Ladies and gentlemen, thank you very much for joining our Quarter 4 earnings call for fiscal year 2025-26. Joining on this call along with me is our Managing Director, Mr.

Nirmal Jain; our Joint Managing Director, Mr. Venkataraman; along with them, we have Mr.

Girish Kousgi, MD and CEO of IIFL Housing Finance; and Mr. Venkatesh, who is the MD & CEO of Samasta Microfinance.

With this introduction, I hand over the call back to Nirmal to give you an update on the entire macro situation and the strategic elements of the company.

Thank you, Kapish. Good evening, everyone, and thank you for joining us this evening.

Let me start with a brief perspective on the macro environment. As we all know, the Indian economy continues to demonstrate resilience with steady GDP growth, moderating inflation, and broadly supportive monetary stance.

Importantly, credit demand, particularly from the retail and MSME segments, remains strong and these are the sectors which are structurally underpenetrated. In this backdrop, the NBFC sector is entering a more stable phase after a period of recalibration.

The industry's focus is clearly shifting towards asset quality, capital efficiency, and sustainable growth, supported by tighter regulatory oversight and improved risk discipline. In this context, our strategy at IIFL has been deliberate and consistent.

Over the past few quarters, we have repositioned ourselves in terms of the portfolio now towards secured lending. We have exited or scaled down higher-risk segments and strengthened our balance sheet.

Today, we are anchored on three clear pillars or a three-pronged strategy: one, secured lending dominated by gold loan and mortgages, mortgages comprise home loan and loan against property; two, capital-efficient growth through co-lending and off-book partnerships with banks; and three, AI-led operating model to drive productivity and risk control. We are beginning to see the outcomes of our strategy coming through clearly in our performance now.

On technology front, our investment in AI are translating into tangible productivity gains. Across lead generation, underwriting, collections, and cross-sell, AI is improving our conversion rates, reducing credit costs, and enhancing operating efficiency.

Regarding income tax, as there was a search operation in the entire group. The assessment orders have been received for seven group entities and therefore, I believe that for IIFL Finance also, the order is expected very shortly, I think within a few days or a week, we should get it.

We have fully cooperated with the tax authorities and we remain confident in our position, which I had repeated earlier also, that the process should not result in any material adverse outcome for our operations or financial positions or business momentum. With this, now I come to business performance.

Our loan AUM has crossed the ₹1 lakh crore milestone and we ended at ₹108,000 crore of total loan assets. Gold loan continues to be the standout performer.

The business has scaled strongly post normalization with robust growth, stable yield, and a very strong compliance and risk framework, and this remains our primary growth engine. Microfinance is seeing a robust recovery with improving collection efficiency and stabilizing asset quality.

We are growing this book cautiously with a sharper focus on quality and sustainability. In housing finance, we have consciously pivoted towards affordable home loans and mid-sized loan against property as additional products in that entity.

In the last quarter, our AUM has remained flat and profitability remains subdued, partly due to higher than expected stress in our legacy micro-LAP portfolio. On the whole, we believe that the business is at an inflection point.

With new leadership, a sharper product mix aligned to our core strengths, and improved underwriting, we expect consistent improvement trajectory in our housing finance business as well. Overall, the quality of our loan book has improved materially.

Provisioning remains strong, the balance sheet is well-positioned, and as we look ahead, our outlook remains constructively positive. We expect continued momentum in our secured lending portfolio and further improvement in our asset quality, scaling up of co-lending as our core engine of growth, and further gains from AI-led productivity initiatives.

In summary, last few quarters have been about reset, discipline, and rebuilding momentum, and we are now entering a phase of sustainable, capital-efficient growth on a stronger foundation. With this, I hand over to Kapish, who will take you through granular details of our financial performance, and then we will open for Q&A.

Thank you very much, Nirmal. While our investor presentation and the press release is already on our website for you to refer, however, to read out some of the critical numbers for the quarter, Quarter 4 of fiscal '26, the consolidated profit after tax before non-controlling interest stands at ₹623 crore, which is up by 24% on a quarter-on-quarter basis.

We recorded pre-provision operating profit of ₹1,173 crore, which is up 80% YoY and 9% on a quarter-on-quarter basis. For the quarter, the consolidated loan AUM grew by 38% on a YoY basis and up 10% on a quarter-on-quarter basis to close at ₹108,180 crore, driven by gold, which closed at ₹52,581 [crore?]

