Ladies and gentlemen, good day and welcome to Aavas Financiers Limited Q2 FY25 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on date of this call. These statements are not to guarantee the 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, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference call is being recorded. I now hand the conference over to Mr. Rakesh Shinde, Head of Investor Relations at Aavas Financiers Limited. Thank you, and over to you, sir. Thank you. Good evening, everyone. I extend a very warm welcome to all participants. Thank you for participating in the earnings call to discuss the performance of our company for Q2 and H1 FY25. The results and the presentation are available on the stock exchanges as well as on our company website, and I hope everyone had a chance to look at it. With me today, I have the entire management team of Aavas, including Mr. Sachinder Bhinder, MD and CEO, Ghanshyam Rawat, CFO, Ashutosh Atre, CRO, Selvin Uthaman, Chief Business Officer, Surendra Sihag, Chief Collection Officer, Ripu Daman, Chief Credit Officer, Jijy Oommen, Chief Technology Officer, Anshul Bhargava, Chief People Officer, Rajaram Balasubramaniam, Chief Strategy Officer, and Head of Analytics. We will start this call with an opening remark by our MD and CEO, Sachinder Bhinder, followed by CFO, Ghanshyam Rawat, and CRO, Ashutosh Atre. After that, we will start with a Q&A session. With this introduction, I hand over the call to Sachinder. Over to you, Sachinder. Thank you, Rakesh, and good evening, everyone. I'm delighted to welcome you all to our Q2 FY25 earnings call, and thank you for joining the call on the late evening. Hope everyone had a wonderful Diwali. Let me now take you through the key highlights of our performance in Q2 FY25. We delivered a growth of 20% YOY in AUM, reaching INR 184 billion. Along with the stated growth, we ensured best-in-class quality with 1+ DPD below 4% at 3.97% and GNPA of 1.08%. Our net profit for Q2 FY25 stands at INR 1.48 billion, registering a growth of 22% YOY. In terms of business updates, in Q2 FY25, we disbursed INR 12.94 billion. Whereas in H1 FY25, we had disbursed INR 25.05 billion, resulting in a growth of around 8% YOY in H1 FY25. In Q2 FY25, we achieved another milestone in our tech upgrade journey by going live with the loan management system, Oracle Flexcube. The one-time LMS shutdown, coupled with an extended monsoon in several parts of the country had affected the building and construction activity, both of which resulted in lower fresh disbursement and core disbursement. This is one of the fundamental reasons for the muted disbursement in Q2 FY25. However, we are confident of covering up on the disbursement in the second half of the financial year, which is typically a strong period for us. We have already seen green shoots with September and October cumulative disbursement growth of 22% YOY. Our focus is to underwrite quality business with risk-adjusted returns. Our incremental business yields have gone up by 25 basis points across products. We opened five new branches during H1 2025, four branches in our existing states to deepen our reach, and one branch in the new state of Tamil Nadu. We've seen a robust sourcing led by a diversified omnichannel lead generation funnel, including digital CSC, Common Service Centers, e-Mitra, RO, and Mitra, resulting in a better disbursement growth and building a healthy business pipeline for the coming months. Let me give you an update in terms of technology updates. We've implemented bank-level systems with robust regulatory compliance. Our loan management system, Oracle Flexcube, has gone live across branches and is stabilized. Our new lead management system, built in Salesforce, has successfully gone live across branches. This will allow us to integrate seamlessly with the aggregated channels. Our fully integrated systems, leading to better visibility, inter-team collaboration, and seamless customer service, will also play out in the coming months. Technology is playing a key role in the transformation and tech improvement. Our time to sanction has improved to eight days in Q2 FY25. In terms of financial performance for the quarter and half year, our net profit in H1 FY25 grew by 18% YOY to INR 2.74 billion, led by a growth in net interest income, coupled with sharp improvement in operating leverage. Our consistent efforts to optimize costs have resulted in a remarkable improvement in OpEx-to-asset ratios by 40 basis points, from 3.65% in H1 FY24 to 3.25% in H1 FY25. We continue with our guidance of improving cost-to-asset ratio by 20- 30 basis points over the years. Our asset quality continues to be first, with 1+ DPD of less than 4% at 3.97%. As As of September 2024, our GNPA stood at 1.08% in H1 FY25. And our credit costs improved further to 11 basis points in Q2 FY25, from 20 basis points in Q1 FY25. We continue to guide 1+ DPD of less than 5%, a GNPA of less than 1.25%, and a credit cost of below 25 basis points. We are committed to a strong growth trajectory, and our focus on quality business growth and cost optimization will continue to drive our success. I'm confident that with our dedicated team and strategic initiative, we will achieve our goals and deliver our value to our stakeholders. Thank you for the continued support and trust in Aavas. I now hand over the line to our CFO, Ghanshyam Rawat, to discuss the financials in detail. Over to you, Ghanshyam. Thank