Computer Age Management Services Limited (543232) Earnings Call Transcript & Summary

Ladies and gentleman, good day, and welcome to the Q2 FY '23 Earnings Conference Call of Computer Age Management Services Limited. We have with us Mr. Anuj Kumar, Managing Director; Mr. Ram Charan SR, CFO; Mr. Anish Sawlani, Head of Investor Relations. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Anuj Kumar, Managing Director. Thank you, and over to you, sir.

Thanks, [ Faizal, ] and good morning, everyone. I thank you all for sparing the time today for attending our earnings call, and I hope that I'm audible to all of you. The way we will structure this is like we've done in the past, I will run you through a small presentation on how the quarter was and the key highlights. And then I will hand over to Ram Charan, our CFO, to speak specifically about the financials. And then we will have enough time left over for a Q&A session. So I'll begin. I guess most of you must have downloaded the presentation. I will just take you through a sequence of salient highlights. Overall, when I speak about our core business, which is the mutual fund business, our assets, which is the core, you can think of it as the operating metric in the business, were at the highest ever and scale past the INR 27 trillion or INR 27 lakh crore mark. The average assets were at INR 27.1 lakh crores, which is an all-time high. This represented a 3% increase over 1Q. So after a period of time when there was almost muted growth, this was the first time in maybe 3 quarters that we saw an inch up in the overall assets. CAMS serviced funds continue to maintain a dominant 69% market share in overall assets of the mutual funds market. So that collectively is reflective of a steady quarter for the core business. On the alternative side, we continue to see both real growth in the market, also potential growth, accelerated signings, many, many new alternative funds getting registered. So all of those are pointing to what could turn into an exciting marketplace. We registered a 32% year-on-year growth in revenues, which is a very encouraging number. And then CAMS WealthServ, our digital onboarding platform, scaled past 50 sign-ups since launch. This is a number we've referenced in the past in about -- just about 1.25 years, about 14 months, about 50 sign-ups. Of course, it's a long road, and we need to and we will do a lot more, but a very nice milestone for us since 32% growth in revenue is a strong growth number. On NPS, the CRA business, we had launched the CRA platform on cloud in March 2020. We are at 9.5% share and #2 position in the eNPS, the direct-to-consumer part of NPS, the eNPS part. On CAMSfinserv, which is the account aggregator and it's adjunct, which is the TSP offering, we've been seeing momentum in the market, 35-plus mandates have been signed till date. And overall, at the market level, you would have seen that now both SEBI and PFRDA have released circulars to enable capital markets participants and pension funds to join the ecosystem, which is very, very encouraging. Our digital properties, myCAMS and edge360 clocked the quarter-on-quarter volume growth at 10%. This was some share gain from other electronic channels, which is very encouraging. We continue to service a growing clientele and our engagement with them on the digital side continues to improve. MFCentral, it solidifies our role in the MF ecosystem. And the encouraging thing that we've seen during the quarter is a lot of interest in the APIs, especially the CAS APIs, that is one API, which is now enabled across the ecosystem and there are participants which are live. If you go to their apps and websites, when you get a CAS statement, it is coming out of MFCentral, and that number is likely to expand. So we are seeing, what I would say, a sustained initial interest on the API participation with some of the core platforms already linked and functional. And of course, during the current quarter and next, we are expecting this to solidify quite a bit. And lastly, on CAMSRep which is our insurance business, the repository business, you have seen sustained, I would say, reporting in terms of change in architecture of the overall marketplace, which is around KYC becoming mandatory and electronic insurance issuance becoming mandatory from a given date, those dates -- the date for the second part is yet to be announced. However, riding on that, our e-insurance accounts and e-policy numbers doubled in volume during the quarter. And we are expecting this growth to remain sustained as investors become more interested in this format of holding their policies and also as the necessary steps from a regulatory front are accomplished for us to get to that regime. And then PolicyGenie, which is our deep contact tracing solution, assisted insurance companies in closing over INR 100 crore of unclaimed benefits till date. This is just the beginning, as we've said in the past. But it's a unique high-impact tool, which is helping address one of the latent needs of the industry, and we're happy with the progress we are making. Overall, I'll move forward. Our growth -- and I'm talking about the mutual funds business, our growth in overall AuM, SIP registrations and transaction volumes. If you ask me 3 just fundamental foundational operating metrics, it is these. AuM, like I said, went past INR 27 lakh crores at INR 27.1 lakh, which is an all-time high. Our NFO collections were over INR 12,000 crores during the quarter. But the significant thing was this was spanning over more than 40 schemes. So you can think of a 13-week quarter and you can think of NFO in almost 40 schemes in that period, which was a pretty large number. And then in terms of SIP registrations in the first quarter, gross registrations were at INR 37 lakh, in the second quarter at INR 38 lakhs. So that number is holding out at an aggregate value quite well. Our share at 61% during the quarter is holding