Questions across 4 calls

Ashish Kehair

Firm not listed in source transcripts

Nuvama Wealth Management Limited

Nuvama Wealth Management Limited CC-Sep24.pdf · 2024-10-28

Sure, sure. So, Sanket, if you look at that business, it's basically split between domestic and international. So, domestic, there is zero impact because domestic, we basically service the PMS and AIFs, which are typically long only or maybe category three, category two, where the impact of this is zero. I mean, there is absolutely no impact. That is, let's say, maybe 30%-35% of the business. Balance 60%-65% of the business, again, half of it is completely non -related to any activity which is related to F&O. So, if you see, let's say, one-third of the clients are the clients that are affected by F&O. And if I look at the volumes, which basically get impacted, which is largely at the retail level, for us, about 90% of the volumes sit into expiry, out of the five, which were there every week. So, it really doesn't matter for the balance expiries to go away. And when we have discussed with these clients, again, as I said, they mentioned that, look, even if the profit pool in India were to fall by 50%, they're saying, which is an extreme scenario, even then the derivative profit pool for these type of clients in India is 5x larger than the next market. So, deployment of capital will continue. Plus, if two out of five days, they need to keep the float here, balance three days, they don't take it out. So, as I said, while the volume for brokers may get impacted, whether the volume for us in asset services, the answer looks to be no right now. That is point number one. Point number two, the number of new clients which are coming in, which are of similar type, size, and scale, which operate in other markets and are now coming in India, and we are opening the accounts, I would say that addition itself will more than compensate if there is any fall. So, right now, I may sound a bit optimistic, but this is after a lot of discussion with all these participants is that we have come to a conclusion that the impact looks marginal, at least on this side of the business.

Yes, Sanket. That's absolutely right.

Nuvama Wealth Management Limited CC-Jun24.pdf · 2024-07-29

Thank you, Jayant. So acquihire actually are working on. Acquihire may not be one of the best approaches because when you do that kind of a hiring 30%, 40% of the team which you get may not be what you want. So, our approach is two-fold always that you look for individual RMs and if there are teams in which a higher proportion of people are of the type which you want then you go ahead. We have not lost too many people, but like any industry which is growing I mean this is a pain which you will have to live with, specifically in a people-oriented industry. If either the industry is not growing then it's a different kind of a pain and if you are seeing a reasonable amount of growth and optimism about future this is one of the factors which you will have to live with and you have to manage time and again. At least at the leadership le vel, we have not seen any churn, but many new players I think are coming into the space across the spectrum. I think in retail, in affluent, in HNI, Ultra HNI and many players are also changing their strategy to move into this space. So, I actually see it will lead to an overall talent expansion because whichever way you slice or dice it, I don't think if people keep recruiting from one another there is going to be a winning approach because ultimately the talent pool is limited. So, people will have to dip into talent pools which are sitting inside banks, build infrastructure around training and other stuff in order to add to the talent pool for the industry to grow meaningfully. In terms of asset movement, I have always maintained this that it's not really easy for clients to close accounts and shift everything and specifically in cases where if somebody is making a movement a multiple number of times in their careers it's practically impossible for clients to shift everything. Yes, incremental business will get split between the two firms, but I think more than 60%, 70% of the AUM is retained with the existing firm, but typically in ultra-high net worth because the number of relationship points, the number of hooks which you have with the clients, the number of touch points which you have with the clients goes significantly beyond just one touch point. So, business typically gets split. It's not that 100% movement happens of assets neither do we get it, nor we lose.

In my view, no. Actually, the more impact of cost-to-income is happening today because of the change over which is happening from let's say the revenue recognition of AIF because for us, for example, we were in the process of booking 60% in year 1 which in CAT 2 has let's say fallen to maybe 30% or 25%. Many players in the market were booking 100% and that changeover is to my mind 12 months to maybe 24 months to 36 month process where it remains elevated, but even this year in our view by the time we end the year we should come back to 65% or below because if you see even in Q1, the impact to cost-to-income has happened not because of your regular revenues or ARR revenues, but because of transactional revenues and transactional opportunities actually keep coming differently from quarter -to-quarter and we are now seeing opportu nities which are emerging in Q2 you will see it should come back. And the cost movement, in a way people are overpaying, but ultimately the relationship manager cost as a proportion to overall c ost of the business is maybe 50%, 55%. So, if you have an established infrastructure, if you are a player which is of scale and your other costs are under control and if you are not mindlessly adding RMs at any cost then the cost-to-income should be under control.

Nuvama Wealth Management Limited CC-Dec23.pdf · 2024-02-14

Too complex, Amit, for me to answer this. I can only say…

So let me give you how I see the overall business. So again, if you look at the entire space of financial services, wealth management, in my view, is one of the most nascent pieces because India is still evolving, right? I mean, we are talking of 3,500 families. Our competition has some 7,000, somebody has 9,000. These are really small numbers. And even if you look at the assets under, I would say, client assets, not under management or advice, client asset numbers are also not very high in terms of the size of the country and the potential which it commands. So I think it's a very, very long runway ahead. Overall, obviously, you understand the equity markets far better than most of us. Equity markets should do well because if the underlying economy is doing well. And essentially, if the markets do well, Amit, if real estate does well, if these two things are doing well, who are the owners of these assets? The owners of these assets are finally individuals, right? Eventually, all these individuals who own these assets, in whichever part of the wealth spectrum they are, whether it is retail, mid -market, high net worth, ultra high net worth, their wealth is continuously going to increase. So one increase is obviously, let's say, you said from market increase, right? So if I'm holding Nifty, I will gain by that much just by holding Nifty. In addition to that, I have a salary income or a business income from which savings is getting generated. So, if you combine the two, obviously, wealth management will grow at a far faster pace than the market itself. So theoretically, what you're saying is absolutely correct.

Nuvama Wealth Management Limited CC-Sep23.pdf · 2023-10-30

Yes.

Actually, no. Now, if you look at last year, our bonus provisioning was not as smooth because we were still adapting. But this year onwards, our bonus and incentive provisioning is in line with the revenues. The reduction in the cost income actually has come because of the improved performance on the revenue side. I don't think there is a severe movement on the cost side in that sense.