Aditya Birla Sun Life AMC (NSE:ABSLAMC) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to Aditya Birla Sun Life AMC Q2 and H1 FY 'twenty seven Earnings Conference Call hosted by Motilal Oswal Financial Services Limited. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. I now hand the conference over to Mr. Prajeet from Motilal Uzwal Financial Services Limited. Thank you, and over to you, sir. Thank you, Aditya. Good evening, everyone. On behalf of Motilal Uzwal, I welcome you all to the Aditya Birla Sun Life Asset Management Company Limited 2Q FY 'twenty seven earnings conference call.

0:47 We have with us Mr. Ebala Subramanyam, Managing Director and CEO mister Pradeep Sharma, chief financial officer mister Parito Chiptora,

0:56 head investor relations. We are thankful to the management for allowing us to host this call. I would now like to hand it over to mister Abalas Subramaniam for the opening remarks. Over to you, sir. Yes. Thank you. Thank you for hosting us, and good evening, everyone, and thank you for joining us on the Q2 FY twenty conference call. I hope you all had the opportunity to read through our earnings presentation, which is available on both the stock exchanges and our company website. Let me begin by sharing our perspective on the current macroeconomic environment. The global economy, as is known, demonstrated remarkable resilience in Q2 FY 'twenty seven.

1:42 Growth sustained its momentum despite a challenging economic environment. The prolonged geopolitical conflict and inflationary pressures and early known potential asset price corrections remain areas to watch, but the global growth outlook remains constructive. And India continues to stand out as one of the fastest growing major economies, powered by robust private consumption, resilient service sectors and strong fixed income investment, alongside a positive contribution from net exports and growth momentum in the first quarter of the year came in well ahead of expectations. And government infrastructure spending and private CapEx and global credit flows are sustaining investment. The IMF has raised its FY twenty twenty one growth forecast for India from 6.4% to 7% and the RBI revised its outlook upwards to 7.1%, a reflection of confidence in the economic underlying strength.

2:39 Economic activity has held firm even as we keep a close watch on the South Coast monsoons and its implication for the upcoming heavy season. In its October quality, RBA raised repo rate by 20 basis points to 5.5% and signaled a more cautious stance on inflation, while reaffirming confidence in the growth trajectory. India's external position been supported by healthy capital flows, including NRI deposits, SNRIB balances and ForEx reserves of $730,000,000,000 and this strengthened our external sector resilience and provide a cushion in times of global uncertainty and the related currency volatility. Moving to Indian market, the quarter was marked by volatility amid elevated crude prices, high global bond yields, a weaker rupee and shifting interest rate expectations.

3:29 While large carbon rises corrected, the broader market held up relatively well, reflecting confidence in India is long term growth story. Steady domestic participation through the SITs and continued financialization of household savings helped cushion the volatility and underscore the structural strength of India's capital market. A busy primary market reflected strong appetite among issuers and investors for capital formation. And looking ahead, near term volatility may persist, but earnings growth and domestic investor base continue to provide a strong foundation for the longer term outlook. Coming to an industry, the quarterly average IAM stood at INR 87.2 lakh crore as on 09/30/2026 compared to INR 77.13 lakh crore as of the same period last year, resulting year on year growth of about 30%.

4:19 The SAP contribution for the industry stood at INR 32,004 and 90 crores for September 26, representing year on year growth of 11%. The total measurement folios stood at INR30 crores as of September 26, growing by 17% year on year. During Q2 FY twenty seven, the industry saw total NFO collection of approximately INR115004 crores across other classes with the equity collection done by index, aggressive hybrid and value funds. And despite market volatility, the industry continued to risk fitness, healthy net inflows and equity oriented schemes, reflecting investors' growing preferences for disciplined long term investing. SAP flows remain resilient and retail participation stayed strong. Investor preferences continue to shift towards mid cap, small cap and subsidy cap funds, a sign up conference in India's long term growth prospects and our participation broadening across market segments.

5:14 Individual average AEM for September 26 stood at INR23.24 crore, contributing around 61% of their total AEM. B30 cities with an average AEM of INR16.37 crore accounted for 18.8% of total AEM growing to 13% year on year. Deepening our reach in B30 is a strategic priority for us, and this is where India's next chapter of wealth creation will come from. We are building our distribution network digital capabilities and investors' engagement in these markets to be well placed to capture the opportunities ahead. Coming to the ABSLAMC performance highlights. At ABSLAMC, we are pleased to share that our overall average AEM, including alternate assets, which is CPFO mandate, crossed INR 11 lakh crore milestones this quarter, and now stands at INR 11.06 lakh crore, a growth of 140%.

