Ladies and gentlemen, good day and welcome to the Aavas Financiers Limited Q4 FY23 earnings conference call. This conference call may contain forward-looking statements about the company, which are based on the briefs... I'm sorry, on the beliefs, opinions and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference, please signal an operator by pressing star then zero on your touchtone phone. Please note, this conference is being recorded. I now hand the conference over to Mr. Sachin Bhinder, Managing Director and CEO of Aavas Financiers Limited. Thank you, and over to you, sir. Good afternoon, ladies and gentlemen. Thank you for participating in the earnings call to discuss the performance of our company for Q4 and FY23. The results and the presentation are available on the stock exchanges as well as our company website, and I hope everyone has had a chance to look at it. As you're all aware, former MD Sushil has decided to step down from the company for personal reasons. Sushil has helped create the foundation for the next phase of growth with significant investments in people and technology. On behalf of the board, we want to put on record that we deeply appreciate his contribution to Aavas and wish him the very best for his future endeavors. I want to reiterate that the board and promoter shareholders are committed to build a long-term institution, and we are confident of executing on a strategy with their support. We'd also like to place on record that our promoter shareholders continue to be committed to supporting the long-term Aavas 3.0 vision. They have not sold a single share in nearly two years. They have reaffirmed that they do not plan to sell any at all in the coming year either. The key driver for our company's continued success is a deep and talented management bench at Aavas, many of whom have been with the institution since its early days and remain committed for the long-term journey ahead. We have with us today Ghanshyam Rawat, President and CFO, Ashutosh Atre, President and CRO, Siddharth Srivastava, Chief Business Officer, Surendra Sihag, Chief Collection Officer, Ripudaman Bandral, Chief Credit Officer, Jijy Oommen, Chief Technology Officer, Anshul Bhargava, Chief People Officer, Rajaram Balasubramaniam, Chief Analytics and Strategy Officer, and Ghanshyam Gupta, our Investor Relations. Q4 FY2023 is the first quarter completed under the new Aavas 3.0 framework, and I'm happy to report that it has been our strongest quarter ever. For the quarter, we disbursed INR 15,818 million, registering 23% year-over-year growth. This is the highest quarterly disbursement in the history of Aavas. For the year, we have disbursed INR 50,245 million, registering 39% year-over-year growth. We continue to borrow judiciously and have raised INR 47,631 million at 7.25% during the year. As on 31st March 2023, we maintained a sufficient liquidity of INR 32,747 million in the form of cash and cash equivalents and unavail documented sanctions. We have also gone live on our industry-leading implementation of the Salesforce platform and are now working on the next leg of our technology evolution. The entire organization at all levels is extremely energized and look forward to our next phase of growth. I will now hand over the line to Ghanshyam, President and CFO, to discuss the financials in detail. Thank you, Sachin. Good afternoon, everyone, and a warm welcome to our earnings call. As on 31st March 2023, average borrowing cost of 7.61% against an average portfolio yield of 13.12% resulted in a spread at 5.51%. As on 31st March 2023, total number of live accounts stood at 187,149. That shows 24% year-on-year growth. Total number of branches was 346. 32 new branches added in last 12 months. Employee count 6,034, 15% year-on-year growth in anticipation of additional 20-25 new branches in Q four FY23. Assets under management grew 24.8% year-on-year to INR 141,667 million as on 31st March 2023. AUM has an impact of subsidy receipt of INR 2,800 million during FY23 versus previous year INR 1,080 million. AUM growth is 26.1% excluding the impact of subsidy. Product-wise breakup, home loans 69.9%, other mortgage loans 30.1%. Occupation-wise breakup, salaried 39.9%, self-employed 60.1%. During FY23, RBI hiked the repo rate by 250 basis point. We have also increased our prime lending rate by 160 basis point during FY23, and a further increase of 40 basis point with effect from 5th April 2023. During the quarter, company borrowed an incremental amount of INR 15,816 million at 8.07%. As of March 2023, our average borrowing cost stood at 7.61% on outstanding amount of INR 125,209 million. IGAAP to Ind AS reconciliation has been explained in detail for profit after tax and its net worth on slide number 34 and 36 of our presentation. Borrowings. Access to diversified and cost-effective long-term financing. Very strong relationships with the development finance institutions. During the year, borrowed INR 47,631 million at an average rate of 7.25%. Overall borrowing mix as on 31st March 2023 has 45% from term loans, 22% from assignment and securitization, 20.8% from National Housing Bank, and 12.2% from debt capital market. Lender support continued to remain extremely strong as Aavas evolution continues. Liquidity of INR 32,747 million as on 31st March 2023. Cash and cash equivalent of INR 13,687 million. Unavailed credit limit of INR 1,100 million. Documented unavailed sanction from other banks of INR 17,960 million. Profitability. Profit after tax increased by INR 19.8% year-on-year to INR 4,282.8 million in FY23. ROA was 3.51%, and then ROE was 14.09% for FY 2023. As on March 31, 2023, we are very well capitalized with a net worth of INR 32,697 million and capital adequacy ratio at 46.94%. Our book value per share stood at INR 430.6. I would like to hand over the line to Ashutosh Atre, President and CRO, to discuss the asset quality. Thank you, Manchamji. The key portfolio risk parameters, asset quality and provisioning. 1+ days past due stood at 3.3% as against 4.05% at the end of last quarter. Gross stage three stood at 0.92% and net stage three stood at 0.60% as on 31st March 2023. Gross stage three of 0.92% includes 0.11% of up to 90 DPD assets which have been categorized as GNPA following RBI's notification dated 12th November 2021. During FY22, resolution plan was implemented for certain borrowers accounts. As per RBI's Resolution Framework 2.0 dated May 5, 2021, some such accounts with an outstanding amount of INR 885.2 million as on March 31, 2023 have been classified as stage two and provided for as per regulatory guidelines. Out of INR 885.2 million, INR 675.7 million is into 0-30 DPD bucket. Total ECL provisioning, including that of for COVID-19 impact, as well as Resolution Framework 2.0, stood at INR 716.1 million as on March 31, 2023. As shown by the strong work done this quarter, Aavas is well placed to continue its industry-leading asset quality. In the no-deal roadshow presentation, we have also shared the performance of Aavas across the COVID period from FY20 to FY23. This was a time when the asset quality was really tested. Our average credit cost in the period is 0.23% and INR 174 million of cumulative write-off. This is driven by