HDFC Asset Management Company Limited ($HDFCAMC)

Ladies and gentlemen, good day, and welcome to Q4 FY '26 Earnings Conference Call of HDFC Asset Management Company Limited. From the management team, we have with us Mr. Navneet Munot; Mr. Naozad Sirwalla; and Mr. Simal Kanuga. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Simal Kanuga, who will give us a brief following which we will proceed with the Q&A session. Thank you, and over to you, sir.

Thanks. Good evening, everyone, and thank you for joining this call. We will begin with an overview of the industry. So looking at the year gone by, Nifty 50 ended down 5%. Through the year, markets had to deal with multiple challenges, stroke news flows, global uncertainty around tariffs and trade, geopolitical tensions, leading to volatility in crude oil prices, et cetera. On top of this, we saw persistent FPI outflows, which kept sentiment under pressure. So overall, a fairly difficult environment for markets. What clearly stood out was the continued participation of domestic investors. Despite the volatility, they not only stayed invested, but continue to report their confidence in long-term India growth story and markets. In fact, many use this corrective phase as an opportunity to allocate more prudently and systematically rather than getting carried away by short-term market movements. Interestingly, if you look at the March quarter, the Nifty 50 was down by 14.5%. The flows into equity-oriented funds came in at around INR 1,340 billion compared to INR 1,188 billion in December of 2025 quarter when Nifty in fact, was up by 6%. SIP flows continue to inch up at a healthy pace. In March 2026, monthly SIP collections touched an all-time high of INR 321 billion, up 24% year-on-year with 97 million contributing accounts. For the full year, the industry across asset classes saw heavy net inflows of INR 7.4 trillion. Equity-oriented funds continued to be the primary driver, contributing close to INR 4.9 trillion. ETF witnessed strong inflows of about INR 1.8 billion of which gold and silver ETFs combined attracted nearly INR 1 trillion. On the fixed income side, flows were relatively muted. Net oriented funds saw inflows of INR 66 billion, liquid funds saw inflows of INR 5 billion during the year. Let me highlight an interesting data point here. This marks 14th consecutive financial year of positive net inflows for the industry as a whole. Another important trend is growth in number of mutual fund investors. So it's not just deeper [ bled ] share from existing set of investors, but also steady addition to new investors driving industry growth. During the year, 7.2 million new investors entered mutual funds, taking the total invest base to $61.4 million. Participation from B30 locations also remains encouraging with over 40% of SIP flows now coming from these markets. We now move to us. Overall QA AUM grew by 20% Y-o-Y to reach INR 9.3 trillion while equity [ wanted ] AUM reached INR 6 trillion. SIP and STP flows together stood at INR 48.8 billion in March of 2026, growing by 33% year-on-year. Our total accounts crossed 30 million and unique investors with us are now at $16.7 million, an addition of $3.5 million over the year to put that in context, industry as a whole added $7.2 million. In terms of mix, direct plans continue to gain traction and now account for about 31% of our equity AUM. Digital adoption remains very strong with 97% of our transactions being digital. To zoom in, this number was 81%, 3 years back and 16%, 6 years back. During the year, we further strengthened our mutual fund offerings with the launch of seven new schemes. Beyond mutual funds, we also made good progress in expanding our alternatives business with announcement of first close of our private credit fund with IFC as a partner and anchor investor. In our international business, based out of GIFT City, we launched two inbound funds during the year, taking the total now to five. On portfolio management services side, we are seeing encouraging traction. We were awarded two marquee mandates during the year. One was from EPFO and the second one is from SPFO, the Siemens Provident Fund organization, both on fixed income. Now we move to financials, Total revenue for the year was INR 46.2 billion, with revenue from operations at INR 41.2 billion, growth of 18% year-on-year. Total expenses were INR 9.1 billion, operating profit for the year came in at INR 32.1 billion, a Y-o-Y growth of 18% with an operating margin at 35 basis points of AUM. Profit after tax stood at INR 28.6 billion, a year-on-year growth of 16%. Board earlier today recommended a dividend of INR 54 per share compared to INR 45 per share adjusted for bonus issuance last year. That translates to a payout ratio of 81%. Of course, this is subject to shareholder approval. Thank you very much. We can open up for questions starting now.

[Operator Instructions] The first question is from the line of Sucrit Patil from [ iSight Fine ].

I have two questions. My first question, Mr. Munot is, what are the key priorities for HDFC in the coming quarters? How do you plan bringing more retail investors into retail funds, trend in distribution in smaller city and leverage digital platforms to make investing simpler and more engaging. I just want to hear your impact on this? That's my first question, and I'll ask my second question after this.

