Can Fin Homes Limited (CANFINHOME) Q2 2027 Earnings Call Transcript

Good afternoon, everybody. Welcome to the Tansom Homes Q2 FY27 earnings call. I would like to hand over the call to my colleague, Nidesh.

Thank you, Ramya.

Before I say, I'm sorry, Nidesh, I'm butting in between. Before I say that, kindly note that this call is being recorded, and I would request you to raise your hands if you have any questions. Over to you, Nidesh. Thank you.

Thank you Ramya. Good afternoon everyone. Welcome to quarter 2 FY27 earnings conference call of Canfin Homes Limited hosted by Investec Capital. As a reminder all the participants will be in 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 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. Thank you, Nidesh, and good afternoon, everyone, and thank you for joining the earnings call for the second quarter results of Camping Homes. Before we get into the questionnaire, we have a small brief on the highlights of the quarter, which I will just share, and then we can go into the question answers. The highlight of the quarter for the campaign, obviously, has been that the entire project pages, which is the IT transformation project, has gone fully live. In fact, we went in phases where July, we went ahead with 11 branches, 5 old branches, and 6 new branches. And now all the operational or the functionalities which are there in the project have all been implemented and we have gone line with the entire LOS LMS across all the branches. Of course, this implementation has had an impact in terms of our disbursement, particularly in each of the branches in the month where the business or the IT implementation has taken place. To this effect, we have actually given a additional slide in the presentation, that is slide number 20, as to the impact that we have had because of this IT implementation. So, if the month in which the implementation has happened, the disbursements, they have dropped in that particular frances by about 70 to 75%. And then the next month, again, it pushes back and it comes back to almost 80, 90% of the whole disbursement. So, that's the kind of thing. So, as a result of this, in the month, particularly of August and September, where, you know, we had a large chunk of 75 and 77 old branches doing live, there has been a major impact. And as a result, the disbursements for the quarter were at only 2375, you know, crores. This, of course, is net of the 29 crores which we have reduced from the disbursements because of the NSP guidelines which have come saying that regarding the cancellation of DDs. So, during the quarter, we have had about 28 crores of cancellations of disbursements, which were already handed over to customers for various reasons, and that has been netted off, plus also about 19 lakhs, which is in respect of the cancellations from the date of the closure of the quarter to the date of the announcement of the results. So, basically combined, both these things put together, it's about 29 crores, which has also been netted off from this 2, 3, 7, and 5 crores. So, that is the impact. In terms of the state-wise or region-wise disbursement, the demand has been quite strong. There has been no change in the demand. We observed that. In fact, on page 20 of the presentation, you will also see that, you know, particularly the branches where no impact or no, The IT transformation has happened in the month of October, that you will see that in the month of July, August, and September, the business has been robust. There has been an increase only as against an average of 435 crores, which these 93 branches were doing in Q1. In the month of September also, they have done 481, so 458, 424, and 481 crores. So, basically, in terms of the demand or in terms of the business per se, there has been no change, but for the impact of the IT transformation, which is mainly on account of the understanding or rather the change in the flow, the additional processes that have been incorporated. So now, in fact, there are some four OTPs, four to five OTPs depending on the customer and the type, which we have to take from the borrower as well as the co-borrowers separately. So that comes to around eight to ten OTPs additionally. So those kind of process changes which have been implemented have resulted in some time lag and things like that. So trying to tell you, what are the questions you need? the best phase of the lista is that in every month since it was a migration from a legacy system, the migration data had to go to a couple of processes. So every month we basically were able to handover to the branches only after post-quist. So that are five days of GIVEAP also. So basically these are one-time issues which have impacted, But as can be seen from the, you know, 93 branches data, the demand is, there is no issue. We are still seeing a robust demand across all the geographies. Karnataka also, which is, as seen in the past, always a point of observation, has stabilized around 30 to 250 crore of disbursement consistently. And only other change during the quarter has been that in the state of Telingana, there has been a new section 22 or something, so some section which has been, wherein, you know, at the time of some areas have been identified by the sub-register offices or by the government to have been, like, notified for this, which is only available with the sub-register offices. So, before execution of any document, you know, everything has to be taken to the service office and they will, you know, confirm whether this can be registered or cannot be registered. So, while this process, you know, before the entire process of processing, we had a lot of cases where, you know, finally when it went for the documentation or registration, the process was stopped because then some study or as per section 22, the legality of those properties has been verified again. So, this has slightly impacted, but having said that, now we have changed the process, whereby now before we, you know, entertain any login or spend time in processing the entire case, we ask the customer only to get the item verified to the supervisor office and then only do it. Otherwise, you know, a lot of cases where it came all the effort up to the stage of documentation was done and we had to, you know, cancel the disbursement. So, basically, you know, that process has been changed now to adjust to this new change of Section 22. So, as a result of this, you know, it's only a one-quarter impact which is there in terms of disbursement. For the full year, we continue to have the same guidance of 13,000 crore in terms of disbursement. So, that effect, you know, whatever corrections, whatever strengthening we have had to do, we are already initiated in October itself across all the branches so that we can push disbursements in Q3 and Q4. And another thing is that now with the entire, all branches having gone on the new system, we should now be able to pull out the people from the teams for