Aptus Value Housing Finance India (NSE:APTUS) Q1 2027 Earnings Call

0:00 Good morning, ladies and gentlemen. I am Danish, moderator for this conference call. Welcome to the earning conference call of Aptus Value Housing Finance India Limited to discuss its results for the quarter ended 06/30/2026. This conference call may contain forward looking statements based on the company's beliefs, assumptions and expectations as of today. These statements are subject to risks and uncertainties, and actual results may differ materially. At this moment, all participants are in the listen only mode, and they will conduct a question and answer session. Please note that this conference is being recorded. We have with us today, Mr. M. Anandan, Executive Chairman, Mr. P Balaji Managing Director, Mr. Siti Manoharan, Executive Director and Chief Business Officer Mr. Sanjay Mehtaal, Chief Financial Officer. I would now like to hand the conference over to Mr. Anandan for his opening remarks. Thank you and over to you, sir.

1:02 Yes. Thank you. Good morning. Good day, Sanjay, everyone. I am Anandan, Executive Chairman of the company. I warmly welcome you all to this earnings call. As you know, the Indian economy continues to exhibit strong underlying momentum and created a supportive environment for credit growth, including for affordable housing finance. Aptus delivered a good start to the year with assets under management growing by 21% Y o Y. Investments reached a good level during the quarter and the growth was broad based across geographies and distribution channels with continued demand from our targeted customer segment.

1:54 Profitability remained healthy during the quarter. Net total income increased supported by business growth, improving operating leverage. Return on assets remained healthy, while return on equity stood at a little over 20% ROE. Spreads remained largely stable. Our margins remained resilient during the quarter despite the rationalization of pricing of certain lending segments and prudent liability management including reduction in cost of funds. Asset quality remained broadly in line despite continued business growth.

2:41 First half broadly contained at 60 basis points during the quarter, reflecting resilience of our underwriting framework and disciplined portfolio monitoring. Looking ahead, we remain optimistic about the opportunities in the affordable housing finance sector. We are seeing good business momentum across our markets and are confident of delivering 22% to 24% area of growth as guided as while maintaining our focus on operating efficiency. With that, I would now like to hand over the call to Mr. P. Balaji, our Managing Director to take you through the business focus and key operating and financial processes.

3:30 Thank you. Thank you, sir. Good morning to all. To begin with, I am happy to convey that we have started FY 2027 on a positive note. The strategic initiatives that we outlined during our last earnings call are progressing well and have contributed to the continued improvement in our business momentum. We remain focused on balancing growth with profitability while maintaining our credit discipline. Overall, the quarter reinforces our belief that the affordable housing segment we operate in remains structurally robust and continues to offer a significant growth opportunity. As outlined during our last earnings call, we continue to make steady progress on the strategic initiatives aimed at accelerating our growth momentum.

4:20 First, branch expansion. We continue to expand our distribution network and during the quarter, we opened 33 branches taking our total branch network to INR $3.70 crores. Next is strengthening customer acquisition. We continue to diversify our sourcing channel through the expansion of our connector network and increased focus on digital marketing initiatives. The connector channel contributed eight percent of our disbursement during the quarter, and we continue to see encouraging traction from the sourcing channel. The next one is the increasing average ticket size. Our continued focus on increasing the average ticket size supported partly by inclusion and calibrated customer selection strategy which helping us onboard higher quality customers while maintaining healthy business momentum.

5:09 The next one is the customer quality and pricing. Our calibrated reduction in the lending rates on select loan ticket sizes together with our strategy of increasing the average ticket size continues to support customer acquisition while helping us onboard higher quality customers. Going forward, we remain focused on the disciplined execution of these initiatives. During the quarter, the last year whatever was guided has been achieved. In the sense in terms of growth, Q1 disbursements grew 36% year on year, providing confidence in achieving the FY 27 AUM growth guidance of 22% to 24%. Just to give a July 26 disbursement also was good and that improved by 25% as compared to July 25 disbursements.

6:00 Branch expansion, we have added 33 branches during the quarter against the full year target of 60 to 70 branches. Spreads, yield moderation remained in line with expectations and was fully offset by a lower cost of borrowings resulting in stable spreads. Operating expenses to AUM remained at 2.7% within the guided range of 2.6% to 2.8%. Credit cost stood at around 0.6% in line with the guided range of 0.5% plus or minus 10 basis points for FY twenty twenty seven. Profitability, ROE remained above 20% consistent with our profitability guidance. Based on the progress made during Q1 FY twenty twenty seven, we remain confident of delivering our FY twenty twenty seven guidance across growth, spread, operating costs, credit costs and profitability.

