Can Fin Homes Limited (CANFINHOME) Q4 2026 Earnings Call Transcript

Hi, everyone. Good day and welcome to CanSense Homes Earnings Conference Call hosted by Investec. I hand it over to Nadeesh Jain, our Lead Analyst, NDSC and Insurance with Investec India. Over to you, Nadeesh.

Thank you, Amya. Good afternoon, everyone. Welcome to the quarter 4 or 526 earnings conference call of Camping Homes Limited hosted by Investec Capital. As a reminder, all participants will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. For Q&A, please raise your virtual hand and we will unmute you from our side. We will start with the management commentary followed by a Q&A session. To discuss the financial performance of Canfin Homes and to address your queries, we have with us Mr. Suresh Iyer, MD and CEO, Mr. Suresh Kumar Singh, Mr. Prakash President, Mr. Uthaya Kumar President and CRO, Mr. Abhishek Mishra CFO of Canfin Homes Limited. Please note that this call will be recorded. I would now like to hand over the call to Mr. Suresh Iyer for his opening comments. Over to you, sir.

Thank you, Nidesh, and good afternoon to everyone, and welcome to this earnings call for FY26 results of Cancel Home. I'll just take you through the brief highlights of the performance for the year ended March 31, 2026, and then we can have a question on session. So, I'll start with disbursements. So, first of all, in terms of disbursements performance, as against the guidance of 10,500 crores of disbursement that we had given for the entire year, the company has ended with a disbursement marginally in excess of that figure of 10,531 crores. And this has been supported by consistent quarterly performance wherein in each of the four quarters, you know, compared to the respective quarter performances, it has been a new peak has been achieved in each of the four quarters, with Q4 ending at a all-time high of 3,245 crore Disbursement by in Q4. In terms of. The two areas, which is Karnataka and Telangana, where the company was having some issues in the beginning of the year, both the zones started with some negative, but over a period with the situation improving in terms of the performance for Karnataka, the state has consistently improved the performance, and by the end of the year, we have ended with a 7% disbursement growth in Karnataka. And now, in fact, also the position is such that barring the rural areas of Grampantra approvals where the Ghatta is getting delayed to some extent, but otherwise in most of the, you know, urban centers, it's coming quite okay. So, therefore, you know, this performance is likely to continue, and in this year, we are targeting a 15% growth in disbursement in Karnataka. In terms of the quarterly performance, as against Q2 and Q2 disbursement of an average 250 crore per month in Karnataka. In Q4, we could achieve about 290 crore average disbursement per month in Karnataka. So, therefore, it is a little positive. And in terms of Telangana, we started off with a Q1 negative of 33%. And that consistency has been coming down. Particularly in Q3 and Q4, we've had a very, very steady run rate of more than 100 crore disbursement. So, So, therefore, we could, you know, reduce the gap, but unlike expectations that we had originally given of that, we might also end up with a positive in Telangana. We have almost ended flat against 1,198 crore disbursement last year. We ended up with 1,147. So, it's a marginal thing. But in terms of the current year, we are looking at a positive from day one because we've already reached the consistency in terms of performance. And Telangana now is doing about 100 plus per month. We have reached that level. Now, in terms of the AUM growth, we had originally targeted about 11% to 12% growth. However, what we had started off with was that we would be having approximately about 6,000 crore rundown, including the part prepayments, full prepayments, and everything, and that was based on the fact that last year we had about 5,400, 5,300 crores of rundown in the entire year. So, we assume that there will be a 6,000 crore rundown, but, you know, Q2, Q3, and Q4, we've had a slightly elevated rundown situation, and therefore, we ended up with about, you know, 600 odd crores extra over and above the 6,000 that we have targeted. So, that has actually shaved off some of our AEM growth expectations. So, we've ended up with about 10.4 crores. For the current year, we are targeting that, you know, if this is a present position, then we may have a, you know, rundown of about 7000 for the entire year. So based on that, with the 13,000 crore disbursement target that we have kept for the year, we should be having a net addition of about 6000 crore to the book in FY27, which would result in about a 14% you know AUM growth. So, in terms of the... You know, prepayment intensity for the year. In Q4, actually, we have not had much of a BTE pressure compared to, compared to Q3 or other. I would say it was very static because as against, you know, rundown totally of, we had of. Thank you very much. This point has been passed on to our customers. So that should help us in managing our you know, BT house. Other than that, in terms of 1691 was a total rundown including in Q3, including the part requirements, including amortization, BT house and normal closures. As against that, it has been 1730, which is very much in line. So Q4 pressure also we have been able to somehow has been handled well. Next, we come to the... So, delinquency performance for the fifth quarter in a row, we've had a reduction in our absolute delinquency numbers. And that has helped in, you know, ensuring that our credit costs remain low. Overall, in Q4, we have seen a, you know, reduction in our overall NPA numbers also. So, that also has brought down our GNPA number to below the last year number of 0.87. So, we've ended with 0.85 in terms of our NPA numbers. Going forward also, we see that there is, you know, even in the month of April as well as in the month of March, in spite of this geopolitical situation, we have not seen any major stress in terms of delinquency. And therefore, in terms of our, you know, going forward guidance for delinquency, we expect that, you know, our credit cost will remain benign. And while it has been about 10 basis points for the current year as a whole, however, If we were, you know, on a conservative basis, we would still like to continue with the guidance of 15 basis points, although we don't see any stress, and it could well be below that by the end of FY27. As we got spread, as I mentioned earlier, we had a, you know, higher percentage of portfolio which was under, you know, annual reset, almost 70% plus of our portfolio was at annual reset and that it was 71.14 at the end of last. Last year, and that has changed drastically because this year we also sent across communication and sought consent from our customers. So, in Q4, we had a major reduction from 48% to below 15%. So, now almost 85% plus of our customers are at quarterly reset, and the entire benefit of the quarterly reset, the 50 basis points has been passed on at the time of the revision to all of them. So now on the entire portfolio, after giving the impact of this quarterly reset half 50 basis points to all our converted customers, as well as after considering the 15 basis points that we reduced in January, also the entire book yield will come down to 9.8, and that also excluding the, you know, any reversal in NPA income and all, but 9.8. So, that means that we will be able to retain the spread of 2.8% starting from day one in this current financial year also. So, this was one major concern which, you know, every time was coming up that what if the portfolio converts from annual to reset, you will have to, the spreads will come down. But that we have, you know, taken into consideration, and therefore, this one additional slide has been presented in this presentation, where we have shown that as of 1st April, after giving the entire impact of… As well as after giving the, you know, benefit of the 15 basis points to customers eligible customers is the yield will be opening yield will be 9.8 and the spread of 2.8 plus will be maintained. However, as a conservative again as a conservative basis, we therefore continue the, you know, guidance of 2.75 percent spread and 3.75 percent on the NIM for the FY27. So, that is, in a nutshell, the entire details of the performance. As regards that profitability, this year, we have had a… Now, in Q4, two one-time specific events, one was the impact of DTA, wherein earlier in the, we were providing for the DTA on the NPA, whereas in case of standard assets, the DTA was not being provided, so that has been provided from this quarter onwards. That's a one-time impact, additional impact of 46 crores. The normal would have anyway, there would have been some impact because of the DTA on the NPA. But this additional for the standard that has been provided is additional 46 crores. And there was also the closure of our income tax refund status where 13.5 crore income tax refund was received and the matter was closed by the department. So that also we have taken into account. So, excluding these two one-time events also, if you look at it, our profit for the entire year would be as again 1.0, as again 1.085 crores, it will be 1027 crores, which is also a 20% growth over the last year profit of 857 crores. So, these are the two one-time events which we have taken into consideration. So, I guess with that, that's in a nutshell. Going forward, we would I have a little impact in the current financial year of about 40 crore, which we have been talking about in our past because of our IT implementation. In fact, 6 crore of that cost in the Q4 has already been booked in this year also. So while we were saying it will start from Q1 of FY27, but 6 crore has come in this year also, which has been already booked. And so additional slightly the cost to income ratio next year will be a little elevated, with inter hosted which we have been already sharing and so overall next year, we hope to be able to maintain our ROE of more than 2.3, 2.4, more than 2.4, and therefore, ROE might It might slightly be impacted because of the cost, but still we hope to have an ROE of 18 plus. So, that's in a nutshell the highlights of the performance. Thank you once again for joining for this earnings call, and I request now to open it up for the open the floor for questions, please. Thank you.

