Ladies and gentlemen, good day, and welcome to the Nuvama Wealth Management Limited Q1 FY 2027 Earnings Conference Call. As a reminder, all participant lines will remain 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 the operator by pressing star then zero on your touchtone telephone. Please note that this conference is being recorded. I will now hand the conference over to Mr. Ashish Kehair, Managing Director and CEO, for opening remarks. Thank you, and over to you, sir. Thank you. Thank you so much. Good afternoon, everyone and a very warm welcome to all of you for joining us today. As always, it's a pleasure to connect with you all. Joining me today on the call is Bharat, our Group Chief Financial Officer, along with our investor relations advisor, SGA. We'll begin with a brief overview of our performance for the quarter. Once I'm done, Bharat takes over. Once both of us are done, we can quickly jump to take your questions. Just a quick summary. I think it was a strong beginning for us this year delivering record quarterly profits and a healthy all-around performance across all our businesses. This was also reflected in a significant milestone for us this quarter. Client assets crossed INR 5 lakh crores. Our quarterly revenues crossed INR 900 crores, and our quarterly PAT crossed INR 300 crores, an all-time high for us. ROE still stands near 30% and remains to be one of the best in the industry. Before I discuss our business performance, let me just share some quick observations on how the industry is evolving and how we see the opportunity ahead. I think I've said some of these before. So, I'll be brief. Some of you may find it repetitive, I think nevertheless, it merits a discussion. Firstly, I think the value of full platform models is becoming increasingly evident. Across the industry you'll witness that if someone is a standalone wealth manager or asset manager, they are trying to build capital market capabilities, while the traditional capital market broking investment banking firms are clearly seeking to strengthen their wealth franchise. I think that convergence is clearly visible across the market now, which we've been talking about for five, six years, that this is inevitable, this is going to happen. Second, I think independent wealth management, as a cluster is becoming an emerging powerful force. A lot of new entrants are coming into this business, whether it's banks bringing focus back or private equity-funded players. A lot of action you're seeing in this segment. Third, I think in addition to ultra-high-net-worth, which of course has been mainstream for quite some time now, the affluent and HNI segment is also emerging as a very attractive opportunity. It's extremely large. It's growing. It's omnipresent across the country, and it remains structurally underserved, and it remains difficult to serve. It's not a very easy segment to crack. It takes time. It is an attractive opportunity. Lastly, I think it merits to say that technology, and more so generative AI is playing a very transformative role. I don't know how it is going to evolve in the next four or five years, but I think it is definitely going to bring in lots of efficiency for everybody. Some may be slightly ahead in the curve, like it happens in any technology innovation. Initially, it is always non-mainstream a few people do it and in two, three years it becomes mainstream. It becomes par for course. It becomes hygiene. Most of the players have it. I don't think people need to panic about it. We are investing around it. We are investing heavily. I think it'll benefit most of the industry because it will bring efficiency in every part of the value chain which we deal with. With that context, let me now quickly share a few highlights across our businesses, starting with Nuvama Wealth. I think we took a call long back that putting the power of choice in the hands of the client is a central differentiator to us, and this is what this business represents. Our MPIS model is a strong reflection of this philosophy. The platform empowers clients to define their objectives and access to investment solutions across the board. It's not narrow. It doesn't confine the clients to choose from only one or two categories. It keeps it open because we understand that every client is unique and their needs are unique, and it can be fulfilled through the wide range of solutions available. Revenue from MPIS grew by about 20% year-on-year. Net new money, one of the highest quarters ever. We crossed INR 3,000 crores in this, overall assets also increased about 32% year-on-year, hitting INR 42,500 crores. I think one of the interesting observations which we are seeing that tier 2 and beyond is expanding faster. I think now it has started contributing to more than 35% and growing even in the MPIS segment. Second, I think the success in this model ultimately is driven by the quality of advice which gets delivered to the client. To support this, we continue to invest in our talent ecosystem, which begins by hiring the right cohort. The right seniority. As I mentioned last time, we are doing a seniorization of the entire team. We added 40 more net relationship managers in that cohort this quarter. Third, to continue my discussion on tech, we are deliberate and intentional in investing in technology and AI across the value chain and this business, I think, will get the most of it. We've introduced concepts like Nuggets. This is an AI-based chatbot which services RMs and our external wealth managers. We have something called RM Buddy, which is a voice-enabled AI assistant for supervisors and RMs to manage their whole life cycle client book, and gives personalized insights to them as to how they can improve their performance. We have a customer profiler, which is now completely AI-based. We've done a POC with about 200 people, and we'll roll out to the full team very soon. I think all this has led to significant productivity jump across NPI's both revenue, net new money assets. We have seen more than 25% jump per RM year-on-year, overall revenue jump of about 17% per RM year-on-year. Lastly, on lending, we continue to scale the book. We had mentioned a few quarters back that the growth of the book will be in line with the overall business. The book has now crossed INR 5,000 crore lending book, NII growth was also about 12% Q1, Q. It remains at about 20%-22% of our overall revenues in this business. Moving on to Nuvama Private. First and foremost RM addition. I think I mentioned last time that this segment is seeing some intense competition. It's not that it was not there earlier, but I think it's become more heightened now and I shared my views around it last time. I keep telling my colleagues that it's a good thing that we keep struggling for RMs because it actually shows the hypothesis that the growth is intact in the industry. We made a bet long back, and I think it's paying out now. Against this backdrop, we are happy to state that we've added about 11% of our force in the last one year. And, we've added about six to eight RMs in the last quarter. I think we offer one of the most comprehensive platforms for seasoned RMs in the industry. Across the entire solution spectrum, it basically allows them to serve their clients in the best possible way and also gives immense opportunity to create wealth for themselves. During the quarter, we expanded our presence both in tier 1 and emerging wealth markets, adding people across Mumbai, Chandigarh, Ahmedabad and Chennai. Moving to recurring