Nippon Life India Asset Management Limited ($NAMINDIA)

Ladies and gentlemen, good day, and welcome to Nippon Life India Asset Management 4Q FY '26 Earnings Call, hosted by Motilal Oswal Financial Services Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Prayesh Jain from Motilal Oswal Financial Services Limited. Thank you, and over to you, sir.

Thank you, Iqra, and good evening to everyone. On behalf of Motilal Oswal, I welcome you all to Nippon Life India Asset Management Fourth Quarter FY '26 Earnings Conference Call. We have along with us Mr. Sundeep Sikka, Managing Director and CEO and the senior madmen team. We are thankful to the management for allowing us the opportunity I would now like to hand it over to Mr. Sandeep sir for his opening remarks. Over to you, sir.

Thanks, Prayesh. Good evening, everyone, and welcome to our Q4 FY '26 Earnings Conference Call. We have with us our President and CEO, Saugata Chatterjee, CFO, Parag, our Deputy CFO, Amol, Chief Digital Officer, Arpan, Head AI, Ashish, Deputy IF Head, Ashwin and Masisa Nominee of Nippon Life Insurance Japan. I would like to share key highlights of our performance. And post that, I will hand over to Parag to speak in greater detail on the recent industry trends as well as the performance, post which we will move to Q&A. Coming to the key highlights, I would like to start by mentioning NAM India was the fastest-growing AMCs in the top 10 AMCs both in Q4 as well as FY '26. This led to a continued increase in our overall AUM market share. We had the highest increase in AUM market share in the industry in FY '26. Our market share is at 8.89% is the highest since June 2019. The Importantly, both equity, net sales, market share and SIP market share remain above our equity AU market share with both being in high single digit for the quarter. Moving to our financial performance. NAM India achieved its highest ever annual profit after tax at INR 15.9 billion, a growth of 19% year-on-year as well as the highest operating profit at INR 17.4 billion, a growth of 24% year-on-year. Further, we also achieved our highest ever quarterly operating profit of INR 4.93 billion. For FY '26, the Board of Directors have declared a dividend payout of a INR 21.50 per share that is 91.5% of the net profit. This includes the proposed final dividend of INR 12.50 per share. Now, I will hand over the call to Parag for further details on the industry and our performance.

