Motilal Oswal Financial Services Limited (MOTILALOFS) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. I'm Yashashri, the moderator for this conference. Welcome to the First Quarter FY '23 Earnings Conference Call for Motilal Oswal Financial Services Limited. We have with us today Mr. Raamdeo Agrawal, Chairman; Mr. Navin Agarwal, Director and CEO, AMC; Mr. Ajay Menon, CEO, Broking; Mr. Shalibhadra Shah, Chief Financial Officer; Mr. Chetan Parmar, Head of Investor Relations. [Operator Instructions] Please note that this conference is being recorded. I would now like to invite Mr. Navin Agarwal to make his opening remarks. Thank you, and over to you sir.

Morning, friends. It is my pleasure to welcome all of you to the Motilal Oswal Financial Services call for the first quarter of the financial year ending March '23. We hope that all of you and your families are safe and in good health. Let me take you through the key highlights of the operations and the financial performance for this quarter. In the first quarter, we reported an operating profit after tax of INR 182 crores, INR 1.82 billion, which is a growth of 40% year-on-year. This is being driven by capital market business profit after tax growth of 16% year-on-year. Asset and wealth business profit growth is muted at 6% year-on-year on the back of the mark-to-market in the AUM that we saw during the first half of this calendar year, which had its full impact in the first quarter of the financial year. And finally, the housing finance business reported very strong near 3.7x in profit year-on-year at INR 32 crores -- INR 32.1 crore on the back of COVID provisions that were there in the base of the last year. And so, this is a more normalized run rate of the profitability of the home finance business. Our consolidated net worth stood at INR 56.5 billion. Net debt is at INR 41.6 billion and net of all the investments that we've made in various products of the firm, we have a net cash balance sheet. We have also successfully completed the third buyback of the firm since its listing of 14.5 lakh shares aggregating to INR 200 crores. Ever since our listing back in 2007, we have never issued shares in either the parent company or the subsidiary and have only engaged in buybacks effectively completing the third such buyback. The key highlights for the first quarter include that the capital markets business delivered consistent growth in various business parameters. We had a very strong growth of 160% year-on-year in the average daily turnovers, meaningful improvement in market share particularly in the very significant F&O segment, growth in active clients and client addition led by meaningful traction in the digital acquisition channel, robust net sales in the distribution part of the business, growth in the funding book and investment banking mandate pipeline. Turning to the asset and wealth management businesses, we saw good traction of flows towards alternate assets. Our net revenue yield was intact at about 75 basis points during the first quarter. We launched more products during this quarter in the asset management business. As far as the wealth management business is concerned, our net sales was INR 19.9 billion, up by almost 88% year-on-year. Our largest ever private equity fund raise at India Business Excellence IV with a target size of INR 45 billion completed raise of INR 40 billion till date, and we expect to close the balance fund in the coming quarters. As far as home finance is concerned, we saw a pickup in our disbursement, INR 270 crores, up by 84% year-on-year. We saw traction in login and sanction pipeline, expansion in our sales force and collection team, and continued diversification of the strong liability franchise that this business enjoys. Doing a little bit of a deep-dive in these individual businesses, the capital market business comprises of retail broking, institutional equities and investment banking business. Revenues for all these 3 businesses combined stood at INR 608 crores, up by 19% year-on-year. Capital market businesses accounted for 63% of the total revenues. Profit, as I mentioned earlier, was up by 16% to INR 909 million in the first quarter, led by healthy volume growth of almost 160% year-on-year, 24% quarter-on-quarter, and an improvement in our retail futures and options market share by 34 basis points on a quarter-on-quarter basis. In this business, we had a total 210,000 new clients acquired in this quarter with traction witnessed in the online channel. NSE active clients have registered a 43% year-on-year growth at 930,000 number at the end of June of 2022. Our incremental demat account market share improved by 40 basis points quarter-on-quarter to 3.1%. Our trailing 12-month overall ARPU was at INR 24,000, which is among the highest in the broking business. Our strategy to bring in linearity through trail-based distribution business continues. The distribution AUM grew by 23% year-on-year to INR 17,200 crores in the -- at the end of this quarter. Our distribution net sales were up meaningfully year-on-year at INR 380 crores. With only 16% of our 31 lakh retail client base tapped for a single cross-sell, we expect continued increase in the AUM and fee income over the coming quarters. Our interest income increased by 64% year-on-year to INR 140 crores due to increase in the margin trading -- funding book to INR 2,030 crores at the end of this quarter. We strengthened our digital ecosystem with focus on revamping the entire digital infrastructure, set up a data science team. We've reoriented digital business unit and launched multiple digital products to this business. Impact