Thank you. A very good morning, everyone.

I welcome you all to the investor call for Q4 FY26 and the close of the financial year 26. Today with me on the call are our CFO, Mr.

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

As you may have gleaned through the exchange notification, I am pleased to welcome Mr. Sachinn Joshi and Mr.

Raju Dodti as whole-time directors designate onto the board of L&T Finance, obviously subject to necessary approvals. Similar to our previous calls, today's call is divided into two sections, taken up sequentially by myself, followed by our CFO, Mr.

Sachinn Joshi, who will be talking about the overall business metrics and financial performance. In today's call, we shall focus on the performance update for Q4 FY26 and FY26 alongside sharing our roadmap for our five-year strategic plan, Lakshya 2031.

Post our commentary, we'll be happy to take questions on the call. Before we delve into the highlights of the quarter, I would like to give you some pointers on the current macroeconomic scenario and sectoral outlook, which becomes important given the volatile global scenario and the ongoing energy market disruptions.

Amidst ongoing geopolitical tensions and volatile global conditions, India's economic activity continues to be resilient. The economy has performed better than expected throughout the year, laying the groundwork for continuous upward revision to forecasts.

According to NSO's second advance estimates, with the new base year being 2022-2023, real GDP growth is placed at 7.6% in FY26, up from 7.1% in 2024-2025. The pickup has been led by steady private consumption, both in urban and rural, and sustained investments in sectors like construction, power, production of electronics, and capital goods, etc.

Domestic demand remains strong, supported by both rural and urban demand, GST rate rationalization, and monetary easing. Structural reforms, favorable financial conditions, and the government's thrust on infrastructure spending have aided investment activity and bodes well for sustained strength in demand conditions.

The government's focus on scaling up domestic manufacturing in several strategic and frontier sectors augurs well for India's long-term growth trajectory. Against this broadly resilient backdrop, spillovers from the ongoing West Asia conflict pose potential downside risk.

However, as per RBI's assessment, strong fundamentals, including sustained growth, low inflation, and fiscal consolidation, provides India the wherewithal to withstand the adverse impact of heightened global uncertainties. The IMF has also raised India's FY27 GDP growth forecast, highlighting resilience despite global risks and the Middle East tensions and high oil prices, keeping India among the fastest-growing major economies yet again.

While the duration and intensity of the West Asia conflict and its broader macroeconomic implications are yet to be fully ascertained, we remain hopeful that the resilient domestic demand and coordinated policy support will provide the wherewithal to withstand the adverse impact of such global uncertainties. Coming to this quarter's highlights, I'm pleased to inform you that we have concluded FY26 with our highest-ever annual profit after tax of Rs 3,003 crores, up by 14% year-on-year, before a one-time impact of labor code of Rs 21 crores post-tax in quarter three FY26.

Our quarterly profit after tax for quarter four FY26 stands at Rs 807 crores, up 27% year-on-year. This has been achieved on the back of highest-ever quarterly retail disbursements of Rs 24,107 crores, up 62% year-on-year, with contributions received from all our lines of business.

For context, we had posted retail disbursements of Rs 14,899 crores in the corresponding quarter in the previous financial year. The significant thrust of disbursement momentum year-on-year has been the result of our continuous focus on risk-calibrated growth in all lines of business during FY26, duly supported by our next-gen credit administration framework, Cyclops.

The retail book now stands at Rs 1,19,508 crores, reflecting a growth of 26% year-on-year, while the overall book size reached Rs 1,21,728 crores in FY26 and a ROA of 2.4%, reflecting a growth of 18 basis points year-on-year in quarter four FY26. This quarter, we registered a strong growth in total income, which grew 26% year-on-year and 4% Q-o-Q, with a PPOP growth of 31% year-on-year, aided by an increase in our NIMs and fees to 10.47%, a sequential increase of 6 basis points, largely driven by a sharp focus on yield optimization across businesses, fee improvement, and efficient liability management.

In the last call, I had emphasized upon our trajectory of paring credit costs on account of implementation of structured credit policy measures in our businesses and the realization of positive dividends of the early implementation of Cyclops in two-wheeler, SME, and farm businesses. I'm pleased to inform that, consequently, credit costs moderated to 2.64%, a 19 basis points reduction from the previous quarter.

I'd like to take some time to share a brief update on the broad themes outlined in our guidance last year. In the corresponding quarter the previous year, when we spelled out the guidance for FY26, I had focused on four broad themes: resumption of the growth trajectory in our rural group loans and MFI business; growth being the primary agenda across all our lines of businesses; granular focus on building OPEX efficiencies in our collections and credit administration verticals as a byproduct of Cyclops implementation; and enhancing productivity of our sales channels.

I'm pleased to state that we have tirelessly worked on these four themes throughout FY26, and the profitability and the growth that you see today are a result of the continuous efforts of our teams making significant progress on these initiatives. Our RGL and MFI business has showcased sustained resilience, an uptick in both disbursement volumes, and a complete restoration of collection efficiencies to the pre-crisis level of 99.8% plus.

As far productivity enhancement is concerned, we have granularly focused on improving productivity and throughput across all lines of business using digital tracking tools. For instance, in our microfinance business, the productivity per field-level officer increased to 16.1 lakhs in quarter four FY26 from Rs 11.7 lakhs in quarter four FY25, up 38% year-on-year.

While our personal loans business, the productivity has increased to Rs 1.6 crore per sales manager in quarter four FY26 from Rs 1 crore in quarter four FY25, up by 60%. The two-wheeler business displayed an increase of 36% from Rs 14 lakhs to Rs 19 lakhs.

Similarly, our retail housing business, the throughput per employee registered an increase of 11% to Rs 1.96 crores in quarter four FY26, and our SME business registered a productivity increase of 6% to Rs 3.11 crore from Rs 2.93 crore in quarter four FY25. In the farm business, the productivity increased from Rs 57 lakhs to Rs 63 lakhs, up by 11% in quarter four FY26.

We continuously benchmark our productivity ratios with our peer group, and while we compare favorably, we will continue to strive to improve further. We have taken concerted measures with the help of our digital tracking tools to enhance optimization of deployment of manpower while also providing opportunities to use them for cross-selling other products.

This, coupled with the opening of our multi-product Sampoorna branches, will help us to augment productivity and bring in operational efficiencies while helping us to focus on cross-sell in a concerted manner. As all of you are aware, L&T Finance as an organization has been investing consistently in building and deploying proprietary AI tools to help us sell, underwrite, collect, and operate more efficiently.

We consider ourselves as one of the pioneers in adoption of AI at scale in the Indian BFSI sector, and we intend to keep this strategic lead as the world moves towards increased adoption of AI-led efficiency. To this end, we'll continue to invest in the latest AI tools, both hardware and software, and make an attempt to acquire market-leading talent to retain our execution lead.

Our annual AI conference, RAISE, is already considered the most definitive AI conference in the BFSI sector in India, and we'll continue to strive to maintain the thought and execution leadership in this space. To substantiate our position as India's leading AI-enabled organization in the BFSI sector, we will start giving performance metrics on our AI initiatives on a half-yearly basis, starting with this result cycle.

Would like to draw your attention to slide number 20 on the investor presentation, where we have given the early credit performance metric of our Cyclops two-wheeler portfolio benchmarked against industry over a period of 10 months. You're pleased to note that Cyclops has outperformed the industry by a wide margin during the forementioned observation window.

Slide number 21 gives details on the effectiveness of the AI interventions in our collections vertical, especially in measurable activities like pre-delinquency management and self-cure. It is to be noted that our successful AI-driven pre-delinquency management and self-cure resolution process has significantly lowered our cost of collection across all our urban finance products.

The number of AI copilots and tools used by our operating departments have mushroomed, and we have given a complete listing of the successful implementations in slide number 22. Our Helios copilot for SME underwriting has significantly reduced the underwriting TAT for our SME clients, and we expect to improve this even further with deployment of additional modules in Q1 FY27.