revenue assets. We continue to see decent momentum there. Full year basis, the ARR assets grew by about 20% to INR 58,000 crore and net new money into managed accounts continued to remain strong at about INR 1,800 crore. Overall ARR flows this quarter was slightly soft on net basis at INR 1,000 crore because we are in the process of weeding out some extremely low-cost mandates which were acquired long back. These are historical mandates and we are in the process of cleaning them up. I think that number is a reflection of post that cleanup. Our target for the full year still remains at 20%-22% of the opening assets. We've launched an offering here for the super ultra HNI called Pinnacle. It's a very differentiated offering, bundling multiple things and delivering a lot of value proposition to the client. I think it'll help us in garnering more ARR assets here. Talking a bit about offshore. Our focus over the last 18 months has been to build the platform out, I think now we are seeing the delivery happen. We have two locations, Dubai and Singapore. Dubai we've already broken even, Singapore will break even by the end of this year. Overall revenue contribution from offshore will remain between 5%-7%, at least in this year. We are now in the process of ramping up capacity there. It is a highly accretive ROE business because lending in this business doesn't sit on our books. Any offshore lending sits in the books of our partners. Basically, there is no capital usage which happens. Once you break even, everything is straight addition to return on equity. I think overall offshore is becoming an important element, not only to serve clients outside, but also to deliver a holistic value proposition for clients in India. Clients in this segment and even in the HNI segment are in some sense becoming globally integrated citizens and allocations are moving out to global assets not rapidly, but I think slowly and steadily. Our view is that over a three, four year period, you will see maybe around 15%-20% allocation sitting in lot of client portfolios which have offshore assets and if you have a presence overseas, your ability to serve them becomes better. I don't think offshore any longer is a luxury. It's a necessity which every wealth manager will have to have. RM productivity here also continues to be strong. We've seen a jump of about 17%-20% year-on-year. Moving to asset management, let me start with commercial real estate. We successfully closed our first commercial real estate fund. It's branded as PRIME fund. We closed at around INR 4,000 crore. We had initially launched with a target of INR 3,000. We've completed deployment of around 40% across three to four marquee assets between Chennai, Delhi, Pune. We are on the verge of completing a few other transactions, the target is to deploy about 70% of the AUM in the next maybe two, three months, so that by end of Q3, we can launch the second fund, which we want to have around INR 4,000 -INR 5,000 crore again. Slightly different strategy from the current one, but in the same space. Eventually over the next 24 months, we are contemplating of looking at building a REIT platform because many of these assets which we are acquiring are real marquee assets and there is no point of selling it out completely. We can move into a REIT platform and have a source of permanent capital in this business. Moving to private equity. In the last call, I had mentioned we have done a change of leadership there. Under the new leadership, our single sole objective remains to complete the deployment of the old funds and start returning money, which we are now doing. From first fund, we've returned about 30% of the capital. Second fund, we've returned about 15% of the capital. We are in the process of raising our fourth fund. It's branded as Crossover 4. We've done about INR 300 crore to INR 350 crore. We are targeting anywhere between INR 700 crore to INR 1,000 crore there. Moving to private credit. Our CIO hiring was done last quarter. Now the team build out is happening. I think it may take another two and a half months to have a basic level of team in place. Again, middle to end of Q3, we will see the launch of our first private credit fund. I think private credit in some sense will have a multiplier effect on the transactional income or also the co-invest income for both the wealth businesses because credit offers significant co-investment opportunity and has a decent appetite across the client spectrum. Which right now we work with the external credit fund managers whose products we offer to our clients. In addition to that, we'll also start offering our own funds co-invest opportunity. Lastly, coming to public markets. I think there we've seen some amount of volatility given the performance and also due to the launch of SIFs which are clearly a more superior tax vehicle. We've seen some redemptions in our absolute return fund and our long-short fund. We have received the MF license. Are in the process of getting the SIF license and once our SIF is launched, hopefully we will be able to move the assets from this to that. On a overall P&L perspective on asset management, many of you have asked me in the past that when do you think it starts making money? I wanted to tell you that at a strategy level now, commercial real estate is making money. Private equity is also making money, and public markets is also making money. Because we are investing into new categories, which has a drag of one to two years, and we've taken an MF license, which needs a separate sort of team from front to back, I think that part of the investment will get over this year. Right now our cost run rate is between INR 30 -INR 33 crores a quarter. Our assessment is that it'll peak at INR 35, INR 36 crores a quarter. By the end of Q4, we will start seeing the revenue inching up with the launches of new products. This year we will end up at a cumulative loss of around INR 35, INR 40 crores and subsequent to that, you will see the path to breakeven start. With that, let me move to our next segment asset services. Momentum was extremely strong this quarter. There was a significant business growth of around 20% quarter-on-quarter. Average client assets have come back to Q1 level of last year when we had lost a very large client and retention rates continue to be strong. Just one word of caution. We have seen extraordinary level of growth here. I think over the coming few quarters, we are not expecting a quarter-on-quarter growth like this. There will be some amount of moderation as new client acquisition has happened and a lot of collateral is right now sitting in cash, which will get converted between cash and GSEC. We may see some level of moderation but on a full year basis, we are confident that revenue growth will be more than 20%, 25% here. We are also investing and building the proposition on this business. You are aware that business is divided into two segments, international and domestic. On the international side, I think some significant initiatives are being planned right now, which will start yielding results. Specifically, three areas of opportunities have been identified. One, subsequent to this STT coming on futures and all, single stock futures in GIFT have become a proposition where we are seeing few international International players wanting to start activity and are asking us to support them, which we will start. Commodities is becoming important for clients and you fundamentally can see right now the collateral of client is