buying for current financial year. It may around INR 30 crore-INR 40 crore kind of book we are planning to buy. Not in a big way. We want to start, we want to explore that avenue also.
Okay. So that would be in the INR 25,000 crore for FY 2028, right?
Yeah. Correct.
Other than this, just wanted to know the investment number for the Q4. I think you said INR 1,350 crore-INR 1,400 crore, right?
Yeah.
Okay. Sir, what would be the overall reduction in the cost of funds annual, because you're going to be selling-
Hello?
There's a lot of background noise, Varun. We are not able to decipher very clearly. Sorry.
One second, sir. Sir, just wanted to know, because you've uncreated around INR 6,000 crores of book would be repriced in this quarter, so how much would be the reduction in cost of funds for Q3?
About 10 basis points to 15 basis points reduction. It's actually around 8 points. Going forward, we expect another 10 basis points to 15 basis points reduction.
Okay. 10 basis points to 15 basis points for Q3, you mean to say?
Q3, Q4, put together and pending for this financial year. We are getting repriced from the banks.
Actually, INR 6,000 crore is due for repricing next three months. Keeping these things, we are expecting around 10 basis points to 15 basis points reduction in cost of fund in next two quarters.
Okay, sir. Sir, you said about. Yes, I got it. You said about opening new branches in the current financial year. How much would that be, new branches?
Sir, we are looking at another 10 to 15 more branches, which is already in the offing. This financial year, we may be adding another 10 more branches.
Out of these 10 more branches, four or five branches will be in the West, and two or three branches will be in the state of Karnataka, A.P. and Telangana, remaining will be in Tamil Nadu.
Okay, fair enough, sir. Sir, just last one question. You said about the BT out rate that is normal when compared to the last quarter. What is the bounce rate for this quarter?
Bounce rate, right now, I do not have exact numbers. I will discuss in offline.
Okay, will do, sir. Thank you very much. Once again, congratulations for your.
Thank you.
Thank you so much. We have our next question coming in from Prashant Kumar of Sunidhi Securities. Please go ahead with your question.
Yeah. Thanks for the opportunity, sir. Am I audible?
Yeah.
Yes. My question again on borrowing side. Actually, commercial borrowing, which is the largest portion of total borrowing, have been gradually declining. However, the cost of finance from Repco has increased. In this quarter, it is stable, but increased significantly from Q4. Could you provide some color on this?
Yeah. The cost of Repco Bank depends on their cost of funds. We started to prepay Repco Bank facility during this current time. In last quarter, we repaid about INR 200 crore to them. We have requested them to reduce the cost of funds. We are having a plan to reduce exposures with Repco Bank by availing lower cost from other banking system.
Okay. I mean, you have already-
Other banks as well as NHB. This quarter, September quarter, from July to September, we have prepaid about INR 200 crore. From this quarter, I'm having a plan to repay another INR 300 crore to INR 400 crore kind of thing to Repco Bank. I want to reduce their exposures with Repco Bank.
Okay. Even the portion is not significant, although. But yes.
Yes.
My second question is, going forward, what will be the cost to income on an annual basis? Can we expect income growth to outpace the expenses and remain restricted to around 27%-28% annually?
Yes, we can see some improvement. Right now our cost to income ratio is about 28.4%. Some one-off expenditure we had incurred in September quarter. Because of that, we have seen reduction in cost of fund. Yes, our loan books are growing, disbursements are happening, loan books are growing. So we can see improvement in cost of income ratio going forward.
Okay. Thanks, sir. That's it from my side.
Thank you so much. We have our next question coming in from Anand Mundra of Soar Wealth.
Thank you, sir. Thanks for giving me opportunity. What is our DSA sourcing?
Yes, sir. The DSA sourcing channel has paid very good for us , and it has helped in our growth momentum. Yes, we are also taking care of the cost of that sourcing channel, and now we are in line with building our own internal team to supplement the same. We are working on it, and DSA has worked good for us also, sir.
Sir, any numbers if you can recollect, sir, in terms of sourcing?
See, the sourcing break between DSA and non-DSA is almost 48% and 52%.
Okay, understood, sir. Sir, one more thing. From equity investor perspective, the higher the growth, the better the valuation is. If you purchase the portfolio, our AUM will grow. But next year growth will drop as the base of the AUM will be higher and our disbursement size would be similar. From that perspective, if our disbursement doesn't move to INR 2,000 crore-INR 3,000 crore per quarter, and if we purchase the AUM, our growth will further go down, sir. Just a suggestion and thought for you to consider before buying a large portfolio, sir.
Sure, sir.
And sir, one last suggestion, sir. Since it's a Silver Jubilee, though I have already mentioned my point regarding dividend from long-term perspective. Since it's a silver jubilee, you can consider giving some special dividend to shareholders, sir.
Sir, we already given-
Mr. Mundra, we have already declared interim dividend for this year for Silver Jubilee.
Yeah, sir. We are running INR 80 per year. We are giving INR 2.5 interim dividend, sir. I am just saying-
You-
Capital from that perspective.
Right. Thank you. Your views are noted. We will convey it to board, sir. Thank you.
Sir, my whole purpose is ROE should move to 18%. From that perspective, I am saying. Otherwise, I can sell my share and create cash.
Yes, sir. We are working on that only. Very soon you can see improvement, better ROE.
