Muthoot Microfin (NSE:MUTHOOTMF) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to the Muthoot Microfin Limited Q2 FY 'twenty seven Earnings Conference Call. As a reminder, all participant lines will be in a listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Mr. Arun Anthony Malkara. Thank you, and over to you, sir. Thank you, Abhrit. Good morning, everyone, and welcome to the Q2 FY 'twenty seven Earnings Conference Call for Muthoot Microfin Limited. First of all, I would like to thank the management of Muthoot Microfin for giving us this opportunity to host this call. From the management side today, we have Mr.

0:46 Thomas Muthoot, Chairman Mr. Sadaf Syed, Chief Executive Officer Mr. Praveen T, Chief Financial Officer Mr. Udish Ulas, Chief Operating Officer and Mr. Rajat Gupta, Senior AVP, Investor Relations. I would now like to hand over the call to Mr. Saddaf Syed for his opening remarks, post which we can open the floor for Q and A. Thank you and over to you, sir. Thank you very much. Good morning, everyone. Thank you for joining the earnings call of Muthoot Microfin. We are discussing here Q2 results of FY 2027. I trust you have had the opportunity to review our financial results, in investor presentation and press release, all of which are available in the stock exchange in our company's website. Before I get into the numbers, let me highlight a few key developments for the quarter.

1:36 We recorded our highest ever quarterly disposal of INR 2,900 crore. We kept our credit cost within the guidance range of 2.5% to 2.3%. We were at 2.6, brought our average cost of borrowing for the first time in the history of the company in single digits. We are at below 10%, 9.93% and reported a quarterly profit of more than INR 110.8 crores for the quarter stand alone. These results reflect improvement we are seeing across our business. Our portfolio continues to grow. Collections have strengthened. Our lending mix is becoming more diversified and our funding costs are easing.

2:22 Importantly, we have been able to make this progress while maintaining discipline on asset quality. The measures we have taken over the past several quarters are now beginning to translate into better operating and financial performance. At the same time, we remain watchful of the macroeconomic environment, particularly this year's uneven monsoons, the El Nino condition have led to a drought like situation in Maharashtra and Karnataka, and we have mapped our exposure to these districts where the deficit train has been there. If you can see our presentation, we have given a particular slide. The exposure for us is very limited. It's around 3.6% of our portfolio in these two states, which is on book portfolio, about INR $5.50 crores.

3:10 There are 34 districts which are affected in these states combined, some severely, some a little bit moderately. Karnataka amounts to just 0.49% of our on book portfolio for group loans and around Maharashtra is 3.1%. But most importantly, I would like to highlight that 81% of this portfolio more than 81% of this portfolio has a natural calamity cover, the nat cat insurance that we are offering to our customer. And as I mentioned in our last call, less than 2% of our overall portfolio is directly dependent on agriculture or any rain sensitive areas where they are located. So from that perspective, the portfolio is very well insulated.

4:01 We have also given in our collection efficiency numbers, the numbers for October. We have seen in October, collection efficiency overall collection efficiency further improved. Our collection efficiency for the quarter is at 98.1%. But for October, it has reached to 99.2%. And I can also appraise you of the presentation, which we have for November, the ENaC presentation, first is the date for that presentation. So yesterday was the date. And we have seen a 2% improvement in presentation clearance. So overall, the collection efficiency and the collection scenario remains to be positive.

4:50 So far, we have not seen any adverse impact in our collection. In fact, collection continues to improve month on month and quarter on quarter. Our collections have remained steady. Our field teams are staying close to the market and they can pick up early signals and act accordingly. Nat Cat cover is not new for us, but we have offered it to our customers since 2020, including cover against fraud. It has been tested in a real situation. It has helped us to impact to limit the impact of Fengal cyclone, which was in Tamil Nadu late twenty twenty four and kept our portfolio largely unaffected through the floods and heavy rains and even the recent monsoon deficit and also the rains in certain areas, which have been heavy. So even if the condition worsened, most of our customer in these areas have support to fall back on. With limited exposure, strong insurance cover and steady collection, we do not expect a material impact on our business at this stage.

