Aditya Birla Sun Life Amc Ltd

NSE:ABSLAMC

Earnings Call Transcript 2024-Q4

[Operator]

Ladies and gentlemen, good day, and welcome to Q4 FY '24 and Full Year 2014 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.

[Jignesh Shial, analyst]

Yes. Thank you, Ayeshashvi, and good morning, everyone. On behalf of InCred Equities, I welcome all to Aditya Birla Sun Life AMC 4Q and Full Year FY '24 Earnings Conference Call. Along with us, we have Mr. A. Balasubramanian, Managing Director and CEO; Mr. Parag Joglekar, Chief Financial Officer; and Mr. Prakash Bhogale, Investor Relations. We are thankful to the management for allowing us this opportunity.

I would now like to hand it over to Mr. A. Balasubramanian, Managing Director and CEO of Aditya Birla Sun Life AMC for his opening remarks. Over to you, sir.

[A. Balasubramanian, executive]

Thank you, Jignesh, and good morning to everyone. I hope we all had the opportunity to go through the earnings presentation, which is available on the stock exchange as well as on our websites.

Before highlighting the broad economic outlook, I'll provide an update on the major industry and ABS AMC performance for the quarter ending March 31, 2024. I'm happy to share that Aditya Birla Sun Life Mutual Fund, being on the oldest private sector mutual fund FMCG, established in 1994, is getting towards the compilation of 3 decades of its presence as one of the other pioneers in the mutual fund industry. We feel proud to serve the growing needs of investors, and one of the contributes the largest success of the mutual fund industry as one of the highly committed well-governed mutual fund player.

On the 30th year of our operation, we have our growth path to achieve new milestones in respect of all our business verticals and make this year as one of our memorable year for our employees, investors, stakeholders and shareholders.

Let me now begin with the economic outlook and mutual fund industry update. We are in a dynamic global landscape with elections happening in nations and territories electively, representing our half of world population. The global picture in the 2024 present a cautiously optimistic outlook with underlying dynamics influencing growth on one side and interest rate on the other side. We believe India will continue to remain in a bright spot with strong government funding and building infrastructure, increased investment coming for the private sector, ably supported by high domestic consumption.

As is known, the Indian economy continues to exhibit its resilience with a healthy projected growth rate in excess of 7% supported in FY '25 stable inflation, interest rates, currency and rising ForEx business. In the equity market has consistently outperformed, global counterparts reflecting on fundamentals of Indian economy and the earnings potential of the company are across sectors. One should not be concerned with the recent market volatility which a large term from the regulatory and mutual fund industry initiatives, small and segment disclosure, which are aimed at enabling investors to make informed decisions.

India's strong structural drivers and economic fundamentals remain intact, encouraging investors to continue participating in growth potential. We also believe that widespread growth will continue to be the driver of our market sentiment.

With respect to mutual fund industry, as of March 31, 2024, the quarterly average AUM read [ INR 24.1 crores, ] growing at 34% on a year-on-year basis as compared to INR 40.49 lakh crores as of 31 March 2023. During the quarter, the mutual fund industry witnessed equal net sales of around INR 169 crores through new funds offering as well as an existing funds. The total NFO collection was around INR 800 crores to INR 900 crores, and the balance coming -- balance fund flows have come into the existing equity schemes, hybrid funds, sectoral sematic, funds.

The industry SAP flows grew by 35% year-on-year from [ INR 40,276 crores ] in March 2023 to [ INR 1,900 crores to INR 2,000 crores ] in March 2024. The total number of mutual fund portfolios stood at around INR 18 crores with an increase of 22% year-on-year with unique customer base around INR 4.5 crores. The individual average AUM grew by 43% year-on-year from INR 23.27 lakh crores to INR 33.31 lakh crores and contributed 61% of the AUM. These cities with an average of INR 9.8 lakh crores accounted for 18% of the total AUM.

Moving on to ABS AMC performance. Turning our strong foundational pillars. Our focus has been to strengthen our main levers of growth in the organization by bringing in the right talent and making strategic changes in leadership role. In fact, our momentum in the last quarter is on the back of uptick in equity performance coupled with well-established a robust sales engines, close to the ground connection, tech-enabled services and a growing digital business network. Building on this synergy and energy, the business is on a meaningful momentum and our team is geared to make the most of it. This has been witnessed during our annual investment conclave, which we call YH, attended by over 2,000 partners in Mumbai in month of February 2024.

