Ladies and gentlemen, good day and welcome to the Motilal Oswal Financial Services Q1 FY 2027 earnings conference call. 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 this 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. Manish Kayal for the opening remarks. Thank you, and over to you, sir. Thank you, Alric. Good afternoon, everyone. I welcome all participants on behalf of Motilal Oswal Financial Services Limited to take time out to attend our Q1 FY 2027 earnings conference call. We hope that you had an opportunity to go through our investor deck and press release uploaded on stock exchanges and on our website yesterday. We have also uploaded our Excel data book on our website that has all the operational and financial numbers. Please note that today's discussion may include some forward-looking statements. These forward-looking statements are based on our macro assessment and can vary. To represent the group, we have the senior leadership members on this call. We will start this call with an opening remark by Navin, who is our Group MD. Then we will have a Q&A session. Over to you, Navin. Thank you, Manish. Good afternoon, everyone. A warm welcome once again to all of you to the earnings call for the quarter ending June 2026. I will first start by a context of how we ended the last year. Last year, our operating PAT reported was up by 16%. On that base, our operating profit after tax grew by 14% on a Y-o-Y basis in this quarter to INR 609 crore, led by asset and private wealth business, which grew by 44% year-on-year. These businesses, the asset and private wealth businesses, now contribute 55% of the total operating profit of the group versus 50% in FY 2026 in the full year and versus 42% in the year before that. We have guided that the share of asset and private wealth businesses will continue to rise because of the annuity nature of the business and the low market share that we have in these businesses, allowing a lot of headroom for us to grow these businesses. The AUM of the asset management business, including MO Alternates, crossed INR 2 lakh crore milestone. This has witnessed a CAGR, a compounded growth of 34% since March 2020 with strong market share gains. We have invested a lot in the past couple of years on all the fronts in the group, be it people, be it brand, or be it technology. We expect these to bear fruits in the coming years in terms of market share gains and profitability growth. Motilal Oswal is the largest integrated capital market player with rising share of annuity revenues and each business offering a strong growth runway, leveraging the opportunities available in financialization of Indian savings. Annuity businesses now contribute over 66% of the group revenues. Please note I highlighted that the asset and private wealth businesses contribute 55% of the operating PAT during this quarter. Annuity businesses, including in the wealth management business, which has annuity revenues, now contribute collectively 66% of the group revenues and will continue to rise as we've transitioned from a transaction-led to an annuity-led business model, strengthening the quality of our earnings. Our operating businesses have delivered a decadal, a 10-year compounded operating profit growth of 33% and an average return on equity of 23%. This growth is supported by our investment book, which grew by 41% compounded since inception, led by strong IRRs and reinvestments of our operating profits after consistent dividend distributions and three buybacks since our listing. Also want to highlight that ever since our listing back in 2007, we have never diluted equity by consistently paying out dividends and buybacks. This has only been possible due to our unique twin-engine business model, where we have a strong backbone of our operating businesses and a large investment book that has continued to compound at nearly 20% per annum. This strategy has resulted in our rank in profit after tax for the last year, improving to 160th rank among all listed companies in India. We are now among the top 200 companies in India by market cap. We see the next decade offering equally exciting prospects, which should drive further improvement in these rankings. Turning now to the segmental performance. Our asset and private wealth businesses comprise of the listed equities asset management business, the unlisted MO Alternates business, and the private wealth management business. Asset management and private wealth businesses continued its momentum during the quarter with robust net flows of INR 10,325 crore. AUM at INR 4.5 lakh crore as on June 26 is up by 34% year-on-year. We continue to invest in talent, in distribution reach, and in marketing. The operating leverage from rising AUM should be a strong driver to our profit growth going forward. Specifically talking about the asset management business comprising of mutual funds, PMS, and AIF, our AMC AUM grew by 34% compounded since March 2000 till June 2006 and is very close to another major milestone of INR 2 lakh crore today, led by our strong performance and differentiated product offering to our investors. Our unique PAN created by our AMCs more than INR 1 crore as on June 26th versus INR 85 lakh in June 25, which shows strong confidence by retail investors in our franchise. This is around 16% share of all clients in the Indian mutual fund industry. The revival in Q1 has propelled our average AUM to grow from INR 1.67 lakh crore in 4Q FY 2026 to INR 1.81 lakh crore in 1Q FY 2027, reflecting the continued momentum in the business. Today, we are closer to another milestone of INR 2 lakh crore in this business. Our product bouquet is pretty young as significant flows comes only once products have crossed the three-year track record. We launched one new active mutual fund in the first quarter, increasing our presence now to represent 87% of the industry AUM. Importantly, only six of our funds have a vintage of over three years, and these categories contribute a mere 44% of the industry AUM. We expect an additional eight funds to cross three-year vintage by March 2027, and a further 16 funds to cross the three-year vintage by March 2028. This will improve our vintage fund participation, which is over three- years vintage fund participation to 75% of the industry AUM from 44% now. Most of these are best performing funds since inception in the mainstream categories, which should help in strong flows as well as diversification of the AUM over the next two years. This will also continue our trend of net mutual fund flows market