6:04 This includes mandate money from ESS and EPFO. Our mutual fund quarterly average AEM stood at INR 4.42 lakh crore, up by 4% year on year. And within this, our equity mutual fund quarterly average AM stood at approximately INR 2.09 lakh crore, growing by 9% year on year. Our equity mix for the quarter stood at 47.4. Our FIB contribution for September 26 stood at INR1095 crores, supported by INR41.7 lakh fully contribution in FIB accounts. Our total investors' folio for September 2026 stood at INR1.14 crores, up 6% year on year with the new SIB registration for the quarter at about INR1.04 lakh approximately. Our equity fund performance continues to be consistent.

6:50 This has strengthened our investors' confidence, supported healthy inflows across the flagship offerings like flexi cap, balance of note, fund, multi asset and small cap fund. In fact, our equity performance has now gone to almost three and five year basis as well, coming in the reckoning of the peer group. Is also good news. Think it should eventually help us in building more stronger equity flows. Strengthening and diversifying our diverse network remains the key priority. Through my Yatra covering nearly 9,000 kilometers across India, I would have stronger and more meaningful conversations with our partners and gather valuable insights from the ground. This has deepened our engagement with distributors in both existing and emerging markets, helping us build a stronger and more diversified distribution franchisee.

7:37 On a technology front, innovation remains at the heart of our customer first approach. During the quarter, we advanced our AI first agenda by expanding our AI enabled capabilities across chatbots, voice and WhatsApp channels, creating more personalized, responsive and scalable customer experiences. We're also leveraging data analytics to strengthen customer acquisition, investor engagement, partner productivity and service effectiveness across our distribution ecosystems. Turning to our alternate business, we witnessed strong growth during the year. Our PMSAAF assets increased from INR37300 crores to INR6537 crores, which of course includes the EPFO mandate that we have got. We currently have fundraising underway for our special opportunities and structured opportunities, Money Manager Fund and India Federal Fund, especially in the business, both including fixed income as well as equity assets under management, equity categories.

8:36 And these offerings are aligned with investors' demand for differentiated and specialized investment opportunities. In our real estate business, our AEM stood at approximately INR 60 crores, a 43% year on year growth and fundraising is currently underway for the RSABL Real Estate Credit Opportunities Fund Series two, which focus on senior secured lending opportunities in post approval of brownfield real estate projects across Taiwan cities. At Gip City, we have launched our retail fund offering, enabling Indian and global investors to access inbound and outbound investment opportunities through a dedicated retail platform. Fundraising is underway for the ABSLA Flexicap fund, which is for remote remittance. The coming quarter, we plan to launch six months across both retail and non retail categories addressing inbound, outbound opportunities, backed by growing product suite and gives to the global investment ecosystem.

9:31 We are well placed to build a scalable offshore franchisee in the coming years under the LRS scheme as well as for the global investor in Western India. Passive is one of the key anchors for our growth strategy, and we are committed to building a leadership position in the segment. In fact, we have introduced Birla Passive as a new brand and dedicated brand and identify strength identify to strengthen our visibility to investors and distributors and drive higher mindshare and grow market share. And during the Q2 FY seven, our past three quarterly average assets under management stood at approximately INR 13,890 crores up 10% year on year. Our investment base continued to expand with the total folio reaching around INR 13.9 lakh folios.

10:17 We were the first in India to launch BSC total market cap index fund and BSC total market cap ETF, the pioneering a new category in the passive investment landscape on the lines of Vanguard, the largest fund in the world. We aim to build these funds into flagship product offering investors broad based exposure to the Indian equity market through a single and simple solution. Our ETF branches delivered particularly strong momentum. ETF quarterly average AEM grew by about 42% year on year and significantly added up the industry growth of about 27%. In the FX segment, which is a new segment, which we had introduced sometime back, Our SA segment, we launched Equity Long Charts Fund and Equity X Top 100 Long Charts Fund, backed by our strengthened investment team with a specialist in long chart and derivatives based strategies.

11:11 Our SA platform now comprises of three products with approximately INR700 crores as of September 2026. Coming to the financials, Q2 FY twenty twenty seven, the total revenue is about INR526 crores as compared to INR506 crores in Q2 FY twenty twenty six. Q2 FY 'twenty seven profit before tax is about INR $2.96 crores as compared to INR $3.16 crores in Q2 FY 'twenty six. And Q2 FY 'twenty seven profit after tax was about INR $2.21 crores as compared to INR $2.41 crores in Q2 FY 'twenty six. And turning to our quarterly performance, our H1 FY 'twenty one total revenue is about INR $11.42 crores as compared to INR $10.72 crores in H1 FY 'twenty six. Our H1 FY profit before tax is INR $70.02 crores as compared to INR $6.88 crores in H1 FY twenty six.

