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 Q3 FY '24 Earnings Conference Call hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Ansuman Deb from ICICI Securities. Thank you, and over to you, sir.

Good morning, ladies and gentlemen. On behalf of ICICI Securities, we welcome you all to the Q3 FY '24 Results Conference Call of Nippon Life India Asset Management Limited. I now hand over the call to Mr. Sundeep Sikka, Executive Director and CEO, for his initial remarks. Post which, we will open the floor for Q&A. Over to you.

Good morning, and welcome to our Q3 FY '24 Earnings Conference Call. We have with us our Chief Business Officer, Saugata Chatterjee; Interim CFO, Amol Bilagi; Chief Distribution Officer, Arpan Saha; Head of ETF, Arun Sundaresan; Head of AIF, Ashish Chugani; Deputy Head of AIF, Aashwin Dugal; and Mitsui-san, Nominee of Nippon Life Japan. Our detailed Investor Presentation and press release has been uploaded on the exchanges as well as on our website. I would like to share some comments on the recent industry trends and our performance prior to addressing your questions. I would like to start by mentioning that Q3 FY '24, NAM India had its highest ever quarterly operating profit of INR 2.51 billion as well as profit after tax at INR 2.84 billion. Importantly, our equity net sales market share and SIP market share well above our equity area market share. This is the result of consistent efforts on part of the business teams. At the same time, we continue to focus on diversification with specific focus on fixed income, alternate and offshore businesses. Beginning with the markets. Equity markets in Q3 FY '24 showed a robust performance. The Nifty moved up by 11% quarter-on-quarter while Nifty midcap and small cap rose 13% and 15%, respectively. RBI held the repo rate steady at 6.5% while the 10-year G-sec yields moderated by 5 basis points quarter-on-quarter to 7.17%. Coming to the data of mutual fund industry. Industry's quarterly average AUM grew by 5% quarter-on-quarter in Q3 FY '24 to INR 49.2 trillion. This reflects year-on-year growth of 22%. Strong momentum in equity segment sustained as the share of equity in the over AUM continued to increase, ending at 56% for Q3 FY '24. Now moving to flows. The equity category, excluding index and arbitrage witnessed a gross inflow of INR 1.61 trillion and a net inflow of INR [ 578 ] billion, both gross and net were higher on a quarter-on-quarter basis. Strong inflows were witnessed across all major categories led by small cap, sector and thematic categories. Investments via SIPs further increased with SIP contribution for the quarter being INR 516 billion, up 29% year-on-year and 10% quarter-on-quarter. Monthly SIP flows in December 2023 stood at INR 176 billion, which was an all-time high. SIP folios increased 7% quarter-on-quarter to INR 76.4 million. The fixed income category that is both debt and liquid witnessed net outflow of INR 291 billion, majority of the outflow was in shorter duration fund. The ETF category has a net inflow of INR 71 [ billion ]. At the end of the quarter, unique investors in mutual fund industry increased to INR 42 million while industry folio increased to INR 164 million. Now moving to our business performance. We closed the quarter with total assets under management of INR 4.81 trillion. This includes mutual funds, managed accounts and offshore funds. Our mutual fund quarterly average AUM grew 8% quarter-on-quarter and 29% year-on-year to reach INR 3.78 trillion. On a YTD basis, we have been the fastest-growing AMC amongst the top 10 players with 29% growth over March '23. Now I would like to share a few highlights for the quarter. Starting with the market share. Our market share increased by 21 basis points quarter-on-quarter to 7.67%, with market share increase across asset category. This is the third successive quarter for market share increase that we have witnessed. Our equity market share also continues to improve. It increased from a low of 6.18% to 6.67%, of which there was a 15 basis point improvement in Q3 FY '24. The share of equity AUM in our overall AUM continued to increase and stood at 48.6% for Q3 FY '24, up from 46.8% in Q2 FY '24. Performance of most of our equity schemes remained strong. And this, along with small with -- along with our distribution network, digital capabilities and strong risk management helped us gain -- helped us again deliver double-digit market share in net sales in equity plus hybrid segment in Q3 FY '24. On the segmental front, our individual AUM, which consists of retail and HNI AUM saw further market share improvement. Individual AUM grew 12% quarter-on-quarter to INR 2,352 billion. Market share increased to 21 basis points quarter-on-quarter to 7.66%. Our B-30 AUM grew 10% quarter-on-quarter to INR 791 billion, which keeps us among the fastest-growing large AMCs in B-30 locations. Our market share improved 13 basis points quarter-on-quarter to 8.71%. This segment forms 