Ladies and gentlemen, good day and welcome to Bajaj Housing Finance Limited Q1 FY 2027 earnings conference call hosted by ICICI Securities Limited. As a reminder, all participant lines will be in the listen-only mode, there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Renish Bhuva from ICICI Securities. Thank you, over to you, Mr. Bua. Thank you, Niraj. Hi, good evening, everyone, and welcome to Bajaj Housing Q1 FY 2027 earnings call. On behalf of ICICI Securities, I would like to thank Bajaj Housing management team for giving us the opportunity to host this call. Today, we have with us the entire top management team of Bajaj Housing, represented by Mr. Atul Jain, Managing Director, Mr. Gaurav Kalani, CFO, and senior management team. I will now hand over the call to Mr. Atul for his opening remarks, and then we will open the floor for Q&A. Over to you, sir. Thank you, Rinesh and ICICI Securities team. A very good evening to all the participants, and welcome to BHFL Q1 FY 2027 earnings call. I have the entire senior management team with me. I hope you got the chance to go through the investor deck, which we have uploaded on our website as well as both stock exchanges. We also just concluded our annual general meeting sometime back. Shareholders presentation is also now available on the website for you to refer. I will quickly cover key updates of the quarter and management assessment, which should take close to 10- 12 minutes, and then we will open forum to address questions. On the presentation, I am straight on the panel three. Overall strong quarter across metrics, with highest-ever quarterly AUM growth and quarterly disbursement in last quarter. Disbursement grew 33% and AUM was up 24% during the quarter, with PAT growth of 23% on YoY basis. On return metrics, annualized ROE was stable at 2.3%, and ROE improved to 12.5%. OpEx to net income improved from 21.2% in Q1 FY 2026 to 19.6% in Q1 FY 2027. Asset quality was also resilient during the quarter. Annualized credit cost was 5 basis points for the quarter. GNPA stood at 29 basis points and NNPA at 12 basis points. For principal business criteria, the total number stood at 61.46% against regulatory requirement of 60%. Capital adequacy ratio of the company stood at 21.59%, both above regulatory limits. The company geographical coverage remains across 224 branches and 182 locations. I am moving to the next panel, which is of quarterly financial indicators. Overall, AUM was a tad below INR 1.5 lakh crore and stood at INR 1.496 lakh crore in Q1 FY 2027. This was highest ever quarterly AUM growth, which we called out INR 8,918 crore compared to INR 5,736 crore for Q1 FY 2026. Overall, AUM as well as product level growth were good during the quarter. While home loans growth improved to 20%, LAP grew 22%, LRD grew 41%, and developer finance grew 19%. Portfolio composition also remained well diversified with home loan mix at 54.1%, LAP at 10.3%, LRD at 23.1%, and developer finance at 11.4%. Disbursement growth as called out was strong during the quarter at INR 19,509 crore against INR 14,651 crore in Q1 FY 2026. Last quarter growth was highest ever quarterly disbursement, which grew 11% on sequential basis as against 6% quarter-on-quarter in Q4 FY 2026. I'll move to panel number five. Cost of funds moderation of 7 basis points on sequential basis from 7.3% in Q4 to 7.2% in Q1. Overall borrowing mix was well diversified with higher composition of money market at 52%, followed by bank borrowings at 38%, and NHB refinance at 10%. Gross spread was stable at 1.7% in Q1, while NIM dropped by 14 basis points from 3.8% to 3.7% in Q1 due to net income moderation. I've talked about operating efficiency improvement on the previous panel, which stood at 19.6% in the last quarter. Moving to the next panel. Healthy asset quality during the quarter with GNPA at 29 basis points and NNPA at 12 basis points. Annualized credit cost at 5 basis points against 15 basis points in Q1 last year. Profitability, PAT grew 23% YoY from INR 583 crore to INR 715 crore. Annualized ROE is stable at 2.3%, and ROE improved to 12.5% compared to 11.6% in Q1 FY 2026. I'll now go straight to panel 17, which is a new panel. We have added this new panel in the deck to share an update on few AI initiatives, which has been deployed by the company to improve internal controllership and efficiencies on one side, and customer experience on the other. We are largely a tech-enabled company and continue to deploy multiple digital initiatives for seamless mortgage journey for our customers, which are being further enhanced through AI initiatives with core focus on improving customer experience, delivering seamless process, and most importantly, improving controllership. We are implementing these initiatives across the loan lifecycle, that is for origination, underwriting, and collateral assessment, and then customer service, as well as in our internal customer processes. That is for our employees. Some of the major initiatives are voice agent for lead generation, credit personal discussion, call intelligence, collateral assessment intelligence, and geoanalytics. AI customer assist platform, training platform, and AI interview agent for frontline hiring. All this should improve conversion, evidence-based underwriting, reduce collateral risk, and provide round-the-clock self-service support and enhance capability building for the company. I'll move to panel 22, which is the quarterly performance financial metric. Majority of the metrics have been covered earlier in the first panel. Other metrics like net total income grew 16% to INR 1,175 crore in Q1, and