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

Good evening, ladies and gentlemen. I'm Rayo, the moderator for this conference. Welcome to the Fourth Quarter FY '24 Earnings Conference Call for Motilal Oswal Financial Services Limited. We have with us today Mr. Raamdeo Agarwal, Chairman; Mr. Motilal Oswal, Managing Director; Mr. Navin Agarwal, Managing Director; Mr. Ajay Menon, CEO, Broking and Distribution; Mr. Ashish Shanker, CEO, Wealth Management; Mr. Sukesh Bhowal, CEO, Housing Finance; Mr. Shalibhadra Shah, Chief Financial Officer; and Mr. Chetan Parmar, Head, Investor Relations. [Operator Instructions] Please note that this conference is being recorded. I now invite Mr. Navin Agarwal to make his opening remarks. Thank you, and over to you, Mr. Agarwal.

Good evening, friends. It is my pleasure to welcome all of you once again to the Motilal Oswal Financial Services earnings call for the quarter and the year ending March 2024. Let me start by providing you a very quick snapshot of the quarter and the year ending March 2024. The year FY '24 consolidated PAT, including other comprehensive income, OCI, stood at INR 2,626 crores and for the fourth quarter stood at INR 625 crores. The consolidated ROE was 35%. The consolidated operating revenue for the last fiscal year was at INR 5,075 crores, up 33% year-on-year; and for the fourth quarter was at INR 1,569 crores, up by 60% year-on-year and 29% quarter-on-quarter. Our consolidated operating profit after tax for the fourth quarter stood at INR 495 crores, up by 66% year-on-year and 30% quarter-on-quarter. And the operating profit after tax for the full year stood at INR 1,535 crores, up by 38% on a year-on-year basis. Our operating return on equity was 25% compared to the consolidated return on equity of 35%. We delivered the highest-ever quarterly and yearly capital market business profit after tax at INR 251 crores, up by 68% year-on-year and 23% quarter-on-quarter; and for the full year at INR 803 crores, up by 47% on a year-on-year basis. The asset and wealth business reported a strong growth in profit after tax in the fourth quarter at INR 210 crores, up by 79% year-on-year and 46% quarter-on-quarter. And for the 12 months ending March '24, this number is INR 607 crores, up by 34% year-on-year. Housing finance profit after tax stood at INR 31 crores for the quarter and INR 129 crores for the full year. Our net worth at the end of the year was at INR 8,732 crores. This is up by 40% year-on-year. Our 10-year net worth has compounded at 22% per annum. In light of the strong performance for the last 5 years and the encouraging outlook for our businesses, the Board has announced the first-ever, post listing in 2007, the first-ever bonus issue of 3 shares for every share held. Based on feedback received from investors and analysts over the last several quarters, we have made some changes in our segmental reporting. Firstly, the operating profit line of each of our operating businesses had a capital charge as they operated with accumulated profits post dividend payout by all the operating businesses. I mean, basically, the operating businesses operated with 0 net worth as they distributed all the capital to the treasury as the group follows the double engine model where there is -- the operating business as the first engine and the treasury investments as the second engine, the operating business profits post dividend payout are deployed in the treasury investment. So far, operating businesses were operating with 0 net worth and their working capital requirement was fully -- was charged full borrowing cost without credit for their past accumulated profits. In the new scheme of things, the accumulated profits of the respective businesses are treated as their net worth, and there is no reduction of a notional capital charge from the operating profit. Any surpluses with the operating businesses can be lent to the treasury at the actual cost of borrowing. Firstly, this more appropriately reflects the capital deployed in each of our businesses and the return on equity for these businesses. The second change that we have made is we have presented the 2 HNI businesses, which is the Private Client Group and the Private Wealth Management together. In the last quarter, we were presenting both of these businesses separately. Our private wealth business