Our first question comes from the line of Avinash with Emkay Global.

A couple of questions. The first one would be more on the longer horizo n. If we were to look back over a longer horizon post your listing , one thing that we have seen the peer margin improving materially because post listing you had this non -par saving products boost coming and the margin expansion has been very, very material. Whereas in y our case, you had one of the best margins when you had listed, as against some other peers, the margin has kind of gone up in between. But today, if I look at last year full year margin or now, the improve ment over the last 7 -8 years is relatively limited – even with product mix turning favorable , operating scale kind of going up. What has put this kind of constraint that your margin improvement has been relatively limited. Second question would be, looking forward, broadly, you are maintaining the guidance of an industry in line grow th and VNB and APE growth to be in line, basically flat margins. I presume that this is for individual APE, that has been kin d of relatively slower. Now going forward, if you were to look, what is giving you the confidence? Is it any sort of a specific channel issue that particularly you have a solution in sight for or you expect that the weakness in HDFC Bank channel to be co mpensated by maybe agency grow ing faster? So, what is giving us the confidence that it will improve from here onwards?

Yes, so on the margins, actually, fundamentally, our margins would have grown. I don't want it to say relative to peer s because -- some are in open architecture, some closed architecture, some are at intensely competitive market commercial, some are at favorable commercial and so on. If you look at o ur own numbers, you will see that margin ex pansion was clearly on the cards, and this is what you see on Slide 5, specially in c ontext of every dip or volatility that you see. If you were to look at FY 16 onwards, there has been a steady FY 16, FY 18, every 2 years, FY20 till FY 22, there was almost linear growth in m argins, almost between 100 to 150 basis points increase in margins exactly to your point. And this happened as recently as FY 22. Thereafter, there were three very significant either regulatory or government-related impact on the sector, which we have called out to say first one between FY22 to F Y24. There was a 90 basis point decline in our margins and thereafter because of the withdrawal of 80C or the INR 500,000 lakhs and above wou ld be taxed, very significant impact also beca use some of our customers were perhaps the more affluent segment and so we were operating at a higher ticket size. So, like we articulated at that time, we changed our strategy to move away from those cohort of customers to a more broad-based, Tier 2 and 3 markets. And around this time, we rolled out our Tier 2 and 3 strategy. Happy to share that now close to 70% to 75% of our new business comes from Tier 2 and 3 when you look at number of policies. So that has worked very well. Thereafter, when you fast forward margins, so we have reached 26.3% in FY24. From 26.3% in FY2 4 to 25.6% in F Y25, we had surrender charg es and we had called out that there was a 100 basis points impact on our margins due to surrender charges. And again, in terms of surrender charges, as you know, we were the architects of non -par product Sanchay Plus, which has now become ubiquitous in the sector. Again, it took us time to re calibrate and look at how we are able to change our business model, economics with distributors, some of it sharing with distributors, and that is what took us sometime between FY24 and FY25. Thereafter, once surrender charges was done and dusted, we had the GST between FY 25 and FY26. And what we have shown last year is that GST came in the second half of the year, excluding the impact of GST, we actually had a margin expansion. So inherently, ma rgins have gone up and not down. An d net of GST, we had that impact. So really, the only reason I would attribute is these three very material shifts and impact on business model. Hopefully, that's answered your question in terms of the 100 basis points downward shift in margins. And when you look at this quarter, actually, our margins have expanded. If you back out the impact of GST, our margins are actually ending up at 2 5.6%, versus opening of 25.1%. So again, a margin expansion. And like we have articulated, the 300 basis point impact of GST, we ended last year having digested everything, with about 110 basis points or thereabouts remaining. 50 basis points has been digested in Q1 and w e have about 60 basis points left yet to go ahead, which we are reasonably confident for us to get over that as well.