Sure. Thank you, Sucrit. So as you can see, over the last couple of years, industry has grown from a [ stent ] to strength. For the last couple of years, we are seeing tremendous focus on expanding the systematic book across all channels, across all geographies, across all investor segments. And while the industry has grown, we have got our fair share continue to focus on that, continue to serve investors across various channels through the physical branch network that we have, where we have significantly expanded in the last couple of years, and we will continue to evaluate opportunities on that side. And on the other side, continue to invest in our digital capabilities, both are the portal website and [indiscernible] the app are best-in-class in the industry. If you look at the transactions, which used to be almost 40% in physically done 5, 6 years back, are almost now 97% or so get done digitally. So we believe in what I call figital, continuing to expand our physical base to serve our distributors, our investors across the country. And on the other side, best-in-class digital capabilities to serve our investors. On the product side, we have the -- I mean, as per the CV classification, most of the categories that mutual fund house can have, they are present in all of those categories. Our aspiration is to keep growing our market share in all of those categories keep delivering good returns to the investors. They have more faith and then we get more money in those products and on the other side, continue to build our distribution capability. Over the next several years, apart from the mutual funds, we also see opportunities grow the non-mutual fund side of the business, which includes our PMS capability. We had some early wins as well as on the alternative side. In the initial comments, Simal has mentioned about what we are doing on the private [ Calit ] side, on the category [ 2AI ] from the fund-of-fund side. And over a period of time, you will hear more from us on that side. The other opportunity I'd highlight is on the international business. So we have a 100% wholly owned subsidiary in GIFT City, where we have five funds live over a period of time. We want to continue to build the product range and the distribution capability on that side, both for inbound money from global investors investing into India and outbound Indian investors investing globally. So some of these are I would say that we'll continue to focus.

My second question to Mr. Sirwalla. How are you approaching this such as market volatility or any regulatory compliances that keeps on changing over the time and rising cost, while still ensuring profitability remains steady and growth keeps on going from the [indiscernible]

Sure. Sir, I'll take the cost question first. So if you break down our costs essentially into two components, employee costs and all other expenses are together. The employee cost front our -- excluding ESOPs, our cost has grown by about 1.5% year-on-year. And it should take this over the last 5 years, the CAGR for employee costs, again, ex ESOPs noncash charge is around 13%. During that period, our employee count has grown from 1,250 to around 1,700 employees. Similarly, on the nonemployee costs, they have increased at a CAGR of about 13.5% over the last 5 years. So while we don't give specific guidance, this will broadly grow in line with the business and the investments we are making across technology and people. Again, if we step back and look at costs relative to AUM over the last few years, there has been a clear downward trend. Despite investing in talent, building new capabilities and factoring long-term investment initiatives like stations, we have improved overall efficiency. So [ Arena-focus ] is not necessarily cutting cost, but on managing them well while we continue to invest for growth. I think on risk management and volatility, of course, we have a team that ensure that they have appropriate risk factors in place. And we sort of manage that very, very actively across our compliance and risk team.

[Operator Instructions] Next question is from the line of [ Kishan Shah ] from the Financial Express.

So my question was on the PFO mandates that you said that the EMC received. Is there any data on that?

So SPF for -- that we already started managing EPFO, we are signing the agreement. So both of them were part of a RFP that was issued and both of these were awarded to us.

[ Kishan ], do you have any follow-up questions?

No, that's it.

Next question is from the line of [ Kush Kumar ] from Magnus Health Hathway Investments.

Okay, sir. So my question is regarding the market share. So how do you see HDFC AMC growing its market share over the next few quarters? And what exactly are you planning to do to gain further market share in this industry, sir?

So as I mentioned earlier that we have a good long-term track record across all strategies and on the other side, the work that we have been doing on the distribution side and C&D product range, the performance tracker record platform that we have. Over a period of time, we -- I mean, won't more optimized market share across all products Incrementally, I mean, what I mentioned earlier on both what we are doing on [ pidical ] presence, relationships with all channels, be it our mutual fund distributors, tens of thousands of them across the country, all the initial distributors, the aggregators all the banks where we have relationship. And of course, the fintech channel, which has been growing quite a bit over the last couple of years, we continue to focus on each one of them. Yes. I think some of the other things I mentioned earlier.

Sir. One last question, sir. Sorry. Sir, how do you think artificial intelligence tools are going to affect the mutual fund industry? And how do you see going ahead the roll of mutual fund distributor and raising of the AUM for [ NMC ]. So do you think there is any tons of disruption from AI or any [ logins ] from that so -- anything which you see coming for the mutual fund industry, maybe from the B2B side or maybe from the B2C side, Do you see things like that?