our DNA of end-to-end in-house from sourcing to underwriting to collection, as well as risk containment, legal and technical evaluation. With this, I open the floor for Q&A. Thank you. Ladies and gentlemen, 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 the 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 Hiren Kumar Thakur Lal Desai, an individual investor. Please go ahead. Yeah. I have two questions. Can you hear me? Yeah. Yeah. Yes, please go ahead. One question is regarding cost of deposit. Do you have an estimate or some ballpark number where it might peak and around what time? Sorry, you are asking about cost of borrowing? Yeah. Yeah. Yeah. Our cost of borrowing is on the basis of full year total borrowing, and it is computed on the basis of year and various products we borrowed, and it is some product basis, 7.61%. As we've seen, RBI has increased the rate in past eight to nine months and thereby banks has increased their cost of borrowing and MCLRs and other product rate also increased in the last two to three quarters. Thereby we also seen some impact on our cost of borrowing. But still we are fully as basis, we have borrowed at 7.25%, and for the quarter we have borrowed at 8 odd percent for this quarter borrowing. That give us a confidence we able to borrow or to feed our increased growth at a very competitive price. Okay. do you have any assessment as to overall blended cost of around what number it might peak? see, some of your borrowing may be still, up for either renewal or further,... As you know, there is a borrowing is a mix of term loan from banks and institutions. We have a long-term borrowing from development financial institutions like Asian Development Bank, International Finance Corporation, CDC, London-based government agency. Those funding we borrow. Certain lot of borrowing is on a fixed rate contract. NHB we have borrowed around INR 3,000 crore. Out of that, INR 2,000 crore is a fixed rate borrowing for the seven year, which is a very competitive price, less than 5%. Obviously with money borrowed from banks, which is a link to MCLR, it comes for reset on frequency of their annual reset. Last six months, whatever loan come for reset, which reset has already happened, but some borrowing will also come for the reset in another 6-month timeframe. That will count as and when happens. Okay. We still expect the overall borrowing costs to rise a little bit, right? Yes. There will be no doubt RBI has paused, that was a very positive impact for the market. For us also. Yeah. April commentary came, little bit paused or they see, the, how the data comes at the regulator end. We have seen softening on the G-Sec rate. We have seen a softening on the bond rate. We hope that now further and banks will also be considered that aspect and not much increase MCLR rate. Older contract definitely will come for the repricing in the first six months. We can see some impact in cost of borrowing in next two quarters. Okay. The second question is regarding growth. Okay, some of the, your peers who are actually smaller in size, they have been growing and they are kind of guiding AUM growth in the vicinity of 30%. I think you are guiding somewhere around 22%-25% kind of a number. Is it because of higher base or there's some other reason that? If you compare, let's say as you rightly mentioned, in your question, smaller company which are in the size of INR 4,000 crore, INR 5,000 crore, if you compare ours at the same journey in 2016 or 2017 in timeframe, and later on the 2018 when we are a similar size, we are also growing 40%-50% at that point of time. Obviously now base has increased, so that higher base obviously, will have that growth impact, is seen. If you refer the new business, during this, year, new business we done more than INR 5,000 crore versus last year INR 3,600 crore, which gives around 39%-40% growth in the new business. The AUM basis we have grown 26% during FY 2023. We have invested also in the various branches and, product, process, policy, technology that give us a comfort, and opportunity is also there in the market. That will add our future growth trajectory going forward. Okay. Thank you. I'll get back later. Thank you. Thanks. Thank you. Thank you. We have the next question from the line of Rinesh from ICICI Securities. Please go ahead. Yeah, hi. Just a small correction. This is Rinesh from ICICI Securities. Sir, two question. one is, you know, on the slightly strategic one. You know, of course earlier you have been guiding at 20-25% kind of a growth number. Now since, you know, we are investing into tech, we are investing on branches and plus we are introducing new products. On blended basis, how should one look at the AUM growth trajectory? That's one, number one. Secondly, let's say even if we are comfortable growing at a faster clip, does that mean that we have to introduce new products? If yes, then, maybe near term, what should be the ideal loan mix in terms of home loan versus the non-home loan portfolio? I think our secular growth has been overall in the range of 20%-25%, and I think this is a mix of one has to look at from a granularity perspective, both from geographies and the product lines. I think from the geographies, where we are already present, I think we are going little deeper into those markets, much more than the normal average. Where we have invested, we actually follow our normal DNA of staying put, invested, learning the markets and understanding and then stepping up and accelerating. I think there are two parts, which are there, which constitute our individual self-conception of home loans. On the other product lines, I think the product lines which we have invested in have started really firing, and I think they are all engine firing, helping us to really build and scale up on a granularity basis across the product lines. These are the two parameters which are there, which are contributing to the ones. On the mix, I think on the mix which are regulatory guided on a home loan, non-home loan ratio, we will follow what is guided as per the regulator, the mix. As the mix of the home loan increases, we'll have the MSME, the LAP portion which is there to be sequentially increasing in those lines. Okay. Broadly you're saying even if, let's say the new products grow at a faster clip, the blended growth will still remain at 20-25%? See, you have to look at growth from two perspectives. One is the, you have the existing geographies where growth will be much more deeper, which will be above the average growth. There is a new territories which you enter, like for example, Karnataka and Uttar Pradesh, which we really want to step up. I think, there we have been very conscious to have a moderated growth. As a result of which the average growth comes to a level of 20%-25%. So some of the regions, some of the geographies which are deep invested in grows at a faster pace. The ones which are there we want to accelerate would be at a medium pace. And where we have invested, we will really look at, how it spans out and then really step up our levels. I think case in points are the two geographies which I talked, and I'll have my CBO, Siddharth Srivastava, talk about the two geographies, typically, the