being used on Tuesdays and Thursdays because these are the two expiries. If we are able to onboard commodities, then Monday, Wednesday, Friday opens up. It gives significant amount of efficiency and improves the return on capital for our clients. I think that is where we are working on. The third area, which is also extremely important for us is trying to work on a global custodian, local custodian arrangement. We have a strategic partnership with a global custodian who doesn't have a presence in India, and we give them the India leg, which allows us to access client segments, which let's say most of the other global custodians which have a presence in India can access, which is long only funds and hedge funds. It's a new segment that will open up for us big time. On the domestic side, I think I mentioned in the past. We'll continue to progress on our RTA offering and trustee build-out. I think maybe another quarter or so. We should roll that out, and that hopefully will lead to a further increase in our market share in that segment. Lastly, coming to capital markets. I think the equity market environment remained broadly similar to what we witnessed in Q4. Primary market activity was very selective. The total number of IPOs which we saw in Q1 were eight as compared to 15 in Q4 and maybe 14, 15 last year. Even the total amount of fund raise fell by around 60%, 65% both against Q4 and last year Q1. Now we are seeing that activity come back and there is a lot of pent-up demand. A lot of documents have been filed. I think the balance nine months, hopefully we should see better activity there. On secondary market, the volumes have been steady. I think cash volumes have actually seen an uptick and derivatives have been rather flat. There is one key monitorable which basically on the new regulations which have come around derivatives, which is STT and on intra-day financing and bank guarantee collateral around these two. We've seen the numbers, we've run through the numbers. At least we don't feel that there's going to be a very significant impact, but we'll closely monitor on that. In the capital market side, I think one point which we wanted to highlight which numbers are actually showing. Our fixed income activity saw phenomenal activity in this quarter. Most of the jump actually on the investment banking side has come from fixed income, and there was significant amount of FPI activity in this quarter. Initially because they were selling as rupee was depreciating and there was hardening of yields. Towards the end of the quarter, they were buying as government made the capital gains on G-Sec tax-free. I think we participated wholeheartedly on both the sides and made significant amount of money. I think there is some amount of, I would say, income which may not be repeatable in the coming quarters. Maybe about INR 15 crore, INR 20 crore which we benefited in Q1. With that, I think I'll come to an end. I will hand over to Bharat to share the granular numbers. Over to you, Bharat. Thank you. Thank you, Ashish, and good afternoon, everyone, and a warm welcome to all the participants on the call. Ashish anyways covered the headline number. Just to repeat few headline numbers. We started this year on a strong note with a quarterly profit of INR 300 crore plus. Just to put this number in perspective, in FY 2022 full year, we did a profit of around INR 292 crore. After four years, in quarter one we have done a profit of around INR 300 crore, and that is also not coming from one or two business lines, it is across the business line. I think that says it all in terms of that the platform strength and the multi-business model is working fine for us. Along with that, the CRISIL has also upgraded our rating from a double A minus to double A stable. That has also been reflected because of the financial strength. Coming back to the Q1 specific numbers. We have actually crossed the INR 5 lakh crore mark on the client assets, and now the client assets should sit around INR 5,36,000 crore. Obviously, it is led by the strong net new money as well as the mark to market during the quarter. There is another milestone which we have achieved. If you look at Nuvama Wealth and Nuvama Private, we always talk about more on the NPI assets for Nuvama Wealth and ARR assets for Nuvama Private, or both put together has also crossed the INR 1 lakh crore mark. NPI assets stands at around INR 43,000 crore and ARR assets stands around INR 58,000 crore. This is a strong growth of around 32% and 21% respectively for both Nuvama Wealth and Nuvama Private. In terms of the net new money, again, this has been highest ever quarterly flows for us. Crossing INR 3,000 crore for Nuvama Wealth in the NPI asset sides. Even if you look at Nuvama Private ARR, as Ashish was referring to a low earning advisory kind of an AUM, which we have actually let it go. Our overall net new money on an ARR has actually been INR 1,800 crore for Q1 for Nuvama Private. That has been going fine. On the asset management side, we actually closed the PRIME fund at INR 4,000 crore. We actually initially launched it with a INR 3,000 crore target, but we actually ended up doing at INR 4,000 crore. We have got the SEBI mutual fund approval, as well as we have applied for our SIF license. Hopefully starting quarter three, quarter four, we will have a lot more strategies coming up in the market, and that will give that momentum to the asset management business. Coming to the overall revenue, our revenue was at INR 909 crore, which is an 18% growth. Within that, Nuvama Wealth grew by 19%, which is almost 50% of the revenue. Asset services, as we discussed, that has seen a very good number in quarter one of this year, around a 34% growth over the previous year at INR 260 crore. As Ashish also referred to, not that this will continue to grow at this kind of a number going forward. This will moderate to some extent, but that is where we are. It is a base effect. In terms of the capital market, our overall revenue number is flattish versus quarter one at around INR 180 crore. This is because the IE revenue has actually dropped compared to quarter one of last year because we had a large ES client which was sitting and helping in that business, which is not there in this case. Despite that, our total number is around INR 180 crore. As we discussed that on the IB side, it is the fixed income business which has actually done very good in this quarter. Again, this was led because there was an opportunity on the 7th of June when the government has actually made G-Sec interest income as well as capital gain tax-free and including there is no withholding tax. That led to a little bit more market-led opportunities for the firm market, and they obviously capitalized it because this was an opportunity. Maybe some part of this revenue may not repeat in quarter two and all. Having said that, fixed income is generally doing a pretty good job for us in terms of year-on-year growth, in terms of actually expanding to new client segments, new revenue sources. I think that's a pretty steady business doing well for us. On the cost side, you will see that the quarter one cost has actually gone up by 19%, and within that employee cost has increased by 17%, and OpEx is up by 24%. If I come to the employee cost in the 17%. We have actually added almost 5% net capacity, net people in over the last one year, and we have actually replaced our low-cost wealth RM with more senior experienced RMs. That is playing in. There is an annual increment and