Thank you, Ramya.

Thank you, Ramya. Good afternoon, everyone.

Welcome to quarter two FY27 earnings conference call of Can Fin Homes Limited, hosted by Investec Capital. As a reminder, all the participants will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes.

For Q&A, please raise your virtual hand and we will unmute you from our side. We will start the management commentary followed by a Q&A session.

To discuss the financial performance of Can Fin Homes and to address your queries, we have with us Mr. Suresh Iyer, MD and CEO, and Mr.

Abhishek Mishra, CFO of Can Fin Homes Limited. Please note that this call is being recorded.

I would now like to hand over the call to Mr. Iyer for his opening comments.

Over to you, sir. Yeah.

Thank you, Nidhesh. Good afternoon, everyone.

Thank you for joining the earnings call for the second quarter results of Can Fin Homes. Before we get into the question and answer, we have a small brief on the highlights of the quarter, which I will just share and then we can go into the question and answers.

The highlight of the quarter for Can Fin obviously has been that the entire Project Tejas, which is the IT transformation project, has gone fully live. In fact, we went in phases where July we went ahead with 11 branches, five old branches and six new branches.

Thereafter in the month of August, additional 75 old branches and 14 new branches were added. In the month of September, 77 old branches again were added.

Finally from effective 1st of October, 93 of the remaining old branches and the five branches which have subsequently opened, new branches, have all gone live. Presently, we are completely online in the new system.

All the aspects of the project including the security aspects, the infrastructure aspects which were already implemented earlier, and now all the operational or the functionalities which are there in the project have all been implemented, and we have gone live with the entire LOS LMS across all the branches. Of course, this implementation has had a impact in terms of our disbursement, particularly in each of the branches in the month where the business has or the IT implementation has taken place.

To this effect, we have actually given a additional slide in the presentation that is slide number 20 as to the impact that we have had because of this IT implementation. The month in which the implementation has happened, the disbursements have dropped in that particular branches by about 70 to 75%, and then the next month again it pushes back and it comes back to almost 80, 90% of the old disbursement.

That's the kind of thing. As a result of this, in the months particularly of August and September where we had a large chunk of 75 and 77 old branches going live, there has been a major impact and as a result the disbursements for the quarter were at only ₹2,375 crores.

This of course is net of the ₹29 crores which we have reduced from the disbursements because of the NHB guideline which has come saying that regarding the cancellation of DDs. During the quarter, we have had about ₹28 crores odd crores of cancellations of disbursements which were earlier handed over to customers for various reasons, and that has been netted off.

Plus also about ₹19 lakhs which is in respect of the cancellations from the date of the closure of the quarter to the date of the announcement of the results. Basically, combined put both these things put together, it's about ₹29 crores, which has also been netted off from this ₹2,375 crores.

That is the impact. In terms of the state-wise or region-wise disbursement, the demand has been quite strong.

There has been no change in the demand. We've observed that.

In fact, on page 20 of the presentation, you will also see that particularly the branches where the IT transformation has happened in the month of October, there you will see that in the month of July, August, and September the business has been robust. There has been an increase only as against an average of ₹435 crores, which these 93 branches were doing in Q1 in the month of September also they have done ₹481.

So ₹458, ₹424, and ₹481 crores. Basically, in terms of the demand or in terms of the business per se, there has been no change, but for the impact of the IT transformation, which is mainly on account of the understanding or rather the change in the flow, the additional processes that have been incorporated.

Now in fact, there are some four OTPs, four to five OTPs, depending on the customer and the type, which we have to take from the app borrower as well as the co-borrower separately. That comes to around eight to 10 OTPs additionally.

Those kind of process changes which have been implemented have resulted in some time lag and things like that. Plus in every month since it was a migration from a legacy system, the migration data had to go through a couple of processes.

Every month we basically were able to hand over to the branches only after post-5th. That 5 days of gap also.

Basically, these are one-time issues which have impacted, but as can be seen from the 93 branches' data, there is no issue. We are still seeing a robust demand across all the geographies.

Karnataka also, which has been in the past always a point of observation, has stabilized around ₹230 to ₹250 crore of disbursement consistently. Only other change during the quarter has been that in the state of Telangana, there has been a new Section 22 or something, some section which has been, wherein some areas have been identified by the sub-registrar offices or by the government to have been notified for this, which is only available with the sub-registrar offices.

Before execution of any document, everything has to be taken to the sub-registrar office and they will confirm whether this can be registered or cannot be registered. While and this process, before the entire process of processing, we had a lot of cases where, finally when it went for the documentation or registration, the process was stopped because as per Section 22, the legality of those properties is being verified again.

This has slightly impacted, but having said that, now we have changed the process whereby now before we entertain any log-in or spend time in processing the entire case, we ask the customer only to get their item verified from the sub-registrar office, and then only we do it. Otherwise, a lot of cases where it came all the effort up to the stage of documentation was done, and we had to cancel the disbursement.

Basically, that process has been changed now to adjust to this new change of Section 22. As a result of this, it's only a one-quarter impact, which is there in terms of disbursement.

For the full year, we continue to have the same guidance of ₹13,000 crore in terms of disbursement. To that effect, whatever corrections, whatever strengthening we have had to do, we had already initiated in October itself across all the branches, so that we can push disbursements in Q3 and Q4.

Another thing is that now with all branches having gone on the new system, we should now be able to pull out the people from the teams for sales also, because we were about 84 people in the month of March in the sales department. Even now, as we speak, is about 90.

All the people will now get relieved, and so we will be able to strengthen the sales team. You will see in one of the slides also that the sales team with the same set of staff has also done ₹560 crore of disbursements have come from the sales team of about 98 people.