6:51 Our growth is anchored on the following strategic pillars. One is diversified mix, geographic expansion, productivity, digital excellence. One more thing which is important is product expansion. We are also evaluating opportunities to broaden our lending portfolio beyond home loans and SME loans through the introduction of a new lending product. Together, these pillars continue to strengthen our franchise and position us well to deliver sustainable growth while maintaining our profitability and asset quality. Now moving on to performance. AUM grew by 21% year on year to INR 13,648 crores, disbursements grew 36% year on year to $10.53 crores, branch network stood at three seventy two branches.

7:37 Now coming to asset quality, the collection efficiency stood at 98.52%, primarily impacted to an extent by seasonality and some moderation in collections within the NBSE portfolio. Consequently, our 30 plus GPD stood at 6.87% as against 6.21% in Q4 FY twenty twenty six. Generally, the collection performance has improved in July with the 30 plus GPD declining by nearly 20 basis points. We expect this positive trajectory to continue as our collection initiatives gain further traction. The GNPS stood at 1.7% as against 1.52% in Q4 FY twenty twenty six, while net NPA stood at 1.29% as against 1.15%.

8:25 The credit cost for the quarter remained within our guided range of around 0.6%. The credit cost for Housing Finance Company came in at 0.2%, while the NBSP reported around 1.4%. Aptus is one company with two businesses and two benchmarks. Our housing finance business should be compared with HSE peers and our NDSP business should be compared with the HSE peers. Each has a distinct operating model and risk profile. Therefore, asset quality should always be assessed in the context of the portfolio mix. Now coming to the profitability. During the quarter, net income margin grew by 19% year on year to INR $4.41 crores. We maintained the spread sequentially to 9%, driven by declining cost of funds to 8%.

9:10 Our OpEx as a percentage of AUM remained at 2.7%. Profit grew 19% year on year to INR $2.61 crores, translating to an ROA of 7.8% and ROE of 20.4%, which is among the highest in the industry. Coming to the funding, during Q1, we raised approximately $8.72 crores on a consolidated basis, primarily through a mix of term loan securitization and direct assignment. Our liability profile continues to remain well diversified with 60% from banks, entities at 14%, securitization at 18% and the balance through NSB funding. We continue to maintain a strong liquidity position with total liquidity of INR $13.33 crores as of June 26, including INR $12.57 crores of Anubhavil's bank sanction, providing us ample headroom to support growth. Now with these remarks, I open the floor for the question and answer session.

10:09 Thank you so much, sir. Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask a question, may press star and one on your telephone keypad and wait for your turn to ask question. If you were... If you would like to withdraw your request, you may press star and one again. Our first question comes from the line of Nishanth Chawate from Kotak Bank. Please go ahead. Hi. Thanks for taking my my question. You know, just just a little bit of a guidance of of the way this year is playing out.

11:00 One is that, you know, the disbursement growth is pretty impressive around 36%. You know, there was... There have been challenges throughout the last four, five quarters. So one is, a, what are the drivers? And, you know, what is the what is what is the thought process comfort in terms of, you know, how this plays out over maybe the next two, three quarters, if you have some color on July, etcetera? And I think even on the asset quality front, if you could give some color, and I know you mentioned that our GDP was down around 20 basis points. But a, what are what exactly are the drivers? And how do we expect the year to really end? I think those are my two questions. Thank you. First is on the growth, like what we have explained earlier. First, the growth will come from expansion of new branches in new states and expansion of new branches in the existing states plus the increase in average ticket price by at least INR 1 lakh as compared to the last year. That is also will provide momentum for the group. Next thing is the connected channel, which we have developed.

12:09 That has actually gained traction. That's as I told you, during the first quarter, 8% of the disbursements was through connected channel and this will be augmented in the second, third and fourth quarter as well. And the other one is the we are also we have also calculated we have also optimized the lending rates on certain housing loan ticket prices. That is also likely to provide momentum for the growth. And that's what has actually happened in the sense, if you look at our July 25 disbursements, it is July 26 disbursements, it is 25% more than the disbursement as of July 25. So all these things are likely to result in good growth and that's what we are pursuing.

