Ladies and gentlemen, good day and welcome to the Bajaj Housing Finance Limited Q4 FY 2025 earnings conference call. This call will be recorded and the recording will be made public by the company pursuant to its regulatory obligations. Certain personal information such as your name and organization may be asked during the call. If you do not wish to disclose, please immediately discontinue this call. Ladies and gentlemen, please note this call is not for media representatives or Bank of America investment bankers or commercial bankers including corporate and commercial FX. All such individuals are instructed to disconnect now. A replay will be available for Bank of America, investment bankers, and commercial bankers including corporate and commercial FX. The replay is not available to the media. As a reminder, all participant lines will remain 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 the operator by pressing star then zero on your touch-tone telephone. I now hand the conference over to Mr. Anuj Singla. Thank you, and o ver to you, sir. Thank you, Ryan. Good evening everyone. This is Anuj Singla from Bank of America Securities. Thank you very much for joining us for the Bajaj Housing Finance Earnings Call to discuss Quarter 4 and Full Year 2025 earnings. To discuss the earnings, I'm pleased to welcome Mr. Atul Jain, Managing Director, Mr. Gaurav Kalani, CFO, and they are joined by other senior members of the management team. Thank you very much Atul sir for giving us the opportunity to host you. I now invite Mr. Atul Jain for his opening remarks, post which we will open the floor for Q and A. With that, over to you, sir. Thank you, Anuj and BofA team, for hosting us. A very good evening to those who are in India joining this call, and good morning, depending upon the geography, if someone is joining from the Western hemisphere. I have with me Gaurav, our CFO, and Jasminder, our President, Home Loans, Vipin, EVP CRE, Niraj, Risk Officer, Dushyant, our Developer Construction Finance Head, and Pawan, heading our Near Prime and Affordable SBU. I'll take 15 minutes-20 minutes to cover the important sections of the Investor deck which is now uploaded on the website as well as on the stock exchange and later on leave the balance time for utilizing for question- and-answer session. Quickly going to panel number three on the presentation. Overall good quarter across metrics: AUM, asset quality, and profit. As of 31st March 2025, AUM has stood at INR 114,684 crore growing 26% while we have maintained asset quality with GNPA of 0.29% and NNPA at 0.11% respectively. Q4 FY 2025 PAT has grown by 54% and annualized ROA was steady at 2.4%. OpEx trajectory continued to improve from 27.1% OpEx to NTI in Q4 FY 2024 to 21.7% in Q4 FY 2025. This for Q4 overall yearly numbers also we will talk about as we go forward. We are currently present across 174 locations through a network of 216 branches. Annualized ROE for the quarter was 12.1% while annualized credit cost was 0.12%. Capital adequacy has remained very strong supported by capital raise during the year and CAR was just below 28.25% and PBC ratio, which is a critical metric from a HFC point of view, which is a 60% and a 50% requirement f rom the regulatory point of view, w e were 63.28%, which was well above the regulatory requirement of 60% as of 31st March 2025. I'll move to panel number four. I've spoken about the overall AUM growth on the previous panel, in terms of the product level, the growth was decent across quarters. Home Loans grew by 22%, LAP by 28%, LRD by 24%, and Developer Finance by 49%. The company total added INR 6,370 crore of AUM during the quarter as against INR 5,442 crore in Q4 FY 2024. Overall portfolio mix also remained well diversified with some movement between the products. HL stands at 56.2%, LAP at 10.7%, LRD at 19.1% and Developer Finance at 12.5%. Company disbursed INR 14,254 crore during the quarter as against INR 11,393 crore in Q4 FY 2024 so overall disbursements grew by 25% on YoY basis for the quarter. As we had updated in the last quarter regarding launch of our SBU of Near Prime and Affordable Housing, the business is growing steadily and is in line with our expectations to meet the future goals of the business. During the quarter, t he company has also strengthened its management team to support future growth. We will continue to invest in the coming year in SBU which is for Near Prime and Affordable Housing and also non top six markets to generate future growth for the company. I'm jumping to the next panel. Cost of funds remained flat sequentially at 7.9% for Q4 FY 2024. Our well- diversified borrowing mix has further improved with mix of money market instruments at 49% followed by bank borrowing at 41% and NHB refinance at 10%. OpEx to NTI, as called out earlier, improved from 27.1% in Q4 FY 2024 to 21.7% in Q4 FY 2025 and on a full year dropped from 24% in FY 2024 to 20.8% in FY 2025. Company also continues to leverage technology for digitalizing various processes which is now reflecting from our increasing penetration of new initiatives like e-a greement. We have crossed on 93% penetration of our entire customer base whom we are onboarding n ew. And online customer onboarding journey is also crossing 80% penetration in month of March. Gross spread was marginally lower at 1.8% from 1.9% in Q3 FY 2025 owing to reduction in yield because of the market competitive pressure while the net interest margin was flat on sequential basis at 4%. Coming to panel number six, overall asset quality has remained healthy during the quarter. GNPA was in line with previous quarter at 0.29%. NNPA improved on sequential basis from 0.13% to 0.11%. Credit costs have stood at 0.12% in Q4 FY 2025. This improved from 0.18% in Q4 FY 2024. Quarterly profit has grown by 54% from INR 381 crore to INR 587 crore. The company has revaluated its income tax position while the PBT has grown by 48% while PAT has grown by 54% because of a one-time tax position reevaluation by the company brought on deductibility of a certain expenditure. Accordingly, the company has reversed INR 24.44 crore tax expense from the previous year and reduced FY 2025 provision by close to INR 10 crore. Thus, there has been a total tax reduction of INR 34 crore in the Q4 FY 2025. INR 10 crore out of it has been pertaining to FY 2025 while INR 24 crore is pertaining to the previous year's expense. Annualized ROA for the quarter was in line sequentially at 2.4% and it has improved by 40 basis points against an ROA of 2% in Q4 FY 2024. Annualized ROA for the quarter was 12.1% against a 12.7% in Q4 FY 2024 owing to the impact of capital raise during the year. Absolute net worth of the company stood at INR 19,932 crore as of 31st March 25th, just a tad below INR 20,000 crore. I'm moving to panel number 15 which is a medium term guidance. There is no change in the medium term guidance on the key financial indicators what we had guided from last quarter's investor