Prudent Corporate Advisory Services Limited ($PRUDENT)

Ladies and gentlemen, good day, and welcome to Prudent Corporate Advisor Q4 FY '26 Earnings Conference Call, hosted by Avendus Spark and Traditional Equities Private Limited. [Operator Instructions] Please note that this conference has been recorded. I now hand the conference over to Mr. Sanketh Godha. Thank you, and over to you, sir.

Thank you, Julius. Good morning, everyone, and welcome to our Q4 FY '26 Earnings Call of Prudent Corporate Advisor Services Limited. First of all, I would like to thank the management of Prudent Corporate Advisors for giving us the opportunity to host the call. We will have opening comments from the management team post which we will open the floor for Q&A. From the management side today, we have Mr. Sanjay Shah, who is Chairman and the Managing Director; Mr. Shirish Patel, Chief Executive Officer and Whole Time Director; Mr. Chirag Shah, our Executive Director; Mr. Chirag Kothari, Chief Financial Officer; Mr. Parth Parekh, Head Investor Relationships. And with this, I would hand over the call to Sanjay sir for his opening comments. Thank you, and over to you, sir.

Thank you, Sanketh. Thank you very much, and good morning, everyone. A warm welcome to all of you for joining us on Prudent's Q4 FY '26 Earnings Call. Thank you for taking the time out with us today. I hope you have access to the investor presentation handy with you because during the discussions, we'll be referring to a lot of slides of the presentation. So before I move to the quarterly numbers, I would like to begin with what we believe is one of the most significant initiative of Prudent. So please turn to Slide 24 of the presentation, which we have uploaded. So this year marks the 10 years since we launched FundzBazar in mid-2016, a platform that has been central to our growth and to the lead which we have built in the B2B2C segment. Tech adoption has consistently been one of our key growth drivers, and we are now taking the next step in that journey with the launch of very powerful AI-led platform called Prudent Edge, our mutual fund distribution partners and Funds Edge for our retail customers on the FundzBazar. The platform is designed to transform the way distributors run their day-to-day business, be it goal-based planning or business analytics such as discontinued SIPs, EU analysis, cross-sell gaps, readymade e-mail and warship communications, marketing support, research and on-demand client reports. Activities that earlier required navigating multiple sections can now be completed with a single click or simply by voice, including in regional languages such as Gujarati Marathi, Punjabi, et cetera. We believe this meaningful -- this meaningfully bridges the gap between technology and the usability for our partners. The platform has just gone live in beta mode. We will closely track partners' feedback over the next few months and refine the engine accordingly. We see this as a timely and ahead of the curve step for the industry. With that, now let me move to the quarterly performance. Now please move to Slide 16. This slide talks about the movement in our overall AUM. So if you look at this slide, it's talking about the movement in overall AUM. And on the left-hand side of the slide, we are comparing 3 numbers. The average daily AUM for the full year of FY '26, the closing AUM as on 31st March 2026, and our current AUM as on 5 May 2026. So typically, our AUM at the end of March tends to be higher than the fiscal year average. But this year, the closing AUM of INR 1.19 trillion on 31st March came in lower than the full year average AUM of INR 1.21 trillion. This was largely due to market correction in the month of March. The good news is that we have bounced back strongly. Our AUM as of fifth 5th March has already climbed to INR 1.33 trillion. This is 9.7% higher than the average AUM of full FY '26. This gives us a strong healthy revenue tailwind for the remaining 11 months FY '27. On the right-hand side, if you look at it provides a trend of quarterly AUM average AUM. Our average AUM for Q4 FY '26 was INR 12,000 crores, which grew by modestly 0.3% sequentially. It is particularly noteworthy because market fell by 14.5% during the same period. We managed to grow sequentially due to two reasons. First, we recorded our highest ever equity net sales in a single quarter of INR 4,300 crores; second, the quarter correct -- the market correction was largely concentrated in the month of March. So on a year-on-year basis, our quarterly average AUM grew by a healthy 6%. Now please turn to Slide 47. This slide shows how our equity AUM has moved both on a year-on-year basis and on a quarter-on-quarter basis. So let us start with the year-on-year view on the left-hand side of our slide. Our equity AUM grew by 15.4% during FY '26. It moved from approximately INR 100,100 crores in March 2025 to INR 115,480 crores in March 2026. This represents an increase of nearly INR 15,400 crores. Importantly, this entire growth has came from net new money, driven by our SIP flows and acquisition of Indus. Now coming to quarter-on-quarter view on the right-hand side. Equity declined by 8.2% during the quarter. This was primarily due to mark-to-market losses of INR 14,550 crores reflecting sharp market correction during the period. However, the impact was partially cushioned by our highest ever quarterly net sales of INR 4,300 crores. Notably, our mark-to-market loss of 11.6% was significantly lower than 14% correction seen in NIFTY500 Index reflect... [Technical Difficulty]

Ladies and gentlemen, the management line has been disconnected. Please hold while we quickly get them reconnected. Ladies and gentlemen, thank you for being on hold. The management line has been reconnected. Thank you, and over to you.

