Ladies and gentlemen, good day and welcome to Repco Home Finance Q4 and full year 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. Thank you, and over to you, sir.
Yeah. Thank you, Michelle. Good evening, everyone. Welcome to the fourth quarter, full year results 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 call for Q&A. Over to you, sir.
Thank you, Michelle. Thank you, Rajiv, from YES Securities. Good evening, everybody. We would like to welcome you all to the earnings call of Repco Home Finance Limited for the quarter and year ended March 31, 2024. Thank you all for taking your time off and joining us on this call. We are happy to announce that we have been able to maintain the growth trend seen in the last few quarters in Q4 2024 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 yielding results. This will be an ongoing process, and we shall adapt to changes as and when the business demands. Business updates. We were able to achieve disbursements of INR 895 crores against INR 835 crores in Q4 2023.
Our sanctions stood at INR 978 crores as compared to INR 966 crores in Q4 2023. Excluding the DA pool buyout transaction we did in Q4 2023, the growth in sanctions and disbursements are 9% and 16% YoY. After taking into account GNPA reduction of INR 168 crores, our AUM stands at INR 13,513 crores, an increase of 9% YoY. Our disbursements for FY 2024 was at record high of INR 3,135 crores as against INR 2,919 crores of FY 2023. On a comparative basis, we have registered a growth of 12.7%, excluding the DA pool buyouts done in FY 2023 for INR 136 crores. Loan sanctions stood at INR 3,340 crores as against INR 3,232 crores of FY 2023, with a growth of 7.9% on a comparative basis. The ratio of exposure between non-salaried and salaried segment stood at 51.4% and 48.6%, respectively.
The share of non-housing loans that we call as home equity stood at 25.3% of loan book, and housing loans contributed to about 74.8% of the loan book. All our loans are to individuals, and there is no corporate book. Book quality. We were able to reduce the GNPA from INR 618 crores in Q3 FY 2024 to INR 552 crores, which is 4.1% of the AUM. Net NPA stood at INR 192 crores at 1.5%. We have reduced NPA by INR 168 crores for the full year. For the NPAs, we have a total provision of INR 518 crores with a provision coverage ratio of 65.2% for stage three assets. Our systematic and relentless action on NPA accounts is proving fruitful and would continue.
As of March 31, 2024, we hold INR 528 crores of restructured portfolio outstanding in our book, of which approximately INR 158 crores are in stage three and remaining in stage one and two. Profitability. Our NIM for FY 2024 was at 5.23%, up from 4.84% in FY 2023. The company has been able to maintain a spread of 3.38% for FY 2024 by raising rates to 11.75%, despite facing stiff competition at our pricing levels.
The net profit grew 8.7% QoQ and 32% YoY and amounted to INR 108 crores for Q4 as against INR 99 crores and INR 82 crores for Q4 2023, respectively. For the whole year, we have earned a net profit of INR 395 crores against INR 296 crores for FY 2023. Our ROA and ROE stood at 3% and 15.8%, respectively, for FY 2024 as against the respective figures for FY 2023 at 2.5% and 13.5%.
News of the phase one of the project comprising of LLMS and EGL are completely integrated and fully functional. Applications planned for phase two are under progress. We have so far spent INR 24 crores, of which INR 13.5 crores have already been capitalized. As of March 31, 2024, we have 212 touchpoints across 12 states and one UT, comprising 168 branches and 44 satellite centers with additional two asset recovery branches. We plan to reach a number of 250 by the year end. The future. Hereon, we would like to recall the roadmap of the company presented in our last call. That is INR 20,000 crores of AUM and GNPA below 2% by 2027. With the problems which are plaguing the company, like negative growth, high NPAs, technology backwardness, having been overcome, the company is well and truly on its way to reach these numbers.
