Q1 2027 Muthoot Microfin Ltd Earnings Call

August 7, 2026

Speaker #1: Ladies and gentlemen, you have been connected to the Muthoot Microfin conference call. Please stay connected; the call will begin shortly. Participants, you have been connected to the Muthoot Microfin conference call.

Operator: Ladies and gentlemen, you have been connected to the Muthoot Microfin conference call. Please stay connected. The call will begin shortly. Participants, you have been connected to the Muthoot Microfin conference call. Please stay connected. The call will begin shortly. Thank you. Participants, you have been connected to the Muthoot Microfin conference call. Please stay connected. The call will begin shortly. Thank you. Ladies and gentlemen, good day and welcome to the Muthoot Microfin Q1 FY27 Earnings Conference Call. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference, please signal an operator by pressing star then zero on your touchtone phone. Please note this conference is being recorded. I now hand the conference over to Mr. Arun Malkani from JM Financial.

Speaker #1: Please stay connected; the call will begin shortly. Thank you. Participants, you have been connected to the Muthoot Microfin conference call. Please stay connected; the call will begin shortly.

Speaker #1: Thank you. Ladies and gentlemen, good day and welcome to the Muthoot Microfin Q1 FY27 earnings conference call. As a reminder, all participant lines will be in 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 Muthoot Microfin Q1 FY27 Earnings Conference Call. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference, please signal an operator by pressing star then zero on your touchtone phone. Please note this conference is being recorded. I now hand the conference over to Mr. Arun Malkani from JM Financial. Thank you, and over to you, sir.

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

Speaker #1: I now hand the conference over to Mr. Arun Malkara from JM Financial. Thank you, and over to you, sir.

Operator: Thank you, and over to you, sir.

Speaker #2: Thank you. Good morning, everyone, and welcome to the Q1 FY27 earnings conference call for Muthoot Microfin Limited. First of all, I would like to thank the management of Muthoot Microfin for giving us this opportunity to host this call.

Arun Malkani: Thank you. Good morning, everyone, and welcome to the Q1 FY27 Earnings Conference Call for Muthoot Microfin Limited. First of all, I would like to thank the management of Muthoot Microfin for giving us this opportunity to host this call. From the management side, we have Mr. Thomas Muthoot, Chairman; Mr. Sadaf Sayeed, Chief Executive Officer; Mr. Praveen T, Chief Financial Officer; Mr. Uday Shrivastava, Chief Operating Officer; and Mr. Rajat Gupta, AVP, Investor Relations. I would now like to hand over the call to Mr. Sadaf Sayeed for his opening remarks, post which we can open the floor for Q&A. Thank you, and over to you, sir.

Arun Nalkara: Thank you. Good morning, everyone, and welcome to the Q1 FY27 Earnings Conference Call for Muthoot Microfin Limited. First of all, I would like to thank the management of Muthoot Microfin for giving us this opportunity to host this call. From the management side, we have Mr. Thomas Muthoot, Chairman; Mr. Sadaf Sayeed, Chief Executive Officer; Mr. Praveen T, Chief Financial Officer; Mr. Uday Shrivastava, Chief Operating Officer; and Mr. Rajat Gupta, AVP, Investor Relations. I would now like to hand over the call to Mr. Sadaf Sayeed for his opening remarks, post which we can open the floor for Q&A. Thank you, and over to you, sir.

Speaker #2: From the management side, we have Mr. Thomas Muthoot, Chairman; Mr. Sadaf Sayeed, Chief Executive Officer; Mr. Praveen T., Chief Financial Officer; Mr. Udish Ulas, Chief Operating Officer; and Mr. Rajat Gupta, AVP, Investor Relations.

Speaker #2: I would now like to hand over the call to Mr. Sadaf, Mr. Sadaf Sayeed, for his opening remarks, after which we can open the floor for Q&A.

Speaker #2: Thank you, and over to you, sir.

Speaker #3: Thank you very much, Arun. A very good morning to all of you on behalf of Muthoot Microfin. I hope all of you have received our investor presentation, financial results, and also the press release.

Sadaf Sayeed: Thank you very much, Arun. A very good morning to all of you on behalf of Muthoot Microfin. I hope all of you would have received our investor presentation, financial result, and also the press release. Before getting into the numbers, I just wanted to mention that this is a turnaround that we have been talking about. The Q1 performance actually reflects what strategy that we have developed and articulated that is getting into motion and is getting into execution. If you look at the industry itself, the industry might have contracted in terms of AUM and numbers. From the point of view of quality of asset, it has started to improve. The disbursement has started to improve, and there is a clear distinction between the well-capitalized, well-managed companies and some of the companies who are at a slightly lower AUM.

Speaker #3: Before getting into the numbers, I just wanted to mention that this is a turnaround that we have been talking about. This financial quarter-one performance actually reflects the strategy that we have developed and articulated.

Speaker #3: It is about getting into motion and getting into execution. If you look at the industry itself, the industry might have contracted in terms of AUM and numbers, but from the point of view of quality of assets, it has started to improve.

Sadaf Sayeed: If you look at the industry itself, the industry might have contracted in terms of AUM and numbers. From the point of view of quality of asset, it has started to improve. The disbursement has started to improve, and there is a clear distinction between the well-capitalized, well-managed companies and some of the companies who are at a slightly lower AUM.

Speaker #3: The disbursement has started to improve, and there is a clear distinction between the well-capitalized, well-managed companies, and some of the companies who are at a slightly lower AUM.

Speaker #3: So the companies which are slightly larger are getting a good amount of support in terms of funds, and they are able to disburse and are growing.

Sadaf Sayeed: The companies which are slightly larger are getting good amount of support in terms of funds, and they are able to disburse and are growing. Which is what is translating in Muthoot is at the outlier. We have had a very good quarter, Q1. We did around INR 2,644 crores of disbursement, which is the ever highest disbursement in the Q1. As compared to the last quarter, it is around 49% improvement over the disbursement last financial year in the Q1 itself. If you look at from a perspective of the way the asset quality is improving, it is improving rapidly. We are at around 97.97%, almost 98% of overall collection on time. ARV bucket remains 99.9. The loans that we are lending are really performing well. Almost 65% of our book now represents disbursements which have happened after April 2025.

Speaker #3: And which is what is translating, and Muthoot is at the outlier. We have had a very good quarter. Quarter one, we did around ₹2,644 crores of disbursement, which is the ever-highest disbursement in Q1.

Speaker #3: As compared to the last quarter, it is around a 49% to 50% improvement over the disbursement last financial year in Q1 itself. If you look at it from the perspective of the way the asset quality is improving, it's improving rapidly.

Sadaf Sayeed: If you look at from a perspective of the way the asset quality is improving, it is improving rapidly. We are at around 97.97%, almost 98% of overall collection on time. ARV bucket remains 99.9. The loans that we are lending are really performing well. Almost 65% of our book now represents disbursements which have happened after April 2025.

Speaker #3: We are at around 97.97%, almost 98%, of overall collection on time. Bucket remains at 99.9%. So, the loans that we are lending are really performing well.

Speaker #3: Almost 65% of our book now represents disbursements which have happened after April 2025, and in that book, the asset quality is very good. The 30+ is just 1.2%.

Sadaf Sayeed: In that book, the asset quality is very good. 30 plus is just 1.2%, and 90 plus is much, much lower. The strategies that we have articulated in terms of strategic diversification, that is playing out as of Q1 end. 76% of our assets are income generating JLG loans and around 24% is non-JLG loan. We have focused on individual loans, so that portfolio stands around INR 3,200 crore, and that is really, really performing well. There is absolutely very minimal delinquency, 0.02% is the 30 plus, and there is no 60 plus as of now, no 90 plus. That portfolio is really performing well. Our strategy is to focus on the creamy layer of the customers that we have. We have around 9 lakh customers in our portfolio, which are 700 score plus.

Speaker #3: And 90-plus is much, much lower. The strategy that we have articulated in terms of strategic diversification is playing out—as of Q1 end, 76% of our assets are income-generating JLG loans.

Speaker #3: And around 24% is non-JLG loan. We have focused on individual loans, so that portfolio stands at around ₹3,200 crore, and that is really, really performing well.

Speaker #3: There is absolutely very minimal delinquency—0.02% is the 30-plus, and there is no 60-plus as of now, no 90-plus. So that portfolio is really performing well.

Sadaf Sayeed: There is absolutely very minimal delinquency, 0.02% is the 30 plus, and there is no 60 plus as of now, no 90 plus. That portfolio is really performing well. Our strategy is to focus on the creamy layer of the customers that we have. We have around 9 lakh customers in our portfolio, which are 700 score plus. Our effort is to focus on those customers and make sure that we become the number 1 priority lender for those customers.

Speaker #3: And our strategy is to focus on the creamy layer of the customers that we have. We have around 9 lakh customers in our portfolio who have a 700-plus score.

Speaker #3: And our effort is to focus on those customers and make sure that we become the number one priority lender for those customers. And with our technology, our app, and our diversified products that are available to the customer will be able to make us top of the mind recall for that customer.

Sadaf Sayeed: Our effort is to focus on those customers and make sure that we become the number 1 priority lender for those customers. With our technology, our app, and our diversified products that are available to the customer will be able to make us top of the mind recall for that customer. Our focus is to create products which cater to their needs. We have an individual loan, which caters to their need of growing business. We have gold loans, which is also there to cater to their emergency needs. We have Loan Against Property, which is there to cater to their need of expansion and bigger kind of improvement in their business or in their living livelihood, whatever they want to do. We are soon introducing another product.

Sadaf Sayeed: With our technology, our app, and our diversified products that are available to the customer will be able to make us top of the mind recall for that customer. Our focus is to create products which cater to their needs. We have an individual loan, which caters to their need of growing business. We have gold loans, which is also there to cater to their emergency needs. We have Loan Against Property, which is there to cater to their need of expansion and bigger kind of improvement in their business or in their living livelihood, whatever they want to do. We are soon introducing another product.

Speaker #3: Our focus is to create products which cater to their needs. We have an individual loan, which caters to their need of growing their business.

Speaker #3: We have gold loans, which are also there to cater to their emergency needs. We have loans against property, which are there to cater to their need for expansion and bigger improvements in their business or in their livelihood, whatever they want to do.

Speaker #3: So, we are soon introducing another product. In this board meeting, we have taken an approval for a consumer durable loan, which is also needed for their improvement of living standards.

Sadaf Sayeed: In this board meeting, we have taken an approval for consumer durable loan, which is also needed for their improvement of living standards. I think from a company point of view, we are at a very sweet spot. Currently, we have a huge amount of liquidity. We have almost INR 5,000 crore of sanction in our hand, and this is without counting the Credit Guarantee Scheme of INR 1,000 crore that is available to us. At the same time, our cost of fund is coming down. In the quarter, we have reduced our cost of fund from 10.27% to 10.13%, 14 basis point reduction has already happened in the Q1 itself. This is before the benefit of the rating upgrade. We had a rating upgrade during the quarter.

Speaker #3: I think, from a company point of view, we are at a very sweet spot currently. We have a huge amount of liquidity. We have almost ₹5,000 crore of sanction in our hand.

Speaker #3: And this is without counting the credit guarantee scheme of ₹1,000 crore that is available to us. At the same time, our cost of funds is coming down.

Speaker #3: In the quarter, we have reduced our cost of funds from 10.27% to 10.14%. A 13 to 14 basis point reduction has already happened in Q1 itself.

Speaker #3: And this is before the benefit of the rating upgrade. We had a rating upgrade during the quarter. We are now AA minus CRISIL rating.

Sadaf Sayeed: This is before the benefit of the rating upgrade. We had a rating upgrade during the quarter. We are now AA minus CRISIL rating. The benefit of that rating will come in the coming quarter, our cost of fund is likely to reduce. Even the benefit of Credit Guarantee Scheme, we have not yet availed. We have just taken INR 200 crore.

Sadaf Sayeed: We are now AA minus CRISIL rating. The benefit of that rating will come in the coming quarter, our cost of fund is likely to reduce. Even the benefit of Credit Guarantee Scheme, we have not yet availed. We have just taken INR 200 crore. Balance INR 800 crore is still available for us to draw down. I think from a cost of fund point of view, we are at a very sweet spot. The cost of fund is reducing for us and incremental borrowing cost is around 9.8%, which was already at 9.9%. We feel that in the financial year, we should be able to come into single digits in terms of our cost of fund. Availability of fund is already there. The asset quality is improving very rapidly. What we are seeing at the ground, the collection is improving very much.

Speaker #3: And the benefit of that rating will come in the coming quarter. So our cost of funds is likely to reduce. Even the benefit of the credit guarantee scheme we have not yet availed.

Speaker #3: We have just taken ₹200 crores. Balance ₹800 crores is still available for us to draw down. So, I think from a cost of funds point of view, we are at a very sweet spot.

Sadaf Sayeed: Balance INR 800 crore is still available for us to draw down. I think from a cost of fund point of view, we are at a very sweet spot. The cost of fund is reducing for us and incremental borrowing cost is around 9.8%, which was already at 9.9%. We feel that in the financial year, we should be able to come into single digits in terms of our cost of fund. Availability of fund is already there. The asset quality is improving very rapidly. What we are seeing at the ground, the collection is improving very much.

