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India Shelter Finance Corporation Ltd
NSE:INDIASHLTR
India Shelter Finance Corporation Ltd
NSE:INDIASHLTR
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Ladies and gentlemen, good day, and welcome to India Shelter Q1 FY '25 Earnings Conference Call hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Renish Bhuva from ICICI. Thank you, and over to you, sir.
Yes. Thanks, Sumit. Hello, good evening, everyone, and welcome to Q1 FY '25 India Shelter's earnings call. I would like to thank the India Shelter management team for giving us the opportunity to host this call.
I will now hand over the call to Rahul. Over to you, Rahul.
Thank you, Renish. Good evening, everyone. I take this opportunity to thank ICICI Securities for hosting our call today. I extend a warm welcome to all participants on our Q1 FY '25 earnings conference call. With me today, I have Mr. Rupinder Singh, MD and CEO; Mr. Ashish Gupta, CFO; and myself, Rahul Rajagopalan.
I now request Mr. Rupinder Singh, our MD and CEO, to brief you all about the company's performance. Thank you, and over to you, sir.
Thank you. Very good evening, everyone. On behalf of the company, I extend a warm welcome to all of you. Thank you for joining us on the call today. We delivered another quarter of consistent performance with sustainable growth in our AUM. The continued performance in this quarter is on the back of volume growth, improved productivity, consistent margins, stable credit costs and improved return ratios.
I would like to start with the budgetary highlights impacting the affordable housing sector. PMAY was introduced in 2015 with the aim of providing affordable housing. The increase in the target by 3 crore houses in this project goes well for those who wish to avail the benefits of the scheme, particularly in EWS and LIG.
The reintroduction of credit-linked subsidy schemes is expected to support housing loan growth as well. The scheme provides subsidized home loans to buyers of affordable homes under PMAY. We are waiting for fine prints, which is expected in some days.
Some of the key operational highlights includes: India Shelter AUM crossed INR 6,500 crores; we have 86,000-plus customers on our book; continue to source internally with in-house sourcing at 98%; 100% of our book is secured; basis our conservative approach, LTV on the book is 52%; 90% of our AUM is from Tier 2 and Tier 3 cities; more than 72% of our customers are self-employed.
Moving to the results of the quarter. We are pleased to report an AUM growth of 37% year-on-year to INR 6,509 crores, supported by disbursement growth of 23% year-on-year to INR 715 crores. As discussed during the previous call, we plan to add 40, 42 branches during the year. On that note, we have added 30 new branches during the quarter sequentially. In this quarter, we added 3 branches each in Rajasthan, Uttar Pradesh and South, followed by 2 branches in Haryana and 1 branch each in Uttarakhand and Maharashtra.
Now moving on to the liability side. Liquidity pipeline continues to be strong with positive ALM. The company has access to diversified and cost-effective long-term borrowings. In a recent rising interest rate environment, our cost of funds was maintained at 8.8%.
Operating efficiencies continues to play out as our OpEx to AUM remained stable at 4.4%. In terms of asset quality, gross Stage 3 came in at 1.1%, 30-plus inched at 3.5%.
On profitability metrics, PAT came in at INR 83.5 crores, registering a growth of 77% year-on-year. ROE improved to 14.3% from 13.9% in quarter 3 financial '24. That was a period when we did our capital raise and got listed.
Business environment continues to be the same as witnessed during last 4 quarters. We continue to maintain our guidance what we indicated during the last call, which is branch addition of around 40, 42 for the year. Margins to be around 6%, credit cost around 40 bps and loan growth of around 30%, 35%.
With this, I would like to hand over call to Mr. Ashish Gupta, our CFO, to take you through the financial metrics. Over to Ashish.
Thanks, Rupinder Ji. Good evening, friends. Let me take you through the key financial numbers. AUM as on June '24 is at INR 6,509 crores, year-on-year growth in AUM is at 37%. Quarter-on-quarter growth in AUM is at 7%. Total income per quarter is up by 39% driven by increase in AUM and improvement in yields. Quarter-on-quarter, it is up by 7%.