For the current year, the company plans to strengthen its resources in sales, collection, and underwriting verticals by market recruitments. We will be adding another 40 outlets in FY 2025 to make the number of outlets to 250. Two more regions will be added to our present nine to make delivery faster. Topping the current year agenda are growth acceleration and overdue reductions. With the momentum gained in the just concluded year and the learnings, the company is confident of reaching a disbursement of INR 3,600 crores- INR 3,800 crores and AUM of INR 15,000 crores, stage two numbers between 7% and 9%, and GNPA below 3% by March 2025. While there may be a dip in our NIM and spread percentages, as we plan to move to a relatively price demanding clientele, we are confident of maintaining our profitability growth of 20%- 25%.
The credit cost for this year is expected to be minimal. To summarize, the key financial highlights of FY 2023, 2024, the loan book stood at INR 13,513 crores, registering a 9% YoY growth. PAT for the quarter was INR 108 crores and INR 395 crores for the whole year, with a 32% increase YoY. ROA and ROE for the quarter are 3.2% and 16.5% respectively. The core profitability has remained strong with a solid spread and margin of 3.3% and 5.1% respectively. The gross NPA has shrunk to 4.1% with a stage three coverage of 65%, and net NPA at 1.5%. We thank each and every one of you for enriching interest and being part of our turnaround strategy. We now open the session to Q&A.
Thank you very much, sir. We will now begin the question- and- answer session. Anyone who wishes to ask questions may press star and one on their touchtone phone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use only handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants, you may please press star and one to ask questions. We have the first question from the line of Megha Agarwal from AM Capital. Please go ahead.
Hi, sir. My question was regarding the asset quality in the home equity segment. From the data I have, GNPA of this segment is at a seven-year low, which is likely due to the commendable work this management has done and also due to the increasing denominator effect. With regards to the home equity segment likely to go up to 25%-30% of AUM. While you have spoken about next steps to keep the asset quality in check, my question is, do we have a certain metric, like a GNPA target in mind for this segment? Like there is a below 2% overall GNPA target. Do we have a specific target for the home equity segment?
See, 2% is for FY 2027 and 3% is for the current year. That is our expectation. The NPA numbers of home equity is slightly larger. See, out of this 3%, maybe it will be around 4% for home equity and 2% for home loan.
Okay. Thank you.
Thank you. Participants who wish to ask questions may please press star and one now. We have the next question from the line of Kaustav Bubna from BMSPL Capital. Please go ahead.
Yeah. Hi, sir. Could you please speak about your disbursement growth targets for mainly FY 2025 and how do we plan to achieve this?
Okay. See, as I told in the initial speech itself, we are targeting something between INR 3,600 crores- INR 3,800 crores. This is our normal target, which we are planning because from around INR 3,100 crores what we are targeting on a conservative basis is between INR 3,600 crores- INR 3,800 crores. If there are some tailwinds, like I said in the last con call, like government support or new schemes, some improvement, we may even reach a number of around INR 4,000 crores. But for the present, I would like to hold around INR 3,600 crores- INR 3,800 crores. And thanks, Kaustav.
You said FY 2024 was INR 3,100 crore, right?
Yeah.
You are targeting 15%+ growth in disbursement for the year.
Up to INR 3,800 crore. It can go anywhere between INR 3,600- INR 3,800.
Will this growth be back-ended towards the second half, or do you think it will be equally spread across the quarters?
First quarter will be slightly dull, let me admit. Going forward, yes, it will pick up. Normally for this company, second and fourth quarters are peak quarters.
Why will the first two quarters be Yeah, say.
See, the first two quarters, normally because of the change, because of the new branches opening and all that, invariably the first two quarter is relatively dull. Second quarter being a peak quarter, especially for the business, second quarter is more. Third quarter, again, because of the local holidays, February month being there. Because of these reasons, third quarter is relatively less compared to the second quarter. Fourth quarter, of course, people will run on that. So what I request all of you people is, there may be a slight dip in some quarters, but at the year-end, we are quite confident INR 3,600 crores- INR 3,800 crores is achievable one.
