Ladies and gentlemen, good day, and welcome to Cholamandalam Investment and Finance Company Limited Q3 FY 2024 earnings conference call hosted by Kotak Securities Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your touchtone phone. Please, I now hand the conference over to Mr. Nischint from Kotak Securities. Thank you, and over to you, sir. Good morning, everyone. Welcome to the earnings conference call of Cholamandalam Investment and Finance Company Limited. To discuss the Q3 FY 2024 performance of Chola and share industry and business updates, we have with us the Senior Management today. The senior management is represented by Mr. Vellayan Subbiah, Chairman and Non-Executive Director, Mr. Ravindra Kundu, Executive Director, and Mr. Arul Selvan, President and CFO. I would now like to hand over the call to Vellayan for his opening comments, after which we'll take Q&A. Over to you, Vellayan. Thank you, Nischint, and good morning, everybody. So we'll just go through the results for the quarter and the nine months ended December 31st, 2023. The disbursements for Q3 were at INR 22,383 crore for the quarter, up by 27%, and INR 63,940 crore for year-to-date December, which is up by 40%. The total AUM stood at INR 141,000 crore, which is up by 36% year-on-year. Net income for the quarter was at INR 2,580 crore, which is up 41% year-on-year, and INR 7,073 crore for year-to-date December 2023, which is up by 37% year-on-year. The PAT for the quarter was at INR 876 crore, which is up by 28%, and INR 2,365 crore for year-to-date December, which is up by 30% year-on-year. So, just some highlights. So like we said, we disbursed volume of INR 22,383 crore. Vehicle finance disbursements grew by 18%, aided by a steady growth in used volumes. Loan against property grew by 51%, and Home loans grew by 48%, driven by branch expansion into Tier 3 and Tier 4 locations. Disbursement growth in the 3 new businesses was at 33%. So, like we said, aggregate disbursements in Q3 FY 2024 were at INR 22,383 crore, as against INR 17,559 crore in Q3 FY 2023, for a growth of 27%. Year-on-year, we were at INR 63,940 crore as against INR 45,512 crore, which is a growth of 40%. Vehicle finance disbursements were at INR 12,354 crore, as against INR 10,446, which is a growth of 18%. This is for the quarter. For year-to-date, there are INR 35,385 crore versus INR 27,509 in the previous year, which is a growth of 29%. The Loan against property business disbursed INR 3,409 crore in Q3 FY 2024, as against INR 2,255 crore in Q3 FY 2023, which is a growth rate of 51%. Disbursement for year-to-date December 2023 were at INR 9,281 crore, as against INR 6,537 crore in the previous year, registering a growth of 42% year-on-year. The Home loan business disbursed INR 1,587 crore in Q3 FY 2024, as against INR 1,072 crore in Q3 FY 2023, registering a growth of 48%. Disbursement for year-to-date December 2023 were INR 4,615 crore, as against INR 2,425 crore, which is a growth of 90%. The SME business disbursed INR 1,981 crore in Q3 FY 2024, which is a growth of 11% over INR 1,782 crore in Q3 FY 2023. Year-to-date for SME, disbursements were at INR 5,971 crore, which is a 39% growth over INR 4,284 crore in year-to-date December 2022. The consumer and small enterprise business disbursed INR 2,773 crore in Q3 FY 2024, as against INR 1,868 crore in Q3 FY 2023, which is a growth of 48%. Disbursements for year-to-date were at INR 7,980 crore, which is a growth of 77% over INR 4,501 crore in year-to-date December 2022. The Secured business and Personal loans disbursed INR 280 crores and 78 crores in Q3 FY 2024, and the nine months ended for FY 2024. Total assets under management stood at INR 141,143 crores as compared to INR 103,789 crores as of December 31, 2023, which is a growth of 36%. PBT growth in Q3 was at 26%, and for year-to-date December 2023, was at 29% as compared to overall asset growth of 36% year-on-year. PBT- ROA was at 3.3% for Q3 and for the nine months ended December 2023. ROE for year to date was at 19.8%, as against 19.1% in the previous year. The company continues to hold a strong liquidity position, with INR 7,742 crore as cash balance at the end of December 2023, including INR 3,765 crore invested in HQLA assets such as G-Sec, T-Bill, and shown under investments. The total liquidity position, including undrawn sanction lines, was at INR 9,932 crore. The ALM position continues to be comfortable, with no negative cumulative mismatches as per regulatory norms. On the ratings front, we've had, you know, some encouraging news. ICRA has upgraded the long-term rating outlook for Chola from A A+ stable to AA+ positive. Consolidated profit before tax for Q3 was at INR 1,157 crore, as against 926 crore in Q3 FY 2023, which is a growth of 25%. In terms of asset quality, stage three levels representing 90+ days reduced to 2.82% as of December 2023, from 2.96% as of September 2023. GNPA percent as per RBI norms reduced to 3.92% as of December 2023, as against 4.07% in September 2023. NNPA as per RBI norms also dropped to 2.456% as against 2.59% in September 2023. NNPA is below the threshold of 6% prescribed by RBI as a threshold for PCA. In terms of capital adequacy, the CRAR for the company was at 19.37% as against a regulatory norm of 15%, and Tier 1 capital was at 15.55%, and Tier 2 was at 3.82%. The Board of Directors also approved the payment of an interim dividend of 65%, being INR 130 per share on the equity shares of the company for the year ending March 31, 2024. I'll stop with that. Thank you, Nischint, and we'll turn it over to the audience for questions. Thank you very much. We will now begin the question- and- answer session. Anyone who wishes to ask a question, may press Star and one on their touchtone telephone. If you wish to remove yourself from question queue, you may press Star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Avinash Singh from Emkay Global. Please go ahead. Yeah, hi. Good morning. Couple