Can Fin Homes Limited analyst Q&A

Thank you, sir. We will now start the Q&A session. I will request the par ticipant to introduce him or herself stating your name and the organization name. The first question is from Siddhant. Siddhant please I just unmuting you, please introduce yourself.

So my first question was, how helpful have the IT programs been? And has there been any qualitative -- could you share any qualitative insight on how it's helping us right now?

Sure. See, in terms of the IT, which we have already implemented, we have presented the share -- the slides. So we have already implemented on the infrastructure side, and also on the security aspect. So both have been completely done. And of course, that is helping us in terms of the speed in terms of the connectivity and all those issues, that has come down considerably wherever there were these MPLS lines that has happened, considerable re duction has been witnessed. In terms of security, of course, it is just -- it is just the confidence I can talk about. I can't obviously say that. But we have our MTTR and MT dTA that is time to identify a problem and this we have been very well within our limits and it has been giving us a lot of confidence that any kind of attack on the system, we have been able to immediately catch an d we've been able to handle it also well. So that is well within our prescribed or whatever the guidelines -- benchmarks we have set for ourselves. As regards to applications, we have already gone ahead with our deposit applications. So that should reduce a lot of our time or that be going forward will be there. Other than that, in terms of our entire HRMS package has gone online. So now there's a lot of saving in that also, whatever manual calculations and impact that were there, that is there. But additionally, what I can say is that the -- some of the upgrades that we have done, we've been able to bring in, some AI components also have already come in. Like, for example, in terms of our digital signatures and everything have been implemented, our entire DMS has been implemented. So search and everything for records has improved. Our -- in terms of our meaning solutions that has also been completely moved to Office 365, and we also have the benefit of the copilot and all. In terms of legal, we have imple mented a new solution for title search and this legal clearance report and all, that has also brought in a lot of efficiencies. But of course, the main component, which is the LOS and LMS, which is yet to be implemented in Q1 of this year. That will also, once implemented, we've given a lot of advantages. And we will be able to -- so therefore, a higher amount of benefit will start coming in at that point in time.

Understood. That's great to know. The second question is just after -- I think on Ap ril 1, we shifted to quarterly resets for most of the largest chunk of customers, right? So after that, would you assume that the BT out rate or the rundown rate has peaked now? Are you...

I would probably assume so because as I mentioned, if I look at the data today, our BT outs in Q4 have marginally increased and that is also probably a function of the increased portfolio. Otherwise, in terms of the percentage, it is almost static, which normally in Q4, see witness is a spike because of increased competition and everything, but it has almost INR380 crores has been just INR400 crores for us. So that has not -- INR373 crores, INR380 crores. That's a very marginal increase only. I would have therefore assumed that, that would be there because we went across sort the consent from the customers. And we pass on the entire benefits. So now the customers have got the benefit. They have already -- we have demonstrated that they will not be negatively impacted. So I guess this should be probably the peak. We have also considered only INR7,000 crores for FY '27 as against INR6,600 crores approximately for FY '26.

Understood. That's great. Just a follow -up to this is now if there is a rate hike cycle, what lag will we have in our spreads?

See, actually, today, almost 85% plus is on quarterly reset. And in terms of our liability side, about 62%, which is the bank -related loans is on a link to repo rate. So if there is a repo rate increase on the liability side, about 62% of the book will witnessed, the liability book will witness an increase immediately or in the coming months. Whereas on the asset side, since 85% is quarterly, that will be about maximum, maximum 1/3 I mean 1 quarter delay might be there.

The next question is from Nipu n Khemka. Nipun, please unmute yourself. I am unmuting you here.

Sir, how satisfied are you with just under 5% growth in our housing loan book this fiscal?