About average 90 people. In terms of that, the comparison last year was for the full year the sales team has contributed about ₹868 crores.

Basically, even without much of an addition in the team, the contribution has increased from the sales team. Now with additional staff that will be moving from the business to the sales division, we will be able to push further in terms of the sales team disbursements, and that should also support us in the Q3 and Q4.

Same also in the sense that we have 28 branches which are planned for the full year. As against that, 25 branches have already been started, and they are operational with staffing also in place.

Therefore, the contribution of these 25 branches will also come in Q3, Q4, which will support in our disbursement push. We hold the guidance of ₹13,000 crore for disbursement, and we'll push in Q3 and Q4 to cover up.

The second thing is in terms of prepayment, you would see that in absolute value last quarter we had a slight increase, and we had indicated that we are taking certain steps in terms of converting some regular excess payment customers to deposits or some alerts and all those things. Some impacts we are starting to see in terms of the prepayments.

July was a little high at ₹655 crores, but then the next two months, it has dropped to below ₹600 crore per month. For the full quarter, it has been much lower at ₹1,500-- ₹1,795 as compared to ₹1,857 in Q1 of this year.

There has been an improvement in the prepayments. Plus now with the rate hike, which has been there, the gap between what the market is offering and what we are offering will come down because 7th there was a 25 basis points increase in the repo rate, whereas we have only increased 10 basis points for our housing customers, old as well as new customers.

Basically, the gap will now start reducing, which will also help us in retaining good customers. This is in terms of the prepayment.

The AUM consequently has been impacted because of a lower disbursements and has been there. With the full year guidance continuing at ₹13,000 crore, we hold the same guidance for AUM of 13-14%, closer to 14%, in terms of our AUM growth for the year.

During the quarter, in terms of borrowing side, we received a sanction from NHB for ₹1,350 crores. You'd also have heard the news articles about NHB planning to increase the refinance as well as increase the proportion of refinance under the AHF component.

This should help us positively, and the ₹1,350 crores plus whatever if enhanced sanction can come, we will be drawing during the year. Last year, as a strategy, we had planned to draw the entire funds only in Q4 when normally the liquidity pressures are there, and the rate is slightly elevated.

If the sanctions are on higher side, we will probably start drawing this year from the Q3 itself, so that we can enjoy the lower rate also. In terms of the undrawn sanctions, we are having close to ₹2,500 crores of undrawn sanctions, which are also there to support the business.

In terms of the rate hike, as I mentioned, we've already passed on effective 8th of October 10 basis point for our housing customers. Basically, our endeavor will be to ensure that our NIM and spread and NIM stays protected.

Our guidance is of 2.75 and 3.75 for spread and NIM, whereas we have been operating around 2.8 and 3.8. We will continue to protect our spread and NIM, and we are confident during the year we should be able to maintain that, because net impact of the rate hike would be that on a 60 six 65% of our liability side, we are impacted by this repo rate as well or by the T-bill rate.

To that effect, it will be on the entire book it will be an about 12 to 13 basis points increase which will be there, as against which we have already increased 10 basis points. As you know last year also when the rates were coming down, we did it in four parts of 10 basis points, 15 basis points, 15 basis points, and 10 basis points.

Same way in the next hike, maybe we may look at a 15, so that we can average out to about 12 to 13 basis points. Indirectly, the what I'm trying to say is that the NIM and spread we will continue to maintain at 2.75 and 3.75 plus, and that'll be the thing.

In terms of delinquency, our overall delinquency has not been impacted much. Only there is a little bit of an increase in the SMA 0, which also is mainly because of the methodology of computation or flagging of this cases.

Basically, we had a old system which was computing the overdues or outstanding up to the end of the month, whereas here it is on a daily basis. If the customers many times for very, very small amounts, what was told to the customer 5 days back, the customer pays today, but the 5 days interest is becoming a lapse.

We are slightly changing the process and all those things to see that we can communicate to the customer that if you pay today, this much, if you pay by the end of the month, this much payment. Delinquency is not much of a concern.

Overall, our credit costs, we have guided for 10 basis points, and for the quarter end of the quarter it is about 9 basis points, and I think we can continue with the guidance of 10 basis points. Generally also, you will see that in H2 there is a reduction in our gross NPA, so that should also help.

In fact, it should reduce the NPA from the current levels, that will also help in the provisioning. Plus if you see in fact the current year, the first half is always where the NPAs goes up and then starts coming down.

Last year, our increase in NPA in the first half was about ₹40 crores, as against this in the current year the 6 months it has been ₹35 crores. Again, the pushback will come in the second half, then we'll be under more comfortable position.

The last thing is about the regulatory guidelines. First, as I mentioned, there was a NHB regulation or a guideline regarding the reporting of disbursements as netting off the cancellations during the quarter and the cancellations of the which have been from the date of the end of the quarter to the date of reporting.

That we have already implemented in this quarter, and we have netted off ₹29 crores from our disbursements, which otherwise where the customers have been handed over the disbursements. The second change is regarding the wage bill, where we have not had a problem in either of the two cases, where all our staff we are having a salary more than ₹25,000, our even the joining entry-level salaries start from about ₹36,000.

Basically, that is not impacting. Second thing is again as last quarter also we had indicated, our basic plus DA is more than 50% of the total package.

That is also no impact in the company. The third is more of a prospective or a likely impact, which is because of the insurance discussion paper wherein the insurance commissions are proposed to be brought down drastically.

There also, in fact, the entire year last year our commission from insurance business was only to the tune of about ₹12 and odd crores, which is less than 1% of our PBT of ₹1,304 crores of last year. Basically, even if it is implemented in the way it has been shared or publicised in the media, it will not have any meaningful impact in terms of our profitability or anything, because the contribution of the insurance income is premium income is very, very low for us.

