Manappuram Finance Limited (MANAPPURAM) Q2 2027 Earnings Call Transcript

Ladies and gentlemen, welcome to the Manapuram Finance Q2 FY27 Earnings Conference Call, hosted by Muthila Luswal Financial Services Limited. As a reminder, all participant lines will be in the list of 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 zero on your touchstone phone. I now hand the conference over to Mr. Abhijit Tibriwal from Motilal Oswal Financial Services Ltd. Thank you, and over to you, sir.

Yeah, thank you, Batuja. Good evening, everyone. I am Abhijit Tibriwal from Motilal Oswal, and it is our pleasure to welcome you all to this earnings call. Thank you very much for joining us for the Mannapuram Finance call to discuss Q2 FY27 earnings. To discuss the company's earnings, I am pleased to welcome Mr. VP Nandakumar, CMD, Dr. Sumita Nandan, ED, Mr. Bhuvanesh Thadasankar, Group CFO and CFO, Mr. Manoj Fasanga, MD and CEO, Ashirwad Microfinance, Mr. Amandeep Singh, CFO, Ashirwad Microfinance. Mr. Rakesh Sharma, CEO, Mannapuram Home Finance, Mr. Suveen P.S., Deputy CEO, Mannapuram Home Finance, and Mr. Robin Karugeli, CFO, Mannapuram Home Finance. On behalf of Motila Loswal, we thank the senior management and the investor relations team of Mannapuram Finance for giving us this opportunity to host you today. I now invite Mr. Nath Kumar for his opening remarks, post which we will open the floor for a Q&A. With that, over to you, sir.

Thank you. Good evening, everyone, and a warm welcome to Monoparant Finance, U2FI 27 analyst and headmaster. I hope you all share the joy of the UID, and I extend my wishes for the festive season. Thank you for asking the time to join us today. We sincerely appreciate your continued effort to contribute trust and confidence in one of us. It's a pleasure to connect with you once again with view of performance for this quarter 2 of our 5th, 27th. Thank you, sir. I share our priorities for the months ahead of the Western environment. The economy continues to more stretch and the length of time towards the second quarter of 2017, even as the global environment remains unsettled by geopolitical tensions, very unrelated uncertainty, and fluctuations in commodity prices. Domestic activity to support from consumption, services, public infrastructure investment, and a gradual improvement in private sector investment. The gold markets present at a distinct set of barriers during the process. Domestic gold prices remain significantly higher than a year earlier. Although, they are moderated on the recent peak, and remained full of tired. When the code from the cell, data indicates that the engine mode depends by volume required sequentially in the July-September quarter, but it may lower year-on-year. In value terms however, given was higher. It's like the elevation prices. For government, this development have important implications. Although, the risk of prices have softened, modestly, in the first half of April 27, from their peak in North Dakota, they remain well above the year regular. This continues to support The value of eligible collateral and

customer's access to secure financial. At the same time, position moderation and continued volatility

reinforce the importance of proven beyond too many practices, accurate valuation, and robust performance.

Hello?

Due to FH27 performance, we see in the context of the opportunity and operating conditions across our facilities, our goal-on franchise

remains the principal driver of the group's performance in accounting for

83% of consolidation of economic benefits. While our diversified businesses are being managed by managers with a focus on portfolio quality, operating discipline, and sustainable success in the quarter. Consolidated assets and management. Students, 73 pros. We have 73,000, we have 73 pros.

I am so sorry to interrupt you, Mr. Nandakumar. We are unable to hear you, sir, clearly. Your voice is sounding muffled.

Am I unable to hear you, sir?

It is still sounding muffled, sir.

How is it now?

Maybe if you're connected on a handset, if you're connected on Bluetooth or anything, can you just switch on a handset mode?

Okay.

Oh, is it no?

Please go ahead, sir.

Is it okay now?

Yes, please go ahead.

Okay.

