Aptus Value Housing Finance India Limited (APTUS) Q2 2027 Earnings Call Transcript

Good evening, ladies and gentlemen. I'm Ikri Ansari, moderator for this conference. Welcome to the Earnings Conference Call of Aptos Value Housing Finance in the LMT to discuss its results for second quarter and half year ended September 30, 2026. This conference call may contain forward-looking statements based on the company's beliefs, assumptions, and expectations as of today. These statements are subject to risks and uncertainties, and actual results may differ materially. At this moment, all participants are in the listen-only mode. Later, we will conduct a question-and-answer session. At the 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. Siti Manoharan, Executive Director, and Chief Business Officer, Mr. Sanjay Mittal, Chief Financial Officer. I would now like to hand the call over to Mr. Anandhan for his opening remarks. Thank you, Vinavati, sir.

Thank you. Good evening, ladies and gentlemen. I am Anandhan, Executive Chairman of the Company. I warmly welcome you all to this earning call. Actors continue to deliver healthy growth during the quarter with continued demand from our target customer segment, leading to asset center management growing by 20% year-on-year. Businessmen remain healthy, supported by new grants across existing and newer states. Actors maintain NP profitability during the quarter, with the total net income growing by 19% year-on-year. Return on assets, return on equity, soon at 7.7% and 21.1% among the best in the industry. On the asset quality front, we remain focused on maintaining portfolio quality through discipline, underwriting, and continued strengthening of our operating framework, including collections. Looking ahead, the long-term growth prospects for affordable housing finance remains increasing. With sustained demand across our markets and continued expansion of our distribution network, we remain focused on delivering consistent growth, operating efficiency, and healthy profitability. Our priorities for the remainder of FI27 remain focused on sustaining growth momentum, maintaining portfolio quality, and current risk management. As we continue to scale, our emphasis remains on translating business growth into sustainable learnings, healthy returns, and long-term value for our shareholders. Thank you, and I will now hand over to Mr. Babaji to take you through the quarterly performance in greater detail. Thank you. Thank you, sir. Good evening to all. Before discussing our quarterly performance, I would like to highlight an important aspect of our business. AdSense operates as a diversified lending franchise through two distinct entities. One is the housing finance company, primarily focused on affordable housing finance, and an NDSP catering to the financing needs of small businesses. As indicated in our previous earnings call, starting this quarter, we have commenced separate disclosures of key business and financial parameters for our housing finance company and NBRK businesses. This will provide investors with greater visibility into the performance, growth drivers, asset quality, and profitability of each business, while also enabling a better understanding of actors as a diversified lending franchise. I am happy to share that we continue to deliver healthy growth during QGSI 27 with our overall AEM crossing 14,000 crores. The strategic initiatives outlined during our earlier earning calls are progressing well, and we remain focused on balancing growth with profitability while maintaining our credit discipline. Our affordable housing finance company continues to perform well, delivering healthy growth and profitability with AEM causing 10,000 growth. The segment remains structurally robust and continues to offer significant long-term growth opportunities. Our NDSP is also gaining significant scale, with AEM costing approximately 4,000 crores. As the business grows, we have focused on strengthening its underwriting and operating framework, enriching greater process discipline in terms of collections and risk management. We continue to advance the strategic initiatives outlined in our last earnings call to strengthen the growth momentum. The first thing is the branch expansion. We continue to expand our distribution network through new branches in both our newer geographies of Maharashtra and Odisha, as well as deeper penetration in existing markets. During H1 SI27, we added nearly 60 branches, taking our total branch network to around 400. Importantly, branches opened in recent months have already started contributing to business growth, with their contribution increasing as they matured. Then the next one is the continuing customer acquisition. We continue to diversify our sourcing channels through our direct sourcing network, expanding connector network, and digital marketing initiatives. The connector channel contributed nearly 12% of our incremental business during the quarter, and we continue to see encouraging traction across our sourcing channels. The next one is the increasing average ticket size. Our continued focus on increasing the average ticket