We have concluded a DA transaction of INR 137 crores during the quarter. DA as a percentage of AUM is stable at 15%. Portfolio yield is at 14.9%, year-on-year up by 20 basis points in spite of improvement in HL share in the AUM from 57% to 59%. Quarter-on-quarter yield is stable.
Disbursement yield for Q1 is at 15%. We have diversified source of borrowing with more than 30 counter-parties. Quarter-on-quarter cost of fund is stable at 8.8%. Our marginal cost of fund is also at 8.8%. During the quarter, CARE rating has upgraded our credit rating from A+ to AA-. This will help us to bring down our cost of funds by 25 to 30 basis points over the medium term.
Our lending margins are stable at 6.1% quarter-on-quarter in line with our guidance of 6% for the medium term. OpEx for the quarter has grown by 27% year-on-year as against 37% growth in AUM and 39% growth in income. OpEx to AUM for the quarter is at 4.4%, down by 40 bps year-on-year with improvement in scale. Quarter-on-quarter, it is stable at 4.4%. Cost to income for the quarter is at 38% stable quarter-on-quarter. Year-on-year, it is down by 800 basis points.
Credit cost for the quarter at 40 basis points, in line with our guidance. DPD 30 is at 3.5% and Stage 3 is at 1.1%. Marginal uptick in -- is on account of seasonal factors. PCR for Stage 3 asset is stable at 25%. Our ECL is INR 51 crores against the regulatory threshold of INR 31 crores. So there is adequate provision buffer is in place.
PAT for the quarter is INR 83.5 crores, year-on-year up by 77%, quarter-on-quarter up by 7%. ROA for the quarter is at 5.4%, quarter-on-quarter up by 20 basis points. ROE for the quarter is 14.3% at a leverage of 2.6x. It is up by 40 bps quarter-on-quarter.
With this, I conclude, and now we can open the floor for Q&A.
[Operator Instructions] The first question is from the line of Raghav Garg from AMBIT Capital.
My first question is on the on-book yield. So there seems to be a quarter-on-quarter decline of about 30 to 40 basis points in your on-book yields, that is your interest income divided by on-book loan. So why is that happening in this quarter?
So that may be purely on account of averages that you may be looking at in terms of P&L divided by average AUM. Otherwise, there is no movement in the yield assets. Broadly, we are stable at 14.9% in terms of portfolio yield. And if you look at our DA to AUM ratio similar at around 16%. So that may be purely because of averages.
I think the one that we are looking at in 4Q is probably an inflated number. Is that correct?
Come again?
I think the one that we are looking at in 4Q, that's probably an inflated number. Is that understanding correct?
I don't say inflated number, but there may be some [ abbreviations ] in the averages of the denominator that you are using.
Understood. And on your cost of funds, you are stable at 8.8%. But when I look at the borrowing mix, the share of NHB has gone up by about 300 basis points. So it seems that there has not been really any benefit that of higher NHB borrowing, why is that? And also, can you give us the marginal cost of funds without NHB borrowing?
So we have draw down NHB funding under the regular refinance this time because we have already draw down the AHF scheme in the month of November last year. So the residual drawdown of around INR 210 crores that we have done in this quarter is on regular refinance scheme, wherein the interest arbitrage is limited to around 30, 40 basis points.
And having said this, either we draw in AHF scheme or in the regular refinance scheme, it doesn't impact our margin as such. Even -- so in case we draw in AHF schemes, our cost of fund you may see coming down, but parallelly, our yield will also come down. Technically, we endeavor to make about 6% margin over the cost of fund that we have.
[Operator Instructions] The next question is from the line of Nischint from Kotak Institutional Equities.
I think I'm just kind of going back to the question on margins. If I look at your NII growth on a sequential basis, it is around 1.7%. Your loan growth on a sequential basis is somewhere close to around 7%. So definitely, I think there is something which is not adding up, right. If your spreads are stable, then your NII growth should ideally be equal to your AUM growth.