you, Sachinderji. Good evening, everyone, and have a warm welcome to our earnings call. First, to update on borrowing side, in terms of liability, we are one of the best well-diversified liability franchises. We have always been innovative in exploring new avenues for sourcing, and I'm happy to share that we have successfully raised NCDs, amounting to INR 6.3 billion from IFC in October month. This is the largest debt fund raised by the company till date. This achievement will enable us to channel these funds towards affordable housing and green individual homes, reinforcing our unwavering commitment to sustainable and inclusive development. We are a unique HFC where our tenure of liability is higher than the tenure of assets. We continue to borrow judiciously, raising around INR 25.7 billion at 8.42% in H1 FY25. Total outstanding borrowing as of 30 September 2024 is to debt INR 161 billion. Overall borrowing mix as of 30 September 2024 is 50% from term loan, 25% from assignment and co-lending, 18% from National Housing Bank, and 6% from debt capital market. Lending support continues to remain extremely strong as Aavas evolves. There is access to diversified and cost-effective long-term financing from various lenders. We maintain a strong relationship with development finance institutions. To meet long-term business growth, we have progressed on co-lending target with the PSU Bank. As of 30 September 2024, we maintain sufficient liquidity in the form of cash and cash equivalent and unavailable CC limit of INR 15.1 billion, and documented unavailable sanction limit of INR 4.65 billion. In terms of spread, as of 30 September 2024, an average borrowing cost of 8.15% against an average portfolio yield of 13.04% resulted in a spread of 4.89%. This is a sequential drop in the spread by 11 basis points on account of increasing cost of funds by 7 basis points quarter over quarter, coupled with the yield comparison of 4 basis points quarter over quarter. However, we are passing on the cost of fund increase by raising our BPLR by 25 basis points with effect from October month. This will result in improvement in the yields and recouping spread in coming months. We have 30% of our liability linked to external benchmarks, which will allow us faster repricing of liability in case of rate cut scenarios. Our margin, NIM as a percentage of total assets during Q2 FY25, is 7.78%. Our NIM in absolute terms has increased by 8% year on year in Q2 FY25. In terms of cost, our Opex-to-asset ratio has improved by 29 basis points to 3.18% in Q2 FY25 versus 3.47% in Q2 FY24. However, adjusted for some one-off item cost reversals, there is a 10 basis point year-on-year improvement in Q2 FY25. We are committed to gradually bringing down Opex ratio to below 3%. Credit cost during the quarter stood at 11 basis points in Q2 FY25 versus 18 basis points in Q2 FY24 and 20 basis points in Q1 FY25. In terms of other parameters, ROA has seen improvement of 18 basis points year-on-year to 3.49% and ROE improvement by 77 basis points year-on-year to 14.87% in Q2 FY25. We are well capitalized with a net worth of ₹40.48 billion and CAR at 46.48%. Total number of live accounts stood at 29,000, translating into 15% year-on-year growth. Employee count remains flat year-on-year at 5,761 as of 30 September 2024. Now, I would like to hand over the line to our CRO, Mr. Ashutosh Atre, to discuss asset quality. Hey, Ashutosh. Thank you, Ghanshyam Ji. Good evening, everyone. I'm pleased to share the key portfolio risk parameters with you. Asset quality and provisioning. Aavas is strongly positioned to continue delivering industry-leading asset quality. Our asset quality remains within the guided range with one-day past due below 5% at 3.97% in Q2 FY25, and gross Stage 3 and net Stage 3 under 1.5% stood at 1.08% and 0.78%, respectively. In terms of geography, average one-plus DPD and GNPA in our vintage states remained well below 4% and 1.1%, respectively, whereas other emerging states, one-plus DPD and GNPA remained well below 3.3% and 1%, respectively. Similarly, in terms of ticket size of more than INR 15,000,000, one-plus DPD and GNPA remained well below 4% and 0.8%, whereas in case of ticket size less than INR 15,000,000, one-plus DPD and GNPA remained below 4.5% and 1.25%, respectively. Our total ECL provisioning, including that for COVID-19 impact as well as resolution framework 2.0, stood at INR 946.1 million as of 30 September 2024. With this, I open the floor for Q&A. Thank you. Thank you very much, sir. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on the touch-tone 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 your question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. Our first question is from the line of Renish from ICICI. Please go ahead. Yeah, hi, sir. Congrats on a good set of numbers. Sir, just two things from my side. One, on the spread. For the first time, spread fell below 5%, and it is due to the combination. Right? Asset yield continued to moderate, and cost of funds continued to rise. And this is despite our range-bound assessment of around INR 1,200 crore to INR 1,300 crore from past quarter except Q4. So, sir, what is happening on the asset yield side? Okay, on cost of borrowing, we all can understand the asset commitments are still elevated, and banks are looking to pass on. But we just need to understand what is happening on the asset yield side, specifically, because