Thank you very much. My heartiest welcome to all who've joined the call, ladies and gentlemen.

On this call today, we are joined by Mr. Nirmal Jain, our founder and MD.

We also have Mr. R.

Venkataraman, who's our co-founder, and also Mr. Gireesh [Madhwal?]

, who's the MD and CEO of our housing finance company. We also have Venkatesh, who's the MD, CEO for Samasta Microfinance.

Through this call, we're going to run you through our performance for quarter 3, and before we go into the details of our financial numbers, I hand over the call to Nirmal to give you a perspective on the entire macroeconomic situation and the company's strategy going forward.

Good evening, everyone, and thank you for joining the call. Before we get into our quarterly performance, I want to first address the income tax special audit under Section 142(A) 42(2A), as this is clearly caused concern and anxiety in the market today.

I understand that the term "special audit" can sound unsettling when taken out of context. The direction under Section 142(2A) is a procedural step in our ongoing income tax assessment for a multi-year block period.

After the search, there's always a block assessment for 6 years together. This is not a finding, this is not an allegation, and not an adjudication.

Such procedural audits are not uncommon for large, diversified financial companies with large transaction volumes and multi-years of data and complex operating structures. This provision allows the income tax authorities to appoint an independent auditor to assist them with verification and reconciliation of data.

The audit report is an input to the assessment process; it is not a conclusion. There is no tax demand, no penalty, no determination against the company pursuant to this direction, and at this stage, there is no financial impact that can be ascertained.

We will fully cooperate with the special auditor, but again, I reiterate that there is no impact on our operations, our capital positions, or growth plan. With this clarification, let me turn briefly to the macro backdrop.

While markets have seen some near-term volatility, the underlying Indian macro environment remains supportive with stable growth, comfortable liquidity, and improving credit conditions, and particularly in our core businesses of gold and mortgages. Now, against this backdrop, let me turn to what truly defines the quarter and our underlying trajectory.

Quarter 3 and 9 months FY26 reflect consistent execution of our strategy with strong growth, improving asset quality, and materially strengthened balance sheet. Loan assets grew 9.1% quarter-on-quarter, driven primarily by gold loans.

Asset quality has improved across the board with significant reduction in GNPA from 2. 2.14% to 1.6%, and also NNPA going below 1%.

You'll also notice the Stage 2 and Stage 3 are also trending down, indicating further improvement in asset quality going ahead. Our provision coverage is at 92%, well above the regulatory requirement.

Over the past few quarters, we have consistently reset the portfolio, exiting high-risk segments such as digital unsecured MSME, micro LAP under HFC, and select MFI geographies. This is now clearly visible in numbers: more resilient portfolio, lower volatility, and better risk-adjusted return.

From financial standpoint, we remain well-placed. Our ROA is 2.1%.

ROE has been moving up and is 11.3%. Our consolidated capital adequacy is 27.7%, liquidity of over 9,400 crores, net gearing of just 3.6 times.

Our funding profile continues to diversify, cost of borrowings are trending down, and our ALM is comfortable surplus across all buckets. Operationally, our AI-led risk governance and early warning system, combined with phygital network of 4,800 branches servicing 4.6 million customers, continue to be our core strength.

This strength is also reflected in S&P, international rating agency of reaffirming our rating and revising the outlook to positive. With this context, we believe that the fundamentals of the business remain strong, stable, and improving.

I'll now hand over to our CFO Kapish for granular details of our financial results. Thank you.

Thank you very much, Nirmal. Ladies and gentlemen, for the quarter, the consolidated profit after tax before non-controlling interest was 501 crore, which is up 20% quarter-on-quarter.

We recorded pre-provision operating profit of 1,075, which is up 101% Y-o-Y and 4% quarter-on-quarter. For the quarter, the consolidated AUM grew by 38% and 9% quarter-on-quarter at 98,336, being at the cusp of 1 lakh crore, largely driven by gold loan, which crossed the pre-embargo level at 43,432, supported by a healthy gross NPA of 0.036.

If I further dissect the AUM, the leading core products of home, gold, MSME loan, and microfinance, they collectively grew by 46% and up 11% quarter-on-quarter to 93,767. Gold in particular grew by around 26% quarter-on-quarter and around 189% on a Y-o-Y basis.

The core segment now collectively comprises of 95% of our total AUM. As Nirmal mentioned, our gross NPA touches around 1.6% and net NPA is around 0.8, which is down 82 basis points and 26 basis points respectively from the same period last year.

The company does maintain a cautious stand on the unsecured and MFI segments and clearly focusing on recovery and collection, which has been showing good resilience and been performing well every single quarter as they progressed the last few months. With the implementation of the ECL, the provision coverage ratio stands at 92%.

With our strategy to partner with banks and downsell our pristine assets, our assigned loan book stands at around 21,373, which is up 71% Y-o-Y and 15% on a quarter-on-quarter basis. Besides this, the co-lending assets stand at around 13,176, which is up 43% Y-o-Y and 11% quarter-on-quarter, taking the aggregate off-book at around 35% of our AUM.

On a quarterly average cost of borrowing increased by around 8 basis points from Y-o-Y basis and decreased 14 by on a quarter-on-quarter basis to 9.24. To briefly update on our liquidity, our liquidity stands at around 7, we raised around 20,007 crore from term loan, bonds, commercial paper during the quarter, and around 7,774 of our assets were assigned to various banks.

Our liquidity stands at around 9,433 crore, adequate enough to not just meet our near-term liabilities, but also adequate to support and fund our growth momentum, which stands quite positive. ALM, as Nirmal mentioned, is positive across buckets, and our net gearing stands at around 3.6.

While the 9-month ROE is what Nirmal talked about at 11.3, annualizing the last quarter ROE, our ROE stands at around 14.3, and ROA was at 2.5. Basic earning per share stands at around 10.9, and book value as of 31st of December is at around 306.85.

Capital position remains to be healthy. With the off-book strategy, the capital adequacy at a consolidated basis stands at around 27.7.

