Good afternoon, ladies and gentlemen, and good day, and welcome to the Can Fin Homes Q2 FY24 earnings call, hosted by Investec Capital Services. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask a question after the presentation concludes. Should you need assistance during the 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. Thank you, and over to you, sir. Thank you, Andrew. Good afternoon, everyone. Welcome to the Q2 FY 2024 earnings call of Can Fin Homes Limited. To discuss the financial performance of Can Fin Homes Limited and to address your queries, we have with us Mr. Suresh Iyer, MD & CEO; Mr. Ajay Kumar Singh, DMD; Mr. Apurav Agarwal, CFO; Mr. B.M. Sudhakar, Business Head; Mr. Prashanth Joishy of Can Fin Homes Limited. I would now like to hand over the call to Mr. Suresh Iyer for his opening comments. Over to you, sir. Yeah. Good afternoon, everyone, and thank you for joining us for this earnings call. I welcome all of you to the second quarter presentation of our the business performance of Can Fin Homes. Just to give you a brief about the quarterly performance, I'll just take you through a couple of points before we open for questions. The presentation that we have prepared, it has already been uploaded. I'm sure all of you would have gone through it. But just to recap a couple of important points, first is on the disbursement front, that we have had a sequential growth in terms of disbursement. But in terms of comparison with the first to the second quarter performance of last year, we've had a slight dip. I guess we had already indicated post our Ambala incident that had where a fraud had occurred in the month of July, that sentiment is a little low, and it might have affected a little bit of disbursement because we are introducing a lot of steps and controls in the processes to strengthen the process and bring in a lot of, you know, internal controls. So that was one thing, but sequentially, the disbursements have grown compared to the Q1 of the current year. The other thing is that in terms of the disbursements, we had indicated that that Canfin would be looking at slight increase in the ticket size and looking at segments with builder tie-ups and everything. So from that angle, the business performance has been a little positive. We have started getting a good results, and the inquiry and logins have been quite positive. So in terms of disbursements, while the Q2 has been a little slow compared to what we would have expected, but going forward, we are quite positive that disbursements will pick up, and we should be able to, you know, cover up for some of the, you know, shortfall of the Q2 performance. In terms of the collections and recovery, you know, the non-restructured book continues to have a very healthy GNPA, and it is in line with what has been there in the March as well as in the June results. The gross NPA, which was 0.55, has only marginally increased to 0.57, which is more of a seasonal impact in as regards the non-restructured book. However, in terms of the restructured book, the NPA has been there, and, as compared to what was initially expected, that about 10% of the book would move into NPA from the restructured book. We have about a slightly higher of 14%, which has moved into the NPA in terms of the restructured book. So to cope up with this, the management has also made a slightly higher management overlay in terms of the provisioning. So an additional INR 17.28 crore management overlay has been, you know, made during the quarter. As a result of this, you know, the overall PCR has slightly improved, because from the INR 17 crore management overlay, which is already made in the March of last year, there is an additional INR 17.28 crore management overlay, totaling to INR 34.28 crore. So this has helped in improving the PCR, including the management overlay, to about 57%. Overall, as you... The important thing that happened in the last quarter was the event at Ambala, wherein the fraud was there. Post the event, the initial disclosure was made to the stock exchanges regarding the event, the event that has happened, and the amount of INR 38.53 crore was reported. Subsequently, the managers, management has conducted an extensive study of this entire thing, not only at Ambala branch, but across all the branches. And it is confirmed once again that it is purely a one-off incident in one of the branches at Ambala, and it is not found in any other branches. The final amount also in respect of this fraud has been crystallized at INR 39.67 net amount, and for that, the management has made a 100% provision in the current quarter. So that is there. So because of this, the total provision, which has been made during the current quarter, INR 72 crore, which is inclusive of the INR 39.67 crore for the Ambala incident and the INR 17.28 crore management overlay that has been done over and above the regular provision that are required as per the ECL. In terms of the spread and the NIMs, there has been an improvement in both the spread and NIM during the quarter, mainly because of the portfolio which has come out of, which has had the last rate hike, which was passed on. So at the beginning of the quarter, there was a INR 12,500 crore approximate portfolio, where one rate hike was yet to be passed on. During the second quarter of the year, around 5,500 crores of book has gone through this, or experienced this rate hike, which leaves another, 6,000 odd crores, wherein this rate hike is yet to be passed on. So totally, we have, you know, the, the spread because of this rate hike, the spread has improved, and so also has the NIM. So NIM, as at the end of the second quarter, stands at 3.62%. Going forward, in terms of disbursement, we are confident that, the logins and inquiries have been good, so we would be able to catch up a little bit, in terms of the, the shortfall of the second quarter. Compared to the target, we would at least be crossing INR 10,000 crore in terms of disbursement during the entire year. The loan book growth because of this shortfall in disbursement during the second quarter has slightly come down to 16%, but we are hopeful that we should be able to pick up in the second half, which normally is also the better half in terms of the disbursement for the housing industry. To push that disbursement, we have also, you know, for this festive season, announced a small scheme for our new customers at a slightly lower rate of interest also. So we are hopeful that, you know, business should pick up and we will be able to, you know, improve the disbursement. We continue to have, maintain the guidance of spread of 2.5% for the entire year and 3.5% for the, in terms of NIM for the entire year. So that's been enough comments of the, for the quarter, and the detailed presentation is already shared and put up on the website as well as on the stock exchanges. So I guess, we can now open for questions. Thank you. Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Manoj Oberoi from YES SECURITIES. Please go ahead. Yeah, sir. Hi, this is Rajiv here. Thank you for taking my question, and congrats on good numbers. So sir, the first question was- Mr. Manoj Oberoi? Yeah. Can you hear me? Can you hear me, sir? Yes. Mr. Oberoi, can you hear me? Can you hear me? Hello? As the current participant is not answering, we will move on to the next question. That is from the line of Shreepal Doshi from Equirus. Please go ahead. Hi, thank you, sir. Thank you for giving me the opportunity, and congrats on a good set of numbers. And sir, much appreciate the details in the presentation. A very detailed presentation. So my first... Hello? I guess, is there a problem on the other side or something, that, we're not able to hear anything? Sir, I am checking that. Just give me a minute, please. Hello? Yeah. Hello, this is Sripal Doshi. Yeah. Yeah, I can... Can you hear me? Yes, yes, we can hear you. Please go ahead, Sripal. Sure. Sure. Thank you, sir. Thank you for giving me the opportunity, and congrats on good set of numbers and wanted to appreciate for the detailed presentation. Thank you. My first question was pertaining to the yields. While, as you explained, that the repricing has benefited us on the yield side, and incrementally there's INR 6,000 crore of portfolio which will get repriced for 35 basis points of rate hike, the last one that you had taken. Correct. Is there anything additional, other than that, that is benefiting us on the yield side? Also wanted to understand our incremental lending rate that we have. See, the two points that you have mentioned, one is the rate hike that was passed on. Obviously, in the first quarter, we didn't get much of a benefit of the rate hike because, you know, whatever was passed on, at the beginning of the year, we had about INR 18,000 crore, and at the end of the first quarter, we had INR 12,500 crore. So about INR 5,500 crore, which came for a reset during the first quarter of the year, which was for a part of the quarter only. So we didn't get the full impact. But in the second quarter, that entire INR 5,500 crore, we have got the 100% benefit. For the entire three months, we have got the benefit. That is the main reason. Same way, going forward, also, the portfolio which has come for a reset in the second quarter, we have only got part of the benefits as it has come to our books, because, you know, it would have, some of it would have come in the month of July, some in the month of August, and some in the month of September. So on that, the entire three months, next quarter we will get. So that is the main reason. And the second reason is the incremental lending rate obviously has slightly gone up because, you know, Q1, Q2, normally the, you know, discounts that are offered for the, uh, festive season are generally pulled out. So same in our case also, we had done that. But that was also there for the first quarter, so that wouldn't make much of an impact in Q2. So the main reason has only been the rate hike that has been passed down, where we have got the full impact of INR 5,500 crore during this current quarter. Second question as regards the lending rate. So our lending rates, we have, I think we have not made any change in the lending rate during the quarter, except, for