sales also because we were about 84 people in the month of March in the sales department. Even now, as we speak, it's about 90, but, you know, all the people will now get it relieved, and so we'll be able to strengthen the sales team. You will see in one of the slides also that the sales team with the same set of staff has also done 560 crore of disbursements have come from the sales team of about 98 people. So, it's about average 90 people. So, in terms of that, the comparison last year was for the full year, the sales team has contributed about 868 crores. So, basically, even without much of an addition in the team, the contribution has increased from the sales team, and now with additional staff that will be moving from the business to the sales division, we will be able to push further in terms of the sales team disbursement, and that will also support us in the Q3 and Q4. Same also in the sense that we have 28 branches which are planned for the full year. As against that, 25 branches have already been started and they are operational with staffing also in place. So, therefore, the contribution of these 25 branches will also come in Q3, Q4, which will support in our disbursement push. So, we hold the guidance of 13,000 crores for disbursement and we will push in Q3 and Q4 to cover up. The second thing is in terms of prepayment, you would see that an absolute value. Last quarter, we had a slight increase, and we had indicated that we are taking certain steps in terms of converting some, you know, regular excess payment customers to deposits or, you know, some alerts and all those things. Some impacts we are starting to see in terms of the prepayment. July was a little high at $655, but then the next two months, it has dropped to below $600 per month. And for the full water, it has been much lower at 1795 as compared to 1857 in 2-1 of this year. So, there has been an improvement in the prepayments. Plus, now with the rate height which has been there, the gap between what the market is offering and what we are offering will come down because there was a 25 basis points increase in the record rate, whereas we have only increased 10 basis points for our housing growth. So, basically, you know, the gap will now start reducing, which will also help us in retaining good customers. So, this is in terms of the repayment. The AUM consequently has been impacted because of a lower disbursement and has been there. But with the full year guidance continuing at 13,000 crores, we hold the same guidance for AUM of 13, 14 percent, closer to 14 percent in terms of our AUM growth for the year. During the quarter, we received, in terms of borrowing side, we received a sanction from NHB for 1,350 crores, and you would also have heard the news articles about NHB planning to increase the refinance as well as increase the proportion of refinance under the AHF component. So, this should help us positively, and the 1,350 crores plus whatever is, and hence Thank you very much. Thank you. During the year, we should be able to maintain that because net impact of the rate hike would be that on a 65% of our liability side, we are impacted by this repo rate as well or by the T-build rate. So, to that effect, it will be on the entire book. It will be about 12 to 13 basis points increase which will be there. As you can see, we have already increased 10 basis points. As you know, last year also when the rates were coming down, we did it in four parts of 10 basis points. 15 basis points, 15 basis points, and 10 basis points. So, same way, the next type, maybe we may look at a 15 so that we can average also about 12 basis points. So, indirectly, what I am trying to say is that the minimum spread we will continue to maintain at 2.75, 3.75 plus, and that will be a thing. In terms of delinquency, our overall delinquency has not been impacted much, only there's a little bit of an increase in the SMA zero, which also is mainly because of, you know, the methodology of computation or flagging of these cases. So, basically, you know, we had an old system request computing the overdues or spending up to the end of the month, whereas here this is on a daily basis. So, if there are customers many times for very, very small amounts, you know, what was told to the customer five days back, the customer pays today, but, you know, the five days interest is becoming a lot. So, we are slightly, you know, changing the process and all those things to see that we can communicate to the customer that if you pay today this much, if you pay by the end of the month, this much payment. So, delinquency is not much of a concern. Overall, our credit costs, we have guided for 10 basis points and for the quarter, end of the quarter, it is about 9 basis points. And I think, you know, we can continue with the guidance of 10 basis points. Generally, also, you will see that in H2, there's a, you know, reduction in our gross NPA. So, that would also help. In fact, it should reduce the NPA from the current levels. That would also help in the provisioning. Plus, if you see, in fact, the current year, the first half is always where the NPA goes up and then starts coming down. So, last year, our increase in NPA in the first half was about 40 crores, as against this, in the current year, the six months, it has been 35 crores. So, again, the pushback will come in the second half. So, then, we will be under a more comfortable position. The last thing is about the regulatory guidelines. So, first, as I mentioned, there was a NHV regulation or a guideline regarding this, the reporting of disbursement as netting of the cancellations during the quarter and the cancellations of the, which have been from the date of the end of the quarter to the date of reporting. So, that we have already implemented in this quarter, and we have netted off 29 crores from our disbursements in other eyes, where the customers have been handed over the disbursements. The second thing is regarding the wage bill, where we have not had a problem in either of the two cases, where all our staff, we are having a salary more than 25,000. So, even the joining entry level salary starts from about 36,000. So, basically, that is not impacting. And second thing is, again, earlier, last quarter also we had indicated, our basic plus GA is more than 50% of the total package. So, that is also no impact on the company. The third is more of a prospective or a likely impact, which is because of the insurance discussion paper or where, you know, the insurance commissions have come down, proposed to be brought down drastically. There also, in fact, the entire year last year, our commission from insurance business was only to the tune of both 10 and odd crores, which is less than 1% of our PVT of 1304 crores of last year. So basically, even if it is implemented in the way it has been shared or publicized in the media, it will not have any meaningful impact in terms of our profitability or anything. Thank you, sir.

