Aditya Birla Capital Ltd

NSE:ABCAPITAL

Earnings Call Analysis

Strong Q1 FY25 Results and Optimistic Outlook

Aditya Birla Capital reported a solid Q1 FY25 with a 15% year-on-year growth in consolidated profit after tax, reaching INR 745 crores. Total consolidated revenue increased by 26% to INR 10,258 crores. The company's NBFC portfolio grew by 25%, and their loans to SMEs surged by 39%. While personal loans showed a decline, direct sourcing is expected to turn this around. The housing finance sector witnessed a 41% rise in the loan book, and the mutual fund average AUM saw a 19% growth, crossing INR 3.5 trillion. The life insurance business and health insurance segment also demonstrated strong performance, with 19% and 35% growth, respectively.

Economic Resilience and Strategy

The Indian economy continues to exhibit resilience, boasting a GDP growth rate of 8.2% in FY '24. This growth is supported by improving productivity, technological advancements, and favorable policies. Aditya Birla Capital is leveraging this economic backdrop to focus on quality and profitable growth by using data, digital tools, and technology. They emphasize customer centricity and prudent risk management to ensure sustainable returns across their business segments.

Performance Highlights

For Q1 FY 2025, Aditya Birla Capital reported a consolidated profit after tax of INR 745 crores, a 15% year-on-year increase. Their total consolidated revenue grew by 26% to INR 10,258 crores. The NBFC (Non-Banking Financial Company) portfolio saw a 25% year-on-year growth, with business loans to SMEs increasing by 39%. Despite a strategic decline in personal loans sourced from digital partners, the company is optimistic about future growth through direct channels such as the ABCD app.

NBFC and HFC Businesses

The NBFC business achieved a profit after tax increase of 20% year-on-year, amounting to INR 621 crores. Key performance metrics such as ROA and ROE remained stable at 2.41% and 16.13%, respectively. In the Housing Finance Company (HFC) segment, the loan portfolio grew by 31% year-on-year. Investments in digital properties and distribution channels have significantly contributed to this growth, coupled with government measures like affordable housing schemes.

Asset Quality and Risk Management

Asset quality saw improvements as gross Stage 3 loans declined by 28 basis points year-on-year to 2.54%. The company maintained a Stage 3 provision coverage ratio (PCR) of nearly 50%, higher than the previous year. Credit costs remained stable at 1.43%, well within the stated guidance of 1.5%. The company’s focus remains on developing a granular portfolio and increasing business loans to MSMEs through platforms like Udyog Plus and the ABCD app.

Investment and Future Growth

The mutual fund segment experienced a 19% year-on-year growth in Average Assets Under Management (AUM), exceeding INR 3.5 trillion. Monthly SIP inflows increased by 39% year-on-year to INR 1,367 crores as of June. The life insurance business also saw a 19% year-on-year increase in individual first-year premiums. Despite some challenges with banca partners, the company expects growth in the banca channel and overall premium growth in the upcoming quarters.

Capital Adequacy and Future Projections

The company’s Tier 1 capital adequacy ratio stood at 14.48%, an improvement of 35 basis points quarter-on-quarter. Moving forward, Aditya Birla Capital aims to grow its overall portfolio at a compounded annual growth rate of 25% over the next two to three years. This will be supported by continual investments in technology, risk management, and customer-centric strategies to achieve sustainable returns.

Closing Remarks

Aditya Birla Capital is committed to delivering sustainable growth through strategic investments in technology, risk management, and customer-centric approaches. Despite challenges in certain segments, the company remains optimistic about future growth, supported by a stable economic environment and robust internal strategies.

Earnings Call Transcript 2025-Q1

[Operator]

Ladies and gentlemen, good day, and welcome to the Q1 FY '25 Earnings Conference Call of Aditya Birla Capital Limited. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Ms. Vishakha Mulye, CEO, Aditya Birla Capital Limited. Over to you, ma'am.

[Vishakha Mulye, executive]

Thank you so much. Good evening, everyone, and welcome to the earnings call of Aditya Birla Capital for Q1 FY 2025. Joining me today are my senior members of my team, Bala, Rakesh, Tushar, Pankaj, Kamlesh, Mayank, Pinky, Vijay, Ramesh and Sanchita. I will cover our strategy and business performance, and Vijay will cover our key financial highlights, followed by a discussion on performance of our key businesses by our business CEOs.

The Indian economy continues to remain resilient, showing strong fundamentals, financial stability and growth momentum even in an unsettled global environment. The real GDP growth rate was 8.2% in FY '24 and various factors such as improving productivity, technological development and conducive policy environment provide a bright prospect for the Indian economy. In the recent union budget, the government has announced various measures towards affordable housing, MSMEs and digital public infrastructure, which will give further boost to the economy.

At Aditya Birla Capital, we continue to focus on driving quality and profitability growth by leveraging data, digital and technology. An unwavering commitment to customer centricity is a key element underpinning our strategy to grow our businesses. As I've mentioned earlier, prudent risk management practices form the bedrock of our approach, which has enabled us to pursue growth, protect capital and deliver us calibrated and sustainable returns across our businesses. We continue to strengthen our omnichannel architecture.

Coming to the performance highlights of this quarter. First, growth and profitability. Consolidated profit after tax, excluding one-off item, grew by 15% year-on-year to INR 745 crores this quarter. The total consolidated revenue grew by 26% year-on-year to INR 10,258 crores. Our NBFC portfolio grew by 25% year-on-year. We continue to remain focused on SME segment, and our business loans to SMEs grew by 39% year-on-year and 3% sequentially.

As we have highlighted in our previous earnings calls, we have been calibrating our approach to sourcing of a personal loan from digital partners over the past few quarters. As a result, we have seen a decline within our personal loan portfolio. However, we are focused on increasing our sourcing from direct channels, including our newly launched ABCD app. We expect the growth in the personal loans to normalize and pick up in the quarters to come. The profit after tax for NBFC business grew by 20% year-on-year to INR 621 crores. The ROA and ROE remained stable at 2.41% and 16.13%, respectively. In our HFC business, we have built significant capacity over the past few quarters by making investments in digital properties, technology, people and distribution. This has resulted in a robust growth of 31% year-on-year in our loan portfolio and the increase in our market share. The demand for housing continues to remain strong and the recent announcement, measures by government such as expansion in PMAY and investment in affordable housing will create an ample opportunity in our housing sector.

We believe the investments made by us over the last year will enable us to capture these opportunities as we go forward. Our mutual fund average AUM grew by 19% year-on-year and crossed a mark of INR 3.5 trillion. Monthly SIP flows increased by 39% year-on-year to INR 1,367 crores in the month of June. We have strengthened our investment and sales team.