share improvement, which stands now at 4.2% compared to 3.7% in the previous quarter. Our flow market share continues to be well above our AUM market share, which is 2.9%. In 1Q, our SIP flows were strong at INR 4,064 crores, up by 16% year-on-year, with a market share of 4.3%, resulting in an SIP AUM of INR 38,643 crores. We believe our AUM growth will be supported by the following factors: an annualized SIP run- rate of around INR 16,000 crores, collections from proposed NFOs besides discretionary flows, more products crossing the three-year vintage. Current AUM of nearly INR 1.9 lakh crores is over 15% higher than the FY 2026 average AUM of INR 1.57 lakh crores. Potential mark-to-market gains after two muted years, and finally entry into multiple funds through the GIFT City route, targeting both inbound as well southbound flows. We believe that the strong growth of AMC led by the above six factors will be a key growth and ARR driver for the overall group. Turning now to MO Alternates. We have a strong franchise in growth capital and residential real estate, and are confident to deliver industry-leading IRRs to our clients in all the products that we offer. We are in the process of executing our final close of our maiden private credit fund of INR 3,000 crores, where we have raised nearly INR 2,500 crores in the second close. We will launch commercial real estate in second half of this financial year and continue to offer a comprehensive suite of product offerings in alternates, which is seeing increasing allocation both among family offices as well as institutions. Alternate asset management business too will be a key growth driver and an ARR driver of the Motilal Oswal Group on the back of larger fund size that we have raised in every subsequent series, entry into newer categories, and more funds entering the carry income recognition threshold, which will boost our carry income run- rate. The asset management business now contributes to 40% of the group's operating profit after tax in 1Q versus 26% in first quarter of last year, and is expected to increase based on all the pointers that I've highlighted. Turning to the private wealth business. The first quarter ARR revenue for the private wealth business grew by 42% Y-o-Y to INR 157 crores. Overall revenues were flattish on lower TBR revenues. We have highlighted the quarter-on-quarter volatility in TBR revenues while ARR revenues continue to steadily rise. Net flows grew by a strong 37% to nearly INR 4,000 crores, leading to AUM growth of 37% on a Y-o-Y basis to INR 2.4 lakh crores. Our 441 RMs will also witness productivity improvement as 32% of them have a vintage of over three years. We continue to make sizable investments in senior leadership as well as relationship managers, and will continue to do so in a calibrated manner going forward as well. Focus is now on growing ARR AUM, which is currently at around INR 52,000 crores through various initiatives including advisory solutions, strengthening leverage solutions as a value add for family offices, and exclusive co-investment leveraging group synergies. All this will help in revenue growth along with cost-to-income improvement, driving profitability. As we scale our ARR-led revenue mix in private wealth, the relative TBR revenue contribution will be volatile quarter-on-quarter, I repeat, while our overall earnings quality and predictability will continue to improve structurally. Turning now to the wealth management business comprising distribution, retail broking, and retail lending NII income. We continue to have a sharp focus on growing our ARR revenues, which includes distribution income and NII. This has led to the share of these businesses in wealth management segment revenue increasing from 33% in the year ending March 2021 to 57% in the quarter ending June 2027. The ARR revenues grew by 26% on a Y-o-Y basis this quarter to INR 304 crores. Distribution book grew by nearly 30% to over INR 45,000 crores. We are confident that our distribution book will grow meaningfully as we continue to harness the cross-sell potential of our client base of our franchise, which stands at only 18% versus multiple times this number globally. Our loan book in this segment rose 33% year-on-year to over INR 7,000 crores. Our MPF market share is close to 6.5% and is expected to improve going forward. Our broking business continues to retain its leadership position as a full-service broker amongst non-bank players. We are the largest broker in the cash segment on revenue market share in non-bank segment. Our overall retail broking market share, including commodities, stood at 7.6% in the first quarter, led by market share gains in F&O premium segment from 7% last quarter to 7.6% in the current quarter. Our cash market share has been stable during this period. We expect our ADTO market share to improve as the global uncertainty subsides, as we have witnessed historically. The distribution lending book will continue to drive growth and increase its share in the overall group's ARR revenue pie. Turning now to the capital markets business comprising of institutional equities and investment banking. Despite challenging market conditions, our investment banking business has successfully completed 11 deals during the quarter, raising over INR 10,000 crores, and our fee income delivered a strong 48% revenue growth quarter-on-quarter to INR 68 crores. We are now ranked number two in the capital markets league table for IPO and QIP. With a $5 trillion market cap of India and growing, there is a base level of IB activity that the markets will see every year, and our IB has built a strong franchise to benefit from this. In institutional equities business, we are continuously increasing the coverage. We released 20 initiations during the quarter, taking our coverage to 384 stocks. Our stated intent is to take this up to 500 numbers. We believe that our capital markets franchise is strong and diversified with products including QIPs, IPOs, advisory business, and we have a few more legs to cover there. Our size per deal is materially higher than in the past, and with a strong pipeline, we are poised to benefit from any market revival. Turning to the housing finance business, our disbursements grew by 64% year-on-year to INR 646 crores. AUM grew by 23% to INR 6,164 crores. We expect housing finance business to continue to witness strong growth in the next two to three years. Business has a strong capital adequacy ratio, very low leverage, giving us enough growth levers without any need for