Q1 2027 Moneyboxx Finance Ltd Earnings Call
Speaker #1: Ladies and gentlemen, good day and welcome to the Q1 FY27 earnings conference call for MoneyBox Finance Ltd. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes.
Speaker #1: Should you need assistance during this conference call, please signal an operator by pressing star, then zero on your touchstone phone. Please note that this conference is being recorded.
Speaker #1: I now have the conference over to Mr. Ankit Jain from Stellar Investor Relations. Thank you, and over to you, sir.
Speaker #2: Thank you, Palak. Good afternoon, everyone, and thank you for joining us today. To discuss the Q1 business performance, we have from the management, Mr. Mayur Modi, co-founder, Mr. Deepak Agrawal, co-founder, and before we proceed with this call, I would like to mention that some of the statements made in today's call will be forward-looking in nature and may involve risk and uncertainties.
Speaker #2: The company also undertakes no obligation to update any forward-looking statements to reflect developments that occur after the statement is made. Documents relating to the company's financial performance, including investor presentation, have been uploaded on the stock exchanges, and the company website.
Speaker #2: I would now like to hand over the call to the management for the opening comments, and then we will open the floor for Q&A.
Speaker #2: Thank you, and over to you, sir.
Speaker #3: Thank you, Ankit. Good afternoon, everyone, and thank you for joining us for the Q1 27 earnings conference call of MoneyBox Finance. I'm Deepak Agarwal, co-founder of MoneyBox Finance, and joined today by my co-founder, Mayur Modi, and we will state our finance controller.
Speaker #3: I would like to begin with the broader operating environment and the opportunity we see in the microenterprise-linked lending segment, followed by our Q1 FY27 performance.
Speaker #3: Lending to the Indian microenterprises continues to represent a significant and underrated under-penetrated opportunity, despite the progress made in financial formalization, a large section of India's micro and small businesses continues to have limited access to formal credit.
Speaker #3: This is the segment MoneyBox has been focused on since inception. Our differentiated approach combines proprietary underwriting models of physical branch networks and technology-led processes, including AI, to serve this customer segment in a responsible and scalable manner.
Speaker #3: The micro MSME segment continues to show encouraging signs of recovery, supported by improving rural demand and consumption, increasing formalization, and various government initiatives. We therefore remain confident about the long-term structural opportunity in this market.
Speaker #3: At the same time, we continue to monitor external developments particularly geopolitical developments and their potential impact through oil prices, shipping costs, and customer confidence.
Speaker #3: While we remain constructive, on the underlying opportunity, we are taking a calibrated approach to growth in current environment. Coming to MoneyBox Q1 FY27 was an important transition quarter for us.
Speaker #3: Over the last 18 to 24 months, we have made significant investing investments in underwriting, customer selection, collection, technology, portfolio mix, and overall team. These initiatives have helped us build a stronger foundation for the next phase of growth.
Speaker #3: During the quarter, we continued to deliberately shift the portfolio toward higher ticket secured lending and high credit score customers. This transition has resulted in some near-term moderation in disbursements and income, but we believe it is the right strategic direction for building a more resilient scalable and profitable portfolio over the medium to long term.
Speaker #3: Our focus continues to be quality over volume, particularly as we operate in an environment where prudent customer selection and portfolio quality remains important. Our aim stood at 832 crore as of June 2026 on an underlying basis, AUM grew price percent year on year, excluding the ARC impact.
Speaker #3: Disbursements during the quarter stood at 77 crore, compared with rupees 92 crores in Q1 FY26, the moderation reflects our calibrated approach to sourcing as we transition towards a higher quality and more secured portfolio, from April 2026 onwards we stopped disbursement of unsecured loans except through partnership model and in the state of Punjab.
Speaker #3: We also stopped disbursement of secured loans below 5 lakhs except in few branches of solar loans. The quality of our sourcing has, however, improved meaningfully.
Speaker #3: Secured loans accounted for 87% of our disbursement during first quarter, compared with 67% in FY26. Around 70% of disbursements were in ticket sizes above 5 lakhs, while approximately 75% were to customers with zero score of 650 and above.
