Edelweiss Financial Services Limited (EDELWEISS) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good afternoon, and welcome to the fourth quarter FY26 earnings conference call of Edelweiss 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. Should you need assistance during the conference call, please signal an operator by pressing star and then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Priyadeep Chopra, President, Edelweiss Financial Services Limited. Thank you, and over to you, ma'am.

A warm welcome to our earnings call today. We have on the call with us today Mr. Rashid Sharf, Chairman and MD of Edelweiss, and Ms. Ananya Suneja, CFO Edelweiss Financial Services. We hope you all had a chance to review the investor presentation that we filed with the exchanges earlier today. During our discussion, we will be making references to it. Please take a moment to review the safe harbor statement in our presentation. We will be making statements that may be forward-looking in nature and hence may involve certain risks and uncertainties. With that, I'll hand over the call to Roshesh to begin the proceedings. Thank you all for being here again. Over to you, Roshesh.

Yeah, good afternoon to all of you and a warm welcome for earnings call for the quarter and the year ended March 26. Thank you once again, all of you for joining us. I was supposed to start with the geopolitical tensions and oil price, but I guess all of us know the headwinds that India is currently facing. But in spite of the headwinds, we do believe India remains relatively well positioned. In the businesses we are, we don't see a very large impact of the headwinds, except at the India macro level. And we do think there is some amount of pain, the inflationary risk and the geopolitics. For the next five, six months, there is some pain. When we talk to investors, we see that they also. I have the same hypothesis, but I think there is some near-term pain, but India seems to be positioned enough to be resilient to the pain. The pain is not going to be there, but I think we feel that India will withstand the pain and come out of this strong lead. At Envoy's level, you would have seen the investor presentation. We had growth in the consolidated profit after tax and the key matrices for the operating businesses. Our consult path has grown by 27%. This was, in spite of some exceptional items, I'll speak about that, in a lot of our businesses because of the labor code impact, the GST impact on our life insurance business. With all of that post-minority investment, our profits have gone up, profit after tax. From 399 to 547 crore. So, a 27% increase in that pack. There have been some headwinds in the fourth quarter on a lot of our businesses because of the market volatility, the treasury income impact in the mutual fund, and our even corporate treasury because of the much volatility. There has been some impact, but as we have seen, markets have stabilized in April, so that has been fairly stable. All the other businesses continue to grow. Alternative Asset Management, FPAUM, has grown by 32% YOY at 44,000 crores. Mutual Fund AUM, Equity AUM, is now grown by 25% to 78,000 crores. MSME disbursements have grown, obviously, very largely by 200% because we have started scaling it up again. Housing finance disbursements have grown by 27%. GI business had a growth of 28% in GWP. And LI has grown by 11% in AUM, and AUM has now crossed 10,000 crores. But ARC also had a good year. ARC recoveries were 8590. So 8590 is extremely good. ARC is always, it is a very paradoxical thing because the more you recover, the more your AUM keeps on falling down. So, but it's always good to recover because that means you are reducing the risk in the portfolio and returning money to the banks who are holding DSRs. So we continue to grow on that. And before going into strategic updates, let me give two or three special updates. And I've got some queries and questions from a few of you in the last couple of hours on that. So, the first one is on insurance breakeven. So, insurance, both the insurance businesses put together for the year had a loss of almost 200 and... which was an increase from last year, which was about 170 crores or so. So, there has been a growth. The loss has gone up in insurance business instead of going down because we have been working towards break-even. So, the way to look at the insurance business is there is almost 110 crores exceptional item. Largely, the GST impact on life insurance, which was a one-time one. We are not talking about the recurring impact. Which we are managing and we'll get to break even even in spite of that. But out of the 159 negative of the life insurance business, almost 70 is from the GST impact. And then we had the labor cord impact on both the businesses. So, there has been an exceptional hit on both the insurance businesses, which our estimate is about 110 crores. So, if you take that away, then the minus number is 100 crores as compared to 170 crores of the last year. So, there is a significant improvement on the performance of the insurance businesses if you remove the impact of the exceptional item, which are truly one of which are not going to recur in the coming years. Along with that, we still remain committed that we will be break-even for the year FY27 in our insurance businesses. We are strengthening ourselves. We are focusing a lot on that. And even without Indies, because Indies will come a year after now, even without Indies coming in, we will reach break-even. Obviously, I said earlier, if Indies comes, we are break-even even now. But without Indies, we still, as per ICAP, we expect to be break-even in the insurance businesses in the coming years. On question number two, which has been on the operating businesses, our operating businesses also have shown a fall in path from 566 crores to 520 crores. So, there is a 46 crore fall in the operating businesses, but as you have seen in the