Ladies and gentlemen, you're connected for the Piramon Enterprises Limited conference call. Please stay connected. The conference will begin shortly. Participants, are connected for the Paramel Enterprises Limited conference call. Please stay connected. The conference will begin shortly. Thank you. Ladies and gentlemen, good day, and welcome to the Q1 FY 'twenty six Earnings Conference Call of Paramount Enterprises Limited. 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. The results materials are available on the company's website, and you may refer to them during the discussion. Please note that today's discussion may include certain forward looking statements, which must be viewed in conjunction with the risks and uncertainties that the company faces. These statements are based on the management's current expectations and are subject to uncertainty and changes. On the call, we have with us mister Ajay Piramal, the chairman mister Anand Piramal, executive director, Piramal Finance mister Rupin Jaweri, group president mister Jayaram Shreedharan, CEO, retail lending and MD, Piramal Finance mister Riyesh Nadukarani, CEO, Wholesale Lending Miss, and Mister, Head of Investor Relations and Strategy. I now hand the conference over to the chairman, mister for his comments. Thank you, and over to you, sir. Good day, and thank you for joining us today on this call. With the first quarter of the current year, we've had a good start of the year with balanced performance on all key parameters. Consolidated AUM grew by 22% to rupees 85,700 crores. This compares with the growth of 17% year on year in quarter four of f y twenty five and ten percent year on year in the quarter one of f y twenty five. Retail AUM grew by 37% year on year and forms 80% of our total AUM. Our growth business comprising of retail and wholesale two point o now stands at 93% of our total AUM. With reduced drag of the legacy business, our consolidated PBT is 301 close, out of which growth business PBT is two ninety five close. Growth business PBT does fully translated into our consolidated PBT. Benefiting from the same dynamics, the consolidated NIM increased by 10 basis points from a q on q to a 5.9. The overall risk performance in the retail portfolio improved sequentially. It is now at a comparable level to that seen in the '25. Wholesale two point o portfolio maintained zero delinquencies. The credit cost for growth business declined to 1.4% versus 1.8% in the last '25. Growth business OpEx to AUM continues to moderate. It stood at 3.9% in quarter one of the current year versus 4.5% in quarter one of f y twenty five. Growth business, PBT to AUM, excluding proceeds, thus came in at 1.4% in this quarter versus 1.1% in the full year of FY twenty five. The '26 is likely to be the last quarter before merger of Piramel Enterprises with Piramel Finance. The merger is expected to complete by September 2025. With the merger, all our lending businesses will get consolidated under Piramel Finance with a much simplified corporate structure. Total capital adequacy ratio was 19.3% versus 23.6% at the end of last year. The change of the HSE subsidiary to an NBSC status and growth in business drove this reduction. The completion of merger process will lead to reversal of about 245 basis points of this reduction. Our balance sheet remains highly liquid with total cash and equivalent of 9,000 crores, which is 9% of total assets. The Lancius and Life Molecular Imaging deal relating to the Earth's Wild Thermal Imaging business has successfully closed on July 2025. The consideration due to us would be based on 2025 profits of the business to be calculated at the end of the calendar year 2025. We expect to receive the payment subsequently in the last quarter of this current financial year. Our earlier guidance related to this matter remains unchanged. Finally, last quarter, we shared our five targets for FY twenty six on total AUM, growth AUM, retail, wholesale AUM, mix, legacy AUM reduction, and total consolidated PAT. With q one FY twenty six numbers, we are on track to meet all these targets. I now hand you over to Jairam, Yash, and Upma to share more details on our first quarter f y twenty six performance. Thank you, sir. Ladies and gentlemen, I'm going to take you through the story and what we have seen in the first quarter in Retail Lending. We have had a very strong start of the year for our business. We do expect usually a little bit of seasonal weakness in the first quarter. However, we were able to sustain AUM growth at 37% year on year for June ending quarter versus the 35% for the quarter ended March 25. From a disbursement standpoint, in the first quarter of this year, disbursements were at INR 8,718 crores, up 28% year on year. In our flagship mortgage business, which comprises the affordable housing loans and loan against property, growth was 38% year on year to INR47101 crores. Mortgages now account for 55% of the total AUM of the company and 68% of retail AUM. Now the market itself, as we all know, is growing sub 10%. I want to address the question of what are the key drivers behind our strong AUM growth at scale in such a market. We believe there are three reasons why our AUM growth continues to be strong. Number one, segment clarity. Our focus has been always on middle tier Bharat markets, and this has helped us buck overall market average trends. We're driving some challenges both at the top end and at the bottom end, but the middle end has done well. So that segment clarity has helped. Number two, a multiproduct strategy. As we have seen over the last two years, diversified NBFCs have delivered consistently stronger growth than monoline, and this choice and strategy for us has again helped. Number three, high-tech plus high touch, our business choice on this front. We have invested a lot in our branch network. That branch network is now rapidly maturing, and that helps us from a productivity standpoint. And parallelly, we have also invested in technology and AIML capabilities that are allowing rapid scaling of what is fundamentally a high touch business. So those are the three reasons we believe our AUM growth continues to be robust in an otherwise weak market. Moving on to the credit risk performance. Key risk metrics such as credit costs, slippages, delinquencies, broadly improved on a sequential basis. As you can see on Slide 21, ninety plus days past due in retail was at 0.8% in the very narrow range that we have consistently maintained over the last three years. Risk in this quarter was seen at levels comparable to the second quarter of last year. Secured lending products basically had a very stable quarter on most risk metrics. There was some improvement seen in on an overall level in unsecured business on a sequential basis, Q1 compared to Q4. However, it was not for all businesses within unsecured. Salaried businesses in unsecured saw a very strong Q1, reduction in all risk metrics. We did increase our disbursements in this segment by 57% year on year, as we have seen these strong trends continue for a while. Trends in digital loans and microfinance were also largely stable to improving. There were two pockets of the portfolio that did show risk deterioration in the quarter. They were MSME Unsecured and Used Car Finance. MFME unsecured is 6% of total AUM. The portfolio which we sold open market did deteriorate in q one compared to compared to Q4. In Q4, we have seen an improvement in the segment, but in Q1, we saw a deterioration again. If you see our risk chart, the long term trajectory that we show, you will see fairly flat behavior of delinquencies in MSME unsecured. That is mostly because cross sell business has actually done well, even though open market sourcing business has deteriorated during the course of the quarter. Consequently, we reduced our disbursements in this segment by 30% quarter on quarter and 17% year on year. In this segment, we track around 30 industry sectors from a risk standpoint. All MSME businesses, our exposure is looked at on these 30 