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ICICI Securities Ltd
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Good morning, ladies and gentlemen, and welcome to the earnings call of ICICI Securities Limited for the quarter ended June 30, 2021. We have with us today on the call Mr. Vijay Chandok, Managing Director and Chief Executive Officer; Mr. Ajay Saraf, Executive Director; Mr. Harvinder Jaspal, Chief Financial Officer; Mr. Vishal Gulecha, Head, Retail Equities; Mr. Kedar Deshpande, Head, Retail Distribution Products and Services Group; Mr. Anupam Guha, Head, Private Wealth Management; Mr. Subhash Kelkar, Chief Technology and Digital Officer; Mr. Ketan Karkhanis, Head, Retail Distribution Business; and Mr. Prasannan Keshavan, Head, Operations. [Operator Instructions] Please note that this conference is being recorded. The business presentation can be found on the company's corporate website, icicisecurities.com, under Investor Relations. I would now like to call Mr. Chandok and take over the proceedings.
Yes. Thank you very much. Good morning to all of you, and welcome to ICICI Securities first quarter earning call for fiscal 2022. I trust all of you, your near and dear ones, your family members are safe and healthy, and I hope it remains that way as we emerge from the impact of the second wave of pandemic. I'm sure that by now, you would have already perused through our quarter 1 results and the presentation which has been uploaded. So before we get into the Q&A that you may have, I would share with you a few observations and insights that we believe are relevant to our industry. The first thing that we're observing in the current context, and it is pretty clear now, is that the pandemic has front-loaded the opportunity for the industry. I think it's pretty clear. The second point that we are seeing is that market is clearly consolidating in favor of larger and digital players. We are also observing that pricing in this business is increasingly becoming commoditized, and experiences, features, personalization, relationships, value-added services, which facilitates the customer and helps wealth creation and wealth preservation journey, are becoming important differentiators. One has also observed that the market is segmented, subsegmented and micro segmented, ranging from the young Gen Z and millennial investor to the Gen X and the Baby Boomers, and the needs of each of these segments, each of these subsegments, each of these micro segments are different. Most companies are treating all customers alike by focusing on low-cost execution. What we believe that these customers need is low-cost personalization. Emerging winning companies, we believe, will need to increasingly demonstrate these capabilities. We are also clearly observing behavior shifts across 8 segments towards use of digital methods of account opening and digital methods of transacting. We are increasingly getting convinced that the growth in the new demat accounts that we are seeing in the industry is not merely triggered by a combination of factors arising out of the pandemic-related development that we've spoken about in the past but signals a structural shift of emergence of a new generation of investors, the Gen Z. These investors are digital natives and are coming to the market in large numbers. Demographic data seems to suggest that the population of this segment of newcomers is going to be significant for the next several years. It is important, therefore, for companies to recognize and harness this opportunity in a format that fits into the sensibilities and preferences of the segment. We have also observed that the value creation in our industry will require demonstration of operating leverage and the ability to monetize lifetime value of customers through a full range of products and services delivered digitally at low cost in a personalized manner rather than having a narrow focus on product and product-related [ease ].Our business at ICICI Securities has demonstrated a secular growth and peak. Our business has demonstrated a secular growth over the last decade, if you view from a window of 3-year blocks. It is important for a company in this industry to not just focus on the visible part of technology. This is the technology that faces the customer in form of easy journeys and interfaces, but it's also important to focus on the invisible technology. This is the stuff that provides cybersecurity, privacy, flexibility, scalability, salience and response time, reliability and uptime in a business like ours, which is a business of trust, and companies will need to invest in both these aspects of technology on an ongoing basis and very actively. We as a company have focused and will continue to focus on all these aspects and nuances that I just spoke about as we transform ICICIdirect into a platform play, straddling 3 important segments of the financial services landscape, namely, the savings and investments and wealth, insurance and distribution of loan products, thereby enabling us to monetize value across customers' life stage.I'm going to conclude my opening comments and throw it open for Q&A. Thank you.
[Operator Instructions] The first question is from the line of Kashyap Jhaveri from Emkay Investment Managers.
Am I audible, sir?
Yes. Yes.
And congratulations for a great set of numbers for quarter 1 FY '22. I have got a few questions. The first one is more of an observation is that in our presentation, in terms of revenue breakup which is given business segment-wise, I do keep seeing the numbers changing for the preceding quarters in subsequent quarters. So like for this -- for example, this quarter, where we have given breakup of retail broking, prime and the ESOP and MTF-related book, the same breakup in quarter 1 of last year was slightly different. So any reason or any reclassification which would have happened for the same quarter last year? And this is an observation across last 2, 3 quarters, actually. It keeps changing. So that's the first question. Second question is also more like a clarification. When you say that wealth management income is about INR 182 crores, where exactly is this -- which segment is it included? And is it net of expenses? The third question is that in terms of declining distribution revenue, is that purely seasonal in nature? Or was there any one-off also in the fourth quarter of last year? And the fourth question is we have seen sharp dip in average revenue per client. Would this be more like a quarter-end phenomenon because we have added a significant number of clients? So opening and closing number of clients has got almost about 16%, 17% difference on quarter-on-quarter basis. Otherwise, what could be daily average or, let's say, based on the number that you would have on a daily basis, revenue per client versus fourth quarter of last year?
Yes. Kashyap, Harvinder here. Let me take on a couple of questions, the initial questions that you asked for. First is about reclassification. So during the year, we have launched NEO as a proposition. Earlier, our allied income strategy has Prime and MTF and ESOP. These are the 3 elements. What has happened is after -- there are a couple of other charges which have started coming from duty of [ 7, 8 ] different charges. So we have not differentiated that. So we have just clumped the prime and other charges into 1 cohort. So that is where you'll see. I'll be happy to connect off-line and give you any clarification that you have on a quarter-on-quarter basis. But that is the prime reason for the first question. The second question that you asked for, that private wealth management revenue of INR 182 crores. Is it revenue or PAT? So it is revenue. That's point number one. Point number two, this is the revenue from all our wealth clients, which we define as every client who has more than INR 10 million of FX, which is [ 2 ] up. These clients are roughly about 60,000 clients. The aggregate of revenue from these clients, including equity broking, mutual funds, PMS, whatever products they consume from our platform, sum total is INR 182 crores. This would be into -- if you go the P&L line route, it would be sitting in the respective line item. So the brokerage in terms of wealth clients will be sitting in the brokerage line item. The interest income would be sitting and so on and so forth. So it will be sitting in the respective one. This disclosure is aimed to say that at the top end of our pyramid, there are 60,000 clients which, in aggregate, are giving this kind of a revenue and how is the traction. So this is our wealth management business, and it is an aggregate of all the different lines. This was the second question that you asked. The third question that you asked about, distribution income. And you are seeing a seasonal dip on distribution versus -- now versus Q4. So yes, there are a few elements which have a bit of a seasonality. That is, let's say, insurance, which is, as we know, more seasonal towards Q4. Some of the loan products have had good business in the last quarter. But because of long term, some of these products, because of seasonality, 2 reasons. So things like insurance, et cetera, there is a seasonality policy. You will see Q4 to Q1 would be of a different order as some of the products have that got impacted by lockdown, for example, loan, because clients were a bit hesitant in this period and wealth product. These are the 2 categories which have seen some impact of lockdown. On a Y-o-Y basis, as you have noted, there is a growth of about 51%. The -- one more question that you also asked for, the average revenue. Yes, because from last year to this year, there has been almost a clear scale-up in the number of clients that we have started acquiring. These clients have not yet got their full 12 months to kind of give the revenue, and these clients are also, as I discussed in earlier calls, younger, coming from tier 2, 3 cities. As a part of our strategy, we have started catching the clients younger in their journey. So a combination of all of this, plus the fact that, yes, clients have grown, and they've not got the full 12 months. So those are the factors which have contributed.
