Can Fin Homes (NSE:CANFINHOME) Q2 2027 Earnings Call

0:02 Good afternoon, everybody. Welcome to the Can Fin Homes q two f y twenty seven earnings call. I would like to hand over the call to my colleague, Nidish. Thank you, Ramya. Before I say... I'm sorry, Nidish. I'm butting in between. Before I say that, kindly note that this call is being recorded. And I would request you to raise your hand if you have any questions. Over to you, Nitesh. Thank you. Thank you, Ramya. Good afternoon, everyone. Welcome to quarter two FY twenty seven earnings conference call of Can Fin Homes Limited hosted by Investec Capital.

0:50 As a reminder, all the participants will be in listen only mode, and there will be an opportunity for you to ask questions after the present... Presentation concludes. For q and a, please raise your virtual hand, and we will unmute you from our side. We will start the management commentary followed by a q and a session. To discuss the financial performance of Can Fin Homes and to address your queries, we have with us mister Shuresh Ayer, MD and CEO, and mister Abhishek Mishra, CFO of Can Fin Homes Limited. Please note that this call is being recorded. I would now like to hand over the call to mister Ayer for his opening comments. Over to you, sir. Yeah. Thank you, Nidish, and good afternoon, everyone. And thank you for joining the earnings call for the second quarter results of Can Fin Homes. Before we get into the question, I do have a small brief on the highlights of the of the quarter, which I will just share, and then we can go into the question answers.

1:41 The highlight of the quarter for Can Fin, obviously, has been that the entire project pages, which is IT transformation project, has gone fully live. In fact, we went in phases where July, we went ahead with 11 branches, five old branches, and six new branches. Thereafter in the month of August, additional 75 old branches and four... 14 new branches were added. And in the month of September, 77 old branches again were added. And finally, in the first from the fifty first of October, 93 of the remaining old branches and the the five branches which are subsequently opened new branches have all gone live. So presently, we are completely online in the new system. The... All the aspects of the project, including the the the security aspect, the infrastructure aspect, which are already implemented earlier. And now all the operational or the functionalities which are there in the project have all been implemented, and we have gone line with the entire LOS LMS across all the branches.

2:41 Of course, this implementation has had an impact in terms of our disbursement, particularly in each of the branches in the month where the business has... Or the IT implementation has taken place. To this effect, we have actually given up additional slide in the presentation that is slide number 20 as to the impact that we have had because of this IT implementation. So if the month in which the implementation has happened, the the disbursement, they have dropped in that particular branches by about 70 to 75%. And then the next month, again, it pushes back and it comes back to almost 80, 90% of the whole disbursement. So that's the kind of thing. So as a result of this in the month, particularly of August and September where, you know, we had a large chunk of seventy five and seventy seven old branches going live. There has been a major impact. And as a result, the disbursements for the quarter were at only $23.75, you know, crores.

3:34 This, of course, is net of the 29 crores, which we have reduced from the disbursement because of the the NSP guideline, which has come saying that regarding the cancellation of d d. So during the quarter, we had about 28 crores or crores of cancellations of disbursements which were already hand over to customers for various reasons, and that has been netted off, plus also about 19 lakhs, which is in respect of the the cancellations from the date of the closure of the quarter to the date of the announcement of the results. So basically, combined put both these things together. It's about 29 crores, which has also been netted off from this $23.75 crores. So that is the impact. In terms of the state wise or region wise disbursement, the demand has been almost... Has been quite strong. There has been no change in the demand. We've observed that impact on page 20 of the presentation, you will also see that they know the particularly the branches had no impact or no the IT transformation has happened in the month of October. There you will see that in the month of July, August and September, the business has been robust.

4:44 There has been an increase only as against an average of four thirty five crores, which these 93 branches were doing in q one. In the month of September also, they have done $4.81. So $4.58, $4.24, and 481 crores. So basically, in terms of the demand or in terms of the business per se, there has been no change, but for the impact of the IT transformation, which is mainly on account of the understanding or rather the change in the flow, the additional processes that have been incorporated. So now, in fact, there are some four OTPs, four to five OTPs depending on the customer and the type, which we have to take from the borrower as well as the co borrower separately. So that comes to around eight to 10 OTPs additionally. So that is a... So so those kind of, you know, process changes which have been implemented have resulted in some, you know, time lag and things like that. Plus in every month, since it was a migration from a legacy system, the migration... The data had to go through a couple of processes. So every month, we basically were able to hand over to the branches only after post shift.

5:51 So that's five days of gap also. So basically, are one time issues which have impacted, but as can be seen from the, you know, 93 branches data, the demand is there is no issue. We are still seeing a robust demand across all the geographies. Karnataka also, which is our... Has been in the past always a point of of the direction, has stabilized around $2.30 to two fifty crore of disbursement consistently. And only other change during the quarter has been that in the state of Telangana, has been a new section 22 or something to some... In section which has been wherein, you know, at the time of some areas have been identified by the subregistered offices or by the government to have been, like, notified for this, which is only available with the subregistered offices. So before execution of any document, you know, everything has to be taken to the sub register office, and they will, you know, confirm whether this can be registered or cannot be registered. So while... And this process, you know, before the entire process of processing, we really had a lot of cases where, you know, finally, when it went for the documentation or registration, the process was stopped because then some study or as protection 22, the the legality of those properties has been verified again. So this has slightly impacted, but having said that, now we have changed the process, whereby now before we, you know, entertain any login or the... Spend time in processing the entire case, we ask the customer only to get the item verified to the sub register

7:23 office and then only do it. Otherwise, you know, lot of cases where it came all the effort up to the stage of documentation was done and we had to, you know, cancel the disbursement. So basically, you know, that process has been changed down to adjust to this new change of section 22. So as a result of this, you know, the... So only a 0.25 impact, which is there in terms of disbursement. For the full year, we continue to have the the same guidance of 13,000 crores in terms of disbursement. So that effect, you know, whatever corrections, whatever strengthening we have had to do, we are we are already initiated in October itself across all the branches, so that we can push disbursements in q three and q four. And another thing is that now with the entire... All branches having gone on the new system, we should now be able to pull out the people from the teams for sales also, because we got about 84 people in the month of March in the sales department. Even now, as we speak, it's about 90.