We also intend to embark on a pan-organization tech DNA upgrade exercise this year, where our operating managers and distribution workforce would be equipped with AI productivity tools and training to use the same efficiently. Project Nostradamus, L&T Finance's AI-driven, automated, real-time portfolio management engine that went completely live in the two-wheeler finance business in November '25, has started delivering measurable outcomes in predicting and containing portfolio risk at a granular micromarket level, and we expect to implement it in our personal loans business in Q1 FY27.

This will be followed with implementation of Nostradamus in the rural business finance vertical in Q2 FY27 and, subsequently, in the SME and farm businesses. As we have concluded Lakshya 2026 and now embarking on Lakshya 31, we would like to give you a final update on Lakshya 2026's metrics and the aspirational goals for Lakshya 31.

Against the target of retailisation of greater than 95% by FY26, we have achieved a retailisation of 98% at the end of the plan. We have outperformed the retail book growth target of 25% CAGR across the plan by clocking a CAGR of 28% across the Lakshya 2026 plan.

The organization achieved the asset quality goals, with our consol GS3 and NS3 standing at 2.88% and 0.96% respectively, against our target of GS3 of less than 3% and NS3 of less than 1%. With regard to the last goal of achieving ROA of 2.8 to 3%, we achieved an ROA of 2.4% in quarter four FY26.

During the large part of the strategic plan's tenure, we remained on track to achieve our Lakshya ROA target of 2.8 to 3%. However, we faced certain headwinds on account of the microfinance crisis, which set us back on this front by a few quarters.

We are hopeful that we will achieve this ROA goal by the exit of Q4 FY27. I would now like to share our Lakshya 2031 goals, which will serve as our north star for our next phase of institutional transformation designed to establish L&T Finance as India's premier AI-enabled, risk-first, tech-first, multi-product retail financier of choice.

This plan is a result of rigorous, bottom-up, granular business analysis and exhaustive peer benchmarking, ensuring that our growth opportunities are risk-calibrated while taking advantage of the market share gain in the opportunities that we have identified. We're focusing on tech-enabled, granular execution to sharpen our competitive edge, allowing us to maintain dominant market leadership in our fulcrum business segments while developing sufficient market presence in our new business lines.

The measurable goals for Lakshya 31 are as follows, as shared in slide number 9 of the analyst presentation: We will attempt a book growth CAGR of 20% plus over the Lakshya period. We'll endeavor to drive credit costs down to a level of 2% or less.

We will target to achieve a return on assets in the range of 3 to 3.2%. We will strive to deliver return on equity in the range of 16 to 18%.

The successful achievement of the stretch targets of Lakshya 2026 plan period gives us the confidence of achieving the goals we have set for ourselves in the five-year Lakshya 31 plan period. I would also like to take this opportunity to brief you about the go-forward plan on FY27.

As we enter FY27, the first year of our five-year strategic plan, Lakshya 31, we expect the momentum gained in FY26 to sustain, with AUM growth of over 20%, supported by robust consumer demand in urban finance, gold loans, and our rural franchise, while maintaining a calibrated and quality-led approach to expansion. From a profitability and ROA standpoint, the investments that we have made over the last few quarters position us well for operating leverage to play out meaningfully in FY27.

We expect our NIMs and fees to remain stable in our guided range of 10 to 10.5%, while credit costs should trend lower, in the range of 2 to 2.2% by Q4 FY27, as newer portfolios season and our AI-led underwriting frameworks mature further. At the same time, we'll continue to add rapidly to our gold loans distribution footprint and our multi-product Sampoorna branches while deepening cross-sell opportunities across our customer base of close to 3 crore customers.

We will also expand our two-wheeler and farm equipment distribution footprint by covering our hitherto uncovered dealer base. We'll build and operationalize an AI-based cross-sell and service engine this year, thus completing the modular intelligence framework for our technology architecture, as first detailed during the investor digital day in November 2024.

Overall, we see FY27 as a year where the foundation built over the last 12 to 18 months begins to deliver consistent, high-quality growth with lower credit cost profiles, leading to improved profitability and return metrics. As I mentioned earlier, by the last quarter of FY27, we are targeting to achieve an ROA of at least 2.8%.

As announced through our exchange declaration on Friday, the board approved the setup of a payments platform by L&T Finance to take advantage of the rapidly evolved digital payments and commerce landscape in India and to build a responsive and a personalized payments framework for our rural and urban customers. The focus will be to infuse the strong AI expertise gathered by L&T Finance into the payments domain through an agentic commerce paradigm.

The organization has already started laying the blueprint for the same and expects to operationalize the platform by Q2 FY27. The payments business will strategically serve as a catchment for new customers acquisition, diversification of fee revenues, and simultaneously will capture rich transaction data for use in our lending businesses through our proprietary AI tools.

We'll keep you periodically updated on the progress of this initiative. As mentioned earlier, I would now like to give you a brief update on the five pillars of execution that we had enumerated in October 2023 and continue to be in implementation mode against the same.

Customer acquisition: The focus continues to be on maintaining customer acquisition momentum, both vertically and horizontally, while proactively implementing credit adjustments to ensure sustained portfolio quality. To ensure focus on acquiring new non-leveraged MFI customers, the team focused on deepening reach into new non-covered villages.

Hence, the number of new villages, zero-disbursement villages activated for the rural group loans and the MFI vertical, stood at 28,335 villages in Q4 FY26 as against 27,146 villages in Q3 FY26. We are also expanding our geographical footprint in UP, Maharashtra, Andhra Pradesh, and Assam.

This quarter, we have added a total of 8.3 lakhs new customer, which is the highest ever, and with this, our overall customer franchise stands at about 2.8 crore unique customers at the end of FY26. The two-wheeler finance segment also saw renewed growth by reactivating dealers to target prime customers.

Further details around customer acquisition and repeat share are available on slides 27 and 28 of the investor presentation. Sharpening credit underwriting: I've already spoken at length on the impact of our proprietary credit underwriting engine, Project Cyclops, which is now live in two-wheeler, farm, SME, and personal loans, and will be further extended to home loans and rural business finance in FY27.

Futuristic digital architecture: We continue working on upgrading our technical capabilities, and our focus on continuously strengthen our IT framework remains unabated. I've already spoken about the Project Cyclops and Project Nostradamus.

This year, we saw the launch of 20-plus new digital journeys, among which the HL Neo 2.0 journeys led to 2x productivity and the 3x performance in our FarmOS portal as well. We enhance credit governance through the Sachet app and an EWS investigations portal for early warnings.

These advancements have built a highly efficient, scalable, and secure digital infrastructure for our retail future. Brand visibility: We continue to focus on targeted engagement through multi-channel and multi-product brand building with Jasprit Bumrah as our brand ambassador.

We expanded brand visibility through targeted branch initiatives and event participation, including the branding of 200 new gold loan branches and the presence at a flagship business loan industry event. To also reach captive audiences, we also have implemented airport branding across multiple cities.

Capability building: On the capability building front, as you are aware, we have taken a series of measures during the year. During the quarter, we have completed our annual long-range planning cycle across all verticals, reinforcing the alignment of function-level talent strategies with our overarching business objectives.

On the employee initiative front, we launched the employee engagement surveys, including the third edition of the Great Place to Work survey, to enable the management to effectively listen to the voice of its employees. Additionally, gold loan expansions remains on track, with 330 branches live as of quarter four FY26.

Notably, 30 of these new locations are integrated into our multi-product Sampoorna branch network. We intend to deploy 400-plus new gold loan branches this year, of which at least 100 would be Sampoorna branches.

This reflects our commitment to fostering a high-performance culture and scaling our physical presence to serve our customers better. Now, I would like to give you an update on the wholesale business and the related investments in security receipts with the ARCs.

