Aditya Birla Sun Life Amc Ltd

NSE:ABSLAMC

Earnings Call Transcript 2023-Q2

[Operator]

Good day, ladies and gentlemen, and welcome to the Q2 and H1 FY '23 Earnings Conference Call of Aditya Birla Sun Life Asset Management, hosted by InCred Equities. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Jignesh Shial from InCred Equities. Thank you, and over to you, sir.

[Jignesh Shial, analyst]

Yes. Hi, everyone. Good evening. And on behalf of InCred Equities, I thank you all for the participation. We have along with us, Mr. A. Balasubramanian, Managing Director and CEO of Aditya Birla Sun Life Asset Management. Over to you, sir, for the opening remarks, and you can go ahead. Thank you.

[A. Balasubramanian, executive]

Thank you. Thank you, Jignesh, and thank you for the introduction. I'm joined by our CFO, Mr. Parag Joglekar; and Prakash Bhogale, who is Investment -- in charge for IR Relationship.

Good evening to everyone for attending today's investor's call. I hope you all had the opportunity to go through the earnings presentation, which is available on the stock exchange and our website.

Let me first begin by wishing you all a happy Diwali and a prosperous New Year. Let me also start the update on the economy and mutual fund industry first, and I'll give you a briefing about Aditya Birla Sun Life AMC performance for the quarter ending 30 September 2022.

Indian economy has been on a steady recovery path to an expected growth between 6.5% to 7% for FY 2023. This is mainly on account of the timely policy measures taken by the Government of India and the Reserve Bank of India. We have been managing to deliver with better performance compared to the global market, which is going through a lot of uncertainty.

The CPI inflation remains at elevated level, above RBI target of 4% plus 2% in terms of expectations. As a result of that, RBI may continue to remain hawkish for the near future in terms of policy rate. And policies given by the policymakers, in my own belief, will continue to remain strong and force India [indiscernible] to come back.

The current uncertainty on the global market continues. Global economy activity is cooling off with a number of growth forecast to downgrade. Inflation remains elevated despite improving supply chains and Central Banks continue to frontload their tightening cycles by delivering outsized rate hikes. The most synchronized monetary tightening in decades will weigh on growth further. As I speak, many policymakers will come with more policy rate hikes. The [indiscernible] economy rate hikes have made emerging market equity less preferrable and [ FIIs ] have been net sellers, which is again known to all of us. But with the increased retail and institutional participation, the Indian stock market has remained buoyant.

Higher interest rates have brought back investors' attention to the bond market on account of higher yields, that opportunity has been generated for investors to generate our fixed income product. The next few weeks will be filled with long Indian festivities, hence where domestic spending will be higher. This will result in higher earnings expectations with limited downside to earnings during the second half of FY 2023. Hence the equity market, our own belief, will continue to remain strong and buoyancy will continue on expectation of earnings recovery.

With respect to the mutual fund industry, during the quarters, quarterly average assets under management, the Indian mutual fund industry touched INR 39.04 lakh crores as on 30 September 2022 as against INR 37.72 lakh crore as on 30 June 2022 and grew by 8% from INR 36.19 lakh crores as on September 30, 2021.

In Q2 FY '23, the mutual fund industry witnessed some fall in inflows across various equity schemes on a quarter-on-quarter basis. A significant proportion of inflows came from flexi cap fund, mid cap and small cap fund and [ debt ] fund. At the same time, retail average assets under management increased on account of higher AUM both from T-30 and B-30 cities during this period. As on 30 September 2022, the total number of mutual fund investors stood at 14 crores versus 11.32 crores on 30 September 2021, an increase of 25% on a year-on basis.

Continuous awareness initiative being undertaken by the whole industry on SIPs. We have seen improved monthly SIP contribution. The overall monthly SIP book was the highest ever INR 12,976 crores in September 2022. The new SIP registrations have increased marginally as compared to last quarter. The total number of SIP now accounts for about 5.84 crores accounts.