as well as the variable cost, which is linked to the business. The data book captures in terms of the fixed cost and variable cost increase over the previous year and previous quarter. That can give more insights to that. OpEx is actually up by 24%, but when compared to Q4, it is down by 4%. There are a few seasonal expenses which come in this quarter. They will be towards the marketing expenses, business promotion expenses. That will be around INR 10 crore. If I remove that, the OpEx would have grown by around 14%-15% kind of a number, which we've always been maintaining that will grow. Our OpEx to revenue has been steady at, say, 14%-15%. To that extent, it is okay with us. If you look at the overall full-year OpEx, I would imagine it will still be in the range of 15%-16% for the full year. Two-thirds will go to the typical business-related, inflation-related expenses, and one-third will be towards the new initiatives. There is one more update on the OpEx side, which I would like to highlight is that, we are looking for a new office because our current lease is coming for renewal. As you guys know that under Ind AS 116, when you do a lease accounting, there will always be some charge which comes up front, and then as the lease matures, it starts decreasing. As of now, we have not completely finalized anything, but we will keep the investor updated on this development and will provide further details during our quarterly results. This cost will be over and above what I have mentioned in terms of the usual OpEx growth for the firm. This will be there. Having said that, on a consolidated basis, our cost-to-income ratio is around 55%, maybe for the full year, this will remain around this level only. If you look at it from a cost perspective, there are three things which will play in. One is the operating leverage, which is coming in Nuvama Wealth and Nuvama Private. You would have noticed that Nuvama Wealth CI has actually dropped by 160 basis points. To that extent, these two businesses will start giving us operating leverage. Asset management, as Ashish was also saying, we are in the process of actually this year could be a peaked out in terms of our cost for the year, and subsequent to that, this will start coming down as a cost-to-income ratio. The third will be the capital market. Within that, asset services is pretty stable. I think within capital market, when you look at IE and IB. IE and IB, and within IB, it's mainly the ECM part. I think these two businesses are very much linked to the market activity, and hence on a quarter-on-quarter basis, you may see a cost-to-income ratio goes up and down. Having said that, on a full year basis, we still believe that it could be closer to 55%. Maybe a quarter can be a + 1%, a quarter maybe a - 1%. We are okay with that. Finally, if you look at our operating PAT, this is at INR 306 crore, which is a 16% growth year-on-year, our ROE is still close to 30%, which is a pretty, I would say, good number to have. That's where we are. Looking at the time, I will request the moderator to take the Q&A now. Thank you. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use their handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We take the first question from the line of Prayesh Jain from Motilal Oswal Financial Services Limited. Please go ahead. Yeah. Hi, everyone. Congrats on good set of numbers. Mostly on the private side, the cost to income is at 70%. We have been discussing that the overall wealth cost to income should tend towards 60%-62% in the near term, in the medium term. When how do you see this progressing, particularly on the private side? Wealth definitely is progressing towards that mark, on the private side it's still kind of elevated. What is the kind of RM addition that you're looking forward from here as well? Prayesh, Q1 actually should not form the basis. If you look at Q1 FY 2026 also, it was 69. Yeah. Q1 FY 2027 is 70. Overall profit growth delivered is about 22%. We also basically load the variable incentive in line with the revenue growth that happens. Full year basis last year was around 66. I think we will be lower than that this year. RM addition, essentially our desire always is to basically keep adding 15%-16% every year, provided the market allows us to do that at costs which are not upsetting to the overall business. Last 12 months, we've added about 11%, 15 RMs on a net basis. Even Q1, we've added around six. I think that will continue. That won't stop. Overall, as you rightly said, that 60%-62% medium term, that target also remains over the next three years. Got that. On the wealth side, the retention seems to have fallen from about 90 basis points to 85 basis points. What was the reason for that? Typically Q4, Q1, the one biggest phenomena in that business is insurance. Of course. In insurance, Q4 numbers are normally higher. For a lower denominator, you get higher income. There is a few bps uptick that happens. Second, in that business, we report the total yield. What happens that in a quarter when the equity market has high mark-to-market, positive mark-to-market, but your overall brokerage revenue doesn't go up in tandem, then there is a downward movement of yield. On the reverse, if there is a decline in Nifty and broader markets and your brokerage doesn't fall that much, there's the uptick in yield. That adjustment you'll have to keep in mind in line with the mark-to-market data. Got that. On the AMC, the yields have shot up significantly. Particularly if I look at your yields on the private market side. What kind of things have changed that kind of yield has gone up so much? If you see, Prayesh, last year after Q1, I think Q1 end or Q2, I don't remember, we had mentioned in the call that we will give a pause to the fees that we are charging on our venture debt fund. There was a change in the market condition and the yields in the market had fallen significantly and the riskiness in the deals had gone up significantly. We had slowed down the pace of deployment. We said in order to not disadvantage the investors in the fund, we will forego our fees, and we will start charging it next year. three quarters we did not charge, and Q1 we have restarted charging. Basically it's that difference only, nothing else. This should sustain now? Yeah. Yes. Unless we stop again, this will sustain. Okay. Last question on the capital market side, on the asset services. You mentioned that there should be some moderation and full year growth should be 20%-25%. In that sense, it will be more driven by yields and not by flows. Is that the right way to think? How should we think about- Yeah. That's right. Flows will continue. The yield will adjust because some amount of collateral may shift from cash to G-Sec. Ashish, just last point here. The cost to income hasn't dropped in the segment. Probably looking at the revenue growth, in previous quarter it was 40%, it's now at 39%. Any IE or IB which is putting the pressure? Otherwise, we would have expected much more significant improvement here. What should we think about full year cost to income in this segment? Similar range only because we've also provided for the variable cost in line with the revenue growth. Investment banking, at least the ECM side and a bit of IE has been under pressure, which I think as it comes out, there will be an improvement. I think overall full year basis, anywhere between 36%-40% range is what will remain here. Got that. Thank you, and all the best. Thank you. We take the next question from the line