, up by 150% on a YoY and 11% quarter-on-quarter basis, with a healthy tonnage at 61 tonnes. If I further dissect the AUM, our core products loan AUM comprising home, gold, MSME, and microfinance are up 45% on a YoY and 11% on a quarter-on-quarter basis to ₹104,198 [crore], and this segment aggregates to around 96% of our overall AUM.

A healthy gross NPA number reasonably below to our stated number of around 2%, our gross NPA stood at around 1.5% and net NPA of 0.7%, which is down 77 basis points and 32 basis points respectively if you compare to the same period last year. The company maintains a cautious stance on the MSME and MFI segment while they have really recovered well and the collection efficiency continues to show a smart trajectory.

With the implementation of ECL, our Ind AS provision coverage on NPA stands healthy at 93% with a larger share of secured assets that we have in the portfolio. The assigned loan book, which is coming through our partnership with the banks, has grown out smartly to ₹23,704 crore, up 85% on a YoY, 11% quarter-on-quarter basis.

More importantly, interestingly, with the implementation of the new co-lending regulation, the company has been able to scale this process well with leading banks and our co-lending asset book stands at around ₹14,384 crore, which is up 36% YoY and more importantly, 9% quarter-on-quarter, because the new regulation came on 1st of January. Our quarterly average cost of borrowing decreased 8 basis points YoY and 25 basis points on a quarter-on-quarter basis to stand at 9.16%.

If I talk about our liquidity, with the growth, we raised close to ₹28,165 crore with a mix of term loan, bonds, commercial papers, and ₹7,046 crore was raised through direct assignments of loans. Our cash and cash equivalent including committed credit lines from banks stood healthy at around ₹6,638 crore and are adequate to meet not just our near-term liabilities, but also to fund our continuous growth momentum.

We have a positive ALM, thereby inflows covered far exceed the expected outflows across all buckets, with net gearing standing at around 3.8. A healthy trajectory as with our annualized ROE for Quarter 4 standing at around 18.59%, similar to what we have reported in the previous years and more particularly prior to fiscal '24, we are moving towards that, and the ROA stood at around 2.79% for Quarter 4.

Our basic earnings per share for the quarter was 13.8%. Capital adequacy has stood well with standing at around 17.8% for the NBFC, HFC at 42.1%, and Samasta Microfinance at 26.6%, each of which are well below the minimum threshold of 15%, reflecting our successful movement with the off-book model that we hold.

With this, I open the floor for Q&A.

go ahead.

Am I audible? Hello.

Yes, we can hear you. Go ahead.

Am I audible?

Yeah. First, I want to know what's happening with the special audit?

The income tax special audit.

The special audit got over long back within 60 days of given period,

and I think

we had communicated to exchanges that the special audit report is submitted to tax authorities as an input for their assessment.

By when will we kind of understand the impact of this report? Because there are some speculative reports talking about ₹300 to ₹400 crores.

I think I can't respond to speculative reports, but because the entire group, assessment orders have started coming. Quite a few group companies' assessment order has come.

I believe that in a few days' time, our assessment order will also come. It's just a matter of few days.

Could you elaborate on the impact

if tax We take it this year

our tax outcome will be in

the normal course.

I'm sorry, I couldn't hear you. Could you repeat what

you said? The group company already started getting the assessment orders, the process is going at a full good speed, and our IIFL Finance also, we should be getting our assessment order in a few days' time.

That will be conclusion of the assessment process.

Right. Will we be paying the assessment order or will we kind of ask for a review or will we appeal for this?

How does that work?

Because if there is any assessment order asking us to pay more tax, we will go for appeal because as I said in my opening remarks, we believe that we don't have any tax liability arising out of any tax evasion or not paid tax, so that's not the situation. Like in our group companies also, where demands are not on strong grounds, if they have any demand, we'll appeal against it.

Right. My next question is regarding your gold finance business.

Under the assumption that the gold prices kind of stay where they are and consolidate here, what kind of AUM growth are we going to see for the coming year?

I think if they remain here, we should see AUM growth of around 20% to 25%.

Right. Is there anything happening with IIFL Home Finance?

Demerger? Because we've been talking about this since two years, but it's always gotten to the next quarter or to the next year.

Want to understand, are there any triggers here? Is there anything happening with regards to the demerger of IIFL Home Finance?

No, I think I don't know for two years, we never said that there

No, there's been rumors about separating this, but anyways.

