Yes, good evening everyone and thank you for taking my questions. Congratulations…
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Questions across 84 calls
Abhijit Tibrewal
Motilal Oswal
HDB Financial Services Limited
Good evening, sir. Thank you for taking my questions. So just two things. First thing is during your opening remarks, you spoke about weakness in CV and CE that we have been seeing for the last few quarters getting better in the second half. So if you could just elaborate on that and also the fact that MSME was showing us some pain, the unsecured MSME in particular. So where is it trending now? Because I see that the enterprise segment is still kind of trending a little weak. And then the second question I had was on Vehicle Finance. I see that Asset Finance disbursements have grown by about 4% Y-o-Y. So if you could just split this up into what was the volume and the value growth? And lastly, now that the festive season and the GST cuts are behind, if you could just help us understand which segments have seen the demand momentum continue in December and January? And which all segments are you s eeing that the demand has already started tapering off? Basically, whatever pent-up demand or bump in the demand that we saw after the GST rate cut. Those were the few questions I had. Thank you.
Muthoot Finance Limited
Good evening, sir. Thank you for taking my question. So, if you could just help us understand how is the competitive intensity in the gold finance sector trending? Now, the reason for asking this is, in the past, you have explained to us so many times that whenever gold prices go up, the tonnage will come down. Something we have seen maybe this quarter as well. Having said that, we have also had other gold financing NBFCs, obviously, much smaller than you. But we are still seeing tonnage growth come through for them. So, if you could first help us understand how are the competitive dynamics? And why I ask this again, sir, is that in the past, you always said competition will come and go. But not everyone is very serious about gold financing. They do it very opportunistically. But this time around, sir, maybe for the first time, we are seeing a bunch of all AAA rated NBFCs who are themselves deep pocketed, can raise liabilities at finer rat es than us. And at some point in time can also build a distribution muscle, which is very important in gold financing. So, if you could just put some of those pieces together for us, sir.
Okay, sir. Thank you. And then the last question I had was on employee attrition. I mean, given that there are so many other NBFCs who are also looking to start gold financing, obviously, they will want to hire people from the best gold financing company in India. So, how is that?
CREDITACCESS GRAMEEN LIMITED
Congratulations on a good quarter. So , first question is around retail finance. I'm just referring to Slide number 41. Within that, I see that retail finance as a proportion of the GLP mix has become 3x; on an absolute basis, it's 3.5x, obviously on a small base. But very, very clearly, other than those other products, we are seeing individual loans growing much faster. So just trying to understand is the future of MFI moving towards individual loans, which could obviously be given as part of a group for operational efficiencies on sourcing and collections, but without JLG safety net.
Got it, sir. And sir, the second question I had was around the guidance that you have put out. Just trying to understand this time around why such a wide band in terms of the credit cost guidance 3.0-4.0%. And within this, as per your estimates, what proportion of this could be because of the higher ECL provision?
Aavas Financiers Limited
Just one question and maybe just trying to paraphrase what some of my friends earlier in this call have asked. If you look at the last 2 years, we grew below 20%. So, if you could, first, articulate where was the problem? When our peers with large balance sheets were able to grow upwards of 20%, why were we not able to grow? Was it an execution problem? Was it a competition problem? That is the first thing I wanted to understand. You have articulated product placement, geography, so if you could add some nuances around it in terms of channel, are we going to do more of DSA sourcing going forward? When you speak about geography, what are the plans to maybe add more states in Southern India? Could you just start with that?
Yes. That answers my question. And just one last thing. You spoke about right product at the right price. And maybe earlier in the call, you also said that there will be an effort to improve the yields at which we operate. So just trying to understand , Aavas, for at least the whole of its listed history, has been a franchise which has been very strong on asset quality. Credit costs have remained benign. Are we now planning to move to a slightly different customer segment or a product segment, which would mean while the risk-adjusted yields go up, or the yields go up, commensurately the risks also go up? And at the same time, I mean, we might see credit cost also inching up. Now, why I ask this is, in your press release, I remember reading that you continue to guide for less than 25 basis points in credit cost. Wherever we talk about a yield increase, there is a commensurate increase in risk as well. So just trying to understand that trade-off.
