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Ladies and gentlemen, good day, and welcome to the Anand Rathi Limited Q2 H1 FY '23 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. The statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Feroze Azeez, Deputy CEO. Thank you, and over to you, sir.
Thank you, [indiscernible]. So good evening, good afternoon, everyone. Thanks to join us for the earnings conference call of the quarter and the half year ended 30th September 2022. I'm joined with Mr. Jugal Mantri, our CFO, Group CFO; Rajesh Bhutara, who is our CFO; Vishal Sanghavi, who is our Head IR; Chethan Shenoy, Director and Head of Product and Research. And we're also joined by the SGA team, which is our Investment Relation advisers.
Let me begin with sharing a piece of good news from our perspective. In the recently published report by MP for the financial year FY '22, we were ranked among the top 3 non-bank mutual fund distributor as per gross commission. And over the previous financial year, the growth in the mutual fund trail revenues was almost about 72%. And in the B2C category, we were the highest if you exclude the aggregator B2B business models.
Now coming to the strong performance we've had in this financial -- in this half year, not just on the flagship business, but on the all 3 of the businesses, including the Digital Wealth and the Omni Financial Channel Vertical address. Our flagship business, Private Wealth grew by about 15% year-on-year on AUM in spite of a very lackluster market and a 3% downtick [indiscernible] 30th of September, both years and a 9% increase quarter-on-quarter on the AUM.
On the back of huge penetration into the wallet, especially during sideways movements or bad markets and uncertainties, we were able to establish our credibility as [indiscernible] much better during bad times. So penetration has resulted in AUM increase and also clients refer you more clients due when their trends are struggling with its other managers. So that's why our net mobilization numbers have doubled when compared to the same period previous year.
So this gives us immense confidence during sideways movements and not such great times and more volatile times, if you're able to do well. And during good times, the AUM also increased because of the market movement and also due to the sentiment where people want to invest more money. So bad times, penetration and references become higher and other 2 growth verticals do very well during great times. So both all the 2 correlated variables help you during opposite times.
So that's why you see almost about 111% jump in our net mobilization numbers for the first half year. And of course, you would have read that we had a great increase in our client base. In terms of year-on-year, we've had a growth of 19% in terms of client addition, and we are inching towards our target of 10,000 crores, 10,000 families in a calibrated fashion. And the pace of client addition is seeing very sharp tick as well.
On the Digital Wealth vertical, the AUM has increased by about 23% to 949 crores, which is a business, which helps us standardize and scale it using the help of technology and also helps us be embraced with the changes in technology, which can be there in our business on the Private Wealth side as well. And clients have grown by about 14% year-on-year to 4,065 clients in the Digital Wealth verticals. [indiscernible] business is a strategic extension for capturing wealth management landscape to service retail clients through mutual fund distribution by using a tax platform or providing them technology platform.
As of 30th of September, we had close to about 5,500 mutual fund distributor associated with [indiscernible] administration and reporting of about INR 8,000 -- INR 85,900 crores, which we currently only monetize as a subscription fee, but later in the life of this business when we find a proper monetizing, too.
So I personally think that -- I will stop here, and I will request Mr. Jugal Mantri to say a few words and take us through the financial numbers as well.
Thank you very much, Feroze. Good afternoon to all. Let me also first begin with a happy note to say that the Board of Directors has declared an interim dividend of INR 5 per equity share, which is 100% of the face value. This is in line with the companies that you want to regularly reward shareholder. Despite all the external challenges, the company and these subsidiaries have posted a strong performance for the quarter and half year ended September 2022, backed by an overall improvement in operational efficiencies.
Our consolidated AUM as on 30th September 2022 stood at INR 35,822 crores, which registered a growth of 16% Y-o-Y and 9% Q-on-Q. Our consolidated revenue for the quarter ended 30th September 2022 stood at INR 138 crores as against INR 104 crores in Q2 FY '22, registering a growth of 33%, while revenue for first half in financial year '23 stood at INR 272 crores as compared to INR 202 crores in the previous first half of financial year 2022, registering a growth of 34%.
