UTI Asset Management Company Limited has informed the Exchange about Transcript of the Earnings Conference Call on financial performance for the quarter and financial year ended 31st March, 2023
Ref. No.: UTI/AMC/CS/SE/2023-24/0308
Date: 4th May, 2023
National Stock Exchange of India Limited Exchange Plaza Plot No. C/1 G Block Bandra – Kurla Complex Bandra (East) Mumbai – 400 051. Scrip Symbol: UTIAMC
BSE Limited Phiroze Jeejeebhoy Towers Dalal Street Mumbai – 400 001. Scrip Code / Symbol: 543238 / UTIAMC
Sub: Transcript of the Earnings Conference Call on financial performance for the quarter
and financial year ended 31st March, 2023
Dear Sir / Madam,
Pursuant to Regulation 30 read with Schedule III Part A Para A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the Listing Regulations), we are forwarding herewith the transcript of the earnings conference call held on Thursday, the 27th April, 2023 on financial performance of the Company for the quarter and financial year ended 31st March, 2023.
The transcript of the aforesaid earnings conference call is also available on the website of the Company at www.utimf.com in compliance with Regulation 46 of the Listing Regulations.
We request you to kindly take the aforesaid information on record and disseminate the same on your website.
Thanking you,
For UTI Asset Management Company Limited
Arvind Patkar Company Secretary and Compliance Officer
Encl.: As above
UTI Asset Management Company Limited
Q4 FY23 Earnings Conference Call
April 27, 2023
Moderator:
Ladies and gentlemen, Good Day and welcome to the UTI Asset
Management Company Limited Q4FY23 Earnings Conference Call. From
the management we have with us Mr. Imtaiyazur Rahman (CEO &
Managing Director); Mr. Surojit Saha (Chief Financial Officer); Mr. Vinay
Lakhotia (Head – Operations) & Mr. Sandeep Samsi (Head – Investor
Relations and Corporate Communications). We also have with us our
investor relations team from Adfactors joining us on this call. As a
reminder, all participant lines will be in listen-only mode, and you will be
able to ask questions after the opening remarks conclude. If you need
assistance during the conference, please signal an operator by pressing
“*” then “0” on your touchtone phone. Please note that this conference
is being recorded. Before we begin, I would like to mention that some
of the statements made in today's discussion may be forward-looking in
nature and may involve risks and uncertainties. Please note the
disclaimer mentioning these risks and uncertainties are on the
Disclaimer slide of the investor presentation that has been shared
earlier. I will now hand the conference over to Mr. Imtaiyazur Rahman
for opening remarks, thank you and over to you, Sir.
Imtaiyazur Rahman: Thank you very much. Good afternoon, everyone. Thanks for joining us
today to discuss our operational and financial performance. Though the
year witnessed some turbulence globally, the major economies world
over, are taking measures to tackle the inflation in the best possible
manner. It is also encouraging that these economies are taking all
1
possible measures to effectively manage the rising interest rate scenario
and the challenges being faced by the financial sector.
The Indian economy too remains robust, receiving recognition globally
for our economic resilience and growth prospects. Our mutual fund
industry also has demonstrated resilience and steadfast growth.
Various factors like rising household savings, the broader geographical
reach of financial products in Tier 2 and Tier 3 cities and the growing
share of Mutual Funds in financial savings are positive factors that will
help drive the development of the sector in a significant manner over
the next decade.
The year was characterized by volatility in terms of inflows and outflows
from Mutual Fund schemes. However, the flows into equity funds have
been positive and so has been the SIP flow. The SIP contribution in
March 2023 was Rs. 14,276 crore. The positive inflows into the Equity
funds are testimony to retail investors’ confidence in the Indian equity
markets and these investments are supporting the benchmark indices
amidst investor sentiments.
The total Assets under Management for UTI Group registered a growth
of about 15.4% over the corresponding quarter of the previous year and
stood at Rs. 15.56 lakh crore as on 31st March 2023. This is the figure
for entire UTI Group.
Friends, at UTI, we are focusing on the following five key objectives:
1. To be among the Best Board Governed Companies
Governance is one of the most important pillars on which UTI
stands. 6 out of 10 Directors on the UTI AMC Board are Independent
2
Directors. UTI AMC Board along with the Boards of all our
subsidiaries have women representation.