Basically, these are the highlights of the quarter. We can open up for question and answer, and once again thank you for joining this call.

Back to you, Nidhesh.

Thank you, sir. Thank you.

We open up for the Q&A session. Attendees please raise your virtual hand and we will unmute you from our side for the Q&A.

Thank you. We're taking the first question from Nipun.

Nipun, please go ahead with your question.

Hi, sir. My first question was our liquidity coverage ratio has gone up for some 100-base 100%.

When the regulatory requirement is only 100%, is there a reason behind it?

Nipun, basically, the only thing is it is a matter of computation. You have to just compute for the next 3 months 1 month actually and see what is the kind of liabilities which are falling due.

You would see that by and large we have increased our long-term borrowings, and therefore, the short-term borrowings basically are which normally come again and again and for which we have to provide or maintain the HQLA, that figure has come down. Just to give you a small number probably around '23 from the time of March '23, we had almost about 26, 27% of our total borrowing side was short-term borrowing, which now has come down to around 12%.

You can imagine this is basically the CPs we have brought down, we have brought down the short-term borrowings from the banks and everything. Basically, that is what is impacted.

Also a fact that now what we as a strategy do is instead of taking bulk borrowings of ₹1,000 crore or ₹500 crore or ₹2,000 crore, which will come for a repayment and one single shot, we are taking in smaller proportions. Basically, the load in terms of providing the liquidity in any period of 30 days is kind of reduced.

This helps us in managing our borrowings and basically, maintaining our LCR.

Okay. Okay.

What should be the steady rate of this ratio?

See, basically, it's a continuous flow of thing that we have to maintain. If there are more short-term borrowings or any kind of borrowings where that it falls due in the next 30 days, we have to provide the HQLA.

Normally, we have a standard amount of approximately ₹2,300 crores or something that we are maintaining as our HQLA. Therefore, what happens if this figure keeps changing, this ratio also slightly keeps changing.

What we're maintaining HQLA will always be above 100%. Now, if in the next 30 days if it is not there and we have more liabilities falling due or interest payments or regulatory payments falling due in the after 30 days, then it will not reflect.

The LCR will reflect high. Our HQLA that we are maintaining is almost steady and it is enough to maintain at any given point in time as per the current requirement more than 100% LCR.

Maximum is 250, minimum is 135%.

Okay.

That's all.

Got it. Sir, what kind of stress test have we done on our loan book?

See,

we have almost 12 to 12 odd scenarios that we are doing in terms of how much of a flow will happen in terms of our delinquency, how much will happen we're also doing in terms of the rate of interest impact, we're also doing in terms of delinquency. Both these kind of tests we are doing for stress testing.

We also see how much it will have an impact. All these tests we are doing as per our RMCB is also we are presenting it to the RMCB.

So.

Okay. What is the frequency of this?

We are doing it every quarter.

Okay. That's it.

Thank you, sir.

We will take the next question from Renish Bhuva.

Hi. Am I audible?

Yeah.

Please go ahead. Please go ahead.

Hi, sir. Good afternoon, sir.

Sir, just two things. One on this interest rate cycle.

Two things: one as you rightly mentioned that our ALM is such that most likely we'll not have any material impact on NIM. Any sense on let us say does this hiking rate cycle will have any impact on the demand side?

As per your let's say assessment, historically whenever we are going through a rising rate cycle, does that impact demand for home loan or it's a non-event?

See, I would say 0.25%, 0.5% is a kind of a non-event. The rates that we are seeing, I think, only once in the past we have seen a rate which is lower than this at around once when it had touched 6.75%.

Otherwise, 7.15%, 7.5%, 8%, these are among the lowest that we have seen. So, 0.5% increase from here is not going to make much of an impact in the terms of the demand, because once it is converted into a 15-year EMI, the impact on the EMI is very, very limited.

It is not going to affect the cash flow as much. 0.5 percentage point increase or even a 75 basis points increase in our this thing in the terms of the EMI is not a very large amount.

Of course, there is an increase. Either you can increase and start giving more of 25 and 30-year loans or you can so that the EMI remains the same, or else you can, even with a little increase in the EMI it is not too much to deter demand.

Got it. Basically, you don't see any change in a customer behavior just because of rising rate cycles?

Not much. This should not have not much.

Okay. Sir, second thing is on this the El Niño impact, right?

We are hearing that South is actually going through a very bad rainy season. What is your assessment?

Do you also foresee some impact because of this over next maybe 6 to 12 months on demand or asset quality?

See, there's definitely an impact. Just to answer your previous one more point in your previous question.

As I mentioned, a 25 basis points increase in the rate, for our loans is only about 10 basis points, as I mentioned that when the rates were coming down, we also reduced 50 basis points for our 125 basis points cut. Consequently, when the same reverse cycle happens, we will also not pass on the impact.

For us, a 50 basis points might work out to about 22, 23 basis points increase for our loans. That is our customers that we offer, so that's just a clarification.

Yes, coming back to your this yes, there is a so if there is a water shortage, of course it can impact in terms of the construction activity. We'll have to see how much, because sometimes there have been delayed rains, and at least Maharashtra, Karnataka, and some of the states, yes, there has been definitely, a lot of drought has been announced in quite a few villages and stuff like that.

Of course, in our case we don't have too much of a deeper penetration in up to the Tier 3 up to Tier 4, Tier 5 and all. We mostly restrict up to Tier 1, Tier 2, where at least, there is water is available.

Of course, but still it will have an impact in the overall scene of things. It will have an impact where construction may slow down a little bit.