12:55 That is on the growth. Next thing is on the obviously with this kind of disbursement growth, the AUM growth also will catch up And that's what is giving us confidence that we'll be able to achieve the guided range of 22% to 24% AUM growth. Now coming to the asset quality, as I told you, the credit cost in the HSP was at 0.24%. This is in line with any other house insurance company. And the quality of the book is engineering very well there. And if you look at the NDSE, there was a small hitch in terms of collections during the back end of June 2026. And rapid work has resulted in the collection efficiency dropping down to ninety eight point five percent thirty plus BPD going up to 6.87%.

13:44 But we have already taken corrective steps in terms of the NDFC collection And we're very happy to tell that in July 2026, the Phase two has almost reduced by 15 to 20 basis points. So this will continue. And going forward, this range, the credit cost range of 0.5 plus or minus 10 basis points will be maintained, and this will be there for the next three quarters. And any specific factors that you would want to call out because of weakness in collections or what happened really in the first quarter in the NBFT? Sir, repeat your question, sorry, Nitsi. Yes. So any specific factors that you may want to call out, which were the reasons for weaker collections in the NBFC in the first quarter?

14:39 So actually, first of all, let's be very clear. There are there is no problem with the quality of the customers whom there we have funded in the MBSE. It's basically the some commitment because there's on the at the end of the June. So at the end so June 26 that was the thing. And again if you look at the credit cost of 1.4% that compares with the NBFC of any other with other NBFC in the same line of business. So actually there is no problem with the quality of the customers. Only thing is some commitments which was there at the end of the June, but they're not able to meet it and that is where there is a slight deterioration in the portfolio quality, but that is getting corrected in the month of July 26 and we'll come back promptly in this quarter.

15:33 So again just to add, the data company wise, the parent company in excellent business, pursuing excellent business, the quality of portfolio, lower dues, NPA data, credit costs, compares favorably with all other comparable housing companies. Equally, our NBSC data also is comparing well with other NBSCs of similar size are comparable NBFCs. But on a combined basis, on a consolidated basis of HL and NBFC are the combined data got increased by this 20 basis points, primarily on account of while it compares well with other NDFC business, but still on a combined basis, our data price, it is higher. That's what we are going to work strongly to reduce it further.

16:35 So probably, you know, this is kind of more of a month end or a seasonal trend is what you are suggesting. I mean, that's how I would read it rather than saying that I would agree with you. Okay. Got it. Got it. Got it. Got it. Thank you very much and all the best. Thank you. Thank you. Our next question comes from the line of with Kotak Mutual Fund. Please go ahead. Hello. Hi. Am I audible? Yes. Yes, Uman. Yes. Yes. Good morning, and thanks for taking my question. Sir, my question is also related to the asset quality point. Now we do understand that Q1 is a seasonally weak quarter, but our headline ratios in terms of 30 plus 90 plus are also higher on a Y o Y basis.

17:25 So is there anything lumpy out here which has led to this? And the second question is that if you could, while the blended collection efficiency has dropped to 98.5%, I mean, if you could just split it out as to how much collection efficiency has dropped in the NBFC business? Yes. See, if you look at the collection agency, the housing finance company is around 99.5% and this one is around 97.5%. That's the difference. So adding up to this on a consolidated basis, it was around 98.5% too. But regarding the increase in the NPAs, actually we are not seeing that kind of lumpiness in this quarter or year on year basis.

18:10 In fact, this is what we have also guided in the same 1.49% was the NPA as of June June twenty twenty five, that has become 1.7%. But this will definitely be brought down with the kind of effort that is being done. And this is broadly on account of the NBOC NPA getting increased. Sure. So so this is not specific to any particular region or any particular cohort of customers or or anything like that? No. No. No. Okay. Understood. And, sir, just one suggestion. I mean, I I do appreciate that. I mean, on the call, you are trying to emphasize a lot more about about the HFC and the NBFC business where you would want us to to sort of compare both the businesses separately. But just a suggestion, I mean, if we could also start giving data points for both the businesses separately, I mean, it would help us as investors and analysts to kind of compare it in a more meaningful Uman, we have already decided, we have already discussed from September 2026 onwards, you will get data for both the companies in the investor business.

19:22 Our next question comes from the line of Amit Ketan with US Securities. Hello? Yeah, Amit. Yeah. Can you hear me? Yes. Yes, sir. Yeah. Yeah. Hi. No. This is Adi here. Sorry. So just to, you know, clear this call in asset quality, you said that towards the end of June, some of the NBFC customer couldn't pay and couldn't honor their commitment. But in July, they have not on... They have not only cleared the June dues, and they've also honored their July commitment as well.