Thank you, sir. We will now start the Q&A session. I will request the participant to introduce him or herself stating your name and the organization I will unmute the participant and state his or her name and then he can unmute himself for to ask the question. The first question is from Sidhant, Sidhant please I am just unmuting you and.

Thank you. You can now unmute yourself and ask your question. Please introduce yourself. Hi, am I audible? Yes, it's done. Please go ahead.

Yeah, hi. So, my first question was, you know, how helpful have the IT programs been and has there been any qualitative, could you share any qualitative insights on how it's helping us right now?

Sure. See, in terms of the IT, which we have already implemented, we have presented the slide. So, we have already implemented on the infrastructure side and also on the security aspect. So, both have been completely done. And, of course, that is helping us in terms of the speed, in terms of the connectivity and all those issues. That has come down considerably wherever there were, you know, this MPLS lines that has happened, considerable reduction has been witnessed. In terms of security, of course, it is just normal. It is just a confidence I can talk about. I can't obviously say that, you know, but we have our MTTR and MTTA that is a time to identify a problem and this we have been very well within our limits and it has been giving us a lot of confidence that, you know, any kind of, you know, attack on the system, we have been able to immediately catch and we have been able to handle it also well. So that is well, well within our, you know, prescribed or whatever, you know, the benchmark we have set for ourselves. As we got the applications, we have already gone ahead with our deposit application, so that should reduce a lot of our, you know, time or that would be going forward will be there. Other than that, in terms of our entire HRMS package has gone online, so now there's a lot of saving in that also, whatever manual calculations and impact that were there, that is there. But additionally, what I can say is that, you know, some of the upgrades that we have done, we have been able to bring in some AI components also have already come in. Like, for example, in the power. You know, digital, you know, signatures and everything have been implemented. Our entire, you know, DMS has been implemented. So, search and everything for records has improved. Our, in terms of our meeting solutions, that has also been completely moved to Office 365, and we also have the benefit of the, you know, co-pilot and all. In terms of legal, we have implemented a new solution for, you know, title search and this, you know, legal clearance report, you know, that has also brought in a lot of efficiencies. But, of course, the main component, which is the LOS and LMS, which is yet to be implemented in Q1 of this year, that will also, once implemented, will give in a lot of advantages. And we will be able to, you know, so therefore, you know, higher amount of benefit will start coming in at that point in time.

