Aptus Value Housing Finance India Ltd
NSE:APTUS
Aptus Value Housing Finance India Ltd
NSE:APTUS
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Ladies and gentlemen, good day, and welcome to Aptus Value Housing Finance India Limited Q2 FY '25 Earnings Conference Call hosted by Dolat Capital. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mrs. Mona Khetan from Dollar Capital. Thank you, and over to you, ma'am. Please go ahead.
Earnings conference call of Aptus Value Housing Finance to discuss its Q2 and H1 FY '25 performance. We have with us the senior management from Aptus to share their industry and business insights.
I would now like to hand over the call to Mr. Anandan, Executive Chairman, Aptus, for his opening comments. Over to you, sir.
Thank you. Thank you, Mona. Ladies and gentlemen, good afternoon to all of you. I'm Anandan, Executive Chairman of the company. I welcome you all to the conference call to discuss the company's performance for quarter, half year ended September ended 2024.
I have with me Mr. P. Balaji, MD; Mr. C.P. Manoharan, CD and CBO; and Mr. John Vijayan, CFO. The financial results and the investor presentations are already available on the website of the stock exchanges as well as our company. I hope you had a chance to look at it.
With low market penetration and significant housing started across regions, more particularly in Tier 2, Tier 3 and 4 cities where we operate and with government initiatives, including [indiscernible] scheme supporting this, we believe that we are having significant headroom for growth to serve the underserved unserved customers largely in self-employed segments.
And for that, we believe in strong growth without losing the focus on the quality of loan book and good financial metrics. Very happy to record that Aptus had a very good first half year FY '25, supported by business growth, stable asset quality and continued focus on our productivity.
Sharp focus -- business focus, good distribution network, deep penetration in markets, customer sensitivity along with appropriate tech support and diversified income stream have enabled the company to achieve good business results.
As you know, our network stands at INR 4,000 crores, presenting the robust capital adequacy, this coupled with good support from institutions like NHB, bonds, mutual funds and BFI on the borrowing side, and the strong ungrown demand for both home loan and smart business loans, gives us confidence to pursue strong growth in the coming years with sustained profitability.
I would now hand over the line to Mr. P. Balaji, MD to discuss the business focus, operating and financial parameters. Thank you.
Thank you, sir. Good afternoon, friends. As we have been explaining in the earlier call, we will continue to focus on key strategies namely growing disbursement on loan book both in housing loans and small business loans, considering the large headroom available in the low and middle income segments in tire 3 and 4 cities, expanding operations confidently in the state of Odisha and Maharashtra and increasing penetration in existing geographies by opening new branches.
Strengthening the analytics and digital adoption, about 20% of our business in Q2 FY '25 has come from customer referrals, construction ecosystem, and through social media channels. Our focus will be to increase the leads through these channels in addition to the typical branch network, continue to focus on productivity, collection efficiency, OpEx and cost of funds.
During the quarter, the new mobile first lead management software, which was launched in April in before, that is well and we good improvement in terms of streamlining our processes, service delivery, asset bound, improved collection productivity, better regulatory compliance and improving overall inventory. We are continuously monitoring the functioning of this new system to bring in more improvements.
Major performance highlights for this quarter, half year was as follows. AUM grew by 25% year-on-year to INR 9,679 crores, disbursements during the quarter increased by 26% year-on-year to INR 935 crores took consol quarter-on-quarter growth was at 39%. We have 291 branches accounts. During the quarter, we opened 24 branches, and for the half year, we have opened a total of 29 branches.
Plan for the year, we had a total of 40 branches, total customers were at 145,000 customers, a growth of 27% year-on-year. NPA was at 1.25%, in terms of asset quality, collection efficiencies were at 99.28% and our 30-plus DPD marginally improved to 6.23% as of 30th September as compared to 6.31% as on 30 June.
With NPA was at 0.94%, provision coverage has been maintained consistently at 1.03% as on 30th September. We are carrying a total provision of around INR 100 crores including a management overlay of INR 45 crores, of this, when completed as the percentage of NPA, works out to a coverage of 82%. NIM was at 13.02%, OpEx to assets were at 2.65%, portfolio after tax was at INR 354 crores, which was a growth of 22% year-on-year. ROA was at 7.77%, and ROE was at 18.3%, which is one of the best in the industry.
