EDELWEISS FINANCIAL SERVICES — Q4 FY26

Edelweiss Financial Services Ltd Q4 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=WnxphXZO6TQ Published: 13 days ago

0:01 1 second Ladies and gentlemen, good afternoon and welcome to the fourth quarter FY26 earnings conference call of Edel Wise 0:08 8 seconds Financial Services Limited. As a reminder, all participant lines will be in the listenon mode and there will be 0:15 15 seconds an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an 0:24 24 seconds operator by pressing star and then zero on your touchtone phone. Please note that this conference is being recorded. 0:33 33 seconds I now hand the conference over to Miss Priyad Chopra, President Edel Wise Financial Services Limited. Thank you and over to you ma'am. 0:44 44 seconds Thank you Sag and a very warm welcome to our earnings call today. We have on the call with us today Mr. Rashi Sharp, 0:52 52 seconds chairman and MD of Adel Wise and Miss Ana Sja, CFO Adelise Financial Services. 0:59 59 seconds We hope you all had a chance to review the investor presentation that we filed with the exchanges earlier today. During our discussion, we will be making 1:07 1 minute, 7 seconds references to it. Please take a moment to review the safe harbor statement in our presentation. We will be making 1:14 1 minute, 14 seconds statements that may be forward-looking in nature and hence may involve certain risks and uncertaintities. 1:20 1 minute, 20 seconds With that, I'll hand over the call to Rash to begin the proceedings. Thank you all for being here again. Over to you, Rashes. 1:31 1 minute, 31 seconds Yeah, good afternoon to all of you and a warm welcome for earnings call for the quarter and the year ended March 26. 1:40 1 minute, 40 seconds Thank you once again all of you for joining us. Uh I was supposed to start with the geopolitical tensions and oil 1:49 1 minute, 49 seconds price but I guess all of us know the headwinds that India is currently facing. 1:56 1 minute, 56 seconds uh but in spite of the hand headwinds we do believe India remains relatively well positioned in the businesses we are we 2:04 2 minutes, 4 seconds don't see a very large impact of this headwind except at the India macro level and uh we do think there is some amount 2:11 2 minutes, 11 seconds of pain the inflationary risk and the geopolitics for the next five six months there is some pain when we talk to 2:19 2 minutes, 19 seconds investors we see that they also have the same hypothesis but I think there is some near-term pain but India seems to 2:26 2 minutes, 26 seconds be positioned enough to be resilient to the pain. The pain is not not going to be there but I think we feel that India will withstand the pain and come out of this strongly. 2:37 2 minutes, 37 seconds Uh at wise level you would have seen the investor presentation we had growth in the consolidated profit after tax and 2:46 2 minutes, 46 seconds the key metrices for the operating businesses. our our console pad has grown by 27%. 2:56 2 minutes, 56 seconds Uh this was in spite of some exceptional items. I'll speak about that. uh in a 3:03 3 minutes, 3 seconds lot of our businesses because of the labor code impact the GST impact on our 3:10 3 minutes, 10 seconds life insurance business with all of that uh post minority investment our profits 3:16 3 minutes, 16 seconds have gone up profit after tax from 399 to 547 cr so a 27% increase in that pack 3:27 3 minutes, 27 seconds uh there have been some headwinds in the fourth quarter on a lot of our businesses because of 3:34 3 minutes, 34 seconds the market volatility, the treasury income impact in the mutual fund and our even corporate treasury because of the 3:42 3 minutes, 42 seconds March volatility there has been some impact but as we've seen markets have stabilized in April so that has been 3:49 3 minutes, 49 seconds fairly uh stable all other businesses continue to grow alternative asset management FPU has grown by 32% YI at 3:59 3 minutes, 59 seconds 44,000 crores mutual fund AUM equity AUM is now grown by 25% to 78,000 crores. 4:08 4 minutes, 8 seconds Our MSME disbbursements have grown obviously very largely by 200% because we have uh started scaling it up again. 4:17 4 minutes, 17 seconds Housing finance disbbursements have grown by 27%. Our uh GI business had a 4:24 4 minutes, 24 seconds growth of 28% in GWP and LII has grown by 11% in AUM and AUM has now crossed 4:32 4 minutes, 32 seconds 10,000 crores. But ARC also had a good year. ARC recoveries were 8590. 4:39 4 minutes, 39 seconds So 8,590 is is extremely good. as is always uh it is a very paradoxical thing because the 4:47 4 minutes, 47 seconds more you recover the more your aum keeps on falling down. So but it's always good 4:54 4 minutes, 54 seconds to recover because that means you are reducing the risk in the portfolio and returning a money to the banks who are holding the SRS. So we continue to grow 5:04 5 minutes, 4 seconds on that and before going into strategic updates let me give two or three special updates and I've got some queries and 5:11 5 minutes, 11 seconds questions from a few of you in the last couple of hours on that. So the first one is on insurance break even. So 5:18 5 minutes, 18 seconds insurance both the insurance businesses put together for the year had a had a loss of almost 200 5:28 5 minutes, 28 seconds and 16 crores which was an increase from last year which was about 5:36 5 minutes, 36 seconds 70 crores or so. So there has been a growth uh the pro the loss have gone up in insurance business instead of going 5:43 5 minutes, 43 seconds down because we have been working towards break even. So the way to look at the insurance business is there is almost 110 crores exceptional item 5:53 5 minutes, 53 seconds largely the GST impact on life insurance which was a one-time one. We are not talking about the recurring impact which 6:00 6 minutes we are managing and we'll get to break even even in spite of that but out of the 159 negative of G of of the 6:10 6 minutes, 10 seconds life insurance business almost 70 is from the GST impact and then we had the labor cord impact on both the 6:18 6 minutes, 18 seconds businesses. So there has been a exceptional hit on both the insurance businesses which our estimate is about 6:25 6 minutes, 25 seconds 110 crores. So if we take that away then the minus number is 100 cr as compared to 170 cr of the last year. So there is 6:34 6 minutes, 34 seconds a significant improvement on the performance of the insurance businesses if you remove the uh impact of the 6:42 6 minutes, 42 seconds exceptional item which are truly one of which are not going to recur in the in the coming years. Along with that we 6:49 6 minutes, 49 seconds still remain committed that we will be break even for the year FI27 in our insurance businesses. Uh we are 6:59 6 minutes, 59 seconds strengthening ourselves. We are focusing a lot on that and even without index because we have index will come a year 7:06 7 minutes, 6 seconds after now even without index coming in uh we will reach break even obviously I 7:13 7 minutes, 13 seconds sped earlier if Indas comes we are break even even now but without Indas we still as per I gap we expect to be break even 7:21 7 minutes, 21 seconds in the insurance businesses in the coming years. 