I have multiple questions on the Wealth Management side. So firstly, this quarter, you saw a mix of your APs and direct revenue shifting towards more of direct. And simultaneously, you saw a quarter-on-quarter decline in market share, both in terms of cash ADTO and F&O premium. Can you give some color on that, as to what has happened? And secondly, have we changed the pricing in F&O because there is a change in regulation and it impacts your revenue directly. That's on the wealth side. And on the Private Wealth Management side, while your distribution income has increased meaningfully quarter -on quarter basis, your AUM has not increased. Is there some kind of transactional products or insurance-like products which are not included in AUM, but in accounts for some revenue? These are my questions.

On the Wealth Management side , increase in t he per lot pricing based on the contract size increase has been implemented for our customers in line with changes in the lot size. Earlier, if you remember, we had reduced it when the lot size reduced. Coming to the overall market share, you must have seen the changes which have happened across the market for derivatives and overall trend. Typically, we have seen, in our customer base with the advisory facilities, that in the short term we have some impact when the markets go down and similarly, we see a better impact when markets are on the positive side. Hence, the decline in market share as market has fallen . However, on overall revenue, we are better off.

As far as the Private Wealth Management assets are concerned, while net flows during the quarter is at ~Rs. 5,300 cr, but the overall assets have marginally dipped because of the mark- to-market movement.

Moderator

Thank you. The next question is from Vivek Ramakrishnan from DSP Mutual Fund. Please go ahead.

I have two questions on the lending book on the Wealth Management business as well as in the housing finance companies. In Wealth Management, as well as private wealth management, your lending book has been coming down. I guess that is linked to market volatility and decline. But do you see the trend reversing or in terms of people not wanting to do as much speculative activity or taking margin trading funding as in the past? And you also mentioned that the margins have expanded, so I wanted to know in the competitive business like this, what would be the sustainable level of margins. So that's on the Wealth Management business. I'll just ask the HFC business question also. Are you seeing that the credit quality is holding up because in many parts of the business you'r e seeing, actually, your numbers are quite strong? And what I wanted to ask was your credit costs are actually a negative number this quarter. So, what drove that?

As far as the lending book is concerned on the both Wealth Management and Private Wealth Management, there is a marginal dip on a sequential basis of about 5%. While markets have corrected very sharply but this book has largely been resilient. However, NIIs have gone up because of the improvement in our spreads as our cost of funds have declined by 30 bps on a sequential basis. On HFC business, the n egative credit cost is actually a function of recoveries from our past written-off cases. This recovery is from assets which were written off prior to FY20 and which is resulting in the credit cost reversal in Q3FY25. Also, on a steady-state basis, our asset quality has been very strong. So, there's no incremental provision cost also in our quarterly P&L.

Moderator

Thank you. Next question is from Abhijeet Sakhare from Kotak Securities. Please go ahead.

I had a question on the Private Wealth business. If you could give some broad breakup of the overall AUM there?

ARR assets is at ~Rs. 32,000 cr. and the transaction bearing assets are at ~Rs 116,000 cr. Out of that ~Rs. 116,000 cr of transaction bearing assets, ~Rs. 46,000 cr is the custody assets.

And the ARR asset, is there a further split that you can share in terms of, let's say, equity debt, fixed income?

These are distribution assets into mutual funds and alternate assets. Total ARR distribution assets are ~Rs 26,000 cr, almost ~Rs 3,000 cr of advisory assets and ~Rs 2,700 cr of lending book.

Moderator

Thank you. The next question is from Manan Mundra who is an Individual Investor. Please go ahead.

I have two questions relating to customers' stickiness. First is, if you can provide the customer vintage-wise revenue, just if we segregate them in separate buckets, for example, 0 to 2 years, 3 to 6 years and 6 years and above. So that's one. Second, whether the client revenue increases as their age increases because generally, the income of the clients also increases with their age in the wealth management business?

As the vintage improves, all our revenues have been increasing for our clients. That's because not only we have broking, but we also do the cross -sell, and our cross -sell ratio has been improving. We don't provide the exact numbers of the vintage of the customer.

Okay. And as the age of the clients are increasing, are we getting additional revenue from those clients?

Yes. As the vintage improves across every bucket, we see the increase in the revenue from the same customer.

Okay. And have we seen any disproportionate rise in the margin calls from the clients – for the clients because of the recent fall in the market? And do we see any systemic risks around that?

No. This is because of the changes which SEBI implemented on the margins and after margins, the impact of the fall is very minimal, and we don't see any big impact coming on an overnight basis. Also, there's a lot of cash which the clients are carrying currently because of which we don't see a big pressure on the selling because of the fall in the markets.

Okay. And the last is, have we implemented any support services? We are giving distribution products like insurance and credit products as well. So, do we have any support infrastructure if customers are facing any issues around that?

