Nippon Life India Asset Management Limited (NAM-INDIA) Q2 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Nippon Life India Asset Management Ltd. Q2 and H1 FY27 on each conference call. As a reminder, all participant lines will be in a 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 then zero on your touch-tone phone. Please note that this conference is being recorded. I now have the conference over to Mr. Praesh Chan from Motila Loswal, Financial Services Limited. Thank you and over to you.

Thank you, Steve. Good evening, everyone. On behalf of Motila Loswal, I welcome you all to the Nippon Life India Asset Management's 2QF27 Earnings Conference Call. We have along with us Mr. Sandeep Sikha, Amjing Director and CEO, and the Senior Management team. We are thankful to the management for allowing us this opportunity. Just to inform, Mr. Sandeep will be there on the call until 4.40 a.m., post which the other senior members of the management will take the Q&A. I would now like to hand it over to Mr. Sandeep for his opening remarks. Over to you, sir.

Thanks, Paresh. Good afternoon, and welcome to our Q2FI27 earnings conference call. We have with us President and Deputy CEO Sogata Chatterjee, CFO Parag Jolikar, Deputy CFO Amor Bilagi, Chief Digital Officer Arpan Saha, CEO of our AI subsidiary Ashwin Duggal, Matheson, nominee of Nippon Life, and Head of our alternate, Andrew Holland. I would first like to share key highlights of our performance, and post that, I will hand over to Parag to speak in greater detail on the recent industry trends as well as our performance, post which we will move to Q&A. Coming to the key highlights, I would like to start by mentioning NAMM India was the fastest-going AMC in the top 10 AMCs in H1, FI27, on overall and equity AEM. We also had the highest increase in overall AEM market share as well as equity AEM market share amongst the top 10 AMCs in H1 F527. Our market share stood at 9.02% relatively flat quarter-on-quarter. Importantly, both equity net market share and SIP market share remained well above our equity market share, both in high single digits. Moving to a financial performance, NAM India achieved its highest ever quarterly operating profit of INR 5.23 billion, a growth of 25% year-on-year. Also, happy to share, the Board of Directors have declared an interim dividend of INR 9.50 per share, along with Q2 FI 27 results. Now, I would like to hand over the call to Parag for further details on industry trends and our performance.