of Deepanjan from Goldman Sachs. Please go ahead. Hello. They've changed your name. I think they changed the name. Yeah. Deepanjan. Yes. Deepanjan Hu. I'll go ahead with my questions. First, in terms of Nuvama Private MPIS and Nuvama Wealth Management, basically the managed accounts and MPIS piece in both the businesses. I just wanted to get some color on the asset mix and the underlying product mix in these two segments and how that would have changed during this current geopolitical crisis, if there has been some change or if you can give some color on that. Second was, I think in the domestic asset servicing business, I think you mentioned that you'll be going live with RTA and trusteeship business which should kind of help gain market share. But if I were to think from medium to long-term perspective, I think in your IB, IE, some of the other segments you might be servicing some of the domestic mutual funds also. Any plans, let's say, the foreseeable future to kind of try to get into that large segment on the MS side in terms of cross-sell opportunity through your RTA. The third question is how should one think of the ESOP cost and dilution over the next two to three years? Yeah, those are my three questions. Asset mix, I don't think one or two quarters have significantly changed it, but broadly for us it remains in the managed account and managed products and ARR segment between 30%-35% would be equity and 65% will be non-equity. It's not fixed income. It will be fixed income plus alternatives like credit, real estate, infrastructure. Products that could deliver clients returns ranging from 7%-8%, right up to 18%-20%, but non-correlated with the equity market performance. People typically try to say that it's fixed income. It's not necessarily fixed income, it's yield, but the range is very wide depending on the product the clients have chosen. I think now some amount of comeback to equities we are starting to see once there is some adjustment in the AI trade globally and some good I think discussion around India is happening. Maybe in the next two quarters the proportion of equity may go up. On the RTA and trustee, both would be targeted towards the current client segments only, which is your PMS and AIF. I don't think right now we firmed up to go behind mutual funds because their banks still continue to have a better right to win because you need some form of balance sheet if they need intraday financing to manage redemption flows and all. We would not be superior. However, for products which are like arbitrage funds or products which are SIF which involve usage of derivatives or let's say categories where usage of derivative and efficiency of collateral becomes a more important paradigm for an AMC to improve the return delivery to their clients, we have a play. Categories which are vanilla, like long-only fixed income and equities, where intraday financing is the play we are not the preferred choice. I think it will remain like that. I think ESOP cost important question. Right now it's gone to shareholders for approval. It's not actually ESOP. It's stock appreciation rights, so SAR. I'll just explain the difference because it has a significant impact on dilution. Most of the companies in India do an ESOP which means if you do 1,000 units and if you grant 1,000 units and people exercise 1,000 units it's a dilution of 1,000 units. Whereas in SAR what happens if you grant 1,000 units, what finally the shares which are given to people who exercise it's only to the extent of profit. Now assume that if Nuvama price today is say hypothetically INR 1,500 or INR 1,800 and let's say average exercise of people is at hypothetically say double at INR 3,600 your dilution will become half. If it is, say 30% above the current price your dilution will become even lower whereas in ESOP the dilution is one to one the EPS loss to shareholders is significant. Our calculation is very simple. If the stock price appreciates by 20% every year for the next five years and people exercise one year after their vesting against a 7.5% pool our dilution will be 3%, so less than half. The cost to the company remains same as ESOP the option premium which will get recognized over the five year vesting period obviously it will be up-fronted more. The profit to the employee will be same as ESOP. The dilution to the shareholders is less than half. It's like a win-win for everybody. Cost for us is typically the premium cost is around 20%. If we grant, let's say if we end up granting options worth INR 1,500 crore or INR 2,000 crore cost order of magnitude is INR 300 crore to INR 400 crore over a five year period. Slightly heavier up-fronted because that's how the Ind AS costing structure flows down. It's a non-cash cost there is no cash outflow and you end up saving tax of 25%. Actually the cost is 75% of the premium cost. That's how it plays out. There's some bit more technicality here. Whenever the exercise happens, there is a perquisite value on which an employee gets taxed. Actually, companies have started claiming that perquisite also as cost, and you end up saving. If you're able to do that against the total cost of INR 400, our net cost will be INR 150 only over a five year period. That's the sum and substance of our ESOP plan. Got it. Thank you, sir, for the comprehensive answer. Just one small question on the wealth business. You have previously classified your Nuvama Wealth AUM between relationship manager-driven and external asset manager-driven. From a flow perspective in the ARR segment, since you categorically mentioned that a lot of flows are coming in from tier 2 and tier 3, is there any breakup that we could get maybe on a rolling basis between RM and EAM from an ARR flow perspective in the Nuvama Wealth segment? We'll have a look at it, and if we can incorporate, we will add it. It's broadly in a similar range as AUM right now. Got it. Thank you, sir, and all the best. Thank you. We take the next question from the line of Madhukar from JP Morgan. Please go ahead. Hi Ashish. Hi Bharat. Thank you for taking my question. You spoke about the external optionalities and the business that you want to create on that side. In particular, you spoke about the GIFT City option and second was making that margin line with you on the asset services side available for other exchanges. Specifically on the second option, can you elaborate a little bit as to what stage are we in this thinking process? Can this actually be done given certain restrictions on commodity exchanges? Where are we over here? And also how large can the opportunity be on the GIFT City's derivatives trading business over there? Any sort of guidance and additional color on this is what I would want to know. Thanks. I think, Madhukar, more clarity will evolve in the next two, three quarters, at least on the GIFT City, because as you know, it's right now premature because the cost structure in India has created this opportunity where there is no STT in GIFT City and there is an STT on the domestic exchange. For any derivative market to thrive, there has to be volume. Right now the volume is restricted to index. It's not in single stock. There are large participants globally who have approached us that they obviously run swap books globally, and those swap books can be hedged using If they trade between themselves also. I think that's how it'll start. Right now they want to work on a minimum commitment basis. That's how it starts, and I think then we will see how that build-out happens. It's a bit