Nippon Life India Asset Management Limited (NAMINDIA) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Nippon Life India Asset Management Limited Q1 FY '23 Earnings Conference Call hosted by InCred Equities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Jignesh Shial from InCred Equities. Thank you, and over to you, sir.

Yes. Thank you, Michelle, and good evening, everyone. On behalf of InCred Equities, I welcome you all for this earnings call of Nippon Life India Asset Management Limited. On behalf of the management, we have Sundeep Sikka and Mr. Prateek Jain, CFO; with the entire management team of Nippon Life Asset Management. I'll now hand it over to Mr. Sundeep Sikka, CEO of Nippon Life Asset Management. Sir, over to you, sir.

Thanks. Good evening, everyone, and welcome to our Q1 FY '23 earnings call. We have with us our Chief Financial Officer, Prateek Jain; Co-Business Head, Saugata Chatterjee and Aashwin Dugal; Chief Digital Officer, Arpan Saha; and Fujikake-san, Nominee of Nippon Life Insurance. Our detailed investor presentation and press release have been uploaded on the exchanges as well as on our website. Before we take our questions, let me share with you some comments on the recent industry trends and our Q1 performance. This quarter has seen significant market volatility, owing to the continued geopolitical uncertainties, high crude oil prices, increasing inflation and weakness in currency coupled with [ FII ] outflow. In the past too, we have witnessed global sentiment and local economic indicators had an impact on the Indian asset management industry. The industry assets declined marginally by 2% in this quarter after witnessing a positive momentum for 7 quarters. The decrease was mainly due to the fall in equity as well as fixed income assets while EPS rose. However, the secular trends in terms of investor additions continue to remain steady. The industry further expanded its base of unique investors, which grew by 1.6 million in this quarter, representing a 5% increase over March 2022. Growth in the investor base and consistently higher quarterly SIP flows indicate investor's preference for mutual fund as an evidence for long-term wealth creation. At Nippon India Mutual Fund, our priority is to be future-ready and capture the long-term opportunity. Our overall market share rose by 16 basis points to 7.40-odd percent. AUM increased by 16% to INR 2,794 billion. At Nippon India Mutual Fund, investor interest remains the only constant. We added 1.3 million investors in Q1 and continue to have largest investor base in the mutual fund industry. We increased our share of industry-leading investors to 37% with a base of over 13 million investors. In line with the investor first motto and the prudent governance philosophy, Nippon India Mutual Fund is committed towards institutionalizing approach towards fund management. As in June 2022, no category of equity has more than 16% of the total assets. Majority of the funds are jointly managed. And no individual fund manager manages more than 23% of equity sales. And that too is spread across funds, which has other co-fund managers. Systematic flows are stable and a key driver for industry long-term equity flow. Nippon India Mutual Fund annualized systematic transaction book is at INR 97 billion. Quarterly flows increased by 30% to INR 23 billion. On a gross basis, over 383,000 systematic folios were added in Q1. Our systematic AUM rose by 7% to INR 482 billion. 51% of [indiscernible] has continued for over 5% vis-à-vis 22% of the industry. Also in volatile markets, folios with lower ticket size have demonstrated longer vintage and better stickiness. 13% of SIP folios have continued for more than 5 years as [indiscernible]. Today, Nippon India Mutual Fund offers industry's best suite of products in passive category. With strong growth in the investor's passive assets, our ETF ecosystem is already in place and far ahead of its sales in terms of investor base and mindshare. In this segment, we managed an AUM of INR 601 billion and have a market share of 14.1%. Excluding ETF allocation, which goes to 2 specific mutual funds, we would be the largest ETF player in the country. Our gold ETF is the biggest fund in the category with assets of INR 68 billion. Nippon India Mutual Fund share in the industry ETF holders rose to 60%. In Q1, we added over 1 million investors and account for 83% of the total folio addition in the mutual fund industry during this quarter. Nippon India Mutual Fund has 74% share of ETF volumes on NSE and BSE. Our average -- our ETF average daily volumes across [indiscernible] far higher than the rest of the industry. Nippon India Mutual Fund always had an unwavering focus towards building a digital-centric business. With the futuristic vision and a clearly articulated strategy in place, digital has become one of the keystones of our long-term growth and sustainability. In Q1, digital platforms contributed up to 55% of our total new purchase transactions. Over 750,000 purchases were executed through digital assets, an increase of 25%. Nippon India Mutual Fund has a well-diversified and a nimble distribution base and a wide presence to 275 locations across the country. As of June 2022, we had over 85,500 distributors in parallel with us. The MFD base rose to 85,300 with an addition of 1,200 distributors. Now on our financial performance. For the quarter ended June 30, 2022, the profit after tax was INR 1.1 billion, a decrease of 37%. Operating income rose by 1% to INR 1.7 billion. Operating profit as a ratio of average assets under management was 25 basis points in Q1 FY '23 as compared to 28 basis points in Q1 '22. In the past, the company has followed a consistent dividend policy. In FY '22, NAM India declared and distributed the highest ever dividend with a payout ratio of 96%. For the last 8 financial years, NAM India has distributed a cumulative dividend of INR 34 billion. As we grow organically through our physical and online channels, we remain open to evaluate investment and strategic opportunities that add to profitability or complement our existing businesses and ultimately are in the interest of minority shareholders. As a signatory to UN-PRI, we have already begun to integrate ESG aspects to improve areas of strategy, business operations, investor management and governance. We have introduced the formal ESG framework in FY '22 and have disclosed our vision and objectives and the progress in the annual update. Through a combination of responsible investing approaches of screening, ESG integration and active ownership, we remain committed to build a resilient portfolio that will not only provide sustainable return for investors, but also have a positive environmental impact and social impact. To sum it up, I would like to reiterate that at NAM India, investor centricity remains the key theme. We strive to deliver a superior performance and sustainable return to our investors and [ in the process ] add value to all stakeholders. We are confident to continue our trend of profitable growth in coming quarters. With these comments, we are happy to take your questions. Thank you.