Got

it. I think it's still a little early for it.

It's a little early. If at all it happens, of course, it'll be impacting everybody, but, yeah, it is something which can impact a little bit.

Got it. Just a follow-up on that, then in that case do you foresee any risk to our disbursement target for '27?

See, if the overall industry is going to slow down, I think we are part of the industry, we cannot be very different, and I don't think we will then in that be this thing. As of now, as I said, it's a little early to start projecting that.

As of now, there are a lot of constructions, there are other ways also. We may maybe look at a little more of LAP or we may look at, some top-ups for a short period and all.

These are all things which, as a short-term strategies, we'll have to adopt.

Got it. Got it.

This is very helpful, sir. Thank you, and best of luck.

Thank you.

I think there's some issue. Maybe we can go to the next

person in the queue.

Hi. Good afternoon, sir.

My question is we have done an IT transformation after a long period. How the operational efficiencies are expected to play out in FY27 and FY28?

Sure. See as I was mentioning once this there's a lot of process change, but a lot of things in terms of the efficiency in the sense that we have a lot of processes which were erstwhile manual having converted into, automated processes.

That is in terms of the process change. There are a lot of opportunities, because all the OEMs or although applications that we have taken are having native AI capabilities also and we're also looking at some more features which can be added.

Auto form filling, things like that are definitely going to improve. This is going to open up a complete channel of digital sourcing for us because earlier it was purely a manual-driven process and all those things.

Now in fact a lot of customer journeys in terms of digital journeys can also be incorporated and so those are things which will start now and we'll start to see some benefits. If you see one of our sourcing, we have a 10% business we are expecting to come from the digital source, so that will be an enhancement to our business.

Then, in terms of efficiency, as the processes are there, although a lot of activities which are manual are doing this, we will be able to pull out people from our teams for sales and on-field activities. That is also a thing.

In terms of a lot of other internal processes, there are auto form filling, auto verifications, validations which are happening. In terms of the compliance also there are it's going there's going to be a lot of improvements.

This year if you see, we have actually looking at an increase from 90 or 85, two odd people to in the sales department to take it up to 150. All this is without increasing the basic structure of the staffing at the branches that we are looking.

It's not that we are adding another eight 75 people or something in the sales department. What we are doing is from the existing teams, we'll be able to remove the people and put them on the field because, the efficiency will start to come in.

At least in this year and part of next year, we will definitely see, some improvement or some benefit in terms of more people on the field because of efficiencies coming in.

Sir, one small follow-up question here. That process has been completed for the entire organization or is it pending or due, something like that?

No, this has entirely been implemented. If you see our presentation, we have various activities which have been put, page number 19 of this presentation, slide number 19, you will see that all those things have already been fully been implemented.

In fact, this implementation started from as early as, prior to September 2025 where first the infrastructure parts component started getting delivered, the security, the SOC, NOC and all started getting implemented, and then in a phased manner by September the risk and ALM and borrowings module got implemented. January we had the deposits the DMS, all those things.

Basically, the entire package with all the components which were part of the RFP which we had released in in '24 end, that have all been implemented.

Thank you so much, sir. It's a good work.

Thank you so much.

My

one more question is here that's related to a rising interest rate scenario and what is our expectation of prepayment rates? Definitely, it's going to come down if 100 bps repo move up.

As I said we would not pass on the full increase to the customers because, for us our 65% of our liability side is is linked to floating rate 65 odd percentage. Whatever is the impact which we will see, 25 basis points to roughly implement about 13, 14, 15 points basis points for us.

Some and some we will pass on right now 10 basis points to our customers is what we are passing on for our housing customers. Basically, if you look at it in terms of the prepayment what will happen is at the prior to the rates coming down before the cycle started, the gap was about 55 basis points in terms of the rates.

Now, that went up to, by another 65, 75 points because 125 was reduced by the banks and those linked to the external benchmark, whereas we reduced by only 50 basis points for our existing and new customers. This gap widened.

Now, what will happen is this gap is slowly start shrinking. Say, for example, 100 bps increase in the over the next say 1 year if it happens, then the gap will reduce by around for us about 60 basis points.

That's basically a sizeable amount of reduction because, as I said, 50 to 75 basis points, I think the customers don't mind. If it is more than 1, 1.5%, 1.25%, then the customers then the impact in terms of the EMI will be larger.

Obviously, this gap once it shrinks starts shrinking, it will help us in our prepayments. In the past, our prepayments have been in the rate range of about, 15.5, 16 odd percent, which has gone up to almost 17, 17.5%.

So, 1, 1.5% reduction in our prepayments or rundown will be almost coming down to, about, ₹400 crores. Okay.

Any outlook for '28? A quick question.

I'm sorry, I asked three questions. Any outlook for FY28 in terms of AUM growth?

See next year at least we are internally looking at around ₹16,000 crore disbursement for FY28. That should translate to around 15% plus AUM growth for next year because, assuming that our prepayments also goes up by, say, for example from this to say, ₹8,500 crores or whatever, then also the addition to the book will be a little higher.

We expect that this should probably work around 15% plus, closer to 15.5 or something.

Once again, congratulations for IT implementation, sir. Thank you so much.

Thank you.

Thank you.

Hello, am I audible?

Yes. Please go ahead.

Yes, sir. Hi, good afternoon.

Thank you for taking my question. Sir, just two things.

One is when you say 65% of your borrowings are floating, I'm assuming we're just talking about our bank borrowings here, which if I remember in the past we have moved almost all of it to repo-rate-linked borrowings. As repo rates move up now, our bank borrowings will reprice upwards.

Sir, this happens on T+1 or did usually happens the following month, following quarter? How does that work?

