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

Ladies and gentlemen, good day, and welcome to the Motilal Oswal Financial Services Q1 FY '27 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Manish Kayal for the opening remarks. Thank you, and over to you, sir.

Thank you, Albert. Good afternoon, everyone. I welcome all participants on behalf of Motilal Oswal Financial Services Limited to take time out to attend our Q1 FY '27 earnings conference call. We hope that you had an opportunity to go through our investor deck and press release uploaded on stock exchanges and on our website yesterday. We have also uploaded our Excel data book on our website that has all the operational and financial numbers. Please note that today's discussion may include some forward-looking statements. These forward-looking statements are based on our macro assessment and actual outcome may vary. To represent the group, we have the senior leadership members on this call. We will start this call with an opening remark by Navin, who is our group MD, and then we will have a Q&A session. Over to you, Navin.

Thank you, Manish. Good afternoon, everyone, and a warm welcome once again to all of you to the earnings call for the quarter ended June 2026. I will first start by a context of how we ended the last year. Last year, our operating PAT reported was up by 16%. On that base, our operating profit after tax grew by 14% on a Y-o-Y basis in this quarter to INR 609 crores, led by asset and private wealth business. which grew by 44% year-on-year. These businesses, the asset and private wealth businesses now contribute 55% of the total operating profit of the group versus 50% in FY '26 in the full year and versus 42% in the year before that. We have guided that the share of as asset and private wealth businesses will continue to rise because of the annuity nature of the business and the low market share that we have in these businesses, allowing a lot of headroom for us to grow these businesses. The AUM of the asset management business, including MO alternates crossed INR 2 lakh crores milestone. This has witnessed a CAGR, a compounded growth of 34% since March 2020, with strong market share gains. We have invested a lot in the past couple of years on all the fronts in the group, be it people the brand or the technology. We expect these to bear fruits in the coming years in terms of market share gains and profitability growth. Motilal Oswal is the largest integrated capital market player with rising share of annuity revenues and each business offering a strong growth runway, leveraging the opportunities available in financialization of Indian savings. Annuity businesses now contribute over 66% of the group revenues. Please note, we had highlighted that the asset and private wealth businesses contribute 55% of borrowing ad during this quarter but annuity businesses, including in the wealth management business, which has annuity revenues now contribute collectively 66% of the group revenues and will continue to rise as we transitioned from a transaction led to an annuity led business model, strengthening the quality of our earnings. Our operating businesses have delivered a decadal a 10-year compounded operating profit growth of 33% and an average return on equity of 23%. This growth is supported by our investment book, which grew by 41% compounded since inception led by strong IRRs and reinvestment of our operating profit after consistent dividend distributions and 3 buybacks since our listing. Also want to highlight that ever since our listing back in 2007, we have never diluted equity by consistently paying out dividends and buybacks. This has only been possible due to our unique twin engine business model, where we have a strong backbone of our operating businesses and a large investment book that has continued to compound at nearly 20% per annum. This strategy has resulted in our rank in profit after tax for the last year, improving to 160 rank among all listed companies in India. And we are now among the top 200 companies in India by market cap. We see the next decade offering equally exciting prospects, which should drive further improvement in these rankings. Turning now to the segmental performance. Our asset and private wealth businesses comprise of the listed equities asset management business, the unlisted MO Alternates business and the Private Wealth Management business. Asset Management and Private was businesses continued its momentum during the quarter with robust net flows of INR 10,325 crores, AUM at INR 4.5 lakh crores as on June 26, is up by 34% year-on-year. We continue to invest in talent, in distribution reach and in marketing. The operating leverage from rising AUM should be a