So our digital strategy is organized around becoming the digital AI value creator for every Indian. Our overall mission as an organization is to be the well creator for every Indian and the digital strategy is to be digital AI [ will ] creator for every Indian. So clear focus on three stakeholders, our investors, our distribution partners and the STFC Group ecosystem. So the approach is not to merely adopt technology, but to use it to strengthen our scale, our efficiency, our investor experience. And I mentioned earlier that 97% of the transactions are already digital. But with the help of AI and all the digital tools, we continue to simplify our onboarding, our discovery, our engagement to drive the long-term participation from -- I mean, from everyone rather than just the transactional usage. And we are clearly on a trajectory towards becoming a 100% digital transaction AMC across the organization, AI is being embedded as an operating layer from marketing and client engagement to investment processes, risk management, compliance. And they're like acting as a force multiplier for our teams rather than a replacement. And this allows faster decision-making, it allows better risk oversight and of course, higher productivity. And all of this is built on a robust and cloud-based technology foundation. We are very particular about the strong data architecture and a very, very rigorous cybersecurity standards. To summarize, I would say, the objective is clear, to build scalable defensible digital and AI capabilities that enhance the investor outcomes, improve operating leverage and create a durable long-term competitive mode for STFC AMC. We have announced today that Board has approved the appointment of Mr. [ Rajan Ananda ] has an invite and external expert on the technology committee for a 3-year term. Mr. [ Anand ] is the currently a Managing Director at 15 Partners. He brings a deep global technology leadership experience. He's worked earlier with and has let Google in India and Southeast Asia. He had senior roles at Microsoft and Dell, and was a partner at McKinsey. So I think there the standards, the board technology oversight and provides an independent and high-quality guidance as our endeavor is to deepen our focus on digital and AI-led transformation.

Next question is from the line of Abhijeet from Kotak Securities Limited.

I hope I'm audible. My first question was to pick up on the opening remarks on the investor behavior, especially in March. But broadly, given the volatility in the preceding year, like we don't see any like major change in ends on the reported numbers, but maybe under the hood, have you seen any change in behavior in terms of ticket sizes or, let's say, let's say, self-directed customers their share kind of coming down in overall flows. Anything that you can highlight to be on the reported numbers?

So I'm sure you have seen the March industry floor data and the numbers really speak for themselves. And if you look at the book at the start of the year versus now, in the context of how markets have behaved, what Simal tells upon earlier, one thing is quite clear that domestic households are increasingly investing with a long-term mindset and they are beginning to appreciate the benefits of rupee cost averaging. In fact, feedback from all the distribution partners I engage with it clearly suggests that many investors are comfortable with market corrections because it allows them to accumulate more units. So credit to our industry and pains, credit to our regulator, credit to all the distribution partners on the ground and the whole ecosystem that more and more investors are looking and invest in a disciplined manner with more long-term variation. Interesting part, I was looking at the data today that if I remember correctly, highest flows in equity funds, equity and equity oriented for as hybrid funds have come in the month of March where we had significant global geopolitical volatility. And the other month where we had hard flows was in the month of July when India got hit with additional tariffs by U.S. And that clearly shows that in extreme volatility and when markets were not doing well. The life and the other indices are down, investors use that an opportunity to put more money to work. I mean, that clearly shows a very mature behavior of investors. During the year, SIP book of the industry has grown by INR 6,000 crores. You would have seen our number on the systematic book the way it has grown during the year. So I think that gives us quite a bit of comfort. I mean, I would still say, I mean, on the cautionary note that we have to see the investor behavior if markets under pressure for a much longer period. While over the last 18 months or so, we have seen good volatility and investors have behaved in a highly matured manner. But I mean, it is always tested over time. But for now, I can say the trend is clearly encouraging.

Got it. Just one small follow-up, Navneet. Would you say that this like contrarian approach is true across both the assisted as well as the self-directed channel? Or is there like a market difference between the two?

I think across both across. I mean you can see the way a number of contributing accounts have increased during the year on the SIP side, at the beginning of the year, there were 81 million SIP contributing accounts at M3 publishers, and that number closed at INR 97.2 million as of March '26. So there is an increase of 16 million accounts. And as I mentioned in the beginning, opening remarks that this year, markets have not done well.

Got it. I had one question on -- like when I led the share of HDFC Bank in the mix of equity AUM, that has kind of come down. Any thoughts on that number, please?

So the bank share and the distribution pie decreasing, I don't think that's the right way of looking at it. What we are seeing is broad-based growth across all our distribution channels. And I mentioned in the beginning itself that we are focused on all channels that includes all the banks, initial distributors mutual fund distributors, fintechs, direct, all the registered advisers, et cetera. So it's really a case of the overall operational expanding rather than any other channel losing out. Bank of -- and HDFC Bank remains a very important partner for us, and the potential within that channel is very significant. We continue to work very closely with the bank, and there is clear alignment at the top. All my interactions, which [ Sashi ] and team reinforces that point. There are changes that take time to play through, but we are confident that results will follow. You know that HDFC Bank has always followed an open architecture approach. This occasionally results in event-driven or seasonal variation particularly in quarters when peers launch a large NFO and the parent bank is actively involved that can lead to shorter movement in the flow market share. Importantly for us, particular thing that we monitor closely is the quality of flows and the SIP share through the bank that continues to remain strong and which is what will be durable AUM over a period of time. I should also mention about the relationship with HDFC Securities, the share of flow with the HDFC security. Securities continue to remain very encouraging. So overall, I mean, I remain very constructive on the [ opportunated ] presence over to long term.

Got it. Just one small data point question. It's possible to give some sense on what could be the contribution of flows or SIP from fintech test.

Contribution of IV from fintechs, you are saying?

I believe you are asking for total?

So first, like on a low basis, how much money comes from those set of guys.

