Nuvama Wealth Management Limited ($NUVAMA)

Ladies and gentlemen, good day, and welcome to the Nuvama Wealth Management Limited Q4 and FY '26 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Ashish Kehair, MD and CEO for his opening remarks. Thank you, and over to you, sir.

Thank you. Good afternoon, everyone. And thank you once again for joining this call. It's a pleasure to speak with you all again. As usual, I'm joined by Bharat, our Group CFO; SGA team, and our Investor Relations advisers. We'll quickly cover the company performance for the quarter and the financial year and share some key updates and the progress around our priorities. And then following both mine and Bharat's remarks, we can jump into FAQ. Just summarizing the results, I think it was really an interesting year for everyone. It started with the whole tariff drama and with the war, and I think many things happened in between. For us, it was a complete test of resilience this year. We navigated multiple moving parts, including something specific for us and overall macro uncertainty. I think before we go into details, I'd like to take this opportunity to thank the entire Nuvama team and our clients for helping us navigate this time and emerge with a growth year even in these times. Looking at our specific businesses, Wealth Management continues to grow overall Wealth Management in the cluster by -- I think both the segments are showing a very, very healthy momentum. Asset Management build-out is progressing steadily. I don't think that business one should rush in because one bad performance here can have years of negative impact. And I think we are building out steadily. Asset Services was an important monitorable for us this year, specifically after what happened at the end of Q1, and I'm pleased to state that business has recovered fully and performed ahead of our expectations. Capital market remained broadly aligned and witnessed some moderation this year. Overall revenues for the year was closer to INR 3,100 and operating profit after tax was about INR 1,050. More importantly, as I said, profits from wealth. So composition of profits changed. Profits from wealth grew by about 23%. And despite challenges, profit from asset services was around 14% year-on-year. Bit on market outlook and some industry trends. I think we've always maintained and we continue to maintain that organized wealth management represents a multiyear structural opportunity. We still believe that the industry is in early stages. Some consolidation, of course, will happen because large number of players are coming in, like what happened with, let's say, private banking or NBFC over the last 3 decades. But I think over time, a few scale players with fully diversified multiproduct platforms will scale as long-term leaders, and there'll be a long tail. And this is a representative of what happens in Wealth Management globally also. A few themes, which are emerging across the industry, I think private equity interest in the industry is all-time high. There is early signs of consolidation within Asset management, specifically in mutual funds, we are seeing some transactions that are happening in the market where the smaller AMCs which have spent some time and is not fitting into the strategic priorities of the promoters are moving into stronger hands. And there is a growing preference for full stack platform. So there will be a few niche single product or dual product platforms, which will remain. But I think their scale will remain a challenge. Multiproduct, which has wealth asset management, banking, research, custody, all put in together, has a far more stronger client value proposition, resilience and, I think, a compelling opportunity for investors. Industry models will evolve. I think over the next 5, 7 years, as the sector matures. Several global platforms, which we've seen in the past have transitioned from a stage of infancy to this mature multiproduct state. And I think India will move much faster than that. Coming to our business highlights, starting with Nuvama Wealth our focus area of managed products and investment solutions of MPIS, as we call it. It continues to be core growth engine for Nuvama Wealth, almost full revenue growth for this year has been contributed by this product subsegment. The revenue stream, as I have alluded in the past, is a combination of managed products, which is AIF/PMS, which are all annuity bearing and other investment products, which is fixed income, [ MLDs ], insurance, et cetera, which are not annuity very. Total MPIS revenue for the quarter now stands around INR 150 crores which about 2, 3 years back was the full revenue of this business on a quarterly basis. This year, MPIS revenue has grown by about 38% on a full year basis. Assets have grown by 32%. Net flows have grown by 38%, representing about 30% over the opening assets. So I think it's a very, very robust and healthy growth we've been able to achieve. Lending, if you recollect, over the past 2, 3 quarters, we've been talking about this that we will increase focus and it's now visible in the loan book. The loan book has grown by about 27% for the full year basis. and closing books stood at about INR 4,900, almost INR 1,000 crores higher than the average book. And NII continues to contribute about 20%, 22% of the revenue. There is some upside still there in this Net interest income for the year did not grow in line with the loan book, and that is very, very specific because once whichever quarter or whichever time or loan book suddenly increases, there is a ECL provisioning that comes in, which is basis RBA. And in the next quarter onwards, that gets normalized and the NII picks up. And second, in Q4, there was a specific phenomena, there was extreme volatility in the market because of the West Asia crisis, which basically leads to a behavior in our ESOP book where people don't sell the exercise, but they don't sell because they wait for the