Ladies and gentlemen, good day and welcome to the Shriram Finance Limited Q4 FY 2025 earnings conference call. As a reminder, all participant lines will remain in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal the operator by pressing star, then zero on your touchstone telephone. Please note that this conference is being recorded. I now hand the conference over to Mr. Umesh G. Revankar, Executive Vice Chairman, Shriram Finance Limited. Thank you, and over to you, sir. Yeah, thank you. Good evening, friends from India and Asia, and warm welcome to all of you. Greetings to those who have joined the call from the western part of the world. To present our Q4 FY 2025 earnings call today, I have with me Managing Director and CEO, Mr. Chakravarti, Managing Director and CFO, Parag Sharma, S Sunder, Joint Managing Director, Mr. Sanjay Kumar Mundra, our Investor Relations Head. It has been a good fourth quarter for Shriram Finance under the current circumstances. Let me first go through the broad economic indicators that impact our business directly or indirectly. India's GDP growth grew by 6.2% in the October-December quarter. This marks improvement from the previous quarter, which was at 5.6%. The government has revised its forecast for the full fiscal year 2025 to 6.5%. On inflation, the inflation has been declining marginally. In the month of March, it was 3.34%. It has come down from 3.61% in February. India's annual wholesale inflation slowed to 2.05% in March, down from 2.38%, giving a broad indication or indicators for the inflation. Coupled with that, RBI policy has been positive. The RBI slashed the repo rate by 25 basis points to 6% on April 9, 2025, with the Monetary Policy Committee voting unanimously to reduce the policy rate in the bid to support the growth. This is the second time in a row the MPC has cut the repo rate. We believe that this will help in reducing the borrowing cost over the period, and the transmission should happen in three to six months. The rural economy and monsoon, our constituency is mostly in the rural area, and despite the global economic challenge and fluctuation in the industrial growth, India's agricultural sector emerged as a key driver of stability in 2024-2025. According to the advanced estimate of GDP for 2025, agriculture and allied activities recorded a 3.8% growth in real gross value added, a notable improvement from 1.4% in the previous year, 2023-2024. This augurs well for us going forward also because the IMD prediction and Skymet prediction for the monsoon have been above average for this crop year, and hopefully that will help the credit demand from the year and also help us in the credit quality. The GST collection has been growing at 7.3% year- on- year at INR 1.77 lakh crore. Hopefully, we should see revival in government spend on the infrastructure activity. Coming to the overall auto industry and the OEM sales side, commercial vehicle, the MNHCV have grown last year at 3.9% for Q4, which stands at 1.15 lakh units against 1.11 lakh units in Q4 2024. For the full year, it remained flat at 3.74 lakh units against the same units in the last financial year. LCV recorded a flat sale for Q4, which stands at 1.58 lakh units versus the same number in the previous year. For the full year, it declined by 2% to 5.83 lakh units against 5.95 lakh units sold in the year 2023-2024. The total CV sales has declined for the full year by 1.2%, which stands at 9.57 lakh units against 9.6 lakh units sold in 2023-2024. Passenger vehicle has recorded a growth of 2.4%, which stands at 11.63 lakh units against 11.36 lakh units in Q4 2024. For the full year, it increased by 2% to 43.02 lakh units against 42.19 lakh units sold in the previous year. Two-wheeler has recorded a growth of 1.4% for the quarter with 45.68 lakh units in Q4 2025 against 45.04 lakh units sold in the previous quarter. For the full year, it has increased by 9.1% to 196.07 lakh units against 179.74 lakh units sold in the previous year. Three-wheeler has recorded a growth of 7.7% with 1.7 lakh units against 1.66 lakh units, and for the full year, it decreased by 6.7% to 7.41 lakh units against 6.95 lakh units. Tractors recorded a decline in the quarter with 2.33 lakh units against 2.44 lakh units in Q4. For the full year, it declined marginally by 1%, 8.83 lakh units against 8.91 lakh units. Construction equipment recorded a decline of 8.4% with 34,876 units against 38,079 units sold in Q4-2024. For the full year, it remained flat with 1.24 lakh units against 1.23 lakh units sold in the previous year. The Board of Directors have recommended a final dividend of INR 3 per equity share of nominal face value of INR 2 each fully paid up, 150% for the financial year 2024-2025. With this, total dividend for the financial year 2024-2025 will be 9.9% per share of INR 2 each after adjusting for the split. Now, I shall ask my colleague, Mr. Chakravarti, to take you through operational performance. Mr. Chakravarti. Thank you. Good evening, ladies and gentlemen. I welcome you all to our Q4 FY 2025 earnings call, and I hope that you have perused the results and the related investor presentation, which is posted on the website of the stock exchanges. We have registered a disbursement growth of 14.04% year-on-year. Our disbursements for the quarter aggregated to INR 44,847.93 crore versus INR 39,026.86 crore in Q4 FY 2024. Our AUM has registered a growth of 17.05% over Q4 FY 2024 and of 3.43% sequentially. Our AUM stood at INR 263,190.27 crore as against INR 224,861.98 crore a year ago and INR 254,469.69 crore in Q3 FY 2025. Our net interest income for the quarter registered a growth of 13.4% year-on-year. We earned a net interest income of INR 6,051.19 crore in Q4 FY 2025 this year as compared to INR 5,336.06 crore in Q4 FY 2024. Our net interest margin was 8.25% as against 9.02% in Q4 FY 2024 and 8.48% in Q3 FY 2025. The decline in the NIMs is mainly attributed to the excess liquidity maintained on the balance sheet, which will get rectified in the coming quarters. Our profit after tax increased by 9.95% and stands at INR 2,139.39 crore as against INR 1,945.87 crore in the same period of