Aptus Value Housing Finance India Limited (APTUS) Q1 2027 Earnings Call Transcript

Good morning, ladies and gentlemen. I am Danish, moderator for this conference call. Welcome to the earning conference call of Aptis Value Housing Finance, India Limited, to discuss its result for the quarter ended June 30th, 2026. This conference call may contain forward-looking statements based on the company's beliefs, assumptions, and expectations as of today's. These statements are subject to risk and uncertainties, and actual results may differ materially. At this moment, all participants are in the listen-only mode and they will conduct a question and answer session. At this time, if you have a question, please press star followed by one on your telephone keypad. Please note that this conference is being recorded. We have with us today Mr. M. Anandan, Executive Chairman Mr. P. Balaji, Managing Director Mr. C. T. Manoharan, Executive Director and Chief Business Officer Mr. Sanjay Mittal, Chief Financial Officer. I would now like to hand the confidence over to Mr. Anandan for his opening remarks. Thank you. I know what to you, sir.

Thank you. Good morning, ladies and gentlemen. I am Anandran, executive chairman of the company. I warmly welcome you all to this earnings call. As you know, the Indian economy continues to exhibit strong underlying momentum and created a supportive environment for credit growth, including for affordable housing finance. Aptos delivered a good start to the year, with assets under management growing by 21%, Y-O-Y. The performance reached a good level during the quarter, and the growth was broad-based across geographies and distribution channels, with continued demand from other targeted customer segments. Profitability remained healthy during the quarter. Net total income increased, supported by business growth, improving operating leverage. Return on assets remained healthy, while return on equity, so that it is over 20 percent, R-O-E. Spreads remain largely stable. Our margins remain resilient during the quarter, despite a resolution of pricing of certain ending segments. And food and liability management, including reduction in cost of funds. Asset quality remains broadly in line despite continued business growth. Product costs broadly contained at 60 basis points during the quarter, reflecting resilience of our underwriting framework and disciplined portfolio monitoring. Looking ahead, we remain optimistic about the opportunities in the affordable housing finance sector. We are seeing good business momentum across our markets and are confident of delivering 22-24% area of growth as guidance while maintaining our focus on operating efficiency. With that, I would now like to hand over the call to Mr. T. Balaji, our Managing Director, to take you through the business focus and key operating and financial trial methods. Thank you. Thank you, sir. Good morning to all. To begin with, I am happy to convey that we have started FY27 on a positive note. The strategic initiatives that we outlined during our last earnings call are progressing well and has contributed to the continued improvement in our business momentum. We remain focused on balancing growth with profitability while maintaining our credit discipline. Overall, the quarter will influence our belief that the affordable housing segment we operate in remains structurally robust and continues to offer a significant growth opportunity. As outlined during our last earnings call, we continued to make steady progress on the strategic initiatives, aimed at accelerating our growth momentum. First, branch expansion. We continued to expand our distribution network, and during the quarter, we opened 33 branches, taking our total branch network to 3.2. Next is strengthening customer acquisition. We continue to diversify our sourcing channel through the expansion of our connector network and increase focus on digital marketing initiatives. The connector channel contributed 8% of our performance during the quarter, and we continue to see encouraging traction from this sourcing channel. The next one is the increasing average ticket price. Our country focuses on increasing the average ticket price, supported partly by inflation and calibrated customer selection strategy, which is helping us onboard higher quality customers while maintaining healthy business momentum. Next one is the customer quality and pricing. A calculated reduction in lending rates on select loan ticket sizes, together with a strategy of increasing the average ticket size, continues to support customer acquisition, while helping us onboard higher quality customers. Going forward, we remain focused on the discipline execution of these initiatives. During the quarter, The last year, whatever was guided has been achieved. In terms of growth, C1 disbursements grew 36% year-on-year, providing confidence in achieving the FY27 AEM growth guidance by 22% to 24%. Just to give up, July 26 disbursements also was good, and that improved by 25% as compared to July 25 disbursements. Branch expansion, we have added 33 branches during the quarter against a full-year target of 60 to 70 branches. Spread yield modulation remained in line with expectations and was fully offset by a lower cost of borrowing, resulting in stable spreads. Operating expenses to AEM remained at 2.7% within the guided range of 2.6 to 2.8%. Credit cost stood at around 0.6% in line with the guided range of 0.5% plus or minus 10 basis points for F527. Profitability, although we remain about 20% consistent with our profitability guidance. Based on the progress made during P1-FI-27, we remain confident of delivering our FI-27 guidance across growth, spread, operating costs, credit costs, and profitability. Our growth is anchored on the following strategic pillars. One is diversified mix, geographic expansion, productivity, digital excellence. One more thing which is important is product expansion. We are also evaluating opportunities to broaden our lending portfolio beyond home loans and SME loans through the introduction of a new lending product. Together, these builders continue to strengthen our franchise and position as well to deliver sustainable growth while maintaining our profitability and asset quality. Now, moving on to performance, EAM grew by 21% year-on-year to 13,648 crores. Discoursement grew 36% year-on-year to 1,053 crores. Grants network stood at 372 branches. Now, coming to asset quality. The collection efficiency stood at 98.52%, primarily impacted to an extent by CCASD, and some modulation in collections within the NDSC portfolio. Consequently, our 30-plus DPDs took at 6.87% as against 6.21% in Q4, FY26. Genuinely, collection performance has improved in July with the 30-plus DPD declining by nearly 20 basis points. We expect this possible trajectory to continue as our collection initiatives gain further traction. The GNPS stood at 1.7% as against 1.52% in Q4 SI26, while NET NPS stood at 1.29% as against 1.15%. The credit cost for the quarter remained within our graded range of around 0.6%. The credit cost for housing finance company came in at 0.2%, while the NDSP reported around 1.4%. Access is one company with two businesses and two benchmarks. Our housing finance business should be compared with HSV peers, and our NDSB business should be compared with the HSV peers. Each has a distinct operating model and risk profile. Therefore, controllable asset quality should always be assessed in the context of the portfolio mix. Now, coming to the profitability, during the quarter, net income margin grew by 19 percent year-on-year to 441 crores. We maintained our spread frequently to 9 percent, given by declining cost of funds to 8 percent. Our office, as a percentage of premium, remained at 2.7%. Profit grew 19% year-on-year to 261 crores, translating to an ROE of 7.8% and ROE of 20.4%, which is among the IS in the industry. Coming to the funding, during Q1, we raised approximately 8.22 crores on a consolidated basis, primarily through a niche of term loan, securitization, and direct attendance. Our liability profile continues to remain well diversified with 60% from banks, MCBs at 14%, Securialization at 18%, and the balance through MSB funding. We continue to maintain a strong liquidity position with total liquidity of 1,933 crores as of June 26, including 1,257 crores of unnaveiled bank sanctions providing us ample headlong to support crores. Now with these remarks, I open the floor for the question and answer session.