8:22 But, you know, all the people will now get it relieved, and so we'll be able to strengthen the sales team. You will see in one of the slides also that the sales team with the same set of staff has also done 560 crore of disbursements have come from the sales team of about 98 people. So it's about average 90 people. So in terms of the the that the comparison last year was for the full year, the sales team has contributed about 868 crores. So basically, even without much of an addition in the team, the contribution has increased from the sales team. And now with additional staff that will be moving from the business to the sales division, we will be able to push further in terms of the concept of the sales team disbursement, and that will also support us in the q three and q four. Same also in the sense that we have 28 branches which are planned for the full year.

9:15 As against that, 25 branches have already been started and their operations with staffing also in place. So therefore, the contribution of these 25 branches will also come in q three, q four, which will support in our disbursement push. So we hold the guidance of 13,000 for disbursement, and we'll push in q three and q four to cover up. The second thing is in terms of prepayment, you would see that in absolute value last quarter, we had a slight increase, and we had indicated that we are taking certain steps in terms of converting some, you know, regular excess payment customer to deposits or, you know, some alerts and all those things. Some impact, we are starting to see in terms of the prepayment. July was a little higher 655 crores, but then the next two months, it has dropped to below 600 crores per month.

10:06 And for the full quarter, it has been much lower at 15... $17.95 as compared to $18.57 in 02/01 off this year. So there has been an improvement in the prepayment. Plus, now with the rate hike, which has been there, the gap between the, what the market is offering and what we are offering will come down because current, there was a 25 basis points increase in the record rate. Whereas, we have only increased 10 basis points for our holding customers, old as well as new customers. So basically, you know, the gap will now start reducing, which will also help us in retaining good customers. So this is in terms of the prepayment. The AUM consequently has been impacted because of a lower disbursement and has been there. But with the full year guidance continuing at 13,000 crores, we hold the same guidance for AUM of 13, 14%, closer to 14% in terms of our AUM growth for the year.

11:05 During the quarter, we received the... In terms of borrowing side, we received the sanction from energy for 1,350. And you'd also have heard that our our news articles about energy planning to increase the refinance as well as increase the proportion of refinance under the EHS component. So this should help us positively, and the 1,350 crores plus whatever is the... Hence sanction can come, we will be drawing during the year. Last year as a as a, you know, strategy, we had a plan to draw the entire funds only in q four when normally the liquidity pressures are there and the rate is slightly elevated. But if the sanctions are on a higher side, we will probably start drawing this year from the q three itself, so that we can enjoy the lower rate also.

11:57 In terms of the undrawn sanctions, we are having close to 2,500 crores of undrawn sanctions, which are also there to support the business. And in terms of the rate hike, as I mentioned, we've already passed on effective October 8, 10 basis points for our housing customers. So basically, what endeavor will be to ensure that our NIM and the spread and NIM stays protected. Our guidance is of two point seventy five and three point seventy five for spread and NIM, Whereas we have been operating around two point eight and three point eight. So we will continue to protect our spread and NIM, and we are confident during the year we should be able to maintain that because net impact of the rate hike would be that on a 66... 65% of our liability side, we are impacted by this repo rate as well or or followed by the credit review rate. So to that effect, it will be on the entire book. It will be an... About 12 to 13 basis basis points increase, it will be there. As again, we have already increased 10 basis points.

12:58 As you know, last year also when the rates were coming down, we did it in four parts of 10 basis points, 15 basis points, 15 basis points and 10 basis points. So same way, the next type, maybe we may look at a 15 so that we can average out to about 12 to 15 basis points. So indirectly, the... What I'm trying to say is that the NIM and spread, we will continue to maintain at two point seven five and three point seven five plus, and that will be other thing. In terms of delinquency, our overall delinquency has not been impacted much. Only there's a little bit of an increase in the estimate zero, which also is mainly because of, you know, the methodology of computation or flagging of these cases. So basically, you know, we had a... This old system request and the computing the overdue was outstanding up to the end of the month, whereas, yes, it's on a daily basis. So so if there are customers many times for very very small amounts, you know, what was told to the customer five days back, the customer pays today, but, you know, the five days interest is becoming alike. So we are slightly, you know, changing the process and all things to see that we can communicate to the customer that if you pay today this much, if you pay by the end of the month, this much payment. So delinquency is not much of a concern. Overall, our credit costs, we have guided for 10 basis points and for the quarter of end of the quarter, it is about nine basis points. And I I I I think, you know, we can continue with the guidance of 10 basis points. Generally, also, you will see that in h two, the... There's a, you know, reduction in our gross NPA. So that would also

14:28 help. In fact, it should reduce the NPA from the current level. That would also help in in the delinquent... Provisioning. Plus, if you see, in fact, the current year, the first half is always where the NPA goes up and then start coming down. So last year, our increase in NPA in the first half was about about 40 crores as against this. In the current year, the six months, it has been 35 crores. So again, the pushback will come in the second half, so then we'll be under a more comfortable position. The last thing is about the regulatory guidelines. So first, as I mentioned, we... There was an HP regulation or a guideline regarding this the reporting of disbursement as netting of the cancellation during the quarter and the cancellations of the...

15:16 Which have been from the date of the end of the quarter to the date of reporting. So that we have already implemented in this quarter and we have netted off 29 crores from our disbursement with other eyes where the customers have been handed over the disbursements. The second thing is regarding the rate bill where we have not had a problem in either of the two cases where all our staff, we are having a salary more than 25,000. So our... Even the joining entry level salary starts from about 36,000. So basically, that is not impacting. And second thing is, again, earlier last quarter also we had indicated our basic plus VA is more than 50% of the total package. So that is also no impact in the company. The third is more of a prospective or a likely impact, which is because of the insurance discussion paper or that then, you know, the insurance commissions have come down... Proposed to be brought down drastically.

16:13 There also, in fact, the entire year, last year, our commission from insurance business was only to the tune of about 12 and odd crores, which is less than 1% of our PBT of $130.04 crores of last year. So basically, you know, the... Even if it is implemented in the way it is... Has been, you know, shared or the, you know, publicized in the the media. I... It will not have a a many meaningful impact in terms of our profitability or anything because as a contribution of the insurance income is... The premium income is very, very low for us. So, basically, these are the highlights of the quarter. We can open up a wire to... For question and answer. And once again, thank you for joining this call. Back to you, Nadeesh. Thank you, sir. Thank you.