During the quarter, we successfully completed our NFO quant fund by raising more than INR 2,400 crores. It is currently the largest scheme in the quant fund category in the industry. The individual first year premium in our life insurance business grew by 19% year-on-year, which is a shade lower compared to the industry growth, mainly due to the muted growth that we have seen with one of our banca partners. However, our premium growth across proprietary channels remain robust at 33% year-on-year.

With the new banca relationship going live, we expect the growth in banca channel to increase going forward. This will give boost to an overall premium growth as we go forward. We will continue to make investments in our proprietary channels and diversify our distribution mix. We remain in the top quartile in terms of our 13th and 61st month persistency among the private players. The new surrender guidelines announced by IRDA is likely to make life insurance products simpler, more transparent and attractive to the prospective customers. And it is expected to have a limited impact on the insurers with the high persistency levels.

In our health insurance business, we saw a robust growth at 35% year-on-year in the gross written premium by our health first and data-based approach. The retail premium grew by more than 50% year-on-year. Our market share and size have increased by around 25 basis points sequentially and about 90 basis points year-on-year to 12.5% in the current quarter. Number 2 is the prudent risk management is a focus on return of capital. Our prudent risk management practices have enabled us to pursue growth while protecting our capital. Proactive interventions and tightened underwriting norms, made over the past few quarters to improve our customer selection, have helped us in a good stead in this environment. The gross Stage 2 and Stage 3 ratio for NBFC portfolio improved by 100 basis points year-on-year and 4 basis points sequentially to 4.45%. Our total credit cost in NBFC business was 1.43% in the current quarter, which is well within our stated guidance of 1.5%. The credit quality in our HFC business remains robust with the gross Stage 2 and 3 ratio improving by 214 basis points year-on-year and 27 basis points sequentially to 2.64%.

Talking about our omnichannel architecture for distribution. Our omichannel architecture allows customer to choose the channel of their choice and interact with us seamlessly across our digital platforms, branches, VRMs and fostering engagement and loyalty. During the quarter, we commercially launched our D2C platform, ABCD. It offers a comprehensive portfolio of more than 20 products and services such as payments, loans, insurance and investments. A unique feature, My Track helps our users to track their personal finance, credit history and health. It helps customers to fulfill their financial needs and [indiscernible] as an acquisition engine for us because this witnessed a strong response with about 8 lakh registrations till date. Our comprehensive B2B platform for MSME ecosystem Udyog Plus, which was launched about a year ago, continued to scale up quite well. We now have 10 lakh registrations. We are also seeing an increase in adoption from our existing customer as well. And as a result, the total portfolio of Udyog Plus today crossed around INR 2,600 crores.

We are seeing an uptick in the cross-sell for various products such as Life Insurance, Health Insurance, [indiscernible] through our Udyog Plus platform. We have further enhanced our integration with ABG ecosystem to provide credit and supply chain financing solutions to [indiscernible] dealers and vendors. While we continue to strengthen our digital offering, we are also expanding our branch network to continue to cover the white spaces. Our overall branch count increased by 31 during the quarter, and we now have around 1,505 branches across our businesses at the end of June.

In line with our One ABC approach, we continued to expand our co-located branches. We increased by 29 during the quarter to 825 branches across 231 locations. Our Board of Directors had approved an amalgamation of Aditya Birla Finance with Aditya Birla Capital in March, subject to the regulatory and other approvals. We are happy to share that the proposed amalgamation has received no adverse observation from BSE and no objections from NSE, and we are now awaiting other approvals.

In July, Aditya Birla Capital received an approval from IRDA for sale of its stake of 50% in ABIBL. The enterprise value of ABIBL as per the transaction is at INR 455 crores. The transaction is expected to be completed in Q2 of FY '25. Going forward, we will continue with our approach of driving quality and profitable growth.

Now I request Vijay to briefly cover the financial performance of our key subsidiaries for the quarter. Over to you, Vijay.

[Vijay Deshwal, executive]

Thank you, Vishaka, and good evening to all of you. The total consolidated revenue grew by 26% year-on-year to INR 10,258 crores during the quarter. Consolidated profit after tax, excluding one-off items, grew by 15% year-on-year to INR 745 crores. As Vishaka Mentioned in our NBFC business, the total loan portfolio grew by 25% year-on-year to INR 1,736 crores as of June end. The NBFC business had an healthy ROA of 2.41% and delivered an ROE of 16.13% in Q1 FY '25. Our housing finance business continues to see a strong momentum. The loan portfolio grew by more than 40% year-on-year to INR 20,399 crores as of June end. The ROA was 1.44% in Q1 FY '25. During Q1 '25, we infused equity capital amounting to INR 300 crores in our HFC subsidiary to support the growth momentum and maximize our share of opportunities.

Coming to our AMC business. The average AUM increased by 6% sequentially and 19% year-on-year to INR 3,52,542 crores in the current quarter, of which equity AUM expanded to 46%. In the Life Insurance business, our first year premium increased by 19% year-on-year and group new business premium grew by 41% year-on-year in Q1.

The year-on-year growth in total premium was 28%. In our Health Insurance business, our unique and differentiated health first model helped us to deliver a growth of 35% year-on-year in gross written premium during Q1 of FY '25. This was an industry-leading growth. Our combined ratio improved for 118% in Q1 of last year to 112% in the current quarter.

I will now hand over to Rakesh Singh, MD and CEO, ABFL, to discuss the NBFC business performance in detail. Over to you, Rakesh.

[Rakesh Singh, executive]

Thanks, Vijay. Good evening, everyone. In our NBFC business, we saw a 25% year-on-year and 2% sequential growth in our AUM, taking it to INR 1,07,306 crores in quarter 1. We continue to focus on SME segment where business loans to SMEs grew at a market-leading rate of 39% year-on-year. This segment now comprises 54% of our overall portfolio. A large share of growth in this segment has come from secured loans, which grew by 43% year-on-year. Our disbursements in quarter 1 was at INR 13,443 crores with secured business loans to SMEs contributing 41%. More than 60% of our sourcing in business loans is done through direct channels, and we foresee this to inch upwards with continued scale up on our B2B platform for MSMEs, Udyog Plus.

I'm happy to share that we now have more than 10 lakh MSMEs registered on this platform. As we have highlighted in our previous calls, we have taken several steps to calibrate sourcing from digital partners in the smaller ticket size segment. We are in the process of scaling up our direct sourcing model, and I'm confident that the growth in this segment will pick up in the next few quarters.