Thank you so much, sir. Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on your telephone keypad and wait for your turn to ask question. If you would like to withdraw your request, you may press star and one again.

Ladies and gentlemen, we'll wait for a moment while the question queue assembles. Our first question comes from the line of

Nishint Chavate from Kotec Bank. Please go ahead.

Hi, thanks for taking my question. You know, just a little bit of a guidance of the way this year is playing out. One is that, you know, the disbursement growth is pretty impressive at around 36%. You know, there have been challenges throughout the last four, five quarters. So, one is A, what are the drivers and, you know, what is the thought process come forward in terms of, you know, how this plays out over maybe the next two, three quarters, if you have some color on July, etc. And I think even on the asset quality front, if you could give some color, I know you mentioned that 30 DPD was down around 20 basis points, but A, what exactly are the drivers and, you know, how do we expect the year to really end? I think both are my two questions. Thank you.

First is on the growth, like what we have explained earlier. First, the growth will come from expansion of new branches in new seats and expansion of new branches in the existing seats. Thus, the increase in average ticket price by at least 1 lakh as compared to the last year. That is also... It will provide momentum for the growth. Next thing is the connector channel, which we have developed. That has actually gained traction. As I told you, during the first quarter, 8% of the disbursements have passed through connector channel, and this will be augmented in the second, third, and fourth quarter as well. And the other one is we have also optimized the lending rates on certain housing loan ticket prices. That is also likely to provide momentum for the growth. And that's what has actually happened in the sense, if you look at our July 25 disbursements, it is July 26 disbursements, it is 25% more than the disbursements as of July 25. So, all these things are ready to impact research and good growth, and... And that's what we are pursuing. That is on the growth. Next thing is on the, obviously, with this kind of disbursement growth, the AEM growth also will catch up, and that's what is giving us confidence that we'll be able to achieve the guided range of 22% to 24% AEM growth. Now, coming to the asset quality, as I told you, the credit cost in the HSC was at 0.24%. This is in line with any other housing finance company, And the quality of the book is delivering very well there. And if you look at the NDSP, there was a small hitch in terms of collection during the track end of June 2026. And that is what resulted in the collection efficiency dropping down to 98.5. 30 plus BPD going up to 6.87%. But we have already taken collective steps in terms of the NDFC collection, and we are very happy to tell that in July 2026, the stage 2 has almost reduced by 15 to 20 basis points. So this will continue, and going forward, the credit cost range of 0.5 plus or minus 10 basis points will be maintained, and this will be there for the next week later.