presentation, there is an exceptional item, and those exceptional items are about 134 crores. So, if you adjust for the exceptional item, the businesses have actually grown by 17% at a pat level, where 566 has gone to 640 odd or something. So, there has been a... Fall in the underlying business's profit, the operating profit of the underlying businesses by 46 crores, but that is after 130 crore exceptional item on that. So adjusting for exceptional item, we still see that on apples to apples basis, the operating businesses have shown a 17% growth. The operating businesses also have an ESOP cost embedded in that, which will be recurring. So we are not removing that. With ESOP costs, we expect to continue to grow our operating business profit at approximately 20% per year. That is what we have maintained in the last four, five years. This year also, Apple to Apple, we have 17%, but we have had these exceptional items, This is mainly has been graduating and impact of the new labor court and the GST impact that has come, which I think all of you are aware about. And the third question I wanted to answer was on the corporate debt. Our corporate debt is about 6,400 crores as of now, which remains almost flat from last year. But we have done a lot of activities to bring down the debt. From our underlying businesses, in this year, we expect dividend and capital through buyback and other stuff of almost 1,000 plus crores. So for this year, 1,000 crores odd will come from dividend and buyback and other stuff from the underlying businesses. We expect between 1,000 to 1,500 crores from the EAAA IPO. And the stake sale of NIDO and EAML should give us another 750 crores. And other things like we have a couple of offices that we are in the process of selling to investors, doing a sale and lease back. And we have some investments in the underlying funds which will also come back. So, through this stake sale and dividend, We expect almost 3,000, 3,500 crores to be realized in the coming year. So when we look at the 6,400, against that, we have 3,000, 3,500 crores of... The liquidity cash flow coming in, out of the balance 3,000, our property investments and the offices we own, Edelweiss House and others, are about 2,000 crore, and 1,000 crore are the investments we have in the underlying company, in the underlying funds and all that we have. So we have 1,000 crores of investments, 2,000 crores of property, and between 3,500 crores of stakes and land dividend realizations that we expect in this coming year. So I think on the corporate debt, though it looks flat, we remain comfortable to go by our earlier guidance that we will keep on reducing it, and we will... I think bring it down to below 3,000 crore in the next one year to 18 months for sure. That is our plan, and we continue to work towards it. Along with that, the other update is EAAA placement. As you may have seen, we have got the CEPI approval for the IPO. Now, as soon as markets stabilize and we have a little bit of bandwidth, we will work towards the IPO. We did do a 4.0. 4% placement of the EAAA to a group of high net worth investors, but more importantly, people who have been investors in our funds. They were TLPs and select individual investors who have been long-term supporters of our fund. They are fairly large investors in our fund, and we wanted to create an alignment of interest with them. So we are very grateful that a 4.4% placement happened. We got 375 crores out of that. The other important milestone we achieved was we got our transportation-focused Inbit. I think listed, it started trading yesterday. It had a very successful IPO and a successful listing. So, SETIUS has a portfolio value of almost 11,000 crores, and it's our first trade. Transport isn't focused in this, so we're very excited about it. The update on strategy investment by Kali and Niro, we have got the CCI approval. We are still awaiting RBI approval, but everything is on track. We've been replying to the queries, and we hope that the process continues smoothly. Fourth important update has been the Edelweiss ARC. The MD&CE appointment has been finalized. We have appointed Mr. Arun Mehta, who was earlier MD&CEO of SBI Capital Markets. He's going to join us in the next three, four weeks. We got approval from RBI for his appointment, and now we are just finalizing the paperwork, and we are very excited for the next innings of Edelweiss ARC for the growth again to start. We are seeing that ARC business... And opportunities are growing again. And with Arun Mehta coming on board, we are pretty excited by that. So I think along with that, both the asset management businesses continue to clip along well. Both the insurance businesses have also shown good growth and should get to break even in this year. And our credit businesses have started growing again in a calibrated manner. ARC recoveries have been strong and we expect them to grow. As I said, corporate debt, we feel is under control. The plans we have, we are very confident that those plans will allow us to get to the reduction of corporate debt as cost as possible. So, with that, I wanted to leave a lot of time for the Q&A, and I just want to sum up by saying, A consolidated profit has grown. There was some misunderstanding because of the reporting, but the investor presentation clears it out pretty well. The operating businesses, Pat, was muted because of the exceptional items and the market volatility in the last quarter. Overall, And we expect that our businesses will continue the healthy growth because that has gone on for the last three, four years in spite of all the volatility and the uncertainty, and the businesses have only got stronger. All the other strategic projects, as I've given an update, are on track, and we truly want to thank all our stakeholders, all our bankers, all our shareholders for the support and the feedback they've given us over the years. Thank you with that, and we'll now open up for questions and answers.

