Ladies and gentlemen, good day and welcome to Can Fin Homes Limited Q3 FY23 Earnings Conference Call hosted by Investec Capital Services. As a reminder, all participating lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during 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. Nidhesh Jain from Investec. Thank you, and over to you, Mr. Jain. Thank you, Neeraj. Good afternoon and welcome to the Q3 FY23 earnings conference call of Can Fin Homes Limited. To discuss the non-financial performance of Can Fin Homes and to address your queries, we have with us Mr. Amitabh Chatterjee, Deputy Managing Director, Ms. Shamila M, General Manager, and Mr. Apurav Agarwal, CFO of Can Fin Homes Limited. I would now like to hand over the call to Mr. Amitabh Chatterjee for his opening comments. Over to you, sir. Good afternoon, all dear investors, welcome to this Q3 earnings call. Our company, Can Fin Homes, has considered completed 35 years of existence. During this year, we have reached a milestone figure of INR 30,115 crores. We have crossed the INR 30,000 crores figure, registering a 9-month growth of 20% YoY growth. Our disbursement in this 9 months from INR 5,500 it has become INR 6,410, registering a 15% YoY growth. Our income has risen by around 38.65% from INR 1,427 to INR 1,928. Our operating profit has also shown an increase from INR 487 to INR 644, to around 32.16% growth. Our PAT from INR 348, it has become INR 455, registering a 30% growth. Gross NPA has been well contained. Against 177%, we are now around 60% gross NPA and so our net NPA is around 30%. Our asset quality has remained stable. 7.30% net NPA. With this, I request the investors to ask any questions they have. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants, you may press star and one to ask a question. The first question is on the line of Abhijit Tare from Motilal Oswal. Please go ahead. Yes. Thank you for taking my questions. Good afternoon. I had two questions. The first one on, how are you looking at the demand environment right now? YOY disbursements were largely flat in third quarter. Is there some sluggishness in demand which has started coming in because of the high mortgage rates? Or would you say that 3Q was more of an aberration and we can again expect buoyancy to be restored from the fourth quarter onwards? That is my first question, sir. Okay. Just to answer your question, which demand is impacted despite that rising prices are rising the cost of the building, demand is still there. Going forward, I think that desire to have ownership of house in the affordable segment is quite good and demand will be remaining intact in the coming quarter. Coming to Q3, I think we have disbursed more than September. It is registering around 9% growth is there as far as disbursement is concerned. As far as book is concerned, it is around 4.4% growth is there. I think whatever we projected 18%-20% YOY growth in both in terms of disbursement and book growth, we are maintaining that trend. Got it, sir. The second question that I had was on the liability side. Just trying to understand, I mean, maybe to surpass to this question, what was the total borrowings number as on December? Our total borrowings was INR 27,800. On the liability side, I wanted to understand that, I mean, how much did you borrow from NHB during the quarter? Are there any current undrawn sanctions from NHB which maybe you are looking to draw down in the fourth quarter? Because what we are seeing that during the quarter you have borrowed, I think more extensively in the form of NCDs, commercial papers, basically from the debt market. You've also drawn down from NHB during the quarter. Wanted to understand, I mean, are these loans, NCDs and CPs kind of coming, I mean, effectively on lower priced versus bank term loans and which is why you are moving there? Is the idea that given that 25% of the incremental borrowings during the quarter has to happen through debt market instruments, which is why you are maybe kind of borrowing through that instrument in the first of nine months of the year and then maybe in the fourth quarter we will see more borrowings from the bank. Some related question again here. Is that if I kind of look at the margins, given that you have an annual reset on the loans that you have given home loans that you have given to the customers, is there a reason to believe that a margin compression will maybe continue for one or two quarters depending on the trajectory that repo rate will take? From there on, we can expect some improvement in margins or some stability in margins. To answer your that first energy question, I think we have borrowed around INR 900 crore during this quarter. We have got a sanction of around INR 1,500 crore from energy. Out of that INR 900 crore we have borrowed. It is only constituted around 23% of the total borrowing as of now. Total outstanding from energy is around 23% of the borrowings. That is one point. Why we raised NCD? Because we find that during the end of the year there is a lot of demand for NCDs from the market, so that time we are getting high rates. We thought it, let us span it out through the whole of the year. As a prudent decision, we have taken this, where let us borrow throughout the year to get NCD at cheaper rate. Commercial paper is We are what we were one year ago, I think commercial paper has not come down. It is mostly a cost management tool. Whatever commercial paper we have borrowed, it is bank backed by bank borrowings, unavailed limits. We feel that at that date, commercial papers are ruling lower than what bank has to offer. We decided to go for the commercial paper. When they mature, if we find it is prudent to use bank borrowings to liquidate that, we liquidate it. Sir, on the margins? Margins. Now around 72% of we have raised the rate of interest twice in this nine month period. 72% of our book is yet to be repriced. It is going to happen in next three to six months time. I think we have already bottomed out as far as margin is concerned. What we foresee that going forward our NIM and spread should increase because major portion of the book will be repriced at a higher rate. Got it, sir. I mean, by how much have we increased our lending rates in this nine months since repo rate cycle started? We have increased it at 145 basis points. 