Speaker #3: The increase in ticket sizes along with higher secured mix is an important part of our strategy. We believe this will help us build a stronger portfolio while also improving operating efficiency as the business scales.
Speaker #3: Our objective is not simply to grow the book, but to grow with the right customers, stronger collateral, and better risk-adjusted economics. Alongside the improvement in sourcing quality, we have continued to remain focused on collection.
Speaker #3: Our overall collection efficiency during quarter one stood at 92.3%, broadly stable compared to 92.4% for FY26. This reflects the investment we have made in our collection infrastructure, field-level monitoring, technology, and customer engagement.
Speaker #3: Our legal efforts are moving in the right step, with over available warrants reaching a stage of 1,000 plus. So this is growing at a sharp pace, and we'll start yielding strong results going forward.
Speaker #3: Importantly, the quality of the incremental book that we are building today is materially stronger. Our secured book now represents approximately 75% of the AUM.
Speaker #3: Including loans, backed by default loss, guarantee programs, compared with 49% in June 2025. This represents a significant transformation in our portfolio mix. And we remain firmly on track towards our objective, of approximately 80% secured AUM by March 2027, including loans supported by appropriate guarantee programs.
Speaker #3: We believe that the combination of a higher secured mix stronger customer selection and improved collection infrastructure will make our portfolio more resilient and support a more stable credit cost strategy going forward.
Speaker #3: As we build the next phase of business, partnership-led sourcing is becoming an increasingly important part of our model. We had earlier indicated our objective of generating approximately 25 to 30% of monthly business through direct partnerships, and this channel is now gaining traction.
Speaker #3: The partnership model allows us to acquire customers more efficiently while reducing the traditional acquisition costs associated with branch-led sourcing. Importantly, all these partnerships are coming with default loss fee structures, providing additional credit protection.
Speaker #3: Therefore, while some of partnerships may carry a slightly lower headline need, the overall economic can be attractive because of lower sourcing costs and better risk-adjusted returns.
Speaker #3: We believe this channel can become an important contributor to both growth and profitability as it scales. Another important growth opportunity for MoneyBox is renewable energy lending.
Speaker #3: We crossed rupees 10 crores of cumulative renewable energy loan disbursements till July 26, reflecting encouraging initial traction. In fact, in July, 15% of the disbursements are through renewable energy loans, which is all partnership-based.
Speaker #3: We remain on track with our objective of taking renewable energy loans to approximately 10% of our AUM by the end of FY27. We are working with leading solar OEMs and few global climate foundations to scale this business.
Speaker #3: The proposition is attractive because we are financing productive assets for micro enterprises helping customers reduce their operating costs while creating an attractive secure lending opportunity for us.
Speaker #3: Talking about the investment made in technology, our proprietary MoneyBox One loan organization system, which was launched in May 2026, is now live. FICA mobile application, Cattle AI, and MB Collect platforms continue to strengthen different parts of lending cycles.
Speaker #3: These platforms help us improve sourcing underwriting, fraud detection, field productivity, and collection. Importantly, the technology infrastructure we have built can support a substantially larger portfolio.
Speaker #3: As AUM scales, we therefore expect these investments to increasingly translate into higher productivity, operating leverage, and improved efficiency. Our technological capabilities, together with our para veterinary services, also helped us build partnerships with global institutions like Rabo Foundation, Gates Foundation, Water.org, Shell Foundation, and few others.
Speaker #3: These relationships provide us with access to new business opportunities and, in most cases, additional credit protection or incentives. On the liability side, we continue to receive strong support from our lending partners during the first four months of FY27.
Speaker #3: We raised a total of 70 crores through NCB, including 50 crores during the quarter from Capri Global, from Capri Global. This further diversifies our borrowing profile and reflects the continued confidence of our lending partners in our business model and the progress we have made in strengthening the portfolio.
Speaker #3: In fact, we added two new NBFCs, Saman Capital and Northern Arc, in quarter in the last quarter. As our lending partners, we will continue to build relationships, across banks, NBFCs, capital markets, and development focused institutions.