I'll tell you what. In IIFL Home Finance, we have another private equity investor, ADIA.

Obviously, they need exit and the most elegant way to get it listed separately and give exit to private equity investor is through a demerger, because if more than 25% holding is public, it automatically gets listed. The way we had done in 2019, if you remember, our consolidated entity had Wealth, Finance, and IIFL Securities, now IIFL Capital.

I think this is something which we'll have to take a call at board level and I don't want to speculate about it. At this point in time, as we said, that IIFL Home Finance business has reoriented its strategy.

Once it stabilizes, we'll look at it. It's a board's call, but it will happen sometime, but maybe I can't give you a timeline for that.

No, of course. I'm not expecting a timeline, but I just wanted to understand that is this something that you are looking to do?

I'm not saying this year or next year, I'm just asking if

this is something you're This is definitely an option for us.

Right. The standalone business and the Home Finance business separately, right?

Samasta will stay as it is?

No, even Samasta can get separated. As a demerger, there'll be three entities.

Just to clarify, if you demerge, you will demerge into three entities, right?

Yes, sir.

I'll just come back in the queue. Thank you so much for your time.

Sure.

Thank you.

Am I audible, sir?

Yes,

please. Thank you very much for this opportunity, sir.

Sir, just on this demerger, is there any timeline? What should one look at?

By when this we can execute or something like that?

Very difficult. I don't think we can give any timeline because this is not something the board has to decide, the boards of respective companies and shareholders.

This is something which actively we are looking? Would that be a right assumption?

No, see, I'll tell you what. When we had done demerger of our consolidated entity earlier, nothing actively looking at it, but you take a decision and you start the process.

Understood. Fair point.

On the special tax audit, now you mentioned the audit is all done and I think shortly you expect some orders or some assessment to come out. Is that right?

That's right.

Okay. Any expectation we have?

It went well and you did mention that we should not result in any material adverse outcome, right, for the company?

If there is any demand, assessment like in our other companies, 360 ONE or IIFL Facility, they have raised some demand, they'll be contested and we'll go against appeal, because we believe that those demands are not tenable. If there's a demand, we'll go in appeal against it, yeah.

When I say, I don't expect any material adverse outcome because I know that we should not have any additional tax liability. If for any reason they make a demand, we go to the appellate authority, CIT appellate authority, whatever is the appropriate authority and seek justice from them.

See, in any way, for a company of our size, a lot of tax matters which are under litigation, which, as that there's a insurance overriding commission and many other things which are always in litigation. That's a normal process.

I got it. On FY '27 next year, now AUM growth of 20% to 25% we are looking at.

What sort of credit cost and ROA the range that we might be looking at?

Credit cost, this year, if you remember, we have given a guidance of 2.7% to 3%. Next year, our credit cost on the whole will be around 1.5% to 1.7%.

What sort of ROA we are looking at?

Again, that will depend on growth. That 2.4% ROA is to I think it should end at 3%, 3.5%, but one can work out the numbers based on assumptions of growth or the way and the credit cost.

See, significant decline will happen with credit cost, because if you see 120, 130 basis point decline in credit cost, so that goes to the bottom line. That will straightaway improve ROA also to that extent.

Correct. When we say this ROA, that is on AUM, right, when we say that credit cost, that includes the assignment part as well, right?

On AUM. No.

The assignment part losses don't come to us. Hello?

Yeah. Fair point.

That's off-book. There only whatever remains on our book, maybe 10% or 20%.

That is the thing that comes. Credit cost is based on loan book and not the entire AUM.

Credit cost is based on your loan book on balance sheet, right?

That's right.

Understood. That's very helpful, sir.

Would like to wish you all the best. That's it from my end.

Thank you. Thank you, Deepak.

Hi, Nirmal. Thanks for the opportunity.

Just a quick question on the gold finance. The new regulations are in place from the 1st April, in spite of all the appeals from the banks and NBFCs.

How are we addressing that? Are we going to categorize all our gold loans as consumption loans?

Are we going to look at the underwriting part of the gold loans and do the other kind of gold loans? What is the new strategy here?

What kind of gold loan growth are we looking at in '27? The other NBFCs, there are new entrant NBFCs as well and my sense is there will be a huge distribution footprint that a lot of these new NBFCs, including incumbents, would put out as one doesn't need any regulatory approval to put out any new branches anymore.

How are we going to address all of this in the gold finance piece, if you can elaborate on that? It'd be really great.

