Recording in progress. Welcome to the Repco Home Finance Q1 FY 2026 earnings call hosted by YES Securities Limited. Please note all participants are currently in listen-only mode. There will be an opportunity for you 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.
Yeah. Hi, good evening. Thank you all for joining on this earnings call of Repco Home Finance first quarter FY 2026 results. We have with us from the management side, Mr. T. Karunakaran, MD and CEO, Mr. A. Palpandi, 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, who is the Company Secretary and Compliance Officer. Sir, with this, I would want to hand over the call to Mr. Karunakaran for his opening remarks, post which we will start with the Q&A session. Over to you, sir.
Yeah. Thanks, Mr. Rajiv. Good evening to everyone. We would like to welcome you all to this earning call of our company for the quarter ended June 30, 2025, to discuss performance of the company. We would like to thank you all for joining us in this call today. We are proud to announce the declaration of 25% interim dividend for the financial year 2025/2026. This milestone dividend is tribute the company's 25 years journey of empowering home ownership across the nation. This interim dividend is not just a financial reward, it is a celebration of our journey, our values, and the trust our stakeholders have placed on us. As we mark 25 years of service, we remain committed to expanding access to institutional credit for the purpose of housing finance to unserved society and delivering long-term value to our shareholders.
Coming to the company's performance, we have been able to maintain growth trend seen in the last few quarters, in Q1 2026 as well. The company is steadily progressing on its business parameters. The structural changes that have been made are getting strengthened across the organization and are started to yielding results. This will be ongoing process, and we shall adopt to changes as and when the business demands. We have initiated the introduction of new loan schemes and business process in current year. Some of the major changes taken by us were, I am highlighting, number one, target-oriented approach in sanction disbursements NPA while strengthening verticalizations. Number two, localized file processing by creating regional level operations like technical legal resources, improvement of turnaround time. Number three, recovery efforts and special OTS schemes we have introduced. We are also taking steps to improve employee morale.
We were able to achieve disbursements of INR 829 crore in Q1 of this current financial year as against INR 680 crore in Q1 FY 2025. Our sanctions stood at INR 907 crore in Q1 FY 2026 as compared to INR 727 crore in Q1 of last financial year. This is the highest ever disbursements and sanctions achieved in the first quarter by us. Our AUM stands at INR 14,690 crore at end of the Q1 FY 2026 as against INR 13,701 crore in FY 2025. Loan disbursements in the first quarter reflects strong regional engagement, with Tamil Nadu contributing 60% to our overall disbursements. Karnataka accounted for 12%, followed by Maharashtra at 8%, Andhra Pradesh and Telangana at 5% each, while remaining 10% was disbursed by other branches across other states.
We have seen improvement in disbursement of Rajasthan, Gujarat, and Madhya Pradesh in this current quarter. The ratio between the self-employed and salaried segment stood at 52% and 48%, respectively. The share to non-housing loan, that is, home equity, stood at about 28% of the loan book, and housing loan contributed to about 72% of the loan book. The new loan book has shown strong performance with NPA accounting just 1% of the total AUM with improvements in stage one and stage two numbers. This is in the new loan book I am talking about. Book quality. Our GNPA stood at 3.3% of the AUM as end of Q1 FY 2026 and significantly improved as against 4.3% as end of June 2025. The net NPA stands at INR 171 crore, representing 1.19%.
The total provision for NPA amounts to INR 314 crore, with a stage three provision coverage ratio of close to about 65%. Additionally, the stage two outstanding stood at INR 1,420 crore as end of June 2025, at 9.7%, as against INR 1,596 crore in the corresponding period of the previous financial year, which at 11.70%. On year-on-year basis, we have seen a reduction in stage two assets aggregating to INR 175 crore. The cost of funds for our company stood at 8.7% as end of June 2025. We are happy to share that we have started diversification of our borrowings. After a very long time gap, we entered into the capital market. As an initial step, the company has successfully issued a commercial paper amounting to INR 150 crore. This will help us improve our funding sources and manage costs better.