Thank you very much. We will now begin with the question and answers session. Anyone who wishes to ask a question may press star and then 1 on their touchstone phone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking your question. Ladies and gentlemen, we will wait for a moment while the question assembles. Again, to register, please press star and then one. Our first question comes from the line of Jeel Dunagaria from Equidia Securities. Please go ahead. Yeah. Hi.

Good afternoon. Thank you for the opportunity. So, I had a few questions. So, sir, firstly, as you mentioned about the EAAA placement, so I wanted to understand more about the same, particularly the profile of the investors who participated in that.

Sorry, can you repeat that question, please?

Yeah, so you mentioned about the e-crypt placement, right? So I wanted to understand more about that, particularly the profile of the investors who participated in that.

So all the investors are actually investors and the limited partners in our funds who have invested with us. Over the years, and they have supported us. So, they are H&I investors, family offices who have all been there. We wanted to do only a 4% placement because it was a long-standing ask from them, a lot of investors. As you know, we have an AUM of more than 64,000 crores, out of which almost 30,000 is from Indian investors, and a lot of that is from Indian high net worth, a lot of that is from Indian... H&I family offices, and we had kept a cap of about 40 crores per head. We had a lot of people who wanted to invest even more than that, but we said only 40 crores, so we had a group of investors. All of them were our LPs. Our requirement was that they are already investors with us, and we had, I think, had about 40-45 investors in total.

Okay, understood. Secondly, I wanted to ask regarding the IPO. So, the DRHP was approved last week, right? So, could you walk us through the next steps and also when the IPO is expected, the timeline of the IPO? And additionally, I wanted to ask if you are considering any other further placement rounds and what could be the shareholding structure post the IPO?

We have not finalized anything. We don't intend to do anything besides the IPO now. We think, obviously, as you know, the markets are still in a state of uncertainty because of the Gulf situation. So we will wait for a couple of months for things to stabilize and then our idea will be to launch. So we are in no hurry because I think we have enough business momentum going on. But if you ask me, I think in the next three, four months, I expect the global situation to stabilize and for us to be able to do the AAA IPO. So maybe July, August.

Okay, got it. I have a last question. So you also mentioned about the Nero Carlyle transaction, right? So could you share the expected timeline for closing that transaction? And also if there are any positive shifts that we foresee, like such as the cost of funds or the credit rating trajectory, or even the acceleration in the disbursement growth?

I think steadily, we are not putting a lot of high growth pressure on that because we want to close the Carlisle Town, and we're also investing in opening some offices and increasing our footprint on affordable housing. So on that basis, I think it's on a steady footing. The Carlisle transaction, we expect the only thing awaiting is RBA approval, which is we filed this in February, and usually RBA approvals have taken three to four months. Normally is what the lawyers inform us. So if we file this in February, we are now March, April. So I think somewhere between May, June, I think we should get the approval. All the other approvals are in place.

Thank you.

That was very helpful. That's it from my side. Thank you.

