Concall — clean across the call.

Tier-1. Why has it declined so sharply? Even if I add back the profits it would be about 70-80 bps. The drop at about 3% QOQ is very sharp. When you are giving this medium-term outlook on cost to income what is the time frame? And if you can share the BT-in and BT-out in home loans for the quarter.

First part of the question, Tier-1 decline. That is in November there had been a consolidation of applicable guidelines by Reserve Bank of India when they came out with a consolidated circular. There has been a minor change which we are seeing in that guidelines as they consolidated the guidelines because there was an illustration given for under construction home loans and the developer loans. In the erstwhile guidelines which allows the provisioning for undisbursed tranches of home loans or undisbursed tranches of construction finance for provision of capital only up to the next stage of disbursal. Now while of a consolidation of the guidelines this example has been removed. Now on a conservative basis then we have provided capital for the entire chunk of undisbursed loans in both home loans as well as the construction finance loans rather than only up to the next tranche available till we have a much more clarity. So our BT-in for the last quarter was 16.5% of our total home loan acquisition. BT out on the portfolio is 16.9%. BT-out Gaurav is informing me it is close to 20%.

Compared to industry level BT would you have that number also? Quick data point, Sambhav loan, what is the AUM? Both near prime and affordable put together.

At a normal basis in BT-in industry used to be 15% of the total home loan disbursal. So we are in line with that but however my own personal assessment is that has gone up in the last 2 quarters specifically because that is an impression or what you can say assessment we have. Basis that data whatever the published data previously will have on the composition of the home loan industry it used to be 15% used to be BT. But my own suspicion is last 2-3 quarters it is much more elevated because of a rate cut pressure from public sector banks. AUM is close to now 5,000 plus odd crores.

Just want to understand what is our prepayment rate which would include the BT-out plus there would be foreclosures, there would be people who want top ups and there would be people who would be fighting for rates. So if we can split this into these four broad categories. The second is how many people do we bank on a monthly basis as in the NACH hitting their bank accounts on a monthly basis. The third question is around liabilities. Today what of our borrowings are on floating and what do we think about the cost of funds going forward in the next year.

On the prepayment rate, total cumulatively what I called out in the last question is 20%. Now this is a mix of a part payment being done by the customer, the natural attrition what happens and also the BT-out while largely you can take 60%-70% of it as a BT and balance be the natural attrition what the customer does or for 20% kind. So 14%-15% you can take as a BT and 4%-5% would be the natural attrition plus the part payment. On the fixed and the floating mix if you look at AUM we are at 60% floating and AR floating will be 52% because when we look at the liabilities we look at AUM because there is a balance sheet which is assigned out, so floating is 60% at AUM and around 52% on AR basis.

On this BT-out, so if there are 100 applications which say that, okay I want to transform my files, how many are we able to retain back? And this versus the industry in the same ticket segment would be how much? And what do we think of cost of funds in 2027?

Roughly 40% of the applications eventually move out in 90 days period. There is no industry data which gets published on this basis on the ticket size and on attrition basis where retention or attrition basis, so I will not be able to comment on whether it is high or low, but given that we are in the prime segment, I suspect our attrition rates would be higher than the industry. 25-30 bps of a downward revision we are looking at for a full year level is an assessment as of today but given the current whatever has happened in last 30-35 days in the market specifically in the money market side where the money market prices have gone up but we assume that till March from April things should get back to normal.

If you could just comment a little bit on the competitive intensity, now why I ask this is, this quarter at least based on the commentaries that we have heard until now everyone is talking about a significantly elevated competitive intensity and primarily coming from banks, within banks, PSUs. Now I understand we have been talking about this competitive intensity for the last couple of quarters but just trying to understand, I mean has it got much more pronounced in the last maybe 2-3 months and within that I mean is the competition only pronounced in the prime and super prime segments or are you also starting to see this competitive intensity go up in the near prime and affordable segments?

So Abhijit first on the competitive intensity we have called out during last quarter as well. We feel the competitive intensity is a feature not a novelty in the market. That is what I stated in Q1 and Q2 as well. So there will be the pressure on the prime side and the super prime because that is a major part of our business will always be high is what we work with a base case assumption. It remains as pronounced as it was and we believe it is likely to remain like that. So our plans factor in a high level of a competitive intensity continuing because there will be at a point of time there will be some banks who will be very aggressive at a point of time there will be other banks who will be very aggressive. On the near prime or affordable side it is not the pricing intensity but the number of players presence and the number of players wanting to make more space there which is increasing but the pricing intensity is not seen as a competitive manifestation there.