In Q4 FY '24, our overall average assets under management, encompassing alternate assets, reached INR 3.46 lakh crore size, reflecting a [ 13% ] year-on-year growth, partially our mutual fund quarterly average AUM reached INR 3.3 lakh crores, with equity quarterly average AUM standing at INR 1.52 crores. I'm happy to say that our SAP numbers during the quarter has witnessed good moving from INR 1,005 crores in the month of December 2023 to INR 1,252 crores in March 2024, making a 23% quarter-on-quarter increase. We have added around 6 lakh new SAPs with approximately 2.5x increase compared to the previous quarters. As part of endeavor to new customers, we've added approximately 11.5 lakh portfolios in the year. Of these, around 7 lakes were added in Q4 by 2024, bringing a total survey portfolio of around 86 lakhs.

Individual investors with an average AUM of [ INR 17.0 lakh crore ] constituted 22% of our assets. Additionally, the contribution from these cities stands at 17.5% as of March 2024. We have seen good momentum build up in our sales numbers, reflected in our healthy retail growth. The impact of building a robust sales support ecosystem that consists of managers, for onboarding reporters, direct channel to serve and family offices, digital distribution and service to sales is coming to its full potential gradually.

Our engagement at the relationship manager level increased satisfaction service, positive sentiment towards the fund performance and an improved digital transaction journey have all led to positive sentiment and improvement in overall AUM comment down. I'm happy to share that MFD NPS score, Net Promoter Scores around performance, sales engagement have improved significantly during the quarter from #3 to #28 as of Q4 2024.

On the alternate business front to meet the growing needs of and family offices, we have strengthened our team to enhance our PMS and AIF offerings, both in equity and income. We currently offer over 13 products in PMS and AIM. Our good investment performance experience across our current offerings in PMS helped care in getting our products being sold in some of the organized channels through the launch of ADSL India Special Opportunity Fund, which is a category 3, where we are seeing traction coming from the HNI investors.

In order to further expand our AIF product offering, we have broadened in an investment professional to offer credit-related AFI to cater institutional mechanic customers. We believe both product offerings will further strengthen our alternate business vertical business line.

Our GIFT City operations gained momentum with the launch of a few products to invest in the overseas markets under the LRL scheme. We will launch the industry-first ABS global mutual equity fund. We strategically fit into merging market equity fund, enabling our investor to access and benefit from emerging market opportunities. We are now in the process of launching the CAD 3 AF, GIFT City, which will fuel in the ABS LMC, which in India.

The passive trend, as of March 2024, our passive assets stand at around [ INR 2,900 crores ] and have built a strong base of around 6.85 lakh years. To drive our passive business to the next level of growth, we have finalized a senior investment professional with extensive international experience to manage our passive business growth and he'll be onboarded very soon.

Moving on to financials. We are happy inform that we achieved our highest ever probability in FY 2024. Profit before tax is INR 1,008 crores, up 27% year-on-year, and profit after tax is at INR 780 crores, up 31% year-on-year. For FY '24, our total revenue, [ INR 1,014 crores, ] up 21% year-on-year. In Q4 FY '24, total revenue is INR 440 crores, up 35% year-on-year. Q4 FY '24 profit before tax is at INR 268 crores, up 48% year-on-year and profitable tax is at INR 208 crores, up [ 20% ] year-on-year. We are pleased to announce that the Board has proposed dividend of INR 13.5 per share for FY 2024.

So with this, I would like to conclude and open the floor for any questions that we may have.

[Operator]

[Operator Instructions] We'll take our first question from the line of Swarna Mukerjee from B&K Securities.

[Swarnabha Mukherjee, analyst]

Congrats on a good set of numbers. Three questions from my side. First, on the top line yields that we have recorded. So there is a sequential expansion. I wanted the same mix or anything else that into it from that expansion? And simultaneously, if you can possibly give some cuts on how are the yields in the specific product lens and maybe flow versus stop, how the numbers standing now? So that would be the first question.

Second is the monthly fee flow that has kind of seen a good jump in this quarter. I wanted to understand how increased schemes you were seeing the incremental flows and if you could also give some color on what kind of distributors these incremental flows are coming from?

And thirdly, on the cost structure. So this quarter vis-a-vis last quarter, there was an increase in both employee expenses and other expenses. So if you can just how should we look at this number panning out in the next year? And any one-offs is...

[A. Balasubramanian, executive]

Sure. I'll just ask Parag to take the first and the third question.