caters to HNI and ultra HNI clients. We have a private client group within our broking and distribution business, which also caters to HNI clients. Like the wealth business, which has 251 RMs, we have another 330 RMs in the private client group. Private client group also offered wealth solutions like mutual funds, AIFs, PMS, et cetera, besides offering broking services. Given the identical HNI client base of both of these businesses, we propose to consolidate both of these businesses under the wealth vertical for the reporting purpose in the presentation. Let me now quickly run you through the industry landscape and some of the key trends that we see. The increased retail participation in the Indian capital markets has been remarkable, with demat accounts experiencing a threefold growth in the last 3 years. This surge has translated into a robust growth in broking volumes, which have expanded almost 13x during the time period. The addition of 36.9 million demat accounts this year on a base of 150 million demat accounts signals a significant runway for sustained growth with projections indicating a trajectory of at least 20% for the medium term. Likewise, the mutual fund industry has witnessed substantial growth driven by persistent efforts from the distribution community and AMFI. Monthly SIP flows have surged by a remarkable 24% compounded per annum for the last 7 years, reaching a record INR 192 billion in the recent months from INR 39 billion 7 years ago. This momentum, combined with active equity mutual fund base of approximately INR 24 trillion as of March '24, underscores the potential for sustained growth, particularly for equity-focused asset management companies like ours. Turning now to our segmental performance, starting with the capital markets business. This business comprises of retail broking, institutional equities and investment banking business. The revenues for this business grew to INR 982 crores, up by 68% year-on-year in the fourth quarter and was INR 3,235 crores for the full year, up by 37%. Profits for this business for the quarter was at INR 251 crores, up 68% year-on-year. And for the full year, it was at INR 803 crores, up 47% year-on-year. The overall ADTO grew by 122% year-on-year to INR 7.2 lakh crores in the fourth quarter. Our retail cash market share in the fourth quarter stood at 8.2%, up by 307 basis points year-on-year, up by 68 basis points quarter-on-quarter. Our retail F&O premium market share in the fourth quarter stood at 8.7%. This again is up by 214 basis points year-on-year and is up by 55 basis points quarter-on-quarter. The trend of increasing market share across both of these segments continues like we've seen in the last several years. The NSE active clients grew to 8.8 lakhs at the end of this year. We acquired 1.8 lakh clients in the fourth quarter and 6.2 lakh clients in the full year. Our distribution AUM grew by 27% year-on-year to INR 27,000 crores plus. Our distribution net sales for the quarter grew to INR 1,336 crores; and for the full year grew to INR 3,046 crores, it's up by 138%. Our focus is on ramping up the distribution team's strength to improve our currently low cross-sell ratio of just 6%. We are hoping to grow this distribution team 3x in 3 years' time. Our net interest income for the fourth quarter was at INR 200 crores, up by 67%; and for the full year, it was at INR 662 crores, up by 42%. Investment Banking business executed 17 deals worth INR 19,100 crores during the year. Revenues stood at INR 104 crores. This is up by nearly 3x on a year-on-year basis. The pipeline of signed mandates provide us strong visibility of growth for the next year as well. The overall capital market profit before tax margin improved to 48% from 45% in the last year. Turning to the asset and wealth businesses. The revenues for the quarter were at INR 589 crores, up by 58% year-on-year and at 1,774 crores for the full year, up by 31% year-on-year. The profit for the fourth quarter stood at INR 210 crores, up by 79% year-on-year. The full year stood at INR 607 crores, up by 34% year-on-year. Our asset management business AUM across mutual funds, PMS, AIF, grew by 57% year-on-year to INR 71,810 crores. Revenues were at INR 784 crores, up 25% year-on-year for the full year and for the quarter were at INR 258 crores, up by 72% year-on-year. Over 