Ladies and gentlemen, good day, and welcome to the Anand Rathi Wealth Limited Q1 FY 2023 earnings conference call. This conference call may contain forward-looking statements about the company which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Feroze Azeez. Thank you and over to you, sir. Good evening and thank you everyone for joining the earnings conference call for the quarter ending June 30, 2022. Along with me, I have Mr. Jugal Mantri, Group Chief Financial Officer, our CFO, Mr. Rajesh Bhutra, Mr. Chethan Shenoy, Director and Head, Product and Research, Vishal Sanghavi, Head IR, and the SGA team, our investor relations advisors. We are one of the leading non-bank wealth solutions company in India and closely work with HNIs and ultra-HNIs to meet their financial goals and objectives. We facilitate their investments in financial instruments using our wealth research solutions. Our performance during the last few years has helped our satisfied clients to achieve their objectives. AUM of our flagship business, Private Wealth, is INR 32,142 Crores as on June 30, 2022. Our strong performance for Q1 FY2023 was backed by addition of new clients and strong net flows. Despite challenging equity capital market scenario, our net flows for the quarter stood at INR 1,355 Crores, which grew by nearly 400% as compared to the same period last year. We have 7,400+ satisfied client families, of which 58% are with us for more than three years and account for 77% of our AUM. The share of equity mutual funds AUM to total AUM has increased from 39% to 46%. We believe this strong performance will continue in the current financial year with a strong team of 271 relationship managers. Apart from this, the company has two new age technology-led business verticals. That is Digital Wealth and Omni Financial Advisors, OFA. The DWM business is a fintech extension of the company's proposition for the mass affluent segment, with wealth solutions delivered through a combination of human interface empowered with technology. OFA business is a strategic extension for capturing the wealth management landscape to service retail clients through the mutual fund distributors by using our technology platform. We believe that the wealth management sector in India holds significant growth potential, and we remain optimistic about the business potential and will continue to drive towards our vision while consistently focusing on uncomplicated solutions. With this, I will now ask Mr. Jugal Mantri to take us through the financial performance. Jugal, sir, over to you. Thanks, Feroze. Good evening and Happy Guru Purnima to all. I am happy to share that the company has posted strong financial performance for the quarter ending June 2022, backed by the accelerated growth across all important business parameters. Our revenue for the quarter ending 30th June 2022 stood at INR 133.5 Crores as against INR 98.4 Crores in Q1 FY 2022, registering a growth of 35.7%. Our PBT for the quarter stood at INR 52.9 Crores, registering a growth of 33.6% as compared to INR 39.6 Crores in Q1 FY 2022. Our PAT for the current quarter, June quarter, stood at a healthy INR 39.7 Crores, registering a growth of 33.6% as compared to INR 29.7 Crores in corresponding quarter of FY 2022. For Q1 FY 2023, earnings per share stood at INR 9.5, while annualized return on equity stood at a healthy 42.3%. We are confident that our long-term commitment to provide our clients with the most effective wealth management solutions, along with a committed team of relationship managers, will enable us to see strong growth in the coming year. With this, we will now open the floor for questions and answers. Thank you. Thank you. Sir, shall we start with the Q&A session? Yes, please. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch tone phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Rohan Mandora from Equirus Securities. Please go ahead. Good afternoon, sir. Thanks for the opportunity and congratulations for good numbers. Sir, could you share what was the MLD issuances for 1QFY23? Jugalj i or Rajeshj i, can you take this one? Yeah, sure. In FY 2023 June quarter, the MLD issuances which were there from Anand Rathi Global Finance was more or less same like in the first quarter of FY 2022 it was INR 690 Crores. About the same amount has been issued from Anand Rathi Global Finance Limited of INR 703 Crores in FY 2023 quarter one. Almost about INR 390 Crores plus have been issued sourced from third party of the similar product. Sure, sir. Sir, how would the yields vary between the MLDs issued from Anand Rathi Global Finance and third party? Yields on third-party products are better than what is getting issued, marginally better than what is getting issued from Anand Rathi Global Finance Limited. Marginally better. Okay, sir. What will be the quantum of MLD that would have matured for 1 Q? The maturity value of the MLD was almost about the same, if you put together, 690, 700+, 390. Almost about INR 1,090 Crores MLDs have been matured in Q1 FY 2023. Sure, sir. Sir, in terms of the employee expenses, on a Q1Q basis it has gone up from INR 52 Crores to around INR 60 Crores. What expenses jump, if you could quantify that. Increase