Speaker #3: The interest, the cost of funds, is reducing for us. Our incremental borrowing cost is around 9.8%, which was already at 9.9%. We feel that during the financial year, we should be able to come into single digits in terms of our cost of funds.

Speaker #3: And availability of funds is already there. The asset quality is improving very rapidly. What we are seeing on the ground is that collections are improving very much.

Speaker #3: Our overdue collection for the quarter was around ₹53 crore, which is almost 25% higher than what was the overdue collection in quarter one last year.

Sadaf Sayeed: Our overdue collection for the quarter was around INR 53 crore, which is almost 25% higher than what was the overdue collection in Q1 last year. It has a lot of scope even further because in March we had done INR 70 crore of this collection. We can further improve in coming quarter. This overall improvement will definitely help us improve the asset quality further. It is improving rapidly as such. Diversification is helping us to have a greater wallet share. I think our investment in the app is really helping us to retain our customers. We have around 2.1 million customers who have downloaded the Muthoot Mahila Mitra app. The way we are looking at it is to create an ecosystem on the app where customer can meet her immediate need, long-term needs, and sustainability needs through that app.

Speaker #3: Though it has a lot of scope, even further, because in March we had done ₹70 crore of this collection. We can further improve in the coming quarter.

Speaker #3: But this overall improvement will definitely help us improve the asset quality further. It is improving rapidly as such. Plus, diversification is helping us to have a greater wallet share.

Sadaf Sayeed: It is improving rapidly as such. Diversification is helping us to have a greater wallet share. I think our investment in the app is really helping us to retain our customers. We have around 2.1 million customers who have downloaded the Muthoot Mahila Mitra app. The way we are looking at it is to create an ecosystem on the app where customer can meet her immediate need, long-term needs, and sustainability needs through that app.

Speaker #3: I think our investment in the app is really helping us to retain our customers. We have around 2.1 million customers who have downloaded the Muthoot Mela Mitra app.

Speaker #3: And the way we are looking at it is to create an ecosystem on the app where the customer can meet her immediate needs, long-term needs, and sustainability needs through that app.

Speaker #3: And we will be focusing on the creamy layer of these customers. All of the individual loan customers whom we have identified with a score of 700 plus are already on the app.

Sadaf Sayeed: We will be focusing on the creamy layer of these customers. 100% of the individual loan customers, which we have identified with a score of 700 plus, are already on the app. We are really rigorously following that they are using our app regularly, and they are not off the app. 100% of the repayments in the individual loan are digital. There is no cash collection. Overall collection also has reached around 40% digital. Every quarter, we are seeing almost 6% improvement in the digital journey. The guidance that we have given of around 75% digital collection by 2030, I think we should be able to achieve that much earlier. Overall, I think the performance of the company has been great in terms of income also. We have increased our earnings by 20%.

Speaker #3: And we are really, really rigorously following up to ensure that they are using our app regularly and that they are not off the app. 100% of the repayments in the individual loan are digital.

Speaker #3: There is no cash collection. Overall collection has also reached around 40% digital, and every quarter we are seeing almost a 6% improvement in the digital journey.

Sadaf Sayeed: There is no cash collection. Overall collection also has reached around 40% digital. Every quarter, we are seeing almost 6% improvement in the digital journey. The guidance that we have given of around 75% digital collection by 2030, I think we should be able to achieve that much earlier. Overall, I think the performance of the company has been great in terms of income also. We have increased our earnings by 20%.

Speaker #3: And the guidance that we have given of around 75% digital collection by 2030—I think we should be able to achieve that much earlier.

Speaker #3: Overall, I think the performance of the company has been great in terms of income also. We have increased our earnings by 20%. If you look at quarter and quarter and 5% 5% quarter on quarter and 20% year on year.

Sadaf Sayeed: If you look at 5% quarter on quarter and 20% year on year. The improvement can be seen in the PPOP. Our PPOP has improved by 43% year on year at around 3% quarter on quarter. Our operating cost is coming down. Our operating cost has come down to around 6.3%. I think with the disbursement growth which we are seeing and the efficiencies that we are building in our operations through using technology, this operating cost will come down further. The credit cost is rapidly improving. We have further reduced our credit cost from last quarter of 2.8% to 2.6% this quarter, and this is even below the lower spectrum of our guidance. We feel for the remaining year, this credit cost will remain lower. Definitely this will help us to improve our ROA and ROE.

Sadaf Sayeed: If you look at 5% quarter on quarter and 20% year-on-year. The improvement can be seen in the PPOP. Our PPOP has improved by 43% year-on-year at around 3% quarter on quarter. Our operating cost is coming down. Our operating cost has come down to around 6.3%. I think with the disbursement growth which we are seeing and the efficiencies that we are building in our operations through using technology, this operating cost will come down further.

Speaker #3: The improvement can be seen in the PPOP. Our PPOP has improved by 43% year-on-year, and around 3% quarter-on-quarter. Our operating cost is coming down.

Speaker #3: Our operating cost has come down to around 6.3%. I think with the disbursement growth that we are seeing, and the efficiencies that we are building in our operations through using further—

Speaker #3: The credit cost is rapidly improving. We have further reduced our credit cost from last quarter—from 2.82% to 2.6% this quarter. And this is even below the lower spectrum of our guidance.

Sadaf Sayeed: The credit cost is rapidly improving. We have further reduced our credit cost from last quarter of 2.8% to 2.6% this quarter, and this is even below the lower spectrum of our guidance. We feel for the remaining year, this credit cost will remain lower. Definitely this will help us to improve our ROA and ROE. I think from a growth perspective, we have revised our guidance to 20%. We feel that with the momentum that we have in the Q1, and looking at the festive season approaching us and the way the liquidity is available to us and the demand that is there at the ground, we definitely feel that 20% is a growth that we can easily achieve.

Speaker #3: And we feel that for the remaining half of the year, this credit cost will remain lower. And definitely, this will help us to improve our ROA and ROE.

Speaker #3: I think, from a growth perspective, we have revised our guidance to 20%. We feel that, with the momentum we have in Q1, we can achieve this.

Sadaf Sayeed: I think from a growth perspective, we have revised our guidance to 20%. We feel that with the momentum that we have in the Q1, and looking at the festive season approaching us and the way the liquidity is available to us and the demand that is there at the ground, we definitely feel that 20% is a growth that we can easily achieve. With the success of the products that we have introduced and the way the customer is appreciating, definitely that is helping us and giving us the confidence that 20% growth we are able to achieve. We have also done a detailed study on our portfolio and looked at where the customer is moving in terms of borrowing. The thesis that we have initially articulated that now it's the time to look at meaningful financial inclusion.

Speaker #3: And looking at the festive season approaching us, and the way the liquidity is available to us, and the demand that is there on the ground, we definitely feel that 20% is a growth that we can easily achieve.

Speaker #3: And with the success of the products that we have introduced, and the way the customer is appreciating, definitely that is helping us and giving us the confidence that 20% growth we are able to achieve.

Sadaf Sayeed: With the success of the products that we have introduced and the way the customer is appreciating, definitely that is helping us and giving us the confidence that 20% growth we are able to achieve. We have also done a detailed study on our portfolio and looked at where the customer is moving in terms of borrowing. The thesis that we have initially articulated that now it's the time to look at meaningful financial inclusion.

Speaker #3: We have also done a detailed study on our portfolio and looked at where the customer is moving in terms of borrowing. The thesis that we have initially articulated is that now it's the time to look at meaningful financial inclusion.

Speaker #3: We are progressing in that direction, and we are focusing on providing customers and the households that we are serving products as per their need.

Sadaf Sayeed: We are progressing in that direction, we are focusing on providing customers and the household that we are serving, products as per their need. We have seen in the industry that secured and unsecured business loan is the number 1 need of the customer. The number 2 need is the gold loan, the number 3 need that the customer is housing loan or a two-wheeler loan. All of these products are available with us, and we are catering to the customer. In terms of our overall performance, we have seen the AUM growth of 18% year-on-year.

Speaker #3: We have seen in the industry that secured and unsecured business loans are the number one need of the customer. Then, the number two need is the gold loan.

Speaker #3: And number three, we need that the customer has a housing loan or a two-wheeler loan. So, all of these products are available with us, and we are catering to the customer.

Speaker #3: In terms of our overall performance, we have seen AUM growth of 18% year-on-year. We will continue to build this AUM with quality.

Sadaf Sayeed: We will continue to build this AUM with quality and look at the customer's need and continue to improvise on products and focus on products which are catering to our customer's needs, and also at the same time, make sure that we build efficiencies from our cost of fund point of view, our asset quality and operating expenditure. I think I'll stop here. I'll open up the floor for questions. We look forward to your participation and your support.

Speaker #3: And look at the customer's needs and continue to improvise on products and focus on products which are catering to our customers' needs. And also, at the same time, make sure that we build efficiencies from our cost of funds point of view, our asset quality, and operating expenditure.

Speaker #3: I think I'll stop here. I'll open up the floor for questions. We look forward to your participation and your support.

Speaker #1: Thank you, sir. 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, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press *1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press *2. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Varun Dubey with Sharekhan Securities. Please go ahead.

Speaker #1: If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use a handset while asking a question.

Speaker #1: Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Arun Dube, who is with InCred Securities.

Speaker #1: Please go ahead.

Speaker #2: Oh, good night, sir. And congratulations on your strong set of results. I mean, your results really display the turnaround that is happening in the microfinance industry.

Varun Dubey: Good morning, sir, congratulations on your strong set of results. I mean, your results really display the turnaround that is happening in microfinance industry. I just had a few questions. The first one is on the yield side, because your overall incremental cost of borrowing has come down around 10 basis points and the NIMs are almost flat. What was the yield for this quarter, if you can throw some light on that. Also, on the disbursement side, your company was aiming around INR 1,000 crores of disbursement per month. That is around INR 3,000 crores of disbursement per quarter. This year this quarter it was around INR 2,600 crores. Do you think the disbursements could come back to INR 1,000 crores per month in coming quarters?

Speaker #2: I just had a few questions. The first one is on the yield side, because your overall income interest cost of borrowing has come down to around 10 basis points.

Speaker #2: And the numbers are almost flat. So, what was the yield for this quarter, if you can throw some light on that? And also, on the disbursement side, your company was aiming around ₹1,000 crore of disbursement per month.

Speaker #2: So that is around ₹3,000 crore of disbursement per quarter. So, I mean, this year, this quarter, it was around ₹2,600 crore. So, do you think the disbursements could come back to, you know, ₹1,000 crore per month in the coming quarter?

Varun Dubey: That is around INR 3,000 crores of disbursement per quarter. This year this quarter it was around INR 2,600 crores. Do you think the disbursements could come back to INR 1,000 crores per month in coming quarters? There would be a substantial increase in disbursement and that could actually lead to a better AUM growth of more than 20%, than the 20% guidance that we had given?

Speaker #2: So, there would be a substantial increase in disbursement, and that could actually lead to better AUM growth—more than 20%, compared to the 20% guidance that we had given.

Varun Dubey: There would be a substantial increase in disbursement and that could actually lead to a better AUM growth of more than 20%, than the 20% guidance that we had given?

Speaker #3: Yeah. So I think, thank you very much for your question. ₹1,000 crore per month disbursement will definitely be achieved. Like I was talking about, for the whole financial year, on average, if you see, the disbursement that we are planning would be in excess of ₹12,000 crore.

Sadaf Sayeed: Yeah. Thank you very much for your question. INR 1,000 crore per month disbursement will definitely be achieved. I was talking about the whole financial year. On an average, if you see the disbursement that we are planning would be in excess of INR 12,000 crores. INR 1,000 per month kind of a disbursement number would be achieved. At quarterly level, usually the Q1 is the slowest quarter, but considering the slowest quarter also, we have done INR 2,644 crores of disbursement. I think it's a good momentum that we are building. Definitely, Q2, Q3, and onwards, you would see these numbers traveling upwards, definitely. On the yield part, if you look at our portfolio, the overall lending mix is there. We are doing group loans at around 24.85%, individual loans at around 23.5%.

Speaker #3: So, a disbursement number of about 1,000 per month would be achieved. And at the quarterly level, usually the first quarter is the slowest quarter. But considering even the slowest quarter, we have done ₹2,644 crore of disbursement.

Sadaf Sayeed: At quarterly level, usually the Q1 is the slowest quarter, but considering the slowest quarter also, we have done INR 2,644 crores of disbursement. I think it's a good momentum that we are building. Definitely, Q2, Q3, and onwards, you would see these numbers traveling upwards, definitely. On the yield part, if you look at our portfolio, the overall lending mix is there. We are doing group loans at around 24.85%, individual loans at around 23.5%.

Speaker #3: I think it's good momentum that we have built in. Definitely, in Q2, Q3, and onwards, you will see these numbers trending upwards, definitely. On the yield part, if you look at our portfolio, the overall lending mix is there.