In terms of funding, during the quarter, we diversified our borrowings further by issuing NCDs worth INR 400 crores to mutual funds of the total borrowing 59% is from bank, 19% from NHB, 11% from NCDs, which will be mutual funds and IFC and the balance in the commerce securitization.
Sufficient on-balance sheet liquidity of INR 1,239 crores, including an undrawn sanction of INR 560 crores from banks. As you are all aware, we have not done any direct attainment of loans, leading to front-ending of income on account of this.
Now with these remarks, I open the floor for the question and answer session.
[Operator Instructions] The first question is from the line of Renish from ICICI.
Congrats on a good set of numbers. Sir, just 2 questions from my side. One, on the LAP book, right? So is it possible to share like say, what percentage of our LAP book customers might have MFI loans?
Actually, there is no overlap. We just did a crop report for the live customers we have with us. Actually, there is no overlap of MFI customers with the kind of our customers.
Okay. Okay. And secondly, given there is a lot of mines around the growth for NBFC. Do you foresee any risk to our near-term growth targets because of the regulatory pressure?
I think it will be a question, it will be in the minds of quite a few analysts and the present -- who are in the call. I would like to explain this RBI stands, which we have understood in a certain way. I'll just clearly explain this. I think then we can take it forward.
From what we understood, RBI seems to be more uncomfortable on the following terms. One is unsecured loans, MFI, unsecured loans, personal loans and -- consisting of personal loans and consumer loans, including the loans given by center companies and cities with very small ticket size from 2 to 3 lakhs. We seem to be uncomfortable if these companies want to grow at 40% or so. And they also seem to be uncomfortable about this superior interest rates charged by them at over 24%. And they are also not comfortable with netting up of loans leading to other gaining of loans, it is being partially some of the players in the industry.
They are also interesting on the fact about the importance of being transparent with the customers in terms of pricing on what is being collected from the customers. All this, I would like to have internal study, we have already started the impact of this. In terms of impact on assets, so we have fully secured loans, both in housing and non-housing and the secured team is mostly residential property.
And we have given a guidance of 30% AUM growth at a lower base. And they are also charging interest rates, which are reasonable across products. Our EPS is around 8 lakhs to 9 lakhs with an LTV of around 35% to 40%, which means we purchase the value is around 30 lakhs or more and we do not follow any netting of loans in after.
In terms of transparency with the customers, we have been transparent in terms of communicating the interest rates and other things, both in the sanction letter, MITP and also in the rates, we also come in with big interactor language. Since we are not impacted by this RBI stands, which is being taken across companies.
Yes. Got it. Got it. This is very helpful, sir. And just last question. On the provisioning front, so if I remember correctly last quarter, our provisioning was lower because we have stopped creating management overlay. But then this quarter, there has been a significant jump in the provisioning. So is this due to the higher write-offs in this quarter?
No, no it's not the -- if you look at the provisioning business, is very marginally from 1.05% to 1.03%. And regarding the write-off, what has happened is if you look at the provision moment after the provision coverage we see, there is a moment of almost INR 4.78 crores and the debit in the P&L is almost INR 9.51 crores. This is basically because of our conservative accounting policy of more than 24 months overdue account have been technically written off.
But there is also what -- how we would need to look at this is you also need to look at the other income where there is increase of almost 26%, where the average vector also has been factored in. If you look at that for this quarter, we have got a recovery of almost INR 2.77 crores.
So that's how you need to look at it. And the provision coverage as I told you earlier, we are adding almost INR 100 crores of provision of that INR 45 crores is the management overlay the actual provision required as per digital model is INR 855 crores and to add to what Mr. Balaji said, debit to the P&L account is slightly the provision, is in provision to account is slightly higher than the first quarter, mainly because there is an increase in the loan book of about INR 650 crores [indiscernible] quarters. So that -- and that also carries in our provision.
The next question is from the line of Shubhranshu Mishra from PhillipCapital.
2 or 3 questions. The first one is around...
Sorry for interrupting you, sir. Your voice is not clear.
The first question is on the yields, sir. When I look at the yield, the [Technical Difficulty]
Sorry for interrupting you, Shubhranshu sir, your voice is not clear.
Hello, is this better?
Yes, now it's clear.