Our PBT for the quarter stood at INR 58 crores, registering a growth of 40%, whereas PBT for H1 FY '23 stood at INR 110 crores, registering a growth of 37%. Our PAT for the quarter stood at a healthy INR 43 crores, registering a growth of 41% as compared to INR 30 crores in Q2 FY '22. PAT for H1 FY '23 registered a growth of 37% and it stood at INR 83 crores. PAT margin stood at 31.1% in Q2 FY '23 and 30.4% in H1 FY '23.
EPS, earnings per share for Q2 FY '23 stood at INR 10.3 per share. And for first half FY '23 stood at INR 19.8 per share, registering a growth of 41% and 37% Y-o-Y, respectively.
Return on equity for the first half ended 30th December 2022 stood at a healthy 43%, which was 41.7% in the financial year FY '22. Other area where we witnessed a strong momentum was [indiscernible] client families. We have added almost 1,250 client families compared to same period last year. Our total client families as on 30th September 2022 stood at 7,928.
In the last 12 months, we have added 37 relationship managers on a net basis. We continue to remain optimistic about the business potential and will drive towards our vision while assisting our clients achieve high-quality experience in the journey of wealth solution.
With this, we will now open the floor for questions and answers. Thank you. Over to you, [indiscernible].
[Operator Instructions]
The first question is from the line of Rohan Mandora from Equirus Securities.
Sir, the first question was on the [indiscernible]. If you could share what was the growth for the quarter and split it across equity [indiscernible]?
Okay. Gross or net, you mean?
Gross. Gross [indiscernible].
We only look at net because mutual funds when they exit one fund and they're recalibrating their portfolios to our model portfolio, there could be very large gross numbers, right? In a mutual fund, if I have 5 schemes when I'm changing 3, then the gross number will be very deceptive. So net number, I can give you some color on that. And the gross number is very, very distorted. Of course, from the M&A standpoint, gross numbers and net numbers can be given to you. I'm sure Jugal and Rajesh will be glad to add there.
So now coming to the net number, which is almost about INR 2,500 crores for the first half year. A large portion of that, which is almost 2/3 of it goes into equity mutual funds,because we believe that when markets fall and if you have seasoned your investors to expect the market fall because that's the nature of the beast, they don't look for reasons for the fall, but they [indiscernible] actually take action.
So the last 6 months, markets have average been lower than they were in the previous 6 months. Hence, we've had our net mobilization largely in the equity mutual fund side of almost about INR 1,500 crores to INR 1,600 crores.
And from an industry standpoint, if you leave SIPs out, the total net mobilization in the mutual fund equity mutual fund has been INR 79,000 crores for the first 6 months. And if you leave the [indiscernible] number of average INR 12,300 crores, then the total net mobilization in terms of lump sum, which is the business we are in, unlike several other aggregators [indiscernible] 6,000, 7,000, out of which 1,400, 1,500 or even a little more has been our market share in terms of net mobilization and it gives us immense pleasure because we are buying low and creating a potential for higher returns for our clients. Otherwise, it's an academic statement to by-law.
Jugal, if you may want to add a few points and some gross numbers, I think, you will have on the slide.
No, you are saying on numbers that in the first half, we have added about INR 1,650 crores in mutual fund equity mutual fund and there was some exit in debt of about INR 200 crores, so net addition was about INR 1,500 crores in the equity mutual fund. And in case of MLD, there was an accretion of about INR 725 crores. And a small accretion was there in other products to the tune of INR 300 crores to this.
So all put together, we have -- there was net accretion of INR 2,500 crores in the first half.
The MLD growth?
The MLD growth issuance was about INR 2,300 crores.
Okay. And the split between [indiscernible] primary and secondary business?
So it's all right -- so out of INR 2,300 crores is largely it's primary only.
[indiscernible] just wanted to understand the reason for the same. And are we looking at any replacement form on the board?
So Rohan, as you are aware since you have been associated with Mr. [indiscernible] since the last 3 years, he has been playing nonexecutive roles in [indiscernible]. He was a nonexecutive director on the Board. And having been decided to pursue his ventures in the financial services and to avoid any conflict of interest or overlapping, he has opted to be relieved from his position as nonexecutive director. And there is no -- we have got independent directors, more than 4 independent directors, who are more adequate and as per the requirement of the company's law. So we don't see that there will be any requirement to have any addition on account of any non-executive director on the board.