the previous year. Our earnings per share increased by 9.85% and stands at INR 11.38 as against INR 10.36 recorded in the same period of the previous year. Our asset quality, gross Stage 3 in Q4 FY 2025 stood at 4.55% and net Stage 3 at 2.64% as against 5.45% gross and 2.7% net in Q4 FY 2024, and 5.38% gross and 2.68% net in Q3 FY 2025. The reduction in GNPA is primarily on account of technical write-off of INR 2,345.10 crore assets, which were fully provided for earlier. Our credit cost for Q4 FY 2025 stood at 2.07% as against 2.06% for Q4 FY 2024 and 1.85% for Q3 FY 2025. Our cost-to-income ratio was 27.65% in Q4 FY 2025 as against 26.61% recorded in Q4 FY 2024. Our cost-to-income ratio in Q3 FY 2025 was 28.59%. I shall now request our Managing Director and CFO, Mr. Parag Sharma, to inform you about our resource raising activities, after which our Joint Managing Director, Mr. Sunder, will brief you about accounting and regulatory aspects. Thank you. Hello, everyone. On the liability side, total debt outstanding as of March 2025 was INR 2,34,459 crore, which was up from INR 1,85,845 crore as of March 2024. These liabilities are broken into securitization, which is close to 16% at INR 38,000 crore. The domestic capital market at 17%, which is close to INR 40,800 crore. Retail deposit, which is close to 23% at INR 56,000 crore. The term loans from banking institutions stands at 21%, and the external commercial borrowing, which is in bond format at 6.77% and loan at 14%. We also have off-balance sheet of DA transaction of INR 3,200 crore. The DA transaction number was almost similar in the previous year. The cost of liability as of March is 8.95%, which is almost similar to the previous quarter. As of March 2024, it was 9.01%, marginal reduction. What we are seeing is the incremental cost of borrowing is coming down. For the December quarter, it was 8.92, and for the March quarter, it is 8.86. That will translate into some cost reduction. As mentioned earlier, there is sufficient excess liquidity what we are carrying as of March. This was the case as of December also, where we had close to around INR 27,000 crore of liquidity, which is now close to around INR 31,000 crore, largely on account of two large transactions of external commercial borrowing, which one we did in December end, which was $1.28 billion, and $800 million what we did in the March quarter. These are long-term facilities what we have taken from development institution. One and other one is from export credit agency. These transactions happen once in a while, not a regular feature, and that has resulted in excess liquidity. The quantum in rupee terms what we have borrowed in March quarter is INR 7,716 crore. That is the reason why the liquidity continues to be slightly higher. We always guide around three months of liability repayment to be in our liquid assets, but it is now close to around six months. We do expect this will come down in the next two quarters to the earlier level of three months of liability repayment. The overall leverage stands at 4.16, which was as of March 2024 at 3.83. Not marginal increase, but not very significant. The ALM buckets, all buckets continue to be positive with up to six months. We will be surplus of close to around INR 48,000 crore, which was a case in December quarter also. Total fund mobilized for this quarter, March quarter, other than the ECBs, is slightly lower compared to December quarter because of excess liquidity what we are carrying. With this, I hand it over to Sundar for. Thank you, Parag. Okay. As a revert, on the Stage 3 provisioning, we have been carrying a coverage of more than 50% for the past five, six years. The company deliberated on this at length, and we decided to take the write-off cases, which we are having a provision of 100%. The return of amount amounting to INR 2,345 crore was already provided in the books of account. Even after this write-off, there is no impact on the P&L per se. There is a reduction in the gross NPA, gross Stage 3, which was 5.38% in the previous quarter. It has come down to 4.55% in the current quarter. The net Stage 3, which was around 2.68% in the previous quarter, is now currently at 2.64%. This does not have any impact on the P&L, but the gross NPA is brought down correspondingly. As far as the Stage 1 PD is concerned, for the March quarter, it is 8.79% as against the December number of 9.05. Stage 2 PD was 20.69 as on March, as against 20.74 in the December quarter. The LGD was 39.05% as on March, as against 38.75% in the previous quarter. Giving a breakup of the disbursements done product-wise, Mr. Chakravarti, anyway, spoke about the total disbursement during the quarter of INR 44,847 crore. The product-wise breakup is commercial vehicles contributed to INR 16,777 crore, passenger vehicles INR 8,256 crore, construction equipment INR 2,180 crore, farm equipment INR 1,060 crore, MSME INR 7,660 crore, two-wheeler INR 2,919 crore, gold INR 3,105 crore, and personal loan INR 2,890 crore, totaling to INR 44,848 crore. I would request the moderator to open the lines for questions. We will be happy to take the questions. Thank you. Thank you. Thank you. Ladies and gentlemen, if you wish to ask a question, please press star and one on your touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use their handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Chintan Joshi from Autonomous. Please go ahead. Hi. Thank you. Can I start with your provisioning cost this quarter? Slightly higher than consensus was expecting. Could you tell us how do you see the asset quality trends playing out over the next year? What kind of seasonal patterns do you expect next year? If you could give us some comprehensive comments on that asset quality, that would be helpful. I have got one more. Yeah. Thank you. See, basically, Chintan, the last two quarters, you would have seen or you would have heard that Indian economy is slowing down a little and had certain pockets of stress building up. Even though for us, most of our loans are secured asset, we did not have any of such an impact. There were certain geographies, remote areas, where it had built