Aptus Value Housing Finance India (NSE:APTUS) Q2 2027 Earnings Call

0:00 Good evening, ladies and gentlemen. I'm moderator for this conference. Welcome to the earnings conference call of Aptus Value Housing Finance India Limited to discuss its results for second quarter and half year ended 09/30/2026. This conference call may contain forward looking statements based on the company's beliefs, assumptions, and expectations as of today. These statements are subject to risks and uncertainties, and actual results may differ materially. At this moment, all participants are in the listen only mode. Later, we will conduct a question and answer session. At the time, if you have a question, please press star followed by one on your telephone keypad.

0:47 Please note that this conference is being recorded. We have with us today, mister executive chairman, mister managing director, mister executive director and chief business officer, chief financial officer. I would now like to hand the call over to mister for his opening remarks. Thank you, and over to you, sir. Thank you. Good evening, ladies and gentlemen. I'm Anandin, Executive Chairman of the company. I warmly welcome you all to this earning call. Aptus continued to deliver healthy growth during the quarter with continued demand from our target customer segment leading to assets under management growing by 20% year on year.

1:38 Investments remained healthy supported by new brands across existing and newer states. Aptus maintained healthy profitability during the quarter with the total net income growing by 19% year on year. Return on assets, return on equity stood at 7.721.1% among the best in the industry. On the asset quality front, we remain focused on maintaining portfolio quality through disciplined underwriting and continued strengthening of our operating framework including collections. Looking ahead, the long term growth prospects for affordable housing finance remains encouraging.

2:27 With sustained demand across our markets and continued expansion of our distribution network, we remain focused on delivering consistent growth, operating efficiency and healthy profitability. Our priorities for the remainder of FY twenty twenty seven remain focused on sustaining growth momentum, maintaining wholesale liquidity and prudent risk management. As we continue to scale, our emphasis remains on translating business growth into sustainable earnings, healthy returns and long term value our value creation for our shareholders. Thank you. And I will now hand over to Mr. Balaji to take you through the quarterly performance in greater detail. Thank you. Thank you, sir.

3:22 Good evening to all. Before discussing our quarterly performance, I would like to highlight an important aspect of our business. Aptus operates as a diversified lending franchise through two distinct entities. One is the housing finance company, primarily focused on affordable housing finance and an NBSP catering to the financing needs of small businesses. As indicated in our previous earnings call, starting this quarter, we have commenced separate disclosures of key business and financial parameters for our housing finance company and NBFT businesses. This will provide investors with greater visibility into the performance, growth drivers, asset quality and profitability of each businesses, while also enabling a better understanding of Aptus as a diversified lending franchise.

4:13 I'm happy to share that we continue to deliver healthy growth during Q2 FY twenty twenty seven with our overall AUM crossing INR14000 crores. The strategic initiatives outlined during our earlier earnings call are progressing well and we remain focused on balancing growth with profitability while maintaining our credit discipline. Our affordable housing finance company continues to perform well delivering healthy growth and profitability with AUM crossing INR 10,000 crores. The segment remains structurally robust and continues to offer significant long term growth opportunities. Our NBSP is also gaining significant scale with AUM crossing approximately INR 4,000 crores. As the business grows, we are focused on strengthening its underwriting and operating framework, embedding greater process discipline in terms of collections and risk management.

5:09 We continue to advance the strategic initiatives outlined in our last earnings call to strengthen the growth momentum. The first thing is the branch expansion. We continue to expand our distribution network through new branches in both our newer geographies of Maharashtra and Odisha as well as deeper penetration in existing markets. During H1 FY twenty twenty seven, we added nearly 60 branches taking our total branch network to around 400. Importantly, branches opened in recent months have already started contributing to business growth with their contribution increasing as they mature. Then the next one is the strengthening customer acquisition. We continue to diversify our sourcing channels through our direct sourcing network, expanding connected network and digital marketing initiatives.

