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

Ladies and gentlemen, good day, and welcome to the Aditya Birla Sun Life Asset Management Company Limited Q1 and FY 2017 Earnings Conference Call hosted by [indiscernible] Capital.. We have with us today from the management, Mr. A. Balasubramanian, Managing Director and CEO; Mr. Pradeep Sharma, Chief Financial Officer; Mr. Paritosh Chittora, Head Investor Relations. [Operator Instructions] Please note that this conference is been recorded. Before we proceed with this call, I would like to take this opportunity to remind everyone about the disclaimer related to this conference call. Today's discussion may be forward-looking in nature based on management's current beliefs and expectations. It must be viewed in conjunction with the risk that the business faces that could cause our future results, performance or achievement to differ significantly from what may be expressed or implied by such forward-looking statements. I now hand the conference over to Mr. A. Balasubramanian. Thank you, and over to you, sir.

Thank you. Good evening, everyone. Thank you all for joining the call for Q1 FY '23 investor call. I hope you all had the opportunity to read through the earnings presentation. It's available on both the stock exchanges and our company website. Let me begin by sharing our perspective on the current macroeconomic environment. The global economy, as is known, has shown real resilience this quarter navigating the uncertainty from the conflict with limited impact on activity so far into an easy IMF project global growth moderating to about 3% in 2026 and before improving to 3.4% in FY '27 as war-related disruption gives way to the strengthening of AI and technology investment cycle. Inflation may rise modestly, keeping centralanks cautious on easing geopolitics commodities and remains, but the outlook is more balanced with the resilient demand and technology led productivity. India has handled this crisis better than most energy importing economies by imports, bolffateduel pricing. That said, the higher import costs have pressured the external account with some pass-through in domestic prices. That's why we are saying the [indiscernible]. And growth remains supported by strong private consumption and crises, improving investment and healthy balance sheet of companies and continued government CapEx. The key risk is a monsoon, with the IMD expecting below normal in all with [indiscernible] the comfortable footprint held reservoirs and abeta supply management should soften and full price impact put the past year. Overall, the near-term challenges are real, but India remains on track to be among the fastest-growing megieconomy. Coming such the equity market, man equities were volatile, but dropped end of this quarter. with sentiment shared by domestic strength, earnings expectations, FIAs and global development. And while large case say brand, I mean, what was our profit booking and broader market outperformed with the next mid-cap, 150 and small-cap 250, both posting gains and FI outflow at various points sustained domestic institution floors and improving macro fundamentals that help Indian code to close the project on a stable not stop. Coming to update on medic industry. The quarterly average AUM stood at INR 8.4 crores as on 30 June 2026, compared to [indiscernible] 2025. [indiscernible] the SAP contribution for industry stood about INR 3,780 crores for June 26, rates year-on-year good about 20%. Total mathletolio stood at INR 2.1 crores as on June 2026, growing by 9% year-on-year. The mini customer close to about INR 5.7 crores. During Q1 FY '27, industries saw total couple action approximately INR 1,059 crores across equity and debt Mitel funds with equity collections driven by index and age hybrid fund and value fund plan. And between market volatility, industry witnesses as flows in various schemes highlighting sustained confidence. In the long-term growth potential in Niket, we witnessed a marginal slowdown in the overall SAP flows. Indig average AUM for June 2026 stood at INR 13.3 lakh crores, contributing most personal totally again. These acts an average AUM of INR 13.5 crores account for 18.5% of the total AUM, growing at 3% year-on-year. Coming to the DSMC government highlights. At ABC place to announce that overall average AUM, including alternate assets surpassed the INR 60 crores milestone this quarter and now stands at INR 6.8 crores, reflecting robust 40% year-on-year growth. This includes the mandate received from both ASIC and EPFO. EPFO got added in the last quarter. Therefore, overall average assets for about 1.5 months that got added to the overall asset management plan. We are pleased to share that we have been investing the EPF and rate approximately about INR 6.8 lakh crores. There is the lamina condition. Our closing total AUM has embedded on tonics the INR 100 crore milestone. This achievement reflects the trust and confidence our clients and partners have placed in us over the years, and thanks a testament to the tenth of our franchise and investment capability. Our Michelson quarterly average AUM stood at INR 4.8 crores represent 6% year-on-year increase. Within this, our equity Magalon quarterly average AUM stood at approximately INR 1.99 crores and growing by 10% year-on-year. Our equity mix for the quarter stood at 46.5%. Our SAP contribution for the June 2026 [indiscernible] the SAP account. The total industry is fully on to visit stood at INR 1.1 crores with the new active registrations for the quarter is approximately 5.5 lakh as a relation plan. Our SAP book remains a cornerstone of our long-term creation strategy. through companies like subtenant plans, we continue to reinforce the value of discipline and storiesting. To take our SAP book to the next level, we have launched the focus initiatives for both employees and partners. And I expect to drive a stronger outcome in the quarters ahead. Though we have seen this quarter, a marginal reduction in the SAP book, but something we continue to remain a big focus area to drive the extra growth momentum. Our investment performance continues to demonstrate strong consistency and meaningful improvement across both our equity and hybrid portfolios. For the past year, we remain focused on strengthening our investment capability, enhancing our investment team and ripening of our compliant investment