Aditya Birla Capital Limited (ABCAPITAL) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Q4 FY26 earnings conference call of Aditya Birla Capitan Ltd. 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 and then zero on your touchstone phone. I now hand the conference over to Ms. Vishakha Moliye, MD and CEO, Aditya Birla Capital Ltd. Thank you, and over to you, ma'am.

Thank you, and good evening, everyone, and welcome to the earning call of Aditya Birla Capital for Q4 of FY2026. Joining me today are senior members of my team, Bala, Rakesh, Pankaj, Kamlesh, Mayang, Pingji, Vijay, and Dean. I will cover our strategy, financial and business performance, followed by a discussion on performance of our key businesses by our business CEOs. Indian economy continues to demonstrate resilience amid heightened global uncertainty and supply chain disruption arising from the war. Underlying growth momentum in India remains strong, anchored on domestic demand and investment activity. While external volatility and energy prices pressures warrant close monitoring, inflation remains broadly manageable, and policy contentions are stable. At Addis Abillah Capital, we continue to focus on driving quality and profitable growth by leveraging data, digital, and technology. I'm delighted to share that in Israel, we concluded our equity fundraise of 2,750 crore in Additabella housing finance from Advent International for the receipt of all requisite approvals. Now coming to the financial and business performance. Our consolidated profit after tax, excluding the runoff items, increased by 30% year-on-year to 1,124 crore in Q4 of FY26. For the full year of FY26, including the one-off item, a consolidated profit increased by 21%. Our total consolidated revenue due by 12% year-on-year and 12% year-on-year in Q4 of FY26 and 14% year-on-year in FY26. Moving to growth across businesses. During the quarter, we built on our strong growth registry across our businesses, seen in the previous quarters, and further strengthened our market position. This workman in NBSP business grew by 28% year-on-year to Rs. 24,950 crore and in HSP business by 37% year-on-year to Rs. 7,950 crore. In Q4 of FY26, our NBFC portfolio grew by 27% year-on-year to around 1.6 lakh crore rupees, driven by growth in secured and unsecured businesses and personal and consumer loans. SSA portfolio grew by 53% year-on-year to about 47,450 crore rupees. In insurance businesses, we remain among the fastest growing companies. In FY26, the individual first-year premium for our life insurance business grew by 15% year-on-year, and graduation premium for our health insurance business grew by 39% year-on-year. In our AMC business, the quarterly average mutual fund AUM grew by 14% year-on-year to about 4.35 trillion rupees. Moving to profitability. The strong growth across businesses was accompanied by increase in profitability. In NBSC business, the profit after tax increased by 27% year-on-year to 825 crore rupees in Q4 of FY26. The ROA increased by six basis points year-on-year and sequentially to 2.31%. In HSC business, the profit after stats doubled year-on-year to 200 crore rupees in Q4 of FY26 and 647 crore rupees in FY26. The ROA increased by 63 basis points year-on-year and 11 basis points sequentially to 2.07%. Despite the changes in GST, there was an improvement in the profitability of our insurance businesses. In life insurance business, our BND margin expanded by 260 basis points year-on-year to 20.6%. And in the health insurance business, a combined ratio improved from 105% in FY25 to 103% in FY26. Moving to quality of portfolio across our businesses. At Addis Abidla Capital, we follow prudent risk management practices with a strong emphasis of return of capital. We saw a strong quality trend across our businesses despite volatile market conditions and uncertainties in the operating environment. The GS2 and GS3 loans in NBFC businesses declined by 38 basis points sequentially to 2.42% and HFC business declined by 19 basis points sequentially to 0.76%. We have seen no material impact from geopolitical tensions in West Asia on our portfolio. However, we continue to be watchful and will calibrate our strategy by closely monitoring the ongoing development. In our AMC business, the fund performance remains strong with over 75% of equity AUM in top two quartiles for one year returns. Moving to digital and technology, we continue to leverage data and technology as a core growth enabler. AI is now becoming a core operating layer for us and we are scaling up its users across various areas such as underwriting, sales, voice calling, audit and compliance, customer service, and operations. This will significantly enhance customer experience, reduce turnaround times, and improve productivity. Our business CEOs will take you through the select use cases in more detail. At Aditya Birla Capital, we remain excited about the long- and medium-term opportunities in the Indian economy despite the near-term uncertainties and volatilities. Our strategy, disciplined execution, and building blocks that we have put in place give us the confidence to sustain growth, gain market share, and improve profitability while maintaining strong portfolio quality across our businesses. We will continue to closely monitor the ongoing developments in the macroeconomic environment and take appropriate interventions to recalibrate our strategy if necessary. Now, I request Rakesh.