Uttar Pradesh and Karnataka. Sid, over to you. Yeah. See, if you look at on the terms of sizes, Karnataka is almost similar to what Rajasthan is. We have, we always on every year we have, every 2 years-3 years we identify certain new geographies. Karnataka, Odisha, Uttar Pradesh are the few geographies which we identified to grow. We will continue to grow deeper into our existing geographies, and this will bring us the required growth which we are looking at around 20%-25%. Got it. Sir, my second question is slightly on the qualitative side. Of course there isn't a top management change. But do you foresee any attrition, let's say, at one or two level below the CXOs? I think as a management strength which is there as part of the CXO levels and they're deeply committed on the side. I think that's already there. We have good amount of bench strength which is there. I think over a period of last couple of years, what we've really done is we've had multiple products, product lines along geography. I think what it really helps is, one is to monetize on the customer side and we to help us really help the manpower portability. If any of the attrition hits, I feel we are very safeguarded because we have at least the buffer and the bench strength which is already available to really place that and really mine the opportunity which is available with period of time. I think we are very well-capacitized, if I were to put across on those lines. I think, A, the geographies, B, the pro-product verticals and our deep investment in the people side, I think is the one which is there. On the people side, I would really like to reiterate that we have invested in reskilling and upskilling, and we have a curated program with IIM Ahmedabad and where we send across select of our staff to really work on the live projects which will help us in our field. This is one part of our training and development and de-developing the leadership bench which really helps in the future course of work. The second enabler, which has been technology. I think we are moving towards institutionalization. When we say so or we say that we are, we would be more on process policies and technology is one of the one of the major facilitator. Continuing with our touch and feel of assessment, credit assessment, what really technology helps is to increase the productivity to be more predictable and help us in overall managing the stuff. I think that helps us in managing the overall stuff which you referred to. On the technology side, I think implementation once is there, we'll see the real jump in the productivity and the other matrices particularly which is really kicking in. I think overall we are very poised to take that as a matter what it comes in in the coming times. Got it, sir. This is very helpful. Thank you, sir. Thank you. The next question is from the line of Rinesh Gandhi from Ambit Capital. Please go ahead. Yes. Hi. Thanks for this opportunity. I have broadly two, three questions. home loan portfolio. When I look at the implied value of home loans disbursed during this quarter, there seems to be a sharp deceleration in growth. It seems to be about 12% Y-o-Y for this quarter. When I also look at the implied disbursements as well as the ticket size data, it seems to suggest that there's been some kind of decline in terms of volume of loans disbursed in the home loan segment compared to last year. Could you just help us understand what kind of slowdown are we witnessing in our home loan portfolio before I proceed to my next two questions? Thanks. If you see, in overall number, this quarter we have disbursed much higher number and ever best quarter in the compared to last year quarter four. You are talking particularly one segment, where you find, this year we found very good pace to do our assignments of MSME and LAP portfolio. If you see other peer group, they struggled in that piece. We have good amount of portfolio, LAP and MSME got assigned. We got extra, let's say, buffer in overall book, continue to lend our MSME LAP portfolio. That way you in proportion you found that the home loan and non-home loan mix is not different than what you see mix in a quarter four of last year, basically. This is a, this goes, let's say, recognition of Aavas credit policy underwriting loans where banks are from EFC, not only looking for home loan, but they are looking for non-home loan or MSME book from us, basically. In last 1 year we have done INR 1,000 crore assignment. INR 900 crore MSME and LAP book got assigned to them, basically. That's creditability of Aavas book, Aavas credit culture which getting recognized with the large public and private sector banks. Sir, if I understand this correctly, you're saying you prioritized the MSME and LAP segments over the home loan segment. Is that how we should understand-? No. why there's been. No, no. Yeah. No, no, no. Please let me again clarify the matter. If you see, we as a housing finance company has certain restrictions to do non-home loan business, basically. During this quarter, during the full year basis, we have churned out lot of MSME and LAP book from on book to off book. We got extra cushion to absorb MSME and the LAP book also during the quarter, during the full year basis. That's why you see in quarter four mix is getting bit different than what you see in the mix of quarter four of last year. Overall as a business strategy, we will remain at 70% or 70%-75% home loan, 25%-30% non-home loan book on the long term basis. I'm not sure if I understood this, but you know, the only point that I was referring to that there's been some kind of deceleration in terms of the value of disbursement. If you look at the number of loans disbursed, then there's been a degrowth in just the home loan segment. That is what I was trying to understand. I can take this with you offline. Yeah. My next question is, you know, on, in terms of margins. While the share of, you know, the higher yielding, non-home loan book has been increasing, and we've also taken about 160 basis points PLR hike during this year, and as I see, we also have a 60% floating rate book now. The spreads have come down in this quarter. In fact, if I look at the spreads up till the last quarter, they were stable. Can you explain, what kind of pricing pressure or competition are we witnessing in our home loan segment, if at all? Since, you know, we haven't really seen spreads expand, at all, despite the share of high yielding book going up and, also, you know, the company has taken PLR hike. I think it in the spread side there are marginal reduction we have seen on the spread in this quarter. It's primarily on the two account. We have seen cost of borrowing get increased, and similarly, it takes own time to pass on the increased rate to the assets, new generation assets basically. There is always remain some gap on the translation on the new business than the cost of borrowing we borrow fund from the market. Overall basis we are confident to maintain our spread, which is given our long-term vision 5% and above spread continue to maintain in that bucket. We have seen, as I earlier mentioned, we have seen RBI talk. RBI has given some relief commentary in the April policy. I think that will