Okay. One more question on your provisions front. For FY 2025, what type of credit costs can we see? What type of write-backs are expected? Could you please go into detail in this and explain us?
See, as of now for this INR 515 crores, we have around INR 350 crores of provision. Going forward, we expect a reduction of around minimum of INR 60 up to INR 100 crores of NPA reduction. This will help us in releasing a provision anywhere between INR 40 crores- INR 50 crores.
But you are not expecting any additional provision. You are expecting write- backs. You are not expecting any incremental provisions to add on.
Not much. Because of the provisions we have already made. So for any likely slippages that may happen, which are going to happen, I think the provision coverage that we already hold, I think that will take care of these slippages.
Did I hear right that you are guiding for 20% growth in PAT in FY 2025? Is that what you said? Did I hear that right?
Anywhere between INR 450-INR 475.
This is taking into account the possibility that interest rates could fall in this year. Is that correct?
Even if interest rates fall, anyhow, that gets passed down also. What we are taking is there may be a slight dip in my spread and NIM. But I have an advantage of the additional provision that we have. That will help us in meeting this 20%-25% profit target.
Got it. Thank you so much for answering my questions. Best of luck.
Thanks, Kaustav.
Thank you. The next question is from the line of Shubhranshu Mishra from PhillipCapital. Please go ahead.
Hi, good afternoon. Thanks for the opportunity. Given the fact that we are so confident about the disbursement growth.
Sorry to interrupt you, sir. Your voice is muffled. May we request you, kindly use your handset, please.
Is this better?
Yes, sir. Please continue. Thank you.
Right. Given the fact that we are so confident about the disbursement growth, what will be the split of the disbursement between LAP and home loans, in FY 2025? What kind of credit costs are we forecasting for FY 2025? Again, if there is a split between the credit cost for LAP and home loan. Also if there is a disbursement mix one can give in terms of states that would be contributing to the disbursement. Thanks.
See, as of now, the ratio between home loan and non-home loan is 75% and 25%. Under non-home loan, LAP constitutes only around 15%. Going forward, sir, we will be maintaining the same ratios. Maybe instead of 75%-25%, it may become 74% or 73%-27% and all that. More or less it will be within this range. Regulatory requirement is we cannot exceed 40% of non-home loan, and internally we ourselves have fixed not more than 30%. Definitely we will maintain these ratios. Second question on your credit cost, as I told you, net credit cost will be marginal because of the provisions that we hold. Even for any slippages that we have, our existing provisions may take care of the likely slippages.
Net credit cost like what was there in 2023-2024, net credit cost to the company may not be much. This is second. Third one, you asked about the state-wise distribution. Gradually, of course, 56% of our loan book is from Tamil Nadu because of the base effect. Tamil Nadu may come down slightly, maybe from 56% it may come to 55% or 54%. We will be increasing our exposure in non-Tamil Nadu, especially in the southern regions of Karnataka, Telangana, Andhra and all that. That is our plan of action.
No, that is on the AUM, sir. I get that point. We have been on that path for some time. What will be the split of disbursements between Tamil Nadu, Karnataka and Maharashtra, our three large states?
Okay. See, that's what I'm saying. See, going forward, if you see the percentage of growth, percentage of growth in Tamil Nadu may slightly tap a low. And the non-Tamil Nadu regions, especially the states that you are talking, definitely it will go up percentage-wise. But quantum-wise, we do not have the exact number I can give you. But percentage-wise, I can tell you that growth will be slightly muted in Tamil Nadu compared to the other states.
Understood, sir. I'll come back and meet you. Thanks.
Thank you. We will take the next question from the line of Gaurav Agrawal from Nine One Capital. Please go ahead.
Thank you for the opportunity, sir. Sir, my apologies, I joined the call a bit late. One or two questions that I will ask might be repetitive, so I request your patience on that front. Sir, first of all, did we guide on the loan growth? I heard about the disbursed growth that we are targeting in the range of INR 3,500 crore-INR 3,800 crore. In terms of, sir, AUM growth, what kind of number are we guiding for in FY 2025?
