[Ladies and gentlemen, good day and welcome to the Sammaan Capital Limited Q4FY25 Earnings Conference Call, hosted] by Investec Capital Services. As a reminder, all participant lines will be in 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 touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Kamal Mulchandani from Investec Capital Services. Thank you, and over to you, sir.
Good evening. Welcome to the earnings conference call of Sammaan Capital Limited. We have with us on the call today Mr. Gagan Banga, Vice Chairman and Managing Director, joined by other senior management of Sammaan Capital and Sammaan FinServ Limited. I would now like to hand over the call to Gagan, sir, for his opening comments, after which we will take the question and answer round. Over to you, sir.
Thank you, Kamal. Good afternoon, and thank you everyone for joining this call. We are mindful of the fact that it's Friday, and so we didn't want to push it to the evening where we usually do our calls at 5:30 P.M. here. So we've reprogrammed it to 4:00 P.M. I hope it makes it more convenient for everyone. We've announced our results earlier today. Fiscal 2025, if we put it in perspective, was a transformational year for us, both at an operating level as well as at a big picture shareholding governance and the overall business structure itself. We successfully concluded two equity-based transactions, one a INR 3,700 crore equity rights issue, and then a QIP earlier in January of 2025. That strengthened the capital base of the company. It also strengthened the cap table of the company at the top.
Now, our top five large shareholders own approximately 25% of the company. As we went through the process of de-promotorization over the last three to four years, the first five promoter used to own about 21% of the company. There is that solidity now there in the shareholder base. We also went through a transformation of our license itself and the brand. Now, we are slowly settling into the brand Sammaan, and we hope that as the months pass by, the brand recognition of Sammaan improves over a period of time, and it becomes a solid brand standing for all the virtues that we would like it to be standing for: customer service, quick solutions, etc., in due course of time.
The other emphasis has been on building up of what we call the growth AUM, which is the business that we would like to do going forward: home loans, loans against property, and select type of wholesale transactions. That growth AUM has now reached as much as INR 37,000+ crore, rising from approximately INR 26,000 crore last year, and now stands at about 60% of the total AUM. Within this AUM, a very important element of success was to firstly establish and then to scale up our asset-light model. That is moving along well. There is a high rate of acceptance, close to about 95%- 96% of the loans that we do are being partnered with banks in a variety of structures. This is providing us with the most stable form of ALM, the most durable form of ALM.
Hopefully, this will also provide a very solid base for growth in the years to come. Another strategic initiative which we took through the course of the year was to recreate our subsidiary into an affordable mortgage-focused subsidiary, Sammaan FinServ. That initiative is chugging along well. The company is slightly ahead of the full year projections that we had made for fiscal 2025, and I hope the same trend would continue through fiscal 2026 as well. A very key element for the success of any non-bank lender is a solid debt program of its own where there is free flow of capital. Through fiscal 2025, we have established a free flow of capital. We have borrowed about 2.3x what we did in the previous financial year. This should then bring in the next level of competitive advantage driver, which is lowering of cost of funds.
Cost of funds can't effectively reduce till the time that you're forced to borrow at any cost in every structure. That is behind us. Through fiscal 2025, I think the quantum of borrowings that we have done on balance sheet well establishes that. Fiscal 2026 should see us being able to reduce the cost of funds slightly ahead of the reduction, which should anyway, in normal course, come to us with a reducing repo rate. In terms of specific numbers, as I said, we did an equity raise. The net worth climbed to almost INR 22,000 crore as a result of that, INR 21,822 crore. The AUM stands at INR 62,346 crore. The growth AUM is INR 37,000 crore. The legacy is just under INR 25,000 crore. Net interest income is stable at about INR 1,082 crore. PPOP was also stable at INR 744 crore. Profit last year, same quarter, was INR 320 crore. This year, it's INR 324 crore.
