Fedbank Financial Services Limited (FEDFINA) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to FedBank Financial Services Q4 and F526, earning conference call hosted by Equius Securities. As a reminder, all participant line will bend the less and only more, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Shripal Doshi from Equal Securities. Thank you and over to you, sir.

Thank you, Danish. Good evening, everyone. We welcome you to the earnings conference call of FedBank Financial Services to discuss the Q4 and FI26 performance of the company. Today, we have the entire senior management of the company represented by Mr. Parvez Mulla, MBN CEO, Mr. C.V. Ganesh, CFO, Mr. Jagdish Rao, CBO Gold Loans, Mr. Shardul Kadam, CBO ST Lab, Mr. K. Suresh, CBO Medium Ticket Lab, Mr. Vikram Rathi, Chief Risk Officer, and Mr. Lokesh Kumar Parikh, Head IA. I would now like to hand over the call to Mr. Lokesh. Well, over to you, Lokesh.

Thank you, Sripal. Good evening, everyone. I would like to welcome all of you for joining our Q4 F526 results earning call. Before we start, I would like to highlight that... Some of the statements made on this call may be forward-looking in nature, including those related to our financial performance, business strategy, and growth plans. These are based on our current expectations and are subject to risk and uncertainties, including broader macroeconomic conditions. These statements reflect our views as of today and may evolve with changing business and market dynamics. With this note, I now hand over the conference to RMD, Mr. Pabais Mullah, for his opening comments. Thank you, and over to you, sir.

Thank you, Lokesh. Good evening, everyone. I would like to extend a warm welcome to all of you for joining the Q4F526 post-results earning call. At the beginning of the year, we had listed our priorities. as follows. One, conserve and allocate capital to businesses with high ROA and ROE. Focus on our twin-engine strategy of gold and lab businesses. Third, to move towards a fully secured lending portfolio. Fourth, expand gold business through branch expansion and increase doorstep coverage. Five, continue to foster synergies between our gold and lab operations. 6. Within LAP, we will concentrate on a combination of high-yield, small-ticket LAP business and the low-risk, medium-ticket LAP business. 7. Expand medium-ticket LAP with minimal capital allocation. 8. Establish leadership in our STLAP team and build a team for growth and quality. We have promised you that FY26 will be a rebuild year, focusing on correcting our credit cost. Nine, continue strengthening our collection infrastructure to effectively manage the delinquencies which had risen in FY25. Ten, aim for increased core income while reducing reliance on DA income. Use DA as a capital allocation strategy rather than an income generating strategy. Eleven, move towards a frugal cost structure. And twelve, ensure that the credit cost remains 1% and below. These were our promises at the start of the year, and against that, our year as well as quarter has performed as follows. On the business front, we have experienced a good year with disbursals increasing by 67% to 31,410 crores from 18,788 crores, primarily due to the rise in our gold business. When excluding business loans, which we exited in first quarter, our disbursals have grown by 75%. On the AUM front, we have grown 27% with our AUM touching 20,000 crores in Q4 this year. This financial year, we have added 4,342 crores to our AUM. When excluding BL, we have observed an increase in AUM of 41%. Gold disbursals for the quarter reached 10,744 crores, compared to 7,853 crores in Q3 FY26, and 4,580 crores in Q4 of the previous year, indicating a growth of 37% and 135% respectively. We have added 2,447 crores of growth to gold AVM this quarter. The gold business surpassed 10,000 crores, increasing 70% YOY. And tonnage has grown by 12% YOY to 12.6 tons. Our doorstep gold loan business continues to perform with an AUM increasing by 108% YOY to 1,730 crores. As promised, we have opened 34 new gold branches this quarter, bringing our total to 148 new branches this year. And we will continue to expand our branches in FY27 too. Despite opening 148 new branches, our AUM per branch has reached 16.5 crores, reflecting an increase of 4.4 crores per branch during this year. Our LTVs on AUM stand at 60.9%, portfolio-level LTVs. In our collaborative initiative involving Gold and ST Lab business, We have successfully further merged additional 7 branches, taking the total to 70 branches this year. That means 70 branches of small-ticket lab business have relocated into the premises of 70 gold branches, thereby releasing the ST lab premises. These Vyapar branches will provide both gold-owned business as well as lab business to our customers. At the beginning of the year, our capital adequacy ratio stood at 21.9. Now, it has increased to 22.4. The measures we have implemented in FY26 to conserve and efficiently use capital are as follows. First, we 100% assigned our business loan portfolio of Rs.886 crores, which was executed and de-recognized from our AUM. In addition to improving capital efficiency, it also ring-fenced us from further deterioration in the unsecured debtor lending market. Secondly, a total of 1,694 crores in direct assignment transactions were executed through the quarter, releasing capital. Gold co-lending book increased 1,131 crores to 2,127 crores, and rupees 450 crores in subordinate debt was raised in this quarter. These measures will enable us to continue our growth story in FY27. As previously stated, the complete allocation of 886 crores of business loan portfolio in the first and second quarters of April 26, this year now ensures that we maintain a secured on-book ratio exceeding 99.5%. In line with our priority of increasing core income and decreasing DA income, The net income from DA has increased by 89%, decreased by 89% to 7 crores for FY26 compared to 66 crores for the same period last year. We have promised you that we will not rely on DA income for the PBT. Nevertheless, our operating profit has risen by 11%. If we had sustained a similar kind of DA income, the operating profit would have reflected a growth of 22% or 23%. The MTLAB business has demonstrated stability over the course of the year, disbursing a total of 2,180 crores, while sustaining its yields. In Q4, the MTLAB business has disbursed 632 crores, reflecting a 16% increase quarter-on-quarter. Throughout the last two years, the company has encountered... Rising credit costs in the STLAB segment, prompting the AUG to strengthen its credit policies and shift towards a system-driven BRE. The STLAB business has disbursed 900 crores during this financial year and 289 crores in Q4, reflecting a 39% increase quarter-on-quarter. In Q3, in this business, we have moved Shardul Kadam, RCRO as the CBO in STLAB business. Over FY26, we have hired senior leadership team and stabilized the product. We are seeing improvements in sourcing quality this year. We expect that to continue as we grow. Collections, senior leadership has been onboarded, field team has been strengthened, the collection framework has been verticalized, additional personnel have been recruited, call center, legal and recovery teams. At the end of 26, we have almost 2x the collection personnel that we started with. For shoring up collection within the STLAB segment and increasing the PCR in Q3, FY25, along with exiting the deep bucket NPS through that ARC sale in Q1, and the work that we have done in Q2 and Q3, we have limited our credit costs for the year at 0.8% and for Q4 at 0.7%. We have raised about $250 million in ECB till date. Finally, the key numbers are as follows. In business, the AUM reached 20,153 crores, translating to a growth of 27%. Excluding BL, it is about 41% YOY. Gold reached 10,352 crores, an AUM growth of 76%, substantiated by a tonnage growth of 12%. Mortgage AUM reached 9,362 crores and AUM growth of 16%. Disbursals of 11,664 crores in Q4 FY26 up 109%. On the profitability and asset quality side, the net interest income for Q4 grew 23.1%. And for FY26, it grew by 14.8%. Operating profit for Q4 grew 24% via wire to 162 crores. And for FY26, it grew 10.8% via wire to 576.3 crores. Our credit cost for Q4 stands at 0.7%. And for FY26, it stands at 0.8%. Our net profit stood at Rs. 100.5 crores in Q4 FY26. And for FY26, it is Rs. 343.6 crores. The gross stage 3 stands at 1.9% versus 2.1% Q on Q and 2% Y on Y. With that, I will now hand over to our CFO, Mr. C.V. Ganesh, to take you through the numbers.

