Aditya Birla Capital Limited (ABCAPITAL) Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the Q1 FY '27 Earnings Conference Call of Aditya Birla Capital Limited. [Operator Instructions] Please note, this conference is being recorded. I now hand the conference over to Ms. Vishakha Mulye, MD and CEO, Aditya Capital Limited. Thank you, and over to you, ma'am.

Thank you. Good evening, everyone, and welcome to the earnings call of Aditya Birla Capital for Q1 of FY 2027. Joining me today are my senior members of my team, Bala, Rakesh, Pankaj, Kamlesh, Mayank, Pinky, Vijay and [indiscernible]. India's growth momentum continued to remain strong despite the challenging global backdrop underpinned by healthy domestic demand, continued investment activity and broad-based credit growth. However, higher input and energy costs makes the growth very uncertain in the future. At Aditya Birla Capital, we continue to focus on driving quality and profitable growth by the [indiscernible] data, digital and technology. Now coming to our financial and business performance. For the quarter, we have delivered the consolidated profit after tax increase of 40% to INR 1,175 crores in Q1 of FY '27. The total consolidated revenue grew by 29% year-on-year in the first quarter. This performance was supported by the strong growth momentum, improved profitability along with the healthy quality in our lending and insurance businesses and continued expansion in our Asset Management franchise. In our previous earnings calls, we have highlighted that approach on pursuing the growth opportunities by maintaining a strong focus on return of capital. This approach, along with our disciplined execution has enabled us to grow our businesses across our platform. Coming to the growth across businesses. Our NBFC portfolio grew by 28% year-on-year, mainly driven by the healthy growth across all segments. Our Q1 FY '27 has been the land max quarter for the Housing Finance business. Our Housing Finance portfolio has grew by 50% year-on-year and crossed the milestone of INR 50,000 crores. In Insurance business, we remain among the fastest-growing companies and continue to gain the market share. The individual first year [indiscernible] in our Life Insurance business grew by 20% year-on-year and around 50% year-on-year in our Health Insurance business. In our AMC business, our quarterly average mutual fund, AUM grew by 6% year-on-year. Now talking about our profitability and quality of our portfolio. I'm delighted to share that in NBFC business, after tax grew by 35% year-on-year and ROA expanded by 14 basis points to 2.39%. In our HFC business, the profit of this tax almost doubled year-on-year with the continued expansion in ROA. Our asset quality across Book Lending business remains strong despite the volatile market conditions and uncertainties in the operating environment. In our AMC businesses, the fund performance remained strong with approximately 75% of our equity AUM in the top 2 quartiles. In our Life Insurance business, and I'm happy to report that our BNB margin almost doubled year-on-year to 15.1% in the fourth quarter. This was mainly driven by the increase in the share of a non-par business, protection and annuity in our product mix. We continue to see a similar trend in Health Insurance business. We implemented the IFRS in our Health Insurance business from this year. We reported a profit during Q1 of FY '27 compared to the losses in Q4 and Q1 of last year. The combined ratio for the quarter was 106%. We continue to leverage data and technology as a core enabler. AI Now is becoming a core operating Leer pass, and we are scaling up its use across our businesses and functions like underwriting, sales, voice calling or the customer service and operation. This will significantly enhance our customer experience, reduce turnaround time and improve productivity. The initial results have been very encouraging. Our business CEOs will cover and take you through the select use cases in more detail in their discussion. Moving to the other strategic developments during the quarter. I'm pleased to share that we raised a growth capital of INR 4,000 crores by preferential allowance, comprising of INR 3,080 crores from our promoter and promoter group and INR 920 crores from RFCW, a member of World Bank. Out of the total proceed, 87.5% proceeds will be used for meeting the growth objective of NBFC business and the balance amount will be used for general corporate processors, including the investment in our subsidiaries and joint venture associates. We sincerely thank our promoters and IFC for their trust to confidence in our long-term growth strategy and potential. At Aditya Birla Capital, we remain excited about the long and medium-term opportunities in the Indian economy despite the [indiscernible] of uncertainties and volatility. Over the last few years, we have built a diversified and scaled financial service franchise with a leadership position across our businesses. We believe that our strategy, disciplined execution, a strengthened capital base, AI digital capabilities, we are well positioned for the next phase of our growth. We will continue to deepen our customer engagement and create a long-term value for all our stakeholders. Now I request Rakesh, to talk about the performance of NBFC business. Over to you, Rakesh.