We can get back to you with this data point.

Next question is from Madhukar Ladha from JPMorgan.

Sorry, I missed a little bit of your call because your sister concern was head of call regarding [indiscernible]. So I wanted to just -- if you've not given -- can you spell out the asset class by yields? And this quarter, I think on a blended business yields are slightly down. So is that mainly because of mix? Or is there some internal sort of change in the yield. So that would be my first question. Second, on expenses, admin and other OpEx has seen a slight increase, nothing too big, but what sort of run rate are we looking at here? Yes. And also on your flow versus book market share, how has that trended in 4Q are we sort of broadly flow share is beating book share, Yes, those would be -- those would be my three questions.

Sure, Madhukar. So on the yields for the different classes, equity was around 56 basis points, debt, 28 and liquid, 13 and blended for the year was 45%. There is actually no yield compression in the quarter. This quarter, the Q4 is a 90-day quarter and Q3 is a 92-day quarter. So that -- if you simply divide our adjusted number of days, then you may have come to that number, but the yields are flat of some...

Got it. Got it.

Madhukar, just one thing. The 56 of equity that Naozad touched upon, that includes equity index funds. If you take that out, if you look at only actively managed equity and equity oriented it is 60, 61 basis points.

On your third question on expenses, it's -- I mean it's just BAU. There's nothing -- it's up by 7%. So I really don't know.

No, I was looking at it more on a quarter-over-quarter basis. So...

Yes, quarter-on-quarter, other expenses of 8%.

In absolute terms.

It's not too big. Nothing special.

There the CSR and all these things because those things which are linked directly like a royalty CSR, they are linked with our profits, revenues. So as that goes up by default, these are like mandatory stoke statutory expenses. .

Now say, Madhukar that we have always said that we are on a very tight ship, very, very nice [ ship ]. I mean, look at the look at our expense as a basis point of our AUM, we would be one of the best and not only in India, but in the world. And we are in a growth business, and I would emphasize, we are at very early stage of financialization of savings in India. We want to make the most of the opportunity which lies ahead. We're expanding our footprint on the physical side. We are expanding our digital capabilities, the investment in AI and our investment capability, product capability. We are very excited from a long-term perspective on the alternatives. It requires upfront investment in terms of the kind of talent we have got onboarded on the PMS, the kind of talent we have onboarded on the international side, the set up that we have put in place. All of this will result in the business over a period of time. But we shouldn't shy away from investing in all of these opportunities. Yes. But again, given the scale of our business, a few crores here and there like technology at and people -- these are like foundational blocks for long-term growth, and we should not shy away from that.

Yes, yes. The flow versus book market share? And then also, I mean, if I can add in 1 more question, See, we are -- I think it seems that you're going a little bit slower on the entire SIF launch. So what are your thoughts on there? And what -- when should we expect sort of any action over there and sort of your buildup on alternatives if you could give some commentary around that?

So overall flows are higher than the book share that much I can tell you. And we remain focused, as I said, across all products, across all channels, across all geographies, and we continue to remain focused on that. On your question on SIF, so we have secured all necessary regulatory approvals. From our standpoint, getting the approval is just the starting point. real question is how do we participate in a way that is consistent with our philosophy. And for us, that means being very clear on two things. One, the product has to be investment line. And two, it has to solve for a genuine client need rather than just occupy shelf space. So we are not approaching this as a race in a category like this being early doesn't necessarily create an advantage. In fact, the first few products will end up shaping investor expectations for the entire segment. So we would much rather be thoughtful and deliberate. And that has always been our view on all products. The good part is we are not starting from scratch, right? I mean we already have the underlying capabilities and what capabilities are needed. You need investment management capability. you need risk management capability and unique product management capability. And of course, on the other side, we have the best distribution capability. So the team is working on designing a couple of products in this space, which are differentiated. So in terms of impact, I would do this as more strategic than immediate. It's not going to move the needle overnight. The category itself will take time to develop and investor understanding will have to build, but over a period of time, having a well thought-out SIF offering becomes important, if you want to be seen as a complete investment platform. And we have always mentioned we want to be the most of solution provider. So the product will be there. But we are -- I mean, we've always been more thoughtful and deliberate and will always be.

Next question is from the line of [indiscernible] from [ Emkay Global ].

My first question is on the regulatory changes with respect to [indiscernible] sorry if I'm asking the question again maybe. But if you can just help us with any update on how you're looking at the change in DR and whether you have kind of gone into any negotiations with the distributors. That was -- that would be my first question. Second is, if I look at the unit investor one share that has increased [ 27% ] could you give some color on how -- on particular which geographies are driving this market share operation and to which channels would be kind of the major or -- and third question would lastly be on whether you are planning to come out with any NFOs in future.