Speaker #3: Our capital adequacy stood at 28.65% as of June 2026, providing us with sufficient headroom to support the growth plan for FY27. Additionally, we will look forward to institutional equity infusion in H2 of FY27.
Speaker #3: Coming to our financial performance for the quarter, Q1 FY27 financial performance reflects the deliberate transition underway in our portfolio, particularly the shift from unsecured towards secured lending and higher ticket loans.
Speaker #3: Total income stood at 52.12 crores while net interest income and fee income stood at 31.02 crores. Compared to 38.52 crores in Q1 FY26, the movement in income primarily reflects the transition in our lending mix with greater focus on secure products and higher ticket customers.
Speaker #3: A net interest margin stood at 12.3% compared to 14.36% in quarter one of FY26, while our interest spread stood at 12%. The movement in lending lending yields is consistent with the deliberate shift towards secure products, while our average borrowing cost remained at 12.5%, though the incremental cost is declining of borrowing is declining.
Speaker #3: Our operating expenses stood at 28.59 crores compared to 29.75 crores in Q1 of last quarter. Operating expenses remained well controlled in absolute terms despite continued investment in people, technology, credit, and collection infrastructure.
Speaker #3: The branch consolidation initiatives undertaken during the quarter have also helped us improve the efficiency of our operating platform. As AUM scales, we expect these investments to be absorbed over a larger portfolio, resulting in increasing operating leverage and improving cost efficiency.
Speaker #3: Our pre-provisioning operating profit stood at 2.43 crores during the quarter, profit after tax stood at 0.21 crores compared to 0.24 crores in last last year.
Speaker #3: While the reported financial performance reflects the ongoing transition in our portfolio towards higher secured mix, we believe the more important development during the quarter has been the continued improvement in an underlying operating matrix of the business.
Speaker #3: We are seeing stronger portfolio quality or higher secured mix, stable operating expenses, and emergence of multiple growth channels. Therefore, we view Q1 FY27 as transition phase where we have prioritized portfolio quality and right foundation for sustainable growth rather than pursuing mere term volume.
Speaker #3: During the quarter, MoneyBox was also recognized as the BW disrupt festival of fintech, where we received three gold awards and one silver award, this recognition is encouraging and reinforces our belief that the investment made in technology and our customer-centric lending model are creating a differentiated platform for the micro enterprise segment.
Speaker #3: As we look ahead, our priorities for FY27 are very clear. First, we want to progressively increase disburse in momentum and grow AUM meaningfully while maintaining the improvement in portfolio quality that we have achieved.
Speaker #3: Second, we will continue to increase the secured share of our portfolio towards approximately 80% by March 2027. Third, we will continue to scale partnership-led sourcing which we believe can provide efficient customer acquisition along with attractive risk-adjusted economics.
Speaker #3: Fourth, we see significant potential in renewable energy lending and digital lending which will start soon as significant growth engines over time. At the same time, we remain focused on improving operating leverage as our AUM scales and our existing branch technology and organizational infrastructure gets utilized more efficiently.
Speaker #3: Our approach remains simple. We want to grow, but we want to grow with right customers, stronger collateral, better technology, and appropriate risk protection. We believe FY27 can be important years for MoneyBox as we translate the stronger foundation we have built into sustainable growth, improving operating leverage, and stronger profitability.
Speaker #3: With this, I would like to thank all our shareholders, lenders, partners, and employees for their continued trust and support. We look forward to updating you on our progress as we move through FY27.
Speaker #3: As a part of summary, I would again, you know, come back to summarize what we have been doing you would notice that unsecured lending has now, you know, from 100% of our lending when we started has now come down to 13% because of the changes we saw post July 2024, with guidelines on MFI, both the segments which is one unsecured and the micro lab suffered.
Speaker #3: So one thing which we notice is that on the unsecured side, we are now at a minimal level. On the secured side, again, because the last two years while earlier whether it was micro lab or or a large ticket loan, have a similar delinquency, but it hasn't seen that loans up to five, six lakhs have higher, much higher delinquency versus a loan which are like eight lakh to 15 lakh category or above segment.