prices to come back. And what happens to us is when they sell our processing fees recognition gets accelerated because otherwise, the processing fees over the life of the loan, which theoretically is 1 year but behaviorally, these loans don't last more than 3 months. So I think once the markets are now back, so in Q1, we should see some acceleration of processing fees. So there could be a quarter lag between the loan growth and NII growth. But eventually, if you look at 12-month rolling, it will catch up. Coming to the RM franchise. I think the mandate here was what we are calling seniorization of the team because the quality of clients also are gradually improving. Last 1, 1.5 years, we've spent on that. A significant part of the team has been now become senior as compared to what we were about 2 years back. On a net basis, we added about 80 relationship managers in this cohort. And when I talk about productivity later, you'll actually see the impact of this happening. A lot of work is happening on technology and AI front here. Foundational work is done. We are now implementing implemented solutions for relationship managers across their value chain, which is acquisition, portfolio advisory, rebalancing, tax loss on vesting the whole value chain or interaction value chain between RM and our client. And we've seen the productivity improvement, which is flowing through because of usage of these tools. Earlier, we were restricting the tools only to training, which is now fully functional rolled out. Now we've moved into advisory also. So we've seen about a 25% per RM revenue jump in this segment. And I think a large portion also comes through the usage of AI, which, to my mind, will continue in the future. On the solutions side, we've added something unique in this segment. we've launched a service called [ Virasa ], this is nothing but a full fledged estate and legacy planning tool for the clients in this segment. Earlier, this was thought to be a product which is needed more in the ultra-high net worth segment. But I think even clients in the UHNI segments are now not only they've come to money, but they also have a reasonable amount of complexity because most of them will have children studying overseas, planning to settle overseas. So you need to now have a structure, which helps them transition the assets in the most tax-efficient manner considering that now there is offshore exposure also. I think we sat launched and we are very, very excited about this product. Moving on to Nuvama Private. This segment also continues to witness a solid healthy growth momentum. Starting with again product ARR. The revenue stream here consistently has grown by about 25%, 30% over the past few years. And I mean now steadily contributes about 60% of our revenues. ARR assets about INR 54,000 and yields are nearly between 85 basis points to 1% this quarter being 1%. So I've always maintained that quarter-to-quarter 10, 15 basis points can move. But on an average, we should end up somewhere around 90, 95 basis points. Our net flows continue to remain strong, about 22% of opening assets in line with our full year guidance. even year-on-year, if I remove the one chunky flow that came last year, which was related to an M&A deal, we've grown the absolute value 20% Y-o-Y. Alongside the growth in distribution assets, we've also seen expansion in our in-house advisory solutions. We now have a full-fledged nondiscretionary, discretionary PMS, we have advisory we have structuring. So I think that will all give an impetus to growth in the future. Coming to lending, here also lending has been in focus. But even now, it only contributes 10% to 12% of the revenues, there is scope to go up to 20%, 25% over the next few years. On the RM side here, just to give you a brief snapshot over the last 4 years, amidst this entire competition, noise, multiple players coming in we've been able to add about 60% of our capacity. We moved from [ 92 ], about [ 150 ] now. We will continue to onboard talent selectively. And we have a stated compensation philosophy, and that is not only performance oriented. It rewards on merit aggressively increases as people perform better, but it's extremely transparent and aligned with long-term value creation. I think I wanted to leave a word of caution here for people that we've witnessed over the last 12, 15 months, a large number of new players are making lofty promises to RM of future valuations, which seem extremely stratospheric to us and no visible monetization signs. I just want everybody to be thorough in their diligence before making any such plunge because of the last decade, we've seen only 2, 3 platforms where people have actually realized value. Rest have either remained on paper or never realized. And in the process, unfortunately, many careers have been damaged. I think here also, we continue to in Nuvama Private also, I think we continue to invest a lot in our tech and AI. We've launched Agentic AI, which basically works alongside the RMs and doing again, portfolio analytics, performance tracking, product insights. And again, here, we've seen our productivity jump about 10% to 15% revenue per [indiscernible] we've also launched an industry-first multicurrency module on portfolio reporting. Basically, we've maintained in the past that clients are increasingly allocating to offshore. And if the Indian market give 1 or 2 years of somewhat tepid performance, which has happened recently, that phenomena will only accelerate. And with that happening, you will need technology to support a multi-country, multicurrency portfolio for clients to review rebalance and basically, over a period of time, have control over the portfolio. Moving to Asset Management. As I said in the beginning that we continue to steadily build our capabilities around asset classes here. I'll start with commercial real estate. Commercial real estate has been extremely successful this year. We've closed, I think, right