Understood. That's great to know. The second question is, you know, just after, you know, I think on April 1st, we shifted to quarterly reset for most of the largest chunk of customers, right? So after that, would you assume that the BT out rate or the rundown rate has peaked now? Are you...

I would probably assume so because, you know, you know, as I mentioned, you know, if I look at the data today, our, you know, BTLs in Q4 have marginally increased and that is also probably a function of the increased, you know, portfolio. Otherwise, in terms of the percentages, it is almost static, which normally in Q4 is a spike because of increased competition and everything, but it has almost 380 has been just 400 crores for us. So that is not a 370, 380. There's a very marginal increase only. I would have therefore assumed that that would be there because we went across. Sort the consent from the customers, and we pass on the entire benefit. So now the customers have got the benefit. They have already, we have demonstrated that they will not be negatively impacted. So I guess this should be probably the peak. That's why we have also considered only 7,000 crore for FY27 as again 6,600 crore approximately for FY26. Understood. That's great.

Just a follow-up to this is, now, if there is a rate-height cycle, what lag will we have in our spreads?

See, actually, you know, today, almost 85% plus is on quality reset. And in terms of our… In terms of our liability side, about 62% which is the bank related loans is on the, you know, linked to repo rate. So, if there is a repo rate increase on the liability side, about 62% of the book will witness, the liability book will witness an increase immediately or in the coming month. Whereas on the asset side, 85% is quarterly, there will be about maximum, maximum one third, I mean, one quarter TJ might be there.

Understood. Perfect. Thank you so much. And the next question is from Nipuram Khemka.

Nipuram, please unmute yourself. I am unmuting you here.

Hi, am I audible? Yes, please go ahead.

Yeah, sir, how satisfied are you with just under 5% growth in our housing loan book this fiscal?

See, actually, you know, it was a conscious effort to have an increase in our, you know, non-housing, and to some extent, it was also because we had to focus more on lab, particularly in Karnataka, where, you know, in Q1, Q2, and almost Q3 also to some extent, we had an impact of our E-Khata issues, where for fresh sanctions, there were issues in getting the. So, there was a compulsory, you know, requirement also where, you know, in one of the most important markets for us, we had to focus more on LAP. That is why, if you see, our LAP also has gone up to by almost two percentage point in this financial year. But having said that, you know, going forward, I think we will be focusing, you know, we have almost reached the limit that we have set for ourselves in terms of our housing, non-housing, so I guess we should probably, we will see a higher increase in this current financial year.

Okay, so wishing you all the best, sir. I had nothing more to ask. Thank you.

I am unmuting you from here.

So, then you can unmute yourself.

Yes, thanks for the opportunity. I had a couple of questions. The first one was on the disbursement target and the loan growth target. So, if I do the math correctly, then, you know, excluding Q1, Q2, Q3, Q4, you need to have around 3,400 crore kind of a disbursement that you need to do, right? So, given that, you know, your brand's growth has been only to the order of around 6% to 7% analyzed in the last couple of years. Could you throw some light on how do you plan to, you know, achieve this higher scale of disbursements? And a related question is that in terms of AUM growth, in the previous couple of quarters, for F527, you were indicating 15%. But I think in your opening commentary, you indicated a 14% AUM growth. So is that a tacit recognition that the BT out and the prepayments are actually much higher than you predicted and that's here to stay? Yeah, that's my first question.