Thank you. We open up for the Q&A session. Attendees, please raise your virtual hand and we will unmute you from our side for the Q&A.

Thank you. So, we are taking the first question from Nipun.

Can Nipun please go ahead with your question? Yeah, hi sir.

So, my first question was, our liquidity coverage ratio has gone like up for some 100%, like 100%.

So, when the regulatory requirement is only 100%, is there a reason behind it?

Yeah, so, basically, you know, this, there is no, the only thing is, it's a matter of computation, you have to just compute for the next, you know, three months or one month, actually, and see what is the kind of, you know, liabilities which are falling due. So, you would see that last year increased our long-term borrowings, and therefore the short-term borrowings basically are, which normally come up again and again, and for which we have to provide or maintain the HPLA, that figure has come down. So, just to give you a small number, probably around 23, from the time of March 23, we had almost about 26-27% of our total borrowing side was short-term borrowing, which now has come down to around 12%. So, you can imagine this is basically the key piece we have brought down. We have brought down the cross-term borrowings from the banks and everything. So, basically, that is what is impacted. And also a fact that, you know, now what we as a strategy do is instead of taking bulk borrowings of 1,000 crore or 2,000 crore which will come for a, you know, repayment in one single slot, we are taking in smaller proportions. So, basically, the load in terms of, you know, providing the liquidity in any period of 30 days is kind of So, this helps us in managing our, you know, borrowings and basically maintaining our LCR. Okay, okay. So, what should be the steady rate of this ratio? See, basically, it's a continuous flow of, you know, things that we have to maintain. So, if there are more short-term borrowings or any kind of borrowings where, you know, it falls during the next 30 days, we have to provide the edge query. Normally, we have a standard amount of approximately 2,300 codes or something that we are maintaining as an HQLA. So, therefore, you know, what happens, you know, if this figure keeps changing, this ratio also slightly keeps changing. But, you know, what we are maintaining in HQLA will always be above 100%. Now, if it's in the next 30 days, if it is not there and we have more liabilities falling due or interest payments or, you know, regulatory payments falling due in the after 30 days, then it will not repel. So, the LCR will reflect high, but our HVLA that we are maintaining is almost steady, and it is enough to maintain, at any given point in time, as per the current requirement, more than 100% LCR.

So, next year, we will minimize all particles.

Okay, that's good. Good, good. And so, what kind of test tests have we done on our loan book?

See, we have almost 12 to 12 odd scenarios that we are doing in terms of, you know, how much of a, you know, flow will happen in terms of our delinquency, how much, you know, wage will happen. We are also doing in terms of the rate of interest impact, we are also doing in terms of delinquency. Both these kind of tests we are doing for trusted things, so we also see how much it will have an impact. So, all these tests we are doing as per our, you know, RMCB is also we are presenting to RMCB, so.

Okay. And what is the frequency of this? We are doing it every quarter. Okay.

Okay. Yeah. That's it. Thank you, sir. Yeah. So, we will take the next question from Ranesh Bhubha.

Yeah. Hi. I'm an auditor.

Yeah. Please go ahead. Yeah.

Yeah. Yeah. Please go ahead.

Good afternoon, sir. Just two day good afternoon. One on this, you know, interest rate cycle. So, two things. One, as you rightly mentioned that, you know, our IELTS is such that most likely will not have any metal impact on name. But any sense on, let us say, does this interest rate, hiking rate cycle, will have any impact on the demand side? I mean, as per your, let's say, assessment, historically, whenever we have a, you know, we are going through a rising rate cycle, Does that impact demand for home loan or it's a non-event? See, I would say, you know, quarter percent, half a percent is a kind of a non-event. The rate of, the rates that we are seeing, I think, you know, only once in the past, we have seen a rate which is lower than this at around once when it had touched 6.75. Otherwise, you know, 7.15, 7.58 percent, these are among the lowest that we have seen. So, you know, half a percent increase from here is not going to make much of a impact in the terms of the demand. Because, you know, once it is converted into a 15-year EMI, the impact on the EMI is very, very limited. So, it is not going to affect the cash flow as much. Half a percent tax point increase or even a 75 basis points increase in our 15. In terms of the EMI, it is not a very large amount. Of course, there is an increase. So, either you can increase and start giving more of 25-30 year loans or you can, so that the EMI is not a very large amount. All right.

So, basically, you don't see any change in customer behavior just because of riding rate cycles?

Not much. This should not have, not much. Okay, okay. And the second thing is, you know, on this, the end, you know, impact, right? I mean, we are hearing that the South is actually going through a very bad, you know, rainy season. So, what is your assessment? I mean, do you also foresee some impacts because

of this over next, maybe 6 to 12 months on demand or set quality?

See, there is definitely an impact. So, just to answer your previous one more point in your previous question. So, as I mentioned, a 25 basis points increase in the rate for our loans is only about 10 basis points. As I mentioned that we, when the rates were coming down, we also reduced 50 basis points for our 125 basis points cut. So, consequently, when the same reward cycle happens, we will also not pass on the impact. So, for us, a 50 basis point might work out over 20 to 23 basis points increase for our loans. That is the last number that we offer. So, that is just a clarification. And, yeah, coming back to this. Yes, there is a, so if there is a water shortage, of course, it can impact in terms of the construction activity. But we'll have to see how much, because, you know, sometimes there have been delayed range, and at least Maharashtra, Tarnataka, and some of the states, yes, there has been definitely, you know, You know, a lot of drought-prone, the same drought that has been announced in quite a few villages and stuff like that. Of course, in our case, we don't have too much of a deeper penetration up to the tier 3, up to tier 4, tier 5 and all. We mostly reach it up to tier 1, tier 2, where at least, you know, there is water is available, of course. But still, it will have an impact in the overall, you know, things. It will have an impact where construction may slow down a little bit. So, I think it's still a little early for it. It's a little early if at all it happens. Of course, it will be impacting everybody. But, yeah, it is something which can impact everybody. Got it. So, just to follow up on that, I mean, so then, in that case, do you foresee any risk to our development target for 27? See, if the overall industry is going to slow down, I think we are part of the industry. We cannot be any very different and I don't think we will then be basically. But as of now, as I said, it's a little early to start projecting that. But as of now, I mean, there are a lot of constructions. There are other ways also. We may maybe look at a little more of LAP or we may look at, you know, some construction, some top-ups for a short period and all. These are all things which, you know, as a short-term strategy, we will have to adopt.

Got it. This is very useful, sir. Thank you.

Thank you.

So, just a request to all the participants to limit their questions to two per participant. The next question we will take up from Dabesh Trivedi.

Yes, Dabesh, you may unmute yourself and go ahead with the question.