2. Building an A-class Human Capital
Realizing the importance of Human Capital in an investment
organization like ours, we have been investing in acquiring, building
and retaining talent with focus on gender diversity. Accordingly 32%
of the hires in the last 4 years were women and currently ~27%
workforce is made up of women employees. We have initiated
measures for Creche facility for our employees.
We have made significant investments to create state-of-art
infrastructure for our investment team. We are also building the
capabilities of our team. We have created customized training &
development programs for employees at different levels.
3. Digital first organization
During the year, we saw very good response from Investors and
Distributors in respect of our digital sales & digital engagements. Our
Digital campaigns have resulted in influencing sales across all touch
points of UTI AMC. We are in the final stages of re-launching
superior Digital Assets (Website & Mobile App) for our partners and
Investors.
4. Geographical expansion & financial awareness program
We are planning to open 29 new offices during the financial year
2023-24 to reach newer markets across the country. Our Investment
Team has been travelling to various locations all over India to spread
awareness about our
investment philosophy and processes.
Considering the potential of the B30 cities, we already have 108 out
of 166 UFCs in these locations.
3
5. Deeply embedded ESG-compliant framework:
We have formed an ESG Committee of the Board which provides
guidance and oversight. We have in place a robust ESG framework
covering all
relevant aspects
for planning and effective
implementation. Friends, we are using 100% renewable energy for
our corporate office and have received a Green Energy certificate.
During this month, we also published our first sustainability report.
Under our Social
initiatives, our CSR projects supplement our
commitment to ESG for social upliftment and conservation of the
environment.
Our subsidiaries for retirement business, alternate investment products
and offshore funds are growing with expansion in operations &
business.
I would like to share some highlights about our group companies.
UTI International which is a 100% subsidiary of UTI AMC, has formed a
new subsidiary in the United States named UTI Investments America to
capture the opportunities in North American markets.
At UTI Capital, we are building a strong team for opportunities in the
Alternatives business space. We are also planning a series of fund
launches such as the Real Estate Opportunities Fund, and others in the
alternate segment and are filing necessary documents with the
regulators. While the company is fully capitalized, we have recorded a
net loss of Rs. 3.3 crore due to various investments being made to build
the business.
4
UTI RSL. The Retirement business in the country is a very big opportunity
and we have plans to expand our team and open new points of presence
across the country. The business has been growing rapidly and we aim
to capitalize further on the same and enhance NPS business.
To summarize, we initiated several progressive measures like building
resources in sales & investment, enhancing engagement of fund
managers with our distributors and partners, conducting investor
awareness programmes, launching learning & development initiatives
for employees, enhancing focus on KYC compliances, upgrading the
infrastructure of the company as well as its subsidiaries. As, One of the
positive developments, UTI was appointed as one of the asset managers
for EPFO’s investment in ETFs for a period of 3 years and Central Public
Sector Enterprises have also enabled a policy to continue their
investments in all Mutual Funds including UTI.
In the financial year 2023 -24, the participation by retail investors in the
Indian growth story is likely to be the key factor for the Indian markets
in FY24. For this call, I have my distinguished colleagues Mr. Surojit Saha,
Chief Financial Officer, Mr. Vinay Lakhotia, Head – Operations and Mr.
Sandeep Samsi, Head - Investor Relations and Marketing.
I will now hand it over to Mr. Sandeep Samsi, who will give the details of
UTI MF’s performance. Over to you Sandeep and thank you.
Sandeep Samsi:
Thank you, Sir. I will first take you through UTI Mutual Fund’s
performance during the fourth quarter and for the full year FY 23.
UTI MF PERFORMANCE
5
• The total Assets under Management for UTI Group registered a
growth of about 15.4% over the corresponding quarter of the
previous year and stood at Rs. 15.56 lakh crore as on 31st March
2023.
• For UTI Mutual Fund, the quarterly average AUM as 31st March
2023 stood at Rs. 2,38,791 crore, up 6.7% year on year against the
industry growth of 5.6%.