Thank you, Sundeep. Let me start off with the markets. Equity market in Q2 FI27 witnessed a correction from prior quarter levels. The Nifty was down 5% quarter on quarter. The Nifty mid-cap index was down 4% quarter on quarter, while the Nifty small-cap index was relatively flat quarter on quarter. The repo rate was flat quarter-on-quarter at 5.25%, while the 10-year GSEC yield increased by 44 bases quarter-on-quarter to 7.19%. Gold prices were flat up 2.5%, while silver prices were down 1% quarter-on-quarter. Now moving to industry AEM and flows. Industry quarterly average AEM grew by 13% year on year and 5% quarter on quarter in Q2 FY27 to INR 87.2 trillion. The share of equity in overall AEM increased by 1% quarter on quarter ending at 58.2% for Q2 FY27. The equity X of index and arbitrage witnessed a gross inflow of INR 2.69 trillion, higher by 9% quarter-on-quarter, and a net inflow of INR 1.08 trillion, lower by 5% quarter-on-quarter. Categories with the highest inflows were small cap, mid cap, and flexi cap points. The fixed income category witnessed a net outflow of INR 59 billion in the quarter after an inflow in the previous quarter. The ETF category had a net inflow of INR 367 billion higher on quarter-on-quarter basis. Quarter-end unique investor in the mutual fund industry increased 11% year-on-year to 63.1 million. Moving on to SIP, industry SIP flows for the quarter stood at INR $967 billion, up 12% year-on-year and 3% quarter-on-quarter. Monthly SIP flows in September 2026 stood at INR $325 billion, another all-time high. Contributing SIP full-years for September 26 increased 9% year-on-year and 3% quarter-on-quarter to 100.6 million. Now moving to our business performance, we closed the quarter with total asset under management of INR 8.66 trillion. This includes mutual fund, managed accounts, offshore fund, and GIFCity. Our mutual fund quarterly average AEM grew 19.9% year-on-year and 4.7% quarter-on-quarter to reach INR $7.87 trillion. We were the fastest growing AMC in the top 10 in H1 FY27 on overall and equity AEM and had the highest increase in overall and the equity quarterly average AEM market share among the top 10 AMCs in H1 FY27. I would like now to share a few key highlights for the quarter. Our mutual fund market share increased 51 basis year-on-year to 9.02%. On quarter-on-quarter basis, it was relatively flat. Our equity market share increased 27 basis year-on-year and two basis quarter-on-quarter to 7.4%. We achieved a high single-digit net sales market share in equity segment X of Index and Arbitrage. We continued to have the largest investor base in the mutual fund industry with 24.3 million unique investors. We are humbled to have over 1 in 3 mutual fund investors invest with us. During the quarter, we also completed the NFO of the Nippon India Income Plus Arbitrage Omni Fund of Fund, raising INR 1.8 billion. I would also like to touch upon some of the important aspects of our systematic book. Our monthly systematic book rose by 2% year on year to INR 37 billion for September 2026. This resulted in an annualized systematic book of INR $445 billion. Excluding STP, SIP book growth was 9% year on year. SIP market share stood at 9.84% for September 2026, similar to June 2026. Moving on briefly to the ETF segment, we continue to be one of the largest ETF player with AUM of INR 2.49 trillion and a market share of 21.12% which increased by 135 basis year on year. Our share of industry ETF folios and volumes remain strong at around 45%. Our ETF average daily volume across C1 remain far higher than the rest of the industry. For gold and silver ETF, combined closing AUM for NIMS was INR 882 billion, up 6.6% quarter on quarter. In quarterly average AUM terms, our gold and silver ETF represent 32% of the ETF AUM and 12% of the AMF AUM. Moving on to our digital franchise, digital purchase transaction and new SIP registration rose to $9 million in H1FI27, up 15% year-on-year. Digital business contributed 78% of the total new purchase transaction in H1FI27. NIMS Digital Business Continues to strengthen its focus on long-term investor behavior, driving initiatives to scale business and deepen SIP adoption, while reinforcing confidence in the discipline management and market volatility. Now, I would like to briefly update you on the subsidiary and the gift city. Starting off with AIF, under Nippon India AIF, we offer Category 2 and Category 3 AIF and have raised cumulative commitment of INR 99.8 billion across various schemes of 14% year-on-year. In Q2FI27, we raised INR $4 billion of commitment across various asset funds. Fundraising is currently underway for our listed equity fund, private credit fund, and direct VC fund. During Q2 FY27, we launched our second Smith category fund, Undiscovered India Opportunity Fund 2. Nippon India Credit Opportunity Fund Nikko 2, with the third capital call in Q2 FY27, is dropped down to the extent of 55%. On offshore front, our managed ASM stood at INR 135 billion, while our gift city ASM stood at USD 45 million. Now on to our financial performance. For Q2 FY27, revenue stood at INR 7.96 billion, up 21% year-on-year and 4% quarter-on-quarter. Operating expenses stood at INR 2.72 billion, up 14% year-on-year, and flat quarter-on-quarter. Operating profit stood at INR 5.23 billion, up 25% year-on-year, and 6% quarter-on-quarter. Profit after stacks stood at INR 3.24 billion, down both YOY and QOQ. However, this is mainly related to the exceptional item, which I will speak about shortly. For H1 FY27, operating profit grew by 28% year-on-year. Profit after-tax grew by 12% year-on-year. Further, the Board of Directors has declared an interim dividend of INR 9.5 per share along with the Q2 FY27 results. Lastly, I would like to speak about the exceptional item recognized in the financial. During the quarter, SEBI accorded its in-principle acceptance of the settlement applications filed by the company and its certain officials in respect of an ongoing regulatory matter relating to the past investment made by certain NIMS scheme in YesBank81 bonds. This relates to the show call notice received by the company from CB dated 30th August 2024 and subsequent settlement proceedings. Considering the time and the cost and uncertainty that is potentially associated with the generally prolonged legal proceeding, the board has decided to pursue the settlement process in the best interest of the company since it brings the matter to quietness, Which in turn allows the management to remain focused on its core business. As a part of agreed settlement terms, an amount of INR 96.76 crore has been paid comprising of INR 89.08 crore as a reversal of management fee earned by the company over the said investment, including interest, and INR 7.68 crore as a regulatory cost in respect of the company and certain company officials. The settlement amount of I&R 96.76 crore has been fully paid and recognized in the financial reserve for the quarter and half-year end of September 30, 2026 as an exceptional item. However, further communication from SEBI is abited. With this, I would like to conclude my remarks and open the floor for questions.