Finally, if you can share what would be the trade income coverage of 6 months for total?
[indiscernible] trade income, we have seen good traction in the trade income also. And as of now, the trade income which is getting covered. So this is largely about 85% of the fixed cost that gets covered by the trade income.
I would like to add one thing. So we've had a 33% increase in trade income between the same periods from the first half year this year. So the increase is 33%. Overall, revenue increase is about 35%. In spite of markets not supportive. If they are supportive, then the ratios could have been far better. So our internal target of having 50% trade and 50% upfront revenues from different sources remains, and we are inching towards that is what is our stance internal targets of going to 50-50.
And of course, like Jugal said 85% to 90% of the trade revenue covers the fixed costs currently.
[Operator Instructions] The next question is from the line of [indiscernible] Private Limited.
First question is what is your growth outlook on clients within the 50 lakh to 10 crores bracket?
Growth outlook in the INR 15 lakh to 10 crores bracket. Is that what you said?
Yes.
See, our focus segment is INR 5 crores to INR 50 crores of balance sheet size, okay? So we don't look at 50 lakhs to 10 crores. If somebody has got [indiscernible], the house he lives in is not counted. If the person has between INR 5 crores to INR 50 crore balance sheet size, putting all assets together, then [indiscernible]. In that segment, we think our growth of 20%, 25% in client set is what is our projection from our business standpoint. Of course, [indiscernible] from this segment perspective. So getting the similar growth numbers for our business should be possible given the fact that now that we have been a listed company for close to a year, it creates a perception or at least creates a basic governance kind of a mindset, and that's as you acquire more clients. So 20%, 25% growth in the target segment, which we currently operate.
Do we mandate the clients who start with INR 5 crores? The answer is no. We start with 50 lakhs to 1 crore as well because if we are able to deliver what's the expectation we are creating in the minds of the client over a period of time gives us a larger wallet share because we are very mathematical when it comes to [indiscernible].
Right. And sir, what would be the cost of AUM acquisition in this bracket versus the above 50 crores bracket?
See, the cost of acquisition of AUM?
The cost of AUM acquisition. I'm not looking for a direct number, but whether this would be higher than the INR 50 crores and above bracket or north. Just if you could give some color on that.
See, the cost of acquisition and AUM addition is negligible. What it is now if I have RMs who are -- I don't have a separate acquisition engine, which acquires the clients. So RMs are the person who take references from existing clients, and I don't pay existing clients [indiscernible]. But over a period of time, every decision we take, we give mathematics for our clients better prudence in terms of decision making.
For example, now if somebody says that you've got 40% of the money in real estate, I would compute the per annum return of its real estate portfolio, which you would have never computed. None of us as Indians compute what is the per annum return of a real estate portfolio and still have half our money there, quite a few HNIs do. So when I compute and show him that he's got 8% compounded return in multiples of value, it will look larger. But when he sees 8%, then it is an eye-opener for him, then he is putting his property [indiscernible] to sell, which I don't pay any cost for. And then when he sells those properties, he consolidates money with us.
So if he says, I'm doing very well in mutual funds, and I take a transaction done from him and then tell him if you followed my model portfolio, you would be richer [indiscernible] if he is richer, then he sells his mutual funds from competition or transfers [indiscernible]. So everything is mathematical. So there's no cost which can be ascertained to asset acquisition or client acquisition, if you say what is the cost, I would say there will be some cost because I do physical events as well.
Pre-COVID, we used to do a lot of physical events [indiscernible] where we get 200 HNIs in the room and give them a presentation. Those are now far and few between, but every event we used to call cost us an average of 5.6 lakhs, which in this financial year would be 4, 5 such physical events, which could have gone up to almost 30, 40 events before COVID. So our cost remains low because we do -- we have done about 100-odd webinars where there are about 30, 40 participants each as an average, and there is no cost to that currently.
Right. And lastly, sir, how do you see the Digital Wealth segment scaling up? And what do you see are the key challenges?