So would you be able to...
Your other question was the daily average revenue. So we have not put out any specific disclosure on daily average revenue, but it is very easy to calculate across product lines because we have, for example, INR 350 crores in broking income. And typically, there are 60, 65 days in a quarter.
Actually, let me put it differently. What -- when I'm saying that there is a dip in the average revenue per client, what we, as an analyst, would do is that we would divide that INR 352 crores, divided by the average of 1.58 and 1.85, which is the opening and closing active clients, which might give us like a distorted figure because you wouldn't have [ on point ]...
That pressure would not be the correct way. I believe what we must do is do this comparison on March numbers because in March, you have 12-month trading clients. So the revenues also for 12 months as the clients are also 12 months. The way you are taking revenue for 3 months, but you are taking the active clients of 12 months. So somebody would have given us the revenue in, let's say, Q4, Q3 and Q2 of last year, that revenue is not there in the denominator, but all those clients have come into this. So I believe we should do it at March end because then the numerator-denominator will be done.
[Operator Instructions] The next question is from the line of Aditya Kondawar from JST Investments.
So far, I just have one question, and it's a qualitative one. So in recent times, we have heard about the Paytm IPO, right? And so Paytm has close to 115 million annual contracting results. They have 21 million merchants. And they have spoken about info tech, wealth tech and broking in a big way [ but the RSP ]. So not just Paytm but other fintech that have come up in the landscape in the last 5 to 10 years. So given all of that, what are your thoughts on the competitive landscape right now and how it will pan out? And how is ICICI Securities navigating all of this?
Yes. Thank you. Yes, indeed, this is a competitive sector, competitive industry. It has been competitive in the past. There are more than hundreds of brokers in the industry historically. And it's just that the nature of the industry is shifting from physicality to the digitality. So yes, competition is there. We have been facing digital competition, and I'm sure we are bracing up to continue to face digital competition going forward, all the names that you mentioned, a few others as well. And it is really for us to keep differentiating and adding value to customers' life to stay ahead. We are very cognizant of the fact that there is no ticket to win unless and until you're adding value to customers' lives, and that is our endeavor. I think as an incumbent player, we share deep insights and deep, what should I say, understanding of what is required by the customer to feel sort of satisfied in this industry. And it is that insight and knowledge that we are putting to use in a cost-effective manner to the customer, and we will continue to keep doing this, not to wish away competition at all. Competition has been there. It is there, and it will continue to probably intensify going forward.
The next question is from the line of Alpesh from Motilal Oswal.
And congrats on the great set of numbers.
Alpesh, sorry to interrupt you. May I request you to speak a little louder, please?
Yes. Alpesh, can you be a little louder, please?
Can you hear me now?
Yes. Yes, better.
Yes. Great. Congrats on the great set of numbers. I just have 3 questions. First is after the implementation of wave 3 of margin norms, what was the impact on 2Q revenues in the June month? Last time, you gave some qualitative comments related to what was the impact in March. And the same thing, if you can just throw some light for the June month and July. Secondly, how do we see employee expenses to the top line for this year? Last year, it was at around 23%, and this quarter, I see it around [ 20% ]. So any ballpark number that you would like to work with for FY '22? And lastly, are you seeing any change into the customer acquisition cost? Because one of the competitor mentioned that there has been a drastic reduction in the new customer acquisition because of the digital initiatives. So are we also seeing that? And is it leading to a lower breakeven period for the new customers that are being acquired? One of the competitors is talking about 3, 4 months. So where are we standing on that front?
Yes. Alpesh, this is Harvinder here. So your first question was with respect to market share and Phase 3 norms. So if you'll refer what we...
No, Harvinder, I saw the market share. I'm just talking about the absolute revenues. Market share, I can see. But any [indiscernible] -- because last time, you mentioned that in March when the overall revenues were down only 1% on -- from February month. So are you also seeing that in June this time around?
June, there has been a negligible impact, actually.
So it is a similar trend, Alpesh. What we had said that time also was that the margin norms, even though the first phase impacted volume but did not impact revenue. The same trend continues for the Phase 2 and Phase 3 as well and market share impact we have already given.
Actually, market share impact was not negligible in Phase 3.
In fact, [ it elevated ]. You'll see there is a slightly uptick...
An improvement [indiscernible].
Yes, because level-playing field has happened after Phase 2. After phase -- between Phase 2, Phase 3 and then going forward Phase 4, we are all at the level-playing field. So relative market share will be -- I think people should be indifferent to margin norms. It will be more of what we do.
Okay. And there is some chatter in the market related to SEBI relaxing these margin norms. Are you also of that camp? Or is there any discussion with the regulators on this front?
To the best of my understanding, till we hear from the regulator, there is -- this is what it is, and we are gearing up for this regime.
Okay. Great. Okay. The second question on the [ other expenses ] number.
[indiscernible] just to add on -- this is Vishal [indiscernible]. I just to look up the [indiscernible] of that. Just to add on the Phase 3 impact in the month of June, so there are 2 ways of looking at it. One is the impact on market share, and second is impact on number of customers because now the focus is entirely on how many more customers do you have who can give you full margin kind of thing. I think June was kind of the end of Phase 3 was implemented and the number of active customers in this segment because we exceeded any previous month right from November 2020, which was the last month of earlier regime, and December 1, the Phase 1 was implemented and subsequently, Phase 2 and Phase 3. So June was Phase 3, and June, we recorded a significant dive in number of unique derivatives of customer. In market share anyway, we have covered it.
Yes. Yes. Harvinder, the only employee expense side.
Yes. Your second question, Alpesh, was with respect to employee costs. So as we had guided last time also that between H1 and H2, there was a front-loading of employee variable expenses last year. So the way to look at it is to take the full year wage cost-to-income ratio about, as you rightly said. And for Q1 also, we are looking at about 22.5%, 23%. My guidance would continue to be about 23% to 25%, down from about 31% to 32% for FY '20. So just to recap the numbers, FY '20, we were at about 31%, 32%, came down to about 20%.
23% for FY '21.
Yes. And slightly down right now to flattish in Q1. Guidance would continue to be between 23% to 25%.