The net interest margin has improved to 6.2%. The gearing has reduced to 1.9x . Gross NPA is down to half at about 1.3%. Net NPA is at 0.8%, and the credit rating is stable from both CRISIL and ICRA at double A stable. We did see an upgrade in our international credit rating. Now, with the full year results out, along with the annual report, we hope to have an engagement with our domestic rating agencies, and we are hoping to be put on a positive trajectory over the course of the next few quarters. The numbers essentially witnessed an accelerated transition of the business model.
Our focus was to ensure that even though we are moving from a wholesale-focused model to an incrementally more retail-focused model, there is steady profitability, and the asset quality should be steady to improving, which is something that we have been able to achieve in the second half of the financial year. The growth AUM now stands at 60%, and it will keep climbing up. What is most comforting is that the collection from the legacy book in FY 2025 was at its highest ever point at almost INR 13,000 crore, with almost INR 3,000 crore collected in quarter four itself, well in line with the projections that we have done. As I mentioned, a key competitive advantage driver is eventually the cost of funds for any non-bank. Before that, there has to be free flow of capital.
The other significant achievement, so to say, was a 2.3x growth in on-balance sheet borrowings from a variety of banks and also the enhancement of our retail bond issuance program. Now, we have over 88,000 investors who directly invest into our bonds. We've provided a roadmap to fiscal 2027, and within that, we have been highlighting now for the last four quarters that we would keep certain disclosures very, very standard such that the whole business model is very comparable for those who are interested. In that context, on a goal of reaching a fiscal 2027 growth AUM of INR 1 lakh crore, we are at about INR 37,500 crore. Still a long way to go, but quite hopeful that as we scale up disbursements at both Sammaan Capital and Sammaan FinServe and the AIF platform starts firing, we should be in a position to hit this number.
The annual disbursements are trending along well. With a nominal growth of 20%-30% every year, we should be able to achieve our target out there. The incremental ROA is also trending, and now, with a renewed focus on improving our cost income ratio in the short term, I believe we should be quickly hitting the 3.2% mark. We are currently at 3%. From an organizational ROE perspective, the idea is to transition the company back to being a mid to high-teens type of ROE company. Our new business is already getting us those kinds of ROEs. As the entire balance sheet transforms to what is the growth AUM, the ROEs will eventually appear. We are well ahead of our net NPA goals, but we would still like to stick to the 120 basis points type of range and not overcommit ourselves.
A clear area of focus for fiscal 2026 is to start driving the cost income ratio. The rundown of the legacy AUM continues to remain an area of emphasis for the management. It takes up significant time of the management. Fortunately, the portfolio has organically run down by over INR 1,70,000 crore in the last seven years. There is no reason why the tail that we are left with now should also not continue to run down organically, and we will achieve a single-digit % of AUM by fiscal 2027. Sammaan FinServ, which is a very strategic subsidiary, continues to move forward on its goals towards fiscal 2027. Fiscal 2027 goal for balance sheet is INR 10,000 crore. We are at about INR 7,000 crore. The net worth goal is INR 3,400 crore. We are at about INR 3,100 crore. Disbursements annually should be at about INR 9,000 crore.
We should be looking to get to a run rate of INR 500 crore per month within fiscal 2026 itself. To be able to get to a goal of about INR 750 crore a month of disbursements from there should not be too much of a stretch. On AUM, we are slightly ahead than we had projected at INR 6,000 crore. This mathematically, with just the disbursements and the runoffs, will get us to INR 15,000 crore. The ROA will significantly increase as the disbursements increase, and we are targeting a 5% plus ROA and a 14% ROE. Our disbursements, as we speak, are on track, and we should be able to get to INR 500 crore a month, sort of a number in fiscal 2026. What is also very importantly being done right now is the redistribution of the branch and the people transfer.