strong driver to our profit growth going forward. Now specifically talking about the asset management business comprising of mutual funds, PMS and AIF. Our AMC AUM grew by 34% compounded since March 2000 till June 2006 and is very close to another major milestone of INR 2 lakh crores today, led by our strong performance and differentiated product offering to our investors. Our unique pan catered by our AMC is more than one on June 26 versus INR 8,500,000 in June 25, which shows strong confidence by retail investors in our franchise. This is around 16% share of all clients in the Indian mutual fund industry. The revival in Q1 has propelled our average AUM to grow from INR 1.67 lakh crores in 4Q FY '26 to INR 1.81 lakh crores in month FY '27, reflecting the continued momentum in the business. And today, we are closer to another milestone of INR 2 lakh crores in this business. Our product bouquet is pretty young as significant flows comes only once products have crossed a 3-year track record. We launched 1 new active mutual fund in the first quarter, increasing our presence now to represent 87% of the industry AUM. Importantly, of our funds have a vintage of over 3 years and these categories contribute a near 44% of the industry AUM. We expect an additional 3 funds -- 8 funds, sorry, to cross 3-year vintage by March '27 and a further 16 funds to cross the 3-year winter March '28. This will improve our vintage fund participation, which is over 3 years vintage fund participation to 75% of the industry AUM from 44% now. Most of these are best performing funds since inception in the mainstream categories, which should help in strong flows as well as diversification of the AUM over the next 2 years. This will also continue our trend of net mutual fund flows market share improvement, which stands now at 4.2% compared to 3.7% in the previous quarter. Our flow market share continues to be well above our AUM market share, which is 2.9%. In 1Q, our SIP flows were strong at INR 4,064 crores, a up by 16% year-on-year, with a market share of 4.3%, resulting in an SIP AUM of INR 38,643 crores. We believe our AUM growth will be supported by the following factors: an annualized SIP run rate of around INR 16,000 crores, collections from proposed NFOs besides discretionary flows, more products crossing the triggered vintage, current AUM of nearly INR 1.9 lakh crores is over 15% had in the FY '26, average AUM of INR 1.57 lakh crores, potential mark-to-market gains after 2 muted years, and finally, entry into multiple funds to the Gift City route targeting both in Mount as a [indiscernible]. We believe that the strong growth of AMC led by the above 6 factors will be a key growth and ARR driver for the overall group. Turning now to MO Alternates. We have a strong franchise in growth capital and residential real estate and are confident to deliver industry-leading IRRs to our clients in all the products that we offer. We are in the process of executing our final close of our maiden away credit fund of INR 3,000 crores where we have raised nearly INR 2,500 crores in the second close. We will launch commercial real estate in second half of this financial year and continue to offer a comprehensive suite of product offerings in alternates, which are seeing increasing allocation both among family offices as well as institutions. Alternate Asset Management business, too, will be a key growth driver and an ARR driver of the Motilal Oswal Group on the back of larger fund size that we have raised in every subsequent cities, entry into newer categories and more funds entering the carry income recognition threshold, which will boost our carry income run rate. The asset pricing business now contributes to 40% of the group's operating profit after tax in 1Q versus 26% in first quarter of last year, and is expected to increase based on all the pointers that I've highlighted. Turning to the private wealth business. The first quarter ARR revenue for the private wealth business grew by 4% Y-o-Y to INR 157 crores. However, overall revenues were flattish on lower ADR revenues. We have highlighted the quarter-on-quarter volatility in ADR revenues, while ARR revenues continue to steadily rise. Net flows grew by a strong 37% to nearly INR 4,000 crores, leading to AUM growth of 37% on a Y-o-Y basis to INR 2.4 lakh crores. Our 441 RMs will also witness productivity improvement as 32% of them have a vintage of over 3 years. We continue to make sizable investments in senior leadership as well as relationship managers and will continue to do so in a calibrated manner going forward as well. Focus is now on growing ARR EM, which is currently at around INR 52,000 crores to various initiatives, including a bitery solutions, strengthening