20:11 So now they are back to... They have kind of rolled their bucket. Right? So on an ongoing basis, your collection efficiency, which was, say, 97.5 in NBFC, now should be coming back to normal of what? 98.599, I mean, in in June, July? Yes. Definitely. Definitely. Got it. So, incrementally, you'll not see flow forward from the NBSE portfolio, you know, in June... In July and August? Yes. Okay. And on this... From a growth point of view and again, you said that July disbursement for a higher 25% Y o Y in your initial remarks. But I think from last July, you also stopped doing this you know, below 7 lakh loans also. I mean, you you stopped doing below 7 lakh ticket sizes from last July.

21:06 So on an adjusted basis, I mean, see, on a like to like basis then, how should we look at your disbursement run rate going ahead? I mean, see, 3135% in 1Q was also because of a lower base last year. But July is 25%, but you still have a lower base. But when the base normalizes, how should we look at your disbursement growth? This quarter, minimum 25% to 30% increase over the last quarter, year on year basis will be happening this quarter. The impact of like the service coming back. Yeah. Impact of less than 7 lakhs was coming down. Yeah. And the disbursement is also now happening on NBFC. I mean, the NBFC side, you have not kind of calibrated on disbursement, right, because everything has come back to normal.

21:55 Yes. See, that's what we told. Actually, there is no problem with the quality of the customers. It was just one small hit that has happened during the June 2. So there is no way that we are reducing the business in the end years. Sir, one thing on the funding side, two things. I mean, energy proportion in the funding is at its lowest in many, many quarters. And I don't see any NBFC sanction in the pipeline also. So what is the reason? And the second is the unavoid sanction from banks as we see in the liquidity slide. What will be the cost of these sanctions when you draw? Yes. First of all, let me talk about this NHG. See, what is happening, we have also applied to NHG for a INR500 crores refinance facility.

22:41 But the indication from NHG is that the cost of funds that they are going to give will be around 8.2% to 8.3%. Whereas in the housing finance company, we are able to raise money from the banks or from the in terms of securitization or NPA at 7.8% to 7.9%. So it makes more prudent to borrow from these sources rather than going to NHB. So but if NHB is able to offer competitive rate of interest, then we will go to NHB. Otherwise, it will be from the other sources. So that is on the NHP borrowing. Next thing is this INR $12.57 crores of sanctions which is there. In the case of HSE, the sanction rate is around 7.9% to 8.1%.

23:31 In the case of NVSE, it is around 8.1% to 8.25%. Got it, sir. Thank you so much. Thank you. Our next question comes from the line of Amit Ketan from Capital. Please go ahead. Hi, sir. Thank you for taking my question. So a couple of questions. First is on the you've talked about getting into new lending segments. Now there are merits to being a company focused on a single segment, and the, you know, the addressable market for affordable housing lab is is pretty large. So what is the rationale for getting to these new segments and which products are under consideration? This new product segment is in a formative stage.

24:19 We are in the process of discussing on which products we want to get into. We'll be able to give more color in the next quarter on call because this is a soft process which is there in the company. So we'll discuss it internally and then give you more color in the second quarter. Got it. But can you explain what is the rationale for getting into new segment? Because our growth opportunity in the single segment is pretty huge, right? So why now? Just to we are looking for we are looking for our next stage of growth, let's say, from 15,000 to 25,000 or from 25,000 to upwards of 50,000 or kilowatt time, we felt there is a strong need apart from strengthening our distribution, digital, online, associates, There is a need to diversify the product range also.

25:21 So this will we see opportunity particularly in the NDFC business because in the HL will continue to be largely in HL and after meeting the basic requirement of HL, the GAAP available in non HL in HL company is limited. But the NBSE wise today we are offering to the SME and to some extent to that. Now there is a large scope for to look at the add on products, particularly given to our existing customers. We have today over 200,000 customers availing the unsecured or security based or non security based products, financial products, some other vendors.

26:14 Now we have a very good experience with this one customer and we see an opportunity for us to introduce supplier field products in our NBSE to expand. So that to support our growth apart from the distribution, we are looking at very closely the products also. We need to see we want to augment. Understood. But does that mean that we'll through in geographic expansion and much deeper into our existing geographies with more products? As I mentioned, the distribution will cover the geographical expansion continue and our direct sourcing through our branches, through our field staff will continue, online will continue, business associates will continue.

