Satin Creditcare Network (NSE:SATIN) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to Satin Creditcare q two FY twenty seven earnings conference call. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Mr. From GM Financial. Thank you, and over to you, sir. Thank you. Good morning, everyone, and welcome to Q2 FY twenty seven earning conference call of Satin Creditcare.

0:46 First of all, I would like to thank the management of Satin Creditcare for giving us the opportunity to host this call. From the management team, we have doctor HP Singh, chairman from managing director and the senior management team. I would now like to hand over the call to doctor HP Singh for his opening remarks. Post which, we can open the floor for q and a. Thank you, and over to you, sir. Thank you. Good morning everyone and thank you for joining us for Satin Creditcare Network Limited H1 FY twenty seven earnings call. When we spoke in May, we said that FY twenty six had tested the sector and separated the institution that is structurally sound from those that were not.

1:31 In July, we said that the test was behind us and that the question that matters now is, who is positioned to grow in a way that holds up when the next cycle turns. Q2 is further proved that we were we are not just emerging stronger from the last cycle, but building the resilience to grow sustainably through the next. H1 FY27 marks the defining milestone for Satin with a standalone pack of $2.92 crores, the highest ever, closing in on our FY26 full year standalone profit of $30.02 crores in just six months, alongside our twenty first consecutive profitable quarter. On a consolidated basis, H1 PAT stood at INR299 crores against INR98 crores in the first half of last year.

2:21 This performance reflects the philosophy that guides us, being big, deliver bigger. The first half of FY twenty twenty seven reflects the progress we have made in strengthening our underlying business and positioning Satin to capitalize on the evolving microfinance landscape. Following a challenging period for the sector, improved borrower indebtedness, industry guardrail and greater credit discipline, they have contributed to a more conducive operating environment. However, we remain conscious that the sustainability of this recovery will depend on prudent underwriting, responsible customer selection and consistent collection performance. At Satin, we have remained focused on these fundamentals while pursuing our growth opportunities.

3:08 We want to address two important points which were discussed in earlier quarters. The first is the monsoon. We had earlier indicated that the revised outlook warranted caution on rural cash flow over the subsequent two to three months. That period has now passed and the recovery has now been very encouraging. Assam, their four districts were severely impacted by floods has almost fully recovered with no discernible impact on our credit cost. 42,394 borrowers were granted a moratorium and nearly 90% have resumed repayments during the moratorium period itself, reflecting the gradual restoration of livelihoods. This is also a very positive indicator of our robust underwriting, thus resulting in negligible impact on credit costs.

3:58 As a genuine customer centric gesture, we have decided to pass on the entire insurance payout that will be received under our nat cat insurance program to the affected customers. Importantly, we didn't need to utilize any portion of the management overlay for this event, reflecting the resilience of our portfolio and the effectiveness of our risk management framework. The second point is geographical diversification. We want to address concerns around Karnataka and Maharashtra, which have both been used as stress states this year, owing to the drought conditions. Our exposure is negligible. Karnataka and Maharashtra account for 1% each of our on book portfolio. This leaves us well protected from stress in these markets and allays concern about the possibility of asset quality being impacted.

4:47 Also as of now, we have not witnessed any stress in repayment in these states. Consolidated AUM reached INR16589 crores, growing 31% year on year. Stand alone AUM stood at INR 13,608 crores, up 23% year on year. Consolidated disbursement for the quarter stood at INR 3,697 crores, up 41% year on year, taking first half disbursement to INR 7,192 crores, up 48% year on year. Consolidated profit after tax for the quarter was INR 176 crores, up two thirty one percent year on year and 43% sequentially. Stand alone profit after tax was 172 crores, up 231%.

5:33 Consolidated PPOP grew 53% to $3.24 crores in the quarter and 43% to $5.90 crores for the half year. Consolidated ROA for the quarter stood at 4.5% and ROE at 22.8% and on adjusting the buffer, adjusted ROA was 5.5% and ROE at 27.7% respectively. I shall discuss this in detail in a while. Our operating expense ratio was 6.6% against 7.2% a year ago. Cost to income improved to 41.6% from 49.8%. Stand alone return on assets for the quarter was 4.9% and return on equity 20.6%. For the half year, ROA stood at 4.3% and ROE at 17.8%.