of questions. The first one is regarding your credit cost and provision cover. So particularly if we look in Q3 versus Q2, the provision cover has come materially lower in the other segment. Now, one can understand there could be some sort of a changes in the asset mix within that segment, but I mean, just in one quarter, taking down provision cover to 45% from close to 64%, what's explain this provision cover changes in this other segment? That's one. And second, if we see, I mean, the fee and commission income has seen a material jump. Your notes to accounts mention that you got the insurance broker license. But, I mean, earlier also, you would have been sort of selling insurance, and the, you know, income would have been recognizing some other lines. So what has changed here, and is this higher commission fee and commission income sustainable, or was it some sort of a one-time sum, one-off? Thanks. Yeah. With regard to the first question, the reduction is because we removed 100% provided items in the others. So if you see the gross Stage Three has come down, and so equally, the initial provision has come down. That's the reason that we fully provided book. You know, you write it down because, you know, for NBFCs, you don't get tax benefit unless you write it down. If you just carry them as fully provided, it does not, you know, work well from a cash flow perspective, and that's the reason we do this, you know, at frequent intervals. That's the reason. It's not a provision coverage drop. It is more a removal of 100% provision items, both from the gross Stage 3 as well as the provision. With regard to the insurance income, yes, so far we have been receiving the insurance income through our subsidiaries over the first two quarters. You would have seen that, and from the subsidiaries, we have taken it back into the main company by way of dividend. So since we did not have the license until then, now we got the license in this quarter, so going forward, it will, the insurance income will accrue into, straight into Chola's book. Okay. So this level of fee income is sustainable. And on this, PCR again, so in other segment, it's largely unsecured, I mean, Personal loan and other unsecured. So this 45% coverage, you think is sufficient? Yes. That is the. It's a mix of SME business, which is a low credit cost as well as low, SBPL is also doing well. They have a very, very low NPA numbers, and CSL is the one where we are carrying a higher provisions because of the unsecured nature. So this will keep moving up and moving down as we, you know, build the provision, write it down, build the provision, write it down. That cycle will continue. Okay, thank you. Thank you. The next question is from the line of Suresh Ganapathi from Macquarie Research. Please go ahead. Yeah, hi. So two questions. One, first on the growth itself, right? I mean, we have had some slower disbursement growth in the personal loan segment, and 4% QoQ is the overall growth that we have seen on disbursement. Because it's a base effect, which has given you a 40% annual growth. How do you look at growth for FY 20 25? Because, we are hearing that banks are cutting down their credit lines to the NBFCs. We still have a large dependence on banks, so have they increased rates? Have they withdrawn some credit lines or restricted, and consequently, what is the outlook for growth for FY 2025? Yes. So, Suresh, I don't think we're going to guide for FY 2025 in this call. You know, but basically- Direction. Just a direction if you can give. Yeah. Yeah, yeah. So, you know, to your point on kind of, you know. So I think definitely, you know, what we see at least, right? And you see even in kind of in the areas we're continuing to grow on, are areas we feel quite comfortable about our book, which is basically kind of, you know, home loans, LAP, have both seen good growth and both are, the books are performing very well. Vehicle finance, you know, will also continue to kind of do well. So I think that, you know, we feel quite comfortable with, you know, I mean, whether the levels of growth sustain at these levels or drop slightly, we will kind of, we will get a better indication through this quarter. But we feel quite comfortable with, you know, the current levels of growth, and, you know, like I said, I mean, it might drop a bit from here, but I don't think it's going to be too significant in terms of the drop. What we have cut back on is, you know, our partnership business in the CSEL, in our consumer installment loans. So definitely we've reduced the amount of exposure to unsecured, and we continue to do that in terms of our bias for disbursements. Into your. Go ahead. Yeah. Yeah, please go ahead. Sorry. Yeah. Yeah. And so broadly, you know, I think that we don't see any trends that would cause us to get a lot more conservative, going into next year. But is there a supply of funds restricted banking system? I mean, are you seeing implications with your banking partners, where they are trying to restrict credit lines, or they are finding out? Because, you see, the problem there is, RBI is saying lending to NBFCs is going down, down the line. We have credit lines to the NBFCs, right? Yeah. Your voice is not clear. Sorry, sorry. Am I? Yeah. You got the question, Vinu? Yeah. So I think, Arul, why don't you provide a perspective, because you're closer in terms of, like, how the banks. I mean, so Suresh, again, right, I mean, I don't think availability of funds is going to be, you know, a challenge for the growth rates we're looking at. But, Arul, why don't you answer the question? Yes. Yes, sir. So, first of all, banks are happy to still lend to us, and we are getting good lines of credit. Apart from banks, we are building other sources. For example, this quarter, we have taken a loan from IFC of around $150 million at a very fine rate. And we are seeking similar loans from other multinational actors, which we will see happening in the