Yeah, thank you, Parvays. Thanks, everyone, for your participation on the call. I will add to what has been covered this far. Right, so I will start with six numbers. Pat of 100 crores, 750 plus branches. 10,000 crores plus of Gold Loan AUM, 20,000 crores plus of Entity AUM, 2.6% ROE, 14% ROE. So these six numbers sum up the quarter. First, on the AUM growth. We have had a strong AUM growth in Q4. XBL Our AUM grew 15.8% sequential quarter-on-quarter. This was led by a 31% sequential growth quarter-on-quarter in the gold loans. Just to amplify that with numbers, in the first nine months of the year, our AUM-X unsecured business loans grew about 3,000 crores. Against that, in the three-month period of Q4, our AUM grew 2,700 odd crores. Now, what this means is that if we exclude the roughly 900 crores of the unsecured book we sold during the year, the secured book has grown a little under 5,800 crores this year, a growth of approximately 41% year-on-year. Within this. Our gold loan AUM has grown 76% year-on-year. While this has had tailwinds of gold price growth in FY26, but we have also been able to demonstrate a tonnage growth of 12.25% during the year. So, while gold has been the primary driver, this underlines our twin-engine strategy in a year where MSME lending has had headwinds. As well as this, buttresses are conviction in investing in the 148 new branches, most of which have turned the corner on profitability within the year itself. Second, on yields and cost of borrowing. Are yields reduced 12% year-on-year due to a never-before growth in the gold loan book? When you grow so much, obviously there is going to be some impact on yields. Also, the back-ended nature of the growth resulted in the average yield optically showing a drop of about 28 bps. Our weighted average cost of borrowing was marginally lower in the quarter by 4 bps, however, with the leverage increasing to 4.6 in Q4. In the ROA tree, you will see interest expenses optically going up by 10 bps. On the interest rate outlook, we saw cost of borrowing hardening post-February, as well as hedge rates on our foreign currency borrowing going up materially. With the current geopolitical situation, we remain cautious in terms of outlook. What did we do? We tanked up on liquidity in the quarter to counter volatility caused by the geopolitical situation in the Gulf. While it has optically increased finance cost and optically reduced the net interest income for the quarter, it gives us a hedge against the uncertainty and interest rate volatility in Q1. On asset quality, asset quality improved quarter on quarter with entity 1 plus DPD improving to 6% from 7.1% in December. An entity 30% DPD improving by 70 BIPs. An entity 60 plus DPD improving by 50 BIPs over the last quarter. This is driven primarily by an improvement in the mortgage delinquencies, which have improved materially. As we have executed moving away from agency-led collections to in-house collections. GNPA has also declined 20 bps quarter on quarter to 1.9% from 2.1 and the net NPA has declined 10 bps to 1.3% quarter on quarter. We have been able to hold our PCR flat at about 32.3%. Now on the profit and return metrics, PAT was up 14.4% sequentially quarter on quarter and 40% year on year boosted by the incremental interest income from the asset growth and lower credit costs. We crossed the psychological milestone of a 100 crore of pad. This was an important base camp for us in our onward journey from a year of repair. We are cautiously optimistic of an upward journey from here. Our peep-off for the quarter came in at 162 crores, an increase of 24% year-on-year and 9% quarter-on-quarter. P-POP for the year came in at 576 crores, an increase of about 11% year-on-year. However, as articulated earlier, if you exclude the DA income of last year, which we have consciously dialed down, the core P-POP is up 22% year-on-year on a full-year basis. The improved delinquency. Resulted in credit cost decreasing 10% quarter on quarter, 14% year on year, to 0.7% as a percentage of average total assets. On a full year basis, credit cost as a percentage of average total assets is down from 1.7% in F525 to 0.8% in F526. Our operating leverage is playing out slowly, but surely. OPEX has a percentage of average total assets reduced to 5.5% from 5.9% a year ago and 5.7% in Q3, giving us some green shoots on economies of scale playing out on an expanding balance sheet. On a full year basis, Fi26 has seen a 20 bps drop in OPEX. To average total assets over FI25 as a whole. The ROE also continued its onward climb at 2.6%, up from 2.5% in Q3 and 2.2% a year ago. Our ROE also broke into the teens at 14%. Now on capital adequacy. A 40% growth in AUM depletes capital adequacy. And has resulted in a leverage increasing to 4.6, up from 4 in December 25. In the beginning of the year, we had consciously divested our lower ROA unsecured business to release capital for the onward climb in the secured business. In Q4, we have raised a subordinated debt of 450 crores, which has supplemented our capital adequacy by 3%. Consequently, in spite of the healthy asset growth, our CRAR at 22.4% as of March is up from 20.5% in Q3. This gives us ample headroom for growth in the coming year. As the numbers over the last four quarters of this year show, we have attempted to build resilience. And consistency in terms of asset quality, credit cost, and an upward linear trajectory in return metrics. We are deeply grateful for your support in this exercise. With that, I now hand it over to the floor for questions and answers.

