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

Ladies and gentlemen, good day, and welcome to Nippon Life India Asset Management Q2 FY '25 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, Steve, and good evening, everyone. On behalf of InCred Equities, I welcome all to Nippon Life India Asset Management Q2 FY '25 Earnings Conference Call. We have along with us Mr. Sundeep Sikka, Executive Director and Mr. Parag Joglekar, the Chief Financial Officer; and the senior management team of Nippon Life India Asset Management. We are thankful to the management for allowing us this opportunity. I would now like to hand it over to Mr. Sundeep Sikka, Executive Director and CEO of Nippon Life India Asset Management for his opening remarks. Over to you, sir.

Good evening, everyone, and welcome to our Q2 FY '25 Earnings Conference Call. I have with us our CFO, Parag Joglekar, who has recently joined us; Chief Business Officer, Saugata Chatterjee; Deputy CFO, Amol Bilagi; Chief Digital Officer, Arpan Saha; Head ETF Arun Sundaresan; Head AIF, Ashish Chugani and Mitsui-San, Nominee of Nippon Life Japan. 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 in Q2 FY '25, NAM India has achieved its highest ever quarterly profit after tax of INR 3.6 billion as well as the highest ever quarterly operating profit of INR 3.65 billion. Further, our equity sales market share and SIP market share remains well above our equity AUM market share. Beginning with the markets. Equity markets in Q2 FY '25 displayed another strong performance overall. The Nifty moved up by 7.5% quarter-on-quarter, while Nifty mid-cap and small cap indices rose by 7.1% and 7.6%, respectively. RBI held the repo rate steady at 6.50%, while the 10-year G-Sec yields moderated by 26 basis points quarter-on-quarter to 6.75%. Coming to the data on mutual fund industry. Industry quarterly average AUM grew by 12% quarter-on-quarter and 41% year-on-year in Q2 FY '25 to INR 66.2 trillion. Strong momentum in equity segment sustained as the share of equity in overall AUM continued to increase, ending at 60.9% for Q2 FY '25, up from 53.5% in Q2 FY '24. Now moving to the industry flows. The equity category, excluding index and arbitrage witnessed a gross inflow of INR 2.78 trillion and a net inflow of INR 1.32 trillion. Both gross and net inflows were higher on a quarter-on-quarter basis for a fifth successive quarter. Categories with the highest inflows were sectoral, thematic, multi-cap and multi-asset allocation funds. Moving on to SIPs. Investments via SIP route further increased with the SIP contribution for the quarter being INR 714 billion, up 52% year-on-year and 14% quarter-on-quarter. Monthly SIP flows in September '24 stood at INR 245 billion, which was another all-time high. The fixed income category that is debt and liquid witnessed a net inflow of INR 507 billion, which was lower on a quarter-on-quarter basis. The ETF category had a net inflow of INR 204 billion. At the end of the quarter, unique investors in mutual fund industry increased to 50.1 million, that is an increase of 24% year-on-year. Now moving to our business performance. We booked -- we closed the quarter with total assets under management of INR 6.54 trillion. This includes mutual funds, managed accounts and offshore funds. Our mutual funds quarterly average AUM grew 14% quarter-on-quarter and 57% year-on-year to reach INR 5.49 trillion. This made us the fastest-growing AMC amongst the top 5 over a period of 6 months, 1 year and 3 years' time frame. We also had a highest increase in quarterly AUM market share on a year-on-year basis amongst all AMCs. Now I would like to share a few key highlights for the quarter. Starting with the market share, our market share increased 9 basis points quarter-on-quarter and 83 basis points year-on-year to 8.29% with the market share increases across most asset categories. This is the sixth consecutive quarter of market share increase that we have witnessed. Our equity market share also continues to improve. It increased by 8 basis points quarter-on-quarter and 43 basis points year-on-year to 6.96%. This is the highest equity market share post 2000 -- post December 2020. The share of equity AUM in our overall AUM continues to increase and stood at 51.1% for Q2 FY '25, up from 49.8% as of Q1 FY '25. We achieved a high single-digit market share in net sales in equity plus hybrid categories in Q2 FY '25. However, excluding NFOs, our market share would be in double digits. We continue to have the largest base in the mutual fund -- investor base in the mutual fund industry with 18.9 million unique investors. We are humbled to have