now, the full fund is closed [indiscernible] but as of end of quarter 4, we were about INR 3,800. We finished acquisition of 3 marquee assets, about 3.8 million square feet or 40% to 50% of our funds are deployed. Once we start touching 70%, we will launch a new fund. We are working on the thesis of the new fund. I think second half of this year is where we should look to launch. Again, the target should be anywhere between INR 3,000 crore, INR 3,500 crores, part of which, of course, will come in this year. Pre-IPO private equity, which is our oldest strategy in some sense. We started to exit our first fund crossover 3. And we've launched a new fund crossover 4, which basically should be live -- the fund rate should be alive for the next maybe 6 to 10 months, and we should target to raise INR 1,000 crores, INR 1,500 crores there. We strengthened our leadership team here. We've hired Aditya Arora, the CIO. He has more than 2 decades of experience in private market investing across forms. I've been talking about private credit as a strategy. Happy to state that we now have the CIO in place, Amit Kansal. He joined us from [ Aditya ] that was hit last assignment, has 25 years of experience in credit across the risk spectrum from performing to specialists to distress. We are right now building the team, and we expect to launch our first fund. I think by end of Q2, again, maybe target about INR 1,000 crores, INR 1,200 crores or INR 1,500 crores in the first fund, some part of it will come in this year. This credit, I think, is an important expansion of the platform because not only does it augment asset management and takes us towards more exhaustive book, but it also helps a lot in giving implication transactions for our wealth clients and wealth business. Coming to public markets. Public market, I think the year was extremely volatile. It was in line with what the industry saw at least in the HNI [indiscernible] segment, incremental allocation to equities did not come. We got gross flows, but we also saw redemptions. So on a net basis, we are nearly flat. Hopefully, now once the market bottoms, and there is recovery we should be able to see that. But the key element here is we are in the process of getting the MF license. Our final inspection has happened, and hopefully, if we get the license in another 2 months, maybe plus a couple of months from there, we should launch our SIS in which over a period of time, we will migrate our long-short strategy, which now has a 5-year track record with the quartile performance. In this business, we've also strengthened our distribution team. We've added -- we have recently onboarded Numesh Mehta as the Chief Business Officer. He comes with years of distribution experience across forms like Motilal and ASKs management and will play a key role in building and scaling our distribution capabilities. Coming to Asset Services. I'm really happy to state that business is back on its growth trajectory following the loss of decline that happened in Q1. And we saw a drop of interest rates by 50 basis points. So we've been able to overcome both of that Q4 revenues exceeded Q1 and full year revenues grew by about 12%. It's important to note, many at times, we've been asked this question, that is this business completely aligned to what happens to the markets or the flows of the market. Now if you look at the current year, despite the headwinds, index not doing anything, volatility in the market, yield compression, loss of big clients, yet there is a near 15% profit growth, which basically signifies that this business characteristic is different from your core capital markets business. Volatility is far lesser. The drivers are very different. So we should not end up equating the same in terms of what will drive this and those businesses has -- needs to be get separate. This is more market infrastructure like business. Our focus here remains around increasing our market share and product value enhancements. On the international side, we are aggressively working with what is called GCLC type, global custodian, local custodian, and we are on the word of signing one of them globally. On the domestic segment, I have highlighted before that we are building out the RT and trusteeship services. These offerings are expected to go live by middle of Q3, and this will help us further increase our market share in the domestic clients. We are currently at 22% of our chosen segments. Lastly, coming to capital markets. I think secondary market activity moderated through most of FY '26, equity cash ADT declining by and future set declining 14 options although remained strong at 8% Y-o-Y growth. Q4 witnessed a rebound of activity, but that, I think, was mostly led because of the volatility of West Asia prices. Coming to the primary market activity, I think the year was still okay. record IPO mobilization across more than 100 main board IPOs despite market conditions. Although in H2, I think the story changed a bit. Retail participation went down. The quality of IPOs changed. There were certain large IPOs where the fee pool was smaller. So overall, I think we were able to maintain our market share or slightly in our market share up from 18% to 19% in terms of value, and we were 15% in terms of deals. But I think the market saw a reduction overall in the QIP volumes, which had an impact on this business. Coming to fixed income within capital markets, we had a healthy growth of about 35% year-on-year. We maintained #1 ranking in public issues and in private placements, we are between 3 or 4, given -- I mean, in one quarter, we could end up 3 and the other quarter, we could end up at a fourth position. Most of the others who are above us are large banks in the balance sheet. I think that sums up from my side. I will now like to hand over the call to Bharat to take you through the financial numbers in detail, and then we can cover the questions which you have. Thank you. Over to you, Bharat.