The industry witnessed net equity sales of around INR 14,500 crores, excluding index funds in Q2 FY 2023. However, there was a reduction in the net inflows as compared to the previous quarter, where the net inflows were around INR 59,000 crores. SEBI's relaxation on the NFOs embargo in Q2 had resulted in an industry net NFO sales of around INR [ 49,800 ] crores, of which around INR 10,500 crores was in equity. The retail investors concentration in the industry continue to remain in excess of 55%. At the same time, overall reduction in the fixed income assets is leading to higher dominance of individual mix to the overall industry AUMs.

Coming to the ABSL AMC performance. ABSL AMC has been, of course, the market leader and continue to remain so, working towards the financial inclusion, depending on financial markets and development in mutual fund industry as industry top leader. We are well positioned due to a strong parentage and brand multi-diverse distribution network and experienced investment and management team.

In order to remain for building our future and ensuring best of our customers and shareholders, our area of focus has been delivering sustained investment performance and portfolio differentiation. This is something we keep emphasizing given the fact that strong investment performance will lead to incremental sales coming in the future. That remains one of our pillars and remains one of the high focus areas. Building retail franchise has been done in the past, increasing the geographical footprint, strengthening the multichannel distribution network. And third, growing our passive and alternate assets, having created a separate team of people, building the size to next level remains one of the key areas of focus.

And fourth is leveraging digital platform for customer acquisition by having our product on board on the base of the performance as well as engagement that we have to create and create customer experience in the digital platform. And finally, driving a strong robust risk management practices, especially at the time where regulatory frameworks are becoming more and more tighter. Therefore, increase the governance framework and best management practices remain the fifth key area of focus for us in building over AMC the next level.

We, at the ABSL AMC, are focused on growing our overall assets under management across different asset categories. And our total quarterly average AUM for the quarter ending 30 September 2022 stood at INR 2.94 lakh crores. Our total mutual fund quarterly average AUM was about INR 2.83 lakh crores with a market share of about 8.2% ex ETF funds. Our equity AUM for the September 2022 quarter was about INR 1.19 lakh crores. Our equity mix is at an all-time high of about 42.1% to the overall assets under management that we have today.

As we stated, customer acquisitions remains an integral part of our strategy, while we have added significant folios in the last number of years to touch 8.1 million folios. In fact, the last quarter, we added about 2 lakh folios in the Q2 FY 2023. With that, we have overall folio count about 8.1 million folio account that we have.

Our short-term equity performance, which, of course, went through its own challenges for a brief period, in fact, have been now showing an improvement in overall -- across all categories. As a result of that, we start seeing some inflows in our mid-cap fund and small cap fund as well as multi-cap funds. We've seen somewhat positive inflows during the quarter, driven by the improved performance and the push that is being given by some of the focus products as we have -- as the industry also has seen some inflow in this category.

We are constantly working towards leveraging the bouquet of existing products, while launching new product, build size and scale and increase the product for customers. We have been growing our retail franchisee over the last few years with a special focus on increasing our footprint in B-30 market. Therefore, we can improve the market share in the B-30 market beyond what we currently have.

Building SIP book size. We always have a great track record having a higher market share in SIPs. That continues to remain a big focus area in order to build in sticky assets and create long-term value to the investors. We're also creating an awareness about multi-SIPs features that eases the process of investing in multiple schemes as well as promoting other kind of SIPs in order to grow our SIP book. As a result of these efforts, we have seen a significant improvement in the current quarter to our overall SIP book outstanding to about INR 931 crores as against INR 867 cores as of September 2021. We also added about 2.6 lakh new SIP registrations during the quarter. Currently, we have about 33 lakh SIP live account with [indiscernible], which again the highest ever SIP account that we have today at AMC.

Last quarter, in order to increase our brand building as well as creating awareness about mutual fund industry and we have been working constructing our portfolio, we launched the Pro Portfolio investor education initiative, which focuses on the need to diversify its investments across and within the other class for wealth creation across market cycles. We believe [Foreign Language], so that is the model in which we're building it in order to encourage more skill to be bought within the equity portfolios in order to have a presence across the different market cap from the portfolio longer-term wealth creation point of view.