a higher ticket size, because we were to enter into the APF segment. For the higher ticket size of loans, above INR 35 lakh, where the credit score is above a particular cutoff, we have offered a slight discount in the lending rate, and we have lowered our, you know, card rate for those kind of customers. So that is now below 9%, whereas for the rest of the customers, it is start from 9.6%. ... Okay, okay. So the second question was on the GNPA front. So we've seen an increase in our numbers. While I understand some bit would be from the event that happened during the last quarter, and some bit would be from the slippages from the restructured book, as you highlighted. But I suppose there is still part, portion of our restructured book which will be coming out of moratorium, because you had highlighted that in August, a majority of it, it will come out, and by November, all of it will be out. So, how do you see the GNPA moving from here on, and was there any other big slippage during the quarter? Yeah. First of all, you know, there is no impact in the GNPA as it is because of the Ambala fraud, because first of all, it is not related, it is not an asset-related fraud. So there is no bearing. It was purely a, I guess, you know, money which was siphoned off, and there was no asset to back it up. So, it's not an asset-related fraud. That is not part of the INR 33,300 crore that is reflected in the asset book, okay? So this entire thing, if you look at the page 30 of our presentation, you would see that, you know, the major reason for the rise in the gross NPA is because of the restructured book where we've had an INR 64 crore portfolio turning into NPA. Now, this INR 64.18 crore, which has become an NPA from the restructured book, is out of the INR 450 crore of restructured book, which has come out of restructuring up to June. So basically, we had a total book of INR 685 crore, which was wherein restructuring was offered, out of which INR 460 crore has already come out of restructuring up to June 2023. And out of that, sixty-four crore has moved into NPA, which is about 14%. Okay, and, we still have out of this thing about INR 210 crore of book, which is yet to now come out of restructuring in the coming month. That is, in the Q2 of the current year, as well as the month of October and November. So out of this INR 210 crore, if you look at the same percentage, there could be some increase in the coming quarters in terms of the gross NPA. But, having said that, I would also like to say that during the last quarter, we also had some recoveries from the regular accounts, so there, so the entire impact will not be felt in the coming quarters. But, but that should probably be the last of the NPA, because in terms of the restructured book, the gross NPA levels have almost been the same at 0.55%, and just marginally improve, increased to 0.57%, which is also a seasonal impact. So that also by March should come down back to the, I guess, 0.55% or something. Got it, sir. Got it. Thank you, sir. Thank you so much for answering my questions. I'll come in the queue for more questions. Yeah, thank you. Thank you. The next question is from the line of Manoj Oberoi from YES SECURITIES. Please go ahead. Yeah, sir. Hi, this is Rajiv. Can you hear me now? Yes, Rajiv. We can hear you. Go ahead. Yeah, yeah. So the first question is on business and disbursement. So, sir, are all the operational changes complete as we speak? And would the branches take some time to attune to them? So anything on that you can highlight? Sure. So we have mentioned in page 33 of our presentation, the action taken, wherein on most of the changes that we had indicated, that is centralized disbursement as well as centralized reconciliation and strengthening of the credit sanctioning, which is the Credit Risk Monitoring Department, CRM, and a few other smaller things, but mainly these three have already been implemented. So the centralized disbursement we have been doing for the last, you know, from the third of October, actually, and it has been going quite well. There is no kind of issue or anything that is being faced. In terms of the centralized reconciliation also, it is completely something which doesn't affect the branch operations, so that is also not going to have any impact. Same also the case for CRM. So the impact in terms of the business would not be as much. It is only that while we were doing this, we were implementing this, there was a lot of, you know, changes in the systems and, you know, clarifications and trainings and all that had to be done, which had an impact in terms of the business. So that, having been done and these processes being implemented, at least in respect of these cases, will not impact much. However, you know, we do have a couple of other things which are planned, which is given in page 34 of our presentation. But, I guess it would not have much of an impact going forward, because those are the smaller things which will not have an impact in terms of the TAT or in terms of the servicing of the customers at the branches. Mm-hmm. Mm-hmm. Going forward, I guess it should not impact much, in terms of the disbursement, because all the trainings and everything that was required was mainly for the central disbursement, which has already been completed. Mm-hmm. Mm-hmm. And is there any spike in branch attrition in recent months? Sorry, branch? attrition in recent months? No, no, we have not seen any attrition. I mean, it, it's a regular course that is there, not much. There is no any difference in terms of attrition. Okay. Sir, the second question is on cost of fund. The cost of fund was flat Q and Q. So if you can spell out the sequential movement in borrowing rates from banks and NCDs, just to understand why the cost was flat on Q and Q basis. See, mainly, if I were to tell you, it's not that all the aspects of the borrowings have remained flat. So there have been a couple of MCLR-linked bank term loans, wherein, you know, we've had a small increase. However, you know, on the other side, there have been the commercial paper that we borrowed, I mean, that we raised, were at a slightly lower rate. So overall, overall, if you look at it, the impact has been kind of set off within each other. So while there was some about a couple of, so since the repo rate loans that have been raised, which is the majority of the bank borrowings that we have, there since there is no change in the external benchmark, that is the repo rate-... Hence, there is no change in those loans. But a few, couple of our bank borrowings are linked to MCLR or T-bill. So there, you know, it's a fluctuation linked to the MCLR or the T-bill, and that has been offset by the CP. Same way, if you look at it, you know, the last year we had raised, you know, NCDs at a, at a higher rate because we had raised it in the month of February when the re-rates had kind of started going up already. This year, the rates that we are getting, are a little on the lower side, although we have not raised any single rupee from the NCD route this year. So I guess, you know, in terms of the cost, there could be a couple of other MCLR rate loans which are there, which if the MCLRs go up, could go up. Otherwise, we don't see much of an impact. And if you look at it, our borrowing from NHB has come down during the year because, you know, we had already exhausted all our NHB sanction limits in the month of December 2022 itself. And for the current year, we are yet to receive the fresh sanction from NHB, which normally comes in the month of October, November. Last year also, it had come in October only. Once that comes, you know, whatever little increase there is there, probably we can offset from a raise, when we raise the NHB refinance, because that is one of the cheapest borrowing avenues for us as of the moment. Yeah, got it, sir. Thank you so much, and best sir. Thank you. Thank you. The next question is from the line of Nishant from MLP. Please go ahead. Yeah. Hi, sir. Am I audible? Yeah, Nishant, you're audible. Please go ahead. Yeah. Yeah. Hi. Hi. Yeah, thanks for taking my question. So, yeah, my question was around, like, growth and possible balance transfers out. So we've taken, like, we passed on a lot of, like, yield hikes onto customers. Like, we've had, like, a very smart and sharp kind of NIM expansion on this. How should I think about growth? Like, do you fear this starts to impact prepayment rates and people BT out, like, festive season, people typically have, like, those processing fee waivers or stamp duty waivers or all that kind of stuff. So how are you thinking about that? Is there a potential for the yields to be kind of negotiated down by customers to kind of preserve growth? Secondly, just if you, if you could talk about like, say, from a three-year perspective, what kind of growth ambitions do you have? Sure. First question, Nishant, is about your—is the prepayment risk or the—whether there has been any spike. So actually speaking, you know, compared to the first quarter and the second quarter, the actual absolute value of prepayments plus amortization during the quarter has been higher by about INR 100 crore, which is not a very large amount. Although it is there, it is witnessed about INR 100 crore. Some of it obviously is also because the base itself has gone up over the quarters. But there has been a slight increase in this thing. Now, going forward with the festive season coming, as you rightly pointed out, a lot of players would be coming in with very good offers for at lower rates and all those things. We have also, as I had mentioned earlier, also slightly offered a good rate for some of our customers, and if required, we will also look at, you know, offering a good rate to retain good customers. So that will obviously be the thing, and that's why in the beginning itself, while our present NIM is around 3.62, and our spread is also higher at 2.6, but still, as I mentioned that, you know, we would be comfortable with a 2.5 and a 3.5 number for the entire year. Because if required, we will not hesitate to, you know, offer a good rate to retain good customers. Hmm. Sure. Understood. And could you talk about growth as well? And you also alluded to, like, higher- What is the outlook