Speaker #3: So, we are doing group loans at around 24.85%. Individual loans are at around 23.5%. Then there is a lab loan, which is between 18% to 22%.

Sadaf Sayeed: There is a LAP loan which is between 18% to 22%, and a gold loan, which is at around 20%. Blended yield, if you look at the portfolio, would be somewhere around 23%. As the overall yield on the portfolio is calculated based on the denominator, which also includes the NPA portfolio, which is not yielding and which has been a historical portfolio, that's why the yield is slightly flat. As we see more and more collection coming in and more and more of that portfolio going out, the yields will start expanding. The more portion of the book would be a performing portfolio, so the yields expansion will happen. Already, if you look at from a NIM perspective, as compared to the last financial year, the NIMs have improved.

Speaker #3: And the gold loan, which is at around 20%. So, the blended yield, if you look at the portfolio, would be somewhere around 23%. But as we calculate, the overall yield on the portfolio is calculated based on the denominator, which also includes the NPA portfolio that is not yielding and which has been part of the historical portfolio.

Speaker #3: That's why the yield is slightly flat. But as we see more and more correction coming in, and more and more of that portfolio going out, the yields will start expanding.

Sadaf Sayeed: As we see more and more collection coming in and more and more of that portfolio going out, the yields will start expanding. The more portion of the book would be a performing portfolio, so the yields expansion will happen. Already, if you look at from a NIM perspective, as compared to the last financial year, the NIMs have improved.

Speaker #3: And the more portion of the book would be performing portfolio. So the yields expansion will happen. Already, if you look at it from a NIM perspective, as compared to the last financial year, the NIMs have improved.

Speaker #3: Last financial year, if you look at quarter four or the full year, we are flat. But if you look from a quarter one perspective, there is a 50 bps expansion that has already happened.

Sadaf Sayeed: Last financial year, if you look at Q4 on the full year, we are flat. If you look at it from a Q1 perspective, there is a 50 basis points of expansion already has happened, and this expansion will continue both from the side of the yield as well as a reduction in the cost of funds, and that will translate into better profitability, better ROA. Also efficiencies will improve. If you look at our per-branch AUM, which was in Q1 last year around INR 7 crores, it has already reached to INR 8.65 crores. There's almost a 20% more than what it was in Q1. Operating efficiencies are also kicking in. Overall, I think the expansion on the ROA would be there. That's why we have revised the guidance on the ROA as well.

Speaker #3: And this expansion will continue, both from the side of the yield as well as the reduction in the cost of funds. That will translate into better profitability and better ROA.

Speaker #3: And also, efficiencies will improve if you look at our per-branch AUM, which was around ₹7 crore in Q1 last year. It has already reached ₹8.65 crore.

Sadaf Sayeed: Also efficiencies will improve. If you look at our per-branch AUM, which was in Q1 last year around INR 7 crores, it has already reached to INR 8.65 crores. There's almost a 20% more than what it was in Q1. Operating efficiencies are also kicking in. Overall, I think the expansion on the ROA would be there. That's why we have revised the guidance on the ROA as well. We definitely think that we will be on the upper spectrum of our guidance in terms of an ROA.

Speaker #3: So there's almost a 20 bps, 20% more than what it was in Q1. So operating efficiencies are also kicking in. So overall, I think the expansion on the ROA would be there.

Speaker #3: That's why we have revised the guidance on the ROA as well. We definitely think that we will be on the upper spectrum of our guidance in terms of ROA.

Sadaf Sayeed: We definitely think that we will be on the upper spectrum of our guidance in terms of an ROA.

Varun Dubey: Okay. Sir, just wanted to understand one more thing. The company said it is getting into the consumer durables business. Can you throw some light on that? I mean, what kind of business or AUM are you expecting from the consumer durables side? What would be the yield that the company would generate from here?

Speaker #2: Okay, okay, okay. Sir, I just wanted to understand one more thing. The company said it is getting into the consumer durable business, so can you throw some light on that?

Speaker #2: I mean, what kind of, you know, business or AUM are you expecting from the consumer durable side? And what would be the yields that the company would generate from here?

Speaker #3: Sorry, come again. What is the business?

Sadaf Sayeed: Sorry, come again. What is the business?

Speaker #2: I mean, the consumer durables business, I think. You highlighted this in your opening remarks, right?

Varun Dubey: I mean, the consumer durable business, I think so you highlighted about this in your starting remarks, right?

Speaker #3: Yeah. Yeah, the consumer durable business you're talking about.

Sadaf Sayeed: Yeah. Consumer durable business you're talking about.

Speaker #2: Yes. So what kind of AUM are you expecting to generate from here? How big could this be and at what rate? I mean, would you be lending over here?

Varun Dubey: Yes. What kind of AUM are you expecting to generate from here? How big this could be and at what rate would you be lending over here?

Speaker #3: Yeah, so the consumer durable yield would be somewhat similar, around 22 to 23%. And we are starting with a pilot of around ₹500 crore.

Sadaf Sayeed: Yeah. The consumer durable yield would be somewhat similar, around 22% to 23%. We are starting with a pilot of around INR 500 crores. This is something which we have strategically thought. If you look at our PTC transactions and our CP transactions, they are happening at a coupon rate of around 7.7%. If you include all the cost which is involved, it is around 8%, 8.1%, 8.2%. Our idea is the consumer durable loans usually are shorter tenure loan, a six month or nine month kind of a tenure. We will be utilizing CP facility for this. This will really give us a good yield on the portfolio because we will be borrowing at around 8.2%, 8.1%, and building a portfolio which will give us a yield of around 22% to 23%. That will really give us good margins on our business.

Speaker #3: And this is something which we have strategically thought. If you look at our PTC transactions and our CP transactions, they are happening at a coupon rate of around 7.7%.

Speaker #3: And if you include all the costs which are involved, it is around 8%, 8.1, 8.2%. So, our idea is the consumer durable loan usually is a shorter tenure loan—a six-month or nine-month kind of a tenure.

Speaker #3: We will be utilizing the CP facility for this. This will really give us a good yield on the portfolio because we will be borrowing at around 8.2%, 8.1%.

Sadaf Sayeed: This will really give us a good yield on the portfolio because we will be borrowing at around 8.2%, 8.1%, and building a portfolio which will give us a yield of around 22% to 23%. That will really give us good margins on our business. This is at a pilot stage of INR 500 crore. Definitely as it plays out, we will expand it. We have looked at the industry. The delinquency in this portfolio are around 1%. 90 plus is sub 1%. Definitely this is something that is very good and also our customers are wanting to avail these facilities.

Speaker #3: And building a portfolio which will give us a yield of around 22% to 23%. So that will really give us good kind of margins on our business.

Sadaf Sayeed: This is at a pilot stage of INR 500 crore. Definitely as it plays out, we will expand it. We have looked at the industry. The delinquency in this portfolio are around 1%. 90 plus is sub 1%. Definitely this is something that is very good and also our customers are wanting to avail these facilities.

Speaker #3: This is at the pilot stage of ₹500 crore. Definitely, as it plays out, we will expand it. We have looked at the industry; the delinquency in this portfolio is around 1%.

Speaker #3: So, and 90 plus is 1%. So definitely, this is something that is very good, and also our customers are wanting to avail these facilities.

Speaker #2: Okay, great, sir. So, one last question I just wanted to understand. I mean, recently we have seen, you know, surges in Assam and, you know, some other places as well.

Varun Dubey: Okay, great sir. One last question I just wanted to understand. I mean, recently we have seen floods in Assam and some other places as well. I think so your company has just entered the Assam area. Are you facing any challenges over there? I mean, should we expect some kind of deterioration in your books because of these issues?

Speaker #2: And I think your company has just entered the Assam area. So, I mean, are you facing any challenges over there? I mean, should we expect some kind of deterioration in your books because of these issues?

Speaker #3: So in Assam, floods or this kind of water problem is kind of an annual phenomenon. So one is that this is in upper Assam.

Sadaf Sayeed: In Assam, the flood or this kind of a water problem is kind of an annual phenomenon. One is that this is in upper Assam. We have no exposure to that local state. We are at lower Assam, so our portfolio is not affected as of now entirely. Second aspect is we take natural calamity insurance for all our customers, so that impact is not there at all in our portfolio. Even if there is some flood that may come, we don't have any impact on our portfolio. Wherever there are excessive rain, even in some parts of Kerala, there is no impact on our portfolio as of now.

Speaker #3: We have no exposure to that location or state. We are at Lower Assam, so our portfolio is not affected as of now, entirely. And the second aspect is, we take natural calamity insurance for all our customers.

Speaker #3: So that impact is not there at all in our portfolio. Even if there is some flood that may come, we don’t have any impact on our portfolio.

Speaker #3: Wherever there is excessive rain, even in some parts of Kerala, there is no impact on our portfolio as of now.

Speaker #2: Okay. Okay. Okay. Thank you, sir, for taking my questions. And once again, congratulations on your results and best of luck for your future. Thank you, sir.

Varun Dubey: Okay. Thank you, sir, for taking my questions. Once again, congratulations on your results, and best of luck for the future. Thank you, sir.

Speaker #3: Thank you very much.

Sadaf Sayeed: Thank you very much.

Speaker #1: Thank you. Before we take the next question, we would like to remind participants to press Star 1 to ask a question. The next question comes from the line of Prithvi Viraj Patel.

Operator: Thank you. Before we take the next question, we would like to remind participants that to press star and one to ask a question. The next question comes from the line of Prithviraj Patil with Investec. Please go ahead.

Speaker #1: With investech, please go ahead.

Speaker #4: Question.

Prithviraj Patil: Question.

Speaker #1: Hello. Mr. Prithvi Viraj.

Operator: Hello, Mr. Prithviraj.

Speaker #3: Yeah, Prithvi, we can hear you. Do you have a question?

Sadaf Sayeed: Yeah, Prithvi, we can hear you. Do you have a question?

Speaker #1: Oh, sir. Actually, the current participant has been disconnected. Ladies and gentlemen, if you wish to ask a question, please press star and one. Oh, yes.

Operator: Sir, actually, the current participant has been disconnected. Ladies and gentlemen, if you wish to ask a question, please press star and one. Yes, Prithviraj, can you hear us?

Speaker #1: Prithvi Viraj, can you hear us?

Speaker #4: Yeah, I can hear you. Am I audible?

Prithviraj Patil: I can hear you. Am I audible?

Speaker #1: Yes, sir. Please go ahead with your question. Yeah.

Operator: Yes, sir, please go ahead with your question, yeah.

Speaker #4: Yeah, so I had a question on the direct assignment. I see that there were some direct assignments done this quarter. So, are we booking that income in the interest income line item itself, or is that as per the recognition policy of that income?

Prithviraj Patil: I had a question on the direct assignment. I see that there were some direct assignments done this quarter. Are we booking that income in the interest income line item itself? That's the first on the recognition policy of that income. The second is on the co-lending mechanism and the referral mechanism. If you could just throw some light about how that gold loan referral business is moving. These two questions.

Speaker #4: And then the second is on the co-lending mechanism and the referral mechanism. If you could just throw some light about how that gold loan referral business is moving.

Speaker #4: Yeah. So these two questions.

Speaker #3: Sure. On the gold loan perspective, I can say that on the gold loan referral business, we are doing really well. We are disbursing almost ₹100 crore every month.

Sadaf Sayeed: Sure. On the gold loan perspective, I can say that on the gold loan referral business, we are doing really well. We are disbursing almost INR 100 crore every month since the gold loan co-lending guidelines came in, and then there was a gold loan guidelines also came in in April. In Q1, the business was minimal, but post Q1, every month we are disbursing INR 100 crore. Already we have disbursed around INR 360 crore of gold loans, and it is scaling up really well. On the DA side, I'll ask my colleague Praveen to kind of explain that. Praveen.

Speaker #3: Since the gold loan coal ending guidelines came in and then there was a gold loan guidelines also came in in April. So in the first quarter, the business was minimal.

Speaker #3: But post the first quarter, every month we are disbursing ₹100 crore already. We have disbursed around ₹360 crore of gold loans, and it is scaling up really well.

Speaker #3: On the DA side, I asked my colleague Kavin to kind of explain that. Kavin?

Speaker #2: Yeah. Oh, hi. This is Kavin Desai. So, the income from direct assignment is booked through the net gain on fair value changes. It doesn't go through the interest income portion.

Praveen Desai: Yeah. Oh, hi, this is Praveen Desai. The income from direct assignment is booked through the net gain on fair value changes. It doesn't go through the interest income portion. It goes through the net gain on fair value changes so that it can be tracked separately. All the AIS is routed through that account. Last quarter, we did around INR 355 crore. Last financial year, we did around INR 1,600 crore of DA. It's a consistent borrowing that we do, and mostly we offload the non-qualifying portion of our portfolio through the DA mechanism so that we can get the benefit of capital adequacy as well as calling a fine asset on the balance sheet.

