Thank you very much. The first question is from the line of Vivek Ramakrishnan from DSP Mutual Fund. Please go ahead.

The questions are in your loan against share and margin trading funding, I just wanted to know the size of the book and what kind of gearing you use in those companies? And the second question is common for both the home loan business, as well as this LAS book. With the falling interest rates, do you expect margin expansion, especially in the LAS book? And how do you expect the interest rate transmission to happen in the home loan book? Those are my questions.

The book size total on the lending, on both MTF and loan against securities is Rs. 7,257 crores, o f which, MTF is around Rs. 5,000 crores and rest is loan against securities. Our gearing (ex of Motilal Home Finance) stands at 1x.

My next question is that the interest rates have come down. So, both loan against shares and MTF book, as well as in your home loan book, how will the interest rate declines get transmitted? And do you expect margin expansion where you'll hold a little bit better margins because you had a margin squeeze, especially in the LAS book when the interest rates went up.

Our incremental cost of funds is now 50 b ps lower than the overall cost currently. We are already seeing the positive impact of favourable rate cycle coming to us on both of the lending business, whether it is on the margin trade finance segment or on the housing finance. To that extent, we will see the improvement of spreads and margins in the coming periods.

Moderator

The next question is from the line of Uday Pai from Investec.

I just had a couple of question s. First one is that for the last 2 quarters, we have seen cash market share coming down significantly. I remember in the last call, you mentioned that your customers tend to trade lower in a volatile market. Can you give some more color on this phenomenon? Why are you losing market share in the cash segment specifically? That's the first. And secondly, on the disbursement run rate in HFC, is there a one -off in this quarter? Or do we see similar kind of run rate going forward? Those are the 2 questions.

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, ours being advisory model, advisors are also a little c autious with the investors and typically when we see this kind of trend, there can be a blip in the quarterly 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. Also note that our FY25, overall market share is up. Coming to the housing finance disbursement, our rate of disbursement has been growing every quarter and for the full year FY25, its up by 78% over FY24. And we had already guided that our AUM is expected to grow at 20% in FY25, and that's what we have achieved in FY25. Going forward, with higher RM base, the disbursement run rate will only increase further.

Moderator

The next question is from the line of Mahek from Emkay Global.

A couple of questions. So first is on the Wealth Management business. So, if I look at the distribution income, the QoQ revenue growth remains substantially high as compared to the flat asset growth. So, I just wanted to understand if this strong growth in the distribution income is likely led by the insurance products. Second is on the Private Wealth Management business. So, if you look at Q4FY25, the performance has not been that great, if I compare it on a QoQ basis. The distribution revenue is down 30%, while the PAT is down 23%. So just wanted to understand what was drivin g this weak performance for the Private Wealth Management business? And lastly, at the consolidated level, if I look at the employee cost, the employee cost has grown for the first 3 quarters of the year from Rs. 387 crores to Rs. 453 crores in Q3 FY25. So, just wanted to understand, what resulted in the decline in the employee cost in Q4FY25 to Rs. 420 crores?

We have been continuously talking about our increasing focus on the distribution business. Net flows are almost 3x on a full year basis and distribution assets have also grown by 33% on a YoY basis, which has led to surge in the distribution revenues. Even in Q4FY25, the distribution revenues have grown on acc ount of a couple of reasons. First is on account of ARR revenues. Secondly, as far as the composition of the transaction -driven revenues, it includes secondary market transactions insurance revenues, etc apart from brokerage revenues . It also represents hi gher transactions in Insurance segment. Distribution revenues on a YoY basis have more than doubled. and this is the result of our laser sharp focus on enhancing distribution business and putting in dedicated team in place. Coming to the Private Wealth segment on the distribution revenues. Last quarter Q3FY25, transaction revenues included larger set of transactions on the co-investment space where there was a lumpy revenue of transactions which has normalized in Q4FY25. We have seen the impact of that resulting in reduction in the transaction revenues in Q4FY25. However, overall, this business has also grown both on ARR and transaction revenues on a YoY basis, resulting in the strong base of the opening ARR assets building in the next year's growth. On the employee cost front at the consolidated level, in the first 3 quarters of the year, we had provided for the variable employee cost factoring overall robust operating performance 9MFY25. Q4FY25 people cost includes some bit of marginal reversal in the variable numbers factoring the overall actual performance for Q4FY25. And that is one of the reasons you'd see the overall employee cost lower in Q4FY25 than the earlier quarters. However, people cost to revenue has been flat YOY at 33% on a full year basis.

Moderator

The next question is from the line of Shreyas Pimple from JM Financial.

Yes. So, my question was in the AMC business. If you look at mutual fund AUM on closing basis and average basis, the mutual fund AUM on closing basis has gone down, while on average basis, it has gone up. So, do you expect going ahead the average AUM also coming down in Q1, Q2? Mr. Prateek Agrawal, MD and CEO, Asset Management Lot of this is in terms of how the markets have moved, we got a bad Jan and Feb while the closing March was better . I t's to do with how markets have moved. Now from March end AUM, if April is positive, then you should expect accordingly and vice versa.