So NII growth is -- I don't know how you're looking at. NII growth is there. In fact, NII is better than the previous quarter that we have.
I'm looking at sequential quarter-on-quarter NII growth and quarter-on-quarter loan growth to get a sense of how the spreads have moved sequentially because optically, it looks like your NII growth on a sequential basis was just around 1.8%, 1.7%. And obviously, your loan growth has been much more than that.
So we may have a look at it and come back to you after this.
No problem. The other thing is I think there was another question on your incremental cost of funds. I'm not sure if you answered that. What is your incremental cost of funds today?
Incremental cost of fund is, if you talk about the non-NHB source, it is running at around 8.9% versus about 9% in Q4. And if you include the NHB funding as well, then our marginal cost of fund is at 8.8%.
So that is not incrementally making any difference as such. And any view or outlook in terms of where you see this cost of funding heading? Do you see this really heading up? Are you diversifying because of which the cost of funding is going up or do you have any kind of MCLR kind of transition to happen?
So even if we assume the market rate of interest remain stable that RBI don't reduce the repo rate, but we are seeing pressure on the cost of funds from the bank side. You are aware that what is happening with the bank CASA and all that. So we are seeing some pressure coming out of the -- on the MCLR -- that MCLR-linked borrowing that we have.
But having said this, we have our rating upgrade in place. So that will help us to maintain our cost of funds. So we believe that in spite of MCLR adjustment that will happen over the next 9 months, our rating upgrade should help us to reduce our cost of fund by about 10 basis point this financial year.
So in the sense, the spread over MCLR is kind of going up. Is that what you are trying to address?
So spread over MCLR is gradually coming down, with the improvement in that -- with the improvement in our credit rating, we have been able to negotiate lower spreads with our lender. So though the MCLR will go up, we will be able to negotiate lower spreads, resulting in overall lower margin cost of fund than what we have currently.
The second question is on disbursements, maybe we are kind of somewhere closer to 23% for this quarter. Is that what we would probably look at for the next 9 months? Or if you could give some color on that?
Well, quarter 1 is normally a little low on the disbursement side. This has been a journey trend with most of the financial institution in this segment, particularly. And yes, this time, what we shown 23% growth, what -- we believe that there's a still a lot of scope going forward. And normally, upticks happens in H2, and quarter 2 is actually also helpful some time.
So we feel that we are optimistic about that this percentage growth, what you're looking on quarter-on-quarter -- year-on-year disbursement, what are you talking about 23%, 24%, it have a little uptick over that size.
But what do you say exact number, I think I can only give you the optimistic picture on that side. Our guidance remains continuos in the range of 30%, 35% of AUM growth, 1% here and there can always happen basically. But yes, we are optimistic about the things.
Okay. And just on the business mix, we are kind of growing home loans faster. So is 60-40 is the optimal mix is what we are looking at? Or do you think we sort of really exceed that as well?
So Nischint Ji, even in previous call, I mentioned there may be 1%, 2% here and there. So our focus remains in the range of 60-40. The 60 can go to 61, 62, that 40 can come down to 38, 37 at the max basically. But ratio of 60-40, which is important to maintain the PBC will continue to remain in the same range. Irrespective, however, because of that gap also, I think business was supportive enough to maintain the spreads around, which we always keep guidance of giving a 6%. So this quarter, we maintained the spread of 6.1%.
Sure. Just if I can ask, what proportion of loans are top-ups for us?
Nischint Ji, we actually are in a segment, which is very low ticket size. And we always keep in mind 2, 3 things aspects. First of all, it is a self-employed customer, end use has to be for the business side. We take a Udyam Certificate and stuff around that piece. Ticket size for us remain around in the tune of INR 10 lakh. These segments of customers whom we charge a rate of average yield of around 14.8%, 14.9%, they rarely come for these kind of top-ups. Still, if you ask the numbers, it won't be more than 2%, 3% of the book.