[Parag Joglekar, executive]

Yes. Sure. Thanks So on the revenue side, the increase in the revenue is in line to a greater extent with the AUM growth, which we have achieved and the mix of overall equity AUM and debt AUM. So that has resulted in growth, plus the growth also on the total revenue has been higher with the increase in the overall other income also. So those are the main reasons on the revenue side.

The other thing on the yield which you have asked, yield on the equity is in the range of around 68 basis. And on debt is in the range of around 23 to 25 basis. Liquidity is more or less around 12 to 13 basis. So that is on the yield side. On the expense side, people costs have slightly increased mainly due to some true-up on the day or the bonus, which has resulted in a slight increase on the VP side. On other expense, the main increase is some of the -- generally in the last quarter, you will see some uptick in the other expenses in most of the last quarter of my earlier years also. And the event which we conducted voyage was one-off in the other expenses, which happened in the last quarter. So those are the main reason for the uptick in expenses.

[Swarnabha Mukherjee, analyst]

Yes. Understood, sir. So sorry, if I could just follow up on these couple of responses, sir. So other expenses, next year, how should we build this? And I guess, voyage will be an annual event. So should we also factor in the come in the -- similar cost will come in the fourth quarter next year?

[Parag Joglekar, executive]

Yes. So the voyage will be annual, and it will come mostly -- most probably, we'll do in the same similar quarter next year. I don't know what will be the format, but if it comes in the same format, there will be cost in mostly in last quarter slightly.

[Swarnabha Mukherjee, analyst]

Okay. And the cost inflation between this year and next year, should we kind of build in a similar run rate as we have seen in FY '24?

[Parag Joglekar, executive]

Yes, people side, it will be more of an inflation plus maybe some of the recruitment, which we do on the sales side or the passive, which we are or alternate side we are trying to build and there may be. But mostly, it will be inflation plus something a couple of percentile up yes.

[Operator]

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

[Lalit Deo, analyst]

Sir, I have 2 questions. So first, on the SIP side, like we have done during the quarter. So could you give us a sense like in which of the schemes we are have been higher flows? And also, could you comment on the channel side, from where we are seeing higher flows?

[A. Balasubramanian, executive]

Lalit, just can you repeat your first question, what you do to the first one, I couldn't hear you properly.

[Parag Joglekar, executive]

Your voice is a little feeble, Lalit.

[Lalit Deo, analyst]

Sir, I was asking on close. So we have seen some material improvement in this -- during the quarter in the flow side. So I just wanted to understand like in which of the schemes we are seeing a higher growth? And also could you comment on the channel-wise growth in

[A. Balasubramanian, executive]

Sure. So one, the uptick that we have seen in the quarters when the renewed focus that we brought in to build SAP, given the fact our components improvement that we have seen across most of our schemes, value accretion to build SAPs in the last set. Second, the increased flows outcome through a mix of products such as Flexicap fund, funds, fund, PSC equity fund, fund, small and mid-cap fund are these schemes in which large we have seen flows coming into the SAP segment, through a mix of online platform as well as on the FAA channel. I think IFA channels, channels, we have seen a significant improvement over the previous quarter, with the monthly registration going roughly about 2 lakh 20,000 kind of numbers, which is [ 75,000 to 80,000 ] So that we have seen is now increased about INR 2.20 lakh, INR 2.30 lakh the range. That roughly about 45% to 50% has come through the platforms. And that has come from the distribution channel, which is our traditional distribution channel. And within that, dominant portion came from the MFD channel.

[Lalit Deo, analyst]

Go, sir. Sure. And sir, like last quarter, we highlighted that there were some redemptions pressures in some of the core equity schemes. So like how has that trend been in those schemes?

[A. Balasubramanian, executive]

I think one of the things that I've seen is, I think, gradually the value is used to be a little higher for as the beginning of the year. The rain coming down in some of the schemes that our outflows because of the category generally has not seen much inflows, second performance issues are also there. With the adding of performance vis-a-vis the peer group, and we've also seen a reduction in the product pressure in most of our schemes and improved performance in some of the categories as the flows have been coming in is also compensated for the line. I think we are seeing both. I think, reduction in the redemptions and increase the flows coming in for a few of our schemes. That's thing getting netted out.

[Lalit Deo, analyst]

And sir, just last one data-keeping question. Could you give us the SIP AUM at the end of the March?

[A. Balasubramanian, executive]

Sure. Sure. Prakash?

[Prakash Bhogale, executive]

It is around INR 69,168 crores.