Thank you, Ashish. Good afternoon, everyone, and a warm welcome to all the participants on the call. Ashish anyway has covered the broader business environment as we are our own strategic initiatives and the market context. I will now jump on directly to the main numbers of the -- for the firm. I'm pleased to share our quarter 4 and FY '26 results where we have seen almost like a steady growth across all our key businesses. Ashish did alluded to the fact that our IBNI was subdued in this quarter. But otherwise, all key businesses, whether it was wealth, private or asset services or decent a stable growth year-on-year and quarter-on-quarter. If you look at it from a headline number, we have actually crossed the operating profit margin number of INR 1,000 crores in this year, this is a big achievement for us. And similarly, if you look at that on our dividend side, we have again declared a dividend of INR 14 for our H2 FY '26 that takes to roughly 50% of our profit being paid as dividend which is consistent with our dividend distribution policy. Having said that, if you look at on the overall client asset basis, our total firm level client assets were at 4.5 lakhs, which was helped by the flows across the businesses, including asset services, wealth and private, but there was a mark-to-market impact on the headline numbers. That's where the impact on the client as it reflected. On our terms of the revenue, the quarter 4 revenue was around INR 825 crores, which is a 7% Y-o-Y. But if we remove IE and IB businesses for the quarter, our actual revenue mix of IE and IB grew by 13% in quarter. And if you look at on a full year basis, excluding IE and IB, our revenue actually grew by 17%, which is wealth and private has actually shown a 20% growth. And now where can private put together contribute 55% of the firm revenue, which was almost 49% last year. So the share of wealth and private has actually gone up. Even if I go further down, if you add wealth, asset management and asset services, now they contribute roughly 80% of the revenue for the firm, which was 74%. I'm highlighting these numbers are because this gives you that predictability of the earnings in the coming quarters and years because these business are more recurring in nature compared to maybe IE and IB, which can have a cyclical impact on a year-on-year basis or on a quarter-on-quarter basis. Even if you look at the total cost for the firm for the quarter, the total cost, when I say total cost, it's [ employed ] plus OpEx has actually gone up by 9%. And on a full year basis, it has gone up by 10% only. The reason of calling out is that, that, that reflects the variability in our cost that in a year when the revenue growth is lower, our cost can be control or can be reflective of the overall performance. Maybe as a reference to the fact that if you look at our FY '25, our revenue went up by 41% and our cost was up by 24%. And in this year, as the revenue has slowed down, so as our cost has been controlled to that extent. Multiple reasons for the revenue slowdown growth was discussed during Ashish opening remarks, but that's where the cost part comes in. And if you look at from a Q4 cost versus Q3, you will see a growth in the number, but that's typically a seasonality impact, which happens I would say you compare Q4 FY '26 with Q4 FY '25, you will see that the cost has only gone up by 8% to 10%. OpEx is up by 7% and employee cost is [indiscernible] that's where the number is. So it's a seasonality which plays in Q4 if compared with Q3. Within costs, if you look at that, our OpEx is around 27% of the cost. That is quarter-on-quarter, we'll see a growth of 27%. But if you compare it with previous year, quarter 4, the growth is only 7%. This is just about the seasonality of the cost. Similar trend, you will see it on the employee side, also employee cost side. So to that extent, we are comfortable with what is happening on the cost side. Just a word of upfront disclaimer that we in FY '27, we will have some incremental costs coming in our asset management business. As Ashish also alluded to the fact that we are launching the new strategies and obviously for our mutual fund license as we are moving towards the SI business, there will be an incremental cost, which will come, but that's more like an investment, not really a so-called cost in isolation to be seen. In terms of the overall, happy to share that the wealth management segment, when I say wealth management segment, wealth and private put together, the cost-to-income ratio has actually come down by 80 basis points compared to previous year. And even if I look at Asset Services and IE and IB, the cost-to-income ratios are actually improved by 100 basis points, just because wealth and private composition has gone up in the overall firm contribution, that is that you will see that the cost to income at a firm level has moved from 55% to 56%, but this is just a composition issue. Otherwise, the operating leverage in both the business is being reflected in the cost income ratio being lower than previous year. Operating PAT, again, if you look at for the quarter 4, it was INR 269 crores, which is a 5% Y-o-Y growth. But within wealth -- within the segment, within the profit growth, well segment actually grew by 23% and Asset Services grew by even on a full year basis, is a similar trend where wealth and private has actually gone up by 23%, 24% and Asset Services is up by 13%, 14% in that range. Our ROE has been healthy at 28% for FY '26. Ashish covered a lot of details in terms of the individual businesses, but if I have to take headline numbers on the Nuvama Wealth, the client assets are at around 1.1 lakhs, which is a 14% Y-o-Y growth despite the mark-to-market impact coming in the last quarter. Our NPS assets now stood at around INR 39,000 crores, and we have registered a net new money of around INR 8,900 crores during the year, which is a 30% growth on the opening NPS, which is where we've been steadily communicating that the well should have anything upward of 25% to 30% as an opening net new money on the opening NPS. So we've been maintaining that. The revenue was at INR 960 crores, which is a growth of 18% and the retention level retention remains stable at 90 basis points or so. Again, if you look at the data book, you will find that the cost-to-income ratio for wealth business has actually improved by [ 135 ] basis points compared to previous year. Now it is running at, whatever, 65.7% but the operating leverage is started playing in. This is were reflected in the cost to income and the operating PBT went up by 22% for wealth. In terms of the private, again, the numbers across the key parameters, whether it is the overall client assets, whether it is the ARR, I said, which has actually gone up by 22%. The net new money, which is again up by 22% or the revenue has actually gone up by 24%. ARR revenue as of now, have now touched 60% of the total revenue for private, which is where we actually we feel comfortable at 60%, 65% revenue coming from ARR side. So I think we are on the right trajectory. Overall, retention again remained in our guided range of 85 to 90 basis points. So nothing to call out there. anyway, we deliberated on the RM expansion, how we have actually added the people over the 4 years and in this year, particularly, the PBT for this business also was up by 4%. Asset Management, we discussed, and Ashish actually alluded to the leadership hiring, which we have done in the business is both for our private business for our private credit as well as on the business side. So I think that piece is at least taking the right shape. Otherwise, if you look at our management fees, income, it's actually up by 31% on a Y-o-Y basis. So I think this is where we are heading. In terms of Asset Services, we did around INR 209 crore in Q4, and we did around INR 193 crore in Q1. This business has actually done better than what we expected for quarter 4. Despite that, the interest rate has actually come down and our earnings is basically a fixed deposit earnings on the margin money given by the clients despite of that. the business has actually came up well. On the IE and IB side, the revenue, if you look at compared to quarter 3 is broadly there, INR 138 crores versus INR 135 crores. And we did discuss about how the market in the quarter 4 has actually played in more specifically on the ECM side. One more thing which I want to highlight, which in terms of the fixed income, which is part of the IB business, that has actually grown 34% on a Y-o-Y basis, and now it contributes almost 50% of the IB top line. And this business is more structural in nature can see a compounding growth of 20%, 25%. In the -- it has seen it and it can continue to see a growth of 20%, 25% compounding in the years to come. ECM, obviously, you guys understand this is more linked to the market activity. That is where the volatility or a quarter-on-quarter seasonality can claim. But otherwise, this business has been doing decent for us. Overall, PBT for Asset Services and capital market was around INR 830 crores. This is where we are. And I think if principally, we look at our various businesses, it seems that businesses are on the right track, and our focus businesses are performing relatively much better than what we initially planned for. And I think that's where we are. I and over to the moderator in terms of the Q&A now.