disbursement is also range-bound. Yeah, thanks, Renish. From a perspective of, as you rightly articulated, in the cost of funds, I think there is an increase. I think if you look at the last two years, our disbursement yields compared to the yield had been lower than the overall AUM yield. So, in order to cover up that, we are trying to push that, but it is taking a lag time. But our endeavor, compared to the last H1 to the current H1, we've increased the disbursement yield by 25%. But since I have a lag of the last couple of years, which was lower than my disbursement yield, lower than my yield, it is taking time to really cover up. However, as I said, our endeavor continues to increase the disbursement yield. And that critical focus, as we've been speaking across, is the focus on the lower ticket side where we have risk-adjusted returns and self-construction individual houses s o that's where we have guided. Our endeavor with that will continue to be in the range-bound of around 4.8% if the rate cuts don't happen, 4.8%-5% in that range-bound as it is at the time as we speak. Okay, so 4.8%-5%, let's say it would be FY25 or slightly near-term? Yeah, FY25 for the current one. And as we see the trades picking up, the cost of funds actually coming down, we see the trajectory actually moving up, actually. So there's a conscious effort, as I've been talking about on every call, that efforts to really increase the disbursement yield on a quarter-on-quarter basis a nd we've seen the green shoots. It is taking time for us to really cover up, but our endeavor is to see that over quarters. Got it. Would you like to share the disbursement yield number? I mean, given the blended yield at 13% and that too despite the 30% live book. We just wanted to get a sense, whether internally, how you guys think about it with 30% live book, blended yield at 13%? Renish, from that perspective, currently, it is lower by around 30 basis points as we speak. And as you would really look at it, the previous year, it was 55 basis points lower than the yield. No worries. I didn't understand this piece. Please repeat. The current yield stands at 13.04%. The current disbursement yield of the H1 is 30 basis points lower than the yield. The previous year, it was 50 basis points lower. Got it. Got it. Got it. And secondly, again, now on the growth side, right? Let's say in Q1, we were sort of guiding at 21%-23% kind of a growth rate. Given the muted first half, and if I calculate the disbursement rate to achieve the, let's say, the desired growth, these numbers worked out to be some INR 4,000 crore in the second half. So, naturally, which means we'll miss the guidance. So, keeping in mind that scenario, what do you guys think the exit growth for FY25 and maybe in 2026? So, Renish, as I've guided that September and October put together, we had a 22% YOY growth. H2 conviction remains strong for us. So, we continue our guidance for the current year of 20% plus. Okay. That's it from my side, sir. Thank you, and that's it. Thanks. Thanks, Renish. Thank you. Our next question is from the line of Shweta from Elara. Please go ahead. Thank you, sir, for the opportunity and congratulations on a good quarter. So, I have a couple of questions. One is on the product category. So, if I look year-on-year basis, LAP has declined steeply, and so has MSME grown sharply. So, is this by demand design? or increased regulatory oversight on LAP-less top-up loans? My second question is, our foray in Tamil Nadu s o, if you look at Tamil Nadu geography, there is pretty intense competition out there y ou have Aptus and Chola and many players, especially on the LAP front. So, how distinctly Aavas will be positioning itself versus the intense competitive intensity there? And just one data-keeping question w hat is the rate differential between LAP, MSME versus home loans and your BTL? Thank you. Yeah, sir, I think thanks, Shweta. You have three questions t he first question is about MSME i think we are a unique HSC, which does, because we have been conventionally underwriting self-employed non-professional, we were able to write MSME. These are micro MSME, which are backed by self-occupied residential properties. The best part about that is that this actually helps us to do a value addition to the working capital requirements of the self-employed non-professional s o, it is going to finally an economic benefit use for that, and we do it with a Udyam, which is helpful for us. And this, hopefully, really helps us for the securitization piece because it qualifies as a priority sector lending for the banks. And this has been the last four to five years kind of our focus area for the franchise. That's one. Secondly, your question on Tamil Nadu, if you look at the state, we've opened at Hosur. So, in line with our contiguous geographic expansion strategy, we look at immediate ones near the geographies which we are operating. Karnataka, we've been operating for the last four years. Hosur happens to be one of the influx for us to understand Karnataka, Tamil Nadu, and Telangana AP side s o, I think from that perspective, it's just a starting point for understanding and going into those regions. Again, on the kind of competition there, I think we are uniquely poised in the segments which we serve, in unserved, underserved, and partially banked. The classic case is Karnataka, where we do continue to see a good amount of growth, and that gives us a good amount