And any specific factors that you would want to call out because of weakness in collections or, you know, what happened really in the first quarter in the NBFC?

Sorry, repeat your question, sorry, Richard.

Yeah, so any specific factors that you may want to call out, you know, which were the reasons for weaker collections in the NBFC in the first quarter?

So, actually, first of all, let's be very clear. There is no problem with the quality of the customers who are there. They have funded the Indian BFC. It's basically the some commitment that was there at the end of June in Mexico. So, at the end, so, June 26, that was the same, and I think if you look at the credit cost of 1.4%, that compares with the NBSE of any other, with other NBSEs, in the same line of business. So, actually, There is no problem with the quality of the customers. Only thing is, some commitments, it was made at the end of the June, but they were not able to meet it. And that is where there is a slight deterioration in the portfolio quality. But that is getting corrected in the month of July 26th, and we will come back strongly in this quarter. So, again, just to add, you know, the data... Company-wise, the parent company in H&L business, the quality of portfolio, overduce, NPA data, credit costs, compares favorably with all other comparable housing companies. Equally, our NBFC data also is comparing well with other NBFCs of similar size or comparable NBFCs. But on a combined basis, on a consolidated basis of HL and NBFC, you know, the combined data got increased by these 20 basis points, primarily on account of, well, it compares well with other NBFC business, but still, on a combined basis, our data, wise, it is higher. That's what we are going to work strongly to reduce it further.

So probably, you know, this is kind of more of a month-end or a seasonal trend is what you are suggesting. I mean, that's how I would read it rather than saying that. Absolutely, yes, sir. Okay, got it, got it, got it, got it. Thank you very much and all the best. Thank you.

Thank you. A next question comes from the line of Omong Shah with Kotak Mutual Fund. Please go ahead.

Hello. Hi. Am I audible? Yes, good morning, and thanks for taking my question. Sir, my question is also related to the asset quality point. Now, we do understand that Q1 is a seasonally weak quarter, but our headline ratios in terms of 30 plus, 90 plus are also higher on a YOY basis. So, is there anything lumpy out here which has led to this? And the second question is that if you could, while the blended collection efficiency has dropped to 98.5, I mean, if you could just split it out as to how much collection efficiency has dropped in the MDFC business?

Yeah. See, because the correction efficiency in the housing finance company is around 99.5, and this one is around 97.5. That's the difference. So, adding up to this on a consolidated basis, it is around 98.5, too. But regarding the increase in the NPA, actually, we are not seeing that kind of lumpiness in this quarter or year-on-year basis. In fact, this is what we have also guided. In the same 1.49% was the NPA as of June 2025. That has become 1.7%. But this will definitely be brought down to the kind of efforts that are being done. And this is broadly on account of the NDSP and we are getting in place.

Sure. So, this is not specific to any particular region or any particular cohort of customers or anything like that? No, no, no. Okay, understood. And sir, just one suggestion. I mean, I do appreciate that. I mean, on the call, you are trying to emphasize a lot more about the HFC and the MBFC business where you would want us to sort of compare both the businesses separately. But just a suggestion, I mean, if we could also start giving data points for both the businesses separately, I mean, it would help us as investors and analysts to kind of compare it in a more meaningful way.

Uman, we have already decided, we have already discussed from September 2026 onwards, you will get data for both the companies in the University of Texas.

All right. Thank you so much, and I'll miss you all the time.

Thank you.

Thank you. Our next question comes from the line of Amit Khaitan with Yes Securities.

Please go ahead.

Yes, Ethan.

Yeah. Hi. No, this is Rajiv here. Sorry. So just to, you know, clear this call and asset quality, you said that towards the end of June, some of the NBFC customers couldn't pay and couldn't honor their commitment. But in July, they have not only cleared the June dues and they've also honored their July commitment as well. So now they are back to, they have kind of rolled back their bucket, right? So, on an ongoing basis, your collection efficiency, which was, say, 97.5 in NBFC, now should be coming back to normal of, what, 98.5, 99, I mean, in June, July?