5:55 Coming to our business performance, We disbursed INR 2,900 crores in Q2, a growth of 28% year on year and 10% over the previous quarter, taking our first half disbursement to INR 5,545 crores with a seasonally stronger second half and festive season ahead, we expect this momentum to remain healthy. Our AUM grew by 22%. This is above our guidance of 18% to 20%. We closed the quarter with INR 15,323 crores of asset under management. We had revised our guidance to 20% last quarter and we remain committed to it.

6:41 We will definitely achieve the guidance and may go beyond. One of the areas that we have focused on is portfolio diversification. We have made very good progress in this. Right now, our portfolio, the breakup between JLG and non JLG product remains $61.3069.0.31 dollars which was around $83.17 in the end of March. We targeted seventy-thirty mix for the year, but we have already surpassed it and we continue to build a stronger portfolio there because we are seeing very good response in terms of take up and also the asset quality. A large part of this growth has come from individual lending business, particularly the Muthoot small and growing business.

7:30 This portfolio has now reached INR 4,164 crores, accounting to 27% of our total AUM and performance has been very encouraging. Delinquency level remains very robust. We have given in our presentation 90 plus is just 0.02% and it is almost like two years into this portfolio. So the performance is reasonably seasoned. Of course, it has to see a little bit more time, but so far, we don't see any early indication. The way we have built this portfolio is also very important. We have largely graduated our existing JLG customer who have demonstrated a strong repayment track record and have a credit score of 700 and above. So this is a portfolio which is graduating our customer and we are carefully selecting our customer and graduating. Out of the 32 lakh customers, we have graduated so far 2.7 lakh customers.

8:29 And these are all customers who are having excellent track record and a relationship with us, long standing relationship and a 700 plus score. Alongside this, our gold loan business is also scaling up through our co lending partnership with our parent company, Muthoot Microfin Limited. We have disbursed around $4.53 crores of gold loans during the quarter. We are seeing very encouraging traction in secured lending. We have also started disbursement under MicroLab, which will further expand. I can update you in the month of October, we have crossed INR 100 crores AUM in MicroLab portfolio as well. And this portfolio is also behaving very well. We have also around eighteen months of seasoning on this portfolio.

9:18 The delinquency is near zero in this as well. Overall, our active customer base stands at approximately 32.7 lakh. Of these, around 50% of our customers are unique to Muthoot Microfin, while another 31% are us plus one. So almost 81% of the customers are having either us and one more relationally. And that has been our focused effort to retain our good customers and continue to increase our wallet share with our customer. Let me also talk about the work we have been doing to improve operating efficiency. We have taken several steps over the past year and we are beginning to see the results. First, we introduced a branch profitability module under which every branch is assessed on its revenue, operating cost and credit cost. This has helped us to identify branches that are were not generating adequate return. We identified 80 such branches and have since taken steps to either merge, rationalize or redeploy resources.

10:26 Secondly, we have strengthened our underwriting capabilities through in house credit scorecard developed by our own risk team. We have also made significant investment in technology to improve quality and speed of our credit assessment. For instance, through our generative AI initiative, discussion with the customers are recorded in local language and there's a trade memo automatically prepared, whether the system can analyze all the photographs that have been clicked through their PD and give a recommendation in terms of the creditworthiness of the borrower. We are using account aggregator platform to get the banking information. We are using E KYC, eSign and very easily digitizing our repayment mandate also with the customer so that there is an eNatch collection.

11:22 As a result, we have been able to also improve our digital collection. Now digital collection amount to 47% of our overall collection month on month basis. And the guidance of 75 that we were guiding for 2030, we are very confident that we would be able to achieve much earlier that 75% digital collection. The third and most important aspect is we have grown our new product portfolio without adding any new infrastructure, Individual run loans run from our existing branch infrastructure with centralized underwriting team. Gold loans are serviced through Muthoot Microfin Limited branches. This allows us to expand our product offering while keeping incremental infrastructure costs under control.

12:13 The results are clearly visible. There is AUM growth per branch. We have reached around INR 9.1 crores outstanding per branch as compared to INR 7.3 crore earlier. AUM per loan officer has also reached around 1,800,000 and OpEx to GLP has come down from 7% same period last year to 6.1% this quarter. And most importantly, our cost to income ratio, which we were guiding that we would be below 50%, we are already at around 48.1% for stand alone for the quarter. And definitely for the full financial year, we will be on our guidance and we will bring in lot more efficiency.