over 1 in 3 mutual fund investors in India who invest with us. I would like to touch upon some important aspects on our systematic book. I'm happy to share that there has been a continued uptake in our systematic flows over the last 13 quarters, which has led to an increase in market share. The SIP market share increased by 52 basis points to 9.88% over June 2024 to September 2024. This also represents an increase of 385 basis points over March '23 when our SIP market share was 6%. Our monthly systematic book rose by 22% quarter-on-quarter and 81% year-on-year to INR 31.4 billion for September 2024. This resulted in an annualized systematic book of INR 376 billion. I would now like to update you on an increase in headcount witnessed in the quarter. Our employee headcount increased by 85 employees in Q2 FY '25. As stated in the previous call, we have inducted 55 management trainees from premier institutes in July '24. As AIF remains an important focus area for us, we have also added resources on this front. We will continue to invest in future growth, including talent, technology and other areas. Now moving briefly to ETF segment. We continue to be one of the largest ETF players with an AUM of INR 1.48 trillion and a market share of 18.2%, which increased by 37 basis points quarter-on-quarter and 414 basis points year-on-year. Our share in industry ETF portfolios is 57%. We are 56% of ETF volumes on BSE and NSE. Our ETF average daily volumes across key funds remain far higher than the rest of the industry. Further, our gold ETF is now the 11th largest passive gold fund globally. To further strengthen our passive offerings, we launched 2 new products in index fund category during this quarter, namely, Nippon India Nifty 500 Equal Weight Index Fund and Nippon India Nifty 500 Momentum 50 Index Fund. Moving to our digital franchise. Digital purchase contribution rose to INR 3.97 billion in Q2 FY '25, up 160% year-on-year. Digital business contributed 70% of our total new purchase transaction in Q2 FY '25. ONDC is one of the major initiatives taken by Government of India towards financial inclusion. Nippon India Mutual Fund was a part of the first ever mutual fund transaction on ONDC platform that happened at the Global Fintech Conference in August 2024. Now I would like to briefly update you on our subsidiaries, namely AIF and Singapore operations. Starting off with the AIF, under Nippon India AIF, we offer Cat II and Cat III AIF and have a total commitments of INR 67.7 billion across various schemes. Fund raising is currently underway for our listed equity AIF, performing credit AIF and direct venture funds. During the quarter, we have undertaken closing of one of our real estate credit AIF, a follow-up fund to the existing real estate mandate from Japanese investors. On the offshore front, we have witnessed good equity inflows in the quarter from various international geographies. Offshore AUM grew by 56% year-on-year to INR 172 billion. Our UCITS equity fund has cost an AUM of USD 500 million, and we continue to spur new and niche offerings in the Indian equity space for international investors. Now on to our financial performance. For Q2 FY '25, revenue stood at INR 5.71 billion, up 44% year-on-year and 13% quarter-on-quarter. Other income stood at INR 1.21 billion, up 55% year-on-year, down 8% quarter-on-quarter. Operating profit stood at INR 3.65%, up 57% year-on-year and 19% quarter-on-quarter. Profit after tax stood at INR 3.6 billion, up 47% year-on-year and 8% quarter-on-quarter. The tax component in the quarter includes a one-off impact owing to the change in the tax regime post the budget. That is removal of indexation benefit on debt funds invested prior to March 31, 2023, and increase in short-term and long-term capital gain on equity mutual funds. For H1 FY '25, operating profit grew by 58% year-on-year. Profit after tax grew by 44% year-on-year. Further, the Board of Directors have declared an interim dividend of INR 8 per share, along with the Q2 FY '25 results. To conclude, I would like to again mention, we have been the fastest-growing AMCs over 6 months, 1 year, 3 years, and we will endeavor to grow our journey of profitable growth going forward as well. With this, I would like to conclude the remarks and open the floor for questions.

[Operator Instructions] The first question is from the line of Krupanshu, from Thinqwise Wealth.

Yes. Sir, you mentioned that ONDC we had a first transaction. So I just wanted to understand how is ONDC helping you and the industry at large basically? And if you could just speak about ONDC in general, I just wanted to understand that one thing.