Financial Year 2026. Our AUM reached to Rs. 1,59,916, reflecting an 8% quarter-on-quarter and 27% year-on-year growth. At this growth rate, we would be amongst the fastest-growing diversified MDFCs operating at this case. Bottom-line delivery regained reverse, with profit after tax for the quarter growing 7% sequentially and 27% compared to the same period last year. We nearly doubled our AUM in profits in the last three years, demonstrating a track record of building a franchise that delivers industry-leading growth with strong commitment to scale profitably. This year has been a remarkable journey for us, and I would like to share a few milestones achieved. First, our AUM crossed 1.5 lakh crore in Feb, with our focus segments retail and MSME AUM surpassing 1 lakh crore. We delivered highest-ever quarterly disbursement of Rs. 25,000 crores, up 16% quarter-on-quarter. From an AUM growth standpoint in quarter four, nearly 85% of the growth came from retail and MSME segments. Pujo Plus, our prop-priser B2B platform, nearly doubled in scale this year with its AUM crossing 5,000 crores. From active quality point of view, Our credit cost was at 1.04% in quarter four. It's our lowest ever. Now coming to quarter performance and starting with the new business sourcing, our disbursement for the year was up 25%, driven by strong traction in retail and MSME, our focus segments for growth. Together, these segments accounted for 68% of the total disbursement and grew 33% year-on-year. This performance reflects sustained improvement in employee and branch productivity, enabled by our deliberate re-engineering of customer journeys end-to-end. Since the start of the year turnaround time across retail and MSME, product journeys have reduced by over 30%. These gains have been powered by deeper integration with digital public infrastructure, efficient file processing, and upgrades to our underwriting platforms with best-in-class rule engines and refreshed scorecards. Collectively, this has improved the speed and precision with which we calibrate risk cohorts throughout the year, eliminating the need for manual rework. This year, we also expanded our MSME proposition with new product launches, which has seen a very encouraging response. In our personal and consumer business, we see steady momentum returning with disbursement growing by 60% for the full year to Rs. 18,738 crores. As a result, the AUM grew 8% sequentially and 38% year-on-year to Rs. 21,432 crores. The mix in the total AUM improved by 106 basis points to 13.4. This portfolio has seen continued cohort corrections throughout the year. Also, initiatives such as use of AI calling bots and behavioral analytics have led to higher front-end efficiency and nearly half the flow rate compared to last year, resulting in superior asset quality outcomes. The gross stage two and three for the person and consumer loans portfolio reduced by 50 basis points potentially and 260 basis points year on year. The gross stage three for this segment stands at 1.3% as of March 2036. In quarter four, we disbursed Rs. 12,023 crores to MSME, registering a 21% sequential growth. As a result, our MSME book grew by 31% year-on-year to Rs. 91,451 crores, comprising 57% share in the overall premium. Out of this, 81% is secured and 19% is unsecured. We continue to be a category leader in secured MSME segment in terms of growth and asset quality. Our secured MSME AEM grew at 28-27% year-on-year, which is faster than the industry growth. The asset quality for this segment continues to be healthy and best in class on the back of strong cash flows and the collateral. The growth stage 3 for this segment stands at 1%, down 20 basis points sequentially, and 50 basis points year-on-year. In our unsecured business-owned segment, we saw the disbursements grow at a healthy 28% year-on-year in quarter four. This growth comes on the back of consistent risk cohort calibration and sourcing undertaken throughout the year. Both in this segment benefited from new product launches, which now comprise nearly 20% of full-year disbursement, with a proposition for professionals doing exceeding media. ZeroPlus, a proprietary MSME platform, now supports a full suite of trade credit solutions, powered digitally, and is recognized amongst the top non-bank finance on Fred's Exchange. This growth is also supported by strong improvement in asset quality, with GS2 and GS3 down 90 basis points sequentially. Gross stage 3 for unsecured business loans stands at 1.4%. 14% of the gross stage 3 book is covered under the government guarantee scheme, excluding which the gross stage is at 0.9%. Our corporate segment grew 3% quarter-on-quarter and 15% year-on-year. This segment now comprises 29% of our overall portfolio in line with our strategy to focus on retail and MSME businesses. Asset quality in our wholesale business also continues to improve, that GS2 plus GS3 reduced by 60 basis points year-on-year. Coming to portfolio quality at our entity level, our gross stage 2 and gross stage 3 stands at 2.4%, improving by 38 basis points sequentially and 136 basis points here a minute. At these levels, our gross stage 2 and stage 3 would be our lowest ever in the last five years. I'd further wish to highlight that about 72% of our book is secured. Our overall stage 3 book is well provided with a PCR of almost 48%, which has improved by 358 basis points over last quarter. The impact of improving asset quality is clearly visible on credit costs as well. Our credit costs for the quarter reduced by 19 basis points to 1.04. The full-year credit cost reduced by 13 business points to 1.18%. In fact, our credit cost has been one of the lowest among diversified MDFCs and lowest we have seen in the last five years. Moving to profitability, our net interest income for the full year has increased by 18% to 8,170 crores. Net interest margin, including fees, was at 6.08 for the quarter, and OPEX to AU ratio for the quarter was at 2%. In quarter four, we delivered profit off the tax of 825 growth, registering a growth of 7% quarter-on-quarter and 27% year-on-year. The full-year profit grew 20% to 3,001 growth. The ROI for the quarter increased by 6 basis points, 8.31%. We continue to invest in AI to transform how do we do business, and I am happy to share our progress in realizing measurable gains. Across scale, productivity, and personal experience. Across scale and servicing, AI-driven channels, intelligence enables more autonomous interactions across voice, email, and mobile. By end, FY26, 65% of contact center calls and 71% of service emails were straight through past. Driving a seamless digital experience for our customers. Unknown originations journeys are powered by AI to enable fraud detection by analyzing identity data, digital footprints, and behavioral signals in real time, flagging anomalies and strengthening onboarding and underwriting decisions without adding manual friction. In credit and underwriting, AI and ML are embedded across decisioning workflows, including AI co-pilots for credit assessment memos. This has improved credit manager productivity, reduced underwriting turnaround time, and strengthened consistency, governance, and co-host monitoring. In connection, Janai powered bots enhanced. Contactability, call quality, and self-cure outcomes. AI-led pre-delinquency management optimizes engagement, timing, and channel, supported by 100% call coverage and automated audits. Across operations, Gen.I. use cases span revanche handling, agent upskilling, digital contracting, automated letters, and real-time service NPAs, considering operating efficiency and scalability. Going to FY27, detail and MSME segments will continue to pivot our growth strategy. We will continue to deepen our relationship with customers by offering relevant and timely solutions. We will further leverage our sourcing capability through scaling up the new product variants and leverage our proprietary digital platforms like ABCD app and GeoPlus for direct sourcing. Overall, our approach remains consistent, grow responsibly, stay close to our customers, and deliver steady, long-term value for our shareholders. With that, I will now hand over to Pankaj Gadgil, Indian CEO of the Aussies Canal.

