Yeah. My name is Vikas Jain, CFO of IIFL Finance.

Thank you very much, and a warm welcome to all the ladies and gentlemen who have joined us today for IIFL Finance Q2 FY '27. Joining us on today's call are Mr.

Nirmal Jain, our Founder and Managing Director; Mr. R.

Venkataraman, our Co-Founder and Non-Executive Director; Mr. Girish Kousgi, CEO of IIFL Home Finance; and Mr.

Venkatesh N., CEO of IIFL Samasta Finance. During this call, we will take you through the company's performance for the second quarter and half year ended September 30, 2026.

Before we discuss the detailed financial and operational performance, I would like to hand over the call to Mr. Nirmal Jain, who will share his perspective on the macroeconomic environment, key industry developments, and the company strategy and outlook.

Thanks, Vikas. Good evening, everyone, and thank you for joining us.

Let's start with the macro environment. Macro backdrop remains very supportive of retail credit in India, but it is not without uncertainty.

While domestic demand is steady, formal credit penetration in small towns and areas where we operate in is still very low. At the same time, global uncertainty, volatile oil prices or commodity prices, and tight funding conditions mean that balance sheet strength, asset quality, diversified funding, and liquidity matter more than ever before.

In this environment, we have chosen to grow with discipline, keeping adequate liquidity and strict control on asset quality. Now to the quarter.

Our AUM crossed rupees 1.24 lakh crores, which is a growth of 38% YoY and 8% sequentially QoQ. Profit after tax on a consolidated basis was 804 crores, first time crossing the milestone of 800 crores, up 13% quarter-on-quarter and 92% year-on-year.

What is important is our gross NPAs have improved and they remain at around 1.5%. Return on equity now on a consolidated basis is above 20%, what has been our target.

The book is about 90% secured now. Our liquidity is significantly higher than what normally we keep given the global environment and uncertainty as well as liquidity tightening expected in local market.

At 13,804 crores on a group basis, our capital adequacy on a computed basis is 23.5%, but we can discuss individual companies separately. Our strategy remains resilient, capital efficient growth, and that's based on six pillars.

One, secured lending as we are pivoted to secured lending and that is already now 90% of our total loan book. We will intend to will endeavor to maintain it at these levels.

Second is capital light growth, our off-book AUM is 34% of our total loan assets. There are 18 banks that are active co-lending partners now.

Many of these relationships have started recently and will scale up. We have originated in the last 10 years, over 1.7 lakh crores loans which are, are the assigned to banks of Poland.

Third is our funding and liquidity. Fitch upgraded our rating to BB-.

We raised $300 million social bond. We also did a small issue for the first time in the tokenized bonds.

More importantly, liquidity, I already talked about that we have over 13,000 crores, which is all-time high. In the month In the previous quarter, we have taken enabling resolution from our shareholders to raise equity which will further strengthen our balance sheet as we go along.

Fourth, AI is part of how we operate, and I think many of projects have moved ahead of pilot and they have been deployed with reasonable success. Fifth is branch-led distribution.

Our strategy remains phygital because our gold that customer pledges with us has to be physically stored. In aggregate, including gold loan, microfinance, we have more than 5,000 branches now.

Primarily serving underserved customers across the country. Sixth is our credit and cost discipline.

As you'll see in our numbers that we are trying to make sure that our credit cost and the operating cost move southwards in relation to our loan assets and which will help us strengthen our balance sheet further. Looking ahead, we are confident that this momentum will continue through FY '27 and will remain disciplined on asset quality and capital.

Thank you. With this, I hand over to I hand it back to Vikas to take you through the financial details.

Yeah.

Thank you, Nirmal. Now, I will take you through the detailed financial and operational performance for the quarter.

Overall, quarter two financial year '27 reflects the strong business momentum, improved profitability, continued progress towards our building a secured and capital efficient portfolio. We remain conscious on the significant portion of recent growth has come from the gold loans, capital adequacy, liquidity, portfolio concentration and risk controls, therefore, remains the important area of focus.

Coming to the consolidated financial performance. At a consolidated level, our loan AUM increased to 1,24,268 crore, representing the growth 8% quarter-on-quarter and 38% year-on-year basis.

Our core businesses, gold loan, home loan, MSME loan, and microfinance now accounts for around 97% of the overall portfolio and grew 43% on a year-on-year basis. Our portfolio remains predominantly secured with secured loan accounting for approximately 90% of our AUM.

Gold loans represent around 53% of our portfolio and while home loan accounts for around approximately 27%. Consolidated net interest income increased to 13% quarter-on-quarter to 1,480 crore.

While total income grew by 6% to 2,340 crore and pre-provision operating profit increased to 8% to 1,355 crore. The loan loss provision has declined by 5% sequentially to 281 crore.

Consequently, the profit after tax non-controlling interest has increased 13%, a very healthy quarter-on-quarter to 805 crore. Nirmal just mentioned, this is the first time we have crossed on a quarterly basis a 800 crore mark as as a milestone, and on a half-yearly basis, it stood at around 1,518 crore.

Again, if we see on the operating efficiency, we continue to improve the operating expense to average AUM has now declined to 3.3%. What is heartening to note is that this is compared to the peak level of 4%.

The annualized return on assets for H1 stood at 3.1%, while annualized return on equity is 20.1%, which is upwards of our 20% target levels. The consolidated portfolio yield has declined by 3 basis point on a quarter-on-quarter to 16.5%.

Largely remains stable. The cost of borrowing has increased by 3 basis point to 9.08.

Again, largely remains stable, resulting to a 6 basis point narrowing in our interest spread to 7.42%. Asset quality remained broadly stable.