Sure. So the first part is, can you -- can the aim of each asset class that we have on book as well as on disbursement because when I look at the yield, it's around 17.5% on the book versus blended, any particular regulatory audit remarks that we have got because of this because the regulator has been speaking about high IRRs on various asset class.
Your voice is totally breaking, and not clear, Shubhranshu.
Maybe I'll come back in the queue if my voice breaking.
If there is anything, you can give me call.
Yes, I'll do that sir. Sure.
The next question is from the line of Abhishek Agarwal, an individual investor.
Yes. Congratulations on great set of numbers. So what I've noticed that in the few quarters that have gone by. On the borrowing side, the floating percentage of our borrowings is going up. So could you share your strategy on what number ultimately we are looking at on the floating versus fixed side?
And the other question that I would like to understand is that the asset book, the 80% of it is fixed. So going forward, when we presumably would see a rate cut, are we confident of not losing customers who might want to refinance these loans with banks who would pay on floating interest? So those are my 2 questions.
First, if you look at the borrowings, if you look at our leverage, it is around 1.5x now. And we would like to -- since -- if you look at our capital adequacy ratio is 70%, which means the future growth, which we are projecting for next 5, 6 years is going to come out of borrowings. So with the result, the leverage, it is currently -- the debt to equity is at around 1.5 is likely to go up to 4 to 5x, and we are comfortable with that. And that will be the growth path and that will be the way in which the growth in business will be funded. So it will be totally out of borrowing. That is the first thing.
Next thing is on the yield that you're talking about 80% is fixed, yes, I mean, I don't think we have been following this practice right for the last 15 years. We have not lost any customers because of the rates we are charging. And if you look at our interest rate, we are charging around 15% to 15.5% on the hiking loan. On the processing loan, we are charging around 17% to 18%. And the demand housing loan we are charging around 21%. It is comparable with the people with the integrated [indiscernible] and also in the case of small business loans it is less than the marketplace.
So we don't see that kind of a that there will be a pressure on us to reduce the interest rate or will be losing customers because of this.
Just to add to what Mr. Balaji said, on the liability side, on the funding side up about INR 6,000-odd crores, that is about 56% is only from the bank. Outside the banking system about 45%, largely coming from the NHB, the securitization. And the other entities that are very slippage [indiscernible] So there is no variability in that.
Within the banking -- bank borrowing also, when the tenure is long-term, you've always gone for long-term tenure, 4 to 5 years minimum. But in some cases, there is a variability coming on the interest reset need to do is either we REPO rate or the MCLR.
So when we say the variable loans, it is not really the entire loan is variable. Only that part of the loan which is taken from the bank. And within that also, partly it is fixed and partly the variable either linked to REPO or into the MCLR. In fact, last 3, 4 months back or 6 months back, we decided not to really take any loans, nor to take loans mainly linked to the external benchmark like REPO rather than the internal benchmark like MCLR and all.
So to that extent, the variable component is somewhat manageable and required purely to support the growth in funding. On the asset side, you are right, 80% is a fixed rate, where in case of interest situation, reduction in interest rates as and when it happens, you may tend to get benefit, because of the fixed nature of the loans.
At the same time, going by our past experience, the pre-closure rate, in our case, is much, much lower. It is not more than 2%, 3%. The overall preclosure rate is around 7%. Of that, about 4% to 5% with the money coming from the customer their own source. It is not really coming out of a loan transfer really. So our exchange in preclosure is very limited,; and to the extent either customers are -- we anticipate that annual fees change in terms of when the interest rate total comes down a bit.
And while we tend to benefit that the risk of preclosure is much lesser. So variable is about 20% that we have defection.
The next question is from the line of Shivam from Abu Dhabi Investment.
Can we start giving the private versus PSU bank breakupin our borrowing? Is it possible?
Not clear. Voice is not clear, Shivam.
I'm saying can we start giving the private versus PSU bank breakup in our borrowing?
Sorry for interrupting you, sir. Your voice is not clear.
Can you hear me now? Is it better now?
Yes.
Is it better now? Sir, can you start giving the private versus PSU bank breakup in our borrowing?
What is that breakup in borrowing? PSU bank, see, if you look at my total borrowing, bank borrowings is 59%. Of that around 25% will be from PSU bank or maybe 30% will be from PSU bank and the balance will be from private sector banks. And as I said, MSB is almost 19% MSB borrowings, and LPD is around 11%. The balance is in the form of [indiscernible]
Okay. Sir, can we start giving this number directly in our investor presentation will be helpful from the next quarter?