for the next three years or something? So current year, plus, in the short term, if I have to mention, I would say, as I mentioned earlier, that whatever shortfall is there in the second quarter, we would probably look at, you know, offsetting some of it in the Q3 and Q4. And we have a good now, you know, spread and margin, and we've had a, you know, pleasant surprise in terms of the spread in NIMs. So we would not hesitate. We will... We are now a little more comfortable in offering a good rate to push growth. And that was what has been our, you know, indication from the beginning, that if we have that buffer, we will definitely use it to push growth. So we will try to do that and, you know, cover up for some of the shortfall of the Q2 performance in the Q3 and Q4. Having said that, for the next three years, if you look at it, our growth target should be somewhere around 20% disbursement growth year-on-year. That would be the kind of target that we would be comfortable with. Sure. Yep, that's it from me. Thank you so much, and all the best. Thank you. Thank you. Thank you. The next question is from the line of Ankur Agarwal from Surge Capital. Please go ahead. Yeah, hi, sir. Thank you for taking my question, and firstly, highly appreciate the improved disclosure on the presentation. So just clarification on the restructured numbers. So you said INR 460 crore came out as of June 2023, and INR 210 crore is more pending? Yes. I'll just explain. So, so we have about INR 680 crore of book, which is, wherein the restructuring has been there. INR 450 crore had come out of restructuring in up to the month of June. Okay? Yes. During the month of July, August, September also, we've had INR 216 crore, which has come out of restructuring. However, for the purpose of calculating the NPA- Right. We have taken that portfolio with a 1-quarter lag... because, you know, if the portfolio has come out in the month of August, then even otherwise, even if the customer has not paid a single amount, it will not be classified as an NPA in the month of September. So for the purpose of clarity and for the purpose of, you know, having a fair representation, we have taken the base or the portfolio which has come out of restructuring up to June and the NPA as on September. That's why NPA of INR 64.18 crore on INR 460 crore. But if you ask me really how much portfolio has come out of restructuring, then it is INR 613.66 crore. Yeah. So technically, entire portfolio has come out. It's just that the 90-day DPD for this INR 210 crore or INR 216 crore is pending, right? No, INR 63.20 crore is yet to come out of restructuring, which is in the months of October and November. Together, this, you know, yeah, INR 676 crore minus INR 460 crore, that is about INR 216 crore, is what is not yet closed, has not crossed the 90 days, so is likely to have some impact in the NPA going forward. Okay. Okay. Got it. That was very helpful. Thank you. Yeah. Thank you. Thank you so much. The next question is from the line of Rohan Advant from Pratt Capital. Please go ahead. Yeah, sir. Thanks for the opportunity. So my first question is that on the restructured book, we had a provision of INR 68 crore, and now in this quarter, we've done a management overlay of INR 17 crore. So we have, say, an INR 85 crore provision. Are you confident that, you know, this provision would be sufficient for all expected slippages from the restructured book going forward as well? In fact, I would say that, you know, this would be more than sufficient. I'll tell you why. One, because, we of course, have that INR 68 crore, which was the mandatory provision required, when the accounts were given or offered a restructuring, 10% of the book. So that's why the INR 68 crore originally is already available with us. Over and above that, you know, whatever INR 64 crore portfolio has moved into NPA, we have already provided the, under the normal ECL guidelines. So whatever provision is required as per the ECL, which is, for the stage three assets, that has already been computed and provided in the normal ECL calculation. Over and above that, we have the INR 17 crore provided in the as a management overlay in March, plus the INR 17.28 crore provided in this quarter, so that is another INR 34.28 crore. And additionally, as a very prudent measure, the entire non, you know, NPA book of restructured pool, that is another INR 613 crore, which you would see in our page 27 of presentation, is being considered as stage two, even if they are in stage one or stage two or if they have not even come out of restructuring. So even in that count, we have provided on the higher side, considering them at stage two, even if they are in stage one or they are in a regular category. So there has been prudence in terms of provisioning for restructured book on all on multiple, three or four counts. So in going forward for the restructured book, we don't expect or foresee any kind of additional requirement that may come. Got it. As I said, the final, you know, thing will emerge in the month of March, because the final last leg of this thing is also expected to come out in the month of November. So in Q4 is when, you know, they will cross 90 days. So by March, the complete picture will be available, and post that, we can take a call on how much to maintain and how much of this management overlay is available to us. Got it. Having said that—but having said that, if you look at our page 29 of our presentation, you know, we would like our, our ECL provision requirement itself is only 44%, so the PCR is less. So as a conservative management, we would definitely prefer to have a slightly better PCR. So, you know, to that extent, whatever possible, we may continue even if, you know, it is not going to affect as a restructuring, but we may still continue because it's, you know, we would like to have a slightly better PCR. Got it. Sir, and my second question is that, in your opening remarks, you said that for this year you are targeting disbursement of INR 10,000 crore. In the first half, we've done INR 4,000 crore, so that leaves us with a run rate of INR 3,000 crore per quarter for the second half. Are you seeing that kind of traction? For a few quarters now, we seem to be around that INR 2,000 crore and have wanted to really, you know, step up that. Also, what I understood from your presentation is that you are trying to diversify your sourcing away from DSAs. So would that have some additional growth pressure? So you are confident on the INR 10,000 crore disbursement and the traction you are seeing. If you could share that, it will be useful. Thank you. Sure. Certainly. See, when we say that we want to, you know, slightly reduce the reliance on DSA, it is not that we want to reduce the absolute amount or sourcing from the DSA. You know, having it was practically a single sourcing channel which is available to the company. So we are just trying to kind of spread and have an additional sourcing channel, which is through this builder tie-ups and APFs, and through this digital sourcing. Okay? So whatever was coming from the from the DSA pool will continue. We will still have to issue... That also you will see that, you know, in terms of the numbers also, we've not seen much of a reduction or a change in terms of the sourcing from the DSA channel. That is also part of our presentation. So what we will do is this, APF sourcing and as well as this digital that we are looking at, will only add to the kind of sourcing that we are looking to have. ... are you seeing traction for the INR 3,000 crore in terms of the pipeline, you know, the inquiries? Yes, we are having a good, you know, increase. In fact, this APF that we had started somewhere in the month of July, end, end July and all, we are getting a good response. And, what has happened is, you know, our absolute business from the INR 25-INR 50 lakh and above INR 50 lakh segment has started moving up. Though it's not a very large number to talk about, but at least the numbers have started to show, and we are hopeful that, you know, this will also help us, because not only will the business come from that segment and the APF channel, but you know that whatever business we get will also be with a slightly higher ticket size. Because, you know, that 25 to 50 and 50+ will be higher than the current average ticket size that we are having of INR 22 lakhs for HL and INR 8 lakhs for NHL. It's thank you and all the best. Yeah. Thank you. Thank you. The next question is from the line of Onkar Ghugardare from Shree Investments. Hello. Please go ahead, sir. Yeah, my question was regarding the INR 46 crore NPAs which you talked about. I mean, can we see this kind of run rate also going forward, or you see... You think it will be moderating in the upcoming quarters? I mean, 46 I didn't get, I guess, you're talking about the portfolio of restructured, which is INR 64 crore, right? Yes. Yeah. So INR 64 crore, as I said, is mainly because of the restructured pool of INR 450 crore, which is INR 460 crore, which has already come out of restructuring. So that's about almost 65% of the restructured book has already come out of it. The balance is only INR 210 crore. So going forward, it will definitely not be as high. And, even as I said, even if you consider the same percentage, which is 14%, then the numbers will be less than half of what we have already seen already. So, INR 64 crore, maybe another INR 30 crore is what we can see, but not beyond that. Okay. Another question is on the growth fund. You mentioned around 20% growth we're targeting for the next three years. What kind of AUM growth we can look forward in that and around the margin, NIM margin also? See, we would be comfortable with a spread and NIM of 2.5% and 3.5% respectively. And in terms of the AUM growth, if we do about 20% disbursement growth, considering the present level of prepayments, amortization, and everything, we should be around 18% kind of growth in terms of AUM growth for the next two to three yearss. Okay, and this NIM percent and yield you mentioned for the upcoming quarters, or this is for the long term, you are maintaining this 2.5% and 3.5%? In the long term, we would be comfortable with about 2.5% spread. I think as a this thing, you know, 2.5% spread is something which is comfortable with to work with, considering that net-net, after all our expenses, after all our costs, and credit costs and our CapEx and everything, we'll still be able to maintain a 2%+ kind of ROA. Okay. What kind of gearing you will be comfortable at? Currently, our gearing is below 8 times, and we would be comfortable. We would not want to go beyond 8 times. So that leaves you for capital, right? 