also help in both the sides. As a competition, we are not seeing, I think market as such is huge in the rural, semi-urban area. We, I think long-term perspective, in earlier calls we have given this commentary a number of time. In the geography where we work, household unit versus home loan penetration is not more than 2%-3% in those market. We have enough spaces there to grow our business. Sir, why have staff costs come down quarter-on-quarter? Yeah, that'll be my last question. Thanks. No. I think you know, in India's accounting system, we grant ESOP schemes, two, three, four, five ESOP schemes are there. Certain older schemes are getting matured during this quarter. Whatever has been ESOP not exercised, not vested, got a reversal of expense in this quarter. That's why you see slight manpower cost in this quarter is lesser than last quarter on that account. Sure. Thank you, sir. That's all from my side. Thank you. Thanks, sir. The next question is from the line of Shreepal Doshi from Equirus Securities. Please go ahead. Hi, sir. Thank you for giving me the opportunity. Wanted to understand this transition at core management level from you being appointed as CEO last quarter to Mr. Sushil Ji resigning within three months. While we have seen some of the founding members of a company moving out due to personal or professional reasons, it's usually done in a transition and planned manner with investors also being on board about the same. Just to understand, was the board and core management aware about this move well in advance? I think, from this perspective, we have embarked upon the Aavas 3.0 journey. Sushil has been there since the founder and had set up the franchise right from the day one. I think from a perspective of institutionalization, where we embarked on a journey on people, processes. I think that was his personal decision to take a call. I think we respect his decision and he's left a franchise, which is sound on rock-solid foundation to really build upon and to embark upon an institutionalization journey. As a part of Aavas 3.0, I think we delivered as a team, the best of the quarters, on all the metrics. We really want to build across various node centers across India as a pan-India institution which has sustainable growth with quality as the key metrics, and build in and really have a right footprint which is really we all as are proud of the franchise which we developed. Sir, I get that point. You mean the board was aware about his move during last quarter itself? Is that a fair conclusion to make? No. I think in the last quarter board meeting, and let's say before that board quarter meeting also, I think, we had in a plan to invest for Aavas 3.0 in which two strategy were planned. Investment in the tech field, where we thought in next 10 years journey, that investment in technology will help next 10 years journey. Second thing was planned ki to to enlarge management bandwidth to capture next 10 years growth, available growth in the market in the home loan space. Management bandwidth got enlarged accordingly. There was Sushil Ji was an earlier, I think entire day-to-day activity strategy, everything piece he is looking. Number of times he got chopped in that system to manage the entire volume of a business. There was strategy to separate day-to-day business and strategy tech piece, tech transformation separately. It was announced and moving ahead to implement that strategy. Obviously, in going forward, by close to next board meeting, I think he found to have his move on and want to have his that he want to move on in his career, so and choose a different path. I think he discussed with the board members and board members, as Sachin Ji mentioned, recognized his contribution in Aavas journey and that's all. We are looking forward for support from all the shareholders, stakeholders to take Aavas to the next journey. Got it, sir. Like, still the exit was little surprising with the founding member resigning in board meeting and it being a board meeting. Sir, the second was respect to the strategy. In the newer states that we've ventured into in the last couple of years, would we still be focusing on going at AC level? You know, this the rural focus lending is what we will be doing, or we will want to be little more semi-urban focused in the newer geographies? I think in the new states, the same strategy continues of focusing on tier three to tier five towns and the cities which are there. Again, on the self individual construction loans, to be really focused and where our core area of expertise and our DNA lies. I think in that journey, what we've done is to have people with this underwriting experience, the distribution experience, the homegrown talent from Aavas to really go across and set up and scale up in those geographies. I think, it continues with the same pace, same growth and in a much more contiguous manner what we've been doing as a, as a franchise and as a institution. Got it. Thank you. Does that answer your question? Thank you. The next question is from the line of Umang Shah from Kotak Mutual Fund. Please go ahead. Yeah. Hi, good evening. Thanks for taking my question. My question is related to what Sripal asked in the previous question, right? Now, just wanted to understand a little bit more from the strategic direction perspective, right? I mean, last quarter, clearly there was a strategic decision which was being taken about splitting the MD and CEO roles and it was made us to believe that that was probably the right way to go ahead in terms of forging the next ten-year growth strategy. Now, clearly what has happened in the past quarter is there to see for all of us. Do we anticipate any further changes in the leadership team or is there a need to further expand the executive committee or the core executive committee or new additions in the team that you are looking at? I think, from the perspective of there is a sufficient amount of bench strength which got created as a part of our Aavas 3.0. As I would say that, the CFO, Ghanshyam Rawat, has been with the franchise for the start, since its inception. Ashu Satray completes nine years this month. He's been the right from underwriting to current CRO. Surender Singh is there as a part of our MANCOM, is there as a part of collections. He's been there for a long period of time. With me about 40 months in the franchise being there and the new CXOs who've been there actually has really helped to build the right kind of management bandwidth and depth which is there. Below them, I think as the layer goes, I think we have sufficient amount of bandwidth which is available with homegrown talent which will help to scale up sustainably and credibly with which our DNA rests on. In a much more laminar fashion, I would put across. I think the franchise and the institution is poised for good growth with the kind of foundation both on financial capital, human capital and technology as one of the key enablers to take the momentum forward. Just to give an outlay. We have a very strong middle layer management of more than 100 people on the origination side, which consists of NSH and circle heads, zone heads and state heads. The risk and credit side, we have more than 234 people