So during the quarter, consolidated assets under management stood at 73,303 crores, up by 50.1% year-on-year, and up by 5.3% quarter-on-quarter, while the consolidated revenue was 3,356 crores, up by 10.2% year-on-year. Profit after tax stood at 701 crore compared to 217 crore in the corresponding quarter of the previous year. On a quarter-on-quarter basis, that increased by 19.9% from 585 crore in FI 27. The performance reflected due to higher growth in Gulu. Our focus remains on ensuring that business growth translates into quality ends. We continue to... Assess opportunities across our lending businesses with a clear emphasis on customer sustainability, good and notoriety, and collections, and the efficient use of capital. Our balance sheets and funding positions remain important enablers of our business strategy. We continue to work with a diversified set of funding partners, and maintain liquidity and capital buffers appropriate to the scale and the nature of our operations. Coal lending remains the foundation of monoprenecy. Our long-standing presence in this business, with a legacy that goes back to 1979, has given a deep understanding of customer needs. The nuances of gold appraisers and the operational requirements of secure clarity. During the quarter, our goal on business continued to benefit from the relevance of gold-backed credit for customers, taking timely and convenient financing. Elevated domestic gold prices have increased the collateral value of household. Beyond the price cycle, however, the demand rush on a structural need. For many households, small traders, and farmers, the golden is the quickest form of secured credit and the way to access liquidity without selling in assets of financial, personal, or family significance. Borrowing against LKM's household gold also continues to shift from informal sources to regulated lenders. Higher gold prices also require lenders to remain visible. Our emphasis is on responsible customer acquisition, Appropriate belong to value levels. Accurate appraisal, secure custody of pledged gold, and timely monitoring of accounts. We explain long-term adoption procedures clearly to our customers. These practices protect our customers as well as the quality of our portfolio. Competition is intensified as bags and NBFCs widen their reach. Our response is to deepen our presence where we can serve customers best. We plan to add around 500 branches by March 27 to our existing consolidated network of 5,375 branches. Alongside this, we continue to strengthen the customer experience through

technology and process improvements.

We see further room to grow in the organized cold-on markets by serving customers responsibly. We are growing from the standards and using technology to make access to credit in a more seamless manner. We are growing so strongly and we intend to keep that growth disciplined. We expect golden growth of 25 to 30 percent this year, supported by brand expansion and digital channels. and the governed by the same authorizer and non-to-earning and custody standards. And I wish my lending business remain an important part of our long-term strategy. They allow us to serve customers across different borrowing needs and life stages by broadening the organizations. Sources of business engines. We are, however, mindful that each segment has its own characteristics and operating cycle.

In microorganisms, the sector has been working through the first of the past two years,

Thank you. We have begun to point to improving collecting funds and a gradual recovery of in-responsments, although conditions are not uniform across regions and institutions. Our response has been to strengthen borrower assessments, improve collection intensity, recalibrate customer acquisition, And focus on responsible relative practices, as it was microfinance, remain profitable to the quarter and will continue to grow cautiously guided by repayment behavior and portfolio quality. In microfinance, we have costs that are disperseable. Our focus is on strengthening collection, protecting asset quality. And running down the existing books in an orderly manner. We reassess the business in a five to eight. Our housing finance and the MSME lending business remain focused on customer segments whose requirements of our city we understand well. And we are prioritizing discipline and rating, operating efficiency, and sustainable risk-adjusted returns over rapid and legit expansion. Across these businesses, the objective is consistent to strengthen the underlying portfolio, improve operating performance, And we'll discuss this. That can contribute meaningfully to the organization over the long-term. Asset quality remains central to the way we manage the organization. We continue to monitor portfolio performance at both the consolidated and the business segment levels. We are recognizing that there is profile and recovery dynamics. Differ across products. As on September 30, 2026, standalone gross non-performing assets stood at 1.79%. Net non-performing assets at 1.245 and then the provision coverage ratio at 31.3%. Good morning, everyone. The underlying collapse, supported by disciplined appraisers, custody, and action forces, remains an important risk mitigate. The portfolio non-to-value ratio stood at 64.5% at the corporate, which is in the US rebates. Please remain. Appropriately focused on provisioning and the recognition of success. Our approach is to address asset quality challenges in a timely manner rather than defer corrective action. Our capital adequacy stood at 22.3% as of September 30, 2026. Upgrade with the applicable regulatory requirements of litigation, our liquidity position within R2H, supported by available cash and little assets, committed, and unutilized bank lines, and access to diversified funding channels.

We are continuing to manage capital, liquidity.

And funding costs carefully ensure that our growth plans remain aligned with our risk capital and value sheet capacity. Looking ahead, India's medium to long-term financial services opportunity remains significant. The rising formalization of credits for the digital access. Glowing financial awareness and the financing needs of households and small businesses provide a meaningful opportunity for responsible leaders. At the same time, the outlook will be shaped by inflation, investments, and funding loss, unsuit conditions, and rural demand. Oil and other global commodity prices, and the ability of the borrowers to sustain repayment capacity. We believe our established move-on franchise, customer relationship, distribution capabilities, and experiencing servicing unranked customers provide a strong foundation. By combining these strengths with disciplined executioner costs, our diversified businesses. We aim to build a more balanced and sustainable financial services platform. Before I can go, I would like to thank our employers for their commitment and hard work, our customers for pleasing their trust. For banking and lending partners, for their continued support, and for shareholders, for their confidence in managra finance. With that, I will send over the call to our President and CEO, Mr. Brunish Karashankar, who will take you through the detailed financial and operational performance for the quarter. With them, be pleased to take your questions.

