Please note that this conference is being recorded. I now hand the conference over to Mr. Manish Kayal from Home First Finance. Thank you, and over to you, sir To all the participants, to Home First earning call, earnings call to discuss the results for Q1 FY 2025. We hope that you had an opportunity to go through our investor deck and press release uploaded on stock exchanges and website yesterday. We have also uploaded the Excel fact sheet, which has the historical numbers, on our website. On today's call, Home First is represented by our MD and CEO, Mr. Manoj Viswanathan, and CFO, Ms. Nutan Gaba Patwari. We'll start this call with an opening remark by Manoj and then by Nutan, and then we will have a Q&A session. With this, I will now request our MD and CEO, Mr. Manoj Viswanathan, to start today's call by sharing his thoughts on the overall performance. Over to you, Manoj. Thank you, Manish. Good morning and greetings to everyone. Before I get into the quarter one FY 2025 performance, I would like to highlight that Home First has crossed the critical milestone of INR 10,000 crores AUM during the quarter. I want to thank and express my sincere gratitude to all the stakeholders for their support in this journey. We have been sequentially increasing our disbursement every quarter. Disbursement in quarter one FY 2025 stands at a new high of INR 1,163 crores, with a growth of 29.9% on a year-on-year basis and a 5.5% on a quarter-on-quarter basis. Growth has been broad-based and coming in from all our markets. Notably, Maharashtra and Karnataka have shown better performance this year, reflecting in their share of the total AUM. Our expansion in new markets with UP, MP and Rajasthan has also been successful. AUM grew by 34.8% year-on-year to INR 10,478 crores and 8% on a quarter-on-quarter basis. The spread ex-co-lending was at 5.2%. We will take the PLR up by 35 basis points from first of August. Since we are losing one month in the quarter, we will get a lesser benefit on the portfolio yield. In addition, we also have some portfolio under NHB schemes and some pools with good track record customers, where we have to adjust the pricing for the customer from a risk-adjusted pricing perspective. As a result, we will get an impact of 10-15 basis points. The profit after tax at INR 88 crores grew by 27.0% on a year-on-year basis, leading to an ROE of 3.6%. We are pleased to deliver an ROE of 16.3% in the first quarter of FY 2025. The branch count remains at 133. We have added 22 touchpoints, taking the total to 343. We have about seven branches in pipeline, which are likely to be opened in the ongoing quarter. Our asset quality continues to be strong, with a focus on early delinquencies. 1+ DPD stands at 2.5%, 30+ DPD is at 2.9%, and the Gross Stage 3 NPA is at 1.7%, which is flat on a quarter-on-quarter basis. Prior to RBI classification circular of November 2021, the number stands at 1.3%. Our credit cost at 20 basis points is up by 10 basis points on a quarter-on-quarter basis. The BT out rate has moderated in this quarter and stands at 6.3% as compared to 8.3% last quarter. Technology remains central to our strategy. Account Aggregator adoption has become mainstream, with an adoption rate of 41% among new proposals, which was 36% in the last quarter. Digital penetration is strong, with 95% of our customers registered on our app. Digital fulfillment has reached 70+%, with the use of digital agreements and e-NACH mandates. 90% of our service requests are raised on the mobile app. With this, I would now like to hand over the call to Nutan to take you through the financials. Nutan, over to you. Thank you. Good afternoon, everyone. On key financial parameters, our overall Q1 net interest margin remains at 5.3%. Operating cost to assets is at 2.7%. We expect this ratio to hover around 2.8%-2.9% going forward. Cost to income is around 35.6% in Q1. Our balance sheet remains strong and ready to take on the growth ambitions of the company. Starting with borrowing, the company continues to have diversified and cost-effective long-term financing sources. This remains diversified across banks as well as NHB. Our borrowings mix is 59% from banks, out of which private sector banks is 30% and public sector banks is 29%. NHB refinance share is at 19%, 14% is from direct assignments and 3% from co-lending. We also have an NCD from IFC at 3%. We continue to have zero borrowings through commercial paper. Our overall cost of borrowing is very competitive at 8.3%. Coming to capital, our total capital adequacy is at 36.2%, with Tier 1 at 35.8%. Our debt to equity now is 3.6 times. As of June 24th, net worth stands at INR 2,188 crores, post dividend payout in June 2024. Our book value per share stands at 246. Moving to provisions, we have remained conservative and continue to carry provision overlay over and above the ECL requirements. Total provision coverage ratio stands at 48%. Prior to NPA reclassification, as per RBI circular, PCR stands at 66%. On specific transactions during the quarter, we did a direct assignment of INR 152 crore during the quarter as a liquidity strategy, and our co-lending volume was INR 42 crore. Co-lending business is growing, and we expect this to contribute around 10% of disbursements in the near future. With this, we conclude our opening remarks, and we will be happy to take your questions. 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. The first question is from the line of Rajiv Mehta from YES SECURITIES. Please go ahead, sir. Yeah, good evening. Congrats on strong results. I have a few questions. Your disbursement volume was pretty strong in this quarter. It seems that you had negligible impact from the RBI circular of April. Can you comment why was it? And on this sequential reduction in BT out rate, it's really commendable. But now that we are increasing PLR for the back book from August 1, how do we ensure that we are able to, you know, control BT out in the coming quarters? On the disbursements, as we had mentioned last time, we actually do a majority of disbursements electronically through NEFT RTGS payments. So this is the reason we did not have any impact. And we have a small set of payments which we do for retail transactions through demand drafts, so which did not get impacted by this guideline. So which is the reason we are, we don't have any disturbance in the disbursements. As far as BT out is concerned, see, the PLR, the increase that we're contemplating is fairly small compared to what the customers have gone through over the last two years. So, 90% of it will get transmitted through a tenure increase, not a EMI increase. So it should not disturb the customers too much. So we don't anticipate an immediate impact from this set of increase which we are doing now. Mm-hmm. Manoj, can you also comment on the origination yield except co-lending that is stable at 13.4%? I believe that in this quarter, we had a higher origination share of LAP, and despite of it, the origination yield is stable at 13.4%. And now that you are taking a PLR hike, I just wanted to, you know, understand that, is there hope for, you know, taking up the origination yield, you know, in, in, in the coming quarters? The origination yield will largely be range bound, 13.4%-13.5%. And still, LAP ratio is also fairly range bound. We operate in the 15%-20% range. So LAP share as a percentage of disbursement