360 ONE WAM LIMITED (360ONE) Q1 2027 Earnings Call Transcript

Good evening, ladies and gentlemen, and welcome to 361WAM earnings call for Q1 FY27. As a reminder, all participant lines will be in listen-only mode. In case you wish to ask any questions, kindly click on the raise hand icon. Please note, this conference is being recorded. On the call today, we have with us Mr. Karan Bhagat, MDN CEO, Mr. Yathen Shah, CEO of the Wealth Business. Mr. Sanjay Wadhwa, CFO, and Mr. Anshuman Maheshwari. I now hand it over to Mr. Sanjay Wadhwa to take this call forward. Thank you.

Thank you, Anil. A very good evening to all the participants and thank you for joining us on our Q1 FY27 earnings call. Before turning to the financial performance, a brief word on macro backdrop. Indian equity indices staged a broad-based recovery over the quarter, navigating a period of geopolitical uncertainty with characteristic resilience. The resilience was equally visible in flows into the domestic asset and wealth management ecosystem, reaffirming our conviction in the industry's structural growth story. India's wealth market remains deeply underpenetrated and presents a significant growth opportunity. For a franchise like ours that is positioned at a premium end of the market, this represents an opportunity to compound our leadership over the coming years. Let me turn to the numbers. Our total ARR AUM increased by 19%, to Rs. 3,42,000 crores, with wealth AUM at 2,42,000 crores, a growth of 24.2%, and asset management AUM at Rs. 1 lakh crore, an increase of 8.2%. Overall, AUM grows by 17% to 7.8 lakh crores as on June 30, 2026. We garnered the ARR net flows at 10,815 crores in this quarter as compared to 8,985 crores in the previous quarter. The wealth business drove the increase, contributing strong flows of rupees 13,379 crores as compared to 6,957 crores in Q4. It is a clear reflection of sustained momentum in our core UHNI franchise, amplified by contributions from recently onboarded teams. On the asset management side, even as cross-flow remained very strong at approximately 4,000 crores, the net flows were negative due to one large outflow in an institutional mandate. Q1 FI27 ARR revenue stood at 614 crores, up 20.3% year-on-year, with ARR revenue now comprising 75% of total revenue from operations. ARR retention was at 74 basis points, with wealth at 71 and asset management at 83 basis points. Our TBR rose by 37.3% year-on-year to Rs 208 crores during the quarter. Total revenue increased 20% to 870 crores, driven by strong growth across both wealth and asset verticals. Total cost stood at 446 crores with a cost-to-income ratio of 51.3% as compared to 53.5% in Q4 FY26. We expect gradual improvement in this metric as these businesses scale up. We drive synergies from strategic initiatives and incoming wealth teams reach full productivity. We are very happy to report a profit after tax of 330 crores, an increase of 14.8%. Tangible ROE stood at 19.4%, and we expect this to improve as capital deployed in our lending and asset businesses begin to reflect in earnings. Before turning to a brief update on our individual businesses and strategic initiatives, let me reiterate the structural backdrop underpinning our confidence. Acceptance of professional wealth management continues to rise, and wealth creation at the top of the pyramid is outpacing the broader economy. For a full-stack platform spanning across wealth and asset management, this is a long and durable runway, and our strategy remains centered on being the manager of choice for our clients' core portfolios. Our UHNI franchise remains an anchor of the firm and continues to perform very well. The addressable market spans 40,000 to 45,000 households, and our focus is consistent across three vectors, deepening wallet share of existing clients, extending beyond the top cities, and being the manager of first-choice post-monetization events. Our advisory-led proposition continues to gain traction as clients migrate from transactional product-driven engagement to portfolio-level solution-oriented mandates, enabling more comprehensive services across the platform and relationships that endure across cycles and generations. We continue to invest ahead of the curve across RM capabilities, technology, portfolio analytics, and client data security. Our H&I proposition is scaling well and is a natural extension of the UHNI franchise. The program now spans approximately 60-plus relationship managers across 12 locations, managing in excess of 5,000 crores of AUM for 800-plus clients, at ARR retention yield of around 90 basis points. What makes this segment strategically important is not just the 200,000-plus household opportunity it opens up, but that it acts as a powerful feeder pipeline into our core proposition, supported by a digital-first, scalable operating model, a state-of-the-art client and RM app, and referrals from our existing client and RM base. As business momentum continues and productivity builds through the year, we expect the business to break even on direct cost by end of this year. FY26 was a year of deliberate strategic transformation of the ET money business, resetting the business model towards profitability. We expect the business to reach break-even level this year. In the institutional business, the institutional equities franchise continues to perform strongly with 550-plus mid- and small-cap companies under coverage, 300-plus institutional clients, and over 85% of broking revenue from the cash segment. More importantly, the synergies envisaged at acquisition are coming to life. Broking income from UHNI clients is seeing an uplift, and access to 600-plus corporate treasuries is opening meaningful cross-sell into wealth, treasury advisory, and lending. Our ECM-focused IB capabilities, while still building out, are showing strong early traction. We expect the broking mix to turn steadily more annuity-like as institutions scales up and UHNI participation rises. Our asset management business continues to be a structural growth engine, and its quality is reflected in a rising ERR contribution and improving cost efficiencies. AUM has now crossed key milestone of 1 lakh crore with strong momentum across our alternates platform, comprising of private equity, private credit, real estate, infrastructure, renewables, and multi-asset, as well as listed strategies. Our product engine remains active and extremely effective. We continue to broaden the shelf across AIF, PMS, and MF platforms, including SIFs. The offshore opportunity is building steadily, aided by global institutional mandates, and the distribution reach that our collaboration with UBS opens up. We continue to see steady progress across the various components of our UBS collaboration, cross-referral programs across NRI, resident, and global mandates are showing early traction, and we expect these to convert into meaningful flows over the medium term. UBS's global distribution is also expected to open up offshore capital access for our alternates and listed strategies during this year. Taken together, these businesses reinforce the 361 flywheel as a single integrated platform across wealth and asset management, in which each business strengthens the other and deepens our relationship with the client. I would like to thank all our stakeholders who have been with us, and with that, I'll hand it over to Karan for his comments.