Thank you.

Good evening, ladies and gentlemen. This is Bhuvnesh. Thank you for joining us for our discussion on our financial results for the second quarter, and half year ended September 30th, 2026. Our consolidated AUM for Q2 FY27 was 73,303 crores, up 5.3% sequentially. And 60.1% year on year. Gold loan continues to be our key growth driver with an AUM of 60,640 crores, up 6.4% quarter on quarter, and 92.5% year on year, supported by strong customer demand. Gold loan business constitutes... 83% of the consolidated AUM versus 82% in Q1 of this year and 69%

last year.

For Q2, consolidated PAT before OCI and Minority Trust was 701 crores, which is up 20% sequentially and 223% year-on-year. We closed the first half of the year with a consolidated pact before OCI and minority trusts of 1,286 crores, which was up to 68% year-on-year. Coming to the standalone businesses, our standalone AUM for Mayfield as at end Q2 was 63,733 crores, up 4.5% sequentially. And 68.5% year-on-year. Gold loan AUM in the standalone business was 58,097 crores, up 6.3% quarter-on-quarter, and up 92.2% year-on-year. Gold loan constitutes 91% of our standalone AUM versus 90% in the prior quarter and 80% in prior year. For the quarter, our standalone PAT before OCI and minority interest was 665 crores, which is up 20% sequentially and up 77% year-on-year. For the first half of the year, our standalone PAT was 1,217 crores, which was up 58.4% year-on-year. Our standalone GNPA As at 30th September was 1.79% versus 1.56% during the previous quarter. Credit cost for the standalone entity was 1.4%. Standalone borrowing cost has gone down by 2 bibs in the second quarter. Coming to the gold loan business, strong momentum in customer acquisition continued, and we were able to add 3.15 lakh new customers. Our outstanding number of customers was 27.2 lakhs, an increase of 2.9% quarter on quarter, and 11.7% year on year. Our average gold loan LTV remains stable. At 64.5% in Q2 versus 65.6% in Q1. Online gold loan book constitutes about 91% of the total gold loan book. Coming to the microfinance business, Ashirvath AUM stands at 7,919 crores and this includes a gold AUM. Of 2,508 crores, which is up 10% quarter-on-quarter and 28.5% year-on-year. For the quarter, MFI disbursements was at 1,461 crores versus 1,055 crores in the prior quarter. The proportion of the new MFI book has gone up. To 79% versus 68% in Q1 and 23% in Q2 of last year. Back before OCI was 32 crores in Q2

FY27 versus 21 crores in Q1

and a loss of 168 crores in Q1. Q2 of last year. For the first half, Aashirwat Pat was at 53 crores versus loss of 436 crores in the first half of last year. Net NPA is at 1.1% versus 1.4% in Q1 FY27. Ashirwaj CRAR as at 30th

September stood at 29.2%.

Coming to the vehicle finance business, in vehicle finance, we have reported an AUM of 2,169 crores, which is down sequentially 15.3% and about 46.5% year on year. Focus is on collections with GNPA standing at 16.9% versus 13.4% in the prior quarter. Loans to MSME and allied business, the AUM was at 3,361 crores with a disbursement of 238 crores versus 191 crores disbursed in the prior quarter. GNPA in quarter 2 was at 6.4% versus 5.9% in the prior quarter. The home loan business had a total book of 1814 crores, marginally declined quarter-on-quarter by about 1.7% and down 4.5% year-on-year. Quarter 2, the disbursements was 121 crores versus 103 crores in the prior quarter. Board has declared an interim dividend of 1 rupee for this quarter. Our capital position is strong and our capital adequacy is at 22.36 percent and consolidated net worth stood at 17,298 crores. As at September 30th, 2026, with book value per share at 184.2. We can now proceed to the question and answer session.

Thank you very much. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touch phone telephone. 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. First question is from the line of Gaurav Gupta from Capital Farming Consultants. Please go ahead.

Yeah, I hope I am audible.

Yes, you are. Please go ahead.

Yeah, yeah. Thanks a lot. So, I have a couple of questions. My first question is like there has been commentary from a couple of your peers in the NBFC, especially in the gold loan segment, and there has been some increase in the delinquencies among those who have been borrowing gold loan, right? So, this can share some color on your... So that's how is the delinquencies or if there has been some increase in the tendency to not repay in 30 plus, 60 plus kind of buckets. So that is the first question. Second question is, in our last call also, management said that we are targeting somewhere around 500 branches to open during financial year 27, right? But what we have observed in the first six months ending September 30th, the number of branches added during first six months is hardly 100, or I would say even less than 100, right? So considering that just 70 branches has been added in the first six months, are we still guiding on that we will be achieving 500 odd branches during the FY27 or we are downsizing that guidance, right? And the third question is specifically on some operational aspects that of late we have been observing as analysts and as shareholders, right? That the senior management personnel who joined our organization post Bain Capital deal, right? Some of them have resigned. So, any commentary or any guidance on the management stability, right? Because that matters a lot when you are expanding your book, giving confidence to the investor community, right? So, these are my third questions. Thanks, Arant.

