Ladies and gentlemen, good day and welcome to KFin Technologies Limited Q2 and FY 2027 earnings conference call hosted by IIFL Capital Services Limited. 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. Devesh Agarwal from IIFL Capital Services Limited. Thank you, and over to you, sir. Thank you, Shaurya. Good morning, everyone, and welcome to the Q2 FY 2027 earnings call of KFin Technologies Limited. Today from the company, we have with us Mr. Sreekanth Nadella, MD and CEO, Mr. Vivek Mathur, CFO, and Mr. Ram Gattani, Head of Investor Relations. I will now hand over the call to Sreekanth for his opening remarks and thereafter open the floor for Q&A session. Thank you, and over to you, Sreekanth. Thank you, Devesh. Very good morning, and good evening if you're dialing in from outside of India, and a very warm welcome. I'll bring to you yet another quarter of a certain sense of consistency. As the saying goes, patience, consistency, and hard work. I think that's pretty much the need of the hour. That's pretty much what sets organizations that have a long-term vision to stay dogged at it and to ensure that we deliver the promises we make. As the organization continues to make strident steps in the forward direction. Our market share expansion, our growth in terms of client wins, and steadfast focus on innovation-driven productivity, not arbitrary, not based on the vagaries of the market, but in a scientific and a clinical fashion of driving technology-driven productivity is pretty much the sum and substance of what we could do in the previous quarter. We will continue to stay on course in terms of making sure that we deliver quantitative and qualitative results over a period of time. From a glance, overall, if you see where KFin Tech stands today, by and large, many of the metrics that we typically speak to you are in the similar range in terms of we continue to be the largest registrar and transfer agent in India and among the largest in the world in terms of the number of human beings we service, whether it's in India or abroad. Between the capital markets, the securities market, and the mutual funds, it has now crossed over 12.5 crore in India and roughly about 75 lakh outside of India. T hat makes us probably one of the largest, maybe ex-China. In terms of our growth on the individual business lines, very heartening to see and hear and tell you that nearly every business line we have grown, albeit in an extremely challenging environment in the form of macros. Whether it is our win rates in the form of new client mandates, whether it is mutual funds, whether it is issuer solutions, alternatives, international, so on and so forth, had been one of the most striking feature of this quarter. AUM growth and revenue growth in an environment where the markets have been significantly down but obviously hints at the direction of net new wins. Hopefully in time to come when the markets do recover, we should have a compounding effect of significantly additional clientele and volumes, then with some help of mark-to-market again, that's when they get. In terms of our market share in issuer solutions, had been one of the big turnaround over the last 18 months. Even excluding Jio Platforms IPO, which is happening real time as we speak, and we have completed the entire activity two alarms ahead, considering it is the world's largest IPO. One, we are extremely honored and privileged to have been chosen as the RTA. Two, to have delivered significantly beyond much of the expectations in terms of the timelines and including the allotment statuses that the investors are checking, where the latency time has been less than 40 ms. That obviously is going to be for the upcoming quarter, but by and large, I am very happy with the progress we have made in terms of the wins in the case of issuer solutions. Same is the case with our international. We have added 18 new clients which are in the transition, and they are expected to go live into the coming Q 2, depending upon the transition timelines, which will then go on to add hopefully additional AUM consequent revenue soon after that. Our acquisition of Ascent and its integration is one of the most strategically important initiatives that we have embarked on. Happy to inform you that we continue to grow the business again. E xtremely challenging macro, especially given that 25% of our revenues come from Middle East for Ascent. Given the situation there, one would have imagined maybe the growth could have been tepid. Again, thanks to some really wonderful work by the business development teams in each of the operating geographies, we continued to grow 30% + on Ascent. Again, with a committed focus on cost optimization, the margin profile continues to expand. We hope to hit double-digit EBITDA numbers in the next couple of quarters also. Pensions too. Entire of last year, we grew 3x of the pace of the industry. Industry grew at about 12%, I think we were at 36%. This year, we have grown faster than that. I think 42% as against similar 12%-13% growth of the industry. A gain, it is a long haul when it comes to pensions. It tends to compound. Not only have we broken even about three quarters back, our growth continues to be significantly higher than that of the industry. All of this gives us a fairly well-rounded growth across business lines. Again, product transformation-driven productivity gains and new feature rollout has been one of the most important focus areas that we have had. The overall AUM for KFin Tech clients this quarter had grown at 15% whereas industry grew at 13%. That's very heartening. Now it is also, however, true that the share of the passives for our clients seem to be on the higher side, as compared to that of industry. Again, some of these dispositions tend to change, and if it were to come back towards more actively focused, again, that would be something that will add additional revenue bump up into the coming quarters and years. Overall market share has grown in the last two quarters for KFin Tech in the form of overall moving beyond 33% and the equity inching close to 33% as well. Our market share on the SIPs, which I continue to believe is a bellwether in terms of where long-term averages could be at, continues to be close to about 37%, which means that there is 100 basis points of bridge that I expect to happen or to build over the next three to five years, as the SIP is a sticky retail book and we would already intend to gravitate and precipitate towards the overall market share on the SIPs. We have launched a