Operator
Ladies and gentlemen, good day, and welcome to Prudent Corporate Advisory Service Q2FY27 Earning Conference Call, hosted by 361 Capital. As a reminder, all participant lines will be in the lesson-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 a touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sudhakna Mukherjee. Thank you. And over to you, Mr. Mukherjee.
Thank you, Dhar. Thank you. Good morning, everyone. Welcome to the QFY27 Results Conference of Proven Corporate Advisories. To give a brief update on the results and address investor questions, we have the management of Proven Corporate Advisories, represented by Mr. Sanjay Shah, Chairman and Managing Director, Mr. Sirish Patel, Mr. Executive Officer, Thank you for taking time to be with us today. I hope you have the investor presentation handy, as we'll be referring to it during the course of our discussion.
So now straight, let us go to slide 49, which highlights our AUM growth for the quarter. So if you look at on slide 49, on the right hand side, we have shown the trend in quarterly average AUM. The sharpest part of market correction has came in last week of October, so after the September quarter has ended. As a result, quarterly AUM of Q2FI27 remained strong at 1.43 lakh crore. This was up by 8% sequentially and 21% year-on-year. If you look at on the left-hand side, we have compared the average AUM for first half of FY27 with our current AUM. Historically, current AUM at this point in the year has been higher than the first half. These are usually provided a favorable base for growth in the second half. This year, sharp market correction has brought our current AUM at par with the, more or less at par with the closing AUM of 1.37 lakh crore. So, it is now slightly below our first half of average of 1.38 lakh crore. Now, let us move to slide 50, which shows the movement in our equity EMM on a year-on-year basis and on a quarter-on-quarter basis. Now, let me begin with the year-on-year trend on the left-hand side. Equity EMM has increased from 1.17 lakh crore in September 2025 to 1.37 lakh crore in September 2026. This is a growth of 16.2% or nearly 19,100 crore. Around 80% of this growth came from net sales, supported by strong SIP flows. So, despite the weak market environment and mark-to-market impact on our equity was positive at 2.9%. Over the same period, Nifty 50 has declined by 8.1% and Nifty 500 has declined by 2.9%. Major reason of our outperformance is due to consistent SIP flows, which help investors benefit from the market volatility, Supported by thoughtful fund selection and portfolio construction by our distributors. Together, these factors reflect the distributors' alpha over the market by our network, which continues to deliver better for the investors. On the right-hand side, we saw the quarter-on-quarter movement. Despite a negative market-to-market impact of 1867 crore, our Ethereum grew by 1.7% sequentially. We recorded net sales of 4,137 crores in the quarter. This is the highest quarterly net sales in our history. Now, please move to slide 51. It highlights our SIP performance. So, as of September 2026, our monthly SIP book stood at 1,272 crores, a growth of 17.2% over last one year. Our SIP collections are growing faster than the market. As a result, our share of SIP contribution has increased from 3.49% in September 2025 to 3.73% in September 2026. Our market share in equity-oriented AUM excluding ETF has also improved. It rose from 2.59% to 2.7% over the same period. This reflects strong net sales and the distributors' alpha generated by our MFD. Now, let us come to the most important part, which is the financial results. So, let us move to slide 54. It presents our consolidated financials. On the quarterly average EVM, as I already told you, our quarterly EVM grew by 7.9% sequentially, and mutual fund revenue grew faster at 9.4%. This faster revenue growth was primarily due to one additional revenue day compared with the previous quarter. MFL otherwise has remained very, very stable at 88 or 89 business point during the quarter. Our insurance revenue grew by a strong 35% sequentially. This was supported by fresh premium growth of 54% in general insurance and 37% in life insurance. On our YOY basis, life and GI fresh premium were up by 45% and 62% respectively. Now, moving to our other financial and non-financial products, the revenue of which has grew by 14% sequentially, this growth was primarily driven by our PMS vertical, our distribution of PMS product. Average PM's AUM grew by 37% year-on-year, and now it stands around 2020 crore. Given the strong performance across all our businesses, our revenue from operation grew by 11.8% sequentially. Operating profit also grew at a much faster pace of 15.4% sequentially on account of operating leverage and operating margin, which has been expanded by 80 business points to 26.4%. Other income has declined during the quarter. Higher bond yield created a mark-to-market drag on the date portfolio. The hybrid portfolio also saw a reversal of earlier mark-to-market gain. As a result, other income fell by around 82% sequentially from 20.8 crore in previous quarter to 3.8 crore in the current quarter. And because of that, our reported profit after tax was at 71.7 crore, which was down by 4.1% compared to the previous quarter. I would ask you to separate that from the operating performance because they tell a very different story. If we set aside our other income, which is treasury line and not an operating one, profit before tax grew by 16% sequentially and 45% year on year. The operating business had its strongest quarter stay. Taking the half-year as a whole, revenue from operation grew by 20% to 736 crore. Operating profit grew by 37.6% to 192 crore, with operating margin at 26.1% against 22.7% last year. So, profit after tax for the half-year grew 39.1% to 146.5 crore. Now, as we highlighted the