industry sectors. We have seen fresh origination credit risk deteriorate in 23 of the 30 secondtors. Used cars, which is 5% of total AUM, also showed a slightly unusual uptick, which is unseasonal for the first quarter. This trend needs to be watched closely in the months ahead. However, the overall improvement in risk was was clear. It was also aided by a favorable impact of an ECL rebalancing effort that happened between q four and q one. Between all of that, card credit costs declined during the course of the quarter on a sequential basis. Will later share a little bit more detail on this. If you look at slide number 16, our customer franchise continues to grow. It grew by 21% in this quarter on a Y o Y basis to 4,800,000. A significant portion of our customer originations are indeed tapped for future cross sell opportunities, which you will see on the chart at 50 plus percent. And currently, we are sourcing 25% to 30% of our unsecured disbursements from cross sell. Our number of branches continues to remain unchanged, in Q1 at five seventeen branches. Our focus in recent quarters has been on raising productivity of existing branches and increasing the number of products offered per branch. You will see details of this on slide 20. For the last nine quarters, you see that we have consistently reduced the OpEx to AUM ratio for our retail business from a high of 6.5% in the fourth quarter FY 'twenty three to where we are today, which is 4.2%. We aim to continue this trend in line with our medium term guidance of 3.5% to 4%. Our performance in lowering the OpEx to AUM in these last two years has been slightly better than what we had anticipated at the beginning of this journey. The outperformance was thanks in part to the investments that we have made in technology, AI, and recently GenAI. Slide 19 highlights some of the most successful use cases of GenAI in our business, making significant headway across risk management, operating leverage, productivity and controls, among other things. Slide 20 shows the year on the Retail business, which has been broadly stable at around 13.3%. A different chart of the same slide shows our reported fee income. You might recall that in financial year '25, we changed processing fee to an amortization model and that impacted this line item pretty significantly. But you can see on the chart on slide 20 that this has been gradually normalizing for the last five quarters and the underlying fee collection trends remain very stable. So this improvement should continue. With increase in DA and co lending transactions, their share and retail income has also steadily increased in the last one year. A little bit of a forward looking heads up to the investing audience. Recently, RBI has notified some new rules on prepayment charges for floating rate loans to individuals and MSMEs. This rule will become effective from first January twenty twenty six. This will impact one part of the income stream from our retail business, particularly the prepayment fees in the MSME lending business, the LAP business. That will get impacted. However, we do have some time before the rules kick in, and it should allow us to plan and mitigate the impact of these new rules in other ways. So we are not changing anything from a guidance perspective that we have shared before. Overall, we remain confident about the continued steady scale up of our multi product retail lending business with consistent improvement in operating leverage and stable asset quality through the cycle. With this, I hand over the call to my colleague, Dheesh. Thanks a lot, Jairam, and good evening, everyone. On the wholesale lending side, in the '26, our AUM for the new business or two point o version of our business grew by 14% quarter on quarter to rupees 10,425 crore. We disbursed rupees 2,302 crore during the quarter across real estate and CMML segments. This was an increase of 35% quarter on quarter in disbursements. Origination per loan was INR 60 crore during the quarter, while disbursed amount per loan was about INR 30 crore. The portfolio has an average ticket size now of INR 74 crore, which is in line with the previous few quarters, and the effective interest rate stands at 14.5%, featuring a well balanced asset duration and diversification. We continue to see strong payments across real estate and CMML segments and will continue, therefore, to grow this book in a calibrated manner and a granular manner through FY 'twenty six. Repayments were almost 43% of disbursements during quarter one. They continue to remain significant at significant rate, signifying better than expected performance of the book, which continues to benefit from strong sector performance and quality partner and asset selection. Since the inception of the new wholesale lending business, we have not experienced any delinquency in the portfolio. I'll just finish with this and hand it over to Upland for a second. Thank you, Yesh. Good evening to everyone. Moving to our financial performance. In Q1 FY 'twenty six, we reported consolidated net profit of $2.76 crores, growth of 52% Y o Y over Q1 FY 'twenty five, net profit of 181 crores. Pro form a PBT for growth business stood at $2.95 crores, growth of 44% Y o Y over PBT of INR $2.00 4 crores in Q1 FY 'twenty five. This reducing drag of legacy business confirmed May increased by 10 basis points quarter on quarter to 5.9%. Gross AUM grew by 38% Y o Y to INR79430 crores. Operating profit grew by 51% Y o Y to INR555 crores. In Q1 FY 'twenty six, the reported gross business credit cost was at 1.4% versus 1.8% in Q4 FY 'twenty five. Last quarter Q4 FY 'twenty five, credit cost included a negative impact of about INR 45 crore due to ECL rebalancing mainly in the Microfinance business. In quarter one FY 'twenty six, ECL rebalancing for the overall portfolio had a positive impact of about INR105 crores. Our total GMT and NPA ratio stands at 2.82%, respectively. Our net worth stands at INR 27,174 crores. Capital adequacy is at 19.3% on consolidated balance sheet basis versus 23.6% at the March '25. Since completion of PEL, BSN merger, we expect reversal of approximately two forty five basis points from this reduction in the capital adequacy. In Q1 FY 'twenty six, our cost of borrowings reduced marginally to 9.1. We continue to actively diversify our borrowing mix. Securitization and international borrowings share stands at 18%, while share of borrowings from mutual funds has increased 12% versus 6% in March 24. The fixed floating gap between asset and liability has now been mostly neutralized to align the balance sheet better with the declining rate environment. With these remarks, I would now like to open the floor for questions. Thank you. Thank you very much. We will now begin the question and answer session. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Again, to register for a question, you may press star, then 1. Our first question comes from the line of Abhinash Singh from MK Global Financial Services Limited. Thank you. Please go ahead. Okay. Thanks for the question. Just two questions. The first one is on your, you know, provisioning coverage in retail. So if we see the data, I mean, stage one provisioning cover has gone down from 1% to point 8%, stage three has gone down from 40 to 34 odd percent. If we look at the kind of, you know, asset composition within retail in terms of secure, unsecured or you are just kind of a but it looks like not much we had changed from, you know, q four March to June. So what experience, I mean, I mean, how is this, you know, issue model kind of leading to this team in terms of, you know, approving probably on retail? I mean, in terms of, you know, retail assets have grown up sequentially and then also saying, well, the absolute, you know, provisions had gone down. I mean, again, not a very big time, but it had gone down. So net net, of course, of the payment of it. So what is the second thing? And second, now, again, more a broader question. Of course, I mean, that your rundown of legacy has been going at a