Ladies and gentlemen, good day and welcome to the Repco Home Finance Q1 FY 2025 earnings conference call hosted by YES Securities . As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Rajiv Mehta from YES Securities . Please go ahead.
Good evening, everyone. Welcome to the Q1 FY 2025 earnings call of Repco Home Finance. We thank the management for giving us the opportunity to host them once again. From the company, we are joined by Mr. K. Swaminathan, MD and CEO, Mr. T. Karunakaran, Chief Operating Officer, Mr. P. K. Vaidyanathan, Chief Development Officer, Mr. M. Raja, Chief Business Officer, and Ms. K. Lakshmi, Chief Financial Officer. I would request Mr. Swaminathan to give us an overview on the company's performance, post which we will open the floor for Q&A. Over to you, sir.
Thanks, Mr. Rajiv from YES Securities. We would like to welcome all to the earnings call of Repco Home Finance Limited for the quarter ended June 30, 2024. Thank you once again for joining us on this call. I am sorry for the time because it is already 5:00 P.M. now. The company's profitability parameters have improved steadily in the first quarter compared to the period year ago, though sanctions and disbursements were at the same level of 2023-2024. Usually, the first quarter business is affected by internal movement of staff, relocations, et cetera. In this year, we also had the impact due to general elections and heatwaves across the country. Notwithstanding these temporary setbacks, we are confident that the company is proceeding on the right track to achieve the set targets. We have disbursed INR 680 crores in Q1 FY 2025 against INR 684 crores in the year-ago period.
Our sanctions stood at INR 727 crores in Q1 FY 2025 as compared to INR 726 crores in Q1 FY 2024. The overall loan book stood at INR 13,701 crores as at the end of June 30, 2024, against INR 12,655 crores in the year-ago period, registering a growth of 8.3%. The ratio of exposure between non-salaried and salaried segment stood at 51.6% and 48.4% respectively. The share of non-housing loans, that is home equity, stood at 25.7% of the loan book, and housing loans contributed to about 74% of the book. Book quality. GNPA amounted to INR 583 crores as of June 30, 2024, as against INR 695 crores as of June 30, 2023, and INR 552 crores as of March 31.
For the reasons mentioned earlier, there was an increase in GNPA numbers, mainly because of the hit we had in the month of April. The position has improved in subsequent months.
We have a total provision of INR 519 crores with a provision coverage ratio of 62% for Stage three assets. Our systematic and relentless action on NPA accounts is proving fruitful and will continue. as of June 30, 2024, we hold INR 506.6 crores of restructured portfolio outstanding, of which approximately INR 168 crores are in Stage three, and remaining are in Stage one and two. The Stage three numbers remained at 11.6%, same as the last quarter. Profitability. Our NIM for Q1 FY 2025 was at 5.14% as against 5.13% in Q1 FY 2024. The company has been able to maintain a spread of 3.4% by raising yields to 11.98%, despite facing stiff competition at our pricing levels.
The net profit grew 18.35% year-over-year, amounting to INR 105.4 crores for Q1 FY 2025 as against INR 89.1 crores for Q1 FY 2024 and INR 108.1 crores in Q4 FY 2024.
Our ROA stood at 3.1% and ROE at 16.3% for Q1 as against respective figures of 2.8% and 15.8% in Q1 FY 2024 and 3.2% and 16.5% in Q4 FY 2024. Cost-to-income ratio for the quarter decreased to 23.6% as against 26.3% in the previous quarter. New software. Phase I of the project, comprising of LOS, LMS and the ETL is fairly stabilized. Phase II of the project, comprising of software relating to support functions, are in various stages of implementation and testing. A total of approximately INR 27 crores have been spent so far.
Branch network. As of June 30, 2024, we have touched 253 numbers across 12 states and one union territory comprising of 181 branches and 42 satellite centers with additional two asset recovery branches. We will be touching 250 outlets by March 2025. I will summarize the key financial highlights for the quarter before opening the floor for Q&A.
The loan book stood at INR 13,701 crores, registering 8.3% YoY growth. PAT for the quarter was INR 105.4 crores with 18.35% increase YoY. ROA and ROE for the quarter stood at 3.1% and 16.3% respectively. The core profitability has remained strong with a solid spread and margin. The gross NPA is 4.25% with a Stage three coverage of 62% and net NPA at 1.67%. Way forward. We have started recruiting people with experience in sales and collection vertical. They are in the process of joining our team. With this additional strength, our focus would be on taking the growth numbers to the next level and reducing our overdue and NPA numbers. We are quite positive on this.