last quarter, the MF regulatory changes which came in effect in April 2026 are prompting more distributor partners to join the Prudent platform that can support them with technology, compliance, and operations. This is reflected in our onboarding numbers. We added around 3,541 new distributors on our platform in the first half. That is nearly 30% higher than the first half of last year. We are also very strongly focused on scaling our SIF business. So far, 1,792 distributors across our MFP networks have obtained SIF certification, and our SIP AUM. SIF AUM is nearly 900%. Now, let me address one of the very important points which is related to proposed regulatory changes in the institutional distributions. Now, if you look at the current consultation paper, there is one change which I would like to just talk about that regulatory is looking at entire industry from a two segment. One is the independent distribution agents, which is IDA, and second is the independent distribution entity, which is IDE. All individual agents will fall under IDE, while every other category, whether it is corporate agent or insurance broker, they will fall under IDE and prudent force under IDE. Now, major change is related to commission as far as these two segment is concerned. Under the proposal, individual agent will earn more than organized distributor like IDE. Let me just give an example in health insurance renewal. Agent or IDE will earn 10% renewal commission, while IDE entities like Prudent will earn 5%. So, IDE earn almost 50% less than the agent for exactly the same business. I believe industry has made a lot of representation on this and we are getting the feedback that regulators are receptive to them. We have also sent our representation as well. What industry is asking is at minimum we should have a level playing field with the independent agents. We should be at par with them or somewhat higher. Let me explain why. At our end, we have invested significantly in claim support, technology and customer servicing, and we have a large team working in this department. And whatever we earn, we need to share out of that earning with our peers. So, I think we all can understand, right, that if we do not earn, we cannot share. In the proposed format, where we earn 5% and an individual agent earn 10%, it would be very difficult for us to sustain this business. That said, based on the discussions and the feedback we are getting from various associations, we do definitely expect a workable middle path to emerge. Let me still address the impact. Assuming the regulation came through exactly as proposed, which we believe is very unlikely, the current contribution of insurance business to our profit is roughly about 12%. So, that is something which is probably might have the direct impact if the regulation comes as this is. Now, let us understand. Even in this unlikely scenario, we see a potential offset and opportunity to accelerate our mutual fund business. If the proposal is implemented as drafted, it will affect the entire insurance distribution industry, including individual agents. With pressure on insurance income, many agents are likely to look for a second source of earnings. They can either grow their insurance volumes or add a complementary business. We believe mutual fund could become a significant part of that second income scheme that create an opportunity for Prudent. Agents who want to enter mutual fund distribution will need training, technology, and client servicing. Our PanIndia branch network, tech platform, and a team of around 700 sales employees give us the scale to support them. There is also an opportunity to raise our own productivity. Today, part of our management and the regional leadership team devotes their significant time for the insurance business. If that bandwidth is de-deployed to mutual funds, it can definitely support the stronger execution, higher productivity in a business where we already have scale. Now, let me try and address another part, which is the recent regulatory changes by the regulator on the PMS front as a manufacturer. Post-regulatory changes, we are in the process of applying for a PMS license. As you all are aware that we have 100% subsidiary called Prutec. We have just got the approval from RSE for change of name from Prutec to Prudent Asset Management, Private Limited, and we are in the process of applying for the MFPMS license. The MFPMS framework is expected to become operational from April 2027. We believe we are well-placed to have required license by them. Our focus for now is on the MFPMS. We see two opportunities in this space. First, we can provide PMS manager with the technology and back office support they need. This would be similar to the backbone we have provided to mutual fund distributors. It would allow PMS managers to focus more on acquiring their clients. Second, there is an opportunity to serve H&I clients who want actively managed mutual fund portfolios. Our PMS offering can help address these needs. So, this is one part which I think we believe is going to be significantly large over a period of time. Second is, we also see an opportunity in the bonds. We already hold an OBPP license. Here too, SEBI has issued a consultation paper on the clarity about the fixed income channel partner, which is just like your mutual fund distributors. They call it FICP. So, I think consultation paper is in the process to define the FICP framework. And we are awaiting the final clarity on that before we launch it full-fledged. Once the framework is announced, we can launch and use our MFD network to expand our online bond business. This opportunity gives us new ways to serve our partners and clients. They also allow us to build our existing network and capabilities. Over time, PMS and bonds can become additional growth driver for the prudent. So with that, I would now like to open the floor for the questions.