The total outstanding of borrowings stood at INR 11,074 crore as end of June 2025. The current borrowing mix remains at 82% from banks, 8% from NHB, 8% from Repco Bank, and 1% from commercial paper. During the Q1 of FY 2026, we have also availed a refinance facility to the extent of INR 58 crore after a gap of three years. Our NIM for Q1 FY 2026 was at 5.23%. The company has been able to maintain a spread of 3.27% for Q1 FY 2026. Our yield on loans stood at 12.02%. The net profit stood at INR 108 crore as end of current quarter, as against INR 105 crore in the corresponding period of the previous financial year. Our ROA and ROE stood at 2.9% and 14%, respectively, for Q1 FY 2026. Cost to income ratio for Q1 FY 2026 is 24.26%.
We have seen a notable improvement in our cost to income ratio compared to the financial year ended March 2025. The credit cost as end of June 2025 is negative. In respect of software, I mean, upgradation of our software, core system, including the loan origination system, loan management system, and loan collection system are fully operational with the initial issues successfully resolved. Additional mobile applications for sales, collections, and field investigation offices are being rolled out. The company continues to drive various technology initiatives with ongoing developments in areas including the customer mobile application portal, treasury system, asset and liability management system, which we rolled out during FY 2026. Following the recent revamp of our IT infrastructure, we have observed measurable improvement in overall productivity. Coming to the branch network.
As of June 30, 2025, we have a total of 234 touchpoints across the 12 states and one union territory we present. This includes 233 branches and 31 satellite centers with additional two asset recovery branches. We are expanding our branches presence in regions outside Tamil Nadu going forward. Now, I'll summarize the key financial highlights for the quarter ended June 2025 before opening the floor for Q&A session. The loan book stood at INR 14,690 crore, registering 7% YoY growth. Profit for the quarter ended was INR 108 crore. ROA and ROE for the quarter stood at 2.9% and 14%, respectively. The core profitability has remained strong with a solid spread margin of 3.27% and 5.23%, respectively. The gross NPA remains at 3.3% with a stage three provision coverage ratio of close to 65%, and net NPA is at 1.19% as end of June 2025.
With the momentum gained in the first quarter, the company is confident of reaching a disbursement of INR 4,000 crore and AUM of INR 16,200 crore by this current financial year-end. We are setting a target of achieving GNPA% of 2.5% and maintaining stage two numbers between 7% - 8% by year-end. We will be adding 40 new branches in the current financial years, and existing 12 SAT centers will be upgraded to the branch. By year-end, our branch count, including SAT centers, may touch 247. The focus for the current year includes growth, acceleration, and overdue reductions. We thank our investor allies, credit rating agencies, borrowers, vendors, and all the stakeholders for showing interest in our company's growth history. In this last board meeting, I'm happy to announce that our board of directors approved to induct Mr. P.K. Vaidyanathan, our CDO, into our board.
I'm extending a warm welcome to him. Looking forward to his continued contribution to the growth of this company. Also, I would like to inform that our board has appointed Dr. G. Venkataiah as an independent director in the last board meeting. With that, I'm concluding my opening remarks, and now I'm opening the floor for question and answer. I'm very happy to answer your questions.
Thank you very much, sir. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may click on the raise hand icon at the bottom of your screen. We will wait for a moment while the question queue assembles. Ladies and gentlemen, if you wish to ask a question, you may click on the raise hand icon now. We have a question from Shubhranshu Mishra from PhillipCapital. Please go ahead.
Right. Hi. Good afternoon, sir. The first part is just an observation. If we can have the quarterly call on the same day as that we declare our results. Second, if you can keep your opening remarks limited to possibly the guidance, because we have already gone through the presentation. My question is just if you can repeat the target for your AUM and disbursement and the gross NPA target that you mentioned, how are we going to manage it? What are the various measures that we are taking? Thanks.
Yes, sir. We have taken note of limiting my initial address as well as conducting this con call. Your question on my target for this current financial year is I plan to disperse INR 4,000 crore and achieving an AUM of INR 16,000 crore. We set a target to achieve GNPA of 2.5%.
How do we do that 2.5% from the present level, sir? What are the various measures we are taking?
