M_MFIN

[Regulatory cover note] 21st July 2026 To, BSE Limited (Scrip Code: 532720) National Stock Exchange of India Ltd. (Symbol: Phiroze Jeejeebhoy Towers, M&MFIN) Dalal Street, Fort, Exchange Plaza, 5th Floor, Plot No. C/1, "G" Block, Mumbai - 400 001. Bandra - Kurla Complex, Bandra (East), Mumbai - 400 051. Dear Sir/ Madam, Sub: Audio recording of earnings conference call for the first quarter ended 30th June 2026 held on Tuesday, 21st July 2026 Further to our letters dated 30th June 2026 and 14th July 2026, and in compliance with Regulation 30, Schedule III, Part A, Para A (15)(b) and other applicable provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 as amended (“SEBI Listing Regulations”), we hereby inform you that the audio recording of earnings conference call for the first quarter ended 30th June 2026 held on Tuesday, 21st July 2026 (concluded at 7:52 p.m. IST), has been uploaded on the website of the Company, which can be accessed at the following link: https://media.mahindrafinance.com/2026/07/Mahindra-Finance-Q1FY27-Concall-Audio.mp3 In compliance with Regulation 46(2)(oa) of the Listing Regulations, this intimation is also being uploaded on the website of the Company at https://www.mahindrafinance.com/investor-relations/regulatory-filings. Kindly take the same on record. Thanking you, For Mahindra & Mahindra Financial Services Limited Brijbala Batwal Company Secretary FCS: 5220 [Investor-call recording transcript] Ladies and gentlemen, good day and welcome to the Mahindra Finance Q1 F527 earnings conference call hosted by 361 Capital Market Private Limited. As a reminder, all participant clients will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the call, please signal an operator by pressing star, then zero on your touch-tone phone. Also, before we begin, we'd like to inform participants that this call is for analysts only. Any participant joining from the media may disconnect the call now. I now hand the conference over to Mr. Pradeep Agarwal from 361 Capital Market. Thank you and over to you, sir. Thank you, Rayo. Good evening, everyone. Welcome to the Q1 F527 earnings call of Mahindra Finance. To discuss the results, we have with us Mr. Roy Rebello, MD and CEO and Mr. Pradeep Agarwal, Chief Financial Officer. I would now like to hand over the call to Mr. Rebello for his opening remarks, post which we will open the floor for Q&A. Over to you, sir. Thank you, Pradeep. And good evening, everyone. Thank you for joining us for our Q1 F527 earnings call. As always, I would request you to keep the result updates which we posted on the exchanges earlier in the afternoon evening handy. I will be referring to pages in the documents as I walk you through the key updates for the quarter. Let's move to page number four first. I have outlined what we think are the key reflections for quarter one. We have been for a while now talking about what in our definition is pivoting back to growth for the core business as well as the new engines for growth. And in reflection, I would say we're quite pleased to see our core businesses, our wheels business, whether it's the PV business tractor, parts of the CV segments, three-wheeler business comeback in terms of growth, which is clocked at a 20%. Our new engines for growth, which was S&E business, PL, and what's not on this page is the housing. Business has also had a reasonably good quarter, which gives us confidence on the investments that we have made in the past starting to bear fruit. On the asset quality side, I would be a little more generous on our comments here. I think we have reminded that this number is in Q1, and all of you would be aware that Q1 usually sees some element of seasonality. We have been able to handle that and overcome an extreme divergence from Q4 over Q1. And our GS3 plus GS2 plus GS3 numbers are at an ADL now at GS3 at 3.47 and GS3, which has had a direct impact on my last comment on profitability. If you look at the credit cost at 1.5 for the quarter, it has also lent itself to us, making sure that the ROA numbers are extremely formidable for the quarter at 2.4%. All in all, the standalone numbers on profitability have delivered a 70% YY growth. Quickly moving to the continuation on reflections for the quarter, page number 5. Our NIM numbers saw some stress, the fiscal end of fiscal 24 and 25, and we have been actively looking at the product composition, actively looking at pricing, as well as fee-based income and other initiatives to augment our NIM. I must also mention that we have been benefited by also leading to last year's right issue adding to the mix to see that NIM number move up to a zone which we think is anything above 7.1 should be the medium-term number that we're chasing. In terms of, I won't go back to GS2 plus GS3, but if you look at what the page illustrates versus last year, these numbers are coming at a much lower level. The collection teams have for the quarter been very diligent in making sure that early-bucket collections are rendered at a very positive clip. At the same time, we have seen even reversals play out well from a collection standpoint. All in all, the AUM growth was at a 13%. Now moving to page number 6. I'd like to spend some time on this page. In our past interactions, many of you asked us about how do we see a more resilient minor finance from a long-term, from a participation of various underlying asset categories, and we mentioned the cornerstone for that would be a more diversified asset base. Pi chart that you see of the 83%, 17% was a very different. It would be mostly plastered with the wheeled AUM. We are seeing a sequential good diversification now kick in from the lending franchise having a non-wheels composition. We see this increase over the period of time, not by reducing the growth in the wheeled business, which I wanted to illustrate as a 20% growth, but the real augmenting of growth will happen from the non-wheels business, which is now growing at a reasonable clip. We demonstrated a 79% growth across the non-wheels business. This is largely the SME business, the mortgage business, and the PL business that we do on our existing Maindra franchise. That's the highlight that the diversification is starting to play out, secular growth across vehicle categories, as well as augmented accelerated growth in the new engines of growth. On the right side of the panel, what you'll see is what we are very encouraged to see are subsidiaries. We don't actively in the call talk about our subsidiaries, but these are starting to meaningfully now grow up quarterly profit numbers. The housing finance company, you know, very strong pat growth, 30 crores posted for the quarter. Insurance-broken business, which does open architecture insurance, motor life growth, 83% YY pat growth, and relatively newer business, five and a half, six years into the offering. The AMC business also starting to now show some good signs of growth as well as profit. This right now on page number eight, just deep-diving into the underlying asset and 15 pretty secular growth across asset categories. But what I would call out here is this is starting to even widen. We have made very, very significant investment in partnerships at various dealer counters, and that's starting to bear fruit in terms of a very high share in tractor growth. You'd have seen the pattern numbers that came out earlier in the month. Rural is growing at a faster clip compared to urban in TV business that's giving us some tailwinds, and we're seeing some of that also add to the commerce of our YY growth. SME at 30% is a reasonable growth. We actually have a desire to grow at a higher clip, and the others, which is a combination of PL, implements, et cetera, and again a decent clip of 77%. Moving quickly to page number nine, here you'd be able to appreciate the seasonal volatility that I was talking about earlier. We've been able to contain that. I'm not saying