Operator
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone from the telephone. If you wish to remove yourself from the question queue, you may press star and two. 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 Praesh Jain from Motilal Oswal Financial Services Ltd. Please go ahead.
Hi, sir. Just on the consultation paper again, one aspect where there is a difference between IDE and IDP is on the IDP side, They have clearly said that the individual agents will not have any options in the sense that if they are selling a health insurance product of a multi-line player, then they cannot sell of another player. Right. So if they have a while on the IDE side, they have optionalities. Right. They can sell products of any insurance company, which probably you have tied up with or the broker would have tied up with. So, I think there is one fundamental difference what the regulator is thinking between IDP and IDE. So, what are your thoughts there, whether, you know, the regulator would kind of concede to this that, you know, it gives you will still have the option of multiple insurance companies and get a commission of IDP as well. That's the first one on the insurance side. And second is also on insurance where you said as it is, if it is implemented, then you would have an impact. So do you think that this 12% contribution to earnings will be completely lost or do you think that the POSP model will not survive at all in this regulations per se? And third is, again on the consultation paper, wherein if you think about the regulator is opening up all the other financial services distribution to all the categories under the same license, or you will have to apply for the license, but under the same entity, you will be able to do it. Does that bring in more competition to your core business of mutual fund as well? Yeah, those are my three questions. Thanks.
So, Sirish, do you want to address all three?
Now, today, if we talk about Janet, who was an insurance broker, and Prudence was doing a mutual fund business. Similarly, there are a few big brokers in insurance, as there are good companies working in third-party products. So, obviously, earlier also these people were working in another entity. Now, they might work in the same entity. Of course, I think more players may enter in the third-party distribution platform these days. And, of course, I think more and more people entering in the platform these days. Obviously, the competition will increase. But at the same time, awareness for platforms also increases. Now, last three, four years, we already have seen many platforms entered in the neutral industry. Of course, it's a competition, but I believe that more and more people have started joining the platform. So it's more of a competition increase. At the same time, more and more people will be participating to the platform, and if you offer a better competitive advantage to the individual seller, So, obviously, I think you will be able to attend that share. So, that is my third question. Second point we talked about, there is a revenue differential between IDEA and IDE. See, there is a huge revenue difference, then probably the POSC will not be able, POSC business model will not be able to survive. Here, definitely, I think, one opportunity and one drawback. Let me handle both.
Sir, your voice is a bit patchy.
Your voice is a bit... Is it better now? Is it better now?
Yeah, it's better, but still there's a disturbance from your side, actually.
So, coming to this problem that if the revenue reduction is there between IDE and IDEA, then why would they work with IDE? Now, the opportunity part, I would say that today, an individual agent is allowed to work with one general insurance company and one standalone health insurance company. So, practically, whatever standalone health insurance companies are there, many of the agents are working in the health insurance business with them. But in the same entity, they are working with two different companies, general insurance as well as standalone health insurance. If the regulation or the consultation paper goes as it is, then obviously, they have to surrender one of these licenses for doing health insurance business. And that would be a big, big opportunity for any IDE for that matter. Now, tomorrow, IDEA is only allowed to sell one health insurance. Now, customers are definitely going to ask the multiple choices, multiple companies. Then, individual agent might have to go to any of the IDE. So, yes, of course, I think by compromising the revenue and such. But yes, I think, I will say that there is a huge difference in the payout between IDEA and IDE, especially on a renewal side. It is going to be a big, big impact for a platform like student or the corporate agent like student in the insurance POSP business. Yes, but I believe volume might increase, but of course that might not justify the revenue. So that is the point two. Point one, I think Sanjeev I missed that point one now.