As Vishaka highlighted, we follow prudent risk management practices with emphasis on protecting our capital. We have tightened our scorecards and credit filters to improve the customer selections over the past few quarters. This approach has helped us in good stead in the current quarter. Our credit cost has remained stable at 1.43%, which is well within our stated guidance of 1.5%.

Our asset quality has shown consistent improvement with Stage 2 and Stage 3 book reducing by 101 basis points year-on-year and 4 basis points quarter-on-quarter to 4.45%. The gross Stage 3 loans also declined by 28 basis points year-on-year and remained stable sequentially at 2.54%. We have maintained our Stage 3 PCR at nearly 50%, which is higher by 289 basis points over quarter 1 of last year. Our PAT registered a strong growth of 20% year-on-year and 6% quarter-on-quarter to INR 621 crores. The ROA for the quarter was 2.41%. The return on equity for the quarter expanded by 28 basis points to 16.13%. Our net interest margin was at 6.56% and cost-to-income ratio stood at 29.74%.

Our Tier 1 capital adequacy ratio stood at 14.48% and has improved by 35 basis points quarter-on-quarter. Moving forward, our focus will be on developing a granular portfolio and increasing the mix of business loans to MSMEs. This will be supported by the scale-up of our Udyog Plus B2B platform with new product offerings and increased investment in distribution across emerging regions aimed at driving growth. In the Personal and Consumer Loan segment, our strategy will shift towards acquiring customers through platform-based approaches via our branches, ABG ecosystem and the newly launched ABCD app.

All digital customer acquisition processes on the app and Udyog Plus are designed for end-to-end control, covering everything from underwriting to [indiscernible] connections, ensuring complete customer ownership. As we have mentioned in our previous earnings calls, we remain confident to grow the overall portfolio at a compounded annual growth of 25% over the next 2 to 3 years. As we scale up, strengthen our capabilities and invest in technology, our primary commitment remains to deliver sustainable returns in the upcoming quarters.

With that, I will now hand over to Pankaj Gadgil, MD and CEO of Housing Finance business.

[Pankaj Gadgil, executive]

Thank you, Rakesh, and good evening, everyone. I'll now present ABHFL's performance for Q1 FY '25. I'm pleased to report that we've achieved highest-ever disbursal and book growth in a single quarter since our inception. GNPA has reduced both in absolute and percentage terms, which is now at its lowest level in the past 12 quarters. This underscores our consistent improvement in book growth and asset quality over the past 8 quarters. Key highlights for Q1 FY '24 are as follows. We recorded highest ever quarterly disbursement of INR 3,068 crores which is an increase of 89% Y-o-Y and 5% Q-o-Q.

We've surpassed the INR 20,000 crores mark in AUM with a total of INR 20,399 crores as of June 2024, an increase of 41% Y-o-Y and 11% Q-o-Q. Our customer base now stands at 69,700 and has grown by 23% Y-o-Y with a focus of maintaining granularity. The average ticket size is at INR 29 lakhs. Net interest income to average loan book is [indiscernible] [ 4.9% ] and our PBT for the quarter is INR 85 crores. Asset quality has improved with Stage 3 reducing to 1.6%, a reduction of 107 basis points Y-o-Y and 22 basis points Q-o-Q.

We maintain a Stage 3 PCR of 34.6%. ROA for the quarter is 1.44% and ROE is at 11.04%. Going forward, we'll further continue to focus on accelerating book growth and strengthening asset quality which will result in better operating leverage with improvement in the ROA over the next few quarters. For more detailed financial information, please refer to Slide 26 of the presentation.

I would now like to provide a brief update on the pillars of our group. Firstly, on portfolio quality, with an emphasis on quality at origination of 95% of our retail disbursement in Q1 FY '25 are towards to 700 plus CIBIL or new to credit. The contribution of 730 plus CIBIL to origination is at 78%, which is significantly higher than the industry average of 48%.

On our second pillar distribution, sales CRM has facilitated last mile planning within 48 hours of the start of the month, using promising results with a 26% Y-o-Y increase in productivity. Also I'm very happy to share that 10.5% of detailed investments are generated from the ABG ecosystem in Q1 FY '25.

Moving on to the third pillar, digital reinvention. We've achieved 100% adoption of unified digital lending platform [indiscernible] covering all stages, right from prospective to disbursement. This quarter, we also introduced do-it-yourself customer onboarding journey for home loans of INR 2 crores, INR 3 crores via WhatsApp, making us one of the first HFCs to offer this option.

Lastly, on the fourth pillar, data and analytics, we have successfully deployed 10 data marts and developed 18 models till date, spanning across the customer's journey from demand generation to collection. The [indiscernible] of our initial models covering attrition, pre-delinquency management and lead scoring is encouraging and aligns with our overall strategy.

In summary, we remain committed to long-term growth and profitability while maintaining robust portfolio quality and a strong focus on customer centricity. Thank you for your attention.

With that, I'll now hand over to Bala, MD and CEO of our Asset Management Company.

[A. Balasubramanian, executive]

Thank you, Pankaj. With respect to the quarter ending, Q1 FY '25 AMC business. Overall average assets under management, including alternate assets reached INR 3.68 lakh crores, reflecting 19% year-on-year growth. Our mutual fund quarterly average asset reached INR 3,22,000 crores with an equity quarterly average AUM moving to INR 1,60,000 crores. SIP number for the quarter crossed INR 1,300 crore mark, showing a 39% year-on-year increase of INR 987 crores in June 2023, to INR 1,367 crores in June 2024.

We added around INR 8.39 lakh [indiscernible] SIP, nearly 3x increase from the previous year. We have witnessed a healthy growth in our investor folio, have [indiscernible] around 9 lakh new folios during the quarter, bringing [indiscernible] a total service folio to INR 94 lakhs. Our quarterly folio growth was 9% compared to industry growth of 7%. The alternate segment PMS and AIF remains our key focus. We have strengthened our team and appointed a head [indiscernible] income credit and aim to offer variety of products, including Category II and Category III alternate investment funds.

Fundraising is underway for ABSL India Special Opportunities Fund, and we also have several products in the pipeline to be launched. Our coverage [indiscernible] B2B. We aim to manage and attract [indiscernible] investors into India to meet growing needs of NRI and foreign investors. We are using [indiscernible] to launch variety of innovative financial products including sustainability, index-linked funds and [indiscernible] thematic funds, and these products are designed to meet the evolving preferences of global investors and that will reach market.