premature to talk about how the volume will evolve because we'll have to see how it goes. Commodities, on the other hand, the movement is faster. Whatever FPIs are allowed to do, some of our clients have already started doing. Specific numbers we'll come back in the next quarter, but I think as a rough cut assessment, what we were seeing, it can become at least 15%-20% of the equity market size for our relevant client segment, in that sense, the way it is evolving. The third one which I mentioned, which actually can become very large is the global custodian-local custodian tie-up. Right now we are precluded from targeting that client segment where global long onlys are investing into India. We are actually closely working with two, three large global custodians who have access to global long only, they lose out on their India mandates because they don't have any local presence. That's what we want to fill up so that they can pitch using our services and we get access to a new client segment. Got it. Got it, sir. Thank you and all the best. Thank you. We take the next question from the line of Sanketh Godha from Avendus Spark. Please go ahead. Yeah. Thank you for the opportunity. Ashish, is it fair to say that your private that is ultra HNI business. I just want to understand from you from industry point of view that more people choosing advisory over trail-based revenue is becoming a prominent factor, which honestly was there, but now you're feeling it to be happening more, and therefore if you take a call of not doing the business at lower yield is it fair to say that your heavy lifting of the incremental net flow numbers will be done more by mid-market or wealth segment and maybe [inaudible] segment? Just need to understand at what point of time you would be okay to do advisory business even if yields are lower. Sanketh, actually when we say lower yield, this is more like a corporate treasury type mandate, not a UHNI. UHNI, we are more than happy and I think directionally we are heading towards advisory. Like I spoke about our Pinnacle proposition and we have our Infinity proposition. Maybe in next three, four quarters, you will see the numbers separately coming from advisory. We are also now fundamentally clear that advisory in the current shape and form will start working, and on the overall book the yield actually may go up. Because if you look at the combined yield today for any ultra HNI business, if you combine the transactional business and the ARR business and you take the full yield, it is not more than 30, 35 basis points, ex of NII. I think that is easily achievable even through an advisory business and gives far higher stickiness in the long run. That progression has started internally in terms of creating value proposition, creating teams and all and numbers will eventually start flowing. That is the reality that is going to play and that I am also seeing the regulatory infrastructure change. Today, if we are doing advisory with an accredited investor, we can offer all distribution services also to them. Earlier, that was not the scenario. Clients were losing out, advisors were losing out. Right now the package is becoming far more stronger. I don't think you should take the statement of weeding out low advisory in that direction. This is more legacy account, typical corporate treasury and all, which we may want to shift to transactional business kind of category, but ultra HNI, we will progress towards advisory. Ashish, is it fair to say that last year you were almost at 90 bps on private. In the quarter, you reported 82 bps on ARR, I mean to say. Basically, this number because advisory going up will keep on seeing little trending downwards, assuming you don't get consumerate NII business? Not really. I think in the next two quarters you will see the range to be again. I've always maintained, Sanketh, that between 80 to 90 at this point in time is what we are able to see. It depends on the product mix of ARR, what gets done, or what proportion of product of between AIF 2, AIF 3, MF, PMS becomes heavy in a quarter. Let's say we have a blockbuster product in category two AIF in a particular quarter, it could cross 1% also. I don't think right now that impact of advisory will play out. Maybe next year we may see the flows will become far larger once that happens. Of course, NII, as you rightly said, that tool remains with us. Okay. Ashish, if you can give a color out of that INR 58,500 crores of closing AUM what you have in ARR, how much is today advisory and how much is on trail? INR 13,000. INR 13. INR 13,000. Okay, understood. Yeah. Second question which I wanted to check is that there was a SEBI consultation paper on PMS MF. Yeah. Do you think this is a material big opportunity for us in mid-market segment or UHNI segment? I don't know whether the 2.5% fees what you can charge will hold up or not, any initial thoughts you have on this piece? Not the PMS MF piece because actually 50 has become 25 and we already had a product in our setup at 50 which was a PMS MF of direct plan. I think the other measures which they have mentioned that can have more impact for both our businesses, which is allowing for to-be-listed securities to be incorporated. That makes PMS come at par with MF and AIF. Allowing for overseas investments to be made as part of PMS, I think that will be helpful because it will allow us to give some amount of global diversification in the portfolios if clients are giving discretionary mandates on the wealth management side. I think these two measures will have better impact than MF only. MF only was already there. It was people were using it. I think it is to enable others who needed higher amount of capital and all to have a light touch vehicle not for established wealth managers. Understood. Ashish, one more. Just a maybe a color on flows number because last year we did around INR 20,000 crore of net flow if I include NPI's, private ARR and AMC. Any color you want to share you will see that number to be in INR 27 and if you can split among the three segments which I just mentioned would be useful. See broadly, Sanketh. These are obviously indicative numbers. Yeah way we are seeing it is that between wealth and private, both are INR 10,000-INR 12,000, INR 10,000-INR 12,000. Range of INR 20,000-INR 24,000. AMC we are seeing anywhere between INR 3,500-INR 5,500. Okay, understood. Lastly on this IEIB business. Yeah largely it was driven by IE in the current quarter and therefore next year if the IPO market or ECM markets become super active then IB should support incremental growth for subsequent quarters. first quarter was a combination of institutional equities plus the fixed income part of investment banking. Fixed income part of investment banking really hit it out of the park. Let's say some bit of moderation happens there, and that will get covered up by the ECM ramp up plus more. I think ECM, like you said, once it opens up, you will see better growth in that line from where we are because fixed income on base level has been set and IE continues to do well. Yes. ECM was very bad in Q1. Okay. Understood. basically, INR 180 odd crore kind of a run rate is more manageable number for next three quarters. Yes. Okay. Thanks. That's it from my side. Thank you. Thank you. We take the next question, but before that, ladies and gentlemen, if you wish to ask a question, please press star and one. The next question comes from the line of Lalit Mohan Deo from Equirus Securities. Please go ahead. Lalit, we can't