Ladies and gentlemen, good day and welcome to Satin Creditcare Network Limited Q1 FY 2026 Analyst 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. Mayank Mistry from JM Financial Institutional Securities Limited. Thank you and over to you, sir. Thank you, Palak, and good morning everyone. On behalf of JM Financial, I welcome all participants on the call and thank the management of Satin Creditcare Network Limited for the opportunity to host this call. For today's call, we have with us the members of the management and the leadership team of Satin Creditcare Network. From the management team, we have Dr. HP Singh, Chairman & Managing Director, Mr. Jugal Kataria, Group Controller, and Ms. Aditi Singh, Chief Strategy Officer. I now hand over the call to Dr. HP Singh for his opening remarks. After that, we can open the floor for Q&A. Thank you and over to you, sir. Thank you, Mayank. Good morning everyone. Thank you for joining us to discuss our company's performance during the First Quarter of the financial year 2025-2026. As we hear the news of floods and heavy rainfall in a few regions, I hope you and your family are safe and keeping healthy. I believe you have had the opportunity to go through our quarterly results and investor presentation. They can be referred to on our website or the service pages. I am pleased to share that we have released our sixth annual integrated report for the financial year 2025, and it's available on the official website of our offices. I warmly encourage all stakeholders to explore it. This year's theme, Legacy Leadership, composing the unwritten, offers a comprehensive lens into our organization. It presents an in-depth view of our resilient business model, built over the years, and showcases our integrated performance across financial strategy, non-strategy, and ESG dimensions. I must say, when I look back at the journey we have taken, the paths we have walked, and the mark we have left on countless lives, I feel a deep sense of pride in how far Satin Creditcare Group has come. For us, inclusion has never been just a term; it has been our way of life. Our path has been anything but linear. It has been shaped by vision, curiosity, willingness to question ourselves, and courage to take the road less traveled. In our effort to unlock the potential of India, we have constantly asked ourselves, "What's next? What else is possible?" This mindset has led us to explore new ideas, challenge assumptions, and step into areas where others often hesitate. We gave ourselves the freedom to try to build, to innovate boldly. This willingness to go beyond the conventional is not incidental; it is central to who we are. Each one of our subsegments reflects this mindset. They have emerged through purposeful exploration, designed to solve real problems and address unmet needs. We have created differentiation through diversification. Whether it is stepping into affordable microhousing, which still remains a niche yet essential space, or addressing the needs of the missing middle through our MSME offerings, those who are too large for micro-credit and too small for traditional lending, our approach has been thoughtful and future-facing. We call it creating value through purposeful diversification. Our investment in technology and the knowledge we have built internally gives us the confidence to go a step further than merely supporting our business. We saw the potential to share our capabilities so others too could benefit from practical, locally relevant solutions, which gave birth to Satin Technologies Limited. Now, carrying that same spirit forward comes our newest initiative, Satin’s Growth Alternatives. A women-led AIF Tech Fund, this venture marks another forward-looking move. The fund will focus on enabling access to capital for under-served MSMEs across India, particularly in rural and semi-urban regions, with a strong focus on enterprises led by women and ESG. Some may wonder why pursue such broad diversification, and to that we say, "Why not?" In a nation of over 1.4 billion people, where every community has its own needs, its own dreams, and its own challenges, we believe our solution must be just as diverse. Real inclusion is not one-size-fits-all. It is about recognizing the uniqueness of lives and responding to them with intention, with courage, and with care. That’s what Satin Group stands for. Now, coming to the performance of the parent-listed entity, SCNL, we continue to demonstrate strengths where it matters most: consistency, resilience, and value creation. In an evolving economic landscape, we have not only stayed grounded but also stayed ahead of the curve through the efforts trained. Over the last six years, we have maintained one of the highest average ROA at 2.1% and ROE at 9.1% amongst our listed peers. We have also managed risk prudently. Our average credit cost over the same period stands at 3.3%, the lowest in our listed peer group. Our capital adequacy has remained well above the regulatory requirement, consistently staying about 25% in the last six years, providing us with ample headroom for growth and innovation. None of this would be possible without the people who drive this engine. One of our biggest strengths is the consistency and commitment of our leadership team, with an average tenure of nearly 10 years of our CXOs. In an industry where leadership changes are not uncommon, this level of continuity ensures a clear long-term vision. Coming to the