framework. In fact, is reflecting on the overall performance improvement, not just on only in the short term, even in the medium to long term, our performance have been showing an improvement there. And these efforts have transferred a significant not only performance, it's also seen. Industry confidence supported at inflows across the world. flagship offering, such as Lexicap, balance advantage on mid-cap, multi-cap small-cap investment that we have seen the inflows on our month-on-month business shows an improvement. In fact, most of these ones are now also featured on the recommendation list of our banking channel partners, which will further support flows going forward. In fact, this quarter, our product got added to the 2 of the large banks as far as recommendation is, which I hope to improve the overall sales numbers from these channels as we go forward. Strengthening and expanding our distribution remains our key priority in order to improve the overall sales productivity. In fact, I have undertaken it's called the APRA across various cities in India in order to meet all our distribution partners and the investment community at large. These interactions have brought several insights on the ground, what customers are picking and how we are perceived by the market, which has given us great confidence that we are on the right track towards growth. building on the legacy goodwill and PD that we have garnered over the retaken. Technology and innovation remains at the heart of our customer first approach and I refer to enhance the overall investor experience as part of Digital ransom journey, we have launched a series of technology-led initiatives. Our GenAI power chatbot. We designed to engage investors early in their vision journey, understand the needs and gave them towards relevant investment actions without recurring an intervention. We also launched our new distributors and investors app, enabling enhanced the portfolio tracking seamless transactions and improved business end management. In addition, our arsenal casing platform, his investors and partners access services more canny and efficiently. And turning to alternate business, the business good growth during the year of PMS and AIF assets increased about INR 230 crores as of Q1 FY underthink to nearly INR 2 lakh crores includes the EPF of flows. And this growth was largely supported by SIs and API for mandate, which I mentioned about it earlier. We also launched the ABS Director at manning the current quarter and the fundraising is still number way. Along with that, we also have fund launches, which is structured opportunity Fund II and Money Manager Fund and India select refund in addition to the special opportunity to fund Series 2 in order to build our PMS and EIA portfolio. And these offerings are broadly in land with noses demand and from differentiated folio and endure opportunity point of view. In our real estate business, our Audit reflecting a 28% year-on-year growth and fund rising is currently underway for the utilized real estate credit opportunities on Series 2, which focus on senior secured lending opportunities and post-approval brownfield real estate projects across Iron with the recent grant up of our retail license at Give City, we are enabling NRIs and global investors to seamlessly access the both inbound investment into India and Autonet global market. And building on this momentum fundraising is currently underway. In our Abelan, which is a predefined we obtain a marginal success in this space to get money from NRI in India site through the lexicon. We're also on track to launch a retail product via get in the upcoming quarter, including emerging market equity fund and India growth fund and also launch series of index wins generating global market. say, growing product sonic global invest in ecosystems. We are well placed to build Callable offshore brands in the coming years on. Segment now turn to our pack business, which remains on our key strategic focus. We continue to see significant opportunity in the segment and remain committed to building leadership patients through a comprehensive product suite on the tie network and strength of our brand. To further strengthen our business in the space, we recently appointed Kevin Bates head of our passes along with the team of people under him. He brings more than 2 decades of experience in building passive and ETF business in India. And we assume we will play a critical role in driving product renovation, strengthening investment capability and accurate in growth in the segment as well as add new customer base through this business model. And during FY '27, our passive quarterly average AUM stood at approximately about INR 47 crores, representing 14% year-on-year growth. Our industrial base also continued to expand with the total folio of reaching about 17.4 line. Within passive or ETF franchise delivered particularly strong momentum. EPA quarterly average AEM grew by about 47% year-on-year. Significant higher industry growth about 29%. And today, our passive products to companies are foci offerings and spanning equities, tingincome and commodities and the macrocells and enabling us to carry the broader custom of industrial portfolio. In the Applied segment, we launched our Apex A hybrid launched fund and backed by the strong investment team before building our size in this space, we want to establish performance factors of our segment. Now that we are sixth over, now we start building a site in the state. In order to build the other momentum, we are now preparing to launch 2 more equity [indiscernible] fund and equity x100 long-term fund. And these additional further scale our SA platform, tapping into the new product segmentation, which I think we can build size and also to support this business, we added -- strengthened the stream by adding 2 more specialists to run these products for us then. And moving to financials, Q1 FY '27 total revenue is about INR 23 crores as compared to INR 56 crores. with the Q1 efforts up by 11% year-on-year. Q1 FY '20 profit before tax of INR 16 crores as compared to INR 32 crores in Q1 FY '20, up by 9% year-on-year. and 27 profit after tax INR 39 crores as compared to INR 70 crores in Q1 up by 12% year-on-year. With this, I'd like to open the floor for any questions that you may have. I'll be joined by Pradeep to take any other questions that you may have.

