And congratulation on the quarter. Just one question. To the proposal, which Raul mentioned about merging the housing finance subsidiary with the parent company, given that both the entities are engaged into a similar line of businesses of mortgages. I mean just an extension to that thought, I mean, is the management also contemplating merging the MIBL subsidiary with the parent, right? Again, we are now doing insurance broking in the parent, excess capital sitting in the subsidiaries getting up streamed as dividend income anyways. If not immediately, in future, will that also be a possibility?
Questions across 12 calls
Umang Shah
Kotak Mutual Fund
Mahindra & Mahindra Financial Services Limited
I have 2 of them. First is, I wanted to understand the thought process. See, when I look at your last 7, 8 quarters data, I mean, our asset quality has pretty much stabilized with our Stage-2 plus Stage-3 in the range of about 10 -odd %. However, our overall ECL provision on the balance sheet has come down from 5% to now just at about 3 odd %. Now in the current environment by your own admission , where there is a bit of a volatility, and you believe that there is a possibility that there could be some deterioration in asset quality. Wouldn't it have been a bit more prudent to not write back these provisions into the P&L , and maybe create some sort of a management overlay, especially given that in the past, too, we have seen a lot of volatility as far as the provision coverages are concerned. Wouldn't it have been a little more prudent to just hold back these provisions , rather than writing it back into the P&L. Just wanted to have your thought process on this.
Okay. Sure. The second question that I have is about capital infusion into the subsidiary. Now while we appreciate that you have been supporting the housing finance subsidiary through thick and thin , while material progress over the past few years has been fairly limited, right? But again, if I look at it from a capital allocation standpoint, probably in a couple of quarters, we ourselves will start hitting a debt equity of about 6x. So, how should we look at capital raising for the parent entit y, Mahindra Finance itself, considering that Mahindra Rural Housing is also in need of capital.
Congratulations on the quarter. I just have one question, which is related to the point that Kunal was making. Clearly, in last two to three years, there are a lot of actions which have been taken by the management. Some of them we would like to believe are more structural in nature, and some benefits you would have got because of the tailwinds in the economy. I just want to understand that, see, you might in the year sub-4% gross Stage 3 number, right? I mean, clearly, that is something which -- I mean we are seeing lower NPA numbers for Mahindra Finance only in the previous NPA recognition regime, right, which was relatively more liberal. So clearly, there will be some mean reversion. The only thing -- I'm not looking for a number, but how confident is the management that when the mean reversion happens, it is not as sharp as that we have seen in the past, thanks to some of the structural cha nges that we would have taken to control this asset quality volatility?
Muthoot Finance Limited
Sir, I just wanted one clarification. So, the non-gold loan portfolio where these customers who are -- is it fair to assume all of these are like active Muthoot customers? Or these could possibly be customers who have been Muthoot customers in the past?
Sure. And sir , typically, out of this INR4,500 crores worth of loans, what proportion of loans or customers would also have active gold loan at this point of time with us?
Indian Railway Finance Corporation Limited
Yes, Hi, Good Morning, Thanks for taking my question. Sir, I just have a couple of them. One is from what I understand from the discussion so far , it appears that, should we understand that capital is a constraint to growth and probably then in that case why not probably raise more equity and bring our gearing ratios down and probably look at growth. Is that an option for us?
Ya sure, This is quite helpful. Sir, In fact, my second question you have sort of partly answered which was in terms of building capabilities as we try to kind of look at funding projects outside the railway infrastructure ecosystem. Sir, Are there any specific areas of infrastructure which you have already identified? And the second part of the question was regarding the private sector exposure, I mean so far as you rightly said we have been operating in an environment where the exposures have been almost sovereign , zero risk. However, if we just go back in history and if you look at some of the other state owned NBFCs and their experiences along with private sector infrastructure companies, clearly that has been a bit more patchy. So how should we look at it in terms of strategy, in terms of our ability to underwrite and our intent to underwrite private sector exposures?