of confidence to really start across in the southern states. Because of the kind of availability of the unique SEMP-based and self-construction individual houses. So, that is where our focus is. So, this is in line with our contiguous geographic expansion strategy, and this helps us to navigate in the southern region, which is there. And if you look at it, there are 372 branches across 14 states of Tamil Nadu w e've not been present in South, so that will help us in the coming months to grow. So, that is the second part of the question. On the yield side, the differential between HL and the non-MSL portion is around 200-250 basis points t hat's the differential between the housing loan and non-housing loan portfolio. Hope that answers. And the BT number? Yeah, yeah, the fourth, sorry. The fourth question of the BT out. BT out, we are at an arrangement of 5.2%, and I think the BT retention model with us really works across analytics and the integrated model which Aavas has developed over a period of time on predicting the BT out really helps us to hold the customers as a part of retention. And since it is what I would really say is direct source business, it also really helps us to hold the customers back into our foray. So, there's a transitioning of movement of customers is restricted. So, we currently are at 5.2% annualized. That's helpful, sir. Thank you so much. Thanks, Shweta. Thank you. Our next question is from the line of Abhijit Tibrewal from Motilal Oswal. Please go ahead. Yeah, good evening, everyone, and thank you for taking my question. Shinde sir, again, kind of elaborating on the spreads compression that we've seen is partly explained in the prior question. But just trying to understand, our earlier long-term guidance used to be spreads of 5%. For this year, we guided for 4.8%-5%. Now, I mean, with our declining interest rate cycle ahead, I mean, although transitory, but I mean, this spread could be in further pressure going ahead. Plus, if we recall, sometime in March, we had taken a retail PLR increase of 25 basis points. So, if you look at our yields, that has not really kind of translated into AUM or portfolio yields. From that level, our yields are actually down. So, now, if we are going to take another 25 basis points increase in retail PLR, I mean, what is the confidence that we have with regards to this kind of translating into improvement in portfolio yields is something I wanted to understand. I think, Abhijit, I'll answer the first question, and then as we really talk about the cost of funds perspective. I think, as I told earlier, if you look at our disbursement yields versus the yields, that was a last couple of years' track. Even with the increased RPLR, we've not been able to cover up that. There's a conscious effort to really put that across by increasing the disbursement yield. But as you would rightly appreciate, it takes its own time. Secondly, on the RPLR increase, 35% of our book continues to be on the fixed rate s o, that translation is only impacted by a little bit of flaw, and again, as I said, that last two years has been more on the lower disbursement yields. That is impacted. The second part is very important i f you look at the trajectory of Aavas over the last couple of years. The cost of funds in the last two years and I'll have Ghanshyam really talk about the cost of fund trajectory and why is that impacted from a level of 4.59% or 4.69% to 5.86%, that is where Aavas is. I think the cost of fund is one factor, which is. One of the factors which has led to the spread compression b ut as I said, even at 4.89%, we continue to guide on 5% plus minus 20 for the current year. On the cost of funds, I'll have Ghanshyam really talk about the one. And in case the rate cut impact happens, we have 30% of the liabilities which are on repo base. We see a cost of fund decrease and resulting in the increase in the spread over two years. Yeah. Abhijit, more or less now, cost of borrowing is stabilizing at this level, basically. Like recently, we raised IFC money, which just came at a six-month MIBOR plus 148 basis point, which is a sub 8% in our cost of borrowing. So, it's more or less cost of borrowing getting stabilized. And on the yield side, as Shinde mentioned, we have in the last two quarters, we have seen on a continuous basis, 25 basis point improvement versus the last year, basically. Another 25%, 25 basis point, we are making efforts in the coming quarters s o, that will lead to almost new business yield versus my AUM yield, basically. So, whatever drag we have seen in the last couple of quarters, that will be minimized in the coming quarters, basically. So, both these two items, we will reach a recoup closer to back to 5% spread. Obviously, we are expecting now, maybe it's difficult to predict anything, but whenever rate downward starts, so it will have a positive impact on the spread side, which we have seen in an earlier phase also. Got it, Shinde. Just one follow-up question to that. Shinde sir, I'm just thinking aloud p lease correct me if I'm wrong. While our BT out at 5.2% annualized is indeed very good. I mean, in the last one year or so, given that our disbursement engine has not fired as what we would have liked, given that we are retaining customers, and which is why BT out is also reflecting in lower BT outs. Is that also one of the reasons why, I mean, our yields have been under pressure? I'm just kind of trying to understand. When