So, concerning increasing delinquency, first of all, you should note, our average LTV remains around 65%, perhaps the lowest in the industry. So, our stage 3 is only 1% in Golo. So, we are the players who have experienced over the last... For decades in handling gold in different scenarios of declining gold prices in Africa and managing its efficiency. Yeah, I understand some of the players. Maybe many from the, many new to the industry. Whereas we are not new to the industry, we are established players in the colon segment. Second, about our grant opening, yes. Even though we have opened nearly 100 branches so far, so another 250 branches are working in the full swing, and we expect that to be opened in another couple of months. And we are very confident about reaching 100 branches with regard to grant opening. Regarding the operational aspect of the CEO, the earlier CEO has resigned on health ground, etc. So, a new CEO is expected to take charge. The recruitment is already over, and he is expected to take charge from 1st of January. The CEO has resigned because of his health issues. So, other than that, from the new recruitment, there is no attrition. So, there is great stability with regard to new recruitment. These are the two attrition levels. So, for the CTO positions also, yes, closing on some good candidates. From with the recruiter background to the industry, and having done some IT transformation. So, yeah, any more clarity about it?

Yeah, yeah, sir, just to follow up, like, in the cost of borrowing the... The panelist team has done a tremendous job while the report has increased by 25 basis points, but we are able to see that 3 basis points has been saved in cost of borrowing. So, would you like to give certain guidance that going forward what would be the trajectory if you can expect certain more savings on the cost of borrowing and second, any guidance on what we can expect that what would be the possible for a tentative AUM while we will be closing FI27. And any guidance on the possible AUM.

So, the second part I will answer. The first part I will leave to see what to answer. So, we have given the guidance, we are respecting a growth of nearly 20%, 30% with the current years. We have been dealing about 25% to 30%. We are respecting a growth of some

30% with the current years.

Hi, Gaurav. So, on the cost of borrowing, you rightly noted that, you know, despite difficult, choppy, you know, volatile market conditions, we've been able to hold to, you know, the Q1 levels and maybe shave off a couple of bips. But having said that, given the environment and the expected rate increases, So, you know, from an overall Q4 exit, you could probably expect my cost of borrowing to go up more towards the 9% handle, and that is in line with, you know, what was communicated in the Q1 call as well. So, that's what we are holding to in terms of, you know, the exit cost of borrowing will probably increase by what? 25 to 30 basis points.

Yeah, thanks a lot. Thank you very much.

Thank you. Next question is from the line of Rajiv Mehta from ES Securities. Please go ahead.

Yeah. Hi. Good evening. Congratulations on very good numbers. Firstly, sir, this can give us some makeup of the gold loan portfolio between the collections,

monthly inter-perfishing loans and EMI loans, if any.

And second, this can also give some disclosure about how the stage two loans have moved, Q on Q, in the standalone goal on this.

So, hi.

So, broadly, yes, sir, please go ahead.

No, no, Bhunesh, you can go ahead.

Okay, sir. So, in terms of the composition, I would say mostly the book continues to be, you know, the longer tenor book, which, so, in terms of the EMI and the shorter tenor book is a more smaller component of our overall portfolio. So that's what we have. In terms of, you know, the staging, I think in terms of the stage two increases, we are looking at single digits as a percentage of overall AUM. So that's where we are.

Okay, and when is a long 10-year book, is it, so it implies that these are bullet loads and where the interest is also not actually contractually due, right, on a regular basis?

See, they may not be contractually due, but, you know, the behavior of the customer, we've seen about almost 60 to 65% of our customers. They pay interest promptly, even though there is no scheduled payment as such, which is due. That is what we observed in the past, and we don't see any change in that behavior, you know, going forward as well.

On this stage, you... Yeah, on the stage to spike of, you know, being fixed in a material number, how do we, you know, plan to, you know, solve this? Or how do you plan to ensure that the customers don't move, you know, buckets forward and they're able to, you know, roll back or regularize whatever they've missed? If their loan is shorter tenure or if the interest is missed in the end area?

So, we send the notices, we contact the customers, the notices are received, they come and remit the interest and make up the LTV also to the current level. This is the practice which has been followed, and this is nothing new.

And just lastly, on gold loan growth, sir, you said that 25-30% growth. So, I think it should be the first half. The portfolio growth grown by 19%. And right now, the Q1Q growth run rate is 5-6%. So, are we seeing that 5-6% growth rate at the AEM level is continuing even in October and November? And that would be the number of questions.