Speaker #3: So that is also the journey you are seeing that, you know, we are discussing more and more loans with people with better civil score, with better houses, better collateral.
Speaker #3: So that is the other movement. Solar partnership is again giving a big boost and, you know, this can grow to 2025 crore business in another six months' time.
Speaker #3: With just one one partner giving us five crore business last month, and it's growing every month. So so this is one business and to tell you just after reaching 10 crore of disbursement in solar, we could get a term sheet of 100 crores from an impact lender.
Speaker #3: So this is the early sign that, you know, whether in terms of lending, whether in terms of loss guarantees, incentives, renewable energy is very much a focused area for large global institutions.
Speaker #3: So so that is a good direction we are moving in. You will also see in coming months we will start some partnerships with the dairy segment wherein again we will not have to incur a acquisition cost or collection cost.
Speaker #3: Digital lending will start because tech is extremely important. We had a good tech team wherein, you know, now we have our own LOS. And we are able to deliver solutions very fast.
Speaker #3: So soon we will start lending with a good partner, the digital loans as well. So that's that's it from my side. Thank you very much.
Speaker #3: And you are welcome to ask any questions.
Speaker #1: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may please press star and one on their touchstone telephone.
Speaker #1: If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question.
Speaker #1: Ladies and gentlemen, we'll wait for a moment. While the question queue assembles, ladies and gentlemen, to ask a question, please press star and one now.
Speaker #1: Participants who wish to ask questions, may please press star and one at this time. The first question is from the line of Chennai Parab and individual investor.
Speaker #1: Please proceed with your question.
Speaker #2: Hello. Thank you for this opportunity. Am I audible? Yes. Yes, Chennai. Yes. Yes, sir. So if you look at some of the peers in the segment, they have delivered relatively strong AUM.
Speaker #2: AUM and disbursement growth, whereas we have seen a moderations. So sir, from your perspective, where are we currently lagging them? Is it primarily the transition towards the secured lending sourcing or branch productivity?
Speaker #3: So Chennai, thanks for asking the question. The larger part is that, you know, we have made very significant changes. So so for example, from April onwards, we have stopped our unsecured business, which we used to do in MP Chattisgarh, Haryana, Rajasthan.
Speaker #3: We completely stopped it. So that was one reason. The second is that while you will notice that most of our secured loans earlier used to be below five lakhs or, you know, five to six lakhs, we have now significantly moved up.
Speaker #3: I hope if you see the investor investor presentations, you will be able to see those numbers. So so this is a lot of adjustments we have made because you know, at MoneyBox, we are continuously analyzing those numbers, you know, how unsecured moved.
Speaker #3: And then the impact which came and you will you will know from the peers, you know, that those segments which are below five lakhs, below six lakhs, had a very similar kind of delinquency which, you know, was noticed in in the unsecured customers.
Speaker #3: So that also we need to move. So this is kind of more of a transition phase, you know, wherein you know, employees sometimes needed to be changed.
Speaker #3: People need to be trained to, you know, close those kind of clients in terms of property papers and everything. So that is the lagging factor.
Speaker #3: And because, you know, that is this April month only where we stopped these loans. However, at the same time, I would say that, you know, last 18 to 24 months, we have spent a lot of time in, you know, this you know, after this crisis, happened and, you know, how to go about the portfolio.
Speaker #3: And now you will start seeing this. So like like I said that, you know, we have last month we disbursed five crores. In solar segment, we disbursed five people.
Speaker #3: So there is no sales team. There is no collection team for for these loans. There is there's SLDG guarantees. There is a impact fund support.
Speaker #3: So again, we are starting one partnership in dairy very soon. I mean, from next month, disbursements will start. Where again, we see, you know, three to five crores per month business without the team effort.
Speaker #3: Digital, we are starting so there are these steps we are taking to grow the business. I agree, you know, versus peers, the growth has been slowed.
Speaker #3: But I I think we have very significantly changed the way, you know, because in the market now, this portfolio of in the last segment, which is eight to 13 lakhs or seven to 15 lakhs, this is or even 10 to 50 50 lakhs.
Speaker #3: These are the these are the areas which are considered to be the most prominent in and beneficial in terms of lower credit cost and reasonable ease.