Consolidated gross NPA declined by 7 basis point on a quarter-on-quarter to 1.48%, and net NPA stood at 0.87%. Overall, the overall provision coverage ratio again remains very, very strong, upwards of 90%, currently at 91%.

The combined 1-90 DPD portfolio stood at 9%, while the 90+ DPD portfolio remained contained at 1.5%. Nirmal just mentioned about the key strategic thing.

Our liquidity position now has strengthened significantly during the quarter. We had approximately around 13,805 crore of our cash and undrawn credit lines, providing a adequate coverage for our near-term liability and supporting our future growth.

We continue to remain cumulative ALM surplus across all our maturity bucket. Our funding profile remain diversified, stable across all term loan, debenture, refinancing, ECB, securitization and other source under different maturities.

This indicates our efficiency to raise further funds across all the maturities. Consolidated capital adequacy stood at 23.5%.

Net gearing is broadly stable at 4.1% compared to four times in the previous quarter. Shareholders' equity has now crossed increased to 15,432 crore, supported by profitability recorded during the first half.

Now we will look at the IIFL Finance standalone financial performance. Coming specifically to IIFL Finance standalone, loan AUM has increased by 11% on a quarter-on-quarter basis, crossing first time 70,382 crore, which is 90% 96% secured.

Net interest income increased 21% sequentially, very, very healthy growth. Total income grew by 8% and P PPOP has increased by 10% to 893 crore.

With loan loss provision declining by 11%, the profit after tax has increased by 17% quarter-on-quarter basis to 548.5 crore. The standalone yield has increased by 12 basis point to 18.6%, while the spread increased by 11 basis point to 9.2%.

Operating expense to average AUM has moderated further to 3.1%. Standalone gross NPA stood at 1.3%, representing a modest increase by 3 basis points.

Capital adequacy ratio stood at 17.03%, while net gearing increased to 4.7%. Gold loan now account for almost around 93% of our standalone AUM.

On IIFL Home Finance performance, the AUM increased by 4% sequentially, crossing 43,070 crore, while disbursement has grew by 10% on a quarter-on-quarter basis to 3,498 crore. PPOP has increased 6% sequentially to 330 crore.

PAT has broadly stable at 188.7 crore. Gross NPA has improved by 8 basis point to 1.38%.

At Samasta Finance, AUM has remained stable at 10,816 crore, and business maintained a calibrated approach to growth. Gross NPA has improved by 46 basis point to 2.82%.

Net NPA has improved by 14 basis point to 0.866%. PAT has increased 13% sequentially to 69 crore, supported by lower credit cost.

Our strategic funding highlights, Nirmal mentioned, capital-efficient distribution and continue model to scale off-book AUM comprising of assignment and co-lending, 42,796 crore, around 36% of our 34% of our consolidated AUM. We have now 18 banking partners across all IIFL Finance, Home Finance, and Samasta Finance.

During the quarter, we have During the first half H1 financial year '27, we have raised aggregate USD of $800 million through international bond issuances. This also includes $300 million USD social bond paired issuances during the second quarter, which was approximately 2.3 times subscribed.

This strong this this reflects strong investor confidence our diversified access to the global fund. In my closing remarks, in summary, quarter two financial year '27 was a stronger quarter in terms of AUM growth, operating profit, profitability.

The quarter also demonstrated continued progress in our operating efficiency, asset quality, liquidity, and funding diversification. With that, now I will now invite for Q&A session for everyone.

Thank you.

We will start my question for that.

Hi. Good afternoon, everyone.

Thanks for taking my questions. I've got a couple of questions.

The first one is on gold NPAs. Why have the gold NPAs increased by almost 30 basis points quarter-on-quarter?

Any color there, please?

Towards the end of quarter, gold prices were lower as compared to the beginning of the quarter, previous quarter. It's a very small increase.

These are actually small customers and some of them are not able to pay in time. Historically, we have seen that these kind of variations happen.

The losses will be minimal because we have the collateral. There's some of the customers who are not able to pay on time say, and they get delayed by 90 days so they get classified.

I don't think there's any worry. See, if this had gone up to say 5%, 10%, then it's a different matter.

60 to 90 basis points is a variation which we are very happy to leave it.

Got it. When I'm looking at the data, sir, even the 1 to 30 DPD bucket for gold loans has increased quite a bit quarter-on-quarter.

Almost 7% of the book is at 1 to 30 DPD. Let's say if gold prices were to correct hypothetically 10% odd from current levels, what would that then mean in terms of both the NPAs as well as LGDs?

See,

if there is sudden correction, 10% correction had happened in the early part of the year. NPAs may vary.

NPAs may drop to 1%, 2%, 3% also in such scenario. Ultimate loss will be minimal because most of the times what happens that customers also know that the gold and the jewelry that they have pledged, the value is significantly higher.

They will take some time to get money, and many a times, these customers have relationship with us for a long time, they also know that a few days here and there, we are just not going to be harsh on them in terms of auctioning the gold. The NPAs can spike if there's a sudden fall in gold prices.

The losses, ultimate losses will be still negligible. That's how this industry is.

Got it. Sir, only for this 90 DPD plus cohort, can you tell us how much is the LTV for their loans?

It will be close to around 85% type.

85%. Got it.

80% to 85%, yeah.

Thanks. My other question is on the capital raise at the standalone.

Where are we in the process? What are we finalizing in terms of QIP or a strategic shareholder, any color there?

What is the size of quantum of money that we are looking forward to raise?

We got our board and shareholders' approval last quarter. Now obviously, the result announcement is a time period which is quiet period.

Now we are talking to various investors from time to time. Today, I don't have an answer whether it's going to be private equity or a QIP.

One thing is that we are committed to raise the equity capital at the earliest opportunity. Hopefully, this quarter, we should be able to close something.

Sir, okay. This quarter, and maybe in terms of size, any indication?