We have our complete separate team for the distribution side. As we have told initially on the call, there are 600 people dedicated for the distribution business. Also, from the insurance perspective, we have a dedicated team plus the insurance companies have th eir own team, which sits out of our office for these purposes.

Okay. And the last and final is, do we have any restrictions because of any regulations around sharing data from one entity to another, for example, sharing housing finance company data with AMC or vice versa?

Yes, we have Chinese walls across all the businesses. Many of them are regulated by different regulators. So, these businesses operate stand-alone as separate entities.

Yes. So, do we have any issues for cross-selling because of those restrictions?

Let's say the broking business has its own customer base and due to open architecture, they are free to sell the best products. Because of that if any of the firm's products turn out to be the best product and that is an option available also. Cross sell does not necessarily mean the firm's products. Cross sell could mean third-party products.

Moderator

Thank you. The next question is from Umang Shah from Kotak Mutual Fund. Please go ahead.

Congratulations on a good quarter and thanks for taking my question. I had two questions pertaining to the asset management business. One is , if you could just throw some light, I mean, last few weeks have been fairly volatile in markets. And if you could just share some of the trends that you guys are witnessing into your net flows or the SIP registrations, how the flows have been, given that markets have been volatile and some of our schemes have also seen a fair bit of softness in terms of performance. So that's the first one. And on the SIP bit, probably if you could also throw some color in terms of while the gross number looks extremely strong, I mean, it's sort of an ongoing debate in the industry about gross and net. If you could just throw some color on that, that would be really helpful?

On the SIP front, our gross and net is very similar. Second, in terms of incremental flows that we are getting , Jan’25 is the second strongest month in terms of incremental flows in our history. The earlier strongest was Dec’24. Jan’25 and Nov’24 look similar. Overall, our net new flows market share is higher than our AUM market share. Even today in all cohorts, like city-wise, distributor-wise or any cohort, our net new flow s market share is multiple times our AUM market share.

That's helpful. Just one more question o n the asset management piece, while on the wealth and the private wealth piece, we have detailed our strategy in terms of expanding distribution. On the asset management piece, just wanted to understand have we added more to our distribution maybe through different channels? Just a little more color on that?

We are expanding very strongly across the channels. To give you substance, beginning of the year, the AMC business had 250-odd people. Today, we hope to end the year with over 600. Most of the incremental has gone into expanding our on-the ground city presence, and beefing up the sales team. So, it is both spread and depth.

Okay. Just one last question, which I want to just squeeze in. On our housing finance business, I mean, in the past, we have guided for a more normalized growth of about 15% to 20% on AUM. Do we still hold same guidance or are there any changes to that?

We hold the same guidance of about 20% AUM growth for FY25.

And going forward?

Going forward we believe, this run rate should improve because we have been continuously adding Sales RMs. In fact, our RM count in FY24 was doubled over FY23. Similar in FY25, this base is up by another 50%. We are clearly building a capacity of RMs to improve our disbursement run rate, and that's why you will see the AUM growth to be better overall with the additions in the RMs as well as improvement in their productivity.

Understood. Perfect. Thank you so much and wish you good luck.

Moderator

Thank you. Next question is from Dipanjan Ghosh from Citi. Please go ahead.

Just a few questions from my side. First, on the private wealth business. If I look at your overall transactional income, ex of broking income, it seems that has gone up meaningfully durin g the quarter compared to a steady-state run rate. So, is there some carry income that has been booked or some sort of syndication activity that you have done? If you can give some color on that. So that would be my first question? My second question would be, while you mentioned that your overall flows on the mutual fund side has been quite strong, maybe similar to November levels or maybe one of the best in the history of the company. I wanted to get some color on, when you talk to, let's say, feet on street or your distributors, what are they sensing in terms of incremental sentiment because this is probably the first-time retail customers are likely to see a prolonged period of paying out there? The third and the last question is more on -- again, going back to the Private Wealth division and maybe in sync with the Capital Markets division, you mentioned that your pipeline on the IB side is holding up quite well, but when you talk to, let's say, your clients what is the hope that you see a fructification of some of these deals? And in that context, from a new client addition in the private wealt h side or new money getting created, how do you see the trajectory maybe in FY26?

Let me take the first question on the Private Wealth Management business. In the last quarter, we've seen increased activity of alternate asset sales. We've seen a lot of activity from ultra- HNI family offices in the co -investment space. So , that has contributed to the increase in transactional revenue. On your third question, yes, there i s a lot of increase in activity on the IB side and we are increasing coverage over monetization events , over large liquidation events . So, we should see a lot of traction around that in terms of new client acquisition and new client sales in FY26.