couple of very important platforms in the mutual fund space. ARYA.ai is India's and probably world's first generative AI intelligence platform. Not just for purchase and redemption and commercial transactions, but also for all non-commercial transactions, which means that you can literally speak to your phone and then ask your agent to change your bank account, add a bunch of nominees, buy and sell a bunch of things, all of this through natural language processing and just talking to the application. The beta stage has gone live, and we are doing a public launch in the later part of this month. Now that marks the first of the consumer-facing AI tech rollout by KFin Tech even as there are several inward-looking AI transformational solutions we have implemented, which were principally one of the important reasons for the margin expansion. If you saw the overall margin moving from about 34% - 40% thereabout on EBITDA profile. Part of that is the scale benefits in the form of our international business, and part of it is productivity, again, driven through large-scale RPA and AI native solutions. These are in early stage, in terms of implementation. There are several more, as I've called out in the previous quarters too. Nearly every business line and the underlying platform in our organization is under a massive rework and a rebuild, given many of these are a couple of decades old. We will be live with the issuer solutions, pensions, and wealth in the next three months. B y January, we should have gone live with many of these next generation AI native, cloud native platforms, which should help us with significant faster go-to-market and productivity as well. For mutual funds, it's a little bit more challenging and much more complex given the size and scale of it. But we have already deployed about 30% - 35% of the total use case, and have seen some benefits associated with that again. By end of Q4 this fiscal year, we would have rolled out nearly all of the transformational platforms that we've been working on. Our growth on issuer solutions I've already called out. We continue to have a significant market share expansion on the IPOs, and especially the large ones. Nearly all the largest IPOs have been orchestrated by KFin Tech in terms of both volumes and value. There are several more in the pipeline, which I guess should the prevailing market conditions improve, should see a tangible progress from there. We have been at the forefront in terms of expansion in the GIFT City because it falls right in the alley of our international business. Again, happy to inform you that our market share there have been. We are currently the single largest provider for gift solutions for GIFT City funds, in addition to several digital solutions that we've been working on. I will just add a little bit of color in terms of our international pipeline. The pipeline itself currently stands at roughly $47 million, that is. That used to be roughly around $20 million about 12 months back. Now it speaks about increase in the pipeline of several new deals where the deal size is substantially larger than a typical GFS deal that we have seen thus far. There are at least six deals, which are over $4 million - $5 million in the total contract value. Some of them are in advanced stages, some of them are progressing in that direction. We have had several successful RFP and client presentations in our operating geographies in the last three to four weeks. Again, we have been down-selected to the final twin, many of those. In time to come, hopefully, there'll be a close on some of those. One of the earlier project in the Philippines that is mentioned that I've kind of called out, there may be questions around that. T hat deal is still under works. It neither has been awarded nor has been canceled. It is something that we are discussing with the local authorities in terms of the next steps, and I'm still very confident that we should be able to turn that around in the coming few weeks or so. Overall, in terms of the productivity gains, our total count in terms of the head count has come down to a certain extent, but we have used that opportunity to scale up our faster-growing businesses given the number of net new clients in addition have been substantial, whether it is wealth or whether it's alternatives, whether it is pensions, so on and so forth, which are still sub-scale in order to, from the standpoint of driving significant operating leverage. We have some pure transformation and AI-led platform rollout into the coming weeks and month. We should be seeing an immediate rollout of the ARYA.ai 2.0. As I said, that's one of the most important ones, followed by our platform rollout of FinEx, which is for mutual funds. The GFS, that is the international business replatforming, is something that is on the way as well, something that we believe will add substantial might in terms of our progress towards winning new deals elsewhere in the world. Our total share of the international business now is 20%. I think I have called out mutual funds share of revenue purely from the standpoint of AUM-driven revenue is just under 52%. I expect this number to get to 50% into the next two to three quarters, which in some sense, had been our internal target to get that far over a five-year period, but happy to inform you that we are getting there in under three years. We would also be working on obviously expanding the total pie so that the concentration risk of any one single client does not go beyond 2.5% - 3%. That is also something that I believe could be accomplished in the next probably about six quarters, if not earlier. T hat is probably the update at my end into the coming quarter. We foresee some headwinds, obviously, given where the markets have been the past 10- odd days. A s I said, our growth, we are not necessarily hoping and praying for the markets to turn around, but do everything that we can do to close the contraction conversions real quick, focus on productivity so that our margin commitments remain sacrosanct. So far, this quarter gives us a lot of heart that our strategy had been on the right path. Even as I look at our upcoming forecast for this quarter and the subsequent quarter, despite the headwinds, I am still confident that we do not have to change any of the estimates at this point in time, unless there is a continual protracted downturn from here on as well. W e have enough buffers to cushion any kind of a blow like this tactical market correction over the last 10 days. O f course, anything