145 basis points. Great, sir. Sir, thank you so much. Just one last question. Last quarter you had guided for about, I think, 12- 14 basis points of credit costs. Given that we have already seen the first nine months of the year, is there a reason to believe that credit costs in this year could be actually lower than that 12 - 14 basis points that you have guided? See, we have our incremental credit cost during this year was 0.06%. Going forward, our credit cost will remain in that range only, our incremental credit cost. Because our book is, our book asset quality is going to be stable in the coming quarter. Got it, sir. That's all from my side, and, thank you and all the very best. Thank you. Next question is from the line of Dhawal from DSC. Please go ahead. Yeah, thank you for the opportunity, sir. Sir, first question just to sort of complete the point on margin. You talked about that the spreads should have bottomed out. I just wanted to understand, you know, this repricing, what's the reason for the delay? Like, why do customers, you know, take like the reset rate takes time for these customers. You said that it will take another three to six months. Just to understand that part. Do you intend to take further price hike or this is basically the peak level that where you are at this point of time? We are following a method of annual reset. All our loan books at the date of the disbursement, they get reset in the same date in the next year. That's why I told it will take around three to six months to get the major portion of the books reset at a higher rate of interest. Our borrowings get reset at a T plus two days, some borrowings get reset at a quarterly intervals. This is the reason for the margin compression. As far as the rate of interest, speaking of rate of interest is concerned, I think now that inflation is almost controlled and now government is thinking about growth. We do not foresee a major jump in high key rate of interest in the coming future. Understood. Sir, just to sort of complete the point on rate of interest. If I look at from the lows that you had in 4 Q 2022, the cost of funds were 5.56 at that point of time. Today they are about 6.62. There is a 107 basis point increase till December. How much more increase do you see from the current level, let's say in the next six months, based on the current rate environment? Any color around that? Just trying to think, the 135 basis, would it be adequate enough to offset the impact eventually? I think we can expect another 20 basis increase in the coming days. Max to max around 20 basis increase. At every 15 days we have an ALCO meeting within our company, and we review what is the position. If required to get the required margin and spread, we may go for another hike in the rate of interest. Understood. Understood, sir. That's very clear. Sir, the other question is on the loan side. You, you said that you maintain the 18%-20% disbursement guidance that we gave in the previous quarter. Just in terms of the ask, so right now we are about 15% odd disbursement growth for the first 9 months. I mean, in terms of ask rate, that would translate to about, you know, like, close to 24% odd growth in the fourth quarter on a QOQ basis, and in absolute terms, about INR 3,350 odd crores. Just, I mean, I just wanted to get your thoughts around it. I mean, what is the kind of growth do you expect for the full year on disbursements? See, generally fourth quarter is better than third quarter, third quarter is better than second quarter. It is a trend which is followed over the years. Q4 also, we are expecting a good growth in numbers. On a conservative side, we are maintaining the 20%, but we may end up in a higher growth. You mean on the loan side? Yes. Book side as well as disbursement side. Understood. Yeah. Just one last data keeping question, relating to provisions. Could you give the stock of, you know, specific plus general plus restructured provision? Last quarter, that number was close to INR 280 crores. Where are we currently? No, restructure provision against RBI respectfully, second phase we are around INR 67 crores we are holding as a additional provision as per regulatory norms. Other than that, we are holding around INR 221 crores on a total book. Got it, sir. Thank you and all the best. Thank you. Thank you. Next question is from the line of Shreepal Doshi from Equirus Securities. Please go ahead. Yes, sir. Please. Shripal, we are unable to hear you. May I request you to unmute your line, please? Am I audible now? Yes, you are. Yeah. Good afternoon, sir. Thank you for giving me the opportunity. I just wanted to understand what are the current card rates that we are offering to our customers? Card rate is currently what we are offering is 9.6%. Yes. new customers onboarded, we are offering 25 bits concession. All right. There, sir, to current business customers, we would be giving them loans at 9.4%. Yes. That is to the prime customers. Prime customers. Okay. The higher rate would be? It depends upon the risk rating and on an average we find it should be around 10%. All right. Just one other question was on this yield calculation side. While we when we calculate it on the basis of average AUM or average gross loans, the, and the reported yield that the company gives, there's a constant difference which is increasing. Just want to understand the calculated yield side of the thing that you guys work out with. Dushyant, could you answer this? Yeah. The interest calculation yield is on the basis of the each loan what is in earning and the interest earned on the each loan for nine months. Because the rate of interest is dependent upon each loan, is dependent upon the credit scoring, risk factors and all these things, even though vac rate is 10.6%, the end of rate will be bit higher or lower. That is why the yield what we are calculating on the straight line method and on the loan wise method differs with a gap of either 15 - 20 basis. Okay. You are doing it on advances, gross advances or net advances like? Gross advances only. It is what we are earning on the loan amount what we have granted. Okay. Okay. Got it. With respect to NIMs, like we, during the quarter, we did a decent job there. What is it that we worked with respect to liquidity? We brought that down or in the balance sheet or what is it that we did differently that we were able to manage the NIMs, you know, so well, while the spreads have come down below 2.4%, which we've been guiding that we will defend? No. Let's see. The NIM is what I have explained earlier. The NIM is totally dependent upon the borrowing cost and the lending cost, as I explained earlier. With the rate being firming up, 6.25 is the repo rate now and another 25 bits also hike. What we anticipate the lending, it may end up at 6.5. Factoring this and take into consideration the overall revision