Thank you, Rakesh, and good evening, everyone. Let me begin with the key highlights for Friday 26th. We recorded our highest-ever disbursements of 25,302 crores, registering a growth of 44% by a while. Thank you. ABM has reached 47,004 Kilo-Crores, resulting of 53% by Y. Contribution of the ABG ecosystem stood at 17.4% of retail investment. Phase 2 and 3 reduced to 0.76%, improving by 63 basis points by Y. EVT of Rs.832, increasing 98% by Y. And ROA at 1.88% and ROE at 14.27%. For more detailed financials, please refer to slide 31. Now, covering the strategic highlights and initiatives, FI26 has been a pivotal year for the entire housing industry, supported by strong structural tailwinds, rising urbanization, improving affordability, and an increasing home ownership across income segments. At EPHFL, our guidance at the beginning of FI26 was to achieve an ROA of 2% to 2.2% for the next 6 to 8 quarters. I am pleased to share that we have accelerated this journey with ROA at 2.07 for the poor FI26, supported by strong operating reach and disciplined execution. Our digital transformation journey initiated in FI23 has delivered significant outcomes over the last three years. We have delivered 4X processing scale-up in processing capacity, 96% improvement in productivity, add improvement from 21 days to 12 days, and stage 2 plus 3 has improved from 4.9% in FI23 to 0.76% in FI26. These outcomes send our confidence and position as well to scale sustainably. Welcome to the call. Even with the industry outlook and our performance so far, we remain focused on consistent growth leadership with best-in-class portfolio quality while remaining mindful of the macro environment. On distribution, we have undertaken a comprehensive assessment of our branch footprint and identified high-potential geographies to enhance both coverage and conversion. Accordingly, we plan to open 100 plus branches in FY27, with expansion in tier 2, tier 3 markets to increase distribution width. and deepening penetration in metro and Taiwan cities. This expansion will support us to achieve a 1 lakh crore AUM in the next 24 to 30 months. Tech Digital and AI. As mentioned earlier by Vishakha, Tech Digital and AI continue to be core pillars of our strategy. We are embedding AI across customer and operational journey, Thank you. Supported by structured KBD building through global best practices and internal immersion programs. Let me now briefly highlight a few use cases that are being implemented across ABHFL. FinWise for Sales Manager Productivity. Using AI-enabled DocAssist to ensure the right documents are collected upfront for first-time right login. We are announcing our industry-first AI co-pilot FinWise. for contextual objection handling and predictability for our teams. Finwise Plus is being launched for enabling channel partners with instant knowledge access resulting in higher counter share for us. Second, FinEngage. This is for top-of-the-funnel engagement. This enables query handling from login to disbursement, announcing sales manager face time, and higher productivity. Third, FinDelect. This focuses on back-office automation and faster credit decisions, automated sufficiency and completeness checks, e.g. bank statement period validation, cross-document consistency checks such as DOB. We have generated insight in this investment memos to support faster underwriting decisions. Fourth, FinServ Assist, enhancing customer experience. This enables contextual customer interactions, varying of 40% reduction in repeat calls, and a measurable uplift in Net Promoter Scores. In summary, in FY27, we expect NII and freight calls to be range-bound, both late by capacity and productivity, to continue to drive operating leverage, leading to an ROA of 2.1 to 2.2%. Thank you for the attention, and with this, I'll now hand over the call to Bala, MDN CEO of our asset management company.

