HDFC Asset Management Company Limited — Q2 FY26

HDFC Asset Management Company Ltd Q2 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=xyhn3eqMdeA Published: 7 months ago

0:01 1 second Ladies and gentlemen, good day and welcome to the Q2 FI26 earnings conference call of HDFC Asset Management Company Limited. 0:12 12 seconds As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. 0:22 22 seconds Should you need assistance during this conference call, please signal an operator by pressing star then zero on 0:28 28 seconds your touchdown phone. Please note that this conference is being recorded. 0:34 34 seconds From the management team, we have with us Mr. Navit Manut, Mr. Noad Survala and Mr. Simil Kanuga. 0:43 43 seconds I now hand this call over to Mr. Simil Kanuga who will give us a brief following which we will proceed with the Q&A session. Thank you and over to you Similar. 0:53 53 seconds Thank you very much. Um good evening everyone. Uh and thank you very much for joining us today. Uh we trust you had an opportunity to review our presentation. 1:03 1 minute, 3 seconds Uh we'll start with uh industry. Uh Nifty50 declined by 2.9% in July, 1.4% in August and was up by8% in September. 1:15 1 minute, 15 seconds industry witnessed net new flows of rupes 593 billion, rupees 458 billion 1:21 1 minute, 21 seconds and rupes 439 billion respectively in equity oriented funds. The net new flows 1:28 1 minute, 28 seconds for the quarter adds up to rupees 1490 billion as against rupees 911 billion in 1:37 1 minute, 37 seconds the previous quarter when nifty50 delivered 8.5% positive returns over the 1:43 1 minute, 43 seconds last 12 months ending September 2025 equity oriented funds have recorded net 1:49 1 minute, 49 seconds inflows of rupees 5.1 trillion in nifty50 has delivered negative 1:56 1 minute, 56 seconds returns In last one year, the SIP contribution continues to grow reaching rupees 294 billion for the month of September 2025. 2:08 2 minutes, 8 seconds What is particularly noteworthy is the net addition of 6 million contributing SIP accounts in the quarter. In our 2:17 2 minutes, 17 seconds view, this reflects the growing maturity and long-term orientation of Indian investors. On the fixed income side, 2:24 2 minutes, 24 seconds debt mutual funds experienced some moderation with quarterly inflows easing to rupees 148 billion down from rupees 1339 billion in quarter ended June 2025. 2:37 2 minutes, 37 seconds Liquid funds in particular witnessed outflows of rupees 219 billion as compared to net inflows of rupes 609 billion seen in the previous quarter. 2:48 2 minutes, 48 seconds There is indeed a noticeable increase in demand for gold and silver ETFs recently with inflows amounting to rupees 28 2:57 2 minutes, 57 seconds billion in this quarter. This surge in investor interest has been reflected in AUM growth for our gold and silver ETFs 3:05 3 minutes, 5 seconds as well. Our gold ETF AUM has increased significantly from rupees 102 billion to 3:12 3 minutes, 12 seconds rupees 141 billion while the silver ETF AUM has more than doubled from rupees 9 billion to rupees 24 billion in this 3:21 3 minutes, 21 seconds quarter. During the quarter equity oriented NFOs collected rupees 141 3:27 3 minutes, 27 seconds billion now we move to us. We closed the quarter with AUM of rupees 8.7 trillion 3:35 3 minutes, 35 seconds reflecting a market share of 11.5% and 12.8% on XETTF basis. Actively 3:42 3 minutes, 42 seconds managed equity oriented AUM on closing basis inched up to rupees 5.4 trillion a market share of 12.9%. 3:51 3 minutes, 51 seconds Within fixed income debt and liquid fund market share stood at 13.3 and 11.8% respectively. 3:59 3 minutes, 59 seconds Total AUM has crossed rupees 9 trillion mark since then. The asset mix furthered towards equities with equity proportion 4:08 4 minutes, 8 seconds rising to 64.9% on QAUM basis. Systematic transactions activity remained robust with monthly 4:17 4 minutes, 17 seconds flows in September 2025 reaching rupees 45.1 billion across over 13 million transactions. 4:26 4 minutes, 26 seconds Corresponding number for systematic flows in September 2024 was rupes 36.8 billion. We maintained our position as 4:35 4 minutes, 35 seconds the preferred choice amongst individual investors with market share of 13.1%. 4:41 4 minutes, 41 seconds During the quarter we launched two NFOs HDFC Innovation Fund which collected rupees 24 billion and HDFC diversified 4:50 4 minutes, 50 seconds equity all cap active FOS which collected rupees 11 billion. Move to financials now. Revenue from operations 4:58 4 minutes, 58 seconds came in at rupees 10260 million. A growth of 16% YI. The reduction in other income was mainly on account of adverse 5:07 5 minutes, 7 seconds marktomarket changes. Total expenses were rupes 2464 million and this includes non-cash charge towards ESOPS 5:16 5 minutes, 16 seconds and PSUs adding up to rupees 211 million. Operating profit grew by 13% YI 5:23 5 minutes, 23 seconds to rupees 7796 million that is 35 basis points of AUM. Profit after tax is now 5:31 5 minutes, 31 seconds at 7179 million. We would like to highlight that the company has reassessed its income tax provision and 5:39 5 minutes, 39 seconds reworked income tax provision for earlier periods amounting to rupees 468 million resulting in a lower tax rate 5:47 5 minutes, 47 seconds for the current quarter. Pat without this particular reversal would have been rupees 6711 million. Lastly, the board 5:56 5 minutes, 56 seconds of director earlier today approved 1 is to1 bonus share issue. This is of course 6:03 6 minutes, 3 seconds subject to shareholders approval. Thank you very much for patient hearing. Nit Nazad and I are here to take questions. 6:10 6 minutes, 10 seconds Nero if you can just start lining up questions please. 6:14 6 minutes, 14 seconds Thank you very much. We will now begin with the question and answer session. 6:19 6 minutes, 19 seconds Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. 6:30 6 minutes, 30 seconds Participants are requested to use handsets while asking a question. 6:35 6 minutes, 35 seconds Ladies and gentlemen, we will wait for a moment while the question Q assembles. 6:41 6 minutes, 41 seconds Participants, you may press start and one to ask a question. 6:53 6 minutes, 53 seconds The first question is from land of Sukrit Patel from Eyesight Fra. Please go ahead. 