[Operator Instructions] Our first question comes from the line of Manas Agrawal from Bernstein.

I have a couple of questions. I'll start with the relatively easier ones. ECM, there are a couple of large IPOs that are coming on. How should we think about our market share on revenue for the year? Are we active in those deals or not? And second, from a regulation perspective first of April, Mutual funds have cut commissions. So what is the impact for the business or the [ consol ] from that perspective. So that is on -- on the Asset Services business, I wanted to just understand, a, on yield trajectory because I understand deals were elevated and now rates have come down. So you've seen some amount of contraction going ahead? How do we think about that? The last question is on wealth. You talked about a 25% increase in revenue per RM. Is that all AI productivity? Is that including MTM flows, et cetera, how to think about number of clients per RM in a steady state. Those are the questions.

So let's start with Asset Services first. I think broadly, when we do the numbers on yield, unless and until we have a client, which becomes extremely large and ratio of collateral shifts, I think the yield should remain at this level. I don't think the yield will compres because we've seen a decline in the overall interest rates happen and that flow-through has largely happened. Maybe in the next 12 to 15 months one-offs, we will see a reverse of this happening. If the inflation stickiness is there because of fuel prices or the war situation being there. And if the Central Bank is forced to increase the rates, then I think we will see further upward trend in yields that will play out as and when our deposits get repriced. On the ECM side, I think our overall pipeline right now. We have about 40 to 45 live mandates across, largely across ECM and some in advisory. So the pipeline remains healthy. I think Q4 was when things got pushed a bit and which we should see the recovery happen in the coming quarters. And even in advisory, we have certain large deals which are there. So hopefully, we will have a good year in investment banking this year. Fixed income anyway, continues to move at a very, very rapid pace there. On the wealth side, 25% increase in productivity is a combination of actually 2 things. One is the seasoning of the vintage of the RM. If you see last year, are less than 1 year cohort was around 40%, 45%. This year, it's fallen to about 33%. So which means that the RMs of higher vintage have increased in terms of cohort. So that contributes some increase in productivity. And second, of course, the contribution comes from the various initiatives you've taken improving the learnability and improving efficiency of people, which is where AI plays a role. Net new money itself doesn't lead to increase. It's an outcome. It's not the cost. The causes are actually these net new money and productivity increase is basically the outcome of that.

Understood. Any indication on the mutual fund commission cut impact?

I don't think we will go through that. I mean it's not a topic which got discussed very frankly, internally. So I'm not sure how important it is for us because IE revenues for us, mutual fund is less than 20%. And the pass-through that happened because whatever initially was proposed and what finally came through and the net margins which we get, I think, is similar to what came through. So there is hardly any impact on.

Our next question comes from the line of Dipanjan Ghosh from Citi.

So 3 questions. First, if I were to think of FY '27. And obviously, there's a lot of geopolitical uncertainty that still persists. Now on that backdrop, if you were to think of the transactional revenues ex of broking majorly in Nuvama Private and maybe to a certain extent in Nuvama Wealth also. Just wanted to get some sense of the deal pipeline that you envisage? Or in terms of market activity, what is the sense that you're getting in terms of the transaction revenues? Because FY '26 was a relatively good year for the company on tax rate. My second question is on the Nuvama Wealth business. Now if I look at the 4Q yields, normally, it tends to be a little bit affected on the managed products and Investment Solutions because of the insurance revenues, but if I look at 4Q to 4Q, I mean the yields have held up fairly well. Despite the backdrop that 1 was expecting maybe some moderation post the ITC changes. So just wanted to get some sense of your insurance commissions. I mean, how has that really held up or was it? Or was there some upfronting of CAT I, CAT II AIF led commissions out there? And the third question is on the overall wealth piece. Basically, if you were to look at the new incoming customers that you're getting, maybe more from the perspective of Nuvama Private and to a certain extent, maybe the high-quality customers in Nuvama Wealth. Would this be more from smaller cities, low ticket size, generational wealth or first generation customers or it will be like poaching from Astral bank service customers? I mean if you can give some color on the customer quality or demographics out there. And I have 2 data keeping questions, which maybe I can ask at the end.

