Can Fin Homes (NSE:CANFINHOME) Q1 2027 Earnings Call

0:04 Hi, sir. Is it good to go? Can we start? We have about 95 odd people on the call. Sir, I mean, I'm fine. We can start. I think it's... Yeah. It is 03:00 already. We can start. Sure. Sure. Thank you. Thank you very much. So ladies and gentlemen, good day, and welcome to the Can Fin Homes q one f y twenty seven conference call hosted by Investec Capital. As a reminder, all participant lines will be in the listen only mode. There will be an opportunity for you to ask questions after the present... Presentation concludes. Should you need any assistance during the conference call, please signal to me, Sapna, by raising your virtual hand.

0:51 Please note this call is being recorded. I now hand over the conference to my colleague, Nidesh Jain, from Investec. Thank you,. Good afternoon, everyone. Welcome to the quarter one FY twenty twenty seven earnings conference call of Can Fin Homes Limited hosted by Investec Capital. We will start with management commentary followed by a q and a session. To discuss the financial performance of Can Fin Homes and to address your queries, we have with us Mr. Suresh, MD and CEO Mr. Kumar Singh, MD Mr. Prakash, President Mr. Uthair Kumar, President and CRO and Mr. Abhishek Misra, CFO of Can Fin Homes Limited. Please note that this call is being recorded.

1:36 I would not now like to hand over the call to mister Suresh for his opening comments. Over to you, sir. Yeah. Good afternoon, everyone. Thank you, Nudish, and welcome to this earnings call for q one FY twenty seven performance of Can Fin. I'll just start by giving a brief of the performance as few highlights. Obviously, obviously, all these things are covered in the investor presentation. However, I'll just give you some brief and some commentary on these aspects also, and then we can open it up for question answers. In... First of all, I'll start with disbursements. In terms of disbursements, we had given a guidance or a projection that in q one, we'll be doing 2,500 crore, q two 3,000, and 3,504 thousand in the third and fourth quarters and so on. So 2,002 thousand 500 crore, which was, you know, what was planned and what was projected, we have achieved 2,609 crores. So we have been we have been able to do more than what we had originally projected.

2:37 And this has been successful because of a, you know, positive growth across all our geographies that is we have six zones. And all the six zones including Karnataka and Telangana, we've had a positive growth. And Karnataka actually with the 18% growth over q one of last year is actually the lowest in terms of the growth... The zone wise growth. So we've had a growth across all the geographies, plus we've also had a positive contribution coming from the sales team as well as from the new branches that are open post March 2023, which has helped us in achieving this disbursement. And that is a positive thing, which is one of the drivers for this growth. In terms of breakup of this growth, if you see, you know, we've had a salaried and self employed both have grown compared to last year corresponding period. So, salary in absolute terms has grown by at 21%.

3:39 The overall growth for the quarter has been 29% that is against 2,015 crores. The current quarter we have done $26.09 crores. So, that is a 29% growth. But within that, the salary segment has grown at 21% and the SE and P has grown at 44%. Similarly, if you break up between the housing and the non housing, the housing comes in q one f five twenty seven has grown at 28% compared to the q one of housing figure of last year. And whereas the non housing that is an excel has grown at 32% and combined there is a 29% growth. So basically, you know, across all the four two by two metrics, if we see, there has been a growth across all the four packs... Four things. The next if we look at, you know, what is the challenge, however, has been that the prepayments or the rundown has been a little higher compared to even q four of last year. So we had this challenge, and one of the expectation or one of our, you know, planning was that post this conversion from annual to quarterly reset, we may probably see a reduction in our, you know, BTLs.

4:47 However, you know, this has not happened. In fact, as against 1,730 crore rundown in in q one... Q four of last year. This, you know, this thing, we are having a rundown of 1,857 crore. So, basically, there is almost a 127 crore increase in the rundown. However, if you break up the same, you know, rundown, there's a... What what is comes out is, you know, b t out, which was which was 400 core in q four of last year has increased to 408. So there is not a... There is no major increase or higher BT out, which has resulted in this rundown. It is just a marginal 8 crore increase compared to q four of last year.

5:34 Same way, you know, if you look at loan closures other than VTO, that is cases where customers have closed their loans from their own funds or because they are selling their property or where we have initiated the sale under surface fee. That amount last year... Last q four was 360 crore. As against that, it has increased to 377 crore. So both these things have not actually increased in a major manner. However, what has actually increased resulting in a higher rundown is that part pay... Payments from the customers and amortization, particularly, have result that has had increased. So, basically, when the the amortization of the... Sorry. These had happened from annual to quarterly. Most of the customers were under a, you know, a change in EMI...

6:24 Sorry, change in a tenure option. So the EMI was constant and the tenure was changing. So in all these cases, when the reset changed from annual to quarterly, and the rate of interest was passed on half a percentage, the tenure has actually, you know, crashed, and the EMI has remained the same because of which higher amount of proportion has gone towards the principal. So as it is 976 crore in q four of last year, which was part payment amortization, the number has gone up to $10.72 crore. So basically, this is the main reason why the rundown has been higher, and we will have to now work on this particular aspect. Now coming to another AUM growth. So last year, we had a overall AUM growth of 10.4%.

7:12 And this year, in q one, it has inched up to 10.8% or 11% as we have reported, but 10.8 in real. This has obviously been because of a 755 odd growth, which has been added to the book from the disbursements net of the rundown. And if you actually see the disbursement was projected at 2,500 crore. And for the full year, we have projected that again 13,000 crore disbursement for the full year. 7,000 crore would be the rundown, which means approximately $717,150 crore every quarter. Against this this quarter, the rundown has been $18.57. So almost 100 crores more than what we had anticipated. But actually, this has also been offset by the disbursement, which has been higher by 109 crores. Against 2,500, we have done 2,609.