what we have done and the annual reset of the existing book and the incremental lending what we propose in Q4, put together is going to give an anticipated NIM which is higher than the present one. Virtually we are at the bottom of the reverse bell curve. Whatever is going to happen going forward will be an upward trajectory only. Okay. Okay. One last question was with respect to the provisions. If you look at the provision coverage ratio on Stage 3 has been quite volatile over the last, say, two, three quarters. Like earlier it was 53, then it came down to 43, then again this quarter up, it is up to 50%. What is your thought process there? What is it that we are trying to maintain here? See, actually we migrated from the IRAC to the NPA concept as per the regulatory guidelines from Q2 onwards. Going forward, we have to maintain the provisioning as per the NPA or ECL model. Whereas the standard assets also require the provisioning at the rate of delinquency of SMA 0, 1, and 2. Because of that reason, in the IRAC you may have to make the provision at 0.25% or 0.40%. Whereas if you factor that into percentage, the provision requirement may come up to the tune of 0.70% - 0.98% and 1.10%. Because of that reason, the provisioning even for standard assets, ensuring that the NPA will not move, the provisioning coverage ratio will be going up because of the ECL model. That is why what we are seeing all the time, there's come down and it is going up now. Going forward, any incremental lending which is of standard nature demands more provisioning and provisioning coverage ratio also will improve going forward. Okay. Your credit cost guidance remains intact as you... whatever you have guided, right? In respect to- Absolutely. Okay, got it, sir. Thank you so much. Good luck for the next quarter. Thank you. Next question is from the line of Ankush Agrawal from Surge Capital. Please go ahead. Yeah. Hi, sir. Actually on the 72% book that you have said is yet to be repriced, Ankush, I have to interrupt you. May I request you to speak through the handset? Thank you. Is it better now? There's a lot of echo while you're talking. Can I request you to talk through the handset? Yes, sure. Is it better now? Hello? Slightly better. Yeah. Yeah. My first question was from the 72% of the book that you said is yet to be repriced, what is the delta on the yield that you can expect on this book? See the main thing is the, what the reset is going to take place on annual basis. That means- Right. These loans are holding the rate what it was lending to them at the time of lending. I say January lending of last year. Mm-hmm. The rate was somewhere around 8.25% and discounted rate what is given to the class A lender, borrower is around 7.75%. This loan is getting to reset to the card rate, which is going to be 9.60%. That means there is going to be an impact to the positive side in the yield by nearly 2%. This is the delta impact and the revision what will happen. When 72% is going to get repriced over a period of Q4, Q1 and Q2, this is presently 1.9%. Going further it will come down because June we have revised, that means Q1 the impact will be somewhere around 1.5%. When we come to the Q2, it will be around 1.5%. Okay. It's like it will decrease from three to about 1.5. Got it. Got it. In a down trending interest rate environment, this reset would again follow the annual one, right? It won't accelerate. Sorry, I think you are not clear, sir. In a downward interest rate environment, I believe, we will be on the gaining part of it because same thing will happen, the annual resets, would happen and we would be having a higher yielding loan because there would be again a one-year lag by the time that yield gets repriced to a lower level. That is exactly what you told when there is a downward revision rate of interest. Right. We stand to benefit immediately on that. Okay. Got it. Is there a possibility that in case of any situation, like if you want to reprice the book in between, is there any understanding with the clients that in a situation like that we can do it? That clause is always there in the agreement. Okay. We seldom use it because we want not to lose our good customers. Right. We want to- We have, we do have an option there. Yes. We are having an exit option. Got it. Got it. Lastly, sir, on the capital raise, any timeline or any, you know, thoughts like if you are looking to do it because I think we are approaching that eight times static GT that we have always, you know, kind of maintained as a hurdle. If you say that you can do a 20%, probably Q1 we would be needing some capital. Any thoughts on that? See, every year this position is reviewed by the board with regard to capital position and the projected profitability and other things there. We are already having an entering clause. We may raise the capital in coming two to three quarters if required. Okay. Nothing has been decided as of? No, no. As of now, nothing has been decided. Got it. That's all good. Thank you. Thank you. Next question is on the line of Shweta Daptardar from Elara Capital. Please go ahead. Thank you, sir, for the opportunity. Couple of questions. You mentioned that, as against the 20 bits, which you are anticipating in cost of funds, you would see, somewhat as a creep rising going forward. At the same time, given that your card rate currently stands at 9.6%, how much incrementally you see you have that leeway to increase this rate ahead? See now the increasing rate of interest will decide certain factors, what the competition is offering to our customers and what is the targeted NIM and spread we hope, we give to the investors as a reference point. All these things are taken into consideration. Book growth is there, ALM is there, everything. We can also raise the rate of interest at any point of time. Maybe we may increase another 25 bits to 30 bits if required so. Okay. Against this backdrop, and you also mentioned in the previous question that your disbursement run rate of, you know, Q4 is always better than Q3. The momentum definitely has come down. Any slowdown or sluggishness in disbursements will be observed because of the higher rates that we'll come to see going forward? No. See, while it depends upon the affordability factor, whether customers are ready to take that higher rate or not. Now the property prices are shooting up. Rental incomes are also going up. What is the surplus income that customers? The income levels are going on, and depending upon the surplus level available to the customer, I think they can take another 25-50 bits hike. Okay. Okay. Understood. Sir, one