95% of all our strategies based on AUM are outperforming the benchmark quite strongly. And this turnaround in performance has led to a visible improvement in gross sales. Gross sales are at INR 17,400 crores in the last year. This is up by 116% year-on-year. And the exit quarter gross sales stand at INR 6,100 crores compared to the INR 17,400 crores full year number. Our target is to double the gross sales in the next financial year, led by strong traction that we are witnessing in our existing products as well as a slew of new products that we propose to launch in the rest of the year. Our mutual fund AUM grew by 65% to INR 48,800 crores. Alternates AUM grew by 41% to nearly INR 23,000 crores. AIF AUM crossed INR 10,000 crore mark. We added 10 lakh new SIPs during the last financial year. The SIP flows grew very strongly from INR 507 crores in the exit quarter of FY '23 to INR 967 crores in the exit quarter of FY '24. We expect a similar traction over the coming quarters as well. Our overall SIP AUM stood at INR 11,900 crores. The private equity business fee-earning AUM stood at over INR 10,000 crores across our growth cap funds as well as real estate funds. Revenues for this business was at INR 217 crores for the full year, up by 18% year-on-year and was at INR 83 crores for the fourth quarter, up by 39% year-on-year. We propose -- we are presently in the process of our IREF, the real estate V -- the VI series launch. We've already done the first close, and we're looking at a final close of INR 2,000 crores during the course of the year. Our V series growth capital fund is expected to be launched in the second half of this financial year. We raised INR 4,500 crores in our IV series and are looking at a substantially bigger sum for the V series growth capital fund. Our wealth and PCG AUM stood at INR 1.23 lakh crores. This was up by 78% year-on-year. Revenues for the full year stood at INR 772 crores, up by 41% year-on-year. And for the quarter -- exit quarter stood at INR 248 crores, up by 53% year-on-year. We added 110 RMs during the fourth quarter and a total of 177 RMs during the full year. Our incremental RM growth, the relationship manager growth will be more measured and strategic. Incrementally, the focus will also be on improving productivity and margin service. Turning to our Housing Finance business. We reported a profit of INR 31 crores for the fourth quarter and INR 129 crores for the full year. Our AUM stood at INR 4,047 crores, up by 6% year-on-year. Disbursements grew sharply to INR 480 crores in the fourth quarter, up by 94% quarter-on-quarter and 33% year-on-year, and were at INR 1,017 crores for the full year. Our net interest income stood at INR 312 crores for the full year and INR 78 crores for the fourth quarter, while NIM for the full year, N-I-M for the full year stood at 7.6%. Our yield on advances stood at 14.2%, up by 30 basis points year-on-year, and our spreads were maintained at 5.9%. The gross and net NPA numbers at the end of the year stood at 90 and 40 basis points, respectively. Gearing stood at 2x, capital adequacy at 51% and return on assets at 3.2%. We have doubled our sales force during the course of the last financial year to 925 RMs and are looking to double this count once again in the coming financial year. With a new and a strong leadership team in place, we believe that we are geared to double our disbursement in financial year '25 compared to the year '24. To sum up, our capital markets business has demonstrated remarkable performance, reporting all-time high quarterly and yearly profit and market share, both in the cash in the Futures & Options segment at 8.2% and 8.7%, respectively. Our Asset and Wealth Management business touched an AUM of INR 1.95 lakh crores. The Asset Management business, in particular, has seen strong improvement in performances, leading to gross sales of INR 17,000 crores, and we are looking to meaningfully scale up the AUM. Our wealth management is progressing towards scalability with strengthened leadership and ongoing investments in RMs. HFC business sales force is being strengthened and productivity is being optimized to drive doubling of disbursements next year. Overall, we are very excited about the growth prospects offered by each of our core businesses in the next 3 years. I will now open the floor for Q&A. Thank you.