We have [indiscernible] funds like ABSL Global Emerging Market Equity Fund, ABSL Index Linked Fund and ABSL India Opportunities Fund. We're also preparing to launch a new fund which would be including ABSL fund, which is ESG Engagement Fund and Flexi Cap Fund and Global Bluechip Fund for inward remittance to India from NRIs [indiscernible]. [indiscernible] as of June 2024, our [indiscernible] approximately INR 29,900 crores. Our customer base has materially grown to over 7.53 lakh folios have diverse product portfolios [indiscernible] over 44 product [indiscernible].

We are focused on driving growth in the Passive segment. I [indiscernible] by bringing in Head of Passive from abroad. He has got a great experience in managing passive funds. We're also looking at expanding our product offering to capture the opportunities, [indiscernible] the thematic shipment as well, we have deep on launches.

Moving on to the financials. We, at ABSLAMC, have achieved our highest ever quarterly profitability in Q1 FY '25, which is driven by an improvement in the overall asset mix and strong focus on cost management. Our total revenue is INR 481 crores versus INR 389 crores, grew by 24% year-on-year. Our profit after tax is at INR 232 crores [indiscernible] INR 185 crores over the last year same quarter, up by 26%.

With this, I'll now hand over to Kamlesh Rao, MD, Indian CEO of Aditya Birla Sun Life Insurance Company.

[Kamlesh Rao, executive]

Thank you, Bala, and I'll spend the next few minutes on the performance of the Life Insurance business. The overall Life Insurance industry saw a robust growth in Q1 of financial year '25. Individual first year premium grew for the overall industry by 20% and for the private players by 24%. As Vishaka mentioned, the individual FYP growth of ABSLI was 19% for this quarter. For ABSLI, the proprietary channel saw a robust growth of 33% on the back of both increased capacity as well as productivity improvement. Our direct business grew by over 100% over last year. The Bancassurance channel registered a growth of 11%. Axis Bank has commenced sourcing for us in the month of July. And as it scales up, along with our other new tie-ups of IDFC First Bank and Bank of Maharashtra, we expect a higher growth in the Bancassurance channel in quarter 2.

In the Group Life Insurance business, the private industry grew by 7%, overall industry grew by 25% and ABSLI registered a growth rate of 41%. Better growth was contributed by superior performance, both in the fund as well as the credit life business. We continue to remain #1 in ULIP AUM in the industry at an AUM size of more than INR 12,000 crores. Our total premium for the quarter of INR 3,986 crores has registered a growth rate of 28% over last year's same period, demonstrating our increasing business growth. This growth came from new business growth as well as renewal premium growing at 17%.

Our digital collections now account for 78% of our renewal premium. We continue to work on customer lifetime value, which is reflected in our upsell ratio, which touched 32% and helped productivity growth in both proprietary as well as partnership channels.

In the product mix of the individual business, traditional business including protection, contributed 70% and ULIP was 30%. The current quarter, in continuation of last year's last quarter, has seen an uptick in the sale of ULIP business across the industry on account of buoyant equity markets. We expect our ULIP mix to remain on the same lines as this trend continues.

We will continue to recalibrate our mix in line with the demand and our extensive product suite to cater to best interest of our customers. The reduction in [indiscernible] and higher ULIP mix has led to net VNB margins of 6.5% up this quarter versus 11.8% last year. The reforms in the product regulation bought over by IRDA are a welcome step for the Life Insurance industry. Like Vishakha mentioned, will make Life Insurance products simpler and more transparent as well as promote Life Insurance to new customers. Based on these regulations, we may see an impact on margins generated in our traditional products. Possible mitigants for this impact include realigning commission structure, relooking at the channel mix and reevaluating the product constructs.

We will ensure that the measures we undertake will be in the best interest of our customers. We continue to maintain our guidance on the net VNB margin for the end of the year to be in the range of 18% to 20%. Our quality parameters now trend better than last year across various areas. Persistency across all buckets did well with 13th month at 88% and 61st month at 66%, which will make us top quartile in the industry. Our consistent efforts on bringing cost efficiency to the business has resulted in OpEx to premium ratio to 19.9% versus 20.9% last year.

Our assets under management now stand at INR 90,682 crores with a Y-o-Y growth of 22%. 25% of this AUM is in equity and balance 75% is in debt. We'll continue to outperform in our investment performance and respective benchmarks across all 3 categories of equity, debt or even balanced funds either from a 1-year or a 5-year perspective. Our digital adoption across various areas is demonstrated on Slide 42. 100% of our new business customers are onboarded digitally now. 83% of our services are now available digitally, covering 67% of our customer transactions and our customer self-service ratio now stands at 93%.

As we move ahead, we will continue to be best-in-class in our digital infrastructure across prospecting and onboarding in sales, underwriting and customer service as well as claims.

With this, I'll hand over to Mayank, MD and CEO of the Health Insurance Company, for his company details.

[Mayank Bathwal, executive]

Thanks, Kamlesh, and let me now share an overview of the performance of our Health Insurance business. We had a very strong first quarter. We continue to build on the momentum that we saw in the second half of the previous financial year. In Q1 of this financial year, we achieved a gross premium of INR 1,041 crores, marking a robust 35% Y-o-Y growth. This performance stands out against [indiscernible] SAHI 12.5% Y-o-Y, and it has reinforced our position as a faster-growing [indiscernible] consistently over the last 20 years. Growth continues to be driven by robust performance in our retail franchise, which experienced a Y-o-Y growth of 51%. The retail growth continues to be diversified across various retail distribution channels. The proprietary channel with an agent base of 1.2 lakh agents registered a 41% Y-o-Y growth.

In addition, all our other major banks and digitalized partnerships also experienced impressive growth as has been given in the presentation. Our market share in SAHI in Q1 rose from 11.6% to 12.5%, a Y-o-Y increase of 92 basis points. Immediate focus on diversifying our product portfolio led to the launch of [indiscernible] Activ 1 in FY '24 [indiscernible] the most comprehensive indemnity product in the industry today. Product position [indiscernible] of a team of 1% health, 0% health insurance continues to be exceptionally well received by the market, helping us penetrate into newer customer segments, including the H&I segment and also segment comprising of people with existing chronic conditions.