There are fluctuations in accordance to the feasible fluctuations of them. So, the fourth quarter used to be very good. The other quarters, the growth used to be moderate at a rate of 5-6%. The fourth quarter used to be good, etc. So, as I said, we are expecting some 30% growth in the whole one AEM this year.

Okay. Thank you, sir.

Best of luck.

Yeah. Thank you. Thank you. Next question is from the line of Gaurav Khandelwal from J.P. Morgan. Please go ahead.

Hi, good evening. Thanks for taking my questions. My first question is on the stage 2 of gold loans. And I'm sorry if I missed it. Can you tell us about the stage 2 gold loans and when do you expect it to settle down? Some details on that, please.

So, on stage 2 and stage 3, while, you know, we are seeing a bit of a spike, but again, you know, compared to, you know, peer group, we are much lower than what, you know, peer groups are operating at. Having said that, you know, a couple of things that I would like to, you know, note here, it is lastly behavioral. Right. In April, you know, you had this changed regulations that came into effect. And you had a set of new products that were launched, which were, you know, the shorter tenor and the EMI based products. Now, these products are something that, you know, the customers have never experienced before. They're used to the traditional, you know, one year consumption kind of loan, which is traditionally a bullet payment. Right. So that's the behavior that they're used to. So, in terms of spike, you know, typically what we've seen is that, you know, what it requires to, you know, correct this is basically increase the customer contact and educate them in terms of, you know, the difference between the traditional product and the new products that have been launched. What we have seen in terms of early rates is quite encouraging in terms of, you know, the spike that we're seeing in stage two. We've seen a large quantum of these customers coming back and paying either in full or in part, and therefore, you know, kind of regularizing the, you know, amounts outstanding, which therefore does not necessitate us to go down the option path. So I think it's a, I would say, you know, it's a phenomenon which I think should kind of normalize. And probably in the next couple of quarters and reach a more normal level as, you know, customers get used to these kind of products. Having said that, you know, we are monitoring it, the overall levels for any stress. But thus far, I think we are quite comfortable with what we are seeing. And we will continue to, you know, keep up the intensity in terms of, you know, reaching out to the customers. And collecting from these customers.

Thanks for that. And my follow-up question is on competition. Can you share your thoughts on how competition is evolving? And do you anticipate that over the next 6 to 12 months, is there a possibility of yields moving lower in terms of, because of competition?

Sorry, I didn't get the...

The competition, competition is there for any attractive product. There will be competition. But our strength is our knowledge, which we have gained over decades of doing that, managing different situations, including the prices, etc. So many of the newcomers may not have that capability. So, regarding the pricing, our pricing remains one of the lowest in industry. So, we are able to look at our customer acquisition and manage increase. Even in a scenario of the price falling down compared to the previous quarter. Our new customer acquisition has remained very high. Our total customer base has gone up by 11% year or year. And our customer base is growing by more than 3%. So in spite of the competition, we are able to grow and we are confident of standing the competition.

Thank you. Those are all my questions.

Thank you. Next question is from the line of Tirana, engineer from Siddiqui International. Please go ahead.

Yeah, hi, sir. Congrats on the quarter. Just two questions. One is your provisioning of 220 crores on a standalone basis.

How much is gold versus non-gold? So, yeah, I think largely it will be driven by gold, and we also have some, you know, prudent management overlays that we have taken and built into the numbers.

Okay, but can you quantify the non-gold part of it?

Yeah, we can, we'll get back to you on that, we'll quantify it.

Okay, sure. And secondly, how should we think about the trend in OPEX going forward? Because you will have contained it pretty well, but at some point, you will have to sort of, you are opening 500 branches, you will add more people, you will have to incentivize your employees. How do we think about OPEX growth?

See, our online goal on OGL is around 91%. So, our existing branches are also growing without adding more people. So, with more OGL and technology in place, actually, we have reduced the amount in branches without affecting the customer's service. So, our ability to shift our customers to online is really helping us. So, when we have 500 branches, we don't expect much of the employee cost to increase because we are in the process of racializing the field of employees. So, we don't expect that. So, the office to AEM will come down even in spite of operating 500 branches. So, the employee cost to AEM will come down.

I understand. I understand. Yeah, okay, so that's it from mine. Thanks, and I'll show you the best.

Thank you. Next question is from the line of Srishti Sardar from Oakland Capital. Please go ahead. Hello, sir.

Am I audible?

Yes, you are.

Sir, I just wanted to know the split of gold and non-gold in JNPA, and can you quantify stage 2 number?