Okay. You have one more question or this is the only one?
Sir, I have a couple of more, and then on the NIMs, I wanted to ask from FY 2024 levels, whatever NIMs that we had in FY 2024, how do we see those NIMs panning out in FY 2025?
Okay. Loan growth from INR 13,500, we are anticipating something around INR 15,000 crores by March 2025. For about INR 3,600- INR 3,800 crores net of repayments. We expect a net growth of around INR 1,500 crores. So we will be reaching around INR 15,000 crores.
Okay.
As far as NIM is concerned, yes, we now have a NIM of around 5.2%.
Yeah.
Going forward, it may not be 5.2%, it may be anywhere between 4.8%- 5.2%. As I told, we may be slightly aggressive in pricing our products, especially for home loan to salaried segment. To that extent, my NIM may come down.
Okay. But sir, if I ever calculate it, I take let's say 20 basis lower NIMs for FY 2025. I take zero credit cost, assuming there will be zero credit cost because of the excess provisions that we are holding. Also, I take, let's say the loan group we are targeting is INR 15,000 crores. So, if I do all those numbers, I get to around INR 430 crore kind of PAT, while we are targeting around INR 450 crore- INR 475 crore kind of PAT. So where will the upside come from to our view?
What we are anticipating is there could be a reversal in provision because of our net NPA reduction.
There is a scenario of having a negative credit cost to, let's say, INR 30 crore-INR 40 crore kind of negative number for the provisions be there in FY 2025. Is there a possibility?
That's right. That is a possibility.
Okay. So far, INR 20 crore-INR 30 crore is a strong possibility, right? INR - 20 crore to INR 30 crore kind of negative provisions for FY 2025.
That is a possibility. In fact, even in the last year, there was a small reversal of provisions.
But that was only some negative one, hardly anything. So that way, FY 2025, we expect the pattern to be much better. Is it?
Yes. Hopefully.
Okay. And sir, any levels on your cost of funding side? Because in my understanding, there were some approvals that you were waiting from National Housing Bank. Once we get those approvals, our cost of funding can meaningfully change. Will you be able to describe some on this?
It's definitely possible because now that our net NPA has come down.
Right
We become definitely eligible for our NHB funding. Of course, that can happen only post AGM, because National Housing Bank normally expects the AGM to be over. That is one. Second one, even with the NHB funding, while there may be a reduction in cost of funds, it may not be all that much. That much I can tell you. Of course, NHB funding is definitely cheaper than bank funding.
Right. But sir, as of now, it's only worth 10%, 11% of our overall borrowings. So over a two-year, three-year period, can this scale up meaningfully from these 10%, 11% levels? It used to be 10%, 15% last year.
See, NHB funding, we do not know how much we will get, because normally it is allotted by National Housing Bank. Okay.
Okay.
Definitely, whatever is getting allotted, we will avail.
Okay. Perfect, sir. Thank you so much, and all the best for your future.
Thank you.
Thank you. Ladies and gentlemen, in order to ensure that the management will be able to address questions from all the participants in the conference, kindly limit your questions to two per participant. Should you have a follow-up question, please rejoin the queue. Thank you. We will take the next question from the line of Bunty Chawla from IDBI. Please go ahead.
Yes. Thank you for giving me the opportunity. Just one data point, if you can share. Last quarter, we have seen for the nine-month FY 2024, the recoveries were around INR 100 crores versus our guidance for the full year was INR 100 crores. If you can share what was the recoveries for the full year FY 2024, and similarly, what you will be guiding for recoveries for FY 2025.
For the full year of FY 2024. Netting any recoveries made during the quarter. Let us assume in a month, a particular slippage happened, and we were able to recover within that year, those things have been netted off. The actual recovery is around INR 316 crores for the whole year. INR 150 crores was the slippage for the whole year, INR 316 crores was the recoveries for the whole year.
Okay.