6:22 ROA after adjusting the management O and A stood at 6% and ROE at 25% for the quarter. On the asset quality, we delivered a very strong quarter in terms of asset quality. What is remarkable is the phenomenal reduction in slippages. Slippages in H1 FY twenty six were INR $3.17 crores and it has drastically reduced to INR 103 crores during H1 FY twenty seven. There is a decline of 68% year on year, that is about onethree. Stand alone GNPA improved to 1.9% from 2.2% in June and 3.5% a year ago, which in absolute terms is INR197 crores. Par one stands at 2.9%, ex bucket collection efficiency was 99.8%.

7:10 Coverage has strengthened sharply across every bucket. Stage three coverage is now 91% against 85% in June. Stage two coverage has gone up from 21% in June to 62%. Our on book provision stands at INR263 crores against gross NPA of INR197 crores and against the provision requirement under ARPA norms of INR152 crores. In other words, our provision exceeds our gross nonperforming assets and net NPA on this basis is negative. Our overall provision coverage ratio is 133, up from 115% in June. We also recovered INR16 crore against write offs during the first half of this financial year. On train costs, our reported figure for Q2 FY 'twenty seven was 2.47% against 4.83% a year ago.

7:58 For the half year, it stands at 2.77% and excluding the overlay, 2%. Both are below the 3% to 3.5% range we guided for FY twenty seven and we feel confident to maintain this momentum. Now the part that matters the most, in July, we told you that we intended to keep building our buffer through the good quarters. We have taken the management overlay from INR36 crores to INR50 crores this quarter. Excluding that overlay, our credit cost for the quarter would have been 0.99 percent and our stand alone ROA and ROE would have been 625% rather than the 4.920.6% we have reported. Our consolidated ROA and ROE for the quarter would have been five point five percent and twenty seven point seven percent for the quarter and not the reported 4.522.8%.

8:47 We have therefore absorbed roughly 100 plus basis points of ROA into the balance sheet and we had every opportunity to declare more seller profits. We said in July that we would keep on doing this and we have done it. We will continue to disclose both the reported and the adjusted numbers every quarter, so that you can see exactly what we are choosing and appreciate our prudence. We are aiming to build a cycle proof return profile and a buffer built when a credit experience is benign, the means to achieve the same. First, there are two operating developments this quarter. First, have adopted the Gramian score for credit evaluation of our Micro finance customers alongside pin code level risk scoring with early warning indicators. This gives us a bureau validated rural calibrated view of borrower quality at the point of underwriting, layered on top of our own internal policies.

9:38 Our sourcing to disbursement ratio stands at 34%. Secondly, cashless collections have reached 25% of total collection and we want to be precise about how. This has happened organically through customer adoption rather than through any mandate or incentive from us. Disbursements remain 100% cashless. Non MFI portfolio now stands at 20% of consolidated AUM against 15% a year ago and we are on track to achieve the target of 30% by 2030. Satin Sensor continues to be the standout with AUM of INR1761 crores, up 184% year on year and 29% sequentially, now across 140 branches and 116 states with 19 branches added during the quarter. GNPA improved to 3.07% from 3.49% in June with CRAR at 26.94% and net worth of $4.61 crores.

10:34 Disbursements for the first for the half year were $9.67 crores. Satin Housing Finance stands at INR $12.19 crores, up 19% year on year with CRAR at 57.67% and gearing at 1.70x across 59 branches in 22 states and net worth of INR $3.70 crores. We have slowed origination in housing for two quarters, while we rebuilt this sourcing and underwriting process end to end and we have grown the fleeting from three seventy to five twelve during the quarter in recession. Patent Technologies continues to commercialize through the quarter with its core banking platform progressing through customer UAT and Cathritto Labs in which we hold a 68% stake, advancing its quantum safe cybersecurity offerings towards certification.

11:19 EHR MS platform remains live in production with an expanding customer base. Satin Growth Alternatives has achieved the first close of its Category II AIS in a record time of 4.5 after getting the license with institutional and high net worth LPs being encoded against a strong deal pipeline and the first deployment has already been done. The benefits of diversification are becoming clearer. Our subsidiaries are still scaling with each carrying a fixed cost base before reaching optimal portfolio size. SFL has nearly tripled in a year and is approaching the scale at which operating leverage could become visible. Our current consolidated returns therefore reflect the investment phase, not the steady state. Capital adequacy strengthened to 27.89% from 26.74 in June and 26.5% a year ago.

12:11 Net worth stands at INR3437 crores, up from INR3243 crores in June. Total on book borrowings were INR1033 crores with a leverage ratio of 2.9x, down from 3.2x. We raised approximately INR2630 crores during the quarter and INR5630 crores across the first half and we hold undrawn sanctions of roughly INR4600 crores with liquidity of INR2235 crores as on September 30. Our marginal cost of borrowing reduced by 65 basis points year on year to 10.28%. We also continue to be supported by a broad lender base of 69 active lenders with our 10 largest lenders accounting for 55% of borrowings. The promoters have committed INR100 crores through warrants and the first tranche of INR25 crores has already been received by the company.