For multichannel market initiatives deepen our presence and market share [indiscernible] virtual relationship manager model, which we had initiated about 3 years back, has activated over 1,600 distributors and through Sampark, again another initiative that we have been undertaking for onboarding of new distributors, the empanelled 4,400 new distributors were added during the quarter.

On customer loyalty and deeper engagement and service differentiation remains the cornerstone of our service to sales model, for which, once again, we have created a separate 200 dedicated client personnel from existing customer service team to take care of the service to sales, the requirement of the customers as a single point guiding and servicing investor's needs. This, in fact, has now started giving higher mind recall, which therefore should actually help in bringing in participation with these customers as we move forward.

With respect to overall mix between retail and institutional customers, 50% of our asset contribution comes from retail investors as of September 2022. In the same manner, the contribution from B-30 cities also have grown to about 16.3%. Our focus in building retail, both in B-30 and T-30 markets remain an integral part of our overall strategy.

On the digital front, we continue to collaborate with the real estate starters to remain ahead of the curve, like what we did in the 3 years back in [ PhonePe ], where we used to get reasonably good market share of about 35% and enhance our partner efficiency working with them closely to improve our market share coming from the segment. We onboarded [ 75% ] new customers digitally. And currently, 82% of overall transitions are done digitally. And 88% of the customers are now serviced via digital platform. We also empanelled 92% of new MFDs digitally in the first half of FY 2023. Again, coming on the back of the emphasis that we are giving on how digital and technology capability that we are building in can help in building the business for our overall AMC.

With respect to the building alternate business, our passive product offering have gained momentum in the last 2 quarters, which has grown by over 6x compared to the last year towards INR 16,922 crores, where existing passive bouquet has grown to over 28, and we have around 10 products in the pipeline. The customer base in this category has also grown to around 453,000 folios.

On the PMF and AIF front, we have launched a suite of products, like India Equity Service Fund and asset linked PMS, which is gaining some traction. In fact, the alternate investment fund that we have launched as a service-oriented fund, we have been doing a roadshow across country. And hopefully, this should help in having the first big success in the AIF product under the ABSL AMC in the last 2 years. Upon completion of the product, we, of course, intend to launch a few more products in the AIF segment as part of our overall strategy to build AIF as well as build our future profitability.

On the offshore front, we aren't seeing a significant momentum. We have maintained, of course, overall assets under management. So we have been having some hopeful expectations that some of my existing clients will add to more contribution. That expectation has been there for quite some time, given the fact the investor experience has been good, but yet to see some kind of incremental money coming in some of our existing customers in the offshore business.

On the real estate front, I'm happy to share that we have completed the second close of Aditya Birla Real Estate Credit Opportunities Fund. In fact, upon completion of this, in the next month or so, we will take this product to the overseas market with the BentallGreenOak to raise money from overseas investors, to invest in real estate market. That's also something we'll see some momentum coming in, in the current few quarters.

I will now move on to the financial for the quarter. Our focus continues to remain achieving robust asset mix between high-margin equities and debt assets. We'd also like to reiterate that the equity mix is in all-time high, up 42.1% for the last quarter. In Q2 FY '23, our total revenue, that is revenue from operations and other income stood at INR 387 crores, up by 42% on a quarter-on-quarter basis. Our profit after tax stood at INR 191 crores, up by 86% on a quarter-on-quarter basis compared to last year. And for H1 FY 2023, our total revenue is at INR 661 crores as compared to INR 708 crores in the first half of FY 2022. The profit after tax in the first half of FY 2023 stood at INR 294 crores as compared to INR 328 crores in the first half of FY 2022.

With this, I'll conclude my initial opening remarks. I'll open the floor for any questions that you may have. I'll be joined by Parag, our CFO, and Prakash, for any questions -- for taking any questions that may have to be answered by both of them. Thank you.

[Operator]

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

[Swarnabha Mukherjee, analyst]

So I have 2 questions. First one on the yields. So just wanted to know, there are slightly higher revenue yield for the quarter sequentially, so was this a function of you able to push some increase in yield some [indiscernible] or is this clearly because of slightly adding a mix of equity-oriented schemes? So that is the first question.

[A. Balasubramanian, executive]

We will answer the question Swarnabha. I'll ask Parag to answer this question.