up. That is a temporary one. I believe it is figured out by this time, and we don't really see because the rural economy is doing well. Back to back, if you have observed that even the IMD prediction for this half this year also, the rates are likely to be above normal. We expect the rural stress, whatever building, will get addressed because of a better economic situation in the rural area. Urban areas have slowed down a little because government spend on infrastructure has slowed down and therefore not creating enough opportunity for credit growth in the urban. Overall, we feel that the credit cost of INR 2.07 in the last quarter and the overall for the full year, it is 1.91, is reasonably good and well managed. I don't really see any further increased stress or increased credit cost for the next financial year because the rural is playing out well. We expect the infra spend by government to cut and even the urban credit demand and the overall credit situation to improve further. Okay. If the economic slowdown continues to be, if economic activity continues to be weak, would you think there could be some impact on your operations? Or are you making this assumption that the real rural economy being better will buffer you against any urban slowdown? Yeah. Rural economy will definitely buffer because most of our operations is in the rural. If you look at our branch network, nearly 85% of our branch network is in semi-urban and rural, which has some kind of what do you call linking to the rural and agricultural economy. We are very confident that we should not have broader challenges. Okay. My second question then is on the NII. Could you help us understand how do you take the financial decision between direct assignment and keeping the loans on balance sheet? If I think from an investor point of view, they obviously value the NII stream better than the trading income from direct assignment, even though you show it in the NII line in the management presentations. From an investor perspective, the NII is more valuable. I was wondering if you could kind of this quarter, you did a lot more direct assignment. What was the financial rationale for doing that? If you could help us understand that. Oh, we have not done any large direct assignment transaction. The outstanding I was mentioning as of March 2024 was INR 3,200 crore and there's a similar number as of this March 2025 also. No large transaction of DA done during the year itself. Okay. I mean, this quarter, you have a meaningfully better higher income, INR 1,694 million. I was just wondering how do you take these decisions? What is the thought process behind it? No, the rationale behind doing securitization or direct assignment is nothing to do with the NII. It is more of a mobilization plan that we carry forward. As regards to your question of that INR 1,690, whatever number you mentioned, I would suggest we will provide a reconciliation to you, maybe to Mr. Mundra after this call. Okay. Thank you. Thank you. The next question comes from the line of Raghav Garg from Ambit Capital. Please go ahead. Hi. Good evening and thanks for the opportunity. My first question is on the CV portfolio growth, which has come down to about 10%-11%. In previous few quarters, it was around 13%-14%. What is the reason for that? If you look at the CV sales, you'll see that the sale has been flat year-on-year this year. Overall, expansion of the CV segment was not there this year because infra spend by the government was much lesser than anticipated. That's one reason. Second, there are not enough transactions in the used vehicle market because the number of vehicles available for transactions are less. As the last four years, the sales have been much lower, right from 2019 to 2021. The CV sales have been less. What we anticipate is since the sales have improved from 2022 onwards, the number of used vehicle transactions will go up in the subsequent year, that is 2026, 2027, 2028. Our focus being used vehicle financing, we expect that to grow much faster. Whatever the growth, what you are seeing now is because of the ticket size being higher as the resale values of each of the asset classes have gone up. We expect the growth to come in the subsequent year, next three years. Right now, we feel that 10% growth is quite good considering the lack of transactions or lesser number of transactions as the number of vehicles in the market is much lower. As for FY 2026, would you say that this number will still be around 10%-10.5%, or it could be higher to 12%-13%, or even 14%? We are looking at 12%-15% growth in the next financial year. On the MSME piece, what kind of growth do you expect? That is one piece which has grown pretty strongly for you last few quarters, even this time. Do you expect that this growth rate would continue? It can grow at 30% for FY 2026? No, no, no. We are looking at my guidance would be sorry, this is Chakravarti. I think our guidance on MSME would be between 18-20% of growth for the financial year. See, this 30% growth was mainly due to lower base. Also, we have activated more number of branches post-merger for MSME. It has given a growth of around 30% in the last year. For next financial year, it will be moderated to around 20% +. Sir, last question too. I understand there have been surpluses in this quarter, even though gross Stage 2 number has increased by about 20 basis points. I know you partly answered that this is where the credit cost is likely to peak, but any expectation that the credit cost at this level could remain at this level, or do you think that it can come down substantially? We are working for credit cost to come down because we feel that the rural economy doing well should help us to bring down the credit cost. We always give a guidance that we will try to maintain around 2%. Hopefully, we should be able to bring it below 2% of credit cost. Thank you. Just, sorry, last question. You are still expecting your guidance on growth would still be about 15%, right? 