which have been there, and 21% of them have been with Aavas for more than 3 years+. In collections we have 54 of them, which is more than 70% of employees are there with 3 year+ of experience. I think that is a deep-dive experience which is there. I've said that, the continued management bandwidth which is available as far as, the transitioning is concerned, I think is already available and, it's been demonstrated. I think the Aavas 3.0 first quarter results bears a testimony to the foundation which is set for the journey going forward, keeping the core DNA of risk architecture intact and building the franchise on risk-adjusted returns and a much more stronger, sustainable quality growth which is driven by governance and quality and with the continued board support over a period of these years. Sure. Thanks. The other clarification which I wanted during your opening comments, you did mention that the promoters are committed to the business. They haven't really sold any shares in the past, and they don't intend to do so in the coming future. Is there any timeline to it that you can specify? I think as I said that since the last share sale by them was in 2021. They've not sold a single share in the last two years, and they have reaffirmed that they do not plan to sell anything at all in the coming year either. I think that's the comforting factor if I were to put across from a. I hope that answers your question. Okay. Okay. Just last question is, the presentation deck has mentions about management employees and board members owning about 3%-9% equity in the company. I'm assuming that this would include some of the new equity or ESOPs allotted to some of the new joinees who have recently joined the company, maybe last 1year- 2 years. Is that a fair assumption? 3.9% of management employees and board members. This obviously this is on as on March 31st, 2023. ESOPs which has been given a recent grants in last two schemes obviously is not included here. Recently in last, let's say two years, we have given almost 14.50 lakhs of ESOP shares in out of given total in three schemes. Obviously that is not included here. This is on March 31st, 2023 number as on that date. Sorry, Ghanshyam ji. The number you mentioned was 14.5 lakh shares, right? 14.5 lakh options. Yeah, options. Ok option, this option is given to... All NCOM members and below it, going up to three levels, we have gone down to those employees at that level, basically. So, so that will give us a lot of confidence. Value creation will happen in coming years. Okay. Thank you so much, and wish you good luck. Thank you. Thanks. Thank you. We have the next question from the line of Nidhesh Jain from Investec Capital. Please go ahead. Thanks for the opportunity, sir. With the new tech rollout and Aavas 3.0, do you see any changes to the underwriting model that we currently have? We have largely a decentralized underwriting model. Do you see any changes to that? underwriting model meaning, see there is the core of underwriting is actually touch and feel where we go and do the assessment of the client, typically self-employed, non-professional. There are various checks and balances, validations of documentation and lot of clerical stuff which is to be done by the underwriting team, which will be taken care by the new, this technology tools. Yeah. I'll have Ritu, our CCO, to add on to what Ashutosh. Good evening, everyone. Ripudaman Bandral this side. With this new technology transition which we are going through, we're able to add efficiency and economies of scale. There is a lot of work which we do in different platforms which would get joined into one. While we'll be able to take a decision which would be much faster and more accurate, and of course, we've been spread in 346 branches and our core is touch and feel, which we would continue to do, and we would take the help of technology to the most which we can. I hope this answers your query. Sure. Sure. There's no fundamental change in the underwriting model. Technology will be much more enabler in the way that we are doing the business right now. Yeah. Also just to add on to that, on the models which we have, developed, which are more prescriptive, descriptive, I have Rajaram Balasubramaniam who's joined Aavas from Citi, New York, to underlay what is that it helps in the entire thing and what this technology and this models really helps. Raja, why don't you share? He comes directly from Citi, New York, to Jaipur. Hello, Sachinder. Thank you. Good evening, everybody. I think just to add to what Sachinder said, I think the if you look really at what technology has done for us today, that's taken away how much time it takes for us to receive information from the front end, process that, use our intelligence and go back at the point where the customer is being met to give them enabling decisions. To add to what Ashutosh and Ritu said, the fundamental model does not change. What we can do now is have a better vision of how we can use that data to make a more calculated decision, right? I think that's the objective of using models to get that consistency and reliability in every file that we process. The fundamental building blocks remain the same, the fundamental strengths remain the same. We just use technology to leverage that and use data to give us a insight into it. That's in short. Okay. Sure. Yes. We are kind of building it in three ways, right? We are building the skills, we are building the technology, we are building the culture to embed the analytics into the system. In terms of analytics itself, all of the, you know, the types of analytics that you already know, whether it's descriptive, whether it's prescriptive, predictive, we have a plan to build that into the entire customer experience to leverage technology. I hope that gives you a perspective of the technology and data integration and how we plan to do that. Just to add on, I'll have GG to talk about what is the layer of technology which really helps. GG has a deep down experience of having helped technology to build Syntex over a period of career. Over to you, GG. Yeah. Thank you so much. Good evening, everyone. You know, good to have this conversation with you all. When it comes to the technology transformation, we looked at three important pillars. One, of course, how technology can help us become more efficient faster. At the same time, you know, how it can help us scale what we do in a much more efficient, faster and, you know, accurate way. Third is, of course, how do we give a great customer experience, right? When we looked at, you know, in the Aavas 3.0, how do we take our journeys to the next level and make it a great experience for our customers? Of course, one of the biggest objectives that we have laid down was how do we make the system efficient in such a way that the turnaround time, right, is enhanced significantly. By doing so, both operational efficiency and customer experience, both the, you know, pillars will be taken care. With this objective a year back, we have brought on board Deloitte to help us do the digital strategy roadmap exercise, looking at the next 10 years vision of the organization. We have then, you know, chosen to go with best of the class