out quite well. And I would say the most encouraging of these is the SIP inflows, which at the industry level, you've seen cross INR 13,000 crores for a month. At CAMS level, they crossed INR 7,500 crores and have grown by 5% over the previous quarter. So as you know, this SIP collection continues to remain the backbone of the equity net sales number across the industry, both the gross sales and the net sales number and continues to inch up, increments almost every month. And is providing the necessary tailwind, and I would say, the sustaining force to the industry in terms of investor participation. Live SIPs grew by over 14 lakh between July to September. So again, a strong number. And then when I look at transaction volumes, which is about what investors are doing with us in our funds, that number scaled up from just over 111 million to 113 million. So about INR 11 crores in the last quarter, about INR 11.3 crores in the current quarter. What we have on the next chart is just an illustrative ranking chart. This is just -- although it's a known metric, all of you know these numbers very well. There's nothing new on this, but just to show the contrast between where CAMS service funds stand, especially in the top pecking order of the top 15 funds, I think this just contrasts the overall market, the quantum of assets that our funds hold, the quantum of assets that we do not hold, competition holds. This is just to frame all of that and give you a single one-page pictorial view. Well, like I said, this metric is well known to all of you, and we will move forward. Overall, in terms of share and share gain, you know that share gain is measured as a percentage of assets in the industry. Pictorially, I think the illustration shows you that over a 12-year period starting about 2010 to 2022, CAMS service funds gained from 56% to 63% in '17 and then 63% to 69%. The non-CAMS part has, therefore, got pared down over this period from 44% to 37% and 37% to 31%. And then just in terms of, that's largely in our market attributed to these scale players, share is -- typically, a share gain is attributed to the scale players. But if I talk of the nonscale players, which is the new players, who came in and what could they do outside of the scale players. In the last 10 new MF launches, and we are restricting ourselves to launches, we are not including in this name changes, ownership changes and those kind of entities, but pure new launches, new to the market entities. Amongst the last 10, we had won 5 when you see the scale, which has been reached across these 5, almost INR 45,000 crores. Of course, the time period could be different between what we achieved and what someone else achieved, but between INR 10,000 crores to INR 45,000 crores, just a large scale difference in terms of scaling up of new operators. So that's an interesting metric chart in terms of how shares have changed over a sustained period, share has changed over a shorter period and our new launches in the market have performed over a period of time, both us and the mandates that did not come to us. From a mutual fund industry and CAMS AuM perspective, I spoke about this, 69% share. Net flows into equity assets remained positive during the quarter. SIP flows increased 5% quarter-on-quarter, 27% year-on-year. And again, like I would say, there was a time 3 or 4 years back, it used to be said that this could be the game-changing metric, the middle of the pyramid, the bottom of the pyramid participation in the mutual fund industry. It looks like that's beginning to happen in a fairly sustained relevant way, where SIP collections, SIP numbers are not just indicative of retail participation, they're indicative of overall market AuM growth and net sales numbers. In terms of industry versus CAMS, these numbers are published. You know them, INR 27.1 lakh crores versus INR 39.6. Year-on-year, just short of 6% gain for us against 8.3% of industry, quarter-on-quarter 3.1% versus 3.5%. On the equity side, the gains are much better, as you can see. When you come to the bottom of the chart, INR 12.2 trillion, INR 12.2 lakh crores is our asset base of the gross size of INR 18.4 lakh crores, which is the industry. 21.2% year-on-year growth on the equity side for CAMS versus 20.1%, so 1% delta and then 7.5% on the quarter-on-quarter side versus 6.8%, so about 0.7% delta. On the transaction side, and again, these are numbers that you are aware of, transaction volumes growing 11% year-on-year, strong, good engagement metric with consumers. SIP book grew 5% quarter-on-quarter, but 26% year-on-year, so stands at INR 3.27 crores, INR 32.7 million on end of the quarter. Systematic transactions processed during the quarter, about INR 93.6 million, again, growth very similar to the book growth at 22% year-on-year. Live investor folios at INR 53.9 million. And then unique investors year-on-year 32% growth at INR 24.2 million. So all of that, again, foundational, I would say, directional metrics in terms of how many investors are coming in and how they are participating in the market. All of that looks foundationally very good. I'll move forward on MFCentral. You will see that about 1,000 users are registering every day, almost 9,000 to 10,000 log-ins every day and then upwards of 1 lakh, about 125,000 downloads. Now this number can be much larger, will be much larger. But for the initial period, we're just closing a year of being out there in the market. And this is just the consumer participation. What the consumers consume through the API-based participation will be numbers on top, which you don't see here. But I would say a reasonable progress as we go deeper and kind of make active attempts and market this platform even better. All of these numbers are likely to scale, very positive feedback on the functionalities that are enshrined in the design of -- single design MFCentral. I wanted to talk a little about adjacencies and how they have been