8:03 So basically, you know, whatever, you know, was the expected increase in our AUM, which we had projected in the... For the full year. As of q one, whatever we had projected, actually has the numbers, net net, have been the same. Just that on the... This was also has been higher as... And as has been offset by a equal equal amount of higher rundowns as well. So we are still in line with the... What we have projected at 14% AUM growth, just that we will have to now consistently do a little more disbursements every quarter to see that we offset whatever is the higher prepayment or rundown that is there. So that we will be planning. As of now, we are projecting for 3,000 crore only, but, you know, we will be pushing for seeing that, you know, we cover up for the higher rundown.

8:50 So the projection for the entire year, we continue to have as a 14% daily on growth is what we we will be targeting. And next, we will talk about the spread and the NIM. So we had in the end of last quarter of last year, mean, q four of last year, we had indicated that there was a high amount of portfolio which has moved from annual reset to quarterly resets and have benefited from the reduction in rate of interest plus, you know, there was a January 2026 rate cut also of 15 basis points. So net of that, our, you know, yield would come down to 9.81%, which in fact we have been able to sustain throughout the quarter. And for the full quarter also, it is 9.81%.

9:35 So this is something which was already, you know, end result and was already highlighted in the in the previous quarter earnings call. As against that, we had, you know, indicated that our cost of borrowing would be 6.99%, which in fact has ended at 6.98%. So, basically, you know, on the cost of borrowing side, we have further been able to bring down from what we were at the... As on April 1. And this has mainly happened because we also had some high cost NCDs, which have been repaid. And we also were able to time our commodity fund raise at a very appropriate time. So this has helped in ensuring that our cost remains low. We do have a couple of term loans, which we have or other one term loan, which we have raised at 7.25% during the quarter. But none of the older borrowings have had any rate revision, because there is no repo revision.

10:31 And all our terminals are either linked to T bill or are linked to repo. There is nothing which is linked to MCLR, so we've not seen any any increase in that. So our spread is 2.83 as against 2.81 as we had indicated in the beginning of the year. And consequently, NIM is is two point... 3.81, which also is... We had we had given a guidance for 3.75. Going forward, as we know, we have a a good amount of sanctions on hand from banks, and, of course, NCDs and TPs are also there. But I think the banks are the... Currently the cheapest option we are having, of course, other than the short term TPs. And we've also got an application with NHB.

11:17 So, at least as of now, even considering that NHB, we don't consider in q two, we don't raise any NCD based on the bank borrowings also, you know, there will be a very very marginal increase only in cost of borrowing. And that also because of the incremental loans, not on the existing loans. So keeping that in mind, we are confident we should be able to maintain the the spread and the NIM because on the yield side also, we have a couple of opportunities available by because of our change in mix, product mix, and segment mix. So we are confident that those... And I... The the NIN will be maintained at 3.8% plus, and we should not have a problem in that. As regards to delinquency and NPA, if the stage two and stage three and delinquency has actually come down compared to q four to March 26 in absolute value. So while there is a little increase of order close $17.18 crores in NPA, it is more than more than that compensated in the reduction in our SMA two and SMA one. And consequently, you know, provision of credit cost is is marginal. It is much less than what it was in last year. And we are confident that the the trends also indicate that our... The last six quarters continuously, our net bond ratios have been coming down.

12:40 And even right now, we don't see any increase in the in the in the number of delinquent accounts. So basically, we are confident that, you know, we should be able to maintain our credit cost guidance of 10 basis points. So that's that's in a in a nutshell the the, you know, high... Brief highlights of the performance. If there are any queries, we can now... I I I open it up for queries. Thank you. Thank you, sir. So we open up session for question and answer session. Participants, please raise your virtual hand. I will unmute you. Please introduce yourself and ask your question. So first question is from. I have have unmuted you. Please ask your question. Hi, sir. Thank you for giving me the opportunity.

13:29 My first question, sir, was on on the on the macros, which have been tough and remain... And still remain uncertain. And while our asset quality indicators have remained resilient, but but how do you see that playing out in the next three, six months now? Do you... And have you taken any underwriting or norms or process changes in the last two, three months? And also, in terms of customer profile, any alterations or any, you know, do's and don'ts that that we have, you know, tweaked there? And any particular trend in terms of salary, self employed segment, in terms of rejection rates, and and then, you know, expects on on on the same. So how do you see the same, like, the asset quality trends shaping up in the next three, six months overall and and keeping in mind the points that I've highlighted?

14:22 Sure. So thank you, Shripal. But this, you know, in terms of macros, I think, as I indicated across geographies, we are at least not seeing any any slowdown in the demand. And we are not seeing any major issues either in the project launches also. In fact, in this quarter, that is q one, we have added another 60 APS projects also. So the projects are also there. You know, we are also in business. So from 271 approved projects, we now have 331 approved projects as at the end of the quarter. So we don't see any major thing on the demand side. On the interest rate side, of course, and liquidity side. Liquidity also, as I mentioned, we are having a good response. Banks are, you know, almost all our partner banks have come forward and have shown a willingness to sanction. In fact, we've got a couple of, you know, large sanctions also. So, you know, we we don't see any problem in the liquidity either.

