Capri Global Capital Limited (CGCL) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the Capri Global Capital Limited Q4 FY26 Earnings Conference Call. As a reminder, all participant lines will be in a 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 has been recorded. I now hand the conference over to Mr. Hardik Doshi. Thank you and over to you, sir.

Good afternoon, everyone, and warm welcome to E4 FY26 Earnings Call for Capri Global Capital Limited. This is Hazik Doshi, Head Corporate Finance and Investor Relations. Before we begin, let me read out a brief disclaimer. The discussion on today's call regarding Capri Global Capital Limited's earnings performance is based on judgments derived from the results declared and information on business opportunities available to the company at this time. The company's performance is subject to risk, uncertainty, and assumptions that could cause results to differ in future. In that context, participants on today's call are advised to consider the same while interpreting the results. The full disclaimer is available on slide 63 of the earnings presentation, which is available on our website. Participants are requested to kindly take a note of the same. Format of today's call would be opening remarks by the management team, followed by Q&A. With that, let me now introduce the management team from Capri Global Capital, present on the call. With us today, we have Mr. Rajesh Sharma, Managing Director and Promoter, Ms. Divya Sutter, Executive Director, Business Strategy, Mr. Kishore Loda, Chief Financial Officer, and Mr. Sanjeev Srivastava, Chief Risk Officer. I would now request our Managing Director, Mr. Rajesh Sharma, to present his opening remarks on the results. Over to you, sir.