So on the new TER regulation that you asked, so we have a new terminology in the industry now. It's called BER, the base expense ratio. It is still early days, and you will hear more from us over time on how we propose to deal with the impact, including changes in distribution commission, our margins and the overall impact on the ecosystem. This time, the impact is on select few schemes, larger strategies are the ones seeing the impact and smaller strategies are even seeing some degree of markup. So let me break this into two parts, one on the exit book and the other one on the new flows. So starting with the existing book. For us, the gross impact is about 3 to 4 basis points. And our approach is to largely offset this through optimization of commission structure, along with prudent management of both the direct as well as indirect costs. So overall, the targeted impact on our P&L should not be material. I know the obvious question is around quantification of the same. But still early for us to give a precise number. Having said that, you would see we have deviated similar changes in the past. And I would point you to look at how we have managed outcomes over time. Second part is coming on the flow. So coming to flows, there are a couple of changes here as well. Firstly, the earlier 5 basis points available in lieu of exit road is now removed, which is a straight reduction. And secondly, there is a shift in the structure post April 1, 2026. So earlier, it was PER, which including GST on Distribution commission and other expenses, while GST on management fees was in addition to PE whereas now we move to a base expense ratio framework with GST cap completely outside of the year. So yes, we will need to make suitable adjustment to ensure margins evolve in line with our expectations.

That answers the question. And secondly, on the unique investor market share increase, like what would be the kind of geographies driving would be the Tier 2, Tier 3 markets? And what would be the channel through which the customers are largely coming in?

So I mean, we get money from almost 98% or so of support from the country. I mean, the share of new investors, I think, have been coming from like almost all geographies. The B30 town and the balance in our industry beyond the top 30 towns have been adding a lot of new investors. And then -- and we have been a beneficiary of that. And yes, I mean, the fintech is a channel where a lot of new accounts on the SIP side getting opened up, where we have a very decent share and of course, all the channels continue to see expansion of unique investors.

Okay. Okay. And are you planning out for any efforts in the near future?

I mean, we will look at some product gap. But overall, I mean, if you look at our product booking, portfolio is fairly well rounded. We are present across most of the key categories. So there isn't a need to keep adding products for the sake of it. I think the bigger opportunity for us actually is within the existing lineup. So there are funds which have delivered steady consistent outcome for decades, but haven't necessarily been in the top bracket in terms of visibility and the AUM that they have. So a lot of our effort is going into sharpening these and moving dam of the curve. On the new launches, we'll stay very selective if we do something in the thematic or cycle space. in the passive space, it will be backed by a strong conviction from the investment team and a clear market opportunity. Otherwise, we are quite comfortable with the portfolio that we have. And beyond, I mean, as I mentioned earlier, beyond mutual funds, from an overall platform perspective, we continue to expand on the PMS, AIF International GIFT city all of those opportunities to cater to a wider set of client needs.

Next question is from the line of [ Shreyas ] from Nomura.

I wanted to understand flow market share qualitatively while I understand we have a robust track record of investment performance, but the -- our calculation suggests that in Q4, the flow market share has been lower than the flu market share that was in Q3. Can you help us understand the reasons behind it?

No, I don't think so. You would have missed the dividend payout. See, most of our schemes pay out dividend in the last quarter, you would have taken dividend payouts as redemptions. IDCW in the way it is now called. Investors who have subscribed for the IDCW scheme for them, it is -- that would have led to your competition, but that's not the data point.

Okay. Understood. And second question was in terms of the performance of schemes in 1-year bucket. Actually, except mid-cap and value category within the equity-oriented schemes, the scheme performance and the rank of HDFC AMC among the industry players, has deteriorated -- can you help me understand how -- why -- what was the reason behind it? And how are we trying to improve the performance?

No, no. this. In fact, we continue to be in top 2 quartiles across most of the categories across like time periods, including longer-term performance and a large number of are rated 4 and 5 star by value research. As I said, low market share remains better than the book market share. The team is clearly among the most experienced in the top tier, the investment philosophy or style is best of times and delivered best-in-class performance over a long period of time. There is enough and more data now age on the flows, and that does suggest continuing trend in our favor. And finally, let me leave you with one thing. Investors as well as distributors, they don't look at fund performance over 1 or 2 quarters. As you move right on the time line graph, we stand out clearly. And there is more and more appreciation of a long-term track record of alpha generation across our strategies. If I remember correctly, 12 or 13 of our funds have got a track record over 15 years and several of them going back 20 or 25 or 30 year plus track record of alpha generation. and investors, distributors, they all appreciate the kind of long-term track record that we have got.

Understood. Just the last clarifying question. You highlighted that the impact on yields on two fronts, existing book and new flows. Existing book, you highlighted that there will not be any material impact and on new fronts, you said that 5 basis point in law of exit load. So overall, on new flows, there will be 5 basis point impact is what...

No. So the only a 5 basis point available in lieu of exit loan is now removed. So that will be a straight reduction from the distribution commission, right? So this was paid out as the commission.

So the new commission that we have published takes care that factors that into account, and there why we have kind of come out with new commission structure, which is lower to that for the next time.

Understood. So there is overall no material impact on P&L?

That is what we are striving for.

Next question is from the line of Prayesh Jain from Motilal Oswal Financial Service.