20% of our AUM versus 18% for the industry. We continue to have the largest base of -- the largest base in the mutual fund industry with 15.5 million unique investors. We are humbled to have 1 in 3 mutual fund investors in India. I would like to touch upon some important aspects on our systematic book. I'm happy to share there has been a continued uptick in our systemic flows over the last 10 quarters, which has led to an increase in our market share. Of the incremental SIP flow in the quarter, we had a market share of almost 18%. SIP market share increased by roughly 260 basis points over March 2023 to December 2023, ending at 8.7%. Our monthly systematic book rose by 21% to INR 21 billion for the December 2023 over September 2023. This resulted in an annualized systematic book of INR 252 billion. On a YTD basis, monthly systematic book grew by 88% over March 2023 as against 23% growth for the industry. Number of systematic transactions for the quarter increased 18% quarter-on-quarter to roughly [ 15.2 billion]. 63% of our SIP AUM continued for over 5 years versus 27% of the industry. Moving on to -- briefly moving on to the ETF segment. We continue to be one of the largest ETF players with AUM of INR 929 billion and a market share of 15.4%, which increased 134 basis points quarter-on-quarter. The gold and silver ETF remain the biggest funds in the category. Overall, passive AUM, which includes ETF and index funds crossed INR 1 trillion in the quarter. Our share in the industry, ETF folios is 61%. We have 64% share of ETF volumes on NSE and BSE. Our ETF's average daily volumes across key funds remain far higher than the rest of the industry. Moving to our distribution franchise. Our digital strategy is continuing to deliver better results with a clear emphasis on increasing reach and taking advantage of technological innovations to deliver a smooth user experience. The perpetual beta approach has enabled us to continuously strengthen our digital ecosystem and provide an easy and straightforward investment experience to our investors and partners. Digital purchase transactions rose to INR 4.25 million in 9 months, up 76% year-on-year. We have witnessed close to 14% increase in Q3 FY '24 compared to Q2 FY '24. The digital channel also contributed to 58% of the total new purchase transaction for FY -- for 9 months FY '24. Our physical distribution base is well diversified with presence in 260 locations across the country. We have over 98,000 distributors in total and added 2,400 distributors during the quarter. Now I would like to briefly update on our subsidiaries, namely AIF and Singapore subsidiary. Starting with AIF, as mentioned in the past, AIF continues to be an important focus area for NAM India. Under Nippon India AIF, we offer Category II and Category III alternate investment funds and our total commitments of INR 60.3 billion across various schemes. The company has started broadening its focus across asset classes. Towards this end, we recently launched our credit AIF and a long-only equity AIF. Fund raising is currently underway, and both funds have undertaken their initial closing. During the quarter, we successfully achieved the final closing of 8 Category III, long-only equity AIF, Nippon India Equity Opportunity AIF scheme 8. We had launched a debt fund of fund in 2020, which was anchored by large institutional -- a Japanese distribution investor and corporate investors. This fund is in advanced stage of deployment with nearly 80% of the commitment raised and have been deployed across 12 tech VCs and funds. On the offshore front, we have witnessed decent inflows in the quarter from various geographies, and we are positive that this trend will continue in the future. We will remain focused on fundraising from international markets and looking at business opportunities with subsidiaries, associates and larger network of Nippon Life Group. Nippon Life Japan also remains committed in supporting NAM India's offshore operations. We continue to see interest for India from conventional markets like Europe, Middle East, Japan and from unconventional markets like LatAm, Thailand and Korea. Now, moving to our financial performance, for Q3 FY '24, revenue stood at INR 4.23 billion, up 20% year-on-year and 7% quarter-on-quarter. Other income stood at INR 1.07 billion, up 73% year-on-year and 37% quarter-on-quarter. Operating profit stood at INR 2.51 billion, up 23% year-on-year and 8% quarter-on-quarter. Profit after tax stood at INR 2.84 billion, an increase of 39% year-on-year and 16% quarter-on-quarter. As I end my speech, I would like to also highlight in line with the philosophy of the company in promoting internal talent, Arun Sundaresan who has been with the company for 20 years, has been promoted and to take charge Head of ETF and Amol Bilagi, who has been with the company for 10 years takes charge as interim CFO. With this, I would like to conclude my remarks and open the floor for questions. Thank you.