presentation. Quickly moving to panel number 17 which is a quarterly financial snapshot as well as a yearly financial snapshot. We have already discussed about quarterly financial for full year FY 2025 net total income has grown by 23% and pre- provisioning operating profit grew by 28% y ear- on- year. P rofit before tax was up 28% and PAT grew by 25%. Full year credit cost has been at 0.09% and ROA stood at 2.4% and ROE at 13.4%. Moving to panel number 19, portfolio yield has come down to 9.7% in Q4 FY 2025 witnessing a 10 basis points reduction sequentially and 20 basis points reduction on YoY basis while cost of funds was flat at 7.9% sequentially and 10 basis points higher on YoY basis. Accordingly, gross spread reduced by 10 basis points sequentially at 1.8% owing to portfolio yield reduction and 20 basis points on YoY basis. OpEx to NTI already improved at 21.7% in Q4 FY 2025 while it has inched up on sequential basis due to investment in new business and management team strengthening as called out in earlier panel. In terms of asset quality, GNPA flat on the sequential basis and I have already covered credit cost, ROA, and ROE on the previous panel. I'll move to panel number 20. Just a reiteration of our well-diversified borrowing relationships, we have borrowing relationship across 17 banks. NCD share has inched up by 2.3% sequentially. Coming to panel number 23, portfolio mix remains within our guided range with slight increment in LAP and developer financing on sequential basis. As of 31st March, HL has stood at 56.2%, LAP at 10.7%, and LRD at 19.1% with Construction Finance at 12.5%. Moving to panel number 28. Stage one assets have improved by 5 basis points to 99.39% as of March 2025. Stage two assets have witnessed reduction of 5 basis points. There is an intra movement from stage two to stage one in that sense from 0.37% in Q3 FY 2025 to 0.32% in Q4 FY 2025, while provisioning coverage has improved from 55% in Q3 FY 2025 to 60.3% in Q4 FY 2025. I'm jumping to panel number 30, which is a product-wise provisioning coverage. It remains healthy across products. Coming to product wise GNPA, there is a slight movement of 1 basis point in Home Loans GNPA to 0.34%, LAP has improved by 9 basis points to 0.65%, LRD continues to have nil GNPA, and Developer Finance GNPA has reduced by 4 basis points to 0.05%. NNPA has reduced across products because of increase in the provisioning coverage. Home Loans NNPA has improved by 3 basis points, LAP by 7 basis points, and DF has improved by 1 basis point, t hereby delivering the overall NNPA at 0.11%. Now, that was all what I would have wanted to talk about on the important figures from the deck. Happy to take questions. Me and the management team are here to provide answers to the questions from the team. Thank you, ladies and gentlemen, we will now begin the question- and- answer session. If you would like to ask a question, please press star and one on your touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use their handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Piran Engineer from CLSA. Please go ahead. Yeah, hi team. Congratulations on your results. Just a couple of questions. Firstly, have we cut our home loan rates after the 50 basis points repo rate cut? And is it only on incremental or also on the back book? Okay, thanks. Yes, we have on the acquisition, of course, because we are in a competitive industry, we have to cut as in line with what competition is. To the second question on the portfolio, yes, the benefit has been passed on in the acquisition. While there may be some differential on the repo book. The repo book asset book, we have to pass on in line with the repo, non-repo book. While there is a differential, there is a benefit which has been passed on. No, I mean could you quantify it? Is it 50 basis points o nly? Fifty basis points is the repo, so the repo book, it's a full 50 basis points which is passed on, while on the non-repo book there is a differential, if you can say, in the range of 10 basis point-15 basis points which has been passed on. That don't fear will lead to BT out because the banks would have anyway passed on 50 basis points? Now the banks would pass on 50 basis points over a period of next three months. This 15 basis points what we are talking about, we are talking about till now which is effectively the February cut conversation we are doing. April cut conversations will take the view in the month of beginning May. Even the bank repo pass does not happen immediately. It happens over a period of three months. The April cut pass on has not happened in terms of i n our case the repo book is repriceable as and when. That's why the repo cut entire 50 basis points is passed on. While in case of internal FRR, there is a decision which ALCO will take in the April end for the May cut there will be some incremental pass on which will happen on the other. Fifteen basis points is not the final number. Fifteen, this is fifteen. This is representing a February number. [crosstalk] Yeah. Okay. Even on the incremental loans, it's fair to say that how much you've cut your PLR, that much is the incremental yield cut at least for the non repo- linked loans. No, it can be higher as well or lower as well because there is a spread adjustment also in incremental book which can happen. Not on the past book, there is no spread adjustment, but in incremental book this is the market pricing. You cut your PLR, but there can be a plus and a minus in the margin side also depending on what is the market pricing at that point of time. Understood? Understood. This is very clear. Also, just a follow up on this would be what percentage of your Home Loans are repo- linked versus say PLR linked on book? Our book is close to INR 13,000- odd crore which is repo- linked out of INR 64,000- odd crore. INR 13,500 crore is a repo- linked book against a INR 64,000-odd crore of Home Loans. Okay, understood. Secondly, just for Gaurav, over the last one year we've increased our NCD share from 35% to 45%. Just wanted to get the logic behind, you know, raising fixed rate instruments when we know rates are going to decline. This is taken a decision that fundraising decision is taken at that point of a time which is a multiple factor of, l et us say what is a variable money you are able to raise at that point of a time versus a fixed money. Taking a call on saying that what is the maximum downward trajectory on the variable money you will encounter versus what is the upfront benefit you are getting. So it is a calibrated call always at that point of a time what is beneficial for the company. We take an interest rate view so that when you raise a fixed money you take the interest rate view versus a variable money available at that point of a time. Because we as a finance company have to keep on borrowing at all points of a time. What is the variable money cost versus a fixed cost? A nd in terms of an NCD as well, we have raised last year as a variable interest