With an emphasis on product mix, our retail Fixed Benefits product contribution on an enlarged retail base is now at 20% compared to 16% previous year, and this will lead to positive impact on future profitability. The corporate business experience as strategically controlled 20% Y-o-Y growth driven by a sharp focus on profitability through careful customer segmentation, cross-sell, upsell strategies, corporate wellness initiatives and our industry-leading outpatient business. With [indiscernible] concentrating on the [indiscernible] and SME segment to continue to build one of the very few sustainable and profitable corporate and affinity business in the industry. By prioritizing both growth and profitability, we're building a resilient franchise. Our net loss improved to INR 51 crores in Q1 compared to INR 62 crores in the same period last year. The combined ratio also improved to 112% from 118% in the previous year. Given all the efforts that we have taken over the last 24 months, both our claims and expense ratios have trended positively at the company level, and we continue to maintain a very positive outlook, especially in the retail business, which is an important part of what we create value in the business. We continue to project strong growth in FY '25, coupled with consistent improvement in profitability towards the combined ratio of 1% in FY '26 as we had guided earlier.

Our Health First model continues to show signs of maturity [indiscernible] outcomes of some of the [ interim ] cohorts are now very visible or able to scale up [indiscernible] at assessment, providing us valuable insight into consumer health. The consumers who are engaging with us on their health are now exhibiting lower loss ratio ranging from 10% to 35% at various cohorts. Likewise, consumers earning health held returns experienced loss ratios of up to 30% lower than the baseline case which is shown in Slide 52.

Our effort now is to increase the engagement with the larger cohort of our customers. Similarly, we have invested in building deep capabilities and managing customers [indiscernible] high health risk through a combination of first-of-its-kind product offering [indiscernible] drove digital capacities to manage the disease burden of these customers.

The customer engagement capabilities and insights are disclosed on Slide 52. Through a combination of our in-house and [indiscernible] our partner, we have intervened in more than 100,000 high-risk lives, improved their [indiscernible] leading to a lower claims ratio. Our promise of insurance is centered on providing industry-leading experience and by investments in state-of-the-art AI/ML driven claims adjudication engine, we witnessed encouraging results in both, which will further enhance customer satisfaction and manage claims costs more effectively.

We continue to invest in several key projects, leveraging data and analytics focused on revenue enhancement, claims management, fraud management and improving customer experience, and they are in various stages of implementation and are shown in Slide 57. [indiscernible] Activ Health app has been relaunched in 15-plus premium services. The app now provides opportunity to non-policyholders also to experience our comprehensive app ecosystem. The app download has increased by 131% Y-o-Y and MAU has also increased by 70% Y-o-Y.

Overall, and as we look ahead, we remain positive on the growth opportunity in the sector, also enabled by the multiple regulatory changes made over the last couple of years. Thank you. And I'll now hand it back to Vishaka for our closing remarks.

[Vishakha Mulye, executive]

Thank you, everybody for joining us today's evening, and we are very happy to take if there are any questions.

[Operator]

[Operator Instructions] The first question is from the line of Chintan Shah from ICICI Securities.

[Chintan Shah, analyst]

Congratulations on the quarter. So the -- first ma'am, I had a question on the merger. So currently, what all approvals are pending? And how much time do we anticipate, I think by March 2025, we expect the merger to be over. So are we through with the time line? And secondly, related to the merger only, we have around 45% stake in AMP and around 46% stake in Health Insurance and 51% in Sun Life Insurance.

So any thoughts on whether the regulator -- whether the RBI would be comfortable with our main NBFC lending having us almost 50% stake in other subsidiaries. Usually, we have seen in case of some banks wherein RBI restricts the stake in insurance to 20%. So what are our thoughts on that? Yes.

[Vishakha Mulye, executive]

Okay. So first is on the status. As we said, we have already got an in-principle approval from both BSE and NSE, which is the first step. Going forward now, first, we need to get a no objection from RBI. After we get the no objection from RBI. Our registered office is in Gujarat, so we will have to file the merger proposal in the NCLT of Gujarat, which is at Ahmedabad. And then, of course, as you know that there is a process, which the NCLT will go through. My expectation is, since this is the merger of our 100% subsidiary into ABC, typically the time required is shorter than the normal merger.

The second is, both the companies have their registered office in Gujarat. So that makes it a little more simpler because both of them will be applying to the Ahmedabad NCLT. As you rightly said, our endeavor would be to complete the process by March 31, 2025. And we will keep you informed about the progress in every quarter. So that's the second from the bottom.

Talking about the specific approval, I don't want to preempt and really comment on how RBI will look at it. The only thing I would say is that regulation does not prohibit NBFCs to hold the percentages that we are holding today in the companies that you mentioned. In case of banks, typically, there is a banking regulation act which prohibits the banks to hold in any company with more than 30%. It can either be a subsidiary or what you hold in any company has to be less than 30%. So that's the act.

And therefore, whatever that you spoke about is applicable to the banks and not necessarily to NBFC. In our case, of course, in case of -- as we had mentioned before, in case of insurance, we are allowed to hold more than 50% with a specific approval from the Reserve Bank of India. There is no prohibition. And in our merger proposal, we have asked for that specific approval. So again, we are very hopeful and we have no reason to believe that they will have any objection to what we have made an application for. But again, we will keep you informed about the progress on that front as well.

[Chintan Shah, analyst]

That is actually quite helpful. Now specific on the NBFC business. If you look at the growth in the NBFC business, it was around 2% Q-o-Q and still we are guiding for around 25% Y-o-Y CAGR over the next 2, 3 years? So how do we look at it? What would be the main driver. If we look at the AUM mix, it seems that we are [indiscernible] focusing or we are going slowly on the [indiscernible] unsecured seat and that is also high yielding. So given that the margins also have given up quite a bit in the coming quarter. So is that due to the unsecured mix change? And will that continue? Or are we again going to build the unsecured mix? Yes.

[Rakesh Singh, executive]

So if you look at, we have grown 25% year-on-year. Yes, sequentially, it is 2%, but that's a calibrated growth, which we had taken some time in quarter 3 of last year, that small ticket unsecured loan, where the risk rates have gone up and also RBI had concern on this segment, and that's the reason we had recalibrated growth. And if you see in the last 2, 3 quarters, we have done this segment down. But as we have committed, we continue to be very, very positive in terms of growing 25% plus year-on-year. So with clear focus on SME segment, which we will continue to grow. So if you look at our secured business has grown by 43% year-on-year. And MSME segment, if you look at, that's grown 29% year-on-year.

And also with the recalibration, which has already been done in the personnel and consumer, and we have really built our direct sourcing channels -- I spoke that in the initial comments that the branches, which we are setting it up, the direct open market acquisition engines, which we have built the ABCD app, which we have launched. All of this will help us to grow our personal and consumer business. So again, it's a recalibration in the last couple of quarters, but we expect this to grow with the clear direct acquisition models, which I spoke about.