13:03 Our aim for AUM per branch is to be around INR 12 crores to INR 13 crores and OpEx to be brought to OpEx to AUM to be between INR 5.52 crores, 5.75 crores. We are confident that we will be able to reach that number. And on digital collection, definitely, we will reach around 75% digital collection pretty soon. On the network side, we have now sixteen seventy five branches. We continue to deepen our presence in our core market, which is South India, while expanding our operations in carefully selected states. We have selected Assam. We have selected Andhra Pradesh.

13:49 We have already we are deepening our presence in Assam and Andhra Pradesh and Telangana. And we will be also entering into Jammu and Kashmir very soon. And definitely, these new areas where we are entering that will allow us to acquire new customers and increase our overall client base. Meanwhile, we continue to offer more products to our existing customers and cater to their needs. Most important improvement is in our operating performance accompanied by the improvement in asset quality. Our overall collection efficiency has reached to 98.1%, an improvement of four seventy seven basis points if you look at year on year.

14:37 Expected collection efficiency has reached 99.9%, almost every rupee that is due is coming on time. On our GNPA, we have had an improvement of 32 basis points. It stands at around 3.38% as of now. Our net NPA is 1.05 and our provision cover continues to be remain strong at 69.6%, almost 70% with a credit cost of 2.6%, which is what we are guided for. All of this now reflects in our financial in Q2. Total income grew by 27%. We reported INR $7.33 crores of total income. And our net interest margin, which is a very important aspect has improved from 12% to 12.5%, which is a very significant development that we are seeing. And it has both impact of our better collection, reduction of NPAs or yielding portfolio has improved and at the same time, reduction of our cost of funds.

15:47 Our PPOP has grown by 67% year on year to $2.49 crores and profit after tax has reached 110.8 crores, INR 111 crores. And our ROA is at 3% and ROE is 14.8%. For the first half, the total income grew by 23% to INR $140.03 crores and PGOP grew by 56% to $4.48 crores with a total profit for the first half at INR 192 crores. This is in line with our guidance. Usually, quarter three and quarter four are even stronger quarters. So we definitely feel that on the profitability guidance, we are on track, and we should be able to achieve our profit guidance that we had given.

16:41 Moving to the liability side. Last quarter, I said that with the benefit of our rating upgrade, which is Crescent AA-, our cost and fund will come down and reach a single digit by end of the financial year. We have reached in quarter two itself, our average cost of borrowing has come down from INR 10.13 to INR 9.93 percent, and our incremental cost of borrowing has come down to INR 9.69%. And during the quarter, we raised INR 3,213 crore, taking our first half fund raise to INR 5,946 crore. This includes INR $2.50 crore of NPD at a coupon rate of 9.25%. Both public sector and private sector banks continue to support us. More recently, we had a CareEdge global rating revised our outlook to positive.

17:36 This builds on the crystal upgrade and will help us access funds at a better rates. We closed the quarter with $170.01 crores of liquidity on the balance sheet and INR 4,328 crores of unavoid sanctions in our hand. So liquidity is not a constraint and we have good room to negotiate for better rates. Going forward also, our guidance is that rate will remain stable and we will only be able to negotiate and bring them down further. Coming to the guidance, our FY 'twenty seven guidance remains fully intact. We are confident of achieving it and on growth, we are on track of a 20% AUM growth On credit cost, we expect to do better than guidance level.

18:26 On net interest margin, we are confident of being on the upper end of our guidance. We will definitely do more than that. And on ROA, ROE, we expect to be also on the upper end and beat that guidance. 3.3% is the upper bracket for ROA and 18% is the ROE. We definitely feel that we would be able to beat that guidance. And we remain fully committed to our long term target of INR 30,000 crores by 2030. We have a strong capital adequacy ratio of 25.5%. And with the kind of profitability that we are seeing and the portfolio performance, we feel that our growth numbers can be achieved without raising any further capital at the moment, and we'll continue to grow with the same momentum and build strong numbers and continue to pursue our strategy of diversification and ensuring that our customers get best products that are available in the market and best of service.

19:33 We will continue to overachieve on our guidance as we have done all the parameters that we have laid down on growth as well as our asset quality, credit cost, our ROA, ROE, we are absolutely on track, and we continue to remain on track, and we are confident that we will achieve this guidance for the full year. I'll stop here. I'll just give a context in terms of the industry. The industry has also come out of a difficult phase in FY 'twenty five and then there was FY 'twenty six recalibration and now FY 'twenty seven, which is a phase where the industry and most of the leaders are seeing a good momentum and good results.