27:06 But that's in terms of largely as you know it is around distribution in some form or the other, physical online, offline with their own shop. But then apart from that the other way in terms of our helping the company to scale up further is really the project expansion and that's where we are looking at an opportunity to be there in our NBSC company to look at the to augment the products in the NBFC business, particularly to deliver our existing customer base, which is also growing at about almost about 20% per year. Our customer base itself is growing. So that we should be able to leverage the new products as well.

27:53 Understood. My second question is on asset quality. If you could give some color in terms of ticket sizes, how the asset quality varies, say, between you have some coupon sub-seven lakhs and maybe 7 to ten and ten plus. Is there a difference in the credit behavior? And how are the NPAs between the different ticket sizes? So we have not seen that kind of a differential behavior in terms of ticket sizes except for the bounce rates. I mean as we already communicated when we less than INR 7 lakhs, the bounce rates were two percent to 3% more as compared to the greater than INR 7 lakhs. So other than that, we are not seeing the kind of difference in the asset quality when you look at the ticket prices. Got it. Lastly, our OpEx hasn't gone up a lot while we've added 33 branches this quarter.

28:46 Is that because these branches were added towards the end of the quarter? Yes. To a certain extent, yes. Of the 33 branches, 10 branches, 10 to eleven ten to 12 branches were opened before May 31 and the balance was opened in the month of June. That the rent and all those costs will get reflected in the second But we have a track record even last year we valued about 30 net branches and that was not really resulted in our OpEx going up in any significant way. In fact, currently we are planning around what 60 to 70. 60 to 70 branches, we've already added 33 in the first quarter, applying to add another 20, 35 in the second quarter as well and the balance will get added subsequently.

29:38 And some of these branches get started with newer states like Bharat and Varissa. But despite this, given our conscious in terms of operating cost, In fact, not only the investment in the branch network, we're also making enhancing our investments in IT. But despite that, we are very conscious of our cost of operations, both as a percentage of AUM as well as as a percentage of the income. So that way we have a very clear advantage in the competition today that we will continue to maintain despite these investments in the infra in branches and like. Got it. Lastly, if I can just ask you, can you give some color on how the attrition in the industry is evolving? Has it improved? Or does it continue to remain the same?

30:33 If you look at the attrition at the senior level, absolutely there is nothing. And the case of middle management also it is only maybe five percent, 6%. And in case of a branch manager, it is around 10% to 15%. But at the fee level, it is around 40% to 45%. The only request around 50% to 60%, it has come down to 45%, but still it is high. We have introduced retention incentive, insurance schemes for these employees and all those kind of things, retail people. But still, if people come and open branches in this stage where we are operating, the first thing they do is to force our field officers. But that's the challenge which we need to recognize.

31:18 But that is why we are also launching the alternate channels, so that there is less dependence on people as well. Understood. Understood. Thank you and all the best. Thank you. Our next question comes from the line of Ramesh Patel from ICIC Securities. Please go ahead. Yeah. Hi, sir. Thanks for the opportunity. Sir, just one question on the strategy side. So so last year, same time, you know, sort of entity for the zero seven deck product. And now when we are thinking for the other for the function strategies, naturally, you know, we have to calibrate growth in some of the existing products to meet energy criteria.

32:06 So how one should think about AM mix shaping up in near term? And is there any insight on NIM ROA at all sort of when you start expanding your product lines? So if you look at the product mix, currently in the housing finance company, 67% is housing loan and the balance is the non housing loans either in the form of quasi home loans or a top up or insurance company. So this is likely to continue, because we'll not I mean we have we still have to maintain this principle business criteria. At this level of product mix, this we are comfortably meeting the principle business criteria.

32:51 So the mix will remain the same. So you can tell any other business will be done, it will be done in the NDFC. Yes. This is not likely to just know one second. This is not likely to impact the ROE. Yeah. Okay. No. No. But So the more... Unless the direct... No. Unless the borrowing increase of the. Got it. Got So my point is in this, you know, the 33% mix, you know, which we have currently, when we start adding new products, right, to maintain this mix, you know, naturally, the new product lines will grow at a faster pace because of low base. And hence, you know, some of the existing product lines in end use fee should see lower growth, right, at blended business.

33:41 Otherwise, we'll miss management criteria. So, strategically, let us say, product do you think will go slow in near term or maybe we'll offset by new product lines? I think to make it clear here, the mix which I was talking was on the Housing Finance company. So that mix will continue. So any new product that will be done will be done in the NBSC company. NBSC company, okay? So while the consolidated mix might change, but on the housing finance company, this will be the mix. So there will not be any impact on the people business criteria or on the ROA or on the ROE. Okay. Okay. So, Nachal, even if we go for this product expansion, broadly, there will be no impact on the profitability.