that persists significantly longer, given our capital markets play, will impact. A t this point in time, we continue to stick with our estimates. I will now request Vivek to cover the financials, and then we will leave the floor open for questions. Thank you, Sreekanth. On the financial performance, the revenue from operations has gone up sequentially including Ascent by 30%, and excluding Ascent, it has gone up by 10%. Expenses were pretty much controlled in terms of the cost optimization initiatives. Sequentially, expenses have gone up only by 3% quarter-on-quarter while the revenue quarter-on-quarter went up by about 13%. We believe that this will continue to play out in Q3 and Q4 as well. As a result of that, the EBITDA improved by about sequential basis, about 18.7% against last year same quarter, 32% growth. Half year ended FY 2027, there is a 13.4% growth year-on-year for the half year. EBITDA margins for Q2 excluding Ascent were 45.8% and including Ascent was 40%. That's the aim that we are targeting, that we will end the year including Ascent with a consolidated EBITDA margin of 40%, and that's where it gets demonstrated from Q2 onwards. There is integration of Ascent in Q2, but also the margins are maintained at the guidance level. PAT has touched INR 100 crores for the quarter and has gone up by 7.5% year-on-year, 33% as compared to the same quarter last year. For the half year, it's 2 points, about 3% growth year-on-year. PAT margins have improved in Q2 including Ascent at 25% and excluding Ascent at little more than 30%. For H1 FY 2027, consolidated margins are at 23% including Ascent. We maintain healthy cash and cash equivalent situation of about INR 550 crores after the dividend was paid out, and the diluted EPS at the end of H1 stands at INR 10.12. Happy to take questions now. Thank you very much. We will now begin with the question-and-answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. 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 Karthik Chellappa from Indus Capital Advisors Limited. Please go ahead. Yeah. Hi. Thank you for the opportunity. Good morning, team. Am I audible? Yes, sir. You are audible. Please go ahead. Okay. Excellent. Just three quick questions from my side. The first question is, we have seen the domestic MF yields, this business stabilize and probably even grow a bit sequentially. How much of this is coming from mix, and how much of this is basically any other factor? Can we reasonably conclude that from here on, the yields will more or less stabilize sequentially? That is my first question. The second one is on the issuer solutions. We have seen a very good quarter this quarter, both on margins as well as growth. Given the visibility you have on pipeline, can we extrapolate this resilience to the rest of the year as well? My third question is, in the beginning of the year, our aspiration was to grow our earnings in low double digit, and it is heartening to see that, Sreekanth, you actually reiterated that is pretty much on track. You also mentioned you have some buffers in case of capital markets were to turn for the worse. What would some of those buffers be, if you could give us some additional color? Thank you very much. Thank you. Thanks, Karthik. Always great to hear from you. I will take the first one in terms of the yield and its marginal expansion, roughly about 2% sequentially. As I always say, there are three important factors. If I were to put a weightage, now the weightage may change depending upon quarters and times of the year. R oughly about half of the reason in terms of the yield stability or otherwise is owing to the pricing discipline. About 30%-odd, maybe even a little more than that, towards which particular asset manager is growing. The third one, of course, is the asset mix itself. Depending upon which of these three levers work in favor against or neutralize each other is usually how the yield moves. The quarter that had gone by in some sense has had all of the three positive effects in the sense that obviously, the pricing discipline was maintained. As we have confirmed in the previous year, those contracts are being closed and negotiated, and hence there is a consistency on the pricing. D efinitely, we had positive tailwinds in the form of both asset mix as well as in the form of the AMCs' growth as to which AMC has grown depending upon the size and scale. As we all know, there are differentiated rates. Will it remain similar into the coming quarters? On the pricing front, yes. O f course, on the asset class mix and the AMC mix, as we all know, it is how the manufacturers grow as against what we grow. Given there is no substantive reason for anything to change at this point in time, in the sense that we had an implement in the form of metal ETFs, maybe Cat III, maybe too active, and that was the reason why the asset class mix. Younger, faster-growing AMCs continuing to grow faster. Six out of the 10 fastest-growing AMCs are currently with KFin. That obviously has been having a little bit of positive help. Now, it can even get better into the coming quarter depending upon which AMCs grow. I do believe that, given we are already near end of October, and we have some visibility into the last 20 days of the work that has gone by, I believe that yields will remain largely consistent. On the issuer solutions, I think we are looking at a 20% total year-on-year growth. Again, with a little bit of luck from the market, and depending upon how some of the other larger IPOs are also around the corner, including the Jio one, of course. I believe that we should get to a 20% + top-line growth, which means that by and large, we can assume that our current numbers can be accomplished in the coming quarters as well. That then leaves us with the third question, which is in the form of the buffers. The buffers are basically a couple of items. One in terms of the discretionary versus the non-discretionary spend. As I have always maintained, there is a certain element of our expenditure, which is something that we will incur if and only if our financials permit. These are obviously for the future benefit, so transformational items, discretionary IT projects, discretionary automation, discretionary expansion of probably a particular geography which we have planned for, so on and so forth. Or even launch of certain products which cost certain amount of business development dollars. If we see an ongoing market downturn, those are the things that, from a levered standpoint, we will pull so that it will release