Got it. And ticket size, when we say INR 10 lakhs, it is on the book? Or is it -- is it on the book or -- is it on the incremental disbursements?
Both on the book and the continuous disbursement remain around the same range.
The next question is from the line of Kunal Shah from Citigroup.
So the first question is on collection efficiency. If we look at that number that's down 300 bps quarter-on-quarter and even maybe because of the seasonality when we look at on a year-on-year basis, that's also down almost 80-odd basis points. So any reason for that? And any state-specific trend, which we are seeing in this collection efficiency and that has led to slightly higher 30 plus as well as 3.5-odd percent. So how should we rate this, yes?
So if you see the 5 quarters of trends, there is definitely a seasonality effect which comes into that piece. In fact, quarter 3 of the last year was also on the same set of number of 3.5% of 30 DPD. And eventually, when we landed into quarter 4, we were able to sustain. Obviously, the effect was both. One is quarter 4 and 1 is what we're able to deal with in terms of collecting it well.
We have taken certain initiatives in this quarter particularly more on the digital side. So you might have noticed that our digital collection, which used to be, say, 93% has gone up to the level of 96% in this quarter, particularly. And yes, there is also an impact of certain seasonality. There are many things you can count on, but there's no point of counting things which are just to give a story around that this is because of that the collection efficiency has gone down.
But what I feel we have enough of energies which are penalized and I think we'll be able to cover up in coming quarters basically. So this is more like a seasonality and it is very much range bound as per us, and we'll be able to maintain it.
Okay. Sure. And secondly, on the fee income side, any one-off element out there, it seems to be quite high even on a quarter-on-quarter as well as year-on-year. So it doesn't seem to be more volume related, but there is any one-off?
So in fee income, there are a couple of things. One is that our insurance agency is now active so that some of the fee income is coming by way of that. Secondly, we have done some tweaking in our fee structure in case of co-lending. So some part of the additional fees is coming from that structure. During the quarter, generally Q1, so like BT is slightly higher by 50 basis points as compared to the previous quarter. So some prepayment income coming from that. So it's a mix of all these 3 factors, nothing beyond that.
Okay. Sure. And lastly, with respect to disbursements, the impact of RBI circular, if you were to look at it, how much would that have been in this number, which we had reported, was there any disruption out there because of the cheque circular, which has been there? And maybe on a normalized basis, how should we look at the overall disbursements, yes?
Well, quarter 1 normally is a little leaner than the quarter 4 of the previous year. This has been the trend with us particularly. But having said so, there is a slight impact of the circular also which happened with us. If you see per se, there may be a drop of 3%, 4% here and there. And which we tweak, I think we were quite effective in responding on that -- on time basically.
And I feel that 3%, 4% can be here and there when we talk about in terms of disbursement going forward in coming 2, 3 quarters as we see particularly. Otherwise, we don't see impact around that side. Quarter 1 is normally a little leaner. And this is a trend in our India Shelter history from not 1 or 2 years, but from ages.
No, no. The only thing was maybe in terms of the cheque, how much was the proportion of the cheque issuances versus the online transfer earlier?
So that's what I'm saying there will not be more than a gap of 3%, 4% around that side.
3%, 4%. Okay. Got it.
[Operator Instructions] The next question is from the line of Omkar Shinde, an individual investor.
The point was you had said that you will be adding 40, 42 branches in current year. Will this continue for the next 2, 3 years or so, so runway for the next 2, 3 years, what would be that?
So Omkar Ji, we are present in 15 states across countries, including North, West and South. And in these 15 states, we have enough of depth, which we can capture. And I feel 40, 42 branches quite comfortable that we have taken up. So I think not only 2, 3 days -- 2, 3 years, but beyond that, we'll be in a position to maintain that number if you want. Obviously, we have to kick off the productivity aspect also. There may be a little bit change here and there. But largely for next year, at least, I can confirm there will be 40, 42 branches for to open.