Digital Wealth, well,if you ask me the key challenges there are to have an ever-changing technology to make sure that we're not just coming to what market does in the digital space because in the digital space, people are focusing on reporting. We are looking at technology to create advice more than report because reporting is one element of it and execution. So technology for execution and reporting has reached the epitome in the industry of Fintech business. But advice creation mathematically and using technology for that is what I think is a challenge with the industry segment.
From our perspective, for us to have a Digital Wealth presence is to create a standardized offering, which is what we have, we just run more portfolios. In spite of having a private wealth output with 8,000 families approximately, I try and fit all the clients to more portfolios, which are centrally managed and implemented in different markets. So if you speak to our Delhi private banks of RM and speak to [indiscernible], he's going to give you very, very similar, if not identical advice. So if I have a standardized proposition in the private wealth business it makes sense for me to see how I can power my RM to not manage 50 clients, but manage 200 clients with technology. So it's always going to be a digital model. It's not going to be a pure digital model, assuming a U.S. kind of an extrapolation to the Indian context [indiscernible] very different. U.S. has been investing in capital markets [indiscernible]. In India, my dad never invested in equity.
So extrapolating the technology strategies there to this side of the content on the world may not be as relevant. So coming back to your pointed question on the technology side, the biggest challenge is to use technology to create advice. Our key strength has been standardization.
In spite of standardization, not having a huge appeal in an HNI, it's difficult to challenge that, sir. I will not customize, I will standardize. But finance will reach clients only if you standardize, you can't run 8,000 different portfolios and leave the judgment to 270 RMs and assume that you will get the best efficient portfolio, right?
So that's our strategy. So if I have a standardized, if I have been able to bring 270 RMs to the same page that we all give our individuality and create similar portfolios, I have the best choice to use technology to scale because the toughest part is to convince the client that you don't need customization. Customization might sound fancy, it is more marketing, but finance will never reach you if you customize the portfolio because the guy is sitting there in Bangalore or in Coimbatore, will not know the best finance to create risk rewards, which are efficient. It's like an asset management company saying the sales guy will be the fund manager.
Sorry, a longish answer to a very pointed question, but I couldn't have articulated that in a few words from my side -- from my perspective.
The next question is from the line of [indiscernible] Capital.
So my first question is regarding the RM addition. So we have not added RM for last 2, 3 quarters, whatever strategy was, right? And in this also what we have [indiscernible] RM, so what was your going plan going ahead? How many AMs would you be making RMs and how would your ratio between RM and AM, the AMs will be converted to RMs going ahead?
And secondly, the second question is on data point. Can I get any break-up between mutual fund other securities and other which you usually [indiscernible]?
Repeat your second question, though.
What is the break-up between mutual fund other securities [indiscernible] the data in the last quarter?
Yes, sure. So firstly, let me throw some light on the RM additions. Our RM addition strategy is going to be completely driven by how many people whom we can currently absorb and make them sizable RMs. So over the last 1 year, given the uncertainty, we have gone a little slow, we've still added about 30-plus RMs from the [indiscernible] largely, lateral hires also happened.
Currently, we continue to follow the principle of 1 relationship manager mentoring 1 AM, which has worked beautifully for us. And we have a small group of people who need to reach INR 40 crores, INR 50 crores of assets, and that 70 RMs is the limit we put. So if those RMs cross the bridge, then I have more capacity to transmit the rest of them from the AM to the RM [indiscernible].
So even if I delay an AM's promotion by 3, 4 months, it's just [indiscernible] and increases our chance of success when he actually transforms [indiscernible]. So what will we currently look at, we think that this ratio because we have not promoted as many, there is more right individuals who are currently potential RMs. So you may see an inverse correlation between the RMs promoted to what can be promoted because the rest of them have -- we've created a larger pipeline in the interim period.
And from an AUM break-up standpoint, I can just tell you conceptually, but Jugal is the best person to answer very, very pointed numbers. So when we look at our client strategy, we look at 2/3 of the money in mutual funds, 1/3 in MLD and some work in progress, which is raw material coming for alignment into these 2 products largely as we recommend only there 2, 3 products today, including net equity mutual funds and MLD.
