Hi. Good morning, everyone. Welcome to the Earnings Conference Call of Cholamandalam Investment and Finance Company Limited to Hi. Good morning, everyone. Welcome to the Earnings Conference Call of Cholamandalam Investment and Finance Company Limited to Hi. Good morning, everyone. Welcome to the Earnings Conference Call of Cholamandalam Investment and Finance Company Limited to discuss Q2 FY26 performance 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, Managing Director and CEO, and Mr. Arul Selvan, Chief Financial Officer. I would now like to hand over the call to Vellayan for his opening comments, after which we'll take the Q&As. Thank you, Anish, for hosting the call. Good morning, everybody. I'm happy to take you through the performance for the quarter. Just in terms of a quick backdrop, obviously, there are a lot of changes in the quarter with rationalized GST rates, repo rate reductions, actions taken by the government, which are quite proactive. I just like to say, and actually, they're quite positive overall for credit uptake. I just like to say, while the impact of these changes weren't fully visible in Q2 due to basically transitional issues, in the medium term, we feel it looks quite strong, especially for players like us, because of both the multi-product and cross-country presence. So I think that makes me quite bullish. In terms of performance for the quarter, the loan growth aggregate disbursements stood at INR 24,442 crores, taking AUM to INR 214,906 crores, which is a 21% growth over the previous year. Vehicle finance registered an AUM growth of 17%, and LAP AUM grew by 33%. Home loans disbursement continued to be negative in the quarter, impacted due to procedural changes in the registration process in a few key markets. The AUM growth continued to be healthy at 28%, and the AUM of SME also grew by 28% with increased focus on business loans and equipment financing. CSEL, which is a consumer and small enterprise loan business, registered a degrowth due to stoppage in disbursements through our FIPBank partnerships. NIM improved substantially from 7.5% to 7.9% during the quarter. We expect another 10 to 15 BPS improvement in NIM levels in the second half of the year. Credit costs and asset quality have been broadly stable, though select segments experienced some stress. Unsecured business loans portfolio under CSEL witnessed higher delinquencies in certain markets, coupled with our exit from the partnership business. However, credit losses in CSEL have peaked, and we expect this impact to be moderate going forward. We've tightened underwriting norms and enhanced borrower monitoring in this segment, which is expected to bring in better results. As highlighted in our Q1 earnings call, NCL performance has shown sequential improvement across other business segments, resulting in credit cost ratios at a company level improving by 10 BPS in Q2 FY26 over Q1 FY26. We remain confident of continued progress in H2. PBT for Q2 FY26 stood at 1,561 crores, which is a growth of 20% year- on- year. PBT-ROTA for the quarter stood at 3%, which is at similar levels compared to Q1. As you know, the business typically witnesses stronger traction in the second half. We expect that that will also translate into improved growth and profitability metrics in the second half. Obviously, we're a bit concerned about the extended monsoon and its impact on harvest. That we'll continue to look at in the coming quarter. The ROE for Q2 was at 18.11%, and for H1 was at 18.47%. In terms of liquidity and capital adequacy, we hold a strong position with total liquid assets being 17,516 crores, including G-Secs and T-Bills. ALM is comfortable with no negative cumulative mismatches across all time buckets. And our capital adequacy stood at 20% in September 2025, with Tier 1 at 14.59. As highlighted earlier, we think that hopefully we'll be looking at a stronger second half. But Anish, I'll stop with that, and be happy to turn it over to the participants for questions. Thank you. Yeah, participants, if you have a question, do press raise hand button on your screen. The first question comes from Kunal of Citigroup. Kunal, your line is, yeah, Kunal, your line is unmuted. Yeah. So can you hear me now? Yeah. Yes, go ahead. Yeah. So firstly, again, on the growth side, you indicated second half would be relatively better. But if you look at the disbursements growth now, it's almost like, say, flat for the first half. Last time, you had broadly indicated that we'll try to grow disbursements by 10% in FY26. Would that be possible? Would we see the improved run rate in the second half, which can take disbursements to almost like a 10% growth? And you had clearly indicated that you will try that the AUM doesn't fall below 20-odd% from the lower level of the guidance. But the run rate this quarter has not been that great. So would we see some risk to both of the disbursements as well as the AUM growth target? So, Kunal, I'll start in reverse. So definitely, I think that I don't see the 20% being at risk in terms of AUM growth. And so then, I do think the second half is going to be quite a bit stronger. So second, then see, there are two sets of things that happen with disbursements in Q2. If you take some of the loan against property business, basically, with some of the festive holidays towards the end of September, a lot of the registration got pushed out. And so we're seeing that that registration basically would then come into the October quarter, so October, November, December quarters. So I definitely see strengths from that perspective. And then the GST cuts, the transmittal of that. So actually, what happened was from August 15th to September 22nd, the entire market was in wait-and-watch mode. But then, since then, we've obviously seen a lot of transmission benefits come in on the GST side, which is also going to help both our vehicle finance and some of our other businesses as well in the October, November, December quarter. Yeah. And And then, I'd say the additional kicker we've got is since we've started the gold business, we've got 500 crores in disbursements. So that'll also start kicking in, coming into the October, November, December quarter. So, Kunal, that's why I'm fairly bullish on both. Now, whether we get to that 10% number, we might be a bit shy of that number. But definitely, we're going to see good disbursement growth in the second half. And