I think on the growth, the way I think Vibha also covered in our opening , our growth in this quarter, if we keep HDFC Bank aside for a minute, has been very broad -based across all the channels. This has been led by our agency c hannel and our own proprietary channels, which has led this by growing faster than 20%. All the channels combined , excluding HDFC bank, grew by about 17%, and our proprietary channels grew in excess of 20% in this quarter. So , the growth has been fairly broad-based. Now coming to HDFC Bank, within HDFC Bank, like we have been talking about this in the maybe last 2 quarters also that how certain competitive pressures which we were not comfortable participating in, we have let some share go in that segment -- in the 4-6 months of the last financial year. In this quarter, a lot of that has evened out. Most of the competition is no w completely benign on those products, which were obviously not profitable for t hem as well. And hence, we have seen the market share coming back. Overall, HDFC Ba nk has not grown this quarter because of a large base. But given that factor, our market share within HDFC Bank has now come back. Now as the bank continues to grow and we continue the mom entum of our market share increase going forward as well, we are very confident of getting good growth from HDFC bank as well.

Our next question comes from the line of Shreya Shivani with Nomura.

I wanted to understand how the product -wise growth shall pan out for the remaining three quarters of the year. So , protection clearly will have a high base coming in from third q uarter. But on the non -par segment, it's good to h ear that the competitive intensity within the H DFC Bank channel has come down. Is there any other pressure or other competition from FD or any other products that m ay create a problem for us in that prod uct going ahead and within that channel specifically ? So yes, a product-wise outlook on what can pan out in the coming three quarters? And to that extent will our margins remain at these elev ated levels or should we see a little bit more compression coming in if ULIP growth kicks in from second quarter?

At a broad level product mix, there are a couple of shifts that are very noticeable are in protection, uptick by 2 percentage points from 6% to 8% over the same period last y ear. And also, as we had indicated over the last few mont hs, the non -par savings bucket has started moving in the right direction. We closed at about 18%-odd last year, and for the current period, it's 22% now, on a run rate basis it's close to 25%. The t hird bit, which is again within the non -par savings cat egory, but falls in the annuity bucket has more than doubled from 5% mix last year to about 11 -odd percent. This is on the back of a new product launch that we had done in Q4 of last year on the variable annuity front. We have a couple of product structures t here, which have been received extremely well by customers and our distribution partnerships. So that is something that has also added to the richness of the product profile. Unit-linked, as anticipated, the same period last year has gone up by about 6 percentage points, but as such on a full year basis is at very similar levels, not having mov ed too much. So , our outlook for the rest of the year on the product mix is going to be not very diff erent from what you see now. Protection as a percentage is likely to stay there or thereabouts. We expect a higher level of growth in the next nine months. So lower ticket size protection products may not be able to match in terms of the mix percentage. So that's something that you could see. Annuity as a segment, we ex pect that to continue, which will be significantly higher than last year. Non-par also meaningfully higher than last year. We don't know where it kind of settles. But mid -20s looks like a fair ly good base from where we would like to build. Unit -linked again, not very different from last year. We don't expect any meaningful elevation from her e neither do we expect a very significant downward movement from here on. In terms of mix, this is where we are. To your question in terms of where do we see margins settle as a consequence of this, very similar to current levels at about 25 %-odd. So , we basically have mentioned about wanting to recoup some of our loss on account of the GST large part of it has been done. We endeavor to mitigate the rest of the impact over the next few months, anyway from H2 it will be in the base. So, we expect to hold our margins at levels similar to where we see today and focusing on VNB growth in line with APE as the rest of the year shapes up. So , no big movement in the levels of margin from where you are seeing it today. So def initely looking for a higher level than what we delivered last year. But similar to where we are at this time.

So just to add , I think inherent margins ho pefully should go up a little bit, but we want to reinvest it back into business for growth.

And just a follow -up question is on the agency channel and the kind of growth momentum over there. Is it fair to say this is the portion where your majority of Tier 3, 4 market expansion story is playing out? That will be a fair assessment, right? And then your agency channel is expanding more into the Bharat market, etc.?

It's not just from the Age ncy channel. Even the bank channels have a big rea ch in the Bharat and the Tier 3 towns, etc. So , it's a very fair mix in these towns. Channel expansion is also happening in Tier 1 and Ti er 2 . So , we did expand branches, and we are also deep ening in existing market where we had lower share of agent channel. So, when we expanded brand, we expanded across markets to increase our reach and second, to increase our depth.