Thank you, Pankaj, and thank you and good evening to everyone. At the ABS and AMC, our overall asset management, including alternate assets, our plans are 4,25,000 crores, over 70% a year-on-year. Mutual and quarterly average assets to that 4,25,000 crores, representing 14% a year-on-year increase. Within this, our equity, which has been quarterly average AEM, came at approximately 1,97,000 crores, 70% year-on-year crores. Our SAP contribution for March 2026 improved to 1,204 crores, growing by 11% quarter-on-quarter, supported by 40 lakh contribution coming from SAP accounts. Our industrial portfolio for March 2026 stood at 1.1 crores. The SAP registration for the quarter at approximately 6 lakh, growing by 60% on a quarter-on-quarter basis. Over the last year, we at ABC and NC have made meaningful progress in further strengthening our investment team and sharpening our portfolio-constructing process, resulting in sustained improvement on investment performance, and stronger investor confidence and consistent growth into our flagship fund. Moving to our alternate business, the PMS and AIF category has maintained a strong momentum, complemented by a comprehensive suit of credit offerings. Our PMS and EIFR tests grew significantly, from Lowndes and Treanor Crows in Q4F25. 37570 crores in Q4F826, battling three times growth over the previous year. The SIC mandate accounts for approximately 24-hour crores as of March 2026. After PMF and AIPAM including excluding ASIC, registered year-on-year growth of 14%, reflecting healthy underlying momentum. On the EPFO mandate, we have signed all the agreements and are operationally ready to receive the funds flows, which will come up very, very soon. On the real estate front, our AEM grew by 740 crores, reaching 14% year-on-year growth. We currently have a fundraising interview for the article as Real Estate Credit Opportunities from Series 2, focused on senior security lending to post-approval, Brownfield Real Estate Project across Taiwan City. Our passive business is witnessing significant momentum between 4FA20 average AEM at 41,200 crores, reflecting 25% year-on-year growth. We have invested in line with ABC businesses in centering our technology and digital ecosystem with the launch of our new investor app and announced the partner app. These platforms reflect our commitment to simplifying how our customers interact with us by making them more intuitive and transparent. And beyond infrastructure, we have built an AI foundation across our customer journey through voice AI, WhatsApp integration, and intelligent chatbots that engage customers in ways that resonate with their preferences. We are also happy to announce that we have incorporated our only one subsidiary, IZBLA Sunlight Games International ISC Limited. Moving to financials, Q4FA23 revenue from operations is 4858 crores as compared to 429 crores in Q425, Q4FA23 operating profit is 242 crores as compared to 233 crores in Q4FA25, and Q4FA23 profit after tax is 187 crores as compared to 228 crores in Q4FA25. For the full year, the revenue from operation is scored at 1,000 840 crores as compared to 1,000 640 crores. Operating profit was at 1,051 crores as compared to 940 crores in FY25. And profit of the tax, 975 crores as compared to 931 crores in FY25. With these, I hand over to Kamilaj Rao, MDNCO, Archibald Sun Life Insurance Company.

Thank you, Bala, and good evening to all of you. Highlights of the life insurance business at ABSLI. The UROL industry registered a growth of 10 percent, and financially at 26, and the private life insurance industry growing at 12 percent. During the same period, ABSLI lost a premium growth rate of 15 percent in the individual life insurance segment. The components of this growth for proprietary business growing at 3 percent, and the partnership business growing at 23 percent. In the agency business, we focused on getting the retail part of our business better, and in our direct business, we continued our growth back on productivity. In our proprietary business, the product mix is favorable for further growth, and in order to scale further, we have added 26 more branches, and with this, we now have a distribution network of 450 plus branches across the country. The partnership business grew at 23% came across all our existing 12 partner banks. In the Lancashire space, we now have a handy mix of private as well as public sector banks, and have banks that have both large national presence as well as ones that dominate the retail space. Mindshare in the large banks have grown, and in a large part of the smaller private sector as well as the public sector banks, we continue to have a dominant mindshare of their total business. Axel Bank started with being present in 25% of the total business. And by the end of Q3 last year, we got access to more zones backed by our good performance in the bank. We will, for this year, have access to more than 50 percent of the business of the bank. The partnership business has a balanced product mix. This margin is going up through the year for all banks. We now have 12 banker tie-ups, and we will continue to expand our We will explain the Bank of Presence further, going forward. In the product mix of the individual business, traditional business including protection increased to 67% and ULIP came down to 33%, helping expand margins for the year. We are seeing a healthy growth in the annuity segment with 10% of our utility and new business coming from this segment now. In the group life insurance segment, the private industry grew by 24% and overall industry grew by 19%. Like we have mentioned in previous quarters too, we have had a calibrated approach to interest rate-sensitive business this year, which saw us de-grow in the first half of the year. We are happy to share that for the full year, we have grown by 31%, enabling us to get back to rank 4 in the group life insurance business. A large part of this business or group has come from the profitable unit-lit business. We continue to be at rank 2 in the ULIP AEM in the industry with an AEM size of 16,000 plus crores in the group business. Credit life business delivered strong growth of 40% during financial year 26, supported by all partners, and with 33% now of our business coming from the captive channels of our own NBFC as well as how we finance. In the Group Termalized Insurance Business, we continue to raise business at 18-20% ROE, which is a very healthy renewal book. Group A&M now contributes 26% of the overall A&M at 29,000 crores. Our total premium for financial year 26 stands by 24,779 crores, up by 20% from last year. The 13-month consistency for us grew in the last quarter, reaching 86.1% for the full year. Annual premium grew by 70%, with growth across individuals as well as the group life insurance. Our digital connections now account for 83% of our annual premium. We continue to work on customer lifetime value, which is reflected in our upsell ratio of 32%. On quality parameters, overall customer NPS now stands at 66% compared to 59% last year. Our OPEX to premium ratio stands at 21.2%, including the GSD and the labor law impact for the year. Total AEM now stands at 1,10,525 crores with a worldwide growth of 11%. 22% of this AEM is in equity and the balance 78% in debt. On a daily basis, more than 82% of our funds continue to outperform as compared to the respective benchmarks. Our digital adoption across various areas is demonstrated in the investor deck in slide 48. 100% of the ZBIS customers are onboarded digitally. 83% of all our services are now available digitally. 87% services are HTTP, and our customer self-service ratio now stands at 94%. We are bringing our AI initiatives together under a focus program we call Saras.ai, designed to improve how we operate across policy issuance, underwriting, and servicing. Through Saras.ai, we are reducing manual effort, enabling faster underwriting decisions, and making policy issuance and services more responsive, especially through AI-led handling of conversations across email, calls, and WhatsApp. We are also equipping our advisors with better insights and tools to improve productivity and customer engagement. The focus is clear. Use AI to enhance human judgment, not just replace it, and drive greater speed, consistency, and quality in everything that we do. On value, performance parameters or solvency stands at 1.78 or 178%. Embitted value is now at 16,447 crores, which grew at 12%, with an ROE of 13.2% for the year. Our net margins, like Vishakha mentioned, are now at 20.6%, 160 basis points higher than last year at 18%. We observed margin expansion due to a controlled ULIP mix, an increase in protection and annuity mix, apart from heavy rider attachments. The traditional business did see an uptick in margin on account of favorable interest rate and the steepness of the yield curve in the second half of the year, which partially helped margins and partially helped offset the GST impact for the year. Our guidance continues to grow the individual FIP at a cadre of 20% plus for the next three years. As achieving this growth, we intend maintaining our current B&B margins in the 18 to 20% range and in absolute numbers, double the value of our net B&B in the next three years' time. With this, I hand over to Mike, the NCO for Health Insurance Businesses.