8 times gearing to ROA would be about 18% growth from internal accruals. Yes. Okay. Any plans to tap the capital markets for this upcoming growth you are talking about? No, no. Up to 18%, if it is there, we will be able to meet from the internal accruals. Okay. Yes, if it is a good year, if the growth picks up, if some new scheme is announced by the government or any such thing which, you know, pushes the demand, then definitely we will have to look at capital if it goes beyond 18%. Presently, as you know, the rating agencies, ICRA, CRISIL, and all, have mentioned about 13 to, so 14-16% expected growth rate for the industry in the current year. So tomorrow, I mean, if overall, you know, there is a good kind of incentives is provided or something and/or some new scheme launch, then in that case, it is possible that growth rates might pick up, in which case we may have to look at something. Because gearing beyond eight would not be prudent or would not be, you know, very comfortable, even from the rating agencies or anything. Okay. All right. Thank you very much. Thank you. The next question is from the line of Shweta Daptardar from Elara Capital. Please go ahead. Thank you, sir, for the opportunity, and congrats on this set of numbers. So, my question again pertains to the growth, to the growth numbers. So two apprehensions that I have, one is the actions which we have taken on the operating systems front, wherein we have mentioned that the disbursements have been centralized. So now that the disbursement or the decision-making authority has been sort of removed at the branch level, does it impact the incremental growth? Point number one, and point number two, so you just mentioned that the INR 6,000-odd kind of run rate is very much plausible on disbursement in second half, given the maintenance of current repayment rate. But if I look at the scenario wherein BT cases have been slightly on the higher side, and given that, you know, you are almost doubling the disbursement from the current odd levels, and if I assume current repayment scenario, then the growth is sort of the final AUM growth is sort of not I mean, conjecture which I'm getting is, you know, it's not getting closer to 18%+. So could you just clarify the math? Thank you. Yeah, sure. So first is regarding whether the, you know, growth of INR 6,000 crore would be possible or not. See, when disbursement of INR 6,000 crore in the two quarters, if you look at it in the previous year also, we have touched somewhere around INR 2,500 crore in terms of the disbursement in a particular quarter. And, we would have probably, you know, you know, touched somewhere closer in this current quarter also, had, you know, this additional impact not happened. So now coming to the impact of this centralization of disbursement, actually, it is not that the power or the disbursement has been completely withdrawn from the branches. The branches only schedule the disbursement. The branches are only, you know, assessing the cases, and sanctioning is also decentralized as it was done in the past. Only thing is, because the check signing powers were also decentralized and we wanted to withdraw that and add an additional control point, that is why we have just added another maker-checker concept at the head office, wherein certain documents are verified and, you know, end-use confirmation and everything is taken. So basically, what we have done is, you know, on a day, there is a cutoff of 12 o'clock, wherein the branches have to feed in all the disbursements like they have normally been doing. There is an additional check-in which happens at the head office. Post which, the disbursement requests are sent to the bank, Canara Bank, and DDs are collected in the evening around 4:00 P.M. and 5:00 P.M. So instead of having a full day available where any time they could do a disbursement, it is only a matter of planning where the branches have to ensure that by 12:00 P.M., they are able to schedule the disbursement. If it doesn't happen, then it will happen the next day. So it's not going to add to any kind of an operational issue or increase in tax, which will affect the business. Okay? So one is as regards the business of INR 6,000 crore, we have done INR 2,500 crore, so a little bit of push to make it INR 3,000 crore would not be, you know, too far-fetched, I feel. Second thing is, you know, we have also planned some additional branches for this year. We have already opened 3 branches in the second quarter, and we are already in the pipeline, another nine branches, where, you know, we are at a stage of negotiation for the property or recruitment is pending and all. So that also will help to the, in terms of the, adding to the growth. And the third point is, you know, the ticket size, as I had mentioned earlier, that this slight increase in the 25 to 50 and 50-plus segment that we are seeing, that will help us in improving the ticket size also. So that is the three points which are there. And of course, with the buffer that we are having in terms of the rate hike, which will help us in the spread, we have an opportunity to offer good rates to get the market. That's the, another thing why the growth should happen. Now, the other point that you mentioned about prepayment. So as I mentioned earlier, between the first quarter and the second quarter, the absolute increase in the prepayment and amortization are only to the tune of INR 100 crore, which is about INR 30 crore a month, which is not a very large amount, considering that we have 200 branches. 208 branches, to be precise. So it's not that, you know, there is a very large run on the, in terms of disbursement or any major kind of a thing. During the entire quarter, Q2 compared to Q1, there is an increase in terms of prepayment to the extent of INR 100 crore put together, three months. So I hope I have answered, you know, all the points. Yes, sir. That explains. Thank you so much. Yeah. Thank you. Thank you. The next question is from the line of Pawan Kumar from Ratnatraya Capital. Please go ahead. Sir, can you, for the INR 450 crore, which has already come out of restructuring, before June, are you confident that this INR 64 crore of GNPA is enough, or do you think, anything further might come out of that book itself? I don't think there is, I mean, in the normal course, some slippages here and there would happen, but again, there would be a total, some payments or some payments also coming, recoveries also happening. So I don't think there is much of a, of an impact, too much of a higher impact that is likely. We are confident we should be able to do it. Recovery efforts are there. We are also, you know, pushing further, adding, maybe we will add some more staff and all, because, you know, the, we had anticipated about 10, it is slightly higher than that. So we are, you know, adding resources on the recovery front and all. So I am quite confident we should not see any, any major spike in that. Okay. So, basically, INR 64 crore from INR 450 crores, and, additionally, if anything comes from INR 210 crores, that is, that has come out of the book, right? That will come out of the book, yeah. Okay. And what do you expect, once this restructuring book is done and over with, what should be the normalized credit cost going forward? See, credit cost in terms of ECL provisioning and all, that's a different issue. That is a normal thing. We have a, you know, stage three provisioning of 0.42. That's a, that in the normal course will continue. Credit cost in terms of actual write-off or anything of that sort, I don't... I think ten bits is more than enough, because traditionally, it has never been beyond that. It is, in fact, not even seven bits, actually. So I think ten bits in terms of the credit cost for write-offs and all those things put together would be should be good enough. Okay. One last thing, sir. When I saw your presentation, if I'm right, there were- there was a decrease in standard asset provisioning, INR 14 crore-INR 7 crore. What would that actually mean? See, actually, in the beginning of the year, whatever we had in terms of our of our, you know, stage one assets, we've had a lot of is the absolute value of, you know, 0-30 bucket has actually come down, okay? With more of a portfolio now moving into into, you know, regular payments and all, impacting the ECL model, this percentage itself is the 5-year analysis that has been done of the actual track. Because the ECL works on a pure scientific model, where, you know, 5-year prepayment analysis is carried out, and then the probability of default and this is evaluated. So based on that, you know, you know, the portfolio is reflecting that. So, so the main effort was we tried to also pull down in terms of the overall amount, which was in, you know, SMA zero, SMA one, and SMA two. So that has also brought in because our overall, overall portfolio, which has, which is in the SMA zero, one, and two, has come down. Well, net of the amount which has moved into NPA. Okay, then, got it. Thank you. Thank you. Thank you. The next question is from the line of Nishchin Chravatay from Kotak Institutional Equities. Please go ahead. Hi. Thanks for taking my question, but just one or two clarifications. You will still have around INR 280-odd crore of loans which come out of restructuring or which have probably come out of restructuring, but you know, we don't know if they are standard or NPA. And I think against that, what you mentioned is that you have around INR 38 crore of our overlay and around INR 68 crore of provisions on restructured loans. Correct. Is my reading... So, so all this, around INR 100 crore, is available for, you know, the INR 300 crore of loans, which we'll have to see whether, you know, how much of it can turn back? Yes. But, again, it is, while it is for the