On the PLR changes that you have done. So if you could just help us understand that last quarter in the month of January what PLR changes have we done and how are we thinking about any further PLR changes over the next two months of this quarter? And lastly, this quarter we have done slightly higher assignments. So how are we thinking about it? Is there an annual assignment volume that we work with or is it like more opportunistic based on you using it as a liability tool?

So there are various parts of our books. One is a book which is an external benchmark link where it is passed on in line with the benchmark which is close to 10%-12% of our book is linked to repo rate. There the book is passed on the repo rate benefits are passed on as per the external benchmark. On the non-repo rate linked book which is our salaried book in the prime side what we have passed on till now from a rate cut cycle from March is 60 bps. So January I am not clear. February onwards ever since the rate cut cycle in line with each rate cut like this last rate cut which had happened we had passed on in December. So January there is no further rate cut. So 60 bps of a pass through has happened. And we don't see as of now any further pass through in next 60 days whether downward or upward basis the market conditions as of now.

Just one follow up based on this the first question the Tier-1 that you explained right why the decline. So I was just trying to understand if my understanding is right. Now what we have done is on the sanctioned amounts as well we have taken a capital charge and till better clarity comes. But the problem here is until now right as an industry we never used to provide on the sanctioned amounts right. While you said that over a course of time those sanctions will convert into disbursements. But until the time clarity emerges people will shy away from giving higher sanctions right.

So this is not linked to that, Abhijit. This is not sanctioned amount. With sanctioned amount in any case you have to factor in some as a part of a credit conversion factor in your disbursal and that's only for a temporary period of 30-60 days which in any case keeps on going on a rotating basis. This is on an under construction home loan or under construction project finance you have disbursed one tranche because you have to disburse first tranche but that the money keeps on going over a period of 24-36 months in tranches which are linked to the construction. So you have to sanction the full amount, you have to disburse the first tranche because that's how you will disburse the final money. So there is no escape from not sanctioning because you are disbursing then you are providing full.

So can you please share how your NIMs will trend going forward and what will be the impact on margins assuming that long term yields will remain elevated?

So for the current year we have already guided for NIMs movements and NTI movements etc. So for the year while we had said that we will be able to maintain the NII's in line with last year, NTI at an overall level we are looking at around 15 basis points to 20 basis points of drop there for the entire year. So that's what we had guided at the start of the year.

Do you have any say targets with regards to how big the near prime and affordable segment could be, say, maybe 3 years down the line? And secondly, even this 325-350 crores of monthly origination that we are doing in this business, can you let us know what percentage of this is say a fresh origination versus say a BT-in and who would be the typical competitors for us in the market?

So Viral, the target for near prime and affordable can be as large as it is there. Because we are like we said that last year when we started this we said that as we go forward, as we get more confident on the credit performance of the portfolio, we will continue to expand our offerings here as well as our appetite here. So today what we are looking at is in next 1 or 2 years to take the business multiple from where it is there. 12 months where you have already said that next 12 months to 15 months we will be looking to nearly double the kind of a disbursement run rate. There on it is a business which is evolving. Space is large, reasonably large. We will continue to evolve. Next three years we will see ourselves having a significant amount of investments continuing in this business which is near prime and affordable for us to keep on growing. On what you ask for a BT mix in this, in this the BT is close to 27% odd to 30% odd in the acquisition what is there. Rest is the purchase or resale or a plot plus construction P plus C which is an affordable.

You mentioned that you'll be scaling up the affordable home loans where ticket sizes 15 lakhs to 35 lakhs. I think you're also saying that you're targeting some 600 crores of disbursements over the next 12 months to 18 months. My first question is what percentage of the 600 crore target will come from the 15 to 35 lakh segment?

As of today from what we do it in near prime, if my numbers are correct, I think 35%-40% comes at an aggregate level between 15 lakhs to 35 lakhs. But I'll have to come back to you for the exact numbers because my assessment is close to 125-130 odd crores comes in that segment and balance comes from the higher than 35 which is a near time segment. 35% of 350-odd crore monthly number comes from affordable segment. Balance comes from the near prime segment.

Your sourcing strategy, so I think you partly answered that, that 27%-30% comes from BT-in which is where you're acquiring from the other affordable HFCs. Is your own sourcing team?

Even for balance transfer you have to have your own sourcing team because customer will not walk in. But it's a mix of a strategy between balance transfer and the market facing. We have four types of sourcing teams what we are deploying or what we have deployed at a subscale. But finally there is an internal data team, data and digital processing team where the larger business composition is towards the balance transfer. There is a market intermediary focus team. There is a builder counter sourcing team because there is a fresh purchase also of a sub 40 lakhs-sub 45 lakh ticket sizes which is getting done. Then we have also deployed a dedicated LAP team for this segment as well.