Thank you. Yeah, so first I'll handle the disbursement aspect of it. See, actually, you know, the year 23-24 and 24-25 also, if you from then onwards, we've been consistently opening branches. We opened 54 branches. The first and the second year, we had almost most of the branches being opened in Q4 or mostly in the month of March. So, we just couldn't get the benefit of the branch expansion. Whereas last year, we entirely opened all the branches, the 20, the branches, 15 branches in the first half itself. So we were able to get the advantage. And what has happened is in terms of the disbursement growth, we have had two factors which have impacted or supported us in our growth. One is that the sales team that we had opened. Okay, sorry, I've come to the branches. So, as against the last year where in FY25, the new branches which are opened in 2324 and 2425 contributed only about 128 crores. The last year because of a change in strategy and also because, you know, we could get the full year benefit of the 2425 branches also. Last year, the new branches have contributed 863 crores. So, the new branch strategy that we have done has really helped in the last financial year. And going forward also, this year, we are looking at 28 branches to be opened, which again, we would be opening in the first half of the year. So, that also should bring in plus this 54 branches that we opened, we'll also have some more efficiency improvements because not all of them have reached their break-even points. So, there also we are expecting. So, this new branch expansion that is there is going to be one key factor pushing or helping us in our growth. The second thing is the sales team that we had last year in FY25, we had only about 30-35 people in the sales team, and they contributed about 183 crores in the full year. Last year, post-June, that is from 1st July, we increased the team strength, and the whole of this FY26, the team of about 80 to 90 people has contributed around 868 crores. So, both these parameters, that is the sales team, as well as the branch expansion is what we are looking at for bringing the growth. And sales team, this year, we are looking at increasing it from about 80, 90 to about 150 people. So, this means another 60 odd people we are planning to add to the sales team. And as I mentioned, 26 branches, 28 branches are also planned to be opened in the first half of this year. So, majorly, it is these two aspects which is held. The third, of course, aspect is, as I mentioned earlier, that Karnataka, which had a first half, you know, slightly negative or whatever because of the IHATA, is now almost kind of getting resolved. So, we are looking at a much higher positive coming in from both Karnataka as well as Telangana, which had some impact in disbursements during the current year. So, basically, these are the three parameters why I feel where this gives us the confidence. The second, as you rightly pointed out, yes, we have to acknowledge that we have had a slightly higher prepayments. And so, therefore, we have slightly marginally looked at it. But as I said, we have taken the step for conversion, and if, therefore, we are able to slightly manage our prepayments, this could go up. But in a nutshell, I would say the calculation is that 13,000 crore disgustment is what we are planning, and we have projected for 7,000 crore prepayments, BTOs, and closures. If that is reduced, obviously, the portfolio can even be 15%. But, you know, knowing the current situation, at least we are fractured in 7,000 because, you know, unlike last year where we had projected less but it slightly was elevated, we don't want to, you know, give a higher figure and then fall short of it.

Understood. Thanks for the response. My second question was, again, on the roadmap, geographical roadmap that you have presented this time. I noticed that, you know, the proportion of the southern states is marginally increasing in FY28 compared to the FY26 levels. Again, is that, does it again imply that Karnataka and Telangana are expected to continue to drive a higher rate of growth and hence the south proportion is marginally increasing?

You know, two things. One, of course, we had these issues in Telangana and Karnataka, which now are getting resolved. So, obviously, their contribution, this 290 crore or 260 crore, which was the run rate, will go up in Karnataka. Same way, if you look at it, our run rate in Telangana will also go up. Therefore, the contribution from these two states, which was actually slightly subdued, will start to show. And the second thing is that, you know, now that the situation in both these states is coming under, you know, has kind of stabilized, in the last three years, we have not opened a single branch in either Karnataka or in Telangana, which now slowly we will look at a couple of branches here and there. So, that is basically the thing. I think we are targeting three branches in Karnataka and about two branches in Telangana this year out of the 28. So, those also we have factored in. So, maybe it will be a marginal increase. Not to mention that we are looking at a slowdown in any of the other markets. Our other markets continue to be able to perform strong. In fact, our north zone, west zone, and, you know, east including, which is mainly Andhra Pradesh, have almost done a 40% plus kind of growth in this year in terms of disbursement, and Tamil Nadu, which has been already was a well high performing even two years back, continues to grow at around close to 30%. So, it's just that these two states will also start now inching up in terms of the disbursement therefore, we have that that is what it is planned.

Understood. And my last question was on the DSA proportion. See, in FY26, your DSA proportion of sourcing is somewhat similar to the previous year, a few decimal points here and there, right? However, in your P&L, when I saw the fees and commission expense, that's in FY26 seems to have come down drastically compared to FY25 levels. So, could you throw some light on that?

No, actually, it is only an impact of the amortization, and it has impacted both in the income as well as on the expense side. So, on the expense side, because of the amortization, it is used. So, also on the income side, because it is there. So, it is nothing to do with that, that the absolute, you know, outflow or cash outflow of the DSA expenses has not gone down. It is just the amortization impact, which is there in this year, for which I think there is a note also, which we have put in our Q1, because we changed that in our Q1. And in Q1 also we have put that note, and in Q4 also we have put that note, but it is impacting both sides on a net-net impact in terms of our entire PNL, there is only a 5 crore difference net of both, but otherwise it is an amortization impact, not otherwise.

Thank you. The next question is from Subranshu Mishra. Subranshu, I am unmuting yourself. You can unmute yourself and ask a question.

Hi, Suresh. Good afternoon. Thanks for the opportunity. Good afternoon. So, if you can take me through the budgeting per state for the disbursements, how much are we expecting in these large states that we have, which is Karnataka, Telangana, Tamil Nadu, and Andhra? And also, if you can talk about North and West as well in terms of what we have budgeted for in FY27. Second is how do we look at the OPEX growth, especially the employee and the non-employee, if you can split it into two parts. And the third is about the credit costs. We have some amount of management overlays. So, if we can speak about that. And fourth is more macro. If we can, you know, speak about, we're seeing a lot of disturbances because of West Asia crisis. Any kind of delinquencies we are seeing in our lab book or anything we want to provide for just to increase our management overlay or any kind of policy support that we are seeing in CLSS 2 additionally or demand and supply of, An affordable housing, it'll be great. Thanks.

