UTI Asset Management Company Limited (UTIAMC) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the UTI Asset Management Company Limited Q4 and FY '24 Earnings Conference Call. From the management, we have with us Mr. Imtaiyazur Rahman, Managing Director and Chief Executive Officer; Mr. Vinay Lakhotia, Chief Financial Officer and Head Corporate Strategy; Mr. Surojit Saha, Group Financial Advisor; and Mr. Sandeep Samsi, Head, Investor Relations, Marketing and Corporate Communications. We also have Investor Relations team from Adfactors PR. [Operator Instructions] Please note that this conference is being recorded. Before we begin, I would like to mention that some of the statements made in today's discussion may be forward-looking in nature and may involve risks and uncertainties. Please note the disclaimer mentioning these risks and uncertainties are on the disclaimer slide of the investor presentation that has been shared earlier. I will now hand the conference over to Mr. Imtaiyazur Rahman, MD and CEO, for opening remarks. Thank you, and over to you, sir.

Thank you very much. Good morning, and welcome to our earnings call for the fourth quarter and financial year ending 31st March 2024. We appreciate your presence today as we discuss our operational and financial achievements. You may have read our press release and investor presentation, which are available on our website and the website of the stock exchanges. The financial year 2024 has indeed been a stellar year for the capital market and for the investor community. The year brought in numerous opportunities following the phase of normalization in financial year 2023. Throughout the year, we have witnessed a resilient surge in growth, driven by robust positive sentiments towards consumer demand and substantial capital expenditure despite tight monetary conditions and a challenging geopolitical landscape. India has maintained its position as one of the fastest-growing economies, building upon the momentum gained in the previous fiscal year. The latest South Asia development update by the World Bank, released in April 2024 projects India's growth to reach an impressive 7.5% in financial year 2024. This optimism is supported by the stellar Q3 GDP growth at 8.4%. Other noteworthy developments there, the increase in India's weightage in the MSCI Global Index to 18.2%, more than double what it was 3 years ago and the inclusion of Indian bond in the JPMorgan EM Bond Index, which is expected to take effect by the end of June in the current financial year. In the mutual fund industry, we have observed a significant evolution in recent years. The equity market starting in financial year 2024 has been instrumental in attracting net inflows of approximately INR 354,000 crores pushing asset under management with commendable INR 534,000 crore as of March 31, 2024. This said, of about 35% from the last year has created substantial wealth creation opportunities for retail investors and has led to a notable increase in their count. According to the latest data from IMC, as per the March 2024 IMC report, more than 60% of our assets about INR 333,000 crores based on average AUM are held by individual investors. Going by the composition around 84% of the individual investor assets, including HNI, are held in equity-oriented scheme. Friends, if we speak about the geographical opportunity for mutual funds, only 18% AUM are coming from Beyond 30 cities. Another interesting point is that the share of HNI investors in AUM was close to 23% till February of 2024. This is an opportune time to bring in substantial investors from the cities into the mainstream financial ecosystem while reinforcing mutual fund industries significance in the country's economic structure. At UTI, we are well positioned to harness the momentum from both B30 and T30 cities, leveraging the changing investor behavior and improving financial literacy. UTI has been expanding its footprint into new locations across India, particularly in Tier 2 and 3 towns. Our strength in Beyond 30 cities remains a steep fall, accounting for close to 21% of our AUM with a total folio accounts of 40.87 lakhs, which is 33% of our total folios. This sector can attributed to our consistent efforts in these towns for onboarding of new investors and fostering long-term relationship with them. During the year, UTI opened 29 new