Praveen T: Yeah. Oh, hi, this is Praveen Desai. The income from direct assignment is booked through the net gain on fair value changes. It doesn't go through the interest income portion. It goes through the net gain on fair value changes so that it can be tracked separately. All the AIS is routed through that account. Last quarter, we did around INR 355 crore. Last financial year, we did around INR 1,600 crore of DA. It's a consistent borrowing that we do, and mostly we offload the non-qualifying portion of our portfolio through the DA mechanism so that we can get the benefit of capital adequacy as well as calling a fine asset on the balance sheet.

Speaker #2: It goes through the net gain on fair value changes so that it can be tracked separately. And all the EIS is routed through that account.

Speaker #2: So, last quarter we did around ₹355 crore. Last financial year, we did around ₹1,600 crore of DA. So, it's a consistent borrowing that we do.

Speaker #2: And mostly, we offload the non-qualifying portion of our portfolio through the DA mechanism so that we can get the benefit of capital adequacy, as well as call it a selling asset on the balance sheet.

Speaker #3: Yeah. And in terms of quantum of DA, I think, Praveen, what is the quantum of DA?

Sadaf Sayeed: Yeah. In terms of quantum of DA, I think, Praveen, what is the quantum of DA?

Speaker #2: 355 crores this quarter, last quarter.

Praveen Desai: INR 355 crore this quarter, last quarter.

Praveen T: INR 355 crore this quarter, last quarter.

Speaker #3: Yeah, and on the gold loan, one thing I wanted to mention is that we have done a propensity analysis among our customers to determine what is the propensity to borrow.

Sadaf Sayeed: Yeah. On the gold loan, one thing I wanted to mention that we have done a propensity analysis among our customers that what is the propensity to borrow, what is the first loan after the microfinance loan the customer takes. Gold loan comes as one of the top priority for the customer that after microfinance, the first loan that the borrower takes is a gold loan. There's a huge potential of doing gold loan business. We have seen among our customer, Muthoot Microfin customer itself, there is INR 11,000 crore of gold loan outstanding with all various lenders. Definitely our effort is to bring that to the Muthoot fold, and we have started that journey. INR 100 crore per month we are already doing.

Speaker #3: What is the first loan that a customer takes after a microfinance loan? So, gold loan comes as one of the top priorities for the customer; after microfinance, the first loan that the borrower takes is a gold loan.

Speaker #3: So, there is a huge potential for doing gold loan business, and we have seen among our customers—Muthoot Microfin customers themselves—there is ₹11,000 crore of gold loan outstanding with various lenders.

Sadaf Sayeed: There's a huge potential of doing gold loan business. We have seen among our customer, Muthoot Microfin customer itself, there is INR 11,000 crore of gold loan outstanding with all various lenders. Definitely our effort is to bring that to the Muthoot fold, and we have started that journey. INR 100 crore per month we are already doing.

Speaker #3: So, definitely our effort is to bring that to the Muthoot fold, and we have started that journey. ₹100 crore per month we are already doing.

Speaker #3: I think there is a huge potential for this. And this product will become a unique product for Muthoot Microfin because, if you compare to our competitors, not everybody has the capacity to offer gold loan products, because this requires a lot of infrastructure investment.

Sadaf Sayeed: I think there is a huge potential of this product will become a unique product for Muthoot Microfin because, if you compare to our competitors, not everybody has the capacity to offer gold loan products because this requires a lot of infrastructure investment. Because of our parent association and the network that the parent has created, we are able to offer this product easily, and most importantly, it requires a lot of credibility and trust in the mind of the customer that her precious jewelry or precious gold will remain safe. Being in this business for more than a century, we have built that trust and we have built that credibility as Muthoot. Definitely, we would have the advantage in terms of customer trying to pledge the gold.

Speaker #3: But because of our parents' association and the network that the parent has created, we are able to offer this product easily. And most importantly, it requires a lot of credibility and trust in the mind of the customer.

Speaker #3: That her precious jewelry or precious gold will remain safe. And being in this business for more than a century, we have built that trust and we have built that credibility as Muthoot.

Sadaf Sayeed: Being in this business for more than a century, we have built that trust and we have built that credibility as Muthoot. Definitely, we would have the advantage in terms of customer trying to pledge the gold. With that INR 11,000 crore, which is among our customer itself, we definitely feel that a good amount of 30% to 40% of that portfolio we should be able to bring into our fold. That has been our effort, and we are focusing at that creamy layer of customers.

Speaker #3: Definitely, we would have the advantage in terms of customers trying to pledge their gold. And with that ₹11,000 crore, which is among our customers itself, we definitely feel that a good amount—30 to 40 percent of that portfolio—we should be able to bring into our fold.

Sadaf Sayeed: With that INR 11,000 crore, which is among our customer itself, we definitely feel that a good amount of 30% to 40% of that portfolio we should be able to bring into our fold. That has been our effort, and we are focusing at that creamy layer of customers.

Speaker #3: That has been our effort, and we are focusing on that creamy layer of customers.

Speaker #1: So if I can ask a follow-up question. I just had a question on the branch network. For the gold loans, we do co-lending.

Prithviraj Patil: If I can ask a follow-up question. I just had a question on the branch network. For the gold loans, we do a co-lending. Are we investing in the branch network or using the parent's gold branches itself for parking the gold loan, for parking the gold?

Speaker #1: So are we investing in the branch network, or using the parent's gold branches itself for parking the gold loan, for parking the gold?

Speaker #3: Yeah. So we have an understanding between the parent and us. We have an agreement where the storage of the gold and assessment of the gold is done at the parent level.

Sadaf Sayeed: Yeah. We have a understanding between the parent and us. We have a agreement where the storage of the gold and assessment of the gold is done at the parent level. The sourcing of the customer, because it's a microfinance customer, we source the customer and we handhold the customer, take them to the branch with their gold, and help them to assess gold. The gold is stored at the Fincorp branch. It's a co-lending arrangement with 60-40, 60% remains on our book, 40% remains on parent's book. In case of referrals, it remains on parent book, but we get an earning from that portfolio, 1.5% of referral that is there. The idea is not to invest and duplicate work. We don't have a gold loan-specific branch. It's the parent branch where we do this, and our branch becomes a contact point from the customer.

Speaker #3: The sourcing of the customer, because it's a microfinance customer, we source the customer. And we handhold the customer, take them to the branch with the gold, and help them to assess gold.

Speaker #3: And the gold is stored at the FinCorp branch. It's a co-lending arrangement with 60 percent remaining on our books, 40 percent remaining on the parent's book.

Sadaf Sayeed: The gold is stored at the Fincorp branch. It's a co-lending arrangement with 60-40, 60% remains on our book, 40% remains on parent's book. In case of referrals, it remains on parent book, but we get an earning from that portfolio, 1.5% of referral that is there. The idea is not to invest and duplicate work. We don't have a gold loan-specific branch. It's the parent branch where we do this, and our branch becomes a contact point from the customer.

Speaker #3: But in the case of referrals, it remains on the parent's book. But we get an earning from that portfolio—1.5 percent of the referral that is there.

Speaker #3: But the idea is not to invest and duplicate work. So we don't have a gold loan-specific branch; it's the parent branch where we do this.

Speaker #3: And our branch becomes a contact point for the customer. And we are not only focusing on Muthoot Microfin customers. We are also bringing in other customers because gold loans generally work on a referral basis.

Sadaf Sayeed: We are not only focusing on Muthoot Microfin customer, we are also bringing in other customers because gold loan generally works on a referral. One customer pledges it, she tells in her neighborhood, the other person also comes in. We are doing so. It becomes a good mechanism to acquire new customers as well.

Speaker #3: So one customer pledges it, she tells her neighborhood, and another person also comes in. So we are doing this, and it becomes a good mechanism to acquire new customers as well.

Speaker #1: Thank you. Thank you. That's all from my side. Thank you. The next question comes from the line of Vishal Nerolia with ICICI Securities. Please go ahead.

Prithviraj Patil: Thank you. That's all from my side.

Sadaf Sayeed: Thank you.

Operator: Thank you. The next question comes from the line of Vishal Narolia with ICICI Securities. Please go ahead.

Speaker #4: Yeah, thank you for the opportunity. I basically have two questions. First is, there are some FMCG companies which are talking about some kind of slowdown in rural consumption because of the El Niño and uneven monsoon.

Vishal Narolia: Yeah, thank you for the opportunity. I basically have two questions. First is, there are some FMCG companies which were talking about some kind of slowdown in rural consumption because of the El Niño and uneven monsoon. If you can give your take about what is happening on the ground, and in case if there is some impact, will our growth guidance be maintained? Second is, what proportion of AUM currently is under CGSMFI?

Vishal Narnolia: Yeah, thank you for the opportunity. I basically have two questions. First is, there are some FMCG companies which were talking about some kind of slowdown in rural consumption because of the El Niño and uneven monsoon. If you can give your take about what is happening on the ground, and in case if there is some impact, will our growth guidance be maintained? Second is, what proportion of AUM currently is under CGSMFI?

Speaker #4: So, if you can give your take about what is happening on the ground, and in case there is some impact, will our growth guidance be maintained?

Speaker #4: And second is, what proportion of AUM currently is under CGMFU?

Speaker #3: Thank you, Vishal. In terms of the guidance, we don't see any change happening immediately. We think that we can confidently achieve our— we have just revised the guidance upwards to 20%.

Sadaf Sayeed: Thank you, Vishal. In terms of the guidance, we don't see any change happening immediately. We think that we can confidently achieve. We have just revised the guidance upwards to 20%. From the El Niño point of view, the deficit of rain which was there initially was around 43%. Now, the latest number shows it is around 12%. Deficit has come down and rains are continuing in northern belt as well as southern belt. We feel that ultimate deficit would be not so significant that may impact crop yield or affect the businesses. We have done a detailed analysis among the agri or agri-allied businesses. Our portfolio, hardly 2% of our customers are directly dependent on these activities which are in sensitive areas, which there could be a shortfall of rain or rain deficit. Some of the parts of Maharashtra, Karnataka that are sensitive to it.

Speaker #3: From the El Niño point of view, the deficit of rain, which was there initially, was around 43%. Now, the latest number shows it's around 12%.

Speaker #3: So, the deficit has come down, and rains are continuing in the northern belt as well as the southern belt. So, we feel that the ultimate deficit would not be so significant that it may impact crop yield or affect the businesses.

Sadaf Sayeed: Deficit has come down and rains are continuing in northern belt as well as southern belt. We feel that ultimate deficit would be not so significant that may impact crop yield or affect the businesses. We have done a detailed analysis among the agri or agri-allied businesses. Our portfolio, hardly 2% of our customers are directly dependent on these activities which are in sensitive areas, which there could be a shortfall of rain or rain deficit. Some of the parts of Maharashtra, Karnataka that are sensitive to it.

Speaker #3: But we have done a detailed analysis among the agri or agri-allied businesses. In our portfolio, hardly 2 percent of our customers are directly dependent on these activities, which are in sensitive areas where there could be a shortfall of rain or rain deficit.

Speaker #3: Some of the parts of Maharashtra and Karnataka that are sensitive to it—so in those, less than 2% of our portfolio is there. And the majority of the agriculture or activity that people are involved in is animal inventory.

Sadaf Sayeed: In that, less than 2% of our portfolio is there and majority of the agriculture or activity that people are involved are in animal husbandry and in fisheries and other activities. They are not directly impacted by this. We don't see too much of impact of this. From a point of view of inflation because of low supply and global macroeconomic events, I think rural inflation is slightly higher than the urban inflation. What we see generally in this scenario, that off take of loans increases. People generally take more borrowing. Overall, we have seen even cash flows improve in rural area. That is what we are witnessing in our collections as well. The collection efficiencies are improving every month and that is why we are able to reach around 98% collection efficiency overall.

Speaker #3: Yes, and in fisheries and other activities, so they are not directly impacted by this. So we don't see too much of an impact from this.

Speaker #3: From a point of view of inflation, because of low supply and global macroeconomic events, I think rural inflation is slightly higher than urban inflation. But what we see generally in this scenario is that offtake of loans increases—people generally take more borrowing.

Sadaf Sayeed: What we see generally in this scenario, that off take of loans increases. People generally take more borrowing. Overall, we have seen even cash flows improve in rural area. That is what we are witnessing in our collections as well. The collection efficiencies are improving every month and that is why we are able to reach around 98% collection efficiency overall.

Speaker #3: But overall, we have seen even cash flows improve in rural areas. That is what we are witnessing in our collections as well. The collection efficiencies are improving every month.

Speaker #3: And that is why we are able to reach around 98 percent collection efficiency overall. And because of the rural cash flow improving, we don't see any challenge as of now.

Sadaf Sayeed: Because of the rural cash flow improving, we don't see any challenge as of now. For any sort of impact of El Niño, we also have the natural calamity insurance, even drought is covered there. From that point of view, we would be insulated. I think your second question was pertaining to? Sorry, can you repeat that?

Speaker #3: And for any sort of impact of El Nino, we also have the natural calamity insurance. So even drought is covered there. So from that point of view, we would be insulated.

Speaker #3: I think your second question was pertaining to—sorry, can you repeat that?