definitely, I don't see the AUM growth of 20% being or 20% plus or greater than 20% being at risk. Sure. And secondly, on the credit cost side, so again, new businesses have shown some stress. Otherwise, commercial vehicles, we had seen some kind of a decline out there, and maybe LAP has been steady. So, when do we see this CSEL credit cost stabilizing? Because that's been, I think it's been a big one in the new businesses. And across the board, the stage three numbers have gone up, I think, at all the product segments. So how do we now view the overall credit cost trajectory for the second half, and what would be the guidance on that front? Yeah. So, Kunal, I think the two trends we should look at, right? So definitely, first off, on your question on CSEL, like I said, my belief is kind of it's now peaked. And now from now on, hopefully, we will start seeing moderation in that book, right? That's kind of what we're really working towards. On the CSEL side, if you actually kind of see the net - sorry, in the company overall, when you start looking at what's happening, the net increase in stage three has actually kind of gone down in Q2 versus Q1, right? So that's a useful trend. We're also seeing stage two stabilize. So if you take those two things combined, right, we really feel like we are going to, I mean, again, there, we're beginning to see the peak. And from now on, we're basically going to see improvement going forward, coming in at least for the next six months, definitely. That's our belief. Now, obviously, the one thing with credit performances is always a bit environmentally driven. And so that's why kind of there's some of the wait-and-watch around the monsoon with some of the factors like that. But broadly, if we just look at the data and we look at how we're seeing trends, we do see, and how we're seeing things on the field, we do see that we see a certain level of peaking and an improvement coming in on the second half. Okay. Yeah. Thanks, and all the best. Yeah. Thanks, Kunal. Yeah. Next question comes from the line of Priyanshu from IIFL. Priyanshu, your line is unmuted. Thanks, Anish. This is Viral here from IIFL. Vellayan, two questions. One, I think you partially referred to the sequential, say, drop in kind of net slippages. I just wanted to pick your brains on. So when I look at the net slippages, both at a Stage 3 level as well as the increase in, I would say, the Stage 2 on a sequential basis, that has been trending lower. So is this a leading indicator of, say, a substantial improvement in, say, NCLs in the second half? That would be my first question. Do you want me to go one- by- one, or should I put all the questions together? Sure. Yeah. So definitely, kind of when we look at the Stage 3 numbers, right, kind of like you said, Q1 to Q2, there has been an improvement, right? So overall, it's come down to about 2.5% versus the 2.8%. Excellent. That's a net slippage, yeah, kind of when we look at the net slippage numbers. So that's why, like I said, I do see that as a positive trend kind of going forward. And like I was answering from Kunal's perspective, so if you look at what we are seeing, just in the individual businesses, right, we definitely see an opportunity because if you look at what's happening with vehicle finance now, we've got net stage three at about 2.24%, right? And so we just see some of these factors continue to kind of moderate kind of going forward. And that's been quite positive in terms of the movement quarter- to- quarter as well. So we basically see an opportunity. We do see kind of that improving in the second half, right? Thank you, Vellayan. The second question, just more of a, I would say, a data question, given a lot of our peers have already disclosed this number. Can you give us a sense of how the growth trends are going on in the month of October? Or it has already happened in October? In general, we have not given kind of current quarter data. But like I said, we are definitely seeing that GST impact and the transferral kicking in on quite a few of our segments. And like I said, kind of what happened in LAP and HL was more of a. It was more the SRO problem that basically kind of created some SRO kind of the holidays that created a bit more of a push there. So on both fronts, we see this being more positive this quarter. October is better than October. Yeah. So to your question, October is definitely looking better, right, kind of. Got it. And last question, Vellayan, from my end, is when I look at CSEL, right, of course, I think when we started this business, the regulations were different, and we had a different thought process. What are the lessons that we have, say, now kind of learned over here? And say, what would we look to, say, do differently when we say embark on growing this portfolio, maybe over the medium term? The reason why I ask this is that on the other hand, we see some of our peers kind of materially scaling up all these partnership businesses, and they keep talking about that this is one of the best portfolios out there. So if you could just help us understand the kind of, say, probably the different approach and how do you see this playing out in the future? So I think each firm has its own culture, right? I mean, I think if we were to take learnings, then definitely one is that, and perhaps kind of some of this normalization needs to happen, right? But the partnership business, I think it was somebody else also. Management. That's Arul, so it's okay, so one is that the partnership business basically is an area that perhaps it was a partner selection kind of issue as well, right? But in general, I think we're better off when we're fully in control of our process, right? And I think our learnings was that some of the partner processes were very different. And so I would say that there's a strong preference to keep total control over origination, underwriting, and collections in-house versus working on the partnership side. Yeah, versus working on the partnership side. That is one thing. The second thing is that, so anyway, the second thing is that from how tight we usually, we've always taken the approach of kind of being collections first, right, and building out our collection strength first. This is a business where we thought would not be as collections-led as, and therefore, didn't build out that collection strength upfront. So that's been a real