And happy to share the branches that we opened in our agency channel, in the past 24 months, it contributes almost 16% to our agency APE.

The new branches were in the Tier 2, Tier 3 markets, but the growth is more broad -based across Tier 1, 2 and 3. But yes, the more recent branches are in the smaller markets.

So the expansion that we took over in the last 2 years, the Phase 1 and 2 of those expansions were more to cover the geographies. The Tier 3 expansion i s more in terms of deepening - so there is a portion of the expansion also, which is for them.

Our next question comes from the line of Sanketh Godha with Avendus Spark.

Just on the Banca thing, you said that market share is coming back in HDFC Bank. So maybe last year, we alluded that we were at early 60s and we used to be in mid-60s. So, when we say that market share is back, are we back to mid -60s or we still have a scope to go back to mid- 60s in HDFC Bank?

We are very selective in which segment we want our market share to go up. I think that is important. The headline number is not something that necessarily is how we look at things. So obviously, in some of the segments that we talked about just now non -par especially as well as in protection and even in par, that’s where probably our focus is a lot more than in unit-linked. So, we are very granular in terms of what are we tracking. But suffice to say that we are on track in terms of level playing field, we are also competitive on our product architecture. We tal ked about that earlier. And a few other things that are well positioned to pick up any demand. We are also looking at this in a very granular fashion of which are the laggard branches and so on and having a very bespoke strategy to fix it. The intention certainly of the bank will aid some of what I'm saying.

Is it fair to say that compared to last year in current year or at least for first 3-4 months, you are operating in a relatively better environment in HDFC Bank compared to what you witnessed in FY26. So probably, if the bank comes back with the gr owth, you will inv ariably do very well in the particular channel?

Yes. I think you more or less captured it.

And second questio n which I had was that this par meaningful slow down what you see is predominantly because of our cons cious focus to degrow the immediate cash back plans, which we launched in par or in general migration of business to variable annuity or non-par? Just wanted to understand the color of slowdown in par business?

Yes. So, it's a combination. Our focus has been on non -par and you will agree that we have shown a fair bit of traction on non -par from the late teens to moving -- exit rate, like we said , around 25%. So, some of that has happened. But also, I think th e overall operating environment, there are preferences of customers where there is a lot more of market volatility, there is some level of relooking at gua ranteed products, that is for some part of people's portfolio as they should, plus aided by a favorabl e yield curve environment. So, the combination of all of those.

The reason why I'm asking is that in the previous results call, the articula tion was a little different that non-par business is still not conducive. But in the commentary, what yo u are giving seems to be a little different. So just it is bit confusing to make a clear conclusion whether the demand has come back to really non-par, either because you're offering or industry is offering better deals because of the yield curve benefit or it 's just some ULIP demand or some other product demand is migrating towards non-par?

No it's a combination, I'll just start with non-par. Non-par we had we've been having a product mix in the 30s for the last few years, ever sinc e we launched the category of products. And last year, we saw a significant downward shift at about 18 %-odd. The reason for that was two fold. We had mentioned that largely the customer mindset move d towards unit linked products in a fairly big way. So that was one. And second, we did see a significant amount of competitive intensity in this space, which like Vineet mentioned, we stepped back to be f ocused on business which we thought was viable from a medium - to long-term perspective. These were the two reasons why the non -par mix went down. And also, as we mentioned, the environment is a little more, let's just say, beni gn on the ground now because of which ability to kind of compete on sensible terms is higher at this point in time. Alongside that, yes, the interest rate environment does help because the headline rates available now are better than what they were maybe same time last year. So, it's more in terms of some of these things, which have increased our ability to get to a non- par s hare to this level. It's not necessarily dependent only on, let's say, the in terest rate environment or any one single factor. The customer thought process on asset allocation will in our minds always be a very significant guiding factor on p roduct mix. So, we just want to ensure that we are well positioned across each of these categories and competing on sensible terms. That's what we would like to maintain.

And lastly one small point w hether variable annuity product margins will be better than the company average ? As in general I just wanted to understand the co lor if the product see ms attractive. And lastly, in the VNB walk you have an assumption change negative impact of 40 bps outside the 60 bps negative imp act due to GST. So just wanted to understand this 40 bps assumption change is related to what line item?