Yes, Dabesh, you can unmute yourself and go ahead with the question. I think, Dabesh, maybe you can go to the next person in the queue.

Yes, we will take the next question from Mr. Vijay Singh Gaur.

Hi, hi, Raphnal, sir.

My question is, we have done an IT talk formation after a long period.

So, how the operational efficiencies are expected to play out in FY27 and FY28? Sure. See, as I was mentioning, there

is a lot of process change, but a lot of things in terms of the efficiency in the sense that we have a lot of processes which are file manual having converted into, you know, the automated processes. So that is in terms of the process change. There are a lot of, you know, opportunities because all the, you know, OEMs or all the applications that we have taken are having AI, you know, native AI capabilities also, and we are also looking at, you know, some things, some more features which can be added. So, you know, auto-form filling, things like that are definitely going to improve. This is going to open up a complete, you know, channel of digital sourcing for us because Earlier, the, you know, there was purely a manual driven process and all those things. Now, in fact, a lot of customer journeys in terms of a digital journey can also be incorporated. And so those are things which will start now and we'll start to see some benefits. If you see one of our sourcing, we have a 10% business we are expecting to come from the digital source. So that will be an enhancement to our business. Then, you know, in terms of efficiency, as the processes are there, a lot of activities which are manual are doing this, we will be able to pull out people from our team for sales and on-field activities. So, that is also a thing. In terms of a lot of other internal processes, you know, there are auto-confilling, auto-verifications, validations which are happening. So, in terms of the compliance, also, there are going to be a lot of improvements. So, this year, if you see, we have actually looking at an increase from 90 or 85 people in the sales department to take it up to 150. And all this is without increasing the basic structure of the staffing at the branches that we are looking. So, it's not that we are adding another 75 people or something in the sales department. What we are doing is from the existing team, we will be able to remove the people and put them on the field because, you know, the efficiency will start to come in. So, at least in this year and part of next year, we will definitely see, you know, some improvement or some benefit in terms of more people on the field because of efficiencies coming in.

Sir, one small follow-up question here.

What is the, you know, for the entire organization or is it pending or due?

No, this has entirely been implemented. So, if you see our presentation, we have, you know, various activities which have been put, page number 19 of this presentation, slide number 19, you will see that all those things have already been fully implemented. In fact, this implementation started from as early as, you know, prior to September 2025, where first the infrastructure parts components started getting delivered, the security, the SOC, knock-and-off started getting implemented, and then, you know, Thank you so much, sir.

Good work.

Thank you so much. Thank you. One more question is here that's related to it's a rising interest rate scenario and what is our expectation of prepayment rate definitely going to come down if

100 BIPs repo move up?

So, as I said, you know, we will not pass on the full increase to the customer because, you know, for us, our 55% of our liability side is linked to floating rate, 65 odd percentage. So, whatever is the impact which we will see, so 25 basis points could roughly implement about 13, 14, 15 basis points for us. And some we will pass on right now 10 basis points to our customers is what we are passing on for our housing customers. So, basically, you know, if you look at it in terms of the prepayment, what will happen is, at the prior to the rates coming down before the cycle started, the gap was about 55 basis points in terms of the rates. Now, that went up to, you know, by another, you know, 65, 75 points because 125 was reduced by the banks and those linked to the external benchmark, whereas we reduced by only 50 basis points for existing and new customers. So, this gas widened. Now, what will happen is this gas is slowly start sinking. So, say, for example, a 100-bit increase over the next, say, one year, if it happens, then the gas will deduce by around, you know, for us about 60 basis points. So, that's basically a sizable amount of reduction because, as I said, 50 to 75 basis points, I think the customers don't mind. But if it is more than 1, 1.5%, 1.25%, then the customer, then the impact in terms of the EMI will be larger. So, obviously, you know, this gas, once it starts shrinking, you know, it will help us in our prepayments. In the past, our prepayments have been in the range of about, you know, 15 and a half, 16 odd percent, which has gone up to almost 17, 17 and a half. So, one, one and a half percent reduction in our prepayments or rundown will be almost coming down to, you know, about four, you know, four hundred floors.

Any outlook for FY28? I have a quick question. I'm sorry. I asked the three questions.

Any outlook for FY28 in terms of AEM growth?

See, next year, at least, we are internally looking at around 16,000 crore disbursement for FY28. So, that should translate to around 15% plus AEM growth for next year. Because, you know, assuming that our performance also goes up by, say, for example, from this to, say, 8,500 crores or whatever. Then also, the addition to the book will be a little higher, so we expect that, you know, this should probably, you know, work around 15% plus, closer to 15.5% in.

Once again, congratulations for IT implementation, sir. Thank you so much. Thank you. Thank you.

Just a request to all the participants to limit their questions to two participants. We take the next question from Mr. Abhijit Tadharwal.

Please unmute it. Hello, I'm audible.

Yes, please go ahead.

Yes, sir. Hi, good afternoon. Thank you for taking my question. Sir, just two things. One is when you say 65% of your borrowings are floating, I'm assuming we're just talking about our bank borrowings here, which if I remember in the past, we have moved almost all of it to repo rate linked borrowings. So, as repo rates move up now, our bank borrowings will reprice upwards. So, sir, this happens on T plus 1 or this usually happens the following month, following quarter? How does that work?

So, bank borrowings, it increases in the next month. So, if the, so this time it has happened on 2nd of October, so basically from the 1st November, our rates on the bank borrowings will go up. Link to the, of course, link to the, you know, EBLR link to record rate. Now, there are some which are linked to T-bills and all, which will happen at the preset quarter, whatever is there. So, we would have taken on us, most of them are at a quarterly reset. So, at that time, the T-bill, whenever it's there, it will be there. So, not all the, you know, floating rate liabilities are on monthly reset.