great pace. So let's look into FY '27. So when you have, you know, the phenomenal finance as a most single listed entity, and you're I mean, you are going to have a no tax program for next few years. Assume that, okay, whatever leftover of, you know, this thing is legacy is there, including everything on the kind of, you know, the control balancing that is largely the work business. I mean, how do you see, I mean, your names, OpEx, and credit cost basically timing out, including whatever drags from the rest towards legacy then? Thanks. Sure. Thanks, Arinash. So your your reading is absolutely correct. See, the way that you feel this is all this is all happening. The I'm answering the first part of the question on on on provision coverage and retail. This is all a part of the easier rebalancing thing that Ukhma spoke about. Right? In the first quarter of every year, we do easier rebalancing. And in our case, we are, over the last three years, consistently been reducing the weightage of external data and increasing the weightage of internal data. Our internal performance has continued to be a little bit better than what market average has been. And so as we are actually increasing the weightage of internal data, as we are getting more and more mature in the business, So you are seeing some ECL releases happening when the re rounding happens. This year, we split the re rounding into two parts. All the unfavorable impact we took in the fourth quarter and some of the favorable impact we have moved to we took now in the first quarter. So you are seeing some lumpy releases, that's what Ukhma mentioned in her remarks that there was an unfavorable INR45 crores in the previous quarter. And this quarter, you have seen a favorable INR100 crores. All of that is coming from the PD regrounding that happens once a year, right? So that's what you are seeing here. Nothing has changed on the LGD front. LGD is all the same. PD has just been regrounded to our internal data. And because our internal data on secured continues to be better than market, so with every passing year, as our internal data weightage is increasing, that PD is actually falling a little bit. So that's the mechanical outcome that you're seeing on the table that you just mentioned. The second part of your question, which is where does this book go as we look at next year? See, we have right now, we talked about, let's say, on the the growth business is at about 1.4%, 1.5% ROA, right? PBT ROA, which is essentially going to be the same as that ROA because of the factors that you mentioned on carry forward loss. So that 1.5%, we have guided that in the medium term that needs to get to 3%, right, or close to 3%. That's kind of where we believe our business model can lead us somewhere around 3% ROA. But it's not all going to happen in one year. But next year, as the legacy book continues to fall even further and the growth book moves upward from one and a half percent to, let's say, somewhere in the two handle, let's say, mid twos in the towards the end of next year, that's kind of what the entire books are. We will also end up being. So that's directionally what you should what you should keep in mind. We have not guided specifically on profits for for next year. I want to be clear for this year to reiterate, we have guided specifically on profit, which is 1,300 to 1,500 crores of fat at the full year level. And with roughly $2.80 crores in the first quarter, I think we are well on track. Okay. Thank you. Thanks, Abhinash. Thank you. Our next question comes from the line of Abhijit Deepriwal from Motilal Oswal. Please go ahead. Yeah. Good evening, sir. Thank you for taking my question. Hi, sir. Sir, firstly, with regards to unsecured MSME, you also highlighted that the open source business has shown some some credit deterioration while the cross sell MSME and subscription continues to do well. What I'm trying to understand, sir, right now, what what we've been hearing at least in the last maybe one, two months, lot of rationing of credit has started happening in MSME unsecured, and I'm talking more particularly about lower tickets, smaller tickets, MSME unsecured loans. More and more lenders want to do bigger ticket in the same so to that end, don't you think that in an environment like this where there are other lenders calling out that there is leverage in terms of number of loans that has built up in the SME and secure, kind of growing too fast in this segment. While I I I remember in your opening remarks, we spoke about the fact that we have reduced our disbursements this quarter in this segment. Would that be going too fast in kind of maybe lead to some accidents given how things are? Yeah. Absolutely. That's quite correct. See, and right now, it's m and a in in our business. You have to look at things every quarter, every month, figure out which business is or or which segment is actually going through some challenges. And wherever you see some challenges, you have to put the brakes on, where you see opportunities, you've got to accelerate. So this business is an kind of always optimizing sort of business. You can't have a one off strategy and just fill it, shut it, forget it. You can never do that in this business. Right now, MSME unsecured is the area. If you look at our chart on page 14, slide 14, you will see what we have done to disbursements and what has happened to disbursements in MSME and secured over the last three quarters at Pitamal from a level of 1,200 crores of disbursements a quarter, are now down to 700 crores. So we've been bringing down disbursements for three quarters now. Let's see how this develops. But these things, Abhijit, you and I have spoken about this in the past. As you can see on Page 14. And now we are seeing some of the risk at the overall level. So actions have to predate the risk outcome. So we have taken action three quarters ago. At some point of time, will see us increase the volumes here for the exact same reason that we are seeing something in the early data, which is making us feel comfortable. And when we when we do see that, you you will see us accelerate as well. Constantly, you will we will do that in every business as as you have seen us do over the last three years, and this is something you'll continue to see us do. Got it, sir. And sir, I mean, a related question here. I mean, this quarter, I mean, lot of NBFCs have already reported. We are seeing some weakness in credit across most product segments, even even in secured product segments. Right? So just trying to understand, in your assessment, how is the environment like? Because I must give give credit that it's used. At least from your results, right, doesn't look like this quarter, there was any credit risk really building up. So we've done well both on growth as well as the risk. So in your assessment, I mean, how is the environment looking I can't answer. The question you also spoke about some spike in used car loans. Is this more a spike in the refinance business of used car loans rather than buying and selling of of used cars? Yeah. No. So let me start with the last part of your question. This is absolutely spot on. I don't know where you thought that thought that sound bite. That is exactly the right sound bite. The in used cars, the problem is in the refinance segment. It is not in the sale purchase segment. The sale purchase is doing just fine. It's in refinance. Even within refinance, it is indeed self employed part of the refinancing refinance market. So that's where the problem is, but the problem is acute enough that it is showing up on the full UCL results. So I don't know where you I'm very surprised actually that you gave me that some, but I didn't know that you that was known. So kudos for catching that. That is exactly what is happening in the market. Refinance is where the problem On your first part of your question on how I'm seeing the market itself and, you know, kind of the risk environment, I think I think the risk environment is stable. I think q one was a stable