we look at you at your size and scale and compare it with a whole host of smaller HFCs today, we have not seen that yield pressure for them. Is it about your size and scale, which is a little bit of a problem? or how should we interpret that? I'll address the question in two parts f irst part on the thing and second part on Ghanshyam due to the model which is there i think from the perspective of the total at 5.2%, there is definitely a yield compression which comes to at around 15 basis points on an annualized basis. As we speak on H1, we had about INR 400 crores worth of retention to the entire staff, actually. So, I think there is a yield compression to be in order to hold that. On the second part of it, how Aavas has really navigated that at that stage and how do we maintain that, I'll have Ravatji really talk about the tech piece on which we actually help us to retain the customer, predicting the part where our AI really model plays an important role. Thank you, Shinde. Abhijit, it is always very important to retain your performing customers, basically. And we always made long back our predictive model that has helped us in our journey despite inaffordable housing piece where a lot of customers come first time to us, basically. And BT out is always maintained less than 6% in last, I think, so many years, basically. And I want to add only one more thing about what Shinde said. If we retain the customers, obviously, we retain only performing customers, basically. And even if we reduce some rate on those customers, but in the year one itself, we recover the fee amount, which is equivalent to take care of our one-year loss, basically. So, it's a win-win situation for us because we also brought down your cost of borrowing. When we lend it to those customers, cost of borrowing used to be in double digit, basically n ow, we have cost borrowing has come down to 8%, basically. So, it always retains to that customer good strategy for us, basically. And we are not losing much out of those retaining those customers. And one more data point, I think, whosoever customer goes out, we also do assessment on those customers, basically, how they are performing in the market. You will surprise to see those performance, those customers are much poorer than what we have customers inside our company, basically. So, that shows us our model is performing very well for us. Got it. Got it, Vensham. Thank you so much for answering my questions i wish you and your team the very best. Thank you. Thanks, Abhijit. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants, please limit your questions to two per participant. Our next question is from the line of Kushan Parikh from Morgan Stanley. Please go ahead. Thank you for taking my question. I actually have two questions. One is around the operating cost. Basically, we've seen a considerable improvement in this quarter, and obviously, we guide for 20%-30% improvement in OpEx to assets. Just wanted to, I mean, if you could elaborate how? have we driven this improvement on a quarter-on-quarter basis, especially on the employee expense side, which has had a sequential drop as well in employee a nd how should we? think about OpEx going forward in context of the Q2, as in the 2Q improvement that we have seen? Should I also put forward my second question? Sorry? Yeah, yeah, yeah, yeah. Sure. So, the second question is around the credit cost. So, we guide for less than 25 basis points credit cost over a longer period of time. Last two, three quarters, we've had a couple of quarters with lower credit cost around 11 odd basis points. Just wanted to understand, obviously, this would be the outcome of the ECL module. Are we seeing better asset quality outcomes than what we had modeled in the ECL, and hence the provisioning requirement is reducing, or is there an overlay component that was present earlier and which is not there now? I mean, wanted to understand the reasons for the different credit cost as well. On the OpEx side. I mean, how sustainable that is going forward? I'll answer the first question. Second question, I'll have Ravaji take it. On the operating leverage really pumping in on Opex to asset ratio, we've seen a sequential reduction on H1 by 40 basis points t hat's around 3.25%. Compared to the previous year, it was 3.65%. If you look at last three years, employee strength has been constant, actually, at a same level. I think that is where the one which really kicks in. Secondly, having invested in the technology, we are seeing now the green shoot as earlier guided in our conference calls and quarterly calls w e said that we'll start seeing the green shoots really coming across from the tech implementation. The operating leverage has started really kicking in. As we go in the quarters ahead, we expect really to what are guided range bound of coming to below 3%. Now, again, on this, we really look at it very granularly on the cost reduction. If you adjust by the ESOP cost reversal, we continue to stand at 3.37, even if curved with that, so one is we remove the ESOP cost reversal because, which is one-time kind of thing, but the rest of them have really kicked in because of the operating leverage really coming across from the way we actually manage our staff, and wherein OpEx has really played an important role. And we will continue to do that in the coming time. As we guided that, I think a couple of quarters, we will be sure about that this is