For individual companies, NBFC is around 18.9, HFC is 47.7, and Samasta stands at 30%. We just touched upon the revision and outlook from stable to positive by S&P.

We also declared an interim dividend of Rs 4 per share, which was approved by the board of directors and will be paid in due course. With this, I come to the end of this session and leave the floor open for Q&A.

Thank you very much.

Hi. Am I audible?

Yes, yes. Very much.

Yeah. No, just before the questions on the business, this tax audit, this would be for which financial year or how many years, and any sense in terms of how long this continues?

You must be aware that last February, we had a income tax search under Section 129. After the search, there is always a block assessment of 6 years.

It's a special audit based on their findings during the search, which will cover the block period of 6 months. This is supposed to get over in 60 days' time.

This is for 1 financial year or what?

No, this is on the certain areas what they want to verify for 6 financial year for the block period. Okay.

Actually, when the income tax search has happened, there's an ongoing income tax assessment. This is always for a block period.

Whenever searches have happened, the assessment happens for 6 years together. Then for the block period that we have filed our income tax revised return in which we have paid another 1.29 crore of tax or something.

Any specific items that you want to call out because of which the tax liability went up?

This 1.29 crore you're saying?

No,

this is insignificant amount. This is a recomputation based on whatever disputed and undisputed.

For 6 years.

Oh okay, okay. Got it.

Just on the business front, I was looking at your secured loans and the standalone business, which has a ticket size of somewhere closer to 2 crores and earns almost 14% IRR. Any texture on who these customers are?

Because, as we understand, typically there is a linkage between risk profile, ticket size, and IRRs. For such a large ticket, the IRR looks a little bit on the higher side.

Just curious, who are these customers and what are these properties or some texture of the business would be helpful.

These are SMEs, and these are priority sector lendings. These are from smaller towns.

In fact, if you really remember, our historical portfolio had 18-19% yield. We recalibrated our entire business portfolio.

The I think the every ticket size is not 2 crores, is it? Yeah.

This must be including the historical data also. Okay.

These are typically between 50 lakh to 1 crore rupees or maybe can go up to 2 crores also. Because they are from smaller towns and segments that we cater to through our branches, average yield is around 13.6% to 14%, that's what we are getting on a continuous ongoing basis.

Till now, in this portfolio, we don't have any delinquency as such.

Got it. The secured MSME that's done from the housing company, what is the ticket size over there?

Because I think that's sort of missing in the presentation.

That secured MSME ticket size is 14.1 lakh. That's on Slide 23.

I know, it's just missing. Anyway, I got it.

Just final two questions. Any status update on the SRs?

Any timeline that you're looking at for getting cash receipts? In fact,

last quarter, if you see slide number 17, then they have fallen from 3,500 to 3,000. In next year, 20 2026 calendar year, I think we'll see significant drop.

Maybe most of these SRs will get redeemed.

Got it. Finally, any plans on capital issuance at this stage?

No, at this stage we haven't announced any capital raising plan. We are monitoring the situation very carefully.

Whenever appropriate, we'll raise capital.

There is no particular leverage level in mind, any particular capital issuance? If one has to sort of model it at what point of time one thinks of

Our situation is such that we are very comfortable on the subsidiary companies. Because if you look at our capital adequacy of home loan is almost 46-47%.

Even microfinance is 27-, 30%. 30% is our capital adequacy.

Now, as far as the standalone company is concerned, where gold loan is growing very rapidly. Typically, if you see our strategy has been more of a bank partnership, where we do co-lending and direct assignment.

Co-lending was on a bit on a hold for last few months because RBI's new guidelines on CLM 1 have come into force from January. People are doing the integration.

Once that gathers momentum, then we'll be very comfortable again on our capital adequacy. We are monitoring it very carefully.

We are open, but at this point in time, no, I don't have any timeline, there's no nothing that board has decided and what I can tell you at this point in time.

Got it. I'm just curious if I have to model growth going forward at any particular ratio that you would kind of urge us to see saying that beyond this, we'll probably have to look at capital.

No, your point is fair. Our leverage, we'll keep it around 4, 4 and 1/2.

Capital adequacy, we would like it to be closer to 20. Right now it's slightly lower, we're monitoring it.

Got it. Got it.

This is very helpful. Thank you very much and all the best.

Thanks a lot.

Yeah. Hi.

Thank you for taking my question. First question is on gold loans that in the tonnage, have we reached the past peak tonnage?

Have we crossed the tonnage? AUM, I understand we have comfortably crossed and moved beyond.

We've crossed it. Digant.

I'll address this. I think our tonnage has been growing up very quickly, very rapidly, much faster than the industry.

We are at around 60 tons. We are still little short of what our tonnage was at the time of embargo.

March end was around 57.39. We have crossed that.

59. 59.4.

Okay. Okay.

Good to know.

We have crossed our peak tonnage before the embargo. Okay.

That's good to know. See my second question is this that now that the tonnage we have got all the low-hanging fruits, those clients who had gone away from us, we would have got them back, we would have given them LTVs in relation to the new gold prices.

Going forward now, in terms of new branches, new customers, what's our strategy because it's just that markets are getting a little competitive on the gold loan side? I think markets are very strong because loan-to-value has gone up.

The addressable market's capacity to borrow has gone up significantly because of gold prices, one. Two, there has been a clampdown on unsecured MSME and personal loans, and many of these customers are also basically moving towards gold.

The awareness has increased. What I see at the ground is a strong momentum.

The underlying factors what I tell you are what I think they are. I think if you talk to the industry, then there is a very, very strong momentum in the business, and environment looks positive.

When we talk about competition, the number of players have come in, but market is very large, and we have a network of more than 3,000 branches catering to gold alone. In our distribution catchment, I think we see significant potential to scale up.

You should look at this way that our average loan per branch is around 12, 12 and 1/2 crores, which is maybe half of the market leader.

Right, right, right. No, no.

Perfect. Perfect.