15:20 In terms of the rate of interest, yes, you know, the rates have slightly gone up. As against 6.95%, which we at which we were raising in in in last year in from the banks. We are now... You know, the spread, they have increased. And while they can't increase on the existing loans, it's only for the new loans where the, you know, their banks have been quoting anywhere between 7.25 to 7.5. So that is only... That is one change to ops. Hello? Yeah. Yeah. Think I know I just called you. No. No. I had some some noise anyway. So so now on... So what we have done is in terms of... To offset this increase in the incremental borrowing cost, we have also tweaked some of our internal guidelines also. So, like, you know, now, you know, whatever special rates that we are offering, we are offering for more than 20 lakhs, we have increased it to more than 25 lakhs. So that is one thing. We could slightly... Know, the twenty to twenty five bucket, we will slightly get a little better yield. We've also...

16:27 You know, in terms of customers, the rerating, basically, every year, we have to do a customer appraisal once again and classify the customer's risk profile. So there also, we have relooked at it. One is we have added additional parameters so that we are doing a little more, you know, AWS signals are... Have been added. A little more monitoring in terms of, you know, OTMS reports and all those things have been added. So that we are, you know, if anything is there, we get an early warning, and we are we are able to take corrective action. And as I said, one twenty to 25 actually have increased. And now we have also, you know, in terms of civil score, as against about 75 to odd percentage, today, we are 82% of our loans are now having a civil score of more than 700.

17:16 So I think, you know, it's more of customer selection also, which which is slightly improved. You know, that is coming from the customers at this point of view. So so consequently, you know, there will be, you know, some indirect increase in the rejection ratios. But as as we know with 80% of our customers are coming to the DSA channel, So the login and everything happens only when it is basically cleared or fitting into our norm. So we we don't have a very great, you know, data by... This thing that we can share about how... Whether the restriction rates have gone up. But basically, these are the things that we have done in terms of this. And as I mentioned, you know, for the last six quarters, we have been monitoring. We have our, you know, NASS bounce rates have actually come down.

18:01 And we have also, during the last couple of quarters, you know, run some exercises to, you know, see that older cases where NAT was not there. We have tried to convert those cases also into NAT. So these are basically some more of, you know, hygiene improvement that we have tried to do. This is what we have done. Got it, sir. Thank you, sir, for the detailed answer. My second question was on the IT side. So in in in the quarter, we were supposed to do a complete implementation on the LOS, LMS, and report revision. And and I think we've we've done... We've completed the pilot already. So when do we see complete implementation? And if it is in two q or in three q, would... Do you see any impact on the business or on the disbursement disbursement targets that we have highlighted?

18:50 Sure. See, we have done a pilot of five branches, and, of course, they're having some dealing problems, but nothing which has impacted our, you know, business. All these... Actually, we implemented all of them on July 8. Today, it is just twelve days. But all the five branches have put through all transactions including sanctions, disbursements, customer creation, you know, natural processing, collection of the EMI collection through, you know, the non non natural transactions, loan closures. All these transactions have been put through, and we do... We we... I mean, while they're having some small small issues, which have come up and have been immediately attended to. But, I mean, we have not had any kind of problem that would... Where we have had to kind of where we feel that, you know, it'll impact our business. So we plan to in in fact, in... Implement it across our remaining 245 branches in the... In this in this current quarter only. The only thing is we don't have a weekly, you know, a a a weekly implementation process possible.

20:03 It has to be only at the month end because only then we can take the data and and, you know, compare it and be able to go ahead. So we have done it on... Based on the June 30 data on July 8. Same year, we'll be doing it on... Based on the July 31 data in August and August data in September. And so very definitely before the next, you know, quarter's earnings call, we will be done with all the 250 branches. And going by the experience of the five branches, I think we don't end without any problems or any issues in the business. Because these branches also are likely to end the month of July with the... Almost the same or better business than Zoom. So we don't... Because, you know, already they are all logging files. Their disbursements are happening in all integrations with all other applications, including, you know, internal as well as external APIs. All of them have been functioning quite well. So we don't end without any problem.

21:05 Got it, sir. Got it. Thank you so much for answering my question. I'll come in with you for more questions. Good luck for the next quarter. You too. Bye. So in case you're joining via dial in facility, please press star and 5 on your phone to raise your hand. The next question is from. So as soon as I can... I'm unmuting you. Please unmute yourself at your end and ask your question. So, sir, you can unmute yourself from your end and ask a question. Rajiv Mehta.

21:58 Rajiv, unmute yourself and ask your question. Yeah. I'm audible. Yeah. Thanks. Yes. Yes, Rajeev. Yes. Please go ahead. Thanks. Thanks. Thanks, Mundesh, and thank you for giving me the opportunity. So I have a few questions from my side. In terms of the IT implementation, what are the experience in, you know, coming back to normal business volume for the five branches that we implemented in June. Are we already back to normal business volume or productivity in those branches so that we get to understand that when you're implementing the residual number of branches, what would be the business impact and for what length of time? See, in this IT implementing, I just mentioned, it is based on the June data we've implemented in July. We are almost twelve twelve days since we implemented.

22:46 We are already kind of, I would say, on track in terms of the business for the month. All the branches I have... We have been talking to them. There are, you know, small small issues, you know, but nothing major. This is a show stopper. All the processes, as I mentioned, disbursement, sanction, closures, repayment, match, everything has been processed, and they are very much on track to, I think in this month itself, they will probably be, you know, on track for the business. Already, disbursements have also started in all the five branches. So there is no problem in terms of that. So going by that, you know, experience, I think we are confident we'll not have major issues. The only thing is, you know, we had five branches. We could, you know, give out individual attention to five.

