Good day, and welcome to IIFL Finance Limited Q1 FY24 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Nirmal Jain. Thank you, and over to you, sir. Thank you, a warm welcome to all of you for being on the call. I also have Kapish Sousa, CFO, and Venkates is here today, he's our CEO of microfinance business. You know, they will actually take over after I just give opening remarks. As all of us know that Indian economy has been doing well. In fact, in a world where most of the economies are in bad shape, India stands out. India's international standing, as well as, our relationship with the U.S. after PM Modi's visit has had a dramatic change. In terms of the excitement about India, I think it's at all-time high. Also, our economy now is on double engine, like many state governments. Till now, we were working, we were just depending a lot on consumption, but the CapEx cycle, after a long time, it has revived, and therefore, the economic growth will have the double boost of CapEx as well as consumption. The CapEx probably can lead from here on. There's a feel-good factor as we meet corporate and investors, and also the demand for bank credits, and the corporate credit in particular, is growing. That will have a good impact, cascading impact on the SMEs and the small borrowers, that constitute our customers. Inflation has been under control, and therefore, we believe that the interest rate cycle, in Indian context, at least, will have a fall, and probably will not see more rate hikes. Having said that, in this quarter, actually, we have seen some of the banks whose MCLR has been going up, and when there's a reset there on 1st April, they have increased the interest rate. Going forward, we hope that at least it will plateau, if they not come down in the near term. In terms of our core businesses, our loan AUM has grown by 29% on a YOY basis, which I think is in line with our targets and a robust growth. 1st quarter typically is a slack quarter for many businesses, but still, on a quarter-over-quarter basis, our loan AUM has shown a 5% growth. Our profit after tax, also after minority, after considering for the minority interest, has also grown by the similar 29%, and prior to minority, has grown by 43%. What is more important to note is that our gross NPAs have been below 2%, as per our target, and also the loan losses and provisions have now come to normal levels. As we move gradually from Direct Assignment more towards whole lending, the constitution of income, and our profitability is also becoming stronger and not dependent on or not actually, having or maybe it will have lesser component of upfront from Direct Assignment. With this, I'll hand it over to Kapi, who will take you through the financial numbers, line items, and then we'll open it for Q&A. Thank you. Thank you very much, Nirmal. Very good afternoon, ladies and gentlemen. For the quarter, for the first quarter of fiscal 2024, the consolidated profit after tax, before the minority interest is INR 472 crore, up 43% YOY, up 3% quarter-on-quarter. We, we recorded pre-provision operating profit of INR 786.8 crore, which is up 20% YOY, up 3% quarter-on-quarter. For the quarter, as Nirmal mentioned, the consolidated loan AUM grew by 29% on a YOY basis, on a healthy 5% on a Q-on-Q basis at INR 68,178 crore. This number is even better when I compare on our core book asset growth, which comprises of microfinance, gold, home, and the digital loan businesses, which has grown by even better as around 6%. This segment now comprises of around 95.3% of our overall AUM mix, which is up by 1.2% YOY. On the asset quality side, you should find our gross NPA at aggregate level stands at around 1.8%, and our net NPA is around 1.1%. It would be pertinent to mention that, it is below our guidance of 2% that we have given to the market. There have been a significant improvement in the asset quality, is down by 73 basis point on a YOY basis on gross NPA, and around 42 basis point on a net NPA basis. The credit provisioning has also been fairly comfortable. The ECL provision on an indirect basis, gives a provision coverage ratio on our NPA at around 159%. Yeah. In line with our, with our capital optimization strategy, and given that a good share of our portfolio either qualify in the priority sector or hold a zero-risk rate in the bank's book, we've been able to pass on these assets to these banks in a very healthy partner relationship that we hold with them, both with regard to whole lending and assignment. Therefore, the total AUM under this arrangement stands at around 40%. Like what we mentioned as a guidance earlier, we'll be working towards enhancing this share more towards co-lending, and therefore, the share of co-lending has moved up around 103% YOY to around INR 8,963 crore. It's also moved up 19% just on quarter on quarter. The assigned portfolio has moved up by 4% Q-on-Q and 21% quarter on quarter and stands at around 17,700. Yes, we have seen precisely during this period of June 2022 to June 2023, the bank repos have moved up by 250 basis