13:01 This investment was made at INR260 per share, which was 17% above the SEBI pricing formula of INR222 per share. On guidance, let me set out where we stand against FY 'forty seven guidance we gave you. On stand alone credit cost, we guided 3% to 3.5%. We are at 2.8 for the half year and that is after adding to our overlay rather than releasing it. We are ahead. On standalone return on assets, we guided 3.5 to 4%. We are at 4.3% for the half year on a reported basis, which is above the top of the range even after absorbing the 50 crore buffer. We are ahead. On consolidated AUM growth, we guided 20% to 25% for the full year. We have grown 9% in the first half, which annualizes to roughly 19%.

13:47 We are approaching the range rather than inside it and we want to be straightforward about that. The second half is seasonally our stronger period for disbursement and on the basis of our current pipeline, we expect to land within the guided range for the full year. Our long term target of INR32000 crores of consolidated AUM by 2030 is unchanged with 30% from non microtrans business. We have now achieved 50% of that target. We serve 34.1 lakh clients across 2,075 branches, 27 states and five union territories, six zero eight districts, 4.1 lakh centers and 1.14 lakh villages through 18,978 employees. We added 1.9 lakh new clients during the quarter, taking the first half to 4.2 lakh new client additions.

14:33 This stellar performance is delivered by a stable leadership team with over ten years of average vintage and our field leadership of 200% at Regional Manager, Zonal Manager, Circle Head and Business Head levels with nil attrition. As always, our priorities remain unchanged. We will continue to focus on profitable growth rather than growth at any cost, further strengthen portfolio quality, expand our diversified lending businesses, improve operating efficiency and deliver sustainable long return long term returns to our shareholders. Thank you. And I will now hand back to the moderator to open the floor for questions. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch tone telephone.

15:22 If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Deepak Podar from Saphyr Capital. Please proceed. Yes. I'm audible, sir. Yes. Yes, You are. Yes. Okay. Okay. Thank you very much, sir, for this opportunity, and many congratulations for a good set of numbers. Sir, just wanted to understand, in terms of geographically, I mean, there any micro market? I mean, you alluded to some of the points in your opening remarks, I just wanted to dwell more.

16:17 Any micro market that we are facing any issue as such in any of the states? So Deepa, again, I highlighted the route conditions state, which are here and as I told in my remarks, are states which has got a very negligible portfolio. Also along with that, we are not facing any step up till now in the repayment, which is there. So I think there is currently no microstate or a major state or anyone where we see a stress. Assam floods, we've already indicated to you that we are already very positive on that, that during the prepayment period, we've got 90% of the repayments, which have already started, which is a very, very encouraging sign. So I think it's moving well in spite of the fact that there are a couple of hiccups which is there in a drought as well as most of which is there. But there's absolutely no reason to bear any kind of a stress in any state.

17:12 Understood. And the Karnataka and Maharashtra also, you mentioned that we are not facing any issue in repayment, right? Yes. There is no stress in the repayment right now. Okay. And across the state, I see your ex bucket collection efficiency has been above 99.5%, right, among even Assam also, right? Yes. Yes. It is there. All across. Understood. And on management, I mean, already our PCR is at 133%, right? And hardly we have any net NPA. So management overlay, have provided additional INR14 crores this quarter, right? That's how it has increased from INR36 crores to INR50 crores. So what's our policy going, right? I mean given our PCR is already at 133%, will continue to provide some management overlay or we are done with it?

18:05 See, right now, we feel that we still want to create a buffer, which is significant enough for us to insulate ourselves for any kind of a crisis or any kind of a problem which occurs for Microfinance because the narrative which we keep on hearing from a lot of people is that it's a very cyclical business with things coming across. And that's the reason why as a management team, took a very prudent decision to have a buffer during the best period of our time. And that is what the whole thought process is that we will start creating buffers for ourselves. We've reached probably midway. Our internal target was that we'll probably close at about INR100 odd crores. But it'll probably be for us if we feel that we need not make more, but that's what our initial thought is that we would like to create a INR100 crore buffer for ourselves to insulate ourselves for any future events which might happen.