Sure, sure. Yes. So, I'll first start the disbursement targeting. See, I will be able to immediately share with you roughly the run rate that we are doing in each of the zones of the states. Close next year, we are almost targeting an almost similar 25% growth across all the zones because, you know, that is what it is. So, you can have the numbers. The exact breakup, I think, I don't have right now. But roughly, if you look at the current run rate that we are doing, we are doing about 275 we can say per month in Karnataka. North zone and west zone both are doing about 150 to 160 crore each. West zone includes, you know, Rajasthan, Maharashtra, Gujarat, and MP. North zone covers Punjab, Baryana, Delhi, NCR, UP, and Himachal, Uttarakhand. These two are doing about 150, 160 per month. Samilnadu does about 180 to 200 crore per month. That is the contribution. And Tevindana now is almost doing 110 to 120 crore they are doing per month. And east zone, which is mainly Andhra Pradesh and other states of Satishgarh, Oristar, Bihar, and West Bengal is doing about close to 100 crore a month. So, that's the current run rate and next year we are predicting almost uniform 25% kind of a growth. Marginal would be somewhere where expansion is a little higher. It could be going up to some extent that way. But this is the present breakup that we are having. In terms of our... So, OPEX, I think I'll just give you this work front. In terms of the credit cost, in fact, management overlay, I don't think we'll be able to, we will be adding any more management overlay in terms of, you know, in the sense of a management overlay per se. But yes, we have slightly, you know, you would have seen that our PCR has slightly gone up from 49% to 56% this year. That is a little more conservative in terms of our valuations and all those things we have taken. But otherwise, in terms of management overlay per se, we don't expect to, we don't, we will not be adding anything over that. But credit cost per se, as I mentioned, we are having a 10 basis points cost, credit cost in this financial year, which includes the higher, you know, the PCR that has been there. Otherwise, next year, we don't expect any major increase. So, while we are projecting for 15 basis points, I am quite confident it will be, you know, well below that only. As regards our CLSS and under the PMAY, the PMAY 2.0, there, in fact, now, you know, some traction is slightly happening. In fact, NHB is also making attempts to tie up with state governments to come up with some construction and providing support. So, there are some states, particularly, you know, last quarter, there was a meeting with the UP and then now with Orissa. So, there are some, each state-by-state, the NSV is also trying to, you know, tie up and provide that support so that, you know, there is more supply coming into the CLS or the PMA by funding and all. So, we are hoping that, you know, slightly that impact will stay, but it's not a very major kind of a number that we are talking about. In fact, it's been almost one year and one and a half year, or I'm sorry, it's almost been a year. I think, sorry, six months that we have done September to now. In six months, it's just been about 1 lakh that the crore that, sorry, sorry, I'm sorry, only 1 lakh numbers that have been happened in terms of the PMAY numbers. Across all the HSTs, all the NBFCs who are claiming and whoever is registered with the primary lending institutions at HATCO and So, it's not a very great number that we have, but yes, some traction or some improvement is there. And hopefully, if the states, other than the couple of states who are doing it can also start shipping in, it might go up a little bit, but we are not very, very, very positive or drunk going that the numbers will jump up in a very drastic manner in terms of our PMEY contribution. As regards geopolitical impact and all those things, currently, there is no impact, we are not witnessing anything in our either net bounce rates or in our delinquency or any customers talking about it so far. So it's been just two months, but even in April, we have not witnessed that kind of pressure. Yep. So that's the situation.

One last question, if I can squeeze in. In terms of prepayments, if we get 100 applications, how many applications are to foreclose or do a part payment versus how many are actually going out to a competition? And what is this percentage which really goes out to the competition as a percentage of if there are 100 applications for prepayments?

Okay, I'll give you my Q4 number. So, that should give you some idea. So, out of 1730 crore, which is the VT out, prepayment, part prepayment, amortization, and everything. You know, 400 crores is what is the BT out, okay? That is 400 crores. There are customers who have closed their loans, which either because they have sold the property or they have made other closures because it's some other thing, but purely from their own funds, that is something around 350 crores, 360 crores, okay? And then there are about 970 crores odd, which includes part prepayment and amortization. That is the principal component of the EMI and part prepayments. So, this is the breakup. 400 crores is BT out. 360 crores is where customers have closed their loans from their own funds or they have sold the property and then taken another loan or moved to another property and stuff like that. Or properties which have got closed because of a surferity action. And third, 970 crore approximately spot prepayment and amortization. So, that's the kind of number you can say. So, I would say, you know, out of 1,800, 400, so that's about 25% of the loans probably are. So, 1 in 4 is where it is coming for a BT out. The key players who are doing the BT out is, you know, LIC housing and Bajaj. These are the two major ones. Of course, region specifically, there are some, you know, local banks and stuff also doing it, but majority of the branches will have NIC as the first competitor and the second would be Bajaj.

Understood. This was very helpful today. Thank you so much.

And the next question is from Henry Pashottam. Please unmute yourself and ask your question.

Can you hear me?

Yeah, yeah. Please go ahead.

First of all, congratulations for a very sound set of results. And I also wanted to appreciate that we have shared with a prolonged period of time. There has been a remarkable degree of consistency in the professionalism and the transparency with which you communicate with us. So, we really appreciate it. Now, my question was a follow-up from what previous people had asked. You have indicated that in terms of the last percentage, the increase in 2%, now you're quite happy with the risk profitability equilibrium, so to speak, right? I'm also assuming that you might be doing the same thing with your target groups, meaning there's some which are more profitable but a little riskier, and that, in a sense, If that is true, Okay.

