Thank you. A very good morning everyone, and thank you for joining us today.

I'd like to wish you all a very happy and prosperous New Year on behalf of the entire leadership team at LTF. Joining me today on the call are our CFO, Mr.

Sachinn Joshi, our Chief Operating Officer, Mr. Raju Dodti, and other members of the senior management team of L&T Finance.

Similar to our previous calls, today's call is divided into two sections, taken up sequentially by myself, followed by our CFO, Mr. Sachinn Joshi, who will be talking about the overall business metrics and financial performance.

Our last interaction during the Investor Digital Day on the 6th of November 2025 was well received, wherein we outlined in detail our business and technology transformation roadmap for the next few years. We also had a chance to share with you the headline business updates.

In today's call, we will focus on the performance update for Q3 FY26, alongside sharing our outlook for the rest of the year. At the outset, I'm happy to state that our core retail franchise continues to be resilient, and we are confident that the momentum we have created for the business during the recent quarters will sustain through the remainder of the fiscal year and would continue into FY27.

Also, opening commentary, we'll be happy to take questions on the call. Before we delve into the highlights of the quarter, I would like to give you some flavor of the current macroeconomic scenario and sectoral outlook.

Global uncertainties persist at a highly elevated levels. The Indian economy, though not fully immune to the external headwinds, has demonstrated remarkable resilience on the back of coordinated fiscal, monetary, and regulatory policies and bolstered by a strong domestic demand.

Real GDP registered a strong growth of 8.2% in the second quarter of FY26. NSO's first advanced estimates project that India is set to deliver a 7.4% year-on-year real growth of GDP in FY26, fueled by robust private consumption and capital investments.

The growth in private consumption is being sustained by robust rural demand and easing inflationary pressures. Headline inflation has remained below RBI's lower tolerance level for four consecutive months and is projected to remain benign well into FY27.

Overall demand condition has remained robust, building up on the festival season pick-up. First advance estimates for Kharif 2025-26 project a record food grain production.

Mandi arrivals started late due to delayed monsoon and harvest cycle and lower crop prices. However, it is catching up fast in the last three weeks, as government agencies have begun direct procurement at various APMC mandis.

Rabi sowing is near complete as well and stands 2.8% higher on year till date. This bodes well for rural cash flows.

Urban consumption demonstrated strong acceleration in Q3 FY26 owing to the GST 2.0 reforms and supply-side de-bottlenecking was able to cater to the increased demand. As food inflation remains benign and consumptions indicator remain robust, we are confident that the growth momentum of the Indian economy will sustain well into FY27.

To start off this quarter's highlights, I am pleased to inform you that we have achieved the highest ever quarterly core PAT of rupees 750 crores, up 21% year-on-year, before a one-time exceptional impact of the new labor code amounting to rupees 29 crore. PAT, even after the one-time impact, stood at a highest ever of rupees 739 crore, up by 18% year-on-year.

This profitability has been recorded on the back of highest ever quarterly retail disbursements of rupees 22,701 crore, up 49% year-on-year. This has led to the retail book growing to 1,11,990 crore at the end of this quarter, reflecting a growth of 21% year-on-year and an ROA of 2.37%, 2.31% for Q3 FY26 after the impact of exceptional items, reflecting a growth of 10 basis points year-on-year.

This quarter showed a strong growth in total income, up 18% on a year-on-year basis and 8.4% on a QOQ basis, and a stable operating cost trajectory with increased only 7% on a year-on-year basis, including the one-time labor code impact, leading to a PPOP growth of 25%. This was aided by a 19 basis points sequential improvement in net interest margin plus fees at 10.41%, driven by a continuous focus on yield and fee improvement and efficient liability management strategy.

We are pleased to share that in line with our guidance we have not used any macroprudential provisions during this quarter, indicating the return of our rural business finance vertical to a near-normal credit cost trajectory. The positive dividends from the early implementation of Cyclops in two-wheeler, SME and farm business continue to accrue well and will show up in meaningful reduction in credit costs through FY27.

The credit cost this quarter has moderated from 2.98% — that was before macroprudential provision utilization last quarter in Q2 FY26 — to 2.8% in Q3 FY26, a reduction of 15 basis points QOQ and 8 basis points year-on-year. It is to be noted that this includes a one-time charge of rupees 28 crore on certain co-borrower provisions.

Excluding this one-time impact, the core credit cost from operations came in at 2.74%, a 24 basis points reduction on a QOQ basis. Our core credit cost in the prior three quarters has been 3.8%, 3.43% and 2.98% respectively, followed by 2.74% this quarter.

This trajectory of paring of credit cost will culminate in the achievement of the guided 2 to 2.2% corridor by Q4 FY27. In my previous call, I had mentioned that the microfinance sector had shown green shoots of recovery in this quarter, and in this quarter I am pleased to inform you that we have seen sustained resilience on uptake in both disbursement volumes and collection efficiencies in our microfinance portfolio.

The quarter saw 38 basis points improvement in Karnataka monthly collection efficiency, which increased from 99.18% in September 25 to 99.56% in December 25. The pan-India zero DPD collection efficiency improved 20 basis points to 99.7% from 99.5% during the previous quarter.

The aversion of the specific event risk has resulted in nil utilization of the macroprudential provisions during the period. Please refer to slides 34 of the investor presentation for a detailed flavor of the RBF business.

I would now like to share an update on the newly acquired gold loan business, which has gained significant momentum with quarterly disbursements of ₹1,408 crores, up 43% QOQ. We continue to expand our geographical footprint and have added 64 new gold loan branches this quarter, focused on areas with high cross-sell potential.

By the end of FY26, we plan on establishing a distribution strength of 330-plus gold loan branches. In line with our earlier guidance, Cyclops is now implemented in our personal loans business and will complete a full rollout by the end of Q4 FY26.

The engine continues to perform exceedingly well in our two-wheeler business and is exhibiting the first green shoots in the farm and the SME business. The net non-starter of the two-wheeler portfolio went down from 2.36% in December 24 to 0.41% in December 25, and in the farm business, the net non-starter reduced from 1.5% in December 24 to 0.42% in December 25.