6:59 6 minutes, 59 seconds Yes. Uh good evening to the HTS team. I have a question for Mr. uh Nunit. Uh good evening sir. How are you? 7:07 7 minutes, 7 seconds Good evening. All well thank you. How are you? 7:10 7 minutes, 10 seconds Good. Thanks. So I just want to understand a forwardlooking question. As the industry is uh changing, how do you 7:17 7 minutes, 17 seconds plan to stay ahead of the game? Uh will it be through new products or uh any tech upgrade or deeper client engagements? 7:31 7 minutes, 31 seconds What is the long-term vision for where the company is going to be heading? Yes, thank you. 7:38 7 minutes, 38 seconds Thank you. So over the last uh 25 years, we built a significant franchise. uh you mentioned about the product. I think we 7:45 7 minutes, 45 seconds have an absolutely best-in-class uh uh product bouquet. We have a very long-term performance track record funds 7:52 7 minutes, 52 seconds going back 5 10 15 20 25 30 years off of uh track record. We have the presence 8:01 8 minutes, 1 second across 280 branches physical offices and as well as absolutely best-in-class digital assets. uh we have 8:10 8 minutes, 10 seconds partnerships with hundreds of thousands of distributors, banks, national distributors, MFDs and of course our 8:18 8 minutes, 18 seconds presence on fintech and and and serving direct customers. We have like uh 14 million customers that we have been 8:26 8 minutes, 26 seconds serving. We see tremendous potential for growth in our industry. I think with all of this what we have put in place over 8:33 8 minutes, 33 seconds the next several years along with the pedigree of the of SGFC brand we see tremendous growth. We continue to invest in everything that I've mentioned so 8:42 8 minutes, 42 seconds far. Uh having the best people across our investment rest product and all other functions. Uh continue to expand 8:50 8 minutes, 50 seconds our presence. Over the last two years we have opened 15 new offices. 50 new offices. A large number of them are in what we call in our industry B30 towns. 8:59 8 minutes, 59 seconds In the smaller towns where penetration is still low and given our pedigree, brand and everything else, we see a lot of potential to grow there. Uh we 9:08 9 minutes, 8 seconds continue to invest in in our digital assets in our technology to create the best possible experience for our investors and distribution partners and 9:16 9 minutes, 16 seconds we see a lot of growth apart from the mutual funds where we have been a one of the dominant player. uh we have been investing to grow in the alternative 9:25 9 minutes, 25 seconds space in the PMS space and of course uh offering all of this to global institutions who would like to invest in India. 9:35 9 minutes, 35 seconds Great. Thank you. So just uh just to close close on that uh just to make all this uh happen I just want to understand 9:42 9 minutes, 42 seconds what are the top two or three things uh which are focusing right now uh which is already in motion. 9:51 9 minutes, 51 seconds So uh maybe I I I think I answered what are what are the things that we have been doing but maybe another way to put it is that uh it may sound very 10:00 10 minutes audacious but we have put a mission for ourselves that is to be the wealth creator for every Indian to be the wealth creator for every Indian. uh we 10:08 10 minutes, 8 seconds serve 14 million investors but we think uh we have a long way to go if we have an audacious mission like that and our 10:16 10 minutes, 16 seconds vision may sound even more audacious which is to be the most respected asset manager in the world to be the most respected asset manager in the world and 10:25 10 minutes, 25 seconds uh for that I think our entire team won't leave any stone unturned to ensure that we create value for each and every 10:32 10 minutes, 32 seconds stakeholder be it our people be it our shareholders be it our clients be it our distribution partners be all our 10:40 10 minutes, 40 seconds vendors, ecosystem partners and society at large. So maybe some of the things are getting covered in the in the presentation and and the other things 10:49 10 minutes, 49 seconds that we put it on our website but I think we get governed and and get inspired by our mission and and vision every day. 10:58 10 minutes, 58 seconds Okay, great. Thank you very much for the guidance and I wish you the best of luck for the next Q3. Thank you so much. 11:05 11 minutes, 5 seconds Thank you very much. 11:07 11 minutes, 7 seconds Next question is from land of Lal Deo from Equest Securities. Please go ahead. 11:12 11 minutes, 12 seconds Hi sir, good evening. Uh congratulations. 11:15 11 minutes, 15 seconds So just uh one first data giving questions. So like this quarter we are seeing that yields have remained stable. 11:22 11 minutes, 22 seconds So could you just give us the segment yields? Uh second uh we saw an increase in the other expenses material during 11:30 11 minutes, 30 seconds the quarter. So what was uh what would be the reasons for the same? answer this large I'll ask the third question later. 11:42 11 minutes, 42 seconds Yeah. Hi. So the uh equity yield for the quarter was around 58 basis points. Uh 11:49 11 minutes, 49 seconds the debt yields were around 27 28 basis points and liquid again has been stable at around 12 13 basis points. Uh so that that's uh the one for the quarter. 12:01 12 minutes, 1 second Uh on the expenses uh Right. So actually the other expenses have increased from 87 crores uh to about 101 crores on a 12:10 12 minutes, 10 seconds year-on-year basis. Right. And that's an increase of about 14 crores. Uh our revenue for operations during this 12:18 12 minutes, 18 seconds period has increased by rupees 139 crores to 1026 crores. So this increase in other expense is mainly on account of business promotion and CSR expense. 12:30 12 minutes, 30 seconds actually CSR which is a mandatory spend uh contributes largely to this. Uh what was the third question? 12:37 12 minutes, 37 seconds No but I think this do you want to add on expense? 