Yeah, thank you, Azik. Good evening, everyone. I hope you all are doing well. We announced our audited financial results for the fourth quarter of FY26 on 30th April. I trust you have had the opportunity to go through our earning presentation, which is also available on our website. Before I move on to the financial and operational highlights, I would like to touch upon the broader operating environment and the key developments during the quarter. Recent geopolitical situations triggered demand of fuels due to supply chain disruptions and higher fuel and energy costs. However, India's economy continues to demonstrate resilience amid a mixed and uncertain global macroeconomic backdrop with domestic high-frequency indicators for March not reflecting much adverse impact. Amidst this soft microenvironment, I am delighted to share a key development in the history of Capri Global. The company has secured credit rating from two leading global rating agencies, long-term issuer default rating of WB- with stable outlook by Fitch ratings and BA3 corporate family ratings with stable outlook by Moody's ratings. Marking a significant milestone in our growth journey and offering strong validation of our business model, governance standard, and risk management practices. These ratings reflect company's diversified and 100% secured lending portfolio, strong asset quality, robust capitalization, and focus on prudent lending and risk management processes. The stable outlook from both agencies underscore confidence in the company's ability to sustain its growth momentum while maintaining financial discipline. With this backdrop, I am pleased to say that Capri Global's delivered Strong quarterly performance in Q4 FY26, continuing its growth momentum and maintaining asset quality while delivering highest ever quarterly profit of Rs. 283 crores, a 59% increase year-on-year and full year profit of Rs. 949 crores, almost double from the last year. Also, we delivered marked improvement in asset quality this quarter with gross NPA declining to 0.9%. Now, coming to our details, business and earning performance during the quarter, we continued our strong momentum across all lending businesses in fourth quarter FY26, our consolidated AUM student rupees 36,623 crores, reflecting a robust 60% year-on-year growth and 20% quarter-on-quarter growth. Gold loans grew at impressive 111% year-on-year and MSME grew at healthy 23% year-on-year, while housing loans rose 43% year-on-year. Businessmen for the quarter rose 116% year-on-year, Rs. 18,145, on account of growing customer base and widening distribution network. Our growth remains granular, diversified, and retail late, with our customer base now exceeding 6.9 lakhs. For our gold loan business, we delivered a strong and well-balanced performance, in line with our strategic objective of growth driven by branch expansion while maintaining focus on effective risk management. During the quarter, we further expanded our presence in high-potential southern and eastern regions of India with a net addition of 89 new branches. Manly, 36 in Telangana, 18 in Andhra Pradesh, 8 in Karnataka, and 20 in Odisha to support the next phase of growth. Good morning, everyone. to Rs.6965 crore, a sequential increase of 33% quarter-on-quarter, led by healthy customer demand and trust. Our aggregate branch productivity continues to see strong ends and has improved now from Rs.14 crores per branch in previous quarter to Rs.17 crores per branch. Our gold loan employee base increased only by 10% year-in-year, resulting in significant improvement in our employee productivity from Rs. 1.6 crore a year to Rs. 3.1 crore now. Considering the volatility in gold loan prices, we maintain conservative loan-to-value ratios on new disbursements while ensuring strong collection practices across the portfolio. Our efforts in controlling asset quality proved effective. The gross NPA in gold loan stood amongst the best in the industry at 0.3%, underscoring our focus on management and portfolio quality. Overall, Q4 marked strong performance for the gold loan business, combining growth through geographical diversification alongside risk discipline and operational execution. The 90% branch is now operating above the break-even threshold of Rs. 5 crore AUM per branch. Our MSME AUM grew to Rs. 6,465 crore, up 23% on year on year, and this investment is due to Rs. 2,550 crore for FY26, up 65% year on year. Led by steady execution and network expansion, within MSME, our micro lab business continues to gain traction, with AUM rising to 824 crores, age 8, the end of Q4 FY26. This vertical enable us to serve emerging self-employed borrowers with smaller ticket size requirements. In this segment, our immediate priority is to leverage robust technological interventions to boost self-productivity and enhance operating efficiency across the expanded network before moving into the next phase of branch expansion. Our housing AUM is to date Rs. 7,447 crores, delivering a year-on-year growth of 43%. We continue to see resilient demand across the affordable housing segment, where rising income levels and stable interest rate regime are driving demand for housing loans. With foray into high potential South India market by entering states such as Andhra Pradesh in the previous quarter, we now have strengthened our presence in South India with 25 branches. The strategic expansion step towards geographical diversification, increasing portfolio granularity, and support yield expansion over time. Further, our yields in housing finance segment have increased consistently, a result of our efforts to pivot the next word self-employed customer segment, which now comprises 74% of AUF. Our construction finance AEM saw healthy growth of 38% year-on-year, Rs. 5,708,000, spread across 282 active projects, with an average sanction, ticket size, Rs. 48,000, and outstanding portfolio, ticket size, Rs. 20,000, the book remains granular and well-diversified by geography, reflecting our focus on working with mid-sized developers in metro and tier 1 cities. We continue to emphasize discipline and writing through rigorous due diligence and escrow-based cash flow management ensuring a risk containment approach. Our total branch network expanded to 1429 locations in Q4 FY26 with a net addition of 98 branches during the quarter and 318 branches during the year. We continue to invest in expanding our network and geographical footprint in line with our goal of becoming a large-scale PanIndia retail lender. Let me now provide an update on our core earnings. Our blended yields and spreads on net advances remain healthy in the quarter at 16.3% and 