points, and MCLRs are moved up by close to 150 basis points. Even then, we have seen a very little muted growth and increase on our cost of borrowing. Our cost on borrowing during this period YOY has gone up by 44 basis points, and on a quarter-on-quarter, it's gone up by 15 basis points, because of the action that we have taken on some of the high cost borrowing by either retiring them or replacing fresh borrowing at lower rates. Just to give you an update on our liquidity positions, we stand very healthy there. During the quarter, we raised close to INR 4,500 crore through term loan, bonds, and refinance, all, all of long-term nature. Around INR 4,155 crore was raised through Direct Assignment of loans, largely from the gold and the home loan product, and also a very decent share of the microfinance product as well. Some of the key fundraisers include INR 175 million that we raised in the form of ECB through HSBC, Union Bank of India, and Bank of Baroda. One highlight that you will note is, we had a public issue of our NCDs. Bulk of this money came in the form of long-term money, and they were oversubscribed 1.5 times, aggregating around INR 452 crores for us. Our cash and cash equivalent, including committed undrawn credit lines from banks and financial institutions, stands around INR 6,510 crores, which is more than adequate to meet not only our near-term liabilities but also to fund our growth. As we reserve, reserve go out in the market, we should be able to then get into fresh lines of credit to negotiate and discuss with our bankers. We also hold a very positive ALM with hardly any kind of exposure on the shorter side of the window. We stand at a net gearing around 3.3, which is down around 3.5. We've been consciously working to see our liquidity position, and you see the numbers have come down, which is resulting a lower negative carry as well on the balance sheet. Our annualized ROE for this quarter stands around 19.1% at a consolidated level, supported by a strong ROA of around 3.6%. Our earnings per share for this quarter is around 11.2 per share, which is up 29% YOY and 3% quarter-on-quarter. On a capital efficiency per side, compared to the regulatory threshold of 15%, we stand a healthy capital efficiency of around 51.2% in the HFC business. In NBFC, it's around 20.6, and in Samasta Microfinance at 20%. We'd like to mention that in HFC, our capital efficiency has improved up from quarter four because of some of the reduction that we could maintain in our liquidity, and therefore, some of the investment assets have come down as well. This clearly suggests that we are able to grow ourselves without impacting hugely on our capital position, given that we work on this capital optimization strategy of on book and off book. With this, I, I open the floor for further question and answer. Thank you very much for your time. Thank you very much. We 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'll wait for a moment while the question queue assembles. Participants, you may press star and one to ask a question. The first question is from the line of Anusha from Dalal & Broacha. Please go ahead. Anusha, may I request you to unmute your line and go ahead with the question, please? Audible now? Yes, you are audible now. Yeah. Congrats on good set of numbers. You know, firstly, I would just want to understand, you know, with respect to your loan guidance, broadly, you know, for FY24, is contained around 25% or 25%-30%. What is the outlook there? Secondly, on this MFI, you know, how do you see growth, you know, panning out, and how sustainable is the growth? Because I think the growth has been quite good, at 63% odd for you and for the industry as well. From where the growth is coming from and the geographies and how sustainable and how long this can continue? Broadly, you know, on the asset quality side for the MFI portfolio. Anusha, I think three things you're asking. One is the loan growth guidance. You are right, 25% to 30%. The asset quality, so our focus will... You know, I think we have achieved significant improvement from here. Given the product, there can be a minor improvement from here. Our net NP, we would like to bring it below 1%, but otherwise, more or less, we are there. For microfinance, Venkatesh says, maybe, you want to have Venkatesh on guidance on loan growth, see all of that. Yeah. Anusha, we'll look at close to around 25%-30% growth this year in terms of our loan book actually. Last year was on the lower base. Yeah. Yeah, since our last year loan base was little high, the growth was little big. We are already at hovering, we closed March at around 10,000 odd growth, so we will be moving it up by around 25%-30% this year. Okay. From which geographies, you know, the growth is more coming from, and is it across all the states and districts, and how is it? We, we have a well-calibrated growth in terms of things. and within the, we don't have any huge saturation in one state. We will be looking at all the states for growth, given our presence in, in terms of the number of