Aditya Birla Sun Life AMC Limited (ABSLAMC) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Q4 FY '24 and Full Year '24 Earnings Conference Call of Aditya Birla Sun Life Asset Management, hosted by InCred Equities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Jignesh Shial from InCred Equities. Thank you, and over to you.

Yes. Thank you, Yashashree, and good morning, everyone. On behalf of InCred Equities, I welcome all to Aditya Birla Sun Life AMC 4Q and Full Year FY '24 Earnings Conference Call. Along with us, we have Mr. A. Balasubramanian, Managing Director and CEO; Mr. Parag Joglekar, Chief Financial Officer; and Mr. Prakash Bhogale, Head of Investor Relations. We are thankful to the management for allowing us this opportunity. I would now like to hand it over to Mr. A. Balasubramanian, Managing Director and CEO of Aditya Birla Sun Life AMC for his opening remarks. Over to you, sir.

Thank you, Jignesh, and good morning to everyone. I hope you all had the opportunity to go through the earnings presentation, which is available on the stock exchange as well as on our website. Before highlighting the broad economic outlook, I'll provide an update on the mutual fund industry and ABSLAMC performance for the quarter ending March 2024. I'm happy to share that Aditya Birla Sun Life Mutual Fund, being one of the oldest private sector mutual fund in the country established in 1994, is gearing towards the completion of 3 decades of its presence as one of the pioneers in the Indian mutual fund industry. We feel proud to serve the growing needs of investors in the country and also contribute to the largest success of the mutual fund industry as one of the highly committed, well-governed mutual fund player. On the 30th year of our operation, we have set aside our growth path to achieve new milestones in respect of all our business verticals and make this year as one of our memorable year for our employees, investors, stakeholders and shareholders. Let me now begin with the economic outlook and mutual fund industry update. We are in a dynamic global landscape with elections happening in numerous nations and territories, collectively representing over half of the world population. The global macro picture really from 2024 presents a cautiously optimistic outlook with underlying dynamics influencing growth on one side and interest rates on the other side. We believe India will continue to remain in a bright spot with strong government funding in building infrastructure, increased investment coming from the private sector, ably supported by high domestic consumption. As is known, the Indian economy continues to exhibit resilience with a healthy projected growth rate in excess of 7% in FY '25 coupled with stable inflation, interest rates, currency and rising ForEx reserves. Indian equity market has consistently outperformed global counterparts reflecting strong fundamentals of Indian economy and the earnings potential of the companies across sectors. One should not be concerned with the recent market volatility which largely stem from the regulatory and mutual fund industry initiatives on small and midcap segment disclosure, which are aimed at enabling investors to make informed decisions. India's strong structural drivers and economic fundamentals remain intact, encouraging investors to continue participating in growth potential. We also believe that widespread growth will continue to be the driver of our market sentiment. With respect to mutual fund industry, as of 31st of March 2024, the quarterly average AUM reads INR 54.11 crores, growing at 34% on a year-on-year basis as compared to INR 40.49 lakh crores as of 31st March 2023. During the quarter, the mutual fund industry witnessed equity net sales of around [ INR 1,600 crores ] through new funds offering as well as in existing funds. The total NFO collection was around INR 800 crores to INR 900 crores, and the balance coming -- balance fund flows have come into the existing equity schemes as well as hybrid funds, sectoral, thematic, arbitrage and multi-asset allocation funds. The industry SIP flows grew by 35% year-on-year from INR 14,276 crores in March 2023 to INR 19,271 crores in March 2024. The total number of mutual fund folios stood at around 18 crores with an increase of 22% year-on-year with unique customer base around 4.5 crores. The individual average AUM grew by 43% year-on-year from INR 23.27 lakh crores to INR 33.31 lakh crores and contributed 61% of the total AUM. B-30 cities with an average AUM of [ INR 9.83 lakh crores ] accounted for 18% of the total AUM. Moving on to ABSLAMC performance. Turning on our strong foundational pillars, our focus has been to strengthen our main levers of growth in the organization by bringing in the right talent and making strategic changes in current leadership roles. In fact, our momentum in the last quarter is on the back of uptick in equity performance coupled with established -- well-established [indiscernible]. A robust growth in sales engine close to the ground connection, tech-enabled services and a growing digital business network. Building on this synergy and energy, the business is on a meaningful momentum and our team is geared to make the most of it. This has been witnessed during our annual investment conclave, which we called Voyage, attended by over 2,000 partners in Mumbai in the month of February 2024. In Q4 FY '24, our overall