I think the point, one was related to series B, sorry, what series is trying to communicate and I also echo that today this particular article contributes 12% of the profit or PBT. So, Sulem, I don't think that this entire revenue will disappear overnight because still, let's say, for example, by end of this year, we'll have a book of, let's say, 300 crore of book It can be health side or 10 crore here and there. It might be let's say 290 or 300 crore. Now the overnight people will not have an option to move somewhere else because there are two things which is happening. On the IDA side, he has to decide and surrender one. So most of the guys are already working with two health insurance companies. So first thing he has to decide which one he has to surrender. And on another side, probably he has to decide which business he can move directly to his code. So I think the renewal business, probably my belief is that might continue, but overall probably, so there are two things, whether it will come as it is, then definitely gradually it will have a huge impact, and you need to make sure that you are able to justify what you are doing, probably better claim management, better technology, better servicing. So the point is every IDA need to, so individual agent need to have the IDE because he cannot sell every product. So I don't think it is going to disappear. Now how much is going to adjust? Who is going to do better? How are you going to probably come to a midway? That all questions will be disappeared over a period of time. And second important thing would be that, say, most of the guys who are doing insurance business in our system are also having the background of mutual funds. And mutual fund is growing very rapidly. So, probably we believe that we'll definitely be able to use them productively in our existing business also. So, I don't think entire 12% will disappear overnight. That's why I wanted to communicate. But very clear guidance I cannot give on that particular path.
So, I understand. Just a follow-up on the third question that I asked. While the competition, you are accepting that the competition is likely to increase, but does that also mean that there could be a pressure in terms of the money that you would share with your mutual fund? So, in a way, if you want to retain your distributors, you would have to share higher with them on their mutual fund business to kind of retain them so that the compensation of insurance some bit happens on the mutual fund side. And also, because there would be more competition in the system on the mutual fund business itself, there could be a pressure to share higher with the distributors. So, does that also bring in a challenge for you?
So, Svodom, I think when you look at the people will look at, yes, yes, yes, yes, no, I'm just trying to say that when they'll enter in this business, first of all, they'll try to convert their POSPI network into the mutual distribution. They will not target somebody else because for them, let's say, for example, you look at one of the large players, they have almost about seven, eight, ten lakh, seven, eight, seven lakh kind of a POSP agent they have recruited over a period of time. Now, their first target is to create the second line of revenue for them as well as for their own platform. So my belief is they'll try to expand the market. And it may not be a direct competition to us, rather they'll definitely work on the expansion of the market. Yes, it is.
Secondly, I think this is the servicing business. So, obviously, simply by paying higher commission, obviously, you might attract people for some time. But the higher commission payout long term, it's very, very difficult for anyone to survive. And obviously, I think they have to bring down the pricing. Now, last 3-4 years, what we have seen already, we have seen 5-6 new entrants in this particular business with the higher payout, commercial payout to the distributors. I think still we have maintained our margins, our payout structure, and we are able to grow. Obviously, now, I believe that after 2-3 years of higher paying strategy, now, from this year on, they started moderating their payouts in the market. So, obviously, I think no one can survive on time with higher payout. Of course, it could be a difference for a few years, but not necessarily it is going to impact our market. Because distributors do believe that this is a very, very long-term service-oriented revenue efficient business. So, obviously, they need that kind of confidence that whatever the company is sharing right now will be able to continue consistently over longer period of time, and that kind of trust that is our distributors and the industry has included. So, we don't see a challenge, no people entering and infecting our margins.
Got it. Thank you so much.
Operator
Thank you. A reminder to all the participants that you may press star and one to ask the question. The next question comes from the line of Dipanjan Ghosh from Goldman Sachs. Please go ahead.