is generally in the 15%-20% range. There may be, like, minor changes within that range, but largely it's in that range. So as a result of it, the origination yield also will be range bound. Okay. One last question is on the cost of borrowing. It was stable. So, Nutan, I mean, when you just look at the numbers, and it seems that we did not have any significant upward repricing on existing borrowings. So are we negotiating, you know, on the transmissions which are coming from the banks? Are we trying to, you know, stop it or curtail it, which is why the stock of borrowings is not getting repriced in a significant manner? That's right, Rajiv. We are doing that, as well as you, as you would have seen, that our overall marginal cost of borrowing also has kind of slightly improved. So that also is kind of helping us. Yeah. Yeah, I saw that. Thank you. Best of luck. Thank you. Thank you. The next question is from the line of Abhijit Tibrewal from Motilal Oswal. Please go ahead. Yeah. Good evening, everyone. Congratulations, Manoj and Nutan. I think, I mean, the way in which we kind of keep improving our disbursements, delivering healthy AUM growth, without any significant impact on the margins and on the BT outs in particular, that is really commendable. And which is where, I mean, my question revolves, that, I mean, while we, w hen we look at peers, the broader affordable housing sector, everyone talks about very high competitive intensity, which is not allowing them to really pass on PLR hikes. I mean, there are players who are taking PLR hikes, but, I mean, it's not really reflecting in their yields, because it's not been absorbed. So just trying to understand, you partly answered this question in the first question that was posed to you. Just trying to understand, what is it that will help us kind of take this PLR hike, maintain yields at similar levels, or like Manoj said, can improve by 10, 15 basis points from here, and yet keep our BT outs at these good levels? So we are seeing the, you know, you can say, kind of, worst-case scenario on the BT outs, because, over the last two years, the increase in rate was almost 1.25%. So what we are contemplating now is nowhere near to that, so very small increase. So, this is why we are not, overly worried on the, BT outs. Because BT out, over the last two years, it moved from about 5% to, you know, 5.5% to about 8%. So that was the range of movement in spite of, such aggressive repricing of the customers. So, and you can see that it has kind of moderated over the last quarter. So which is why, you know, a 35 basis points increase that are too largely passed on through a tenure increase should not hurt us that much. Got it. Then the last question that I had was again on the liabilities. Nutan, just wanted to understand, I think, I mean, maybe couple of quarters back, we were saying that somewhere now, maybe one more quarter from now, you were expecting the cost of borrowings to start stabilizing. Now that, I mean, the spreads are very close to 5%, 5.1%, I mean, how are we looking at cost of borrowing stabilizing, and what could that translate into spreads and margins? So the cost of borrowing has stabilized now, maybe another 10 basis points. And still the deposit rates of the bank are increasing, and the MCLR of bank are also continuing to creep up. We are working on it so that we don't get the full increase and, you know, many other things. And the current spread is 5.2, excluding co-lending. That is the kind of number that we kind of focus on. Because we have this view, we have already been proactive and, you know, done the scale of increase, and we expect an annual, or sorry, impact of around 10-15 basis points. So then the spread should be able to hold in this broad 5.2 region, is what we feel in another quarter or two. Got it. And sorry, again, one last question. One more question that I had was, and now that we have crossed that critical milestone of INR 10,000 crore in the year, have we started engaging with credit rating agencies, that somewhere down the road, if we can favorably look at a credit rating upgrade? Yes, we have. I think the discussion is ongoing. It will, like we had always said, you know, maybe around 9, 12 months once we cross this threshold. So it's just the first quarter. So perhaps another 12 months, hopefully we should get that going as well, and then probably that should also help us by another 10 basis points, with interest rate cycles remaining where they are. So it's all moving in the right direction. It's not a question of if, it's a question of when, I would say. So earlier, the better. Great. I think, I mean, congratulations once again. I think our execution has consistently been very good. All the very best to you. Thank you. Thank you. Thank you. The next question is from the line of Kunal Shah from Citigroup. Please go ahead. Yeah. Hi. Congratulations on the set of numbers. So on this INR 10,000 crore AUM milestone, obviously it's a great thing from your end. But generally, when we look at it in terms of commentary from most of the players, once they cross this milestone, they talk about moderating growth trajectory. At any point in time or maybe any anything which is happening, which you believe that maybe this 35% or maybe 30% plus kind of AUM growth might not be sustainable? Or maybe what we have delivered over the last 3, 5 years, are you seeing same trajectory over the next 3 years as well? Yeah. Disbursal has been very strong in the first quarter. If you just look at it from a run rate perspective, this should translate to at least INR 4,800 crore of disbursal for the year, which basically then translates into a 30%+ growth. We are not seeing any slowdown at this point. Demand seems to be quite strong on the ground. There seem to be enough opportunity for us to grow. I guess there are two areas where we are, you know, we have headroom to grow. So we have a lot of, you know, markets still to penetrate, especially in the central and northern part of the country. We can go much deeper, even in the other parts where we have already been present. Plus, we don't have, I mean, our penetration in LAP or our contribution from LAP is fairly low. That's another area where we have headroom. So we have multiple areas where we have headroom to grow. So, we are not very much concerned about our ability to grow at the pace that we are growing at. And, secondly, with respect to maybe now, there would be some spread benefit, which might play through. But overall, any thoughts in terms of building up some buffer, given this kind of healthy growth over the last three, four years and increasingly covering it across various stages? Because it's been coming off since for past few quarters. So would we want to create any management overlay buffer or something and just try to manage the ROA? Or maybe we are very comfortable with this kind of maybe six years or let's say two and stay on provision. So, yeah. So, Kunal, we have been doing that. As you would have seen, you know, we have, there is a certain management overlay on top of what the ECL model shows up. But, you know, the fact of the matter is, the portfolio, you know, post-COVID, you know, the since once the normalcy has returned, so there is improvement in how the portfolio is behaving, and as a result of which the ECL is throwing up, lesser and lesser, provision. So, you