Just one question on the -- so if you look at the top 3 schemes as they account for a significant portion of the AUM equity side, probably closer to about 50% of equity [indiscernible] put together. So and given that the smaller schemes would have related more advantage in the new TER structures, do you think that, that can be a strategy for us where we kind of push these more -- the smaller category products, smaller-sized schemes to kind of protect our business with and as well and also from a diversification of AUM perspective?

Advantage to whom fresh, I mean, it is advantageous to investors. We exist for our investors. -- these given the tariff's copic pricing, as some bigger you have a lower TER and that much of additional returns baked in for the investor, and I feel very happy for them. Over a period of time, I think people underappreciate this aspect. One, if you look at the long-term track record of larger schemes, I think that has been outstanding. And on the other side, as the PR has the impact from the telescoping pricing, investors tend to gain. And ultimately, I mean, the fate of our industry is decided by the investors and if they make better returns, good for us.

Okay. The other question was on the yield on the AIS and the PMS book. if you could spell that out for us, so it's kind of easier for us to think about what kind of incremental revenue contribution that can come in from these two products over the next few years?

So on the alternative business, marginal premium to our equity margins. On the PMS side, pure discretionary is in line with equity margins. the nondiscretionary, particularly the PFO and SPF kind -- these are government of India is mandates and among the most strategious and very tightly contested opportunity. So we are honored to have been selected. That said, there is a segment that operates under very, very tight economics.

So when you say this, these are the net yields, right, of distribution income?

That's right. it.

And just on the guidance on expense growth for '27 and '28. Anything that you can guide on what kind of expense growth we should look at on an absolute basis that would be great.

So we don't give out guidance generally. And I think I said it on one of the previous questions that if you look at our last of employee costs and other expenses. It's been around the 13% mark. And we -- and I think you heard Navneet also say that we focus on costs at the same time. we are mindful of the opportunity ahead of us in terms of growth, and we'll keep investing around it. But there's no specific guidance, which are really on cost.

Got that. And then last question, any color that you want to give on how the SIP trajectory has now, is there any change because obviously, March data was good and probably was because of some rollover at of February. But any color on how the book has been progressing? And also any difference between how the direct channel versus assisted channel is the kind of seeing different trends between the sets that they're generating?

I mentioned earlier, I gave the numbers in terms of the SIP contributing accounts. We started the year at INR 81 million in March 25 and closed the year at INR 97.2 million. So an increase of 16 million accounts in a year where markets were down. In the last quarter of the financial year, where we have significant volatility, particularly in the month of March, and we not only closed with highest ever SIP monthly flow, but we also had relatively higher the overall flow into equity and equity oriented funds. I mean, that just flags the majority of individual investors. The -- I mean, there's more stickiness of investor behavior and reinforces the long-term nature of SIP participation, and we are seeing that across both, I mean, direct as well as distribution distributor led. Over a longer period of time, I think AMP has published this data some time back that the longevity of investors has been greater with those who have come through distributors because there is like more handholding versus the direct investors. In the last couple of years, we have seen a very significant increase in investors who have invested directly. Last couple of quarters, notwithstanding the volatility numbers have been encouraging. But we have to see that trend observe that trend over a longer period of time. We continue to, as a house and as an industry, as a large player in the industry, continue to focus a lot on investor awareness campaigns both physically and digitally. In fact, as a house, we have been very passionate about investor education campaigns across the country and keep highlighting to investors that rupee cost averaging works in your favor think long term, don't get paid by the volatility, stay true to your goals, focus on the goals rather than the short-term market movement. And I think, I mean, those efforts are really paying off. And we hope that investors will continue to maintain this disciplined way of investing.

Next question is from the end of [ Supratim Datta ] from Jefferies India.

Most of my questions have been answered. But it was happening to hear the feedback on how investors have behaved in March. Just wanted to understand, is there some color around whether lump-sum flows or the additional flows that come during March or during the market correction. Was it from new investors or existing investors putting in more money into the existing full years? If you could give some color there, that would be helpful.

Sure. In fact, interesting part is a larger part of flows into equity and equity-oriented funds are coming in the form of SIPs. And they are relatively more sticky. Predicting lump, some flows have not been easy. But and there is some, I would say, variability in that. But the interesting trend that I talked about earlier that the two particular months, whether there's volatility and more FPI selling. I think it was month of July, last calendar year and the month of March in '26. Both the months are higher flows on a relative basis versus I think it was May last year where SPIs turned buyers and markets by volatile but better, and we saw lower flows. So maybe there is a contrarian behavior among the investors who are investing in a lump-sum manner, trying to take advantage when market is down while waiting on the sidelines or booking a little bit of profit when market is up.

Next question is from the line of Dipanjan Ghosh from Citi.

