Q1 2027 Ugro Capital Ltd Earnings Call

August 5, 2026

Speaker #1: Ladies and gentlemen, good day, and welcome to the Q1 FY27 earnings conference call of Ugro Capital Limited. As a reminder, all participant lines will be on listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes.

Operator: Ladies and gentlemen, good day and welcome to the Q1 FY27 earnings consensus call of Ugro Capital Limited. As a reminder, all participant lines will be in the listen only mode. 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 touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Juhi Manwani from Arihant Capital Markets Limited. Thank you and over to you.

Operator: Ladies and gentlemen, good day and welcome to the Q1 fiscal year 2027 earnings consensus call of Ugro Capital Limited. As a reminder, all participant lines will be in the listen only mode. 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 touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Juhi Manwani from Arihant Capital Markets Limited. Thank you and over to you.

Speaker #1: Should you need assistance during this conference call, please signal an operator by pressing star, then zero on your touchtone phone. Please note that this conference is being recorded.

Speaker #1: I now hand the conference over to Ms. Juhy Manvani from Arihant Capital Markets Limited. Thank you, and over to you.

Speaker #2: Hello, and good afternoon to everyone. On behalf of Arihant Capital Markets, I thank you all for joining the Q1 FY27 earnings conference call of Ugro Capital Limited.

Juhi Manwani: Hello, and good afternoon to everyone. On behalf of Arihant Capital Markets, I thank you all for joining into the Q1 FY27 earnings conference call of Ugro Capital Limited. Today, from the management, we have Mr. Shachindra Nath, the Founder and Managing Director. Mr. Anuj Pandey, the Chief Executive Officer. Ms. Shilpa Bhatter, Chief Financial Officer. Mr. Siddharth Rajan, Head of Strategy and Investor Relations. Without any further delay, I'll hand over the call to Mr. Shachindra Nath for his opening remarks. Over to you, sir.

Juhi Manwani: Hello, and good afternoon to everyone. On behalf of Arihant Capital Markets, I thank you all for joining into the Q1 fiscal year 2027 earnings conference call of Ugro Capital Limited. Today, from the management, we have Mr. Shachindra Nath, the Founder and Managing Director. Mr. Anuj Pandey, the Chief Executive Officer. Ms. Shilpa Bhatter, Chief Financial Officer. Mr. Siddharth Rajan, Head of Strategy and Investor Relations. Without any further delay, I'll hand over the call to Mr. Shachindra Nath for his opening remarks. Over to you, sir.

Speaker #2: Today, from the management, we have Mr. Sachendranath, the Founder and Managing Director; Mr. Anuj Pande, the Chief Executive Officer; Ms. Shilpa Bhatter, Chief Financial Officer; and Mr. Rajan, Head of Strategy and Investor Relations. So, without any further delay, I will hand over the call to Mr. Sachendranath for his opening remarks.

Speaker #2: Over to you, sir.

Siddharth Rajan: Thank you, Juhi. This is Siddharth Rajan, Head of Investor Relations. Good evening, everyone, and welcome to Ugro Capital's Q1 FY27 earnings call. On behalf of the management team, thank you for joining us today. Before we begin, a brief note on the basis of comparison. The financial results for Q1 FY27 and Q4 FY26 are presented on a consolidated basis and include results of its subsidiaries, Profectus Capital and Groex Technologies, previously Datasigns Technologies. The corresponding Q1 FY26 numbers were reported on a standalone Ugro Capital basis. All year-on-year comparisons discussed today, therefore, will be read in this context. The financial results and investor presentation are available on the stock exchanges and on the company's website. Certain statements made during today's call may be forward-looking and should be read together with the safe harbor statement contained in the investor presentation.

Siddharth Rajan: Thank you, Juhi. This is Siddharth Rajan, Head of Investor Relations. Good evening, everyone, and welcome to Ugro Capital's Q1 fiscal year 2027 earnings call. On behalf of the management team, thank you for joining us today. Before we begin, a brief note on the basis of comparison. The financial results for Q1 fiscal year 2027 and Q4 fiscal year 2026 are presented on a consolidated basis and include results of its subsidiaries, Profectus Capital and Groex Technologies, previously Datasigns Technologies. The corresponding Q1 fiscal year 2026 numbers were reported on a standalone Ugro Capital basis. All year-on-year comparisons discussed today, therefore, will be read in this context. The financial results and investor presentation are available on the stock exchanges and on the company's website. Certain statements made during today's call may be forward-looking and should be read together with the safe harbor statement contained in the investor presentation.

Speaker #3: Thank you, Juhy. This is Sidharth Rajan, Head of Investor Relations. Good evening, everyone, and welcome to Ugro Capital's Q1 FY27 Earnings Call. On behalf of the management team, thank you for joining us today.

Speaker #3: Before we begin, a brief note on the basis of comparison: the financial results for Q1 FY27 and Q4 FY26 are presented on a consolidated basis and include results of its subsidiaries, Provectors Capital and Growex Technologies, previously Data Science Technologies.

Speaker #3: The corresponding Q1 FY26 numbers were reported on a standalone Ugro Capital basis. All year-on-year comparisons discussed today should therefore be read in this context. The financial results and investor presentation are available on the stock exchanges and on the company's website.

Speaker #3: Certain statements made during today's call may be forward-looking and should be read together with the safe harbor statement contained in this investor presentation. I will now hand the call over to Mr. Sachendranath, Founder and Managing Director.

Siddharth Rajan: I will now hand the call over to Mr. Shachindra Nath, Founder and Managing Director. Over to you.

Speaker #3: Over to you.

Speaker #4: Thank you, Sidharth. Good evening, everyone, and thank you for joining us. I would like to begin by recapitulation of strategic direction of the company and the structural realignment of Ugro's business.

Shachindra Nath: Thank you, Siddharth. Good evening, everyone, and thank you for joining us. I would like to begin by recapitulation of strategic direction of the company and the structural realignment of Ugro's business we had announced on 7 February 2026, why we undertook the business realignment, and how we believe this transition would strengthen earnings, capital generation, and create long-term shareholder value. Over the preceding years and with the acquisition of Profectus Capital and MyShubhLife, now GrowX, we invested significantly in building the institutional infrastructure required to serve India's MSME market, covering a large spectrum of customer segments. Along with our strong presence in prime customer segment, we created pan-India emerging market branch network, partnered with multiple ecosystem players, built a formidable embedded merchant financing platform, well supported by state-of-the-art proprietary data and underwriting capabilities. One of the most encouraging outcomes of this transformation has already become visible.

Speaker #4: We had announced on February 7, 2026, why we undertook the business realignment and how we believe this transition would strengthen earnings, capital generation, and create long-term shareholder value.

Speaker #4: Over the preceding years, and with the acquisition of Provectors Capital and My Shubh Life, now Growex, we invested significantly in building the institutional infrastructure required to serve India's MSME market, covering a large spectrum of customer segments.

Speaker #4: Along with our strong presence in prime customer segment, we created pan-India emerging market branch network, partnered with multiple ecosystem players, built a formidable embedded merchant financing platform, well supported by state-of-the-art proprietary data and underwriting capabilities.

Speaker #4: Overall, one of the most encouraging outcomes of this transformation has already become visible. In July 2026, the combined momentum of our emerging market branch network and Growex platform enabled Ugro to cross ₹1,000 crore of monthly disbursement for the first time in our history.

Shachindra Nath: In July 2026, the combined momentum of our emerging market branch network and GrowX platform enabled Ugro to cross INR 1,000 crore of monthly disbursement for the first time in our history. The milestone reinforces our conviction that the new Ugro, powered by two complementary growth engines, is structurally better positioned to scale substantially. The length and breadth of this infrastructure in the past has helped us to achieve our targeted AUM of INR 15,000 crore plus, and we are now well poised to concentrate capital, management attention, and operating resources on the two business segments where we possess tremendous potential to generate structurally superior economics: Emerging market secured lending, and embedded merchant finance, and discontinue incremental origination in the lower yield, intermediated prime businesses.

Shachindra Nath: In July 2026, the combined momentum of our emerging market branch network and GrowX platform enabled Ugro to cross INR 1,000 crore of monthly disbursement for the first time in our history. The milestone reinforces our conviction that the new Ugro, powered by two complementary growth engines, is structurally better positioned to scale substantially. The length and breadth of this infrastructure in the past has helped us to achieve our targeted AUM of INR 15,000 crore+, and we are now well poised to concentrate capital, management attention, and operating resources on the two business segments where we possess tremendous potential to generate structurally superior economics: Emerging market secured lending, and embedded merchant finance, and discontinue incremental origination in the lower yield, intermediated prime businesses.

Speaker #4: The milestone reinforces our conviction that the new Ugro, powered by two complementary growth engines, will scale substantially. The length and breadth of this infrastructure in the past had helped us to achieve our targeted AUM of ₹15,000 crore plus, and we are now well poised to concentrate capital management attention and operating resources on the two business segments where we possess tremendous potential to generate structurally superior economics.

Speaker #4: Emerging markets, secured lending, and embedded merchant finance, and this continue incremental origination in the lower yield, intermediated prime businesses. This has led to reset of our operating cost base, and we decided to reduce dependence on income from co-lending and direct assignment, and move towards more recurring cash-generative and capital-accretive earning models.

Shachindra Nath: This has led to reset of our operating cost base. We decided to reduce dependence on income from co-lending and direct assignment and move towards more recurring, cash generative, and capital accretive earning models. Q1 FY27 provides the first meaningful evidence that this transition is taking shape. The combined contribution of emerging market and embedded merchant finance increased from 32% of total asset under management in December 2025 to 46% in June 2026. The duo will scale to 85% of our AUM by FY29. The operating cost reset has been substantially completed. Our plan to take out approximately INR 220 crore of annualized operating cost is already in place. At the same time, income from co-lending and direct assignment declined materially. Despite this reduction, the company maintained a resilient level of profit before tax.

Shachindra Nath: This has led to reset of our operating cost base. We decided to reduce dependence on income from co-lending and direct assignment and move towards more recurring, cash generative, and capital accretive earning models. Q1 fiscal year 2027 provides the first meaningful evidence that this transition is taking shape. The combined contribution of emerging market and embedded merchant finance increased from 32% of total asset under management in December 2025 to 46% in June 2026. The duo will scale to 85% of our AUM by fiscal year 2029. The operating cost reset has been substantially completed. Our plan to take out approximately INR 220 crore of annualized operating cost is already in place. At the same time, income from co-lending and direct assignment declined materially. Despite this reduction, the company maintained a resilient level of profit before tax.

Speaker #4: Q1 FY27 provides the first meaningful evidence that this transition is taking shape. The combined contribution of emerging market and embedded merchant finance increased from 32% of total assets under management in December 2025 to 46% in June 2026.

Speaker #4: The DO will scale to 85% of our AUM by FY29. The operating cost reset has been substantially completed. Our plan to take out approximately ₹220 crore of annualized operating cost is already in place.

Speaker #4: At the same time, income from co-lending and direct assignment declined materially. Despite this reduction, the company maintained a resilient level of profit before tax.

Speaker #4: A faster rundown of the Prime Intermediate portfolio has moderated the reported AUM trajectory in the near term, but it is simultaneously accelerating the intended transition towards directly originated, higher-yielding businesses.

Shachindra Nath: A faster rundown of prime intermediate portfolio has moderated the reported AUM trajectory in the near term. It is simultaneously accelerating the intended transition towards directly originated higher-yielding businesses. Capital adequacy remains comfortable, liquidity remains strong. The company continue to have access to diversified long-term institutional funding. Based on this strategy, we are confident that Ugro can achieve its planned growth without incremental equity through FY29. I would also like to address the performance of our share price. We recognize that the share price has not reflected the progress being made in the underlying business. We believe that as growth trajectory of emerging market and embedded merchant finance becomes more established, the portfolio transition progresses and the company demonstrates sustainable improvement in recurring profitability, cash generation, ROA, and ROE, the true value of Ugro franchise should become increasingly evident.

Shachindra Nath: A faster rundown of prime intermediate portfolio has moderated the reported AUM trajectory in the near term. It is simultaneously accelerating the intended transition towards directly originated higher-yielding businesses. Capital adequacy remains comfortable, liquidity remains strong. The company continue to have access to diversified long-term institutional funding. Based on this strategy, we are confident that Ugro can achieve its planned growth without incremental equity through fiscal year 2029. I would also like to address the performance of our share price. We recognize that the share price has not reflected the progress being made in the underlying business. We believe that as growth trajectory of emerging market and embedded merchant finance becomes more established, the portfolio transition progresses and the company demonstrates sustainable improvement in recurring profitability, cash generation, ROA, and ROE, the true value of Ugro franchise should become increasingly evident.