[Operator Instructions] First question is from Abhishek Nagaraj from Alts Wealth Private Limited.

I have a question related to the Wealth Management business. I wanted to understand, the average number of families per RM is kind of lesser than our competitors, but our AUM per RM is higher. Is there something that we fundamentally do different or target a different segment, which is why the RM is able to handle a higher AUM?

So what we've done is over the last 2 years, we've capacitized the business, and there has been a lot of hiring and capacitizing in the RM strength. So the newer RMs take a little time to scale up their AUMs. So that's one of the reasons why you see the average -- the number of families being lesser. About 60% of our RMs are less than 2 years vintage at the moment in the Wealth Management business.

Okay. Is that typically because of the higher hiring that has happened of late? Or is it because of a higher churn? And the other question I had was, what is the typical time taken by an RM to become stable in terms of the full capacity that he can handle in the number of families?

So it takes roughly between 3 to 4 years for the RM to get fully capacitized in terms of the number of families that they manage.

Okay. The other question I had was on the cost per RM. It typically increases over time. I understand the RM pool right now, 60% of them are less than 2 years. But over time, the cost increases as well. So how are we thinking about maintaining the same gross margin? Is it through wallet share increase or increasing the capacity of an RM? And any strategy around that to maintain the yield?

Yes. So typically, what happens is as the vintage of the RM grows, the number of families that he or she manages or the AUM they manage, it also grows. And that also results in increased productivity. So in the first year, typically an RM delivers 1, 1.5x productivity. It goes up to 3.5, 4x by the third to fourth year. So that typically results in increased margins. So whenever you hire aggressively, the margins tend to be a little subdued. And as the productivity kicks in, the margins tend to improve.

Got it. One last question was on -- there is a high increase in the number of RMs that we hired last quarter. Is there something in the business that you're seeing, which is why you want to get this capacity in-house? Or it is more of, in the longer term, you would want to have a more stable base with a higher vintage RM, so productivity increases over time?

So like Navin mentioned, the size of opportunity in the Wealth Management business as well as the PCG business is extremely big. And we are not only increasing the number of RMs, we were also increasing the number of locations. So from hereon, the hiring will be more measured, and the focus will be more on productivity and margins.

[Operator Instructions] The next question is from Avinash Singh from Emkay Global.

Two questions. First one is, again, on the wealth management. Now that you have started to sort of present your wealth management and PCG together, now looking ahead, in terms of a strategy, is there some sort of a focus, I mean, clientele segment where in terms of investable wealth for family in your preferred pick, I mean, like going more towards slightly lower, say, INR 5 crore -- INR 2 crore to INR 5 crore band or like expecting with the UHNI families or kind of -- so if you can sort of explain here that with this kind of PCG and wealth putting a sort of focus getting together, what sort of a family or a [ sort of client base ] in terms of the average AUM that we would be targeting? And how sort of you are thinking to keep these 2 businesses together? Because I mean a UHNI versus a PCG will be slightly different strategy. That's the first. And second, I mean on the broking side, I'm cognizant of the fact that you have a relatively lower sort of a dependency on derivatives. However, if at all, I mean the derivative volumes were to sort of moderate or even temporary, they were to decline, I mean, what sort of a cost composition in the broking side you have variable and fixing nature? And how that will affect profitability if there is any sort of a concern around F&O volume sort of a moderation?

Yes. So typically, the PCG and the Wealth Management business would operate in 2 segments, the HNI and the ultra-HNI segment, INR 5 crores to INR 25 crores and INR 25 crores plus. So the Wealth Management business operates in both segments. PCG operates in the INR 5 crores to INR 25 crores segment. What happens is that predominantly, majority of the customers on the PCG side get onboarded with broking as a product and then we look at upselling through distribution products. Whereas in wealth management, most of the clients would get onboarded through wealth mandates, and they would be offered broking as well. And broking, Ajay, maybe you can comment on the F&O side?

Yes. Coming to our overall business on the booking side, as you know, we are a full-service broker. We have a good cash market business based on our research and advisory capacity, and we charge the full brokerage on the cash market. So the component of cash market brokerage is well aligned as compared to the revenue, so it's almost 55%-45%, in that ratio. So to that extent, if there are any changes in the derivatives as per the guidelines which are coming out or which may come out, we are very well aligned to manage our business based on our advisory and research capabilities based on the business requirements. So we are well aligned with both the segments in the way we want to handle our customers.

And also, as far as flexibility is concerned, as you know, our booking business is the highest -- we are the largest franchisee broker and we have the highest revenue salience of the franchisee business, which is a highly -- which is an entirely variable cost model. And so to that extent, any volatility in the market will have a lot lower impact because even during the upside, the operating leverage, at least as far as the franchisee side of the business, is a lot lower.

[Operator Instructions] Next question is from Vivek Ramakrishnan from DSP Mutual Fund.

Congratulations on a great performance. My questions all are around the broking book. In terms of the loan book, how stable is this book? If the market has some disruptions or the perceived returns come down, will this book decrease in size? And so that's part A. The Part B is, what are the yields that you get on this book because that will also affect the rate of return, especially because interest rates are very high? And the last part of it is, how do you manage ALM in this book, given the fact that it probably is a short-tenure book and you are borrowing long term here and there?