last question. Is there anything on the audit front that is going on internally or from the regulator front, any observations or anything that is pending? Internally, have you changed your audit policy or some reviews which are wherein the frequency has increased now? Anything on that front, if you can give some color. Our audit policy is drafted in line with the RBIA audit policy. Apart from that, internally we are auditing our branches once in a quarter, and all VNBs and other branches, big branches, top 20 branches, there we have introduced a system of concurrent audit. If anything is noted, if the corrective measures can be taken at a earliest date. Apart from that, we are also imparting training and other inputs to our staff who are working in the field to be more vigilant and to be more, have more due diligence. No idea. As regards the regulatory audit, I think we have not had anything so far. We have not been intimated, and we feel as such at present there is no trigger to have such audit. Sure, sir. That's well taken. Thank you so much. Thank you. Next question is from the line of Sarvesh Gupta from Maximal Capital. Please go ahead. Good afternoon, sir. Sir, 1 question is on your disbursement rate. Obviously, if you look at the YOY or even sequentially, while there is some growth, but YOY it seems flat. You know, what are the trends that you are seeing amongst your customer base, given that in the last nine months, 10 months, we have seen almost a 200 basis point increase? You know, if you can throw some light on how your customers are taking this interest rate hike and how is that affecting their purchase decision and financing decision. See customers so far they have not reacted adversely to the whatever hike of rate, interest we have passed on. Our BT are under the controllable level. People have accepted this rate of interest hike, and we do not foresee that any slowdown in disbursement or retaining the book is a concern with the current rate of interest. The 78% of your book it is yet to be repriced. What is this annual reset date? Number one. You know, what can be the, you know, once your customer sort of get this sort of a one-time hike of almost two odd percentage? What is the expected, you know, sort of reaction from the customers given this? Because, you know, they might want to sort of shift to other lenders from getting better rates or something like that when they see such a steep hike in one go. See one thing that, first of all, that 72% of our book is yet to be repriced. That is one thing. If they think of going to new banks or some banks, there also they will face a similar rate of interest because whatever bank they go, they will be getting that lending at the current rate. It is not a problem. Since we have been able to control our BT-out at BT, balance transfer, and we do not foresee as a challenge to our disbursement as well as book growth. Understood, sir. Thank you and all the best. Thank you. Participant, you may press star and one to ask the question. Next question is from the line of Rahul from DSP Mutual Fund. Please go ahead. Yeah. Thanks. Just couple of follow-ups. One is on the new MD and CEO appointment. Any timeline around it? I mean, could you just update on that? That would be very useful. The person who has been selected is expected to join in this financial year. No date has been so far finalized, but the person is going be joining in this financial year itself. Okay. Okay. Thanks. Sir, the other question is relating to the restructured book. I understand, you know, bulk of the restructured book was supposed to come out of a moratorium in the last few months. Could you just update us on the, you know, on the behavior of the restructured book? How many percent have, you know, are paying regular or some more data around that would be useful. Lastly, the data keeping question on gross Stage 2 asset. What's the number as of December 31st and the provisioning on Stage 2 asset? Thank you. See, as for restructured book is concerned, that repayment has not yet started. It is going to start in a staggered manner. Since we have formed a team and that is following up of the restructured accounts, though the repayments have not started, but in 30% of those accounts we have started receiving the repayments, and in some accounts are also getting closed also. Going forward, I think we will be handling this restructured book in efficient manner, and against that we are holding around 67 crores provision. understood. Because in the Stage 2 accounts, it is the amount is the same as INR 1,000 crores. It remains same in Q1, Q2 as Q3, since the INR 10 crores upfront down here. We have moved last quarter also restructured accounts are moved to Stage 2. With INR 7 and 1 crores of restructured accounts put together, INR 77 crores is there in Stage 2. Against this the provision held in the book is INR 748 crores. Sir, sorry, what's the provision amount you said? Sorry, I missed that. Provision is INR 48 crores. This is excluding the provision what we held under RWA exposure of INR 67. Okay. Just to be clear, on the 1,000 you have INR 48 crores, on the 700 you have INR 67 crores? Yes, correct. Okay. Okay, got it. Thank you. All the best. Thank you. Next question is from Shreepal Doshi from Equirus Securities. Please go ahead. Sir, actually my question has been answered. It was with respect to the new CEO, which you just answered. Thank you. Thank you. Next question is from Shubhranshu Mishra from PhillipCapital. Please go ahead. Hi, sir. Good afternoon. Just want to know the number of loan accounts that we have underwritten in this quarter versus Q2. That's the first question, sir. The second question is there a plan in place or will the parent be selling off certain amount of stake in Can Fin Homes? If yes, what's the plan or what has been the board discussion around it? The third question is, what would be the top 50 branches, amounting to the total of books, sir? What proportion of book is coming from the top 50 branches, sir? Thanks. Second year on, sir. See, as regard the new sanctions what you asked, we had around new approvals of around close to 2,600 during this quarter. No, sir. Not the amount, sir. I'm asking about the loan contracts, sir. Volume. Number of loan contracts. He wants sanction number. Total sanction amount. Number. Okay. It is around INR 2,400 crores. Sir, I'm asking for the number of loan accounts, sir. This is the value, sir. How many loan accounts have you dispersed, sir? Okay. Okay. Okay. Around INR 12,000. Around INR 12,000. INR 12,000. What was this