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

Ladies and gentlemen, good day, and welcome to Aditya Birla Sun Life Asset Management Q3 and FY '25 Earnings Conference Call 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, sir.

Thank you, Manav, and good evening, everyone. On behalf of InCred Equities, I welcome all to this Aditya Birla Sun Life Asset Management Earnings Conference Call -- 3Q FY '25 Earnings Conference Call. We have along with us Mr. A. Balasubramanian, Managing Director and CEO; along with the senior management team of Aditya Birla Sun Life AMC. 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.

Thanks, Jignesh. Good evening, everyone, and thank you for joining today's investor call. I hope you all had the opportunity to see the earnings presentation, which has been put out in the exchange as well as our website. Let me begin with the economic outlook very quickly and give an update on MF Industry as well. The current global macroeconomic landscape presents a mixed picture of challenges and some bit of cautions to have come with optimism. Global growth is expected to remain stable with most forecast placing it around 3.5% to -- 3% to 3.2%. Central banks are now likely to maintain a cautious stance on monetary policies and considering their gradual normalization of interest rates after a period of tightening. And global markets have experienced increased volatility, leading up to the new administration of U.S. taking power. We expect this volatility to subside in Q1 FY 2025 once there is a greater clarity on the policies of the new administration. Against this backdrop, India is expected to maintain its position as one of the fastest-growing major economies with GDP growth of 2025 estimated about 6.5%. And India's economic outlook remains -- though it's a positive, supported by strong fundamentals and favorable government policies, we might also participate in the recent volatility witnessed in the global market. Inflation is also showing signs of moderation with the RBI actively managing it through effective monetary policy measures. We expect balanced recovery with a moderate uptick in both private investments and consumption. The Indian equity market is currently witnessing significant volatility driven by a mix of global and domestic factors, rising inflations and potential trade-related issues and global market turbulence due to geopolitical tensions and economic uncertainties are fueling price fluctuations. And despite the global uncertainties and domestic challenges, Indian economic resilience and policy reforms and growing retail participation should continue to fuel investors' confidence in the market. Coming to the Mutual Fund industry. The industry has witnessed a record-breaking growth in 2024, reaching all-time AUM high of INR 68 lakh crores. As of December 2024, the mutual fund industry quarterly average AUM reached INR 68 lakh crores as compared to INR 49 lakh crores as of December 2023, growing about 29% year-on-year. During Q3 FY '25, the mutual fund industry witnessed the equity net sales around INR 1,60,000 crores through new fund offerings and also inflows in the existing funds. The total NFO collections in equity funds were around INR 19,400 crores, majorly coming from sectoral and thematic funds. The industry SIP continued to show good growth with a 50% year-on-year growth to around INR 26,500 crores in December '24 with 5.26 crores unique customer base. The total number of mutual fund portfolios stood at INR 22.8 crores with a year-on-year increase of 37%. The individual average AUM grew by 39% year-on-year from INR 30.7 lakh crores to INR 42.5 lakh crores and contributed 16% of the total assets under management. This is also on the back of institutional AUM have remained somewhat flat for the last 2 years for a variety of reasons, including the withdrawal of tax, which we saw last year. And B-30 cities with an average AUM of INR 12.83 lakh crores accounted for 19% of the total AUM. At ABSLAMC, our overall average assets under management, including alternate assets, stood at INR 4 lakh crores plus, reflecting 23% year-on-year growth. Our mutual fund average AUM reached INR 3,84,000 crores, growing by 23% again year-on-year. The quarterly equity average assets under management stood at INR 1,79,000 crores, growing by about 32% year-on-year. The uptick in equity investment performance driven by improved perceptions and strong narratives has helped us gain traction in equity net sales during the current quarter. Our SIP book grew by 30% year-on-year from INR 1,005 crores in the year December 2023 to about INR 1,382 crores in December 2004. We also added close to about 6,70,000 new SIPs, which again increased by 3x compared to the previous year around the same time. The total investors folio crossed INR 1 crore, now it is about INR 1.05 crores is the investor folio with around 24 lakh new folios added during the 9-month period of FY 2025. And during the quarter, we launched the ABSL Conglomerate Fund, which is an unique fund with a different concept and garnered about INR 1,375 crores. We also conceptualized and launched the industry-first 3 to 6 months index fund, which also garnered close to about INR 715 crores during the current quarter. The retail sales teams, which is dedicated to drive the higher engagement and establishing strong mind share in the deeper market through a series of impactful initiatives. We have been running programs like Yashasvi, which is nothing but empower and groom women MFDs, fostering inclusivity and leadership within the sectors and provide the necessary training program in order to gain higher engagement and higher mind share and higher market shares. And FULCRUM, which is to focus on equipping MFDs with the tools and strategies to build high-performing teams, driving sustainable business growth and improve the overall productivity of the team as well as the distribution partners. Third is a legacy LEAP, which is designed to cultivate the next generation of MFDs by sharpening and enhancing their skills. Together, these initiatives, we believe will help us create a long-lasting impact across retail channel improvement that we are trying to bring on an overall basis. On the alternate business front, to meet the growing needs of HNIs and family offices, we continue to strengthen our team and enhance our PMS and AIF offerings, both in equity and fixed income. In fact, our PMS assets, including AIF equity, long-only equity grew by 44% year-on-year from INR 2,671 crores to INR 3,850 crores. We are seeing momentum picking up as far as our PMS and AIF traction concerns. On offshore business, we grew by about 28% from INR 9,894 crores to about INR 12,686 crores. In fact, in the current quarter, we have seen some inflows coming from offshore investors into India dedicated funds that we have created, both in Europe and USA platform as well as on the GIFT City to get money into the country. And in line with our vision to scale the passive business, we continue to offer a diverse product portfolio to our investors, delivering strong returns. As of December 2024, our total passive assets stood approximately about INR 31,600 crores and our customer base has grown to over 10.68 lakh folios. Our diverse product offering currently is about 52, and we plan to launch additional funds in the coming quarters to further expand our passive investment options. Moving on to the financials. Our quarterly revenue from operation was at INR 445 crores versus INR 342 crores in Q3 FY '24, up 30% year-on-year. Our quarterly operating profit also has shown a significant improvement during the current quarter to INR 262 crores from INR 184 crores in Q3 FY '24, up by 42%. In fact, our operating profit grew by 42%, which is higher than the overall revenue operations, about 30% growth. On the 9-month period, our revenue from operations was about INR 1,256 crores versus INR 988 crores for 9 months FY '24, up by 27% year-on-year. For the same 9-month period, our operating profit was about INR 710 crores versus INR 528 crores again for 9 months FY '24, up by 35% year-on-year. With this, I'd like to conclude and open the floor for any questions that you may have.