Good evening. Thank you, Sandeep. Let me start off with market. Equity market in Q4 FY '26 witness a correction from prior auto levels. The net decrease by 4.5% quarter-on-quarter, while the NIFTY midcap and small cap decreased by 12.8% quarter-on-quarter and 14.4% quarter-on-quarter, respectively. The repo rate was flat quarter-on-quarter at 5.25%, while the 10-year GCC yield increased by 45 basis quarter-on-quarter to 7.04%. Coming to the data on the mutual fund industry. Industry quarterly average AUM grew by 20.9% year-on-year, and 0.7% quarter-on-quarter in Q4 FY '26 to INR 81.5 trillion. The share of equity in the overall at 0.6% quarter-on-quarter, ending at 56.4% for Q4 FY '26. Now moving on to industry flows. Even in these volatile markets, the equity category witnessed gross inflows of INR 2.78 trillion, and net inflows of INR 1.23 trillion both the gross and net inflows were higher quarter-on-quarter. Categories with the highest inflows were Flexicap multi-asset allocation and mid-cap funds. The fixed income category witnessed a net outflows of INR 1.7 trillion in the quarter. The ETS category had a net inflow of INR 709 million, up 36% quarter-on-quarter. Moving on to SIP, industry SIP contribution for the quarter was INR 929 million, up 19% year-on-year and 3% quarter-on-quarter. Monthly SIP flows in March 2026 stood at INR 321 million at an all-time high. Contributing SI portfolios decreased by $0.7 million, that is 1% lower to INR 97.2 million for March 2026 over December 2025. However, on a year-on-year basis, contributing SIP folios increased by INR 16.1 million, that is 20% year-on-year growth. At the at the end of the quarter, unique investors in the mutual fund industry increased to INR 61.4 million. That is an increase of 30% year-on-year. Now moving to our business performance. We closed the quarter with the total asset under management of INR 7.73 trillion. This includes mutual fund managed accounts, offshore funds and get city. Our mutual on quarterly average in grew 30.1% year-on-year and 3.4% quarter-on-quarter to reach INR 7.25 trillion. We were the fastest-growing AMC in the top 10 in Q4 FY '26 and annually in FY '26. And had the highest increase in quarterly average AUM market share among all AMCs in FY '26. I would now like to share a few highlights for the quarter. Starting with the market share. Our market share increased 63 basis year-on-year and 24 basis quarter-on-quarter to 8.9%. Our equity market share increased 24 basis year-on-year and was 3 basis quarter-on-quarter to 7.6%. We achieved a high single-digit market share in net sales in equity and hybrid segment in Q4 FY '26. However, excluding NFOs, our market share would be in double digits. We continue to have the largest investor base in the mutual fund industry with 23.8 million in an investor. We are humbled to have over 1 in 3 mutual fund investors invest with us. I would also like to touch upon some of the important aspects of our systematic growth. I'm happy to share that there has been continuous momenting our systematic close. Our monthly systematic book rose by 17% year-on-year to INR 37.2 billion for March 2026. This resulted in an annualized systematic book of INR 447 million. SIP market share stood at 9.84% for March 2026, marginally higher than 9.82% as of December 2025. Moving on briefly to ETF segment. We continue to be one of the largest ETF players with AUM of INR 2.42 trillion and a market share of 21.4% in which increased by 234 basis year-on-year and 109 basis quarter-on-quarter. Our share in the industry ETF folios is 45%. We also have a 52% share of ETF volume on the NSE and the BSE. Our ETF average daily volumes across key funds remain far higher than the rest of the industry. The industry continued to witness a surge in gold and silver ETF volumes in the quarter. Combined AUM in these 2 ETFs was INR 848 billion as of March 31, 2026, up 23% quarter model. In quarterly ambition terms, our gold and silver ED represent 36% of EPA and 12% of the MRM. During the quarter, we completed 2 debt index fund undergoes, raising INR 8.6 million cumulatively. These were Nippon India, Brazil IDX Financial Services 3- to 6-month debt index fund and Nippon India received IBX financial services 9 to 12 months debt index fund. Moving on to the digital purchases. Digital purchase transaction and new SIP registration rose to 5.04 million in Q4 FY '20, up 44% year-on-year. We had our highest ever monthly transaction in January 2026 at 1.79 million. Digital business contributed 77% of the total new purchase transaction in Q4 FY '26. During the quarter, NAM digital business intensified its focus on long-term investor behavior through multiple initiatives aimed at strengthening SIP habits and reengaging terminated SIP investor mid-market volatility helping rebuild confidence in disciplined, long-term investing despite short-term noise. Now I would like to briefly update on our subsidiaries and GIFT City. Starting with AI, under Nippon India AI, we offer category 2 and category 3 AI and have raised cumulative commitment of INR 93.3 million across various teams, up 26% year-on-year. In Q4 FY '26, we raised INR 4 billion of commitment across various asset classes. Fund raising is currently underway for 2 of our listed equity AI, 1 private credit fund and direct VC fund. Based on the success of Nippon India Credit Opportunity Fund, Nikon 1, we launched the serious second site Nipipelineon 2 and successfully conducted first close in Q4 FY '26. With the first capital cost, the fund is drawn down to the extent of 25%. On the offshore front, our AMU stood at INR 139 million. We continue to expand our footprint in new geographies across Europe, Asia and Latin America. Moving to GIFT City. At the previously, we currently have 2 bigger funds, namely Nippon India ETF Nifty Fifty GIFT and Nippon India large-cap fund. The in this fund stood at USD 38 million. Now on to our financial performance. For Q4 FY '20, revenue stood at INR 7.39 billion, up 30% year-on-year and 5% quarter-on-quarter. Other income stood at negative INR 0.34 million lower both year-on-year and quarter-on-quarter due to the market volatility. Operating expenses growth at INR 2.4 billion, up 16% year-on-year and down 1% quarter-on-quarter. Operating profit stood at INR 4.93 billion, up 39% year-on-year and 8% quarter-on-quarter. Profit after tax stood at INR 3.85 billion, up 29% year-on-year and down 5% quarter-on-quarter. For FY '26, operating profit grew by 24% year-on-year. Profit after tax grew by 19% year-on-year. As Sandeep mentioned earlier, for FY '26, the Board of Directors have declared a dividend payout of 21.5%, that is approximately 91.5% of the net profit. This includes proposed final dividend of INR 12.5% per share. Lastly, the Board of Directors in their meeting today have approved the following ESOP based on the recommendation of NRC. Brand of 387,248 stock units under Nikon Life India Asset Management Limited performance-linked stock units scheme 2023 at INR 10 per stock unit. Grant of 1596475 stock options, under the Nippon Life India Asset Management Limited employee stock options in 2023 at INR 898.04 per stock option. With this, I would like to conclude my remarks and open the floor for questions.