Speaker #3: So even you know, at at 18 to eight to 15 lakhs, you can make a good ease. So that is the core segment which where we are focusing on and this transition has actually led to a lower disbursement number.
Speaker #3: But I hope the way we are going with the partnership model and many other things which I told, things will start to grow up with now MoneyBox One, which is our app for as LMS on the Play Store.
Speaker #3: We can now even connect to several connectors who can just put in the data. On the app itself, so it will help us in generation more and more leads.
Speaker #3: So things will change over next few months. And you know, everything should be on the north direction in terms of AUM.
Speaker #2: Okay. So just wanted to know, are we completely stopping unsecured loans for good or will we revisit it in the future?
Speaker #3: So what we are doing is I would not say it's a completely stop it, but what we are doing is we are doing it in a framework of some guarantee program.
Speaker #3: So for example, we have tied up with the with a very reputed and strong dairy farm. Wherein they will give us the lead. They will give us the collection.
Speaker #3: They will give us the FLDG. So that will be unsecured loan in the PSL category. But here we are much more secured because we know all the pouring data, everything is there.
Speaker #3: So I'm not saying that we are completely stopping it, but but yes, we are doing it under some or the other guarantee program. So we should so we don't want to do it exactly the same way.
Speaker #3: And Punjab is anyway doing the unsecured category. I think given given how the market has been operating, in last two years, we are still not comfortable with the older way of lending.
Speaker #3: But yes, as I said, that we will soon start digital lending as well. These will be small ticket unsecured loans. Which will have a higher yield, much higher yield than our existing book.
Speaker #3: So so that we will do.
Speaker #2: Okay. Is that enough? Okay. Just wanted to know that our fixed cost, as we can see, is relatively high. So this lower growth is also, you know, we are limiting our operating leverage and keeping profitability under pressure.
Speaker #2: So what specific steps are we taking to improve productivity and by when should we start seeing the existing cost just to get better absorbed through AUM growth?
Speaker #3: Right. So I think the the biggest concern today is AUM, you know, because it's not that our cost structure per se is high. You know, it's not that the employee cost per se is high, but but yes, from the perspective of AUM, you know, the the OPEX look high.
Speaker #3: Now these other steps, you know, Chinmay, we have taken that, you know, how to deal with this, that, you know, one, we have to have higher growth without hiring more people in the team.
Speaker #3: So you will see that number of employees are not increasing. In fact, to to some extent, they are decreasing. So how we are doing it, that we are bringing these kind of partnerships.
Speaker #3: So as I said, that, you know, five crore disbursement with five people. So that is one thing which we are doing that bringing the partnership wherein our OPEX, the incremental growth does not require significant OPEX.
Speaker #3: So that's one, you know, way we have identified. And and balance is that we have to make our branches more productive. We have also done some rationalization of branches.
Speaker #3: We have closed some branches which were in typical rural areas and where we felt that this new lending of, you know, more like ATS of 10 lakhs is not possible.
Speaker #3: You know, in those segments or in those areas. We have taken some rationalization call there as well. So so I think everything we are touching on on the on the NPA side, we are taking very significant steps.
Speaker #3: On the OPEX side, we are taking very significant steps. You know, as I told, you know, through these partnership tie up. And AUM ultimately, you know, because when these partnerships take time to build up, you know, the first partnership took us six to eight months to build up.
Speaker #3: But once this starts, it becomes forever. So so, you know, that is the point that we have at least five, six, seven partnerships which can give us anywhere between, you know, five to 10 crore of business.
Speaker #3: And, you know, keep growing this number. So so that is the strategy. But but I agree that AUM growth is very very important. Somehow you know we needed to go back to the table and you know see what is not working for us.
Speaker #3: You know as I said that you would notice that most NBFCs we are they were lending to a customer which is similar to MFI.
Speaker #3: Even though in a secured book has you know suffered a lot in last last almost two years.
Speaker #2: Okay. So thank you. Thank you for that. But I just wanted to understand what is the main challenges that we are facing of not being able to do do the disbursement because peers are able to do it more, you know, the disbursement.