Shall we start with the Q&A -- question-and-answer session?

Yes.

[Operator Instructions] The first question is from the line of Sameer Dalal from Natverlal & Sons Stockbrokers.

I have a question regarding your other income loss. You showed a loss this time of about INR 17 crores. When I look at your breakup of your investments, only INR 240 crores is in equity, about INR 2,500 crores in debt in the mutual fund schemes. So have the debt side also underperformed that badly that the overall returns are showing a negative? I mean I just want to understand, I mean given most of it is in debt, how we reported a loss for this period and the other?

I'll request Prateek Jain to please proceed with this question, please?

Yes. So Sameer, actually, if you see what has happened is that, as we mentioned, there is INR 250 crores of equity exposure. And broadly, the market has fallen about 12% to 15%. And our schemes have been -- because of the mark-to-market impact has been about -- not in the same range of 10% to 12%. So broadly, the major MTM impact is coming from there. Also, the yields in the [indiscernible] also if you look at it, it has gone down by about 50 basis points in this 1 quarter itself. And also, that has had a rub-off affect on the shorter end of the curve as well. So on an overall basis, there has been some decline on the fixed income side also. And you have to understand that, look, our investment share, because of the -- requirement, we have to invest into all our debt schemes across the portfolio. And that may have also resulted in MTM impact on the fixed income side. And therefore, you see the overall impact, which is up about INR 7 crores on the standalone basis and about INR 17 crores on the consol basis.

Would it be possible to share how much of your portfolio is into long-term debt, short-term debt and give a breakup of that? Because if the short-term debt really, even if the interest rates move up, the impact is not much. It's basically the long term that have taken a hit, I'm guessing. So I just want to know in the future if...

So 70% of our debt is into the short term category.

Sorry, what percentage?

70%.

70% is in short term?

That's right.

Okay. So given 70% is in short term, I mean I'm just still again trying to extrapolate. I mean any debt-net is small amount. But net-net, that's affecting your profitability for the quarter, right, if you look at it? And second thing is your fee income has also gone down a bit as a percentage of total [indiscernible] so has there been any change in certain structures of brokerage given out or commission given out that have affected your earning income?

Sameer, I'll tell you. If you just go and see this the complete accounting impact. If you look at the markets were almost at its peak. 4th April or 31st March was the time where the market was at its peak. And if you see market has recovered significantly. But as of 30th June, when the accounts were drawn, the market was at it's tough, so what happens? This is a balance sheet event date. So you have to take the market impact. So when we were preparing our financials for the quarter of March, the valuation order the peak. And when we were making the valid balance sheet for the quarter, it was at the lower end. And therefore, those have to be accounted in our interim income.