[Operator Instructions] We have our first question from the line of Dipanjan Ghosh from Citigroup.

First, maybe I'll just start off with a few data keeping questions, and then I'll move on to my generic questions. So if you can quantify the employee number, SIP flow for the quarter, ESOP expense and non-mutual fund revenues.

Yes, I'll ask Prakash to give you.

So employee count as of December '24 is 1,627. The SIP flows for the quarter is around INR 4,000 crores. What was the other question?

The non-MF revenue and the ESOP expense.

The ESOP expense for the quarter is around INR 28 lakh and the non-MF revenue is in the range of around INR 34 crores, INR 35 crores.

Got it. So sir, just moving on to the question front. First, starting off from this employee number only. It seems that sequentially, there has been a significant uptick in your employee base from around mid 1,500 to 1,627. So just wanted to get some sense of has the entire employee cost been absorbed in the base? Or should one see it kind of overflowing into the next quarter? And also in this line, given the way the markets have been going into, let's say, the next year, if it were to remain choppy, do you expect the overall OpEx trajectory? How do you expect that to really shape up? The second question is on the mutual fund or rather the overall yield part. If I understand correctly, there has been a significant sequential improvement in yields. So can you just explain that? And lastly, just qualitatively for January, how are you witnessing your net sales, redemptions and maybe for the industry, if you can give some color out there?