of some of these should come through in the coming quarters. In the institutional broking business, we've continued to see improvement in domestic client rankings. This has been a result of differentiated research products' wide coverage. Investment banking continues to enjoy a reasonably strong pipeline although execution has been extremely weak. As you know, there has been hardly any IPOs in the market during the current quarter. Turning to the asset and wealth management business, our AUM across mutual fund, PMS and AIF stood at INR 43,400 crores. This was lower on a quarter-on-quarter basis because of mark-to-market. In fact, as I speak to you, our AUMs are now at about INR 46,000 crores before the end of July. Revenues for this business stood at INR 140 crores in the first quarter. Our equity mutual fund AUM stood at INR 27,400 crores. Based on this INR 434 billion end of the quarter number, we've seen improvement in performance of some of our flagship products. We added 47,000 new SIPs in the first quarter, with traction witnessed in active funds, which saw a growth of double-digit on a year-on-year basis. Our share of alternate assets continues to be at the higher end of the spectrum at about over 35% of our totally AUM. Our private equity business AUM stood at INR 114 billion, INR 11,400 crores across the 3 growth, capital PE funds, the 4 real estate funds. In the first quarter, revenues grew by 35% year-on-year to INR 31.8 crores. Our first private equity fund had delivered an XIRR of 26%. Track record of the [ part ] fund performance, both on the private equity growth capital as well as the real estate side, has led to the largest fund raise IBEF IV, where out of the target size of INR 4,500 crores, we've already raised INR 4,000 crores and expect to close the balance in the coming quarters. As far as the wealth management business is concerned, the AUM grew by 20% year-on-year to INR 34,400 crores. This obviously excludes the distribution business wealth AUM of INR 17,000 plus crores that I spoke about earlier. The wealth business revenues grew by 20% year-on-year to INR 47.3 crore, led by net sales of INR 2,000 crores, which are up meaningfully year-on-year. Our RM count of the business is at 143 and our trail revenues predominantly cover our fixed costs. Strong operating leverages visible, led by improvement in the productivity of RM. And we continue to invest in this business and are hoping to add between 40 and 50 RMs to this denominator of 143 numbers during the course of the current year ending March 2023. So, the overall asset and wealth business revenues stood at INR 219 crores, up by 9% year-on-year, accounted for 23% of the consolidated revenues. Profits were at INR 58 crores, up by 6% year-on-year. Finally turning to the home finance business. This business reported a profit of INR 32.1 crores, meaningfully up year-on-year. NII grew by 15%. Net interest margin expanded to 7.7%. Yield on advances stood at 13.7%. Cost of funds were down by 69 basis points year-on-year to 7.9% and as a result, our spreads improved by 64 basis points to 5.9%. Our disbursements were up strongly on a year-on-year basis to INR 170 crores and we are obviously looking to build on the disbursement numbers in the coming quarter very strongly. We will keep you posted in terms of how the traction continues. Our gross NPAs were at 2.2% in the first quarter. Collection efficiency was 100% in the month of June. Our net gearing for this business is quite modest at 2.3x. And our Tier 1 capital adequacy remains quite robust at 51%. So this business has obviously -- is well capitalized and is also earning recurring profit of INR 32 crores to be able to self-finance its growth at rates potentially higher than the industry growth, given the small base that we have. Fund-based businesses include the sponsor commitments to our asset management, public market products, private equity products, real estate products and other strategic equity investments. The total investments, including unrealized gains, stood at INR 4,440 crores as of June 30. Our total equity investments, including alternate funds, stood at INR 3,840 crores. The IRRs on our private equity and real estate investments are a particular standout at about 23%. However, our cumulative XIRR on all these investments that we made till date since inception is at about 18%. We think of this like the return on equity of this money, which is also quite liquid and is available as dry gunpowder for converting to operating assets as and when we have an opportunity. To sum up, all of our businesses have delivered robust and sustainable performance in the first quarter amidst a challenging environment. Our retail broking business, which is our cash cow, has improved its market share and is benefiting from market expansion and industry consolidation. Our strategy to diversify our business model towards linear sources of funding continues. Asset management business should gain because of some improvement in the performance of our products. Wealth management business has a lot of headroom to grow, given the small size in the context of the very strong brand that we enjoy. The private equity business, as I mentioned earlier, the biggest fund raised on the back of very strong performances of the past funds. The home finance business had witnessed a solid turnaround in terms of disbursements improving, asset quality being under control, cost to income being reasonable, and is very well geared for building up from here given the low gearing and the profitability of the business. We will now open the floor for question and answers. Thank you.