in employee cost you are asking? Yes, sir. Employee expenses. Is this like there are multiple factors. One thing is that there is a majority of the RMs, their expenditures or the provisioning is linked to the revenue. If you will look at the revenue, it is in terms of percentage, there are hardly any change. If you look at it, given that last year the employee benefit expenses was about 45% and it is in the same range even in this financial year. At the absolute number you might say that number looks higher, but if you compare it with the revenue number in terms of percentage, it is more or less same. Besides that, definitely there is an addition of the account managers and the employees. The team have been growing, but those will have the marginal impact. Largely it is linked to the revenue. Sure. Is the annual hike factored in this or will it be in the subsequent quarters? Annual increments. Annual increment of course, it will come in the Q2. In our case, the impact of the annual increment is very, very marginal. Reason being that, majority of the employee benefits are driven by the variables. The impact on the fixed cost is very marginal. Sure, sir. Fixed costs for 1Q has increased by almost 17% year-on-year. Should we consider this a normal run rate for the full year in terms of fixed cost increases? Yes. Definitely, Rohan. Reason being, see, the fixed cost is. We have moved from COVID era to the normal era. Okay? Right. Definitely, the saving which we were achieving because of the virtual environment now since offices are running and the administrative expenses, business promotion expenses, and all have come on track. In fact, this was the normal operating first quarter post-COVID era. Rise is largely on account of this. Going forward, it will remain in at the same line. Sure, sir. Thanks a lot. Okay, welcome. Thank you. The next question is from the line of Umang Shah from Kotak Mutual Fund. Please go ahead. Yeah. Thanks for taking my question and congratulations to the team for a very strong first quarter. Sir, my first question is on clearly the new client acquisition as well as the net flow creation during the quarter has been fairly impressive. If we were to look at it in the context of a very volatile market environment. So if you could just help us, one is clearly what will be our strategy going forward as well? Let's say if markets were to stabilize and improve from here on, should we expect a similar trajectory or a better trajectory from what we have reported in the first quarter? Yes. Umang, thanks for your question. Firstly, the net flows have been better, and they've been, like you said, very healthy. It's because what happens is in good times, of course, a wealth management outfit does well. In bad times or volatile times like, we've all seen for the quarter ending June, what happens is, there's emphasis placed on, consolidation. When a person sees good performance relative to other outputs, then they start consolidating their monies and give me a larger wallet share. That's one reason. Second is, clients start giving you more references when they see relative better performance. During good times, everybody looks identical. Risk becomes an abstract word. In bad times, it's very easy to distinguish between good advisors and bad advisors or good distributors and bad distributors. That's one very important reason. What happens is, once you get a listing, there is an extent of transparency goes up, and that improves confidence. That's acted as a catalyst or has begun to act as a catalyst. We believe that this trajectory will improve. If markets stabilize, you will get a further lift in the rate at which net flows and clients will be added future. Perfect. This is good. Also, is this also the reason, I mean, we are also seeing improving kind of vintage both in clients as well as the assets that we manage, which means that it's fair to assume that the assets and clients become much more stickier for us. Client attrition is very minimal for us. What happens is, dealing with this segment of HNI, you're not doing absolute pure play retail in the Private Wealth business. You basically will influence client behavior during bad times already, because if you speak to a person for two, three, four years and you season him and prepare him for bad times, like we saw in the last quarter, when bad times happen, they're wanting to invest more. That's why you would see net flows in equity especially have been beautiful. Coming to your point, whether the clients net flows are gonna remain as robust, the answer is yes. What we see is, when clients have already been seasoned, and in HNI you're interacting with a smaller universe, so you'll be able to influence their behavior with vintage. to answer your pointed question on vintage, the clients' vintage is increasing as time progresses. As you see, 58% of our clients have been with us for three years. It also implies that 42% have been added in the last three years alone. we think as time progresses, vintage will happen. What I see as an opportunity is the other 42% also giving us large wallet share as time progresses. Sure. That's helpful. My second question is for Jugalji. Picking up from the previous