that our business doesn't have seasonality. What I'm basically amplifying here is our ability to manage within seasonal variations is improving. We have a handle on variables that we think we can influence with a larger extent. So the 41 BIPs which we saw last fiscal movement between Q4 and Q1 has been reduced in GS2 to only 11. And the GS3 has also come down from 16 to 4. On an absolute basis, basically you'd see, June to June it's a 100 BIPs, close to 100 BIPs decrease in GS2, and close to a 40 BIPs decrease in GS3 numbers. With credit cost, I am with the clouds that were the Asia crisis already starting to set in at the onset of Q4 with El Nino and the commentary on a possibly compromised monsoon. We decided to be prudent and increase our traditional liquidity buffers to an extent that you see close to 5,500 crores. That does have a drag. It has the existing, I mean, a departure from the normal quantum of liquidity buffer does have a drag, but we thought that's the most prudent thing to do. The second prudent activity was in terms of the coverage. We took two overlays, one in Q3 and one in Q4, and that's why you see the PCR number at the levels they are 58.1 for the quarter-ending. Moving to page 11, this is a page which gives you a good appreciation of the, you know, the dew point of how independently things are moving. The big call-outs are here. If you see the ROA expansion, there is a cost of, I mean, there are many things moving. The significant ones are cost of funds and credit costs. Those are the two big ones over there which have rendered a stronger ROA of two points. Also, we have grown very well 75% YY at 927 crores. There are pages which we basically talk about the franchise, but I will skip most of them and come to one of the capabilities that like most formidable franchises are building in the AI muscle. I'm moving to page number 17. For us, mind the finance took a little time to even climb the maturity curve on digital. That was our first agenda to the first bridge to cross. We were speaking to most of you and I'm happy that some of you joined us in our field trips to dealership locations, to our CPCs. I know many of you asked us and happy to give you, you know, any of some of the analysts have put me and team to facilitate more such field visits to appreciate what we have done over the last two years on climbing the graph on our digital maturity, which we call as the Odan stack. I'm happy to tell, you know, to share with you that it's now 100%. Our entire wheels business is done on the digital stack, which means that productivity, you'd see we're not adding too many manpower, which is the last two, three years, our manpower count has remained a lot flattish, but we are able to squeeze in much higher clips and productivity, which is largely augmented from the Odan. 100% of our disbursements close to 15,000 crores done in Q1 was on the new stack, which is the FIN one and the LI base, whether it is account aggregator, et cetera. All that coming to bear. Now the next frontier for us was AI, but AI, we didn't want to get lost in the woods. We have a very strong definition of what AI will lift for the franchise, defined on three pillars of customer acquisition, operations, resident operations and efficient collections. On acquisition, we have a Rupa Valley target that we're chasing through digital and AI led acquisition. We are already seeing in Q1 and we talked about it in Q4, a 25% lower cost of acquisition from these channels, which are starting to bear. Operations, we are seeing high cost come down because of increased our in-house AI agent, which we have coined as summer.ai, now covering from 20% where we give the last update of our CPC operations, which are agentic in nature, that's climbed very quickly to 45 and we will see much higher coverage in the possible future. On collections, which is, again, AI augmented collections from workflow standpoint, whether it is 12 AI vernacular bots that call our customers to remind whether it is HTTP, what we have, panel charges being collected through AI bots, which once the call is done, tuck in a WhatsApp payment link, we're seeing very strong Rupa Valley benefits from the collection standpoint. More importantly, this is rendering into some of the forward flow numbers, which are coming at much lower. AI vernacular bots coverage has gone up to 20% and you see a much higher clip going forward. My last slide is on page 19. This is not a new slide. Guys, we've been, I think, for the last four quarters. This is what keeps us honest on a daily basis. Very key priorities that is cascaded to the length and breadth of the organization. We have four big themes, defend and grow views leadership, which is starting to play out as you saw in the numbers. We have mortgages, SME leasing, and fee income is a big theme. That's also starting to show in the NIMP profile. We have margin focus, which is also seeing across various asset categories. As I said, most of my business heads now speak only RWA language rather than just business growth. Risk has been swapped into by the CRO's office, by the collection heads. We're seeing all the investments that we have done in the control function play out. Overall, the North Star for us is to have a very resilient franchise, boxes in terms of very efficient tool kits, traditional underwriting tools, smart underwriting and sales, using the best in class digital data aligned with RWA now improving to a 2.4 and RWA touching close to a 15% RWA, we do think the investor moderator for Q&A. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask questions, may press star and one on your touchstone telephone. If you wish to remove yourself from the question key, you may press star and two. Participants are requested to use handsets while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. To ask questions, please press star and one. The first question is from the line of mission from Kotak. Please go ahead. Thanks for taking my question and from that for a great set of numbers. I have a few timing questions. One is on the operating leverage side. We have seen a fair amount of improvement and going by the digital commentary, I would believe that we would continue to leave some fruits. But just some color or some texture in terms of how much juice would be left and probably if there is any next leg of Kpex which could be required. Just to get a little bit of a handle of how the operating leverage or operating expenditures pay out. Thanks Nishin. See for our traditional businesses, I mean the wheeled businesses, you would already look at two metrics. One is OPEX to average assets and cost to income. Both these numbers for the wheeled business, there is a delta to squeeze out there. But as a growing franchise, we are investing in the new categories, new engines of growth for which we are not shying away from making incremental investments. So there the OPEX to average assets for let's say a mortgage business or a new SME business or for some of the new categories of PL, etc. which we are doing. Those will naturally see a higher clip. But for the traditional businesses, I am encouraged to see the number from 2.8 sequentially slip to 2.65 or you know come down to 2.67 from a YY, it's almost dropped. This is largely the main businesses can see. I want to attribute some of the investments that we made over the last two years in terms of the UDAN stack, the productivity gains that our frontline officers are seeing have played out. Whether this will, this is very, is there scope for it to dramatically change? We are in a distributed business. We still do a lot of digital activity. Our customer base is rural, semi-urban, self-employed. So we will need to keep that OPEX number at a level which doesn't, the way we look at it, we don't want to reduce OPEX that creates a credit cost number for us. At the planning stage, can we say that your OPEX growth will be