The wholesale book has been reduced from 2,582 crores in FY25 to 2,220 crores in FY26, a reduction of 14% year-on-year. The net security receipts book has also been reduced from 5,862 crores in FY25 to 4,808 crores in FY26, down 18% year-on-year, mainly due to monetization of assets driven by active stakeholder negotiation, completion of projects and subsequent sale of constructed units, and recovery measures implemented through legal action.

Details of the same are available on the slide number 15 of our investor presentation. With wholesale ARC book reduction progressing satisfactorily, we'll continue to work with the ARCs, focusing efforts towards further reduction in outstanding SRs.

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

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

First talking about the quarterly performance: Consolidated NIM plus fee for the quarter stood at 10.47% versus 10.15% for Q4 FY25 and 10.41% for Q3 FY26. Consol PAT for the quarter was Rs 807 crores, up 27% year-on-year.

Quarterly retail disbursements stood at 24,107 crores, up 62% Y-o-Y. Retail book stands at 1,19,508 crores, up 26% Y-o-Y, and our consolidated book stands at 1,21,728 crores, up 25% year-on-year.

Consol ROA stands at 2.40%, up 18 basis points year-on-year. Consolidated ROE stands at 11.71%, up 158 basis points Y-o-Y.

Now coming to annual performance: Consolidated PAT at Rs 2,981 crores, up 13% Y-o-Y. If we exclude the one-time impact of labor code, which was there in quarter three FY26, PAT stood at 3,003 crores, our highest ever.

Consolidated NIM plus fee at 10.33% versus 10.59% for FY25. Highest-ever annual retail disbursements of Rs 83,213 crores, up 39% year-on-year.

Consolidated ROA after one-time exceptional items stood at 2.37%, down 7 basis points year-on-year. Before one-time exceptional item, it is 2.39%.

Consolidated ROE at 11.25%, up 38 basis points year-on-year. Before one-time exceptional item, it is 11.33%.

Now, before I move on to our retail business performance, I would like to briefly talk about our annual ECL model refresh. We have already provided a detailed impact of annual ECL model refresh in slide 13, but would like to just reiterate the same.

The company undertakes refresh of the ECL model annually, including recalibration of probability of default, that is PD, as well as loss given default, LGD, methodologies across stages. The model refresh also incorporates updated assumptions and forward-looking risk parameters.

This year's ECL model refresh has resulted in release of ECL provisions of 301 crores. These were carried as management overlays over and above the provisions required as per ECL model.

290 crores were in stage three and 11 crores in stage two. There is a corresponding increase in ECL provisioning of 301 crores in stage one.

Additionally, as part of this exercise, 125 crores of macroprudential provisions have also been subsumed within the ECL model. This leads to improved provision coverage on performing stage one book, which constitutes a substantial around 96% of the total exposures, from 0.52% in Q3 FY26 to 0.80% in Q4 FY26.

The PCR on stage two assets improves marginally from 23.23% in quarter three FY26 to 23.59% in quarter four FY26. Correspondingly, the PCR on stage three assets comes down from 73% to 68%, which is an adequate level of coverage and does not in any way diminish or impact existing coverage requirement as per model within stage three.

Overall, this does not have any P&L impact, which exhibits structural consistency and balance sheet resilience. This exercise strengthens the company's credit risk framework and reflects its continued focus on prudent credit risk management.

Talking about retail businesses now: First one is rural business finance, which registered quarterly disbursements of 7,208 crores, up by 41% year-on-year, and annual disbursements stood at 25,882 crores, up 24% year-on-year, mainly on account of improved collection efficiencies and sectoral trends. The book size reached Rs 30,805 crores, up 6.3% quarter-on-quarter and 17% year-on-year in Q4 FY26.

In the farmer finance vertical, quarterly disbursements stood at 2,037 crores in Q4 FY26, up 16% Y-o-Y, while the annual disbursements stood at 8,674 crores, up 9% Y-o-Y. The book size reached 16,970 crores, reflecting a growth rate of 12% year-on-year.

Talking about urban finance, which comprises two-wheeler, personal loans, and home loan-LAP business, saw a 61% year-on-year jump in overall quarterly disbursements, Rs 9,850 crores, and a 38% jump in annual disbursements, totaling to 34,514 crores. As a result, the overall book size increased to Rs 59,048 crores in Q4 FY26, translating into a 29% year-on-year growth.

The two-wheeler business registered quarterly disbursements of 2,930 crores in the quarter, up 58% Y-o-Y, and annual disbursements stood at 10,787 crores, up 16% Y-o-Y. The book size increased to Rs 14,372 crores, up 17% Y-o-Y, with 90%-plus of March '26 two-wheeler disbursements in the prime segment.

We continue to prioritize high-quality growth and optimized risk-adjusted returns. In the personal loan business, we achieved our highest-ever quarterly disbursement of 3,786 crores, translating into a growth of 98% Y-o-Y, and annual disbursements stood at 12,220 crores, up by 100% Y-o-Y, with the book size of 14,666 crores, an increase of 70% year-on-year.

The double-digit growth is attributed to the scale-up of digital journeys. In the housing loan business, we achieved quarterly disbursements of Rs 3,134 crores, up 34% year-on-year, and annual disbursements stood at 11,507 crores, up 20% year-on-year.

The book size reached 30,009 crores, an increase of 20% year-on-year. In the SME business, quarterly disbursements stood at 1,838 crores, up 20% year-on-year, and annual disbursements stood at 6,130 crores, up 23% year-on-year.

The book stood at 8,507 crores, up 30% year-on-year. The growth in business volumes was aided through an increase in direct sourcing and an existing strong network of distribution channels.

In the gold loan business, quarterly disbursements stood at 2,779 crores, up by 97% quarter-on-quarter, and the total annual disbursements for FY26 reached 6,700 crores. The closing book reached 2,845 crores at the end of the year, representing a significant growth of 63.7% quarter-on-quarter.

Let me now hand over the call back to Sudipta to make his closing statements.

Thank you, Sachinn. In summary, our performance in quarter four FY26 has been satisfactory, and overall performance for FY26 has been up to our expectations despite a difficult start due to the Karnataka microfinance ordinance issue.

We have started the new financial year on a strong footing, with disbursement momentum keeping pace with the previous months, and we are reasonably confident of a strong growth trajectory in FY27. As we go forward in FY27 with the backdrop of the West Asia geopolitical tensions and the possibility of El Niño conditions later during the monsoon season, we are hopeful that we can maintain the upward momentum in risk-calibrated growth and profitability in FY27 and beyond as we continue our journey of executing the Lakshya 2031 plan.

I thank you all for a patient hearing. The floor is now open to questions.

Thank you for the opportunity. Congratulations on a good quarter, a good year.

My one question is actually going to be about the impact of the West Asia war in terms of we have all these AI capabilities and are probably able to see the data quite upfront versus many other players. Is there any areas of concerns that you can highlight, whether it be across your SME book, whether it be across your personal loan book?

Also going ahead this year, there are a couple of headwinds in terms of the rural economy can face because of El Niño. There are headwinds of the war continuing to cause disruption or maybe causing inflation later in the year, etc.

How are we thinking about the full year across certain critical segments which are susceptible to the monsoon impact for example? That's my one question.

Thank you.

Thank you so much for the question. At the outset, let me tell you that though the West Asia crisis continues to go on, the domestic consumers have been largely shielded from any energy shock as of now, barring the little disruption on LPG supplies that we saw.

However, there have been sort of tightened supply of industrial gases, etc., which has also impacted some of the SMEs. As of now, we really do not see any significant worsening or impact rising out of the West Asia crisis on any of our portfolios, whether be it SME or any other portfolio like rural business finance vertical, or tractors, or two-wheelers.

As of now, there is no visible impact. However, we continue to be cautious.

