Piramal Finance Limited (PIRAMALFIN) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Q4 and Annual FY2026 Earnings Conference Call, hosted by Piramal Finance 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, then zero on your touch-tone phone. The results materials are available on Exchanges and the company's website, and you may refer to them during the discussion. Please note that today's discussion may include certain forward-looking statements, which must be viewed in conjunction with the risk and uncertainties that the company faces. These statements are based on management's current expectations and are subject to uncertainty and changes. On the call today, we have with us Mr. Anast Ramal, Executive Chairman. Mr. Jairan Sridharan, MD and CEO, Mr. Rupain Zaveri, Group President, Mr. Yash Nadkarni, CEO, Wholesale Lending, Mr. Vikas Singla, CFO, and Mr. Ravi Singh, Head of Investor Relations and Strategy. I now hand the conference over to Mr. Anand Baramal for his comments. Thank you and over to you, sir.

Good afternoon, everyone, and thank you for joining us today on this call to discuss the March quarter and full year FY26 results of Piramal Finance. As you all know, during the last few weeks of this quarter, geopolitical disruptions in the Gulf have created a volatile global macroeconomic environment. Crude oil prices have risen sharply. There have been also concerns around the availability of refined products such as LPG. We believe ongoing diplomatic developments and a potential de-escalation could limit the overall macro impact on India. At this stage, the effect on India's economy and financial services sector appears contained, reflecting underlying resilience. Retail, petrol, and diesel prices. This pricing discipline has played a critical role in containing near-term inflation, preserving domestic demand, and avoiding a spike in retail loan pricing. The government's timely interventions to support exporters have helped cushion the impact from ongoing maritime challenges. Overall, while geopolitical risks... I am happy to report. 25% year-on-year and cross the 1 lakh crore mark. We have completed our AUM mixed run. Now, listen. 26, it grew 33% year-on-year. Thank you very much.