15% or higher for 2022? Yes. Okay. Thanks. Thank you. The next question comes from the line of Zhixuan Gao from Schonfeld. Please go ahead. Thank you for the opportunity. Can I have the total write-off number for the fourth quarter and the third quarter as well, please? Thank you. Including this technical right, also total right of this quarter, the fourth quarter and the third quarter. Hold on for a second. Yeah. We'll just give you the number. Yeah. Right off for the current quarter is INR 501 crore. Sorry, INR 3,162 crore. And the write-back of the provision was INR 1,603 crore. The total provisions in credit cost number is INR 1,559 crore for the current quarter. For the previous quarter, the write-off number was INR 5,001 crore, and the provision was INR 825 crore, totaling to INR 1,326. It took the P&L. Got it. The fourth quarter write-off was INR 3,164 crore, you were saying. Sorry. INR 3,162 crores. INR 3,162 crore. Okay. As you said, the net slippages was increasing quarter on quarter, right? Do you mind sharing with us what segment is largely causing this net slippage increase? Okay. What I would suggest is we'll give this number to Mr. Mundra. He will be in touch with you. We'll provide the number. Which segment is driving the QoQ increase in the slippage? Yeah. We have the number. Mr. Sanjay will send across to you, reach out to you, and then provide the number. Got it. Thank you. Thank you. Thank you. The next question comes from the line of Rajiv Mehta from YES Securities. Please go ahead. Yeah. Hi. Good evening. Thank you for taking my questions. Firstly, what triggered this technical write-off division of INR 24 billion? Is it in some way related to your PD and LGD reset annually, which you do in March quarter? Also, can you help us with the composition of this write-off so that we can look at the growth at the product level in the right context? See, this INR 2,345 crore was nothing to do with the PD and LGD, which we have assessed for the current quarter. It is mainly a decision taken based on the coverage being continued for the last five to six years. Just before the COVID, we started having a coverage of more than 50%. We used to continue that. To achieve that, we used to maintain 100% provision on certain assets. Those assets, we technically wrote off in the current quarter after deliberation at the board. That was the basis and the background for technically writing off those assets. In the investor update itself, the breakup of INR 2,343 crore product-wise has been given. Okay. Okay. Now, see, we've also seen some increase or, say, I would say a material increase in the Stage 2 for passenger vehicles and MSME segments in Q4. You also spoke about the stress peaking now. How do you contain the forward flow of these accounts? Q1 is typically weak in terms of collections and even recoveries of NPA. Hence, can we see an increase in NPA in Q1, or will we be able to contain the flow of these accounts which are mistakes too? Look, I mean, we are very certain that you will not see much of a forward flow into the Q1 of these accounts into Stage 3. Because see, it's the kind of a segment of customers that we deal with, we have been seeing this for a period of the last few years that they keep moving between Stage 1 and Stage 2. I mean, we don't see any stress points as of today. Okay. And just last two things. We're going to Stage 3. The stress point is basically the worry would be if they will slip into Stage 3. That, I'm reassured that the feedback that we got from the ground is that that's not going to happen. Most of this, some of these will flow back and or stay where they are. Okay. This gold loan portfolio has been continuously shrinking. I mean, Q4 had a benefit of much higher gold prices as well. I mean, previous quarter, I think we spoke about higher pledge releases. In Q4, we have seen further shrinkage in the portfolio despite much higher gold prices and tailwinds from it. Can you explain what is happening in the gold loan portfolio? Despite the fact that we're adding distribution there as well? Not only distribution. In fact, the disbursements also were up QoQ, quarter- on- quarter. The redemptions have outpaced the disbursement. That is the reason why you see a drop in the AUM. We think we are on a growing curve in terms of disbursement. This year, you will see an addition to the AUM. Just one last thing on the business. Specific. To be honest with you, there is nothing specific. It's more of a pressure on redemption. Okay. On the business team count number, it has been flattish or it's been growing very slowly in the last two, three quarters. I mean, is it the productivity coming through, or are there some challenges related to attrition? No, no, no. Attrition has been steady. It is the same. It has not increased, or I would say it has also not decreased. It is basically a reason of, yeah, better productivity. Okay. Thank you. Best of luck. Thank you. Thank you. The next question comes from the line of Piran Engineer from CLSA. Please go ahead. Piran, if you can please unmute yourself and ask your question. Audible? Yes. Yes. Okay. Yeah. Thanks for taking my question and congrats on the quarter. Firstly, just a clarification on one of the previous questions. You had mentioned 12%-15% growth for some segment. Was that used commercial vehicles? Like 12%-15% growth outlook. Commercial vehicle. Passenger vehicle, we are growing at 20%, and we are confident of growing at 20%. Commercial vehicle will be between 12%-15%. MSME will be around 20% or 20% +, I can say. Other segments also will be growing at around 20%. The CV will be growing gradually. Sir, my question here then is, if the new CV sales are weak, will that impact used CV sales? Because typically, people exchange their trucks. They will buy a new truck, then they will sell that old truck. If they are not going to buy a new truck, they will not sell their old truck. How does that work? Let's assume new CV sales do not grow. This is just an assumption. How will that play out? Basically, what happens is you are right in the sense the new vehicle sales is also dependent on used vehicle transaction. The number of new vehicles sold between 2019 to 2021 was very low. There was not enough supply of used vehicle in the market. The used vehicle market