slowly converted into products for the benefit of the marketplace. When you see ReconDynamiX, we've spoken about this earlier. The proprietary reconciliation tool, which is put to use for mutual fund reconciliation, but is also now actively solicited and sold to the insurance and online sectors, loan against mutual funds, MFCentral, et cetera. And then you have seen that across the board, products like Wincentive, which is a sales incentive administration tool, which enables the front end of the food chain for asset managers to have meaningful negotiations with the marketplace, with the intermediaries and then give them incentive plans and schemes, which are then sent out for approvals and then get set up in the system so that in a very [indiscernible] untainted way, they can be administered. It's a large expense for the sector, so it has to be done with very high accuracy in [indiscernible] way, and this is the tool which enables all of that to happen. Similarly, our APIs for AMCs and intermediaries are powering their expansion through digital means. CAMSPay, which has a variety of solutions and the underpinning used to be the NACH of the -- NACH solution now has expanded to UPI. You've read about some of our AMCs now being live on UPI autopay, and that's going to give a fill-up to the SIP market additionally in terms of how payment mechanisms or how additional payment mechanisms will be available to the consumers. And then across the board through eKYC, eSign, AML checks, et cetera, a variety of solutions are now out of the platform, sold and offered as part of the platform, but also offered independently if somebody is interested, just to improve the use cases and turn adjacencies into meaningful businesses for the group. I wanted to spend some time on the alternatives. Like I said, 32% revenue growth year-on-year, which is a very meaningful number. New business addition in terms of new logo wins, 19 new wins in the AIF/PMS space during the quarter. So more than a signing every week, and that's something that we hold ourselves on to capture a significant and disproportionate share of this market as it expands. So that's the sustained number I wanted to speak to you about. The 50 funds which I have signed up for AIF and PMS for digital onboarding is something that I mentioned at the beginning. And I will also mention that Fintuple Technologies, which is an investment we've made as a majority investment in a start-up firm, which has solutions -- platform-based solutions in the area of integrating with custody and general onboarding for both PMS and AIF, has now had a couple of medium-sized meaningful wins with large brands and large players in the market in the last 7 months. We will continue to cover that in the ensuing quarters, but we just thought that this being the second quarter when Fintuple has been part of CAMS, just to make a mention that the progress has been encouraging. And our GIFT City operations now have 5 signed up clients. All account aggregator and TSP, I spoke a little initially, we're seeing significant momentum in terms of proliferating sign-ups across various entities, but now specifically on the wealth and advisory side and on the broking side, we are finding participants becoming interested and becoming part of this ecosystem. Largely, it was led by the bank, still about 3 months back. We are covering the marketplace through targeted events, largely in terms of end use cases of this product. And then overall, our unique value proposition, which couples our digital solutions, along with core AA offerings is now part of a very well-received bouquet of solutions in the marketplace. Guidelines for SEBI-related entities have been released. We are under prep to become the FIP Gateway for our part of the industry. And overall, both in terms of SEBI managed entities and PFRDA managed entities, there are now specific guidelines for them to become part of this overall architecture. So in general, encouraging news across the board. NPS, I spoke about at 9.5% market share. We are the #2 position in new NPS sales -- eNPS sales during the quarter for FY '23. And then on the insurance and the insurance repository side, like I said, that because there was sustained media buzz on what could be the future of the industry. Part 1 is for KYC to have become mandatory. Part 2 is for e-insurance or holding insurance in the insurance format, the new issuance to be mandatory in that format for that to become mandatory at some point in time in the near future. Riding on that, we are seeing uptick in the consumer awareness and what better sign to see that, that to see the number of new policies and number of e-insurance accounts doubling over 1Q. And of course, this is what I call green shoots. These are first signs. This sustained increase has to remain this way over the next 3 quarters. But we believe that as structural changes happen in the industry, it will certainly benefit the consumer in the way they interact with the insurance industry and will certainly be a means for us to expand our business. And then we said that our overall digital solutions, including insurance repository services do continue to improve and expand policyholder experience. I spoke about the depressing tool initially. One more thing I would say is that CAMSRep had applied for the Sandbox project with IRDA for developing an industry platform for assignment. This is the digital policy assignment. This completion report is now done. The sandbox is fully functional, and we are kind of end route to commercializing this product by adding a meaningful number of insurers and financiers, as you know, just like loan against mutual funds, loans against securities, loans against insurance will become a familiar common product over the coming years. And happy to share with you that we've taken the pole position in this particular area. I will pause here and hand over to Ram Charan to now cover the financials.