some amount of additional expenditure that we may have budgeted into the next five months, which we will not incur. That is what I am referring to, Karthik. Should we get that far, then definitely we will probably withhold or at least prioritize the most important ones and still do it and probably defer some of those into the coming quarters, at which point in time, should the markets permit, we will then spend that money. Excellent. Thank you for the detailed responses. Wish the team all the very best for the rest of the year. I will come back in the queue for more questions if any. Thank you, Karthik. Thank you. The next question is from the line of Sunil from Dymon Asia Capital Limited. Please go ahead. Good afternoon, sir. Thank you for the opportunity and congrats on a good set of numbers. I have two questions. Firstly, sir, if I look at your presentation, this quarter we are seeing a good increase in your value-added services revenue. As a percentage also it has increased. How do we look at this? Is it seasonal or what has driven this growth? Secondly, this value-added services is majorly related to the mutual fund business, or where does this lie in the revenue breakup? If you can give me some clarity about this revenue. Sure. Firstly, I think I should answer the second question first so that it's easier for the first one. VAS is not just mutual fund alone. It's both issuer solutions and mutual funds. In Q2, typically you will see a rather large spike in the value-added solutions because included in the VAS for the issuer solutions is our entire platform-based revenue solutioning around eAGMs, e-votings, and any large corporate, not the regular corporate actions like dividend declarations and buybacks, but there are other items where our platforms and solutions are used, including insider trading platforms, so on and so forth. Q2 typically is also a good quarter in terms of VAS. T hat's what you have seen given the issuer solutions related, many of these annual general meetings, etc, happening to the second quarter. That said, in spite and despite of it is also a good show in terms of the overall revenue pool itself. It is now 7.5% of the total revenue of the organization. Again, I remember probably three or four quarters back talking about one of the other internal sub-goals we have is to get the value-added solutions to double-digit figure in the next three to four quarters. We are working in that direction. Again, it's very important for us to look at such avenues of revenue because they do not depend on the vagaries of the market, but adds a certain amount of predictability and consistency in our revenue earnings and the quality as well. Okay, sir. Thank you. That was helpful. Just circling back, so the increase which we see on a quarter-on-quarter basis, so the major increase would be driven by the issuer solution at a quarter-on-quarter level. That's correct. That is correct? Understood. Yes. That is helpful. Secondly, if I look at your Ascent business, as you know, in your opening remarks also, you said there are a lot of headwinds in the Middle East where 25% of the revenue is coming. If I look at the PPT disclosure this quarter, if you see there are no new client additions. Is it mainly because of the Middle East issue? How are you tackling it? Because if this war continues for, let us say, next six months or a year, how are we looking at Ascent as a business? What are the strategies we have for this macro event? Yeah, we model in worst-case scenarios and obviously have calibrated and purposeful responses for each one of them. One of that was obviously to look at geographies which are rather unperturbed by such events and drive growth in those areas. Not to say that we should be putting some of the stressed geographies on the sidelines. Obviously, all we can do in that scenario is just keep the client conversations live and warm and continue to solution, continue to engage, and as and when things turn around, it will and had traditionally been positioning us in the right way then to go on to win deals. What have we done to combat, given large presence in over 18 geographies? It is quite possible there are always some local events that happen, whether it is the market movements or local politics or anything at all. That offers the risk diversification. If you saw the last quarter, especially in U.S., we have won a pretty large number of deals. We won about five deals, and two of them are reasonably larger, up north of, or rather close to $0.5+ million. As the deal sizes of some of these funds increase, so will the intent of several medium and large fund managers as well. What you have seen is, in spite and despite of the challenging times, even in Middle East also, we have seen growth, but we could have grown more if not for the situation. It got largely overcompensated by much faster growth in the Americas as well as in Singapore. Okay. Yeah, that was helpful. J ust lastly, why was the client addition flat this quarter? Was it any reason for that? I mean, are they in pipeline or how do we look at that? No. That metric is not the number of deals we have already won, which are yet to launch. What's happening is that given Ascent's core business is largely on AIFs, and in many of the geographies, again, whether it's AI trade or a whole bunch of things, a lot of fund managers have held back in terms of launching their funds. Okay? But we have, even today, a little around 80 + funds, 80 or 90 funds, which have been already contracted, but the fund manager is yet to launch and/or is expected to launch into the coming weeks or a month or so. That's pretty much it, there is nothing untoward. If anything, the repeat business from the same clients who are launching new funds or their referrals to many of their network in terms of the new fund managers who are coming, that had been on the steady rise. Our net retention rate had been higher than ever before. B y and large, we're very satisfied with the growth. T ypically Q3, Q4 or the H2 tends to be a better season for Ascent, as you might have seen into the last couple of years as well. So, we're waiting for probably a better set of results in the coming three quarters. Okay. T hank you, sir. It was very helpful, and all the best for the outcome. Thank you. Thank you. Participants, in order to ensure that the management is able to address questions in the conference, please limit your questions to two per participant. The next question is from the line of Swarnab Mukherjee from 360 ONE Capital. Please go