12:42 12 minutes, 42 seconds Sure sure. So over the last 3 years our business has grown significantly across uh every dimension. Uh you have been 12:51 12 minutes, 51 seconds seeing the numbers our AUM has expanded from 4.2 2 trillion to 8.7 trillion almost doubled and the number of 12:59 12 minutes, 59 seconds investors has also more than doubled from 6 million to uh 14.5 million. Uh team has grown you have seen in the 13:08 13 minutes, 8 seconds presentation from 1233 people to 1700 plus now and uh we have reinforced our 13:15 13 minutes, 15 seconds culture of ownership through ESOP and PSU grants in uh 2023 and then 2025. 13:22 13 minutes, 22 seconds uh we have talked about it earlier. We have expanded our reach significantly. I mentioned earlier that we have added 50 new offices across the country. We have 13:30 13 minutes, 30 seconds deepened our presence. We've also made significant strides in digital and technology uh which enhances the investor experience, partner experience. 13:40 13 minutes, 40 seconds We have automated a lot of our internal processes trying to build a more and more datadriven organization. 13:48 13 minutes, 48 seconds And uh during this period we have launched a large number of new products across both active as well as passive 13:55 13 minutes, 55 seconds categories. Uh diversified our business footprint by setting up our alternative platform. U expanded international 14:03 14 minutes, 3 seconds business with the establishment of um the subsidiary in the gift city and this uh all of this growth and all of this 14:12 14 minutes, 12 seconds investment in future the cost has remained well under control. I mean it's just 11 basis point of AUM uh probably 14:20 14 minutes, 20 seconds makes us one of the most efficient asset managers in the world as far as costs are concerned and uh I would also like 14:27 14 minutes, 27 seconds to request that look at absolute numbers you know our spend for the quarter ended 14:33 14 minutes, 33 seconds u September 22 was 156 crores and this 14:39 14 minutes, 39 seconds quarter it is 246 so uh 90 crores extra when AUM has doubled and number of 14:46 14 minutes, 46 seconds customers have increased 2.4 times. I mean the numbers that I gave you earlier. So seeing in in that context I 14:53 14 minutes, 53 seconds think we have been running an extremely tight ship. Uh we've been very frugal. 14:58 14 minutes, 58 seconds We have been very constrained in our spending. At the same time uh continue to invest in the future. I mean we have a very optimistic view about the uh 15:07 15 minutes, 7 seconds growth trajectory about the of this industry in India the potential that we have and so continue to invest at the 15:14 15 minutes, 14 seconds same time remain extremely costconscious that addresses uh the question. 15:23 15 minutes, 23 seconds Yes. So actually because I was asking from a sequential point of view because there was still some uh one time like there seems to be some increase in that 15:32 15 minutes, 32 seconds cost line item like on a sequential basis but yeah I guess it's again about 16 15:43 15 minutes, 43 seconds promotion and uh CSR is that's right right sir and so just lastly on this uh the on the distribution side so 15:52 15 minutes, 52 seconds we are seeing some strong growth from this uh direct channel point of view. So just wanted to understand so like 15:59 15 minutes, 59 seconds whether this would be mostly attributable to the fintech channel only. So but uh so is it more like the 16:07 16 minutes, 7 seconds whole of this growth is uh funneled through the fintex channel or is it also due to the fact that we have been adding a lot of employees on the sales side. So 16:14 16 minutes, 14 seconds will will that be al so for that also for some single portion of the this mix. 16:21 16 minutes, 21 seconds So uh direct includes three things. One is uh most of the fintexs who bring clients in the direct plan. Number two 16:30 16 minutes, 30 seconds is a direct clients who may come to the our portal or through the app or or visit through the branches and third 16:37 16 minutes, 37 seconds could be raia registered investment advisor who charge fee from the client while put money in the direct plan. So it's a combination of all three. uh over 16:46 16 minutes, 46 seconds the last couple of years we have seen significant growth in the fintech as a distribution channel. They have emerged as a vital channel for the for the 16:54 16 minutes, 54 seconds mutual fund industry and uh they've played a significant role in expanding the reach and and accessibility for for 17:02 17 minutes, 2 seconds investors. If you look at last uh 6 months or so in the current financial year they've registered 15 million SIPs. 17:11 17 minutes, 11 seconds So they they've become quite big and have built a strong presence uh uh in among the investors of of all cohorts. 17:18 17 minutes, 18 seconds We have a very strong presence on leading fintech platforms. So we have notable share both in the new flows as well as SIP registrations. 17:31 17 minutes, 31 seconds No sir yes thank you sir. I would add on on on direct you need to keep this in mind that it is natural for the share of direct plan to rise gradually over time. 17:42 17 minutes, 42 seconds Uh also because of the lower total expense ratio of direct plans compared with regular plan. So there is a difference between the TER of regular 17:51 17 minutes, 51 seconds and direct. So to that extent it will keep inching up every quarter. Right. Right. 18:01 18 minutes, 1 second Yep. Thank you. Thank you. 18:05 18 minutes, 5 seconds Next question is from line of harsh Modi from JP Morgan. Please go ahead. 18:13 18 minutes, 13 seconds Hi. Uh thanks for this. Uh the question is more regarding the market share over next let's say 12 to 18 months. 18:24 18 minutes, 24 seconds fantastic traction over last three years as you said across asset 18:31 18 minutes, 31 seconds across uh uh customers. Uh how does that uh extend let's say over 12 to 18 months 18:40 18 minutes, 40 seconds purely on market share and if you could break it up between u equity and uh uh 18:48 18 minutes, 48 seconds the fixed income and liquid portfolio that would be great. Thank you. Sure. 18:54 18 minutes, 54 seconds So, uh the way we we monitor at our end is we look at market share across asset classes. We look at market share across 19:03 19 minutes, 3 seconds all distribution channels, market share across products, market share across geographies. And we try our best to 19:11 19 minutes, 11 seconds optimize or maximize our our market share across all of this. Uh fixed income uh which is uh relatively more 19:20 19 minutes, 20 seconds institutional. We enjoy best relationship with most of the institutions, family offices, corporates, treasuries etc. and and over 19:28 19 minutes, 28 seconds a period of time uh idea is that uh how do we promote fixed income among the uh among the individual investors also 19:37 19 minutes, 37 seconds relative participation is is less but we see a lot of opportunities uh particularly through the hybrid funds asset allocation products etc. On the 19:46 19 minutes, 46 seconds equity side overall uh I mean we have the full product bouquet performance track record. You can see I mean we have been doing very well and of course have 19:54 19 minutes, 54 seconds a long-term track record and continue to work hard on all channels and and across all geographies to to get uh best possible share. 