number last quarter, sir? It was around INR 10,500, you can say. Sure, sir. The rest of the two questions that I asked, sir, the stake sale by parent and top 50 branches as a proportion of your AUM, sir? I think at present there is no talks about stake sale by the parent. There is no discussion in it. I think Canara Bank is making adequate profit and they have got good capital adequacy. What we feel from our end at Can Fin, there is no reason for stake sale at present. Right, sir. As regard this, top 50 branches, it will be somewhere around 40% of the total outstanding. Of the total books, sir? Total books. The same proportion of disbursement, sir? Top 50 would accrue to how much% of disbursement, sir? Top 50, I think it will be to the extent of that only. 40% of disbursement as well, sir? Yes. Around... Not 40%, around 35%, you can say. Sure, sir. Thank you so much, sir. Those were my questions. Thanks. Thank you. Next question is from the line of Chetan Jani from Nuvama Wealth. Please go ahead. Yeah, hi. Thanks for taking my question. Firstly, on your guidance, would you be maintaining similar guidance as 18%-20% loan growth for FY24? On NIM as well, we generally are guiding about 3%, maybe about 2.4% spreads in the past. Do you think in FY24, once you have majority of the reset done, we will be coming back to at least 2.4% or above spreads for FY24 as a total? That is the first question. The second question I have is, in your presentation, if you look at the slide 12, on September 2022, cost of funds is about 6.19%. If you look at the pie chart wherein you are giving the borrowing mix at the bottom, the cost of funds for September 2022 is 5.57%. Could you just highlight why there is a difference there? Thirdly, I think we have reduced the number of branches by about five branches, when compared to Q1Q. Any update on that, why there has been a reduction in branch count? Branches, we have opened five branches during this financial year, and we are going to open around five to seven branches every year. As regards the projections for the next financial year, with NIM and spread, Guidance will be around 3.5% NIM and 2.4% spread. Sir, on growth? Growth it will be around 20%. The growth. Right, sir. On the cost of fund difference? The cost of fund, what is mentioned in the funding basket is 5.57% is YTD. Okay. Whereas 6.19 what has been grown is incremental for the quarter. Okay, understood. Sir, one final query on just structurally. What we have seen is what you have mentioned as your incremental housing loan ticket size that you mentioned in your PPT, that has been going up from Q1 - Q3. Q1 it was INR 21 lakhs and now it is INR 24 lakhs. Is it that you are structurally targeting more higher ticket sizes, or it is just a factor of prices going up and essentially your loan amount simply going up? What is LTV increase? What is driving that increase? It is a combination of both, because that all those big branches which are headed by experienced and senior level persons. We are encouraging them to give a higher ticket size loan. In tier 2, tier 3 cities, we are focusing on more on affordable sector. Right. There is no LTV increase associated with this, right? No, LTV is same. We have not changed our any policy with regard to LTV. It is same as it was before. Okay. Understood. Thanks so much for your answers. Thank you so much. Thank you. Next question is from one of Ashwani Agarwalla from Edelweiss Venture Fund. Please go ahead. Hi, sir. Just some question on BT out and BT in. If we see in last one year, our interest rates have increased by roughly 190 basis points, and in last three to four months, the increase has been roughly 85 basis points. In the last three months increase, banks have only passed on roughly 20-25 basis points. The home loans, which were roughly at 8.2%, 8.3%, has gone up to 8.5%. They have not gone up to 9.3% or somewhat. For your customers, when their rates increase by 2%, do you think that they will not move out because the banks are currently giving loan at 8.5%? Correct. Whatever that is in the public domain about rate of interest, it is for the prime customer. When a customer reaches any financial institution, rate turns out to be a higher hike based on his risk rating and his income level and various other risk factor. Every bank and every financial institution has their own risk rating metrics. Though it appears that 2%, I think that is not, that is not going to harm us in any way. So far, we have not faced anything. Our BT in and out is we have controlled it to about INR 100 crores per quarter. Last time it was INR 300. Two hundred, two years back, it was INR 300 crores when our rate of interest was much higher. We have taken a conscious decision to lower our rate of interest during two to three years ago. Now we have controlled that BT-out. Okay. It is quite possible that you may not pass the entire 200 basis point hike to the customers and to retain them, the hike may be lower. You will decide that at that point of time, right? It, as regard passing of interest rate, it depends on two things. What is the rate prevailing at that point of time, and how the risk rating of customers are moved during that one year. If a customer has moved from a higher bucket to lower risk rate bucket, his rate of interest will automatically come down. Similarly, if a low-risk customer has moved out to a higher risk or medium risk bucket, then his rate of interest will go up. Good. It is not an automatic reset. It happens with after a discussion between the two parties, right? It is an automatic reset. It is automatic reset. Before reset, we send a message to the customer. Okay. Sir, what is NIM, expected NIM next year, as you said? I didn't get that number exactly. Expected NIM next year will be around 3.5%. Okay, 3.5. That is a good number. Sir, similarly, when we come to the new CEO, there has been quite a lot of delay in hiring the new CEO. What are the chances that the current person would join in and there would be no hiccups later on? I cannot comment on this. This is a, this is a process, and it is a listed entity. We have to follow certain norms. We have to find a suitable person to head this institution, as there are many stakeholders. I think that has taken a time. A person who is selected, he or she needs some time because he must be working somewhere. There is a, some period is there. Taking into account this, I think it is not a delay, it is a usual thing which happens. Okay, sir. That's from my side. Thank you. Thank you. Thank you. Next question is from the line of Jagdish Sharma, individual investor. Please go ahead. Hello, sir. What is the borrowing cost which you just mentioned? Sir, our borrowing cost is now 6.63%. 