ahead. Hi, sir, thank you for the opportunity and congrats on a great set of numbers. S ir, I have questions on Ascent business in terms of the cost. W hen I look at our consolidated cost structure, I think even at an employee expense level, the delta is coming from Ascent. Given that, I think the expectation was that Ascent should now gradually start to see ramp-up in margin. Just wanted to understand why, at the employee cost level, this cost is continuing to increase. Given that margin, at least from the data that we have in hand, appear that margins have been reasonably flattish quarter-on-quarter. H ow should we think about the trajectory of margin for Ascent over the next two, three years? If you could give some color on that. That is the first question. Secondly, I also wanted to understand, as you mentioned that you are expecting to maintain a similar run rate in the issuer solutions business in the subsequent quarters. So, if you could give some color on what would be the share of folio-based revenue this particular quarter and corporate action-driven revenue this quarter. Because if I understand correctly, I think there is a seasonality in corporate action revenue, and the folio-based revenue is dependent on the IPO pipeline and at what time it goes through. Just wanted to understand how should we expect that. There could be some visibility for third quarter, but then in the subsequent quarter, how should we expect this to trend? These will be my two queries. Sure. Thank you. Okay, t wo ways to look at Ascent. One, it is a five-year-old organization, okay? Founded by young entrepreneurs who also had a similar vision as KFin Tech does, which is to create a large global fund administrator and be in that $40 billion addressable market time space. There are very few or no one who have done from this part of the world, and hence, together we can join our hands to grow this business over a period of time into that space. They specialize on one specific asset class, which is largely private mandates. Okay? That includes AIFs, PMS, private equity, hedge funds, venture capital, digital currency funds, so on and so forth, which are largely non-public, like mutual funds and pensions and insurance, so on and so forth. Now, the disposition of that business, by and large, as you have seen, even with KFin Tech's own AIF business, it is small mandates and several of them. I have 30 mutual fund clients, and you could see the revenues are closer to $100 million. We have 750, 800 alternative investment funds, and yet the revenues are very small. T hat kind of a nature of work requires a certain amount of scale, which is more than what we have, by the way. It may look like having 1,000- odd clients for us and having another 2,000- odd clients overall, including Ascent, is a very large number. Y ou will be surprised by the amount of bespokeness that exists in alternate investments in general. For us to be able to draw synergies and drive operating leverage, we need to horizontalize the business processes. Otherwise, it tends to be one-to-one relationship. That is, client-server kind of a relationship. That does not render itself to significant operating leverage at a certain base. A s the scale increases, the operating leverage tends to be much, much larger. Given much of what we also deal with are public market funds, and given there have been no mark-to-market gains at all in most of the operating geographies, the overall AUM continued to be a little tepid. In that context, so combination of both- Operating leverage to be at a much larger scale to kick in, and the fact that there have been absolutely no AUM growth because of the mark-to-market is one of the reasons why and what it is. But if you see the overall Ascent specific cost optimization and hence where the productivity stands, yes, the overall EBITDA margin had been similar to that of last quarter. In last quarter, it was around 7.5%. This quarter, it is around 8%. L ast year, this time, it was -12%. For us, we have to look at such optimizations in a purposeful manner, where we have to drive in a methodical manner rather than just taking arbitrary decisions around it, which will be counterproductive for a fast-growing company. For a fast-growing company, what it needs is capital, what it needs is flexibility, what it needs is the G&A spend so that we capitalize on all the markets we have started. Having spent money and a certain amount of intangible assets sitting on the CapEx at this point in time. No point in building geographies and tying the local CEOs down without the necessary support, which is largely SG&A side to grow. In spite and despite of that, for us, this is nearly -10%, -12% to +8% in about four quarters. As I have already given in my commentary, we are looking at getting into double digits as well sooner than expected. This acquisition, again, by no means is going to get to KFin margin levels in the next three or four quarters. It is a very different business, but a business that has significantly long-term compounding gains. As per our base case, we will touch double digits, and we are looking at about 20%+ thereabouts into the next fiscal year. The next two years after that, we will work towards getting it somewhere closer to KFin's overall margins, by which time both the things would have fallen in place, hopefully, that is the scale and the transformation we are doing, which is largely around the replatforming of the current solution they have with KFin's proprietary platform, in addition to having horizontalized many of the business processes. That is broadly the Ascent story. When you add the overall cost of Ascent, obviously, this is a full buy kitty, and hence the first two quarters where they were loss-making to that extent. Obviously, the cost addition was probably looking to be higher than the revenue addition. E ven if you look at standalone Ascent numbers, the overall EBITDA has turned positive. The overall gap from turning cash positive is roughly about INR 3.5 crore -INR 4 crore, which is not substantial and something that we should be able to turn EPS positive as well into the coming quarters. On the issuer solutions, what I had called out was that we should look at our overall year-on-year numbers to about 20%+ or so. This quarter, of course, the percentage was higher. I f you take a look at again on a year-on-year basis, I would like to believe that we should continue to grow. Corporate actions are predominantly a Q2 phenomenon with some spillover into Q3. It will not be as large, but