So the [ Pason ] transactional revenue overall in FY '26 for private, the jump was about 14%. So it was significantly lower than actually the ARR revenue. ARR revenue was 32%. I think if you look at both the businesses and if you look at the decomposition of the transactional revenue for us. Like you said, broking is a large component. And then there is fixed income, which is again a flow business. which actually improves in times when geopolitics goes through this zone. Third, so I think between these 2, if we add in Nuvama Wealth, at least, this would constitute about 90%, 95% and 5% would be some transactions or deals, and that also, I mean, unlisted for us is reasonably small and hopefully with NSE listing for everybody, it becomes small because we've considerably reduced the exposure to unlisted over the last 2, 3 years. It's not a large sum for us. So whatever deals happen, they will happen more in higher credit transactions where we are co-investing with some fund or in commercial real estate, if any. So those are really not impacted by the geopolitics. So for us, actually, except broking, which is more linked to market volumes, lest everything is reasonably insulated and actually works better when the equity markets don't do well. So both for private and wealth, we don't see that as an impact playing through. I think it could only benefit. From a yield perspective, I think right now, the insurance yield impacts have been negligible for us. It has not led to that impact. In fact, the overall volume of insurance growth was also not like historically, we would grow by 50%, 50%. I think it's stabilized more to 25%, 30%. But the yield impact is not there. Yes, a bit of category to may be higher this year because, again, reason being that if equity markets don't do well, then more money flow will happen in yield-based products, which actually sit in category 2. So there is some amount of first year commission, which is about 30% of the life commission. So about 10% extra is what you make, which can insulate the yield a bit. New customers actually remains the same. I don't think there is any change in demographic. -- migration from banks is a continued phenomenon and that will continue to happen. In Nuvama Wealth, Tier 2 is -- I mean, beyond Tier 1, Tier 2, actually is 35%, 40% of our business. In private still, I would say the top 8, 10 cities constitute about 80%, 85%, 15% would be below that because the density of this thing is still lower. I mean there are people there. But if you compare it to, let's say, Mumbai, Delhi Bangalore, Hyderabad, Chennai Bangalore, the density of wealth is far, far, far higher. Maybe another 2, 3 years' time that [ 15, 20 ] could reach to a 30% level.

Got it. And just 2 data keeping questions. One is for FY '26 and 4Q '26, if you can break up the IB/IE between IB and IE. And the second question is, what would be your distributed mutual funds within the overall cohort of distributed MF, PMS, AIS, I mean whether you put the overall wells together or private and well segregated out there.

About INR 8,000 crores to INR 9,000 crores.

Sorry, sir, this would be your overall distributed MF, right?

Distributed MF. Yes, a border line INR 9,000 to INR 10,000, correct.

And if I can give the data on IB/IE...

IB and IE broadly, right now, the split would be 30-70. 30 IB, 70 IE.

Our next question is from the line of Lalit [indiscernible] from Equirus Securities.

Sir, I have 2 questions. So firstly, if we look at the cost constant ratio for both the wealth segments for FY '26, it still -- it's remained around in the range of around 66% to 67%. So how should we look at this number for the next 2 years, incrementally given that we are seeing improvement in the RM productivity as well? And secondly, on the asset services business, if you just do a back of the envelop calculation, it suggests that our cash collateral within the asset under custody, asset under clearing has increased to more than 40% over the last 2, 3 quarters. Just wanted to understand what would have driven those things? And how should we -- and is that -- will that be one of the reasons why we are seeing some pickup in the [indiscernible] and just 1 data keeping question, sir. Like within the MPIS revenue in the Nuvama well segment was full year '26. What would be the split between recurring and the transactional revenues?

So cost income, just quickly covering that, Nuvama Wealth, we've seen 130-150 basis points compression this year. And that is -- that always will remain, I mean, a toggle between productivity improvement and how much we want to reinvest back in adding capacity because if we get growth I mean we could have spent that entire 150 basis points and adding more RMs, which we chose not to. But I'm saying productivity improvement led growth is 150 basis points in 1 year. In private on the other hand, whatever productivity improvement happened, we reinvested in adding capacity. So this will keep moving. But broadly, like we keep saying over a 3-, 4-year period, you can see a 100 basis point reduction every year. Obviously, we can choose to change if we want to add capacity at more aggressive pace because there is growth to be had. When many such players are coming into the market and operating at a loss-making business, I think we don't want to let the field get captured by others. So we will continue to grow. And we will continue to toggle between how much of the productivity gains, which we will reinvest back into adding capacity because that gives us future growth. I think the second question was on the yield of Asset Services. Yes, the cash component would have gone up. That is the reason why the yield has gone up, and that is because when we launch that large client, their cash component used to be lower given the size of their collateral. That was replaced with large number of smaller clients. So their ratios would be different. As I keep saying, as the client collateral size goes up, your ratio could change and cash would come down. But broadly, you will either be at 70-30 or 75-25 at a portfolio level. The main trend or the impact on yield going forward could be how the interest rates move if the inflation remains sticky. There is a -- if you can -- if you think that there is a 50% upside in, let's say, RBI will hike rates over the next 12 months. then a flow-through of that will happen in deposit pricing, and we will see the yields go up if that happens. In MPIS, about 60% to 70% would be maybe 60% annuity and 40% transaction.