Value creation and long-term alignment with our shareholders. I'm into that evaluation. Here on here. As Anand mentioned, to 2.1% in Q4 versus the 1.7% we were at in the same quarter last year. Leverage, which is AUM to equity, also continued to increase, and we are now up at 3.0%. The third vector in our value creation framework was predictability, on which I'd like to draw your attention to slide number six. In the fourth quarter, the growth business delivered a PBT of 495 crores, keeping up the steady and predictable trajectory of the last eight quarters. The stability and predictability are also visible in our credit risk outcomes, with retail 90-plus delinquencies down 20 basis points quarter-on-quarter to 0.6%. Thank you. Growth business credit cost was also down marginally quarter-on-quarter to 1.5%. More importantly, as you can see on the page, the performance was extremely steady over the last four years. Let's now get into our specific business performance metrics. On the growth business, our retail AUM growth remained strong. We ended the fourth quarter with a retail AUM growth of 33% year-on-year. The disbursements in retail recovered from a moderate Q3 and were up 34% year-on-year to $13,101 crore. Our mortgage business comprising housing loans and LAP grew by 32% year-on-year to $57,837 crores. Mortgages account for 57% of the total AUM of the company and 67% of the retail AUM. If you look at slide 24, we have provided this quarter some additional disclosures on sub-segments within our HL and LAP businesses. Over the years, we have expanded our presence in mass affluent home loans and larger-ticket LAP Plus products. With our rating upgrade, our ability to serve these segments is significantly higher. Retail AUM growth was well-diversified across our product category. All growing at about 20% to 50% year-on-year. Wholesale 2.0 AUM was up 38% year-on-year in the fourth quarter, with both real estate and mid-market lending showing strong YOY trends. Growth AUM was collectively thus up 33% year-on-year to 98,423 cross. 30. Our retail customer franchise grew by 22% year-on-year to 5.7 million. As Anand referred earlier, we've crossed 5 million as our customer franchise this year. Our sourcing from cross-sell in unsecured disbursements is around 30%, which we expect to materially improve over coming years. Our cross-sell portfolio comes with significantly lower OPEX as well as credit costs. During the third quarter call, we had guided towards opening 100 new branches in the fourth quarter across three formats. We have successfully delivered on that plan. After not expanding our branch network for seven quarters, we resumed branch expansion in Q4, for which I'd like to refer you to slide 28. In this quarter, we opened 26 full-service branches, which we have now rechristened as urban branches. In addition to these, we've also opened 22 gold loan branches. We have now... I have not accessed before. And quarter on quarter. We have now consistently reduced our OPEX to AUM ratio for three years and have now entered the target range which we had indicated some years earlier. While we have restarted our branch expansion, the continued productivity gains for our employees and branches have the potential to take our retail OPEX to AUM a little bit lower than current levels over FY27. Tech and AI have been key enablers of our growth and productivity enhancement. While we have been sharing in the past the impact of AI across five key business areas, we are now starting to share additional input metrics as well. I'd like to draw your attention to slide number seven. Here, we have tried to share a metric for overall use of Gen AI techniques at Seeramon. You will see that there is a strong growth in our total token usage across SLMs and LLMs. In the course of this year, showing the high levels of AI adoption in the company. In Q4, our total token volume was at 178 billion tokens in the quarter versus 63 billion in the first quarter of this year. This compares well with the best of global elite enterprise-scale companies. In terms of token usage for high-frequency agentic AI and processing of massive amounts of document data. On slides 32 and 33, we have shared some more details of our enterprise AI strategy, PIRAML.AI. On slide 32, we introduced a new dashboard on the progress of AI, particularly Gen AI, use cases across all key aspects of our business. As you can see, AI adoption cuts across sales, underwriting, collection, order and compliance, CX, and people management. The next page, slide 33, covers our fourth quarter AI spotlight. Last quarter, we had featured collections in our AI spotlight. This quarter, we feature operations. You can see on this slide that operations productivity Our AUM has doubled in this period, whereas our operations staff and headcount has remained roughly flat. The microloan portfolio has almost completely normalized, As you see in our... IGDPD chart that we share every quarter. In our semi-secured business, which is USCAR, after three quarters of elevated risk metrics, we saw a steep fall in Q4. In mortgage business, risk continues to be quite steady. We had earlier flagged the part of this business as potentially problematic, given increasing risk levels. This was around smaller ticket mortgages with MSME customers. Over this, Last quarter, however, we have seen the segment stabilized and performed noticeably better than before. We will, however, continue to track the segment closely. ...segments that could potentially be vulnerable to the ongoing conflict in the Middle East. We have originally taken MSMEs in the F&B sector as the epicenter of potential vulnerability and impact, but we have since... Thank you. Thank you.

During the year, we dispersed 9,292 crore with fresh sanctions across 135 deals. Thank you. Keep it really strong. The long rates of repayments continue to be a measure. We have realized that the portfolio has seasoned very well and is performing well ahead of our underwriting. In fact, due to these significant repayments, almost 50% of the contractual repayments due to us in FY27 have already been paid by our borrowers to us to date. On wholesale 1.0, our legacy book, we ended the book at 2,807 crore, which was a reduction of 59% during the year. This is now a very small part of our balance sheet, and we will continue to work on the resolution of this book over the following quarters. Before handing over to Vikash, I will also say that we continue to monitor the impact of the Iran war on the real estate and CMML segments. Since the war broke out in Feb, today our portfolio sales, collections, and other operating parameters have continued to remain very strong. We also feel good about the granularity and the diversified nature of our portfolio, but we will continue to monitor our credits proactively as we progress from here. With this, over to you, Nikar.

Thank you, yes. Moving to our financial performance, in Q4 FY26, we reported consorted net profit of 502 crore versus Q4 FY25 net profit. Full year FY26 net profit was 1,506 crore vs. 485 crore in FY25. Proforma TBT for growth business stood at 495 crore in Q4 FY26, implying a growth of 61% year on year. 2 by 12% here. If you ever done, thank you.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a 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 handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We'll take our first question from the line of Shreya Shivani from Nomura. Please go ahead.