20:11 20 minutes, 11 seconds Does that answer your question? 20:16 20 minutes, 16 seconds Harsh can I assist on meter line please 20:25 20 minutes, 25 seconds no response we move to our next participant next question is from line of pri shen 20:32 20 minutes, 32 seconds from motil loal please go ahead yeah hi uh just on this expense again uh 20:39 20 minutes, 39 seconds this business promotion is uh increase in business promotion sequence potentially is mainly led by the new 20:48 20 minutes, 48 seconds scheme launches and so whether that's a sustainable increase or and the CS are obviously generally slumpy in nature so 20:57 20 minutes, 57 seconds you know could you highlight as to you know what are the what is the sustainable kind of a or a mix of these 21:05 21 minutes, 5 seconds one-time bumps what would be the sustainable run rate on the OPEX front so I would request to look at OPEX on an annual overall annual basis And broadly 21:14 21 minutes, 14 seconds we've been u discussing this on past calls as well that between 12 15% is what we should expect OPEX to grow 21:23 21 minutes, 23 seconds certain quarters you may uh spend uh in this quarter there was also CSR expense which is mandatory and there was some 21:30 21 minutes, 30 seconds NFOS and a new business promotion which we spent on so on an annual basis if you looked at the sustainability uh on a sustainable basis 12 to 15% of opex is 21:40 21 minutes, 40 seconds something which we we would look at from a growth Okay. And come down from 14 basis point to 11 and 21:49 21 minutes, 49 seconds that 11 includes uh the ESOP cost additional. If you adjust for that noad it would be 10 basis point. 21:57 21 minutes, 57 seconds Yeah. 21:57 21 minutes, 57 seconds So it's phenomenal but you know we always want more right more growth or both. 22:08 22 minutes, 8 seconds That's what we have been delivering for decades. Yeah. Thank you. Absolutely. Absolutely. 22:18 22 minutes, 18 seconds Yeah. Uh the the the other question was on you know uh the alternate side of the business. Um could you apprise us about 22:26 22 minutes, 26 seconds you know what's the kind of a we built across alternates alternate channels and you know what's the kind of uh growth 22:34 22 minutes, 34 seconds we've seen there? What are the plans going ahead? Sure. 22:38 22 minutes, 38 seconds So our our alternatives platform has been building traction and uh continues to grow. We've strengthened our investment capabilities in this space uh 22:47 22 minutes, 47 seconds including bringing on board a dedicated team to drive uh upcoming AF initiatives and deepen our expertise. Uh we have 22:55 22 minutes, 55 seconds onboarded couple of more people on the investment side on on risk side uh product side. Last year we closed our 23:03 23 minutes, 3 seconds first category 2 Aif a fund of fund of around 1,200 crores and are now in the market with our performing credit fund 23:11 23 minutes, 11 seconds uh which has seen a promising start to fundraising. Uh we are in the final stage of discussions with a large global 23:18 23 minutes, 18 seconds investor uh for participation. Meanwhile in our PMS business uh we are steadily expanding on the strong foundation we 23:28 23 minutes, 28 seconds have built uh looking at both discretionary as well as non-discretionary offerings. 23:34 23 minutes, 34 seconds We strengthened our team again by hiring Ashish uh a highly experienced professional who has worked with reputed sellside firms and more recently with a 23:44 23 minutes, 44 seconds top tier AMC. On the international side you ask so uh under our gift city platform uh at present we have five 23:51 23 minutes, 51 seconds active funds one of which we launched uh during the last quarter uh these are the feeder funds into our our mutual funds. 23:59 23 minutes, 59 seconds Additionally work is underway for launch of uh inbound funds as well as uh for outbound strategies. 24:07 24 minutes, 7 seconds uh in our partnership with uh UBS asset management both the mandates India small and midcap and India allcap strategies 24:15 24 minutes, 15 seconds where we act as uh investment advisor uh it's gone live few months back there is continued uh distribution and 24:23 24 minutes, 23 seconds institutional coverage and engagement for both the strategies across geographies so we remain committed to uh 24:31 24 minutes, 31 seconds seizing any opportunities to drive growth and strengthen our competitive edge 24:38 24 minutes, 38 seconds So just on this extending this point uh you know five years down the road do you think that the alternates can be like a 24:45 24 minutes, 45 seconds 10 15% contribution to the overall uh revenues for HBFC? 24:51 24 minutes, 51 seconds I wouldn't give that forward-looking statement. All I can say is that we are putting a very solid foundation and uh 24:59 24 minutes, 59 seconds whatever it takes by the bestin-class investment capability, best-in-class risk management capability, product 25:06 25 minutes, 6 seconds capability uh we are putting and uh we have the distribution might which you all all are 25:13 25 minutes, 13 seconds aware of. We we enjoy a great brand LFC where comfort of both uh individual 25:20 25 minutes, 20 seconds investors which include HNIs, ultra HNI, family offices etc. and on the other side institutions both domestic and 25:28 25 minutes, 28 seconds global uh have deep comfort with uh so we remain quite optimistic uh in terms of our journey on the alternatives. The 25:36 25 minutes, 36 seconds other thing we believe that being part of