Sorry, I think the line is connected. So I'm again starting with our consolidated financial slide, which is Slide #51. Before that I explained about the SIP growth. So I think the last slide of our presentation, which is the -- I think that's very important one. So let me just again talk about the consolidated financials. So if you look at on a full year basis, our mutual fund revenue growth at 21% is in line with our quarterly average AUM growth of about 21.7%. Despite impact of back book repricing, our yields have remained more or less stable at 91 basis points, not only for the year but for last 3 years in a row. So if you look at on a full year basis, our insurance revenue grew by 18%. This was on the back of a very strong growth in fresh premium with health insurance growing by 35% and life insurance by 28%. This revenue growth was a bit softer than the fresh premium growth led by rationalization of commission rates 1st October 2025 in health insurance vertical on account of GST being reduced to nil rate and change in product mix on life insurance vertical. On account of strong growth in both these key verticals, total revenue from operations grew by 19.4% and our commission and fee expenses which is a very strong line item has also grew in the same line and the same pace at 19.8% on a full year basis. Excluding ESOP, employee expenses during the entire year went up by 21.2%. This is a bit higher on back of Indus acquisition and the cost related to all the employees of Indus and onetime provision related to labor code changes, which has came in last quarter. With our annual incremental CapEx cycle now complete and our entire team's review is also completed, we expect that the employee cost for the existing base will increase by approximately 14% in FY '27. If I give you the indication that our salary bill has moved from INR 8.93 crores in March 2026 to INR 10.2 crores in April 2026. Led by a healthy operational performance, operating profit grew by 18.2%, and operating margin were stable at 23.6%. Profit after tax was lower at 13.5% compared to operating profit growth, mainly led by a dent in other income due to market correction in the month of March. Of INR 585 crores of our treasury investments, INR 200 crore is parked by us in the balance Advantage Fund and hybrid SIS. On account of steep market correction during the quarter, other income turned negative by INR 4.7 crores as compared to positive income of INR 9.5 crores in the preceding quarter. It has resulted in an overall drag on P&L for last quarter by approximately INR 13 crores to INR 14 crores. However, all the losses on mute fund portfolio have since reversed, current gain on the mutual fund portfolio stand at approximately INR 11.5 crores. And if markets remain at current level, I think by 30th June, we expect a very healthy income from other income side. On a quarter-on-quarter basis, our revenue grew by 5.1% sequentially, led by a 69% growth in insurance revenue. Operating profit grew by 19.5% sequentially, aided by lower employee cost Employee costs were lower as variable pay provisions required in the current quarter was lower compared to what was set aside in the preceding quarters. However, despite a very healthy operational performance, profit grew at a stronger pace of 2.6% -- at a slower pace of 2.6% due to negative other income as stated in the commentary above. Now shifting from our financial performance to the regulatory landscape. SEBI Has recently made changes in the total expense ratio, and I would like to address a few points on that matter. First point is that revised expense ratio, which will now be inclusive of all statutory levies, including GST. It's revenue neutral for those who are registered under GST. But the big advantage is that it removes the earlier anomaly where a GST-registered distributor on less than and under the third one. This creates a level playing field and helps us attract smaller players to join the Prudent platform. So even though it's a revenue neutral as far as impact is concerned, strategically, it is very, very beneficial to us. We have aligned our payout structure in line with regulatory changes, wherein rate will also be exclusive at our end and distributor who raised a GST invoice, we will be reimbursing him GST based on the invoice raised by them. The second point relates to the removal of 5 basis point benefit in lieu of exit loan, which has been in place since 2012. This benefit, which is available over and above regular tier has now been withdrawn by SEBI. While this represents a cost for the entire industry, we would like to highlight that broader implications are still being discussed and negotiated at the industry level. We expect greater clarity to emerge by end of this month, and we will update our stakeholders accordingly once the picture is clearer. So to conclude our full year performance, FY '26 has been very, very satisfactory year for us. Despite 2 key headwinds, mark-to-market pressure in the mutual fund segment and yield rationalization in the insurance segment following the reduction of GST to 0, both our key business verticals delivered close to 20% growth. This is a testament to underlying strength of our business model. A few highlights that stand out for the year our equity net sales at INR 13,900 crores were the highest level in the history. We added 5,100 new partners during the year, reflecting strong and healthy distribution expansion, and our health insurance vertical continued to deliver outstanding performance with fresh premium growing at a 35%. So across the board, our key parameters and the performance indicators have remained robust, and we are well poised as we move into FY '27. So with that, I'll open the floor for question and answer.

[Operator Instructions] The first question is from the line of Swarnabha Mukherjee from 360 ONE Capital.

Congrats on a great set of numbers. Two questions from my side. So as you highlighted on the 5 basis point equity growth as on you're still waiting clarity. I just wanted to understand, I mean, I think last time in the earnings call, it seems like that the expectation from your side was that there will be passed on. What are the factors why this is taking time on the lack of clarities there if you could highlight, has there been any deviation vis-a-vis what was your expectation previously in terms of the impact? So that is the first question. Second is, if I had to look at your stand-alone P&L, the even commission expenses, if we calculated as a percentage of the fees and commission income. There is a drop in this ratio. Just trying to understand is this a function of Indus acquisition and more direct revenue? How should you think about it? And on the life insurance side, I mean, what is driving the growth in this segment because as far as we understand that apart from retail protection, I think the other segments, which we do -- at the industry level has been tepid in 4Q. So I wanted to understand that our growth has been steady. So what is helping that? And also, given that our fresh to overall premium mix, I think improved, if I'm not wrong. So what is happening on the renewal side? Do we see any kind of persistency related impact playing out there if you could highlight?