question. So given that a large part of our employee costs or a large part of OpEx actually becomes more revenue-linked or performance-driven, is it fair to assume that as the overall AUM starts expanding, the operating leverage starts playing out and EBITDA margins either sustain or start improving from where we are currently? Yeah. Umang, I think you are playing my role because the way you have highlighted all the positive sides of our business, that is the great thing since all the financial veterans, they understand what we have been doing. Whether it be you are banking on the way we have performed in terms of AUM as well as vintage, as well as the new funds mobilization. Similarly, when you're talking about the point about the variability linked to the vintage, you are absolutely right. In fact, you can see I recall having discussed with you about the operating leverage before IPO time. At that time, the operating margin which we had, those were like about, say, 38% of the margin which we had, and now it has already moved beyond 41%. That is the beauty of the whole structure, that when vintage starts playing, definitely your operating costs will not grow in that tandem. That is why the margin, whether be it the EBITDA margin or the PAT margin, are showing year-on-year growth, even though it will be marginal because there is a limit to which we can reach, because of the taxation and other impact. Definitely, bit by bit, we are adding to what we have, what we were doing in the past. Understood. Great. Thanks. Just last question from my end is on yield. So clearly this quarter, we have been able to kind of optimize our yields, probably because of a larger component of MLD issuances in the net flows. Now I understand that probably there could be some quarterly volatility, but assuming on a 4-6 quarter basis, what should we assume as base yields for the business? I mean, would we see a higher volatility? Or we believe that yields should kind of move in a narrow band going forward. You know actually, see, in case if you will talk about the yield, the volatility impacts the AUM, frankly speaking. Actually the yield, there is not substantial change because the yield will remain constant and it is linked to the asset bucket. Like if I'm having the asset in equity mutual fund, the commission which is being paid by the mutual fund, that remains same. Ultimately the point which I'm making is that the volatility largely impacts AUM, but the yield more or less it remains same and it changes with the change in AUM or the traction in the AUM. If I have the increase, I am adding to the AUM by way of increase in market capitalization or growth in equity, mutual fund as well as new mobilization, the revenue amount will keep on growing. In terms of yield, I don't see much change going forward. It will remain almost around same level. All right. Perfect. Thank you. Thank you so much for patiently answering my questions, and good luck for future quarters. Okay. Thanks. Thanks a lot, Umang. Thank you. A reminder to all the participants, you may press star and one to ask a question on your touchtone phone. The next question is from the line of Arpit Shah from Stallion Asset. Please go ahead. Yeah, hi. Congratulations on the set of numbers. I had a few questions. It's very basic questions from my side. Can you just help me with the market size of the MLDs in India, and who would be the top issuers of this product in India? I couldn't hear your question. Could be a little louder, it'll be helpful, Mr. Shah. Yeah. Can you help me with the market size of MLDs in India, and who would be the top issuers of this product in India? MLD market size in India is now reasonably large, but MLDs are broken into two. One are pure bonds which look like MLD. That's a very large market, and that's the listed market. Basically you are having MLDs from a listed debenture, more or less not too much market play. Then you have the pure play MLDs which actually give you the market play. I would say I would not precisely know the market size currently, but I can tell you who are the top issuers. The top issuers of course is ARGFL, Edelweiss, now the Nuvama entity. You also have Centrum, you have IIFL Wealth, and you have from the MNC side, Citi is a issuer. There are several issuers, seven, eight of them, but I've named the top ones. If you look at the MLD business, pure play MLD, I would say, INR 1,500 Crores of net mobilization every month could be the size of the pure play MLD business. Got it. I just wanted to understand why our take rates in MLD are around 2-3%. Because if I see other wealth products, they would be around 1% or so, maybe lower than 1%. How do we make money on MLD products? That is what I wanted to ask. Arpit, if you will look at any debt product which is getting sold, okay, by any wealth distributor or any financial intermediary, you will find that the commission, if somebody is selling, say NCD even or, any debt product, typically the brokerages which are being paid are in the range of 1.5%-2.5%. Okay. In fact, the commission structure which is there on the MLD, that is in line with what is being offered on the similar product, in the market. Got it. Let me add something