the SDFC group we have tremendous responsibility on our shoulders to ensure that the whole alternative 25:43 25 minutes, 43 seconds industry in India uh the whole ecosystem uh develops well and uh our team members 25:49 25 minutes, 49 seconds also spend a lot of time engaging with uh various stakeholders to ensure that uh over the next several years as as 25:58 25 minutes, 58 seconds alternative industry grows we play a leadership role uh the way we have done on the mutual fund industry side and we are reaping the benefit today the way 26:06 26 minutes, 6 seconds industry has grown uh we remain very optimistic on the alternative side as well. 26:12 26 minutes, 12 seconds And this last last bit on last bit uh when we talk about costs also there will be some burn right now going into 26:20 26 minutes, 20 seconds alternate business and uh is there a way to quantify it uh where you can highlight that okay so far the alternate 26:28 26 minutes, 28 seconds business is running at a analyzed cost of x x rupees uh so that will help us understand the profitability of the core business as well. 26:37 26 minutes, 37 seconds So you're calling it burn. I'm calling it probably one of the best investments we are making in future. Absolutely. 26:46 26 minutes, 46 seconds All right. Thank you so much. Thank you. 26:50 26 minutes, 50 seconds Thank you very much. Next question is from Lan of Madukar Lada from Noama. Please go ahead. 26:57 26 minutes, 57 seconds Hi sir, thank you uh for taking my question. See uh one on uh net inflow 27:04 27 minutes, 4 seconds market share. Uh reverse calculations suggest that you continue to do sort of 27:10 27 minutes, 10 seconds quite well over there. Uh maybe but you know if you could add some color what is 27:16 27 minutes, 16 seconds uh what what is driving that and uh and you know uh some trends on on that that 27:24 27 minutes, 24 seconds will be uh helpful. Uh second uh see the the admin and other opex has gone up. Uh 27:32 27 minutes, 32 seconds can you sort of quantify any one-time expense over here and uh when you give a guidance of about 12 to sort of 14 15% 27:41 27 minutes, 41 seconds increase year-over-year uh that would also include any NFO related expenses etc. Right? So the 27:50 27 minutes, 50 seconds right way to look at it would be last year's number plus 12 14 12 to 14% uh whatever that number comes and that 27:58 27 minutes, 58 seconds would include everything or would there be some sort of one time you know NFO or any other related expenses some clarity 28:06 28 minutes, 6 seconds on that that would be helpful thanks uh I mean we have continuously been uh invested on many things that I mentioned 28:14 28 minutes, 14 seconds before uh we had two NFOs and uh both were like quite successful uh one fund 28:22 28 minutes, 22 seconds of fund and uh one was the SDFC innovation fund probably it was uh if I correctly the largest NFO of the quarter 28:31 28 minutes, 31 seconds and the diversified equity all cap FOF uh which has also uh kind of got good response from our investors and and distributors. 28:42 28 minutes, 42 seconds So they were those were the NFOs during the quarter where some bit of spending would have gone otherwise as Nazad mentioned earlier it's on account of 28:50 28 minutes, 50 seconds higher uh CSR expense some bit of other business promotion and the general business related expense 28:58 28 minutes, 58 seconds your first question was on uh the net inflow bucket I mean you know we we don't share there 29:05 29 minutes, 5 seconds is so much information is on yeah no but uh from a perspective I I mentioned that uh I think the engagement 29:14 29 minutes, 14 seconds with uh distributors have been great. Uh we we keep trying to maximize our share with each and every one of them. Uh work 29:23 29 minutes, 23 seconds at like as I mentioned earlier every asset class, every product, every geography, every channel partner uh and 29:30 29 minutes, 30 seconds of course on the on the direct side. So continue to kind of uh uh work on maximizing 29:39 29 minutes, 39 seconds uh our our share and uh you know a lot of uh uh the the 29:47 29 minutes, 47 seconds market in general is uh is uh positively surprised with the strength of the SIP 29:56 29 minutes, 56 seconds numbers uh despite you know now one-year returns not being uh that attractive. 30:02 30 minutes, 2 seconds ive uh and and normally uh you know what I've heard uh from a lot of uh companies and uh also distributors is you know 30:12 30 minutes, 12 seconds when one year sort of returns uh are not that good that's when you know sort of SIP numbers uh start with can get weak I 30:21 30 minutes, 21 seconds wanted to get your comments uh on this and and you know as and this like what should we uh look at and uh what's 30:30 30 minutes, 30 seconds driving the strength Yeah. So if we look at the SIP uh book 30:37 30 minutes, 37 seconds today at over uh 290 billion rupees, it was 40 billion in 2017 or so and over a 30:47 30 minutes, 47 seconds period of time it has steadily been increasing and I mentioned this before that there are many factors at play. Uh 30:55 30 minutes, 55 seconds first and foremost is the long-term track record. Now investors can go back and see last 20 25 I mean some of SDFC 31:04 31 minutes, 4 seconds funds have a track record of 30 years and can go back and and see across cycles how funds have delivered. Second 31:11 31 minutes, 11 seconds is the transparency. I think over the years thanks to the efforts made by regulator as well as the uh industry at 31:18 31 minutes, 18 seconds large. All of us have have worked very hard to to to build more transparency more trust in the product. Third, I 31:26 31 minutes, 26 seconds would say technology has played a big role. Uh we have like doubled our our unique investors in last two two and a half years that wouldn't have been 31:35 31 minutes, 35 seconds possible but for the technology. And fourth last but not the least is I think the effort that all of us are putting on investor education uh the efforts made 31:44 31 minutes, 44 seconds by M uh collectively uh for uh collaboratively that we do as an industry and each one of us within the 31:53 31 minutes, 53 seconds industry the efforts we have been making to reach out to larger number of investors conveying the message of long-term investing power of compounding 32:02 32 minutes, 2 seconds don't get swayed by the volatility invest for the long term invest for your goals so on and so forth. The importance of asset allocation and the steady 32:11 32 minutes, 11 seconds increase we are seeing in SIPs reflect the growing maturity and and the long-term orientation of investors that 32:19 32 minutes, 19 seconds Siml also talked about earlier. So on that part uh I'm very optimistic that over a period of time there is potential 32:27 32 minutes, 27 seconds for for it to increase. There would be some cyclicality. We have seen that before and uh maybe month to month or 32:35 32 minutes, 35 seconds quarter to quarter uh some bit of volatility in flows but the heartening feature of flows is increasing amount 32:44 32 minutes, 44 seconds coming through the monthly SIP number of accounts also you should notice uh they have also been growing quarter after quarter. 