We are confident that as disbursements through this engine scales up across businesses, our portfolio quality will get enhanced with lower bounce rate and non-starters, leading to lower roll-forwards and thereby reducing the overall cost of credit administration for the organization. Our next digital initiative, Project Nostradamus, an industry-first AI-driven automated real-time portfolio management engine, went live in beta mode in two-wheeler financing in August 25, and the engine has started delivering real-time actionable insights for proactive portfolio management to monitor performance down to an individual micro-market cluster.

We also initiated two primary AI initiatives: Project Helios and Project Orion. Project Helios serves as an agentic AI platform that enables underwriters to make faster, consistent, and accurate decisions.

This has already processed 5,000-plus cases, resulting in a 30% reduction in turnaround time and saving 1.5 hours per case in our SME business. This will slowly be extended to all our other lines of business as well.

Project Orion is a conversational Nostradamus co-pilot designed for automated portfolio monitoring, allowing credit teams to query complex delinquency and vintage data in real time, which is currently live in the two-wheeler business. I would like to add that adherence to the RBI's guidance regarding provisioning for co-borrower exposures has contributed to an increase in provision coverage ratio this quarter from 70% in Q2 FY26 to 72% in Q3 FY26.

Now I would like to share an update on our quarterly performance against the Lakshya 2026 goals. The first milestone was to achieve retailization of greater than 95% by FY26.

We have achieved a retailization of 98% in Q1 FY26, which has remained at the same level during Q3 FY26. The second milestone of retail book growth: we had set ourselves a retail book growth target of 25% CAGR, against which we achieved a CAGR growth of 28% between FY22 and FY25.

The third milestone, which is on asset quality front: we maintained the retail GS3 and NS3 levels closer to the threshold levels of 3% and 1% respectively, and our consolidated GS3 and NS3 stood at 3.19% and 0.92% respectively. On the fourth and last milestone of ROA, we achieved an ROA of 2.31% in quarter one, quarter three FY26.

This includes a one-time exceptional item impact of the new labor code of ₹29 crores, and ROA before exceptional items is 2.37%, which has been achieved without the use of any macroprudential provisions. I would like to reiterate that we continue to work towards achieving our Lakshya 2026 target of 2.8 to 3% ROA in Q4 FY27.

As mentioned earlier, I would now like to give a brief update on the five pillars of execution that we had enumerated in October 2023 and continue to be in implementation mode against the same. Customer acquisition: The focus continued to be on expanding our customer base, both by deepening our reach in existing segments and broadening our geographical and digital footprint through partnerships.

The implementation of GST 2.0, coupled with a favorable monsoon, served as a catalyst for robust festive demand this quarter. Leveraging this tailwind, we successfully onboarded 7 lakh new customers, up from 5.9 lakh last quarter.

For a deeper dive into our acquisition metrics and repeat customer share, please refer to slides 14 and 15 of our investor presentation. Sharpening credit underwriting: We have given extensive details on the design and performance of our new-age underwriting tools in our investor digital day deck on slides 6 to 7, and our focus remains on implementing Cyclops in our mortgage and rural business finance verticals in FY27.

The model risk management framework and team has been significantly boosted to guard against any unforeseen pockets of execution risk arising from the plethora of machine and deep learning models running across our state-of-the-art AI-based credit tools. Futuristic digital architecture: We continue to work on upgrading our technical capabilities, and our focus on continuously strengthening our IT framework remains calibrated.

I have already spoken about Project Cyclops and Project Nostradamus. Full stack Nostradamus implementation will be completed in the two-wheeler business by March 2026, and will be implemented in personal loan and the rural business finance vertical in H1 FY27.

Under the Planet 3.0 initiative, the company has achieved significant digital penetration, with over 2.2 crore app downloads, which now features a multilingual conversational voice agent for real-time loan servicing. This quarter, we also launched Partner Planet mobile app with a complete service suite for our dealer partners.

To strengthen the cross-sell engine, a new digital tool called Loan Offer Pod was operationalized in Q3 FY26 and will be scaled up in the coming quarters. This operational efficiency is further bolstered by KAI voice and chat, an agentic AI solution currently handling automated collection calls in 11 languages across multiple lines of business.

Please refer to slide number 59 and 60 in the investor presentation for operating metrics on the app. Brand visibility: We continue to focus on our targeted customer engagement, leveraging our brand ambassador, Jasprit Bumrah.

During the quarter, we also ran campaigns for our two-wheeler and farm finance business while participating in major agricultural expos in Gujarat and Indore. We successfully concluded the second edition of our flagship BFSI AI event, RAISE, which attended 4,500 attendees and 40 speakers.

A key highlight of the event was launch of Pitch Point, an AI startup pitch platform to cultivate the fintech AI entrepreneur ecosystem. Capability building: On the capability front, to strengthen our presence and to be a pan-India player, we are expanding our gold loan branches to over 330-plus new branches in FY26.

Central to this strategy is the integration of some gold loan branches into multi-product Sampoorna branch network, where we inaugurated our first Sampoorna branch in Ujjain, thereby creating a more comprehensive service ecosystem for our customers. Till date, out of the new branches, gold loan branches we have opened 11 are in the Sampoorna branch format.

I will now request Mr. Sachinn Joshi, our CFO, to take you through the financial updates.

Thank you, Sudipta. As always, I will be walking you through the financial performance of the company for the quarter.

Consolidated NIM plus fee for the third quarter improved 19 basis points QOQ to 10.41% from 10.22% in Q2 FY26. This has been contributed by stable yields and cost of borrowing reduction due to treasury efficiency, which resulted in lowest ever weighted average cost of borrowing at 7.25%.

Consolidated PAT after one-time exceptional item for the quarter is at 739 crores. This is up 18% year on year.

Quarterly retail disbursements stood at 22,701 crores. This is up 49% year on year and 20% quarter on quarter.

The retail book stands at 111,990 crores, up 21% year on year and 7% quarter on quarter. Our consolidated book stands at 114,285 crores, up 20% year on year and 7% quarter on quarter.

Consolidated ROA after one-time exceptional item stands at 2.31%, up 4 basis points year on year and down 10 basis points quarter on quarter. Consolidated ROE at 11.07%, up 86 basis points quarter on quarter and down 26 basis points quarter on quarter.