Yes. Vivek, so basically, in respect of the lending book in our broking business, this typically is the margin trade finance book where this is typically linked to the cash market segment predominantly, whereas you've been seeing that the cash volumes have been growing. So this book has been sharply growing, plus given that we have a good set of franchisee and HNI clients who basically also tap to this lending. So we have seen a very strong growth over the last 4 years in this book. So we believe that with the strong structural tailwinds, this book will continue to grow. If you look at the industry, also that book has been continuously growing across all players. And for us, there has been a very substantial growth given that we have a strong balance sheet with a very strong uptick in the net worth, which has happened over the last few years. So by virtue of that, the overall leverage continues to be stable at 1.6x. And from an ALM perspective, our -- while the book is lent as a short term because it is a book where positions are taken and when the positions are liquidated, the cash comes out. The access happens -- as per the regulatory framework, the borrowings can be accessed only through the short-term route for this book given the regulatory framework itself because we can raise money only through commercial papers or have the bank -- short-term bank borrowings against this. You're not permitted to raise nonconvertible debentures, long-term borrowings against this book. So predominantly, this is -- this will be a function of short-term borrowings. So from an ALM perspective, the asset is also short term and the borrowings are also short term. To that extent, it matches. Plus we have a very strong liquidity facilities available on tap. So at any point of time, we have almost INR 2,500 to INR 3,000 crores of banking lines outstanding because we have a very strong treasury book on our balance sheet, which gives us that ability to borrow on tap this money. So to that extent, to meet any short-term or cyclical obligations, we are very well aligned with the liquidity out of that limit as well. As far as the yields are concerned, overall, yields on this book stands at almost about 6% for this book. So our cost of fund is 8.75% and yield on the book stands anywhere around 14% to 15% on an average basis.

Excellent. If I can follow up, you are in the market for a public issue. So where does the long-term debt go into?

Yes. So the long-term debt will go into actually our working capital in the exchanges because as you've seen that volumes have grown very strong over last 1 year. And in fact, our own volume has grown by almost 133% on a 1-year basis, which has led to increase in our working capital that we put in the form of fixed deposits in the exchange through bank guarantees. So as our volumes go up, the base minimum capital that we place to operate at, say, almost around 65%, 70% capacity, that also goes up. To that extent, we are deploying the money into the working capital. As we have also highlighted that in our prospectus, how the working capital has been for last 1 year and what we are projecting the increase over the next few quarters on that.

Perfect. Just one question on the Housing Finance business that seems to be doing really well. You've invested a lot of the businesses and turned it around. Again, like the wealth business, is the pace of expansion going to slow down and it's more sweating of assets? How does it look like in the next year or 2? That's my last question.

We are primarily in the affordable housing space. And in terms of market share as well, our market -- the market is very huge and our market share is very small. And we expect the affordable space to keep growing at a decent pace. And so, I mean, in terms of prospects for the industry, we see it very positively in the space that we are in.

I meant more from your cost-to-income perspective, actually, in terms of sweating the expansion expanded, like about 45% right now. So how is it going to trend?

So cost-to-income, so this 45% is basically because, as we highlighted at the start of the call that there has been a strong doubling of the RMs -- sales RMs in FY '24. And we are investing heavily on the sales RM over the last 3 quarters. And we expect to even further double the sales RM count in current financial year FY '25. So cost-to-income would be elevated to that extent. However, as our throughput of disbursements is improving gradually because if you see our quarter 4 run rate of disbursement, we did almost INR 400 crores of disbursement in quarter 4. And next financial year, we are targeting to overall even double the disbursement that we did in FY '24. So from FY '26 onwards, we would see some respite to the cost-to-income ratio, which could start coming down. So for FY '25, this will continue to remain elevated.

Next question is from Rohan Advant from Prad Capital.

So my question is that, as you stated, the PCG segment has moved from capital markets to asset and wealth management. So can you quantify the amount of PCG revenue that has moved and now it's considered under the asset and wealth management and break it down further into broking and non-broking, if possible?