See, actually, it was a conscious effort to have a increase in our non -housing -- and to some extent, it was also because we had to focus more on LAP, particularly in Karnataka, where in Q1, Q2 and almost Q3 also to some extent, we had an impact of our e -khata issues where for fresh sanctions, there were issues in getting the registration or the sales deeds and all. So there was a compulsory requirement also where in one of the most important markets for us, we had to focus more on LAP. That is why if you see our LAP also has gone up to almost 2 percentag e points in this financial year. But having said that, going forward, I think we will be focusing -- we have almost reached the limit that we had set for ourselves in terms of our housing, non-housing. So I guess we should probably -- we will see a higher increase in this current financial year.

Next question is from Pavan Kumar.

I had a couple of questions. The first one was on the disbursement target and the loan growth target. So if I do the math correctly, then excluding Q1, Q 2, Q3, Q4, you need to have around INR3,400 crores kind of a disbursement that you need to do, right, on the run rate. So given that you have -- your branch growth has been only to the order of around 7% -- 6% to 7% annualized in the last couple of years. Could you throw some light on how do you plan to achieve this higher sales of disbursements? And a related question is that in terms of AUM growth in the previous couple of quarters for FY '27, you were indicating 15%, but I think in your opening commenta ry, you indicated a 14% AUM growth. So is it a tacet recognition that the BT out and the prepayments are actually much higher than you predicted and that's here to stay? Yes, that's my first question.

Yes. Yes. So first, I'll handle the disbur sement aspect of it. See, actually, the year '23, '24 and '24, '25 also, if you -- from then onwards, we've been consistently opening branches. We opened 54 branches. The first and the second year, we had almost most of the branches being opened in Q4 or mostly in the month of March. So we couldn't get the benefit of the branch expansion, whereas last year, we entirely opened all the branches, the branches, 15 branches in the first half itself. So we were able to get the advantage. And what has happened is in terms of the disbursement growth we have had 2 factors which have impacted or supported us in our growth. One is that the sales team that we had opened -- Okay, sorry, I'll counter the branches. So as against the last year where in FY '25, the new branches which are opened in '23, '24 and '24, '25 contributed only about INR128 crores, the last year because of our change in strategy and also because we could get the full year benefit of the '24, '25 branches also. Last year, the new branches have contr ibuted INR863 crores. So the new branch strategy that we have done has really helped in the last financial year. And going forward also, this year, we are looking at 28 branches to be opened, which again, we would be opening in the first half of the year. So that also should bring in plus this 54 branches that we've opened, we'll also have some more efficiency improvements because not all of them have reached their breakeven points. So there also will -- we are expecting. So this new branch expansion that is there is going to be 1 key factor pushing or helping us in our growth. The second thing is the sales scheme that we had last year in FY '25, we had only about 30, 35 people in the sales team, and they contributed about INR183 crores in the full year. Last year, post June, that is from first July, we increased the team's strength and the whole of this FY '26, the team of about 80 to 90 people has contributed around INR868 crores, so both these parameters, that is a sales team as well as the branch expansion is what we are looking at for bringing the growth and sales team this year, we are looking at increasing it from about 80, 90 to about 150 people. So this means another 60 -odd pe ople, we are planning to add to the sales team. And as I mentioned, 28 branches are also planned to be opened in the first half of this year. So majorly, it is these 2 aspects, which has helped. The third, of course, aspect is, as I mentioned earlier, that Karnataka, which had a first half slightly negative, whatever, because of the e -khata is now almost kind of getting resolved. So we are looking at a much higher positive coming in from both Karnataka as well as Telangana, which had some impact in disbursements during the current year. So basically, these are the 3 parameters why I feel where it gives us the confidence. The second, as you rightly pointed out, yes, we have to acknowledge that we have had a slightly higher prepayments. And so therefore, we have slightly marginally looked at it. But as I said, we have taken the step for conversion. And if, therefore, we are able to slightly manage our prepayments, this could go up. But in a nutshell, I would say the calculation is that INR13,000 crores disbursement is what we are planning. And we have projected for INR7,000 crores prepayments, BT outs and closures. If that is reduced, obviously, the portfolio can even be 15%. But knowing the current situation, at least we have factored in INR7,000 crores because unlike last year, where we had projected less, but it slightly was elevated, we don't want to give a higher figure and then fall short of it.