there will still be some. Given we have just done the largest IPO in the world and some more to come, and the folio expansion was largely also because of the net new IPOs that we have done in the last 12 months or so, will mean that there would be a year-on-year revenue growth, both on the count of folio-based revenue and some more on the form of corporate actions. Corporate actions of the net new IPO clients we have added, not just the old ones we have had. It is with that confidence that I am saying that we should be able to still look at a 20% year-on-year revenue growth. Again, in a year where there has been a reasonable exodus of retail investors from the existing companies. Our total folios grew, but that is because we won a lot more clients, not because the shareholders of the existing clients actually grew. They actually have de-grown. Understood. This is very clear. Just one thing I additionally wanted to ask was on our legacy international business. I think if I look at the revenue numbers for last three quarters, there seems to be some volatility that last quarter it went down and then this quarter it has bounced back. Just wanted to check if there was some kind of a one-off in last quarter's number and actually a linear growth. I missed the first part. Was that for alternatives, your question? No. Our legacy international business. E xcept Ascent, the international part. Okay. T hat's, again, two important factors. One was the go live of some of the deals which were under transition. Second, fortunately Malaysian markets actually looked good in the last quarter, compared to India, at least. B oth the factors, basically, successful transitioning and hence going live, and hence the revenue kicking in conjunction with the mark-to-market gains that we've gotten in Malaysia. Those are the two reasons why the numbers have gone up. As I called out, there are still 18 more transitions underway, and as they go live, there will be incremental revenue coming from that in addition to the organic AUM growth for the existing clients. Yeah, that's very clear. Thank you so much. Thanks, and all the best for the rest of the year. Thank you. Thank you. The next question is from the line of Supratim Datta from Jefferies Group. Please go ahead. Thanks a lot for the opportunity. My first question is with respect to the Ascent business. You indicated that Ascent has started winning large contracts. Wanted to understand what has changed or what is changing at Ascent that is allowing them now to win these large contracts, and how does the economics of these contracts differ with the smaller contracts in terms of yield or profitability? If you could give us some color there, that would be helpful. Secondly, on the tax rate. The tax rate seems to be increasing the last quarters. Wanted to understand if there is anything that is there and how would the full-year tax rate look like, and is there something that we need to take into consideration here? So those are my two questions. Thank you. Thank you, Supratim. On the Ascent, when I say large contracts, again, everything is relative to the size of the deals that entity had been traditionally winning. Basically, in the last 12 months, there were two deals which are worth a little over $1 million each. In the U.S. market, a single alternate investment deal giving you anywhere around $0.5 million -$1 million is reasonably sizable. Otherwise, typically the funds, as you know, are reasonably small. Even if you look at India, a INR 2,000 crore, INR 3,000 crore fund itself is considered reasonably large in the alternative side of it. I n that context, anything around $1 million for a single deal is reasonably lucrative. Those are the deals we are winning. The economics, they work better for the very simple reason that the fund size does not necessarily dictate the underlying effort. There will be some variabilization, obviously, in the form of probably additional volumes, and hence there is a little bit more effort given much of it is tech-based solutions that we have. Obviously, large fund size comes with large risks, so there is a certain amount of risk premium that we have to bake in, which translates in the form of additional quality control costs, so on and so forth. A ll of them put together still does not necessarily mean the cost will go commensurate with the size of the deal. T he large deals, anything around $1 million typically tends to give you nearly 2x the margin profile of that of five different deals together, basically having a similar revenue profile. I guess what I am saying, Supratim, is one deal with $1 million versus five deals with $200,000 each. Both of them will translate to the exact same AUM, probably the same revenue. T he efforts would be probably just about half of what it would be for five different deals otherwise. T hat is the focus area in terms of winning large deals as to how it impacts the operating leverage. On the tax rate part, I would request Vivek to cover that in addition to one of the other things about our plan to move into GIFT City, the entire international business, which has certain tax benefits associated. Vivek, do you want to cover the tax rate part? Basically, there are some new businesses like KFin Services, the GIFT City entity, and some of the like KFin Thailand. These entities are basically still not profitable, and therefore we are not recognizing the deferred tax on these entities, which is resulting in a slightly higher tax rate than 25.64% for KFin India. Ascent itself is currently loss-making in Singapore, and therefore whatever they pay as tax in India, we cannot take foreign tax credits. As a result of that combined impact, you will look at tax rate being slightly higher than normal. We are looking at moving period of time to the GIFT City, which should give us the advantage of 20-year tax holiday. It is a process that has been initiated, but it will take some time. We cannot give you guidance on when we will optimize in terms of the tax rates. T hat is a strategy which is in the pipeline. As of now, it is largely to do with the loss-making entities, deferred tax not being accounted for. Understood. That is very clear. Just one follow-up on the Ascent business. When you were acquiring this asset, you had indicated that certain roles from Singapore would be transitioned to India. Where are we in that process? Has that been completed? Yes, Supratim. That is the rationalization topic that I spoke on two important counts. One was the payroll-level rationalization. Which means