Thank you, Anuj. So I'll just take the next few minutes and go through the broad financials for the quarter. As Anuj was mentioning, there was a recovery from the asset growth side. On a year-on-year basis, the assets under management grew by almost 6%. So tracking that, my mutual fund revenue as well as the overall revenue grew by 6.3% year-on-year. On quarter-on-quarter 2, we saw a growth in AuM almost 3 percentage. So the revenue also grew by around 2.5 percentage, largely on the back of growth in mutual funds and asset-based revenue. So for the quarter, we ended up with a revenue of INR 242 crores, which, as I said, is up 6.3% year-on-year. The corresponding number was INR 227.6 crores in the FY '22 Q2. On a sequentially, we were up at 2.4%, which compares to INR 236 crores in the Q1 of FY '23. Mutual fund revenue broadly mirrored the growth in AuM. The growth was 6% on mutual fund revenue year-on-year basis, which is mirroring the growth in AuM. And on a sequential quarter basis, it was up 2.3% against AuM growth of 3 percentage. And most of the mutual fund revenue growth came from the asset-based revenue, which again mirrored the same percentage, 6.6% growth year-on-year at -- we ended the quarter with INR 185 crores of asset-based revenue versus INR 173.5 crores in the corresponding quarter last year. That's a 6.6% growth. And sequentially, again, we were up by 2.3% quarter-on-quarter. The number last quarter was INR 180 crores, again, broadly mirroring the trend in the growth in assets. The assets growth also had a disproportionate growth in equity, which actually helped in sustaining to an extent our yields. Equity AuM actually grew, as Anuj, was mentioning around 21% year-on-year, which is a very healthy growth. And hence, the mix -- asset mix was favorable for us. It is around 45% of the total assets for CAMS is the equity component. From a non-asset-based revenue, the growth was 3.6% year-on-year, driven largely by increase in call center revenue, OP and application revenue. There was some reduction in the transaction revenue on NFO, which kind of depressed this a little, but overall up 3.6% year-on-year. The number for the quarter was INR 33.2 crores. That was the non-asset-based revenue. Sequentially quarter, it was up by 1.2% in -- there was some drop because of OP as well as call center. From a non-MF revenue, again, smart growth, 8.2% year-on-year and 4.3% quarter-on-quarter. The non-MF revenue for the quarter was INR 23.7 crores, almost INR 24 crores. And again, as you saw in the earlier part of the call, the AIF is doing a smart growth in terms of greater than 30% year-on-year and 6% quarter-on-quarter. So AIF continues to grow, alternates continue to grow. In fact, based on the requirement from this call in the last few quarters, we've also published a chart, which gives you the overall breakup of the non-MF revenue. And if you see the increasing trend of AIF, almost like 3% of the total company revenue is now AIF now. Similarly, CAMSPay is showing a smart growth in terms of more than 30% year-on-year. And Rep is now beginning to see the uptick in terms of the new notifications that is expected or the KYC mandatory for general insurance that is coming into play. So the non-MF revenue is growing 8.2% year-on-year on the back of very smart growth in AIF as well as the payments business. And just a small commentary on the yield because that's a question that often gets asked. In terms of yield, as we've already kind of guided, there could be a small yield compression that happens in some quarters. In some quarters, it may not. It is a combination of various factors. What we have seen play out from a quarter-on-quarter basis is a small depletion in yield, contributed by 2, 3 factors. From a year-on-year basis, actually, the yields are very stable. But from a quarter-on-quarter basis, there is a small decrease. Again, this is -- the telescopic pricing will play its part on this and equity slabs are more prone to this telescopic pricing depletion. And as the equity assets grow, there could be some impact of that. Although the mix has offset this to a large extent, the increase in -- because of the depletion because of the equity slabs, telescopic. There were some pricing contracts that were kind of finalized during the last few quarters with some of the major customers and the impact of this is there. And the good part is most of this has been closed for the next 2 or 3 years. And also within the mix, you would see that the debt has fallen at a pace which is higher than the liquid. And you will understand that the realization for a debt asset is much higher than what we get for liquid assets. So within the non-equity segment also, the fact that debt and given the market conditions, which you're all aware of, has fallen steeper than what liquid has fallen. So that's having a small impact on the mix benefits, too. So overall, while the yields are stable on a year-on-year basis, quarter-on-quarter, we did see a small depletion in the yields, which is attributable to these reasons. From a profitability perspective, I think we said last time, there were questions on whether this is the bottom in terms of the margins and the commentary that we have consistently given was if the assets stop kind of recover a little, then we will see the margin improvement, which is what we have seen in the current quarter. From an operating EBITDA perspective, we are at -- this is an Ind AS number. We are at 43.8%, INR 106.1 crores; which compares to the 41.1% that we had in the last -- in the sequential quarter, which is that we are up 8.2% quarter-on-quarter. And on a year-on-year basis, it's almost flat at 0.3% up. The margin was 46.5%. And from a PBT perspective, we are at 38.9%, again, which is up 11.4% quarter-on-quarter. There was some other income that we received in terms of interest on income tax, et cetera. That's why there is a difference between the operating EBITDA growth and the PBT growth but on a sustained basis, our operating EBITDA has been growing -- has grown at a percentage of 8.2% on a sequential basis and flat on a year-on-year basis. PAT tracks the growth in PBT, which is up 11.4% quarter-on-quarter and almost flat year-on-year. The thing to note here is that this includes the charges that we take. We have not yet slowed down on the investments that required for the new businesses. You saw in the earlier commentary from Anuj, the investments that are continuing to happen in MFCentral has continued to happen in the products in AIF, that's continuing to happen in CRA, that's continuing to happen in account aggregator, TSP. We've not slowed down any of those investments. Those continue to come. And as per our guidance in the earlier quarters, the investments will continue for a quarter or 2. While we are seeing very encouraging signs from the market in terms of account aggregator, TSP, the actual substantial revenue flow is going to take a couple of quarters. But this is something that we have taken the cost in the books, we have actually taken the price impact, we have taken the other inflation of salary that's happened in the current year. We've taken the technology hiring that's needed to be done to keep the platform and the new initiatives up and running. And on top of this, we have posted out -- posted operating EBITDA margin of 43.8%. And that's the way we look at the margins for the current quarter. The profit numbers are also after considering the ESOPs, which is the noncash charge, which for the current quarter was around INR 6.5 crores. And the Board has declared an interim dividend of INR 8.5 per share, and we ended the quarter with a cash and cash equivalent of around INR 446 crores. This is before the interim dividend has been declared by the Board. So this in summary is the financial highlights for the quarter. For the half year, again, we did -- we have closed the half year with a revenue of INR 480 crores almost as opposed to INR 429 crores in the last half year, which is up 11%. From a PAT perspective and operating EBITDA perspective, we are marginally ahead. Our operating EBITDA is INR 204 crores for the 6 years -- 6 months period and around INR 138 crores for the 6-month period in terms of PAT. So all in all, it's a quarter that I should say is characterized by the fact that our margins have started creeping up again. We continue to make investments and the investments are going to bear fruit a couple of quarters down the line. We are seeing exciting trends in terms of AIF, in terms of TSP, AA, and in terms of the insurance repository. And all those revenue optionality, as you call it, would be probably the upside in the coming quarters. With that, I kind of hand over the call to [ Faizal. ] You can probably take it over and moderate the questions.