leverage solutions as a value-add for prime offices and exclusive co-investment leveraging group synergies. All this will help in revenue growth, along with cost to income improvement, driving profitability. As we scale our ARR led revenue mix in private wealth, the relative TBR revenue contribution will be volatile quarter-on-quarter IEP, while our overall earnings quality and predictability will continue to improve structurally. Turning now to the wealth management business, comprising distribution, retail cooking and retail lending NII income. We continue to have a sharp focus on growing our ARR revenues, which includes distribution income and NII. This has led to the share of these businesses in Wealth Management segment revenue increasing from 33% in the year ending March 21 to 57% in the quarter ending June 27. The ARR revenues grew by 26% on a Y-o-Y basis this quarter to INR 304 crores. Distribution book grew by nearly 30% to over INR 45,000 crores we are confident that our distribution book will grow meaningfully as we continue to harness the cross-sell potential of our client base of our franchise, which stands at only 18% versus multiple times this number globally. Our loan book in this segment rose 33% year-on-year to over INR 7,000 crores. Our MTS market share is close to 6.5% and we expect it to improve going forward. Our booking business continues to retain its leadership position as a full service broker amongst nonbank players. We are the largest broker in the cash segment on revenue market share in nonbank segment. Our overall retail booking market share, including commodities stood at 7.6% in the first quarter, led by market share gains in F&O premium segment from 7% last quarter to 7.6% in the current quarter. Our cash market share has been stable during this period. We expect our ADTO market share to improve as the global uncertainty subsides as we have witnessed historically. The distribution lending book will continue to drive growth and increase its share in the overall group's ARR revenue pie. Turning now to the capital markets business comprising of institutional equities and investment banking -- despite challenging market conditions, our investment banking business has successfully completed 11 deals during the quarter, raising over INR 10,000 crores, and our fee income delivered a strong 48% revenue growth quarter-on-quarter to INR 68 crores. We are now ranked #2 in the Capital Markets League Table for IPO and QIP. With a $5 trillion market cap of India and growing, there is a base level of IB activity that the markets will see every year to build a strong franchise to benefit from this. In institutional equity business, we are continuously increasing the coverage. We released 20 initiations during the quarter, taking that coverage to 384 stocks. Our stated intent is to take this up to 500 numbers. We believe that our capital markets franchise is strong and diversified with products including QIP, IPOs, advisory business, and we have a few more legs to cover that. Our size per deal is materially higher than in the past. And with a strong pipeline, we are poised to benefit from any market revival. Turning to the housing finance business. Our disbursements grew by 64% year-on-year to INR 646 crores. AUM grew by 23% to INR 6,164 crores. We expect housing finance business to continue to witness strong growth in the next 2 to 3 years. Business has a strong capital adequacy ratio, very low leverage, giving us enough growth levers without any need for further capital infusion. Turning to our treasury book, it grew by 22% year-on-year to INR 10,482 crores. The longer-term compounded growth of this book has been 41%, led by strong and the investment of offering profit after paying dividends to conclude the rise in wealth to over INR 100 trillion combined with financialization of savings and powerful tailwinds in the rising rate of capital market sector within the Indian market cap. This is an important tailwind for the group. In this space, MO OFS has decided at record of 33% operating profit growth an average ROE of 23%, delivered entirely through internal accruals, no dilution, rising market share in multiple businesses, entering promising adjacencies in each of our businesses, rising share of annuity revenues to 66% and importantly, improving quality and predictability of our overall profit driven by asset management and private wealth business, all over well for us. The regulatory headwinds in the base, particularly for the wealth management business, given the regulatory changes, our continued resilience shown by Indian investors, we believe, makes the future outlook promising. With this, I'll conclude my opening remarks and open the floor for Q&A.