[Operator Instructions] The first question comes from the line of Swarnabha Mukherjee with 360 Capital.

2, 3 questions from my side. First of all, sir, if I were to calculate the yield for the primarily focusing on the active part of the business and keeping for the EC the mandate. I mean, I can -- by my calculation, I'm seeing some increase in yield -- just wanted to understand whether this is the right approach? And is there an increase? How should we think about it? Is this an outcome of the TER regulation? And we have actually slightly benefited, if you could highlight on that? Second is also if you could call out the segment that will be Thirdly, sir, wanted to understand on the employee expense part, what is the reason for the increase? And is there anything one-off there? And also if you could call out the piece of number in that. Yes, these will be my questions, sir.

Sure. Just ask Pradeep to answer the -- yes.

So Swarn, this BR actually this was effective from 1st April. '26. So that has been rolled out completely, and we have optimized the [indiscernible] along with the management of cost, and this is weiboth as an AMC for us and for our partners. So that as we rolled out and is what is there in Q1 reflects the key picture and will be maintained going forward into -- in these levels. Yes. So coming to the yield levels for equity, it is around 63 to 64 basis points. That it should be around 24 to 25 basis points and liquid would be in the range of 12 to 13 basis points. an ETF around 8 basis points. So these are the yield levels. Coming to employee cost. Employee cost for this quarter has increased mainly due to the soft cost. If you remember, we actually rolled out to for the employees in Q1 in January -- from effective January '26. So this is because of that. The impact of that is around INR 10 crores per quarter of additional employee cost through the use of -- and roughly the low was, which is there in Q1 should continue in the same range for coming quarters.

Okay, sir. Very helpful. I understood that, sir. Just a follow-up on the headline yield number that you have mentioned. So you said that the true picture. Now how should we think about overall, the dilution of the yields going forward as our AUM increases? And also, if I could squeeze in another question, more on the broader industry level that we are seeing this trend that a lot of manufacturers are focusing on the asset side and the ETF side and planning to develop that. So over the next, say, 3, 5 years, sir, how would you be forcing the industry from the active side as well as from the passive side, how should we expect things to develop this section?

So Swarn, actually, see, by and large now this -- the regulatory changes have been now rolled out -- and now only thing which will come in place is the telescoping pricing, which will be based on the AUM side, which would grow, right, as you are aware. So what we can do, as we will as a business would like to maintain our yields plus/minus 3 basis points. This is a mix, which we will be working on through the alternate business. . So we feel that going forward, the yield should be in the similar way, barring 1 or 2 basis from here and there, plus the telescoping pricing. Sir, you want to add something?

Just to add to that, so the terms of [indiscernible] business growth. The way, as Pradeep was mentioning as the size improves definitely, the silica prices will be coming in. But we also believe that active will continue to be the dominant asset last and it comes to the ratio of overall momentum growth. But having said that, the paste is something in order to build choice to the customers at the same time, ensure the ratallocation remains key. So that is something we have now invested on people who have a passion towards building passes. The way we are looking at passives, it should -- will help us build scale and get more -- at the same time, has to be extremely low cost kind of product. So I think the way we're looking at will add to the overall profitable numbers. We have not done the ability to profit. Of course, margin could be lower given the fact that we pass on the benefit both to the customers as well as the motor expenses, but in terms of addition of profit revenue as well as the bottom line, that something is the road map in which I think we are planning to drive even the gift product that we'll be looking at doing, especially for investing in the overseas market, there as we are doing with a similar intention. Of course, the expenditure could be lower than the equity managed fund. But at the same time, given the fact it can be relatively lower, but absolute profit at the remain high. But in terms of mix, I think the way we see today, it the past is about INR 110 crores roughly is the SI. If you knock out and based investment, the pure retail would be roughly about don't have to INR 3 lakh crore. And within that if you take a large component coming from gold and silver, again, it will remain on our asset like for us to focus, which gives reasonably good profitability as well. So maybe this number will keep pricing. At the same time, our intent is actually to build size in the key product, which is why we believe that given the comparable asset class in the same size if we take given the significant improvement performance that we are witnessing, we will focus on building a price in our core product, which is what our current focus is, while building our base for the passive ATR.

[Operator Instructions] Our next question comes from the line of Mohit Mangal with Centrum Broking.