Talking about overall business results, let me start with rural business finance. This business registered quarterly disbursements of 6,740 crores, delivering a strong momentum with a growth of 47% year on year and 7% quarter on quarter.

This growth was driven by improved collection efficiency and sectoral trends. The book size in turn reached 28,976 crores.

This was up 10% year on year and 6% quarter on quarter respectively in the third quarter. In the pharma finance vertical, quarterly disbursements stood at 2,078 crores in third quarter.

This was up 12% year on year and 68% quarter on quarter. The book size reached 16,671 crores, reflecting a growth of 11% year on year and 5% quarter on quarter.

GST 2.0 along with favorable monsoon periods, robust festival demand, this resulted in all-time high disbursements for the pharma trends. The urban finance business, the segment comprises two-wheeler, personal loan and home loan.

Let me begin with two-wheelers. The business registered quarterly disbursements of 3,217 crores in the quarter.

This was up 33% year on year and 28% quarter on quarter. GST 2.0 and robust festival demand resulted in all-time high disbursements.

Notably, 87% plus of two-wheeler disbursements in December 25 went to customers from the prime segment, average 53% for the month of March 24. This reflects our focus on quality growth and risk-adjusted returns.

The book size reached 13,913 crores, an increase of 10% year on year and 7% quarter on quarter. In the personal loan business, we achieved a quarterly disbursement of 3,574 crores.

This translated into growth of 118% year on year and 23% quarter on quarter, with the book size reaching 12,810 crores, an increase of 64% year on year and 18% quarter on quarter, attributed to the successful scale-up of BigStep partnerships. Moving on to housing, we achieved quarterly disbursements of 2,879 crores, up 16% year on year and a growth of 6% quarter on quarter, with the book size at 28,682 crores, an increase of 22% year on year and 5% QOQ.

Growth in the segment was supported by new partnerships and a strong network of distribution channels. In the SME business, quarterly disbursements stood at 1,550 crores, up 24% year on year and 6% quarter on quarter.

The book stood at 7,946 crores, up 37% year on year and 6% QOQ. In the gold loan business, quarterly disbursements stood at 1,408 crores, up by 43% quarter on quarter, and the closing book stood at 1,738 crores at the end of third quarter, up by almost 18% quarter on quarter.

Let me now hand over the call back to Sudipta to make his closing statements. Thank you, Sachinn.

In closing, I'd like to state that Q3 FY26 was a robust quarter driven by macro tailwinds, and I expect the structural momentum to continue into Q4 FY26. The normalization of the RBI business augurs well for our business momentum, and we expect to make gains in the same.

All our businesses have been primed for execution over the last couple of quarters, and we can expect the positive outcomes to continue through FY27. Our asset quality will continue to improve through FY27 as Cyclops underwritten portfolios take center stage and their share continues to increase.

The improved business momentum, reduced credit costs and continuous focus on operating efficiency should lead to a continual improvement in ROA and improving ROA trajectory as the leverage increases. We thank you for your support throughout our transformation journey thus far and look forward to continuation of the same.

Please go ahead. Hello.

I just have a couple of questions. Firstly on credit cost, you have explained that, the incremental portfolio is doing well, and, you've given detailed explanation on the credit cost.

Your annual reset would happen every year in the fourth quarter. How would it pan out in FY27 fourth quarter?

what would be the pull and push factors? Because there will be a reset even then next year.

That's my key question.

Thanks, Mahrukh. Sachinn here.

Let me take this question. You are right.

Every year, end of the year in fourth quarter, we do the, we revisit the ECL models. If I recall, you mentioned how will it pan out in FY27 Q4, right?

Yes. FY27 quarter 4, we believe will be a much better revisit.

We are in fact waiting for that day and that quarter because by then most of our book would have been seasoned through the, using the Cyclops underwriting tool, which would mean that directionally, the overall models would start taking into account the benefit flowing through slowing down of slippages, which are quite evident. if you look at the slippages between first and the second quarter, the slippages were lower by about 160 crore.

Between Q2 and Q3, the slippages have come down further by about 190 to 200 crore. Clearly it's evident that as more and more newer portfolio is getting created using Cyclops, the flow forward has been slowing down.

It's not just Cyclops. There are lots of other tweaks done to various underwriting models, which are now leading to improvements being seen across whether it's two-wheeler, whether it's farm, personal loans, and on the rural business finance also Cyclops is not yet implemented.

We have already showcased to the world how we have been better than the other industry players. We believe that come quarter four of FY27, we will be in a far more comfortable position compared to where we are today.

I hope I have answered your question.

Yes, that's good enough. Thank you.

Thanks a lot.

Thank you.

Yeah. Hi.

Again getting on to the credit cost trajectory, given that MFI collection efficiency has improved, plus when you look at it in terms of two-wheeler as well as farm equipment, the non-starter rate has also improved from, say, compared to that of September. Still in terms of credit cost, maybe it was 15-odd basis points, anyone adjusting for that 25 basis points.

Was it equally satisfactory from your end? Would this be the run rate of improvement, or there was anything specific during the quarter and the run rate of improvement should actually accelerate from here on to get towards your guidance of 2 to 2.5% by Q4 of FY27?

Thanks, Kunal, for the question. If you see, and I'd like to point out the overall credit cost, if you, for the last three quarters, right?

At the peak of the microfinance crisis, we actually, and these numbers are without factoring in the macros, right? At peak we had gone up to 3.83%, 3.8%.

From 3.8% we came down to 3.43%, right? From 3.43% we came down to 2.98%.

Now obviously, in unsecured, especially when the pool which is there, which is the unsecured pool, the speed at which it goes up, when any flows quickly. When you see an improving trajectory, normally the pace of improvement will be very rapid in the first few quarters as the portfolio normalizes, and the slope will slowly tend to flatten out, right?

That is what you see. If I take away that 26 crore one-time impact that we have got because of the co-borrower prudential provision that we have taken this quarter, the degrowth is around 25 basis points degrowth, right, in credit cost.