Bank borrowings, it increases in the next month. If the so this time it has happened on 7th of October, basically from the 1st November our rates on the bank borrowings will go up.

Of course, linked to the EBLR linked to repo rate. Now there are some which are linked to T-bills and all, which will happen at the preset quarter.

Whatever is so we would have taken on a most of them are at a quarterly reset. At that time, that T-bill whenever is there, it'll be there.

Not all the floating rate liabilities are on monthly reset.

Got it. Then, sir, I mean NHB, which is almost 14, 15% for us, that is also largely floating only, right?

Linked to NHB's PLR.

It is linked to NHB's PLR, but NHB's PLR also has not changed for some time. It there was only one change which also last time in spite of so much thing, they did it at a very fag end they did it.

By and large, that is also very delayed. It doesn't happen immediately.

Of course, for NHB also, we have the AHF, which is fixed. It is not floating.

Right, sir. Got it.

Sir, in that case, I mean for us to keep our spreads and margins stable, whatever increase we see in our liability side, and like you mentioned, predominantly banks, will have to be passed on to the customers. Otherwise, I mean there is a risk of spread and margin compression in a rising rate cycle.

That is absolutely right. Basically, 7th was the, policy announcement, and on 8th itself we had our ALCO, and we have increased our rates for our existing and new customers on the housing side by 10 basis points.

Obviously, the impact would be resultant would be around 12, 13 basis points, but we've have done 10 this time. Maybe next time we'll do 15 for a equivalent 25 basis points increase, because we are not doing this, it's 5, 10, or 15 basis points.

Sir, in the this 10 basis points that you have hiked for your borrowers, that is effective? If you've increased it on the 8th, that becomes effective on?

Basically, for new customers, of course, there are two, three days of implementation in the system. So 12th effective, 12th we have to give the notice also.

Effective 12th, all new customers will start getting it. Post-12th of October, whenever the reset comes for the existing, 85 odd 85, 87% of our floating rate assets, as and when the reset comes, that'll happen.

Now we have 87% on quarterly reset, only about 12 odd percentage, 12 point something percent is in annual reset. Within a quarter, this entire thing will be passed on from 12th of October onwards.

Got it. Sir, then the last question that I had is you've not changed your guidance on disbursements and loan growth for this year.

Sir, what I am able to see on slide number 20 for us, there are still about 90, 95 branches which will undergo the tech upgradation or which will migrate to the new tech platform maybe this month, month of October. Sir, in the month of October,

they've actually already been They've already. On first, effective 1st, they have already moved to the new system.

Okay. Sir, in that case, this 90, 95 branches will exhibit some weakness in disbursements in the month of October?

In the month of October.

Right.

Not with standing that, we are saying we will be able to push disbursements. We are targeting for about ₹3,500 crore in this quarter and the balance in the next quarter.

The thing is that, along with this, now that the tech implementation is over, one is, we had to be clear, we had about 129 people who were deployed in this IT transformation either for our testing part of it or for the training part of it or from the branch component this thing for the train-the-trainer module and all. Slowly we have also started, those people are also going back to the branches and moving back to their branches or to the respective departments as and when, because now the implementation is complete.

Now we basically require people only to maintain and maybe for a little longer for maybe one or two months for a support. Otherwise, basically the testing component, the implementation, all those things are already over, those teams are going back to support the branches.

As I mentioned earlier, there are two things: one is, this sales team will get a support and we will be able to push our sales team strength from 90 to about 150. In fact, by December definitely it'll cross 120, because already we have that many people who are lined up to move back into sales and all.

Some more who will be joining in all. Basically, that will be one support.

Plus this 25 branches which we have opened will also support in terms of disbursement, because they have all been opened in the month of mostly August and September. Those branches will start delivering additional business, which is not part of the first half business.

Basically that's what it is. We have also started taking some steps in terms of some contest, some kind of support, and some decisions in terms of some fees and all those things, so that we can start pushing disbursements and cover up for the Q2 impact.

Got it, sir. That's all from my side, and I wish you and your team the very best.

Thank you.

Hi, good afternoon, sir. Thank you for the opportunity.

My question was on again on the pricing side. If there is a 25 basis point of rate cut, how much time does it typically take for the same to get incorporated in the PLR?

While you said to the earlier participant that, on the 8th of October you revised the rate, sorry, 7th of October there was a revision on the cost of fund side, at least the 25 basis point increase on the on the 65% of our borrowing. How So, typically on the mathematical If you look at it, how much time does it take for the, let's say, any rate hike any repo rate change to get implemented or incorporated in the in the PLR?

See, as I mentioned earlier, 62 or 65% of our borrowings on the liability side are linked to this, but not all of them are linked to repo. There are about 75 or 80% which is linked to repo, the remaining is linked to T-bill.

On the repo-linked borrowings, the impact will be from 1st of November. For the T-bill-linked borrowings, depending on the when the quarter reset happens, that date it'll start impacting.

In terms of our asset side, from 12th of October onwards, as and when the three quarters you have, you have about 99% you say, 33% of the book will get repriced in 1st of November, 33% you can say on a standard basis, not to the exact this thing, but roughly I'm saying 1/3, 1/3, 1/3 will happen in 1st of November, 1st of December, 1st of January. In the meantime, if say, for example, something else additional further increase in repo rate happens in December, then maybe the ones which will happen in January will have a combined impact in January.

Okay.

Okay. Got it.

Sir, the remaining 13% of the portfolio, which is still at annual reset, when will that transition to quarterly reset?

See, basically, we are making attempts to convert those customers also into quarterly reset. Last time when we had sent this communication, many customers had shown the reluctance to move to quarterly reset.