17:01 We open up for the q and a session. Can you please raise your virtual hand, and we will unmute you from our side for the q and a. Thank you. So we're taking the first question from Nippon. Can you please go ahead with your question? Yeah. Hi, sir. So my first question was, our liquidity coverage ratio has gone up, like, up for some 100 bit... Like, 100%.

17:51 So when the regulatory requirement is only 100%, is there a reason behind it? Yeah. So, Nifun, basically, you know, this... There is no better. The only thing is it's a matter of computation. We have to just compute for the next, you know, three months or one month actually and see what is the kind of, you know, liabilities which are falling due. So you would see that, by and large, we have increased our long term borrowings, and therefore, the short term borrowings basically are are are... Which which normally come up again and again, and for which we have to provide the... Or maintain the experience, that figure has come down. So just to give you a small number probably around 23 from the time of March 23, we had almost about 26, 27% of our total borrowing side was short term borrowing, which now has come down to around 12%.

18:45 So you can imagine this is basically the CPC have brought down. We have brought down the the the short term borrowings from the banks and everything. So basically, that is what is impacted. And also a fact that, you know, now what we, as a strategy, do is instead of taking bulk borrowings, thousand 4 or 502,004, which will come for a, you know, repayment in one single shot. We are taking in smaller proportion. So basically, the load in terms of, you know, providing the liquidity in any period of thirty days is kind of reduced. So this helps us in many... Managing our, you know, borrowings and basically maintaining our our LCR. Okay. Okay. So so what should be the steady rate of this ratio? See, basically, it's a it's a it's a continuous to flow of, you know, thing that we have to maintain. So if there are more short term borrowers or any kind of borrowings where, you know, there are...

19:39 It falls during the next thirty days, we have to provide the expiry. Normally, we have a standard amount of approximately 2,300 codes or something that we are maintaining as a HQLA. So so therefore, you know, what happens, you know, if this figure keeps changing, this ratio also quietly keeps changing. But, you know, what we are maintaining is always be above 100%. Now if it's in the next thirty days, if it is not there and we have more liabilities calling due or pay in the payments or, you know, regulatory payments falling due in the... After thirty days, then it will not return to the will return high. But our HDLA that we are maintaining is almost steady, and it is enough to maintain any... At any given point in time as per the current requirement, more than 100% SDR. So maximum two fifty, we will we will have one fifty five.

20:27 Okay. That's good. Got it. Got it. And, sir, what kind of test test have we done on our loan book? See, we have almost 12 to 12 order scenarios that we are doing in terms of, you know, how much of a, you know, flow will happen in terms of our delinquency, how much, you know, will will happen. We're also doing in terms of the rate of interest impact. We're also doing in terms of delinquency. Both these kind of tests, we are doing for testing. So we we also see how much it will have an impact. So all these tests we are doing as per our, you know, RMCB is also we are presenting it to the RMCB. So Okay. And what is the frequency of this? We are doing it every quarter. Okay.

21:13 Okay. Yeah. That's it. Thank you, sir. Yeah. So we will take the next question from Ramesh Bhuva. Yeah. Hi. Am I audible? Yep. Yeah. Please go ahead. Yeah. Yeah. Yeah. Please go ahead. Good afternoon, sir. Sir, just two things. Good afternoon. One on this, you know, interest rate cycle. So two things. One, as you rightly mentioned that, you know, our our is such that most likely will not have any material impact on NIM. But any sense on, let us say, does this interest rate hike in this cycle will have any impact on the demand side?

21:58 I mean, as per your, let's say, assessment, historically, whenever we have a... You know, we are going through a rising rate cycle, does that impact the demand for home loan or it's a non event? See, I would say, you know, quarter percent, half a percent is a kind of a non event. The rate of... The rate that we are seeing, I think, no. Only once in the past, we have seen a rate which is lower than this at around one twenty five, that's 6.75. Otherwise, you know, 7.15, 7.58. These are among the lowest that we have seen. So, you know, half a percent increase from here is not going to make much of a impact in the terms of the demand. Because, you know, once it is converted into a fifteen year EMI, the impact on the EMI is very, very limited. So it is not going to affect the flow as much. The half point... Half a percentage point increase or even 75 basis points increase in our... The thing in the... In terms of the EMI is not a very large amount. Of course, it is a... There is an increase.

22:55 So either you can increase and start giving more of twenty five, thirty year loans, or you can... So that the EMI remains the same. Or else you can, you know, even if it is a increase in the EMI, there's not too much to deter demand. Got it. So basically, you don't see any any any change in customer behavior just because of running rate cycles? Not much. This should not have... Not much. Okay. Okay. And so second thing is, you know, on this... The MVNO impact. Right? I mean, we are hearing that the South is actually going through very bad, you know, rainy season. So what is your assessment? I mean, do you also foresee some impact because of this over next maybe six to twelve months on demand or asset quality?

23:47 See, there... There's definitely an impact. So just just to answer your previous... One more point in your previous question. So as I mentioned, a 25 basis points increase in the rate For our loans, it's only about 10 basis points. As I mentioned that we... When the rates are coming down, we also reduced 50 basis points for our one twenty five basis points cut. So consequently, when the same reverse cycle happens, we will also not pass on the impact. For... So for us, a 50 basis point might work out over 22, 23 basis points increase for our loans. That is a customer that we offer. So that is just a clarification. And, yeah, coming back to that this... Yes. There is a... So if there is a water shortage, of course, it can impact in terms of the construction activity. But we'll have to see how much... Because, you know, sometimes there has been delayed range and at least Maharashtra, Karnataka, and some of the states, yes, there has been definitely, you know, a lot of drought prone...

24:41 The thing drought that has been announced in quite a few villages and stuff like that. Of course, in our case, we don't have too much of a deeper penetration in top of the tier three, up to tier four, tier five, and all. We mostly just think up to tier one, tier two, where at least, you know, there is water is available. Of course, but still it will have an impact in the world's team, you know, things. It will have an impact when construction may slow down a little bit. So... But I think still a little early for it. It's a little early. If at all it happens, of course, it will be impacting everybody. But, yeah, it it is something which can impact a little bit. Got it. So just to follow-up on that, I mean... So then in that case, do you foresee any risk towards adjustment target for '27? See, if the overall industry is gonna slow down, I think we are part of the industry. We cannot be any very different, and I don't think we will then that... Yeah.