7:25 7 minutes, 25 seconds On question number two which has been on um the operating businesses now operating businesses also have shown a 7:35 7 minutes, 35 seconds fall in path from 5666 crores to 520 crores. So there is a 46 cr fall in the 7:42 7 minutes, 42 seconds operating businesses but as you have seen in the presentation there is a exceptional item and those exceptional 7:50 7 minutes, 50 seconds item is about 134 crores. So if you adjust for the exceptional item the 7:57 7 minutes, 57 seconds uh the businesses have actually grown by 17% at a pat level where five where 566 8:07 8 minutes, 7 seconds has gone to 640 odd or something. So there has been a fall in the underlying businesses profit 8:17 8 minutes, 17 seconds operating profit of the underlying businesses by 46 crores but that is after a 130 cr exceptional item on that. 8:25 8 minutes, 25 seconds So adjusting for exceptional item we still see that on apples to apples basis the operating businesses have shown a 8:32 8 minutes, 32 seconds 17% growth the operating businesses also have an ESOP cost embedded in that which will be recurring. So we are not removing that with ESOP cost. We expect 8:41 8 minutes, 41 seconds to continue to grow our operating business profit at approximately 20% per year. That is what we have maintained in 8:50 8 minutes, 50 seconds the last four five years. This year also apple to apple we are at 17% but we have had these exceptional items which is 8:58 8 minutes, 58 seconds mainly has been graduating and uh impact of the new labor code and the GST impact 9:06 9 minutes, 6 seconds that has come which I think all of you are are aware about and the third question I wanted to answer was on the 9:14 9 minutes, 14 seconds corporate debt our corporate debt is about 6,400 crores as of now which remains almost flat at from last year. 9:23 9 minutes, 23 seconds But we have done a lot of activities to uh bring down the debt from our underlying businesses in this year. We 9:31 9 minutes, 31 seconds expect dividend and capital through buyback and other stuff of almost 1,000 plus crores. So for this year 1,000 9:41 9 minutes, 41 seconds crores odd will come from dividend and buyback and other stuff from the underlying businesses. We expect between 9:48 9 minutes, 48 seconds 1,000 to,500 crores from the EAA IPO and the stake sale of Nidato and EML should 9:55 9 minutes, 55 seconds give us another 750 crores and other things like we have a couple of offices 10:02 10 minutes, 2 seconds that we are in the process of uh selling to investor doing a sale and lease back and we have some investments in the 10:11 10 minutes, 11 seconds underlying funds which will also come back. So through this stake sale and dividend we expect almost 3 three and a 10:19 10 minutes, 19 seconds half,000 crores to be realized in the coming year. So when we look at the 6,400 against that we have three three 10:28 10 minutes, 28 seconds and a half thousand crores of um liquidity uh cash flow coming in out of the balance 3,000 our property 10:36 10 minutes, 36 seconds investments and the offices we own house and others are about 2,000 cr and 1,000 cr are the investments we have in the 10:44 10 minutes, 44 seconds underlying company uh uh in the underlying funds and all that we have. 10:48 10 minutes, 48 seconds So we have 1,000 crores of investments, 2,000 crores of property and between 3 to three and a half thousand crores of 10:56 10 minutes, 56 seconds stake cell and dividend realizations that we expect in this coming year. So I think on the corporate debt though it looks flat, we remain comfortable to go 11:05 11 minutes, 5 seconds by our earlier guidance that we will keep on reducing it and we will I think bring it down to below 3,000 cr in the 11:14 11 minutes, 14 seconds next 1 year to 18 months for sure. That is our plan and we continue to work towards it. Along with that, the other 11:22 11 minutes, 22 seconds update is EAA placement. As you may have seen, we have got the SP approval on the 11:30 11 minutes, 30 seconds for the IPO. Now, as as soon as market stabilize and we have a little bit of bandwidth, we will work towards the IPO. 11:37 11 minutes, 37 seconds We did do a 4 uh 4% placement uh of the 11:43 11 minutes, 43 seconds EAA to a group of high netw worth investors but more importantly people who've been investors in our funds. They 11:51 11 minutes, 51 seconds were key LPs and select individual investors who have been long-term supporters of fund. They are fairly large investors in the fund and we 11:59 11 minutes, 59 seconds wanted to to create a alignment of interest with them. So we are very grateful that the 4.4 four person 12:06 12 minutes, 6 seconds placement happen. Uh we got 375 crores out of that. The other important uh uh 12:13 12 minutes, 13 seconds important milestone we achieved was we got our uh transportation focused in bit uh I think listed it got uh it started 12:22 12 minutes, 22 seconds trading yesterday. Uh it had a very successful IPO and a successful listing. 12:29 12 minutes, 29 seconds So uh so fitius has a portfolio value of almost 11,000 crores and it's uh it's 12:36 12 minutes, 36 seconds our first uh transportation focused in this. So we're very excited about it. Uh the update on strategy investment by 12:44 12 minutes, 44 seconds Kalai in Nido. We have got the CCI approval. We are still awaiting RD approval but everything is on track. 