One of the things that we continue to be cautious is the fertilizer supply because the Kharif season is down the corner, and many of the input stock for fertilizer production as well as some of the commonly used fertilizers originate in and transit through the Middle Eastern corridors. If the crisis does not resolve in time for the Kharif sowing season, then we might see some sort of constriction of supply, fertilizer availability there, which might have downward impact on yields on some of the agricultural produce later.

These are all second-order or third-order impacts. Obviously, we are cognizant of the energy shock that might come at some point in time because the oil prices continue to be at a higher level.

We obviously are looking at being cautious in our approach to the urban unsecured lending, especially in the SME business as well as in the personal loans business. I would like to point out that our focus for the last 2 years have been more of prime customers, and we do believe that our prime customers have a larger factor of safety in terms of dealing with the vagaries of economic cycles than the more sensitive, below-prime or near-prime customers.

However, we remain vigilant. Our portfolio management engine, Nostradamus, which is in two-wheeler, is already giving us measurable benefits.

We're implementing it in personal loans as well. We will probably be able to see any risk pocket developing much earlier than maybe others.

In conclusion, we remain vigilant. As of now, there is no immediate signals that we're seeing of worsening of credit parameters that is directly related to the West Asia crisis, but we'll have to monitor the space continuously.

Right. Just to follow up here, your 20% plus 20% AUM growth guidance for FY27 is inclusive of all these concerns that you've talked about, right?

We have taken everything into concern. See, the fact is that as of now, we remain committed to that 20%-plus growth guidance.

However, if there are unseen geopolitical shocks that might happen later during the year, those are not factored into the guidance. However, as of now, we stand by the 20%-plus guidance.

Okay. That's very helpful.

Thank you, and all the best.

Thank you.

Thanks. A couple of questions.

Firstly, you have spoken about the AI and efficiencies which it can bring in. Just if you can touch upon within the overall guidance both near-term as well as maybe 2031 guidance with respect to how the cost ratios should pan out, be it in terms of cost to income as well as cost to assets, that would be helpful.

Second question is on ECL model refresh. The contingency buffer has been subsumed, and I presume it was in the stage two.

Ideally, when we look at the release from the stage two, then ex of contingency, it wouldn't have been anything related to PD or LGD. If that can be clarified, that will be useful, because there is hardly 11-odd crores, and 125 crores was contingency, and so we don't carry any contingency as of today within the ECL.

That clarification would also be helpful, yeah. Thank you.

Yeah.

Hi, Kunal. Thank you.

Let me take the second question first. On the macroprudential provisions utilization, the stage one, two, and three, when the recalibration has been done, anyways when we show the slide on stage one, two, three, yes, you're right, 125 crores was part of stage two itself.

As we have recalibrated, the 125 crore has been subsumed primarily taking in account the last four to five-quarter challenges that have happened at the microloan sector. The requirement naturally increases because ECL model runs at a lag.

We have actually, this quarter, come out of this whole challenge with the March ending at 99.80% collection efficiency. Right, but the 125 crore which was remaining is anyways part and parcel.

Earlier, it was separately available. Now, it is part and parcel of stage one and two as part of the ECL model itself.

It's not gone anywhere. Anyways, it is just strengthening the same piece.

It's just changed the color, that's it. Going forward, as we step into the next financial year, whenever there is a possibility and a requirement, we will anyways continue building macroprudential provisions, which will take care of the future events.

This is as far as the macroprudential is concerned. In terms of the Lakshya 31, the OPEX to book range, I think we are looking at a range of 3.75 to 4% range, primarily keeping in mind the investment that will be required, because over the next 5 years, there will be further investments in technology, which will be required, investments in setting up branches, gold loan, microloans, microlap, these are the businesses which we will continue investing in, and setting up the branch network come at a cost.

We have continued to factor these in when we build the 31 projections. I hope I have answered

both

the questions.

Near-term cost ratios? It will be same or maybe

show

some positivity?

As far as the operating expenses are concerned, if you talk about FY27, assuming that the external conditions remain normal, we continue to plan setting up about 150 to 200 microloan branches, further 150 to 200 microlap branches, and about 400 to 500 gold loan branches. Now, these will come at a cost, and hence we've said that the credit cost trajectory, exit Q4 FY27, we are expecting it to come down to a range of 2 to 2.2%.

Keeping the reduction in credit cost in mind and the investments to continue in FY27, I think we are looking for an ROA target of 2.8% to be achieved by exit FY27, basically the Lakshya 26 target of 2.8 to 3, we expect to achieve with a lag of about four quarters, because we are out of the crisis now and we should start moving towards achieving that target.

Perfect. Thanks, yeah.

That's helpful. Thank you.

Hi, thank you for the presentation and taking my question. First one is just on the fee income.

It is relatively tepid if I look compared to your disbursements growth of 61 and 6%. Is this MTM losses that is pulling this down or what is this exactly?

No, fee income does not include any MTM losses. Primarily, there is an amount of liquidity income.

Depending on the liquidity that is kept, we have the income coming in as part of the interest cost, and if there is a negative carry on that, that comes over here. Otherwise, the disbursement trajectory, the processing fee and the CLI income remain range-bound in that.

Do you expect this to grow in that 20% range in line with your AUM and disbursement target for next year, the fee income?

See, fee income has be continued to remain in the range of about 1.7 to 1.8, 1.9. There are quarters where we receive something more, quarters where we receive something less.

I think the range, rather than looking at standalone fee income, we always give a range for the NIM plus fee, because ultimately, it's a part and parcel of whatever fee income that we garner depends ultimately on disbursement on a specific business. Microloan will give a particular range of fee, gold loan financing gives something else.

To remain within the trajectory of 10 to 10.5 is what we have assured, and we have been maintaining that. This quarter, we've done 10.47.

Some plus minus few basis points here and there will keep happening. We can't really monitor on exactly what will be the fee income, but broadly, this range should continue.

Understood. Thank you.

Lastly, just one clarification. Your reported NIMs versus the calculated based on period and averages is quite a bit of delta.

Your reported is on daily average assets, am I correct there?

No, reported what we do is we do end of the period averages.

Understood. I'm getting a bit deltas there, but I'll take this offline perhaps.

Sure, thank you.

Sure.

Hi. Thanks for the opportunity.

Couple of questions. The first one is more on AI, of course you are kind of leading there and leveraging it.

My question is more on that medium-term impact of AI and the job markets. The hiring scenario in IT looks muted at the moment.

Uncertainty is there. Even if you were to look at financials, as a sector overall, the wage growth has been slowing, and hiring is also relatively slowing.

Now these two sectors typically will be very, very key for your targets of the two-wheelers as well as the PL. Now, if these two sectors are kind of a bit clouded here, now how do you see this risk in terms of your growth, asset quality over the medium term, because the two-wheelers and personal loan growth are very, very critical to your growth trajectory and plans.

We have this big sort of a uncertainty coming in. On one hand, of course, AI is helping on the operations side, but this is kind of a creating a cloud.

That's one. Second, again, I guess this has been discussed and answered.

From this FY31, broadly, if I were to remove this drag on earnings from the security receipts and see the credit cost improvement, by and large, it looks like that, okay, in terms of even over the medium-term 4-5 years, your plays like NIM plus fee changes and OPEX changes basically offsetting. There is very little play from these two parts.

The large play is from credit cost and some, of course, SR drag going off. Now if you were to continuously invest in technology, why it is so that even at the exit, after even 4-5 years, you do not see that OPEX play to come into pictures?

This branch, 150 each for microlab and 400 for gold, is to be open in how many years? Will there be some overlapping branches?

Thanks.

I'll take the first question. The first question is that the fact is that yes, there are a lot of headline moderation in hiring by some of the sort of the bigger Indian IT firms as reported in the media.