branches in the Tier 2 and 3 cities. And we will continue to expand our presence in a smaller town during the current fiscal as well by using the digital infrastructure. Our strategic focus has been on enhancing supervisory efficiency within the sales function, introducing innovative sales model and roles and expanding our product offering for distribution at key counter. We have established our engagement with our distribution partner. And during the year, our fund management and product team traveled across the country and conducted 106 meetings. Of these 43 meetings were in the top 10 cities. We have also reached out to potential investors, conducting investor awareness program across Bharat to raise awareness about mutual fund industry to the first-time investors and benefits of investing through SIP in the mutual funds. As a part of this commitment, on financial literacy, we partnered with Dainik Jagran to conduct investors' awareness program at our 40 Tier 1, Tier 2 and 3 cities. Our mega IFP event in Varanasi in December 2023 garnered significant retail participation. We will continue to use IFPs to create investor awareness. Our new and revamped website catering to investors and distributors offer enhanced accessibility and functionality. All digital assets of UTI Mutual Fund are now consolidated under our digital platform UTI HART, indicating our commitment to providing a delightful experience across all touch points. Leveraging on the digital network, we have hosted online session with our fund managers on the debt and equity market outlook. We have undertaken a comprehensive innovation of our corporate office services, focusing on ease of comfort and accelerate and create an appealing working environment on our -- for our stakeholders. Over the last year, we have strengthened our focus on sustainability and responsible investing and ESG has been deeply embedded in our investment processes and operations. We have developed sector-specific ESG framework and are continuously building capabilities for value-driven investors. Continuing our commitment towards environment conservations, we have implemented cutting-edge processes, such as biometric KYC and a go-green option for selected after sales services. During the year, we launched UTI Balanced Advantage Fund in the month of July. The fund has an AUM of INR 2,750 crores as of 31st March 2024. This product launch has helped us complete our offering in the hybrid category of fund. Also, we now have 5 products under the smart beta category with total AUM of more than INR 5,500 crores. These smart beta products have helped us addressing the growing demand of our products in the market. Additionally, we have launched our 2 differentiated products, namely Nifty 5 years and 10 years G-Sec ETF during the year for the institutional investors. While the aim of this fund is small, we now have 2 products in the upcoming categories. On the group level, we are delighted to share with you that UTI International obtained license from the French regulator for business operations in European region through our Paris office. This will give us on-ground presence in Continental Europe and create significant business opportunities in this market. Our Retirement Solutions business has obtained a point of presence license from PFRDA and NOC from SEBI. The POP license did allow UTI RSL to reach out to new pension fund investors and engaged the services of partners to grow the business. For our AIF business, we have received SEBI approval for starting operation in GIFT City in Gujurat. This will enable foreign investors to invest in our domestic AIF funds. UTI AMC and UTI Investment America Limited has been registered with the Securities Exchange Commission USA, and we are planning to start operation in the U.S.A. The total AUM for UTI Group has increased by 19% to INR 184,800 crore as of 31st March 2024 compared to INR 159,600 crores during the previous financial year. The domestic mutual fund business has witnessed a commendable 22% growth reaching to INR 291,000 crores against INR 239,000 crores last year. For further insight into UTI Mutual Fund performance, and other operational update for Q4 and financial year 2024, I now invite my colleague, Mr. Sandeep Samsi, Head of Investor Relations, Marketing Corporate Communications to provide with more details. Over to you, Sandeep.