It's an ongoing exercise, and that exercise is fully underway. It will take us another about two to three months. Hopefully, by the end of this quarter, we should be in a position to have Sammaan FinServ operating with an independent distribution, independent leadership team, and independent execution team itself. Which brings me to another important update. The company has been focusing on strengthening its leadership program. In that context, we are undergoing a full leadership review. We are looking at allocating senior resources to Sammaan FinServ, beefing up Sammaan Capital's leadership as well. That program, in terms of its results, has already started showing some initial results. So we just, a few months ago, hired a new Chief Technology Officer, Dharamveer, who comes with a long financial services experience and has served in mortgage companies like Home First, NBFCs like Europe Incorporated, and a small bank like Swandhanath.
He has the relevant experience of New Age as well as a well-rounded experience of financial services, and he's already started to make his mark internally in terms of the technology transformation that we are doing. We have retained one of, I would say, globally, one of the largest human consultancy firms to help us do this reorganization, and the NRC is deeply involved in that process. I'm quite hopeful that towards the end of this quarter, early next quarter, the results of this reorganization and all the efforts that have been put in place to have a very solid succession plan, additions to leadership, etc., all of that, from an implementation point of view, would also be happening. Coming back to business, there has been significant improvement in asset quality.
Year on year, our stage three assets have dropped from 2.7%- 1.3% on a gross basis, on a net basis from 1.5%- 0.8%. We continue to use asset reconstruction companies for facilitating the recovery process. That is working along well for us. The credit costs have been guided at about 100 basis points. In the second half of the year, after the large provisioning exercise that we did in September, the credit costs have come in at 95 basis points. We are fairly confident that going forward as well, we should be able to manage credit costs at about 100 basis points. Our total imputed provisions stand at about 33% of the legacy book of around INR 8,300 crore. We have introduced a slide.
This is slide number nine, where since the business is transforming and the business is moving from balance sheet loans to incrementally, there would be a bump-up of loans being assigned in one structure or the other. We have tried to explain the various lines, so those of you interested in building models, etc., are guided by this. A primary revenue line is going to be interest income, in which we see income from loans. This should be for fiscal 2026 coming in at an approximate 11.5% of the average loan book for the year. The processing fee that we get on the loans that we disburse is approximately 1.25% of the retail disbursements. Currently, that is running at about INR 5,000 crore. So we should, per quarter, so that into four with some growth is the estimated processing fee.
As the AIS scales up, we expect for that AUM a processing fee of approximately 200 basis points. This is then netted for expenses and amortized. We also get income from loans that we sell and off our balance sheet, so we continue to get about 50 basis points- 70 basis points of management fee. There is investment income in the nature of interest that we get, which is roughly approximately 7% blended for fixed deposits, bonds, etc., that we would be holding. As we move forward in the process of recovery, there would be overdue interest amounts, which will be sporadic. They may come in one quarter or may not come in the other quarter. They would be chunky in nature, and we would continue to use all such overdue interest write-backs or recoveries, largely towards continuing to create provisions.
We expect this to be about INR 200 crore-INR 300 crore for financial year 2026. There is a fee and commission income that we get, which is linked to disbursements, which is around 2% of disbursements. We get net gain on fair value changes. This is, again, approximately 7% of the investment book for the year. This is largely investment income other than those in the nature of interest, so dividends or something like that that we may receive from time to time. There is the net gain on derecognition, which is effectively when we do an assignment, then we under NDS are required to upfront the prospective income. That turns out to be approximately 4.5% of the value of the loans sold. These are our lines of income.
Often, during analyst conversations, we were asked these questions, so we thought that it is best that we put this down on a piece of paper. These numbers between fiscal 2026- fiscal 2027 would undergo a further change as the business model evolves. Certain instruments become more favorable than the others, but this would be broadly the line of revenue streams that we will have going forward. In terms of the structure, we had discussed this shared structure after our Q2 earnings. Sammaan Capital is an upper-layer NBFC, which is mortgage-focused, completely focused on origination and co-lending or assignment of loans. It operates in the prime space.