[Operator]

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

[Dipanjan Ghosh, analyst]

First data-keeping questions. If you can give you ISOP expense for the year? And how do you forecast it for, let's say, FY '25, FY '26?

Second, your employee count March 31st. And the thirdly, you've given your site flows for the month of March, will be great if you can kind of give it a past 2, 3 months also will give some color of the traction and the pace of traction we are seeing in the channel?

Lastly, in terms of the product pipeline, how does it stack up for the next few quarters?

[A. Balasubramanian, executive]

The ISOP rates, the expenses is in the range of around INR 23 crores or INR 24-odd crores.

[Dipanjan Ghosh, analyst]

This will be for FY '24, right?

[A. Balasubramanian, executive]

Yes.

[Dipanjan Ghosh, analyst]

And how should we...

[Prakash Bhogale, executive]

The count is the around 1,049.

[A. Balasubramanian, executive]

Head count is in the range of around 1,400 plus, 1450. What was the other question?

[Dipanjan Ghosh, analyst]

The other was some on the FIC flow for the last 1 or 2 or 3 months?

[A. Balasubramanian, executive]

Yes. SAP flows, Dipanjan, while the number for the full quarter is close to about INR 6 lakh registration, the monthly run rate somewhere around 2.2 roughly 1.95 to 2 that's roughly range. I think we are seeing each month, the number is shown an improvement. Each month, the number is showing improvement. Even though I'm not in the month of April, too, we are saying the trend is continuing. I think the focus is to be somewhere around 2 lakh to 3 lakh kind of number that we which is now falling in place in the last quarter, and that momentum continues.

[Dipanjan Ghosh, analyst]

First the thing that I'm trying to understand is if I look at your March FYP market share, that's around 6.5% on a slow basis compared to around 5.7% in December '23. So if you can give some color on this movement between 5.7% to 6.5% broken up Jan-Feb? Or in case if you don't have the data, you can share some color on around how equity share like a 5 to 6.5 or we could expect stable or lower risk in the terms of the low market share on the FYP side?

[A. Balasubramanian, executive]

The way we approach SAP is given the fact that this agnostic performance and it's also something both in terms of adding new customer case as well as on gold-based investing. The idea is to have somewhere in the range of about 8% to 9% per market share. That's why we in fact the peak though it's true, it was the year 2019, 2020. This was about 13% to 14% kind of market shares that high number that we expect. Right now, I think by the renewed sales focus that is being pushed and also being to the market with the fluctuation. We'll definitely continue to work towards making these numbers.

[Dipanjan Ghosh, analyst]

Sir, if you share some color on the product pipeline going into the next 2 to 3 quarters on the equity side?

[A. Balasubramanian, executive]

In terms of pipeline of products, we have a fund, we in terms of pipeline of product, we have a corn fund. We already have an approval and plan to launch it post election. We launched it in the current quarter, the beginning itself. Given generally the vacation month in the month of May, employee election there, we will launch it before the June possible that one product we have, and it's going to be managed by along person internally. And we're also looking at filing one product, which is of course under drawing board. And hopefully, that as well, but more in the thematic category. And the AIF and PMS side, we are saying that would have increased the traction, given the fact that our performance has been pretty good in the PMS side, and that is being noticed compared the peer group in the same segment.

We're also seeing onboarding of our PMS products and as alternate channels. But also, I think you see some going to increased the flows in the PMS side.

[Dipanjan Ghosh, analyst]

Got it. If I can just squeeze one more question on this particular point. You have previously highlighted at the start of the year or the last year also, that expect your alternate and PMS business to become a meaningful portion of your revenue maybe 3, 4 years out. And probably today, you're laying the ground stone for that. So in terms of that, I mean, in terms the investments on the alternate and PMS. What should one expect that to be kind of elevated looking for a medium to long term and maybe even your employee additions or your employee headcount additions or your new fund launch related excess can kind of high, at least for the next, say, 12 to 18 months?

[A. Balasubramanian, executive]

Yes. the AIF, our leverage the existing sales that relationship built or the franchisee to build out an 8%. While that strategy continues each of the sales teams have got started to drive the PMS and AIF business, including product. In terms of team strengthening, we already have about 7 people with PMS sales as the main anchor. And they will of course work with sales force under the Head of Retail business to build that part overall business. But we've also been building direct team which is now close to about 30 that we have close about 40 to 50 people have, yes, that also will help us reaching out to the direct customers, including family of business. And we are creating a vertical under the sales team to cater to the growing needs of the family offices. All this put together, we believe AIF and PMS segment should see incremental growth coming better than what you have seen in the last 2, 3 years. That's something we are thinking but they do not have an increased significant costs coming from people, but benefit all approved from the existing team would be the focus there.