Also on the unsecured business also, we are very, very positive in terms of growth on the unsecured business, and that should help us in terms of mitigating the margin compression, which you mentioned. Yes, the margins have compressed because of the change in the product mix. But as we grow our unsecured business and scale up our direct sourcing channel for personal and consumer, we should be able to manage our margin.

[Chintan Shah, analyst]

That is quite helpful. So for FY '24, we have a margin, 6.9%, so [indiscernible] margin should stabilize around similar levels for '25 or there could be some compression [indiscernible].

[Rakesh Singh, executive]

So it should be around these levels is what we see in this year. Yes, in the next few quarters, it will be in this range itself.

[Operator]

The next question is from the line of Avinash Singh from Emkay Global.

[Avinash Singh, analyst]

I have two questions. But first one is again on NBFC. Now as you have some sort of recalibrated growth, both in unsecured business and unsecured personal and consumer loans. Now if you can just provide some color, I mean, [indiscernible] calibration on your change in strategy more focused on [indiscernible]. How the growth in terms of AUM growth in these 2 unsecured business and unsecured personal is going to look? And in this kind of a calibration or running down some passbooks, how is this sort of delinquency or [ GSA 3] target to go? I mean, is this number what we are seeing, particularly the GSA numbers in these 2 segments kind of peak or still, I mean, as sort of, until the time the growth comes, like the full throttle , it will kind of inch up further. So that is the first question on NBFC, I will come back with [indiscernible] question later.

[Rakesh Singh, executive]

First question was on the growth of these 2 segments, which is the personal and consumer and unsecured business. In terms of -- as I mentioned, we continue to be very bullish on both these segments, personnel and consumer. We have built direct sourcing channels, and our focus will be completely dependent on acquiring customers directly rather than third party. That's the reason why the recalibration you see, we are seeing -- in quarter 1 also, we have seen that our direct [indiscernible] 2, 3 channels have started delivering. Our branches, which we have invested over the last couple of years have started delivering results. And also last quarter, we have launched ABCD app. Initial response is pretty good. And we are seeing conversion, especially on the consumer and personal loans, the conversion is pretty good. So these platforms and these engines will fire up for us in the personal and consumer segment. If you see unsecured business segment, as we have mentioned, this is our chosen segment, MSME is a chosen segment, and we continue to build investments and platform for this segment.

We launched last year, B2B platform Udyog Plus. And we have already seen almost 10.5 lakh MSMEs registered on this platform. The new customers are being onboarded on this platform. And on this platform, there is a complete seamless digital journey, which we have [indiscernible]. Also, our existing customers are adopting to this platform and migrating on this platform. So we again see that unsecured business segment will grow quite smartly for us in the coming quarters.

In quarter 1, there was also -- because of supply chain, which is more seasonal in nature, there was some repayments, large repayments. That's the reason you see some degrowth, larger repayments. But in the coming quarters, we look at very positive growth on this segment.

In terms of the quality, Stage 3, which you mentioned about personnel consumer and unsecured segment, both if you look at, this is primarily because of the de-growth in the denominator.

In terms of the normal flow and we track it on a month-on-month basis and quarterly basis, the normal flow is quite stable. So we don't see -- it's only in the percentage terms you see slightly higher Stage 3, but it's quite normal if you see in terms of the quarterly flow.

[Avinash Singh, analyst]

Okay. Okay. So I mean you're saying that growth will sort of sequentially will start from this quarter in both the segments?

[Rakesh Singh, executive]

Yes.

[Avinash Singh, analyst]

Okay. Coming on Life Insurance now, in quarter 1, if you were to look at the margins, of course, the margins have dipped quite a bit, could be due to maybe product mix changes some bit and also some bit due to the relatively growth kind of coming under -- in some banca channel. Now still you are guiding like -- for the full year, a very similar kind of margins. And that if we try to look particularly in the backdrop that okay, from [indiscernible] you are going to sell a new variety of the nonlinked products with the new [indiscernible] norms in place. So what is sort of giving you the confidence that you will be, by and large, able to come back to the same margin level? Is it that you are hoping a big shift in product mix? Or is it that you are expecting growth to come big time providing sort of a [indiscernible] better. So what is sort of [indiscernible]. First quarter, there is a big shift, but for the full year, you are looking confident to achieving the flattish kind of -- or slightly minor decline in margins?

[Rakesh Singh, executive]

So first quarter for us is -- if you look at even in the last 3 years, there are first quarters in which you could have done 3%, but you still were able to reach 20%, 20% plus VNB margins. So we actually catch up on our net VNB margins through the year, as you would have seen in previous few years itself. You have to remember that the [indiscernible] rates coming down, we've also passed on the reduction and some of our benefits to customers in our traditional products. Some bit of it has already happened, as I speak, in the month of June, which is in line with what the industry has done, plus incremental growth, like I said, we are not -- we are thinking that the ULIP mix will continue to be where it is, 30%. But in the traditional products, because of the [indiscernible] rate coming down and whatever benefit we have passed lesser, so that's one element.

Like I said, the absolute value of growth will catch up with the banca channel also in subsequent quarters. Like I said, Axis has started in the month of July mid, IDFC and Bank of Maharashtra. So absolute value of what we will be able to generate in terms of premiums will help us generate those margins. If you look at, the guidance is still 18% plus. Last year, we were at about 20.2%, so if you're in the 18%, 19% range, we are still saying there could be a loss of about 100 to 150 basis points, which we had said even before and we are in line with that trajectory to be able to get that by the end of the year.

[Operator]

The next question is from the line of Bhaskar Basu from Jefferies.

[Bhaskar Basu, analyst]

I had a couple of questions. Firstly, on the NBFC side, mainly around NBFC. So this quarter also, you kind of bought about purchasable loans of about 2%. Last quarter, there was about 2.2% of portfolio purchase. So can you help us understand which segment were these loans purchased? And what is the strategy around loan purchases going forward?

[Rakesh Singh, executive]

[indiscernible] we disbursed close to INR 14,000, INR 15,000 crores in a quarter, and this is -- if you look at, it's a small part of the overall disbursement numbers. But in -- the way we look at it -- your second question was which segment. This is primarily secured loans, which is there. A very small part would be unsecured, but primarily secured is what we have. In terms of what is our strategy, these are portfolio interventions. We look at in terms of whether it's assignment of the portfolio or buyout of the portfolio. We look at both as an opportunity and our ability to cherrypick big good quality portfolio, that's what we look at.