5:58 The connector channel contributed nearly 12% of our incremental business during the quarter and we continue to see increasing traction across our existing channels. The next one will be increasing average ticket size. Our continued focus on increasing the average ticket size supported by inflation and the calibrated customer selection strategy is enabling us to onboard higher quality customers while sustaining healthy business momentum. This further strengthens our portfolio quality and supports sustainable long term growth. Now next one is the customer quality and pricing. Our calibrated reduction in lending rates on select loan ticket sizes together with our strategy of increasing the average ticket price continues to support customer acquisition while helping us onboard higher quality customers.

6:47 Additionally, we have continued strengthening our underwriting and collection infrastructure within the NBSE business to enhance portfolio quality. Going forward, we remain focused on disciplined execution of these initiatives while addressing the recent challenges in the collections and asset quality, particularly within the NBFC business. Together with our strategic pillars of diversified customer mix with varied income streams, calibrated geographic expansion, productivity and digital excellence, we believe these initiatives position us well to deliver sustainable growth while maintaining profitability and credit discipline. Our execution on various strategic initiatives during H1 FY twenty twenty seven continues to support our full year outlook with healthy performance across most operating and financial parameters.

7:35 Growth H1 disbursements grew 27 year on year to INR2206 crores. The disbursements in Q2 grew 20% year on year to INR1153 crores. While business momentum remains healthy, factoring in recent weather related interruptions and tightening of MD and A underwriting, AUM growth is likely to moderate a bit in Q3. However, we are confident of achieving the momentum back in Q4 FY twenty twenty seven. Branch expansion, we have already added 60 branches in H1 FY twenty twenty seven keeping us on track to achieve our full year target of around 17 branches. Split moderated marginally by 10 basis points on a sequential basis during the quarter. Operating expense remained at 2.8% within our guided range of 2.6% to 2.8%.

8:24 Now coming to the credit cost. Credit cost in our HSBC business remained well controlled. In the NVFC business, while credit costs are elevated, but remain broadly comparable to industry levels, our focus is on bringing them down further through disciplined underwriting, process improvements and strengthening of our collection infrastructure as the business reaches a meaningful scale. Starting in the elevated overviews in the NBSC, we have revised our consolidated FY twenty twenty seven credit cost guidance by around five to 10 basis points. ROE remained above 20% consistent with our profitability guidance, which remains unchanged. Overall, we remain focused on delivering healthy growth and industry leading profitability while further strengthening our operating framework, particularly within the NBSE business. While we have recalibrated our growth outlook and credit cost expectations, our guidance on operating efficiency and profitability remains unchanged.

9:20 Now moving on to performance. As regards to business growth and scale, AUM grew by 20% year on year to 14,177 crores. The half year growth in disbursement was at 27% and disbursement in Q2 grew 20% year on year. Branch networks stood at three ninety seven branches adding 58 branches in the first half. Asset quality, the collection efficiency stood at 98.35 versus 98.52 primarily impacted to an extent by some moderation and collections within the NBFC. Consequently, 30 plus BPD stood at 7.08% as against 6.87%. We remain confident of improved collections and the gradual normalization of asset quality metrics to earlier levels by the end of FY twenty twenty seven.

10:10 GMBA for the HSC business stood at 1.48%, while the NVFC business reported a GMBA of 2.17%. On a consolidated basis, GMBS stood at 1.68% compared to 1.7% in Q1 FY twenty twenty seven. The credit cost for APTUS came in at 25 basis points, while the MBS reported around one six nine basis points for the first half of the year. The credit cost for the consolidated entity came in at 67 basis points from the first half of the year. Profitability and efficiency during the quarter, net income margin grew by 19% year on year to INR $4.63 crores. Our spreads moderated marginally to 8.9%. Our OpEx as a percentage of year on year was at 2.8.

10:55 Profit grew 18% year on year to INR $2.67 crores translating to an ROA and ROE of 7.720.1% respectively. The profit growth for the half year came in at 19% year on year to INR528 crores translating to an ROA and ROE of 7.720.1%, which is among the highest in the industry. Funding during Q2, we raised approximately INR $9.50 crores on a consolidated basis, primarily through a mix of term loans, securitization and direct assignment. Our liability profile continues to remain well diversified with 64% from bank, entities at 11%, secured by Central and VA at 18% and the balance through energy. We continue to maintain a strong liquidity position with total liquidity of INR1759 crores as of September 26, including INR1028 crores of Anavel Bank pension, providing us ample headroom to support growth.