20:24 I feel that this momentum will continue. There is a renewed vigor, more calibrated approach and there is no overzealousness where people are following the same guidance principle that we had put in place as an industry that nobody should add more than three lenders and that even though the market has improved, we continue to follow those guidance and be more vigilant about it and ensure that the customer gets less service, but without getting over leveraged. And in our presentation, you have seen that since FY 'twenty four till September FY 'twenty six, overall exposure among our customers has only grown from INR 62,000 crores to INR 64,000 crores. So there's not a huge increase in the exposure to the customer. But at the same time, Muthoot Microfin exposure has grown from INR 12,000 crores to INR 15,000 crores. So we have been able to replace a lot of loans and increase our wallet share among our customers without overleveraging, and that is what our strategy is going forward also to be the preferred lender, preferred service provider to our customers.

21:43 We are using technology. We have our customer app, there are 2,200,000 customers who have already subscribed to their app. One of the new initiatives that we have started is that with our loan through the app, where customers who are eligible for loans, we have already credit tested and we have checked their track records and given them the opportunity where they can transact directly through the app and borrow the loan. And this loan happens within thirty minutes, even faster. But right now, it is within thirty minutes. And there is no physical interaction with the customer. In some cases, there is some assistance, which is required that is provided. But most cases, there is no assistance, even on a weekend, on a Sunday, there are disbursements happening.

22:33 I think that is the future of Microfinance and also for Muthoot Microfin. We will be able to disburse loans, assess the customers over a fly, and we will be able to disburse these loans digitally. And for those loans also, we have disbursed right now only 1.5 crores worth of loans through this process. But all of those loans are through eNACH and the repayments are coming very swiftly. So we see this as an empowerment tool for the customer, and we see this will become preferred a way to go for the customer where she doesn't have to come and subject herself to physical verification. She can do it online.

23:18 At the same time, it's complete liberty to the borrower whenever they want to borrow, whatever they to borrow, they can do it. And our credit assessment process is very, very strong, and we are able to assess the customer over a digital platform very quickly and make a decision on them. And this is a campaign based product where already filtered customers are given this facility. And we feel that this will help us to maintain customer loyalty as well as bring in operational efficiency, move more swiftly toward digitization. And definitely, in the long run, this will become a key part of our overall disbursement process. I'll stop here and happy to take any questions that are there.

24:12 Thank you very much. We will now begin the question and answer session. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. The first question is from the line of Varun Dhube from Share India Securities. Congratulations on your strong set of numbers, sir.

25:03 Sir, you have given in your presentation that around you have exposure to Maharashtra Karnataka about 3.6% of your portfolio and 82% is covered through Nat Cat. What about the other states? I mean, what kind of exposure do you have? Because there are several states who have actually declared loss. And would you go slow on disbursements in these states? What's the strategy going to be? So, we are a well diversified organization. We have coverage in 21 states. The effective state, which are majorly are Karnataka and Maharashtra, which for which we have given our number of 3.6%. In terms of other states, we have not seen any trend. For other factors like there were floods in Assam and Maharashtra in Bihar.

25:54 Those we do not had any impact on those because we already have natracked collection. 85% of our portfolio is covered under natural family insurance. So we don't see any challenge. And as far as disbursements are concerned, we are consistently disbursing our loans. So we have seen almost 27% increase in disbursement actually. And we'll continue to be on that track, but we are watchful of those districts where there is challenges. So definitely, in those districts, we will adopt a calibrated approach, and we will focus on more of secured loan product in those districts. And only customers who are paying as well, we will continue to give loan to them. If there is any disturbance, we will, of course, be mindful of that and we'll recalibrate what we want to disperse. There are only 34 districts, which are affected in these particular regions.

26:56 Okay, sir. So you said about secured loans, but sir, I mean, there are several companies who have been facing issues with gold financing as well, especially smaller ten year gold financing. So have you faced any challenge in that? And then what kind of asset quality has been there in gold financing, if you can throw some light on that? So we have not seen any challenge at all. One, we are conservative on our bonus in LTV. Secondly, most of our assessment is based on income. So we already have a track record of the customer. We already have the income level of the customer. And based on their eligibility only, we are funding them. So from that perspective, the gold lending that we are doing is very well balanced in terms of adjustment capacity of the customer and tied up with the collateral value as well.