Thank you, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Shreyas with Nomura. Please go ahead.

Hi, thank you so much for the opportunity. First question was on yields. We have seen slight deterioration in yields as compared to last quarter, while other AMCs and peers have seen quarter-on-quarter increase in yields. Can you explain why is this so?

Yes, I'm all here. So, the compression is mainly on account of the increase in the equity AM and due to telephobic pricing. That was the reason for that.

What we have seen in peers is that the equity mix has changed and hence the equity yields have improved. In that relation, has our equity yield, I mean, the mix in equity AM, QM, has it changed or has it been similar?

If you look at our equity growth, that has been the highest in the industry, and that's why you see the compression in the industry, basically.

Sure. Understood. And can you throw some light on the AT1 bond case and what exactly it was? That was the second question.

No, Shai, I have covered in my opening remarks what the details of the case at the settlement which we have paid. We don't have anything at this point further on that.

What was the non-compliance that, you know, Sebi alleged regarding certain provisions of securities law, if you can explain that a little bit, please?

Yes, there is nothing further to add on that. At an appropriate point, we may come back and disclose. But currently, we have covered in the financial and the opening remarks, whatever we have to submit currently.

Sure. My third question was on SIFs. How has been the process that we are taking when we can see SIFs being launched by the company? Because peers have said, and we have seen in the industry as well, that it has been a very important product and has been garnering a lot of flows. What's the strategy there?

Yeah, so, hi, Shreyas. Of course, we, as we have spoken in the past, you know, we definitely have started working at the, you know, the drawing board as to what will be our SIF launch strategy. We, of course, are waiting for the SIF, you know, clearance to come in from SEBI. Once we get that, of course, we'll be in the market to launch our ideas. And as we have also spoken, we have Andrew Holland and team who have been working on this space for the last now one year, and this particular category requires experience. We feel that we have enough experience in the system to, you know, exhibit the two FIF strategies in the market, and at the right time, we will come and, of course, explain and launch our ideas.

Sure. Thank you so much.

Those were my questions.

Thank you.

Thank you. Participants, if you wish to ask a question, Humipress, star and one. The next question comes from the line of Fennel with Diamond Asia. Please go ahead. There's a lot of disturbance coming from your line. Hello. Is it better now?

Thank you. Telescopic or maybe because of, you know, the commission to distributors that may not have been passed on because of the regulatory change. So, if you can throw some highlights there because the drop seems a little high if we compare.

So, Saril Parag here, just to tell you that our growth in the equity area is one of the highest in the industry. And it is purely on the telescopic pricing. Any changes due to regulatory change have already happened in the first quarter. So, there is nothing on that in this quarter. This is purely due to the growth of our AUM and the flows which we are garnering, which has resulted in lower, due to telescopic pricing, in lower equity years.

Okay, okay. Thank you, sir. And secondly, if you see the current market trend, a lot of our flows are coming in the small cap and the flexi cap and the mid cap kind of schemes. But recently, a lot of correction has happened in the small cap recently. A lot of MTF has seen some drawdown over here. So how are we seeing investor thought process over here? Because the flows in this category, let's say, see a sharp decline or redemption. So, what kind of investor, you know, psyche we are seeing over here, and if this correction continues, then what are the mitigants do we have? Because these are technically one of the biggest schemes. So, how do we, you know, look at this category going ahead?

