Muthoot Finance Ltd
NSE:MUTHOOTFIN
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
1 274.7
2 057.75
|
| Price Target |
|
We'll email you a reminder when the closing price reaches INR.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
Muthoot Finance Ltd
You don't have any saved screeners yet
Ladies and gentlemen, good day, and welcome to the Muthoot Finance Q1 FY '24 Earnings Conference Call, hosted by DAM Capital. [Operator Instructions]
Please note that this conference is being recorded. I now hand the conference over to Mr. Sanket Chheda from DAM Capital. Thank you, and over to you, sir.
Yes, thanks. Hello, and good evening to all of you. We have with us the entire management team of Muthoot Finance to discuss the Q1 FY '24 results. Naming the management, we have with us George Alexander Muthoot, who is the Managing Director; Mr. Alexander George, who is the Whole-Time Director; George M. Alexander Muthoot, Whole-Time Director, George and George -- George and Jacob, both of them are Whole-Time directors, Mr. Eapen Alexander, Executive Director; K R. Bijimon, who also an Executive Director; and Mr. Oommen Mammen, who is the CFO.
Without further ado, I will hand our call over to Mr. George Alexander Muthoot for their opening remarks, followed by which we'll take Q&S. So over to you, sir.
Thank you, and good evening to all. I am George Alexander Muthoot, Managing Director. Today, Muthoot Finance had its Board meeting and the results of the Q1 have been finalized, and it has been uploaded to the stock exchange also.
I would like now like to say a few things about the performance highlights of this quarter. Our consolidated loan assets under management has increased year-on-year 21% and today stands at INR 76,799 crores. We also had the highest ever quarterly gold loan disbursements of INR 53,600 crores. All-time high gold loan portfolio growth in any quarter 1 of INR 4,164 crores. There is an increase in the consolidated tax of 27% year-on-year, which is at INR 1,045 crores, and the stand-alone profit after tax 22% year-on-year at INR 975 crores. There is also an all-time high interest collection in any quarter -- first quarter of INR 2,863 crores.
On a Q-on-Q basis, the gold loan assets have grown by INR 4,429 crores in this Q, which is up by 7% quarter-on-quarter. And the gold loan assets has also grown by INR 4,164 crores quarter-on-quarter, 7%. Other key highlights we would like to place here would be, we opened 59 new branches in this quarter. We received permission from the RBI in July last month, to open 140 new branches. We have raised INR 179 crores through the 31st public issue of secured NCD, mainly from retail industries.
As far as the subsidiaries are concerned, the growth revival continues. And for Muthoot Finance, the growth home finance, the gross AUM stands at INR 1,501 crores, with a growth of 4%. The disbursal this quarter is INR 109 crores versus INR 59 crores in the quarter of last year. The interest income is up by 10% to INR 37 crores versus INR 34 crores in the last quarter. The profit after tax of 4.72 versus INR 1.41 crores in the same quarter last year and INR 2.1 crores in the last quarter.
GNPA and NNPA stands at 3.79 and 1.21 in this quarter, respectively, against higher GNP of 4.01 and 1.39 in the March of last year. The provision coverage ratio in the home finance is 70.37 higher than the required provision as per NHB norms. Muthoot Money, there's a continuous decline in the NPA through physical collections witnessed consistently throughout the quarter, the NPA decreased to INR 2.6 crores 6% from 3.72%.
The gross loan assets has increased from INR 387 crores to INR 496 crores, and the branch network increased to 185 from 149. The Belstar Microfinance has seen an improvement in the disbursement month-on-month to INR 700 crores per month, the gross loan assets under management crossed the INR 7,000 crores mark, and the collection efficiency on regular accounts is 99.4%. GNPA stands at 1.62% and NNPA at 0.21%.
There was an improvement in the credit rating and the outlook has changed from AA- Stable to AA Positive by CRISIL rating agency. We have -- Belstar has also started expansion other than Tamil Nadu states, to reduce the concentration in Tamil Nadu which is our home state. This has been initiated in line with the long-term strategy to diversify the concentration from 49% to 35% by financial year 2026.
All details are there in the file. With this Muthoot Insurance Brokers has -- is a wholly owned subsidiary, has generated a total premium of INR 148 crores premium collection as it is 131 and the profit after tax stood at INR 10 crores versus INR 4 crores the same quarter last year.