Size, so, you know our market cap. Dilution will be anywhere from 10% to 20%.

Got it. Okay.

If I can ask one more question, the off-book AUM is up quarter-on-quarter, but the off-book income is actually down quarter-on-quarter. What explains that?

See, no,

this is a good question actually. Co-lending is increasing, and in co-lending, we don't have any upfronted income.

As the DA book runs off, that income also gets amortized over a period of time. I think off-book income will continue, as we move more and more towards co-lending, off-book income will continue to decline or will not grow at the same pace.

You will see the net interest income because in a co-lending, it's just like loans are on your book because your interest keeps accruing quarter after quarter. For a long time, many analysts have concern that there's a upfronted component in our profit.

In a way upfronted component is only on the flow, on the stock you don't get anything, and it harmonizes over a period of time. I think as we go along, co-lending will keep increasing and you'll see that upfronted income reduces, but the interest income maintains.

Net interest income.

Got it. Sir, just a final question.

This entire draft by IRDAI on the insurance commissions, right? If I look at the FY '26 insurance commission that we've earned at a group level, which is closer to 240 crores and almost 10% of the PBT.

If let's say this were to come in the current form, how much of this gets impacted? Then how are you and the management and the board thinking about this, the impact of this?

How will we make up if this gets lost?

Significant part of it is part of housing finance. Which will be and then is Samasta.

IIFL standalone has hardly any. Life insurance commission is just about 3 crores in IIFL holding company or the IIFL Finance, the NBFC.

Samasta has about 78 and HFC is about 160 crores. HFC will have an impact.

Girish, you want to talk about it?

I think we've been very closely watching, interacting with all the insurance partners. As of now, insurance income, cross-sell income to total revenue is about 4.5% to 5%.

We are just figuring out as to how to cover that up. We are constantly in touch with all the insurance partners as to how do we change the strategy to ensure that the impact is minimal.

This will be I think as per the initial consultation paper, this was to be effective from 1st of April. Maybe it might be slightly deferred.

This would be in the coming financial year. We are very closely working on the plan as to how to try and bridge this gap.

Venkatesh, what is the impact on microfinance?

Yeah. We will definitely have slight impact in the thing because we do the credit shield aspect of it for the customer.

What is the commission decline on that?

We get close to around 14%.

What will it be under the new regime?

It will be close to around 2.5% to 5%, between 2.5% to 5%.

Okay. If at a PBT level, it will be around 5% also, not 10% for us.

Maybe a little less than that. Some part of it, we will figure out, and of course, industry will have to be working on other cross-sell products.

We have to watch how it is. There's an impact.

Got it. Those were all my questions.

Thank you very much.

Just going back to the insurance, significant part of our profit is from standalone, where there is no impact or negligible impact. For a consol basis, the impact for us is significantly lower.

Yeah.

Hi, sir. Thank you for the opportunity and congrats on the good set of numbers.

I have two questions. One on gold loans.

How much of the gold lending is through income-generating loan option? What are the pre and post-disbursal documentation or the processes that we are doing to illustrate that these are income-generating in nature?

To meet the RBI requirements whenever that happens. Just part of that is, on the auctions, right?

You have always maintained that you would rather not auction the gold but maintain the customer trust. When I look at yesterday's Business Standard, there is a whole host of auctioning by you.

What is driving this? Is it to maintain the CRR at the standalone entity?

Or is it more like customer delinquencies are increasing? That's first question.

Second question, part of the gold again, the tonnage in improvement has been quite strong, like from 64 tonnes to 69 tonnes, The gold tonnage improvement, it's been quite strong this quarter, right? Generally going into the festive quarter the assumption is that, while the merchants want to increase the stock in the store and then, pledge more gold, the families would want to have the gold at home.

How are you managing to balance these factors, but increase the gold tonnage? Those are my two questions.

Thanks, Pavan. First question is about the auctions.

That in retail, we have millions of customers. Even if 1% goes for auction, that will be like tens of thousands.

The newspaper ad, you will see every center being listed out. When we say that our auctions are minimal, but they are not zero.

As I said that the number of transactions that we do in a year is about almost like 40, 50 lakh or maybe more. Therefore, even if one maybe around say give and take 1% goes for auction, there will still be significant number in terms of count.

We try to minimize auction, but you cannot avoid them 100%. There will still be some customers who may not be traceable, some customers who just do not want to pay.

Every year after year, for last many years, our auctions have not been very significant, but of course they are in the range of 1% to 2% or depending on the year, it can be a little more or a little less. Secondly, tonnage growth is the important part of our as we have been recoupling our market share, one.

We have also set up new branches in last two quarters. Two years ago, when we resumed our business after the embargo, I know there are the market share gain that we do and many customers that come back, it really takes long time.

Also, the market is expanding, I think that our tonnage growth is there which shows that we're getting new customers as well as our new branches are becoming productive. Oh, nice.

Thank you. Just the follow-up on this, are you seeing any increase in intensity of auctions this year considering the gold prices have come off vis-a-vis earlier years?

Also on the first question, I was asking

you In last two, three quarters, we almost had negligible gold auction, almost zero kind of a thing. There's a slight increase, but just like NPA 60 to 90 basis point or this, they are very insignificant for a business like this where the ticket size is small.

There is increased, but the percentage increase or the basis point increase is very insignificant.

Got it, sir. Just one part of the first question, on the income-generating loans, how much of the loans are?

Income-generating loans, we started late. We just started last quarter.

I don't have precise number, but I think about 20% to 25% would be our income-generating member of income-generating loans as of now, and this might grow a little bit as we go along.

Got it, sir. Thank you so much.

I will come back in the queue.

When I say income-generating loans, I mean the process on that basis. Otherwise, 70%, 80% of our customers will be MSME customers and they all qualify for income-generating.