[Bhaskar Basu, analyst]

Yes. I mean, basically, the point was it's almost 2% of the book. I mean, so it's almost like 4% of book purchased in the last 2 quarters. And especially given that your own channels are building up. What is the driver for this essentially? I mean, I would have probably expected more from the organic channel.

[Rakesh Singh, executive]

So it is -- if you look at organic channel, almost 90% of the sourcing or disbursement, which is happening through the organic channel. This is a supplementary in terms of if you look at. And also, Bhaskar, if you look at the repayment on this segment because if there is a PTC or [indiscernible] transaction, the repayment is quite fast. So disbursement might be slightly, but -- as you said, the net growth is very small for the quarter. So it's not even 2000 -- almost 50%, 60% of that comes back from the whole portfolio as a repayment.

[Vishakha Mulye, executive]

And Bhaskar, another thing from a strategy perspective, see one has to keep looking at opportunity in addition to the channel and the direct channel that we have, and we continue to leverage those channels. But if you look at the opportunity today in the market because of the liquidity position, which is there, there are certain franchises, which probably have more access to that liquidity.

Whereas a franchise like us has an access to that liquidity at a reasonable cost. Now naturally, people have started -- they have already built those channels where they're in a position to actually originate the assets. We look at this as a great opportunity with our franchise who has an access to capital, particularly the liability capital at a reasonable cost [indiscernible] this opportunity. So we'll continue to look for buying and selling of the portfolio in the market as an activity. Today, we believe there is an opportunity to buy. In the future, if our appetite is completed and we have built such a good franchise, we probably will continue to churn our portfolio as we go forward on both sides.

[Bhaskar Basu, analyst]

Okay. So just following up on this, essentially, the spreads you make on these pools purchased are the comparable less or higher than you organic channel.

[Vishakha Mulye, executive]

So we always do our unit economics, 2 or 3 things that we look at very clearly. One, we will never compromise on the quality. So it has to match our credit underwriting standards that we would have done for our own assets. Second, in terms of unit economics, whether it's a return on asset or return on equity, it has to mark up and make that minimum hurdle that we have for own assets. So these are the 2 things that we continue to do. And to be frank, this we will do in both our lending companies and [indiscernible] as we go forward.

[Bhaskar Basu, analyst]

I have two more questions. I mean, one, on the OpEx side, OpEx has been obviously lower and -- is it more seasonal? Is it something to do with more acquisition to purchases? Or do you expect some of it to normalize? So any guidance on the OpEx side?

[Rakesh Singh, executive]

This is for NBFCs, Bhaskar?

[Bhaskar Basu, analyst]

Yes, NBFCs, yes.

[Rakesh Singh, executive]

So Bhaskar, if you look at last quarter, we had advertisement marketing costs, which were there. We had run a campaign. So there was a marketing cost in the last quarter. We have always operated in the range of 30%, 31% cost-income ratio, and we will continue to operate in that range. Yes, there will be one quarter where some marketing expense comes out or some payout comes out, but it will normalize. So we will continue to operate in terms of guidance, 30%, 31% cost-income ratio is what we have always operated at, and we will continue to operate.

[Bhaskar Basu, analyst]

Okay. Just my final question, if I may. On the provision coverage, this has come down sequentially. So is there a recalibration of PD/LGD or you expected it through. What would be kind of the steady-state provision coverage you expect from this book? And the related cost question is also around the write-offs this quarter, please.

[Rakesh Singh, executive]

Bhaskar, if you look at our provision cover, it is quite in line. I think last quarter was 49.9%. This quarter is 49.5% of [indiscernible] is in same line and it hasn't come down. If you look at -- because also our portfolio is primarily secured, 70% of our portfolio is secured. So that's the reason this is a very good provision coverage for that segment. And if you look at for a higher risk segment, which is consumer and personal loans, there, our provision coverage is almost 86%. So purely in line with the unsecured business, which you see 35%, 36%, where we have a credit guarantee of almost INR 4,300-odd crores of portfolio, we have credit guarantee on that portfolio. So that's the reason why the credit guarantee [indiscernible] there. So it's been quite stable, and there's no reduction in terms of...

[Bhaskar Basu, analyst]

Yes, it's not. I take your point. And just the write-off number, please.

[Rakesh Singh, executive]

It's not readily available, but Bhaskar, we will come back.

[Operator]

The next question is from the line of Suresh Ganapathy from Macquarie Capital.

[Suresh Ganapathy, analyst]

So I just had a question on your ROA targets in the medium term, right? So -- you had earlier guided that in the NBFC business, we wanted ROA to be 2.7% to 3%. Now -- that's on an AUM basis. And as of now, the number is like 2.4% flat on that for the past couple of quarters. Now you're guiding for stable margin, stable credit cost -- are you confident that you can meet this 2.7% to 3% range? When it will happen? What are going to be the drivers? Because really it looks like we are not going to see that kind of a number happening anytime soon. So any clarity on that would be great.

[Rakesh Singh, executive]

Suresh, we had always guided that we will come to 3% ROA in the next 2 to 3 years year.That's the period which we had always guided. On that front, we still are confident that we will be able to deliver. Yes, there has been some recalibration in terms of change in the product mix.

And that's on the backdrop of regulatory requirement because the risk range went up. There was some concern on small ticket unsecured loans. And that's the reason we took that very calibrated call. So we will continue to follow 3%, and we will deliver that in the time period, which we [indiscernible]. And what will be the drivers, if you look at -- see, if we grow secured business, instead of, let's say, personal and consumer, then my credit cost will offset the difference because my credit cost will be lower in the secured business.

So clearly -- but as I had mentioned earlier that we are looking at growing both personal and consumer and also unsecured business. And if you look at, unsecured business comes primarily at the same yield range as of personal and consumer. So we still are following that. And yes, for few quarters, this recalibration which we took, yes, but we are confident that we will be [indiscernible].

[Operator]

The next question is from the line of Nidhesh from Investec.

[Nidhesh Jain, analyst]

So first is on NBFC, so do you expect the share of unsecured remaining at 25% from here onwards? Or we expect share to reduce?

[Rakesh Singh, executive]

So if you look at personal and consumer. Earlier, we had always guided that our cap on personal and consumer used to be 25% and 50-odd percent for MSME and 25% for corporate. But at this point in time, personal and consumer is at 15% [indiscernible] MSME. Unsecured, secured is closer to 54%, 55% and remaining corporate. So we will continue to work in that product mix, Nidhesh. Then, at this point in time, as I said, because the last 3 quarters, we have calibrated the personal and consumer, which has come down. But as we leverage the platforms which we spoke about, branches, ABCD app and our direct sourcing channels, we will build that up as well as we go forward.