On the second one, assumption change is largely linked to what we had spoken about last year on the persist ency variance that we had. So , this is something that we have corrected for and taken a hit upfront . On your var iable annuity question, yes, the margins will be higher than company average. It basically depends on the kind of stru cture that the customer chooses in terms of how many premiums they decide to pay. So , it would be anywhere between an annuity product that you saw the traditional annuity product and non-par product, depending on the structure, but higher than company average.

Our next question comes from the line of Swarnabh Mukherjee with 360 One Capital.

Two questions. First of all, in terms of the growth, just wanted to have your view on how should we see it panning out over this year. Because if I look at, say, the numbers from April to June, we had a stronger print in April and then the print kind of tapered. And if I were to calculate a 2-year CAGR kind of a number, it is broadly around early teens for each of these months. So just wanted to understand that when we think about the remaining part of the year, should we expect a similar kind of a 2 -year CAGR or should we think that now with a broader port folio of products seeing pickup in growth, we should be able to have the growth trend at a higher level. And second , in terms of the variable annuity product, just wanted to understand like the customer base, whic h we are targeting on this , what is the opportunity size as per you? Of course, this is an innovation, but would we expect there could b e a competitive intensity picking up in this segment. I think if you could share your thoughts on this. And t hirdly, in terms of the solvency margin, I understand that it has improved after the preferential issuance, but just wanted to understand th at with the retail protection run rate, we are seeing what kind of runway do we have before we need to go for a fund raise.

Like we have articulated, our endeavor is to grow in line with the market, both on VNB as well as on the top line. And that has been ma intained for the rest of the year. So, whatever we have seen in the last three months makes us fairly confident that we should be able to deliver them.

To your question on variable annuity, yes, it's a very exciting space. We started out by offering a product and have now expanded to two product categories within variable annuities and we expect over the next few years , as the regulator engages w ith us , to develop this category further. We believe there's a lot more scope for innov ation and more options from a cust omer perspective. The customer segments that we're focusing on, at least to start with was somewhat a little more nuance and discerning in terms of ability to live with the variability in the pr oduct bec ause traditional annuity product was a guaranteed product with no upside or downside potential. But this product allows the cu stomer an opportunity over a 15 -20 year period to get meaningful upside and that can be illustrated at the time of engaging with the customer. So that is something that we started off with. As we expanded our product portfolio, we have seen that customers are willing to commit for a lon ger period of time from an investment perspective. They are typically slightly youn ger in age than folks taking a single premium product. So, there we are able to widen the customer segment and offer ticket sizes, which are slightly lower than what we would do for single premium products as well. As we understand the customer behavior in our engagement, we will look at how w e can expand the customer segments, but we have been fairly watchful to ensure that the customers understand what this offering is becau se it is different from what the traditional guaranteed product that everyone understood. On solvency, yes, so as of now at about 185 %-odd after the preferential allotment of INR 1,000 crores , we have additional sub-debt capacity as well, amounting to INR 500 crores, giving us potential of additional 4% solvency upside. The run rate that we are at this point in time, we're comfortable with a 15-18-odd months runway with the current capital that we have along with the sub-debt capacity. And we would expect the transition to RBC to happen at this point in time. With the current run rate on protection and non-par or any of the product categories, we believe we should be okay as far as capital is concerned and we definitely look forward to the implementation of the risk based capital framework.

The next question is from the line of Nischint with Kotak.

Could you comment a bit on growth in the Banca channel beyond HDFC Bank?

Last year we spoke about competitive inte nsity in all the bank channel, including the other banks beyond HDFC Bank. And we have seen that also mellow down to a large extent. And our growth in those bank channels have also for this quarter been about 15%, in Banca beyond HDFC Bank.

And in that sense, the HDFC Bank is probably a decline is what we are seeing right now?

Marginally lower, but let's say flattish.

If you see on a 2 -year CAGR basis, HDFC Bank is very similar to other banks, but they had a higher base effect because of very good growth last year.

And typically HDFC Bank exhibits kind of mid-teens sort of a growth trajectory , which you believe should catch up for the entire year, is that a fair reading?