sustainable, this is consistent, and we continue our endeavor as a team to really build on our digital initiatives, our initiatives on digital collections, our initiative on digital sourcing. And after the systems going live, we'll have reduced cost of acquisition, reduced cost of collections, which really would kick in in the coming times. On the second part of the credit cost being low, I'll have Rawatji really talk about in detail. Before we move to that, just one question. If you could quantify the ESOP cost reversal that we had this quarter? Yeah. So, as I said, the normal case scenario, we were at 3.25%. If the ESOP cost, if I don't include that, we would have been at 3.37%. Understood. Okay. Thank you. As you know, Aavas is always a credit-conscious company since beginning. So, we have invested in underwriting, technical, legal, RCU. And back to that, on top of that, we have one of the best collection teams in the company, basically s o, top of that, we always believe that our cost of credit cost will not be more than 20 basis point i f you see from COVID, from demonetization time, from RERA, all across the time, we are not more than 20 basis point. Yet, after the COVID, everything, I think hopefully the quality got improved quarter over quarter. We're consistently maintaining one day past due less than 5%, and NPA is around 1%. All these goes into model. And as per the ECL model, our cost is where we are today, basically. It is continuously will be maintained less than 20 basis point. Right now, we are just between 11 to 12 basis points. The reversal is coming because of that. I don't know what Ravaji said i think the fundamental principle and the DNA of the company is the sound risk management principle, which is risk-adjusted returns. The sound underwriting principles laid across on the framework of putting across self-constructed individual house to be funded where it is occupied, where the LTVs are there s o, the end usage is also there. I think a couple of factors which have been there, which become the bedrock of really building a strong fundamental franchise, which works on sound risk management principles, a sound understanding of risk-adjusted returns. Now, coupled with the digital initiatives and the tech initiatives, which will really help to tread the path as we've crossed the 2.5 lakh plus of customer base. And secondly, having a repository and understanding of having underwritten over the last 12- 14 years, as we speak, about 4 lakh plus of customers, I think we've found across based on very well diversified understanding at a macro and a micro level of what to underwrite and what to let it go. So, I think as we traverse the journey, the guardrails are very clear t he guardrails are good enough that we don't slip, but not strict enough that we don't traverse the journey s o, I think from the perspective, we would continue to traverse a path which is risk-adjusted return, risk management control, and sound underwriting practices, coupled with the digital and the new age AI-based thing, which will help on our kind of stuff which we have been traversing. Thank you. Our next question is from the line of Raghav Garg from Ambit Capital. Please go ahead. Hi, good evening. Thanks for the opportunity. Sir, you mentioned about 22% disbursement growth for September and October. Is that right? And is that the number that you expect to sort of achieve or deliver in the second half, or will it be higher? So, Raghav, thanks, Raghav. Raghav, as I spoke that September and October cumulative, we are at 22% of disbursement growth as we speak. We've guided that for the current year on an AUM basis, we would be 20% plus. Conventionally, H2 has been stronger for Aavas, and as we laid out, I think two principal factors for an elongated long monsoon in the regions which we work in the western and the northern parts of India because we are a self-construction finance company which funds self-constructed homes. That's one. Secondly, a part of regulatory change of the way you treat the disbursements, I think both cumulative put together a nd the third is an element shutdown because of the month of October when we went. I think it resulted in that b ut we are confident with what we've seen in September and October to continue w e continue to guide with the 20% plus for the current year, the AUM growth. We are confident of traversing the journey for the current year. Sir, how many employees did you have in this quarter? I heard you said that your employee count has been flat. 5761 is the exit employee count. And Raghav, this has been there across for the last three years, if I were to really put across t here's hardly a growth about 30-40 absolute employees over a period of last one year. I think this is aided by, you see, our operating leverage really coming across i 'll give you an example of saying with the kind of increase in the AUM, increase in the number of accounts, we hardly had any addition in the collections where the digital initiatives or digital collections, no-touch collections, which are there, which really helped us to really be doing a touch-free kind of stuff which is there. I think the second leverage which we'd really like to kick in after the SFDC, the loan origination system, the lead management system really going live, we'll start seeing that really sucking into the final operational efficiencies really kicking in. Sir, what's the off-roll count as of September? The