Thank you so much, sir. Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets only while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Diganth Haria from Greenwich Wealth. Please go ahead.

Yeah, hi. Thank you for the opportunity. And congratulations for the century. It's the first time we've crossed the 100 crore mark. And, you know, given that the back end nature of growth and what Ganesh mentioned that we have built in some liquidity, you know, just for a rainy day in the coming quarter. So I think, you know, this century will probably remain our base. So congratulations on that. My question, you know, I have two questions only. One is on gold loans. Like, you know, Parvasi, you mentioned that second half is generally heavy for us, and it was exactly like that. The question here is that, you know, we have had such strong growth. But, you know, only one thing is that the yields have probably been a little softer in the last two quarters. So I just wanted to know the growth strategy. Like, you know, is it in the new branches just to ensure that we reach breakeven? We are giving discount schemes in the initial days? And you know, like, you know, what are we doing on the growth front, like, you know, the top-ups versus new customers versus, you know, other things. If you can just highlight the color of growth.

Thank you so much. Thank you for remembering that we had said that we will grow in Q3 and Q4 differently from what we did in Q1 and Q2 because that's the way our seasonality plays out. Also, if you remember, I had spoken about tonnage growth. You have seen the kind of tonnage growth that we have delivered YOY. It's a 12% tonnage growth, and we are very conscious of that tonnage growth. As far as yields are concerned, there are two factors which are playing in here. So, if you take about 30 bps here and there, which you are comparing, I would break it into two parts. There could be 5 to 10 bps, which we could have done on the yield front, but the balance is because of the backending of the dispersals. When you have such a large number of dispersals, which are happening in the last quarter, and there is a backend, that is the effect. So, the yield effect is hardly 10 bps, and I think Q1 will, that we will cover back. When you are playing in a market which is competitive, and when you are pressing the pedal for Q4, and when you are trying to get the tonnage growth, 10 bps here and there is okay because we will cover it in Q1.