[Operator Instructions] The first question is from the line of Swarnabha Mukherjee from B&K Securities.

Congrats on a good set of numbers. So my first question was on the yield side. So the yield dilution that we are seeing this quarter. First, on the stand-alone business, if you could highlight what resulted in that? Because it looks slightly more sharper considering the fact that I understand maybe there has been some fund size increases, which could have resulted in lower utilization in those schemes, but the equity mix have also moved significantly. So if you could maybe break down the impacts granularly across these heads, which have been the major factors for dilution. So that is the first one. And on that also at the consolidated level, the dilution looks slightly more. So I just wanted to understand that in our other subsidiaries apart from the mutual fund business, has there been any kind of impact on the yields or some capital we have received or which we are not earning. If you can throw some light on these 2 factors. I have a couple of more questions, and will ask them after this.

I'll request Amol to take this question, please.

Yes. Yes. Thanks, Sundeep. So on a blended basis, I think there has been a decline in mutual fund yield to around 0.4 basis points quarter-on-quarter. Again, this is in line with our stated and we could see a 2-to-3-point basis yield compression on a yearly basis, okay? And this is mainly due to the increase in the size of the equity AUM. Again, this is because of telescopic pricing formula of the SEBI defined slabs. And again, this is also due to the increase in the sale of new assets, which comes at a higher cost of acquisition compared to the older assets. So if you look at it, our net sales in equity, excluding index arbitrage for 9 months is almost 2.2x the net sales for the entire last year. And if you do analyze it, so basically it is 4x of the last financial year. So that is the main reason whereby there has been an increase in yield. Apart from that, I think on the other asset classes, I think there has not been any sync -- consolidation of yields. Only in equity, we have seen a marginal decline in yields. And so the yield would be -- the equity is in the range of mid-60s as of now. And on the debt, continue to have around 10, 25 to 28 basis point of yields. On liquid, we continue to have 10 to 12 basis points yield. And on ETFs, we continue to earn 15 to 20 basis points of yield.

So you are say on a stock basis? So would it be fair to assume that the flow yields would be even lower than this on the equity side?

It could be little, not major.

So just to add, I think if you exclude the ETF segment, actually, the blended is actually increased quarter-on-quarter.

Okay. Okay. Understood. I also wanted to, on the ETF side, I just wanted to understand, you have given that December quarterly average AUM of ETF is around INR 93,000 crores. So out of that, how much is the ETF for assets, if you could highlight?

I think the [ ETF ] assets have started recently in July. So there will not be a very big number.

Understood. So would it be somewhere, sir, in the range of maybe around, say, close to INR 4,000 crores or something. Would that be a fair estimate?

Again, I think we'll not be able to predict that number because of confidentiality. I think as we have mentioned in the past, roughly indicatively the ETF will be resting around INR 1,500 crores per annum. But giving exact numbers and all very difficult for us to share.

Okay. Okay. Understood, sir. Also, if you could give some color on how to read the employee expense increase that we have seen in this quarter.

For the employee expense, our overall cost remains the same. Whatever increase is the increase in provision because of the provision that has been created for PLI and because the alignment of interest as the company profits go up. I think the PLIs will also go up. So it's just in line with that. So there is no incremental additional cost or additional hike. This is a provision for the PLI, which has been stated.

Okay, sir, understood. So assuming that how the markets have done, et cetera, everything? So should we see a similar run rate in the fourth quarter also?

Really difficult to predict. I think none of us are in a position to say that. But I think overall -- the good thing is I think the granular business set we have built up I think we are very seeing very strong momentum. And I think the new investors coming from smart cities and towns, especially our digital ecosystem that they built up, we believe I think we'll be in a better position compared to the industry to see the flows going forward.

The next question is from the line of Prayesh Jain from Motilal Oswal.