here, Jugal ji. Yeah, yeah. Please. Okay, super. See, you can look at commissions in two ways. MLD yield, if you calculate per annum, you will not get 2.5%. See, what happens in MLDs is you recognize it initially as trading income. Like for example, ARGFL has had 985 MLDs maturing. If you compare it with what would you have actually earned per annum yield on market value, which is what you get paid on equity mutual funds, it will not be 2.5, 3%. Point is, if you calculate yield like a mutual fund does, it pays you a trail commission on a annualized basis on market value. At maturity, if somebody backwards calculated what did you make, you would make 10, 15% more. When you actually take your total gross mobilization and the money you made and divide it by AUM, the yield will look sharper and larger. To answer your pointed question, the yield per annum, if measured in the way a mutual fund pays trail commission, would not be twice that of mutual fund. It will be just 15-20% more than mutual fund. Got it. You understood my point, right? Yes, yes. I got your point. I just want to understand who will be the underlying borrowers of such products, what kind of businesses would be borrowing in such format in terms of MLD? Jugal ji? The borrower in the sense these MLDs are issued by the NBFC. NBFCs are the borrowers. No. Who would be the underlying borrowers of those NBFCs? No, no. It is not necessary. Ultimately, see, the money which is being raised by the NBFC, okay, it is at the discretion of the NBFC that how does they want to utilize this money which is being raised. It is not necessary. It is not a structure where these borrowings are being made to facilitate or back-to-back any the borrowing arrangements are there. These are plainly the MLDs are issued on the strength of the balance sheet of the issuer. Right. Right. Right. Okay. Got it. Can you just split the difference between fixed and variable expenses on employees? It's quite simple. Like, anyone who is getting a fixed compensation or the fixed salary which is coming every month, that is the fixed component. The variable component that is linked to the performance of the employee. We have got a CTC structure where the overall compensation of every RM is determined based on his AUM and earnings on that AUM. His CTC is being decided and whatever fixed component is being paid to him that gets deducted and remaining amount is being paid as a variable payment. What would be the fixed amount a quarter? Fixed amount per quarter you are talking about at the overall aggregate level? Yes. Yes. Yes. That is to say about INR 12 Crores per month. Around INR 36 Crores a quarter. INR 36-INR 37 Crores per quarter. Correct. Correct. We do get upfront fees on MLDs, right? That is what, Feroze meant. Yeah, every product other than mutual fund, most of the products which are being sold by financial intermediaries, they receive upfront income. Got it. That is the case with MLD also. Okay. Take it. Thank you. Thank you so much. Okay, Arpit. Thank you. The next question is from the line of Janakiraman Rengaraju from Franklin MF. Please go ahead. Hi, Feroze. Are you able to hear me? Yes, you are audible. Yes, Janakiraman, sir. You are. Hi, Feroze and team. Commendable performance. Congratulations. Thank you, sir. One is again going back to that interplay between the profitability and the cost structure. Now, you have gradually improved the profitability, so I can measure PBT as a percentage of AUM. I think this quarter you almost touched about some 65 basis points. Where is the limit to this? To what level can improving efficiency in your operations improve this PBT metric by? Janakiraman, sir, according to us, see, like AUM is a photograph. Revenue is, margins are a movie. 30th June AUM, if you calculate profitability as a percentage of the AUM captured on a specific day, that will not be a right representation of what yields would you make as a profit after tax or profit before tax. What we believe is that making first is making an yield of 1.3%-1.5% on AUM is something which is sustainable for good, point one. Point two, making more than 42% PBT and upwards of 31%-32% PAT is what these are the three numbers we look at, internally. Right now, of course, it can be dissected as a percentage of AUM, but since AUM is just one specific day and if the market is 5% down that day, for example, it will distort that number. I don't know whether I'm able to articulate. These were the three numbers we internally focus on and swear by. 1.3-1.5 and about 42% of revenue as PBT. Yes, sir. Right. Right. Sometimes we'd like to discover further value-added services in our research and product group to spend some money to get a further lift in the revenues. Sometimes when we go to 43%-44%, we like to see what else value-added services can be given to clients. We are not very ambitious to bring PBT to 45%-47% also because then you might be missing out on several other opportunities which can give you growth. We spend that little money and not try and get to 47%-48%. 