Good morning, ladies and gentlemen. I am Swapnali, moderator of this conference.

Welcome to the earnings conference call of Aptus Value Housing Finance India Limited to discuss its results for the quarter and nine months ended December 31st, 2025. This conference call may contain forward-looking statements based on the company's beliefs, assumptions, and expectations as of today.

These statements are subject to risk and uncertainties, and actual results may differ materially. At this moment, all participants are in the listen-only mode.

Later, we will conduct a question-and-answer session. At that time, if you have a question, please press * followed by 1 on your telephone keypad.

Please note that this conference is being recorded. We have with us today Mr.

M. Anandan, Executive Chairman; Mr.

P. Balaji, Managing Director; Mr.

C.T. Manmohan, Executive Director and Chief Business Officer; Mr.

Sanjay Mittal, Chief Financial Officer; and Mr. Amit Singh from Investor Relations.

I would now like to hand over the call to Mr. M.

Anandan for his opening remarks. Thank you, and over to you, sir.

Thank you. Good morning, ladies and gentlemen.

I am Anandan, Executive Chairman of the company. I warmly welcome you all to this earnings call.

Happy to share that the sustained growth momentum is broadly ensured by us in Q3 as well, aided by stable business growth and prudent portfolio management. Looking ahead, we expect to deliver sustained AUM growth driven by new branch additions, channel augmentation, higher ATS, calibrated pricing on incremental home loans without compromising on NIMs.

Our financials remained healthy with ROE sustained above 20% level. As one of the highest in the industry.

This performance is underpinned by diversified product portfolio and a broad customer base across income segments, which together provide balance and resilience across market cycles. With that, I would now like to hand over the call to Mr.

P. Balaji, Managing Director, to take you through the business focus and key operating and financial parameters.

Thank you. Balaji.

Thank you, sir. Good morning to all.

To begin with, our assets under management has grown by 21% to ₹12,330 crore from ₹10,226 crore as of 31st December '25. Disbursements for nine months FY '26 has grown to ₹2,768 crore, recording a growth of 9% year-on-year.

Q3 FY '26 disbursements were at ₹1,030 crore as against ₹930 crore in Q3 FY '25, leading to a growth of 11%. This is despite a conscious pullback in loans below ₹7 lakh.

As we have been reiterating, growth remains our key focus area, and to accelerate growth momentum, we are executing a set of targeted high-impact initiatives. Firstly, branch expansion: In FY '26, we had planned 40 branch openings, most of which are already operational.

For the next financial year, we plan to accelerate expansion to 60 to 70 branches. Expansion will be focused on new states and key high-growth markets while maximizing productivity from the existing workforce.

Increasing the average ticket size: As we have been guiding earlier, we will be increasing the average ticket size on account of the following: first, to bring in better-quality customers and also to support increase in construction cost. Third thing is optimizing lending rates in the housing loan segment: As part of optimizing the interest rates on home loans, we have reduced interest rates by 50 to 75 basis points on incremental home loan disbursements, leveraging the benefits from lower borrowing costs.

As the rate reduction is only for the housing loan and not for any other products, coupled with the fact that it is only for the incremental customers, the impact on the spreads and NIMs is likely to be minimal. On the consolidated loan book, the impact of this rate reduction on our yields is less than 10 basis points.

Looking ahead, we expect to deliver sustainable AUM growth of 22% to 24% driven by the above-said initiatives. Now, our growth is anchored on four strategic pillars: First thing is diversified product and customer mix, serving self-employed customers to a wide suit of housing and business loan products with a deeper presence in Tier 3 and Tier 4 towns, ensuring portfolio stability and steady demand.

Expanding beyond southern markets: Building on our strong southern presence, we are now scaling thoughtfully in Maharashtra and Odisha, this while continuing to strengthen high-growth pockets in existing states. Productivity: Leveraging data-driven insights and system-led process to drive higher output, better service, and cost efficiency, creating a truly scalable growth engine.

Digital and process excellence: Technology underpins our growth with targeted improvements in sourcing, onboarding, collections, credit, and enhancing control, execution speed, and accuracy. Now, coming to the major performance highlights, regarding the business growth and scale, AUM has grown by 21% year-on-year to ₹12,330 crore.

Disbursements in Q3 FY '26 grew 11% to ₹1,030 crore. Disbursements in nine months grew 9% to ₹2,768 crore.

Branch network stood at 335 branches as on 31st December '25, adding 35 branches in nine months. Asset quality: Asset quality remained largely stable with the gross NPA at 1.56% and net NPA at 1.18%.

30+ DPD saw a slight uptick to 6.48% due to seasonal volatility in collections, mainly because of the festive periods. There is also a slight uptick in the NPA of MSME loans, which will be focused and controlled in Q4.