Yeah, hi. Thank you for the opportunity. Hi, I have two questions. My first question is on the console NIM and the growth NIM. The gap between these two has been narrowing. It's at about 50 bps as a fourth quarter, right? Six and a half and seven percent or so. So, the legacy book is now, like, very minimal. Where do we see our – I'm assuming the growth name is where the console name will reach, and then beyond that, what are the levers for expansion? I mean, I get your gold loan and MFI segment would be one of the major levers. And my second question is on the legacy book. I mean, that scale down is quite impressive. Fair to say that majority of it is actually SRs and Stage 1. So, how should we think about the legacy book movement over the next two years? It's at about 3% or whatever, less than 3% of your AUM mix right now.

Yeah. Thank you, Shreya. So, first question, where is the console name headed? Obviously, console name and growth name will become effectively the same, you know, hopefully towards the latter half of this coming year as the legacy book becomes smaller and smaller. Now, what is the, and growth name, of course, today is about 7%. What are the levels on the growth book name itself? There are two main levels. One is exactly what you said, which is product mix on the asset side, which is increase in unsecured, which... We would like Unsecured to be about 400 basis points larger, 400 to 500 basis points larger in our mix compared to where we are right now, plus some of the new products that we are launching. So, between the two of them, the mixed story. We have not yet shown its effect on our cost of borrowing, and as I mentioned before, I expect the AA plus impact to be about 50 to 80 basis points over the course of the coming three years, because three years is the time of churn of our liability side book, so that should come in as well. So those are the two big levers, one on the asset side and one on the liability side, which should help lift our NIMS on an overall console basis once we have merged everything together. Now, if you have a question on... The legacy book, we are at less than 3% of the portfolio here. You should see... At this time, we will be very, very surprised. It will become irrelevant by the latter half of this year. By Q4 of this year, it will become kind of so small to be irrelevant. And that's why our statement earlier that you will just see us talk about one set of numbers rather than X of legacy numbers by the end of this year.

Okay, that's great to hear. Just a follow-up on the scale-up of the unsecured book. So, fair to say the unsecured book scale-up would be... So, equally across digital loans, which is aggregated loans and your own sourced UDL book, or one would take precedence over the other, or you'd focus more on one?

It depends a little bit on risk performance, Shreya. Like, as it happens, the last few quarters, digital loans have performed super well. If you see page 22, you look at the risk performance of digital loans, which is on the bottom left, it's been insane good. So, currently, we are somewhat bullish on that segment, but if it turns, if that curve starts to turn, we'll be equally ruthless in actually starting to cut that and go even more towards branch business. If you see the salary TL chart on the same page, you'll see it's been rock steady, right? It's been really, really strong. So, we love both our branch-based businesses as well as our digital businesses, which takes precedence that's a month-on-month, quarter-on-quarter call depending on what the risk curves look So, we don't have a philosophical bias on one versus the other.

But it's easier to scale up digital loans faster than the branch-led, salaried, PL, or UBL.

But it also tends to be more volatile. So in bad times, we also cut it much more ruthlessly. So you might recall that when digital was going through its peak in FY25, we had cut it by more than 60%. So volumes also disappear there very, very quickly.

Right, right. This is very useful. Congrats on a good set of numbers. Thank you. Thank you, Shrey.

Thank you. Next question is from the line of Harishit Toshniwal from Saimji Invest. Please go ahead.

Hi, Harishit. Your audio is not clear, Harishit.

Can you use your handset mode, please?

Sure.

Hi, is this better?

Much better.

Yes, please go ahead.

Yeah, the question was from, so one was on the other income, obligate free income for the growth business itself. So, you mentioned the statement about some change in agreement with the life insurance partner. But, like, in general, I look at the number as a percentage of our retail growth, that's now, I think, 0.5442. And, obviously, there was some amortization impact, which was also going on, if I'm not wrong. But there, we should look at this number, because given our asset mix, ideally, 80-90 basis points, 70-80 basis points is something which is not unreasonable. That was one.

Your point is correct. What we have in Q4 is low. It needs to go up. It will go up. There was a one-time event that we had in Q4 where we reversed some fee income in aid of our associate company, which is our life insurance company, for some technical reasons. I'd not like to go into that here. It is absolutely correct, and you will see.