11:53 Dividend, the Board has approved an interim dividend of INR22 per share. Now with these remarks, I open the floor for the President and Answers. Thank you. Thank you, sir. Ladies and gentlemen, we will now begin the question and answer session. Please press star and one on your telephone keypad, and wait for your time to ask the question. If you would like to withdraw your request, you may do so by pressing star and 2. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Ramesh from ICICI Securities. Please go ahead. Yeah. Hi, sir. Calling on a good set of numbers. Yeah. Hi. Yeah. So just two things. So one on the growth side. Right?

12:42 So when we look at the adjustment for the first half and, you know, when we calculate the adjustment and rate to arrive at 22% growth, I think the ask rate is roughly 2,800 plus for the second half. And now given the way micro is currently, how confident we are that we'll be delivering 22% growth in FY 'twenty seven? See, normally, Ramesh, the second half of the year is any MBSE or an SoC is better than the first half. That is the first thing. Next thing is the 60 branches which we have added, that is contributed only partly. That has to contribute for the full year half year in the next I mean third quarter and the fourth quarter.

13:33 So these are two things which is actually helping us give us confidence to achieve this. But having said that, in October and but having said that considering the asset quality in the MD and are also strengthening the underwriting process. So there can be a slight drop in Q3, but we can be confident of achieving and catching up the dividend in the Q4 and still achieve this 22% growth. Got it. Got it. And just to relate to that, I mean, the way this noise is around the broad, etcetera, and maybe hiring patient as well. So considering these things also, do you feel there could be a scenario wherein we would be forced to tighten tight filters maybe in second half and that can impact the business spend or how you are internally assessing the prevailing macro challenges?

14:29 The drop impact is in select places in some of the places in Maharashtra. But actually we are not seeing that kind of an impact in terms of ramping up our business in Maharashtra. So we are actually seeking on the ground information phase we might not get impacted because of drought in terms of building up the volumes. Got it. Got it. Okay. And then just last thing on the ARC sale, right? So we have sold roughly INR 89 crores, INR 90 crores worth of assets to ERC. Just wanted to understand, first of all, whether these are the standard pool or it was in one to 90 DPD? And also related to that, again, what explains this sequential increase in 30 plus DPD despite the ERC sale?

15:18 No. Actually, the ERC sale is a combination of one to ninety and zero to 30 to sixty and sixty to 90 budgets. Also some NPAs were also sold. So that is one thing. But if you look at the logic behind this ARP, these are all slightly low value loans. And mostly we would like to have all the kind of paying customers in our book. These are slightly unintentional, I mean intentional defaulters. And also if you look at the value, it is around 5.5 lakhs per loan. So that is what is the thing that we have sold it. And if you look at the recovery considering the LTV comfort we have, I think we have registered a lot of just INR90 lakhs on that.

16:09 So crore. On a INR90 crore book which we have sold, it is just a INR90 lakhs loss which has been booked there. So this calibration of this selection of assets for selling to ARC will be decided every quarter based on this because there is no point in following up with these customers for 7 lakhs and above, 7 lakhs and less. Got it. 5 lakhs, 6 lakhs in less and it's better for us to concentrate on recovery of more than 10 lakhs. That's why we are also strengthening the departments in terms of collections and also the legal recovery. Got it. And sir, what explains the sequential increase in 30 plus GPD? Actually, if you look at it, if you look at our investor presentation, the 30 plus GPD, again, you need to break it into housing finance and the MBSE.

17:03 So housing finance, there is not much increase in the 30 plus GPD whereas in the MBSE, there is a slight increase or there is a good increase. So that's where there is a I mean we are having elevated over dues there. And we are that's why we are also strengthening the collection mechanism and the legal recovery to bring it down. In fact, that's what in my opening speech also, I told from the MD and A, it will take at least one or two quarters to bring a thing like this and bring this in under control. Okay. Okay. And stress is by and large in below INR 7 lakhs ticket size? Yes. Next question is from the line of Prashi Modi from Modi Advisory. Please go ahead.

