ABSLAMCNSENovember 2, 2022

Aditya Birla Sun Life AMC Limited

7,033words
40turns
6analyst exchanges
3executives
Management on call
A. Balasubramanian
MANAGING DIRECTOR & CHIEF EXECUTIVE OFFICER
Parag Joglekar
CHIEF FINANCIAL OFFICER
Prakash Bhogale
HEAD, INVESTOR RELATIONS
Key numbers — 40 extracted
6.5%
ber 30, 2022. Indian economy has been on a steady recovery path with an expected growth between 6.5% to 7% for FY23. This is mainly on account of the timely policy measures taken by the government o
7%
2022. Indian economy has been on a steady recovery path with an expected growth between 6.5% to 7% for FY23. This is mainly on account of the timely policy measures taken by the government of Indi
2%
h a lot of uncertainty. CPI inflation remains at an elevated level above the RBI target of 4 plus 2% in terms of expectations, as a result of that RBI may continue to remain hawkish for the near fut
rs,
e to remain hawkish for the near future in terms of policy rates. Policies given by the policymakers, in my own belief, will continue to remain strong force for India’s growth to come back. The curren
₹39.04 lakh Crore
he quarter, quarterly average assets under management for the Indian mutual fund industry touched ₹39.04 lakh Crores as on September 30, 2022, as against ₹37.72 lakh Crores as on June 30, 2022, and grew by 8% from
₹37.72 lakh Crore
r the Indian mutual fund industry touched ₹39.04 lakh Crores as on September 30, 2022, as against ₹37.72 lakh Crores as on June 30, 2022, and grew by 8% from ₹36.19 lakh Crores as on September 30, 2021. In Q2 FY
8%
Crores as on September 30, 2022, as against ₹37.72 lakh Crores as on June 30, 2022, and grew by 8% from ₹36.19 lakh Crores as on September 30, 2021. In Q2 FY23, the mutual fund industry witnessed
₹36.19 lakh Crore
as on September 30, 2022, as against ₹37.72 lakh Crores as on June 30, 2022, and grew by 8% from ₹36.19 lakh Crores as on September 30, 2021. In Q2 FY23, the mutual fund industry witnessed some fall in inflows ac
₹14 Crore
during this period. As on September 30, 2022, the total number of mutual fund investors stood at ₹14 Crores versus ₹11.32 Crores on September 30, 2021, an increase of 24% on a year-on-year basis. Contin
₹11.32 Crore
d. As on September 30, 2022, the total number of mutual fund investors stood at ₹14 Crores versus ₹11.32 Crores on September 30, 2021, an increase of 24% on a year-on-year basis. Continuous awareness initiati
24%
ual fund investors stood at ₹14 Crores versus ₹11.32 Crores on September 30, 2021, an increase of 24% on a year-on-year basis. Continuous awareness initiatives are being undertaken by the whole indus
₹12,976 Crore
e have seen improved monthly SIP contributions. The overall monthly SIP book was the highest ever ₹12,976 Crores on September 30, 2022. The new SIP registrations have increased marginally as compared to last q
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Guidance — 13 items
Jignesh Shial
opening
“CPI inflation remains at an elevated level above the RBI target of 4 plus 2% in terms of expectations, as a result of that RBI may continue to remain hawkish for the near future in terms of policy rates.”
Jignesh Shial
opening
“The current uncertainty on the global market continues, global economic activity is cooling off with a number of growth forecast downgrades.”
Jignesh Shial
opening
“The next few weeks will be filled with long Indian festive seasons where domestic spending will be higher this will result in higher earnings expectations with limited downside to earnings during the second half of FY2023.”
Jignesh Shial
opening
“Upon completion of the product of course we intend to launch a few more products in the AIF segment as part of our overall strategy to build AIF as well as build our future profitability.”
Parag Joglekar
qa
“As Parag explained there is a marginal increase again due to the increment that has been given plus any new recruit that comes at a little higher cost while that will be the case of course once the output starts coming in as part of productivity which has been one of our big area focus, therefore, the cost will come under check.”
Parag Joglekar
qa
“While that is our endeavor of course we also know how to build the business to the next level we may want of course beef up the talent pool further, if at all we do that then it may probably see a marginal increase in cost at the same time I am only of the belief that as the individual productivity starts getting better that incremental cost may become a very small component of the overall incremental growth that we can expect.”