Asia Asset Finance plc, which is the Sri Lankan subsidiary, where Muthoot hold 72.92%. The loan portfolio grew to LKR 2010 crores during the year as against LKR 1762 crores last year, which shows an increase of 14%. Year-on-year, revenue has also grown up and the profit after tax stood at LKR 6 crores in this quarter as against LKR 5 crores in the same quarter last year.
I think with that, I would like to conclude my initial opening remarks, and I would now leave the floor open for clarification from the investors. Thank you.
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions]
The first question is from the line of Nischint Chawathe from Kotak Securities.
Just trying to get a little bit of sense on your cost of borrowings, which have inched up by around 40 basis points quarter-on-quarter. So if you can kind of just explain what exactly happened over here? And what will be the outlook for cost of borrowings going forward?
So Nischint, the cost of borrowing for the quarter stands at 8.41 percentage. March quarter, it was 8.04 it's an increase of about 37 bps. As you know, most of the banks, [indiscernible] is around 8.6% or 8.65%. So gradually, it will move in that direction unless there is a reduction, which is not likely to happen, I feel in the next 6 months to 1 year. So it is more moving in that direction.
Sure. And on the new term loans, if you kind of try to see it mathematically, there is some compression on a sequential basis, not very significant, but some compression. So how should we see that? And in light of the fact that this cost is going up really significantly, let's say, over last quarter and this quarter, would you kind of see overall rates going up?
So March quarter, the yield was 18.48 percentage. This quarter, it is 18.08. If you look at the last year, it was 17.3%. So compared to last year, certainly, it is a higher number. Of course, no gold loan business, that could be because it's a short term, there could be always be a fluctuation of 30, 40 or 50 basis points, fluctuations side by side. So we feel this is a normal thing which can happen because it is a very short term.
No, no, fair point. But I think the point I'm saying is that given the fact that if you look at last quarter, which is first quarter and second quarter, we're probably looking at around 60, 70 basis points kind of increase in cost of funds. Probably half of it has happened and maybe some of it is kind of coming in the next quarter. So in light of that, would you sort of believe that across the board, there would be some hikes in gold loan rates or the competitive scenario says that, it doesn't make sense.
Yes, you're right, because it's gold. Borrowing rates are also going up. Certainly, we'll be increasing our lending rates also, as you said rightly. We have tried to maintain our spread and NIM to the earlier level so that, that doesn't get affected. Overall, the cost of borrowing is going up. Definitely, the cost of borrowing for our gold loan, gold loan or there are other loans also should go up. And we wouldn't find it difficult to pass it on to the customer. That's what we usually been doing. Certainly, we'll be taking account on that also at the rates of gold are increasing. We'll pass it on to the customers.
And have you seen any of this in the ground right now or you just probably take a call in next couple...?
Because we review these interest rates maybe on a monthly basis or once in 2 months, we review. And wherever we see there is some tweaking to be made, because there are so many, so many schemes, et cetera. We tweak some of these schemes so that we get a better need. Cost is going up. Certainly, we will pass it on to the customer also. So that -- that is definitely the policy here.
Perfect. Thank you very much and all the best.
[Operator Instructions] The next question is from the line of Raghav Garg from AMBIT Capital.
Just one question from my side. So historically, we've seen that your [indiscernible] margins in Q1. They always tend to be lower quarter-on-quarter versus Q4. Can you help us understand what is the element of seasonality here?
And my second question is that, though I understand that margins have compressed quarter-on-quarter because of higher borrowing costs. I think you partly answered that, should we expect margins to expand in subsequent quarters and overall margins for the full year to be higher than last year? Those are my two questions.
We -- generally, we have a NIM of between 11 plus as a spread of around 10% in the plus or minus 0.5. So I think going forward also, we will be maintaining debt. And as I said earlier, if required if the cost of borrowing is going up, we'll increase our cost of lending. We will increase our lending rates also, sorry.
Sir, but could you help us understand why your margins are always lower in Q1 versus Q4 of last year?
I don't know. We've never thought like that why is quarter lower. So, yes a small, small...
Your question was on the seasonality. I don't think now since we are spread out across the country, there is any specific seasonality in terms of, it is all about the schemes you drive. Now as I said to [indiscernible] because it's a short term, there could be always be different schemes run parallel in different locations.