Thank you, Sanjay. The floor is now open. We have Karan join us. In case you wish to ask questions, I request you to kindly click on the raise hand icon. We'll give it a minute for the questions to queue up. I request Mohit Mangal, kindly unmute yourself and ask your question.

Right. Thanks for the opportunity and congratulations on a good set of numbers. I've got three questions. My first question is basically on the net flows. I think, you know, we are on the target to achieve that 12 to 15% of opening net flows. But do you think it would be more lopsided towards wealth as AMCs kind of, you know, seeing outflow specifically in the PMS over the last two to three quarters?

Mahat, do you want to do all three questions and I can answer it?

Okay. Okay. So basically, my second question is on the cost to income ratio. I think we have this kind of mandate to, you know, go at least 150 to 200 basis point decline. But this quarter also, it was more than 51%. So should we expect the remainder of financial year 27 to have that operating leverage and decline in cost to income? And lastly, Basically, an industry question, wherein, you know, we are a significant player in the private credit industry. So just wanted to know, you know, how do you see the future for this segment? And how are we kind of positioned to, you know, increase our domain position for it?

Thank you. Thank you, Mohit. Thank you, everybody, for joining in. So very quickly, starting on the net flows, I think, you know, last quarter, generally speaking, FIF flows into India as well as large institutional mandates have been a little tepid. So outside of one institutional mandate kind of reducing its allocation from around about $500, $500, $600 million to around about $175, $180 million, the rest of the mandates have stayed quite strong. But generally speaking, global allocations to listed equity has been fairly muted over the last six to nine months. Outside of that, obviously, on the alternate side, we've had good flows over the last six to nine months. But I think, you know, honestly, from an AMC perspective also, I think when I look at our net flows of roundabout, give or take 40,000 crores, which is 12 to 15% of the number we've kind of started out with. We started over to like 40,000 crores of ARR AUM. So 30 to 40,000, 35 to 40,000 crores of net flows. I think I would like to still believe our net flows will be broadly broken up as 70, 30, 75, 25, broadly in the split, being in the favor of the wealth business. So last quarter, obviously, the asset management business is slightly lopsided because of one partial redemption on the institutional mandate side. But we have a lot of product launches kind of planned out for the next six to nine months, which should average out the flows between the wealth and the asset management side. PMS as a structure, obviously, is a little challenged because I think a purely, purely portfolio management scheme versus, let's say, today doing the same product on the AIF side or potentially on the mutual fund side or even on the CIF side, those three structurally present slightly better platforms to launch the same product purely on the equity PMS side. And so while the strategy is alive, while the same set of clients, for the same set of reasons they used to come into the PMS will come in, but most likely it will find its way into these three pool structures as opposed to coming into a PMS. On the cost to income side, I think we've taken two or three steps. I think number one, HNI business has kind of come to fold fairly well. I think we moved our AUM from around about 600 crores to 3,900, 4,000 crores last year. The current quarter has moved from 4,000 crores to around about 5,100, 5,200 crores. Systems are stable, execution is happening, onboarding is fully digital. Outside of us launching the execution platform on that platform, the platform is extremely stable. We are in a position where today, I think with 65, 70 people, we feel fairly confident. And we will, over the period of next two to three months, also move our small amount of clients who are between the 1 to 2 to 9 crore segment or 2 to 10 crore segment into the HNIPs. I think together with that and the constant organic growth which has happened in the H&I business, I feel the H&I piece will also kind of not only break even, but may move into a little bit of profitability this year itself. ET money, we kind of restructured quite a bit over the last quarter. I think on a run rate basis, if I exclude the costs associated with exits, we are now down to around about a 3, 3, 3.5, 4 quarterly loss per quarter. We will be seeing seven crores last quarter, potentially see another six, seven crores for the current quarter. But post that, by the end of quarter four, we'll be close to break even on the ET money side. So ET money together with the HNI piece should definitely help us retract the cost to income by around about give or take 100, 150 odd basis points. And a little bit of operating leverage both on the alternate side of the business as well as on the wealth management side of the business Should hopefully take us on Q4 basis from 51 to around about 49, 49.5, and potentially for the full year, approximately 100, 150 basis points from where we are today. So that's the picture on the cost to income. On the industry side, I think private credit, real assets, private equity, as well as the renewables, all four remain a very, very promising landscape for alternates. I think we've obviously done a lot of work on the first three, which is the private equity side, the real asset side, as well as the private credit side. So I think private credit in India is in a very, very interesting threshold. It's obviously a very, very vast industry. It starts out all the way from instruments between 9% to 10%, all the way ranging from 13% to 15%, and also moving into some kind of special situation opportunities with 18% to 20%, and then potentially some structured credit opportunities with a bit of fixed income as well as equity linkage, which could be higher. From our perspective, we've really been operating more on the first two buckets, which is really the 10% to 11% and the 13% to 15% bucket. The good news there is accidents are practically, not practically, they have been negligible to zero over the last seven to eight years. So we had a fairly stellar track record in that. Having said that, Good morning, everyone. Obviously, we've not kind of ventured into the deep private credit side. And two or three things which have happened in India where the regulator has been, you know, kind of super cautious and rightly and allowed the industry to do extremely well are two things. One, obviously, unlike the rest of the world, I think we really don't have semi-liquid or kind of partial liquid funds. So there's really no schemes which have gated redemption pressure. So in that sense, that's kept the private credit industry going quite well. And secondly, I think just the pure nature of, we've seen a lot of institutional demand from insurance companies as well as other domestic institutions to participate on the private credit side. Just given the long tenure of the money they have to manage, the ability to generate that extra 250, 300 basis points over a longer time period is extremely interesting to them. So overall, if you ask me, I think the private equity industry is a very, very nascent stage in our country. And, you know, I think it's over a period of time, I think I would not be surprised if it continues to grow as fast as the private equity industry itself.