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

Just firstly, on the insurance repository business. Now if I look at the data that you all have shared and in that sense, the revenues have been flattish on a sequential basis in spite of the fact that we've kind of doubled the accounts and the KYC has gone up. So what is the revenue model for this segment? And now once that there is a mandate from the regulator about converting all the possible insurance policies to eIA accounts, what would be the revenue potential for the industry?

Yes. Prayesh, I'll answer the question. So the number that you see in terms of the flattish number quarter-on-quarter insurance has two components. One is the outsourcing business, which we have again kind of put out several times in the past. It's not the focus area for us. It's more kind of an outsourcing business, labor arbitrage. We continue to have good relationships on that, but that's something that is kind of not the focus for us. If you see purely from a digital revenue or from an IR revenue, it has actually grown smartly and the numbers that Anuj spoke about, the number of policy conversions that happened in this quarter year-on-year basis has almost doubled in terms of this. So if you combine the two, you would see this difference. But on a stand-alone basis, the insurance deposit revenue has grown both quarter-on-quarter as well as year-on-year. The business model for that is 3 fronts. One is the policy conversion, we get paid for every policy that gets converted into the demat form or electronic form. We get some AMC for the accounts that are maintained with us, which is per policy. And we also get some minimum transaction charges. As you understand, the current architecture is that the number of transactions that happens to be minimal because it will be basically changing their master data, changing their phone number, address, et cetera. So currently, the revenue from transactions is a little less because the scope for transacting in that total asset space today is less. But the bulk of the revenue is from the policy conversion. And this is just the beginning. See the eKYC is not yet operational -- the KYC mandatory is not yet operational. It's been postponed from November to January. And all of us are awaiting clarity from the regulator on how this demat is going to happen. So what Anuj was mentioning is that in anticipation of that because of the awareness, we have seen a spurt in the number of policies. When the actual notification does happen and IRDA is in very close touch with the various insurance repositories including CAMS, on the preparedness for this in terms of the infra requirements, in terms of handling the customer requirements, et cetera. So once that gets final, then we will see the real action coming in this space. What we are seeing is the initial spurt in volumes because of the wide reporting in the news and people being more aware of this requirement or this possibility of demating policies. So the short answer is that, yes, we are seeing uptick in insurance repository, but the action will start once the regulator steps in and gives us notification.

I'll just add a little to that. So Prayesh, when you think of the business, think of it this way that there is a mass of almost INR 30 crore plus life insurance policies out there and INR 20 crore plus general insurance policies. As and when this becomes mandatory, all of that will become the purview of e-insurance and all of those will be digital policies. When we say number of policies doubled, it's a more localized quarter-to-quarter metric. So think of it this way that if new policy addition in CAMS was, and I'm just throwing a number, was just say, 1 lakh in a quarter in 1Q, that number has become 2 lakh in the quarter. Why did it become 2 lakh from 1 lakh? Why did it double? Because consumers are reading reports that some of this will become compulsory, they will come to the website, tinker a little and perhaps go and open an account and start linking policies. So that's very preliminary action which has happened. The real math hasn't happened yet because that will happen in 2 parts. One, new issuance of policies initially will become, and that's our understanding, will become mandatorily digital, which means it will have to be issued in digital. And the second is that the past period mass of paper policies, which are undergoing -- either undergoing renewal, every year premium is being paid, they will become digital in the second part of this implementation. That's going to take time. I mean that will only happen when the statute gets announced. Those specific dates are not announced yet.

That's helpful. Secondly, continuing on this insurance repository, the transactions that -- something like a premium payment reminder or say, a premium payment that comes through a loan against the policy or all these transactions will also be charged or these all are still under discussion and it will take time to get a clear picture on this.

So I'll answer it in 2 ways. First is the loan against or the assignment that you spoke about. That's the Sandbox that was mentioned earlier. So that has been -- IRDA has permitted us to do the Sandbox, and we have tied up with one insurance company and one financier and proved the concept in the sandbox. It is going to be commercially exploited. So that will start very soon. So that doesn't have to wait for the larger question of transactions being broadened. So that's going to start pretty soon, probably from next quarter where we'll have a commercial model, and the financiers will pay something, insurance company will pay something, and that will happen. The second part in terms of the premium collection, the reminders, the claims, et cetera, that's a broader reengineering of the platform that's underway. And once that happens, the scope of the transaction revenue will increase manyfold. And that was what I was alluding to when I said that the scope now is currently limited to changing your information on master data, on address, name, et cetera. So once the platform becomes a policy servicing platform, which is expected within the next couple of quarters for sure, then the scope for transaction revenue will be much higher than what it is now, which is all the components that you spoke about in terms of policy collection and now routing it through a payment, they're are doing claims, policy statement, et cetera.

All right. That's helpful. And lastly, on alternates, what would be our market share currently? And how do you see this business kind of seeing, it's 32% Y-O-Y growth you've seen in this quarter. Do you see this sustaining or even getting better from here on?

So overall, from a market perspective, if you see the food chain, the number of alternate -- alternative funds registering with the regulator, that is where the whole activity starts. I'm sorry, if you see in the last 2 quarters, that number has grown phenomenally over the past year. That's point number one. Point number two, we have seen expanded consumption from clients in the base. So clients in the base are expanding new schemes and bringing in new investors, and that is one of the ways of growing. And the other is both CAMS WealthServ and the RTS servicing have won a number of new logos. So this 32% growth, obviously, has been a very sustained number, which has come in. We are expecting this growth trend to continue. I will not commit on specific numbers. We will continue updating you quarter-on-quarter. But I would say that we are seeing the momentum will continue. Of the outsourced part, which is the fraction of the market that outsources, unlike mutual funds, everybody does not outsource, we are upwards of 50% of the market. So we are holding a dominant share. And we are expecting with the offerings that we have and now with the addition of Fintuple to the overall set of offerings, we are expecting this share to continue sustaining and growing.