Yeah. Vaidyanathan CDO speaking. Last year we have reduced our NPA from 5.45% to 4.72%. This year we are planning to reduce below 2.5%. For which, till last year, we have introduced a collection vertical to concentrate on the collection of overdue, that is B1, B2, B3. This year we have created a separate layer that is recovery vertical managers, exclusively to monitor the NPA accounts. As of now, we have posted at least three recovery managers in each region to concentrate at least 100- 150 NPA accounts. Apart from that, we have introduced a special OTS, which was approved by the board of the company yesterday. With that, we hope that we will reduce considerably the NPA portion. Apart from that, we are conducting mega auctions on a monthly basis.
We are also having the recovery agencies, and we are planning to give more number of accounts to the recovery agencies. Also with the collection vertical, we are giving various strategies to control the flow from B3 to NPA. With these strategies, we hope that we will reduce considerably the NPA portion before the financial year ends.
Right. Sir, if you can just quantitatively answer one last question. What is the total amount of OTS we have done YTD, sir, in this fiscal year?
Right now we don't have data in hand, sir. We will discuss in this offline.
Okay. Thank you, sir.
Okay, fine.
Thank you very much. Before we take our next question, we would like to request participants, if you wish to ask a question, you may click on the raise hand icon again. We take the next question from Sameer A. H .of Vidura Capital. Please go ahead.
Yeah. Hello, sir. My questions are twofold. First is the stage two assets. We are at around 9.7%. Sir, when we compare it with other affordable HFC players like Aadhar, Aavas, HFFC, India Shelter, Aptus, PNB, and LIC Housing, they are in the range of 1.3%-4.7%, sir, as compared to our number of 9.7%. So if we can work in getting this number to that range, it will be a great confidence booster for the shareholders. So I would like to hear your views on how you are planning to go about doing that. That is question number one, sir. Question number two, in your earlier analyst call, you mentioned about having a builder channel. So you are going through builders and originating the files, et cetera.
Some of the other housing finance companies have had actually a very difficult situation when they have sourced from builders, especially in the western part of the country, which has led to lot of NPAs, sir. Given that we have recently forayed into this channel and these geographies, I just want to seek your views on what studies we have done. For example, have we decided that we will finance apartments sold through builders only after a certain stage of construction or something like that? I want to get more color about this, sir.
Sir, in respect of stage two, yes. If you look at old book performance versus new book performance, our new book, that means a loan given after COVID, is doing good. Even NPA in our new loan book is below 1%. Even on stage one, stage two assets in the new loan books are very minimum. We are having the issues with old book that we are given prior to, before COVID. We are taking a lot of efforts to reduce. I am sure and confident going forward, these numbers will come down. If you look at analysis of stage two in last two quarters, it started to coming down. If you look at my current, I mean, June 2025 stage two assets with June 2024 assets, we have seen a reduction of close to about INR 175 crore. We have taken efforts to reduce stage two and stage one assets.
Going forward, we can see substantial improvement in both categories.
To supplement to that, I wish to say, if you see the percentage of stage two accounts two or three years back, it was around 14%. Last year, we have reduced to 11.7%, and this year, again 9.7%. Gradually we are reducing. The only thing is, three years or four years back, we have not concentrated more on the B1, B2 accounts, stage one, stage two accounts. Only we have concentrated on NPA. But now that we have changed the strategy, and we are now concentrating from B0 onwards. Because of that reason, we have reduced stage two accounts from 14% to 9%, and we are planning to be below 7.5% before the end of this year.
In connection with the builder product, we are very conservative. We are having well-defined policy. We always exercise more caution. We have taken note of your thing. We always exercise more caution on this kind of product. So far, we have not experienced any kind of bad thing on this builder product.
[Proceeds.]
Thank you, sir.
Thank you. A reminder to our participants, if you wish to ask a question, you may click on the raise hand icon. Next question is from Kaustav Bubna, from BMSPL Capital. Please go ahead.
Yeah. You had mentioned in your opening comments that management is going to take certain steps to boost employee morale. I found that pretty interesting. Could you dwell deep into that and explain exactly what you all are going to do?