Right. So, it's only 10 bips. You know, I just thought, you know, the yields at origination, like, you know, I understand that, you know, optically, you know, the reported yields may not, you know, reflect because of the back-ended nature, but at origination, you know, have we seen any meaningful pressure on the yields and, you know, like, is it because maybe we are, you know, doing slightly larger ticket sizes or, but there is absolutely nothing like that, you know, and the yields at origination still remain healthy.

Yeah, so in the quarter four, there tends to be that tendency to play with the origination yield in the sense of different geographical markets. We do that, but overall level, it's steady. What we did in last quarter, that is exactly, last Q4, FY25, we did exactly the same thing in FY26. It's a seasonality play. You will see us Q1 back to the same pockets. The competition pressure that you are talking about is yet to play out, is the way I would put it. The competition has yet to get those branches in the spaces that we are operating, and we are yet to see that pressure play out, although it might, but it has not yet played out, and that is not what has happened. This is unprecedented dispersals, and I think we are in the same zone where we wanted us to be.

Perfect, great for that detail. The second question is that now we have this new guideline of 75% LTV across the life of the loan. So just internally, what are the process level changes we have done? Because if we don't do any changes, then optically the NPAs might go up because some customers may just go higher than 75%. So there is no credit cost risk at all. But still, you know, optically, the NPAs in the coming quarter for the industry may go up because of this guideline thing. So, you know, how have we as FedCINA, you know, decided to tackle this or, you know. Any insight here?

So I will see these guidelines have come effective this April. There are two sets of guidelines. The guideline that you are talking about that we have to maintain 75% across the loan, that was an earlier guideline. The revision and guideline, which will happen from April 26th, we are executing it, and I will request Jagdish to elaborate it for you. He will give you all the details that we are doing and how we are de-risking what we need to do on the operations side. Hi, Degant.

Hello. Yeah, hi. So, this margin breach has nothing to do with the delinquencies of the book. Yeah, so that is the first point. And on the margin brief regime, last year, we were following 75% in the regime. Now, it is changed to 85% for exposure up to 2.5 lakhs, and 80% for exposure up to 5 lakhs, and anything above 5 lakhs, it is 75%.

So, so, uh, that is...

There is no room given by the regulator for playing on the LTV. While 90% of the book is less than 75% for Fedfina, we don't see any impact coming out. And like I said, margin breach, even if there is a margin breach, there is no need of any provisioning or no need of treating it as a delinquent book, other than initiating for margin collections.

Okay, so it won't impact the NPS estimation. That's good to know, sir.

No impact, no impact.

Right, right, right. No, no, no, perfect. That is very helpful, sir. Sir, and last question is on, you know, the small lab piece. I see that, you know, we have recruited some really good people on the collection side. So, you know, maybe this year we have built the collection team. So, you know, like, do we have a little more confidence than last year that, you know, FY27, you know, this portfolio may actually grow and, you know, deliver maybe positive kind of ROAs also?

Yes, Pekant, definitely I am much more confident than what I was one year ago when we were giving you a guidance that there will be a GNPA number which will increase and we will hold the credit cost. Definitely, the collection efficiencies have improved. What we have also changed is the ST Lab business had a percentage of collections happening through agencies. We have now moved it to our own people. Our own people have joined us last year and now have spent about three to six months vintage. They started giving us results, so definitely we are positive on the ST Lab business in terms of the past GNPAs also, and we are also confident about the new book that we have written in the last one and a half years. So I think that piece definitely we are confident about. What we are now working on is picking up the growth story. You would see that last year we were hovering around 200 crores. March definitely is a good momentum quarter for everybody. So we did clock to 90 crores. But definitely that is where we are working on to pick up the business. Even on the business front, we have hired new people who have come in last year, and the productivity will start jumping up there too, although we are taking it under the new credit BRE that we have done. So it will pick up steadily, and we are happy with that.

Okay. Okay. Perfect. Thank you. Thank you, everyone, for this detailed answer. Thank you, and all the best.

Thank you. Thank you, Dikant.

Thank you. Ladies and gentlemen, anyone who wishes to ask a question, may press star and one. Our next question comes from the line of Meghna Luthra from Ingrid Equities. Please create.

Hi, sir. Thank you for giving me the opportunity, and congratulations on a good set of numbers. Sir, a few questions. One is, since our average ticket size and gold loan is, you know, around the 2.7 DAG mark, how has the new KYC rule impacted disbursements? Has it impacted disbursements at all?