Second and third is basically if you can clarify on the previous questions on Home Finance and IIFL Samasta demerger that you just spoke of and also the previous clarification on the appeal for tax audit if there's any adverse. Thanks.

Okay. First is the new guidelines.

We are fully complying with the new guidelines from 1st April. Basically, loans above ₹2.5 lakh, they want the credit assessment to be done and the loans to be monitored.

We have set up our system and detailed credit assessment is done for all the loans above ₹2.5 lakh. I think that in a way is good because companies like ours who have good system, processes, and our trained people, then we can tap this market.

That's the first question that you asked, I think that is fully in place, our system, process are working. Most of these loans or entirely they are for MSME purposes.

Typically, these are small businesses who borrow. In our case, the predominant part of loans above ₹2.5 lakh.

Two, I think I already clarified about the demerger that this is something which is decided by the board and shareholders, I can't speculate on it. I already said that in my opinion, it's a logical thing to do given that there's a private equity investor in our housing finance company.

When we'll do it, I don't think whenever it happens, we'll obviously communicate to you, communicate to exchanges, but there's no decision on this at this point in time. Third is about income tax.

Income tax authorities basically do the assessment and they will send the order, which we are expecting in a few days' time. I'm expecting in a few days' time because entire group search operations happened together, everything happened together, and now the orders have started coming.

We have seen that they've come for 360 ONE, IIFL Facility, IIFL Management. All the companies are getting their orders.

Whatever we hear and we understand that this entire process will get over next few days' time, maybe next few working days, give a week or so, maybe, that's my personal opinion. Obviously, there's no firm guidance on this, but should happen very soon, that's what I believe.

Just one clarification, and if you can also give a guidance for the gold loan growth. The clarification is on you said that our gold loans are for MSMEs, we are going to classify these as income assessment?

In that case, as per the new guidelines, we'll have to assess the cash flows of the customers, or are we going to classify them as consumption loans?

No, you're right. We have to do a cash flow assessment and our branches are already doing that.

We will classify them as income generation loans.

Systems, training, and moving towards this.

What would be the guidance for '27 for gold loan growth?

Okay. Somebody asked this question earlier.

If the prices remain at similar levels what they are, consolidate in these current levels, then we should see 20% to 25% AUM growth.

30% to 35%?

20% to 25%? 20, 20, 20, 20% to 25%.

Right. Thank you so much.

One more thing that has happened is that RBI has freed the branch expansion. Our business motto has always been to get into underserved segments where the banking penetration is relatively poor.

When you say banking penetration, many times you see that bank branches are there, but they're mostly focused on deposit, and they don't have infrastructure for loans and particularly gold loans. Many of these small customers, their creditworthiness or their income documents are just such that they really can't borrow any other type of loan.

Now we are free to set up more branches there and penetrate deeper. I think that's the guidance that we can give.

Understood. Thank you so much.

I'll come back in the queue. Thanks.

Yeah. My first question is, the subsidiaries or group companies which received the tax assessment order, were they also subject to the special audit or it is only for us considering maybe size or nature of the business?

No. They were not part of special audit.

Special audit was only for gold loan primarily.

Okay. Nirmal ji, do we have an access to that audit report or it is directly submitted to the tax authorities?

We had access to the report, but it's submitted to tax authorities.

Okay.

Special audit was discussed with us.

Understood. Secondly, in terms of the off-book, which is in the form of DA and co-lending, what's the intent of proportion which we want to keep as an off-book AUM?

Between the DA and co-lending, is the proportion going to change in the favor of others? Reason I'm asking you, there is some changes in the co-lending mechanism by RBI.

Any comments you want to offer there?

RBI has formalized and set very detailed regulations and procedures for co-lending. In a way, that's good because if there are certain things ambiguous and you always won't know how to deal with it.

If everything is black and white and precise, then you know that you have to follow these rules. The total off-book proportion, which is DA and co-lending put together, which is 34%, 35% in that range, our endeavor will be to take it to 40%, 45%.

Within that, co-lending also has been growing relatively and we think that co-lending should grow even further because co-lending has become a very formalized and a very well laid-out process. Let the co-lending grow faster.

If you see on slide it also shows that the co-lending has been growing in our presentation if you see, on slide 9, which was 6% in 15, 14, 13 also is in that range now and we would like it to grow to 20% or so.

Okay. Thank you so much.

Thank you.