Yeah, so I'll take the stage two first. So on stage two, I would say it is between low and mid single digit. That's what we have on stage two. And in terms of

GNPA,

Gold GNPA is about 1.04% for the quarter,

from

the overall total of 1.79%.

I'm sorry, just one more follow-up that can you also quantify the number of stage 2 of quarter to SI26, if possible?

So, stage 2 would be much lower, I mean, if you look at, you know, gold, because, you know, the other portfolios have been undergoing changes. So, you know, overall, MAFL, I mean, you had VEF and, you know, other products which are in wind-down mode.

So, I think, you know, from a gold perspective, it was much lower.

It was probably, you know, less than half a percent, you know, same time last year is what I will look at.

Okay, sir. Thank you. Thank you. Next question is from the line of Shibdansha Mishra from Philip Capital. Please go ahead.

Yeah, hi, good evening. So, the first question is around the EMI products. So, if we do EMI products, it has to be yield mitigating versus a bullet loan where the interest is getting accrued at the end of the tenor. How is it at a similar kind of a yield? Can you please elaborate on that? Second is basically data keeping questions. If you can quantify on the auctions this quarter, what is the gold price per gram in rupees, and what is the accrued interest as a percentage of AUM? Thank you.

The gross yield on the EMI and the bullet payment combined will remain somewhere around 17.5% to 18.5%. So, that's the expectation. Yield will remain somewhere within that phase. So, regarding the auction, yes, finish or that you can.

So, auction amount is nearly 100 store in this quarter. Hold the price we taken, hold the price is on this quarter too is 13,526 rubles. And what is the accrued interest as a percentage of AUF?

It's more or less same asset of 21.

We will compare. What is the number?

We'll come back on that number.

Right, right. If I can just squeeze in one last question. When we speak to various competition, whether it's bands or other NBFCs, they come back with the feedback saying that we have started. A price war in various markets, at least five to six states, wherein we are offering very low teaser rates, less than 1% per month, which basically would be a cumulative or an effective interest rate of around 12-13% on an analyzed basis. So, if we can speak on that, and how is competition yielding to it, and is that a strategy going forward as well, or is that something that the new promoters are asking us to do? So, what is the idea behind all of this, and if you can speak on this and clarify this? Thanks.

So, we are not in competition and not on a price walk, etc. We wanted to remain as one of the attractive lenders for the consumers. So, we are keeping our trade as one of the lowest in the industry to ensure that our customers are retained and we are able to acquire customers. It's a long-term strategy. We feel like that will make our business model more sustainable. Still, whatever we have given the guidance to the market with regard to our ROA and ROE, we will stick to that. We told the ROA to be between 3.5 to 4%. And ROE between 15% to 18%. We will stick to that.

Right. And what is the board approved policy for the pricing of the loans? Do we have a minimum and so a floor and a ceiling if the board approves a policy on that?

Yeah, we have the modaprood policy, so we go by the modaprood policy, yes, this changes from time to time, we can react to the market rate, etc., which is taking the modaprood. So, it's all market related.

Yeah. Right, right, right. Thank you so much. I'll come back in the queue. That's a plug for NCA in quarters.

Thank you. Next question is from the line of Sankej from Dam Capital. Please go ahead.

Yes, sir. I heard you saying stage 2 is lower single digit, but it would be helpful if you can put up a number to it. We are seeing sharp increase in stage 2 for other peers and answer questions, so it would be really helpful if you can spell out the number.

So, stage 2, I would say it's about 5% or thereabouts.

Okay.

This is on the gold area.

Okay, okay. Cool, sir. I see. And the other thing that we have seen in PPT is Is that this quarter you have reclassified some AAC, loss on AAC sale to provisions. How much that amount would be?

That's about 14 crores. It's a very small amount.

Okay, and besides that, have we created any overlay since the profitability was strong?

So, yes, we have taken some prudent management overlays over and above the ECL provisioning, but that is, you know, something which is dynamic, and, you know, we will decide

in terms of, you know, the environment,

and we have just considered it to be prudent to build some management overlays, given the strong momentum.

Okay, how much that overlay quantum would be for this part of?

So, we'll get back to you on that, on that number.

Okay. Okay. Good. Thank you.

Thank you. Next question is from the line of Samir Bhisej from Diamond Asia. Please go ahead.

Hi, thanks for the opportunity and congrats on the quarter. Just wanted to ask how are you thinking on golden growth, especially given the way prices have moved and assuming it stays around current level by next quarter, we will be on a lower price on a YOY basis, meaningfully lower price on a YOY basis. So how should one think on growth for the year and maybe next couple of quarters? If you can kind of give a sense.

See, we have told you towards the market from the very beginning, we are expecting a growth of 25 to 30%. So, we stick to that. We expect we'll be able to grow. And we are able to acquire customers also, customer acquisition has improved, also has improved, so this momentum will continue.

