Yes. Firstly, congratulations on the good set of numbers. On this unsecured MSME piece where we have told that there are some uncertainties in the portfolio and we are seeing some kind of stress and adopting a cautious approach. So just wanted to understand, what is the customer profile here? Typically, how much would be the unsecured self-employed mix in the total pool? And secondly, on the guarantee scheme, which we are highlighting, 53% of the portfolio is covered in the guarantee. So how does this guarantee actually work? And what is the typical timeline to get the money? And what is the final cost, which you have to bear in case of this guarantee? Yes, that's the first question.

So, your first question on the unsecured SME. If you look at our total book is about 12,000 crores. Out of that the total portfolio, 1.6% is supply chain, which is short term with our underlying treat, our invoices, so very low risk. Then we have 6.5%, which is business loans, where the portfolio performance is very, very good in terms of bounce rate of forward flows or delinquencies are looking pretty good. The small ticket unsecured loan, we call it STUL, that is around 1.3% of our overall loan book. We had started taking actions from two, three quarters prior, and we have tightened our underwriting, collections, score cards. So, all of that, we took proactive action on this portfolio. So that's the only portfolio where we are slightly cautious at this point in time. In terms of your second question, how much is the guaranteed portfolio? So, if you look at the Stage 3 portfolio in unsecured business, close to 53% of the Stage 3 is guaranteed by the CGTSME or the government guarantees, which we spoke about. How much of that gets covered? 75% of the principal gets covered by the guarantee. It takes between 12 to 18 months in terms of getting the refund and all at times. Our track record has been pretty good on this, and we have been getting the refund and the claims from the CGTSME. ABCL – Q1 FY26 Earnings Call Page 12/19

Sure. And so, on this portfolio, when can we see normalization of disbursement? So where do you see the kind of picking out of normalcy kicking in for this portfolio?

So, if you look at our business loans, we will continue to grow our business loan portfolio in that segment. That's holding up very well, and it's performing. And that's quite our old portfolio. We have been doing that business for the last 8 years or so. That's holding up quite well from bounce rates, forward flows and delinquency. So, we will continue to grow that business loan portfolio. We will continue to grow the short-term unsecured business. What we are tightening is the small ticket unsecured loan, and we will continue to watch that and see how it performs.

Sure. So, in the small ticket lap, how much of the total unsecured MSME?

So that's close to INR 1,700 odd crores, which is there on the total portfolio. And it's not that the performance is, we are watching it. We have taken all the corrective actions in terms of tightening, and we have slowed down the sourcing in that segment.

So basically, the risk is only on the INR 1,700 crores portfolio where we envisage some uncertainties or where we are cautious, right?

Yes. From a sourcing point of view, yes, in terms of portfolio, this is a rich portfolio, this would have been underwritten 12, 18 months back or 24 months back. So yes, we are watching it very closely.

Yes. And the tenure would be 3 years typically, right?

Yes.

Sure. And so just now on the housing part, just one last question. Actually, exceptional performance on the housing portfolio, and the growth has been quite robust. But now given the repo rate cut and probably some players have also highlighted, there are higher instances of BT out, particularly in the prime portfolio. So how are we seeing the competition panning out? And I think more growth for us is also led by the developer pool rather than the prime pool. So yes, ABCL – Q1 FY26 Earnings Call Page 13/19 any thoughts on whether that could grow or slow down over the remaining part of the year? And what kind of growth trajectory could we be looking at for housing portfolio?

Chintan, for us, the growth is coming in all the three segments, affordable, prime and developer. Yes, you're right, with the repo rates going down, we saw naturally some elevation in the foreclosures that we saw in the prime segment. And those ratios overall on the prime are in the range of about 14% of the opening book. But since we are a full stack player, the balancing act also happens in the affordable and informal. Therefore, we don't see a very significant change as far as the foreclosures are concerned, also BT outs are concerned. In fact, till the BT in that we track versus BT out ratio, the ratio remains quite similar to where we were in the month of quarter 3. So, coming to your next question, which is how do you see growth panning out? I think what we have been articulating earlier in the last 8 quarters, I think what we have done is build capacity. And with the advent of 6 digital platforms that we have across the customer life cycle, we are seeing, in combination of the capacity that we have built, productivity is significantly coming up. And as you would have noticed, 15.5% of our business that we do disbursements that are coming in are also from the ABCL and ABG ecosystem. So, I think we are very well placed to take advantage here. Clearly, the market share gain is what we are getting. So riding on the 14%, 15% growth, which is there in industry. And with the capacity and productivity moving up for us, combined with the ABC ecosystem and with the right eye on portfolio quality, I think we can see the growth momentum remaining quite consistent for us.

Moderator

The next question is from the line of Avinash Singh from Emkay Global.