Company is geared up on achieving the targets set for FY 2025 in terms of GNPA reduction, disbursements, and the AUM growth, and reach an AUM level of INR 15,000 crores by March 2025 organically.
We thank each and every one of you for investing interest in our company's growth story. We now open the session for Q&A.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone phone. 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. The first question is from the line of Kaustubh Bubna from BMSPL Capital. Please go ahead.
Yeah, hello. Thank you for taking my question. I just wanted to talk to you. I am trying to understand why this company's disbursements are not growing. Our capital adequacy is very high. We are at decadal low leverage. Given both these factors, we should be growing high double digits, and we are not even. Our disbursements are flat. What is stopping this growth from happening, and could you give a detailed answer to this so that we get some insight? How do you plan to now grow from here?
Thank you, Kaustubh. See, this company is slightly different from the other companies that you may have in mind. We are totally not a company which is charging something like 15%-16% growth giving to all customers. We were quite quality conscious. We want to be very much selective in selecting our loan applicants. This company had problems in the past on the asset quality, we do not want to get a repetition of what we had suffered in the past. That is one of the reasons. Perhaps, maybe that is there in your mind when we are thinking that we are not growing at the level at which the others are growing. But one thing I can give you an assurance, we are having clear plans how we will grow.
The INR 15,000 crores that we are targeting this year is around 11%-12% growth from what we had last year. This, we are doing it systematically. We have started recruiting people in sales vertical. People with experience are joining the company. They are joining company across geographies, across various branches, including head office. Slowly and steadily, the numbers will keep growing. The people are coming. Already we have recruited nearly 38 people in sales vertical already. Another 20-30 people are in the pipeline. These people are taking time because they have to leave from the previous organization, they have to join us. This experience is definitely going to help us. I think you may be knowing that we have already recruited one Chief Business Officer who is primarily involved in driving business. Past is past, definitely the company will grow.
But one thing I can tell you, sir, we will be growing, but we will be growing consciously with the quality in mind. We do not want to grow just by numbers and get suffered in quality and attrition data. That is one thing we are clear in our mind.
What is your disbursement year target for the year, given that you have been flat in the first quarter?
The first quarter being flat, I think I already indicated even in the last call itself. First quarter, traditionally, for this company, is not all that, because I am now third year in this company. Almost in all the three years, the first quarter has been more or less flat. Even this year, it is around INR 680 crores. I do not think it is all that bad, considering that we had issues like election, heat wave. So many problems, especially in the state of Tamil Nadu, where we are predominantly there. In April month, nothing much could be done because of elections and all that. Our people could not move. We had so much of transfers also, so many branch heads had to be changed and all that. It took some time for those people also to move. The first quarter is traditionally like that.
We are sure that in the second and third quarter we will improve. The numbers, I think we told already. We are planning to disperse somewhere between INR 3,600 crores to INR 3,800 crores by the end of the year. As of now, I do not have any hesitation that we will be able to reach these numbers. We do not want to change whatever is the projection that we have already given.
You are saying INR 3,600 crores disbursement in FY 2025. Did I hear that correct?
Yes. INR 3,600 crores disbursement and INR 1,500 crores will be the book increase because we anticipate some INR 2,000 crores of repayments.
Okay. I have my last question, which is, if you are planning to go ahead with cautious growth, which is good. Do you plan to return money to your investors in the form of dividends, et cetera, because your capital adequacy is pretty high? What is your plan on that front?
Okay. See, of course, it is beyond my thing. Board has to take a call. Already we have increased dividend. I think you would have seen today there was an AGM also. We have already increased the dividend by 3% this year. That is FY 2023, FY 2024 also we have increased. Whether there will be further increases, I think the board has to take a call. But we feel that a certain capital is necessary for the growth that we are planning. INR 15,000 crores by this year and around INR 20,000 crores by two years hence. I think for all these growth numbers, we require capital, and this capital that we are conserving, definitely it will helpful for us in our growth story.
Okay. Best of luck, and hope to see better growth numbers from you in the future. Thank you.
Thank you, Kaustubh.
Thank you. The next question is on the line of Ashish from MB Investment. Please go ahead.
Hello? Hello.
Ashish, you are audible.