size supported by inflation and the calibrated customer selection strategy is enabling us to onboard higher-quality customers while sustaining healthy business momentum. This further strengthens our portfolio quality and supports sustainable long-term growth. Now, next one is the customer quality and pricing. Our calibrated reduction in lending rates on select loan ticket sizes, together with our strategy of increasing the average ticket size, continues to support customer acquisition while helping us onboard higher-quality customers. Additionally, we have conquered strengthening our underwriting and collection infrastructure within the NBFC business to enhance portfolio quality. Going forward, we remain focused on disciplined execution of these initiatives while addressing the recent challenges in these collections and asset quality, particularly within the NBFC business. Together with our strategic pillars of diversified customer mix with varied income streams, calibrated geographic expansion, productivity, and digital excellence, we believe these initiatives position us well to deliver sustainable growth while maintaining profitability and credit development. The execution on various strategic initiatives during H1 F527 continues to support our full-year outlook with healthy performance across most operating and financial parameters. Growth H1 disbursements grew 27% here on year to 2,206 crores. The disbursements in Q2 grew 20% here on year to 1,153 crores. While business momentum remains healthy, factoring in recent weather-related interruptions and tightening of NDSP underwriting, AVM growth is likely to moderate the best in Q3. However, we are confident of achieving the momentum back in Q4, F527. Branch expansion, we have already added 60 branches in H1, F527, keeping us on track to achieve our full-year targets of around 70 branches. Spreads moderated marginally debt-term basis points on a consequential basis during the quarter. Operating expense remains at 2.8%, this is our guided range of 2.6% to 2.8%. Now coming to the credit cost. Credit costs in our FSC business remain well controlled. In the NBSC business, while credit costs are elevated but remain broadly comparable to industry levels, our focus is on bringing them down further to discipline underwriting, process improvement, and strengthening of our collection infrastructure as the business reaches a meaningful scheme. Starting in the elevated overviews in the NBSC, we have revised our consolidated FI27 credit cost guidance by around 5 to 10 basis points. ROE remains about 20%, consistent with our profitability guidance, which remains unchanged. Overall, we remain focused on delivering healthy growth and industry-leading profitability, while service strengthening our operating framework, particularly within the NDSP business. While we have recalibrated our growth outlook and credit cost expectations, our guidance on operating efficiency and profitability remains unchanged. Now, moving on to performance. Because the business growth in 3, AEM grew by 20% year-on-year to 14,177 growth. The half-year growth in business was at 27%, and business in 2-2 grew 20% year-on-year. Branch networks stood at 397 branches, adding 58 branches in the first half. Asset quality, the collection efficiency stood at 98.35 versus 98.52, primarily impacted to an extent by some moderation and collections within the NBFC. Consequently, our 31st BPD stood at 7.08% as against 6.87%. We remain confident of improved collections and the gradual normalization of asset quality metrics to earlier levels by the end of FY20 select. GMPA for the HFC business put at 1.48%, while the NDSP business reported a GMPA of 2.17%. On a control basis basis, GMPA put at 1.68% compared to 1.7% in Q1, FY27. The credit cost for HFC came in at 25 basis points, while the NDSP reported around 159 basis points for the first half of the year. The credit cost for the consolidated entity came in at 67 business points from the first half of the year. Profitability and efficiency. David in the quarter, net income margin grew by 19% year-on-year to 463 crores. Our stress modulated marginally to 8.9%. Our office as a percentage of AEM was at 2.8%. Profit grew 18% year-on-year to 367 crores, translating to an RAE of 7.7 and 20.1% respectively. The profit growth for the half-year changing at 19% year-on-year to 528 crore, translating to an ROE and ROE of 7.7 and 20.1%, which is among the highest in the industry. Funding, during Q2, we raised approximately 9.50 crores on a consolidated basis, primarily through a mix of term loans, socialization, and direct attendance. Our liability profile continues to remain well diversified, with 64% from banks, NCDs at 11%, socialization and DA at 18%, and the balance to your energy. We continue to maintain a strong liquidity position with total liquidity of 1,759 crores as of September 26, including 1,028 crores of unavailed bank sanctions, providing us ample headlongs to support growth. Dividend, the board has obtained an interim dividend of this two per share. Now, with these remarks, I open the floor for the President and I position. Thank you.