All right. This is very helpful and clear. Thanks and wish you all the best.

Thank you. Thank you, Mohan. Thank you. May I request you, in case you wish to ask a question, kindly click on the raise hand icon. Next in line, we have Praesh Jain. Kindly unmute and ask your question.

Hi, thank you for the opportunity. Karan, three questions. Firstly, a broad look at your retentions in this quarter. It's been kind of down across the board, you know, and so even if I exclude the carry, I think there seems to be some pressure on retentions, whether it's in AAMC or whether it's in wealth management. There seems to be some kind of pressure. So, if you could allude as to what are the factors that are kind of driving that. Second question is on UBS. You know, you spoke about ET money and the HNI segment breaking even. But I would presume that incremental flows coming in from UBS can be a big operating leverage Because I don't think there could be a large element of cost associated with those UBS mandates. And lastly, in your previous call, you had mentioned about the RM addition target of taking the RM count to about 400 in the medium term. So would that mean that your cost to income kind of stays elevated? You kind of guided for it to improve by 100 basis points, 150 basis points from the point where we are today. But structurally, how should we think about the cost to income that it stabilizes at the levels that we see in the current year, or do we see further improvement going idea? Those would be my questions.

Thank you. So I'll quickly start with the question of the retention. So I think broadly, retentions are kind of down approximately from 78 to approximately 73, 74 basis points. I think largely out of the four basis points, half of that is broadly attributed to carry. So close to out of four basis points to two and a half basis points is really a function of carry recognition, largely on the asset management side and partially on the wealth management side. The remaining two basis points is largely a function of the mix of business. So I think on the wealth management side, I think the advisory business has a slightly lower retention than the distribution business. And also the TBR, typically speaking, for no specific reason, but typically slightly lower in Q1, Q2 as compared to Q3, Q4. So those are two things kind of impacting the retention a bit. On the ARR side, purely on the wealth side, it's just one or two basis points is largely a function of the mix. And similarly, on the asset management side, it's really nothing much outside of the mix of the business. So I can't, for any specific business line itself, we've not seen any reduction in margins. I think advisory continues to be broadly in that ballpark of 30 odd basis points, 30 to 35 basis points on average, 25 to 27 basis points for large mandates, and 30 to 35 basis points on average. Discussion continues to be in the region of 40, 45 basis points, and distribution largely in the region of 65, 70 basis points. So it's really largely a functional mix. So roundabout, you know, give or take one, 1.25 basis points on the, the only place where we see a little bit of retention pressure, which will kind of keep playing out is on the pure listed side of the asset management business. I think that that business kind of will continuously see a little bit of margin pressure for us. Obviously, it's a, it's, it contributes around about eight to 9% of our revenue. So that's the only place where I feel there'll be a headline decline in retentions. But otherwise, it'll be broadly continued. I would give or take, you know, not hazard a guess more accurately than between 70 to 75 basis points on the ARRA UF. I think there might be quarters where it goes towards the 70, 71, and there will be certain quarters where it's towards the 74, 75. But it will be between that 70 to 75 basis points. I think on the UBS side, obviously, I think... We started the process of onboarding our funds mutually and referring clients from January to March of the current year. I think we made super progress. Would be fairly certain to say that in the coming quarter, we should have some funds launched in both ways. UBS potentially launching some of our funds and we launching some of UBS's funds in India and simultaneously also referring clients to each other. I think we've got a certain AUM number of, a fairly conservative number, but in the region of $500 to $600 million, hopefully to get kind of exchanged between both the organizations over a period of time. And that's really what we're going to use as a measure of collaboration. And I think that's really the first step rather than trying to look at cost to income and trying to see profitability numbers out of it. But I think both the organizations can add value from the collaboration and ensure that we are able to kind of add value to our platforms. That's really where our step is. We're fairly confident over the next three months, we'll start some money actually changing. And similarly, by the end of maybe a year from the time we started, which is Jan to March, we'll definitely be close to some of the internal targets we've kind of set out for ourselves. On the RM count, you