Yes, sir. We have conducted a promotion exercise. We have elevated a suitable candidate. That is the number one steps we have taken. Of course, we have given annual increment, which is a little bit higher than what I have given in the last financial year. We are conducting regular training programs to improve their knowledge and other things. These are the few initiatives we have taken to improve the morale of the employee.
Okay. None of these initiatives are stock-based compensation for senior employees, right? Not that.
Right now, we don't.
Okay.
Right now, we don't. We'll explore the possibilities in future. Right now, we don't.
Okay, thank you.
Thank you. Anyone who has a question may click on the raise hand icon again. We will take the next question from Rajiv Mehta of YES Securities. Please go ahead.
Yeah. Hi. Just in the meantime, as more people are queuing up, I just wanted to check, in terms of growth momentum, you said INR 4,000 crore odd disbursement, you are retaining your guidance. When you look at the first quarter, can you give us some idea how the monthly disbursement run rate is playing out? Generally, April, May is weak, and then you would have had good June. How is July going? Also in terms of where are we in terms of Karnataka, because I am sure Karnataka is not fully normalized for anyone. Can Karnataka normalization also help us get the volume going ahead? Yes, I think if you can answer how the incremental volumes will come from, and from which geographies you expect higher volumes to come.
Yes, sir. You rightly said Karnataka. Yes. Now the scenario is better than what we experienced February or March. Day by day, things are improving in Karnataka. I am expecting more disbursement in coming quarter. If you look at our HFC history, any other housing transform, the first quarter will be always dull. Yes, we have seen improvement in July. Our disbursements are picking up. If you look at disbursement numbers, Gujarat and Rajasthan, we have seen substantial improvement in disbursement in first quarter. We are expecting increase in disbursement in these states like Rajasthan, Gujarat and Madhya Pradesh.
Yeah, Rajiv, to supplement whatever our MD was saying, Raja here. Our trend has been almost the same as what it was, only a plane higher. That is, whatever number we were doing previously, we are doing the same trend, but the numbers are higher because whatever we have invested on manpower strategy and our positioning in the last year is now giving us dividends. That is what is happening now, and I believe it will continue to happen, and it is happening good also from a business perspective.
In addition, last two, three years, we have opened around 30- 35 branches. All the branches infrastructure facilities are provided, manpower issues, branch head issues, verticalization issues, all those things are stabilized. All the branches opened last two, three years started to giving the business, which all those things indicate that achieving INR 4,000 crore disbursement will not be any challenge.
Sure. Yeah. I will just come back in the queue. There are people who wants to ask questions, so maybe I will just join back. Thank you. Yeah.
Thank you.
Thank you.
We'll take the next question from Damodaran Narayanan from Acuitas Capital. Please go ahead.
Yeah, hi, and thank you for the opportunity. Just to continue the previous participant's question on growth and on asset quality. We have heard two of your peers call out that asset quality stress in South and particularly, I think one of them highlighted Karnataka. Just wanted to get your thoughts on any region-specific stress that you are seeing out or emerging signs of stress in any of your Karnataka especially, and the other geographies in the South. As a result, even on growth, not only Karnataka, we have heard about Telangana and Telangana also having an issue with slowdown in terms of growth. Are you seeing any signs of improvement there? Yeah, just wanted to get your thoughts on those regions and the asset quality front.
Okay. In respect of asset quality, we have not experienced anything in Karnataka or any other specific states. It is similar to what we experienced in the previous quarter. We have not noticed or we have not experienced any significant increase in asset quality or deterioration in our asset quality across the states.
Yeah. The issue in Karnataka, what we were facing or we are facing even today is on the E-Khata, A-Khata, and B-Khata. Now the government is coming out with solutions and slowly the situation is improving, and we are also trying to go in line with the market and the government, and we are doing cases where only we get the E-Khata upfront proper. That is helping us a lot. Though the business has slowed down a tad, we are not impacted by it and we are managing the same. The Telangana growth story is something we believe is happening, though it is not at the speed that we had expected. But yes, Telangana is growing and we are getting our numbers better in Telangana and we wish to continue to do so.