[Operator Instructions] The next question is from the line of Sahej Mittal from HDFC Securities.

So firstly, I mean, on the negotiations with the AMCs, right? So where are we in terms of negotiations on the pricing side? If you can give some color given the kind of yield compression all these AMCs are facing. So where are the negotiations with the RTAs. If you could talk about that a bit? And the second one was on OpEx. So if you can quantify the investments. So out of the INR 27-odd crores, what are the investments which we are making in the new businesses and part of which will sort of stabilize after 2 quarters to get a better sense of the long-term normalized number? Yes.

Yes, sure. On the price negotiations with the customers -- with our AMCs, this is something that will happen periodically. So the good part is a lot of these contracts have been signed up in the beginning of this year for, no, 1, 2 years -- like 2 years -- none of it is 1 year, it's actually 2 or 3 years depending on which AMC it is. So barring one, all the major contracts with the AMCs have been signed and the results that you see is the -- contains the result of the negotiations and whatever the commercial outcome of those discussions were. So this is an ongoing thing. So there is nothing that I can specifically kind of say is going to happen in the next 6 months or 1 year, whenever the contract falls due again. But the only comfort I can give is in the terms of the major customers, barring one, all those things have been concluded and do not -- are not expected to come up in the next 2 years, right? And in terms of the question on investment, so we have been a little conservative on that. So for example, the investments that we make on the account aggregator, TSP, et cetera, and a lot of the marketing and sales-related expenses, the people that we get on the roles for CR, et cetera, are actually part of the OpEx, as you mentioned. What I would look at it is not from the perspective of those costs actually going down because we would kind of retain the development cost on the books because to add additional features to ensure that this platform stabilizes, et cetera. So while on an approximate basis, I can tell you the total money we spend from an OpEx perspective is between INR 3 crores to INR 4.5 crores in a given quarter on these expenses. I would rather put it this way that once the revenue starts flowing, there should be commensurate revenue for this. Would I see a huge decrease in these expenses? I think we would rather wait for the platforms to stabilize to include more features in that, to enhance them, listen to the market, et cetera. And we would not be in a hurry to unwind all the investments that we are doing in the platform development. There will be some rationalization that happens. Yes, after going ahead, there will be something, but we are looking at more from the revenue kick in that will happen a few quarters down the line.

Right. And maybe on the -- one follow-up on the first question, so I'll maybe reframe my question. So in the last 3 or 6 months in terms of the negotiations which you did with the AMCs, if you can directionally highlight that whether there was any downward revision in the pricing with any of these AMCs, not quantifying, but I mean, just directionally also would help give us some sense.

We've seen both. We have seen both. We have seen contracts that have been rolled over. We've seen contracts that have had a small -- for a downward revision in price. That's more to do with the volume growth and various other factors in terms of that particular dynamics with that AMC. But as a broad industry trend, we have also seen a lot of rates being rolled over and no reduction happening also. So both we have seen.

Right. And one follow-up on the -- one data keeping question was on the ESOP expense. So what is the quarterly run rate which we should assume? I mean last quarter, it was INR 9.5 crores. This time, it is like INR 6.5 crores. So going forward for the balance of FY '23 and for FY '24, if you could give us some numbers?

Yes, I just clarified it last time. So you're right. So this is something like a cliff, right? The way we have to amortize that as per accounting standard is the end of the anniversary of the auction, suddenly the cost amortization will come down. That's how the standards requires us to amortize the cost. So just to give you a guidance for the year, we expected the cost -- and we expect the cost to be around INR 27.9 crores. And what we have taken to the P&L in the first 2 quarters has been, I think, INR 16.1 crores, plus or minus a few lakhs. So I think INR 16.1 crores. So the balance, you would see a lesser charge-off on ESOP for the -- around INR 11.5 crores, INR 11.6 crores for the remaining 2 quarters. It won't be the same number each quarter, but this is the number that we would work with because around INR 11.5 crores to INR 11.7 crores charge for the remaining half of the year.

And for FY '24?

Sorry, for the remaining 6 months?

For FY '24 and for FY '24?

Sorry for FY -- for next year, FY '24, the total expense, and we'll have to wait and see what is the additional grant that happens. So I'll give you that caveat. The next year, the expenses should be around INR 14 crores.

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

A broader question. I mean the way we live -- your business is shaping up, there are so many sort of business areas like starting with core mutual fund, now there's opportunity on the insurance side, on the alternate side, account aggregators. I mean there are many and quite scalable. Now there are 2 sort of, I would say, forces at play. I mean, of course, there is a massive volume growth opportunity in each of the areas. But with volume growth, [ scalability ] also comes to price competition or kind of a being a B2B business, also comes to the price increases. In all this backdrop, I mean, if you were to just sum it up because some of these areas are just emerging, how do you see -- I mean your top line net revenue growth over the next couple of years? That's the one question.