Speaker #4: Capital adequacy remained comfortable, liquidity remained strong, and the company continued to have access to diversified long-term institutional funding. Based on this strategy, we are confident that Ugro can achieve its planned growth without incremental equity through FY29.

Speaker #4: I would also like to address the performance of our share price. We will recognize that the share price has not reflected the progress being made in the underlying business.

Speaker #4: We believe that as the growth trajectory of emerging markets and embedded merchant finance becomes more established, the portfolio transition progresses, and the company demonstrates sustainable improvement in recurring profitability, cash generation, ROA, and ROE, the true value of the Ugro franchise should become increasingly evident.

Speaker #4: The most effective way for management to address the present valuation is through execution. Our focus will remain on disciplined execution of our stated commitments.

Shachindra Nath: The most effective way for management to address the present valuation is through execution. Our focus will remain on disciplined execution of our stated commitments. We are deeply thankful to all shareholders who continue to place their faith in Ugro, in the institution we are building. We remain fully aligned with them. Our objective is to create durable long-term value through consistent operating performance. During the quarter, we also received the requisite stock exchange approval and observation letters for the merger of Profectus Capital into Ugro. The scheme has now been filed with NCLT. Upon effectiveness, the scheme provides for set off of the goodwill arising from the acquisition and reassessment of the carrying value of future spread assets, predominantly our co-lending and direct assignment portfolio, based on the behavioral tenor of the underlying portfolio against reserves. Consequently, our reported net worth may reduce.

Speaker #4: We are deeply thankful to all shareholders who continue to place their faith in Ugro, in the institution we are building. We remain fully aligned with them.

Speaker #4: Our objective is to create durable, long-term value through consistent operating performance. During the quarter, we also received the requisite stock exchange approval and observation letters for the merger of Provectors Capital into Ugro.

Speaker #4: The scheme has now been filed with NCLT. Upon effectiveness, the scheme provides for a set-up of the goodwill arising from the acquisition, and reassessment of the carrying value of future spread assets, predominantly our co-lending and direct assignment portfolio, based on the behavioral tenor of the underlying portfolio against reserves.

Speaker #4: Consequently, our reported net worth may reduce; this would be a non-cash accounting adjustment and would not impact capital adequacy, as these amounts are already deducted while computing the regulatory capital.

Shachindra Nath: This would be a non-cash accounting adjustment. It would not impact capital adequacy as these amounts are already deducted while computing the regulatory capital. At the same time, aligning the spread asset with behavioral repayment pattern should materially reduce future income reversal arising from foreclosure and portfolio run-off, improve earning predictability, and support a stronger ROE. The above is of course subject to NCLT approval. We will provide further details closer to the approval itself. This is an important step towards completing the legal and operational integration of the two entities and simplifying the overall corporate structure. I will now hand over the call to Anuj, who will discuss the operating performance and growth potential of the two origination engines that we have built. Anuj, over to you.

Speaker #4: At the same time, aligning the spread asset with behavioral repayment pattern should materially reduce future income reversal arising from foreclosure and portfolio runoff. Improve earning predictability and support a stronger ROE.

Speaker #4: The above is, of course, subject to NCLT approval, hence we will provide further detail closer to the approval itself. This is an important step towards completing the legal and operational integration of the two entities and simplifying the overall corporate structure.

Speaker #4: I will now hand over the call to Anuj, who will discuss the operating performance and growth potential of the two origination engines that we have built.

Speaker #4: Anuj, over to you.

Speaker #5: Thank you, Seshan. Good evening, everyone. The central operating message for quarter one FY27 is that both our focus engines are gaining momentum. Our emerging market secured lending and our embedded merchant finance via Growex.

Anuj Pandey: Thank you, Sachin. Good evening, everyone. The central operating message for Q1 FY27 is that both our focus engines are gaining momentum. Our emerging market secured lending and our embedded merchant finance via GrowX. Total AUM at the end of the quarter stood at INR 15,013 crore, while net disbursements during the quarter were INR 2,551 crore, representing growth of approximately 59% year-on-year. Together, emerging market lending and embedded merchant finance now have AUM of approximately INR 6,899 crore and represents 46% of our total AUM, compared to 32% in December 2025. With a distribution network of 317 branches spanning 13 states, emerging market lending AUM has increased from INR 3,581 crore in March to INR 3,890 crore in June, representing a quarter-on-quarter growth of approximately 9%. The business disbursed INR 592 crore in Q1. Portfolio yield was approximately 18.5%, while GNPA remained at approximately 2.1%.

Anuj Pandey: Thank you, Sachin. Good evening, everyone. The central operating message for Q1 fiscal year 2027 is that both our focus engines are gaining momentum. Our emerging market secured lending and our embedded merchant finance via GrowX. Total AUM at the end of the quarter stood at INR 15,013 crore, while net disbursements during the quarter were INR 2,551 crore, representing growth of approximately 59% year-on-year. Together, emerging market lending and embedded merchant finance now have AUM of approximately INR 6,899 crore and represents 46% of our total AUM, compared to 32% in December 2025. With a distribution network of 317 branches spanning 13 states, emerging market lending AUM has increased from INR 3,581 crore in March to INR 3,890 crore in June, representing a quarter-on-quarter growth of approximately 9%. The business disbursed INR 592 crore in Q1. Portfolio yield was approximately 18.5%, while GNPA remained at approximately 2.1%.

Speaker #5: Total AUM at the end of the quarter stood at ₹15,013 crores, while net disbursements during the quarter were ₹2,551 crores, representing growth of approximately 59% year on year.

Speaker #5: Together, Emerging Market LAP and Embedded Merchant Finance now have AUM of approximately ₹6,899 crore, and represent 46% of our total AUM compared to 32% in December 2025.

Speaker #5: With the distribution network of 317 branches spanning 13 states, emerging market LAP AUM has increased from ₹3,581 crore in March to ₹3,890 crore in June.

Speaker #5: This represents a quarter-on-quarter growth of approximately 9%. The business disbursed ₹592 crore in the first quarter. Portfolio yield was approximately 18.5%, while GNPA remained at approximately 2.1%.

Speaker #5: With the branch build-out complete, our operating focus has now shifted from branch expansion to productivity, throughput, and operating leverage. Blended monthly productivity across the network increased from approximately ₹48 lakh per branch during FY26 to ₹62 lakh per branch per month in Q1 FY27.

Anuj Pandey: With the branch build-out complete, our operating focus has now shifted from branch expansion to productivity, throughput, and operating leverage. Blended monthly productivity across the network increased from approximately INR 48 lakh per branch during FY26 to INR 62 lakh per branch per month in Q1 FY27. Branches older than 12 months are already producing approximately INR 81 lakh per month. This is within the lower end of our target of INR 80 to 85 lakh. The number of branches in this mature cohort increased from 81 in March to 96 in June. At the same time, approximately 145 branches are less than 6 months old. These branches are still at an early stage of their productivity journey.

Anuj Pandey: With the branch build-out complete, our operating focus has now shifted from branch expansion to productivity, throughput, and operating leverage. Blended monthly productivity across the network increased from approximately INR 48 lakh per branch during fiscal year 2026 to INR 62 lakh per branch per month in Q1 fiscal year 2027. Branches older than 12 months are already producing approximately INR 81 lakh per month. This is within the lower end of our target of INR 80 to 85 lakh. The number of branches in this mature cohort increased from 81 in March to 96 in June. At the same time, approximately 145 branches are less than 6 months old. These branches are still at an early stage of their productivity journey.

Speaker #5: Branches older than 12 months are already producing approximately ₹81 lakh per month. This is within the lower end of our target of ₹80 lakh to ₹85 lakh.

Speaker #5: The number of branches in this mature cohort increased from 81 in March to 96 in June. At the same time, approximately 145 branches are less than six months old.

Speaker #5: These branches are still at an early stage of their productivity journey. As this cohort moves through the six-month and twelve-month vintage milestones, the productivity matrix indicates that the network can become a significantly large engine of secured loan disbursement without a corresponding increase in the number of branches.

Anuj Pandey: As this cohort moves through the 6-month and 12-month vintage milestones, the productivity matrix indicates that a network can become a significantly large engine of secured loan disbursement without a corresponding increase in the number of branches. As branch productivity rises and the product suite expands selectively, we believe that the emerging market network can become one of Ugro's largest and most durable engines of secured lending disbursement and annuity income. Our second origination engine is embedded merchant finance, now operating under the GrowX brand. GrowX AUM increased from INR 2,280 crore in March to INR 3,003 crore in June 2026, representing growth of approximately 32% quarter-on-quarter. The portfolio has grown about 4 times in the last 5 quarters. The business disbursed INR 1,853 crore during this quarter and is now disbursing more than 60,000 loans every month. The platform currently serves approximately 3.4 lakh active customers.

Speaker #5: As branch productivity rises and the product suite expands selectively, we believe that the emerging market network can become one of Ugro's largest and most durable engines of secured lending disbursement and annuity income.

Speaker #5: Our second origination engine is embedded merchant finance, now operating under the Growex brand. Growex AUM increased from ₹2,280 crore in March to ₹3,003 crore in June 2026, representing growth of approximately 32% quarter-on-quarter.

Speaker #5: The portfolio has grown about 4 times in the last 5 quarters. The business disbursed 1,853 crores during this quarter and is now disbursing more than 60,000 loans every month.

Speaker #5: The platform currently serves approximately 3.4 lakh active customers. Portfolio yield was approximately 26%, while GNPA remained at 2.1%. The strategic strength of Growex comes from the combination of two highly complementary capabilities.

Anuj Pandey: Portfolio yield was approximately 26%, while GNPA remained at 2.1%. The strategic strength of GrowX comes from the combination of two highly complementary capabilities. The first is Ugro's data analytics and underwriting platform, including GRO Score, our proprietary risk architecture, and our experience in underwriting MSMEs through Ugro. The second is a technology-embedded customer journey and partner integration capability built by GrowX. By combining Ugro with GrowX technology, automated loan journey, we have created a highly scalable embedded lending business. Accumulation of proprietary customer-level performance data improves our ability to distinguish credit risk more accurately, offer repeat loans more efficiently, increase limits for well-performing customers, price by risk and partner cohort, identify early signs of stress, reducing customer acquisition costs and improving the lifetime economics of our relationship. Our priorities for GrowX are clear.

Speaker #5: The first is Ugro's data analytics and underwriting platform, including Growscore, our proprietary risk architecture, and our experience in underwriting MSMEs through Bureau. The second is the technology-embedded customer journey and partner integration capability built by Growex.

Speaker #5: By combining Ugro's and Growex technology, automated loan journey, and eco, we have created a highly scalable embedded lending business. Accumulation of proprietary customer-level performance data improves our ability to distinguish credit risk more accurately.

Speaker #5: Offer repeat loans more efficiently. Increase limits for well-performing customers. Price by risk and partner cohort, and identify early signs of stress. Reduce customer acquisition costs and improve the lifetime economics of our relationship.

Speaker #5: Our priorities for Growex are clear. We will continue adding customers through the existing partner ecosystem, deepen the share of eligible merchants within each partner platform, improve repeat customer conversion, and increase the lifetime value.

Anuj Pandey: We will continue adding customers through the existing partner ecosystem, deepen the share of eligible merchants within each partner platform, improve repeat customer conversion, and increase the lifetime value. We will also add selected commerce, distribution, and merchant ecosystem where transaction data is available and customer acquisition can remain efficient. GRO Score and partner-specific models will continue to be used to improve risk selection, pricing, and credit limits. While fraud control, early warning systems, and collection performance will be strengthened as performance scales. The opportunity is substantial because the digitally transacting merchant base across the payment and commerce platforms is very large, while formal credit penetration remains limited. Our objective is to make GrowX the preferred lending infrastructure for platforms that want to offer credit to their merchant ecosystems without building a lending balance sheet, underwriting capability, and collection architecture themselves.

Speaker #5: We will also add selected commerce distribution and merchant ecosystem, where transaction data is available and customer acquisition can remain efficient. Growscore and partner-specific models will continue to be used to improve this selection, pricing, and credit limits, while fraud control, early warning systems, and collection performance will be strengthened as performance scales.

Speaker #5: The opportunity is substantial because the digitally transacting merchant base across the payment and commerce platforms is very large, while formal credit penetration remains limited.

Speaker #5: Our objective is to make Growex the preferred lending infrastructure for platforms that want to offer credit to their merchant ecosystems, without building a lending balance sheet, underwriting capability, and collection architecture themselves.

Speaker #5: As we scale, our focus on maintaining robust asset quality remains. The next phase is about converting these operating strengths into sustained AUM growth, recurring income, and higher productivity.

Anuj Pandey: As we scale, our focus on maintaining robust asset quality remains. The next phase is about converting these operating strengths into sustained AUM growth, recurring income, and higher productivity. I will now hand over the call to Shilpa to discuss financial performance, liquidity and liability profile, and capital positions. Shilpa, over to you.