[Operator Instructions] We have a first question from the line of Vivek Ramakrishnan from DSP Mutual Fund.

My questions are all on the home finance business. There has been a small -- I'll just ask the questions sequentially. There has been a small pick-up in GNPA, so wanted to understand why. Secondly, I wanted to also understand your strategy in terms of construction finance, where you said it will be tied up with Motilal Oswal Real Estate and what proportion of the book will be in such funding? And the third question was on the yield on or the interest rate charge to customers. Given the higher rates that are there in the market, have you been able to pass on hikes? And is it being with higher EMI or have you been -- have you need -- did you need to lend them tenures?

Thank you for your questions. So on the first point, in terms of the asset quality, so actually asset quality, if you look at it from the new RBI circular perspective, we stand -- from a quarter-on-quarter basis, it is -- the GNPA increase is only 19 basis points, because we are still under the old method. And as of the 30th September, this will get realigned. So, the focus is on actually collecting the complete overview EMIs and that's why we are getting cached up with the new circular impact. Even in quarter 1, the collection efficiencies have been improving month-on-month. So generally, the whole industry has had a lower efficiency in April, May which starts getting cached up in the month of June and onwards. So, we are now almost over 100% collection efficiency. So, that should help us to better have the collections on the 90-plus book. Even in terms of -- there is -- the asset quality -- the increase in the NPA is also from a part of a restructured book because of that. So, as we move out the call, I think the overall collection efficiencies have been improving on the restructured book as well. On the construction finance strategy, construction finance, we have a very strong track record of investing in capital developers from a real-estate fund management team. So we already have INR 5,000 crore assets under management in our real estate funds in our private equity business where we have done almost 110 investments and they have a very successful track record of exiting those investments at more than 20% IRR. So, we'll be leveraging internal synergies to create a very strong, good quality construction finance book in our housing finance business as well. So while we have a good proportion of the retail housing finance book, so the idea is to create a meaningful non-housing booked through the -- through funding the category developers and there -- we believe that this book will be close to 20% of our overall loan book. In terms of the yield, so while cost of funds for us -- all our loans are driven by MCLR, so the -- there is as of now banks have the -- the average bank MCLR increases 35 basis points and that impact will also actually come to us over next period of 9 months to 12 months. So as the whole -- the MCLR increase based on our cost of fund, accordingly then we would take a call to increase the RPLR. So at this juncture, there is no increase in the RPLR. Even across the industry, only one of the players in affordable segment has actually increased the RPLR, rest industry has not yet increased. And we expect to maintain spreads over 5.5% in this business on a consistent basis.

We have a next question from the line of [ Raj Jha ] from Edelweiss Financial Services.

Congratulations for the good set of numbers. My question is more towards the retail broking business. As was mentioned by Navin that this is a cash cow business. So I would rather like to understand it on 3 parts. One is how the business was faring pre-COVID? Obviously, during the positive time, there was a huge traction or oppression happened. How the business is faring as of now? If you can break it on the run rate basis the type of traction, which was there, both from industry perspective and from a Motilal Oswal perspective? If Ajay can answer that, [indiscernible].