40%-44% is what we look at as a percentage, PBT as a percentage of revenue. Right. Right. I think, I'll just add to what Feroze bhai has said, Mr. Janakiraman Rengaraju, is that the one simple point which he has made, if you compare the AUM on point-to-point basis, definitely there is a variation. Because if you see from thirty-first March to thirtieth June, the Nifty was down by say about 9.5% and Midcap, Smallcap, they were down by 10%-13%. Wherever the clients who have invested in different asset classes either being managed by you or anywhere else, their AUM numbers are down. But we have been getting trail on day-to-day basis. Okay. When AUM on any particular point, if it is lower, that can have a variation if you compare on point-to-point basis. Ultimately all three objectives, as highlighted by Feroze bhai, that those are the key parameters. Whatever trailer which you have seen in the quarter, that is actually in some instance that is the picture and these broad numbers, even whether you compare it today or after one year based on the operational efficiency, it might be we can better it by another, say 2%-5%, or it can come down by 2%-5%, whatever operating leverage which we have. That would be the end result. Directionally we'll be moving in the similar way. Got it. Feroze, when I look at the growth in AUM, how to look at that number. You have the increase in the per ticket, per client, the AUM size as well as the total client count, both of them contribute. How do you see that mix working? It's very simple. I'll just tell you how we internally look at the growth engines for AUM. The four growth engines for AUM are as follows, and all of them seem to be very consistent. One is the embedded growth of the portfolios. Since the asset mix of how we have deployed our AUM is priced for an expected return of 12%-14%, we expect at least a 10% growth in AUM by the virtue of the growth in portfolios. That's first leg, which is the embedded growth which this business has, unlike several other businesses. That's one. The second engine of growth is the capacity utilization of our RMs. Our RMs today manage 28-29 clients per head. In our belief, before COVID itself, the capacity of an RM to efficiently manage and keep his clients and family satisfied is 50. That means as a unit, I can double or close to increase our client strength by 80% without using a new RM machinery. That's capacity utilization vertical of AUM growth. The third is existing clients, like the. There are 42% of the clients of the 7,400 who have come within three years. They start believing us more as you start establishing credibility to what you have said, and they start giving you large wallet share. That's the third source of AUM growth. The last source of AUM growth is my 300 account managers who are currently being trained to become RMs. That's the fourth leg of growth. With these four legs of growth, the first one, which is the most certain one, which is the 10%-12%, plus the other three, gives us a 25% AUM growth belief over years to come, not just one or two years guidance. I would say that I personally very strongly believe 20-25% AUM growth is with all these four cylinders of the engine is what has happened in the past. We've and I would say that's how we look at AUM growth on a yearly basis. 20-25% AUM growth in a bad quarter where market fall. Like for example, the last one, we added INR 1,355 Crore, but our AUM didn't go up because market took away from. Next quarter, if God is kind, for example, if this INR 1,300 Crore, we again add INR 1,500 Crores, for example, and then market gives back the INR 1,300-1,400 Crores, then you have INR 2,800 Crores of AUM growth. I'm not making a guidance. I'm just giving you an illustrative way of how we look at it. Understood. These are a bit early days for Anand Rathi Wealth as a listed entity, but have you taken any decision in terms of distribution? This is a asset-light business. Of the free cash that you generate, what, how do you plan to deploy that? Janakiraman Rengaraju, we have a dividend policy as. Yeah. See there are two things. One thing is that we do have very clearly spelled out dividend distribution policy, where the guidance is about 30%-40% of the cash approved will be distributed. Rest of the things, so as you have rightly said that these are the early days for us, and this is the first time any of the group company has been capitalized. There are a lot of opportunities in the market, and as and when those opportunities will crop up, will come up, so better to sit on certain cash on the balance sheet and scout for other opportunities which may come up in future. Got it. Got it. Thanks, Feroze. Thanks, Jugal Mantri. All the best. Okay. Thank you. Thank you very much, Chandrashekhar. Thank you. Before we take the next question, participants are requested to press star and one to ask a question. The next question is from the line of Rohan Mandora from Equirus Securities. Please go ahead. Thanks for the opportunity again. Just as a follow-up to an earlier question on operating efficiency. In terms of the employee OpEx, employee expenses to total revenues, where do we see that in the next two years' time? Because for the RM employee expenses, that thing would probably move in line with the growth in revenue. But how should we look at the non-RM employee expenses growth trajectory? That was one. Second, the