Thank you, sir. Ladies and gentlemen, We will now begin the question-and-answer session. If you have a question, please press star and 1 on your telephone keypad and wait for your turn to ask the question. If you would like to withdraw your request, you may do so by pressing star and 2. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Relish from ICICI Securities. Please go ahead.

Yeah, hi, sir. Congress on a good set of numbers. Yeah, hi. Sir, just two things. So, one on the growth side, right? So, when we look at the disaster spent for first half, and, you know, when we back-calculate the disaster spent run rate to arrive at 22% growth, I think the ask rate is roughly 2,800 plus for the second half. And now, you know, given the way micro is currently, how confident we are that, you know, we'll be diluting 22% growth in F27?

See, normally, the second half of the year is any point. Any NBSE or an HSE is better than the first half. That is the first half. Next thing is, the 60 branches which we have added, that is contributed only partly. So, that has to contribute for the full half-year in the next, I mean, third quarter and the fourth quarter. So, these are two things which is actually helping us, give us confidence to achieve this. But having said that in October, but having said that considering the asset quality in the MDSE, we are also strengthening the underwriting process. So there can be a slight drop in Q3, but we can be confident of achieving and catching up the... This is in the Q4, and still achieve this 22% growth.

Got it, got it. Just to relate to that, I mean, you know, the way this noise is around the drought, etc., and maybe higher inflation as well. So, considering this thing also, do you feel, you know, there could be a scenario wherein we would be forced to tighten tight filters maybe in second half and that can impact the disaster spend or how you are internally assessing the prevailing macro challenges?

The broad impact is in select places in some of the places in Maharashtra, but actually we are not seeing that kind of an impact in terms of ramping up our business in Maharashtra. So we are actually seeking on the ground, the information case, we might not get impacted because of broad in terms of building up the volumes.

Got it, got it. Okay, and so just last thing on the ARC sale, right, so we have sold roughly 89-90 crores worth of assets to ARC. Now, just wanted to understand, you know, first of all, whether these are the standard pool or it was in 1 to 90 DPD, and also related to that, again, you know, what explains the sequential increase in 30 plus DPD despite the ARC sales.

No, actually, ARC sale is a combination of 1 to 90, I mean, 0 to 30, 1 to 30, 30 to 60, and 60 to 90 assets. Also, some NPAs were also sold. So that is one thing. But if you look at the logic design with ARC, these are all slightly low-value loans. And mostly, we would like to have all the paying customers in our book. These are slightly unintentional, I mean, Intentional default is, and also if you look at the value, it is around 5.5 lakhs per loan. So that is what is the thing that we have sold it, and if you look at the recovery, considering the LTV comfort we have, I think we have registered a loss of just 90 lakhs on that. So, on a 90 crore book which you have sold, it is just a 90 lakh loss which has been booked there. So, this calculation of, this selection of assets for selling to ARC will be decided every quarter, based on this, because there is no point in falling off with the customers for 7 lakhs and above. Now, 7 lakhs and less, and we make it for us to concentrate on the quality of more than 10 lakhs. That's why we are also mentioning the department in terms of collections and also the legal recovery.

Got it. And sir, what explains the sequential increase in 30 plus GPD?

Actually, if you look at it, if you look at our inverter presentation, the 30 plus GPD, again, you need to break it into housing finance and the MBSC. So, housing demands, there is not much increase in the 30th century, whereas in the NDRC, there is a slight increase, or there is a good increase. So, that's where there is a, I mean, we are having elevated overdose there, and we are, that's where we are also strengthening the correction mechanism and the legal recovery to bring it down. In fact, that's what in my opening speech also, I told for the NDRC, it will take at least one or two quarters to streamline this and bring this in under control.

Okay, okay. And stress is by and large in below 7 lakh rupees ticket size?

Yeah.

Okay, okay. That's it. Thank you and best of luck, sir. Thank you.

Thank you. Next question is from the line of Rishi Modi from Modi Advisory. Please go ahead.