Yes, but that still affects your yield on the [indiscernible]. I think your yield is down. So any particular reason why the yield is down?

On the yield side, again, because of the mark-to-market impact on our equity schemes, obviously, the realization in terms of equity yields were comparatively lower because the equity assets have declined to the extent of MTM impact. And also, whatever we have seen, the growth into our assets have come into the more low yielding assets, which is the liquid and the ETF. And that is the reason of the lower yield.

The next question is from the line of Lalit Deo from Equirus Securities.

Sir, just what I understand, sir, if you look at the increase in total folio, so majorly it has been driven by the ETF segment. So sir, I just wanted to understand the folio [indiscernible] -- on the equity side? And how has that trend been over the last 12 months?

I think from my perspective, yes, I think broadly, as we have mentioned on the total, I think they are very high percentages coming in ETF. We have also seen 375,000 new SIPs getting added within the quarter. Again, ETFs, what we are seeing, the new investors are coming. And in active, it's a mix of both new investors, whereas the existing investors are also going for top-ups. But I think what we'll do is try to give you the -- Abhishek will share the information post the call.

Sure, sir. And sir, with respect to the operating expenses, so there have been a sharp increase in the other operating expenses sequentially, so what are the reasons for the same? And sir, with respect to operating leverage. So apart from the increase in AUM, so what are the other levers for us to improve the operating -- to have better operating leverage?

So from the last quarter, if you look at it, Q4 of '22, we had other expenses of INR 138 crores, which is now at INR 145 crores. So I would not call it as a sharp increase. There is a INR 7 crore increase on an overall basis. And predominantly because if you look at last 2 years, we have not given much increment to our employees this year. The last year was, from a profit perspective, one of the best years for us. And therefore, we have given inflation-linked increments to our employees. So that is one reason. Secondly, after the -- if you are comparing with -- compared to the sequential quarter, what has happened is that our corresponding quarter, I think the economy has completely opened up now and business is as usual and normal. So there are certain expenses which is related to that, which has gone up. And also, the fact that we have carried out certain marketing initiatives, which you would have witnessed both in terms of our television campaign as well as the newspaper campaign, which is again, as part of our future readiness and future investments for the future. So those expenses have resulted in this increase. However, we remain committed to continue to work and operate with -- and utmost frugality. And that has been our approach for the last 3 to 4 years, and we'll continue to operate in that fashion. Also, one has to -- importantly, as Sundeep mentioned in the call, that look the way we have diversified in terms of our fund management, et cetera. We are geared up but the assets have to grow from here even it has to grow to 1.5 to 2x. Then there are no significant investments or expenses will be required. And then that's where the operating leverage will come into play.

The next question is from the line of Sahej Mittal from HDFC Securities.

First question is around equity. So there is a sharp drop in equity yield in this quarter, whereas for the other peers in the yield -- equity yield other players, you are seeing that you know for them, they yield has sort of improved in Q1 after the normalization in [indiscernible] environment. But for us, even in Q1, there has been a sharp drop -- so if you can explain, what is been the reason?

So there has not been a sharp decline. I would say that what has happened in terms of our overall yield. One, we have to see that some of our fixed income or the debt assets, now we've seen shrinkage in our fixed income. And those money has come in terms of ETF as well as other liquids. So our market share as well as our overall composition is skewed towards -- so while we have maintained our equity composition of 42% but the debt, which has declined, has gone into ETF and liquid. And therefore, there has been some change because of the impact of this composition. Also because of the mark-to-market impact, there has been an impact on the overall yield. As regards...

Because of mark-to-market, your asset go down. But ideally your yields should be going down, right? Ideally the yields should improve risk-assets if absolute assets go down in that year. And I'm -- my question is around yields actually because even if I [indiscernible] on the churn backing on the share of debt has gone down. But even then the drop in the yield seems quite high, on a sequential basis, actually.

So you see, from our perspective, what we have been maintaining is that, look, we start the year anticipating what could be the cost likely to come in. So we preempt that expense now only. So what we have done is we've anticipated what is the likely yield, which will be going to be the end of the year. And we start building up on that basis. So that in compliance with a SEBI circular, the brokerage remains within. So what has happened in the last few years, there has been an higher intensity of competition and a lot of new money has come through [indiscernible] et cetera and which has been at a significantly higher cost. Basis that what we have done is we have -- in fact, our realization basis the expected new inflows and the expected new costs. And basis that we -- you will see some decline in our yield on our equity assets.