average assets under management encompassing alternate assets, reached INR 3.46 lakh crore size, reflecting a 22% year-on-year growth, possibly our mutual fund quarterly average AUM reached INR 3.32 lakh crores, with equity quarterly average AUM standing at INR 1.52 lakh crores. I'm happy to say that our SIP numbers during the quarter has witnessed good uptick moving from INR 1,005 crores in the month of December 2023 to INR 1,252 crores in March 2024, making a 25% quarter-on-quarter increase. We have added around 6 lakh new SIPs with approximately 2.5x increase compared to the previous quarter. As part of our endeavor to acquire new customers, we've added approximately 11.5 lakh folios in a year. Of these, around 7 lakh folios were added in Q4 FY '24, bringing our total serviced folios to around 86 lakhs. Individual investors with an average AUM of INR 17.3 lakh crores now constitute 52% of our assets. Additionally, the contribution from B-30 cities stands at 17.5% as of March 2024. We have seen good momentum buildup in our sales numbers, reflected in our healthy retail growth. The impact of building a robust sales support ecosystem that consists of virtual relationship managers, Sampark for onboarding reporters, direct channel to service HNIs and family offices, digital distribution and service to sales is running to its full potential gradually. Our [indiscernible] engagement at the relationship manager level increased satisfaction with service effectiveness, positive sentiment towards the fund performance and an improved digital transaction journey have all led to positive sentiment and improvement in overall AUM momentum. I'm also happy to share that our MFD NPS score, net promoter score, around performance, sales engagement have improved significantly during the quarter from #3 to #28 as of Q4 2024. On the alternate business front, to meet the growing needs of HNIs and family offices, we have strengthened our team to enhance our PMS and AIF offerings, both in equity and fixed income. We currently are offering over 13 products in PMS and AIF. Our good investment performance experience across our current offerings in PMS helped us in getting our products being sold in some of the organized channels through the launch of ABSL India Special Opportunities Fund, which is a category 3 AIF where we are seeing traction coming from the HNI investors. In order to further expand our AIF product offering, we have brought in a senior manager -- investment professional who offers vision cum credit-related AIF to cater to both institutional and HNIs customers. We believe both equity and fixed income AIF product offerings will further strengthen our alternate business vertical business line. Our GIFT City operation has gained momentum with the launch of a few products to invest in the overseas markets under the LRS scheme. We will launch the industry-first ABSL Global Emerging Equity Fund. We strategically switched into other emerging market equity funds enabling our investors to access and benefit from emerging market opportunities. We are now in the process of launching the CAT III AIF Feeder Fund in GIFT City, which will feed into ABSLAMC mutual fund schemes in India. On the passive front, as on March 2024, our passive asset stands at around INR 28,900 crores and have built a strong customer base of around 6.85 lakh folios. To drive our passive business to the next level of growth, we have finalized a senior investment professional with extensive international experience to manage our passive business growth and he'll be onboarded very soon. Moving on to the financials. We are happy to inform that we achieved our highest ever probability in FY 2024. Profit before tax is INR 1,008 crores, up 27% year-on-year, and profit after tax is at INR 780 crores, up 31% year-on-year. For FY '24, our total revenue is INR 1,641 crores, up 21% year-on-year. In Q4 FY '24, total revenue is INR 440 crores, up 35% year-on-year. Q4 FY '24 profit before tax is at INR 268 crores, up 48% year-on-year and profit after tax is at INR 208 crores, up 54% year-on-year. We are pleased to announce that the Board has proposed dividend of INR 13.5 per share for FY 2024. So with this, I would like to conclude and open the floor for any questions that you may have.

[Operator Instructions] We'll take our first question from the line of Swarnabha Mukherjee from B&K Securities.

Congrats on a good set of numbers. Three questions from my side. First, on the top line yields that we have recorded. So there is a sequential expansion. I wanted to understand the levers for the same, is it product mix or anything else that we can read into it from that expansion? And simultaneously, if you can possibly give some cuts on how are the yields in these specific product segments, maybe flow versus stop, how the numbers are panning out? So that would be the first question. Second is the monthly SIP flow that has kind of seen a good jump in this quarter, wanted to understand how -- in which schemes you were seeing the incremental flows and if you could also give some color on what kind of distributors these incremental flows are coming from? And thirdly, on the cost structure. So this quarter vis-a-vis last quarter, there was an increase in both employee expenses and other expenses. So if you can guide us how should we look at this number panning out in the next year? And any one-offs in this, that would be...