restructured book, as I had also mentioned, it is also because, you know, our PCR is only 44% in terms of stage. It's 44% in case of stage three assets, okay? So, you know, part of it, we would like to also retain or, we would also like to. We are also would like to maintain, to have a slightly better PCR. So it is not that it is the entire additional management overlay or whatever is being carried, is because of, you know, in the restructured book only. Some of it is also because of, you know, we would like to, you know, slightly have a better PCR. No, but in that sense, it is fair to say that, you know, if the leakage rate from restructured book is similar for, you know, the balance INR 300 crore, then you may not require another management overlay. I think, is that a fair assumption? That is a fair assumption. In fact, by and large, we would have a complete fair picture, and we would probably have some excess which we can write back. But as I said, we may not because we would like to still maintain a healthy PCR. But in terms of the portfolio, the way we are looking at it, I... Yes, this available management overlay should be more than good enough to handle the excess additional provisioning and risk change. Just one clarification, I know you started off with this, that, you know, disbursements were little weak this quarter. I didn't quite follow the reason for this. See, we, you know, we had this incident in the month of, you know, July, where, this fraud had happened. So obviously, after that, we tightened a lot of things. Even in terms of the sentiment, there was a little bit of, impact. And, we have tightened certain processes and, additional checking, and we had this entire exercise which was carried out to ascertain whether the same thing is happening in any other branches. So there was an additional reconciliation, additional visits carried out, and then we had the centralized enforcement. So we also had an extensive round of training, which is conducted across, for all the branches. So all those things have been additional things which have impacted our, you know, the business. Basically, it is just that, you know, there were too many other diversions as well. So that is the main reason. That is why I would say one, the main cause for this. I think two, three quarters back, you had called out, you know, some sort of a weakness in higher tickets. So would you sort of say that from a demand point of view, things are sort of, you know, there's no issue at all and things are back on track? Or would you still say that there may be some pockets where there is a little weakness? I mean, I didn't get your question. You're saying in the higher ticket size, what is the point? Sorry. So my point, the point. Okay, my question essentially is on the demand side, do you see weakness in any pockets, you know, at this point of time? See, not in the segment. As I mentioned earlier, this INR 25 lakh to INR 50 lakh and above INR 50 lakh, we are actually seeing a, you know, increase or a improvement in terms of the business as well. And this particular ticket size, we are not seeing any kind of slowdown or anything. Yes, to some extent, affordable might be a little slow because post CLSS withdrawal, there could be something. But in the INR 25 lakh plus, basically, I would say not even INR 25 lakh plus, basically the two BHK and three BHK and that kind of a segment, which is the mid-size, and definitely there is a good demand. So there is, I mean, I don't think there is any slackness in that particular segment. Not at least one, not in any of the markets that we are operating in. Perfect. That answers my question. Thank you very much, and all the best. Thank you. Thank you. The next question is from the line of Anusha from Dalal & Broacha. Please go ahead. Yeah, thanks for taking my question. So I just want to understand what is average ticket size currently? For the Q1 as well as Q2, our average ticket size for HL was around INR 22 lakhs, and for NHL was around INR 8 lakhs. ... Okay, and for the entire book, if we have to take? For the entire book, we'll have to work out. I, I'll probably come back or we'll put it somewhere. But right now it is, we will take that. So I just want to understand, incrementally, you said that, you know, average ticket size, you're looking at INR 25 to 50 lakhs bucket and INR 50 lakhs+. So going forward, say, over the next 2 years, you know, how do we see this high ticket size even segment share in the in the overall loan book? Because I also want to understand the the relative competition in the high ticket size is, you know, is higher, you know, from the banks and other NBFCs. So how you would like to, you know, grow in this at INR 22 lakhs, which, you know, you, the ticket size that you had, and plus on the higher end side. So what is the share that we might look at it, say, over the next 2 years' time? See, we have indicated that, you know, while I don't have a kind of breakup, how much of it would go into the kind of more than INR 50 lakh segment, but definitely, you know, we are looking at the ticket size moving up to the present, of the present INR 22 lakh in the Excel segment to around INR 27 lakh-INR 30 lakh in the next three years or something. So this would mainly come because we would be pushing for the business in the INR 25 lakh plus segment also. Now, competition obviously is there, and, you know, when we were in this lower segment, there was also a segment that, you know, now the bigger players are also open to come to the lower segment. So, you know, that way, everybody, the competition is always going to be there, so we'll have to find our space within that, you know, INR 25 lakh-plus segment as well. And with this APF, what happens is, it is not only a matter of a loan amount which matters, it's also a matter of segment, it also matters the customer profile, it also is a function of, you know, the local presence that we may be having in certain pockets. So all those will contribute. So it is not that we need to have a very sizable chunk of the market to be able to do it. Looking to our size, I know even if you get a small, you know, 2%-5% kind of customers in the bigger ticket size, INR 25 lakh plus, in projects that we are approving, we should be able to get a good, sizable amount of business from that. Because we had meant, like we have started this APF, we are looking at about, you know, 350-400 projects to be approved during the year. Now, if 350-400 projects are there, and we are able to get 2%-5% of the business from those projects also, I think that should also add up to quite a bit of the business. Okay. On the margin side, if I just look for the Q1 margins, they were around 3.5% plus. Q2, it was 3.8%, and you said that going forward in H2, there is INR 6,500 worth of books is yet to get repriced, with 35 basis points, you know, the rate at that you had done. So, in my opinion, I think the trajectory should be, you know, I think, you know, definitely should be much higher than... the blended for the FY 2024 months should be much more higher than 3.5. Then the guidance is actually much lower that you have been, you know, putting it out. So that is purely because, the gains on this incremental basis are lower. That is the precise reason that you are aiming for lower margins? No, as I mentioned earlier also, that yes, there is a buffer available, and in this quarter itself, we are present. It's been a good, healthy growth in the NIMs and spreads. So definitely, as indicated earlier, we would, you know, this will give us a lot more comfort to offer better rates to attract customers in the INR 25 lakh plus segment. So we would be... That's why, you know, we would be open to kind of compromise on the spread up to 3.5%, sorry, NIMs up to 3.5%, so that we can get some growth. That's why we continue to have a 3.5% kind of guidance in terms of NIM. Okay. And I missed on to your credit cost, you know, guidance, that is mentioned. So what was that number for the FY 2024? basis points. 10 basis points, Ten bps. for the credit cost, yeah, I mean, not the ECL provision, but in terms of the credit cost, absolute losses and all those things, not more than 10 basis points. Okay, so this will be, so on a normalized basis, that's a runway that we should look at? Correct. That is right. Okay. And just one last thing on the OpEx side. I think you had said that you will be opening closer to around 15 odd branches, and I think the 9 more are yet to open. So do we assume that OpEx cost, I mean, should be higher in the second half? To some extent, yes, they would be higher. You are right, there would be slightly higher, although this would not be the main reason. But along with this, there will be a little bit of additional staffing that we have projected, which will be joining. We also have, you know, this IT transformation, which will also have a little bit of a cost. So, you know, the small IT interventions and all those things that we are doing. So all those would have a cumulative impact, and yes, we had indicated that by the end of the year, we can probably look at somewhere in the range of about 18% cost-to-income ratio. Okay. So last thing on this, putting all these, you know, things together, how do you see ROA, you know, for the current fiscal? See, this quarter, of course, because of this, you know, exceptional item of provisioning for the Ambala incident, but other than that, we are confident, you know, ROA of 2 should be; we should be able to maintain an ROA of 2. In fact, we have given that by... Excluding that event, our ROA would have been 2.21% in this quarter. ... Okay. Okay, sir. Excluding this event. Otherwise, but because of this, you know, one-time event, it is 2.01. Otherwise, if this one-time provisioning had not happened, it would have been 2.21. Okay. Okay, sir. No, thanks. Thank you. The next question is from the line of Bhuvnesh Garg from Investec Capital. Please go ahead. Yeah. Hello, sir. Thank you for the opportunity. So, I have a question regarding the RBI guidelines on changing EMI or increasing tenure, the guidelines which they issued in August. We just want to understand the impact of it, like how we used to do it earlier and what has changed after the guidelines. Yeah, that's my