Yes. A few questions. The first one is on NIM. I mean, in the lending business, the NIM is still falling. So now, based on what is happening sort of on the borrowing side and how business mix is changing, can you provide some kind of a guidance that if this NIM has bottomed out and what sort of trajectory do we expect, I mean, as we exit this financial year? And in that context, one question is that now you have tried to increase or rather that your disbursement in consumer finance and PL bottomed out, you are starting to increase, but there remains some bit of a debate among various lenders that the consumer leverage is still higher. So how do you see, I mean, our path going forward in this consumer and PL? And the second question is your current capital adequacy is, I mean, near 18%, so Tier 1 will be slightly lower. What kind of growth are you envisaging? And at what juncture will you be looking to raise capital? ABCL – Q1 FY26 Earnings Call Page 14/19

So, thanks, Avinash. Your first question was on the NIM. So, if you look at NIM is an outcome of the product mix which we have. The mix of higher-yielding unsecured loan, that is personal and consumer loans and business loans to SME, was at 22% as of June '25 and this was at a similar level compared to March '25. The personal and consumer business, as we just mentioned, has grown well in terms of in quarter 1. And the disbursements in the personal loan segment grew at 28% sequentially, and the portfolio has grown by 6%. So, we expect that as this portfolio grows and our unsecured business, which is business loans, grows, our margins should start improving. So, in the next few quarters, you will see margins improving from here on. Your second question was on personal loans and consumer loans and leverage at a client level is still high. So, I think Avinash, we were ahead of the curve in terms of tightening, recognizing that there is a leverage, which is going up. We build the leverage in our underwriting and all our metrics in terms of tracking and unsecured enquiries. All of that, we have built it over the last four, five quarters, and we track customers leverage very, very closely. And in this segment, if you look at it, we have largely run down our legacy portfolio source from the digital partners. We have tightened our underwriting norms, as I mentioned, and reduced the exposure to small ticket size segment in this portfolio. Given that the environment in this segment is stabilizing and we are seeing that the credit quality indicators, which I had mentioned in my opening remarks, that bounce rate, forward flows and delinquency rates are stacking up quite well. We track in terms of FEMI, which is first EMI default, second, third. So, we really track this portfolio very, very closely, and we will continue to watch this portfolio as we grow our business.

Avinash, Vijay here. On the capital question, yes, our Tier 1 ratio is 15.62% and total cap add is at about 18.11%. During the quarter, we infused INR250 crores in our HFC subsidiary, which is the only company which in a way, needs capital infusion because the asset management company returns dividend. In our insurance companies, we have JV partners and if at all, there will be very minimal capital requirement. So, I would say that looking at the overall capital plan for us, we are sufficiently funded for our growth requirements for the next 9 to 12 months, and we will look at any capital situation post that.

Moderator

The next question is from the line of Abhijit Tibrewal from Motilal Oswal.

Congratulations on a good quarter. Sir, the first thing is a clarification where you said that there are three products that we are doing in unsecured MSME, which is your supply chain finance, then we do business loans and then we called out small ticket unsecured loans. So, I'm just trying to understand, it is only in this small ticket unsecured loans, where we are seeing some stress building up. Otherwise, in business loans that we do in unsecured MSME, we are not seeing any stress building up is it, which you called out is about 6.5% of the portfolio? ABCL – Q1 FY26 Earnings Call Page 15/19

Yes, Abhijit, you are right. We are not seeing any stress in any other portfolio.

And then in this portfolio also, what Rakesh mentioned, is that whatever it is, it's anticipated. There is nothing which is out of the way and the portfolio is well within our control, adequately provided. So we don't see any undue worry here, it's in control. We are being cautious.

Got it. And then, I mean, I think on one of the slides and also in your opening remarks, you spelled out that close to 52% of your Stage 3 in unsecured MSMEs covered in the government schemes. So, at the overall portfolio level, what is covered under these government schemes?

It's similar, upwards of 50% is covered in the overall portfolio on the business and STUL.

Got it. And then one last question. That is that if I look at your secured businesses, close to 60% of your secured business has LAP. So, I was just trying to understand what are we seeing in the LAP portfolio today? Because given how things have moved, right, in the last 12, 18 months from credit cards to PL to MFI to micro-LAP to unsecured MSME. Just trying to understand, is there anything that you are seeing today in the LAP segment? And sir, why I ask this is LAP as a segment over the last 12, 18 months has seen very, very strong growth across the industry. So that is one. And the related question, in our HFC business, are we doing micro-LAP or in the NBFC, are we doing micro-LAP? And if yes, how big is that portfolio, micro- LAP?

So, Abhijit, first, your question on LAP, if you look at, touch wood, I think the performance is very, very strong, in terms of overall performance. And this is our oldest portfolio. So it is a very vintage portfolio and this portfolio has seen difficult cycles, whether it was demonetization or the NBFC crisis or COVID, and it has stood the test of the time and is very, very strong in terms of the performance. Even if you see the time period which you just mentioned, both our Stage 2 and Stage 3 has come down significantly. So very, very good. This is backed by the cash flows of the customer and the collaterals of the customer. So very good performance and has been stacking up very, very well.

