Ladies and gentlemen, good day, and welcome to the Q2 and H1 FY24 earnings conference call of Piramal Enterprises Limited, hosted by JM Financial Institutional Securities. 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 the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sameer Desai from JM Financial Institutional Securities. Thank you, and over to you, Mr. Desai. Thank you, Michelle. Good evening, everyone, and welcome to the second quarter FY 2024 earnings conference call of Piramal Enterprises. Firstly, I would like to take this opportunity to thank the Piramal team and the management for giving us this opportunity to host the call. From the management team today, we have Mr. Ajay Piramal, Chairman, Piramal Group; Mr. Anand Piramal, Executive Director, Piramal Group; Mr. Jairam Sridharan, Managing Director, Piramal Capital & Housing Finance; Mr. Yesh Nadkarni, CEO of Wholesale Lending; Mr. Rupen Jhaveri, Group President; Ms. Upma Goel, Chief Financial Officer; and Mr. Ravi Singh, Head of Investor Relations at Piramal Enterprises. As always, we will have opening remarks from the management team, post which we will open the floor for Q&A. Over to you, sir. I would like to transfer the call to Mr. Ajay Piramal for his opening comments, post which we'll take the questions. Thank you. Thank you, and welcome to our earnings call. Let me begin by wishing all of you a very happy Diwali and best wishes for the festive season. Before diving into our results for the quarter, a few comments on the macro backdrop in which our company operates. The global macroeconomy is clouded with uncertainties arising from record high inflation, geopolitical conflicts, tight financial conditions, and Chinese economic slowdown. Amidst this, India has demonstrated exceptional resilience, fueled by strong domestic economic fundamentals. India's financial sector is playing an important role in ensuring sustained growth across vital sectors like infrastructure, real estate and retail. As capacity utilization increases, demand for credit to invest in private capacity rises further. Indian banks and NBFCs have strengthened significantly in recent times, backed by several regulatory and supervisory initiatives of both banks and NBFCs, making them ready to meet this growth in credit. Large NBFCs have witnessed improved asset quality, higher capital buffers, and improved profitability over the last few quarters. Indian NBFCs have undergone a strong recovery despite a difficult operating environment characterized by COVID, high interest rates, and global economic and financial uncertainties. The retail credit demand has been strong. The current festive season has taken off well, and we expect the momentum to continue with improving economic conditions. However, El Niño can pose a risk, with lower acreage of the winter crop affecting rural consumer demand. We need to be cognizant about slippages that may emanate from these markets. We are optimistic about our loan book growth going forward, and at the same time, vigilant on prevailing risks, including unsecured lending and the rural slowdown. Real estate demand continues to remain buoyant. While annual growth rates may come off the post-COVID peak at a pan-India level, there are markets where demand will continue to remain high, buoyed by India's rising economic activity and growing middle class. Moving to our company's performance and how we have delivered during the quarter, our Q2, our Q2 performance was in line with our strategic focus of building a diversified retail business, an accelerated rundown of Wholesale 1.0, and building a granular Wholesale 2.0 book. Firstly, it was encouraging to witness the AUM getting in a growth mode. Our total assets under management grew by 4% quarter-on-quarter to INR 66,933 crore after seven quarters of broadly unchanged overall AUM. Retail segment led this growth, with the AUM growth of 55% year-on-year to INR 38,604 crore. Retail now comprises 58% of our total AUM, versus 33% at end of March 2022. Within wholesale, the Wholesale 2.0 AUM is up 48% quarter-on-quarter and now stands at INR 4,500 crore across real estate and the corporate mid-market lending. Wholesale 1.0 AUM is down 8% quarter-on-quarter to INR 23,827 crore. This is a 45% rundown since March 2022. Secondly, another key highlight for the second quarter of FY 2024 is a reduction of 13% quarter-on-quarter in the wholesale SR book to INR 3,259 crore. Thirdly, on retail asset quality, the DPD trends were either stable or down across all our retail products. Thus, consolidated GNPA ratio was down 10 basis points quarter-on-quarter to 2.7%, while the NNPA ratio was flat at 1.5%. Lastly, on operational performance, during the second quarter of this year, the improvement in yields drove the NIM expansion of 38 basis points quarter-on-quarter and NIM growth of 10% and net