Yes. Sir, you just said that the commission was restructured. So out of 5 bps, how much was kind of transferred to the distributors? .

So Mohit, actually -- so we have optimized the commercial structure so that it is a win-win for both, right? So there is no on terms of basis points. So we have reviewed the entire whole ecosystem of commission. And we have ensured that it should remain neutral for everyone and win-win for we as an AMC as well as for our distributor partners. And then the outcome is that my and large, our yields also remains intact. And by and large, these sisters also maintain their margins.

Yes. So the broad approach we have taken on this space is -- when you mean the win-win is something neither I can make a profit or we can take it at the same time from distributor point of view also. So we look at the whole model and looking at the account or the sharing format that we have. I think basis with our own assessment is significant benefit as the last chance. So that we approach it the margin here and there some [indiscernible] accrued to distributing coated. But broadly, we are kept it more like a [indiscernible] kind of impact.

Understood. Understood. The second question is that we have kind of lost market fit as well. So just wanted to know that given your opening comments, you said that the price of schemes have been doing well. So where are we seeing problems within the IP? Is this non-[indiscernible] scheme? Or how should 1 look at the [indiscernible]?

No, flagship them, our effort has been to build. I think flagship as it is that our flagship skins we have mentioned, we are seeing improved flow even compared to the last year as well as even this quarter I mean largely or especially the ALS schemes we are seeing general outflow in the industry, and we did have impact on some of the ALS can even industry also this time the cancellation rates are higher than the previous quarter. So to some extent, I would say the product that has added to the because sometimes some of the long, we have seen some canister. But having said that, the corn that is 1 of our intent is to go mine scheme that we have identified is the one where we call it a focused product where we have seen improvement in terms of SAP registration as well as SAP drive. So this quarter was more or less a as a result of what I just mentioned. Then secondly, as for the casino concerns, I think the volatility that we witnessed in interest rates, especially in the month of May was actually a little panic month when it comes to our vision is income, we do have large size in the nonliquid fund, liquid plus category, the duration based. We did lose some bit of the money. In fact, those all the money has come back in June and in July. But all the months -- I think in the subset in the month of May, therefore, it got impacted in the average assets. Otherwise, had it gone in the June end or not had an impact. The end in the month of May and coming back after month gap. So it had an impact on the overall average asset.

Okay. Understood. Data keeping question. If you can spell out the PMS or for the non-mutual fund revenue for the quarter and the [indiscernible].

AUM is approved INR 87,000 crores for quarter. And [indiscernible] and AF contribution, if you see contribution on total revenue on a gross basis is around 7% for the quarter. And on net revenue, there is post payout of commission to distributors is around 4% on overall revenue.

Out of 6%, 4% would be PMC, right?

Yes.

Our next question comes from the line of Lalit Mohan Deo, Equirus Securities.

So I have two. So firstly, on this this particular quarter, you just see that we are seeing some healthy shows in our flagship products -- so just wanted to understand if you could give some more color into it, like in terms of the market share, how is it lacking with respect to our overall market share in close in those particular screens. And also, if you could also give some color on the channel perspective, like where we are seeing some habits and where we are seeing some more -- probably some redemptions over there, probably our attributor side or the bank [indiscernible]?

Yes. See, these of these funds, we are seeing -- though not track the exact mini improvement in the market, generally look at the flows. The core funds such as the Flexicap balance of organ, multicar, small cap, mid-cap and the multi-album, these are the general core funds, including I'm even seeing controls coming into BSE-liven the fact that good performance right to the cost. And we are seeing flows in these core funds. And our idea is actually to ramp up the flows into these funds by keeping this high focus area for the entire sales team across the country. And wherever even I've been traveling with my sales team across different parts of the country to push over overall engagement. I do see parties coming from each of them, acknowledging that some of our fund performance is even giving -- we bring better than the better competing funds in the same category, whereas the volume would have gone in the last 3, 4 years. That's something is the higher resin is that. And second, with respect to a second with respect to the channel, more or less steady growth, but I see MRB volumes gradually is picking up. With the banking channel, LS, some of our products were not bought up the approvals. So we already started seeing products getting now becoming part of the approval is recently this bank has put some of our products and Cortech onboard some of our team. And we have seen already product approved products, SBCsecurities, bank as well as on the Stancharted bank and also the -- some of the other wealth management firms including LGT well as well and industry bank. Some of our products are probably missing a part of their comparison such as electric and Baleno, even our equity savings run on the big income category. We are now getting added to the overall recommendation list, which is my belief is that given the fact that our engagement is pretty good. And also, they normally sell the products that are part of recommendation list I see improvement coming from sales engagement leading to a better outcome from these channel partners. [indiscernible] are things is coming in some of the bank channel partners. In fact, exist Bank added only a Letica fund only in the last 2 weeks. And I didn't do all in the [indiscernible].