And the second question was on the, so right now we are standing at 2.1 on the growth area, and this is with 1.5% credit cost, and probably if we plan to end FI27 with 2.5, then I'm just trying to marry these two facts that are credit costs. In general, you said that... Should be 1.92% as a steady state one, which is 40 basis points higher than today's number. So, are we expecting FI27 credit cost to remain benign because of the, for whatever reason? Or do you think that it's the margin and the cost leavers and fee income leavers, etc., which is helping you stick on to that 2.5 number? Because I'm deaf. Because 4Q 2.1 is on the help of that 40 basis points lower than sustainable credit costs.

Correct. That's a great question, Harshit. And the answer is pretty much the second half of what you said. Yes, you're right that we have been surprised positively by how good the risk environment has been. I thought risk environment through the year was good. Q4 turned out to be even better. So, yes, we are mildly positively surprised. But you will also notice a fact in our presentation, and if you look at some of the new disclosures we have started, which is the sub-segment level disclosures and mortgages, etc., you will see that over this year, we have started doing a little bit of more prime-like business, right? We'll see more of that coming forward, which will help. Thank you.

Thank you very much, Christian Jambos. But still, if I look at probably the write-offs of 1,500, 1,600 crore, which we have used from our games, and another 20. So, it's a 3,000-4,000 crore book. In our minds, we expect some recoveries. It's going to be a bounty itself, but at least on the current 2800 tour, because I'm not sure, barring Shidam life, we will not have much more capital gains left, but in general, more from just a recovery point of view, rather than recognition, that should be hoped for some benefit on that side, and probably the last question just attached to this itself is on the capital adequacy. We are right now at around 19 and a half. Now, you mentioned slightly in the opening remarks of some of the levers which can free us from capital, but if you can help us elaborate that, till what time we don't need capital with this kind of growth?

Yeah, great question, Sarsha. On your first one, which is, should we expect, I'm just paraphrasing you, should we expect any sort of recoveries to come from all the provisions that we have made in the legacy book? You're saying that, hey, broadly, we expect no further recognition issues and no further hits. Is it qualified? Yes, we have. Because we had some opportunities and some one-off games, we have used that. And it is reasonable to expect that as the unwind completes, between what we have on the book and a little bit of what we have off the books in the form of AIF, et cetera, there are a few hundred crores. I will not specify an exact amount. I'll just say that there are a few hundred crores of potential... Kind of right back that you can expect, but I'm not specifying a number nor a specific time period, but you should expect that. I think there is something there in what you said in terms of the way we have gone about providing over the last few quarters. Your second question was on capital. Again, a great question. We ended the year and the quarter at 19.8%. We have said in the past that while the regulatory requirement is 15 percent, If we get to the 17.5-18 kind of range, we will probably be looking at raising capital. In this quarter, if you see, It has only been 50 basis points, which means we have some runway ahead of us when we are at about 20. So we have like maybe four quarters of runway, three to four quarters of runway, depending on how you look at it and the kind of profitability we have in the coming year. We have some runway left. Let's see. Let's see what we need to do. We have some other levels as well to take care of capital needs, if any. You know, never say never on any of these things, but our current levels are healthy and consumption rate. Relatively modest, and so we should be able to get through a few quarters pretty easily.

Got it. Perfect. Great. Thanks a lot, sir.

The next question is from the line of Avinash Singh from MK Global Financial Services. Please go ahead.

Yeah. Good evening. Thanks for the opportunity. A couple of questions. The first one continues on the capital part. So, if we were to see that, you know, the balance sheet leverage, it is still pretty much on the lower side. So, from the network that is on the balance sheet, what all sort of adjustment on the monetary capital? Because it seems a pretty big number. I mean, is it kind of the deferred tax asset, that up front end income? So that's really, I would say, large number, because the balance equity is not yet four times, and the capital adequacy is relatively lower. So that's one, and particularly considering the fact that on the risk rate side also, you will have a monthly side that will not, that kind of risk rate indulge it. So that's why. The second one is on the tax. Now, the given that, you know, the tax, accumulated tax losses are close to 25,000 euros. What is the kind of a timeline by which you need to kind of consume it? So, just to get an idea that, okay, if that entire piece is going to provide you, you know, the tax. Thanks.