slide on guidance, we have not given this quarter. Does the previous guidance hold or is there a change in the guidance with respect to the FY 2023? Rohan, very important. I'll take your first question first. In terms of like variable cost, you rightly identified. In case of fixed cost, that is where you get the operating leverage advantage. Reason being that the cost of the product team, operation teams and other support and services functions, that remains constant even. It is not directly incommensurate with the growth in your business. We are capacitated to even like as of now, if the AUM, suppose from 32,000 it runs up by 50% or 100%, the incremental fixed cost increase will be marginally up. It will not grow with the growth in the revenue as well as in AUM. That is the scenario with the fixed cost. Okay. The second point which you guidance. With regard to the guidance, we thought that if somebody will look at the guidance number, we have already achieved 27% in Q1 of FY 2023. Normally, like, the first two quarters are the lean period for the BFSI sector. We thought that since we are already on the track with the guidance and having slightly overachieved that, there's no need to reiterate what we have given in the guidance. It is up to you people to make sense of how we are going to fare with regard to the guidance which have been given. Sure, sir. Thanks a lot. Thank you. Thank you. Thank you. Participants are requested to press star and one to ask a question. The next question is from the line of Nityanand Parab. Please go ahead. Hello, am I audible? Yes, you are audible. Yes, you are. Please go ahead. Yeah. Yeah. Congrats on a good set of numbers, sir. I have one question on OFA platform value. So in this quarter's presentation, you have shown that we have increased the overall clients to 18 lakhs. But the platform value is shown INR 79,511 Crores. So if I compare it to the Q3 FY 2022 presentation, you have shown it 17 lakhs with INR 84,596 Crores. So just wanted to check how we can read this. Is this the right number or is this a typo or something like that? No, Mr. Nityanand, if you will see, the number which has been given for OFA is that we have got 5,368 MFDs, which are mutual fund distributors. The assets on the platform is INR 79,500 Crores at the end of 30th June 2022. Which if you compare it with the 30th June 2021, at that point of time, we had 5,058 MFDs with an AUM of INR 58,586 Crores. Okay. I was comparing with Q3 FY 2022. In the presentation, the figure which was shown was INR 84,596 Crores. I don't have that presentation. Okay. Okay. I don't have that presentation right now, but I'm giving you YOY number. That's what was the number at the end of 30th June 2021 and what is the number at 30th June 2022. Okay. Got it. The second question. One point. Yep. It could also be mark to market. Mm-hmm. Markets were at 7,500 and stuff like that. This was at 15,800. Generally retail is more equity than debt. Okay. Are you with me? Yeah. Mark-to-market AUM. Got it. The second question is related to the Digital Wealth AUM. We can see that it has degrown slightly for this quarter. What is the outlook for this? If you can share, what will be the percentage of the Digital Wealth overall, in terms of business, for next three years, five years. What is the overall, say, bifurcation we can have within the overall business? Nitya, right? Yeah. Nityanand. It's Nityanand. Basically, like we've always stated during the IPO as well, these two businesses, which are the digital businesses, we are learning and we are making sure that we adapt to the changing environment. What we look at from a 3-5-year perspective is a robust growth of 30%-35% on a lower base like this. Since we are in the stage where we have come to have a digital business which is not burning cash, and that's something which we are reasonably clear about, I think a 30%-35% growth on a lower base of AUM is something which is reasonable as we learn and we adopt and develop a strategy which will make it more monetizable. For the OFA business, of course, today we have used it as a SaaS platform. Monetizing it, we have some ideas of monetizing it, very effectively. I would not like to comment and create an expectation on businesses which we are wanting to build over the future. That's why, giving a guidance of 3-5 years on a business where you're trying to develop something to be making sure that you capture the adjacent segments. Mm-hmm. Is something we should look at it on a yearly basis. Okay. Got it. The last question was on the guidance. The last participant has also asked. I mean, we are on the path to achieve the guidance which we have shared in last year, right? For FY 2023. Are we going to up the guidance overall or what is the overall say on that? Nityanand, like Jugal he said. That if, now you have to extrapolate in a quarter like how it has been April to June. Mm-hmm. If we have done 26-27%, whatever that second digit decimal, penetration into the guidance, and generally we do 22-23% in the first quarter. It's for you to extrapolate. These were not periods where it was as easy as breeze, right? April to June quarter. It's for you to extrapolate and see. We feel very, very