Yes. So as far as the employees are concerned, of course, one -- wherever we are building up our team, especially in the passive, direct as well as emerging markets where we are opening locations and especially place like Mumbai, where we are further strengthening our team further with respect to the distribution front-facing sales team. Largely, the increase is on account of them. There has not been any significant addition at the top level. These are all at the operating level. That I think more or less this year, whatever we have taken as a budget, we thought before we start the year next year, we'll complete the recruitment this year. So that next year, we don't need to increase the headcount on an overall basis. That's broadly the principle in which we function. That's something, I would say, this increased headcount is on account of that. As far as in the month of January is concerned, I think, broadly, the trend remains the same. We are not seeing any significant change in the trend that we have witnessed in the previous quarter. I think we are seeing a net sales improvement for us is coming in gradually in some of the schemes, which are already identified as a scheme to be pushed from a broader perspective, there we are seeing some kind of improvement. And the SIP focus continues to remain. So again, no major change. But however, the current volatility we'll have to just watch out. There is one trend we'll have to just watch out. In general, what happens when the market turns volatile, the lump sum generally normally comes -- they don't come as aggressive as it generally is supposed to be. Second, SIPs, while the top line SIPs continue to come, normally, the cancellation rate from 50%, 55% average, that goes to, say, 60%, 65% and comes back. But right now, going by the January trend, very difficult to make many assessment any significant deviation that we are witnessing currently.

And sir, on the mutual fund yield part, what happened during the quarter?

Yes. So Dipanjan, on the mutual fund yield, the improvement which you are seeing is mainly account of 2, 3 reasons. One is on a few debt scheme, we have increased TR that has resulted in the increase in the yield. The other one is the mark-to-market because of the lower AUM, we're able to charge some higher TR and there some yield has been improved. And the third reason is on account of marketing and distribution expenses have been realigned based on the current market conditions. So these are the 2, 3 reasons because of which you can see the improvement in the yield.

Sir, I couldn't understand the last part what you mentioned in terms of marketing and distribution getting realigned. So is it like the incremental -- yield in the incremental...

Complete your question?

Sir, is it on the incremental flows where the commissions are getting realigned? Or is it like your overall distribution expense that you are spending for the franchisee is getting reduced? Or is it on the back book that you have taken some kind of repricing? If you can just give some color?

So based on the current situation, we have projected a few marketing and distribution expenses for the year, okay? So those expenses has been realigned, which has resulted in the increase in the fees.

Sure. And then on the debt book, you have kind of repriced on a few schemes? Sorry, I missed that part.

Sorry, the few debt schemes we have, we have increased the TR. That has again resulted in the...

Yield in revenue.

Revenue yield.

[Operator Instructions] We have our next question from the line of Prayesh Jain from Motilal Oswal Financial Services.

Decent set of numbers. Just your thoughts on how aggressive or how -- what kind of growth aspirations you have on the non-MF businesses. Probably, if you could give us some 3- to 5-year aspirations or targets for AUM size of PMS, AIF or GIFT City, any of these things, which can be significant contributors to your revenue and top line -- to your AUM and top line, that would be much help.

Yes, Prayesh. As far as alternate business concerns, last few years, the investment that we have been making, both in building PMS, AIF and AIF fixed income credit and real estate fixed income credit and offshore; and lastly is the passive. This is the 5 different verticals we cover under the alternate. We are giving a reasonably good push as far as the PMS, AIF and AIF credit fund concerns, given the fact that it can easily fit into our family offices and HNIs across different parts of the country. Right now this PMS and AIF put together, we have roughly about INR 4,000 crores kind of size. And definitely, the overall scheme of thinking that we put aside this year for the next 5 years road map, we have been assuming the rate of growth in the alternate business has to be faster than the mutual fund. And given the fact that the customer segmentation here is different from mutual fund. And that we are seeing already both in terms of AUM growth as well as on the profitability contributions. Though I cannot give you any specific numbers per se, but otherwise, we have put as a carry for individuals across the country. From a sales team point of view, a 20% of the carry goes towards building our PMS business. AIF credit fund, we already committed some seed capital from AMC business and basis which few commitments already started coming in, some underwriting of instruments has started happening. And initially, our idea was to collect close to about somewhere between [ INR 1,000 ] crores kind of size. I think upon building the first issue and then closure of the first issue, then we'll start building up the second launch. So that's something, which we have put in place. And ideally speaking, in the PMS and the AIF equity side, we would be gunning close to about INR [ 2,000 ] crores kind of size over a period of time. In the case of AIF credit fund, we would be gunning for close to about INR 5,000 crores kind of size over a period of next 3 years. And in the case of real estate fund, where we have already given good experience wherein we managed roughly about INR 750 crores money that we are already managing it. Whatever the efforts we have put in, in terms of reaching out to global investors, we are seeing some traction in that. There also, we'll be looking at the first bigger closures in the next 1.5 years close to about INR 5,000 crores size and keep building it as we start making a progress on the number which I'm just mentioning. Clearly, the idea is to build this space on an overall basis. Offshore, in fact, I'm seeing some kind of traction. In fact, the last quarter, we saw some success coming from 2 of the Canadian-based investors with whom we have a tie-up. For the India dedicated mandate, we saw some flow coming in. With whom, we also have tied up from India to invest in overseas market. We have seen some success, which also now starts giving me revenue to the GIFT City. We will see volume picking up in this space and subject, of course, emerging market attraction for overseas investors point of view continues to remain. As far as the passive is concerned, right now we are roughly about INR 30,000 crores to INR 32,000 crores kind of size. Clearly, we are keeping an eye at how do we make our passive business verticals, which includes index, ETF, fixed income, target maturity fund to reach a size of about INR 1 lakh crores size over a period of next 3 years. That's something we are putting as part of the business plan and work towards that.