Okay. So 3 years, we can assume, it is 40 to 42 branches?
Yes.
What I wanted to understand then, then the steady state OpEx to AUM that is currently at 4.4%. I think that it could remain steady at the current level? Or will we see some impact of seasoning? So what I want to also understand is once the branch, say, for example, the branches that's opened in current year, 2, 3 years down the line, they will season and they will get productivity. So how will that impact going ahead?
So one thing is very important to understand. We have maintained a quantified the number of 40, 42 branches. So this year, 40, 42 branches were on previous years of 180. And 3 years, this 40, 42 branches will be on the number of 320 basically, if you add up the number. So automatically, the percentage-wise, this OpEx is bound to come down basis on that is because percentage wise, the number of branches which are adding up is a little lower on the side in that case, right?
Secondly, since we have already maintained our supervisory costs very well. And what we need to do is only opening -- expensively opening new branches and that also into Tier 2, Tier 3 branches, which is in the same geography largely. So that is again going to play around that piece. So effectively, you can easily find out with these impetus maybe 20, 30 bps of OpEx on AUM benefit you're going to get in next 2, 3 years. So this year, what we started with 4.4%, you will find out we'll be landing somewhere 15, 20 bps lower than the previous year and eventually the next 2, 3 years also.
Okay. So on an average, you might get 15 to 20 bps operating leverage every year for the next 2, 3 years?
Yes.
Okay. And lastly, what is the average number of log-in and the final disbursement? So for example, what are the number of log-ins per employee? I'm trying to understand per employee productivity because our number of employees have been increasing as we are also expanding per branch. So I'm trying to understand how will that per employee level productivity improve going ahead? So for example, what are the number of sanctions, files and the number of files that are disbursed that way per employee or even on an overall basis, if you can?
So if we see when we drive our business, purely 98% of business comes from the self sourcing. We don't depend upon third-party DSA channel partners and things around that piece. So per employee, last year it was in tune of around 5, 5.5. This year has reached the level of 6. And obviously, as you're driving this productivity, it has to go up. So this is a sequential way.
So instead of giving a futuristic statement around this is the number that we are driving, but we know that this productivity should go up. So you can easily see that every year, there has to be a growth coming around apart from addition of the people and the branches, there will be some spots, which is coming from the per employee productivity also.
So if we see the trend of last, say, 3 years or 4 years, you'll find that every year there is incremental starting from 4.5 to 5, 5 to 5.5 and now touching around 6 and next level what we'll be targeting for the next year will be around 6.5, 7.
6.5, 7 will be for FY '25, '26, I did not get that.
For '25, '26, yes.
'25, '26 is 6.5.
Yes.
[Operator Instructions] The next question is from the line of Renish, an individual investor.
This is Renish from ICICI. Sir, just 2 questions from my side. One on this CLSS scheme being announced by the government. Do you foresee any upside risk to our growth targets now being that is just implemented after a lag of 2 years?
I think any kind of this scheme which come is good for the industry to create a roller coaster on that piece. So we have -- in our business plan, we have not included any part of the scheme coming around. So whatever growth trajectory, which we keep, that is irrespective of whether the scheme comes or not. But yes, if the scheme is coming in right spirit, and we are able to implement this, definitely we'll find some kind of improvement in terms of overall numbers.
Got it. Got it. And sir, secondly, on this NHB refinance scheme, so far, we are still awaiting for the final papers. But what's the discussion going on?
I think it will be a little hurry to take some indication on that piece. There's a lot of discussion going on, but I'm not in a position to give you an exact idea how it's going to shape up as of now.
But in whatever forms that scheme comes, does that will have any impact on our cost of funds incrementally, I mean of course, the NHB lines still have impact. But the new scheme, do you foresee that will have a material impact on cost of fund going ahead?