No, because I was a bit confused because this quarter is the last time you did front-loading of employee expenses, and this time around, the employee expenses to top line is around 21% -- 20%, 21%. So would that number, 22%, 23%, can come down to 20%, 21% for FY '22? I'm just trying to understand that.
No. So Alpesh, yes, you are seeing that because of a bit of front-loading last year and a more level this year. See, effort always would be to have enhanced operating leverage. We are focusing on productivity, but just still as a guidance, I would still want to keep it at 23% to 25% level on a [ summary side ].
Perfect. And just the last question on the customer acquisition cost and the breakeven period.
Yes. Your third question was customer acquisition costs. Of course, we are also seeing the benefit of scale. So the cost of acquisition overall is coming down. We are not there at a 3- to 4-month payback period that you are talking about for competitors, but we are getting there. We are getting better. And with scale and the mix that we are focusing on, that is the endeavor, to kind of reduce costs, improve leverage, and definitely over the lifetime to [indiscernible], the -- it is a very, very positive equation always. I mean that's the nature of the platform. But even for a 1-year scale back -- payback, we are getting there.
And would you be comfortable sharing the absolute number of customer acquisition cost? The competition is between $800 and $900. So would you be lay off...
[indiscernible] Alpesh, in due course.
So Alpesh, kindly bear with us. We are roughly 6 months into the journey of scale-up -- effective scale-up, you would have observed. So every month, it changes. So you will actually get confused, and it is improving. So we'll just let it stabilize to a point before we start sharing. So shortly, we will start sharing because it should be when things are more stable.
[Operator Instructions] The next question is from the line of Nidhesh Jain from Investec.
So firstly, on the NEO platform, how many customers are -- do we have today on the NEO platform?
Yes. Nidhesh, this is Vishal. So you would have seen our customer communication 2 days back when we crossed the 100,000 new subscriptions. So we are now in the upward of 100,000...
The NEOs are about 100,000 plus, and 7.5 lakhs would be Prime.
Yes. So we have added almost 4 lakh customers in this quarter, but it seems like most of the quarter or most of the customers are being acquired on the old pricing only. NEO is a very, very small subsegment of these 4 lakh customers.
Yes [indiscernible].
Why is that the case? Because I hope that -- I believe that NEO is a much better [ addition ] to the much better pricing. So customer ideally should choose NEO when he's opening an account.
Nidhesh, Harvinder here. So 2 quick reasons on that, Nidhesh. First of all, NEO is our proposition for trading clients. Now if you look at the market, the way the number of customer split is there between, let's say, investing clients and trading clients, it is roughly -- I mean there's no formal number, but roughly 80-20, 85-15, and these are the numbers that people see for the industry. So you have like 1 trading client for about 5 to 6 investing clients. So therefore, that would be one reason. Secondly, as we discussed very briefly in the last call, NEO was added to the digital account opening journey very, very recently in this quarter. It was earlier not a part of the account-opening journey. It was communicated...
It is just a matter of a few weeks back when we added NEO in the account-opening journey. Earlier, the journey was that the company [indiscernible] becoming a customer. So there's always a lag. So that has now become real time, just a couple of weeks back when we launched it. So the NEO traction through a digital sourcing at the time of acquisition is already picking up in this -- from this period onwards.
Sure. Sure. And secondly, if you look at our growth in revenue, still 50 -- more than 50% of revenue comes from equity delivery of cash intraday. While if we look at the way the sector has been heading, that sort of revenue pool has been completely disrupted. Since we have a very sticky client base, we have been able to demonstrate that maybe 50% of revenue has been coming from the clients which we have originated 5 years back. But on an incremental basis, what gives us confidence that we will be able to hold on to that revenue pool?
Yes. So first and foremost, I think we had given out directional guidance that we want to move to a clear lifetime value and move away from a product-centric, e-centric, single-product centric focus. And as a guidance, therefore, we had also given that we will get the proportion of broking revenue as a percentage of our total revenue lower than what it is today. We wanted to bring it down below 50%. We remain resolute in that task. And as we are doing this, you will notice that broking itself is getting sort of -- the equity revenue itself is getting texturized. So it is not a pure-play broking alone, but you have -- in addition to broking, one would call allied equity revenue, which comes in the form of different types of fees. It also comes in form of subscription fees. It comes in forms of service fees that NEO plan sort of associates itself with. There is also NII which starts coming, which is -- which is consequent to our growth in the NPS business, which you would have noticed has grown quite a bit; the ESOP business, which has also grown quite a bit. So it's a lot more texturized, and the nature of relationship, the moment to have these products and propositions, completely changes. We have seen that in the face of disruption, there is stickiness. We have demonstrated the market share gains. And we believe that we have to keep dancing to ensure that we remain cutting-edge with the customer. And as we do that, we broad base our offering, which is what we are endeavoring to do, so that we don't have a single-product dependence, single-plan dependence, single sort of business segment dependence, which is too much. We try to make it as granular as possible, and that's the direction that we are moving ahead with.
Sure. Just last question. So on the prime customer that we have added, how much of the broking revenues is coming from brands? I just want to understand whether those clients are more engaged similarly to what we see with Amazon Prime plan where the prime customers order -- the frequency of order is much higher. So are we also seeing similar behavior from the customer? And if you can share what percentage of the broking revenue is coming from client customers, that will help understand that. And also, in addition to that, in the distribution revenue, how much of the distribution revenue we are able to go from and to when complete digital sales without any human intervention?
Yes, Nidhesh. Vishal here again. So I would like to take prime plus prepaid together because both are very, very similar proposition. And we have about 8.5 lakh customers in these 2 brokerage plans. Put together, about 65% of our total equity broker revenue, I mean, that's being generated by time and prepaid customers, which includes the liquidity method and derivatives.
With respect to your second question, distribution revenue. So roughly about 94% of our mutual fund revenue comes in -- of [indiscernible] customer [ enters ] and conducts the transaction himself. But of which -- so this is pure-play customers entering the transaction on the platform, and there's no like meeting happening, et cetera, et cetera. But of this 94%, I will just add a nuance to it. That's about, let's say, 20%, somewhere around 20% of the clients would be probably seeking assistance on call or some kind of a low-touch engagement format before punching the order or ordering on the platform. So this is a nuance. 94% of the transaction, customer is [ uncertainty ] of -- and maybe above 20%, he would be getting some calls of something.
Yes. It's like mutual fund revenue. What about the other revenues in the distribution...
Various categories would have -- so for example, fixed income would have similar attributes. Some of the wealth products may be more physical. Some of the insurance products, especially in the nonproduction straight-through category, they could be slightly more physical. So it varies from category to category. Our endeavor and our belief is that we are one of the most digital delivery capable across product categories. I mean a lot of products that we have been able to digitize are still sold physically in the industry, larger industry. For example, NPS. NPS is digital on our platform and so forth. This has been an approach of product design from very beginning. An example of that would be even global investment platform. This for us is completely end-to-end digital, including remittance. So some of the products, yes, still half of some physical life but most of the products we are trying to...