So there could always be a fluctuation of 30, 40 basis points between quarters or any time. So that is a normal thing. But compared to last year, we have already taken a call that we should increase the interest rates. So that's why the rate has gone up during last year because first quarter, you can see that the yield was 17.3 percentage. And that is more because of the impact of the impact of the [indiscernible] scheme. Subsequently, we revised the interest rates continuously in the subsequent 3 quarters, which now helped us to reach 18% or 18.4% last year in the subsequent quarters.
Sure. And just another question, sorry. So you've delivered about 18% gold loan growth. Your guidance has always been about 15%. Is there a chance that you would like to revise your guidance given the positive momentum that we've seen in this quarter?
Yes, you're right. But the way we would try to stick to what we said earlier. We will try our best to deliver more than what we have promised.
Sure. That's all from my side.
[Operator Instructions] The next question is from the line of Piran Engineer from CLSA.
Congrats on the quarter. Just wanted to clarify one thing. Now with our loan-to-value ratio at 68%, it's fair to assume that this ratio does not go up much more. And whatever growth should come from tonnage growth, right?
I want to say to assume that it is just that the 68%, 70% is their average -- the loan, which people take average. Some people take 60%, some take 65%, and majority of them take 75%. It is the 68% is a function of that the rate -- the amount which people take on their loan.
So it's not that we are going to maintain the LTV at 68%. It is just -- it just happens. It happens. If people don't need more money. They don't take more money. They need more money, they take. So there is no relation that we should -- we cannot do. We are permitted and we would like to go even upto 75% but if people don't want it, we don't give it.
Got it. Got it. Okay. So that was all from my side.
[Operator Instructions] The next question is from Pratik Kothari from Unique Portfolio Managers.
Good evening, and thank you. Sir, one is, qualitatively comment, I see in the past quarter, you had mentioned that the rural demand tends to be picking up for the kind of products and customer segment that we cater to. So one qualitatively comment, and we are seeing these numbers, too. So you can comment how we see demand shaping up and also the competition that we saw 6 to 18 months back, just some update on that.
No, the business process function comes from all the areas and we have been confident of maintaining our NIM, et cetera. Our -- so I think our non-gold loan segment also continued to grow and we witness improved business performance. And so far, we have seen that gold loan also is driven by strong domestic demand. And I feel that going forward, the demand will be there, both in the rural as well as the semi-urban and urban areas also.
Sir, any comments on the competition. How is it shaping up currently?
So as you know, we -- competition has been there and probably from the banks, et cetera, has been there for the last 1 or 2 years. We have -- nevertheless, we have also been able to grow our book. So competition is there. As I said earlier, we -- when people feel this is a good sector to be in, so more and more people are coming. And the players -- with focused players will continue to do better. And I think our results in the last 2 quarters also proved that we have been able to maintain our position as a year in this segment.
If the competition is receding, I mean, at one point of time, we assume you make 12%, 13%, 14% spread, it might be one-off, but you used to do 12% spread for quite some time. In your comment today that we will be in the 9.5, 10.5 range. So what has changed then in the industry?
The 12% and excess very, we should say, one-off time when we did more, what should we say, auctions at that time and relaxations were better, et cetera. At the time when we got more yield at that type. But as a one-off. So generally, we also should be, tend to be happy with the spread of around 10%. I think we should be able to -- we should take that going forward also. 12, et cetera, came 1 or 2 years or so. But just now, I don't think that can be something which we also feel that it can be sustained and continued.
Right, right. And sir, last, what would be the auction numbers for this quarter?
It's around INR 110 crores, yes.
The next question is from the line of Bunty Chawla from IDBI Capital.
Sir, why we have not focused on Stage 3 assets. It has still increased from March 3.79 to 4.26. Because if we think -- if you compare the last year, still gold prices are still higher and we can go for collection efficiency or auction and decline or rest the increase in the asset quality front. Any specific reason we are still allowing the customer to hold the asset though it is above 90 days, after the 12 months also? Any specific reason?
So we have actually been quite supportive of the customers. And we have been -- many of our customers have -- we have been collecting a large interest from many of these customers. So all the customers -- some of the customers pay past interest and those which have gone into the Stage 3 category also have accounts.
Many of them have accounts which have already paid. Most of them would have paid past interest also. So when they are paying past interest, it shows that they have not abandoned the gold, they would like to keep their gold, they need into more time. So when these customers approach our bank and request that please do not auction this gold, please keep -- tend to keep it for some more time because that definitely endures well with our customers, and they are also quite happy. And finally, the company does not lose money here.