first question. Okay. Now, actually, there are two guidelines which the RBI has come out with. The one that you mentioned about the variable rate and the customers giving, having an option, or a particular number of times they can move from a fixed to floating or floating to fixed. Okay? That is, one, particular guideline. That may not have too much of an impact because it is more of a transparency and giving a customer an option. And we are already having, you know, an option where customers can... We are already having a reset clause where, you know, every time the rate changes, there is a, the card rate, and the card rate, the customers at the time of the reset are put back into the card rate, depending on the kind of, credit scoring or the credit band in which they are, falling. So that is already being there, so the customers don't even have to ask for it. So in terms of that, we may not have much of an impact, except that we don't have a fixed rate loan, which we may have to offer. But, you know, looking to the trend of the customers, there is not much of a demand for a fixed rate loan. Most of the customers are comfortable, and in the last about since 2003 to 2023, there have been 20 years, the customers are now completely used to fluctuations. There have been upward movements as well as downward movements, and so customers may not have so much of a, of a, of a request for fixed rate loans. And, you know, this particular request or this guideline has also come mainly because, you know, the, for the first time in the history so of so many years, you know, there has been such a, such a, such a sharp rise in the interest rates in the market in a such a short period of time. So, you know, the... We don't expect that it will have much of an impact. However, since you raised the point of RBI guideline, there is another guideline by the R-- from the RBI for all lending institutions, including banks, wherein, you know, the penal interest rates, you'll have to... You cannot compound, and they cannot be in the nature of a percentage. It has to be for a, on an absolute value, and it cannot be compounded. That is something which will have a larger impact for all the players, but that will be something which will impact everybody. So I think that is what we'll have to see. But that is not yet implemented, that we still have time. Okay, sir. Would you be able to quantify that, how much that impact of penal interest would be then? No, not right now, but you know, we have evaluated. We don't have too many instances where actually it is going in the nature of a penal interest. Mostly it is the nature of the penal charges, but yes, compounding impact, we'll have to see how much of it is there and how to handle it. But the way the systems will have to be changed and everything, we'll have to see whether, you know, that deadline given by the RBI is maintained or, you know, there is some possible, there is some extension which happens. But as of the moment, you know, we have not quantified it. Okay. Okay, sir. Okay. And, sir, if you can provide the breakup of customer base in terms of how many of your customers haven't seen any change in EMI, also have only seen increase in tenure ever since the rates have been increasing? And, say, how much percentage of customer have seen, say, 10% increase or...? I don't have it right now, but I can, we can probably look at it and provide it. Right? Okay. I don't have it offhand. I don't have the rate, the data available. Okay. And, and is there any change in the customer behavior post the RBI guidelines that whether the customers are actively asking for increasing EMI or increasing tenure? Is there any change in customer behavior? See, by default, you know, we opt for a change in tenure as per the loan agreement. Because for the customer, it is kind of an inconvenience if they have to keep on changing their EMIs. They would not have an idea as to how much to provide for in their cash flows. So that is something which is generally accepted in the market, and only in the event where, you know, the tenure crosses that limit of 30 years or 70 age cap that we have, or if, you know, this results in a negative amortization, that is when we go for a EMI change. The number of customers who opt for a change in EMI is not a very large number. I wouldn't say it is even in the lower, you know, single digits. Got it, sir. Yeah. Thank you, and all the best. Thank you. Thank you. The next question is from the line of Deepanshu Suman from Vriddhi Capital. Please go ahead. Hi, sir. Congratulations on good numbers. So I just wanted to understand on the cost to income ratio. So right now we are at 16.25. So for coming, say, coming two to threes with the initiatives on branch opening as well as on the digital side, how do we, how do we try to model this? ... See, branch expansion, we have planned for, you know, just 15, 20 branches every year. You know, most of our branch, in fact, all our branches are on a, you know, OpEx model, where we just have lease rentals and, you know, registration and all those things. So it's not a very large cost, so that will not be a major impact. However, we have an IT transformation, which is planned. That will have an impact in the coming years, at least for the next two years. We feel, you know, this trend could be slightly elevated and go up to about 18%, 18.5% in the coming two years. Beyond that, you know, as the size increases, the book size increases, this would probably get absorbed and again, start coming down. In the next two years, that is the current and the next year, probably this could be slightly elevated because of the IT transformation, more than anything else. Okay, sir. So most of the other points already you have clarified, but just wanted to understand from you, what are the levers and what we have on the ROA side? So right now, as you said, we are at 2.2 for this quarter, excluding the exceptionals. So how do we, how do we try to see that we can be at 2.2, 2.3 over a longer period of time, say, for example, 3 years, kind of? See, I would love to have a, you know, ROE of 2.2, 2.3, but as the size increases, as we also are moving into the, you know, slightly, higher ticket size loans, I think we'll have to, you know, be a little more, you know... We'll have to understand that this probably could stay, rather, come down, rather than go up to 2.3 and 2.4. So I mean, if, if you are, if you have to, you know, factor it into your projections, I would say a figure of 2% in the longer run would be a little more appropriate, rather than looking for an increase in the ROA rather, of 2.3 or 2.4 from the current levels. That would be a little more realistic, I would say, rather than going for a higher ROA. Because as we move in the ticket price, we have to be a little more competitive, and we may have to, you know, offer some better rates, which will impact our spreads, which will impact our the thing, some offers, special offers, and all those things will have to be offered. So that would, you know, do it. But we would be more comfortable with about 2%, and we would like to maintain at 2% and not go below that. Okay. So, got it, sir. So but, do we have something in mind from the product segment basis? Say, for example, builder side or, say, on the loan against property side, and the product mix, which we can, which, which can help us, to be at a 2.1-2.2 kind of? See, we do have certain options in the sense that we have a very low percentage of business in the LAPs segment. Yes. We don't offer these products like, you know, LR, LRD, or we don't have the structured loans or things like that. We don't practically have minimal or nil, I would say, loans in the commercial segment. Okay? Yes. Those options are always available, along with the construction finance also, which is offered by many other players. I mean, if at all, there is a conducive environment and we are in a position, we may look at it at a later date, but not as of the moment. I think we are comfortable with the pure home loan segment, self-construction or purchase cases. You know, even within that, we have a good, healthy, you know, mix of salaried to self-employed of 72-28. I think, you know, if we are able to operate in the same segment, we would like to maintain it as far as possible. Yes, there are a few levers available, which we are not looking at as of the moment. Okay, sir. So, right now, you have already been for almost six months. So any opportunity or low-hanging fruits, which you see in which can help us out in the shorter term, as from the growth perspective, any other low-hanging fruit, what you would have observed or any of the key observation which is bothering you? So both on both sides, of one on the opportunity side and one on the concern side. So any key concerns, what you feel? Well, I guess we have, I've articulated this quite often, but just for the sake, I'll just mention: See, one of the opportunities is, you know, on the IT front, we have embarked on an IT transformation, and that has been actually long overdue. So once that happens, that's going to help in our, you know, in terms of additional... Obviously, a latest, state-of-the-art kind of a technology platform will help us in better analytics, will help us in better, you know, a better CRM and all those things. So that will definitely be a positive, which we can look forward to. We have already embarked on that IT transformation project. The second, of course, was that, you know, it was a single sourcing channel on which we were dependent upon, and we have tried to diversify that and add a couple of more channels, which is the APF as well as the digital onboarding and digital sourcing. So this is another positive, I would say. In terms of the negatives, of course, it's, you know, clear that, you know, if we have to move to the slightly higher ticket size, we will have to compromise, and we are- we would be open to a little little in terms of our spread and NIMs. So that is the main course. We already had, you know, in the beginning, when I joined it, obviously, there was this concern about this, restructured pool, where, you know, majority of it has already come out. So I think by March, you know, that particular, part of our, that, that small, you know, the gray area would also be very clear by the end of, this financial year. So that also was, was one of the areas of concern, which now we are a little more clear as to where it is happening, and we are taking corrective steps on that as well. Okay, sir. Thank you. Thank you. Thank you. The next question is from the line of Gaurav Jani from Prabhudas Lilladher. Please go ahead. Thank you, sir, for taking my question. A couple of location questions first. Can you quantify the investment income in Q2 and Q1? I think it was- Sorry, can I just repeat it? What is that? Can you quantify the investment income, please, for Q2 and Q1? Investment income. Investment income you're asking about? That's correct, sir. The investment income for this quarter is INR 31 crore, and for last quarter also, it was the same number, INR 31 crore. 