So actually, as you know that the addition to the retail investor base has been quite dramatic in the last 3 years, 4 years. And if you have attended any of our earlier calls, we have always cited that given the under-penetration of equities in India, you will have phases of 5, 6 years when this base will multiply at least a few times over. That happened if you go back in time in the decade of 2000 to 2010, which also coincided with very strong corporate profit growth. And we were of the belief that this can again repeat itself in the current decade and we also expect very strong profit growth. So if you look at the ADTO numbers, the ADTO number used to be INR 24,000 crores odd in the year ending March '20, which was a pre-COVID year, rose to INR 44,000 crores in the year-ending March '21, INR 88,000 crores in the year-ending March 2022. And in the first quarter, it has already doubled to INR 1.5 lakh crores. So, I think typically there is a multiplication of the investor base, correct. And we believe that this number is still easy to multiply from the current number as of 30th of June, and an even bigger increase in the ADTO, right. And with fewer and fewer players or the market consolidating in the hands of fewer players, those who are in the right side of consolidation will see disproportionate capture of this strong growth in ADTO. Our own model is slightly different, as you know that we believe in cross-selling the more sustainable high-quality investment products to these customers. So this funnel really has been exploited to the tune of 16%, as I mentioned in my opening remarks. And we believe that there is a long runway to convert many of these trading account customers into -- more holistic investment-oriented customers. Usually, that leads to increasing the life of the customer. Usually a pure trading customer life would be much smaller or shorter.

Yes, totally agree on that count. But do you see a drop in the run rate of new client acquisition? And how much of a basket is going in for the funding route, or are they pure cash pay?

So actually if you see, our overall incremental demat market share has only improved in this quarter. So while we -- the total incremental demat accounts opened have fallen on a Q-on-Q basis, but our market share on that has actually improved, so that -- by virtue of that, we have been able to acquire 2.1 lakh clients in this quarter. Sorry, what was your second question on this?

And the new clients who are coming in, I mean last 2 or 3 years saw a phenomena, so are they going for the NBFC route, funding route, for the broking business or they are just pure cash which is coming in?

So it is a function of both. Actually, the clients are having their own money as well as they are taking the funding through the margin funding growth. So as far as the regulatory framework is concerned, the client has to bring his upfront margin, but over and above that, if we need funding with the specified LTV, he accesses the margin funding range.

That I understand. I just want to know whether there is a traction in the other route, I mean margin funding route, or no?

If you see -- no, that's right, because if you see year-on-year there is increase in the total funding book by 20% from Q1 of last year to Q1 of this year, while sequentially the book has remained flat, but if you see over many years, there has been a meaningful improvement in the funding book. Our funding book stands at INR 2,039 crores.

[Operator Instructions] We have our next question from the line of Samip Bhansali from Tata AMC.

So the loans breakup that you have shown in the presentation, what would be the 11% others part in the book?

So you are referring to which slide?

The breakup you have shown, right, there is 8% your commercial finance and more book, then you have home improvement.

Right.

Overall book breakup.

Yes, that portion actually consist of loan against property.

And in this construction finance book, what would be your typical average ticket size?

Average ticket size here is almost INR 20 crores to INR 25 crores.

Okay. And the NPA which was -- which has increased sequentially is more due to slippages from the restructured book. So, any color on restructured book, on where it stands and what amount has slipped from the restructured book?

Restructured book, actually if you see, there has been overall improvement. So as of now, the collection efficiency of that book stands at 82% versus the overall collection efficiency that we report. So, there is marginal slippage from that book, which has arisen in this last couple of quarters from that book. So overall, we expect the slippage to be around 25% of that total book.

So, overall -- so can you share the quantum, what is the amount of restructured book?

The restructured book stands at INR 278 crores.

INR 278 crores, okay. And lastly, the -- as per the new norms your NPA would have been around 2.8%. So, if I have to compare it sequentially last quarter, would you have a similar number?