rate NCDs, which was one issue, was on an NCD which was on a variable interest rate. There is a variability there. On the fixed NCD, also to some extent, we cover through our OIS hedging as well. There are various strategies which are available to manage your cost of fund flow through the cycles. We are cognizant of our book, and we are cognizant that in the interest rate downward cycle, there is a pass- through which happens. The strength is just it today's time point of time a fixed rate instrument versus a variable rate borrowing which would b e a bank borrowing. What would be the difference in cost? It will be. After the second rate cut we have not borrowed in the variable rate from the bank. I'll say still the differential at the, because there will be a tenor differential. Let us say a three- year bond versus a bank line, today differential would be close to 50 basis points-60 basis points. Okay, 50. Okay, got it. I'll get back in the queue for m ore questions, but thank you so much and a ll the best. Thank you. Thank you. The next question comes from the line of Shubhranshu Mishra from Phillip Capital. Please go ahead. Hi Atul. Hi Gaurav. Two q uestions. T he first partner, what is the total number of collection on-roll employees [crosstalk] I'm not hear you clearly. Can you come closer to the mic and speak because we are not able to hear you clearly. Right. Is this better? Slightly better, yeah. Please go ahead. We'll try to make out of the question. H ow many collection on-roll employees and how many connection agents will be deployed? And if we can split that asset class, r ight? Second is that what percentage of our Construction Finance book would be still in morat? And if we can get the split of what comes out in this year and w hat comes out in the next one or two years. Sorry. If I understood your questions right, the first question is how many are the regular employees of the company versus the off-roll contractor and contract employees. The absolute number is 1,977 are company on-roll employees and total manpower is 4,811 as of 31st March 2025. You can say balance 2,900 are off-roll or contractual employees. 1,977 are on-roll employees. That's first part. Second part, you are saying on the Construction Finance morat book. Is my understanding right? That's the question y ou asked? How much book is on morat? Correct. See, I had explained last time also, I think should keep that the morat. See, when we give a Construction Finance, there is not a case where we don't have a sweep from day one in terms of principal repayment as the sales happen. While the first on a paper, the morat period is till the point of a time the project gets completed which is close to 36 months k ind of a normal scenario which is a morat. Largely in that sense if you look at from the contracted term, it is larger part of the book will be morat. However, the sweep on the sales collection starts from day one. If I look at the past experience of last four years, there is no case which eventually comes out of the morat before the three year because of the sales and the cash flows coming stronger, the entire loan gets repaid before the morat period is over. We do not give any holiday on any collection as it starts. Our construct is clear. We disburse on tranches. This is the movement of the stage in construction. We have a sales milestone and a collection milestone linked to each stage of a construction. At each tranche and each amount of rupee collected from day one, there is a sweep structure which comes as a principal payment, and interest has to be serviced by the developer on a monthly basis on the separate side. Morat is a technical question because you are, I am assuming you are coming from the banking side, because in the banks, they follow a different structure, public sector banks, where they give a complete morat up front and then they collect the money later on. In our case, the repayment starts from day one. Have I been clear? Sure. The first question was around the collection employees. What are the total number of collection e mployees and what we give the off-roll employees? In our case we don't have much of off-roll employee because we are not a very heavy collection, heavy infrastructure company. Number 250-odd would be the number of collection employees. Right. Sure. I can come back in the queue. Thank you. The next question comes from the line of Shashi Kumar from Trade Brains. Please go ahead. Good evening sir. I have observed a strong absolute growth in both PAT and total income over the past few years. However, the year-on-year growth rates appear to be moderating recently. For instance, PAT growth declined from 77% in FY 2023 to 25% in FY 2025, while total income growth also slowed from 50% in FY 2023 to 26% in FY 2025. Could you please share your perspective on the driving factors behind this moderation in growth rates? Additionally, do you see this as a natural normalization following a high growth phase, or are there specific challenges or a strategic shift impacting this pace of growing income? Shashi, I think we are, I can request BofA team to see the connectivity because we have guessed your questions. Shashi, you can correct, and Gaurav will try to answer the question. If that answer is right, you are talking about growth moderating in the PAT from FY 20 23 to now as a percentage. Is that, I heard you right? Yes, yes sir. Gaurav, can you check on FY 2023 growth percent? B ecause FY 2023, because we are so far looking at FY 2024 versus 2025. Just give us a minute to look at the number to refer to what number you are referring to. PAT growth is current year is 25%. Last year was 38%. You're looking at NTI growth, right? Which was 19% last year and 23% this year, right? Yeah. So reason for movement from 19 to 38 last year versus 2023 to 2025 this year? Shashi, if I can request you to be and explain your question. Maybe I can take it offline as well. Yeah, no, but if because we are not able to understand the question. Once again, t he PAT and total income over past few years, like last three FY 2023 to FY 2025, PAT has declined from 77% to 25% in FY 2025, while t otal income also declined from 50% to 26% [crosstalk] Shashi, for FY 2022, w e we re a three-year-old company. The base is very small. As the company will grow forward, because if I look from FY 2018 to total cumulatively, we look like the growth of a 90% or 80% because the company started in 2017, 2018. The initial period on a very small base, as the book grows, the income levels will grow in a very different level. There is no decline or there is no decline or there is no other than a normal- sizing conversation because o nce you grow at a certain size, then the growth happens at a particular percentage while the growth at a much smaller scale will be at a very different level i n terms of income growth right there. Because there when you are adding the book, you are almost increasing the book by more than, I think in FY 2022 or 