know, we currently obviously wanted to add around about, as you rightly said, move towards the 350 to 400 RM target number. I think we broadly got a target number of 9,000 to 10,000 families as compared to the 4,100 families we have today over a three-year time period. Now, all things being equal, 10,000 families would need around about 300 to 350 RMs to manage. Today, potentially, that means we add around about 30 to 40 RMs a year over the next three odd years. Obviously, some internal junior RMs will also keep escalating and kind of move up to become senior RMs. So 350 to 400 senior RMs over a period of time would need around about 30 to 40 RMs to get added. I think, to be honest, that's one part of our business on the wealth management and ultra high network wealth management side, which typically kind of RM's relationship managers are able to kind of work within the system extremely well and potentially break even in our system substantially faster than most other platforms. So in our core cost to income, if I look at our core stable ultra-HNI cost to income, typically tends to be in the region of 45 odd percent. We always assume 100-200 basis points for expansion and for new people to come in and productivity to kind of get settled in. So there we are fairly convinced about being at the 44-45 mark long term and 46-47 mark depending on how recruitments pretty much happen. That amount of operating leverage is built in because every year there are a cycle of people who joined last year who are becoming productive this year. So in some senses, it's a perpetual hiring curve. So I think on the ultra-HNI side, really, I think the cost to income remains in that 4647 zip code, including some of the hiring we have to do. The bridge between the 5051 to the 47 number is really not coming out of the or not getting subtracted out of the hiring on the ultra-high network side.

Just one follow-up, Karan, on the UBS thing, if you can delve some bit on the unit economics of the business that you would have in mind, if you kind of reach the 500 to 600 million asset transfer between the two entities, what kind of revenue potential or does it operate at the similar cost structure, what we have today, how should we think about this if it gets added to your AUM?

Honestly, I wouldn't want to kind of just go absolutely deep down from a user economics perspective. But I think at a headline level, at a very headline level, it's fair to say that it's mutually very accretive for both firms at whatever retention we are able to do business. Because honestly, I think from an India perspective, we have a very strong platform already built out. And I think UBS from our collaboration perspective already has a large, large, large platform built out. So obviously, it doesn't disproportionately add to our costs. But obviously, I think from a retention perspective and pricing perspective, the market will discover it. And I definitely see it being fairly accretive to the P&L. But exact terms of retentions and unit economics, I would want to kind of wait and see how it kind of plays out over the next six months. Thank you and all the best.

Thank you. Next in line, we have Aegis Lakhani. Aegis, kindly unmute and ask your question.

Yeah, hi, Karan. Congrats on the numbers. Karan, just one question. I wanted to understand the yield that your net new inflows typically have.

Oh, again, it just depends on the kind of net flows. Obviously, if it's pure advisory, then obviously it will be in the region of 30 to 35 basis points. If it's discretionary, it will be 45 to 50. If it's pure distribution, it would be 60 to 70 basis points.

Uh, okay. And, and, you know, since you're dealing with very large clients here, is there, is there any element that, you know, probably it's, it's a little more subsidized upfront and, and then it sort of builds out or there's nothing of that, uh,

as, as, as I think relationships definitely built out. I think, you know, needless to say, like in most businesses, I think at a starting point, we are always facing a little bit of competitive pressure, but that competitive pressure eases out as the relationship kind of goes deeper. And obviously, our own ability to offer the entire platform to the client becomes larger and larger. So obviously, I think, you know, clients end up doing a lot of work with us on the overseas platform, on the lending platform, you know, sometimes on the banking side. So obviously, I think the ability to kind of go deeper, both vertically and horizontally with the client becomes larger and larger. And sometimes, you know, if there are large mandates, obviously, we have to kind of... Be slightly flexible on the fee. But I think we've done a fairly decent job. And I think at scale to build an advisory practice with this retention has not been that easy. Because obviously, I think building out a product model is relatively sometimes easier, but scaling that is tougher. But on the advisory side, the flip is, obviously, I think it's tougher to build out the service model and even tougher to charge fees. So I think you have to kind of combine both of that. And obviously it has a lot of benefits because it has the ability to scale up faster.