confident about the guidance. Okay. Okay. Yeah. Thank you. Thank you. Thank you. The next question is from the line of Ajox Frederick from Unifi Capital. Please go ahead. Thank you for the opportunity. My question is again on the OFA. What quantum of revenue is coming from that particular business? Jugal, sir? You may wanna take that. As of now, since in case of OFA, as it is being said that this is an IT platform and where we are charging fixed fee from these MFDs. Monthly income is in the range of about INR 40-50 lakh fees which we are collecting from these MFDs. Oh, in total, right? Okay. Okay. INR 40 lakh-INR 50 lakh per month. Yes. Oh, per month. Yes. Sir, I mean, some of our peers are using a similar model and charging the AUM, right? As a sub-broker or whatever you may call it, and they're charging 30 basis points on the AUM. What stops us from doing that? Mr. Ajox, our process is that we are anyway we are the largest player and once you grow it and you penetrate the market to the fullest extreme, thereafter only you should focus on the revenue. As Feroze bhai has said that these are the experimental businesses where we are into it and initial objective is to gain the market share. Thereafter, explore it from the revenue perspective to the fullest. As of now, when you are building up the size, capacity and penetration, the focus is on acquiring the market share, not on generating the revenue. Because anyway both these businesses are positive contributor to the group. Got it, sir. Got it. Just one question on the MLD. To a new customer, how is MLD being positioned as a guaranteed product or how is the sales pitch being done? In a very general manner. To any customer for that matter, we look at a portfolio with a plan A and a plan B. We create portfolios. It all emanates from client objective. If the client objective is, let's assume 12%, we try and see what is the minimum three-year standard deviation at which this can be delivered. You, there's a team which actually simulates several portfolio combinations as percentage of these three products: equity mutual fund, debt mutual fund, and MLD. Depending on the risk return profile, 12%, then we try and backward calculate what is the minimum standard deviation at which that can be achieved. Then we draw what is the most efficient portfolio which can achieve an expected return of 12%. We give a client an alternative of having a certain percentage in MLD 10, 20, 30 and 35. If the client understands and says 30% in MLD, then we tell him the standard deviation of a portfolio with this much amount of mutual fund, this much amount of debt mutual fund, equity mutual fund and MLD. This is the three-year standard deviation. This is the beta. This is the maximum drawdown you could expect on a three-year holding period. When the client signs up for that portfolio, MLD is a resultant outcome of that decision. MLD is not standalone sold. If I went in the marketplace and if somebody said, take INR 1 Crore, put it in MLD, that's not the way we work. We like to design a portfolio on the risk return objective and then work backwards and whatever is the MLD proportion which gives an efficient combination, that's how an MLD is sold and that's why you see such repeat buying. I'm sure a few of you would have seen during IPO presentations, close to 70, 80% of repeat buyers. The reason why it is repeat buyer, it is not being sold as a standalone product. It's a proportion in a portfolio. When there is a maturity, automatically there is a void and the void gets filled with a new fresh issuance. That's an answer, sir? Yeah, yeah. That's very helpful, sir. Sir, I'm assuming current MLDs are three-year products, right? Whatever is being designed right now. Both three-year and five-year. Okay. The markets are too high. Yeah, sure. Please go ahead. Please go ahead, sir. This is both three-year and five-year. Okay? We issue MLDs on the basis of the probability of its success. If the markets are obscenely overvalued, then you would rather have a five-year MLD. To answer your pointed question, it could be three-year and five-year. Proportions could be two-thirds favoring five years and one-third favoring three years at the moment. All right, sir. That's very helpful and all the best for your future. Thank you very much. Thank you, sir. Thank you. The next question is from the line of Mr. Bhuvnesh Garg from Investec Capital. Please go ahead. Hi, sir. Thank you for the opportunity. Sir, first question on your Digital Wealth and OFA. Just want to understand the difference between these two, because I see in your presentation in Digital Wealth, you have mentioned that it's a partner-led distribution. Whereas OFA also, you are having an MFD as your partner. Just want to understand what's the difference between these two, so Digital Wealth and OFA. That's my first question. Digital Wealth business is actually, it's a kind of a sub-broker model. Okay? To cater to. Firstly, the segment is different. Segment for MFDs is very retail, SIP driven, and it's a SaaS platform. OFA is a SaaS platform, software as a service. Digital wealth management is providing the HMI proposition to a mass affluent using the help of technology powering the human. The