whatever in line or X percent lower than loan growth or something like that? Yeah, definitely. I mean we look at the job between revenue growth and OPEX growth which will again, revenue happens with AUM. So that job has to widen for sure. Got it. Just looking at slide number 24 and I'm looking at the line for end losses. You know, we've seen a good improvement in growth stage two, three loans, but end loss ratio remains sort of, you know, range bound in the, you know, between 1.2 to 1.3. So how should one think about it? Does this number come down? Does it come down with a lag or this is a very comfortable number for us? I would stand by my earlier guidance of 1.3 to 1.7 overall credit cost. Sometimes some quarter you'll see provisions going up, but you know, since our business needs to factor both this provision as well as end offer then saying that the business model to fit our ROA expectations. And this one, last one on the CV business side, you know, when do you see the investments picking up? Or is this by design that you want to live on right now? We've got this question in the past and I've made this distinction on our participation framework shift for the CV business. We were earlier playing in all facets of HCV, construction equipment, LCV, SCV, M&H CV. We have consciously looked at from a NDFC as well as someone from, let's say, with the cost profile that we have. We are actively reducing some of the earlier HCV CE business of fleet operators considering the overall ROA attractiveness of that business. I don't need to labour the point that post COVID that fleet operator segment has migrated more to the bank supplier base because of the cost of fund attractiveness. So while we have recalibrated growth now in the SCV-LCV, but it will take time to play out on our over numbers because we were, let's say, shaving off growth on one segment while increasing net-net, you're not seeing that number go up. Do you think in the next few quarters you will see how our investments in the SCV-LCV business will currently versus the other categories CV does have a cyclicality, et cetera. So we do paper our growth. Thank you very much and all the best. Thank you very much. Before we take the next question, I request to participants to please limit your questions to two participants. Should you have follow-up questions, we request you to rejoin the queue. We take the next question from Kunal Shah from City Group. Please go ahead. Yeah, thanks for taking the questions and congratulations for good set of numbers. So firstly on the growth side, so given this entire diversification strategy, the entire tech tech, improving the productivity levels, plus maybe getting equal comfort on the side quality side. When do we see growth going up? It's reflected in terms of the disbursements, but that's again on a lower base of one queue. So would there be acceleration in the disbursements and the growth and how long would it take for us to get towards maybe the mid-teens to high-teens kind of a level on the AUM side? Yeah, hi. Kunal, thanks for taking your points that last year was a tail of two halves where each one was pretty much flat growth and each two was, you know, so naturally we are benefiting from, everyone's benefiting from a lower base of last year. I can only go back to, you know, and yesterday we basically talked about how do you think about cagger growth for the franchise between 26 and 26 to 31? Where I did mention that we are looking at the franchise compound at a 16 to 18 percent growth. Now for the 16 to 18 growth, the core business, which is the mobility business, will have to, at a lower end, compound at a 12 percent and the new businesses will have to compound at a 30 percent plus. If you look at what's happening for the last two quarters, for example, even the AUM growth for this quarter, the mobility of the wheels franchise is compounded at 11 to 12 percent and the non-wheels franchise is started compounding at a 28 to 30 percent. And that's the clip we would like to maintain going forward to get an overall growth in the corridor of 16 to 18 percent with the current mix that we have. That's exactly what we had communicated at the group in western day and we stand by that objective. We know from a categories of growth we will have to really get on the new engines of growth and we have made investments and we are confident with the investments that we have made that we will be able to hit those Kaggle growth of the non-wheels. For the wheels, we have done this for three decades. We have made investments also and thank you for joining us for our field trip. You would have seen some of the core businesses that we invested in through the WDAN stack etc. So structurally the mobility business will definitely see industry and we are aiming for industry plus growth across the three wheeler, four wheeler, tractor, CV business. Yes, that's what maybe on the mobility business why we are still stuck with the 12 percent growth after taking so many initiatives wouldn't we see a better growth profile out there maybe 10, 12 on the low double digit kind of a number still appears to be maybe I think slightly modest given the initiatives and the productivity which we are improving we saw the entire tech stack maybe it's improving the productivity quite a lot all across then why not scale up the core mobility business growth as well. So Kunal, the core mobility business we tried track from our FADA lens from incremental business in all asset categories we have gained market share whether it is the PV business whether it is the three wheeler business whether it is the tractor business CV we have not gained market share but for my appreciation on month on month diligence on growth we look at lender market share and it's easy for me to get that with the bureau data and the FADA data triangulating that so I can give everyone confidence that if you look at Q1 we have gained incremental market share in all categories except CV categories. Thank you. The next question is from Shreya Shivani from the Mora please go ahead. Thank you for the opportunity congratulations on a good quarter my first question is actually going to be on the ROA target I mean we've had a very good start to the year and I understand there are I mean there is seasonality through the quarters but 2.1 or 2.15 seems like I mean your way past that where do we see closing our year maybe 4Q 27 4Q 27 levels second is on the monsoon trends and this one sort of is a follow-up question to the earlier one that I mean we all know the the risk to the deficit of monsoon etc but any color on what are you seeing on ground any kind of changes that you have made to deal with it other than the overlay that you made. Hi Shreya am I audible because you had a line should I repeat my question? No I have the question I just want to know whether we are audible. Yeah yeah you are audible. Thank you for the question see I just refrain from giving we don't give yearly guidance in terms of ROA what we had clearly mentioned in FY 24 is we don't think the franchise is doing merit to its self by operating at a sub 2% ROA so we talked about hitting 2, climbing to 2.2 and then getting eventually to 2.5 we gave a frame for that we are happy that we are moving in that direction we are progressing in that direction but I am refrain from giving physical year end ROA numbers now moving to your second question on how sustainable are these what are the kind of proactive measures we are taking in an environment which clearly has clouds in terms of let's say phase ruptions as well as the El Nino and rainfall might be repeating this but what we have done proactively is two things for the book that we already have in the bag what we think is essential is an extreme level of monitoring and actioning so we have created an extremely high sensitive monitoring mechanism where we look at each geography what are the thresholds