If you look at the NPA amount of 2,878, that if you look at the tonnage of that, it is only 60%. The LTV at today's price is only 60%. So even we say add all the interest on that even then, we are still in the money. So the point is as long as we are in the money, customer has paid past interest. He has shown his interest [indiscernible] his commitment to pay more and he doesn't want to lose the gold. We don't want to auction.
We can auction the gold, but then we will be unfair to the customers. So since we can safely carry some of this NPA in our books, we tend to -- or not us, we tend to support the customer so that customers don't go away because once you auction it the customer is definitely unhappy. And those who have paid past interest, et cetera, many of them and requested for extra time, we give them. This has been our position. And finally, over the last year, because we have not lost any money in this -- through NPA. And none of these NPAs, loan loss.
Sir, out of this INR 2900 crores, if you can share how much percentage of customers would have not given a single penny? Is it all the customers have shared some bit of interest.
We haven't got any such number, et cetera, but many of them pay money and that is why we give them more time. So it is the branch managers. And the data also shows that we have not lost any money.
That was very helpful, sir. And sir, if you can share one data point, interest accrued, what will be there as of March '23, and similarly, Q1 FY '24 numbers, sir?
June, it is INR 1,866 crores. [indiscernible] And March [ INR 1,853 crores ].
[Operator Instructions] The next question is from the line of [ Rajagopal Ramanathan from Seaco ].
Just two questions, sir. One is you -- I don't know whether you normally disclose this, but do you disclose NIMs for your vehicle financing business and your microfinance business? If not, can you indicate what they could be, a range at least?
The vehicle finance? Vehicle finance...
Yes. The Muthoot Money business.
So the yield on the 2-wheeler portfolio, we have roughly about 22 to 23 percentage. That is on the yield side. The cost of borrowings, Cost of borrowings would be roughly about 8.5%, 8.3 percentage.
8.3%. And what would it be for the Belstar book?
Yield would be in the 24 to 25 and cost is around 10 percentage.
Cost is around 10. And could you also just sort of explain what led to a significant pickup in NPAs in the vehicle financing business? And what have you learned? And because you have -- you intend to infuse equity into this business, what is your strategy going forward? So some strategy would always help us.
Yes. So we had seen a spike in the NPA for our vehicle finance business because about 3 years back, we were funding commercial vehicle, construction equipment, both new and used. Those are product lines that we have either to stopped about 2 years back. And today, we are focusing purely on the retail customers that are aligned with our gold loan customer base and focusing only on 2-wheelers and used cars.
Our NPAs quarter-on-quarter for the last 3 quarters has been coming down in Muthoot Money. But I think our learning was that probably on the commercial vehicle, construction equipment sort of product lines, it requires a little different sort of skill compared to the retail franchise that Muthoot Finance.
Okay. So going forward, you will continue to focus on segments like 2-wheeler financing and what else, sir -- just vehicles?
As of rate it is certain tools of financing in used cars, et cetera.
Used cars.
For the next 10 years, we'll do only that. We -- year-on-year, we will look at what is the better one and the change and tweak according to the requirement.
Fair to think that this would at least be your strategy for the next 3 years, right?
Don't put words into our mouth. Let us do the business and the strategy.
Great. And what about Belstar? Now what is the capital adequacy at Belstar?
It is around 20% in the [indiscernible]
20%, is it.
Yes.
So would you need to increase capital adequacy there? Or would you need to go out and raise money?
Current year growth , we're thinking of taking off some generic options we are thinking. I think [indiscernible] contract options also as we're thinking.
Okay. The reason for asking is, are the agencies mandating any minimum threshold from a capital equity standpoint for the credit rating that you are currently at?
No, no. We're at 30 actually this year current growth. But it is then get going. So maybe the -- when they see the growth of [indiscernible] and before that, the committee has been formed to find out options for [indiscernible].
The next question is from the line of Shweta from Elara Capital.
Congratulations for this set of numbers. A couple of questions from my end. So firstly, year-on-year basis, we have seen a rise in bank borrowings. So is it despite incremental spike in cost of funds, which will come by should definitely come from yours, what sort of repricing you're seeing on this book? And how would the mix shape up ahead?
And secondly, because you clearly mentioned that -- I mean you admitted that competition sustained. And define that, we have posted over 20% growth this particular quarter. So how sustainable is this? And since you mentioned that focused players will continue to do well. So how are we doing differently today now that even [indiscernible] loan schemes are behind? So can you please address that?