17:55 Yes. Hi, sir. Can you hear me? Yes. Yes. Yeah. Just a quick question on the collections fees, right? We've increased our team size on collections and legal recovery by 25% over the two years. Now I know we're new to the NBFC business. We're still finalizing our processes and everything, but the connection efficiency should ideally not slip. So is it... Like, I'm just trying to understand is the effect of this hiring still to come in and we'll have a catch up in h two on collections or the collections will still slip before we finalize our credit underwriting policies and everything in place?

18:41 This is an ongoing process. If you look at the collections, our business has also increased. So in order to support the collections on the field, the collection officers will be recruited to support those collections. That doesn't mean that collection agencies will drop. So it's basically some problem encountered in the MBSE book where we are strengthening the underwriting process and also the collection team strengthening and also the legal recovery. So just because we are adding collections, it doesn't denote there is a problem in the collections or it will lead to drop in the collection efficiencies. Number of customers also. All right. Second question from my end was, I was just calculating your BT out plus prepayment rate that's kind of inched up in this quarter.

19:34 Just like is this accelerated competition in the affordable housing finance space or something else leading to this? No, it is actually the competition. If you look at, there is a slight increase in the disclosure rate. And we are... That that we'll we'll try to max it... Maximize it by doing more volumes. And this competition is coming from, say, lower cost of funding competitors like, say, Badaj Housing and kind of price or people like Aadhar who have similar borrowing costs? From the small finance banks. It's coming more from small finance. From small finance banks. Okay. Got it. Third question I just had was, I was seeing your presentation, there's been some change in the format on the sourcing mix.

20:27 So your customer referral plus Bandu app drops from 19% of contribution to 11%. Just wanted to know if this is some technical change or if there's something that's like to this drop off. Some of the bundled partners have got converted into connectors, so that's where there is a shift. Okay. Got it. And finally, just given, you know, right now, we are growing our book at 20% and our ROE is is at 20%. The book seems well self funded at this point. So any prospect of accelerating dividend payout to bring down our capitalization rate? Dividend payout. I think. So we don't have any plans to accelerate the dividend payout.

21:15 Okay. All right. Great. That's it from my end. Next question is from the line of Divya Shrivedi from Omega Portfolio Advisors. Yeah. Hi. Thanks for the opportunity. So, again, my question in the asset quality. So why our asset quality metrics like 30 plus equity and collection efficiency has not improved? Our credit cost has also increased to seven tables, which was higher by around 20 bps from last year's Q2. And it's again higher than our guided range also, which is 0.5% plus minus 10 bps.

22:02 And what is driving this actually? And when do you expect to improve this share? Actually, as I told you, if you look at the asset quality, you split between the housing finance company and the NBS. If you look at the asset quality in terms of the housing finance company, the NPA was 1.53% in September 25 that has come down to 1.48%. And similarly if you look at the stage two also it is more or less the same. So actually there is no problem in the asset quality in terms of the housing finance company. But actually as I have told in the opening remarks, NPC asset quality, if you look at the NPA September 25 was 1.59% and September 26 it is 2.17%.

22:58 In fact in June it was 2.49% and it has been brought down to 2.17%. Okay. Now in the case of stage two in the NDSP that becomes 6.88% which is what we are trying to control. This is what is the reason why the collection efficiencies have dropped. And this is the one which I have been telling where we are collecting by way of strengthening the collections and also the regulatory processes and also underwriting we are also strengthening the underwriting norms in terms of the NBFC. And also if you look at the performance, if you look at the credit cost of the housing finance company and also the NBFC, it's compared with the industry. I mean if you look at the peers, it's the same. If you look at the credit cost of housing finance company, it is around 0.23% and it is 1.6%, 1.7% in terms of the NBFC.

23:51 But we are not satisfied with that. We will try to bring that down. Okay. So... And because of the stress, our growth, we have kind of moderated our growth in the q two, and we are planning to moderate in q three also. Right? AUM growth? In the NBFC, there will be a slight moderation, but we are confident of catching up in the Q4. So overall, we are confident of achieving 22% growth for the whole year. Yes. And the next one is on the margin side, like now with the RBI raising the repo rate. So how does that affect our margin over the coming quarter?