subsequent quarter. We are also building our retail book. We have done a retail debentures, INR 5,000 crores. We created IM during this financial year, and all of it has been subscribed, and we have closed the issue to, we closed the last branch of the issue, yesterday. Sorry, that was on Friday, and then we will get the money in the near future. So INR 2,500 crore is coming in from there. So there is multiple sources of revenue with good credit, and thankfully, ICRA's credit rating would also help us, and, hopefully, as we move forward, we should see better traction in the rating side also. That's helpful. Just one housekeeping question. Your FinTech NPA last quarter was 4.6, 4.7, is what you had disclosed. Do you know if that number come down, any number you can share that? No, we cannot yet talk about those going forward numbers, Suresh. And I think, we have been giving guidance on two questions per participant. Can we stick to that, and we should come back in the queue? Okay. Okay, sure. Thank you. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two questions per participant. Should you have a follow-up question, we request you to rejoin the queue. Participants are requested to use handsets while asking a question. Next question is from the line of Bhavesh Ratilal Kanani from ASK Investment Managers. Please go ahead. Thank you for taking my question. This one is on the new lines of business. As you said, that there has been, you know, quite a few of write-offs in the lines of business that we have started recently. One, can you quantify the write-off there? And, secondly, if you can share your thoughts on the writing policies we are following for these new lines. And, to add some color to the situation, if you can share, what are the corrective steps we had taken a few months back on these lines, on sourcing and how to manage the quality, and what has been the impact I've seen? Yeah. So with regard to the CSEL business, the way we provide is on 90+, we provide 50%, and then on 180+, we provide 100%. The moment it touches the 100% provisioning, we remove it from the books because we already will get an FLDG reimbursements on that to the extent of the FLDG cover. And so we do this as a on an ongoing basis. What you are seeing as a removal this quarter is also with regard to those 100% efforts which are being provided. That's where you are seeing a drop in NPA, as well as with regard to the provisions coming down. This is a cycle, as I answered somebody else earlier also. It's an ongoing cycle, and you will see that continue clearly. With regard to the rest of the businesses, depending on the tenure of those businesses, we have different type of policies. Likewise, for example, in vehicle finance, we provide at the end of around 36 months in different categories of assets, and, you know, 48 months for the rest of the categories. And in case of loan against property and mortgage, it's a slightly longer tenure, and we reach 100% provisioning. But in every case, when the provision coverage reaches 100%, we remove them, because as I said earlier, we need to get the tax benefit on it, and we don't get it when we simply provide. Unless we write it off, we cannot get the tax benefit. So it's a difference between the current tax and the tax, so we need to reduce this variance between these two. And so on the corrective measures we have taken for these new lines and the impact of that on Yeah. Yeah, yeah. In the current, with the CSEL business, as we clearly articulated in the past, we have two line of business in the CSEL. One is the traditional, which is through our feet on the street, and one is the through partner. So through feet on the street, there were no issue in terms of delinquency, because as low as point six percent. And in the case of the you know, partnership or it went up to 4.7, it has come down to 2.2, 2.7. So that is because we have reduced the disbursement from four partners, and earlier we used to do INR 550 crore-INR 600 crore disbursement, which is now we are capping it to INR 250 crores-INR 300 crores. The ROIs are good in this business, so we will continue to do it, but we'll do it with the good partners. And we have also tightened our underwriting process with the existing partner. We started also providing them details of the roll forward rate management, what we do it in our traditional book, as well as in the in LAP for many years. So those partners are also getting benefits in terms of their collections of those cases. We have continuously focusing on reducing the roll forward rate of non-delinquent to delinquent, delinquent book in the partnership book as well, along with that. Wonderful, sir. And last bit, sir: Where do we book the FLDG-related outflows? That comes under the other income line, fee and other income. Yeah. Yeah. Okay, sir. Thanks. Thanks for the responses. Thank you. Thank you. The next question is from the line of Kunal Shah from Citigroup. Please go ahead. Yeah. Thanks for taking the question. So a couple of questions. Firstly, in terms of the bank borrowing, how much has the rate gone up for us, if you have to look at it in terms of banks trying to pass it on post the increase in the risk rates? See, the bank borrowing rates are not moved up any significantly, because they are still at, under the, what we call as the EBLR-linked loans. So the EBLR-linked loans, the spreads are not increased. One or two banks which have tried to come with a request for a higher increase, where we were, where we are able to accommodate, if it is minimal, we have accepted that spread increase, which is in the range of around 15-20 basis points on a much smaller number. And in case there are requests for a higher, you know, requirement on our side, we are pre-closing those loans and moving on to get better loans from other sources. Okay. Okay. So overall increase will also be around about less than like 15-20 basis points as such. We are not seeing much