If you see directionally, the trajectory of pairing of credit cost remains unabated. Now, for example, next quarter and over the next couple of quarters, right, we will see improvements, and we are very, very confident.

See, when we guide to 2 to 2.2, see our net non-starters, as I said in my... net non-starters in two-wheeler is down to 40 basis points levels.

net non-starter in farm is down to, 40 basis points levels. Sachinn spoke about the slippages coming down, right?

The slippages, the gross slippages this quarter between last quarter is lower by almost 200 crore, right? The slippages also have been coming down with every passing quarter.

I do believe that the credit cost trajectory will continue to improve. Now some quarter it might be a significant improvement, some quarter it might be a less than significant improvement because, this also depends upon the collections efficiencies in that particular quarter and the efficacy of the entire, how the collections team have been able to do it during that quarter.

The only thing is that, credit cost, if your expectation is that the credit cost will actually move in a metronomic regularity in a straight line fashion, that sometimes in real life does not happen, right? What we are very, very confident is that 2 to 2.2% reaching that 2 to 2.2% guided trajectory by Q4 of FY27, right?

If the tailwinds are with us, we might reach it before Q4 of FY27 also, right? The fact is that on a conservative basis, I would like to say that we are very, very confident of reaching that trajectory by Q4 of FY27.

Sure. Just a related one, why this 23

crore is a one-time, given that the co-borrower exposure prudent provisioning would be business as usual every quarter? This is a little different from that, Sachinn.

This is the nature. If you can just highlight that.

The co-borrower piece, at industry level there were different ways of either taking it into account or not. The example I can give you is that if there is a husband and wife who have taken exposure in one particular business, the wife has taken exposure to another business loan, completely different, and that loan was standard.

We did not consider that because that was a co-borrower taking a fresh loan. Those loans, because they were standard, were continued to be shown as standard, and hence the provisioning was as per the normal stage one provision.

At this quarter, post RBI interaction, at the time of inspection, we were advised that we should take into account all such accounts as well. The cumulative effect of this has been about 23-odd crore, and because it's cumulative, going forward on a quarter-on-quarter basis, this will be very minimal.

You can also understand this, they are all retail loans. The overall impact will be very minimal and which will get subsumed within the normal costs that we take.

perfect. Thank you.

Hi, am I audible now?

Prafulla, you are audible.

Sir, many congratulations on a great transformation and turnaround. Just a couple of questions.

One, very strong delivery on NIM and fees, and as the structurally lower credit cost regime starts to play out, do you think that there is a trade-off between NIM and fees and credit cost as a business model?

Thanks, Prafulla, for the question. I would go back to what I had said during my analyst call that we are a risk-first tech-first diversified financial services player.

Obviously, many of our decisions on customer segment choices have been driven by this tech-first risk-first philosophy. Having said that, we are also very, very cognizant of the fact that we need to balance our NIMs and fees and give a predictability to our NIMs and fees trajectory, and that is why our continuous guidance has been that we will put the NIMs and fees, we will try to deliver the NIMs and fees in the corridor of 10 to 10.5%.

Now you can see that there has been an improvement of NIMs and fees by about 18 basis points this quarter, which is primarily driven by two things: firstly, our core lending businesses have improved their NIMs and fees trajectory, primarily because the rural business finance vertical has seen a resurgence after resolution of the microfinance industry issues. Plus also all our businesses have been pushing their yields upwards.

Also because the flows have been lower, the enquiry reversals that we normally get, right, which is a sort of a negative drag on the NIMs and fees, also has been lower this quarter, right, which also shows the improving resilience of our book. Last but not the least, on a QOQ basis there has been a 7 basis points improvement in our funding costs, right.

We do believe that the full transmission of the current round of rate cut has still not yet been transferred. There remains possibility of some more rate transmission this particular quarter, right.

Given the fact that the businesses are on a forward trajectory across most of our lines of businesses, we are very hopeful that we should be able to maintain the trajectory that we have been on this particular quarter. I'm hopeful that it should be able to sustain over the next couple of quarters.

However, in terms of guidance, our guidance is that we will maintain it between the corridor of 10 to 10.5%. Fair, fair.

Ritesh, if you could, please maintain the question for follow-up question.

Am I audible?

Yes, please, sir.

Yes, congratulations. Good set of numbers.

Just one question: if you can break up also your credit cost into a couple of other components like standard asset provisioning, what is the M2M loss you have on the treasury book? That would be helpful.

Actually, if you look at in the presentation itself, we give Stage 1, Stage 2, Stage 3, full details on the retail credit cost. You can look at that.

Next slide, that already has the breakup in the slide.

No, sir. In terms of standard asset provisioning, if you are doing, has that number now moved up?

Also if there is any investment book loss that you are looking at? Standard asset provision, the amount will go up based on the increase in the fresh book, right?

As our book starts growing, it will first reflect the increasing Stage 1, yeah, and depending on the quality of assets, it will lead to change. It is on slide 39, slide 39.

Sure, thank you, sir.

Thanks for the opportunity. One on your NIM plus fees, currently, if I understand broadly, a 6,000-odd crores of received that will be there, and if this is the console NIM plus fees that you are disclosing, is it fair to assume, once, say in FY27, once your 6,000 crores gets resolved, broadly that would lead to close to a 40 basis point improvement in NIM plus fees, or 30 basis point improvement in ROA.

That's particularly, and how we visibility around the resolution of these assets. Secondly on credit costs, if I look at your book, 30% is now nearly 40% is going into very, very low-grade costs like mortgages, LAP, and incrementally in gold.

Then annual STD guidance is coming to us, to say 200 to 220 basis points. Is it fair to assume, in STD state you are assuming certain businesses to be somewhere, say 3 to 4% credit cost type?

Okay. Thanks, Avinash.

Talking about the NIM plus fees first, NIM plus fees has different components, the first being the yield, which depends on the kind of mix, because we already initially it was retail, wholesale. Now we are 98% retail, so that impact is gone.

The second impact now is in terms of the overall mix. Rural business finance being the highest yielding.

In percentage terms it will keep coming down, but albeit a bit slowly, because, as you fire up the other businesses, but we also have similar high-yielding businesses that we have started off. Micro LAP is one such business, followed by personal loans, SME, all these businesses are gran and gold loans, which we recently took over the business.