interest income growth of 10% quarter-on-quarter. Fee income growth at 39% quarter-on-quarter and 159% year-on-year was also strong. Thus, our PPOP, excluding dividend income, grew by 27% from the last quarter to INR 237 crore. This, along with broadly stable credit costs, meant that our PAT, excluding exceptional items and one-off, stood at INR 113 crore versus INR 30 crore in the first quarter. In the second quarter, we also successfully completed our share buyback of INR 1,750 crore, as announced by the Board last quarter. We remain strongly capitalized with a net worth of INR 28,710 crore and capital adequacy ratio of 31% on a consolidated basis. With these highlights, I will now hand over to Jairam, Yesh, and Upma to discuss the segments with specific highlights. Thank you, Chairman, sir. I will walk you through the details of the retail lending segment and then hand over to Yesh for the wholesale side of the business. Our retail AUM scaled 55% year-on-year, coupled with growth in quarterly disbursements as well of 57% year-on-year. So for the second quarter, our disbursement yields stood at 14.3%, while the overall book yield stood at 13.2%, excluding the POCI book. Our housing loan disbursements grew 55% year-on-year, with an average ticket size of INR 18.1 lakhs for the second quarter. 77% of our retail AUM is made up of secured loans, with an average CIBIL score greater than 740. 90+ delinquency in all our retail products are stable to down and are currently well under control. Our unsecured retail book across four different product lines stands at INR 8,512 crores. In recent months, there have been a lot of conversations on risk and unsecured lending. We believe this is a healthy conversation to have, and we have flagged it multiple times over the course of the last year. Over the last two quarters, through various measures to tighten credit lending, our disbursement volumes in unsecured have declined. Simultaneously, the risk metrics have remained benign, with a slightly improving bias. 90+ delinquency ratio has decreased from 1.6% at the end of last quarter to 1.4% as of September end. In this unsecured segment, we served over 13.4 lakh customers with an average CIBIL score of 760. We continue to make steady progress towards the long-term operating profitability metrics, which we have shared with you in the past. Our yields in the retail business are steadily increasing on a book basis. Fee income is improving, OpEx ratio is lower than at the end of last year and flat QOQ, and asset quality continues to be benign. As we continue to expand our retail lending business, we also continue to invest in manpower, branch infrastructure, technology, and analytics for future growth. During the quarter, we added 19 new branches, aggregating now to 99 branches over the last 12 months. With this, today, we have a network of 442 full-service branches and 142 microfinance branches across our network. We serve across 596 districts in India across 25 states. Our customer franchise now stands at 3.6 million, with us acquiring 250,000 new customers during the quarter. Our active customers out of this 3.6 million is at 1.1 million. With that, I'll hand over to Yesh to walk us through what happened in Wholesale Lending during the course of the quarter. ... Thanks, Jairam, and good afternoon, everyone. In Wholesale Lending, we have achieved an accelerated rundown of 45% since March 2022, in our 1.0 AUM, in line with our strategic focus. Wholesale Stage 1 AUM, excluding non-yielding assets in the nature of land assets, receivables, Security Receipts, and DHFL, on which we don't record yield. On that book, it stood at, which stood at about INR 17,381 crore. We had an average yield of 12%. Stage 2 + 3 AUM combined reduced 63% year-on-year to INR 4,126 crore, with a provision coverage ratio of 32%. We continue to focus on resolution of stressed assets, which will shrink the wholesale portfolio in the short term, as we have communicated earlier as well. A dedicated team is involved in monitoring and executing the resolution strategy for some of the complex recoveries and enforcements, aim to improve recoveries and monetization of assets on an accelerated basis. Security Receipts reduced by 9% QoQ, and is the first quarter during which we actually saw a decline in Security Receipts to a number of INR 4,862 crore, of which 67% have been relating to wholesale loans on the underlying assets. With this, our wholesale SRs reduced by 13% QoQ to a number of INR 3,259 crore as of Q2 FY 2024. As the resolution process continues, we expect our SR portfolio to reduce in the near term by a combination of sales, enforcement, and collections at our carrying value, while a few more ARC sales are expected over the next two quarters. In Wholesale 2.0 AUM, we are focusing on building a granular and high-quality portfolio, wherein