Speaker #4: Yeah. What is the proportion of AUM under CGMFU guarantee?

Vishal Narolia: What is the proportion of AUM under CGSMFI guarantee?

Vishal Narnolia: What is the proportion of AUM under CGSMFI guarantee?

Speaker #3: Yeah, so we have applied for the CGMFU guarantee. We are yet to get that in effect. The portion that we are looking at is around 20% to have that CGMFU guarantee.

Sadaf Sayeed: Yeah. We have applied for CGSMFI guarantee. We are yet to get that in effect. The portion that we are looking at is around 20% to have that CGSMFI guarantee.

Speaker #4: Okay, thank you. That's it from my side. Thank you.

Vishal Narolia: Okay, thank you. That's it from my side. Thank you.

Vishal Narnolia: Okay, thank you. That's it from my side. Thank you.

Speaker #1: The next question comes from the line of Nilesh Patel with Chair India Securities. Please go ahead. Mr. Nilesh, your line has been unmuted. Please go ahead with your question.

Operator: The next question comes from the line of Nilesh Patil with Sharekhan Securities. Please go ahead.

Operator: The next question comes from the line of Nilesh Patil with Sharekhan Securities. Please go ahead. Mr. Nilesh, your line has been unmuted. Please go ahead with your question. As there's no response, let's move on to the next question. It's on the line of Chintan Shah with Invest Yadnya. Please go ahead.

Operator: Mr. Nilesh, your line has been unmuted. Please go ahead with your question. As there's no response, let's move on to the next question. It's on the line of Chintan Shah with Invest Yadnya. Please go ahead.

Speaker #1: Okay. As there's no response, we'll move on to the next question. It's on the line of Chintan Shah with InvestantA.com. Please go ahead.

Speaker #5: Hello. Am I audible?

Chintan Shah: Hello?

[Analyst]: Hello?

Operator: Yes, sir. Please go ahead.

Chintan Shah: Am I audible? Yes. Okay. Thank you for the opportunity, sir. Am I basically looking at the presentation you are uploading, in which I am seeing active clients, which base is actually year-on-year and Q-on-Q de-grow. There is a reason because asset quality was not that good in that time. Will it improve in Q2 and Q3 onwards? That is my question, sir.

[Analyst]: Am I audible? Yes. Okay. Thank you for the opportunity, sir. Am I basically looking at the presentation you are uploading, in which I am seeing active clients, which base is actually year-on-year and Q-on-Q de-grow. There is a reason because asset quality was not that good in that time. Will it improve in Q2 and Q3 onwards? That is my question, sir.

Speaker #3: Yes.

Speaker #5: Okay. Thank you for the opportunity, sir. Am I basically looking at the implementation you are uploading? In which I have seen the active customer active clients which basically is actually year on year and Q on Q degrowth.

Speaker #5: There is a reason why asset quality was not that good at that time. And will it improve in Q2 and Q3 onward? That is my question, sir.

Speaker #3: Yeah, so definitely, I think from a customer point of view, if you look at it from an industry perspective, the industry at its peak had around 8 crore customers, which has reduced to around 6 crores now.

Sadaf Sayeed: Yeah. Definitely, I think from a customer point of view, if you look at from industry perspective, industry at peak had around 8 crore customers, which have reduced to around 6 crores now. Almost 25% reduction in the customer base. If you compare from that perspective, we have had a minor kind of a Q1 Q reduction of 0.6%. Yeah, we have taken steps in terms of recruiting new customers. The products that we are offering now, like gold loans, consumer durable loans, also from the

Speaker #3: So, almost a 25 percent reduction in the customer base. If you compare from that perspective, we have had a minor kind of quarter-on-quarter reduction of 0.6 percent.

Speaker #3: So, we have taken steps in terms of recruiting new customers. The products that we are offering now, like gold loans, consumer durable loans, are also different from the traditional ones.

Speaker #5: Hello.

Chintan Shah: Hello?

[Analyst]: Hello?

Speaker #1: Oh, yes, sir. Sorry to interrupt. The line for management has been disconnected.

Operator: Yes, sir. Sorry to interrupt. The line for the management has been disconnected.

Speaker #5: No, maybe I'll take that while you're joined. So, I think we have introduced new customers, new products such as consumer durables, we have gold loans, and we have also expanded our network to the northern, eastern, and western geographies, where we are acquiring more new customers.

Sadaf Sayeed: No, I will take that while he joins. I think we have introduced the new products such as consumer durable. We have gold loans, and we have also expanded our network to the northern, eastern, and western geographies where we are acquiring more new customers. We are expecting this to be improving from Q2 onwards. It is not that we are adding customers, but at the same time, there are certain customers we are either through write-off or closure, we don't want to renew. They are moving out of the system. The Q2 onwards, the customer base will start improving.

Speaker #5: So, we are expecting this to improve from Q2 onwards. It is not that we are adding customers, but at the same time, there are certain customers we are either, through write-off or closure, choosing not to renew.

Speaker #5: They are moving out of the system. So, from Q2 onwards, the customer base will start improving. Okay. Just a second question, sir: from the branch point of view, is there a decline on a quarter-on-quarter basis?

Chintan Shah: Okay. Just a second question, sir. From the branch point of view, there is a decline in year-on-year basis. It will improve in Q2 and onwards?

[Analyst]: Okay. Just a second question, sir. From the branch point of view, there is a decline in year-on-year basis. It will improve in Q2 and onwards?

Speaker #5: So, it will improve in Q2 and onwards.

Speaker #3: Yeah, so on the branch network, we have focused on two areas, which are Andhra Pradesh and Assam, which are comparatively newer. So that's where the expansion is.

Sadaf Sayeed: Yeah. On the branch network, we have focused on two areas, which is Andhra Pradesh and Assam, which are the newer comparatively, where the expansion is. Andhra Pradesh, the expansion is more. The focus is to have a deeper penetration with our customer, have a larger wallet share. We will be focusing on that, at the same time expanding our branch network as well. We will look at some of the newer territories that we are exploring. Definitely, in the coming year, we will open more branches, this branch number will go up.

Speaker #3: In Andhra Pradesh, the expansion is more significant. So the focus is to have deeper penetration with our customers and achieve a larger wallet share. We will be focusing on that while also expanding our branch network as well.

Speaker #3: We will look at some of the newer territories that we are exploring. But definitely, in the coming year, we will open more branches, so this branch number will go up.

Speaker #5: Okay. Any idea for the FY27 total number of branches you will add or something like that?

Chintan Shah: Okay. Any idea for the FY27 total number of branches you will add or something like that?

[Analyst]: Okay. Any idea for the FY27 total number of branches you will add or something like that?

Speaker #3: So, we will be in the range of 1,750 to 1,740 branches. We are right now around 1,670 branches.

Sadaf Sayeed: We will be in the range of 1,750 to 1,740 branches. We are right now around 1,670 branches.

Speaker #5: Okay. Okay. Thank you. That is my question. That was my question.

Chintan Shah: Okay. Thank you, sir. That was my question.

[Analyst]: Okay. Thank you, sir. That was my question.

Sadaf Sayeed: Thank you.

Speaker #3: Thank you. Thank you very much.

Operator: Thank you. The next question comes from the line of Ashlesh Sonje with Kotak Securities. Please go ahead.

Speaker #1: Thank you. The next question comes from the line of Ashley Sonje with Kotex Securities. Please go ahead.

Ashlesh Sonje: Hi, team. Good morning. First, a couple of questions on the MFI business.

Speaker #6: Good morning. So, first, a couple of questions on the MFI business.

Speaker #1: Oh, I'm sorry to interrupt. Mr. Ashley, your voice is coming in very low. Could you please use your handset or speak a bit louder?

Operator: I'm sorry to interrupt. Mr. Ashlesh, your voice is coming very low. Could you please use your headset or speak a bit louder?

Speaker #6: Is this better?

Ashlesh Sonje: Is this better?

Speaker #1: Yes, sir. Perfect. Thank you.

Operator: Yes, sir. Perfect. Thank you.

Speaker #6: Yeah. So, first, a few questions on the MFI business. Have you taken any price hikes recently on the MFI portfolio? And are you considering any hikes going forward in the rest of this year?

Ashlesh Sonje: Sir, first, a few questions on the MFI business. Have you taken any price hikes recently on the MFI portfolio, and are you considering any hikes going forward in the rest of this year? Secondly, within MFI, what are the key areas which are being discussed at the SRO level today?

Speaker #6: And secondly, within MFI, what are the key areas which are being discussed at the SRO level today?

Speaker #3: Yeah. So on the price hike, we had increased the rate last year at the end of the quarter. So we had increased the rate from 23.5% to 24.85%.

Sadaf Sayeed: On the price hike, we had increased the rate last year at the end of the quarter. We had increased the rate by around from 23.5% to 24.85%. There has been an increase in the yield, definitely because of the risk and the credit cost that was there last year. This year, we may evaluate, if there is a requirement of increasing rate, we will increase, but at the moment, we don't see that. In fact, we are getting larger kind of funding at a cheaper cost, we may share some bit to our customer. Largely, I think it will go into expanding of our NIM. On the SRO bit, I'm not the official spokesperson, I can tell you from my interaction, SRO has taken initiative to ensure that the multiple lending and overlending is avoided. I think that is playing out well.

Speaker #3: So, there has been an increase in the yield, definitely, because of the risk and the credit cost that was there last year. This year, we may evaluate—if there is a requirement of increasing rate, we will increase.

Speaker #3: But at the moment, we don't see that. In fact, we are getting larger kinds of funding at a cheaper cost. So we may share some of that benefit with our customers.

Sadaf Sayeed: In fact, we are getting larger kind of funding at a cheaper cost, we may share some bit to our customer. Largely, I think it will go into expanding of our NIM. On the SRO bit, I'm not the official spokesperson, I can tell you from my interaction, SRO has taken initiative to ensure that the multiple lending and overlending is avoided. I think that is playing out well.

Speaker #3: But largely, I think it’ll go into expanding our NIM. On the SRO bit, I’m not the official spokesperson, but I can tell you from my interaction, SRO has taken initiative to ensure that multiple lending and overlending are avoided.

Speaker #3: I think that is playing out well. If you look at our customer base itself, we are now at around 46 percent of our customers who are absolutely unique to us.

Sadaf Sayeed: If you look at our customer base itself, we are now around 46% of our customer are absolutely unique to us, and another 30% of the customer are us plus one. I think that is what is playing out in terms of overall over-leveraging customers are moving out of the system. That's a good trend and overall delinquency of the industry is also reducing. Another important role that SRO is playing is to provide liquidity to the sector. There is INR 20,000 crores of Credit Guarantee Scheme for Microfinance Institutions that is available with the government. The off-take in that scheme is slightly slow but definitely SRO is engaging with the government and the lenders as well and ensuring that fund is sufficiently utilized. Those are the two most important initiatives right now SRO is doing.

Speaker #3: And another 30 percent of the customers are us plus one. So I think that is what is playing out in terms of overall overleveraging—customers are moving out of the system.

Speaker #3: So that's the good trend. And overall delinquency of the industry is also reducing. Another important role that the SRO is playing is to provide liquidity to the sector.

Sadaf Sayeed: Another important role that SRO is playing is to provide liquidity to the sector. There is INR 20,000 crores of Credit Guarantee Scheme for Microfinance Institutions that is available with the government. The off-take in that scheme is slightly slow but definitely SRO is engaging with the government and the lenders as well and ensuring that fund is sufficiently utilized. Those are the two most important initiatives right now SRO is doing.

Speaker #3: So, there is a ₹20,000 crore credit guarantee scheme that is available with the government. The offtake in that scheme is slightly slow, but definitely, SRO is engaging with the government and the lenders as well.

Speaker #3: And that ensuring that that fund is sufficiently utilized. So those are the two most important initiatives right now SRO is doing. But apart from that also, the most important activity is to ensure that they monitor what is going around in the industry and evaluating that if there is anybody who is indulging in a deviant behavior.

Sadaf Sayeed: Apart from that, also the most important activity is to ensure that they monitor what is going around in the industry and evaluating that if there is anybody who's indulging in a deviant behavior, that remains an ongoing activity. I think that is an important role that SRO is playing currently.

Speaker #3: So that remains an ongoing activity. So I think that is an important role that SRO is playing currently.

Speaker #6: Understood, sir. Thanks for that, Kannan. Lastly, on the gold loan portfolio, if you can share, how large is the overall gold loan book today?

Ashlesh Sonje: Understood, sir. Thanks for that clarity. Lastly, on the gold loan portfolio, if you can share how large is the overall gold loan book today. If I heard you correctly, you said some of the loans sourced by Muthoot Microfin, they are partly held on the book, while some of the other loans are purely given as referrals to the parent entity. What is the size of each one of these two segments, and how do you decide which loans are to be classified under the co-lending piece and which loans are to be classified under the referral arrangement?

Speaker #6: And if I heard you correctly, you said some of the loans sold by Muthoot Microfin are partly held on the books, while some of the other loans are purely given as referrals to the parent entity.