quarter. There was there was nothing which is which is surprising that happened. Used car is probably the one thing that I'm a little bit surprised about. Like, this is not something we we might have we we would have anticipated getting into the quarter. So that's the one thing which is which which we have found a little bit unseasonal and a bit different. But most other things, even UCL sorry, even MSME unsecured or MFI, all the stuff has been kind of has been fine, you know, in you know, nothing has really deteriorated. There's some accumulated effect of of the last few months and couple of quarters that that you have seen play out in the numbers, but nothing particularly untoward. So it's a it's a decent enough market. Salaried customers continue to do very well. Is the self employed where there is a problem? It's still not a problem as acute as it was in, let's say, the third quarter of last year. The third quarter of last year, in my mind, was still the peak of credit risk. Risk in the environment has improved in the fourth quarter and has been steady in the fourth quarter. And for some people and ourselves included, it has improved a little bit in the first quarter, but even for market, my guess is that it will be stable on the whole, right? But salary has done well, self employed has struggled a little bit, but not it's not struggling as much as it was before November. Things have improved since then. Got it. And just one last question, Jairam, sir. So so while you I mean, we appreciate we are at about PVT ROA or fat ROA of about 1.4, 1.5. For the medium term, we want to get to 3%. But, I mean, as as you'll also acknowledge, the reality is that we're still far away from a double digit ROE. But at the same time, we're going very, very strongly, especially in our growth businesses, growing at, I mean, 30% thereabouts. So, I mean, would there be a time maybe by the end of the year where CRAR would put trigger an equity raise? Because I understand right now more of a SSP to NDFC classification which has led to this compression in CRAR, which will again get released when the merger is complete. But but given how we are growing and given how where we are placed on the CRR, do you think by the end of this year, it could trigger an equity raise or perhaps to give some comfort to the credit rating agencies if it helps in getting some credit rating upgrade given that now, retail is the dominant portion of your overall region? Yeah. That's a good question. See, our our numbers don't don't get us to a get us to a raise by the end of the year. In general, like, right now, let's say, we get the clawback of two forty five basis points that Umar spoke about, we'd be in the mid twenty one kind of range in terms of CRAR. Our we are we are reasonably comfortable to, you know, still about, let's say, 18%. Right? You know, below 18%, we are probably looking at a at a raise event. I don't think we are getting to 18% by end of the year. So even with these growth, there is accumulated profits that's coming in. Let us see, these things are dynamic, and we'll have to keep updating you. But our current expectation is not pointing us in the direction of a raise in the this financial year. Got it. This is useful. Again, congratulations on a good quarter. Ravi reminds me of another another important element as well that there are some investment portfolios that we have on our balance sheet, which as you know carry fairly high risk weight as and when we are able to exit those investment portfolios, not just will it lighten up the balance sheet and make cash available or capital available for growth, it will also disproportionately release risk weighted assets. So its impact on on on capital adequacy would be disproportionate. So that's an important element as well to keep in mind. Sir, just for clarification, you spoke about this legacy AGM, if you'll That will lead a disproportionate amount of capital or I I cannot miss you. Investment assets for the Sri Lanka Life and General Insurance assets. Yeah. Those are all investments. Right? So the the capital rates are very high. Right. No. That's that's understood. Thank you so much, and I wish you and your team very well. Thank you. Thank you. A reminder to all the participants, if you wish to register for a question, please press star then 1. Our next question comes from the line of Shreya Shivani from CLSA. Please go ahead. Yeah. Thank you for the opportunity. My first question is actually just a clarification. Your AIS recovery for 01/02/2025 was 103.7 crores, which you have regrouped in the other operating income. So is it fair to believe that the 82 crores of other operating income that you've shown in 01/02/1926, that's the entire AIS recovery or there's some bit of other part in it? So what is the AIS recovery number? That will be my first question. My second question is on the employee expenses. For the quarter, these expenses, but the employee portion of it seems a little elevated. Can you help us understand what happened what was what measures were taken or was it because of hiring or some color around that would be useful? And my third question again is around expenses itself. But if I look into your pro form a, you know, p and l for the three segments, you have about $30.30 crore of expense coming from the legacy book and from the alternate book. Right? I want to understand what are those expenses towards and as and when that book reduces, how much of that is variable or something that that eventually your growth book will have to absorb? So I'm just trying to understand. It's not a big number I'm talking, but I'm just trying to understand. Yeah. Okay. So there are three parts to your question. Your first question, which is on AIF recovery. AIF recoveries in the first quarter are real. So there is nothing in the P and L that has come from AIF recovery. You are seeing an element in the P and L that is coming from recovery from old return of account. So in the same wholesale book, not in the AIF book, but in the loan part of the book, there were some assets which we had taken 100% provision on in the past and which we had which we had written off as well, potentially written off. We did see some recoveries coming from there. Those are the items that you're seeing in the in the p and l. AIF recoveries, we have not seen. There are some lumpy assets, so there are only four assets left in our AIF book. We did not see any recovery from them in the first quarter. So what you're seeing is the recovery from from the write off. Your second question was on staff costs. Nothing has changed in in in staff cost. Basically, we had some high as you might recall, that we started a new business on micro lab in the latter half of last financial year. So we did some hiring for that and a little bit of hiring for our newly emerging MFI business in the fourth quarter of last year. So that staff, you are seeing full quarter numbers of that staff in this year. All our other businesses have seen no hiring in the last multiple quarters, and we have not opened any branches in the last few quarters. So what you're seeing is basically the impact of a little bit of hiring that we did for these two businesses, microfinance and microlab, that we did and completed in the fourth quarter of the last financial year. So that's it, plus, of course, people get their increments and bonuses, etcetera, and that's so the new pay scales become applicable from April. So that's one delta that you do see in Q1. So that's what you're basically seeing from a staff standpoint, nothing major to point out there. Not a whole lot is going to happen to that line item through the rest of the year. Then your third question was on costs in the on the legacy book. See, some of those costs, I would say it's about a fifty-fifty. 