34:35 Yes. Yes. Okay. In fact, it can be just In fact, it can be more. Yeah. Yeah. Got it, sir. Just just last clarification on, again, this subject was the pretty moment. Right? So given we exited that ticket size a year back, and I'm sure incremental growth would have been towards better customer pool. So, logically, at least the early bucket should have Y o Y improvement. Right? Sequentially, I can understand that there's a seasonality. But if we are exiting the, like, this is a challenging segment last year. And twelve months, I will be...

35:21 I wish I should confirm better than a vintage book. So in that sense, why is not coming down on Y o Y business? Correct, Ramesh. What you are asking is very logical. But the thing is, this is not because of the deterioration in the asset quality of the customers or the thing. It is just that it was a temporary hit during the SAG end of June twenty six where some commitments was not delivered. That's clear that has happened in July. That's what I'm saying. Whatever commitments didn't happen as on June 30 that has got honored in the month of July. Got it. So in this case, despite maybe... With the result, there is improvement in July.

36:08 So this improvement will continue in the month of August and September as well. Sir. Okay. Got it, Sir, thank you and number of Gupta. Yes. Thank you. Our next question comes from the line of Raghu Garg from Abbott Capital. Please go ahead. Hi, sir. Thanks for the opportunity. I have a few questions. One, your tax rate has been lower for the last two quarters around 20% versus I think if you look at the figures and that is around 23%. So why is that? And then going ahead, what should be the normalized run rate on the effective tax rate?

36:54 I didn't get your question correctly. I understand. Why is it not clear rather? So are you able to hear me now? Yes. Certainly better. Okay. I'm saying that your effective tax rate has been 20 for the last two quarters, q four and q one Yeah. Versus 23% before that. So why is that? And then going ahead, what should be the normalized run rate on the effective tax rate? The tax rate is basically because of the benefits we are getting because of the adjusted write off policies which we are following and that's the tax benefit we are getting. So that's what has resulted in this and this will continue. The credit cost is largely an account of write off rather than provision. Some write off as soon as eligible for the tax allowance.

37:47 Understood. So you think this will continue, is it? Yeah. Understood. For July, you said that your disbursements are up 25%. What is the Y o Y growth in volume terms for the month, like in terms of number of loans? These are very specific questions. Will answer when we meet up. Don't want to. So our growth in loan number of customers will be around. It will the same. Yes. Sorry. How much? No. It will broadly be the same. Patrick, we'll discuss. Yeah. In that meeting. Sure. Sure. Last question, the assignment income.

38:33 That run rate in absolute value term, that run rate seems to be stabilizing or if I look at that as percentage of the off book AUM, the margin is normalizing lower. Where should this margin settle on a steady state basis? Because when I look at other housing finance companies, the the assignment income as percentage of assets of book assets seems to be somewhere around 11 to 12%. Yours is currently at 23%, and it's been coming down from as high as 40%. Should it, say, settle somewhere closer to 12%, 15 mark or maybe lower, assuming that you probably have a higher yield book versus other higher yield products? I just wanted to get some things there on the margin. It should come to around 1215%.

39:21 Should come down to around 12% Understood. 15 Thanks a lot. That was all from me. You. Our next question comes from the line of Sukriti Deepathal from ISAT Fintech Private Limited. Please go ahead. Good morning to the team. I have two questions. The first question to mister Manoharad is beyond the regular outlook, what are the top two to three execution priorities you are focusing on in the next few quarters? And alongside that, what do you see as the biggest risk in borrower demand shift, interest rate moment or competitive pressure? And how are you preparing to manage them while strengthening Aptus position in affordable housing finance? That's my first question. I'll ask my second question after this. Thank you. Once again, we didn't understand the question. Can you please repeat it? Sorry about it.

40:12 Yeah. I'm I'm asking about concrete plan of action that you may be implementing, like expanding branch networks, strengthening digital lending, or diversifying borrowing, like, borrowing segments, and also the risk you see in borrower demand, interest rate cycles or or in competition? Just want to understand both on how you plan to grow and how you are preparing to handle challenges that could slow down the growth process. Thank you. First of all, the competition that will be there that we cannot rule out. So, branch expansion will be happening as guided. We have guided about 60 to 70 branches in this financial year, of which already 33 has been opened.