Sure. So let me start with AIF first, where we are seeing because it is a complex suite of services run over a platform, prices are largely holding. Do remember that each of the markets that I'm going to speak about, none of them is a 2-player market. There are 4-player, 5-player and basically multi-participant markets unlike mutual funds. But in AIF, we are finding that price is holding, which means we are not seeing too much of price attrition because of competitive pressures yet. We will have to see because there are 5 or 6 players that participate how that turns out. In this quarter, you saw that we have spoken about a 30% year-on-year growth. Now of course, the base isn't that large yet, although it represents 50% of the market's outsourced share, the base isn't that large. As the base expands, I would say, any revenue growth between 20% to 25% will be a creditable growth. So for both this year and next year, if we are able to accomplish that number, I think we will be happy and to be able to hold the price line. So that's on AIF. On insurance, you know that it's a licensed market, but there are 4 licensees, and it is reasonable to expect some degree of price competition. Price competition has already happened in that industry. If you see in comparison to any other dematerialized holding, I would say the prices are comparable or even lower than there. So as the market expands, although the amount of investment each player has to make is humongous and the quality of service will come under test because right now, it's not been a core player, not everybody -- not every consumer has any insurance account. There will be a time when everyone has and the pressure of performance will mount. We expect that there could be some price attrition from this level, may not be very large, but a 10 to 20 price attrition may happen. But we are confident of turning in reasonable profitability at those prices. But you're right, both in AIF and in insurance, it's a set of players who are participating. And if we continue to do value-based competition rather than price-based competition, it is obviously accretive to everyone, including to the marketplace. Account aggregator and TSP, although, again, there are named players and it's a licensed market, we are seeing some degree of, I would say, irrational pricing. Is that going to last for a long time? We don't know. We are up against a set of players we have not encountered in the past. We are trying to figure out their behaviors, et cetera. CAMS has always been a value player, which means we don't try to enter a market at 0, near 0 pricing and then try to expand share and then think of price increases. That's a very arduous cycle to be a part of. Of course, then there are players who will always believe in those things. So that is one market, I would say, the account aggregator market, which is seeing some degree of irrational pricing. We will continue to keep you guys updated on how that pans out.

Yes. Very clear. So on a net-net, I mean, if I were to sort of -- we were to just put these things together and of course, your core large party mutual funds, what kind of a revenue growth expectation do you have for, say, the second half this year and next year, overall consol revenue?

Okay, this is -- are you asking for the company as a whole?

Yes, yes, yes.

Sorry, your voice is not clear. If you don't mind...

Yes, is it better now?

It's still the same. We can hear some disturbance from the line.

Yes. Is it better now?

Yes.

Yes. So my question is, I mean, in this backdrop of quite detailed explanation of segments, what sort of consolidated business revenue growth for the company as a whole you see for the second half this year and next?

So while we would generally don't give specific guidances on revenue numbers, yes, we had -- we were around INR 480 crores in the first half of this year. So what we will say is this one, see the new business revenue, whether in repository or in account aggregator would probably not kick in, in a large extent by this -- by the next quarter or 2. So that is more kind of FY '24 story because of regulatory reasons for insurance repository as well as the market being what it is and we'll have to kind of further develop for the purpose of AA and TSP, very exciting stages. AIF will continue to grow. So we have always said that it will be -- 90% of the revenue is the mutual fund revenue. So it will be guided by what happens from an asset growth perspective. And we should be confident of mirroring to a large extent, if not 100%, the growth in assets that we expect over the next 6 months as the top line growth. I think that's where we will leave it at.

Mr. Singh, does that answer your question? Mr. Singh, does that answer your question?

Yes, yes. I am done.

Next question is from the line of Ansuman Deb from ICICI Securities.

My question was regarding the cost that you said, considering that we have already spent on the AIF as well as the AA/TSP platform as well as the platform that you pointed to the insurance thing. Also some of these of course would be lower. So in many ways, could we understand that the quarterly cost that we are seeing in Q2 is broadly -- should remain at this level going ahead, which means that Q1 was kind of a bottom of -- kind of bottom margin. And if that is the case, would we be able to kind of think of a margin more like around 45 -- mid-40s going ahead? That is my question.

So Ansuman, broadly, I would agree with you that quarter 1 was probably -- we saw the salary cost coming in, in terms of the increases we had to give given the job market and the tech resources. Let me put it this way that we are not on a hiring spree. It's not as if we are going to keep hiring other than technology resources, investments we make in security and infra, it's not going to be a huge investment that we are going to incrementally do on other things. So I think the cost will be pretty stable, at least for the next couple of quarters. Again, the April cycle, we'll have to see. But for the next couple of quarters, we expect the cost to be reasonably stable. That's not to say it's going to be the same number, but it's going to be reasonably stable. And from a margin perspective, well, I know the common refrain has been the operating leverage playing out, and that's been your view, too. So we have to wait and see. While we are comfortable with where we are in terms of margin now, whether it will go beyond 45% is something that we'll have to wait and see. But as we already continue to guide, we will be in the early 40s in a reasonable quarter. I think we'll continue to hit that number. The upside could come when the new businesses start giving substantial revenue going forward, but that's probably a couple of quarters away.

Right, sir. Right. And last question from my side is on the possible star in terms of revenue optionalities. You were mentioning about AIF and now it has been shaping up well. So now if I were to look at the main sources of revenues, it would be AIF, AA, TSP in FY '24 and the insurance deposit, right? These 3 would you put it as top 3 kind of possible revenue sources?

Yes, absolutely. Absolutely, we'll put them as the first 3. And maybe although I think that list is a good enough list in terms of order because AIF is largely a signed business, which yields revenue with about 2 to 3 months lag is easier to predict, so it should remain at the top. Insurance, depending upon how fast the regulatory guidelines come in with specific dates because right now, it's a statement of intent. The firm dates have to be announced. But as and when that gets announced, there will be a scramble to meet them. And like we said, because consumers are anyway savvy on digital management of their investments, we don't see too much reluctance coming in from investors to open their insurance accounts. So that could be number two. And then with all the momentum that we are seeing on the account aggregator side, I would stack them as 1, 2 or 3 in that order. But yes, certainly, you've got the order right.