Speaker #6: So, what is the size of each of these two segments? And how do you decide which loans are to be classified under the co-lending piece and which loans are to be classified under the referral arrangement?

Speaker #3: Yeah, no, that's an important question. So, gold loan is a big opportunity, as I said. Among our customers itself, there is ₹11,000 crore of outstanding as we speak.

Sadaf Sayeed: That's a valid question. Gold loan is a big opportunity, as I said. Among our customer itself, there is INR 11,000 crores of outstanding as we speak and this is definitely growing. If we focus on this, we can generate good amount of business for ourselves and our group. At the moment, because the co-lending guidelines came in during the later part of the year, there were some gold loan regulation which also came in April. That co-lending business has started just at the end of the quarter. Purely we were doing referral business before that. Almost 98% of our business for that quarter is referral business. A minimal part is co-lending. Going forward in Q2 onwards, there would be lot of co-lending business that will be built in.

Speaker #3: And this is definitely growing. So if we focus on this, we can generate a good amount of business for ourselves and our group. At the moment, because the co-lending guidelines came in during the later part of the year and there were some gold loan regulations which also came in April.

Speaker #3: So, that co-lending business started just at the end of the quarter. Previously, we were purely doing referral business. So, almost 98% of our business for that quarter is referral business.

Sadaf Sayeed: That co-lending business has started just at the end of the quarter. Purely we were doing referral business before that. Almost 98% of our business for that quarter is referral business. A minimal part is co-lending. Going forward in Q2 onwards, there would be lot of co-lending business that will be built in. That is what we are seeing, we are disbursing almost in excess of INR 100 crores every month.

Speaker #3: Our minimal part is co-lending. But going forward, in Q2 onwards, there will be a lot of co-lending business that will be built in. That is what we are seeing.

Sadaf Sayeed: That is what we are seeing, we are disbursing almost in excess of INR 100 crores every month. As we speak, we have already disbursed around INR 350 crores of loans in gold and this momentum is carrying on. Definitely we are focusing strategically on this segment of the customer and we can build a healthy portfolio. Our aim is to have around INR 1,200 crores of disbursement and around INR 500 crores of gold portfolio. We are likely to overachieve this number for sure.

Speaker #3: And we are disbursing almost ₹100 crores—in excess of ₹100 crores—every month as we speak. We have already disbursed around ₹350 crores of loans in gold.

Sadaf Sayeed: As we speak, we have already disbursed around INR 350 crores of loans in gold and this momentum is carrying on. Definitely we are focusing strategically on this segment of the customer and we can build a healthy portfolio. Our aim is to have around INR 1,200 crores of disbursement and around INR 500 crores of gold portfolio. We are likely to overachieve this number for sure.

Speaker #3: And this momentum is carrying on. And definitely, we are focusing strategically on this segment of the customer, and we can build a healthy portfolio.

Speaker #3: Our aim is to have around ₹1,200 crore of disbursement and around ₹500 crore of gold portfolio. We are likely to overachieve this number for sure.

Speaker #6: Thank you very much for the insight.

Ashlesh Sonje: Thank you very much for the insight.

Speaker #1: Thank you. Ladies and gentlemen, if you wish to ask a question, you may press star and one. The next question comes from the line of Jyoti Khatri with Chair India Securities.

Operator: Thank you. Ladies and gentlemen, if you wish to ask a question, you may press star one. The next question comes from the line of Jyoti Khatri with Share India Securities. Please go ahead.

Speaker #1: Please go ahead.

Speaker #5: Yeah, Jyoti Khatri here. Thanks for taking the question. Since the outlook on the credit cost for...

Jyoti Khatri: Yeah. Jyoti Khatri here from Ambit Securities. Thanks for the clear question. Just wanted to know, what is your other outlook on the credit cost for next fiscal?

Speaker #1: Ma'am, I'm sorry to interrupt you. Your voice is not coming through very clearly.

Operator: Ma'am, I'm sorry to interrupt you. Your voice is not coming very clear.

Speaker #5: Yeah. Is it audible now?

Jyoti Khatri: Yeah. Is it audible now?

Speaker #1: Yeah. Thank you.

Operator: Yeah. Thank you.

Speaker #5: Is it audible now?

Jyoti Khatri: Is it audible now?

Speaker #1: Yes, ma'am. It is audible.

Operator: Yes, ma'am. It is audible.

Speaker #5: Yeah. Yeah. What is the credit cost guidance for the current fiscal?

Jyoti Khatri: Yeah.

Operator: Yeah.

Jyoti Khatri: What is the credit cost guidance for current fiscal?

Speaker #3: So, see, we had given the guidance of around 2.7% to 3.5%. We are already below the lower spectrum, at around 2.7%.

Sadaf Sayeed: We had given the guidance of around 2.7% to 3.5%. We are already below the lower spectrum of around 2.7%. We are already at 2.6% for the Q1. Definitely going forward it will be improving in the coming quarters. We have revised the guidance in terms of our credit cost. We are likely to overachieve that in terms of credit cost. We are looking at 2.7% at the lower spectrum, but we'll be better than that for sure, the way the asset quality is panning out.

Speaker #3: We are already at 2.6 percent for the first quarter, and definitely, going forward, it will be improving in the coming quarter. So, we have revised the guidance in terms of our credit cost.

Speaker #3: So we are likely to overachieve that in terms of credit cost. We are looking at 2.7 percent. At the lower spectrum, but we would likely to over we'll be better than that for sure, the way the asset quality is spanning out.

Jyoti Khatri: Okay.

Speaker #3: In a normal scenario, you can anticipate—I'm not talking about this here—but overall, around 2% to 2.25% on a long-term credit cost, kind of.

Sadaf Sayeed: In a normal scenario, you can anticipate, I'm not talking about this year, but overall around 2% to 2.25% on a long term credit cost.

Jyoti Khatri: Also, does the margins have a potential to improve from the current rating upgrade and cost of funding?

Speaker #5: And also, the margins have the potential to improve from the current levels and cost of.

Jyoti Khatri: Also, does the margins have a potential to improve from the current rating upgrade and cost of funding?

Speaker #1: Ma'am, I'm sorry. We could not hear the last question. Could you please repeat it?

Operator: Ma'am, I'm sorry we could not hear the last question. Could you please repeat?

Speaker #5: What I'm asking is, is there a potential for margins to improve from the current levels, given the fact that your cost of funds is coming down?

Jyoti Khatri: I'm saying, is there a potential for margins to improve from the current levels, given the fact that your cost of funds is coming down, you've just received rating upgrade as well. On the yield side, I think there is expansion that you're seeing. All put together, is there any potential of further improvement on the margin side?

Speaker #5: You just received a rating upgrade as well. And on the yield side, I think there is expansion that you've seen. So all put together, is there any potential upside?

Speaker #3: Yeah, definitely. I think the margins will expand. Our new guidance is around 12.5 percent on the upper spectrum, and on the lower spectrum, 12.3 percent. So we definitely believe that NIM will expand, both on the side of the yield, also as more and more of the good portfolio becomes a part of the larger pool.

Sadaf Sayeed: Yeah, definitely. I think the margins will expand. Our NIM guidance is around 12.5% on the upper spectrum and lower spectrum 12.3%. We definitely believe that NIM will expand both on the side of the yield also as more and more of good portfolio becomes a part of the larger pool and the yield on the portfolio improves and collection also from the NPA improves. On the cost of fund side also, we'll be able to reduce our cost of fund because we have yet to take advantage of our rating upgrade. Definitely there would be reduction in cost of fund. We are aiming to be around single digit by end of this financial year. We are at 10.14%, so 10.13%. Definitely, we should be able to come into single digit overall cost of fund and that will really help us to expand our NIM.

Speaker #3: And the yield on the portfolio improves, and collections also from the NPA improve. On the cost of funds side, we'll be able to reduce our cost of funds because we have yet to take advantage of our rating upgrade.

Sadaf Sayeed: On the cost of fund side also, we'll be able to reduce our cost of fund because we have yet to take advantage of our rating upgrade. Definitely there would be reduction in cost of fund. We are aiming to be around single digit by end of this financial year. We are at 10.14%, so 10.13%. Definitely, we should be able to come into single digit overall cost of fund and that will really help us to expand our NIM.

Speaker #3: So definitely, there would be a reduction in cost of funds. We are aiming to be around single digit by the end of this financial year. We are at 10.14%.

Speaker #3: So, 10.13 percent—definitely, we should be able to come into single-digit overall cost of funds. And that will really help us to expand our name.

Speaker #5: Okay, any guidance there? Any ballpark range that you can provide?

Jyoti Khatri: Any guidance there? Any ballpark range that you can provide?

Speaker #3: We have guided for 12.3 to 12.5, and I'm quite confident that we'll be at the upper spectrum of 12.5.

Sadaf Sayeed: Yeah, 12.3 to 12.5 is what we have guided. I am quite confident that we will be at the upper spectrum of 12.5.

Speaker #5: Okay. And breaking all this into assumptions, what do you think could be the ROE and ROA for the full fiscal year '27?

Jyoti Khatri: Okay. Taking all this into assumption, what you think that could be ROE and ROA, for the full fiscal FY27?

Speaker #3: So, ROA—we have guided for around 3.3 percent on the upper spectrum, and ROE of around 18 percent on the upper spectrum. And we feel that with the...

Sadaf Sayeed: ROA we have guided for around 3.3% on the upper spectrum and ROE of around 18% on the upper spectrum.

Speaker #5: Sorry, I did not get that clearly. ROA?

Jyoti Khatri: Sorry, I did not get that clearly. ROE?

Speaker #3: Of 3.3 percent on the upper spectrum, and ROE of around 18 percent on the upper spectrum.

Sadaf Sayeed: Of 3.3% on the upper spectrum, and ROE of around 18% on the upper spectrum.

Speaker #5: Okay, and just one last thing from my end. What could be the ideal AUM mix between MFI and non-MFI, secured and unsecured? Say, over the next two years' time.

Jyoti Khatri: Okay. Just one last thing from my end. What could be the ideal AUM mix between MFI and the non-MFI secured and unsecured, say over the next two years' time?

Speaker #3: So, we have guided that we will be around 60/40; basically, if you look at the AUM mix, it'll be 55/45. But as per the regulation, based on the balance sheet direct assignment that we will do of the non-MFI portfolio, it will be 60/40.

Sadaf Sayeed: We have guided that we will be around 60/40 means basically if you look at the AUM mix will be 55/45. As per the regulation basis, the balance sheet, our direct assignment that we will do of the non-MFI portfolio will be 60/40 and this is the aim that we want to achieve at. We had guided for this year at 75/25. We are already at 76/24, this year we will be around 70/30. Coming year, definitely we will look at strategically where we want to be, but in a long-term scenario, AUM base is 55/45, but balance sheet base is 60/40 will be there.

Speaker #3: And this is the aim that we want to achieve. We had guided for this year at 75/25. We are already at 76/24. So this year, we will be around 70/30.

Speaker #3: And coming year, definitely, we will look at strategically where we want to be. But in a long-term scenario, AUM basis 55/45, but balance sheet basis 60/40 will be there.

Speaker #5: Okay. Thanks. Thanks a lot.

Jyoti Khatri: Okay. Thanks. Thanks a lot.

Speaker #3: Thank you.

Sadaf Sayeed: Thank you.

Speaker #1: The next question comes from the line of Eshan Gupta with Choice Institutional Equities. Please go ahead.

Operator: The next question comes from the line of Ishan Gupta with Choice Institutional Equities. Please go ahead.

Speaker #6: Good morning, sir. My first question is: what are the top three focus products that will drive credit growth in the next two to three years?

Ishan Gupta: Good morning, sir. My first question is, what are the three top focus products that will drive the credit growth ahead for next upcoming two to three years?

Ishank Gupta: Good morning, sir. My first question is, what are the three top focus products that will drive the credit growth ahead for next upcoming two to three years?

Speaker #3: I think the number one product that we are looking at is the individual loan. And then, of course, our GLG product remains key. And then, gold loans.

Sadaf Sayeed: I think the number one product that we are looking at is the individual loan, and then of course our JLG product remains key, and then gold loans. I think these are the top three products for us which will really drive the credit growth as well as the asset quality mix. We feel, as I explained that we have done the propensity analysis, when you look at the customer and when we see that what is our first borrowing outside MFI, the first borrowing is gold and the second borrowing is business loan or a secured or unsecured. That is the product that we are looking at through individual loan. Our priority will remain individual loan, gold loan, and JLG loans. They are doing really well in terms of our digitization drive also. The individual loan is playing a very important role.

Speaker #3: I think these are the top three products for us, which will really drive the credit growth as well as the asset quality mix. We feel, as I explained, that we have done the propensity analysis when you look at the customer, and when we see what is her first borrowing outside MFI.

Speaker #3: The first borrowing is gold, and the second borrowing is a business loan—secured or unsecured. So that is the product we are looking at through individual loans.