6.6? 6.63. Okay. Six three. Okay, okay. Total borrowings are? 6.25. 6.25. Okay. In terms of amount, sir? Pardon? Like, total amount. Like, what is the total amount? Total amount borrowed is INR 27,800. INR 27,800. Okay. Thanks, sir. Thank you. Happy New Year. Thanks, sir. Happy New Year. Thank you. Thank you. Next question is from the line of Mayank Talati from Yellow Cherry Investments. Please go ahead. Unfortunately. My question was regarding how much of our book is currently from Bangalore or Karnataka. From Karnataka, if you say, it will be around 20%-22%. From Bangalore? Bangalore, it will be around, say, 17%. May I, which are the other markets which we are currently focusing on where we see good growth in terms of disbursement except for this Bangalore market? There is Telangana is there. Also we are getting a good business from Tamil Nadu also. We want to increase our business in Maharashtra, Rajasthan and Gujarat, these three states. Okay. There, how many new branches are we planning to open in these new markets of Maharashtra, Gujarat and Rajasthan in order to increase our focus there? In coming year, we are going to open around, maybe around two to three branches in these three states. As of now we are having branches in all the major centers in these states. Okay. What is any target to reach, like how much% of AUM we are targeting from these markets of Maharashtra, Rajasthan and Gujarat? Any target which we have set? See, we want to increase whatever that outstanding Maharashtra, Rajasthan and Gujarat is there. We want to increase the outstanding to around 30% in these states. Out to 30%. By 30%. Coming year. In the coming year. Okay. Sir, just it might be a repetitive question. How much rate hikes have we taken in this quarter? This quarter means last quarter or this current quarter? This quarter. Last quarter, in Q3. Q3 we have taken a 50 basis point increase. This quarter we have increased around 35 basis points. Okay. Thank you. Thank you. Next question is from the line of Ankush Agrawal from Surge Capital. Please go ahead. Thank you. Follow-up, sir. Firstly, when you say that selected, CEO, will effectively join by the end of financial year, so do you mean that the person is already selected and that the process is already complete and is yet to announce? Pardon? I think I'm not clear, I think. What I mean that you said that there's a selected person would be joining by the end of financial year. Do you mean that the person has already been selected and you are just waiting for him to join? Yes. The person has been already selected and we are waiting for him to join. Okay. Would it be possible for you to share some more details, like, around the person? See, he's from the industry and he's an experienced person. Okay. Okay. Secondly, sir, just a clarification on the branch count. The third quarter slide shows that, we have 187 branches. Is it a misprint or, like, we have closed branches? No, no. We have not closed any of our branches. We are now having, satellite office and branches put together, we are around 205 now. Okay. 192 plus 12. 13 satellite branches. Satellite. Okay. Okay. There's a misprint in the presentation of this quarter. Okay. Thank you. Thank you. We'll get it corrected. Okay. Okay. Thank you. That's all. Thank you. Thank you. Next question is from line of Gaurav Sharma from Prabhudas Lilladher. Please go ahead. Thank you, sir. firstly, if you could just quantify the investment income or the treasury income in Q3? Sir, you are not clear, sir. Can you repeat, sir? Just a second. I'll just come on the handheld phone. Yeah. Is it better now? Yes, sir. Yes, sir. Yeah. What I was asking is, can you quantify the investment or the treasury income in Q3, please? Sir, we will get it, sir. Meanwhile we can take another question. Sure. Just to follow up also on that. On a nine-month basis, we reported a margin of 3.46% versus 3.44% in the last nine months. You know, if you could strip off the treasury income, and, you know, then please give us the margins. That's on the treasury. Secondly, you mentioned that about 28% of the loan book has already been repriced at 72% 10-year. What would this number be on the borrowings side as to what proportion of borrowings have been repriced? Borrowings. The borrowings are linked to three factors. One is T-bill linked, second is repo plus spread, third is MCLR. T-bill spread is to the extent of around 4% which is getting reset as and when the T-bill rate is changed. Most of the borrowings are linked to the previous T-bill so it is getting reset at the end of every anniversary quarter. Repo rate also we have gone with the anniversary concept. That means as and when repo changes it will not change the rate, but on the anniversary quarter it will get changed. That means there also we have a leverage of some time to get, calculate and adjust. MCLR also is on a quarterly MCLR basis, it will get changed only at the end of quarter. That means virtually the borrowing book is getting repriced at the end of anniversary quarter and we will be knowing the applicable rate of interest well in ahead so that we can do the back calculation assessing the impact on the NIM and spread and rework the lending activity as such. as to what is explained, I want to just add on some more things. During this financial year, 2.25% is the increase in the borrowing cost. Because of the lag effect as well as this anniversary reset, we have passed on this load to our customer to the extent of 1.6% only during this financial year. 1.35% is we have passed on. That means if we compare to the other banks, their lending rate as of 31st of March to 31st of December, what the hike has taken place and what is our lending rate from 31st of March to 31st of December, there is a huge gap. This is what a clarification giving to the earlier question also that whether you have an ability to increase further to see, take care of your NIM and spread. Yes, there is a scope because we are still incrementally we have done than the banks increase that has taken place. The banks have increased on a staged manner month-on-month, but we have not done like that way. That is why we have a scope to see that NIM and spread is not compromised in the next this quarter as well as coming years. We appreciate your input, sir. What I was only trying to ask is, of the INR 27,800 crore of borrowings, what proportion has already been repriced? That is 28% now. 72%. Whole borrowing book is linked