capacity of managing clients could be 150, 200 in the DWM. You're trying to make sure that the HMI proposition is delivered to a mass affluent with an internal team or an external team of relationship manager who can reach out to three times, four times and make it a more profitable business to go to a INR 1 Crore client or a INR 50 lakh client. That's the difference. DWM is an interpolation of the private wealth business to the mass affluent. OFA is a SaaS platform for a fee. An MFD uses our technology and white labels it and shows it to the client. Is that clear? Okay. In Digital Wealth, if I understood correctly, the RM is your employee, right? Whereas in OFA it's again an MFD. Yes. See, OFA has only technology. DWM has an HNI proposition as similar as it's possible to the mass affluent. Okay. Because if we send a conventional relationship manager who can manage only 50, 60 clients to a client who has only INR 50 lakhs, it's not a viable business. For it to become a viable business, technology should be able to power an RM to manage 200 clients, then it becomes a viable business. That's why we call it an experiment, because you learn as you go along. A private wealth division is 20 years old, 18 years old, or whatever that number is. This you're learning, so you will strategize and learn and have the agility in the initial part of the business. That's why we are being so clear that you should not extrapolate it by 10 years, unlike most technology businesses who extrapolate and then say this should be the valuation and stuff. We are trying to learn, be very agile in these businesses. Okay. Here the, I mean, compensation for RM would be the same for your Private Wealth RM or- Sorry to interrupt, Mr. Garg. May I request you to join the question queue again, as there are many participants waiting for their turn. Sure. I will. Thank you so much. Okay. The next question is from the line of Devesh Agarwal from IIFL Securities. Please go ahead. Good evening, everyone, and thank you for the opportunity. I just wanted to know in your Private Wealth business, I see on a sequential basis there has been a 60% growth in the net flows. Can you share the breakup between the different products, how the flows have been? Yeah. I can give you tentative. Jugal, you will have the precise numbers or I at least know the tentative ones. If we'll compare it like on the mutual front as against INR 15,400 Crores in 30th June 2021, it has grown to INR 18,600 Crores. In case of MLD against INR 9,200 Crores, it is. You wanted AUM mix, huh? No, no, sir. You wanted- The net flows. INR 1,355 Crores breakup. Okay. I remember that number, Jugal. Yeah, yeah. Tentatively. 1:55 P.M. 800-900 Crores of equity mutual funds, INR 100-200 Crores of debt mutual funds and other securities of another INR 200. This is the break. Correct. When we say INR 200 Crores of MLD flows, the earnings or the revenues that we made in the quarter, if I assume a 7% yield, that would imply it's just INR 1,100-INR 1,200 Crores. How do I tie up these two numbers? You are mixing up two things. What is net flow? The commission you make is on the gross flow, right? Like a previous call, participant asked a question. What is the net flow in MLDs? Net flow in MLDs this quarter could be minuscule, but there is maturity and there is reinvestment. What you earn is a percentage of gross mobilization. Does it answer? Understood. Yeah. What was the gross number for the quarter? Gross mobilization for MLD was about INR 1,100 Crores. That includes your secondary sales or secondary sales are different? No. This is primary mobilization. How much would be secondary, sir? Secondary might be about, say, 40% of this. Around 40%. Okay. Third party, the deal-wise, MLD that you do would be 1/3 of your overall numbers? Yes. Understood. 390- And, uh- Five. How much? 390. INR 390 Crores out of the 1,100 INR 390 Crores. Okay. One final question. If I see the portfolio mix of the AUM product mix, in last one year the share of equity has gone up from 39% to 46%. This would have also helped you in your blended yields. Do you think that there could be some churn that you would be doing from equity to debt and that can have some impact on your yields going ahead? To answer your pointed question, the answer is no. We have different clients with different return objectives. We generally look at allocating money into equity and 46% is a reasonable representation of what we currently aggregate and recommend to our clients. Perfect. That answers my question. Thank you so much. Thank you. Due to time constraint, that was the last question. I would now like to hand the conference over to the management for closing comments. Thank you. I take this opportunity to thank everyone for joining on the call. I hope we have been able to address most of the queries, but it appears that there was some pending queue. Will request for all the participants who have not been able to raise their questions or put up their questions, they please kindly get in touch with our investor relations team or Strategic Growth Advisors or investor relations advisor. Thank you all. Thank you. On behalf of Anand Rathi Wealth Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.