challenge. And what we've been doing, obviously, since then is building out that collection strength. And I think that's very critical for us as well. And then the third is that, honestly, I didn't think we estimated correctly the implications of the massive supply-side rush. So what started happening is that there were a lot of customers that started getting loans from multiple people. And that massive supply-side rush is something that should have been a significant warning signal for us where we tighten underwriting much quicker. And that's perhaps in hindsight a mistake because we didn't do that quickly enough, right? And we're paying the price for that now. Got it. That is really great. Thank you so much, Vellayan. Yeah. Absolutely, and again, I'm not questioning whether partnerships are the right approach or the wrong approach. I'm just saying, for us, I think kind of there were learnings from that, right? Kind of that when we spread out, we saw that there weren't enough control. So for others, it could be an approach that works. Got it. Thank you. Thanks. Abhijit Tibrewal from Motilal, you go next. Yeah. Thanks, Anish. So two questions. The first one is on vehicle finance. While we have seen some asset quality deterioration, which was acknowledged as well, I'm just trying to understand which segments in vehicle finance have exhibited higher stress and which segments continue to do well. Also, during the opening remarks, Vellayan Sir kind of said, "Michhan, is someone speaking on the line? Can you request? Yeah. There are two management lines. So my request is the other management line can probably go on mute. Somebody's coming down. One second. We're trying to figure out kind of where this line is. Yeah. Abhijit. Yes, sir. So sir, I was just trying to understand in vehicle financing, which segments have exhibited higher stress, and which segments in vehicle finance, which products continue to do well? Also, I mean, in your opening remarks, Vellayan Sir said that extended monsoons is something we would kind of closely monitor. All of October, we continued to see rains. So what impact it could have on the third quarter? And so second question I had was on unsecured business loans. Again, Vellayan Sir said that we have seen higher delinquencies in certain markets. So just trying to understand which ticket sizes are these, which markets are these, if you can give some nuance around maybe the customer cohort, right, or geography for that matter. And lastly, in terms of property, which is essentially home loans and LAP, I heard that there were, again, certain markets where registrations were a problem. Is this something geography-specific, or which Vellayan Sir later said that this was more holidays and which is why registrations could not happen? So just give those couple of questions. So, just to start with vehicle finance, just to clarify that or give you some data point, that even after having monsoon impact on the overall portfolio of vehicle finance, from Q1 to Q2, the stage two has been flat. It has not gone up. In terms of stage three, if you see that the absolute value increase in quarter one over quarter four and quarter two to quarter one, you see that there has been improvement. And obviously, because of the monsoon effect, the capacity utilization getting banked for commercial vehicle and construction equipment. And that has been the reason for a little bit increase in terms of whatever has been increased. And that is what we are expecting to improve over quarter three, quarter four, because now capacity utilization from here it will start improving, and that will improve the overall portfolio of vehicle finance behavior. It's across commercial vehicle and construction equipment, wherever it actually depends on getting impacted with them because of the monsoon got impacted a little bit. In spite of that, we have been successful in keeping Stage 2 at the same level. Now, coming to the registration, yes, HL affordable housing registrations got impacted for the last two, three quarters due to the changes in the norm, especially in the southern zone. Also because of the festival holidays across the country, the SROs were not performing. Therefore, a lot of disbursement has moved to October. In fact, that disbursement spillover has been for even vehicle finance due to the GST implementation happened during the last 10 days. So in a nutshell, October has been a fantastic month to start with the quarter three, and we are expecting that that should continue in terms of the growth point of view. Got it, and so on, the unsecured business loans. Yeah. The unsecured business loan, as Vellayan Sir said, is exactly right. There are two things. No, I think the question is, what are the specific geographies? Yeah, that's what I thought. Okay. So in the case of unsecured loan, which we see swell, we have three businesses. One is the personal loan, the business loan, and the professional loan. So, business loan across the country, the behavior is same. And in fact, we have done some analysis with the CIBIL data, bureau's data. It is actually appearing across the states, across the ticket size. The main problem is the business loan alone, which is irrespective of the geography irrespective of the ticket size. It is because of more of the leverage issue where the customer wanted to take two, three loans, and the DSAs have actually done it with the multiple finance companies simultaneously. Therefore, those customers have failed. And therefore, there is an issue, and the entire industry has taken note of it and then taken the decision that the number of inquiry, number of existing loan, based on that, the credit term has been now tweaked. And therefore, we are now quite comfortable that that is going to improve our CSL business. Within the CSL business, the far end of the rundown, which is happening now with respect to partnership, has got higher NCL in terms of percentage, which is showing up into entire NCL of the CSL. That is also a reason for overall in terms of percentage increase in CSL, NCL, quarter- on- quarter or last year to this year. And as both things get corrected, business loan quality improvement has already started. We have seen that early default non-starter has come down during the last two quarters. Also, CSL partnership book is running down. In the quarter three, quarter four, we will be seeing the improvement in terms