• As on 31 March 2023, our market share has increased to 5.89% for
the quarter ended.
• The QAAUM for Index & ETFs recorded a Year-on-Year growth of
~33% to Rs. 82,871 crore for the fourth quarter. Our Equity QAAUM
for the quarter ended March 2023 stood at Rs. 70,494 crore, rising
by ~2% as compared to the quarter ended March 2022.
• UTI was able to capture market share of 8.5% of the gross sales of
the industry during fourth quarter.
• UTI Mutual Fund recorded a net sales of Rs. 1,208 crore for FY23.
• ETFs & Index Funds net inflows stood at Rs. 1,100 crore. Hybrid
funds witnessed an outflow of Rs. 719 crore for the quarter.
• During the quarter under review, UTI added 36,000 folios taking up
the number of live folios to 1.22 crore as on 31st March 2023 from
1.19 crore as on 31st March 2022.
• Our SIP AUM witnessed a growth of 17.5% over the corresponding
quarter of last year, reaching to Rs. 21,509 crore as of March 2023
from Rs. 18,311 crore as of March 2022.
• During the quarter, our number of new SIP accounts rose by 2.14
lakh taking the total numbers of live SIP folios to 25.2 lakh as of 31st
March 2023.
• The SIP inflows for the quarter stood at Rs. 1,667 crore, rising by 12%
year-on-year with the average SIP ticket size being Rs. 3,262 for
March 2023.
6
• 22% of our Monthly Average AUM for March 2023 came from B30
cities while the industry average stood at 17% in terms of its B30
MAAUM.
• Weighted average AMC yield was at 35 bps for the quarter and was
37 bps for FY 23.
UTI AMC FINANCIALS
• During the fourth quarter, the Company posted a consolidated net
profit of Rs. 86 crore, recording a growth of 43% QoQ and YoY
growth of 59%.
• For the financial year 2023, the consolidated net profit stood at Rs.
437 crore.
• For UTI AMC Ltd (Standalone):
o The PAT of UTI AMC Ltd in Q4 FY23 was Rs. 98 Crore
reflecting a growth of 31% YoY & a decline of 10% on a QoQ
basis.
• For UTI Retirement Solutions Ltd:
o UTI Retirement Solutions Ltd. has been managing the NPS
corpus for the Government & non – Government sectors.
o The AUM for UTI RSL has increased by ~19.2% to Rs. 2,40,709
crore in Q4 FY23 and has a share of 26.78% of Industry AUM.
o PAT of UTI RSL is at Rs. 46 crore, an increase of ~10%
compared to the corresponding quarter of last year.
• UTI International Ltd:
o UTI International has an AUM of Rs. 21,703 crore as of 31st
March 2023.
o Our international clients are across more than thirty-five
countries. These are primarily Institutions – Pensions,
Insurance, Banks, and Asset Managers.
7
o One of our flagship funds, the India Dynamic Equity fund
(IDEF) domiciled in Ireland, has an AUM of USD 852 million.
o UTI International’s J Safra Sarasin Responsible India Fund, an
ESG-compliant India fund, has an AUM of USD 75 million.
o UTI India Innovation Fund, launched in the first quarter of
the last financial year has an AUM of USD 19 million.
o The Management fees of UTI International are at Rs. 129
crore, an increase of 1.6% YoY from Rs. 127 Crore in Q4 FY22.
• UTI Capital Pvt. Ltd.:
o As Mr. Rahman highlighted, we are building this business.
o UTI Capital has a total AUM of Rs. 1,707 crore, currently
managing Active Debt Funds:
UTI Structured Debt Opportunities Fund (UTI SDOF)
I, launched in August 2017 and closed in May 2019,
having an AUM of Rs. 137 Crore. Currently, the fund
is in exit mode.
UTI SDOF II launched in September 2020, having an
AUM of Rs. 506 Crore, and the fund is currently in the
investing stage. UTI SDOF II has a well-defined ESG
Policy and strategy.
UTI Multi Opportunity Fund I launched in March 2022
which has an AUM of Rs. 763 crore. Currently, the
Fund is in the Investing stage.