Yes, so actually that number is 2.75% as per the new norm. And if you do compare it sequentially, it is 2.56% at March end.

Okay. And any for further higher impact on credit cost do you see due to transition to the new norms or recognition as per the new RBI norms in our P&L?

No, actually we have fully provided for that in quarter 3 and quarter 4 of last financial year. So, we have actually fully baked in the new norms presently, because even if you see our Stage 2 assets, they are actually provided higher as if the new -- the Stage 2 assets and Stage 3 assets, I'd say.

Okay. And any -- how was the book which you have -- you would have originated with the Motilal Oswal -- the real estate team, how is it performing? Any initial trend that you are seeing there?

No, not at all. There is no overdue on that book. It is fully performing.

[Operator Instructions] We have a question from KG from ISec.

This is Kajal from ICICI Securities. Sir, I wanted to understand, in your brokerage, you have mentioned that your ARPU is one of the highest. In that, what will be the share of sub-brokers that may be coming to? And what's the formula that you are using for your ARPU circulation, basically the underlying?

The formula used is trailing 12 months revenue divided by the active customers. Yes. And as far as the ARPU mix is concerned, actually almost half of our business comes through the franchisee channel. So, it's a blend of that which gets accounted in the overall ARPU.

And that -- and any color on your brokerage in terms of retail and institutional?

We don't give that out separately.

Okay. Sir, and second question is, in the new customers that -- which are coming on the platform, so how much are purely digitally acquired or other mode? And when we say digitally, it is like 100% on their own or its online and we assess how is the client acquisition happening in the new customers and whether most of them are coming under your flat group raise the discount plan.

See, first, we do not have any discount plan or a flat brokerage. We completely have a tight volume structure as far as the client acquisition is concerned from any channel it is, whether it is acquired through a digital channel or through our franchisee channel or through our channel PCB channel or through the branch, all have an ad valorem model. As far as the acquisition mix is concerned, almost 60% of the new clients are coming through the digital acquisition channel.

Sir, there is no assistance across in this through -- is it thoroughly fully digital or there is some assistance?

So this is a fully digital channel through the online lead generation route. It's a fully digital route of acquiring customer.

Okay, sir. And have you seen any impact of this cash margins and full 100% -- 50% cash margin for the intra-day and all?

So actually, that is something which is a 50-50 rule, which has come from 1st May. So, if there is an ineffective client in the sense that if he brings in a higher non-cash portion, so to that extent, the broker can meet the margin requirements. So, we're not seeing any impact because of that. In fact, it will only add to our funding revenue because the inefficiency would be passed on to the customer.

[Operator Instructions] We have our next question from the line of Madhukar Ladha from Elara Capital.

The first question is just on this rule change from 1st May. Can you elaborate exactly what the change is and what sort of impact it could have? Second, I see your funding book has stayed quite strong. I would have expected it to be more volatile, especially given what is happening in the markets. So, what do you think is the reason for this resilience? I mean do you think it can sustain if markets continue to be the way, sort of, they have been in Q1? Sort of, would you expect it to drop, so -- or the nature is something else? Maybe you can comment a little bit on that. And what is the net sales in the listed AMC business for the quarter? And finally, I'm not sure whether you've given the SIP numbers or maybe I've missed that in the -- missed them in the presentation. So maybe you give that out as well. Those would be my questions, yes.

Yes, sure. So this -- as far as the new 50-50 rule is concerned, which is effective from 1st May, what it means is that the form of margin was earlier required by the broker at an overall level to be kept at 50-50. It was not required by the clients to be brought in the 50-50 fashion, 50% cash component, 50% non-cash component. So say for example, if the customer brings 100% margin in the form of shares, which is typically the case in our derivatives, so to that -- so now, the customer has to bring in 50% in the form of cash or 50% in the -- and 50% in the form of shares. But if he doesn't do that till -- we, as a broker, can actually fund that exposure. So to that extent, in fact, as I highlighted in the earlier question that, that would improve our overall funding and the interest income on the book. So, that is the impact of the first change. So to that extent, today we have almost around INR 6 billion of that mismatch, which we have actually funded through bank guarantees in the exchange. Coming to the second on the overall...