Right. And there is a positive surprise in CAMS space. The payment thing, then what is driving that growth in -- is it purely number of transactions or anything that...

No, it is a number of transactions. And the ACH continues to be very stable and continues to get a major market share from mutual fund perspective. We've also seen some uptick from a digital perspective, which is your non-ACH in terms of, as we said, UPI autopay has been launched, although it's in a small way. We also have the net banking, we have the debit -- we have the IMPS verification that's done because of the regulatory changes. So the ACH remains stable kind of being the major share from a perspective. But digital revenue has come up in the last quarter, and that's the positive surprise that you're seeing.

[Operator Instructions] We'll take the next question from the line of Sagar Gandhi from Future Generali Life Insurance.

Sir, my question is while you've highlighted that alternatives, insurance and AA will be your top -- I mean top businesses in your new segment. Does that also remain the order of -- when I ask you something like this, which business will clock INR 20 crores of EBITDA first? So will it -- will the order remain the same? Or will the order change?

Well, without making too much of forward-looking statement, I think INR 20 crore EBITDA has to be a result of -- and again, I'm talking in a very approximate manner of INR 40 crores or INR 50 crores revenue. The way things are looking right now, just in terms of current size, of course, tough to predict future size in terms of who will get there first. Alternatives looks like will be the first to get there. I'm sure the other business heads would like to prove me wrong, but that is the way I would look at it right now.

Okay. And this will be followed by insurance and then AA broadly in your estimate. It may not happen that way, but that is how you...

Yes, I think the only difference I would say between insurance and AA today is that if regulatory guidelines state a reasonably aggressive date for the market behavior to change, then consumers react very quickly and the options they have go away. While in the case of account aggregator for consumers to react, the first part is already done, which means everybody is linked, at least in banking, all the banks and SIPs. But for active change to happen at the consumer level and consumer is not just the individual consumer, I'm talking of the FIU or the financial information user, that may still take a bit of cycle time. So yes, I mean, that is the way we would think about it right now. And we will continue updating you as the whole thing unfolds itself.

The next question is from the line of Punit Kumar from Reliable Investments.

My name is Punit. I'm calling from Delhi. I would like this question to be answered by Mr. Ram Charan. I'm looking for basically -- I'm seeing the 2 sides of the company. I would like which side I should look at. First side is the investor presentation. So many engines, so many companies, which create future. That is one side. Second part of the first side is Mr. Anuj presenting some lakhs of crores plus some lakh crores, we got billions of transactions added, et cetera. These are the positive sides. The negative side I see in the consolidated P&L is sales have increased from INR 231 crores to INR 249 crores, which means that we have added INR 18 crores, and we have added INR 21.5 crores to the receivables. So sales is actually minus INR 3 crores, and if I see the bottom line, it's gone down. No. So which side should I look? How is the company doing? I cannot -- I'm confused.

So I'll try to kind of clarify. I'm sorry if something got confusion to you. The only numbers that are relevant is obviously the consolidated numbers, and those numbers are uploaded in my -- in the SEBI website as well as in the exchange. And the earnings presentation has the same numbers. So just as a summary, the sales have gone up by 6.3% year-on-year and 2.4% quarter-on-quarter. That is the INR 242 crores number that you see, which is attributable to the increase in the assets under management by the similar number. There's no confusion on that. And you don't have to worry about subsidiaries separately because barring one, which is a very small component, remaining things are 100% subsidiaries. The subsidiaries are more from a regulatory perspective because IRDA will require a separate company, RBI will require a separate company for account aggregator and then other things like that and SEBI for a KYC. So for our purposes, all of these are 100% subsidiaries. They are done only for regulatory reasons. There is no minority interest, barring one. So you should look only at the consolidated numbers, which is the number that we have, which we have uploaded in the website as well as the number that you see in the earnings presentation. So the INR 242 crores is the increase that you have seen, the asset-based revenue increase you have seen. The sequential growth in profit has been 8% on EBITDA perspective and 11% from a PBT perspective. These are the same numbers that you will see in all the presentations. And from a PBT perspective, you've seen 11% growth quarter-on-quarter and stable year-on-year. That's the INR 97 crores -- that is INR 97 crore number that you will see. And from a PAT perspective, you will see a number of INR 72.14 crores. That is the number you will see from a consol perspective as well as what you will see from the earnings presentation. So the numbers that we spoke about are all consolidated numbers. There is a single number that you will see. As an investor, if you feel that some of it is confusing, we will take the feedback and kind of address it to you separately. But you don't have to worry about the subsidiaries, you don't have to worry about every other filing. It's the consolidated number that we file with the exchange as well as with the earnings presentation that is relevant for this.

Ladies and gentlemen, that was the last question for today. Should you have any further questions, please reach out to Anish Sawlani at Shareholder Relations at camsonline.com. I would now like to hand the conference over to Mr. Ram Charan, Chief Financial Officer, for closing comments.

Sure. Thanks. On behalf of the CAMS management, I would like to thank the participants for their continued interest in CAMS. And for any further questions, please feel free to contact IR, Orient Capital or Anish Sawlani at the coordinates that I mentioned in our presentation. Once again, thank you for your participation and continue to please follow CAMS, and please get back to us in terms of any questions.

Thank you, everyone.

Ladies and gentlemen, on behalf of Computer Age Management Services Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.