11:59 On H1 FY twenty seven profit after tax is INR $5.30 crores as compared to INR $5.18 crores in H1 FY twenty six. With this, I would like to open the floor for any questions. I'll be joined by Pradeep Sharma, who is our CFO, for taking any of the questions that you may have. Thank you very much. We will now begin the question and answer session. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Shayas Bentley from Nomura Wealth. My

13:06 first question was first. So on ESOP, I like didn't a new team from I'm sorry to interrupt you, mister, but we are unable to hear you, sir. Your voice is breaking. Is it? Can you hear me? Hello? This still breaking? Hello? Is this? Hello? We would request you to kindly please come in the proper reception area. We are unable to hear you, sir. Hello? Hello? Can you hear me? Sir, the whole brief we would request you to please check your connection and join back the queue. Thank you. Participants to ask a question, you may please press star and one now.

13:55 The next question is from the line of Mohit Bongal from Centrum Broking. Please go ahead. Yeah. Good evening, and thanks for the opportunity. My first question is that, you know, in terms of employee expenses, we have seen a very big increase. And even if I say exclude the ECOB expense of, say, 10 crores, which was there last quarter, the growth seems to be very high. So what could be the reason for that?

14:17 Yeah. Yeah, Mohit. So basically, this is on three counts, the Y o Y basis you are talking. So basically, one is the ESOP cost. So for this quarter, around 12 to 13 crores is the ESOP cost, which amounts around 13% increase. And second is actually last year, last year numbers, there was a

14:40 old provision reversal of INR 6 crores in last year numbers. And hence, this is actually resulting into some kind of growth, which is resolved, which amounts to around 6%. So that was onetime in last year numbers, hence, it is being soon as increased. And third one is the normal increase on Y o Y basis, plus the few headcounts, which we have built our passive team, etcetera. So these are the three regions, basically, the number is higher than last year. For coming quarters, I think the number should be in the same range of Q2. Increment?

15:16 That is already correct. Yes. Understood. Yes, that is helpful. Secondly, sir, on the key schemes of FlexiCAP, the balance advantage fund, I just wanted to understand what were the gross flows during the quarter? And how did the investor preference for these schemes increased during the quarter?

15:41 Yes. So while we don't give specific to gross flows and net flows type, I'll give you broad indication. So we have identified four, five categories of funds are the key products, which is the general flows also from industry, which is right from Flexi, balance of ownership, multi asset, multi cap fund and small cap and mid cap fund. In fact, in each of them, we are seeing increased flows on a quarter on quarter basis, both on the broad sales as well as on the net sales number. That's something which I see as a trend. Though we see the category in which generally the level of interest is low, like ALS scheme where we have seen some of the outflow along with industry, even the last cap to some extent. But otherwise, the core fund, which are called the focus funds that we are seeing, quarter on quarter basis improvement.

16:36 And that's something which I can see. Secondly,

16:42 to the like even SAP contribution. So, way I measure is month on month basis, how the gross number is getting better than the previous month. That also is something I see as an improvement. Just to give you the broader thing, the way we see is assuming the industry market share, say, in Flexiga fund, we are at, say, 3%, 3.5%, whereas the NetFlow's market share is actually higher than 3.5% kind of things, just to give you some bit of pulse.

17:17 Okay. So you mean that we are at around 3.5% in the Flexigap and balance advantage fund, right?

17:24 Now goes almost about 4.5% kind of things. Point 5% to 4.8% kind of a number. Whereas the same number, they would have been lower in the previous quarter. That's something I see as a trend improvement there. Right, right. That's helpful. A few... Yes, even the question on the just also add to that, even as a balance of the only point of the category, while the whole category is not receiving significant flows at this point of time, But as we have been the recipient of flows because of improved performance and some bit of allocation could happen from weak performing funds to the better performing funds. Therefore, we have seen in a positive inflows as well as well. Okay. That's very helpful, sir. So few data keeping questions, One is basically the non mutual fund revenue for the quarter, segment wise yields.

18:19 Yeah. So Mohit, the SiP AUM is around 86,000 crores as of September 26. As far as yields are concerned, equity, it is in the similar range of 63 to 64 basis points. That is around 24 to 25 basis points. Liquid is into in the range of 12 to 13 basis points and ETF around eight basis points. As far as other revenues are concerned other than mutual fund revenues, alternates, this is on gross basis, it will be around 7.4%. We are seeing an improvement here. From Q1, it was 7.1%, now it is 7.4%.

19:04 On net basis, it is 4.3%. Q one, it was 4%. So gradually, we are seeing an improvement in the asset mix mutual fund versus alternate assets. Yeah. Right. Right. Right. That's really helpful. Thanks, and wish you all the best. Thank you.

19:29 The next question is from the line of Ram Mehta from IIFL. I had just one question on the mandate, which we have won. Can you please help with the gross yields, which we are expecting out of the EPFO and ESIC mandates? Thank you.