Got it. And then, sir, I mean, NHB, which is almost 14-15% for us, that is also largely floating only, right, linked to NHB's PLR?

It is linked to NHB's PLR, but NHB's PLR also has not changed for some time. There was only one change, which also last time, in spite of such thing, they did it at a very sag, and they did it. So, by and large, you know, that is also very delayed. It doesn't happen immediately. And of course, you know, for MSB also, you know, we have the AHF which is fixed. It is not floating. Right.

And so, in that case, I mean, for us to keep our spreads and margins stable, whatever increase we see in our liability side and like you mentioned predominantly banks, we have to be passed on to the customers. Otherwise, I mean, there is a risk of spread and margin compression in a rising rate setting.

That is absolutely right. So, basically, 7th was a, you know, policy announcement, and on AH itself, we had our alpha, and we have increased our rates for our existing and new customers on the housing side by 10 basis points. Obviously, you know, the impact would be resultant would be around 12, 13 basis points, but we have done 10 this time. Maybe next time, we will do 15 for a 215 basis points increase, because we are not doing this, you know, it's by 10 or 15 basis points.

So, this 10 basis points that you have hiked for your borrowers, that is effective. So, if you increase it on the age, that becomes effective.

So, basically, for new customers, of course, there are 2-3 days of implementation in the system. So, 12th, effective 12th, we have to give the notice also. So, effective 12th, all new customers will start getting it. And post-12th of October, whenever the reset comes for the existing, you know, 85 or 85-87% of our floating rate asset, as and when the reset comes, that will happen. And now we have 87% and what we reset only about 12 or a percentage, 12 point something percentage is an annual reset. So, within a quarter, this entire thing will be passed on from 12th of October onwards.

Got it. And so, then the last question that I had is, you've not changed your guidance on disbursements and loan growth for this year. And so, what I'm able to see on slide number 20 for us, there are still about 90-95 branches which will undergo the tech upgradation or which will migrate to the new tech platform maybe this month, month of October. But in the month of October, they've actually already been there already.

Yeah, first, effective, first, they have already moved to the new system. Okay.

So, sir, in that case, this 1995 branches will exhibit some weakness in disbursements in the month of October. In the month of October.

Notwithstanding that, we are saying we will be able to push the disbursements. We are targeting for about 3,500 crore in this quarter and the balance in the next quarter. And the thing is that, you know, along with this, now that the tech implementation is over, one is, you know, we had to be, you know, you know, clear. We had about 129 people who were deployed into this IT transformation, either for our, you know, testing part of it or for the training part of it or from the branch component, we think for the trainer module and all. So, slowly, we have also started, you know, taking out some, those people are also going back to the branches and moving back to the, once they are branches or to the respective departments, as then, you know, those, because now the implementation is complete. So, now we basically request people only to maintain and maybe for a little more longer, for maybe one or two months for the support. Otherwise, basically, the testing component, you know, the implementation and all those things are already over. So, those teams are going back to support the branches. And as I mentioned earlier, there are two things. One is, you know, this sales team will get a support and we will be able to push our sales team strength from 90 to around 150. In fact, by December, definitely it will cross 120 because, you know, already we have that many people who are lined up to move back into sales and all. And some more to who will be joining and all. So, basically, you know, that will be one support plus these 25 branches which we have opened will also support in terms of disbursement because, you know, they have all been opened in a month of mostly August and September. So, you know, those branches will start delivering additional business which is not part of the first half business. So, basically, that's what it is. And we have also started taking some steps in terms of, you know, some contest, some kind of support and some decisions in terms of some fees and all those things. So that, you know, we can start pushing disbursements and cover up for the 2-2 impact.

That's all from my side, and I wish you and your team that are there. Thank you. Thank you.

Thank you.

So we take the next question from Mr. Sipal Doshi.

Please unmute yourself. Hi. Good afternoon, sir. Thank you for the opportunity.

My question was on, again, on the pricing side. Okay. So, if there is a 25 basis point of rate cut, how much time does it typically take for the same to get incorporated in the PLR? So, while you said to the earlier participant that, you know, on the 8th of October, you revise the rate. Sorry, 7th of October, there was a revision on the cost of fund side, at least the 25 basis point increase on the 65% of our borrowing. So, typically on the Mathemat, if you look at it, how much time does it take for the, let's say, any rate high, any repo rate change to get implemented or incorporated in the PLR?

See, as I mentioned earlier, 62 or 65% of our borrowings on the liability side, borrowings are linked to this, but not all of them are linked to repo. There are about 75 or 85% which is linked to repo, the remaining is linked to TBL. So, on the repo-linked borrowings, the impact will be from 1st of November. For the T-bill-linked borrowings, depending on when the quarter reset happens, that date, it will start impacting. In terms of the asset side, from 12th of October onwards, as in when the three quarters you have, so you have about 99% you say, so 33% of the book will get reprived in 1st of November, 33% you can say on a standard basis, not to the exact accuracy. But roughly, I am saying, one-third, one-third, one-third will happen in 1st of November, 1st of December, 1st of January. And in the meantime, say, for example, something else, addition, further addition, increase in report, it happens in December, then maybe the ones which will happen in January will have a combined impact in January.

Okay, okay. Got it. And just the remaining 13% of the portfolio, which is still at annual reset, when will that transition to quarterly reset?

See, basically, we are making attempts to, you know, to convert those customers also into quarterly research. So, last time we had changes communication, many customers either were not able to, had shown the reluctance to move to quarterly research. So, probably this may not reduce further. It may, even if it does, it will be a very slow change. And And over a period now, since all incremental loans are only under quarterly reset, so basically, you know, over a period, this percentage anyway, this will start coming down and the impact will be lower. So, otherwise, by and large, you know, these customers that have either opted not to go for quarterly reset or have, you know, we may still have, of course, some impact on customers we could not contact or we have still to push a little bit. That we will try to do. So, this will now slowly be, it will be a little slower impact. And obviously, you know, you know, customers who are, you know, smart customers will now not want to move to a quarterly reset because the rates are on an increasing curve. So, basically, you know, the smart ones may not want to do it.