Probably this may not reduce further. It may even if it does, it'll be a very slow change.

Over a period now, since all incremental loans are only under quarterly reset, basically, over a period this percentage anyway will start coming down and the impact will be lower. Otherwise, by and large, these customers have either opted not to go for quarterly reset or have, we still have, of course, some impact where customers we could not contact or we have still to push a little bit.

That we will try to do. This will now slowly be a little slower impact.

Obviously, customers who are smart customers will now not want to move to a quarterly reset because the rates are on an increasing curve. Basically, the smart ones may not want to do it.

Got it. Got it.

Sir, just the second question was on the PMAY 2.0. How is the scale up of that?

How are you seeing that being benefiting us, or are you seeing is it relatively, let's say, slow versus the earlier schemes?

It is a little slow. Not to the extent that we have seen in PMAY 1 or CLSS 1, the impact is much less.

Recently the government did have a meeting to review and has taken a lot of our suggestions. I think, the process, which is much longer compared to what it was in CLSS 1, that process, of course, may see some improvement.

We have some cases, but definitely whatever we have, even if we are able to convert it, it'll be much lower than what we saw in CLSS 1. That definitely is there, because again it comes down to the locations where we are operating, the states where now there is a shortfall and where first-time homebuyers will be wanting to go for it.

Those states who have not opted for PMAY or for whom this is the first housing loan in the family, for those kind of customers which are in the states which are there, we have a smaller presence also. The CLSS 1 was very successful in states like Maharashtra, Gujarat, Karnataka, Tamil Nadu, which are already well-developed states and all.

Now the shortfall has considerably reduced over here. Now the shortfall is more in other states like Odisha, Bengal, Bihar, UP and all.

Obviously, those states our presence is less. At least in UP, we have increased our presence now quite a bit.

We have added about 12 branches in the last year in UP. We are trying to see if we can take advantage of that.

Got it, sir. Got it.

Thank you so much, sir, for answering all my questions. Good luck for the next quarter.

Thank you.

Thank you.

Hi, this is Sonal Minhas, sir. Thanks for taking my question.

I hope I'm audible?

Very much audible. Please go ahead.

Sure. Sir, if I understand the data given in the deck correctly, there was a potential shortfall of ₹357 crores of loans being disbursed because of the IT impact of the software.

If we add that back, basically to the numbers that have been given, we've been growing at roughly 2% quarter-on-quarter net of prepayment and amortization. Now, for the second half, we've given a target of roughly 5% quarter-on-quarter growth.

First question is how sure are we whether we hitting these numbers, because even despite that I think if we compare the numbers for last year and this year itself, we've been growing at 2 to 3% quarter-on-quarter. What changes that gives you this confidence?

That's the first question, yeah.

Sure. See, if you look at it that way, last year we had given that when we had given our ₹10,500 crore target, we had said we will do about ₹2,000, ₹2,500, ₹3,000, and ₹3,500.

That's how we had planned our business for the last year. For this year also, in the beginning, we said we'll do ₹2,500, ₹3,000, ₹3,500, and ₹4,000.

That is how the plan for the four quarters was prepared. Now, in the first quarter, against ₹2,500, we have done ₹2,600.

Obviously, that's been a ₹100 crore extra we have done, which is a buffer in Q2. This quarter we have had a shortfall, but for Q3 we are sticking to the same ₹3,500, which anyway we had planned.

Basically, if you look at it from that point of view, what we are targeting is about additional 500 or something odd if we are doing every quarter more than what we did in the previous corresponding quarter, that is how it is planned. So, ₹3,500 is still in line with what we had when we began the year also.

The shortfall of that 400 odd crores that now is there we will now have to cover up in the Q4, which we will build up in the during the year. That's the plan basically.

Got it, sir. Sir, just from our understanding, the proposals during this period where we could not lend because of slowness of implementation in the IT system, those proposals are in the system or we've lost those proposals to let's say competition, or they've just fizzled off?

There's a pipeline basically, is what I'm trying to get to, right? Just if you could explain that

Sure. See, there are two things: one is the sanctioned but not disbursed, second is the undisbursed portion of partly disbursed cases, which, of course, will be the same because whatever you disbursed based on that only as per stage of construction.

Basically, it's the sanctioned not disbursed and the files in the hand which we could not sanction because of this process change, that is the thing. Yes, there is a definite at least in the pipeline which has not been booked or which has not even been entered, yes, we don't have the visibility right now.

Even if you look at the numbers, I guess if I recollect, it's about ₹118 crores is the extra amount that we are carrying in terms of the sanctioned but not disbursed as compared to the previous quarter. There is about 100, 120 which is already logged in, sanctioned, and kept on hand.

Then in the process of course there are some more, which partly are in the old system, which will have to be brought into the new system and all. That is again something which is additional to that.

There is some business. Having said that, of course, when it comes to the customer, if it is not there, I'm sure some of the loans or at least a decent proportion of the loans would also have gone off the system, because the customer eventually wants the money.

If you are not able to give it, they would have gone elsewhere also. Some of the business is definitely lost, but some of it is already booked in and we are sitting on that, which will help us in the coming quarter.

Got it, sir. Sir, just a second part of the question.

Given that if you're sure about your guidance this particular year and does a target of 15% next year seems to be something which is conservative? I'm not questioning the target, but I'm just trying to understand bottoms-up which are the pockets where you think you can actually fire more?

Because you've anyway which ways adding 27 branches this particular year. You will be adding more branches next year.

Is this a ballpark? If yes, then what is the subjective guidance behind that?

Okay. See, the 15% is the AUM growth that we are talking about.

It is also an outcome of the run-down that is there. What we have in our control is the amount of disbursements that we can do.