Sure. I'll ask Parag to take the first and the third question.

Yes. Sure. Thanks Swarnabha. So on the revenue side, the increase in the revenue is in line to a greater extent with the AUM growth, which we have achieved and the mix of overall equity AUM and debt AUM. So that has resulted in growth, plus the growth is also on the total revenue has been higher with the increase in the overall other income also. Those are the main reason on the revenue side. The other thing on the yield which you have asked, yield on the equity is in the range of around [ 68 ] basis. And on debt is in the range of around 23 to 25 basis. Liquid is more or less around 10 to -- 12 to 13 basis. So that is on the yield side. On the expense side, people cost has slightly increased mainly due to some true-up on the v pay or the bonus, which has resulted in a slight increase on the v pay or the bonus which has resulted in slight increase on the v pay side. On other expense, the main increase is -- some of the -- generally in the last quarter, you will see some uptick in the other expenses in most of the last quarter of my earlier years also. And the event which we conducted Voyage was one-off in the other expenses, which happened in the last quarter. So those are the main reason for the uptick in expenses.

Yes. Understood, sir. So, sir, if I could just follow up on these couple of responses, sir. So other expenses, next year, how should we build this? And I guess, Voyage would be an annual event. So should we then also factor in that it will again come in the -- similar cost will come in the fourth quarter next year?

Yes. So the Voyage will be annual, and it will come mostly -- most probably we'll do in the same -- similar quarter next year. I don't know what will be the format, but if it comes in the same format, there will be cost in mostly in last quarter slightly.

Okay. And the cost inflation between this year and next year, should we kind of build in a similar run rate as we have seen in FY '24?

Yes, people side, it will be more of an inflation plus maybe if some of the recruitment, which we do on the sales side or the passive, which we are -- or alternate side which we are trying to build there may be. But mostly, it will be inflation plus something a couple of the percentile up, yes.

[Operator Instructions] The next question is from the line of Lalit Deo from Equirus Securities.

Congratulations...

Mr. Deo, can you please use your handset mode, your audio is not very clear.

Yes, hello.

Yes, please go ahead.

Yes. Sure, sir, I have 2 questions. So firstly, like on the SIP side, like we have done materially well during the quarter. So could you give us a sense like in which of the schemes we are have gained higher flows? And also, could you comment on the channel side, like, from where we are seeing higher flows?

Lalit, just can you repeat your first question, what did you ask, the first one, I couldn't hear you properly.

Your voice is a little feeble, Lalit.

Sir, I was asking on SIP flows. So we have seen some material improvement in this during the quarter in the flow side. So I just wanted to understand, like, in which of the schemes we are seeing a higher flows? And also could you comment on the channel-wise flows in the SIP side?

Sure. Sure. So, one -- the uptick that we have seen in the quarter is, one, the renewed focus that we've brought in to build SIP given the fact our performance, the improvement that we have seen across most of our schemes that gave the accretion to build SIPs in the last quarter. Second, the increased flows have come through our mix of products such as Flexi Cap fund, [indiscernible], Digital India fund, PSC equity fund, small and mid-cap funds and other mid-cap fund. These are the schemes in which largely we have seen flows coming into the SIP segment, through the mix of both online platform as well as of the IFA channels. I think IFA channels and [indiscernible] we have seen a significant improvement over the previous quarter, with the monthly registration going roughly about 220,000 kind of numbers, which gives around 75,000 to 80,000 for quite sometimes. So that we have seen is now increased about [ 222,000 ] [indiscernible] is the range. That roughly about 45% to 50% have come through the online channel platforms and rest have come from the distribution channels, which is our traditional distribution channel. And within that, dominant portion came from the MFD channel.

Sure. And sir, this last quarter, we highlighted that there were some redemption pressures in some of the core equity schemes. So like how has that trend been in those major schemes?

I think one of the things that I've seen is, I think, gradually the redemptions used to be a little higher for in the beginning of the year. That has been coming down in some of the schemes which of course are outflows because of the category generally not seen much inflows. Second, performance issues are also there. With the narrowing of performance vis-a-vis the peer group, and we've also seen a reduction in the redemptions pressure in most of our schemes. And improved performance in some of the categories as the flows have been coming in is -- also compensate for that as well. I think we are seeing both. I think, reduction in the redemptions and increased the flows coming in few of our schemes. That's been getting netted out.