UTI SDOF III launched in September 2022, has an
AUM of Rs. 300 Crore, the fund is currently in the
fund-raising as well as Investing stage
• Employee Cost of the Group
Employee Cost of the group for FY 22-23 was Rs. 415 crore
witnessing an increase of 2% over FY 21-22.
8
Employee Cost of the group in Q4 FY23 was Rs. 107 crore
witnessing a decrease of 7% YoY as against the amount of Rs.
115 crore in Q4 FY22.
I would now request the Managing Director & CEO for his concluding
remarks.
Imtaiyazur Rahman: Thank you, Sandeep, for sharing operational financial highlights on this
call for the fourth quarter and financial 2022-23. With this I would like
to open the forum for your questions and thank you for joining this call
today.
Moderator:
Thank you. Ladies and gentlemen, we will now begin the question and
answer session. We have the first question from line of Swarnabh
Mukherjee from B&K Securities. Please go ahead.
Swarnabh Mukherjee: Three questions from my side. The first one is on the yield. So there has
been a quarter-on-quarter drop in the yield. So just wanted to
understand what would be the factors driving there. The second
question is in terms of the other expenses. This had also seen some
amount of increase. So if you could highlight the reasons behind that
increase. And thirdly, in terms of international business, the AUM for
the business is now around Rs. 21,000 crore. So it has seen some
reduction. Is it the Markets or anything else to read into this if you would
highlight that.
Vinay Lakhotia:
Hi, this is Vinay here. So I'll take the questions on the yield and Surojit
will take the questions on other expenses as well as the international
piece. On the yield part, the marginal decline of the yield of around half
a basis point is primarily because of the decline in the yield under the
9
equity category where the yield has actually fallen by close to around 2
basis points during the last quarter. Two reasons for this - the fresh
inflows are coming at a lower yield as compared to the stock AUM and
plus there has been a redemption of the older AUM which has been
carrying a slightly higher yield. So these are the two primary factors
because of which the yield has actually come down marginally to around
half a basis point as compared to the previous quarter.
Swarnabh Mukherjee: Sir, just to follow up, can you indicate what is the yield you are seeing
on the stock AUM and the fresh AUM on the equity segment right now?
Vinay Lakhotia:
On the stock AUM, the yield on the equity and the hybrid side, is around
75 basis points. I can't give an indicative number on the fresh AUM
because the distribution mix between the distributor and the AMC
varies depending on the categories of the IFA and the distributor. But
normally the distribution is within the range of around 50% to 80% of
the total expense ratios of the fund, so an indicative range won't be
possible.
Swarnabh Mukherjee: OK, got it, Sir.
Surojit Saha:
In respect of the other expenses, the increase is around Rs. 16 crore
from Rs. 56 crore in Q3 to Rs. 72 crore in Q4, which includes expenses
like an amount of Rs. 4 crore towards CSR. CSR amount has to be booked
on actual outflow and it is not based on the accrual basis. The actual
payment was in the last quarter. Though there was a commitment
towards CSR in Q3 FY23, there was no actual payment since the amount
was not requested by the concerned institution to whom we had
committed. The same has been accounted for in the last quarter and
reflected in the increase in cost. After coming out of the COVID situation
10
last year, our business operations significantly increased with business
travels, and visits of the fund managers to different centres for the
purpose of creating sustained growth
in business and creating
awareness about our investment philosophy across the country. For the
first time, we conducted a sales meeting in which the entire sales team
across the country participated in the strategic sales discussion and this
has reflected in the increase of cost of Rs. 3 crore which includes the
travel as well as the related expenditure, we considered as an
investment for the future. During the quarter we also spent Rs 2.5 crore
for the digital initiative, security of the business application and disaster
recovery systems across our applications. Further, the subscription fees
for index funds have increased corresponding to the increase in AUM.