pressure out there. Yes, I think, you will not get more than that. Correct. Yeah. And the second question is with respect to OpEx. So while we are seeing some benefit with respect to the insurance income, an element which is there in the cost or this entire increase in the cost, which has been there, say, on a quarter-on-quarter basis, that is more related to the core business and overall cost to assets will continue to be at the higher level? So overall cost to assets would be in the range of around 3%. Yes, it is trending a little higher because there have been some expansions as well as some additional costs, et cetera, we are incurring with regard to on the IT side as well as on the branch expansion side. So we will endeavor to keep it, you know, around the 3% mark, which is what I was, you know, what we have spoken about earlier also. Okay. Okay, thank you. Thank you. Thank you. The next question is from the line of Abhijit Tibrewal from Motilal Oswal. Please go ahead. Yeah, thank you. I have two questions. First one is for Ravi, sir. I just wanted to understand what is the view on the vehicle cycle now? You've in the past explained that it is only when push selling starts to happen is where we start looking at maybe a downward trajectory in the vehicle cycle. Where are we in the cycle today? Whether we talk about passenger vehicles, I mean, we often keep hearing that the discounts are going up now, especially in passenger vehicles. So if you could just briefly elaborate on your view on both passenger vehicles and commercial vehicles. So in the passenger vehicle, the small entry-level cars are actually doing very well. Their discount levels are not under control, and that is the area of focus for us. Mm-hmm. The mid segment and the premium segment, you know, still, the discounts have not started as it used to be in the past. It is still very, very, you know, there is a demand in that segment. So passenger vehicle, if you see the growth for the quarter, it went up by 8%, which is the among the, between the commercial vehicle and passenger vehicle, is, PV is in the highest. Commercial vehicle, in fact, is actually lower. It is 4% in terms of the new, which was expected. So for us, the used vehicle, for both PV/ CV, are the growth driver. And in addition to that, we are also doing small ticket sales from, like, two-wheeler, three-wheeler, tractor, and the other products. So for the industry, if you take entire vehicle industry, including construction equipment, tractor, it went up by 18%, and our growth has been 22% in the same period for the new vehicle segment. And, and in addition to that, we have also done better job in terms of used vehicles. So we are quite confident that the growth levels will be continued in next year, although the, the commercial vehicle growth will be in single digits this year and might be in the single- digit in next, next two, three quarters. Got it, sir. So then my last question was on the margin trajectory in vehicle financing. I mean, having said that, I mean, we've already seen some rise in cost of borrowings in this quarter. So the two sub parts to this question, one is, I mean, how do we look at cost of borrowing extending for the next few quarters? And assuming a status quo on rates, how do we look at cost of borrowing for next year? And given that our vehicle book will kind of continue to reprice, how do we look at margins in the vehicle financing book going forward? Thank you so much. So what is the cost and what is the margin? So if, if you see the vehicle finance numbers which you have given, you will already see that the yields have been improving around 50 basis points, and, and the cost of funding increase has been only 20 basis points in the case of vehicle finance per se, if you refer to our presentation on page 47. The earnings have started improving, so you'll see the trend going forward. Unless something more differently happens in the environment, we don't know. As we talk today, our cost of funds, we are we, I would say that we are at the cusp of hike, and, unless something new happens, we should start to see, you know, further rate increase other than the 10, 15 basis points we spoke about earlier. The NIM trend is 7.2, 7.6, 7.8, for last three quarters, and is going to go up. The difference between the NIM from the same period of last year is also coming down from a, you know, 100 basis points to 80 basis points, and now it is coming to 30 basis points. Our marginal book yield is actually 1% higher than this book yield. So that will start, you know, coming up, showing it up in next two to three quarters. So I think from the NIM point of view, I don't think any problem. We'll, we'll be continuing to increase our ROA if the kind of the situation continues as it is. Got it. This is very useful. Thank you, and all the very best to you. Thank you. Thank you. The next question is from the line of Piran Engineer from CLSA. Please go ahead. Yeah, hi. Thanks for taking my question, and congrats on the quarter. Just firstly, a question on overall customer-level indebtedness, when we are talking about our LAP customers, and there's been a lot of noise about rising, you know, leverage in the system. And these are smaller customers who might take, say, a LAP loan for their business, personal loan elsewhere. Are we tracking that data? Can you share some information on, you know, what percentage of our LAP customers have taken PL from other lenders? And broadly, is there any merit, given where the environment is in unsecured, to slow down this business? So loan against property for Chola is actually coming from three things. One is that the expansion happening continuously, you see that our number of branches in LAP is much lower than the vehicle finance branches. Second is that we are also having another product called Micro LAP, which we have introduced it in the last year, in last, I think two years, which is actually catching up. And third