Yeah, thank you, Avinash. Great question. The first one. is what goes into the numerator of CRAR calculations. Net worth is what you see on the balance sheet, 28,000 crores. Be it the, uh, Sitting there, that's one element. Calculators, net-owned funds. So the second one, which is DTA, exists in our case because we have so much accumulated losses, etc. So we get the benefit of that from a PVT to FAT standpoint, but you have to pay for it a little bit in the form of capital. So that's the second one. The third one, which is the investment, is the one that can go away. As we keep divesting more and more of the assets, that part will go away. So the gap that you see between network and Inovat will narrow to that extent. It will narrow by about a third. Of what it is right now. So that's as far as capital is concerned. Your second question was, what was the question?

Tax.

Ah, tax. Okay. So, you see, the total, we have about 24,500. We have created about 2,100 crores of loss-related DTA, carry-forward loss-related DTA. That's 8,400 crores. So if you net off that, essentially you have 16,000 crores, give or take. Roughly 16,000 crores of future profits of the company are tax protected as far as P&L is concerned. That's the simplest way I can actually frame this. So however long it takes for us to consume, 16,000 odd crores, as long as that period is less than, what is it, seven years? Is that what? We can keep...

Okay, clear. And just one, again, on this, so in a normal course of business, as you kind of, for now, your profit has start to go up, and you start to sort of, so how will this thing, this carry forward losses will move, it will keep creating DTA, and I mean, so will this DTA go to rising, kind of, it will be offsetting, so how will the DTA kind of typically, you know, the typically over 2.5% kind of hours trajectory. Every time we want to do it.

Yeah, see, the... The way to kind of think about this is... And based on their... We will create DTA as necessary. to offset. But from a P&L perspective, the way you will see it is that effectively your PBT and BAT will be pretty Like some dividend line items, et cetera, or some other line items might be taxable, but mostly you should see PBT go to bad for the foreseeable future. From the volume perspective, you can keep an kind of effective date rate in your model at a very low number. This is all with the current level of carry-forward losses that we have. Any future carry-forward losses that get created will add on to it. And every time we get tax authorities approval on some carry-forward losses, they are valid from that point of time for...

Before we take the next question, we would like to remind participants to ask the question, please press R&1 on your phone now. Next question is from the line of Nishan Savate from KOTEX Security. Please go ahead.

Thanks for taking my question. Maybe you touched upon this already, but in terms of cost of funding, you know, what is the difference between We have an incremental and average cost of funds.

Yeah, so our stock cost of borrowing is about 8.8%. In Q4, our incremental borrowing cost for long-term money was 8.4%. We didn't raise much short-term at all, so I don't know. My guess would be that short-term will be like 7.25% right now if we went to the market and started raising short money. So, then you can take any mix between short-term money at 7.25 and long-term money at 8.40. That should give you a little bit of a sense of where our Q1 will be. We are currently not raising anything short-term. We have only been doing long-term over the last four or five months.

And in terms of your bucket, you know, what could be, I mean, if I have to just take a normalized bucket, how could that cost look like?

What do you mean by bucket? It's AA+. Oh, I said AA+.

Okay, okay, like that. So, see, I think we would, this is still probably at the higher end of the entire AA-plus range. If you look at the best in AA+, they are probably 50 basis points better than this, maybe 60 basis points better than this.

Sure. So probably you touched upon this, but, you know, now as your cost of funding comes down, you know, how does that really sort of feed into your asset side strategy? Do you see the rainbow competition changing?

So two things there. We will take some of the delta into BNF and we'll use some of the delta to drive growth. So effectively, we will... We will build some new businesses, which we could not do, you know, when we were a AA, and that will help us actually drive growth. And the rest, we will essentially, you know, feed through to our DuPont and get closer to our 3% return on EU and goals that we have shared with you all. So, both of those will happen. You've seen some early signs of that. You saw some of our high-ticket lab and some of our mass affluent housing disclosures this time. Those are more AA plus like this. So, we were a purely below price.

The second question is, you know, walking the, you know, inorganic route, is there anything that you are sort of, you know, planning? I mean, I won't say on the cards, but are you really thinking on those lines?