Sadaf Sayeed: That is the product that we are looking at through individual loan. Our priority will remain individual loan, gold loan, and JLG loans. They are doing really well in terms of our digitization drive also. The individual loan is playing a very important role. Almost 100% of individual loan is digital collection and it has helped us improve our digital penetration to 40%. Every quarter we are improving around 6% in terms of digital collection. Definitely, that will help us to improve our efficiency and digital penetration. The focus is individual loan, gold loans and JLG.

Speaker #3: So, our priority will remain individual loan, gold loan, and GLG loan. And they are doing really well in terms of our digitization drive also.

Speaker #3: The individual loan is playing a very important role. Almost 100 percent of individual loans are collected digitally, and this has helped us improve our digital penetration to 40 percent.

Sadaf Sayeed: Almost 100% of individual loan is digital collection and it has helped us improve our digital penetration to 40%. Every quarter we are improving around 6% in terms of digital collection. Definitely, that will help us to improve our efficiency and digital penetration. The focus is individual loan, gold loans and JLG.

Speaker #3: Every quarter, we are improving around 6 percent in terms of digital collection. Definitely, that will help us to improve our efficiency and digital penetration.

Speaker #3: So, the focus is individual loans, gold loans, and GLG.

Speaker #6: Okay, my second question is that in the analyst midday, we had said that we are looking to increase the yields and have already done that in the last part of the quarter.

Ishan Gupta: Okay. My second question is that, in the analyst mid day, we had said that we are looking to increase the yields on the JLG portfolio and we have already done that in the last part of the quarter. We haven't witnessed any increase or improvement in NIM margins for the current quarter sequentially. When could we realize an improvement in NIM margins going forward?

Ishank Gupta: Okay. My second question is that, in the analyst mid day, we had said that we are looking to increase the yields on the JLG portfolio and we have already done that in the last part of the quarter. We haven't witnessed any increase or improvement in NIM margins for the current quarter sequentially. When could we realize an improvement in NIM margins going forward?

Speaker #6: So, we haven't witnessed any increase or improvement in NIM margins for the current quarter sequentially. When could we expect to see an improvement in NIM margins going forward?

Speaker #3: Yeah, I think that NIM expansion you will witness in the next quarter. We are already witnessing that, as our month-on-month numbers are showing.

Sadaf Sayeed: Yeah, I think that NIM expansion you will witness in the next quarter. We are already witnessing that as our month-on-month numbers are looking at. If you look at from an expansion point of view, for the full year, there is a 10 bps expansion. From quarter-on-quarter, maybe Q4 versus Q1, there is a flat kind of a number, but if you look at the full year, it was 11.9%, which is now 12%. If you look at year-on-year, which was 11.5%, it has come to 12%. It's expanding. Of course, Q4 versus Q1, it's kind of flat, but in Q2 you will see that expanding.

Speaker #3: If you look at it from an expansion point of view, for the full year, there is a 10-bps expansion. From a quarter-on-quarter perspective, maybe December—sorry, March quarter versus quarter one—there is a flat kind of number.

Speaker #3: But if you look at the full year, it was 11.9 percent, which is now 12 percent. And if you look at year-on-year, which was 11.5 percent, it has come to 12 percent.

Speaker #3: So, it's expanding. Of course, Q4 versus Q1, it's kind of flat. But in Q2, you will see that expanding.

Speaker #6: Understood. Got it. All the best for the—.

Ishan Gupta: Understood. Got it. All the best for the-

Ishank Gupta: Understood. Got it. All the best for the-

Speaker #4: To add to that point, one more element is that in Q1, unfortunately, we had to carry a lot of liquidity also because from Q4, we were carrying a lot of liquidity.

Praveen T: To add up to that point, one more element is that in Q1, unfortunately we had to carry a lot of liquidity also because from Q4 we were carrying lot of liquidity and the disbursement even though was best, still compared to Q4, slightly down. I think as the disbursement improves, a lot of this liquidity also gets consumed and the negative carry also will come down.

Speaker #4: And the disbursement, even though it was best, but still compared to Q4, slightly down. So I think as the disbursement improves, a lot of this liquidity also gets consumed and the negative carry also will come down.

Speaker #4: So, effectively, starting from Q2 onwards, you will definitely see that improvement in the NIM.

Sadaf Sayeed: Effectively starting from Q2 onwards, you will definitely see that improvement on the NIM.

Speaker #6: Got it.

Ishan Gupta: Got it. Okay.

Ishank Gupta: Got it. Okay.

Speaker #1: Thank you. Ladies and gentlemen, if you wish to ask a question, you may press star and one. The next question comes from the line of Girish Shetty with GIRI Capital.

Operator: Thank you. Ladies and gentlemen, if you wish to ask a question, you may press star and one. The next question comes from the line of Girish Shetty with Girik Capital. Please go ahead.

Speaker #1: Please go ahead.

Speaker #7: Hi, sir. Am I audible?

Girish Shetty: Hi, sir. Am I audible?

Speaker #3: Yes. Yes, Girish.

Sadaf Sayeed: Yes, Girish.

Speaker #7: Yes, sir. Congrats on a good set of results. Just one question: as I look at your peers, like your largest peer, they do around 4% kind of an ROA, which even stretches to 4.5–5% in a good cycle.

Girish Shetty: Yes. Sir, congrats on a good set of results. Just one question. If I look at your peers, like your largest peer, they do around 4% kind of an ROA, which even stretches to 4.5%, 5% in a good cycle. For Muthoot Microfin, where do you think there is a maximum gap that we can bridge to reach this 4% kind of a number? Or your portfolio composition is such that we should expect 3.3%, 3.5% kind of an ROA even in a normalized cycle?

Speaker #7: So, for Muthoot Microfin, where do you think there is the maximum gap that we can bridge to reach this 4% kind of a number?

Speaker #7: Or is your portfolio composition such that we should expect a 3.3% to 3.5% kind of ROA even in a normalized cycle?

Speaker #3: So, if you look at our guidance for FY30, we are trying to achieve around 5% ROA. And this journey is in that direction.

Sadaf Sayeed: If you look at our guidance for FY30, we are trying to achieve at around 5% ROA, and this journey is in that direction. We are trying to do more with less expenses. If you look at our branch productivity, it has improved by more than 20%. We had around 7 crores outstanding per branch. Now that has moved to around 8.6 crores outstanding per branch. We feel that we can take it to around 12 to 13 crore outstanding per branch. That will improve the efficiency of the overall system. The operating expenses already started to come down. We are at around 6.3%, which we were at 6.4%. This, we feel in the long run, should be at around 5.5% to 5.75%. Our NIMs are also improving as our cost of fund is improving.

Speaker #3: So, we are trying to do more with less expenses. If you look at our branch productivity, it has improved by more than 20%.

Speaker #3: So, we had around ₹7 crore outstanding per branch. Now, that has moved to around ₹8.6 crore outstanding per branch. We feel that we can take it to around ₹12 to ₹13 crore outstanding per branch.

Sadaf Sayeed: We feel that we can take it to around 12 to 13 crore outstanding per branch. That will improve the efficiency of the overall system. The operating expenses already started to come down. We are at around 6.3%, which we were at 6.4%. This, we feel in the long run, should be at around 5.5% to 5.75%. Our NIMs are also improving as our cost of fund is improving.

Speaker #3: So that will improve the efficiency of the overall system. The operating expense has already started to come down. We are at around 6.3 percent, whereas earlier we were at 6.4 percent.

Speaker #3: This, we feel, in the long run should be at around 5.5% to 5.75%. And our NIMs are also improving as our cost of funds is improving.

Speaker #3: So, both on the NIM side, OPEX side, and also on the credit cost side, there is a huge amount of leverage that we have. And because of our ability to do business with our parent company, this gives an additional kicker for us in terms of fee income that we earn.

Sadaf Sayeed: Both on the NIM side, OpEx side, and also credit cost side, there is a huge amount of lever that we have. Because of our ability to do business with our parent company, this gives an additional kicker for us in terms of fee income that we earn. I think 3.3% is the guidance that we have. Definitely, we will try and overachieve that. In a matter of, I think, 18 months, we should be in the range of around 4% to 4.5% ROA business and aiming to be at around 5% ROA by 2030.

Speaker #3: So I think 3.3 percent is the guidance that we have. Definitely, we will try and overachieve that. And in a matter of, I think, 18 months, we should be in the range of around 4 to 4.5 percent ROA business.

Speaker #3: And aiming to be at around 5% ROA by 2030. That is the strategy that we have laid out, and the diversification of the product is focusing on that—ensuring that we are able to do more business with limited expenses and limited resources.

Sadaf Sayeed: That is the strategies that we have laid out. The diversification of the product is focusing on that, ensuring that we are able to do more business with limited expenses and limited resources, expand our yield on the portfolio as well as reduce our cost, and build a very strong asset quality which is sustainable, well-diversified, and across the cycle, we are able to deliver a good ROA to our investors.

Speaker #3: And expand our yield on the portfolio, as well as reduce our cost. And build a very strong asset quality, which is sustainable, well-diversified, and across the cycle, we are able to deliver good ROA to our investors.

Speaker #7: Okay. Okay. And since you mentioned you will be diversifying more from MFI to non-MFI and that ratio is likely to increase, say, from 70:30 this year to 60:40, will that have an impact on ROA, or will it still be at the same ROA, and you will still maintain that 4-4.5% kind of number going forward in, say, 18 months, like you said?

Girish Shetty: Okay. Since you mentioned you will be diversifying more from MFI to non-MFI and that ratio is likely to increase, say from 70/30 this year to 60/40. Will that have an impact on ROA or even that will be at the same ROA and you will still maintain that 4% to 4.5% kind of a number going forward in, say, 18 months, like you said?

Speaker #3: Yes, that is what is driving ROA. Because of the improvement in asset quality, as well as our ability to cater to the customer based on the risk profile, our pricing is on the basis of the risk.

Sadaf Sayeed: Yeah, that is what is driving ROA. Because of the improvement in asset quality as well as our ability to cater to the customer based on the risk profile. Our pricing is on the basis of the risk. We are able to understand the customer's credit score, internal and external, and price the loan accordingly. We are able to charge the right amount of rate to the right customer. That is really helping us to improve our ROA. Gold, for example, is a business which turns fast. A customer can pledge gold and take a loan of around INR 1 lakh. Our average ticket size is around INR 1.3 lakh. She kind of pledges that, releases that within six months, and again pledges that. When this happens, you are able to earn multiple times from the same customer.

Speaker #3: So we are able to understand the customer's credit score, both internal and external, and price the loan accordingly. So we are able to charge the right rate to the right customer.

Speaker #3: And that is really helping us to improve our ROA. Gold, for example, is a business which churns fast—a customer can pledge gold and take a loan of around ₹1 lakh. Our average ticket size is around ₹1.3 lakh.

Sadaf Sayeed: That is really helping us to improve our ROA. Gold, for example, is a business which turns fast. A customer can pledge gold and take a loan of around INR 1 lakh. Our average ticket size is around INR 1.3 lakh. She kind of pledges that, releases that within six months, and again pledges that. When this happens, you are able to earn multiple times from the same customer. That is where I think the ROA gets built up and the fee income also kind of adds to our overall top line and to the ROA. Diversification and asset quality will be the most important drivers for us in terms of our ROA.

Speaker #3: So, and she kind of pledges that, releases that within six months. And again, pledges that. So when this happens, you are able to earn multiple times from the same customer.

Speaker #3: So that is where I think the ROA gets built up, and the fee income also kind of adds to our overall top line and to the ROA.

Sadaf Sayeed: That is where I think the ROA gets built up and the fee income also kind of adds to our overall top line and to the ROA. Diversification and asset quality will be the most important drivers for us in terms of our ROA. We are also building this consumer durable portfolio, which will also be short in our product. With our rating and our ability to borrow fund at a cheaper rate, we'll be able to build a good yield, good margin on this portfolio, which will also add to our overall ROA. Overall, I think, the performance of the company will be more on efficiency side, improved asset quality, and focused on customer retention with the diversified product portfolio, and all of this will drive ROA.

Speaker #3: So, diversification and asset quality will be the most important drivers for us in terms of our ROA. We are also building this consumer durable portfolio.

Sadaf Sayeed: We are also building this consumer durable portfolio, which will also be short in our product. With our rating and our ability to borrow fund at a cheaper rate, we'll be able to build a good yield, good margin on this portfolio, which will also add to our overall ROA. Overall, I think, the performance of the company will be more on efficiency side, improved asset quality, and focused on customer retention with the diversified product portfolio, and all of this will drive ROA.

Speaker #3: Which will also be short in our product. And with our rating and our ability to borrow funds at a cheaper rate, we will be able to build a good yield and good margin on this portfolio.

Speaker #3: This will also add to our overall ROA. Overall, I think the performance of the company will be more on the efficiency side, with improved asset quality and a focus on customer retention with a diversified product portfolio.

Speaker #3: And all of this will drive ROA.

Speaker #7: Okay, that's it from my side. Thank you. Thank you so much.

Girish Shetty: Okay. That's it from my side. Thank you. Thank you so much.

Speaker #3: Thank you very much.

Sadaf Sayeed: Thank you very much.

Operator: Thank you. Ladies and gentlemen, this will be our last question. It's on the line of Varun with Omkara Capital. Please go ahead.