23:33 When we do the next 50 or 100 in the next month, we may not feel it should take a little longer to, you know, give to the handholding. But beyond that, we don't see any problem because the system perhaps... System wise in terms of the product that has been delivered and the processing that is happening, there is no issue. And in fact, even the people, they have been, you know, three to four days is all that they they they are taking to, you know, get the hang of the system. Sir, are we are we targeting a certain number of business in in in this quarter since it's gonna be a very testing quarter from our bandwidth point of view? I mean... So if we did a certain run rate, say, May... Say, in June, would we be able to maintain that run rate in July or September despite this implementation? And can you share the number? No. I think we we are confident that 3,000, we don't want to change. We are...

24:22 I think we we will be able to meet that number. However, I I... We do plan to come back somewhere in September, and maybe either we will issue a press release or we will maybe come back and have a conference like this. But we can, you know, update. We'll give a a proper update on how the remaining two of implementation has happened in August and September also. But we are confident the way five branches have been able to quickly, within ten days, come back to normal and do all the processes. I think, you know, other branches also, we should be able to do it in the same month. And so third, $33,000 crore that we are targeting for q two stays. That number stays. And then just one last thing on pricing. When I look at the shift in the, you know, ticket size mix to more than 30 lakh loans, the proportion is going up in disbursement. And 5,200 lakh category, you know, ticket size and loans have also gone up in EUN.

25:17 So, you know, if they're contributing higher to our growth with every passing quarter, what is the pricing here? What is the overall, you know, pricing that we get in the quarter? So, actually, there's a, you know, multiple combination. It's, I would say, a two by two or a three by three or whatever kind of matrix with some is okay. Yeah. So as I said, you know, blended cost is 9.81. And last year also, we had 9.82 is is there. And so by and large, you know, overall blended cost is coming to 9.8. For a salaried customer who is having a civil score of more than seven twenty five and who is probably, you know, looking for a loan of 25 lakh plus because you moved it from 20 to 25, I think the best rate would be around 8.4.

26:10 But then, you know, it goes up to around 11% also depending on the customer profile. So if it is a... It's a individual to customer rating is s two or s two plus or s three, then obviously, the rate will be higher. Same way if the customer is in... Yeah. Visa via salary is a self employed, then it will be a little higher. Against the housing, if it is a little, you know... So the highest rate would be, you know, for a non salary, non housing per customer who is having a s three rating. That would be the... Probably the highest rating. So anywhere between 8.4 to around 10 and a half would be the range, but blended comes to 9.8. Okay. Thank you,. Yeah. Thank you. Thank you, Rajiv. The next question is from Subhanshu Mishra. Subhanshu, I'm unmuting your... You you... Please unmute yourself and ask your question.

27:04 Yeah. Thanks,. Hi, Subhash. Thanks for giving me this opportunity. Two or three questions. The first one is a couple of MBS teams who have reported before you have spoken about some amount of disruptions in the IT sector hiring, especially at the entry level, mid market management level. Given the fact that we have larger exposure to Bangalore and the outskirts of Bangalore, are we seeing any kind of changes in the offtake, especially in the IT sector for home loans? If so, have we changed any policies around it? Second is, can we spell out the number of home loans and the number of lap loans that... Nonhome loans that we have done in this particular quarter? And what's the expected run rate for the...

27:56 Quarterly run rate for the rest of the year? And the third question is around any any kind of surprises that we might ex... Expect in the OpEx going forward in '27? Thanks. Sure. See, in terms of the IT sector impact on the, you know, loans and everything, we have not seen any major thing. Maybe, you know, Karnataka, as you said, is still is also growing at 18%, and Telengan has grown at a little higher than that only. So, you know, of course, to some extent, it is also because of the base effect, but we're having said that, it is still growing compared to last year, and it is also contributing.

28:41 We're not seeing seeing any major change because of this IT. In fact, we... There are job losses. That's a fact. But there are also people who are, you know, in the mid mid visiting and all who are able to, you know, you know, re equip them with new... You know, they are also able to get different jobs and different listings. So there are, you know, it's not that there are more jobs and people are absolutely having to sit at home. So so far, there has been no impact. I said that if you look at our Karnataka delinquency, our NPA as on thirty first March twenty six was lower than in absolute value as compared to 03/31/2025. And in June also, it's a very, very marginal one or two, three cases, but nothing nothing major, which is there, which also is anyway a first quarter sequential impact.

29:28 So we're not seeing any major impact of that. Second, in terms of number of loans, I don't... Wouldn't be able to have... Give you the the the number of loan accounts, but I can definitely share the the number, the amount. So as in out of 2,015 crores, which we have done in q one FY twenty six, $12.91 was our whole h l, 07/24 was NHL. As against that, q one FY twenty ten, you will have done 2,609 crores of which one six five zero is h l and $9.58 is n h l. So, basically, in h l, have had a 28% growth q one to q one. And in the n h l, we have had a 32% growth. This is in terms of the the the amount I can say. Number of accounts I don't have right now.

30:22 The third question was around OpEx, if I can just squeeze in one last question, which is around the APS. So the total number of APS you've spelled out is around 331. Per per project, what is the maximum number of apartments that we can do? And when does this become a major contributor? When I say major, upwards of at least 15% in our disbursement as well. I think... See, in terms of OpEx, I don't think there is any major surprise other than what we have been saying that, you know, 40 crores is yet to happen. As I said, since we have just implemented in q one... Two... In July of this this year, We still have some of the, you know, things that sign up with Madhav. We have to still capitalize some of the things we've capitalized in this July also.