to T-bill spread as well as the T-bill MCLR as well as the repo. For the NHB, leaving the NHB. If you want to see exactly NHB INR 6,500 crores is out, which is linked a separate rate of NHB. CP and NCD is to the extent of INR 11,600 crores, which is the fixed rate of interest. Out of INR 27,000 crores, INR 12,000 crores is out. The remaining INR 15,000 crores is already got repriced. Understood. Understood. Very helpful. Just a slightly different way of asking you, in terms of margin guidance versus the 20%, you know, AUM growth for FY24, what is the likely NII growth that we would look at? No, NII growth what happens is what we have told the NIM and spread is maintained at the guidance of 2.4 and around 3-ish. Keeping that as the base, we are doing the reversal. On the same lines, what you can see the NIM, the same will be continued. When NIM is derived, the book growth is derived. We can do the reverse calculation and derive what will be the NII. Our calculation is on the basis of guidance, 2.4% of spread and around 3-ish. That is 3+ is going to be the NIM. What I was just trying to understand that, so whether, you know, the NII growth would be more than 20% or not? It will be by default. Understood. Thank you, sir. Please if you could give me the data points I had asked for. Your earlier question of regarding the income from the treasury income you are asking. The investments are held for the purpose of SLR as well as for the LCR purpose. The LCR purpose we have invested to the extent of around on books you can see the invested investment is around INR 1,200 crore which was earlier lesser than that one. Current year for the nine months the interest earned on investment what we call as a treasury is around INR 79 crore. The same period last year it was around INR 13 crore. Understood, sir. Appreciate this. Thank you. Thank you. Thank you. Next question is on the line of Jyoti Khatri from Aryan Capital. Please go ahead. Yeah. sir just on your credit cost guidance for the, you know, next fiscal, what's the number that you put up? Credit cost. Credit cost is around 0.06% and going forward it will be around the same range. Okay. Sorry for being repetitive again. On the margin side, you know, given all the inputs that you have given so far, don't you think that margins of 3.5% and spread of 2.4% is still very conservative? You can outbeat that by a very big margin or that's not the case? Just to add to what we said, we are mainly. Our book is almost totally retail. It is a very sensitive rate of interest, it is a very sensitive matter as we deal with the retail customers. We have to see what the other banks and other HFCs are offering. Based on this, we have given a guidance of 3.5% in the near future. Okay. What's the outcome in provisions that you're holding? Total provision on INR 1,000 crore restructured book, that is INR 67 crore plus INR 48 crore. Restructured book is only INR 701 crore, madam. Okay. Provision is restructured book is to the extent of 10%. RBI guidance is clear. We have to hold 10% of the restructured book as a provision, which is over and above the provisioning what we are holding in the books in the normal course, either as per IRAC or ECL. That is what we have told. We have a 67% additional provisioning, which is as per the RBI guidelines. As per the ECL, these loan accounts are classified Stage 2 even though they are Stage 1. Against this one, we are holding a provision of INR 48 crores. Restructured, Stage 2 is having INR 48 crores. Stage 1 is also having the provision. Put together, the provision held in the books of the company as on date, stand at INR 290 crores. Okay. Okay, got it. Thanks. Thank you. Next question is from the line of Rohan from Multi-Act. Please go ahead. Yeah, sir. Thanks for the opportunity. Sir, my question was on the annual reset that comes up. Is a default, you know, a reset option a tenor increase or an EMI increase? It is a combination of both. Wherever possible, we give for a tenor increase, and wherever the scope is not there as per our guidelines, we give for a EMI increase. It is automatic thing. Yeah. Sir, based on, you know, I mean, the scope being there or not being there, you know, the 72% of the book which is going to come up for annual reset, a large part of it there would be scope for tenor increase or not so? Going by the previous experience, yes, large part of it will be a tenor increase. Okay. Sir, in terms of disbursements in Q4, to have the 20% YoY, you know, run rate being maintained will require, like, a INR 3,000 crore plus disbursement. You are seeing that kind of pipeline, sir? Yes, sir. We are targeting on those lines also, and we are working towards that only. Okay. Thank you, sir, and all the best. Thank you. Thank you. Next question is from the line of Rahul Maheshwari from Ambit Asset Management. Please go ahead. Hello. Good evening. I just have two questions. One, can you give what is the kind of rejection rate that is taking place? Looking at, as you mentioned, that you want to enter into new geographies and go into Rajasthan states and et cetera, Maharashtra, I just wanted why as a strategy, we are just restricted with four to five branches opening. Does it mean that there is a very much higher scope in terms of the branches, in terms of the loan per branch and the employee per branch? If that is not the case, what is the limit, the maturity limit where you expect that per branch and then loan disbursement can go to? Rest of the peers when we look at even the large banks or even the NBFCs, the kind of branch expansion is phenomenally high. Why we are just stuck with the five to six branches? See, we have got around 13 satellite offices. Those we here, we are planning to upgrade it to a fully fledged branch because those were opened some five, six years ago. Now we feel that the link, the branch to which they are linked, they are able to source from their own side. These branches we'll be upgrading into fully fledged branches. Apart from that, we are targeting around five to seven branches every year. Second thing, we are going for an IT overhaul where we find we leverage technology to bring in more customers. That is one thing. Also as regard that Maharashtra and other states, we feel that the branches which are there, they are in the major cities where we will be increasing our efforts to increase the business there. Just to ask, current, INR 147 crores per branch, the business which has been doing, how much more lever per branch can go up to? See, in the near future we are thinking of increasing it to INR 160 crores. Apart from