[Parag Joglekar, executive]

Swarnabha, the yields are a little bit higher compared to the earlier quarters. It's mainly due to the mix of assets on the equity slightly gone up compared to earlier quarters. And debt also the mix in between the various categories has slightly improved, resulting it is more of flattish yield on the debt side, not a great increase, but it is mainly on the equity, which has seen slight improvement on the yields -- overall mix.

[Swarnabha Mukherjee, analyst]

Okay, sir. Would we be -- in near future, if yields remain at this level or on the fixed income side or I mean the interest rates go up slightly, will we be able to push in any kind of expense ratio increase in that segment?

[Parag Joglekar, executive]

So we have been continuously focusing as we mentioned earlier also to strengthen the overall size of our AUM plus improve the equity mix in overall AUM. Plus on the debt side, we are trying to build a longer-term, long-duration asset, which will fetch us slightly higher yields on the debt side also. So that is the overall broad thought process, which we have. And I think so it will help us to strengthen the yield over a longer duration.

[A. Balasubramanian, executive]

Just to add to that, clearly, on the fixed income side, last 2 quarters, we have been, of course, trying to build some momentum on fixed income, though we have seen momentum coming in fixed income phase to a target maturity fund, which is akin to FMP, which doesn't give you a big margin, but definitely helps in building market share. At the same time, with the likely further hike in interest rates and in all probability, once we get a visibility that now we are more or less close to the peak. We have kept 2 products ready to be pushed among our retail and [ HNIs ] to build the assets the way we used to have in the past [indiscernible] medium-term plans. These are some of the products which are more mix of [ HNI ] result-oriented product with the reasonably good expenses, which I can take into account interest of investors, but then second, of course, good margins that will have both for ourself for the distribution channel. That's something we have already kept the plan ready. To launch the product, of course, we used to see a momentum given the fact that currently the interest rate high cycle continues.

[Swarnabha Mukherjee, analyst]

Okay sir, got it. That's really helpful. My second question is on the employees benefits expense side. So I see a slightly sequentially higher trend in the employee expense this quarter. And I also noticed that it was similar in second quarter last year. So is there a variable component here? Or what is the underlying reason for this, and also if you could let me know what would be the ESOP cost for this quarter?

[Parag Joglekar, executive]

Swarnabha, the cost for employee has increased in this quarter mainly due to the increments, which has happened during the current quarter, which happens in the July month for us. So that is the main reason for increase in the cost on the employee side. And there was a couple of some onetime expenses on staff welfare, which we generally do in the second quarter of the year per the staff meetings. Compared to last year, it is more or less similar because -- or slightly lower because last year, we have launched the ESOP plan, where in the first year, generally, you have a larger expenses. And structurally, it keeps on dropping as the year passes. So that is a slight reduction in the expenses on that account. So that is why a slight drop compared to the last September quarter to this September quarter.

[Swarnabha Mukherjee, analyst]

Okay. So should we then for the next 2 quarters take this INR 70 crores as the run rate for employee expense?

[Parag Joglekar, executive]

So this should be the flattish. But as we may be beefing up team on the various alternate asset or any other strategy we may want to run, there may be slight increase if we beef up the team on those products.

[A. Balasubramanian, executive]

Just to add to that, Swarnabh, while we've been quite conscious about keeping employee costs under control, as Parag explained, there's a marginal increase again due to the increment that's being given, plus any new recruit comes at a little bit higher cost. While that would be the case, of course, when the output starts coming in as part of the productivity, which has been one of a big area of focus, therefore, the cost will come under check.

While that's our [indiscernible], we also know how to now build the business for the next level. We may want, of course, beef up the talent pool further. If at all we do that, then it may probably see marginal increase in cost. At the same time, I'm only of the belief that as the individual productivity starts getting better that incremental cost may become a very small component of the overall incremental growth that we can expect.

[Swarnabha Mukherjee, analyst]

Sure, sir. And last question from my side, sir, regarding the alternate assets, so this has been -- the AUM has been hovering around 11,000 to 12,000 above mark from the last few quarters, I wanted to know from your side how to think about this number over the next couple of years? And how can we think about also the yields from this segment?