19:53 Yes. So Mr. Ram, actually, these yields are actually expense neutral, whatever expense which we need to incur additionally. That's it. Yeah. The way I look at Ram, so, of course, winning the... About the mandate that reflect the funds capability in managing money in the term, both on generating the return as well as managing risk. So they go through various parameters basis which the short happens,

20:23 both technically and financial qualifications. So happy to share with you that we passed that test, which of course reflects our Fundaos credibility on the investment world. And second is, while it's cost neutral, because the existing team only will be managing it, of course, I would have dedicated team for this, no doubt. But the existing resources will be put into use, put into manage money. That's the way

20:49 they want about selecting it. But the above effect that it can come to us. The others, a private IPFO managed funds and so on and so forth. Even when we look for mandate from overseas, Broader, we are above the fact that something which can add to that is quite high. So that's the way we even our strategy also is bidding for this kind of mandate. It's a quite a prestigious mandate and incur any incremental cost should be fine. That's the way we build it up. Of course, I'm sure over a period of time, everything changes, it can add to a few basis points for our profit as and when the permit, of course. Thank you so much. That's it from my side.

21:40 Yes. Thank you. The next question is from the line of Shreyas Pembli from Nobaravel. Please go ahead. Yeah. Thanks for --. I hope I have heard from this time.

21:54 Shreyas, your voice is still breaking. Hello,.

22:02 We are unable to hear you. Okay. What you can... Harish, we ask since you have some question, after the call and then address your question as well since you are not able to do... We are not able to hear you properly.

22:22 Thank you. If if if that okay, we can do that. Yeah. Yes, sir. Participants to ask a question, please press star and 1. The next question is from the line of Prajjan from Motila Roosevelt. Please go ahead. Yeah. Hi. Sir, a few questions. Firstly, some broader questions. Now how do you see the industry kind of moving with respect to flows? You know, SIP has held up strongly, but, you know, large lump sum flows have been a bit of a challenge in the recent past. How do you see that? And on the other hand, we've seen very strong traction in SIS inflows. Do you see that, you know, the AUM or the flows are moving from mutual funds to SIS or some other categories, you know, where...

23:15 Especially in the in the medium ticket size where, you know, earlier this option was not there. The competing products were probably PMS and AIS, which were at a much higher ticket size. However, SIS is at a much lower ticket size. But do you see that change happening? And

23:31 would you say that from a medium term perspective, SIS could be a product where things can be very different? That will be the first question. I'll ask the questions, other questions later. Yeah. Yeah. No. Thanks, Praj. For a broader view, I think general sentiment towards or a comfort and sentiment towards investing in mutual fund remains. We have been traveling extensively,

23:59 wherein general negativity, which otherwise used to witness in the past during this kind of volatile time, uncertain time, then it doesn't prevail at the ground. And second is, there's a common question, of course, will understood SAPI and I think therefore that will remain as a permanent way of gateway to that mutual fund will continue to get money. And there is a segment of people who also want to come with the lump sum with the fast track, get a big kind of thing, fast track, a kind of thing. There is an interest which is there. Of course, beyond the point that money will have a limited will have limited, what do you call, availability. And then interest rate is going up. Now, so far it's coming in the bond market side, but not representing somewhere on the FNRB sorry, the deposit side because the FNR deposit coming in with the huge liquidity, banking industry is not actually purchasing hike in interest rate non deposits. Therefore, I would assume the overall growth momentum for the mutual industry would remain.

24:57 I also feel that wherever the significant flows have gone in the last, say, two, three years, we'll have to realizing there is a bit of need to reallocate funds from one to other. That's one coming, especially when it comes to the vision of Birla funds. I think there is a widespread acknowledgment that is coming from all our partners and investors. And Birla's performance have been pretty good. Therefore, how to reallocate money towards the Birla that also is coming in, which is what I make a feel

25:28 while industrial continues remains will remain. And probably we should also start getting that reallocation of funds from one to other kind of things may come in the absence of any money being incremental money being available. As far as the SAF concerns, SAF is being considered as arbitrage plus, plus kind of thing. There are two ways to look at it. One is the hybrid fund is considered as plus plus kind of thing. And

26:02 something is the option that money manager has got to go start in the market and take a view. And therefore, this category, the number of products qualifying for selling this category, again, there is a separate there is an exam that they, of course, along with the AMC exams, there is a capital which also they have to clear for the SAF selling. So that's something number of undertaking the SAF license is rising. Second is, even the people who have been otherwise funding in the market on their own, now they experience the last six months, even our own funds have been in the top performing fund in the hybrid long short category, which is taken into account arbitrage plus options, plus IPO investing and also managing the portfolio with some kind of hedging mechanism in future.