Speaker #1: Thank you. Ladies and gentlemen, this will be our last question. It's from the line of Varavji with Omkara Capital. Please go ahead.

[Analyst] (Omkara Capital): Hi, sir. Thank you for taking my question. Sir, in one of the calls, there are peers, obviously in a different segment, they highlighted that the macros are slightly tricky and banks are charging higher interest rates. What is your take on that and how is the cost of borrowing panning out for us?

Speaker #8: Hi, sir. Thank you for thank you for taking my question. Sir, in one of the calls, one of the peers obviously in a different segment, they highlighted that the macros are slightly tricky and banks are charging a higher interest rate.

Speaker #8: So, what is your take on that? And how is the cost of borrowing panning out for us?

Speaker #3: So, to the second question first, on the cost of borrowing, we are experiencing that the liquidity is quite good. So we are able to negotiate better.

Sadaf Sayeed: To the second question first on the cost of borrowing, we are experiencing that the liquidity is quite good, we are able to negotiate better and our cost of fund is coming down. It has come down in the quarter from 10.27% to 10.13%, 14 basis point reduction. This is without the impact of our credit rating upgrade. With the rating upgrade benefit, having had AA rating, definitely, this will further improve. The AA rating also opens up avenue to borrow from mutual funds as well as insurance companies and for short-term borrowing for CP, mutual funds are a effective source. We will look at leveraging on that. That will also help us to reduce our cost of fund. Definitely, as I have guided that for the year, we are looking at reaching single digit in terms of cost of fund.

Speaker #3: And our cost of funds is coming down. It has come down in the quarter from 10.27% to 10.13%, a 14 basis point reduction. And this is without the impact of our credit rating upgrade.

Speaker #3: With the rating upgrade benefit, having had AA rating, definitely this will further improve. The AA rating also opens up avenues to borrow from mutual funds as well as insurance companies.

Sadaf Sayeed: With the rating upgrade benefit, having had AA rating, definitely, this will further improve. The AA rating also opens up avenue to borrow from mutual funds as well as insurance companies and for short-term borrowing for CP, mutual funds are a effective source. We will look at leveraging on that. That will also help us to reduce our cost of fund.

Speaker #3: And for short-term borrowing, for CP, mutual funds are an effective source. So, we will look at leveraging that. That will also help us to reduce our cost of funds.

Speaker #3: Definitely, as I have guided, for the year we are looking at reaching single digits in terms of cost of funds. We should be able to get there.

Sadaf Sayeed: Definitely, as I have guided that for the year, we are looking at reaching single digit in terms of cost of fund. We should be able to be there. Our incremental borrowing cost is already at 9.8%, which is also 10 basis points down from earlier 9.9%. This will continue to kind of reduce. On the macros that you asked, I think the macros have improved since then. If you look at the deficit rain-

Sadaf Sayeed: We should be able to be there. Our incremental borrowing cost is already at 9.8%, which is also 10 basis points down from earlier 9.9%. This will continue to kind of reduce. On the macros that you asked, I think the macros have improved since then. If you look at the deficit rain-

Speaker #3: Our incremental borrowing cost is already at 9.8 percent, which is also 10 bps down from the earlier 9.9 percent. So, this will continue to kind of reduce.

Speaker #3: On the macros that you asked, I think the macros have improved since then. If you look at the deficit rate, which was expected before, the deficit has reduced.

[Analyst] (Omkara Capital): Three months ago

Sadaf Sayeed: which was expected before as the deficit has reduced. It was earlier 43% deficit rain, but now it is around 12% and it is reducing every week and every day. From the global scenario perspective also, the crude prices have corrected significantly. RBI has also taken right steps in terms of mobilizing FCY deposit. We are seeing great amount of dollars coming into our country, which is also giving stability to the currency. I think macros are improving as we speak. There is a good amount of auto sales that we have seen. Auto industries, they are doing good. Industrial production numbers are good. GDP has been revised upward by RBI, from what it was earlier, from 6.6% to 6.7%. Inflation number has been revised downwards from 5.1% to 5%. All of these weighs positively on the business.

Speaker #3: It was earlier a 43% deficit in rain, but now it is around 12%. And it's reducing every week and every day. And from the global scenario perspective also, the crude prices have corrected significantly.

Speaker #3: RBI has also taken right steps in terms of immobilizing FCNR deposits. We are seeing a great amount of dollars coming into our country, which is also giving stability to the currency.

Sadaf Sayeed: We are seeing great amount of dollars coming into our country, which is also giving stability to the currency. I think macros are improving as we speak. There is a good amount of auto sales that we have seen. Auto industries, they are doing good. Industrial production numbers are good. GDP has been revised upward by RBI, from what it was earlier, from 6.6% to 6.7%.

Speaker #3: So I think macros are improving as we speak. There is a good amount of auto sales that we have seen, so the auto industry is doing good.

Speaker #3: Industrial production numbers are good. GDP has been revised upward by RBI from what it was earlier, from 6.6% to 6.7%. And the inflation number has been revised downwards from 5.1% to 5%.

Sadaf Sayeed: Inflation number has been revised downwards from 5.1% to 5%. All of these weighs positively on the business. Also, the benefit of this would also be there in our overall performance and overall profitability of the business. Definitely, macros are improving. I would not say it is perfect, but yes, definitely improving.

Speaker #3: So, all of these ways will positively impact the business. Also, the benefit of this would be seen in our overall performance and overall profitability of the business.

Sadaf Sayeed: Also, the benefit of this would also be there in our overall performance and overall profitability of the business. Definitely, macros are improving. I would not say it is perfect, but yes, definitely improving.

Speaker #3: So, definitely, macros are improving. I would not say it is perfect, but yes, definitely improving.

Speaker #8: And just, last question from my side and congratulations on a good spread, by the way. I just wanted to understand—so on our individual loan, I think we are shifting from JLG to individual loans.

[Analyst] (Omkara Capital): Just last question from my end, sir and thank you and congratulations on a good split, by the way. I just wanted to understand, on our individual loan, I think we are shifting from JLG to individual loans. What are the challenges you are seeing in transitioning the business model in that sense? Slightly, the customer code in that sense.

Speaker #8: What are some of the what are some of the challenges you are seeing in transitioning the business model in that sense? Slightly the customer case in that sense.

Speaker #3: Yeah. So we are very selective about our customers. We have identified a 'creamy layer' of customers, which is around 850,000 customers within our database who have a 700-plus score.

Sadaf Sayeed: Yeah. We are very selective on the customers. We have identified a creamy layer of customers, which is around 8.5 lakh customers, within our database, which are 700 score plus. We are very selective while we do the individual loan. The challenge is only that the credit standards that we have put in, we have to maintain that and continue to grow this business. As we grow this business to have that base continuously growing, I think that is the biggest challenge that we have and our focus is there. We are focusing on quality of assets, ensuring that we cater to quality customers. That is why you might see a minor drop in the customer base, but our focus is to retain the quality customer with us. I think probably that is the only challenge that we see.

Speaker #3: So we are very, very selective while we do the individual loan. The challenge is only that the credit standards that we have put in—we have to maintain those and continue to grow this business.

Speaker #3: So as we grow this business to have that base continuously growing, I think that is the biggest challenge that we have. And our focus is there.

Sadaf Sayeed: As we grow this business to have that base continuously growing, I think that is the biggest challenge that we have and our focus is there. We are focusing on quality of assets, ensuring that we cater to quality customers. That is why you might see a minor drop in the customer base, but our focus is to retain the quality customer with us. I think probably that is the only challenge that we see.

Speaker #3: We are focusing on the quality of assets, ensuring that we cater to quality customers. So that's why you might see a minor drop in the customer base.

Speaker #3: But our focus is to retain the quality customer with us. So I think probably that is the only challenge that we see. Otherwise, the customer is really appreciating our business.

Sadaf Sayeed: Otherwise, the customer is really appreciating our business. That is what we can see in the business volume. From a portfolio point of view, it is really performing well as compared to the industry. The bounce rate is much lower. We are getting only 13% bounce rate in this business as compared to the industry, which is at around 25% to 30% bounce rate. That bounce is also collected immediately in seven days. I think from a portfolio perspective and customer support perspective, we are doing really well. The only thing is that we have to live up to our standards which we have built at 700 plus score. That is something which we will see that how we are able to address that and without diluting those standards, continue to build that portfolio. I think that is the single biggest challenge that we have.

Speaker #3: That is what we can see in the business volume. And from a portfolio point of view, it is really, really performing well as compared to the industry.

Speaker #3: The bounce rate is much, much lower. We are getting only a 13 percent bounce rate in this business, as compared to the industry, which is at around 25 to 30 percent bounce rate.

Speaker #3: And that bounce is also collected immediately, within seven days. So I think from a portfolio perspective and customer support perspective, we are doing really well.

Sadaf Sayeed: That bounce is also collected immediately in seven days. I think from a portfolio perspective and customer support perspective, we are doing really well. The only thing is that we have to live up to our standards which we have built at 700 plus score. That is something which we will see that how we are able to address that and without diluting those standards, continue to build that portfolio. I think that is the single biggest challenge that we have.

Speaker #3: The only thing is that we have to live up to our standards, which we have built. At a 700-plus score, that is something which we will see how we are able to address.

Speaker #3: And, without diluting those standards, continue to build that portfolio. I think that is the single biggest challenge that we have.

Speaker #8: Okay. Thank you so much for taking the time and answering some of the important questions.

[Analyst] (Omkara Capital): Okay. Thank you so much for taking the time and all the best on coming quarters. Thank you.

Speaker #3: Thanks. Thank you very much.

Sadaf Sayeed: Thank you very much.

Speaker #1: Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to Mr. Sadaf Sayeed for closing comments.

Operator: Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to Mr. Sadaf Sayeed for closing comments.

Speaker #3: Once again, I thank all of you for participating in this call and supporting our organization. I think, as I articulated, this is kind of a golden period for microfinance and Muthoot Microfin.

Sadaf Sayeed: Once again, I thank you, all of you, for participating in this call and supporting our organization. I think as I articulated, this is a kind of a golden period for microfinance and Muthoot Microfin. We are in a very favorable scenario, where our cost of fund is reducing. We have enough support from the banks. We have huge amount of liquidity and elbow room to negotiate for better rate. Secondly, our asset quality is improving. The collections from the field is improving. The on-time collection, the overall collection efficiency, everything is improving. We are at 98% collection efficiency, which is almost at the best times that we had. Next bucket at 99.9%, almost 100% money coming on time for the fresh customers. Overall GNPA reducing. In terms of disbursement growth, we have seen it is growing and we have the market.

Speaker #3: We are in a very, very favorable scenario where our cost of funds is reducing. We have enough support from the banks, and we have a huge amount of liquidity.

Speaker #3: And elbow room to negotiate for better rates. Secondly, our asset quality is improving. The collections from the field are improving. The on-time collection, the overall collection efficiency—everything is improving.

Sadaf Sayeed: The collections from the field is improving. The on-time collection, the overall collection efficiency, everything is improving. We are at 98% collection efficiency, which is almost at the best times that we had. Next bucket at 99.9%, almost 100% money coming on time for the fresh customers. Overall GNPA reducing. In terms of disbursement growth, we have seen it is growing and we have the market. We have the products that we have diversified and we have created. We are in a very healthy space.

Speaker #3: We are at 98% collection efficiency, which is almost at the best times that we had. And ex-bucket at 99.9%, almost 100% money coming on time for the fresh customers.

Speaker #3: And overall, GNPA is reducing, and in terms of disbursement growth, we have seen it is growing and we have the market. We have the products that we have diversified and we have created.

Sadaf Sayeed: We have the products that we have diversified and we have created. We are in a very healthy space. We have technology, we have finance, we have capital, and we have the right formula to cater to this customer. We are very confident that we will be able to achieve our growth that we have guided. We will overachieve the ROA and ROE targets that we have given. We continue to look forward to your support. We look forward to taking this financial inclusion journey from merely just inclusion to a meaningful inclusion for our customers. Thank you very much for all your support.

Speaker #3: So, we are in a very healthy space. We have technology, we have finance, we have capital, and we have the right formula to cater to this customer.

Sadaf Sayeed: We have technology, we have finance, we have capital, and we have the right formula to cater to this customer. We are very confident that we will be able to achieve our growth that we have guided. We will overachieve the ROA and ROE targets that we have given. We continue to look forward to your support. We look forward to taking this financial inclusion journey from merely just inclusion to a meaningful inclusion for our customers. Thank you very much for all your support.

Speaker #3: So, we are very confident that we will be able to achieve the growth that we have guided. And we will overachieve the ROA and ROE targets that we have given.

Speaker #3: And we continue to look forward to your support. We look forward to taking this financial inclusion journey from merely inclusion to meaningful inclusion for our customers.

Speaker #3: Thank you very much for all your support.

Speaker #1: Thank you, sir. On behalf of JM Financial, that concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you.

Operator: Thank you, sir. On behalf of JM Financial, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.

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Q1 2027 Muthoot Microfin Ltd Earnings Call

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