The next question comes from the line of Sirtesh Dharmadikari from PL Capital. Please go ahead.

Hi, thank you for the opportunity. Am I audible?

Yes, sir, you are. Yeah, it is.

Zuno has been a pioneer in insurance with products like usage-based insurance and telematics. So, with the rapid evolution of AI, how do we see the opportunity for further product innovation and differentiation, sir?

Yeah, I think it's a very important question, because as you know, in Zuno, we have been focusing more on auto insurance. Our aspiration is to be one of the best auto insurance companies in India. It will take time, but the reason we are very bullish on auto insurance, you know, motor insurance. It's because we think it is very data-based. It is very data-linked. And with cars also having a lot of data on driver, on fuel consumption, even the cost of repair and all, a lot of that is now getting standardized. Garages have become very professional. So, I think India is where the U.S. car insurance market was about 40, 50 years ago, and on that basis, with the kind of data and AI available, this business has a lot of possibilities for innovation. You can do a lot of innovation in pricing, really allow customers to pay for what real risk they want. You can slice risk. You can also quote pricing, which is customers to customers, pin code to pin code, you know, car make to car make, all of that. Even on the claims settlement, you will be able to do claims settlement within. You know, three hours and all that. We have already been experimenting with that because with a lot of AI, you can look at... So, there is a lot of improvement on all three. There are three parts of the auto insurance business. One is the pricing and the policy. The second is the customer experience. And third is the claims management. All three of them have a huge amount of AI application that is there. So we have large teams doing agentic AIs and all that because a lot of your call center and customer support and all. Can also use AI in a fairly big way. So, though we are very proud about our product innovation at Zuno, and as you would have seen since inception, Zuno has been growing at between 25 to 40% every year. And the motor insurance market has not been an easy one, as I'm sure a lot of you would have seen. Health has been growing much more easily. Motor has been a difficult market. But in that difficult market, we have innovated a lot. But we're also very proud of our customer service and claim settlement. And in that also, AI is going to be a big help. So we are investing very big in that. Data was always very important to us. Now, how that data will be used, I think AI will make it easier and easier.

Understood, sir. And on the SIF side, Alteva SIF has crossed 3000 plus crore in AUM, making it one of the largest in the industry. So how do we view the long-term opportunity in this space and are there any plans to expand the product suite further?

Yeah, I think SRF is a new asset class.

Everybody thinks it's like, you know, another mutual fund or another AIF or another PMS. But it actually has some elements of a mutual fund, some elements of an AIF, and some elements of the PMS category. So if you go back and study the underlying needs, because a PMS serves a very different need than AIF does, and that serves a very different need than the mutual fund does. Because as you know, a lot of people ask that, why do PMS exist when there is an income tax advantage, capital gains advantage, which is a mutual fund? But because they're serving different kinds of needs. In the same way, an SIF is also solving a very different need at the customer level, which is... Some parts of it are available in AIF, some parts are available in PMS, and some parts are available in a mutual fund. So it's a very hybrid product. You really have to understand customer needs, create the product as per that, and more importantly, market it very carefully as per that. Because even if it's a product which is marketed as another AIF or another PMS, or, you know, what some people call it, a poor man's AIF, it's not true. I think it is a very different, very, very nuanced product that is there. We are pretty bullish on that. There are some specific customer needs that an SIF will cater to, and your ability to create products in that is important. We have already launched the first product, which is, as you said, done very well. We are the leaders in that. We are currently looking at a couple of other products also. We should launch our second product in the next. A few weeks, but we do a lot of research to understand customer need and then create the product and communicate with the distributors that this product is for this kind of customer for this kind of need. And that is important. Just using a distribution to sell a product in a very average manner will not really allow you to capitalize on this new asset class and new product very effectively.

I just think so. Thank you very much. That's all from my side.

Thank you. The next question comes from the line of Shobit Sharma from HDFC Securities. Please go ahead.