Yeah. Hi, I am Rudransh from MB Investment. My question is, are the promoters planning to dilute stake in the company? My other question is that microfinance industry and small finance banks are also heavily getting into the home loan space so as to secure their book. What are your plans and strategies to fight off with the small finance bank and microfinance industry, and keeping the growth trajectory and the disbursements in place?
Okay. See, to my knowledge, I do not think as regards dilution of stake. You mean to say dilution of stake by the promoter, right?
Yeah, right.
Yeah. We do not have any information on that particular thing, so I am unable to comment. We do not have any news. Till now, there is no such news to my knowledge. Regarding competition, yes, this company has been facing competition for quite some time. It is not something new. But we have been able to wade through all these years, and we are quite confident that we will be able to do current year as well, current year as well as future years as well. This company has its own specialty compared to others. We have got a good brand recall, a good reputation, especially in the south of India. So with all this, we do not feel that competition is going to hurt us. We have gone through all this.
It is slightly different, as I went saying, because our interest rate is anywhere between, we start from around 10%, we go up to 13%, 14%. Compared to many other housing finance companies, this is slightly different, and we feel that at this price range, we have a market, we will be able to penetrate in that market.
All right. Thank you so much.
Thanks, Rudransh.
Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask a question. The next question is on the line of Sanket Chheda from DAM Capital. Please go ahead.
Yeah. Hi, sir. You said it has been close to three years that you have been here. I remember in Q4 of FY 2023, we had said that we have done some tech upgradation and maybe during the course of FY 2024 on a blended basis, INR 1,000 crore funded would be possible, which was about INR 4,000 crore. Later we toned it down to INR 3,600 and then ultimately delivered even lower. This year also we are now targeting same, INR 3,600. That would be like 11%-12% growth. In just two quarters back in Q3, with a miss you were guiding that we might double the AUM in three years, that is INR 25,000 crore would be possible, though INR 20,000 would be the base target. Even that INR 20,000 would need 15% kind of a growth in 2026 and 2027.
While you say be rest assured, but we have not been exactly going on what we believe, what we have guided so far on growth at least. Q1 being soft is understandable, but there is no growth YoY. It is slightly lower than last year also. How do we see that? On growth we have not been walking the talk, just wanted to have a clear stance on that.
Okay. Sanket, I understand your views, but once again, I am saying please be restful. Let us not go only by the Q1 numbers. I think you will agree that in the last two or three years, the company has been consistently performing. It is not that there is a big dip in any of these quarters right from FY 2022, FY 2023. I think you will agree on that number. You must also understand how the company was two or three years back. From that level, the company is improving consistently, not only in disbursement. You are only talking of disbursements. What about the NPA numbers, Sanket? I think even there has been a considerable improvement. Growth, as I have already told, we are keeping on changing the strategies. We see the expectation requirements from all the stakeholders, including people like you. We are changing.
We have started this verticalization. We have inducted and we are inducting new people who are having exposure in the sales segment. This is that is giving us the confidence that we will be able to improve the numbers. As regards the numbers of INR 20,000 crores or INR 25,000 crores that we are giving, it is based on the facts on hand as on that date. Today with all the available records before me, all the people's support and all the records that I am getting from the field, I am quite confident that the INR 3,600 crores that we are projecting is on a conservative note, but we want to over-surpass this particular thing. That is our expectation. Definitely INR 3,600 crores, I feel, we are quite confident unless something extraordinary happens, we are quite confident that we will be able to reach these numbers.
One thing I can assure you, this company will be consistent in performing. We do not want to just to meet the numbers and there could be a problem on a later date, as I said in a previous answer as well. Just for the growth numbers and then having a problem later is not our food. We want to be consistent and we want to be quality conscious. This is a slight differentiator from maybe other companies that you maybe have in mind.
Sir, the thing was that in past few quarters, whatever growth we have had, that is mainly come from our own equity segment. Growth on home loans has been pretty weak. While maybe the cost of funds were increasing and in an attempt to maybe maintain margin, we are doing higher yielding loans. Incrementally, how do you see that share moving in whatever disbursement that you are anticipating, that INR 3,600, what should be the share between the two? Will the home equity continue to or the left one will continue to be a higher proportion in an incremental growth?
Okay. See, even if we increase, internally, we have fixed a target that we will not be going above 35% as far as home equity is concerned. Today, we are only around 25% something. Internally, we want to even restrict to around 30%. Home equity as a whole overall book, it not be more than 30%. That is there. We do not want to get into riskier areas of pure lab going above 25% or something like that. This is helpful for us. Not only that, as I have been telling in the previous calls also, this home equity segment also consists of some of the home loans which could not be classified as home loans otherwise. Like a plot loan which has not been, a houses has not been constructed, or a reimbursement loan that we have given for purchase.