[Operator Instructions] The first question comes from the line of [ Sagar Khatwani ] with Phillip Capital PMS.

Congratulations on a good show given the current environment. Your first question on the wealth management segment, your distribution assets and looking assets have increased by 13% and 7%, respectively. On the other hand, distribution revenues have fallen by 50% Y-o-Y. So what went wrong here? Could you please explain?

So as we've discussed in the Wealth Management business, we had a high base of TBR last year, but in the first quarter, particularly, we highlighted that we have quarter-on-quarter volatility in this number. The subsequent 3 quarters will be far muted as far as TBR is concerned there. And so you will see the distribution income tracking back to growth in line with the restriction assets, but higher share of TBR led by unlisted revenues is what caused this decline. Part of the private wealth business decline in 1Q in TBR is also led by exactly the same factor, much as in both the businesses, the wealth management business and the private well business, we have had rather strong growth in the ARR revenues, which I shared in my opening remarks.

Yes. And in HFC business, the credit costs have seen a sharp increase on a quarter-on-quarter basis from 10 bps to 1% now. So what led to that?

Yes. See, credit cost overall for the year last year was 0.5%. And if you look at overall our GNPA and NPA Y-o-Y have down, but sequentially, in Q1, generally, 1 plus, 30-plus, 90-plus, numbers are marginally up. And that is the reason you will see Q1 numbers always the credit cost will be higher, but court care during the course of the entire financial year. So asset quality has been at the supreme because if you see quarter 1 last year, GNP was 1.4%, and this year is at 1.1%. So the delta only because of the relative increase from other 4 to quarter 1 of this financial year.

And what sort of a cost of borrowing reduction can we expect from the rating upgrade?

Yes. So all you see, there are 2 forms of borrowings. One is from the capital markets that we borrow and one is on the bank side that we for. On the capital market side, our spreads have come down relative to the AAA and the earlier at 75 basis now. Related to AAA, we are at about 335 basis spreads. Even our bank borrowing cost has come down if you look at the last 12 months of our early. So with the overall -- the recent upgrade from [ CRISL ], we further expect cost to rationalize by 15 to 20 basis points over the course of next 12 to 18 months, given our AA rating.

And in the July month, the volatility has again increased. So could you comment on how the treasury book performance in speak?

Actually, this month is still not over. And I mean we've seen -- there will be lot can change between the 24th of July today and the 30th of September. But I think I would like to reiterate that the long-term compounded growth of 40%, led 20% by IRR and the balance led by reinvestments of our operating PAT. This has been going on since March 2014, all the way till June 2006. And you can slice and dice smaller time periods of 5 years, Cetera, still get similar outcomes. So that is what I'd like to guide you for. However, on a month-to-month basis or a week-to-week basis, these things could be quite volatile.

Absolutely. And we have the strong IPO pipeline going ahead. So how do we see the capital market segment performing some thoughts on that for the rest of the year?

Yes, the pipeline is very, very strong. In fact -- but also this whole variation scenario keeps changing and is quite volatile. So are the signed mandates very substantial to show strong growth on a year-on-year basis? The answer is yes. How many windows do we -- and also, the business is now reconciled to not having a one clean runway of the whole year, but having pockets of 2 months or 3 months multiple times in a year, maybe 2, maybe 3 times in a year to be able to execute this signed mandate pipeline. So again, I'd like to guide you that pipeline is very strong. If we get if there's a good window open in any quarter, then you will see a lot of execution and hence a very strong growth. We saw decent growth in 1Q also. However, if there's a quarter that there's more such window, then this business for us and for the whole industry would be quite volatile for that quarter. So if you ask me, FY '27 as a year as a whole, we'll see growth. But on a quarter-on-quarter basis really depends on whether execution happen on the back of the window, which is open or not.

And lastly, the AMC and PWM PAT is up by 45% put together. Could you please give a split of both these segments? Which was the AMC PAT higher and PWM as well?