further capital infusion. Turning to our treasury book, it grew by 22% year-on-year to INR 10,482 crores. The longer-term compounded growth of this book has been 41%, led by strong IRRs and the investment of operating profits after paying dividends. To conclude, the rise in wealth to over INR 100 trillion, combined with financialization of savings and powerful tailwinds in the rising weight of capital market sector within the Indian market cap. This is an important tailwind for the group. In this space, MOFSL's decadal track record of 33% operating profit growth and average ROE of 23% delivered entirely through internal accruals, no dilution, rising market share in multiple businesses, entering promising adjacencies in each of our businesses, rising share of annuity revenues to 66%, and importantly, improving quality and predictability of our overall profits driven by asset management and private wealth business all augur well for us. With regulatory headwinds in the base, particularly for the wealth management business, given the regulatory changes, continued resilience shown by Indian investors, we believe makes the future outlook promising. With this, I'll conclude my opening remarks and open the floor for Q&A. Thank you. We will now begin with the question- and- answer session. Anyone who wishes to ask a question may press star and one on their 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 comes from the line of Sagar Jethwani with PhillipCapital PMS. Please go ahead. Yeah. Thanks for the opportunity and congratulations on a good show given the current environment. Your first question on the wealth management segment, your distribution assets and broking assets have increased by 13% and 7% respectively. On the other hand, distribution revenues have fallen by 50% Y-o-Y. What went wrong here? Could you please explain? As we've discussed in the wealth management business, we had a high base of TBR last year, in the first quarter particularly. We've highlighted that we have quarter-on-quarter volatility in this number. The subsequent three quarters will be far more muted as far as TBR is concerned there. You will see the distribution income tracking back to growth in line with the distribution assets. Higher share of TBR led by unlisted revenues is what caused this decline. Part of the Private Wealth business decline in 1Q in TBR is also led by exactly the same factor. Much as in both the businesses, the wealth management business and the Private Wealth business, we have had rather strong growth in the ARR revenues, which I shared in my opening remarks. Yeah. In HFC business, the credit costs have seen a sharp increase on a quarter-on-quarter basis from 10 basis points to 1% now. What led to that? Yeah. See, credit cost overall for the year last year was 0.5%. If you look at overall our GNPA, NNPA, year-over-year they are down. Sequentially, in Q1, generally 1+, 30 +, 90+ numbers are marginally up, and that is the reason you will see Q1 numbers. Always the credit cost will be higher, but it course corrects during the course of the entire financial year. Asset quality has been at the supreme, because if you see quarter one, last year's GNPA was 1.4% and this year is at 1.1%. The delta is only because of the relative increase from quarter four to quarter one of this financial year. What sort of cost of borrowing reduction can we expect from the rating upgrade? Yeah. Overall, if you see, there are two forms of borrowings. One is from the capital markets that we borrow, and one is on the bank side that we borrow. On the capital market side, our spreads have come down relating to the AAA and they were earlier at 75 basis points. Now relative to the AAA, we are at about 30 basis spread-35 basis spreads. Even our bank borrowings cost has come down if you look at last 12 months of our journey. With the overall recent upgrade from CRISIL, we further expect cost to rationalize by 15 basis points-20 basis points over the course of next 12-18 months, given our AA+ rating. Yeah. Yeah, thanks for that. In the July month, the volatility has again increased. Could you comment on how the treasury book performance is as we speak? Actually, this month is still not over. A lot can change between the 24th of July today and the 30th of September. I think I would like to reiterate that the long-term compounded growth of 40% led 20% by IRR and the balance led by reinvestments of our opening PAT. This has been going on since March 2014 all the way till June 2026. You can slice and dice smaller time periods of five years, three years, et cetera, and you still get similar outcomes. That is what I'd like to guide you for. However, on a month-to-month basis or a week-to-week basis, these things could be quite volatile. Absolutely. We have the strong IPO pipeline going ahead. How do we see the capital market segment performing? Some thoughts on that for the rest of the year. Yeah, the pipeline is very, very strong. In fact, also this whole West Asian scenario keeps changing and is quite volatile. Are the signed mandates very substantial to show a strong growth on a year-on-year basis? The answer is yes. Also the business is now reconciled to not having a one clean runway of the whole year, but having pockets of two months or three months multiple times in a year, maybe two times, maybe three times in a year to be able to execute this signed mandate pipeline. Again, I'd like to guide you that pipeline is very strong. If there's a good window open in any quarter, you will see a lot of execution and hence a very strong growth. We saw a decent growth in 1Q also. However, if there's a quarter where there's no such window, this business for us and for the whole industry would be quite volatile for that quarter. If you ask me, FY 2027 as a year as a whole will see a growth, but on a quarter-on-quarter basis, really depends on whether execution happen on the back of the window, which is open or not. Lastly, the AMC and PWM PAT is up by 45% put together. Could you please give a split of both these segments? How much was the AMC PAT higher and PWM as well? PWM is flattish, is up by 2% on the back of the lower TBR as we've highlighted. All of the growth is led by the asset management businesses, which comprise of both the listed equities and the unlisted equities I'd just like to double-click on this. As you know, our average AUM last year was INR 1.57 lakh crores. We are tracking at nearly INR two lakh crores now. That is a base that is driving very strong growth coupled with operating leverage. Correct? I