The credit for the nine—the credit cost for the nine months FY '26 remained at 50 basis points within our guided range. Profitability: During the quarter, net income margin grew by 26% year-on-year to ₹406 crore.

Our spreads improved to 8.9%, driven by decline in cost of funds to 8.3%. The provisions related to the implementation of the new Labor Code has been considered in the financials.

The impact of the same is ₹3.85 crore, and it is ₹3 crore net of tax. Our opex as a percentage of AUM remains stable at 2.7% for the quarter.

Profit grew 26% year-on-year to ₹239 crore, translating to an ROA and ROE of 7.9% and 20.2% respectively, which is one of the highest in the industry. The profit for the nine months rose 26% to ₹685 crore.

Now, coming to the funding, during Q3, we raised approximately ₹902 crore on a consolidated basis, primarily through a mix of NCDs, term loans, and securitization. Our liability profile continues to remain well-diversified with 59% of the borrowing from banks, 11% from NHB, 17% through NCDs, including insurance companies and mutual funds, and the balance through securitization.

As part of the ongoing focus on liability diversification and prudent ALM management, we also executed direct assignment transactions of around ₹155 crore during the quarter, which supported our principal business criteria and further strengthened our balance sheet flexibility. We continued to maintain a strong liquidity position with a total liquidity of ₹1,877 crore as of December, including ₹1,387 crore of undrawn bank sanctions, providing us ample headroom to support growth.

Now, with these remarks, I open the floor to the question-and-answer session. Thank you.

Thank you, sir. Ladies and gentlemen, we will now begin the question-and-answer session.

If you have a question, please press * and 1 on your telephone keypad and wait for your turn to ask the question. If you would like to withdraw your request, you may do so by pressing * and 2 again.

Participants, you are requested to limit your questions to two per participant. If you have a follow-up question, please rejoin the queue again.

Ladies and gentlemen, we will wait for a moment while the question queue assembles. We have the first question from the line of Kunal Shah from Citi

Group. Yeah.

Hi, sir. Sir, firstly, maybe if you can quantify in terms of what has been the impact of discontinuing the smaller-ticket loans, maybe in the nine-month disbursements as well as 3Q disbursements?

What is the quantum of that loan as a proportion of AUM currently?

If you look at the disbursements of this less than ₹7 lakh in the first—in Q1 FY '25, Q2 FY '25, and Q3 FY '25, it was around ₹432 crore. In the first quarter, we had done ₹148 crore.

After that, we took a decision to stop this less than ₹7 lakh. Which means there is a difference of ₹283 crore which needs to be built or added to the disbursements which we have done now.

That is the difference. That is the number on the disbursements, basically.

Okay. On a year-on-year basis, that number would be 148 crore?

For Q3 it was ₹149 crore, yes.

₹149 crore, okay.

Yes.

Okay. On AUM, what is the proportion which will eventually run down over a period?

What is the proportion of the AUM at this point in time and that number on ₹12,000-odd

crore? It would be around 10%, 11%, I think, yeah, 10%, 11%, yeah.

Okay. Currently, that's almost 10% to 11-odd percent.

This will keep on running down?

Yes.

Okay.

Actually, just to add to what Mr. Balaji said, less than ₹7 lakh was about 17.5% of our lending in the beginning, April '24, which progressively moved down to, for June, yeah, and in fact in August it moved down to about 16%, and then in August and September it moved down to about 9.2%.

The impact of this discontinuance of less than ₹7 lakh will come to very less, about 5% of our disbursements projected to be in the fourth quarter. In other words, progressively, in the overall disbursements, the percentage of discontinued portfolio, starting with 17%, now it's come down to almost 6%-odd percent only.

As a percentage of loan book, as Mr. Balaji said, it's around 10%.

Got it. On disbursements, the impact will be there in Q4 and Q1, and then the base will get set from 2Q onwards?

Yes. In Q4 also, in Q4 of FY '25, there was around ₹163 crore of disbursements, which will not be there in Q4 of this year.

That will be offset by the growth initiatives which we have taken.

Sure. Lastly, on opex to assets, given that you would accelerate the branch expansion now, do we see opex to assets rising from the current level of 2.7-odd percent, or maybe the productivity gains could actually offset that?

Because we have seen a huge addition in the employee base, collection team has been scaled up, we have added sales force, sales officers as well.

This 2.7% of the assets and there has been a slight increase in the expenses is, we have also doubled our expenses in IT and also the 40 branches which we have opened has also, there is a cost associated with that. Because of that also, even with this, we have been maintaining 2.7%.

Also, this Labor Code is also there to the extent of ₹3.85 crore, with that there was a debit in the P&L. Going forward, what will happen is, as you rightly said, we will be opening 60, 70 branches, but still, if you look at our cost of opening branches or running a branch, it is the bare minimum.