hear you. We can't hear you, Lalit, at all. Yes, sir. Is this better? Yeah. Sir, just one question on this lending book. We are seeing a good growth on a sequential basis. When we calculate the margins now, I understand this is based on the period-end numbers. In terms of margins, we are somewhere currently trading at around 3.7%, 3.8% on a period end basis. What would be the steady-state margins in our lending book? Going ahead, how should we see this overall lending book, both in private as well as in wealth business? About 30, 40 basis points higher than this, because like I've mentioned in few calls, our cost of debt basically moves a bit up and down because of the hedging gains and losses which comes on our MLD book. Our overall borrowing has about 25%, which is MLD, on which we keep hedging. On a full year basis, we are able to save around 50 basis points of cost. In some quarters, you go slightly negative, in some quarters, you go slightly positive. If you see Q4 of last year and Q1 of last year is where we saved about 60, 70 basis points, and Q2, Q3, we were slightly negative. This year, Q1 is like the Q2, Q3. Basically blended, if you are asking me from the current level, you can add 40, 50 basis points from here. Sure, sir. Yeah. That's it. Thank you, sir. Thank you. We take the next question from the line of Sanidhya from Unicorn Assets. Please go ahead. Hi, Sanidhya this side. Hi, Ashish. Fairly good color in the opening remarks about the tech capabilities that are driving the sector right now. Would want to hear more upon how do you see in the wealth segment, particularly as you see the largest retail-focused broker in the sense or the other brokers as well, which are basically platform or technology-driven. They are focusing more on the mid to lower ticket size clients in terms of wealth management. In the holistic sense, mainly driven by the technological benefits that they have. How do we see ourselves placed in that? Because I think Nuvama is also in the same category. Are we competing? Are we looking to Actually, there is a category difference in the customers which we handle. Yeah. Could you share the color on it? That will continue. Each of the segments are very large. Segments which can be completely Well, I would not say completely. Let me correct myself. That can be largely managed by technology as the end delivery channel to a customer has to enable execution using very simple products. It can't be complex. It can't have multiple categories, unlisted, offshore, AIFs, PMS. It's very easy to say that I will enable all execution online, but for a customer to consume that much and take action on it is virtually impossible. There have to be simple products, which means the ticket size of the disposable networks which the customer has to be significantly smaller so that they don't go beyond. You're talking about INR 25 lakh, INR 50 lakh, INR 1 crore, INR 2 crore customers, where their investable surplus is in that range. Maybe technology can end up doing the end-to-end execution in perhaps the next five years. You'll reduce the product complexity maybe to only MF or MF plus maybe maximum one more category. Beyond that, it's difficult. It's not that technology can't do, so don't get me wrong. Technology can do everything, and if it happens, we will also offer. The customer is not in the position to consume that and to take that service using technology. That is the space and that I don't think is going to change. People who have INR 10 crore, INR 15 crore, INR 20 crore, they will have needs which will become significantly more complex and human interface on advisory will still remain. Yeah. You were highlighting that we are trying to reach, penetrate deep and reaching to the clients which were not easily available earlier. Could you share more color on that? We are going beyond tier 1, but we are not changing the segment in which we are operating. There is geographical distribution and there is affluence distribution. Affluence distribution, we are not diluting. We are not saying that we are going retail, or we are not saying we are going down the value curve right now because the segments in which we operate are large enough and they are fairly well expanding. It's not that we have some dominant market share there. I think there is a lot of play available. There are segments which are below us, they are also large enough and different types of players are suited to capture that. I think it'll be difficult for people to cross each other. It's a different DNA, different customer set, different product set. Everything is very different. Do we think beyond tier 1 there is enough entity for us to operate and be profitable on the large scale? Yeah. Because obviously initially it would be less, but then eventually we think we can do that. Yeah, absolutely. That setup for us has worked out and we've been now present in 65, 70 cities directly and through our external wealth manager model, we are present in about 400, 450 pin codes. I don't think that's a challenge anymore for us. Okay. Are we setting up physical offices there? Not everywhere, but top 70, 80 places now we have physical offices. We are actively getting relationship managers in those places? Yes. Cool. That explains. On the private business is there anything to read except for the few quarter four versus quarter one differences in the revenue? I don't think quarter numbers should be looked at so much. You should see full year and if you have to look at a quarter number, you should compare with the relevant quarter in the previous year. There's nothing much to read. There's no structural change in the market space or in the margin or at a product level margin or customer behavior, nothing. Okay. On the commodity trading, whatever we were discussing the other participant also asked, where do the revenues end up for that business? Is it largely the asset services in the capital markets? Both. If there is obviously on the Wealth Management side, also customers who do commodities that would sit in Wealth and Private, but that's smaller. When I was talking at that point in time, I was talking more on the asset services business. Our international clients, they are opening up to doing systematic quant trading on commodities in addition to what they do on equity derivatives and that is opening up and the key point is that their collateral, which right now sits unused on, let's say Monday, Wednesday, Friday, will start getting used if they build on commodities. For them, that return on capital today is, let's say zero. Anything they get is superior so that improves the possibility of more capital flow coming into the country and also mitigates the negative impacts that could happen on derivative tightening or whatever. Makes sense. Is it more linked towards now NSE also launching different commodities? Yes, it does. It really does help, right? GIFT City an NSE access then? Yes, it does help. Great. Okay. Good quarter. All the best for the next one. Have a good one. Thank you. We take the next question from the line of Sidharth Negandhi from CWC. Please go ahead. Hi. Congrats on a good quarter. Just two questions. One clarification on whether I got that right. You mentioned that the ARR yield net of lending would be very similar to the 35 odd bps that one gets on advisory. What I said was that if you take the total revenue in Private, which is transactional plus ARR and divide by the total AUM and from that if you remove the lending, or actually don't remove the lending take the full yield, then advisory yield is actually similar. Right now what people bifurcate is that transactional you don't calculate yield. ARR is the only one where you calculate yield, but when you do advisory there is nothing called transactional. For that client, everything you earn on the full asset. So right now it's getting bifurcated into two streams so advisory in the end can actually become more rewarding for a wealth manager if played well. Got it. The second question was, given the strong growth on the transaction side in quarter one, do you see there being any one-offs there that again like you mentioned on the fixed income side may not come through in subsequent quarters? Not really. Even in fixed income I'm not saying, it is one-off. It's a heightened level of activity and you may see a compression of some INR 10 crore-INR 15 crore in the coming quarters. Private, as I've mentioned in our transactional income, about 70%-80% is BAU, which is basically equity broking, fixed income and MLDs. About 70%-80%. 