For the last quarter alone, if you want, I might share. It is INR 37 crores of slippage and INR 101 crores of recovery.
Okay. Sir, what will be the guidance for FY 2025?
Okay. See, we had given a guidance of less than 3%. Assuming that a INR 15,000 crore is the book, we should definitely go below INR 450.
Okay. Sir. Thank you. Thank you very much.
Thanks.
Thank you. The next question is from the line of Devendra Chawla from Prasun Exponentials. Please go ahead.
Hi. What are the operational challenges being faced in growing disbursements faster?
There's nothing like challenge. The only thing is, since we are making so many changes within the organization, like verticalization, decentralization and all that, it is taking some time for the people to understand, to change themselves to the circumstances. That is the only thing. Otherwise, comparatively, we are better off if you see. Compared to the previous years, the company has done fairly well in disbursement of around INR 3,100 crores. Going forward, since these situations have now more or less stabilized, we will be improving them, increasing the numbers, increasing the number of outlets and all that. These challenges will be met. We will be in a position to take care of whatever is the budgeted numbers.
Understood. What is the number of outlets the organization is trying to add in the coming year?
See, today we have around 210 as of March 2024. By March 2025, we want to reach a number of around 250.
Understood. Thank you so much.
Thank you, Mr. Chawla.
Thank you. The next question is from the line of Sushil Choksey from Indus Equity Advisors. Please go ahead.
Good evening, sir. Congratulations to team Repco for excellent results.
I am sorry to interrupt, sir. There is a static on the line. May I request you to kindly use your handset, please?
I am using a handset, ma'am.
Okay, sir. This is fine now. Please continue.
Congratulations to team Repco for excellent results. Sir, your guidance of INR 3,600 crore- INR 3,800 crore of growth. What kind of repayment is expected this year?
Hi, Sushil. See, like last year, INR 3,600 crore- INR 3,800 crore. Last year we got a repayment of around INR 2,100 crore. So even if you go around INR 2,300 crore-
Already projected disbursement, what is the receipt?
One second. See, INR 2,300 crores is the expectation. Net book increase will be around INR 1,500 crores.
AUM will grow approximately by 20% to 15%. That is your assumption.
Yes.
Okay. You highlighted that for salaried section you may lower rates, you may sacrifice a bit of margin, but you will grow the book on a healthier note. What kind of mix are we estimating on a self-employed and salaried class? Southern India has lot of self-employed, self-owned construction business rather pay compared to developers loans. Can you give me a mix? What is expected for next year?
See, as of now it is around 52% and 48%. Sushil, as of now, it is around 52% salaried and 48% non-salaried. Maybe because of our stress, this 52% may become important for salaried. This 52% may become 53% or 54%. There may not be much increase, but definitely there will be an increase quantum wise.
Okay. Are you finding that your loan ticket size led by the inflation and construction cost as well as house loan prices is getting elevated on average ticket from the current values?
Yes. Today my average ticket size is around INR 20 lakhs. Two years back it was only around INR 12 lakhs- INR 13 lakhs. So my average ticket size for the new book is around INR 20 lakhs, but for the entire book it is around INR 10 lakhs.
How are you seeing your collection track record on terms of 30-day DPD and on a normal basis?
It has improved, Mr. Sushil, but not to the extent even we want. That is why, as I was telling in the initial speech itself, our focus this year is on book growth and secondly on the overdues recovery. We are strengthening our collection team, especially on the overdue numbers. We had around 80 something, 800 people for collection. Now we want to almost double it to around 150 for this current year. So our focus this particular year will be more on collections, especially 1-90 days bucket.
Sir, based on the forecast for growth, are we looking to penetrate in the same area with additional offers or we are getting into new geographies?
At least for 2024, 2025, I do not want to venture into new geographies because the existing geographies itself, there are so many more places to venture into. So we will be spreading our wings in those areas, especially in Maharashtra, Andhra, Telangana, in addition to, of course, Tamil Nadu. Tamil Nadu, maybe this year we may expand, but going forward, I do not think that there are many places in Tamil Nadu. So there will be branches in other parts of country at least from 2025, 2026.