Got that, that's quite interesting. But one aspect which I wanted to understand also was what are the kind of costs that we are incurring today on a run rate basis in the non-MF businesses, which -- the reason why I'm asking that is as these businesses scale up, the profitability improvement can be significant because if your teams are in place and no further hirings or no major hiring will be needed, then the revenue grow -- with AUM growth coming in and then following up with revenue growth, the profitability of the entire company can improve significantly. So just if you can give some color on what is the cost of non-MF businesses or at what level they are operating today?

Yes, 1 second.

So Prayesh, difficult to give you in the call because we have not disclosed the cost as such for the particular business as such. But as we have already spoken that the alternate asset business used to contribute around 14%, 15% of our total revenue. So currently, it is in the range of around 7% to 8%. So our target is to take it further to around what we were there in the earlier period.

But just to add to that, Prayesh, see, the cost has more or less remains the same. Whatever, see, we have add, we have already done that, except we'll only do the replacement of people who left. So it means incremental cost as far the people concerned, main is investment function and that we are already full. So that's unlikely. One cost, which anyway we mentioned, in the last call also I mentioned that we'll add somebody to head the overall alternate business to drive this as a separate vertical, which is a senior recruitment we'll do, who would take the entire responsibility of building the offshore business. That cost will get added. But beyond that, what we are trying to leverage is the distribution strength, which has been created. That's why I think it comes in the form of carry of people to add to the overall growth, which essentially means existing people in the sales will only add to the success of the alternate business, which will come as an add-on business rather than adding -- coming along with the incremental cost. Even this quarter, the last 2 quarters itself, we have seen the addition of revenue contribution coming from the alternate business grew by almost about -- improved by almost about INR 16 crores or INR 17 crores. Additional revenue came because of the increase in assets in alternate business.

So is it fair to assume that these businesses are profitable today or they are still breaking even or...

Yes.

Yes, yes, these are profitable today.

In fact, all my offshore business also everything is profitable today. The only question is the scale.

Got it. Sir, last question is on the mutual fund business here, where if you -- so fund performance is one element where we are seeing some green shoots for you. The other element to grow the AUM is the distribution machinery, right? And at the time of IPO, we have -- we were talking about a lot of growth coming in from cross-sell to the group companies. Apart from that, any other drivers that you are putting in the business model to kind of really take up this momentum further stronger because we are just at the cusp of fund performance improvement. And if the distribution machinery also kind of picks up more momentum, then you have a great runway ahead.