Got it, got it. The second question was on the PMI 2.0. So, how is the scale-up of that? How are you seeing that benefiting us? Or are you seeing is it relatively, let's say, slow versus the earlier teams?

So, it is a little slow. So, not to the extent that we have seen in PMAY or CLSS-1, the impact is much less. But recently, the government did have a meeting to review and has taken a lot of our suggestions. And I think, you know, the process, which is a little longer, much longer compared to what it was in CLSS-1, that process, of course, may see some improvement. So, we have some cases, but definitely whatever we have, even if we are able to convert it, it will be much lower than what we saw in CLSS 1. So, that definitely is there because, again, it, you know, comes down to the locations where, you know, we are operating. The states where now there is a shortfall and where first-time home buyers will be wanting to go for it. Those states where who have not opted for TMA or for whom this is the first housing loan in the family. For those 10 of customers which are in the states which are there, we have a smaller presence also. So, this is one of very successful in states like, you know, Maharashtra, Gujarat, Karnataka, Tamil Nadu, which are already well-developed states and all. But now the shortfall has considerably reduced over here. Now the shortfall is more in other states like Orissa, Bengal, Bihar, UP and all. So, obviously, you know, those states' presence is less. At least in U.P., we have increased our presence now quite a bit. We have added about 12 branches in the last year in U.P. So, we are trying to see if we can take advantage of that.

Got it. Got it. Thank you so much for answering all my questions.

Good luck for the next one.

Thank you. We will take the next question from Sonal Minas. Sonal Minas, please tell me. Hi, this is Sonal Minas, sir. Thanks for taking my question.

I hope I'm audible.

Yeah, very much audible. Please go ahead.

Sure. Sir, if I understand the data given in the debt correctly, there was a potential shortfall of 357 crores of loans being dispersed because of the IT impact of the software. If you add that back, basically, to the numbers that have been given, we have been growing at roughly 2% quarter-on-quarter net of prepayment and amortization. Now, for the second half we have given a target of roughly 5 percent quarter on quarter growth. So, first question is how sure are we with the we hitting these numbers because even despite that I think if we compare the numbers for last year and this year itself, we have been growing at 2 to 3 percent quarter on quarter. So, what changes that gives you this confidence? That's the first part of the question.

Sure. See, if you look at it that way, last year we had given that when we had given our 10,500 crore target, we had said we will do about 2,000, 2,500, 3,000, and 3,500. So, that's how we had, you know, planned our business for the last year. And for this year also, So, in the beginning, we said we'll do 2,500, 3,000, 3,500, and 4,000. That is how the plan for the four quarters was, you know, prepared. Now, in the first quarter, again, 2,500, we have done 2,600. So, obviously, you know, there's been a 100 core extra we have done, which is a buffer in Q2. This quarter, we have had a shortfall, but for Q3, we are sticking to the same 3,500 which anyway we have planned. So, basically, if you look at it from that point of view, what we are targeting is about, you know, additional 500 or something odd. If you are doing every quarter more than what we did in the previous corresponding quarter, that is how it is planned. So, 3500 is still in line with what we had when we began the year also. The shortfall of that 400 odd growth that now is there, we will now have to cover up in the Q4, which we will build up during the year. So, that's the plan, basically.

Got it, sir. So, just from our understanding, the proposals during this period where we could not land because of flowness or the implementation in the IT system, those proposals are in the system or we've lost those proposals to, let's say, competition or they've just figured off. So, there is a pipeline, basically, is what I'm trying to get to, right? So, if you could explain that.

Sure, see, so there are two things. One is the sanction but not disperse. Second is the, you know, undisperse portion of partly disperse cases, which of course will be the same because whatever you disperse based on that only as per stage of construction. Basically, it's the sanctioned, not dispersed, and the files in the hand, which we could not sanction because of this process change, that is the thing. Yes, there is a definite, at least in the pipeline, which is not being booked or which is not even being entered. Yes, there is a, we don't have the visibility right now, but even if you look at the numbers, I guess, if I recall it, it's about 118 crores is the extra amount that we are carrying in terms of the sanctioned but not dispersed as compared to the previous quarter. So, there is about 100, 150, which is already logged in, sanctioned, and kept on hand. Then, in the process, of course, there are some more, which, you know, partly are the old system, which will have to be brought into the new system and all. So, that is, again, something which is additional to that. So, there is some business. But, having said that, of course, you know, when it comes to the customer, if, you know, it is not there, I am sure some of the loans or, you know, at least a decent proportion of the loans would also have gone off the system because the customer eventually wants The money, if you are not able to give it, they would have gone elsewhere also. So, some of the business is definitely lost, but some of it is already booked in, and we are sitting on that, which will help us in the coming quarter. Got it, sir.

So, just the second part of the question, given that you are sure about your guidance in this particular year, and does a target of 15% next year seems to be something which is conservative? So, I am not questioning the target, but I am just trying to understand bottoms up, which are the pockets where you think you can actually fire more, because in which ways adding 27 rankers this particular year, you will be adding more rankers next year. So, is this a ballpark and if yes, then what is the subjective guidance behind that?