18:58 Understood. Got it. Got it. And on the guidance front, I mean, we are already ahead. I mean, this 9% you 19% annualized, you're saying year till date, right? But on a Y o Y basis, our AUM still grown by about 31%, correct? Well, yes, see Deepak, what happens is the last two quarters are always the best quarter. So for us, if we've been able to do a 19% practically in the first half, we probably will be able to achieve a better over there. So the guidance remains the same. Our endeavor is to hit the upper bracket of that guidance of 20% to 25% and we are well positioned to probably do that. So the reason I asked because as of first half our EM growth is 31%, right. So we are also well ahead of this 20%, 25% bracket we are talking about. So any thought process to kind of revise up any kind of guidance on the AUM, even ROA?

20:00 Deepal, just one thing, that this 31% actually already considers the q three and q... Good q four we had last financial year. And if you see only this year sequential, it is nine, which is analyzed to 19. So if we say 25, give or take, if it goes to 30, I think we don't need to revise it again. But we'll surely be like sir indicated on the upper band of 20 to 25, which is 25 plus. Understood. So across these two, three parameters, we are looking at the upper band, right, of the range? Yes. Very much. Yes, credit cost and ROA. Okay, okay. Understood. I think that would be, from my side, wonderful performance, and I wish you all the best. Thank you. Thank you, Deepa. Thank you so much. Thank you, Deepa. Thank you.

20:49 Thank you. A reminder to all participants, anyone who wishes to ask a question may press star and one on the attached tone telephone. The next question is from the line of Giriraaj from Visaria Family Trust. Please proceed. Yeah. Hello, team. Congratulations on very good set of numbers. One clarification, Mr. Singh. You mentioned INR50 crores we added additional management over in quarter two, right? So cumulatively probably we had an INR86 crores in the first half. Am I thinking right or wrong? INR50 crores. Hello. So cumulative, we've done INR 50 crores. This quarter, we added another INR 14 crores to our already created buffer of INR 36 crores. So now cumulative stands at about INR 50 crores.

21:41 But when I look at the number, let's say, Slide number 15 on your presentation, we look at loan loss ratio of 2.2%, but adjusted loan ratio only 1%. So this 1.2% is minus an overlay, right, if I'm thinking right? Yes. But that amount was INR50 crore actually. Yes, it's INR50 crore only. So, if we actually forego that, our profits would have been higher and our credit cost would have been lower basically. No. So, I'm saying that probably I'm saying that 1.22.2% difference, 1.2%. Like last quarter, it was 0.9% in the quarter '1. The difference between our adjusted loan ratio and loan loss loss ratio and this time it's 1.2%.

22:30 So, just one clarification here, ECL is always stated on the entire model from scratch. So, theoretically, if my ECL was 100 crore last quarter and if my model indicates 80 crore this quarter, that does not mean that I have reduced it by 20. So, when we say 50, it means when we restated the entire ECL, we could have actually the 36 was also not needed. So, the entire 50 is an overlay. Therefore, when we make the adjusted ROA calculations, we count for or account for the entire 50, then we restate the numbers because we are in every right to even release the 36 because that is not something the model has indicated at all.

23:17 Understood. Understood. Now fully clarified. One question on the, like, let's say, what is the branch opening guidance this year for the remaining second half and the next year, FY 'twenty eight? So I think the second half, we will open close to about 50 odd branches, which will be there. Next year, looking at how we are able to fan out this year, it could probably be in the range of about 100 to 150, that's the broad range in which we'll be able to do that. Okay, okay. And would you like to have some color on the FY28 growth? We have June 30, FY30 guidance, so probably it will be linear growth? We're taking a step by step, but I think the overall guidance which we've given for INR32 000 crores, think that stands right, 6070% would be MicroPlan and the balance 30% would be. So you can extrapolate that basically practically on a year to year basis.

24:10 Okay. Okay. Thank you, Mr. Satin. Thank you so much. Thank you. Thank you. The next question is from the line of Rohan Joshi, an individual investor. Please proceed. Yeah. Hi, sir. So thank you for giving me the opportunity. So, sir, according to me, and correct me if I'm wrong, the tangible impact for this quarter was $1.72 odd crores with the ROI of 4.9%. So, sir, what are the key drivers for sustainable ROI over the medium term? And, like, what's the investor of this reported returns of this quarter along with the management only? I was not... You were not very audible, you know, for me. I heard you. I... You want to understand what led to the increased ROE. Is it... Increased profit, is it?