Hi, sir. Can you hear me? Yeah, just a quick question on this collection space, right? We've increased our team size on collections and legal recovery by 25% over the two years. Now, I know we're new to the NBFC business, we're still finalizing our processes and everything, but the collection efficiency should ideally not slip. So, is it, like, I'm just trying to understand. Is the effect of this hiring still to come in and we'll have a catch-up in H2O on collections, or the collections will still slip before we finalize our credit underwriting policies and everything in place?

This is an ongoing process. If you look at the collections, our business has also increased. So, in order to support the collections on the field, the collection officers will be recruited to support those collections. That doesn't mean that collection efficiencies will drop. So, it's basically some problem encountered in the NBFC book where we are strengthening the underlining closet and also the collection team strengthening and also the legal recovery. So, just because we are adding collections, it doesn't denote there is a problem in the collections or it will lead to drop in the collection efficiencies. The number of customers also correct?

No. No. Let's get back.

The number of customers is also correct.

Alright, second question from my end was, I was just calculating your BT out plus prepayment rate that's kind of inched up in this quarter. Is this accelerated competition in the affordable housing finance space or something else leading to this?

Well, it is actually the competition. If you look at, there is a slight increase in the disclosure rates, and we will try to maximize it by doing more volumes.

And this competition is coming from, say, lower cost of funds, competitors like, say, Bajaj Housing, Canfin kind of price, or people like Aadhaar who have similar borrowing costs. It's coming more from the smart finance banks. It's coming more from the smart finance. From small finance banks. Okay, got it. Third question I just had was, I was seeing your presentation, there's been some change in the format on the sourcing mix. So your customer referral plus Bandu app drops from 19% of contribution to 11%. Just wanted to know if this is some technical change or if there's something that's led to this drop-off.

Some of the Bandu partners have got converted into connectors, so that's where there is a change.

Okay, got it. And finally, just given, you know, right now we are growing our book at 20% and our ROE is at 20%, the book seems well self-funded at this point. So, any prospect of, you know, accelerating dividend payout to bring down our capitalization rate?

Dividend payout? No, we don't have any plans to accelerate the dividend payout. Okay. All right. Good. Thank you. That's it from my – Thank you.

Next question is from the line of Divyash Trivedi from Omega Portfolio Advisors. Please go ahead.

Yeah, hi. Thanks for the opportunity. So, again, my question in the asset quality. So why have our asset quality metrics like 30 plus CPT and correction efficiency has not improved? Our credit cost has also increased to 70 bits, which was higher by around 20 bits from last year due to. And it's again higher than our guided range also, which is 0.5% plus minus 10 this. And what is driving this stress, actually? And when do you expect to improve this stress?

Actually, as I told you, if you look at the asset quality, you split it between the housing finance company and the NBS. If you look at the asset quality... If you look at the asset quality in terms of the housing finance company, the NCA was 1.53% in September 25. That has come down to 1.48%. And similarly, if you look at the stage 2 also, it is more or less the same. So actually, there is no problem in the asset quality in terms of the housing finance company. The actual, as I have told in the opening remark, the NCA asset quality, if you look at the NCA, September 25, it was 1.59%, and September 26, it was 2.17%. In fact, in June, it was 2.49%, and it has been brought down to 2.17%. Okay. Now, in the case of stage 2 in the NDRC, it has become 6.88%. This is what we are trying to control. This is what is the reason why the collection efficiencies have dropped. And this is the one which I have been telling where we are collecting by way of strengthening the collections and also the digital recovery processes and also underwriting, we are also strengthening the underwriting norms in terms of the NDRC. And also, if you look at the performance, if you look at the credit cost of the housing finance company and also the NDFC, it compares with the industry. I mean, if you look at the peers, it's the same. If you look at the credit cost of housing finance company, it is around 0.23%, and it is 1.6%, 1.7% in terms of the NDFC. But we are not satisfied with that. We will try to bring that down.

Okay, so, and because of the stress, our growth, we have kind of moderated our growth in the Q2, and we are planning to moderate in Q3 also, right? In the NBFC, there will be a slight moderation, but because we are confident of starting up in the Q4. So, overall, we are confident of achieving 22% growth for the whole year. Yeah. And the next one is on the margin type, like now with the RBI raising the report, so how does it affect our margin over the coming quarter?