31:16 So, you know, that will come into by way of depreciation and all all those things. But by and large, I think quite a few of the items which are there, where the AMCs are also kicked in. Some of the cases where, you know, payments and all have been made, which are... So those those things have already started. I think even this quarter, there is a little bit impact. In fact, if you recollect, two four of last year also, about five to six core of expenses are already kicked in in terms of the project because some of the project items is for which we had, you know, taken in the last quarter of last year, one year the end... First year, AMC was also started. So basically, you know, in terms of OpEx, I don't think major any major new that things are going to come. Salary cost or rent and taxes and all those everything else other than, you know, IT cost is also well under control. There is no major surprise there.

32:08 Everything is in line with the last year's thing only. In terms of APS, actually, we are looking at, as such, about up to a $100,150 per per per project also, we can consider for a... For APS. So we do have some good marquee projects also, which have been approved by us of some very CATI builders also. Although most of the projects are of CATI builders, but we do have some good market projects of CATI builders also. As of now, in fact, the contribution is more of... We are... They are also testing us. We are also, you know, going through the whole thing. So learning is happening. So it's it's a very small number. I think 15%, I think, would still take a... Will be a while away. But at least we have started getting a good regular trickle from the... From these projects, which is what is...

32:57 Which is a positive thing. Sorry. This 100 number is what percentage of their total apartment throughput? No. No. This is the total number of apartments in the project. What we are expecting is, you know, to start with maybe one, two, because we will basically see all the projects that we have tied up with mostly are already having two or three tires. Okay? Right. And no builder goes with a single tire. And since we are not doing developer finance, obviously, first right of refusal goes to the lender who has also given the project plans. No. What I'm what I'm trying to get at, Suresh, is what... From a risk management perspective, what is the maximum number of apartments we can do per project? That that that actually we have a dual thing. We have a 10%, and there is a number wise also that, you know, if it is a, you know, project with with with 20 units, then, you know, you can go up to five and four or up to five or six or something. So we have a matrix for that also.

33:53 Sure. Sure. So we don't go by question. From the risk point of view, we will never go with more than 10% in a single project. Understood. Thank you so much. I have one more question. I have another point of view. I I misunderstood your question. Sorry. Done. Done. Done. Thanks. I'm done. I'll come back in the queue. Thanks. Thank you. Thank you. And the next question is from Abhijit. Abhijit, unmute yourself and ask your question. Abhijit, am I audible? Yes. Yes. You are. Yeah. Thank you. Sir, just just two things. One is, I mean, we we have been the fact that we are going for a higher ticket site users now where we are seeing that last part of the group coming from higher ticket size. And I think I also heard you on the call that given that the incremental cost of borrowings are moving up, we're also trying to do some quick fix on the asset side. Basically, when you said that maybe the yield that we used to charge to up to 20 lakhs is the same yield we will charge to up to 25 lakhs now. I hope that understanding was correct. Correct. Also, the That is correct. Don't you think that as we keep moving up, sir, we are facing higher competition?

35:04 Basically, all I'm trying to understand is, sir, until now, the competition always is used to be with banks or PSU banks. Now a lot of these large HSPs also talk about doing... I don't want to call it affordable, but small ticket housing, like, $2,530.35 lakhs where we are building our sweet spot. So are we not seeing higher competition from banks there? I come from these largest cases there. Am right? See, actually, in fact, it is not the banks who are the prime, you know, players who who take away our portfolio. Our main BT happens with LIC and Bajaj only. It's always been the private sector and, you know, players who are who are who are doing it in the BSCs or it is larger as of the space. The banks, of course, are there. But so far, you know, we are not... Still not in that ticket size segment.

36:01 We are, you know, directly in competing with them. So it's... You know, if I ask, you know, you know, 50 branches, you know, probably 30 branches would say, like, the main competitor. Maybe another 10, 12 will say, but just maintenance competitor. And maybe a few of them will say, you know, for PNB, one or two pockets, smaller geographies, or... Well, so rarely, you know, you will you will have the number one competition or the number one entity as a bank. So so we don't have that. But so far, I know these... At least these other players, they have not majorly been able to do a dent, make a dent in our other thing. And as I also mentioned, our, you know, prepayment or loan, BT ounce has been almost stable in q one compared to q four of last year. So q four last year, we had 400 crores of VT out. This time, it is 408 crores.

37:03 Got it. And, sir, then you remember you touched upon this when someone asked you if you're seeing any higher bounce rate, higher delinquencies from salary customers in the IT sector. Given that we have a very good presence in Bangalore and in India, Telangana. So, sir, just trying to understand, have you had a chance to look at what proportion of our salary customers are employed in the IT sector. That is one part part of the question. And the other part is that if these are our customers, right, what ticket sizes, what is their, basically, annual income line? Because what I'm trying to understand is what kind of IT customers will typically end up going to banks, and what kind of IT salary customers will come to us?

37:59 Sure. See, our IT sector exposure is only about, you know, 6% in terms of, you know, the number of customers who are associated with the IT sector and have taken a loan from us. Okay? And, you know, we have done so at the study at least, you know, the top companies which are in IT are definitely not the the the customers from those companies are not likely to say, whether customer, a referral customer, whether a Cognizant customer or somebody is taking a loan from us. It's it's almost not there. Okay? We are small small IT related entities which with whom we are there. Obviously, you know, yes, there are, you know, those entities also have to have... Will be the first ones hitting the challenge whenever competition comes out, whenever any new change happens. But still so far, we have not seen any major impact of this.