Sure.

And just, can we have the stage 2 number for Q127 as well, on the gold business?

So, on the gold business, it was about close to 50 basis points.

Thank you. Next question is from the line of Deep Vakil from Bandhan EMC. Please go ahead.

Congratulations on a good set of numbers. Am I audible? Yes.

Yes.

Sir, we had, I mean, some regulations around to classify loans as income generation and consumption. So, I think certain if it's income generation, then we had to underwrite some underwriting around cash flow based underwriting. So, do we have any color on that? I mean, what is that proportion of IGL versus consumption loans in us, I mean, in our book? And, I mean, what underwriting practices we follow or any color on that?

So, for income generating gold loans, we underwrite the customer.

So, we look at his cash flow, we look at his other borrowings, etc. On the basis of cash flow, we consider it as a cash flow-based lending. So, that practice, other than the bullet loan, this is a different practice where we have already trained our employees. The numbers are finished and supported.

Okay. Any proportion that you can give of our overall gold loan book? What will be IGL and consumption loan?

Income rating loan is a very small component in my overall gold loan base.

Okay, so it's majorly consumption loans then. Okay. Yes, yes.

This is the IGGL engagement, I think, hold on is growing slowly because we are introducing that, we have introduced that in a fixed manner, training our employees to assess cash flow, etc. So, you will see a gradual increase in the dispersal in IGGL going forward.

Okay. And, sir, any analysis that we do around, I mean, some percentage fall in gold price, and what impact does it have on our LTV? And, sir, I think some of the participants asked the question of gold price in rupees. So, can you please repeat that number as well?

See, at the beginning itself, the opening remarks also, I have told about our ability LTV. Today, in our books, it's around 65%. So, you look at the published data of other letters. All of them are much higher than the LTVs, most of them. So, that shows our current practices

in managing the LTVs. The pension level is 13,526.

13,526. Okay, sir. Okay, thank you.

Thank you. Next question is from the line of Nidesh Ren from Investec. Please go ahead.

Thanks for the opportunity. The first question is on distribution of LTV. So what percentage of our gold loan book will be above 80% LTV?

Do you have that number?

We'll have to get back to you. Sure, sure. And second, what percentage of our book will be bullet loan and what will be non-bullet payment?

Most, large component, I mean, the majority of our book is largely bullet. And given that, you know, these schemes have been recently introduced, you know, in the first quarter, they are a smaller component, both the IGGL and the EMI-based loans, they are a much smaller component. Majority is all bullet schemes.

So the majority is basically 90%, we should take 90% plus or? Yeah, 90% plus.

Yeah, yeah, absolutely.

And then last question is on auction. What is the quantum of auction we have done in this quarter and in first half?

100 crore in this quarter. Okay, and first half? Second, one, three. The first half is nearly 20 crore only.

So, total 125 crore.

Okay, okay. And this is on this monthly scheme. So, going forward, we will continue to see share of monthly schemes going up or do you see that plan paying out?

So, it is gradual. As I mentioned, it will be gradual. We are training our employees. And that has been done in the first panel. So, gradually it will improve.

But if you can get some color on how the share of monthly scheme on incremental displacement, that would be useful.

So, gradually as you said.

We are currently around this less than 10% only, 8 to 10% only, this monthly or quarterly payment category scheme. As told earlier, like it's gradual only because customer also, we are sharing detail and educating them, and also employee also, will be in the gradual mode.

So, even on the incremental disbursement, the share is 10%. That level only. Majority or bullet draw. Sure, sure, sure.

Thank you, sir. That's it for myself.

Thank you. Next question is from the line of Gora from MLP. Please go ahead.

Yeah, thank you for taking my question. I have a couple of questions. One is, sir, if you can quantify, what was the quantum of overlay that you created in this photo? If you can quantify, because provisions seem to have gone up sequentially. So I just wanted to understand the overlay or the discretionary element of the provisions.

In terms of, you know, the overlay, I would say, of the 1.79% cost that we're seeing, you can say about 70 to 80 basis points would be the overlay.

Understood. Understood. Perfect. And the second question is regarding the stage 2. So stage 2 currently is at 5%. Let's say by end of this year, do you expect this to normalize? Normalize as in what we saw in 1Q, we were at about 50 basis points, give or take. Do you expect this in the next couple of quarters to self-cure?

So early reads, what we are seeing right now, you know, are encouraging in terms of, you know, getting the collections on from the customer. But as I said, you know, these are all early reads and largely attributable to, you know, behavior of customers getting used to this kind of product. So as of now, it's because it's something very new. It's difficult to, you know, predict what the normalized trend would be. Right, in a particular product.

Sure, but it's already started trending down. Is that a fresh statement to make, let's say in October or November?