All these are equally, or maybe at a slightly lower level, but high-yielding businesses. As, because these businesses have started growing, you have seen that the yields also have gone up by a few basis points.

The second component, of course, is the weighted average cost of borrowing. In a low interest regime, we are now actually reaping the benefits of, the overall weighted average cost of borrowing going down.

our businesses are such that we really don't tweak the yields. In fact, when the interest rates were going up, when the RBI repo rate had gone up by 250 basis points, we did not increase the yields on most of our businesses except for mortgages.

Same thing is happening as we are seeing the interest rates coming down, only the mortgages business where the benefit of interest going down is being passed on. At the NIM level, I think there is a fair play between yields and cost of borrowing.

We may have something more coming up because the repo rate reduction has still not been completely. I don't think the banks have started or fully pass on the benefit, and if there is any further reduction also in repo rate, that also will be available.

It also depends on what is your treasury strategy. We have wherewithal to utilize the short-term paper, which comes in slightly at a lower cost compared to medium to long-term instruments that we use to raise funds from the market, like term loans or NCDs.

Our CP exposures right now are in the 8% range overall of the borrowings. We can go as per our ALM, we can go right up to 14-15%, although we have kept it range bound at 8 to 9%.

We can surely take advantage of that. PSL is one big advantage that a company like L&T Finance has, especially because of PSL qualifying assets with farm as well as microfinance assets.

The third component is of course of fees, where, right now fee depends on two things: one is the disbursements, which leads to increase in processing fee, and number two, the cross-selling in terms of the CLI income that we have, the credit-linked insurance. As and when we start off some other fee-related businesses, we will surely see some prop up on the fee part as well.

I think the NIM plus fees, at least because of so many moving parts, we conservatively, give a guidance of a range to be met, which is 10 to 10 and a half. When things are favorable, we will be more tending towards 10 and a half, and when things turn unfavorable, maybe we will move towards 10.

I think we will be able to successfully be within this range going forward. The second question I will take.

Second question, I think your question was that, if you are mortgage at a much lower credit cost than, if you are a credit cost at a particular level, where the other businesses are at higher credit cost. Obviously, if you look at, the microfinance business, for example, in a steady state, it's not credit cost that you should expect about the microfinance business.

You have a 99.7% collection efficiency, 0.3% is flowing every month, right? Across the 12-month period, that's 2.6%, right?

That naturally gives you a credit cost threshold of about 3% in that particular line of business. Now, the fact is that if suddenly your collection efficiency goes northwards from there, you will have a much lower drag.

For modeling purposes, etc., it is fair to assume that, in that business you can expect a steady-state 3% credit cost. In the two-wheeler business, industry operates at a much higher credit cost level, right?

The fact is that for us Cyclops, with Cyclops, we are very, very confident that over a period of time, and when I over a period of time, I mean in the next couple of quarters, in the next two to four quarters, the headline credit cost trajectory of this business for us will drop below 3%, but will it go below 2%? We'll have to wait and watch, right?

When we do our modeling and when we do our predictions, obviously there are certain businesses where the credit cost trajectory, there are certain businesses where the loan cost trajectory, and the weighted average will obviously come between that 2 to 2.2% level.

Thanks. Any sort of a timeline or security resolution, and what is the amount currently sitting on your balance sheet?

About 5,000 crores is sitting on our balance sheet right now, and the way we have guided is that it will take us anywhere between the next two to three years for a full resolution of that, right? We are seeing good amounts of resolution.

Typically we give details on our security assets in our Q4 annual results. Please wait for next quarter to get a full update on that.

You will be reasonably satisfied to see that there has been good amount of progress on resolutions this year, throughout this year, and we expect that resolution trajectory to continue, and we are hopeful that this thing will be a thing of the past post the next three years. Not next three years.

Yes, it will take between two to three years to fully resolve.

Thank you.

Thank you.

Hey, thank you for the opportunity. I just want to understand why did our stage 2 and stage 3 coverage increase quarter on quarter this quarter?

Is it because of some ECL refresh, or is it because of the mix of the LGD on the scrappages? Yeah.

The PCR, PCR increases more to do with the higher provisions done for the stage 3 assets. As I mentioned, the co-borrower issue basically meant that if there were some stage 3 assets and related borrower or a co-borrower had taken an exposure to some other business, we have made those provisions, the incremental provision, and that incremental provision has led to increase in the overall provision on stage 3 assets.

Whatever assets moved to stage 3, the provision made was slightly higher than the incremental GS3 which happened, leading to the PCRs being high.

Got it, thanks. I just want...

We talked about the fourth quarter 27 ECL refresh. How should we think about the fourth quarter 26 ECL refresh?

Is it likely to be a negative impact or positive impact on the overall credit cost?

No, like I mentioned in the earlier, when I was explaining, what we believe is that as we move from quarter to quarter, the benefits of Cyclops will start flowing in, and once the benefits start flowing in, the models also will look at a lower PDLGD coming into play because of a better-performing book, and naturally that would ideally, if that happens over the next four quarters, naturally, when we do this similar exercise in quarter 4 of FY27, we should see the numbers actually turning much more favorable than they are today.

Thank you so much.

good morning, everyone. A couple of questions.

Can you speak about the asset quality trends and general leverage, etc. in the digital PL book, especially, for the disbursements that are coming from your digital tie-ups?

We've seen some of the other peers in the industry backtrack on this, I just wanted to get an update of how that is going. The second question I wanted to throw in there is, if I back calculate your write-offs, it's about 600 crores for the quarter.

How much of that was MFI? I'm guessing some of the write-offs in MFI would be from the legacy book.

If that goes away next quarter, then what happens to the MFI write-off number? How much can it come

down? Two questions.

Over to you. Yeah.

The first question, our digital partnerships continue to do very well with every passing quarter, passing actually month. The credit metrics continue to improve, including the gross non-starters and the net non-starters, and the disbursements continue to increase.

For example, if I were to talk about the gross non-starter for our portfolio in the month of December, especially in the personal loans business, it was a low of 2.6%. Right?