25:33 Be busy things. But as of now, as I said, it's a little early to to to start projecting that. But as of now, I mean, there are a lot of construction. There are other ways also. Like, we may maybe look at a little more of lab or we may look at, you know, some construction, some top out for a short period and all. These are all things which, you know, as a short term strategy, CA will have to adopt. Got Got it. That is very useful, sir. Thank you, and that's all. Thank you. Just a request to all the participants to limit their questions to two per participant. The next question we'll take up from. Yes., you may unmute yourself and go ahead with the question.

26:40 Yeah. Devesh, you can unmute yourself and go ahead with the question. I think there's something. So maybe you can go to the next Yeah. Person in the queue. Yeah. We'll take the next question from mister Vijay Singhal. Hi. Hi. Good afternoon, sir. My question is Good afternoon. We have done a IT transformation after a long brief... A long period. So how the operational efficiencies are expected to play out in FY '27 and FY '28? Sure. See, as I was mentioning, once this this has a lot of process change, but then a lot of things in the... In terms of the efficiency in the sense that we have a lot of processes which are a file manual having converted into, you know, the automated processes.

27:37 So that is in terms of the process change. There are a lot of, you know, opportunities, but all the all the, you know, OEMs are all the applications that we have taken are having AI, you know, native AI capabilities also, and we are also looking at, you know, something... Some more features which can be added. So, you know, auto form filling, things like that are definitely going to improve. This is going to open up a complete, you know, channel of digital sourcing for us because earlier the, you know, the it was purely a manual driven process and all those things now. In fact, a lot of customer journeys in terms of digital journeys can also be incorporated. And so those are things which will start now, and we'll start to see some benefits. If you see one of our sourcing, we have a 10% business. We are expecting to come from the digital growth, so that will be an enhancement to our business.

28:28 Then, you know, in terms of efficiency, as the processes are there, a lot of activities which are manual are doing this. We will be able to pull out people from our team for sales and on field activities. So that is also a thing. In terms of a lot of other internal processes, you know, there are auto form filling, auto verification, validations which are happening. So in terms of the compliance, also, there are going... There's going to be a lot of improvements. So this year, if you see, we have actually looking at an increase from 90 or 85 to 40 people to... In the sales department to take it up to 150. And all this is without increasing the basic structure of the staffing at the branches that we are looking. So it's not that we are adding another eight seventy five people or something in the CANF department. What we are doing is from the existing team, we'll be able to remove the people and put them on the field because, you know, the efficiency will start to come in. So at least in this year and part of next year, we will definitely see, you know, some improvement or some benefit in terms of more people on the field because of efficiencies coming in.

29:32 Sir, one small follow-up question here. What is the... Know, that process has been completed in the... For for for the entire organization? Or is it pending or due, like... No. This is an entirely been implemented. So if you see our presentation, we have, you know, various activities which have been put page number 19 of this presentation, line number 19, you will see that all those things have already been fully been implemented. In fact, this implementation started from as early as, you know, prior to September 2025, where first the infrastructure part component started getting delivered, the security, the stock, started getting implemented. And then in a phase manner, some in... By September, the risk and a and and and the module got implemented.

30:19 January, we had the deposits, the the the DMS, all those things. So basically, the entire package is all the components which are part of the RFP which we have released in in '24 and that has all been implemented. Thank you so much, sir. It's a good work. Thank you so much. Yeah. My one more question is the... One more question is here. That's that's related to exercising the interest rate scenario, and what is our expectation of prepayment rate Definitely, they're going to come down if 100 bps repo move up. So as I said, you know, we will not pass on the full increase to the customer because, you know, for us, our 65% of our liability side is is linked to floating rate, 65 order percentage.

31:11 So whatever is the impact which we will see, so 25 basis points to roughly implement about 13, 14, 15 points, the basis points for us. Some... And some, we will pass on right now 10 basis points to our customers is what we are passing on for our holding customers. So so basically, you know, if you look at it in terms of the prepayment, what will happen is at the... Prior to the rates coming down before the cycle started, the gap was about 55 basis points in terms of the rate. Now that went up to, you know, by another, you know, 65, 75 points because 125 was reduced by the banks and those into the benchmark, whereas we reduced only 50 basis points for our existing and new customers. So this gap widened, now what will happen is this gap is totally start shrinking. So let's say, for example, a 100 bps increase in the... Over the next, say, one year if it happens, then the gap will reduce around, you know, for us about 60 basis points.

32:09 So that's basically sizable amount of production because as I said, 50 to 30 basis points, I think the customers don't mind. But if it is more than one one and a half percent, 1.25%, then the customer... Then the impact in terms of the EMI will be larger. Obviously, you know, this gap, once it shrinks, starts shrinking the... You know, it helps... It will help us in our procurement. In the past, our prepayments have been in the range range of about, you know, 15 and a half, 16 odd percent, which has gone up to almost 17, 17 and a half. So one one and a half percent reduction in our our prepayments are rundown. We'll be almost coming down to, you know, about two, you know, $4,400 crores. K. Any outlook for '28?

32:55 A quick question. So that I asked the three questions. Any outlook for FY '28 in terms of the inflow? See, next year, at least, we are internally looking at around 16,000 per hour disbursement for FY '28. So that should translate to around 15% plus AUM growth for next year. Because, you know, assuming that our prepayments also goes up by, say, for example, from from this to say, it's a way thousand 500 crores or whatever. Then also the addition to the book will be a little higher, so we expect that, you know, this should probably, you know, work around 15% plus, closer to 15 and a half or something. Once again, congratulations for IT implementation, sir. Thank you so much. Thank you. Thank you. Just a request to all the participants to limit their questions to.

33:43 We take the next question from. Hello. Am I audible? Yes. Please go ahead. Yes, sir. Hi. Good afternoon. Thank you for taking my question. Sir, just just two things. One is that you say 65% of your borrowings are floating. I'm assuming you're just talking about the bank borrowings here, which if I remember in the past, we have moved almost all of it to repo rate link borrowings. So as repo rates move up now, our bank borrowings will reprice upwards.