total count is 5761, Raghav. Sir, that's on-role, right? I'm asking off-role, because that's something that may not be in your file, but. It's around 1800 employees. Okay, 1800 off-role and another question. See, when I look at your intangibles, right? They're at about 47-48 crores. That has increased by about 5.5 crores in the last six months. I just wanted to understand. This number is up 13% YTD. What is the nature of this expense? Raghav, can you come back again? I think we lost your connection. We heard 47 w hat was that? Can you reframe the question? Intangibles on your balance sheet, they are up about 13% YTD. They're standing at about INR 47-INR 48 crore. None of the other affordable HFCs have such a number. I just wanted to understand what kind of expense is this which is being capitalized? Where exactly are you spending, or where exactly have you spent this money to the extent of INR 48 crore? Yeah. Raghav, in last two quarters, and including this quarter, you mentioned that we are doing a tech transformation, so LOS, LMS, EGL, and data warehouse, technology transformations, along with the lead management solution, basically s ome of them have gone live, which got capitalized. Some of them have just gone live, but the hypercare period is their own. So, that majorly is towards IT spend, which we have invested for IT capitalization, basically. Technology access? So, but I believe. Yeah, please. Sir, what I understand from the all-new tech investments that the affordable HSPs do, what I understand is that it is mostly subscription-based, right? I mean, you pay a subscription fee to your technology partner, which is Salesforce or some other. And therefore, given that, shouldn't it be expensed through the P&L? No, no, no, no. It's exact. When projects get implemented, till the project go live, implementation partner expenses, projects, they always do sit with you, plan your, develop your model for you, and then made implement i t takes almost 12 months' time, basically, to make program develop, then allow this. Yes, once it has gone live, then it becomes a subscription model, basically l ike Salesforce is now a subscription model. Because it has gone live, and we have capitalized the INR 12 crore which we invested in the Salesforce loan origination system, basically. Similarly, LMS now is going live. Their fees have been capitalized, then it will go on a subscription model from January onward, basically. Understood. Yeah. Sure, sir. That's all from my side. We are doing around, put together what we have already capitalized, and which is in the pipeline, will be around INR 60 crore total amount we'll capitalize in the IT projects, which will be amortized in the next seven years. Understood. Sir, I have one more question. Can I ask? Yeah, please. Yeah, please. Sir, your repayment rates have increased in this quarter, but I heard you saying that the BT rate is still at 5.2%, which is same as Q1. So, why is it that the repayment rates have increased in this quarter? No, I think it is a steady state. We don't see any spike, any change in overall rate. BT out is in the range of 1.2-1.25% every quarter. So, in the first half, we have seen already 5%. And put together, full year basis, it will be around 17-18%, which will have three components o ne component will be the 5-6% BT out, and around 6% customer pay out of his own pocket as a monthly EMI 6% generally customer pay out of whenever they have surplus money, they can pay back to me part payment also. Until now, we are around 16%, which is almost 2% better than what we forecast in our annual assumptions, basically. Understood, sir. That's very helpful. Thank you. Please take 18% in overall basis. We are at around 16% as you speak. Thank you. Thank you. Thanks. Our next question is from the line of Yash from Citigroup. Please go ahead. Hi, sir. Thanks for the opportunity. Sir, just wanted to get your thoughts on incremental asset quality in the month of October, how's the collection move? And also, sir, while the 1+ DPD continues to be below the guided range, I just seen some increase of 30 basis points. And so, any thoughts there? I think if you look at the, as we spoke, I think you had an extended rainfall y ou had an extended run. You had the rally which had came after the festival season i think there was some part of which was there. But as we speak, in the month of October, we were from 3.97%, we were at around 3.84%. There is a sequential decline on month-on basis w e have recouped what was being left out, and this was like an elongated period of time which is there. We continue our guidance of less than 5%. As we speak, from a 3.97%, we are already at an October of a 3.84%. Got it. And just to follow up on that, was there any discernible increase in the less than 1.5 million segment, or it was broadly stable increase across both? It was broadly stable t here's nothing, anything which is incrementally or differential which would really give any difference as far as our understanding. And our number is really sure. Yeah. Yeah, I think we track, I think as you will really appreciate, we track it on a sequential absolute basis, actually, so to say, and across the project segment s o, we've not seen anything i think we've been cautiously optimistic in the approach of our underwriting perspective, really to build on the quality which we deliver. And as earlier said, we continue to guide at a 5% or less 1+ DPD. Got