Understood. My second question was again on the road map -- geographical road map that you have p resented this time. I noticed that the proportion of the Southern states is marginally increasing in FY '28 compared to the FY '26 levels. Again, is that -- does it again imply that Karnataka and Telangana are expected to continue to drive a higher rate of growth and hence, the South proportion is marginally increasing?

No. 2 things. One, of course, we had these issues in Telangana and Karnataka, which now are getting resolved. So obviously, their contribution this INR290 crores or INR250 crores, which was the run rate will go up in Karnataka. Same way if you look at it, at run rate in Telangana will also go up, therefore, the contribution from these 2 states, which was actually slightly subdued, will start to show. And the second thing is that now that the situation in both these states is coming under has kind of stabilized. In the last 3 years, we have not opened a single branch in either Karnataka or in Telangana, which now slowly, we will look at a couple of branches here and there. SO that is basically the thing I think we are targeting 3 branches in Karnataka and about 2 branches in Telangana this year out of the 28. So those also we have factored in. So maybe it will be a marginal increase. Not to mention that we are looking at a slowdow n in any of the other markets. Our other markets continue to be -- to perform strong. In fact, our North Zone, West Zone and East including, which is mainly Andhra Pradesh have almost done a 40% plus kind of growth in this year in terms of disbursement. And Tamil Nadu, which has been already -- was a well, high-performing even the 2 years back, continues to grow at around close to 30% so it's just that these 2 states will also start now inching up in terms of the disbursement, Therefore, we have -- that is what it is planned.

Understood. And my last question was on the DSA proportion. See, in FY '26, your DSA proportion of sourcing is somewhat similar to the previous year, a few decimal points here in there, right? However, in your P&L, when I s aw the fees and commission expense, that's -- in FY '26 things should have come down drastically compared to FY '25 levels. So could you throw some light on that?

No, actually, it is only an impact of the amortization, and it has impacted both in the income as well as on the expense side. So on the expense side, because of the amortization, it is reduced. So also on the income side, because it is there. So it has nothing to do with that, that the absolute outflow of the DSA expenses have not gone down. It is just the amortization impact, which is there in this year, for which I think there is a note also which we have put in our Q1 because we changed that and in Q1 and in Q1 also, we have put that note and in Q4 also, we have put that note. But it is impacting both sides. So on a net -net impact in terms of our entire P&L, there's only a INR5 crores difference net of growth. But otherwise, as it's an amortization impact, not otherwise.

The next question is from Shubhranshu Mishra.

So if you can take me through the budgeting per state for the disbursements, how much are we expecting in these large states that we have, which is Karnataka, Telangana, Tamil Nadu and Andhra. And also, if you can ta lk about North and West as well in terms of what we have budgeted for in the in FY '27? Second is how do we look at the opex growth, especially the employee and the nonemployee if you can split it into 2 parts? And the third is about the credit costs, we have some amount of management overlays. So if you can speak about that. And fourth is more macro, if you can speak about, we're seeing a lot of disturbances because of West Asia crisis, any kind of delinquencies you are seeing in our LAP book or anything we want to provide for just to increase our management overlay? Or any kind of policy support that we are seeing in CLSS to additionally a demand and supply of an affordable housing, it will be great?