50% of those costs will remain and 50% of the costs will go away as the legacy book goes. The part that will remain is the part where our team, our staff are engaging with these clients and those people. We will naturally absorb them in other parts of our business. So that part of the cost will remain. However, there are also going to be a lot of legal costs and some of these recovery procedure costs, etcetera, that are also part of that, which will obviously not apply when that book goes away. So you should assume that about 50% of those costs will remain and 50% will go. Got it. Got it. That is that is very useful. And just one more clarification that I wanted was on on the completion of the merger. The expectation is about September, October. So from third quarter onwards, we can expect building in no for you guys. Right? Or that's not long answer. Hopefully, from second quarter, sir, see, the process gets done. Let us say, we are in the very last leg of the process, which is NCLT approval. The day NCLT approves, and let's say, the next day, we we file with ROC, then, basically, as of that day, we are a single company. The moment we are a single company, all the carry forward losses are now available to this single company. Right? So if that process happens towards the August or September, which is our current expectation, though, of course, it's a regulatory process, it can take its time. But our current expectation is August, September, that should get done. The moment it gets done, we become a single company. So next quarter, if our if this process goes as per what I'm what what I'm suggesting to you now, next quarter, you should see a single company declaring your loss, and hence, naturally, that that dynamic will play out. Got it. Got it. And if if I if I can just squeeze in one more question, this is on your on your digital loan book. Right? I mean, is one book which was continuing to like, this was flattish at about 2,800 crores level for the last couple of quarters, and that has sort of picked up. Disbursement is also not at the same level as you had seen in FY '24, but now it is at a better level versus FY '25. So can you give some color on exactly what all segments or what all categories you're you're feeling more comfortable in this person in this this particular sector? So that's a good catch. We have gotten more comfortable with digital lending in this quarter and publicly mentioned this in our in the previous quarter's call as well that you might see us accelerate this segment given some of the risk trends we are seeing, and that's exactly what we have what you have seen now. If you look at the the risk trajectory, if you look at page 21, for example, and you look at what has happened to risk in digital loans, you've seen a couple of quarters of pretty steep improvement Yeah. In in risk, and that's what has actually given us confidence. What has happened here is that the market has shifted in very large part towards FLTG, which means the originator is still bearing a meaningful part of the part of the risk, and the the lenders, in this case, ourselves, are getting a lot more credit protection. So and so the market has moved and some of the larger players in the market who historically were not offering FLDG based FLDG based origination, which because of that, we were not willing to do a lot of business there. That situation has changed. A lot more FLDG is now available, and and that has made us a little bit more comfortable. There's also been a shakeout in the market. A lot of the weak guys have left, and only the slightly stronger guys are are remaining now. So so that's also given us confidence to actually go work more deeply, you know, backed up with an FLEG protection. Sorry. So it's do I have to do more with the originators being more comfortable with the FLDG format now? And also, obviously, your own trend also be being much better. That's the main there's no difference. You've not changed the product structure or the category or nothing of that sort has happened at No. We continue to remain we continue to remain away from the very small ticket short duration business. The BNPL type business, which has been kind of very problematic in the cycle, we continue to remain away from it. That probably comprises 10%, 15% of our originations in digital, no more than that. So we continue to remain in the slightly larger ticket, slightly longer duration type players. And we have, in fact, increased proportion of salaried as well in this, though it is still a majority self employed population, but we have increased the proportion of salaried as well. So the the risk has continued to move favorably in this segment. Got it. This is very, useful. Thank you so much and all the best. Thank you very much. Thank you. Our next question comes from the line of Nishin Chawate from Kotak. Please go ahead. Hi, Nishin. Yeah. Yeah. Just two questions. You know, one was on the asset quality side. When I look at your presentation, you know, it looks like you seem to be doing fairly well on collections in most of the segments, let's say, other than used car loans. I mean, I was curious, you know, you had a slightly cautious commentary on MSMEs. So I was curious whether you you're looking at I mean, you you see this trend for the industry, or is it something that you are seeing in your portfolio? I mean, our data will be in a trend. If you see business loans, you see that little blue line there. You can see it's fairly stable. Nothing much has happened even though it used to be at lower levels at the beginning of last year. It has increased, but you see that the blue line is relatively stable. However, it hides one important fact, which is that if I deleverage that blue line into two parts, one, which is about new open market origination and the other, which is cross sell. What I'm finding is that the cross sell part is actually doing really well, and the new open market origination stuff is actually not doing that well. It is actually still on an upward trajectory. So that's the that's the driver behind my commentary that this MSME unsecured continues to remain problematic and it has not gotten to a point that we are comfortable right now. Right now, on surface, it is looking good because you know, cross sell, you know, proportion has increased. Otherwise, it would not remain stable. It would it would show an upward trajectory. Got it. Just, sir, yeah, did you share the incremental cost of borrowing data for number I I I remember you mentioned It's nine we've shown the overall number, which is 9.12. Point one. Yeah. Incremental cost of borrowing range. But it's about nine nine point one. Sure. And one tiny question if I can squeeze in. This loan against mutual funds is something that you see as a secular trend or is it something that kind of is done opportunistically? No. No. It is secular. It is something that we want to build. I don't currently show it as a separate bar in our tag bar. Our general philosophy is if something becomes 2% of book, then we will start showing it as a separate color. Currently, it is not there yet. So but in a quarter or two, you might start seeing that come up. It's about, what, a thousand growth or something now of book. So, yeah, it is a business we like a lot. We like the business actually more than we like to own or get share. We think mutual fund, the general ownership in the market has improved, retail ownership of mutual fund has improved quite a bit in the last two, three years, but not enough penetration of lending and not enough monetization of those assets has happened. So we do believe that there's a secular opportunity there. And NBNCs do have a little bit of an advantage here over banks, given the 20 lakh rupee limit that banks have. So it is a business that we like and you will see us do more for Indus and to be a little bit of a cyclical business. If the market does well, the book utilization does increase quite a bit. The market has been a bit choppy, so utilizations have actually fallen a tag over the last few months, but it is secular. It's a business we strategically like. Perfect. Thank you very much and all the best. Thank you, Nitin. Thank you. Our next question comes from the line of Kunal Shah from Citigroup. Please go ahead. Hi, Kunal. Yeah. Hi. So, Jaron, just