All right. Thanks and all the best.

Thank you.

Thank you. May I remind you, in case you have any question, kindly click on the raise hand icon. Next in line, we have Dipanjan Ghosh. Kindly unmute and ask your question.

Hi, Karan. Good evening. So a few questions from my side. First, you know, we are obviously seeing a very strong flow number in the 361 plus segment. I mean, basically the overall wealth segment and not for this quarter specifically, but if I look at the past few quarters after the attrition related issues kind of got sorted. Now, I think at the start of the call, you mentioned that a lot of it had to actually do with the new teams that have been onboarded. So I just wanted to get some sense of, you know, incrementally, what is the contribution of flows coming in from these large teams which have onboarded? And, you know, because you have aspirations of scaling up the RM franchisee and the client franchisee to that 9,000, 10,000 levels. I mean, do you expect the contribution from new clients or new wallets to actually be a relatively higher portion of your flows in the wealth segment compared to, let's say, what you used to see on a run rate basis? So that's the first question. The second is on the core transactional revenues, which is X of BNK. I think on that part of the business, I mean, despite being a relatively weak and volatile quarter, you're still kind of clocking around that 140, 150 crores, which historically used to be, you know, towards the upper end of your guidance of 150 crores per quarter, just on the core part. Now, in terms of the pipeline on the TBR side, do you see any large transactions? Like last quarter, you mentioned there were some high-yielding debt-related transactions. I mean, do you see any large transactions in the pipeline over the next, let's say, three to nine months, be it on the real asset side or on the private credit or, you know, something out there? And two data-keeping questions. I think a query on the cost part, is there around a 12 to 13 crore of exceptional cost cost that is setting out in this quarter, because if I look at your wealth, overall expense, it's around 354 crore. But in the presentation, you have mentioned that you're operating PBT, excluding some exceptional cost items. I mean, in that case, the cost is like 342 crores. But this difference of 12, 13 crores, is it some like initial payouts to acquire some teams or build up the IB business? Yeah, those are my questions. I have a small question which I can ask at the end. Yeah.