profit before tax increased by 23% from INR 757 crore to INR 929 crore. Moving to panel 24. Portfolio yield stood at 8.9% in Q1 FY 2027, while cost of funds was 7.2% in Q1 FY 2027. Overall, gross spread was flat at 1.7%. Other metrics have been covered on the previous panel. I'll move to the next panel, which is on the treasury side. Well-diversified borrowing mix across instruments with relationship bank by 18 banks. NCD mix improved on sequential basis by 2.6% in ICD by 10 basis points, with offsetting moderation in bank borrowings to the extent of 2.5% and NHB refinance by 20 basis points. I'll move to panel number 30. Portfolio mix remains well-diversified, with sequential movement of LRD increased by 70 basis points, offsetting reduction of 50 basis points in LAP and 10 basis points in DF. Home loans remain by and large sequentially stable. Move to panel 32. This is an update on the Sambhav Housing. From last quarter onward, we have started updating the analyst call on the Sambhav Housing. Business continued to progress well on the quarterly basis. For Q1, our monthly disbursement run rate was close to INR 450 crore -INR 465 crore. This was INR 410 crore -INR 425 crore in Q4, which traditionally Q4 is better for the industry. Sequentially also, this has grown from INR 410 crore to INR 425 crore on average to INR 450 crore -INR 465 crore. Average ticket size remains stable. Around 65% of the customers in this segment also continue to have bureau score of greater than 750. Business is operational now at 73 urban locations and 72 rural locations. Salaried mix was stable at 68% in the last quarter, and business is on track to achieve our disbursement target of INR 600+ crore in the next nine months, because that's what we called out during last quarter, saying that in next 12 months, our target is to cross INR 600 crore. That remains on track. Moving to panel number 37. Stage 1 assets improved by 2 basis points sequentially from 99.37% in Q4 last year to 99.39% in Q1. Stage 2 assets also improved from 0.36% in Q4 to 0.32%. Stage 3 from a sequential basis moved up by 2 basis points, from 27 basis points to 29 basis points. Provisioning coverage ratio for Stage 3 stood at 58.5% during Q1 FY 2027, largely stable over last three, four quarters. I'll move to the next panel. Provisioning coverage ratio was healthy across products. In terms of product level GNPA, home loans moderated by one basis point sequentially to 34 basis points. LAP inched up from 46 basis points to 62 basis points in Q1 due to movement of one weak account, excluding which the asset quality continued to be fine. Historically as well, LAP GNPA remain in corridor of 50 basis points - 70 basis points, with Q4 being an exception. DF GNPA stood at 12 basis points due to movement of one account from Stage 2 to Stage 3, where necessary resolution efforts are being undertaken. Overall, NNPA inched up by 1 basis point sequentially to 12 basis points. I'll go straight to panel number 41, which is a management assessment now for the current financial year. From last year, we have been sharing the management assessment for the year along with the Q1 results. That's where we are sharing the assessments. We have seen various geopolitical factors which have played out during last three, four months, and also a bit of a macro outlook, which has been uncertain due to the various geopolitical factors. Inflation impact is yet to be assessed. Volatile borrowing cost movement had been there in the money market in the quarter one. Given home loan industry grew by 9.4% in FY 2026, assuming that the growth rate remains in the corridor of a 9%-10% or a 10.5% for home loan industry, that is where we are projecting the FY 2027 assessment also in the range of what we did the last year. While in the Q1, there has been some moderation in the BT out pressure in the home loan side, we are right now cautiously watching that whether it is a trend or we estimated it to go down from Q1 2027. As of now in Q1, it is moderated a bit from Q4, but we'll watch for one more quarter for us to see that it is a trend which can then result into a higher AUM growth. Considering stable interest rate regime, which limits up for repricing opportunity because there is a stable interest rate regime. The old portfolio which is going out is a higher IRR portfolio, while the new portfolio which is coming in because of a competitive intensity remains the same in the way it was in Q4 and there is a little pricing movement in the acquisition side. The NIM is expected to moderate by 20-25 basis points during FY 2027 from what it was in FY 2026. Operating efficiency shall continue to improve. We are estimating it to be 19%-20%, which was broadly in line with what we achieved as end of the quarter, but we will expect a bit of a movement in the positive side. No deterioration seen in the credit behavior across our products, and hence asset quality is expected to remain healthy with GNP of 30-35 basis points and a credit cost of 10-15 basis points. Coverage, as per our normal guidance, shall remain in between 50%-60% on the GNP. On a profitability, ROAs again assessed to be in the range of 2.1%-2.3% for the year. Leverage levels are likely to fluctuate between 5.8x-6.3 x. We are already at close to 5- 5.8x. 5.8x. We are likely maybe end the year at 6.1x or so. Accordingly, ROE is expected to be in the range of between 12.5%-13% for FY 2027. That's all from my end on the quarter updates and full year assessment. I, along with senior management team, are happy to take any questions from your side. Back to you, Rinesh. Thank you very much. We'll