Yes, definitely, definitely.

Got it. So, incrementally, you will not see flow forward from the NVFC portfolio, you know, in July and August.

Yes.

Okay. And, uh, on, uh, this, uh, you know, from a, uh, growth, uh, point of view, and again, you said that July does work for higher 25% Y&Y, uh, in your initial remarks, but I think from last July, you also stopped doing, uh, you know, uh, you know, this, uh, uh, you know, below 7 lakh loans also. I mean, you stopped doing below 7 lakh ticket sizes from last July. So, On an adjusted basis, I mean, see, on a like-to-like basis, then how should we look at your disbursement run rate going ahead? I mean, see, 35% in 1Q was also because of a lower base last year. But July is 25, but you still have a lower base. But when the base normalizes, how should we look at your disbursement growth?

See, this quarter, minimum 25 to 30% increase over the last quarter, year or year basis, will be happening this quarter. Impact of recent carbon rate will be coming down.

And the disbursement is also now happening on NBFC. I mean, on the NBFC side, you have not kind of calibrated on disbursement, right? Because everything has come back to normal.

Yes, yes. See, that's what we told. Actually, there is no problem with the quality of the customer. It is just one small hitch that has happened during the second of June. So, there is no way that we are reducing the business in the end years.

And one thing on the funding side, two things, I mean, NHB proportion in the funding is at its lowest in many, many quarters. And I don't see any NBFC sanction in the pipeline also. So what is the reason? And second is the unavailable sanction from banks, as we see in the liquidity slide, what will be the cost of these sanctions when you drop?

First of all, let me talk about this NHB. See, what is happening, we have also applied to NHB for a 500 crore e-finance facility. But the indication from NHB is that the cost of funds that they are going to give will be around 8.2 to 8.3 percent. Whereas in the housing finance company, we are able to raise money from the banks or from the, in terms of securitization or NPDA, at 7.8 to 7.9 percent. So, it makes more proven to borrow from these sources rather than going to NSB. So, but if NSB is able to offer competitive rate of interest, then we will go to NSB. Otherwise, it will be from the other sources. So, that is on the NXB borrowing. Next thing is this 1,257 crores of sanctions which is there. In the case of HSE, the sanction rate is around 7.9 to 8.1 percent. In the case of NDSB, it is around 8.1 to 8.25 percent.

Got it, sir. Thank you so much, Vesitla.

Thank you. Our next question comes from the line of Amit Khaitan from Lebanon Capital. Please go ahead. Hi, sir. Thank you for taking my question.

So, a couple of questions. First is on the, you've talked about getting into new lending segments. Now, there are merits to being a company focused on a single segment, and the addressable market for affordable housing, that is pretty large. So, what is the rationale for, you know, getting into these new segments, and which products are under consideration?

See, this new product segment is in a formative state. We are in the process of discussing on which product we want to get into. We will be able to give more color in the next quarter phone call because this is the soft product which is there in the company, so we will discuss it internally and then give you more color in the second quarter.

Got it.

But, can you explain what is the rationale for getting into new segments? Because, you know, our growth opportunity in the single segment is pretty huge, right? So, why now?

Yeah, that's true. You know, we are looking for, you know, to really look at our next stage of growth, let's say from 15,000 to 25,000, or from 25,000 to upwards of 50,000 over to the time. We felt there is a strong need apart from strengthening our distribution, because online associates, etc. There is a need to diversify the product range also. So this will, we see opportunity particularly in the NDFC listeners. Because in the HL, we'll continue to be largely in HL, and after meeting the basic requirement of HL, the, you know, gap available in non-HL in HL company is limited. But the LBFC-wise, today we are offering to the SME, and to some extent, lab. Now, there is a large scope to look at the add-on products, particularly even to our existing customers. We have today over 200,000 customers availing the unsecured or security-based or non-security-based products, financial products from other vendors. We have a very good experience with so-and-so customers, and we see an opportunity for us to introduce appropriate products in our NDSC to expand. So that to support our growth, apart from the distribution, we are looking at really closely the products also. We intercede we want to augment.

Understood. But does that mean that, you know, we'll go slow in geographic expansion and much deeper into our existing geographies with more products?

No, as I mentioned, the distribution will cover the geographical expansion will continue. And the, you know, and our direct sourcing through our branches, through our feed staff will continue. Online will continue. Business associates will continue. But that, you know, but that's in terms of largely, as you know, it is around distribution in some form or the other. Physical, online. But then apart from that, the other way in terms of helping the company to scale up further is really the product expansion, and that's where we are looking at an opportunity to be there in our NBFC company to look at the, to augment the product in the NBFC business, particularly to deliver our existing customer base, which is also growing at about, almost about 25%. Our customer base is growing. So that we should be able to leverage the new products as well.