Yeah, hi, sir. Thanks for the opportunity. Sir, I have multiple questions. So, firstly, on the alternate piece, if I look at your fee-paying AUM on the retail assets have surpassed the private credit fee-paying AUM. So, what actually are we doing on that piece? What differentiates us from the competition and what are our plans to expand that kind of business? Secondly, coming to your mutual fund business, the growth on the profitability seems to be material. So how should we think about the yields on the pet level yields for the medium term? And similarly, on the mutual fund business, we have seen strong growth on the SIP book. So if you can give us some color around this SIP book, how this book has behaved during the last quarter and what kind of cents we are getting for the month of April. And where are we seeing the new SIP folios being generated? Is this on the passive side or is this on the commodity funds? And last question is on your insurance business. Are we going to seek a forbearance from the IDI for the applicability of the Indias for FY27?

Okay, I hope I remember all the questions you asked and answered them. I'll try and do it in reverse order. So, in insurance index, yes, we have asked for the forbearance because I think most of the industry players are going to ask because the clarity is still emerging. There is a lot of investment to be made and you still have to run IGAP. So if you don't ask for forbearance, then for this year, you will end up running INDEX and IGAP both, and you might end up, you know, spending a lot of money and effort on that. So I think the idea currently is to take forbearance for a year. So both the insurance businesses will implement INDEX from the next year, though it is... Actually, very useful from a profitability point of view, from a profit after tax reported point of view. India's is a lot better for us than IGAP. In order to avoid complexity, we have taken the four patterns. That's your first question. Second, SIP book, we are now more than 600 crores in SIP in the mutual fund. A lot of this is in equity and commodities, largely equity, and a little bit in our international funds, but largely, I think, our main focus has been equity, AUM, and we are getting a fair amount of inflows into that through SIP. On the mutual fund growth... As you can see, now we are at a path yield level of about 6%, which is still low, and we have some headroom to grow. As our product mix is undergoing a change, as our equity component is going up, as our new money is coming at slightly better economics and all that, when we add up all of that, our aspiration is that from current 6, We should go to trend basis point by 2030. So it's going to be a slow improvement. We want to be fair to our distributors. We want to be fair to our partners. And we want to improve our yield, but not by reducing theirs, but by calibrating the product portfolio, by introducing high economics on product, by having higher economics on incremental flows that we get. So, we think we will continue to grow on the AUM the way we've been growing at about 20% a year. But on the path margin, which is about a six basis point, we would like to go to a 10 basis point in the next three, four years. So, we are in no hurry. We want to do it in a very careful, calibrated manner, in a win-win-win manner with our partners and distributors and creating products like SIF is actually one example. That we are creating products which truly add value to the customer and hence improve our economics. On EAAA or FPAUM now, the real asset has become higher than private credit because private credit, we have not raised a big fund in the last three, four years. So our expectations is they will both be equal. In private credit, the assets keep on going down because you keep on returning money to the customers. And Average Private Credit Fund, Average... Tenure is only two and a half years, while in real asset, the average tenure is about four to five years. So, the real asset is a slightly longer duration fund, while private credit, because we also keep on getting income and realizations, we keep on returning the money. So, we expect our average private credit fund to have an average in and out. Every horizon of three years, while the real asset will have five years. So, that would be the difference. But again, a lot of this is based on the new fund launches. And we launch a new fund every two years or so, two to three years in private credit. So, as a new fund is getting launched in this year, we expect private credit FPA will also go up in this year.

Okay, sir. I understood. Thank you.

Thank you. Your next question comes from the line of Arth from Dam. Please go ahead.

Hi, sir. I'm out, isn't it?

Yes.

Yeah. Sorry, sir. I joined the call late if my questions are just repeating. So I have two questions. One, right now, given the volatility in the market, are we seeing any challenges on raising of funds from foreign investors in EAAA? And... What are the FBA web and fundraising targets for the next year, and could you also give some color on the pipeline of new fund launches? That would be my first question, sir. I will take second question afterwards.