of stress points that if they are starting to get breached we have active monitoring of stress as well as actions in terms of collection for granted how Q1 has rendered itself since in our franchise at least in Q1 we... elevated liquidity levels that you have pulled it up to in one Q that should stay through the year and should we expect the cost of fund which is a 9 bits or so sequential increase to play out for the rest of the quarters as well I'll hand it over to Pradeep but let me tell you that we are looking at the liquidity buffer on a dynamic basis we have a very active treasury team as we read the cost of fund and the liquidity position we take all so if we see that we are entering a new domain of stability we won't shy away from letting go of some of the additional buffers that we created but I'll just hand it over to Pradeep to unpack it in detail I think the geopolitical events play out in quarter one and I think it's again picked up in the distant past in July as well so on a cautious side we as of now continue to carry an additional liquidity buffer of close to 5000 crore rupees as in one situation improves and we feel that we did not carry this buffer accordingly we'll unwind that buffer so far as cost of borrowing is concerned again we have seen a fluctuation depending on the expected inflation level basis accrued prices and basis geopolitical crisis fluctuates a lot you have seen our cost of funds going up by equity adjusted cost of funds going up by 10 basis points compared to Q4 we don't see a steep hike in this kind of cost of funds because these are impacted by the incremental cost of funds and not the entire stock cost of funds so I think overall we are should be in the ballpark in this kind of range 10 basis point plus minus here and there market will determine as in when we move forward thank you the next question is from from please go ahead hi thanks for the opportunity the first question is around your strategy around I would say the non-wheel as well as the fee income so regarding mortgage or housing what's the game plan now are you looking to continue doing this business under that your subsidiary but the kind of a change in the mandate of subsidiary to go more of a universal housing than the kind of a rural or low ticket housing they are doing or you plan to do that you know the prime or large ticket housing or lap within the parent organization so that is the one and secondly regarding you know the fee income side one that okay what's your take on the kind of the at least the perceived risk or talk risk around IRDA is probably upcoming regulation regulating or limiting certain commission income and related to fee income also you had some time back I mean maybe a couple of years ago to kind of capture the prime vehicle you know or market by going into PLM kind of arrangement with large public sector back including I guess SBIs what's the sort of a status of that I mean there's something progressing all completely around so that's kind of you know the entire question around your non-wheel as well as the fee income and the second question we more around you know asset quality very very impressive that okay now you have kind of a minimize the volatility and kind of a seasonal volatility in terms of the disclosures I mean would you kind of try to give something more of a bit of a leading indicator kind of you know the 12 movie you know 30 plus or 90 plus in the 12 movie data to just get you know idea that okay how particularly the business and you have originated you know how they are improving particularly from the early you know the non-starter or early market delivery perspective so can you just add this kind of a disclosure probably to provide more of a bit of a leading indicator or some bit of improvement there any questions in that on the housing front you know we had specifically mentioned that both the boards will sit on judgment on this by Q2 of this fiscal our priority from an operating team standpoint was to accept the mortgage house in order which we have done if you just look at the franchise I think it's firing on all cylinders in terms of growth they have pretty much buried the past asset quality concerns and at an employee base which is shaved off and you know now operating at a very a very formidable level the operating metrics of the housing business I would say we have crossed that pitch he highlights as I mentioned earlier the Heter 30 Crow Pat mostly by good set of growth numbers good set of you know GS3 slippages etc all contained well so that's on the mortgage side we do two facets of business there we do house we do affordable which is self-construction and some kind of you know in our non metro location because we are a deep geography player so we get that commerce and we have started in a calibrated manner the prime business which on console basis we think on a medium to long term will be not are we a drag on the franchise and that's on the housing on your comments on insurance I think there's a dynamic you know evolution of we don't see the guidelines yet we know that something is coming regarding a very prescriptive manner in terms of what commissions are going to be etc etc I would just say that our insurance income today for both our credit life as well as we have activated even non credit life 1,300 branches now are selling retail products and what we take most companies all the products that we do are extremely good for the customer there is complete consent there is products which are for a customer segment which is fraught with volatility and ambiguity all the products that we do are anchored with what is absolutely good for the customer throughout all our audits etc we have come we have been I would say bracketed as a very responsible of all the credit and protection products so we are very confident whatever regulation comes because our products are very clean no hybrid or no u-lips or no very complicated products we do very basic products we don't see a very big departure from the fee based income which we have swapped into the organization of the last 2 years your third question on cold ending you know the guidelines change which meant from January 1 there is only one playbook for cold ending which is a system-to-system integration so we were doing some business with with some banks we had to unplug that because of the system readiness I'm happy to share that we have gone live in the PV business with one bank in this quarter very numbers are not material but we have managed to go live we do see merit and we will continue to do you know a B testing etc etc considering we have an access to commerce but that commerce may not do benefit to our balance sheet we are looking at the best way to partner with like-minded folks who can do just right now on GS2 GS3 within credit cost how much is end losses how much is provisions but I reflect on what you suggested and see whether we need to further amplify some of the disclosure elements over there and and if you think there's merit in doing that we'll we'll kind of edit the pages according thanks thank you the next question is from Iran engineer from please go ahead yeah hi team congrats on the quarter and thanks for taking my question just if I could delve a bit more into what sort of you know underwriting tightening we are doing in the tractors portfolio specifically with respect to El Nino risk that would be helpful so hi Biran thanks for that question see there are certain so let me just unpack the tractor customer segment right there is customer segment which is totally dependent on rural cash flows and an agri cash flows typically what we do there is we do a half yearly or a quarterly installment because it reflects into their cash flows and then there is a large set of customers which are using the tractor for college income as well as partly agriculture or rural cash flows so our underwriting reflects that so our