[Operator Instructions] Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Swarnabha Mukherjee from 360 ONE Capital.

Congrats on a great set of numbers. Three questions, sir. First of all, on the yield movement this particular quarter, just wanted to understand whether this is primarily a product mix or the EPS? Or is there anything else to read into that in terms of how the expansion has happened in terms of the margin? And also, if you could call out by category, including the APF category also, how it has played out this quarter, so the last quarter. That's my first question. Secondly, sir, in terms of the SIP flow numbers that you have reported, the numbers have been broadly in the INR 600 crores to INR 700 crore kind of range over the last 4, 5, 6 months. So I just want to understand, what is -- how do we think about this trend going forward? And in terms of the close the various schemes that we have, has there been any change or movement and if you could give some color on new SIPs created vis-a-vis the redemptions, et cetera, that will be very helpful. And in conjunction, if we could also discuss about the net inflows in equity and that activity category, how they are looking resaving the stores. And lastly, yes, just 1 last question on the import costs helping the opening. Yes.

I'll request Parag to take the question on yields and the ESOP cost, and then we'll have Saugata Chatterjee talking about the flows.

So one of the moment is mainly due to the change in the asset mix, as you mentioned, that has resulted a slight increase, marginally higher yield in the current quarter. The yield on equity is 53 basis -- 55x of arbitrage. On debt, it's 25 basis on liquid equipment in the range of around 11, 12 basis on ETF, it's slightly higher than 25 basis overall. So blended yield is marginally up basis. And on the ESOP cost, the next year ESOP is -- on the current year ESOP -- for quarter ESOP is INR 11 crores. The overall is for the current year is INR 43-odd crores, and for the new plan, the next year, ESOP cost will be in the range of around INR 35-odd crores. The overall cost on ESOP of the new plan will be in the range of around INR 70 crores to INR 75 crores for the next 4 years.

For the next 4 years, sir, we can take a staggered approach in the numbers.

Yes. So generally, first year is definitely higher. Because it's 40 above numbers.

Yes. So coming to the SIP trends. So like you mentioned, we have the SIP flows are in the range of about INR 3,600 crores, INR 3,700 crores. So you would have seen last quarter also in our call, we had mentioned that the SIP net inflow, which is coming in the industry has sort of flattened. So we are also sort of seeing a similar trend in our case. . But along with that, what we have seen in the last, say, 6 or months, we have started now building SIP book across a few other categories. mostly in the hybrid and in the commodity funds. 1 or 2 categories, like I mentioned in the last quarter call, Flexicap and sector funds these are 2 categories where we really need to build our IP book -- we are working on that very closely. Hopefully, that will keep giving us a slightly better net sales growth as we go ahead from a year on. But the good part is that we fit book market share is more than our equity net sales market share and equity market share, which is definitely the reason why our equity market share is growing. So that should be the parameter which we will need to track, and we are tracking that very closely. And hopefully, that should keep helping us have a stable growth in market share.

Okay. under -- so just to clarify, the equity net sales market share even mentioned in your opening remarks, it would remain in high single digits.

Yes. If we exclude the NFOs, it is in double digit. If you include NFO, we don't do NFO, it is still closer to a double digit.

The next question is from the line of Mohit Mangal from Centrum.

My first question is on the regulation. So regulation that came with effect from April 1, which has a potential impact of 5 basis points on equity now that we are towards the end of April, just wanted to know what steps we have taken to mitigate the impact? And maybe how should we see that impact going forward? .