So, first of all, you know, thank you for appreciating our, you know, performance. So, in terms of our, you know, Portfolio mix and our yield and everything. Currently, after having passed on entire benefit today, our entire portfolio yield is around 9.8. Actually, it's 9.84 or maybe there are some portfolios which we have not considered for the NPAs and all those things. So, that's why we have given a conservative 9.80. Our incremental yield is also 9.80 plus because, you know, that's the breakup post our, you know, change in our mix from housing to a little bit of non-housing lap increased and all those things and also increased slightly from our self-employed segment which has happened from our salary which has come down from about, you know, 89 percent has come down to now close to around 84, 83 percent. So, that, in fact, what we have seen, that is ensure that the incremental yield is also around 9.8 plus. So, therefore, you know, in terms of our current yield and everything, we should be able to maintain even if we don't change our mix. But having said that, you know, as our roadmap 2028 shows, there is a scope for slightly increasing our non-housing as well as our, you know, SENP category. So, which would slightly give us a little slightly higher or a little improved yield if we work on that a little more. So, that is one thing. The second thing is in terms of a cost, we have given that our present borrowing cost is of 6.99 to start with as on 1st of April. However, on the liability side, there is some small book which is of NHB where we are yet to get benefit of the rate cut because as and when the particular trance of NHB comes for a rate revision or the annual, Which is an annual reset. At that time, they are given the PLR impact to us. So, there is still some component of NHB portfolio, which is not a very large one, but some portion is there where we are yet to receive that. So, probably our cost will, might slightly come down. Plus the fact that, you know, Q1, we have already, you know, got sanctions on hand, which were the highest cost from banks is at 7%. So, we are already getting something which will be lower than 7, which is what we will be raising the points from banks. And, you know, currently, you know, the CP rates also come back to Q4 have come down. So, if there's opportunity, we may raise some little bit because already our CP rates, our CP proportion has almost come down to below 3%, which used to be at a point in time 6%, 8% and so on. So, therefore, we have some scope on the liability side to slightly reduce further and on the So, I think the assets have to slightly improve if we continue with a little increased SEMP and a little more in higher percentage of non-housing portfolio. So, these are the two things in terms of the mix. So, I guess that's what it is. In terms of the cost, as I mentioned, yes, there is a little extra cost that will come. But the other area that we have seen is last year, we have, you would have noticed that. Yeah, our bad debt recovery has also increased lightly. So, there is some scope, probably we will be able to do some recovery and keep the credit costs also lower. Although we have projected to 15 basis points, it will be definitely below that. So, that should help.

I'm just wondering whether you have two additional maybe small levers of profitability. One is the revenue kick from the increased positivity of Telangana and Karnataka. And the second is the decreased cost of sourcing to increase digitization. So, would these be significant contributors to some extent, or do you think there are marginal contributors?

No, they will definitely contribute. In fact, as I had mentioned earlier, the LOF, LMS, once it is introduced, we will be able to bring in a lot of efficiency in terms of our delivery, and we are also increasing the percentage of our business coming through our direct sourcing, through our old sales team. So, that will obviously help us in managing our, for reducing our DRK costs. So, those are, but this will not be adding too much, maybe a few basis points, definitely, yes, but maybe that would be what it is. The true impact of our IT transformation, probably we will be able to, you know, gauge and come back in FY28 more than in FY27.

Thank you very much, and once again, appreciate your team hugely.

Thank you, thank you, thank you.

Next question is from Pawan Kumar. Pawan, I am unmuting you. Please unmute yourselves and ask I want you to unmute yourself. Ah, okay. Can you hear me?

Yes, yes.

Okay.

So, I just wanted to understand the cost structure, especially in terms of two things. One is the employee cost, which has gone up significantly this particular year. What is our expectations going forward? Secondly, Suresh didn't mention that 40 crores incremental expenses will come in next year. So, for the year, it is particles extra on the IT infrastructure. I just wanted to clarify. Can you just go? Is it 40 crores for the entire year?

Yeah, 40 crores for the entire year because currently, you know, the entire IT project has a total outlay of 300 crores, of which 100 crores was capex, 200 crores was OPEX spread over 5 years. So, the depreciation amount will kick in mainly from this financial year, that is FY27. So, the depreciation component of the CAPEX and the OPEX, which will be there, the total cost in FY1 financial year will be about 60 crores. Whereas, currently, we are paying about 20 crores total cost for our IT in a financial year. So, the net impact will be 40 crores for the full year. Okay, and in terms of our the full year office is about 311 crores of which 177 crores is for the employee cost and the other cost is about 134 crores. So, the employee cost will probably go up by about, you know, 10-12 percent because we are also adding staff and there will be some increments and all. And the other cost which is 134 crores will probably go up to about 175 to 180 crores.

Okay, okay. And the IP, this 40 crore incremental, does it also include the amortization of 100 crore capex that we have done or?

Yes, that is included. So, as I said, the 100 crore is a capex. So, the depreciation will also start. So, I said that's what the depreciation of the capex plus the opex will be about 60 crore and net 40 crore.