it, sir. Thank you. Thank you. Our next question is from the line of Shreepal Doshi from Equirus. Please go ahead. Hi, sir. Thank you for giving me the opportunity. So, my question was on liability side a ny fresh sanctions from the NHB front incrementally? Yeah. We already applied to National Housing Bank for this limit because generally NHB accepts the limit once we publish our results and upload to BSE and NSE websites. So, it's in their process, basically. Okay. So, for this year, we are yet to receive any of this? Yes. Currently, refinance limit yet to be sanctioned by them. Okay. Okay. Got it. And just on the asset quality front, I mean, if you look at the mortgage segment, there the NPA increase has been pretty sharp, like in the last, say, four, five quarters. So, anything that you could sort of explain why is it so? You see, a non-home loan majorly goes towards a self-employed. And secondly, we overall see that this adjusted return, basically, out of we make out of that book, basically. This book is already we have given a loan almost 250-300 basis points at a higher rate of interest. But ultimate loss we are not seeing in the last couple of years, basically. Recovery pattern is the same, whether it is a home loan or it is a non-home loan, basically. In both the cases, security is a residential self-occupied housing property, basically. So, yes, NPA is more, but ultimately loss is similar. Similar in both the assets, basically. Second thing, this asset is also now reached the maturity because non-home loan, which is we started four and a half, five years back, basically. Now this asset is reached the maturity level now, basically. Home loan is a last 10-year book we have on the maturity term, basically. So, but we are confident. We We don't see any sort of risk around the NPA numbers on both the product, whether it's a home loan or non-home loan. Got it. Sir, just last question, just squeezing here. In terms of product mix, will the new book mix remain at where it is, or will there be some change in the mix with respect to actually? It is almost at optimum level i t will remain in the same range, maybe 3%-5% here and there, but it will be more or less in the same range. Given the RBI norms for NBFC, HFC, I think the 75% we are already there, right, in terms of housing loans. So. 60%. I think we are fully compliant as per NHB and regulatory norms on the home loan and non-home loan components, and we don't see any change. We don't see any change to be done at our end. Got it. Got it. Thank you and good luck for the next quarter, sir. Thank you. Thank you. Thank you. Our next question is from the line of Mona Khetan from Dolat Capital. Please go ahead. Yeah. Hi, sir. Good evening. I have a question on the OpEx grant. You mentioned about the ESOP cost reversal, which has lowered the cost to assets over the last two quarters. So, is this one-off fully accounted for? or we will see some more benefits from ESOP cost reversal coming in in the subsequent quarters instead? No, ESOP cost reversal happened in the only quarter two. Overall saving we see on H1 to H1 level is 40 basis points. Even if we exclude this ESOP also, then we will have a 30 basis points better OPEX improvement on H1 to H1. It is not accounting of what has been left out, what has been provided i t remains accounting of point of time, basically. Every quarter, reassessment of long-term incentive plan happens, and on that basis, whatever is available, benefit has been taken in the books of accounts. Because ultimately, it's a non-cash item. We'll appreciate it. Got it. So, for this fiscal, is it fair to say that the improvement in OpEx to assets will be higher than what we are sort of guiding for of 20-25 basis points given this 30 basis points improvement, even ex of the ESOP impact? I think in the beginning of the year, we guided 25-30 basis points annual saving after the tech transformation for a couple of years till we reached at a 3% Opex level. Full year guidance, almost we have achieved in the H1. And as a management, efforts are there to maintain this 30 basis points by the year end. Got it, sir. Thank you so much. That's from my side. All the best. Thank you. Ladies and gentlemen, that was our last question for today. I would now like to hand the conference over to Mr. Sachinder Bhinder, MD and CEO of Aavas Financiers Limited, for closing comments. Thanks. As we conclude today's earnings call, I want to express my heartfelt gratitude to each one of you for your participation and engagement. The dedication of our team, the trust of our shareholders, and the loyalty of customers has been instrumental in our growth. We aspire to reach a milestone of one trillion in assets under management by 2033 and broaden our horizons as a pan-India player. I express my deepest gratitude to all our regulators and stakeholders whose constant faith and support have been the wind beneath our wings. We remain optimistic about the future and are confident that our strategic initiatives will continue to drive sustainable growth and create shareholder value. If you have any further questions or require additional information, please feel free to reach out to Mr. Rakesh Shinde, our Head of Investor Relations. Thank you and have a wonderful year ahead. God bless. Thank you. Thank you, everyone. Thank you. On behalf of Aavas Financiers Limited, we conclude this conference. Thank you for joining us, and you may now disconnect your lines.