First, just two questions from my side. First, you quantified the impact of this new base TER and other regulations on at a gross level and also the strategy in terms of distributor commission cuts that you might undertake going ahead. I just wanted to understand that you also mentioned that other nondistributed costs and other overhead also that you can manage. So just wanted to understand, I mean, is there -- I mean, is there a thought process around your RTA payouts? And when do the negotiations really happen? And do you think that at least for the next perspective, there is any scope or headroom available on that side to curtail cost? The second question was on under unique investor count. Obviously, your market share has expanded rapidly, and it kind of showcases maybe a lot of new customers coming in through the fintech channels, given that they are probably the largest of originators new customers. Now given this current market downturn and maybe the ongoing pain in the broader Indian equities for the last many quarters now. And two things. One is how is the customer wallet really divided between different players on these platforms? I mean, have you done any study on that? And secondly in terms of the customer behavior during this current downturn, I mean, any difference between the more assisted channels and like the DIY sort of channels out there? Yes, those are my questions.

So a couple of questions. First, on the sequences on the fund side. So I think I mentioned in the context of operating expenses on the AMC that we run a very tight ship, I can say the same about the fund expenses also. We try to optimize it for our investors across all the costs that we have while ensuring that they get best-in-class service. I won't comment more on that. The second question was on the way we have been adding the unique investors. And from the presentation, you can see that the penetration, which was 17.6% in March has gone up to 27% in March 26. Over the last 3 financial years, we would have added almost 10 million investors, one core new unique investors to -- in the fund house. So it's been a very interesting good journey for us. I think a reflection of the investment performance, reflection of all the investments that we have been making on the distribution side and of course, the reflection of the brand and the franchise. And we continue to remain focused on that. Your other question was on fintech as a channel, right, our share in the fintech.

Yes, the question was more on [indiscernible] Let's say, the wallet share of a customer, how that would be divided between you and other players when they're deciding on, let's say, a location through the fintech channel. And in that regard, also how their behavior has been versus, let's say, the assisted channels during this downturn?

So I mean, as I said that our flow share through the fintech channel is also higher than the book share. So that reflects, I think, a strong presence on their platforms. Our followers also, I think this year, we have moved up from INR 2.3 crores out INR 3 crores volume. So INR 70 lakh values have got added in last 1 year or so. And while we have added around 35 lakh new investors. So investors are -- I mean, every investor is on an average, investing in more than one product of ours.

Sorry, but let me -- if you can give some color on the customer behavior of this on these channels versus, let's say, a tested channels like in the last 2 or 3 months?

Two and 3 months, I mean it will be really difficult. I mean we can only look at the data at our end, and I think we should -- when you get an opportunity to ask some of these guys. But see, they have added really large number of new investors to the industry in the last 4 or 5 years. I think in FY '20, the number of investors coming through the fintech would have been less than INR 1 million. And that number is now a multiple of that in the last year, I think, probably more than INR 30 million or so. So it has been an exponential growth in the last 4 or 5 years. And I think we have to give it a little bit of more time to really assess the behavior of all of these investors.

Next question is from [indiscernible] from Centrum broking.

My first question is on the distribution mix. So looking at your distribution mix. And I was looking at the share of banks, excluding the HDFC Bank, not compare over the last 12 months, the share has down -- I mean the share is basically down by around 30 to 40 basis points, both on overall basis as on the equity AUM basis. I just wanted to know that is the flow market share higher than the book market share here as well? And what are the strategies so that we have increased share here as well.

You're talking about -- I've answered about the HDFC Bank share. Are you asking about banks other than HDFC Bank?

Yes. Yes, sir.

Yes. So other than a few banks like SBI, which is almost a closed architecture and a few other banks which are more guiding particularly on the retail distribution side, where there would be lesser share, but we have a very healthy relationship with almost all the other banks continue to work hard with them and I won't be able to share like individual data. But with all the other banks who operate under an open architecture, our share has been -- has been healthy.

Okay. So counter is increasing with all these banks?

No. So I think what you are seeing is like the overall pie, but what happens is that there is a broad-based growth across all distribution channels, right? So banks are growing. [indiscernible] distributors are growing. MFDs are growing, fintechs are growing. And then, of course, the direct investors are growing. So it's like opportunity expanding for all the channels. And then there could be periods where, on a relative basis, one channel has grown higher than the other. Endeavor at our end is to ensure that we optimize across all channels.

Understood. My next question is on the market share business. So actually, I was looking at your market share the last 8 to 9 quarters, it's pretty much constant at around 12.8%, 30-odd percent. Do you have any explanation to increase your market share to, say, maybe 14% or 15%? Or do you have any vision or strategy to how you and can achieve the same.