Regarding distributors and the client response to this correction, the trends that we have seen over the past 4 weeks on the mutual fund side, there is some reduction. We believe we haven't lost market share. This should be industry-level reduction in net flows. On the alternate side, I think our flows adds close to record levels. So , there we haven't seen any slowdown. If we look at the behavior of retail versus HNI, I think the HNI part is holding up much better. They are taking it as an opportunity. The correction gives them a great opportunity to put in the lot of money to work. Retail may be behaving a tad differently.

Just one small follow-up, if I may, on the first question. When you mentioned that the activity levels were strong in 3Q and maybe more on alternate side, so the transactional income that you have booked would be the upfront fees that is still permissible. Is my understanding correct?

That's right.

Got it. Thank you, sir, and all the best.

Moderator

Thank you. Next question is from Avinash Singh from Emkay Global. Please go ahead.

Congratulations on a great set of numbers. A couple of questions. The first one, if you can help us in terms of your asset management, AUM, how much of it is within your group ecosystem distribution, like wealth and private wealth? Together, how much they contribute to this distribution? And in your data, say, disclosure, where these are get captured? Do they get captured in direct and or wealth management piece? So that's question number one. And on the private wealth side, the thing here is that, of course, you have been kin d of in expansion mode ramping up your RM and all. So , the question is that if I were to look at i n terms of your kind of a focused segment, where this private wealth split in, I mean, like Rs. 5 crores per client investable asset or higher or lower or put it the other way, what is the median typically investable asset, not the customer you said, investable asset you will have as your kind of a focus segment for the private wealth?

On the first question, the captive AMC AUM is just 15% between Wealth and Private Wealth. This number is also moderately coming down.

We look at families with a financial net worth of Rs. 25 cr plus in the Private Wealth Management business and we onboard with Rs 3 cr plus.

Okay. Got it.

Moderator

Thank you. Next question is from Sanil Desai from ICICI Securities. Please go ahead.

I just wanted to ask that what kind of traction you have seen in the net flows and the new NFOs which Moti has launched? Because I think in last one or two con call, the strategy was said that to expand the AMC business you were targeting around 1 NFO per month. So how has that strategy been? What is the pipeline of NFOs? And if I may, then in this period where there has been market weakness, has there been any weakness in the flows seen in the NFOs?

As we speak, we are just opening our innovation fund. This is the first stage of that fund launch. We will get the trends over a period of time. Otherwise, we have been launching a slew of new products with very satisfactory inflows during the NFO period. Post NFO, we have seen very strong scale-ups in several of our products. When business cycle fund, multi- cap fund, small cap fund, and larg e cap, were launched they were of small size. But today, they account for a very large part of the net inflows in that cohort. The current sizes are multi- times our launch sizes. So , that has definitely happened to us. Now our spread of inflows is very well diversified.

Okay. And just a small follow-up. Has our strategy changed because of the market weakness of launching one NFO per month or is that broadly safe going ahead?

No, there is no change in strategy.

Moderator

Thank you. Next question is from Lalit Deo from Equirus Securities. Please go ahead.

Sir, just two questions. So firstly, in the Private Wealth Management side, so like in this particular quarter, like we have seen a strong addition of the family. However, in terms of net sales, that number might not have picked up very well. So just wanted to understand, like when we onboard a family, then do we get that initial Rs 3 cr per family at one go or is it like spread over multiple months?

Typically, we would onboard a family with a financial net worth is about Rs 25 cr or a lower amount as well but then the endeavor will be to onboard the family up to Rs 3 cr plus within a year.

And similar to that, so we are seeing addition in the family side. So probably the RMs that we have added over the last 3 years, so they are -- their productivity levels are improving. So, from here on, do we plan to add more RMs or first to improve the productivity of the existing RM base and then look to add more RMs further?

No, we continue to invest in both engines. First is, addition of new wealth managers is a constant effort and second is, all the wealth managers who are onboard and below 3 years of vintage, we continue to work on the productivity.

And sir, just thirdly, AMC side of it, just wanted to understand, like so we have seen good traction in the flow of the alternate side. So, like probably how should we look at it for like for FY26? Like do we have any production pipelines at this moment?

Let's understand who we are. We are a growth -focused AMC. We seek to make money for our investors by looking at businesses where earnings growth quotient can be an order higher than the index earnings growth quotient. Towards that, on our alternate platters we have 5 strategies which look at the problem from different sides. If we think founders / promoters, can drive growth faster, we have one. If we think there are spaces in the market where the tailwind of value migration will aid growth, that's another. Third cut could be mid - to mega, if there are businesses which today being small, have a better propensity of growth, that's the third one. We have another one Next Trillion Dollar Opportunity (NTDOP), where we are looking at the next trillion-dollar growth of the country, which spaces will be touched and formulate the portfolios. I think in terms of growth, we have covered all sides. On the alternate front, our whole thought is to stick to respective strategies and grow them all over a period of time. If you look at our strategies, the construct and the name, you should feel that our strategies are managed in true to label format.