Yeah, so this is Sanjay Vitaly. So if you look at our borrowings, First, I will speak about the borrowing. So, one-third of our borrowing is repo length. So, that will transfer into an 8 basis point increase in the borrowing cost. Sir, there will be... Okay. So, NCLR will have another 4-5 basis point. So, from an overall book perspective, if our book is around 14,000, AUM is around 14,000 floors, 5,500 floors under the equity. I mean, 8,500 left out is borrowing. So, if you reduce the fixed cost borrowing, so it is left out at 5,000 crores. My floating rate lending is around 20%, which is around 2,000 crores. So, in this 5,000 floating rate roll, I have the ability of passing on the interest rate to my floating rate customer. Ultimately, I am left out with 3,500 crores up borrowing, which is not hedged with the rising rate of interest. So on 3,500, if you divide 14,000, it comes to 25%. So our 25 basis points will have an impact of around 7-8 basis points on my name, on an overall basis.

But that means also we are trying to protect by way of higher volumes, and that will be taken care of based on that. Okay.

Good. Got it. Thank you. Thank you.

Thank you. Next question is from the line of Dhruv Sathlani from Leo Capital. Please go ahead.

Thanks for the opportunity, and congratulations on a good setup number. So, my first question is, what portion of our NBFC customer would have a microfinance loan, either in their own name or in the name of NBFC, and what portion of these have defaulted on any other loan, be it a gold loan or any other form of loan?

If you look at the microfinance exposure, if you look at our average ticket price of our NBFC loan, it is around 8 lakhs. So, this is totally far away from the microfinance or the small ticket lab customers. So, if at all, if there is an overlap, there can be 3 or 5% overlap. Over and above that, we don't have a thing on the overlap of microfinance loans. So, that will not have an impact on the thing. And it's secured against the residential property. And with an LTV of around 45-50%.

Okay, so my next question is related to competition. So are we seeing any kind of competition from larger NBFC at our ticket sizes in housing loan and business loan? And is that affecting our disinvestment growth or putting any kind of pressure on yields?

No, actually, if you look at the competition, I mean, five years back, how many companies are there? Now, there are so many companies actually in the affordable housing space. So, but the market opportunity is so huge that if this competition is not impacting much in terms of the volumes, but what is impacting is they take people from us. So that is what is impacting the business which we are doing. So, but nevertheless, that's why we have also announced the, introduced the alternate channels by way of connectors and customer app and that kind of alternate channels, which is contributing to the higher business. If you look at connector channel business, last quarter, the contribution was 8%. This has become 12% in this quarter. So, definitely, we are well equipped to face the competition by these matters.

Thanks for the color, sir. Happy Diwali and all the best for the next photo.

Thank you. Next question is from the line of Eshan Gupta, from Choice Institutional Equity. Please go ahead.

Yeah. Good evening, sir. My question is regarding the average ticket size on quasi home loans. So, our average ticket size on POSA handles has decreased from 10.1 lakhs to 9.4 lakhs, so we are targeting to improve it year on year, and moreover, our average LTE has increased to 45%. So, are we driving the increase in average ticket size given by increasing LTE?

No, first of all, if you look at the funding philosophy of actors, we take LTV as a backup. First of all, we determine the income to installment ratio, that is, how much an EMI the customer can afford. That is what is the first criteria which we look for when I am evaluating a credit profile. So, LTE is a backup. So, it doesn't matter if it's from 40 percent, if it is going to 45 percent, that is not the main important thing. Because it has increased because the customer whom we have funded, we are able to pay that much kind of EMI.

Moreover, my second question is regarding the incarnation of VPD. So, we said that it was mainly attributable to our NBFC book. So, with particular any geography that is witnessing, that is driving the increase in delinquencies.

It is, to a certain extent, Karnataka, there is an impact where we are actually centering the underwriting norms on the thing. But other states, it is not very variable, variant. It is only the Karnataka, there is a slight increase as compared to the other states in terms of delinquency in the NBFC.

With our share of NBFC book at 29% and approximately 80% of our book at fixed rate, our yields have decreased by 10 lips. So, what was the reason for this?