REC Limited
I have a couple of them. While I appreciate that on your existing bank book, there might not be a material impact, right, as bulk of the projects are already operational, but don't you really think that the new guidelines does impair our ability to grow in a meaningful way. Where I'm coming from is that in your initial comment, you also allude to the fact that there is a possibility where banks and players like yourself might pass on some of the incremental costs, which will alter the viability of some of the projects that we intend to finance, so although the sanctions pipeline at this point of time is looking fairly good, how much of that eventually gets converted in disbursements? Do you really think is there any risk to that number? And also as a proportion, currently the share of under -construction projects is relatively lower. But as we keep increasing or keep growing the book, this proportion will eventually increase, right? So to that extent, there will be material impact on our capital rat ios as well. Just wanted to hear your thoughts on these points.
Got it. Because, sir, I mean when we are talking to some of the other players within the ecosystem, they are fairly circumspect about the growth prospect either on the infrastructure side or on the power sector side. So I mean, it's quite interesting that you have a view that the growth will not get impacted in a meaningful way. Sure. Sir, the second point, which I wanted, which is more of a clarification at this point , two points which you mentioned, one, that these norms might be applicable only to projects where DCCO extension has happened? Or will it be applicable to all under -construction projects regardless whether they are within the guidelines or not. Is there any clarity on that point as yet?
Cholamandalam Investment and Finance Company Limited
I just have one question. Is there any one-off in the OPEX line item? And also going forward, if you could just give us some color as to buy, when can we expect the operating leverage to kick in, given that we are anticipating good asset growth, how should we look at this OPEX line item going forward?
Just one question from my end. Now in the past also, the management has discussed, right, some of these new businesses will take some time to stabilize, and by nature itself, they might have slightly higher NPLs on the face of it. But my question is that, should we assume that on a long- term basis the headline NPA and the credit cost number might look a little elevated, although we might be able to deliver the kind of ROAs and ROEs that we are looking at the overall consol level? Is that the right understanding?
Bajaj Finance Limited
Congratulations to the team on the quarter. Just two questions. One is the FY '25 guidance that we have given on various metrics. I mean, does that factor in the relaxation from the RBI on eCOM and Insta EMI Card? Or you are assuming that it will -- I mean, the guidance is assuming that the situation that we are in today, that kind of continues?
The relaxation will be lifted, right?
SBFC Finance Limited
Good afternoon. Thanks for taking my question and congratulations on a good quarter . I just had two questions . One is on the AUM growth right . Clearly the growth is looking extremely stronger at this point of time. What should be a more steady state sustainable sort of a growth rate for us and also do we intend to add any new products at least in foreseeable future?
Understood. That is helpful and the second was on co-origination I mean should we assume that the share of co-origination inches up in the overall mix and if so up to what extent?
Can Fin Homes Limited
Good evening. Thanks for taking my question. Just an extension to what Dhaval was asking. So from credit cost perspective, how should we look at the provisions which are sitting under management to overlay and restructured loans on the balance sheet given that almost all the loans are out of the restructured pool now, is there any view that the management has in terms of either retaining or utilizing these provisions over the course of next one to two years?
You mean to say carry a little bit of provision over and above whatever the ECL requirement is?
AU Small Finance Bank Limited
Yes, hi. Good morning. Thanks for the opportunity and congratulations to the team for this strategic merger. So a couple of questions. One is on the shareholding of Fincare small finance bank. We do understand that there are quite a few private equity players, both at the holdco level as well as the operating bank level. So as per the DRHP, some of them have expressed their intent to pair some of their holdings as well. So as a part of the merger agreement, is there any lock-in for the existing shareholders of Fincare, SFB or the holdco? Or how does that work?
Understood. So the second question is, again, in part Sanjayji has already kind of answered it. But typically, the way we have seen in mergers, now we do understand synergies will take some time to kind of show up. But are there any one-off costs which we are foreseeing at this point of time which can hit us maybe next 6 to 12 months?