branches. With the number of branches we have, we will have a well-calibrated growth. Pre-predominantly, if you look at the top, four, four states, it will be Bihar, Tamil Nadu, Karnataka, and Odisha. UP may come up this month, this time, so we are a little focused on the state of UP. Okay. How sustainable is the growth? Any outlook there? I mean, you know, you think so that it can sustain for a year or two, I mean, the kind of growth- Yeah, actually. that we're seeing right now? On the whole microfinance side, I mean, there have been quite a few reports on microfinance. I think one was by IFC and their global reports also. The penetration in India is still very, is much lower than what it can be. Maybe southern states are slightly more saturated or penetrated as compared to rest of India. The growth potential, 35%, 30% can continue for quite some time. In our microfinance business, we'll also, we are growing with individual loans and the small, secured loans. Secured, secured loans. See, given that, right now, the overall microfinance industry is around INR 3.5 lakh crores, we are looking at, I mean, the overall, if you look at today's thing, we are looking at INR 18 lakh crores as a potential market. There's a huge thing in terms of the growth aspect of it. There are tremendous, I feel. To answer your question, this growth can be easily sustained for next three to five years. Okay. Okay, and in the home loans, if you can just further break down to how much was the growth in the pure home loans and in the LAP book? Monu? Yeah, yeah. Hi. Hi, Anusha. Yeah, hi. In home loan, if you will see, we are today are in absolute terms, we disbursed about INR 1,900 crore of disbursement we did, and we have grown by about 5% in this quarter. The LAP has grown by 19% YOY, and 2% quarter-over-quarter. You know, in LAP, we are a little cautious because till we bring down our NPA levels to, you know, what our target is, we've been growing slowly, but, the potential for this, you know, with the revival in the economy, is very strong. Okay. On the margin side, I think you have quite, you know, the spreads were, I guess, were maintained for this quarter. What outlook, you know, you'd be giving for the rest of the fiscal? I mean, you- Margins. current levels to continue? Yeah, margins, we, I think, will maintain our levels. Okay. Okay. Margins, we are fairly confident that we'll be able to maintain the NIM, given the product mix that we have. Okay. Lastly, on the branch expansion side, you know, what's the outlook there? Today, there's a branch expansion. Last quarter, it happened in microfinance and housing finance. In microfinance, the larger branches, we split them into two from a better control and management point of view. In HFC also, I think a significant part of our expansion has already taken place. Going forward, this year, branch expansion will be slow. Okay. Still, if you can just put up some number. Okay. If you see our, in the... If you look at our NBFC branches, we basically cater to gold loan and SME. We had something like 2,682 branches. As of March, there we have added about, you know, 36 branches, so we are 2,718, and they were in the pipeline. HFC branches have gone up, you know, by 24, and the microfinance, we have set up about 85 new branches in the last quarter itself. Now, in this full year, I think there'll be about, if you look at NBFC, we probably have 150 new branches. HFC, Monu, what is the plan for the rest of the year now? We are expecting to open not more than 15 to 20 branches, because in the last, two years, we've had a good, footprint of about 180 to 200 branches. So about- Microfinance? Yeah, microfinance. microfinance will be a little more, maybe around 200 more branches will come up, but these are small branches in the room. As I split branches, wherever, you know, from branches becoming larger, they'll be able to handle the customers and the collections, so there, probably to split them. I think that is the plan. Okay. Yeah. Thanks. Thanks a lot. Thank you. Thank you. Participants, you may press star and one to ask the question. The next question is from the line of Deepak Poddar from Sapphire Capital. Please go ahead. Hello. Yeah, Deepal, go on. Yeah, thank you very much, sir, for the opportunity, and many congratulations for a good set of numbers. Thank you. First of all, I wanted to understand on, what percentage-. I'm sorry. Hello? Yes. What% of our portfolio is still left for repricing in that sense? Repricing, from, you know, asset side, you say? Yes, asset side. o, okay, in gold loan, microfinance, we don't expect any repricing as such. Incremental loans may be at a different rate. But Monu, what is the home loan or LAP portfolio that you see We are all done, Neville, for now. ... if unless a new rate hike happens, it's separate, but otherwise we are done. I don't think, we don't expect any repricing as such. You know, the yield may improve with the mix change, and the new customers onboarding at a, you know, maybe slightly better rate in gold loans and other businesses. There's