Against the ₹10,500 crore, we have targeted 13,000 this year, which is a 20% plus disbursement growth. Next year, from we're saying 13,000 to 16,000, that again is a almost 22% growth in disbursements compared to the FY27.

Basically, disbursements will grow, but the AUMs will slowly inch up as we go ahead. It'll come with a lag.

That 15, 15.5% or whatever is more of a net income assuming that the prepayments will remain the same or slightly elevated. Now, even if we are able to reduce on the prepayments because the rate the gap is reducing, then, in fact, it is even better.

This could improve

or slightly

better. It could be, exactly.

Basically, that 15% is more of a resultant figure. What we have in our control is the disbursements where we are saying we will grow at around 22% next year.

Got it, sir. I'll fall back in the queue.

I have some more questions, sir. Thank you.

Thank you.

Am I audible?

Yes, yes. Now you are audible, Raghav.

Thanks. Sir, I have two questions.

One, you've given some data on sourcing through new and old branches, old branches being the ones that were opened before March 2023. What I understand is that the disbursement productivity in the new branches is about 50 to 60% lower versus the older ones.

What I want to understand is that how many years does it take for a new branch to get to the same productivity level as an old branch? Is it one year, two years, three years?

What's the typical timeline that that you've observed? That's my first question.

Okay.

See, in terms of the productivity, I think it'll take about 18, normally we say 18 to 24 months. Some do it much earlier.

On an average, this is what it works out to to reach that kind of a level of productivity of whatever we generally maintain our productivity of five cases per staff per month. Keeping that in mind to reach that kind of a productivity, it is about 18 months is what you can say.

However, the other thing is that we have a category of branches. There are small branches where we only have three people staff.

Once it crosses a threshold of the particular book size, then it moves to a medium branch, then a large branch, then a very large branch, and so on. Basically, along with the movement from small to medium, the staff size increases from three to four.

With a productivity of five, a three-man branch will do 15, a four-man branch, then the number obviously increases to 20. It is not just a simple increase, at that time the jump is also because the staff also we provide more.

Basically, we also have that kind of a movement which will help where people get added because the branch has shifted from one level to the next level. Productivity, to answer your question, yes, 18 months roughly you can say on a blended basis, some faster, some a little slower, some take more time, blended about 18 months to reach a five productivity.

Right.

If I look at FY26 numbers, then the newer branches were disbursing about ₹20 crores of business annually, that should get to about ₹40-45 crores in about a year, year and a half time frame, right? That's reasonable to expect?

₹100 crores is when they cross the target of ₹100 crores, that is when they become a medium branch. That's what is.

Up to below ₹100 crore AUM or book size, we keep it as a small branch. Yes, the productivity will increase, and obviously the branches which are opened in FY26 will probably, by end of '27 is when they will reach that five cases per staff per month, or 15 cases in a branch kind of a thing.

Understood. Sir, my second question is that so I think all of us understand that disbursements have been impacted because of the tech upgrade, but just before this, if you can throw some color on maybe the inquiry levels, were they up this quarter versus the same quarter last year?

Something that you were referring to in the previous question about the pipeline that was there in your hands. Can you give us some flavor on how is the pipeline looking like, whether that was better than last year or not?

Because if it was, then eventually it will get converted into disbursements in the subsequent quarters, right?

Okay. I'll just go back to the same slide, slide number 20.

If you see, the first column number 3 talks about the average business in the first quarter of the year. Now if you see the branches which went live in August, the August disbursement was more than the first quarter average business.

In the month of July, in July they had a better inquiry, but because that was implemented in August, that there was a dip. Same way if you look at the branches which went live in the month of September, you see the July business as well as the August business was more than what was the average of the first quarter.

Now same way if you look at the branches which are not gone live at all, which went live in the month of October or 1st 1st of October, the 435 was the average, the entire quarter if you look at it, they have done actually more than that. There was a improvement if had everything been the way without any implementation, the business would have been close to ₹3,000 crore only because the month after month the business would have improved.

I think that should answer your query. The same slide, if you look at the fourth last second last column of October, that will give you an idea that the business was definitely there, the business where no impact happened, where no implementation happened, business was inching up and moving up.

The demand, there was no problem. The logins also were there.

That's why the numbers have also gone up. So ₹435 the average would have been around ₹450 to ₹455 if the same trend has continued, if you see.

From the Q1, 435, it is ₹450 average. Understood.

Thanks a lot for those answers. Thank you.

Yeah.

Hi. Most questions answered.

Sir, firstly, some queries on the business side. Do you expect that there will be much sharper movement towards higher-ticket home loan in your quest to cover up the business and scale up the business to your guided level?

Would one see more sharper movement towards higher-ticket home loan and maybe even say non-home loans like LAP or the other loans? In your slide of your disbursement mix, you are also now mentioning digital sourcing coming in and becoming 10% by Q4 FY28, which is not there right now.

What is this? What do you mean by digital sourcing?

Does the new tech stack enable you to scale this channel in a meaningful way? On the sales team contribution in disbursement, currently, it is 10, 11, it's not a right quarter to look at, but you are projecting that it's going to become 20% in the next four, five quarters.

What is the plan to scale up or to add people on the sales side?" Sure.

Your first question, higher-ticket business, see, over a period if you look at it, ₹30 lakh-plus kind of business in terms of the incremental disbursement has also slightly gone up, and even in terms of AUM has gone up. Yes, there is a little bit of high-ticket business or the ₹30 lakh-plus business, which is coming in.

That is also because the construction cost and everything has also increased, plus of course, the fact that gram panchayat and all those things in Karnataka and even in case of Telangana actually there are issues. Basically, we are doing more business in the corporation areas in the BDA and all those things where their property prices are a little on the higher than what it was in the gram panchayat areas.