[A. Balasubramanian, executive]

See, one, as a need for building alternate business, one, we set up a separate vertical few quarters back, which is beginning of this year only we did that, and now they have put things in place, including the product. Second is a new leadership team that we have beefed up to head our PMS, who has got about [ 25 ] years of experience, he came on board about the month of July. When he came on board, we launched our first AIF product, which we are hopeful of closing this product first. And once it is done, we will -- we can have a series of launch in line with what we believe as a team that we can offer to the [ HNI ] customers, that's something that we do have a plan. Second -- these are for [ AIF ] concern.

As for the real estate concern, after almost 10 years of break, we have launched first product. We never launched any product. Now we have seen first success of the real estate product that we intend to take it to the next level. And third, which we believe that the interest rate [indiscernible] today, and we also believe that corporate bond size will widen, therefore it will provide an opportunity to launch a credit opportunity to fund the AIF phase. It's also something we have now kept in place their product. I've taken approval and launch as part of the product offering [indiscernible].

And lastly, with respect to the offshore, as I mentioned, it has remained flat, close to about INR 10,000 crores size. There is not any incremental contribution coming from the -- though the business itself fund its own, but it's not been highly productive from the business growth point of view, which we believe is a function of interest rate differential, function of [ FII ] flows in the country and function of leverage benefit that overseas investors will get to invest in India. Once we see some change in that, probably, we'll push through some success as well as offshore business concern, therefore, bringing in some incremental profitability.

And lastly, some of our existing customers in the offshore who have been adding to the profitability, we were making [indiscernible] given the fact that we have delivered on the best performance for the last 15 years for these customers and [indiscernible] given incremental money. And hopefully, we're able to get that without increase in additional cost that can add to the overall AUM growth as well as profitability.

These are some of the expectations that we have kept and putting things in place to ensure that, at least, we have a push that we are able to give for this asset class given the fact it can keep the costs under control, at the same time add to the overall profitability.

[Swarnabha Mukherjee, analyst]

Sure, sir. Very helpful. Just in terms of yields, could this be more profitable than our equity segment or at a single level?

[A. Balasubramanian, executive]

Okay. Alternate assets, the aim is to have a higher profitability compared to the mutual fund. I think that is what I would aim, except the only difference that comes in the AIF is you pay upfront commission, which again [indiscernible] and gets recovered. And that's the only difference that we are able to see between the mutual fund and AIF. That's the way AIF has [indiscernible] being sold. But at least our endeavor would be to have a higher contribution of margins coming from the [ AIF ].

[Operator]

[Operator Instructions] The next question is from the line of Prayesh Jain from Motilal Oswal Financial Services.

[Prayesh Jain, analyst]

Yes. Sir, firstly, on a much broader level question probably from an industry perspective more than from particularly from the Aditya Birla AMC perspective. So we've seen the industry going through period where we -- the core profit, except other income, has been very muted or declining in the last few quarters. This quarter possibly we've seen some uptick coming in because the yields have improved for most of their AMCs. But from a medium-term perspective, say, 2- to 3-year perspective, do you think that the industry can actually report a strong profit growth mainly given the fact that yields, whether these will be under pressure going ahead? Or it will improve cost? I understand most of them have a lot of scale benefits. But primarily from a yield perspective, do you think that the profitability of the AMCs see some improvement going ahead?

[A. Balasubramanian, executive]

Yes. Thanks, Prayesh, for this question. So the way I see in 3, 4 years, one, as you rightly put it, the scale benefit will continue to be one of the major contributor to the profitability. It may not increase in margins, it may actually increase in absolute profit. So that I think will remain. Second is in terms of profit contribution, well, of course, on the equity side, there has been quite discipline being maintained in terms of what the payout ratio and so on and so forth, that's something we are now seeing that it's been coming in to the extent we can probably see a marginal improvement on the margin, not a significant one, but good that could be expected given the fact they're all mostly streamlined in terms of payout ratio and so on and so forth.