The income-generating process, which allows you to go up to 85% and even up to 90%, although we don't go that high in terms of LTV, that process we started last quarter. What we do is we take the CIBIL data, we also take the bank and the GST data wherever available, and we triangulate that data to forecast income.

Also of course, our branch people talk to the customer. Also as you know that we have very strong co-lending relationships with banks, and banks have even tighter process.

When we do co-lending, we have to comply with the requirement to the satisfaction of bank. We believe that relative to peers, we'll have much stronger system for document collection and monitoring the income-generating loans.

Got it, sir. Thank you so much for this.

I'll come.

Hi, sir. Congratulations for the all-time high profit numbers.

My question is related to the AI strategy that slide shows that there is a 30% productivity increase. The question was with respect to

Sorry. AI strategy.

Yeah. Go ahead.

Yeah. Can you hear me, sir?

I can hear you, yeah.

Sir, I was looking on the AI strategy slides of your deck. There it was mentioned around 30% of productivity increase.

I'm sure this is very new tool which everybody's using in the industry. Sir, can you just highlight what kind of productivity increase do you see?

Also in microfinance, this numbers are helping us in terms of collections or is it only for for the customer acquisition aspect only?

These numbers are for the processes which are scoped or when we started, like audit or collection. Wherever we are able to implement this, then we can have a chatbot, we can have automated WhatsApp journeys as well as So there are quite a few tools that are being used.

The processes where we have applied this, we have seen about 30% improvement in the productivity. Supposing what 100 people could do, now 70 people can do.

This number will further improve, the productivity or the cost and these numbers will go down as we become mature in applying the AI technology.

Understood, sir. In microfinance related aspect, are we getting some kind of collection benefit by doing AI call?

Or this tool is working in terms of collection, improving of the collection bucket?

Microfinance Venkatesh, why don't you? Yeah.

For this, it's especially helping us in the 1 to 90 bucket and 90 plus bucket where it's feeding our field officers in terms of giving them the PTPs and things. It is definitely helping our field officers in especially on collections.

Also, we look at lead generation for our existing customer base. If any of our existing customer base is interested in near renewal loans of add-on loans, we are able to work on that.

Got it, sir. Thank you so much for this.

Yeah. Hi.

Congratulations on a great set of numbers. My first question is regarding the fund raise, right?

There are three verticals that we obviously have. One is Home Finance, Samasta, and the standalone business that is majorly gold.

I just want to understand if you're looking to because I think Samasta and Home Finance is majorly not growing at the rate at which your standalone business is growing, right? Just wanted to understand in terms of fund raise, are we looking at the standalone entities, any of these three or we're looking at the consolidated entity?

Fund raise in subsidiary companies we don't need because we have adequate capital adequacy. Fund raise is required only in the listed holding company which is IIFL Finance.

No,

but you're looking at selling Samasta, right, initially? That was discussed.

Yes. Yes, you're right.

The issue that we need to resolve is that there is a faster growth in the standalone entity which is in gold loan and LAP business primarily. We need to provide for more capital there.

Capital can be provided even if you are able to sell the subsidiary company because then the listed company or the parent company get the capital. Or we can do a primary raise also.

Now, the question is the timing is of importance, it appears at this stage is that divestment of part of full of subsidiary company will take time. In the meanwhile, we need to make sure that we do the equity raise so that the growth is not affected.

Understood. I think that is a great answer.

My second question is regarding your guidance because I feel like home loans, I think, are not growing that well in general. Initially, we had guided for, I think, 18% uh-ish growth in your Home Finance business.

That's not growing. Obviously, H2 should be stronger.

What is the overall AUM guidance? Gold finance will majorly depend on gold prices, I understand, but what are we looking at in terms of ROE guidance and AUM growth guidance from here onwards?

In Home Finance, disbursement has grown. The AUM is growing on the whole around 4%, 5% per quarter.

When you say 18% to 20 18% guidance, the loan assets will grow at that pace. The core home loan has grown by 2% quarter-on-quarter, but LAP has grown faster.

In terms of structurally, if our target is that we should have about 20% 20% to 25% LAP, then LAP is what we're catching up. In Home Finance, we have completely reoriented our strategy towards affordable home as compared to earlier when we were straddling across all segments.

For that, we have set up the branches, people, the infrastructure, a lot of work has already been done. I think as you're right that in the second half, we should see accelerated growth in the core home loan segment as well.

I think on the year basis, we should be able to meet our guidance. ROE is 16% to 18% for Home Finance target for next year, but there will be a continuous improvement quarter after quarter.

There's an operating leverage that works here also. As the volume growth accelerates, we see more than proportionate growth in the bottom line.

Right, but the ROE guidance for the consolidated entity?

Girish,

I would like to add, I think if we look at the disbursement, which is based on clearance. If I compare with last year, the growth is 64% on disbursement.

On AUM, the growth is 8%. We've just caught up on the growth in last few quarters.

If you look at last couple of years, it was pretty flat. Now we are back.

We've done almost this is on the numbers what we report, which is based on clearance. If you look at the booking, which means what we actually disbursed, even sequentially if you look at disbursement is grown by 41% quarter-on-quarter.

I think there is a clear growth on disbursement. It will catch up with the growth in AUM.

We had guided growth of 18% to 20% on AUM. We'll be well within that because we are already at 8% up to two quarters.

Right. The ROE for the consolidated entity?

Guidance?

ROE for consolidated entity will be above 20%, that's what. What will happen is if we do equity raise, it can be a bit dampener temporarily for the Finance of the NBFC and the parent company.

As the profitability catch up, in just in a quarter or two we should be able to catch up. On a medium to long term, we want to keep it above 20%.

That's where our target is.