So you would see a very similar proportion. It's not academic that these proportions are not being followed in the marketplace. So that's why you will see almost about INR 18,000 crores, INR 20,000 crores of mutual fund assets, about INR 9,000 crores, INR 10,000 crores of MLDs, and there is a lot of money, which is work in progress, which just moves to our [indiscernible] account and then we align it to our strategy where the client get efficiency as the prime driver and decision-making criteria. Jugal, if you may want to add a few things and give pointed numbers?
So I think what you said is that in terms of the relationship manager efficiency, one thing which is absolutely clear besides 271 relationship managers, we [indiscernible] a strong force of 265 account managers. And as you have rightly said the addition to the RM fraternity, that is a graded process. And these people are upgraded and added to the RM fraternity over a period of time. So just to answer what [indiscernible] we have got a very, very strong force, which is up or elevated in next 18 to 36 months' time and that itself has got the potential to double our RM force to almost 500-plus number of RMs.
The next question is from the line of Devesh Agarwal from IIFL Securities.
And many congratulations on good set of numbers. Jugal, I wanted to understand better [indiscernible] number that you shared. You said INR 2,300 crores is the number for the first half. And if I recollect rightly, in the first quarter, it was INR 1,500. For the second quarter, are you talking about INR 800 crores of gross [indiscernible]?
In the first quarter, the gross issuance was INR 1,100 crores, okay? And in the second quarter, it is INR 1,235 crores.
So [indiscernible] issues?
Out of INR 1,100 crore, INR 350 was secondary issue, right? And this quarter, the secondary number is 180.
Hundred and...
180.
180. So broadly, the yields that we are getting stand around 7.5% on the entire revenue?
Yes, around that.
Around that. Perfect. And secondly, in the past year, you said that the first half [indiscernible]...
[indiscernible] you please continue.
No, please continue.
The yield, which was about 7.5% in the first quarter, that is around 7% in the Q2 on MLDs.
Okay. Sir, generally, you have said in the past that our first half is relatively little and second half is much stronger. And we have already achieved INR 83 crores of PAT in the first half versus our guidance of INR 155 crores for FY '23. So is it this time you think that the 2 halves would be equal or you are looking to upgrade your FY '23 guidance?
So I don't see any reason that second half will be equal. Historically, what we have seen that will definitely -- that holds true, and I'm sure that the second half will also move in a similar fashion as it has happened in the past also.
And as far as guidance is concerned, we have already achieved 50%, 53% of the guidance, which have been given on the profitability front.
So internally, our belief is that as long as our performance or the likely performance if it is in the range of 10% of the guidance given though it can be like 5% to 10% of overachievement. Let the guidance remains same instead of giving number on every quarterly basis. So that is why we are sticking to the guidance, which have been given in the beginning of the year.
So there is -- just for year for the guidance, which we have given, we are still holding that. And we don't see any reason to believe that this year's second half will not be in line with what has happened in the history.
I would like to clarify one thing. [indiscernible] you said is 7.5%. Like Jugal has said the yield is 7%. And yield is a number which generally in our business is referred to the per annum income of a specific instrument, okay? So when you look at an upfront of something which is a 5-year instrument, if I calibrate the yield on the market, average market value, of all the 1,000-odd products, which are matured is about 1.17% per annum, okay? And that will be the yield. Yield is always per annum generally, right? So annualized yield, what happens in a mutual fund, like, for example, I fund my 11 mutual fund model portfolio, which I buy from myself and most of our clients end up buying the same 11 mutual funds. I make 1.11% post-GST, okay?
With that 7% number, it might make you believe that you're earning more on mutual fund -- on MLD. If your mutual fund commissions are on market value, face value recognition of 7% is on face value, right? If the product gives you a 13% IRR, then if you look at the market value, average market value it was 92% of our MLDs, which have matured and given the desired coupon. None of them have ever lost capital in spite of 1,024 maturities being done from December 2012 [indiscernible] issuances.