Understood. My second question is on asset quality. If you could give some color in terms of ticket sizes, how the asset quality varies, say, between you have some book on sub 7 lakhs and, you know, maybe 7 to 10 and 10 plus. Is there a difference in the credit behavior and how are the NPs between the different ticket sizes?

So, we are not seeing that kind of a differential behavior in terms of ticket sizes, except for the bounce rates. I mean, as we already communicated, when we less than 7 lakhs, the bounce rates were 2 to 3 percent more as compared to the greater than 7 lakhs. So, other than that, we are not seeing the kind of differential asset quality when you look at the ticket sizes.

Got it. Lastly, our OPEX hasn't gone up a lot while we've added 33 branches this quarter. Is that because these branches were added towards the end of the quarter?

Yeah, to a certain extent, yes. Of those 33 branches, 10 branches, 10 to 11, 10 to 12 branches were opened before May 31st, and the balance was opened in the month of June. The rent and all those costs will get reflected in the second part. No, but we have a tractor car. Even last year, we arrived at about 30 net branches, and that was not really resulted in a rough, you know, going up in any significant way. In fact, currently, we are planning around, what, 60 to 70 branches. We have already added 33 in the first quarter, a plan to add 120, and 35 in the second quarter as well, and the balance will be added subsequently. And some of these branches get started in the New York State, like Barras and Varsha. But despite this, given our, you know, consciousness in terms of operating costs, In fact, not only the investment in the branch rate, but we are also making, enhancing our investments in the IT. But despite that, we are very conscious of our cost of our operations, both as a percentage of premium as well as a percentage of the income. So that way, we have a very clear advantage in the competition today that we will continue to maintain despite the investments in the intra-inbrances and IT.

Got it. Last thing I can just ask you, can you give some color on how the acquisition in the industry is evolving? Has it improved or does it continue to remain a thing?

If you look at the acquisition, at the senior level, absolutely there is nothing. In the case of medical management also, it is only maybe 5-6%. In the case of a branch manager, it is around 10-15%. But at the field level, it is around 40-45%. Earlier it was around 50 to 60 percent, it has come down to 45 percent, but still this is high. We are, we are, we have introduced retention incentive, insurance schemes for these employees, and all those kind of things, retail people, but still, if people come and open branches in the states where we are operating, the first thing they do is to support our field officers. But that's a challenge which we need to reckon with. But that is why we are also launching the alternate channels so that there is less dependence on people as well.

Understood, understood. Thank you and all the best.

Thank you. Next question comes from the line of Ranesh Patil from ICSA Securities. Please go ahead.

Hi, sir. Thanks for the opportunity. Just one question on the strategy side. So, last year, same time, you know, sort of exiting the below-7-dex products. Now, when we are thinking for other product expansion strategies, naturally, you know, we have to calibrate growth in some of the existing products to meet NHB criteria. So how one should think about the EU mix shaping up in near term? And is there any impact on the ROA at all, you know, when you start expanding new product lines?

So, if you look at the product mix, currently in the housing finance company, 67% is housing loan, and the balance is the non-housing loan, either in the form of quasi-home loans or a top-up or insurance company. So, this is likely to continue. Because we will not, I mean, we still have to maintain these principal business criteria. At this level of product mix, we are comfortably meeting the principal business criteria. So the mix will remain the same. So you can tell any other business will be done, it will be done in the NDFC.

Yes.

This is not likely to, just one second, this is not likely to impact the ROE. Oh, yeah. No, no, but unless the borrowings increase and the leverage increase.

Got it, got it. So my point is, in this, you know, the 53% mix, you know, which we have currently, when we start adding new products, right, to maintain this mix, you know, naturally the new product lines will grow at a faster pace because of lobbying. And hence, you know, some of the existing product lines in NBSP should see lower growth, right, at blended basis. Otherwise, we'll miss energy criteria. So, strategically, let us say, which product do you think will go slow in near-town or maybe will offset by near-product lines?

I think we need to be clear. The mix which I was talking was on the housing finance company. So that mix will continue. So any new product that will be done will be done in the NBFC.

NBFC company.

NBFC company. Okay. So while the consolidated mix might change, but on the housing finance company, this will be the mix. So, there will not be any impact on the principal business criteria, or on the ROA, or on the ROE.