That is not an issue. Yes.
Okay. And the second question is bifurcation of the variable rate borrowing between the REPO rate and the MCLR?
I'll tell you. See, of the total borrowings, the borrowing given to the external benchmark debt is around 20%, the amount borrowing into MCLR is around 32%, was around 48%.
Okay. And sir, right now, the -- as the regulators are very hard on high interest rates. So what is the interest we are charging on the small business loans?
We are charging 21%. This is reasonable according to us. Yes.
So there is no...
Other part of our portfolio being a home loan company, the large part of portfolio being the home loan, where we can interest rate of around 15% to 15.5%. The second large component is the quasi home loans where we charge about 17.5%. Now then there is the later part in terms of the SME loans, where the interest rate is around 21%, 22%. But that -- the reason because the RBI regulatory concern is really more in terms of the unsecured loans flowing out of microfinance, flowing out of printer companies.
And the term that they use is luxurious interest rates. So we don't really come under the category.
So we are not thinking of reducing the interest rate from 21% to something like 20%, right?
Some part will be -- part of the company is operating in this segment, in that particular segment. And our rates are quite comparable. And we don't see it as an micro related [indiscernible]
Okay. Understood. It's been 13 quarters since we are giving the quarter-on-quarter growth. So congratulation on a good set of numbers and hope to see the good numbers in the future quarter also.
And sir, with the 30% growth rate for the next 5 years is comfortable, right?
Yes, 5 years will be at least for the next 3 years, it is there, 30% will be there.
Okay. At least for 3 years, okay.
The next question is from the line of Yash from Citigroup.
Couple of questions. First is on the ECL provisioning, where ECL provision to total AUM in this quarter has slightly gone down to 1.03% where as we have been guiding of comfortable range of 1.05% to 1.1%. So how do we see it moving? And I mean would it inch up in the 2-ish of this year?
It depends if you look at the -- I mean, obviously, the provisioning depends on the quality of book and quality of collection, Okay. So if the collections are happening very on time and if the collection efficiencies are good, I don't think we should increase the provision. So we'll be maintaining around to 1% to 1.03% as the provision coverage ratio. So it will be ranging between 1% to 1.03% and this will be contained because as I said earlier, if you look at the total provision which we are having, almost INR 45 crores, we are having is management overlay.
The provision required after the initial model, it has been tested by 3 auditors. One was the first, the model was tested by [indiscernible] then the next one was done by Chheda, then new auditor Sundaram. So they are all okay with that model. And the requirement is only INR 55 crores. So having additional INR 45 crores of management overlay. So I don't think I'll be increasing the overlay from now on.
Got it. Got it, sir. And sir, any incremental color on the 30+ DPD book, which is still at the elevated level in October and first week of November?
No, the collection efficiencies are improving. I mean, as we been saying. The third and the fourth quarter, definitely, the collections will start improving and 30+ DPD will come down because that's what is the focus from our point of view as well. So eventually come down.
Got it. And sir, last question on the borrowings. Even in this quarter, we saw a good growth in borrowing. So were they more front-ended for the 1H? Or we'll see the similar traction in 2H as well?
I didn't get your question.
Sir, on the borrowings, so there was a good growth -- sequential growth in borrowings in this quarter as well. So was it more front ended for the year? Or we'll see the similar traction in 2H of this year as well?
See, normally we maintain 3 months or 2 months disbursements on balance sheet liquidity and another -- 1 or 2 months disbursements has been undrawn function. So it is like that change of owner. And also, we see this -- the proposal from mutual fund for INR 300 crores, we get at a very good growth. So we should take that opportunity and draw that fund. So that is why our balance sheet -- on-balance sheet liquidity has gone slightly.
Actually seeing the presentation in a total liquidity in the is about INR 1,200 crores that was about INR 689 crores is really the unincumbered cost we have in funds with us. That includes the money that was done in the last year from the issue [indiscernible] Apart from this INR 689 crores is our cash on the balance sheet, we have the unavailed the sanction of INR 550 crores. These funds are not drawn yet.
But then -- this INR [indiscernible] crores, is comparable in terms of our business growth, almost given the collections on the product and things like that almost for up to February, March kind of yes.