now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants, you may press star and one to ask a question. The first question is from the line of Abhijit Tibrewal from Motilal Oswal. Please go ahead. Good evening, sir, and thank you for taking my question. The first question is around this daily guidance that we put out for FY 2027. We have said that we expect NIM to moderate by 20 - 25 basis points. Within that, I'm just trying to understand what part of this compression you foresee coming from the pressure on cost of borrowings. We all know incremental cost of borrowings have been moving up for the last two quarters. Some color around has there been some respite over the last 1.5 months on that front? The other thing is, I'm just referring to panel 41, where you said that there are limited upward repricing opportunities within the stable interest rate regime. I think, correct me if I'm wrong, what is also true is that MCLR of banks have gone up by 5-1 0 basis points. We've heard that PLR of NHB has also gone up, NCD borrowings themselves have actually been coming in at higher cost. Is there a case for increasing the PLR from here or what we have shared in the past, large HFCs like us have to remain price takers given that banks are the price setters. Just trying to put this puzzle together, if you could help us on understanding. Thanks, Abhijit. Abhijit, your first question was on the NIM moderation 20-25 basis points, what we are calling out, largely coming from the yield part because like I called out, what happens, both the answers. Second question, what you had said, limited upward pricing and the yield. In the stable interest rate regime, which we are expecting now, stable interest rate regime, I'm talking from the point of view the pricing in the market, acquisition pricing in the market. Is by and large stable now for quite some time at the range what it is there in the prime housing space. In the stable interest regime, whatever book is attriting, that book attrites at largely a historical book, which is at a higher yield than what the book is coming. A natural process in the stable regime is that your book what gets replaced is of a lower acquisition IRR than the portfolio unless you change the mix dramatically. Change the mix dramatically where the business from where the incremental business is coming is different. The same business, if your asset mix is going to remain largely stable from the composition point of view, then in a stable interest regime, the pressure on the NIM will come from the yield compression, assuming that the acquisition pricing in the market remains in the range where it stands. That's on your question one. On the question second on the upward pricing portion, you rightfully called out. Banks might have increased MCLR and NCD borrowings in the market are priced higher, specifically from Q4 onward. Q4, Q1 largely were in the same range. Q4 was because of a liquidity and Q1 from the macro instability due to geopolitical factor. The pricing opportunities in terms of a market acquisition are linked to the market players' pricing, which you have rightfully called out, is we have not seen any trend for large scale acquisition pricing upward movement. That's why we are not factoring in. That's where we say the limited opportunities. To an extent, whatever opportunities they are coming is because of a balance mix. Like we had called out, today, we are 84/16 in our mix within home loan of a prime to Sambhav. By the time we exit the year, we'll be 80/20. There will be a uptick in the yield or the pricing in because of a change of a mix, but if we remain the same mix, that opportunity is limited because prime is much larger in size compared to the Sambhav Housing. Have I answered your questions, Abhijit? Yes, sir. That answers my question. Second question I had is, this quarter, we are seeing a lot of these large HFCs, including some of the smaller affordable HFCs, moving to encashment basis of checks. Just trying to understand, you'll recall almost two years back, the regulator NHB had said that we should all move to check handover. Here, how do we recognize disbursement, say, an interest income? Abhijit- The related question here. Sir, yes, sir. For this, for last six years, we had always been on encashment while regulator gave the guidance two years back. Our whatever numbers are reported had always been reported, even when we were an unlisted company long back, is always on encashment. We start charging interest only on encashment from last six years. There is no check handover interest start principle in BHFL since six years. Got it, sir. That explains. Thank you. Lastly, sir, on NHB, we keep hearing that there's a lot of reviews that keep happening, lot of thematic audits as well, like how do you compute the PLR, and things like that. Again, regulator is the regulator, we understand. Just trying to understand, are things there okay? Or as you'll recall, maybe two, three years back, there was a lot of overbearing that came from the central bank, especially in the PFC sector. Are we looking at something like that in the housing finance space now? Or are things the usual what they had been? Abhijit, our stance has been slightly different since earlier as well, even if you call the earlier. We always believe regulators are there to improve the market or set right any, let us say, any imperfections or any what they see, which is not in rightful interest of a long-term development of the market or in the customer interest. There are certain practices on which we or any other company can get impacted. From the spirit of regulators, whether earlier