And third, which I see, the last 3 years, especially in the fixed income, has been not so great years given the fact interest rates were low, high-margin product and the fixed income were also very low. And we, as a fund house, have had a huge success in terms of increasing the contribution when the rates were high, yields were high, portfolio returns were high, in order to get higher participation from investors as well as the margins coming in, in terms of incremental profit, which in our own, my own belief is, the next 3 years, you will see some contribution coming in the fixed income product.

While one can argue, within the fixed income phase, the target maturity fund, which is nothing but index fund is also growing. Therefore the margin could be under pressure, one can probably argue in that phase. At the same time, I believe that this segment will be largely suitable for institutional customers and very, very high [indiscernible] customers. But medium to retail customers would largely participate in the open ended debt funds, which will have a little higher margins, same time not so high expenses, so to speak. At the same time, give a satisfied experience that the investors can get it. So that way I see this coming in from the mutual fund contribution to the overall assets under management profitability.

[Prayesh Jain, analyst]

Just on equity yield, do you think that we are kind of close to bottoming out in terms of yield or there is still some headroom wherein we will continue to see equity yield falling by another, say, 2 or 3 bps every year for the next few years?

[A. Balasubramanian, executive]

I don't think so. Let me just open Parag also.

[Parag Joglekar, executive]

So Prayesh, as you know that it is the size -- increase in size [ TER ] goes down. So there will be some impact of that calculation. But as the size goes up, the absolute amount will increase on the equity contribution on the fee side. There may be a slightly drop on the overall bps basis because the size will grow up and the [ TER ] may drop, may have some impact, maybe another couple of years on the yield as a bps to AUM.

[A. Balasubramanian, executive]

But Prayesh, that's a good [ product ] to have actually in the sense [indiscernible] to have given the margin drop [indiscernible] fact that size is growing and increase in absolute profitability and analyze any logical pressure coming in on the margins as generally is being perceived. See more than the margin pressure on the existing schemes, the shift of assets from active to the passive, if it happens, then you'll see that margin coming in. But my own belief is at least for next 3, 4 years, active will continue to have a dominant percent. And ETF will, of course, have a faster growth. Therefore, the conversion should happen maybe in the next 3, 4 years in terms of margin drop because of the ETF has grown, not because of the active funds margins have come down.

[Prayesh Jain, analyst]

Okay. Sir, another element of this has been the transition of order transfer of legacy assets to the new assets, where possibly, at what level would the industry be at possibly now closer to 75%, 80% would have been converted from legacy to new assets? Or is it still at around the 50%, 60% mark?

[Parag Joglekar, executive]

Prayesh, very difficult to comment on that but as it is almost a 3 years' time period has gone up from upfront to trial model. I think so over maybe another couple of years, it should be replaced because generally, industry sees around 3 to 4 years retention aging. That should be the case.

[A. Balasubramanian, executive]

I think expectations that we should build around 3 to 5 years kind of holding period, but in fact by the time we moved the trial model, in general, the holding period only has gone up. Normally, the churn happens either for moving from -- even today, one may take credit that NFOs adding more assets. I mean we must note that [ 20% ] of the money into the NFOs come from either switch or moving from one fund to other fund. That's the only assumption that you have to make, which is basically I'm going with as well. I think -- in terms of holding period, I think since the SIP has become a large component of the assets, you'll probably see the holding period getting tilted more in favor of longer term. The SIP book contribution to overall assets under management is now keep rising.

[Operator]

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

[Lalit Deo, analyst]

So I have two questions. Sir, firstly, on the distribution side. So in the distribution mix, you're saying that there's a decline in the area, which is coming from the banking channel. So could you share some light over there? And also, could you talk about the incremental -- the market share and the incremental flows, which we are getting from the banking channel?

[A. Balasubramanian, executive]

Yes. No, banking channel contributions, largely, one, on account of withdrawal of fixed income space, where we saw some withdrawals in the [ SPDR ] corporate bond fund category. So that's something resulted in marginal dip in terms of -- absolute number has not fallen, but there is a drop in the market share as a result of this. Second is we have also seen improvement of contribution coming from the ND channel, especially in SIP we have seen improvement of contribution coming from the ND channel, the lead ND channel that we have in the country. And we have seen some improvement contribution coming on the SIP side, therefore the contribution overall asset under management has gone up.