that, in coming days we see around INR 200 crores per branch. This is why you are not very much aggressive of opening the branches because there is still lot of juice left from the existing branches. Yes. There is some other reason? No. See, we have redone the ABC analysis of all our branches. We still feel that around 25 or% of our branches, they are underperforming. We want to upgrade those branches and make efforts so that these branches also contribute optimally to the loan book growth and disbursement. In terms of underperforming, what is the benchmark that you are keeping, 25% branches which underperform? These underperforming branches, we are giving around 40% growth, both in disbursement and book growth. Okay. Okay. First question on the rejection rate. What is the rejection rate currently? Rejection rate is around close to 11%. This 11% is at the moment it has been sanctioned till the disbursement or it's at the point of sourcing, this is 11% rejection? At the point of sourcing only. At the point of sourcing where due diligence and other income and other things are being checked. At that point of time it is getting rejected. As per industries and benchmark, your rejection rate is quite low. Means, any particular reason, sir? No, it is not. See generally primary AC when you do the some checks that itself, we can come to know whether it is a doable or not doable. That is at the time of PD itself, sir, we see that whether this customer can be further progressed upon. Sir, as you also talked about that you would be doing IT investments et cetera. Have we any systems on the early warning signals being established and due to that you can do a back tested et cetera mechanisms? We have got certain OTMS report generated and with that, from those we see any early warning signals are there or not. Since the present IT sector is more than 10 years old, we thought it to migrate it to new IT sector where that book growth can be also be taken carried forward. How much this spending would be for IT spending for next two years? It is a around seven years project. It will be close to around INR 200 crores. This will be spread across, seven years. Yes. Yes, yes. This once IT spending is being done of INR 200 crores, how much loan book capability on overall basis it can handle up to? We have, it will be handling around INR 100,000 crores per year. It can be further scaled up to INR 200,000 crores per year. Okay. Okay. Thank you so much. Thank you. Next question is from the line of Shubhranshu Mishra from PhillipCapital. Go ahead. Hi, sir. Thank you for the opportunity again. Just wanted to understand the average duration of the liabilities, of, if you can mention that. Thank you. The borrowings what we borrow from the banks will range from five to 10 years. The average tenure is somewhere around 78 months. What was this last quarter, sir? What? What was the same number, average duration of the liabilities last quarter, sir? Same thing. The borrowings are fixed and the rate of the, your tenure of the borrowings is fixed as a time of documentation only because the sanction letter will contain the tenure. On the basis of that only it is matched with the year-end position. It has been accordingly that is borrowed. See the NHB borrowings are ranging from 10-15 years. Bank borrowings on a long term are around eight to 10 years. Whereas some short-term borrowings are ranging from fivee to eight years. It's a total mix with average tenure when we call for it is around 78 months it comes. It is on the same line as that of last quarter or before last quarter also it remains in the same range. That is six to seven years is average tenure is going to come. Okay. I was asking about the duration, sir, not the tenure. I get the point on tenure, sir. Duration is something different. Maybe I can take it offline. That's fine. Okay. Thank you. Thank you. Next question is from the line of Bhaskar Basu from Jefferies India. Please go ahead. Thanks. Good evening. Just had one question. I think it's a repetition. Just wanted to clarify, a clarification around the repricing of the liabilities. It was not really clear when you say MCLR, sorry, the repo reset and the T-bill. Could you just explain that once again? See certain borrowing we have got different arrangement with different banks. MCLR, some banks reset the MCLR on the date of their change MCLR. Some banks they do at the end of the quarter. Some treasury link borrowings they reset at T plus two day. It is a mix of all. As you see you can find out during a quarter whatever change of rate of interest is there it gets repriced. Okay. I mean it's more or less done in the same quarter itself. Yes, yes. Most of them are short cycle reset. Yeah, yeah. By the end of the quarter it everything gets repriced. Ballpark speaking, like given that your cost of fund has gone up by about 100 basis points if I look at between 4 Q to 3 Q. Given that 51% of your book is basically bank borrowing, is it a reasonable assumption that 200 basis points roughly be give and take, of the lending rate, of the interest rate hike has got factored in? Yeah. See 23% of NHB borrowing is there of the total book which is coming at a contractually rate because NHB rate is somewhat couple of basis points, 200 points below the market rate. Right. The CP and NCD is there which is around INR 6,000 crores which is at a fixed rate of interest. Right. That comes at around 24%. Virtually nearly 47% is almost at a lower rate or a fixed rate. Right. Remaining is only getting repriced and that is getting repriced every quarter. As and when the repo rate changes. That means it got reset with Q1, Q2, Q3 and an ongoing basis. Right. Incrementally the asset side is yet to kind of reflect the reset, the hikes which you have taken. Yeah. The full impact of the reset what is going to happen is appearing, going to appear in the asset side over a period of remaining nine months, whereas the liability side is already got impacted. Understood. Understood. Thanks. I think that was my only question. Thank you. I now hand the conference over to the management for closing comments. I would request our GM madam to offer closing comments. Yeah. I hope we have clarified all the questions. I mean, answered all the questions. As we just said, we are looking for a very good quarter, JFM quarter, and we've already given our guidance rate. We're very confident that we will be able to live up to the expectations of one and all. Thank you. Thank you very much. On behalf of Investec Capital Services, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you. Thank you.