2023, probably your book grew by 40%-45%, c orrect? FY 2022 to 2021, in FY 2022 versus 2021, probably book growth was much higher. You have to take a base impact, at a base impact suffer in that sense from in 2018 to 2019 the book would have grown more than 100%. The income would have been much more than that. It's a question of a relative sizing and the baselining. There's no other impact. Okay. My follow up question is on like, sir, recent in Maharashtra there was your recent hike in ready reckoner in our mix on demand patterns of average ticket size in the region. Can this influence our growth like in this guidance for FY 2026? There is no impact of ready reckoner rates on the home loan growth b ecause ready reckoner rates are in terms of increase by the government. After three years, government has increased the ready reckoner by 6%-%. In my individual assessment, I don't think it is going to result into any impact in demand for homes or versus home loan demand. Because if you have to buy a house, you are buying a house. It is not dependent upon the ready reckoner rate. And ready reckoner rate in any case is a reflection of what is the pricing in the market which you are currently buying. To the best of my understanding or assessment, there is no impact flowing in the home loan growth from decision to increased ready reckoner rate. Okay. Thank you. Thanks. Thank you. The next question comes from the line of Viral Shah from IIFL Capital. Please go ahead. Yeah. Hi Atul and Gaurav. Thanks for the opportunity. I have a few questions. Just one is first clarification. Atul, you mentioned on that hedge book to kind of manage this fixed rate borrowings that you have done. Can you quantify the extent of this hedging? Is it material at all which can help us convert this fixed kind of liabilities into a floating nature e ffectively? it is. It is to some extent material. It is close to INR 2,300 crore if I have to give the absolute number. Okay, so the way to look at it is INR 2,300 crore of your bonds would behave like a floating rate bond? Yeah. The market, y es, that is the same way to look at it. INR 2,300 crore because there is a hedging. Viral, it's taken in various forms. Like if you have a 10- year NCD, you do not take a hedging against a 10 years because that is supposed to play over the interest rate cycle. It is largely a five- year bond what you hedge b ecause that is where you can be on the one end of the interest rate cycle. You can enter at the same rate interest cycle and exit at the same. A two- year or a three- year, a gain you are able to take a very calibrated call at the time of raising, seeing that whether how it will play out during the tenor as you raise the money. You can take the calibrated call at that point of time. What is the differential between a floating rate money versus a fixed rate money what you are getting into? Take an interest rate view ahead of a two- year or a three- year. Ten-year, i n any case there is no hedging instrument available and we don't take the view at a 10- year. S o there is a five- year which falls in between where the hedging takes place. From that point of view that is covered. The other way is two years or three years, w hen you raise the money at that point of time, only you take the call, calibrated call on basis of seeing that whether you are taking a fixed call versus a floating money what is available. Got it. Basically on this INR 2,300 crore effectively, have we seen already 50 basis points kind of a decline? More than that. Adjusted. Okay. We have already seen that on t he borrowing front? Because OIS, they run ahead in the market. This is the future rate cut expectations as well. Got it. Makes sense. Yeah. Atul, t he other question is on basically the credit cost, right? So now, we are still at 12 basis points kind of a credit cost. With no more buffer provisions there, and also some bit of, I would say, changing book mix, like say within LAP, the share of self-employed is increasing. When do we see kind of a normalization on the credit cost front? There is another complexity to the credit cost which is a factor of assignment we do b ecause when we do an assignment, there is a stage one provisioning goes down. That is where when we guide for the credit cost, we see on a steady state basis 20 basis points-25 basis points of the credit cost is what we envisage. If you have to say that we are not, if we do not do any assignment and the book mix remains same in terms of a medium term, that is a 20 basis points-25 basis points of a credit cost is the guidance what we give, which is put as a part of our medium term guidance. That is because if we continue to, let us say, assign more, the credit cost looks lower because of a lower stage one provisioning. But 20 basis points-25 basis points from a business modeling perspective is a credit cost, not more than that, not less than that can be a factor of a time or the decision to do assignment less or more. Got it. Basically, effectively this 20 basis points-25 basis points is on assets, not on AUM? Yes. Got it. Atul, if you can say quantify the impact [crosstalk] I will correct your understanding. I think 12 basis points is also an asset, not on AUM, which is the current cost because there is no credit cost on the AUM minus AR. What is now my off book? I am saying that because that year, if you do a more assignment, the credit cost for the year looks lower because you release the general provisioning on the assets that you have assigned out. There are multiple mixes of a GP provision. That is where I will be saying that if, assuming we do not do any assignment out in a year and the kind of business we are pursuing, 20 basis points- 25 basis points is the credit cost we bake in our business mathematics or business calculation, and which is what we guide for. It is always on AR on book. It is never on AUM. The 0.12% is also on AR only. I just wanted to clarify. Atul, next is if you can quantify the impact from, say, the removal of the exit penalties on the floating rate loans, which is, say, LAP. Of course, the Home Loans, you do not have the exit penalties, but on the LAP front, the proposed circular from RBI, what could be the impact of that if at all that gets into implementation? Won't be very material for us at an absolute level because Home Loans, as you have already called out, are already exempt from FC charges. Commercial businesses also, as per the draft circular, are exempt, so the only business impacted would be loan against property. If I look at the last year entire foreclosures as is collection in that business was less than INR 12 crore-INR 13-odd crore, so if you have to take a zeroization, that is the kind of a number we are talking about. It's not a material number for us. And the second order impact. Do you see BT outs increasing over there? Maybe you will have to work more on the pricing front over there a lso? That will let it play out how it plays out, Viral, because it's a