know, beyond a point, it will be difficult for us to, you know, overlay, too much on top of that. So we- which is why, which is... So, but we are, you know, taking some overlay over and above what the ECL is throwing up. But if the ECL model itself is throwing up lower and lower numbers, you know, there will be. It will be difficult for us to maintain that coverage which we had post-COVID. But yes, there is a regular process of, you know, reviewing it and, you know, taking overlays. I just want to add to that. We've also done back testing on, when we, you know, close loans to see that, whether, you know, we have significant amount, which is under-recovered. And as you would see from the credit cost line, the credit cost is also reducing, and it's now settling at around 0.2%, though we've been guiding 0.3%-0.4%. So, you know, again, that gives further comfort to say that, you know, the portfolio quality is improving, and in an eventual NPA situation also, the recoveries are not compromised s o that is also getting captured in the ECL flow. Okay, sure. One last question, if I can, is on the co-lending part. So now that the inflection is closer to like 2%, but maybe at what level you would want to scale that to, given now maybe all the work with respect to integration and whatever is done? Finally, maybe what support can it provide to the overall ROE, at the level of the portion that we are looking at? Yeah. So immediate milestone to hit 10% of disbursal, which is what we are aiming for. So 10% of disbursal is our first milestone. Maybe over a longer period, maybe 2, 3 years, that number can go up. But, first milestone is to hit 10% of disbursal. Okay. And given the lower capital requirement, the boost to ROE, that it can provide? Correct, correct. It will, I mean, so that is, that is something that we have mentioned, that it is ROE effective, it's an ROE effective product. So we have lesser capital allocation, and, we can, we can keep growing, you know, with this product. Okay. Okay, yeah. Thanks a lot. Thank you. The next question is from the line of Nidhesh from Investec. Please go ahead. Thanks for the opportunity. First is a slightly longer term question. Can you elaborate on the strategy from a three-year perspective, for the company in terms of growth? How we prepare, we have reached around 10,000 overall book. How we prepare for the growth over the next three years, and how do you see return ratios panning out in that journey over the next three years? Yeah, over three years, broadly, our strategy is to, you know, it's a distribution-led strategy. When we started speaking about this three years ago, we said we are going to double down on our older markets, which is West and South, and we are going to penetrate deeply in these markets, and which we have done. And then, we said we will look at, you know, three large markets where we had a fairly skeletal presence, which is UP, MP, and Rajasthan. And we will then start building our distribution there. So our three-year plan is to basically double down on distribution on all these nine markets, you know, and improve the penetration and, you know, try to cover as much of the state as possible. So that is our primary focus for the next three years. As far as product is concerned, luckily, we are going to be focused on housing loans. We want to be known in the market as a housing loan provider. So we are very focused on that. Plus, also, the focus on housing loans helps us to understand the dynamics in the market better, in terms of the properties and nuances in various geographies, et cetera. So that is our product. From a product focus perspective, that is our strategy. As far as the ability to retain margins, et cetera, concerned, as I mentioned, we have some headroom over there, because we have, as we go deeper and deeper into smaller markets, we have a greater ability to retain the margins. Plus, we also have a good amount of headroom on the loan against property product, where we are still at about 15% of disbursements. And, so there again, we have headroom to be able to protect our margins. So broadly, this is a strategy, fairly simple. It's very distribution-led. So granular distribution, through our, our connector-led, as well as branch and hub-and-spoke led model. Product focus, keep the product focus on housing loans and kind of maintain the margins for the next three years. That's what we are basically looking at. Do you expect operating leverage between cost to asset improving over the next three years, and which may lead to ROA expansion or in your three-year journey, or that is not what you are believing? Yes, there will be some gradual operating leverage which is flowing through. And so as you can see, we are still you know, while we have guided to around 3%, you know, Opex to AUM, we are still kind of hovering below that. So Opex, so the operating leverage is flowing through gradually. And while our intention is that we want to use that in building distribution, et cetera, still it will definitely, you'll see some of it flowing through in the next three years. So our aim is to kind of, get to eventually get to, maybe not in three years, but in five years, get to about 2.5% of Opex to AUM and, closer to 30% cost to income. Sure. Secondly, on the insurance corporate license, when should we start seeing fee income from the insurance in our P&L? We should start seeing something coming in from the next quarter. Okay. And any quantification for the three years that you have in your mind? I just want it back. It will be not appropriate to provide any figures on this, because we are still in negotiations with the insurance company. So I think we'll have to wait for that. Last is a repetitive question on the active number of connectors for the quarter. Active connectors is about 3,500, 3,500 connectors. Okay. Thank you. That's it from my end. Thank you. Thank you. you. The next question is from the line of Nischint Chawathe from Kotak Institutional Equities. Please go ahead. Hi, thanks for taking my question. Y ou know, over the last one year, we have seen, sort of, you know, pressure on yields, despite the fact that, you know, cost of borrowing has been going up, and this is true for all the players, in the industry. Now, over the next one year, we're probably looking at, you know, interest rates sort of settling out or maybe coming off. You know, what gives us comfort that, you know, yields will not come down further or, you know, or probably will not come down faster than the cost of borrowings, leading to further pressure on, on core spread, and, especially in the backdrop of some of the larger players, you know, getting into the smaller ticket businesses? So, Nischint, generally speaking, if you see our last cycle also, when the, in a decreasing interest rate environment, when the, for borrowing costs are decreasing for us, generally, we have actually been able to maintain our yields, and the spreads have actually expanded for us. That is what has happened in the last cycle. So you will see that, you know, across cycles, we are able to maintain our yields at around 13.5, or thereabout. So as the borrowing cost reduces, you know, we are anticipating that spreads will expand. And as I mentioned, you know, we have some, you know, tailwinds on that. You know, as we go into smaller markets, we have ability to retain margins, we have