And does this 100 crores Capex has already been done or it will be completed in the next six months? How does that work? It is part of CWI capital warming process, we will sacrifice one of the… No, but has the entire 100 crores.

So, almost the entire component has already been taken into the… Yeah.

Okay, thank you.

The next question is from Abhijit at the river. Abhijit, please unmute yourself.

Yeah, Abhijid, I think we are not able to hear you.

Yeah, Abhijid, please unmute yourself and ask you.

Yeah, am I audible now?

Yes, yes, yeah, Abhijid.

Hi, sir, thank you for taking your question. Sir, sir, could you please, in the fourth quarter, we have seen a whole momentum in terms of discussions for us. We talked about the fourth quarter. Fourth quarter, we have seen a whole momentum.

Sorry, our voice is very muffled, Abhijid, we are not able to hear you.

That's a good morning. It's a good morning. Sir, is it better now? Yeah, this is better, much better. Please go ahead.

Doctor, I want to understand this, this poll, but we have seen very good momentum in disbursements. As well as a few other players who might report and once have already reported. But fourth quarter, after maybe a lull in the first half, third quarter, we saw things picking up and then fourth quarter, things really picked up when it comes to housing. So you think this was just seasonality led or are there, I mean, real structural triggers at play, which is leading to a good demand? Because So when we hear analysts who are tracking real estate, experts who are tracking real estate, they're all talking about the strong upside that we saw in real estate and housing kind of seems to be tapering off now. I don't know whether this is just applicable to higher ticket size loans or the same comment can be applied equally to affordable housing as well. So that was the first question that I had that what is the outlook on demand? So one thing is we write for a certain disbursement, certain sanction number, right? But underlying that, is the demand also very strong, which will help us do that? Or do you think that the demand is weakly? And if you have to get to maybe the 13,000 crore disbursement number that you spoke about earlier, that will require market share gains? That is the first question I had. The second question I had, sir, was around margins. Like you mentioned, almost 85% of our customers are now on quarterly reset, effective April 1st. So, and then I remember you also spoke about a small tranche from NHB, which is expected to get repriced sometime later this year. So, a combination of both these things on one side, you have customers getting repriced because they are now on quarterly reset. At the same time, there are, I would say, small little pockets on the liability side, which can also get repriced. So, to combine together, what could be the outlook on spreads and margins? And lastly, sir, just wanted to understand, given that we have a good presence in Bangalore, which is the IT hub, do we have customers who have got it? It's impacted by layoffs in the IT sector or are those predominantly customers who are catered to by the banks firm. So, those three questions.

So, first thing about the disbursement, yes, to some extent, it is a seasonality because normally, you know, across the year, we have seen that it's a 45%, 55% breakup H1, H2. So, roughly H1 is a little lower than H2 definitely. And as in Q3 and Q4, once the, you know, festive season starts, the demand picks up and the business also picks up. So, that is mainly the seasonality part of it. And having said that, you know, we don't see any major impact in our demand side because across our branches, we are seeing a good amount of inquiries coming in still. Even normally, you know, you know, you know, post March, there is a slowdown and people generally, but that is also we are seeing that, you know, there is a good amount of demand there. Good inquiries are coming in and we are not seeing that much of an issue in terms of that is a segment that we cater to. Probably, yes, there is a definite slowdown in the affordable segment, and that is also reflected in the numbers because, you know, if you look at affordable, if you look at mid-segment and look at prime, yes, affordable definitely is now in the mid-single-digit numbers that growth that we are talking about. So, definitely affordable is impacted in terms of demand, but in the segment that we are catering to, I think we are not seeing any major change or slowdown or anything in terms of the demand. As regards to the margins, See, what has happened is this entire 45% or 48% of the loans that we had, which were at, you know, annual reset, we sent across communication to them, and we got in touch with them, and basically the remaining 15% are those customers who either have opted not to shift to quarterly reset or who have right now not, you know, taken a call. So, the shift now further from here to the, you know, quality reset probably will be a little slow because these are customers who opted for this thing. So, only thing would be in case of a rate going up, yes, this 15% will have an impact where, you know, there will be a lag effect in terms of the assets getting repriced. But on the liability side, as I said, currently, assuming that this 15% does not move to quarterly reset and remains same, you know, we have taken into consideration the entire impact of the reset as well as the 15 basis points that we passed on in January. Therefore, no further, you know. So, reduction is expected on the asset side in terms of the yield. As I said, our incremental yield is also a little higher than 9.8. Therefore, you know, even that is not going likely to eat into our overall yield on the book. Therefore, you know, whatever we are expecting, a reduction in our NHB refinance rates or whatever we are able to get in terms of our better pricing from a bank term loans or repricing or being able to raise the CP at a lower rate, that will help us actually reducing our cost further, which should actually help us in improving our spread. So, the only flip side will be if the rates start going up, then this 15% is where we will slightly get impacted. Okay. So, that's as regards margin. So, we are confident that the 2.8 is which is there is kind of is there, we do not have a problem in that and but we do conservatively talk about 2.75, okay. As regards IT impacts, our IT impact has been very, very less, in fact, I do not think our, in fact, our delinquency ratio in Karnataka is the lowest among all our six zones. And we have not seen that impact. In fact, our absolute value of NPA in Karnataka in March 26 is lower than our absolute value of NPA in Karnataka in March 25. So, I think that should give you the confidence that we have not had the impact of the IT job losses and everything in this. So, I guess that's what. Anyway, our IT salaried segment coming from IT segment is only about 6% of our book. It's not very high.