No, there was no such, no any KYC rule, as far as we know. Can you be more specific?

Sir, from our understanding is that loans above 2.5 lakh have to go through KYC, and most likely the customers who are coming for a gold loan do not prefer going through KYC, say, on the Sibyl or based on the Aadhaar card and other details.

So, this is actually with the effect of 1st of April, 2026. The new regime. So it is not about KYC, it is about the assessment. So for us, when the exposure increases 2.5 lakhs, we need to do a basic assessment on the income and basically the cash flow of the customer to understand the profile a bit more in detail. So, we are prepared, and after April 1st, we are completely on, we are live with our systems, our integration with the credit bureau to understand the existing obligations not, and we don't see much of an impact. But, yeah, there is an impact on the practice of our branches, our staffs, servicing, because that's a new journey for them. But, yeah, over a period of a month or so, we expect stability there. Yeah.

Oh, good God. And, sir, another question was on the co-lending spread in the co-loan book.

Sir, so our overall book under CLM is 21%, which is around 2,100 crores.

Okay.

And that gives a AUM level spread of around 4%, and...

Okay. Got it, sir. And another question, sir, on other income, we are seeing that the disbursement growth was very strong during the year. However, our fee and commercial income declined, you know, year-on-year basis. Sir, would you like to highlight that? How do we see that moving ahead?

The other income, Meghna, is actually coming from the lab business. And the lab business disbursals, they have not been as strong as the gold business disbursals. So that is where you are seeing that piece.

Okay.

And one more element, I think, is also about business. You might be seeing if you're looking at F525, there is business loans through which I had the fee income coming in.

So, sir, how do we see this line going forward? Do you think we could see a reasonable amount of growth?

Yes, it will, because, see, I am, as I said, I am picking up the dispersals, and the dispersals on the ST-Lab business will pick up, on the medium-ticket-Lab business will pick up, and it's a direct correlation there. So, on the rota tree also, we are expecting 0.8 to 1% coming from the fee income side. So, this should pick up going forward. And also, BL won't be in the base of FY26.

Thanks. And, sir, on AUM growth, we understand that gold prices, you know, I mean, you would be building in some sort of gold prices in the growth strategy. How do we see the gold loan book growing during the year and also the lab book, the MP and ST lab book?

Yeah, Meghna, so we've been giving overall guidance last year also, and we said we will be a 20-25% AUM growth company, and we'll continue with that.

And so lastly, what would be the incremental cost of funds during the quarter?

Devi Ji? Right now, as I said, it's an uncertain environment. It would be hazardous to sort of have a guess around that. We are watchful. As I said, we have tanked up on liquidity. We do not foresee us needing too much of money in the markets. At least till the geopolitical situation cools down. And then we are hoping Q2 is a new quarter.

Okay. Thank you.

Our next question comes from the line of Chintan from iSecurities. Please go ahead.

Yeah, thank you for the opportunity and congratulations on the strong set of numbers. So, sir, diving deeper into this gold loan, also disbursements for gold loan, if I look at the number, they have almost doubled in FI26 versus FI25. So, what is the kind of key vectors which would have contributed to this loan as in branch expansion plus I think we also have doorstep banking. So, what would be kind of the mix? How much would be from doorstep banking and how much could that be attributed? So, just wanted trying to understand now what could be the run rate which could sustain going forward. Yeah, that's the first question.

So, yeah, there are multiple drivers. Obviously, the first driver is the new branch and the existing branches giving more productivity in the existing book. So, from 12.5 crores, we have reached around 16.5 crores average per branch book size. Another driver is the doorstep gold loan. Doorstep gold loan stands at around 1730 crores AEM, which is 17% on the overall AEM. So these are the two major drivers, and as we always promised, we concentrated on the tonnage, and the tonnage has grown around 12.5% for this financial year. These are the three major drivers.

So sir, but in terms of this EUM per branch, so it is almost 16.5, so probably peers could be somewhere around at max best peers, I think like around 18 to 20 crores. So what is the maximum stretch, I think, which we believe could be stretched to on EUM per branch? And what is the branch expansion idea for the next year, particularly for gold loans?

Just to detail there, we have opened 148 branches. Even after opening branches, our average, overall average is 16.2. But when you see the branches which were there in FI 25, we reached around 20 crores of average per branch there. So we are at par with the market as we speak. So the capacity of every branch we have is to accommodate at least 66. And that's the size of the safe room, that depends on the... We are the first guest.

Chintan, one way of looking at that also will be to look at each of the competition and look at what is the vintage of the branches you have. So you will have certain branches which are in the range of 20-25 crores, they will grow at a particular rate, the 15-20 will grow at a particular rate, the 5-10 will grow, and the new branches will grow at a particular rate. And depending on the geography that you have these branches, you will have a kind of growth because there will be white spaces available in the western and northern geographies and the southern geographies will be a little dense. And plus we add the doorstep. That's how we model our growth story.