Thank you, sir. I'll first take you through UTI's performance during the fourth quarter and financial year ended 31st March 2024 UTI Mutual Funds performance. UTI was able to capture a market share of 6.84% of the gross sales of the industry during this quarter and market share of 7.79% of the gross sales for the financial year 2024. Our equity quarterly AUM for the quarter ended March 2024, stood at INR 84,777 crores, rising by 20% as compared to the quarter ended March 2023. Quarterly average AUM for index and ETFs stood at INR 115,448 crores, up by 39% in the fourth quarter, commensurate with growth in the overall passive investment. ETFs and index funds net inflows stood at INR 11,682 crores. UTI added 1.92 lakh folios, taking up the number of live folios to 1.24 crore as on 31st March 2024. Our SIP AUM witnessed growth of 42.95% over the corresponding quarter of the last year, reaching to INR 30,747 crores as on March 2024. The SIP inflows for the fourth quarter stood at INR 1,772 crores. The SIP gross inflows for UTI Mutual Fund witnessed a year-on-year growth of 5%, with an average SIP ticket size of being INR 3,164 for March 2024. For the full year, the SIP inflows were INR 6,767 crores, higher by 5% compared to INR 6,463 crores in FY '23. On UTI Financial -- UTI AMC financial on consolidated basis. During the fourth quarter, the company posted a consolidated net profit of INR 163 crores, higher by 90% year-on-year and down by 12% quarter-on-quarter, while consolidated revenue from operations for the fourth quarter stood at INR 416 crores, up by 38% year-on-year. Consolidated core PAT for the fourth quarter is INR 96 crores, up by 68% year-on-year and 22% quarter-on-quarter. For the full year, the consolidated profit was INR 766 crores, higher by 75% year-on-year, and consolidated revenue from operations was INR 1,737 crores, up by 37% year-on-year. For the full year, the consolidated core PAT was INR 345 crores, up by 8% year-on-year, and the core revenue from the same period is INR 1,182 crores, which is up by 5% year-on-year. On a stand-alone basis, the PAT of UTIAMC Limited for the fourth quarter FY '24 is INR 151 crores, reflecting a growth of 54% year-on-year and 1% quarter-on-quarter and core PAT for quarter 4 of FY '24 is INR 91 crores, up by 71% year-on-year and 40% quarter-on-quarter. The PAT of UTIAMC Limited for FY '24 is INR 601 crores, higher by 41% (sic) [ 42% ] year-on-year. Core PAT of UTIAMC Limited for FY '24 is INR 293 crores, up by 6% year-on-year. Our 100% owned subsidiary UTI Retirement Solutions Limited has recorded a growth of 25.74% year-on-year in its AUM, reaching INR 303,000 crores in quarter 4 FY '24 and currently manages 25.8% of the NPS Industries AUM. The PAT of UTI Retirement Solutions for the full year is INR 54 crores, an increase 16% year-on-year basis. UTI International, which represents our international business interest has an AUM of INR 27,645 crores as of 31st March 2024, up by 27.4% year-on-year. Our international clients are across more than 35 countries. These are primarily institutions, pensions, insurance, banks and asset managers. One of our flagship funds, the India Dynamic Equity Fund domiciled in Ireland has an AUM of USD 951.77 million. UTI International J Safra Sarasin Responsible India Fund, an ESG compliant India fund has an AUM of USD 74.66 million. UTI India Innovation Fund launched last year has an AUM of USD 41.33 million. On UTI Alternative Private Limited, UTI Alternatives Private Limited has a total AUM of INR 1,974 crores. It has a well-defined ESG policy and strategy in place. It currently manages the following active debt fund. UTI Structured Debt Opportunities fund, which is called as UTI SDOF I, for which we have received an SEBI approval in August 2017, and which closed in May 2019, it has an AUM of INR 132 crores. Currently, the fund is in exit mode. UTI SDOF II has an AUM of INR 519 crores, and the fund is currently in investing stage. We had received the SEBI approval for this in February of '21. UTI Multiopportunities Fund I has an AUM of INR 763 crores. Currently, the fund is in investing stage. SDOF III for which we have received a SEBI approval in April 2022 has an AUM of INR 433 crores. The fund is currently in fundraising as well as investing stage. UTI's Real Estate Opportunities Fund I is currently in the fundraising and investing with commitment of INR 127 crores. It is also pertinent to note that UTI got the co-investment portfolio managers, that is the CPM license in August of 2022. We have received SEBI approval for 2 more funds, UTI Credit Opportunities Fund I and UTI Asset Reconstruction Opportunities Fund, which we'll be launching at the appropriate time. On the digital front, we have launched a new and revamped website for our investors and distributors. And with this, we have completed the revamp of all our digital assets, be it our website, mobile app, contact centers for both investors and distributors. Accompanied with multiple new features and seamless journey, we have now introduced robot advisory capabilities that shall cover goal planning and management, innovative calculators, risk analysis, et cetera. We have also launched 3-in-1 self-service digital KYC process riding on Aadhar, Digi Locker and eSign and have also extended the same for biometric-based KYC through UTI Mutual Funds offices. We now have a scalable and robust architectural design to cater to nearly 0.6 million transactions per day riding on micro service architecture. To ensure the enterprise assets are accessed securely through a trusted network and device, we have successfully rolled out the virtual desktop infrastructure. I would now request the Managing Director and CEO for his concluding remarks.