I'll start off with the color of flow. So I think that's a great question. And to be honest, I think what gives us the highest amount of encouragement is that we're seeing the color of flows really do well at the absolute base level, unit level, which is number of clients. I think, honestly, for us, that's the asset test. And I think what gives me the most amount of excitement is if I just go back, maybe 36 months back, a number of clients with more than 10 crores with us would be a number somewhere in the 1,800, 1,900, 2,000 kind of number. And that number, obviously, today is just above that 4,000 kind of number. So that's the biggest opportunity. And I think eventually, that's what really adds the AUM, because if this 4,000 becomes 8 to 10,000, because most of these clients at 10, 20 crores would be maybe 15, 20% wallet share with us. And obviously, what happens is the ability for us to, as a full-fledged wealth platform, the ability to really seep in and kind of increase our wallet share is the highest. So the ability to really kind of canvas these clients from 4,000 to 5,000 to 6,000 to 8,000 is going to be one defining big number for us from a wallet share perspective. If I was to specifically look at last three, four quarters, I think it's kind of the same. It's A, I would say number of clients, B, obviously a slightly higher wallet share or slightly higher market share at the point of the client having a liquidity event. And thirdly, I think our own ability, together with the help of all our relationship managers, the advisory team, and as well as the product team, to be able to kind of increase our wallet share with the client as time goes by. And I think the third one is really, really important because most of the clients we end up dealing with eventually end up with two or two and a half advisors. I like to call it two and a half because there are two advisors the client is dealing with on a day-to-day basis, and another half advisor is always kind of lurking around. Initially, most advisors start, most clients start with four, four to sometimes even five advisors. And our ability to really be part of that too, as opposed to, you know, kind of starting as one out of the four or five is really what has been very, very distinguishing. So I would say it's going to be a combination of both. At the base level, we have to have the right number of families. And as we scale up, I think we have to ensure that we have the right quantum of wallet share. The transaction collection is also great. I think, to be honest, We've been trying to improve that over a large period of time, we've come off from a place of having a lot of kind of lumpy transactions, sometimes on the fixed income side, sometimes on the private equity side, with the co-investment regulations in place and our ability to raise. We have to raise money in the AI PMS and in the CIV vehicle for co-investment, for standalone transactions. It really kind of gives us a better vehicle to be able to collect long-term money even for single instruments rather than going out and doing syndication in those kind of transactions. So that necessarily means a lot of those assets will get converted to ARR assets rather than come in the form of transaction brokerage assets. Obviously, it reduces the upfront revenue, but from a business perspective, adds a lot of good color over the next 5-10 years because it allows us to be able to potentially charge a fee as well as charge carry over a longer period of time. So I think just the inherent ability to develop To have individually large transactions on the TBR side is becoming lower and lower. And I think if I was to look back over the last four quarters, maybe we had one transaction like this in Q4 last year. But going forward, these lumpy transactions will become lower and lower. We've at the same time worked very hard, like you rightly said, to ensure that while our transaction brokerage income doesn't have lumpy transactions, yet from a number perspective, doesn't change dramatically. I think we've worked hard to try and kind of get it to a consistent 125, 150 crores number. The hope and ability to potentially increase it by a modest 10% to 15% as you go along over the next two to three years. In that regard, actually, I think the biggest line items to look at in that sense, obviously, will be our own ability to do two or three things. One, obviously, I think we've built the equity brokerage franchise substantially better than what we had built earlier. I think together with BNK, together with our ultra high net worth brokerage practice, today it's safe to say, you know, roundabout, I think, give or take some number between 23 to 25 crores a month, effectively 75 crores a quarter of equity brokerage on the listed side is something which we can definitely look at. Obviously, this number can go down plus minus 10% depending on the markets, but it has no lumpy nature where, you know, that 300, 325 crores becomes zero. It can go down plus minus 5-10%, or it can go up plus 10%, but it definitely doesn't have that kind of lumpy nature. With the integration of the BNK research into our high net worth fold, we are fairly confident of being able to make this one the highest growing kind of segment line items within the transaction and within the TBR business. I think just given the size of our business, at 325 pros, this broadly represents less than 7-8% of our revenues. And for any wealth business across the world, there are always clients who like to buy stocks directly. I would like to believe this should be around about 10 to 15% of our revenues as we go along. Overall, TBR will continue to still be below the 25% number, but this should definitely see an increase from 8% to 10% to 12% to 15%. Then obviously, we've got brokerage on fixed income, brokerage on unlisted equity, brokerage on fixed, brokerage, a little bit of brokerage on real estate, insurance. And finally, you'll have a little bit of income on the merchant banking side. I think all these three things, all these four things put together should end up somewhere in that ballpark number of 125, 150, 160 crores a quarter. And hopefully, we can kind of keep pushing that up organically by 15% to 20% a year. And in that sense, as the overall ARR even grows at a slightly higher clip than the TBR revenue, The TBR revenue stays in that zip code of 15 to 20, 25%, or maybe 20% of overall revenues, without actually increasing dramatically in absolute terms, but definitely increasing in terms of quality. And the last, yeah, the last, the last point on exceptional cost, I think that 12 trading costs is exceptional cost is just related to ESOPs, relative to the acquisition. So that's, that's, that's the reason it's kind of put out there. So that's really, in some senses, not necessarily, you know, kind of on a, on a, on a constant basis, but it's related to the BNK acquisition. That's about it.

Got it. And just one small question. I mean, historically, you mentioned that the carry, you know, will stabilize around the four to six basis points of recurring yields on a more structural basis. But even if you look at for this quarter, it seems a little bit higher of towards a higher end or maybe a little bit higher than the higher end of the guidance. So, you know, in terms of visibility over the at least for the fiscal year 27 or 28, how do you see that shaping up?

Hmm. I think it's still around four basis points is the right number to look at. So I think just if I look at the entire alternate, say you are approximately at 58, 59,000 crores, or just let's round it off to 60,000 crores for lack of a better word. I think 60,000 crores into around about four basis points, 240 odd crores for the year is broadly what I would look at. Sanjay, the numbers, right?

Yeah, yeah, correct. Impact is about four basis points in this quarter.

Three to five basis points is really what you can look at.

Of the AIF alternates?

Yes, yes, absolutely.

Okay, thank you, Karan, and the team, and all the best.

Thank you. Thank you. In case you have any questions, I request you kindly click on the raise hand icon. Next in live, we have Siddharth. Siddharth, kindly unmute and ask your question.

Hi, team. Thanks for the opportunity and congrats on a good quarter. Just wanted to understand three things. One, could you give some color on the trajectory that you're seeing on H&I and, you know, how much of the distribution AUM growth is coming from H&I flows? You also mentioned about ECM mandates sort of becoming meaningful. If you could give some color around, you know, how that is shaping up and how that team build up is coming in and, you know. How much of that TBR revenue is coming from ECM? And how should we think of that going forward? And the third one was on the synergies alluded to from the BNK acquisition, if you could give some quantification and some color on the nature of those synergies. Yeah, those were my three questions.