Yeah. Regarding the special audit, what is the typical timeline from the conclusion of the audit till you receive the final assessment order?

No, there is no timeline that tax authorities have. Normally, all the groups' tax, they'll do it together.

That's what my understanding is. There's no timeline, I'm not aware of any timeline.

Okay. One of the earlier participant mentioned a rumored tax liability.

Are you expecting such high tax liability? Because you have been mentioning that nothing material should come out of the special audit.

I have said

material

adverse outcome and the demand, whatever it is, will be contested. I have absolutely no idea of what is actual demand going to be.

See, if you see most of the searches that have happened in other companies, then typically they will raise some demand and then that gets basically appealed and in most cases, settled or removed, kind of a thing.

Okay. On the growth trajectory for the housing finance book, what are we expecting for the current financial year?

Girish is here, maybe you want to talk about it?

Sure. Okay.

Growth trajectory he is asking. What we have done is, we had recalibrated our strategy depending on the mortgage landscape and the focus going forward will be on affordable and emerging.

We were doing affordable earlier also, but I think going forward, we will do more of affordable at a higher yield. Now, in terms of growth, we are expecting book growth of about 18% to 20% in FY '27 and disbursement growth would be about 25%

to 27%. 18% to 20% growth in the advances?

In the loan book, 18% to 20% in the loan book and 25% in disbursements, because

there can be some balance transfers and prepayments also, so that's what the guidance for home loan is.

AUM growth of 18% to 20% and disbursement growth of 25%.

Got it. Okay.

That would be it from my end. Thank you.

Hello, am I audible?

Yeah. As we discussed and also you told that the IIFL Home Finance and Samasta needs to be demerged and it is a very logical thing here.

Just want to understand your point of view. I know that it will be a board's decision.

In your point of view, what will be a better way to demerge a company? While we have done the IIFL Wealth and IIFL Capital years ago and completely demerged without any cross-holding, will that be a better way or just we will IPO out the Home Finance and Samasta?

We are not saying they need to be demerged, but I think, yeah, that will be a similar way what our earlier way we had done. The demerger, so that's the most clean way of doing demerger, that the subsidiary shareholders get the shares in the similar economic interest and then the listed company shareholders get shares of subsidiary in the same economic ratio and it gets the de-listed separately.

Yeah. Thank you.

That's all from my side.

Thank you.

There are in the queue I can see the questions, you can call them out.

Hi, sir. Congrats for a good set of numbers.

I have just one question. Your leverage level has increased meaningfully this year, obviously it's following the growth.

What are you thinking about leverage, capital raise? I believe if you want to continue growing at 20%+ you would need capital.

Yes. As I discussed, that our strategy of growing co-lending and off-book faster will probably keep the leverage also under control and meet the capital requirement also.

At appropriate time, we can raise capital, the debt capital that we continue to raise periodically, and equity whenever the time is right, we'll do that. Without that, I think if we can grow our co-lending and DA to targeted level of 40%, 40% between 40% to 45%, we are safe in terms of our leverage as well as capital.

Sir, what is the leverage ratio that you would be comfortable with in your books, in your consol books?

4.5x is okay. I don't think up to 4.5x is any challenge.

Typically, you can go up to 6.7, 7x based on the capital adequacy. Actually, equity requirement is 10%, you can go 10x also.

Less than 5, up to 4.5 is good.

Understood. Thank you so much.

Thank you.

Hello. Sir, my question is on tonnage growth.

We've seen around 1% growth on the Q-on-Q basis on the gold tonnage. What has led to this flatish growth?

Secondly, when we are expecting a 25% AUM growth, that would be purely on a tonnage basis, you're saying, or and how are we planning to achieve this, the roadmap for it?

See, tonnage growth, the previous quarter was better, stronger, but see what has happened in this that customers' requirement of loan basically is really not dependent on the price as such. Whenever the gold prices go up, then and this you will see with other gold companies also, you'll probably see some decline of them.

Customers will keep only as much gold as required, the demand for credit is there and sometimes tonnage will follow that. If they can meet their credit requirement without giving extra gold, they'll do that.

When additional gold has to be given, then that will be done. It's not really linked to that.

That is one. Two, we'll also be expanding our branch footprint a little.

Last year we did not, but now we may. This year we will.

Not aggressively, but just to make sure that we keep the growth momentum up.

Okay. Thank you.

Yeah. Just a continuation question on the net gearing ratio.