If I have to visualize your AUM in FY 2025, 2026, not even 2024, what percentage would constitute South India and specifically Tamil Nadu?
Tamil Nadu, maybe around 54%. Because from 56%, today we are around 56%, maybe anywhere between 50%- 54%. The other states will start increasing.
Sir, every housing finance company's commentary is to enter Northern India led by UP because of the growth model run by the local state government. Are we having any plans for that?
Yes. In fact, even in our board meeting there was request to open such branches. Maybe we will think, but as of now we do not have specific plans.
Sir, I didn't see in the presentation anywhere, or I might have missed or it's my error. What is the-
Sir, I am sorry to interrupt. I would request you to rejoin the queue for follow-up questions.
Thank you, ma'am.
Because there are others who are waiting. Thank you so much, sir. The next question is from the line of Naveen Baid from Nuvama Asset Management. Please go ahead.
Thank you for the opportunity, sir. Just a housekeeping question. What were the ECL provisions for stage one and stage two assets this quarter?
No, I could not get you, Naveen. Can you repeat?
What are the provisions?
Stage one, what do you want?
Stage one safety provisions.
Oh, yes. I just confirmed. Stage two, we have INR 94 crores.
Stage three, INR 360 crores, and stage one, INR 64 crores.
Stage one?
INR 64.
Okay, thanks. Thank you.
Thank you.
Thank you. Participants who wish to ask questions may please press star and one now. We take the next question from the line of Dev from Haitong Securities. Please go ahead.
Yeah. Hi. Thanks for taking my question, and congrats on a good set of numbers. I have seen that your employee expense and other expenses have seen a jump on a YoY basis, and even on a quarter-on-quarter basis. What do you guide for FY 2025? Can you also tell me, you spoke that we are in phase two of the transformation. Can you throw some light on how it will pan out in FY 2025, and what sort of expenses do we expect on this project in FY 2025? Yeah, that is my question. Thanks.
Okay. Thanks, Dev. See, as far as employee expense is concerned, we made an additional provision of around INR 4 crores in March quarter. This was mainly because of a request from our HR department saying that there may be an increase in incentives payment for the fourth quarter based on the changes in the metrics of our staff incentive scheme for 2023, 2024. For information, we implemented a new salary structure from 2023, 2024 onwards. So HR department came out with a request, there may be an increase in incentives, and requested us to provide for the same. So heeding to their request, we have made a provision of INR 4.5 crores. Of course, this is only one time. This cannot get repeated. Even if it is there, we will see that it is spread over a period of 12 months. That is the first thing.
As far as the phase two of our this IT project, it is more related to back office operations, mostly related to our head office, like HR, treasury, departments like audit and all that. So these are all back office operations, and it does not have any impact on the day-to-day functioning of the company. This is first. Second one, as far as cost is concerned, the total project cost, excluding any security-related expenses, is around INR 40 crores. We have already spent around INR 22 crores, so it will be maybe another INR 15 crores- INR 16 crores will be there for phase two.
Okay. Got it. Thank you.
Thank you. The next question is from the line of Darpin Shah from Enam AMC. Please go ahead.
Yeah. Hi. Thank for the opportunity. So during the course of the call, I have been hearing that you are confident of having a slippage period of INR 60 crores- INR 100 crores and have lower provisions or negative provisions for FY 2025. So just wanted to check, what is the vintage of these NPAs which we are expecting recoveries? Also, what has changed for these borrowers that we are so confident that the recoveries will come back from these borrowers?