Thanks, Vishakha, and good evening, everyone. I'm pleased to report yet another strong quarter for our NBFC business. In quarter 1 FY '27, our AUM has reached INR 167,456 crores. registering a year-on-year growth of 28% and a sequential growth of 5%. Bottom line delivery remained robust with a profit after tax for the quarter, growing 35% year-on-year and 12% sequentially, supporting strong business momentum. In FY '26, we built a strong foundation for a sustainable scale up, which has based on reengineered end-to-end customer journey, efficiency processing, improved decision-making frameworks, et cetera. These initiatives reduced the turnaround time and enhanced branch productivity and improved our sourcing quality. Building on this momentum, our disbursement for the quarter stood at INR 2,201 crores up 34% year-on-year. These disbursements were driven by retail and SME are chosen segments for growth, where we continue to experience a strong customer demand. Together, these segments accounted for 72% of the total disbursement, up from 16% last quarter and grew 39% year-on-year, reinforcing our strategic focus on granular and diversified group. In our Personal and Consumer business, our growth trajectory remains robust and disbursements growing up 41% year-on-year to INR 5,577 crores in quarter 1. This growth was supported by scale up of new programs introduced last year, improved turnaround times driven by journey significant and process automation. With continuous improvement in our rule engines and AI-led process efficiency, we have enhanced customer experience while maintaining a risk segmented approach to growth. The AUM in this segment grew 9% sequentially and 41% year-on-year to INR 23,267 crores. The mix in the total AUM improved by 136 basis points to 14% year-on-year in quarter 1. This portfolio continues to benefit from ongoing cohort level calibrations undertaken over the past 2 years, supported by use of multilingual GenAI [indiscernible] and behavioral analytics, we have been able to achieve higher front-end efficiency, leading to significant improvement in [indiscernible]. As a result, the gross Stage 2 and Stage 3 for the Personal and Consumer loans portfolio reduced by 230 basis points year-on-year and 20 basis points sequentially. Gross Stage 3 for the segment stands at 1.3% as of June '26. In quarter 1, we disbursed INR 9,730 crores to MSMEs, delivering 37% year-on-year growth supported by deeper geographic penetration of broader product portfolio and faster customer on [indiscernible]. Our turnaround times have improved through the use of AI partners for credit assessment and AI-enabled decision support capability, driving greater operating efficiency. Consequently, our MSME book grew by 31% year-on-year to INR 95,099 crores, representing 57% of the overall AUM with a prudent mix of 80% of these MSME loans are secured and 20% is unsecured. We continue to be a category leader in the MSME segment in terms of growth and asset quality. Our secured MSME AUM grew at 27% year-on-year, which is faster than the industry growth. The asset quality for this segment continues to be healthy investment class on back of strong cash flows of customers and [indiscernible], which we have in this segment. The GS3 for this portfolio stands at 1.1%, down 50 basis points year-on-year. In our unsecured business book segment, we saw the disbursement grow at a healthy 27% year-on-year to INR 1,388 crores in quarter 1, including the first tranche line of credit disbursements, the quarter 1 disbursement in this segment stands at INR 2,445 crores. The momentum in this segment is sustainable on the back of disciplined risk and sourcing calibration we have been executing over last few quarters. Growth from scale-up of new products launches have been encouraging and now contributes nearly to 25% of quarter volume boost. Our proprietary MSME platform with [indiscernible] further complement this by providing an end-to-end digital suite of trade solutions, establishing a strong position among NBFCs on trends. Growth in this segment is well supported by strong improvement in asset quality with GS2 and GM3 down 30 basis points seventially. Gross Stage 3 for our unsecured business loan, [indiscernible] stands at 1.1%, 40% of this Stage 3 1.1% is covered under government guarantee including which the gross ageist. Our Corporate segment grew at 4% quarter-on-quarter and 16% year-on-year. This segment now contributes 29% of our overall portfolio in line with our strategy to focus on retail and SME businesses. Asset quality in our wholesale business also continues to improve, where again, GS2 plus GS3 reduced by 40 basis points year-on-year. Coming to portfolio quality at an entity level, our GS2 plus GS3 stands at 2.4%, improving by 127 basis points over the last year. I further wish to highlight that about 72% of our book is secured. Our overall Stage 3 book is well provided with a provision cover of 48.2%, which has improved by 40 basis points over the last quarter. Backed by a strong asset quality, our credit cost for the quarter reduced by 27 basis points year-on-year to 1.03%. This is clearly an outcome of continued cohort correction carried out in retail and unsecured portfolio since last 1.5 years. Moving to profitability. The ROA for the quarter increased by 14 basis points year-on-year and 8 basis points sequentially to 2.39%. We delivered profit after tax of INR 927 crores, renewing a growth of 12% quarter-on-quarter and 35% year-on-year. Our net interest income for the quarter has increased 28% year-on-year and 9% sequentially to INR 2,377 crores. The net interest margin, including fee was at 6.07% and OpEx to AUM ratio for the quarter was at 1.95%, down by 5 basis points sequentially. Coming to the customer service, we have made meaningful progress on service responsiveness through AI-led interventions resulting faster and more effective customer engagement. In quarter 1, 63% of contact center interaction and 71% of service emails were processed through STP, which is a straight pass-through. Our conversation analytics module has reached 100% automation, providing us with an actionable insights to improve customer interaction and identify new business opportunities. As we move forward, I'm pleased to announce our foray in the Gold Loan business. Gold Loan business will further strengthen our product portfolio by complementing our existing lending offerings to the flexible and collateral bank credit solution and reinforce our position and a diversified financial solution provider. We are in the final stages of operational readiness with our identified locations, branch infrastructure and our execution teams in place. We are going live in quarter 2. We plan to scale to nearly 200 to 300 branches, which will be stand-alone Gold Loan branches by March '27. We remain confident in the long-term opportunities across the retail and MSME segment, where we have demonstrated our ability to fall substantially. And then -- and these segments will continue to pivot our growth rate. as we continue to enhance our sourcing capabilities, broaden our product suite and leverage our proprietary digital platform we believe we are well created to further consolidate our position as a lender of choice. Overall, our approach to remain consistent, grow responsibly, stay close to our customers and deliver long-term value to all our stakeholders. With that, now I will hand over to Pankaj , MD and CEO of our Housing Finance business.