no repricing, unless, as Monu said, if there's a rate hike by RBI. Mm-hmm. Understood. Is there any, any kind of, I mean, excess liquidity that you already mentioned that you have reduced? Any more scope there that we are looking for going forward? No, we, I think, given the growth in the business and the size of our business, we maintain at this level. Okay. Okay, we'll maintain. So in terms of NIMs, any kind of upside potential that we see? I mean, ideally, it is because of the- See, what is happening in the NIM. Yeah. the upside potential will happen primarily because, gold loan in last year, second half, and more so in March quarter, was booked at a very low rate. Mm-hmm. As they come for repricing or renewal, then you get a higher price. Similarly, in microfinance also, the incremental loans, because typically a two-year product, so since last year, the prices have started moving up, so the yield may improve there also. Also, in digital loan, as we are going granular, we'll see some improvement in yield there also. The mix change also, because the microfinance has been growing a little faster than others, then also we see a weighted average yield moving up. so we do, do feel that there, there can be an upside potential to the NIM? Yeah, there is some, some upside potential in yield improvement, yeah. Okay, fair enough. You know, also bear in mind. Yeah. that our cost of funds is also, will move up more or less in tandem, because the banks have. What happens, that the, their MCLR rate hikes, so there are reset date. Some loans from, you know, borrowing from banks have been repriced, and some more will get repriced during the year. There's a slight upward pressure on cost of funds also, so NIM will be maintained at the level. Okay, understood. Understood. Understood. I mean, you just mentioned, I think couple of, couple of questions back, that we expect growth, this growth can be sustained for 3 to 5 years. Mm-hmm. So are we talking about any particular segment or overall for the company, at, at the company level? Overall at the company level, okay, we, that time the question was in response to microfinance, but all our businesses, we think growth can be maintained. If the economy remains buoyant and, you know, the CapEx of the government goes up, which has a cascading impact, then probably, you know, we should see, growth can accelerate also. At, you know, at this point in time, I think 25% is a good target for next 2-3 years for HDFC. Good. Next 2-3 years, a 25% CAGR growth is quite. The loan growth, that's right. That's right. Achievable target for us. You know, because we expanded our network, and we will make our network more productive, and the economy, as I said, is robust. I think affordable home loans also probably, Monu, I think we should see some acceleration now. The last two quarters have been a little sluggish, but hopefully things will revive now. Yes, because if you see, we've really expanded our footprint into tier three, tier four geographies, where the impact on affordable housing is lesser and the distribution has been enhanced. We should see sustainable, growth, for affordable housing as well for us. Yeah, it's a longer, lead time product, and, in terms of setting up infrastructure, getting the network right, and also the customer. Outlook is, you know, looks good at this point in time. Understood. Understood. My, my third question revolves around your credit cost. I mean, the credit cost, how do we see the credit cost this year and maybe next year? I think as we have guided, that our credit cost will be, 150 to 200 basis points. Mm-hmm. over a sustainable basis. More or less, we are in that range now, I mean, maybe a few basis points here and there. Remaining to the current level. Okay. understood. Understood. Lastly, on the cost to income, I mean, in the, in terms of cost to income, how do we see that? I think we, we have seen some improvement in cost to income, and but it hovers around 42, 43%, right? Yeah. In the next 3-5 years, do you expect some kind of efficiency based on your leverage or the scale that, that, that, that comes with it? Any kind of improvement that we can see in the cost to income? If, if that's so, so how much is the improvement that we are in search of? Deepak, actually, cost to income is one area where we can see significant improvement. Again, it... Every business has a different cost to income ratio, and also which business grows faster also will have an impact. Our original, you know, the, the what we are planning is to drive path to 35% cost to income ratio. The way things stand today, and we expanded our network, and there can be more opportunities also in at least, like HFC has been recently expanded. We'll see some improvement, and maybe it'll take 2-3 years to reach our target of 35%. That, that, that, that's excellent, right? I mean, if in, in 2 to 3 years- Cost to income, certainly we should improve, because it was all functional expansion, which was quite aggressive till last quarter. Right. I think we should see impact coming