important is that our east zone has also started, you know, adding the numbers, which was not there actually. We were operating in three zone, and fourth zone also started adding value. So, and delinquency are coming down continuously. It is all-time lowest delinquency in loan against property, because of the, you know, circulation is helping us and our, disbursement LAPs are always been 50%, so that is also helping us. Now, we have been, doing the scrub of our portfolio and seeing that how much, our LAP customers are taking, personal loan. In fact, it is much lower. That is, that is also reason for, for, you know, existing penetration is also not high in the LAP. So these are the scenario. Now, going forward, how going to be the growth? We are expecting that this will be, you know, much stronger than, any portfolio in Chola. As the Chairman mentioned, that we are quite confident and, you know, you know, hoping that our LAP and HL will be growing faster among all. Okay, so just to clarify, very few customers have taken an additional personal loan from outside the system, like outside Chola? Relatively. Okay. Okay, fair enough. The second question, just for Arul, sir, just to clarify, are we seeing banks also move away from repo-linked loans to MCLR-linked loans, given that there is tightness in liquidity at their end? The point is that we go to the MCLR-linked loan for non-priority sector assets and EBLR-linked loans for priority sector assets, because still priority sector loans are, you know, can be priced finely, and which will be always a shade lower than the MCLR rates. So since banks have a restriction that they cannot lend below MCLR, there we opt for the EBLR-linked loans. Got it. And that is for 2/3, 2/3, right? EBLR versus MCLR. You have a few fixed rate also, so we have around 15% of our borrowings in fixed rates, so they don't change. And then, around 25%-30% in MCLR linked, and the rest are EBLR linked. Got it. Got it. Okay, sir. That's all from my end. Thank you, and wish you all the best. Thank you. Thank you. The next question is on the line of Dhawal Gada from DSP. Please go ahead. Congrats on the result. I just had one question relating to profitability. So, you know, if you look at the nine-month PBT ROTA, that was about 3.3%. Directionally, would you agree that this is at the lower end of our sort of sustainable band, given where we are in the margin cycle and where we are in the investment of our OpEx cycle? So as you know, some of the new businesses scale up, would you agree that the PBT- ROTA should be, you know, 3.6%-4% kind of band on a sustainable basis compared to the 3.3%, where we are today? Or if there's any other part which I'm sort of missing, to understand the sustainable profitability that you're targeting of the model. Thanks. All the businesses are laughing because that is the target we have given internally. Dhawal, first of all, we never, you know, guided on any, any specific level. Our guidance of pre-provision can be called a guidance, but, you know, that it will be in the 3.5% level. Yes, we should be there, maybe a shade less if for it, you know, in a worst-case scenario for the full financial year. But, it is also through a cycle. We will have to see how, you know, we, you know, get, get ourselves in the next financial year. This financial year, it has been hit a little bit, on because of the higher cost of funds and the vehicle finance being a fixed rate loan, but it will keep changing. Got it. Got it. Thank you, sir, and wish you all the best. Thank you. Thank you. The next question is from the line of Shubhranshu Mishra from PhillipCapital. Please go ahead. Good morning, Arul sir. Good morning, Thank you, sir. Thanks for your, thankful time. Two questions. The first one is, what is the percentage of repeat customers in each of our business, vehicle finance, Home loans, and LAP? Second is, what is that percentage that would be over and above 5% mandated FLDG? Do we have some kind of soft liens on the fixed deposits of the Fintech partners, which is beyond 5%? So repeat business in Vehicle Finance, we are actually tracking, you know, because this business is quite mature. So 35, 30% is actually we are getting from our existing customer month-on-month. Other businesses are lower, very low, long-term book. So unless the one customer completes the loan, it's difficult for that customer to go for the second loan. So top-ups are also much lower because of the seasoning norm in the other businesses. So Vehicle Finance is 30%. Repeat loan. Yeah, and there are no crossing between the businesses, there are hardly any crossing between these businesses. The second question on the FLDG, we restrict it to 5%. There's nothing beyond that. But in the last call, you said that you do it beyond 5%, sir. That's in the transcript. That was in the earlier scenario where we were getting higher, and those things have been stopped post the update items. We were doing it beyond 5%, beyond the mandated 5% by the regulator. Is that a fair understanding? No, we are not, is what I'm saying. Yeah, it is the norm. The difference between the earlier norm, earlier, FLDG level and the current FLDG level is adjusted in the- Got it. rate, which we get from the customer, from the Fintech. So earlier if we were getting only 15% as the bill rate, now we are getting higher to the extent of the sacrifice on the FLDG. Sure, sir. Thank you. I'll come back on this now. Thank you. The next question is from the line of Abhishek Murarka from HSBC. Please go ahead. Yeah, hi. Good morning, everyone. Congratulations for the quarter. I wanted to understand the yield, spec, especially on home loans. So when I look at your Slide 64, it's gone up from 15.6% to 16.7% in one quarter. So can you explain what, what that is, and if there's any one-off or any of the incomes booked there can be segregated? No, there is no one-off income. It is, the mix of the new business, the new portfolio