Thank you, Rakesh, and good evening, everyone. I'm pleased to share that Q1 FY '27 has been another strong quarter for BHFL. During the quarter, we achieved 3 important milestones. First, we crossed a significant scale milestones with AUM surpassing INR 50,000 crores and reaching INR 51,830 crores, reflecting 50% year-on-year growth. Second, the quarterly PBT reached INR 300 crores while continuing to maintain a [indiscernible] quality franchises in industry with Stage 3 at 0.41% and Stage 2 and 3 together at 0.78%. Third, we successfully completed the INR 2,150 crores primary capital infusion from [indiscernible] International, strengthening our capital base and enhancing our capacity to support the next phase of growth. Now let me briefly take you through the key highlights for Q1 FY '27. Premium, as I mentioned earlier, stands at INR 51,800 crores, registering 50% y-o-y growth, a 9% sequential growth. Disbursements stood at INR 7,515 crores as growing 39% Y-o-Y. NII increased by 52% Y-o-Y to INR 502 crores. Profit before tax, as I mentioned, grew by 95% Y-o-Y to INR 300 crores. ROA at 2.2%, with ROE was 11.29% for the quarter. The EBG custom contributed 16.2% of our retail disbursements during the quarter. [indiscernible] will provide an update on our specific priorities. First, distribution. Distribution, as we have earlier mentioned, continues to be one of the most important growth levers for EDF now. As part of our branch expansion program, we have launched 50 new branches in this financial year so far across Metro, [indiscernible]. What is particularly encouraging is that these branches are delivering productivity levels comparable to mature branch costs much earlier than expected. The objective of this program goes far beyond increasing the 0%. It is about deeping penetration, high potential micro markets, expanding sourcing capacity surging customer access and creating a distribution foundation required for the next phase of our growth. Our channel ecosystem will also continue to strengthen meaningfully. During the quarter, our partner franchise expanded further with the overall base crossing 40,000 partners, supported by digital onboarding and engagement initiatives. Second, data and analytics. Technology, data and AI continue to be core pillars of our strategy and are increasingly becoming embedded across every stage of the customer life cycle. During the quarter, we continued to make strong progress across our AI road map, with 13 AI use cases now going live. These initiatives are focused on driving productivity, improving our experience, accelerating digital making and studies [indiscernible]. Let me highlight a few examples. [indiscernible], has gone live and enabled generated insight enriched credit assessment amoral camp to support faster underwriting decisions regions. Second, we operationalized our can discriminate check capability, enabling greater process standardization and reducing time lines across workflows. Also in parallel, we launched Part our next-generation partner platform, which will enable a more seamless digital experience for channel partners through internal of journeys, [indiscernible] and enhanced engagement capabilities. Collectively, these initiatives are helping us create a scalable operating model that combines human expertise with and [indiscernible] both growth and operating efficiency. On asset quality, the Stage 2 entry assets, like I mentioned earlier, together, are at 0.1%, while Stage 3 further reduced to 0.41%, [indiscernible] quality continued to remain best in class. It is the outcome of our disciplined framework supported by extensive investments in analytics, in regional collection infrastructure and early warning mechanism. Our collections ecosystem continues to evolve through the use of multiple analytical models, delinquency interventions, digital collection capabilities and enable engagement tools. To conclude, Q1 FY '27 has been a quarter of both strong performance and strategic progress with a certain capital base and expanding distribution footprint, differentiated digital capabilities and unlevering focus on portfolio quality, we believe EHFL is well positioned for its next phase of growth. Over the next 8 to 10 quarters, as we mentioned earlier, we remain focused on building a INR 1 lakh crore plus franchise by delivering 15% ROE and sustained top-decile asset quality. Thank you for your attention. With that, I will now hand over the call to Bala, MD and CEO of our Asset Management company.