24:38 Yes. So this is Sanjay. See, if you look at our borrowings, first, I will speak about the borrowings. So onethree of our borrowing is repo linked. So that would translate into eight basis point increase in the borrowing cost. Sir, there will be... Okay. So in CLRs, we'll have another four, five basis points. So from an overall book perspective, if our book is around INR14000 crores INR15500 crores under the equity and INR8500 crores left out in borrowing. So if you reduce the fixed cost borrowing, so it is left out INR 5,000 crores.

25:24 But my floating rate lending is around 20%, which is around INR 2,000 crores. So in this INR 5,000 crores floating rate loan, I have the ability of passing on the interest rate to my floating rate customer. So ultimately, have left out with INR 3,500 crores of borrowings, which is not hedged with the rising rate of interest. So on 3,500, if you divide 14,000, it comes to 25%. So our 25 basis points will have an impact of around seven, eight basis points on my NIM on an overall basis. But that NIM also we are trying to protect by way of higher volumes and that will be taken care of based on that. Got it. Thank you.

26:10 Thank you. Next question is from the line of Dhruv Sitalani from LEO Capital. Please go ahead. Thanks for the opportunity and congratulations on a good setup number. So my first question is, what portion of our MBSE customer would have a microfinance look either in their opening or in the name of and what portion of these have defaulted on any other loan, be it a gold loan or any other form of loan? If you look at the microfinance exposure, I mean if you look at our average ticket size of our NBFC loan, it is around 8 lakhs. So this is totally far away from the microfinance of a small ticket lab customers.

26:55 So, in fact all if there is an overlap there can be 3% or 5% overlap. That's all. Over and above that we don't have anything on the overlap of microfinance loans. So, that will not have an impact on the and it's secured against the residential property and with an LTV of around 4550%. So my next question is related to competition. So are we seeing any kind of competition from larger NBFC at our ticket sizes in housing loan and business loan? And is it affecting our disinvestment growth or putting any kind of pressure on yields? No. Actually, if you look at the competition, mean, five years back, how companies are there now there are so many companies actually in the affordable housing space.

27:44 So, but the market opportunity is so huge that this competition is not impacting much in terms of the volumes. But what is impacting is they take people from us. So that is what is impacting the business which we are doing. So but nevertheless that's why we have also announced the introduced the alternate channels by way of connectors and customer app and that kind of alternate channels, which is contributing to the higher business. If you look at connected channel business last quarter, the contribution was 8%. This has become 12% in this quarter. So definitely, we are well equipped to face the competition by these methods.

28:29 Thanks for the color, sir. Happy Diwali, and all the best for the next quarter. Yes. Thank you. Next question is from the line of Eshank Gupta from Choice Institutional Equity. Yeah. What do you mean, sir? My question is regarding the average ticket size on Quasi home loans. So our average ticket size on Quasi home loans have decreased from 10.1 lakhs to 9.4 lakhs. So we are targeting to improve it year on year. And moreover, our average LTV has increased to 45%. So are we driving the increase in every ticket size beyond the increasing LTV?

29:17 No. First of all, if you look at the funding philosophy of Aptus, we take LTV as a backup. First of all, we determine the income to installment ratio. That is how much an EMI their customer can afford. That is what is the first criteria which we look for when I'm evaluating a credit profile. So LTV is a backup. So if it is it doesn't matter if it applies it from 40%, if it is going to 45% that is not the main important thing because it has increased because the customer whom we have funded, we are able to pay that much kind of that kind of EMI. Moreover, my second question is regarding the inflation liquidity.

30:02 So we said that it was mainly attributable to our NBFC book. So which particular any geography that is witnessing that is driving the decrease in delinquencies? It is to a certain extent, Karnataka, there is an impact where we are actually centering the underwriting norms and things. But other states, it is not very variable variant. It is only the Karnataka, there is a slight increase as compared to the other states in terms of delinquency in the NBFC. And with our share of NBFC book at 29% and approximately 80% of our book at fixed rate, our yields have decreased by 10 bps.