I think 10% to 12%, because all these regulatory changes also spooks distribution. So, I think a 10% to 12% kind of growth of l ate. And that's what even other banks have largely grown , if I look at a 2-year CAGR basis. I think 2 years CAGR they are about 10%, yes.

We are quite confident. The agency is a channel is a very bottoms-up funnel. We already have that funnel of new agents. They have been trained and we look at different buckets of 0 to 12 months, 12 t o 24 months in terms of productivity, products, our presence in all the 250 -plus branches that we have added that are now contributing 16% to our agency business and it was probably in high single d igits last year. So, it's a very bottoms-up, brick-by-brick growth. And we have some visibility, all things being equal on the regulatory front and so on , that gives us the confidence that our agency channel sh ould continue to trend well. And not just that we are very happy th at term and annuity together has been growing disproportionately high in our agency channel. So that also includes our profitability in the channel. If you were look at Slide 15 of our inve stor presentation, term and annuity has gone up from 15% to 27%. So not just the growth is good, but also consequently aiding profitability. And other things like our active agent count and all of those, if we put it out. But that's what I mean by the underlying building blocks of this channel.

And anything specific to read in the sharp increase in non-bank alliances?

Non-bank alliances, growth is largely on the protection business, mainly from the aggregators. And that's where you see a large traction on term coming in. There is also a base impact, which happened post GST. So obviously post GST, there will be some re-organization on this business, but that's the large contributor.

Yes. also, the exit rate in FY26 , if you look at that, it is 19%. And if you further deconstruct that into H1 and H2, it might actually be a sha de higher in FY26, second half. So more or less in the zone, and it should kind of trend there. We have also done many things on our product competitive proposition, and that has also helped.

So the term tailwind essentially is outside bank and agency, I think if I have to read it this way.

No agency also. So here in this Slide 17, it might not look like agency as such , but if you were to look at that 12% underlying, there's a lot more happening in terms of exit rates in agency are trending well. The quality of the protection business is also getting reasonably better. Our direct cha nnel also has seen a fair bit of material uptick from about 8% l ast year to 12% this year and 8% exit rate last year versus that of 12%. So proprietary channel to move broadly in terms of agency plus direct is trending pretty well on protection, bo th protection and annuity.

So Vibha, I think at the start of this call, you kind of alluded to the fact that you're looking at HDFC Bank for a more granular perspective both in terms of products and customers. And previously, you’ve also alluded to the VNB counter share at that channel. So now if I have to look at, let's say, 1Q '27 and compare, how much of the incremental wallet in terms of term or annuity or non -par of HDFC Bank, in particular, you're able to garner. Is there any color or either VNB counter share , the kind of the trajectory on that or the product level counter share that you're having rather than the blended number. Some color o n that would be useful. And also, the strategy.

It is higher. At t he same time, you will appreciate that we are in an intense open arch itecture scenario. And so, some of that information is di fficult for us to share given these are competitive dynamics. But it is noticeably higher.

The second question was in terms of the non -par business. Now if you compare your high - ticket business mix in non -par versus, let’s say, pre-change in taxation levels and immediately post that, how would those ratios be tracking on a run rate basis?

All our ticket sizes are doing very well, whether it is lower ticket INR 50,000 to 1 lakh as well as the higher ticket sizes. Really, it's almost secular growth across ticket sizes.

I just want to pre-empt that our overall ticket size looks muted in terms of growth. The only reason there is that the pro portion of our INR 50,000 and thereabouts ticket size, that proportion has gone up. So, it's a mix impact, but different cohorts of ticket sizes, there is INR 50,000 to 75,00 0, INR 1 lakh to 2.5 lakhs. All of those have largely shown growth, but i t's a mix impact.

With higher protection business is going to go down, overall ticket size.

The last question, I think Niraj touched on the fact that over the next 2 years, the regulator and the companies might be more focused on co -developing differentiated products on the variable annuity part. I just wanted to get some contours or lines of discussion with the regulator o r what incremental strategies or kind of variations can come in this particular category.