Just to add, our current AUM is now nearly lifetime high. It's about 2% short of that and we guided that our market share in net sales continue to improve. While the overall industry flows are lower, we'll still continue to have reasonable market share out of those lower volume, the absolute numbers still continue to add to the monthly AUM.

Moderator

The next question is from the line of Rohan Advant from Prad Capital.

Sir, most of my questions have been answered. Just on the broking revenue front, we've reported Rs. 288 crores in this quarter. Has all the impact of the rule changes been reflected for the full quarter or there is any further tailwind that remains to be factored into the book revenue line item?

Moreover, market volatility accompanying these regulatory changes over the course of the last 5 months ending March and the impact of that on both F&O as well as cash volumes. All of these bundled together happening in a space of 4 to 5 months.

Understood. And sir, just one question as a follow -up on the distribution revenue you reported under Wealth Management segment of Rs. 187 crores. If I relate it to the distribution AUM, it translates to a 2.4% yield. So that seems very high relative to o ur past. And I get that you've added RMs and that's caused uptick. But what kind of a yield is more sustainable on this?

In distribution, our overall yields are 110 basis points for the year on ARR assets. If you're looking at the transaction revenues, the yield is to be looked at on the flows. We have seen substantial rise in the flows in the distribution business amounting to Rs 3,883 crores of net flows . At the same time, as I highlighted earlier that the impact in Q4FY25 was because of the revenues on the secondary market transactions on the private securities and as well as the insurance, where the yield is higher. So , because of that mix, Q4FY25 yield was higher overall to that extent.

The next question is from the line of Nidhesh Jain from Investec.

Sir, 2 questions. Firstly, on the Housing Finance, is there any update on our stance of demerging that entity or monetizing that stake in the Housing Finance business? Second question is on, sir, on technology, et c. We are seeing significant changes on the technology side across all businesses , and I think financial service business will also be significantly chang ing over next 5 to 10 years because of the changes in technology. So how are we preparing for those changes? How much investment we are making? What is the profile of our technology team? Who is heading that team? How are you preparing for that?

As far as the Housing Finance business is concerned, we gave you a business update already. We are looking at continued strong growth, and we have a very strong leadership team in place. We have all the options open, whether it is in terms of stake monetization, eventual IPO, etc., as we have articulated in the past. At this point in time, we don't have any update as of the last quarter on any of those, but we'll keep you posted as we have any updates in the current financial year.

On Technology, our Group CTO is Pankaj Purohit and he has been with us for last 22 years in the group. He's very well experienced, and we have an IT team of over 800+ people catering to all the group businesses. And if you look at our digital journey across each of the businesses, we are very well aligned to take care of the scalability through the technology medium. In terms of our tech spends also, we spend almost about 4.5% to 5% of our net revenues on technology, and this number is growing. Over last year, this number is up almost 100 b ps. Even in the current financial year, we have a very strong IT budget, which we keep spending to scale up our businesses, including security and all. So that's how we are well positioned for our scalability through the digital means as well.

In fact, just to add, in the year ending Mar'25, three line items which have seen very strong growth which may not necessarily have its impact on the same financial year. As Shalibhadra mentioned, our technology cost is up by 100 basis points as a proportion of the revenues YoY. Same is the case with our marketing costs this year, subs tantially higher spend on that. And the third is the leadership strengthening that we've done both across business, as well as support functions. I think all 3 have led to giving away a lot of the operating leverage that a strong top line growth could have given us in the current year. So, we are hopeful that some of these investments will make a big difference in coming periods. As I mentioned, the leadership positions includ ing Group Chief Strategy Officer, the Chief Marketing Officer, the strengthening of the technology team in a big way. And even at the business level, several senior people have been hired.

We also have created few new positions in the technology as part of Pankaj's team. We have Group Head AI who has joined from a global firm. We also have a technology research team created separately for the first time. And I think we have invested a lot into new technology to make sure that we maintain the edge. Our app “RiiSE” is one of the top rated. We have made sure that we remain one of the best in technology added by the best talent.

Sure, sir. Just one more question, sir. If you look at the Wealth Management business, the share of our direct channel has been going up and the share of B2B is coming down. So, is there any difference that we are focusing more on direct channel vs the AP channel in that business?

We have no preference for direct vs indirect because indirect is a way to reach to the nooks and corners of the country, while direct branches will be only into large cities.

Moderator

The next question is from the line of Dipanjan Ghosh from Citigroup.

A few questions from my side. First, on your Wealth Management and Private Wealth business separately, if you can give some color of the quality of the transactional revenue, not for fourth quarter, but maybe more on a steady- state basis, what's the mix between insurance, secondary market transactions, fixed income transactions some color on that? And how do you see the market activity levels incrementally? My second question is on the distribution of MF assets, both in Wealth Management and Private Wealth and especially in Wealth Management. On a closing basis, it seems that the mark -to-market movement is a little bit higher than the industry averages. So just wanted to get some sense of 2 things. One is, distributed assets a little bit more skewed towards SMID, small and mid-cap and also what is the share of your own AUM or in -house AUM within the distributed assets for both Wealth and Private Wealth? And third question, while the overall flows might have been a little bit here and there over the last quarter, but in terms of new family additions on the Private Wealth side, you have done decently well. So, I wanted to get some color on incrementally, how are you seeing the pipeline of both fresh flows coming in from these newly acquired clients also new clients coming into the ecosystem on the Private Wealth side?