Sure. I will request my colleague, Arpan to give some inputs on this. But I'd just like to give an initial comment. ONDC is Government of India's largest initiative equivalent to or bigger than UPI, and it will help a lot for financial inclusion in India. I think our transaction is in spirit of continuous innovation that we plan to do and launch new products and try to keep exploring new avenues to reach small investors in small cities and towns. In line with that, I think I'll request Arpan if he wants to add anything else.

Thank you. Thank you, Sundeep, and thank you for the question. So the open network for digital commerce is, as Sundeep mentioned, an initiative by the Government of India. The objective is to democratize digital commerce to reach out to the numerous sellers and buyers across the last milestone in this country. Also the part of our digital strategy, we believe that in order to have inclusion of new customers for the mutual fund industry it's important to go beyond BFSI partnerships and touch upon the retail space where people are still not got etched on the mutual fund industry. And we believe that ONDC would be a great platform, which will gain a lot of momentum in the years to come. And each and every Indian customer who would be able to invest in Nippon India Mutual Fund along with the rest of the asset management industry, especially, the huge base of B2C customers in Tier 3, 4 locations and the [ PIMCOs ] where Internet has benefited. But because of people's saving skills, mutual fund is just starting to gather momentum. It is the right time to do that. And Nippon, in fact, was the first asset management company to partner and get an opportunity with ONDC to start the mutual fund business on this platform for the consumer. Thank you.

So just 1 follow-up on that. So are we like paying ONDC for some kind of a data analysis on that sense for those cities where we cannot have reach? Just wanted to understand that.

No, we are not in any kind of payment structure because we believe that both ONDC and Nippon have the same vision of inclusivity for the digital commerce space, and therefore, it is important that we jointly get customers to the mutual fund for us. So I think that's the overall vision that we have jointly concluded for.

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

Congratulations on the good quarter. Sir, just 2 questions. Firstly, on the SIP flows. So we have gained about more than 50 basis points of market share on a sequential basis. I just wanted to understand, like which of the categories we are seeing a huge improvement in the SIP flows. And also you can talk -- could you talk about the different channels where we have been gaining market share?

So I'll request my colleague Saugata Chatterjee to answer this question.

Thanks Lalit for this question. Yes. So SIP for us, like we have been mentioning in the previous calls, it's a very, very important part of our strategy. And when we are trying to acquire these SIPs from the various parts of India. We use multiple channels. For us, digital is a big channel. We also use the feet-on-street model where our mutual fund distributors, the bank and various stock broking arms, they are all -- they have all onboarded our funds. And through the retail channels, we acquire these SIPs in the market. The good part is we have a very strong franchise of beyond 30 channels who are participating in our SIP growth. So it's a cumulative effort of digital, nondigital physical efforts which we are putting on the ground to increase the SIP book. We also do a lot of digital marketing activities using on our -- all our existing client base to enhance the SIP book as well as to ensure that multiple products are acquired by -- through the digital channel. That's the way we are increasing our SIP book.

Sure, sir. And sir, second, sir, on the yield side. So our calculation suggest that revenue yields have broadly been remained stable on a quarter-over-quarter basis in the standalone business. But despite the strong growth in the overall AUM. So could you give us the segment-wise yields like have you seen any pressure on the -- across different segments?

Amol here. So on the yield side, because of telescope pricing at the AUM growth, I think the pressure on the yield would continue as we have been maintaining same over the call. So for the current quarter, the yield stood at around 37 basis points, a drop of around 0.5 basis point quarter-on-quarter. As far as asset class wise is concerned, the yield on the equity stood at around 58 basis points. On debt, it stood around 25 basis points, on liquid around 12 basis points and on ETF around 15 basis points.

Sure. And sir, another thing was like one of our competitive peer has probably cut distribution -- has cut yields on the back book of the distributors. So going ahead, do we see any similar kind of reaction from our side just to protect our revenue yield?

I think as a process, we continue to always keep evaluating wherever there's an opportunity. As I mentioned in closing remarks, I think we will continue focusing on profitable growth. And as a part of that, we have it in past also, we looked at the brokerages, and we will continue doing that irrespective of what the competition does or not do. I think we will continue our focus remains, while we have seen a lot of increase in our market share. But between market share, top line and bottom line, our focus has always been on bottom line.