That is yes. At the same time if you see, I think the message from NHB is that the AHF funding is going to increase.

We are also in fact looking at pushing some business in the affordable AHF category, because we'll also have to have the loans for availing that refinance from NHB and we are definitely looking that as the direction which the government is having. We are also going to look at it.

While yes, the number of ₹30 lakh-plus loans will increase, I think we will also have ₹15 to ₹25 lakh segment also, which is under AHF, which will also go up, okay? That's the first part, because we are looking at, as I mentioned, some steps that we are taking, we are looking at this segment also, because government is looking at the AHF to be pushed.

The second, in terms of digital, yes, the new package enables us to have customer journeys, fully digital journeys, online applications, CRM package, which will be able to be on-boarded and all included and all. Yes, digital will be something which will add in terms of the channel available to us.

That will slowly start inching up. The third is in terms of sales.

You are saying today it is still 11%, how are we projecting a 20%? Today if you look at it, 90 people are there, we are targeting to increase it to about 150 people.

We are looking at about ₹1,500 crore this year coming from ₹1,500 to ₹1,600 coming from the sales team. Already in the first half with the same lower staff strength also, they have contributed ₹560 crores.

With additional 60, 70 people and the second half being the with the entire IT transformation behind us, I think the remaining 1,000 crore will come. Next year when we are looking at it, we are looking at increasing this strength from 150 to 250, and next year definitely we should be having more than ₹2,500 crore of the business coming from this sales team.

If you are looking at 16,000, 20% will be ₹3,200 crores, and we are definitely looking at ₹2,500-plus crores of business coming from it. 20% is what we are aiming at, but definitely it'll be somewhere there because we are looking at a much more number of people, the feet on street who will be doing business from that.

Once we increase it from 150 to 250 people next year, obviously the numbers will be even higher. That's how

we

are looking at the sales contributing.

Sure. Sir, my second part of my questions are on liabilities.

If you can firstly repeat the NHB sanction that you have received, what is the amount and what is the pricing? Second is on NCDs.

You haven't spoken about the risk on liabilities repricing happening because of NCDs, the newer NCDs for which you must be you will have to pay a higher rate maybe in the future. When I look at your bank loan mix, except for the repo loans, there are also special rate loans.

When you say special rate, and that's a significant sum. Is there a risk that those special rate loans can actually get repriced at a much higher level, or revision in terms of rates can be much sharper than just the repo-linked loans?

See, first question, NHB refinance, we have got ₹1,350 crores of refinance right now. The rate obviously it is a mix.

Last year when we got ₹1,500 crores of refinance, which we drew last year, we had ₹400 crores under AHF and ₹1,100 crores under regular refinance, and so the blended cost for us came to somewhere around 6.6 to 6.7%. Between that range, we got the cost, okay?

This time, the government has or the NHB has indicated that there the the proportion of AHF could be higher, in which case, even the impact of the rate hike will not be impacted, because you know even if, the regular refinance rate is slightly higher, the AHF, which is a fixed component, will be at larger proportion. Effectively, the cost may still be 6.6 to 6.7% only.

Right now we have got 1,350 crores. There is a possibility now that, with NHB looking at increasing the size of the refinance, we may, in fact, be able to apply a afresh for a additional refinance limit also during the current year.

That is what we are exploring. As of now it is 1,350, and the cost is most likely between 6.6 to 6.7%.

The second thing is, regarding the liabilities, the special rate, basically these are T-bill-linked. Yes, there is a possibility that depending on that at the time of reset, whatever is there, it may, slightly vary here and there.

By and large the market prices it accordingly only, it should not be a major impact on that. Second, I think you also asked about NCDs.

NCDs actually for the current year, while we are we continue we were getting around even after this 25 bps increase, we are getting bank term loans at 7.65. I think today if you go maybe it might be 8.3 for 8.3 or 8.35 for an NCD.

Having said that, today we are already complied in complying with the regulatory guidelines on the 25% borrowing through the market for this financial year. We are not having any compulsion to go to the market and raise at 8.3.

Of course, it is all a matter of how you read the interest rates and when do you borrow and the timing and the the plan that you have. As of the moment, at least we we're not under a compulsion to go and raise money and at the from the NCD market, because we are already complying with our 25% requirement.

We will plan accordingly and see at the if there is a good opportunity at a good time, good price, we will then probably go for it.

Refinance already happened in May, the refinance. We don't have NCDs.

That's already happened in May only.

No, no. He didn't ask for that.

Sir. Thank you so much for answering all my questions, and best of luck.

Yeah. Yeah.

Thank you. Thank you, Rajiv.

Yes. Thank you.

Thank you to everyone for taking time out and joining this earnings call. I hope we have answered all the queries.

I think it's been a quarter where it's been slightly impacted because of the IT transformation. I think it is in the long-term perspective of the company, I think this IT transformation was very, very necessary, and also is going to drive the business in the coming quarters and the coming years.

I think this was very much necessary and it will bring in long-term benefits for the company. We are still confident that in the next two quarters we'll cover up for the shortfall in the disbursements, and we have already initiated steps also in that regard.

In a nutshell, I think the thing would be to protect the NIM and the spread. At the same time, we will also push for growth.

We will be looking at a 20% plus growth in terms of the disbursement, which consequently should become a 13, 14% AUM growth this year and a 15% plus AUM growth in the next year. That's what is the attempt by the management.

Once again, thank you to all of you for joining this earnings call. Thank you to Investec also, Nidhesh and team, for organising this.

Back to you, Nidhesh.

Thank

you so much, sir.

Thank you. Thank you.