So, um, We don't have a lot of challenges

from global investors on the products we have, which have a higher yield. So the products will have a yield of more than, you know, 16 to 18% rupee yield. Their foreign investors are still very keen and all. Where the yields are about 13, 14, like in performing credit, foreign investors are slightly worried about the rupee effect. They are actually very hot on India, but a lot of the, even the FPI selling we have seen in the market, a lot of that is now driven by the view on the rupee and not the view on underlying Indian opportunities in the market. So, but we also have a lot of products we are looking at offering a hedge, you know, offering. To our international clients, which will be in U.S. dollar and then hedge that dollar to rupees to remove any uncertainty. So I think there is opportunity on creating new products because hedging and rupee stability has become a key need for a lot of foreign investors. But where there are high-end products like our Spatial Situations Fund, which, you know, expects to make around 18% plus, there I think investors are fairly okay because at that end, a rupee is not that big a problem. But the biggest problem across the board for all foreign investors in India today is... Their view on the rupee, and they are looking for some stability on that. Understood, understood.

Secondly, our MSME disbursements have tripled in FY26. So, could you just highlight what were the key drivers or initiatives that has contributed to such significant growth here? And also, with our wholesale scaling down and the wholesale scaling down now largely behind us. When can we see our earnings actually starting to reflect the real retail mix? So could you just share some outlook there and what would be our MSM-EUM growth and the ROE trajectories for next two to three years? That's it from my side.

So, yeah, I think on ECL Finance, as you know, we have a lot of equity out there.

We had decided that we will grow MSME only after wholesale book is scaled down, after all the cleanup is over. So, around March 25 is where we concluded that the wholesale is behind us. The stress on the wholesale is behind us. We also hired a new managing director, Ajay Kurana, who came on April 1st, 2025, and we have almost grown our disbursements 3x in this year. We did about 1,000 crores of disbursement in this year. We expect to keep on growing, and we'll be happy if you do between 1,700 to 2,000 crore disbursements in the coming year. We are currently investing a lot also in that business, so that the NIMS... So we'll be there, but we are also opening a lot of branches and hiring people and all of that and focusing a lot on MSME only. So we expect that the profitability and all is maybe 18 months to two years away, but the growth has started coming and we always said growth before profitability. If you look at our asset management business, mutual fund also, until two years ago, profits were very low, but we had been growing for five years before that. So growth and then profitability, rather than try to get profitability and growth at the same time, which becomes much harder. So currently MSME... We'll be in a growth mode for the next couple of years, and we do feel confident about the disbursement growth, and the profitability will form that.

Thank you. And, sir, just think, what would be the kind of ROE trajectories over the next two to three years for us? In the... In the...

In the... Yeah, you shall find it. We have to stabilize the two years' time to

get to a 10% ROE because we are still very under here now. So we should get to 10% ROE once we get the scale-up done, which is about 18 months to two years from now. So, we have quite a bit of equity there. So, our idea is to get there, and you will see improvement. It won't be overnight, but it will be gradual. But I think getting to a double-digit ROE is an important milestone for us.

Understood. That's very helpful. Thank you so much.

Thank you. The next question comes from the line of Rajesh Ganesh Kumar from JM Financial. Please go ahead.

Hi, thank you for the opportunity. Am I audible?

Yes, sir, you are audible. Great.

I just have two quick questions. First one being the cost to income in mutual funds. It has improved by about 10% by the current FY. And, you know, as we continue to scale, what is the steady state efficiency level that we are targeting? And, you know, how does one view the near term growth potential in the equity AUM? I'll ask the second question post this.

So, as I said earlier, our aspiration in the mutual fund equity, AUM, is to grow at 20% plus. We have been growing faster than that, but our aspiration grew at 20. As you know, 8-10% comes out of your... We have MTM growth in a normal year, and the other comes from new money. We already have also a very strong SIP book, 600 odd crores and all. And as we introduce a couple of new products, NFOs and all, that also helps you collect additional AUM. So I think getting to 18-20% AUM growth in equity is a good target to have. Cost-income ratio, we are in the 60s now. I think eventually according to us, A good cost-income ratio for a mutual fund should be 45% to 50%, and hopefully, I think we should also get there as the scale happens in the next 2-3 years. So, we do expect that we would also want to list our mutual fund at some point of time. So, when we list, we would hope that, you know, the cost-income ratio is 50%. Good morning, everyone. Constantly, I think, invest in efficiency and technology and not

allow your cost to grow as the income is growing.