In the sense that the basic facilities are provided, and we are concentrating more on the productivity of the people. Because of that, we believe that this 2.7% may slightly go up to 2.8%, but it might not be substantially very high.

Got it. Thanks.

Yeah. Okay.

Thank you, sir. Yeah.

Yeah.

Thank you. We will take the next question from the line of Varun Palacharla from Kotak Securities.

Please go ahead.

With regard to the state-wise AUM growth figures, if you look at Andhra Pradesh, which has sharp decline in growth, is this largely because of the cut in lower ticket sizes, or is anything else that you're finding riskier in the state?

If you look at Andhra Pradesh, there is a growth of 23%. Basically, because it is less than ₹7 lakh loans got impacted there more, and because of that, there is a growth slightly coming down there.

Going forward, people have been informed about our strategy at the ground level in the state of Andhra Pradesh, and in fact, we have seen good amount of ATS increase in the month of December because of this. This will continue in this in the fourth quarter and in the coming years in Andhra Pradesh.

Just to add, in FY '26 year to date versus the previous year, in Andhra Pradesh, the portfolio has grown by 23%. Apart from the impact of the less than ₹7 lakh, and the base in Andhra Pradesh also is the highest in terms of the base figure.

In fact, FY '25 March end, it is about ₹4,600 crore loan book. That is really one of the high base also is there in Andhra Pradesh.

In fact, Telangana also, in Telangana, increase is about 35%, where their base is slightly lower compared to Andhra Pradesh. In other words, but going forward, again with the impact of the less than ₹7 lakh getting minimized, we should get back to our normal growth in Andhra Pradesh as well.

Okay. My second question is with regard to product mix change and the impact on yields.

If you look at the mix, I think the share of LAP and small business loans has increased and home loans has kind of declined on overall book. That should have ideally aided the yields, offsetting the lending rate cut, whatever we have done on incremental loans.

If you can give a walk as to how much is the impact on yields due to these two factors?

Varun, I think you are talking about the pie chart which was there in the presentation, correct?

Yes.

Yeah. See, basically, in the earlier presentations, what we did was, we gave the consolidated numbers also based on the end-use of loans.

Correct? Now, there was some confusion in the numbers, as pointed out by quite a few analysts, which said that, since it was based on end-use of loans, the numbers didn't get added up.

We had to remove that consolidated pie chart and just give the housing finance and NBFC. The mix has not changed because of that, okay?

Because of that, there is no impact on that yields and all. What we need to do now is, if you have to compare this pie chart with the previous board presentations, just take housing finance AUM and NBFC and add it and see, and that will be the number.

Because at that time, for consolidated pie chart, we classified the loans based on end-use. What does this mean?

Even if I give a LAP loan, if the money has been used for construction, then I would have classified it as a home loan in the consolidated pie chart.

Yes, I got that. I was just comparing on the stand-alone basis.

Stand-alone, quasi home loans was about 20%, it's now 24%. Even the share of NBFC in overall AUM was 26% last year, it's now 29%.

In both these aspects, the higher-yielding book has been increasing. The yields are a bit muted.

That's why I was—

Your voice is breaking, Varun.

I was just saying that the quasi home loan mix in the stand-alone piece itself was 20% in 3Q FY '25, it's now 24%.

No, wait. In stand-alone thing, it was 69% and 23% or something in the housing in the earlier slides as well.

There is no change in the mix, actually. Varun, we can discuss this offline.

I'll have it clarified with you slightly later. Yeah?

Because, actually, there is no change. I'll explain you.

Okay? Yeah.

Thank you. We have the next question from Shailesh Kanani from Centrum Broking.

Please go ahead.

Yeah. Good morning, everyone, and thanks for the opportunity.

Sir, couple of questions from my side. Do we have seen the business momentum picking up in both Odisha and Maharashtra?

Could you please help us understand how these states are expected to contribute in terms of quantification, in terms of future growth, how critical these states are? You have alluded to AP and Telangana in your earlier replies.

Wanted to know about Tamil Nadu, because Tamil Nadu, being our core state, is still reporting muted performance. Any color you can give it on that?

See, first, let me address this question on Odisha and Maharashtra. See, we have taken some two years, from FY '24 we started the branches, and two years we have been studying the market.

We are now confident of growing the book there. With that in mind, we have opened more branches in this quarter.

I think eight branches in Odisha, nine branches in Maharashtra, earlier it was only five each. We'll be opening more branches as well in the coming years.

We'll end the year with 10 branches in Odisha and Maharashtra, 10. Now, if you look at the loan book, in FY '25, it is ₹54 crore, it has gone up to ₹109 crore.

In the nine months, it is ₹37 crore to ₹109 crore. Definitely, the book is behaving very well.

Also, we have also identified people who are contributing to this business growth. The branches which we have started has also performing very well.

Going forward, we will open more branches in these states, and as we have got confidence now. Still, these are still new states.