Thank you, Pankaj. With respect the average AUM and the EBITDA, including [indiscernible], this quarter, now time at [indiscernible], reflecting a [indiscernible] growth. is, in fact, includes the mandate received from [indiscernible]. Now of course, have to say that PPA mandate, approximately [ INR 6.8 crores ] have been received in our accounts with this demark -- our closing and [indiscernible] management as our [indiscernible] reflect the trust and confident our plans and partners as an insert [indiscernible]. Our major industry quarterly average at INR 4.8 crores represents 6% year-on-year increase. Our equity mutiple quarterly average AUM stood at approximately INR 1.9 lakh crores, growing at 10% year-on-year. Equity for the quarter to 46.5%. We at contribution by the June 2026, INR 1,080 crores, INR 40 lakh [indiscernible]. We coinvest full year so INR 1.11 crores. The [indiscernible] for the quarter up from about [ 5.5 lakhs ]. Our investment performance continues to demonstrate from consistency and meaningful improvement across both our equity and hybrid portfolio. For the past year, we remain focused on strengthening our investment capability, enhancing our investment team and refining our portfolio condition and investment framework plan. These efforts have translated a significant improvement in fund performance. This also further strengthened the industrial [indiscernible] across our flagship [indiscernible]. Turning to our alternate business, we witnessed good growth during the year. Whether our PMS and AIF assets, which increased from [indiscernible], including EPFO loans about accent average assets and management. And in real estate business, [indiscernible] ensued approximately with our growth. reputing healthy 25% year-on-year growth. And [indiscernible] in some of our fund products that we were launched in the current quarter. With the recent grant of our retail license city, enabling NRIs and global investors [indiscernible] both in loan investments in India and [indiscernible] market. Building on this momentum, fundraising is currently a rebate for the ABS LLC [indiscernible]. We're also on track to launch a more agile product coming quarters. [indiscernible] minis update on PACs, which remains on our key strategic focus area. We have strengthened the team recently, is a significant opportunity in this segment and remain committed to building the leadership question with the new team coming on board in [indiscernible]. average AM showed at approximately [indiscernible] 14% year-on-year growth. Our industrial base also continue to expand with the total floating [indiscernible]. With the patio ACF prices delivered particularly strong momentum [indiscernible]. significant of the industry was about 29%. The FX of [indiscernible] segment with unique category, we launched our best product, the FX SAM non-stand backed on our sensor investment team that has specialized in a long chain derivatives based strategy. [indiscernible]We are now preparing the large [indiscernible] such as equity launched our plan and equity to fund. [indiscernible] other revenue. Our revenue for the Q1 was about [indiscernible] to [indiscernible] year. Q1 FY '27 profit before tax in [indiscernible] have come return to gross and a profit after tax of INR 309 crores as compared last year about [indiscernible]. With this, I hand it over to Kamlesh Rao, [indiscernible] Insurance.