So point I'm trying to get to is, anybody looking at our business, thinking that yield of MLD is 7% may be looking at -- that is not the yield. Yield has to until when I look at bond portfolio, bond deals mean the per annum yield at the purchase price in secondary market. So that's what I wanted to clarify. We out of curiosity work backwards to find out the 1,000 maturities. What did I end up making per annum. So if tomorrow, if I don't want to do an MLD, an equity mutual fund will give me the same ease, it's only accounting difference from an upfront to 3 basis.
Yes, that is very clear. Just wanted to know one more thing. The average duration of our MLD is now 5 years, what you are selling?
Yes. So what we have is we -- all our decisions are driven by client objectives. After COVID and given where the markets reached, we thought back our MLD, which is a 3-year MLD and has a lesser probability of success because the 2-year additional, and that was -- that's why August 2020, we did a lot of mathematics and realized that even if 1 year gets wasted in a 5-year product, you still have 4 years to achieve your targets on Nifty because we have Nifty-linked MLD. If I take a 3-year product and like you see the 1 year got wasted, right? Last October to now, market has not done anything.
So if I buy a 3-year product, then I have to make up for the lost ground in 2 years. So the probabilities of success for my client goes up at 5 years, that's why it's 5 years. [indiscernible] look at -- I wanted to make more money upfront is why this 5 years. So I'm clarifying everything in our company emanates from our client's objective, period.
The next question is from the line of [indiscernible] Capital.
Congrats on the various numbers. So my first question is that 11% -- 12% of our AUM, which is in others. So what is that? And what kind of revenue do we generate over there?
The others could be PMS transfers when we look at -- we don't recommend PMS because we have mathematically seen efficiency doesn't happen in PMS because of the high [indiscernible]. But the client has PMSs. So I take a broker code transfer and then if it is PMS's, there is revenue. It comes to me.
If it is tax free bonds, which are work-in-progress, if it is stocks, which are work-in-progress. Those are the 3 large categories. In the others, which we take as raw materials to converge to our strategy because when I meet a client, he has a INR 5 crore, INR 7 crore balance sheet. He says, okay, I'll give you INR 1 crore, which is liquid. I have INR 1 core mutual fund. I'm transferring broker code to you. But the other INR 2 crores is sitting in the [indiscernible] account, take it, I have 1 PMS. I can transfer it to you. I have insurance policy with different people, exit them over a period. So that's what is my Work in Progress, WIP.
So coming back to your pointed question, what do I earn on it? There are 3 different categories largely out of which direct equity and tax rebonds we don't earn. In PMS transfer, we start earning from day 1, unlike mutual fund, POPs, change of brokers don't give commissions from first day, PMSs do. So it's reasonably different. But yes, that's still work in progress. And that goes back to my specific years of 1%, 1.5%, which I made on these 2 products. Plus the debt mutual fund, which gives us 40 paisa, 50 paisa trail.
And the second question was on the quantum of MLD. We did about INR 2,300 crores of MLDs. Now if I look at our AUM of roughly INR 35,000 crores and 30% of that being in MLDs, that's INR 10,500 crores now. With an average 5-year kind of maturity, we would -- I'm simply dividing it by the annual rollover. Just the rollover part of it would be about 2,000 crores, INR 2,100 odd crores and then [indiscernible] again. But in the H1 itself, you've done INR 2,300 crores. So is there a risk that in H2, the quantum of MLDs would be significantly lower?
In fact, the maturities are very, very healthy. Let me not put a number to it. So what happens is that whatever you issued 3 years back is not coming back as capital. It's coming back with an appreciation. So if you ask me, how is our maturity pipelines over the next few years? Very, very healthy.
Second, what kind of proportions do clients roll over. When we had done it during IPO, it was 78% of our clients are repeat buyers. Does that continue? Does it become stronger with credibility? We have improved credibility further because we have been issuing for 10 years. So 10 years to say that I've been issuing for 10 years, I finished 1,000 maturities, which is might be the largest, I don't know the number, but one of the largest issuances plus maturity. The credibility increases. So repeat buying becomes more and more solidified unless I tell him to put 5% as a company into equity mutual funds, which we did last year. Money get rolled over.