Okay, see, the 15% is the AUM growth that we are talking about. It is also an outcome of the rundown that is there. So, what we have in our control is the amount of disbursements that we can do. And against the 10,500 crore, we have targeted 13,000 this year, which is about 20% plus disbursement growth. Next year, when we are seeing 13,000 to 16,000, that again is almost 22% growth in disbursements compared to the FY27. So, basically, disbursements will grow, but the AUNs will slowly ink up as we go ahead. It will come with a lag. So, I And the 15, 15.5% or whatever is more of a, you know, net income, assuming that, you know, the performance will remain the same or slightly elevated. Now, even if we are able to reduce on the performance because the rate, the gap is reducing, then, in fact, it is even better. This could improve or be better. It could be, it could be exactly, it could, so basically that 15% is more of a resultant figure. What we have in our control is a disbursement, where we are saying we will grow up to 22% next year.

Got it, sir.

I will call back if you have some more questions, sir. Thank you. Thank you.

We will take the next question from Mr. Agav Garg. Please unmute yourself. Mr. Agav Garg, please go on. Am I out of this?

Yes, yes. Now you are out of this.

Okay, thanks. Sir, I have two questions. One, you have given some data on sourcing through new and old branches.

Old branches being the ones that were opened before March 2023.

What I understand is that the disbursement productivity in the new branch is about 50% to 60% lower versus the older ones, and what I want to understand is that how many years does it take for a new branch to get to the same productivity level as an old branch? Is it one year, two years, three years?

What's the typical timeline that you observed?

That's my first question.

See, in terms of the productivity, so there are, I mean, productivity, of course, I think it will take about 18, normally we say 18 to 24 months, some are, you know, do it much earlier, but on an average, this is what it works out to, to reach that kind of a level of, you know, productivity of whatever, we can really maintain our productivity of five cases per staff per month. So, keeping that in mind, you know, to reach that kind of productivity, it is about 18 months is what you can say. However, the other thing is that, you know, we have a category of branches. So, there are small branches where we only have three people staff. Once it crosses a threshold of the, you know, particular book size, then we make it, it moves to a medium branch, then a large branch, then a very large branch, and so on. So, basically, you know, along with the movement from small to medium, the staff size increases from three to four. So, with a productivity of 5, you know, 3-man branch will do 15 or 4-man branch, then the number obviously increases to 20. So, it is not just a simple link series. At that time, the jump is also because the staff also will provide more. And so, basically, you know, we also have, you know, that kind of a movement which will help where people get added because the branch is to step from one level to the next level. But productivity, to answer your question, yes, 18 months roughly you can say on a blended basis, some faster, some a little slower, some take more time, so blended about 18 months. So, these are five of the productivity.

If I look at Fy26 numbers, then the newer branches were disbursing about 20 crores of business annually. That should get to about 40, 45 crores in about a year, year and a half time. That's a reasonable effect.

Like, so, 100 crores is when they cross the target of 100 crores, that is when they become a medium branch. So, that's what it is. So, below 100 crores AUM or bookstates, we keep it as a small branch. But, yes, the productivity will increase and, obviously, the branches which are opened in FY26 will probably, you know, by end of 27 is when they will reach that, you know, 5 cases per staff per month or 15 cases in a branch end of a team.

So, my second question is that so I think all of us understand that disbursements have been impacted because of the tech upgrade but just before this if you can throw some color on maybe the inquiry levels were they up this quarter versus the same quarter last year something that you were referring to in the in the previous question about the pipeline that was there in your hand can you give us some flavor on on how was the pipeline looking like whether that was better than last year or not because if it was then Eventually, it will get converted into disbursements in the subsequent quarters, right?

Okay. So, I'll just go back to the same slide, slide number 20. So, if you see the first, you know, column number 3 talks about the average business in the first quarter of the year. Now, if you see the branches which went live in August, you know, the August disbursement was more than the first quarter average business in the month of July. In July, they had a better enquiry, but because that was implemented in August, that was that day. Same way, if you look at the branches which went live in the month of, you know, September, you see the July business as well as the August business was more than what was the average of the first quarter. So, that is. Now, same way, if you look at the branch, which has not gone live at all, which went live in the month of October or 1st of October, the 435 was the average. The entire quarter, they have, if you look at it, they have done actually more than that. So, there was an improvement if had everything been, you know, without any implementation, the business would have been close to 3000 crore only because, you know, month after month, the business would have improved. So, I think that should answer your query. The same slide, if you look at the, you know, second last column of October, that will give you an idea that, you know, the business was definitely there. The business where no impact happened, where no implementation happened, business was inching up and moving up. So, there was a deal. The demand, there was no problem. The logins also were there. That's why the numbers have also gone up. So, we would have, so the 435, the average would have been around 450 to 455 if, you know, The same trend that has continued efficiency. From the Q1, 435, it is 450 average.

Thanks a lot for those answers. Thank you.

We will take the last question from Mr. Rajiv Mekha. Mr. Rajiv Mekha, please continue. Yeah, hi.

So, most questions are answered, but, sir, firstly, something, you know, some queries on the business side. So, when you look at, so, do you expect that there will be a much sharper movement towards, you know, So, what is this? What do you mean by digital source? And does the new tech stack enable you to scale this channel in a meaningful way? And for the sales team contribution in disbursement, currently it is 10-11. I mean, it's not the right word to look at, but you are, you know, you are projecting that it could become 20% in the next four, five quarters. So what is the plan to scale up or to add people on the same site?

Sure.

So your first question, hire ticket business.