Sir, firstly, on the yield bit again, so you have been maintaining this 2, 3 basis points all which is likely to continue. How long should we expect this? At what level do we see this kind of coming down to something like 1 basis point kind of a fall? Because the transition from old assets to new assets, I would have assumed that it would have very less impact now given that it has been there for some time. So we are still above -- what level we would be with respect to old assets versus new assets if some directional number you can share out here?

I think in line with our approach of being conservative, I think we will say I think this can continue for 3 to 4 years more. Can this come to one, let it [indiscernible] positive surprise for everybody. I think we have to be conservative and give a guidance that this can continue for 2 to 3 years -- 3 to 4 years more.

Any thoughts on the share of old assets versus new assets?

Around 30% old assets are there.

Okay. Okay. Okay. Got that. Sir, secondly, with regards to the net inflows that you would have seen in this quarter or for the 9 months, could you give some understanding as to how much of it was in the small cap fund and how much is the rest? Or is it quite distributed or it's driven largely by small cap fund or the midcap funds?

From our perspective, we continue to maintain a very, very diversified portfolio. As you are aware. few months back we have stopped inflows into our small cap fund. So technically speaking, no new incremental [ flows can come there]. I think we are continuously seeing funds coming across our categories, the large cap, midcap, growth funds, focused funds. So we see clear flow across all categories. So it will not be skewed towards one. I think the major thing I think I'd like to be what we have been working on is to build up a very granular distribution system and which has come to a point where we are happy to share with you at this point of time majority of the SIPs, 76% of our SIPs are below INR 5,000 and they are spread across various categories. And in amount terms, a number of investor terms, it goes in excess of 90%. So, the idea is to have a granular approach, I think well diversified, well derisked portfolio.

Okay. Sir, the customer base, how many of your customers would have more than 1 scheme of Nippon? And how do you plan to increase that?

Again, a very difficult [indiscernible] or I think it's -- we are having like at this point of time in advanced stage of deployment of AI, and I think trying to work on multiple things to increase the penetration. As we talk today, I think it is something between 1.5 to 1.8.

Okay. Sir, my last question is on the distribution side. We do have tie-ups with many, many banks, national distributors, but still, the -- what would you attribute -- the way we have seen the improved performance, somehow the market share increase seems to be lesser. We could have possibly more market share given the fund performance has been consistently improving. What would you attribute that to? And how can you change that to see further market share gains?

I mean very difficult to -- it depends how you see it. I think from our perspective, one thing is very clear, we want to have more sustainable growth rather than having a quick growth. So I think we are building a strong foundation across -- I think our approach will remain -- I think definitely market share can increase by getting higher AUM or higher ticket size of SIPs, but I think our focus continues in smaller ticket size at which ticket size of SIP is [ INR 2,803 ]. And I think like I mentioned it earlier, 90% -- about 90% of our SIPs are below INR 5,000. That's correction, I said INR 10,000 earlier, it's below INR 5,000. And we continue that our focus into a smaller business, which means business will grow slowly but will be more stable and predictable.

Any particular measures that you are taking on the distribution side that you can highlight?

I think we're on a continuous journey. It is very difficult to say that one particular thing. I think the idea is to continue to increase productivity, increase efficiency. And I think we will see quality of engagement and [indiscernible].

The next question is from the line of Abhijeet Sakhare from Kotak Securities.

The first question is if you can share the net flow of market share for the quarter gone by. I think 2Q was about 11%.

I request Chatterjee to take this question.

So the net sales market share is in excess of 10%. We continue to be in double digits month-on-month and for the quarter as an average.

Got it. And sir, within the SIP pool of money, what would be the share of the largest category or the top 3 categories there?

I think while we individually do not give the category. I think that the number -- the top 5 funds are about 80% for us.

Got it. And again, some similar color on the SIP flows in terms of the improvement that has happened if you can qualitatively or with some numbers give us a sense of where it is coming from, whether it's banks, national distributors, NFTs and fintechs.