Thanks. My confidence maybe is because of the relentless efforts we have been doing in the last two years on the NPA side. See, out of this INR 500 odd crores of NPA that we have, almost all the accounts have moved to the final stage of auctioning the properties or even taking physical possession or a symbolic possession of the properties. There will be more and more pressure on the borrowers from our side. They will come to us for discussion, come to us for settlement and all that. We are also planning to implement a simplified settlement scheme for all the old borrowers, especially those accounts which are more than 1,000 days old. With these two things, we are quite confident. Even without these parameters, we were able to recover a net recovery of INR 160 crores last year.
What we are estimating this year is a net reduction of around INR 100 odd crores. That way, I think we are quite confident.
Okay. Sir, in terms of this vintage borrower, which is 1,000 days plus, how much would be that proportion?
See, out of around INR 500 odd crores, INR 300 odd crores, I do not have the exact number. Around INR 300 crores is more than 1,000 days old. In fact, we are targeting a special scheme only to attract these NPA borrowers. See, last year also, in the same segment only, we got bulk of our recoveries. This is the way we are planning to target this time.
Okay, sir. Thanks a lot.
Thank you. The next question is from the line of Kishan Rungta from Emkay Global. Please go ahead.
Hi, sir. Congratulations on good set of number. Just wanted to check, what is the guidance for ROA for FY 2025?
ROA?
Yes, sir.
ROA should be anywhere around 3%. ROE should be around the same. We were around 15.8%. ROE, we should be able to maintain around that range.
Okay. Sir, as you guided, you would be increasing the share of salaried and there will be some impact on the demos. What would be the impact? We are expanding also, we are going to open 40 branches. What is the cost-to-income ratio and OpEx to AUM for FY 2025? Do we have any guidance on that?
Kishan, cost to income ratio is around 24% for the whole year.
Okay.
Hopefully, with the likely increase in the income because of our expansion, as well as the recovery that is going to give us income. I think this cost to income ratio, we should be able to maintain around 24%.
Okay. Got it, sir. Thanks a lot.
Thanks, Kishan.
Thank you. A reminder to all the participants that you may please press star and one to ask questions. The next question is from the line of Rajiv Mehta from YES Securities. Please go ahead.
Yeah, sir. So you gave a target for stage two reduction by March 2025. Can you just repeat that target? I missed it.
Okay. I think we are around 11% on March 2024.
Yeah
7%- 11.5% to be exact.
Yeah.
We want to reach anywhere between seven and nine. That is going to be a challenge. This is the challenge we are planning, taking this year. As I was telling in the initial call itself, growth and reduction in the stage two numbers is our target.
And I believe you spoke about almost doubling the collection team as well for that. Yeah.
Yes.
Okay. On this, can you also speak about the quality of the new loans or of the underwriting in the last one and a half, two years? While we can see the slippages are low, the initial flows in the initial bucket from the zero DPD bucket. Just to understand that nature or that quality of the loan, if you can just give some parameters around how the last two years loans are performing.
Rajiv, I can tell you. We have dispersed something around INR 5,700 crores from January 2022. Which means in 27 months, we have dispersed INR 5,700 crores. Our NPA in this book is only INR 24 crores. It is 0.24%. Stage two is around INR 100 crores, around 1.8%. What this implies is, the new book, there are not many shocks. I cannot guarantee that these accounts will not slip in the future, but at least there are no immediate shocks are down there.
Okay. On this management overlay, you spoke about writing back a good amount of provisions in the current year. But still, I believe you will be left with a significant amount of provisions, even to be written back in FY 2026. Would that be right, that you can be in a negative credit cost even in FY 2026 if the overall asset quality cycle remains as good?
Hopefully. Let us hope, Rajiv. I cannot think what will happen in next year, but at least 2024, 2025, if you are able to maintain the same momentum of the last two years in recovery efforts, definitely there is a good possibility that we will write back provisions. Touch wood, if you are able to recover more than what is our expectation, like what we did last year, yes, the provisions release will be much more.
Correct. This is in FY 2025 year.
Yeah. That will be an optimistic thing. But FY 2025, 2026, there could be some slippage. You could not avoid a slippage in this lending business. But still, as we are already having enough of provisions, your thinking may be right. But I think that will be a guesswork, which I don't want to enter into.