also highlighted that multiple funds are crossing the three-year vintage and they're best performing in their category, so that's a tailwind that is available to us. The SIP book will continue to build up so that's a tailwind. Importantly, as you may have seen from the third quarter of last year, the alternate business unlisted has also graduated now to having a lot of mature funds, and so the approved carry income has started to build up. That is showing up in the numerator, but not in the denominator because the income starts kicking in only from the October, November, December 2025, which is a 3Q FY 2026. Correct? That income will be higher this year's quarters and quarter-on-quarter it will be stable. I think even the alternates business AUM has grown strongly and the approved carry income has started kicking in. You have basically four or five factors which are all contributing to this abnormally high growth, which at least for the current year, we are hoping will continue. Yeah. Thanks for answering all my questions. I'll call back in the queue if there are any further questions. Thank you. Thank you. The next question comes from the line of Nidhesh with Investec. Please go ahead. Thanks for the opportunity, sir. The first question is on the wealth management business. There has been a regulatory change on prop trading from 1st of July. How are we seeing the impact of that change on our wealth management revenue and trading volumes? As of now, there is not much impact because of the prop changes because that is mainly impacting the prop brokers. From a liquidity perspective, it's very early time to say that is it impacting liquidity in a big way because of the volatility in the markets. As such, there is no impact for us on the overall business model except for the There is some change on the intraday funding part from the banks, which will have its minor impact. Otherwise, it's too early. What would be the share of prop traders in our wealth management business? No, we don't do prop. We mean to say that prop traders have that larger impact because of the 1st July change from RBI. It's not the impact for us, that's what I mean. Nidhesh, our entire treasury book is invested largely in our own funds and very small part in direct equity. Okay? We don't engage in the prop trading of this, the one which is impacted due to the regulatory changes. We have zero impact. Within our broking business, obviously, we have no revenues coming in from that. This is an impact for the overall market volumes and hence for the exchanges, but not for broking players like Motilal Oswal. Sure. Helpful. Secondly, in the alternate business there has been a soft net flows for this quarter. What is the reason for that? Any front closure that have happened this quarter which has led to outflows? What is driving that and how should we build net flows in alternates business for the full- year? Hi, Prateek here. Alternates business itself had a tough quarter given the overall geopolitical scenario which existed in this quarter. If we just put ourselves in the shoes of a ultra HNI and think about what is going on in the head, it has been a soft quarter. Except for, I think one player who continued to do well from the trough. I think everybody else consolidated. Our gross inflows were amongst the highest in the street. Because of the AUM that has been collected, we are tracking INR 35,000 plus on the alternate side, assume some amount of normal redemptions. The net has been negative for the quarter. As we speak from this month, actually we are tracking net positive. Nidhesh, if I can add two more points to what Prateek highlighted. First is that the performance of the products are exceptionally good, that is not an issue at all. From a market perspective, as you may have also observed, there's a whole plethora of structured debt, private credit, real assets, special opportunities type of funds and that has taken up a lot of the alternates allocation by private banks, by family offices, by HNI clients. I think that is what has also happened in this quarter because of which, as Prateek highlighted, barring one player, no other player has seen any significant inflows. In terms of the gross sales, we continue to be among the top players in the alternate space. Sure. Are there any funds launch plan through the year? On the alternate business? On alternate side. On the listed equities, we don't really believe in proliferation of products. I think the headroom in our existing product itself is very large according to us. As far as the overall market is concerned, I highlighted to you that a whole variety of products on the credit side are coming up. You are aware that this quarter also, if you look at the alternates business overall, we had a net INR 800 crore flow on account of our private credit fund, Nidhesh. That credit fund will continue to see the residual flows in this second quarter. We already got the regulatory approval for our commercial real estate fund launch, and that should happen in the second half as I guided. Basically, in market there is flows in credit products. We are seeing strong flows in our own credit product in 1Q. That we think will continue in the residual nine months. We are also hopeful of the listed equity side alternates seeing flows in the coming quarter. Sure. Have you booked any carry income in AMC this quarter? What is the expected quantum that we're likely to book through the year in terms of carry income in AMC? We have not. Booked any. booked any carry income which is meaningful. There must be some very rounding off error. We have carry income on our products. I think in 2Q or 3Q, you may see us report some number there. It's not something that I'd like to call out because it's also a function of the markets also. Yeah. Sure. Last question is on Private Wealth. There also, ARR net flows have been a bit soft this quarter. I think on a quarter-on-quarter basis, there is a meaningful decline. YOY, I think the net flows are okay, but on a quarter-on-quarter basis, there is a bit of a decline in the Private Wealth business. Yeah. If you look at the net flows over a period of time, they've been quite strong. We've doubled the net flows over the last three years, from INR 10,000 crore to INR 20,000 crore. Quarter-on-quarter, the flows tend to be a bit more volatile because the preferences of clients in terms of allocation changes. What we've seen is we've seen more flows into direct fixed income kind of assets this quarter. These things tend to even out over the year because