Sure sir. And sir, just last one data-keeping question. Could you give us the SIP AUM at the end of the March?

Sure. Sure. Prakash?

It is around INR 69,168 crores.

[Operator Instructions] The next question is from the line of Dipanjan Ghosh from Citi.

First few data-keeping questions. If you can give you ESOP expense for the year? And how do you forecast it for, let's say, FY '25, FY '26? Second, your employee count as of March 31st. And the third will be, you've given your SIP flows for the month of March, will be great if you can kind of give it for the past 2, 3 months also, will give us some color of the traction and the pace of traction we are seeing in the channel? And lastly, in terms of the product pipeline, how does it stack up for the next few quarters?

On the ESOP rates, the expenses is in the range of around INR 23 crores, INR 24-odd crores.

This will be for FY '24, right?

Yes.

And how should we think of it for the next year?

Head count is the around 1,449. Head count is in the range of around 1,400 plus, 1450.

1,450, right.

Suer.

What was the other question?

Sir, other was some on SIP flow for the last 1 or 2 or 3 months?

Yes. On the SIP flows, Dipanjan, while the number for the full quarter is close to about 6 lakh registrations, the monthly run rate somewhere around 2.2 roughly -- 1.95 to 2 that's roughly range. I think we are seeing each month the number is showing improvement. Even though I'm not -- even in the month of April, too, we are saying the trend is continuing. I think earlier the focus used to be somewhere around 2 lakh to 3 lakh kind of number that we used to target which is now falling in place in the last quarter, and that momentum continues now.

So, sir, the thing that I'm trying to understand is here. If I look at your March SIP market share, that's around 6.5% on a flow basis compared to around 5.7% in December '23. So if you can give some color on this movement between 5.7% to 6.5% broken up for Jan-Feb? Or in case if you don't have the data, if you can at least shed some color on how April is shaping up. It would like higher than 6.5% or we should expect a stable or lower range in this terms of the flow market share on the SIP side?

Yes, the way we approach SIP is given the fact that this is to the agnostic performance and it is also something goes very well in terms of adding new customer case as well as on gold-based investing. The idea is always to have somewhere in the range of about 8% to 9% kind of market share that's what we gun for. In fact the peak though it's true -- it was in the year 2019, 2020. We used to have almost about 13% to 14% kind of market share in SIPs. So that still got a higher number as we expect now. Going by the renewed sales focus that is being pushed and also being agnostic to the market fluctuations, we'll definitely will continue to work towards making these numbers better each month. That's the whole interval.

Sir, if you can give some color on the product pipeline going into the next 2 to 3 quarters on the equity side?

In terms of pipeline of products, we have a [indiscernible] fund, we already have an approval and plan to launch it post-election. We would have launched it in the current quarter in the beginning itself. Given generally the vacation month in the month of May employee, election is also there, we will launch it before 30th June if possible that 1 product we have. And it's going to be managed by Co-Head Equity -- Co-CIO and Head of Equity, Harish Krishnan, along with 1 support person internally. And we're also looking at filing 1 product, which is of course under the drawing board. And hopefully, that as well, but more in the thematic category. On the AIF and PMS side, we are saying that would have increased the traction, given the fact that our performance has been pretty good in the PMS side, and that is being noticed compared to the other peer group in the same segment. We're also seeing onboarding of our PMS products in some of the alternate channels. But also, I think should see some kind of increased flows on the PMS side.

Got it. Sir, if I can just squeeze one more question on this particular point. You have previously also highlighted at the start of the year or the last year also, that you expect your alternate and PMS business to become a meaningful portion of your revenue maybe 3, 4 years out. And probably today, you're laying the ground stone for that. So in terms of that, I mean, in terms of your investments on the alternate and PMS space, what should one expect that to be kind of elevated looking for a medium to long term and maybe in that sense your employee additions or your employee head count additions or your new fund launch related expenses can kind of be a little high at least for the next, let's say, 12 to 18 months?