So, the introduction of the category itself was a fairly big step, because this product as understood, is a fairly sensitive segment at 60 and abo ve, as such. But increasingly over the last few years, we had developed deferred annuity products as innovation, and we had started getting younger customers engaged to this category. Over a period of time, single premium products got enhanced with regular premium products for customers who are willing to accumulate more regularly. And now with variable annuity, I think the level of risk that the customer is able to take, I think the product development is going to be more linked to that. And that is obviou sly going to be based on how comfortable the regulator is in terms of opening up this segment over a period of time. What is also equally important is the development of the asset side of the market through direct instruments as well as through derivative participation because that is something t hat will help manage risk for the customer as well as provide upside. So , a lot of these things are linked. We are in constant engagement with the regulators. We have seen on paper, which is in the draft stage at th is point in time where life insurance companies will be allowed to participate in the repo market. That is a very big step in the direction to be able to manage risk in a more diversified way rather than being dependent only on counterparties. So, these are some of the thin gs that the regulator will look at from time to time based on our engagement, and that will further develop this category over a period of time.

The next question comes from the line of Nidhesh Jain with Investec.

Two questions. Firstly, on persistency. If we look at the trend s in the traditional business, the persistency used to be 88 - 89%. That has now come down to 83%. So , is it a reflection of surrender value regulations where the surrender value is high in the first year and that is leading to lower persistency? And should we treat this persistency as now the steady-state persistency across our business ? That is one. Second is what gives you confidence that HDFC Bank channel will start to revive soon? And what is exactly happening there? Because last year also growth was soft for us. And this year, again, Q1 is quite weak for HDFC Bank channel?

On the persis tency, it’s a combination of things . The 88% or 89% persistency was seen when the segment had a large proportion of high -ticket-sized cases. Post the withdrawal of the t ax exemption for beyond INR 5 lakhs policies, the ticket size has been reducing. The persistency also has been lower. One other thing that has happened in the last year, which we had alluded to in the previous calls, was that there was one product feature which was resulting in a lo wer persistency. We have taken action s to ensure that the feature is moderated, and also engaging the distribution channels, as well as the customers, to improve the persistency. So that is one of the reasons why the p ersistency has fallen to84%. So 40 -50 basis points change. The other thing is that, generally, in the first quarter of the financial year, because of the March pace, which is quite large and doesn't get enough time for collection, the persistency is slightly lower. So these are the reasons. And on the experience being reflected in the assumptions, all these factors which influence the experience, that is, your ticket size, channel, etcetera, is already captured. And that is why our variance is not anything big or material in terms of the EV walk that we have shown.

We expect it to be in 84%-85% range. It's difficult to say that it will go up to 87%, 88% as we have seen. With the ticket size, moderation has happened. But we expect it to get better from the current level.

On your question regarding HDFC bank, like you said , there was irrational competitive intensity in the co unter, which led to our share dropping. In this quarter, we have seen that intensity going down and it has been more like a level playing field. And hence, our share has come back. Bank growth this quarter is muted largely because of a large base of last year. And as bank inherently grows from here, we should continue to grow at erstwhile market share that we used to enjoy in the bank.

Our next question comes from the line of Prayesh Jain from Motilal Oswal Financial Services Limited.

The question is on your guidance . When you mentioned that will grow eit her in line with the industry or faster than the industry. What is the assumption of the industry growth that you have in mind? And adding to that, what is the kind o f traction that you expect on a HDFC Bank channel, whether it is to be at par with the company level growth this year? Or is it still agency-led and Banca and HDFC Bank would still be, say, in single digits kind of number. And when you say again on the guidance part, when you say that the VNB growth will be similar to APE growth, you are talking about probably a margin compression from here on because we ended the year last year at 24.2% and this quarter, we are at 25%. So how should we think about this?