30:50 So what's the reason for this? I could not follow. Can you please repeat? Yes. So our peers have declined by 10 bps sequentially, and most of our lending is at fixed rate. So what was the reason for decline in yields? It's basically NBFC. What we have done, we have calculated certain interest rates on the new loans. To that extent, there will be some reduction in the yields. That is what would have contributed to this 10 basis point decrease. Okay. All the best for this coming quarter. Thank you. Next question is from the line of Mayank Mistry from Antic Stock Broking Limited. Please go ahead.

31:41 Hi, sir. Thanks for the opportunity. Sir, I was just looking at the sequential trend of your growth, and this is the first time where, you know, your q one sequential growth has... Is quite... So q two sequential growth has actually slowed down compared to q one. So just wanted to understand, there are a few players who have highlighted that, you know, maybe drop a situation could impact the self construction projects and maybe impact the demand. So are we seeing something like that already? That's my first question. And sir, second, on the insurance impact, sir, we have 0.4% of your total, you know, on a gross gross level of a total assets right now contributing from the insurance income. So, sir, have you thought of any, you know, backup plan in order to compensate for this point 4% somewhere.

32:42 Maybe this is another gross level, maybe a lower impact. So if you can throw some color on that front as well. So yes, that's my question. As I told you earlier, the drop, actually we are not seeing that kind of yes. As I told you earlier, the drop, it was we are not seeing that kind of an impact on the ground because of the drop and on the volumes which we are doing. So definitely that is not the reason. In terms of the insurance income, we'll still have to wait for the final guidelines from the IRDA. Based on that only we'll be able to decide on what is the kind of impact and what is the corrective action, which we'll be doing. So insurance there are two things, one is the loan amount.

33:28 Loan given for covering the insurance premium there is not going to be any change even regulation. The revised regulation they're talking about reducing the commission. So the loan component of 4% into the event for covering the insurance premium that's not going to be any change in that. But then the commission that the financial intermediaries including banks and NBFCs for getting the commission on the insurance that is what is going to be revised. But how much of it is going to be revised and that aspect we will really want to pay for the final guidelines on that basis basis point. Okay, sir. Got it. And sir, just to clarify, earlier sir already explained on the margin trajectory.

34:21 Basically, your... One third of your book is repo linked. I didn't get it clearly what was the MCLA linked portion. So earlier, you used to, you know, show this in our PPD, the fixed and floating. So you can just... Yes. The borrowing mix is around 31% is fixed rate borrowings. Balance 69 is around 34%, 35% is repo and 34% is NPL earning. So what is your question now? No, sir, sir. I was just trying to understand the portion of which where we can find margin trajectory. Basically, are we seeing the margins to remain largely stable from even So if I I will explain you again. So our AUM is around INR 14,000 crores.

35:16 If we remove the equity part and left out with INR 8,500 crores, that is exactly my borrowings. So around INR 8,500 crores of borrowings, if I remove the fixed rate borrowings, which is around INR 3,000 crores and left out is INR 5,500 crores. Now out of this INR 5,500 crores borrowing, if I look at my lending side, 20% is floating rate loan. So if I take 2,500 crores from INR 2,000 crores of the fixed rate lending there, I have the ability to pass on the rate, increase whatever I can. So INR 5,500 crores minus INR 2,000 crores is INR 3,500 crores. So this INR 3,500 crores of my book is exposed to an interest rate rising risk. Now if you divide this with my INR 14,000 crores of AUM, it comes to around 25%.

36:05 So what we are seeing is a 25 basis point will have an impact of around 25 basis 25% of rate mining contraction. Understood, sir. Understood. Okay, sir. Thanks. And all the best for the coming quarters. Thank you. Thank you. Next question is from the line of Pankaj Chera from DAM Capital. Please go ahead. Yes. Hi, Pankaj, sir. So sir, I just wanted to know on our energy borrowing, so the current share is about 7%, but it has been consistently coming down since last three years.