Sure, sure Yes. So I'll first start the di sbursement targeting. I will be able to immediately share with you roughly the run rate that we are doing in each of the zones or the states. Growth next year, we are almost targeting an almost similar 25% growth across all the zones because that is what it is. So you can have the numbers. The exact breakup, I think I don't have right now. But roughly, if you look at the current run rate that we are doing, we are doing about INR275 crores, you can say, in per month in Karnataka. North Zone and West zone, both are doing about INR150 crores to INR160 crores each West zone includes Rajasthan, Maharashtra, Gujarat and MP, North Zone covers Punjab, Haryana, Delhi NCR, UP and Himachal and Uttarakhand. These 2 are doing about INR150 crores, INR160 crores per month . Tamil Nadu does about INR180 crores to INR200 crores per month. That is the contribution. And Telangana now is almost doing INR110 crores to INR120 crores they are doing per month. And East Zone, which is mainly Andhra Pradesh and other states of Chhattisgarh, Odisha, Bihar and West Bengal is doing about is doing about close to INR100 crores a month. So that's the current run rate. And next year, we are projecting almost uniform 25% kind of a growth, marginal would be from where we are -- expansion is a little higher. It would be going up to some extent that way. But this is the present breakup that we are having. In terms of our opex, I think I'll just give you this work -- in terms of the credit cost, in fact, management overlay, I don't think we'll be able to -- we will be adding any more management overlay in terms of -- in the sense of a management overlay per se. But yes, we have slightly -- you have seen that our PCR has slightly gone up from 49% to 56% this year. That is a little more conservative in terms of ou r valuations and all those things we have taken. But otherwise, in terms of management overlay per se, we don't expect to -- we don't -- we will not be adding anything over that. But credit cost per se, as I mentioned, we are having a 10 basis points cost -- credit cost in this financial year, which includes higher PCR that has been there. Otherwise, next year, we don't expect any major increase. So while we are projecting for 15 basis points, I am quite confident it will be well below that only. As regard s to our CLSS and under the PMAY, under PMAY 2.0, they are, in fact, now some traction is slightly happening. In fact, NHB is also making attempts to tie up with state governments to come up with some construction and providing support. So there are some states, particularly last quarter, there was a meeting with the UP and then now with Odisha. So there are some -- each state by state the NHB is also trying to tie up and provide that support so that there is more supply coming into the CLSS or the PMAY fu nding and all. So we are hoping that slightly that impact will stay, but it's not a very major kind of a number that we have. In fact, it's been almost 1 year and 1.5 year or I'm sorry, it's almost been -- I think -- sorry, 6 months that we have done September to now. In 6 months, it's just been about INR1 lakh crores that -- sorry, Sorry, I'm sorry, only 1 lakh numbers that have been happened in terms of the PMAY numbers across all the HFCs, all the NBFCs who are claiming and over is registered with prima ry lending institutions HUDCO and NHB. So it's not a very great number that we have. But yes, some traction or some improvement is there. And hopefully, the states, other than the couple of states who are doing it can also start seeping in. It might go up a little bit. But we are not very, very, very positive or gung-ho that the numbers will jump up in a very drastic manner in terms of our PMAY contribution. As regards to geopolitical impact and all those things, currently, there is no impact. We are not w itnessing anything in our either match bounce rates or in our delinquency or any customers talking about it so far. So it's really just 3 months, but even in April, we have not witnessed that kind of a pressure. So that's the situation.

One last question, if I can squeeze in. In terms of prepayments, if we get 100 applications, how many applications are to foreclose or do a part payment versus how many are actually going out to a competition and what is this percentage which really goes out to the competition as a percentage of if there are 100 applications for prepayment and who are these competitors basically?

Okay. I'll give you my Q4 numbers, so that should give you some idea. So out of INR1,730 crores, which is the BT out prepayment, part prepayment amortization and everything, INR400 crores is what is the BT out okay? That is INR400 crores. There are customers who have closed their loans, which either because they have sold the property or they have made other closures because it's some other thing, but purely from their own funds, that is something around INR350 crores -- INR360 crores, okay? And then there are about INR970 crores odd which includes part prepayment and amortization. That is the principal component of the EMI and part prepayments. So these are the -- this is a breakup. INR400 crores is BT out, INR360 crores is where customers have closed their loans from their own funds or they have sold the property and then taken another loan or moved to other property and stuff like that or properties, which have got closed because of a separa te reactions. And third, INR970 crores approximately is part prepayment and amortization. So that's the kind of number you can say. So I would say out of INR1,800 crores, INR400 crores. So that's not -- that's about 25% of the loans probably are. So 1 in 4 is where it is coming for a BT out. The key players who are doing the BT out is LIC Housing and Bajaj. These are the 2 major ones. Of course, regions, specially, there are some local banks and stuff also doing it. But majority is -- majority of the branches will have LIC as the first competitor and the second would be Bajaj.