So, yeah, so we, nothing has changed on the front. As we've said this in the last couple of calls, I'll repeat, like, we are quite interested in M&A. We have limited interest in buying kind of perfect assets. You know, we'd rather find something which even if it's a little imperfect, but it is at a value pricing, we'd prefer that kind of a story. The market has not been conducive for that kind of M&A in the last few quarters and last couple of years, but we remain interested. We remain interested in the spaces of microfinance, gold loans, MSME, any of these spaces, you know, we remain interested and we do look at a lot of deals, but nothing's imminent. Hi. Can you hear us?

Yeah, yeah, yeah. You talked about the...

Sorry, I don't know where you lost us, so let me just quickly repeat. We remain interested in the spaces of microfinance, MSME, gold, etc. However, what we are looking for is an asset which is priced at value and not fully priced in, so we are okay to look at slightly imperfect assets. We can actually make the assets or take the assets to a better place. But it needs to be at value, which that strategy has not had much bite in the recent market because everything has been priced well, even assets in the MFI space, which is not our style of M&A. So we are still in the wait and watch mode, but we are looking at all transactions, but nothing is imminent.

And anything just on the promoter side, is there any sort of a, you know, kind of a holding, you know, thought process or threshold or something in mind?

The promoters have always held kind of 45-odd percent. The promoter holding currently is 46%. We are perfectly happy with that situation, and promoters remain fully committed to supporting the company in whichever way it needs to proceed. So, no, there is nothing very specific to talk about there.

No, I was just referring to, you know, any dilution that could happen because of a potential M&A.

Yeah, but none of the M&A's that will come our way in the segment that I mentioned are large enough to really merit anything. Like, you can't present here or there, man. Like, it's not one of those things. You can move things too much. We are not looking at a transformational M&A right now. We don't need one.

Got it. Got it. Thank you very much and all the best. Thank you, Nishin.

Thank you. Ladies and gentlemen, to ask a question, please press R&1 on your phone. Next question is from the line of Abhijit Jibriwal from Mopila Loswal. Please go ahead.

Yeah, good evening. Am I audible? Yes, Abhijit. Yeah, hi, sir. Sir, just two things. One is on slide 17. We have articulated a target, which is that ROAUM for exit quarter Q4. We want to take it up from 2.1 to 2.5. So, just trying to understand the levers here. So, I mean, the question here is that as we speak, we have set in the path that we are working on improving the yields, whether that comes to a change in product mix or even existing products in mortgages where we are trying to increase the yields. And at the same time, this credit rating upgrade will give us some benefit on the cost of borrowing side. I recall you saying in your opening remarks anywhere around 50 to 80 basis points. In addition to that, I mean, OPEX is something which has been kind of coming down. So a lot of concerted efforts. I recall you pointing that we'll now be adding more branches in this presentation. Also, you have shared that we have forayed into gold lending now and plans to add more gold lending branches. So, I mean, fair to suggest that a large part of this. Margin site. Given that you are already there in that band, the guidance that you have put out even after lowering that band. And in credit course, I mean, given how the environment is, OPEX to assets.

I believe that we have another kind of, you know, This is probably the last year or so that we can do this kind of OPEX narrative, but I think the OPEX narrative is not over. So we will continue to see that. That will still be a meaningful part of the delta. The second big favorable delta, of course, is the NIMS story, which, as you rightly say, is all going to be driven on the cost of borrowing side, from the liability side rather than on the asset side. On the asset side, yes, we will have a little bit more of unsecured and a little bit of gold, both of which is yield accretive, but we also have a little bit of this prime thing that we will start to do. On the whole, yield should go up, but even more so, the margin will grow a bit more than where we are, as our cost of borrowing adjusts to the AA plus reality, which we have not yet started. We have not borrowed even a single bond issue we have not done in the market ever since we became AA plus, because the markets have not been producing. Over the next few years, you will see us go there, so you should expect to see. On the credit cost side, even if there is a little bit of negative, i.e. 1.5 goes up a little bit from here, we will still be able to absorb that through the first two that I mentioned, and hence we feel comfortable guiding toward two and a half for exit quarter.

Got it. Thank you. And the last question I had was maybe just trying to clarify further why you already spoke in. I've answered a couple of participants in this call. This unsecured segment, basically unsecured business loans and PL, I find it a little difficult to understand that how is it that despite disruptions in various supply chains, I mean, you as well as other lenders who have reported until now have not seen any alarming impact. We then conclude that maybe some second-order, third-order effects of whatever disruption that we are seeing from the West Asia war might come in the coming months, or do you think that customers, and particularly self-employed and business customers, are resilient, and they have managed these disruptions very well?