Some of these loans are actually home loans, but we are classifying it as home equity to be in line with the regulatory requirements. That said, please be assured we want to grow more in home loan segments. We want to grow more in home loan segments for our documented people, so that we become more and more safe, we become more and more stable in our numbers.
Sure, sir. Thanks a lot. Those are my questions.
Thank you. The next question is from the line of Kamal from Investec. Please go ahead.
Hello sir. I had a couple of questions. Firstly, can you please give your AUM and credit cost guidance for FY 2025?
Okay. Then this question, sir. Only one question, right?
Yeah. I have one more.
Yeah. Okay.
My second question is that what forms the other income? This quarter it has increased quite a lot despite disbursements being flat. I wanted to understand what has formed in our other income.
Other income. Okay.
Yeah.
AUM, we have given a guidance of INR 10,000 crores, sir. We will be able to maintain. Credit cost will be almost negligible. Even in this quarter, we had only around INR 1.4 crores of credit cost. In fact, we wanted to do a reversal of provision in the current year, INR 25 crores-INR 50 crores of reversal of provision and credit cost. Credit cost will not be a big factor, and we are quite confident by the way things are moving after April. April was, of course, a negative thing. We could not manage April. There was some problem. But after April, things are improving, so credit cost will not be a big issue in the current year. This is our expectation. Other income is mainly because of interest income that we got. We had some investments in fixed deposit and all.
The other income increase only because of interest income from investments as well as some G-sec securities that we had purchased for our liquidity requirements.
Okay. That's all from my side. Thank you.
Thank you.
Thank you. The next question is on the line of Abhijit Tibrewal from Motilal Oswal. Please go ahead.
Yeah. Thank you and good evening, everyone. Sir, can you just remind all of us when was the last time we had taken a PLR increase?
See, this current quarter that is in April to June quarter, We have revised our PLR twice, from 9.8%- 9.9% in April, and 9.9%- 10% in the month of May. We have been revising our MLR every month. Now it is 10%. MLR is 10%.
Right. So sir, if I understand you right, during the course of this quarter, you have increased the PLR by 10 basis points twice and taken it up to?
Totally 20 basis points.
Okay. And sir, before that, when had you taken the last PLR increase, before April?
I think it was, if I can remember right, it was May 2023.
Right. So sir, what I am kind of trying to understand is your reported yields have gone up by 30 basis points, from 11.7%- 12%, if I am reading it right. Given the fact that you have taken PLR increases in this quarter itself, very unlikely, right, that it will start reflecting in yields in this quarter itself. So how is it that our yields are going up? What are those drivers that are helping you further expand yields in an environment when rest of the HFCs, rest of the peers are actually facing pressure on the yield side?
See, the reset is happening every quarter. So the April reset would have affected all the accounts which are due in April and subsequent. May again, whichever of the accounts which were done in February and subsequent. So which means by June, almost all the accounts would have had at least 10 basis points increase. That is one of the reasons why our yield would have gone up. I do not know.
Got it.
Other companies, how they have done, but we are doing a quarterly reset. That is, all the accounts face a quarterly reset of interest.
Got it, sir. Sir, effectively this 12% that we report is the yield as on the last day of the quarter on your book?
Yeah. The income that we earned in the quarter divided by average AUM.
Okay. Sir, last thing is, I have been asking this question, as you would have seen from lot of participants who have asked you, those is something that worries everyone. My life profitability is very good. ROE of course of 3%, very good. Are you not thinking along the lines of maybe bring down the NIMs a little bit and accelerate growth?
You are perfectly right. If I have to bring down the NIMs, the problem will be on, again, how people will take profitability and all that. Second, what will be the price range? Suppose definitely I cannot compete with a bank. How much I can reduce? Even if I reduce, I can reduce by 10 basis points. By 10 basis points, can our business grow too much? This is a question that we need to ask ourselves. We feel that maybe at this price range, if I have to reduce, I have to reduce something like 1% or 1.5%. For which my rating has to improve.
Got it.
Unless there is a rating improvement, my cost comes down, I cannot reduce my yield beyond a point. This is where we are placed.