12:53 12 minutes, 53 seconds We've been replying to the queries and we hope that the process continues smoothly. Fourth important update has 13:00 13 minutes been the Adel Wise ARC. The MDNC appointment has been finalized. We have appointed Mr. Arun Mata who was earlier 13:08 13 minutes, 8 seconds MD and CEO of uh SBI Capital Markets. He's going to join uh us in the next 3 four weeks. We 13:18 13 minutes, 18 seconds got approval from RBI for his appointment and now we are just finalizing the paperwork and we are very excited for the next innings of Edwise 13:27 13 minutes, 27 seconds ARC for the growth again to start. We seeing that ARC business uh opportunities are growing again and with 13:34 13 minutes, 34 seconds Arun Meta coming on board we are pretty excited by that. So I think along with that our both the asset management businesses continue to click along well. 13:43 13 minutes, 43 seconds Both the insurance businesses have also shown good growth and should get to break even in this year and our credit 13:50 13 minutes, 50 seconds businesses have started growing again in a calibrated manner. ARC recoveries have been strong and we expect them to grow. 13:58 13 minutes, 58 seconds Uh as I said corporate debt uh we feel is under control. the plans we have we are very confident that those plans will 14:06 14 minutes, 6 seconds allow us to get through the reduction of corporate debt as fast as possible. So u with that I wanted to leave a lot of 14:14 14 minutes, 14 seconds time for the Q&A and uh uh I just want to sum up by saying our 14:21 14 minutes, 21 seconds consolidated profit has grown. Uh there was some misunderstanding because of the of the reporting but the investor presentation clears it out pretty well. 14:31 14 minutes, 31 seconds The operating businesses p was muted because of the exceptional items and the market volatility in the last quarter. 14:39 14 minutes, 39 seconds Uh overall uh we expect that or businesses will continue the healthy growth because that 14:47 14 minutes, 47 seconds has gone on for last 3 four years in spite of all the volatility and the uncertaintity and the businesses have only got stronger. 14:55 14 minutes, 55 seconds uh the all the other strategic projects as I've given update are on track and uh we truly want to thank all our 15:04 15 minutes, 4 seconds stakeholders, all our bankers, all our shareholders for the support and the feedback they've given us over the years. Thank you with that and we'll now open up for question and answers. 15:16 15 minutes, 16 seconds Thank you very much. 15:19 15 minutes, 19 seconds We will now begin with the question and answer session. 15:23 15 minutes, 23 seconds Anyone who wishes to ask a question may press star and then one on their touchtone phone. 15:29 15 minutes, 29 seconds If you wish to remove yourself from the question queue, you may press star and two. 15:36 15 minutes, 36 seconds Participants are requesting requested to use handsets while asking your question. 15:42 15 minutes, 42 seconds Ladies and gentlemen, we will wait for a moment while the question to assembles. 15:46 15 minutes, 46 seconds Again, to register, please press star and then one. 15:51 15 minutes, 51 seconds Our 16:03 16 minutes, 3 seconds first question comes from the line of Gil Dagaria from Equia Securities. Please go ahead. 16:11 16 minutes, 11 seconds Yeah. Hi, good afternoon. Thank you for the opportunity. So, I had a few questions. So uh sir firstly as you 16:18 16 minutes, 18 seconds mentioned about the EAA placement so I wanted to understand more about the same uh particularly the profile of the investors who participated in that. 16:34 16 minutes, 34 seconds Sorry can you repeat the question please? 16:38 16 minutes, 38 seconds Yeah so you mentioned about the efment right? So I wanted to understand more about that uh particularly the profile 16:47 16 minutes, 47 seconds of the investors who participated in that. 16:52 16 minutes, 52 seconds Yeah. So all the investors are our are actually you mean investors and the limited partners in our funds who have 17:00 17 minutes invested with us over the years and uh they have they've supported us. So there are HNI investors uh family offices who 17:09 17 minutes, 9 seconds have all been there. We wanted to do only a 4% placement because it was a long-standing ask from them. Uh a lot of 17:18 17 minutes, 18 seconds investors as you know we have an AUM of more than 64,000 crores out of which almost 30,000 is from Indian investors 17:27 17 minutes, 27 seconds and a lot of that is from Indian high net worth a lot of that is from Indian uh 17:35 17 minutes, 35 seconds HNI family offices. So and we had kept a cap of about 40 crores per head. We had 17:42 17 minutes, 42 seconds a lot of people who wanted to invest even more than that but we said only 40 crores. So we had a a group of investors 17:50 17 minutes, 50 seconds all of them were our LPS. Uh our requirement was that they are you know already investors with us and uh we 18:00 18 minutes think had about 40 45 investors in total. 18:05 18 minutes, 5 seconds Okay. Understood. Uh secondly, I wanted to ask regarding the IPO. So the DRHP 18:12 18 minutes, 12 seconds was approved last week, right? So could you walk us through the next steps and also when the IPO is expected, the 18:20 18 minutes, 20 seconds timeline of the IPO and uh additionally I wanted to ask if you are considering any of the further placement rounds and 18:29 18 minutes, 29 seconds what could be the shareholding structure post the IPO. 18:37 18 minutes, 37 seconds We will not finalize anything. We don't intend to do anything besides the IPO. 18:42 18 minutes, 42 seconds Now uh I we think uh obviously as you know the markets are still in a state of 18:49 18 minutes, 49 seconds uncertaintity because of the gulf uh situation. So we we'll wait for couple 18:56 18 minutes, 56 seconds of months for things to stabilize and then our idea will be to launch. So we are in no hurry because I think we have enough uh business momentum going on. 19:07 19 minutes, 7 seconds But uh if you ask me I think in the next three four months I expect I expect the global situation to stabilize and uh for 19:15 19 minutes, 15 seconds us to be able to do the AAA IPO. So maybe July August. 19:21 19 minutes, 21 seconds Okay. Got it. I I have one last question. So you also mentioned about the neo carile transaction right? So 19:28 19 minutes, 28 seconds could you share the expected uh timeline for closing that transaction and also if there are any positive shifts that we 19:37 19 minutes, 37 seconds foresee right such as the cost of funds or the credit rating trajectory or even the acceleration in the disbbursement growth. 19:49 19 minutes, 49 seconds So uh growing steadily we are not putting a lot of high growth uh 19:57 19 minutes, 57 seconds pressure on that because we want to close the caral tunnel. We also investing in opening some offices and increasing our footprint on affordable 20:05 20 minutes, 5 seconds housing. So on that that basis I think it's on a on a steady footing. The carline transaction we expect the only 20:13 20 minutes, 13 seconds thing awaiting is RB approval. Uh which is we file this in February and usually 20:20 20 minutes, 20 seconds RB approvals have taken 3 to four months normally is what the lawyers inform us. 20:26 20 minutes, 26 seconds So if we file this in February we are now March April. So I think somewhere between May June I think we should get 20:35 20 minutes, 35 seconds the approval. All the other approvals are in place. Okay. Thank you. That was very helpful. 20:43 20 minutes, 43 seconds Uh that's it from my side. Thank you. 21:00 21 minutes Your next question comes from the line of Siddeshadikari from PL Capital. 