Thank you for that. Then last question is just on numbers that I see that non-Samasta or non-microfinance provisions are steady at around 300 crores.

They used to be around 100 crores in the past. Now they're close to 250-300 crores a quarter.

When does this particular part stop bleeding? I think it's because of the unsecured MSME where this portion is slightly elevated.

Yeah. If you see our discontinued business's portfolio, in one quarter only, it has come down from roughly 4,000 to 3,000.

That is like short-term 3-year loans that we had given for in some digital partnership and personal loan. Now, there's some flow from that and that has caused the provisions or the losses other than microfinance.

If you see, we are in line with our guidance because this quarter's loan losses provision annualized are around close to I think 2 and 1/2%. Last quarter, if you remember, we had given guidance for full year at 2.8% to 3%.

Next year will be less than 2%. I think we are on track for that.

Right, right. No, no, perfect.

I was just wondering,

the gold We're on the guided path and the next year, we'll see a significant improvement as this book really runs down to a much lower number.

Perfect, perfect, perfect. Then just this quarter, the OpEx seems a little higher.

Is it because we pay incentives on the gold loan originated at the start or because the whole AUM has grown wonderfully, but it's not translated into the pre-provisioning profit in equally strong way? Just wanted your thoughts on that.

That's the last from my side.

Yeah. No, your point is valid, but this is one-time charge that we have taken for the new labor code.

I think 23 crore rupees additional cost has come for that revision in measurement of gratuity and leave. I think that all companies are basically getting this, which is the new labor code has come in force and the employee liability particularly for gratuity and etc.

has gone up. We have put that in the summary slide note also actually, that that's 23 and 1/2 crore rupees.

Correct. That number I saw, sir.

Just wanted to know that But even apart from that 23 crores, the OpEx was a little higher, so that's

I think if you adjust that, then it's pretty much in line. OpEx has gone up by 50 crores, and that is maybe half of that is because of that.

Then there's normal inflationary growth.

Right. Thank you so much, Nirmal ji, for the detailed answer.

Thank you.

Good evening, sir, and thank you for taking my question. Again, just kind of going back to that IT special audit which has been commissioned.

Sir, thank you for the clarification, but just trying to understand, this does not have any business and regulatory risk, if I understand this right, right? Because if at all, after 60 days, whatever special audit happens, there could be a certain tax implication and which you can naturally contest, but beyond that, I don't think there is any other business or regulatory risk, right, with regards to

No, there is no The income tax department will have limited resources. This is just an input to them.

This has absolutely zero impact on our business or operations, and there's zero risk to that.

Got it. Then, sir, the second thing I was trying to understand is on the housing business, you have also put out one one point in the notes to the accounts where you have said that as advised by NHB, you have restated your March '25 NPAs and GNPAs, which is more in line with show the collections only after you realize.

Just trying to understand, until that point, right, which is March '25, when NHB said that hey, both disbursements as well as collections should be done based on a realization basis, until then, the entire housing industry was working on the cash-received basis is it?

I wouldn't know about the entire industry. What happens supposing the cheques which come in the last 1 or 2 days or last few days, they don't realize till the end of the quarter or the month.

Basically so this is, okay, maybe I don't know about the existing thing, but this could have been the practice of the industry, which NHB has advised us that this is not correct, we will restate. We have done that.

Important thing is that if you look at our December results, that they're in line with the check on the realized money and not based on the cheque received but not realized. We are now following NHB's guided practice, and in fact, with that only, our NPA is significantly better.

Perfect, sir. This is useful.

Then on the housing bit again, we're still seeing that book is largely flat or a minor decline. Micro LAP anyways, we have discontinued and put it in I think the discontinued AUM.

Now, when is it that we think that the clean up is done and we can start accelerating even in our housing business?

I think this quarter clean up is done. From next quarter, we should see acceleration in the housing or the growth in the housing portfolio as well with a very clear strategy and focusing on certain segments that we are comfortable with and from a long-term point of view.

Got it. Sir, have we done any PLR changes in our housing book?

Basically, have we passed on any PLR

No. We have not done anything in PLR.

No change. Got it.

Sir, that's all from my side. Thank you so much for taking my question.

Yes, hello? I just had one question.

Today only your Chief Information Security Officer, Sameer Rathe, resigned. Any reason for the sudden resignation and what will be the impact of that?

No, there's no sudden resignation. It's a normal sort of churn that happens.

People find better opportunities, some people go abroad. There is nothing.

Then we have very competent second line and very competent set of people that take over. It's very normal business.

Got it. Thank you.

Thank you for the opportunity. Am I audible?

Yes, you are, Vedant. Go ahead.

You are,

Congratulations on great set of numbers, sir. We have seen a tremendous growth in our gold loan portfolio.

Going forward, at the current gold prices, how we are seeing the growth in gold loan portfolio? I think the prices remain at current level, even if they don't go up from here, but they consolidate, then we'll see very strong growth in the gold loan portfolio.

Somewhere around 24, 25-26% growth on Q-o-Q basis?

Should be. I think that should be a very comfortable target.

Thank you, sir.

Yeah. Good evening.

Just one question regarding the ARC transaction during the quarter in the housing finance business. Could you give some texture on how much of that was micro LAP and how much was pertaining to the affordable housing book, that 900 crore kind of ARC deal which you did this quarter?

Gireesh is here with me. Maybe he's our new CEO.

Maybe I'll just give a little bit of backdrop to this, and then Gireesh can add if he has something. I think with the new CEO and the board based on the experience and whatever we have done so in the past, we reviewed our entire portfolio of housing loan LAP.

Obviously, there are certain segments that we had indicated last time also, which is like BLC or beneficiary linked construction, that is BLC, and then micro LAP that we exited completely. All these segments, profiles of customers, or geographies, or areas that we have discontinued.

Gireesh took a view, which board has agreed with him, that we should basically dispose of that portfolio once to ARC, and where the collection can be joint effort, and then we can focus on our continuing businesses in a strategic way. Almost about Rs 900 crore or something, 874 crore, 835 crore rupees of total portfolio deal has happened.