Yes, I'll cover revenue side. So I think the most important part and which -- what Sundeep also did allude earlier, that we believe in a fragmented business approach. And if you see the number of locations where we operate out of close to 280 locations. We have a majority of our business coming from mutual fund distributors, MFDs. The digital tech platforms also have a very strong inflow of retail applications which come to us. And also the other categories, which we cater to are the CSU banks, the national distributors. So we have a very large franchise of distribution network. Hence, it is not focused on a particular category, which gives us business. Also, it's very important for us to note that we don't do NFOs. And hence, it is a natural flow of business which is coming into all our products, which is a very important thing one should keep in mind when we assess the monthly flows. The other side is the SIP. If we are incrementally increasing the SIP book, that itself shows that very strong flow is coming from B-30 market. We have a very strong market share in the B-30 space and that too is adding to the granularity of the incremental flows which are coming in.

Sir, one follow-up there. Can you give us some sense on what's been the trend -- recent trends on SIP closures as well, if you've seen people also booking profits or closing their SIPs given the market levels?

Yes. So industry data, of course AMFI does publish that data, which one can refer to. But in our case, the net accretion of SIPs every month is much better than the industry data. We have about 30% to 35% of the SIPs are closing. So we have a 70% net retention in the monthly SIPs which come to us which is why...

is that amount basis, the 70% retention?

In the count.

In the count. Okay. All right. And sir, last one data question is, do you have the closing equity AUM handy, if possible?

Maybe I'll share with you offline after this. I just read this question on SIP just one thing. I think as I mentioned earlier the smaller the ticket size, I think we have seen it is always more sticky. And that is the reason 63% of our SIP AUM has continued for 5 years compared to the industry 27%. I just thought that I mentioned earlier, but I think this will give you a little color. And also one small correction for myself, I've mentioned, the total number of SIPs below INR 10,000 is 75%. I think I mentioned earlier. Again I just corrected on the number that I have given earlier.

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

Firstly on the yield side. So, like, as you mentioned that the equity yield is around in the mid 60s. So we have seen a sharp decline over the past 2 quarters, like it has gone down from mid-70s to mid-60s. So can you qualitatively highlight the difference between the stock yeild and the flow yield? Like, what is the current status over there?

Yes. Sorry, we don't share that kind of number. So we'll not able to share that number.

And sir, second, so -- and one which is on the ETF side, so like in the volume market share, we have seen some decline in the overall volume market share in the ETF side. So are we say -- so like in the industry level, we are seeing that there are lot of players who have been launching ETFs. There are a lot of players in the ETF side. So what are the reasons which were -- what is the way which we are trying to do to dominate -- to maintain this kind of a market share going ahead? Could you give us a sense over this?

I think I will break it 2 parts, definitely, we've been a dominant player in ETF. I think our modeling from the stock exchanges, It's 2/3 of the volume hours. Underpinning the ETFs, I mean there can be a little plus/minus in volume. But I think one thing that is to understand is unlike mutual funds, in ETF, two things remain very important, volume on the stock exchange and the liquidity. These two things basically drive future growth. So I think from our perspective, we believe we are in a very strong position. But definitely, new competition can become very [ tough ]. And there could be a plus/minus some listing of our percentage of volumes on the stock exchanges. But I think from our point of view, the focus continues on profitable growth. I think we believe -- I think we do not believe that I think we'll continue launching ETF at low cost because we do not believe that can increase volume. I think it's [ tracking error ] and the liquidity which are the most important thing, and we feel -- I think we are in a very strong position there.

Sure, sir. And sir one last data [indiscernible] question, could you give us the new SIP registration done during the quarter?

New additions [ 3.8 lakhs ] ?

[ 3.8 lakhs ] monthly. So it's [ INR 1 million. ]

The next question is from the line of Sahej Mittal from 3P Investment Managers.

Congratulations on a good set of numbers. So just two questions. What would be our unique SIP customers or unique SIP folios of the [ 68 lakhs ] which we have?

I think we'll not have that number at present, but the total number remains about 68 lakhs.

I was just trying to understand the overlap in SIP.

I understand [indiscernible] , I think that total number of folio count that it's [ 2.2 crores ] and 68 lakh are unique. But 68 lakh are the folio count of sales. I mean if that was to give you color that would help you.

Got you. And what would be the average age of new SIP customers who are coming in? Just some qualitative comment on that.

I think, again, difficult to put a number to it because most of the SIPs which are being signed up. I mean, they have 5, 10 years plus, but that is not important. The idea is how many of them stay. And I think as I mentioned earlier, because of the regular business that we run and very small ticket size, what we have seen is stickiness is much higher than the ticket size is smaller. And that's the reason 63% of a SIP AUM has remained with us for more than 5 years compared to the industry, which is about 27%.