Right. I just hope with the way the business is going, we do not dilute at a very disappointing valuation.

Of course, those numbers are going to be confidential and based on demand and supply in general. All I'm trying to tell as a shareholder is that I really hope you guys are able to at least maintain a basic print based on your current ROE and ROA, you guys are able to maintain a Lakshman Rekha in terms of raising at a particular or above a particular price-to-book.

I really hope that investor and stakeholder interests are maintained in that sort of a direction, and we do not raise at a suboptimal valuation in terms of price-to-book, especially when we're throwing the kind of numbers that we're throwing. You guys are working extremely hard to get these numbers out there.

I really hope the dilution is not something that dampens the stock price from here onwards.

See, there's always a trade-off. The market price is market price.

We can't really fight with it beyond a point. There's a trade-off that you have to maintain your growth.

There's some time you can wait and have this thing. I think long term, all shareholders should create good may have good return and create good wealth and that's what our endeavor will be.

In a finance or in a lending institution, is important to maintain margin of safety and equity because that will also help us in upgrade of our credit rating and bringing the cost of funds down, which can further accelerate the profit growth and the ROE. We have to keep all dimensions in mind.

Yes.

No, I completely understand and agree. I just hope a particular price-to-book ratio is maintained in terms of raising.

Because see currently, we are at all-time high profits in terms of annual, quarter, our ROE, ROA, everything is extremely, extremely healthy. Obviously, when you look at it as a shareholder, you expect a certain price-to-book equity fund raise.

Looking at the current price action, the general assumption is that

I appreciate your this thing. When we raise equity, it's also important the quality of investors that we bring in, because that also helps in rerating and perception change.

Thanks, we'll

keep all those things in mind.

Yeah.

Thank you so much for your time. Really appreciate it.

Hello, good evening, management. My question is on GNPA and NPA.

At a consol level, if I see the GNPA is declined. The NNPA is slightly increased on quarter-and-quarter basis.

Why this so happened?

GNPA has declined, but within the GNPA, gold loan GNPA has gone up where actually, as I said, that the loss given default is much lower. That is why you see that the provision has not gone up at the same pace.

It's slightly lagging the GNPA. That's why you see that the GNPA has marginally come down and NNPA has marginally gone up.

Even the lower GNPA would have been much lower, but for gold loan, which is slightly up.

Okay. Second question is on our IIFL Home Finance.

Like for Home Finance and for Samasta, we were talking about you know like share shareholders value creation. Is there any plan also like the divestment of the any of the company as of now like maybe stake sale or IPO or anything like that of any company, whether Home Finance or Samasta?

No, I don't think we have any such plan at this point in time. Whatever we have said earlier, we'll look at if there are opportunities, we'll look at boosting the capital of parent company by either of these ways.

Okay. If we are raising the equity for a standalone, can't we sell some portion of our equity within our subsidiaries and raise funds from there?

Yeah. No, but subsidiaries may we can raise equity, but we can't put money in the parent, right, because dividend is taxable.

If you can sell part of the subsidiary, then we get capital. We are looking at all the options, all possible options.

Okay. Okay.

The last question, can you just reconfirm FY '27 guidance all the guidance you have given?

There's no change in guidance as such, but I think, hopefully, we are on track to meet and exceed the guidance. The guidance is there in slide 46, 25% AUM growth and similar profit growth, and ROE of around the upper end of the guidance in ROE is 20%, I think we are there.

Okay. Will it be possible for us like maybe you have done a calculation, will it be a possible for us to close FY '27 with the 20% ROE?

Because maybe there will be a dilution of a fund and equity will be more in a standalone. So,

It's possible.

It's possible. Okay.

That's from my end and best of luck.

Thank you, sir, for the opportunity. Congratulations on a good set.

Sir, one question on the industry. I think you already highlighted the draft consultation paper that has come on the insurance norms, right?

Earlier also, there was a draft consultation on the broking entities with respect to MTF and STT and all that. The final guidelines were a lot more, not harsh as the initial draft.

What do you expect do you expect such something on those lines also in the current consultation paper that it will be more easy out and not harsh like it is proposed in the draft? What do you sense on market, or what's your overall idea on this?

It's very difficult. I'm not an expert on this, but it's possible that it might be diluted a little bit.

Some changes will happen. Industry will have to learn to adapt.

Become cost-efficient and be more on different cross-selling. It's quite possible that So, what happens that the 100 they say 10, they might settle at 50, we don't know.

In my personal view, which is maybe completely different or may not be true. I think, yeah, some middle path can make happen, because a lot of resistance and a lot of worry about the job losses also.

See, insurance is a great product and it can be a great price. Then who will sell it?

The problem is that selling is a very, very huge effort and it takes time. There's only certain productivity that people can achieve.

Therefore, when we balance there may be some middle path. That's my personal belief, but I'm not sure.

Sir, just thank you. Sir, generally, in home loans in our subsidiary, can you just guide, usually we have a condition attached to the loan that you'll get the loan only if you take insurance or we try to cross-sell it?

No,

this

can never be. It's not never like that.

Okay.

What happened? When we are bundled insurance, then something happens to the bread winner of the family, then the family does not have to pay any more installments and they get the house to stay forever.

In a way, that works very well for a nominal premium is fully protected. It is never forced, it's never conditional, not in our

case. Sir.

Thank you. All the best for the future quarter.

Sir, once again thanks for the opportunity. On the MSME, the MSME yields have come down 0.98% quarter-on-quarter, right?

Again the home loan yields have also come down 11 basis points quarter-on-quarter. What is driving this?

At the same time, we are seeing GNPA also come down significantly. Can you give some commentary on the on-the-ground situation and your internal approval rates?

Are you seeing increase in the approval rates, the MSME LAP? Thank you.