So I think let me, first of all, add to the second question related to your what you call the reduction in the -- or probably overall, you're finding visibly in the brokerage payout percentage. So I can tell you there are 2 important points as far as the revenue is concerned. So if you look at -- as you know that at Prudent, we have an annual additional trail which we pay to the partner based on their full year net sales. And the provision which we have made based on our assumption in the first 3 quarters was sufficient enough for us. So that in the fourth quarter, our provision was practically nil. So if you look at in the previous quarter, there was an additional trail provision of INR 5 crores Finally, when the final number arrived in the quarter 4, the provision for that was 0. So there is INR 5.5 crores of extra -- so lower expenditure because of that, number one. Number two, I think we have all the time telling as far as the insurance is concerned, that we provide the revenue in our books only when we were absolute clarity. And there is -- related to full year revenue of additional about INR 4 crores, INR 4.5 crores has been recognized by us in the month of March. So there is additional revenue of also INR 4.5 crores. So overall, there's a INR 10 crore of extra revenue. I think that is the 1 major item. And probably the insurance revenue is also a bit higher because there are [indiscernible] money would have came from the insurance. So all put together, I think that's the reason. But my belief is that when you look at the overall commission cost, you should look at the full year number, which is more representative from the point of view of your model rather than the last quarter. So that is number one. Number two, you are talking about regarding the clarity from the AMC side about 5 basis points is concerned. I think the large AMC has already communicated, and I think we assume that -- so overall, we believe that as far as new business is concerned, our yield might remain neutral. On the book, we are expecting about a 2, 3 basis point impact as far as exit or related [indiscernible], but still a couple of AMC are yet to communicate clearly. That's why I think we are not able to tell you exactly that what is going to be impact. As far as sharing this with our distributor partners are concerned, consistently, we've been maintaining this stand that we'll try to share as best as possible. And if not more, at least in the existing ratio, which are heavy as resin with them concisely, we'll be able to share that. So these are the 2 questions. I think rest 2 questions, I'll tell to probably Shirish to address about the life insurance and the -- there's another question also. Shirish.

Just a follow-up on this one. if I may. So I mean, in terms of the -- this -- you're saying that it will be relatively neutral in terms of the flow yield. So how does that feel out? I mean, in the flow yield also not there have been an impact at a level?

So I think there are 2 things. One is AMC repricing on the existing book -- and their call on the new business. So we believe I think Shirish would be the right guy to also give you more clarity. But I think based on the water indication we have till now, I think my new book pricing might remain more or less similar because GST component has already been adjusted. So it was very neutral for us. And 5 basis point impact is not on everybody, somewhere, I think our impact would be might be more or less neutral as far as new rates are concerned. On the old book, I think still will have some impact. It is going to be repriced. And so there, we need to pass of -- so there are 2 things. Old group whenever the impact will come to us, we need to share with our distributor partners. As far as new business is concerned, our rate would be more or less neutral. So we may not see a significant change as far as payout is also concerned.

Right, sir. And this leaner the similar vis-a-vis, say, a national distributor like and individual agents. I mean, I just wanted to understand that post that, would we be at a similar competitive advantage vis-a-vis AMC passing on to their individual regions, individual distributors?

So I think probably for us, the biggest advantage from 1st of April is the GST rational itself because large player in the industry are less than INR 21 lakh as far as INR 20 lakh is concerned as far as ones concerned. So most of the players in the industry are non-GST-registered partner, and they had a huge advantage of GST. Now with that advantage being gone away, we will be very, very competitive as far as what they used to get from AMC and what we used to offer. Now their yield -- the rate might remain the same, but because of GST being taken out, I think their yield from AMC will come down by 15%. So automatically, we are competitive by almost 15% compared to the rate of AMC.

Regarding the life insurance business, what you asked about that how we could grow better compared to the industry in the life insurance side. Two reasons, I would say, one, definitely post 2023, in -- our life insurance business were a little muted because the higher ticket side flow completely a majority of the higher ticket side flows died away. So last 2 years, I think business growth was not there. Of course, we took some time to settle down and also to change the product mix, what we used to sell. If you look at in this financial year, the new category, I think we were talking the last few quarters also, ULIP category that tops category. I think we have been pushing this category very, very actively. So whatever we lost in terms of life insurance business from the guaranteed plants, what we try to recover through this particular product category. And this year, that category is the biggest selling category in our system. Because historically, we have been trying to sell term plans as well as on a mutual fund side or equity or SIP way. So the ULIP brand of the industry, I think so both the power point, which gives the higher life cover as well as the exposure to equity. And this product goes very well in our system. And hence, I think we could navigate this particular business, and we are very, very confident that over time, the Tulip category will do better in our system and probably that will help us grow our life insurance business. So that answer. And Sanjay fourth question, I think I don't think that has any question was there.

If you look at the persistency, probably he's finding that process was a little bit lower. Could it be because of phase and new composition or something else? That was the question, right?

Yes, yes. So my confusion the renewal growth rate has come off. While last year, it was -- I mean, the last year free growth was also better than the real growth. So I was just trying to understand that is there a persistent issue or any way to look at it in a different manner.

No, no, persistency is still the highest. I think still we are maintaining more than 94%, 95% of persistency. So there is no challenges on a persistency. Still we have maintained the same. So there is no challenges on it.

Okay. So would this be then more like product mix of ticket size men again? I just wanted to say that can this be like more a function of ticket size rather than as you say, that is not a -- and the renewal growth is tidily business growth?

Chirag, can you take this question or Chirag?

We need to also look at the data, what we are referring, maybe you can connect to offline and then take it.