basically do a department-to-department mapping between both the independent entities and look for those departments which can be done by a singular unit. For example, two separate finance functions, two separate HR functions, two separate tech functions, so on and so forth. As you could imagine, as you consolidate, you would have certain amount of redundancy. That job has already been completed. For example, much of the finance function is managed by Amit Murarka who sits in India. Likewise, aspects around tech and HR, and even certain aspects on operations also, given Ascent also has its operations in India, in Hyderabad, in Mumbai, so on and so forth, many of the locations that we are ourselves organically be part of. Both in terms of movement into the same physical location and wherever there are roles that could easily be handled by a single person instead of two different people. That amount of rationalization has already been secured. Got it. Thank you. Thank you. The next question is from the line of Lalit Mohan Deo from Equirus Securities Private Limited. Please go ahead, sir. Hi, sir. Congratulations on a good set of numbers. Mr. Deo, we are not able to hear you loudly. H ello? Yeah. Please proceed. Hi, sir. Congratulations on a good set of numbers. Sir, just two questions. One, on a clarification, sir, when we have mentioned that the overall margins will be around 40% by FY 2027, does it mean the exit quarter or should we assume 40% for the full-year? Sir, second question is more on the issuer solution business. Could you just explain the unit economics over in terms of during the IPOs, what kind of a revenue which we make in terms of new foliation or in terms of applications over there? Sure. On the IPOs, let me just cover that first. The IPO itself, as an event or an episode, does not necessarily generate any significant revenue. Again, it is largely the competitive dynamics. Many of these get tagged at just a few lakhs of rupees. O f course, the larger ones will probably do down a little bit more. B y and large, it is the annuity that we focus on. For example, if you would have any of the more retail-focused stocks, some of them can go have as large as 30, 40, 50 lakh individual shareholders. That is the broad revenue model. It is not as much about the individual IPO itself. I would not factor more than, say, 2% of the total issuer solutions revenue in a year because of the IPOs. At a stop, it is all the folio maintenance, the corporate actions, and the value-added solutions revenue that we drive. I am sorry, I seem to have missed your first question. What was that about? Yes, sir. That was on the clarification part on the EBITDA margins. W hether that 40% is for the full-year or is this- Yeah, I will cover that. Sure. No, it is average. It is not the run rate on Q4. As you have seen this quarter itself, it is already at 40.6%. W hat we have to do is expand these numbers into the coming quarters to basically compensate for the Q1 EBITDA, which was only 34%. W e are working towards basically having a full-year average of 40% and not just the running quarter. Got it. Yeah. Thanks, sir. Thank you. The next question is from the line of Dipanjan Ghosh from Goldman Sachs. Please go ahead. Hello. Am I audible? Yes, sir, you're audible. Hi. Few questions from my side. First, in terms of your core ex-Ascent international business or the legacy international business, just wanted to get some sense of the client concentration in terms of revenues, top five, top 10, if you can give some color on that and how that would have changed, let's say, over the past few years. The second question is on your ex-Ascent EBITDA margins. Would it be possible to break it up between the mutual fund business and the issuer solutions business and maybe the rest which would probably be a little bit subpar, for example, the pension business? The third question is in terms of the mutual fund margin business. How much more scope do you see in terms of efficiency realization or cost rationalization in that portion of the business? Sure. The exact numbers, I think it's probably better for Ram or Vivek to get back to you separately one-on-one. B y and large, the numbers are there, published for each of the businesses. In terms of the overall margin profile, as I said, if you take a look at the mix of the revenues, 52% for mutual funds, 13% for issuer solutions, 20% international, including Ascent, 7% other businesses like alternatives, pensions, and so on and so forth. T hat's been the revenue mix. It, as I said, will be more skewed towards the remaining non-mutual funds business, which will continue to grow faster than the mutual fund business, hence the overall revenue and the margin profile shake-up will still be there. Our intent and commitment towards 18%-20% top-line growth and about 20%-25% broad range of EBITDA numbers continue to hold good despite a change in the mix in terms of which one give you more operating leverage versus the other. The reason why the operating leverage or the margins for other businesses is just transient, simply because it's very important to understand the nature of those revenues and margins. At the individual contract level, including the GFS, they are far more profitable than most of the Indian contracts we have. However, you will see a consolidated margin percentage lower. It is for the very simple reason that there are constantly transitions that are happening, hence there is always certain element of cost that is currently being incurred, the revenue for which will coming into the coming quarters. My position that should we not win anything, for example, in a quarter or two, you'll actually see the margins of the other businesses to be at par or even higher than our traditional core businesses, so to speak. Y ou will see this anomaly of reported profits lower than that of the core businesses profit. Till such time, we continue to grow. Obviously, as the scale increases, that margin will reduce because the transition Driven cost as a percentage of the revenue will continue to drop as the overall pie itself expands. T hat's the point. In terms of the core, the GFS businesses, largely the concentration risk is substantively lower as compared to that of the domestic mutual funds. Our top five clients contribute around 23%-24% in total, with the largest client probably around 5% thereabout. Even in India, if you see, there has been a substantive reduction in the overall concentration risk, with the top client contributing to around 5.5%-6%. T he second