[Nidhesh Jain, analyst]

And what is the share of direct sourcing in unsecured today?

[Rakesh Singh, executive]

Just give me a minute, I have the number. So if you look at in personal and consumer -- digital, we source digitally 53% of our loans through digital, direct is 28% and [indiscernible] is 19%. At company level, if you look at, direct is 69%, almost 70% of our business at a company level, we do it directly. This was 67% last quarter. So if you look at, our direct sourcing has been increasing.

The personnel and consumer also, last quarter, we were at 22%, that's gone to 28%. So that's what we are really focusing on in terms of acquiring customers directly.

[Nidhesh Jain, analyst]

Sure. Next is on Life Insurance. Can you quantify the impact of surrender value regulation on a gross basis on overall company on a [indiscernible] full year basis of last year's margin. If we move to the new surrender value regime, what would be the impact on our margins.

[Kamlesh Rao, executive]

So like I said, there are 2 impacts. One, of course, is the impact on the fact that the first year surrender value is available to the customer right now, which was not available before. Industry, obviously, will respond to that differently in terms of looking at what kind of commission structures should be paid, whether it should be brought back for whatever is not persisted. So that impact is not very large.

The second impact comes on account of high surrender value which happened in the subsequent years, which is typically year 2, year 3, and year 4. If you look at our persistency numbers over the last few years, we typically now are in the top quartile. 13 month is at 88%, even our 61st month now is at 66%. And these are overall persistencies. Actually, our persistency in the traditional part of our business is even higher than these numbers.

So typically, the impact on a portfolio basis could range -- this is our mix that we have of the product of traditional, roughly in the range of 100 to 200 basis points, inclusive of the impact on the first year money to be paid back to the customer, like I said, through multiple approaches, relooking, realigning at structures on distribution, business mix as well as what we want to do on our product offering. We don't think that will have an impact for us on the net VNB margins that we have guided [indiscernible] for this year.

[Nidhesh Jain, analyst]

Sure, sure. So this 100 to 200 basis point impact that you mentioned is on a gross basis without making any changes to the structure sir?

[Kamlesh Rao, executive]

On a product construct basis, it will be a little higher because of the -- it impacts only 50%, 60% of the mix because it doesn't impact you on ULIP, it doesn't impact you on protection or par it doesn't impact you. It impacts you only on the nonpar part of the business. That will roughly come back to about 150 to 200 basis points.

[Operator]

The next follow-up question is from Suresh Ganapathy from Macquarie Capital.

[Suresh Ganapathy, analyst]

Forgot to ask one more question which is on capital. You're growing at 25%, your ROE is at 15%, 16%. And your capital adequacy is just at 16.5%. So -- just wanted to understand what is your thought process here? Because it is very precipitously close to that 15% mark, right? And I think you need to keep some margin of safety. So are we looking at any kind of capital raising? What could be the amount? Any clarity on that [indiscernible]?

[Vijay Deshwal, executive]

Yes, Suresh, Vijay here. Suresh, as you are aware that we had reached our INR 3,000 crores of equity capital, of which we infused INR 1,600 crores in that NBFC in the last 1 year and about INR 300 crores in the last quarter in HFC. Further, we did the OFS of our AMC, which got us another INR 600 crores. And also, we got the IRDA approval to monetize the insurance broking firm, which will help us get another INR 200-odd crores.

So we have close to about INR 1,900 crores to INR 2,000 crores of equity capital right now. I think which will suffice us for the next about 20 -- 18 months of growth. And also, as you know that we have announced the amalgamation of ABS and ABCL. And as we had mentioned in the last call that it helps us release our capital of close to about INR 3,000 crores, INR 3,500 crores deal. So I don't see CapEx in near term should be an issue, and we'll be able to [indiscernible] .

[Suresh Ganapathy, analyst]

Okay. But the stake in NBFC will go up. Again, you come back to the free float ratio, if that is the case.

[Vijay Deshwal, executive]

Sorry, come again?

[Suresh Ganapathy, analyst]

So because you will have to infuse money. The holding company infuses, the stake in NBFC further goes up, right?

[Vijay Deshwal, executive]

100% subsidiary, Suresh, so there is no...

[Suresh Ganapathy, analyst]

Okay. Okay. Sorry for that.

[Operator]

The next question is from the line of Sameer Bhise from JM Financial.

[Sameer Bhise, analyst]

So the Stage 3 inch up in the P&C is quite expected. Can you just elaborate what's causing the unsecured business loan delinquency inch up and some thought there while it is guaranteed for yourself and should not cause any major credit issues, but I just wanted to understand that.

[Rakesh Singh, executive]

If you look at the 3.4%, which you're seeing, if I exclude the guarantee portfolio, my Stage 3 is 1.5%. 1.5% Stage 3 for our 17%, 18% clean loan book is a very, very good quality. So that's what I just want to share.

[Sameer Bhise, analyst]

But any specific reason that you are saying, I mean, on a gross basis, even if we don't include guarantees?

[Rakesh Singh, executive]

What is it? come again?

[Sameer Bhise, analyst]

Any specific reason you wanted to highlight that why would one see inch up in the delinquencies for the unsecured business loan book?

[Rakesh Singh, executive]

So if you look at, it's just the denominator effect here as well in quarter 1, we have not -- it is very normal in terms of flow, which we are seeing both in personal and consumer and unsecured business. And this is the reason why we are waiting for the [indiscernible] the guarantee money to come from SEBI when we can net it off and write off whatever the accounts which have gone back. So that's where it is. We don't see a 1.5% Stage 3 or gross NPA, whatever you call it, for a 18% rate yield product.

[Unknown Executive]

This is more or less flattish. So it has not gone in absolute terms, gone up in absolute terms.

Just that the portfolio we have recalibrated and therefore, you are seeing a little bit of a percentage and even at an overall portfolio basis, if you look at GS3, it remained -- we were at around INR 2,700 crores.

[Sameer Bhise, analyst]

Yes, overall, it's less. This is helpful.

[Operator]

Thank you. Ladies and gentlemen, due to time constraints, that was the last question. I would now like to hand the conference over to Ms. Vishakha Mulye for closing comments. Please go ahead.

[Vishakha Mulye, executive]

Thank you, once again, for joining us today evening. If there are any questions which are pending, please feel free to reach out to me or Vijay or Pramod or Ashwin. We'll be very, very happy to take any questions. So thank you, look forward for continued interaction.

[Operator]

On behalf of Aditya Birla Capital, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.