Yes, just a moment. Yes, so total revenues that have been moved into the asset and wealth segment is INR 438 crores, which belongs to the PCG segment. The total profit for FY '24 of PCG segment that has been moved to asset and wealth segment is INR 184 crores. So that is the impact of this change that we have done. And this gets added to our asset and wealth segment and gets reduced from our capital markets segment.

And out of this INR 438 crores, what would be the broking revenue?

That is INR 260 crores is the portion of the broking revenue.

Okay, so that is INR 260. And the balance was distribution-led, which was classified under capital markets and now whether it is broking or distribution-led, it comes into asset and wealth management as long as it pertains to the PCG segment. Is that understanding correct?

That's right. There is also NII component in that because we have HNI client segment where we also have lending to the PCG clients. It's a combination of distribution and NII income.

Okay. So all form of revenue from the PCG segment comes under asset and wealth management now?

That's right.

Next question is from Sanil Desai from ICICI Securities.

Congratulations on this good result. So I have 2 questions. The first one would be that we have seen that on the broking front, a lot of volumes have increased, right? And we have seen some other brokers also raising money because of the capital requirement. So how are we doing on that front? And do we have still enough working capital available for enough growth? Or how are we looking on that front?

We don't have any such immediate plans to raise capital for this business. So we have a very strong net worth. And as I highlighted, that [ strong ] net worth has grown at almost 40% Y-o-Y for us. Given the sizable growth in operating profit and our treasury profit, we have strong enough internal accruals to take care of this.

Yes. Okay. And can you give a breakup of your asset or ADTO and cash ADTO for the quarter gone by?

Yes. So cash ADTO is INR 6,000 crores and F&O ADTO business premium is...

How much for F&O?

So ADTO is INR 6,000 crores on a premium tenure and cash ADTO is [ INR 5,000 crores ].

Next question is from Abhijeet Sakhare from Kotak Securities.

I had a couple of questions on the broking business to start with. One is that the revenue share with sub-brokers, is it the same between, let's say, what he brings in through the broking side as against the distribution business?

Yes. The broking side is different compared to the distribution because, as you know, the broking sharing is much more in our favor. Whereas the distribution part, the sharing will be much, much higher in the range of 80% to 85%.

Understood. And the 8 to 9 lakh active clients that we have, is it possible to give some indication of what would be, let's say, the monthly active of these? And then the second part is that also some color on -- how does the overall customer base look like between people who are only doing cash equities versus only F&O and those doing both on a monthly basis? Just some qualitative or quantitative color would be helpful.

So as far as the monthly run rate goes, it will be around 3.5 to 4 lakh customers on a monthly basis in the overall numbers, but we'll not be able to give you the split between the cash and F&O as such because that's something we keep to ourselves.

[Operator Instructions] The next question is from Abhishek Nagaraj from Alts Wealth Private Limited.

In my earlier questions, you mentioned that we're looking to also look -- enter into more locations. And assuming this is a Tier 2, Tier 3 entry, one, correct me if I'm wrong, and two, in terms of productivity there, are you seeing any differences or any product differentiation that you want to get into? And the second question is, how is the management thinking about entering into the affluent and the mass-affluent segments? Some of our competitors have tried to do that through digital modes.

So firstly, the huge hiring of RMs that have happened in the last 3 years, we highlighted that we believe productivity improvement of those will be a big focus area for us. Obviously, there will be an expansion into newer markets, particularly Tier 2 and Tier 3. But as far as the offering is concerned, there wouldn't be any differentiation in that offering because that color is not very different according to us for a Tier 1 market versus a Tier 2 market. We are presently very under-indexed or not present in the UHNI segment, and that is a separate capability that we are building through the appointment of the CIO recently and the advisory capabilities that are getting created. Using digital for affluent, mass-affluent segment is not something that is on the cards as far as the wealth management business for us is concerned.

Got it. The other question I have was on considering we have multiple businesses housed in the same entity, any thoughts of the management that you would want to probably, in the near future, look at demerging and probably unlocking certain value amongst these businesses? Though I understand there is synergies in between, but is that on cards?

We've highlighted our position on this before that we believe there are very strong synergies, the common brand as well as the potential cross-sell opportunities. So as of now, we have no such plans.

[Operator Instructions] Next question is from Abhijeet Sakhare from Kotak Securities.