[Operator Instructions] The next question is from the line of Lalit Mohan Deo from Equirus Securities.

Just 2 questions. So firstly, like as you mentioned that on the older book, like we probably there will be an impact of around 2 to 3 basis points from the larger AMC. So I just wanted to understand, like are the non-GST distributors like other partners, which we have, so are we aligning our distribution rates for them as well on the order book? Or are these continuing with the earlier rates itself? And sir, secondly, can we -- can you give us the breakup of like the nonfinancial other -- other financial products income, which is like around INR 30 crores, INR 35 crores for the full year?

So I think as far as the rate alignment is concerned, definitely, our payout will also get adjusted as per how the AMC is adjusted. So what we used to pay was the gross rate and now the rate would be aligned by net of GST on the book, if I'm talking about. So I think that adjustment will definitely happen. For the first time in our history it is happening that our payout is going to be delayed by a few days. This time because still a lot of clarity is required from the AMC, and we do not calculate it for the month of April. So it will be difficult to give you any clear indication as well as numbers are concerned. But yes, the rate would be readjusted for -- so I think the same definition will be followed by us. We'll reduce the GST component and we'll probably pay the GST wherever GST which is raised.

Sure. And sir, that because of this rate alignment or the GST. So then the smaller distributors in the country, like they will get a very disadvantaged state. So probably the growth or the addition for the newer channel partners at an industry level might slow down like for the overall industry because of this?

So I think you look at both the , I think probably they need to go a little bit harder because they had an advantage of GST component, which was otherwise also not a part of your remuneration and you are making a little bit extra because of GST, but you are right, for the non-GST partner, I think across the board, there is an impact of 15%, 20% of the revenue. And so we normally say that I think it's a 1-year mark to market, and you need to work a little bit harder. But you are right. And probably for us, that is advantage also this year, you will see a lot of people getting consolidated under the platform because they're competitive to sustain independently will become questionable. And they'll also want that all other expenditures should be borne by somebody other than CB customer rate. So you are right. I think we will see this more consolidation opportunity in the industry. Now coming to your question about the bifurcation of our other financial product revenue of INR 33 crores, right? That is what you're asking about?

Yes, sir.

So I think INR 22 crores came from PMS, INR 6 crores from FD. So 20 plus 6, and rest is probably small case and LAS and everything. So I think small smart product. But majority of the income is coming from mobilization through PMA. -- is almost entire we were other than , which is about INR 5 crores, INR 6 crores is recurring in nature. And I can tell you, if you look at current year, our revenues in the other product has not grown because last year, there was about INR 6.7 crore revenue liquid loans, which has probably discontinued as a product is concerned. So if you remove INR 6.7 crores from last year, my other product revenue growth is almost about 34%, which is as of now, only 5%, but if you struck out -- stuck of the liquid on from last year, that growth is almost 35%.

The next question is from the line of Dipanjan Ghosh from Citi Capital.

So firstly, in your presentation, I see that there are around NFTs who are 1,000-plus MFPs who are -- who can basically sell FIS. So just 2 questions on that front. One is what would be the FIF flows in fourth quarter? And if you can give some color on the yield construct for SIS versus, let's say, on the equity book that you have, how does it differ? The second question is on the life insurance business. If I look at your annual yield, they've been almost similar or marginally lower compared to last year despite which probably would have been lower because of the ITC impact. Now you mentioned in your commentary that the term plus ULIP products have tied up, so is it just a function of mix change? Or is there something to read more into the numbers? The third question is on the cash position. So I mean, previously, you have deliberated multiple inorganic opportunity. We have also kind of ventured and gone ahead with a few of them. So anything else that would be -- that one can expect going into FY '27 or '28? Those are my 3 questions.

So let me answer about the third 1 first. First two Shirish will try and address. So there, as far as equities, it's a work in process, and some previously we have been exploring. So nothing at a concrete state, but I'm sure something -- I think you see in the process. We'll not say that something will happen but '27-'28, but or '26-'27 but [Foreign Language] we've been trying and exploring that opportunity all the time. So Shirish about SIF and I.

Yes. So you asked about the flows in have in last quarter. So we did around INR 90 crores kind of business in SIF in last quarter. So currently, I think month-on-month, we believe that we have attained a run rate of around INR 25 crores, INR 30 crores now. And we strongly believe that this is still a new category for us. And incrementally, every month, we strongly believe that this monthly flow will keep on increasing on SIF side. So today, I think the industry has got around 6,000 unique distributors who are certified to sell SIF and out of 6,000, almost 1,000 plus are done by prudent and working with products. So that way, we are very, very confident on. In the same line, the second question was how is the margin in SIF versus other products? So probably the SIF margins are in line with mutual funds. So there is not much difference between SIF margin and the mutual fund margin. So you can consider as part of the mutual fund sales or mutation margin only going forward. So the margin in SIF would be in line with mutual funds. So that is the second point. Third point was about the yield experience in the life insurance side. So yield experience in the life insurance side, I think a few of the things would be positive, few of the things could be negative in a sense which can bring down our which has brought down yield. One is the ULIP category compared to the previous year, the ULIP sale has gone up by almost 5%, 6%, I would say. So you can see that the ULIP growth will bring down the yield in per se. So that is one. But at the same time, I would say that the positive side post October, definitely because of our quality of the assets and the mix of the product, we could definitely maintain our commercials with most of the insurance companies. So obviously, I think that is a positive sign. So per se, I think we could maintain the life insurance yield. Of course, ULIP definitely will bring down some kind of yield. But otherwise, I think other categories, we could maintain the yield from the life insurance side.