Okay. Yes, and also, you know, if you typically see the Nippon India Mutual Fund flows, we have had flows in our traditional funds like multi-cap, large-cap, mid-cap, small-cap, and our hybrid funds. You know, the industry flows in small cap and sexy cap may be higher, but as you know, we have stopped taking any lump sum flows in our small cap fund for the last three years. So what is happening is the money coming to us is more dispersed, coming into more multi-cap and large cap opportunities. Yes, market volatility does impact the investor sentiment. We are seeing now H&I investors slowly taking exits from large caps. Till about last month, the large cap category had seen some negative net sales, though our fund has not seen any negative net sales. But at an industry level, the net sales has been negative. So, we have to wait and watch. As we progress from here, if the downside is going to be sharper from here on, then maybe some of the fund houses who have got flows in small cap and the other sector funds, et cetera, might see some erosion in, might see some higher redemption. But from our perspective, we have a very, very strong SIP book, which actually protects us in these circumstances, as we know that we have almost close to, you know, 3,200 crores of inflows coming in every month, which is more structural in nature, more fragmented, coming from deeper part of India. So, we definitely have more, you know, we have protection around net sales, across our equity funds.

Okay, sir. Thank you. This was very helpful. And just lastly, you know, if I may ask, in this current situation, what is the communication do you have to the distributor network you have? Because what's the communication right now to all the distributors, you know, what kind, what strategies are you using or anything? If you can show some light on that.

So, as I mentioned, you know, we have, for the last one year, we have been propagating hybrid funds. We have been speaking about multi-asset allocation products. We have been speaking about, again, large cap, multi-caps, and more broad-based strategies. We are also bringing in a lot of fixed income focus into our distributors. As we all know, this industry is very lowly penetrated when it comes to fixed income funds. Typically, in the retail and H&I space, we as a fund house have taken the lead much earlier. And, you know, the asset diversification along with more, you know, with lesser risk-oriented products is what we are trying to, you know, communicate. We do a lot of activities and communication with our distributors and investors around why should the ships, you know, not stop in these markets.

Thank you, sir. This was really helpful. Thank you for answering the question, sir. All the best for you.

Thank you. The next question comes from the line of Madhukar Lara with J.P. Mockin. Please go ahead.

Hi, great. Thank you for taking my questions. First, I'm not sure whether you gave this out or not. Can you give me the asset class-wise yield that you've got? Second, can you comment on how your net inflow market share is trending? So maybe you can give a comparison between, you know, 1Q and 2Q and whether you're seeing an improvement, decline, and, you know, some sense of there. And third, I noticed that in the equity mix, we've seen a little dip in the direct share. So, what is really driving that? Is there anything that we should, you know, lead into it? Yeah, those would be my three questions. Thanks.

Hi, Madhukar Amul here. So, on the yield part, so the equity yield is 52 basis points, debt is 25 basis points, liquidity is 12 basis points, and ETF is 25 basis points. On the net inflow market share, we can study it on that.

Yeah, hi, Bhadugar. With regard to the flows, you know, if you compare Q1 and Q2, we are still in the higher, you know, double, higher single digit, basically touching around 10%. That's the net flows when it comes to equity. There hasn't been any major deviation from the flow point of view. The color of the money, which is coming to us, as I mentioned, is, you know, coming into more diversified funds as well as hybrids, which is where we would like the investors to participate and not get into NFOs and, you know, smaller cap products which are there in the market. So, we continue to be in that camp and that's probably helping us to maintain our net sales growth. When it comes to, you know, ratio of direct versus regular, maybe these are our temporary quarterly phenomena, nothing to read into those numbers. Right. Because we continue our effort to, you know, for us, it is flows which come into our funds, and, you know, typically H&Is try to exit when it comes to, when there are market volatility, so it might skew the percentile of direct AUM in certain quarters.

Madhul, just to add on the yield part, the blended yield stood at a traditional basis point.