Got it, sir. I think what you are saying is fair, that basically just reducing it by 20-25 basis points will not move the needle on growth for you.
Yes.
If at all you have to accelerate growth, you will have to reduce it by 100 basis points, 125 basis points, which actually requires you to also benefit on the liability side before doing that. Got it, sir. This is useful. Thank you very much and wish you and your team the very best.
Thank you.
Thank you. The next question is from the line of Shubhranshu Mishra from PhillipCapital. Please go ahead.
Hi, sir. Good evening. Thanks for this opportunity. Essentially, I am looking at the disbursement, and I am sorry, I have to again stress on this disbursement number. But if I have to take it on a unit basis, say, if I have to do number of loans, which I am arriving at basis the average ticket size. When you do the number of loans either on a per employee basis or on a per branch basis. On a per employee basis, I think we are doing close to five to six loans in a quarter, which is around two loans per employee per month. At a branch level, we are doing around 25 - 30 loans per quarter, which is around 10 loans per month.
When we are talking about this INR 3,600 crore, INR 3,800 crore disbursement that we will do in the entire FY 2025, where is this delta going to come from? On a per branch basis? Per employee basis? How are we working this out on a bottoms-up basis? Essentially, I am trying to get at the number of loans, which is presently hovering at around 5,500- 6,000 level. My sense is that we will have to go up to almost 10,000 loans per quarter. If you can explain this math, sir, it will be very helpful. Thanks.
Thanks, Shubhranshu. I think you have done a better analysis than we should have done. One thing I can tell you, sir, one thing we are trying to improve our channels. The sourcing channels we are increasing. In addition to the DSAs that we are already having, we are adding DSPs who are having some connections so that they will also bring. There is one more channel, connectors we have now started, so they will also be giving. In addition, our personal sales vertical people also, they are getting energized. The people with experience are coming. With all this, we are anticipating an increased productivity from our staff members. As a branch level, as you have just rightly pointed out. Each branch we have also segmented depending on the potential of each and every branch, their location, how much they can do, what sort of business each branch can do.
We have done a detailed analysis. So each and every branch has been given targets based on all these parameters. That is how we are trying to improve the productivity numbers of each and every branch. Each branch is depending on the potential. We are having anywhere between two to three persons in sales alone. Maybe some of the new branches will have one, but some of the older branches, established branches will have two or three. In addition to the branch head, who will also be sourcing channels for sales. So with all this improvement in the funnel, as well as trying to improve the productivity, this is how we want to drive the numbers to this INR 3,600 crores that we are targeting. In addition, as I already said, we are also increasing our footprints. Another 30, 40 branches will be open.
Already from around 212 we had last year end. We are now around 223. Another 10 branches have already been added. So another 20, 30 branches will also add. These branches, in addition to the disbursement numbers, will also give increase in the AUM numbers. Hi, Shubhranshu. Hello?
Can you hear me, sir?
Hello. Am I audible?
Yes sir, you are audible. Am I audible, sir?
Yeah. No worry.
Can I ask a question? Yes, sir. Just one data point, sir. If there is a funnel for the branches, sir, top 10% of the branches account for how much of disbursement versus, say, the top 50% of the branches account for what percentage of disbursement, sir? Is that data available, sir?
I do not have readily available, but I will be able to share you after the call.
Understood, sir.
After the call, we will try to send you by means.
That will be very helpful, sir. Just by adding branches, sir, they will also take time to break even, right? Sir, the 30, 40 branches, my sense is each branch takes close to 18- 24 months to really break even and come up to a size. Will they be really meaningful in the disbursement target that we have given, the additional 30- 40 branches that we just spoke about?
Okay. Sir, break even is a different issue because that also depends on the cost and all. That we have factored. But as far as disbursements are concerned, right from day one, they can start. So that should not be an issue, especially because we are recruiting people with experience and all that, and people who are familiar with the geography are only getting posted. So it should not be a difficult thing for a new person who is familiar in that particular area to start sourcing proposals. So that may not be an issue as far as disbursement is concerned, but break even is a different subject that I agree with you, it may take some time.
Understood, sir. This was very helpful. Best of luck for the future quarters, sir.
Thank you.
Thank you. A reminder to participants that you may press star and one to ask a question. Next question is from the line of Anand Mundra from Soar Wealth. Please go ahead.
Hello, sir. Good evening. Sir, wanted to take your guidance on GNPA for this year, sir.
Sir, we are given a target of INR 450 crores by year-end on 3% GNPA.