So, on the HFC question, LAP, as I mentioned, the ticket size for LAP is about INR 54 lakhs. So it is a very small proportion of that is the micro-LAP. And if you see the slide, which is there, which depicts the composition of LAP that we've got, you would see that in the affordable segment, LAP is about 9.6%. So, a very small subset of the 9.6% will be micro-LAP. ABCL – Q1 FY26 Earnings Call Page 16/19 And to also speak on how we are seeing this, of course, the growth has been strong, but we monitor the portfolio both on on-boarding. In fact, we have created our own proprietary score, which ensures that right quality of customers are voted in. And then, of course, back that up with a very strong off-us analysis, not only for our own portfolio, but also look at what portfolio we have created as to how the customers are behaving outside. And I also spoke about pre-delinquency management and also the utilization also on post-delinquency management, which is overall helping in managing the portfolio. So, we are not seeing any different trends in the LAP portfolio of ours in the housing segment.

Got it. And sir, then if I can just squeeze in one last question. If you could also share what is the write-offs that we did in the quarter in NBFC and HFC? And if you could just answer that, and I had a follow-up question on this?

We do not disclose write-offs as of now. So, I think we will stay with that.

Sure. And then lastly, I mean, how much have we recovered in CGTSME scheme so far? In other words, how much have we claimed so far? And how much has been the recovery?

I think this is ongoing, in terms of depending on every quarter, whatever claim which we put up, it goes through its own verification and everything, so I think we see it over the period of full year and full cycle. We can share that later with you some time.

Sure. And like you suggested, it typically takes between 12 to 18 months, right?

Yes. Yes.

Moderator

The next question is from the line of Kushan Parikh from Morgan Stanley.

Just a data question. If you could share the slippages during the quarter for the NBFC as well as the total Stage 1, 2 and 3 ECL? That would be helpful.

Stage 1, 2 and 3 segment-wise, we provide that, and we have provided this time as well. ABCL – Q1 FY26 Earnings Call Page 17/19

Sorry, I'm talking about the provisioning against Stage 1, 2 and 3?

That we do not disclose. As of now, we don't publish that. But I think what we have given, for sure is the stage wise, whatever are the Stage 1, Stage 2, Stage 3 across various segments and also the provision cover that we carry for stage 3 in these segments.

Moderator

The next question is from the line of Mr. Punit Bahlani from Macquarie.

Yes. Just firstly, on the NBFC bit. The unsecured business, the NPAs have increased and the PCR at 35% appears to be low. I know like over 50% is government guarantee, but my understanding is it might require some level of provisioning, right, even if it's government guaranteed. So, 35% for the unsecured appears to be a bit low. And over time, like if I look at FY '24, like it was at 2.9%, the NPAs, it has gone up to 5.4% now. And so what is the tenor of receiving these claims so that when we can remove this from our NPA pool as in does it take 12 to 18 months or more than that, if you could give any comment on that? And thirdly on the housing finance bit, there has been a big improvement in opex this quarter. Is it primarily driven by operating leverage or is there any component that is like we have saved on some opex component? If anything, you could highlight on that. That's all.

Punit, your first question was about the provision coverage on the unsecured business. As I mentioned, 75% of the principal is guaranteed, so we believe that 35.7% or 36% PCR is quite sufficient in this. But at some point in time, if we believe that the claim is delayed or claim is not coming in and we will have to evaluate, we will do that. But at this point in time, because 75% of the principal is guaranteed, I think this provision coverage is sufficient.

So how much time does it take for the claim to come in?

As I mentioned, it's anywhere between 12 to 18 months.

Okay. Got it.

On the question on housing finance, as you rightly said, if you look at the operating expenditure for ABCL – Q1 FY26 Earnings Call Page 18/19 quarter 4 and quarter 1, in absolute amounts, it is INR 194 crores and INR 190 crores. So INR 4 crores additional. And as you will know that in the last year, when the book grew from INR 18,400 crores to about INR 31,000 crores. The expenditure for generating the business, most of it gets booked in the year in which the disbursements happen. And as you will see, the proportion of new disbursements to the overall book as because the book is also increasing, as the proportion keeps reducing, you will start seeing operating leverage kicking in even more. That is the reason why earlier as well when we've been speaking about how the ROAs will stack up, we've been speaking about this 2.91%, which was the earlier opex on average loan book in quarter 4, how that we foresee will come down to 1.6% in the next eight quarters which is 130 basis points of reduction. And we've already seen a shift in one quarter itself to about 31-32 basis points. And that is how it will stack up.

Moderator

Thank you. Due to time constraints, we will take this as the last question. I now hand over the conference to Ms. Vishakha for closing comments.

Thank you so much for joining us. And if there are any other questions, all of us are available. Please reach out to us. Thank you.

Moderator

Thank you. On behalf of Aditya Birla Capital Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines. ABCL – Q1 FY26 Earnings Call Page 19/19

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