For a while longer, it is inconceivable that you will see no effect. It doesn't seem like that. The effect will only come. I don't think you'll see it in Q1 either. Have a little bit of a margin of safety. Even after they start feeling effects of business flow down, they will go on for a month or two. After that, they will slowly become tardy in their repayment. And then it takes them three months for them to actually flow into a 90-day bucket. So this all will take time. So watching a 90-day, you know, delinquency metric, it is not going to move anytime soon. My guess is July, August is when you can actually see that outcome if at all. And that's what bounce rates are important to watch. That's why if you heard our earlier commentary, we said that in April, the bounce rates of the segment are the same as in March. Surprising, but true. We will keep watching it. We don't know and we shouldn't. This thing might hit. It's not our job to reason out why something is happening or not happening. It is our job to watch it like a hawk and react the moment we see something happening. So far, nothing much to report.

Yeah, this is useful. Thank you so much, Jaram, sir. I wish you and your team the very best. Thank you, Vijay.

Thank you. We'll take our last question from the line of Nikram Damani from Damani Family Office.

Hi, am I audible? Yes, sir, you are. Congratulations on a good set of numbers. I have two questions. First is, could you explain the 900 crore, the two line items on the PL, the net loss on fair value changes at almost 1000 crores, and the 590 crore impairment that you've taken, and the second one was around your branch expansion. You've sort of gone from 570 to 700, now you're going to 880 as per your... So, given that, any sort of change can we expect in the OPEX-2 AUM? Because new branches will take time to bring up the vintage. So far, it's done very well. So, on these two things. Thank you.

Yeah. No, no, thanks for saying that, Vikram. See, on the first one, you know, you point to two items which are... That was about 1,300 crores or thereabouts, and there was a 300-250 crore gain on the sale of... We had the 1,500 crore. We wanted to not take it through to PNL, or we wanted to kind of strengthen the balance sheet appropriately now that we got that bounty. The line items you are referring to are our ways of strengthening the balance sheet. identifying either areas where potentially in the future some losses could come and to preempt that and actually take, you know, roll that to now and then take the hits now itself or areas where I hope it might come back to you in the future. I don't want to go into it in any more detail than that, but suffice to say that this has helped us clean up the old legacy book quite nicely and also created some pockets of conservatism in the balance sheet, which can help us in a rainy day in the future. I think it's a fair way to talk about it. The way I say this is that the increase in our safety buffer is probably a third of the entirety. The other two-thirds is probably stuff would have come to us anyway, but maybe over the next two years.

Okay, good to know. Thank you.

Thank you. There was a second question on OPEX to assets and whether OPEX to assets is likely to increase because we are investing new in branches. The answer for next year is no. We have come up with our branch plan in such a way that our OPEX to assets will continue to fall. And let me restate something I said, I think, in a previous call, that if it comes to choosing between a declining OPEX to assets ratio and putting up new branches, in this year, our bias will still be towards the OPEX to assets curve. We want the opposite axis curve to come down for one more year. After that, we might be more comfortable for it to be stable, but we want it to come down for one more year. I don't think it will come to making that hard choice, but if it does come to making that hard choice, we will choose in favor of the OPEX curve rather than in favor of branch openings. Let me also add that the area where we are adding branches are gold and rural lending. A gold branch takes about one-third of the operating expense of a regular urban branch on an annualized basis, about one-third. A rural branch takes about one-tenth the level of investments of an urban branch. So these two categories where we are growing branches, they are actually much cheaper branches than what we regularly do in our full-service branches. So we should be okay, but if my math is wrong and if we end up seeing that OPEX-SERV starts to move up...

Thank you very much, everybody.

Have a great evening. Thanks for participating actively in our call. We look forward to hearing any more from you. If you have more questions, please do reach out to Ravi and the IR team and they'll be able to share more data with you. Thanks and have a great evening.

Thank you, members of the management. On behalf of the management team, we thank you for joining us, and even now disconnect your mind.