INR 450 crores by year-end?
By year-end.
Yeah. Okay. And sir, what are the policy changes which we have done to increase disbursement growth in this financial year? I am assuming you would have done something to increase the disbursements. Any policy changes we have done?
Yeah. See, in addition to the staff thing that I have already talked about, some policy level changes also we have done, some sort of a liberalization for all this. I think it will be very difficult for me to explain in detail, depending on the geographies and the requirements of the geographies. Because you know, in housing, it is a state law, so each and every state, they have got their own legal thing. So we are given some specific policies depending for each and every state. We have liberalized somewhere, we have liberalized the needs also. So it will be very difficult for me to elaborate in detail. But such policy.
Yes, that's okay.
Liberalization in policies are already in place.
Are you seeing changes with respect to, say, last month, July, in terms of disbursement growth?
Yes. I am unable to give you the number, but I am seeing definitely a change compared to one year back.
Okay, sir. Last thing which you had promised last time also that stage two, you will try to bring it down to 10%, which was currently 13%, 14% then. Any update on that?
I still maintain that number, sir. We are quite confident. We are pushing our collection vertical, and I am seeing a slight traction in each and every month. The numbers are coming down. Maybe the numbers are not coming down as steadily as, let us say, GNPA. But still, my stage two numbers, as well bucket one numbers are coming down, and we are quite confident that by year-end, the denominator effect also will be there. With all that, we will be able to maintain the stage two guidance of 10%.
Okay. And sir, what is the update on NHB loans, sir?
NHB. Today was our AGM as well. NHB will get the application only post AGM, post posting of our numbers in ROC site. We will be taking up with NHB only after that.
Okay. But we are hopeful that we will apply for the NHB loan very soon, sir?
Yeah. We are always hopeful, sir. Because we are meeting all the requirements. Last year there was an issue of GNPA, NNPA. We were not able to meet our NHB's requirement. But this year, because of the reduction in NNPA numbers, we will be meeting the needs of NHB. We are quite confident that NHB will also agree on the sanction.
Okay. Sir, any chances of getting credit upgrade because of lower GNPA?
That is not in my hands, sir. Rating agencies, they will take their own views. I am quite positive that they will look into all our numbers. They will see the trajectory that the company has been moving. With all that, it is left to the rating agencies.
Okay. Thank you, sir. Thanks a lot.
Thanks, Anand.
Thank you. The next question is a follow-up question from the line of Kaustubh Bubna from BMSPL Capital. Please go ahead.
Yeah, thank you for the follow-up. I wanted to understand a little bit more about your incremental AUM growth you are talking about. Could you explain? Right now, to get to INR 20,000 crores, you need to disperse probably INR 6,500 crores incremental. You need to grow your loan book by INR 6,500 crores to get to INR 20,000 crores. Out of the INR 6,500 crores ballpark number, how much incremental loans would be to states outside of Tamil Nadu? Are you really trying to understand loan book diversification over here, and are you growing in your core state or are you incrementally growing outside of your core state? That is the first question. The second question is, when you talk about INR 20,000 crores AUM, when we are at INR 20,000 crore AUM, what type of disbursements would we be at?
Is it fair to assume between INR 4,800 crores and INR 5,000 crores or something like INR 4,500 crores? Yeah, thanks.
Sir, as far as this growth outside Tamil Nadu geography, because of the increase in the branches outside Tamil Nadu, slowly the share of branches outside Tamil Nadu will keep growing. Tamil Nadu today is around 56% and all. Going forward, maybe it may come down to around 50%. This is a rough ballpark number that I can give. INR 15,000 crores this year and INR 20,000 crores by two years down the line. This is our expectation. We anticipate a repayment of around INR 2,000 crores, including prepayments, VTOs and all that we expect. If you have to reach around INR 20,000 crores, another INR 5,000 crores we have to increase in the next two years, which means around INR 8,000 crores- INR 9,000 crores of disbursement we have to make in the next two years.
We are focusing based on our performance this year. We will also be re-strategizing our sales disbursement numbers in the next two years. This is our thinking of INR 20,000 crores AUM.
Okay. One of the easiest discussion is the management intent is to use this capital to grow, right? Or is there a sense of complacency that just to stay safe, we won't grow. The intent is to grow, right? Or is the intent just to stay safe?