higher, you know, ability to take on higher LAPs. So those are both kind of, you know, cushions that we have, as far as the yield is concerned. So we are confident of maintaining yields at these levels. So if the borrowing cost reduces, hopefully it will, you know, mean that, our spread expands. Over the next four quarters, let's say if I look at your, you know, ticket size makeup of book, you know, given the fact that you're going into lower tickets, should it remain similar? Or would you kind of, expect a trend where the larger tickets, you know, INR 15-25 lakhs or INR 25 lakhs plus, grow at a faster pace than the overall company growth? So overall, I mean, if you see, if you take a 5-10-year view, the ticket sizes do migrate up. So when we started out, we were focused on, you know, between INR 5-15 lakhs, but that number has moved up over time. So now, if you see, between INR 15-25 lakhs or INR 15-30 lakhs is where the growth is, you know, across the affordable segment itself. So that's where we are likely to focus. So growth in all the segments, INR 15 lakhs+, INR 15-20, INR 20-25, INR 25-30, are fairly similar for us. And that is where, you know, we will be also focusing. Sure. Okay. Thank you very much. Thank you. The next question is from the line of Renish from ICICI. Please go ahead. Yeah, hi, sir, and congrats on a good set of numbers. So just two question: one, on this, BT out rate, which has been improved sharply this quarter. So any particular initiative we have took to arrest this or how is it, sir? Renish, I think there are two things that have happened. One is that, you know, the recency effect has faded out for the customer. Because the last rate increase actually happened in, on 1 April 2023. So it's been, like, 12 to 15 months since that time. And secondly, we have also put in place, you know, the previous quarter, we have put in place a set of, you can say, protocols, for arresting the BT out. Some of it has, some of it has started working. So I think it's a both, both the things have contributed to the slight decrease. Okay. So you mean you have put out a separate team for that or? No, not a separate team. It's more like a set of rules or a set of protocols we have rolled out for the branches, and we have given them a training on that. As to what needs to be done and when a customer comes for a BT out, you know, step one, step two, step three, step four. So that is beginning to help. Got it. Got it. And sir, lastly, again, sorry to circling back to spread and yields. So now when we look at the origination yield, you know, stay at 13.4%, wherein our margin cost of borrowing is higher at 8.6, you know, which is almost 30 basis points higher than the funded cost. Which, you know, essentially means that at the ground, competitive intensity such that even in the origination inside, we are not able to charge a premium, you know, to that extent. So, let's say, given the base as well, right, when we tap new markets, what is your ground experience? I mean, where do you see this yield settling in near term? And does that pose risk on the spread, what you are guiding today? So, on the borrowing cost, you know, when we compare, we should actually take the book borrowing cost, because the origination origination borrowing cost will not reflect the correct cost of borrowing for us. Because there is, you know, in the overall borrowing cost, there is a blend of NHB also, which, which, which comes to us at a slightly lower rate, and hence the overall borrowing cost is lower. But in a particular quarter, there may not be any NHB borrowings. So as a result of which, the cost of borrowing for that quarter might show, show up higher. So I would say we should take the origination yield and the borrowing cost for the overall book. I mean, that, that will give us the trend of spread. So if you take it that way, it is 13.5 minus 8.3, so 5.2, which is also the, happens to be the book spread. So that is a better way to look at, you know, what will be the trend of spread in the book going forward. Yeah, but sir, if I look at our slide number 32, you know, the share of NHB refinance, it has actually gone up this quarter. Yes. So that's why I'm wondering, you know, despite the higher NHB borrowing, why our marginal cost of borrowing is, you know, significantly higher? Yes, so that's why I said it depends on the schemes under which we are drawing from, drawing from NHB. So there are schemes where there is no concession, there are some schemes where there is a concession. So on an overall basis, if you look at it, you know, it will be different. In this particular quarter, for example, we drew down on a particular scheme that there is no concession in the scheme, in the, in terms of the borrowing cost. So, you know, the book borrowing, so the cost of borrowing has not, it is reflecting higher. Right. Uh- And it Yeah. In a full year of funding, you know, there'll be many things that will be playing out. So, you know, there'll be new borrowings from banks, from NHB at different schemes. There'll be repricing for older loans and a whole bunch of things. So, you know, to pick up a quarter and then anchor that to the cost of borrowing is not a good reflection of how the spread will move forward. The right anchor should be what ultimately lands on the book at the final, you know, on an average quarterly basis. And also the other way to look at it is interest expense, what's actually getting charged to the P&L. Those will be two more appropriate methods when you look at the cost of borrowing. Okay. And, anything on origination yield side and in terms of competitive pressure? Origination yield side, broadly, we have been able to maintain at 13.5. So, we will continue to do that. 13.4, 13.5 is what we have been targeting, and we are able to maintain that. Okay. And sir, lastly, you know, we have seen that, you know, the two largest affordable housing finance players are now getting into the smaller ticket size loans to sort of sustain the yields. Wherein, in this call, you know, we are mentioning that the incremental growth or the larger opportunities in between INR 15-30 lakh ticket size segments. So, does that segment provide that price advantage for us, or how is it? So it is, see, it is in terms of customer profile, it is the same. It is just the ticket sizes have gradually moved up over time, you know, because incomes have moved up. So the profile of the customer would be the same. I mean, so 10 years ago, a person who was earning probably INR 25,000 is today earning INR 40,000 or INR 50,000. And correspondingly, the price of the property is also, price of the property that they are targeting to build or buy is also, has also gone up. So as far as the segment is concerned, it is the same segment. It is just that there is an inflation effect on the ticket size. So it's a very gradual movement. So what was 10 lakhs 5 years ago is now 15 lakhs. That's, that is the only way to look at it. Okay. Okay. Okay. That's it, sir. Thank you. Much obliged, sir. Thank you. The next question is from the line of Raghav Garg from Ambit Capital. Please go ahead. Hey, hi, thanks for the opportunity and congrats on a good set of numbers. I have three questions, so my first one is that you often talk about increasing LAP, being a margin enhancer for you. But if I look at over the last eight, nine quarters, despite share of LAP