Got it, sir. And this is just one follow-up where you mentioned, right, that margins can be maintained at marginal spreads for that matter, where you said spreads can be maintained at 2.8%. You conservatively guided for 2.75%. So, sir, then when we look at the entire business model, the only risk that is left then is basically a rate upcycle where the rates start going up. And the 15% who have still not opted for the quarterly reset, they are the ones you think are the only risk today.

I guess, in terms for the spread component, yes, and you know, therefore, I mean, we do not see any change in that because our current incremental spread also will not yield to our overall spread.

Got it. Lastly, cost of borrowings, while you spoke about NHB, but when we are speaking to other NBFCs, other HFCs, all of them were acknowledging why you don't borrow too much from the debt markets, but debt market borrowings had gone up significantly, especially in the month of March, and they have subsequently pulled up a little bit in the month of April. Do you think that the cost of borrowing bottoming up? As now come to an end and from here, cost of warring either remains stable or inch up or do you think there is some more lag, some room left, you know, except this NHP warring that you spoke about, where cost could further come down, remain sideways or inch up from here.

See, today, if you would see our presentation from 55% which was a bank borrowing, it has gone up to 62%. So, basically, you know, we have relied more on bank borrowings where we have got rates at below 7, 7 and below 7% and rates that funding rather than depend or go to the debt market. Okay, that is the one point. Second thing is in Q4, some of them I am sure the, you know, the rates are very much there for everybody to see. The debt market rates, even CPs actually have gone up considerably post the, you know, the shift in the geopolitical situation, all those things. But we had, if you recollect, we had indicated that we were sitting on a 1,000 crore of unutilized NHB sanction in at the end of Q3. And that was also because we had total 1,500. We had planned wherein we could drop 1000 crore in the Q4 when normally the rates because of a tighter liquidity are on the higher side. So, we had, you know, planned our liability side accordingly, and therefore, we were obviously benefited, which is there. Going forward, other than this NHP, I mean, the only thing would be that we have about today our NCDs are at the highest, you know, cost of funds for us, which is on a blended So, the current outstanding portfolio of NCDs is around 7.667. So, there in fact, if we are able to, as and when the maturity happens, we will be able to replace them with a lower cost NCD because today the rates are at a lower than the 7.67. So, that is one thing plus as I mentioned CPs, CPs in Q4 had gone up 90 days CP had gone up to almost 7% and a little About 7.35 also, whereas now today you are, we raised in the month of April, we raised the CPS, fresh CPS 6.35. So, these are some of the types of timing differences where you know if you have to, you have to be careful and see if we can draw at the right time, we will, we will use those opportunities.

Lord sir, this is useful. Thank you very much and I wish you and your team the best.

Thank you.

Yeah, there is a follow-up question from Andrey Pushartham. Andrey, do you have a follow-up question? If you have, please ask your question.

Can you hear me?

Yes, please go ahead.

You mentioned that your free payments, you are largely losing out to LIC Housing and to Bajaj Finance, right? Now, LIC Housing, I can understand that they will be basically luring customers by virtue of price. I was a little surprised to hear that about Bajaj Finance. I thought their plank would be mostly convenience and ease and quickness for this thing. But since the person has already been... Sanction the loan by you, that cannot be an advantage for Bajaj's finance. Can you just throw some light on better self-behavior? And why do you think they are believing the fact that they don't?

You are absolutely right. LIC, because they offer a lower rate. In fact, they were also offering 7.15 at a point in time for new business. And that is one thing. But in case of Bajaj, what happens is it's normally a takeover plus top-up. And many times we are not able to match the kind of top-up that they are able to offer. So that is some area where we lose sometimes to Bajaj. That is one aggressive, you know, they, I mean, I wouldn't want to, you know, get into that. But, yeah, sometimes they're not able to match the top-up. So, it's usually, you know, BTE plus top-up where they are able to offer the same rate on a takeover probably, but on the top-up, they are able to give a much higher amount.

Any thinking of how to counteract that or you're saying that we'll just live with it?

No, I guess, you know, we are a little more conservative in our LTV values when it comes to takeover or a top-up loans and all those things. So, I guess, you know, it has helped us in the past and we would like to maintain that conservative approach. So, sometimes, yes, it hurts, but I think the conservatism has helped.

Thank you. Thank you very much, Ken.

Thank you. As there are no further questions from the participants, I now hand over the question over the contents over to Mr. Sureshaya and the team for his closing comment.

Thank you, Nidesh, and thank you once again to all of you for joining this earnings call of Canton Homes for Q4 F526, and I hope we have been able to answer all the queries. In fact, one of the queries we couldn't answer then, but it subsequently came up, and I guess we've been able to answer that also on the cost breakup. So, if there are any further queries, of course, you can please feel free to get in touch with us, and once again, thank you very much.

On behalf of Canfin Homes Limited, we conclude this conference. Thank you for joining us and you may disconnect your lines now. Thank you. Thank you.