However, one of the things we should be cognizant of that much of that slack is also being picked up by the huge expansion of GCCs in India. The fact is that and we are in the hiring market almost every day, it's still as difficult to get qualified talent as it was 2 years back, right?

Maybe there might be a little bump in the freshly minted engineers getting hired into some of the big Indian IT services firms, but the hiring by the GCCs expanding is quite strong. According to our assessment, we really do not expect the IT staffing or hiring industry to completely fall off a cliff, at least for the next 12 to 18 months.

The fact is that because we have been very early in adopting AI-based tools, and now we have a significant AI development team as well, our realization is that the front end of AI development is only 15%. To make AI solutions useful for use in the front line or for use by operating managers, you require a heavy engineering wrapper around it.

That requires software engineers and developers to put it together in a usable format. I do believe that and this is obviously my own personal opinion, some of the gloom and doom regarding job losses from AI being an unstoppable stream has been probably a little overblown.

Right? Yes, there will be some losses because of efficiency gains, etc., but I do believe that some of those will be deployed into tools development or manufacturing of AI-enabled solutions.

Overall, I do believe that there will be a marginal impact and not a massive impact. Again, the caveat is that we'll have to see as it plays out.

My guess is as good as yours, and no one can predict with 100% certainty as to what will happen. Having said that, we are cognizant of wherever there are large-scale job losses, of late, there was a large-scale job cuts by one large global US player, right, in the IT segment.

Our underwriting sort of paradigms as well as underwriting processes, especially in SME or personal loans, etc., remain cognizant to such risks, right? We incorporate such things into our decisioning process.

For example, if you get advance news of a particular large, heavy amount of job losses in a particular IT services company, right, or downsizing in an IT services company, automatically, any application coming from that company for a personal loan or for a credit facility goes through an additional amount of scrutiny, right? Those things are built into the underwriting process.

As part of the second question, you were asking whether on the gold loan branches, 400-plus gold loan branches is for deployment only in this year. That means from 1st of April till 31st March of 1st of April '26 to 31st March 20 2027, in between this period, we'll deploy these microlab branches and we will deploy these 400-plus gold loan branches.

The rate of deployment of gold loan branches will be at the rate of almost one to 1.2 a day, right? That is to answer the question.

The third thing is that, obviously, the OPEX and the credit cost trajectory will evolve over the period of the Lakshya 31 framework. Currently, we are at about 2.64.

You can see that our slippages have been coming down. Our slippages same quarter last year were about 900 crores plus.

This quarter, it is 402 crores, right? We have given in slide 20 the impact of Cyclops on our two-wheeler portfolio, where you can see our 30-plus number at 10 months from the observation period is 2.8%, where the industry average is 7.1%.

Actually, our Cyclops portfolio, two-wheeler portfolio, which is almost 11,000 crores right now, is observation window book, which is about 3,250 crores, is outperforming the industry by almost a factor of two, right? We remain very, very confident on the trajectory of paring our credit costs during the Lakshya cycle to sub-2%.

That is why we felt confident enough to put it that part of the Lakshya guidelines. The fact is that you are right.

To a certain extent, the ROA expansion will come from some part of the efficiency that is arising out of OPEX, as well as we will build headline efficiency in our OPEX plus credit cost. As if you had been part of the analyst call previously, at one point in time, we used to guide saying that our OPEX plus credit cost will be in the corridor of 6.5 to 7%.

Now, we have moved that to a corridor of 6 to 6.5%, and during the Lakshya period, we expect that to be in the corridor of 5.75 to 6%. That is where we expect that to be in the corridor of.

Obviously, there will be efficiencies built in the OPEX line, there will be efficiencies built in the credit cost line, and obviously, we will try to hold our NIMs and fees in the corridor of 10 to 10.5%. There was a question on fees.

We have launched the payments business primarily because we want to diversify our fee revenues, right? We are cognizant of the fact that our primary fees comes from insurance revenues as well as from origination fees, we want to diversify our fee revenue pipelines.

That is why the payments business has been launched, or payments business is proposed to be launched. We are working on diversifying our fee revenues as well.

That is why for the near term, our guidance on NIM plus fees remain at 10 to 10.5 for the near term, right? We are very, very confident that given the fact that structurally the changes that we have done to the businesses and the way we do our businesses, right, will help us navigate the Lakshya 31 period and deliver those metrics that we have put on the paper.

Thank you, very clear.

Thank you for the opportunity, and congratulations on the quarter. Sir, firstly, on this Lakshya 2031 ROE guidance of 16 to 18%, in that, are we considering any benefit from the SR portfolio as in any provision reversal which we are which we could expect from that or what is kind of the recovery rates on the SR portfolio?

This quarter, I think we have this year, we have a reduction of almost 1,000 crores in the SR book. Has that gone anything towards the provision and any add back on the capital for the other purpose?

Yeah.

First thing is, yeah, we have not taken into account any gains coming out of SR portfolio, because earlier we had guided that as and when such gains come in, we will actually utilize those credits to take care of further macroprudential provisions to be created. Once we have sufficient provisions created for microloan, we may also consider creating provisions for the unsecured portfolio overall.

That's a top-up which has not been factored in over here. As far as the current credits are concerned, you would have seen that the SR portfolio used to have about 59% provisions.

That has now gone up to 64%. Till the time the ARC has more than one asset, the release of these credits to P&L is not possible.

Whatever credits have been received have actually just gone to create more buffer for the balance assets which are currently going in for resolution. Over a period of time, there will be a redemption of SRs, and at that point of time, the credits will come in, and we will, like had guided earlier, we will utilize the money to take care of the creation of additional macroprudential provisions.

His question is that is that

3 to 3.2% ROA

It does not include. One of the important points to note is that the SR portfolio still gives us a drag, right, because we have to still provide for the funding cost for the portfolios with the ARCs.

As and when the portfolio is resolved, that drag resolves to a large extent, which releases a marginal ROA into our entire earning stream. If you had to look at standalone basis, our retail portfolio is actually exhibiting ROAs at a level higher than our consolidated ROA, right?

As that drag reduces, yes, there is a secular benefit that will come into the ROA profile as well, right? To that extent, yes, the resolution of the SR portfolio will aid our ROA expansion definitely.

Sure, sir. Just on that retail portfolio standalone ROE, which you mentioned is higher than the overall.

How much would be that delta which retail portfolio ROE would be having over the consol ROE?

Rather than talking about the delta on retail, I would like to just talk about what is the money that is stuck. We have 2,200 crores of portfolio on the book, the loan book, the wholesale portfolio, and about 4,800 crores of SR portfolio.

2,200 plus 4,800.

Totally, about 7,000 crores, right?

6 1/2,

7,000.

7,

7,000. 7,000 crores is the money which will get released over a period of time, and right now, the 4,800 does not give me any interest income, because they are part of SRs.

2,200 must be giving me around 11 to 12% kind of yields. You can do the calculation there.

This money will get released and will get redeployed in high-yielding retail business.

Understood. Fair to expect that this will get resolved in 3 years timeline at least?

Yeah, 3 to 4 years. There may be a long tail, but yeah, larger resolutions, there has been a positive movement, which we are seeing.

Ultimately, it's with NCLT, it's anyone's guess. Yes, next 2 to 3 years, significant part of the assets will come up for resolution.

Let me add to what Sachinn said, Chintan. In many of the assets, there has been significant progress over the past 1 year, and and and and we we are we are reasonably positive about the trajectory of that, but it will take another 3 to 4 years.

It will take another 3 to 4 years because, for one of the assets, for example, if I were to give an example, the JD has just been signed, last quarter. Now once the JD has been signed last quarter, the construction period is at least 2 to 2 and a half years, right?

It will take about 4 years for the 4 to 4 and a half years for the full project to get delivered. The delivery will come across the next 3 to 4 years is what we what we look at, and so we have a team.