7.1% respectively, driven by increasing share of high yields, product, and decline in cost of funds. Our net interest income for Q4 FY26 student to be 596 crore of 56% year-on-year and FY26 student to be 1,998 crore of 50% year-on-year driven by strong loan book expansion. In line with our focus on building a diversified and resilient earnings profile, we continued to strengthen our non-interest income stream in Q4 FY26, reinforcing our strategy of generating recurring quality of income. Non-interest income grew 36% year-on-year to Rs. 247 crores, contributing 29% of our net total income for the quarter. This strong increase was largely driven by growth in Commission on Insurance Distribution and Co-Lending Fee Income. In our insurance distribution business, we generated net fee income over Rs. 65 crore during the quarter and Rs. 153 crore for the full year. With the help of our upgraded fully digital end-to-end platform, CapriCare launched in Q3. Third quarter, we can now issue policy real-time with speed and convenience, thus significantly easing insurance adoption across our retail customer base and scale our insurance distribution. While our loan protection insurance has addressed life-related, we have embedded preventive healthcare and wellness solutions such as annual health screening and cashless consultation into the CapriCare ecosystem, evolving it from a claim-driven product offering into a proactive health and protection partner for our customers. Going forward, we will continue to strengthen our insurance offering for gold loans and MSME customers while expanding into cross-sell for retail health and motor insurance through digital channels. This digital fast integrated approach is expected to drive higher insurance penetration, improve customer engagement, and meaningfully enhance fee income contribution over time. Our co-lending AUM surged 91% year-on-year and 9% quarter-on-quarter at Rs. 7,783 crore, now accounting for 21% of total AUM. Reflecting our strategy of capital-efficient growth, as you would be aware, new co-lending guidelines have come into effect from 1st Jan 2026, and as per that, industry will start moving to new co-lending guidelines once existing contracts expire. Because of this, there could be temporary slowdown in co-lending volume for couple of quarters, but eventually volume should come back. Going forward, we would also be exploring direct assignment route at a faster phase and higher volume as there is a good demand for the same from partner banks considering the PSL nature of our loan book as well as gold portfolio. Our co-lending and BA income for the quarter-to-day to be 97 crore, up 76% year-on-year, and down 16% quarter-on-quarter, driven by higher dispersal volume and deeper engagement with partner banks. Our car loan distribution business maintains its steady momentum with origination of Rs. 3,492 crore in Q4 FY26, up 18% year-on-year, and Rs. 11,910 crore in FY26, up 13% year-on-year. With a growing footprint and deep relationship across 14 partner banks and financial institutions, we have built a scalable platform with Pan India Network in this segment with potential to monetize further for distribution of other products. On the expenses front, our operating expenses increased 7% quarter-on-quarter. This was mainly driven by net addition of 692 employees, up 5% quarter-on-quarter on account of new branch additions. Our continued focus on operating efficiency is visible with the cost-to-income ratio improving to 49.4% in Q4 FY26 compared with 54.8% in Q4 FY25. This sharp improvement signifies the benefit of investment in technology, a maturing branch network, rising productivity, and improving operating leverage across our businesses. As a result of margin expansion, operating efficiency, improvement, and strong traction in fee income, our pre-provision operating profit sells 68% year-on-year to Rs. 427 crore for the quarter and robust 97% year-on-year to Rs. 1,446 crore for full year. Further, we continued our strong profitability momentum in Q4 FY26, delivering a robust pair of Rs. 283 crores of 59% year-on-year and with 949 crores for FY26. Strong, up strong 98% year-on-year. Our return ratios considerably improved during FY26 with return on average equity at 16.5% versus 11.8% for previous year, and return on average assets at 3.5% for the year versus 2.7% for the previous year. Now, coming to our asset quality, we saw marked improvement on our asset quality across each of our business segments. Our gross stage 2 assets decreased by Rs. 100 crore driven by reduction of Rs. 22 crore in MSME, Rs. 18 crore in gold, Rs. 53 crore in construction finance. The decline in construction finance is on account of strong collection efforts and rollback of three accounts. Our gross stage 2 ratio for the quarter was down to 2.8% from 4% in previous quarters. Our gross stage 3 asset decreased by Rs.11 crore quarter on quarter mainly driven by decrease in housing loan. Our gross stage 3 ratio improved quarter on quarter by gold loan to 0.3% for housing loan 1% and remained flat 3% for MSME and 0.3% for construction finance. At consolidated level, our gross stage 3 ratio improved further to 0.9% down sequentially by 61 basis, while net stage 3 ratio stood at 0.5% down 35 basis sequentially, which is amongst the top quartile. In the industry, our impairment cost for the quarter student is 54 crore. This is largely attributed to stage 1 provisions on account of increase in the loan book and included student student. Management overlay and provision to account for evolving macroeconomic conditions of Rs.16 crore. Historically, our credit cost has remained in the range of 0.6 to 0.7% of the average total assets. At consolidated level, our provision coverage ratio on stage 3 assets remained steady at 41.2%. In our segment-wise, PCR also remained healthy and amongst the best in the RPA group. Let me now talk about our liability side. Our borrowings increased by 55% year-on-year and incremental borrowing. Sanction limits for the full year was around Rs. 10,950 crore. We added 15 new lender relationships this year, taking the active relationship now to 35 plus. We also continue to diversify our borrowing by mix by raising funds through other instruments such as non-convertible debentures and commercial papers. During the year, we raised Rs. 2,187 crore from non-convertible debentures and commercial papers. In addition, we also closed last week our second public NCD issuance for Rs. 489 crore with average tenure of 4 years. As a result of MCLR reduction in our active effort on repricing existing borrowings, our cost of borrowings declined further by 18 basis, quarter and