increasing, the spreads have declined consistently, which probably implies that, there is pressure on HL yields. So what gives you the confidence that LAP will be able to... increasing LAP will help you improve yields or NIMs, when it has not happened in the past? So the calculation of yields, Raghav, I want to first address, then hand over to Manoj on the origination side. When you look at yields, whenever we take an NHB borrowing or a drawdown, which includes PSL too, we have to reprice that to the customers. So, you know, when you look at that total number, that repricing also included. And bulk of that decline is coming from that line. Of course, the LAP is contributing to the increase, and maybe Manoj can articulate better on the origination yield of both the products. Right. So, But one second. This spreads have still declined, right? Yield has been a function of- So spreads, spreads have declined in line with the cost of borrowing increase. So you see, you know, in quarter one of last year, the cost of borrowing was 8%. So that's a, that is a 30 basis points increase, and broadly, that's the range in which the spreads have declined. So that is something that we have acknowledged, that there is a cost of borrowing increase and, we have not, you know, increased the rate over the last one and a half years. And which is why we are now going in for a repricing of, you know, to kind of bridge that gap. Understood. That's 35 basis points, right? From August onwards. From August onwards, correct. Yeah, yeah. And, and the book is repriceable, as and when the PLR hike is taken. Is, is that it? Yeah, because we have a floating rate book, except for the portion- Right ... which I mentioned, that it's maybe under NHB schemes where we cannot reprice. So, rest of the book is, you know, we have the ability to reprice. Right. My second question is on the ECL on LAP portfolio, which seems to be, you know, low, relatively compared to peers or even when compared to your own home loan portfolio. Now, that may be the case because, it's not a very well, you know, seasoned portfolio, given you've recently started focusing on it. But in your opinion, what should be an ideal ECL cover on the LAP portfolio? And do you think over a period of time, as the LAP portfolio seasons, it will lead to higher credit cost for you? See, we have been kind of late starters on LAP, and we have also observed how our peers are doing on that product because some of them started earlier and they have a higher proportion of LAP. So even through the COVID cycle, the LAP book in this segment seems to have done fairly well, you know, without any stress as such. So we don't anticipate any, and we also don't see any early signals on the LAP portfolio in terms of stress, et cetera. So we think it will play out more or less like our home loan portfolio only. We don't, we're not seeing any different, different behavior on it. Understood. Just last one, what was the incremental disbursement ticket size? And that's all from my side. Thank you. Incremental disbursement ticket size would be around INR 13.5 lakh, 13.5. Thank you. The next question is from the line of Shreepal Doshi from Equirus. Please go ahead. Hi, good evening, everyone, and congrats on a good quarter. My question was on capital adequacy. So Tier 1 has dropped by almost 38 basis points sequentially. What explains this decline? So, good part of this, and we've discussed this, in some previous calls, that, when we have our investments powering mutual funds, they carry a 100% risk weight. So of almost, 1%, is attributed to that. The rest is more, you know, consumption, of capital because of growth, in, segments, which, so for example, LAP now requires a 125%, risk weight, which used to be 100 basis, 100, 100% until a few quarters back. So all of that is contributing now to a, a higher consumption. 1% out of this is, contributed by the higher mutual. Okay. Okay, got it. And the other question was on the technology front. So while we aspire to, you know, grow our book at 30% incrementally, and also expand our reach in terms of branches, how well are we placed on, you know, technology front or will we further need tech-related CapEx in the coming years? So, we decided to adopt cloud-based technology very early on in our journey. So we adopted Salesforce platform. Salesforce is a globally, you know, used platform, and it has you know very high scalability. So the version that we are using, you know, and the implementation that we have done, we can, I mean, we don't have to worry about it, you know, as far as the scale is concerned. I mean, we can add 5x, 10x, 20x the number of customers to it without any change in the response or change in you know any additional investment which is required. So, from that perspective, we don't require, we don't need to spend anything significant on our core applications. But of course, we will keep enhancing it and, you know, enhancing some of the ancillary applications, our mobile apps, plus the cybersecurity, you know, and you know, various other MIs related visualization applications, et cetera. So those kind of things we will keep enhancing, so that the customer experience keeps improving. But on the core application itself, we will not need to do any significant additional expense. Got it. Got it. Most of my questions have been answered. Thank you and good luck for the next quarter. Thank you. The next question is from the line of Jignesh Shial from InCred Equities. Please go ahead. Yeah, hi, am I audible? Yes. Yeah. Yeah, just, you know, again, I know it's, you know, digging to the same, same area, but what the yield softening what we are seeing and cost of funds are going up, you would have done some PLR hike and all. So is it not getting reflected in yield because you're doing more of, you know, low-yield products? Or how, how exactly is it matching? I'm, I'm still a bit, bit confused on that thing. And two more, more strategy-related questions I have, but if you can just give me, you know, some, some idea on this, that will be really helpful. PLR increase, we have not yet taken. We have, we are going to take in this quarter. Mm-hmm. So PLR increase has been initiated. That is what we have mentioned because we require, we are required to give the customer 30- days' notice. So we have given the 30- days' notice, and implementation will happen from first of August. Understood. So but whatever, you know, if you see that sequentially from seeing all your yields, it has been softening it out on a sequential basis, on a consistent basis. So that is the reason I'm little confused that have we not taken any rate hike, and we have not passed it on to the end customer, or how exactly does it work? Yes. So what you're saying here, you know, from quarter one of last year, we have not taken any rate increase. As on the right-hand side, if you see page number 28 of our investor deck, the repricing schedule is mentioned on the right-hand side. So the last repricing that we did was 50 basis points on 1st April 2023. Post that, we have not taken any repricing. So over the last entire 5 quarters, you can see there is no, no repricing, so which is why there is a softening of the spread. That's understood. Okay. Now, two more like a strategy question. You know, we have been, you know, tracking it for a while, and there have been discussions about, you know, moving