38:52 At least, you know, our check bonds ratio, as I mentioned, for the last six quarters have actually... Our nice bounce ratios have been coming down. So we've not seen any major impact because of this. Yeah. Got it. Mister Ben, just just the last thing and the clarification to what you said earlier. Obviously, you said this year, you're still targeting that 13,000 crores in this one business. Does that... Given that what we explained the EMI remain the same, the tenant comes down to the principal amortization is faster. So to that end, this year, you're expecting the rundown in the book to be higher, but still targeting that 14% growth that is total. So if required, we may have to push business. I think we should be able to do that. And, you know, already in q one, we've short...

39:40 Over short our whatever we had targeted for. Q two also, are targeting 3,000 growth. And I think, you know, the way our IT transformation has gone, I I... We may not have a... We we may be able to push a little earlier than what we had anticipated. So I think we will still... We will we will be able to do that, that 6,000 for our attrition for the book by the end of the year. If that means you'll have to push a little more in terms of disbursement, 13,000 will become 13,200, 30,400 or whatever. We will try to push for that. But if that that answers my question, and I wish you a. Thank you. Thank you,. And the next question is from. So please unmute yourself and ask your question.

40:28 Hello, sir. Am I audible? Yes. Yes. Okay. Am I clear? Yes. Go ahead. Hello? Okay. Okay. So just two questions from my side both long term. First is, is it correct that since 2001, Can Fin Homes has written out just about 20 crore rupees in total loans. Is is is is that information correct? Sorry. 20,000? 20 crore. 20 crore? Since 2001. Since the year 2001. Right now, have written Return off. Of you're talking about. Yes. That is correct. That is correct.

41:17 How, sir? I mean, we we we have we have companies who write of thousands of crores in a year. Can you please talk about the culture or the process of canceling that make it so very difficult? So so I... I'll tell you. So so one thing is, you know, in terms of, you know, technical write offs, so so there are two things over here. I will just clarify. This is all... We are talking about credit fraud... Credit fraud or credit write offs that we are talking about. So, of course, this doesn't include that 40 crore of of Ambala, which we are talking about. That is not a noncredit issue. In terms of credit thing, which affect the thing, we have... There are two things. One, there is a... There are frauds. So there are issues where some frauds might happen, and these frauds are... We are still continuing those frauds with a 100% provision, and they continue to reflect that NPAs in our books of accounts. So our 300 and, you know, 80 or 375 crore of NPA that we are showing, This could include some accounts which we have been flagged as fraud. We may be providing 100% provision for it, but we don't... We would not have written off those accounts. So there's a 100% provision. There is a fraud. It continues to show as an NPA. It is there in our books of account, and it is the items to recover from that my...

42:40 That that either through, you know, surface whatever properties available or through other, you know, legal processes is continuing. So that is one part of it. The second is in terms of actual write off where, you know you know, this happens where one, we know that, you know, there is no property customer, some some fraud wherein nothing is possible. That is a case where we would have written off. Or alternatively, second would be where we have sold the property. There is a different amount. Like, for example, there is a 22 lakh outstanding. We have sold for 21 lakhs through surface e sales, and we don't envisage the possibility of remaining... Recovering the remaining one lakh, you would have written up that one lakh also. So those add up... When we add up those write the write offs also, that is up to 20 crores only from the the last, you know, twenty, twenty five years. That is correct. But there are additionally some fraud, which are shown as frauds reported to the regulatory authorities.

43:36 We have taken police action. They continue to show us and clear. They continue to show us with a 100% provisioning. And so if we actually, okay, if we actually remove those kind of frauds and would have either written off, then probably we would have had another 60 odd frauds. We could have probably, you know, which which is which pertain to the fraud, which pertain into all those things. Maybe about $50.60 crores could have additionally been would have written off. So had there been some other entity where there is a fraud... That the write off policy, then in that case, if we would have had a similar policy, then another $50.60 crores would have probably been also written off. In which case, our NPA, which is $3.75, would have come down to $310,320 crores only. That that that that's still in a very exceptional number, especially if it is cumulative given how much how this total loans have disbursed over the twenty twenty five years and taking off just 100 per hour cumulatively.

44:33 And that was my question. Even with reliance on DSA sourcing, how have you been able to maintain such a pristine credit underwriting practice and policies over such an extended period of time? We all know that financial institutions are subject to very great external pressures, human pressures and organization pressures pressures to grow when they make mistakes, but Can Fin has been able to maintain that discipline over the last two two and a half decades. No. I I guess, yes, for customer selection and that that... And the type policies, conservative policies is yes. It has, you know, impacted our growth. Sometimes we've not grown in line with what market expects. Yes.

45:25 But but, yeah, we've been a... It has been a very safe lending, conservative policies, conservative lending has followed. So that's all. The second question on the cost to income ratio. With the technology transformation and the movement with more in house sourcing, how do you see that playing out over the next few years? See, current year, we will do do a result that, you know, it will be hovering around 19 and a half percent cost to income ratio. And some of it, as we said, has already started kicking in in this quarter itself. Therefore, you know, from the 18% odd numbers, we have now moved to the 19% plus cost to income ratio. For the year, we expect it will be around 19 and a half percent. And since, you know, our project is already implemented and we already worked out the cost, now going forward this, you know, the AMCs and this depreciation part and all, they kind of remain stable. But as the book grows, this percentages again start to come down a little bit.

46:27 So I guess, you know, we would... In under three years down the line, we would, again, would would want to bring it to 18% or thereabouts. Okay. That would be the long term update. Okay. Yes. Correct. That's correct. Okay. Thank you very much, and have a Alright. And the next question is from Sunal. Sunal, unmute yourself and ask your question. Hi, sir. This is Sonar. I hope I'm audible. Yes. Yes, Sonar. Please go ahead. Yes. Sorry for, I think, the IT trouble earlier. There was some issue regarding some admin issues. So I have two questions, sir. I'm looking at your book rundown numbers, and they have been elevated for the last four quarters.