our 2.0 AUM grew at 48% QoQ to INR 4,501 crore across real estate and corporate mid-market loan strategies. Our 2.0 loans are performing well and are in line with or ahead of our underwriting, as reflected in significant prepayments that we have received to date. We received about INR 966 crore from Wholesale 2.0 over the last six quarters, which illustrates the credit quality of the underlying portfolio. We disbursed INR 1,819 crore in the second quarter of FY 2024, of which INR 1,115 crore was disbursed in the month of September 2023. The average ticket size is around 172 crore for real estate loans and 64 crore for corporate mid-market lending in this version of our AUM. We will further build this book in a calibrated manner while capitalizing on the market opportunity. With this, I'll hand over to my colleague, Upma, to cover financial performance and liabilities as well. Thank you, Yesh. Covering our financial performance, in Q2 FY 2024, our net interest margin expanded by 38 basis points QoQ, supporting the net interest income growth of 10% quarter-on-quarter. Fee income continues to scale up well and was up 39% QoQ. Our OpEx was up 6% QoQ to INR 664 crore, led by growing with business and our investment in tech platforms and distribution. Thus, our pre-provision operating profit, excluding dividend income, went up 27% quarter-on-quarter to INR 237 crore. Credit cost was at 1.2%, versus 1.1% in Q1 FY 2024, which is in line with our expected range for credit cost. During Q2, in furtherance to the order dated fifth September and twentieth September 2023 of the Honorable Delhi High Court, Piramal Fund Management Private Limited, 100% subsidiary of Piramal Enterprises Limited, has agreed to refund or return the principal amount to all investors of IndiaREIT PMS as a one-time payment without admission of any liability and without prejudice basis. This led to recording of exceptional loss of INR 64 crore during the quarter. Our reported profit after tax for Q2 FY 2024 stood at INR 48 crore, versus INR 509 crore in Q1 FY 2024. Profit after tax, excluding exceptions and one-off, stood at INR 113 crore, versus INR 30 crore in Q1 FY 2024. On liability management side, we continue to focus on diversifying our borrowing mix, including securitization. Our fixed-to-floating rate debt mix improved to 54-46, and we'll continue to see further improvements over coming quarters. Our cost of borrowings remains stable at 8.6%. Our ALM is well matched with positive gaps across all the buckets. With this, I'll hand it over to Chairman, sir, for his concluding remarks. We have given you an update, a brief update of this quarter and of the first six months. The documents have been, the investor presentation has also been uploaded on the site. Now I will ask you to throw open the floor for questions. Thank you. Thank you very much, sir. ... We will now begin the question and answer session. Anyone who wishes to ask questions may please press star and one on their touchtone phone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants, I request you to only 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 Avinash Singh from Emkay Global. Please go ahead. Yeah. Good afternoon. Thank you for the opportunity. Two questions. The first one would be around your credit cost, that is close to INR 2 billion. It has so many moving parts. If you can just help me understand that, you know, that INR 683 crore that you have taken kind of a hit on, the loan that you have derecognized, what was the pro- I mean, provision already there? Because, I mean, the net -INR 244 crore I see, that will be a kind of a sum of two parts, that you would have reversed whatever you were provided on this part of the loan being derecognized, and you would have incrementally provided some bit there. Also, to help us understand, what part of your other income that you have sort of given a note that majorly is the recovery from write-off. Is there some sort of a FLDG-related income also in there? And if I were to look at the fair value gains line item, that's 78 or close, is it majorly now from the revaluation of SRs? So this is question one. And the second is that, okay, in terms of your QoQ reduction in Wholesale 1.0, if you can just provide the sort of a breakup, that how much of it is kind of a you know the regular payments prepayments, or how much of that is coming from the you know a sell-down of either the stressed loan or standard loans? Thank you. We have other questions. Oh, that's a lot of questions. Okay, we will, we'll try and take it in two. So we will do the credit cost question first. There are, there were three parts to your credit cost question. I'll try and take some of them, and Upma will add whatever I might miss, and then and then Yesh will talk you through the Wholesale 1.0 side of the story. See, your, your first point