It is just ₹104—₹109 crore on the ₹12,000 crore. Definitely, it will not be a huge number that will be contributing to the growth, but definitely, the growth momentum in these two states will pick up.

That is the first thing on the Odisha and Maharashtra. Next thing is on the Tamil Nadu.

See, earlier it was around 10%, 11% of growth, it has got sustained at 15% growth now. Going forward, it might go up to 18%, that's what we are looking at.

As we have been telling, there are one or two clusters which needs to be corrected, and once we have done that, we are confident of getting back to around 17% to 18% growth in Tamil Nadu. You can say Tamil Nadu is our core state, but actually, the contribution from Andhra Pradesh and Telangana is also started contributing and they are doing good.

Also, there are many players in Tamil Nadu, so that is also restricting our growth. Definitely, 18% growth is a possibility there.

18% to 19%. Focus states.

Fair enough. One more thing which we have mentioned in our PPT, addition of connectors.

Can you just throw some light on that, what is the rationale of that, and how we are going to proceed? Is it for new states, the strategy, or the core states?

No, actually, this is a new concept which we are evolving. See, first, we have thought about it, and then this will be an additional channel to the existing channel.

Our core business generation will be from the branches and from our own sales officers. This we are trying in one or two states.

If this becomes successful, then it will be launched in a full-fledged basis.

This pilot is in which region? Is it specific or anything you can throw some light?

Not clear. What was the question?

Means the pilot for the connector business model what we are trying, piloting, right, is it specific to any region, a new geography, or across? That is what I wanted to understand.

No, actually, we are trying this in Tamil Nadu and Andhra Pradesh. It is in a very nascent stage.

We have just launched it in Jan. Over and above, we need to see how this performs, and then we'll be rolling out to other states.

Fair enough. Sir, just one clarification.

In your opening remarks, you had mentioned that asset quality has some deterioration due to seasonality and holidays. There are no other reasons as such, or you would like to highlight anything on the asset quality front?

Actually speaking, asset quality front, our housing loan portfolio has been behaving very well. In the third quarter, there is a slight uptick in the NPA and also slight drop in the collection efficiencies in the MSME portfolio.

Anyway, our MIS is so strong that these kind of signals come very fast, and we have already started acting on it. In Q4, we are confident of controlling that.

Other than that, I'm not seeing any issue in the asset quality.

Thanks a lot, sir. That's very helpful, and best of luck, sir.

Thank you, Shailesh.

Thank you. We have the next question of Ansh Mehta from Val-You Partners.

Please go ahead.

Hi, Mr. Balaji.

Now that we've discontinued loans under the ₹7 lakh segment, can you give your comments on credit costs going forward? Right now, we are at about 50 bps.

What do you expect that going forward for FY '27?

Your voice was not clear, but I think your question was on the future guidance on the credit cost, right? Actually, yeah, we have been guiding a credit cost of 0.5%, and that we reiterate that will be maintained.

This is despite the aggressive write-off policy which we are following, and this will be maintained. Going forward also, you can factor in 0.5% credit cost in all the models which you are developing.

Sure, thanks. In terms of our expansion to newer states, Maharashtra and Odisha, of course, we are sourcing most customers through our in-house network.

Is that true for newer branches as well? How do we go about sourcing newer customers?

No, your voice is not very clear. We are not able to hear you properly.

I'm

sorry. I meant when we are entering newer markets, such as Maharashtra and Odisha, with newer branches, how do we look at our sourcing profile when we are entering newer states?

No, no. See, the sourcing profile has been common.

If you look at our processes, it will not be different if we are entering into a new state. It will be the same, the sales officers will be sourcing the profiles.

Of course, we have also got a digital marketing team at the head office, where if the leads are coming from either the customer app or the construction ecosystem app, they get those leads, they do an initial check on whether the customers are prima facie eligible for our loans which meets our credit norms, and that gets passed on to our branches for taking it forward. This sourcing will continue, whether it is a new state or whether it is a old state.

This process is going to be there in all the branches, and that's how we are doing in Odisha and Maharashtra as well.

Got it. Thank you.

Yeah.

Thank you. We have the next question from the line of Rajiv Mehta from YES Securities.

Please go ahead.

Sir. Hi, good morning.

Congrats on steady performance. Sir, this MSME asset quality issue in which you said that it will be brought under control in Q4, have you already seen improvement in bounce rates in January and February, or are we seeing similar bounces, but you're trying to collect it earlier and resolve it earlier now?

There was slight increase in the bounce rate as well in the Q3, and that has not come down. We will have this additional efforts for collecting this money in the MSME segment.

Because if you look at it, the product is the thing. Again, it is secured by the self-occupied residential property, the LTV is 35%, 40%, the installment

to

income ratio is currently maintained at 50%. Those kind of cushions are already available.