47:19 Sorry if I was out of the call because of these IT issues. I want to understand, like, how do you understand these numbers? How do you decide for these numbers? And what is the near term to longer term target of these numbers? Should this be lower than 4% over the course of next one or two years, this is the new normal. That's the first one. Sure. See, first of all, you know, as as I've given in the opening remarks, it's still the breakup of our rundown. We have about 408 crores is coming from BT out. $3.77 crores is from where the customers are making their own closures from their own funds, either because they're selling the property or because we are pushing them to sell the property or we are generally small amounts and they are just making a payment and closing their loan to reduce their liability.

48:08 So the major, you know, challenge or the major portion from where our rundown is happening is actually amortization and more importantly, part of the measure. Customers are making more payments every month and... But their loans are still with us. So it's just a conservative approach on the customer side where they just get some extra funds and they are parking with us. So this is something which, you know, from the customer's point of view, obviously, it is good because, you know, they're able to, you know, cut down their ten years and repay earlier, less interest burden for them. So from that point of view, it is good, but at the same time, it is hurting us. You'll have to see how it is there. What we look at is, you know, this particular quarter, it has been...

48:55 This has been the number. But going forward, I think we will want to work on, you know, whether we can convert some of these customers into deposit customers for us, or else if we can, you know, look at some some other kind of a thing where, you know, they can be retained without having to prepay and move out. So those, we will we will be looking at it, because some of the prepayments probably we may be able to offer them a solution and see. So we have, right now, analyzing and talking to credit information bureaus to see if, you know, we can get an alert even at that time when they make an inquiry as well so that we cannot contact them and try to retain them. So those efforts are going on. But another thing which is there is today, if you look at it, before the interest rates started going down, our best rate was 8.95, whereas the banks and the biggest player, largest players are offering best rate of 8.4%.

49:53 So the differential was... For Delta was 55 basis points. Today, with the repo rate cut, you know, the banks have moved from 8.4 to 7.25 or 7.15, and some of the larger players also have followed suit. But we have come down from, you know, 8.95 to 8.4. So basically, now the difference is 7.15 to 8.4 or 7.25 to 8.4. So this difference, because 55 basis points has now increased to more than one percentage point, which is difficult to convince a customer. 50 to 60 basis points, we can convince a customer. Customers also don't mind because the impact on their EMI is not very large. But over a period of time, a 1% impact is quite large. If it is a 25, 20, 30 kind of ticket size loan. So therefore, you know, it is the one issue.

50:42 If, you know, this rate differential can come down either because the PR starts... I mean, sorry, goes... Starts going up or something of that sort, then maybe, you know, this might get... Come down a little bit. Then we may not have so much of a pressure. But having said that, I think, you know, the biggest challenge for us is the part is the main that not PTO because PTO is just about 408 crores out of 1857. Got it. Got it, sir. So my second question is with regard to looking at your numbers, and you talked about LIC being a competition. I see LIC not growing, you talking about Bajaj Housing Finance being the other competition. So just want to understand, like, one player is going at 25, 30%, which is Bajaj Housing.

51:31 And what is it that you see the trade offs they are making as a competition vis a vis you, because of which they are able to demonstrate aggressive growth. So we have three players. One is 45%, You are at 11, 12%, and there is LIC, which is not doing at all. So from a form set perspective, if you can just subjectively tell us what's happening and who's doing what trade offs, basically. That will just help us set the context for us here. See, I think, definitely has had a technology advantage. They have been the first movers, and they have adopted technology, and that is able to give them a better, you know, edge in terms of that and all those things. We are catching up and we have all just implemented our right transfer model project has been implemented. So we also will now be, you know, starting on these learnings and, you know, customer journeys and digital roadmaps and all. So I think that is something which we will be able to, you know, catch up, and we will have to obviously, you know, push for consistently 20% plus kind of a disbursement growth over previous years for us to slowly the areas to start picking up and catching up.

52:49 Second thing is, you know, I think having said that, while technology is is also one but not better, I think, you know, LIC also has an issue of larger prepayments, much higher prepayments because they are directly in competition with the... On pure home loans with the with the Most of the banks. Most of the bigger banks because the ticket prices are also higher than ours. So I I guess, you know, that that they have a, you know, a pressure of one is constantly going, having to go at the same time also retain whereas, you know, had it been a lack of book or had it been a a l r d or had it been a developer finance and all, maybe that that pressure would have been less for them. So I guess... But I guess, you know, you know, only they will be in a a position that exactly tell you what are the challenges they are facing. I mean, sitting here, I can...

53:40 I guess these are the... What I see. So, sir, like, all of the equal with the IT background and I think more agility with regard to the software platform, would that mean that you would have more higher capability of assessing risk at higher yields apart from, obviously, aggression in this investment, but that also means that you're able to launch more products, a little higher yield products, which are not too bad in terms of customer profile, quality of customer, but we are in the 11, 12, 13% kind of yield spectrum. Can we see that happening in the near term? Actually, today, our system, what we are now implementing definitely gives us the the chance of users the opportunity to launch these kind of products faster with proper controls and all those things in place, you know, workflows and decision engines and all those things in place.