quarter. Our balance sheet remains robust with low leverage ratio of 3.3X, providing ample headroom to support growth across business segments. Our standalone capital advocacy ratio CGCL is about 25.8% and 27.7% for a housing grant subsidy. Our liquidity remains comfortable with over Rs.3,964 in cash and bank balances, investment, and undrawn credit line across CGCL and CGHFL. On the technology front, this year, our focus was something fundamental over building fast, that is to build right. Four years ago, we made a deliberate structural choice. To move away from being a traditional NGFC that operates on technology to becoming a platform-native AI-first financial institution. What we have built is not a static endpoint. It is a scalable architecture that will continue to deepen operating leverage as we progressively embedded AI across the technology stack. Let me anchor this in the numbers first. As you all are aware, our union grew 60% year-on-year, businessmen grew by 83%, while headcount grew just by 19%. That delta between disbursement growth and headcount growth is not incidental. It reflects technology and AI replacing linear growth with intelligent scale. And this is clearly visible in our financial outcomes. As mentioned, our cost to income ratio for the year has compressed to 49% from 60% a year earlier and return on average assets expanded to 3.5% and return on average equity expanded to 60.5%. Capri today operates on real-time, event-driven architecture, where every customer interaction across sourcing, underwriting, servicing, and collection is captured within our in-house lending ecosystem and instantly converted into decision-grade intelligence. In Q4 alone, we processed over 115,000 customers' interactions through speech-to-text pipeline and educated more than 40,000 multilingual AI voice interactions, entirely autonomous and without human intervention. The real value, however, is not in the volume. It is in the conversion of interaction into intelligence. These interactions feed into a continuous learning feedback-driven system that generated over 285,000 structured intelligence output during a quarter. Each one tagged, scored, and rooted into a credit risk and collection engine in real time. We have fundamentally graduated from process-based learning to data-empowered decisioning. Our bureau rule engine processed over 61,000 applications in Q4 alone. Our automated bank statement analysis pipelines completed over 29,000 assessments without human intervention. What this means in practice is that a growing share of our book is now witnessing reduced variability, compressed stats, and improved portfolio behavior coupled with consistency. During Q4 FY26, our Capri Loans customer app recorded over 31.5 lakh digital customer engagement. In terms of financial throughput, the app facilitated transaction of approximately Rs. 784 crore during the quarter. For the full year FY26, the app delivered over 85 lakhs customer engagement with an aggregate transaction value exceeding Rs. 1700 crore. On the collection side, the system operates as a predictive, closed-loop framework, which requires approximately 1,45,000 automated nudges every month, driven by AI-led action models. Our platform is built on an API-first microservices-driven architecture, which handles over 310 million actual API calls in a single month across our various applications. Behind these external calls are billions of internal interactions that allows us to run the entire landing life cycles in real time. At this scale, we are no longer operating applications. We are running a unified intelligence platform that power fast, high-quality decisions at a scale. Let me now come to what we believe is the most important strategic milestone in this transformation journey. While most institutions today are consumers of AI, they integrate third-party LLM, layer workflows on top, and position that is transformation. Capri has moved into a different category. We have built and deployed our own specialized small language model, SSLM, that is domain trained model, purpose built for financial services, use cases in India, and already operating in production for collection communication across voice and messaging channels. Because it runs within a controlled closed-loop environment, it delivers our critical properties simultaneously, that is, low latency, high domain accuracy, zero external data leakage, and near-zero hallucination risk. Equally important, every output is auditable, explainable, and aligned with regulatory expectations. This is not an incremental layer on top of existing systems. It is a fundamental shift in how intelligence is created, controlled, and deployed within the organization. I can now say that Capri Technology and AI has become a mode and not merely a tool. On the ESG front, I am pleased to share that our ESG practices have been recognized by leading global independent rating agencies, including SNP Global and Morningstar Sustainalytics. Capri Global has achieved an S&P ESG score of 70, ranking 20th globally within its industry and 7th in the Asia-Pacific region, the highest amongst our NBFC peers. We have also been recognized in the S&P Global Sustainability Yearbook as the highest scoring NBFC in its category, receiving the prestigious Industry Mover Award. Further, the company has established a sustainable financing framework independently validated by Sustainable Fitch. To a second-party opinion rated good and has been assessed as low ESG risk by morning style sustainability. These ratings places us firmly among the leaders in ESG practices within the MDFC sector and reflect our adherence to globally benchmark standards. Importantly, these assessments are based on publicly available independently verified data, reinforcing the strength, transparency, and resilience over operating models. Before we open the floor for questions and answers, let me sum up. We delivered a strong performance in FY26 with healthy AEM growth across our key lending segment, supported by a diversified and predominantly retail secured portfolio. Profitability improved during the years, driven by changing mix. To high yield products, improving margin, a strong growth in fee-based income, and operating leverage from an existing branch network, while asset quality remains resilient. With a strong capital position and continued investment in technology and distribution, we are well positioned to scale efficiently and are confident of achieving our aim target of which 55,000 crores and sustainable return on average equity of 16% to 18%, and return on average assets to 4 to 4.5% by FY28. We shall now be happy to take questions.