So based on where the industry is at this point in time, the 15 -17% kind of a number. If we continue with that base case, the requirement for us for the remaining nine months is to grow maybe a percentage higher than the industry for the full year basis. If the growth is lower th en the delta required for us over the industry will be smaller. But I think if the current growth momentum continues, then 15% industry growth can be a base case, and we'll probably have to grow at a little over 16% over the next nine months to get to industry-level growth. To your question on VNB, what we have said is a couple of things. One, we definitely expect margin expansion over last year, which was at 24.2%, and we are at 25% right now. Where we end up, I think it's going to be a combination of what we see in terms of growth. We are fairly constructive in terms of where the growth numbers will be for the remaining nine months compared to where we are at an overall level today. We will t oggle between the margin outcome and the growth opportunity. But at an overall level, le t's say, if the growth settles at industry levels, then we should be able to deliver VNB growth similar to topline. If the margins are higher tha n last year, then there could be an opportunity for VNB growth higher than APE. But at this point in time, the base case is in line. Given where we are on growth at this point in time, and we'll take it from here quarter-on-quarter.

When you say in line, it's in line with last year, 24.2%?

Yes, current level is 2 5%. So, it depends on where our growth fin ally settles. If our growth is at about at industry levels, then the margin could be anywhere between last year an d where we are today. If the growth is on the lower side, then the margin expansion basically w ill get us to the same outcome. So, we want to basically retain that flexibility. At this point in time, we are fairly clear that growth is what we want to driv e. Margin is going to be, in some sense, incident al. Some of it will be driven by product mix. H2 protection base was very, very high last year. So, some of the conversations we had earlier on the call. So, a lot of it is going to be dependent on that. So , we're not really overthinking that too much. We’ll focus on getting to growth in line with industry. The margin outcome will kind of be in a range, a fairly narrow range as we just discussed.

And what have you pencilled for HDFC Bank growth?

We don't want to give you channel -wise growth outlook because, again, that's some of the competitive dynamics. But our philosophy is all channels have to grow and grow to t heir potential. Some will have a particular base effect, like I articulated with HDFC Bank. And some will have further tailwind like our agency because all the investments that we have made. Each channel is on a different path, and we want all our channels to competitively rank, and we do track this very closely. We look at our agency channel in terms of ranking amongst peers and so on and other channels as well. And that's how we track and run the business. So, each one will have to grow at least in line with the sector.

The next question comes from the line of Vinod Rajamani with Nirmal Bang.

So, I have a few questions. So, one is o n non -par. So, if I compare your non -par offerings versus peers. So, they are able to offer things like I mean, leave the IRR aside, but they are able to offer things like set up structures and bundled business covers and so on. Whereas we seem to have a sli ghtly more kind of rigid kind of framework in terms of ride r dependent products and so on. So, are we likely to kind of refresh our Sanchay Plus offerings in terms of -- I'm not talking about IRRs per se, but just in terms of what features and benefits customers can get, so that it's more competitive in the marketplace. That is one. Then on bancassurance, we are seeing shift away in bancassurance back to ULIP. So, the ULIP mix seems to have gone up whereas par has fallen to 14% from 36%. So, is this a deliberate pivot towards volume o ver value? And h ow should we think of that? So, these are the two questions.

So, on non -par, I don't know where you got this impression from. But if you look at our product suite, it started with Sanchay Plus and we've had a fair number of products thereafter, the latest among them being Click 2 Achieve , which is a do -it-yourself product with multiple optionalities for customers. The rider penetration in non-par today is very, very limited. So, there is no as such dependence on putting this out to customers only on the basis of riders. That is something that we would like to do more of, but it's not yet part of the proposition. So clearly, the non-par category expansion or product mix increase is because of a variety of products that for various kinds of customers and preferences that they may have in terms of either taking lump sum benefits or taking benefits over a period of time. Taking accelerated benefits or otherwise and also linked to var ious levels of protection th at they can get within the base product itself so there is a fair bit of options that are available to customers. And like we have always maintained, we will try and be competitive to the extent possible, but we are not going to be competing only on price.

But say, for example, see wellness integration and so on, like, for example, peers like Tata AIA are also able to offer vitality and so on. So , wellness will become more relevant kind o f proposition going forwa rd and so on. So, are you think ing more holistically in terms of offering a better kind of suite of benefits and features to keep customers engaged? I mean, besides the IRR, IRR is one aspect, but leaving the IRR aside are yo u trying to e ntice customers to other ways?