We've seen that IIFL Home Finance especially, has operated on quite low leverages, like 2.6, 2.7 net gearing ratio. I just want to kind of understand when will the ROA and ROE pick up here, because we've just hit single-digit ROE in IIFL Home Finance, right?

We've done very well historically. You guided for 18% 18% to 20% growth IIFL Home Finance, but I still want to understand the ROE and the ROA movement here.

It's a good question. Actually we raised equity in Home Finance 2, 3 years ago and the book has not grown because there are some of the businesses, particularly micro-LAP, that we discontinued.

Therefore, the leverage has also fallen and that has also impacted our ROA, ROE. This year, as we said, that as we grow our disbursements and our loan book and loan AUM, then these things should start falling in place.

Which segment are we targeting to get this 18% to 20% growth?

We predominantly focus on affordable and emerging. As we had confirmed earlier, we have shut prime business because of margin.

We currently have about 94 branches focusing on emerging and 221 branches focusing on affordable. We are also increasing our branch network on the affordable side.

We plan to open about 100 branches this year in a phased manner. We have dedicated branches for affordable and emerging, dedicated teams, and we are also pivoting towards higher yield.

We were doing affordable business earlier also, but we were doing at a lower yield. Now we are pivoting towards higher yield, which will be to start with about 12%+ this year and going forward, we will further up the yield in line with the market.

This is what we are planning. As mentioned earlier, we plan to grow at about 18% to 20% on AUM this year, on book also around similar, on disbursements, it will be about 25% to 27%.

Two things are happening: one is very clear strategy and focusing on affordable and emerging, where we have an opportunity of higher yield, and number two, upping the yield both in affordable as well as emerging.

Just a question on your strategy to focus on affordable housing. Hasn't premium real estate outperformed affordable housing in the last 4 to 5 years, especially post-COVID?

Also on the yield part, I think our yields are around 10.55%, right, if I'm not mistaken, in IIFL Home Finance?

On the aggregate basis, yeah. Yes, you are right.

By let's say by next year, where are we looking for the yields to move towards, from 10.5 to where?

Prime market has outperformed, luxury segment has outperformed the affordable in last 2 years, that's a fact, because interest rates were slightly elevated. That is not our sweet spot because that is at a very low interest rate, 8%, 8.5%, 7.5%.

It can start based on AAA, but still it is at a much, much lower rate. On the contrary, affordable has not probably grown very strongly in last 2 years, but there's an opportunity there.

Girish, you want to add something?

Yeah. If you look at the overall mortgage industry, the growth is about 13% to 14% for last 4 to 5 years' time.

If you look at affordable per se, the growth is about 18%

to 20%. The growth in affordable is The lopsided is that super luxury market has really grown, but that's only 2% of the market, the Bombay and Gurgaon, that has grown very rapidly.

That is an exception, yeah.

Correct. The overall, the growth in affordable is much, much higher than all the other sectors.

We see a lot of opportunity in affordable given the backdrop of government focus on affordable with PMAY 2, which specifically focuses on interest subsidy scheme, which was launched last year October. This time, this scheme would ensure that customer on book would be there for a longer time because there is incentive if customer stays with the company for 5 years.

The customer attrition would come down, number one. Number two, this would largely improve the repayment behavior of the customer because one of the ask is that customer should be current and non-delinquent during the entire period of subsidy time, which is 5 years, because government would pay subsidy in five annual equal installments.

All these things would ensure that affordable as a segment would grow at the same pace or maybe slightly higher vis-a-vis compared to. Of course, there are certain pockets in certain segments, which is luxury and super luxury in certain markets, the growth could be higher.

At a aggregate level, there's lot of opportunity on the affordable side and to a reasonable extent on the emerging.

Just putting in a point here. Why aren't we focusing on LAP loans?

Through my personal experience, I can tell you that LAP loans have a higher yield than housing loans. Are we planning to focus on LAP loans going forward?

Absolutely. I think we will be focusing on LAP both on affordable as well as emerging.

Now we are completely out of prime as a segment, but we would focus on LAP. Today, if you look at the overall AUM, our LAP mix is about 18%.

80% is HL, 18% is LAP, and the rest is construction finance. So, 18% if you look at the mix, it's quite low, but there is lot of opportunity.

Although it comes at a higher yield both on affordable and emerging, our focus is very clearly there on that as well.

Just to one point, please.