The next question is from the line of Shreya Shivani from CLSA.

So just wanted to check on the tax that has come in. So whatever was the excess that we would have incurred because of the change from March '23 till now, we've taken all of it 2Q, and we should not expect anything higher than this coming up in the coming quarters. I'm just asking because this tax rate was a big question mark for this quarter and your tax rate and what probably your peer has reported is very different. And I understand the mix is very different and so many things could be different for the calculation of it, but I just wanted a clarification on that. Second, I wanted to check that on the employee addition, you mentioned -- you had mentioned 55 management trainees had joined in July. And had you also mentioned about 45 new employees addition in this financial year? So is it like there are 90 people added in FY '25? This is my second question. And my third question is just something that I was wondering that on your small and mid-cap fund, so I understand that if I take Nippon small and mid-cap fund as a market share of the total small and mid-cap industry, it's been -- it dipped a little back to about 13% or so. Do we internally keep any market share limits over here or any market share limits in the non -- in the other large caps, et cetera, because there, you've significantly gained market share in the small and mid-cap equity portfolio. So do we internally keep any limits, any ranges that we want to be in? Those are my 3 questions.

Yes. Thanks, Shreya for the question. So I would take the tax part of it and then probably other colleagues can take the other part. So on the tax front, see, how we go about when we provide for taxes on a yearly basis, what is the effective tax rate that we foresee that is going to happen. So on that basis, what we force is the tax rate for the year is as of now tax rate forecast is 25.7% of -- roughly 26%. And that is what you will see in the half yearly results tax rate if you look at it. So we -- that is how we posted as mentioned. So we have taken the full impact of the change in the tax rate and the indexation benefit that is 1. We have taken the full impact of that in this quarter.

So I think on the other 2 questions on the employees. I think we have added 130 employees in H1, 45 were added in Q1 and 85 have added in Q2. I think we broadly feel for this financial year, we broadly -- I mean, this number will not go up maybe by about another 10-odd -- 10, 15, but we have finished our recruitment for this year. That is point number one of the employees. Coming to the other question on the small cap and market share. I think we do not like to approach it like from a market share of a segment point of view. I think from our focus is very simple that I think we'll continue every fund, every category is important for us. We will ensure that we continue to deliver superior returns and let the investor decide where he wants to come. I think they have to put individual market share targets in a subcategory. I think we feel that is not a very customer-centric approach. Let customers take the decision whether he wants to come based on risk appetite. From our perspective, overall, as a portfolio, every fund remains equally important. So we should -- it's not small cap is more important than others. And as we have mentioned in the past, the inflows for us, even after we put a cap on the small cap, inflows we are seeing across the various funds. So I think -- I hope this answers your question.

Yes. That's useful. One more question, if I can add is on your managed account. That book -- okay, I'm not very sure of this, but that includes your AIF business, right, the INR 825 billion?

Yes. Yes, that includes.

Yes. So I was just trying to understand that book has been largely flat between June and September. So any color around that? What has happened and some color on that would be useful.

So broadly, I think you're right, I think it's broadly been flat. There has been some fund raise, but there's also some maturities. There are some funds which have matured, I think, and they have seen an outflow. From our perspective, I think as I mentioned earlier, we are currently underway in our fund raise for our listed equity performing credit and a direct venture fund, which is [indiscernible] technology fund. So as you can understand, unlike mutual funds, many of these things and some of these are also funds because, they take a little time, and they are more [indiscernible]. It's not like a ship which is ticking in every day. So I think we believe we are building up a strong foundation. And even maybe in the next quarter or 2 also, you might see it relatively flat because it will take a little time. But I think all I can say is this is going to be an important business for us.

Got it. So should I interpret it as it is an account whether inflow outflow can be chunky. That bit is correct, right? If the money can come in huge amounts and then exit in huge amounts, right?