guess what, yes. Exit rate, exit barrier going down or not being there, it can result into a higher BT out. In that sense, if you look at a Home Loans, even today also, the exit rates of LAP prepayment or a BT out rates of LAP are not very different from HL. In fact, they are on a higher rate. So there is a LAP is slightly higher even with the exit clause or exit penalty as well. Home Loan, there is no exit clause or a penalty. It depends on various factors. I'll not say it is assumed to be much higher. Of course, we have to generally talk intuitively. Yes, we can say there can be a more BT out when there is no exit clause. Got it. Atul, if I may, one more question more from a quarter perspective. There has been a sharp increase in the OpEx on a quarter-on-quarter basis. Also secondly, the PBC number on a sequential basis seems to have increased by around 100-odd basis points despite, say, Home Loan growing slower. What can be the explanation for both of these things? First part, we had already called out that we have invested deep and we are going to invest deeper as far as in both in the management team and the new businesses, both SBU which we have set up and the top six plus market we are investing. That sequentially it has moved up by close to 1%. It has not moved up dramatically in that sense. C corrected 20.9% has moved to 21.7% or 21.8% and generally March is always heavier. If you look at the last [audio distortion]. I think there's a disturbance [audio distortion] Ladies and gentlemen [audio distortion] Are we audible Anuj? Yes sir, you are audible. Yeah. Okay. Sorry, Viral, just to continue the conversation. Sorry we got dropped out. We were talking about impact on the OpEx to NTI growing. It has grown by close to 1% in the current quarter versus the previous quarter. I see a marginal increase. If we see the previous years also, quarter four is always the heaviest because generally you tend to place all your orders and investments in quarter four. That is a YoY comparison and a trend. Second, we had called out clearly saying that we are investing deep in our SBU as well as our non-top six structure. That is where it has inched up to that extent on OpEx to NTI for the current quarter. Your question was on why it has inched up or if I missed, PBC has moved up, Viral, on account of two factors. W hile Home Loan growth has been lower than the overall growth, i t's the assignment out during the quarter was largely non- home loan assets. The PBC is calculated on the assets with us, if there was a large assignment out of non- home loan assets, t hat's where PBC, you see an improvement by 1% on a quarter-on-quarter. Second, also on reduction of cash holdings because in, for PBC computation, even cash holdings are taken as a denominator. You see on a quarter-on-quarter at the exit quarter, if there is a drop in the cash holdings, that is also resulting into improvement in the PBC criteria. Got it, Atul. Very healthy. Do I have a chance of one more question? [audio distortion] Stop. Ladies and gentlemen, the management line has dropped once again. Please stay connected while we rejoin. Ladies and gentlemen, we have the management reconnected. We take the next question from the line of Raghav Garg from Ambit Capital. Please go ahead. Hi, good evening and thanks for the opportunity. I just have two questions. One, I know there's been a fair bit of discussion on the liability side but I still have one question. Can you please comment on the trajectory for cost of funds for FY 2026? What is your expectation in terms of how much can it decline because of t he repo rate cuts? Raghav, our estimate. Our estimate is to assuming that two cuts which has happened and one cut more happens, YoY I think we should see a drop 34 b basis points - 35 basis points roughly. You're saying on a 75 basis points rate cut cumulatively, r ight? On a 75 basis points rate cut cumulatively we should see 34 basis points- 35 basis points kind of pass- through on a full year basis in FY 2026. Understood. Thanks. The second question is I wanted to understand h ow are you looking a t your market share in retail home loans at the developer counter? Why I'm asking this question is when I look at the Home Loan AUM as a multiple of say one- year or two- year LAP developer loans, right. That multiple of that number has been continuously declining for last several quarters. I don't know if it makes sense t o you or not. Probably you can guide me better but i f you can just comment what is your retail home loan market share maybe based on sourcing at the developer counter? Raghav, our home loan market share in the market has been improving every quarter from last two years. If you look at our market disbursement versus what we disbursed, we have been inching up in our market share. Now the metric what you are seeing is to my mind, I think that's not a, because we don't acquire only the home loan at our developer counters where we have funded the project with that. That's a minor part of our acquisition. That's not a minor but it is not the only part where we are acquiring the home loan penetration, Home Loan business. Home Loan business is acquired at multiple counters and the Home Loan AUM growth is also a factor of acquisition minus the retention and minus what has gone out. In terms of a competitive market, a lot of time in last year there has been a kind of a significant pressure on the book from a BT out perspective where the acquisition prices have run much lower than the pre -cost fund cut also or a pre- repo cut as well. The metric with the way you are looking at is not the rightful metric in that sense. Our market share has moved up gradually on a quarter-on-quarter basis from last two years, three years on an acquisition basis at a total level. Understood. What percentage of home loan sourcing that you do comes from the developers that you have funded to? I'll assume close to 15%-20% kind of a number. I'll come back with your exact number, but my ballpark figure will be 15%-20% kind of a number. Understood. That's enough. That's all from my side. All my other questions have been answered. Thanks. Thanks. Thank you. The next question comes from the line of Abhijit Tibrewal from Motilal Oswal. Please go ahead. Yeah. Good evening everyone and thank you for taking my question. First clarification. The previous question when you said with the assumption of a 75 basis points repo rate cut, you foresee a 34 basis points-35 basis points pass- through. Were you talking about the pass- through to the customers if there is a 75 basis points rate cut? No, we are talking about pass- through number cost of funds to the company. The pass- through to the customer would be higher. It will be 45 basis points-50 basis points kind of a number which will get passed through. Of course it will depend upon the competitive intensity in the market, ho w the yield impact can be 45 basis points-50 basis points on a 75 basis points kind of a cut. Got it. I