what you're calling out or now, we don't disagree with the regulator spirit in terms of driving the practices, what they want to drive. I would not call it in any way impactful to the company. Rather, it will help the sector in the long run to grow in more resilient manner and a more mature manner. We don't see any impact of this. I think overbearing is probably a harsher word. At least to the best of our understanding, we have not experienced it. Got it. Sir, last question from my side. This quarter, obviously, credit costs are coming much lower, I think 5 basis points. Are there any one-offs there? Because I see for the full year, you're still guiding for 10 -15 basis points. Yeah. This quarter, we had done a assignment out of it close to INR 2,300 odd crore. That is what the difference in AUM you look at. That's why the Stage 1 provisioning is lower, and which results into credit costs being lower. Second part also is there in the quarter four of last year, we had enhanced significantly with Stage 2 asset coverage because of a uncertainty due to macroeconomic factors that may ask for, where we have not seen any impact now. We have not done that similar acceleration. There are two one-timers. One one-timer was in quarter four of last year when we did an acceleration. Second one-timer, what you can call out, is a much larger assignment out, which results into your release of your Stage 1 provisioning to that extent. That's why for the year, we are still guiding at 10- 15 basis points, which is the normal range for BHFL credit cost to be there. This is a one-off, you can take it as a 5 basis points. Got it. That explains. Thank you so much for answering all my questions, and I wish you and your team all the best. Thank you, Abhijit. Thank you very much. Participants, you may press star and one to ask a question. Next question is from the line of Gaurav Khandelwal from JPMorgan. Please go ahead. Good evening. Thanks for taking my questions. I've got two questions. One, when I look at the yields this quarter, loan yields have been flat. Cost of fund has been down 7 -odd basis points. How come is margin declining by 13-1 4 basis points while spreads are also flat? Can you just help me understand the mathematics behind all of these? Thanks, Gaurav. Another Gaurav will explain you, Gaurav, on this. Spreads are largely flat because spreads are basically computed basis portfolio yield and cost of funds. Portfolio yield as on the quarter end versus what you see as cost of funds as on the quarter end, or for the quarter. That's the difference, where we are spreads predominantly flat. It's a 3-4 basis points movement, that's why you are seeing 1.7% remaining 1.7%. Portfolio yields overall have come down because of the reasons which Atul had mentioned earlier. Attrition, higher yield book going out, lower yield book coming in, et cetera. That's where you'll see compression, which has come in in this quarter and some bit of it further expected through the year. That's where the guidance is on the yield compression. Predominantly, that is what will flow through on the NII and NTI compression as well. While some benefit will come from the cost of fund movement through the year. Largely, it will still have compression because of the yields going down. Thanks for that, Gaurav. On cost of funds, how are July cost of funds looking compared to the first quarter exit cost of fund yield rate? We'll be sideways, Gaurav, for the quarter two in cost of fund with a tendency overall to be a minus from whatever cost of fund had been in Q1. Overall, Q2 cost of fund would be sideways with a downward bias. Got it. Just another one on the disbursement run rate at Sambhav. INR 450 crore-INR 465 crore is, and we've seen that pick up in the last few quarters. When I look at the average ticket size at Sambhav, that's constant at INR 28 lakh in the last two, three quarters. How is affordable within that progressing? Once affordable becomes a bit more meaningful in the portfolio size, what should the average ticket size in Sambhav book look like? The current mix of affordable within the Sambhav book is close to one-third, that's what remains stable. 33%-36% is a mix of affordable within the Sambhav Housing. Affordable ticket size is close to INR 18 lakh. We are generally not in the sub-INR 10 lakh or a sub-INR 12 lakh kind of a bracket because affordable also, we are largely towards a If you have to say, if there is any upper segment of affordable, then we are there and there. Our ticket sizes are generally between INR 10 lakh-INR 12 lakh to INR 27 lakh- INR 28 lakh in the affordable side, not from INR 3 lakh, INR 4 lakh, INR 5 lakh to INR 15 lakh-INR 20 lakh. That's where the average ticket size in, as of for next six months to one year for the purposes of current financial year, that's the segment largely we are going to be there in affordable. Average ticket size affordable should remain INR 17 lakh-INR 18 lakh. A bit of a bias going downward for overall Sambhav Housing ticket size from INR 28 lakh in the current year to INR 26 lakh-INR 27 lakh because as we continue to grow more in the non-top markets, because that's a geo expansion is one of the strategies in the Sambhav Housing. As we continue to grow more towards the Non-metro and the next three level of location in Sambhav Housing. A ticket size reduction should come from there. Mix between near-prime and affordable should by and large remain the similar mix as we exit the year. Ticket sizes in both the segment in the same market should remain similar. A bit of a negative bias or a downward bias on the average ticket size coming from