did not grow in the last year and maybe previous last year, which is expected to grow because supply will come into the market. There is one is replacement of a vehicle. The second one is additional growth because of the economic activity. What I am saying to say is replacement demand continues to remain. When there is a flat sales, replacement demand will come. The extra vehicle that is required for higher economic growth, that will not happen. Okay. Okay. Fair enough. Sir, just on personal loans, are we getting confidence back now to start growing? Because we were degrowing for a few quarters. Now, last one or two quarters, we pushed the pedal on growth. Just wanted to get a sense of what we are seeing outside to get this confidence. No, no. To be honest with you, I think last two calls also, last two investor calls also, I made it very clear that the slowing down is not because we are worried about the quality. It is also because the regulator was expressing concern on the personal loan growth in the industry. We thought it is better to be on the safe side, so we slowed it down. The reason why we are back on the pedal now is we have not seen any reason to be concerned in the last two quarters, number one. Number two, the industry as a whole, I think, looks like that the delinquencies also peaked. Primarily, we did not find any reason to be worried, and we are pushing it back. Adding to that, we are not really looking for personal loan growth from the market or outsourcing. It is existing customers, mostly two-year customers, who have repaid us back. There we are offering the personal loan. Most of the customers who will be giving personal loan will be our existing customers. We are not really exposing ourselves to the market. As Chakravarti rightly said, we had a slowdown because there was a concern, and we had tightened the credit requirement, which we have now feel more comfortable in lending. Understood. Understood. Sir, just last thing, maybe an accounting thing, but our employee cost is down quite meaningfully by about INR 70 crores quarter- on- quarter. Was there a one-off last quarter, or is there some sort of provision reversal this quarter? The last quarter was on the higher side because during the festival scheme for two-wheelers and other retail products, we were running some incentive schemes for the employees, which got accrued and paid in the previous quarter itself. That component is not there in the current quarter. Hence, compared to the previous quarter, it is on the lower side. Okay. Okay. Fair enough. Because usually, we don't see that between 3Q and 4Q. Like if I look at the past few years, so this was like a one-off scheme, is it? Yeah. One-off scheme. Yeah. Got it. Got it. Okay. This is useful. Thank you so much and wish you all the best. Thank you. Thank you. The next question comes from the line of Shweta from Elara Capital l. Please go ahead. Thank you, sir. Just a couple of questions. On the passenger vehicles front, the Stage 2 continues to spike pretty materially. Now that you've mentioned that this movement keeps happening between Stage 2 and Stage 3, in this quarter in particular, we also saw write-off amounts for passenger vehicles slightly on the higher side. Stage 3 improvement could be attributed to that. What could be the reason for continued spike in material spike in passenger vehicles Stage 2? See, basically, most of the passenger vehicles which we are financing has been in the rural segment. Certain rural segment had some impact because of the slowdown in the economy. That too in the central part of India. Now that things are back to the normal, I do not really see any further deterioration. When I say central part of India, it is basically around Chhattisgarh, MP, and some part of Bihar. Now things are much better. I do not really see any scope for increase. Sure. That's helpful. Secondly, sir, how has been the repossession activity panning out for this quarter in particular? See, the repossession has not really increased because what has happened is the customers' repayment has been good in the sense they have been bouncing back and paying. We do not really see a higher repossession anywhere in the industry for that matter. Most of the vehicular segment, the repossession has been at very low. Sure. Sir, just one last clarification on growth. Are we now guiding 15% kind of growth? Because we were pretty confident on 18%. We have also been building a strong liability profile despite putting margins under pressure. I mean, did I get it right? Why growth at 15% only? We have been giving a 15% growth as a medium-term growth. The last two years also, we had given 15%. If the economy is growing well and if it can absorb and there is better demand, it will grow faster. As of now, I feel a 15% growth at current projection of the government, where the government itself is talking about 6.5% GDP growth, and the other economists are talking about 6% GDP growth. 15% is a fair growth we are expecting. If the growth is faster and the credit growth is better, then we'll grow faster. Sure. Sir, just a bookkeeping question. Sorry for this. What are the IRRs for two-wheeler loans? Sorry? IRR? Yeah. IRR is ranging between 16%-22%. Okay. That's very helpful, sir. Best of luck. Thank you. Thank you. The next question comes from the line of Shreepal Doshi from Equirus Securities. Please go ahead. Hi sir. Thank you for giving me the opportunity. My question was on margin size. You highlighted in the earlier comment that because of high liquidity on balance sheet, that impacted our margins. What is the normalized liquidity as a percentage in balance sheet that we want to maintain going ahead? What basis point of impact was there in margin for this quarter because of high liquidity? Yeah. Liquidity, what we used to always tell was that three months of future liabilities to be maintained as liquid assets. The number-wise, it used to be close to around INR 19,000 crore. That number is now around INR 31,000 crore. That is up from INR 19,000 crore-INR 31,000 crore. This is close to around six months of our future liabilities. That has to normalize to three months