Yes. On the AIF side, our focus always been to leverage the existing salesforce and relationship that you've built over a period of time as a franchisee to build our alternate business. While that strategy continues each of the sales teams have got separate target to drive the PMS and AIF business, including [indiscernible] product. In terms of team strengthening, we already have about 7 people in PMS sales as the main anchor. And they will, of course, work with salesforce under the Head of Retail as well Head of Institutional Business to build as part of overall business. But we've also been building direct HNIs team which is now close to about 30 people that we have and close to about 45 to 50 people will have that this year. That also will help us reaching out to the direct customers, including family offices. And we are creating a vertical under the sales team to cater to the growing needs of the family offices. All this put together, we believe AIF and PMS segment should see incremental growth coming better than what you have seen in the last 2, 3 years. That's something we are thinking but they do not have an incremental significant costs coming from people, but benefit approved from the existing team would be the large focus there. And largely, what we are also doing. Finally, this year, there are 2 areas where we're looking at building size, one, is on the fixed income-oriented credit opportunity, which also is pretty big. And we are now brought in a person who has the experience of having underwriting capability and managed assets for the last almost 15 years with a successful track record. He has come on board and he comes with a high passion of building credit portfolio which can be offered to both the family offices, HNIs and pension funds globally. That's one which I'm feeling that we'll be able to build. Second, the real estate AIF, we're seeing reasonably good track record in terms of not only, of course, performing well, even giving back the money to the investors close to about 16% kind of range of returns that investors got over the last 3 years. We want to build on the base of this success that size as well this year.

Got it. Sir, just one small question. Actually, if I look your SIP flow share now, that, as I said, has improved from around 5.7% to 6.5% between December and March. Can a similar assumption we made about the improvement in net equity flow market share, including SIPs and all other sorts of flows, lumpsum and everything?

Yes. I think SIP momentum would continue. I think that can be assumed, I will try and of course build more momentum on SIPs. See, one of the thing is the widespread acceptance for the entire sales team to drive on a single minded focus on building this as a category is very much alive and that's being pushed accordingly.

[Operator Instructions] the next question is from the line of Prayesh Jain from Motilal Oswal.

Just a follow-up on the previous question. How has been the trend on the overall equity sale on a net basis? What has been the trajectory wise SIP has been doing really well for us, but what has been the trend on the overall sales like equity sales for us and in the current quarter versus the previous quarter?

Yes. Overall sales, Prayesh, is actually improving on a quarter-on-quarter basis. This quarter we have a net equity sales. Earlier, we used to have the redemption of the equity used to be high, which as I mentioned earlier, that trend is changing. And in the month of quarter -- March quarter sales and net equity flow though we don't have the numbers disclosed generally, but that's something I've seen in the month of -- the last quarter, sorry.

In the last quarter again positive...

SIP flows are largely through a mix of our thematic funds as well as one or two are actually managed funds, including funds like Flexicap, Pure Value kind of funds and we're also seeing inflows coming in the arbitrage fund.

Got that. And, sir, the momentum in SIPs that we witnessed, where is it coming from the online distributors or is it across channels, could split that for us?

Yes, Prayesh, I just shared the number earlier in one of the question, probably it's coming from -- roughly about 45% -- 40% to 40% comes through the online channel platforms. About 55% to 60% comes through the traditional channels, within that dominant component comes from the MFD channel.

Okay. Got that. And sir, on the yield front, you mentioned -- I think the yield would be about 68, 70 basis points on equity? And how is the trend in the equity yields in this quarter?

So yield is -- Prayesh, is 68 basis on equity, pure equity. The slight drop as a telescopic pricing is as the AUM goes up, there will be slight drop, so there is slight drop in the yield on equity.

Okay. Okay. Got that. And on the -- under the debt side, do we see any improvement in yields given possibly from next couple of quarters or 6 months or to your perspective that we could see some movement towards the longer duration effects?

Yes. So if the movement happens towards longer duration, the yields are generally high in those products. So we would able to see some uptick on that side. So currently, it is slightly showing some improvements, but still it is a little long way to go and maybe another couple of quarters.

With last question on my side. For FY '24, what will be your revenues from the PMS and AIF segment?

Just hold on Prayesh.

So PMS and -- the alternate asset revenue overall will be in the range of around INR 100-odd crores.

INR 100 crores. This alternate includes PMS, AIF and?

Offshore, onshore and new shore.

And offshore as well. Okay.

The next question is from the line of Abhijeet Sakhare from Kotak Securities.

So the first one on the yield, like for some of the peers, there's been some year-end adjustments true-ups as well. Has that also played into our yield moment for this quarter?