a more contribution from a, let us say, Tier 2 or a Tier 3 locations as we go forward. For the current year, you should assume the ticket sizes to be largely stable with a downward bias of INR 1 lakh-INR 2 lakh max as we exit the year. Thanks. That's very clear. Thanks for those insights. The final one, sorry if I may. The construction finance asset quality NPAs have increased quarter-on-quarter. I think I missed your comments earlier. What are those? Is there something to worry about? No, this is only one account, Gaurav. This was a Stage 2 account in the last quarter, which has moved to Stage 3. The teams are working to resolve that account. There's only one account. There's one account, which was part of Stage 2 LAP. Okay. Got it. Thank you so much. Thank you. Next question is from the line of Kunal Shah from Citigroup. Please go ahead. Yeah. Couple of questions. Firstly, with respect to the guidance on spread. We are seeing it 20- 25 basis points decline in terms of the margins from, say the FY 2026 levels. FY 2026 was 3.9%. We are already at 3.7%. From current level, I don't think we are looking at much of a pressure through the year. So 10- stable to 5- odd basis points. Is that correct? Yeah. From 20-25 basis points when we are saying, we are calling out from the last year. In the first quarter, there is a 14 basis points decline. You can say 6-10 basis points of a further decline, what we may envisage in Q2 and Q3. Yeah, average for last year is still 3.9%. Yeah, maybe not much in terms of the spread compression from the current level. Yes. Less than 10 -odd basis points. Yes. Yeah. The second question is, we have seen movement happening from Stage 2 to Stage 3, both in LAP as well as developer finance. There is no increase in the provisioning. When we look at it in terms of the numbers, INR 136 crore Stage 2 plus Stage 3 and INR 64 crore of provisioning, it is continuing, and it is a very small amount, nothing big. Against the INR 20 crore, which is there on the developer side, that is also the INR 9 crore. Why maybe transitioning from Stage 2 to Stage 3 not leading to any increase in provisioning? Generally, what will happen now, LAP and DF both are handled differently because LAP, it is a pool which always comes in. If there is an earlier account which is higher provision, it was, let us say, a much higher DPD, higher provision. If it gets normalized during the quarter, the release is much higher versus a new customer which moves into an NPA, the provisioning. When the customer moves to a 90 DPD, the provisioning rates are different. As it moves to, let us say 180 DPD, the provisioning rate is higher. As it moves to 210 DPD, it is much higher, as it moves to 240- 270 DPD. With every movement of a DPD, the provisioning increases. Now, at a point of a time in a pool account, whether in a home loan or LAP, there is a pool account of an NPA. If an older account, which has been rolled back, had a much higher provisioning coverage compared to the new account which has moved in, which will have a far lower, there is a bit of a provisioning plus minus will happen. This is that. It is basis pure formula and a pure DPD-based logic. There is nothing else to see from there in terms of in the LAP. In developer finance, the provisioning happens on the estimation basis, the way we are seeing the account to move. Typically, if we are seeing in Stage 2, because there is a particular one account which moved from 2 to 3, we were aware as a management that the account is going to be in a longer-term issue. The provisioning in Stage 2, which we increased in the last quarter, was already higher than the provisioning, what we require as it moves to 90 DPD. That is why you are not seeing any change in the provisioning. The account is provisioned at a higher number than what it would have required. It is provided already at a 48%- 49%, while at an entry level it would have been required, let us say, at a 90 DPD when it moves to. As per the ECL model, it requires a provisioning of close to 33%- 34%. The account in Stage 2 itself was provided at a much higher level. There is no requirement to increase provisioning on it as it has moved to 90 DPD. That is how. Got it. One account you see the provision gets stable. Okay. This LAP account, weak account was of INR 18 crores? Yes. Maybe when you look at it, INR 63 crore, maybe almost say INR 81 crore moving down to INR 63 crore in Stage 2 and INR 55 crore moving up to INR 73 crore in Stage 3. This INR 18 crores account is just moving. I think INR 18 crore is the total movement, not one account, sorry. Okay. I- Okay. Okay. Yeah. That's the reason you are saying the pool. Parag is just correcting me. You had mentioned one account. I said INR 18 crore movement. Yes. Okay, got it. Perfect. Similarly, when you look at it, Stage 1, almost INR 7,500 crore of increase in Stage 1. In absolute term, the provisioning is almost INR 401, similar to that of last quarter. You indicated assignment, but ahead assignment led to almost a similar kind of a release, which would have required maybe 30- 32 basis points on the INR 7,500 crore incremental pool in Stage 1. The release on account of assignment would be close to INR 20 crore-INR 22 crore, which would not have required a provisioning INR 13 crore-INR 14 crore. INR 13 crore-INR 14 crore, Gaurav is correcting me. INR 13 crore-INR 14 crore is a lesser provision required. See, the provisioning, Kunal, moves. This is a type of a customer you have brought in, the rating of the customer or the type of assets what you have assigned out. Now, if the asset assigned out is of a higher-rated customer, ECL