Thank you. No, so on the H&I side, as I said earlier, I think that's the portion which, from a new initiative's perspective, seems to stabilize the most. I think good early shoots in terms of both the stability of the platform as well as the stability of the team. I mean, just looking at the team itself, out of the 60 relationship managers, we've been able to grow distribution assets from a measly number of 5,600 crores all the way to 4,000 crores last year. And the 4,000 crores now grown to down about 5,100, 5,200 crores. Needless to say, like we've discussed earlier, the revenue recognition of all of these assets start with a 12-month lag. So for the last quarter, finally, we've started kind of accruing revenue for the assets we had kind of moved in the same quarter last year. So around about seven to eight rows of trail revenue has started. We are also now fairly confident of the platform and system where we have around about 4,000, I would say, not ideal clients who can be substantially serviced better, who in our system are between the one to nine crore number. And today, potentially, they contribute around about 17,000, 18,000 crores of AUM, but a relatively small revenue number of 10 to 15 crores a quarter. Those accounts can definitely be serviced substantially better. So very soon, over the course of next three odd months, we'll kind of migrate those sort of clients to the HNI team. It doesn't require a very large employee migration, less than 10 to 12 people from the ultra high net worth side to the high net worth side. So I honestly see the high net worth side business really kind of taking full shape towards this financial year. And, you know, it will kind of, in some senses, really serve the purpose of us. Kind of getting in and addressing the right set of clients between the 2 to 10 pro client, between the 10 to 50 pro client segment extremely quickly. On the ECM side, still in early days, you know, as I said earlier, we've kind of got a good set of six people, four people on the coverage side and a couple of more strategic, important people, both on the process compliance side who joined us. Some of them are serving notice period, some of them have already joined us. I think we will definitely start pitching for ECM mandates in a very, very active way. You know, starting somewhere in October or December or potentially from January next year. Having said that, obviously, we have the distribution strength as well as promoter connects in a lot of mandates. So you'll already see us in a lot of mandates. But those are really, in some senses, connects and relationships and our distribution capability, which is already there in some of those relationships. I think it's fair to say somewhere between October and December, we will be a full strength team on the ECM side. And potentially from January next year, you know, hopefully we can have a certain target number in mind to kind of attach to that business. Currently, obviously, as I said earlier, it's a very, very small business. I think revenue from that business for the last quarter would be less than eight odd crores. So in that sense, it's not really kind of meaningfully contributing to the transaction and brokerage side. But over a period of two to three years, if the transaction brokerage revenue number was to be somewhere between the 750 to 2000 pros, I would expect 15 odd percent, 15 to 20 percent to come out of the ECM side. On the synergies with BNK, you know, I think as I discussed earlier, I think the biggest synergy in the immediate short term is on the equity brokerage side. I think both the platforms put together at the point of coming together, we're doing around about 250, 260% of listed equity brokerage. I think today that number is already close to give or take 310, 320. I think that's the number I honestly see kind of increasing potentially at a healthy clip of 15% to 20% every year for the next two to three years with our ability to kind of match our wealth management clients together with the right set of research, I think will kind of lead to its own kind of expansion. And obviously, on the wealth payment side, we have a lot of promoter connects and people we manage money for, and the ability to kind of connect them at the right point of time to the ECM banking team and research team on the BNK side will also be helpful from a synergy perspective.

Thanks. This is very clear. Just a small follow-up. Assuming that the broad retention range that you alluded on the distribution side of 60 to 70 pips will be pretty much the case for HNI AUM also once the revenue starts kicking. Is that fair?

H&I would be higher. So H&I obviously would be higher. I think on the ultra H&I side, everything has a slab by structure. So I think if you look at the lowest slab, everything's at around about 90 to 100 basis points and goes all the way down to 60 basis points. I think even today on the ultra H&I side, our distribution would be slightly higher. It would be 71, 72, 73 basis points. But on the pure H&I side, I think it'll be closer to 85, 90 basis points.

That's helpful. Thank you.

Thank you. Next in line, we have Abhijit Sakkari. Abhijit, kindly unmute and ask your question. Thank you.

Am I audible?

Hi Abhijit, yes.

Hi, Karan. So first one is the data question. The new SARS that have been announced, is there a cost component that is built into the current quarter numbers?

For the current SARS, which is announced. No, that will only start at the point of next quarter, right? Once it's approved and allotted. So that is approximately 12 lakh SARS. So 12 lakhs would be approximately 130, 140 odd crores into 40, 60 odd crores. So it will be around about 60 odd crores spread over three years.

And going back to your comment on cost income ratio. So looks like we are kind of indicating somewhere close to 49% to 50% sort of full year cost income ratio. Just wanted to get that number.

That's the desire, yes.

Understood.

And just from a cost point of view, again, during periods when we have fairly elevated transactional revenues or carry revenues, when we kind of use some of these revenues to build out and spend towards the teams, Is it more of a variable nature or do they actually sit as more permanent type of costs? Because while the environment is favorable for the last few years, it's a great question.

It's a constant, constant debate, which I have with the team. I can give you three kinds of answers, but I'll give you one. So no, honestly, I think, I think, honestly, I think the industry, both on the wealth management side and asset management side is relatively quite competitive. And I think what kind of really makes it, makes it kind of take its own time and moves it to the 24-30 month cycle as opposed to a 12-18 month cycle is the, is the GBs and GBs, right? So typically, anybody kind of coming into the system or exiting from the system has some. has some bonuses which he's leaving behind and potentially has built a book in the current organization, which is potentially worth something. And as he's changing the organization, he's going to take some time to build that book. So I think that kind of adds a bit to the cost to income. But otherwise, I think it's fairly well measured. And I think it's a good equilibrium, honestly, between all stakeholders. So I think from an industry perspective, you've not really seen a dramatic change over the last two, three years. But obviously, I think once you're hiring people a little bit, the equilibrium changes because of the time period taken to kind of reach that book back again.