Sir, you are trying to say that our yields are actually charged -- from what I understand is that the yields are charged on a daily basis. So is this something that we are charging on estimates -- some estimated yield on our P&L?

See, because what we have to do is, as per the SEBI requirement, you have to charge equity expenses -- expense on equities, keeping the average brokerage as expected. So what we do is we always try to estimate that would be the yield, what would be the average brokerage cost and what would be the average margin which will be realized. And based on that, we bank our fees.

Sir, some outlook on the yield front because if we continue to dip at such a rate, then I mean any operating leverage payout seems quite unlikely in our business because the yields have been falling at such a fast pace, whereas the growth in assets hasn't been -- whereas inflow has been coming to the passes. So if you're going to share -- give us some color around outlook on equity yields.

So I would say that, look, there's downward pressure on yields to continue for some more time because there has been a sea of new players who have come in. And also, while last 2 quarters, we did not see much of NFO but we have seen NFOs coming in. And therefore, there has been a tendency that -- look, from a distribution opportunity, the money will get -- or other -- this pressure would be there -- will be felt on the yield. So that is one reason. Secondly, as you mentioned that look when the asset grows up from here, obviously, there would be a decline in the realization. The third bit is that from the overall yield perspective, the composition has been changing. And the composition is changing and there has been both on the debt and the equity side, what we have seen is a lot of the new money has started coming on the passive side. So we have seen a good amount of inflows on the passive side, both on the equity as well as fixed income side. So all of these are putting some pressure on the yield and which we see that it is likely to continue for some more quarters before it becomes -- or because of the base effect, it comes down. But more importantly, there are various, what we also expect that from here on -- the yield curve moves to the -- or reaches the peak. From there on, when the yield curve changes or when the interest rate cycle changes, a lot of money will come into the long-tenor and the credit side of fund. And that's where once that will lead to the change in the asset mix again, so what has happened there is a flight to safety at this point of time. And then again, we have seen that when the money will flow into those asset class and those categories, where we have a propensity to [indiscernible] money, I think you will see there has been an overall increase in the yield. So I think this is a cyclical nature and the...

Sir, I agree that with the change in interest rates flows into debt based returns. But my point is that on the equity side, I mean for how long this pressure? Because when yield affects yield on a quarter-on-quarter basis, it is very difficult to -- until when will this pressure continue to remain, I mean for 1 year, 2 years, 5 years, taking...

So I'll tell you that, look, this -- from our perspective, since we do not completely participate in the way the competition goes about and share their fee income with the distributors. We have our own benchmark, and we'll continue to maintain our profitability, which we'll continue to do so. However, we could not control the outflows and the churn from the old asset to new assets. But what we have seen is the base of that has significantly come off. So what we lost from December '18 till about December '21, we've seen significant outflows from our schemes. And so there was a gross outflow which was happening. Despite getting a lot of AUM, there was net outflows. That has been now arrested and we are seeing net positive. Again, also the redemptions, the overall redemptions have gone down. So this means the vulnerability to those old assets getting churned has now come down significantly. And hence, the impact going forward, it will not be significant unless we also start sharing a significant portion of our fees with the distributor. So there is one which was -- and what we could do proactively to stop it is that not to share a significant amount of our fee assets. And the second was the redemption, which was beyond our control.

Got it. And sir, just one on the passive side. Given that most of these new fintech companies are coming up with a plan to launch schemes on the asset side, what do you think [indiscernible] given that these schemes are sort of quite easily receivable by the other agencies, what sort of innovation do you see on the package side going ahead in the segment?

From our perspective, we clearly see -- I think you mentioned the fintech. I think it's not only fintech. Clearly, I think India still remains highly underpenetrated. And I think more players is going to be more competition is really good. I think from our perspective, I think more than innovation, I think what we value, on one side, we continue launching new products, especially on the passive side and on the active we have already articulated in the past that we will not be launching new schemes for the sake of launching until the time we see they can be scaled up. On the passive side, we will have the launch of a few schemes. Ultimately like anything else, the key focus is going to be on execution. It's not just going to be launching a scheme. So I think we believe on the passive and the ETF side, we have the ecosystem in place. And I think we'll continue the strategy of executing. So -- new players coming, not coming, what competition is doing. I think we keep an eye on that. But I think our core focus remains I think what is there suited for the investors' interest, what is there suited for the portfolio. And we'll continue launching schemes based on that.