PWM Is up by -- is flattish, up by 2% on the back of the lower TBR, as we've highlighted. And so all of the growth is led by the asset management businesses, which comprise of both the listed equities and the unlisted equity. I'd just like to double click on this. As you know, our average AUM last year was INR 1.57 lakh crores. We are tracking at nearly INR 2 lakh crores now. And so that is a base that is driving very strong growth, coupled with operating leverage, correct? I also highlighted that multiple funds are costing the per vintage and the be performing in their category. So that's that is available to us. The SIP book will continue to build up. So that's a tailwind. But importantly, as you may have seen from the third quarter of last year, the alternate business unlisted was also graduated now to having a lot of mature funds and so the food carry income has started to build up. And that is showing up in the numerator, but not in the denominator because the income starts kicking in only from October, November, December 2025, which is a 3Q FY '26, correct? So that income will be higher this year's quarters and quarter-on-quarter, it will be stable. But I think even the alternate business AUM has grown strongly and the crude carry income and target kicking in. So you have basically 4 or 5 factors, which are all contributing to this abnormally high growth which at least for the current year, we are hoping will continue.

The next question comes from the line of Nidhesh with Investec.

The first question is on the wealth management business. So there has been a regulatory change on operating from first of July. So how are we seeing the impact of that change on our wealth management revenue and trading volumes?

Yes. So as of now, there is not much impact because of the prop changes because that is mainly impacting the brokers. From a liquidity perspective, it's very early time to say that is it impacting liquidity in big because of the volatility in the markets. But as such, there is no impact for us on the overall business model, except for the there is some change on the intra funding part from the banks, which will average minor impact. Otherwise, it's too early.

And what would be the share of prop traders in our wealth segment business?

You mean to say that drop triggers have that larger impact because of the 1st July change from RBI. It's not the impact for us. That's what our age. Our entire book is invested in our -- largely in our own funds and very small part in direct equity, okay? And so we don't engage in the prop trading of this -- the one which is impacted due to the regulatory changes, we have 0 impact. Within our broking business, obviously, we have no revenues coming in from that. And so this is an impact for the overall market volumes and hence, for the exchanges, but not for broking players like Motilal Oswal.

Sure, sure. . And secondly, in the alternate business, there has been a soft net flows for this quarter. So what is the reason for that? Any fund closures that have happened this quarter which has led to outflows and what is driving that? And how should we build net flows in alternate business for the full year?

Prateek here. So alternate business itself had a tough quarter given the overall geopolitical scenario, which is spend in this quarter. So if we just put our the shows of ran and think about what is going on in the head, it has been a soft quarter. It's of, I think, one player who continue to do well on the drop, I think everybody else consolidated. Our gross inflows were amongst the highest in the street, but because of the AUM that has been collected, we are tracking 35,000 plus on the alternate side. assume some amount of normal redemptions. So the net has been negative for the quarter. As we speak from this month, actually, positive.

And Nidesh, 2 more points to what Prateek highlighted. First is that the performance of the products are exceptionally good. So that is not an issue at all. But from a market perspective, as you may have also observed, there's a whole plethora of structured debt, private credit, real assets, special opportunities type of funds and that has taken up a lot of the alternate allocation by private banks, by family offices, HNI clients. And so I think that is what has also happened in this quarter because of which as highlighted barring one player. No other player has seen any significant improve. And in terms of the gross sales, we continue to be among the top players in the alternate space.

So are there any launch plans through the year on alternate business?

On alternate side, we have -- so on the listed equities, -- we don't really believe in launch proliferation of products. I think the headroom in our existing product itself is very large according to us. But as far as the overall market is concerned, I highlighted to you that a whole variety of products on the credit side are coming up. You are aware that this quarter also, if you look at the alternate business overall, we had a net INR 800 crore flow on account of our private credit fund, Nidesh.And that credit fund will continue to see the residual flows in this second quarter. And we already got the regulatory approval for our commercial real estate fund launch, and that should happen in the second half as I guided. So basically, in market, there is flows in credit products, we are seeing strong flows in our own credit product in 1Q that we think will continue in the residual 9 months. And we are also hopeful of the equity side listed equity side alternate seeing flows in the coming quarters.

Sure, sure. And what is the contra -- have you booked any carry income in AMC this quarter? And what is the expected quantum that we will be likely to book through the year in terms of carry income in AMC?