27:52 And we are going conservative on the LTV. So far, we have not seen any challenge. Okay, Just wanted to understand something. I mean, you said that your rate of interest has come down below 10%. So in a rising rate environment, what could be the outlook? And I will just combine two questions and two, three questions. And then also just wanted to understand what's your status on the ESGFMA? Because I think, sir, you have applied for this. So where does it stand right now? And one more thing, sir, if you can tell me what would be the impact on the IRGI draft regulation? Sorry, I didn't get the last question on this. So the IRGI draft regulation on insurance, what would be that in?

28:39 Yes. So I think as far as the CGF MU credit guarantee is concerned, we have applied for it. There is budget allocation still awaited at the CGFU level. Once that is there, definitely we are in the forefront of the queue that would be available. Having said that, irrespective whether we have a CGMFU or not, we already have a natural gravity insurance, 85% of our customers are already having that insurance. So we don't see any challenge there. And related question with respect to IRDA, at the moment, it's a draft. We have also given our feedback on the draft. We don't see this as an immediate challenge. I think once the final version is there, we would be able to comment on it. But at the moment, there is no impact on it. As such, the insurance revenue from our book is very limited.

29:45 It is less than around 5% of our total revenue. So the impact would not be there so much as even if the guidance the guidelines come in the frame and form, which is there today. So on the overall earnings of our business, where it would not impact, we offer these products as a pass through. So the customer, whatever premium they're paying, we pass it on to the insurance company, and they give the insurance cover to them. So that will remain for us the model. So you had one more question. Sorry, I missed that. On the cost of funds, I mean, they have come below 10%. But now we are in a rising rate environment. So do you expect them to be below 10%? Or will we see some rise from here?

30:38 Yes. So definitely, we have seen the rate hike of 25 bps, which has recently happened, and the pass on of that will happen over the course of time. And the anticipation is that there would be further rate hikes. But at the moment, we have been able to negotiate better. We have INR 1,700 crores of liquidity on the balance sheet and over another INR 4,000 crores of sanction in hand. So we have enough in our city for us to be able to sufficiently negotiate. So one of the benefits that has happened with the individual loans and other products, which are slightly longer tenure product that the portfolio sticks on our book for longer.

31:25 So we can take our time to negotiate with lenders in terms of borrowing. We are like generally in a microfinance portfolio, the loans are co terminal. So, the replenishment and the deployment of fund is immediate because otherwise the portfolio goes down. So, with the diversification that also leverage has been available to us. Apart from that, we have had a conscious effort of diversifying our source of capital. We have used NCD. We have done a INR $2.50 crore NCD at 9.25%. We will further do more NCDs also. And as the global macroeconomic environment changes and there is a stability in the hedging cost, we will also use our ECB route.

32:15 We already have a couple of sanctions in our hand where ECB is available to us. We will definitely draw them down, maybe first one would be this quarter itself. And that will help us to continue to maintain our interest rate. We are confident. The biggest reason why we are able to bring this cost of fund down is the PTCs that we are doing are at a very fine rate. There's a huge demand of priority sector portfolio among the private banks and foreign banks, and they are doing on an average at around 8% the PTC transaction. So we are able to get better rates there. So that really is helping us to bring the cost of fund down. And we feel that the competitive tension will remain, and we will be able to negotiate better and continue to maintain our rates.

33:10 Okay.. The next question is from the line of Ashish Sonjay from Quotek Securities. Sir, first question is on the MSR portfolio in Maharashtra. If you can talk about the ex market collection efficiency trend in the state in the month of September, October? And if you can also give us some color on what are the borrowers saying about the repayment ability? Yeah. So I think the collection efficiency has remained strong.

33:57 If you look at overall and especially through the case, it has remained stable. It has not deteriorated even in the peak of you would have to keep in mind that this was a month, especially September, where there were a lot of festivities also were there and a lot of holidays were there. But despite that, the collection efficiency has remained stable. On ex bucket, Karnataka remains 100%. And on Maharashtra, which was already at around 98%, it remained at 98%. So from that perspective, there is no impact on like collection efficiency from the current situation as we see. Even in October, where there were even more festivals and holidays, the collection efficiencies have remained strong.