underwriting would largely be relevant what you talked about the El Nino etc would be those households or those customer segments whose fortunes are very very tightly coupled with agri cash flows and there are underwriting scorecards as usual SS you know what the agri output the kind of level the levels that they are borrowing whether it's a combination of cash crops MSP crops the very detail tool and maybe we can spend more time offline giving you more color on that but for this group let me just say that what we see as an El Nino risk is not just rainfall but it gets amplified overall by rural and agri cash flows and rural agri cash flows is not very simplistic just what is agri output it's a combination of Monday arrivals MSP is a whole lot of things that underpegs that rural cash flow too early in the day to call but we have enough experience over the last decades doing a tractor underwriting to know and to of course augment the underwriting scorecards to keep the right level of good but and for the back book there's nothing more we can do apart from just say augmenting monitoring or collections etc. right according to tractors yeah bang on we do want to be the last editor in the list we will show up first we always say we are fair but firm in our colleagues thank you next questions of Viral Shah from IISL Capital please go ahead hi thanks for the opportunity and congrats on good set of numbers while most of my questions have been answered can you just help us delve deeper into what is structurally now driving the market share gains for us in the sub segments or rather most of the sub segments of vehicles that we mentioned right what is the strategy that we have over the last couple of years and how should we think about this going ahead and of course there's some potential risk in this year with regards to growth but structurally how would you put it yeah thanks from the ability to gain the market share the biggest vectors over there are improving channel relevance and being hygiene in terms of customer relevance in terms of TAD product features etc I think what we have concentrated on for the last few years is we were seeing minor finance slip on the channel relevance specifically because you know some of the let's say the customer TAD the ability to respond fast with a time to yes was the industry had moved or the finance industry had moved ahead of us thanks to the investments done through the run stack etc and I'll invite you you know I don't know whether you were part of the field trip which saw it in action at the dealership or at our CPC our ability to scale the time to yes and time to money has gone up which is rubbing off well on the channel relevance that's what I would place as one of the abilities structurally to be the financer of choice to the channel and the customer I must also mention that versus other financers who basically you know are very they come in at festivities and they go out we are a mobility financer who have very well immersed ourselves in the micro market and that dealer ecosystem and that's now starting to play out we have created you know last couple of years we created a program called key account manager for our dealers where we have looking at dealer relevance holistically from trade advance to inventory funding to retail market share to other abilities to deepen relationships because in this business while some of the lenders have tried to be extremely cute in their channel relevance and higher indexed on customer relevance we look at it in a combined manner of channel and customer relevance and all the investments that we have made in the couple of years have I would say giving us market share benefits it's not all keep our incremental market shares also at a formidable level. Thank you for that detailed explanation Roland of course I will connect with you separately just as a follow-up the second question on that insurance piece that you mentioned how should we think about it with regards to the MIBL subsidiary that we have you are talking about the MIBL yeah MIBL you explained the standalone piece so see we have a corporate agency rather than a broken both have I would say the playbooks are quite differentiated Viral earlier I would say because we didn't have a corporate agency we couldn't exploit revenue pools that existed so we had to have the broken company very inefficient manner set in our branches etcetera and do captive business so we have created a very significantly clean playbook what the corporate agency will do and the corporate agency largely does finance ecosystem business and MIBL does open market business as well as M&M ecosystem vehicle motor insurance spreading team at MIBL deliver very well is the in the first second third year of the MIBL in the motor insurance business 1 to 38 there is a lot of operating focus in motor and point out in the MIBL business it was a one trick pony just motor insurance now they are starting to see reinsurance commercial line business all come in you got very good leadership team very good second line of leaders all staying extremely honest to market share increase for the 3-4 facets of the broken business that set their their eyes on thank you the next question is from Abhishek Murarka from HSBC please go ahead hi good evening and thanks for taking my question and actually thanks for congratulations for a very great quarter so I want to check this credit cost guidance of you know 1.3 to 1.7 that you've given implementation of tech AI etc how much of this do you expect to get shaved off so this range of 1.3 to 1.7 that's over 3 to 5 years does it come down by 20 base 30 base how do you see the efficacy of the AI work that you're doing similar kind of question on the cost side right so there to you are doing a lot of tech upgrade and higher growth in new businesses so when do you see that operating leverage playing out and related to that is the employee base especially in your standalone that's been around 22,000 people but at the same time you're seeing higher disbursements and higher growth so at what point do you need to start adding to that or do you think you'll have enough efficiencies that employee growth lags AUM growth by a significant you know by I mean significantly so you're just trying to get a handle on these three things Thanks Abhishek see I just want to at the front mention that sometimes a perception that AI is this magic wand that can shave off at no cost but for everyone who's starting to soak in the token cost numbers we need to look at the trade-offs between token cost and human capital cost right so I just want to make that point to maybe many of us got lured into looking at in the honeymoon period of AI not being a big token cost we have a very conscious view on what's that trade-off on the OPEX front at least and by virtue of our business most of our business is not just pushing money into someone's through an app to somebody's bank account we are not a very prolific PL open market player so our businesses have a leg of assisted journeys our businesses do have customer segments who are not all 100% digitally savvy so I don't see I mean we have come down on our own graph of OPEX to average assets cost to income we have come down reasonably I think this two point I've always said being in the 2.5 to 2.7 clip is a business model requirement for us anything below that significantly might start showing shades of compromise on the credit cost side so that's my take on the OPEX side we will use as many tools please visit our CPC to see how where the AI tools not puzzling on efficacy of the traditional cost of acquisition etc now to your question on whether 1.3 to 1.7 if again AI will drastically shave that number off I would still stay with that 1.3 to 1.7 for the business model from a medium and this is by the way we all know that our businesses have simply quantity right I've given this range across cycles