And so, sir, hypothetically, assuming that if there is a decline, say, 10-15% in the gold prices, so, do we, so, in that kind of scenario, what could be the growth which we should be targeting at overall AUM growth for gold loans?

Yeah, see, we, when we do a budgeting exercise with gold loan, we start with the tonnage growth, irrespective of the price. So, we will be budgeting for a 10-15% tonnage growth. Our branches are modeled for tonnage growth in terms of the KRAs as well as the drivers as well as the support that we give them. That is how we drive our branches, and we take price as a bonus. And depending on the each of the quarters, there could be ups and downs which could happen, but overall level, even if you have a flattish kind of a price play next year, we still should see a 20-22% growth on the EVM on the gold side for a flattish price.

And so on the overall AUM, what would be our guidance? So 20% odd guidance remains, right, on the overall AUM growth?

Yeah, 20 to 25%.

Sure, sir. And lastly, on the margins front, I think if you could just help me with the breakup of the fixed and floating book on the liability base, so just wanted to understand if there is a rate hike kind of scenario, how are we placed on that frontier?

David, fixed and floating?

Yeah. No, roughly about a quarter of the book is on fixed, right? And here I am excluding the commercial papers we take. Now, commercial papers, we would have six months, one year also. If you factor commercial paper of a longer duration also, roughly 30-35% would be fixed. So, there is some insulation there. Right?

Yeah, on the overall worrying, so it is kind of 30-35% is fixed, including CPS. And so on the asset side, so largely gold will be the entirely fixed, and on lab portfolio?

See, it is, I think the way you will have to look at it is that in gold, because of the shorter tenor, right, we have the opportunity to reprise on mid-order.

Reprise.

Understood, understood, understood. So, you know, I think we have the opportunity and we have the insulation.

Understood, understood, fair enough. Okay, sir. Thank you. I think that's it from my side. Thank you, and I'll come joined by and thank you on all the various for the future quarter.

Thank you. Our next question comes from the line of Sripal Doshi from Iqiris Securities, Private Limited. Please proceed.

Hi, sir. Good evening. My question was pertaining to the growth side. So, as you said, even if the gold price remains steady, we would be growing at 20-22% on the gold side, which will be on the back of 10-25% gold tennis growth. But if you look at next year, when we're trading in...

Sorry to interrupt you, Mr. Doshi, but your voice is breaking.

Am I better now?

Yes.

Okay. So next year, how are we looking at the mortgage segment growth coming back? Because next year, we might not see similar level of gold business growth. So on the mortgage side, if you could give us some clarity on the small ticket lab segment, you know, growth or how we are seeing the trends emerging there in terms of not only asset quality related trends, but also how our framework is, newer framework is helping us on the market. A better group trajectory going ahead.

Yeah, I mean, Shripal, whatever questions I've answered, I've answered the overall growth. I've answered the gold growth. Now, the only thing remaining was the mortgage growth. It's a subtraction, right? Arithmetic.

But that STLAP as a segment, I mean, it was a challenging segment for the industry at large as well. And then while the industry has started to showcase some signs of recovery, at least on the bounce rate as well as the forward flow rate, are we also experiencing the same? Because on the disbursement side, when I look at the numbers, it still is broadly sticky on a quarterly run rate level of 300 crore now.

Yeah, no, I understand your question. See, what I am saying is at a mortgage level, we'll look at that growth. Within the mortgage team, we have the lap, medium ticket lap and the small ticket lap. So that we will leave it for the year to play out. So at an overall mortgage level, we'll still do that growth.

Okay, okay. So, because, okay, so we would try to maybe cover up the, if there is continued slowdown, we would try to cover up with MTLEP doing relatively better than STLEP.

Yeah, that's how we will, as a strategic, I mean, the advantage of having multi-products is that, right, when you have an injured product which has come out of an injury, I agree with you, it will take some time to get into the 20 growth story. Although we will try it, but we will also be cautious of the quality that we want. But at an overall level, first we'll get the mortgages to be at that growth. And if the gold supports, then we deliver the AUM growth of 20-25%. And within the mortgage, we see how STLAB plays out in Q1, Q2, and then pick up MTLAB accordingly.

Got it. So, why I was asking that question is because that HTLAP as a product also helps us on margin side, given the relatively better yield versus MTLAP. So, but yeah, got the answer for the same. And so, for next year, with respect to, while I heard that you had alluded about it, but on the, let's say, credit cost and ROI front, what is the, let's say, FI27 and FI28 target that we have from a Range-bound perspective, if you could highlight.