Sorry. Right. Can you also, sorry, just on the yields, can you split the equity yield between arbitrage and the balance, like equity and hybrid funds that far?

So, there you don't provide that kind of backup, Amadudar.

And we are not very significant in arbitrage. We don't focus on that kind of yield. Okay. Understood. Got it.

Thank you.

Thanks. That'll be all.

The next question comes from the line of Mahek with MK Global. Please go ahead.

Yeah, hi. Thank you for the opportunity. I have two questions. So, first is on the employee costs. So, employee expenses have been largely flat on a sequential basis. So, I just wanted to, you know, understand how should we look at it from the balance year point of view And going forward for the next maybe over the medium term. And secondly, my question is on the ETFs. So our ETF market share has been largely stable sequentially. However, we have seen some contraction in the volumes market share. So if you could just help us with some of your comments on the same.

Yeah. So, I'll take the ETF part first. So, I think if you see the entire ETF, you know, market space, in the last one year, if you dissect the last one year into two halves, first six months was run by, because of the entire commodity, you know, momentum in the commodity ETFs, the flows were very, very strong. In the last six months, the flows have, you know, sort of slowed down on the commodity side. And hence, the volumes look to be lesser. And of course, equity market being volatile, the inflows into the equity funds have, you know, sort of slowed down. But when it comes to us as an asset management company, our flows continue to, the net flows into our ETF products The good part is, you know, the reason why our volumes are higher than competition and in industry we stand out is because of, you know, like we have been historically talking about, we believe in volumes. So, we have enough volumes in the exchange because of the strong retail base which we have built in all our equity ETF products. We have very strong, you know, tracking errors are very, very competitive, and we have the least impact cost when it comes to ETFs. So, investors do prefer us as a go-to, you know, category, as well as the multiple options which we provide to the investors. So, from ETF standpoint, we continue to remain relevant in the market.

Thank you. So, on the employee cost front, probably the employee cost should range in the similar range, except for the new hires that we may do to strengthen our teams and also if we spend on training and investments on that front. As guided in the quarter one, on the overall cost front, we continue to maintain our guidance of 18-20% growth over the next 2018 quarter.

I'd just like to add more on this. While on the mutual fund side, AMC, it will be almost flat, but AF business, when you look at the consolidated, that is where we plan to expand, and I think we are in the process of some new senior team members have joined, and we are in the process of adding more professionals. So, you may see incremental cost in our AF subsidiary over next three to six quarters.

Got it, sir.

Thank you so much. Thank you. The next question comes from the line of Praesh Jain with Motilal Oswal. Please go ahead.

Yeah, hi. Thanks for the opportunity. Certainly, you know, while this is kind of a small decline, very small decline, but on your unique investors count as well as your total folios, we have seen marginal declines in this quarter sequentially. Any, anything to read into it, any challenges that you're looking at, especially towards the exit rate of the quarter? Well, we have also seen some bit of fund performance kind of weakening. So, have we faced any challenges towards the end of the quarter in terms of client addition as well as flows in any sense?

So, I think, see, good observation. See, what is happening is, if you see the market, because of the volatility in the market, there has been, you know, the investor flows into the mutual fund industry has also started slowing down. Okay, the investor growth has been flattish. That's what is also reflective in the SIP industry book as well as the SIP inflows are also sort of flattening. When it comes to us, we have not launched any NFOs also in the last several quarters. NFOs do have a tendency to bring in new investors. We stay away from that. Second part is what we measure. We measure ourselves on the control levels. Our number of SIP folio growth continues to be positive, as well as our total investor acquisition is also positive. Some bit of moderation can happen because of market dynamics, but we are not looking at that as a major concern area, because we still feel that there is a lot of opportunity for investor growth. But yes, there is a slowdown in the industry, for sure. Thank you for that.

And secondly, you said, you know, while we attributed to slowdown in the industry, have you seen any divergent trends between a direct customer and an assisted customer? And where in direct, the channel type what you've done is kind of indicating that direct customer seems to be turning far more than the, than the advice customer. So, are you seeing that trend changing? And what would be your thought on the new PMS products of mutual funds that has been allowed by CERI?