Okay. Thank you, sir. Thanks a lot, sir
Thank you so much. We have Mr. Rajiv Mehta asking his question now. Please go ahead. Mr. Mehta, please unmute your microphone.
Yeah. Am I audible now?
Yes, please.
Yeah, sir. Just last two, three things from my side, and then maybe we can end. Sir, firstly, can you tell us the average tenure of LAP loans and home loans that you are disbursing?
In respect of home loans as per credit policy, I can go up to 25 years. But if you look at real-
Yeah, the experience.
Average tenure at the time of sanctioning is about close to 14-15 years. Actual life of my HL is across about 8.5 years to nine years.
Okay. What about non-home loan LAP?
Yes. Non-HL also I can go up to 15 years as against 25 years for HL. The average tenure of non-HL at the time of origination is across about eight to nine years.
The actual experience is what?
Experience is about six to six and a half years in case of non-HL.
Correct. Average ticket sizes for both in disbursements?
At a book level it is INR 13 lakhs and incremental now we are at INR 21 lakhs-INR 22 lakhs average ticket size.
Both products.
Both put together, yes.
No, can you give us separate ticket sizes for?
Almost similar kind of thing only. We have not seen much variations between HL and non-HL.
Okay.
Incrementally INR 13 lakhs. Simple logic. Incrementally it is about INR 13 lakhs. I mean, overall book it is about INR 13 lakhs. Incrementally about INR 23 lakhs to INR 24 lakhs. It is the same for HL as well as non-HL.
You said incremental average ticket size is INR 23 lakhs-INR 24 lakhs for both?
Yes, sir.
Okay. Are incentives different for LAP and home loan for the employees?
No, it is the same, Rajiv. We only look at the overall disbursement, and the incentive structure is same for both the products, and it is in line with the market. That's how we have structured it.
Okay. What is the reason that LAP as a proportion of the book has been growing much faster? The LAP book in absolute terms has been growing at about 30%-40%. When I look at the LAP growth, LAP portfolio growth in the last two years, it's roughly 40%.
When I look at home loan portfolio growth in the last two years, it is just 8%. If the incentives are same, then why the growth rates are so different between home loan and LAP.
Yeah, Rajiv, if I can take it. When I say non-housing loan, it is not pure LAP for me. Because within non-housing loan, LAP is only 7%-8%. Balance all, we have CRE, we have mixed use, we have certain commercial buildings, we have multi-tenanted properties. That is what is now increasing with me. It is also helping in my yield.
Yeah. NHB also this is a very couple of months before they came with the clarifications that loans given for the purpose of a reimbursement thing we should classify as a non-HL. Earlier, we used to classify such a loans as a housing loan.
Now, as per the NHB clarifications and advices, such loans are classified as a non-HL, though it is given for the purpose of housing. As per the directions we are classifying as a non-HL, number one. Three kitchen units, loan given to construct a house with three kitchen units, earlier we used to classify as a HL. Now, NHB guidelines are very strict, their directions are very strict. We are classifying such loans are non-HL. Because of that our non-HL portion is going up. If you bifurcate non-HL portions, I can say almost around out of 23%-24%, 16%-17% loans given for the purpose of housing. But because of regulator guidelines, we are classifying such loan as a non-housing loan. Remaining things only for the purpose of pure other non-HL.
Okay.
No, I was just thinking that when I look at the portfolio rundown rate, portfolio runoff rate, that has been increasing in the last three quarters, and which is why despite the increasing disbursements, our growth rate in the loan book has been little bit kind of got constrained because of higher rundowns. You are saying that BT out has not gone up, then the natural rundown of the book has changed, and that is because the non-HL proportion of the loans has actually gone up and which is having a life of six, six and a half years versus an HL life of eight and a half, nine years. This will be a structural thing, right? Your rundown will naturally be higher now in the coming quarters as well.
Even if you were to grow your disbursements to INR 1,100 crore, INR 1,200 crore, your book accretion will remain slightly limited by it, right?
Yeah, you are right, Rajiv. That is a challenge we are facing on day in and day out. Going forward also, yes, my book attrition will happen, but we will have to run fast even to be in the same place, yes.
Okay. Got that. Just one last thing on this ECL and write-off thing, are we done with all the realignment as far as the coverage on stage three is concerned? On the fact that whatever had to be cleaned up is already cleaned up.
Yeah, right now, our provision coverage ratio is at 52.5%. You know well that for HFC and NBFCs, there is no specific mandate from regulator to maintain PCR. We are very comfortable.
Of course, our bankers are very comfortable with the existing, I mean, 52% provision coverage ratios.
The write-off bit, the write-offs will continue at the current rate or the write-off was a one-time accelerated exercise which should end now?
Yes. We can see some more write-off in next one or two, I mean, December quarter as well as March quarter.
Okay. I am done. Back to the operator and maybe we can end the call. Since the management has some other thing. Yeah.
Thank you so much. Ladies and gentlemen, that was the last question for today. I now hand it over to the management team for their closing remarks.
Yes, sir. We extend our sincere gratitude to all the investors, analysts, and credit rating agencies for our continuous support. We will meet in next- con call. Thank you.
Thank you so much. On behalf of YES Securities Limited, that concludes today's conference. Thank you for joining us. You may now click on the leave icon to exit the meeting. Thank you for your participation.