On the growth perspective, we are almost equal across all the states except for a few pockets in states like Maharashtra or somewhere else where we are yet to put in the proper manpower in place. Everywhere else, my growth is not an issue. On the asset quality as rightly what my MD was saying, we are not facing any package-specific issues. It is more general for us across the states and across all our branches.
Okay. Can you quantify in terms of year-on-year what Karnataka and Telangana would have grown at in terms of disbursement?
Karnataka is anywhere between 10%-12% growth for me.
Okay.
Telangana has been at 7%-8%. We are looking at improving Telangana. We should be doing it. Yes.
Okay. Sure, sir. That is all from me, sir. Thank you.
Thank you.
Thank you. Our next question is a follow-up from Sameer A. H. from Vidura Capital. Please go ahead.
Yeah. Sir, just a follow-up question to earlier question about the builder channel. Because in affordable space, there are also a lot of builders who are first time or have done only one or two projects. So what is our criteria? Again, my question is also on at what stage do we finance, right at the project launch stage or after a certain percentage of the project is completed? What is our whole criteria on choosing builders and at what stage do we jump in to finance? That is first question, sir. The second question is related to ESOPs. Because compared to the peer set, we are valued at less than one time price to book, whereas many other companies are at three plus price to book.
If we give ESOPs to management team and others, if part of compensation is given through ESOP, it can be really a very good wealth generation mechanism for the management team also and they will collectively work for the growth of the company. The AUM growth is anyway coming, ROEs are good. If NPAs also go down, the stock can really get re-rated very well. This question is about ESOPs, sir.
Yeah, Sameer, thanks for advocating for us.
Thank you, sir.
On the builder front, as you rightly said, we have revamped our APF norms, wherein we go with only builders who have a proven track record. We look at his past projects, how many projects he has done, and we go purely with RERA-registered projects only. We have our controls and checks in place, and also we will be funding only after the borrower invests his part and money. So basically, whatever controls you are talking about is already in place. It is in the form of our APF policy, and hence we don't see that much of a strain in our funding to projects that are being promoted by builders because we choose on the builders, and that has helped us a lot. And it should continue to be so.
Thank you, sir.
Thank you. Our next question is a follow-up from Rajiv Mehta of YES Securities. Please go ahead. Mr. Mehta, could you unmute your microphone and go ahead with your question?
Yeah. Can I be-
Yes, you are audible. Please go ahead.
I have a few questions then. Sir, just to understand the impact and the contribution of the sales vertical and the collection vertical that we have set up in the last 12-15 months.
Could you give us specific numbers in terms of, say, for example, the sales vertical's contribution in disbursement, how is that growing and playing out in your monthly disbursement, your quarterly disbursement? That is number one. For the collection vertical's performance, can you give us whether are we able to control the bounce rates itself, or are we able to resolve the bounce better in first bucket, second bucket, so the flow rates are lesser now than what they used to be before? Can you give us more outcome numbers and the impact of the sales vertical in business and the collection vertical in the resolution of bounces and forward flows?
Rajiv, to talk about the business, the sales vertical, on the impact, I would say the impact of 22% has been because of our collective efforts on both improving our branches and sales verticals. There may not be an exact science of splitting it because whatever my BSM or my sales vertical does as a business comes in the branch numbers only. To give you more of a clarity, the productivity of each of my BSM is more than INR 40+ lakh , and my DSE is INR 25+ lakh . That is the kind of productivity that we are operating on currently. We are working at increasing both on numbers and also on the productivity. I think that should be a fair idea of what I am talking about on a contribution from a sales vertical.
Okay.
On collection side, after implementing vertical system, if you look at analysis and numbers of stage two and NPA numbers, we have seen substantial improvement. If you look at my stage two number as end of June 2025 versus June 2024, we have seen a reduction of close to INR 170 crore, which indicates this is purely based on what the implementation of the vertical system in the company. Even if you look at numbers of NPA also started to coming down. Even bounce rate. Bounce rates also yearly was close to about 4%-5%. Now because after implementing the collection vertical system, the bounce rate has decreased to 1%-2%.
Sir, what is this 1%-2% per month? What is this number? How should I look at this 1%- 2% number? When every month?