So it may have a cost of fund impact, but it will not impact the margins. So that's what we are saying that if we -- even if NHB come out with the AHF scheme, wherein we roll up on that like 5%, cost of funds come down by about 20, 30 basis points from that. But parallelly, the yield also come down because those schemes will have a capping on the yield rates.
So at the end of the year, we target our margins. So even if NHB is lending us at 8%, if we are driving around 6% margin like we are happy. In case NHB is lending at 5%, and we are driving 11% yield, we are happy with that. So we don't frame our business plan. This is the scheme, cost of fund or for the scheme what NHB will bring, we frame our business plan. This is the margin that we target.
No. So completely agree with you, but the limited point is, let's say, whatever the spread cap has been there previously, if there is an increase in the spread cap in the new scheme, does that will have impact on our margins is what I'm trying to get a sense?
Obviously, in case NHB came out with some scheme wherein cost of fund is lower margins like allowed is higher. Obviously, that will have a positive impact on the cost of fund as well as...
Okay. Okay. And my second question is to Rupinder, sir. So the -- sir, with steady growth, what we are expecting over the next couple of years, where do you see the OpEx ratios settling down, sir?
I think Renish Bhai, you can take it up at least 15, 20 bps coming on year-on-year basically. So if you see the trend...
From Q1 levels?
Yes.
Okay. And in a steady state basis, why do you see it settling at, I mean, around 3% or more than that?
Look, there's always scope of improvement. When a company is doing a lot of initiatives about digitization, the process is getting tweaked, improved. I think we should not get settled at any point of level. Every time, there's always a scope of improvement. So we don't have come up with a target that after 3 years we have to be nothing beyond 3% or 3.5%. We'll continue to work towards reducing it as the time progresses. So I think there is still a lot of scope and we'll continue to keep working towards that.
The next question is from the line of Jigar Jani from B&K Securities.
A couple of them. Could you share your 1 DPD number?
Our 1 DPD remains around in the range of 5% generally. At this point of time, it is around 6%.
6%. Okay. And sir, if you look at your off-book AUM, could you share this quarter what is the split between DA and co-lending? I have the Q3 numbers, it was about INR 82 crores, I guess, co-lending. Would it be possible to share the Q4 and the Q1 numbers split between DA and co-lending?
See, if you look at the total off-balance sheet portfolio, so DA is considered as off-balance sheet wherein that proportion is around 15.7% for Q1. And if you look at the Q4, this was again at 15.6%. So broadly, we target DA as a percentage of -- or like off-balance sheet percentage as a -- off-balance sheet portfolio as a percentage of AUM at around 16%.
If you look at co-lending, co-lending, we did about INR 52 crores this particular quarter. And at this point of time, that is around 2.9% of the total AUM. And in March, it was at around 2.4%.
Understood, sir. And sir, lastly, could you also share your borrowing absolute numbers, in terms of borrowing, total borrowings?
So if you look at our total borrowings, our total borrowings are to the tune of around INR 4,700 crores, including direct assignment.
And the same number for Q4 would be similar?
Q4 was around INR 4,300 crores.
Okay. Okay. Okay. Sorry, just one more. Can you also share what kind of disbursements we had done in the CLSS scheme, when it was there last time around, what was the subsidiary disbursed under the CLSS scheme?
So this scheme, I think, discontinued around 2 years back. And effectively, the percentage of disbursement, which has to happen through this scheme was not more than 7%, 8% that time when we are doing it, in that frame of scheme, whatever it was. Today, our AUM in CLSS scheme would be lying somewhere around 4%, 5%.
The next question is from the line of Chirag from RatnaTraya Capital.
Just 1 question. The top 3 states -- for our top 3 states, is there any trend that you see in terms of collections or in terms of repayment or in terms of overleverage of the customers that has been above normal? Is there any trend? That's just a qualitative comment. I understand that it hasn't had any impact on us. But in those particular states, have you seen any issues? Madhya Pradesh, Maharashtra, Rajasthan?