And third is because of the outflow on the [indiscernible] companies, even the institutional side, therefore that contribution also gets a little higher because of the some outflow that has happened on the fixed income space. It's a combination of these 2 things. The absolute number if you have to take, there has not been any kind of significant drop on the absolute number.

[Lalit Deo, analyst]

Sure, sir. And sir one data keeping question. Could you tell us about the SIP AUM side as of September '22?

[A. Balasubramanian, executive]

Yes, what is the number? 40 -- 53...

[Parag Joglekar, executive]

It's INR 51,000 crores.

[Operator]

The next question is from the line of Dipanjan Ghosh, [indiscernible].

[Dipanjan Ghosh, analyst]

Sir, am I audible?

[A. Balasubramanian, executive]

You're audible, Dipanjan. You're audible. You're audible.

[Dipanjan Ghosh, analyst]

Just 2 questions from my side. First, you highlighted on the SIP contribution including from ND channel, if you can also break up your incremental SIP flows across channels, that will be helpful. Second, if I look at your SIP new registration market share, that seems to be on the lower side. Just wanted to get some sense of if it's from some particular channel where your SIP registration market share is on the lower side? And lastly one data keeping question is, if you can mention the number of employees that you had as of September 30?

[A. Balasubramanian, executive]

Yes. As far as the SIP's contribution is concerned, one, of course, the dominant share is coming from IFAs. Second dominance is coming from ND channels. And third, we are part of the drive with some of the banking channel SIPs, such as large banks, like HDFC Bank and a few others. Our SIP contribution has been -- there's regular contribution coming from these 3 channels. And fourth, of course, there's a marginal dip in the digital channel in terms of incremental contribution. I think if you look at the SIP registration, for your second question, SIP registration, in general for the industry has dropped about 5.98 lakh, that has dropped about 6.22 lakh for the SIP registration as the whole for the industry. It's about [indiscernible] SIP registration, which used to be in the range of close to about 7.55 million last year.

In general, we have seen a dip in the SIP registration. But, however, for us, the SIP registration normally we count per month is about 1 lakh SIP registration we normally account, 1 lakh to 1.2 lakh. This quarter was about marginally lower, in line with the overall drop in the SIPs, but something while the registration was literally lower compared to the previous quarter, but we have increased absolute amount to over [ INR 930 ] crores. But again has come on basis of special focus that we have brought in, in order to add more SIPs with high-value ticket items, which could come in the form of 3 to 5 years kind of registration that they can do to [ SDP ] combination as well as pushing through the target for absolute number is also equally important while you are focusing on SIP registration. That's something I have seen some rate of success, in fact we keep pushing the team for retail across the country in order to increase the monthly contribution from [ INR 930 crores ] to higher number. The peak number that we used to have was about [ 980 ].

So one question, of course, often comes is SIP market share is dropping. I must mention the current SIP run rate that we have was built on the back of having 14% market share for almost controlled period about 4 to 5 years until 2019. And given the fact that the increased contribution is coming from more and more layers and everybody is now focusing only on SIP, SIP, SIP, that something has dropped to some bit of market share contribution and registration. But otherwise, our focus has been on building what you call absolute SIP contribution on a month on month basis then.

With respect to the channel, the digital channel, I just mentioned. Our digital channel is actually is purely on the basis of whatever algorithm they build. It can keep moving from one fund to other fund, even a smallest fund will get algorithm. So I've -- we have roughly about 7.5% kind of market share in the digital channels, with about 78 channels that we track, anywhere between 6% to 7%. But as this [ starts ], we're taking some efforts to make sure some of the products are coming in on recommendation list. I think that's something gaining momentum as well. But broadly if we have to speak, the focus on building SIP is back on track. That's what you'll see the numbers coming in reflecting on the [ INR 930 ] crores contribution as against [ INR 898 ] crores over last quarter.

[Dipanjan Ghosh, analyst]

Sure. And the number of employees...

[Parag Joglekar, executive]

1,351. Dipanjan, it's 1,351.