that is being built by the team in the, new locations. That is what is showing up, which is, you know, the tier three, tier four locations in the East and the five. Also, you know, the floating rate book, which we had repriced over the past year when the, increase happened. That time, we would not have repriced all of the book because some parts of the book would, would not have, would not have gone through the full tenure, that is like a one-year cap or something we leave, because we don't want to reprice it with, immediately after issuing the book, or issuing the loan. So those things, once that mandatory period of one year crosses, we reprice them, so such increases have also come into play. Because as you know, the recent scale up in Home loans was helpful in repricing the new book as they mature into the one-year threshold or across the one-year threshold. Okay. So what would be the incremental yield over there, so marginal yield versus the book yield? It is 1.5%, actually, across, so to say. Okay, so the marginal yield or disbursement yield would be 1.5% higher. So we can still see some bit of catch up in the overall yield in the quarters? No. See, this happened like one time, and, you know, now most of the book would have been repriced, so there would be, you know, not much to scale up from here. See, this is different from the vehicle finance book, where, you know, the marginal yield of a new book that consistently changes the color of the book because the old book remains, you know, at the old rate. Here, the old book is getting repriced. Yeah. You know, please, I don't want you to, you know, think this rate will go significantly beyond this. Okay. But, yeah, it will remain the book yield and marginal yield is more or less same now. As such, as we move on, we'll be allowed to see how their yield is, you know, will pan out in newer locations as they grow, and that they will build it. So there is vehicle finance is a slightly different piece of cake, and we understand. No, of course, of course. So basically, the repricing has happened, and now incrementally, the yield is around these levels? It will be around this level is what you should think of. Got it. Got it. Okay, thank you, sir. That's what I wanted to check. Thank you. Thank you. The next question is from the line of Shweta Daptardar from Elara Capital. Please go ahead. Thank you, sir, for the opportunity, and congratulations on a good quarter. So I have a couple of questions. So one, because I joined the call late, is it that the insurance distribution income has seen higher commission rates from, say, 5%- 15% last quarter? Is this why there is one-off element and that's why the other income is lower? That's question number 1. Question number 2, I'm looking at Stage 2 B assets. So since the time we started reporting this number, we have never seen decline, or at best, they've remained stable. So which sort of business segment is contributing to this? And there's one more, but I'll come back. Yeah, so it's these two. Yeah. See, as I was saying earlier, the insurance income started accruing into Chola's book because this quarter is the quarter where we got the license in our name. Until last quarter, we got it through the subsidiary because they used their license, and they could get it, and we got it as dividend. That's why the line items are different. When you get it as dividend, you take it to the other income, when you get it as a fee and commission income, it comes into our business income itself. But basically, both are business income, and going forward, it will come in the fee and commission income as you see it now. Sorry, what was the second thing? On the Stage 2 B? Stage 2 B. Stage 2B, where it depends on cycle, Stage 2B. No, as of percentage, it still remains much within the. No, it's actually a drop also. Uh, right. Yeah, it is a drop, and, as the thing grows, you will have a, you know, these progressive increases. The other point is also we will be doing this correction. We have always been representing our restructured book in Stage 2B, which is where we will move them because most of the restructured book, which have completed more than one year in the, in, you know, something in Stage 2B, we can move it now into, maybe one half, one year, one year on the, we are just in discussion with auditors. These are actually lower than 60 days or lower than 31 days, but still, we are showing them in Stage 2B because they were restructured during the period of COVID restructuring given by as a special thing, when they are there. And we consciously kept that as 2B, you know, to identify them as restructured assets. But now they have been performing, you know, well, and remaining below the 30 days overdue, we can move them into the Stage 1, which is what we are discussing with- But the numbers in terms of percentage is actually 0.93% as compared to 0.9%. Yeah, it's come down. Percentage has come down. Yes. So can I ask for one last question and squeezing in? So the new business contribution you were guiding earlier will be around 15 odd percent over the next few years. So anything changes on that with the kind of system and concerns rising? Thank you. Compared to concerned? Sorry. Can you repeat? Can you repeat? Sir, new business share you had guided last quarter will be around 15% over the next few years. So anything changes on that with the kind of concerns we are seeing in the system? Thank you. No, it remains this. Okay. Sure. Thank you, sir. Thank you. Thank you. The next question is from the line of Arvind R from Sundaram Alternates. Please go ahead. Hello, can you hear me? Yeah. Yeah, yes, sir. Like, so I would like to understand, like, sorry if the question has been answered already. If this increase in yields on, like, home loan book, is sustainable quarter-on-quarter, like, I mean, like, is this the yield it's going to be for the, like, in the future quarters? That is my first question. And second question