Thanks, Kandesh, and I will now share an overview of the performance of our health insurance business. It was a very interesting year for the insurance sector, reduction in GS-8, and then the new insurance act, new labor costs, and the leaders being brought to our solution to IFRS support income in FY27. Viewers that all changes supported for sectors' long-term growth, but with some issues addressed in the short-term. Presenting our performance, we continue to build on growth momentum in maintaining our position as a faster and growing side player given by Daiya. On F526, as for the whole accounting regulation, we achieved a growth rate of 7292 crores, presenting a strong 39% YOY growth. Even on a 1xN basis, our growth rate of 6855 crores, reflecting a similar 39% growth. Our market shares have moved from 12.6% to 13.7% and YOY increase up under its end basis point. We grew strongly across both retail and group businesses. The retail franchise experienced a large 43% YOY growth and it continues to be diversified across retail distribution channels. The factory channel with an agent based of over 1.86 lakh even registered a 36% growth. All our major bank and business alliance partnerships also experience good growth. Our corporate business delivered a growth of 35% in the last year, driven by our focus and discipline strategy to create a sustainable franchise segment. As we shared earlier, we have now taken a differentiated health-first model to corporate also, and we are seeing very positive response from them. On the profitability front, our net profit for FY26 today at 39 crores as per the new company recognition. Profit includes the impact of new labor code and net GST impact of close to 40 plus crore. As per the old accounting regulations without 1xN, the net profit for FY26 stood at 85 crore. A combined ratio for FY26 under the old accounting regulations was at 102%, and the new accounting framework under 1xN ratio was 103% versus the 105% on a comparable basis. These improvements underscore our continued focus on human economics and thus overall profitability ahead of industry. We believe our robust growth and superior human economics driven by our digital health first model. Please continue to help us grow ahead of the market. Our health first model is resonating with our consumers with nearly 40 to 45% of our consumers, retail consumers, engaging with our health. We use an AI-driven consumer engagement engine. 11.25% of our eligible consumers earned good health-based incentives, up from 9% last year, reflecting a very deep engagement with our wellness ecosystem. These consumers continue to exhibit an 8% lower loss ratio and 11% better persistency on an absolute basis, as these are shown in slides 59 and 60. Similarly, investments and managing customers with high health risks to interventions. More than 70,000 lives have left to improvement in their loss ratios of more than 7-8%. Overall, this has helped keep our loss ratios well under control. We believe this model, which now other competitors are also trying to look at previously, but needs a large investment, commitment, and persistent effort for many years to mature gives us a large competitive advantage as we scale further, including the corporate side of our business. We are promised for insurance. The whole focus is on claims experience where we have made investments in the state-of-art AIML-driven claim certification engine, which continues to enhance both customer satisfaction and also eliminate leakages and wastages. We now process more than 25% of our pre-off requests straight-through with no human intervention. We are investing consistently in data and analytics capabilities to create efficiencies across the business life cycle. For example, apart from claims, as I shared earlier, users of Gen AI help bring in 35-40% productivity improvement in underwriting alone. Use Identic AI extensively in remote management leading to significant cost reduction, but also better customer confidence leading to very good traction in the remote. Ineventary capabilities across consumer health and insurance, like cycling and health. We use our consumer app Active Health to create very high consumer engagement. It has led to our MOU costing 6 lakh consumers. We continue to remain very optimistic for our business, and FY27 marks a significant milestone for APHI as we enter our 10th year of operation. We will continue to invest more in our proprietary distribution franchise, work towards 100% cost. Thank you, Mayank. And this concludes our remarks on Q4 F526 performance, and we'll be very happy to take the webinar in the presentation.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and then 1 on their touch-tone phone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Your first question comes from the line of Chintan Shah from ICICI Securities. Please go ahead.