Hi. Good morning, everyone. So, a few questions from my side. You know, first, coming back to this concentration paper, I just needed numerical data. If you can give the quantum of volumes generated in the POSP business from the top, let's say, 50 or 100 POSPs versus others, that would be great. My second question is on the nature of the contract with this POS piece. Now, let's say, hypothetically, let's say if all of them were to, or some of them were to completely defocus selling insurance, what happens to the renewal revenues that you get from the manufacturers? I mean, are the renewal revenue passed through to the POS is renegotiated every year, or how does that mechanism really work for you guys? My third question is that I think in response to the previous participant's question, you mentioned that most of the POSPs or some of the POSPs might focus on increasing volumes or changing their product mix to better realign their top line. Could you give some color on the previous regime changes, either in mutual funds or in secondary market broking or in insurance over the last two decades, whenever there has been a cut in expense ratios or realizations? How have the partners really responded in terms of the volume of tech that you see or expect? Okay, there's some color on that. And last question is, in your commentary, you mentioned that the regulator has kind of listened to the voice of the industry, and there can be some middle ground that can be achieved. I just wanted to get a sense of how have the discussions really panned out, And what have been the hurdles from the regulator's end that you perceived related to the POSP channel?
Sirish, you can cover initial points, then I'll talk about the regulatory lastly.
I couldn't hear him completely. But the third point, what he talked about probably was that in the past, there were multiple rounds of regulatory changes, how the distributors reacted during those periods. Specifically, when we talk about mutual fund industry, when the anti-load was abolished, obviously, I think that time there was a biggest regulatory change when we talk about distribution. At that time, many of the distributors who were dependent on the first year upfront, obviously, they had a very, very big impact. Many of them had reduced their focus on the mutual fund business, and they entered into other businesses at that time. And after three, four, five years, when they realized that the industry has grown, many of them have come back in the industry. But those who continued focusing on the product wherein the commissions have reduced, I think they've grown substantially higher. After that, we have seen that in 2019, again, we saw that the TR cut has happened. Again, in 2023, April, we have seen that there is a regulatory change, and the TR has impacted the commercials. Now, during the last three, four, five years, we have seen that every year, few AMCs are cutting the commissions on the historical book. In this April, again, we have seen that most of the AMCs have cut on the historical book. So, multiple rounds of regulatory intervene has happened. Distributors have realized that there would be a cut in the commercial, but that is compensated by way of increasing the volume. So unlike that anti-load cut, unlike the anti-load cut, this time, last two, three years, I think whatever, last three times, whenever there was a cut in the commercial, we did not see any impact on our distribution business. So, all these, I think now, distributors are mentally prepared that over a longer run, there would be a cut in the commercial, but that would be compensated by the way of increased volume. In the insurance side, also, if you look at last three years, we have seen that every year there was some kind of regulatory changes. Now, one was the DSC cut. Now, when the DSC was cut, obviously, the distributors' income came down by around 18%. Then we talked about surrender guidelines. Obviously, surrender guidelines also have impacted distributor agents or PRC commissions. Obviously, I think that also got impacted. But the focus on insurance continued by every agent. This time, probably the impact is much, much higher. But obviously, I think the impact is much, much higher. At the same time, other products, other businesses, I think, are also there. So, standalone insurance agents will definitely get impacted more. But those who are doing multi-line business, obviously, the impact would be a little easier.
Operator
It has been disconnected. So let me just quickly connect them again. Or would you like to continue answering this question?
Yeah, so I think the bottom line is what you were just trying to communicate that historical evidence says that all the regulatory changes has virtually brought the pain initially, but over a long period of time, every industry has grown. So, I think that is the simple hypothesis. We believe that this change, it might be, it may not be as harsh as we have projected. We definitely assume that there will be a lot of changes which will happen. But finally, it will bring a lot of growth in the industry. And who remain probably very, very focused to this with a lower margin will get a disproportionate share out of this. That is a very important thing. Your second question was regarding the contractual understanding between BOSPI. So I think renewal also probably, if our remuneration will go down, I think we will also share less to them. So let's say, for example, we would have said that your renewal rate would be X percentage, but if I do not earn X, I cannot give X. So even though, so I think there is a very, every renewal is a contractual renewal, and every renewal has a different rate. So probably, I don't see any legal hurdle there, and we can definitely change our pricing structure to them based on whatever we are earning. Your first question was top 50 POSP contributor versus others. I don't have the data readily available because we never worked on that, but we can definitely provide you offline whenever you ask about that. But I think still my belief is that if you look at my MF concentration, I think it will not be significantly large because we have a good amount of people who participate in the insurance business. So I don't see a huge concentration risk there also. Sarish, you are there?