technology tools like, Salesforce, you know, MuleSoft for doing the entire orchestration of the, you know, ecosystem to connect with the Aavas, and then which is, you know, blended with the analytical models. This will be a front layer of the systems. You know, we are glad to share with you that we have completed that first phase of the rollout. As on April, we have rolled out Salesforce to the entire organization, and April month has been closed well in the new system. Of course, currently we are undergoing another big transformation on our back office and middle office systems, and we are implementing Oracle FLEXCUBE and Oracle Fusion on Oracle Cloud. This is to make sure that, you know, our systems are much more scalable and robust. I think, you know, the great work that you all have done in different phases, these technology solutions are going to make it much more scalable, you know, and give better experience to our customers. Thank you. Yeah. Sure. Thanks. Thanks for the detailed reply. Secondly, if you can share, at what level our branch tends to mature. If you can share that, the three-year-old or four-year-old branches, what is the AUM of that branch or disbursement per month of that branch? The cohort of branches which are three years of vintage. Sorry, if you can repeat. We just lost your,... Yeah. Uh, so, uh, like- Yeah. Can you repeat the question? Sure. If you can share the AUM of branches which are of three years of vintage, the branches that you have opened three years back, what is the AUM per branch on an average of those branches or disbursement of those branches on an average? We will this data point we will share separately or publish it for everyone. As a branch maturity, in the tier two, tier three, tier four town, our branches are very low OpEx model branches, where we take a branch rental is roughly INR 20,000 to 25 per thousand per month branch rental. four or five employees remain there. Branches within six months. Because if we have the contiguous approach, we don't go open a branch in new immediately. It's a contiguous approach. We keep on doing some business from that branch. We open a branch in that place so that day one the branch starts to give us a business. Within a six month timeframe, our 90% branches has a breakeven. Today, we have almost one-year-old branches is giving us a ROE, 12% upward. Three-year and more branches is giving us roughly 20% odd ROE branches, basically. Sure. Lastly, if you can share the AUM breakup, that would be, geographical breakup of AUM, that would be useful. Any comment on how the AUM in Rajasthan is doing, has grown in FY 2023. Rajasthan, I think during this year also, Rajasthan, our most of the oldest state has grown new business prospective around 25%-30% of growth we have seen in the Rajasthan during this full year basis. MP has also grown better. Gujarat and state Gujarat and Maharashtra has also grown around 25%+. These are on disbursement basis, right? These are on disbursement? Yes. Disburse. Yeah, yeah. Disbursement. Sure. Yeah. Sure. Okay, sir. Thank you. That is from my side. Okay. Thanks. Thank you. The next question is from the line of Piran Engineer from CLSA. Please go ahead. Yeah. Hi, sir. Congrats on the quarter. Just one question. We've hiked PLR by 160 basis points, when I look at your yield in FY2022, it has improved only 50 basis points YoY from 12.6 to 13.1. Is it that we are hiking PLR but reducing the spread above PLR for our existing customers? Yes. We have increased 160 basis point in the full year basis. You see on assets and liability, both sides, we have very good mix on interest rate scenario risk basis. My liability is around 50 basis point around the fixed rate borrowing we have done, I mentioned in earlier in another question. Asset side also we have around 50% around the fixed rate asset we have basically. When we increase our rate, almost 50% increase happens on a total AUM basis. Remaining 50% fixed rate contract have a repricing power after three year, every three year basically. We can't correlate 150 basis point. 100% will have a impact on overall AUM base because my liability is also not increasing that fashion basically. You will see that positiveness is there in a ALM, not only tenure basis, but ALM, interest rate scenario basis, it has a perfect match is there basically. That's one thing. Second thing, yes, we agree, new business translation of rate increase in a new business takes some time. Lagged impact comes after a quarter basically. That has also gone a little bit in our overall AUM yield. It is not showing a complete increasing trend what we have increased our PLRs. Right. Sir, let me ask another way. Aapka disbursement yield in March 2023 versus disbursement yield in March 2022, what would be the increase? If you can give the actual numbers, 13 point something, 12 point something. I think we will come back on this exact number, how that numbers are there basically. As I mentioned, translation of interest rate rising takes its own time on the new business. Okay. When we do a PLR hike, it gets transmitted on the spot or with 1 quarter lag, two quarter lag? No, no. Interest rate, when we increase our PLR, we disclose in our website when it is effective. Like last our increase happened on the fifth of April two thousand twenty-three. Whatever contracts are at a floating rate that got impacted on the same day. Okay. Okay. Understood. Understood. Thank you, sir, and all the best. Thanks. Thank you. The next question is from the line of Abhijit Tibrewal from Motilal Oswal Financial Services. Please go ahead. Yes, sir. Thank you for taking my questions. Sir, apologies, I joined in a little late. There was a overlap with another earnings call. Just in case you've answered any of the questions which I'm about to ask, please let me know. I'll always, I can always listen to the recording. Sir, first things first, I mean, what I heard in the last 15, 20 odd minutes, you talked about technology and how it's kind of going to help us- Sorry to interrupt, but the line for you is not very clear, sir. I request you to. Is it better now? This is much better, sir. Please go ahead. Yeah. I request you to- Thank you. repeat your question. Right. Yeah. sir, I mean, in the last, I would say, 15, 20 minutes, that I heard, I think we talked a lot of good things that we have done on the technology side and which will maybe help us accelerate growth over the next two years. I think. I mean, I briefly also heard we talk about this technology investments that we have done, bring down the TAT. Just wanted to understand, is it a fair understanding that TAT, which is about, let's say, 10 days, now would come down to anywhere around three to four days once you have implemented all the technology changes that you want or the technology improvements that you want? If you see our average lead time is around 11days-12 days, before we go live on the Salesforce. We gone as a pilot project on the Salesforce in the March. We have launched full-fledged from the April. It is under hyper mode for the three months where it will get stabilized. After that, we will start to see the real result of how the TAT will get reduced. Our envision statement, our as when we took a