Mohit, the impact will be in the range of around 3.5 to 4 basis, which we will try to minimize even though it's the first month, but it is over the period, we'll try to minimize for the finance on the P&L number. .

Okay. So will that be through a distribution cut or how that should be? .

Yes.

Yes, we are going to pass on the entire thing to the to the distributors. It's a pass-through. .

Second is that the tax rate was very low in Q4. So what was the reason for that?

So there was some releases post the assessments, which we have taken still in the current quarter. Plus, there are some due to the mark-to-market losses also there is some lower taxation because rates are slightly lower on that. So that is why there is a slightly lower taxation on that side.

Understood. My last question is towards the share of folios in the ETF space. That has come down from 53% in Q4 to 45% in the current quarter. So are we facing a lot of competition within the space? Or how should we look at.

So if you see the ETF -- the color of the ETF flows, which are coming in various categories in the industry, the commodity ETFs, I have seen some higher inflows in the last 6 months and typically in the last few months, barring March. So it's not competition. It is something related to it's more related to how the market looks at multiple options when they are trying to diversify their product but I think we still remain highest on volumes. Our volumes are the highest car in so from a net inflow point of view is still higher. So we continue to build on that perspective in the market. it is more about volume. It is more about how many new investors are trading on the exchange and what is the impact cost they are able to deliver in the funds.

I think also, I think it's important to note that the overall volumes continue to grow.

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

Just a few questions from my side. Firstly, the -- as you mentioned, right, that the SIP momentum in the industry itself has kind of stabilized, and post that also, we've seen markets not doing great. right? So do you see any further slowdown? Or how should we kind of read into this from an industry trend perspective, and especially if you could hide how are the trends different between, say, do-it-yourself model versus a distributed model. That's my question number one. Question number 2 is on the last couple of quarters, we've seen a very strong traction on silver and gold in terms of flows and because of which we have kind of benefited on the. How do you see the traction at least in the near term on these categories? And my last question will be on the expenses to overall expenses. You've been guiding about 15% growth in overall expenses. Should we kind of stick to that and as basis points of AUM are still higher than a few of our peers. So do you think that we structurally over the next couple of years, we should start intending towards that kind of a number? Or how should we look at expenses. Yes, those would be my questions.

So expend number, I will take it, and then category line on to the sales number, Ashwin. So the expenses, yes, our guidance will still remain in a range of 15%, 16% year-on-year or IOP, that is what our guidance remains. The basis, the idea is always that we should have an operating leverage. And as AUM growth, the operating leverage would kick in and should help us to reduce the basis over longer period. That will be our thought process. Carry on [indiscernible]

Yes. I think on the SIP, it's a good question. What we are seeing is that the fintech platforms are definitely aiding growth of the book in the industry. The client behavior might be slightly different than what comes in from a distributor-led SIP inflow. The cycles have been shorter when it comes to fintech investors. But the good part is they are ready to commit more. And hence, the average ticket size is also now moving up. So that's a good trend. The other side is when it comes to distributor-led we are finding that these volatile conditions are leading them to educate the investor and show better attention. . Challenges will always remain. But as we progress from here on and more IP is moving towards hybrid category and large cap-oriented funds will lead to better retention in times to come. That's our thought process and view.

And just on the question on the silver and gold ETF, what is the kind of traction that we are seeing in the near term on these products?

I think as you would have seen, I think, gold silver -- and my only gold silver, I think most of the tax ETFs, I think because of our volumes, liquidity, I think we normally get a higher share. last 2, 3 years because underlying gold and silver. The increase in prices, we definitely saw the new investors, a lot of the investors coming in last 2 months ever since the volumes are , the price has come down. We have also seen a little bit decrease. . But interestingly, I think the act, which was ardently, I think was the total traded volume on the stock exchange that day as 63% of the volume was of the commodities. So I think we continue building this foundation. I think it's very -- we don't want to look at the numbers on a monthly or a weekly basis. But I think the key fundamental things, which is basically the tracking area, the liquidity, I think these are the two things we continue focusing on and there's a natural pull for the pro and we see well ever commodities depending on the cycle, the way they move. I think investors, whenever they come, I think we remain 1 of the first protocols.