24:57 Yep yeah. Yeah, it is actually due to the reduction in credit cost, Rohan. And as sir mentioned, that the slippages have been phenomenal for this financial first half. So 103 contributed in the six months and this quarter barely contributed anything. So because of this, since the credit cost is leased, see our names have always been intact. Our OpEx has come down year on year by 60 bps. So that is one delta. And another delta is the reduction in credit cost by almost 200 plus bps. So, if you, yeah, from the last financial year. And our NIM has also improved during the quarter. The cost of fund is under control, liquidity etcetera is under control. It's a combination of all those factors. But the major, the most significant has been the reduction in credit cost, while every other lever also triggered well for us.

25:56 Got it. Got it. Thank you, Ramujan. Also, are you concerned about credit cost reducing by two more than 200 bps for this on a year on year basis? So of the same look line. Any ballpark idea of how it will turn out in the future? So the credit cost guidance we've given three to 3.5. I think the sector also factors this in their model of a normalized credit cost. Even if I indicate our cross cycle credit cost of last six and a half year,, which actually has the worst cycles in it, it was 3.3. So I think for us, we should be good. We should be very comfortable. Okay. Okay. Thank you. Thank you. Thank you so much. Thank you. Yeah. Thank you.

26:43 A reminder to all participants, anyone who wishes to ask a question may press star and one on their touch tone telephone. The next question is from the line of Soumil Shah from Parex Investments. Please proceed. Yeah. Hi. Good morning, and thanks for the opportunity. Yes. So I wanted to know on our part one number. So I think last few quarters, we are constantly going down. So how do we see this part one number going forward for the remaining half of this year? See, I think on a year to year basis, carbon has improved from 5.79% to 2.92%. I think we always feel when you are doing connection as well as listing and as we have got a handle on underwriting properly, for us, I think we are looking for slightly more improvement also to come in. But having said that, there's been a drastic reduction over there and this would keep on happening across when we go forward.

27:48 Typically, the first half again is a little benefit with the monsoons as well as heat waves and everything. I think once we reach into the second half, I think we'll have something more positive coming up in terms of R1 also. Okay. Okay. So more or less we could be here or maybe even further down than this number? The endeavor is always to bring it down. Okay. And what was the collection efficiency for the month of October? I mean, we are almost at the end of the October. How is it? It's exactly the practically the same. It's practically the same. Although we've still not been October still not closed, but it's practically the same up till now. Okay. Okay. And on our NIMs, for this quarter, if we are looking, it is drastically improved, I mean, from 14.3% last quarter to 15.9%.

28:43 So what is the reason for such high yields? I mean, is it due to the liquidity tight tightness, which is there in our industry and we are able to generate more yields or just wanted your thoughts? So, since the combination of all the factors, our yield has improved because of the better portfolio quality, the cost of fund has also gone down. We have been able to manage the liquidity in a better manner. So to say, overall slightly higher DA, combination of all that has resulted into a better NIM for the quarter. But we feel that around 14.5% to 15% NIM is something we can sustain. So, I think if you can look at a stable yearly NIM of about 14.5%, aberration would probably come in, in quarters basically where there will be reduction in OpEx, there will be slightly higher increase in DA.

29:41 But I think if you look at it on a stable basis, on a year to year basis, it should be around 14.5% is what you should look at. Okay, okay. Sir, normally for our industry as a whole, second half is always stronger than the first half. And so basically, how do we see this planning out for this year? Are we seeing any effects of El Nino or maybe there are so many geopolitical issues currently going on due to which second half may not be as strong as first half? See, I think after all, geopolitical issues, been it goes to about a year since we've seen this, so it has had no impact in the weak quarters. So I don't think it will probably impact us in the stronger quarters.

30:27 On El Nino, Irene, I gave my remarks in which we said that the states where this is probably been there, our portfolio is very, very negligible. The price are also I think that we're not facing any stress in terms of our repayment even in these cases which are there. Okay. And if I may ask one or two more questions. Please, please. Yes. On our subsidiary setting housing, we are seeing big growth in our AUM Q o Q. So what is the reason for that? And how are we seeing this subsidiary performing in the remaining half? See, in housing, we are actually reengineering our products the way we do business because for us, we fell across the time when we've been able to address the housing that for us, we have to move away from urban to rural housing in a larger fashion. And that's exactly what we are doing right now. And that is probably one of the key reasons that we are going a little slow recalibrating the total product the whole business model. And now I think once we've been able to recalibrate that, we are now able for a growth. So you will see now slow and steady growth coming in from housing also.