We have a reasonably focused team that keeps on working on this, and so far, the outcome has been positive.

Fair enough. That's very helpful.

Sir, just one last question on the fee income part. I think in order to boost fee income, are we looking at any opportunities to further expand into co-lending?

Are we doing any co-lending as of now? What are the thoughts on that, yeah?

See, co-lending we do on the personal loans side, but on a very selective basis, with only a couple of partners. Co-lending always remains on the plan for us, on the table for us.

There can be opportunities in home loans to do co-lending. There can be opportunity personal loans, obviously, the opportunity arises.

In SME, there can be an opportunity to do co-lending, on a product like warehouse receipt finance, there can be an opportunity to do co-lending. The only thing about this is that co-lending frameworks are slightly complex to implement, as well as it requires a little bit of tech integration as well as monitoring.

If we find a co- co-lending See, we are not starved of capital, right? We will do co-lending wherever we get access to newer customer pools, right, and the partner also wants to wants a say in the control of the customer experience process, right?

There are various considerations that go into co-lending, or the partner does not have enough capital to deploy to, to do a certain amount of product to its customer base. There are horses for courses.

Yes, we remain open to doing co-lending frameworks, but obviously, at terms which, we think are favorable to our business philosophy. Sure.

That's it from my side. I'll come back in the queue.

Thank you. Thank you.

Thank you.

Good afternoon, sir. Sir, my question is on the ECL refresh.

While you have elaborated quite a bit on that, on the stage three PCR cut, is there a change in LGD or PD assumptions there?

See, the PD, LGD, there are two ways within the industry. There are certain players who have PDs which keep increasing, which have an increasing trend as they move stages.

There are some players who also have the LGDs showing an increasing trend. There are other players in the industry who have a moving PD, but the LGD is static, which means that LGD is decided at a portfolio level, and accordingly, the overall LGD is applied to every asset right from so it's fixed for all the three stages.

When we've done this exercise over last 2 years, we have actually been recalibrating stage one, two, and three PD, LGDs. This year, based on the impacts of FY26, we have revisited this, and accordingly, the stage one, if you look at what has actually happened is that the overlays which were kept in stage three, which were more over and above whatever was requirement as per ECL model, the difference of PCR between 70 4% and 68%, that differential was nothing but the management overlays.

They have got released as part of this whole exercise, and the 96% of the portfolio, which is in stage one, there we have actually enhanced the overall PCR plus from 0.52% to 0.80%. Right on day one as the loan gets sanctioned and disbursed, 80 basis points is set aside.

If you are aware, in the RBI prudential norms, this used to be a minimum requirement of 40 bps. It's actually double that number.

The LGD across the stages has been fixed. That's the result why you see that right from day one, the stage one carries 80 basis points.

Stage two also, there is a small increase which has happened from about 2.23 to 2.47, and stage three, there has been a release. This release of provisions out of stage three does not in any way bring down the provision coverage in terms of what is required for that portfolio.

I hope I am clear on that.

My question is if there is a LGD or PD change for stage one, let's say for the incremental portfolio buildup in FY27, will you be providing at 80 basis points incrementally as well or it will be 50? You have created a buffer between this 30 basis points of incremental buffer, but that's a one-time buffer.

Or have you changed the assumptions that every incremental asset buildup will now need to be provided at 80 basis points for stage one?

It will be. It will be.

It

will be. There is a permanent change in assumptions then.

Does that impact any Yeah. Yeah.

Right. There are still certain overlays continuing in stage three.

We have not fully exhausted the overlays which are part of stage three, okay? Number two, if you have seen that last four to five quarters, the whole rural business loans business has gone through a crisis, okay?

Just simple arithmetic. If you exclude one good year and you add one difficult year to the overall ECL model, you will find that the PD, LGDs will increase, okay?

Now, the actual behavior of our portfolio, if you see, has only been improving. We have actually gone back to the pre-crisis levels.

Our collection efficiencies are back to 99.80%, which means the actual requirement as part of the credit cost will come down significantly, whereas the ECL model requirements will continue for some time, just as a pure arithmetic. That's also one of the factor which leads to this increment.

If my asset book is going to be improving with every quarter, this will actually create only cushion in the system, and that's what we ultimately intend to. We used to hold 975 crores of macroprudential provision at one point of time, and in a way by the acceleration of stage one provisions, it only helps us create that cushion at the early stages of life.

The standard asset gets a higher coverage. We have also shared how the roll forwards have been slowing down, and that actually shows very clearly that the overall portfolio across all businesses is only improving, and the overall requirement for provisions will go down in reality, but when we look at the provisions to be created, it is purely dependent on the ECL model.

Partial impact through the segmentation and all has been already considered. As we move into the next financial year, you will see the further impacts coming in and which will help us improvise on the overall credit cost, and that's why we are pretty bullish on how we will end this financial year, FY27, and we've taken a aggressive target, I would say, in terms of bringing down the credit cost to a range of 2 to 2.2%.

Okay.

Just to clarify, this does not the change in this quarter does not have impact on the next quarter next year credit cost outlook. Because mathematically it should, I just want to clarify if the the stage one, you're now factoring at 80 basis points versus 50 basis points till 3Q.

Now we have increased the provisioning of stage one buildup, which will incrementally

will

be adding in FY27, does it change in any way the outlook of credit cost for FY27?

No. See, the reason for that is the actual roll forwards, if they've slowed down, the hit to P&L is expected to come down significantly.

The provisions requirement, based on the book increase will go up, but more than compensated by the reduction in the roll forwards.

Got it. Pretty clear.

Thank you. Thanks a lot.

Thank you for taking my question. Good afternoon, sir.

Sir, just to clarify what you just answered that we now plan to keep stage one provision cover at 80 basis points, I was under the impression that this quarter, because we have had a release from stage three, rather than taking the benefit of that in the P&L, we chose to be prudent and we parked it in stage one. If we start providing on stage one at 80 basis points, it essentially means that our PD and LGD assumptions are now telling us to provide on stage one at 80 basis points.

Which is not just ECL model refresh. In other words, parking whatever release we had from stage three in stage one, this is our ECL model now telling us that provisions on stage one is required at 80 basis points.

Is that understanding correct?

No. Abhijit, the way it works is that if the LGD is like I was mentioning earlier, either you have an increasing trend in the loss given default the way you have it for PDs, then you will have a lower provision created for stage one, slightly higher in stage two, and then finally much higher in stage three.

The way the model was worked out was the ECL model used to give a particular result. If you look at our PCRs historically also, you would see that our PCRs for stage three assets have been always on the higher side.

We have been in that 70 to 75% range when other peer group you will see that similar businesses, the PCRs have been kept in the range of 50, 55 to for some time, and they have now been increased to 60, 65%. So 68% PCR, like I was mentioning, also includes some parts of the overlays.

We believe 60 to 65% is a reasonable requirement which comes in, and which, with Cyclops implementation and we have also shared some early results on that, the expectation is that the ECL models will naturally be recalibrating once again in September and next March, and we will be revisiting this because, see, I don't think anyone else in the industry is currently working on the credit cost piece through implementation of a tool like Cyclops, which has started giving early results. We will possibly see the full-fledged results in FY28, because the full book would have moved through the Cyclops underwriting.

There are early results which have come in, which very clearly showcase Sudipta earlier explained on one of the question how the two-wheeler piece has been working out. Similar thing we have been noticing on farm as well as personal loan, but the full effect of it naturally will happen only after the new book get seasoned.

The ECL model refresh we do once in four quarters. As we revisit the ECL model next time, you will naturally see that there is an improvement in that, and for next four quarters is what we will continue with this 80 basis point.

If there is a need, in September we will see, because it's up to us. If the results are really good and we can recalibrate the models in September, end of September, we will do that.

I hope I have clarified.