It is just that maybe we need to push hard our collection guys to get this done, and that is being done. We have already started observing this, and in December itself, we are pushing this, and January, February, March definitely will be a better number for this.

Okay. Sir, this whole loan classification angle, now, if you add up the AUM of HFC and NBFC and then you look at the loan classification of home loan, I think it's about 48%, 49% pure home loan.

That piece is growing at 2%, 3% on a Q-on-Q basis. When you give us a long-term growth path of 22% to 24%, then at the current proportion of home loan, we would require the home loan piece to grow at a much faster pace, right, from here on?

Yes, yes.

Actually,

that is why

as

I was talking about this optimization for the incremental customers. This is likely to bring in more volumes in terms of housing loans.

Also, what we were talking about this connector channel where we are trying out, that also will slightly to bring in more housing loans at a much higher ticket size and better-quality customers. All this is going to aid us in getting that growth.

Just one clarification, sir. When you say that we are moving towards higher ticket segment for to build a better quality customer base, we are largely into self-construction home loans, right?

When we talk about migrating ticket size, does it mean that we will target customers having larger plot size or building larger value of homes or does it just simply mean that Yeah.

It's not that we will go beyond ₹15 lakh or ₹18 lakh. See, what I'm meaning by increasing ATS, maybe if I had done ₹8 lakh or ₹9 lakh ATS last year, I will do ₹10 lakh or ₹10.5 lakh.

That's the first thing. Also, the cost of construction is also going up.

We need to fund the customers for that as well, right? That is what is moving in this higher ATS.

In the process, we are also getting better-quality customers. If I go beyond ₹15 lakh and above, I don't think we are in that segment.

Okay. We've not opened up the upper end of the range.

Okay. Yeah.

No, no, no. Yeah.

Perfect. Perfect.

Thank you. Yeah.

Best of luck. Yeah.

Thank you.

Thank you. We have the next question from the line of Amit Khetan from Laburnum Capital.

Please go ahead.

Hi, sir. Thank you for the opportunity.

Can you talk a little bit about the competitive landscape? If we look at our different products, there is home loans, LAP, MSME loans, right?

Where do you see the most competitive intensity and across which geographies? Related to that, what are the steps we are taking to stay competitive in the marketplace beyond you talked about the recalibrated pricing in the home loans?

Who are the key competitors?

Let me explain this. See, if you look at it, first of all, let us understand the market opportunity is huge.

That is the first thing. Then, okay, there are competitions emanating from various players in certain geographies.

Basically, in Tamil Nadu, we are seeing a heightened competition, but in other states, we are not seeing that kind of a competition. That is one thing.

There are players like, if you look at Aadhar, they have opened some nine branches in Tamil Nadu, but they are still to establish their presence. There are quite a few players who are operating in the Tamil Nadu segment, which they believe this because the portfolio quality is good and that kind of thing.

The competition is there in Tamil Nadu, but in other states, we are not seeing that kind of acute competition. In the case of MSME, there are many players, but they are into different products.

We have got a product which is between ₹5 [lakh] and ₹15 lakh, and we are charging between 17% to 20%, and we are giving loans from 7 years to 10 years. This product, not many are there.

We have ample scope for growth there as well. That is basically the competition landscape, which we are seeing as of now.

Of course, in Odisha and Maharashtra, where we are operating, there are not many players that are available.

Just to add to that point, actually, apart from the competition from the existing NBFCs, including HFCs, that newer players like small finance banks or some aggressive lending by the PSU banks on the MSME segment also is becoming a additional source of competition. Our own experience, more than the competition, which is more than the demand perspective, we see particularly the competition is more disturbing, it is somewhat we have seen in a closer quarters competition in terms of our HR resources at the branch level from the existing the NBFCs, housing companies, kind of thing.

In other words, field level, customer-facing jobs, and where is the attrition there, actually, it's more of a competition rather than really demand-oriented competition at this point in time.

Understood. Understood.

Just a follow-up to that, we are not recalibrating our pricing in MSME and LAP. Is it a fair assumption that competition is more in the housing segment?

That's what I told. The competition is more in the housing segment.

Okay.

That is why we are calibrating the interest rates on the housing loans for the incremental customers, which would aid growth in the housing loans.

Understood. Understood.

Thank you.

Thank you. We have the next question from the line of Avnish Tiwari from Vaikarya Change LLP.

Please go ahead.

Hello. Can you hear me?

Yes, you are audible.

Yeah. Yes.

Yeah. Can you articulate this less than ₹7 lakh segment?

What are the asset quality markers there, either 30+ DPD or slippages rate in Q3 versus Q2? If it is overlapping with the MFI and that's where you are seeing some stress, MFI companies are reporting improvement in their asset quality markers.

How is your experience in this pool, this less than ₹7 lakh pool?