31:47 So it was probably the way we were looking at it that we were considering also a little bit on the urban affordable housing finance piece that we are foregoing right now. And we are just concentrating on our rural housing finance piece, which we feel is a huge demand and with the parent company having its network and our distribution outreach being able to address that, I think we are well poised now to look at growth also in housing finance. Okay, okay. So, it may not be as strong as Satin Finsir? It will not be as strong as Satin Finsir, that's for sure. But give or take another couple of quarters, I think they'll be probably be coming up the curve, the way Satin Finsir came up the curve. Okay, okay. And I wanted your views, I mean, government is coming up with this MDR on UPI payments.

32:39 So how do we see this impacting? I mean, we must be also receiving payments through UPI, right? Yes. We so currently our portfolio collection portfolio is close to about 25% cashless. Having said that, our installments per installment technically is below INR 2,000. So I think for us, the effect is not going to be significant. It's going to be very, very negligible because the installment amount is probably one of the key factor, which is taken into account by UPI and PR basically. So I think so. Correct. Less, very less impact for us. And and for repayment, you know, they had a Sorry to interrupt you, Mr. Somin, but can you please rejoin the queue? No, I was not answering from the management you answered.

33:28 Sorry, what can you come up? Sure. So, just wanted to add that on the loan repayment, the MDR fee will be 5 rupees and not the percentage report. So, to that extent also the impact will be negligible. Okay. But then 5 rupees is on, I mean, the insurance and petrol bonds and all, I think? So, are discussions that will be on the loan repayment as well. But I think the broad base is that it's below INR 2,000 crores, is INR correct. And on the insurance credit line, insurance also similarly? We don't have any income from the account. Don't have any income.

34:14 Okay. That's it from my side. Thank you and all the best. Thank you. Thank you. The next question is from the line of from ASK Investments. Please proceed. Yeah. Thank you for giving me a call. Oh, thank you. Your voice is stable. Very stable. Can't hear you,. Am I audible now? Yes. You are. Yes. Yes. So as we have seen Q1 also sorry, in Q2, there has been a spike in the cost of funds on a sequential basis. And now we are seeing the rate hike cycle has started. So what is the thought process?

35:03 How much cost of funds will get if we are assuming 50 bps or 75 bps rate again? Ultimately, what will be the impact on the margin? And linked with it, what is the reason of increase in the gross yield improvement from '23 versus '21? So, we have raised some sub debt because of which not the reported cost of fund is slightly higher, but we have reported that there is a sequential reduction in cost of fund. Our marginal cost of borrowing is 10.28%. Our performance is good. We have been talking to lender. We have more than INR 4,000 crore of sanction in hand. We do not anticipate, so to say, the cost fund going very, very high in spite of credit size that people are talking about in December or so. But in case it is, so to say, drastically going up because of the overall ecosystem, we have always the ability to pass it on to our customers. So, as we said, our NIM should be broadly in the range of some 14.5% or so. So, that will maintain.

36:07 Okay. On yields per se? Yes. NIM of 14.5% is will And specific reason the gross yield has improved 23 versus 21? So it is a combination of DA during a particular quarter because in case of DA, the net income goes up and in case the amount is slightly higher. So, reported yield is slightly high, but that is the normal cycle. Our DA's are broadly in the range of some 23% or so. So, it's a factor of that. Okay. Okay. Secondly, on the Nat Cat, you have given some data points. How much is that covered and how much we have credit guarantee scheme as a portfolio?

36:55 So, Nat Cat, think practically now 78% to 80% coverage is there. That's the data point. And on credit guarantee, I think we've We are eligible. We are eligible, but we are not taking that. See, credit guarantee scheme is also technically technically, when if your NPAs are high, I think that then becomes far more feasible to take that. Otherwise, if your NPAs are on a lower band, I think taking a credit rating scheme doesn't is not feasible enough. Okay. That was very helpful. Thank you and best of luck. Thank you. Thank you. The next question is from the line of from MyTemple Capital.

37:56 Please proceed. Okay. I audible, sir? Yeah. Hello? Yes. Yes. You are. Sir, thank you for the opportunity. Sir, any... This... In this quarter, you've seen a iron build because of the DA component also. So is it safe to assume that the... From next quarter onwards and for the maybe the half, second half, the yield will be normalized to that range of 14.5% overall? So that's the that's the name. That's the name. You know? So I think, you know Sorry. So the name I mean, the name will also... Yeah. Sorry. Go ahead. Yeah. So so so I... That's why I say that the stable state of affairs, you should look at the name of about 14 and a half percent 14%. Which will be the stable state, which is in the, there could be quarters, which could be up and down, if you look at the stable state, it should be 14.5%, not not not anything beyond that. And sir, our entire cost of borrowing gets repriced when the repo rates are high, or how does it work? Are they repaid immediately?