Parag Joglekar
qa
“As for the real estate concern after almost 10 years of break after launching the first product we never launched any product now we have seen the first success of the real estate product where we intend to take you to the next level and third which we believe that interest rates having gone to where we are today and we also believe that the corporate bond spread will widen therefore it will provide an opportunity to launch credit opportunity fund in the AIF space.”
Prayesh Jain
qa
“While one can argue within the fixed income space the target maturity fund which is nothing but an index fund is also growing, therefore, the margin could be under pressure one can probably argue in that space.”
Prayesh Jain
qa
“At the same time, I believe that this segment will be largely suitable for institutional customers and HNI customers but medium to retail customers would largely participate in the open-ended debt funds which will have a little higher margin at the same time not so high expenses so to speak at the same time give a satisfying experience that to the investors can get it.”
Parag Joglekar
qa
“So Prayesh as you know that as the increase in the size of the TER goes down so there will be some impact of that calculation but as the size goes up the absolute amount will increase on the equity contribution on the fee side.”
Risks & concerns — 7 flagged
As for the real estate concern after almost 10 years of break after launching the first product we never launched any product now we have seen the first success of the real estate product where we intend to take you to the next level and third which we believe that interest rates having gone to where we are today and we also believe that the corporate bond spread will widen therefore it will provide an opportunity to launch credit opportunity fund in the AIF space.
— Parag Joglekar
While one can argue within the fixed income space the target maturity fund which is nothing but an index fund is also growing, therefore, the margin could be under pressure one can probably argue in that space.
— Prayesh Jain
So Prayesh as you know that as the increase in the size of the TER goes down so there will be some impact of that calculation but as the size goes up the absolute amount will increase on the equity contribution on the fee side.
— Parag Joglekar
Any logical pressure coming in on the margins as generally is being perceived.
— Parag Joglekar
See more than a margin pressure on the existing schemes the shift of assets from active to the passive if it happens then you will see that margin coming in but my own belief is at least for the next three to four years active will continue to have a dominant presence and ETF will, of course, have faster growth, therefore, the convergence should happen maybe in the next three to four years in terms of margin drop because of ETF has grown not because of the active fund’s margins have come down.
— Parag Joglekar
Prayesh it is difficult to comment on that but as it is almost three years time period has gone up from upfront to trail model, I think so over maybe another couple of years it should be replaced because generally industry see around three to four years of retention aging and that should be the case.
— Parag Joglekar
Firstly, on your distribution side in the distribution mix we are saying that there is a decline in the AUM which is coming from the banking channel so could you share some light over there also could you talk about the market share and the incremental flows which we are getting from the banking channel?
— Lalit Deo
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Q&A — 6 exchanges
Q
Good evening Swarnabh. The yields are a little bit higher compared to the earlier quarters is mainly due to the mix of assets on the equity slightly gone up compared to earlier quarters and debt also the mix in between various categories has slightly improved, it is more of a flattish yield on the debt side, not great increase but it is mainly on the equity which has seen slight improvement on the overall mix. Swarnabh Mukherjee: Ok Sir. In the near future if yields remain at this level on the fixed income side and the interest rates go high up slightly would we be able to push in any kind of
Parag Joglekar
We have been continuously focusing as we mentioned earlier also on strengthening the overall size of our AUM plus improve the equity mix in the overall AUM plus on the debt side we are trying to build long-duration assets which will fetch us slightly higher yields on the debt side also. So that is the overall broader thought process that we have and I think so it will help us to strengthen the yield over the longer duration. A. Balasubramanian: Just to add to that Swarnabh, in the fixed income space last two quarters we have been trying to build some momentum on fixed income though we have see
Q
Good evening, everyone. Sir firstly now a much broader level question probably from an industry perspective more than particularly from the Aditya Birla AMC perspective so we have seen the industry going through a period where the core profit except other income has been very muted or declining in the last few quarters, this quarter possibly we have seen some uptick coming in because the yields have improved for most of the AMCs, but from a medium term perspective say two-to-three-year perspective do you think that the industry can actually report a strong profit growth mainly given the fact t
Prayesh Jain
Just on the equity yields do you think that we are kind of close to bottoming out in terms of yields or there is still some headroom wherein we just continue to see equity yields falling by another say two or three bps every year for the next few years? So Prayesh as you know that as the increase in the size of the TER goes down so there will be some impact of that calculation but as the size goes up the absolute amount will increase on the equity contribution on the fee side. There may be a slight drop on the overall bps basis because the size will grow up and the TER may drop, may have some
Q
Good afternoon, Sir. Sir, I have two questions. Firstly, on your distribution side in the distribution mix we are saying that there is a decline in the AUM which is coming from the banking channel so could you share some light over there also could you talk about the market share and the incremental flows which we are getting from the banking channel? A. Balasubramanian: Banking channel contributions largely were on account of withdrawal of fixed income space where we saw some withdrawals in the STP or corporate bond fund category, but that is something that resulted in a marginal dip, the abs
Lalit Deo
Sure, Sir and Sir one data-keeping question could you tell us about the SIP AUM size as of September 2022? It is ₹51,000 Crores. Sure Sir. Thank you, Sir. That is all from my side.