So, Abhijeet, our yields remain more or less flattish. There is no per say, any -- I understand what you are asking, but no, there is nothing, nothing of that sort. Increase in the overall AUM, which has increased -- if you are specifically asking on equity, it is an overall increase in the AUM.

Yes. Got it. And sir, second was that the 40%, 45% contribution from online channels that you mentioned, I mean, could you just elaborate like this is on an account basis, flow basis and are these like the Groww, Zerodha, type of channels or are there any other digital online channels that are contributing?

Yes. Basically is on the -- on account basis, I think value-wise will be a little lower and value-wise the traditional channels that would have given higher. And in terms of online channels mostly it's coming from -- of course, as you know, today, the large volume generator is only about top 3, 4, which is Groww, Zerodha, ET Money and Kuvera these are the large, Angel. So these are the ones large flows. In this case, I think the large contribution would have come from us -- from only on our 3, 2 -- top 3 platforms.

And sir, Bala sir, generally qualitatively speaking of the next year, given that the redemption pressure is sort of easing off, do you foresee products getting included in some of the larger distribution channels and that sort of creating a stronger run rate of growth? And how close are we to kind of getting done so that the next year's flow run rate is probably substantially better than last year?

Sure. That's the endeavor, I think if you look back some of the steps that we have taken to strengthen our -- on the people side, right, from investment to sales, to rest of the functions. That definitely bring in new results and commitment to focus on every segment of the business model. Investment performance is of course a key, which, of course, under the change that we have made and the existing team members who also got high responsibilities, performing quite well is being noticed. The gaps are narrowed quite significantly that used to exist maybe about 1, 1.5 years back with respect to the peer group. And even in terms of upgrade, our teams from ranking point of view also we are seeing quarter-on-quarter improvement. One of the reasons we've also seen pickup and higher recognition is also coming which I just mentioned in NPS score which I mentioned about. All this is a reflection of that. I think one of the things that I witnessed with positive change. When we did our annual investment Voyage event in the month of February, we not only had more than [ 1,000 ] people turned out for that, we also saw the reaction from the partners who came on board. We have been witnessing as growing substantially well then we have seen over a period of challenge. Our channel challenge period, I would say and they have seen everything. And this time around, they feel good factories came on that event that we had, also was -- was actually quite promising.

[Operator Instructions] The next question is from the line of Madhukar Ladha from Nuvama Wealth.

And sir, 2,3 questions. First, can you give the number of the average SIP flow for the water? You've given for the month of March, but can I get an average number?

Sure.

So it's around 2 lakh, Madhukar, on an average.

No. I mean the flow number.

Okay.

Not the registration number.

Give me a second, Madhukar.

Around 1,400 for the -- 1,143 average and total is around 3,429.

Okay. Got it. Sir, on our equity market share, that is at 4.9%. Now, see the -- it seems that still on a flow market share basis, we are probably lower, right, than what our stock market share is because market has been positive, our teams have been performing well and yet we are losing market share. We've lost sort of 10 basis points Q-o-Q. Is that reading correct?

Yes. From the number point of view what you're saying is right. I think the way I see is, Madhukar, is one, when you look at the past trend, and how it's summed the March quarter. While we seeing panning of fall, earlier the rate of fall was a little higher and that's now getting narrowed and increased traction coming on SIPs will start reflecting in terms of not only stabilizing the market share movement and starts speaking ideally starts giving at least an uptick on the market share. So that's the way we see. While your number what you're saying is right, but that's the way that we've seen.

Right. So obviously, what you're saying is that trends are improving. And I think first half we had net outflows and now we are seeing some inflows. And we've, in the past, highlighted that certain channels we don't have access to, and those are some of the disadvantages, right? Now given this context, how do you think that and over what time frame do you think you can actually go back to this-- at least this 5% sort of slow market share? I know it's -- and you know what -- apart from performance on the distribution side, what else can we do or what are we doing? I also noticed that you've done well on the direct side because we're seeing in equity the direct contribution has picked up meaningfully, I mean, 200 basis points on a Q-o-Q basis is quite good. So maybe some color there will be helpful.