Sorry, Shali. Just on this, so when you fund this 50%, -- so you charge interest to the customer on that -- so INR 6 billion additional, in a way you've given to the exchanges, right? So it's almost like margin funding in a way, right? So, all against the shares sort of a T plus 5 or margin funding, whatever you want to call it. The money can be used anywhere. So, he has the shares with you, 100% shares, for which you have given 50% in -- 50% funding for him through a limit.

Yes. So actually, as far as the pricing is concerned, because as the circular came in the month of May, so we had evaluated the whole impact and actually from Q2 onwards we will see the pricing implication to the customers on that. We were just trying to see how the book stabilizes. And from Q2, in fact, we have started passing on that cost to the consumers. As far as the funding is concerned, it is not exactly like a margin funding because this is given in the form of bank guarantees. So typically, you don't have to have the whole cash component borrowed for funding the customers.

And -- so is this amount included in the INR 20 billion loan book that you have shown?

So -- no, it is not included, because it's an off-market closure through the bank guarantee.

Okay. So, this will actually become INR 26 billion in a way?

Yeah, that's right. So, there is a difference in the pricing from the margin funding book to this because the costs are lower for a bank guarantee versus a borrowing.

Understood, understood.

Coming to the overall funding book, so actually the funding book has been flattish on a quarter-on-quarter basis so -- because the cash volumes have actually been down in the market by almost 23%. So, we're seeing that impact. So while actually there was also some impact of the overall regulatory framework since last few quarters, right. So that -- given that, on a year-on-year still our focus has been to improve the margin funding book, and that is almost up 20% on a Y-o-Y basis. So, the focus will continue because the new clients that have come in and are becoming active, so we are also focusing on funding those customers. And so, we'll see a meaningful improvement of increase in the funding book over next few quarters as well.

Despite the market volatility, it's held up well. Actually, I meant it in fact -- despite market volatility it has held up well, so. I do expect it to continue despite markets not really doing well -- that well, so...

So actually, the impact is in -- Q-o-Q guides are flattish in fact otherwise it could have grown the cash volumes would have been better. That is the overall impact. And coming to the question on the net sales in the AMC business, so actually the net sales stands negative at INR 2.7 billion, so that is -- that also includes actually the overall impact of the RBI regulations on not allowing the international investing in a couple of large passive funds. So to that extent, we have seen the overall flows getting negative because of the impact of the off-shore investing. While there is a strong net flows on our alternative fund, that continues to be improving overall. However, because of the MF [indiscernible], there is an impact of minus INR 2.7 billion on the net.

And the outflows were seen more in PMS?

PMS side actually gross sales have been improving, in fact, year-on-year as well and redemptions have been actually lowering. But overall, net flow is negative.

And SIP numbers you've not shared?

SIP numbers this quarter were INR 340 crores. As you know that about INR 300 crores of quarterly SIP flows into passive funds have been discontinued. And so, this number is after that impact.

[Operator Instructions] We have our next question from the line of Rushab from Guardian Capital.

Sir, I had a couple of questions. First, what is the growth guidance we are looking for in next 2 to 3 years in terms of revenue as well as net profit? And secondly, we had a buyback call last month. So just wanted to understand what was the buyback you meant for? And -- yes, these are the 2 questions I had.

We don't really give out any guidances. As I articulated in the opening remarks, we are very optimistic about how the entire broking business can grow as there is more and more financialization of savings and within that, the share of equities has gone up. And we are a pure play on that across our various businesses. As far as the private equity business and the wealth management business is concerned, they have both seen very strong traction. The Public Markets Asset Management business has consolidated and its performance is improving. We are very hopeful that like in the first round we saw AUM build up from INR 1,000 crore to INR 50,000 crores, our next leg will be equally exciting. As far as the home finance business is concerned, I talked about acceleration in our disbursements, very low gearing. So a strong growth, well above the market growth through internal accrual of that business should continue. So, we see very strong growth in the capital market franchise on the back of our positioning where we are gaining market share. I gave you those numbers of overall gaining market share, also the F&O gaining market share. We spoke about the asset and wealth management businesses and the home finance business, all 3 of them we believe have a lot of headroom to grow in the coming years. What was your next question? Buyback. So, buyback has been completed. INR 200 crores is the amount that was proposed. And that amount is fully done and completed during the current quarter and yes.