Sachinder sir, again, just may be repeating what you've already said, right. But again, I think while we have managed to get some handle on the BT out and the portfolio attrition this quarter, which I'm sure was driven by all the actions that you would have taken. Because, from what we hear from other housing finance companies, the competitive intensity continues to still remain very high. But I think disbursement momentum kind of still leaves a lot to be desired. What we usually know, right, 40:60 kind of a disbursement mix between 1H and 2H. Even if we were to do that, right, I think you'll still fall a little short of what maybe you would have targeted on disbursements for this year. So, I mean, while you've already partly answered it in the previous question, but what were the growth headwinds this year? And what will change next year for us to start accelerating on growth, except for this addition of branches that you just explained?
Got it, sir. Sir, then on the disbursements, again, if I look at the disbursement mix, very clearly. Until last year, the non -HL in the disbursements was typically used to be around that 35% ballpark. But now if I look at this year, the non-HL piece is consistently above 40% in the mix. So , I mean, how is the demand landscape today purely in individual home loans? And the related question here also is that, recently at least some of the larger HFCs who reported, they have all been talking about kind of moving towards near prime and affordable. So do you think that until now, we very often used to say what if there was a competition from the banks. But now if the larger HFCs also start looking at the affordable side, is it going to kind of meaningfully increase the competitive intensity in the affordable housing sector?
Yes. Good evening, sir. Thank you for taking my question. Sir, first thing on asset quality, while our 1+DPD has improved by about 15 bps Q-o-Q, which is appreciable. In your opening remarks and Ashutosh's opening remarks, I remember hearing you speaking about what has helped us achieve this asset quality. But at the same time, you also acknowledged in your opening remarks that you remain cautious because of what you are seeing in some of the industry peers. Some of the industry peers have called out localized pain in various pockets. Some calling it some spillover from MFI, Micro LAP into affordable housing. Some saying it is more to do with US tariffs, which has impacted a few industries, right? Whether it be diamond, gems jewelry, textiles, leather. Is there anything that we are seeing at our end, right? Which you are monitoring now, right? While your asset quality is holding up, right? But something that you are monitoring at your end?
Got it. Thank you for that. Sir, the second question I have is, this quarter, this first half, right, the AUM growth is tracking around 16% Y -o-Y. What we have started seeing in the last 2 quarters is in your presentation, you started sharing your aspiration of where you want to scale up your AUM by FY30, which is about Rs. 55,000 crores. And which then kind of translates into almost a 23 % of an AUM CAGR from now to FY30. So, I am just trying to understand now that CVC is clearly working a long with you. In addition to expansion in Southern India and the digital transformation now complete, what are the other changes that you are making, right, which kind of makes you put out that aspirational target of getting to Rs. 55,000 crores by FY '30?
Five-Star Business Finance Limited
Yes, good morning sir. Thank you for taking my question.
Sir, thank you for taking my question. The first question I had is just a follow -up on what you just answered to Renish , that steady -state credit costs could be 1.5% to 1.6%. So, sir, if you could help us understand what has really changed in the last one year since this asset quality stress that we started seeing in the lower ticket LAP. Basically, what I'm trying to understand is , going forward, we are saying that the overlap with MFI customers will gradually become lower. We are moving to higher ticket sizes. You just mentioned, we are moving to a better customer segment. So, versus the credit costs at which we used to operate earlier, and now steady-state credit costs of 1.5%- 1.6%., so, what has changed? I mean, earlier credit costs used to be let's say 70- 80 basis points. Now, we are looking at 1.5% to 1.6%. So, what has changed in the environment?