21:07 21 minutes, 7 seconds Please go ahead. Hi. Uh, thank you for the opportunity. Am I audible? 21:16 21 minutes, 16 seconds Yes, you are. Yeah, it is. 21:19 21 minutes, 19 seconds Uh, Zuno has been a pioneer in insure tech with products like usage based insurance and telematics. So, with the 21:27 21 minutes, 27 seconds rapid evolution of AI, how do we see the opportunity for further product innovation and differentiation? So 21:36 21 minutes, 36 seconds yeah, I think it's a it's a very important question because as you know in Zuno we have been focusing more on 21:44 21 minutes, 44 seconds auto insurance. Our aspiration is to be one of the best auto insurance companies in India. uh it will take time but our 21:53 21 minutes, 53 seconds our the reason we are very bullish on auto insurance uh you know motor insurance is because we think it is very 22:02 22 minutes, 2 seconds data based. It is very data linked and with cars also having a lot of data on 22:09 22 minutes, 9 seconds driver on fuel consumption on uh even the even that the cost of repair and all a lot of that is now getting 22:17 22 minutes, 17 seconds standardized. Garages have become very professional. So I think India is where the US car insurance market was about 40 22:25 22 minutes, 25 seconds 50 years ago and on that basis with the kind of data and AI available this business has a lot of possibilities for 22:33 22 minutes, 33 seconds innovation. You can do a lot of uh innovation in pricing really allow customers to pay for what real risk they 22:42 22 minutes, 42 seconds want. You can slice risk. You can also code pricing which is customers to customer pin code to pin code. um you 22:50 22 minutes, 50 seconds know car make to car make all of that even on the claims settlement you'll be able to do claim settlement within uh 22:58 22 minutes, 58 seconds you know 3 hours and all that we have already been experimenting with that because uh with a lot of AI you can look 23:05 23 minutes, 5 seconds at uh uh through you know cameras and all you can look at the damage done you can assess the cost very quickly so 23:12 23 minutes, 12 seconds there is a lot of improvement on all three there are three parts of the auto insurance business one is the pricing and the policy. The second is the 23:21 23 minutes, 21 seconds customer experience and third and third is a claims is a claims management. All three of them have a huge amount of AI 23:29 23 minutes, 29 seconds application that is there. So we have large teams doing agentic AIs and all that because a lot of your call center 23:36 23 minutes, 36 seconds and customers customer support and all can also use AI in a in a fairly big way. So though we are very proud of 23:44 23 minutes, 44 seconds about our product innovation at Zuno and as you would have seen since inception Zuno has been growing at between 25 to 23:52 23 minutes, 52 seconds 40% every year and uh the motor insurance market has not been an easy one as I'm sure uh a lot of you would 24:00 24 minutes have seen health has been growing much more easily. Motor has been a difficult market but in that difficult market we 24:07 24 minutes, 7 seconds have innovated a lot but we also very proud of our customer service and claim settlement and in that also AI is going 24:14 24 minutes, 14 seconds to be a big help so we are investing fairly big in that data was always very important to us now how that data will 24:21 24 minutes, 21 seconds be used I think AI will make it easier and easier understood sir and on the SI side uh 24:31 24 minutes, 31 seconds Altima S has crossed uh 3,000 plus cr uh in EUM making it one of the largest in the industry. So how 24:38 24 minutes, 38 seconds do we view the long-term opportunity in this space and are there any plans to expand the product suite further? 24:48 24 minutes, 48 seconds Yeah, I think SRF is a new asset class. 24:50 24 minutes, 50 seconds Everybody thinks it's like you know you know another mutual fund or another AIF or another PMS. But it actually has some 24:58 24 minutes, 58 seconds elements of a mutual fund, some elements of an AIF and some elements of the of the PMS category. So if you go back and 25:06 25 minutes, 6 seconds study the underlying needs because a PMS serves a very different need than a AIF does and that serves a very different 25:14 25 minutes, 14 seconds need than the mutual fund does because as you know a lot of people ask that why do PMS exist when there is an income tax 25:21 25 minutes, 21 seconds advantage capital G advantage which a mutual fund but because they're serving different kind of needs in the same way 25:29 25 minutes, 29 seconds and SIF is also serving a very different need at the customer level which Some parts of it are available in AI, 25:37 25 minutes, 37 seconds some parts are available in PMS and some parts are available in uh in a mutual fund. So it's a very hybrid product. You 25:46 25 minutes, 46 seconds really have to understand customer needs. Create the product as per that and more importantly market it very carefully as per that because even if 25:54 25 minutes, 54 seconds it's a product which is marketed as another AIF or another PMS or you know what some people call it a poor man's 26:01 26 minutes, 1 second AIF, it's not true. I think it is a very different very very nuanced product that is there. We are pretty pretty bullish 26:10 26 minutes, 10 seconds on that. There are some specific customer needs that an SI will cater to and your ability to create products in 26:17 26 minutes, 17 seconds that is important. We have already launched the first product which is as you said done very well. We are the leaders in that. We are currently 26:25 26 minutes, 25 seconds looking at couple of other products also. We should launch our second product in the next uh few weeks. But we 26:32 26 minutes, 32 seconds do a lot of research to understand customer need and then create the product and communicate with the 26:39 26 minutes, 39 seconds distributors. Yeah, product is for this kind of customer for this kind of need and that is important. Just just using a 26:47 26 minutes, 47 seconds distribution to sell uh you know a product in a very average manner will not really allow you to capitalize on 26:54 26 minutes, 54 seconds this new asset class and new product very very effectively. 27:03 27 minutes, 3 seconds Understood sir. Uh thank you very much. 27:06 27 minutes, 6 seconds That's that's uh that's all from my side. 27:11 27 minutes, 11 seconds Thank you. The next question comes from the line of show Sharma from HDFC Securities. Please go ahead. 