Correct. Just two things. What was the BT-out monthly run rate in fourth quarter? Second is whether any more augmentation of senior management team is being planned.
BT-outs were around INR 102 crores and BT- ins were INR 161 crores for the Q4, is one. As for the senior management, I think we have already informed one CBO, Chief Business Officer, Mr. Raja, has already joined. We may induct some people at the middle level, under all verticals, whether it is sales, collection, or even in underwriting. At middle level, but not at the senior level, perhaps. But definitely at the middle level.
Got it clear. Thank you so much and best wishes.
Thanks, Rajiv.
Thank you. You may please press star and one to ask questions. The next question is from the line of Shubhranshu Mishra from PhillipCapital. Please go ahead.
Thanks for the follow-up, sir. Actually just one question. What kind of employee expense are we targeting in FY 2025, 2026? Hopefully, total OpEx growth would be more than the disbursement growth or the lane growth that we are targeting. That is the first. Second is just an observation, sir. I think we have been giving out our calls almost two days after we declare our results. My request to the time management is that, if going forward from next quarter, if we can have the conference call on the same day as that we declare our results. Thanks.
Mishra, see, same day call may be slightly difficult because invariably our board meeting gets over in the evening, or at least around 3:00 P.M. to 4:00 P.M. So immediately after board, it may be slightly strategically difficult for us. Maybe the next day we can target. The next day of our meeting, definitely we will target. That is for sure. Regarding employee expenses, last year we were around INR 102 crores. So maybe this time there may be a 10%-12% increase. That is for 2024 to 2025. 2025, 2026, we are not so far budgeted exactly about the employee benefit expenses. But 2024, 2025, yes, there is likely to be an increase because of the likely induction of our workforce. But I think we are quite confident by the increasing business and the reversal of provisions and all that.
The recoveries from our technically written-off accounts, all this will help us in maintaining the profitability. The cost to income ratios, as I already told, we hope to maintain for the whole year. My only request to you people is, please do not look into the numbers quarter wise, but annually, we should be able to maintain.
Total OpEx growth, sir, what have you guided?
That's what I'm saying. I do not have the exact number of OpEx, but cost to income ratio is what we are targeting. That we will see to it that we make it.
Sure, sir. All right.
Thank you.
Thank you. The next question is from the line of Sumit Rathi from Centrum PMS. Please go ahead.
Thank you for taking my question, and congratulations on good set of number. I just had one question to ask. We were doing to uplift our sales team, our in-house team, and in the last quarter, we had given some color on that, how the training is happening and the proportion of DSA and in-house sales team with respect to the new business. Can you give similar kind of flavor this quarter also? What is the progress on building our internal sales team and the training over there, and any metric if you can give for us to understand how we are progressing over there?
Okay. The internal sales team, we had given training, as I told already. Yes, I can say that it is partially successful. I will not say that it is entirely successful. Maybe we may have to augment, as I told in the beginning itself, maybe we may have to augment from outside source also. This year, we plan to increase the number to around 300. Last year, we had around 200 sales people. This year, our foot on street salespersons will be around 300. This will be excluding the branch heads. Okay? This is on sales front.
So this 100 additional we would be bringing from outside. Is that understanding correct?
Not fully outside. Maybe a mixture of outside and local. That is, within our stream.
All right. Thank you, sir.
Thank you.
Thank you. Participants who wish to ask questions, may please press star and one on their touchtone phone now. Ladies and gentlemen, that was the last question for today. I would now hand the conference over to the management for closing comments. Over to you, sir.
Thank you. I think we have spoken enough on all the aspects. I once again thank all the participants who have took time off. I heard that there are two or three more meetings happening simultaneously. Still, you people have come and joined this conference call. I thank you each and every one of you for showing interest in our organization. Thank you very much.
Thank you, sir. Thank you, members of the management. Ladies and gentlemen, on behalf of YES Securities, that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.