Yes. So I just wanted to understand what was the buyback for. And the buyback price was around INR 1,200 per share whereas the current market price is around INR 700, if I'm not wrong. So, wanted to understand the differential there.

Yes. So actually the buyback was done through the tender offer route where typically the buyback price was at INR 1,100 which was almost at around 25% premium to the current market price when the buyback was announced. So, this buyback has -- is typically where Motilal Oswal also participated in the whole process and it's -- so actually if you how to pay out, it includes dividends and also in the form of buyback.

[Operator Instructions] We have our next our question from the line of Yash from Dante Equity.

I just want to know more about the opportunities that you're looking at, whereas your PE revision is concerned. And also, as far as the housing finance business is concerned, what is your market view as interest rates are going up now? What is the market view there? What is -- I'm not asking for a guidance, I'm asking for a view, basic commentary.

Sorry, you'll have to repeat your question. Unfortunately, your voice was...

The first question, the second one we understood, the first one what was it?

The first question is, on your private equity management business, what are the kind of opportunities that you're looking at right now in this current market scenario?

Basically, as I've mentioned to you, we have completed INR 4,000 crores of [indiscernible] INR 4,500 targeted raise. We received an overwhelming response. So in the coming quarter, we should close this fund. We will be making about a dozen investments of [indiscernible] range of size of investment. This business has a 15-year vintage and the first fund had returned money at an IRR of 28%. So, we are very excited about the prospects of -- and the investment opportunities that this business has been offered. And we'll continue to announce in the coming quarters our traction on deployment of these proceeds. As I speak to you, there are almost 4 transactions that have already been finalized and you will see updates on those in the coming quarters. So, that's the growth capital side of the business. As far as the real estate side of the business is concerned, that also has had very spectacular track record. By vintage, it is also 15 years old and we are in the process of also filing and raising a fund in the second half of this year as far as the real estate funds are also concerned. We've not had any delinquency through the poor real estate cycle in the last decade, and returns have -- the gross IRRs have been of the order of 20% in that business. The net IRRs net of taxation also have been superlative compared to any other alternative avenues that are available out there. So basically, both the businesses are very large in terms of their ability to scale-up. But we have chosen to scale them up only gradually so that the performance delivery is not impacted. And you will see us announcing fund raises almost at an annual basis and deployments as and when we do them. You'll see us making those announcements on a quarterly basis. Your second question was about the home finance, so the outlook of the mortgage finance business continues to be quite positive. You know that the HDFC Limited Affordability Index is at a decadal best as incomes have grown and real estate prices have been stagnating to lower. And so, we think that volumes will improve. The sentiments have also improved. You might have seen the new house registration data, across all the TCPs. We believe that the same impact will be reflected in the affordable housing business also, but maybe with a little lag, given the impact of COVID on jobs in general. But I think the market itself is very large and we're very tiny in the overall scheme of things. And so, for the mortgage business overall, we are -- we see acceleration, notwithstanding the marginal rise in mix. You also don't see rate really rising too much. You must have already seen commodity prices come off. So, we are optimistic on the overall mortgage business growth, affordable housing growth and our own growth in particular, given how small we are and how well positioned we are, both in terms of the liability franchise as well as our wide distribution network of over 100 branches all India.

As there are no further questions, I now hand the conference over to Mr. Shalibhadra Shah for closing comments.

On behalf of Motilal Oswal Financial Services, I would like to thank every participant for attending the Q1 FY '23 con call. If there are any further queries, please do get in touch with me or our Investor Relations desk. Thank you, and have a good day.

On behalf of Motilal Oswal Financial Services, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.