32:54 32 minutes, 54 seconds Understood sir. Thank you and all the best. Thanks. Thank you. Thank you. 33:01 33 minutes, 1 second Next question is from Nan of Mohit Mangal from Centrum Broking. Please go ahead. Yeah. Yeah. Thanks for the opportunity. 33:08 33 minutes, 8 seconds My first question is towards the B30. Uh so last month you know SEBI reintroduced new incentives of B30. So how do you see 33:15 33 minutes, 15 seconds this and and maybe uh if if you can quantify there's any sizable impact on our top line because of that going forward. 33:23 33 minutes, 23 seconds Yeah. So I mean we are yet to get the final guidelines on that uh uh in in what manner and what shape it will be 33:29 33 minutes, 29 seconds implemented. Uh we heartily welcome uh SEB's guidance on that uh to increase 33:37 33 minutes, 37 seconds both uh number of women investors as well as new investors from B30 towns. In fact, over the last couple of years, we 33:45 33 minutes, 45 seconds have seen greater traction uh in in flows particularly in the form of SIPs 33:51 33 minutes, 51 seconds coming in from B30 towns. uh we remain fully prepared both in terms of our physical presence there and being part 34:00 34 minutes of SDFC group uh are our brand and uh the the overall ability to make the most 34:07 34 minutes, 7 seconds of it as and when the opportunity arises to do something more with our distribution partners. 34:14 34 minutes, 14 seconds Understood. So so it's not still in practice you mean? Not yet. 34:19 34 minutes, 19 seconds Okay. Uh my second question is towards the investment books. So I was looking at your praise release and your investment investment book actually declined in September 25 as compared to 34:28 34 minutes, 28 seconds March. So what could be the reason for that? 34:30 34 minutes, 30 seconds We paid the dividend out in June right okay understood. Uh last question is about the NFO. So you said you know we 34:38 34 minutes, 38 seconds launched on two NFOs basically uh what is the pipeline because we do have a comprehensive product bouquet but but do we have any pipeline for the future? 34:48 34 minutes, 48 seconds So uh the current product lineup is uh more or less complete given the CB classification and within that the 34:56 34 minutes, 56 seconds products that are allowed uh you know while I've said before also that our portfolio is largely complete but 35:04 35 minutes, 4 seconds opportunities continue to emerge uh whenever we see the right fit for the customer such as the recently launched innovation fund where we saw very good 35:13 35 minutes, 13 seconds interest and uh got 24 billion uh in the NFO um it was the largest equity 35:20 35 minutes, 20 seconds oriented NFO in the quarter and we also launched a fund of fund which was SDFC diversified equity all cap active FOF 35:28 35 minutes, 28 seconds that uh raised 11 billion uh on the passive side we have launched a lot of products but uh we'll be on the lookout 35:36 35 minutes, 36 seconds if there is any more opportunity on that I would mention that uh I mean many of our existing funds have plenty of room 35:45 35 minutes, 45 seconds to grow so our focus is on strengthening their position and scale. And I'll give you one example. If you look at our value fund uh that has an AUM of around 35:54 35 minutes, 54 seconds 7,000 crores, it's not yet in the top five of its category. Even though it has um very strong long-term track record. 36:03 36 minutes, 3 seconds So there's significant potential to move it into a leadership position. But at the same time, our teams are scanning the market for new opportunities. 36:13 36 minutes, 13 seconds uh and and then I've always mentioned that at our end new product offer is always guided by what our investment 36:21 36 minutes, 21 seconds team believes in uh rather than what's selling in the market and what's the latest Fed. Uh we we actually look at 36:29 36 minutes, 29 seconds what the best fit for the investor and the belief and conviction and capability of the investment team on the other side. 36:36 36 minutes, 36 seconds Right. And and my last question is that you know I mean we always maintain that HDC bank slow market shares higher than the book market share. So so that uh even continued this quarter as well 36:45 36 minutes, 45 seconds right so uh so first just to clarify the the pie 36:55 36 minutes, 55 seconds chart that you see represent how our AUM is distributed across all channels that includes direct MFD ND banks. Uh it does 37:04 37 minutes, 4 seconds not indicate market share in any channel. possible for one channel to grow at a faster pace than another. While our overall market 37:12 37 minutes, 12 seconds share across both remains uh unchanged uh the LDFC group continues to play a important role in our growth and uh we 37:20 37 minutes, 20 seconds have a healthy flow share from them. So and then they are a force to reckon with in in distribution. They remain a key 37:28 37 minutes, 28 seconds partner for us and uh we see a lot of opportunity to further deepen and expand this relationship. 37:35 37 minutes, 35 seconds uh our major focus with the bank has been on on the uh SIPs uh penetration of SIPs among their clients and it's 37:43 37 minutes, 43 seconds yielding uh encouraging results market share in the new SIP is uh higher than our bookshare uh substantially so 37:53 37 minutes, 53 seconds yeah there is strong intent to build tighter alignment and and have greater collaboration u across various touch points between 38:02 38 minutes, 2 seconds SDFC bank and Understood. Thanks and wish you all the best. Thank you. 38:08 38 minutes, 8 seconds Thank you. Next question is from one of the panjan go from city. Please go ahead. 