Thank you. We'll now begin the question and answer session. Anyone who wishes to ask question may press star and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handset while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. Your first question is from the line of Ishaan Gupta from Choice Institutional Equities. Please go ahead.

Yeah. Hi, sir. Good afternoon. So my first question is regarding our AUM mix, gold loan AUM mix has already reached 46%. As of last quarter, we were targeting around 45% gold loan mix. So what would be our target for the gold loan mix?

Yeah, thank you. So, golden mix looks like the way we are operating, opening more branches. Golden mix can be reached about 50%.

Got it, got it. And as of last quarter, you mentioned that you were going to go to RBI to seek permission to open new gold loan branches. But in RBI, in fair policy have done the requirement to take the permission. So what is the target for new branch addition, gold loan branch addition over the next two years?

So, next two years, we would like to add about 700 to 800 branches, including gold loan. Majority will be the gold loan branches. And now, as you rightly said, we don't require any permission. So, that will make us plan in a manner that we will be able to those branches in a very time frame manner. This year, we should be able to add about 350 branches in gold loan alone. And all these branches should be operational within this financial year.

Got it. Our yields on gold loan have again dropped sequentially by 90 pips. Last quarter, we were targeting our 18% gold loan yield. So, what could be the sustainable yield for the gold loan segment and overall blended yield?

So, if you look at this, growth has happened largely because we also followed a high co-lending and BA book. In that, we have decided that to capture the market and also to open the new market, we lower the yield, but we are able to do downsell through the co-lending route. So, meeting those banks' criteria and some of the customers whom we would not otherwise land, we have decided to land in the co-lending scheme. And overall, it is an accredit to our overall profitability and contribution per branch. While the yield has gone down, that is compensated by much higher volume growth.

So, sir, but the co-lending AUM in the gold loan segment has reduced sequentially from 39% to 31%. So, going forward for, specifically for gold loan, what would be the target in terms of co-lending?

So, I think AJ company between the DA and co-lending, it will remain in the range of 20% is the target.

That is overall 20% to 25%?

Yes. No, 20%. Not 25, 20% overall AEM will remain in the co-lending in BA across mix of all MSME, gold, and housing.

Understood. And my last question was regarding the cost of funds. So, last quarter, we said that we will be targeting a reduction of 20 to 25 basis over the next year. But in the quarter itself, we have witnessed a reduction of 18 to 20 pips. So, is there a possibility of further reduction? And if yes, how much over the course of next two years?

Overall basis, cost of funds have come down because we also changed the mix of borrowing by including the dementia and commercial paper. And I think this year, looking at... The interest rate hike might happen the post-election and other things. I think we should be able to do about 10 to 20 basis. This year, we are not expecting much cost of borrowing go down, but even though we reduce 20 basis, that will be very good from our perspective.

So exit of around 9 to 9.1% for the year?

9%?

Conservatively, you can consider 9%. And for 28?

Any further reductions? 28th, I think it will also be expect our some point of time credit rating upgrade to happen. And that will be in addition to this rate reduction. If the credit rating happens in next six to nine months, which we expect to, in that case, the further cost of fund will go down by another 20 basis.

So, I would like to add in one last question. So, our sustainable credit cost could be 0.6 or 0.7% for the year because for the quarter, it came at 0.8%.

So, sustainable, our credit costs will remain by and large in the range of 0.7. This increase has happened because we have taken the management overlay as guided by a board, and we are very conservative that way. So, we have taken about 16 crore rupees, additional management overlay due to macroeconomic environment, and Barring that, if you look at our asset quality, it has been best in the quarter, in the year. So, and the almost majority of the provisions have also come because of their new loan book. So, there is no slippage, it just happened.

Got it. All the best for the future. Thanks.

Thank you. A reminder to all participants that you may press star and 1 to ask question. The next question is from the line of Siddesh from PL Capital. Please go ahead.

Hi, am I audible?

Yes, sir.

Hello.

Hi. So, I just wanted to understand on the car loan front, so what is the strategy to monetize and what are the plans for starting other products in that entity?