Thank you, Vala. The overall Life Insurance industry registered a growth rate of 16% in Q1 of '27. Financial the private lakeshore industry growing at 15%. In the CMD, total locked the premium growth rate of 20% in the Individual Life Insurance segment. This growth across both lines of business, the proprietary business growing at 7% and the partnership business growing at 25%. In the proprietarin business, the growth was back to better productivity as well as growth in the retail part of our business. We now have a distribution network of 450-plus branches across the country, and we will add 10% more to the balance part of this year. The partnership growth of 25% keep across all our existing [indiscernible] banks. The bank insurance space, we have a healthy mix of private as well as public sector banks and have banks that have both the large national presence as well as one which dominates the regional space. One share in the large banks have grown in this quarter. I mean a large part of the regional private sector as well as the public sector bank, we continue to have a dominant mind share of the total business. The partnership business and a balanced product mix with margins going up through the year for all banks. We will continue to expand our presence further at Axis Bank as well as pursue adding more banks to our distribution network going forward. In the product mix of the individual business, traditional business, including protection increased to 71% and unit came down 29%, helping expand margins for the year. We have seen a healthy growth in the annuity segment with 16% of our ATL new business coming from this segment alone. In the Group Life Insurance segment, the overall industry grew by 18%, the private industry by 46%. And in the same period, EPFL recorded a growth rate of 74%. We continue to be ranked 2 in unpremium in the industry with the AUM size of INR 7,000-plus crores. Light business delivered a growth rate of 51% during the first quarter, supported by all partners and now with 33% of our business coming from the captive churn of our own NBFC as well as the housing finance. The group term Life Insurance business, we continue doing business at 20% plus ROE, grow AUM collectively now contributes to 26% of the overall AUM at INR 30,000 crores. Our total premium for the first quarter at INR 4,743 crores was up by 13%, with 13-month persistency at 83%. Premium grew by 19%, of which the digital collection loan now account for 83% of our renewal premium. We continue to work [indiscernible], which is reflected in our upsell ratio of 40%. On the quality parameters, our overall customer interest now stands at [ 67 as ] compared to [ 62 ] same time last year, and the OpEx to premium ratio in the first quarter is at 24.8%. Total AUM, at ABC is now at INR 117,483 crores with a Y-o-Y growth of 13%, 24% of this AUM is an equity and balance in debt. On [indiscernible] basis, more than 86% of our funds continue to outperform compared to the respective benchmarks. Our digital adoption across previous areas is demonstrated in the Investor Day [indiscernible] 100% of business customers are onboarded difficulty. 83% of all our services are now visible digitally. 67% of these services are Stage 2 processes. Overtime self-service ratio now stands at 97%. [indiscernible] Insurance, we are bringing our issue together under a focused program called [indiscernible] designed to improve how we operate across policy issues, underwriting and servicing. Through Sarasota, we are reducing manual work, enabling faster underwriting decisions and making policy and servicing more responsive, especially through AI handling of conversation through e-mails, calls and Whatapps. We are also equipping our advisers with better insights in those to improve productivity and customer engagement. The focus is clear, to use AI to enhance human judgment, not just replace it and drive greater speed consistency and quality in everything that we do. Our solvency stands at 201%. Our net margins, which a scope for Q1 is at 15.1%, 756 basis points higher than last year same time of 7.5%. We observed mad expansion due to a control unit mix, increase in protection and annuity mix apart from healthy rider attachments as also mentioned by better productivity across all our channels at about half the growth rate that we got for the first quarter of this year. Our guidance continues to grow individual [indiscernible] at a CAGR of 20% plus for the next 3 years. And whilst achieving this growth, we expanding VNB margins above 20% and an absolute number, double the value of our net VNB in 3 years' time. With this, I now hand over to Mayank, CEO of [indiscernible] Company.