Right. Now with respect to the distribution, of course, we have an established distribution model as far as the retail concern. So that -- which is basically divided into our T30 and B30 and then beyond that, the emerging market. And then within that, we created a 5 step of verticals that we created. One is the VRM model to activate IFAs, growing IFAs in the country. We are seeing good success. We keep adding more people to the VRM model, the Virtual RM model, that we keep increasing the number of team members. As each period passes, we also learn from the experience and then keep improving on contributing overall success. We are seeing some success. In fact, I must mention the conglomerate fund that we had, in fact, close to about INR 70 crores, INR 80 crores got added from the VRM channel itself in addition to the traditional distribution channel. So that's something we are seeing as a success. Second is operation team beyond the point when it becomes well-oiled engine. The operation team, which is service-facing team, can also contribute to the overall success of the sales. We got a service to sales, we are stepping up the focus. And each year, we keep increasing the target to ensure their contribution increases. While these are the established model that we have, emerging market is one where as a fund house, we always had great success coming from creating our presence in smaller locations and improve our presence in those markets; therefore, increase our market share. They continue to remain one of our big area. Currently, we have about 95 locations, which we operate. While 95 may remain 95, but some will go to the branch level. Some new branch locations will get added there. That something remains one of the big area of focus. Having built that, I think last 1 year, given the fact that we need to step up our engagement on distribution activities, and also get a higher output, the team got together identified about 25 locations in the country, which gives roughly about 80% of the overall sales volume for the industry, including ourselves. And what are the steps that we can take to ensure. This 80% market gives me higher contribution by way of engaging at this ground level. That's something we are doing. In fact, one of the initiatives that we are taking this year is, we normally do an annual voyage event. This year, we are converting that into -- voyage event, we are considering, but we are doing only with the cream of people with whom our market share is less. But subject to our high engagement and they're getting convinced, as you rightly mentioned, about the perception and performance improvement coming, also being noticed. Therefore, we can get incremental AUM from them. That's something, which we are now doing it. Upon doing this, we'll probably do this across different parts of the country to ensure the distribution engagement increases quite significantly as we are currently putting an effort.

Got it, sir. Just last bookkeeping. Can we get the yields on each of the asset classes for this quarter?

Sure.

Prayesh, the yield for this quarter on the equity side is in the range of around 70, 71. Our debt, it's 25%. Liquid is 13. And ETF is around 7 to 8 basis points.

[Operator Instructions] The next question is from the line of Abhijeet Sakhare from Kotak Securities.

Question is on yields, again...

Sorry to interrupt Mr. Abhijeet, but can you please be a little louder?

Yes. Sir, question on yields again. If you could quantify what was the increase in debt TR that we have -- yield done in the previous quarter?

I don't have that data, Abhijeet, but -- I don't have that data to quantify the yield increase on account of debt side. But on a few of our debt schemes, we have increased the TR, which has resulted in the increase in the yield. Overall, it's around 100 basis points.

Yes. And then going forward, are you anticipating any further tweaks to the overall TR number in the fourth quarter or going ahead, both on the equity as well as fixed...

Equity will remain more or less the same. I don't think -- sometimes you must also remember this number keeps changing depending upon which bucket in which AUM moves. But otherwise, broadly, equity should remain the same. As far as fixed income concerns, one can expect marginal improvement on the yield given the fact that as interest rates get stabilized and then start coming down, it will also give somewhat of room for growth in the duration assets, wherein the expense are generally higher than the liquid fund or liquid plus fund. So to the extent, one can expect that segment to improve. And third is we're also pushing very aggressively our hybrid funds where like multi-asset allocation fund, balance advantage fund, equity savings fund, we are giving a push in terms of sales. And as we start seeing the overall improvement in terms of sales activities there, once again, the revenue contribution coming from that segment will also rise. Given the fact, again, the size is relatively lower compared to the large industry size, therefore, to the extent we could see the improvement in the contribution.

Sir, again, coming back to the growth front, now that we've seen some improvement in our performance, especially in the short-term buckets, have you seen any improvement as far as the products getting excluded in overall recommendation list or any material change in how the products are perceived in the major channels?

Yes. See, that keeps coming on and off. I think the major channels, in the organized channel except 1 or 2, we have been part of the recommendation in most places. In fact, I must mention that our large cap funds: front equity and Flexi Cap funds, both of them are now coming as part of the recommendation list in the organized channels. We are seeing progress in the current quarter. Even our balance advantage fund, which has, again, have been improving on the overall performance, we are seeing money -- getting recommended in the organized channel. Third is the multi-asset allocation fund, which, of course, about 1.5 years of track record, have done extremely well, also being included as part of the recommendation list by the organized channel piece. As far as the online channel concerns, we did have a huge success in the last quarter. A few of our funds came as part of the recommendations. And those recommendations keep moving up and down, depending upon the ranking, which they calculate from an overall basis. But a few of our funds are part of the core list, which is basically front equity, Flexi Cap and multi-asset allocation fund and balance advantage funds. These are some of the funds have been part of the recommendation list. We are seeing some kind of progress in this space. But of course, in order this to get converted into a visibly higher AUM contribution coming from this segment that we need to continue to work towards it, the number keeps improving on a quarter-on-quarter basis.

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

Sir, just wanted to confirm, firstly, on the debt side, could you classify the overall yield on the debt side? Was it 23 basis points?