34:31 So, sir, this this happens on p plus one, or this usually happens the following month, following quarter? How does that work? So bank borrowings, it increases in the next month. So if the... So this standard has happened on October 7. So, basically, from the November 1, our rate from the bank borrowings will go Linked to the, of course, linked to the, you know, e b l r linked to repo rates. Now there are some which are linked to t bills and all, which will happen at the preset quarter. Whatever is the... So we would have taken on up to most of them are at a quarterly reset. So at that time, the team will, whenever there, it will be there. So not all the, you know, floating rate liabilities are on monthly reset. Got it. And then, sir, I mean, NHV, which is almost 14, 15% for us, that is also largely floating only. Right? Linked to energy, PLR.

35:25 It is linked to energy, PLR, but energy, PLR also has not changed for some time. It... There were only one change, which also last time, in spite of searching, they did it at a very bad and they did it. So by and large, you know, that is also very delayed. It doesn't happen immediately. Of course, you know, for MSD also, you know, we have the AHS, which is fixed. It is not floating. Right. Right. And, sir, in that case, I mean, for us to keep our spreads and margins stable, whatever increase we see in our liability side and, like, mentioned predominantly banks, we have to be passed on to the customers. Otherwise, I mean, there is a risk of spread and margin compression in a rising rate setting.

36:12 That is absolutely right. So, basically, seventh was the, you know, policy announcement. And on eighth itself, we had our alco, and we have increased our rates for our existing and new customers on the housing side by 10 basis points. Obviously, you know, the impact would be resultant would be around 12, 13 basis points, but we have done 10 this time. Maybe next time, we'll do 15 for a for a... For equivalent 25 basis points increase because we are not doing this, you know, five, 10, or 15 basis points. It's just in this this 10 basis points that you've hiked for your borrowers, that is effective. So if you increase it on the eight, that becomes effective on? So basically, for new customers, of course, are fifty days of implementation in the system. So 12, effective 12, we have to give the notice also. So effective '12, all new customers will start getting it. And post October 12, whenever the reset comes for the existing, you know, 85 orders... 8587% of our floating rate assets, as in when the reset comes, that will happen. And now we are 87 and what we reset only about 12 odd percentage, 12 something percentage is in annual reset. So within a quarter, this entire thing will be passed on from October 12 onwards.

37:26 Got it. And so then the last question that I had is, you've not changed your guidance on disbursements and loan growth for this year. And so what I'm able to see on slide number 20 for us, there are still about ninety ninety five branches, which will undergo the tech upgradation or which will migrate to the new tech platform maybe this month, month of October. Yes. But even in the month of Octo... They've actually already been there already. Yeah. Yeah. First, effective first, they have already moved to the new system. Okay. So, sir, in that case, this nineteen ninety five branches will exhibit some weakness in disbursements in the month of October. In the month of October. Right. Yeah. So then, sir, I mean, we are saying... Notwithstanding that, we are saying we will be able to push the disbursements. We are targeting for about 3,500 crore in this quarter and the balance in the next quarter. And the thing is that, you know, along with this, now that the tech implementation is over, one is, you know, we had to be, you know you know, clear. We had about 129 people who were deployed in this IT transformation either in for our, you know, testing part of it or for the training part of it or for the... From the branch component testing for the train the trainer module and all. So slowly, have also started, you know, taking out some... Those people are also group...

38:47 Are going back to the branches and moving back to the one they are branches or to the respective department as in many of those... Because now the implementation is complete. So now we basically require people only to to maintain and maybe for a little more longer for maybe one or two months for the support. Otherwise, basically, the testing component, you know, the implementation, all those things are already over. So those things are going back to are are going back to support the branches. And as I mentioned earlier, there are two things. One is, you know, this sales team will get a support and we will be able to push our sales team strength from 90 to over a 150. In fact, by December, definitely, it will cross 120 because, you know, already we have that many people who are lined up to move back to to... Into sales and all. And some more to... Who will be joining and all. So basically, you know, that will be one support plus these 25 branches which we have opened will also support in terms of disbursement because, you know, they have all been opened in a month of mostly office in September.

39:44 So, you know, those branches will start delivering additional business, which is not part of the first half business. So they they basically, that's what it is. And we have also started taking some steps in terms of, you know, some contest, some kind of support, and some decisions in terms of some fees and all those things. So that, you know, we can start pushing disbursement and cover up for the q two impact. That's all from my side, and I wish you and your team the very best. Thank you. Thank you. Thank you. So we'll take the next question from mister. Hi. Good afternoon, sir. Thank you for the opportunity.

40:33 My question was on, again, on the pricing side. So if there is a 25 basis point of rate cut, how much time does it typically take for the same to get incorporated in the PLR? So while you said to the earlier participant that, you know, on the October 8, you revised the rate, September of October, there was a revision the cost of funds side, at least the 25 basis point increase on the on the 65% of our borrowing. So so so typically on the measurement, if you look at it, how much time does it take for the, let's say, any rate high, any rate change to get implemented or incorporated in the in the PLR? See, as I mentioned, are there 62 or 65 of our borrowings on the liability side? Our borrowings are linked to this, but not all of them are linked to repo. There are about 75 or 84% which is linked to repo, the remaining is into T bill. So on the repo linked borrowing, the impact will be from November 1.

41:33 For the t building borrowing, depending on the... When the quarter reset happens, that date it will start impacting. In terms of our asset side, from October 12 onwards, as in vendor, three quarters you have... So you have about 99, you say. So 33% of the book will get repriced in November 1, 33% you can pay on a, you know, standard basis, not not to the exact thirty days. But roughly, I'm saying one third one third one third will happen in November 1, December 1, January 1. And in the meantime, if, say, for example, something else, the addition... Further addition, increase in report, it happens in December, then maybe the ones which will happen in January will have a combined impact in in January. Okay. Okay. Got it. And then this... The remaining 30% of the portfolio, which is still an annual reset, when will that transition to quarterly reset?