Yes, sir, that clarifies. Basically speaking, till the time we do our next model refresh, which could happen in September or March, we'll continue with stage one with 80 basis points,

and

maybe potentially in September or March, stage three, depending on how we see Cyclops benefiting the asset quality, the stage three PCR could further come down to 60, 65, because, like you mentioned, you're still carrying some overlays in stage three. There is a possibility that

No, Abhijit, 1 second. The last part, if you have noticed, over almost 2 to 3 years, we have been carrying PCRs in the range of 70, 75%.

The recalibration exercise, once it has been done, it was right now just significant part of stage three provisions moving to stage one. This whole exercise now is not going to have such significant impacts.

If on one side I am talking about creating additional macroprudential provisions, the intent is not to really bring it down further from here. We will be in this range only.

The PCRs will be kept in the same range.

Got it, Sachinn, sir. That is useful.

Then I had one last question for Sudipta, sir. Hi, sir.

Good afternoon. Sir, just one thing.

This Lakshya goals are very, very aspirational. It's very heartening to see that we are at least aspiring to get to credit cost which are less than 2%.

Will a change in the product mix have a bigger role to play in bringing down credit cost to below 2%, because the way we are thinking about it is by the exit quarter FY27, we were thinking of taking down credit cost to 2 to 2.2%, which essentially means that this less than 2% credit cost that we are thinking about as part of Lakshya 2031 is not very far away. It could come in FY28 or by FY28 end.

Just trying to understand, will it be more a function of the product mix changing, or like Sachinn, sir, was mentioning, the full impact of Cyclops will start showing up from FY28 onwards? Will that play a major role, or will product mix play a bigger role in getting us to less than 2% credit cost?

Because the way the mix is today, some of these products, tractors, two-wheelers, PL, including MSME, these are inherently, if I look at the industry, higher credit cost segments. If you could just help us understand this better.

Thank you so much.

See, one of the things which is there is that the impact on credit cost will be primarily driven by customer selection through Cyclops. Because the way we have implemented Cyclops is that we have implemented Cyclops in the credit-aggressive segments earlier.

Two-wheeler followed by tractor followed by SME. As you rightly said, these are what I call the aggressive credit products, and so obviously, we wanted to implement Cyclops first on this just to make sure that we are very, very certain about the credit cost trajectory of this business going forward.

The early indicators we have given the 30-plus numbers out. We see the 90-plus numbers on Nostradamus.

They are very, very encouraging, which gives us the confidence that, see if you see a prime throughput on our two-wheeler business, two-wheeler business, monthly originations have grown from 650 crores to almost 1,000 crores, my prime contribution has gone up from about 65% to almost 90%, right? I'm able to pull at that scale also.

We are reasonably confident about the credit cost trajectory, which will be primarily Cyclops-driven customer selection. In a way, you are right.

Some of this might happen, the if everything goes well, this is a caveat is everything. Sometimes we hope for the best, but sometimes there is a spanner in the works.

The Karnataka microfinance industry ordinance issue came out of the blue, right, in the month of February last year, and it was nowhere factored into any of our plans, right, which delayed the recovery of the entire microfinance industry by almost 6 months. Right?

Ceteris paribus, things remaining normal, which is a tough ask these days, right? We are reasonably confident that even within those seesaws, etc., in terms of environment, we're reasonably confident of reaching that less than 2% trajectory by FY28, as rightly pointed by you.

Now, which quarter that might happen is something that I can't point out, right? Sometime during FY28, we should be in touching distance of that 2% or below credit cost trajectory, right?

After that, it's a question of maintenance and see how far we can optimize it even further. That is why we have stuck out our neck and said that it should be less than 2%, right?

That is what we have stuck our neck. How much less than 2% is a matter of execution and full maturation of our Cyclops portfolio, but a mix of economy, geopolitical factors, etc., everything thrown in.

Right? We are reasonably confident of getting to that 2% or below trajectory by somewhere in FY28.

Got it, sir. This is very, very useful.

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

Thanks. Thanks.

Hello. Good afternoon, sir.

Am I audible?

Good afternoon. Yes.

Sir, one quick thing. I think the main motto that I could understand is this Sampoorna branches.

Does this have something

Is it better now? Hello?

No, there's still the same ring, phone ring at the background.

Hello?

There's a Okay. Sure.

Thank you for the opportunity. Congratulations, Sudipta, on good set of numbers.

My only question is on the credit cost assumption. What are we assuming in terms of through-the-cycle credit cost for two-wheeler and personal loans for us to go from 2.6 to less than 2% from a structural standpoint?

See, we don't give business-wise credit cost estimates. We don't give out because this is too dependent on market conditions, etc.

What we have given out is a 30-plus number as part of our Cyclops 3,250 crore book. You might want to calculate it from there.

30-plus number on 3M the 10-month observation window is about 2 2.8%. There's an assumption of a 90-plus from there, and there's an assumption of a loss given default from 90-plus, right?

Basis this chart on that 3,250 crore portfolio, probably at this point in time the caveat, this is not a fully matured portfolio yet. It has to go through 24 months for it to fully mature.

It has gone through only 10 months by now, right? In the two-wheeler portfolio you're probably looking at a sub-2% credit cost.

Again, these are not matured portfolios. There are certain businesses which are lower credit cost businesses like mortgage, etc., gold loans.

There are certain businesses with slightly higher credit cost business like MFI as well as two-wheeler. Overall, at a balance level, we still sign up to that 2 to 2.2% corridor by quarter four FY27, and over the Lakshya period, sub-2% is what we are signing up on.

Having said that, the initial trends on the Cyclops portfolios, especially in SME, tractors, and two-wheeler, are very, very encouraging, which gives us the confidence to stick out our neck and give that commitment.

Got it. How about personal loans, given that our incremental share is increasing from the partnership loans?

See, the personal loans industry loss rate, especially for players who have a large amount of salaried customers in their portfolio will range in the corridor between 2 to 3%, right? Our objective will be to land in that corridor as well.

Got it. Perfect.

Thank you. That's all.

Hi, Sudipta, Sachinn, and team. Congratulations for the quarter.

Can you give a sense of at least your key segments, like farm equipment, two-wheeler, microfinance, consumer, is the disbursement yield higher than the portfolio yield at this point of time?

Thanks, Abhishek. Microfinance, all of you guys know that the disbursement yield is more than the portfolio yield.

Not microfinance, but the others.

See, Abhishek, we don't give individual business-wise yields, but I'll give you some pointers, right? Personal loans, we are higher than industry salaried average by almost 2 to 2 and a 1/2 percentage points, primarily because of the online origination.

We are able to get a little bit higher yield. This I maintained earlier, and I stand by it.

Two-wheeler, the industry operates between 16 to 18% overall yield levels. We are still at that levels, and we are able to maintain those levels.

In one dealership with a very large prime, very very high-ticket bikes, it might be slightly lower. One dealership with a slightly lower ticket bikes, it's slightly higher.

SME also continues to be

Just broadly, would it be higher than your portfolio yield, I just wanted to get that range, even if you don't give a number. Is it higher or lower at this point of time?

Yes, it is higher.

It is higher. Just trying to see if there is any portfolio where there can be an yield improvement as you build the book.

That is what I'm trying to

I'll tell you. The yield improvement The yield improvement, we are continuously trying yield improvement in personal loans.

We are trying Home loans, we got hammered quite a bit last year. Home loans, we got quite hammered last year.

Home loans, the, we have moved quite a bit to loan against property. If you look at our sort of mix of home loans to LAP, we were about 80-20 about, 12 to 18 months back.

Right now, we are about 60 We are about 60-40, maybe 55-45, right? 55-45, 55% home loans, 45% LAP.

We are trying to push yields up, right? MicroLAP is a business where we have reasonably high yield, and MicroLAP, book size has crossed 1,000 crores, as you have we have disclosed for the first time this time, right?