26:50 I think people are noticing it and the return has been of course much better than what you would have gotten in the other funds during the current market period. The people have realized some bit of allocation could go there. I think the way things are moving, definitely more and more allocations as an addition to the existing funds allocations would come into the SAB as a fund house. Didn't want to be the first one to launch in the month of March when it allowed. We want to actually have the skill set, a dedicated portfolio manager. And therefore, we had three people now running this business for us, dedicated team who breathes options, who breathes F and O at the same time, looking at hedging as one of the mechanism by going short term, wherever their views are there. So, this seems to be giving good experience. I think people don't want to I mean, people do want to try it out. And therefore, we are actually pushing it.

27:43 Whether it became a large category, I would probably say the way the product to a function is high probability can fit between the conservative hybrid category to the aggressive hybrid category, it could come somewhere in between in terms of size. Today, if you look at it, consider the hybrid category comes as the equity savings fund, then comes with the balance of 101 category. Then the third is actually aggressive hybrid category. This could fall between balance of one twenty one hybrid category, aggressive hybrid category, to which extent people are looking at this as a third class. Whether the large flows will come at this point of time, adding the short while of about nine months, six months, then that year has become about INR 31,000 crores. Of course, largely, his money has gone into who took the lead. But as we start seeing the performance track record with some of the unity in terms of using the tools that has been given to the managers and two to the level kind of things, once they start seeing it, we'll see this category gaining some kind of traction.

28:48 This will fall between balance one category and hybrid asset class category. I agree to every category, I would say. All right. Thank you, sir, for that elaborate answer. Just one more point on this before I move to the next one.

29:03 As a unit economics of SIS, how would it kind of look versus, say, alternates or mutual funds, equity mutual funds? Would it be in terms of yields similar to what you would earn on equity mutual fund? Or would it be more linked closer towards PMS's AIS? What would be the unit economics that at a sizable scale, would it be more profitable than mutual fund business?

29:33 Yes. Yes, sure. Prajeet is answering. Yes, Prajeet. So actually, the five categories are little higher than what debt categories and lower than equity categories. So if you see, these are in between equity and debt category. Yes. While what saying Pradeep is saying is the current model, eventually, they will evolve with the three or five categories are there in this category, which is the long chart hybrid fund, which will be akin to our bridge plus plus kind of things, which will be more or less calling in what Pradeep is mentioning. If I go to the higher end of that category, which is basically long chart equity and then the other than the next 100 long short equity and then the settlement equity when it comes, that will of course come the margin could come closer to about the equity fund, given the fact that we need all the take care of the distribution commission that is involved.

30:30 And then the fixed income, there is another category they are permitted, which is the fixed income credit fund also can be launched under this category. That may come like a dynamic bond fund, wherein we get about 50 basis to 60 basis points kind of dynamic. That's the way it could evolve. So right now, it's too early to say in which direction it will be. But as the building starts size starts coming in, when we look at building this each of this category, we'll try and actually somewhere look at what the risk is involved and what is the purpose is done accordingly, the pricing will get fixed. Got it. Sir, the other question is on your flows. So, you know, while we don't share flows data as such, but it would be great if you could share some insight into what was the exit rate for us in the sense that whether our exit rate, low market share was better than our AUM market share. Have we reached that stage?

31:33 And, in terms of SIP, again, while there is some pickup in the data points that we have shared, but it's still not reflective of the strong fund performance that we have. So what are the initiatives that we are taking to kind of increase both the flows as overall flows as well as SIP? Yes. I think two, three things. In terms of our focused product, as I mentioned, we are seeing an increased traction. The way we looked at is in terms of quarter on quarter basis, how the numbers can come, which essentially taking into account the flexi cap and the multi cap one category, even the balance category, multi asset gain one category. That's something we are seeing flows coming in.

32:19 There are about six or seven products, including small cap and mid cap, we are seeing. Of course, as you rightly pointed out, the rate of growth and each of these things should move up. That's why I think the initiative that you are taking is to drive the engagement with the distribution partners and communicate very strongly in terms of how we are doing vis a vis the market, vis a vis the benchmark, a vis the peer group. In fact, 85% of our funds are in the peer group in addition to beating the benchmark as well. So those are the communication needs to be communicated in terms of narrative very strongly. Birla has found out the needs a little more a lot of attention on these improvements that we have done. Therefore, this is driving us through the communication and engagement at the ground level has gone up quite significantly.

33:05 Second, in order to drive the sales team for the SAP improvement, we have set a target for the whole team both by we are setting a target and also incentivizing the team to get a larger success by way of SAP, right? That's something again we roll it out for each of the location wise improvement that individual should build on the base of this. And the third is, of course, visibility. Generally, fund house this last two, three months that we improved our increased our visibility maybe of brand expenses. There are also something we are doing like small cap education that we are doing. We have printed the entire country in select pockets of country.