Yes, sure. See, as you rightly said, Madhukar, one is investment performance is only one part of it. I think sales, productivity improvement, which we call the sales excellence model that we have set aside and making some core changes within the sales team structure to bring in sharper focus, identifying the location in which -- where we have a huge potential, identifying the channel partners where we have huge potential in terms of improving, further, looking at their active business that they generate versus [indiscernible] that they give it to us, bringing in sharper focus on each of these areas. And the head of retailer has just joined us very recently, also have been driving the whole team and bring in necessary changes that in order to increase these sales productivity. The idea is actually to increase the output from every location which we operate. So that's one agenda. Second is building SIPs. We always been quite successful as a fund house building SIPs in various markets volatile period without on the basis of the goal-based investing and bring that back as part of your narrative to the entire sales team out in the market with high conviction both on the steps that we have taken on the investment side and improve performance that we're seeing [indiscernible] from the customer point of view, and therefore, have the high engagement for increasing the productivity. So that's something we are doing it. The support channel. I just mentioned in my speech, the support channel that you have created, earlier we used to run this as a silo channel. We felt that some of these channels, which can attribute to the sales team directly from retail sales team point of view [indiscernible] under the sales team so that there will be a higher synergy that can be created to make each of the channels to contribute to the overall success of the retail AUM. And last is actually a digital platform engagement is also essential, given the fact they help in terms of getting new customer additions. So that we have a strategy to ensure that we are able to highlight some of the product which can come as part of the recommendation list on ongoing disengagement and show them actually the work that we have planned and how the performance of the schemes are coming, how those engagement to ensure that we are able to participate in the new customers. In fact, in the quarter of March ending, we added close to about 3.5 lakh new customers that we added during the during quarter.

Understood. And anything special to read into the direct contribution increasing in equity AUM mix?

Yes, that's basically as you rightly pointed the exclusive team that we have created and then we branded under the name of CAT, which is basically to ensure that we provide a better service to those customers and handover them on a customized basis, handover allocation pattern. We are seeing the high engagement that the team has been creating and where we are further strengthening the team to close to about 50-member team this year, and that renewed focus, high engagement would help in terms of increasing [indiscernible]. The ultimate idea is actually to make the direct team, he is more like a wealth manager kind of concept, help in building a holistic experience for the customers and thus increase the share of their wallet share to both our equity schemes and other products including PMS.

So on the passive side, there has been some reduction in AUM, not a lot, but there has been some small reduction. So any comment on there? And second, I wanted to ask again on the passive side, is there any possibility of the EPFO money being given to additional set of asset management companies. So, yes, would it -- at what time -- what is your expectation over there?

Sure. See on these -- on the passive side reduction was largely on account of maturity of some of our debt-oriented index fund that we had. Of course, the money has gone into the mutual fund schemes, got shifted from ETF to -- sorry, index funds to mutual funds. On the equity side, we have seen growth both on AUM as well as customer additions. As far as the EPFO concern, of course, we do have participated in the bidding process, and we are keeping fingers crossed, whether we'll -- we would win the mandate.

So when is expected on that? And how many companies is the EPFO office expected to select now because I think Nippon was the last addition. And then you're talking that again, they've sort of invited bids, so just wanted to understand what frequency does it happen?

We have no idea in terms of how many people. Of course, I'm sure they will shortlist for more 5, 6 names, but right now, no publicly information is available on this.

We'll take our next question from the line of [ Abhishek Saraf ] an independent Investor.

So sir, I just had few question regarding -- if I heard right, that in the call, somewhere you mentioned that our SIP shares during 2019, '20 used to be around 14%, 15%. Is that right, sir? Have I heard it right.

Yes, on the SIP, yes, Abhishek.

Yes. If you can understand that why are the SIP share slipped from there to where it is currently 6.5%? And given that you are targeting around 8% to 9%, so how we will reach there and within what duration? And secondly, on the equity redemption side, it is very heartening to see that the redemptions are not happening or it has come down, which is somewhat counterintuitive as well because as a higher -- we said the high level of market people who may want to book profits. How is -- so what is changing fundamentally, if you can help us understand? And if I tie this with something which was said by an insurance company, in the ULIP funds they saw actually a decent redemption happening in the later cohorts in the -- after 5-year cohorts. So somewhat, there's a bit of dichotomy as well and maybe something is changing fundamentally. So if you can help me understand and share your thoughts on these 2 questions, sir, it will be very helpful.