42:24 See, basically, we are making attempts to, you know, con... To convert those customers also into quarterly reset. So last time, when we had send this communication, many customers that either were not able to... Whether they had some of reluctance to move to to to quarterly reset. So probably this may not reduce further. It may... Even if it does, it will be a very slow change. And over a period now, since all incremental loans are only under quarterly reset. So basically, you know, what appear at this percentage, anyway, this will... This start coming down and the impact will be lower. So otherwise, by and large, you know, these customers that have either opted not to go for quarterly reset or have, you know, we we still have, of course, some impact that customers we could not contact or we are still to push a little bit. That we will try to do. So this will now slowly be... It will be a little slower impact. And obviously, you know you know, customers who are, you know, smart customers will now not want to move to a partly reset because their rates are on a increasing curve. So, basically, some of the smartphones may may may not want to do it.

43:37 Got it. Got it. So then the second question was on the feedback. The PMIER 2.0. So how is the scale up of that? How are you how are you seeing that being benefiting us? Or are you seeing... Is it relatively, let's say, slow versus the earlier schemes? So it is a little slow. So not to the extent that we have seen in PMA y one or CLSS one. The the impact is much less. But recently, the government did have a meeting to review and has taken a lot of our positions. And I think, you know, the process, which is a little long... Longer... Much longer compared to what it was in CLSS one. That process, of course, may may see some improvement. So we have some cases, but definitely whatever we have, even if we are able to convert it, it will be much lower than what we saw in CLSS one. So that definitely is there because, again, it, you know, comes down to the the locations where, you know, we are operating the the states where now there is a shortfall and where first time home buyers will be wanting to go for it. Those states where... Who have not opted for CMA or for whom this is the first housing loan in the family. For those kind of customers, we are in the states which are there.

44:51 We have a smaller presence also. So the... Yeah. This is one of very successful in states like, you know, Maharashtra, Gujarat, Karnataka, Tamil Nadu. These are already well developed states now. But now the shortfall has considerably reduced over here. The... Now the shortfall is more in other states like, Bengal, Bihar, UP, and all. So, obviously, you know, those states, our presence is less. At least in UP, we have increased our presence now quite a bit. We have added about 12 branches in the last year in UP. So we are trying to see if we can take advantage of that. Got it. Got it. Thank you so much, sir, for answering all my questions. Good luck for the next quarter. You... Thank you. We will take the next question from., please.

45:52 Hi. This is. Thanks for taking my question. I I hope I'm audible. Yeah. Yeah. Very much audible. Please go ahead. Sure. Sir, if I understand the data given in the deck correctly, there was a potential shortfall of three fifty seven crores of loans being deferred because of the IT impact of the software. If you add that back, basically, to the numbers that have been given, we've been growing at roughly 2% quarter on quarter net of prepayment and amortization. Now for the second half, we've given a target of roughly 5% quarter on quarter growth. So first question is how sure are we visibly hitting these numbers? Because even despite that, I think if we compare the numbers to last year and this year itself, we've been growing at two to 3% quarter on quarter. So what changes that gives you this confidence? That's the first part of the question. Yeah. First question for you. Sure. See, if you look at it that way, last year, we had given that when we had given a 10,500 crore target, we had said we will do about 2,002 thousand 500, 3,000, and 3,500.

47:12 So that's how we had, you know, planned our business for the last year. And for this year also, in the beginning, we said we'll do 2,500, 3,000, 3,504. That is how the plan for the four quarters was, you know, prepared. Now in the first quarter, I mean, 2,500, we have done 2,600. So obviously, you know, there's been a 100 core extra we have done, which is a buffer in q two. This quarter, we had a shortfall. But from q three, we are sticking to the same 3,500, which anyway we had planned. So basically, if you look at it from that point of view, what we are targeting is about, you know, additional 500 or something or if we are doing every every quarter more than what we did in the two, the previous corresponding quarter. That is how it is planned. So 3,500 is still in line with what we had when we began the year also.

48:00 The top four of that 400 odd growth that now is there, we will now have to cover up in the q four, which we will build up in the... During the year. So that's the that's the plan, basically. Got it. So so so just from our understanding, these proposals during this period where we could not lend because of slowness other implementation in the IT system. Those proposals are in the system, or we've lost those proposals to, let's say, competition or they just figured off. So there is a pipeline, basically, is what I'm trying to get to. Right? So just... If you could explain that Sure. See, so there are two things. One is the sanction, but not disbursed. Second is the, you know, undisbursed portion of partly disbursed cases, which, of course, will be the same because whatever you're doing was based on that only as as a period of construction. Basically, it's the sanction not this first, and there are files in the hand, which we could not sanction because of this process change. That is the thing.

49:01 Yes. There is a definite at least in the pipeline, which is not being booked or which is not even been entered. Yes. There is a... We we don't have the visibility right now. But even if you look at the numbers, I guess, if I recollect, it's about 118 crores is the extra amount that we are carrying in terms of the sanction, but not disbursed as compared to the previous quarter. So that is about a $100,120, which is already locked in, sanctioned, and kept on hand. Then in the process, of course, there are some more, which, you know, partly as the old system, which will have to be re brought into the new system and all. So that is a a gain something which is additional to that. So there is some business. But having said that, of course, you know, when it comes to the customer, if, you know, it is not there, I'm sure some of those loans are, you know, at least a decent proportion of the loans would also have gone off the system because the customer eventually wants the money. If you are not able to give it, they would have gone as well also. So some of the business is definitely lost, but some of it is already booked in, and we are sitting on that, which will help us in the coming quarter.

49:59 Got it, sir. So just the second part of the question, given that you... If you're sure about your guidance this particular year, and does our target of 15% next year seems to be something which is conservative. So I I am not questioning the target, but I'm just trying to understand bottoms up, which are the pockets where you think you can actually fire more because you... Any which way is adding 27 branches this particular year, you'll be adding more branches next next year. So is this a ballpark? And if yes, then what is the subject... Objective guidance behind that? Okay. See, the 15% is the AUM growth that we are talking about. It is always an outcome of the rundown that is there. So what we have in our control is the amount of disbursement that we can do. And Yeah.