The same number probably in the month of August was about 3%. You can see that the quality of the portfolio continues to improve with every passing month, and we are extremely confident of the quality of the book that we are building because, contrary to maybe many other players, we do not play in the BNSPL space or the near prime or the subprime space.

Most of our offers to all the digital partnership is basically in the prime PL space with good ticket sizes, and that is why our portfolio continues to remain stable in that particular cohort. Overall, we have had very, very encouraging results on the personal loans credit quality, and we remain quite stable in that particular line of business.

The next one was Sachinn on the write-off number. Yeah.

If I can just take on this. On a six-monthly, nine-monthly basis also is good because, your portfolio growth is quite high.

The denominator... On a six-monthly, nine-monthly basis.

A couple of things, Abhishek, we look at. We look at overall portfolio bounce rate.

That means, whether you are on a 6 MOB and a 9 MOB basis, we remain stable, right? The fact is that the portfolio bounce rates, which means the number of people who bounce their payments at the end of the month, has been actually falling with every passing quarter, right?

To be very specific, the partner book bounce rates, right, is sub-2%, right? That means out of 100 checks that we present in the partnership book in the month of December, less than 2% of people bounce their checks, right?

Now if I were to look at the industry average for a pure salary prime personal loans book, this number ranges between 3 to 4%, right? In a way, we are very, very happy with the leading metrics of this business, and, as I said, we are not chasing numbers here.

We are chasing quality across all our lines of business. If we find that if there is a little bubble of risk at any point in time, we will ruthlessly shut it down, right?

One of the important things is that we implemented Cyclops in the personal loans business this quarter, obviously on a small portion of the business we have initially implemented. We will finish full implementation by the end of Q4 FY26.

We are very confident that the quality credit origination that we are seeing already in the personal loans business will continue to improve. In a way, we are reasonably confident that our personal loans business will not go any shocks or any upheavals, which might have been prevalent elsewhere in the industry.

Sachinn. Abhishek, on the write-off, I think I am happy to state that, you have gone wrong on your assumption.

The slipages, as I mentioned earlier, the slipages have been much lower, and the write-off book accordingly is also much lower than what you have mentioned. It's about 470-odd crores.

That's where we are.

Okay. Bulk of it would be MFI?

I would say so. Because that was the legacy.

Yeah. It is the same.

This is from the legacy. Does come off significantly in 4Q as well.

That's what I was trying to get. See, we mentioned, 99.7% collection efficiency would mean that only going forward between Jan to March, it's only the 30 basis point which is moving forward.

The book which is going to get into 90-plus is going to naturally become trickles. We have also shared in our presentation that only 2.5% of our total exposure of 28,000 is LTF plus C or more, means four exposures of that customer.

Those are the risky ones, but that's just 2.5% of the overall.

See, Abhishek, just to add to what Sachinn says, our MFI book continues to is actually stabilized reasonably well right now, right? Frankly, we are very, very confident of the go-forward territory of this business.

Extremely confident, if I were to say stick my neck out, right? You have seen the collection efficiency improve secularly as we had guided, and we are happy with 99.7%, right?

Obviously, we will try to push northwards.

Perfect, perfect. Thank you for all the clarifications, and all the best.

Please go ahead. Yeah.

Hi. Hi, sir.

Good morning. Sir, just quickly on your operating expenses, right?

We have trended quite well in the cost-to-income ratios are coming off the 40% to 38% or percent. Just wanted to understand where are we?

How do we understand we see this directionally going down, but what is your view on this one? Second, just on when you look at your slide, which talks about the cross-sell, right, and cross-sell upsell, and look at your farm and personal loans cohorts, there the repeat customer percentage in terms of value that you are giving out is reducing.

Anything that's happening out there, if you just talk about that as well, that would be helpful. Thank you.

The first question is on OPEX. Sachinn, you want to take OPEX?

On the operating expenses, earlier also we have guided that looking at quarterly numbers, the ups and downs that are there should not really, you should not get too much meaning out of it. Very clearly, we are in investment mode.

We are investing in technology. We are investing in setting up new branches.

Gold loan, we are setting up one branch a day. We also are setting up branches to rural lab.

We have Sampoorna branches coming into play. The investments will continue to happen.

This quarter, the cost-to-income ratios are below 39%. I would still suggest that we should assume that it will be somewhere in the range of 40% on.

We are now going to focus on the top line. As the top line starts growing, the collection, the cost-to-income ratios will continue to predictably.

I think directionally, medium term, our target would be to move below 40%. I think that will, when we are sharing with you the Lakshya 31 targets that we will be taking up for achievement.

On personal loans, value to existing customer, you can see that it has gone down primarily because the origination to fresh customers has increased. The proportion of the value of personal loans cross-sell in the overall personal loans pie obviously has reduced.

Right? Though the volume more or less remains similar, right?

The actual value more or less remains similar. Because personal loans right now we are doing about 1,300 crores a month, right?

The amount of cross-sell, roughly, I am giving you a roughly number, right? We were doing about 300 crores, right?

That number remains more or less constant, right? Because one of the things is that our primary personal loans cross-sell is to our seasoned two-wheeler customers, right?

Because the, and that will depend on the ingress of the velocity of ingress of the two-wheeler customer. Of late, the velocity of ingress for two-wheeler customers has gone up primarily because our two-wheeler volumes have gone up.

You will see probably a quarter or two from right now that number might tick upwards. That means, as more and more two-wheeler customer gets seasoned, the two-wheeler cross-sell number might increase as a percentage of the total personal loans.

As personal loans overall disbursement continue to increase, I do believe that this percentage will remain more or less stable at around this 25% to 30% level. My question was more on farm equipment, the more seasoned portfolio.

There the number is 16% versus, 27%. Farm, one of the things, yeah.

Farm, one of the things is that we also have a farm variant, which we call Kisan Suvidha, which means, for a customer who has sort of finished off paying a large proportion of the farm loan, we normally tend to give an unsecured line of credit to that particular customer, which he can take as a loan. Now, the Kisan Suvidha part, the Kisan Suvidha, because see, the focus on fresh origination because of GST put-auto was very, very high during this quarter, right?