provisioning is different for each account. Because ECL is a model-based, rating-based pool. There will be too many pluses and minuses. You will not be able to do a simple mathematics of a calculation. No, absolutely agree. The only question was, say if INR 7,500 crore is the net increase, on that even if we do INR 30 crore odd, there would have been almost INR 26 crore-INR 27 crore odd of provisioning, and release was INR 13 crore-INR 14 crore. The only thing was, the credit cost is much, much lower. In fact, would we have provided maybe slightly higher and improved the coverage across the buckets? Yeah. Kunal, you are saying that INR 26 crore, instead of that, we could have used this to do more provisioning coverage, that's what you are suggesting? No, sorry. I was just saying INR 7,500 crore is the net increase in Stage 1 assets. From INR 123,000 crore to INR 131,000 crore. On that, normally our coverage is 30-32 basis points. Okay? That would have called for at least INR 23 crore-INR 25 crore of provisioning. Our provisioning is remaining same at INR 401 crore-INR 401 crore. Yeah. Okay. I understood your question. Kunal, what happens is, each year in the January board meeting, there's a ECL model recalibration which happens, and which is approval is done and which is validated by statutory auditors and then the external auditor. Given the credit performance has been stronger in last two years, the ECL rates in the last year when we revalidated the model, have gone down on Stage 1, because Stage 1 provisioning is what provides for your next 12 months delinquency. All our portfolios have been behaving immaculately, there has been a downward movement in the rate applicable on most of our portfolios in the recalibration of the model, what we did in January to March. That's why you are seeing that. Second part, within that also, when you look at a INR 7,500 crore, which I was saying, there are moving pieces. Let us say in lease rental discounting, you onboard a AAA customer. The general provisioning requirement there is very different than you- Yeah. - onboard a local developer. Also, there is another moving piece, if I have to complicate your life more. We have disbursed INR 19,000+ crore. AUM growth is INR 8,900 crore. Now, INR 11,000 crore attrition, what has happened, what was the category of that customer attriting? The provisioning on that could have been very different versus a new customer which is coming in. Because ECL model on a new customer coming in varies the provisioning from a bureau point of view also. If you acquire more customers with 770 or 780 + kind of a bureau score, your ECL model throws up a much lower provisioning at that, versus what has gone out. There are multiple moving pieces, Kunal. Got it. There's not a pool-to-pool computation calculation. That's what only. Got it. Perfect. If I can quiz one more question. Yeah. Just on OpEx to NTI, still maintaining at 19%-20% odd with this kind of a growth rate. I understand there is maybe the incremental investments which are happening on near prime and affordable. Still, wouldn't that improve a bit and get towards the range of our medium-term guidance? Nothing visible during this fiscal in terms of the improvement of OpEx to NTI or operating leverage. Kunal, it would be sideways because there are two parts to the OpEx to NIM equation. What are the growth in the NIM? If you're calling out for the moderation of a NIM, that also impacts the equation. Second side is what we continue to make investments. It will be a downward from the last year, but largely we are assuming it to be sideways from the last year, because we are assuming a margin compression and a NIM downward. NIM downward itself. If you are more efficient also at the same, but with a NIM compression means that your OpEx to NIM income remains, looks the same, even if you're more efficient. Okay. Got it. Yeah. Thanks. That answers all the question, yeah. Thanks, Kunal. Thank you. Next question is from the line of Viral Shah from IIFL Capital Services. Please go ahead. Yeah, hi. Hi, Atul and Gaurav. Hi. Thanks for the opportunity. I had actually three questions. Atul, I think you did call out, and also a couple of participants referenced the increase in the LAP GNPA. I'm not focusing more on the provisioning part. But is there anything specific with regards to, say, the cohorts of the INR 18 crore pool that you mentioned, say whether geography or the customer profile wherein we are seeing some stress? The reason why I'm asking is that one of the NBFC, a couple of weeks back, called out some stress in the salaried tech employee kind of sub-segment in Bangalore. Is there any connotation to that? No. Viral, if I take you to last seven quarters LAP GNPA, and you will be able to refer them. Q3 FY 2025 LAP GNPA was 0.76%. Q4 it was 0.65%. Q1 FY 2026, it was 0.62%. Q2 it was 0.59%. Then it came down to 0.52% and 0.46%. It has gone back to 0.62%. Year-on-year or the previous years, GNPA on LAP book had always remained, because it is a customer segment which comes under a cyclical there. We are not in affordable LAP. We are largely in a prime LAP or a higher ticket LAP. That is where when you look at even seven quarter or even if I go, because seven quarter number is there right in front of me, but even if go back as well, it has always been in a corridor of 50, 60, 65, 70 basis points. There is no exception or nothing to call out in terms of any segment or any geography outcome, what we are looking at. Got it. That's helpful, Atul. Two other questions that I had was basically on the cost of fund, Gaurav, if you can basically highlight