And could you help us with the schemes already going in the pipeline for the next 6 to 12 months?

Slide #27 of our presentation -- sorry -- 17 of our presentation. I think all the entire details is there.

The next question is from the line of Kunal Thanvi from Banyan Tree Advisors Private Limited.

Yes. So my question is again on trying to understand where Nippon India stands in terms of profitability, market share juncture? Because if you look at equity and [indiscernible] categories we have been not able to gain back the lost market share. The market share is either stable or we continue to lose it. But at the same time, if you look at our yields, we are seeing a fastest compression in the revenue yields compared to [ 3 ] years, both listed and unlisted. So what's happening out there like -- we are not -- as we said, we are not participating in giving high commission. Then also our realizations are coming down. And at the same time, we are not gaining market share as well. Can you help us understand the sharp fall in the yield, which from, say, 4Q FY '22, our revenue yield was at 48 bps. It is at 45 bps. The change in asset mix won't explain this kind of fall, right? We have seen this kind of change in asset mix in previous cycles as well. And if it is like -- what are the -- what's happening out there? Because at one end, you're saying you're losing fees. At the same time, you're not seeing increase in market share. So if you can explain us how one looks at market share versus yield phenomena. Because when you look at other AMCs, it is clear inverse relationship. We give more submissions and get a higher market share. But in our case, on both ends, we are on the -- we are seeing pressure on the both sides.

Look, Kunal, I think I'll give some initial comments and hand you over to Prateek. I think firstly, just from our perspective, I think you talked about market share. I think we have seen our market share lower. For 5 quarters, it has been going up. Now for which asset class, I think again, I'll stay out of that right now because it's already in the presentation, we don't want to repeat it. But I think the first comment that for 5 quarters back to back, the market share has been increasing. #2, I think that from our perspective, we clearly believe, I think, we remain top of market share given that one of the most difficult things to execute in this industry has been retail. I think in the retail market share, our retail portfolio's market share, everything has been increasing. Having said that, I think I will go to the large part of the listing and different AMCs will have different strategies. One strategy, we're really clear, we are not going to be doing any business, which is going to get us a loss. The change that you're seeing is due to product mix, #1. I think in equities over the last 5 quarters, I think we have started seeing better inflows. I think with the improvement in performance, I think we are seeing the gross flows are getting better. The redemption has totally stopped. Clearly, we believe there is going to be a lag effect. And I think the composition of equities will actually increase further in the next few quarters. As for the realization, I think Prateek, you want to take that?

Yes. So I think Kunal, I think I have already spoken about the yeild part. But you are right that what has happened is the recent increase in the market share has come through the low-yielding asset, which is passive and liquid. What you can see is the pace of decline of our equity assets. The net outflows which you were witnessing have been arrested. The kind of depletion in our equity market share we've all been witnessing has gone a bit. Obviously, from -- since that time, we've actually started exiting our past group from thereon till about last December 21. If you see, we were seeing continuously outflows coupled with some not-so-great performance. But if you now see that our 1-year and 3-year performance has come up. And in the last 6-odd months, if you see, we have been able to arrest that decline. Also, if you see on the credit income side, large part of the money which has gone out, you know the FMPs which we had. Obviously, these are time bond. And we could -- so while we have got them back, much part of it, but that has come into the low-yielding assets. So those assets have matured and they've come in to us. And I think at the appropriate time we will be able to migrate them to the higher yielding assets. Again, as Sundeep mentioned, for us, the philosophy has always been the investor first. And importantly, during these times, I think the best strategy from the fixed income side has been to have on the shorter end of the call. So large part of our assets, even in the fixed income category has come in the shorter end of the curve. And therefore -- so growth has come on liquid, ETF and shorter end of the curve, the debt. And that has had an impact on the realization. And importantly, we have been witnessing decline in the equity assets, which has now got arrested and we -- in the last 6 months, we have seen a decent amount of positive inflows. We would like to build on that momentum. And going forward, we're likely to see that a higher share of -- our higher market share in the equity asset as well.

Sure. Just a follow-up on that. One, if I get it right, large part of the yield, we are gaining market share in lower-yielding assets. Second question was if you can help me with equity, average equity yield that we had in Q4 FY '22 versus this quarter.