If you remember, right from the first quarter of this financial year, we have been talking about increasing the average ticket size and moving away from the segment less than ₹7 lakh. We have also been telling that it is not because of asset quality we are moving away.

It was that we were seeing some stress in the MFI and also the small LAP segment. Because of that, we took a decision proactively to get into this segment, and which is actually aiding us to get better-quality customers.

It is not the stress level. If you look at the NPA levels of less than ₹7 lakh or more than ₹7 lakh, it is not different.

It is basically the decision at that point in time, there were some stress in the MFI and also in the small LAP segment, which made us take this decision. Still, we believe, though MFIs are reporting better numbers, but their numbers have not come back to normalcy.

As of now, we are still of the belief that the asset quality there has to improve if I have to reconsider that. That is the decision point which made us to get away from this less than ₹7 lakh.

Going forward also, we'd like to stick to this.

Great. This MSME where you are seeing some degree of delinquencies going up, do you know on the ground what's the feedback, what exactly factors you're observing?

Any segment of customers or geographies which are giving you this?

Basically, if you look at some of the MSME loans, while the end-use is monitored at the time of giving the loans, many a times, the amount gets spent on consumption, maybe for a health or a marriage or something like that. While we have checks in place to check whether the money given has been used for the purpose of the loan which we have given, but still, there will be some segment where the money has been used for consumption, which is creating this stress.

Actually, if you look at it, their business models are intact. If you look at our customers' business models, the cash flows are there.

It is basically a temporary blip that has happened, and which has led to this slight increase in the NPAs and also drop in collection efficiencies. Also considering the cushions we have on the LTV and also on the installment to income ratio, we are confident that we'll be able to collect this back.

Okay. Lastly, is there a divergence between low-ticket size MSME loan versus high-ticket size where you are experiencing this, or this is not necessarily divergent by that?

That's what I told you. It is not that less than ₹7 lakh, greater than ₹7 lakh where we are seeing this kind of an issue.

It's not that.

Okay. Great.

Thank you.

Thank you. We have the next question from the line of Chintan Shah from ICICI Securities.

Please go ahead.

Yeah. Thank you for the opportunity.

Just one question. I'm not sure if this is repetitive, but on the standalone P&L, if I look at the impairment number, so that has inched up from around ₹4.6 crore to around ₹13.8 crore on a sequential basis.

Whereas on the consolidated basis, the rise has not been that sharp. This I just wanted to understand, how should we read this?

Chintan, how this is, see, if you look at last quarter, we reported a policy change of write-off greater than 500 days. Correct?

If you look at that decision, the impact on NBFC was more there because most of the assets went into that 500 days bracket in the NBFC. In the housing finance company, there were some assets which were at the brink, between 400 to 450 days in the last quarter, that has come to this 500 days now.

Because of that, this cost has gone up. It's basically a lead-lag kind of a thing where because of two companies being there, and at different points in time, the assets are getting into that 500 days thing.

Because of that, this cost difference is there. Going forward, we are not expecting that to happen.

Overall credit cost is— Overall credit cost will be at 0.5%.

Understood. Understood.

Got it, yeah. Thank you, that's it from my side.

Thank you. Yeah.

Thank you. We have the next question from the line of Rohit Maheshwari from Tata.

Please go ahead.

Good morning, sir. Sir, my question is on a longer-term view.

You have an aspiration by FY '29 your AUM size will be close to 250 billion ₹250 billion. Considering because the disbursement growth for the last three, four quarters has been very subdued type as compared to the earlier times, to reach that, you would require a higher growth.

Plus, 10% of your book will run down maybe next 15, 18 months, which is below than ₹7 lakh. By when we can see a pick up in disbursement?

Basically, if you look at it, see, that is the reason we have also given a slightly lower growth, if you look at our guidance, it is between 22% to 24%. It is because of this.

We have moved away from the less than ₹7 lakh, that has slightly moderated the disbursement growth in this year. Going forward also, this is likely to have that impact.

Of course, this year only that impact will be there, and we are also charting out various initiatives to bring back the growth that is going to be there. For example, I was talking about the branch expansion, increase in ATS, reduction in the home loan rates for the housing loan.

These are some of the high-impact initiatives which we are targeting to bring back the growth. Having said that, having guided at 22% to 24%, achieving this ₹25,000 crore AUM by FY '29 might get delayed by one quarter or one, two quarters.

Other than that, we are not seeing that kind of a thing. Considering the current operating environment, this is the correct growth, I think, which is good for the company's interest.

This is what is a plan we have.

Yeah. Thank you, sir.

Thank you. I'm done.

Thank you. We have the next question from the line of Balkrushna Vaghasia from Axenon Investment Management.

Please go ahead.

Thank you for the opportunity. I have two questions.