one, probably around 3.5%-4%. I would expect these numbers to come down close to 2%-2.5% in the next 18-24 months latest. Got it. J ust one question on the last question on the possible efficiencies in the core mutual fund business. How much do you think the margins can improve? M argin, as you know, is a factor of both the price and the cost. I will talk about the productivity and price. The unit price, as I told you, itself is a factor of asset class, which AMC is growing, and the pricing. G iven there is a certain amount of non-controllable item in it, we focus on the controllables, which is effectively the productivity, and hence the cost takeout associated with that. I have called out the planned rollout of FinEx, which is basically rebuilding the entire mutual funds platform bottom up based on the latest and greatest technologies that we have available at this point in time. T hat is about roughly 1/3 done and deployed. Certain bit of the gains associated with that productivity, you could see, is part contributing to the basis point expansion. We have the rest of the program to be concluded into the next six to seven months, at which point in time I would like to see there is going to be a little bit more productivity gains that we will get. Of course, there had been compensatory offsetting because of cloud costs, infra costs. As we all know, the memory and the compute space and energy and all of these costs have doubled and tripled. A good part of what we are doing, however, is also getting negated because of the market forces. Should they get benign, which means that with the AI trade, etc, if it slows down a bit and the memory compute costs come down a bit, we will see benefit at that point in time. Otherwise, a large part of what we are trying to accomplish is also getting offset because of the absolute uncontrollable items beyond our hand. I believe that pound to pound, the human element into our services is coming down and it is getting more and more on the non-people cost. I guess what I am trying to say is that you will see headcount optimization because of the straight-through that we are doing. However, a part of that is getting compensated by large-scale cost increases in the case of cloud and the non-cloud computing costs. Got it. Thank you and all the best. Thank you. Thank you. The next question is from the line of Mohit Mangal from Centrum. Please go ahead. Good afternoon, and thanks for the opportunity. I have got two questions. First is on the AIF and the wealth management business. We have seen the number of funds, they have kind of consistently increasing, even though the revenue growth was good and the yields expanded. I f I look at the AUM growth, it was kind of flattish to marginally negative on a sequential basis. Just wanted to know what are your views on this business growth and yields going forward. My second question is basically, we have spoken about our new offices in the past couple of calls. Just wanted to know when the depreciation expense will come into the picture and what would be the quantum of it. Sure. I will take the AIF question, and I will request Vivek to cover that second question in terms of the depreciation effect. See, nearly about 80% + of all the funds that we manage are Cat III funds. O f course, by definition, they are all exposed to public markets. Last quarter, mark-to-market gains obviously had been tepid. In the case of mutual funds too, it had been tepid, but it got offset by the net flows being slightly higher. Whereas in the case of alternatives, based on the commitments and that schedule, the net flows did not compensate for the loss of mark-to-market gains. I t was a very tactical blip on the radar, something that I will not read too much into it. The fact that the number of clients, the yield, and the revenue has grown despite a dip in AUM, I think actually augurs well. As I said, because as the markets turn around, you will have a compounding effect of net new clients being there, their revenue coming, as well as the organic growth of the individual client themselves. All right. Vivek, if you could address the point? Sure, Sreekanth. On the new office, new Hyderabad office, that is likely to become operational effective December 1st. We expect two kind of increases. One is in the increase in the rent, which will be about INR 80 lakhs per month. On the operating lease for the asset build-out, this will also start from December 1st. This year for FY 2027, there will be an impact of about INR 7 crores. Next full-year, it will be about INR 18 crores, then you can say every year it will keep coming down by 7% because of the discounting. Starting this year, INR 7 crores. Next year, which is FY 2028, INR 18 crores, then you can reduce it by 7%. The total lease period is nine years. Okay. Just one follow-up on this. Basically, the INR 80 lakh per rent, you said. Basically, for the next two to three years at least, we should expect the rent to be INR 10- odd crores for the entire year? This is INR 80 lakhs per month for the next 15 years. That is the additional rent over and above what we are already paying for Selenium, because of the larger space that we have taken. T hat is the hit to the P&L for the rental lease impact, which you will see in the depreciation amortization lease, the part of it. The CapEx build-out, which is through operating lease, is the other piece which I talked about. Understood. That is very clear. Thanks, and wish you all the best. Thank you. Thank you. As there are no further questions from the participants, I now hand the conference over to Mr. Vivek Mathur for closing comments. Thank you. As you would have seen, the results have consistently been improving in Q2 over Q1, where we have regained the EBITDA margin of 40%. We have been giving the guidance that we want to end the full-year with 40% EBITDA margin. The growth in revenue will continue to be in the range of 18%-20%, with EBITDA margins in the range of 40%-45%, and PAT margins in the range of 25%-30%. We remain buoyant about the Indian market, and as the market plays out in terms of mark to market and net inflows with the fundamentals being intact. Corporate actions are back on track, and that is why you see issuer solutions business doing well. Q2 is typically a great quarter. Q3, Q4 comes down a little bit on corporate action, but our overall guidance remains where we stand. Thank you very much for attending the call today. Thank you. On behalf of IIFL Capital Services Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.