on, Vehicle segment, sir, like, you know, how do you view, like, you know, like, you know, I can see like a month-on-month, you know, vehicle, sales data, I mean, like, maybe it's, showing signs of, slowdown. Clearly, the growth is coming from the, you know, realization, rather than the number of, you know, vehicles sold, sales sold itself. What is your view on the segment? Thank you. In the case of vehicle, as I mentioned, that the growth from the industry point of view, it will be in single- digits. You know, this that is specific to the CV, but the other vehicle, like passenger vehicle or three-wheeler, two-wheeler, are growing very well. Tr actory is down. Put together, you know, as of now for the quarter, it grew by 18%, and our disbursement for the new segment was 22%. But if you include the used vehicle, you know, growth that is actually giving us a positive number. This is going to be continued in terms of, you know, Q4 as well as next quarter. So we are quite confident that we can grow for the vehicle finance for at least 10%-20% in next year as well. As far as home loan is concerned, since we have expanded in new geographies and Tier 2, Tier 3 towns, where we are keeping rates slightly higher than the yield, because we foresee we are for unexpected, the 14 regions in terms of delinquencies. Therefore, we are keeping the rate as certainly higher, and we want to operate at that site so that we can adequately price the risk going forward. Sure, sure. Sure. Thank you so much. Thank you. Thank you. The next question is from the line of Vikram Subramanian from MWAM. Please go ahead. Hello. Hi, thanks for taking my question. I just had a follow-up on the PCR, especially in the other book. I think earlier in the call you had mentioned the PCR in the other portfolio, that is the new business portfolio, will keep moving up as you build up provisions with the increasing delinquencies, and then will come off when write-offs happen, just like what happened between last quarter and this quarter. But as for LGD, isn't there a specific level of provision that we need to maintain? Could you please share some color on what that could be for the new business overall or specifically to CSEL? The new businesses have not gone through enough cycle to build LGD. We have taken the provisioning basis, you know, what is happening in the industry and worked on it to conservatively build beyond that. As we were saying earlier, we provide, you know, when we provide at the Stage 1 level, around 2%, 1%, and then Stage 2, and when it crosses 90 days, we provide 50%, and when it crosses 180 days, we provide 100%. The CSEL? This is only in the CSEL, yeah. This is the unsecured business. I think the focus of your question is more on that side. Uh- So this we will continue until we get, like, 3-4 years of LGD experience in this business, and then we will adopt it. As if we calculate LGD in the current way we are performing, actually, the provisioning requirement would be much lower. So we don't want to adopt that, and we want to conservatively build a slightly higher provisioning. And this, the cycle I spoke about has nothing to do with the LGD. It is more like what you create as a provision, and you write down when, you know, from a perspective of availing tax benefit on the write-downs, that you are less confident of, you know, collecting. But that does not rule out any collections therefrom. We will still pursue and collect if there is. And possibility. Yeah, and just to clarify, the new business is including three businesses, SBPL, SME, and CSEL. And so CSEL portion is only 7%, and rest of the portions are 4%. Okay, that's clear. Just one other follow-up question. Stage 1 and 2 provisions. Through the past couple of years, this specific to Stage 1 and 2 provisions, cumulatively, it has reduced from about 1.8%, 180 bps a couple of years ago, to about 75 bps right now. I mean, again, I'm assuming this is just going by the ECL PD into LGD calculation. And as the cycle improves, you've been reducing that. But is there any, you know, portion or probable contingent that we can provide here? Could that be something I need them to look at it? Because transfer book seems like quite a low number for such a high growth rate of Stage 1, 2. So Stage 1 provision, if you see that, it is actually 0.44, and this is higher than the pre-COVID level. And even for the Stage 2 also, the provision is 10.33% for the Stage 2 book, which is much higher than the, you know, old book. Yes. So, see, you should not look at it in a combined way, because in a combined way, if you look at it, because when you are growing the Stage 1, which is a lower loss, you know, requirement book, then your overall percentage will look like it is coming down, because the denominator is a larger part of the Stage 1. So you should always look at Stage 2 separately, which is slightly riskier than Stage 1, because it is tended to look at, go into the 30% +. Stage 3 is where we already review, all of us know what it is. So don't look at Stage 1 and 2 together. If that is the way you are looking at it, that is not the right approach, because when you are growing the book, especially when you are growing book at 30%+, you are, you will always seem to be at a percentage also, it is dropping. But in absolute terms, if you look at Stage 2, while the effect has remained more or less at the same level in spite of such a growth in book. For example, in September it was at INR 4,000 crore, now we are at around INR 4,100 crore. So as percentage, it, the proportion of Stage 2 assets has also come down, and thereby the total provision thereon has actually increased from 10.24% to 10.33%. So it is actually we have reduced the, we have the, the increase in book and the provision coverage, both are being commensurate to what is happening there. So kindly don't look at it together. Okay, got it. Got it, sir. Thank you. Thanks for taking my question. Thank you. The