over a period of next two quarters. Impact on NIMs because of high liquidity. For the current quarter, it will be around 20-25 basis points. Yeah. Basically, going ahead in the next couple of quarters, this 20-25 basis points will flow in, and the benefit of the repo rate cut will also sort of flow in. What is the kind of NIM that we are looking at for exit of first half fiscal year 2026? See, we are guiding for an 8.5-8.6 kind of a NIM. Again, obviously, if I get a rate benefit, some of it I would like to pass it on to my customer also. We would like to peg our NIMs at about 8.6. Got it. Got it, sir. Got it. Very helpful. Thank you, sir. Thank you. Thank you. The next question comes from the line of Nidhesh from Investec. Please go ahead. Thanks, sir. My question is on MSME. Can you give some color on MSME? What percentage of the book is secured? What is the nature of security? What is the average ticket size? What is the average yield that we are earning on that portfolio? The book is secured. The majority of the book is secured. I think it will be between 70%-80% of the book is secured. As far as security is concerned, most of the time, I mean, most of the security would be either a house property or a commercial property, either a shop or something like that. It is basically most of it is immobile asset. Sorry, your follow-up was you wanted to know the IRR? Yes, sir. IRR and the average ticket size of this book. Average ticket size is about INR 7 lakhs. Sorry. It will be between INR 5 lakhs-INR 6 laks. IRRs range anywhere between, again, 16%-24%. Okay. Okay. In this book also, we have seen quite sharp increase in Stage 2 over last quarter. Till Q2, Stage 2 was consistently improving. Suddenly, in last two quarters, we have seen a sharp increase in Stage 2. That too on a base when the book is growing at 40%. On a, let's say, one-year or two-year lag basis, the increase in Stage 2 is quite sharp. Any comment on that and how do we see this pending? If you look at it on a year-on-year basis, I think the gross Stage 2 has gone up by about, what, 98 basis points. Sorry. It is at 7.43 to 7.5, 7 basis points. On a quarter-on-quarter, there will be a fluctuation because, as I was saying, the kind of segment of customers that we work with, it's natural that they move Stage 1, they move between Stage 1 and Stage 2. They keep moving. Sir, have you seen any differences across geographies in terms of Stage 2, Stage 3 movement, or? See, it is basically nothing specific. I mean, it is not specific to a particular geography, but to a certain extent, I would say it's borders of UP, Bihar, MP. The border villages got affected. The border areas got affected. If you compare between the previous quarter, the Stage 2, in fact, even though percentage terms it has gone up, the movement has come from the Stage 3 to Stage 2, not from Stage 1 to Stage 2. Okay. The previous quarter, Stage 3 was 4.75%, which is now 4.08%. Obviously, that differential has moved up to either Stage 2 or Stage 1. Thank you, sir. Thank you. Thank you. The next question comes from the line of Kunal Shah from Citi Group. Please go ahead. Yeah. A couple of questions. Firstly, on the overall post the write-offs, now coverage is almost 43% odd. How we would like to maintain, maybe we would like to maintain it around these levels, or would there be any plan to take it up further? How we would look at it on a statutory basis? A related question is on the tax benefit. Has there been the tax benefit? Has it entirely accrued in the quarter, or will we see tax benefit in the coming quarters? See, basically, we had a provisioning cover of around 51%. That That has come down to 43% because of the numerator impact. If you look at our provisioning prior to COVID, it used to be around 36%-40%. During COVID, we increased the provisioning. We were guided to maintain at 50% because the COVID impact or post-COVID impact was unknown. Now, since the business is as usual and the economy is doing good, we feel that we can manage with the current provisioning coverage. I do not really see any reason to increase the provisioning from here. The overall tax benefit is one time, no? It has already come through in this quarter. Yes. It's come through in this quarter. Okay. Okay. Secondly, when we look at it in terms of the interest expenses over the last couple of quarters, no doubt we indicated that pressure on margins has been due to excess liquidity. Interest expense somehow has been rising quite significantly. Is there any one-off, some cost related to raising of the Forex, which is getting booked over there, or maybe hedging cost, which is getting involved on this Forex borrowing, which is leading to higher interest expenses? Nothing of one-off. As I mentioned, the overall cost of liabilities remains the same. It's only the overall quantum of debt which has gone up because, and that has translated to higher liquidity also. Overall quantum of debt which has gone up, which is leading to higher interest cost. Yeah. No, the only thing was like it's up like 10%-11% quarter on quarter. Last quarter also, it was up like 8%-9%. If you look at the movement on the borrowing side, that has been relatively low. Here we get to know that at least in terms of the overall cost of funds, it's remaining stable at 8.95-8.97, not much at the moment. Still, interest expenses are growing at a pace faster than the borrowing growth. Just wanted to check on that, yeah. That is also another element which is leading to some pressure on margins. Yeah. No, it is only because of higher debt and higher liquidity because of which there is higher debt only because of which there is a higher interest expense. Nothing of. Okay. There There is no interest or maybe no cost of raising the money or any hedging cost or something which is getting booked. Yeah. Okay. This would be 100% hedged, the entire borrowing which has been raised? Correct. Correct. Everything hedged for both principal and interest for the full duration. Okay. Okay. Thank you. Thanks and all the best. Yeah. Thank you. The next question comes from the line of Shailesh Kanani from Centrum Broking. Please go ahead. Good