wanted to touch upon slide number 22 instead of slide number 21. Okay. So here again, when you look at it in terms of the vintage risk, okay, that seems to be building up in salary PL as well as in digital loans, if I'm reading it right. So how should we look at it? You have you have clearly called out with respect to used cars and business loans. But again, like I said, salary PL and digital, and I think disbursements in both these segments are growing. So how should we read that? Yeah. Yeah. No. It's a good call out, Kunal, and it's a good catch. This is a nine ninety percent twelve months metric that we're showing. We also look at lots of other metrics, 30 plus and six in particular. That is actually doing better. So I'm feeling okay. But, yeah, if this trend continues for two more quarters or can have even one more quarter, I would have to change commentary on this. Okay. So that that would be but are we are we changing the stance on disbursements in these two segments? Because that's not clearly reflecting a fee. Maybe it could be Right now, you should assume that business loans and UCL sort of, you know, a little bit of break on it. Salary PL accelerator on it. Housing or Lat accelerator on digital loan total neutral. That's the way you should think about it. Okay okay. Got it. So you said home loan and that is clear, accelerator on. Yeah, clear what did you mention? Accelerator on. Salary PM acceleration. Okay. That is that is also on. Yeah. Okay. So this decline, it would be that that's more of a seasonality in the January from 1420 to '20. Exactly. January. And digital, you are saying it's, like, neutral. Yeah. Okay. That is right. But I do want to state that this is not a strategic start. This is a tactical start based on what I'm seeing in the data today. If tomorrow or next month, if the data is a little bit different, I might change my plans completely. Right? So we are very flexible about this. We don't have big kind of strategic view of business data we'll keep changing our mind. Okay. And as you mentioned on MSME as well as, say, self employed, said, like, that is also struggling a little bit. That's more on the unsecured part. But on secured, would you be worried about? And within that, if you can highlight maybe in terms of how the maybe the self employed proportion would be and would at any point in time, we could see some Almost 90% is self employed. So it is a predominantly for business. The small ticket lab is struggling. You know, the so smaller you go on ticket, the more the struggle is. And there is some there are some risk challenges. You know, we, of course, have seen some results in this season, which have also pointed in that direction of other firms. You know, experience is also the same. The smaller the ticket size, the challenge So that would be less than 10 megs, How would that be? Less than 10 for less than five to income Okay. Then what you see less, it was in very, very deep trouble. But even less than 10 is not doing that great. But more than 10, everything is just fine. So far, we have not seen anything. Okay. Got it. And how much would be the proportion for us in this two? Very small, yes. Less than less than 10 Okay. So not over the course. Yeah. Yeah. Arj is almost 25. So what we have mentioned, like, the average ticket size is 25. So there is no not too much of worry on the left front. So you wouldn't be too bothered about it at this point in time, even though you are seeing it in the smaller tickets and self employed is still struggling a bit, but you are not too worried about it. Yes. Correct. The big problem we are seeing is in small ticket Yeah. Small ticket, big town combination mid ticket, midsize down. Okay, got it. And in terms of like catch up on the coverage, you mentioned like instead of external now we are looking at more internal sectors given the intake that we have built. But then would we be getting back towards those kind of a coverage levels which we have been providing on this It doesn't seem to be the case now. See, what is happening is what in our business, our our the way our accounting policy works at one twenty days, we're making 100% provision and essentially writing the thing off. So secured So security by and large. Oh, so one twenty provision. Right? So we make provision of 100% at one twenty, and we're doing write off at one seventy days. Right? So what that is Write off at one seventy. Write off at one seventy, but 100% provided at one hundred. Got Yeah. Yeah. What is happening is that you don't have a large unsecured book in your in in your in your stage three. The because the stage unsecured book is continue to run. Got it. Right? So the customers are housing or. So that's the reason coverage is low. Correct. Got it. Perfect. And one last question, if I can ask, maybe would you want to call out if there would be any impact in any of the line items, parameters, capital adequacy indicated, but when this merger happens, should we be prepared for any of the maybe abdominis in the reported numbers? No, do not. Nothing nothing to point out. Capitalization is a big one, which we have which we have spoken about. Otherwise, we have been doing consult numbers anyway for the last multiple quarters. So that we don't expect to So there shouldn't be any surprise at all. I don't know what this merger happens. Okay, cool. Perfect. Yeah. Thank you. Thank you, Punav. Thank you. Our next question comes from the line of from GM Financial. Please go ahead. Hi, sir. Thanks for the opportunity. Sir, I have just one, you know, just one just figuring out whether in the retail book right now, our our yields are close to 14%. And our cost of funds stands at around 9%, and we have 4% of OpEx to. Right? So a differential spread of 5% on which we are doing some OpEx of 4%. And then, I will say, after even after this, all the credit cost, it comes around maybe, let's say, let's say on a on a optimal basis, let's say, comes around fifteen weeks. So, largely, the retail ROAs would seem to be more of flattish. Right? More of, like, muted. So I just want to know, I mean, in next two years or maybe even more, should we see the trajectory and where should we see the differential coming going forward? Okay. See, your your the math that you did is is is a math on margin. It is sorry, on spreads, not on margins. So let's go to the margin math. Yes. Today, we are at about little over 1%, 1.1, 1.2%. You know, ROA, we showed that growth book ROA is about 1.4, 1.5% during the quarter. So and, 86% of the growth book is retail. So you cannot be, like, flat or losing money in retail and still make 1.5% in growth book, right? So retail, let's call it some of percent automotive, ROF and that will continue to move upwards based on two or three parameters. Number one, OpEx, where there is about a 50 basis point play between where we are and where we have guided. And the fee thing, which we have indicated on Slide 20, if you have seen, we have shown how the amortization fee impact the back book kind of coming in. There is a it has it has already caught up a lot. There is another 30 odd basis points to come from there. So between that and cost, which are fairly kind of certain outcomes, you're already looking at kind of anywhere from 60 to 80 basis points of of delta between these two items. So that is the kind of hardware expansion that is in the back in some sense. Apart from that, we have to work on kind of margin by essentially finding the right time to accelerate on unsecured and hopefully get a little bit of benefit on on cost of funds, etcetera. That those will provide the other the other impediments. Overall, in a world in which growth book is 100% of our business, 80 to 85% of the growth book is retail, and another kind of 15 to 20% is wholesale split, let's say, kind of one is to three between CMML and and and real estate. That's the portfolio we're trying to build, and that portfolio with kind of somewhere in the two seventy five to three kind of ROA is something we can realistically achieve