Lastly, what we are also doing. Finally, this year, there are 2 areas where we're looking at building size. One is on the fixed income-oriented credit opportunity, which also is pretty big. And we are now brought in a person who has the experience of having underwriting capability and managed successful full track record. We have come on board and he comes the high fashion of building a credit portfolio which can be offered to both the family offices, and our pension funds globally. That's one which I'm feeling that we'll be able to build.

Second, the real estate AIF, we have seen reasonably good track record in terms of not only, of course, performing value, even giving back the money to the investors, they close to about 16% kind of range of returns over last 3 years. We want to build on the base of the success that size as well as this year.

[Dipanjan Ghosh, analyst]

Got it. Sir, just one small question. Actually, if I look at share that, as I said, has improved from around [ 5.5% to 6.5% ] between December and March. Kind of similar assumption we made about the improvement in net equity flow market share, including SIP, there sort of flows, lump sum and everything?

[A. Balasubramanian, executive]

Yes. I think SAP momentum would continue. I think that can be assumed, I will try and of course more momentum on SAPs. See, one of the thing is the widespread acceptance are entire sales team to drive on a single minded the foreboding this category is very much alive that being pushed accordingly.

[Operator]

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

[Prayesh Jain, analyst]

Just a follow-up on the previous question. How has been the trend on the overall equity sale on a net basis? What has been the ship has been doing really well for us, but what has been that overall sales like equity sales for us and in the current quarter versus the previous quarter?

[A. Balasubramanian, executive]

Yes. I think overall sales, Prayesh, is actually improving on a quarter-on-quarter. This quarter we have a net equity sales. Earlier, we used to have equity used to be high, which, as I mentioned earlier, that trend is changing. And in the month of -- quarter March quarter sales and net equity flow though, we don't have the numbers disclosed generally, but that's something I'd say in the month of the last quarter, sorry.

[Prayesh Jain, analyst]

Last quarter, I didn't positive...

[A. Balasubramanian, executive]

It's flows largely through a mix of our thematic funds as well as one or two actually managed funds, including funds like Flexicap kind of funds and we also see inflows coming in the fund.

[Prayesh Jain, analyst]

Got that. Perfect. And of the momentum in ships that we have witnessed, where it's coming from the online distributors or is it across channel, could split at that for us?

[A. Balasubramanian, executive]

Yes. Average addition number really is one of the question, broadly is coming from roughly about 45% -- 40% to 40% comes through the online channel platforms. About 55% to 60% comes through the traditional channels, within that dominant component comes from the MFP channel.

[Prayesh Jain, analyst]

Okay. Got that. And sir, on the EV front, you mentioned -- I think the aim would be to basis for the equity? And how is the trend in the equity yields in this quarter?

[Parag Joglekar, executive]

So yield is, Prayesh, is 68 basis on equity. The slight drop as a telescopic pricing is as the AUM goes up, there will be slight pop, so there is slight drop in the yield on equity.

[Prayesh Jain, analyst]

Okay. Okay. Got that. And on the debt side, do we see any improvement in given possibly next couple of quarters or 6 months or to your perspective that we could see some movement towards the longer duration effects?

[Parag Joglekar, executive]

Yes. So if the movement happens towards longer duration, the yields are generally high in the so we would able to see an uptick on that side. So currently, this slightly showing some improvements, but still is a little long way to go and maybe another couple of quarters.

[Prayesh Jain, analyst]

With last question on my side. For FY '24, what will be your revenues from the PMS and AIF segment?

[Parag Joglekar, executive]

So PMS and the alternate asset revenue overall will be in the range of around INR 100-odd crores.

[Prayesh Jain, analyst]

INR 100 crores. the alternate includes PMS, AIF and...

[Parag Joglekar, executive]

And the offshore, onshore and as well.

[Operator]

The next question is from the line of Abhijit from Kotak Securities.

[Unknown Analyst]

So the first one on the yield, like for some of the peers, there's been some year-end adjustments true-ups as well. Has that also played into moment for this quarter?

[A. Balasubramanian, executive]

Abhijit, our yields remain more or like flattish. There is no per say any I understand what you are asking, but no, nothing, nothing of that. Increase in the overall AUM, which has increased if you are specifically asking on equity, it is an overall increase in the AUM.