On the next slide, in the earning update, we have detailed the home loan and the LAP product that this company focuses itself on, as well as via its subsidiary with Sammaan FinServ, which is more focused on affordable home loans and semi-urban LAP loans. Sammaan FinServ is targeting a standalone growth AUM of INR 15,000 crore by fiscal 2027 and a steady-state ROA of 4+% by fiscal 2027. What we have been working on, and I'm happy to announce that we've done one small transaction through the platform. Hopefully, we will conclude another transaction in the month of May, which is fairly material. This is a platform which will work with several of our partner funds, more in a co-investment format. This itself expects to be targeting an AUM of getting to an AUM of INR 15,000 crore.
In due course of time, it should, of that INR 15,000 crore, we expect about INR 1,500 crore to be our contribution, which is Sammaan Group contribution, be it via the AIF or the NBFC, INR 1,500 crore. We've drawn an internal line that we would not want more than 10% of our net worth exposed in all of this, but we expect a 10% contribution to our profits coming from this vehicle. All in all, between the AIF, FinServ, and Sammaan Capital, we are continuing to focus on getting to a consolidated AUM of INR 1 lakh crore by fiscal 2027. We've given details about a variety of cuts around the retail business that we are building in terms of collateral, sourcing, income, occupation, CIBIL scores, loan-to-values, geographical distribution, and stages. This is fairly typical of any home loan and LAP-focused company.
What is going to be our strategic focus through fiscal 2026 is, first, the reorganization and then the expansion of the branch network. On a consolidated basis, we should get to about 350 branches by fiscal 2027, which would then be further split between Sammaan Capital and Sammaan FinServ. Our focus remains on continuing with the asset light strategy, which is working well for us. More of this asset light strategy is the quality of this portfolio. On slide 15, we have detailed the credit quality of the portfolio. We've also shared some of our partners' names, and this would continue to remain an area of high focus. The core funding requirement of the company would be coming through that, and it would reflect in the AUM mix in due course of time.
An important discussion in most of our investor meetings, as well as discussions with analysts, etc., continues to remain the pace of the rundown of the legacy book. Whatever we had targeted for fiscal 2025, we have very nicely achieved all of that. As I mentioned earlier, we have had cash collections of almost INR 13,000 crore in fiscal 2025. In this quarter, we've collected almost INR 3,000 crore. As more and more of the projects that we have financed reach a stage of occupancy certificate, then it becomes a process of selling. All of us are aware that there is significant sales momentum in residential real estate. We hope to continue to ride on that for the next year, two years and a half, and then take out the big risk out of this book. The ALM continues to remain well-managed.
We continue to remain fairly liquid, given the uncertainties that the world was facing entering into April. We had created additional buffers, which we will start unwinding in due course of time. The overall buoyancy in the economy from a retail lending perspective continues. I believe there is more, I would say, a steady hand on the regulatory environment as far as NBFCs are concerned. That is, again, something that one can now work with, that this is the set of regulations and how do we navigate our business through this. All in all, if I was to kind of summarize fiscal 2025, I would put it as it being a transformational year.
As far as fiscal 2026 is concerned, our key areas of focus, besides continuing to rundown the legacy book and recovering monies on what we've already provided for or written down or sold to ARCs, is going to be to ramp up our disbursements around growth AUM, the three pieces of that we have shared with you. Continue to focus on reducing our cost of funds. I think the two key ingredients which were required to finally start playing into cost of funds, which is demonstrating to the market the ability to raise equity as well as getting a free flow of debt capital, both have already been achieved, and one can now start focusing on reducing cost of funds. The per loan economics would start emerging by reducing cost of funds as well as having a key focus on our cost-income ratio.