Speaker #2: So can you shed some light on that?
Speaker #3: You know so kind of I I think a good part is kind of you know being takes time, you know, because there was a there was a theme to do certain so peers who have been doing this for say several years, they have all the processes, they have all the employees focused on that particular thing.
Speaker #3: Here it's like a continuous movement towards up and up, you know, which which we have been doing. And I I think that has some impact.
Speaker #3: You know, in terms of disbursement. I think that is the main reason. And also to some extent, our earlier cost of lending was relatively higher than peers, which now, you know, we have started adjusting.
Speaker #3: So so things will improve for better. I'm not saying in one or two months, but incrementally things are getting better and better. And the portfolio of the partnership will actually support disbursement growth a lot.
Speaker #3: So I I think this kind of.
Speaker #2: Timeline on that? Like when by when do we aim to achieve those kind of disbursement as to the level of our peers? When do you think it would be for us?
Speaker #3: I think in the four, five months which is starting January. I mean the way build up is happening, on on these fronts, whether digital lending solar, dairy through partnership, and you know now starting building.
Speaker #3: Connector base. For the lab. I think by January, the fourth quarter of this year, should see very normalized disbursement. And I would say maybe even sometimes better than peers in terms of productivity.
Speaker #2: Thank you, sir. Thank you so much for your time, sir. I'll join by the queue. And all the best. Yeah.
Speaker #3: Thank you.
Speaker #1: Thank you, sir. The next question is from the line of Janvi Sharma and individual investor. Please proceed with your question.
Speaker #4: Hello. Can I audible?
Speaker #1: Yes, ma'am.
Speaker #2: Yes, Janvi.
Speaker #4: Yeah. Okay. Thank you for the opportunity. So my question is, you are targeting 20 to 25 percent of monthly business through partnerships. What is the current contribution from partnership and what is the expected economics after factoring in lower yield, lower acquisition cost and FLDG benefits?
Speaker #3: So Janvi, last month, 15 percent of the disbursement came through partnership. And I believe in in coming months, say in September and October, this could this could reach 20 percent of the monthly business.
Speaker #3: And by January, 30 percent at least monthly business should be from from the partnership level. Now, what I can say is that one, the yield is not not that the yield is low.
Speaker #3: So like in solar, we are getting a yield of 23 percent. Again, for dairy partnerships, we will be at a yield level, we will try to make about 22 percent.
Speaker #3: Which is which is not less than our lab portfolio. And digital will be much higher. So I will not comment on that as of now.
Speaker #3: But on these things, the OPEX, my understanding is that OPEX will be in the range of one, one point five percent. And because there is FLDG and SLDG guarantee program, and sometimes even incentive program, so numbers should look better.
Speaker #3: You know, as we increase these disbursements, AUM build up, this will really help us bringing down the OPEX level over a period of time.
Speaker #4: Okay. Okay.
Speaker #3: The yes, yes, we need to yes, we need to significantly grow our AUM at this stage. I think numbers will completely change in terms of profitability.
Speaker #3: If we are able to, you know, cross 16, 17 hundred crore kind of AUM. So that's the that's the target that, you know, we increase our AUM.
Speaker #3: Through obviously increased disbursements. And maintain the OPEX level at current level. So so while we while we control our OPEX at the similar level, and increase increase other numbers.
Speaker #3: Basically the disbursement.
Speaker #4: Okay. Just a follow up question on that. Like a meaningful part of the partnership this book is supported by FLDG or Secindor's guarantees. How should investors think about the underlying credit quality of this book once these guarantees are removed?
Speaker #3: No. So these are very much kind of, you know, so so I'll tell you. For example, in solar loan, you know, if we see the competition, wherein they are not even doing without without the guarantee program, credit cost is somewhere in the range of three to five percent.
Speaker #3: And then you know, one, we see that guarantee program will continue. For a longer time. And till then, you know, market will mature. And you know, we'll be able to see what kind of and these guarantee programs will, you know, most likely to be you know, continuing in nature because you know, right now there are six global foundations are working with us on these programs.