41:02 And another 20 or 23 will happen in this quarter and the rest will happen in Q3. So branch expansion we do not have any challenges. And the growth will come whatever branches we are opening, obviously new sales officers will be joining there. So to that extent number of sales officers will go up and to that extent business will also go up. So we don't find any challenges in the growth from the new branches, so that is... Will go as per plan. Can. Yeah. Yeah. Tell me. One second. No. Sorry. Sorry. Sorry. Please please please Please kindly. No. Regarding the risks we are seeing for the growth, we are not seeing that kind of a risk because we always believe there is good opportunity for growth in the affordable housing segment and also in the NBFC where we are located. In the new In the new geographies also in the existing geographies. Of course competition is there, but still the market is there and we still believe that we can still grow. And to have the sustainable growth as explained by Chairman, we are also getting into the new products. So this is what is the thing. So definitely growth is not an issue considering the fact that we are guiding 22% to 24%.

42:21 So this is not I mean I hope I answered your questions only. And also this accomplishment, again, one of us told, there are people, there are companies who are opening branches in the state where we're operating. But what we are doing is we are also when somebody comes and tells that people are opening branches, we also say that there is a business opportunity available in this existing state. But we are also getting into states where the competition is not very intense. For example, Odisha and also in Maharashtra, there are the locations where we have open branches, the competition is not very intense. So this is how the progress will happen and of course, we'll be following this contiguous branch expansion strategy and going deep into a contiguous state. Thank you. Can I ask my second question?

43:09 Yeah, please. Yeah. The second question is to mister again along the similar line while the business guidance is just now mentioned. So to understand from a financial point of view, what key risks or challenges you anticipate in the coming quarters and what specific measures are being taken to manage margin, liquidity, and balance sheet strength, especially in areas like borrowing costs, asset quality, and regulatory compliance? Thank you. So first coming on the margin front. So as we have little bit reduced the rate of interest income, so that we are protecting by effective borrowing. So we expect the gross pay to remain at 9% and that since our leverage is also being stable around, so we expect the NIMs to be around 13%, twelve percent and thirteen So our NIMs are protected from that perspective.

44:03 In terms of operating costs, we are very prudent. So we have consistently delivered 2.7%. And in spite of increasing brands, the way we manage the operating costs, I think there might be a 2.7% to 2.8% range, but we are very strongly managing our operating costs and that we are very confident on managing that. Regarding the freight costs, that is one little aspect where we are working on. Definitely, Balaji sir also collections is one of the key things which we are trying to manage and we expect that to also range in between $50.60 paisa. So this is the thing of our aspects in the financials which we have declared.

44:49 In terms of liquidity, what we have been doing is we have been keeping enough liquidity for two, three months. And since our leverage is very low, so we are able to negotiate with the bank and bring them to our price what we want and what rate of interest we want. We are not in a hurry. We have not delivered it. That is the most important aspect of our balance sheet. So we can wait and bring the lenders at our terms and at our rates rather than asking our offering rate what banks are asking. You and best Just to add to what Sanjay said, you are also asking about the list of list that can come in the second quarter or third quarter.

45:38 The one big thing which I'm seeing is if there is a I mean if you look at our total borrowings, 66% is variable and 34% is fixed. Of this 66%, 35% is linked to repo rate and 31% is linked to MCLR. So basically there is an increase in the repo rate, there can be some impact, but we have also computed it. It is just the impact is likely to be 0.06%. So that also will not be a major impact in terms of maintaining the NIMs on this space. You. And best wishes, Mahan. Yes. Thank you. Thank you. Our next question comes from the line of Ankit Shah from White Equity Investment Advisors. Please go ahead.

46:28 Thank you for taking my question. Sir, our COLI home loan LAP has been growing than the home loans over last year or so. So have we optimized lending rates more in that segment, or what is the reason for this higher growth rate? You're talking about the housing loans? Yeah. Yeah. On the optimization rates. Look. We have optimized for certain ticket prices and back to. Yeah. In in itself only and back to only incremental housing loans. Yeah. So the question was, our lap is growing faster than housing loans. So what would be the reason for that? So if you look at it, last year, our SSP loan book grew by 18% and NBSE loan book grew by 29%.

47:17 Now in this quarter, SST loan book has grown by 20% and NBFC loan book has grown by 24%. So we'd like to concentrate more on the housing finance and grow that book and also concentrate on the NBFC by introducing new products and also the existing products. Sir, my question was on the parent company side only. Within the parent company, between the house... Home loans and the home loans or LAP. So LAP has been growing faster than the home loan product. So I'm asking for the reason for this difference, not the NBFC. No. Correct. But that... For a quasi home loan has a lower base. So that base effect will always be there. Right?.