This was helpful, thank you. The last question I have is, you know, EAA's recently launched CITES Transnet Invit IPO, which has received an overwhelming response. The question that comes to mind is, how does Invit as a class of a set, is different from other infra-yield funds in terms of, let's say, risk, income generation, and overall return profile? If you could just throw some light on that.

So there are different kinds of invits are there.

There are some invits which are mainly steady invits. Some are declining invits where their, you know, assets are declining because as every year goes by, when you have roads, you know, the road concession, which is 20 years, become 19 years, becomes 18 years every year. So there are also in which we have growth in it, where you are keeping on adding assets. You keep going on buying new assets so that you get... You know, your InBit horizon keeps on expanding. So we want our InBit to be a growth InBit. We'll keep on adding assets as we go along. We understand this. The second is we also have a very strong operating team, which actually can manage the asset and run the asset. So we are not just financial investors. We also run the assets pretty well. And most of the inputs are road inputs. Ours is a transportation input. And though the difference seems very nuanced, a transportation input can do a lot of other things besides roads. So we can do things like. Airports and ports and other transportation hubs. You know, we can do cable car, which is a big growth in India. All the tourist spots are going to have a lot of cable cars coming in. A lot of the transportation is going to be via cable car because that is easy to do and it doesn't require a lot of infrastructure. So in a lot of smaller cities, that will also be the game. So when you have a transportation in wait, your options on what assets which are there in transportation are a lot more than in the road in wait. Road is a big part of transportation, but transportation has a little bit more optionality on much higher ending assets also.

Right.

That's very helpful. Thank you. Good luck.

Thank you. Your next question comes from the line of Sujal Jain from Walford PMS. Please go ahead.

Hi, sir. Am I audible?

Yes, sir.

You're audible. Please go on. Yeah. So, sir, just a couple of questions. Given the bearish market environment in March, how did it impact performance across our business segments, like with PBT largely flat for the year? What is your assessment of the overall financial impact?

Very hard to put an impact, but I think, you know, a lot of our mutual fund also has a lot of sponsored investments, right? They have almost 100 odd crores, which are compulsory sponsored investments. We also have a lot of treasury activity on arbitrage and other things. So I would say overall March would have impacted about maybe 40-50 crores on a consolidated basis, but it's hard to estimate because there are many factors, different businesses. But across all the businesses, because, you know, there are equity investments in quite a few businesses also. So across all the businesses, maybe a 40-50 crore impact would have come. But it's normal, I think, that these things happen. In India, we would have learned to live with all this.

Another question is, how does our private credit opportunity in India differ from the global market? Which key asset class within private credit do you see as the most attractive in terms of growth perspective going forward?

Sure. Actually, there are three categories in private credit. One is special situations, one is performing credit, other is called investment grade credit, IG credit. They all are good. They cater to different investment needs. IG credit usually is about 12 to 14 percent, 12 to 14, 15 percent. Performing credit is 14 to 18 percent. Special states is 18 plus. They all have different nuances. They have different capabilities and they cater to a different kind of investment needs. So, all of them are good. We obviously have been very strong in the special situations category. Almost, if you look at our FPAUM, out of the private credit, approximately 20,000 crore we have. Almost 65% is in special situations. Also, it differs from international because international, a lot of private credit funds are slightly open-ended. They are called semi-liquid. That every quarter, you can go and redeem your holdings. And actually of late, that is where you are seeing some of the problems are happening. In India, there are no liquid credit funds. All AIFs in credit are close-ended. So the fund has a lot of holding power. There is no redemption pressure that can come. So one of the biggest difference between private credit globally and India is that India, all funds are close-ended. So there is holding power. You don't have to try to liquidate something in distress. I think globally, a lot of private credit funds have gone into open-ended or things which are liquidable. On top of that, So, the international private credit market has also been very competitive and very high growth. So, a lot of people have gone down the risk curve. That has not happened in India, because in India, there is still a scarcity of capital. It's not easy to raise a private credit fund of scale. I mean, you know, private credit funds, which are more than 4,000 to 5,000 crores of AUM, you can count them on your fingers. There are a lot of 500,000 crore funds. But to raise a big fund is not easy. So, I don't think the intensity of competition which is creating asset quality issues globally are happening in India. So, on that count, India is a pretty okay. It's still a very small market, but we hope that it continues to grow, but in a steady manner, not a very fast growth.