The focus on converting Kisan Suvidha slipped a bit, right? Because the fresh tractors was too large, that we really focused on that, right?

That is why the Kisan Suvidha slipped a bit this quarter. That has shown up in that 60%.

Perfectly, very, very useful.

Thank you.

Yes, good afternoon everyone and thank you for taking my question. Just two clarifications on what we have already discussed until now.

First, focusing on provision cover, you explained earlier that this time the increase in the cover was more to do with certain higher provisioning that we did on the COVID over exposures. Just trying to understand in this, at the end of this quarter when you revisit your ECL models, are you expecting a further increase in the provision cover given what we have seen, especially in MFI in the last one, one and a half years?

Then, when is it that you plan to start creating macroprudential provisions? I remember you had shared with us earlier that you look to start creating these macro provisions only when you see some benefits flowing through from SR resolutions.

Then second question I had was more on the NIM plus fee, which we have discussed extensively, your guidance of 10 to 10.5. We are already at the higher end of that guidance range.

New expansion in the coming quarters that we spoke about earlier, is it going to be more a function of an improvement in the product mix? Because you mentioned, Micro LAP, PL, SME, gold loans, they all continue to become a higher proportion of your loan mix.

Is that how we should think about it?

Abhijit, let me take the first question first. On the overall PCR, in fact what you mentioned on the microloans actually does not apply to us because microloans, the moment it goes to 90 plus, we have been providing 100%.

Okay. We have used to have the macroprudential, which was at some point of time 975 crore, and that used to sit against the stage 1 and stage 2 assets, overall portfolio.

because 90 plus is already being provided for, and if there is a technical write-off required, we used to do that. It was more of a finance decision with regard to the tax benefit.

Going forward, which means that the PCR increase will not be required for stage 3. I am anyway providing 100% on that portfolio.

Going forward, we will have to revisit each and every business to figure out how the businesses have performed and what is the future track which these businesses would take. As I was mentioning earlier, the Cyclops delivery, which is the early signs of which are very good, will frankly decide on the PCR buildup.

Because if you look at the past, we had challenges starting off with the IL&FS debacle, COVID, and last about a year, year and a half, or maybe around five quarters, we have seen challenges on the microloan piece. We have actually come out of major various crises, which actually going forward we can safely assume that all these crises are not going to come up on an immediate basis, which and if our portfolio starts showing improvement over the next few quarters.

I was mentioning that next financial year Q4 FY27, we will be in a much better position to really relook at the PD, LGD coming slightly down. Even if you take a decent future into account, we possibly may, if at all we have to bring it down, the PCRs may only come down, because at industry level you would say that there are various players having PCR in the range of 50-55%.

We are yet to really look at, because we will start the work now that we have closed the third quarter, we will start the work on revisiting the ECL models, and thankfully when RBI has prescribed the ECL to be made applicable to banks, now everyone will be on the same level playing field. We will also perhaps get some clarity from the regulatory side how things are applying to banks and also.

There will be various inputs which will be taken into account to really finally conclude whether these PCRs are really required, they need to go up or down. As I speak, I think that we are anyways slightly higher on the PCR side.

If at all we have to take a call, it will be on slightly lowering it rather than increasing it.

On the macroprudential, I'll just to add, obviously it is our objective to build back the macroprudential as fast as possible. What we are also doing is that in the microfinance business, especially in the markets where we feel that there is a risk overhang or there is a historical track record of event crisis, we have also started taking a CGSME guarantee as well on those portfolios.

That even before we start building back the macroprudential provision, there is a secondary protection that is put in. Obviously, as we have said, as our SR portfolios move towards realization, we expect some over-realization from that, and whatever we get from that, we will put that towards the macroprudential provision pool.

That is always what we have maintained. Our objective is to build back this macroprudential provision coverage as fast as possible, though this time, as a matter of strategy, we might do it at an unsecured assets level rather than a single line of business level.

Right? Last time the 975 crores of macroprudential provisions all we had was specifically targeted towards microfinance business and RBF business.

This time when we build it, we will build it for the overall unsecured assets business of L&T Finance. Right?

That will be our strategy. As and when, we get that window of opportunity to build those provisions, we will definitely build those provisions, and we are committed towards the same.

Good, sir. Thank you.

Then the last question that I asked was on how should we think about margins and yields. Will the expansion in yields be more a function of the improvement in product mix?

Absolutely. The product mix will ultimately decide which way it would move.

I think we will be doing significant work on this when we work on the five-year plan, and we'll be better off talking about this maybe after the end of next quarter when we unveil the Lakshya 31 fresh set of goals.

Got it, sir. That's very useful.

Thank you, and I wish you and your team the very best.

Thank you so much.

Thanks for the opportunity. My question is on unsecured loans.

The share of unsecured loans is around 45% of AUM. How do you see this share moving over the next two to three-year perspective?

Also, I see that there is a very strong growth in personal loan portfolio, around 17-18% Q on Q and acquired portfolio growth on a Q on Q basis. What is driving that, and how should we see growth in these two portfolios?

Personal loan and acquired portfolio, you said? Yes.

Okay. What was the first question?

First question was unsecured share.

Okay. Unsecured share, yeah, currently it's about 44%.

Our stated objective is to have the secured-unsecured ratio at 60-40. That is our stated objective.

Obviously, if you see some of our business lines, the microfinance business, the personal loans business, the unsecured business loans originations, they are of the unsecured nature. We are trying to balance it by secured gold loans, right?

You see the speed at which gold loans have been going, and that is why we are focusing on rolling out more and more branches of gold loans, 200-plus gold loans branches we will roll out this year, new branches, 330-plus new gold loans branches next year. The focus will be on growing that business.

We are also starting the process of semi-secured as well as secured business loans as well, to bring down the proportion of unsecured in the business loans and the SME segment as well. That is what we are also starting.

Over a period of time, we would want to move it to closer to about 40% in terms of unsecured. Even in SME business loans also, even if they are unsecured, we are looking at taking the CGF, CGTMSE guarantee to partially secure some of those loans.

Structurally, within the tools available at our disposal, we are also trying to secure some of the downside risk of some of the unsecured loan portfolios by subscribing to some of the government credit guarantee schemes. That is what is being done.