Thanks Kamlesh. Let me now share an overview of the performance of our [indiscernible] been guessing quarter potential up charge sector and the industry continues to build on the growth in that we experienced in the previous financial year. [indiscernible]we had a very strong start in the first quarter, given a gross premium on sales basis of INR 2,196 crores, delivering a strong growth of more than 50% Y-o-Y. Our market share this amongst is, have increased to 15.2% from 14.2%, an increase of 20 basis points for the year. Can be 1 to build on the momentum that we have achieved in the past to continue as the fastest-growing size player in this year as well. We grew strongly across both retail and group businesses. The retail franchise experienced a large 47% growth, and it continues to be diversified across retail distribution channels. [indiscernible] channel with an agent base of close to 2 lakh agents and store a 56% growth Y-o-Y. And in addition, all our major bank and digital partners will also experience impetigo. During the quarter, we launched a first of its kind [indiscernible] active a product for the large and underpenetrated young India, that combines comprehensive has the [indiscernible] coverage between the net engagement, readiness to help conscious behaviors who are announced incentivized by test program and returns. Built on the each moving philosophy, the product strengthens our differentiated product portfolio and deepen our ability to engage in large and important underpenetrated customer segment. Open our Corporate business delivered a strong 55% growth in the first quarter, driven by our focus and disciplined strategy to create a sustainable franchise into the segment. We've now taken our differentiated inferred model of competition also, and we have started being to scale up in this model. Company has with the forefront of ship to IFRS financial statements for financial quarter ended [indiscernible] is sustained in according to the IFRS principle. The profit for first quarter stands at INR 18 crores versus noon for the same period prior year. On a comparative basis, combined ratio for Q1 as per IFRS as 106% versus 107% same sales for the combined insurance service coverage ratio at 4% was understated last year. our overall sale ratio being better than last year. We continue to endeavor to achieve 100% cost on an IFRS basis in this financial year. We strongly believe our robust growth and superior uneconomics, are driven by our digital labor and hence first more. has now scaled up significantly for the last 10 years that we have been [indiscernible]. Our enforce model is emulating with the consumer with more than 50% of our reliable retail computers in leading with us. For the head [indiscernible] AI driven in at now [indiscernible] consumers on [indiscernible] centers, up from 9% last year, electing a very deep occasional [indiscernible]. And as in the past, the consumers continue to exhibit our loss ratios of about 6% to 7% and 10% better persistency, [indiscernible]. Similar investments in managing consumers with [indiscernible] 320,000 lives have led to an improvement in the loss ratio by more than 13%. The initiative overall help us keep our retail loss ratios and the control. We believe that this business model is where industry should move, but we are positioned very well to compete our advantage to stay ahead of the market. [indiscernible] on providing industry-leading experience continued investments in state-of-the-art AI and investment at mutation engine continues to enhance consumer manufaction and enable sufficient claims management by reducing it. We now process nearly 74% of our cashless claim [indiscernible] and more than 35% of forecast or [indiscernible] through. early, we are investing in data and IT capabilities to create initiatives across business life cycle from sales to underwriting claims engagement for the reduced expense and claims. Our app has now got an MAU of more than 6.7 lakh consumers, but more importantly, each of them banks making it place to go for the head to me. As we look ahead, we will continue to elevate more in our proprietary distribution franchise, data differential helpers model and even more AI and emerging tech in our business. and we believe people will take us well positioned codinthe market and deliver sustainable value. Thank you. And now I hand back to Vishaka, for her closing remarks.