Good evening. Thank you for taking my question. So, the first one is, I mean, if you could just give some geographic color around what is it that we have seen during this quarter? Which are those geographies where we have seen better performance? And likewise, given that we are expecting Q3 to be a quarter of stabilization and improvement from Q3 onwards, which are those geographies in particular which will contribute to that? The second question that I had was on the guidance front. Now that we are looking at Q 2 stabilizing, it's much stronger improvement from Q3 onwards, how is it that we are looking at the rest of this year in terms of growth, in terms of credit costs, as well as if you could speak a little bit on FY '27 in terms of guidance? And lastly, while I acknowledge that both the MFI and the Micro LAP product that we do are very different, I mean, for at least the last couple of quarters, right, at least in MFI business, we have seen that the goalpost has just kept moving after every quarter. In other words, what I mean is we are still seeing some of the NBFC MFIs increasing their credit cost guidance for the coming quarter and the next two years. So, how would you kind of look at that, given that in the past, we have acknowledged that we also have maybe 40 %-45% of the customers where there's an overlap of microfinance business? So, just those couple of questions if you can help with. Thank you so much.
The third question was around this micro-LAP and MFI, where I acknowledge that while both products are very different so if you could elaborate?
Piramal Finance Limited
Yeah, good evening. Am I audible?
Yeah, hi sir. So just two things. One is on slide 17, we have articulated a target which says that ROAUM for exit quarter Q4, we want to take it up from 2.1% to 2.5%. So just trying to understand the levers here. So, I mean, the question here is that as we speak, we have said in the past that we are working on improving the yields, whether that comes through a change in product mix or even existing products in mortgages where we are trying to increase the yields. And at the same time, this credit rating upgrade will give us some benefit on the cost of borrowing side. I recall you saying in your opening remarks anywhere around 50 to 80 basis points. In addition to that, opex is something which has been kind of coming down through a lot of concerted efforts. I recall you pointing that we'll now be adding more branches. In this presentation also you have shared that we've forayed into gold lending now and plans to add more gold lending branches. So fair to suggest that large part of this ROAUM expansion that we're talking about will come from the margin side because your opex, I don't know how to think about it, might remain elevated given that you're already in that band, the guidance that you had put out even after lowering that band in your AI investor day. And credit costs, I mean, given how the environment is, I think 1.5% may be well-primed now, right, in terms of credit cost. So how should we think about the various levers here?
Yes, good evening, and thank you for taking my questions . Congratulations on a good quarter. Jairam sir, first things first, i f you could just help us understand, how does our mortgage book behave? Now, why I ask this is very often when we track monoline lenders in mortgages, they do talk about some PLR changes that are being passed on, given that they have seen some benefit in their cost of borrowings. And like you also mentioned earlier in your opening remarks that we have also benefited, maybe 40 to 50 basis points out of the 125-basis points repo rate cut that has happened. Have we made any PLR changes in our mortgage book in this rate-cut cycle? If yes, if not, what are your thoughts on this mortgage book going forward?
Got it. And to that end, we are not even seeing any elevated BT-out pressure, because we have not really cut PLRs, I mean, even that is holding up well.
Shriram Finance Limited
Yes. Good evening, sir. Am I audible?
Hi, sir. Sir just one thing. A few times, we talked about fuel prices and the fact that, I mean, given that state e lections might now get over, there could be an increase in fuel prices. Just wanted to understand this fuel price increase leading into inflation, which may consequently feed into some impact on consumption and eventually the loan truck operators get. When something like this happens, do we first see this impacting asset quality or first, the impact comes on growth?
Sir, just three questions. First is, while your disbursement numbers have continued to remain strong even this quarter, but earlier during the October, we had heard that there was some slowdown that were being seen in used PVs and CVs and that there was not enough change of hands happening because the new vehicle prices have come down, particularly PVs while they used customers perhaps were maybe not willing to come in terms of tactility, so what have you seen in the used vehicle market, both PVs and CVs in maybe months of December and January?