what led to this 7 basis points kind of an improvement on a sequential basis. Was that predominantly the hedged book which was there, or is there anything else over here? One part of it is the hedge book, Viral. Second part is a natural repayment of older, higher cost borrowings because there is a maturity cycle which happens of older higher cost borrowings as well. There was some reset of the old borrowings at a lower price, which has happened, which has, at an incremental, helped us to reduce our incremental cost compared to existing borrowing, and that's what has resulted into overall cost reduction. What we are calling out also, this is a trend, what we are seeing and the number what we are projecting. In the quarter two also, we are looking at it sideways with a bit of a downward revision from here on as well. Got it. There are one, two, three. One is the hedging. Second is the repayment of older, higher cost borrowings is a natural process of attrition what happens as the books matures. Third is reset of some of the old borrowings, which were at a bit higher price, which has come to lower. Got it, Atul. The last, basically, again, just double-clicking on this piece. On the margin front and the guidance, I understand that incrementally you are guiding for only, say, another 5 or 7 basis points kind of a margin compression. Given that our cost of funds should be on a sequential basis lower, plus the margin guidance that we have basically is at a total income level, which also includes the DA income. Given that our share of DA has been increasing, I was just expecting that shouldn't this be or is there some conservativeness that you are baking in over here in this margin guidance? No, Viral, I think we are estimating it in a, I'll not say conservative, we are cautious in estimation. I'll not say conservative. Based on our estimation, it should result into 25 basis points with even a cost of fund downward because the yield computation in terms of because we are able to see every month what is going out at what yield and what is coming in at what yield. That's where we are doing a mathematical projection. We're neither being aggressive in assumption nor being conservative in calculation. Got it. That helps a lot. Thank you, Atul, all the very best. Means in 12%-13% corridor, it's not exceptional or higher assignments which we've been doing. Yeah, that's what I was also, we had always been, Viral, in 12%-13% of the book being assigned, always. In one odd quarter, it can be plus minus because a quarter movement here, we did it in there. If you look at a trendline basis at a company level, 12%-13% of AUM is always what is assigned. Yeah, I was just referring to your right, just the incremental 50- 100 basis points kind of a difference. Not much. If the number on the year basis remains in that range, the year basis margin compression is what we are calling out at a 25 basis points, because year basis number is not going to change from 12%- 13% the assignment. A quarter movement can happen, like last year quarter one was lower, maybe quarter three or quarter four was heavier. Right. This quarter distance can be there, at a percentage level, the number doesn't move, Viral. Got it. Makes sense. Thank you very much. Thanks, Viral. Thank you. Participants, you may press star and one to ask the question. Next question is from line of Nishant from Kotak Securities. Please go ahead. Thanks for taking my question. We're just looking at the fee income line item. There's a fairly large increase this quarter. How should one think about it? Hi, Nishant. Gaurav here. Nishant, just to clear, you're looking only at fee and commission income line or the entire other income? Sorry, fee income line. Income line, yeah. Fee and commission income predominantly considers insurance incomes, foreclosure, bounce, penal, et cetera, and all other those charges. Predominant movement year-over-year is because of as the disbursements have increased, basis that the insurance incomes have increased. Other income lines are predominantly in sync with the year-over-year, whether it is any kind of penal charges or other stuff. It's all business-linked variable incomes. Got it. Your loan growth guidance for the year, that I believe bakes in a lower BT out rate, right? I mean, what you're seeing in the first quarter, you're saying it probably continues in the second quarter and so on. That bakes in a lower BT out rate or does it bake in a normalized rate and there could be a scope for an upgrade? Slightly lower BT out rate, but not very. It is what we are baking. Because in last year also, what happened is the BT out rate jumped up from July onward because there was a 50 basis points cut in June. July onward, the BT out rates had significantly gone up. One quarter which has been slightly lower than the previous quarter, but we are just holding on for us to assess it. Quarter two, if we see the downward trajectory further, I think we'll be more confident. That's what you're baking in the numbers. Otherwise, I mean, very theoretically, there could be some downside if BT increases or from the current level. If the price in market doesn't go down, which there is probably a little probability of it going down. Increase side should not be there. Decrease may or may not happen. The increase can happen only if the pricing in the market goes down further, which will surprise me if the pricing goes down further in the market. Fair enough. Just a little bit on the market itself, in terms of demand dynamics. You alluded to the fact that the industry has grown at some 9.5% last year. Where do you see the overall