Got it. Maybe just one small question, which I'll squeeze in. You mentioned that any repricing that happens in the mutual fund yield the impact on back book might be in the range of 2 to 3 basis points per your best guesstimate at this point of time, and you expect the incremental flows to largely be neutral. Now I just wanted to understand how the economics works for you. Let's say, you generate around INR 100 crores of flows for a particular mutual fund, let's say, in the month of May '26. Let's say, that comes in at, let's say, 90 basis points of gross realizations. Now let's say, the customer stays in the ecosystem and the AUM compounds over the next 3 to 4 years, how are the trail commissions organized in this case? If you can give some color on the economics of the business after the initial money has come into the ecosystem.

So actually, if you look at -- because the transaction level yield is always defined. So for example, today, I have brought somebody is INR 1 lakh, wherein I'm earning, let's say, 90 basis points. So one is your back book on the book as on 31st March. Hypothetically, I'm assuming that my entire book is going to be repriced by, let's say, lower than 2 basis points. So whatever the -- so when it's a question of income, right? So for example, Sanjay Shah has given me INR crore before 5 years and my earning on that particular investment was, let's say, 50 basis points, now it will come down to 48 basis points. That is one part of the story as far as back book is concerned. Regarding the existing business, which I've told you that I don't see a significant change as far as my earning because one was repricing the back book, another was taking a call on the new business. And current indication is such that I might have an impact of 2, 3 basis points in the back book, but not into the new business. If you look at the -- my book and the new business, I think probably if you look at gross to net ratio of 50%, we are expecting that this year, my gross sales has been in the range INR 30,000 crores, INR 35,000 crores on a total of INR 1,30,000 crores. So my net new sales is always in the range of 20%. So probably you might see that my book virtually would -- a 20% book might get repriced by end of the year. But then as long as the money remain into the system, I think we'll continue to enjoy the same rate unless there is a change in the back book repricing. Otherwise, we'll continue to have the same rate because the rate is mapped to a particular transaction, whether it is INR 1,000 SIP or a INR 1 crore lump sum.

No, I think I get that, Sanjay sir. So just to kind of close the argument, you're saying that if you get, let's say, INR 1,000 crores today at, let's say, 90 basis points gross yield and the money stays in your ecosystem for next 10 years, the yield will be 90 basis points as long as there is no one-off back book repricing like some of the AMCs did last year or last year, right?

Perfect. Perfect. Absolutely.

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

I joined in a bit late. I don't know whether this point has been discussed. So one is the GST impact that is there and the second is the exit load impact, the 5 basis points going away. Now whenever you consider the passing it on to your distributors, what is the thought process that Prudent has with respect to maintaining its margins, whether it is the absolute spread that you would earning. So for example, if you were earning 90 bps and earlier you were giving 70 bps to the distributor where you were earning 20 bps. Now that goes to 88 bps, you would maintain that 20 bps and give 68 bps? Or would it be on a percentage basis? How does that -- how does the company think about passing it on to the distributors?

So I think we -- you are right, before you joined, we tried to discuss about the -- how are we going to manage the changes which are going to happen. So 1 thing is we just wanted to communicate that whatever AMC has done for the distributors as far as changing the rate is concerned. It was previously our 8 was, let's say, for exile 1% increase of GST. They have reduced their revised it would be 85 basis points. And whoever is a part of GST has to raise a invest for that. the similar impact would be at our end also. However, we'll not be able to crystallize anything in the monetary terms because here the April calculation is planning. So that is -- I think that's the answer to your question. And second question you said about the exit or also, I think roughly about -- so the interest exit load also, if you look at the back book and the need is actually mobilized -- so we assume that as far as book is concerned, there might be impact of 2 to 3 basis points on the entire AUM on a weighted average basis. This is also a presumption because still a couple of yet to be closed, but I'm assuming it be in the range 2 to 3 basis points. And that also we'll try and share with our distribution partners that we used to share either in absolute terms or in form of a percentage sharing. So I think that is about the exit load impact on the existing book. I think the -- in the new business, current indications as such, that probably our yield would remain more or less similar, and we do not see a significant change as far as my new yield is concerned. And hence, probably the overall my pricing strategy also would remain the same.

Got that. And sir, the other part was the script run rate and secrete generation now that the ship returns are kind of being 1 year suite have been very moderate for the last, I think, many months now. And it's reflected in your numbers as well the SIP momentum has slowed down. What are the ground pillars that you're getting with respect to SIP momentum going ahead?

Shirish?

So in terms of new agitation, last financial year, we have done the highest gross registration in terms of new SIPs. Yes, I think you can say that I think post February mid and that time, I think, yes, we have seen some kind of low reduction in the new SIP registration. But annualized basis, we have done the highest ever registration, new SIP registration. Regarding the termination of the cancellation, obviously, I think the last financial year, we have seen that higher termination compared to the previous year. Obviously, when the market returns are not degraded, 2 years, SIP are not delivering great returns, 2 things happen. -- the new registrations come down and cancellation increases a little bit. So considering both these things, definitely, the cancellation has gone up in last financial year compared to the previous year. But as I said, that the growth has helped to grow end of returns continue for a longer time definitely, there could be some impact on the new SIP and the cancellation both. Having said that experience of investors, the confidence level of investor is much, much different compared to what it used to be earlier. So hence, we have seen the trend that the cancellations are low and still the investors are giving more money. But again, that depends how the market returns in the next 1 year. As of now, we are very, very confident.