27:19 27 minutes, 19 seconds Uh yeah. Hi sir. Thanks for the opportunity. So I have a multiple question. So firstly on the alternate piece if I look at your fee paying AUM 27:27 27 minutes, 27 seconds on the retail assets have surpassed the private credit fee paying AUM. So what actually are we doing on that piece what is what differentiate us from the 27:36 27 minutes, 36 seconds competition and what are what are our plans to expand that kind of business. 27:40 27 minutes, 40 seconds Secondly coming to your mutual fund business the growth on the uh on the profitability seems to be material. So 27:48 27 minutes, 48 seconds how should we think about the yields uh on the par level yields for the medium term and similarly on the on the mutual 27:55 27 minutes, 55 seconds fund business we have seen strong growth on the SI SIP book. So if you can give us some color on this SIP book, how this book has behaved during the last quarter 28:03 28 minutes, 3 seconds and what kind of sense we are getting for the month of April and where are we seeing the SIP 28:11 28 minutes, 11 seconds new SIP folios being generated? Is this on the passive side or is this on the commodity commodity funds? And last question is on your insurance business. 28:20 28 minutes, 20 seconds Are we are we going to seek a forbearance from the IID for the for applicability of the Indas for FI27? 28:29 28 minutes, 29 seconds Yeah. 28:33 28 minutes, 33 seconds Okay. I hope I remember all the all the questions you asked and answer them. 28:37 28 minutes, 37 seconds I'll try and do it in reverse order. So in insurance index, yes, we have asked for the forbearance because I think uh 28:45 28 minutes, 45 seconds most of the industry players are going to ask because the clarity is still emerging. there's a lot of investment to be made and you still have to run IGAP. 28:53 28 minutes, 53 seconds So if you don't ask for forbearance then for this year you will end up running index and I gap both and you might end 29:00 29 minutes up you know uh spending a lot of money and effort on that. So I think the idea currently is to take forbearance for a 29:07 29 minutes, 7 seconds year. So both the insurance businesses will implement indes from the next year though it is actually very useful from a profitability point of view from a profit after tax reported point of view. 29:19 29 minutes, 19 seconds India indas is a lot better for us than I gap. Uh in order to avoid uh complexity we have taken the forbearance 29:27 29 minutes, 27 seconds that's your first question. Second SIP book we are now more than 600 crores in SIP in the mutual fund. A lot of this is 29:37 29 minutes, 37 seconds in equity and commodities. Largely equity and a little bit in international funds but largely I think it's about our 29:45 29 minutes, 45 seconds main focus has been equity AUM and we are getting a fair amount of inflows into that through SIP on the mutual fund 29:53 29 minutes, 53 seconds growth. uh as as you can see now we are at a PAT yield level of about about six 30:00 30 minutes I say which is still low and we have some headroom to grow as our product mix is undergoing a change as our equity 30:08 30 minutes, 8 seconds component is going up as our new money is coming at you know slightly better economics and all that when we add up 30:17 30 minutes, 17 seconds all of that our aspiration is that from current six we should go to 10 basis point by 2030 30. So it's going to be a 30:24 30 minutes, 24 seconds slow improvement. We want to be fair to our distributors. We want to be fair to our partners and and we want to improve 30:31 30 minutes, 31 seconds our yield but not by reducing theirs but by calibrating the product portfolio by introducing high economics on product by 30:40 30 minutes, 40 seconds having higher economics on on incremental flows that we get. So we think we will continue to grow on the AUM the way we've been growing uh at 30:49 30 minutes, 49 seconds about 20% a year but on on the on the path margin which is about six basis 30:57 30 minutes, 57 seconds point we would like to go to 10 basis point in the next 3 four years. So we are no hurry. We want to do it in a very 31:04 31 minutes, 4 seconds careful calibrated manner in a win-winwin manner with the with our partners and distributors and creating 31:11 31 minutes, 11 seconds products like SIF is actually one example that we are creating products which truly add value to the customer 31:19 31 minutes, 19 seconds and hence improve our economics on EA or FBAUM. Now uh the real asset has become higher than priv and private credit 31:28 31 minutes, 28 seconds because private credit we have not raised a big fund in the last 3 four years. So our expected they'll both be 31:34 31 minutes, 34 seconds equal. Though in in private credit the assets keep on going down because we keep on returning money to the customers 31:41 31 minutes, 41 seconds and average private credit fund uh average tenure is only two and a half years while in while in real asset the 31:49 31 minutes, 49 seconds average tenure is about four to five years. So the real asset is a slightly longer duration funds while private 31:56 31 minutes, 56 seconds credit because we also keep on getting income and realizations we keep on returning the money. So we expect our 32:05 32 minutes, 5 seconds average private credit fund to have an average in and out uh average horizon of three years while the real asset will have five years. So that that would be 32:13 32 minutes, 13 seconds the difference. But again a lot of this is based on the new fund launches and we launch a a new fund every uh two years 32:23 32 minutes, 23 seconds or so two to three years in private care. So as a new fund is getting launched in this year we expect private 32:30 32 minutes, 30 seconds credit FPAM will also go up in this year. Okay sir understood. Thank you. 32:41 32 minutes, 41 seconds Thank you. 32:43 32 minutes, 43 seconds Your next question comes from the line of Arth from DAM. Please go ahead. 32:49 32 minutes, 49 seconds Uh hi sir am I audible? 32:54 32 minutes, 54 seconds Yes. Yeah. Uh sorry sir I joined the call late if my questions are just uh repeating. Uh so I have two questions. 33:01 33 minutes, 1 second one uh see right now given the volatility in the market are we seeing any challenges on raising of funds from 33:08 33 minutes, 8 seconds foreign investors in triple EA and u what are the FBA fundraising targets for 33:16 33 minutes, 16 seconds the next year and could you also give some color on the pipeline of new fund launches that would be my first question sir I will take after uh uh second 33:25 33 minutes, 25 seconds question afterwards so uh we don't have lot of challenges 33:32 33 minutes, 32 seconds from global investors on the products we have which have a higher yield. So the products will have a yield of more than 33:39 33 minutes, 39 seconds you know um 16 to 18% rupee yield there foreign investors are still very keen and all where the yields are about 13 14 33:48 33 minutes, 48 seconds like in performing credit uh foreign investors are slightly worried about uh the rupee effect they are actually very 33:56 33 minutes, 56 seconds hot on India but a lot of the even the FBI selling we have seen in the market a lot of that is now driven by the view on 34:04 34 minutes, 4 seconds the rupee and not the view on underlying ing Indian opportunities in the market. So, but we also have a lot of products. 