Okay, okay. So, Nutshell, even if we go for this product expansion, broadly there will be no impact on the profitability.

Yes, yes.

Okay.

In fact, it can be more. In fact, it can be more.

Got it, sir. And there's this last clarification on, again, this subject of security movement, right? So, given we sort of anticipated that ticket size a year back, and I'm sure incremental growth would have been towards better customer pool. So, logically, at least the early bucket should have YY improvement, right? Sequentially, I can understand that there is a seasonality, but if we are exiting this, let us say, the challenging segment last year, and 12 months MOB, I am sure should perform better than a vintage MOB. So, in that sense, why certainness is not coming down on YY business?

Correct, Renish. What you are asking is very logical, but the thing is, This is not because of the deterioration in the accurate quality of the customers, it is just that it was a temporary siege during the sad end of June 26th, where some commitments were not delivered. And that has happened in July, that's what I'm saying. Whatever commitments didn't happen as on 30th June, that has got honoured in the month of July.

Got it. So in this case, maybe...

With the result, there is an improvement in July, so this improvement will continue in the month of August and September as well.

Got it, sir. Okay, got it, sir. Thank you and best of luck.

Yeah, thank you. Thank you.

Our next question comes from the line of Raghav Gurk from Ambit Capital. Please go ahead.

Thanks for the opportunity. I have a few questions. One, your tax rate has been lower for the last two quarters, around 20% versus, I think, if you look at the previous trend, that's around 23%. So why is that? And then going ahead, what should be the normalized metric on the effective tax rate?

I didn't get your question correctly. Why is it not clear, Raghur?

So, are you able to hear me now?

Yes, slightly better.

Okay, I'm saying that your effective tax rate has been 20% for the last two quarters, Q4 and Q1, versus 23% before that. So why is that? And then going ahead, what should be the normalised budget on the effective tax rate?

The tax rate is basically because of the benefits we are getting because of the Adversive Right-off policies that we are following. And that's the tax benefit we are getting. So that's what has resulted in this, and this will continue. The credit card is largely on account of write-off rather than provision. So write-off as soon as you are eligible for the tax elements.

Understood. So you're saying this will continue, is it?

Yeah.

For July, you said that your disbursements are up 25%. What is the YOY growth in volume terms for the month, like in terms of number of loans?

These are very specific questions. I will answer when we meet up. I don't want to...

Sure.

So, oddly, our Zoropin loan number of customers will be around... It will be the same.

Sorry, how much?

No, it will probably be the same. Patrick, we will discuss, yeah, in well-being.

Sure, sure. Last question, the assignment income. That run rate in absolute value term, that run rate seems to be stabilizing, or if I look at that as percentage of the off-book AUM, the margin is normalizing lower. Where should this margin settle on a steady-state basis? Because when I look at... Other housing finance companies, the assignment income as percentage of assets, of book assets, seems to be somewhere around 11 to 12 percent. Yours is currently at 23 percent. And it's been coming down from as high as 40 percent. Should it, say, set it somewhere closer to 12-15 percent mark or maybe lower? Assuming that, you know, you probably have a higher yield book versus others or a higher yield product. I just wanted to get some things there on the market.

It should come down to other characteristics of children.

Understood. Thank you a lot. That was all coming.

Thank you. Our next question comes from the line of Sukriti Dipartil from ISET FinTrade Private Limited. Please go ahead.

Good morning to the team. I have two questions. My first question to Mr. Manohar is, beyond the regular outlook, what are the top two to three execution priorities you are focusing on in the next few quarters? And alongside that, what do you see as the biggest risk in borrower demand shifts, interest rate movement, or competitive pressure? And how are you preparing to manage them while strengthening access position in affordable housing finance? That's my first question. I'll ask my second question after this. Thank you.

Thank you. Once again, we didn't understand the question. Can you please repeat it? Sorry about it.

Yeah, I'm asking about concrete plan of action that you may be implementing, like expanding branch networks, strengthening digital lending, or diversifying borrowing segments, and also the risk you see in borrower demand, interest rate cycles, or competition. Just want to understand both on how you plan to grow and how you are preparing to handle challenges that could slow down the growth process. Thank you.

First of all, computation that will be there that we cannot rule out. So, branch expansion will be happening as guided. We have guided about 60 to 70 branches in financial year, of which already 33 have been opened. And another 20 or 23 will happen in this quarter, and the rest will happen in Q3. So branch expansion, we do not have any challenges. And the growth will come, whatever branches we are opening, obviously new sales officers will be joining there. So to that extent, number of sales officers will go up, and to that extent, business will also go up. So we don't find any challenges in the growth from the new branches. So that is, we will go as per plan.