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

[indiscernible]

Abhijeet your line is extremely disturbed up.

Just one -- Hello. Is this better?

Yes, this is better.

Okay. So this was an industry question, taking the lead from your opening remarks. For incumbents, when we think about the ultra-HNI business, it's obviously a compensation problem, but at the same time, like you say, new entrants do not have a large platform as us. But from a client's point of view, how are they looking at all of these new entrants? Are they starting to kind of give away part of the wallet share and that's why the industry is kind of getting more fragmented?

So part of it, I think, will happen. That fragmentation. If you look at wealth management, is a global phenomenon. I mean even if you look at players like maybe UBS and all which are world leaders, they have a 2% market share in the global wealth [ famine ]. I think India will be more skewed in that sense. There will be maybe 3, 4 large players but there will always be a long tail. And what happens if you have a large platform or a multiproduct platform that you will be able to retain or you will be able to get significant proportion of the client portfolio because they also don't want to go through the hassle of having multiple advisers unless there is some genuine value add and gene value-add in client size could be an access to a transaction or access to a product, which, let's say, you cannot provide, but somebody else is providing. So typically, the way industry structure will evolve that large clients will have, let's say, 1 or 2 core wealth managers, where bulk of their portfolio is it. So most of the annuity income and most of the transaction -- large part of the transactional income will sit there. And then there will be smaller players who will have access to some deals, transactions where there will be a long tail. Obviously, in these smaller platforms, also there will be certain exceptional RMs who will move, they will be able to move some relationships. There is no question about it. But I think it will be a struggle because every large clients [indiscernible] line, for example, a let's say, if you already have a lending line with an institution where your products which are not so easily marginable, AIF, illiquid products it's difficult for a smaller platform to extend. There are single borrower limits, there are group borrower limits. Then to be able to set up a vehicle offshore to move money. So I mean there are significant number of investments in the platform that will be required to be done, capital investment that will be required to be done for some players to start becoming meaningful in this process. INR 10,000 crores, INR 20,000 crores, INR 30,000 crore AUM, few RMs, a few initial client successes, one-odd unlisted deal, one-off credit transaction. All this will continue to happen and create a lot of noise but on a systematic basis to attract flows, attract people, the kind of platform and infrastructure that is needed to invest and maintain. I find it very difficult to see that all these new incumbents will be able to do it in [indiscernible].

Got it. That's very helpful. The second question was -- if you could clarify on the point that you made on the DTC [indiscernible] how does it play out? And what are the benefits?

So basically, when FPIs are investing globally, there are certain categories of investors, which are like long -- large long-only funds, we then work with large global custodians, which are multi-country presence. So somebody like a State Street or somebody like a city will have a multi-country custodian presence, so they will be able to offer their relationships. But somebody like us who is a single country, single currency, custodian does not have appeal for such clients. So how do we counter that? We counter that by having a strategic tie-up with a global custodian which does not have presence in India. So it adds for them a new service or a new client segment which they can go after. And for us, we get access to clients, which we would otherwise don't have. So this is something which exists globally, and we are aggressively pursuing. So we have 1 or 2 types, which are in the works. Once we are able to close, that'll basically open up a new set of clients, which we were not able to access earlier.

Got it. And just one last data question. In the ultras business, around 4,000 families that we have, if you could give some further color on what is the distribution in terms of, let's say, more than INR 5 crores or INR 10 crore relationships?

I think more than INR 10 crore, which is -- if you see the vintage and intersection AUM, more than INR 10 crores would basically be, I think, the third of the clients which contribute more than 70%, 75% of the AUM. And this phenomena consistent across the top 2, 3 leading players in the market. As per our study of data, people -- so families which have spent more than 3 to 4 years, start graduating towards higher AUM per family and then that becomes a larger proportion and rest would be [ IP ] so I think about 1/3 to 40% would fall more than INR 10 crores.

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

My first question is to the asset management business. Now if I look at '26, we had about INR 1,800 crores of net inflows, obviously distorted by public markets now in '27 you have...

INR 1,000 crores, net inflows.

INR 1,800 crore, right?

No, INR 1,000 crores of net inflows.

Okay. So that now understood. Now if I look in terms of '27 where your AIF and private credit is expected to be launched -- so I just wanted to know basically how do you see '27? What are the reasonable estimates that we can expect from the segment?

Let's go strategy by strategy. Private equity, we've launched our fourth fund. We are currently sitting at about INR 250 crores, INR 275 crores. We target to do maybe anywhere between INR 1,000 to INR 1,500 let's take the conservative side if we end up at INR 1,120. So that adds up about INR 1,000 crores there. Private credit, again, as I said, the launch will be somewhere around H2 and the first fund could target may be INR 1,500 crores. Part of it, which will come this year. I can't certainly say how much, but maybe half of it comes this year. Commercial real estate, our next fund also gets launched this year. That would be INR 3,000 crores to INR 4,000 crores. Again, maybe 30%, 40% starts coming in this year. And on the AIF and public market side, maybe once we launch and we start seeing the flows happen. Next quarter, we could discuss the numbers. And by that time, maybe the volatility levels of the market also should settle down.