34:12 34 minutes, 12 seconds We are looking at offering a hedge um hedge um you know offering to our international clients which will 34:19 34 minutes, 19 seconds be in US dollar and we'll hedge the dollar to rupees to remove any uncertainity. So, I think there is 34:26 34 minutes, 26 seconds opportunity on creating new products because hedging and rupee stability has become a key need for a lot of foreign investors. But where there are high 34:36 34 minutes, 36 seconds yield products like our special situations fund which uh you know expects to make around 18% plus there I 34:44 34 minutes, 44 seconds think investors are fairly okay because at that yield a rupee is not that big a problem but the biggest problem across the board for all foreign investors in 34:53 34 minutes, 53 seconds India today is their view on the rupee and they they're looking for some stability on that. 35:01 35 minutes, 1 second Understood. Understood. Uh so secondly um our NSME discusses have tripled in FI26. So could you just highlight what 35:10 35 minutes, 10 seconds were the key drivers or initiatives that has contributed to such significant growth here and also with our wholesale 35:17 35 minutes, 17 seconds scaling down and uh the whole scaling up now largely behind us. Uh when can we see our earnings actually starting to 35:25 35 minutes, 25 seconds reflect the real retail mix. So could you just share some outlook there and what would be our MSM EUM growth and the roe trajectories for next two to three 35:34 35 minutes, 34 seconds years sir that's it from my side so yeah I think on ECL finance as you 35:41 35 minutes, 41 seconds know we have a lot of equity out there we had we had decided that we'll grow MSME only after wholesale book is uh 35:49 35 minutes, 49 seconds scaled down after all the cleanup is over so around March 25 is where we concluded that the wholesale is behind 35:56 35 minutes, 56 seconds us the stress on the wholesale is behind us. Uh we also hired a new managing director Ajay Kurana who came on April 36:05 36 minutes, 5 seconds 1st 2025 and uh we have almost grown our disbbursements 3x in this year we did 36:13 36 minutes, 13 seconds about 1,000 crores of disbbursement in this year we expect to keep on growing and we'll be happy if you do 36:20 36 minutes, 20 seconds between,000,700 to 2,000 cr disersments in the coming year. uh we are currently investing a lot also in that business. So the the 36:29 36 minutes, 29 seconds the nymphs um will be there but we are also opening a lot of branches and hiring people and all of that and 36:37 36 minutes, 37 seconds focusing a lot on MSME only. So we expect that the profitability and all is maybe 18 months to two years away but 36:45 36 minutes, 45 seconds the growth has started coming and we always said growth before profitability. 36:49 36 minutes, 49 seconds If you look at our asset management business on mutual fund also until two years ago profits were very low but we had been growing for five years before 36:58 36 minutes, 58 seconds that. So growth and then profitability rather than try to get profitability and growth at the same time which becomes 37:05 37 minutes, 5 seconds much harder. So currently MSME will be in a growth mode for the next couple of years and we do feel confident 37:13 37 minutes, 13 seconds about the disbbursement growth and the profitability will follow that. 37:19 37 minutes, 19 seconds Also thank you and sir just thinking how what would be the kind of trajectories over the next two to three years for us 37:28 37 minutes, 28 seconds in this yeah connect 37:39 37 minutes, 39 seconds in two years time to get to a a 10% roe because you know we are still very under 37:46 37 minutes, 46 seconds so we should get to 10% % ROE once we get the scale up done which is about 18 months to two years from now. So we have 37:54 37 minutes, 54 seconds quite a bit of equity there. So our idea is to get there and you and you will see improvement. It won't be overnight but it will be gradual but I think getting 38:03 38 minutes, 3 seconds to a double digit ROE is an important milestone for us. 38:08 38 minutes, 8 seconds Understood. That's very helpful. Thank you so much. 38:13 38 minutes, 13 seconds Thank you. The next question comes from the line of Rajes Ganesh Kumar from JM Financial. Please go ahead. 38:22 38 minutes, 22 seconds Hi, thank you for the opportunity. Uh am I audible? Yes. Are you audible? 38:29 38 minutes, 29 seconds Great. Uh I just have two quick questions. First one being uh see the cost to income in mutual fund it has 38:36 38 minutes, 36 seconds improved by appro 10% by y in the current fi and uh you know as we continue to scale what is the steady 38:44 38 minutes, 44 seconds state efficiency level that we are targeting and you know uh how how does one view the near-term growth potential in the equity aum uh I'll ask the second 38:53 38 minutes, 53 seconds question post this so as I said earlier our aspiration in 39:01 39 minutes, 1 second the mutual fund equity AUM is to grow at 20% plus uh we've been growing faster than that but our SP didn't grow at 20 39:09 39 minutes, 9 seconds as you know 8 10% comes out of uh your uh MTM growth in a in a normal year and 39:17 39 minutes, 17 seconds the other comes from new money we already have also a very strong SIP book 600 odd crores and all and as we 39:24 39 minutes, 24 seconds introduce a couple of new products NFOs and all that also helps you collect uh additional AUM so I think getting to 18 39:31 39 minutes, 31 seconds 20% AVM growth in equity is a good target to have cost income ratio we are in the 60s now I think eventually 39:41 39 minutes, 41 seconds according to us a good cost income ratio for a mutual fund should be 45 to 50% and uh hopefully I think we should also 39:50 39 minutes, 50 seconds get there as the scale happens in the next 2 three years so we do expect that we would also want to list our mutual 39:57 39 minutes, 57 seconds fund at some point of time so uh when we list we would hope that you know the 40:04 40 minutes, 4 seconds cost income is 50% but it's very you constantly uh I think invest in 40:11 40 minutes, 11 seconds efficiency and and technology and not allow your cost to grow as the income is growing 40:20 40 minutes, 20 seconds understood this was helpful thank you the