First is regarding the competitive intensity in the market. Whenever we hear from small finance bank and microfinance players, all those are from last one year, they are venturing into affordable housing finance, most they find it very lucrative, and all of them are venturing into those things.

Particularly the affordable housing finance segment. How do you see that competitive intensity in last one year, plus how do you see in a coming one or two year, what is your view?

Actually, this was actually explained by Mr. Anandan also.

See, if you look at it, we are not seeing competition more from the business angle, but more from the HR angle. In the sense, people get into the new companies, because of that, we are seeing an issue rather than because of the market size or the market opportunity.

That's the answer which I can give on the competition intensity.

Right. My second question is, since the going public, we have consistently grown our revenue and profits and all the stuff.

Also, on financially, we are very good, and you have started issuing dividend also. With all those efforts still are not resulting into shareholders' return even after four or five years of IPO.

Are you planning to take any actions which can help to generate the shareholder returns? Because the only guy who is not paid after the IPO is shareholder, I think.

Rest of the stakeholder are paid their dues. Do you have any action plan for that?

Actually speaking, if you look at the management perspective, I will deliver exceptional results in the operating side. Operationally, we will be very, very efficient, and we will be able to deliver these numbers in the future as well.

If you look at the market, I don't think I have any hold on that. If you look at my stock, Aptus stock, I think 17 analysts have covered, and there is a 14 analysts who have recommended buy.

This is basically reflecting the strong fundamentals we have, strong prospects we have, and the efficiency to execute things. All this is there.

If the market is believing some other thing, I don't know how much to convince the market. I can only communicate like this to you all, and also, most of the time, I'm also meeting the investors.

I'm also communicating the same thing to them. Over and above that, if the market is this way, I don't think I can do anything about this.

Okay. Can you increase the dividends, or you can issue buyback or anything?

Are the board willing to do that, or is there any discussion?

In India, buyback for NBFCs, yeah, it's not possible. That is one reason we have also started giving dividends.

Over and above that, I don't think we can do anything about this.

Yeah. Okay.

Thank you.

Thank you. We have the next question from the line of Mayank Mistry from Antique Stock Broking.

Please go ahead.

Hi, sir. Thanks for the opportunity.

Sir, my question is largely on the spreads. Our cost of funds have decreased from 8.7% to 8.3% over the last four quarters.

I would like to know, what is the incremental benefit that we are expecting in terms of, since we got a rating upgrade in Q1, and given that some of the MCLR is also about to get to flow, maybe? Any guidance on spreads front?

Secondly, given that we are decreasing our lower ticket size as well, from there, what is the incremental yield decline that we can expect? Of course, for the higher ticket and maybe for the better customers, you must be taking some hit on the yields, right?

In net-net, what can be the impact on the spreads?

I'll answer your query on the cost of funds. If you look at my total borrowings, 61% is variable and 39% is fixed.

Of that 61%, 25% is linked to MCLR, and 30%, 35%, 32% is linked to EBLR, basically repo rate of the treasury bill. In that 31% of that borrowings, there is another 0.25% repo rate cut which will come in as savings.

From the 0.3%, 0.4% savings in interest cost that have been achieved till date, another 0.1% to 0.15% savings will come. Of course, if you look at our incremental cost of funds, which we were borrowing between 8.5% to 8.6% in housing finance company, that we are borrowing at between 7.85% to 7.95% now.

In the case of the NBFC, earlier we were borrowing between 9% to 9.25%, it is around 8% to 8.25% now. This is likely to bring in good amount of efficiency in terms of cost of borrowings.

In the case of yields, what I communicated earlier, it is only on the housing loans and also on the incremental customers, where we have reduced the rates by 0.5% to 0.75%. If you look at the impact on the total loan book, the impact is likely to be less than 10 basis points.

Yeah. Sir.

Got it. Thank you, sir.

Thank you. We have the next question from the line of Manik Bansal from Master Capital Services Limited.

Please go ahead.

Hi, sir. Thank you for taking my question.

With the quarterly disbursement running at 8% of AUM, but the reported AUM growth is 4.8% quarter-on-quarter, this implies a sequential 3.8% quarterly run-off. Can management quantify the split of this?

What was the question? I didn't understand.

With the quarterly disbursements running at 8%, 7% to 8% of AUM, right, but the reported AUM growth is 4.8% sequentially this quarter.

Correct.

This implies a differential of 3.2% that is attributable to prepayments, repayments, and BT outs. Can you quantify that split between those segments?

See,

if you look at the run-down, it is around 15.9%. Of that, 10% will be 6% will be on the pre-closures.

6% or 7% will be because of the pre-closures, and of that, the balance transfer is only 2.5% to 3%. The balance 10% is on the run-down from the principal, because of the repayments from the customers.

Okay. Last question: Strategically, what level of disbursement to AUM ratio is required to achieve the target of 25, 25,000 CR by FY '27?