Yeah, thank you for the opportunity and congratulations on the quarter. So, this first question on the margins. So, margins on the NDSP business. The margins have actually compressed like almost 4 bits. And this is despite like strong growth seen in the unsecured business as well. And this unsecured growth has been kind of continuing since the last two quarters now. So where do we see, when do we see the margins improving? So also can you give the delta between secured and unsecured ease? Yeah, that's the first question.

So, Shintan, if you look at the margins have been more or less stable over the previous quarter, you see from quarter one, the quarter one of last financial year, the margin was 5.97, which is around 6.08, as you rightly mentioned, slightly four basis point down because there were some NPM losses and all, which were there. As we grow our unsecured business, you're right, that last couple of quarters, our unsecured business is growing. Our unsecured person and consumer is still 13.4% of our overall product mix, which used to be 19%. Our unsecured business, which is also higher yield compared to the overall portfolio, that is at 11%. So combined together, unsecured business and personal and consumer is around 23.4%. But if we improve both these segments even by 200 basis points in the next two, three quarters, we will see expansion of margins by almost 25, 30 basis points. So that's how we are really looking at in terms of improving. And we did this calculation in terms of if the growth sustains at the current level, then what is the kind of margin we can look at.

Sure. But correspondingly, with the rise in margins also, I think credit cost seems to be at almost historical low. So there could be also some normalization expected here, plus growing in the unsecured piece would also entail a higher credit cost requirement. So probably, I'm just trying to understand that in terms of ROA expansion, so as you already mentioned, 24-30 on the margin front and somewhat probably normalization of the credit cost front. So, what could be the ROA which we could be looking at in 27?

We are looking at, by end of this year, we are looking at 2.5% ROA. This is what we are looking at. And as I said, margin expansion is the one way in terms of achieving that. And your point on credit cost, yes, credit cost of 1.04% is the lowest for us. And as we grow our unsecured business, we expect this to, we have always guided that it will be in around 1.2, 1.1. So I think 1.1 to 1.2 kind of a range, it will remain in the similar range is what we expect. We didn't, even if that was secured with this group.

Okay, sure. And lastly, on this AI front, I think we have, we talked a lot about AI and we probably seem to be making a sizable investment. So ultimately means what is the probably result kind of expected from this? So I think margin of credit cost is already at historical low. So probably won't delta won't come much from that front. Also names we are expecting it to improve that is largely due to change in the mix. So, OPEX is likely to further model due to AI or is it the customer quality which is likely to improve?

Thanks.

In terms of, if you look at underwriting, I think stages can come down in terms of earlier, if there were multiple stages, that can come down, and that has improved that turnaround time, which I spoke about in my opening remarks. Clearly, the customer experience, these things will improve significantly, and which is improving. We are seeing a net promoter score both on onboarding and service going up. Self-cure on collections has significantly improved in terms of because of the usage of AI and bots. Across, we should see branch productivity and employee productivity improving, customer experience improving. In terms of your OPEX, if you see for the full year, it's 1.93, for the quarter, it's 2%. So it's one of the better cost-income ratios in the industry. We will see what efficiency we can draw on this line as well.

So, this is really helpful. I will get back in the queue of further questions. Thank you and all the very good.

Thanks, Shintran.

Thank you. The next question comes from the line of Jejuan Gao with Sean Field. Please go ahead.

Thank you for the opportunity, and congratulations on behalf of all of you. I'm sorry to interrupt.

Mr. Gao, your line is quite muffled, and I request you to use . So, it is still not very much. So, your line is muffled. This is slightly better. Management, are you able to hear the participants clearly?

Not with absolute clarity.

Okay, please go ahead, Shishwan.

Yeah, on the margin, I just want to follow up on that. So, you know, what's up margin can define our unsecured class, DL, and class, you know, mix have run up to percentage points here and here. But the margin is almost, you know, what is raised from here and here. I just want to understand why hasn't the increase in the open area mix.

I think if I understood your question right, you are talking about that unsecured has grown and our margins in terms of reflection on the margin. What I mentioned for my earlier question response also is that the overall product mix if we look at. That is still at 13.4%. Personal and consumer was at 13.4%, so all other segments have also grown quite well. So, still product mixes, earlier we used to have 19%, our personal and consumer used to be 19% of our overall portfolio, which two years back we had calibrated. We are coming back with the growth. So, in the next two, three quarters, as it keeps growing, as I mentioned, by every 200 basis point improvement, there will be a margin expansion the way we see it in this business. So I think if it continues to grow at the current rate, if you see last quarter, we have grown by 8% quarter on quarter, and if that continues, in the next two, three quarters, we will see the margins expand.