Thanks, Dipanjan. So basically, a few high-level trends that you may want to make note of. We have been guiding that our cross-sell ratios are quite low, particularly in the Wealth Management business and that there is a lot of headroom. This was something that we would have said 2-3 years ago. And then, if you listen to the same concall last year, we highlighted to you that we have substantially augmented the team and the leadership for the distribution business. This was already an opportunity for us, but now we also have put a lot of resources behind this opportunity over the course of the last 18 months. So FY25, it is the first year of realization of those, but we believe that this can continue for multiple years. So that is one resour ce augmentation and tapping this opportunity, which was latent in the business. The second thing that we had highlighted to you earlier is that we are a big believer in the rise of alternatives, while the mutual fund AUM continues to rise. So basically, we actively manage part of the wealth of India, which itself is expected to go up many fold. And within that, the share of alternates is expected to continue to rise. Now what is happening in this process is that the yields on some of these prod ucts would be higher than the traditional products. The advent of secondary market in unlisted companies, which is a big phenomenon in many parts of the world, particularly in the U.S., is something that has also been rising in India. And you have more and more companies that are becoming relevant for people to start looking at , particularly the affluent and the high-net-worth individuals. So basically, it's a mix of both, a lot more effort, a lot more resources and how the market is evolving and how we are positioned overall within that market to tap this opportunity. You will always see quarter-on-quarter volatility in these revenue streams, lumpiness of insurance in the fourth quarter, certain unlisted opportunities or co -investment opportunities spik ing up in a particular quarter. But directionally, if you ask me, FY25 was much bigger than FY24. I have no reason to believe FY26 , FY 27, FY28 will each be much bigger than the respective previous years because of these trends that are really unfolding.

As far as the captive AUM is concerned, on the Wealth Management, the captive AUM is 31%, and on the Private Wealth it is 10%.

As far as the mark -to-market of this AUM being higher than the peers, actually, “Think Equity, Think Motilal Oswal” is a n important tagline for the group. While we are very upbeat on the share of fixed income in our overall AUM and where a lot of effort is being put like we have a separate head for

Fixed Income in our Private Wealth Management business and the Fixed

Income AUM is also growing. But we are more indexed to equity AUM. And as you see, in the last 5 years, 3 years have seen very strong performance of equity AUM vs the fixed income AUM. And hence, the mark-to-market on that equity AUM has also been higher than the peers.

One more point. As regards to the number of families, we've grown the total relationships by 25% in FY25 over FY24. And like Navin mentioned, the kind of products that we are launching allows us to get a foothold into the largest families in India. So, the quality of client addition has been significantly better than the previous years. And we expect it to be even bigger in the coming years.

Just maybe if I can get 1 or 2 follow -ups. So, on the first question on the transactional revenue, I appreciate the efforts, but just wanted to get some sense of the mix in terms of in a normal year. I mean, I understand there will be volatilities, but would it be like a secondary market would be like 30%-40% of the TBR or maybe insurance is like 10%-20%. So, if you can give some color on that? And second, this is one question on the Private Wealth business and maybe I can recheck my calculations, but it seems that there has been some significant mark-to-market hit on the seed funding that you have done in that in terms of the manufacturing of all the products. So, these are my last 2 questions.

As far as the mix of the distribution income is concerned, I mean, really, even if you anchor yourself to secondary being X, insurance being Y, trail being Z, broking being A, I think we see meaningful changes depending on how the market themselves behave on a year-to-year basis. So really, I would say, at a broader level, the way I'd like to guide you is that at least for the Wealth Management part of the business, the distribution income should continue to grow strongly. And the overall Private Wealth business is highly under indexed in terms of how much gap there is between the leader and us. So, I think the headroom to grow in that business is quite substantial. I know it doesn't answer your question about trying to get the exact split of the distribution income, which we've not shared in the past, but that mix itself may be quite volatile from a year-to-year basis.

I think it's a function of markets as well, Jan and Feb were bad and like Navin mentioned that we are quite indexed to the equity market. So that's why from an AUM point of view, you don't see the kind of growth that we probably got last Q4.

Moderator

As there are no further questions from the participants, with that, I now hand the conference over to Mr. Shalibhadra Shah- CFO, for closing comments.

On behalf of Motilal Oswal Financial Services, I would like to thank every participant for attending the Q4 FY25 conference call. In case of any further queries, please do get in touch with our Investor Relations desk. Thank you, and have a good day.

Moderator

Thank you. On behalf of Motilal Oswal Financial Services, that concludes this conference. Thank you for joining us, and you may now disconnect your line. Please contact ir@motilaloswal.com for any queries.

The reader is requested to also refer to audio recording of the call uploaded on company website. Our conference call transcripts are edited to correct any grammatical inaccuracies or inconsistencies of English language that might have occurred inadvertently while speaking.