So I think bank loans have gone up if it has gone up, it also has gone up because of AUM also increased. There is a growth of about INR 600 crores in this quarter. So it should be compensated by some sort of borrowing and the bank loans should have been one of that. And we had -- we also repaid some of our ECB loans. So that set us brought down the other than bank borrowing. So bank borrowing are a part of or [indiscernible] and we'll need to do a bank borrowing et cetera.
Next questions was about whether the 26% or 25% is the fair mix. I think I answered earlier also. We have given a guidance of 10% to 15% for the year, and that's what we should be achieving that. We don't want to change our guidance now just based on the good performance of Q1. We'll try ourselves to do the best and probably do better than what we have promised.
And I don't remember what was your second question. What is your second question?
So the same -- it was a follow-up. So you mentioned that focus players will continue to do well. So what differently you're doing now that even [ Trigr ] loan scheme are behind. So to sustain this growth defined competition.
Okay. Actually, we are not doing anything different. We are continuing to do what we are doing. It is only the new players who come and start doing different things. We continue to service our customers, we continue to do the good and good service, we continue with what we are doing. Some of these that is because we said we are focused.
Some of the other players come, will do something, they get sell business up on site, they lose interest et cetera. Okay. Only time will tell. For us, we are focused. We are continuing -- we will continue our focus on who we loan et cetera. And I'm sure going forward, the focus price will definitely be doing well going forward also.
The next question is from the line of Pranay Khandelwal from Alpha Invesco.
I'm sorry if I mix this information, I think I joined a little late. I just wanted to know what sort of outlook on the yield going forward? Are you looking to maintain the yield or will you be looking to increase the yield, on the gold loan side?
Okay. I said -- we already expect that the yield will be a function of the borrowing cost also. If our borrowing cost -- the yield will be a function of that borrowing cost. If the borrowing cost is going up, our yield. The lending rate also will definitely go up. So it's not that we are going to maintain the yield, we will try to maintain the NIM and the spread.
Okay. But in the same respect, I think if banks keep on their [ borrowing ] into gold loans. I think wouldn't be harder to pass on that borrowing costs because there will be stay and probably look to maintain them at a lower interest. And will we be able to pass on cost, if that happens.
I think we have crossed that bridge of almost 2 years back. 2 years back is bank started this and we have been able to maintain our business and our position and maintain at least a good part of our NIM et cetera. So I think going forward also, we'll be able to do that. If it's nothing new, sir. It is last 2 years, 3 years, banks have been doing the same thing. And we have been -- our strategy has been to grow and we have been able to maintain reasonable NIM and spread.
Okay. And also, sir, do you have any -- do you -- what do you think about the impact OCEN relive on our business, Open Credit Enablement Network?
I didn't understand, sir. What is Open Credit Network.
So the government is coming up with a new initiative, OCEN, Open Credit Enablement Network. And that is supposed to help unlock lot of that is supposed to help a lot of underbanked and unbanked areas be reachable by financial services company. Sir, do we have a view on that if that will be a threat to our business?
No. In fact, we are actually embracing these things and building it into our business models for unsecured loans. So Muthoot Finance, as you know, has an unsecured salaried, personal loan product as well as unsecured business loan products also. So these are new initiatives and public infrastructure that the government is building, but we are also embracing that into our business models.
Next question is from the line of Abhijit Tibrewal from Motilal Oswal.
Good evening, everyone. So two questions. First one, for Oommen. Sir, I mean at the beginning of the call itself, you have guided that cost of borrowings, which are at about 8.4% can stabilize around 3.6%, which is where bank and [ CLRs ] are. Just wanted to understand, sir, almost all of last year, you didn't see any increase in the cost of borrowings. Now that you started seeing that increase, you think with the repo rates remaining here, the cost of borrowing should speak out around that 8.6%, 8.7%?
So as it stands now, with turn out -- it should be around 8.6, 8.65. We don't have a visibility in terms of that there could be a right above that.
Sir, the second question that I had was on the asset quality, you partly answered it. But, sir, I mean just trying to understand if the NPA on is appreciable you're giving more time to your customers, people who request you not to auction their gold jewelry. But what is the indicative of why you see that, I mean, people are not paying their interest or is it that people are not renewing their loans.
Is it indicative of some stress somewhere that people are not coming forward and paying their interest in their loan. Because you've seen multiple cycles, multiple gold prices -- as well gold prices moving up and down. At this point in time, where gold prices are higher. What is this indicative of, I mean, this increasing NPA is customers are not paying their interest?