We have not booked any carry income, which is meaningful, very rounding of weather. We have carry income on our products. I think in 2Q or 3Q, you may see us report some number there. It's not something that I'd like to call out because it's also a function of the market also, yes.

Sure. Sure. And last question is on private wealth. There also ARR net flows have been a bit soft this quarter. I think on a quarter-on-quarter basis, there is a meaningful decline Y-o-Y, I think the next are okay, but on a quarter-on-quarter basis, there is a bit of a decline in the private wealth business.

Yes. So if you look at the net flows over a period of time, they've been quite strong. I mean we've doubled the net flows over the last 3 years, I mean, from INR 10,000 crores to INR 20,000 crores. But quarter-on-quarter, the flows tend to be a bit more volatile because the preferences of clients in terms of allocation changes. So what we've seen is we've seen more flows into direct fixed income kind of assets this quarter. But these things tend to even out over the year because if you see Y-o-Y, Q1 versus Q1, we have seen strong growth in net flows. But however, the allocations have gone more in fixed income in this quarter. And hence, you will see the ARR flows being weak, but these things tend to even out over the course of the year.

And to clarify again on the carry income question. My carry income question that I answered was on listed equities. On unlisted equities, if that was your question, the number is INR 66 crores accrued carry income for this quarter. And this number will continue to recur at a similar level for the next 3 quarters and for the next year also and going forward from here also because there's a whole pipeline of products, which will keep advancing and coming closer to maturity.

Sure, sure. And then just one last question on private wealth again. So there -- actually, your TBR has been a bit volatile -- what we have seen in some of the peers have built our TBR, which is slightly more stable now, more granular -- so how are we planning to build much less volatility? And if you can give some color on TBI, what is the composion of TBR in terms of unlisted share, listed shares or structure a deal, et cetera?

It is led by transaction flows. And again, like I mentioned, the preferences also keep changing in terms of asset class. So last year, we had very strong sourcing in unlisted equity. However, what we are seeing this year is we are seeing very, very strong flows into fixed income as an asset class. So over the course of the year, you will see this even out, and we see volumes also compensating for the high base that we had last year.

Sure. Sure. That's it from my side.

As equities you will see fixed income and equities balancing out and that should lend more stability to this. But as you know, that last few years have seen a very strong trend in unlisted paper, both credit and equity. And so that is what is there in the base of the first quarter last year. And also the strong growth in ARR revenues gives us the air cover whilst we build up the transaction flows. I mean if you see the growth in ARR, it's almost 42% Y-o-Y and 46% in the net interest income as well.

The next question comes from the line of Umang Shah with Kotak Mutual Fund.

I have a couple of them. One is related to whatthe vehicles -- Yes, am I audible? .

Umang, you are audible, One moment, please.

Yes.

Ladies and gentlemen, the line for the management has stopped. Please stay connected while I get them reconnected. Thank you. [Technical Difficulty] Ladies and gentlemen, thank you for your patience. The management line has been reconnected. Umang, you may go ahead with your question.

Congrats on a good quarter. My question is somewhat related to what Nidhesh was asking on the alternates business. In terms of the carry income booking, I can see that there are a few funds both on private equity and real estate side, which are likely to get exited in FY '27. So our carry income assumptions are contingent upon the fact that exits get completed in FY '27 or if at all, let's say, if there is any delay because of market conditions, then there could be a spillover in FY '28?

These assumptions, Umang, have been made on a conservative basis, factoring in delays. And so the run rate that I articulated, booked INR 66 crores this quarter. We will likely have similar numbers for all of the quarters of this year and also for the next year.

Also, only 70% of the fair value has been recognized. So already, we are more conservative, like 30% is recognized beyond realization.

Okay. Okay. Understood. And from a growth perspective as well, Obviously, there are a few and there are a few funds in the pipeline as well. on a net basis, we should not see any lumps in terms of in terms of AUM, right? I mean, we should be able to still deliver reasonable net sales numbers for the year? Or there is a likelihood that there could be some lumpiness for FY '27, '28?