if you see Y-o-Y Q1 versus Q1, we have seen strong growth in net flows. However, the allocations have gone more in fixed income in this quarter and hence you will see the ARR flows being weak, but these things tend to even out over the course of the year. Nidhesh, if you clarify once again on the carry income question. My carry income question that I answered was on listed equities. On unlisted equities, if that was your question, the number is INR 66 crore accrued carry income for this quarter. This number will continue to recur at a similar level for the next three quarters and for the next year also, and going forward from here also because there's a whole pipeline of products which will keep advancing and coming closer to maturity. Sure. Just one last question on private wealth again. There, actually, your TBR has been a bit volatile. What we have seen, some of the peers have built a TBR which is slightly more stable now, more granular. How are we planning to build a much less volatile TBR? If you can give some color on TBR, what is the composition of TBR in terms of unlisted shares, listed shares, structure, direct deal, etc.? TBR is led by transaction flows. Again, like I mentioned, the preferences also keep changing in terms of asset class. Last year we had very strong sourcing in unlisted equity. However, what we are seeing this year is we are seeing very strong flows into fixed income as an asset class. Over the course of the year, you will see this even out and we see volumes also compensating for the high base that we had last year. Sure, sir. Thank you. That's it from my side. Nidhesh, from equities-led TBR, you will see fixed income and equities balancing out and that should lend more stability to this. As you know that last few years have seen a very strong trend in unlisted paper book credit and equity. That is what is there in the base of the first quarter last year. Also, the strong growth in ARR revenues gives us the air cover whilst we build up the transaction flows. If you see the growth in ARR, it's almost 42% Y-o-Y and 46% in the net interest income as well. Yeah. Thank you, sir. That's it from my side. The next question comes from the line of Umang Shah with Kotak Mutual Fund. Please go ahead. Yeah. Good afternoon and thanks for taking my question. I have a couple of them. One is related to what Nidhesh was. Yeah. Am I audible? Hello? Hello, sir. Can you hear us? Umang, you are audible. One moment please. Yeah. Ladies and gentlemen, the line for the management has dropped. Please stay connected while I get them reconnected. Thank you. Ladies and gentlemen, thank you for your patience. The management line has been reconnected. Umang, you may go ahead with your question. Yeah. Hi. Thanks for taking my question. Congrats on a good quarter. My question is somewhat related to what Nidhesh was asking on the alternates business. In terms of the carry income booking, I can see that there are a few funds, both on private equity and real estate side, which are likely to get exited in FY 2027. Our carry income assumptions are contingent upon the fact that exits get completed in FY 2027, or if at all, let's say if there is any delay because of market conditions, then there could be a spillover in FY 2028? These assumptions, Umang, have been made on a conservative basis, factoring in delays. The run rate that I articulated, we booked INR 66 crores this quarter. We will likely have similar numbers for all of the quarters of this year and also for the next year. Yeah. Umang, only 70% of the fair value has been recognized. Already we are more conservative. That 30% is recognized only on realization. Yeah. Oh, okay. Understood. From a growth perspective as well, obviously there are a few exits, and there are a few funds in the pipeline as well. On a net basis, we should not see any lumpiness in terms of AUM, right? I mean, we should be able to still deliver reasonable net sales numbers for the year. There is a likelihood that there could be some lumpiness for FY 2027-2028? Are you talking about the alternates unlisted net sales? Yeah. I mean, overall. I can see there are a couple of real estate funds which are also likely to exit this year. Because of a series of new products that we will launch, Umang, the overall income, ARR income of the unlisted alternates business on a year-on-year basis will continue to rise. Right? Whatever number you've seen last year, this year's number would be higher and the next year. Because as you are aware, the private credit fund will see the final closure in the 2Q. The commercial credit fund will be launched after that. Then we have a series of products to be launched even after that. The AUMs keep rising, point 1. Point 2, for the same product the subsequent series is always a higher AUM. If there's an outgoing AUM of the previous fund, there will be an incoming AUM which is larger of the next fund. Unlike in listed alternates, Umang, in unlisted alternates you book fees or you report fees on the amount raised, not on mark-to-market. Understood. We would like to guide that there should be a steady rise in both the fee income as well as the accrued carry income for this business. Understood. This is quite helpful. For the mutual fund business as well, last few years we have seen fair amount of additions in the team as well as on the product side. How does the product pipeline look over next 12 to 18 months, in terms of new scheme launches? Are there any more additions to the team required, or we are pretty much done with people hiring? Okay. In terms of mutual fund side, you should expect to see on the passive side, we would continue to populate our offerings. On the active side, there would be fewer, but still over the next 12 months, one should expect four to five new offers from our side. The big thing to focus on the AMC is that over the December to January quarter, we have two large positions, the small- and the large- cap funds, which will complete three years. As we know, it comes into the tracking of more distributors, more wealth platforms after three years, which we believe should help flows. After that, in three months, a multi-cap category, which is again a mainline category, will come into the focus. Lots to look forward to from existing funds only over the next period starting December, while we will continue to populate the active side also, but fewer. Like it was told in the initial comments, the coverage that we have today is 87% of the active fund listings. The positions left are few. Umang, just to summarize, NFOs