Yes. Okay. Okay. And sir, lastly, on the attrition rate, how are we moving -- have the trends improved and any new initiatives have taken on that front?
If you look at the attrition rate, I would like to divide this between across level. Of course, at the top management level, the attrition is nil. At the middle management level, considering the area manager, AVPs and manager, it is between 5% and 10%. And of course, at the branch manager level, it is between 15% to 20%. And at the sales officer level it is between 25% to 30%, which is less than the industry, but still a bit of challenge to be on it.
The next question is from the line of Shubhranshu Mishra from PhillipCapital.
Am I audible now?
Yes.
The first question is around the yields. The blended yield is at around 17.5%, can you tell about the yield asset as [Technical Difficulty]
Only the [Technical Difficulty] what I will do, I have your number. I'll give you a call maybe after...
Sure, sir. I'll probably do that. I'll get off the queue.
The next question is from the line of Nischint from Kotak Institutional Equities.
Just 2 questions. One was on the LAP side, our growth is sort of a little lower at I think around 12% year-on-year. And I think even in case of state of Tamil Nadu, our growth sort of still lag the -- significantly lags the overall company level growth. So I mean, just what are the thoughts here?
Nischint, not clear on the question -- Nischint.
The LAP growth, see, if I look at your overall AUM growth, which is at around 27%. Growth in LAP is around 12%. So which is significantly lower than the company level average. Is there any specific reason why growth is lower over year? Is there any asset quality stress, any execution stress, anything that you have seen because of...
No, no, no, it is nothing we added to the asset quality. If you look at now the collection efficiency or if you look at the 30 plus DPD, it is all in line across products, maybe 0.2% here and there, but it is line, it is in line, whether it is 30 + DPD or whether it is NPA or Stage 1 assets. So there is no worry on the asset quality because our credit norms, whether it is a housing loan or a LAP, it is different, see the LTV norm at the installment to income ratio is same, the credit appraisal is the same. So there is no difference there.
So it's basically because we have to do more housing loans because we need to do it site of the compliance for factor. It is because of that, that has happened. However, if you look at the total composition of the book, in terms of the consolidated basis, it is around 61% and 15% on the quasi home loan and 20% on the small business loans. So that will be continuing.
So that is the way in which we need to look at the mix rather than quarter-on-quarter disbursements moving slightly here and there.
Yes, got it. So basically, it is just because we wanted to comply with the 60-40 ratio and that is the simple reason why you LAP. Got it, got it. And the other thing is in the state of Tamil Nadu, I know we've kind of ramped up in the last 2 quarters. But when do you think we go back to Tamil Nadu to company level average growth?
Sure. See, what happened, first of all, let us understand this fact, in Tamil Nadu first of all, there is no market-related issues. Market is good. We need to do the -- so the market -- the offered to grow in the market is very well there. But as you know, we have been taking this action issue in last September and they have been slowly making changes and then winning in the way that is performing.
If you look at the half yearly growth, it is around 8% to 9% is the growth in disbursement. And the yield on growth half year, I mean September '24 as compared to September '23 is also 8%. We have made some structural changes in the team, and that is actually paying off well. And in the third quarter, we can see much more in the Tamil Nadu performance.
So is it something to do with internal to the team change in team? Or is it something because the market is...
It's basically our internal issue, which is getting sorted out. It is not relating to any market-related.
Got it. And just since there are a lot of questions related to the regulator that are coming up in this call, is there anything that the regulator has sort of in your discussions commented on growth or margins or asset quality. I mean if you could clarify that could just help us.
Let me clarify here very clearly. MSB inspection, I think completed products for the year ended March '23. We have given their comments, and we have already submitted our response. There is nothing alarming there. And they have suggested some process improvement which we have committed that we will also do that and we will do that as well. That is on the MSB.
If you look at the RBI for the NBFC, RBI inspection took place 5 years back, and there were no major observations at that point in time. And of course, they have just completed the instruction now and they've gone back. They have yet to come back with their comments, they told they will have a call with us before finalizing on the comments.
And as of -- from what we got to know the final discussion I have with the person who conducted the inspection, he was quite comfortable with the way we are doing the business, and there were no input from the RBI on either the growth or the injected or the yield which we are planning. So this is the status as of now.