So, currently, car loan is a completely distribution business. We are currently... We are distributing the leads generated by our team with about 12-plus institutions and partner banks, and in the times to come, we will add more products like used card, credit card, personal loan, and mortgages. Over the period of next 3-4 years, this year, we will be adding the used card. And the advantage will be the same supervisory team and team of 1800 people will be able to drive the same business so that cost allocation will happen on the higher revenue. And next year, we will be able to see that about 20 crore rupees of profit. It is able to deliver by the car loan entity alone. And idea is and target is the next four or five years, this 20 crore has become to significant amount of 60-70 crore piece of income, which is coming purely from the fee income. So in that direction, this year we are adding another product to the used car loan distribution through our partner banks.

Understood. And how do you see AUM mix changing at the company level?

So as of now, AUM mix is about 46% gold. I think gold will become about close to 50%, and rest of the three segments of MSME, housing finance, construction finance will range between 16% to 18% each.

Okay, and lastly, can you help me with your AUM, ROE, and ROE targets for FY27 in terms of guidance?

So, as I said in my opening remark also, our guidance for the FY27, our aim will be to achieve a ROE about 4% and ROE not less than 16%.

Understood, sir. That's it from my side, wishing you all the very best. Thank you, sir.

Thank you. The next question is from the line of Hardik Dara from Grow More Credit Advisor. Please go ahead.

Hello. Good evening, sir. Am I audible? Sir, just thank you so much for taking this question. Just wanted to understand the strategy, you know, apart from gold loan on the other three verticals, MSME, HSC, and Construction Finance. How aggressive are we planning to grow these other three verticals and what can be the growth expectations? I agree that, you know, 16 to 18% is the tentative mix, but just wanted to understand that how aggressively will these three grow over the next two years.

So, individually, I think this segment will also grow in the range of about, MSME will grow in the range of about 20-25%, construction finance will also grow in the range of about 25-30%, and housing will also grow in the 25-30%. So, overall, if you look at our business mix, it is designed in a manner to grow in tandem with the overall growth. Gold has done wonderfully well because gold price increase has also helped in the faster growth. So we assume that price remains stable. We should be able to grow all the segment together. Gold can still rise more because there are a lot of branch additions also happening. But all other segments will rise in the range of about 25% to 30%.

Thank you very much.

Thank you. The next question is from the line of Suwani Singh from Seja Capital. Please go ahead.

Hello. Hi. Good afternoon. I wanted to understand how do you see origination growth trending in the car loan segment?

Car loan, if you see, we have seen about 18% growth. We expect our car loan originally will continue to grow in the range of 12 to 15% year-on-year. And next coming year, our more focus will be improving the margins rather than the volume growth alone. FY26, we originated about 11,910 crore and which was up by 13% year-on-year.

Okay, okay. Also, with pressure on fee margin, despite higher growth volume, where do you see margin stabilizing and profitability settling?

You are asking about the car loan or the overall?

The overall.

So overall, we clearly see there are two things. One is the operating scale is kicking in so that efficiency is coming in where the cost income ratio is coming down and our overall efficiency is going on because of the technology part as well. And another efficiency, I would say that gold loan branches, the old branches which are growing, this is already delivering the high profit because break-in point is long back is crossed and more volume the per branch AUM grows, the more profitability improves in the gold loan segment as well. So, current our branch per AUM is about 17 crore, and we make break-in about 5 crore rupees. I think per branch AUM basis, we are among the top three players in the country, and that speaks our profitability of the branch. So, I think gold loan business will start delivering the higher profitability, which is the per branch AUM in the coming year. And as far as the MSME and home loan is concerned, home loan have achieved a base of about 7,500, so operating scale will kick in there also, and their margin will significantly improve in the coming year. MSME is already stabilized, MSME margin will remain stable on the similar pattern what was in the current year.

Okay. Thank you so much, sir.

Thank you. A reminder to all participants that you may press star and want to ask question. The next question is from the line of Prince Chaudhary from Pinch Wealth. Please go ahead.

Yeah. Hi, sir. Can you share more lights on what are the changes of RBI for the new guidelines of co-lending and how this will impact our growth for a couple of quarters?

So, RGI guidelines in the co-lending comes on the part of one is more clarity. Second, on the loan of moratorium, they have advised that interest accrued should be included in the LTV. And third, the income assessment of the customer above loan of 2,50,000 should be done. So, these are being implemented across our co-lending partners. And technology integration will take some time. So we expect the company to resume at the full volume with their co-ending partners in the quarter of July to September. This by June, I think most of the players will go live. Couple of players have already gone live. And the rest of the partners will go live by the next quarter. So I think the full volume we will be able to see from the September quarter.