evening and thanks for the opportunity. Other questions have been answered. Just one question. With respect to fee and commission income, there is a quarter-on-quarter spike. Anything of one-off over there? Yeah. We have done certain attainment deals in the past. Okay. Okay. We'll ask Mr. Mundra to connect with you offline and then give this number. Okay. Can you just repeat the disbursement product-wise number? Just a repeat of the same. Yeah. Disbursement income. Yeah. Yeah. Disbursement. Yeah. The segment-wise, you're wanting? Yeah. Yeah. Product-wise. Yeah. Yeah. It is CV is INR 16,777 crore. Passenger vehicles INR 8,256 crore. Construction equipment INR 2,180 crore. Farm equipment INR 1,061 crore. MSME INR 7,660 crore. Two-wheelers INR 2,919 crore. Gold loan INR 3,105 crore. Personal loan INR 2,890 crore. Totaling to INR 44,848 crore. Thanks a lot, sir. Thanks a lot. Yeah. Thank you. Thank you. Thank you. The next question comes from the line of Renish from ICICI. Please go ahead. Yeah. Hi, sir. Just one question again. Sorry for circling back to the credit cost part. As you highlighted that the write-off in this quarter was 100% provided, and there was no final impact. When we look at the credit cost for this quarter, sort of moving up to 2.4%, much higher than our guidance range, obviously, this must be due to higher Stage 2 or higher foreclose. What has actually led to this kind of higher provision in Q4 specifically? What sort of indicators give you that confidence that in Q1, Q2, credit cost will not be elevated and will be able to retrace back to our guidance range? Okay. In the current quarter, okay, even though the impact of the INR 2,345 crore one-time technical write-off, which was anyway provided, there is no impact on the P&L. Having said that, compared to the previous quarter, there has been an increase in the debit to the P&L to the extent of one second. To the extent of INR 233 crore. This primarily has occurred because there has been some increase in the Stage 3, even though when you compare between the previous quarter 5.38% - 4.55%, there is no increase. If you remove this one-time write-off, so had we followed the earlier quarter's same policy, it would have been 5.41%. There has been an increase of three basis points in the Stage 3. Obviously, on that increased portfolio, we need to maintain that provision. In Stage 1 and Stage 2 also, there has been an increase in the asset size, contributing to higher provisioning requirement. This total provision, comparatively, when you compare with the Q3, it is higher, but not materially higher. No, sir. Yeah. Got it. My question is, what has led to an increase in Stage 3? Obviously, there has to be higher foreclose, which has resulted in this kind of a credit cost. Is there any particular product which is going through a stress? If that is the case, then what are the lead indicators which give you that confidence that, okay, Q1, Q2, we'll be able to recover that? No, it is not particular. I think we answered it already. It is not a particular segment. Particular geographies had issues because of the slower economy and also because of the local economy there not really doing well. We had told you that the central part of India, that's border of Madhya Pradesh, Bihar, Chhattisgarh, there has been a little slower growth in the economy. That had impacted the cash flow of the local business people and the transporters. That is the reason, main reason. Now, the rural economy has picked up to some extent because rabi crop has been bumped. We believe that rabi crop cash flow will help the customers to bounce back. This year, again, the monsoon prediction has been above normal. Back-to-back to above normal monsoon should help the rural economy and even the central India's geography to bounce back. We are confident that things will improve. There is nothing very unusual which has happened or nothing really particularly pertaining to certain, what you call, segments. Okay. Okay. Got it. Also, just a clarification. Your answer to Kunal about PCR, is it fair to assume that going ahead will sort of maintain PCR at 40%-42%, and there is sort of no intention at least in near term to increase to 50%? No, no. There is nothing. Because see, we are all doing asset-backed lending, and asset values have remained firm. There is no reason for us to increase it beyond this level. In fact, I was telling you that prior to COVID, most of these assets, we were providing between 30%-40, 36%-40%. Got it. Okay. Hence, we'll be sticking to our credit cost guidance of 2%. Yes. Okay. Thank you so much, sir, and best of luck. Thank you. The next question comes from the line of Adarsh from Enam Asset Management Company. Please go ahead. Hello. Hi, sir. Quick question is on the recoverability. Since these are all fixed assets, these are all proper assets that you would have written off, just understanding the recoverability of the technically written-off accounts. How old are these accounts? Have you been carrying these for many years, or these are very old, which you can't recover, or? No, it is a combination of old as well as maybe around a couple of years old assets also. It is not very old assets. If you see our bad debt recovery quarter on quarter, it has been in the range of INR 100 crore-INR 150 crore in a few quarters. In the current quarter, in fact, it is INR 209 crore. Out of this, there will be definitely some recoverability will definitely happen. If you try to think that things you've written off a lot more, the chances you will recover more is not there, is it? Because ideally, ideally. Yeah. That's what I see. The entire amount may not be recovered, but there will be some component of recovery. Into the system. In the system, it will be getting back to the customers. There will be a legal recovery. All those options are always open, but it's a long-drawn process. Understood. Okay. This is good. Thanks. Thank you. Thank you. The next question comes from the line of Harshit from Premji Invest. Please go ahead. Hello. Hi, sir. Am I audible? Yes. Yes. Yeah. Sir, actually, just to one of the previous questions itself, that if you look at