Salesforce, our targeted that we will bring down between average six days-seven days. Got it. Sure, sure. Sir, the second question that I had was on, I think we briefly also mentioned that we very recently in April deployed Salesforce. I'm sure there would have been some teething issues in terms of training your credit officers to the new systems. Just wanted to understand by when can we expect these teething issues and the new deployments that we are doing in our back office and middle office of Oracle FLEXCUBE and Oracle Fusion. By when can we expect these teething issues to be settled? More importantly, versus, I mean, looking at the last quarter where you did about 1,600 crores of disbursements, which broadly translates into 500-600 crores of monthly disbursement run rate, exit run rate. What is the target that we have in mind once these teething issues are behind, and once you have implemented these these softwares that you're intending to, I mean, should we now start expecting that the disbursement run rate will start moving towards that, I would say INR 800 crores-INR 1,000 crores? I just answered about the teething issues. Any new thing will definitely have some kind of a resistance and a training curve. Okay? Every day there is a resolution of the teething issues. Just to confirm that the Salesforce will never be the hindrance for doing the business for us. If it is a teething issue, if it is a training issue, we might have to work harder to clear the cases. Yes, it is going to get resolved. We have completed one month, so we are wiser now in terms of how to handle the Salesforce. Maybe in this quarter, by the end of this quarter, it will be completely up and running, but definitely nothing to do with the business. It is not going to be hindering the business. Got it. Sir, do you want to comment on the monthly disbursement run rate that you have in mind? We have a plan for the year, and accordingly, we will be delivering the number in terms of monthly. Quarter-on-quarter we are going to achieve the target as we have planned. As budgeted. As budgeted. Got it. Last question. Thank you so much for being patient. Now, with I would say Mr. Sachinder kind of heading this franchise, I mean, is there going to be a change in the DNA of the organization? What I mean, essentially is, we were always reckoned as an affordable housing company doing lower ticket size loans. Over a course of time, do you think that there will be a change in thought process where you would want to also start doing slightly higher ticket sizes as well? Just to answer your question, I think the core DNA continues to be the same and our DNA of it is more of deepening the management team, retaining our original DNA of evaluating how to underwrite credit in C&P and ACP customers backed by mortgage. I think it's more to institutionalize, to scale up its sustainable quality and which is the franchise is known for over a period of 11 long years, and how to use that to really scale up on that. Our focus on tier three to tier five markets, self-individual construction home loans, serving the unserved, underserved, and unbanked continues in the same momentum, in the same breadth, in the same form, with the risk architecture of overlaying risk-adjusted returns. With growth, first comes the governance, then comes quality, and third comes growth. I think that those overlaying factors of DNA as a part of the core DNA does not change at all. We build on the sustained DNA, which has brought the franchise to the current level with the fundamentals, with the so right in place, and build on that with sustainable scale and quality over a period of coming years. Abhijit, I think or hope that answers your question. What Sachindra said, I think, let's on the behalf of entire management team who are here at this moment, and I am, let's say, oldest member in the entire group. Like, on the behalf of promoter shareholder, we assure you all the company's DNA, company's credit underwriting principles, governance sector, those will be topmost priority in Aavas 3.0. We will keep governance as the topmost. Credit quality, culture is remain as the same. What we have seen in last 10 years will be similar in the next Aavas 3.0 journey. Got it. Thank you, Shashyan. Thank you, Sachindra. We wish you and the team the very best for Aavas 3.0. Thank you. Thank you, Abhijit. Thank you. The next question is from the line of Mona Khetan from Dolat Capital. Please go ahead. Yeah. Hi, sir. Good evening. We have seen about 160 bits PLR hike in last fiscal. What I wanted to understand was what percent of AUM has seen, you know, rise in EMI after, you know, you've exhausted the tenor increase. We different point of time, we increased 150 basis points in FY 2023. Right. 90% old book we have seen has an increase in a tenor, because generally our tenor was not so large in our customer segment. There is enough scope where we have increased the tenor. Around 10% sort of customer has got a reprice, their EMI got increased, and they are serving their increased EMI, going forward. If I may try to understand, to what extent the EMI has increased in terms of percent, whatever was the average EMI and to what extent has it increased for these 10% of customers? It depend, I think, it depend ki customer at what rate and what tenor customer is there, basically. Mm-hmm. if it's a customer is a average rate is a 12% odd or 13% odd, his EMI has got increased by around INR 500-INR 1,000 per month. Okay. What would be, say, the average EMI in your case? About INR 10,000 or more? Uh, is it twelve thousand rupees. Okay. Okay. Got it. Around INR 12,000. Got it. Secondly, in your, both your HL lab, as well as the HNU portfolios, incrementally, what are the rates that we are onboarding new customers at? Non-HL, if you look at non-HL, it ranges between 13%-15%. Home loan, we will be around 10.5%-12%, approximately. If I may try to understand, what was this, say, a year back, when you were onboarding customers, especially the HL, if you could just mention. Today it's 10.5%-12%. What was it, say, a year back? I think I mentioned earlier that there is a transition in interest rate rising. Mm-hmm. in period time to time basis. Roughly, we have seen on a different product segment, increasing trend in this journey 50 to 100 basis points, depending upon the product, depending upon the customer geography. Yes, I mentioned earlier also, the rising interest rate takes its own time to pass through the new customer acquisition, basically. Now, that we'll see in the coming 2 quarters more, a better transition will happen. Just to understand it better, the 160 base, this hike, we have not seen a similar hike when it comes to onboarding new customers. Is that a fair understanding? Yeah. Ma'am, the that's natural. That's natural. That's not a advance, that's not a. Mm-hmm. let's say, specific. It's a natural happen in the entire lending business. What they increase in the MCLR and PLR rate, new business transition takes its own time, in every way. Got it. Got it. Thank you. Thank you. That's all from my side. Thank you. Thank you. The next question is from the line of Sanket from Dam Capital. Please go ahead. Yes, sir. My question was on this corporate