over the next couple of years. Okay. Largely, in the current mix, it's 110 is easy increment in ROA and the rest is dependent on the mix. Okay, sir. And on on the on the cost of funds side, I mean, our cost of funds have been incremental cost of funds is in the same range. So any any any trajectory on when should we able come back quarter? We we have seen some improvement, but towards the very end of the first quarter. So it actually didn't show up much on the, you know, on the quarterly numbers. There was also a little bit of, like, you know, there were some some favorable spillovers in the last quarter in terms of baseline interest cost, a favorable spillover, which have which have made last quarter look kind of unrealistically kind of slight bit lower than what it otherwise would have. But anyway, the point is that there has been if I look at pure on a purely economic basis, if I look at q one versus q four, we have seen a benefit of about seven basis points. You'll see only one basis point on this because there is some one off, as I said, in the well, favorable one off in the last quarter. But anyway, but even seven basis points is not that much. You will see a little bit more in the second quarter because all the deductions that have happened in Q1, you will see the full benefit of that in Q2. And hopefully, will see more banks reducing in CLR. See, the banks are cutting in CLR, we are not gonna see that much benefit in our in in our numbers. But now banks are starting to cut, so you will start seeing that more in q two. Got it, sir. Okay. Okay. Thanks a thanks a lot, sir, and all the best for the coming quarters. Okay. Sorry. One, I do want to take, you know, fourteen seconds to go back to Kunal's question on merger and whether there are anything, whether there is anything to be expected. Of course, we spoke about the capital acquisition, but there is also Kunalu and others. We should expect one time cost of merger that will happen. Merger is a big process. It's a big corporate action. So there's a lot of, like, legal cost and a bunch of these other costs, stamp duty and some of the stuff that will come up. All of that, we will we will, of course, disclose that separately in the in the second quarter. That's a material onetime event, though nothing so huge. You shouldn't get you shouldn't get worried about it. But but, you know, but it will be it will be something. It will be like a some two digit crore number, not a three digit crore number, but but it will be meaningful. Will be noticeable. Part of that full year guidance. Okay. Yeah. And it is fully incorporated in our full year guidance of 1,300 to 1,500, so you shouldn't have to worry about Sorry, let's go back to the questions. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the conference, please restrict your questions to one per participant each. If you have follow-up questions, please rejoin the queue. Our next question comes from the line of Shivrantu Mishra from PhillipCapital. Please go ahead. There. So the first question is around the SEC that you just mentioned. The sizable listed fintech mentioned that we are going off FLDB with their lending partners. While we are saying the opposite, that we are doing more of FLDB with our fintech partner. What is the divergence here between these two examples? Second is that another last year of ours mentioned about tracking MSME, especially in tickets unsecured business loans. So what are we seeing in the unsecured part of the business loan, especially ticket size is less than 10? And when do we see them resolving? Okay. On your first part of your question, see, different companies will have different strategies. I can't comment on what what what what this other competitor said. Our belief is that fintech originated business continues to be continues to be of a risk profile and volatility that a listed large regulated entity like us wouldn't want to keep a large part of that on our balance sheet. I would want to protect that risk. And so I'm not that keen on actually doing a lot of non FLTG business. Others might have a different viewpoint, and that's fine. But our strategy is a more FLTG driven strategy and not that we it's not like we don't do non FLTG business with some partners that could be whom we have worked for a very long time and where the customer profile we find is much more stable and where the risk profile is such that we can put it on our balance sheet directly, we are happy to do it. But those are few and far between. In the main, we want to do a strategic business and there are enough providers of FLTG in this market, so we don't feel the need to take on risk on our balance sheet. That is our strategy, others might have something different. Your second point on MSLE risk, I had mentioned this in my opening remarks as well. Yes. We are seeing risk in MSLE unsecured, particularly in the open market business. And so we are being careful. We have we have cut disbursements there quite quite radically in the last three quarters. If you look at our Q1 numbers, it is down 30% Q o Q. So for three quarters now, we've been cutting in our open market, MSME unsecured business, replacing it with a little bit of cross sell MSME unsecured, which is doing well. Right. If I can squeeze in one last question. You mentioned that you can do non FLDB. Would that be more in personal loans or in business loans? No. No. If we do with if we do with through a partner, we will show it in EF only. We'll show it as part of the EF business only. There is one significant partner in EF where we do non FLNG business. Otherwise, practically, everybody else we do with FLNG. Right. Thanks. Thanks, sir. And best of luck. Thank you. You. Our request to all the participants, please limit to one question each per participant. Thank you. Our next question comes from the line of Jigar Vanya from OHM Group. Please go ahead. Yes. Thanks for the question. And the question is if the yeah. Basically, accreditation, when is it up for the next review? And also if any specific leverage number of guidance given it may help improve valuations? Yeah. So, Jigar, there is we do a conversation with with credit rating agencies on a very regular basis. We are plotted to have a conversation right after this quarter's results as well. So I'll be speaking with them next week. Don't have much more to say on that. Let's see what they think. You know, in terms of leverage, what we have said historically, and I'll repeat, is that we, you know, we we think a right level of leverage or an appropriate level of leverage beyond which we will probably not be comfortable is four:one debt to equity. We are we are currently very far away from there. So it's it's not it's not something that's a binding constraint right now. We are we I think we ended the quarter two and a half is to one. So there is there is still a lot of room for, you know, for that. But beyond four is to one, we'll probably not be not be comfortable. Okay. Got it. Thanks. Thank you, Jigar. Thank you. Our next question comes from the line of Vijay Sartha from Systematics Group. Please go ahead. Hi, Hi, Jainam. Congratulation on good set of number. I just wanted to understand two things, broader aspect. Basically, if you can dwell more upon this W2O book, how we are managing the risk. Till date, I think we have been doing quite excellent with zero delinquency, But getting into intricacy as things on the IT side is slightly getting bad in terms of the hiring and all that. Do you see this because 80% of your exposure is into all the IT help? So just wanted to understand things going forward for that. And secondly, if you can touch upon this pause on the branch expansion strategy. So what is the plan there? So are we more tuned to expand the business, as you said, on the per branch side before taking the next leap on the branch? Or is it just a temporary pause? Yeah. My colleague, Yashul, first, take take the first part, and I'll jump into the second one in a moment. Yes. So on your question, look, our intention is to actually