We will go for Q&A now.

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

Two, 3 questions from my side. First one on the yields in the stand-alone business. So there is an expansion of yields that we see. So just wanted to understand what would be the levers of the same? Is it only because of a higher mix of equity? Or is there anything else to read into that? So that would be the first thing, sir. Second is on the SIP flows, so the run rate has improved in the current quarter. So how are you seeing that as we have moved into the first quarter of FY '25? And just wanted to understand from your side, how the flow share would be across the distribution channels for direct vis-a-vis, the other intermediated channels and what are the engagements that we might be having to drive this. And thirdly, on the expenses part, sir, if you could highlight what led to the increase in the -- sequential quarter-on-quarter increase in the employee benefit expense? And also, if there could be any additional expense from the Paris office side in the competitive entity. And also on the expenses front, the other expenses have remained fairly steady over the years. So any comment on that how to deal with that.

So I'll take the question on the yield as well as on the expenses side, and Sandeep will take care on the SIPs and the marketplace. So on the yield, there have been a yield improvement across all categories of the fund apart from equity and hybrid. We are seeing little bit improvement in cash and arbitrage fund of around 2 basis points. In the income fund also around 1.5 basis point yield improvement is there. On the equity and hybrid fund, the yield improvement is close to around 5 basis points, primarily because of 2 factors. First of all, normally, we estimate the commissions and this is our understanding of the business mobilization, the actual payout could be more or less. As you're aware, that team expenses cannot be charged to AMC. So is there any underestimate or overestimate of commission, the differential is adjusted in the management fee. So there have been some increase in the management fee on account of overestimation of commission. Secondly, as you are aware, B30 approval commission was being stopped by SEBI in February 2023. So whatever the business we mobilized until February '23, the commission was required to be paid for 1 year additional trail commission. Since the approval has stopped for those businesses, that impacted our yield in the first 3 quarters for equity and hybrid fund and the fourth quarter since we are not required to pay any commission as 1-year period has already over. So that has also improved our AMC yield under the equity and the hybrid category of the fund. Coming to the expenses, the employee cost, there have been an increase of close to around 10%, both on a sequential quarter as well as a year-on-year basis. It's primarily because of 2 factors. One is onetime expenses, the increase on account of gratuity where because of actuarial valuation, the increase of close to around INR 5.5 crores. Although the insurance cost has marginally gone up by INR 2.5 crores during this particular quarter. Apart from that, there have been an increase in employee expenses of UTI International and Mr. Rahman rightly pointed out, we are expanding our business in the international fund, both in European market as well as in the North American market. Because of that, we have been recruiting people over there. So in UTI International, there have been a slight increase in the employee expenses of close to around INR 3 crores. The other expenses are almost flat, and we believe that this run rate should continue going forward as well.

Right, sir. A quick follow-up on the yield part, I wanted to just ask that as we mentioned, this quarter, we are seeing impact of some overestimation of commission possibly in the previous quarter, right? Is that my understanding correct? So then from 1Q, how should we look at it? We go back to the earlier range as it was?

We are continuing with the same rate. So almost around 76 basis points yield is there on equity and hybrid fund. So we start the year with the same rate only.

Okay. And for the other categories, the increases that you highlighted, we should bake that in going ahead?

Yes.

Swarnabha, on the SIP inflows, as you mentioned that we have seen improved inflows, and we are taking a number of steps to further improve our inflows in this category. . One is the kind of effort that we are taking with our distribution partners across the country, even more so in the smaller cities where we are seeing significant traction for our fund. Also, what we are trying to do is try to pitch new products, like we have different products which we have launched, the Balanced Advantage Fund, which we had launched last year. And we are also targeting the new generation investors who look at more of these index funds. So that also has helped us to get -- improve our SIPs. So these are the steps that we are taking, and we will continue further to take these steps. On the direct versus the distribution piece, like it has been in the previous quarter, the equity and hybrid, which is the right parameter to look at it because the distribution plays an important tool in the distribution of equity and hybrid fund. That ratio remains similar. 30% is direct while 60% to 70% comes from the MFD.

We are extremely focused to enhance our engagement with our distributors. We are -- we have a very deep relationship with the banks or the channel or distributions. We are further enhancing our relationship with top 1,000 distributors across the [indiscernible] country. Yes. So far as Paris office is concerned, we are not expecting any further expenses to be incurred.

Understood, sir. Just one clarification, sir the distribution mix that you mentioned, that is for the flow. Would that be a correct assumption?

It's for the AUM, but for the flows also, it is very similar.