of overall NCL coming down of CSL book. Got it. Thank you so much, and so just one follow-up question. Have you made any PLR changes in the home loans and LAP book in the Second quarter? So for the LAP book, we have done a PLR change of 15 BPS in which we have passed on to the customers, specifically customers. Both LAP and HL, we have done that. 15 BPS. All right, sir. Thank you so much. Raghav Garg from Ambit, you go next. Thanks, Anish. Good morning. I just have a few questions. One, I think you've partly answered in your previous question that I think the October month has been pretty good. I just wanted to get some more definite color, whether the vehicle utilization has improved in the month of October or so far in November. What are some of the trends that you're seeing on the ground? That's my first question. Yeah. Vehicle utilization has been improving for the last 30, 40 days. From the festival season, it started improving. But the best result will come only from December because it is still raining in some part of the country, especially in the south. This is Tamil Nadu, which rains come in the winter season. So therefore, the capacity utilization improves in some markets and in the north, and some markets in the month of November. But December is a month from there up to, say, April, May, June, the capacity utilization peaks up. So we are expecting that further improvement will happen. At one point, I think you had also indicated a couple of quarters ago that MNHCV is one segment which is more impacted because it's more vulnerable to the cycles, the industrial cycles. Any color you could give between the heavier vehicles versus what you're seeing in the SCVs and the LCV segment, that will be helpful. Yeah. If you go through the call, and also I said that the heavy commercial will get impacted. Now, today, you see the number. The heavy commercial vehicle growth has been flat. It has come up from minus 250. And small commercial vehicle has picked up. It has now gone up to 4%. And light commercial vehicles also gone up. So the improvement will start now. It has already started. So the improvement will come with the lag effect. First, the lights will improve. Heavy commercial will improve. And it also depends on the macros because the industrial production improved, that will improve the commercial vehicle sales. GST cut has come, which is actually creating definitely sentimental, positive sentiment in the market. But we have to see that also. Post-agricultural harvesting period, after the kharif price comes in the market. And that will also improve the capacity utilization. Because of that, purchases will start. Mining also will support the heavy commercial vehicle to further start the purchases in terms of HCV. Also, quality of the HCV portfolio will start improving from there. Understood. Another related question is, I think last quarter, you had highlighted that in your conversations with vehicle OEMs, they were saying that volumes were below expectations. This was obviously before the GST cut happened. But after the GST cut, when you've conversed with the vehicle OEMs, what are they indicating? Is there a pickup, or do you expect a substantial pickup in 2H in volumes? No, it has not been so far put. So the pickup they are expecting in the second half only because the commercial vehicle, as I mentioned, actually grew up by 4%, wherein the change in the passenger vehicle and two-wheeler will be better, and that is why I'm saying that the quarter two to quarter three, the improvement will start coming from light and small commercial vehicle, and then after that, heavy commercial will go. As of now, for the commercial vehicle industry, all manufacturers together they are expecting higher single-digit growth in this year. So as of now, we are at 4% at the industry level. That might go up to, say, 7%-8% by the end of this year. Understood. My last question is on cost of funds. So see, I think a couple of large triple-rated NBFCs have indicated that the cost of funds benefit they were to get from the 100 BPS repo cut, that's more or less already come. What are your thoughts on this, and how much more cost of funds reduction do you expect? And I think that there is some warrant conversion, which is pending for you. So when you say 10, 15 BPS NIM improvement in the second half, does that include the benefit of that warrant conversion? If yes, to what extent? That's all from my side. Yeah. There will be some more small improvements coming through because we are to get the full MCL passed through happening from the banks. This is what we spoke last quarter also. When a large part of it has come, there will be a little bit more that should come in. The CCD conversion will have a little bit positive impact. It is a 2,000 number on which the cost of funds will come down, and it will move to equity. But that will be spread over the next three quarters. The first conversion has happened around 300,000 in October. Balance 1,700 will get converted over the next three quarters. Progressively, as it converts, we will get that small benefit coming. Thank you. That's all from my side. Next question from Bunty Chawla of Ask. Yeah, thank you, Anish. And one housekeeping question. Can you share the write-off number for this quarter, as well as Q1 FY26? This was on data. And secondly, as you rightly said, now we are seeing the improvement on the ground, and the credit cost, which has slightly improved in Q2, should improve in next first half. So, can you share just in first, in FY25, it was around 1.5, which has come up to 1.8 and 1.7. Can we say the second being the improvement in second half, it should equalize to FY25 number? And how one should see the FY27 similar growth and credit cost guidance? Thank you. Yeah. The write-off numbers in Q1 was INR 514 crores, and in Q2, it is INR 639 crores. And. Yeah. Sorry. Yeah, the question is around. You're asking that the improvement in NCL. So that is because on the provision, ECL being slightly lesser on the incremental volume being lower. So that is the reason why it has reduced. And NCL, which is actually improved from 1.8 to 1.7, is likely to further improve in quarter three and quarter four. And obviously, we will reduce it from overall, like at YTD level, we are at 1.7 or 1.8. From there, I think it should come down to for the full year, it should be, I think we are expecting closer to 1.6. Let's