Just to add to what Balaji said. So basically our portfolio of above INR 9,900 crores, INR 7,300 crores, which is a foreign company, housing company, which is really secured the loan for home or for the purchase which also secured loan. And the interest rate that we charge is like any other housing company, the housing company interest rates never been seen at [indiscernible].
So the housing loan, process loans, the farmer contributes about 70% -- 70% of our balance sheet, which is the parent company, housing companies, regulators there is several RBI -- there is no issue. From the point you have small unsecured loan and not clear about the terms and conditions, those issues.
So the RBI, if you read the RBI concern, largely, as you know is from the unsecured loan owned by -- given to small customers by certain legal entities like microfinance companies or few fintech companies. We are not really present in any of the unsecured loan, we are not presenting the small loans, the loans which we are talking about is it could 1,000 to 3 lakh we are not present in that segment.
And our interest rates are -- profile is well communicated to the customer in [indiscernible]. All the terms are fully disclosed. And we have also made a inter comparison for our terms and conditions of the loan that we do versus 8 other other companies, we found it our -- where service charge or the [indiscernible] preclosure, precharges, we are really quite comparable. And so that's why we don't really see any concern of -- and we don't have any loan in terms of the other uses in terms of the loan. We don't have -- we don't do any netting off loans. And we don't do any -- all other regulatory things are fully and totally compliant, and it is transparent our customers and to the regulator and to us. So if you don't really see anything, any concern on that for us.
Got it. I think this just helps to clarify.
The next question is from the line of Kartik Kumar Pandey from Ashika Broking.
Sir, you were explaining you made...
Sorry for interrupting you sir. Your voice is not clear. Could you speak a little loud?
Yes, sir. You were talking about the effect of [indiscernible] on your fixed asset -- fixed portfolio -- fixed asset portfolio. So can you please explain that once again? And just -- I missed out at at the beginning...
I'm not able to hear you properly. Sorry about this.
Please use handset while asking a question.
Yes, I'm using handset. I was just trying to understand the struggle explaining regarding the effect of PAT, put specific trade portfolio. So can you please just explain it once again?
Okay, just note down my number, you call me a little later. I'll explain what you are referring. It's 9791007160, just give me a call after the briefing.
The next question is from the line of Nidhesh Jain from Investec.
Can you share the disbursement number for Tamil Nadu for the quarter Q1 and Q2?
Then we don't pass Tamil Nadu some other than closer a brand. So as a company as a whole, we have grown certain percentage in terms of our loan book as well in terms of disbursement has grown 16%. And we have given a guidance of 30%, which we will do. And given the 16% disbursement growth, we'll move into -- expect to move into 20% by third quarter, moving to 25% in the third quarter -- fourth quarter, and our loan book is 20%.
We are growing in assets, as I see and we are growing Telangana. We are going in Karnataka, we growing in. And then as far the Tamil Nadu, we have explained enough in terms of we had certain issues in some stop acquisition to do it correctly. Beyond that, we don't want to do to improve in terms of Tamil Nadu which is -- which clock, which brand, which state staff. I think we need to stop it somewhere.
Sure, sir, sure. But in Tamil Nadu, the issue is that 2 years back, I think that issue has happened. And for the last 2 years, the growth is still...
Otherwise, we won't say that we will grow 30%. What is happening, so it's not that easy to do -- it's a business, okay? So I mean there is a problem that needs some time to get sorted out. See, the thing is, we don't get fully experience and good people immediately. So even if they come, they might not get adopted today to the work environment.
So there are issues. It's not that -- it's not a plug-and-play model there. We just have some people and going to ask them to perform and then start doing things. So it is taking time. We have been saying it is taking some time, what we are having, we are on the right path in correcting the Tamil Nadu state, and we are correcting it also. And there has been a growth of disbursements of 8% over the last half year.
So I think we should resist that and then take it forward because it is taking some time. And we all accept that, but we are on the right track on that. So that is how we need to look at things. But that doesn't -- as I said, again, there is no market-related issues in Tamil Nadu. It is basically our own internal issues, which we are sorting it out.
Okay. Okay. And secondly, in sourcing there is a significant -- I think the sharp increase in the share of construction ecosystem. And over a period of time, customer referral share has also gone up. So what we have done there to show strong growth in these 2 channels?