33:54 They're going to ensure that our brand recall also gets comes and support comes both in the digital platform as well as on the physical platform, which is the traditional platform. So these are the initiatives that we are doing. Last but not the least is the proof of this thing also comes from our product recommendation. Some of the key large national distributors or bank distributors who predominantly go by the product recommendation to the investors, wealth management team or maybe the PPG team. In fact, I'm happy to share with you in three or four channels, the large channels. Of course, have about 30 channels in which we have products are being recommended list. But at least the four or five channels gives a volume as well as have a high reach. In those channels, the products are being recommended. Therefore, even the exclusive channel team members across the country, they are getting an opportunity to increase their connectivity.

34:47 And therefore, they can engage more and then also get more, what do you call, subscriptions. So these are some of the things we are doing. Hopefully, these things I think should give us incremental continuous focus there. Okay. Any comment on whether you are exiting through market share was higher than your AUM market share? Yes. Basically, way we looked at is adding from each partner model, we did some analysis again is more for internal purpose. The ratio of exit with respect to the redemptions versus how much is being retained. The retained ratio, suppose somebody redeemed INR100 crores out of reach, how much is getting retained, the number goes almost about 25% to 30% kind of retention that you have used to be somewhere around the past or maybe four to 5% in the past.

35:43 That retention ratio is increasing. There are two ways that's something which we try to do. After we can't stop redemptions on those schemes, which are currently not in private. At same time, performing in those schemes is very important to the extent the redemption can be reduced. Second is, the other redemptions are there, I also increased them to move to other funds that delivery is going to remain investors in the schemes in the fund. And that's something we are increasing. Therefore, switch is also, to that extent, I would say the ratio has been rising. The similar way, even when I travel in the market, people do ask questions about incremental money being given. And there also something I see is an acceptance coming from people where we've doing more allocations, but the experience is not that great. Even those kind of investors are also now expressing interest to restart some of the things that would have probably stopped in between. But also I see as a one of the trend that is coming in.

36:52 The next question is from the line of Meghna Lutzha from Incred Equities. Please go ahead. I had a question. Is the system is I'm sorry to interrupt you,, but your voice is breaking. Can you please check your connectivity? Yeah. Is this? Yes. Please go ahead. Yeah. Thank you for the opportunity. I just wanted to have a question on the mandate. Since it's profitability neutral, we expect some debt side or the EDF side, or what other benefits can we see from the mandate? Yeah. No. The mandate, of course, every mandate that comes from the government, we need to be competitive, both both on the technical qualification as well as financial qualification.

37:47 Therefore, it doesn't give us any added advantage that okay, won this mandate before all other mandates will become natural. But at the same time, there are many such mandates that could come from other providers of mandates, who are actually outsourced enough mandate to outsiders, other fund houses. It definitely supports us in terms of yes, it definitely helps. Second is, as I mentioned, there is a privately managed APFO, which runs on their own. Then actually it increases the entry barrier, which as you would so that improves therefore it can help in increasing the flows coming from privately managed assets with the attempt that we are making.

38:37 And third, of course, when you're also looking at winning mandates globally as I know that comes in, it helps in terms of overall credibility, including public sector units, it actually adds to the overall credibility. So that's the way I call it above effect. It's quite large. That's only we can also build our the large size the scale that we have one of our main scale billing scale is one of our key growth mantra. In that it helps. But only thing is as a bundle, we also ensure that while we have to manage this kind of money, we ensure the cost is also kept under control without compromising on the quality of service I'm supposed to provide to each of these mandates.

39:25 Got it. That's helpful. And secondly, what would be... I mean, if you can help give some color that the flows and FlexiGab have been pretty strong and good in the last quarter. So what could be the mix over there? Is it the same mix that we are seeing on the equity front between, say, 50%, 52% MFDs and and direct and, you know, between the national distributors? Or is the mix different for, say, a flagship cap fund which is quite strong performance fund? Yeah. The way I I see is in terms of in terms of flow of funds. Definitely, of course, flex fee gets a little higher than other funds, given the fact that it is part of the recommendation list everywhere. And second is general acceptance on performance improvement quite visible and deep in their understanding.

40:25 Therefore, they are to give allocations where these rising. But at least broadly, when I look at it, MFDs and each of the channel partners as

40:33 a fund house, roughly about 52% of funds is come from MFDs, which is what our engagement is with them quite significantly. Second, of course, the national distributors refer about 20%. The bank is about 10%, which is what I think I'm mentioning that now the products are part of recommendation list. An incremental share coming from the banking account is rising, specifically a flexi cap fund. And direct channel something remains about 18% that we continue to drive both in institutional segment as well as on the HNI segment. Just to answer your question in terms of FlexiCab, the recognition is good. Understanding of people that there's one or two funds are Birla, 1,000 if you have to take large exposure, Flexicap is an automatic charge that comes in. And that's something which I'm seeing as an incremental growth number comes in the segment is rising.