away from your concentrated states and all. So what I see from Gujarat, correct me if I'm wrong, but Gujarat, Maharashtra and Tamil Nadu used to be your top three states earlier. Still, I see more or less there have been, you know, some reduction, but more or less your contribution comes out from these three states and on a large basis. Are we going to see the similar trend going forward as well as you grow, going forward as well? Or, we see that some other states might be, you know, contributing pretty heavily in next, say, two years or three years down the line. How this geographical change is going to plan out if I see three years down the line? So, in terms of share, yes, there will be, see, but Gujarat still contributes 30% of the AUM. And if you see, Maharashtra and Tamil Nadu, they are about 14%, 13% and 14% of the AUM. So I think we will more or less be able to maintain this, more or less be able to maintain this share. But yes, as the other states grow a little faster, like states like maybe Telangana, Andhra Pradesh, UP, MP, et cetera, their share in the overall AUM will start climbing up a bit, as you can see in the chart. If you see page number 12 of our investor deck, you can see that MP has moved up from last quarter, 6.2%- 6.6%. UP and Uttarakhand have moved from 6.1%- 6.5%. So there is a gradual increase in the share of the overall AUM from the new states, and this is likely to continue. So over a longer period, maybe over, let's say, eight to 16 quarters, these numbers can change. So you can see probably Gujarat's share coming down below 30% and the share of some of the other states climbing up. So, but we have mentioned in the past that, you know, what we are expecting is that over maybe a 3-5-year period, we would expect many of these states to kind of be at the 10% mark, as a share of the overall AUM of the country. Understood. So So it's fair to say that, you know, digging deeper into the existing states, but more entering into the new states, I mean, improving penetration into the new states will make sure that the growth momentum remains healthy for coming years. Is that fair to assume, right? Absolutely. Absolutely. Understood. And just lastly, if I see your, your, bounce rate, it's more or less maintained somehow, apart from, you know, a jump that has happened during COVID. But your pre-COVID bounce rates used to be pretty lower, you know? So is it possible that this trend of maintenance will continue, or do you think that even, you know, we can, we can go back to the pre-COVID levels as because we are moving more towards, a relatively high ticket sizes and all, say, INR 10 lakhs to INR 25 lakhs size? That's, that's the average I'm seeing it up. But do you see that the, the bounce rates will remain more or less similar, or we, we might see an, improvement happening on that particular front as well? That, that's my, question. Yeah. So our intent is to try and improve it. But, you know, there is some customer behavior that has changed post-COVID, especially with the introduction of UPI. So we are finding it difficult to, you know, bring customers back on track because of that. So a lot of customers have multiple bank accounts now, and they kind of move between accounts. So we are seeing, you know, slightly more casual approach towards the ECS debit. But a lot of customers are actually clearing the payment within three to four days of, you know, bouncing the payment. So if you actually see the bounce rate, let us say, on the 14th of the month, sorry, on the 8th of the month, that is, you know, three days after the three days after the presentation date, the bounce rate is very similar to what it was pre-COVID. So within the first three to four days, the customers are actually making the payment, making the payment, even though they are bouncing on the particular date. Understood. Understood. Our mix is still more tilted towards salaried, so that trend will also continue going forward also, right? You will be still be focusing on salaried customers itself. See, in the market, we don't have any stated focus, you know, towards salaried customers. It's more a natural flow that comes to us because we are, you know, we have a more convenient process. So, we are agnostic, whether it is salaried or self-employed customers. And in some of the smaller markets, as we kind of go deeper, in the deeper in the market, we do get more self-employed customers. So, at times may gradually, I mean, it has been. It has not changed much, but then it can gradually change over a period of time. Understood. Understood. Thanks. Thanks a lot, and, and all the best. Thank you. The next question is from the line of Chinmay Nema from Prescient Capital. Please go ahead. Hi, sir. Thank you for taking my question. Just wanted to double-click on certain aspects of your operations. Could you provide some color on the operations of your field teams and RMs? What are the key activities, 2, 3 key activities carried out by them, and what's their contribution to the underwriting? Basically, trying to understand how you deal with the subjectivity of underwriting with a centralized underwriting system. So basically, the field teams, you know, have basically two or three core activities. Core activity is to develop, you know, business development, which is involves basically meeting builders, meeting connectors, and originating loans from them. And the second activity is basically once the lead comes in, to basically go convince the customer, and, you know, close the transaction, close the deal with the customer. They also capture, you know, some information, and physical information in terms of photographs of the property, photographs of the customer, customer's place of work, and things like that. And rest of the correlation actually happens centrally. So today, a lot of information is available on customers through digital API integrations. And with the Account Aggregator coming in, even, that has become even more strengthened. So we basically pull the bank statements directly from the, you know, through the Account Aggregator, and then we correlate. For example, if it's a salaried customer, we can correlate from the EP, EPF records or, you know, Form 16 records. And so the triangulation happens centrally. Some information gets captured locally and gets uploaded on our cloud-based system. And then the triangulation is done by a central team of underwriters and the approval is given to the customer. What's the strength of the central and centralized underwriting team? Centralized underwriting team, we have about 30-35 people in our central office. Understood, sir. And so, for the self-employed segment, where there's higher degree of unpredictability of cash flows, how is it done? If you could explain that, on a centralized level, is it done through transaction statements and bank account statements, or do you have more on-the-feet operations for underwriting to that segment? So, see, it started with subjectivity, but our objective since starting the company was to remove the subjectivity from this process by collecting data and, you know, using that over a period of time. So today, we have removed a lot, a lot of the subjectivity from the process. So today we have a lot, first of all, a lot of records which are available centrally. For example, if the customer has a GST registration or a Udyog Aadhaar, we