build a very highly diversified and granular book on wholesale side, comprising both our real estate lending piece, which is about 75% of the portfolio, but also diversified by way of getting granular exposure to a number of industries in our corporate mid market lending strategy. So what we are looking at is a wholesale portfolio that is very different than what it was in our previous version, one point o version of the legacy business that we have built. And that is very highly sort of as reflected in the ticket size of being 74 crore per per deal, but also very diversified and not therefore relying on any one or two or three sectors. Right? As it relates to how we are building this portfolio, clearly, the very detailed set of sandbox conditions that we have designed Mhmm. Which we apply through every deal, and everything has to stand on its own two feet of the underlying credit metrics, being conservative credit ratios of the corporate leverage, the appropriate structures and so on and so forth. Your question also was specifically in regards to demand from IT. Actually, what we are seeing in the IT space, obviously, the headline in the last couple of weeks has suggested that there were some slowdown in the IT hiring and etcetera. But that slowdown, so far, we are seeing happening in some segments of the IT industry as a whole. For instance, the IT outsourcing companies have actually seen muted headcount growth, but that slowdown has been compensated by significant hiring by global capability centers, for instance. Right? And therefore, on net basis, what we are seeing happen in the market is significant growth in demand for IT office space. Some of this data is all public. We can see the IT office space, which is in turn depend on the IT company's expansion and headcount, and therefore, demand for the offices as well as residential spaces in this location continues to play at 25%. Right? And that's affecting our portfolio as well. We'll obviously monitor how situation evolves, how sector grows. And and and then depending on that, we'll design or redesign our portfolio as it grows. But at this point in time, we are not seeing any material impact of that. At this point in time, I will also reiterate that the way we are constructing our portfolio has a very strong element of sector sort of diversification as well as granularity and therefore, far more diversified than ever. On your branch question, you're right to point out that we've been on a pause with respect to new branches for the last few quarters. It is a temporary pause. We did need to take a little bit of breather. We had opened up about 200 branches over a quarter, about seven, eight quarters. So we wanted to take up all you know, let all of those branches settle in and for us also to absorb the OpEx coming in from new branches, etcetera, and get to a point where our OpEx is a little bit more of a manageable level before we give ourselves the license to build out branches again. We have continued to do well on the OpEx ratio front and the ratios are moderated. Let's see in a quarter or two, we might get to a point where we feel comfortable again, and we will restart branches. We are not done with respect to branch openings at about five seventeen branches. We have enough to go for a little while, but but this is not end stage for Pramal. So we will be opening more branches, but maybe not in the next quarter or two, but you might see us do that do some branch openings after that. Just last question, Shivam. I wanted to understand, we were supposed to do some new segment like gold and all that. Have we started with the pilot or we are deferring that for some time being or No. No. We have we have started working on it. We will let you know some details once we have done a little bit of business, once we have, like, kind of scoped out what, know, what is working well for us, etcetera. Last year as well, you might recall that we started our Microlab business. We ran it for two or three quarters. And after that, we came out and told you guys that this is something that we are that we have started a little while ago. That is, stylistically, what you should expect from Piramis. We are not gonna make announcements before we launch a business. We will launch it. We will run it for a little while, get comfortable, and then you will hear us talk about it. The same you should expect in gold loans as well. Thank you, sir. Thank you very much, and all the very best. Thank you. Thank you. We will take our last question from the line of Abhijit Devriwal from Motilal Oswal. Please go ahead. Yeah. Thank you so much for allowing me a follow-up. Jairam, I just wanted to understand. You spoke about Microlapse just now. Earlier in the call, you also alluded to the fact that less than 10 lakh ticket size is not doing well. Less than five lakh ticket size is is even worse at all. So the Microlabs product that we are trying to build, right, how is it that we are looking at it? Which ticket sizes? Which geographies? Kind of looking at because why I ask you is, I mean, in the last one year, there has been so much euphoria around this micro lab product. Right? Everyone wants to be doing micro lab. And given how multi kit a lab has behaved. Right? I'm just trying to understand how are we approaching this product. No. It's a it's a good question, Abhijit. See, we are our average ticket size is 9 lakhs in in in MicroLab. And, yes, it is it is it is not the it's if you just look at the last two quarters of data, you'll be worried about it. And you will think that this is not this is not really a a business that we should be looking at right now. But, you know, as we have mentioned in the past, businesses get built with the long term in mind. We are building this business because we believe it be a really good thing twenty years from now. So we can't get caught up in where we are in the cycle right now, and and we will not be overly optimistic about the business and, like, do thousands of crores of this in the short run. You know, it'll nothing like that is gonna happen. It'll probably reach a total of, like, thousand crores by the end of this financial year or something like that. So it's gonna be a really small thing in the largest scheme of matter, but building businesses is a five, six year game. So we have to start somewhere and at some point of time, we don't get worried about business cycles when we are starting businesses, because we are building for the long run and we hope that we will be going through multiple cycles in the life of that business. So timing is just not our thing. We are building this business. We know that it's a tough market for it right now, same as microfinance. We we know it's a tough market, but we will still build the business because through cycles, we believe that we'll be able to make good money in it in the long run. So we are in the investment phase right now. Got it. And just one more clarification, you spoke about our pilots in gold finance and and we'll disclose when appropriate. The the question here is, I mean, this gold financing that we'll do, will they have dedicated gold loan branches or will they be in the nature of collocated branches? We have been trying both models, Abhijit. Let's see which one is more cost economical. We have not yet figured out which one we want to bet bet on. We will try both. But, you know, right now, the bias is towards doing more gold loan specific branches. Let me be clear. But there is a small chance we might also try some mixed mixed usage models. Got it. This is useful. Thank you so much, sir. Thanks, Abhijit. Thank you. Ladies and gentlemen, we will take this as the last question. I now hand the conference over to mister Jairam Sreedharan for the closing comments. Thank you, everybody. It's been a slightly longer call than usual. I hope that's a good thing. Thanks for participating actively in this call, and have a very good evening. Thank you, sir. On behalf of Piramel Enterprises Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.