41:25 Same way, we are seeing in the multi application fund, where performance improvement has been quite good and was quite visible. Same comes in the case of balance of bondage fund and the multi cap fund. Even a small cap fund, flows have been better than each quarter, I would say. And lastly, is there any new addition in any of the bank recommendation this... During this quarter?

41:59 Yes. I think and four, five banks have come. Of course, the latest addition is part of the largest private sector bank where they added more product. And they're already part of the protect channel. And otherwise, basis, we keep seeing the addition keep coming in. Okay. Great. And lastly, sir, what would be your pipeline on the equity side more specifically and even overall in terms of new product launches? Anything on the thematic sectoral funds that will be done? No. In terms of in terms of our product, currently, of course, in terms of pipeline effects that we have continued to push. We have finished our fund launches.

42:48 Now we are promoting aggressively to get our rightful market share. Second is in the passive side, we have launched a product which I think will become part of the permanent flows, which is the total market index fund as well as ETF fund. And third is the we have launched financial services sectoral debt fund given the fact that these have gone up and we launched it as one of the open ended product. And in terms of our alternate product, clearly related credit opportunity fund Series two, right now, we are in the fundraising, intend to close it by December, in the

43:30 same way credit opportunity fund. From the Gift City, we have two products, one for the emerging market fund, which is outdoor remittance and LRS. We have a great track record of managing money in the emerging market. In the same fund, we have relaunched it, hope to get some of our decent flows in that. And the India Growth Fund, which of course will use the best of Birla to invest in the fund up fund from Gilcity, that again for a no remittance in addition to Flexiga funding on the remittance that we have. Other than that, of course, we have well listed the product gap between the what Sebi has offered and what the company has got and what we have. And we identified one or two funds in the category that we can of course launch it. We only filed with one product with Sevi.

44:17 I think it's too filed with Sevi, I think. I think once it is done, we'll have one or two open ended equity product and based on the gap, including the life cycle fund, we would would plan to launch soon.

44:32 The next question is from the line of Gaurav Jani from BFL Capital.

44:48 Thank you, sir. Firstly, if you could just, you know, quantify the ESOP cost that would come through in '27, '28 and '29. Also, given I think we've launched a new ESOP scheme as of today from now on. So any changes because of that? Sure. Yeah. Yeah, Gaurav. So the scheme which has been launched yesterday, that may have impact of around 14 crores to INR 15 crores per annum. So roughly around INR 3.5 per quarter. So this would be an earlier schemes, which are already going on. Roughly the yearly impact would be between 55 crores to 60 crores in coming two years, means yearly impact, 55 crores to INR 60 crores yearly impact.

45:37 Yes. It's also coming on the basis of a broader strategy for both employee reward and then we reward them for their long term performance. So that's something

45:51 we rolled out covering largely the investment team and some of the other members of the AMC. Sure. So sir, this would be basically $55.60 plus $14.15 for two years, right? I mean, to clarify this year and the next year. Yes, yes. Yeah. Okay. Understood. Secondly, could you quantify the SIP AM, please?

46:18 SIP AM is around 86,000 crores. Okay. And, sir, lastly, I think on the direct side of, you know, there is there is probably something to be desired as compared to our peers. So, you know, what what kind of what kind of steps are we taking to kind of, you know, shore up our direct channel? Think in equity, are about 18%, which is probably one of the lowest. Just wanted your thoughts on that. Sure. No. We, of course, build our direct team. We were not pretty early in the building of our direct team and that was introduced. We have another day. We do work with of course large distribution community as well as build our own base. I think we now have almost about 80 people dedicated in 14 locations which we operate, reaching out to our existing direct customers who have we used to have large HNI base pre-twenty twenty versus now. So all those customers, one, who are investing directly.

47:22 So we have stepped up our focus in terms of reaching out to them. Second is a lot of referral systems through which either through the existing systems, existing customers or through our own ecosystem, which includes ABG systems as well as ABC systems and ABCD systems and work together in order to build

47:46 direct to the customer base. So that's something we are doing. And whatever of course gap areas are there, as you rightly pointed out, ourselves have identified there's an opportunity that we need to step up our focus. So we divide them into three parts. One, the customers who are greater than INR 1 crore will be handled by the safety people. And our operation team, which of course we call the service to sales anywhere between 25 lakh rupees to 1 crore will be handled by that team. So we divided that team into two parts. And third is of course virtual relationship manager,

48:23 headboard, with customers and often promote our product. That's something we do. These are three channels through which I think are driving it. But of course, it needs a little more aggressive growth momentum. That's something we identified as a focus area for sharpening the execution skill on this. So, Rajesh, if I could just squeeze in one, would be your thoughts? You know, surely, we are seeing performance in the one year bucket improve phenomenally. And it's also kind of, you know, enhancing in the three year bucket, not probably as much as the one year because of the lag effect.