Q
Sir there are two to three questions from my side. First, you have highlighted your SIP contribution including from the ND channels if you can also break up your incremental SIP flows across channels that will be helpful, second if I look at your SIP registration market share that seems to be on the lower side so just wanted to get some sense of is it some particular channel where your SIP registration market share is on the lower side and lastly one data keeping question if you can mention the number of employees that you had as of September 30, 2022? A. Balasubramanian: As far as the SIP con
Dipanjan Ghosh
On the number of employees? It is 1,351. You mentioned on the yield trajectory over the next two to three years but can you quantify the difference between your current yields on fresh flows on the equity side versus your extreme blended yields on the equity basis? Our yields as we mentioned always that generally the sharing with our distributor is in the similar range of around 60% to 65% of our DTER and the company makes in the range of around 30% to 35% odd percent of the overall DTER so that remains for us on the new flows. Got it. Thanks, and all the best.
Q
Sir I just wanted to get back to the question where you mentioned that there are two products in the fixed income category which are ready to be launched so have they been launched in this Q3 or they are just ready to be launched? A. Balasubramanian: We already rolled out the presentation of a dynamic bond fund with the renewed strategy that we used to have in the past and medium-term plan which again one of the largest funds for us using a mix of good credit and high-quality papers, there is also something we are now repositioning the product, we were not doing it earlier in the past given th
Ravin Kurwa
Sir can you guide me on the yields on these two products? A. Balasubramanian: In terms of current expenses versus expectations? Yes. Ravin I do not have the number handy. It is there on our website on the TER side but it is more than around 1% to 1.25% type Okay that is really helpful. Thank you.
Q
Sir one data-keeping question you can quantify your ESOP expense for the quarter and how do you see that trajectory for FY24 and FY25?
Parag Joglekar
Dipanjan it is more similar in the range of around ₹8 odd Crores for the quarter. Any guidance for FY24? As I mentioned earlier that it is generally a 40:30: 20:10 sort of a droping in this thing so over the period it should drop so this is currently the second year first half so it may continue in the similar range for the next couple of quarters and then it will drop further. Thank you.
Speaking time
Parag Joglekar
10
Moderator
9
Dipanjan Ghosh
7
Prayesh Jain
4
Ravin Kurwa
4
Lalit Deo
3
Prakash Bhogale
2
Jignesh Shial
1
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Opening remarks
Jignesh Shial
Hi everyone. Good evening and on behalf of InCred Equities, I thank you all for the participation. We have along with us Mr. A Balasubramanian, Managing Director, and CEO of Aditya Birla Sunlife Asset Management. Over to you Sir for the opening remarks and you can go ahead! Thank you. A. Balasubramanian: Thank you Jignesh and thanks for the introduction. I am joined by our CFO, Mr. Parag Joglekar and Prakash Bhogale who is incharge of the Investor Relations. Good evening to everyone for today’s investors’ call. I hope you all had the opportunity to go through the earnings presentation which is available on the stock exchange and our website. Let me first begin by wishing you all a Happy Diwali and a prosperous New Year. Let me also start the update on the economy and mutual fund industry first and then I will give you a briefing about our Aditya Birla Sunlife AMC performance for the quarter ending September 30, 2022. Indian economy has been on a steady recovery path with an expected gr
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