And the next question is from Andrey Purushottam.

First of all, congratulations for a very sound set of results. And I also wanted to appreciate I've been a shareholder for a long period of time. There has been a remarkable degree of consistency in the professionalism and the transparency with which you communicate with us. So we really appreciate it, okay. Now my question -- my question was a follow-up from what previous people had asked? You had indicated that in terms of a LAP percentage, the increasing 2% is -- now you're quite happy with the risk profitability equilibrium, so to speak, right? I'm also assuming that you might be doing the same thing with your target groups. It means there are some which are more profitable, but a little riskier. And that, in a sense, cup you already drank from. So if that is true, are there any significant levers for you to improve your profitability in the next 12 months or so, given the fact that there is an understandable increase in your IT expense to the extent of INR40 crores of whatever you have mentioned, how do you look at improving profitability? And how should we look at it? Should we talk -- think in terms of your ability to improve profitability? Or should we assume that your profitability would be roughly at levels that you currently have?

Okay. So first of all, thank you for appreciating our efforts and our performance. So in terms of our portfolio mix and our yield and everything. Currently, after having passed on the entire benefit today, our entire portfolio yield is around 9.8%. Actually, it's 9.84% or maybe there's a -- there are some portfolio, which we have not considered for the NPAs and all those things. So that's where we have given a conservative 9.80%. Our incremental yield is also 9.80%-plus because that's the breakup post our change in our mix from housing to a little bit of non-housing LAP increases and all those things and also increased slightly from our self-employed segment, which has happened from our salary, which has come down from about 89% has come down to close to around 84%, 83%. So that impact, what we have seen, that is -- ensured that our incremental it is also around 9.8%- plus, so therefore, in terms of our current yield and everything, we should be able to maintain even if we don't change our mix. But having said that, as our road map 2028 shows there is a scope for slightly increasing our non -housing as well as our SE NP category. So which would slightly give us a little slightly higher or a little improved yield if we work on that a little more. So that is one thing. The second thing is in terms of our cost; we have given that our present borrowing cost is up 6.99% to start with as on first of April. However, on the liability side, there is some small book which is of NHB, where we are yet to get benefit of the rate cut because as and when that particular tranche of NHB comes for a rate revision or the annual -- which is an annual reset, at that time, they've given the PLR impact to us. So there is still some component of NHB portfolio, which is not very large, but some portion is there where we are yet to receive that. So probably our cost will -- might slightly come down, plus the fact that Q1, we have already got sanctions on hand, which -- where the highest cost from banks is at 7%. So we are already getting something which will be lower than 7% is what we will be raising the funds from banks in the coming quarters. And currently, the CP rates also compared to Q4 have come down. So if there's opportunity, we may raise some, little bit because already our CP rates -- proportion has almost come down to below 3.4%, which used to be at a point in time, 6%, 8% on so on. So therefore, we have some scope on the liability side to slightly reduce further. And on the asset side to slightly improve if we continue with a little increase SENP and a little more higher percentage of nonhousing portfolio. So these are the 2 things in terms of the mix. So I guess that's what it is. In term s of the costs, as I mentioned, yes, there is a little extra cost that will come. But the other area that we have seen is last year, we have -- you would have noticed that our bad debt recovery has also increased slightly. So there is some scope, probably we will be able to do some recovery and keep the credit cost also lower. Although we have projected to 15 basis points, it will be definitely below that. So that should help.