Yeah, the early reads are that, you know, from the levels of what we have seen in September, we've been able to collect a fair bit. But, you know, this is something that is, you know, on a rolling basis, you know, you will see a, you know, a certain inflow as well into stage two. So, where it will normalize and, you know, that would be a normal trend, that is, you know, a little difficult to predict at this stage.

Understood, understood. And just a data keeping question on the overall, let's say, management overlay in your EC, over and above your ECL, how much overlay are we carrying on our books cumulatively, if you can highlight that.

So, we'll get back to you on that in terms of overall, you know, how much overlay we are carrying. We continue to maintain prudent overlays in our, you know, financials. So, it's almost back into like a counter-cyclical buffer given, you know, the overall conditions that we are seeing.

Got it. So, is it something that we've been creating earlier also, or it's only something that we started last quarter and this quarter, or this is something we've been carrying for legacy book as well?

So, it's something that, you know, we assess every quarter, not necessarily a FY27 phenomenon. But, you know, there are overlays which we have taken in the past, and we will continue to assess and, you know, create prudent buffers where required.

Right. Understood. That's perfect. This last question is on Aashir Badh. This time we saw AUM growth of 10% sequentially. So going forward, typically second half is always better in case of MFI. So can we assume the growth rate to pick up in the second half from here?

The answer to that is that we want to maintain very clearly that the focus is not going to be, it's not growth focus. We are going to continue to have a very calibrated method of growing. So if circumstances allow us, with absolutely no compromise for underwriting, and if the growth was to happen in spite of our strict underwriting norms, So be it. But we are not looking at anything to perpetually go for or go behind those.

Understood. But anything that you're targeting, let's say, next year, this year, while I understand it is going to be calibrated, let's say, for next year, what kind of growth should we pencil in for Asirwaj?

The day they're building the book now, I think there is a very positive trend from the quarter four of last year to quarter one of this year and the quarter two of this year. I think our product line has been growing and the running down of a book is now a thing of the past. So, going by this trend, I think we are looking at a steady growth in the same kind of growth rates that you've seen over the last two quarters.

So, I see no difference in the next year as well.

Perfect. Thank you so much for answering all my questions. That's all from my side, and all the best.

Thank you. Next question is from the line of Vedansadha from Nirmalpang Securities. Please go ahead.

Am I audible? Yes. Hello, am I audible?

Yes, we are.

Yes, yes. Thank you for the opportunity. So, my question is with respect to the yields, like, we are telling, uh, Like, with respect to competition that you are providing the attractive rates, let's agree, like, you will always provide attractive rates as compared to industry. But what is your take on the yields part? Like, in coming two to three years, how do you look at the golden yields to settle down at?

So, I expect that to be somewhere in the range of in three years, maybe around, yeah, 70% in three years. But all depends on the borrowing cost, how is it going to be the borrowing cost, etc., the policy, etc. So, accordingly, then, that can be changed also. It can be even 80%, even more also. A lot of fractional factors are also influencing that.

So, yes, like borrowing cost is one factor. I am asking you with respect to the competitive intensity, like other participants also competing and considering that thing.

So, I believe there is some settlements around 18%, you know, among the top place.

It's 17 to 18% kind of yield use.

Yeah, yeah, yeah, yeah.

Thank you.

Thank you for your answers.

Thank you. Next question is from the line of Bhaskar Basu from Referees. Please go ahead.

Yeah, thanks for taking my call. One question I had was regarding the shorter tenure golden products which you are offering. As we've seen across players, there has been an increase in stage 2, etc. What is the thought process? Would you like to keep pushing this product or would you like to kind of revert back to the traditional bullet product? Is there any thought process around it? Few players have actually stopped doing this product is what we understand.

So, we are also slowly moving from 3-month to 6-month product to 1-year product. So, we lend to these short-term products only after assessing the customers. So, it will come down, short-term products will come down, and more of it will go down to 1-year product.

So, to be clear, you're essentially trying to move back to those earlier traditional bullet products.

So, for those customers who are very clear about short-term requirements, we'll continue with that. For others who have no certainty about short-term redemption, we'll move to a near term.

Okay, okay. Thanks, that's on me.

We don't, we don't induce, we don't, we don't induce the customer to avail short-term loans.

Okay.

Yeah, because the collection intensity, et cetera, is much more intense requirements in this segment.

In the case of short-term products, the managing the price must be better. But at the same time, we should go after the customer's movements also.

Options with the customer. Okay. Thanks.

Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to management for closing comments.

Thank you very much for your active participation.

So, any further questions, we are available.

And management is available. Thank you.

Thank you, ladies and gentlemen, on behalf of Motivar Oswald Financial Services Limited and Manapuram Finance, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.

Thank you. Thank you.