So, from an investor, see the direct investor and the H&I investor, of course, you know, like I mentioned earlier also, H&I investors do tend to have short cycles. And when it comes to volatility and one-year, two-year performance not reflecting in their portfolios, as you have seen, you know, there has been a sort of a migration of investors to FIF. There has been some migration of investors into alternate assets, as well as, you know, the direct bond and other categories where definitely investors are getting positive returns. So, of course, in any market cycle, there will be, you know, investor behavior which can change. We are also experiencing that behavior.

So, I think regarding this PMS, MF only PMS, I think it's a very good new initiative by the regulator. It will help in expanding the market on ground, you know. So, and also it gets more and more, you know, advisors, you know, who have been advising, gives them a formal route to, you know, I mean, help their investors to invest. While it is very early to comment on it, how things will play out, but since this is supposed to invest in mutual fund schemes, I think at Nippon, we believe, I think because of the long-term track record of the schemes which we have, I think we will benefit from that. But even more, because of a very substantial position or a strong position in ETF, a lot of this money will also indirectly can flow into us. But like I said, these are very early days. We need to evaluate how investors respond to it. But I think it will be good for the industry, and we also believe it will be good for established mutual funds, and especially mutual funds which are very established in ETFs.

Got that. Thank you so much.

Thank you. The next question comes from the line of Mohit Mangal with Centrum Broking. Please go ahead.

Yeah, good evening, everyone, and thanks for the opportunity. My first question is on employee expenses. I was looking at your price release, and it said that, you know, the ESOP expenses was about 16 odd crores for H1, and you have guided it for about 60 to 80 crores for the entire year. So, should we assume that your ESOP expenses would be higher for H2?

So, sorry, when you return to 60 to 60 crores that we mentioned, that was for the new ESOPs granted, that would, that the expense, that expense would come over the period of four years. So, and what we have mentioned, the financial results is basically about the, only the new ESOP grant. So, if you look at the overall ESOP expense, for the quarter, it was around 4.155 crores, and for the half year, it was around 28 crores.

Okay, so actually I was looking at your price leaves of, you know, slide 12 of 14. So, basically it said that, you know, that your ESOP expenses were about 15.93 crore for the half year ended 30th September. The non-cash component of the employee benefit expenses. Okay.

So, for the year, the expense is expected to be about around 28 crore for the entire year.

Okay, and for the first half, it was 28 crore, right? Okay, understood. That's helpful. Second is basically on the offshore business. I mean, we understand that due to a lot of macroeconomic issues, the AEM has kind of declined. But are we doing some things, you know, wherein we can increase the growth, any particular strategy towards that?

I think the reasons for offshore AM overall has been that because owing to, you know, the rupee INR equation, rupee depreciation of the last one year or so, okay, there has been decline in flows from FQIs into India, okay. What we have seen though is that we are seeing money come in real assets, but I think we will have to improve, you know, that is just the global macros have to improve and, you know, once we see, you know, the West Asian crisis possibly, you know, nearing some resolution, you could see, you know, the rupee coming back, you know, strongly. So, that, I think that is one of the main reasons that we have seen both institutional as well as, you know, retail flows from overseas, you know, we continue to engage with important investors and placement agents overseas. So, that continuous engagement is happening.

Okay. Any particular newer schemes that you'll launch in the next three to six months?

You are talking about offshore or onshore?

Offshore, offshore.

We would be looking at, you know, looking at a couple of ideas, maybe feed us into one or two or through gift into our master funds in India. And there is also possibly a chance of, you know, a strategy of, you know, outbound funds with our strategic partners. But at the formative stage right now, we will not be able to really share too many details about it.

Understood, not a problem. Lastly, in terms of the yield, so you said that, you know, that equity yield has been around 52 odd BIPs, excluding arbitrage. And if I look that, you know, in Q1, that number was around 54 BIPs. So, just wanted to know that 2 BIPs was primarily on account of just telescopic pricing, or there is another element to that as well?