36:52 Before three years, we used to have 26, 27% share of energy borrowing. So what was the reason behind that? And do we think this share will continue to come down or maybe move up in the coming times? Because energy refinancing, I suppose, would be the least costly source of revenue for you. So just wanted some Definitely, energy borrowings will come in handy for us. We are in the process of applying to energy for additional loan. So hopefully, we'll get it sanctioned and then we'll draw refinance from the energy. But why has it come down consistently since the last three years?

37:42 First of all, it was never 25%. It was 14%, 15% was the maximum at any point of time. Currently, it is around 7%, 8%. So we have on a consolidated basis, our actual business seems slightly higher. Okay. So on a consolidated In Q2 'twenty five, it was 19%. In Q2 'twenty four it was 26 Okay. So see we have recently applied again for the refinancing and we have been in continuous documentation like whatever queries are being asked we are reverting. So hopefully, we will get one loan in future. Okay. Sure, sir. Thank you.

38:29 Thank you. Next question is from the line of from Ambit Capital. Please go ahead. So thanks for the opportunity and good evening. I wanted to ask in the INR 89 crore ARP, what is the proportion of loans that were already NPA in your books? I heard you say it's a mix of regular loans and NPAs. So I just wanted to ask what would be NPA amount out of the INR 89 crores? The specific details of the ARTUS sale, I'll it I'll ask Amit to send it to you in a separate mail. Okay, sure. I have another question on the provisioning policy. So see, when I look at the TCR on the ART loans for this quarter, it's around 25%. Yeah. And these are about seven to eight year old loans.

39:18 Mhmm. Over last seven to eight years, your stage two and three have also gone up and write off have also gone up. And, you know, because of the aging factor, you would anyway have to increase provision. So the question is that why is it that the PCR is only 25% here? Because when I look at your your AIC sales in last few quarters, there the provisioning has been somewhere around 50, 60%. So just wanted to understand, you know, how should one read this provisioning on AIC? This is based this provision is based on the ETL model that has been developed. See, this can be even a thirty to sixty day bucket loan, where there is an intentional default from the customer. So there the provision might not be that high.

40:05 So all put together, it is at around 25%. So that's how we need to read that number. So these accounts would have probably gone into the NPL bucket very recently and NPE provisioning somewhere is low. Is that correct? No, it does not some there are as I told you Amit will give the breakup of how much is the NPA, how much is the other loans. But it is not that everything will be you cannot limit 25% with the NPA version of 25%. That's what I'm saying. Understood. Understood. That's what I wanted to understand. Sure. I'll take it. Yes. Yes. You. Next question is from the line of Ankur Shah from Quasi Capital. Please go ahead.

40:53 Yeah. Hi, sir. Thanks for the opportunity. Sir, I believe last quarter, the management had spoken about, you know, some deviation in credit cost being temporary and an expected recovery in this quarter. However, you know, this quarter also, now I think for three to four quarters, the credit quality has been deteriorating. So your your detailed thoughts on this would be very helpful. And secondly, like, if I just try to think about Aptus, like, are we going wrong somewhere? Because, you know, if you are trying to push on growth, you are not getting the credit quality right. And if you're trying to save on credit quality, you are not getting the growth right. So is the competition too harsh? Is it too high for us to, you know, get things right? Or or do we want to guide, structurally slightly higher credit cost than what it used to be for Aptus?

41:54 Actually, see, first of all, I want to record the statement. We are not doing wrong anyway. So first that's the first thing. Then I think last time we promised that we'll keep the numbers separately for both the companies and that's what we have given now. So if you look at the housing finance company, the book quality is intact and the credit cost is just 0.23% and this is comparable with any company the affordable housing space. Again, if you look at the NBFC, the credit cost is around 1.69% and this is again comparable with any NBFC within this business. So, these are the things. So, first of all, I don't think we are going wrong anywhere. Yes, it is the fact that told that the collection of utilities were improving in the month of July last quarter. But what happened is, that's what has happened in the case of housing finance company. So in the case of MBSE, debit replaces and that's what is getting reflected. If you look at the stage two, it is around 6.88 and NPA is around 2.17%.