see how it pans out in quarter three, quarter four. Okay, and on FY27, if you can share some thought process? I don't think you're asking for guidance for FY27. I think it's too early to give right now. Okay. No, just a color. Nothing as a number, but as a color, per se. The standard best thing we like you to keep our growth level between 20% to 25%. Sometimes it actually comes down toward the closer to 20. Sometimes it goes up. So if we continue to see the growth like what we have seen in October, obviously, the growth will be higher than where we are. Okay. That was very helpful. Thank you. Thanks. Next question from. Yeah. Hi, team. Congrats on the quarter. I'm Piran Engineer of CLSA. Yeah. I'm unmuted. Am I audible? Yes. Yeah. Okay. Hi. Thanks for taking my question and congrats on the quarter. Firstly, I just want to understand this conceptually. We've had a few quarters of CV stress, and obviously, then your contractors and all are not buying new trucks. Is it fair to say that first we should see CV stress normalize and then we start seeing a pickup in growth, or is there any reason why growth should precede asset quality improvement? No. In general, what we've seen is that you do see growth kicking in even though stress doesn't fully correct. In general, Piran has always been the way it's been. So just because, I mean, you have a combination, right? New buyers coming in. People wanted to kind of change their fleets. So it's not that one has to correct fully before the other happens. Okay, and is it like two different cohorts? For example, the large fleet operators will be the ones buying while the small fleet operators are the ones still under stress. No. Depends upon situation. For example, now, GST cut benefit will be more towards the retail customer because they don't take GST input. They would like to take it because then EMI burden will go down. Cost of funds has come down. So the rate of interest will be charged to them will be lower. Wherein for the large fleet operator, depends upon how many contracts they get. And it depends on the infrastructural development and the mining and construction, how that is happening in the market. So if the consumption goes up, the industrial production goes up, agriculture growth kicks in, retail customer buys the vehicle. And if the GST cut reduces the cost of vehicle, also cost of the down payment, and also the interest rate has come down, it will improve their capacity to utilize the vehicle and pay it in time. So, therefore, those people will come forward. And they are the core customer of Chola. And therefore, we are likely to benefit it. And as I mentioned, that happens first, small commercial vehicle, and then light commercial vehicle, then heavy commercial vehicle. Understood. Okay. So for HCV, it's probably some time away, maybe a quarter. Growth is some time away, but improvement has started. Understood. Okay. That's clear. Just secondly, our tractor book has been declining now for three or four quarters. And that's actually been the segment for the auto industry, which has seen the best volume growth. So what exactly are we missing here? Is it that competition has heated up? Are we taking some conscious stance of. Taking some corrective actions. No. We have taken conscious call. In the past, also, we said that there are two problems in tractor we have seen. Because it is a PSL asset, as there is a supply-side rush we have seen in the CCL business. Here also, all finances have started doing it, and the rate has come down. In the same way, the yield of the business has come down. And if that yield, if we continue, then therefore, the ROA, which we normally deliver in tractor, gets impacted. Therefore, we said that. And the payouts of dealer also gone up. So that's the reason we started driving the used tractor more. And then we also completely revamped the tractor vertical. And And then top to bottom, we have now people. So from here onwards, we start driving the tractor new disbursement also. And two years, there were monsoon deficits, and therefore, there were problems. So this year onwards, tractors started growing. So now it is the right time to basically increase the tractor. I mean, some markets, you have this government-run schemes which is not supporting the NBFCs. There's Annasaheb Patil scheme in Maharashtra, some schemes in Gujarat, and all those things. It is only for the public sector banks or banking. So it is difficult for NBFCs to participate. And whatever the leftover are coming in, we have taken a call to keep away from that because of the portfolio-related issues. So tractor, yes, you can see some improvements in the coming months. We have corrected it, and we are on the way back in that particular segment. Okay. That's clear. And just lastly, I know it's early days, but indicatively, how are gold loan yields looking like? Are we pricing ourselves below, say, Muthoot Manappuram or similar sort of yields? Thank you, Anish. If you look at our yield, definitely, we are not looking at pricing lower than the industry peers. Okay. We are on par as far as the pricing is concerned, and we do not want to dilute our yields on that. We have a very, very healthy marginal yield, which is yield at origination, which I think is slightly better than the incumbent players in this segment, so I think the focus is on providing easy access, great experience in terms of availing a gold loan with ease, and also offering a lot of digital processes so that the loans are disbursed quite quickly so that the customers start seeing a better experience at our gold loan branches, so in terms of a pricing strategy, we do not want to get into any kind of pricing war with competitors because we just started our operations in gold. We are doing well. We are slowly building a customer franchise and slowly and steadily building. And our marginal yields, which is yield at origination, is quite healthy. Understood. Okay. That's it from my end. Thank you and all the best. Thank you. Thank you, piran. Subramanian Mishra from Phillip. You can unmute yourself and ask your question. Thanks, Mr. Mithra. Hi, good morning. Three or four questions. The first part is on heavy commercial vehicle. If we can split it into three parts, buses, haulage, and tippers, where exactly are we seeing growth, and how do we look at it going forward in the next three to four quarters? Small commercial vehicle and light