I think that cleans the entire thing, and that's why if you see, our GNPA in housing has fallen from 1.4 to 0.5. That is the level at which we know we would like it to be.

Maybe Gireesh, you want to add something?

Yeah. Basically, what we have done is we've reviewed the entire portfolio, and we've also have a vision for next 3 years as to which all segments we need to operate.

Now, given the opportunity and in terms of what is the kind of risk that we can take given the yields. We have identified certain pools which we think is not fitting into our line of strategy when we think of building the book for next 3 to 4 years' time.

We thought we should do one-time cleanup exercise so that we can focus our energies towards segments where we can try and build the book. That is why we had done this ARC.

Our focus, I think going forward is going to be in terms of segments broadly on emerging and affordable. Affordable largely will be the priority for us, which can give us yields, and emerging to a certain extent, which can help us in terms of growth, which will be in line or maybe slightly better than the industry growth rate.

This is one. Number two, in terms of products, I think predominantly we'll be focusing on HL and LAP.

This is our focus. We found that certain products, as Nirmal mentioned, and also in certain geographies the product mix, for example, in certain locations where we need to focus on HL predominantly and less of LAP and stuff like that.

I think that is what we had identified. We thought we will just clean up so that the path will be clear for us to grow in next 3 to 4 years' time.

That was the exercise what we did.

Got it. Just to clarify that BLC portfolio, I think, which was about 400-500 crores, I think that has entirely moved out now.

BLC and micro LAP, that portfolio entirely moved out.

Okay. Now the discontinued asset, which is there primarily refers to unsecured.

Micro LAP was the other area where you were kind of discontinuing, and it is whatever is there is Micro

LAP also has more or less gone to the ARC in this HFC's portfolio. Micro LAP was part of HFC's portfolio.

Right. The discontinued now refers to mostly the unsecured business

Unsecured business loan and personal loan portfolio, which is part of the parent company, yeah.

Okay. Thanks a lot.

That's all.

Hello? Yes, sir.

Sir, a follow-up question was on your this IT thing. Just wanted to clarify again that the block years that you mentioned, is it routine that after every raid you would tend to have a block or it's specific to us that we've got a block of 6, 7 years of

No. It's a part of income tax law that after the search, there's always a block search.

The is very very well-defined. The search can pertain to up to 6 years.

The search is typically never for the current year. Then once that's done, then the assessment is block assessment always, without exception.

Understood. Just to clarify, here this would pertain to in their view, tax evasion and nothing to do with authenticity of the accounts.

Is that how would you answer that?

When the search happens under 129, which happened February last year, so that happened with a suspicion that there's a tax evasion. It's a suspicion, it's not a conclusion or not an adjudication.

With that suspicion, they come in a surprise way, collect a lot of documents, evidence, statements of the people, and everything. Now, the way the income tax processes, the search department is supposed to collect facts and evidences, but they're not supposed to analyze or come to any conclusion on that.

Then that goes basically to the assessment department. Then they are supposed to analyze and ask the company that, okay, based on our findings, what do you all do?

We give you an opportunity to file a revised return. That has to be for a block period.

That is what we did. When the data collected from search or whatever evidence the data document they have is something where they need some external help for reconciling, verifying, that is when they appoint special auditor.

Which means now what I'm trying to understand is this is not audit-specific or checking the authenticity of the accounts, it's more to do on tax evasion.

No. Not at all.

Special audit word to that extent maybe misnomer. It is not anything to do with accounts.

It's more to do with what they've found in their search needs to be verified or reconciled. See, many a times in the search, they can take certain documents.

Even if they get access to all the data and all the accounts, they can't analyze in their 5, 6 days that they are there.

Understood. Thank you, sir.

That's it from my side.

Thanks, Adarsh.

Yeah. Good evening, and congratulations for your better results this time.

One thing which I wanted to ask is, what is any scope is stipulated for the special audit and the second thing is any preliminary assessment has been done by the company with regard to the maximum possible impact on account of this tax issues?

No. Sorry, first part of question, can you repeat, please?

Yeah. Can you just brief about the scope of the audit?

Any scope of this audit is being given by the tax department?

No, I think the scope of audit will be restricted to the search findings. That report also is not fully shared with us.

Whatever, when the income tax search happens, they collect certain documents and statements. From our point of view, whatever they've taken, they've given.

Then as well, the scope is always limited to that.

Okay. One more thing with regard to that, whether the special auditor has been already appointed or is it under the process of appointment?

It has been appointed. Okay.

The second point, with regard to the preliminary assessment about the maximum possible impact on account of this tax issues. Anything company has ascertained?

No, there's no way to ascertain, but what we ascertain is based on that, we file our revised return. That we already done.

Okay. Thanks for the clarification.

Have a great quarter.

Based on whatever findings and everything, we are supposed to file our revised return. That's done for 6 years' block assessment together.

That's nothing much in terms of that revised return that we have filed. That is company's preliminary assessment and now they are to verify it.

Okay. Thank you, sir.

Thank you very much.

Hey. Thanks for the opportunity.

Am I audible?

Yes, Gao. Go ahead.

Thanks. My question is on the credit costs.

For this quarter, our credit costs have come down to 160 basis points. How should we think about the fourth quarter and also next year?

Now I think your voice is not clear. Maybe can you pick up the receiver and speak?

Yeah. Am I audible now?

Yes, go ahead now. You're Audible, but there's some disturbance, but yes, I can hear you.

Cool. Just on the credit costs, we have come down to 260 basis points this quarter.

How should we think about fourth quarter credit cost and also next year credit cost?

I think credit cost has come down and will continue to remain low, and so it's around 2.5%. For the full year, we had said that we will end at anywhere from 2.8% to 3% because first half credit cost was higher.

This last 1, 1 and 1/2 years, our credit cost had been unusually higher because of the turbulence in microfinance industry as well as in micro LAP. Going forward, next year, we expect our credit cost to be even lower, maybe further 50-60 basis point decline and should be less than 2% on a steady-state basis.