54:33 But, you know, when and how we'll start, I think we'll have to... As of now, in fact, our IT transformation was a bigger... Was a was a first priority. We will look at all these products, you know, going forward. I mean, as of now, I can't comment on that because we... Our board has not... We've not actually deliberated and taken a call at our board. Got it, sir. Thank you. I'll call back in the queue. Thank you. Thank you. You are on mute. Yes. Sorry. Our next question is from. Unmute yourself and ask your question. Oh, hello, sir.

55:19 So I wanted to ask that last quarter, the company has indicated an estimated to deliver around 2.4% ROE and around 18% of ROE. So given that the relatively softer performance in, like, q one and some higher OpEx also we're expecting a little bit, so are we still confident of achieving these return ratios in FY twenty seven? So I guess this quarter, we have done 2.39 as ROA and, you know, 18% plus in terms of ROE, at least for the quarter. And, yes, you are right. In terms of our, you know, OpEx, we... It has slightly in step. But, you know, because it has in step a little bit compared to last year is is the reason why in fact our ROA has dropped from around 2.53 last year to 2.39.

56:12 But going forward, I think we are... The the cost thing, whatever impact we are end result, it started already reflecting. Therefore, you know, this number is something which you will be able to do, manage. And so one is, you know, we may have to, you know, we will have to obviously ensure that our NIMs and spreads in m I n... I... I'm are maintained, which as of now definitely looks possible. In terms of credit cost, also the other variable which is there, where we will have to look at it. As of now, we don't see a problem in the credit cost either. In fact, being the first quarter also, if you look at it, last year, you know, in q one, we saw a 45 core increase in NPA. The part... The year before that, again, in q one, we are... We we looked at...

57:00 We had a 41 crore increase in NPA. So this, you know, $30.40 crore increase in NPA has been there for us as a as a cyclical thing every year. But this year, you know, we have been able to impact, you know, restrict it to just about $17.18 crore. So basically, you know, what I'm trying to say is that, you know, in terms of credit cost, we are in a much better position today. And so so the 10 bids that we have been talking about definitely doesn't look to be a challenge this year. So I guess, you know, as of the moment, there is no reason to believe or nothing to reflect that we may not be able to achieve it. Also, one more question was around the f e and p segment increase, which we are looking at. I wanted to understand the portfolio, how we compare it with salary segment in terms of the use spreads, the credit cost, and the returns.

57:51 So gonna be... They are gonna be margin accretive right over the medium term. Correct. So, actually, see, when we are talking about SEMP, so we we... Our SEMP also is not the assessed income or, you know, surrogate income kind of segment. The the category or the customers whom we serve actually are ones who have documented income. So they also are having two to three years of IT returns. And we are verifying the IT returns from the portal. And based on that, we are assessing based on the... Our norms. So so even the s t and t segment compared to the rest of the affordable housing finance companies will be a better segment for us, you know, in terms of credit. This... If I have to look at the credit cost and all, I mean, and the and the the the use, self employed would be at least half a percentage higher in terms of the the ROI as compared to a housing customer. If it's everything else being the same, if it was just a matter of, you know, salary versus self employed, the differential would be half a percentage point.

59:00 And if you look at it as to the, you know, risk weighted... Oh, sorry. The the risk, the GNPA in the salary segment today is roughly around, you know, point six to point six three. Whereas in case of SEMP, our current, you know, NPL ratio is around 1.45, 1.5. So roughly, you know, you know, factored for our credit cost also, I think, you know, but point 5% is is is accretive only. One more on the the the CBS platform, the branch expansion, all we have invested and the incremental operating expenses which are going up. So when do we expect the productivity benefits, you know, start to reflect in my cost income ratio?

59:53 See, today itself, you know, the five branches that we have initiated, those five branches also the speed and everything is much faster. And I think, you know, in terms of the, you know, stability, I think it'll take about six months for the branches to stabilize, to get fully used to it, and all those kind of things. But having said that, I think this year itself, we could start seeing some benefits in terms of staffing itself. Not to mention, you know, the speed and on, you know, better cook... Quality, more faster tag, and all those things. That apart, I think, in terms of manpower, I think this year also itself, we should be we should beginning to see some benefits, thereby, you know, we may not be taking a... Adding staff for the sales team. We will... Might be able to... Or we, in fact, intend to take all the sales... Additional salespeople from within the existing team sizes only.

1:00:46 Okay. Okay. And lastly, just one point on the tax rate. What do we see the tax rate for FY twenty seven overall in total I should expect? Is it same? 1%. Yeah. 21% because of some DTA benefits, and this will be stable rate. There are no major surprises from Okay. The next purpose. Got it. Thank you so much. Thank you. Thank you, everyone. That concludes today's session. I will hand over the call to mister for his closing comments. Yes. Thank you, and thank you once again to everyone for taking your time out to join this earnings call of q one results for Can Fin. And I hope we've been able to answer all your queries. And, of course, if there are anything more, you can always, you know, feel free to write to us. We have our listing.

1:01:40 We are also in fact meeting the... And whenever we are having any meeting with any investor or anything, we are uploading our... The transcripts of all our meetings also on our website. So I think, you know, that also is something which you can refer to for any updates and all. Second thing is as as we mentioned that now that we have undertaken this IT transformation thing, and we expect to complete it in this quarter, somewhere around September, you know, mid September or first week of September, we might, you know, put up some update also on that, you know, on how it is progressing and how many brands have gone live, how is the disbursement performance and all in light of this, because it is a very important thing. But having said that, we we don't end without any issues as of the moment looking at the five branches, but we will still be putting up an update somewhere around September.

1:02:31 So that's that's it. So once again, thank you. Thank you very much for joining this call. Thank you. Thank you, everyone. Thank you. Thank you, Nitesh.