Speaker #5: I will now hand over the call to Shilpa to discuss financial performance, liquidity and liability profile, and capital positions. Shilpa, over to you.

Speaker #1: Thank you, Anuj, and good evening, everyone. Please allow me to take you through the numbers. Interest income was ₹363 crore, up 19% year-over-year, though this was down 13% quarter-over-quarter.

Shilpa Bhatter: Thank you, Anuj, and good evening, everyone. Please allow me to take you through the numbers. Interest income was INR 363 crore, up 19% year over year, though this was down 13% quarter over quarter. The sequential decline is a base and volume effect. On-book interest income is earned only on the on-book portfolio. This quarter, foreclosures of the prime intermediated DSL-led vertical was higher, leading to increased DSA cost. This cost was earlier amortized over the loan tenure, now being recognized upfront on the foreclosure of these loans. Crucially, portfolio yield rose to 18.1%. This was up 63 basis points quarter over quarter. The mix shifted to high-yield emerging markets and GrowX. Co-lending and direct assignment income was INR 75 crore. This was down from INR 155 crore in Q4.

Speaker #1: The sequential decline is a base and volume effect. On-book interest income is earned only on the on-book portfolio. Therefore, this quarter, foreclosures of the prime intermediated DSL at vertical were higher, leading to increased DSA cost.

Speaker #1: This cost was earlier amortized over the loan tenor, now being recognized upfront on the foreclosure of these loans. Crucially, portfolio yield rose to 18.1%.

Speaker #1: Now, this was up 63 bps quarter-over-quarter, as the mix shifted to high-yield emerging markets and Growex. Co-lending and direct assignment income was ₹75 crore; this was down from ₹155 crore in Q4.

Speaker #1: Income from co-lending and direct assignment is now about 14% of total income, as against 24% in Q4 FY26, and this is actually as planned.

Shilpa Bhatter: Income from co-lending and direct assignment is now about 14% of total income, as against 24% in Q4 FY26. This is actually as planned. Other income was INR 97 crore. This largely consists of fee and commission income and net gain on fair value changes. Total income achieved was INR 535 crore, which was up 27% year over year. Finance costs stood at INR 289 crore. Our cost of borrowing was down 41 basis points year over year and stood at 10.14%. This is our seventh consecutive quarterly improvement on our cost of borrowing. Our total debt stood at INR 10,793 crore. I'm happy to inform you that about 66% of borrowings are now beyond three years tenure, and our incremental long-term borrowing also came at about 9.8% in this quarter.

Shilpa Bhatter: Income from co-lending and direct assignment is now about 14% of total income, as against 24% in Q4 fiscal year 2026. This is actually as planned. Other income was INR 97 crore. This largely consists of fee and commission income and net gain on fair value changes. Total income achieved was INR 535 crore, which was up 27% year over year. Finance costs stood at INR 289 crore. Our cost of borrowing was down 41 basis points year over year and stood at 10.14%. This is our seventh consecutive quarterly improvement on our cost of borrowing. Our total debt stood at INR 10,793 crore. I'm happy to inform you that about 66% of borrowings are now beyond three years tenure, and our incremental long-term borrowing also came at about 9.8% in this quarter.

Speaker #1: Other income was ₹97 crore; this largely consists of fee and commission income, and net gain on fair value changes. Total income achieved was ₹535 crore, which was up 27% year-over-year.

Speaker #1: Finance costs stood at ₹289 crore. Our cost of borrowing was down 41 basis points year over year, and stood at 10.14%. This is our seventh consecutive quarterly improvement in our cost of borrowing.

Speaker #1: Our total debt stood at ₹10,793 crores. I'm happy to inform you that about 66% of borrowings are now beyond a three-year tenor, and our incremental long-term borrowing also came at about 9.8% in this quarter.

Speaker #1: In line with our strategic alignment plan, our quarterly operating expenses have now reduced to approximately ₹119 crore from ₹217 crore in Q4 FY26. This represents an annualized run rate near our FY27 guidance of about ₹490 crore of OPEX.

Shilpa Bhatter: In line with our strategic alignment plan, our quarterly operating expenses have now reduced to approximately INR 119 crores from INR 217 crores in Q4 FY2026. This represents an annualized run rate near our FY2027 guidance of about INR 490 crores of OpEx. Total OpEx was down 42% quarter over quarter and 2% year over year. Credit cost was at INR 66 crores. This is contained at 1.7% of average AUM. GNPA on AUM was a healthy 2.6% versus 2.5% at March 2026.

Speaker #1: Total OPEX was down 42% quarter-over-quarter, and 2% year-over-year. Credit cost was at ₹66 crore; this is contained at 1.7% of average AUM.

Speaker #1: GNPA on AUM was a healthy 2.6% versus 2.5% at March '26. As we have flagged before, this is largely a denominator effect. We purchased books carrying 3.1% GNPA, which are now running down, while the incremental focus book sits at 2.1% GNPA.

Shachindra Nath: As we have flagged before, this is largely a denominator effect. The refocused book carrying 3.1% GNPA is fast running down, while incremental focus book sits at 2.1% GNPA. Stage 1 on the book is 92.5% of exposure. Stage 2 is 4.9%, and our provision coverage on Stage 3 is 45%. Net NPA is accordingly at 1.9%. The total collection efficiency was 98% for this quarter. Over the quarter, we also migrated to the new tax regime, resulting in a one-time deferred tax adjustment. Accordingly, investors should evaluate the underlying operating performance primarily through profit before tax and pre-tax ROA. Our pre-tax ROA stood at 2.6%, and the reported tax basis ROA is 2.8%, with the difference driven by the one-time reversal. ROE stood at 9.2%. We closed the quarter with a strong liquidity position of about INR 1,864 crores, providing adequate financial flexibility to support future growth.

Speaker #1: Stage one on the book is 92.5% of exposure. Stage two is 4.9%, and our provision coverage on stage three is 45%. Net NPA is, accordingly, at 1.9%.

Speaker #1: The total collection efficiency was 98% for this quarter. Over the quarter, we also migrated to the new tax regime, resulting in a one-time deferred tax adjustment and, accordingly, investors should evaluate the underlying operating performance primarily through profit before tax and pre-tax ROA.

Speaker #1: Our pre-tax ROA, which stood at 2.6%, and the reported PAC basis ROA is 2.8%, with the difference driven by the one-time reversal. ROE stood at 9.2%.

Speaker #1: We closed the quarter with a strong liquidity position of about ₹1,864 crore, providing adequate financial flexibility to support future growth. Net worth is at ₹2,976 crore, and our leverage stood at 3.6 times.

Shachindra Nath: Net worth is at INR 2,976 crores. Our leverage stood at 3.6 times. Capital adequacy on Ugro's standalone basis is at 21%. Thank you. We will now open up for the question and answers.

Speaker #1: Capital adequacy on UGRO's and the loan book basis is at 21%. Thank you. We will now open up for the question and answer session.

Speaker #2: Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone.

Operator: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while a question queue assembles. The first question is from the line of Amit Mehendale from Ugro Capital. Please go ahead.

Speaker #2: If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question.

Speaker #2: Ladies and gentlemen, we will wait for a moment while a question queue assembles. The first question is from the line of Amit Mehendale from Robo Capital.

Speaker #2: Please go ahead.

Speaker #3: Thank you. Thanks for the opportunity. My first question is on AUMs. What do you expect our closing AUM to be by FY27 and FY28?

Amit Mehendale: Thank you. Thanks for the opportunity. My first question is on AUMs. What do you expect our closing AUM to be by FY27 and FY28? Do you have any ROA? What type of ROA do we expect this year year-end?

Amit Mehendale: Thank you. Thanks for the opportunity. My first question is on AUMs. What do you expect our closing AUM to be by fiscal year 2027 and FY28? Do you have any ROA? What type of ROA do we expect this year year-end?

Speaker #3: And also, do we have any ROE what type of ROE do we expect this year, year end?

Speaker #1: Do you are asking the closing AUM for the current financial year or for next financial year?

Shachindra Nath: You are asking the closing AUM for the current financial year or for next year?

Amit Mehendale: Yeah, FY27 and FY28. Current and next financial year.

Amit Mehendale: Yeah, fiscal year 2027 and FY28. Current and next financial year.

Speaker #3: Yeah, '27 and '28, correct—current and next financial year.

Speaker #1: We expect the AUM to remain flat for the current financial year. Even if you look at the current quarter AUM, you can see that total assets have declined, but on-balance sheet assets have gradually increased a little bit.

Shachindra Nath: We expect the current financial year, the AUM to remain flat. Even if you look at the current quarter AUM, what you have seen, the AUM has declined our total assets, but on-balance sheet assets have gradually increased a little bit because the runoff which we are seeing is largely in our prime lending space on which we have exited. Majority of that asset continue to be off balance sheet and that's why they're declining. Why they don't impact the financials, because anything which is off balance sheet, that is not interest earning because the NPV value of those assets have already been recognized in our balance sheet. We see reversal of income once they run off. Given the growth which we are getting on our GrowX platform and also our second engine, which is our emerging market has now picked up the pace.

Speaker #1: Because the runoff which we are seeing is largely in our prime lending space, which we have exited, the majority of that asset continues to be off balance sheet.

Speaker #1: And that's why they are declining. Why don't they impact the financials? Because anything which is off-balance sheet is not interest-earning, since the NPV value of those assets has already been recognized in our balance sheet.

Speaker #1: We see a reversal of income once they run off. So we expect, but still, given the growth which we are getting on our Growex platform and also our second engine, which is our emerging market, has now picked up the pace, we expect the AUM to remain flat at where we started.

Shachindra Nath: We expect the AUM to remain flat where we have started, but on-balance sheet asset to grow a little bit from the last phase. Next year, as our guidance, we are not guiding on year-on-year basis. We have given a full guidance up to FY29. If you look at FY29, what we have said that our emerging market asset would grow roughly at around 25% CAGR. They are actually right now growing faster than that. We have also guided that our GrowX platform, which is merchant lending, would also grow at 25% CAGR. That is also growing at much faster pace. We have said that our refocused portfolio, which is the prime business, would run down at 20%. That is actually running down at 25%. Based on that we expect sequentially FY27, 28 to see the uptick of the on-balance sheet asset as well as the AUM.

Shachindra Nath: We expect the AUM to remain flat where we have started, but on-balance sheet asset to grow a little bit from the last phase. Next year, as our guidance, we are not guiding on year-on-year basis. We have given a full guidance up to fiscal year 2029. If you look at fiscal year 2029, what we have said that our emerging market asset would grow roughly at around 25% CAGR. They are actually right now growing faster than that. We have also guided that our GrowX platform, which is merchant lending, would also grow at 25% CAGR. That is also growing at much faster pace. We have said that our refocused portfolio, which is the prime business, would run down at 20%. That is actually running down at 25%. Based on that we expect sequentially fiscal year 2027, 28 to see the uptick of the on-balance sheet asset as well as the AUM.

Speaker #1: But on balance sheet asset to grow a little bit from our last base. Next year, as our guidance, we are not guiding a year-on-year basis.

Speaker #1: We have given full guidance up to FY29. If you look at FY29, what we have said is that our emerging market assets would grow roughly at around 25% CAGR; they are actually right now growing faster than that.

Speaker #1: We have also guided that our Growex platform, which is merchant lending, would also grow at a 25% CAGR. That is also growing at a much faster pace.

Speaker #1: And we have said that our defocused portfolio, which is the prime business, would run down at 20%. That is actually running down at 25%.

Speaker #1: So, if you base on that, we expect, sequentially, FY27 and FY28 to see an uptick in the on-balance sheet asset as well as the AUM.

Speaker #1: However, given that this is a transition phase and we cannot actually determine the runoff rate, we can determine the rate of growth for our two assets.

Shachindra Nath: However, given that this is a transition phase and we cannot actually determine the runoff rate. We can determine the rate of the growth for our two balance sheets. It is hard to actually give a predictable number for next one year forward. I think we are very confident that these growth rate and this decline in the portfolio would be achieved very easily.

Speaker #1: It is hard to actually give a predictable number for the next one year forward. But actually, we are very confident that this growth rate and this decline in the portfolio would be achieved very easily.

Speaker #3: Thanks. And talking about FY29, do you have AUM numbers? Because I joined when I started tracking the company.