First thing is to understand is this is not a EMI loans. We have units for 12 months loan, and to people who do not have a regular cash flow. This has been taken by something. Somebody has a regular cash flow, monthly expense. He would take an EMI loan or personal loan et cetera. He is expecting some money from [indiscernible]. It has not reached.
And certainly, the number of loans which goes here, it is not even 2% of our portfolio. So if we have let 100 people, only 2% to 3% of them come into this bracket. All the balance 97% 98% people, we've have already taken it back. So doesn't show that there is some big stress in the market. Individual people who have some stress. That is why they are coming for home a loan also because they don't have monthly repayment capacity, monthly resource.
We're taking a loan, paying higher interest than any other loan that is cost of the comfort their rupee because there is no EMI pressure. So this is just natural, nothing great in this.
As I said, we are definitely in the money. The principle of interest, if we auction the gold, we can definitely get it, but then people are paid some past interest. They have shown their commitment to the borrowers that is clean to take it back. It just needs more time. And their weakness point is because they want more time. Some customer usually pay. Even and after sometime they are coming forward, we have to auction it.
So just give a helping hand for an adjustment to the customer so that we will no need to auction. It's definitely a customer-friendly mission. And that is one of the reasons why many customers come choose Muthoot over many other companies. You should see that has always been said, the good filers have all the other industries right on the 1, right from any branch. Any branch of Muthoot have succeed 4 or 5 [indiscernible].
But still, many customers come to us because of some of these things. We have been more reasonable and more accommodating of the customer. And we have never lost any money also on this cycle. We gained the customer. This way, we give more time to these customers. [indiscernible]
Okay. Sir, -- and so last question, just a follow-up here. Just trying to understand when you said it, I mean, we wait for a certain time and then eventually, if the customers will not come, that is where the auction the gold. And obviously, I understand we don't move money somewhere. Earlier you also said that and some of these customers who are there in stage 3 [indiscernible] around 60%. So if you add the interest, you will still be in the money. But I mean, internally, what is it that you factor how many -- for how months or quarters do you wait before you eventually decide that, okay, let's auction the gold...?
That is a function which at the field level, the managers take. The managers come back and say, sir, there is no point giving any more time rather we auction gold. It's a decision taken at the branch level individually.
Sir. That's all from my side. Thank you.
Next question is from the line of [ Sagar Jani ] from B&K Securities.
So basically, your active customer base has gone up by almost 2% in the quarter Q-on-Q. Do we expect this trend to continue going ahead for the rest of the quarters? Are we confident of having a similar sort of range every quarter going ahead?
Yes. I think we have taken quite a lot of initiatives. We have driven. I think we will also see that we have put a lot of advertisements other than Amitabh Bachchan we have also bought in Madhuri Dixit also at our [indiscernible] going on the media side. And we have also started or rather doing more of these local road shows and initiatives. So definitely winning in more customers.
So going forward, we should see more customers coming in. But as you also know, there's a big churn here for customers come, customers go, 100 customers come, 80 customers take back their gold. Another 110 come next year rather than 100 goes away. So it's good churn, quick churn, yes. Our effort is to see that what you have taken, a gold loan, earlier come back to us or new customers. So we take their gold and take away back, we would expect them to come back. Maybe up to 3 months, 6 months et cetera. [indiscernible]
Sure. And sir, so considering you're investing in marketing and so are we kind of confident of maintaining our earlier guidance of OpEx to average assets of 3.5%, or if you will we see an increase?
Is didn't hear you, what is the percent...
OpEx to average [indiscernible] last quarter. You're guided 3.5%..
That's not very much drastic increase or decrease in the OpEx exercise. It will be almost the same line [indiscernible], not that we are going to invest thousands and thousands crores on these things. To be reasonably good investment we make year-on-year.
Right. And sir, last question. Can you share your AUM by tickets sir, it's less than INR 50,000. INR 50,000 to INR 1 lakh and above INR 1 lakh, gold loan.
Let's see someone take it up. Any other questions, you can take some is will [indiscernible] hold on.
Loans about INR 3 lakhs is 27 percentage. Between INR 1 lakh and INR 3 lakhs it's 38%. And less than INR 1 lakh it is 24 percentage.
The next question is from the line of Arul Selvan from Independent Advisors Private Limited.