This, I would say, is amongst the most important agendas. To take it slightly at a higher level, the next area of focus, which is both execution as well as strategic, is to get the AIF firmly off the ground so that over the next two financial years, we can build an AUM of around INR 15,000 crore there. What I mentioned, the internal reorganization, the senior-level hiring, getting on the right talent, succession planning, all of that is, again, something which I would say is more a H1 fiscal 2026 agenda rather than a full-year agenda. We have already fairly progressed on this, and every few weeks, you will keep hearing some or the other announcement around this. That was the year for us, and hopefully, fiscal year 2026 would be even more constructive as far as we are concerned.
With this, my remarks are over, and we are open to questions now.
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 touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants who wish to ask a question may press star and one now. Ladies and gentlemen, you may press star and one to ask a question. The first question is from the line of Sarvesh Gupta from Maximal Capital. Please go ahead.
Good afternoon, sir. Sir, on the NBFC book, we have seen the provisions that you have made, but are you expecting any further losses which have to be routed via P&L on the NBFC book?
We have guided for an annualized credit cost of 100 basis points. What we have also guided is that the write-backs that we hopefully will get would be back, as in terms of release from the P&L, would be back-ended. Yes, the company would continue to incur credit costs. Those credit costs are well within the budget of what our PPOP can handle. If your question is, do we expect in the near term, any near to medium term, any dip from capital? No, that is not the expectation. I think we are provided well enough. If the other question is, do we expect any write-backs in the near to medium term?
No, we would continue to carry those provisions as provisions and use them tactically for accelerating the pace or at least making sure that the pace stays in line with what we've guided. In due course of time, as we come towards the end of fiscal 2027, based on the overall success we've achieved, we will take a call on if there are residual provisions, what to do with those residual provisions.
This 100 basis point is inclusive of legacy as well as the growth book? It will be on the entire?
Yes, everything.
Okay. Secondly, sir, in this quarter, I can see that versus the previous quarter, there is some 10-15 basis point spike in the GNPA as well as Net NPA. A little bit, in last quarter, I think the impairment credit cost was also very low, only INR 6,000 crore. This quarter, we are seeing INR 290 crore. Can you throw some light on this?
Yeah. If you recollect, in quarter two, we had done a large provision. We had done, going forward, a 90-day sort of a dive, and as part of that exercise itself, done whatever we could. Our more normalized Net NPA number, as I shared in my remarks, is about 120 basis points. That is what we will probably be averaging over the next few years. Unless we are significantly breaching that 120 basis points, I think it is all built into our business model.
Okay. On the overall model, we have around INR 20,000 crore plus of net worth. If I look at your plans, excluding the legacy book on the growth side, most of it is looking to be very asset-light in nature. AIF, again, would be very asset-light. For this one lakh crore book, how much would be the equity requirement? Once these legacy loans are sort of taken down, then will we not be very over-capitalized in terms of equity if we are having this sort of an asset-light model?
We are already barely geared. We are already in a fairly well-capitalized situation. In order to get free flow of capital, in order to get a reducing cost of debt funds, you need to remain in an over-capitalized situation for an extended period of time for lenders, rating agencies, and other debt-side stakeholders to get increasingly comfortable. Until whatever is the business model that you are striving for achieves maturity in terms of scale, size, season cycle, and all of that.
At least over the next two to three years, I expect that we will continue to stay in a state of an over-capitalized state.
Then, sir, let's say in FY 2027 exit, what could be the ROEs that we are looking at from the growth AUM and overall on the company financial?
On the growth AUM, we are targeting higher teens. On the overall book, we should be hitting mid sort of teens.
Okay. Okay. Thank you.
Thank you. The next question is from the line of Narath Jared from Branch Capital Partners. Please go ahead.
Hi, Dawal. With regards to Sammaan FinServe, is there a requirement to dilute majority stake in the company under the RBI guideline? And if there is, by when do you have to get this thing diluted?