Amit Mehendale: Great. Talking about FY29, do you have AUM numbers? I'm tracking the com-

Amit Mehendale: Great. Talking about fiscal year 2029, do you have AUM numbers? I'm tracking the com-

Shachindra Nath: Yeah. Sir, the way to calculate the AUM number, we don't want to put a number exactly, is that if you go to the previous slide. Yeah. If you go to slide eight of our presentation. We did this realignment in month of February when our total assets on the emerging market lab business was INR 3,199 crore, and we have said that that would grow to 25% CAGR. Our merchant lending business was INR 1,798 crore. We have said that that would grow to 25%, and the balance portfolio was to run down at 20%. You can take the three number and broadly calculate what we are telling you that both emerging market and embedded financing is growing faster right now. Simultaneously, the rundown of portfolio is also a little faster. I think you can still believe that rough.

Speaker #1: Yeah. So, sir, the way to calculate the AUM number—we don't want to put an exact number—is that if you go to the previous slide... yeah, there.

Speaker #1: So if you go to slide eight of eight of our presentation, we did this realignment in the month of February, when our total assets in the Emerging Market Lab business were ₹3,199 crore, and we have said that would grow at a 25% CAGR.

Speaker #1: Then our merchant lending business was ₹1,798 crore. We said that that would grow by 25%. And the balance portfolio was to run down at 20%.

Speaker #1: So you can take the three numbers and broadly calculate what we are telling you: that both emerging market and embedded financing are growing faster right now, but simultaneously, the rundown of the portfolio is also a little faster.

Speaker #1: So I think so you can still believe that rough if you calculate all of that, I think so we should be at around in terms of percentage term would be around 15%.

Shachindra Nath: If you calculate all of that, I think we should be at around Yeah, in terms of percentage term would be around 15%.

Amit Mehendale: Around 15.

Speaker #1: Around 15% growth.

Shachindra Nath: Around 15% growth.

Speaker #2: Sorry to interrupt. The line for the participant has dropped. We'll move on to the next participant. The next question is from Neil Advani from Pico Capital.

Operator: Sorry to interrupt. The line for the participant has dropped. We move on to the next participant. The next question is from the line of Neel Advani from PICO Capital. Please go ahead.

Speaker #2: Please go ahead.

Speaker #3: Hi, sir. Am I audible?

Neel Advani: Hi, sir. Am I audible?

Speaker #1: You are audible, Neil. Please go ahead.

Shachindra Nath: You are audible, Neel. Please go ahead.

Speaker #3: Thank you, sir, and congratulations on the OPEX delivery. Sir, my first question is: with respect to the sequential interest income decline, how much of this is due to reversal on the old book, and how much is due to, maybe, say, the mid-quarter timing of the disbursements?

Neel Advani: Yeah. Sir, congratulations on the OpEx delivery. My first question is with respect to the sequential interest income decline. Sir, how much of this is reversal on the book, old book, and how much of this is maybe say the mid-quarter timing of the disbursements? Can you bifurcate the two?

Speaker #3: Can you bifurcate the two?

Speaker #1: Sir, we can get back to you, Neil, on the exact numbers specifically. See, look,

Shachindra Nath: We can get back to you, Neel, on the exact numbers specifically.

Shilpa Bhatter: No, you can actually see. Look at the numbers.

Neel Advani: Just to maybe finish questions simpler, when do you see the interest income draft and then turn sequentially positive? As in which quarter would we see interest income going back to the Q4 levels and then eventually turn positive?

Speaker #3: I mean, could you make this question simpler? I mean, when do you see the interest income graph turning sequentially positive? As in, in which quarter would we see interest income going back to Q4 levels, and then eventually turning positive?

Speaker #1: Yes, okay. Let me explain a little bit about how the numbers are designed, right? So, the book is running off. When the book runs off, obviously a certain portion of that runoff book is on our balance sheet, and a certain portion of our book is off balance sheet.

Shachindra Nath: Yeah. Okay. Let me explain a little bit how the numbers are designed. The book is running off. When the book run off, obviously certain portion of that run-off book is on our balance sheet, and certain portion of our book is off balance sheet. When the book which runs off balance sheet, that comes as a reversal of income. The line, if you look at slide 15, income on co-lending and direct assignment, that also embeds reversal of that income. Suppose we added INR 100 of total book off balance sheet, and of that INR 100 we have recognized Now, that book runs off faster than its contracted period of income. That impacts income on co-lending and direct assignment. The interest income is purely the reversal of, not reversal or is the reduction of the on-balance sheet asset. Reduction of roughly around INR

Speaker #1: When the book, which runs off balance sheet, is settled, that comes as a reversal of income. So, if you look at slide 15, the line 'income on co-lending and direct assignment' also includes the reversal of that income.

Speaker #1: So suppose we had a 100 rupees of total book off balance sheet, and that 100 rupees we have recognized now that book runs off faster than their contracted period, income, but that impact income on co-lending and direct assignment, the interest income is purely the reversal of not reversal or is a reduction of the on balance sheet asset.

Speaker #1: The reduction of roughly around ₹30 crore is predominantly on account of the reduced AUM. With respect to your question on when we would be at the same level of interest income, this should be the base, right?

Shachindra Nath: INR 30 crore is on account of predominantly the reduced AUM.

Neel Advani: Yes.

Shachindra Nath: With respect to your question on when we would be at the same level of interest income.

Shachindra Nath: With respect to your question on when we would be at the same level of interest income. This should be the base, right? The current. I think so, Neel, you should look at this, what is current quarter interest income is the base. With every quarter-on-quarter, you'll see this increasing because our on-balance sheet assets are now growing. That's why in terms of the, there is an ROE guidance. Three things. One, OPEX will now be flat.

Neel Advani: Not in this stage.

Shachindra Nath: This should be the base, right? The current.

Speaker #1: So I think so Neil, you should look at this at what is current quarter interest income is the base and with every quarter on quarter, you'll see this increasing because our on balance sheet assets are now growing.

Neel Advani: Yeah.

Shachindra Nath: I think so, Neel, you should look at this, what is current quarter interest income is the base. With every quarter-on-quarter, you'll see this increasing because our on-balance sheet assets are now growing. That's why in terms of the, there is an ROE guidance. Three things. One, OPEX will now be flat. All the OPEX actions is now fully played out. What you are seeing the Q1 OPEX is what would be broadly the Q4 OPEX. Obviously, the inflation-related increase would come. OPEX remaining flat. Interest income would continue to grow from here. The income on co-lending for the current transition year would also remain in the same range. That's why we think so that incremental, there is a bottom line better delivery, which will keep happening. I hope this is clear to you.

Speaker #1: But in terms— that's why, in terms of the— there is an ROA guidance. So, for three things: one, OPEX will now be flat. I think all the OPEX actions are now fully played out.

Shachindra Nath: All the OPEX actions is now fully played out. What you are seeing the Q1 OPEX is what would be broadly the Q4 OPEX. Obviously, the inflation-related increase would come. OPEX remaining flat. Interest income would continue to grow from here. The income on co-lending for the current transition year would also remain in the same range. That's why we think so that incremental, there is a bottom line better delivery, which will keep happening. I hope this is clear to you.

Speaker #1: And what you're seeing is that the Q1 OPEX will be broadly similar to the Q4 OPEX. Obviously, the inflation-related increase will come.

Speaker #1: So, OPEX remaining flat, interest income would continue to grow from here. The income on co-lending for the current transition year would also remain in the same range.

Speaker #1: And that's why we think that, incrementally, there is a bottom-line better delivery which will keep happening. I hope it is clear to you.

Speaker #3: Yes, sir. So just to clarify, the DA income for this quarter would be the run rate for this year?

Neel Advani: Yes, sir. Just to clarify, the DA income this quarter would be the run rate for the year?

Shachindra Nath: Yes, broadly, that would be the run rate, but it is also a function of how much foreclosures happen on our off-book. Sometimes if it is a little higher, this is actually the income which is there on this slide is the net income which we book. The total gain minus the total reversal due to foreclosure. In case foreclosures are little higher, then this might be little lesser. If they are little lesser, then this might be little higher. Broadly, this is the benchmark. As we have guided after February results, that our objective is, if you look at Q4 results, that percentage of income from co-lending and direct assignment was roughly around 24%. We would like this to be 4% in end of the next 12 quarters or now 11 quarters.

Speaker #1: Yes, broadly, that would be the run rate, but it is also a function of how many foreclosures happen on our off-book.

Speaker #1: So sometimes if it is a little higher, then there is a—so this is actually the income which is there on this slide; it is the net income which we book.

Neel Advani: Yes.

Speaker #1: So, the total gain minus the total reversal is due to foreclosure. So, in case foreclosure is a little higher, then this might be a little lesser.

Shachindra Nath: The total gain minus the total reversal due to foreclosure. In case foreclosures are little higher, then this might be little lesser. If they are little lesser, then this might be little higher. Broadly, this is the benchmark.

Speaker #1: If they are a little lesser, then this might be a little higher. But broadly, this is the benchmark. Yeah. And as we had guided in February, after the February results, our objective is — if you look at Q4 results, the percentage of income from co-lending and direct assignment was roughly around 24%.

Neel Advani: Yeah.

Shachindra Nath: As we have guided after February results, that our objective is, if you look at Q4 results, that percentage of income from co-lending and direct assignment was roughly around 24%. We would like this to be 4% in end of the next 12 quarters or now 11 quarters.

Speaker #1: And we would like this to be 4% by the end of the next 12 quarters—now 11 quarters.

Speaker #3: Understood. And sir, with respect to the ROA that you're projecting, I mean, if I normalize this to the 25% rate, our ROA would roughly be at 1.9% for this quarter.

Neel Advani: Sir, with respect to the ROE that we are projecting, if I normalize this to the 25% rate, our ROE would roughly be at 1.9% for this quarter. When we are projecting 3% to 3.5%, how do we then see that trajectory in the sense that, are we projecting it on the reported one or on the normalized one?

Speaker #3: So, when we are projecting 3 to 3.5%, I mean, how do we then see that trajectory? In the sense that, are we projecting it on the reported one or on the normalized one?

Speaker #1: So, you are normalizing the ROA for what?

Shachindra Nath: You are normalizing the ROE for what?

Speaker #3: For the tax rate that we got—so, I mean, normalizing it for a 25% rate, and then Rs 46 crore to PAT, 10% of ROA.

Neel Advani: For the tax rate that we got. I'm normalizing it for 25% rate, and then INR 46 crore of tax would percent of ROE.

Speaker #1: Okay, so you're saying that—okay, you're right. So, the ROA for the current quarter is because of the reversal of the tax, you are saying, right?

Shachindra Nath: Okay. You're right. ROE for the current quarter is because of the reversal of the tax, you are saying, right? If we adjust for that, the ROE would be how much?

Speaker #1: So, the reversal—so if we adjust for that, the ROA would be how much?

Speaker #3: 1.1.

Neel Advani: 2.1.

Speaker #1: Yeah. So obviously, that's the base, and it has to increase from here. Yeah.

Shachindra Nath: 2.1. Yeah. Obviously that's the base, and it has to increase from here.

Speaker #3: Yeah. But I mean, the R that we're projecting at 3 and a half percent, this is from the 2.1.

Neel Advani: Yeah. For the year that you are projecting at 3% and 3.5%, this is from the 2.1, right?

Speaker #1: Oh yes, of course. Of course, yes. You're absolutely right.

Shachindra Nath: Yes, of course. You are absolutely right.

Speaker #3: Okay. And sir, one question on the—I think in the last quarter, we were processing at 2%.

Neel Advani: Okay. Sir, one question on the, I think the last quarter we had crossed NPAs were at 2%. The move is to bring-

Shachindra Nath: Neel, sorry, your voice is breaking up. Can you be little closer to the mic or the speaker?

Speaker #1: Neil, sorry, your voice is breaking up. Can you be a little closer to the mic or the speaker?

Speaker #3: Is it better now?

Neel Advani: Is it better now?

Speaker #1: Yeah, a little better. Yes, go ahead.

Shachindra Nath: A little better. Yes, correct.

Speaker #3: Yes, sir. So, my second question was on the lab book.

Anuj Pandey: Yes, sir. My second question was on the lab book.

Neel Advani: Yes, sir. My second question was on the lab book.

Speaker #1: On the Emerging Market Lab book, yeah. What is the question?

Shachindra Nath: On the emerging market lab book.

Neel Advani: Yeah.

Shachindra Nath: What is the question?

Speaker #3: Emerging market lab: So, the emerging market lab booked across 24 from 1.2% to 2.1% from March to June. And even on the embedded financing, it's 1.7% to 2.1%.

Neel Advani: Emerging market lab. The emerging market lab book took across 20 from 1.2% to 2.1% from March to June. Even on the embedded financing, it's moved 1.7% to 2.1%. I'm just trying to understand, we are scheduled for 3.5% and 4% on a steady state. Are we seeing that it is running ahead of our internal model in that sense? This is what the projection is at par, in that sense, to that 3.5% number that we were projecting. The projection is well within what we had anticipated as the book seasoned. In the emerging market lab business, the peak delinquencies are projected to be around 3.5%, 4%, when the average month-on-books starts touching 18 months. We are today at around 15 months. As we move forward, it will keep inching upwards and then get steady around 3%, 3.5%.