of, you know, how much exactly can, you know, the gross-to-gross comparison to essentially say, "Hey, kind of, did did you say previous forms? Did stock get derecognized and kind of written off and go off the books, and how much was it?" Like, I think the best way to kind of look at this is on a net-net basis. The 1.2% credit cost is probably the simplest way to look at this. That's what we have guided as well, that on a net basis, we expect our business in the long run to be about 1.5% credit cost business. We are at 120 basis points. You know, every time we derecognize something or we write off something, obviously, we will make incremental provisions and bring it up to 100% and then derecognize it, right? Obviously, we can derecognize only assets that are 100% provided. So yes, some part of this has gone towards that derecognition. The Stage 2 and Stage 3, whatever is left on the books right now, you will see in our investment presentation on page 37, that 37 total, that stage two plus stage three, the provisions are broadly the same. They are, they may be a little bit less in, you know, compared to last quarter. So they're a tiny bit less than last quarter, and 200 is the net credit cost that we've had. So you can do the math and figure out what is the gross level incremental provisions that we had to make to write off, you know, write off the cases. So that's a couple of INR 100 crore that, that you will see there. As far as recoveries are concerned, you had a right question there about, are part of the recoveries coming from FLDG? The answer is yes. You know, we had, a two-digit number. You know, we're not disclosing the specific number, but I'll just say that it's two-digit number, you know, which is sort of, you know, which is coming from FLDG. Yes, we do have FLDG recoveries as, you know, showing up as part of that as well. There was a third part to the question, which was, did you have... Yes, sir. Yes. You asked whether the revaluation was about revaluation of SRs. Not really, no. Okay. The revaluation of the SRs just got created, so it would be premature for us to start revaluing them upwards. A lot of the revaluation ends up happening actually on our old POCI book, where cash flows come in, and based on that, we end up doing some evaluations. So that's what you're seeing, that it's got nothing to do with SRs right now, at least. A year from now, if SRs are behaving really well, we might consider some evaluation, but it's too early at this point of time. Yesh, you want to take the question on Wholesale 1.0? Yeah, I think, I think your question, if I got that right, was the reduction in stage two and stage three book, right? What was the source of it? I mean, overall, your QoQ reduction in Wholesale 1.0, how much of this Wholesale 1.0 reduction, that's like, if I recall, some 8%-9% QoQ, how much of that, I mean, absolute amount, is coming because of the kind of your regular payment, and how much of it is like asset sell down, whether it's stressed or standard? Yeah. Yeah, so I think, predominantly it has been, organic recoveries where the underlying assets or a pool of, other capital has been taken out from the underlying position. I don't have the exact number, QoQ handy to answer your question, but it has been a mixture of the two. But if I were to take a step back and tell you the composition of the repayments over a longer period of time, which is really the trend you should focus on, about 75% plus has- ... being sourced through the asset cash flows themselves, right? So material part of the reduction that we have seen has come through the performance of the underlying assets and the partners who we worked with to be able to achieve that performance. Okay. And if I can just follow up that. Okay, let's look at the credit cost on net basis, that INR 200 crore odd number for the quarter. If you can provide now again, sort of, how much of it is on Wholesale 1.0, Wholesale 2.0 and retail? See, the numbers are there, no? If you look at our, you know, page 37, and you can see the stock that is there. If you see our study disclosure, you will get to see kind of the recoveries that we have got. The best way to think of this is roughly about INR 200 crore, you know, right now, you know, retail credit costs are going to be very small because retail is still a young book. So, you know, much of the credit costs, both the credit costs getting formed as well as the recoveries coming in, are all going to be kind of related to the wholesale part of the book. The retail part of the book will slowly come. So, I think that it's good enough right now. We're not making segment-specific credit cost disclosures, so I'll just leave it at that at this point. Okay, thank you. Thank you. Thank you. Ladies and gentlemen, in order to ensure that the management will be able to address questions from all