Understood. This is very helpful. My second question is towards the Wealth division. I mean, if I look at the external wealth managers. I think we have added about INR 1,000 over the last 12 to 15 months. Now we have about INR 8,000 external wealth managers. And our own RMs are pretty stable at about INR 1,100. So do you see this kind of business model evolving more towards AWM rather than your own RMs, although I understand the economics kind of remain the same but just wanted to understand the business model here.

No, not really. We will grow both and even on RM. So what has happened in the own RMs right now is that though the number may look steady. But as I said in my initial remarks that we're doing the process of seniorization. So your individual RM that is going out and the 1 that is coming in, the 1 that is coming in we are getting more senior variety, higher fixed pay variety. So even if the productivity level in terms of ex time salary. So the way industry looks at productivity is very simple. If I give somebody a salary of INR 100, what multiple of that comes in as a revenue. So let's say, if you were having an RM of INR 100 and that person was generating 3x, INR 300 ofrevenue. Now we have an RM of INR 200, and he is also generating 3x, which is INR 600 of revenue. The contribution to the company increases substantially because your other cost per RM do not increase at the same pace. You understood. So that phenomena also adds to productivity and operating leverage.

Understood. Just lastly on attrition, I mean, have we had any kind of a regulated attrition during the year? And any loss of RM because any loss of AUM because of that?

You don't typically lose lots of AU because the number of books are large. Regret attrition in private maybe a range of 1%, 2%. And in wealth, maybe with maybe 3% to 4%.

Our next question is from the line of [ Saurabh Dhole ] with Fies assets.

I just have 2 questions. First is on your private assets front, what exactly is causing the yields to kind of be so strong. I understand there is a mix component here where transactional assets versus ARR is in voting. But is there any other color that you can provide for the yields? That is question number one. The second one is when you look at your ARR composition or ARS share improving, to what extent do you think this is happening because some of the transactional assets are moving to ARR?

Actually, for us, the second element has still not started playing out. This is a huge opportunity, which we discuss internally, and we are yet to crack it where we basically have this mechanism of moving transactional to ARR, which will happen in somewhere around next 12, 15 months because now we have the nondiscretionary PMS, the discretionary PMS, all the enabling vehicles are in place. We need to orient the team and start going out and demonstrating the benefits to the client so that migration will happen. Right now, that's not happening. It's purely business fresh flows that are coming into ARR. Actually, when we look at the yields, the product-wise yields, there is no change. It's basically composition led. So as I said, between 80 basis points to 1% it will range depending on the composition change on a quarter-to-quarter basis. We've looked at it multiple times. There is nothing more to read into that.

So given the fact that ARR is growing much faster than transactional, does it mean that there is more headroom to use from here?

Actually, our yield which we publish here is only ARR yields. That's not a composite yield.

Our next question is from the line of [ Sandy Agarwal ] from Unicon assets.

So first question is on the Asset Services business. So given the RBI bank guarantee homes would kick in. Do we see any impact on the yields from the services business perspective? And like do we see any changes on the ROCE basis of Nuvama capital employed? Second is on the -- so we are seeing on the capital market or you can set service mine business. So we are seeing upside in the FPI educative turnover on BSE and the SFT contribution in terms of participation on the BSE particularly. So how do we see as a trend for our business going forward, given the incremental client addition that we are also seeing in [ Arbon ] also on the exchange side, we are seeing a good momentum there? And lastly, just if you could highlight anything -- any updates on the [ PAG ] side? That would be all.

So the bank guarantee thing, we've done the incremental borrowing and all. Basically, for us, we did the math that has an impact net of deposit costs of maybe some INR 10 crores, INR 15 crores a year. So not much should get covered in. In terms of increase in volume, that, of course, will have a positive rub off on the Asset Services business because if the volumes increase, I'm assuming that the profit pool for players will increase and they will deploy more capital. deployment of more capital basically means more collateral and therefore, more earnings settle come to us. On the PAG side, as we have maintained that they've spent about now 5 years with the asset, they have seen reasonable returns at -- and they are a private equity fund. So they will exit at some point in time. Right now, there is no process that is on whenever something happens, I mean, you will also come to know right now in its just fits.

Okay. And impact on ROCE basis we are seeing from the...

[indiscernible] with INR 15 crores, INR 20 crores of...

Yes, that would be negligible.

Yes.

Ladies and gentlemen, we have no further questions at this time. I would now like to hand the conference over to the management for closing comments. Over to you.

Thank you. Thank you all for coming again. I think we'll see you again after the end of Q2, hopefully, by then the geopolitical situation would have resolved, and we'll have something to cheer about. Thank you.

Thank you so much.

Thank you. On behalf of Nuvama Wealth Management Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.