Distribution products, the 3 products which have some element of physicality involved would be loans, insurance and wealth products. And all the 3 are WIP for digitizing as much as we can. The rest of them are completely digital. As Harvinder said, maybe 20% is in the nature of assisted digital, but it's still digital. No [indiscernible] digital.
The next question is from the line of [ Devvrat Mohta ] from [ Capital Group ].
Firstly, congratulations on a good set of results. I have one question. Over the last 2 quarters, we've seen very strong client -- new client addition traction. However, the cross-sell ratios kind of remained in that 1.75 to 1.8 range. Why hasn't that been going up? Because I mean with just with the sheer pace of client addition, I would have thought that, that's kind of going up faster.
Yes.
[ Devvrat ], Harvinder here. So thanks for your comments. First, the cross-sell ratio. The way we define cross-sell ratio is number of products per active client. So if that active client expense is going, the base is going up at a much faster pace. Our endeavor definitely is to grow cross-sell at an increasingly higher base. That is definitely the endeavor. What we've been able to do is to grow it to 1.79 at a base which has already grown upwards of 30%, 35% over the last couple of quarters, as you commented. So that is our journey. Second thing is we are investing behind a lot of analytics-based technologies as well as in the marketing side, et cetera, to propel the journey at an even faster clip. So we hope to see results of increasing cross-sell ratio. But I just wanted to underline the fact that at a client base which is increasing at upwards of 30%, even maintaining cross-sell ratio requires a huge amount of effort, but we are able to grow it, although by a small margin.
Yes. [ Devvrat ], let me step in here just to augment. This is an area of great focus, and it's a great point that you picked up, actually. It's a great point indeed. And it's an area of significant focus which we are driving. Got it to 1.79. We believe there's a lot of runway to go. And towards that, 2 steps taken quite recently. We've completely strengthened our digital team. We have new guys who have significant experience of dealing with digital cross-sell and other fintech companies. And we have also taken the services of one of the -- what we would believe is a high-quality consultant working with us to deliver the project for increasing process. They have the same guys who work with us to deliver scale-up of our digital sourcing. You've seen the results. The same guys are working with us now to improve process. We've just about kicked off that project.
Understood. And to an earlier question, you mentioned that the revenue per client was lower because, I mean, one is obviously the client growth has been very strong, but you mentioned that your new customers are younger and from tier 2, tier 3 cities. So is this a headwind to cross-sell? I mean is it harder to cross-sell products to these customers versus your traditional cohort of customers?
So the characteristic and the persona of this customer is something like this. Number one, they are far more amenable to do things themselves. They don't necessarily need to be sort of called and assisted. They would prefer to be digitally connected with information and data, and they are economically less endowed compared to the traditional guy for sure. So it is -- that's the nature of that customer set. So to that extent, there's a little bit of an economic growth. As it happens to him, his own capability will improve, and we've seen that in the past. The younger customer becomes very valuable in 3, 4 years. So that's the nature. Not difficult in the sense of he's no different from how a younger customer of the past in terms of preferences or difficulty or less difficulty. But the nature of engagement is very different. The older, young customer, the old-format young customer was more physical. This -- the person is do-it-yourself digital. He likes to get influenced by friends and third-party validations, et cetera. So it's important to be in that world with him to cross-sell. You have to cross-sell it in a different format.
Understood. If I can squeeze in one last question. Your activation rate, I mean, slightly shorter term, but your activation rate went down from 84% in Q4 to 71% in Q1. Reason for that?
Yes. If you noticed, between sequential quarters, quarter 4 to quarter 1, you would have seen that the proportion of ICICI Bank-sourced customers have actually come down, right? The total number of customers have gone up, and the ICICI Bank customers proportion has come down. ICICI Bank customers, we've been doing it for such a long time, and in a way, we have attained a very high level of activation because of the nature of that connection that we have with him. Since that proportion has come down, the digital customer activation rates are comparatively lower than the ICICI Bank, and that mix change is what is reflected in the overall number.
And the decline in ICICI Bank was because, whatever, through the lockdown, they weren't able to...
Yes, yes, yes. April, May was lockdown period. In fact, the lockdown -- actually, the way to compare that it was non -- completely non digital life of last quarter versus a digital lockdown phase of this quarter. So if you see how it was in April quarter of last year versus April quarter of this year, you will see a dramatic difference, and that's because we were able to do remote digitize despite lockdown and everything.
The next question is from the line of Madhukar Ladha from Elara Capital.
And congratulations on a good set of numbers. I have a couple of questions. Number one, see, the [ NIFTY ] lot size has reduced from July. Can you sort of elaborate on any early trends that you're seeing? I would suppose that, that should be beneficial for derivatives trading volumes and revenue. So that would be helpful. Any comment on that would be helpful. And you might -- I'm not sure whether you've answered this earlier, but we've lost some market share on the cash side. So what is exactly happening over there? And any comments on why that is? And what can we do to recover it? Yes, those would be my 2 questions.
Yes. Madhukar, Vishal here. So see, in derivative space, now we have 2 kind of plans. The one is our traditional time plan where the brokerages, in the future, still it is regular, and in NEO, it is per order brokerage. So as far as NEO is concerned, I mean, in one order, the number of lots -- whatever that number is, the brokerage is flat. So there is not much impact there. As far as traditional plan, time and prepaid are concerned there. I mean it always depends on what is that quantity which customer is dealing in. And accordingly, the revenue generation happens. So it's not very significant change per se, and we are more or less aligned with the market in this.
Okay. I would have thought that maybe a lot size changing with more people trading or the number of trades increasing or orders.
Yes. Madhukar, I mean too early to comment on that. I mean June was also a very robust month in terms of number of customers. Maybe I mean -- this trend will be clearer in the coming months in this quarter.
Right. Right. And on the market share?
Yes. So let me comment. This is Vijay here, Madhukar. On the market trend, if you see the -- we've given out month-on-month details there in the chart. You will find that we -- our change in market share is principally reflective of the mix change. Retail market share has actually not gone down after third sort of round of margin change. It is the mix between institutional and retail that led to this change. So the way you should read it and interpret this is that there has been no impact on the retail side of market share, and we continue to hold market share actually.
Okay. Within retail market share, you are still there.
Yes. We are holding market share.
The next question is from the line of [ Abhijit ] from Sundaram Mutual Fund.
Hello? Sorry. Sir, I have 2 questions. First question is on the MF distribution revenue. Can you clarify how much is the, well, commission and how much is -- when the customer comes in, how much is booked? Also, if you can give some understanding about -- between Q-on-Q or year-on-year, how much benefit has come in because of the market action versus flow of the AUM -- and of the AUM?
Yes. So sorry, I didn't get your second part of the question. Can you just repeat? What is the...
Sir, I'm asking, I know AUM has improved year-on-year or sequentially. How much has been benefited because of market action? And how much is because of the flow?