Thank you.

Sorry, sorry.

Please continue.

Now, regarding the risks we are seeing for the growth, we are not seeing that kind of a risk because we always believe there is good opportunity for growth in the affordable housing segment and also in the NBFC where we are located. In the new geography. In the new geography, it also exists in geography. Of course, competition is there, but still the market is there and we still believe that we can still grow. And to have the sustainable growth as explained by chairman, we are also getting into the new product. So, this is what is the, so, definitely growth is not an issue considering the fact that we are guiding 22 to 24 percent. So, this is not, I mean, I hope I answered your questions on the, and also this competition, again, I've never told, there are people, there are companies who are opening branches in the states they are operating, but what we are doing is, we are also, when somebody comes and tells that people are opening branches, We also say that there is business opportunity available in the business stage, but we are also getting into states where the completion is not very intense. For example, Orisa, and also in Mahavastra, the locations where we have open branches, the completion is not very intense. So, this is how the problems will happen, and of course, we will be following this contiguous branch expansion strategy and going deep into a contiguous state.

Thank you. Can I ask my second question? The second question is to Mr. Mittal. Again, along the similar lines, while the business guidance is just now mentioned, to understand from a financial point of view, what key risks or challenges you anticipate in the coming quarters and what specific measures are being taken to manage margin, liquidity, and balance sheet strength, especially in areas like borrowing costs, assets quality, and regulatory compliance. Thank you.

So, first coming on the margin front, so as we have reduced the rate of interest income, so that we are protecting by effective borrowing. So, we expect the gross pay to remain at 9% and that since our leverage is also being stable around, so we expect the means to be around 13%, 12 and 13. So, our names are protected from that perspective. In terms of operating costs, we are very frugal, so we have consistently delivered 2.7%, and in spite of increasing bands, the way we manage the operating costs, I think we have 2.7 to 2.8% range, but we are very strongly managing our operating costs, and we are very constant on managing that. Regarding the credit cost, that is one little aspect where we are working on. Definitely, Walaji has also emphasized that collections is one of the key things which we are trying to manage, and we expect that to also range in between 50-60 paisa. Thinking about aspects in the financial, which we have declared. In terms of liquidity, what we have been doing is, we have been keeping enough liquidity for two, three months. And since our leverage is very low, so we are able to negotiate with the bank and bring them to our price, what we want and what rate of interest we want. We are not in a hurry. We are not leveraged. That is the most important aspect of our balance sheet. So we can wait and bring the lenders at our terms and at our rates rather than asking our offering rate what banks are asking.

Thank you, and thanks, Vishen.

Just to add to what Sanjay said, you are also asking about the list that can come in the second quarter or third quarter. The only thing which I am seeing is if there is, I mean, if you look at our total borrowing, 66% is variable and 34% is fixed. Of this 66%, 35% is linked to repo rate and 31% is linked to NCLR. So, basically, there is an increase in the repo rate. There can be some impact, but we have also come to the rate. It is just the impact is likely to be 0.6 percent. So, that also will not be a major impact in terms of maintaining the means of the spreads.

Thank you, and best wishes.

Thank you. Thank you.

Our next question comes from the line of Ankit Shah from White Equity Investment Advisors. Please go ahead.

Thank you for taking my question. Sir, our causey home loan, LAP, has been growing faster than the home loans over last year or so. So, have we optimized lending rates more in that segment, or what is the reason for this higher growth rate? You are talking of the housing loan?

Yeah, and the optimized rates. Yes, we have optimized on certain ticket prices and back to initial loans. Yeah, in HL only, and back to only incremental housing loans.

So, the question was, our LAP is growing faster than housing loans. So, what would be the reason for that?

Well, if you look at it, last year, our HSP loan book grew by 18% and NBSC loan book grew by 29%. Now, in this quarter, HSP loan book has grown by 20% and NBSC loan book has grown by 24%. So, we would like to concentrate more on the housing finance and grow that work, and also concentrate on the NDFC by introducing new products and also introducing products.

Sir, my question was on the parent company side only. Within the parent company, between the home loans and the quasi-home loans or LAP. So, LAP has been growing faster than the home loan product. So, I am asking for the reason for this difference, not the NBFC.

No, correct. But that quasi-home loan has a lower base. So, that base effect will always be there, right? Thank you, everyone. Thank you.