I am back. I got this, Nathan.
Yeah, his question was about the contractual obligations with POSPI and if there is a change, will our payout to POSPI will also change? So I just tried to say that, yeah, it's every contract is a renewal contract.
I think practically every year is a renewal contract. So whenever our payable changes on the renewal side, our payable commission also changes on the renewal side. So, from April onwards, assuming that our renewal permission on the health book reduces, we will be able to pass it on the reduction to the pre-OSPs as well. Of course, the margin will get impacted, but yes, I think we will be able to pass it on the entire system as well.
Got it. And Sanjay, sir, if you can give some color on the last question regarding the discussion with the regulator.
So, I think probably when we are talking to our friends in the industry, there are a lot of information which we all have shared about the, let's say, persistency, kind of activity which do, the kind of effort which we provide for the claim management, kind of infrastructure which we have created. I think the regulatory is looking at very, very positively. I'll tell you, for example, our 60-month persistency in health is roughly about 85%, 86%, sorry, in the life, which is a very, very positive number. So, regulator has looked at only 48%, which is the headline number. Beneath that, there are a lot of players who are probably doing things very, very constructively, positively. So, they are mindful of this. My point is that when you talk to them, initial reaction was that they probably have a very strong thing which is already decided. No, I think that's not the case. And they are receptive to all the information. They are probably asking more and more data. So probably what we believe is that this time they are talking about discussion with the data rather than any emotional pitch. And if you are able to substantiate it, I'm just trying to tell you that if I'll earn 5%, there is a cost of administration, claim management, technology, team. After that, whatever is left, I can share with the POSP. Now, I think that is a very strong message which we need to give to them with the data that out of 100 rupees, this is the cost which I'm already absorbing. And then I have to share. So I think this information has been very, very positively looked at by the regulator.
Got it. Thank you, and thank you.
Operator
A reminder to all the participants that you may press star and one to ask a question. The next question comes from the line of Sanket Gora from Avindas Park. Please go ahead.
Yes, thank you for the opportunity. Can you give a bit of color, like mutual fund, how much we share in insurance business with the POSP guys, and just wanted to understand how much MFDs and POSP overlap is there. Because the reason why I'm asking this question is because of MFREC.
Please go ahead. Yes, sir. Yeah. So, my question was regarding the market share. So, where's the competition becoming tougher right now, like from banks or large national distributors or online platforms? As we saw that you are ranked like fourth in retail AUM, but fifth in retail next sales. So, just want to understand like which one is taking market share from you right now.
Operator
Hello, Mr. Sharish, are you there?
We are gaining the market share, I think, quarter on quarter. Hopefully, I think we will be able to get it in the same way. I think what is helping us also the focus on SIP, more long-term business in nature, probably that is also helping us. Another point I would say that if you look at loyalty, you know, many of the businesses do only have got done in the industries, that loyalty also is an important role in the kind of business. So hence, we are able to maintain the market. Hopefully, I think we may continue to kind of work in the market.
Operator
Thank you. The next question comes from the line of Swarta Mukherjee from 361 Capital. Please go ahead.
Thanks for the opportunity. My question, first of all, on the influence regulations, I decided to ask if there is a change in the regulation where, you know, maybe there is a higher level playing field between IDEs and IDPs. So, just wanted to understand that what would be accessible to basically start thinking about looking at this business. If you could give some color and maybe where is the insurance business price point margin for profitability so that we can understand. That is the first question. Second is, in terms of, you know, slight yield increase this quarter, I wanted to understand what was the function of, if it's that, you know, your mix moving to smaller entities is leading to a bit of a higher realization. Thirdly, given how the equity matters are personally, if you could throw some color on, you know, what kind of conversations you Have it with the investors. You've got to make a sense, maybe more on the direct side, where there is no distributor, how the things might plan out.