This 35% which is affordable, will this increase or should we assume that this will remain as it is at 35%-40% of the 600 crore disbursement that you are targeting? Based on your assessment so far for the affordable housing finance segment what percentage of your targeted locations overlap with areas where affordable HFCs are already operating?

In the short run the percentage should remain the same. But as we go further forward from here the percentage should increase. I will say short run means next 6-12 months you should assume the percentage remaining the similar what we are talking about. But as we go forward from there the percentage would increase towards the affordable. Markets will be common only, Raghav. There is no differential in the market. The catchment areas of affordable housing will remain same for whether for any other HFC or for us. As of now for us next 2-3 years, we will remain largely wherever most of the companies are there.

As housing finance market remains competitive, how does the management think about balancing growth opportunities with underwriting disciplines across core products like home loans and LAP? What changes in borrower behavior or portfolio performance would prompt you to become more selective or adjust the growth priority?

We run an active management strategy, active risk management strategy. The products what we do are, now all products have their different roles. Within home loan as well, the prime has a different role and a near prime or a non-prime has a different role. Then affordable has a different role. It is matched by the opportunity, risk emanating from it, costs associated with it and the return. Now at a point of a time, as the management what we look at is, we are a low risk at a broad level. Our strategy construct is we are a low risk company, which is what is reflected in our risk performance over the years as well in the portfolio. So our anchor product remains always a low risk, which is a prime housing as well as a lease-rental discounting.

Beyond the reported asset quality and capital metrics, what are the key indicators you track internally, such as customer repayment patterns, portfolio assessment or funding behavior that help you assess credit risk and balance sheet health ahead of what shows up on the numbers?

So predominantly we look at a few metrics internally like bounce rate, how are they moving, stage-wise asset movement, how is it happening, etc. If you look at the stage 2, which is the early indicator, the first indicator would be the bounce rate, second indicator would be stage 2, and then getting into the stage 3 side. So stage 2, if you look at, has pretty much remained in that 35 bps to 40 bps corridor. That gives us that comfort that overall across the couple of years, recency-wise also, we are pretty much okay on the asset quality side. Repayment rates, we have discussed already, Sucrit so, repayment rates over the last 1.5 years have remained high. This year specifically have remained elevated, not just for us at an industry level.

The disbursement growth of 32%, will it translate similarly on the AUM side?

Both are different denominators, Omkar, because the balance sheet denominator is different and the disbursement denominator is different. Then there is a factor of attrition also which comes. So, it would not be the same, it would be different, whether the disbursement base is different and growth in AUM growth. That's why 32% disbursement growth; you are seeing 23% AUM growth. And going forward also, there may or may not be a correlation on both the numbers.

Because it's relatively new, so, I think you barely would have any specific data with respect to any credit cost in this particular book or asset quality movements. But overall, what you are seeing, say, 1-2 years down the line, because I think generally in this kind of a book, first delinquency is just coming after, 24 months or down that line. How do you see in that perspective? And how is the count of growth?

So, Omkar, first question, what you asked on the delinquency metric. Yes, while the delinquency comes later, but the early indicators, which start becoming visible, which is a bounce rate metric, because we are the first round, what we would have booked will be 18 month or 18 MOB. So, we are seeing, we are reasonably confident on seeing the performance. That's what we had called out last year that we first see the early performance because we were new in this business. And basis that that we will take a decision to scale. Now, when we are giving an update in the current quarter, when we have taken a decision to scale it much more rapidly. We feel that that is an indicator thing that our early impact, early reading of all the early metrics is giving us a comfort to rapidly expand this portfolio.

What are the sanction ratios or the disbursement ratios in the Sambhav housing SBU? So like if 100 cases come to you, how much would go to sanction and how much would go to disbursement? Affordable yield is 11 to 13. Is this on the lower end or do you think that you can push this higher?

But at a broad level, 55% to 60% would get sanctioned and out of that 70%-75% would get disbursed. But it will vary between various segments. So, Omkar, the affordable is a very wide market. It starts from 9%-10%, goes up to 16%-17%. So when you see a blended rate of other district players, if you see a 13% rate, it will be a mix of a business starting from 10%, going up to 16%-17%. Now there are various segmentation within the affordable. Since we are new in affordable, we have started the business not very long back. We are right now towards the upper end of the affordable segment, which is a segment, in the segment we operate in, this is the rate what is operated by most of the companies. There is no price positioning to gain market share because the size of the market versus what we are doing is relatively, we are like in affordable, there is a formal segment which is at a better price range.