25 basis points.

Sure, sir. And also, one more data keeping question was that, could you quantify the SIP AUM for the -- as of December end, sir?

Sure.

It is INR 78,000 crores, Lalit.

Sure, sir. So just on the SIP flows, so like what we have been seeing is that for the industry, there has been an uptick in the monthly SIP flows. Whereas for us, there has been a decline and the discontinuation rates have also increased. So what would -- could you give us some reasons like why -- what would be the major reasons for the same?

Broadly in SIP, the trend remains in terms of registration numbers, except we saw especially the lump sum ticket SIPs. As I mentioned about normally during market volatile period, lump sum is the one, which generally gets stocked and then they can come back, which I call it as a high-ticket SIPs. We saw some reduction in that. Therefore, we saw overall numbers marginally lower than the previous quarters. Otherwise, the retail pure SIP that we try to drive both by way of adding new customers and the new registration coming from the larger channel partners, that focus remains. But otherwise also from a cancellation point of view, generally, the ratio is about 50%, 55%, especially month of December, we saw the number going up to almost about 55% to 60%. And at times, when that number suddenly improves, rather goes up, it does have an impact on the overall number. But otherwise, I would attribute this to the market volatility that we are currently witnessing, which normally I've seen historically, it happens for the industry. Even for us also, the numbers can vary from fund house to fund house. But otherwise, I think once things settle down, we should see this number coming back to normalcy. Basically, generally, we try to position as agnostic to the market and that acceptance generally is high. Therefore, we go back to the basics and keep pushing it that safety is something agnostic to the market and fluctuations and sentiment. That's something -- keep harping on it should only help in terms of maintaining it and improve.

Sir, based on this question sir like -- so on the net sales, when we are saying that we are seeing some improvement in the net sales. So particularly in this channel probably we are seeing more improvement or seeing some improvement in our market share probably?

I think it's generally spread across all channels, Lalit. Mainly the IFAs contribution on incremental basis is improving. ND channel, which is the second largest channel for us, so their contribution is improving. In fact, when we did that conglomerate fund, we did have participation into our funds coming from almost about 22,000 IFAs contributing to the conglomerate fund, which has also helped us in activating a lot of the IFAs during this period. We're also seeing online channel selectively contributing on the SIPs. I think broadly, the order of MFDs and NDs and direct and banking and then online channel.

Got it. And sir, just last question, any products in pipeline on the active equity side?

Of course, we've already taken approval in the month of -- we didn't launch the fund, which is the innovation fund. We have taken approval. We gave a preference to conglomerate fund over innovation fund. And when we feel is right either in the current quarter or in the subsequent quarter next year, we will have this product launch. Otherwise, we have a series of product pipeline on the passive side, both on passive equity, ETF and index fund equity fund as well as the target maturity fund on fixed income, both we already have pipeline of product. We have 1 pipeline of product for GIFT City. Upon closing this first fund, which we launched, special opportunity fund that we created. Now we have created another fund to invest in global blue chip. That's something we have launched. We already launched and we'll go aggressive in terms of promotion as we move forward in the current quarter. We also, of course, announced a fund that we'll launch from GIFT City to NDF. That also, we will do an official launch maybe in the next few months, we will do. These are some of the product pipelines that we have as far as the offshore concern. Domestic concern, there's only 1 product pipeline that we have kept as it stands today.

We have our next question from the line of Mohit Mangal from Centrum Broking.

Yes. Sir, first is in terms of SIP AUM. I think you said that it's around INR 78,000-odd crores. So if I look sequentially, I think there is a 7% decline. Is this number right?

Yes, yes, it's because of the equity mark-to-market, Mohit. Equity has a slow decline.

Understood. Understood. And secondly, basically, in terms of the industry. So there's a lot of talks of this INR 250 SIP that is there. So could -- Bala sir, could just help us understand the dynamics of it? And how do you intend to kind of use this situation to further improve your SIP thing?