So basically, you have from the team at the head office. So what happens is you have got this customer app. So there, the existing customers can refer their leads. Similarly, we have got the construction ecosystem partners who are basically construction shop owners like paint shop owners or shop owners. So when somebody comes and buy something from them, they said they ask them whether they need a housing loan and then they refer the same to us.
And once the deals come in, what we do at the head office is, we go through the deal, we talk to the customer, they do various checks, and make this cold lead into a warm lead and then take it forward. So that is what -- that is being done on a focused manner.
If you look up at 18% of our disbursement last quarter since these channels, now it has become 20%. And we find that this channel is really good because the conversion ratios are also high. And the average ticket size is also high at around INR 99.5 lakhs. So we would like to focus on this channel and develop this channel, and that's what we are doing.
And then lastly, how is the experience in the state of Odisha, Maharashtra, I know it is slightly is the new states. But in terms of disbursement ramp-up, how -- if you can share some data out there.
Job SP1 It is very encouraging. We have got -- I mean, if our experience was not good during opening branches there. So our experience in Odisha and Maharashtra has been good. And we have formed a team now it is led by a manager there who are decent enough and experience enough, we can take this to the next level.
The next question is from the line of Jigar from B&K Securities.
Congratulations, sir, on a good set of numbers. Two questions. The yield that you mentioned on HL, cost HL and SBI of 15%, 17% and 21% to 22%. These are disbursement needs or these are bookings? And do they differ materially -- just trying to understand whether we have reduced rates?
Basically there is disbursement rates. We charge 15% to 15% on the housing loan. It is 17% to 17.5% or 18% of the quasi home loans and 21% on the small business loans.
Right. And we have not reduced trades recently on SBL, right?
We have not been included.
No, no, we have not reduced...
The interest REPO, increase in the REPO rate half about 2.5%, we are increasing interest rate is much, much less than that, roughly around 0.5% to 0.7% overall. So we have really consciously done for a lower increase in the interest rates in that way.
That too, we did it sometime in September '23 or October '22, we have not done anything.
Understood. Understood. And sir, on this interest rate cut and 52% of your borrowing either linked to EBLR or MCLR so if and when the system wide rate cuts happen and it may flow through in EBLR and MCLR, our spreads definitely been increased because a large part of our book is fixed rate. So do we intend to kind of like pass it on to our customers or we will kind of maintain it the yields at the current level?
In the last 2 years, we observed the interest rate charge -- I think we remain our profit on it on to contract on and then we'll be.
Okay. Okay. And sir, any clauses you have on this fixed rate book that is -- does this remain fixed throughout the tenure of the loan? Or does it get repriced a 1 year, 1 year, is there a review clause in the agreement?
Fixed sale contract, while the loan agreement does have a clause, so in exceptional situations, the company can raise the interest rates to recover part of the improved interest rates, so it's exceptional situations. So the loan agreement it is not fixed purposes. But in case of exceptional situation, the company does have the right to go for an appropriate increase to recover the cost.
The next question is from the line of Rajiv Mehta from YES Securities.
Congrats on strong performance. So many of my questions are already answered, only a few left. Sir, firstly, on the employee cost, it was flat on a Q-on-Q basis despite a very sharp jump in disbursements. So can you share the employee count change on Q-on-Q basis? And how are the incentive structure for employees?
Incentive structures, I don't want to tell it in the con call because it is, I mean, a company specific. Basically, incentives are being paid based on the performance. And it will enhance productivity. So we increased -- we are a productivity driven organization. So anybody who performs well will earn good amount of incentives and maybe a fixed salary will be 60% to 65% and 35% will be incentives.
Actually, just to add on that as far the numbers are concerned, spot numbers are concerned, we have closed September with about 3,000. And in March, we possibly around 2,700 to 2,800 so there the increase is about 200. And in this time, we have also added about talking to our brand size. So this increase also to last are mainly in the bonds and the field level functions like sales and collections, so that we do have encourage that way.
As far as incentive is concerned, we do recognize with performance, performance both in terms of quantity and quality and quality in terms of the proposal, the policy of the proposals are generated. The track record of really, track record of installment payments and the quality of documents that have been completed.
As far as just not be some disbursement number alone, it will just take into consideration other qualitative aspects as well. Even in the collections also, it is not that in rate alone, there is the weightage given for the EMIs now. We recognize the quantum of EMI, we recognize the number of vessels. And more importantly, we also recognize you ever be realized for the current month of this year in a collection of world, EMI is selling.