Flow. Okay, flow. Okay, got it. Yes.
So first of all, in terms of the revenue contribution between trail and others for a long time now, mutual fund would be only trade commission. So everything is...
There is no upfront investment.
So I just wanted to check, [ Abhijit ]. Have I got the question correctly?
That is correct, sir. Yes. I got that.
So 100% of it now, the entire revenue stream. That's point number one. Your second question was that the contribution...
From the market action basis.
Versus the flow.
Yes. so we -- Yes. So on both impacted because of both market as well as the flows. If you look at our SIP market share, that has gone up. Our flows' overall market share has also gone up. So we are able to get both gross flows as well as net flows at a clip higher than market. Obviously, the AUM also has gone up. So the total income on a Y-o-Y basis is up 49% on a Y-o-Y basis.
So actually, the impact of flows will be felt in the later part of the year, typically. A significant part of this impact would be on account of the market action, as you said. Flow, it will start building up, and the impact of that comes in a later point in time. Most of our flows are in -- which where we have gained market share, you would have seen is in form of systematic investment plan. So it's a commitment, and that keeps sort of coming over the months.
Right. Sure. Got it, sir. Is there any seasonality in life insurance revenues? You explained it a bit earlier, but I wanted to clarify again. Probably, yes.
Yes. Certainly. There is a seasonality, which is typically loaded in the second half of the year and even within the second half, it is still flat.
Okay. So the Q1 FY '22 revenues, how much would have been impacted because of lockdown? And how much seasonality? I just want to see where it is settling, this life insurance distribution revenue. On a run rate basis, where is it settling?
So it will be difficult to give a run rate in a life insurance revenue, [ Abhijit ], because typically what happens is in life insurance your Q4 contributes to roughly about 1/3, 30%, 35% of the full year number, whereas Q1 contributes to roughly about anywhere between 15% to 20% of...
On the insurance business, since you asked, there has been an important development which has happened during this period. We have actually gone open architecture there, right? So apart from ICICI Life, we have added HDFC Life. We are expecting not to -- we are expecting growth over -- certainly growth over last year, whatever numbers you saw. It should be a good growth over last, because now we have variety as well. And there's lots of efforts going on to digitize the processes to minimize the human contact. So one should anticipate good growth there. You would have seen the buildup of momentum already in Q1.
Yes. Yes, I saw that, which is why I was asking. Was there any impact, sir, from the lockdown? Or...
Yes. There was some slowdown because of lockdowns. So typically, what happens in such scenarios is that medicals get sort of delayed. So they get pushed to later parts of time -- from a time frame. So you have the customer sort of interested and committed in some sense, but he's not doing his medicals there just yet.
Sir, do you also distribute alternate investment products, AIF products?
Yes. Anupam?
Yes. That's right. We also do coordinate. We do PMSs. So from a customer engagement perspective, we are really a broad-based client engagement platform. So on one side, while you see numbers on equity, et cetera, from a client engagement perspective, we have a fairly robust booking on the fixed income side. On equities, what we've also done is essentially, we've curated a host of new solutions as well. In fact, I'm happy to announce that we've launched something called, "Masters of the Street," which is largely targeted to customers who would want to invest into the equity market, but at the same time, they would want some levels of handholding and research. And there, we've come out with curated offerings for our clients where we are seeing a good level of success. Also, since you asked on the alternate ways, we've also seen some success in the unlisted there as well, yes, on the unlisted side as well both. So we do -- we have CAT-II as well as we have CAT-III, which is largely on the listed side. On the PMS, we have a fairly large booking of services. In fact, apart from the third-party PMSs that we do, we also have our own in-house proprietary PMS. And in fact, if I may just spend 2 minutes to explain what we do there, largely given that we have -- as you're aware, have a large clientele who are interested in equity, right, and have large demand base as well, there, we engage with them. Because in PMS, we have both discretionary PMS as well as nondiscretionary PMS. And as well, the nondiscretionary PMS is something where it's a conservative approach to portfolio building. So there, I believe, we will see a lot of traction going forward because there, clients can build portfolio in consultation. So that is one. And we also launched something called multi-asset PMS, which are typically risk-based PMS strategies as well, which gives the diversity to a client, both across equity data alternates, which is gold in this case.
So the short point is we are quite strong in there.
Right. Right. Sure. So just one last question, sir. How many of your clients are moving from the regular pricing to flat fee, the new structure? And is there any forcing of your clients by the discount brokers? Some idea you can give there, very - it would be very helpful, yes.
Yes. So first of all, this is an open to market. The client has got the complete freedom to choose what he wants. They're all transparently available. He just clicks and avails. So it's open. So that's the approach. We have continuously seen, by and large, I would say, gains in clients. Our sort of attrition rates have not changed over the last 8 to 10 years is what I would say, even before the discount brokers were in the country. Even in -- we went back to time in the early 2010, '11, in that period, and we compare it with this period, we haven't noticed any sort of, through this period, any kind of a significant change in our attrition rate. So nothing really, at a portfolio level, that one can cite. I'm sure there would be people -- individuals who might have shifted their sort of portfolios. But in an overall portfolio level, it is broadly held on pre discount broker phase post discount broker phase and even the new emerging period. It's not had any major change. Total number of people who have opted for the flat plan is, in a way, reflected in the new subscription, which we have reported, has crossed 100,000. Rest of them are -- got the option of taking it. Whoever wants can take it. And every day, we find x number of people keep opting for it. A combination of the new customers as well as a combination of some of the, what we call, NTs and STs, stock traders and new traders -- nontraders. And some active traders also opt for it. But that whole cumulative impact, as you've seen, is about 100,000, slightly over 100,000 now.
Yes. The majority of the customers are from new acquisitions and the activation of the inactive customers, the majority. And still, active customer owns a small part of the overall subscription base.
The next question is from the line of SivaKumar K. from Unifi Capital.
Congrats for a great set of numbers, sir. Sir, I just want to refer to the Federal Bank partnership, which was done about last quarter. I know the traction might be lower on account of the lockdown situation. But you had also mentioned that you're also getting into similar partnerships with 4, 5 other partners. Any progress on that front, sir?
Yes. Yes. Can you hear me? Yes. Yes, progress is happening. We have signed up with another 3 of them. And we have signed up the NDA, and digital integration work is underway as we speak.
Yes. So different level of integration is required, I mean the funds part, account opening part, demat. So we are in process of...
So while can -- yes, through the course of the next few months or so, 3 more should start being visible.
Great, sir. And how has been the experience with the Federal Bank partnership? Because this is the first time you partnered with a third party. So has the process been seamless, and all the bottlenecks have been ironed out?
Yes. Yes. See, unfortunately, the moment we launched it, we got into Phase 1. So we had very little practical time to really test it out. Sorry, Phase 2 of the corona pandemic. So all that has started off. I think we launched it last week of March or so, and come April and May, you had what you had. So it was a tough sort of a period for everyone. And we have started seeing numbers only in the month of June onwards picking up. Actually, we can see good growth in June, July as well. We've seen growth over June. So there is a -- we used that time actually to socialize, to familiarize, process cleanups, et cetera. To my knowledge, Vishal, you can confirm, I don't think there is any ongoing projects for improving. I think we have something which is good to fly. It is now -- it has to fly.