share. We Sorry to interrupt, sir, but the volume for you is very low. I request you to please speak closer to the mic. Is it better? Yes, this is much better, sir. Thank you. Yeah. My question was on corporate, which used to be like 0.1% of the book this quarter. There's slight increase to say 0.3%, so about more than INR 30 crores something has been increased there. What was the nature of this? I sorry. Actually, we are not able to hear. It's not audible. Can you repeat the question again? I was saying that, in the split that we give retail and corporate as of last quarter was 0.1, and this quarter it has moved up to 0.3. More than about INR 30 crores of increase is there. Just wanted to understand the nature of this loan. It is normal. I think you... It's not in 1 quarter impact. It's a full year basis. Last year we were at a 0.1. This year ending we are at 0.3. In overall basis it is just an INR 20-22 crore increase on this segment. Keeping in the overall our volume and overall AUM basis, it is not that big amount basically. And, in lot of what happens is smaller town, smaller town cities, lot of people is a director of a small company. They take and come a home loan, so that company also come as a co-applicant. Co-applicant and main applicant in our case. The loan, as per the regulatory compliances, the loan get tagged as a corporate, basically. As far as business model is concerned, we are not in the business of, nor is plan to go in the business of a builder lending or let's say large corporate loan lending. We are not. You can maybe check. I am seeing it in Q3 it was 0.1, and in Q4 it has moved to 0.3. Anyways, you can correct that. That is wrong in the last presentation. The other question was maybe on LAF and the pure home loans. This year also on incremental disbursements, 35% of the disbursements were to LAF. Going ahead, maybe, how do we see this mix moving? Can it become 35-65 or we are comfortable keeping it at 30-70s, LAF and pure home loans? We are, as you know, as per our compliance perspective also, we need to be remain between 30-70 or 35-65, in that range. It's very difficult to have a comment on 1%, 2% here and there. Basically, it depend upon business opportunity. It depend upon what we able to assign it to the make available to off it from the balance sheet side basically. Overall basis, we want to be remain between 30-35% non-home loan book or 70 to around book is a home loan book. Okay. 30-35 is 5%. Okay. Okay. Last question was there on provisioning. We are probably the only HFC which has seen, say, increase in 90-plus DPD this year, point to point. But we have been too tight on, say, providing, as a result of which, say, on standard asset we just have about 23 bits of provisioning, and very low provisioning on stage two as well. How do we see the credit cost going ahead, and why, say, some reduction in the prudence on having the provisions on the book? No. I think, point-to-point basis our gross NPA is a lesser than last year. Basically difference is on account of, we as we mentioned in earlier, sometime back, updated to all the investors, all the shareholders, this year we changed like. Till last year we acquired, under sub-GC assets, that asset get classified as asset acquired for sale and not as a loan asset, basically. This year, from April 1st onward, we are not classifying that asset, that loan as a asset acquired for sale, but we are taking as a NPA asset there itself, basically. That's why you see some marginal change in that account. If we exclude that amount, then our gross NPA will fall to 0.70%, basically. That's Apple to Apple comparison of a 2 period. Secondly, on provisioning, I think we are very well covered on the provisioning. We are fully Ind AS compliant. We do historical our assessment or our NPA provisioning, what asset, when asset goes an NPA, how much amount we recovered from that asset, how much time it takes. Accordingly the provision get built in the balance sheet. We are fully covered as far as assets provisioning is concerned. As let's say, one of the data point which let's say I want to share here. In last 12 years, we disbursed almost INR 22,000 crore disbursement. Our total write-off is just INR 25 crore, which is just 11 basis points on write-off. That give us the confidence our provisioning is well covered our NPA assets. Okay. Lastly on the management question that you said, augmenting the management bandwidth, maybe to capture, say, next 10 years growth. At our size, even if we say grow 20%-25% will still be below INR 1 lakh crore. There are many companies which do have one MD and CEO till they reach that size. Maybe one could have a deputy CEO. But as far as the key position is concerned, we have many examples. Maybe that reasoning made a little sense. Any greater understanding on that? We, I think we noted your suggestion and but as a long-term growth, I think management team bandwidth has been, I think, as Sachinder mentioned, CTO, Chief Strategy Officer, CFO and Chief Collection Officer, Chief Business Officer, and one below, two level below, we have 7 to 8 NSM in the business side. We have credit side too. We have number of NCM basically who can underwrite that book. We have, I think, good management bandwidth created for next 10-year growth, which we see in the market. We mentioned, we don't give much forward-looking our numbers, but we see good opportunities there in the market as a low housing loan penetration. We see another growth of housing loan upgrade is happening because of GDP growth and income growth. We see housing upgrade and aspirational house need will also emerge in tier two, tier three towns. That will also help us to our growth, better growth in the coming years. Just to add on to what Ghanshyamji said, I think, from a middle layer management, which is there. I think we have a robust, strong middle layer management. Whereas in business origination we have 43% plus of people on the team side, which is more than 3 years vintage. On credit and risk we have 71% of employees which are 3-year plus vintage. On collections we have 78% employees which are 3-year plus vintage. I think that talks about the depth of management and the strength of management, fitted on the right and strong pillars, so to say. I understand layers below the top guy. But my question was more on the top position. Anyways, yeah, so those were my questions. Thanks a lot, and I wish you all the luck. Thanks. Thanks. Thank you. Ladies and gentlemen, that will be our last question for today. I now hand the conference over to Mr. Sachinder Bhinder, MD and CEO of the company, for the closing comments. Over to you, sir. Thank you all for attending the call. As mentioned last quarter, we will be hosting an investor analyst day on May 24, 2023 in Bombay to give you all a chance to spend time with the broader leadership team. A formal invite will soon follow. We look forward to hosting you all. For any further information, we request you to get in touch with Ghanshyam Gupta in our investor relations team or SGA, our IR advisors, and they would happy to help you. Wish you all the best and God bless you. Thank you. On behalf of Aavas Financiers Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.