I'm just wondering whether you have 2 additional maybe small levers of profitability. One is the revenue kick from the increased positivity of Telangana and Karnataka. And the second is the decreased cost of sourcing to increased digitization. So should this -- would these be significant contributors to some extent? Or do you think they are marginally contributing?

No, that will be -- they will definitely contribute. In fact, as I had mentioned earlier, the LOS, LMS, once it is introduced, we will be able to bring in a lot of efficiency in terms of our delivery. And we are also increasing the percentage of our business coming through our direct sourc ing through our own sales team. So that will obviously help us in a little -- in managing our or reducing our DSA costs. So those are -- but this will not be adding too much, maybe a few basis points, definitely, yes, but maybe that would be what it is. The true impact of our IT transformation, probably we will be able to gauge and come back in FY '28 more than in FY '27.

Next question is on Pavan Kumar.

So I just wanted to understand the cost structure, especially in terms of 2 things. One is the employee cost, which has gone up significantly this particular year. What is our expectations going forward? Secondly, on Suresh did mentio n that INR40 crores incremental expenses will come in, next year. Is it on -- so for the year, it is INR40 crores extra on IT infrastructure, is it? I just wanted to clarify. Can you just clarify, is it INR40 crores for the entire year?

In INR40 crores is for the entire year because currently, the entire IT project was -- has a total outlay of INR300 crores, of which INR100 crores was capex, INR200 crores was opex spread over 5 years. So the depreciation will kick in mainly from this financial year, that is FY '27. So the depreciation component of the capex and the opex, which will be there, the total cost in FY, in 1 financial year will be about INR60 crores, whereas currently, we are pa ying about INR20 crores total cost for our IT in a financial year. So the net impact will be INR40 crores for the full year okay? And in terms of our the full year opex, it's about INR311 crores, of which INR177 crores is for the employee cost and the oth er cost is about INR134 crores. So the employee cost will probably go up by about 10%, 12% because we are also adding staff and there will be some encryption. And the other cost, which is INR134 crores, will probably go up to about INR175 crores to INR180 crores.

Okay. And the IT, this INR40 crores incremental, does it also include the amortization of INR100 crores capex that we have done or...?

No, that is included. So as I said, the INR100 crores is our capex. So the depreciation will also start. So I said that's what the depreciation of the capex plus the opex will be about INR60 crores and net INR40 crores.

And this INR60crores capex has already been done, or it will be done in the -- it will be completed in the next 6 months. How does that work?

It is part of Capital learning progress we will summarize once the [inaudible 0:44:41]

So almost the entire component has already been taken into the..

The next question is from Abhijit Tibrewal.

Voice is very muffled Abhijit. We are not able to hear you.

Just give me 1 minute. Sir, is it better now?

Yes, this is better, much better. Please go ahead.

Sir what I wanted to understand is, this fourth quarter, we have seen very good momentum with disbursements, for us as well as a few other players who might report and once who've already reported. But fourth quarter after maybe a lull in the first half, third quarter, we saw things picking up. And in fourth quarter, things really picked up when it come s to housing. So you think this was just seasonality led? Or are there, I mean, real structural triggers at play, which is -- are leading to a good demand. Because, sir, when we hear analysts who are tracking real estate, experts we are tracking real estate, they're all talking about the strong upcycle that we saw in real estate and housing kind of seems to be tapering off now. I don't know whether this is just applicable to higher ticket size loans on the same comment can be applied equally to affordable housing as well, so that was the first question that I had that what is the outlook on demand. Sir one thing is we guide for a certain disbursement, certain sanction number, right? But underlying that is the demand also very strong, which will help us do that? Or do you think that the demand is weakening and if we have to get to maybe the INR13,000 crores disbursement number that you spoke about earlier, that will require market share gains? That is the first question I had. The second question I had, sir , was around margins. Like you mentioned, almost 85% of our customers are now on quarterly reset effective April 1. So -- and then I remember you also spoke about a small tranche from NHB, which is expected to get to the price sometime later this year. So a combination of both these things on one side, you have customers getting repriced because they are now on quarterly reset. At the same time, there are, I would say, small little pockets on the liability side, which can also get repriced. So combined tog ether, what would be the outlook on spreads and margins? And lastly, sir, I just wanted to understand, given that you have a good presence in Bangalore, which is the IT hub, do we have customers who have got impacted by layoffs in the IT sector, or are those predominantly customers who are catered to by the bank? So those 3 questions.