No, sir, I understand the reason I'm asking this question is that is because the kind of frenzy which we are seeing in the market right now and given that the young millennial crowd moving to direct equity. So what would be the average age of new SIP customers? Is it that the new millennial customers are also coming to the mutual funds via the SIP route? Or is it only the customer over 35 years of age?

I think it's a mix. We have seen a very positive trend. New investors, also young investors are also coming to SIPs. I mean I would say SIP has become across the industry a preferred route of investment rather than lump sum.

The next question is from the line of Viraj Sanghavi from Banyan Tree Advisors.

Am I Audible?

Yes. Please go ahead Viraj.

So I wanted to understand the mix of equity and debt in our investment book and investment versus cash balance in the investment book...

Sure. I think I'll request Amol to take this question, Viraj.

Yes. So in terms of equity probably, it would be 10% of our network would be invested in the equity and that is more because of the share capital requirements that we have invested in the equity schemes. Otherwise, mostly, it is in the debt schemes only.

This is 10% of your net worth?

P Yes.

Okay. And out of that 10%, most of that equity part will be invested in your own Nippon scheme, right?

They are 100% invested in the Nippon schemes.

The next question is from the line of Parth Agarwal from Bastion Research.

Good set of numbers. I have just one question on the number of bank distributors, which has suddenly increased from 77 in September quarter to 88 in the current quarter. Is there any reclassification bulk? Or can you help me understand these numbers?

This is [indiscernible] here. There has been a reclassification this quarter. There's no other change we can connect offline for that.

The next question is from the line of Arushi Shah from Sushil Financial Services.

Am I audible?

Yes, ma'am.

Number one is could you just give me a brief idea on the blended yield? And when is it expected to flatten out and start increasing a brief time line or something? And second question is based on unlike our other income has shot up tremendously in the current quarter. Is it going to be prevalent? Or is it a onetime thing?

I'll request Amol to take this please.

Yes. So Arushi, as I mentioned, the blended in stands at around 41 basis points, okay -- 40 basis points. And this is mainly due to as we have maintained that we will see 2 to 3 basis point compression every year. Such that we are seeing what you say, disproportionate higher net sales compared to the industry peers. And as for the telescopic pricing formula, this is impacting our equity yields, okay? And also, I would like to mention that the new assets coming at higher cost of acquisition versus the old asset is also impacting -- has had some impact on yields as well. However, just would like to add that we have rationalized distribution costs in one of our flagship schemes in December, in line with the lower TER given increase in size. We will continue evaluating opportunity for similar rationalization in other flagship scheme to stem the flow of compression of equities.

Okay. So as of now, we still expect certain compression for next foreseeable future, right?

Yes, as we have maintained in the past, for next 3 to 4 years, we will see compression in the overall blended yeild going forward.

Yes. Okay. And yes. And how would that impact our margins per se?

So I think it will be difficult to predict it because it all depends on the flows in the -- on which category of money which come into which category of schemes and everything. So it's very difficult to predict. But as I mentioned, we are working on various initiatives which are to arrest the declining yeild.

Okay. Okay. So could you just address the other income, which is -- it is about INR 107 crores this quarter and our run rates has been quite less comparatively in previous quarters. So is it going to be prevalent or how is it got be?

So again, the other income is mainly due to the mark-to-market movement. So as I mentioned, so we have our investments in -- across the mutual fund schemes. So depending on the capital market performance because of the mark-to-market the income keeps on fluctuating. So again, this quarter since the market has been very good. That is why there is a boost in the other income. But again, it all depends on how the market goes and it could be fluctuating in the future as well.

Also sir, what is our growth driver going to remain going further like a bird's eye view, I have to see. So, like, what is our growth driver going to remain? And what would be -- we see a weakness, which would really [ restrain ] us from the same?

Yes, from a growth driver point of view, I think the industry offers enormous opportunity. The key lies in execution. And this business is a scale business. And as we continue, I think, from our perspective, as we are today, the fact our biggest strength is retail. Our biggest strength is small ticket size. And all these things, I think, as we go ahead, as we move as the country moved from INR 3 trillion to INR 5 trillion, INR 7 trillion as the per capita income goes up, I think more money will be committed to savings. Then we believe we are -- we have a very strong platform that we have created, and we will continue gaining as the country grows and mutual funds become the preferred route of investment.