Also to add, we are also seeing a lot of ships coming in this category. That will really give stability to this category in times to come, which is to happen about 5 years, 10 years well. I think that's a good trend. I hope we have answered your question. .

The next question is from the line of [indiscernible] from Yes Securities.

Am I audible?

Yes, please go ahead.

Just a couple of questions surrounding the SIS business. One is that when is the SIF business actually starting on the ground, is there any specific time line for that? And is there anything holding it up? That's number one. And number two, what is the outlook for this business from a medium term, maybe a couple of years' perspective and also long-term year perspective, from an AUM standpoint and also perhaps profitability.

I think with let me -- I will take the second question first, and then I think we are. This is a new business line. We somehow are convinced I think this is something very, very -- can become very big. This is something what it were about 10 years back. Very difficult to put a number to it 10 years back if somebody would have asked about the ETF business would not have been able to say how big it can become. But I think we are very, very -- we're seeing this business very -- see it as an important pillar in times to come. none. That is one of the reasons we've built up a very strong team under the leadership of industry veteran Andrew. And so I think what will be the numbers, whatever the AUM, we do not know, but I think we clearly feel, this is a product and a category, there is demand for that, there's a separate market for them. There's a separate niche and it requires specialized skill set for that. and we are getting ready. So this is an important opportunity. To your question of when do we hit the ground. I think we are already -- I think while we have not formally launched our product, definitely, there's a lot of work happening at the back end to decide and work on back testing of certain products and all which we want to launch because no idea trying to launch SIF, which is a mutual fund plus 10%, 20% variation of the mutual fund. I think you really want to differentiate it and add value to it. So to your question, I think we are very serious for this business because we feel it satisfies -- it takes sort of a separate need which some investors have. And I think Andrew and team are already working on it.

The next question is from the line of Praveen from HSBC.

Congratulations on a good set of numbers. Two questions from my sides. Firstly, about uCity, I wanted to understand your strategy and if you have any more products planned. Second is just about the little low and early fine and thing. So is there is any time line on resolution.

So I think let me take this one first. I think at this point of time, we do not have anything new to disclose other than that has been disclosed to the stock is changes. I think as and when we hear from SEBI, I think we'll inform through the stock exchanges. So that is I think part number one. Point number two, on the GIFT City, I think, again, it -- we feel -- I think GIFT City is again becoming an important gateway into India. So I think while there is a lot of discussion happening on money moving out of India launching products, which is under but we see a bigger opportunity on me coming into India. I think all our road shows that we've been doing in Japan and certain other markets, I think we feel to the acceptability of GIFT City is increasing, and more foreign flow will come into India through GIFT City. So we have our operations in place. We have a complete team. And we have some more details on Slide #25.

The next question is from the line of Maher from MK Global.

Congrats on a good set of numbers. So I have this 1 question on SIP volumes. So we have seen SIP volumes have been declining on a sequential basis. So any readthrough out there? If you could just help us understand what are the SIP trends in terms of flows with a to the month of April. And secondly, I just wanted to know your thoughts on the stickiness of SIP flows in the commodity ETF segment. Yes. These are my 2 questions. .

So the SIB inflows, if you take Q3 and Q4, of course, there is a jump in the Q4 numbers vis-a-vis Q3. Like I mentioned, November, December, Jan and Feb was a bit of a tough phase for the industry as well as the improved well lesser. But I think March, we have seen a slightly better month. So the trends continue to be better as we go ahead. So that helps us in net SIP growth every month, which probably will start now replacing further in the SIP book. We have seen in March, our SIP book has improved. So -- which is a clear indication that the investors are coming in with slightly better understanding of the volatility. So that's the first part. When it comes to chips in the commodity side, most of the ships are coming in gold and silver of course. And there are ships which flow into other categories which have got a commodity tilt like hybrids, like fund of funds. So we are -- we keep getting floors which are coming through the fund of fund also into our hybrid -- into our commodity front.

[Operator Instructions] The next question is from the line of Abhijeet Sakhare from Kotak Securities. .