When

we were doing micro-LAP, these are ₹3 to ₹4 lakh rupees of loan to microfinance customer. That we discontinued.

Now, when we say affordable LAP, it's typically about ₹13, ₹14, ₹15 lakh rupees of LAP, similar to what our home loan customers are, which the interest may hover around 16%, 17% type.

Right. No, see, there's one

That's a great business to be. That's a good business and we are there in that business, yeah.

No, sir just pointed out, we have an 18% exposure to LAP and if we want to focus on higher-yielding products and get our yield higher from 10.55%, because 10.55% is basically a very low yield for an housing NBFC, right? Obviously, LAP as an opportunity is big and LAP in terms of ticket size also is pretty huge, at least in metro cities, right?

The only thing I kind of wanted to point out is our leverage in the Home Finance business is quite low now and I really hope that your AUM growth through LAP or affordable housing or premium prime loans or emerging loans kind of picks up this year and we again move back to the double-digit ROE. Do you think that is going to happen this year?

That will happen. That should happen.

What you're saying is right, that there's an opportunity to grow faster. Girish has got a team and things in place, last few months we were just trying to get that in order.

Hopefully, what you're saying is the correct strategy to work on. We are working on that strategy, let's see.

Right. As far as IIFL Samasta Samasta is concerned, I just wanted to understand which segment are we going to focus from here onwards for this year, for this financial year?

Venkatesh is here. Samasta, he can take this question.

See, we want to get back to our AUMs where we left off in March '24, so that would be the key thing. We're cautiously growing and the guardrails have been working well.

Within these parameters, we are looking at how we can retain our existing customers and grow our book within the geographies we are already operating in.

No, but my question was regarding the segment, right? We've been growing in the MSME, I think.

I wanted to understand if we're focusing on the individual or group loans or what kind of unsecured loans are we going to focus on?

No, no. If you look at it, see, the qualifying assets need to meet a criteria of 60%, our key growth driver would be the microfinance loans.

Our micro-LAP would also grow. We would be growing overall on around 20% odd.

Within the things, micro-LAP is the only thing other than the microfinance which we are focusing on actually.

Right. Your average ticket size in these loans are going to stay here?

I think it's around ₹68,000 per loan, or is it going to move upwards? Where have we seen this kind of sustain average ticket size?

Average ticket size in our microfinance when we are lending, it's around ₹68,000, but in our micro-LAP, it's much, much higher.

Is it upwards of ₹4 to ₹5 lakh?

It's around 4.8 lakh.

Right. Okay.

Theek hai. Thank you so much.

Sorry?

Slide 33 has these data in detail.

Understood. Thank you.

Thank you so much for taking all my questions. Thank you to the entire team.

Thank you.

Hi. Good evening.

Thanks for taking my questions. If I can just understand a bit more on the mortgage loans.

Number one, why was the growth almost kind of muted at ₹32,000 to ₹33,000 crores in FY '26? How are we thinking about it going forward?

The other part of my question is, how are we looking at competition in this space? The competition is always tough, but do you see the competition accelerating, and especially from where I'm coming is that some of the other companies, housing finance companies like Bajaj Housing, PNB Housing, they've been actively entering the affordable and the lower ticket size near prime housing, which is in the ₹15, ₹20, ₹25 lakh zip code.

Do you think that the competition incrementally tightens further, and what are you trying to do to mitigate that? Those were all my questions.

Thank you.

Let me take the second and third question first. One, talking about growth, as I had mentioned earlier, we plan to grow from here onwards and the guidance what we have given is about 18% to 20% on AUM on the book and 25% to 27% on disbursement.

If you look at competition, what used to happen is that amongst all the four segments which is there in the mortgage business today, which is super prime, prime, emerging, and affordable, largely, housing finance companies were focusing on affordable and emerging, to a small extent of prime. We took a decision of not getting into prime because to start with, we will have a challenge on margin, and after a year, year and a half, we would have no customer attrition.

Right? Now, what has largely changed, if you look at any affordable company, once they reach a particular size, growing the book was a challenge.

Going forward, this has eased out, as I mentioned about the lock-in which is there for 5 years on the interest subsidy, and this is a large scheme. This is on home loan and most of the loans, depending on where we want to focus in terms of segment and geography, would fit into interest subsidy.