performance of the quarter, we have begun the financial year with firm steps and maintained consistent momentum in both our operational and financial numbers. However, since a significant portion of our portfolio is linked to agriculture and allied sectors, the First Quarter typically experiences a slowdown due to the harvesting cycle and lease pays, which naturally makes this period more challenging in terms of credit demand and operational efficiency. Despite these factors, we are pleased to report our 16th consecutive profitable quarter. This is a great achievement, particularly in a quarter marked by seasonal headwinds, ongoing cyclical pressures, and in sector-reported degrowth of 21%, based on the average of peers who have declared their results. Talking about our operational performance during the quarter, we continue to expand in a calibrated and sustainable manner. On a consolidated basis, in terms of growth, our AUM grew by 6.8% YoY to INR 12,499 crore. On a standalone basis, our Gross Loan portfolio stood at INR 10,956 crore, reflecting a growth of 4.5% on YoY basis. We also maintained consistent disbursement momentum with INR 2,242 crore disbursed on a consolidated basis, up 6% on a year on year basis, and INR 2,065 crore on a standalone basis, marking a growth of 3.4% year on year. Our network continues to expand its reach and strengthen our presence across the country. On a consolidated basis, we now operate through a network of 1,599 branches, reflecting a growth of 10.5%, covering 519 districts across 29 states and union territories. On a standalone basis, the branch count increased by 14.3% to 1,487. I would like to apprise you that our growth strategy continues to focus on deepening our presence in high-performing regions while identifying new markets that align with our financial inclusion goals. Building on this approach, we marked our strategic entry into Mizoram in July 2025, further strengthening our leadership footprint in the Northeast, a region that has consistently demonstrated strong portfolio quality and customer engagement. This extensive geographical presence gives us a strong distribution platform to better serve economically disadvantaged and remote markets, further reinforcing our commitment to financial inclusion. As of the quarter end, our consolidated client base stood at 32.9 lakh. We would now like to draw your attention to slide number 19 in the investor presentation on the asset quality update. Our PAR 90 levels remain stable at 3.7% as of June 2025, in line with March levels. This stability is a strong reflection of our portfolio quality and the continued discipline in our risk management practices. It also underscores the deep client engagement that has long been a strength of our operating model. We did observe a slight uptick in PAR 1, which stood at 5.8% during the quarter. This was expected given this was driven by seasonal factors, particularly the harvesting period, heat wave, and unusually heavy rainfall in some geographies. There was also a base effect at play given the relatively slower disbursement during the quarter. Despite these conditions, we remain well buffered. As of June 2025, we hold on-book provisions of INR 316 crore, which is 3.6% of the on-book portfolio, significantly higher than the RBI requirement of INR 177 crore. In addition to this, we have created a management overlay of INR 8 crore during the quarter. Our provision coverage ratio has improved to 63% compared to 61% in June last year, which again reinforces our focus on prudent provisioning. During the reporting period, we have recovered around INR 8 crore against the return of 2, another marker of the strength in the systems. We also took proactive steps this quarter to further strengthen risk quality. Following the implementation of guardrails 2 from April onward, we tightened our credit evaluation framework, which led to an increase in application rejection rates to 67%, up by approximately 300 basis points since March 2025. As of June 2025, only 6.1% of our clients had exposure to more than 3 microfinance lenders, and just 0.1% had loan exposure of INR 2 lakh or more at the time of disbursement. These indicators clearly reflect the strength of our credit control and our ongoing commitment to prudent lending. Moving to the financials for the First Quarter of the financial year 2025, our revenue grew by 10.3% year on year to INR 642 crore, and by 14.3% on a quarter on quarter basis from INR 562 crore. Net interest margins remain stable and consistent, standing at 13.48% during the reporting quarter, compared to 13.38% in Q1 2025 and 11.81% in Q4 FY 2025. Our operating expense ratio stood at 6.80% on a consolidated basis and 6.68% on a standalone basis. While the ratio remains elevated when compared to the same period last year, largely due to sector-wide challenges, it has shown sequential improvement. This improvement is a result of our ongoing cost rationalization efforts as operational conditions begin to stabilize. Loan loss ratio on a standalone basis stood at 4.84%, slightly elevated due to the inherent seasonality of the period, along with a reduction in AUM on a quarter on quarter basis caused by muted disbursements and write-offs. That said, we are actively managing this through strengthened connections and tighter portfolio monitoring to ensure stability in the coming quarters. On a consolidated basis, return on assets and return on equity stood at 1.50% and 