from this quarter. Yeah. So ideally, that, that's an, that's an, quite an excellent, improvement, right? Absolutely. From current level of 43% going to 35% in three years, I think it will improve your ROA a lot, right? I mean... Absolutely. Okay. Fair enough. Yep, that's it from. Thank you. That's it from my side, sir. Thank you. Thank you. Thank you. Next question is from the line of Krishnan ASV from HDFC Securities. Please go ahead. Yeah, hi. Many thanks for taking this question. I had a query on the co-lending arrangement. I just wanted to understand how does, how does the customer's pricing... I mean, I'm assuming whether it's home loans, for instance. So if a home loan borrower is EBLR linked for the bank, how does the pricing then get distributed between IIFL and your partner lender? No, sorry, what link you said? If the home loan is, I mean, the pricing of the home loan is linked to the EBLR, right? When, when the repo rate moves up 50 basis points, how does the pricing get distributed between... I mean, what is the share that gets distributed to the lender partner versus what is it that you receive? Monu, you want to say it? Yeah. Krishnan, if I have understood your question right, you're saying is that we have our own PLR basis which, basis our cost of funds, so that's how we define. Obviously it has an imputed impact of the repo rate also built into that, into our cost of funds, and that's how we do that. Was your question to say that how is it distributed between the bank and the borrower? Was that the question you said? No. When you are originating and then co-lending, so there is a sharing that's happening, that 80% that goes to the bank. Okay, you're talking about specifically co-lending. Yeah. Yeah. In that case, what happens is, what we are doing is, it's, every time, if the bank increases that, we are resetting that in the same proportion as the share is, which is 80/20. That if bank increases something at that level and gets passed on, the revised weighted average is calculated and accordingly it's given, forwarded to the borrowers. Okay. Yeah. which means if the bank moves it 25 bps, you would have to move an identical 25 bps as well? Yeah. 80% of 25 bps would be 20 bps for that customer. yeah, 20 basis points of the attrition would go to the bank, 5 basis points will go to you. Is that- Yeah. I think- Yeah. Okay, what Monu is saying that we are not obliged to move in the same ratio, but practically, that is what will happen. Understood. Okay, okay, understood. Just in terms of home loans, for Monu, if you don't mind, just on your co-lending, given it's going to be incrementally a larger part of how you want... I mean, how this playbook will be for IIFL, could you just throw some light on what is the expectation that your, what lender partners have from you when you're originating these loans? Are they looking for certain ticket sizes? Are they looking for... I mean, what, what is it that you are jointly looking for in your engines? Sure. Where are you finding that overlap best? Sure. Krishnan, if you know, the entire co-lending was meant for the PSL book, it any which way is, is directed towards enhancing the priority sector loans. For us and the banks, it is very much common what kind of PCG and the ticket size they are expecting. Good for us, that our any which ways, our 95%-97% of our natural business was priority sector loans. We didn't have to really redirect our business model vastly in terms of the target group. Comes is every bank has its own set of credit policies, which over a period of time, we've been able to map them and put them in sync. Every bank follows its own credit criterias, which we are able to do. We are not feeling anything out of the, out of line that we have to really change our, any course correction for us to do this business. I think naturally, our business fits very well into most of the bank's co-lending portfolio as well. Understood. This is helpful. Thank you. Yeah. Thanks, Krishnan. Thank you. Participants, you may press star and 1 to ask a question. Next question is from the line of Mona Khetan from Dolat Capital. Please go ahead. Mona, I request you to unmute your line and go ahead with the question, please. Yeah. Hi, good evening. Thanks for taking up my question. My question was on the housing portfolio. How are you seeing the BT outs in this portfolio? Anything different versus over the last 2 quarters? Sorry, Mona, can you repeat the question, please? I was talking about the balance transfers in the housing book. Yeah. Anything different that you're seeing? No, Mona, really, because any which way is for all the institutions, the rates have been increasing, so we are not seeing any radical change. It's very consistent as it was, say, about a year or 2 back, and it's very consistent. We are not seeing any flight of portfolio of ours, any which way we don't target BT in much. No abrasion. Got it. Has anything changed on ground when it comes to the competitive intensity in the gold segment, gold portfolio? Yeah. I think, in a way, competition