next question is from the line of Ashwani Kumar Agarwal from Edelweiss Mutual Fund. Please go ahead. Hello. Sir, we're not able to hear your voice, sir. Okay, yes, sir. In the last quarter, the tractor industry de-grew, but whereas our disbursements grew 23% quarter-on-quarter. So can you just throw some light on that? No, tractor industry is down by 5%, and tractor overall volume is actually up by, you know, 5%. That is because we are not only doing tractor new, we are also doing tractor used. Okay. And, and this, in the last quarter, the liquidity, was became negative for the first time in, many quarters. And, and this quarter itself is likely to be negative. So do we see an increase in cost of funds or more in this quarter as compared to last quarter? And this quarter is typically, tight liquidity, situation. See, this time, we have seen some increase in cost of funds, primarily because if I again recall, or that means we proposed those loans we closed when there was an increase in, you know, increased by banks, which are, which in our, you know, context was higher and not justified. So we closed those loans. So when you close that loan, you have certain pre-closure expenses that would also have flown in. And as again, I was saying earlier, the cost of funds, in our view, has sort of peaked out here. And until unless something drastically different happens, either by regulatory interference or any global incidents, and so we don't see cost of funds going up from here. We also don't subscribe to any quick rate cuts, so though there are talks about it, but we are without factoring in rate cuts, the cost of funds should go over on this level. Okay. Sir, business loans have been flat quarter-on-quarter. Typically, Q3 is a strong quarter for business loans because of the festive season and whatever. Why were we flat on quarter-on-quarter basis? Sir, you are talking about seasonal business, do you have? Yeah. So overall business loans, the disbursement was INR 66 crores, INR 66.20. Sorry? All the business loans put together, INR 6,620 crore. You are, you are talking about the growth in the AUM or disbursement? Disbursement in the business loans. See, which line once again? You are talking about others, you are talking about? I don't know. What line? Can you tell me maybe, like, which slide you are referring to? For this I don't know. Sir, I'm not referring to a particular slide, but I'm more talking about overall business loans. If you look at some of the business loans together. What are you referring to as business data? We have not given any such data on business loans. Oh, what is business loan? Like, is it vehicle finance? All of it is business loans in our view. Yeah. You know, I don't know. What are you referring to as business loans? I'll take this, take this question offline. And, secondly, what was in fact, because of the Tamil Nadu floods in.? Tamil Nadu is a very, small portfolio. We are well diversified from geography, and the floods were only in Chennai, not even in the entire Tamil Nadu. Yeah, the Tamil Nadu is not impacted. It's not impacted much. It might have impacted a few customers in Chennai, but I don't think that's significant. Okay, sir. That's all my time. Thank you. Thank you. The next question is from the line of Pranav Shah from JP Morgan. Please go ahead. Yeah. Thank you, sir, for the opportunity. Just a couple of questions. First one is on OpEx. This quarter was elevated at 3.3. Now, you did allude to that you're currently in an expansion phase, and there's also IT costs coming in. So can this continue for another few quarters also, and then you normalize maybe sometime later in FY 2025? No, it is 3.1 versus 3.1 last same period. It is not that it has gone up. What we are mentioning that our cost-to-income will be at 3% level because of the continuous improvement in our IT as well as the expansion going on. So it has not gone up, first of all. At YTD level, we are still, yeah, marginally, it is lower. Okay, sure, sure. And, last thing is on, like, obviously, you've had higher write-offs in the new business segment. So the FLDG income for this has already been recognized, or that would come in the upcoming quarters? Yeah, wherever we are writing off, that to that extent, FLDG income would be recognized. I think this quarter we would have recognized around INR 6 crore-INR 7 crore as FLDG. Sorry, INR 6 crore-INR 7 crore FLDG? Is that what you mentioned? Yeah. Okay, got it. Sorry, it is INR 12 crore. INR 12 crore. Got it. Thank you. The next question from the line of Nidhesh from Investec. Please go ahead. Thanks for the opportunity, sir. Just on the housing finance and, home equity, if you can share what is the average ticket size on book and incremental average ticket size on these two businesses? So for the LAP business, the portfolio average ticket size is about INR 50 lakhs, and through the door, it is about INR 60 lakhs. For the actual business, the ticket size is INR 1,320,000, and the tenure is around 14 years. LTV is 30. About last as well, portfolio level, the LTV is about- So, just a follow-up on home loans, on that, the yield of 16.7% looks very high, because the listed peers in the housing finance segment, on the pure housing, the yields are more like 12%, 13% on the affordable housing finance side. Is this portfolio also contains some LAP book or it's just pure housing book? No, it is pure home loan only and self-construction housing loan. As we expanded into newer geography, we have expanded the disbursement or other than South. Like you, we have mentioned that from last 1.5 years, we have been expanding non-South. So non-South business has actually started growing, and as the South and all non-South will start actually doing the similar growth, then obviously the number will not be going further. So this particular yield is actually because of 2: 1, the expansion, and second is the reset of the pricing. And after that, it will not be going up.