can actually check that centrally. As I mentioned, the banking comes completely centrally, you know, through the Account Aggregator. And now we have a you know experience with various segments and sectors and occupations of people as to what their approximate monthly income would be, so we benchmark to that. Plus, we are also supported with bureau data as well as our own, you know, proprietary algorithm. So if a particular customer comes from a particular segment with a certain set of characteristics, we know what would be the probability of default. So from the time we started 15 years ago to now, we have actually eliminated a lot of subjectivity from the process, and that reduces the requirement of, you know, the local touch and feel and, you know, data collection that used to happen on the ground. So a lot of the data collection actually now happens centrally, and the triangulation happens centrally. Hello? Shubhangi, are you there? Yes, I'm there. Yeah, we can move on to the next. Yeah. Okay. Okay, thank you. The next question is from the line of Pritam Aggarwal from, a s an individual investor. Please go ahead. Hi. Congratulations on the good set of numbers. So my first question is with respect to the sourcing mix for Q1 2025. So can you throw some light on what is the mix of direct, connectors and the DSA, what's your source, and what was it for FY 2024, and the way it will be going forward, how you see it? So, sourcing mix, you know, it's basically connectors is about 77%, and, it's mentioned in our 13, page number 13 of our investor deck, all the various channels from which we source. Broadly, it has remained the same. Connectors, range between 70%-7 5%, 78% of our origination, and, then there is a long tail of various other channels. So broadly, that is, that is how we operate. You see it same going forward also? Yeah, at least the medium term, we are seeing this continuum. So maybe for the next between 1-3 years, this is the trend that would be there. Okay. And my another question is with respect to the under-construction property in the outstanding AUM. So under-construction properties have also been largely range bound. If you see our pre-EMI to overall ratio is about 13%. And so that's basically what is in pre-EMI. Pre-EMI as a percentage of total reflects what is in, what is under construction, because till the time the full dispersal happens, we remain in pre-EMI, pre-EMI mode. So broadly, that is the ratio of under-construction property, so as a percentage of the overall property, so about 13%. So on an AUM basis, it is 13%, right? That is right. Okay. Thank you. Thanks. Thank you. The next question is from the line of Chintan Shah from ICICI Securities. Please go ahead. Yeah. Hi, congratulations on the good set of numbers and achieving the INR 100 billion milestone. So just wanted to understand, so now if we move further now, going down the line two, three years, from going to a INR 100 billion to INR 200 billion, so, how would the growth dynamics be? So, now also more or less it could be sourced by a connector model or would we and continue with the lean branch structure, or in the new geographies, would we be also expanding our branches? So, for example, if we see in the new geographies where we are expanding, UP, MP and Rajasthan, the players which are already present there, the leaders, they are mostly expanding via the branch network. They have a very exhaustive branch network in those areas. So would we also go via the branch model or the connector model? Yeah, first question was on that. And secondly, on the technology piece, I think we are very well, very well developed on the tech piece. But so if we grow or double our AUM, for example, on the from currently, so would the current tech investment suffice or would there also be some one-time CapEx expense to be taken there? Yeah, those are my questions. On the first question, our distribution model will remain the same. We are looking to... So we have, basically, there are two, three pillars in our distribution strategy. One is the hub and spoke model. So we have branches, and then we operate through touchpoints which are connected to the branches. So that strategy will remain the same. We are not looking to change it in any of the new, new expansions that we are planning. And second is the connector model. So connectors, again, the last mile connectivity with the customer, so there again, we intend to be very granular, so we are not going after large, after some of the large DSAs. The origination from each connector is very, very low in terms of annual contribution, so we are looking, talking about probably in the range of between 5-10 loans in a year contributed by a connector. So that's a very granular connector approach is what we are intending to pursue. No, no change absolutely in that process at all. As far as the second question is concerned, on the technology, it's the technology that we have adopted is actually very scalable. So it's a Salesforce platform, it's a globally used platform by very, very large companies in this world with a much larger customer base than us. So it's a very scalable platform, does not require any additional investment as such. It's a cloud-based platform base, and we have to just only buy the licenses. Of course, there are some enhancements on which we need to invest, which we are investing on an ongoing basis, but nothing which is like a very significant jump, you know, in the investment that we need to make, you know, to sustain the growth. Sure. And sir, just one more bit on the spread. I'm just harping upon on that again. On the cost of borrowing fees, so assuming, say, there is a rate cut in the next 12 months or so, so how are we placed on the cost of borrowing side due to a rate cut? How much beneficial would it be, or how much percentage of a borrowing would be on the floating end, yeah? So, rate cuts, I think, you know, as and when it happens, generally gives us temporary expansion and spread, as we have seen in the last rate cycle also. But that is still some quarters away. So there is some lag between, you know, the rate cut happening and us passing it on to the customer. So there is a temporary expansion and spread, which is there for a couple of quarters. Yeah, but that's maybe still a couple of quarters away. Sure. And this 35 bps transmission would be immediate and almost for the entire book, except for the NHB-related, right? No. So first of all, we will lose one month in this quarter. Yeah. We will literally be affected from first of August. Yeah. So we should see two-thirds impact in this quarter. Plus there is the NHB book, as well as some historical customers, where we need to do some adjustment in terms of the risk adjustment. Because we have to offer similar rates to similar profiles of customers, so those customers will get the advantage of it. So, like I said, you know, in this quarter, we will get a benefit of about 15 basis points. Sure. Sure, sure. This is quite helpful. Yeah. Thank you. That's it from my side. Yeah. Thank you. The next question is from the line of Siddharth Chandrashekar, an individual investor. Please go ahead. Ma'am, sir, my voice is audible? Yes, yes. Okay. So, my question is regarding our, capital structure and the way we are, utilizing our off-book strategy, right? So right now, if I see, we are already a double A-rated company, and, we