So I think -- again, I think there are 2 parts to it. I mean, definitely, when you look at the offshore mandates and all, they are chunky and they are chunky. So what happens is many times, you will see 1 [indiscernible] going out. But I want to also clarify, I think what you're seeing in the managed account, a very large part of the managed account is also the PL as opposed to life insurance mandate that we manage. And so that also has a reflection of mark-to-market their flows and inflows. But the bigger question on -- I think, what I want to touch is the AIF remains very critical for us. A lot of things. In fact, when I talked about recruitment also head count, as specifically mentioned, we are adding a lot more senior resources in AIF business. And I think we're building a strong foundation for future.

[Operator Instructions] The next question is from the line of Prayesh Jain from Motilal Oswal.

Firstly, I just wanted to understand the behavior of the customers, especially coming in from the digital players like Groww, Angle One and those kind of digital customers. Is it that a lion's share comes to the top 3 schemes -- top rank 3 schemes the category and the lower schemes get a much lower share. So basically trying to understand whether the quartile -- importance of quartile is kind of receding and the top 3 rank is kind of holding up better? That would be my first question.

I think I would not like to go for the customers of a particular channel, coming through ABC distribution on its digital partner. But I think broadly, what we have seen is digital, I think, investors which are coming through digital are also in offline. There can be divided in 2 different categories. There are investors who are especially some of the first time investors for whom the returns become a very, very important thing. I think they look at the only the returns. But I think what we have seen as investors mature and they try to see a longer track record of the companies, which have been -- how they have performed in different market cycles. And no 2 investors are the same. So I think these are the investors, I think there will be investors who like to see funds, which have a track record of 20 years. I think for them, the -- some investors, that could be a very important thing. For some investors, performance of the last quarter, forget 1 year could also be important. So there's no single trend that we can figure out from digital channels. But I think one thing that you must see that works whether it is digital or offline, funds having the long-term track record and have performed through different market cycles, they tend to get away with the lion's share. Irrespective in 1 or 2 quarters, you can see a little bit of slip here or there. But consistency over a long period of time is what I think gets rewarded.

Got that. Secondly, on the international fundraising and international -- what are the recent developments? And what are the things that you guys have planned for the next couple of years?

I think so we are at this point of time, I think there are 2 parts to it. I'll break it down Japan and ex Japan. So I think as a regular day-to-day basis, I think we -- because of our usage structure, and we have come some advisory mandates globally, which keeps happening. But I think we've also seen a lot of interest in -- from Japan. We are, at this point of time, I think while I won't be able to give specifics. But over the next 6 to 9 months, you will see a couple of new funds, India dedicated funds getting launched in Japan, which will be managed by us.

And Japan?

In next 6 to 9 months.

So you said a couple of schemes in Japan in the next 6 to 9 months, right?

Yes, yes, yes.

And what about ex Japan?

Ex Japan, I think we continue -- I think, because of the Japan as is our home country, I think we're very strong there. But other than that, also there are a couple of -- I think we have seen money sovereign -- Middle Eastern sovereign wealth funds that we are managing. We are seeing flow coming from Europe also. But I think it is -- that is in line with what we're seeing the flow coming. But in Japan, we have a distinct advantage being the home country for us. I think we are very bullish on that.

Okay. And last question is on the commission structure you mentioned that you make corrective actions here and there. But is it a trend that you basically to protect the further fall in yields from here on with respect to the growth in AUM, would you want to kind of link to the commission structure to the TERs and rather protect your yield as well by not passing on -- by passing on the hit of the TER to the distributors? Is that a thought that we are working with so that our yields kind of get protected in further falling TERs because of the telescopic structure?

I think I won't get into the nitty gritty, but I think my sense is you will see industry moving towards that.

The next question is from the line of Madhukar Ladha from Nuvama Wealth Management.

Congratulations on a great set of numbers. So just a couple of questions from my side. I don't know whether you've already addressed this because I missed a little bit of the call. First, is there some reduction in Q-o-Q equity yields? And I just wanted to get a sense of what is driving that? And if you could also give your segment-wise yield, that would be useful. Second, what is driving such a strong other income? And third, even if I adjust your tax amount by the INR 29.5 crores of that deferred tax liability, our tax rate for the quarter is still quite low. So what is happening there? If you could help us with that.

Madhukar, I think I'll request Parag and Amol to take this question.