Pavan, they are linked. As we move towards superior quality of borrowers, you get lower yield and the quality of asset improves.

This trend will continue because in LAP now, loan against property, there's a time when we had a micro LAP with 24% yield or 18% to 24% and had massive losses. Now the new business that we are doing is maybe around 12.5% to 13.5%.

Then quality is very superior and the losses are minimal. Our strategic decision that we took and we have to sacrifice on yield a little bit and over a period of time gradually.

It will improve the quality of assets significantly.

Sir, just a follow-up to that. We are giving up yields of almost 1%, right?

The credit cost won't go down by similar number. What will be the overall impact

on the Yeah, it's a very good question, and we have debated a lot on this over the last one year. The problem is in the cycles.

Right now, we are in a fairly good cycle of credit and collection. When the cycle goes bad, these things really go much worse.

That's one. Two, is too much of volatility in the asset quality and the reported numbers.

On balance, over a period of time, also they have a higher collection cost, which will appear somewhere in the operating cost. When you have a small ticket and a high yielding asset.

From a longer term point of view, strategically, I think this helps to have a lower yield and lower credit cost, lower collection cost, and stable or a lower band of the NPA wavering. Yeah.

Got it, sir. The overall impact on the ROA would be at the segment level?

Any comment on that?

Operating income comes to credit cost.

Hello?

Yes, go ahead.

No, on the just on at the segment level of the MSME, what would be the kind of overall ROA impact that we can expect because of these going higher up in the curve in terms of quality?

Yes, I think ROA this year will be not much, maybe breakeven or a little bit of this thing. Again Housing Finance, NBFC, they operate differently.

A lot of costs are common which in also depend on how we allocate. Next year will be around 3%, 2.5% to 3% ROA.

What our target is for all other businesses.

Got it, sir. Last question from my end.

Can you give any kind of status update on the tax-related aspects, both at the parent level and the subsidiary level?

There's no further update because there was an assessment order, there's a tax demand, we got a stay on that and we are litigating and we are presenting our case. No updates since whatever we have updated last.

Thank you, sir. No other questions

from my end. All the best.

That is under control. Yeah.

Thank you so much.

Hi. Good evening.

Congratulations on strong numbers. My first question is on the gold loans business.

I think on the gold loans business, we've performed very well. We've had a good tonnage growth, good overall portfolio growth, and even the yields have improved.

If you can just comment on the competition landscape, because Q2 was supposed to have a more intense competitive landscape after the regulations changed from Q1. Q1 the industry adopted with the new products and then Q2, I think as far as we know on the ground that the competition has kind of intensified.

Even amidst this environment, we've been able to grow in volume terms and even improve our yield. How have we done it?

Secondly, if you can just comment on the competitive intensity even amongst the NBFCs vintage player, yeah.

One, market is expanding, and two, competition is also increasing. Competition is a lot more noise rather than the real, because competition will take time to set up branches, hire people, train them, and the customer acquisition in a retail walking or a retail shop kind of a business over a period of time.

Having said that, yes, competitive intensity is increasing. Fortunately, at this point in time, even market is expanding very well.

Market is expanding for two reasons. One is, the gold prices have increased the borrowing capacity of the households or the small businesses that have the collateral.

Two, unsecured lending in microfinance has been tightened across industry. That industry, many of those customers are now moving towards gold loan also.

Also, third thing, I would add is the economy has been doing pretty well despite whatever we hear in news about geopolitical, everything, but the economy in the market So there's a demand for credit. Small businesses are picking up.

If I want to kind of break your growth, say on a month-wise basis, even in maybe September month when I believe that some of your larger competition was running some lower rate schemes, even in that month, we were able to hold our yields and we were able to hold our growth?

We are focusing on customers and not competition as such. We make sure that customer experience is good, our policies are transparent, customers, not that we attract customers at 10%, 12%, and then within 1 month, we charge 16%, 18%.

Also our people are trained and motivated and they are doing a fairly good job, I guess. We are continuing with that some part of our market share.

We're in the recouping

process. Broadly, do we remain kind of mostly assured about maintaining yields and the growth momentum in the second half then?

I think market is very large one. We have set up new branches, that will also gain market share.

I personally think that, if the gold price remains stable, I'm not saying that they will go up even if they remain plus minus 10% and the economy remains what it is, then we should be able to maintain our growth momentum. We are seeing continued growth momentum, let me put this way.

I think at least second half we will

Okay. Just lastly on housing business, and when I look at the core housing portfolio, within the IIFL Home Finance book, the growth is slow.

Even the yields are kind of coming down. When I look at the segment that we're trying to signal or indicate in the presentation, the average ticket size seems to be 17 lakh.

I'm just trying to understand what is happening in that portfolio, when does it turn around in terms of growth, when do we see yields or disbursement yields start to improve there?

Yeah. If you look at probably yield a year back, this is incremental yield that is yield on disbursement, it was about 10.6%, 9%.

In April, we took it up to 11%. If you see for quarter two, the yield has gone up to 11.81%, which is much above the portfolio yield.

With every passing quarter, this will pull up the yield. In terms of margins, in terms of yield, it has gone in last one year the lift is about 110, 115 bips.

Even compared to last quarter, it is about 35 bips higher on the onboarding, which is the new disbursements.

Sorry to interject, but I think the yield that you're talking is about the blended yield which is including MSME secured LAP. Because I'm just looking at the home loan yield at the portfolio level, that has come down on Q-on-Q basis, which also means that the incremental yields are is not improving there.

If you look at the AUM, we had pool of assets within pool which is running out. If you look at the same HL, in last one year, the yield was about it was about 9.3%, 9.4%.

Today, the same HL yield is coming at 9.6%, 9.65%. Within HL, the yield is going up, but if you look at the overall yield, there is a drop.