34:54 And we don't see any impact in coming in near terms also. Karnataka has pretty much stabilized, and there is no challenge there. Maharashtra also, incrementally, we are seeing collection improving only. Is no challenge. Overall collection efficiency for our company in October has improved from 98.1% to 99.2%, which is a very healthy indicator. And also our presentation for November, as I said, has improved by 2% in terms of first presentation clearance. So all the indications are quite positive for collection efficiency. Sorry, sir. Just a clarification, the Maharashtra ex booklet collections is trending at 98%, is it?

35:49 Yes, correct. Okay. But just qualitatively, what are the borrowers saying, sir? Is it an income problem over there? No. So we whatever are the customers who are falling behind on their payments in for the first time, we are calling them. And more than 60% of that customers have told that they will continue to pay. The balance customers are also saying that they have been told by their leaders not to pay right now, but they are willing to pay. So the approach is to have a kind of independent connection with those customers and to convince them to pay. And I think most of these customers like we have seen in other scenarios also, they come back and pay.

36:46 Got it, sir. And any collective action which is happening from the the SRO side or RBI side to address the issues here? Look, from the SRO side, collectively, we have decided to be more vigilant and responsible. So biggest challenge in this scenario is miscommunication. A lot of the time, the communication was like that coercive collection practices are being used and stuff like that. So there is a standing guidance from both the SROs that be more empathetic and more careful in collection. There should not be too much of a harsh collection, which is anyway microfinance industry does not follow.

37:34 Secondly, to avoid any sort of miscommunication, the SROs have already detailed the media that what is the function of NFIs and what is the job that NFI doing. Sometimes other lenders, unregulated lenders are also confused with NFI. So they have made that distinction that not to confuse those customers with MFI, those lenders with MFI. Sir. Perfect, sir. Thank you very much. Thank you. Thank you. The next question is from the line of Neeraj Gandalwal from NMTT Family Office. Please go ahead.

38:21 Sir, my question was on this purchase of the loan assets from Muthoot Finance. What is it? This is the first time that we are seeing such type of a transaction where loan assignment has been purchased from Muthoot Microfin of 200 crores. If you can give more background on this? Yeah. So these are loans that we are originating on the referral program. So we have two models under which we are offering gold loan. One is referral where we only get a fee... Upfront fee for the loan that we have originated. Second one is where we do a coal and dig with Fincor, where we have 60% share, Fincor has 40% share. Initially, when we were originating, most of the business was booked under the referral program.

39:09 To get that portfolio back into our books, we have purchased that portfolio. So this is the same gold loan portfolio. These are largely our customers, where some will be mixed also. But that is the transaction. And going forward also, like as we originate portfolio under the referral scheme, we will continue to have those portfolio because these are the customer owned by Muthoot Microfin will continue to be on our books. Okay. And what is the average yield on this particular portfolio? So see, effectively, when we originate, we get 1.5% upfront fee. And then on the margin, we are getting around 9.8% yield on this portfolio.

39:57 So effectively upfront and generally these are the three to six months kind of a tenor weighted average, if you can say, it's around five months kind of a tenor. On that, effective yields is in the range of around 12% to 12.5%. Okay. That's it from my side. Thank you. Thank you. The The next question is from the line of Ajay Dhube, an individual investor. Yes.

40:54 I hope I'm audible. Yes. Yes, Ajay. You are Yes. Perfect. Perfect. Congratulations on a good set of numbers. The first question I had was related to situation that we're seeing around the country. So I understand that our exposure to Maharashtra and Karnataka is, you know, not very high, but what's the situation with exposure to, you know, Assam and Bihar, for example? That's the first question. And related to that is do we have any kind of Nat Cat insurance on the portfolio in these situations? Ajay, see, first of all, like Assam is one of the areas that we have newly entered.

41:39 So our portfolio exposure there is limited. We are just about less than INR 100 crore portfolio there in Assam. And all of those customers have a natural calamity insurance, 100 there. And in Bihar, we are close to around 1,000 crores of portfolio in Bihar. And as of now, we have not seen any challenge from that drought situation. But during the monsoon, there was some part which was affected due to floods. There, we had availed the benefit of nat cat insurance. Around 85% of our portfolio continues to have cover of nat cat insurance. And there is no challenge there that we have faced in terms of post the floods as well.