Sirish, you can answer other questions, but the margin, so now he's saying that between the IDE and IDP, Sirish, what is the comfortable margin which you'll be looking for to look at this business comfortably? So what are you expecting? For example, if they are giving renewal rate of 10% to IDA, what is the bare minimum level which we should expect so that they can do the business comfortably? That is the question.
So, I think whatever the regulation can be done,
I think the insurance margin is not going to come back. That is very, very sure. If the commercials between IDE and IDE are either similar, or at least IDE are made little more, I think probably the competitiveness of any IDE can continue because all the IDE are spending a lot on multiple things like infrastructure, technology, and settlement, ground level support and everything. Obviously, the IDEs are at least higher than the IDEs, so obviously this model will continue working and processing and growth as well. So I think let the regulators come out with the final regulation and then probably we will be able to give the number. Currently, we are speculating on what regulators may do or what is the survival number, I think it is difficult. Whatever it would be, we are very, very confident that the business, the insurance business has to grow. Now, today, it is a higher volume, a lesser volume and a higher margin. Tomorrow, it may become higher volume and lesser margin. For us, one positive thing, there is a huge overlap between the mutual fund distributor and the POSP. So, with the POSP, now, this competitiveness is the same. Whether they are working with us or other IDEs, that is what they have to select. Probably they might select students because for mutual fund business, anyway they are working with students. So, on that front, we don't see a big talent that the COSP will move to other IDEs, but yes, I think the margin definitely is going to be a big, but let the final regulation come, and then probably we'll be able to tell you that, definitely.
Yeah, on the margin side, I think the margin has been more or less static. If my revenue has gone up a little bit more than the average, you mean because of one more working day. That is the only reason. One more revenue day. Otherwise, it is roughly about 88.8 business.
And the last one, sir, on, you know, what are the recent commercial sales?
Yes, sir, what are the ground level feedback of the investors on the market and overall, what is the, how you look at the sentiment?
Uh, obviously, I think when two years returns are not in double digit or I think many of the cases it is negative. Obviously, there would be a concern in the market. But I would say that I think this time investor behavior is much, much mature than what it used to be earlier. I think this quarter, our net sales is the highest ever. That outsell says that I think the maturity has improved. I am not saying that every investor is coming in this kind of market. But at least if you look at the redemption pressure is less. Of course, the cancellation of SIP numbers have gone up. But in previous era, whenever the market used to predict like this, we used to see the negative hope in the industry. This time, at least the growth is there. Of course, the growth phase has slowed down, but the growth is there. Investors are definitely concerned about the returns. At the same time, there is a clear-cut message that at the India level, the macro is strong. Of course, I think global uncertainty, global concerns, all these things are there. But yes, I think new money is still coming less compared to what it used to come earlier. But yes, we are trying to pacify, we are trying to give that confidence to our distributors that this could be a good time for those who are in the industry for long term, and anyway, I think every industry is in the industry for about five years, probably this could be a better time. Many of the customers are getting that confidence and entering purely in this particular market. But yes, I think we need to address the concerns on the regular basis for our distributors and the customers.
Operator
A reminder to all the participants that you may press star and one to ask a question. The next question comes from the line of Sanket Ghoda from Avengers Park. Please go ahead.
I'm sorry, I got locked off.
So, my question, let me address your first question. So, I think we've been probably telling that in the case of insurance business, our margin is similar to the mutual fund, more or less. You might look at that, there might be different ways of expenditure which will be required for doing the businesses, but overall margin is in line with the mutual funds. That means I can tell you. Now, you can ask the second question.
Sorry, related to that, sir, how much is the overlap between MFT and POSP guys? Are there any exclusive POSP guys or the path of MFT family only?
Sirish? Mostly, but yes, sirish.
I think I already said that there is a huge overlap between mutual fund distributor and the POSP. So practically, you can say that more than 90% overlap is there between mutual fund and the POSP. Yes, it may happen that the guy with POSP may not be the same guy but the ERM. His family member has taken the POSP with us. But otherwise, if you consider it at a family level, it's more than 90%. I can say because we don't encourage people only working for insurance with us. Hardly, I think, anybody would come to work for the insurance business. We try to convert. We try to get the people for mutual funds first and then for the insurance. So, I think without having any number in hand, but at least I can see that at a family level, more than 90% overall would be there.