will be a far smaller contributor, but the vintage products which are performing well, we have a bigger hope of a large growth there. In terms of team addition, yes, we keep adding. As we are launching more funds, we will need more hands. There is no vacancy to fill, but opportunistically as well as from a longer-term perspective, we are looking to strengthen both the fund manager base as well as the research team on the active side as well as the passive side. Understood. My last question is on the SIP flows now. I do see that there has been fair amount of improvement in the net sales numbers. However, for SIP, our market shares have remained range-bound this quarter, in fact, not just for yourself but for most of your peers as well. We have seen a little sort of a mixed performance on the SIP front. Just wanted to understand, how has been your experience when it comes to investors? Is it some sort of a fatigue which is catching up? Or going forward, will it be more driven by returns? Specifically for Motilal Oswal, is there a scope for market share improvement, especially on the SIP side? Yeah. We saw very strong market share improvement in SIPs. We tracked over INR 1,450 crores at our peak. Today, we are INR 1,360-plus crores a month. Our market share on SIPs is significantly higher than our AUM market shares. Yeah. It has been led by primarily one and a half fund, I keep saying this, mid-cap fund and to some extent, LMC. Of course, passives also. Now, as our other categories, especially small- cap, completes three years, at least we expect SIP flows to pick up in that category also, taking up our overall market shares. Understood. Okay. As far as the fatigue in the industry is concerned, there are times when you see a spell of 6 to 12 months when there's strong growth, particularly when trailing 12-month returns look very exciting. Times like this, where the trailing 12-month returns don't look that exciting, you do have stagnation. I would say, is there a long-term fatigue in this? The answer is no. There are spells when you have strong growth and spells when you have flattish numbers. Good news is that we're not seeing any meaningful contraction as an industry in this number. Mm-hmm. Right. Perfect. I think this is helpful. Thank you so much, and wish you all the best. Thank you. Thanks, Umang. The next question comes from the line of Neeraj Toshniwal with UBS. Please go ahead. Yeah. Hi, team. Congrats on a good set. My question, first on wealth management, I know distribution, I think you've done a good job here steadily increasing the distribution book. How should one think about the yield that's gone up? The lending is obviously increasing across the board for the industry as well for you guys. How should one think about the distribution piece going forward, and how the mix is changing with that the yields are also improving? Yeah, the focus on distribution has been there for the last three, four years, we have got a dedicated team now in place. At the same time, if you look at the overall penetration, it's still very low compared to the overall transaction-related client base, which we have got. We have got a dedicated team across the channels who are working on the distribution across all our client network. We see that this will keep on building up from here across the ARR products where you have the consistent trail revenue, and there will be some amount of products on the other front side also. As far as the yields are concerned on the trail yields, the yields are stable at around 70 basis points. Okay. This is helpful. Second question is on capital markets. I think employee cost has been fairly low from last two quarters. Is this the stable trend it or we can assume that with the activity picking up, there could be some increase here because it has been fairly low. Yeah. That is linked to the revenues. Quarter four, quarter one of this year, if you look at the overall revenue spike has been fairly a bit volatile. The people cost, the variable component actually goes down because the fixed cost remains constant. That is one of the reason you will see a bit of volatility in the people cost on account of the actual cost is volatile because of the lower variable cost which is there. Neeraj, you would have understood the variable component in the employee cost in that business is higher, and so if you look at the cost-to-income ratio, that's probably more stable. If you look at the absolute number, it will vary depending on how much top line is coming through. Got it. That is helpful. The other bit was, I think already it has been debated in the call. On the flow side, just wanted some more color on the private wealth and also on the AMC. I think AMC, we have kind of stabilized within the MF side. As you're mentioning that there's couple of closing of three years of the timelines are there for some schemes. We might see some improvement there. How should one think about the flow trajectory? Any guidance in terms of flows, in terms of opening AUM across the board within AMC and within private wealth? That's a tough one. Period- by- period, we have been tracking higher than our AUM market share in terms of net flows. As our large new provisions complete three years, that should increase is what we think. The second manner of thinking is, if the net flows in the industry are lower than SIP flows, then it constrains a younger AMC like us. We have noticed if the net flows in the industry are more than SIP flows, and of course, if the performance looks competitive, the impact on net flows on us is more positive. It is quite a few variables which are there, which need to interact for the net number to happen. Lastly, our digital flows continue to track stronger. There we continue to maintain or increase market share. Digital itself is increasing market share amongst all channels in the industry. In some sense, we believe chances of us sustaining a better than industry growth rate, better than our AUM market share on net flows is a very good possibility. To quantify, do we have digital market share as of now and maybe a year back? We would have- Try to take that offside also. We would have increased by 60 basis over. The year before was very strong for us because that was our peak year. From our peak, in our peak, we were getting double-digit market share. From there, we are today just about 4%. Our net flow market share versus our peak has declined. Versus our AUM market share has continued to be higher all through. In terms of what we do on a month, we are between