Yes. INR 250, of course, we were one of the fund house to take lead in this space as the regulator announced some time back. So we have put things in place. But even otherwise as well, we do offer INR 100 SIP for people who can't afford more than that to the online platform. So we already have that in place. And once if it become industry-wide push, of course, we would participate in that. But otherwise, in general, SIP is something -- my own belief is, whether it is INR 250 or INR 100, SIP in general, having gained acceptance and momentum. And the ticket size, the average ticket size also keeps improving. I think our focus would be, use this product more to get new customer acquisition rather than focusing on ticket size. I think we'll have both the strategies going simultaneously. All the INR 100, INR 250 for customer acquisition and then increase the average ticket size of their contribution as they come on board. So that's the way we -- I see it normally. But otherwise, I don't think this will have something unique for one to benefit big time given the fact that SIP itself now is becoming the widest accepted instruments in the country.

All right. All right. Understood, sir. Sir, lastly, in terms of -- I mean, your peers are kind of rationalizing the distributor commission. And I think basically, any thoughts that you would be doing the same? Or what are your strategy on that?

Of course, we do have a scope, no doubt. However, we need the right balance between the -- growing the business on one side; other side, grow the distribution channel on the other side and ensure we also be able to maintain our overall leadership in the industry. Therefore, we'll have to just see when to do and how to do and kind of things. But otherwise, we do have scope, but not in the current juncture. We would rather focus on growing the book size and the customer base and expand the business.

We have our next question from the line of Bhavin Pande from Athena Investments.

Congrats on good set of numbers. Sir, I just wanted to understand one thing on how do we look at managing fund performance in a down cycle? Specifically, thinking from a scenario of us just being on a cusp of turnaround and maybe garnering more flows. So how do you look at it?

Yes. It's interesting, Bhavin. I think we'll also be managing money business. I think all of sudden this down cycle comes and the only way we can manage the risk, which is what we keep harping all the time. The drawdown, especially in market volatility happens, the number of stocks that pull you down should be the least and number of stocks that we have in the portfolio that gives you some bit of either index performance or a little better than index performance, the component should be high. So that is the principle on which we normally work sometimes. Most of the time we get it right, sometimes we don't get it right. But this time, I must mention the last 2, 3 weeks of volatility, most of our funds could actually withstand this current market volatility and doing better than the market competition. That is the only way we manage the risk. Second, of course, the sizing between large cap and mid-cap and small cap. In fact, as a fund house, we have a reasonably good domination in the large-cap and mid-cap space, less of small cap space. To the extent drawdown could also be less. I think that's the only way we keep a close track. Basically, the investment team keeping a very close track on that in terms of portfolio management operating style.

Okay. That's helpful, sir. And sir, when we look at the behavior of an IFA partner, let's say, maybe he is not seeing discontinuation of SIP right away, but customer is reducing the size of SIP, he or she is doing. So when it comes to pecking all those things, that fund performance comes into account in terms of allocation?

Yes, definitely, of course, we will -- do pay attention. I think there are 2 ways I look at it. One is, of course, improvement in performance. Second is the perfection, our improvement on performance. And third is the, irrespective whatever it is, how well we are committed to engage with partners and continue to provide the top of the mind service. In my talk, I mentioned about 3, 4 initiatives that we have taken, such as Yashasvi and Legacy Leap kind of things. These are all shows our commitment to the distributors. And third, of course, is the customer engagement, direct customer engagement by way of guiding, giving insight and giving our narrative on a consistent basis. It's not about getting our calls right or wrong. It's about being in the front foot and engage with the marketplace. All those things do matter. And of course, fund performance is one part of it. The fund performance is there, it becomes that much more easier for the front sales team naturally to go and back it that much aggressively. The fund performance is actually there, but in the borderline case, then you must also replace that this high level of engagement at the ground level. This is a combination in which we work. And as I stand today, I would definitely say performance improvement vis-a-vis the peer group, not only there has been improvement, it's also being recognized and noticed by people; therefore, leading to gradual conversion of that into numbers.

We have our next question from the line of Madhukar Ladha from Nuvama Wealth Management.

Congratulations for a good set of numbers. First, sequentially, our yield has increased, and that's particularly come from equity yields doing better, where you also mentioned that we have increased -- we've changed some distributor payouts. Now what I wanted to understand is, is this recurring? Or is this onetime in nature? Second, on the market share bit, our equity market share sort of continues to slide. despite we have actually done 2 NFOs this quarter. And if I'm not wrong, we collected almost INR 1,410-plus crores. So if I adjust for that, what is your sense on net inflow market share ex NFO in continuing schemes, right? Like what is our market share? And are we sort of improving on a quarter-over-quarter basis? Or do you say -- and in your opinion, is this decline in market share more because the performance needs to catch up or more because our market share and net inflow needs to catch up? So that is my second question. And third, on the current trends, like SIP cancellations have picked up. Also, given this volatility, is the industry -- I know the industry will probably witness higher SIP cancellations. But maybe you could talk a little bit about what are we seeing in our current trends in terms of SIP numbers holding up so far or cancellations actually picking up even more in this month so far? And how do you see investor behavior in this sort of situation over the next 2, 3 months if, let's say, the markets were to sustain in this way. So yes, those would be my broad 3 questions.