Understood. And, sir, the second question was when you spoke about PMS-MF, which you intend to start from 1st April, most likely you start from 1st April. So, I just wanted to understand if it goes live, whether it can potentially cannibalize your existing MFP business because ultimately the customers are saying they might end up selling PMS, MF rather than doing direct plans. So, you think that will happen in those lines? And also, your expectation whenever you go live on MS, PMS, MS, your realization on PMS of MS will be still 90 bits, which is closer to our current numbers, or how do we see that number to be doing good?
So I think probably my belief is this will open up for us to attract more and more players to join the Prudent platform because I think this is going to be a very strong product line for you to attract the probably very high quality distributors to join the Prudent platform. Another important thing is today a lot of people who become H&I clients, probably he says that I don't want to pay you such a high fee for my large portfolio. I think this will probably help them to charge through the variable fee structure can be decided. I don't know, still we'll probably figure out. So that also probably will be helping us. So overall, I think this will definitely help us to expand the market. And on the margin front, I think regulations say that you can charge up to 1% on the PMS, MF, as a fee. So probably that 1% itself is closer to what we are earning today, right, about 89, 90 basis point. So I don't think there will be a drop in the margin is concerned. Probably it will be similar to what we are earning in the mutual fund side. But I think it's a very strong pitch. And I actually took a line of revenue stream for us. One would be that once we create the backend for the PMS manufacturers, we will probably provide the entire backend to fund managers also who can probably work in our platform and they can manage the customer's portfolio on their own, and the backend will be taken care of. That is one. And second is positioning as a manufacturer from the point of view of direct piece, advisory piece, and attracting the high-quality wealth managers on our platform. Understood. Understood.
And the second question I just wanted to understand is that we gained a bit of market share in the current market, or we grew better than the industry. So, Egypt, Facebook says that we being very strong in small and mid-cap played a role. And if you can do a color out of the total AUM or total flow numbers, how much is concentrated towards small and mid-cap?
So, I think small and medium, they are much higher than the fresh growth flows. In this kind of market where in the phrase gross flow have reduced compared to the FIP flow, and FIP being more on the mid and small cap side, obviously I think that also might help us in gaining little market share. But if you've got a market share alone, I would say, two, three reasons. The next share has increased. In the next share, there is only one reason. The redemptions are less. In the industry side, less people have participated in the new business. Now, if you also look at the composition of the gross sales for Prudent and the industry. Historically, our SIP book is much, much higher. So, if you look at the composition in gross sales, SIP normally contributes around 50-50% of all gross sales, and fresh sales also contributes around 50%. In the industry, the SIP share in the gross sales is much lesser than the current share. Today, the fresh gross sales is a little bit controlled. Hence, automatically your market share has improved. Tomorrow, hypothetically, the sentiment coming back, a lot of people participating in the fresh brothel, probably that may be the time we might become stagnant in terms of budget share, or that kind of thing can happen. But yes, I think communication of both of the things.
Understood. If I look at your commission for the percentage of non-insurance operating revenue, that number has gone up by almost 120 basis points compared to 12. So I just wanted to understand from 61.4, it has gone to 62.5, so we will do it. So I just wanted to understand the reason for the commission cost to go up.
Probably, so I, yeah, okay. So overall, I think probably, I think there is an annual additional trail which we give to the partner based on the full year revenue projection. So if you look at first quarter projection, and we after looking at the second quarter number, we felt that the current year's gross sales and late sales number would be much, much better. I think because of that number, I think my provisioning on the additional trail has gone up by two and a half crore. So, that entire 2.5 crore has been probably almost, probably about 1.75 crore has been booked in this quarter. That must be the only reason. Otherwise, regular payout structure has not changed.
Understood. Understood. Perfect.
Operator
Ladies and gentlemen, as there are no further questions, we have reached the end of question and answer session. I now hand the conference over to management for closing comments.
Thank you. Thank you, everyone. And probably if you have any query or any question which is unanswered, you can definitely reach out to us one-on-one and we'll try to give you the proper explanation. Thank you very much. Thank you.
Operator
Thank you. On behalf of 361 Capital, that concludes this conference. Thank you for joining us. You may now disconnect your lines.