Sorry. Next year credit cost you're expecting less than?

Another 50-60 basis point decline in the next financial year. From the current 60?

From this quarter level, yes. If this quarter annualized is around 250, this should go below 200.

Got it. Thanks.

I just have a follow-up on the tax audit. Is this a normal standard SOP whenever there's a raid to double-check

Am I audible now?

now your voice is cracking a bit. Can you Yeah, just

How about now?

Please repeat, huh.

I'm just trying to understand on the special audit. Is it a normal standard operating procedure after a kind of seizure and search, is that part of normal SOP for the tax department?

Or this is not typically done?

When income tax search is done and the subject of the search is fairly large, complex, because our operations are really vast, we're almost more than 4, 5, 4 million customers. If you look at 6 years, the number will be even larger.

Then in such cases, that's a normal thing. Income tax search itself is not something that happens exceptionally.

Not that it happens on every company. When that happens, and the operations are large and complex, then this is normal.

I see. For large, complex search, a special audit is typically a normal procedure.

Yeah. Again, if the documents and the accounts and that they have are relatively simpler to understand, then they may not need a special audit.

This is not something which is automatic process. This is done only when needed.

To that extent, this is by exception. It's not something which is automatic.

I see. Got it.

Thank you so much.

Thank you.

Hello? Am I audible, sir?

Yes, you are.

Yes, sir. My first question is regarding the net gain on derecognition of financial instruments.

As we see since FY26, since the start of FY26, there has been some movement in that line item. Going ahead, how should we model that and what could be the strategy for this?

This is something which is dependent on what assets we are able to sell to banks by way of direct assignment. The way it happens is that you basically have certain yield on the assets, certain cost of funds or certain price at which you have sold to the bank.

The difference basically you can take NPV and reduce it by operating cost or service cost and the probable early repayment. That is how it is.

Maybe the simpler way to look at it is that it may vary from quarter to quarter a little bit, but maybe it will be linked to the portfolio of off-book assets that you're assuming your model.

Okay. Sir, the assumption is that it is calculated on an upfront basis.

Had we amortized this value going ahead, what would

It automatically gets amortized because every quarter the assets which have been repaid, to that extent it gets amortized. It becomes a net amount which comes to profit and loss account.

I'm sorry, sir. It was a bit unclear.

Can you just repeat it, sir?

No, it keeps getting amortized as the loans are repaid. What you see is the new assignment minus amortization.

That is what you'll see in the balance in the profit and loss account.

This can be the steady-state number, right, going ahead?

Yeah.

Okay. My next question would be regarding the home finance GNPA.

It has reduced considerably in this quarter. Can you give us some color on that?

No, it's primarily because that certain NPA exiting has, Gireesh also spoke about it, that certain category of assets where we had significantly higher NPA and delinquencies are higher that we have sold to ARC. That has gone off our book in HFC.

Okay. Sir, regarding gold loan, sir, our AUM has grown very strongly.

Keeping in mind, our borrowings have not grown so strongly. When I try to model it on an average AUM basis and when I try to get total income on an average AUM basis, I'm trying to understand as to how should we model this going ahead.

If this growth continues and there is no movement in the borrowings, is there any other way we're looking at it?

It's a good question. Whatever growth, we can fund either by borrowings or by selling assets to banks.

In both cases, our income or our NIM will be similar, 6-7% or whatever, which will come either by way of net interest income, or will come below as off-book income or income from assets which are off-book, DA or co-lending. What will happen, whatever you assume, you assume 60-40, 70-30, so that percentage of income will go above the net interest income line and the remaining will come below the net interest line, broadly in similar range.

Okay. Sir, and these gold loans, sir, at what average gold price we would have booked them?

No, at all gold prices, but gold price gain or loss is not to our account. The customer will take the gold back, only pays interest.

No, I understand that, sir. This movement we've been seeing in gold since the past year now, we're just trying to understand as to in this quarter what price you would have booked that loan at.

Right now our LTV is just about 61%. Obviously part of it is contributed by gold prices also going up.

It reduces LTV. Every day the price varies.

Generally, we keep it sometimes below the 75% price, just as a being conservative. This is a weighted average of everything.

Maybe you can look at LTV, which is 61%, maybe a good indication of what price that it is booked on average.

Sir. I think, sir, we can take this offline.

I think there is some unclarity on this, I guess we can take this offline.

Unclarity, you're saying?

On the gold price, sir. There's some unclarity here.

Maybe I'll try to explain once again, Ansh. Every day we have a gold disbursement and there are certain repayments.

Every day gold price, comes based RBI has already indicated that where do you take gold prices from. Then your maximum loan amount is 75% that we can give to the customer.

Typically, we may end up giving a little lesser, say 70 or whatever. Then on this gold, as the gold prices go up, our LTV will go down.

At quarter end, LTV was only 61%. On a because there are millions of transactions, it's very difficult to say that what if there's any particular loan booked at what price, because they're booked at different point in time, partly repaid, repaid, renewed.

There's a continuous process.

Okay. Got it, sir.

Okay. Thank you.

Good evening to the management team of IIFL Finance. Post embargo, by each passing quarter, I think the operating performance of the company has only been improving.

My only request to the management is if it is feasible the management can issue and clarificatory note and file it with the exchange on this income tax because this special auditor word has spooked the nerves of many participants in the market. That is the reason we have seen large correction in the stock price.

While I do not have any question, but I have a request to the management if a clarificatory note on this can be issued and filed with the exchanges. Thank you.

Sure, we'll do that, Bhavin. Also this analyst call transcript will also be put up on the website.

In the beginning itself, I had explained. Yes, I think your point is taken.

We'll do that.

It's my earnest request, sir, if a separate filing can also be done because not many people go through the transcripts and all, but anybody would go through a one pager or two pager related to this clarification. There is no downside to this, but it may protect the interest of many investors.

Sure. Thank you.

Sure.

Hi. Thank you for the opportunity.