has eased little bit. I mean, it's still intense, but not as cutthroat and as... What had happened last year, that many people started a price war or a teaser rates, which were ridiculously low and obviously not sustainable for the customer. Right. I think most players have understood the fertility of it, that is not going to help anybody. To that way, market has become a little more sensible, and, you know, the prices are more, you know, more fair prices rather than the teaser prices, which are. you know, at a lower than cost, and then you, try to increase it later. I think that's so competitive, competitive intensity at ease now. I mean, there, but it's not as bad as it was. Got it. Just finally, on the demand outlook on ground that you're seeing across all your core portfolios, particularly HL and Gold, how is the demand environment at this point? Demand environment is very good. Gold in particular, gold, microfinance, MSME is very good. Housing also is, also is facing competition that way, is also good and improving. Demand outlook for all core products is, is fairly good. Got it. going forward also, it looks like that, you know, in the next few quarters, I think demand will remain strong. Sure. Thank you. Thank you. Thank you. you. Participants, you may press star and 1 to ask a question. Next question is from the line of Navneet, individual investor. Please go ahead. Hello? Yeah. Hi, so it's great to see a good traction in terms of your fundraise via the ECB, as well as, you know, oversubscription on your NCDs. I have just one question on your credit rating. I believe you are at double A by CRISIL right now. My question was, you know, in your discussions with these credit rating agencies, what are the triggers for an upgradation further of your credit rating to maybe double A plus or even triple A? Is it mainly size? If it is size, then, you know, what is the size that they look at for an upgradation? No, you're right. They look at size and the performance, and I think on all parameters, I believe that we have done well. It's time, so maybe, you know, the result is a quiet period, and then after results, we need to follow up. It's the review time from credit rating agency point of view. Typically, you know, it goes step by step, so from double A to double A plus, and then it'll take some time to go to triple A. Basically, scale and the quality of assets as well as performance, management team, all these criteria are taken into consideration. It's time that, you know, we do take cognizance of these things. Do you think you will be eligible for an AA+ rating in the next 12 odd months, 12-18 months? Do you think that could be possible? I, we, I think for sure that we are eligible and we, we know. We should, we deserve that, let me put it this way. Okay, thank you so much. That's all confirmed and all the best. Thank you, Navneet Bhaiya. Thank you. A reminder to all the participants, you may press star and one to ask a question. Next question is from the line of Saptarshi Chatterjee from Groww Asset Management. Please go ahead. Good afternoon, sir. Thank you for the opportunity, and congratulations on a good set of numbers. My question is on the LAP business, where we have, or in a couple of years, we have reduced our ticket size significantly. What you are saying is the stage 2 and 1-30 DPD remains quite high. Just wanted to understand what is happening in business at this, like, sales and sales segment are having difficulty in the cash flows, and how we are planning to reduce it down? How is our collection infrastructure there? Yeah, hi. Hi, Saptarshi. I'd just like to tell you, if you will look at our growth of the AUM under this bracket, we have had a very moderate growth over the last few years. Really, we've been trying to transform this business from a big-ticket LAP business to more granular LAP business. In comparison to home loan, we have seen that since in, from 2021, it was about INR 5,400 crore, we have reached to INR 6,800 crore, whereas HL has grown so much. We've not had a denominator effect of it to, to balance out that. As we are seeing quarter on quarter, the quality of recoveries is being improving and the GNPA have also dropped, like, they were as high as 4.5 in FY2022, and now we're at 2.7. We are pretty confident that maybe by end of this March, we should see these numbers to be even below 2% for LAP business as well. We are fairly in-house driven collection setup, and we have been pretty successful in containment, and now we should see reduction by March 2024 for sure. Great, sir. Thank you. In the microfinance side, if you can give some colors, like how much would be rural versus urban in our portfolio, as well as, like, a cycle-wise breakup of our microfinance customers, and how many customers or how, what% of customers would be exclusive to us or 1 lender plus us that way? I mean, in terms of, our urban and rural mix, we have close to around, 70 odd%, rural, and another, close to around 8 odd% would be semi-urban. Our, even our urban mix, we don't, actually operate in the proper urban. We are in the peripheries of the urban thing. We are, again, predominantly, you can say semi-urban and a rural mix kind of a portfolio. If you look at our cycle one customers across board, since we are onboarding, lot more customers, given, we have expanded our, branch outreach to, new states like UP, we have started, AP, and, this is going to kickstart Telangana. Right now, our cycle one customers are hovering around close to around, 40 odd%. The balance of customers would be from our existing cycles. In this one, the new to credit per se would be close to around 80 odd%. 