[Unknown Analyst]

Got it. And sir, second was that the 40%, 45% contribution from online channels that you mentioned, I mean, could you just elaborate like this is on an account basis, flow basis and are these like the grower type of channels or are there any other digital online channels that are contributing?

[A. Balasubramanian, executive]

Yes. basis on the on account basis, I think value-wise will be a little lower and values the traditional charge that would have given higher.

And in terms of online channels mostly is coming from -- of course, as you know, today, the large all-in generator is only about top 3, 4, which is Grow, ETMoney, and the one to use large flows. In this case, I think the large contribution would have come from us -- from 3 -- 2 top 3 platforms.

[Unknown Analyst]

And sir, Bala sir, generally qualitatively speaking of the next year, given that the redemption pressure is sort of easing off, do you foresee product getting included in some of the larger distribution channels and that sort of creating a stronger run rate of growth? And how close are we to kind of get it done so that the next year's floor run rate is probably substantially better than last year?

[A. Balasubramanian, executive]

That's the endeavor, I think if you look back some of the steps that we have taken have to strengthen our -- on the people side, right, from investment to sales to rest of the functions. They definitely bring in new results and commitment to focus on every segment of the business model. Investment performance is of course a key, which, of course, under the change that we have made and the existing team members who also got high responsibilities, performing quite well is being noticed.

The cash are narrowed quite significantly, that used to exist maybe about 1, 1.5 years with request to the peer group. And even in terms of upgrade of our teams from ranking point of view. Also, we are seeing a quarter-on-quarter improvement. The one of the reasons we've also seen pick up and our recognition is also coming at a mention NPS score which I mentioned about all this is a reflection. I think one of the things that I witnessed the positive change when we did an annual investment event in the month of February, we not only had more than 1,000 people turned out for that, we also saw the reaction from the partners who came on board. We have been witnessing as growing substantially well then we have seen a period of challenge. Our channel challenge period, I would say.

And the other thing, and this time around, they feel good. They actually came on that event that we had. Also was quite promising.

[Operator]

[Operator Instructions] The next question is from the line of Madhukar Ladha from Nuvama Wealth.

[Madhukar Ladha, analyst]

And sir, 2 key questions. First, can you give the number of the average flow for the water you've given for the month of March, but can I get an average now?

[A. Balasubramanian, executive]

Sure. You want to take?

[Parag Joglekar, executive]

It's around 2 lakh on average.

[Madhukar Ladha, analyst]

No. I mean the flow number.

[Parag Joglekar, executive]

Okay.

[Madhukar Ladha, analyst]

Not the registration number.

[A. Balasubramanian, executive]

Give us a second.

[Parag Joglekar, executive]

[ 1,143 ] average and total around 3,429.

[Madhukar Ladha, analyst]

Okay. Got it. Sir, on our equity market share, tax is at 4.9%. So we -- it seems that still on a slow market share basis, we are probably lower, right, than what our stock market share is because market has been positive. Our teams have been performing well. And yet we are losing market share. We've lost sort of 10 basis points of Q-o-Q. Is that reading correct?

[A. Balasubramanian, executive]

Yes. Probably from the number point of view, ordering is right. I think the way I see is, Madhukar, is one, when you look at the past trend, and how it's come the March quarter. While we seeing panning of rate of followers a little higher and that they now getting narrowed and increased traction coming on SAPs will start reflecting in terms of not only stabilizing the market share movement. And it's also speaking start giving at least an uptick on the market share. So that's the way we see. The number what you're saying is right, but that's the way that we've seen.

[Madhukar Ladha, analyst]

Right. So obviously, what you're saying is that trends are improving. And I think first half, and now we are seeing some inflows. And we've, in the past, highlighted that certain channels we don't have access to, and those are some of the disadvantages, right?

Now given this context, how do you think that and over what time frame do you think you can actually go back to this at least 5% sort of slow market share. I know it's -- and you know what -- apart from performance on the distribution side, what else can we do or what are we doing? I also noticed that you've done well on the direct side because we're seeing in equity, the direct contribution has picked up meaningfully, I mean, 200 basis points on a Q-o-Q basis is quite good. So maybe some color there will be help.