Thank you. The next question comes from the line of Avinash Singh from MJ Global. Please go ahead.

Hi, good evening. Thank you for the opportunity. A couple of questions. The first one is on your credit cost, I mean, performance. FY26 is very great and you are guiding again despite increasing and secure. Keeping it 1.1 to 1.2%. Can you just help us? I mean, what is your kind of a base case assumption behind this 1.1 to 1.2% guidance in terms of the current conflict? Because this current conflict is, of course, on current scenario and that sort of is dragging on. So based on your kind of assessment, what is your base case assessment where you are guiding for this 1.1 to 1.2%. And the first question is on if you were to look, I mean, at the margins. The kind of diversified business you have, though, of course, I mean, you are the leader in OPEX and trade costs is really impressive, and that's why, of course, you allowed it to operate a slightly lower margin. But when you are talking of margin expense, it is largely where my product makes. So based on the market dynamics and competitive analysis, can you sort of indicate where are you versus competition in terms of, you know, ease? Is it, I mean, that you are pricing it lower or it is kind of a parity to some of the, you know, mid-side bank or the large NDFC that operates? So, I mean, how are you placed versus competitive dynamics in this segment in terms of each you are offering? Because the kind of, you know, one of the best cost of fund you have, but the margins are kind of slightly, it looks like they have moderated. Thanks.

So, Avinash, your first question was, how are we giving, what is our base case in terms of the credit cost, which we are giving a guidance for? The reason for that is almost 70 to 73 percent of our loan book is secure. And when I say secure, it's secured by a collateral, which is not depreciating in nature, which is appreciating in nature, majority backed by real estate collateral, primarily the SME owners, self-occupied, Residences, offices, so that's how, and in terms of pricing, if you look at it, and you mentioned, we compare quite well with the other NDFC in this segment. Our yield in this segment is almost 12.2%, so I think quite well priced. What was the other question? In the security, if you look at, I think our pricing is quite well priced compared to the industry. And in terms of how the margins, yes, we have one of the best costs of borrowing, best credit costs. I think from here on, as we, still our person and consumer is pretty small in the overall product mix. And so as I have been saying, 13% is our person and consumer, which is a high-yield product for us. And that is still 13%. The moment it improves every 200, 300 basis point, you will see a margin expansion in this for us. And credit cost, because still, even 200, 300 basis point, we go up still 70%, close to 70% of our loan book will be secured. So that's the reason we are quite confident on the credit cost. And with that change in the product mix, Expansion of module.

Okay, thank you. Thank you. The next question comes from the line of Arun Antony from GM Financial. Please go ahead.

Hi. Thank you for your question. Just a couple of questions. So one, when I see the numbers for this quarter, the OPEX growth has sharply outpaved the aim growth and this is for the last three quarters as well. If you could get some light on why this OPEX growth has been increasing and specifically for this quarter. And another question would be, despite increasing the PNC exposure, the AU numbers have been increasing, but disbursement figures have been broadly flat for the PNC as well as the unsecured space. So why is this also happening? So these are my two questions.

So OPEX has been, we have been seeing our investment in our retail, retail businesses and MSME business, which we have been doing over the last few years and few quarters as well. So that's the only reason which on the OPEX side we can, as I mentioned, there will be some normalization which will happen. So that's the reason on the OPEX.

Well, is there any specific reason for a sharp rice in this quarter?

Well, there's no specific reason for that.

Thank you.

And then on the disbursement piece? Yeah, so disbursement piece, I'll tell you, on the personal and consumer, as we have been saying, we are quite calibrated in terms of how much we will disburse. So the disbursement is slattish, yes, and we are looking at a very, very calibrated growth in the current environment. On the unsecured business side, this last quarter also I had mentioned that There is a supply chain business and line of credit which we don't include in our disbursement numbers because those are churning portfolios, and that's the reason you don't see that kind of numbers in terms of disbursement, but that adds to the AUM. Okay, okay. Some segment and some products which we don't count in are disbursements.

Okay, okay, excellent. Thank you.

Thank you. The next question comes from the line of Midesh Jain from Investec. Please go ahead.

Thanks for the opportunity. In housing plans also, we have seen margin compression. On a QMQ basis. So what is the reason for that and what is the outlook for margins and ROA in the housing finance business for FMP7?