Speaker #3: So, I'm just trying to understand. I mean, we are scheduled for 3.5% and 4% on a steady state, but are we seeing that it is running ahead of our internal model in that sense?

Speaker #3: Or this is what we had. I mean, the projection is that path, in that sense, to that 3.5 number that we were projecting.

Speaker #1: So the projection is well within what we had anticipated. As the book seasons, so in the emerging market lab business, the peak delinquencies are projected to be around 3 and a half, 4%.

Anuj Pandey: The projection is well within what we had anticipated as the book seasoned. In the emerging market lab business, the peak delinquencies are projected to be around 3.5%, 4%, when the average month-on-books starts touching 18 months. We are today at around 15 months. As we move forward, it will keep inching upwards and then get steady around 3%, 3.5%. Same with embedded finance. While embedded finance already has kind of peaked, we expect it to not go beyond 3%, because lot of cohorts, the full life cycle we have seen, because the average tenure of these loans are around between 12 to 13 months. Now we have many cohorts which have completed that. We are quite confident that it will hold. It should not go beyond 3%, while we had projected higher.

Speaker #1: When the average month-on-books starts touching or crossing 18 months—so, we are today at around 15 months—as we move forward, it will keep inching upwards.

Speaker #1: And then get steady around 3, 3 and a half, 3 and a half percent. Same with embedded finance. While embedded finance already has kind of peaked, we expect it to not go beyond 3% because a lot of cohorts, the full life cycle we have seen, because the average tenure of these loans is around between 12 to 13 months.

Anuj Pandey: Same with embedded finance. While embedded finance already has kind of peaked, we expect it to not go beyond 3%, because lot of cohorts, the full life cycle we have seen, because the average tenure of these loans are around between 12 to 13 months. Now we have many cohorts which have completed that. We are quite confident that it will hold. It should not go beyond 3%, while we had projected higher.

Speaker #1: So now we have many cohorts which have completed that, so we are quite confident that it will hold. It should not go beyond 3.

Speaker #1: While we had projected higher. Yeah. While also adding to what Anu said, Neil, on the emerging market small ticket lab, the cohorts which are actually which is earlier cohort, which is more than 18, 19, 20 odd months, we have seen the peak delinquency there to touch around 3 odd percent.

Shachindra Nath: Yeah. While also adding to what Anuj said, on the emerging markets small ticket lab, the cohorts which are earlier cohort, which is more than 18, 19, 20 odd months, we have seen the peak delinquency there to touch around 3 odd percent. That's why we saying that this is 3%, 3.5%. As you know, it's a growth business because right now more than 50% of our base branches are still yet to reach their full disbursement delivery. Obviously, once you're growing the book, the GNPA per se get hidden in terms of the growth which you are getting from the business. We just wanted to be very conservative when we're presenting to the market and what should be the peak delinquency.

Speaker #1: And that's why we say saying that there should be 3%, 3 and a half percent. But as you know, it's a growth growth business because right now more than 50% of our base branches are still yet to reach their full disbursement delivery.

Neel Advani: Yeah.

Shachindra Nath: That's why we saying that this is 3%, 3.5%. As you know, it's a growth business because right now more than 50% of our base branches are still yet to reach their full disbursement delivery. Obviously, once you're growing the book, the GNPA per se get hidden in terms of the growth which you are getting from the business. We just wanted to be very conservative when we're presenting to the market and what should be the peak delinquency. The delinquency that we have reiterated many times, that when we were running a combined model of prime business, the difference between a prime business to an EM lab business, there the credit cost and the GNPA, their dilution is not too much. Even if you have a 2.5% of GNPA, the credit cost would be roughly around 1% in total in a secured business.

Speaker #1: So obviously, once you're growing the book, the GNPA per se gets hidden in terms of the growth which you are getting from the business.

Speaker #1: But we just wanted to be very conservative when we were presenting to the market on what should be the peak delinquency. And the delinquency—and that we have reiterated many times—is that, when we were running a combined model of prime business, the difference between the prime business and an EM lab business, there, the credit cost and the GNPA, their gradation is not too much.

Shachindra Nath: The delinquency that we have reiterated many times, that when we were running a combined model of prime business, the difference between a prime business to an EM lab business, there the credit cost and the GNPA, their dilution is not too much. Even if you have a 2.5% of GNPA, the credit cost would be roughly around 1% in total in a secured business. In EM lab, while GNPA may go all the way up 3.5%, it does not mean the credit cost also actually goes that way. Finally, there is a recovery which happens because it's still a secured asset.

Speaker #1: So even if you have a 2 and a half percent of GNPA, the credit cost would be roughly around 1% in total in a secured business.

Speaker #1: In emerging market lab, while GNPA may go all the way up to 3.5%, it does not mean the credit cost also actually goes up by that much.

Shachindra Nath: In EM lab, while GNPA may go all the way up 3.5%, it does not mean the credit cost also actually goes that way. Finally, there is a recovery which happens because it's still a secured asset. Our secured asset, our micro lab business is not that 3 lakh, 5 lakh ticket size. We are still between INR 7.5 lakh and INR 50 lakh rupees. Average ticket size of INR 17 lakh. Very formal customer. Normally, at a lag effect of around 18 months, you get full recovery of the portfolio.

Speaker #1: But finally, there is a recovery which happens because it’s still a secured asset. And our secured asset, our Micro LAP business, is not that ₹3 lakh, ₹5 lakh ticket size.

Shachindra Nath: Our secured asset, our micro lab business is not that 3 lakh, 5 lakh ticket size. We are still between INR 7.5 lakh and INR 50 lakh rupees. Average ticket size of INR 17 lakh. Very formal customer. Normally, at a lag effect of around 18 months, you get full recovery of the portfolio.

Speaker #1: We are still between ₹7.5 lakh and ₹50 lakh, with an average ticket size of ₹17 lakh. So, a very formal customer. And normally, with a lag effect of around 18 months, you get a full recovery of the portfolio.

Speaker #3: Understood. And so we are holding the for the EM lab, we are holding the 1 and a half to 2% credit cost guidance that we've given.

Neel Advani: Understood. For the EM lab, we are holding the 1.5% to 2% credit cost guidance that we're giving.

Speaker #1: Yes. Yes. That's true.

Shachindra Nath: Yes. That's true.

Speaker #3: Yes, and sir, one last question on the merger. I mean, what is the timeline from here with respect to the NCLT? I mean, what are we expecting in terms of number of months?

Neel Advani: Sir, one last question on the merger. What is the timeline from here with respect to the NCLT and what are we expecting in terms of number of months? Just to confirm, post the merger, we would come back, our capital adequacy would come to 27% to 28%, right?

Speaker #3: And just to confirm, post the merger, we would come back, our capital-added income for 27, 28 percent. Right?

Speaker #1: So, first, the timeline of the merger—this is on the timeline of the merger—we expect, on the outer side, that the merger will be completed by the month of February.

Shachindra Nath: First, the timeline of the merger. On the timeline of the merger, on the outer side, we expect the merger to get completed by the month of Feb. Some of this is not completely in our hand, but we'll try to achieve this by end of Q3 itself, if we are lucky. Otherwise, prior to Q4, it would definitely get completed. With respect to the capital adequacy, the capital adequacy which we are now projecting is on a merged basis or standalone?

Speaker #1: We are, and some of this is not completely in our hands, but we'll try to achieve this by the end of the third quarter itself.

Speaker #1: If we are lucky. But otherwise, prior to the fourth quarter, it would definitely get completed. With respect to the capital adequacy, the capital adequacy which we are now projecting is on a merged basis or standalone?

Speaker #1: This is standalone—21% standalone. What we did.

Shilpa Bhatter: This is standalone, 21% is standalone.

Shilpa Bhatter: Yeah. Standalone. What we got.

Shilpa Bhatter: On a merged basis, we should be about 23%, 24%.

Speaker #2: On a merged basis, we should be about 23-24%.

Neel Advani: Yeah. That would give us room of another INR 1,500 odd crores of AUM growth. What beyond that?

Speaker #1: Yeah.

Speaker #3: Okay. So that would give us room for another 1,500-odd crores of AUM growth. And what beyond that then?

Speaker #1: No, that's actually not necessarily only 1,500-odd crores. So look, there are multiple levers, right? One, the profitability which you are seeing now in EUR is all cash.

Shachindra Nath: No. Actually, not necessarily only INR 1,500 odd crores. There are multiple levers. One, the profitability which you are seeing now in Ugro is all cash. Predominantly it would be cash profitability in FY2027, 2028. Our network is accreting from there. What Shilpa just told you is the network at the time of the merger. After that, there'll be a capital accretion is happening in the balance sheet itself. That gives the growth potential. Second also is that, we still have a lever of to continue doing off-balance sheet. In fact, on our GrowX platform, which is growing fast, because the platform we have now started onboarding other lenders as well. We have SIDBI as a co-lending partner there and other banks are also coming, also large NBFCs are also partnering there.

Speaker #1: Predominantly, it would be cash profitability in FY27 and FY28, so our net worth is accreting from there. So what Shilpa just told you is the net worth at the time of the merger.

Speaker #1: But after that, there'll be the capital accretion is happening in the balance sheet in itself. That gives the growth potential. Second, also is that in we still have a lever of the continue doing off balance sheet.

Speaker #1: In fact, on our Grow X platform, which is growing fast, we—because of the platform—we have now started onboarding other lenders as well. So, we have SIDBI as a co-lending partner there.

Speaker #1: And a few other banks are also coming, and also large NBFCs are partnering there. So, with the AUM guidance which we gave in the last question, we would be able to achieve it without an incremental capital raise, and we feel very confident about it.

Shachindra Nath: What the AUM guidance which we gave in the last question, we would be able to achieve without incremental capital raise. We feel very confident about it.

Speaker #3: Okay, thank you for taking my question. All the best.

Neel Advani: Thank you for taking my questions. All the best.

Speaker #1: Thank you.

Shachindra Nath: Thank you.

Speaker #4: Thank you. The next question is from the line of Rishi, an individual investor. Please go ahead.

Operator: Thank you. The next question is from the line of Rishi, an individual investor. Please go ahead.

Speaker #3: Yes, hi. Good evening. Can you hear me?

[Company Representative]: Yes. Hi, good evening. Can you hear me?

[Shareholder] (Private Investor): Yes. Hi, good evening. Can you hear me?

Speaker #1: Hi, good evening, Rishi. Yes, we can hear you.

Shachindra Nath: Hi. Good evening, Rishi. Yes, we can hear you.

Speaker #3: Yes, yes. So, I have a couple of questions. One is on the DSA-led business that you're trying to wean off. Is there a possibility that the management is considering selling it out as one whole business chunk?

[Company Representative]: Yes. I have a couple of questions. One is on the BSA-led business that you're trying to wean off. Is there a possibility that the management is considering selling it out as one whole business chunk, like how we bought Profectus? Is this something that is in the charts? Are you looking at selling that whole business one shot so that all these explanations just can be avoided, instead of going through 12 quarters?

[Shareholder] (Private Investor): Yes. I have a couple of questions. One is on the BSA-led business that you're trying to wean off. Is there a possibility that the management is considering selling it out as one whole business chunk, like how we bought Profectus? Is this something that is in the charts? Are you looking at selling that whole business one shot so that all these explanations just can be avoided, instead of going through 12 quarters?

Speaker #3: Like how we bought Protectors. Is this something that is in the charge? Like, are you looking at selling that whole business in one shot so that all these explanations can be avoided, instead of going to 12 quarters?

Shachindra Nath: Rishi, no. We are not considering selling off that completely as a portfolio. There are two reasons for that. One, as you know, selling portfolio require a minimum six months of vintage. Some of that portfolio may not have that vintage, and then you have to sell it in parts. If you do that, the collection infrastructure attached to that portfolio would become disproportionately uneconomical because today there is a large collection infrastructure which is engaged in collecting that portfolio. Second, we have to build other earning asset to replace that asset. If we sell off all of that portfolio, we will sit on too much of cash unnecessarily, and that would have a negative carry. Third is that there is a non-balance sheet asset component of that and an off-balance sheet asset component of that.

Speaker #1: Rishi, no. We are not considering selling off that completely as a portfolio. There are two reasons for that. One, as you know, selling a portfolio requires a minimum of six months of intake.

Speaker #1: Some of that portfolio may not have that vintage, and then you have to sell it in parts. If you do that, the collection infrastructure attached to that portfolio would become disproportionately uneconomical, because today there is a large collection infrastructure which is engaged in collecting that portfolio.

Speaker #1: Second, that portfolio—we have to build other earning assets to replace that asset. If we sell off all of that portfolio, we will sit on too much cash unnecessarily.