Okay. My second question is a simple bookkeeping question. So, we've in the past been giving the advances split in the IP in absolute numbers. This time we've changed it to percentages. So, because of this, Odisha and Maharashtra numbers are looking a little off. Can you give the absolute split of the advances?

I can ask Amit to contact you and give you the exact numbers on the statewide loan book. Actually, what was the percentage that will come? What is the loan book in Maharashtra and what, sir? 162 crores. Yeah, 60 crores. 60 crores in Maharashtra and what, sir? Now we have best about 160 crores. Which is about 1.2 percent of it.

Yeah. Okay, this is Elfuzer. Sir, my last question is, difference between the AUM and the advances have dropped by 115 crores in this quarter. What would be the reason for this? What? Difference between? The difference between AUM and the advances book.

That used to be 1175 crores. Yes, you are ready. Yes, you are ready. You can't attend. It's basically 13 to 14, not 12, 16, and 21. It's almost 957 pros. So, we can't do it. How is it basically the attendments that we have done? Yeah, so if we do assignments, though, yeah, so if you do assignments, so, yeah, okay. No, no, once again, let me clearly tell you, if you do a direct assignment, that gets added in the asset center management, but it gets out of the balance sheet. The next thing is, the balance sheet as I said also gets reduced by the EPL provision and also the processing piece that is yet to be recognized as such as the AX. Okay. So, both are the classes for the difference.

Got it. Thank you for taking my question.

Thank you. The next question comes from the line of Rajiv Mehta from Yes Securities. Please go ahead.

Yeah, hi, hi. Thank you for allowing me to follow. Sir, just two questions. First on credit cost, your guidance of 50-60 basis points for the whole year. I just want to understand from two perspectives. One is this write-off. You said that you've started doing aggressive write-off. So, is this an acceleration of policy and would this remain an ongoing policy of write-off? And second is when you look at stage one provision also, I mean, you've drawn down from that provision of stage one, and now it is 24 basis point, it used to be 40 basis point, you know, six, seven quarters back. So how should we look at your credit cost guidance in view of how the write-off, you know, policy will happen, and how the stage one provision coverage will be maintained going ahead.

What is happening? First of all, this... Credit cost at 0.6% will be maintained for the year. And regarding the stage 1 provision, which has got reduced, basically, the behavior of the customers in terms of repayment in the stage 1 category has been very good as per the UTM model. And that's why this percentage coverage has got reduced from, say, 0.3%. And since we saw some deterioration or some increase in the stage 2 assets, we increased the provision coverage there. That's the whole logic.

And on the write-off, is there, I mean, have you switched to a policy of doing it?

The policy will continue. Of anything more than 500 days will get written.

Okay. 530 DPD, right? Okay.

Yeah.

You got it. And just on connectors, you said 8% contribution in disbursement. So, two things. What is the number of connectors right now? And what can the number go to? And also, their proportion in disbursement, maybe say next year.

Well, actually, we have got right now across 333 branches, we have down 1,000 connectors, average 3 to 4 connectors per branch.

Okay, thank you.

Thank you. Our next question comes from the line of Shubhi Gupta from CleanIt Reset Manager. Please go ahead.

Hi, sir. Thank you for taking my question. I'm sorry this has already been answered. Sir, if you could just give me the breakdown of the slippages that have occurred.

What is the slippage? I'm not going to understand your question.

Any slippage that has happened in this quarter, and if you could give me any breakdown for this?

No, that's what we have told. Stage 2 from 6.21% in March has gone up to 6.87%. And NPA has also gone up from 1.52% to 1.5%. I'll give the number to you when you throw on that.

Sorry, sir?

Sir, the numbers will be given to you. If I contact our investor relations with Mr. Amit, he will be able to give that number.

Okay, sir. Okay, sir. Thank you.

Thank you. Ladies and gentlemen, that was the last question for today. I now hand the confidence over to the management for the closing remarks. Thank you. And over to you, team.

Thank you, everyone, for attending the phone call. I would like to pay my sincere gratitude to all analysts, investors, friends, for taking time to listen to us today. Please feel free to contact us if you have any further queries. Thank you.

Thank you so much, Mr. Anandan. Ladies and gentlemen, thank you for being a part of the conference call. If you need any further information or clarification, please email at amit.singh at aptisindia.com. Ladies and gentlemen, this concludes your conference for today. Thank you for using course call conferencing services. You may now disconnect your lines. Thank you and have a pleasant day. Thank you.