20% is opportunistic trades which can be unlisted shares, which can be credit deals, which can be secondary deals in AIFs. The only variation is 20%. At some times, in some quarters, you may get opportunities which are more attractive, so it'll be higher. In some quarters it'll be lower. On a full year basis, let's say we ended up last year at around INR 300 crore-INR 305 crore. This year we should be anywhere between INR 350 crore-INR 360 crore. Got it. That's useful. I'm assuming some of the extra jump that we've seen this time is coming from that 20%-30%, which is a little more variable. Yes. Okay, clear. Thank you. Thank you, and all the best. Thank you. We take the next question from the line of Shrenik Mehta from IndoAlps Wealth. Please go ahead. Shrenik, please unmute your line and proceed with your question. Hi, can you hear me? Yeah. Okay. I just wanted to ask you about the asset services in the capital markets. This you have combined in a single INR 269 crore PBT. Within that INR 269 crore PBT, what is the capital markets PBT in Q1 versus the Q1 of FY 2026? That we don't share. Okay. What is the absolute decline that you are seeing in the capital markets, if you can share that? Because your fixed income has grown 2x, so there will be some- The capital market, listed equity and ECMPs between Q4 and Q1 is nearly flat to marginally positive. Between Q4 and Q3. Okay. Also, positive growth in institutional equities and IB as well? Marginally, yeah. Okay. Fixed income was stronger. This was marginal. All right. Thank you for this. All the best for your next coming quarters. Thank you. We take the next question from the line of Abhijeet from Kotak Securities. Please go ahead. Hi. Thank you. Good morning. Ashish, I had a very broad question. In terms of your entire scale of offerings in terms of how would you or where would you place yourself in terms of being able to capture the range of things that a client wants and the range of things that an issuer wants, right? Basically, the wallet share both at the client side as well as at the corporate side, and the range of things that you are able to offer today. Client side, I think wallet share is a different question, but in terms of solution capability, I think it's 100%. Wallet share, as I've always maintained that at least in the ultra-high net worth segment, clients prefer to have at least two core advisors, and then they have a long tail of other players where they may like a single product of somebody. There order of magnitude, the share could be around 40%-50%. From a solution capability perspective, it will be 100%. On the issuer side, again, from a solution perspective on their capital raise side, if we are restricting ourselves to, let's say, debt and equity, we possibly have all the solutions today, yes. We don't have offshore fund raise capability. If somebody wants to raise a bond overseas or stuff like that, there we say that we have a offering, I don't think we are a preferred choice partner for them. For domestic debt, capital markets or equity markets, the solution offering is today 100%. Got it. Just one more question on the wealth business. In terms of following up on your comment on the advisory business. In your experience, what is that rough threshold after which you actually don't mind offering the advisory services and probably below which it still doesn't make sense from a financial point of view? I think more from a client perspective, Abhijeet, it is important because what we do should be aligned to what is right for the client. Any client who is actually below maybe INR 100 crores-INR 200 crores, it does not really make sense for them to go for advisory. Anybody who is above INR 500 crores is a clear case. There is no doubt in my mind that they should move towards that because it gives them reasonable access. Many of them do not want to. The issue is many of them want to continue with this combo relationship because they want to have access to mutual funds completely free of cost. They want to have access to deals. They do not really want to shift. I think it will never be a utopian world that all large clients are doing advisory. Neither will it be a world that everybody is on a combination of transactional distribution. Neither globally it has happened in any country. It will be a mix. Directionally, people or clients whose preferences shift towards letting go of control, maybe second generation, third generation, there the proliferation of advisory will increase. Got it. Just last one in terms of the talent capability on the advisory side. Any gaps in terms of the experience level or maybe geographically, whether you want to ramp up pitch in north or south or any of those points that you can highlight? I think advisory in that sense is slightly easier to deliver because if you look at it from a practical sense right now, okay. One is what we look at is the revenue model, and second is the customer delivery. Typically, everybody ends up confusing between the two. Whether you are running a model of transaction plus distribution, the customer engagement is still advisory. Right? No customer you go with a laundry list and say, "Okay, choose the product." Every relationship manager, at least the core job is to understand the customer, is to understand how his overall asset allocation is, and within that asset allocation, how the said product will fit in, what portfolio sizing of the said product has to be there. That all still happens. How you earn is different. In that sense, a transaction cum distribution model is a fairly difficult model to execute because every relationship manager is an advisor in his own right, handling the client. The minute you shift a portfolio into an advisory model, there is a central team which also has an overlay, where the advice, recommendation, the generation the actions to be taken can be done jointly between the relationship manager and the central team. In my view, it's more easier to develop than a transaction cum distribution model at scale. Got it. That's very helpful. Thank you so much. Thank you. Ladies and gentlemen, we take that as the last question and conclude the question and answer session. I now hand the conference over to the management for their closing comments. Thank you. Thank you once again for being here. We will look forward to meeting you again at the end of quarter two. Thank you. Thank you. On behalf of Nuvama Wealth Management Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your line.