demand? Do you really see this going in double digits or mid-teens levels? How is the scenario like? Nishant, overall demand dynamics is, I'll say, slightly muted versus what previously we used to see. The industry growth has been muted last year, and to the best of my understanding, because it is very difficult to predict, sitting in July, August. Probably, industry growth is likely to be in the similar range or a bit muted only from what normally we used to project at a 12% kind of industry growth there. My estimation, it may not be in the range of 11%-12%, what we normally assume the market to be there. Sales are also a bit muted. I call it a stabilization phase more rather than a downward phase, because the price momentum has dropped. In any market, if I have to, on the real estate market, when the prices are going up, you see a bit of a preponement of a demand, which I think we saw in two years prior. In FY 2024- 2025, there was a lot of preponement of demand because as the prices were going in, the people were rushing to lock in there. As the price stabilization phase happens, people slightly postpone because there's a time value of a money if you are confident that the price will hold. I'll say the demand is stabilized or a bit muted compared to the previous two years. Okay. Thank you very much and all the best. Thanks, Nishant. Thank you. A reminder to all the participants, you may press star and one to ask the question. Next question is from the line of Abhishek Murarka from HSBC Securities. Please go ahead. Yeah. Hi, good evening. Hi, Atul. Hi, Gaurav. Hi, Abhishek. My first question is, just taking off from Nishant. You have mentioned in your PPT also that code foot attrition has reduced. A, this is in prime or this is across the board. Second, what is leading to this tailwind? Because if I see your disbursements are up quite sharply, your BT out is a little lower. What is leading to this tailwind? Who stepped off the pedal? Is it PSU banks? Is it large private? Who's not competing? What is happening in the industry? Yeah. There, the tailwind is purely the outcome of various actions, what we've been taking in the prime side. In the prime home loan side, what we've been taking actions of deepening and widening there. There, we have seen a reasonable uptick in the disbursal momentum. Commercial businesses have continued to do well. Sambhav, we have talked about. There is a significant YoY growth. There, we talk about not YoY, we talk about from last quarter and previous quarter, because given that historical base had been low. All businesses or all units in the company, we see, we are still very small, Abhishek, compared to the overall market. If we gain a bit, it is from, we are taking slightly more from the market growth. We are not taking from someone. Our higher growth cannot be interpreted by someone else ceding the space. We are just taking a bit more from the growth in the industry, because industry is that large. There's no other dynamic change which has happened in the market. The BT out rate is slightly lower. That is when we talk about the BT out rate, that we are talking about only in terms of a home loan, because that's what largely people refer to. Developer finance, it's largely natural attrition, which is a project cash flow run. At a company level, aggregate level, that continues there. The lease rental discounting, the attritions are largely led by customer selling of assets or some of the balance transfers are not that large play in the other part of the businesses. That's why you talk about home loan. Our overall aggregate attrition has multiple other pieces. Multiple other pieces. The aggregate disbursal and aggregate growth has other pieces or a play of other businesses. We also said in home loan, we have seen a bit of a easing. Yeah, I meant in home loan. Whether it is in prime or also in near prime affordable or. Near prime our book is much, much younger. The pricing acquisition, there is no much of a, you can say, opportunity of a BT out there because the average book will be 12 MOB. We started this business around 24- 28 months back or lower than 12 MOB because we have been growing faster every month. When we talk about a BT, we talk about largely the prime, which is our historical book, and also the segment which is most susceptible to the BT out by PSU or the banks. Got it. Just one quick sort of data keeping question. In your Sambhav disbursements, how much would be affordable and how much would be near prime? Can you split that up? One third would be affordable and two third would be near prime. Between 33%-36% odd mix affordable within the Sambhav. In some months it can be 33%- 34%, some months 35%- 36%. You can. Okay. Take a ball point figure of one third to 37%. Disbursement mix is similar to AUM mix broadly. AUM- I think you said 33% of Sambhav is affordable in AUM. I called out the disbursal mix only. I had not called out. Oh, that was disbursement. Okay, got it. I'm answering the same. In a way, my answer is the same. Okay. I thought that was AUM. No, no. I called out on disbursements only. All right. Thank you. Thank you so much and all the best. Thanks, Abhishek. Thank you very much. There are no further questions, I'll now hand the conference over to the management for closing comments. Thank you. Thank you all for patiently listening and thank you all for giving us an opportunity to explain our company results to all of you. A very good evening to all of you again. Thank you very much. Thank you, Rinesh. Thank you. Thank you very much. On behalf of ICICI Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.