And last question is, just this goal to double the ultra-HNI client base, is there a, I mean, in terms of where most of that incremental flows will sit in the wealth book? Should we assume that advisory would be the place where most of that gets added to or it would get spread across?

A little bit of the starting point of clients. I would say today to get a client starting with more than 250 crores not on the advisory side is less than 3 out of 10 or less than 2 out of 10. I think it's fair to say 70% or 80% of the clients above 250 crores would be on the advisory side. I would say if it's 50 to 250 or 100 to 250, it will become a 50-50 kind of number. And if the number is somewhere between me starting off with a 10 to 50 quote check, it still might be a little bit more skewed towards the distribution side.

Okay, so assuming that we would have captured the top of the pyramid, so incrementally the Mix in terms of advisory to distribution. Should we assume it's more distribution-led?

No, more advisory-led. More advisory-led on the ultra-high network side. So, I think safe to say it would be 60-40. But the only caveat I have is the ability to use the full platform with advisory clients is substantially higher. Okay, so for a distribution client to set up a trust with you, to do gift-ready investments, to borrow from you, to do equity brokerage from you, So the cross-selling and the cross-pollination of the platform for an advisory client would be 3x of that of a distribution client. So while the headline retention looks lower on the advisory side, I think we did this exercise once. I haven't done it for a couple of, maybe two, three quarters, but actually the overall retention between an advisory client and distribution client is not dramatically different because he ends up using, he's much more engaged with the platform. So his ability to do multiple things with the platform is substantially higher than the rate of distribution flat.

Got it. That is super helpful. Thank you so much.

Thank you. Next in line, we have Prakar Sharma. Prakar, kindly unmute and ask your question.

Thank you, and Karanth, congratulations to you and the team on that set of numbers. First thing I just wanted to ask with you, now that you have this partnership with UBS quite well set, is there an opportunity for 361 to market the FCRB-related products on these lines, especially when you have some of the smaller banks offering very attractive IRRs but don't have relationships on the leveraging side? Is that a product that 361 can do?

So, you know, obviously, I don't want to comment on individual products which UBS is doing, but overall, I don't think UBS has still launched FCNR program, at least in my knowledge. From a 361 perspective, obviously, you know, we are absolutely open architecture and we are helping our clients on advisory side. So in some senses, we've kind of worked with at least 8 or 10 prime lenders as well as 8 or 10 bankers to ensure our clients are able to access the FCNRB platform on the right side. And we continuously work with clients, and I think we will end up building out a large number of trades for FCNRB, not necessarily with us as a bank or us as a lender, but us acting as an advisor on an open architecture basis.

And the other one is a slightly tricky question, but I'll still take a shot at it. Karan, over the last couple of months, there have been a lot of murmurs about, you know, when Bain as an investor steps back, you as the CEO might also, you know, take a backseat. You have been very active with all the acquisitions, integrations that you are running. But if you won't mind to share how you think yourself from a three to five year perspective running 361, a lot of us would love to hear your thoughts around it.

I'll surely take a crack at it. And I should start off by telling you it's not a very tricky question. I've answered it at least 125 times. So it's not that tricky. I actually answered it first in 2008, three months after starting the company. So I've been answering it for 18 years. So very quickly, I think, obviously, my longevity or my desire to continue as CEO of the firm has nothing and nothing at all to do with being an equity shareholder. Both of those things are not linked in any way, manner, or form. I think, so that's the first thing. Number two, obviously, your own ability to continue as CEO of the business is a function of two or three things. Obviously, it's my own desire to do what I'm doing, what I like, and what I'm passionate about, which is safe to say in the last 25 years, pretty much, this is what I'm doing. So, I will continue to be equally excited about this. And second, obviously, you know, age and health has to support. Unfortunately, I'm all of 49, and hopefully I have a long, long, long time to go. And third, you know, I think, you know, as long as all other things continue to be equal, I think today it is fair to say mentally and emotionally, we are all 85, 90, 95, 100% invested in the business and financially more than 90% invested in the business. So I think that's really where it is. And Baki, you know, as things go by, so there's no real definition of three years, five years, seven years, 10 years. I think whatever it is, is what we take. And typically, I like to look at things on a continuous basis. And today, if you ask me, there's nothing really at all which is really even making me think differently from what I'm doing today.

Perfect, and thank you for sharing the details. Have a good, you know, best of luck. Thank you.

Thank you. Thank you. Thank you, Karan, for taking all these questions. And this brings us to the end of the earnings call. Thank you, ladies and gentlemen, for joining us. Have a pleasant evening.

Thank you.