My question is on the MFI IIFL Samasta business. It's to do with the liability book.

One can see that the term loans or probably the bank borrowings was declining till last quarter. Now that mix has sort of inched up.

Though the cost of fund movement between the quarters has been volatile in a way. It was 9.something, 9.7 last quarter, it's inched up this quarter.

There were certain media articles which mentioned that the NBFC MFIs' equation with banks have not been at the best terms and probably whatever new money that they're able to raise from banks are coming at an adverse cost of fund. I just want to understand that article may not be for IIFL Samasta, but I just want to understand what's the ground reality for us and how are we viewing our liability mix on this book?

Thank you.

There's a slight decline in the total borrowings. Basically the earlier loans get repaid, so that also gets repaid.

If you really look at it, looks like 44% to 46%. If you go back 6 months, it was 52% of our total portfolio.

I would say it's more similar level, there's no significant change in that. Our cost of fund has if you see the slide 31 again, gone down for microfinance also by 10 basis points.

I would say that there's not see any significant change there. They're similar.

Given track record has been satisfactory for banks and also the parentage, we have been getting new loans from banks also. This entire fear is more about standalone small microfinance companies which may or may not be able to survive the turmoil that happened last year.

Otherwise, we find liquidity comfortable.

Right. For us the lines and the limits continue to be available from these banking partners, right?

There are no new challenges, or Okay. Okay.

Fair, that's fair enough. If I can squeeze in one more question, again on the NBFC MFI performance.

In your second and third largest state, Karnataka and Tamil Nadu can you help us understand if probably the 30+ book or 30 to 90-day book, how is that performance versus pre-crisis, maybe versus June of '24? Has the trends reversed back or things have normalized?

Or how has been your experience in these two states?

See, Venkatesh will take this. He's our CEO of microfinance.

Yeah. In the month of November and December, the strongest comeback, I can say, was in these two states.

Though the portfolio of Tamil Nadu overall for the industry also has dipped a little, but the collection efficiency has considerably increased. In both the states, considering that Karnataka came out of the ordinance what was there last MFI Act of last year.

It's much better than the last thing. We have back in both the states at around 99.5% plus.

Right. That trend pretty much continues in January, would that be a fair assumption?

Yeah. The trend continues in January, too.

All right, sir. Those were my questions.

Thank you so much and all the best.

Thank you and congrats for pretty good performance. One question on this gold loan group, and now if I correlate that with the Tier 1 of 12.8, how much can this growth continue with this kind of a Tier 1?

Or does it need to necessarily now slow down or you can find something else which allows you to grow fast in gold loans?

Abhishek, see, now I think it more depends on our ability to do co-lending and DA. That is what probably will sustain growth, and if not, then we have to raise equity.

I think that's a very simplistic answer to your question.

Is it urgent now to get equity, or still go say 2 quarters or 3 quarters without raising any?

No, it depends. If we are able to do co-lending and DA, then we can continue.

We'll be on the edge, but we'll continue. We have a strong capital adequacy in our subsidiary company.

For the time being, I think the co-lending engine has to start quickly and strongly.

Okay. And Appropriately,

we'll raise equity sir, which we can do at any point in time. Alternate strategy is to work with the co-lending and DA.

Understood. I have one question for Venkatesh.

What is the disbursements last quarter? Especially if you can break it down into October, November, December.

In October, we would have done around 500-odd crores. In November, we would have done around 700 and 600-odd.

November in microfinance alone, we would have done 700-odd crores. Overall, we would have done 800 crores in December for all products put together.

Okay. Got it.

That is helpful. Then I have another question for Gireesh.

You used the words affordable and emerging, when you earlier made a comment. How do you define it here?

Is it different from your previous form, or what do you classify as affordable, what is emerging for you here?

I think if you look at the market, basically there are four segments. One is super prime, second is prime, third is emerging, and fourth is affordable.

When you talk about affordable, typically this is the business where we would be focusing on starting from tier 2, tier 3, tier 4 kind of cities and towns. This is where we have an opportunity for affordable.

This segmentation is quite standardized across the industry. These segments are pretty much standard.

When we talk about affordable, these are basically on the salaried side, income level of let's say 20,000 to 30-35,000, and on the self-employed also it will be on similar lines. The ticket size will be about 14 to 15 lakhs.

This also covers, under PMAY interest subsidy scheme, where the loan is up to 25 lakhs and the property cost 35 lakhs. This is typically the affordable segment.

If you talk about the segments within this, basically this will be predominantly

The yield would be what in this affordable?

If I talk about, most of the companies will be focusing on yield of 12.8% to 13.5%. This is the affordable business.

When we talk about emerging, this is a level up, where the yield should be in the range of 11% to 11 and 1/2%, both focusing on salaried and self-employed, both formal and informal. This is the differentiation between these two segments.

In terms of The

ticket size should be?

Ticket size should be about 20-21 lakhs. Affordable is 14 to 15, emerging is 20-21, and the next is about prime, 26-27 lakhs, and then we have super prime, which is 50 lakhs and above.

In terms of geography, I would say top 10 probably could be a super prime and prime, and the next 30 cities would be a emerging market, and the next 200 would be affordable.

Okay. When I look at the yields and the average ticket size for the home loans part that you disclose, that's actually the yields blended are around 10.5-10.6, whereas the incremental target that you have is anything 11.5 and say 13, 11 to 13, let's say.

Should we expect that, going forward the portfolio yield or at least the disbursement yields would be higher, and then that should translate into portfolio yields going higher over a period of time?

Yes, you are right. I think the plan is to ensure that in next few quarters, the onboarding yield is going to go up because predominantly our focus is going to be on affordable and emerging, which I spoke about in terms of customer segmentation, property type, and the expected yield.

This would aid in the overall portfolio yield going up. This will take some time, maybe another 2 to 3 quarters, because we've started this already.

Our focus would predominantly be on affordable and then emerging.

The 32,000-odd crore AUM that you have in affordable home loan as you report it in IIFL, that is actually affordable and prime, rather than or rather emerging and prime, rather than emerging and affordable, as you described.