because I do believe at the lower end you know we'll be able to augment a lot of the tools to come close to the 1.3 number we're already at a 1.5 but there could be times when things go south and that's the 1.7 for those kind of times right and employees employees in passing I did mention which is that you know we have come down we think that we don't see an extent at this point how do we see the how do we see our expansion as I mentioned my growth in revenue has to out face growth in OPEX so growth in OPEX is companies like us have largely two costs right we have we have people cost and we have branch cost so we will optimize between this to make sure that the job revenue growth versus OPEX growth is optimized thank you next question is from Anand Dhawan from Novama please go ahead no we are progress for the great set of results my question was about the gross price you know we can actually come down quarter on quarter what kind of cost of fund that we should expect going forward no this is again a cost of fund that we assume for the average for the quarter what was that for the month of you know June and it is basically you know I think you to another participant you said that you want to keep the liquidity on a high side you know given the conflict and so on and so basically that in that case that should have a bearing on the overall margin for us for the portfolio so I will give some opening commentary and hand over to Pradeep see you are right the sequential and it is a single digit number so possibly you are not able to appreciate it in total but if you just look at the big number that has moved between the quarters it is the loan income right now there is a big attribution of that 25 bips completely to the liquidity buffer enhanced liquidity buffer of 5,500 crores that we are carrying right I do not have a crystal ball to gaze to say that this this number will completely you know get shaved off in next quarter because it is a dynamic we are watching overall liquidity the tragedy as I mentioned does watch the liquidity position to take calls whether we need to slide down on that buffer or keep it so far we believe as a prudent lender it is always good to around the side of portion so we are keeping a buffer right now the minute we see things getting better that number will get shaved off and you will see that loan income that 25 bips which is largely attributed to that also go down and give us a gross spread which is coming back to a more formidable number but maybe Pradeep can add more color to that I think again just role has already covered this topic but this fall in the loan income is not attributable completely towards the negative carry it is more of a denominator impact that the point I just want to clarify over here negative carry is there for the extra liquidity but it is not very tangible enough to run this kind of large businesses to absorb the any sort of unforeseen market dynamics from that perspective I think liquidity is not that much it is more of a denominator impact which is kind of dragging us the loan income in terms of percentage terms in terms of cost if you ask me I think in earlier question I have already replied like you know quarter on quarter when the borrowing rates were elevated throughout the quarter we have seen a 10 basis point of increase in the cost compared to last quarter whether the borrowing rates further goes from here or was the situation normalized we can see certain amount of softening in the borrowing rates I think these are all market dynamics which play out overall I said that it does not impact us largely because we are carrying a stock of borrowings and incremental borrowings only get impacted because of the rate fluctuation so all we are quite comfortable with which we already guided for the last quarter also so that is the way I can put it the cost of funding that is helpful my second question is on the collection efficiency that is training well in the first quarter do you expect that to continue or basically it should improve further into second quarter and if yes whether you would want to unlock the management overlay that we have built in the second quarter or maybe after that once you have a better overall situation I think it is too early to call the second quarter we are as I said we have an enhanced monitoring making sure that the vulnerability sectors are over prioritized Q1 has been played out well typically has some kind of disruption in certain categories like tractor etc which will be more watched to this quarter considering the new curve all that is there but I don't want to kind of call the Q2 number right now I can just say that we are making sure that we are equipping the teams to over manage any disruptions the next question is from Abhijeet Debreval from Motila Nospal please go ahead good evening everyone thank you for taking my questions congratulations in a good quarter also just two questions and basically clarifications on what you have already shared with us earlier first one growth I think I remember you shared that business should grow at 11 to 12 percent and the newer businesses should grow at 30 percent which would allow us to deliver a roll cager of 16 to 18 percent over the next five years so given where the growth is today and expected to pick up gradually is the understanding right that maybe at the end of this five year range that we are talking about maybe F530, F531 we are looking at a growth which should be in excess of 18 percent 18 to 20 percent to get to that 16 to 18 percent known cagers so Abhijeet are you talking about disbursement cager or AEM cager no I am talking about the AEM cager 16 to 18 percent I would speak to the 16 to 18 range because there is a very strong non-vehicle assumption not assumption but you know doctrine ambition in that so the 16 to 18 is itself quite formidable I do not want to kind of put my hat on 18 versus 16 at the moment investments have been put in place for all the non-vehicle business to grow at a you know at a very rapid in these segments have come in channel investments product investments all of that are being said in new market so just read it as the same 16 to 18 that we had so basically what we are aspiring to what is the 16 to 18 percent growth by F530 31 is that the right understanding or a cager AEM cager of 16 to 18 cager 6 to 18 got it sir so the other clarification I wanted to have is that this call itself times we are leaving to this true cycle credit cost of 1.3 to 1.7 percent given that one few typically used to be that quarter which used to be the most problematic in the past we started the first quarter with credit cost of around 1.5 percent plus you had also built a management to one lane the food quarter so would you think that this year the credit cost can be closer to the lower end of that guided so do you think that there is some risk for many no or relatively we can monsoon this year in some of your product segments too early Abhijit to kind of call full fiscal I mean we just I would say while we are in those with the way Q1 but we are not taking anything for granted or we are not in any ways complacent because there are while see we are not looking at a easy just because there are overlays that we will kind of consume it on tap and you know keep the credit cost low these are very specific overlays come out and we do not want to in a convenient way depend to it so that is not the nature in which they have also so I would still say just if we continue to execute well we will be in the lower end of the trains if to make curveballs come away we will but definitely be within that just the last clarification that I had the housing business I think I mean we mentioned earlier in the call that one is the affordable piece and the other one is the prime piece I think I mean few quotas that we are also going with that idea of doing housing from the standalone entity and sometime I