Speaker #1: And that would have a negative carry. Third, there is an on-balance sheet asset component of that and an off-balance sheet asset component of that.

Speaker #1: If you sell all of that upfront, there will be a large reversal of income, which will happen for the off-balance sheet component of that.

Shachindra Nath: If you sell all of that as upfront, there will be a large reversal of income which will happen for the off-balance sheet component of that. We cover it. Intention is, and I understand that it looks little complex and for investors and market to understand that it looks complex, and we seem to be more defensive first explaining that. I think it's another one or two quarters. As the trajectory for our two engines at Emerging Market Lab and our embedded financing would continue to demonstrate and grow, the runoff would become a standard explanation. Over a period of time, you'll see we will be focusing more on where we are getting the growth and its metrics rather than explaining more on the runoff of the business.

Speaker #1: So we cover it. The intention is—it's—and I understand that it looks a little complex, and for investors and the market to understand, it looks complex.

Speaker #1: And we seem to be more defensive first explaining that. But I think it's another one or two quarters, as the trajectory for our two engines—emerging market lab and our embedded financing—would continue to demonstrate and grow. The runoff would become a standard explanation, and over a period of time, you'll see we will be focusing more on where we are getting the growth and its metrics, rather than explaining more on the runoff of the business.

Speaker #3: Okay, thank you for that. My second question is about the recent shareholder voting. We had a couple of resolutions where the result was very close to not being approved, and one got rejected as well.

[Company Representative]: Okay. Thank you for that. Second question that I have is the recent shareholder voting that we had, a couple of resolutions were very close to not being approved and one got rejected as well, and this is probably the first time it's happened. Did you have a discussion with the institutional investors who are with us for several years who seem to have voted against it? Is there anything that you're doing about that currently?

[Shareholder] (Private Investor): Okay. Thank you for that. Second question that I have is the recent shareholder voting that we had, a couple of resolutions were very close to not being approved and one got rejected as well, and this is probably the first time it's happened. Did you have a discussion with the institutional investors who are with us for several years who seem to have voted against it? Is there anything that you're doing about that currently?

Speaker #3: And this is probably the first time it's happening. Do you have a discussion with the institutional investors who have been with us for several years, who seem to have voted against it?

Speaker #3: Is there anything that they're doing about that currently?

Speaker #1: Yes. So there are two, actually. It was more that confusion got created, and certain proxy advisory firms wrote against that without really understanding the depth of the resolution.

Shachindra Nath: Yes. There are two. Actually, it was more which got created as a confusion and certain proxy advisory firms which wrote against that without really understanding the depth of the resolution. There was two resolutions actually. One which was approved one With respect to my reappointment, and the station to that. Because I'm defined as the promoter of the company, there is a limit in terms of the total compensation which can be paid to me, which is 2.5% of the total profitability of the company, because I'm defined as a promoter. My fixed compensation remain unchanged, and there was no increase in that, and that was moved as an ordinary resolution. Second was a special resolution, which was more as an enabling resolution, for providing variable pay in future.

Speaker #1: There were two resolutions, actually—one which was approved, one with respect to my reappointment, and the relation to that. Because I'm defined as the promoter of the company, there is a limit in terms of the total compensation which can be paid to me, which is 2.5% of the total profitability of the company because I'm defined as a promoter.

Speaker #1: So my fixed compensation remained unchanged, and there was no increase in that. That was moved as an ordinary resolution. Second was a special resolution, which was more of an enabling resolution for providing variable pay in the future.

Speaker #1: What was designed in that special resolution is that the company may pay, or it was authorizing the Board of Directors to define, a variable pay which can be linked to the operating performance of the company, as well as the increase in the value of the company through share price.

Shachindra Nath: What was designed in that special resolution that company may pay, or it was authorizing the board of directors to define a variable pay which can be linked on the operating performance of the company and as well as increase in the value of the company through share price. It was only an enabling resolution, and nothing was defined in certain, I think the proxy advisory firms felt that this is an uncapped variable pay structure being approved by the shareholder, and they decided to write against it. Some of the institutional investors who get bound by these proxy advisory firms decided to vote against the second resolution. Which was fine. Neither there was an intention to pay any huge variable pay to me nor I'm interested. I think the appointment got approved.

Speaker #1: It was only an enabling resolution, and nothing was defined for certain. But I think proxy advisory firms felt that this is an uncapped variable pay structure being approved by the shareholders, and they decided to write against it.

Speaker #1: And some of the institutional investors, who are bound by these proxy advisory firms, decided to vote against the second resolution. And that was fine.

Speaker #1: Neither was there an intention to pay any huge variable pay to me, nor am I interested. But I think the appointment got approved. But obviously, most of the institutional investors who voted against that—we have engaged with them, and their response was that it's more of an issue of governance and process. Today, if proxy advisory firms are saying certain things, then they have to vote against it.

Shachindra Nath: Obviously, the institutional investors who voted against that, we have engaged with them, and their response was that given that it's more of an issue of a governance and the process today, if a proxy advisory firms are saying certain things, then they have to vote against it. Also, they were confident that we had requisite majority for appointment to get approved. That's where the matter ended actually.

Speaker #1: And also, they were confident that we had the requisite majority for the appointment to get approved. And that's where the matter ended, actually.

Speaker #3: Thank you. I have another question. I mean, I've been an investor for many years, so it might sound like a very silly question, but today we are actually quoting at a market cap equal to what we paid as cash for Protectors.

[Company Representative]: I have another question. I've been an investor for many years, so it might sound like a very silly question, but today we are actually quoting at a market cap of what we paid as cash for Profectus, which is INR 1,400.

[Shareholder] (Private Investor): I have another question. I've been an investor for many years, so it might sound like a very silly question, but today we are actually quoting at a market cap of what we paid as cash for Profectus, which is INR 1,400.

Speaker #3: Which is $1,400. It's hard to imagine: either we made a mistake and overpaid for Protectors, or the market thinks that what we overpaid for Protectors—if we had paid exactly the correct amount—then the previous you grow, all of it is worth exactly zero.

Shachindra Nath: Yeah.

[Company Representative]: It makes it hard to imagine either we made a mistake and overpaid for Profectus or the market thinks both we overpaid for Profectus or if we had paid exactly correct amount, the previous Ugro, all of it is worth exactly zero.

[Shareholder] (Private Investor): It makes it hard to imagine either we made a mistake and overpaid for Profectus or the market thinks both we overpaid for Profectus or if we had paid exactly correct amount, the previous Ugro, all of it is worth exactly zero. I understand that-

Speaker #3: I understand that. Prices are not.

Shachindra Nath: Yeah.

[Company Representative]: I understand that-

Speaker #1: I think, Rishi, you're right. I also sometimes think about what went wrong. Look, sometimes this market pricing is a function of multiple things.

Shachindra Nath: I think-

[Company Representative]: either is a model.

[Shareholder] (Private Investor): either is a model.

Shachindra Nath: Rishi, you're right. I also sometimes think that what went wrong. Sometimes it's market pricing is a function of multiple things. It is all beside anything else. It is sometimes when you make a shift, then some of the investors don't like it. As we know, our capitalist shareholder register consists of one side, roughly around 50% is held by four or five long PE investors. One or two of them whose fund life is over, and they are looking for exit, and that's why they probably have no choice but to sell in the market. That's point number one. Number two is that when we made this shift, and that coincided with the war in Iran, market didn't like it and our price came down quite significantly.

Speaker #1: And it is also decide anything else, it is sometimes when you make a shift then some of the investors don't like it. We as you know, our capitalist shareholder register consists of one side roughly around 50% is held by four or five long P investors.

Speaker #1: One or two of them whose fund life is over and they are looking for exit, and that's why they probably have no choice but to sell in the market.

Speaker #1: That's point number one. Number two is that when we made this shift, the market obviously—and that coincided with the war in Iran—the market didn't like it, and our price came down quite significantly.

Speaker #1: Third, with respect to the question of whether we acquired a business of ₹1,400 crore and we ourselves right now are quoting at ₹1,400 crore, did we make a mistake?

Shachindra Nath: Third, with respect to question of whether we acquired a business of INR 1,400 crore and ourselves right now is quoting at INR 1,400, did we make a mistake? I think not. The pure reason for acquiring Profectus Capital was to acquire a book of roughly around INR 3,000 odd crore, is strip the OpEx from that and gain cash profitability from that. Use that and then implement the same OpEx reduction in Ugro and use that as our transition to a higher-yielding business. The OpEx reduction and the profitability. We are moving from more accrued income model, wherein we are doing very high volume of co-lending, very high volume of NPV value recognition, and it was running on a treadmill engine, and we were simultaneously seeing foreclosure and reversal of the income. We wanted to move from there to more cash income-generating business.

Speaker #1: I think not. Our view—the pure reason for acquiring Protector's capital—was to acquire a book of roughly around ₹3,000 crore. We stripped the opex from that and gained cash profitability from that.

Speaker #1: And use that, and then implement the same opex reduction in EUR, and use that as our transition to a higher-yielding business. So the opex reduction and the profitability—so we are moving from a more accrued income model, wherein we are doing very high volume of cold lending, very high volume of NTV value recognition, and it was running on a treadmill engine.

Speaker #1: And we were simultaneously seeing foreclosure and reversal of the income. We wanted to move from there to more cash income-generating business. So, roughly around ₹130 crore of stripping of opex, and that is adding purely to our profitability on a cash basis.

Shachindra Nath: Roughly around INR 130 crore of stripping of OpEx, and that is adding purely to our profitability on a cash basis. Second, stripping OpEx from our business and adding that to our profitability is allowing us to go away from this very high volatile co-lending and direct assignment income model. I still continue to believe we paid, if you look at this way, Profectus we acquired for INR 1,400 odd crore. Its net worth at that time was around INR 1,160 odd crore or INR 70 crore. We paid around INR 250 crore of premium. We would on that portfolio over life of the loan of that asset will generate more than what we paid as a goodwill. It was not a bad buy. We bought it for roughly around 1.1x price to book value, and we retrieve more cash from them.

Speaker #1: Second, stripping opex from our business and adding that to our profitability is allowing us to move away from this very highly volatile co-lending and direct assignment income model.

Speaker #1: So I still continue to believe we paid, if you look at it this way: Protectors, we acquired for ₹1,400-odd crore. Net worth at that time was around ₹1,160-odd crore, or ₹1,170 crore.

Speaker #1: We paid around ₹250 crore of premium. And we would, on that portfolio over the life of the loan of that asset, generate more than what we paid as goodwill.

Speaker #1: So, it was not a bad buy. We bought it for roughly around 1.1 times price-to-book value. And we recouped more cash from them.

Speaker #1: And I hope that the market, over a period of time, would realize that. Over the next few quarters, when we see the liquidity or the liquidity stress on the share price—which is largely driven less by fundamentals but more by less buyers and more sellers—it would reset in the coming quarters.

Shachindra Nath: I hope that market over a period of time would realize that. Over a period of next few quarters when we see the liquidity stress on the share price, which is largely driven less by fundamental but more by less buyers, more sellers, would reset in few coming quarters. We are fairly patient, and I understand that shareholders would feel very frustrated with that, but I continue to believe this is a matter of time.

Speaker #1: So, we are fairly patient, and I understand that shareholders would feel very frustrated with that. But I continue to believe this is a matter of time.

Speaker #3: Thank you. I mean, if I can just add one more observation to that. I know there are probably people waiting in the queue, but what I wanted to say is this: I mean, usually, companies have some heavy investors who don't have a problem buying.

[Company Representative]: Thank you, Srinath. If I can just add one more observation on that. I know there are probably people waiting in the queue. What I wanted to say is this. Usually companies have some heavy investors who don't have a problem of buying. Currently, we are having 50% with PE investors. Either they are in the end of cycle and no matter what the price falls to, they are not willing to support the price. On the other extreme, we have people who are fully invested, like they cannot go higher. For example, the institutions around 5%, even they had to sell at about INR 90 recently. We have Samena who is already at 10% and they cannot go higher. Usually, I see that you are organizing these events where large mutual fund houses come and go.

[Shareholder] (Private Investor): Thank you, Srinath. If I can just add one more observation on that. I know there are probably people waiting in the queue. What I wanted to say is this. Usually companies have some heavy investors who don't have a problem of buying. Currently, we are having 50% with PE investors. Either they are in the end of cycle and no matter what the price falls to, they are not willing to support the price. On the other extreme, we have people who are fully invested, like they cannot go higher. For example, the institutions around 5%, even they had to sell at about INR 90 recently. We have Samena who is already at 10% and they cannot go higher. Usually, I see that you are organizing these events where large mutual fund houses come and go.