See, earlier we had a high-yielding portfolio of micro LAP and also the B2C of those loans. There was a small segment of the portfolio of a high yield, but that had higher losses.

That is what is impacting the weighted average yield. On a quarter-on-quarter basis, you are right.

Home loan portfolio yield has come down by 10 basis point. It's a mix change.

As Girish said that the boarding yield continues to be healthy, it takes two, three quarters to pick up. Our yield should improve.

Just last clarification on this, what is Yeah.

Earlier, we had certain high yield mix which is going away. I think now it should pick up.

What is that mix still left in the book that high-yielding portfolio which you're running down or which you're not doing incrementally? How much is it left?

It

will not be much now, but how much is that?

It's coming down to

In the home loan, it's about 250 crores of BHC. In LAP, it will be about 50, 100, 1,000 crores.

LAP is Shakti, and BLP is going to be 9.

Yeah. It is about 600 in total, 250 in home loan, around 400 in LAP.

Got it. Thank you so much and best of luck.

Okay.

Hi. You said the overall equity dilution is anywhere between 10% to 20%, right?

That we're looking at. No,

no, I'm saying it can be up to that much, but that depends on the investor. See, till now, as soon as something happens, we'll obviously report to all the investors and exchanges.

It will be in that range, that's what I'm saying. See,

let's say at the current growth rates, I was just trying to understand that, hence the question.

Tell me. Hello?

Yeah. Did you get the question?

No, no, I have not got the question. You said the current growth rate, and we stopped after that.

Yeah. Oh, sorry.

I said at the current growth rate, even if we dilute, let's say, 15%, how long is it going to sustain for us? Because obviously, if the dilution is not sizable, then I don't think it's going to sustain us for more than six, seven quarters, right?

No, I think it's a good point. Two things: one, our profits will get added to the net worth, and we expect strong profit growth; two, in six, seven quarters, we'll have an opportunity to either demerge or divest or unlock the capital blocked in the subsidiary companies.

Right.

Right. As far as Samasta Finance is concerned, we're clearly not growing that business or we're not focusing on that business.

Is it safe to say that within a year or two, we are going to be out of the microfinance business?

No, I don't think so. I think the growth will now pick up a little bit.

It may not be as strong as used to be in two, three years ago. The growth will pick up once.

Venkatesh, you want to say something about your VR

Yeah.

We are cautious, but it will become positive now going forward.

See, looking at various situations across, we were taking a cautious thing in terms of the growth. We have muted certain geographies in terms of where we've seen some proud conditions and so on.

We have muted growth in those pockets, and now the second half of the year you can see a little more momentum building up. Probably during the festival season and thereon, you can see the momentum building up actually.

The only shocking part for me is that we've not capitalized much on the motor finance. Is that something looking at the current auto sales, I'm sure all of you have looked at the numbers, right?

Looking at the current auto sales, do you think this is a missed opportunity that we've not been able to capitalize on or is it deliberate in nature?

To capitalize upon this requires a whole infrastructure of understanding the credit for auto, and also connecting with dealers or even second-hand. When you're going to set up a new product line, it's a long effort.

We'll be able to set up all kinds of teams from credit underwriting, operations, sales, risk management, getting the customers, marketing. It's a long-term call that one has to take.

Seasonally, there may be spikes, but it's not possible to capitalize upon seasonal spikes. We have to take a strategic call [unclear] in this business, then we set up the entire team.

Right.

Right.

Honestly, only one single segment is currently driving our growth. Currently LAP and Home Finance in general because of the real estate cycle is I think 15% to 20% in general for all companies in that segment.

Again microfinance, we've not traditionally historically done very well in microfinance. The question that I raised regarding motor finance was obviously one is there's a lot of word in general in that industry for people to get into.

The sales numbers are also picking up very, very drastically. I think we should actually consider getting into this sort of a segment also.

I think that's just a suggestion from our end, but then it's obviously up to you and your long-term planning in general.

No, thanks. Your point is well taken.

See,

Thank you so much. Thank you, sir.

Thank you.

Hi. Good evening, Nirmal and team, and congratulations for the quarter.

The first question is on housing. This disbursement of 2,000 crore that you have reported this quarter, last quarter as well.

Can you give a split between how much is in affordable, how much is in emerging? Just to get a sense of where we are headed in terms of the mix.

Sure. Girish can give you.

If you look at quarter one, we disbursed, not 2,000, 3,155 crores. This is based on the check clearance inclusive

of You're including

SME No, we exclude that. He's talking about affordable home loan

and I'm just talking about the home loan piece.

Yeah. In Q2, we've disbursed affordable, almost about 790 crores.

In quarter one, it was about 400 crores. There is a significant growth in the affordable business what we're doing because

Emerging?

Out of total, only about 100 odd crores is CF, rest all is retail. Within retail, affordable is about 400 in quarter one and the rest is emerging.

In quarter two, 790 is affordable and the rest is emerging.

It was 400 and close to 800 in quarter two.

Almost double. Okay.

That would mean that your emerging numbers have fallen from 1,600 come down to 1,300 or so. Right?

So As we move towards affordable

On branches, we have added 38 branches, new branches. We were at about 312, now we are at 350.

All the branches are in affordable. The idea is to try and augment the affordable business because we will get a higher yield and that's the plan.

Right. Currently, what is the yield for affordable versus emerging, disbursement yield?

For affordable, the yield will be about 12.5% to 12.6%. This is blended.

Emerging will come at about 11.5%.

Got it. This kind of run rate should actually accelerate now, right, like your quarterly disbursement run rate?

Yes, it is definitely yes. It will accelerate.

If you look at H1 to H1 comparison, we have grown the disbursement by 64%. This is based on check clearance, because whole of last year was based on booking, whereas this year it is based on check clearance.