7.06% respectively, while on a standalone basis, they stood at 1.51% and 5.97%. We reported a PAT of INR 45 crore on a consolidated basis, whereas INR 43 crore on a standalone basis for the quarter, reinforcing our ability to maintain profitability even in a stressful quarter, establishing us as an outlier. Coming on the borrowing front, we continue to operate on a strong and well-balanced funding base. The company's financial position remains strong, with CRAR of 26%. During the quarter, the company has adequate liquidity of approximately INR 2,000 crore, coupled with undrawn sanctions of INR 401 crore. This financial strength reinforces our stability and further strengthens stakeholders' confidence in the company. On our targeted sales cost for the financial year 2025-2026, we are targeting a reduction compared to FY 2025, where it stood at 4.6%. While we remain mindful of the evolving environment, we are committed to strengthening both our financial and operational performance through disciplined execution, deeper field engagement, and a continued focus on serving our customers responsibly and sustainably. I'm also pleased to share a significant development during the quarter on the governance front. We further strengthened our board with the induction of two highly distinguished professionals, Mr. Ashok Kumar Sharma, former Executive Director of the Life Insurance Corporation of India, and Mr. Anupam Kunal Gangaher, a seasoned Chartered Accountant as Independent Director. We are certain that their expertise will add meaningful value to the board and support the organization's long-term strategic vision. Our commitment to responsible business also extends beyond compliance. It is deeply rooted in our approach to environmental stewardship. By understanding our carbon footprint, we are driving targeted actions to reduce emissions and contribute to global climate goals. Furthermore, in financial year 2024-2025, we conducted our first formal materiality assessment. This exercise enabled us to identify 21 material topics that highlight the key areas we need to focus on, based on a rigorous four-step evaluation process. Coming on the recognition front, we are proud to share that Satin was ranked 57th amongst India's great places to work for 2025 and was honored as the Microfinance Institution of the Year at the FinVision AI Excellence Award. These recognitions reaffirm our values of innovation and inclusion and reflect the collective efforts of our team and the trust placed in us by our clients. Speaking of the industry, we strongly believe that microfinance is not just a promising sector, it's a critical one. With nearly 70% of India's population living in rural areas and a significant portion still outside the formal credit system, the demand for small-ticket lead-based financing continues to grow. Microfinance fills this gap with purpose and precision. As highlighted in the Avendus Capital report, the sector is currently navigating a transitional phase, but the groundwork being laid today is expected to yield resilient and profitable operations in the coming cycles. We fully resonate with this view and remain confident in this role; the sector will continue to play in driving inclusive and sustainable development across the country. Now, sharing with you financial and operational highlights of our company, starting with the consolidated highlights. We have a customer base of around 3.29 million as of Q1 FY 2026, with presence spanning in 1,599 branches across 519 districts in 29 states and UTs of India. Our top four states contribute to 56% of total AUM as at Q1 FY 2026, and the states are UP, Bihar, Assam, and West Bengal. Standalone highlights: our average ticket size of microfinance lending for the reporting quarter stood at INR 56,000. We have a well-diversified customer base of 3.22 million clients, with 76% rural exposure. Pan-India presence with 1,487 branches. The shareholders' equity stood at INR 2,870 crore as of June 2025. Gross margin percentage as of June 2025 stood at 3.7%. The overall provision coverage ratio increased to 97% in June 2025 versus 91% in June 2024. Total borrowing stood at INR 8,328 crore as of June 2025. Debt to equity ratio as of June 2025 stood at 2.9X. As of June 2025, 97.7% of our districts and less than 1% of AUM. An update on subsidiaries. As a one-stop diversified financial services provider for rural India, our subsidiaries work selectively to expand financial access, leveraging a strong management outreach. We provide affordable housing and retail MSME loans to clients who have completed two or more loan cycles with us and require higher credit support. Satin Housing Finance Limited has now reached an AUM of INR 961 crore. It grew by 25% YoY, having presence across 20 states with 9,432 customers. SHFL has a 100% retail book, GMP of 3.1% as of June 2025. The company has 34 active lenders, including NHB Refinance, CRAR of 48.3%, and gearing of 2.3X. PAT for Q1 FY 2026 stood at INR 57 lakh. Credit rating of A- stable for mix. Satin Finserv Limited, the company's MSME lending arm, has reached an AUM of INR 582 crore. We are running down the business personal book and focusing on building the retail MSME book. MSME on-book portfolio grew by 56%, CRAR of 36.8%, and gearing of 2.4X. PAT stood at INR 1.9 crore. 21 active lenders, including banks and PE funds, etc. Credit rating of A- stable for mix. Lastly, thank you for joining us today and for walking alongside us as we build a stronger, more inclusive, and more purpose-driven future. With this, I would like to open the floor for questions. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may please press star and one on your touch-tone telephone. If you wish to remove yourself from the question queue, you may please press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Shubhranshu Mishra from Philip Capital. Please go ahead. Hi, good morning. Two questions. The first one is, the concentration is in South Coast states, which is UP, Bihar, West Bengal, and Assam. Together, they are based around 56% of the AUM. What is our plan to de-risk from these states, which also have a message to public customers as well as rates? Particularly asset states, and we're trying to significantly prevent risk from clear disruption from our portfolio every two years. Second is the qualifying assets coming up to 50%. How do we think of the OpEx? How do we model for the newer products? Will there be more of PCOR products or more of un-PCOR products? If you can take us through the product roadmap and what are the related OpEx that we're coming up with? Let me answer your first question. If you look at the past seven years, from demonetization, if you look at our percentages of delinquency in UP, Bihar, and the four top states, it has been negligible. For us to comment on re-leveraging ourselves on the state where we are very strong as compared to anyone in the industry, that's probably a myth which we would not like to take. We would like to concentrate on whatever has been steady at about 56% to 50%. This has been steady across the last five, seven years. We would like to concentrate on these states only. There is no reason for us to be disgruntled from there, but we are growing in other states also. Having said that, for us, we've put our ways of how we look at concentration risk across over there. The second point of looking at secured lending products, we are very well aware of the subsidiaries which we have. For us, it doesn't make too much of a difference to look at the qualifying assets portfolio norms now because we already have three subsidiaries which are now working through, two in the financial service space and one in the non-financial services space. We are going ahead by looking at credibility, increasing our portfolio over there. Housing having reached about INR 960 crore. SFL looking at about INR 560 crore. We are well geared to look at our operating performance through our investments and our subsidiaries to bring them over, across to de-leverage ourselves also from un-PCOR to PCOR lending. Okay. Thank you, sir. The next question is from the line of Naman Barjatya from Aum Capital. Please go ahead. Hi, thanks for the opportunity. I just have a few questions to ask. Firstly, if you look at us on a bottom-quarter basis, at a standalone level, the company reported a slight drop in its assets from time-based approximately around 6%. I would like to go ahead. Excuse me, can you repeat? The volume of your voice is not clear. The volume is cracking up. Am I audible? Can you repeat the question, please? Yeah, yeah. Your voice? Okay, okay. Now it's better, right? If you look at, yeah, if you look at a bottom-quarter basis, at a standalone level, the company reported an approximately 6% drop in its active client base. I would just like you to put some color on that to get a better understanding, like, why did it happen and how are you looking at it going? My second question is, yeah, I'll tell you a first question, then you can ask the second question, you know. The First Quarter we had, you know, the equation year on year is always very muted. However, for us, even in the First Quarter, we have beaten our YoY projections. You know, we discussed about, hello, can you hear me? Yes, sir. I think. I think Mayank. Hello. Have you been able to hear? Yes, yes. I think we need to support the second question. I think she will continue. Yeah, of course, sir. Thank you, sir. The next question is from the line of Mayank Mistry from JM Financial Institutional Securities. Please go ahead. Yeah. Hi, sir. My question is largely on the borrowing side. I mean, we have seen some increase in cost of funds during this quarter. Is it like banks have actually increased their rates largely to the MFIs, or what is driving this increase? Mayank, it is not the increase. It is because of the hedge accounting that there is some increase of about INR 27 crore in the top line and INR 20 crore in the finance cost. Otherwise, the marginal cost of borrowing is actually going down. We are close to about 11.1% or so in terms of marginal cost. It is because of the hedge accounting that both the top line and the finance cost is slightly showing as a higher number. If you see the NIM, they are broadly stable, and they are close to 13.5%. Last quarter, you said marginal cost of borrowing is 11.1%. Our blended strength is around 9%. I'm not able to connect. Finance cost, what we have shown in the viewpoint is that finance cost to average AUM. It's not on the borrowing. Okay. My second question is on the increase in average ticket. Hello? Yeah. My question, another question is on the increase in the average ticket size. It has moved up from INR 53,000 to INR 56,000 now. Even on the year on year, it seems like it has been consistently increasing. I mean, even on the ground, we are seeing that a lot of MFI, especially, are trying to find the higher chunk of