So Madhukar, I think, Amol covered the realization which we have. So there is a slight drop because due to the telescopic pricing in equity, it has dropped to from 59-odd up to 58 around. And so that is there. So as telescopic pricing, there will be some more movement in the yields will happen on equity. Debt remained in the range of around 24, 25 basis and liquid remain in the range of around 12 basis.

Got it.

Yes. On the other income front, Madhukar, I think it is more due to mark-to-market. There's nothing -- anything one-off or something like that. It is clearly mark-to-market. It is on the investment that we have in the mutual fund equity debt scheme. So there's nothing...

That's why the tax rate is low because...

Yes. Tax definitely the higher the other income, it would have a positively impact on the overall tax rate.

The next question is from the line of Darshan Shah from Multi-Act Equity.

My question is on the commission rationalization part. So on what percentage of AUM have you rationalized the commission? And have we seen the full impact in this quarter?

Yes. Darshan, this is Saugata. So commission rationalization, like we have mentioned in our earlier calls. So we had done in our small-cap fund, which was the largest fund of ours. We have done the entire -- on the book, the commission rationalization was done, which continues to fall in place because we have now set up a system where as per the TR movement, the commercials keep going down in case of small cap fund. The similar logic has been applied to all the new businesses which come in all the funds. So depending on the telescopic pricing drop or the telescopic method of drop in TR, the new brokerage structure to -- on the new flows continues to move in that direction. So we are technically -- actually, it's a pass-through what is happening at this point in time.

But there is no change in the back book commission side, except for the small cap fund?

On the entire book, of course, it was the small-cap fund, and we are evaluating. As you progress, we will definitely keep assessing opportunities to look at the entire book on certain funds.

The next question is from the line of Santosh Keshri from SKK Huf.

Actually, a few queries from the financial. Like, I can see that our revenue quarter-on-quarter went up by 13%, whereas the PBT is up only by 10.78%. Now in this kind of business, the operating metrics is more in favor of the business, it should not -- it should be more than the percentage of revenue that it went up by. So may I know the reason? Is this because of ESOP cost?

So if you look at it -- you're right, the revenue from operation has gone over 13%, but the other income is down 8%. So that is also having an impact on the PBT level. So that's why the PBT is up by 11%.

Okay. And what is the impact of ESOP cost in this quarter? And how long it will continue, if you can just give full numbers.

So the ESOP for the quarter, it would be around INR 12 crores, INR 12 crores -- or INR 11 crores or INR 12 crores for this -- INR 11 crores, sorry for this quarter. And for this year, as we have maintained that for this year, the ESOP hit on account of the ESOP granted would be around in the range of INR 42 crores to INR 45 crores.

Okay, okay. And second thing is from the business point of view, I guess we haven't launched any new ETF or new fund for fund for subscription by the investors. But even then we can see that the fees and commission line is going up, like we have seen an increase of almost 7% quarter-on-quarter and 23% year-on-year. So what's the reason that the fees and commission will go up while we are not launching any new fund?

So Santosh this is not only for the mutual fund, it is on the AIF side. That is why there is a slight increase on the fees and commission.

What you're seeing is a consolidated basis.

Yes, not mutual fund.

Okay, okay. And any reason, sir, we are not launching new funds because our competition is launching new funds and they are collecting money in buckets. And most of the subscriptions are hugely successful, a lot of funds are coming in and their profits are also -- even though they are quite large, their profits are much more appreciating quarter-on-quarter increment is much more than us. So any reason we're averse to launching new funds?

So Santosh, I think, as we have mentioned in the past, I think we will not like to launch multiple NFOs. We like to focus scaling up our existing schemes, and wherever we have good performance, continue creating wealth for investors and scale it up. We do not believe in launching NFOs, which is more asset gathering strategy. From our point of view, the 2 principles guide us. Number 1 is to create wealth for investors, we focus on the existing schemes. And for the shareholders, the focus will be on profitable growth. So we do not want to be distracted by short-term increase in AUM, which comes with NFOs, which may or may not be sticky or sustainable from long-term point of view.

Okay. So that's the biggest call we have taken.

And also Santosh...

Yes. You're saying something, sorry.

No, just a reference point should be that our net sales growth is very consistent over the last 1 year, month-on-month. So we don't get impacted by these NFOs, because there's a lot of churn money which keeps coming in NFOs. We are looking at fresh flows, which keeps giving us growth.