So we do not give individual breakup of the yields. So -- but largely, if you ask me the decline, we're in line with the industry. So if you see the schemes, various schemes, which is from our perspective, whatever distribution commission, what we've been paying, it is lower than most of our peers also because of the mix of the -- in the last part coming through IFAs. Our average brokerage is lower. And that is where we'll continue to do so. But what has happened is that, look, what I'm saying -- and we are admitting that we saw a lot of outflows. So a lot of the old assets which were higher-yielding as well as low trade has been replaced by the new trade.

The next question is from the line of Dipanjan Ghosh from Citigroup.

Am I audible?

Yes. Please go ahead.

Sir, so just one question from my side. If you can give some color on your wallet share across top distributors in the banking category or MHPs or national distributors, more from the equity flows perspective as we see, let's say, in the last 1 or 2 quarters.

Yes. Over to this side, I'll just share data from the last 2 quarters. Broadly, the equity market share flow from a growth perspective, when it comes to MFDs, we are roughly around 7%, 8% of the industry. From a banking and the larger wealth counters, we will be slightly lesser, maybe around 5%, 6%. The IFAs are, of course, highly -- higher market share, closer to 8% to 10%. And from a blended perspective, it will be around 6%, 6.5% as a company. So that's where we stand today. We have a very high SIP concentration. We -- SIP flows will be close to double digits. That has incrementally gone up over the last 8 quarters. And hence our net sales have started becoming positive in the last 3 quarters. So that will be broad numbers, what I can share.

Just to confirm, 7% to 8% -- 5% to 6% was on the banking channel, 8% to 10% was on the MFS channel, 7% to 8% was on the national distributor or the large distributor channel and on a blended basis, around 6%, 6.5%. Is that correct?

Yes. Our larger share of wallet comes from the IFAs even in [indiscernible] terms.

Sir, just maybe a follow-up on this 8% to 10% wallet share that you gave across the IFAs. If you can segregate your overall flows through the IFA and MFD channels between, let's say, the top 500 IFAs versus the rest. And not maybe from last 2 quarters but maybe whatever trends you have seen, let's say, for the past 1, 2, 3 years out there?

So see, we do not give -- we do not comment on these granular data in terms of our engagement with the distributors -- individual distributors or group of distributors. But I think whatever disclosures are required and which is available on the industry or the peers, that data is made available either to MLP and also our presentations.

The next question is from the line of Akshay Jain from JM Financial.

Sir, I have 2 questions. #1, can you please share some broad range of yields across segments specifically on the equity side? Maybe if you can give some color on what you are making on the old stock versus what you're making on new flows.

Regards of -- see, it's in the same range. It's about -- close to about 80-odd basis points on the overall basis. What we earn, 75 to 80 basis points on the overall basis, I would say, on the equity assets. And in terms of the old one, again, it all depends in which asset class, which category, at what time the investor has come in. But the good news is that look, we have almost 30% of our assets which are more than 4 years old now, which is actually that all the money which could have churned would have been churned by now. You see the pace of churn has come down dramatically. So I think this is the assets which is there, which has continued to yield a good yield for us. However, as we continue to grow from hereon, this asset will keep reducing. And hence, there will be a pressure on the overall yield. But from a competition perspective, this will insulate us from the perspective that our yields are not going to drop as much as compared to -- because now that the outflows have been arrested, the yield drop will not be as significant compared to some of the players who will continue to have this churn happening. And the other good news is that because our fund performance has also come up significantly up the curve, that will also arrest the churn. And also we'll see some decent amount of inflows back into our equity groups.

Understood. Understood. And about the range in debt and liquid and others?

So I can -- even in the last 2 years, so the shift of the debt assets from credit to more safe has started 2018 September from the[indiscernible] issue. From that period, if you look at it, the average blended deal on the debt would have come off for the industry as well as for us, close to about 10 to 12 basis points.

Understood, sir. And on the -- second question is on the tax rate. Your listed peers have benefited from 2 things: one, on the deferred tax which has been reversed on [ NTN's office ], and #2, the benefit of indexation on the investments that they received. But in [indiscernible] case, we are not seeing any benefit of the tax rate. So any comment on this?