As per the gaps, which are there in the products, which we do as the decision-making criteria. Somebody has given me a INR 100 or if you have a balance sheet of INR 100, if you have decided, INR 55 goes into equity mutual fund, INR 30 goes into MLD and INR 20 goes into debt or INR 10 goes into debt, any time we has fresh funds, the location happens as per the gap in the decided allocation. And that's how [indiscernible] company has gotten.
So I'm not looking at [indiscernible].
Sorry, you were not audible at the last part. Jugal, please feel free to add whatever you want to add.
[indiscernible] must have understood that when you are talking about the MLD value, whether it is INR 9,500 crores as of now, the book, which is there. And as Feroze has told, even if you take a mean appreciation of 60% on the AUM in the next 5 years, your INR 10,000 crores can become INR 16,000 crores. And now if you divide by 5, you will see that annual issuance, even if there is a rollover of 90% to 95% of INR 3,200 crores annual maturities, which would be, that can translate into the assured business of around 3,000 new MLD issuance. Is it clear, [indiscernible]?
Yes, that is clear.
Okay, very good.
We'll move to the next question, which is from the line of [indiscernible] Services Limited.
I want to understand the management's outlook on giving guidance of INR 39,000 crores for FY '23. So in the first half of '23, AUM increased by 16 percentage to INR 33,842. I could see percentage drop in prices will be in inflow in second quarter on sequential basis. And annum base is only 14% incremental guidance is achieved in Q3 effect 23% against the 21% per quarter. So on back of pace, it's the management confidence of achieving target in the second half of '23?
So let me take that. So Jugal, you want to add something that...
No, no, go ahead, I'll [indiscernible].
See, our AUM addition comes from 2 forces, right? One is the new money you bring in and the change in the market value of the underlying INR 35,000 crores, approximately.
So over the last 1 year, the mark-to-market has not been a huge contributor. Average, they end up instituting over the long term of 10% to 12%. Since you've not got support from there is why you are at 16% AUM growth. Are we confident to achieve the guidance on the AUM? Very, very confident. Of course, not in the market 20%, right? Because it has 2 components, but are we confident to add similar numbers in terms of net mobilization for this 6 months and for the next 10 years and growing.
So because there is an element of external variables, which will dictate the AUM, the net mobilization, which is fresh money, we think will become better in the second half from the INR 2,500 crores. So we -- our internal target for the first 6 months was INR 500 crores per month. Of course, we marginally fell short to INR 2,500 crores. The target continues to add. So if the markets don't disappoint extensively, we will surely meet -- we should most likely meet our AUM guidance. Jugal?
No, I think you have very rightly answered that we should not look at the AUM, which is driven largely from the Nifty performance, the reason being in case if you look at the AUM on the [indiscernible] around INR 17,900, you will find that the AUM is up whatever we have been discussing, it is higher by another 4% to 5%. So as you rightly said that , which was around 17,500 on 31st March, and it is almost 2.5%, 3% down compared to that.
In spite of that increase, we have achieved the growth in AUM besides taking any credit on account of average appreciation in the equity-related portfolio. That is quite impressive. And once that gets factored in, it definitely will be much more than the target or the guidance which has been given by us.
Is it clear, Mr. [indiscernible]?
To achieve [indiscernible].
Your audio isn't clear. If you can speak up a little, it will be very audible.
So at your AUM guidance of INR 39,000 crores in the first half, you have achieved INR 35,843. So remaining balance of second half, you have achieved INR 3,157 crores of AUM. So INR 3,147 crores, how much the proportionate mix between the 2 components, as you said, new AUM flow and market momentum? The breakup between the 2 components, how much the management is expecting from this?
See, like I told you, our internal target for this year is to bring INR 500 crores of new money every single month, okay? Market movement can sometimes give you a fill-in. Unlike the last quarter, market didn't give you a fill-in we ended -- because AUM is a picture, photograph, right? But the new money you bring is like a movie. It's a continuous variable. So to answer your pointed question, I told you our internal target in terms of the fresh money which need to come on a monthly basis.
So if that 6 x 500, that's INR 3,000 crore, that's our internal target to add new money. Now whatever is the differential, we have to hope and pray that the market movement or the value of the MLD also go up, debt also goes up. So overall, our client portfolios, they grew by 6%, 7%, 8% also this financial year. We'll be able to meet that number.