39:02 Sir, we have broadly 50% of the borrowings on floating rate and there are different days on which this gets revised both upward, downward. So, it's not that, you know, it is immediately. Both up or down revision happens on periodic basis depending upon the sanction terms. Some are repriced on six monthly basis, some are repriced on annual basis. So, even the rupee for this floating rate book may not be repriced on a t plus one or even on a quarterly reset? Or that portion will get re Okay. So, sir, I said that there are sort of say agreement with the lenders, some some of the facilities are repriced on six monthly basis, some are repriced on annual basis. So, any upward downward revision happens on periodic basis, not on immediate basis. I think you should look at from that point, Aditya, that if there is, when we reprice it, we do negotiate with our lenders. So technically, any upward movement is negotiated with them, and that's the reason why when we said that the last quarter incremental borrowing was 65 basis points lesser, that's probably the answer to it. So I think we should there will not be technically any increase in our borrowing cost.

40:16 Okay. But I'm just noting it is entirely repo linked, right? There is no P bill or are of repo linked, some of them are linked to internal banks and CLR, etcetera, but they work in right one direction only. Know, just for your understanding, you know, as we explained earlier, you should think that, our NIM should be broadly around 14.5% cross cycle. So, any increase, decrease in the overall cost of fund and other factors will be factored into our lending rate. So, we will try and protect 14.5% NIM over a period of time. Understood, sir. Thank you. Thank you. The next question is from the line of Sanyam Jain from Wealth Growth Capital.

41:11 Please proceed. Hello. I'm audible? Yes, sir. Yeah. So my question is that since the record has been revised and in the December MBC meet also, we are predicting that 25 to 50 basis point can be increased. So what's the planning of fundraise and refinance strategy for the next four to six quarters? Because, historically, we have seen that in this interest rate up cycles, microfinance as an industry has struggled historically. And my second question is that since there is a capping on how much interest we can charge from the microfinance customers, how much space do we have to pass on the increased cost maintaining the repaying ability of the customers as a whole?

41:59 So Sanyam, let me clarify first, there is no capping of the interest rates to the borrowers. So I think that is something which is not there. Second point, which is also important for, I think, for you to understand this and which was indicated by Jubal earlier, you should look at the NIMs broadly. I think any increase in yields, any increase in terms of other things. So we've got all levers which are handled by us, but the ultimate objective it is to protect our NIMs, which are going to be there. So any floating rate interest hike or whatever it is, it will probably not have any impact on us. And that's the reason why we said, please look at NIMs. In fact, if we look at our last quarter, our NIMs actually increased from 14.5% to 15.8%.

42:52 Now for us, what we are going to protect is 14.5%. So any increase even as there is a slight bit in terms of our borrowing rates, I think we are well protected to maintain that stable NIM for the entire half year at least for this year. And then just to add on your question of fundraise etcetera, as we have written that we have almost INR 4,000 crores plus of sanctions in hand. We have INR 2,200 crore of liquidity in hand. Overall, the sector is also doing and our performance is much better than all our peers. We don't anticipate any challenge in terms of raising the required funding program. Okay.

43:37 Thank you. All the best. Thank you. Thank you. The next question is from the line of Mayank Kumar from Prasoon Exponentials. Please proceed. Hello, team. Congratulations on. I just had one question. So we have some of the states coming. Sorry. Personally, your voice is breaking. Can't... We can barely... It's not at all. This better? Yeah. So next year, have some states going up for elections. So do you see or do you forecast any kind of effect on on our loan book or on on slippages part?

44:27 No, absolutely not. See, that's the reason why we said, you have to look at the entirety as such. Events will come and go, and this is something which is there. So I think broadly what we have created, we have created buffers, our underwriting is very strong, our technology is very strong, our growth is there, our collection efficiencies are strong. So I think these are factors which actually encompass whatever happens in terms of local elections, state elections, national elections. I think these are things which are taken into our stride for us to do well. So, I think there's absolutely no concern which you should have in terms of the election coming up next year. Okay.

45:13 Got it, sir. Got it. Thank you very much. All the very best. Thank you. Thank you. The next question is from the line of from Growth Investors. Please proceed. Okay. Sir, congratulations on the great set of consistent... Great set of numbers and consistent performance. And very glad to note that your top officials, 200 senior management employees has been consistently there with you. That also reflects a great culture you have set as a as a employer. My question is about... Again, when we look at it, number seems to be growing quite well consistently. And when we look deep into the numbers of profit, a good amount of that is from...