Are you talking about the Alternates unlisted net sales?

Yes, I mean, overall, I mean, because I can see there are a couple of real estate funds, which are also likely to exit this year.

So because of a series of new products that we will launch, Umang, the overall income, ARR income of the unlisted alternates business on a year-on-year basis will continue to rise, right? So whatever number you've seen last year, this year's number would be higher and the next year because as you are aware, the private credit fund will see the final closure in the 2Q. The commercial side fund will be launched after that. And then we have a series of products to be launched even after that. The AUMs keep rising, point number one. And point number two, for the same product, the subsequent year is always a higher AUM. So if there's an outgoing AUM of the previous one, there will be an incoming AUM, which is larger of the next one. And unlike in listed alternate on in unlisted alterate you book fees or you report fees on the amount raised, not on mark-to-market. So we would like to guide that there should be a steady rise in both the fee income as well as the accrued carry income for this business.

Understood. This is quite helpful. For the mutual fund business as well, I mean, last few years, we have seen a fair amount of additions in the team as well as on the product side. How does the product pipeline look over the next 12 to 18 months in terms of new scheme launches? And also, are there any more additions to the team required? Or we are pretty much done with people hiring?

Okay. In terms of mutual fund side, you should expect to see on the passive side, we would continue to populate our offerings. On the active side, there would be fewer, but still over the next 12 months, should expect 4 to 5, a few of her from power side. We seem to focus on the AMC is that over the December to Jan quarter, we have 2 large funds, 2 large positions, the small and the large cap fund it's been complete 3 years. And as we know, it comes into the tracking of more distributors, more wealth platforms after 3 years, which we believe should help flows. And after that, in 3 months, a multicar category, which is again a mainline category, you've come into the focus. So lot to look forward to from existing plants only over the next period starting December, while we will continue to populate the active side also, but fewer. Like it was stored in the initial comments, the coverage that we have today is 87% of the active funds listing. So the positions left a few.

So Umang, just to summarize, NFF will be a far smaller contributor, but the vintage products, which are performing well will be we have a bigger hope of a large growth there. And in terms of team addition, yes, we keep adding -- as we are launching more funds, we will need more hands. And so there is no vacancy to fill, but opportunistically as well as from a longer-term perspective, we are looking to strengthen both the fund manager base as well as the research team on the active side as well as the passive side.

Understood. Understood. And my last question is on the SIP flows now. I do see that, I mean there has been a fair amount of improvement in the net sales numbers. However, for SIP market shares have remained range bound this quarter, in fact, not just for yourself, but for most of your peers as well, we have seen a little sort of a mixed performance on the SIP front. Just wanted to understand how has been your experience when it comes to investors? Is it some sort of a fatigue which is catching up? Or going forward, will it be more driven by returns? And specifically for Motilal Oswal, I mean is there a scope for market share improvement, especially on the SIP side?

Yes. So we saw very strong market share improvement in SIPs. I mean, we tracked over INR 1,450 crores at our peak. Today, we are INR 30, INR 60-plus crores a month. So our market share on SIPs is significantly higher than our AUM market share. And it has been led by primarily 1.5 when I keep saying this in a mid-cap part and, to some extent, the LMC. And of course, actives also -- now as our other categories, especially small cap, some less 3 years we should at least, we expect it flows to pick up in that category also taking up our overall market share.

Understood. Understood.

As far as fatigue in the industry is concerned, see, there are times when you see a spell of 6 to 12 months when there's strong growth, particularly when trailing 12-month returns look very exciting. But times like this, where the trailing 12-month return don't look that exciting, you do have stagnation. So I would say, is there a long-term fatigue in this. The answer is no. but there are sells when you have strong growth in sales when you have flattish numbers. Good news is that we're not seeing any meaningful contraction as an industry in this number.

Right, right. Perfect. I think this is helpful. Thank you so much and wish you all the best.

The next question comes from the line of [ Niraj Toshniwal ] with UBS.