Got it, sir. And then one question for Sunder, sir. Sir, employee expenses, even if you adjust for this INR197 crores on account of the new labour code, we're still seeing employee expenses go up by about INR100 crores Q-o-Q sequentially. And this despite our employee count saying that they have declined by about 1,000 employees again Q -o-Q. So what really led to this sudden increase in employee expenses in the quarter?
Bajaj Finance Limited
Yes, good evening. And thank you for taking my question. Just two things. One is, Rajeev, you just explained this was a management decision, which was fully supported and ratified by the Board. But just trying to understand, I mean, why this decision now and you spoke about this decision being taken in the context of global uncertainty. I mean if you look at it, right, I mean, yesterday, we concluded the U.S. tariff deal, right? I mean so to that extent, things might actually start looking better from here. If we think about it last two to three years, India on the retail side of lending, right, has seen a credit cycle in almost every other retail product, but for home loans, LAP and maybe gold loans. So , what is it that really prompted this? While I appreciate the fact that it just gives more resilience to your balance sheet. But the fact that we are now looking at higher LGDs on each of the products, what was the rationale behind doing it and doing it now?
And then just a follow -up on that. I mean, this quarter, maybe it was just a coincidence that, I mean, we sold a stake in BHFL and like we had seen in the consolidated that comes below the line. Given that, over the course of time, you will have to kind of keep reducing your stake in BHFL to meet the MPS, can we expect that rather than that accreting to your net worth, it will predominantly be utilized for further improving the value chain?
Just 2 questions that I had. First is in addition to what we have already shared on the MSME segment, if you can give some more colour. What I'm trying to understand is, I remember in the first quarter earnings call, we had shared that we expect about another INR 150 crores of loan restructuring in the second quarter. I think this quarter, we have done about INR 288 crores. So I mean, was the asset quality experience in MSME much more pronounced than what we were earlier expecting? And then I also heard Rajeev sir earlier say on the call that maybe by March and June next year is where we are expecting based on incipient stres s to settle down a few quarters almost into, so how much restructuring are we expecting in the MSME business in the coming quarters? And like I asked, if you can give some more colour on...
Got it. And then the only other question I had was, I mean, maybe 15 days that the festive season has got over in India, while we have already given out a festive season update. If you could give some colour on whether this momentum is sustaining or there's thing that...
Bajaj Housing Finance Limited
Good evening, sir. Just two questions. Thank you for taking the question. Firstly, if you could just comment a little bit on the competitive intensity, now why I ask this is, this quarter at least based on the commentaries that we have heard until now everyone is talking about a significantly elevated competitive intensity and primarily coming from banks, within banks, PSUs. Now I understand we have been talking about this com petitive intensity for the last couple of quarters but just tryi ng to understand , I mean has it got much more pronounced in the last maybe 2 -3 months and within that I mean is the competition only pronounced in the prime and super prime segments or are you also starting to see this competitive intensity go up in the near prime and affordable segments? That is my first question. The second one is around the PLR changes that you have done. So if you could just help us understand that last quarter in the month of January what PLR changes have we done and how are we thinking about any further PLR changes over the next two months of this quarter ? And lastly, this quarter we have done slightly higher assignments. So how are we thinking about it? Is there an annual assignment volume that we work with or is it like more opportunistic based on you using it as a liability tool , so whenever opportunities arise you go ahead and do the assignment. Just those three questions.
Right. So just one follow up based on this the first question the Tier-1 that you explained right why the decline. So I was just trying to understand if my understanding is right. Now what we have done is on the sanctioned amounts as well we have taken a capital charge and till better clarity comes. But the problem here is until now right as an industry we never used to provide on the sanctioned amounts right. While you said that ov er a course of time those sanctions will convert into disbursements. But until the time clarity emerges people will shy away from giving higher sanctions right. Because that eventually means that even without disbursing you are having to take a capital charge.