INR 700 crores and INR 1,200 crores net on active equities. Got it. This is helpful and wishing the team all the best. Thank you. The next question comes from the line of Neha with Abacus Investment Managers. Please go ahead. Hi. Thank you. Most of my questions have been answered. Just one question on the expenses side. If you could please explain why the employee expenses have increased substantially this quarter. Quarter-on-quarter, there is an increase of 16%. Is there any one-off that is coming? See, quarter-on-quarter increase relates to the annual performance appraisal cycle which has been closed and the increment which is actually effective from 1st of April of this financial year. Most of the portion of the increase is on account of the cost increment on the people side. on a year-on-year basis, it's headcount led. sir, specifically for the AMC business also, the number has increased almost 2x. is that because of the same reason? In AMC in quarter four, there was a reversal of an ESOP line item and that is one of the reason where because the cost of about INR 24 crore absolute amount was reversed. To that extent, the cost has been If you compare the current quarter is a normalized cost versus last quarter reversal. that is why sequentially to that extent also it will look higher. The number that we have seen in Q1 will be the normalized number going forward. That's right. Not just for AMC but also for the group. Got it. Okay. Sir, just lastly on the PBT margins. If you can just share some view on where do we see that going forward. I think last year it was about 52.5%. Where do we see that? And if the incremental increase will come, which would be the segments that will drive the expansion going forward? If you look at historically our last few years of our margins have been around the range of 50%-52% margins. Quarter one of this year is also around 52%. We expect historically the margins that have had to sustain over the course of the current financial year. Even bulk of our costs are variable. Just to give an example, in our wealth management business almost 70% of the costs are variable. To that extent, the ability to control our margins because of the variable cost is also strong. Understood, sir. Okay. That's it from myself, sir. Thank you. Thank you. The next question comes from the line of Dipanjan Ghosh with Citigroup. Please go ahead. Hi. Good morning, everyone. First two questions on the wealth management side or at the overall wealth piece. I think in your presentation you mentioned that the cross-sell ratio is around 18%. There are two sub-parts to this question. One is I wanted to understand, do you include, let's say if a customer is doing broking and let's say MPF utilizing MPF also, would you include that as a cross-sell? Or is it like when the customer purchase any distributed products or mutual funds or PMS, then you kind of consider it as cross-sell? I just wanted to understand the definition. Second, in terms of this 18%, let's say going to 20%- 30%, the other way to look at it is probably trying to understand the share of broking revenues from, let's say the top 20% customer or the top 30% customers. If you can give some color on that so that we can understand how much this 18% can increase to. The second question is on the MPF book. I think similar to the industry, you have also witnessed a strong increase in that book. Just in terms of adoption rates or hit rates amongst your existing customer base, can you give some color on how much this book can further grow in terms of adoption amongst existing customer base? Those were my two questions on the wealth side. I have one question on the capital markets business, if you can give the IB pipeline for the next 12 months. Dipanjan, if you can hold on to your question. Let us answer so many. We will forget. There is too many questions. Let us first answer these. Sure. On the first part there, whether MPF is considered as part of the distribution, no, it is not considered. This 18% is without considering MPF. We only consider asset products which are being sold as part of the distribution network. Right. Your second question was regarding the MPF book growth, right? Correct. That as you understand it's in the industry standards. We are growing and the potential to grow for us is much higher because as you always know, we have been always into this advisory and HNI business and high quality clients and our ARPU has always been higher. To that extent, the penetration we see that there is a good scope to penetrate further in the MPF book at overall levels. We see that this can be a good growth potential going forward. Sorry. Just one small follow-up. Any quantification on the current hit rates amongst your existing cash customer base from an MPF perspective? Hit rate means in the sense of penetration? Yes. I mean, let's say how much of your cash customers would be utilizing MPF as a product? I do not have this number immediately in hand but we can share it. I think it will be around in the range of 18%. Got it. On the MPF side, we have very healthy yields and spreads because if you look at even our cost of fund trajectory and our overall low leverage that also gives us more delta in the P&L. While book has grown 54% Y-o-Y and the average book has also started catching up, which will result in delta on the absolute growth as well as on the improvement in the spreads in the book. Got it. Fair enough. On the capital market business, any color on the pipeline from IB revenues over the next 12 months now that primary markets are kind of improving a little bit? I answered that earlier, I'll repeat. Basically, the signed mandate pipeline is quite strong. This quarter we reported a strong growth as well. Markets have been quite volatile because of the valuation scenario. If we get a few windows of deals happening, then I think our segment pipeline is quite substantial for us to be clocking revenues. I would guess that there's a high probability that we should show a reasonable growth in this business on a year-on-year basis. Okay. Probably, if things go one way down, deals are not happening, it's all contingent on execution. It's not contingent on pipeline. Pipeline is there. Fair enough. Just two small questions on the private wealth business. One is, if I look at your recurring assets on the private wealth business, it looks like the closing AUM is meaningfully higher than the average AUM. I mean, compared to even the industry numbers for AUMs of mutual fund industry or something like that as a proxy. Is