38:16 38 minutes, 16 seconds Hi, good evening sir. So just uh one or two questions from Yeah. So two questions from my side. First uh you 38:23 38 minutes, 23 seconds know if you uh look at across channels obviously your uh market share has been holding up well on the active equity side across most of the channels but you 38:32 38 minutes, 32 seconds know if you were to kind of look at let's say the past 12 months or 18 months uh has the trajectory of improvement or shift uh in your market 38:42 38 minutes, 42 seconds share across all the channels been similar or do you feel there is there are one or two channels where you can probably kind of scale up a bit more and if so uh what would be the strategy 38:50 38 minutes, 50 seconds around it? Uh the second question uh is uh more on the uh on the on the cost side of things. So just wanted to uh 38:57 38 minutes, 57 seconds again get some color on you know in terms of uh uh currently building capabilities on the alternate side or even on your investment management team 39:06 39 minutes, 6 seconds on the mutual fund business uh or expanding a sales capabilities. How should one think of uh incremental employee additions uh over the next let's say two three years? 39:18 39 minutes, 18 seconds So incremental employee edition has been uh you mentioned about the uh people that we have hired on the alternative 39:24 39 minutes, 24 seconds side on international side uh in our digital and and tech capabilities and of course larger number would be in in 39:32 39 minutes, 32 seconds sales and client service apart from uh investments on the expense side I mentioned. So all of these investments 39:40 39 minutes, 40 seconds whether in increase in people whether in in the increase in number of offices whether in uh building more capability 39:48 39 minutes, 48 seconds on on the alternative PMS AF side uh I mean we've got six uh investment 39:55 39 minutes, 55 seconds professionals on the VCP side and six on the credit side. uh we have built like I 40:02 40 minutes, 2 seconds mean capabilities across the board and all of this is already part of the the cost structure that that you are seeing 40:11 40 minutes, 11 seconds and I mentioned earlier that uh ESOP is is uh I mean we remain fully committed 40:18 40 minutes, 18 seconds to retaining the best talent and you have seen recently the new ESOP and PSU initiatives in addition to several ESOP programs we have implemented uh in the 40:27 40 minutes, 27 seconds past and that cost is also So part of the overall cost that that you are you are seeing a large amount of heavy lifting has 40:35 40 minutes, 35 seconds already been done in terms of investment side of things on the channel share. So yeah, we have 40:43 40 minutes, 43 seconds healthy uh across the board uh whether it's MDS, whether it's uh NDS, whether 40:50 40 minutes, 50 seconds it's uh banks uh which includes SDFC bank and uh and and and direct and 40:57 40 minutes, 57 seconds fintech. uh of course uh some of the banks which are either uh have a closed architecture or a guided architecture 41:06 41 minutes, 6 seconds uh our market share wouldn't be higher relative to their own uh AMC's but otherwise yeah we enjoy healthy share 41:14 41 minutes, 14 seconds across all channels but of course aspiration is always to get more got it uh uh thank you uh everyone and 41:23 41 minutes, 23 seconds all the best thank you thank Thank you. Next question is from Nan Abijit Sakre from Kodak Securities. 41:33 41 minutes, 33 seconds Please go ahead. 41:35 41 minutes, 35 seconds Hey. Hi. Uh good evening everyone. I have a question on uh yields. So if I go back to your comments from you know last 41:43 41 minutes, 43 seconds couple of quarters it looks like the equity yields have kind of stayed at those levels around around 58. But if I 41:51 41 minutes, 51 seconds look at the uh equity amum growth right for example let's say from March till now it's like almost uh 15 odd%. So I'm 41:59 41 minutes, 59 seconds just trying to understand uh you know between uh let's say commission cuts implemented last year versus the telescopic uh repricing I mean how do we 42:08 42 minutes, 8 seconds understand this moment over the last six odd months. 42:13 42 minutes, 13 seconds So that rationalization has clearly helped us in u u reducing the impact of telescoping 42:20 42 minutes, 20 seconds pricing but you know margin compression from telescopic price telescopic pricing is inevitable and remains an uh industry reality. 42:31 42 minutes, 31 seconds So we we recognize that TER will structurally trend lower over time and we factor that into our our pricing 42:39 42 minutes, 39 seconds decisions on the new flows. Uh I must mention this Savij that one metric that I keep a particularly close eye on is uh 42:48 42 minutes, 48 seconds is our operating margin. We have typically operated in the 33 35 basis point range and the objective is to stay 42:55 42 minutes, 55 seconds within that corridor though that's not always straightforward. Uh you have seen with significant increase in the uh 43:02 43 minutes, 2 seconds equity AUM uh due to MTM as well as flows. Um so what happens that asset mix 43:09 43 minutes, 9 seconds improves with higher equity aum. Um so then there is an impact on the uh on 43:17 43 minutes, 17 seconds the equity margin but the asset mix improves and we we are able to rationalize on the cost side in terms of 43:24 43 minutes, 24 seconds cost basis point uh as a basis point cost as a basis point of AUM. So the operating margin we have been able to 43:32 43 minutes, 32 seconds maintain in that uh range. Um also should mention we don't view margin in isolation. Uh it's simply an outcome. 43:39 43 minutes, 39 seconds The real focus is on expanding absolute profitability. 43:43 43 minutes, 43 seconds Uh and I I assume you would agree that that's where our our real focus has to be. 43:50 43 minutes, 50 seconds Got it sir. So sorry one clarification. 