Dr. Tamsin, please. I could not follow. Can you please, please?

Yeah, so our yields have declined by 10 bps sequentially, and most of our lending is at a fixed rate. So, what was the reason for declining yields?

If it is in the NBFC, what we have done, we have calibrated certain interest rates on the new loans. To that extent, there will be some reduction in the yields. That is what would have contributed to this 10 bps decrease. Okay, all the best for this coming call.

Thank you. Next question is from the line of Mayank Mystery from Antextraught Broke in Levitin. Please go ahead.

Hi, sir. Thanks for the opportunity. Sir, I was just looking at a sequential trend of your growth, and this is the first time that, you know, your Q1 sequential growth has actually slowed down compared to Q1. So, just wanted to understand, there are a few players who have highlighted that, you know, maybe a broad situation could impact the self-construction projects and maybe impact the demand. So, are we seeing something like that already? That's my first question. And so, second, on the insurance impact, sir, we have 0.4% of your total, you know, on a gross level for total assets. Right now, contributing from the insurance income. So, sir, have you thought of any, you know, backup plan in order to compensate for this 0.4% somewhere? Maybe this is on a gross level. Net may be a lower impact. So, if you can throw some color on that front as well. So, yeah, that's my good question.

As I told you earlier, the drought, actually we are not seeing that kind of, yeah. Thank you. As I told you earlier, we are not seeing that kind of an impact on the ground because of the drop and on the volumes which we are doing. So definitely that is not the reason. In terms of the insurance income, we still have to await for the final guidelines from the IRDA. Based on that, we will be able to decide on what is the kind of impact and what is the collective action which we will be doing.

No, the insurance are two things. One is the loan amount. The loan given for covering the insurance premium, there is not going to be any change, even in regulation. The revised regulation, they are talking about reducing the commission, you know, so the loan component of 4% given for covering the insurance premium, there's not going to be any change in that. But then the commission that the financial intermediaries, including banks and NBFCs, who are getting the commission on the insurance, that is what is going to be revised. But how much of it is going to be revised, and that aspect, we would really want to pay for the finance guidelines. On that basis, we will respond.

Okay, sir, got it. And, sir, just to clarify, you know, earlier, sir, already explained the only margin trajectory. Basically, our one-third of your book is repo-linked. I didn't get it clearly what was the MCLR-linked portion. So, earlier, you used to, you know, show this in our PPD, the fixed-floating.

You can just... Yeah, the borrowing mix is around 31% is fixed rate borrowings. Balance 69 is around 34-35% is repo link, and 34% is NJL link. So, what is your question now?

No, sir, sir, I was just, you know, trying to understand the portion of which, you know, where we can find margin trajectory. Basically, are we seeing the margins to remain largely stable from even despite, you know.

Well, I will explain to you again. So, our AUM is around 14,000 crores. If we remove the equity part, I am left out with 8,500 crores. That is exactly my borrowing. So, around 8,500 crores of borrowing, if I remove the fixed rate borrowing, which is around 3,000 crores, I am left out with 5,500 crores. Now, out of this 5,500 crores borrowing, if I look at my lending side, 20% is floating rate loan. So, if I take 2,500 crores from the 2,000 crores of the fixed rate lending there, I have the ability to pass on the rate, increase whatever I can. So, 5,500 minus 2,000 is 3,500 crores. So, this 3,500 crores of my book is exposed to interest rate rising risk. Now, if you divide this with my 14,000 cures of AUM, it comes to around 25%. So, What we are saying is a 25 basis point will have an impact of around 25 basis, 25% of rate minimum contraction.

Okay, sir, thanks, and all the best for the incoming quarters. Thank you.

Thank you. Next question is from the line of Kankaj Chheda from Jam Capital. Please go ahead.

I just wanted to know on our NHB borrowings, the current share is about 7%, but it has been consistently coming down since last three years. Before three years, we used to have 26-27% share of NHB borrowing. So what was the reason behind that? And do we think this share will continue to come down or maybe move up in the coming times? Because NHB refinancing, I suppose, would be the least costly source of revenue for you. So, this is just wanted some.