Um... See, FY26 was a rebuild year for us. We had told you it will be a rebuild year, and we will work on the credit cost, and that was the single biggest promise that on FY25, you will see the credit cost being shaved off, and that's what we wanted it played out. In FY27, the credit cost should remain range-bound. We should work on the OPEX, and between the OPEX and credit cost, we should get the upside to see an ROA better. Approximately about 20 to 30 BIPs betterment of ROA from the average ROA that we have delivered this year. So the trajectory will be in that direction. So if you are seeing a 20, 30 BIPs improvement on ROA, then at a PBT level, if I say 40 BIPs, that should come from credit cost or OPEX. And since it's a year after the rebuild year, we will toggle between these two and figure out where it has to come from with the rest of the rota tree remaining the same.

Got it, sir. Thank you, sir. Thank you so much for answering our questions. Good luck for the next quote.

Thank you.

Thank you. Our next question comes from the line of Devanj Thru from Acquaintance Wealth Advisory. Please go.

Hi, sir. Thanks for the opportunity. An audible. Congratulations on a good set of numbers. My first question was, where do we see our yields settling in FI27? So, I am talking about the origination yields. Where do we see them settling? Will they be at this level or will they improve?

See, as far as yields are concerned, I think the lap yields have held. There could be a 10 bips here and there, but they have held the medium-ticket lap as well as the small-ticket lap business, and they will continue to hold in the next year also. The gold business is where you've seen some yield play out in Q3 and Q4. And by Q1, you should see some bit coming back. And if the competition is not active, and there is a steady state, then the gold yield also should come back to the Q2 levels that we had seen in FY26.

Okay, and that is helpful. My second question is, I think we have not mentioned our active Thank you. A new presentation this quarter. So, what would that be? And if not that, I think we are giving a run rate of customer acquisition every month. What is that exactly right now?

So, on gold, last year, when we closed, we were at an average customer base of 2.56 lakh. This year, we are crossing 3 lakh. Recording a growth of 17% in the on-by-by basis.

Okay, 3 lakh active customer base. I think Q3 we were at 2.7, right?

2.67, yeah, around 2.7. Oh, so Q4. In Q4.

Okay, that is quite a healthy run. What would we attribute that to?

Yeah, new customer acquisition of around 60,000.

60,000. So, we have actually doubled. So, we were adding around 30,000 customers per month, if I'm not wrong, and now we have added 60,000 this month, this quarter, right?

60,000 per quarter, yeah, that's right. That's the scenario in Q4. So, if you see, this is a result of around 148 new branches, where new branches contributes to...

Okay, okay. So we would attribute that to the new branches that we've added. Any other strategy change? Okay, fair. And my other question was, are we seeing any asset quality stress in the month of April? How is April for us on the side of asset quality and on the side of growth?

See, as far as quarter one is concerned across the industry, the collection efficiencies are very different in quarter one. These kind of collection efficiencies play out across the industry. But if you're asking me as far as the industry is concerned and if you're talking about the environment, whether it is affecting, the businesses that we are in, we get a lag effect. So the banks will see that kind of effect first. Then it will come to the larger players and then we in the affordable segment will see it because our customer is in the supply chain slightly two, three links away. So we will see it later. So right now we are not seeing anything from the customer side.

Okay, okay, fair. And the average ticket size that we have right now, where do we see that, you know, see that going? Like, I think we are at 2.7 lakhs. Do we keep on continuing to increase that for our 10-inch growth? Or where do we see that going?

We see it to flatten. It's actually depending on the gold prices. The average ticket has grown from 1.5 lakh to 2.5, 2.6 lakh. This is basically a price. If you go to the April 25th, right?

Okay, first type stabilizers, ATS stabilizers. Okay, fair, fair. Okay. I think, yeah, that was quite difficult. Thank you so much.

Thank you. Our next question comes from the line of Aruvind Ravichandran from Syndrome Alternates. Please go ahead.

Hi, I hope, you know, you're audible. Thank you so much for the opportunity. Sir, two questions. One is, I know I see, you know, early delinquency is improving, you know, according to the presentation. So, like, can I safely assume that it is primarily because of the mortgages and, you know, medium ticket last segment? Sorry, yeah, small ticket and medium ticket last segment. That is my first question. And second question, like, you know, like, we have built a capacity in the mortgages segment over the last, you know, five, six years. And especially, like, you know, your disbursements have obviously come down because of, you know, multiple reasons. Can we expect, you know, growth to come back without, you know, meaningfully increasing cost? You know, sorry, yeah, that is my second question. Yeah. For next two years at least.

The delinquency question, it is at an entity level that you are seeing, but we also have our delinquencies on the mortgages level coming down. But that delinquency at a one-plus level, yes, we have mortgages which has come down. But the entity level that you are seeing, it has all the three businesses which is showing. As far as growth is concerned, yes, we are, as far as our internal, see, our growth had got stunted in the smart ticket lab business because of the issue which we faced one and a half years ago. It was our issue and which we have resolved and are moving forward. So unless there is an environment challenge, we should continue on the same trajectory that the market is operating at. So the dispersal should take the trajectory how the market takes.