Thank you, Mayank, and [indiscernible] or amounts on Q1 of FY '27 performance. And we'll be very happy to take if there are any questions.

[Operator Instructions] Our first question comes from the line of Raghav Garg with Ambit Capital.

I have a few questions. First one is more of a clarification. So based on my calculation, there seems to be some drop in loan spread, -- and the way that I'm looking at loan spreads is yield minus cost of borrowing, but it's not the new calculation. This is even after adjusting for some bit of, say, higher balance sheet liquidity. Can you confirm if this actually the trend or not because calculations on quarter averages can we revert the actual times. That's my first question.

I don't know the -- I got your question. But if you look at our yields have been stable quarter-on-quarter. Margins -- fee income was slightly [indiscernible] and cost of funds go better -- so that's how the Margin is [indiscernible]

Sir, your voice is breaking, but I think what you said is that the margins are stable or already done.

I said still. If you look at quarter-on-quarter, the yields were stable, there were lower fee income by 6 basis points. And cost of funds benefit of 5 basis points. So if you look at the margins were stable at 6.07 basis points.

Understood. The second question is in the HFC business despite the branch expansion, the OpEx ratio looks stable at around 2% to [indiscernible] Is it that the expansion was back ended during the quarter and for expenses will likely come through in the P&L in the second quarter?

Yes. So this is Pankaj here. I think the branch opening has been right through the quarter. It kind of personal lance inaugurated on tenth of increased [indiscernible] throughout the quarter. OpEx, you're right that the OpEx is at 2.21%. So it's almost a 10 basis point reduction from where we were. In my assessment, as you ramp up the number of people because we have the [indiscernible] year by any [indiscernible] 100 branches further. As the Mantakind of goes up, the OpEx will be informed. And for the year, it will be closing to about [indiscernible]. So we may range up. When we're doing this, Raghav, spoke about all the initiatives are we add and also on our digital platforms. That is fully in the productivity. Adding on the productivity also is happening, the increase is happening with the new colleagues that are joining us for the branches and also for the older colleague. So that is really helping us. And of course, the digital platform also needs senior, which also has an impact on partners being a higher business because it is more gettable, more seamless. And that is also in a that is in a sense to answer their questions.

My last question, the fee income for the NBFC business back up 50% Y-o-Y. And even when I look at fee income as a percentage of disbursements, that ratio has also gone up. So I just wanted some color as to what is happening here.

Raghav, it is primarily the processing fees and insurance attachment that is -- and we will continue to gear. So we will continue to be in the same range and keep improving, in fact, in terms of attrition portfolio.

Business on quarter yields are still and the cost of funds is down [indiscernible], correct?

Yes.

The next question comes from the line of Chintan Shah with ICIC Securities.