The subscription fee is linked to the quarterly average AUM. UTI Nifty
Bank ETF AUM increased significantly from Rs. 70 crore to Rs. 2,500
crore over the year, the UTI NIFTY 50 Index Fund AUM increased from
Rs. 6,300 crore to Rs. 10,000 crore and the UTI Nifty200 Momentum 30
Index Fund went up from Rs. 1,100 crore to Rs. 2,200 crore. In view of
this trend during the year there is an impact on Q4 also. In view of the
linkage of the index fees to the AUM, the quantum of the fees paid
during the quarter also increased by Rs. 1.5 crore. Further, there was an
increase of Rs. 2 crore in the PFRDA fees paid by UTI RSL, which is in
tandem with the increase in the management fees. UTI RSL has started
business promotion expenses, increasing the NPS business by reaching
out to the pan-India opportunity. And lastly towards the promotion of
ESG in our company, we took membership of Sustainability Accounting
and Standard Board (SASB), an internationally recognized organization.
And we did the sustainability and value reporting, which has an
expenses of Rs. 1 crore. These are the major expenses and out of this
Rs. 15 crore around 50% will be one time expenditure and around Rs. 8
crore will be a recurring expenditure. Lastly, Bloomberg expenses.
11
Because last year also we have added few terminals and we initiated
Bloomberg terminals for all our investment fund managers. So there
was an increase of Rs. 1.5 crore.
Imtaiyazur Rahman: Also, the depreciation in the currency has also contributed to this.
Swarnabh Mukherjee: And just to follow up on these index-related charges, we are paying to
NSE.
Surojit Saha:
NSE as well as BSE. Charges are paid to both.
Swarnabh Mukherjee: OK and how is it accounted for? Is it as the whole charge paid in Q4 every
year?
Surojit Saha:
It is done every quarter. So this particular quarter it was around Rs. 1.5
crore, which is an increase compared to last quarter.
Swarnabh Mukherjee: Ok. And in terms of the business, the PFRDA charges that the increase
that you mentioned has come because our AUM has increased?
Surojit Saha:
Yes, AUM has increased. If you see over the full year, the AUM has
increased by ~Rs. 40,000 crore. And 5 bps is accounted as sale of
services and 1.5 bps are accounted as an expense.
Swarnabh Mukherjee: Right. OK. So that incremental Rs. 40,000 crore part of that has come
this year
Surojit Saha:
Yeah, lastly in respect of UTI International AUM, actually we have a few
funds which are periodic funds like Phoenix Fund. Two Phoenix Funds
have matured during this particular period. One is a Rs. 1500 crore fund,
12
which is a B19, then another Rs. 2900 crore and another one is around
Rs. 1600 crore. So the total is around Rs. 6000 crore in this respect. India
Dynamic Equity fund which is a leading fund for the international
business also there was a repurchase - redemption pressure. So it's
around Rs. 2000 crore and the fund is doing well. Globally the growth
stocks have not been performing well, so we expect a turnaround. Mr.
Rahman has already informed during his part, that we have opened
offices in Paris and America to improve our international business.
Swarnabh Mukherjee: In IDEF, the redemption is coming from us only because I remember that
you mentioned last quarter you had redeemed.
Surojit Saha:
We have not yet redeemed our seed capital. This is one of the HNI
investors at this market level who has invested when the scheme was
launched, who redeemed his investments. We have not done it yet. We
are waiting for the opportune moment, and we'll definitely try to reduce
our exposure in this seed capital.
Imtaiyazur Rahman: No, but redemption is very minimal, is more on the currency which is
depreciated by 6%-7% and 17% is basically the performance issues. But
the redemption is only to the extent of 5.5%-6%.
Swarnabh Mukherjee: OK, Sir. And out of this Rs. 20,000 crore, how much do we hold right
now? Our investment.
Surojit Saha:
Rs. 7000 crore is the total IDEF size now, we should be around Rs. 350
crore.
Swarnabh Mukherjee: So you're initially Rs. 31 crore. And that has gone up to how much? That
is what I wanted to know.
13
Surojit Saha:
Initially we invested USD 25 million and we have already repurchased
around INR seven crore.
Moderator:
Thank you. We have the next question from the line of Viraj from SIMPL.
Please go ahead.
Viraj:
I just had two questions. The first is on the book, so if I look at the equity
and the hybrid book, can you just give some colour on what share of the
book is now new flow, one which comes in a much higher sharing with
the distributor? So can you just give some perspective?