I'm sure.

Yeah, also, my question is also on, like, you know, can we, like, see revenue growth here, like, without meaningful improvement in OPEX growth in this particular segment? And, you know, like, what kind of, like, you know, ROA expansion could lead to, like, the next two to three years? That's what I'm trying to understand.

So, the ROA expansion which I guided was about 20-30 WIPS on the FY26 ROA. The FY27 ROE, you will see a 2030 BIPs expansion. And that expansion, as I said, could come with the reduction in both the OPEX as well as the credit cost. So it could be a play between these two. And that is how we will continue in FY28 also.

So, Arvind, I'll just add on to what Parve said on that. See, the medium lap for us is the variable cost business. So, obviously, it is accretive as soon as we get the business, right? Also, we recover more fees than the origination costs. So, all of that, obviously, the more medium lab we do, the more profitable it is. On the small lab, if you see the volume this year, our belief is it can only get better because the infrastructure is there, the people are there, they are gaining vintage, the leadership is there. It's a matter of the execution kicking in. It's not a matter of whether, it is a matter of when, and obviously the reason we have invested so much is with the optimism that it will supplement our return ratios. So I think the answer to both is of course.

Thank you. Our next question comes from the line of Rahul Kumar from Vankaria. Please go ahead.

Hi. Can you help us the numbers of write-offs for the business and in the mortgage business?

You're talking about the quarter?

Yeah, this quarter and the previous quarter as well?

So, previous quarter, I don't think we had anything. This quarter, we would have had about maybe 14, 15 crores.

Okay.

But the credit card reflects the impact of all of these items. Right?

Yeah. The second question would be, would it be fair to say that now we are at the past point of maximum slippage in the mortgage business, and then Citrus Peribus, I think, you know, the great quality in this segment should improve from now onwards.

Yes, see, the incremental slippages should show a declining trend if the environment remains steady. Because we went through our own challenging situation and our slippages were because of our own reasons. And once we put down those own reasons behind us, the rest of the things should fall in just the way it is operating for the market. We should align ourselves with the market in terms of the slippages. So, we should see a recent story going forward. Okay.

Okay. So, Ganesh, can you help us with the figures of moderate slippage in this quarter and the previous quarter?

We don't put it out by segment, right? But if you see, we… Obviously, the delinquency metrics improving means that there has been a material improvement.

Thank you. Our next question comes from the line of Aditya from Securities Investment Management. Please go ahead.

Hi, sir. Thanks for the opportunity. Firstly, on this small ticket lab, the book we have of 3,800 crores, so are we making money currently on this, considering the credit costs which we have incurred this year and the investment in collection and building the teams? So, the 3,800 crores book, are we making money on this currently?

As we said, we are reviving, we are very bullish on this particular business, and it will be unfair of us to answer that question right now when we have told you that we have gone through a tough period on that and we have rebuilt that book. So maybe a year later, we should be in a better position to answer that question.

Understood, sir. But, sir, going forward now, this growth in Small Ticket Lab, is it more dependent on how the external environment is for you, or it is more on further internal restructuring, which we have to undertake? So, the growth is going to be dependent on which of these two factors?

External environment will always play out for every company. As far as we are concerned, we are behind with our internal issues. We have already structured the STLAB business. Our leadership team in each of the states is present. They have vintage in those states, and they have started delivering decent productivity, and that productivity needs to move up. So we know the tracking that we are doing state-wise for the dispersals to pick up on the STLAB side. And we are monitoring our collections team. As you know, we invested into the collection side for the ST Lab business, verticalized it, looked at the collection efficiency. So all those things are behind us now. So we should align with whatever happens in the market because, see, we are operating in a volatile environment as well as the world, as well as India is concerned. And those kind of things I can't give a guidance on. But the rest of All of our internal issues, I am telling you that it's behind us.

Fantastic. And ask me, sir, on fundraise, so our debt equity is now 4.6, any particular level beyond which we wouldn't be comfortable, and when would we be looking for a fundraise?

See, what you are talking about is an area of competitive advantage for us. So, we have room there for expansion. I think you should sit back and enjoy the leverage increasing and the ROE increasing. Okay. Now, we have comfortable covenants. You know, I think I'll just leave it there.

Sure. Thanks for answering the question.

Thank you, ladies and gentlemen. That was the last question for today. I would like to hand the conference over to the management for the closing remarks. Thank you and over to your team.

Thank you so much for joining in. Really appreciate it, and thank you so much for supporting us.

Thank you so much, sir. Ladies and gentlemen, on behalf of Acura Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.