was just trying to understand. I mean you shared earlier in this call that almost 20% of your home loan book is linked to repo rates and the remaining is linked to your internal PLR where you have already effected 15 basis points rate cut. E ven when in this quarter, our cost of borrowing is largely flat Qo Q. Just trying to understand I mean is this internal PLR book, right, m ore linked to how market forces are, how the competitive intensity is instead of how your cost of borrowings are going to evolve? It is both ways because there is one is a projected cost of funds trajectory as well, Abhijit. Because you have to pass on in the market as a rate cut expectations happen to protect rightfully the BT out kind of a portfolio because there can be more BT out seekers. If you do not pass- through in your internal link rate. I nternal linked rate, sometimes you run ahead of passing by. This is your projected reduction in the cost of fund, like our projected cost of introduction probably in this quarter would be close to 20 basis points from what last quarter had been there. If you have to pass on a bit ahead, one or two months ahead of the time on the reset to protect the book from there, that is a temporary mismatch which happens. Fair enough. The other thing I was trying to understand in this last three months or so, I mean has anything changed i n terms of the a ggression from banks? We have not seen. If you're talking about public, I think the aggression is not changed even post March end. From a private sector bank, w e saw a fair bit of aggression in month of March. I think April in our assessment, w hat we have seen in the market is we are yet to fully firm up the mind I think but there is a bit of a public sector banks continue to be much more aggressive. Private sector banks are not that aggressive in months of April, but March, everyone was as aggressive as what we could have assumed. Got it. Essentially speaking, I mean March aside, right, which is where we continue. We've always seen this competition from banks, but beyond that, because of rate cuts, you have not seen any additional aggression from banks, either PSUs or private? After the first rate cut I think PSUs were far more aggressive. After the second rate cut, t he market is yet to find its feet or get settled in the pricing because pricing gets settled after 15 days-20 days of the rate cut. It is yet to settle down the market. What I talked about, the early indicators, that early indicators were feelers in the market. We will have to finally arrive at the conclusion in the month of May, because February rate cut, we saw the impact in the month of March. April rate cut, probably month of May is where we will be able to appropriately, rightfully answer saying t hat what we are seeing in the market. Got it. That is useful. The last question that I had was, I mean, in terms of assignments. While you explained how credit costs can vary when you do assignments because there is a general provision release, I was just trying to understand how are we thinking about assignments going forward because, as you appreciate, there is a component of upfronting of the assignment income that comes through? How are we thinking about assignments more structurally going forward? Assignment is an integral part of a mortgage balance sheet because of an ALM match we get, because we are essentially lending for long term and our borrowings are not for that long term. For a mortgage company, assignment at a particular portion of 12%-15% of our book, normally we keep it, and that's a long-term strategy as well. You will continue to see the percentage of assigned at that ratio. It is nothing to do with the upfronting of income. Yes, that's an Ind AS accounting which results into, so in this last quarter, in that sense, there is assignment income of INR 46 crore which is booked in because of the assignment. If we exclude assignment income also, then also the income growth would be in line with Q4 FY 2024 in terms of non-interest income growth. Got it. This is useful. Thank you so much and wish you and your team the very best. Thanks Abhijit Thank you. The next question comes from the line of Dhaval from DSP Mutual Fund. Please go ahead. Hi Atul. Congrats on the quarter. Just had three questions. First was relating to spread. Till now whatever you discussed around pricing and cost of funds. I s it safe to assume that next year, we could see about 10 basis points of spread compression from where we end Q4, and any comment around that would be useful. The second question is relating to the target mix, asset mix. I f my understanding is right, directionally we expect the developer book share to increase, we expect the deeper market share to increase, and those should yield benefit outcomes. How much of that can play out next year and sort of help you protect on the mix- related benefit, asset mix related- benefit? Any comments around that would be useful. The last bit is, you know, the minimum public shareholding, you know, just any color around that. How do you intend to sort of get to that 75%? Will there be a fresh equity, etc. in FY 2026 or we intend to use that in FY 2027? Any comments around that would be useful? Yeah those are three questions. Thank you. Thanks, Dhaval. On your first question, if we maintain as it is book mix, yes, you can see a NIM compression of 10 basis points-15 basis points during the year. Because if you are going, if you are saying 34 basis points -35 basis points is what we expect the differential in the cost going down, and I said 45 basis points -50 basis points on the yield impact which can be there if we take a 75 basis points kind of a rate cut scenario. However, as you have only called out, there is a target type mix which is a play around for us available, whether a Developer Finance book going up from 12.5% to 15%, what we had called out in last year also, which results into compensating the increase of our non- top six markets which we have invested deep, or increase of contribution from the SBU in terms of a Near Prime and there, w e will target to cover a reasonable portion of that hit w hat we expect from the NIM. Of course, the pool cannot be covered because there is a larger book sitting there. To some extent, our intent would be to compensate or mitigate a larger part of the hit what is going to be there from the yield or a NIM compression in terms of a declining rate scenario. However, I would just like to call it. We had always called out earlier as well, even when we were talking about in the interest rate cut scenario was not here. Market is a cycle business. When the interest rates are up, of course the returns are, margins expand for a point of a time. Then the liabilities catch up on the going interest rate scenario. While the assets run a bit ahead of a liability, on a downward cycle it will be a reverse way. Barring the change of the mix play, what as I called out we will try to do, but through a cycle that is