Sir, anyway, we have computed this, and then only we have given this number. There is a detailed calculation that has been made, and based on that only we have given.

Okay. Thank you.

Thank you. We have the next question from the line of Daksh Chaudhary from Ratnatrayi Investment Management LLP.

Please go ahead.

Hello. Yeah.

Hi, sir. Sir, could you please guide us on what percent of housing loan AUM is linked to PMAY?

Actually, PMAY, it's not very high because PMAY, we are more in the rural areas rather than the urban areas. The government that is pushing more on the PMAY Urban, urban and semi-urban, because of that, most of our customers don't become eligible because PMAY Rural is not a great success.

Actually, government also has been pushing on the PMAY Urban only. Our kind of customers don't qualify so much for the PMAY.

Sir. No definite number can be given?

No definite numbers. It's very, very minimal.

Okay. Thank you, sir.

Thank you. We have the next question from the line of Saten Kumar from AA Holding Trust.

Please go ahead.

Hello. Thanks for giving me this opportunity.

I have just couple of questions for Mr. Balaji.

First is I have been following your guidances since last three, four quarters. What I observed, there has been multiple times bit of chop and change, like earlier you guided, I think that in Q4 about 28%, 30% AUM growth, then 25%, right now around 23%, 24%.

On top of that, you said that the targeted ₹25,000 crore AUM can be delayed by one or two more quarters. Are you sure about this growth?

Because what happens, time and again, this guidance gets changed, it brings a sentimental hit onto the people.

How

confident you are?

See, first of all, when we give a guidance, it is depending on the market conditions present at that point in time. The market conditions also change as and when we progress.

See, and there are certain decisions to be taken for this purpose, which is good for the organization at some point in time when this kind of developments happen. For example, stress in the MFI portfolio, stress in the small ticket LAP,

₹7 lakh.

That is why we took this decision, and because of that, there is a moderation in the disbursements. The guidance will be given at that point in time when the markets look really good, and after that, if some events are happening, I need to tone down the whole thing because, for me, maintaining the quality of book is much more important than maintaining a guided range of 28% or 25%.

Definitely, this confidence with ₹25,000 crore by maybe with a lag of one or two quarters is possible, but subject to the fact that things will improve in the MFI segment, small ticket LAP, and the overall environment. I don't think I can be sure at any point in time saying this is what it is, correct?

The decisions for the guidance is based on the market sentiments and market conditions at that point in time.

Just to follow up on this, do you still see volatility in this overall industry, or things are more or less settling right now? Would you like to comment on overall macro environment with regards to affordable housing?

Just to add, you are aware that, by and large, the financial services as a business as a whole depends and linked to the volatility in the overall economic activity. When the overall economic activity, the volatility because of internal within the country or external environment, if the macro-level volatility is there in the overall economic system, obviously, it will have an impact on the financial services as well, which we have been seeing in the results published by various financial services companies in the last one week, two weeks kind of thing.

Within that, the challenge is really for each one of us to manage the impact of this volatility as minimum as possible. That's where Aptus is able to manage this volatility, still maintain a consistent growth in our top line revenue, overall revenue, in our margin, and in our ROA, in our ROE, and it's just growth alone, a percentage of growth and disbursements alone, absolutely we agree with you that whatever we guide, we should strive and get it, and we will continuously do that.

Then there will be this temporary situations will be there, as you are aware. That is why Aptus is taking a lot of steps, as Mr.

Balaji has rightly listed out, we are taking various steps that will really increase our resilience even better and increase our disbursements and the loan book growth also is better, while at the same time maintaining our quality of our loan book and also the level of margins that we are doing. In other words, for us, the risk also is as important, managing the risk of the portfolio is as critical as the growth rate percentage itself.

Thank you for your detailed answer, sir. Just one last question, my second question, is you have recently received a credit rating upgrades.

Are you also looking to refinance your existing high-cost loan or a fixed loan, increase the variable portion of your borrowings in the total borrowing mix? How it is?

Are you refinancing your borrowings?

No, this is an ongoing exercise which our treasury team always does that. Suppose if it is a fixed-rate loan or a variable-rate loan contracted at a higher rate of say 9% or 9.25% in case of an NBFC, we always negotiate with the bank, call them because they also have to give us additional funding, and because of that, and considering the relationships, we always negotiate hard with them to reduce the interest rate.

For which we are successful in the sense that there are three or four loans, even SBI rate, which was around 9.25%, that has got reduced to 8.4%. There is also a new facility that has been given by them at 7.95%.

Overall, it's an ongoing process by our treasury team, where these kinds of negotiations keep on happening and the rates are getting reduced.

Understood. Thank you, sir.

Thank you for detailed answers.

Thank you very much. Ladies and gentlemen, that was the last question for today.

I would now like to hand the conference back to the management for the closing comments.

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