Speaker #3: Currently, we are having 50% with PE investors. Either they are at the end of the cycle, and no matter what the price falls to, they're not willing to support the price.

Speaker #3: On the other extreme, we have people who are fully invested, like they cannot go higher—for example, the institution around 5%. Even they had to sell at about $90 recently.

Speaker #3: And we have Samina, who is already at 10%, and they cannot go higher. So usually, I mean, I see that you are organizing these events where large mutual fund houses come and go.

Speaker #3: Why do you think they are not impressed by the story yet? I mean, I can see competitors like iFinance, which has recently listed its price to market cap with way poorer numbers, to be honest.

[Company Representative]: Why do you think they are not impressed by the story yet? I can see competitors like Aye Finance who just recently listed its price, the market cap with way poorer numbers, to be honest. What is it that markets are not happy with? It is not like the entire industry is doing bad. It is bad considerably from before. In terms of price to book, we are at 0.5 or even less right now after this profit. What do you think is missing?

[Shareholder] (Private Investor): Why do you think they are not impressed by the story yet? I can see competitors like Aye Finance who just recently listed its price, the market cap with way poorer numbers, to be honest. What is it that markets are not happy with? It is not like the entire industry is doing bad. It is bad considerably from before. In terms of price to book, we are at 0.5 or even less right now after this profit. What do you think is missing?

Speaker #3: What is it that markets are not happy with? And it's not like the entire industry is doing badly. I mean, it is considerably worse than before.

Speaker #3: But in terms of price-to-book, we are at 0.5 or even less right now after this profit. What do you think is missing?

Speaker #1: No, absolutely. And so you are absolutely right. Companies have different types of problems. I don't think so, in the microfinance industry, we saw share prices of a large number of microfinance companies coming below book value.

Shachindra Nath: No, absolutely. You are absolutely right. The companies have different types of problem. In microfinance industry, we saw share prices of large number of microfinance companies coming below book value and trading for a very long period of time, subpar at the same rate. That was predominantly because there was a large portion of portfolio risk which was not yet fully provided for. Ugro doesn't have any of that problem. It is fundamentally three sets of problem. Ugro never had an IPO of itself. That's why its shareholder register doesn't have long-only domestic or foreign institutional investors. We have 15.5% of Denmark government which is IFU, which is a long shareholder. We have 12.7% of Samena which is also a long shareholder. We have TPG NewQuest which is 8.9%. They have sold off 1% because it seems that their fund life is over. There is ADV.

Speaker #1: And trading for a very long period of time at the same rate—that was predominantly because there was a large portion of portfolio risk which was not yet fully provided for.

Speaker #1: EUR doesn't have any of that problem. It is fundamentally three sets of problems. EUR never had an IPO of itself. That's why its shareholder register doesn't have long-only domestic or foreign institutional investors.

Speaker #1: We have 15.5% from the Denmark government, which is IFU, and they are a long-term shareholder. We have 12.7% from Samina, which is also a long-term shareholder.

Speaker #1: We have TPG NewQuest, which is at 8.9%. They have sold off 1% because it seems that their fund life is over. There is ADV.

Speaker #1: They sit on our board, so we don't see a reason why they will exit in the market. But obviously, they are also an old investor; at some point in time, their fund life would be over.

Shachindra Nath: They sit on our board, we don't see a reason why they will exit in the market. Obviously they are also an old investor. At some point in time their fund life would be over. We have Patni family and Arjun's and then there is a large tail of retail shareholder. While I won't comment on any competitor and its performance, obviously what we have learned from the public market especially domestic institutional investor, that the threshold cap for domestic mutual fund entry is roughly around four to 5,000 crore market cap. Anything below that becomes extremely difficult for fund managers to give entry to a new stock in their portfolio. Oddly enough, the threshold is not applied when companies are going in IPO because mutual fund industry or other investors are looking at an IPO-related upside or pop.

Speaker #1: Then we have the Patni family and Argent, and then there is a large tail of retained shareholders. While I won't comment on the competitor and its performance.

Speaker #1: But obviously what we have learned from the public market, especially domestic institutional investors, is that the threshold cap for domestic mutual fund entry is roughly around ₹4,000 to ₹5,000 crore market cap.

Speaker #1: Anything below that becomes extremely difficult for fund managers to give entry to a new stock in their portfolio. Oddly enough, that threshold is not applied when companies are going in for an IPO because the mutual fund industry or other investors are looking at an IPO-related upside or pop.

Speaker #1: And that's why, even if the market cap is at a lower threshold, they end up getting an IPO. So it's a little odd. We also feel very bad and pained about it.

Shachindra Nath: That's why even if the market cap is a lower threshold, they end up getting IPO. It's a little odd. We also feel very bad and pained about it. Let me assure you, there is no lack of effort of continuously going and presenting ourselves in front of the domestic investors, few large investors who might be interested. Feedback which we have got that since we have just done this transition, everyone has liked it. People want to see one, two, or maximum three quarter of execution of this new strategy. We are hopeful after that we will see an entry of some new shareholders and change in the capital register. I can be as much candid I can be. I have been here.

Speaker #1: But let me assure you, there is no lack of effort in continuously going and presenting ourselves in front of the domestic investors, a few large investors who might be interested.

Speaker #1: The feedback we have received is that, since we have just done this transition, everyone has liked it. People want to see one, two, or a maximum of three quarters of execution of this new strategy.

Speaker #1: And we are hopeful that after that, we will see the entry of some new shareholders and a change in the capital register. I am being as candid as I can be; I have been here.

Speaker #3: Yeah, I mean, much appreciated, Mr. Nat. Final one question: What are the guidelines from RBI for share repurchase for NBFCs? Because, I mean, we have a lot of cash.

[Company Representative]: That's much appreciated, Mr. Nath. Final one question. What are the guidelines from RBI for shared repurchase for NBFCs? Because we have a lot of cash. You just mentioned that you have INR 1,800.

[Shareholder] (Private Investor): That's much appreciated, Mr. Nath. Final one question. What are the guidelines from RBI for shared repurchase for NBFCs? Because we have a lot of cash. You just mentioned that you have INR 1,800. If we are investing in somebody else's business, we could invest in our own. We could actually buy 20% of the share back easily.

Speaker #3: You just mentioned that you have 1,800. I mean, if we are investing in somebody else's business, we could invest in our own. We could actually buy, like, 20% of the shares back easily.

Shachindra Nath: Yeah.

[Company Representative]: If we are investing in somebody else's business, we could invest in our own. We could actually buy 20% of the share back easily.

Speaker #1: Yeah. Unfortunately, for NBSC.

Shachindra Nath: Yeah. Unfortunately, for NBFCs-

Speaker #3: And if I may add—if I may add just one more thing.

[Company Representative]: If I may add-

[Shareholder] (Private Investor): If I may add If I may add just one more thing. Sorry, I'll just add one last part of the question. I'll just add a part of the question. Sorry about it. The other thing that I was wondering is this year we are roughly going to do about INR 300 crore of profit, mostly cash profit. Would the management consider, at this market cap, we'd be like 5x P/E. Would you consider giving a bonus? No, sorry, not a bonus. I meant a dividend, which also reduces your equity and increases your return on equity, which is what many companies do in terms of giving out cash to increase their-

Shachindra Nath: Sorry, I've-

[Company Representative]: If I may add just one more thing.

Shachindra Nath: What?

Speaker #1: What on.

[Company Representative]: Sorry, I'll just add one last part of the question. I'll just add a part of the question. Sorry about it. The other thing that I was wondering is this year we are roughly going to do about INR 300 crore of profit, mostly cash profit. Would the management consider, at this market cap, we'd be like 5x P/E. Would you consider giving a bonus? No, sorry, not a bonus. I meant a dividend, which also reduces your equity and increases your return on equity, which is what many companies do in terms of giving out cash to increase their-

Speaker #3: Sorry, I'll just add one last part to the question. I'll just add a part to the question—sorry about that. The other thing I was wondering is, this year we are roughly going to do about 300 crores of profit, mostly cash profit.

Speaker #3: Would the management consider, at this market cap, we would be at around five times PE? Would you consider giving a bonus? Sorry, not a bonus.

Speaker #3: I mean, I meant a dividend which also reduces your equity and increases your return on equity. Is that what many companies do in terms of giving out cash to increase their—

Shachindra Nath: Yeah. No, we have given this solution earlier as well, and obviously we've worked very fiercely on that. With respect to buyback, unfortunately, buyback for NBFCs is not possible at all. The regulation, not the RBI regulation, but the Companies Act regulation says any company to do buyback cannot have leverage of more than 2 times. Any NBFC in India cannot do buyback from that regulation perspective. With respect to dividends, this year actually the profitability is a combination of both cash profitability and income from assignment and co-lending. Next year it would largely transition to cash profitability because we are still in transition phase. On the dividend, actually, the dividend policy is also regulated by RBI. For us to execute dividend, we have to change that policy, which will require, again, the shareholder approval.

Speaker #1: Yeah, yeah. Given this suggestion—yes, given this suggestion earlier as well, and obviously we have worked very clearly on that. With respect to buyback, unfortunately, buyback for NBFCs is not possible at all.

Speaker #1: The regulation—not the RBI regulation, but the Companies Act regulation—says any company looking to do a buyback cannot have leverage of more than two times.

Speaker #1: Now, any NBFC in India cannot do buyback from that regulatory perspective. With respect to dividend, this year actually the profitability is a combination of both cash profitability and income from assignment and co-lending.

Speaker #1: And next year, it would largely transition to cash profitability because we are still in the transition phase. But on the dividend—actually, the dividend policy is also regulated by the RBI.

Speaker #1: And for us to execute dividends, we have to change that policy, which will require, again, shareholder approval. So, by and large, we have to wait a little bit. I know there is one side of the pain on the share price and return on equity.

Shachindra Nath: I know there is one side of the pain on the shareholder price and return on equity. We also want to be conscious of the fact that come next year, we have to augment growth and which will require more capital. We don't want to be a situation that we pay a hefty dividend and go down in our capital adequacy and then we look for capital again, which is very dilutive. As we will near to First one is ruled out. The second one is in our mind, in our agenda. It was discussed in our board meetings as well. As we come near to our Q3, Q4, we will take a final call that whether we can change the dividend policy and can we look at some nominal dividend to the shareholders or not.

Speaker #1: But we also want to be conscious of the fact that, come next year, we have to augment growth, which will require more capital.

Speaker #1: So we don't want to be in a situation where we pay a hefty dividend, and our capital adequacy goes down, and then we have to look for capital again, which is very dilutive.

Speaker #1: So as we will near to, the first one is ruled out. The second one is in our mind; in our agenda, it was discussed in our board meetings as well.

Speaker #1: But as we come near to our Q3, Q4, we will take a final call on whether we can change the dividend policy and whether we can look at some nominal dividend to the shareholders or not.

Speaker #1: Most likely, it looks like with the growth momentum we are experiencing, we would need to preserve more capital to augment our growth, rather than taking out the cash.

Shachindra Nath: Most likely it looks like that the growth momentum which we are getting, we would need to preserve more capital for augmenting our growth versus taking out the cash. Definitely we will keep it considering.

Speaker #1: But definitely, we will keep it under consideration.

Speaker #3: Thank you.

[Company Representative]: Thank you.

[Shareholder] (Private Investor): Thank you.

Speaker #2: Thank you. The next question is on the line of Ritesh Khandelwal, a retail investor. Please go ahead.

Operator: Thank you. The next question is on the line of Ritesh Khandelwal, a retail investor. Please go ahead.

Speaker #4: Okay. Hi. Section 19. Am I audible?

Ritesh Khandelwal: Hi, Sachin. Am I audible?

Speaker #1: Yeah, I couldn't get your name, sir.

Shachindra Nath: Yeah. I couldn't get your name, sir.

Speaker #4: Ritesh.

Ritesh Khandelwal: Ritesh.

Speaker #1: Yes, Ritesh. Please go ahead.

Shachindra Nath: Yes, Ritesh, please go ahead.

Speaker #4: Super. So firstly, thank you so much for a good set of numbers and the focus. Just a request before my question comes up: please don't focus on the market share price or dividend at this moment by default.

Ritesh Khandelwal: Super. Firstly, thank you so much for a good set of numbers and the focus. Just a request before my question comes up is please don't focus on the market share price or dividend at this moment, but focus on continuing to build the right business, right? I think the market will take care of its own. You don't need to be under any pressure is what I would like to say.

Speaker #4: Focus on continuing to build the right business set. I think the market will take care of its own, so you don't need to be under any pressure—that is what I would like to share.

Shachindra Nath: Thank you.

Speaker #4: My question is basically on the risk perspective, Sachin. So, what are the top three major risks that your team is currently looking forward to, or working on now, and how are you taking care of those?