the last question I have is uh you know ELA's recently launched site is 40:28 40 minutes, 28 seconds transmitting with IPO uh which uh has received overwhelming response. Uh you know the the question that comes to the 40:36 40 minutes, 36 seconds mind is how does invest is differ is you know different from other infra funds in terms of let's say 40:44 40 minutes, 44 seconds risk or income generation and overall uh return profile if you could just throw some light on that. 40:53 40 minutes, 53 seconds So there are different kind of inits are there. There are some inits which are mainly steady in bits. Some are declining in it where their you know 41:00 41 minutes assets are declining because as every year goes by when you have roads uh you know the road concession which is 20 41:09 41 minutes, 9 seconds years becomes 19 years becomes 18 years every year. So there are also in bits which are growth in bitid where you are 41:17 41 minutes, 17 seconds keeping on adding assets. You keep on buying new assets so that you get uh you 41:23 41 minutes, 23 seconds know uh your your init horizon keeps on expanding. So we want our init to be a a 41:30 41 minutes, 30 seconds growth in bit. We'll keep on adding assets as we go along. We understand this business very well. The second is 41:38 41 minutes, 38 seconds we also have a very strong operating team which actually can manage the asset and run the asset. So we are not just 41:44 41 minutes, 44 seconds financial investors. We also run the uh the uh the assets pretty well. And most 41:51 41 minutes, 51 seconds of the inits are road in bits. Ours is a transportation in bit. And though the difference seems very nuanced, a 42:00 42 minutes transportation init can do a lot of other things besides roads. So we can do things like um airports and ports and uh 42:09 42 minutes, 9 seconds other transportation hubs. Uh you know we can do cable car which is a big growth in India. All the tourist spots 42:17 42 minutes, 17 seconds are going to have a lot of cable cars coming in. A lot of the transportation is going to be via cable car because 42:24 42 minutes, 24 seconds that is easy to do and it doesn't require a lot of infrastructure. So in a lot of smaller cities that will also be 42:32 42 minutes, 32 seconds the game. So when you have a transportation invite your options on what assets which are there in transportation are a lot more than in 42:40 42 minutes, 40 seconds the road in bit. Road is a big part of transportation but transportation has a little bit more optionality on much higher yielding assets also. 42:53 42 minutes, 53 seconds Right. That's very helpful. Thank you. Good luck. 42:58 42 minutes, 58 seconds Thank you. Your next question comes from the line of Sujil Jane from Walford PMS. Please go ahead. 43:05 43 minutes, 5 seconds Uh hi sir. Uh am I audible? 43:09 43 minutes, 9 seconds Yes sir. Are you audible? Please go ahead. Yeah. Uh so sir just couple of questions. Uh given the bearish market environment in March uh how did it 43:18 43 minutes, 18 seconds impact performance across our business segments like uh which PBT largely flat for the year? Uh what is your assessment of the overall financial impact? 43:32 43 minutes, 32 seconds very hard to put an impact but I think you know a lot of our like the mutual fund also has lot of sponsor investments right they have almost 100 odd crores 43:41 43 minutes, 41 seconds which are compulsory sponsor investments uh we also have lot of treasury activity 43:47 43 minutes, 47 seconds on arbitrage and other things so I would say overall March would have impacted about maybe 40 50 crores on a 43:55 43 minutes, 55 seconds consolidated basis but hard to estimate because there there are many factors has different businesses but across all the 44:02 44 minutes, 2 seconds businesses because uh you know there are equity investments in a quite a few businesses also. So across all the 44:10 44 minutes, 10 seconds businesses maybe a 40 50 cr impact would have come but is normal I think of these things happened in India we would have learned to live with all this. 44:21 44 minutes, 21 seconds That's great. Uh another question is how does the our private credit opportunity in India differ from the global markets 44:30 44 minutes, 30 seconds like uh which is which key asset class within private credit uh do you see as the most attractive for uh in terms of growth perspective going forward? 44:42 44 minutes, 42 seconds So all actually there are there are three categories in private credit. One is special situations, one is performing credit uh other is called investment 44:51 44 minutes, 51 seconds grade credit. IG credit they all are good they cater to different investor needs IG credit usually is about 12 to 44:58 44 minutes, 58 seconds 14% or 12 to 14 15% top performing credit is 14 to 18% special is 18 plus 45:06 45 minutes, 6 seconds they all have driven nuances they have different capabilities and they cater to a different kind of investor needs so all of them are good we obviously have 45:14 45 minutes, 14 seconds been very strong in the special situations uh category almost if you look at our FPUM 45:21 45 minutes, 21 seconds Out of the private credit approximately 20,000 cr we have almost 65% is in special situations also it differs from 45:31 45 minutes, 31 seconds international because international a lot of private credit funds are slightly open-ended they are called semilquid that every quarter you can go and redeem 45:39 45 minutes, 39 seconds your holdings and actually of late that is where you are seeing some of the problems are happening in India there 45:46 45 minutes, 46 seconds are no liquid uh credit funds all AIFs in credit are close-ended. So the fund has a lot of holding power there. There is no redemption pressure that can come. 45:57 45 minutes, 57 seconds So one of the biggest difference between private credit globally and India is that India all funds are closended. So there is holding power. You don't have 46:06 46 minutes, 6 seconds to try to liquidate something in in distress. 46:10 46 minutes, 10 seconds uh I think globally a lot of a lot of private credit funds have gone into uh open-ended or you know uh things which 46:18 46 minutes, 18 seconds are liquidable. On top of that on top of that uh the international 46:26 46 minutes, 26 seconds uh private credit market has also been very competitive and very high growth. 46:29 46 minutes, 29 seconds So a lot of people have gone down the risk curve. That has not happened in India because in India uh there is still 46:36 46 minutes, 36 seconds a scarcity of capital. It's not easy to raise a private credit fund of scale. I mean uh you know private trade fund 46:44 46 minutes, 44 seconds which are more than 4 to 5,000 crores of aum you can count them on your fingers. 