42:57 Actually just to add, of the loan book of INR14000 crores, INR10000 crores in the HFC housing business where the growth is there and the credit quality also improved and comparable with comparable companies. So, that's what Bharat has explained that as far as the AUM is concerned, our growth and growth is ensured and the credit quality also sort of enhanced and improved. But then as far as the non HLN VFC business is concerned, yes, there also the growth has not come down drastically, they have not come down, growth is maintained.

43:44 But then we need to improve the credit quality in terms of outstanding, our views on NPAs that you are right what we have promised in the last first quarter, we are not fully able to realize. As we pointed out earlier, there is some reduction in the stage two, but then if there is an increase in stage two, that's what we are really focusing. On the NBFC side, though again, if you look at the entire data of NBFC with other NBFC companies, it is comparable. You can I can name 10 names, which are comparable? Some of the best, Belmaro, some of the ten years also will be exact.

44:32 Me And we are in the lesson to run that when we have seen and we will work on that hardly to extend it down. And in terms of guidance in the credit card, I think in my opening speech I have told another increase of five to 10 basis points will be there in the credit cost. Yes. Yes, sir. So I agree that the comparable companies are at a higher credit cost if we take the NBFC business. But I'm just pointing out towards the guidance which the management has been consistently maintaining. And, like, you know, at the NBFC level specifically, 70 bps credit cost spike up is quite a surprise, to be very honest. So from the guidance to the reality, it's something where I see a big deviation versus...

45:25 So that is where the question that do we see do we see the need to structurally revise the credit cost? And so that we can model a higher credit cost in our model rather than staying at 50 bps plus minus 10? Actually your observation is right. And we've not been in fact now we have started tracking the underwriting itself, let's say, in the last thirty months, we have tracked the quality of performance for FY 2025, FY 2026 and the first six months of the current year. And we see significant improvement is happening in the performance of the portfolio of the NBFC business also.

46:14 But then the loans that were done prior to April 24, it is taking little more time than what we had anticipated in terms of resolution recovery. That's why we have strengthened not only our collection team, but we have strengthened our legal recovery team as well. And we will continue to work on that. Okay. And sir, next question is on the new business, which again you had highlighted in the last call. So any thoughts and concrete plans where you can disclose the line of businesses which you would like to enter? We will we are still evaluating. We were not able to come to a conclusion, though we indicated that we wanted a new launch a new product. This quarter, we'll be coming out with some information on that.

47:03 And so just to know, like, will it be a setback business or unsecured business? So we'll never get into this unsecured loans. We need to be an asset backed business. Okay, sir. All the best. Thank you. Next question is from from Citigroup. Please go ahead. Yeah. So, yeah, thanks for the opportunity. So just, again, on the AUM growth number, so like we have delivered 20% and given that H2 is a seasonally strong half for us. But just I think you already mentioned, we could see some dip in divestments in Q3 due to some tightening in NBSP underwriting process? So that dip could be on a sequential basis. Do you mean that? And so then how are we placed?

48:00 And what gives us the confidence that despite that, we'll be able to get to that 22% AUM growth guidance, which will be inferring almost INR 2,800 crores disbursement versus INR 22 crores in first half year? So that's the question. Basically that's what actually I communicated earlier. The 60 branches which we have opened that is going to contribute to the additional business in the next two quarters fully. So that is going to contribute to the business. Of course, this NBFC strengthening of underwriting and sales. Yeah. That is one thing which will contribute to the slight drop, but there are also new channels that is picking up basically the connectors, the customer app, the bundle partner and the social media, those ATS. So those are things which is giving us this confidence.

48:53 Plus this we are pursuing this ATS increase of at least one lakh over the last year ATS. So that also is going to contribute to the growth and that's what is giving us this confidence. So no worries. All the best for the second half. Thank you. Thank you. Ladies and gentlemen, we will take that as the last question for today. I would now like to hand the conference back to management for closing comments. Yes. Thank you, everyone, for attending the conference call. I would like to pay my sincere gratitude to all the analysts and investor friends who have taken time to listen to us today. Please feel free to contact us if any further queries are there. Thank you. Thanks.

49:40 Thank you all for being a part of the conference call. If you need any further information and clarification, please email [email protected]. 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.