42:28 Our drought situation has not had an impact on the hard collection efficiency. It's improving every month and every quarter, it is improving. Perfect. And the second question I had was about the ECL release this quarter. So if I understand correctly, there was roughly around $540,000,000 of ECL release. Is there, you know... So I wanted to understand, you know, the, you know, approach behind it because your competitors, if I understand, are starting to build buffers during the stage of the cycle, right? So I wanted to understand what drove the release and what is the normalized credit cost if, you know, the release stops? So on the credit cost, I think the credit cost remains stable around 2.6%.

43:19 The ECL basically is based on the portfolio experience and also there are factors such as macroeconomic GDP guidance and inflation guidance, which has an impact on that overall ECL calculation. So as the portfolio continues to improve, the ECL model will show a lesser requirement. We continue to maintain a healthy cover of around 70% on our portfolio NPA, and we will maintain that. And that is what has resulted in a little bit of a release of ECL. We continue to have a buffer of around INR 24 crores, which is not really a management overlay, but there is a buffer for contingencies like these drought like situations we have in our overall ECL model. So we'll continue to build on that INR 24 crores.

44:15 And definitely, if there is a requirement, that would be utilized to cover for any sort of an impact on the portfolio. Maybe Praveen, if you want to elaborate a little bit. Yes. I think you have covered. But I think one more point here is that so some of these provisions release is to use it to the write off and clear it off. But otherwise, the coverage remains stable at around 69.9%, close to 70%. So that has been remained. And one more point here is to note is that as we grow on the secured portion of the portfolio is also growing in the balance sheet size. Currently, it is around 4.5% if you look at six months back, which was less than 1%. So that also will play a role in terms of some the overall provisioning coverage will depend upon the composition of that as well.

45:09 But to summarize, one thing is that there is other provision overlay, which is around INR24 crores carrying in the balance sheet, plus the overall coverage remains stable. Perfect. That answers my question. Thank you and all the best for Q3. Thank you. Thank you. Ladies and gentlemen, in order to ask a question, you may press star and one now.

46:14 As there are no further questions from the participants, I would now like to hand the conference over to the management for closing comments. So once again, thank you very much for joining the call. As we mentioned in our opening remarks, we remain committed to our guidance. We will continue to build a robust, strong portfolio with diversified asset base. On all the parameters, the fundamentals on the growth, we are doing very well on availability of funds and liquidity is sufficient for us. We have own balance sheet as well as sanctions in hand. On the cost of fund, it continues to trend down, and we'll continue to negotiate better and make sure that our cost of fund continues to be stable or coming down even though we are entering into a rising interest rate scenario.

47:15 Thirdly, the asset quality is improving very well. We are seeing better collections from our existing portfolio and the new portfolio that we are originating is very, very prime quality. And there is absolutely no delinquency in the individual loan that is very, very minor, 90 plus is 0.02. Similar is for LAP and gold loan remains robust. So that will help us to improve our asset quality. And our consequently, our credit cost is also trending down. We are stable at around 2.6%, which is on the lower spectrum of our guidance. We are confident that in coming quarter, as we build more portfolio of higher quality, this credit cost will come down. We will keep in mind that we maintain some provisions for our portfolio.

48:04 At the same time, the guidance of ROA, ROE would be achieved. We have for the first two quarters, we have already reported INR 192 crores of profit. We had guided towards INR $4.25 crores to INR $4.50 crores of profit, knowing that Q3 and Q4 are very, very strong quarters for lending business. We definitely are very confident that we will be able to achieve those numbers, and we will be able to give the kind of ROA, ROE that we have committed. And we have put all the fundamental things in place and all the macroeconomic environment also, we have sufficient installations in terms of our natural climate insurance, the collection practice, the diversification, the underwriting practice.

48:56 We will calibrate our disbursement in the areas which are affected. Irrespective of that, because of our diversification, we continue to have our disbursement target met. So we are looking forward to the remaining part of the year, and we anticipate a strong growth and a very strong performance and anticipate that we will be achieving all of our guidance numbers. I wish you a very, very happy Diwali on behalf of Muthoot Microfin, and thank you for continuing to support us, and we look forward to interacting with you on a regular basis. Thank you very much. Thank you. On behalf of GM Financial, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.