So first thing about the disbursement, yes, to some extent, that is a seasonality because normally across the year, we have seen that it is a 45%, 55% breakup, H1 , H2. So roughly H1 is a little lower than H2 definitely. And as in Q3 and Q4, once the festive season starts, the demand picks up and the business also picks up. So that is mainly the seasonality part of it. And having said that, we don't see any major impact in our demand side because across our branches, we are seeing a good amount of inquiries coming in still. Even normally post March, there is a slowdown in people generally. But that is also -- we are seeing that there is a good amount of demand there. Good inquiries are coming in, and we are not seeing that much of an issue in terms of -- at least the segment that we cater to. Probably, yes, there is a definite slowdown in the affordable segment. And that is also reflected in the numbers because if you look at affordable, if you look at mid segment and you look at prime, yes, affordable definitely has is now in the mid-single-digit numbers, that growth that we are talking about. So definitely affordable is impacted in terms of demand. But in the segm ent that we are catering to, I think we at least are not seeing any major change or a slowdown or anything in that in terms of the demand. As regards to the margins, see, what has happened is this entire 45% or 48% of the loans that we had, which were at annual resets, we sent across communication to them, and we got in touch with them. And because the remaining 15% are those customers to either have opted not to shift to quarterly reset or who have right now not taken a call. The shift now further from here, to the quarterly reset probably will be a little slow because these are cust omers who opted for this thing. The only thing would be in case of rate going up, yes, this 15% will have an impact, where there will be a lag effect in terms of the assets getting repriced. But on the liability side, I said currently, assuming that this 15% does not move to quarterly reset and remains same, we have taken into consideration the entire impact of the reset as well as the 15 basis points that we passed on in January. Therefore, no further reduction is expected on the asset side in terms of the yield. As I said, our incremental yield is also a little higher than 9.8%. Therefore, even that is not going likely to eat into our overall yield for the -- on the book. Therefore, whatever we are expecting a reduction in our NHB refinance rates or whatever we are able to get in terms of our better pricing from a bank term loans or repricing or being able to raise the CP at a lower rate. That will help us actually reducing our costs further, which should actually help us in improving our spread, so the only flip side will be if the rates start going up, then this 15% is where we will slightly get impacted, okay? So that's as regards margin. So we are quite confident that the 2.8%, which is there is kind of is there. We don't have a problem in that. And -- but we do conservatively talk about 2.75% okay? As regards IT impact, our IT impact has been very, very less, in fact I don't think our -- in fact, our delinquency ratio in Karna taka is the lowest among all our 6 zones. And we have not seen that impact. In fact, our absolute value of NPA in Karnataka in March '26 is lower than our absolute value of NPA in Karnataka in March '25. So I think that should give you the confidence that we have not had the impact of the IT job losses and everything in this. So I guess that's what. Anyway, our IT salaried segment coming from IT segment is only about 6% of our book. It's not very high.

And then, sir, just one follow-up where you mentioned, right, that margins can be maintained at, marginal spreads for that matter, where you said spreads can be maintained at 2.8% in you conservatively guided for 2.75%. So sir, then when we look at the entire business model, the only risk that is left then is basically a rate upcycle, where the rates start going up. And this 15% who have still not opt for the quarterly reset, they are the ones you think are the only r isk including?

I guess in term for the spread component, yes, and therefore -- I mean, we don't see any major change in that because our current incremental spread also will not eat into our overall spread.