[Dipanjan Ghosh, analyst]

Okay. If I can squeeze in one question. You mentioned on the series of trajectory over the next 2 to 3 years that can quantify the difference between your current uncertainties on cash flows on the equity side versus your existing [indiscernible] on the equity business?

[Parag Joglekar, executive]

So Dipanjan -- no, no, sir, I got it. So Dipanjan, our yields, as we mention always, that generally the sharing with our distributor is in the similar range of around 60% to 65% of our [ DTR ]. And the company mix in the range of around 32 -- 35-odd percent of the overall [ DTRs ]. So that remains for us on the new flows.

[Operator]

[Operator Instructions] The next question is from the line of Ravin Kurwa from ICICI Securities Limited.

[Ravin Kurwa, analyst]

Am I audible?

[Operator]

Yes, please.

[Ravin Kurwa, analyst]

So sir, I just wanted to get back to the question where you mentioned that there are 2 products in the fixed income category, which are ready to be launched. So have they been launched in this Q3 or they are just ready to be launched?

[A. Balasubramanian, executive]

No, we already indicated -- we already rolled out the presentation of dynamic bond fund with the renewed strategy that we used to have in the past. And medium-term plan, which, again, one of the largest funds for us are using a mix of good credit and high quality [indiscernible], that's also something we are now [ reapproaching ] the products. We weren't doing it earlier in the past given the fact that we had a few assets, which were yet to be rectified in the portfolio from a recovery point of view, which got banned in the last quarter. With that, now we are seeing an opportunity that fund also can be renewed from the point of view of promotion to the retail and medium [ HNI ] investors.

Dynamic bond fund, we have already launched it. We had multiple round of calls and given the -- as I mentioned earlier, given the current interest rate volatility, we will of course give a push once we believe that now is the time to build the size in this. And we have chosen this 2 products for 2 reasons. One, the portfolios are now getting better, so that expectation for the investment can be met those who come in to the funds as an alternate to banks [ deposit ]. Second is [indiscernible] compared to equity versus fixed income. And third is we used to have great success, significant contribution coming from these 2 segments of our product offering in the past. That's something we believe that a similar success story can be created for the future. Therefore, these 2 funds we are approaching on that.

[Ravin Kurwa, analyst]

And sir, can you guide on the yield in these 2 products?

[A. Balasubramanian, executive]

In terms of current expenses versus expectations?

[Ravin Kurwa, analyst]

Yes.

[A. Balasubramanian, executive]

Yes. I know [indiscernible] currently, about 1.1, right? It's something like that.

[Parag Joglekar, executive]

Yes. So Dipanjan -- sorry, Ravin, I don't have a number handy. I can -- if you are there on our website on the [ TER ] side, but it is in more than around 1%, 1.25% odd type.

[Operator]

There is a follow-up question from the line of Dipanjan Ghosh from Citigroup.

[Dipanjan Ghosh, analyst]

Just 1 data keeping question, if you can quantify your ESOP expense for the quarter? And how do you see that trajectory for FY '24 and '25?

[Parag Joglekar, executive]

Dipanjan, it is more similar in the range of around INR 800 crores.

[A. Balasubramanian, executive]

For the quarter.

[Parag Joglekar, executive]

For the quarter.

[Dipanjan Ghosh, analyst]

Okay. And any guidance for FY' '24?

[Parag Joglekar, executive]

So as I mentioned earlier that it is generally a 40, 30, 20,10, sort of drop in things, over the period it should drop. So this is currently the second year, the first half. So it may continue in the similar range for the next couple of quarters. And then it will drop further.

[Operator]

As that was the last question for today that the management could answer, I would now like to hand the conference over to Mr. A. Balasubramanian, Managing Director and Chief Executive Officer, for closing comments.

[A. Balasubramanian, executive]

Yes. Thank you very much, ladies and gentlemen for tuning in. And with this, we conclude our Q2 and our first half FY '23 earnings call. Do feel free to reach out to us, to Prakash Bhogale, who is our IR in charge for any queries that you may have. Thank you, and have a nice weekend.

[Operator]

Thank you. On behalf of InCred Equities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.