And anyways, AUM is the most fluid number. And as you look at a 5-year investing, 4-year investing, our AUMs are best point because we are now in the non-bank B2C category. We are the largest equity mutual fund holder. Okay, with some -- as of now. That's what [indiscernible] data tell me.
Now we have a target of capturing in the next few years or even a decade of 3% to 4% of the market share of the entire equity mutual fund in India, will we get it linearly. The answer is no. But today, from whatever we have as a market share on the equity mutual fund, which is close to 10%, we want to take that to 3%, 4% because that's what we want to master it, right? The equity mutual fund because we don't do [indiscernible] we don't do private equity. We don't do unlisted stock. We don't do REITs. We don't go InvITs because all those I don't buy myself.
So I don't give it to my clients. So our focus on AUM addition is going to be paramount. And of course, the fluidity because of its market mark-to-market nature is why I'm not giving you a pointed answer, but I've definitely given you my internal target to achieve other net mobilization.
The next question is from the line of [indiscernible] Securities.
I just wanted to understand on the MLD issuance part. So of the INR 1,200 crores of [indiscernible].
Sorry to interrupt you, your audio is not clear at all. So I'm not able to pick up. Jugal, are you able to hear his questions?
No, no, no. [indiscernible].
[indiscernible] which we have done in this quarter, so could you break it down between the group company issuances and [indiscernible] issuances. Like how much would be distributed?
Yes. Rajesh, can you give us the split. And Jugal, if you can add something. Yes. So the ratios are -- Rajesh, if you can give the precise numbers?
Okay. Let me tell you whenever we launch the product, we approved them in October, November last year. So in a few months where we had the product, 5, 7, 8 months, we have done 1 or 2 months, we have not done their issuance because there is a name change from Edelweiss to the PAG entity and we're waiting for that whole thing to happen. We are very selective about which issuer we take. Otherwise, for the last 3, 4 years, we had [indiscernible] sister company, which is ARGFL. So the ratios were as much as 1/3, 2/3. 2/3 internal, 1/3 external. That is a approximate weightage between the 2 issuers, which we had.
So from 0 external to 1/3 external or even 40% in a few months is what is conceptually the order of magnitude number as well.
Sure, sir. And sir, last quarter, we had highlighted that the employee expenses were typically in the range of about 45% of the overall revenues. But however, in this quarter, it has further improved to about 43%. So just wanted to understand some that trajectory from here on. So would we see that this number could further improve, like what could be the outlook [indiscernible]?
Jugal?
We are working on an operating leverage ratio of about 1.8%, okay? So whenever you see that the revenue goes up, the cost will have the positive impact on the cost. So this number what the broad range will remain, say, between 42% to 45%. That would be the employee cost range, okay. So you can in case we have a similar quantum jump in the revenue, definitely, there could be some improvement on that cost fund, but that would be very, very marginal.
The next question is from the line of [indiscernible] individual investor.
As there is no response from the participant, we'll move to the next question, which is from the line of Rohan Mandora from Equirus Securities.
[indiscernible] new flows that we have got. What proportion of that was coming from new clients that were acquired during the quarter?
Sure. I can tell you the approximate number. When we acquired close to 150 clients a month, the average ticket size, which people start with is 80 to 90 lakhs. So just to tell you approximate numbers. So maybe 1/3 from new clients and 2/3 from existing ones. Does that answer, Rohan?
As there are no further questions, I would now like to hand the conference over to Mr. Jugal Mantri, Group CFO, for closing comments.
Thanks, [indiscernible], and all the participants for your active participation. I take this opportunity to thank everyone for joining on the call. I hope we have been able to address all your queries. For any further information, kindly get in touch with our IR head, Mr. Vishal Sanghavi; our CFO, Mr. Rajesh Bhutara or Strategic Growth Adviser or Investor Relations Adviser.
Lastly, on behalf of the management, I would like to wish everyone a very happy Diwali and a prosperous [indiscernible] to each one of you in advance. Thank you very much.
[indiscernible] Bye.
Thank you. On behalf of Anand Rathi Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.