Thank you.

The next question is from the line of Samia from Nirwa Capital. Please go ahead.

Hello. Good evening. Thank you so much for the opportunity. I just have a couple of questions, starting with what is the strategic rationale behind entering capital markets, and how do you see risk contributing to fee income?

So fixed income, since we, being an NBFC, always maintain a high liquidity in our treasury, and some of those treasury most of the time remain in the negative carry, because we put the money in the debt mutual fund, where negative carry sometimes even 2 and 2.5 to 3 percent. Against that, we have decided to start this vertical where some part of the book we will maintain in the treasury operations by buying the bond and downselling them and also helping some of the issuer to raise the bond from the bond market by managing their publications. So it will contribute to the fee income as well as also to reducing our negative carry in our treasury income. So, it will be incidental to what we are doing today. And I think next year, you will see that once we get the Category 1 license, we have applied and we have been told that by the end of June, we can have that. You will see some income coming in. First, our income target is in the range of about 40 to 50 crore rupees. At gross level, at math level, it will be in the range of about 20 to 25 crore rupees.

Okay, sir. Got it. And secondly, what is the current scale of revenue contributions from fixed income and bond-related activities?

The contribution is likely that it reduces the negative carry first. So if we mark about every 600 to 800 crore we book, we remain, and we expect to reduce almost 3% negative carry on this portfolio. So it helps contributing indirectly about 25 crore rupees of income to the bottom line.

Okay, sir. Thank you so much, sir. That's it from my side.

Thank you. A reminder to all participants that you may press star and one to ask question. The next question is from the line of Kushal, an individual investor. Please go ahead.

Yes, sir, you're audible.

Yes, since we are expanding a lot of branches, currently we have 1,400 branches, and those old branches are going to become efficient in next year, and our target is around 700 branches. What is the pad guidance we are giving for FY27? Hello?

So, we have given the PAD guidance of next year FY27, about 1300 quads.

1300 quads, okay, thank you.

Thank you.

The next question is from the line of Amyagya Khandekar from HDSC. Irgo, please go ahead. Hi, sir. Are you audible?

Yes, yes, you are audible.

Yes, sir. My question, it can give like the LTVs on the on-book for the bold ones. So we have a digital LTVs, but if you can provide the LTVs on the... Gold ones which are on the book currently.

So portfolio level LTV is about 66% and on the new displacement, portfolio LTV is about 70%.

Okay, I understand. And on the overall Indian guidance, so I think previous quarter we had said we would be doing around 55,000 crores of Oh. So, is there any update on that number? Because I think what we have said as a target for FI26, we have surpassed that. So, is there any upward diadons on the AUM frame? And also, in the overall, so, you have mentioned, you know, individually, MSME would grow between 20 to 25 and construction finance and housing would grow between 25 to 30. So, in this kind of a mix, how do you see the gold loans also growing? Because we are, you know, adding branches. So, how do you see that also growing, if you can get that? Thank you.

Yeah, so, overall growth we are targeting conservatively 25%. And we are giving a guidance of 46,000 crore by end of FY27 and about 57,000 crore by FY28. Thank you. So we revised the FI28 guidelines by about 2,000 crores. And as gold loan is concerned, you are rightly said that yes, we are adding more branches, so gold loan proportioned overall EU will grow. Gold loan will grow in the range of about 25 to 30 percent. So overall growth may remain in 25 to 30 percent range, but conservatively we are saying 25 percent. And gold within that segment will grow a little higher, because we are adding more branches as well.

Okay, for this, sir. Thank you.

Thank you. A reminder to all participants that you may press star and want to ask question. The next question is from the line of Keshwedehya from Centra Insight. Please go ahead.

Thank you for the opportunity. Since the cost of borrowings are declining, how much scope remains for the expansion and stress?

So cost of borrowing further decline, I have said earlier also that by the year end, we are targeting about 20 basis points, and another 20 basis points can also be achieved further from the rating upgrade, from the 12 months from the rating upgrade happen. So, I think we expect next six months some positive views on that, but however, it depends on various other factors, and it doesn't remain in our complete control, but we hope that all the environment and macro environment remain positive. We can expect and aim for that.

Okay. And do we see any impact of recent macro situations on MSME book?