Sir, numbers right now I am not having.
No. You just said. Initially, it used to be 4%- 5%, now it is 1%- 2%, the bounce rate. Are you saying that of all the EMI presentations that were happening in a month-
Yeah.
4% - 5% were bouncing, and now it is 1%- 2%?
Yeah. Now it is below 1%.
Oh, so less, the bounce rate.
Yeah.
Okay.
That shows the effectiveness of vertical system in collections.
Any incipient pressure that you are seeing in terms of not direct competition, but at least given the fact that you just yourself pointed out that your new book is holding up so well in terms of asset quality. Our rates, our customers are not exactly very affordable types. We are slightly below prime. In that case, the BT pressure from the larger players should come on us. Are we seeing that BT pressure increasing in the recent months, and how do you take care of it in the future?
The management team, sir, could you please unmute your microphone? It looks like you muted it.
Yeah. Am I audible now?
Yes, sir. Thank you.
Rajiv, as you rightly said, yes, we are seeing a small uptick in BT out happening, but we are trying to manage or we are trying to retain the customers either through a reduction in ROI or through a top-up. As you rightly said, we may not be able to hold them back for a long time, but as of now, yes, we are a bit comfortable, though the trend is increasing. Rightly said. BT out is a thing that is that we have taken a lot of efforts to retain a good customer. Wherever it is possible, we are reducing the interest rate. Wherever it is possible, we are giving top-up loans and retaining the good customer. As April, May, June, we have experienced a BT out of closely about INR 60 crore-INR 65 crore.
Okay. And sir, have you factored this rising and increase of BT out in your guidance of reaching INR 16,200 crore of AUM by the end of the year? Has that already been factored?
Yes. If you look at my BT in, corresponding BT, my BT ins are more. If you look at April, May, June, my BT outs are close to INR 60 crore, whereas my BT in is close to about INR 80 crore-INR 85 crore. I factor all those, my BT in, BT outs in arriving the outstanding of INR 16,200 crore, what I just now given for target for this current financial year end. The guidance what I given is all those things are factored in-
Great.
-repayment, prepayment, scheduled, unscheduled repayment. All those things are factored in the INR 16,200 crore.
Just to understand the profile of the BT in customer, I am sure these will be the good customers of affordable housing finance companies. So you are onboarding them at what rate?
At our average rates, Rajiv, because they are already higher with their current financial rates are higher than our average rates. So we are managing to maintain our average rates. So far, so good, touch wood.
Okay. Understood. Okay, fine. Inma, you can check for questions, please. Yeah.
Sure, sir. Participants, if you wish to ask a question, you may click on the raise hand icon so that I will be able to unmute your connection. Our next question is from [Dev Shah] from HDFC Securities. Please go ahead. Mr. Shah, could you please unmute your microphone? Sir, please go ahead.
Yeah. My question was more on the yields and cost of borrowing front. Have we taken any kind of yield rate cuts during the quarter, or are we planning to anytime soon? How much of the cost of borrowing benefit will be passed on to the customers? Could you also highlight what kind of mix, since you all have started doing commercial papers and accessing capital markets, what kind of optimal borrowing mix are we targeting by your end? If you could give any kind of cost of borrowing guidance for the year, that will be my question. Thank you.
Yeah. Our cost of borrowing is substantially reducing, but to highlight by majority commercial bank loans are still not passed on the benefit to us. We are trying our best to reduce the cost of borrowing by at least diversifying with the NCD market and the PTC market. We hope we could raise around INR 500 crore in the NCD market before this financial year.
So, CFOs use. Yes. See, if you look at our borrowing mix, all our borrowings are linked with respective banks' six months MCLR. I am expecting that is due for resetting July onwards. I have seen we have experienced some reset in July. Of course, we have also availed a refinance from National Housing Bank to the extent of INR 900 crore. Recently, NHB has reduced their benchmark interest rate. Such a reduction in repo rates we will experience in coming quarter, one or two quarters. The average cost of fund as end of June is close to about 8.75%.
Mr. Shah, do you have any more questions?
No. Thank you. This is quite it. Thank you.