the two lakh indebtedness, which is allowed for each customer. Are you also aiming for the same, or what is driving this increase in credit size? See, for us, we are looking more at our existing customers, basically, who have a better credit quality and a better score. That is the reason why I think that has jumped up from INR 53,000, which is pretty negligible in terms of if you look at the average EMI, which comes every 14 days. It's probably not very significant for us to really look at from INR 53,000 moving to INR 56,000, because our concentration more is towards our existing good clients to look at portfolio quality in a much better holistic approach, rather than just looking at a new-to-feted or new-to-facet license. Basically, Basically, that's what our approach has been. Okay, sir. This last question, when do we see the book being cleared out of this? I I think there's three customers. It's hardly anything. Mayank, it's just 6%. If you look at the entire industry, we probably have the lowest kind of lowest, lowest listing, you know. I think that's how we've probably configured ourselves. If you look at the composition for us, close to about, you know, if I have the figures, only Satin customers are technically 48.53%. These are the numbers. Satin plus one is 29.66%. Satin plus two is 15.76%. This means Satin plus, Satin plus one, and Satin plus two are close to about 94%. There's hardly just 6%, which is at Satin plus three. This technically would be more of our existing borrowers rather than end users. Who are we not going to see? Yeah. I'll give you a figure that after Guardrails 2 has been imposed, this is not now being done. This is out. This was previous to that. Now it's absolutely zero. It's only Satin plus two. I gave you that number of 0.1% of any client attendance beyond INR 200,000. That is what not we are doing. Basically, there are a lot of filters which we put in the crowd, and that's the reason for our portfolio quality being better than a lot many. Okay, sir. That's all from my side. Thank you and all the best. Thank you. Thank you, sir. The next question is from the line of Naman Barjatya from Aum Capital. Please go ahead. Hi, am I audible? Yes. Yeah, that's why my question was that if you look at the on our quarter to quarter basis, the company reported approximately 6% drop in its active client base. Just wanted to understand why it did happen and how are you looking at it going ahead? I think, you know, you could hear at that point of time. First Quarter, they go in a muted quarter. Naman, can you hear us? Can you hear us, Naman? Yeah, now I'm able to hear you. Am I audible? Yes. As I said, the First Quarter is always a muted quarter, but we have done better compared to YoY. Basically, last year it was about INR 930 crore. This time we just got close to about INR 2,065 crore, so it's been better. Secondly, there's been a write-off of INR 112 crore. That is also one of the key reasons why there's a dip in that. As I told you earlier, the First Quarter is always a muted quarter. Having said that, we are going ahead with our plans of growth. Just for your consumption or for everybody's consumption who's been there on the call, we are now opening close to about 188 branches this quarter to move forward and continue with our growth plan. Thank you for this. Like you mentioned, because of the higher write-off, we saw a drop during the quarter. What exactly led to the higher write-off? Was it because of the power of attendance, like pensioning loans to our customers, or what exactly led to it? Write-off is basically because of a cleaning up of our portfolio quality. Our quarter is one of the lowest write-offs which is happening. Oh, okay. All right. Thank you. This is all I had to ask, and we are back to the clock for the questions. Thank you. Ladies and gentlemen, to ask a question, please press star and one now. Participants who wish to ask questions may please press star and one at this time. The next question is from the line of Prabhu Dayal Sharma, an individual investor. Please go ahead. I'm interested in joining the call a little bit later. May I know the ROE guidance and growth guidance? No growth guidance, no ROA guidance. We are only giving you the present picture of what, you know, where we are right now. I think, you know, where we stand right now, I think it will probably be stable enough. I said, you know, the ROA was about 1.51% and ROE was about 5.6%. Overall consolidated was about 9-odd%. I think, you know, for, you know, and we gave you, I think, a share in the investor presentation. If you look at the six years listed also, we maintained an ROA of 2.1% and ROE of 9.1%. I think, you know, looking forward ahead, this remains stable within that range. Okay. Thank you, Mr. Singh. Thank you. Thank you, sir. Thank you, sir. As there are no further questions from the participants, I now hand the conference over to Aditi Singh for closing comments. Thank you, Palak and Mayank, for helping us organize this call today. On behalf of Satin Creditcare, I thank each one of you for taking out time on a Monday morning and listening to our call. I can understand the questions are limited because our growth is very stable and we are very consistent with our profitability numbers. On that note, we conclude this call. We thank everyone and wish you a great week ahead. Thank you, ma'am. On behalf of Satin Creditcare Network Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.