This would ensure that we will be able to retain customers on book for 5 years from now onwards, which was earlier about 12 to 18 months' time. Once we onboard the customer in affordable segment, after 12 to 18 months, because of the pricing difference, customers would switch from a company focusing on affordable to companies focusing on emerging, because customer would have upgraded in terms of bureau score and customer would get a lower rate and therefore BT outs were higher.

Going forward, in affordable, BT out would come down given the backdrop of interest subsidy, number one. Number two, if you look at competition, competition is there.

It was there 7, 10 years back, last 5, 6 years also there was competition. The only point is the market is huge.

Affordable market is huge. Right?

Today, if you look at, there are not more than seven to eight big companies in affordable who are actively doing business. There are another 80+ other companies, but their AUM is very, very small, their book is very, very small.

Opportunity is huge and growing the book was not a challenge, customer retention, book retention was the challenge. Now there is a solution for that thing.

As long as we get a strategy right in terms of geography, segment, and pricing, I think book retention won't be a problem and in terms of competition, huge opportunity and we don't see any challenge at all in terms of growing the book. Answering on the last point, if you look at last year, our disbursements and book growth was muted.

I think earlier, we had said that we were in to micro-LAP and that had a lot of overlap on the MFI customers. We all know that since last 2 years, 2 years back the challenge started in MFI industry.

Of course, now it is almost recovered. Last 2 years, there was a overlap between the MFI business as well as our micro-LAP, we also faced a challenge, we had to rework on our strategy, which we have done now.

We have exited that business and we don't intend to do that business going forward. That is one big reason as to why the growth was muted.

Now we have reworked on our strategy and going forward, you will see growth happening in IIFL Home in line with the industry.

Got it. Thank you for that.

That's very helpful. If I can just ask for your short-term borrowing in the shorter end of the curve, how are the money market rates behaving today for you versus let's say the fourth quarter average, if you could give us some sense?

When the war broke out, the last month the rates had shot up and liquidity became very tight. It's normalizing now very soon.

I think as we speak, rates are coming back. In between maybe month of March, April, a little aberration, maybe April first half at least.

Things are getting back to where they were and what we see is that the rates are trending down. Many times, it's a function of liquidity rather than the benchmark rate.

What we see is that the RBI's monetary policy has been pretty pragmatic in terms of managing liquidity. We see that things are getting better.

Got it. Thank you.

That's very helpful. Thank you so much.

Thank you. Thank you, Gaurav.

Hi, sir.

Hi.

Can you share the roadmap of improving standalone credit rating and how does that translate into reduction of cost of funds?

Also,

what would be the estimated impact Sorry?

Your voice is a little muffled. Can you repeat, please?

Yeah. Can you share the roadmap for improving standalone credit rating and how that translates into reduction of cost of funds?

Thank you. A roadmap for standalone credit rating when we have been talking to credit rating agencies, one of the criteria they have their size and maybe ₹1 lakh crore is a good benchmark, so that we have crossed.

Two, obviously, they look at the profitability and the capital adequacy. The roadmap to do that is the focus on profitability, focus on asset quality, which you see that our asset quality has improved significantly, GNPA at 1.5%, way below our guidance of 2% and less.

Our NNPA around 0.7% odd, which again is pretty healthy. Now, I think the only one thing that we need to work on is our capital adequacy, which either we improve our co-lending and off-book significantly or we raise capital.

Besides that, I think we are on track on many other criteria as I spoke, whether the size of the business, asset quality, and profitability.

Sir. What would be the estimated

Now see, we are AA stable and we are two notches below the best. They can be AAA, they can be AA+, and AA.

Obviously, our first step will be AA positive, AA+. I believe that our cost of funds can go down easily by 100 to 120 basis points, once the rating improves.

Okay. Sir, what would be the estimated impact of a one-notch upgrade on borrowing cost and profitability?

It's

very, very difficult, because that depends on rating agencies, that's a call based on the macro environment, sector view, and everything. Obviously, anything like geopolitical, inflation, crude weighs on their mind for the sector.

Really this is not a question that I can answer correctly.

Okay. Thank you very much.

Thank you.

Thank you very much, ladies and gentlemen, for joining this call late evening today. For any further queries, we are available and you can drop an email to our investor relations team and we'll be happy to answer.

Thank you very much and look forward to meeting you again soon.

Thank you so much. As Kapish said, that anything else, you can always reach out to us by investor relations.

Also, there's a data book, which is on a very detailed Excel sheet about all the relevant data that can go into any detailed analysis model. Thank you so much.

Good night. Have a good day.