31.1. Okay, thanks for that. So secondly, wanted to clarify on, you know, the entire movement of the provisions on the PCI. So, what I understand is this quarter, about INR 64 crore has flipped from the restructure to the NPA. Not in this quarter, but yes, we have had, you know, we started off with INR 174.something crore as of March, and today we are at INR 254 crores, so- Probably, 26 and 54, 80. Yeah. In this quarter. Yeah. You're right, 64 in this quarter, and 24, 20-something in that previous quarter. You're right, correct. Correct. So which means then, where I'm coming from is NPA provisions were about INR 69 crore, so I believe those were written off, right? I mean, because last quarter there was again, a restructure slippage to NPA of about INR 70 crore. I believe that is completely written off this quarter because the PCR has come up there. No, no, there is no write-off. It is a NPA portfolio. The efforts for re-recovery continue. It is not a write-off. Yes. They are NPA. So they are accounts where, you know, the payment is not coming, but the asset is there, the customer is there, and so the recovery efforts will continue and, the provisioning will also continue as per the requirement, of the ECL model. Whatever is required, we'll be continuing it. Normally, you know, if once an account goes into an NPA, we as per the ECL model, we have, you know, considered or our past record shows that, the repayment happens in- Five. Five years. So there is a five-year period in which the account comes to a closure. Either it, gets regularized or it, these things, some of them will remain in an NPA for a longer duration and all. So earlier also, if you look at the, the IGAP requirements, it was 15, 25, 40, and 100, wherein it was going up to beyond five years also. So that, that was the thing. But in case of ECL, when the consideration is, purely based on the statistical data, so our, the, you know, track record shows that, you know, on an average it doesn't go beyond five years, and the account, gets closed or either which ways. You know, maybe with a little bit of a one-time settlement or a small, you know, waivers or something, or with a full recovery. So that's the kind of thing. So these accounts of 18 point something, which we, which became an NPA from the restructure pool in Q1, they are part of that, 64 crores, which are an NPA as on the end of the second quarter. And they will be- Understood. They have been considered in the Stage 3 assets for the purpose of our ECL calculation. Sure. So, basically, you know, last two quarters, we've seen a decline in PCR. So what you're alluding to is that's basic, you know, that's largely because of the slippage from the restructure to the NPA, and that initially would obviously entail lower provisioning. Correct. Correct. That is true. That is true. I understand. I understand. Sir, lastly, in terms of, you know, again, harping on this point of, disbursements, for the second half, right? So what I understand, is, you know, most of your... the, the processes would have been implemented by September end? Yes. If you, if you see the presentation, yes, most of it in terms of the centralized disbursement, lead sourcing, pilot project, reconciliation, CRM, all those things, yes, we have implemented by the end of September, yes. Good. Most of them have are operational from first October or something like that, yes. Correct. Which means that October would be a normal month, right? Yes. We should look at October as a normal month, except that it has too many holidays, but other than that, yes, it would be a normal month where Diwali falls. Dussehra falls, sorry. Correct. So till date, sir, could you quantify, you know, the amount of disbursements that you have done? Or, you know, what sort of number are you looking at in terms of disbursement? As we said, we are looking at a INR 10,000 crore disbursement by the end of the year, so we should be doing about INR 3,000 crore, and that is what we are pushing for in this quarter. So, which translates to about 1,000 per month, so which is what I was getting at. Yeah, yeah. So that, that's the kind of a thing. We have given a targets accordingly only, and we are pushing for that. I understand. That is it from my end. So thank you for answering my questions. Yeah, yeah, yeah. Thank you. The next question is from Akshat Arya from Multi-Act PMS. Please go ahead. Hello, this is Darshan Shah from Multi-Act. I just have one question. Can you please share BT out number for the Q1 and Q2 of this year? See, we have a total amount of, you know, portfolio, which is inclusive of the amortization. I can probably separate it and give it to you, but in Q1, the total amount of amortization plus prepayment put together was 105... Sorry, no, no. Q1. Q1 was INR 1,025 crores, and this quarter it is INR 1,165 crores. Okay, thanks. Yeah. ... Thank you. The next question is from the line of Arvind Dar from Sundaram Alternates. Please go ahead. Hi, sir. Thank you so much for the opportunity. So like, I would like to understand, so this APF loans, would it be like only residential, like an individual, you know, home loans, or like will it also include commercial loans? That is my first question. So since the ticket sizes in APF loans is much higher, like, about INR 25 lakhs, you know, could even be in the range of 30, 40, even 50 lakhs, I mean, like, couldn't, can, can it not, you know, you know, up the growth potential for the company itself, like from 18% to even 20-21%, something like that? Another question I would like to understand, I mean, like another query I would, I would have is, the interest rates sensitivity. Like, let's say, like if there is a 100 basis points rate cut, like in next year, like, you know, how can it, you know, show up in the yields or the cost of funding? Yeah. So first of all, your part about this, APF, whether it also is commercial. No, we are only doing residential loans presently in the APF project. So if it is a kind of a loan with the shops, plus, houses, we would be targeting the houses or the flats in the particular scheme, for our APF projects. That is one, because as I said, we have a minimal to almost nil kind of a portfolio in the commercial segment, as of the moment. So that's what is the first point. The second point is as regards the disbursement of the APF, yes, we are also expecting the average ticket size to be in the range of INR 35-40 lakhs for the loans that we give in the APF segment. So, that is one of the key factors why we are confident that we should be able to, you know, achieve this kind of 18%-20% growth in loan, 18% loan book growth, and achieve over INR 1,000 crore in the disbursements. And third, as regards your, you know, stress testing, the interest rate sensitivity calculations, we have, you know, three levels of testing that we do for our, you know, in our stress testing. And we have a scenario where even up to 1%, if there is a hike or a change in the interest rates, we do factor in and consider as to what would be the impact in terms of our, you know, interest rate sensitivity. We do factor in, and whether we are adequately capitalized and whether we are... how much it would impact in terms of the profit is being monitored. We are, you know, even monitoring the kind of limits that the board has set the limits for what kind of variation is acceptable and what will be the breach limit. So we are not reaching the - I mean, we will not be crossing those breaching those limits that have been laid down by the board, even with a 1% variation in the interest rate, either way. Oh, so, so you are saying, like, there won't be much impact on the spreads or margins, because of the, No, I'm not saying there would not be an impact. I'm saying that, you know, we do have this stress testing mechanism, wherein we are doing three levels of, you know, mild, medium, and high kind of a, kind of three levels of stress testing done. One of the factors is, wherein in case of the interest rate sensitivity, we do consider up to a 1% high or a drop in interest rates, either which way, depending on the, you know, how much fixed rate and variable rate you have on the asset and liability side, it could go either way. The board has set the limits in terms of how much of variation in terms of the profit is acceptable. So there could be some impact or negative impact also in case of the interest rate, but they are within the limits that have been set, so we are quite comfortable within that. And these obviously are conservative limits which have been set by the board. Okay, sir. Just one thing on APF, like, so, that high-ticket are higher, and we are entering more and more into the banks', you know, you know, customer segments. What kind of things would we be like, you know, little more relaxed in terms of, you know, say, in, in, in terms of selecting the customers? I would try to understand, sir, in comparison to the banks. Well, this segment of, you know, APF that we are targeting, we have. First of all, we are, you know, trying to work with the Cat B and Cat C developers, because obviously Cat A developers would mean they would be very, very competitive. They would have much more, you know, attractive options available to them. So matching them would be a, you know, huge compromise from us, for us also. So in terms of that, we are looking at a Cat B, Cat C kind of developers, where the project sizes are kindly, slightly