Thanks, Abhishek. As far as the SIP is concerned, of course, we took really more advantage of pushing SIPs as a fund, having seen market cycles. As we have felt that SIP is the best way of building our equity that way we build our leadership position till about '19, '20. And for a variety of reasons, volatile period and then more and more competition coming in and a few large AMCs have underpenetrated in the industry, which all of us know that the large fund house it may not have major assets till 2019, '20. They actually upped the game in the overall business growth. Therefore, the growth for some of them actually were exceptionally higher than even the market average because they were underpenetrated. So that led to some fall in share. And of course, there are certain schemes where you have built blue skies where we got [indiscernible] performance, the level of performance is lacking for some time which I must admit for a brief period of time, also led to a drop in SIPs, which I feel that we can get back. SIPs are something that we've been promoting as much to the performer. That's the only way we can build SIPs from a longer-term growth perspective. That narrative comparably with driving to the team that irrespective of that we must build SIPs. Ultimately, investors do get benefit in the long term. And there is no much difference you'll find between good performing fund or bad-performing fund if the investment is made in SIPs for longer term. That's something communication we are making more strongly and making them realize in terms of building size then. That's something I did want to highlight. The other part is, in terms of growth, I think as I mentioned, I think if we keep pushing our -- the renewed engagement that we have on the investment side, engagement at ground level, sales production -- sales productivity focus that is bringing in. All put together should only help in getting renewed participation coming from some of our existing channels who always been loyal to us. Secondly, new customer additions continues to remain that big area of focus, all put together [indiscernible] strategy that renewing the focus on emerging market expansion. All of them put together, it should help. And also the [ ABC ] expansion that they are doing across the country, should also help sales in getting money coming from some of the other customers for overall financial business, all put together I feel that the overall improvement will keep progressing.

Sir, on the redemption side, if you can help me understand what is actually holding back customers from redeeming. It's a good sign, but are you feeling some change in the customer behavior at the customers or the investors end?

Generally, redemption is largely an anchor of profit booking and then come back. I mean the more the buyer is coming. At the same time, I think historically I've seen the trend, the -- whenever the market areas we can fragment are volatile, we see that as a trend emerging. But otherwise, I only see the incremental participation, good mix of from existing customers or new customers. It is very difficult to find any kind of trend on that. And given the fact at the broader acceptance for MF and the renewed accretion that we as a fund house bring on the table all put together should only help in looking at the improvement in sales rather than just looking on the redemption numbers.

Sure. Sure. That's helpful, sir. Sir, one last question, if I can just squeeze in. So as you mentioned that the equity yields are around 68 basis point handle and given that there will be a telescopic effect on the yield and assuming the normalized market, so what kind of yield one can expect, especially in equities, one can expect over the next year?

I think more or less, we have said in one of the other question as well. As it stands today, we'll be able to maintain the overall the margin expectation coming from both an equity and fixed income. Maybe on the fixed income side, we'll see there is scope for that to improve little bit given the fact the product mix within the fixed income could also change here.

[Operator Instructions] The next question is from the line of [ Janvi Jave ] from Kaizen Partners.

Yes, I just wanted to ensure that during -- like there has been a sudden increase in the influx of the passive mutual funds gaining like a predominance in the market. So like how do you believe that in the next 5 to 7 years as people would be shifting to passive mutual funds, but there would be very less opportunities for like market share and everything. So how would you like envision yourself in the next 5 years in comparison to like these mutual funds, like this passive mutual funds as compared to active and majority of the inflow will be -- has been predicted will be in the vertical only?

As a fund house, I think we look at offering products to customers across the segment of the market will be -- will remain the active manager both on fixed income and equity. And at the same time we will also build our capability, product offering, the capacity. As we know, passive in the last year, if you see active funds have done far better than passive. And before that passive was doing better than active. Given the fact that Indian market have got huge potential to outperform the market, that I think active will continue to be a focus area. But in our case nice to say for 3 years, we are building our capability on the passive side. Hopefully, we should see higher momentum coming in the passive as well. And within the passive, we'll bring in fine focus between product, which can be more profitable as well by looking at the product differentiation in this space. But I think from industry point of view, we will see growth on active will continue to be the driver for some more years, while along the side, passive also will get built.

We'll take that as a last question for today. I now hand the conference over to management for closing comments. Over to you, sir.

Yes. Thank you, and thanks all of you for taking time out on a Saturday to attend this call. And with this, I'll conclude Q4 FY '24 earnings call. Do feel free to reach out to our HR -- IR Head, sorry, Prakash Bhogale for any queries that you may have. Thank you.

Thank you, sir. On behalf of InCred Equities, that concludes this conference. Thank you for joining us and you may now disconnect your lines.