49:09 So, you know, what are what are your thoughts on profitability versus, you know, growth? Right? I mean, would you would you not mind, I mean, paying up extra to distributors and getting some more flows, or what's your thought on that? Yeah. We are quite balanced in our approach. At the same time, we also need... We also understand that we need to push aggressively on sales momentum. So we do the right balance between keeping in mind wherever there's a product in which we need to be little aggressive in the beginning in terms of accretion of money and then subsequent to their profit will come. So the way we looked at is any incremental growth that comes in is not going to come at the cost of a profit margins profitability going down. Maybe the margin on incremental assets we'll try to maintain it, but still it will actually add to that.

50:05 Approach we take. At the end of the day, the idea is actually to invest on the business and build our scale, which we deserve. At the same time, just keep in... Keep... Have a... Be mindful of the cost that we incur, but we keep calibrated and a continuous basis.

50:27 Sure, sir. Perfect. Thanks. Thanks so much for your answers. That's it from me. Thank you. The next question is from the line of Shobhit Sharma from Illara Securities. Please go ahead. Yeah. Hi, sir. Thank you for the opportunity. Sir, I have one question, which is on the scheme performance. You mentioned the scheme performance has improved, and we have seen some some indicators some indication on the SiP close and SiP count as well. So can you give us some color around the flow share? Have we seen rising flow share from the fintech side or the MMD side? How are the early signs been? And any color on the scheme category we have been seeing humongous amount of flows coming in from each of these channels?

51:09 Shumita, I just mentioned about this in my earlier answer session. So broadly, when I look at it, in terms of account, definitely roughly about 55% to 56% of the account is coming from the digital platform and rest of it is coming from the traditional platform. When I look at the same in the form of amount,

51:31 absolute amount in terms of contribution, now for the digital channel is very lower in ticket size. Therefore, that's roughly about 18% to 20%. And that's why we're coming from the traditional channels, which I can mention earlier, the traditional channels where we are seeing incremental growth coming from both MFDs as well as banks and the national distributors. Of course, the rate of growth on a quarter on quarter basis is getting improved, so which is what I think we are also trying to push. Then your second question was yes, this is only question, sorry. So incrementally, have we seen the flow share increasing because of the scheme performance which has improved or traditionally it has been on the similar line, specifically on the digital Yes. The way we design the narrative is first and foremost, the perception of improvement or performance should be changed.

52:30 And second is performance improvement should be accepted and basically, you should start allocating flows. In fact, the first round of perception improvement that got changed quite significantly. And as you rightly pointed out, almost about 88% of the funds, 78% of the funds is in the Q1 to result of the peer group and 88% of the funds are between the benchmark as well as peer group. And it is from a one year, it traveled about two, now it's about three years, even three years, this is 70% of the funds are in the Q1, Q2, which is what is being noticed. And again, the core funds, which are essentially where the major allocation happens. So 61, 71 allocation comes from the core category or maybe focus category, we can call it, which I again mentioned the names earlier. And those funds, we are seeing an incremental basis, flows are getting better. Definitely, few basis point improvement, ultimately, if it keeps improving, it will lead to larger shares coming in.

53:33 Okay. Got it, sir. Thank you and all the best. Thank you. Ladies and gentlemen, that will be the last question for today, which is from the line of Kumar Sharma from Antic Stock Broking. Please go ahead.

53:47 Hello, sir. Thank you for the opportunity. So the first question is to understand the expectations in terms of cost growth for the year. And the second one would be the breakup of your investment book. So, Pumal, cost would be, I think, the inflationary impact would be there. But other than that, we have already factored in the ESOP cost,

54:17 which was a little higher this quarter, I think that will continue as we discussed a little before. So I think cost will be in line what is there in Q2 and except the inflationary impacts, both in employees' cost as well as other business cost? And the second question was on investment book. Yeah. So what is the question on treasury? Treasury investment book. Yeah. So so what was the question?

54:45 Was on the investment book. The breakup of the investment book, the equity Yeah. We have about 2,802 thousand 890 crores as of today. Our investment treasury book, which will... Which is deployed across largely into debt mutual funds and corporate bonds and partly some share into equity schemes, which is in line with the consistent investment policy which we have. Yes. And equity share is between around 17% to 18%. That is all debt and corporate bonds. Yeah. Got it, sir. Thank you. Thank you. Ladies and gentlemen, as that was the last question for today, With that, I now hand the conference over to management for closing comments.

55:37 Thank you, everyone, for joining us today. If you have any further questions, please contact our IR head,. With this, we conclude the Q2 earnings call. Thank you. Thank you. Ladies and gentlemen, on behalf of Multira Lohswa Financial Services Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.