46:04 That profit is coming from fair value recognition FX plus the recognition gains. So can you throw a little more light on these items? With the view that, how much of it are going to be consistent across all of these coming years? Or is any part of it the one time? So how do we see those numbers? So that we want to see what is the predictability of the earnings. That's the context of the question. Satin, let me answer this for you. There is no one off income which is there, which is reflecting the profits. So I think that concern should be allayed first. Secondly, DA remains practically close to in the band of about 21 to 23%. That is what the band which we have across the year and that is what we are doing it. So any kind of income which you think is probably inflated in terms of DA income, it's not. It's a stable steady state of 21 to 23% DA which we do across the year as such. So I think that is what is there. I think that should probably allay concerns or thoughts on the income which is there.

47:14 Okay. Thanks for that clarification. That means we could see that these are all more like regular business income, and we could see consistency in that... Though it is classified differently, but these incomes are regular in nature. Fine. That's why the reason why I gave you basically that when you're looking at these two, basically, it's it's the stable state in which is there. Absolutely. It is one of the tools with which we... Like, one of the instruments with which we raise liquidity. And you would appreciate at any point of time, there is also the pool which we are servicing and incurring a cost, which we had done an assignment or a DA in the earlier quarters. We are not adding any more income from that. So it all... It balances that out as well.

48:01 So in the long run, you would say it all normalizes, and there is no one off. That... That's great to hear. Okay. I had one question From a valuation perspective, actually, considering the kind of growth you are delivering quarter after quarter and consistent performance, especially in a difficult sector like microfinance, you seem to be doing extremely well. But market do not seems to be recognizing it from the valuation perspective. Do you have any plans to correct the valuation mismatch what you see? That is something which is not in our hands, and we would not like to comment on that. I think it is as per the understanding of, how people view it as. We our job is to deliver consistent good performance and that is what we keep on doing. For us, this is not an indicator which either makes us feel good or feel bad about it, we are happy with whatever is going on in terms of our performance.

49:00 Okay, sir. Got it. Thank you. Thank you. And I'll add sorry, just half a minute. Just to add to the previous question, think the stakeholders can draw comfort from the fact that promoters have infused 100 crore at almost 17% premium to the heavy formula price. That shows our confidence in the business, market prices where it is and it has covered some distance. Hopefully, with performance, it will further improve. Yeah. Thank you. The next question is from the line of Riti Singh, an individual investor. Please proceed. Hi.

49:49 Am I audible? Yeah. Yeah. You are. Yeah. Good morning. I just wanted to know the loan officer's account for HH1SY 27. 15,300 something. So, no, that's the overall employee. Loan officers are little above 11,000. So can you just tell... I was just comparing the loan officers for q four FY twenty six is around... Just give me a minute. Was around $11,008.67 for q four. In q one, it was $12,511. So for q two, it is not mentioned in the investor presentation, I guess. Q two is 11,122.

50:37 Like I said, little above 11. It's mentioned. You will find the breakup when you see the graph. There is a console number, and then the individual stand alone numbers are mentioned there in. But still, for your clarity, it is $11,001.22. Okay. Okay. And what is the write off amount for the q two FY twenty seven? Yes. 73 crore. 73 crore. Okay. Thank you. Thank you, ma'am. Thank you. Thank you. As there are no further questions from the participants, I now hand the conference over to the management for closing comments. Yeah. Hi. Good morning, everyone. My name is Singh. I'm chief strategy officer at Satin.

51:24 And I would just like to close by the, again repeating, reiterating what we have been telling the market. Two quarters ago, we told you we would use a good part of this cycle to build a cover rather than to print a better number, and that the returns we wanted to be measured on were the ones that hold through a cycle rather than at the top of one cycle. I also mentioned how we have always been consistent, whether it is a cross cycle returns or the cross cycle credit cost. This quarter, we had the clearest opportunity to declare the best returns ever, but we still opted not to and stick to the discipline and provide a buffer. The book is key. Our provisions now exceed our gross NPAs.

52:11 The state we ask you to watch for flood stress has come through with the lowest par 'ninety in our portfolio. The states the market is worried about are the states we are barely present in. We took the overlay from 36 crores to 50 crores anyway, and this is our commitment. This is the whole of our case, and it is worth being plain about it. We are building a 32,000 crore diversified financial services group by financial year 2030 with a third of that book outside microfinance, and we are a little over halfway there. Everything we do is measured against that end state rather than any single quarter.

52:57 And an institution that intends to be there in FY 2030 does not spend its good quarters on headlines. We believe in dream big, deliver bigger. Thank you for joining us. Thank you. On behalf of GM Financial, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.