commercial vehicle, we had alluded to slightly heightened asset quality and delinquency in the early quarters. How are we looking at the asset quality in that specific segment? In terms of passenger vehicles, the largest OEM, Maruti, they have spoken about higher guidance in FY27. They are also seeing higher realizations. How are we geared up, especially in terms of market share growth in Maruti and possibly in Hyundai as well? And the fourth is, if you can speak about the net balance transfer out in LAP as well as home loans. Thanks. Okay. Shubhranshu Sir, good morning. Thank you. The MHCV has improved 1.9% as an overall level, but the buses are seen higher in the MHCV segment. Light commercial vehicle, 5.1% during the April to September period. Both the product line, MHCV and lights have gone up. As you asked us that which segment of MHCV, it is the buses who are actually driving the HCV number. On the contrary, we don't do HCV buses. We are able to do HCV haulage number, but there are markets where we are seeing that the participation by our competitors are slightly lower. Therefore, we have gained our market share in heavy commercial vehicle. In the case of light commercial vehicle, small commercial vehicle, we have done well. As I mentioned, this is what is going to be the trend also. First, small and light will happen, and then HCV will start growing over the period. What was the second question, Subramanian sir? Can you repeat? Maruti. Maruti has increased its guidance for FY27. They are also getting much better realizations. So as far as Maruti is concerned, we are now in the top four of the financial metrics. We have done our highest-ever numbers last month. The last four months, we have been continuously doing. We have the best now. As far as Maruti is concerned, we are quite aggressive. We have done well in that segment. We are doing well. And slowly coming to Hyundai, we are slowly getting, but the initial focus was to grow our market share and numbers, which is reasonably good at par with the best in the industry. So Maruti, we are focused. We are month on month. BT, you want to answer? Yeah. So for LAP, out of the total closures, 45% is BT out, rest are all from the old funds and SME assets and so on. So this trend remains the same almost in all the quarters. But BT in is more than the BT out. Yeah. Our BT in is good. We have always been maintaining good BT in. And if I can have just one clarification on Maruti and Hyundai, what we are seeing in passenger vehicles is that PSU banks are super aggressive, both in terms of tenor as well as rates. What is our strategy in terms of countering PSU banks to gain more market share in both Maruti and Hyundai, which are two large PV OEMs? No, we are not competing with the PSUs because they are focusing on salaried class, and we are focusing on self-employed, non-professional. We are into tier three, tier four, tier five markets, and they are into one, two, three. So the segment and the customer segment and the market are both different between us and them. So there are NBFCs who are doing their job and the banks doing jobs. So we are also not offering that kind of tenor or that kind of pricing. So our pricing and our tenor are to our customers, and we have been financing. And we are seeing that segment is growing. And we are also seeing that the manufacturers are also interested to equally increase salaried class as well as self-employed, non-professional categories buying the vehicle, especially in the smaller segment, entry-level car and mid-segment car. They are more working with the NBFC, and the salaried class people are buying both the category, premium segment as well as mid-size car. Understood. This was very helpful. Thank you so much. Best of luck for coming quarters. Thank you. Next question comes from Kaushik Agarwal of Haitong Securities. Kaushik, you can unmute and ask your question. Yeah. Hi, sir. I hope I'm audible, and thank you for the opportunity. I have a couple of questions. So firstly, can you please explain what explains the steady pressure on the yields in the SBPL segment? So should I ask other questions, or we'll go one by one? One by what is better? What type of pressure you are seeing in the yield? No, He's saying that why it's steady yield. Steady yield? I thought pressure. No, So I'm curious. I'm referring to slide number 58, where you have given the profit and loss statement of SBPL. The asset ratio shows that the income number has come down to 25.5 in 2Q. This was 25.9 in 1Q. Just wanted to understand the yield's movement over there. Right. So because of the average asset movement, as the business was started three years back, so as the average assets are improving, the yields are slightly initially. It was looking higher. Now it is coming to the natural, but our normal yields have remained the same over the last three years. Margin yield is the same only. There is no PLR cut as such we have taken in this particular product segment. No, This is a fixed rate. Okay. And so my second question is on the OpEx front. How do you see the same panning out in the medium term? There is some jump in the second quarter as well, so is it more of a seasonal impact? No. For. For SBPL? This, I'm asking for the overall business. Overall business just gone up by 10 BPS. We mentioned that in the previous quarter that during this period, we do all salary increment and incentive payment, which because of that is gone up, and you have to also consider that we have been continuously investing in the new businesses like gold and consumer durables. In spite of that, we have been successful in keeping it at 3.1%. As Ranjit has mentioned, that is also doing a good job in terms of gold. As it grows, their operating expenses will further come down, so that will improve our overall cost of operating expenses in time to come. Understood. And so my last question is relating to CSEL business. Since you have pulled back from the partnership channel, can you throw some light upon how do you plan to scale the same? And is there any target which you have set in terms of how will this number be in terms of overall AUM mix in the medium term? Yeah. So as of now, it is 7%, 8%. So it will remain at that level only. But all other businesses are going to grow. So therefore, the percentage mix in terms of the CSEL to Chola will remain as it is. However, overall disbursement, AUM growth, we