The next question is from the line of Mohit Mangal from BOB Capital. Sir. The current participant has left the queue. We'll move on to the next question, which is from the line of Lalit Deo from Equirus Securities.

First question, like as you mentioned on the yield numbers, there's two, can you reveal the numbers on the cash and arbitrage and have you mentioned on the debt scheme, what were the yields and how much it has improved?

So cash and arbitrage, it has improved from 9 to 11 basis points and the fixed income from 21 to around 22 basis points.

And sir like on the flow side, like -- so while we are taking steps to increase our flows across channels. But then the mainstream side, on the equity side, we are still seeing some pressure on the reduction side. So could you highlight like what were the gross sales during the quarter in the equity area -- in the equity and hybrid categories?

Do you want the quarter or FY '24?

Yes, quarter.

Quarter was close to -- equity and hybrid fund was INR 2,981 crores.

And so lastly, on the product pipeline, like we have been looking to launch, sir, any new products which -- any new products which you are looking to launch FY '25?

Sir, we are planning to launch a multi-cap fund during the year, and we are also looking to further innovate on the passively managed space as well as on the thematic funds. So we have, of course, continuous efforts to launch new products. As and when the market cycles and timing is right, we will launch new products.

We'll take the next question from the line of Prayesh Jain from Motilal Oswal.

Sir, just firstly, on the yield front, the improvement on the equity and hybrid category, you said it was 5 basis points. I'm correct that on a sequential basis?

Yes.

So out of that, how much part of that would have come from the B30 because that would have -- benefit would have been only for 1 month, right?

No, no, no. in that particular yield impacted our margins for 3 quarters. So now since the payout is also not there and approval is not there, it's a continuous effort only. But not possible to give a breakup of how much is because of the commission savings and how much is on account of B30.

Okay. Because until February, you would have paid the commission and it's from March that the commission would not have paid, and that's the reason I was coming from that point that whether the rates that you have mentioned are the exit rates that improved. So the 5 basis points is on an end-to-end basis or is on an average basis?

It's an end-to-end basis.

End to end. So this can sustain basically whatever you have mentioned.

Yes.

Okay. Got that. Got it. And secondly, sir, there is an improvement in the yield on the international side as well, right? I think, I mean so sustainability of the same, could you just help us understand the same?

Yes, International business, we are investing heavily and in the process of launching few of the fund as well. So we believe that we have international business, that yield should actually improve. This is an area we are investing heavily. So we are promoting 2 new products over there, India Innovation Fund as well as a private credit CMC state fund. Both these fund has a slightly better margin. So we do improve that the overall revenue as well as the margin number should improve in UTI international as well going forward.

Sir, we've seen very high volatility in this yield internationally. Like, for example, Q4 FY '23, it was 0.57%, it continuously declined until 3Q and now we've seen some improvement. So what was the reason for this continuous decline and now a recovery? Is the mix changing? Or what is driving this improvement in yields after 4 quarters of consistent decline?

There was a slight asset mix changes as well. So during the September quarter, we have witnessed some of the redemption in our flagship funds, which was the IDF category and significant import has come into a fixed income fund. So that brought volatility into the yield number. But we are focusing very heavily on the equity category of the fund. And going forward, we believe that overall margin number should improve.

Okay. And sir, from a expenses standpoint, how should we look at employee expenses for next year?

So very similar to whatever the growth rate has been there for the current year. Maybe on a stand-alone basis, the increase could be around 2% to 3%. On a consolidated basis, the increase could be slightly higher because we are investing in all 3 lines of business. . International, I have already spoken to. UTI Alternative also, we are strengthening our team since we are launching 2 or 3 new fund over there. And for UTI RSL we are also expanding our team for growing our private pension business as well as POP business. So on a consolidated basis, the number could be 100, 150 basis points higher than the stand-alone number.

Okay. And last question on the tax rate. Could you guide for FY '25, what would be the tax rate?

It should be in the range of 22% to 23%, I think.

[Operator Instructions] The next question is from the line of Mohit Mangal from BOB Capital.

Yes, sir, 2, 3 questions. First, on the dividend, I think you have given a special dividend. So going forward, should we expect the same 55% to 60% dividend payout ratio?