My first question is for Sundeep. First of all, congratulations on the new role as well. Sir, on the SIP, again, like what we have seen in the last few months, like you mentioned, there was a little bit of a slowdown in net SIP inflows, just wanted to check here, whether you've seen people take money out and kind of take it out of the mutual funds itself or compared to the past, you see people kind of staying on within the mutual fund ecosystem and moving that money into some of the safer products or, let's say, at least more exciting products, commodity, ETF. Just some qualitative sense on that. And secondly, in terms of the fintech versus traditional channel, you mentioned that the fintech channel ticket sizes have gone up. So if you could just give some sense of what is the relative difference in terms of the fintech SIP book versus the traditional SIP? That's the first question, sir.

So SIPs. When it comes to SIPs, which are coming through fintech platform, like I mentioned, they are a bit of a short cycle because they come with a fast track record in perspective? And if there is a volatility, which is what is the fact in the market today, they tend to stop and restart. So the good part is they don't exit the they restart a new journey. And that's the reason why the ship discontinuation number in the industry looks to be on the higher side. But when it comes to net ship accretion, every month, there is a positive accretion, which is happening. . When it comes to the average ATS, as ATS is sequentially moving up on the digital side. maybe they are in the range of 60% to 70% of the regular SIP, which comes in from the distribution channel, but the catch-up has very good and very fast. So the education drive, which is happening digitally through fintech platforms and through the asset management companies is really helping the investors to commit a slightly larger SIP amount on a monthly basis. I hope I've answered your question.

Yes, sir. And secondly, a question for Parag sir, would be that what would be the revenues in the year 2026?

Percentage, it will be much -- it's higher than 92% oil on the overall revenue.

92% of the overall revenue on the mutual funds. Okay.

91% Abhijeet, sorry.

91%. Understood. Those are my questions.

The next question is from the line of [indiscernible]

One simple question. If I look at the industry leader and the recent one that also IPOed, adverse -- and looking at their operating margin versus our operating margin? Is there a clear pathway in our head where in we also can reach those EBITDA margin or given the product mix, we are likely to remain at lower EBITDA margin business compared to the other 2 companies?

So we went -- basically, the reason for us is that we are maintaining the EBITDA margin. That is what we have been continuing even though there is a trajectory that -- the question or the reason is mainly the , we almost contributed 33% of the EPS, we have significantly ETF higher NPS in our overall again, and that's why our margins are low. But the idea is to grow the overall profitability year-on-year and growth as a percentage growth, which is in line or higher than the most of the industry players. So that is what number we are looking at rather than the only bps, which is a derived number from that. So absolute profit will be more critical for us to monitor and grow as a business. .

And the second question, if you can share any update on the recent JV that we found.

So I think broadly, I think that's for our AF business as we have signed up a nonbinding agreement. And I think it's -- the idea is, I think we will be, I think, launching products in AI I think the idea is, I think we clearly see an opportunity to get a lot of overseas money and especially the alternate and the alternate and the infrastructure side. . Also, as far as the JV is conservative also helps in collaboration, not only in the AIF where it will be a JV but also within the mutual fund business to whether from a capability of international funds, ETF and also offshore money. So I think it will play out as the idea is to keep getting ready as India keeps getting stronger as the more foreign money will come into India. And I think building capabilities access, I think we're always very strong in Japan. So now this JV gives us an access to Europe.

And just 1 last question. Like in India, we have fed funds going into U.S., right? So let's say, there will be a Vanguard fund or a JPMorgan fund, and not specifically related to Nippon, but generally at an industry level, is there anything moving towards making a fund of fund kind of structure being made available in India, so that actually the retail money can come in because I understand the site, but the ticket size or Betwill also be higher, but the feed-on can actually drive much more retail AUM. So is there any work at the industry level to create freed up funds coming into India?

I think I will not be able to comment on behalf of the industry. I think as a company, our focus is always keeping investors in mind. I think and as and when we feel there is an appetite and there's a need I think we will be open to launch it. And to your earlier question, having DWS with us and Drives is 1 of the largest international place both also in EBS space, and our ETF and passives. So there could be -- I wouldn't want to say it will happen. But depending as and when there is a need from the investors and the demand from the investors, we feel we're in a strong position to launch products like this. .

That was the last question for today. I now hand the conference over to the management for your conference.

Okay. Thank you all for taking out time to join us on the call today. If you have any other further queries, we will be happy to address the same post the call. Thank you. .

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