We are setting up almost 200 MicroLAP branches this year. We need we focusing on MicroLAP.

In MicroLAP, our collection efficiency continues to hold at, 99.5 9% plus, right? That portfolio is doing very well.

Even in tractors, right, we're trying to push our yields upwards. In in two-wheeler, we have been able to improve our yields slightly upwards over the last quarter, right?

Overall, the push is on improvement of yields across.

Okay. Because I think using Cyclops and all your customer selection tools, you're getting into better quality customers even within those portfolios.

Then to push up your yields, how do you do that? Just trying to connect the dots there.

Yeah.

Basically, the only way you can do that is by changing the mix in the right manner, right? That is the reason why gold loans was introduced.

If we look at how will we fare in terms of our book mix say by FY31, the whole rural business finance piece will be somewhere in the range of about 20%. 15% of the total mix will be for businesses like personal loans, gold loans, which is a very small piece, right, today.

You will have farm and two-wheeler somewhere in that 10 to 12% kind of range. Then you will have, what is left, SME is again going to be about 10-odd percent.

The mix itself is going to really do the work, and it's already doing. To your question on whether the disbursement yields are higher, yes, it is higher because of the change in mix which is happening.

As the higher-yielding book starts growing, proportionately, the overall yields will start moving up, and that's where you see that our ability to manage the overall NIM plus fee within the 10 to 10 and 1/2 percent corridor is not just a function of lowering of weighted average cost, but also managing to stabilize the yields through acceleration of higher-yielding businesses. We had challenge in four to five quarters when the rural business finance had to be slowed down, but with that coming into play and gold loans getting accelerated, MicroLAP will get a big push, personal loans you have already seen 98% growth you saw.

These are all pieces which are naturally higher. Mortgages will grow perhaps, we saw 20% growth over there, and that was one piece we had to do it because it was secured, but the yields over there, especially now in the reducing interest rate cycle, the yields come under pressure.

Once the interest rate cycle changes, there'll be an advantage on mortgages also, and we are also talking about getting into economical housing. All in all, there is always an attempt to ensure that we have the right kind of mix for book growth, so as to ensure that the overall yields don't really come under pressure that we are forced to again look at subprime kind of customers.

It's very clear that we've changed that trajectory, and we will continue to be in the prime space and ensure that the collections cost as well as credit cost don't go back to the older levels.

Got it. Just this slippage number that you've disclosed, 400 crores for the quarter, how much of it would be MFI right now?

We don't give a break up. We don't give a break up, but it has been coming down significantly.

You can actually look at we had Jan and Feb 99.7, 99.75, And 99.8 And 99.8 is in March. The corresponding number, I think, December was 99.

4, 99.6. The roll forwards are the differential of what about 40, 45 bps.

Right. No, because I was just thinking that at 400 crores for the quarter, the annualized number works out to approximately 1.6%.

Looks like a very good number, and probably with the kind of book mix you have and looking forward with Cyclops implementation catching up in larger part of the book, would this 1.6 come down or is it cyclically a very low number, very strong number already?

No. Abhishek, one thing which you should keep in mind is that there has been also a big thrust, there is a project on the collections piece as well, and every chief executive is currently pushing for recoveries of whatever moneys were provided for.

We may write off in the books, it's a technical write-off, but every chief executive is painstakingly trying to get every rupee back. The collections of the older receivables are also part and parcel of the final roll forwards, right, because they get netted off against the moneys that we have to finally provide for.

There are targets taken by every business, and we have been very successful in terms of doing the collections as well.

Having said that, yes, the trajectory is very encouraging for us, and let's see how FY27 pans out. See, the customer selection for the last 24 months has been of a order of magnitude better quality, right, and that is what is flowing in terms of the credit numbers.

The fact is that we are not even diluting the customer quality that we have been acquiring over the last 24 months even a wee bit. In fact, we are trying to see if there is an opportunity to optimize that even further, right, while doing volumes, right?

The tools that we have, Nostradamus, for example, now on two-wheeler, helps us to pinpoint one dealership in a district which is going bad. It is so precise,

right?

It helps us to attack it much faster and address it much faster before it even becomes a problem. In a way, things are moving in the right direction.

The geopolitical headwinds is a fly in the ointment, we are being cautious. Let's see where it takes us in FY27.

Sure. Thanks for answering my questions, Sudipta and Sachinn.

Thank you, and all the best.

Thank you.

Am I audible?

Yes, you are audible.

Hi, sir. Thanks.

Most of my questions have already been addressed, but couple of follow-ups. You mentioned that your LGD assumption is consistent across all stages.

Did I hear that correctly?

That's right.

Sure. Can you share the LGD assumption for stage three, the number?

No. We don't share all those details.

See, ECL models are proprietary to every organization, we just can't divulge those details.

Sure. Just directionally, if I look at your stage two and stage three PCR over the last 2-3 years, that number is coming down very significantly.

I think stage three PCR has come down to 60 7 68, and you are saying that you also have some additional buffer there over and above what is required. Does it mean that your LGD number is also coming down because of maybe project Cyclops and so forth, whatever you are doing.

Your LGD number is also coming down, you are recovering much higher now versus what you used to recover 2-3 years back. Would that be a fair assumption, because that's how the ECL model will work, right?

Suraj, I think what you should do is you should also look at making peer group comparison as to what is the actual loss given default business by business that is required, which will itself enable you in concluding that the PCRs that we have been holding for so long have always been higher. In fact, when we kept it at those 70, 75% levels, there have been conversations which I have personally had where people used to question that are we expecting some challenges because of which we are keeping the PCRs very high.

My response to that used to be that we always have been conservative. We would set aside in good times, so that whenever there are any challenges in bad times, it comes in handy.

The microfinance crisis is a very good example of how setting aside the macroprudential provisions helped us in difficult times. Same thing comes in as far as the stage three provisions are concerned, which is the PCR, which everyone usually looks at.

Across the industry, the money which is required as per the ECL model is in that range of about 60 to 65%, and hence the incremental is nothing but the overlay. As we move forward, all these assumptions also keep changing depending on the quality of book that you're building, right?

Our expectation is that the Cyclops underwritten portfolio will actually only keep improving the portfolio quality, and hence the stage three percentages have to come down. Once the roll forwards slow down, even the stage one, stage two requirements will come down.

If you look at, there are players in the market who have a very secured book and who are very comfortable with a 40% PCR. It all depends on the kind of mix and how you have created a track record for yourself.

We are right now in the process of creating that track record, and hence, plus the change in the assumptions. We are at a juncture where there are certain segments of portfolio we have which have already moved to Cyclops and created through that underwriting, there are older portfolios, and then there is a portfolio which has recently come out of a crisis.

Because it's a mix of all these, this is just the result that you're looking at. Simultaneously, we have been focusing on collections, like I mentioned earlier.

Ultimately, ECL model, you're right. It's a function of what you lend and how much you end up spending to recover it, which comes in the form of collection cost, and if the roll forward slow down, the collection cost goes down and even the credit cost improves.

Directionally, that's why we believe that if you just compare last four to five quarters, you will see that the credit cost has started coming down directionally, and this quarter again about 10 basis points lower compared to the previous quarter, and we believe that we have a journey to complete. We are at 2.64.

We have to go to a range of 2 to 2.2 by end of FY27, and I think we are fairly comfortable at this point of time based on the book that we have and the slippages that we are actually being able to factor in for the next four to six quarters.

Sure. Thank you, Sachinn, sir.

Yeah. That's from my side.

Thank you.

Thank you.

Thank you. I thank all of you for a patient hearing and participating in our quarterly results call.

I trust we have been able to address all your queries. As always, please do reach out to our investor relation teams in case any of your questions has been left unanswered.

We'll be happy to discuss the same with you. Thank you again, and wish all of you a good financial year FY27.

Thank you.