I just wanted the split of the overall wealth AUM across the 3 categories that you mentioned, ultra-HNI, HNI and PCG.

So out of the total AUM between wealth and PCG, wealth is 1 lakh crore. And from the 1 lakh crore, about 46% is UHNI AUM.

Got it. And roughly, when I look at the ARR, TBR split for this business division, it's roughly 50-50. Do you have like a number in mind, let's say, over the next 2 to 3 years how would you want the mix to look like?

I think the ARRs will inch up in a more progressive manner, whereas the transaction income is more dependent on the kind of products, the kind of preferences that customers have. But over time, the ARR AUMs will keep inching up. What has happened is broking as a product is doing extremely well, which gets classified in transaction revenue.

And the TBR for us -- sorry, the TBR for us, it's all largely broking, is it? Or there's some indication of private market transactions as well?

So it's a mix of broking, private market transactions, bonds and certain Cat II AIFs, which give portion of the revenues upfront.

[Operator Instructions] Next question is from [ Sagar Kapadia ] who is an individual investor.

Sir, I have 2 questions from my side. One is, in FY '24, what is your broking revenue? And please provide me a split of this annual broking revenue between the institution side and the retail HNI side. And then further, provide me a split of the retail HNI to the cash side and F&O side.

Yes. Our broking revenue for FY '24 stands at INR 1,995 crores. And retail and distribution mix, we have not been putting it out separately.

And if you give a -- segregate the cash and F&O?

So as stated earlier in the call, our cash mix is 55%.

55%. Okay. And sir, another question. So in last quarter presentation, you had given that very good example of the private equity, which many of them are closing down next year, that fund raised is INR 100, the IRR is 20% cumulatively for 8 years, then the cumulative returns are 330 and the company makes a 20% carry on the same. So carry income is INR 66. Now please explain to me how do you report it? I mean, out of this INR 66, when the fund actually closes down, at that time, how much percentage is reported in the P&L?

Yes. So basically, none of the carry income is reported as a part of the operating profit. It is reported as a nonrecurring income. However, this is very rare. I mean it doesn't happen. It happens once in, you can say, 3, 4 years, and that's why it is put out as a nonrecurring income and not a part of the operating profit in the asset and wealth segment.

Yes. Okay. But when the fund closes down, then also it will be -- at that year, out of the INR 66, how much percentage is recognized in the P&L when actually the fund will exit, I think then you will be showing it in the P&L, right?

Yes. The INR 66 is what is recognized over a period of -- so all of this doesn't happen in a single year. The exit happens, let's say, in the year 8, 9, 10, okay? Initially, you are just returning principal and then returning the hurdle, right? Only post the hurdle do you start earning carry. That carry typically happens in the last 3 years of the fund, okay, could be any mix depending on the exits that we make. So if there is INR 100 original capital raised, then INR 66 is effectively -- this is an illustration. It could be much higher or much lower than this number depending upon the IRR delivered by the funds. But typically, it will be in the last 3 years of the life of the fund.

Okay. And it will be shown as a nonrecurring income, right?

Yes. So sorry, to correct that, it will be shown separately. So there is an operating profit line item, and we also include an operating profit line item, including this carry income as a separate line item to depict that the normal run rate versus the annual run rate that we record from the carry is separately reported.

Okay. So in the operating profit income, you will report it separately as this is the carry income in the operating profit, correct?

Yes, that's right.

[Operator Instructions] Next question is from [ Dinesh ] who is an individual investor.

So I just...

Dinesh, I'm sorry to interrupt, but your voice is not very clear. If you're on a hands-free, I request you to use the handset.

Yes, sorry. Am I audible?

Yes. Please go ahead.

Yes. My [ question ] on the housing finance company, I think that has been already answered. Thank you. Thank you for giving me the opportunity.

That was the last question in queue. I would now like to hand the conference over to Mr. Shalibhadra Shah for closing comments.

On behalf of Motilal Oswal Financial Services, I would like to thank every investor and participant for attending this con call for quarter 4 FY '24. If you do have any further queries, please do let me know or our Investor Relations desk. Thank you, and have a good evening.

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