Even if you look at disbursement, which is not the clearance for quarter two, that is a good 4,000 plus crores. Which is again 41% compared to quarter one, sequential growth of 41%.

There is a good growth on disbursement, which is why we're also seeing the growth of 8% on AUM.

Right. I was just trying to figure this whole yield compression that you're currently seeing in your portfolio yield for home loans, when do we see that sort of stabilizing and moving back up?

Because incrementally you're disbursing almost more and more percentage in affordable. When do we see the yield benefits coming in?

The other question is, see, between affordable and emerging, both your yields are much higher than the 10.4% that you have reported as your portfolio yield. What part of the portfolio is dragging down the yield?

You said it's just 250 crore or something in home loan, but that's a very small number, it's not reconciling. That's what I'm trying to figure out.

True. On the AUM, the pool which are at a higher yield, that run off, that is pulling down the portfolio yield.

However, as we mentioned to you, the boarding yield has now gone up to 11.

His question is that these 250 crore can't pull it down so much.

Yeah.

Vikas, you want to explain? In the home loan component is there a home loan in LAP?

Not LAP.

Yeah. In 34,000 crore home loan, 250 crore is a very small number.

The yield differential between disbursement and portfolio is more than 100 basis points. Why is that differential?

There must be some part of the home loan with really low-yielding which is not 250 crore, which is a much bigger number. Is that the case?

I'm just trying to figure out when the yield compression will plateau out and go up.

Portfolio yield maybe we can share the breakup, but the incremental HL which is coming now is at a higher yield for a simple reason, we have stopped doing prime business which was earlier sub

Understood.

On a substantial large portfolio, why the weighted average is lower?

It's okay, maybe you can take it offline or some explanation now.

There could be some interest reversal or something, but we need to check this, Abhishek.

Sure, no problem. The second question is on MFI.

Now I know that disbursements will pick up next half, but can you give a sense of what is say the monthly run rate for September or something, just September or maybe so far in October, targeted in October? Just to get a sense of how much that pick up could be.

See,

September we did around close to around 550, etcetera. We are looking at close to 800 in October.

Okay. Second half, it should obviously improve, right?

Because generally 3Q, 4Q are much busier than the first half.

That's right.

What is the exit you are targeting? Let's say Feb, March, what should be the run rate by then?

We should be looking at around 1,000 a month.

Got it. 1,000 a month.

Yeah. Got it.

Finally, just a clarification. In the beginning of the call, you gave the insurance revenue numbers.

That was as a percentage of overall revenue or percentage of PBT? Just didn't catch that properly.

You said 4.5%

to 5% of cross-sell

revenue for Home Finance? No,

it's cross-sell. Is about 250 How much?

250, 260 crores what we have that revenue that goes straight into PBT actually, more or less.

Okay, 250 crores, okay. Is there a break

up

between HFC, Samasta? 160

160, 170 160 or so is HFC and around 75, 80 Samasta.

Okay. Got it.

Thank you, Nirmal. Thank you, everyone.

All the best. Thanks, Abhishek.

Thank you.

Hi, Nirmal. Thanks for the opportunity.

I'm focusing on this slide which talks about co-lending and assignment. Almost 40% of the gold loans are either assigned or we're doing a co-lending versus we having close to 2,500 branches pan-India.

I'm just curious about the co-lending part of it. Assignment, I do understand, but again, in terms of assignment, I think there are certain regulations of RBI which prohibit NBFCs from doing assignment because these are bullet loans and not monthly repayment loans.

How do we understand the true nature of these assignments in terms of vanilla economics or the commercial transactions which are being enacted. Thanks.

There is no ban on the assignment. Only thing is that earlier regulations is, if you assign, banks don't get the priority sector credit for that.

Even if those loans are to small and priority sector customers, when you do assignment, is not considered as a PSL. In co-lending, it works simultaneously.

When we basically disburse the loan, money comes to syndicate through the escrow account. The co-lending happens on the same day.

That process has been integrated and started. If you really look at it in gold loan in particular, then almost about 40% of our portfolio is co-lending.

Out of the total off-book portfolio. Right.

We don't do much of bullet loans, about your question on bullet loan. Our portfolio does not have much of bullet loans.

Not in the co-lending or assignment. Some part we might keep in our books.

Essentially what we are saying is that 40% of our assignment and co-lending book for gold loans is basically a monthly repayment structure.

Could be monthly, quarterly, monthly, but not bullet.

Understood. Which means that it would be far more yield dilutive versus the rest of the portfolio.

So 60% of the portfolio would have upwards of 20% kind of yield versus the 40% of the portfolio. Is that a fair understanding?

Broadly yes, but not exactly.

Where am I lacking the understanding in that case? Because if we make it non-bullet, then it is yield dilutive.

No, highly can't be that way. What you're saying is right in terms of the broader trend or indication.

It's not precise that every loan that goes is higher yield and every loan that we retain is higher yield. Most part of it, what you're saying is right.

Right. The only question I think which remains unanswered is that, why are we doing co-lending at all in gold loans, because we've got enough distribution, we've got enough experience in gold loans.

We've been doing it for quite sometime. What is it that we are drawing out of the co-lending, apart from I understand the economics of it, but I'm just trying to understand from our own distribution perspective that we have a large enough distribution across various fincos in the country.

To tell you candidly, we don't have enough capital. Our capital adequacy is not adequate to meet, keep everything on the book.

We have to do co-lending.

Right. Understand.

I'll possibly take this offline. Thank you so much.

Okay.

I think we don't have then now we can wind up. Thanks.

Yeah. Thank you so much for joining today's conversation in the financial performance and the Q&A session.

We look forward for quarter three, and thank you so much.

If you have any more questions, you can always reach out to us. Thank you so much.