No, intent is to grow. There is no second opinion on that. Intent is to grow. Intent is to grow faster year on year. But we do not want to just ape other person. That is a thing that we are very clear. Just because another company is growing at 25%, we do not want to grow at 25%. We want to grow at our own pace so that we reach these numbers.
Yeah. The only question we analysts have, as you can see, everyone was focusing on growth is what is your own pace? Is 15% your own pace? Is 20% your own pace? Is 5% your own pace? That was the main thing what I am at least trying to understand.
From 8%, we have moved to 10%. 10% we want to move to 13% this year. From 13%- 15%. This is the trajectory that we ought to have.
Okay. Understood. Thank you so much for answering all my questions. Thank you.
Thanks, Kaustubh.
Thank you. A reminder to the participants that you may press star and one to ask a question. As there are no further questions from the participants, I now hand the conference to Mr. Rajiv Mehta for closing comments.
Okay, sir, before we wind up, I had a couple of questions to ask, and then if after my questions there are no more questions, we will wind up. Sir, firstly, on this new people with experience joining us in the company in various roles, that is really good. How are we attracting them? Are we trying? Is it through matching their salaries and giving them higher positions? Can you just elaborate on this?
Yeah. Naturally, sir, people will not join unless there is an increase in salary. Otherwise, who will join? So naturally, we have to match with their expectation. We have to do it. We offer something extra. That is why they are joining. They also see, to my knowledge at least I can say that they also see some growth movement that is happening in this company. That is why people are willing to join. So the new people are coming not only for the salary purpose, they also see future in this company. Maybe they can show their skills in this company and exhibit their results outside. That is the thinking why people are joining us.
Okay. We plan to augment our sales and collection team. What is the number right now for salespeople and collection people, and what is the year-end number we are looking for?
One minute, Rajiv Mehta. I will just see whether I am having the data ready. Can I give you offline? I do not have readily available. That is number of people in sales today. I do not have readily available. I will try to give you. Only thing is some 38 people have joined. 210 people. One minute, Rajiv . I will be able to give.
Sure. Yeah.
Rajiv, I got information that we have around 210 people in sales. Anyway, I will confirm. I will send you through mail exact numbers in sales, collection. Collection is around 150 people, that I know. Sales is around 210. Some of them are existing employees, but in the current quarter, so far, 38 people have joined in sales, 22 people in collection, they have joined. Another 20, 30 people are yet to join. In sales also, people are yet to join. Another 20, 30 people are likely to join in sales.
Sure. Sir, just your outlook on margins, because firstly, you can share how the incremental cost of fund is moving. Secondly, what is the incremental lending yield now? Because I think a couple of quarters we have been talking about focusing on salaried home loan segment, which with a competitive pricing in mind. So how, as a consequence, we should look at the numbers moving in the next two, three quarters?
Okay. The cost is moving up, as you all know, because of competition in the market, the cost is also going up. We have so far passed on. See, last quarter also, we have passed on almost 30 basis points. Totally, the yield has remained the same, which means we have passed on all the cost increase. But going forward, whether we will be able to maintain the same spread of around 3.4% may be difficult because there will be some resistance beyond a point. So maybe if the cost continues to increase, it may be difficult for the company to completely pass on all that. Maybe we have to bear some of the cost increases. That is one. Now, for the salaried people, especially for home loans, competition is tough. So I have to necessarily offer them some carrot pricing, unless they will not come to me.
Such discussions are already on. Maybe if we are getting some favorable pricing in our cost, we will be able to pass on to such segment of customers, maybe with the quality, but salaried sales segment, so that we can offer them a better rate. That is how we plan to increase on salaried segment home loans.
Net-to-net, there may be a small dip in our spread that we anticipate. But overall, the profitability may not come much because, perhaps we will be able to compensate by the return of provisions that we have already made. The income loss that we may have because of competitive pricing, maybe may get compensated by the reversal in provisions.
Okay, got it. Sir, there are no more questions. Can we wind up?
Yes. Thanks, everybody. Thanks everybody for joining this call. I thank YES Securities, Mr. Rajiv in particular, as well as Chorus Call, who have been able to arrange all the things. Once again, thanks to all the investors for the trust that you people have. I would like to give an assurance that the company is on the right path. Notwithstanding the flat business that we had in the first quarter, we are quite confident that the numbers will keep improving in the second and third quarters, which is a busy season for the company as well. Okay. Things are going in the right direction. We are quite confident. Thank you once again for sparing your time for hearing us. Thank you.
On behalf of YES Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your line.