So Rajasthan is a biggest state and then followed by Maharashtra, MP, then south state of Karnataka, this is a sequence that we run around. In every state, there are certain pockets, you'll find a little up and down. That is obviously happens because of multiple sectors. Sometimes local way over collection resources may not be up to date in terms of resource allocation and things around that piece.
Overall, if you see, same was the situation when we talk about quarter 3 last year. And when we see the quarter 4, we have bounced back. So normally, this I feel it's more like a seasonal factor. It's too early to think about the trend around because within a quarter, it's very difficult to come out to a certain trend around that piece.
But yes, there are certain pockets in every geography where we always find that there is a small challenge that we have to cover up with time. So we are more optimist how to tackle that then instead of relying on this is a trend that's going to happen if this -- continues in the same fashion.
So Rajasthan, which constitutes 31%, their numbers almost remain intact. Maharashtra #2, which is 17%. There's a little spike in few of the territories and same is in a couple of more states like that.
And Madhya Pradesh, was that also unusual?
Yes, there are certain what we call locations there, where we have find trends where the 'delinquency has spiked off, which is more not related to the market per se. I think internally, we have changed the people and resources around. That will take time to settle down.
[Operator Instructions] The next question is from the line of Omkar Shinde, an individual investor.
What I wanted to understand the disbursement that we have done the split for it with respect to HL, NHL, I think would be the same, just a clarification, HL, NHL, home loan and loan against property?
So like home loan disbursement for this particular quarter is at around 61%. And like LAP or business loan disbursement is around 39%.
Understood. And with respect to the ticket size. So most of our ticket loans are below the INR 10 lakhs and that bucket. Are we seeing any trends with respect to other buckets seeing higher growth. So why I'm asking is at the current size, we are growing good on the lower ticket size and we are getting the benefit of higher yields for the smaller ticket size loan. But as we grow, is there a possibility because one of our peer also is in the same direct sourcing model. So they are facing issues, and they are diversifying. So do we see a hurdle beyond which this direct sourcing case will have its limits?
So Omkar Ji, we are maintaining the ticket size of approximately INR 10 lakhs from last 3, 4 years. And we have an opportunity to deep dive into the locations, geographies will still exist. So a presence in 15 states, that gives an opportunity to go deeper into geographies, which leads to manage this ticket size to a large extent. Thankfully, the top up happens because of the technologies we are using, which is again supporting and making the process more easier and convenient around that piece.
So I think for the next couple of years, you'll not find that ticket size spiking up to a certain level. There may be some impact of inflation a little bit here and there, INR 10 lakhs can be INR 10.5 lakhs or at the max INR 11 lakhs. But we don't have a thought change this drastically up in coming time because we feel there's still a lot of juice, a lot of opportunity in these markets. And I think we have enough opportunity to ride over this roller coaster.
Understood, understood. And I wanted to understand the breakup of our borrowing specifically of the banks. So approximately 53% is banks. How much is linked to external benchmark like repo link. So if the rate cut scenario does start although in RBI meeting today, there was no indication. But can I understand what is the MCLR, EBLR link split?
So like, if you look at about 50% of our total borrowing are linked to MCLR or like NHB PLR. And about 35% of the borrowings are linked to external benchmark likes of repo, T-bill then about 15% of the borrowings are at fixed rate.
Okay. Fixed rate is how much?
50% of that is linked to MCLR, 35% is market linked like T-bill or repo rate, 15% are at fixed rate.
Okay. Okay. And the total loan assets that we have, how much is that split -- what is the split of that fixed and floating?
So you can say about 25% of our total assets are either at a variable or semi variable rate. And then 75% of our total assets are at fixed rate. Then -- but a significant portion of our total assets at this point of time are also funded by way of equity. And we have started our variable rate of funding about a year back and gradually, it is picking up well.
So down the line, 2 years from here, we expect that our variable rate or semi variable rate book will significantly pick up from here from 25% to about 40%, 45%. And portion funded by equity will remain around 25%, 30%. So overall residual risk at the portfolio level, interest rate risk will be around 15% to 20% at max.