Sir, my other question was on your overall revenue profile. How do you see that revenue profile between mutual fund insurance and other financial products, we see that mix has gone through some changes over the last few years. How do you see this changing in, let's say, next 3 years? Do you think that all the new businesses can scale up materially from year on? And what would be your dependence on mutual funds will go down? How do you see the mix panning out in the next 2, 3 years?

So currently, the revenue, other product revenue is very, very significant, if I exclude the insurance side. So obviously, I think there is a lot of scope to grow the other product revenue. As Sanjay said earlier that if I exclude the liquid loan, which product is not there now, last year, other product revenue growth was around 34%, 35%. And PMS has contributed the highest one. Obviously, as we know that I think PMS business was also kind of cyclical when the market returns are not that great, PMS sales also comes down. So assuming in a normal scenario, we surely believe that the PMS and the FD, which are the new products for us in the alternate side, definitely, it is going to grow drastically up in our system as well. SIF is a new product category, though we consider or to treat SIF as part of mutual fund only. But incrementally, SIF is definitely going to contribute a lot in our system. Insurance, yes, we are very, very bullish on specifically health insurance side. So that component also may grow but this financial year, we may see some kind of yield reduction in insurance because regulatory is talking about rationalizing the commission or not. But having said that, mutual fund business, we are very, very confident that we will grow it though the base is very high, still it will grow. But all the products what we have introduced in the last 4, 5 years may grow faster than the neutral for in terms of percentage. But there's no clear cut indication that what would be the percentage share of other products versus mutual pen because we want to grow mutual funds as well.

Got that. And last question, sir, the MFD business have seen many players coming in. So do you think that the competitive intensity to acquire MFDs as well as the rates that needs to share with these MFDs, that could be a challenge going ahead, how do you see in the competitive environment among different types of players, different to atelier and because many players are getting into B2B2C mutual fund distribution now. So do you think that the competitive intensity will be high in terms of sharing and that could impact, especially on the new closed tank because back book takes almost a year to transfer, but at least on the new flow front, people can share significantly higher and take away some MFD the incremental share could be lower for us. How do you see the environment there?

Prayesh, Price now these new competitions are not new. Last year, the same question definitely would -- definitely, we could have said that they are new. Now they are already 2 years old. The competition is there for last 2 years. we have experienced what they are doing and what we are doing in the last 2 years. Having said that, last -- that is '25, '26, we have seen all this competition. But if I tell you that my equity gross sales was the highest ever equity net sales was the highest ever. Equity gross -- new SIP registration was the highest ever. My health insurance business was highest ever. My life insurance business was second highest ever. So obviously, the competition comes, we have to be mindful. But to be very honest, we have not seen any big impact or any impact on -- in terms of business we are very, very, I would say, alert to what they are doing and what the competition can do it. But the other side of this coin, I would say that because of so many B2C platforms, I think more and more MFDs are becoming aware about the advantages of platform. So we also get this indirect advantage of platforms being more popularized. So obviously, that is a bigger advantage than I think the worry about these guys will pay more brokerage and will take the distribution. And now I think specifically from April onwards, I think the level playing field with the AMCs, I think especially for the smaller distribution. I think the market for the platform business is going to become very, very big. So we are not worried about what this competition will take something, but rather I would say that the market has become bigger and bigger. I think how we can get the maximum pie out of the growth opportunity in the market. So that is how we consider.

The next question is from the line of Gaurav Jain from ICICI Prudential Mutual Fund.

Just 1 question from my side. On Indus Capital acquisition, if you can highlight how much AUM we have been able to retain if there is any attrition or outlook we have seen on that front is one? And second, do you think there can be further such acquisition potential opportunities, which we can find in the market. That is all from my side, sir.

So if I talk to comment you are taking Yes. I'll just talk about the invested probably you can discover. So are you just talking about the industry as an acquisition. So just saying that Indus the experience has been very, very positive. We communicated that we acquired INR 2,085 crores was the AUM when we were supposed to acquire. And finally, I think INR 10 crores, INR 15 crores here and there, we got roughly about INR 260 crores in our core by end of September. And if I tell you the relates number, the mid, INR 2,250 crores, it has grown in line with my overall AUM growth and the our gross sales, net sales, SIP book, everything has been reasonably great. I think the retention of mentor is absolutely everybody is there. Not a single person is left. The senior guy who is managing the business also very, very settled into the system. So overall, if you look at on all key parameters, I think the experience, adaptability, client adaptability, we have a couple of discussions with the client also. So overall, it's a very, very satisfactory thing. Regarding another acquisition, I think we are already trying to address that it's a work in process. We regularly try and assess. So nothing is concrete. So I will not say that something is definitely going to happen in the next 3 months. But it's always a regular agenda for us to scout and look for some good acquisitions. Yes. Shirish?

I think you answered both.

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

Sir, my first question is on Slide 32. Just wanted to check what is the AUM share of MFCs with more than INR 10 crores of AUM. I don't know if that number is disclosed anywhere else in the presentation.

I think there is a size if you look at more than INR 1 crore cost material is showing up on my December 22, where we say we have 2,220 people largest cost INR 10 crore even. And then -- so I think we have not provided the AUM, but if you look at the average.

Okay. And sir, just qualitatively, just qualitatively, Sanjay sir, of the MFDs that you're acquiring, how has been the direction in terms of, firstly, at what AUM level they are joining the platform? And has it changed materially in the last 2 to 3 years?