So the incentive structure is largely for our sales and collection, recognize these aspects of productivity and quality.
Sir, on this OpEx to asset ratio, I mean, we are at 2.65%, and we are talking about being the lowest cost to asset and cost-to-income ratios in the sector. So what is the juice left? And what will be the key drivers here? What can drive it further down and to up to what level do you see it going?
There is no juice losses, I mean, each and every expense is just monitored very closely. We negotiate better and also the productivity. That's what the secret sauce is. And I don't think we can improve further on this.
Yes. Culture, as far culture of our, we follow approvals on culture that does not doing that we pay the lower salaries, we are probably one of the best possibility in the industry comparable year. And our terms of employment [indiscernible] we those assets. But then our investment in IT, our investment in brand sales, even receivable will come in to our sort -- we will be adding about 15% of our brand size. We are beginning brands have, we are adding another -- branches they're going to have. So despite the investment and we also invested in the new software that has been mentioned earlier.
So we do make the investments in terms of easy distribution in the IT. At the same time, we are very conscious significant part of our growth has to come from the productivity of our -- from the existing branches, from the the existing staff and the new staff after we release turnaround time.
So in other words, more of course, as an organization, we do believe in approval of culture, of operation.
Just checking and clarifying these 201 branches that we report. Is there bifurcation -- are there separate branches for the NBFC and the HFC and how does the sourcing happen across branches for all products? Can you just throw some light on that?
There is no separate branches for NBFC, it is to think NBFC is the wholly-owned subsidiary, the cost that's shared between the company is based on the assets under management. And figure the sourcing is concerned, people are free to log in either the housing loan or a non-housing loan. Of course, there will be some push from the head office side on how much small business loans are being done at each brand and of course, on the housing loans.
Okay. Understood, sir.
The next question is from the line of Kushan from Morgan Stanley.
I had 2 questions. One was around the loan growth. So we have guided for 30% loan growth. In the near term, if I look at that F '25 broadly looks like an ask rate of about INR 2,400 crores, INR 2,500 crores disbursement in the second half of F '25. Is that something that we are targeting? Secondly -- my second question was around the loan spreads. So over the last 2, 3 quarters, we've broadly maintained a loan spread of about 8.7%. Is that something that we would like to maintain going forward as well? And in that context, I mean, how do you think cost of funds will play out from here on? And also the higher liquidity on the balance sheet that you alluded to over what timeframe would that come back to a more normalized level? Those are the questions.
Currently, we have disbursed around INR 1,600 crores in this last 6 months and another INR 2,000 crores to INR 2,100 crores is a possibility. Okay. So which means another -- I will try to assume do more, but this is definitely will be the INR 3,700 crores. But definitely, we'll try to touch INR 4,000 crores of this year. So that is the guidance which we want to give. And what is your next question, on the spread, right?
Was on the loan spread. Yes.
Yes see, spreads is a resultant of what yields and the cost of borrowing, our spreads are likely to be maintained at around 17.3% to 17.5%, and part on our current rate is at 8.5% or 8.7%. Of course, if the rate that's happened then this interest costs will come down, at least on the variable rate borrowing. So to that extent, there can be a limitation, but I'm not suffering in that as of now because the rate cut has to happen. So with the result, the spreads is likely to be maintained at 8.7%.
Understood. And on the -- lastly, just on the liquidity part.
What was the question on the liquidity?
So liquidity has increased Q-on-Q this quarter. Just wanted to understand in what time frame will that normalize to earlier levels?
It is basically 3 months business and we would like to drop business to utilize maintain as the liquidity, whether on balance sheet or off balance sheet, it could be determined based on the market unless -- based on the availability of funds and also the market dynamics. So for example, last quarter, we had to draw that money because the rates are good and the terms were good, and the results from mutual funds. So we have to draw the money and keep it on the balance sheet. But normal plan is to have 3 months disbursement as we liquidity available.
As that was the last question, I would now like to hand the conference over to management for closing comment. Please go ahead, sir.
Yes. Thank you. Thank you for organizing this conference call. I would like to pay my sincere gratitude to all analyst investor friends who have taken time to listen to us today. Please feel free to thank us, Mr. Balaji, I encourage if you have any further queries. Thank you.
Thank you. Thank you all.
On behalf of Dolat Capital, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.