So far, we have not seen any deterioration in our collection efficiency or asset quality. So, we have not seen any sign as far as, till now, is concerned.

And also, the decline in capital adequacy appears mainly driven by subsidiary investment. So, how do we think about this? Like, what will be the capital allocation going forward?

So, going forward, we will

increase the DA co-lending that will conserve some part of capital, and some point of time required, we will raise clear to capital also to shore up the capital base. So, in nutshell, about 18 to 24 months, our aim is to... Effectively, utilize all the downselling tools of DE and co-learning and also raise tier 2 capital, so capital requirement is taken care of.

Okay, thank you. That's just so much.

Thank you.

The next question is from the line of Behel Sharma from PG Capital. Please go ahead.

Hello. I just want you to put some highlight on the strategic intent, like what is behind the proposed international bond issuance.

So, international bond issuance with the purpose to diversify your resources. of borrowing, and it will give us one or more avenue to borrow the money, and it can be done every year. We, being into lending business, always require the debt capital, which is one of the major raw materials. So I think it is just opening that avenue, and we have got the international rating done. But we are little cost conscious in terms of our The cost of funds. And currently, because of the macroeconomic environment and West Asia crisis, the hedging costs have substantially gone up. So we are waiting that to settle down and hoping that happens in next two, three, four months, whenever it happens, we intend to raise and access the market depending on the underlying situation.

Great, great. In addition, with that question, I have one more question. What are the key drivers behind the improvement in GNPA and NMPA during the quarter?

So, it is, of course, collection efficiency, because a lot of emphasis is put not only on the technology, but also on the ground. Right hiring, right push, right training program, right AI-enabled videos on various fronts, and customer communication. So that has helped together across all verticals to improve our collection efficiency, and hence our GNP and NetNP numbers are like that.

Okay, okay. Thank you so much, and all the best.

Thank you. The next question is from the line of Kalmesh from an individual investor. Please go ahead.

So, my question is, currently, we are at a 70% loan to value ratio. So, what is the gold prices crashed by 10 to 15% and how would you manage that?

So, I think you are very relevant question in terms of current volatility. So, golden prices will not fall in one single day. So, assuming that golden prices fall 4% and customers, LTVs, reach by to that extent, either we give the customer, ask him to... Additional money to bring back his loan to value within the norm of 75% or he has to give additional gold to pledge to bring the LTV back in the norm and telling which we give him a notice that within 14 days if we don't make those goods, margin goods, we have a right to auction the gold and recover money. So, whenever it happens. Where teams on ground do collection calling and able to recover the money. For example, only one half rupees, four percent gold have fallen. We had to recover four thousand rupees. Jewelry worth about five and half thousand rupees jewelry. And I think a mix of those are able to do in most of the cases. And in case the customer don't do, as I said, we have a right to auction, the gold will recover money. So, we hope the gold will not fall 10-15% in a single day.

Yeah, sir, yeah. I just asked a hypothetical question, but, yeah, thank you, sir.

Thank you. The next question is from the line of Vignesh Ayer from Sequin Investment. Please go ahead.

Hello, sir. Just one question from my side. So, I wanted to understand what is the kind of growth that we can see on the insurance income side and the income side as a whole, you know, in FI ready time.

So, I think the insurance distribution is purely in line with our AUM growth target. So, insurance income should also grow in the tandem of about 25 to 30 percent.

And overall, the fee income, I mean, all the non-interaction income.

Our lower income will grow about 12 to 15 percent. Insurance income will grow in the line with the regime growth of 25 to 30 percent. And co-lending income, I would say that it will remain more or less same of the last year because co-lending now, DA, for one quarter will be a little lower side. So, there may not be any growth in the co-lending income, but that will be compensated by the DA. So, more or less, it will remain the same.

Okay. Well, I got it. Thank you.

Ladies and gentlemen, we take this as a last question. I now hand the conference over to Mr. Rajesh G for closing comments.

I thank you for participating in the running calls today. Should you have any questions, you can reach out to us or to our IR advisor, and we shall be happy to answer your queries. I reiterate, we are on track to achieve in a U.S. 55,000 crore by FY28 with return on average equity of 16 to 18 percent and return on average assets of 4 to 4.5 percent. Thank you once again and have a happy week ahead. Thank you.

Thank you. On behalf of MUFG, that concludes this conference. Thank you for joining us. You may now disconnect your lines.