think we also submitted a proposal to the board to merge the subsidiary with the standalone entity any thoughts on that or right now the focus will be doing housing business from MRHC so we mentioned that the proposal has been taken to both the boards by Q2 of this fiscal so hopefully we will give you an update next quarter. The next question is from Pankaj Mahatma from LXR's management please go ahead yeah hi thanks well I have two questions within the 30% guidance that you are giving for other businesses given our housing business is a very small business the time is very large the underlying asset is secured can that business not grow at a much higher pace or rate you know given the context once we have our system and processes are firmly in place one and secondly I understand that we have adequate or more than adequate capital at this point of time in the middle of 5 years when do you think you will come back to shareholders to ask for capital so on both the questions if you just look at the quarterly growth on mortgages it is growing at a much higher clip than 100 plus clip but of course these are early days so that will moderate I just look at the mortgage growth adjusted to margins we have to be careful about that it is a business where the headroom for growth is pretty large we are indexed in terms of where we are and there is scope with our balance sheet and our ability cost of funds etc to participate we will continue growing the 30% is more console non-wheels so there are categories there which we are you know which are let us say the S&M business etc which may not grow at the same clip at mortgages so console 4 year cagger is the number that I talked about 30% on the second question which was sorry what was the second other than mortgages when will you come back to shareholders seeking capital we are currently pretty comfortable in tier 1 plus tier 2 I think tier 1 is 16 and a half rate and we are way above the regulatory requirement I do not see us in the next at least 6 to 8 quarters requiring capital and the second thing if you look at we are still at a ratio of 5 is to 1 for the Q1 F 27 and I think in the early also we have guided very clearly that we have to achieve our desired ROE will quite comfortable delivering it to maybe a 6 plus 6 plus kind of the district so that also plays out in deciding when to raise capital thank you the next question is from Chintan Shah from SCSS security hello thank you for the opportunity and congratulations on strong set of numbers first question is on the underlying portfolio health so if I look at the collection efficiency so it is kind of flat at around 95% is but at the same time credit cost and GNPL both are declined on a yoy basis so this wanted to understand what is the improvement is given by which factors so is it due to better recovery or flow forwards first on that and secondly related question on this would be have you seen any impact of the recent fuel price hike on the cash flow for operators or anything in the credit behavior due to the fuel price hike so that's the first question and one last question on the yield front so while we have been able to expand name but that has been largely driven by cost of funds benefit and the momentum now seems to be shifting so now cost of funds has been improved inch up in this quarter and yield have also contracted by 10 QQQ so what's the kind of outlook on that's it from I said yeah so collection efficiency the metric is generally what is the numerator is you know collections from standard book as well as collection from and my total use right so that's the way to read collection efficiency which is range bound the forward flows which is your stock of GS2 and GS3 the way to look at that is the flow forward from age 1 to age 2 age 2 to age 3 to age 4 that is the the GS2 GS3 number right so any so what is the difference between collection efficiency and stage 2 flow forward what was the question so I was trying to understand that collection efficiency has been kind of stable and 95% odd levels why why but so credit cost and GNP less than a soft decline on a why way basis so this trying to reconcile so what is exactly happening for the decline is it lower flow forwards or better recoveries yeah lower flow forwards and even you know the credit cost sorry the backward flow from GS3 to GS2 also is happening at a higher click it's a function of both flow forward as well as backward flow better backward flow okay so got it on the margin front if you could comment yeah yeah margin front again I think we clarified that on sequential basis the contraction which you are referring to in the loan income percentages that is more of a denominator impact and it's not the actual on a quarter to quarter basis that's point number one point number two again I think I'm reiterating the fact that even there was a quite a good elevation in the borrowing cost in quarter one compared to last quarter four we have seen a 10 basis point of increase in the cost of funding the moment we have you know you can say geopolitical crisis going out of our way and inflation expectation also coming down which is largely right not driven because of the crude prices and you know expected there may be some anticipated attacks in the overseas markets the moment those expectations are toned down we can see you can say reasonable borrowing market so as such at least we are not concerned about the steep increase in cost of funding going forward thank you the next question is from Vinod Rajamani from Mirbal Bang please go ahead thank you for taking my question and I just wanted to know on tractors the the disbursement number is quite strong so is there any pre-buying or something which is kind of you know is that playing out for tractors and also is also the in terms of the end use is it shifting more away from say agree to say construction and so on is that also leading to you know greater uptake in tractor disbursement tractor typically if you look at the actual buying behavior that happens I would say one of the silver lining of late rains this year was that generally what happens is when rains onset of rains the tractor purchasing comes to a standstill so some of the Q1 volumes that you would have seen some of the OEMs also talk about is because in certain geographies delayed rains elongated the Q1 buying cycle which helped both the OEMs and lenders like us get a higher growth number which anything which happens in Q1 will have a bearing in Q2 so you might see a contracted Q2 because of an accelerated Q1 that's one reason why we've seen in various geographies a stronger Q1 for tractor your second question on whether the mix of college versus agree I'm not seeing a big shift in that it's it's playing out as as usual for for us it's it's no big deviation from the past mix yeah thanks so much thank you for taking my question is from Meghna Lutra from in credit equities please go ahead yeah hi thank you sir for an opportunity I said one quick question again following up on the tractors what would be I mean I do understand that our share in the group M&M group has inched up to 46% since since the last two three quarters what would be our share in particularly tractor and PV and do we expect this share to interrupt further just a correction there our share in M&M is not 46 only for tractor it is an overall business so the 46 that you see in our total assets is a combination of PV, CV, tractor right not just tractor and the trivial business also so that's the 46 what is your second question sorry Meghna I didn't get that so the first question was what is our share in tractor and in PV particularly because that I kind of understood it is the entire asset base and do we plan to or do we intend to say inch up or you know finance more vehicles from the group company so I just want to be fair to our disclosure standards we don't give that very specific cut on PV, CV, tractor