Dividends is concerned. This is Rahman. We have a policy that we always pay minimum 50% dividend to our investors. Last year, we have paid around 66%. So this year, 66% or 67%, we have maintained for the current financial year, and we have given an additional dividend, and we made -- 100% of our profit we have distributed to our investors.

All right, sir. Sir, next is in terms of the flow. So I think in the -- I mean, apart from the equity flow, liquid also seeing net outflows this quarter. So what are the major reasons for that?

Liquidity fund basically, at the end of the quarter, most of the banks, they basically go for the exit and therefore, there was an outflow. And again, it comes back on the first or second day of the next financial year. It's a quarter-on-quarter problem, which all AMC faces.

All right. Understood. So in terms of the live folios, so I think we could saw like 1.2 crores -- 1.24-odd crores. So I think any strategy over there if you could increase the live folios, I mean, if any particular strategy. So I think we went to around 12.2-odd million last quarter and now we are around 12.4-odd million. So that's basically kind of a stable from the last 2 quarters. Are there any particular strategy if we can increase the live folios, I mean, that would be helpful.

We are trying to increase our live folios as we mentioned that we have invested in our digital assets. We have also invested in our partnerships, as Mr. Rahman mentioned that we are deepening our relationship with the top 1,000 mutual fund distributors across the country. And we are trying to increase our presence of both digitally as well as physically on the ground. So through the SIP flows, through the partnerships, we are looking to increase the number of folios that we have. Currently, we have 1.24 crore folio, and we are confident that we'll be able to add more number of SIP folios as well as normal folios in our account.

We'll take the next question from the line of Abhijeet Sakhare from Kotak Securities.

First question was a clarification on the balance sheet. So what we noticed was that there is a movement between September and March from property plant and equipments to investment property. So if you could just explain that, please?

So we are owning UTI Tower. In UTI Tower, we have leased out 3 floor to NIIF. And as per the accounting standard, if any of the property is leased out, that needs to be reclassified from building to investment property. So just a reclassification of assets, the overall property remains the same.

Understood. And sir, second question, going back to yields. If you could just help us like sequentially, what has been the movement in overall equity and hybrid funds. The 5 basis points, is that like quarter end to quarter -- quarter start to quarter end, is that the movement?

Yes, yes. 5 basis point is a movement on a sequential quarter basis.

Understood. And last one is that on the flows, like the general slowdown or outflows, could you just give some color on whether it's like 1 or 2 large funds, which is driving it and whether the rest of the smaller funds are actually seeing some level of inflows or this behavior is more or less spread across all the top 5, 6 funds, something on that will be very helpful.

Yes. So Abhijeet, if you see we have good performance, both in our hybrid fund as well as income funds. Also in our passive funds, we have the tracking error which is the lowest in the industry, and this has helped us to build the traction. In our equity funds, some of our largest schemes had a quality growth bias and we are confident about their ability to perform over a full market cycle. Our value-oriented strategies have shown good performance, and we are able to capitalize on the performance in terms of market share for these funds. We have also fine-tuned our go-to-market strategy for the overall equity funds. As you would know that we have a strong position in Beyond 30 cities and we remain focused on growing our share in these cities. As I already mentioned, we have also revamped our digital assets, and we are getting good traction on these digital assets. And again, we have plans to launch funds across in the multi-cap fund as well as on the passively managed space as well as thematic funds. So these are all the efforts that we are taking for improving the performance and market share of equity funds.

[Operator Instructions] The next question is from the line of Dipanjan Ghosh from Citi Group.

So firstly, a data keeping question. If you can spell out the ESOP expense for the quarter and year for the stand-alone and consol entity. Second, more on your equity outflows that you have seen during the quarter and year. If you can give some color on if there is a dominance of any particular channel, particular geography, be it B30 or customer type, like retail HNI, where you're seeing relatively more outflow, some color on the quality of the outflows and also on the fresh gross sales that you are seeing in the equity and hybrid category? And lastly, if I look at your other expense number, given that you'll be launching a plethora of funds next year, be it multi-cap or on the passive side or also on the thematic side. How should one think of NFO-related expenses in your other expense going into FY '25-'26? Those are my questions.