48:07 Okay. My second question is a simple booking booking question. So we've, in the past, been giving the advantage split in the IP in absolute numbers. This time, you'll change it to percentages. So because of this, Odisha and Maharashtra numbers are looking a little off. Can you give the absolute split of the advantages? I can mean, I can ask Amit to contact you and give you the exact number on the statewide loan book. Actually, Worcester, if you just what was the percentage that will come, what is the loan book in Maharashtra and Worcester? 162 crores. Yes. Good to hear. 57 Maharashtra now we have touched about INR 160 crores, which is about 1.2 crore. Okay.

49:00 This is helpful, sir. Sir, my last question is difference between the AUM and the advances have dropped by INR 115 crores in this quarter. What would be the reason for this? What difference between? The difference between AUM and the advances book. That used to be $11.75 crores. You are ready. AUM and the time. Yeah. It's basically $136.48 minus $126.51. It's almost $9.57 crores since then. How is it basically the assignment which we have done? Yeah. So if we do assignments, though... Yeah. So if you do assignments of...

49:47 Yeah. Okay. Because of. No. No. Once again, let me let me clearly tell you. If you do a direct assignment, that gets added in the assets under management, but it gets out of the balance sheet assets first. The next thing is the balance sheet asset also gets reduced by the ECL provision and also the processing fees that is yet to be recognized as per the index, okay? So those are the cost and product difference. Got it, sir. Thank you for taking my question. Thank Thank you. The next question comes from the line of Rajiv Mehta from US Securities. Please go ahead. Sir, just two questions. First, credit cost, your guidance of up to 60 basis points for the whole year. I just want to understand from two perspectives.

50:40 One is this write off. You said that you've started doing aggressive write offs. So is this an acceleration of policy? And would this remain an ongoing policy of write off? And second is when you look at Stage one provision also, I mean, you've drawn down from that provision of Stage one, And now it is 24 basis points. It used to be 40 basis points, six, seven quarters back. So how should we look at your credit card guidance in view of how the write off policy will happen? And how the Stage one provision coverage will be maintained going ahead? What is happening? First of all, this credit cost at 0.6% will be maintained for the year. And regarding the Stage one provision, which has got reduced, basically, the behavior of the customers in terms of repayment in the stage one category has been very good as per the UCL model.

51:37 And that's why this percentage coverage has got reduced from, say, point 3% to And one point whereas we first simply saw some deterioration or some increase in the stage two assets, we increased the provision coverage there. That's the whole logic. And on the write off, is there... I mean, have you switched to a policy of doing it? Policy will continue of anything more than five hundred days, we'll get it. Okay. Five thirty DPD. Right? Okay. Yeah. Got it. And just on connectors, you said 8% contribution in disbursement. So two things, what is the number of connector right now? And what can the number go to? And also, their proportion in the investment, maybe say next year.

52:26 Well, actually --. We have got right now across three thirty three branches. We have down thousand connectors. Average three to four connectors per branch. Okay. Thank you. You. Our next question comes from the line of Shubhi Gupta from Credit Asset Manager. Please go ahead. Hi, sir. Thank you for taking my question. I'm sorry if this has already been answered. So what is the... If you could just give me the breakdown of the slippages that have occurred. What is the slippage? I'm I'm not able to understand your question.

53:12 So any slippage that has happened in this quarter, and if you could give me any breakdown for this? Yeah., that's what we have told. Page two from 6.21% in March has gone up to 6.87%. And NPA has also gone up from 1.52 to 1.5%. It's an NPA. It is in current class format. It's only because I'll I'll give the number to you. Sorry, sir? So the numbers will be given to you. You may contact our investor relations, mister Ahmed. He'll be able to give the number. Okay, sir. Okay, sir. Thank you. Thank you. Ladies and gentlemen, that was the last question for today.

54:01 I now hand the conference over to the management for the closing remarks. Thank you and over to you team. Thank you everyone for attending Hong Kong. I would like to pay my sincere gratitude to all analysts, investors for taking time, and not to listen to us today. Please free to contact us if you have any further queries. Thank you. Thank you so much, Mr. Anandan. Ladies and gentlemen, thank you for being a part of the conference call. If you need any further information or clarification, please e mail at [email protected].

54:46 Ladies and gentlemen, this concludes your conference for today. Thank you for using Chorus Call conferencing services. You may now disconnect your lines. Thank you, and have a pleasant day. Thank you.