No, there's nothing to apply. Yes, it is mainly on telescopic rising and the new flows which keep on coming. We are guarding them. That is the only reason. And obviously, there will be between the various key macros and equities, there may be some shifts. Otherwise, there is nothing other than that.

Understood. That's very helpful. Thanks and wish you all the best. Thank you.

The next question comes from the line of Meghna Luthra with Incred Equities. Please go ahead.

Hi, thank you for the opportunity. I just had a few questions. One around the gold ETFs, I wanted to just understand what proportion of our SIP comes from gold ETFs.

We, though, Meghna, we don't share, you know, team-level SIP book, but this will be a small portion of our SIP book because mostly it is equity-oriented.

Got it. And this comes in context of the recent restrictions on flow and FOS funds. Do we see any impact? And yes, what sort of an impact are we assessing on this plan?

Actually, if you just go back to three months back, you know, the entire industry had stopped taking lump sum and large ticket flows into commodity ETFs. It did not impact the flows at all because, you know, in ETFs, there is a buying and selling which hasn't. So even if there are investors who are coming in to build a gold or a silver portfolio, the counterparty, you know, there is always a counterparty to, you know, create a market. So the net growth in gold tonnage is very, very insignificant. And even when it comes to current, you know, which we have undertaken in the fund of fund, it doesn't impact the ETF business because the ETF business, So, actually, ETF is more prominent when it comes to gold and silver rather than the fund-of-fund. So, there the buying and selling continues irrespective of flows being restricted in funds.

Thank you. And I just wanted to understand, regarding the expense of the one-time exception item on 81 bonds, we did not have any sort of provisions for it, right?

So, we booked that as an expense in the current quarter. Good.

That's it from my side. Thank you.

Thank you. The next question comes from the line of Abhijit with Cotec Securities. Please go ahead.

Hi. Thanks. Good evening, everyone. So, my first question is I wanted to clarify the point on OPEX. If I heard it right, you mentioned 18% to 20% growth for the full year OPEX. And just a clarification there, given how we are heading into the current quarter as well in terms of the top-line momentum, I just wanted to clarify you're still kind of sticking to that guidance of 18% to 20% growth. Second question was on the flows, but more broadly for the industry and then specifically for Nippon, like 2Q flows were weaker than the first quarter, and if you could highlight like across all the channels, like where have you seen flow pressure to be maximum for Nippon specifically? And third question is on AT1, just wanted to, again, check, like, what was really the trigger that we had to take this particular action in the current quarter? Was it regulatory driven? Was it, like, board discretion? If you can provide any color on that.

Yeah, so coming to the first part, you know, from the flows point of view, you know, as I mentioned, between the two quarters, our net flows has been more or less similar. But what's happening in the industry, if you're tracking the entire industry flows on the equity side, the pegging order of the fund houses are changing every quarter. The, you know, there are a few new fund houses who have come in and started garnering assets because of the new strategies they have launched in the market. Some of the older fund houses, you know, have started losing, you know, market share there. So, it's a very interesting, you know, trend which we are seeing in the marketplace. Yes. For now, this is like us who have been trying to be in the traditional space, advocating large cap, mid cap, multi cap, you know, the multi asset strategies. We continue to, you know, continue to get flows which are normal. We are not getting any abnormal flows and we are happy with that. But there are, you know, AMCs which are who are getting flows in certain categories because of the, as I mentioned, either it's a new fund or some existing fund has been repositioned. So that's how the trend line is shifting. And we are clear that we will continue to do what we think is the right for the common investor standpoint. And we'll continue to talk about our traditional products.

So, Vijit, on the expense side, I think so, we have been mentioning that we will keep on investing for long term. And that thought process remains. Obviously, we are watchful on the movement, market cycles and all. But the idea is that it is important to keep on investing on technology, brand, on digital, on people. On various segment of business, that is critical, and we will keep on doing it, but we will be mindful of the overall environment in the market. What was your third question, Abhijit, I just missed you?