See there are customers when they come to different product categories, they look at different needs. In non-par usually, it's a long-term saving and IRR becomes the most important criteria. Anything you add to it also starts to differentiate or erode the IRR away. So hence the penetration of rider even though it's available, it is less on non-par. However, if you look at ULIP o n the other hand, –we have seen a good penetration of riders and typically the likes of product that you mentioned about. We also have equivalent products available and those are in place with most of our ULIP sales right now. And that also is leading to an answer for your ULIP question. That the ULIP margin now are much more palatable because of the built-up protection and riders on the ULIP products.

So shift to ULIP is not like deliberate from our side, but there is a preference that we have seen in the banking channels fo r customers wanting to buy ULI P. We thought that this might peak out and might even g o down. But given even the current market conditions, we are seeing that this demand is reasonably resilient. So, what we have done structurally is that we have made sure that our ULIP proposition is profitable and it is giving us margins which are bette r than just plain ULIPs. So , a reasonable contribution of the ULIP business now comes with attached riders and hence with better profitability.

Our next question is from the line of Madhukar Ladha with JP Morgan.

This discussion aroun d HDFC Bank left me a little bit confused. So , I just w anted to understand what is our sort of counter share in the last quarter at HDFC Bank channel? Are we now at least in the early 60s so if you could give some number? And what proportion of our individu al APE is coming from the HDFC banks channel . And then finally, where do we see ourselves getting back to because in the foreseeable future, are we looking to get back to the late 60s, mid-60s, percentage sort of a number.

On our counter share within HDFC Bank, I stated this earlier, but let me just explain that we have seen some irrational pricing and increase i n competitive in tensity and hence we have taken a step back , which is now mellow ing down and hence our market share now is back to what it used to be in the first quarter last year. And going forward also, we believe as inherent growth in HDFC Bank channel comes back, we should see our growth also from that channel coming back. Just coming to the contribution of HDFC bank in the retail APE. In this quarter, it has been at 47%.

The next question is from the line of Mohit Mangal with Centrum.

I have two questions. My first question is on credit protect. I think you have mentioned ri ght now we have 19% growth now given that conditions kind of remain stable? Should we kind of expect this growth to be sustained for the entire year? Question number two, I mean, we have been adding more and more branches in the l ast 2 years. So just wanted to know what is our strategy on adding more branches? And how much time does it take for a branch to break even?

So on the credit protect, I think as the credit environment has been good and disbursements are up, we have seen the growth continuing. And as we believe this environment seems to be continuing on the credit growt h. So hence, I don't see a challenge on credit growth. Even within that, the MFI segment has started to come back and we have seen a faster gro wth in MFI. Even though it has still not come up to the same level that it used to be about 1.5 years ba ck. So, there could be some upside from the MFI business that continues to recover. Even though new lines of businesses have also come up, there's a gold loan business which is a new er segment for us, beyond MFI. But as MFI starts to improve, there could be an upside. The other question was on branche s. So, we did a significant expansion over the last 2 years. One branch typically takes about 18 months to break-even and start delivering margins and positive profits. And in about 2.5 years, it becomes more mature, that's a typical cycle for a branch. We have already done a significant expansion and the Phase 1 and 2 were focused on widening our reach and Ph ase 3 of the branch expansion was focused on deepening our reach. Right now, we have slowed down the expansion only in selective cohorts, where we clearly feel that there is a gap and we need to do it, we are do ing it in this year. And as these branch es stabilise and become mature, we could see further deepening as required. I think from a widening angle we have reached 700-plus branches across maybe 600-plus cities, which is a significant reach.

Is the breakeven in 18 months, that's true for Tier 2 and Tier 3 cities as well?

Yes. So, this number varies between larger markets and smaller market s, larger markets break- even faster. That would be anywhere between 12 to 18 months. But the smaller markets wi ll take anywhere between 18 to 24 months or 30 months, depending on the size of the market and the kind of productivity we're able to drive. So, it's really dependent on the size of the market.

This is a portfolio number. So, it could vary across different markets.

There are n o further questions from the participants. I now hand the conference over to Ms. Vibha Padalkar for closing comments.

Thank you all for joining us today. Should you have any follow -up questions, please feel free to reach out to our Investor Relations team.