Congratulations on a great set of numbers. I had just a few questions. I was actually going through the performance of your micro finance subsidiary. And one thing that really stands out here is that over the last 2, 3 years, there has been a substantial improvement in the quality of your microfinance loans and the asset quality. I was just wondering, have there been some learnings? Have there been some changes in your strategy? Is this kind of the quality that you expect to kind of maintain going forward?
Yes, we would like to maintain this as this, but then these are the lower end of the pyramid, lower end of the business. But as long as there are no big hiccups coming in the market, I think we should be able to renew...
One differentiation, we say essentially on that is we have over like the other microfinance companies, the focus is here more on the [ SHG ] model. So that is at group level as at the [indiscernible] level we normally we're talking on some of the.
So that's one thing which is supporting the sickness as well as the reason is have to so the SHG groups are [indiscernible] model. So that's one reason. Of course we are some greetings and we did more deferral, all those things have helped us to know the collections also.
Okay. So could you just explain a little bit more about the difference between I'm guessing when you say SHG, you mean self-help group versus joint lending groups, right?
Yes. The SHG actually is a group of bigger growth of and the only train the receive or they're making and how to make an earnings as well as savings et cetera. And they don't need the money. So after 6 months, very good work, hand in hand, the group only the one is less. And the other one, there's just a borrower directly come, borrower of higher level lender, their number 1 concern is [indiscernible]
Something like a few months seasonings is there.
Yes, seasoning is the...
Before the -- that is the difference...
So the secular collection and that we have another differentiator like other microfinance companies, we have a branch model that we will have to come and revisit most of these or other microfinance companies, they don't have a -- they are currently excluded their growth and to be the connected. So I think those 2 are on differentiator with the other microfinance.
Okay. Okay. And any learnings in the last 2, 3 years? I mean, anything differently that you've done, which could kind of indicate that there's improvements and that will sustain this sort of level will sustain?
Yes, yes. We're monitoring [indiscernible].
Okay. Okay. I understand. So that bringing on it's actually related question. I also noticed that the AUMs of your housing and your 2-wheeler portfolios have shown a substantial improvement increase. Is there any guidance that you would like to give in terms of how much of an increase that I mean you expect for FY '24 in these portfolios?
In the housing finance, I think we will have guidance of INR 1,800 crores to INR 1,900 crores at end of the year.
Okay. Microfinance and 2-wheeler, sir?
2-wheelers, I think it's very modest. Very modest.
Okay. Okay. And the microfinance, sir?
Micro finance I think they want to reach about INR 9,000 crores. It's about INR 7,000 crores, we would like to reach about -- that's something the guidance there by the end of the year INR 9,000 crores.
Okay, okay. And one last question, sir, not that I'm complaining, but any particular reason for the cash levels to have decreased to these levels? I think 2, 3 years back, the total amount of cash that you maintained was much higher and now.
So there you're complaining about excess liquidity. We also wanted to reduce focus enough and loan growth has also started coming in. If you look at the last 2 quarters, we have grown almost like INR 9,000 crores, INR 10,000 crores. So that reduced the excess liquidity.
No, I understand. But my larger question here is that are you comfortable with the liquidity levels at where they are currently? Or do you plan to kind of get back to...?
This is a liquidity level, which is comfortable. We keep operating funds which should meet the growth requirement.
Okay. No, I mean, I was more wondering whether at these levels, you're able to be comfortable because the last time I think what sir was saying was that unless you have a substantially higher amount of cash available, it gets difficult, the bargaining power is not very high with the banks. I was wondering whether if you're able to continue borrowing from other sources at these levels...
Not an issue. It's also a good level, very, very decent level, because I don't want to mean -- there are some reports of some companies who are having almost similar AUMs, et cetera, with a very low cash in hand. So still we're much better.
[Operator Instructions]
Probably all the questions might have been answered by now.
Sir, actually, that was the last question in queue. There are no further questions. I'd like to hand the conference back to the management team for any closing comments.
So from the management side, thank you. And probably, we will continue -- we'll put it in our best efforts to do better and better quarter-on-quarter. We value your suggestions, we heard your comments. Please keep us well informed of [indiscernible] and we will from our side, see that we do the best for the company and best for your investors also for all the other stakeholders. We'll be doing our best going forward. Thank you for the support, and thank you for attention.
Thank you, Sanket, for organizing the call. DAM Capital.
Shall we switch off.
Yes sir.
On behalf of DAM Capital, that concludes the conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.