Thank you. Anyone who has a question may click on the raise hand icon so that the moderator can unmute your connection. As there are no further questions from the participants, I hand over to Mr. Rajiv Mehta from YES Securities. Over to you, sir.
Sure. Sir, broadly, just maybe a couple of last questions from my side, and then we can end the call. From a spread point of view and credit cost point of view, I think what I also see is that you've kind of moved your coverage from stage two to stage three. There has been a shift of provisions from stage two to stage three. What is the thought process behind shifting the ACL provisions from stage one and two to stage three, and what purpose does it serve? This write-off that we have started doing more assertively in the last two to three quarters, is this an exercise to have a much lower NPAs so that we are able to appease or ensure that the rating agencies and the lenders are very comfortable with us going ahead?
Yeah. Stage one assets, these are the provisions what we have made during the time of COVID. Now we felt that that provision is no longer is required. Therefore, we shifted the entire provision, what we kept over and above the norms in stage one assets, we shifted to stage three. That is our answer to your question. Yes, this quarter we have done some few technical write-off. Right now, our provision coverage ratio is close to about 64%-65%. We want to maintain this 65% going forward.
Sir, why 65%?
If you look at my borrowings, majority of the lending is coming from bankers. Of course, the PCR coverage is not applicable for our industry like NBFCs, HFCs. The bankers, our lenders are very comfortable with having a PC coverage ratio of close to about 70% or 75%. That is the reason we want to increase our provision coverage ratio.
No, I'm just thinking, sorry to ask this, but no other HFC is holding, especially on retail NPLs, because I believe that whatever NPLs we have are all retail NPLs. The loss given default, if you can share the loss given default experience on the NPLs earlier, and if that's much lesser, then you are saying that you're holding higher PCR just to give comfort to the lenders.
Exactly.
Maybe when the headline GNPA numbers correct or get resolved, as you are thinking it should, then the coverages can be lower so that your net NPA number can still be managed at a more comfortable level?
See this PCR coverage, what we are keeping now is just to maintain the same coverage as we were having. This quarter, we have shifted some stage one to whatever coverage we had, which we felt it is no longer required. It was kept in the provision itself, which was adjusted with the stage three asset. It's not that we made an additional provision to make the coverage higher.
Yeah.
Whatever we maintained with the provision basket, it was continued with the stage three assets and a limited portion, we thought it is no longer required. We can take it back to P&L. We have interchanged the provision. That's all. But we still think that the stage three coverage is higher apart to the other HFCs. It's on a conservative basis and not to reverse it in the P&L in the one quarter and if the coverage is there. That's all.
No, just one thing, because as you are looking to reduce your NPAs, and you've set yourself a target also. If you were to reduce your NPAs by, say, INR 70 crore-INR 80 crore from now to March, then you will have to release INR 40 crore-INR 50 crore odd of provision, or will you just retain it?
Yeah. We will decide based on the numbers. If such scenario is there, then we will keep it the excess provision in contingencies. Based on that, we will decide further course of-
Quarter to quarter.
Quarter. Okay, fine.
Yeah. That is our whole idea.
Okay.
We will keep it, whatever the provision reversal we are getting going forward, we will take it something in profit and loss account, something we will keep it in contingent liability.
Got it.
We are saving it for the rainy day. That is all.
Okay.
Thank you. We have a question in the queue. That is from MPC Srinivas from Sagar Asia. Please unmute your mic and ask your question, sir. Mr. MPC Srinivas, please ask your question. There seems to be no response from this connection. Back to you. I now hand over to Mr. Rajiv Mehta for closing comments. Over to you, sir.
Sure. Thank you to the management for giving us the opportunity to host this call as always. Thank you, everyone, for joining. Sir, any last thoughts? Or should we just wind up?
Yeah. We extend our sincere gratitude to all investors, analysts, and credit rating agencies, borrowers, lenders, and stakeholders for continued support for us. Also, thanks to you for arranging this con call. Thank you.
Thank you. Have a good evening, everyone.
Thank you. On behalf of YES Securities Limited, that concludes today's call. Thank you for joining us. You may now click on the leave icon to exit the meeting. Thank you for your participation.