[A. Balasubramanian, executive]

Yes, sure. See, as you rightly said, Madhukar, one is investment performance is only one part of it. I think sales productivity improvement, which we called the sales excellence model that we have set aside and making some core changes within the sales team structure to bring in much ARPR focus, identifying the location in which -- where we have a huge potential, identifying the channel partners where we have huge potential in terms of improving, looking at the active personnel that they generate versus the continuity give it to us bringing sharper focus on each of these areas. And the head of retailer joined us very recently, also have been driving the whole team, necessary changes in order to increase the sales productivity as actually increase the output from every location which operate. So that's one agenda that.

Second is building SAP always been quite successful as the building SAPs and various markets volatile period, with all the days of the gold-based investing and bring them back as part of the narrative to NPS team to the market with both on the steps that we have taken on the side and improve that we're paying in a product being a 11 from the customer point of view, therefore, have the high engagement for increase productivity. So that's something we are doing it.

Support channel. I just mentioned in my speech, the support channel that you have created earlier channel. We felt that some of these channels, which can attribute to the sales team directly from retail sales team point of view, we are the sales team so that there will be a higher synergy that can be created to make each of the channels to contribute overall subsidy retail. And last is actually a digital platform engagement is also essential, given the fact they help in terms of getting new customer additions. So that our strategy to ensure that we are able to highlight some of the product which can come as part of the recommendation later on ongoing disengagement and show them actually the work that we have planned and how the performance of the schemes are coming, how those engagements to ensure that we are able to get participate in the customer. In fact, in the quarter of March ending, we added close to about 3.5 lakh new customers that we added during the during quarter.

[Madhukar Ladha, analyst]

Understood. And anything special to read into the direct contribution increasing in equity AUM mix?

[A. Balasubramanian, executive]

Yes, that's basically as you rightly pointed the exclusive team that we have created and then we branded under the name of CAT, which is basically to ensure that we provide a better service to those customers and endorse them on a customized basis and We are seeing the high engagement that the team has been creating and where we are further strengthening the team to close about 50-member team this year, and that enabled the focus, high engagement would help in terms of increase the tariff action. The ultimate idea is actually make the direct team is more like a wealth manager kind of concept, helping building a holistic experience for the customers and thus increase the share of their wallet share to both our equity schemes and others including PMS.

[Madhukar Ladha, analyst]

So on the passive side, there has been some reduction in AUM, not a lot, but there has been some small reduction. So any comment on there? And second, I wanted to ask again on the passive side, is there any possibility of the EPFO money being given to additional set of asset management so yes, would it -- at what time, what is your expectation of there?

[A. Balasubramanian, executive]

See on these -- the passive side reduction was largely on account of maturity of some of debt-oriented index we had. Of course, the money has gone to the mutual fund scheme, it got shifted from ETF to -- sorry, index to mutual fund. On the equity side, we have seen growth both on AUM as well as customer addition. As far as the EPS are concerned, of course, we do have a participated in the bidding process, keeping fingers crossed, whether we'll improve in the mandate.

[Madhukar Ladha, analyst]

So when is expected on that? And how many companies is the EPFO office expected to select now because I think Nippon was the last addition. And then you're talking that again, they're sort of invited bids, so just wanted to understand what frequency does it happen?

[A. Balasubramanian, executive]

There have to be no idea in terms of how many people. I'm sure they will shortlist names, right now, no publicly available information on this.

[Operator]

We'll take our next question from the line of Abhijit Sarava, an independent Investor.

[Unknown Attendee]

So sir, I just had the question regarding -- if I heard right, that in the call, somewhere you mentioned that ASPs shares during 2019, '20 used to be around 14%, 15%. Is that right side?

[A. Balasubramanian, executive]

Yes, on FYP, Abhijit.

[Unknown Attendee]

Yes. If you can understand that why are the share from there today is currently 6.5%? And given that you are targeting around 8% to 9%, so how we will reach there and within what duration? And secondly, on the equity redemption side, it is very heartening to see that the redemptions are not happening or it has come down, which is somewhat counterintuitive as well because as a higher -- we said the high level of market people who may want to book profits. How -- so what is changing fundamentally, if you can help us understand? And if I tie this with something which was said by an insurance company, in the ULIP funds they saw actually a decent redemption happening in the later cohorts in the after 5-year cohorts. So somewhat, there's a bit of dichotomy as well and maybe something is changing fundamentally. So if you can help me understand and share your thoughts on these 2 questions. So it will be very helpful.