If I remember correctly, I think in the last -- the early part of last decade, it would have been 20%. But of course, the overall size of the market was small, incremental flows were like small fraction of what we get now. In the last 2 years, the net flows in the industry are like over INR 9 lakh crores. I mean, this was a total equity AUM a couple of years back what we have got in terms of flows. So I mean, now the market share what you are seeing is on a much larger base of AUM and much, much larger base of flows. Having said that, aspiration is always very high. As I said, I mean 10, 15 years back, we used to have a much larger share. Of course, the overall environment is different. But our aspiration is always to grow more. I'll put it this way. At our end, and I generally get deeply driven by this and each and everybody in HDFC AMC. Our mission is to be the well creator for every Indian. To be the value creator for every Indian. So while on this call, I answer all the questions surrounding market share and margins and everything, but over a period of time, we believe that in a country of 1.4 billion people, I mean, industry has only got 60 million investors. And we have about 17 million -- we take pride that every fourth investor has invested with us, but there are three investors in the industry out of those who are yet to invest. And we have penetrated quite deeply in last couple of years, and one penetrate more over a bit of time. The other opportunity is if you compare the people who have invested in capital market versus the people who are in the mutual fund industry. So I assume there are I mean my sense is at least INR 13 crore people have invested in capital markets, and there are 60 million in the mutual funds. So there are another 60 million, 70 million investors who have invested directly. And last couple of years, would have given them -- I mean looking at the market and you would have better data than me. Last couple of years of experience would have taught them that it's better to invest through a professional fund manager like us than doing on their own. And of course, there is opportunity beyond that. So I think very big opportunity in expanding the market, a lot of efforts that we put in place. And as I said, that everybody at [indiscernible] is passionate about investor education. And we do many interesting things on the ground, digitally, virtually in many ways, several of our campaigns have been extraordinarily popular and appreciated by not only by the investors, but even the other industry players. And so our focus as a large player is on growing the market as much as getting higher share in the flows that we are getting. In fact, the SIP flows that everybody talks about in the last 4 or 5 years, there is a huge contribution of [ LTAC ] AMC because like we were one of the earliest ones to talk about importance of multi investing, importance of investing through the SIPs, remaining diet, et cetera. And all the players who did that over the years. I mean, overall, as an industry, we have been a beneficiary.

Next question is from line of [ Sara Munden ] from Artha Research.

So as retail investors as we see these days are increasingly seeking personalized portfolios rather than generating mutual fund units. So how do you see from positioning its technologies that to offer direct indexing and [indiscernible] How do you foresee this impacting the traditional active asset management?

I mean we, have -- I mentioned earlier that we have a large number of products, which have been in existence for a long period of time. I'm a very big believer in active investing, and our track record speaks about it. I also believe over the next several years, given the opportunity in Indian market, I always call this as top figures paradise. There is time arbitrage. If you think long term and ignore the short-term noise, there is research opportunity. If you put in good resources with good people, well laid out philosophy the processes in place, you can continue to generate that far. And we continue to invest in those capabilities. We have one of the most experienced team in the industry. and remain positive on that. On the other side, there would be investors who would meet there are certain needs through the passive funds. We have the best-in-class product booking on that, be it index fund with market cap in leases or the smart beta or sector thematic passive and passive. I mean, the ETFs as well as index funds and of course, distribution capability to grow both sides of our business.

The next question I have is regarding the alternative. So alternative needs kind of specialized talent and what kind of cost to AUM ratio do you see on alternative division versus, let's say, the [indiscernible]

If we don't give segmentized cost to income, but I mentioned earlier, the work that we have been doing to grow our alternative business and our PMS business. As of now, I mean, we have hired high-quality investment resources, putting in place client service capabilities, putting in place all the other the capabilities in place to grow it over a period of time. We don't feel like segmental costs.

[Operator Instructions] The next question is from the line of [ Anja ] from Value Partners.

Thanks for the color. So far and all the responses. Just one question from my side. This is on the other income component I'm assuming this has come from the dip in yields towards the end of March. But I just want to understand, is this because one of the other AMCs reported a loss in this quarter. So was this driven because of a heavier tilt towards sort of debt instruments, as you softened? Or was it more proactive tactical rotation. I mean, how should we think about that? And also, given the correction in fin March because of the crisis, how are we adjusting our investment bond books duration or equity sensitivity to ensure that other income continues to remain in a smooth in the question of our total income.

So if you see Page 34 of our investor presentation, we have given the breakdown of the investments across multiple asset classes. The equity investment in mutual funds that we have on the balance sheet is largely due to the skin in the game circular from [ SEB ]. So that portion of the equity investments soon because of the market correction in the Q4, right? The rest of the portfolio is largely in liquid and debt mutual funds. And we, of course, have invested in some of our own EIF those are early days of investment. On the liquid and debt side, we run a fairly reasonable duration, and we keep it fairly fast as there we are not facto much active management on the mutual fund debt investments that we have on the balance sheet. And equity is largely -- almost all of the equity investments in the mutual funds are because [indiscernible]. So this is an outcome of the market movement.

Sure. And just going forward, I mean we can see we plan to continue this comfortable duration on the debt side?

Yes. I mean, yes, we are not very long on the detraction in any case.

Thank you very much. As there are no further questions, I would now like to hand the conference over to Mr. Navneet Munot for closing comments.

So to sum up despite a volatile year for markets, investors continue to invest in a highly disciplined manner as reflected in rising SIP flows. For us, it has been a year of consistent progress across investor base and product expansion, along with strengthening presence across mutual funds, alternatives and international business. We remain focused on disciplined execution and delivering long-term value to all our stakeholders. Thank you for your time today.

Thank you very much. On behalf of HDFC Asset Management Company Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.