participants in the conference, may we request you to limit your questions to two per participant. Should you have a follow-up question, please rejoin the queue. Thank you. The next question is from the line of Abhijit Tibrewal from Motilal Oswal. Please go ahead. Yeah, good evening. So I think kind of coming back to the SRs. Excuse me, sir, I'm sorry to interrupt. Sir, your voice is muffled. May we request you to use your handset, please? Is it better now? Sir, please proceed. Let's, we'll let you know. Yeah, is it better now? Yeah. Yeah. Yes, this is better. I just wanted to understand, the sharp decline that has happened. So whenever the SRs run down, what impact will it have on the P&L, or through which item will it get outed? Essentially, trying to understand, there will be a certain fair value at which you would be carrying SRs on your balance sheet. So once SRs get resolved, so this quarter as well, you have sold down SRs, I think, which has led to, to SRs to ARCs, which has led to the decline. So when we sell down a SRs, is there any component that comes and sits in the, in the P&L, any line item which gets impacted when you sell down SRs to ARCs? Abhijit, when we sell down the SRs, if we are realizing the full SR value, there will not be any impact on the P&L. Any amount more than the SR value will go in the credit line item in the P&L. And if we are reducing by way of or any, the impact comes into the loss as a loss and gain onto the same valuation. So the reduction, what you are seeing within our quarter, is the recovery, without having any significant impact on the P&L. Got it. Got it. Got it. Just to clarify that, we haven't added SRs in this quarter. In fact, the SRs have got reduced. That's the point I would have made. No sell down to the ARCs. Yeah. There's no sell down. There's no new sell down to the ARCs. We have recovered. The SR, you know, we have been able to sell, and we have been able to recover, you know, equivalent value, so there's no meaningful P&L impact one way or the other during the course of the quarter. Got it. Got it. Then, sir, the second question that I had was on this retail yields. So I mean, obviously, you've given out in your presentation why QoQ there have been moderation in the retail yields, because you've kind of cut down your unsecured disbursements. But just wanted to understand, at the overall company level, your yields have actually improved sequentially. Yes. So what has led to that? I mean, is there some other component in interest income? Sure, sure. So more of the, mix that move, is moving towards retail, you will, you will keep seeing this. It's, you know, we are, you know, even after the, the moderation in yields in, retail, we are still at 14.25, incremental, for the, for the quarter. So, so that's what you're seeing. By the way, let me make one, one other point on that, on that moderation, clear. We were at 14.7 at the end of, during last quarter in terms of disbursement yield in retail. That 14.7 went to 14.2. Some part of it is mix shift, as you rightly mentioned, less unsecured. But the other part, which is also equally important, is that within unsecured, particularly in the partnerships business, the new RBI guidelines on partnerships and FLDGs, et cetera, and digital lending took hold in the course of the quarter. That led to some realignment in commercial, where earlier, I might have charged a higher part of the interest to my P&L, because I was not able to get a clawback from an FLDG format. Now, in an FLDG format, I will actually charge less from an interest perspective, but I have the FLDG cover at the back end, so it do not show up in my credit cost. So the commercial rearrangement has also happened, which is what has actually, you know, shown up in the yield number. Got it. Got it. And then maybe one last question that I had is, I mean, in one of the notes that you've given out in the financial statements, you talk about this Principal Business Criteria for our HFC subsidiary. So wanted to understand, as on September, where are we? And going forward, is it fair to expect that maybe because you are required to meet this Principal Business Criteria by March 2024, which I believe is 50% at the overall level and 60% in individual home loans, will be kind of accelerating your growth in mortgages? See, I think, the current position is that we are well short of, of where we need to be. Having said that, we have known this for a while, so we have been in conversation with both NHB and RBI, and, while I cannot tell you the specific details of that, because that's privileged communication with regulator, but, but suffice to say that we are in conversations with the regulator, and they are well aware of, what our realistic goals are. One of the things that you've got to be careful about in the lending business is, trying to achieve extraord-