Basically, if you look at these segments, one city would give you an opportunity of doing or being in two or three segments. It is those pockets in a given city which are giving the opportunity.

The exceptions are when you go to tier 3 and tier 4, predominantly 90% of business what we do is going to be from affordable. Every city would give you a mix.

Let's say top 50 to 60 cities would have an opportunity of doing two or three segments within the given city. Our new strategy going forward would be in terms of trying to increase yield and therefore, the overall yield on the portfolio goes up.

Our focus is going to be on different segment, different type of collateral, different kind of profile within the given city. We are today presenting about, we have about 350 branches.

Our focus in this would be on emerging and affordable.

Yeah. No, that makes sense.

For example, just to make it very simple, suppose if you take let's say Chennai. Now, Chennai is a large city, we all know.

In Chennai, there are three segments available, which is prime, emerging, and affordable. There are affordable companies in Chennai doing only affordable business, which is basically catering to outskirts areas, where the property ticket size would be about let's say 20-25 lakhs, and the loan could be about 18-20 lakhs.

Similarly, slightly away from city center would have an opportunity of emerging, and core city center would have an opportunity of either prime or super prime. Some of the large cities would give you opportunity.

The minute you go to small towns and all, I think predominantly it is affordable, which comes at a higher rate.

Sure. No, what I was trying to understand, thank you for the explanation, though, that from the current portfolio which you've got 32,000, the average ticket is more or less in that affordable segment you described, but the yield is lower.

Was it just that underwriting was aggressive, focus was on that or why is the yield lower than typical affordable, which would be 12 and 1/2, 13%?

Today, if you look at where we are present, we are present in top cities, which includes affordable, emerging, and also a little bit of prime. It is basically focused on certain segments and certain customer profile.

There has been a new strategy which is now laid out. I think your question is that we have a book where the yields are quite low even though we are into affordable and emerging.

I think that's the question. Now, what we have done now in the revised strategy is that going forward in these locations, we're going to focus on the segments which we want to focus on.

For example, predominantly it's going to be the affordable and then followed by emerging. There's a change in strategy to a certain extent.

This does not require our expansion in terms of geography because we are already present in many locations which can cater to these two segments. Within those geography, within those cities, a segment focus will be a little different, which will get us a higher rate.

Got it. Got it.

Got it. Thank you so much and all the best.

Thank you.

Thank you.

Thank you for taking up the follow-up. While we are at housing, Gireesh sir, what is the housing book growth that we are looking for from next year onwards?

Housing?

Book

growth.

Housing book growth, yeah.

Yeah. On the book, we plan to grow by about 15-16%, and on disbursement, it'll be 24 to 25%.

Okay. Disbursements 24 to 25%.

Yeah.

Got it. Then a few other clarifications that I had.

Just trying to understand, given that we received that special audit letter yesterday and like you mentioned earlier, if they have 60 days to complete the audit, is it safe to say, right, that in the next 60 days, this audit we'll be done

with? They will do and they'll submit it to the income tax department only.

The report goes to the assessment department.

Okay. All right.

Then this audit is only with respect to certain points, where the IT department might have had a different opinion, right, versus what we would have filed earlier in our returns?

This audit is only related to the findings of the search. Search also was in certain specific areas where they had suspicion.

They collected data, documents, and whatever information and their statements that they wanted. They compiled, and this is restricted to that.

See, this special audit has nothing to do with audit of accounts or whatever. Auditor name is generally can capture lots of things.

Here, their purpose is to verify the things which are found in search. Or related to search findings.

Got it. Got it.

Then, this amount of 1.47 crore, right, that we have paid, right, based on our own assessment, the only thing is after this special audit is complete, maybe the IT department comes back with a final amount, right?

They can raise a demand, and this you can dispute and appeal, kind of thing.

Got it. Then lastly, sir, we said earlier that maybe from next year onwards, there could be a 50-60 basis points decline from current level of credit cost of about 2.5%.

Is it safe to say, given that, like you mentioned earlier, the cleanup in the housing business is complete, the gold loan business is doing well, and then MFI also what we are hearing from others, there's no further deterioration at the margin, the collection trends, the forward creation trends are looking better. Even next quarter directionally, right, you should see credit costs coming down, right, to get to that less than 2% for next year that you guided for?

Yes, I think the glide path has already started. You will see further improvement quarter should see further improvement quarter-after-quarter.

Got it. This was useful.

Thank you so much for patiently answering questions. I wish you and the team the very best.

Thank you so much.

Yeah. Thanks for taking my question, and congratulations, sir, on a very good set of numbers.

On the gold loans, we have seen a very strong growth of around 26% on Q-o-Q basis. What have been tonnage-wise increased there in this quarter?

Yes. There's about 7% increase tonnage-wise also.

Okay. Also on this special audit, was it the case that this special audit was supposed to follow after the RBI embargo, which was there a few quarters back?

Yes. There was special audit done by RBI also, very thorough and detailed special audit.

That was only related to gold loan and for 3 years. Now, although this name is similar, but this is very different.

This is for certain areas of search documents that they want to do and is for a block period of 6 years.

Okay. Okay.

Sir, if you can just give us some color on the overall AUM growth. Like you said that for home loans, we are anticipating a growth of 15-16% in FY27.

Some color on how gold loans we are anticipating growth there in FY27, even on the MFI side and on the business loans. How do we expect overall AUM to grow over the next 2 years' time?

Also on the MFI side, I believe that asset quality, isn't that, should have been much more better relatively because if I just compare the GNPA numbers, the relative improvement for the peers have been much more sharper. What are thoughts on that?

In last two, three quarters, we have been shrinking our portfolio, we're very cautious trying to completely realign our strategy. Our denominator has not grown, has actually shrunk.

That has exaggerated the impact of asset quality and that also reduces our profitability. We'll be cautious, but now portfolio as the industry environment has become more sanguine, we'll see our portfolio also growing and things getting better.