it like the flows were more back-ended or is it a function of the asset mix in that particular distribution and recurring basket? Some color on that would be useful. The divergence between closing AUM and average AUM on the recurring side. Second, in your Private Wealth also, loan book is growing quite fast. I mean, we don't get color on the book, whether it's MTF, LAS, lease of financing. Yes, some color on that would also be helpful. The Private Wealth business, as you can see, is a breakup of custody assets, ARR, as well as TBR assets. The ARR assets have been going up quite steadily. What happens is sometimes when we get a transfer in our DP or some promoter assets, the overall AUM tends to get bumped up, but the ARR AUMs are more steady in nature. If you see sequentially, they've been going up gradually. Even on the question around the closing AUM to average AUM. Closing AUM on the ARR side is up 40% and the average AUM is up 36%. It's largely in line. There's not much of back-ended thing. The absolute number itself is strong because the base is small still. We've added a lot of RMs. They are getting productive. We would like to see this number continuing to grow strongly at similar rates in the future also from this angle. Sir, the loan book mix in the private wealth business. This would be all related to MTF meaningfully. The non-MTF part LAS book would be also included in that number. Again, very under indexed if you compare ourselves with the other private wealth players. It's a very tiny book as of now, the headroom to grow there and hence NII forming a part of the recurring revenue base to be greater is a lot and I think that is something that you should see happening over the next two to three years time, including March 2027 and March 2028. Got it. Thank you everyone, all the best. Thank you. The next question comes from the line of Mohit Mangal with Centrum. Please go ahead. Good afternoon, thanks for the opportunity. My first question is specifically towards the private wealth management. I think we have seen a steady growth in net flows. Two questions over there that, first is basically have you seen any increase in the wallet size of existing clients? Second is if you can throw some color on basically the net flows of existing versus new clients, that would be helpful. If you see even the wallet size per customer steadily moved up. We are now closer to INR 25 crores and even the AUM per banker is now closer to INR 550 crores. That number is steadily moved up. Your second question was on? Sorry, could you repeat your second question? Could you repeat your second question? Mohit, can you hear us? Yeah. Typically, the flows from newer customers in any year would be around 20% and 80% is basically deepening from existing customers. Does that answer your question, Mohit? Yeah. Am I audible? Yes, you are now. Now you are. My second question is towards the RM counts. We have seen about 25% increase in the overall RM to 441. You also said that the productivity has also improved for RMs. Are we going to go that aggressive on hiring RMs or are we going to slow down on that? No. Last year, obviously, there was a meaningful step up. This year, the composition of RM additions will be fewer in numbers but much higher in cost, targeted at the family offices. The cost increase will continue to be there, but head count increase will be lesser in FY 2027 compared to FY 2026. Understood. My last question is basically on the breakeven. I just wanted to know, basically, a typical RM, how much time does it take to breakeven, and do you also face any attrition issues in that aspect? Typically, bankers at an aggregate level breakeven around two to three years. However, what we are seeing, which is quite encouraging, is some of the senior bankers that we are hiring are breaking even much faster. I guess that's also the function of the kind of platform that we have, because the platform enables the bankers to breakeven much faster than what normally happens. Okay. Understood. That's all from my side. Thanks, wish you all the best. Thank you. The next question comes from the line of Saket Mehrotra with Tusk Investments. Please go ahead. Hi. Thanks for the opportunity. I have a question on your data book. See, for private wealth this quarter, we are reporting INR 157 crores as ARR, and the distribution is INR 110 crores. Last year, ARR was INR 111 crores and distribution was INR 166 crores. I'm just trying to understand what is the bridge between the two. Would be very helpful to understand that. Yeah. The bridge between the two is actually the net interest income on the lending book is at INR 4,200 crore, and earned on that is the bridge because NI is also part of the ARR. Okay. Your net interest income this quarter was INR 91. That's it. You're saying some part of that is ARR and some part is transactional? The entire NII is ARR. There is no transactional in NII. Okay. Within distribution, there is some element of transactional? That's right. Yeah. Okay. The second question I have is in your AMC reporting. There's a line on variable additional returns. How does one read into it? Is this the carried interest of your AIF investments or like I'm sorry, I'm not aware of how this number should be read. Could you just help me understand that? Yeah. This is not pertaining to the listed equities AIF. This is pertaining to the private equity, unlisted equities, resi credit, going forward there will be private credit. This is a globally accepted practice followed by Blackstone to everybody else. As funds mature, they start kicking in. It started kicking in for us from Q3 of FY 2026. It will gradually rise as Shali explained earlier that we consider only 70% of the fair value while reporting this number, so there is a buffer. We reported INR 66 crores this quarter. We expect similar numbers for the next three quarters, and a higher number for the next year. This is- Okay. -consistent and stable that you will see. Okay. This is a part of your ARR? Yes, that's a part of ARR. Okay. Thank you so much. Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. Shalibhadra Shah for the closing remarks. On behalf of Motilal Oswal Financial Services, I would like to thank every participant for attending the Q1 FY 2027 conference call. In case if there are any further questions, please do get in touch with our Investor Relations desk. Thank you, and have a good day. Thank you, sir. Ladies and gentlemen, on behalf of Motilal Oswal Financial Services, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.