50:51 Against the 10,500 crores, we have targeted 13,000 this year, which is a 20% plus disbursement growth. Next year, when we're seeing 13,000 to 16,000, that again is almost 22% growth in disbursement compared to the FY '27. So basically, disbursement will grow, but the AUMs will slowly interrupt as we go ahead. It will come with a lag. So... And the 15, 15 and a half percent or whatever is more of a, you know, net income assuming that, you know, the prepayment will remain the same or slightly elevated. And even if we are able to reduce on the prepayments because the rate... The gap is reducing, then in fact, it is even better. This could could improve or... It could be even better. It could be it could be exactly. It could... So basically, that 15% is more of a resultant figure.

51:37 The... What we have in our control is the disbursements where we are saying we'll go ahead with 22 next year. Got it, sir. I'll call back if you ask some more questions, sir. Thank you. Thank you. Yep. We will take the next question from mister. Please unmute yourself. Yeah. Mister, please go on and audible. Yes. Yes. Now you're audible, Raghur. Okay. Thanks. Sir, I have two questions. One, you've given some data on sourcing through new and old branches, old branches being the ones that were opened before March 2023.

52:24 What I understand is that the disburse ment productivity in the new branch is about 50 to 60% lower versus the older ones. And I want to... What I want to understand is that how many years does it take for a new branch to get to the same productivity level as as an old branch? Is it one year, two year, three years? What's the typical timeline that that you worked out? That's my first question. See, in terms of the productivity, so there there are... I mean, productivity, of course, I think it will take about eighteen... Probably, we say eighteen to twenty four months. Some are, you know, do it much earlier. But on an average, this is what it works out to to reach that kind of a level of, you know, productivity of whatever we we generally maintain our productivity five cases per staff per month. So keeping that in mind, you know, to leave that in our productivity, it is about eighteen months is what you can say.

53:18 However, the other thing is that, you know, we have a category of branches. So there are small branches where we only have three people staff. Once it crosses a threshold of the, you know, a particular book size, then we make it a... It can move to a medium branch, then a large branch, then a very large branch and so on. So basically, you know, along with the movement from small to medium, the staff size increases from three to four. So with the productivity of five, you know, three man branch will do 15 or four man branch, then the number obviously increases to 20. So it is not just a simple increase. At that time, the jump is also because the staff also will provide more. And so basically, you know, we also have, you know, that kind of a moment which will help where more more people get added because the branches would get it from one level to the next level.

54:09 But productivity, to answer your question, yes, eighteen months roughly you can say on a blended basis, Some faster, some a little slower. Some take more time. So blended about eighteen months to reach the price of our activity. If I look at FY twenty six numbers, then the newer branches were disbursing about 20 crores of business annually, that should get to about $40.45 crores in about a year, year and a half then. Thank you. Right? That... That's that's reasonable to expect? Like, so so 100 crores is when they cross the target of 100 crores, that is when they become a medium branch. So that's what it's up to below 100 crores AUM or book size. We keep it as a small branch. But, yes, the productivity will increase, and obviously, the branch which are opening FY '26 will probably, you know, by end of twenty seven is when they will reach that, you know, five cases per staff, per month, or 15 cases in a branch kind of a thing.

55:06 Understood. Sir, my second question is that... So I think all of us understand that disbursements have been impacted because of the tech upgrade. But just before this, if you can throw some color on maybe the inquiry levels, were they up this quarter versus same quarter last year? Something that you were referring to in the in the previous question about the pipeline that was there in your hand. Can you give us some flavor on on how was the pipeline looking like, whether that was better than last year or not? Because if it was, then eventually, it will get converted into disbursements in the subsequent quarters. Right? Okay. So I'll just go back to the sales slide, slide number 20. So if you see the first, you know, column number three talks about the average business in the first quarter of the year. Now if you see the branches which went live in August, you know, the August disbursement was more than the first quarter average business in the month of July. In July, they had a better inquiry, but because that was implemented in August, that there was a date. Same way, if you look at the branches which we implied in the month of, you know, September, you'll see the July business as well as the August business was more than what was the average of the first quarter. So that is... Now same way, if you look at the branch, it has not gone live at all. We went live in the month of October or first first of October. The four thirty five was the average. The entire quarter, they have... If you look at it, they have done actually more than that. So so there was a improvement if had everything been, you know, the way without any implementation,

56:37 the business would have been close to 3,000 per hour only. Because, you know, the month after month, the business would have improved. So I think in the... I think that should answer your query. This... The same slide, if you look at that, you know, fourth last... Second last column of October, that will give you an idea that, you know, the business was definitely there. The business where no impact happened, where no implementation happened, business was inching up and moving up. So so that was a deal. That demand, there was no problem. The logins also were there. That's why the numbers have also gone up. So we would have... So the four thirty five, the average would have been around four fifty to four fifty five if, you know, the same trend that has continued if you see from the q one. Four thirty five is four fifty average. Alright. Thanks a lot for those answers. Thank you. Yeah.

57:27 We will take the last question from mister Rajiv Mister Rajiv Meta, please unmute it. Yeah. Hi. So most questions answered, but, sir, firstly, know, you know, some queries on the business side. So when you look at... So do you expect that there'll be much sharper movement towards, you know, higher ticket home loan in your quest to cover up the business and, you know, scale up the business to your level? Would once be more sharper movement towards high skilled home loan and maybe even say non non home loans like LAP or the other loans. And you... In your side of your... The person makes... You are also now mentioning digital sourcing coming in and becoming 10% by q four FY twenty eight, which is all there right now. So what is this... What do you think about digital sourcing and does the new tech stack, you know, enable you to scale this channel in a in a meaningful way? And for the sales team contribution in this work, mate, currently, it is 10 level.

58:27 I mean, it's not the right course to look at, but you are, you know, you are projecting that it's gonna become 20% in the next four, five quarters. So what is the plan to scale up or to add people on the same side? Sure. So your first question, higher ticket business. See, what a period, if you look at it, 30 lakh plus kind of business in terms of the incremental disbursement has also slightly gone up, and even in terms of AUM has gone up. So, yes, there is a little bit of, you know, high ticket business or the 30 lakh plus business it is coming in, And that is also because the construction cost and everything has also increased. Plus, of course, the fact that, you know, and all those things in Karnataka and even in case of Telengan actually, there are issues. So basically, we are doing more business in the corporate... In the corporation areas and the the the and all those things, which where the take... Where the property prices are a little on the higher than what it was in the ground price area.