So Madhukar, on the yield side, marketing and distribution expenses, which we have realigned based on the current market situation, it's in the phased manner. So you may see some impact in the next quarter also. And there will be -- the yield will more or less remain in the same range.

Yes.

[indiscernible].

Yes, correct.

Okay. So this is not a one-off?

Yes.

No, he is asking if it is a one-off?

So we are doing it in a phased manner, Madhu garu.

Okay. So the equity yield will probably sustain at about 71 bps, as you mentioned earlier in the call.

Yes, yes.

Madhukar, 1 second. I have group CFO.

Madhukar, so what Prakash is saying, so these current yields may be there for maybe for next quarter. These are one-off a case for 1 or 2 quarters.

Understood. Then you are back -- likely to come back to the 67, 68 basis.

Yes.

Okay. And what is causing this? I mean, I didn't understand what causes this actually.

So like Prakash explained, this is the realignment of certain marketing and selling expenses, which is the regulatory guidelines.

So Madhukar, we have made some provisions. So that we have -- that we have realigned.

So that we will not be incurring any more because we are cutting back on that, is it?

Yes.

Correct, correct. Second, on your other 2 aspects. See, as far as the sales numbers concern, of course, the market share, the way I see is the overall market share as far as the equity is concerned, on a quarter-on-quarter basis, the fall in market share is now getting better. That's one way I'm looking at it. And second is incremental net sales in some of the funds where we have only seen outflows for a variety of reasons, some of our traditional funds where we are seeing net sales improving, which includes arbitrage fund as well as the large cap fund and a few other funds, which are in the main category like multi-asset allocation fund, including our thematic funds such as Birla Dividend Yield Plus. Index funds, where we are seeing continuous flows. And these are each of these categories we take. I think there are some other categories, we are getting inflows. Those category -- against those category, the net sales would be in the range of about 3% to 4% kind of thing. There are certain schemes, of course, ELSS, as a category, we are seeing outflow. And that is largely on account of the category itself has not been getting, in any case, big inflows. And on top of it, performance-based outflow that we have witnessed given the fact that we have large size, but where we are seeing outflows, but that's something getting reduced each month-on-month basis. Our idea is actually to identify, as I mentioned earlier, focus fund. Whether we call it 5 funds we have taken a focus funds on the diversified nature and 3 funds on the thematic we have identified and then driving it across the country to improve our numbers, that's something we should see it being driven from a sales point of view. But from the cancellation of SIP other things point of view, as it stands today, anyway in the last 2, 3 months, the -- in general, the SAP's top line number keeps rising. The cancellation number is generally in the range of about 40% to 50%. And this number may even go up a little bit 60%, 65%. And again, it's a function of market trend that we are seeing. But that's something should not necessarily bother anyone given the fact that these numbers again do come back by way of gross numbers. And then new customer addition coming in. We still have only about 5.5 crore unique customer base. We have about 75 lakh unique customer base. So given the fact that the unique customer base can continue to rise, but these numbers should not ultimately lead to any different kind of output, except the ratio could change given the current market volatility, if it sustains for, say, 1 or 2 quarters as we move forward.

Understood. Sir, just a follow-up, sir. On a quarter-on-quarter basis, like from quarter 2 to quarter 3, I wanted to understand if we were to exclude the NFO flows, is our market share improving in net inflows?

Yes.

Yes, under schemes -- there are certain schemes, is improving. Yes.

So Madhukar, in the quarter 3, we have received -- we have seen the improvement in the net sales ex NFOs, which has resulted in the improvement in the market share.

Ladies and gentlemen, due to time constraint, that would be the last question for today. And I now hand the conference over to the management for closing comments.

Yes. And thank you, everyone, for joining. And with this, we conclude our Q3 FY '25 earnings call. And do feel free to reach out to our IR Head, Prakash Bhogale, for any queries that you may have. Thank you.

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