And sir, just lastly, we've been hearing like a lot of AMCs have been trying to -- due to their increase in MTM gains, a lot of AMCs have rationalized some distributor commissio ns. So, like we also have some large schemes within ourselves. So , do we also envisage that, like where will be trying to cut down our distributor commissions?

Growing profitability is going to be our endeavor. We have taken some steps. 4Q will show the full impact of those steps.

Moderator

Thank you. Next question is from Sanjaya Satapathy from Ampersand Capital. Please go ahead.

Sir, two questions. One on brokerage side, we hear that your market share has gone down a bit again, and you've taken some pricing action. Can you just help me understand what will be the near-term as well as long-term strategy in this area for you to gain market share?

We have been continuously increasing our market share, if you look at the overall trend in the last 2 to 3 years. This blip which we have seen in this quarter is mainly because of a market fall where, because of our advisory model, we are also a little cautious with the investors. Typically, when we see this kind of trend, there can be a blip in the overall market share. We feel with the quality of advice and the quality of investors where we focus more, our market share strategy will always be on the growth phase. Latest changes where the contract size has gone up, which was not our strength compared to discounts, our overall market share should increasingly benefit in the overall scheme of things. Coming to the pricing part, as I tol d you earlier, the pricing is mainly a factor of the number of the lot size. We changed based on the lot size of the contract, which has gone up now. So automatically, the brokerage fee value changes based on the lot size. It comes down when the lot size c ame down and when the lot size went up, we increased the brokerage. Hence, it's more linear to the lot sizes.

But is there any long-term plan of aggressively tapping the retail market through technology intervention and app based which many others have done. Can you just share your thought on that?

We do have a digital setup and we have a mobile app, which is very clearly aligned with the overall competition. We are seeing increasing growth on the digital side in our overall volumes and we are very confident on the overall growth in that segment, including the overall distribution, which we align with our overall broking business. However, we are very clear that we will not be going on the discount side of the business and we are focusing on the quality. Having said that, the digital business and the digital client acquisition has been increasing month-on-month for us on overall scheme of things.

And la st question, sir, your -- this mutual fund AUM, can you please give me a bit of a bifurcation in terms of debt equity? And within that equity, how much is ETF and how much is non-ETF? And very last thing that I would like to understand is that because you are one of those who have the NASDAQ ETF, etcetera, because of which, are you seeing some better inflow? And are you being able to kind of withstand this slowdown in Indian market better?

We are completely Equity oriented AMC. With respect to offshore, we can't invest in the offshore strategies. We are limit -up in those. No house can accept monies for offshore strategy. So, that's not the source of growth. Secondly, of our ~Rs. 1.3 lakh cr , ~Rs. 27,000 cr is passive and out of which NASDAQ and S&P is ~Rs. 13,000 cr, rest of it is India focused strategies. ETFs are a very small part of total. We have just now started to launch ETFs of several of our strategies. But AUM -wise, it's not very meaningful.

So, will the number of schemes go up meaningfully over the next 1, 2 years for Motilal, and that will be the biggest -- one of the key drivers of growth?

As we understand, on the mutual fund side, people look at various cohorts, which have been decided by industry participants and investors allocate money. As of today, we are not there in a few cohorts. We will be there as the year goes by. On the thematic s ide, we have just started the journey. If we see some of the larger houses, they have 10 to 11 thematics. We just have got 2. We have a very tight launch calendar frankly. You would see us cover a lot of ground on the active side and also on the passive side. Every month, one should expect us to launch a new fund broadly speaking.

Understood. So, I don't want to kind of sound -- give any value judgment, but any publicity is good publicity as they say and hoping that the con trols, etcetera, that we saw throughout last one month, you'll leverage it positively. Wish you all the best.

Thank you.

Moderator

Thank you. Next question is from Mahek from Emkay. Please go ahead.

Just one question from my side. If I look at the private wealth business, the employee cost has gone up significantly on a sequential basis. So just wanted to know, is it largely on account of the RM addition or is there anything else there?

As dictated in our presentation, we continue to invest in senior talent to grow the ultra -HNI and family office business as well as wealth managers. Typically, as explained in the earlier calls as well, the productivity comes in as the vintage grows.

Thank you.

Moderator

Thank you very much. Due to time constraints, we'll have to take that as the last question. I will now hand the conference back to Mr. Shalibhadra Shah for closing comments.

On behalf of Motilal Oswal Financial Services, I would like to thank every participant for attending the concall. In case of any further queries, please do get in touch with our Investor Relations Desk or me. Thank you, and have a good day.

Moderator

Thank you very much. With that, we conclude today's conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.

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