And there will always be small...
Yes. Those are [ minute ], which will come, but nothing major there.
It's more of socializing and bottom-up approach now. How do we create that awareness, reach out to each and every one in...
Specifically with Fed Bank, because they have a very large NRI segment, that is a segment which requires development, actually, because that has a different compliance structure. And that is an area where there is effort that we have to put. But for the RI segment, that is the Indian segment, it's up and running.
Got it, sir. Sir, my second question is -- yes, you were saying something.
So I just said that we don't want to let go the NRI opportunity, because it's one of the largest players in NRI business in the country.
Right, sir. Right. Sir, with respect to the loan cost of distribution, we see that we were doing very good run rate over the last 1 year, but unfortunately, in Q1, we had fallen from INR 5.3 billion to INR 3.2 billion sequential basis. I know the long term would have some effect. But are there any other challenges apart from that, which led to this decline?
No. No, purely lockdowns. Purely lockdown and the concurrent inability to sort of satisfy, and I would say, to some extent, even risk appetite came down a little bit from the banking side. The moment we got into this bank, startups shriveled up a little bit, waiting for uncertainty to fade. So it's a combination of physical inabilities as well as the risk appetite playing out.
Got it. And currently, how many banks are we partnering with, sir?
Total number of banks, 7.
Seven banks, right. And my last question is with regards to the MTF book or MTF listing, so book...
Sorry, banks and NBFCs come back, yes.
Banks and NBFCs, sir. Okay. Sir, and the last question is with regard to the MTF equity, so book, which has been seeing good traction over the last 2 quarters. Is it a follow-up of the recent changes in the peak margin norms, which SEBI has brought in? Because client would need your support for the funding, right? Or are there any one-off you saw funding, which led to this kind of an increase over the last 2 quarters?
No. No. So first and foremost, our growth is granular, right? It is not lumpy. Second point I would say is that MTF as a proposition is what one would say it requires a certain market condition and that market condition is playing out very well today, which is a sentiment of positivity kind of a market outlook. That is what push people to use this facility. So it has been sort of propelled by that kind of a sentiment prevailing in the market. To say that it is because of the norms would be very -- there are 2 different products. One is an intraday product, which were the norms of SEBI sort of applied. And this is an overnight product. So they are not comparable in that sense. Now whether there's this change in the norms that prompted a behavior shift is a possibility. But to say that because of this that has happened is -- may not be exactly accurate. The categories of customers opting for intraday and the categories of customers opting for an overnight, there is a different persona of these 2 customers.
Yes. And -- yes. Just to add on MTF. This is a complete ecosystem. So from outside, it looks like as if it's a one product. But when we look at different blocks, I mean you have to put in place some 5, 7 different things, and then only this kind of proposition is very useful for customers. I think right from the transaction process, how do you make use of existing demat in taking exposures in MTF? How seamless is your pledge process? Subsequently, how can you offer position without any hiccups? As well, the -- what is the growth rate and the variable cost component, which will also be demanded by customer depending on their own appetite? I think we have kind of improved each and every parameter, and the result is evident. To add to that, apart from ecosystem, how do we help customers navigate in the market? So I think our research team has done a great job. In the last 15 months, 100-odd portfolio recommendations have come from them. And giving about 20% returns, 60 portfolios have been closed, 38 recommendations were on a technical opportunities, and about 62 recommendations were on the fundamental opportunities. How it augurs well with MTF customers because technical portfolio recommendations is ranging from 15 days to 2 months, and fundamental portfolio recommendation ranges from about 2 months' to 6 months' time. So it will comprise of 3 to 5 stocks kind of a thing. So this very well fixes the -- in the life of the MTF customers who not only want to take advantage of the system, but they also want to take a very conscious decision which is in line with the market movement.
The next question is from the line of Piran Engineer from CLS India.
Congrats on the quarter. I had a couple of questions and 1 or 2 clarifications on some of your comments. So firstly, I'm kind of repeating this question, but I want to understand it well. So our active client base is up 60%, 70% Y-o-Y, but the retail broking revenue's up only 10% or so. Now do we attribute this to the margin norms that came in the interim leading to loss of market share in futures a few months back? Do we attribute this to migration to the New York plan? Or do we just simply say that the new customers have a much smaller ARPU? So while customer addition may be strong, the revenue addition may not be as strong. So how do we think about this? Because if you have to project revenue trend, but it is so divergent from customer count trend, it just becomes a bit hard to project. So if you could help me on that, please.
Piran, Harvinder here. So I'll try to address. I think most of the factors that I would have answered, you have kind of ticked off in your question. So it's a combination of these 3 itself.Number one, definitely, there would be an impact of migration to prime, et cetera, that would have some impact. Some impact is because of the second and third elements that you just said, that in the active customers, our larger portion are new customers because that's where the new scale-up is happening, and they are, one, younger and they have got limited opportunity. So in Q1, and I'll help -- with a help of an example. Supposing to have 100 active customers in Q1 of last year, but maybe about 70 of them were existing customers who are seasoned guys and have, therefore, zero fear of investment. And 30 was made up from the new customers who have got acquired in that quarter itself. So that was the mix, let's say, 1 year back. But when -- 1 year later, today where we are, this makes us slightly more contribution by new customers, because there, a scale-up has happened which is huge. The 70 has remained, maybe 70, it has become 85. But the 30, which was from new customers, has exploded to 70.So obviously, new customers in the first 90 days, you would not expect them to get the same level of ARPU as the seasoned customer. So that is the second, which is a combination of the second and third factor. And obviously, as we have earlier also discussed, the new customers are younger. They are at an earlier stage. So a combination of those 2 or 3 things. And we will see that this trend to stabilize when the scale stabilizes, and you have an inventory of customers coming to your active base.
But then tomorrow, if the market goes down and this 70 old vintage customers start trading less, that will wipe off all the positive impact of the new 70 customers simply because of the sheer -- the size of the vintage customers versus the new customers.
No. So Piran, if you look at the trend, right, over the last maybe 6 years, 7 years, 10 years, we have seen about 2 or 3 cycles of markets going down, coming up. I think there were 3 cycles. Consistently see -- what we have witnessed is the platform activity level. That has a very secular trend. So if we had, let's say, 100 customers transacting on our platform 5 years back, today, we could have 500 customers or 1,000 customers. That level keeps going. And every customer cohort, let's say, a new customer acquired in Q1 of this year, that cohort has a life cycle which is huge. I mean we are consistently able to engage customers over 20 to 30 years. That is something which we have already seen and demonstrated. Now we are going younger. So -- are -- never is that -- you start a customer interaction at maybe even 20 years of age and go right up to 70. So it's a 50-year runway, which is theoretically possible, and that's something. So it will be very -- I mean there could be some -- one quarter to another quarter, there could be some impact of high market activity. But over a longer term, we have seen, across cycle, the trend is very, very secular.