59:26 So that is... Yes. But at the same time, if you see, I think the message from NHP is that the ASF funding is going to increase. So we are also, in fact, looking at doing some... Pushing some business in the affordable ASF category because, you know, we also have to have the loans for operating that refinance from NSB and we are definitely looking that as the direction that the government is having. So we are also going to look at it. So so while, yes, the number of 30 lakh plus loans will increase, I think we will also have, you know, 15 to 25 lakh segment also, which is under which should also go up. Okay? That's the first part because we are looking at, as I mentioned, some steps that we are taking. We are looking at this segment also because government is looking at the to be pushed. The second in terms of digital, yes, our...

1:00:14 The new package enables us to have, you know, customer journeys, like, fully digital journeys, online applications, you know, CRM package, which will be able to be on on boarded, all those included and all. So, yes, digital will will be something which will add in terms of the the channel available to us. So that will slowly start in. The third is in terms of sales. So you are saying, like, today, it's 11%. How are are we projecting our 20%? So today, if you look at it, our, you know, we are targeting 90 people out there. We are targeting to increase it to about 150 people. And we are looking at about a 500 growth this year coming from 500 to 600 coming from the sales team. Already in the first half with the same lower staff and also, they have contributed 560 growth. So with additional 60, 70 people and the second half being the... With the entire IT transformation behind us, I think the the the remaining 100,000 crores will come. So next year, when we are looking at it, we are looking at increasing this strength from 150 to 250.

1:01:20 And next year, definitely, we should be having more than 2,500 core of the business coming from this case team. So if you are looking at 16,000, 20 will be 3,200 crores, and we are definitely looking at $22,500 plus crores of business coming from it. So it... I mean, 20% is the the... Is what we are aiming at. But definitely, it will be from there to there because we are looking at a much more number of people. The... We don't see who will be doing business from that. And once we increase it from 150 to 250 people next year, obviously, the numbers will be even higher. So that's how we are looking at, you know, the case contributing. Sir, sir, my second part of my question around liabilities, you can firstly repeat the energy sanction that you received. What is the amount and what is the pricing? And second is on NCDs.

1:02:11 I mean, you haven't spoken about the risk on liabilities repricing happening because of NCDs. The newer NCDs, for which you maybe have to... Must be... You will have to pay a higher rate maybe in the future. And when I look at your, you know, bank loan mix, except for the repo loans, there are also special rate loans. So when you say special rate loans and that's a significant cost. Yes, sir. Is there a risk is there a risk that those special rate loans can actually get repriced at a much higher level or, you know, the reversion there in terms of rates? Yeah. Revision in terms of rates can be much sharper than the the repo in less... Loans? See, first question, NSP refinance. We have got 1,350 crores of refinance right now. The rate, obviously, it is a mix. So last year, when we got the 1,500 crores of refinance, which we drew last year, we had 400 crores under ESS and 1,100 crores under regular refinance.

1:03:08 And so the blended cost for us came to somewhere around 6.6 to 6.7. Between that range, we got the cost. Okay? This time, the government has... The energy has indicated that the proportion of the ASF could be higher. In this case, you know, even the impact of the rate hike will not be impacted because, you know, even if the, you know, the regular refinance rate is slightly higher, the ASF, which is a fixed component, will be a larger proportion. So, essentially, the cost may still be 6.6 to 6.7 only. And right now, we've got 1,350 crores, and there is a possibility now that, you know, with the ISB looking at increasing the size of the refinance, we may in fact be able to apply a threat... A threat for a additional refinance limit also during the current year. So that is what we are exploring. So... But as of now, it is 1,350, and the the cost is most likely between 6.6 to 6.7.

1:04:04 The second thing is, you know, regarding the liabilities, the special rate, basically, is the t building. So, yes, there is a possibility that depending on that, at the time of reset, whatever is there, it may, you know, slightly vary here and there. But by and large, the market prices it accordingly only. So it should not be a major impact on that. And second, I think you also asked about NCD. So NCD is actually for the current year, you know, while we are... We continue... We were getting around the... You know, even after this 25 increase, we are getting, you know, bank download at 7.65. I think today, if you go, maybe it might be 8.3 for a 8.3 or 8.35 for an NCD. But having said that, today, we are already complying complying with the regulatory guidelines on the 25% borrowing to the market for this financial year.

1:04:58 So we are not having any comparison to go to the market and raise at 8.3. Of course, it is all a matter of how you read the interest rates and when we do you borrow and the timing and the plan that you have. But as of the moment, at least, we we are not under comparison to go and raise money at at the... From the NCD market, because we are already complying with our 25% requirement. So we will plan accordingly and see at the... If there's a good opportunity at a good time, good price, we will then probably go for it. The refund has already happened in the the refund has already happened in May only. And that's the heating up on that one. Okay, sir. Thank you so much for answering all my questions, and best of luck. Yeah. Yeah. Thank you. Thank you, Sandeep.

1:05:44 So that was the last question for the day. So I'll just hand over the call to the management for the. Yes. Thank you. Thank you to everyone for the, you know, all the taking time out and joining this earnings call. And I hope you've answered all the queries. I think it's been a quarter where it's been slightly impacted because of the IT transformation, but I think it is in the long term perspective of the company. I think this IT transformation was very, very necessary and also is going to, you know, drive the business in the coming quarters and the coming years. So I think this was very well necessary and very... It will bring in long term benefits for the company. And we are still confident that in the next two quarters, we'll cover up for the the shortfall in the disbursements, and we have already initiated steps also in that regard. And with some...

1:06:35 But in the nutshell, think the idea... The... This thing would be to protect the NIM and the spread. And at the same time, we will also push for growth. We will be looking at a 20% plus growth in terms of the disbursement, which consequently should become a 13, 14% AUM growth this year and a 15% plus AUM growth in the next year. So that's what is the attempt by the management. Once again, thank you to all of you for joining this earnings call, and thank you to Investec also and team for all the. So back to you, Nidish. Thanks. Thank you very much. Thank you so much, sir. Good request for the participants that you may exit this call. Thank you for joining today.

1:07:24 Yeah. Thank you.