all I can say is that the way we approach this business we look at it as a strategic partner the groups PV, CV and tractor business we do not have any discriminatory scorecards for M&M versus non M&M it is we don't even use the terminology captive it's strategic partner we have certain programs that we run with them the you know kind of synergy that we enjoy is owned it is not given for granted we compete with all other finances but we do have over the years developed a certain amount of synergistic benefit which is not predicated on any lowering of commercial guardrails or credit guardrails right we have grown in market share with all the other OEMs also in the PV, CV business in the tractor business considering Saraj and M&M have such a dominant share we have in fact within the Mahindra Finance business itself created there are two entities actually on the ground they are the number one and number two so we have even in the Mahindra Finance tractor division I think it's right time to give more disclosures on PV, CV etc we will think about it right now percent that we have put there okay thank you thank you the next question is from Raghav Garg from Ambit please go ahead hi thanks for the opportunity and good evening am I audible yeah okay so sorry I joined the call a bit late I wanted to ask if you've given your disbursements growth guidance for FY 27 and 28 that's my first question and then I have one more question so Raghav I'm sure you know by now we don't give specific year disbursement guidance sure see I was going through your annual report for 26 and you know every year the disclosures are pretty good and you disclose that the number of vehicles financed those have gone up by 5% year on year while I see the industry growth in terms of photos sold was higher so that implies that the growth in the number of vehicle finance contracts done by you has been lower versus the industry growth if you can give me some color as to why you lost that market share or why your growth was lower than what the industry saw in terms of number of cars and TVs sold and then when next year you know you think about your disbursements growth or even growth how do you think about it because it is quite obvious that the volume growth for the industry will normalize lower and it cannot sustain a double digit it tends to be in single digits maybe between 5 to 10% so next year you know when the auto growth normalizes for the industry how do you plan to accelerate your even growth in that scenario that's the question I mean since you are referring to last year's number from the annual report let me just tell you how we think about the unit growth this 5% number what you are referring to is across PV-CV tractor used because every category if I were to just give you how we look at the unit growth dimensionalized to the franchise in the PV business we would have lost unit growth last year specifically because of the segments that we sit out from the premiumization playbook as you know the PV segment has had a huge premiumization play over the last OIRR business and that's the PV unit market share that we have lost when we look at the entry level cars when you look at post GST reforms that happened with the with some of the entry level cars we have from each to last year till Q1 of this year gained market share so that's how we look at the PV PV business is PV business we have gained market share in the SCV LCB business we have lost market share in the ACV business fleet business in tractor universally we have grown significantly higher than industry on unit and on use we have kept clip with the market we have not lost again we have kept clip with the market that's the way to think about the unit growth that you mentioned very helpful and then I think the other question that I had was industry growth normalizes the volume growth you know the unit growth will always be to see some of the segments which has historically been very inactive that favors us even if you look at the fada numbers for rural PV and rural CV that has been growing at a higher clip than urban so all of these are tailwinds for a player like us to beat unit and industry growth hope that the rural trends you may have joined the call late some of the PV business which has historically been margin dilutive for us but we have access to that commerce we have done very early days evaluation on co-lending etc how can we not miss that action but participate in that commerce we will see some of that thank you next question is from Prashi Jane from equitas please go ahead the last question will be able to take please note that yes sir hello sir so I wanted to understand that after the man has remained okay so I wanted to understand that tractor demand has remained relatively resilient despite the weather related concerns or the geopolitical concerns currently but how do you currently assess the demand across your key rural markets which is going you know going now going forward and any any changes you've been seeing in the past few years you know the inquiries in case you've been assessing them Prachi I did mention earlier on we saw a little bit of Q1 departure from normal trends aided by delayed monsoons the buying period got extended we also saw a tailwind for tractor purchases in Q1 was a form factor of very high rural cash flows because of ruby you know Monday arrivals and price for the you know Monday arrivals and price discovery so we have the markets that we have seen strong growth was a resultant of again people turn up and buy attractive and margin money and margin money is generally a reflection of rural cash flows and rural cash flows not just agris agris plus college plus plus so so far that's been the trend that we have seen we'll have to see how the rest of the year plays out as in hopefully with some of the disruptions you know being the mitigants for some of the disruptions today for example I was reading a report about crop insurance there are disruptions on let's say price does that serve as a buffer you know we are already talking about government adding its weight on MSP so any regional differences you are seeing in the you know particular all of the states where they could be the rainfall has been you know normal or is very rainfall dependent I know I mean the departure from normal is higher in states like Rajasthan and MP and Gujarat now for now but too early you know the zones are still in its first stage which we hope that things can normally at the same time look at state coffers the states which have better treasuries are more equipped to add shade to cushion some of these disruptions I mean so the credit cost I mean how do you assess I mean in case there are disruptions how do we how do we take you know this thing at the credit cost can go to what level for us we don't give asset category credit cost in the call earlier talked about 1.3 to 1.7 being the franchise credit cost bands let me also mention that I am seeing the OEMs play very responsibly they are not flooding the dealers with huge inventory if you look at the dealer stocking even tractor is a very reasonable level it's not over so we don't see any perverse practices in a season which is which needs to be in all players have to be responsible so the OEM the dealers everyone is following the right practices so credit cost from a franchise like us in this guidance but let me also remind you that we created certain overlays in Q3 and Q4 specifically to take care if things go extremely violently south we have buffered up to smoothen any disruption I don't know whether you are following our overlays that we created they were created one of the specific reasons was a possible compromise Thank you very much that would be the last question on behalf of 361 capital markets that concludes this conference. Thank you for joining us ladies and gentlemen you may now disconnect your lines. Thank you moderator thank you