Speaker #3: And there are more to be added. Plus there are government programs like CGFMU, which are continuing. So the intention is and also, I tell you, solar loans are secured loans.
Speaker #3: They are secured by the by the asset. Which is solar. And also it's a in the sense that, you know, money does not go to borrower.
Speaker #3: It directly go to the OEM or EPC. And you know, there is a 20 percent contribution by the customer. So it's not that credit quality is bad for these customers, but it is just that it gives us far more reassurance in terms of that, you know, we will be able to disburse this loan setup much better credit quality.
Speaker #3: And or even, you know, NPA will not hit. So even if I have you know, say five percent going in in the worst case, which is not likely now because there is we are seeing a significant support from dealers also in these collections.
Speaker #3: We will not have to book an NPA here. You know, because of the guarantee program. So although you will notice that all the partnerships which we are making, you know, whether it is in digital lending, whether it is in dairy, or solar, these are very reputed clients.
Speaker #3: With a strong business impact. So the the dairy partnership which we are doing is, you know, has raised seven hundred crore private in private equity from, you know, very good firms.
Speaker #3: It's a reputed name. The digital lending is again a very very reputed name. So so I think quality is going to be good. Even otherwise.
Speaker #4: Okay. So this is.
Speaker #3: Yeah. But then but then if if there is any if there is anything change, because you know, because of the guarantee, you know, we are giving some benefit in terms of yield.
Speaker #3: So if guarantee goes, that yield will change. Or you know, we will relook. At how we have to do it. But at at this stage, you know, I I feel getting into a three hundred to five hundred crore kind of guarantee program is not difficult.
Speaker #3: That's that's my estimate as of now. But we will look into the future. How things shape up.
Speaker #4: Okay. Okay. Thank you. Just a last question. Renewable energy lending is targeted at ten percent of AUM. While cumulative disbursements have crossed ten crores, what is the realistic path to which to reach eighty to eighty five crore of AUM in this product within FY27?
Speaker #4: And what credit process are you underwriting for this portfolio?
Speaker #3: Okay. So two things. One is in terms of ten percent of AUM. So we started solar starting in April. First month disbursement was thirty lakh.
Speaker #3: Then we then we disburse one point eight. Then we disburse four. Then we disburse five crores plus. This month target is seven. So this is growing every month.
Speaker #3: And so that's the thing. You know, by January, it should reach about twenty crores per month. So that's the reason we have said that ten percent of the AUM.
Speaker #3: For FY27. So that's one part. Really you asked me, we don't see I mean, more than say half a percent of credit loss in this segment for this year.
Speaker #3: You know, that is because you know, this is supported I mean, the collections are supported by OEM, supported by EPCs. So the way we are seeing that, you know, all installments are supported by EPCs, et cetera.
Speaker #3: So we don't really see and then, you know, it's again, it's a secured loan. So we don't really see that, you know, higher credit cost will come in this segment.
Speaker #4: Okay. Thank thank you for for your answers. Thank you.
Speaker #3: Welcome.
Speaker #1: Thank you. The next question is on the line of Raj Doshi, an individual investor. Please proceed with your question.
Speaker #5: Hello. Am I audible?
Speaker #3: Yeah, Raj. Yes, Raj.
Speaker #5: Yes. Thank you for the opportunity. So my question is regarding the operating expense. So currently it is somewhere around twenty-nine CR. And OPEX to AUM has also increased.
Speaker #5: To thirteen point three. So have you are you seeing any operating leverage that will come with this gain?
Speaker #3: Okay. That is the most important thing. So you know, as I said, that OPEX now is not really increasing. In terms of absolute terms.
Speaker #3: So so OPEX is not really increasing. The key is to have a higher AUM now. Because you know, if we are lending at say twenty-four, twenty-five percent and and borrowing at twelve percent, there is that twelve to thirteen percent spread which is there.
Speaker #3: Which covers you know, helps in covering the OPEX. So the core now is to increase the disbursement and have higher AUM. So that is what we need to do now.
Speaker #3: Which is the most important task now. Other than obviously other things which we are working on, whether it is NPA management, you know, recovery from NPA, you know, these other things.