Ritesh Khandelwal: My question is basically on risk perspective, Sachin. What are the top three major risks that your team is currently looking forward to or working on, and how you are taking care of those?

Speaker #1: Anuj.

Speaker #3: So broadly, from the credit risk perspective, it continues to be the biggest risk which we are cognizant about. Both our focus verticals are to relatively smaller size customers.

Shachindra Nath: Broadly from the credit risk perspective, it continues to be the biggest risk which we are cognizant about. Both our focused verticals are to relatively smaller-sized customers, and hence we have to be very careful on monitoring the early warning signals. Thankfully, for the last one or two years, we have been building this portfolio carefully calibrating all the parameters and revising our business rule engines accordingly. For example, post the Middle East war breaking out, we were very careful in monitoring our embedded finance portfolio, especially the end customers who were part of food and beverages business. We have started monitoring their daily revenues, which is possible today through the GrowX engine which we have. We'll continue to do that on early warning signals, and continue to monitor.

Speaker #3: And hence, we have to be very, very careful in monitoring the early warning signals. Thankfully, for the last one or two years, we have been building this portfolio carefully, calibrating all the parameters, and revising our business rule engines accordingly.

Speaker #3: For example, after the Middle East war broke out, we were very, very careful in monitoring our embedded finance portfolios, especially the end customers who were part of the food and beverages business.

Speaker #3: And we have started monitoring their daily revenues, which is possible today through the GrowX engine that we have. So we'll continue to do that.

Speaker #3: On early warning signals, and we continue to monitor. While we don't foresee any large trend or risk coming in on both our businesses, smaller, concentrated, state, geography, and sector-wise risks, we keep monitoring.

Shachindra Nath: While we don't foresee any large trend on risk coming in on both our businesses, but smaller concentrated state geography, sector-wide risk, we keep monitoring. The second is not actually a risk, but a focus area is on cost of borrowing. Our whole premise is that as our AUM increases, our profitability increases, it would reflect on our cost of borrowing. While we have not taken that into account when we have been projecting our next two to three years, but at the back of our mind, we hope that it will keep coming down. We have already seen some progress. Our long-term tenured loans share has increased. It has helped us a lot in asset liability. On cost of borrowing itself, we expect to do better.

Speaker #3: The second point is not actually a risk, but rather a focus area—cost of borrowing. If our whole premise is that as our AUM increases, our profitability increases, it would be reflected in our cost of borrowing.

Speaker #3: While we have not taken that into account when we have been projecting our next two to three years, at the back of our mind, we hope that it will keep coming down.

Speaker #3: We have already seen some progress. Our long-term tenure loans' share has increased. It has helped us a lot in asset-liability management. But on the cost of borrowing itself, we expect to do better.

Speaker #4: Super. Thank you so much. I think this really helped.

Ritesh Khandelwal: Super. Thank you so much. I think this relates.

Speaker #1: Thank you.

Shachindra Nath: Thank you.

Speaker #2: Thank you. The last question is from Kamal, an individual investor. Please go ahead.

Operator: Thank you. The last question is on the line of Kamal, an individual investor. Please go ahead.

Speaker #5: Hello, thank you for addressing all the questions so far. I have only one question, and that is about execution risk. The management thesis for everything you've mentioned in this call and before—regarding self-funding the AUM growth—relies mainly on three aspects.

[Company Representative]: Hello, all. Thank you for battling through all the questions so far. I have only one question, and that is about execution risk. The management thesis for whatever you've mentioned in this call and before, for self-funding the AUM growth relies on maybe three aspects. One is keeping the new book GNPA below 2%. One is the actual OpEx rationalization as a result of Profectus acquisition, and generating enough net profit in the operation so that you can fund your growth without raising fresh capital. These are three pretty strong assumptions. What are the main execution risks that you see beyond the current and next quarter, that can maybe create an operational bottleneck or a structural execution risk to achieving the long-term goals?

[Shareholder] (Private Investor): Hello, all. Thank you for battling through all the questions so far. I have only one question, and that is about execution risk. The management thesis for whatever you've mentioned in this call and before, for self-funding the AUM growth relies on maybe three aspects. One is keeping the new book GNPA below 2%. One is the actual OpEx rationalization as a result of Profectus acquisition, and generating enough net profit in the operation so that you can fund your growth without raising fresh capital. These are three pretty strong assumptions. What are the main execution risks that you see beyond the current and next quarter, that can maybe create an operational bottleneck or a structural execution risk to achieving the long-term goals?

Speaker #5: Right? One is keeping the new book GNPA below 2%. One is the actual OPEX rationalization as a result of the Perfios acquisition. And generating enough net profitability from operations so that you can fund your growth without raising fresh capital.

Speaker #5: So, these are three pretty strong assumptions. What are the main execution risks that you see beyond the current and next quarter that could potentially create an operational bottleneck or a structural execution risk to achieving the long-term goals?

Speaker #1: Yes. First, this is the kind of thing which is keeping us on the toes. If you go if you look at the slide on we have a slide what we call the how it is getting executed.

Shachindra Nath: Yes. This is the kind of thing which is keeping us on the toes. If you look at the slide on, we have a slide, what we call how it is getting executed on the emerging market side? I think the first is on the first one, which is our emerging market. I would request you to look at slide 21, wherein we say emerging market productivity inflation has begun. The premise of this portfolio shift is that the branches which crosses 12 months get to a certain level of volume. What we are seeing that's happening. Actually, the month of July was actually where almost it looks like that on a combined basis, all branches achieved that.

Speaker #1: On the emerging market side, with the branch number of branches, which are—so I think the first is on the—so yeah. On the first one, which is our emerging market, I would request you to look at slide 21, wherein we say emerging market productivity inflation has begun.

Speaker #1: So the premise of this portfolio shift is that is that the branches which crosses 12 months get to a certain level of volumes. What we are seeing that that's happening actually the month of July was actually where almost it looks like that on a combined basis all branches achieved that.

Speaker #1: But we have to make sure that all the GRAV 145 branches which are less than six months old, as they cross 12 months, get to roughly around 75 to 80 lakh rupees of monthly disbursement volume.

Shachindra Nath: We have to make sure that all the gray 145 branches, which are less than six months old, as they cross 12 months, get to roughly around INR 75 to INR 80 lakhs of monthly disbursement volume. That would help us to rebalance the portfolio and offset the runoff. That's part one. Second, on our embedded merchant lending side, while we have large volumes coming through that, obviously that doesn't grow AUM. We are now looking to partner with more platforms where we can embed, and that is beyond the payment rails. Today, we are highly, deeply specialized in underwriting small-ticket customers, with high-velocity loans, give it a little higher yield and collect that daily. Gradually, we are looking at little longer tenure loans with different types of ecosystem. Say, marketplaces and few others, wherein the tenure would go up and ticket size would go up.

Speaker #1: Because that would help us to rebalance the portfolio and offset the runoff. That's part one. Second, on our embedded merchant lending side, while we have large volumes coming through that, obviously that doesn't grow AUM.

Speaker #1: So we are now looking to partner with more platforms where we can embed, and that is beyond the payment rates. Today, we are highly and deeply specialized in underwriting small-ticket customers with high-velocity loans.

Speaker #1: Give it at a little higher yield and collect back daily. But gradually, we are looking at slightly longer tenure loans with different types of others, wherein the tenure would go up and the ticket size would go up.

Speaker #1: Whenever you do that, there is a potential for credit risk going up. And that's why we have to be a little tight and make sure that while we do that and increase our volume on the emerging market, on the embedded finance side, we don't see a big impact on the credit side.

Shachindra Nath: Whenever you do that, there is a potential of credit risk going up, that's why we have to be little tight and make sure that while we do that and increase our volume on the emerging market, on the embedded finance side, we don't see big impact on the credit side. These two are execution-related risk, which we have to monitor and be at our toes. Third, technically, is the runoff. We have presumed runoff of roughly around 20-odd%. Since we have executed fresh disbursement, the competitive intensity, large lenders, given the quality of our book, find our portfolio as a target portfolio, obviously, they are taking it away from us. We don't mind that, obviously if the runoff is very, very fast, then as I explained earlier, the reversal of income is also much higher, and that puts pressure on our total P&L.

Speaker #1: So these two are execution-related risks, which we have to monitor and be on our toes. Second—or third, technically—is the runoff. We have presumed a runoff of roughly around 20-odd percent.

Speaker #1: But since we have exited fresh disbursement, the competitive intensity from large lenders—given the quality of our book—means they find our portfolio attractive and are obviously taking it away from us.

Speaker #1: We don't mind that. But obviously, if the runoff is very, very fast, then as I explained earlier, the reversal of income is also much higher.

Speaker #1: And that put pressure on our total P&L. So, while we can do as much as possible to retain the customer, we hope that the runoff doesn't become too large.

Shachindra Nath: While we can do as much as to retain the customer, we hope that that runoff doesn't become too large. We have taken multiple actions on that, including, for example, reducing the rate if required, doing more things to the customer. We have to just carefully watch that, if that to happen, then we have to accelerate our disbursement to offset for that. While which is not very easy task, we will surely calibrate that as we go forward. I think so besides these two, I feel we are fairly comfortable in where we are. As I said, that market being market, that puts in more emotional pressure on us. It's not to be in a very happy state that you are valued at half time of your net worth.

Speaker #1: We have taken multiple actions on that, including, for example, reducing the rate if required and doing more things for the customer. But we have to just carefully watch that.

Speaker #1: And if that too happens, then we have to accelerate our disbursement to offset for that. While that is not a very easy task, we will surely calibrate that as we go forward.

Speaker #1: I think so. Beside these two, I think we are fairly comfortable with where we are. As I said, the market being the market, that puts in more emotional pressure on us.

Speaker #1: It's not a very happy situation to be valued at half the net worth. But we are confident that with continuous execution and delivery of performance in both channels we have now built, and by being consistent with what we are doing, that issue will also be taken care of in due course.

Shachindra Nath: We are confident that with continuous execution, delivery of performance of two channels, which we have now built, and being consistent about what we are doing, that also would get taken care of itself. Anuj, if you want to add anything?

Speaker #1: Anuj, if you want to add anything.

Speaker #3: No, I think this is broadly there.

Anuj Pandey: No, I think this is broadly there.

Speaker #5: Yeah, thank you very much. And I hope for a strong execution in the coming quarters.

[Company Representative]: Yes. Thank you very much, and I hope for strong execution coming in the next quarters.

[Shareholder] (Private Investor): Yes. Thank you very much, and I hope for strong execution coming in the next quarters.

Speaker #1: Thank you.

Shachindra Nath: Thank you.

Speaker #2: Thank you. We take that as the last question of the day. I now hand the conference over to Ms. Shohei Mandvani for closing comments.

Operator: Thank you. We take that as the last question of the day. I now hand the conference over to Ms. Juhi Manwani for closing comments.

Shachindra Nath: Thank you very much. Let me conclude today's investor call with one central message. The strategic realignment is intended to create a more focused, recurring, and capital-accretive Ugro. The operating infrastructure has been built. The branch network is maturing. GrowX is scaling rapidly and adding customer at a significant velocity. The cost base has been reset. Liquidity and capital remain comfortable. Incremental long-term funding is being raised at cost below the average cost of our existing liability book. The value of this transition will now be demonstrated through consistent performance over the coming quarters. Management priorities remain clear. Execute the portfolio transition. Scale the two focused businesses with disciplined asset quality. Improve recurring profitability and cash generation. Reduce the cost of borrowing. Preserve capital, and fund growth without repeated equity dilution.

Speaker #1: Thank you very much. Let me conclude today's investor call with one central message: the strategic realignment is intended to create a more focused, recurring, and capital-accretive Ugro.

Speaker #1: The operating infrastructure has been built. The branch network is maturing. GrowX is scaling rapidly and adding customers at a significant velocity. The cost base has been reset.

Speaker #1: Liquidity and capital remain comfortable, and incremental long-term funding is being raised at costs below the average cost of our existing liability book. The value of this transition will now be demonstrated through consistent performance over the coming quarters.

Speaker #1: Management priorities remain clear: Execute the portfolio transition; scale the two focus businesses with disciplined asset quality; improve recurring profitability and cash generation; and reduce the cost of borrowing.

Speaker #1: Preserve capital and fund growth without repeated equity dilution. We remain deeply thankful to our shareholders, lenders, partners, and employees for their continued confidence in the Ugro franchise.

Shachindra Nath: We remain deeply thankful to our shareholders, lenders, partners, and employees for their continued confidence in the Ugro franchise. Thank you everyone for attending the call and listening to us patiently, and thanks for all the support.

Speaker #1: Thank you, everyone, for attending the call and listening to us patiently. And thanks for all the support.

Operator: On behalf of Arihant Capital Markets Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.

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Q1 2027 Ugro Capital Ltd Earnings Call

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