Okay. Okay. And any weakness which we see which would restrain us from capitalizing on these opportunities?

I think with this business, as I said, both the weakness I mean if I have to say, I think, we have to execute. I think we have to continue creating wealth for our investors. I think that is and I think and continue working with a very strong risk management framework. I mean these are the things we have to focus on. I won't call them weakness as we move forward. I mean, there has to be a very strong focus on risk management because I think ultimately, the investors are trusting us with their money and we think we need to continue creating wealth for them.

[Operator Instructions] The next question is from the line of [ Sanjay Kumar ] from ithought Financial Consulting.

First question within equity, can you give the growth in AUM, net of mid and small cap? Just trying to understand how much of the growth is market driven?

So just to, Saugata this side, there are some broad numbers I can only share with you that when we categorize the net sales growth across large cap, midcap, small cap and the various other market caps, from our perspective, almost currently, as we speak, about 25% is coming from the large cap category. And that is growing for us for the last 6 months, which clearly shows that we have also derisked our flows across the asset classes and remaining categories obviously get the remaining 75% of flows.

Would you have that figure from the industry as well?

Industry obviously can refer to the AMFI data, but the large cap category is actually just turned positive in the month of December. Till December, the large cap category was negative in the industry.

Okay. And just an extension, are we doing any [indiscernible] investments either on the large cap side or on the mid side, there could be trade duration given the red cycle kind of help broad base our business and derisk away from mid and small.

Could you repeat that question, please?

Are we doing any investment, say, marketing investment on the debt side and the large cap side?

I think it's a continuous endeavor to derisking our business, that's exactly -- it's not only from -- within equity and say, multiple schemes in equity, but also from -- in different asset classes and further extending it to from mutual fund business to other businesses. So the company continues focusing on derisking every product line, asset category and business line. So we definitely making efforts towards that.

Great. Then last question. How do you look at employee costs going forward, 17% year-on-year while revenue is up 20%. How much of it is linked to revenue growth or in a market correction, will this impact our P&L?

I think broadly from our perspective, we don't see any substantial change in our employee cost. There could always be in whatever I think the CLI is the only variable thing which is in line with depending on the profits because of the percentage of the profits typically. And over and above that, we -- as and when I think ESOPs are issued because that is important for alignment of interest from the [indiscernible ] and also from the stability of the team, I mean that will be an expect that can come. And broadly, we do not expect any major change. And also just to add to this, even if we were to further expand our teams and more branches and smaller cities and towns, the incremental cost is not going to be much.

The next question is from the line of Lester Poon from Pedder Street Investor Management Limited.

I have one question. I read that your market share has been increasing in the past few quarters. Is that quite influenced by the investment performance of your mutual funds?

It is -- I think it's always a mix of multiple things. Investment performance has to be there. I think after that, it's about execution, reaching out, distribution, digital multiple things put together. But needless to say, I think in this industry, our performance is a starting point.

I see. And now for your yield, I understand because of the total expenses ratio, the equity side when the weighting has gone up, you have -- you face some compression. But at the same time, there's a big difference in the yield between equity fund and the other, say, fixed income fund. So the mix -- the improvement in mix should have had to yield. That's why I do not fully understand why the higher equity weighting in your portfolio should need to -- should necessarily lead to a new compression.

Lester. So as per the SEBI formula for TER, basic telescopic pricing. So as the equity AUM grows up, the ability to charge TER goes down, and that impacts the overall equity. So even though the proportion of equity goes up but because of this SEBI pricing formula, the overall blended yields comes down. And hence, you have seen the marginal decline in the yields for the quarter.

Okay. I see. So the marginal increase in this inflow cannot offset the decline of the overall portfolio, the compression -- the overall compression, is that what you mean?

It will not have so much impact because the new money comes in at the latest rate and the cost equations are higher. So probably when you look at the overall blended yield, it will not have a major impact.

Thank you. As there are no further questions from the participants, I now hand the conference over to management for closing comments.

Yes. Thank you all for joining the call.

On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.