And sir, lastly, cost of borrowings, while you spoke about NHB, but when we a re speaking to other NBFCs, other HFCs, all of them were acknowledging and while we don't borrow too much from the debt markets. But debt market borrowings had gone up significantly, especially in the month of March, and they have subsequently pulled off a little bit in the month of April? Do you think that the cost of borrowing bottoming up has now come to an end and from here, cost of borrowing figure remains stable or inch up or do you think there is some more leg, some room left except this NHB volume that you spoke about, that costs could further come down, remain sideways or inch up from here?

See, today, if you would see our presentation from 55%, which was our bank borrowing, it has gone up to 62%. So basically, we have relied more on bank borrowings where we have got rates at below 7% and below 7% and raised that funding rather than depend or go to the debt market. okay? That is the 1 point. Second thing is in Q4, some of them, I'm sure the rates are very much there for everybody to see. The debt market rates, even CPs actually had gone up considerably post the shift the geopolitical situation and all those things. But we had, if you recollect, we had indicated that we were sitting on a INR1,000 crores of unutilized NHB sanction in -- at the end of Q3. And that was also because we had total INR1,500 crores. We had planned wherein we could drop INR1,000 crores in the Q4 where normally, the rates because of a tighter liquidity are on the higher side. So we had planned our liability side accordingly. And therefore, we were obviously benefited, which is there. Going forward, other than this NHB, I mean the only thing would be that we have about -- today, our NCDs are at the highest cost of funds for us, which is on a blended outstanding portfolio in NCDs is around 7.67%, 7.66%. So there, in fact, if we are able to, as and when the maturity happens, we'll be able to replace them with a lower cost NCD because today, the rates are at a lower than the 7.67%. So that is one thing. Plus, as I mentioned, CPs. CPs in Q4 had gone up, 90 days CP had gone up to almost 7% and a little above 7.35% also. Whereas now today, you are -- we raised in the month of April, we raised CP fresh CP at 6.45%. So -- these are some of the sense, the timing differences where we have to be careful and see if we can draw at the right time, we will use those opportunities.

There is a follow-up question from Andrey Purushottam.

Correct.

Now LIC Housing, I can understand that they will be basically luring customers by virtue of price. I was a little surprised to hear that about Bajaj Finance. I tho ught their plan would be mostly convenience, ease and quickness of this thing. But since the person has already been sanctioned the loan by you, that cannot be an advantage for Bajaj Finance. So can you just throw some light on that, [inaudible 0:57:00], behaviour? And why do you think they are behaving the fact that they want?

Absolutely right. LIC because they offer a lower rate. In fact, they were also offering 7.15% at a point in time for new business, and that is one thing. But in case of Bajaj, what happens is it's normally a takeover plus top up. And many times, we are not able to match the kind of top up that they are able to offer. So that is some area where we lose sometimes to Bajaj. That is one aggressive they -- I mean, I wouldn't want to get into that. But yes, sometimes we are not able to match the top up. So it's usually a BT plus top-up where they are able to offer the same rate on a takeover probably. But on the top they are able to give a much higher amount.

So any thinking on how to counteract that? Or you think that we just live with that?

No, I guess we are a little more conservative in our LTV values when it comes to takeover out of top of loans and all those things. So I guess, it has helped us in the past, and we would like to maintain that conservative approach. So sometimes, yes, it hurts, but I think the conservatism has helped.

As there are no further questions from the participants, I now hand over the conference over to Mr. Suresh Iyer and the team for his closing comment.

Sure. Thank you, Nidhesh and thank you to once again to all of you for joining this earnings call of Can Fin Homes for Q4 FY '26. And I hope we have been able to answer all the queries. In fact, 1 of the queries, we couldn't answer them, but it subsequently came up, and I guess w e've been able to answer that also, so on the cost breakup. So if there are any further queries, of course, you can please feel free to get in touch with us. And once again, thank you very much.

On behalf of Can Fin Homes Limited, we conclude this conference. Thank you for joining us, and you may disconnect your lines now. Thank you.