43:53 43 minutes, 53 seconds uh would it be fair to say that the entire commission cuts was fully absorbed uh by the March quarter or some 44:00 44 minutes of it has flowed through uh in the first half of this year as well? 44:07 44 minutes, 7 seconds No, it will be there every quarter right AJ in sense we cut it in August last year right so the basically the numbers are rationalized last year so numbers 44:15 44 minutes, 15 seconds from there on have been rebased see what you have seen is I think Ni touched upon right between March and now when you're talking about uh increase in 44:24 44 minutes, 24 seconds equity amum but the asset mix also has got tilted in favor of equity further out from 63 odd to 64 odd percent. So 44:32 44 minutes, 32 seconds that has kind of kept the revenue margins at that 58 kind of a number. Uh okay. Okay. I'll revisit this later. 44:41 44 minutes, 41 seconds And just one uh smaller uh number question. So this uh employees uh cost uh of about you know 124 odd kores. Uh 44:50 44 minutes, 50 seconds fair to assume that this is this is more or less like the base for the rest of the year or the quarter? 44:56 44 minutes, 56 seconds Uh so Abijit we had uh disclosed in the previous quarter uh since we did a issuance of ESOPs um in the June quarter 45:06 45 minutes, 6 seconds uh there is a particular amount of uh black shows amountization that will happen right uh in the books and we had given out those numbers uh in our 45:14 45 minutes, 14 seconds previous call uh which should be in addition to the normal employee cost this is a one-time non-cash amortization 45:20 45 minutes, 20 seconds of black shows call if you want I can uh I can just give you the broad Again the 45:27 45 minutes, 27 seconds non-cash expense uh on account of ESOPS only I'm talking for the second half of 45:34 45 minutes, 34 seconds this year would be around uh 42 crores uh for FI27 45:41 45 minutes, 41 seconds we think it's about 67 crores uh for FI28 53 odd crores uh uh then it tails off 45:51 45 minutes, 51 seconds FI29 about 33 crores and it tails off after that so these are again broad numbers lot of things go into this but this is a broad uh amortization non-cash expense on account of stock option. 46:02 46 minutes, 2 seconds Got it. Thanks Nad. That's it from my uh my side. Thank you so much. Thank you. 46:09 46 minutes, 9 seconds Thank you. Next question is from Dan of Franir Singh from Yesh Securities. Please go ahead. Uh hello. 46:18 46 minutes, 18 seconds Hi. Hello. 46:20 46 minutes, 20 seconds Yeah. So I just wanted to understand uh does the yield of the EMC differ if someone subscribes for a direct plan versus a regular plan. 46:32 46 minutes, 32 seconds The margin is uh management fees remain management fee remains the same. So pardon uh I can't hear you. 46:39 46 minutes, 39 seconds So management fees are the same whether you come in for the direct plan or the regular plan. 46:44 46 minutes, 44 seconds Okay sir. So my next question is like say for example a hybrid fund which has like 60% in equity and 40% in debt. So 46:53 46 minutes, 53 seconds to think of the yield would this be the right approach that we think 60% of 58% uh 58 bits and 40% of 28 bits would be 47:02 47 minutes, 2 seconds the blended yield for that product. No anything above 65. So equity oriented hybrid funds uh the fee structure is 47:11 47 minutes, 11 seconds aligned with that of equity schemes. So when you look at hybrid equity oriented hybrid will be at 58 basis points where it's minimum 65% equity. 47:20 47 minutes, 20 seconds Yeah. 47:21 47 minutes, 21 seconds Okay sir. And you sir uh just the last uh question uh the non-cash expense esop 47:30 47 minutes, 30 seconds you said uh it's 42 crores for this year. So how much of it has already come to a PL account? I'm talking for the second half. 47:40 47 minutes, 40 seconds Oh for the second half. Okay sir. Okay. Thank you. Happy Diwali. Happy to you. 47:48 47 minutes, 48 seconds Thank you. Next question is from Nano Veno Rajani from Naral Bank. Please go ahead. 47:55 47 minutes, 55 seconds Uh uh thank you for the uh opportunity. 47:58 47 minutes, 58 seconds Uh most of my questions have been answered but I just wanted to know what is the philosophy around uh the new SIS 48:05 48 minutes, 5 seconds plans which uh you know many AMC's are planning to launch. uh I mean what kind of timeline do we have in case we are 48:12 48 minutes, 12 seconds also uh planning to go down that path and um what kind of uh yields could that uh benefit uh for us? 48:21 48 minutes, 21 seconds So we already have approvals in place uh for launch of SIF. We want to be full service providers across categories 48:30 48 minutes, 30 seconds um say active passive alternatives and even the newer categories uh as they emerge. We're watching this space 48:37 48 minutes, 37 seconds closely and we'll decide on how we want to progress uh on this front. Team here is evaluating all possible options and 48:45 48 minutes, 45 seconds products that can be well suited for our client segment. So you will hear more from us on this front going forward. 48:54 48 minutes, 54 seconds Okay. Yeah. Thank you. Thank you. 49:02 49 minutes, 2 seconds As there are no further questions, I'll now have the conference to Mr. Nomit monot for closing comments. 49:08 49 minutes, 8 seconds Thank you. So in summary, while equity markets softened in uh Q2 FI26, the mutual fund industry continued to 49:16 49 minutes, 16 seconds demonstrate resilience supported by record SIP flows and steady equity fund inflows. Uh I salute the resilience and 49:25 49 minutes, 25 seconds maturity of Indian investors. Uh supported by distribution and uh advisory partners. Uh SDFCMC's AUM stood 49:34 49 minutes, 34 seconds at rupees 8.7 trillion with a steady market share. We remained the most preferred choice among individual 49:41 49 minutes, 41 seconds investors with a market share of uh 13.1%. 49:46 49 minutes, 46 seconds Our investor base reached 14.5 million unique investors that represents a healthy 25% penetration. 49:55 49 minutes, 55 seconds uh that's on the mutual fund side and we have been progressing very well on our initiatives in PMS uh in alternatives and international business. 50:05 50 minutes, 5 seconds We wishing you and your loved ones a very happy Diwali and a prosperous new year ahead. Uh thank you for your time today. 50:16 50 minutes, 16 seconds Thank you very much on behalf of HDFC Asset Management Company Limited. That concludes this conference. Thank you for joining us. And you may now disconnect lines.