very where it remains and that's where we'll remain. Our ROE will remain within the guidance range of a medium term ROE range w hat we have given with the plus- minus whether a interest rate rising cycle or whether a decreasing rate cycle. Of course in that scenarios we'll try to play it a bit different to over manage so that there is a less of a disruption. That is where so 10 basis points-15 basis points on a steady state. We are confident that we should be able to mitigate a larger part of it. The asset mix change strategy is what we are trying to execute. Second question. Yes, you asked on the public shareholding. It's two and a half years away, Dhaval, to meet a 25% requirement. Of course, categorically I can tell you there is no plan to raise new capital in FY 2026 basically because our leverage is 5.1 or 5.2 as of 31st March 2025. As a mortgage company it does not make sense for us to raise money anywhere less than seven and a half kind of a lever. Seven and a half kind of a lever. There is no conversation or a thought process around any public issue but for meeting the guidelines, t here is a mix up of whether it can be a secondary offering from Bajaj Finance as a shareholder at their appropriate time. The Board of Bajaj Finance will have to take the call at appropriate time to say that how do we meet that. There is no primary conversation which will happen for next at least one and a half to two years. There's no primary requirement of a capital. Understood. I think this is very useful. Thanks and all the best. Thank you. Thank you. Ladies and gentlemen, if you wish to ask a question, please press star and 1. The next question comes from the line of Pranuj from JP Morgan. Please go ahead. Thanks for the opportunity. I hope I'm audible. First question. You're not clearly audible, Pranuj here. I think that now better. Yeah, yeah. Now it is perfect. Yes. Please go ahead again. Yeah. Thank you for the opportunity. My first question is on your incremental loan sourcing that you're doing. On what pieces do you decide whether you have to link it to repo or your PLR? Like, is it purely based on competition, some customer cohort, or on incremental basis, should we see this queue continuing to move towards higher repo- linked loans? This is dependent upon market scenario and also our ability to sell to the customer. Incrementally you should see more of a PLR rather than repo, because repo we offer up to, it's an internal setting. We offer repo asset size only to the extent of repo liabilities w e have to not carry an interest rate risk in the balance sheet. If I have to say, if there was a INR 14,000 crore repo book on the asset side, there's a INR 16,000 crore book on the liability side. For us to not have a mismatch in the interest rate risk side, because we can't carry interest rate side. We are only a credit risk company, which we have to take a credit risk because we are in a lending business. Apart from that, we don't want to take an interest rate risk. The ability to grow repo book is linked to our ability to grow repo- linked liabilities. Rest has to be in the internal PLR. Okay. The preference would be for PLR. I'm guessing because of higher competition, it could shift more towards repo a lso? It will be determined by availability of our repo liabilities rather than the competition because we will not want to create an interest rate risk in the balance sheet. Okay, okay, understood. It is fair to think that this 15k Cr repo-linked liabilities will be a ll bank loans? Largely. Okay. Thanks, thanks for that. The second question is on your Affordable and Near Prime SBU unit. Will the growth over here be purely organic or will you also try to BT out customers from some of t he affordable housing companies? We are looking at organic growth here. The BT is in this business. What we have started is an SBU will not be more than 10%-12% of the mix. Even now a lso what we are acquiring 10%-12% of the mix only comes as a balance transfer because we want to look at an organic number and we want to build a purchase transaction mix. We are yet to learn the ropes of the trade in this business as we are going forward. We know from experience that balance transfer is slightly more riskier than the organic purchase which is a monetization versus investment or a purchase of an asset. Our focus will largely be on purchase assets here as we grow this business. Okay, understood. What would be the ease as compared to your correct on- book yields of 9.7% in the Affordable and Near Prime segments? The yield you do not have to compare with the current book because in a Home Loan to Home Loan versus a Prime Home Loan to a Near Prime and Affordable book, the difference in yield will be close to 180 basis points on acquisition. Okay, understood. That's very clear. Thank you. That's it f rom my side. Thank you. The next question comes from the line of Nischint Chawathe from Kotak Institutional Equities. Please go ahead. Yeah, thanks for taking my question. You know, you mentioned about approximately a 10 basis points kind of a hit this year because of the fallen interest rates. I mean, I was just curious whether this is only for the Home Loan book or is it kind of, you know, doing a math for the entire book. In that sense what role can really be played by the change in business? Nischint, this which you are talking about book stock as of today, w hich includes the book stock. That is where we said that a part of it or largest part of it, w e'll try to mitigate through the asset mix change as we acquire during the year because w e are taking a stock on the stock today when we are calling it. This is not home loan book. This is the entire book that we are talking? Yeah, I'm talking about the stock. Yeah, I understand. The stock of, not home loans but entire book? Sorry, the full entire, entire company book stock. Company book stock. And on the bank borrowing side of INR 34,000-odd crore, how much is linked to repo? This is MCLR, is close to 23%-24%. Balance is either repo or repo equivalent, which can be a T- bill or a G-sec where the pass- through is as close to repo. Got it. On the disbursement side, how much is linked to repo? On disbursement side, repo in the last quarter would be quite low. I do not have the exact number there, but it would be quite low. Largely if you look at the repo book, it would have remained stable versus last quarter to this quarter. Got it. Thank you very much and all the best. Thanks Nischint. Thank you. The next question comes from the line of Keyur Asher from PNB MetLife India Insurance. Please go ahead. Yeah, thank you for the opportunity, sir. I just wanted to get your s ense with respect to just trying to b etter understand how do you manage ALM risk in this business. If you could give some f lavor on what could be roughly the t enor of the loans that you extend across these product classes of home loans. Yeah. Just against that, how are we placed on the borrowing side? Just because I'm