18. Sir, in, in there, what would be like customers who would be, like we would be, we will be the only lender as well as there will be two lenders, including us? The new to credit, what I mentioned is we are the first lender in that thing. Okay. Okay. Sir, in the digital loan portfolio, where ticket size is around INR 60,000, do we get to know what are the usage of these loans and like how do we track that? Is it kind of a BNPL loans therefore? Well, they are more, most of them are small businesses, and they are used for working capital primarily. Some of them are like personal loans, but these are all individual self-employed people or professionals and non-professionals. The predominant use would be more for working capital. BNPL, we don't do much actually because it requires very deep integration with the shopping and the e-commerce websites. Secondly, that space is a little crowded. We have done some bit with the partnership with ZestMoney, but that also has, now, you know, been discontinued. BNPL is not our focus area. Okay. There, do we use that 5% FLDG? No, because most of the... Okay, RBI has come up with guidelines that is allowing that. Most of our business is not through partners where... 5% FLDG is relevant when we are relying on fintech partner, and they basically are sourcing the customers. They are trying to make some preliminary assessments on the quality of the customer. That is there, but it's very limited. In our case, 5% FLDG business is not much. Understood, sir. Thank you so much and all the best. Thank you. Thank you. Participants, you may press star 1 to ask the question. Next question is from the line of Tushar Sarda from Athena Investments. Please go ahead. Yeah, thank you for the opportunity, congratulations on excellent set of numbers. I just wondered a little bit more understanding on your cost by assets, you know, business line wide, you've given some information on slide 44 and 45. What I see is for gold loan, it's almost 5-5.5%, whereas I think the industry operates at around 3%. What am I missing there? Why, why does your expensive sale a little bit on the higher side? Muthoot operates at 3, 3.5%. Manappuram and other people operate at 6 or maybe thereabout. It's all function of scale, because if you look at their size or their average cost is more than 50% higher than ours. As the branches become older, you keep getting scale advantage. If you really look at our operating costs, gold has come down from 5.6 to 5.1, but the trajectory is, you know, to follow Muthoot or 3 or 10, but it will still two, three years away. That is what is the same thing which is on earlier question was, with the cost income, it should come down. Our primary cost in NBFC is gold loan branches. As this goes down, you'll see cost income also coming down. It's on scale. What happens is, if you keep selling a few branches and our average productivity per branch remains low relative to Muthoot or established player, and then, our cost structure will be higher. It's still, I mean, it's, it's some time away. It's not going to happen overnight, but I think what we need to see is that it keeps improving or cost income ratio keeps going down. On microfinance, what are your thoughts? Microfinance, in terms of the... We, we have been able to bring down the cost, to loan and the cost income, both are same. If you see last, this quarter has come down from 7.2 to 6.7. The established players will be at 5.5, 6. We'll also have to follow that path. You know, so we are on the right track. Maybe, you know, I can put it that way. Okay. Thank you. Thank you. Thank you. Ladies and gentlemen, you may press star and 1 to ask the question. Participants, you may press star and 1 to ask the question. I think we are done? Yeah. All right. Sir, we don't have anyone in the question queue. Okay. Sure. Thank you. Maybe, yeah, Kapish can give the closing remarks. Thank you very much, ladies and gentlemen, for joining and supporting us. I know, I hope, I hope it was a very interactive conversation that we had today at the end, in the Q&A. We're happy to address any further queries that you might have. There are more than 20 parties in the conference. You may reach out to us at our investor relation email, and anybody else in the company, and we'll be happy to address any query that you any further have. Thank you very much. Thank you very much. On behalf of IIFL Finance Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.