will start taking up from quarter three because we are also parallelly investing on the consumer durable and D2C, which is the direct-to-customer digital lending by Chola, which is coming under CSEL as of now. And CSEL business also now they have started improving in terms of their direct business, their personal business has improved, and they are going to increase their disbursement over. So and then quarter four onward, you will see that the base effect of stopping the partnership business will go up. And therefore, you will start seeing the number also, the product number, positive number. Understood. That's it from my side. Thank you. Thanks, Kaushik. Yeah. So there is one question which has come up, and it says that while you expect the second half to be better than first half, and you're already seeing some improvement in October, given the fact that we have higher exposure in Tamil Nadu and Karnataka, which have their own set of problems, is there in the vehicle side risk-to-utilization levels in Tamil Nadu and on the HL/LAP in Karnataka because of the e-Khata issues and all? See, as far as Tamil Nadu is concerned, in fact, the portfolio has improved, and it has continued. Even September, October has been good. So Tamil Nadu, we are back on track. In fact, we are fully ready to gear up any market improvement. We will be the first to hit the block. So Tamil Nadu, we are not seeing any concern. Karnataka, because of this rains and mining segment, some delays here and there, we are seeing, but things are improving. As far as South India is concerned, vehicle finance book and the disbursement, everything is improving. So we don't see any concern, even if this is part of the regular. As far as Tamil Nadu rains are all concerned, this is a part of the regular listing, and absolutely, we are not expecting any surprises there. In fact, HL and LAP also likely to grow in. Karnataka is only a procedural issue which is causing delay. However, it doesn't have any portfolio. Yeah. It doesn't have any portfolio issue or a risk. It is not translating and it's only the transactions pillar which is happening and which is delaying the whole process. For HL, Tamil Nadu remains the best numbers for HL business, and we keep on doing these numbers in Tamil Nadu. Karnataka, there were issues on the e-Khata conversions. Slightly, the registration process was getting delayed on that front. As far as delinquencies and controls are per se, Karnataka, the reduction has started cracking in. And we see now all the South Indian states from here will do better. And accordingly, the disbursement and the book will also show that signs. And just one more is, I think, there's some clarification for credit cost. You're guided for around 1.6. That's around 20 BPS YOY rise, right? I think that's one clarification which I would like. We are at actually 1.8 as of now. So from there, if we come down to 1.6, so obviously, that will be the achievement for us. And obviously, we will try to do more, but let's see that. That's what I'm saying here. All depends on how the quarter three improves. The quarter three and quarter four will definitely improvement will come over quarter two. And how much improvement come, that is what is something we need to wait and watch. And one important thing, so Arul also mentioned in the beginning itself, the little bit, there is a monsoon which is getting extended is a cause of concern, but therefore, but that is what we have already factored and started working on it. Got it. Next question from Nidesh Jain of Investec. Thanks for the opportunity. Two questions. Firstly, how do you see the GST-led deflation impact on our disbursement in the vehicle finance segment? Do you think that 10% reduction in value of vehicle which has happened, you will be able to negate through volume? Secondly, what is the long-term strategy on SBPL? We have seen some stress in that book. Do you plan to scale that book further from the current levels? The first month and the month of October, the ticket size has come down by almost 8%, but our volumes have gone up by 14%. Despite, the disbursements have gone up by 14% and units have gone up by 18% in the first month. So we will see that. I think that's it. For the time being, we are not much worried about that. As far as SBPL is concerned, we plan to continue the growth. Only thing is that the growth will happen on those areas where we are already becoming stronger. So the strong will become more stronger. And wherever we are having some issues like what you are seeing in that, there we will just maintain the status quo. Sure. That's it from my side. Thank you. Next question comes from Shwetha Daptardar. Thank you for the opportunity. I have two questions. First, there is quantum jump in disbursements on the LAP front first half of this year vis-à-vis the corresponding period. Is this attributable to home loan competitive intensities flaring up and also that larger part of branch expansion has stabilized for us? If you could just throw color upon the whole LAP product dynamics right from origination, ticket size, yields, and any change in strategy on the LAP front? No, I understand. Basically, we're talking about disbursement growth has been 14% H1 on H1, right? So is that what you're saying is a quantum jump? Yeah. I mean, that's actually lower than the increase in disbursement growth last year, Shwetha. So if we observe in the past three quarters, the disbursements and AUM growth has been stronger in LAP higher than home loan segment. So if you could just lay out. You're comparing it to home loans. Okay. So I think it's better to look at them individually at a segmental level because both businesses are at a different stage of growth. Okay? So just look at it from look at LAP, don't compare it to the home loan business. And the loan against property business had a higher growth rate last year. That growth rate has moderated a bit on the disbursement front because you got a higher balance sheet this year, a higher starting kind of level from last year. But obviously, the intent there is that we feel like these are achievable disbursement levels and will continue kind of. Yeah. And these are prime. So HL is an affordable segment where the average ticket size is 13 lakhs, and here the average ticket size is about 65-70 lakhs. They are completely not a comparable. Comparison compared to issue business. To do