No. So see, what we do is -- and we have commented in the past as well that look, we created ETR, so what will be the effective tax rate which will be there. Not considering just this quarter because the accounting standard require us to anticipate, so we have not taken the impact. We assume the market is going to be flat for the year. And based on that, we have accounted for the profit and that's how we have calculated the ETFs. I'm able to make you see -- what we are seeing is that whatever income we are earning, we'll continue to earn irrespective of this onetime mark-to-market impact on the equity yield because we assume the market will become flat by the -- so neither the appreciation nor the decline, we are considering in the ETF for the full year. And based on that, we are calculating. And therefore, if you see the effective tax rate is about 25-odd percent, 24%.

Understood. And what about the indexation benefit?

See, what we do is that from our perspective, till the time we do not sell or we do not trade into that, we do not calculate any kind of long-term or short-term capital gain on our equity investments.

[Operator Instructions] The next question is from the line of Krunal Shah from ENAM Investments.

Most of my questions have been answered. Just one question, what are the yields in EPS for us [ when we are losing ] EPS?

EPS would be in the range of -- we have said in the past, 11 to 12 basis points and which has remained that way.

The next question is from the line of Mohit Surana from CLSA.

Sir, just on one of the previous answers that you gave on your share in gross inflows of various distribution channels. If you could also -- if you have the data handy, you could also tell us your share on gross credit inflows, which is like nondistributed and also your share on redemptions?

Mohit, apologies. But what we've been disclosing in our investor presentation, that is what we comment on at this point of time because some of this is -- like the data we have not been sharing. However, as and when we believe that such data need to be disclosed then we will definitely take up the lead and start disclosing it. But at this point of time, we do not disclose the individual shares from particular segment, gross flows from particular segments in terms of distribution. However, total distributed assets as well as our share of assets from IFAs, bank distributors and national distributors has already been provided in our presentation.

Understood, sir. And the second question is with regards to the operating expense now. You've mentioned in one of your previous responses that there is some increase on account of higher activity, et cetera. So do we assume this is kind of a new normal and new steady state and if there is any outlook that you want to share for the full year growth in operating expenses? That's all from me.

No. So see, if you look at it from an employee expenses or what was supposed to be get accounted in the first quarter itself because the increments and the provisioning, et cetera, as you have seen, we have been consistent and will continue to be consistent. So that has been there. So this will be the steady run rate unless there is a significant change in our profitability. Based on that, if it is a good year, we may decide to share some more variable. Or if it is not a good year, we may -- which you have seen in the past that we may work on our available payout. So that is the one case. And so that [ evil ] has always remained with us, and that is completely contingent on what kind of profit we make. But at this point of time, our anticipated profit business, we have already provided adequately. And we do not see a significant change in the numbers going forward. And in terms of the other expenses, if you see, there has been a marginal increase in terms of rather 2 broad reasons. One is the marketing spend, what we did. I think we'll continue to invest into marketing because we are seeing good traction and our performance has been good. And I think these are the right time for investors to invest. So obviously, we'll reach out. We are seeing good traction of new investors coming in. And therefore, we'll continue to invest into the marketing spend. And in all the other nondiscretionary spend, we'll continue to keep tighter controls. And we'll try to see that how much we can squeeze out of it or at least not let them below from here.

Okay. Understood. And just a follow-up, is there -- do you foresee any seasonality in terms of spends across the quarter?

As I told you, there are only a few things which we have said in the past that we will continue to invest in the future. So one is the marketing given the traction and given how our scheme continues to do and how we want to spend. So that is one area. The second area is that digital. We have seen a significant increase in the activity on digital. And that is one area we believe that we will keep investing. But all these investments, while as a part of conservative accounting, we accounted in the same quarter where we spent. But the benefit of these is likely to approve in future as well. So this is how you have to see. And the details of these expenses are also available in our annual reports. So you can see that how we have been spending. And going forward also, these are the 2 areas, marketing and digital, that is where we believe some higher allocations which may happen.

The next question is from the line of Abhijit from Kotak Mahindra Bank.

I have one question. Of the new retail ETF customers that you have seen over the last 1 year, would you have a sense of how many of these are starting that mutual fund investments through ETF group? Or these are largely sort of already existing investors and sort of now experimenting with an ETF product as well?

I think at this point in time, we may not have that kind of a color. But I think we clearly see an opportunity going forward where that -- how to cross-sell, upsell our various products. So I think very, very difficult at this point of time to give this answer that I think whether they are existing or new. But our strategy will be to cross-sell various other products.

That was the last question for today. On behalf of InCred Equities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.