So I think if you refer to Slide 14 of our presentation, it kind of depicts what Harvinder just said, we did an analysis for the last decade. And what we found is that through this period, if you look at it in a block of, let's say, 3 years, you will find that the growth in profit has consistently been above at least 17% or higher [ year-to-year ].
Yes. Okay, that is fair. I'm not disputing that. I was just thinking. But now other than...
To your point, whether it can have a quarter-to-quarter Impact, it is possible. But if you look at it from a more medium term, which is a 3-year window, we have seen consistent digital growth.
Okay. So -- and just to Harvinder's point about the client's life cycle. Now I'm assuming that the starter client has an ARPU of maybe INR 2,000, INR 2,500 per year, and your average is closer to INR 8,000, INR 10,000. So how long does a client take to really scale up from that INR 2,000, INR 3,000 to maybe INR 8,000, INR 10,000? Is it more like it takes a decade or so? Or is it a much faster process in your experience?
So we've not put that out specifically, but it is not a decade. It will be maybe a year or 2 years that it takes. So one is that the INR 2,500 or whatever you are assuming, you have to factor in the fact that the customer, in the year that he gets acquired, on an average, could get -- some clients will get only 1 month, or some clients will get 11 months. So it will be a weighted average period runway of only 6 months. So the first year ARPU is lower. But yes, it does get built up. So over a period of, let's say, 5, 10, 15 years, we have seen 5x, 10x, that kind of a growth in ARPU that happens.
Okay. Okay. And I just had a couple of clarifications. So could you remind us what are the charges under NEO? Because in your opening comments, you said some of the growth in the other income has come from NEO.
No. No. There's a distortion on the phone. Just repeat what you said.
In your opening comments, you mentioned that part of the contribution of other income came from some other charges under the NEO plan. So what are these charges? Could you please remind us? These are onetime migration charges, is it? Or is it a recurring...
It's a combination. It's a combination. I will request Vishal to...
No. Yes, Vishal is just going to that.
Yes. Yes. So it's definitely a subscription fee which is once in lifetime. And subsequently, there are other charges. Like if you give -- shared collection, there are -- there is an interest kind of component on that. There's a fund transfer charge. There is a system, in spite of charges -- there's a call entry charge. So all put together, I mean, this comes in the midstream from your proposition.
Got it. Got it. And just the other clarification. On Madhukar's question where you said that with this nifty contract size going down, it won't have much impact. But then you'll also have an Option 20 plan, right, which has been in place for quite a long time. So do you not have a lot of people using it?
See, Option 20 still is a significant part, and it's important proposition for us. However, lot side, I mean, from 75 to 50 is still -- it is not very small. When we look at Nifty-ies, the contract size is still INR 7.5. So it's not that it has come to INR 2.5-odd bill. So it's -- I mean for your retail customer, it's still -- it is a kind of a long shot. So I mean it is just about 14 trading sessions since this change has happened. So, I mean, we will see more impact as we move forward.
Sorry, there is a lot of static noise coming on the phone suddenly. Is there...
But anyway, sir, I'm good. Thanks for answering my questions and all the best.
Are you able to hear clearly? Because suddenly, it started coming.
No, I can hear. I could hear.[Technical Difficulty]
Ladies and gentlemen, please stay connected while we rejoin the management back to the line. Participants, please stay connected while we rejoin the management's line back to the call. Ladies and gentlemen, thank you for your patience. We have the line for the management reconnected. We move on to the next question. The next question is from the line of Arash Arethna from India Infoline.
Yes. Am I audible?
Yes. Yes.
Yes. I just had a follow-up question. One is I think on the mix of ADTO between equity and derivatives, I think last year, we had a slightly higher mix in the previous 2 years, and we were building that there would be some decline. But I think this quarter also, the share of equity ADTO has been relatively higher. I just want to know, at around 6% of your ADTO mix, so just wanted to see how you're looking at this going forward because the way we look at brand revenue, that has an impact.And my second question is I think the broking yield on -- the broking revenue on a quarterly basis ranged from INR 230 crores to INR 250 crores per quarter over FY '18 to '20. Now this went to around INR 375 crores in FY '21. So this year, while we would have anticipated maybe some bit of moderation, you still managed again an increase. So it's at INR 395 crores. So just want to know how you are looking at broking income on a quarterly basis. What is the new benchmark? Is INR 390, INR 350 the new benchmark? And how should we look at that versus the prior history?
Yes. Arash, so on the second question that you asked, broking, definitely, we have seen a slightly structural uptick. Even we were of the view earlier 5 quarters back, that it could moderate down. It could still moderate down. It depends on capital markets, et cetera. But we have seen in the past as well, I mean, if you analyze the data, that one, this kind of a wave that came in, in FY '21, earlier also a couple of times end of '15, if you remember, when the first -- where the government got elected; and in 2018 after -- so some of these events have led to a slight structural lifting. Even if it moderates down, what we've seen is that it is much higher than the earlier baseline. It's a baseline shift. Very difficult to predict and put a number unless -- I mean you put a number toward capital markets will be, which is difficult. But structurally, we are seeing that, I'll say, in terms of, let's say, number of active clients, we were at about 1 million active clients not so long ago. We have 2 million active clients, plus 2.2 million active clients. That is something that we have seen is structured. It is here to stay is what we believe. There could be, as Vijay elaborated in the last question as well, it could be quarter-on-quarter slight variation. But otherwise, underlying is a structural trend. A very secular one.
Sure.
You had one more question, Arash. I'm -- sorry, I missed that.
On your ADTO...
On mix of derivative and equity ADTO. So it's not 6%, Arash. I mean the derivative, even for the industry. It's more of 96, 97.3 are in that zone. So equity and derivatives, that is broadly the volume mix. But increasingly, as we have said earlier also that in the derivative and trading products, our shift is more towards contract size pricing rather than volume. So increasingly, volume or ADTO, especially in derivatives, because notional call option is considered as turnover there. That will become less and less relevant in some time from now.
The next question is from the line of Sanketh Godha from Spark Capital Advisors.
Sir, I have 2, 3 questions. One is that we've seen the balance sheet trade payables going up by 28 percentage year-on-year. How much do you contribute this to our newer customers coming from open architecture? And therefore -- because that tool was never with us in the past because it went to ICICI Bank. So is the increase in 28 percentage is largely contributed to the open architecture, which we have opted last year, and therefore, we are seeing a steady source of interest income in our numbers? Or is it this growth is largely contributed to the increase in market itself, and therefore, should not be read much into it. I just wanted to understand the nuances there.