Yeah. So, Prakash here, so if you see the NIM for Q3, Q3 NIM was 5.22 for us and Q4 NIM 5.03. So observation is a 19-bit that's gone now. If you build on it, you know, a bit deeper, you see that the NIM… The other income typically is a function of three important parameters. One is, of course, the direct assignment that you do. Second is, Thank you very much. Thank you. So, the reason of the other income being down is essentially because the DA has been low, and last but not the least, mark-to-market in Q4 was also there, because, you know, some maturities are held to maturity, and others are also linked to market. So, all of us know how the G6 actually moved, and there was, you know, some laws that we have also had a mark-to-market. So, that is basically the reason why we see, you know, the overall MI being 5.03 versus 5.22. As I mentioned earlier, you know, in my opening remarks, we are estimating the NII to be range-bound in this year. So they should be in the range of about 5.10 to 5.13. There will definitely be some compression in threats, but as you know, the capital has come in, so there will be some support that we have on the call side of it. So that should help us, you know, in maintaining the NII at the current levels that we are, you know, talking. We are demonstrating operating efficiency, as you would have noticed, versus last school financial year against 2.94. We've closed the year, OPEX to average loan to get 2.4 percent, so it is about a 50% decrease. So this year also we anticipate app number to be closed at about 2.10, and this is coming at the back of the 100 plus branches that they're opening. So actually we are building an operating efficiency, the net of increasing the branches. We expect the OPEX to be in the range of about 2.13. So that brings us to 2.13, that is 3%, and with the credit cost being at 28 basis points, we should have a 3x ROI of 2.72, which should translate to an ROI between 2.10 to 2.17. That is what we are targeting right now. And on credit costs, we're finding confidence because if you look at the trajectory of the credit cost. So, both in absolute and in person value, we have come down. So, stage 2 plus stage 3 for us is among the top two in the industry. It is currently tending at 76 base points, 44 base points of stage 3, and 32 base points of stage 2. So, having a very strong stage 2 performance gives a lot of confidence that the great cost will be normalized, and therefore, even our confidence of... Being in that ROA trajectory of between 2.1 and 2.15, I think is where we are, along with very, very robust growth, and that's why I spoke about the 1 lakh growth of the year in the next 24 to 30 months, so very focused on asset quality and also growth.

Sure, sure. And from a medium term perspective, how do you see ROA, ROE for Housing Connects business?

Yeah, so ROA I've mentioned 5527, ROA will be in that range of 2.10 to 2.15. Because currently the capital has come in, you would have noticed that it was coming in already. So naturally the ROE will be lesser than the last financial year. It will be in that range of land part at 12%. Currently we are at 1427 at the end of the financial year. The Biba is becoming... It continues to rise because, as you would have seen, we have always been in the divide of about 6.5, 6.1 or 6.5. So, as the years have progressed, in the next 24 months, you will see the ROE is crossing 15%. That is, you know, our trajectory.

Sure. Now, in life insurance, there is a negative operating variance and assumption change variance. So, what are the reasons for that?

So, in the breach that you see, we are on the verge of shifting from the IFRS regime, and typically in IFRS regime, the conservatism that you have in your valuation interest rate actually does not unwind for you. So what we've done is we've revisited some of our assumptions as we build it for moving into the IFRS regime in the next one, one and a half year. It's supposed to be 26 or 27 because we've asked for a forbearance to say we will go to IFRS in the next year to 27. We've had some... Changing assumptions on the reduced rate of benefits on some of our products. So that has got built in as we speak. So we are showing operating variance negative on account of these factors. But like I said, the large part of the reason is on account of change of the assumption, which we think when we move into from, I guess, world to an IFRS world, it may be a prudent step to do at this point in time.

Sure, and these assumptions are on which parameters? Persistency or?

We are on parameters related to your portfolio getting a little better. So for the lapses that you assume if they are lesser, some of it because it is lesser than what you planned for, you obviously need to bring in better reserving. So some of the assumptions that you make is the experience does not turn out to be the same, but in a way, on a long-term basis, it is good for the portfolio because you're seeing less slashes, so obviously it will contribute to the embedded value growth in future times to come. So you do this on an annual basis, and we did this in the month of January. We do this every year.

Sure. And in life insurance, we have also been in a growing pretty well versus industry growth. How do you see growth next year, FI27?

So like I said, we've said, maintained that we will definitely want to grow at 20% plus. Look at the CAGR of the life insurance. This is the last two years in individual. We've been at about 23-24. It's been our CAGR for the last two years. And in group, we've been at about 26-27. Like I said, as you get new bank infrastructure, like I said, Axis, we are present in only about 20-25% of the business for the whole of last year. It will be close to about 50%. So all of this will help us maintain that CAGR for sure in the next two, three years to come.

Sure, sure. And last question is on NVFC. So, have we seen a spread compression on a line of business basis? Because overall margins have, there's a marginal decline in margin this quarter. Last quarter also, I think margins, there has been a mixed shift towards higher yielding portfolio, but that is not visible. Probably the numbers have been marginally shifted. But on a line of business basis, have we seen a spread compression? Basically, in secure business, are we seeing a spread compression?

No, Nitesh, we haven't seen any compression. It's primarily the outcome of the product mix is what it is. And if you see from quarter three, it has not compressed. Quarter two was 6.06. It improved to 6.12. It's 6.08 in this quarter. And the reason I mentioned one is, yes, quarter four is slightly more competitive and everything else, but there was an MTM loss because of the G-Sec, which had gone up. That has impacted our margins by info basis points, because we believe it's quite stable, and we should be able to improve from here.

Sure. Thank you. Thank you. That's it for my time.

Thank you. Ladies and gentlemen, due to time constraints, we will take this as our last question. I now hand the conference over to Ms. Vishakha Mulye for closing comments.

So, thank you again for joining us today evening, and we look forward to keep in touch. If there are any more questions, feel free to get in touch with any of us. Thank you.

Thank you. On behalf of Aditya Birla Capital Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your...