our calculated cost of funds, that number comes at, as I said, 30 basis points higher than last quarter. I get that there might be some difference in the average borrowing. Yeah. That is primarily because of the average. The INR 1.2 billion worth of borrowing, which happened in the last week of December, even though it was if you calculate that closing balances, it reduces the cost of funds for the particular quarter. For the entire quarter, we had to provide for that interest. Hence, if you compare. This owning that if you have borrowed it at the last week, shouldn't it lead to a lower calculated cost of funds? Last week of December. Last week of December. Hence, December, the rate might have been whatever calculation you might have applied, it might have been lower. If you take that into consideration and apply the same thing in the current quarter, you may find that around 20-25 basis points, it is higher than December. In actual, there is no, as Parag was mentioning, the average cost of borrowing on the book as on 31st December and as on 31st March continues to be the same. Not much of a decrease or increase. Sir, you said that incremental cost of funds is 8.96%? No. I said incremental cost of fund is 8.86%. 8.86%. Can you let me know that whatever is the on-book cost of funds? Because I do not think we. 8.95%. It's 8.95% in the current quarter. This number was same in the previous quarter also. Got it. If I, sir, if you can just help us that given the rate cut possibilities, how should we build that deduction in the sense that what% of your book will get repriced relatively? If you can help us with a guidance as to how should we look at the cost-to-fund trajectory. Because roughly 30% of the book will mature. That is, will reprice this year. This will have different components of bank borrowing, the retail borrowing, and also the capital market borrowing. The capital market will adjust much faster, which is close to around 20% of the lender. The bank will take some time. The retail, we have announced reduction, but that is around 20-30 basis points, which will have a benefit over the next two to one and a half years. I would say gradually, we will see the cost coming down. One on the account of the borrowing cost itself. Another is on the account of liquidity coming down. I would say around overall for the year, we will target close to around 15-20 basis points benefit in the cost. Okay. Okay. Got it. Got it. On the sir, I think will there be, if I look at the CV versus non-CV mix, should we assume that a good part of this will be taken away because of the mix change towards non-CV segment? I think it will be similar if IRRs will be similar on both segments for us. Yeah. There may not be a significant mix going forward. It may be more or less in the similar pattern. There may be a shift between maybe one product to the other, but not significant. The rate benefit, some component will be passed on. The NIM was guided by Mr. Chakravarti. It will be in the range for the entire year between 8.5%-8.6%. Okay. Got it. Sure, sir. Thanks a lot. Thank you. The next question we take from the line of Abhishek from HSBC. Please go ahead. Yeah. Hi. Good evening, sir. Most of my questions have been answered. Just one. I think last quarter or a couple of quarters, you've been saying that income trend around 29%-30%, slightly elevated maybe because of the investment you're making. Do you see that coming off in the next, say, year or so, three-four quarters, or it's likely to trend at 30-31, 29, that range? Yeah. It should be hovering around between 27%-28%. From the current level, do you expect some improvement or basically a slowdown in your price? Yeah. Correct. Some improvement will be there. Okay. This is over what time? One year, is it? Yeah. One year period. Understood. Understood. All right. Thank you. The rest of my questions have been answered. All the best. Thank you. Thank you. Thank you. The next question comes from the line of Raghav Garg from Ambit Capital. Please go ahead. Sir, thanks for the opportunity again. Just one last question from my side. I heard you say that repossessions have not happened, right? When I look at Shriram Automall's revenue for the last two quarters, they've been up 12% and 27%, year- over- year to 12% in this quarter, 27% in the third quarter, compared to a decline in the quarters preceding that. This trend also coincides with increasing stress in the CV loan across system. Can you please explain why the Automall revenues are growing if repossessions are not happening? See, Automall, the Shriram's portfolio or Shriram's repossessed asset in Automobile is not really significant. They have ties with all the banks and all the NBFCs. Overall, if you look at the repossession rate, it's still at a lower rate. In Shriram portfolio, it is much lower. Automobile growth is also due to the direct customer putting the vehicle on the platform. Not 100% of the vehicle that is on the platform of the Automobile is not repossessed. It is also direct customer putting their vehicle for exchange of vehicle. They are increasing their presence. As they add more number of Automobile and increase their presence, their business volume will keep growing up. Yeah. That's all from my side. Thanks. Thank you. Ladies and gentlemen, we take that as the last question, and we conclude the question- and- answer session. I now hand the conference over to Mr. Umesh G. Revankar for his closing comments. Thank you for joining the call. As we said in the meeting, this last quarter was not a very high number quarter, but a good quarter for us. We had decent growth and good quality collection. The indication of better economy, especially in the rural economy, due to better monsoon prediction, we are expecting next couple of quarters to be good for us as far as the demand and the trade quality is concerned. Overall, for the next financial year, we expect to grow as the guidance given of 15% with better credit quality. Thank you very much. Meet you again. Thank you. On behalf of Shriram Finance, this concludes the conference. Thank you for joining us, and you may now disconnect your lines.