When you look at it in terms of the other income, so is it primarily from the assigned loans or is there something else, maybe 90-odd crores in Q3 and almost like Rs. 133 crores for the 9 months? So is this because the off-book AUM is also going up during the quarter? In terms of the guidance, what you had suggested that there would be pressure on margins because of the lower reliance on assignment during this particular fiscal, do we see because I think there is a large chunk which is gained during this quarter, so do we expect that to continue even in the 4th Quarter and the impact on margins may not be so high?

So 90 crores for the quarter is largely driven by the income of derecognized loans versus the Q3 FY'25, which was lower. But however, for 9-months comparison, it is almost the same levels of FY'25 to FY'26. There are two parts, Kunal, why we do the assignment. One is the ALM match, which is where the assignment is there. However, we had called out in the Q1 saying that ALM match, not driven by ALM match, but we like to do a lower assignment for the year to leverage the capital position more. However, we had also called out because if there is an opportunity to grow more in the non-home loan segment to maintain our PBC criteria, we will not cap the business in the non-home loan, but then assign out. So for Q3, we had to assign out or we followed the policy strategy of assigning non-home loans more because the home loan growth, as you are seeing from an AUM, was 18% driven by much more higher attrition, but at overall part, we are growing at 23%.

When we look at NTI for first 9 months compared to last year's first 9 months, my calculation suggests that it's down by hardly like 6 odd basis points and we are still guiding for maybe NIMs expected to moderate by 15 to 20 odd basis points. So what exactly is the number?

So you are right Kunal, as of now we are trending in 4% corridor over the last 8 quarters, I mean 3.95 to 4% in that corridor. While we had guided for full year 15-20 basis points, looking at the first 2 quarters we had done lesser assignments considering how we see the attrition happening and accordingly we saw first 2 quarters at 24% growth. This quarter we did relatively higher assignment than what we had done in the initial 2 quarters. From here looking at full year, I believe 8-10 basis points of compression would still happen on the NTI level for the full year. I am talking of FY'25 versus FY'26.

On Slide #17, you have your medium term growth as 24% to 26% and your FY'26 is 21% to 23%. So what is going to change over the medium term, you think, given that the level of competitive intensity is expected to be high?

Hi, Bobby. We had called out clearly when we gave a guidance for 21%-23% for the current year versus the medium-term growth guidance. The medium term growth guidance had two factors. One, at that point of a time, the basis of disbursements we were growing and the attrition which was there and our own strategy to keep on gaining market share in home loans. The medium term guidance stand because that's what we believe we can deliver in the long run or a medium run. That is also dependent upon that what we said that 12% to 14% kind of an industry growth. Now 21 to 23, we guided lower for the current year because after the rate cut cycle started and specifically towards nearer to June, we saw a significant uptick in the attrition pressure which was led by largely balanced transfer out to banks. As the interest rate cycle gets stabilized, the attrition pressure will go down.

What percent of your loans did you disburse through a direct assignment this quarter?

Direct assignment? We assign out after acquisition. We don't do any co-lending in that sense. We don't disburse in co-lending. Yes, so that is assignment is done post acquisition which is largely of a non-home loan total of 3,470 odd quarter loans got assigned out during the quarter. For total balance sheet, this will be close to 2.5%. Total balance sheet is close to 2.5% of Rs. 1,33,000 crore, Rs. 3.500 crores would be 2.6% of the total balance sheet.

There have been a couple of promotions within Bajaj Housing. Can you please introduce the broader team of new business heads now? Second is, how does the Sambhav distribution team or the sourcing team look like? Like how many front end guys, how many credit guys, how many collection guys? If you can spell out that architecture?

Shubhranshu, there is no new change which has happened in the organization. The Company broadly operates in three verticals. One is the Prime vertical. Prime vertical is headed by Jasminder. Near Prime and Affordable is the second vertical for the Company, which is what we started as SBU 18 months back. Mr. Pawan Bhansali, leads that vertical. Third vertical of the company is commercial, which is headed by Vipin Arora, who leads the commercial vertical, which incorporates both Vipin and Dushyant Poddar, who heads our Construction Finance Business, leads as an overall commercial vertical, Lease Rental Discounting and Construction Finance. We keep on organizing and reorganizing our business. Recently, we reorganized our direct business entirely under one umbrella. So collections as of today, because you asked for the DMS also in near-prime, collections, we run a horizontal structure, which is our DMS at a Company-level structure, barring commercial, because commercial runs at the relationship level.

Just one statistic. What was the individual housing loan percentage of the total portfolio?

IHL as per definition of NHB was 50.71%, as of 31st of December.