Yes. There is no RBI guideline on this. There is a RBI dispensation that we currently enjoy as far as an NBFC owning an NBFC. That's not a structure which will be long-term enabled. During the course of this year, we will go back to RBI with a firm plan around how exactly do we want to run this business and build a distinct business model. As part of that process, we had created a distinct business model in the second half of fiscal 2025. That's what we would be engaging with the Reserve Bank on and then seeking their guidance in terms of timelines, etc. As and when there is any update on that, we will certainly inform you. As of this time, we are working on trying to get to fiscal 2026 and AUM of INR 10,000 crore.
Once we get to that size, with just that size, a lot of optionality happens in terms of whether we want to desubsidize it, whether we want to list it, or do what with it. At this point in time, the focus is more execution in terms of moving forward on a distinct business plan as well as creating the options which would facilitate the overall group.
Just a follow-up on this one. The current dispensation given by RBI is for 12 months, which ends in June of 2025. Have you already made an application for extension of that?
I would not like to comment on whether we have made or not. All I'm saying is with a high degree of confidence is that as of right now, we are moving forward to creating an AUM of INR 10,000 crore in Sammaan FinServe as a 100% subsidiary of Sammaan Capital Limited. And we will take it from there.
Okay. Thank you.
Thank you. The next question is from the line of Nilesh Doshi from Prosperity Asset Management LLP. Please go ahead.
Yeah. Hi. Just a small question from my side. In Q2, we did a provision of around INR 4,000 crore. So can we now assume that this current provision is sufficient enough to cover the current size of our loan book and that no additional provision will be made? And another question that what is the blended borrowing cost and lending cost in terms of %? That's all.
Yeah. In terms of provisions, what we spoke at about that time, what I spoke about a few minutes back as a response to the first question as well as through the course of my presentation, we expect an annualized credit cost of about 100 basis points. That is what we are fairly hopeful and confident that we would continue to run with, and the business can get managed within a credit cost of 100 basis points. We currently are borrowing at about a little over 9%, and the book is yielding something around, with all fees, etc., about 13%, of which interest income would be coming at about 11.5%-12%.
Okay. Just another thing. Out of the total, what is the total provision that we have made from our legacy book, and how much of it have we already recovered?
The total provisions that we have made would be in the ballpark of, yeah. So we are carrying existing provisions plus fair value provisions of INR 3,710 crore. We expect from stuff that we have written off, which would be in the ballpark of INR 10,000 crore, recoveries of around INR 3,750 crore. And then there are other recoveries expected of about INR 875 crore. So our imputed provisions are at over INR 8,000 crore.
Thank you. The next question is from the line of ASM Raju, who is an individual investor. Please go ahead.
Good evening, Dharamveer. Good evening. I'd like to ask, when does our AUM start going as it is declining from last year? And when will our rating improve? Overall rating.
Yeah. So as I've been explaining on various calls, you have to look at the AUM in two parts: growth and retail. Growth is net growing. The overall AUM, sorry, growth and legacy. The legacy is there is a net reduction in the legacy basis strategic decision taken. We have done cash collections of INR 13,000 crore. If we continue with these kind of collections, then I believe sometime in the second half of fiscal 2026, we should be in a position to, on a net basis, grow the overall AUM. The growth AUM will be growing faster than the reduction in the legacy AUM. As far as rating upgrade is concerned, it's not on me to be able to give a guidance on that. We have had a long, good, solid relationship with rating agencies. Most of the relationships are 15-20 years old. I think our financials reflect a very solid picture. We expect that through the course of this year, the ratings are put on a positive trajectory.
Exactly which quarter, which month, that is very, very difficult to say.
Okay. Overall, you are doing growth part. Thank you.
Thank you. I'll take one last question, sir.
What about the dividend, sir?
So dividend, we will discuss with the board and propose a small dividend this year and hopefully a larger dividend next year.
Thank you. The next question is from the line of Sumit from MK Ventures. Please go ahead.