Definitely, NHB borrowings will come in handy for us. We are in the process of applying to NHB for additional loan, so hopefully we will get it sanctioned and then we will draw the finance from the NHB.

But why has it come down consistently since the last three years?

First of all, it was never 25%. It was, I think, 14-15% was the maximum at any point of time. Currently, it is around 7-8%. So, we have, on the consolidated basis, our total basis is slightly higher.

Okay, okay. So, on the consolidated basis, in Q2, in Q2, 25, it was 19%. In Q2, 24, it was 26.

Okay, so, see, we have recently applied again for the refinancing, and we are in continuous documentation, like, whatever queries are being asked, we are reverting. So, hopefully, we will get one known in future.

Okay, sure, sir.

Thank you. Thank you. Next question is from the line of Raghav Garth from Ambit Capital. Please go ahead.

Thanks for the opportunity and good evening. I wanted to ask in the 89 crore ART scale, what is the proportion of loans that were already NPA in your books? I heard you say it's a mix of regular loans and NPA. So I just wanted to ask what was the NPA amount out of this 89 crore?

The specific details of ARC sales, I'll ask Amit to send it to you in a separate mail.

I have another question on the provisioning policy. So, see, when I look at the PCR on the ARC loans for this quarter, it's around 25%. And these are about seven to eight year old loans. Over the last seven to eight years, your stage two and three have also gone up and write-ups have also gone up. And, you know, because of the aging factor, you would anyway have to increase provision. So, the question is that, why is it that the PCR is only 25% here? Because when I look at your ARPCS in last few quarters, there the provisioning has been somewhere around 50-60%. So, I just wanted to understand, you know, how should one read this?

This provision is based on the UTL model that has got developed. See, this can be even a 30- to 60-day bucket loan, where there is an intentional default from the customer. So there the provision might not be that high. So all put together, it is at around 25%. So that's how we need to read that number.

So, these accounts would have probably... I have gone into the NPA bucket very recently, and NP provisioning summer is low. Is that correct?

No, it is not. Some, as I told you, Amit will give the breakup of how much is the NPA, how much is the other loans, but it is not that everything will be, you cannot link this 25% with the NPA provision of 25%. That's what I am saying.

Understood. Understood. That's what I wanted to understand. Sure. I will take it.

Thank you. Next question is from the line of Ankur Shah from Kwasar Capital. Please go ahead.

Yeah. Hi, sir. Thanks for the opportunity. Sir, I believe last quarter, the management had spoken about, you know, some deviation in credit costs being temporary and an expected recovery in this quarter. However, you know, this quarter also... Now, I think for three to four quarters, the credit quality has been deteriorating. So, your detailed thoughts on this would be very helpful. And secondly, like if I just try to think about Aptis, like are we going wrong somewhere? Because, you know, if you are trying to push on growth, we are not getting the credit quality right. And if you are trying to save on credit quality, we are not getting the growth right. So is the competition too harsh? Is it too high for us to, you know, get things right? Or do we want to guide, you know, structurally slightly higher credit costs than what it used to be for Aptis?

Actually, see, first of all, I want to record this statement. We are not going wrong anyway. So that's the first thing. Then I think last time we promised that we will give the numbers separately for both the companies, and that's what we have given now. So if you look at the housing finance company, the book quality is intact, and the credit cost is just 0.23%, and this is comparable with any company in the affordable housing space. Again, if you look at the NDSG, the credit cost is around 1.69%, and this is, again, comparable with any NDSG who is in this business. So, these are the things. So, first of all, I don't think we are going wrong anywhere. Yes, it is a fact that we told that the collection of facilities were improving in the month of July, last quarter. But what happened is, that's what has happened in the case of housing finance company. So, in the case of NBSC, there were changes, and that's what is getting reflected. If you look at the stage 2, it is around 6.88%, and the NPA is around 2.17%. Actually, just to add, you know, of the loan book of 14,000 crores, I'm going to put 10,000 crores in the HFC housing business where the growth is there and the credit quality also is improved and comparable with comparable companies. So, you know, that's what Bharati has explained that as far as this home loan is concerned, our growth and, you know, growth is ensured and the product quality also sort of enhanced and improved. But then, as far as the NBFC business is concerned, yes, there also the growth has not come down drastically, not come down, growth is maintained, but then we need to improve the credit quality in terms of outstanding overviews or NPAs. That you are right. What we have promised in the last, in the first quarter, we are not fully able to realize. As been pointed out earlier, there is some reduction in the stage two, but then there is some increase in stage two. So, that's what we are really focusing on the NBFC side, though, again, if you look at the entire data of NBFC with other NBFC companies, it is comparable. You know, you can, you can, I can name 10 names which are comparable. Some of the best, well, no, definitely, yes, also, will be a bad. No, definitely, sir. And we are in the process of doing that, NVFC, and we will work on that hardly to bring it down, bring it down. And in terms of guidance in the credit card, I think in my opening speech, I have told another increase of 5 to 10 basis funds will be there in the credit card.