Shirish?

Basically, MFD is joining our 2 categories, 1 new to industry and secondly, the existing [indiscernible]. Almost I would say that 40% to 50% of the MFD is joining us. I think we convert them from [indiscernible] and bring them in the mutual fund industry. So practically, they start at 0 AUM, mutual fund clientele and everything, and that is what we build upon. As I said, I think other 50% who joins us from the industry, I think they vary from 0 AUM to even INR 100 crores or INR 200 crores. Many of the MFDs don't join us for the mutual fund business. They join us for alternate products or the insurance business, this kind of product. And when their experience becomes better, they join us or they start -- they may start doing mutual fund. So there would not be any single answer that at what AUM distributor joined. So it's a different range.

Sir, alternatively, is there a leakage in terms of, let's say, somebody crossing let's say, INR 100 crores or any such number after which they want to venture on their own or that we're still not at that stage?

To be very honest, after INR 100 crores till date, I don't remember any MFD who has left. But yes, with the leakage specifically in the range of kind of INR 10 crores or INR 20 crores earlier. And again, that would we have not seen that in Particularly very for any MFD to move out after attaining a certain scale their customers are on funds moving their platform the wire at form becomes very, very -- because the for any MFD to move out of any platform.

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

Sorry, just a few follow-ups from my side. One is if you can quantify the employee number as of March 30 Second, given all the discussions around MFD is, would it be possible to give some color on what are the incremental is currently?

As far as 31st March is concerned, the precise number is 140 people. And that new salary bill would be, I said about INR 10 crores. So that is about the entire number of employees. Regarding the new business yield, it will be difficult because still, like I told you that -- and then the yield also vary based on the composition, which segment more money will come, which scheme more money will come. So it's not a single answer that -- because you know, right, because more money comes in largest scheme of dev or the smallest scheme of the real difference would be almost about 30, 40 basis points. So to give you an indication that what is likely to be the blended, it will be very, very difficult and that probably -- and normally, we are difficult to give you about the book yield and the existing business. Normally, it's very difficult for us drive. And normally, we do not communicate also that number.

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

So just 2 questions. Just to simply for, I mean, your distribution yields would kind of probably go down a bit, right? But that will be offset by the fees and commission, right? So is that a correct to addition? And hence, would we be able to maintain our net news is the first question.

So the overall yield should remain in the more -- my yields should not come under any compression because on the book, other than GST, we might see a 2, 3 basis point impact, which, to a large extent, we should be able to share with our distribution partners. And the new business, I told you that I don't see any change as well as my yield is concerned. So overall, my book yield should remain static. I think whether my earnings, how it will get adjusted would be -- I'll be able to tell you only once the entire thing is implemented to the system. But somewhere, we should see an improvement in our real as far as my overall yield is concerned.

So you mean the net yield?

Yes, net yield should be positive. Overall yield should remain more or ecstatic. There are 2 things. My army -- let's say, today, I'm running 91 basis points, for example, as on 31st March. My belief is that in April, on the total book yield might probably move by about 1, 1.5 basis points on the total 2 basis points. But overall, my -- because I'll be able to -- able to share this with my partner also. So overall, my earnings should not be -- should not go down in any case. I think I should be able to protect my overall earning yield.

Which is also I was trying to get at. So I got your point. So I appreciate that. And sir, lastly, what is the expected ESOP cost in the upcoming year? This year, it was, I think, INR 3.3 crores.

So last year, it was about INR 6.7 crores or let's say, to INR 7 crores on an annualized basis. I think I assume that it has to be linked to the stock price because at INR 2,600, I think the cost was roughly about INR crores -- so probably, I don't know what the price of the share. But 1 thing is clear, we have decided that every September or October, we are going to announce the ESOP, now because -- so that we can have next 4 quarters, continuous amortization, and there should not be any spillover into the -- so there should not be double provisioning on a particular quarter. So now more or less probably a number of sales might change by a few sales here and there. But -- so probably you can assume that costs might go up by 15%, 20%. It's not -- we are as of cost -- so if, let's say, this time, the cost is likely to be INR 7 crores. Next year, it could be INR crores. you had on a number you cannot take it in the projection, but I'll just give you my thought.

Understood. And sir, correct me if you mentioned that total employee costs would grow by 14% in FY '21, right?

Yes.

Existing -- not the total cost. My existing employee salary, which used to be INR 8.93 crores in March would be INR 10.1 crores in the a same people who were on the books. So I'm not talking about the [Foreign Language]. So I'm not talking about their salary. The guy who was with me on 31st March, the salary has been revised on first of April, and that growth is about 1%.

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

Just 2 follow-up questions, sir. So like in the last quarter, we had mentioned that like the AUM coming from the top 5 AMCs in the rand 51%. Now I just wanted to understand, like from a flow perspective, what -- where could that number be? And also, like total around INR 133 crores, like -- could you just bifurcate it between the direct channel AUM and like the AUM coming from the partners' level?

Shirish?

Basically 5 AMC as you contribute around 50% of the AUM. And between direct and the regular channel, I think the ratio, what we maintained earlier also, that still continues as it is around -- after Indus acquisition, it has a little -- right now, the contribution comes -- the AUM by 90% of the contribution is from our B2B2C channel and around 10% contribution is from the direct plus Indus channel. If you talk about the new flows, new flow would be around, you can say, 6% to 7% coming from the direct channel and almost 90% to 94% coming from the B2B2C channel.