To cut a long story short, guidance growth and final sort of share is 60-40 between secured and unsecured, and we will work towards achieving the same. That might take a couple of years to get to there, but, that is what our management has guided.

Was that the end of the question? PL, decent from my?

Yeah. PL we have grown quite well, but the fact is that you have to understand that the high growth in PL is on a low base.

The PL business is on a low base. When you go from 1,000 crores per month to 3,900 crores per month, the growth seems high.

Also, one of the reasons our personal loans business has been growing very high is that, when we put in the digital partnerships, when you do a partnership with Google Pay, or Amazon, or for that matter SuperMoney, what happens is that initially you take a couple of months to stabilize the systems and processes, and then that businesses start delivering the numbers. That is why there is a rapid scale-up in initial phase, which will settle down to a sort of a much more sedate pace over a six- to nine-month period.

The sort of the near-vertical trajectory that you see in growth in personal loans will attenuate over the next couple of quarters, as, volumes tend to stabilize, right? All of these channels tend to reach their funnel maturity.

That is what will happen. In terms of the acquired portfolio, obviously acquired portfolio is primarily portfolios purchased from the market, and we normally do this as a process.

Right? Just to, we obviously have a good amount of surplus capital available, we want to deploy that capital into productive assets.

For example, at times it might make sense for us to acquire a mortgage portfolio, or an affordable housing portfolio primarily because the customer origination is not part of the business, right? We have previously done acquisition of portfolios, and that continues.

This quarter we focused on it, so that is why you see a sharp growth. The previous quarter, if you see, there was a degrowth, right?

This does not form a normal sort of steady-state trajectory. It depends upon the portfolio pools which are available in the market, which portfolio pool meet our income as well as risk thresholds and benchmarks.

You can consider this business, which will be there, but the trajectory of this business will be sinusoidal, you know. There is no particular—we do not chase any number target for the acquired portfolio.

Whenever we get a portfolio which meets our benchmark, we buy it, right? Just to make sure that our capital is deployed more efficiently and our leverage continues improving.

Sure, sir. Thank you.

That's it from my side. Thank you.

Hi, thank you for the opportunity. Sir, one thing firstly, on the rural business finance portfolio, given that there are no guardrails on the JLG lending piece, are we looking to refer to individual lending in MFI?

That's the first question. Secondly, sir, on the average yield, if you could just share the average disbursement yield for gold loans for the current quarter, so that would be helpful.

First question, individual loans, not in terms of individual consumption loans. We are not looking at individual consumption loans.

Though, we might work on micro-business loans, somewhat in the lines of Micro LAP that we do. It will be a very slow start.

This is something that we will very carefully tread on. To answer your question, right now we are not doing it, right?

The fact is that in our plan for FY27, we might look at some pilots. In FY27, we might look at some pilots because we want to tread very cautiously on this, and we want to do very small pilots, see the efficacy, see the top-line credit parameters that are building before we build it up.

We'll be very, very clear: we will not be giving individual loans for consumption. We'll be very, very focused on linking it to a business outcome, or a micro-business loan, if I might put it.

That is why a good amount of pilot and seasoning is necessary. This might not be a relevant item for FY27, but if we are successful, this might be a relevant item for FY28.

Sir. Just one thing, a follow-up on that,

in terms of steady-state growth for the MFI business, would we be looking at the 20-25% growth for MFI, or lower than that? If lower, given the MFI?

No, we will not be looking at a 20-25% growth rate for the MFI business. We will be happy to hit somewhere between 15

to 20%. Given that this is almost 25% of our portfolio and a high-yielding business for us as well, how are we looking to compensate the yield from the MFI lower growth in the MFI business?

Again, gold is obviously a compensating block, and that is why we made the acquisition of the gold loans business. Then, we are trying to optimize our yields upwards for all our lines of business.

We are trying to optimize yields upwards for our two-wheeler business, we are trying to optimize yield upwards for our SME business, we are trying to optimize yield upwards for our personal loans business. Because also if you see our Micro Loan against property business is also been going very well, right?

We crossed the 1,000 crores of book size this quarter, right? We are improving our branches, branch presence on Micro Loan against property as well.

Overall, whatever, the question on that is that, whatever sort of growth sort of missing part of the jigsaw that we might get from our MFI business, we will try to cover it up by our high-yield secured businesses, as well. Just to add, Chintan, earlier also we mentioned about the kind of mix that we tend to see over a period of time.

It will be having three components, right? The yield, cost of funds, as well as fee.

The yield part we are already working on, and it's already started showing results. The reduction in book of rural business loans is not going to be at a significant pace.

It will continue to grow standalone, but it's only because of the other businesses growing in percentage terms, it may come down, and that will be more than compensated by the growth of other high-yielding businesses like gold loan, micro lab, SME. One more thing which one should not miss out is that we are not going to focus only on the NIM plus fee, because directionally you may find NIM plus fee slightly lower over a period, over a medium to long term, but which will be more than compensated by reduction in operating expenses, which is the collection cost and the credit cost.

We will still have the ROA intact in spite of this coming down a bit. I'm not saying that it will, but if at all in your models, if you are trying to factor in, you should also factor in that if the yield goes down a bit, because we are more towards prime, you should factor in a reduction in credit cost and collection cost accordingly.

Sure, that is very helpful. Just one last thing on gold loan, if you could please reach out the question queue.

Thank you everyone for giving us the opportunity and patiently hearing us out. As always, we remain focused on execution.

We remain focused on, as I have said in a recent press item, in our relentless execution. Our focus is to make sure that the initiatives on the credit side that we are currently running, especially Cyclops and Nostradamus, actually are completely pushed out across all our business lines.

We will be focused on disbursement growth. Q4 FY26 will be also a focused quarter for disbursements, and we are very hopeful that the growth trajectory that we have seen in Q3 FY26 will continue unabated in Q4 FY26.

We will announce our Lakshya 31 plans in the April quarter. As part of our April quarterly results, we will also announce the Lakshya 31 plans, and I am looking forward to discussions on the Lakshya 31 plans in our next analyst call.

I wish all of you a very happy New Year once again, and with that we will bring this call to a close. Thank you.