already have, from our capital adequacy ratio around 36%. Right? So if, if I see this off-book, right, there is a trend, and even if I listen to your comments on last two calls, right, we are doing more amount of co-lending, along with securitization. So why we are not actually, you know, utilizing our on-book and making, make sure like, our capital adequacy falls to 25% or something like that, then we go for, you know, off-book strategy, right? Just comment on this. So we are trying to build it sadly. So this is why if you see, we have not aggressively gone after co-lending or direct assignment. It's just a start. And it will also take time to understand it, understand the understand the partners, because the co-lending is to be done with with bank partners. So there is also, you know, the process that needs to be streamlined, et cetera. So it will take time for it to scale up. So we don't want to start late, because then again, it will take us take two years for us to, you know, understand the process and, you know, streamline all of that. So which is why we have started early, and we are doing at a very nominal level. So at this point, you know, the contribution of co-lending is only about 5-6% to 5-7%. Our first aim is to take it to about 10%. Similarly, on the assignment, it's about 13% is our assignment, as a percentage of AUM. So both are, w e have kept it at fairly low level at this point, and when required, we can always, you know, scale it up. The idea is to understand the dynamics and understand the process well, so that when it is required, we can actually utilize it. Okay. Okay, understood. Thanks for the clarification. So on one more, you know, question on the capital front, right. So, till then, you know, at what point of time you will hit the market again for the capital raise? And what sort of, you know, mature level capital adequacy ratio that as a business we are looking for? Is it something around 20%, or, you know, we are looking for around 30%, and we will keep on going for market for, you know, new funds. Right. So if you see our, you know, consumption, as also mentioned in the call, it's about 2%-2.5% is the capital consumption, based on our growth, the, that we are having at this point. So, you know, we, we would have-- we have a, we have a cushion of about 15%-18% there, so we can say about four to eight quarters, worth of capital is still there. And even after that, we will still have a cushion because the regulatory cutoff is 15%. So, somewhere in, in that zone, between, you know, you can say in the next, six to, six to 18, six to 18 quarters, we will, look at, look at raising capital. Okay. So during that time, we will be around capital adequacy of around 25 or something? Yeah, we're keeping that, you know, we should not, I mean, keeping an internal threshold of, say, 20%, because 15 is a regulatory cutoff, so we don't want to go very close to the regulatory cutoff and, you know, start looking for capital at that point. So I'm saying keeping, the regulatory cutoff at about 20%, that is, how we will, you know, approach the capital raise. Does it answer the question? Yeah, yeah. And, regarding ROE profile, so when we are, you know, when we are maximum, maximum utilization level of our capital part, right? So what sort of return on equity that we can look for? Return on equity, see, for last year, we ended the year at 16.1, and for the full year, we delivered 15.5% ROE. We had mentioned that every year we are looking to, you know, increase that by about 75 basis points. So we can expect that kind, those kind of numbers. So this year, last year we delivered 15.5. This year, full year, we want to deliver between 16.2-16.5 kind of a number for the full year. And every year we can expect 50-75 basis points increase in ROE. Yeah. So business model, will we touch, 20% plus or, you know, 18, 19 would be the maximum kind of level that we are looking for? Our first milestone is to hit about 17.5%, 17.5%-18%, and then we will see from there, depending on how the market is. Okay. Yeah, thanks much. Thanks. Thank you. The next question is from the line of Arvind R from Sundaram Alternates. Please go ahead. Hi, team. Thank you so much for the opportunity and congratulations on the great set of numbers. Can you quantify, you know, how much we have as floating provisions over and above ECL? Like, if you can, give me that. That is my first query, and the second query, like, will this 35 basis points hike in PLR will it be on the entire home loan book, or will it be like in phased manner? That's my second question. Yeah. So on your first question, over and above, ECL is about INR 15 crore, approximately. On your second question, the hike, even the entire book, but like Manoj was mentioning, that the NHB fixed book does not undergo repricing. And we're also looking at the back book and looking at the risk categorization and considering the good pool of customers, we are seeing how we can adjust the pricing there, because that's also a requirement that we have to do and also right thing to do. So adjusting for all of this, about 10-15 basis points is the net impact that we expect from this increase in PLR of 35 basis points. Sure. Sure. Thank you. Thank you. The next question is from the line of Sonal from AMSEC. Please go ahead. Hi, thanks for the opportunity. Just, similar question. So generally, you know, banks who are giving out loans, for the first year, the loan is a fixed rate loan. So for us, whatever the business we've done in last one year, even over there, we'll be repricing the PLR or, how does it happen? We do not do any fixed price loan. We don't have any fixed price loans. So not even for a year? So the- What gets fixed is actually the NHB. So when we originate the loan, it is full, it's a floating rate loan. But some of the NHB schemes require us to fix the interest rate later, if the concession needs to be passed on to the customer. So certain portion of the book gets fixed at a later point. You know, if we are getting a corresponding fund from NHB. So those, that is what we are calling as the fixed NHB book. Basically, for disbursements what we've done in quarter of last year, even, for those disbursements, there will be a 35 basis PLR hike. Is that correct? Yeah, depending upon the risk categorization of the customer. Okay. Okay, that's fine. The other question I had was on DA income, Direct Assignment. So do we upfront this income, or is it only on a yearly, you know, for, for the same year that we take the income in our PNL, how does it happen? And then in this, we do have to upfront, that is the regulatory guideline. Okay. Okay, that's it. Thank you. Thank you. Ladies and gentlemen, as there are no further questions from the participants, I now hand the conference over to Mr. Manoj Viswanathan for closing comments. Please go ahead, sir. Thank you. We are confident to continue the growth momentum led by a strong economic environment, expanding distribution network, and differentiated business model. We continue to stay focused on providing loans for affordable housing, led by distribution and use of technology, backed by diversified funding and strong risk management. Thank you everyone for joining us on this call. I hope we have been able to answer all your queries. In case you require any further details, you may get in touch with Manish Kayal. Thank you.