So ESOP, I will provide you the full year number. On the AMC, the ESOP cost was around INR 13.14 crores. At a consolidated level is around INR 16.8 crores. And for the next year, as of now, if we don't issue any further ESOP, the next year cost will be INR 4.5 crores on the AMC and roughly around INR 5 crores at a consol level. As far as NFO is concerned, in terms of thematic or an index fund, we don't foresee much of the expenses on the NFO side because those will be soft launches. The multi-cap fund as and when we launch, there could be some amount of onetime advertisement expenses being charged, but we are cognizant of the cost, and that number will not be that sizable.

Sir, on the quality of...

Equity flows, we had seen some redemptions from the banks and the national distributors, but equally our other products, which are doing well, we are seeing inflows coming from the same channel. So net-net, it is similar.

Right. Sir, just if I can squeeze in one question on the yield part, and this is more of a clarification. If I understand correctly, there was some overestimation of commissions and when the actual cash flows were compared with estimations, you reported a yield improvement. So theoretically speaking, I mean, when you start from April 1 or when you look at first quarter of FY '25, it should be on a normalized basis on the correct estimation basis. So should 35 bps or whatever blended yield that you have kind of booked in the stand-alone business for fourth quarter, is that the right benchmark to start off with?

Yes, the 34 basis point is the right benchmark. And this yield estimation and comparison is being done on a quarterly basis itself. But we need to be cognizant of the fact that no scheme expenses can be charged to AMC. So normally, it has to be on a conservative basis. If any upside is there, that gets adjusted in quarter 4. But 34 basis points is the right number to start at the beginning of the financial year.

[Operator Instructions] The next question is from the line of Pratham Shah from [ TD Exports ].

I had a question regarding the stake sale of PNB, Bank of Baroda and SBI. There were some reports that they wanted to sell their stake. So is there any progress on that?

No, we don't know anything about it. We can't offer any comments on this piece. This is their matter, shareholders matter. And we as a management, we have no role to play in this.

The next one is from the line of Ajay Jain from Makrand Invest.

Wonderful figure, sir, congratulations on that. While going through your investor presentation, sheet #38 that is consolidated statement of profit and loss. Sir, can you please throw some light on net gain on fair value changes because in FY '23, it was INR 99 crores, and FY '24, it is INR 500 crores. I presume it has something to do with the market valuations of shares or the investments which you've made, but can you please let us know because the figure is a huge difference. Going forward, what do you feel of the same? My second question is on sale of services. We have 5% growth right from FY '23 INR 1,131 crores to INR 1,182 crores. Going forward, what do you feel of this?

So I'll take the question on the net gain on fair value changes. So as you are aware, in the investor presentation itself, we have mentioned we have a total consolidated investment of around INR 3,833 crores. Out of that, almost around INR 737 crore is invested into hybrid category funds of UTI, INR 709 crores into equity category and around INR 557 crores is invested into equity schemes of UTI International. These are equity-oriented schemes. And as you are aware, the market during the last financial year have given a return in excess of around 29%. I'm saying for the NIFTY. So because of that, there have been a mark-to-market appreciation, which has significantly increased the fair value changes number. On the management fees, yes, the 5% growth is there, and we are hopeful that with the growth in the AUM, especially on the equity and hybrid category, we should be witnessing a positive growth in the management fees as well during the next financial year.

Do you feel it would be greater than the current 5% growth?

Yes, we believe in that. Yes, we are quite confident.

Fine. And as I understand, the second fair value changes is basically the market improvement in the investments -- equity investments which we've done. Sir, just what you feel of going forward in this particular assignment because this is the major income which we are earning and makes a lot of changes to the profit and loss account. So your views on it going forward, sir.

Sees we can't give any forward-looking views on the market depreciation. We will give you a quarter-on-quarter details when it comes. Please wait for some more quarters.

Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. Imtaiyazur Rahman for closing comments. Over to you, sir.

Thank you very much for joining this call. I wish all of you a great financial year, and nice weekend. Thank you so much. Thanks, Sandeep, Vinay, and Surojit for joining me. Thank you.

Thank you, everyone.

Thank you, members of the management. Ladies and gentlemen, thank you for joining the call. In case of any queries, feel free to contact -- connect with Adfactors' Investor Relations team. Once again, thank you for joining us. You may now disconnect your lines. Thank you.