Yeah, sir. So, I agree that the comparable companies are at a higher credit cost if we take the NBFC business. But I'm just pointing out towards the guidance which the management has been consistently maintaining. And like, you know, at the NBFC level specifically, 70 bps credit cost spike up is quite a surprise, to be very honest. So, from the guidance to The reality is something where I see a big deviation versus, so that is where the question that do we see, do we see the need to structurally revise the credit cost, and so that, you know, we can model, so that we can model a higher credit cost in our models rather than, you know, staying at 50 bits plus minus 10.

Actually, your observation is right, and now we have started tracking the underwriting itself. Let's say in the last 30 months, we have tracked the quality of performance for FY25, FY26, and the first six months of the current year. And we see significant improvement is happening in the performance of the portfolio of the NBRC business also. But then the loans that were done prior to April 24th, it is taking more time than what we have anticipated in terms of resolution recovery. That's why we have strengthened not only our collection team, but we have strengthened our legal recovery team as well. And we will continue to work on that.

Okay. And, sir, next question is on the new business, which, again, you all had highlighted in the last call. So, any thoughts and concrete plans where you can disclose the line of businesses which you would like to enter?

We are still evaluating. We were not able to come to a conclusion, though we indicated that we wanted a new, launch a new product. This quarter, we'll be coming up with some information on that.

And so just to know, like, will it be an asset-backed business or an unsecured business?

We will never get into this unsecured business. It will be an asset-backed business.

Okay, sir. All the best.

Thank you. Next question is from Chantan Shah from Citigroup. Please go ahead.

Yeah, so yeah, thanks for the opportunity. So just harping again on the AUM growth number, so like we have delivered 20% and given that H2 is a seasonally strong half for us, but I think you already mentioned that we could see some dip in disbursements in Q3 due to some tightening in NBFC underwriting processes. So, that dip would be on a sequential basis. Do you mean that? And so, then how are we placed and what gives us the confidence that despite that, we'll be able to get to that 22% union growth guidance, which will be inferring almost 2,800 crores dispersant versus 22 in first half. Yeah. So, that's the question.

Basically, that's what actually I communicated earlier. The 60 branches which we have opened, that is going to contribute to the additional business in the next two quarters. So, that is going to contribute to the business. Of course, this NBSC strength of underwriting and types and such, yeah. That is one thing which will contribute to the flight drop, but there are also new channels that is picking up, basically the connectors, the customer app, the Bandhu partner, and the social media, those ATS. So, those are things which are giving us this confidence. Plus, we are pursuing this ATL increase of at least 1 lakh over the last year's ATL. So, that also is going to contribute to the growth, and that's what is giving us this confidence.

Sean, no worries. All the best for Dr. Navya. Thank you.

Thank you. Ladies and gentlemen, we will take that as the last question for today. I would now like to hand the conference back to management for closing comments.

Thank you, Arjun, for joining the conference. It is nice to pay my sincere gratitude to all the analysts and investors who have taken time to listen to us today. Please feel free to contact us if any other colleagues are there. Thank you.

Thank you all for being a part of the conference call. If you need any further information and clarification, please email amit.singh at aptosindia.com. Ladies and gentlemen, this concludes your conference for today. Thank you for using Curious Call conferencing services. You may now disconnect your lines. Thank you and have a pleasant day.