On the E81, sir, what triggered the provision this quarter?

No, sir, Abhijit, we got the in-principle settlement from SEBI, and that is why we paid the amount and made the necessary provision, as we mentioned in our opening remark.

Understood, sir. Just one follow-up for Chhati, sir, on the first point. And, like, if you can give some color on whether Nippon compared to the rest of the, like, large listed space in terms of the market share, low market share from the digital, the self-directed channel, if it's, like, higher than the broader tier set or is it lower, which is kind of leading into more stable flow behavior.

Yeah, so I think that part of your question I could not answer. You know, the flows which are coming to us, you know, the digital, the fintech flows continue to be steady, and we being more of a retail fund house, we continue to get higher share from our MFDs, and, you know, both the digital channel and the MFDs continue to be our, you know, the higher, The contribution is higher from these two channels, and then we have the other channels contributing to our flows. Because these two channels are more retail-oriented, we haven't seen any sort of large impact when it comes to flows, which I think is slightly different from the other AMC's behavior of inflows. All right. Thank you so much.

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

Yeah, hi, sir. Thank you for the opportunity. Sir, I'm just to continue on the earlier participant question on the unique customers. So if I look at the incremental unique customer count or the acquisition or the market share on the incremental unique customers, I think it has been significantly lower than what it used to be in the previous 10 to 12 quarters. So any kind of any channel where we have seen kind of moderation in our counter share, which is leading to this? And secondly, is it right to assume that because our flagship scheme, both small-cap and mid-cap, has grown faster than the overall liquidity AM growth, is actually leading into the yield dilution?

So, I'll answer the first question and maybe Parath can take the other question. See, the investor count behavior, as I mentioned to the previous participants, the NFO, you know, NFOs when they come in the market, still as an Indian investor, the 10 rupee is an attraction. Okay. And whenever any NFOs which have been launched by the new AMCs who are coming in the industry, as well as some of the existing AMCs having launched some new ideas, that definitely attracts, you know, volumes, both digitally as well as through channels. We definitely are away from that space because we don't want to, you know, in a market which is very volatile, we would not like investors to come in with an experience in funds which don't have a track record. So, we stay away from that. Hence, maybe you are finding us, you know, flattening on the investor count growth. But let me also say, you know, which has also been communicated in the opening remark, that we crossed the 40 million folio count in this quarter. So, 40 million folio count and 2.5 crore unique investors, PEXA is at 37% of the total unique investors in the MF industry, which itself is a very large number, and that is incrementally growing for us. So, few lakhs here and there should not, you know, probably, you know, worry us, because we are definitely growing our industry base.

So, with the mix, basically the overall yield has been dropped mainly due to the use on equity, with the growth of AUM and the new flows which we are getting that has impacted the yield overall.

And the mix between the various scheme across the equity, nothing specifically of the distributor or the investor side to lead into work. It is generally a growth and flows which are coming.

Just a small follow-up, Saugur. If you can give us some color around if there is an NFO launch which happens, so which is the channel which actually helps in garnering most of the flows because I believe you are pretty large on the FinTech side and the MFD side. So if you can give some color around that, that would be helpful.

Yeah, so we have stopped launching NFOs, so I can talk about the industry because they behave very similar. See, whenever any new idea is launched in the market, the retail comes in. So, the retail comes in through the MFDs and the fintechs. So, these two channels are the go-to channels for any asset management company. And then the remaining channels like banks and the direct investors or the wealth managers, they come in. So, it is definitely skewed towards the two retail channels. And, see, today mutual funds are coming in from 300 locations in India. So, you know, getting investors from any part of India becomes convenient because the fintech reach is very large. And the MMD distribution network is also very, very strong. So, these two are the go-to channels for any fund to be launched.

Okay, understood. Thank you, and all the best.

Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing comments.

Thank you all for taking out the time to join us on the call today. If you have any further queries, we will be happy to address the same, post the call. You can get in touch with Arash for those. And thank you. Thank you.

Thank you. Thank you very much.

Thank you. On behalf of Motila Loswal Financial Services Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.