So yes, just again happening on the yields front business. So I think we were of the U.K. once the personal consumer mix increases, the yields could see some inch-up and the margin could also benefit. But like now the personal consumer share has increased from 12.5% to 14% over the last 1 -- And the growth also has been 41%, where in the yields in the same year, we have the client kind of up 13 bps. So how should we into that? Is it does fee income and excluding the fee income have been stable? Some color on that would be helpful. Also, if you could just help us understand what will be the portfolio yield on person consumer portfolio and the portfolio is [indiscernible] consumer portfolio. So that will help you understand the [indiscernible] for the incremental.

So Chetan, if you look at the last quarter also, our [indiscernible] consumer was 13%, and this quarter, it's 14%, close to 14% and unsecured business was at 11% last quarter and this quarter at 11%. So almost 24%, 25% of our overall loan book is unsecured business. It will take some time, a few more quarters in terms of it's once it changes -- composition changes from 24% to let say 27%, 28% closer to 30%. So it will take a few more quarters in terms of the yield expansion. If you look at the last 3, 4 quarters, I think we have -- and the way we look at our unsecured business together for unsecured business and personal and consumer. That was 23% in quarter 2, which gone to 25%. So I think that yield will keep -- will grow in the next, I think, it will be 2 quarters. But overall, we'll look at it as we look at risk-adjusted return. And look at the risk-adjusted return across at the entity level, that the credit cost has come down by almost 20%, 70 basis points year-on-year. and that's flowing into our ROE as well. And to a question in terms of what is our yield on personnel consumer, it's around 16.2% is on that portfolio.

Okay. Sir, So probably you look at, as you mentioned, our credit adjusted yield. But on the risk front, we won't be like just to increase the yield, we won't be taking any additional risk of losing that underwriting filters, right?

Yes. We don't -- we are very focused in terms of, as Vishaka had mentioned in our opening remarks also, I think return of capital is very, very important for us. So we will not take anything which is undue risk, and we have been calibrating over the last or most 18 to 24 months. And anything which is high-risk segment, we have been completely leaning person and consumer in our unsecured business, we have been removing it from our road that's how we look at risk-adjusted return.

Sure. And on the ASP, just one thing for -- so now the -- given that we have the capital base because of that, there is a bit on the ROE. So how much quarters do we expect the ROE to again scale back to the 15% mark?

Yes. So Chintan, you rightly identified the ROE, the ROE is 2.92%. As I mentioned earlier, also in our commentary, we are looking at we close to INR 1 lakh crores in the next 6 to 8 quarters. And that is the time that the ROE also will come closer to the 15% mark. So the growth that you have to track us for [indiscernible] Maybe the obligated last [indiscernible], it came down 2.4%, OpEx to loan .This year, we already in 2.21%. So the others will be informed, but I think what will include during the year is on close to earning in in the next 2 or 3 quarters that you will see. So the ROE will be close to 13% as we exit the year, will be Q4 of this year. And then it will into the 15% mark between 6 to 8 quarters.

And also this MC being a capital guzzler. So do we anticipate any -- so for that target of [ INR 1 trillion ] current capital would be enough, right? Or would you do we understand what is before reaching that target?

I think we're reaching INR 1 lakh crores will be enough in the way the calculations have been done.

The next question comes from the line of Avinash Singh with Emkay Financial Services.

A couple of questions. The first one is ending on the quarter and commune side. Currently, this is largely, I mean, our [indiscernible] loans. In terms of venturing into new product area that could help probably increase your share of retail [indiscernible] margin, is there something that you are kind of thinking to venture into, say, overcoming 6 to 12 months? Or I mean you are happy with the kind of a product offering you have? So that's one. And second, that insurance [indiscernible] cross-selled fee income is now assuming a kind of a [indiscernible] whatever kind of have been talked around [indiscernible] and watering media on [indiscernible]. Do you see some kind of a risk coming on to you fee from on that if then award to curtail kind of payouts in case of [indiscernible]?