Thank you. Thank you.

Our next question comes from the line of Siddharth Shah, an individual investor. Please go ahead.

Yeah, hi. Thanks for taking my question. Both of them relate to EAAA. So, you know, I think you spoke a lot about operating leverage in the business. This year, I think revenues were up about 22%, 23%. Costs were also up about 25%. So is that due to some of the exceptional items that we were referring to at the start of the call?

We will operate at 50 to 60% cost income ratio. Because there, it's a very people-driven business. You need people and you constantly invest in new businesses and products. So this year, a little bit of optic in cost have happened is because we expanded the team, the international sales team, the local sales team, as well as we're introducing a couple of new products. So the investment in that has started. So partly, I think that will be, I would expect that to be a cost income ratio of about 50 to 60% range. We will fluctuate in that from a quarter to quarter basis. The mutual fund is the one where there is a lot more operating leverage because it's a more retail business, while this is more institutional, more wholesale. So you need salespeople, you need investment team, all of that.

Understood. And just the second one was, you know, I think we spoke about the 1500 crores going towards debt reduction once the IPO happens. Have we utilized the, you know, we saw the 4.4% for 375 crores. Did we utilize that for debt reduction? Because, you know, net debt seems to be flat year on year.

Yeah, I think on that, you

know, about 6,000 crores of debt. We have an annual interest burden. I mean, every quarter is about 150 to 200 crores. So, there is an interest meter also on the other side. So, the fact that for our investment holding company, the fact that we are flat itself means that at least whatever interest was that, that has come from stake sale. And as I earlier clarified, a lot of the activities we did last year, like NIDO, like Mutual Fund, like EAAA, IPO, PrEP, like the dividend coming from underlying companies, a lot of the work has gone in the last year, FY26, but the actual cash will come in FY27. So I think on that basis, we expect that a lot of the... Over and above the interest, we have about 400-500 crores will get added only because of interest, but this year we are expecting 2,500 to 3,000 crores of cash flow realization, so there will be a significant fall in that.

Understood. Got it. Thank you. Thank you.

The last question comes from the line of model, Sheph Andresen Chaudhary from Monash Airport Capital Limited. Please go ahead.

Hello, sir. Am I audible?

Yes, sir. Yes, sir. You are good. Please go ahead.

So, sorry, sir, if the questions will be repetitive as I joined in late, but I have a couple of questions. So, the first question is on our insurance business. So, our combined losses in our insurance business declined by 23% over the last two years, and losses in life insurance has remained flat because of GST and other exceptional items. And also, in Q4, we saw market volatility as compared to last year. So, how confident are we about achieving break-even over the next four quarters? That is my first question. Second question is, how do you see India's capital market position in the context of this global uncertainty that is there?

So these are my two questions.

So, I think on the first one, we are pretty confident that we'll get to break-even. We are working very hard for that. There were some exceptional items this year, like GST and labor code and all. But we are doing a lot of things to get to break-even. So, we remain reasonably confident of getting there. I think, as you said, the global geopolitical event and the global uncertainty and the high oil price is going to affect India. We do think there is some pain for the next three to six months. But I think India is resilient enough, our reserves are there, plus our economy is in a pretty good place to be able to handle that. Just because you handle it, doesn't mean it will not be painful.

It will be painful, but handleable. Thank you, sir.

Thank you. Thank you very much. We will take that as the last question. I would now like to hand the conference back to Ms. Priyadeep Chokra for closing comments.

Thank you, Sagar, and thank you, Roshish, for all the answers. Thank you, each one of you, for your time today. It's been a joy to have you all and listen in to your insightful questions. Please do write it to us at Edelweiss Investor Relations for any other questions and feedback or any additional information you may need. Thank you and have a great day ahead. Bye-bye.

Thank you very much, ladies and gentlemen. On behalf of Edelweiss Financial Services, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.