Poonawalla Fincorp Limited
Good evening and thank you for taking my question. Sir, the first question is on the gold loan and the CV business. What I heard during the opening remarks is we have crossed 300 gold loan branches. But when I see our presence, it is predominantly the western India, Gujarat, Haryana, Rajasthan, Maharashtra. So, if you could just help us understand, is the idea to first capture the central and northern parts of the country, and then eventually go to southern India and in consumer durable, also, I kind of heard that 90% of our dealer presence is somewhere in Tier- II, Tier-III cities. So, what is the playbook w hich will be there in CD (consumer durable) as well?
Got it, sir. So, that answers my question. The only other follow -up I had on gold loans was, I mean, right now, I have seen the branch presence is predominantly in western India. Is that the thought process to first capture western India, central, and northern India, and then move to southern India?
Home First Finance Company India Limited
Yes, good evening. Thank you for taking my question. If I look at this quarter, you will also acknowledge disbursements are a notch lower than maybe what we would have targeted in the beginning of the quarter, the BT outs are inching up. Likewise, when we look at the asset quality, the Stage 2, Stage 3 has inched up, the respective provision covers have come down. So, is this something that you have seen industry-wide or do you think this has to do with the customer segment and the geography, which is more, I would say, urban, metros, peripheries of metros? So, are you seeing something which is more pronounced, like you said, Manoj, maybe Surat you mentioned, Coimbatore you mentioned, Tirupur you mentioned . I remember in your opening remarks you also shared that Surat has seen some improvements, but Coimbatore and Tirupur kind of continue to exhibit some weakness, like you shared on the back of tariff uncertainty. Is it something specific to us, the customer segments, the way we are positioned geographically ? Or is it something that you are seeing across the industry today?
Got it. And just a follow-up on that bit that you explained before I ask ed you my last question. So, fair to conclude that whatever asset quality weakness that we have seen during this quarter was concentrated in that leather industry around Chennai and a little bit of maybe textile industry around Tirupur, maybe Salem, Erode ? I mean, largely restricted here ? All that I am trying to understand is, is this more local in nature? Or, is it some spillovers that we have seen? Like you mentioned last year we saw MFI spilling into micro-LAP, so all of us are naturally worried that are there some spillovers that we have seen from micro-LAP into little bit of affordable housing now?
IIFL Finance Limited
Yes. Good afternoon, sir. Thank you for taking my question. Firstly, what I wanted to understand is other than goal loans, when I look at our MSME business, if I look at the other LAP that we call out, which is excluding the micro-LAP or whether I look at the unsecured businesses that we call out, excluding the digital and MFI sourced unsecured business loans which we have discontinued, even there we are seeing that asset quality kind of continues to deteriorate. So, I am just trying to understand was it a bad origination or are you seeing that overall at the industrial level unsecured business loans are still going through a little bit of a weather? And s ir, I just wanted to add what is exactly happening in the LAP segment today. We have seen very strong growth across the industry in LAP, but at the same time, in this quarter as well, we have reported a deterioration in asset quality in the other LAP segment. So, if you could just help us understand that?
Got it, sir. Sir, just a related question. Have we done any ARC transactions in this quarter? If not, any plans of doing ARC transactions, particularly in these two segments where NPAs are elevated in the second half?
LIC Housing Finance Limited
Thank you for taking the question. And sir, before I do that, may I request the operators that the operator lines and the participant lines are coming great, but t he management line, at least for me, is not very great. I don't know about the other participants in the call.
So, sir, just two questions. First thing is, I mean just a clarification in terms of this PLR changes that we have done total until now, right? Since the time the repo rate cuts have started, how much PLR cut have we taken? Is it 25 basis points or cumulatively 50 basis points? One 25 basis points effective from 1st April and the other one was 28 April thereabouts, is it? Just a clarification on that front.