Okay. Otherwise, on-ground, you're seeing improvement on the asset quality behavior on the MFI side?

Yeah. On-ground, there's significant improvement in asset quality, credit culture, and even the leverage of customer has fallen, and the risk is just much lesser.

If you see our slide on microfinance, which is slide 32, you'll see that the zero bucket, which is due today, how much you collect out of that, and that indicates the real strength and that is at all-time peak. It's much better now at 99.5-6%.

Okay. How do we see a overall AUM growth say for FY27 across the segments?

I would rather talk about because see we have a little bit of diversified business model, not very widely diversified, and we have seen that sometimes some segments do much better than expected, some segments do a little lower than expected. On the whole, I think you should see about 20-25% AUM growth next year.

Okay. Okay.

On any internal targets for ROA, ROE in the near term?

Our ROE was in the range of 18% to 20% in normal times. We would endeavor to reach towards that.

That is our internal target in next 2 to 3 years.

Okay. Fine, sir.

Thank you.

Hello, am I audible?

Yes, you're audible. Go ahead.

Sir, a couple of questions. First is on the gold loan Stage 3 provision.

I have seen that we have declined our provision Q-o-Q from 42% to 19% in 3Q. Just wanted to know the reason of the same, and going forward, should we maintain at this level only?

Second, in response to one of the questions, you mentioned that you're comfortable with growing gold loan book at 24-25% Q-o-Q. Was that guidance for 4Q FY26 or beyond that, also we can maintain the same run rates?

These are my two questions, sir.

Basically our pace has been significantly higher. Of course, quarter-over-quarter, probably this pace will slow down over a period of time.

Now I can't say that what will happen this quarter. In the recent past, we have seen that there are two factors that are working for us.

One is gold prices have been moving up. Two, in our branches, we're getting back our old customers and getting our productivity level back, whatever impact was caused by embargo, we're just trying to undo it.

It's very difficult to give any guidance on that going forward. Now you said that the provision we have reduced, that's what you say?

What is Stage 3. Stage 3 losses are always again dependent on gold prices.

The way ECL is computed is based on empirical data. What we have seen is that our losses have been negligible.

That is why this number probably was much higher than what it ought to be. This number could have gone up during the embargo period when even NPAs appeared higher because many customers could not roll over.

And 3 months' interest backlog, it becomes NPA. On a steady-state basis, gold loan business typically will not have any losses.

Also the percentage in Stage 3 also very low, it doesn't make any much impact actually.

Got it, sir. Sir.

These were all my two questions. Thank you so much.

All right. Thank you, Gaurav.

Hi, sir. Thanks for the opportunity.

Sir, just a clarification on the previous participant's question where he was talking about the net gain derecognition. Firstly, what is the purpose we are started doing in FY26 as opposed to FY25?

Second, is it that a better way of raising your borrowing books as compared to a borrowing which we have a 9 9% yield 9% cost of fund? Is it a less cost effective way of doing this?

This is better way because it releases your capital. Secondly, I think we have always been doing this.

Obviously, the volume it has gone up. In the COVID crisis and after that, after IL&FS crisis, after COVID and after this when the liquidity became very tight, that's the time we started doing it more aggressively.

Then we realized that maybe long-term strategy also it makes a lot of sense because it can allow you to grow faster without really having to raise equity and dilute very frequently because the assets go off the balance sheet along with the risk.

Got it. What is the delta, sir, if if can say on a ballpark, what is the delta between our cost of borrowing versus the this we are selling the book on a one-time cost of What is the delta we get on that?

No, again it varies from transaction to transaction. It may be about 100 basis point more cost, but that's for risk and capital and everything else.

Again, it varies. Again, there's a demand for PSL.

There's a demand for retail assets by the banks, like a market where the prices fluctuate.

Understood. Sir, this will be purely on which segment?

This will be purely on the gold loan book?

No, both, even microfinance for that matter.

Okay. Once you're saying this releases our capital, you have mentioned it is amortized.

Once you're saying it is releasing the capital, it is not on amortized, this is on one-shot basis, right?

Once you have sold the assets, they are off your book. Basically, you'll keep getting income on the difference of interest, whatever you agree.

Then you take NPV, provide for some cushion, and then take it as a upfront. Then what happens when the actual loans are redeemed, that's the time then you get the actual interest income and then you amortize this against that.

Actually, it will not be cash flow negative over a period of amortization. Supposing you have sold gold loan for 2 years, and there's a say 5% extra interest cost, 10% is what you've taken upfront.

Every quarter it amortizes, you're getting interest income and you're reducing this that way.

Right, right, right, right. Understood.

What percentage just to so we assume that in the current quarter, what percentage of that amort- amortization would be there of the Q1, which is part of the Q3?

No, there are a number of assignments. I won't be able to give you one data for that.

Because see, over last 5 years, 2 years, 3 years, tens of such transactions would have happened. Everything amortizes at different pace.

Every transaction actually is monitored by the bank and as well as by us.

Understood. Understood.

Every customer is monitored.

Correct, correct. There's an interesting thing to see on the home finance where we have significant improvement in the asset quality basically on the gross NPAs and net NPAs.

Which you've recently mentioned that future plan of growing the AUM book over there. At what level of NPAs do we expect we'll be comfortable in this book?

You're saying home loan?

In the home finance segment.

I think the current level what we achieved in this quarter will be the comfortable level.

All right. Even in the growth which you'll be expecting of a 14% AUM growth and 25% disbursement growth in that?

I think home loan, Gireesh, 15% to 20% is what we are, 15% to 18%? Yes.

Home loan will be slightly slower, but these are long-term assets. So

Yeah. Okay.

That's it, sir. Thank you.

Thank you. Thank you so much.

Thank you so much. If you have any more queries, you can always get back to

Yeah. Thanks very much for joining this call and for your patient hearing.

For any further queries, you can reach out to our investor relations desk, and we will more than happy to sort of clarify any further question that you might have. Have a wonderful evening.

Thank you.