Speaker #3: But I think the whole focus now is that we don't see surprises and you know, we build parallel things. Around these disbursements. So which are more permanent in nature.
Speaker #3: So not to see surprises in terms of lower disbursements over a period of time. So so so now, Raj, if you see the way things are moving, although yes, the OPEX number doesn't look good.
Speaker #3: The the AUM doesn't look good. But but if you go into the matrix you know, they are improving every quarter. In terms of how company should look like from that investor point of view.
Speaker #3: That you know, lenders have this problem with the unsecured loans. Not everyone, but then a lot of lenders had this problem with unsecured loans.
Speaker #3: In the NDFC space. Or even the investors, large institution investors. So that is now getting out of the system. Then you know, people want to move because the largest opportunity is this MSME lab for NDFC like us.
Speaker #3: So that that thing is also now coming up. With with a little bit larger ticket, better customer profile. And then there are these three channels which we said.
Speaker #3: One is on the renewable energy side. Very much driven by foundations, partners, dairy again, and and digital again. I mean, what we have spent on technology for last one, one and a half years, now will start showing up results.
Speaker #3: Because we are we will be able to start our own digital lending journey. You know, first with a partner, very soon. And then on our own as well.
Speaker #3: So that is what, you know, all these investments will roll out to. And you know, help us generate better margins and better profitability.
Speaker #5: Okay. Thank you for that. And also regarding the branches as well. So you have mentioned that you have consolidated the branches. So can you quantify the cost savings we expect from the consolidation?
Speaker #3: No. It would be early to to say that, you know. But yes, we are able to contain our expenses. I would not say that cost saving immediately is is very, very high.
Speaker #3: But yes, you know, on the OPEX side, you know, it's if if you don't so approximately you say you save about one point two five lakhs.
Speaker #3: When you you know, because every branch is not closed. Sometimes you have to still collect on those branches. But but a approximately one to one point five one to two one to one point two five lakhs is per month which is is what you save.
Speaker #3: There.
Speaker #5: Okay.
Speaker #3: Which is the fifth expense on the sales side. And the rental.
Speaker #5: Okay. Got it. And so again, we have also raised rupees seventy crores through NCDs in the last four months. So what are the targets for AUM?
Speaker #5: Like any additional debt and equity capital will be required to deliver the FY twenty-seven growth growth plan for AUM?
Speaker #3: No, no. So that is the monthly requirement. So almost a eighty crore of debt is a monthly requirement. So so that will continue and we we will continue to raise.
Speaker #3: That debt. So every month. I'm saying this is twenty crores is not just the one debt. We we raised twenty-five crores from Saman. We raised from Northern Arc.
Speaker #3: And you know, we are continuously raising. Because every month there is a repayment of, you know, thirty, forty crores. And then you have to raise again.
Speaker #3: So debt is what we do every month. As I said, there is one term sheet we have got from global impact fund as well.
Speaker #3: Four hundred crores. This is a debt again. And then equity is obviously because for last seven years we have raised equity for seven times.
Speaker #3: So I I don't think this year will be an exception. But the trial will be to raise from institutional this year.
Speaker #5: Okay. Sure. So that was from my side. Thank you very much for answering it. Thank you.
Speaker #3: Thank you.
Speaker #1: Thank you, sir. Ladies and gentlemen, to ask a question, please press star and one now. Participants who wish to ask questions, may please press star and one at this time.
Speaker #1: As there are no further questions from the participants, I now hand the conference over to management for closing comments.
Speaker #3: Mayur.
Speaker #5: No. I think nothing from my side.
Speaker #3: Okay. So thank you everyone. Thanks for the support. And we really look forward to a long-term strong journey in terms of growth. You know, these recent times have been tough in terms of AUM growth, I understand.
Speaker #3: But I think the way we are going is is very, very differentiated in the market. And you know, this should definitely over a longer period of time, you know, give us good results.
Speaker #3: That's that's all from my side. Thank you again.
Speaker #1: Thank you, sir. On behalf of Money Box Finance Limited, that concludes this conference call. Thank you for joining us and you may now disconnect your lines.