Basically, our SIP book has almost doubled. And the market share has doubled in last 3, 4 years. And we believe it is slow growth but consistent and stable growth.

The next question is from the line of Amit Gupta, an individual investor.

My question is I think most of the questions have been answered. But one question which I've been looking to ask is like we are the leading player in the ETF and ETF segment. But we are not launching any innovative products like triple ETF, triple leverage ETFs, which are like in U.S.? Are we not allowed to do launch such ETFs in India or we have not pushed those to -- SEBI to introduce such ETFs India?

Mr. Amit, I think broadly, I think we continue, like we mentioned in the opening address, we launched 2 new products this time in this quarter, which was Nippon India Nifty 500 Equal Rate and Nippon India 500 Momentum 50 Index Fund. I think -- and some of these are industry first. We continue evaluating various products. Some of the products that you mentioned right now, some are not allowed by the regulator and some also we believe -- I think we have a very strong view. I mean, in line with the earlier question, which was asked, we like to launch products such as simple and easy for investors to understand. We do not want to get into complex products, which basically is difficult for investors to understand. And while in the short-term, they look very exciting. But from a long-term point of view, they may or may not be good for investor. But we'll continue evaluating. I would also like to share with you our ETF and passive product suite is one of the largest in the industry. And so -- and which also gets reflected in the number of investors and the total market share we have.

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

I just have one number question. What would be your realizations or yields in the pension in the offshore business.

Generally, we don't give out that number. So it would be in the range -- actually you see on the government, it will be on the lower side. But on the AIS and other businesses, it could be in the range of 0.5 to 1.5 basis percent.

Got it. And just one more, if you can share any outlook on expense growth for the next 6 to 12 months?

So Abhijeet, the expense growth, we are looking at [indiscernible] ESOP should be in the range of around 15-odd percent. That should be the outlook we are looking at.

The next question is from the line of Gaurav Jani from Prabhudas Lilladher.

Congrats on the quarter. So 2 questions from my side. One is a slightly broader question. I mean also according to the industry, I mean, not only you guys, but last 2-odd years, we have seen elevated commissions, elevated payouts, which is sort of normalizing right across some of the [indiscernible]. So could this trend continue for 1.5, 2 years? I mean, how should we look at it? That's number one. And secondly, what would be the impact on net sales overall for the industry and especially for the players that are doing well?

So if I was to, I think it will be very difficult to answer it for the industry. But I think one thing is very clear. I think if you were to see in any industry, there will be different players depending on what the Board and the shareholder guide, whether you want to work for top line or bottom line. I think what you are seeing is basically -- I mean there will be industry players who will continue to pay higher commissions for whom the market share is more important. As over multiple quarters and including the address earlier, I mentioned, as a company, we will focus on growth, but it will be profitable growth. While I think we have seen market share go up, but if ever, it's a question between market top line and bottom line, it will be the bottom line that will guide us. So for us, that will be the guiding principle.

So Sundeep, what I understand is certain amount of flows can be compromised?

It's incremental, they do not add to the profitability, yes, we will.

The next question is from the line of Bhavin Pande from Athena Investments.

Congratulations on a great set of numbers. I just had one question regarding the filing that we had done last month in which we spoke about investments made by erstwhile promoters. So has there been any measurable progress on that front?

I think we continue working with the regulator. There's no new update. I think the last update, which has been informed to the stock exchanges, there's no further update after that. And if there is any, I think, we'll keep you informed.

The next question is from the line of Jatin, an individual investor.

My question is like whether Nippon India Mutual Fund will look to expand in other verticals like health insurance or life insurance in near future?

So Jatin, as mentioned earlier, I think our focus will remain on profitable growth within the regulatory framework that we can do. As per Section 24, I think, we can only continue focusing on asset management businesses. So we will continue focusing and expanding our businesses and continuously evaluate both growing organically and acquiring any business that is related to asset management. And as when there is anything further update, we'll continue -- we'll be in touch with you.

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

So thank you very much. I think as mentioned earlier, the management team will continue focusing on profitable growth. Thank you very much. I'm wishing all of you very happy Diwali.

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