trying to understand from t he deck. I see that close to 50%-60% of your liabilities are up to three- year tenor. Just trying to better understand the ALM risk aspect. Yeah. Asher, if I have to take see the loan tenor, what we offer in various products is different. Like for a home loan, let us say the tenor can be anything from 15 years - 30 years as well. However, I have to call out that the behavioralized maturity of a home loan is less than seven to eight years because the extension of tenor initially is one conversation. There is a behavioralized maturity of the book which is seven to eight years which is largely in line with what is in industry or what we see. We are largely a prime company, a prime home loan company. We see a behavioralized maturity at close to six to seven years only rather than even at eight years scenario. That year two and then the second part of the book which comes in terms of whether it's a Developer Finance, wherever we look at a behavioralized maturity at less than 24 months today. There are various parts of the book. And the average behavioralized maturity of the book is not what is at which tenor you extend on the behavioralized maturity of the liabilities. There are various mixes we play. I called out in the earlier answer saying that 12%-15% of our assets we always do assignment out as a liability mix because that's a perfect match funding. Then it comes to 10- year bond, which is again a long term, which covers more than what we look at in terms of for covering of a liability. The bank loans or the NCDs which are largely between an average maturity for three to five years, that is where it is managed. There is a, what we look at our ALM, we do not factor in any kind of a rollover of the liability. That is why what you are looking at, a cumulative gap or there is a 10%, it is well lower than, if I say that from the regulatory definition permissible, because we do not even factor in rollovers available. For the other loans, t here is a rollover because in the mortgage business you do not get, if I have to take eight-year liabilities, all eight-year liabilities are not available, neither in the bond market nor is it advisable to fill the entire bucket through a 10-year bond market. The ALM is to be managed by the company actively, which is in line with all mortgage players, if I have to say so. Right. Understood. Thanks. This is helpful. Yeah. Thank you. Thank you. The next question comes from the line of Viral Shah from IIFL Capital. Please go ahead. Yeah, thanks for the opportunity for getting me again on the line. Just one last question Atul, I was noticing your BSE disclosure. There is some INR 4,000 crore of portfolio that has been bought this year unlike in the previous years. What exactly is this? If you can give some color from where we are acquiring this. S o Viral, this is a portfolio what we purchase. This is assignment end of the portfolio from various players, which is, which can, I can name the players where we purchase the various portfolio as a technically opportunity available in terms of from making a bit of a money. That's a portfolio which is a purchase, pooling, purchasing, which is assignment in. There is an assignment out what we do, and there is an assignment in what we do. It's a pure opportunistic, a bit of a margin expansion strategy available. Like what yields does this come in any idea? If you can share. it is incremental. It is ROE accretive to the business. Got it. Thank you, Atul. Thank you. Thank you. The next question comes from the line of Shreepal Doshi from Equirus. Please go ahead. Hi sir. Thank you for giving me the opportunity. My question was on the developer finance portfolio. I was just checking the number of projects that we have. There is a decline in the i ncremental projects that we are doing. So is there some reading with respect to decline in the conversion rates with respect to inquiry to purchase ratio in the r eal estate sector that you see? Shreepal, no, we are not seeing any decline. While there is less launches which is happening in last six to nine months, which is by as per various reports available in the market, there is less launches which is happening, but at our state we have not seen kind of a decline that number, absolute number. If you're referring on a quarter-on-quarter growth in terms of a number of projects. I t can be on a volume basis, because on a value basis we have done better, we have done higher number. It can be that there is number of projects can be lower, but it's not structural in nature. I've not seen that number. That's why I'm not able to give you absolute, just one. Excuse me. You see the quarter make it seem projects are aggregating. If it is an aggregator, this quarter makes it an aggregate. That's the question. This quarter. See, there is also a factor Sixty. L ast quarter, 45. This quarter, 60, But we had absolute number. We have added last quarter 45 projects. This quarter 60 is added. I'm not sure from where the number is coming in terms of a decline. Number of projects like it is 758, r ight? [crosstalk] 798. Right, right, right. Are you seeing any trend there with respect to, like, decline in the, you know, the inquiry to conversion rate at our, at our project that we have financed? No, no, no. You are talking inquiry to conversion of the retail sales or you are talking about conversion of? Yes, for the developers. No, no, for the developers. Inventory, see, while there is a slowdown in the sales, if you are referring to the market reports in terms of a slowdown of the sales, but you look at the inventory ratios, it is the ever lowest in the country today because the launches have declined more than the sales ratio. There is net- net no impact in terms of inventory because the inventory is still going down only while the sales are slowed. Sales are slow, but there is no stock also available proportionately. Got it. Yeah, that was the only question I had. Thank you for answering. Thanks. Thank you. The next question comes from the line of Raghav Garg from Ambit Capital. Please go ahead. Thanks for the follow up opportunity. Just one question from my side, needed some clarification to my earlier question. When you said 35 basis points reduction in funding cost, you meant that over the next one year, r ight? Thirty-five basis points lower on the exit for the run rate for 2026. Is that understanding correct? I meant YoY cost. For the year, what was our cost of fund versus next year projected cost of fund for the year to year? I did not mean exit to exit quarter. I meant for the year. Okay. Thank you. That's all. Thanks. Thank you. Ladies and gentlemen, that concludes the question and answer session. I now hand the conference over to Mr. Anuj Singla for his closing comments. Thank you very much. Atul sir, any closing remarks from your end? No, no. Thank you very much. Thanks, everyone, for giving us an opportunity to explain our position. Thank you. Back to you, Ryan. Thank you.