46:49 46 minutes, 49 seconds There are a lot of 500,000 cr funds but uh to raise a big fund is not easy. So I don't think there is a the the intensity 46:58 46 minutes, 58 seconds of competition which is creating asset quality issues globally are happening in India. So on that count, India is a is a 47:07 47 minutes, 7 seconds pretty okay. We're still a very small market, but we hope that it continues to grow, but in a steady manner, not a very fast growth. 47:16 47 minutes, 16 seconds Understood. Thank you. 47:21 47 minutes, 21 seconds Thank you. Our next question comes from the line of Sedat Sha, an individual investor. Please go ahead. 47:29 47 minutes, 29 seconds Yeah. Hi, thanks for taking my question. 47:31 47 minutes, 31 seconds uh both of them relate to EA you know I think we spoke a lot about operating leverage in the business um this year I think revenues were up about 22 23%. 47:44 47 minutes, 44 seconds Costs were also up about 25%. 47:47 47 minutes, 47 seconds So is that due to some of the exceptional items that we were referring to at the you know start of the call? 47:56 47 minutes, 56 seconds uh in competitive leverage will be more uh we will operate at you know 50 to 60% 48:04 48 minutes, 4 seconds cost income ratio uh because there it's a very peopledriven business you need people and we constantly invest in new 48:13 48 minutes, 13 seconds on the businesses and products. So this year a little bit of uptick in cost have happened is because we expanded the team the uh the international sales team the 48:22 48 minutes, 22 seconds local sales team as well as we introducing new couple of new products. 48:27 48 minutes, 27 seconds So the the investment in that has started. So partly I think that will be I would expect that to be a cost income 48:34 48 minutes, 34 seconds ratio of about 50 to 60% range will will fluctuate in that from a quarter to quarter basis. Uh the mutual fund is the 48:44 48 minutes, 44 seconds one where there is a lot more operating leverage because it's a more retail um business while where while this is more 48:51 48 minutes, 51 seconds institutional more wholesale so you need salespeople you need investment team all of that 48:59 48 minutes, 59 seconds understood and just the second one was you know I think we spoke about the 1500 crores going towards debt reduction once 49:07 49 minutes, 7 seconds the IPO happens um have we utilized the you We sold the 4.4% for 375 crores. Did we utilize that for debt reduction? 49:17 49 minutes, 17 seconds Because you know net debt seems to be flat year on year. 49:23 49 minutes, 23 seconds Yeah, we we but if you do some I think on that uh on you know um 6,000 crores 49:30 49 minutes, 30 seconds of debt we have an annual interest burden. I mean every quarter is about 150 to 200 crores. So there is an interest meter also on the other side. 49:39 49 minutes, 39 seconds So the fact that for a investment holding company the fact that we are flat itself means that at least whatever interest was that that has come from 49:48 49 minutes, 48 seconds stake sale and as I earlier clarified a lot of the activities we did last year like Nidato like mutual fund like EA IPO 49:57 49 minutes, 57 seconds prep like the you know dividend uh coming from underlying companies a lot of the work has gone in the last year 50:04 50 minutes, 4 seconds FI26 but the actual cash will come in FI27 So I think on that basis uh we expect 50:11 50 minutes, 11 seconds that a lot of the over and above the interest we have a say about 400 500 cr will get added only because of interest 50:19 50 minutes, 19 seconds but this year we expecting a 2 and a half to 3,000 crores of cash flow realization. So there'll be a significant fall in that. 50:31 50 minutes, 31 seconds Understood. Got it. Thank you. 50:38 50 minutes, 38 seconds Thank you. Your last question comes from the line of ch from network capital limited. Please go ahead. 50:48 50 minutes, 48 seconds Hello sir, am I audible? 50:51 50 minutes, 51 seconds Yes. Yes sir. Yes, you audible. Please go ahead. 50:55 50 minutes, 55 seconds So sorry sir if the questions will be uh repetitive as I joined in late but I have a couple of questions. So the first 51:04 51 minutes, 4 seconds questions question is on uh our insurance business. Uh so like uh combined losses in our insurance 51:11 51 minutes, 11 seconds business declined by 23% over the last two years and uh losses in life insurance has remained flat because of 51:19 51 minutes, 19 seconds GST and other exceptional item. Also in Q4 we saw market volatility as compared to last year. So how confident are we 51:28 51 minutes, 28 seconds about achieving break even over the next four quarters? That is my first question. Second question is uh uh how 51:38 51 minutes, 38 seconds uh do you see our India's capital market position in the context of this global uncert uncert uncertainty that is there. 51:46 51 minutes, 46 seconds So these are my two questions. 51:51 51 minutes, 51 seconds So I think on the first one uh we are pretty confident that we'll get to break even. Uh we are working very 51:59 51 minutes, 59 seconds hard for that. There were some exceptional items this year like GST and labor code and all but uh we are doing a 52:07 52 minutes, 7 seconds lot of things to get to break even. So we keep uh we remain um reasonably 52:14 52 minutes, 14 seconds confident of getting there. Uh I think as you said the global geopolitical event and the global uncertaintity and the high oil price is going to affect 52:23 52 minutes, 23 seconds India. We do think there is some pain for the next three to uh 3 to six months but I think India is resilient enough 52:30 52 minutes, 30 seconds our reserves are there plus our uh I think economy is in a pretty good place 52:37 52 minutes, 37 seconds to be able to handle that just because you handle it doesn't mean it will not be painful it will be painful but 52:45 52 minutes, 45 seconds handleable okay okay thank you sir Thank you. 52:57 52 minutes, 57 seconds Thank you very much. We will take that as the last question. I would now like to hand the conference back to Miss Priyad Chopra for closing comments. 53:08 53 minutes, 8 seconds Thank you Sagar and thank you Rash for all the answers. Thank you each one of you for your time today. It's been a joy 53:15 53 minutes, 15 seconds to have you all and listen into your insightful questions. Please do write it to us at awise investor relations for 53:23 53 minutes, 23 seconds any other questions and feedback or any additional information you may need. Thank you and have a great day ahead. 53:30 53 minutes, 30 seconds Bye-bye. 53:34 53 minutes, 34 seconds Thank you very much ladies and gentlemen. On behalf of Wise Financial Services, that concludes this conference call. Thank you for joining us.