businesses. Okay. So no change in origination strategy or ticket sizes on the LAP front? No, Like we said, we've had a drop from last year's growth. So asking if we're going more aggressive. Yeah. Yeah. Exactly. That's the point. But Shwetha, the data does not reflect that. My second question is, we have dealt in greater detail on volume pickup on the CV side and also capacity utilization's gradual uptick. But how is the operator economics shaping up for SRTO segment, considering that even freight rates at Pan India level aggregate basis have seen some inch up? Yeah. As we mentioned that September 10 onwards, the activity on ground has improved and capacity utilization also improved. And even in October, that has continued. Now, after November, we will get a current drop on ground, and therefore, that will further increase the capacity utilization of the retail customer. And therefore, their capacity to repay whatever delinquencies are there in Stage 2 or Stage 3 will improve. And therefore, we are expecting better result in quarter three and quarter four. So things are improving on ground. Sure. Thank you, sir. Sure, and next comes in Avinash Singh from MK. Avinash, you can unmute yourself. Yeah. Thanks, Nischint. Am I audible? Yes. Yes. Yeah. Yeah. Yeah. So the question is on that home loan business. Two things. One, of course, I mean, with the base effect coming into picture and also seasoning happening, it's clear that I mean, there will be kind of some increase in the GS3. But over the last four, six quarters, probably the pace of this accelerated GS3 is a bit on a higher side. So can you provide some color, I mean, if it is specific to particular geography or particular customer segment that is kind of affecting this piece? And also, gradually, the coverage has been coming down on this. So is it kind of some of your ECL model led change where, I mean, you have a different time period, different kind of past experience data that is affecting it? So what explains this sort of a reduction in the PCR? That's it. So we mentioned that in the past, also in the case of affordable housing, we have 50% coverage, 50% doesn't cover coverage. So the non-coverage asset, we need some time to see our efforts are actually getting result or not. And therefore, we don't do immediately asset sale and wait for some time. And you have seen that in the case of past, also in the LAP, we have benefited by not acting so hard on the NPA cases. And then after that, post-COVID, when coverage come down to 20% across the entire portfolio of LAP got covered, the NPA reduction has been fast. So for some time, it goes up. And then after that, once we see that there is a sale need to be done with the ARC who are actually having a coverage for all these cases, then our NPA comes down. That is what is the strategy in general in affordable housing being managed by the NBFC because we have a different norm as compared to the HFCs and banks. That is one. Second is that it is not impacting as of now anything in terms of the ECF also, for that matter, if you're asking that. The early bucket increase in the NPA, if suppose cases move from stage two to stage three and it is getting into the stage three, automatically, the provision coverage for the overall stage three goes down because it is a new asset. Overall stage three is most of it is a new. Therefore, the provision coverage comes down. As far as growth is concerned, we are with EU growth of 30%. And geographies we have spread, we have seen slight degrowth in southern states, as I said, for Q1 and Q2. But from here on, the leads are good, and we'll see the disbursement going up for the Q3. And we'll maintain the steady rate of 30% AUM growth as committed earlier. If you can just help, this Stage 3 growth over last four, six quarter in absolute terms, are these issues some kind of specific to certain geographies, or it's like your? It is not. It is no. And the indicators are not indicating. It is because, as I said, secured, unsecured, we take time for an unsecured pool, and then gradually, it will take a mature shape. It is related to unsecured secured, not related to the geography. Got it. Thanks. The last question comes from the line of Aravind Ravi Chandran. Hi, team. Thank you so much for the opportunity. In respect to the SBPL business, are we seeing any issues there which could affect short-term growth prospects in that business? That is my first question. SBPL is looking very solid in terms of growth. They are growing higher than 30%. In fact, they're growing 27%. Though this is in early, therefore, the growths are so high, but we will definitely grow this business more than 30% over the longer term also. Sure. No, my question was particularly related to this particular segment has seen some other quality issues with other players. Are we seeing any short-term issues because of that and affecting the growth in the shorter term? The SBPL, when we started, we thought it is a secured business and personal loan. But we have not done the secured personal loan so far. So that is the advantage for us. And therefore, we are quite comfortable that we continue to do business loan and maintain the quality in terms of both net credit cost and ROE tax, ROE, what we are delivering. No, as far as shorter term you are asking, it will not affect whatever we are maintaining for the first half. That will be maintained for the second half also, the growth rate. Sure. And just one last question. When you mentioned about CCL business, you said the mix should be somewhere closer to this only. Then are we saying that it would not be a big growth driver in the medium term? We have seen LAP and HL being a big growth driver for our businesses, which is growing above the overall growth, credit growth. Are we saying in medium term, CCL will not grow beyond the, let's say, overall business growth, whatever we say in the? No, no. We are not saying that. What we are saying is that the mortgage business will be growing maybe at the rate of 30%, and non-mortgage business will be growing at the rate of 20%. So obviously, we will try to do better than 20%. That's the endeavor. And that is what we are saying always. Okay, sir. Thank you. Thank you. Thank you. That was the last question for today. Thank you very much, participants, for joining us. Thanks, management, for giving us an opportunity to host the call. Thank you, Ninkleer. Thanks, Krishan.