Yes, see, over a period, if you look at it, 30 lakh plus kind of health business in terms of the incremental disbursement has also slightly gone up, and even in terms of AUM has gone up. So, yes, there is a little bit of, you know, high ticket business or the 30 lakh plus business which is coming in, and that is also because the construction costs and everything has also increased. Plus, of course, the fact that, you know, Grand Panchayat and all those things in Karnataka and even in case of Telangana, actually, there are issues. So, basically, we are doing more business in the corporation areas and the BDA and all those things, which where the property prices are a little higher than what it was in the Grand Panchayat area. So, that is, yes. But at the same time, if you see, I think the message from NHP is that the ASF funding is going to increase. So, we are also, in fact, looking at doing some, pushing some business in the affordable AHF category because, you know, we also have to have the loans for availing that refinance from NSP and we are definitely looking that as the direction which the government is having. So, we are also going to look at it. So, while, yes, the number of 30 lakh plus loans will increase, I think we will also have, you know, 15 to 25 lakh segment also, which is under AHF, which will also go up. Okay, that's the first part, because we are looking at, as I mentioned, some steps that we are taking. We are looking at this segment also, because government is looking at the AHF to be pushed. The second, in terms of digital, yes, the new package enables us to have, you know, customer journeys, fully digital journeys, online applications, you know, CRM package, which will be able to be on board and all those included and all. So, yes, digital will be something which will add in terms of the channel available to us. So, that will slowly start inching up. The third is in terms of sales. So, you are saying like today it is still 11%, how are we projecting a 20%? So, today if you look at it, our, you know, we are targeting 90 people are there, we are targeting to increase it to about 150 people. And we are looking at about 1500 crores this year coming from 1500 to 1600 coming from the sales team. Already in the first staff with the same lower staff strength also, they have contributed 560 crore. So, with additional 60-70 people and the second half being with the entire IT transformation behind us, I think the remaining 1000 crore will come. So, next year when we are looking at it, we are looking at increasing the strength from 150 to 250. And next year, definitely we should be having more than 2500 crore of the business coming from this KFC. So, if you are looking at 16,000, 20% will be 3,200 crores, and we are definitely looking at 2,500 plus crores of business coming from it. So, I mean, 20% is what we are aiming at, but definitely it will be somewhere there because we are looking at a much more number of people, the free-down-street who will be doing business from that. And once we increase it from 150 to 250 people next year, obviously the numbers will be even higher.

Sir, my second part of my question is on liabilities. You can firstly receive every NHD sanction that you have received. What is the amount and what is the pricing? And second is on NCDs. I mean, you haven't spoken about the risk on liabilities, repricing, happening because of NCDs. The newer NCDs for which you may be have to, must be, you will have to pay a higher rate maybe in the future. And when I look at your bank loan mix, except for the reformers, there are also special rate loans. So when you say special rate loans, that's the significant part. Is there a risk that those special rate loans can actually get repriced at a much higher level or the reversion there in terms of rates? Yeah, revision in terms of rates can be much sharper than just the reforming loans.

See, first question, NHB refinance. We have got 1,350 crores of refinance right now. The rate, obviously, it is a mix. So, last year, when we got the 1,500 crores of refinance, which we drew last year, we had 400 crores under AHS and 1,100 crores under regular refinance. And so, the blended cost for us came to somewhere around 6.6 to 6.7. Between that range, we got the cost. Okay. This time, the government has, or the NSP has indicated that here, the proportion of AHS could be higher. In which case, you know, even the impact of the rate hike will not be impacted because, you know, even if, you know, the regular refinance rate is slightly higher, the AHS, which is a fixed component, will be a larger proportion. The cost must still be 6.6 to 6.7 only. And right now, we have got 1350 crores. And there is a possibility now that, you know, with NHB looking at increasing the size of the refinance, we may in fact be able to apply a fresh for an additional refinance limit also during the current year. So, that is what we are exploring. But as of now, it is 1350 and the cost is most likely between 6.6 to 6.7. The second thing is, you know, regarding the liabilities, the special rate, basically, this is a T-building. So, yes, there is a possibility that, depending on that, at the time of reset, whatever is there, it may, you know, slightly vary here and there. But by and large, the market prices it accordingly only. So, it should not be a major impact on that. And second, I think you also asked about NCD. So, NCD is actually, for the current year, you know, while we are, we continue, we are getting around, you know, even after this 25 increase, we are getting, you know, bank terminals at 7.65. And today, if you go, maybe it might be 8.3 for a 8.3 or 8.35 for an NCD. But having said that, today, we are already complying with the regulatory guidance on the 25% borrowing through the market for this financial year. So, we are not having any compulsion to go to the market and raise at 8.3. Of course, it is all a matter of how you read the interest rates and when do you borrow and the timing and the plan that you have. But as of the moment, at least, we are not under compulsion to go and raise money from the NCD market, because we are already complying with our 25% requirement. So, we will plan accordingly and see if there is a good opportunity at a good time, good price, we will then probably go for it.

This is already happening in May. This is already happening in May.

Thank you. Thank you.

Thank you. Thank you. Thank you.

So, that was the last question for the day. So, I'll just hand over the call to the management for the in-comment.

Yes, thank you. Thank you to everyone for, you know, all the taking time out and joining this learnings call. And I hope you have answered all the queries. I think it's been a quarter where it's been slightly impacted because of the IT transformation. But I think it is in the long term perspective of the company, I think this IT transformation was very, very necessary and also is going to, you know, drive the business in the coming quarters and in the coming years. So, I think this was very well necessary and it will bring in long-term benefits for the company. And we are still confident that in the next two quarters, we'll cover up for the shortfall and the disbursement, and we have already initiated steps also in that regard. And with some, but in a nutshell, I think the idea, the thing would be to protect the NIM and the spread, and at the same time, we will also push for growth. We will be looking at our 20% plus growth in terms of the disbursement, which consequently should become a 13-14% AUM growth this year and a 15% plus AUM growth in the next year. So that's what is the attempt by the management. Once again, thank you to all of you for joining this earnings call. And thank you to Investec also, Nidesh's team, for the next piece.

So back to you, Nidesh.

Hi, Stan. Thank you very much. Thank you so much, sir. Good request for all the participants that you may exit this call. Thank you for joining today.

Yeah, thank you.