[A. Balasubramanian, executive]

Thanks, Abhijit. As far as SAP is concerned, of course, we took a really more age of pushing SAP as a fund, having seen market cycles, that SAP is the best way of building equity that way we build our leadership position till about 1920. And for a variety of reasons, volatile period and then more and more competition coming in and a few large AMCs were underpinned in the industry, which all of us know that the large funds and it may not have major assets till 2019, '20. They actually upped the game in the overall business growth. Therefore, the growth for some of them actually were exceptionally higher than even the market average because they were under-penetrated. So that led to some fall in shared. And of course, there are certain schemes that are blue guys where we got 1 of performance, let performance for some for a brief period of time, also led to a drop in SAP, which I feel that we can get back. SAPs, it's something that we've been promoting as much to the performer. That's the only way we can build SAPs from a longer-term growth perspective. That narrative comparably with driving to the team that irrespective of that we must build SAP. Ultimately, investors do get benefit in the long term. And there is no much difference you will find between good performing fund or bad-performing fund if the investment is made in SAP full terms, that's something communicators making it more strongly and making them realize doubling size then. That's something I did want to highlight.

The other part is, in terms of growth, I think as I mentioned, I think if we keep pushing the engagement that we have on the investment side, engagement in the ground level sales production, sales productivity focus that is bringing in, all put over there should only help in getting renewed participation coming from some of our existing channels have they been Secondly, new customer additions continues to remain that big area of focus, all put together a strategy that renewed focus on emerging market expansion all of them put together, it should help. And also the ABC expansion that they are paying across the country, should help sales in getting money coming from other customers customers after overall financial business, all put together I feel that the overall improvement will keep progressing.

[Unknown Attendee]

On the redemption side, if you can help me means what is actually at customers from redeeming. It's a good sign, but are you feeling some change in the customer behavior at the customers or the investors end?

[A. Balasubramanian, executive]

Generally, the reduction is largely in of profit booking and then come back and more may -- at the same time, I think historically I've seen the trend, the -- whatever the market, either the competent or volatile, we see that as the trend emerging. But otherwise, I only see the incremental participation, the good mix of from existing customers only customers that. It is very difficult to find any kind of trend on that. And given the fact at the broader pace for MF and the renewed funds bring on table all put together should only help in looking at the increase improvement in sales, just looking on the numbers.

[Unknown Attendee]

Sure. Sure. That's helpful, sir. Sir, one last question, if I can just squeeze in. So as you mentioned that the equity yields are around 68 basis point handle and given that there will be a telescopic effect on the yield and assuming the normalized market, so what kind of yield one can, especially one can expect over the next year?

[A. Balasubramanian, executive]

I think more or less, we have ended on the other question as well. As it stands today, we'll be able to maintain the overall the margin expectation coming from both an equity and fixed income. Maybe on the fixed income side, we'll see there is scope for that to improve a bit given the fact the product mix within the fixed income could also change here.

[Operator]

[Operator Instructions] The next question is from the line of Janvi Jave from Kaizen Partners.

[Unknown Analyst]

Yes, I just wanted to ensure that during -- like there has been a certain increase in the influx of the passive mutual funds getting like a predominance in the market. So like how do you believe that in the next 5 to 7 years as people would shifting to passive mutual funds that there would be very less opportunities for like market share and everything. So how would you envision in the next 5 years in comparison to like these mutual funds this passive mutual funds as compared to active and majority of the inflow will be -- has been predicted will be in the vertical only?

[A. Balasubramanian, executive]

As I think we look at operating products to customers across the segment of the market will be -- will remain the active managers both on fixed income and equity. And at the same will also build our capability and product offering, the capacity As you know, passive in the last year, if you see active funds have done far better than passive. And before that passive has better than active. Given the fact that Indian market have got a potential to outperform the market, that I think active will continue to be a focus area. But in our case next say for 3 years, we are building our capability on the backlight. Hopefully, we could see momentum coming in the past as well. And within the passive, we'll bring fine focus between product, which can be more profitable as well by looking at the product differentiation in that space. But I think from investment point of view, we will see growth on active will continue to be the driver for some more years, while along the side, passive also will get built.

[Operator]

We'll take that as a last question for today. I now hand the conference over to management for closing comments. Over to you, sir.

[A. Balasubramanian, executive]

Yes. Thank you, and thanks all of you for taking time out on a Saturday to attend this call. And with this, I'll conclude Q4 FY '24 earnings call. Do feel free to reach out to our HR -- IR Head, sorry, Prakash Bhogale for any queries that you may have. Thank you.

[Operator]

Thank you, sir. On behalf of InCred Equities, that concludes this conference. And you may now disconnect your lines.