Thanks for the question, Sanketh. Indeed, the increase in trade payables has these 3 components. I'll just add, I'd say 3 -- 2 that you mentioned, the third is also increase in margin. So what has happened is that there is starting of a client float under new open-architecture format. That is definitely a cause in this client table. Second factor is that the margin quantums have obviously gone up with the new margin norms coming in. For the same level of trade, people need to give more margins to us. That is the second factor. And the third factor is a bit of a T+2-day impact. So -- but T+2-day would be -- let's say, it ranges sometime it is are INR 200 crores at the end of the quarter. Sometimes it goes up to INR 500 crores. So we have seen historically INR 200 crores to INR 500 crores has been that kind of a limit. But these 2 factors are here to stay.
Okay. But do you see, because of the open architecture incrementally contributing, we become like other -- other brokers will make a huge amount of money from the float. Do you see that structurally playing out for us going ahead given we are acquiring one customer digitally and you might be more used to those kind of customers. So I just wanted to understand the thought process around this, how you plan on doing it.
Yes. So Sanketh, I'll just give you a bit of directional inputs over here. What you're saying is right. This is something which is new for us we have been able to add, which was not a part of our business model earlier. So we do believe that this will start becoming a part of our business model. However, there's a difference. Our approach has been to make it very seamless to our customers. I mean that's very important for us. So the way we have designed this open-architecture system is that at a click of a button, our customers can sweep the funds back, access accounts. So as compared to some other places there, it would be quite an effort and not as seamless there. So in our mind, that is also equally important. We have seen a buildup over there. Going forward, also, it should improve. We have also said that NEO is our proposition to attract trading clients. Open architecture plus NEO, both are helping in...
So will could just add one element just to clarify. It is not just a NEO plan which is float centric.
The open architecture.
Any customer acquired digitally is open -- is float centric.
Yes. Yes. I understand.
Yes. So he could be taking even a prime plan, and he will still contribute float.
So any other bank system, any bank customer outside of ICICI Bank will be a person who would provide float to us. And that segment is growing, actually.
Got you. Okay, sir. And the second question which I had was, if I look at the activation of last 2 quarters, it is broadly in the range of 70, 80 percentage. And bulk of the customers, what we recently added in last 2 quarters were digitally sourced customers. And the other digitally discount brokers, where we see the activation levels, what they're paying is around 30, 35 percentage. And for us, it is 2x or maybe 2.2x of the numbers, what they report. So just wanted to understand what is leading to such a high activation level when customers are sourced digitally, and the experience for others is different than the experience what we are facing -- we are experiencing is a little different from this. So if you can give a color on it, it would be easier, sir.
Yes. So Sanketh, it's like this. The other players who are in this space have been doing this for 3 to 5 years, depending on the name -- the player. Just to say that the activation levels, et cetera, to be compared, you have to have a little bit of stability before you start comparing the 2 numbers, and that is why we are not giving out any numbers. These numbers are available as a part of our historical disclosures, so you're seeing it as a cohort. But I think you have to give us some more time before -- what this digital thing is going to settle down. It's going to take a little bit of time before it settles down. But I would believe that we would -- it will be -- eventually, as when it reaches scale in a consistent way, I don't expect it to be very different from what the other industry players are expecting.
Okay. So all this -- and also, you assume it should be very similar to what the industry are expecting?
We will -- at scale, I think, it should settle down. It's still -- that's the anticipation. Currently, I don't go by the current sort of cohort that you are seeing because there is -- it varies month-on-month, and we need to have some more runway of experience before we come to settling down on this.
Got it, sir. And the third one is that the strong growth in the NPL book, what we have seen even in the quarter-on-quarter basis, just wanted to understand. Is it driven by market share gains or for the industry as the demand for this product has gone up? And if it is because of the market share gains, is it because our ability to offer low interest rate is also playing a significant role for us to gain market share? Just wanted to understand the dynamics there, whether it's a market share story or more of a demand. And classically, it's a bull cycle product. So do you -- and our dependency on the product is going a little higher. So if due to some reason, market remains a little -- even bookings remains range bound, how do you see risk of revenue not picking up from this line of business?
Yes. As I briefed earlier also, this is a complete ecosystem which we have put in place now. So there is a gain in absolute MTF book, in absolute amount of MTF book, and there has been a market share gain also. And also, as I said, the research team also has played a very, very critical role, and market also has favored this kind of product. So I know it will always be that we stick to market share. And as and when such opportunity is available in market, we are not left behind and leverage that. So it's -- I mean, both in terms of market share as well as in absolute amount.
Okay. Sir, what is your current market share? I think in the past, you said it is around 20-odd percentage. So has it substantially increased from that -- those levels, sir, in MTF book?
22, Sanketh. I will let you judge whether it's substantial or not, but it is 22 now.
Okay. Okay. And finally, one on -- this question was partially addressed, but I just wanted to understand. In your customers, what we added is 1 lakh in the current quarter. So just wanted to understand how many -- bulk of this 1lakh is existing inactive guys getting converted into an active new client. So anyhow, he was not contributing to the new revenue. So he is probably now thinking of contributing to revenue? Or still new is largely requiring -- this is part of the digital acquisition of 2.7 lakh accounts. Sir, I just wanted to understand the overlap of NEO in 2.7 lakh accounts got added in the current quarter or through digital.
Yes. So see, NEO is just about 6 months old proposition. We started in month of December in a small way. And January, we started offering this to the new set of customers who are coming in system now and also customers who are -- who have shown a diminishing trend or completely stop kind of behavior. So I would say the bulk of this 100,000 customers are from the reactivation of such stock traders and as well as from [indiscernible]. As far as active customers are concerned, I mean that forms a very, very small portion of the overall mandate of right now, very small percentage.
Okay. So it's fair to think that the customer who was never contributing revenue in the past is starting contributing to revenue, because anyhow being active -- got active because of the new offering?
Yes. That's right.
Yes, Sanketh.
So of 100,000, high portion would be that. Yes.
Got it. Got it. And finally, on investment banking pipeline or growth trajectory, because this year seems to be a hyper year, so just wanted to understand our deal and what kind of trajectory we could see, given we made around INR 200-odd crores -- sorry, INR 42-odd crores in the current quarter. How do you see this trajectory to play out in subsequent 3 quarters?
Yes. Sanketh, Ajay Saraf here. So compared to the last year, as you said, we are seeing a lot more activity, the pipeline. The overall market volume, we expect to be higher by at least 50% in last year. All of that depends on, obviously, the market factors over the next 3, 6, 9 months. But sufficient to say that if all of these pipelines go through, I expect we'll play a very pivotal role there given we would have 60%, 70% market share in all these issues. Pipelines, very, very strong for the year.
Ladies and gentlemen, that's the last question. I now hand the conference over to the management for the closing comments.
Yes. Thank you very much. Thank you for patiently going through this call and asking and participating actively in your questions. I hope we've been able to respond to all your points. And in case there are after thoughts or after questions, please feel free to reach out to Harvinder, reach out to our IR guys and reach out to me, and we'll be more than happy to clarify these points. Please do take care, and all the best to all of you. Thank you very much. Good day.
Thank you. Ladies and gentlemen, on behalf of ICICI Securities Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines. Thank you.