And sir, from the top 5 AMCs contribution from a global perspective?

Similar, there is hardly any change. There could be a change of 2% because new AMC is coming in, they might eat into some kind of sharing from the bigger AMCs. But if you look at the share of -- in the business and share in the AUM, of course, there would be the new business share will be a little lesser than the AUM share, but there is no drastic difference because as I said, new AMC will lead into the existing assets of the bigger AMCs, but there is no meaningful difference you can highlight.

The next question is from the line of Sanketh Godha from Avendus Spark Institutional Equities.

Sir, my -- I mean if I look at the gross flows numbers in the current month, current quarter, it seems to be more driven by the lump sum number rather than the ship, which has been pretty stable. So sir, just wanted to understand whether this amount came predominantly when the market corrected? And is it fair to say that it might not repeat if the market come back? And therefore, we can go back to that lump-sum number around INR 4,000-odd crores kind of figure instead of INR 5,300 crores figure what you experienced in the current quarter. And I just wanted to understand whether it came in the month of March or it was more than probably distributed?

So basically, I think whenever market corrects the initial phase, we -- historically, we have seen that the lump sum money takes advantage of the market and hence, the lump sum flows would be higher than the SIP flows during that period. Long term, I think always, you would see that currently in our system, almost it is 50%, 50% kind of number. So long term, I think 50% contribution comes from kind of SIPs and almost similar from the number. Overnight SIP numbers cannot change. So tomorrow, market corrects, obviously, I think lump sum will take it over in terms of share and tomo if the market is -- and longer term in the market is not doing that great, that time, you will see that the new flows or the fresh flows will come down significantly. And that time, you will see that the SIP sales is much, much higher than the new sets. But long term, I think currently, the system is 50-50. But specifically, if you talk about whether the flow has come in the month of March or April, I would say that the difference in Jan, Feb, March, if I look at the fresh flows hardly any difference, I think, of course, there was a difference of around INR 100 crores, you can say around 10% deviation in the Jan, Feb, March number. But you can't say that I think the March number was 30%, 40% higher than my January numbers. It was hardly INR 100 crore difference in Jan and March number. So yes, there was a difference, but not much.

Understood. And the second question is predominantly on the SIP market share that monthly SIP market share, if I see, it's been stuck in that zone of 3.5 to 3.7 kind of a number. I just wanted to understand, I mean, the pain is coming from more other platform companies where we are not able to expand market share. It's not paying, but we are not able to expand the market share. Is it largely coming from the other platform companies are more and more people choosing to take direct in your view, sir?

Definitely. I think you would see that more and more people in the industry market share of direct is increasing. So when you are comparing the share only on a total SIP registration, if you are saying that we have maintained in a scenario wherein the overall share of direct is increasing, that way yourself is saying that, I think we are gaining the market in a regular plan. So that says that we are not losing the share to other competition platform or other regular plant platforms. On that particular space, we are gaining the market share. But when we are talking about the overall industry, the share is maintained.

Understood. Absolutely. But any number you have in mind set like this number should be at least 4 percentage 4.5 percentage in medium term as a market share?

So practically, I think we don't target this kind of number. But of course, I think we keep on tracking the growth of the share month-on-month or quarter-on-quarter -- and I think every month, it is at least a few basis points higher than the previous one. So I think we are on the -- that zone that I think we are growing. But specifically, if you say that are we targeting 4%, 5% of the market share that way, I think -- because direct I will not be able to control. How the direct goes, how many platforms will become stronger on the direct side, I think it is anybody's guess to say. But yes, I think always, there is a focus that we should be able to increase the market share in the overall industry and specifically on a regular plan. But no number in mind.

Okay. Understood, sir. And lastly, on this -- due to GST thing, the unorganized MFD who probably don't pay GST. In your assessment, how big is that number or how much AUM is managed by them? And if they come on the platform and if we take a bit of market share, very similar to what we have today, maybe too early to tell, but just any numbers you have in your mind, how many people are there? How much of AUM is driven by these guys -- and managed by these guys and if they come to our platform, how much potentially bump up, we can see in the AUM?

So here, definitely, 1 thing is very clear that the competitive of platform has increased compared to what it was last year. Now how this will play out, I think, only the time would say. I don't have any exact number on the industry side that what percentage of the AUM this GST guys were contributing. But I think AMC would be the right person or the IT will be the right person to give you the number. But I think what I understand again, I think I would say that it's not an authenticate number, but what I heard in the market maybe around 15% to 16% of the AUM is contributed by non-GST registered partner. Now whether this is the entire industries or only MFDs, even I'm not too sure right now. So in terms of number of distributors, would it be much, much higher, but the contribution in terms of overall AUM definitely will be much later than what it looks like. So of course, it's an opportunity for all the platforms that these nonregistered distributors may join them. But it is not only nonregistered distributor, I think I would say that the entire industry for that particular matter the platform competitiveness has increased, whether it is nonregistered or the registered. So only thing how it plays out, I think, let's see, I think after 1 year, we'll be able to see that how it works.

As there are no further questions from the participants, I now hand the conference over to Mr. Sanjay Shah for closing comments.

Thank you. Thank you, everyone. I think we probably tried to address all the queries. However, if you have any questions, you can definitely reach out to our IR guy, Parth Parekh, we'll be happy to answer all your questions. Thank you very much.

Thank you.

Thank you.

Thank you. On behalf of Avendus Spark Institutional Equities Private Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.