smaller, you know, right up to not more than 100-150 units in a particular project. We are also, you know, aware that, you know, we will not be able to look at the very high end of the segment, that is 4 BHK or, you know, very, very luxurious kind of apartments and things like that. So we are more concentrating in terms of our APF, in terms of our, you know, 2 BHK and 3 BHK segment, which normally would be in the range of about, you know, INR 25 lakhs to about INR 1 crore. That is the segment that we are operating in. So, I mean, if it has to be a property of INR 2 crores, flats, which are each costing INR 2 crores, probably we may not be touching those kind of properties for our APF segment. Sure. Thank you. Thank you. Thank you. The next question is from the line of Abhijit Tibrewal from Motilal Oswal. Please go ahead. Yeah, good evening. Thank you for taking the question. I think you have answered most of the questions that I'm about to ask, but asking them again, just for better understanding. So I mean, lot many people today asked what led to slightly muted disbursements. You explained it by saying that somewhere towards the end of July we came across fraud in the Ambala branch... But sir, when we kind of look at or when we kind of speak to your peer set, there is the definite acknowledgement of a demand slowdown that you also talked about in slightly lower ticket sizes, which is INR 15 lakh-INR 25 lakhs, probably an outcome of the withdrawal of the CLSS subsidy. So for you, in particular, disbursements slightly lower than maybe even your expectations, most predominantly because of the distraction which was there because of projects which are unaided, subsequent process fixing, employee training, branch trainings, or would you attribute it to, to weaker demand? And sort of related question here, is the demand genuinely weak, or is it that a particular bank or an NBFC is, is only aggressive in mortgages and which is kind of leading to weaker demand environment for the other players? See, in terms of the first question, is it because of this, the incident and the repercussions that we had? I would say it is because of that only, because in spite of all these things also, we have seen an increase in our business in the INR 25 lakh to INR 50 lakh and above INR 50 lakh segment in Q2 compared to Q1. And in terms of our project launches, in terms of our, you know, the kind of demand, particularly in that segment, we are definitely seeing that it is continuing. There is no slowdown in that segment. But you rightly pointed out in the smaller segment, which I also earlier mentioned, that post-CLSS withdrawal, there could be some kind of a little pressure in the smaller ticket size or affordable segment because supply has always been an issue. But for the CLSS, which was a very good incentive for the people to enter that segment. So, so that is definitely there. But in the segment where we are having a ticket size of INR 22 lakh, and we are looking at, you know, APF, where we are targeting INR 25 lakh to INR 1 crore crore kind of a project. So there, definitely the demand, is continuing, and we don't see, too much of a slackness. Okay? Second, as regards, you know, players, whether somebody is becoming too aggressive, no, I think, I think, you know, overall, everybody is trying to, you know, operate in their own, comfort zones and, areas, and is trying to be as, as, as aggressive within the limits that that are possible. So there is no single player who is becoming any great competition or anything of that sort. But having said that, I would probably say that, yes, you know, some of the players have slightly come down in terms of the ticket sizes, like probably, you know, I mean, the competition phase of the competition has almost remained the same, except probably a couple of NBFCs who have entered the market. That's about it. Got it, sir. So the second question that I had was on margins again, you've commented extensively on that, that, to spur growth, we are okay compromising margins and spread, as long as they remain above your guidance of 2.5% spread and 3.5% margins. Which is the way I look at it, third quarter, you have a couple of levers, like you said, almost INR 6,500 crore kind of got repriced in the second quarter. The full benefit of that you will get in the third quarter. Another INR 6,000 crore will probably get repriced in the third quarter. The full benefit of that, you will get in the fourth quarter. But having said that, like you said, in the festive period, you are offering loans below 9% for new customers, while for the existing customers, it's 9.6%. At the same time, because you will be working under APF developer tie-ups to spur growth in higher ticket sizes, quite naturally, you'll need to be aggressive, because you'll be competing with banks in ticket sizes. But net, is it right to conclude that from here on, versus what you reported in Q2, we should see margins moderate and which will also aid your disbursements? Like you said, you're targeting almost INR 3,000 crore each in Q3 and Q4. No, your reading is right, that we do have certain levers, and we do have certain, you know, areas like, absolutely rightly pointed out, that this rate hike is yet to have the full impact. And so there would be... You know, on a steady state basis, if we had not changed gears or if we had not changed the segment, probably we would have seen a uptick in the spread and margin. But we would like to enter the new segment, and this is a good time where we can use this buffer to offset that thing and enter the new market. So we will... Going forward, you can see that probably 2 point might either remain and/or might come down. But we would not want to go below 2.5 in terms of spread. Got it, sir. Sir, thank you. Last question is, I mean, this quarter, the effective tax rate was lower at, I think, 20%. What was the reason for the lower effective tax rate? See, our tax rate in Q1 was around 22%, but this time, because of this impact of this Ambala, you know, provision that we have taken, there's a deferred tax asset also, which is to the tune of about INR 10.13 crore. So because of that, you know, the effective tax rate for this quarter is a little lower. But otherwise, you know, if you were to kind of project it into your figures, probably you could continue it as 22%, because this is a one-time impact for this quarter. Got it, sir. So for the full year, it still remains at 22%, is it? 22 net of this INR 13 crore, which we will have to continue in terms of the deferred tax in this year. ... Got it. Got it. Great, sir. Thank you so much, and wish you and your team the very best. Thank you. Thank you. The next question is from the line of Jigar Jani from BNK Securities. Please go ahead. Yeah, hi. Thanks for taking my question. So just a couple of them. One, on the APF side, any particular targets you have probably out of the INR 6,000 crore, how much disbursal you're targeting this year in second half on the APF side? And for next year, especially given that this is likely to be a one, major growth driver that is likely to come in out of, say, twelve thousand odd crores of disbursements that we are targeting next year. How much are we kind of internally targeting from the APF segment? That's one. And secondly, on the OpEx front, on the IT infrastructure, I think we have guided for INR 60 crore of OpEx, the IT systems spread over two years. We just want to understand how much we have spent, in the first half and how much is pending, to be taken in the second half? Hello? Hello. Yeah, sorry. The first, your, on your APF question, you know, we don't have a specific amount-based target for the current year. As I had mentioned earlier, however, we have kind of said that, our target, that we should try for about 350 or to 400 kind of projects to be approved during the current year. Now, obviously, these project approvals happen at a very nascent stage when the kind of project is just getting launched. So actual disbursements and, and all for these projects also will come at a lag. That's why for the current year, we will get some benefit, but we have not quantified it. Having said that, going forward, we have said that, you know, 20% of our business should come from this segment of APF. Currently, we have 80% plus coming only through the DSA channel, and we would like to in the two to three kind of a horizon, we would like to see it come down to about 60%. 20% coming from our you know APF segment, some 10% coming from a digital sourcing and channel, and whatever remaining 10% would be from our walk-ins and existing customers coming for repeat loans and things like that. Yes. Thanks. And on the OpEx for IT. Hello? Yeah. On the OpEx for IT infrastructure, which was about- Yeah. I missed that point. See, on the OpEx, we have not actually spent anything in the current year except for, you know, because we have still not finalized the vendor. The vendor we have mentioned in our presentation also is likely to be the system integrator. SI is likely to be finalized in this particular month, October. We are expecting October or, you know, by mid-November. So the expenses have not been, you know, have not come into the so far in this current year. But once the SI is implemented, then the expenses will start. That's why, you know, while we have projected that, you know, it could go up to around 18-18.5%, as of now it is still only 16.25% in terms of the cost-to-income ratio. Okay. So probably in the second half is what we are seeing, some impact come. Yeah. Okay. Thanks a lot for answering my question and yes. Thank you. Thank you. Ladies and gentlemen, that was the last question for the day. I would now like to hand the conference over to the management for closing comments. Over to you, sir. Yeah. Thank you, Nidhesh. Thank you to all the participants for taking out the time and for all the questions. I hope we've been able to answer all the questions. And if at all there are any queries that are left out, you know, we are most welcome to you know get in touch with us. Thank you once again for taking the time and for hearing us out. Thank you. Thank you so much. On behalf of Investec Capital Services, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.