Hi, Dawal. Thanks for taking this question. Just a couple of questions. First, on the funding side, with the recent rate cuts and our fundraising also behind us and the new governor being really supportive of the NBFC funding environment, we have seen a lot of changes on the liquidity front. How has the liability side, funding side, eased up for us in terms of the incremental borrowing rate as well as quantum?
That is one. Secondly, on the co-lending, the plan that we have for the next two years, obviously now we are at a stage when we look forward to scale up aggressively. The co-lending book is a vital part of our strategy. What is your sense on the overall system's ability to absorb our volume? If you can give some color on that, a red vision on that, whether if we go to say INR 1 lakh crore in terms of overall book, including the fintech, whether we would be able to do that kind of quantum in terms of off-book to the bankers?
Sure. Thanks so much for the question. Our incremental rates that we are getting are about 35-ish basis points lower than what we were getting. The backbook would get repriced as and when it's a cycle. We typically would be running at MCLR plus three-month MCLR or six-month MCLR. Over the next three to six months, whatever is the reduction in MCLR so far would also get priced into the stock of bank borrowing. From a quantum perspective, last year, as I mentioned, we have done 2.3x . In the first 45 days of the quarter, we've probably done five times of what we would have done in the first 45 days of last year. Very clearly, we are seeing the benefits of a reducing rate environment, a steady hand in terms of regulation, and so on. All of that is clearly flowing in from a capital flow perspective. Your question on co-lending is very important. As we'd mentioned in a couple of our earlier calls, co-lending is one of the three structures which exist: co-lending, direct assignment, and pass-through certificates.
There is both macro and micro traction in all three. I'll spend a minute on this. Co-lending is a business in which has its advantage in terms of the capital circulating very fast. From an RO return on asset, which is the residual left on our balance sheet, it is not as remunerative as direct assignment. Direct assignment requires you to season the book for six months, but then on a longer-term basis, you only have to hold 10%. You're able to work your capital that much harder. We were mindful of our own liquidity requirements and capital requirements, and therefore were not wanting to commit that kind of capital where six months of money is locked in. Now, with all the positive developments of last year, I think we are in a position.
We are steadily working towards building a larger portion of our mix towards direct assignment versus the earlier years. By fiscal 2027, I expect direct assignments to rise to 40%. A very interesting development which is also happening is I have been speaking for the last two years about the government of India focusing on setting up a residential mortgage-backed security issuance system in the country. That has finally taken off. The first transaction of RMBS happened on the 6th of May. Soon, all the other entities would also start working with this company, which has been promoted by the National Housing Bank. PTCs in due course of time would also emerge as a very interesting option just because of the pricing advantage that that instrument would have. The transactions would happen at a ballpark range of 7.5%.
Asset light is somewhere where we will go. We will not get restricted with co-lending or direct assignment or PTC. We will tactically keep moving between these three options depending on where we are getting the maximum return on asset for ourselves and where is the maximum scale that we have been able to build up on disbursements. Co-lending is also restricted to priority sector. There is a proposal to free that up. Let's see where that regulation eventually lands up. At this point in time, just to sort of summarize, it is an asset light strategy which is evolving and tapping into pass-through certificates, direct assignment, or co-lending tactically. As and when whatever is best for us, we will use that and probably use each of them every month or every quarter and assign different proportions.
As things are right now, it will probably be a 40% co-lending, 40% direct assignment, 20% pass-through certificates. This will be the core funding structure which will emerge over the next four to six quarters. If this is something that we are able to move forward on, then I think our desire to get to a 4% sort of ROA should get comfortably met.
Thanks. This has been very helpful.
Thank you, everyone, for your questions, for your support, and for patiently listening in to us. As I said, fiscal 2025 was transformative. Fiscal 2026 should be a year of improving returns, returns for all shareholders, returns on all metrics. That is what the company is looking at. We finally should be in a position to get to a competitive ROE by fiscal 2027. That is the goal with which the management team is working on.
Thank you again, and look forward to speaking to you shortly.
Thank you. On behalf of Sammaan Capital Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your line.