I was going to ask that same question. And finally, to understand the part with respect to your DA. So 22% is approximately borrowings funded from DA. And we are at the brink of the 60-40 regulatory mark. So the whatever DA that we do I think should be more towards the nonhousing. And I think we must be getting good amount of spread from that. And consequently, the DA upfronting income that we see would remain elevated. Will that be understanding correct?
So if I understand your question correct, so we do direct assignment transition for our LAP portfolio primarily, which is primarily including business loans, wherein our yields are slightly higher than our portfolio yield. So that is in the range of around 15% to 16%. So this entire 22% of direct assignment transaction is towards this particular portfolio of LAP that we try and do to ensure our PBC compliance as for the RBI guidelines, which is 60-40 that you have referred.
So the entire DA transactions are fully LAP, there is no home loan component that is being assigned?
Exactly.
Okay. And can you just give me the breakup of the yield in home loan and LAP if it is possible?
Home loan remains in the range of 13.5% to 14% and LAP remain in the range of 15.5% to 16%.
This is on AUM or disbursement?
This is both at the AUM as well as disbursement.
There is no material difference between the 2?
Yes, yes. So 14.9%. So as we have said, 14.9% is our portfolio yield and 15% is our disbursement yield. So mix between the portfolio as well as disbursement is 60-40 in terms of home loan and LAP. So our yield mix is also similar.
The next question is from the line of Chinmay from Prescient Capital.
Firstly, could you provide some sense around the -- how asset quality differs between LAP and home loans? If you could provide the breakdown of the book and stage 3 between LAP and home loans?
So if you look at the overall asset quality perspective, you say like our GNPA is at 1.1% if you split it between home loan and LAP. So home loan, you will have around 0.9% and LAP will have around 1.3%. So that is a broad spread between home loan and LAP.
But having said this, in case of LAP, we have our LTV at a very conservative, that is around 45%, 46%. So if you look at the difference between in terms of credit cost, in terms of home loan and LAP -- in terms of credit cost, that is at around 40, 45 basis points. There is no difference in the overall credit cost that we incur in home loan and LAP.
Understood, sir. Secondly, could you share the SMA1 and SMA2 numbers if you do that?
SMA -- so our DPD 30 is at around 3.5%. So you can -- and our NPA is at 1.1%. So you can arrive at your SMA1 and 2 basis this number.
Okay, sure. And the third thing is, do you -- from a 3- to 5-year perspective or from a medium-term perspective, what do you think about the leverage and ROE profile going forward?
So in terms of leverage at this point of time, we are at around 2.6x. So down the line 2 years from here, we could easily achieve a number of around 3.5, 4x kind of leverage from here. And we believe that as we touched 4x kind of leverage, we will be delivering around 4% kind of ROA resulting in ROE of around 16%.
Understood, sir. And lastly, could you talk about any post disbursal monitoring processes that you might have? So do you do regular bureau scrubs after your loan disbursals or do you keep a track of if any other -- if your customers are taking on any other loans, any micro finance loans? Any -- involving in any such activity?
So we do have a due diligence process internally, which has been taken care by a separate data science team through bureaus and other activities which are possible. We keep identifying the customer who may be in a high risk, medium risk or low risk. And on basis of that, the strategy is also defined, whether it is in form of collection and things around that piece. So yes, we do have that process around that piece. And there is a mechanism on which we work around to understand what are the trends which is running around.
[Operator Instructions] As there are no further questions, I would now like to hand the conference over to the management for the closing comments.
Thank you, everyone, for taking your valuable time for attending our earnings call. We will keep you posted for any further updates. Also, an audio recording and the transcript of this call will be uploaded on our website in due course. Looking forward to hosting you all in the next quarter. Further, if you have any questions or require additional information, please feel free to reach out to us. Thank you so much.
On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.