Vinay Lakhotia:
Less than 20% of the overall book is actually the old AUM and almost
80% is the new AUM only.
Viraj:
OK, so basically then going into FY24, we should see the yield should be
more or less stabilized for us. Because now the book is by and large new.
Vinay Lakhotia:
Yeah. Unless there's a significant redemption on the older AUM, we
should see some stabilization in the yield. But the overall yield will still
have a drag-down effect because of the growth under the ETF and the
index category.
Viraj:
OK. And second question is largely in terms of the competitive dynamics.
So if I look at a year back, we had and not just us, but the industry had
seen a very high competitive pressure and there was also a significant
increase in sharing with the distributor. How is that, if you could just
provide some perspective in terms of the competitive landscape and
especially in the sense of pricing and sharing of TER with the distributor
14
in channel? So has that normalized or has that corrected or is it still
elevated?
Vinay Lakhotia:
I think it has more or less become a standardized distribution ratio only.
As I stated earlier, most of the entries are sharing in ratios of around 50
to 70. In some cases, it may be slightly higher. So depending on the
distributor category, whether it's an individual IFA or the larger national
distributor or a private or a foreign bank, the ratios are changing. I don't
think the competition has anything to do with that. I think over the last
two years also the pricing has become more or less standardized as far
as sharing is concerned between the manufacturer as well as the
distributors.
Viraj:
OK. And just one last question, if I can squeeze in on the expansion part?
What I heard, correct me, you said that we'll be looking at adding
another 29 branches. Now if you look at the spread of our current
network itself. And based on the last few calls and what we understand,
there's still a good amount of potential throughput which we can further
leverage from existing branches itself. So compared to the potential the
AUM per branch or the turnover at the branch level is still relatively
lower than what the potential could be. So what is the thought process
behind adding another 29 branches when we still have scope for
increasing the throughput in the existing branch network? And in
relation to the digital-physical mix expansion strategy we talked about
over the last one or two years.
Sandeep Samsi:
So Viraj, good question. This is not an either-or strategy. This is an ‘and’
strategy. So while we look at different markets, we realize that there is
enough amount of potential in the top 30 markets. We have also
mentioned that we have work to do, and we are continuously working
15
with our partners in those markets. However, India or Bharat as it is
called, is growing and we see a lot of potential in these smaller markets
also. Now there is a huge amount of education which is coming into this
market and there are people who are ready to work in this market. So
that's why we want to open and tap these markets, which have got the
potential for us to grow over the next maybe three to five years. They
will not be immediately mature enough, but over the next three to five
years they will give us good returns. The second part is yes, we are also
focusing on the digital part, but India is still not completely digital. It's
still a Phygital world where in India, people while they want to use digital
mode, also look at physical mode. So you have to follow an and strategy.
You have to focus on the top 30 cities. You have to look beyond 30 cities.
You have to open in the Tier 3 Tier 4 cities. As well as we have to have a
very clear digital strategy to be present whether it is on the website or
the app or any other mode through partners.
Viraj:
So what kind of OpEx we will be looking to incur for these 29 and
typically what is the gestation period in terms of the branch to start
contributing in terms of profitability?
Surojit Saha:
Yeah, we are expecting it should break even in around 1.5 to 2 years.
We have plans and based on the potential, what we already have, we
are opening these branches. So our existing plan is to open these 29
branches and it should break even in 1.5 to 2 years.
Viraj:
Investment, Sir.
Surojit Saha:
Investments for these 29 branches will be around Rs. 3.2 crore because
we are expecting to open around 500 square feet to 600 square feet
16
area. The total restructuring is what we are doing in respect of our big
offices which we have.
Imtaiyazur Rahman: Viraj, there are two distinct strategies which we are working on. We had
a strategy meeting here in Jaipur and we are attending this call from
Jaipur. One is the top eight cities. It is our key focused area and 2nd is
the rationalization of our branch offices. Earlier we opened a lot of
branch offices, bigger in size, which is no longer required. So we are
going to rationalize all our branch offices in this financial year. We are
also here to expand. The saving which will come out of that
rationalization will be good enough to meet our expansion
requirements. So we are not expecting much pressure on our P&L
account. Other than three to four crore, which Surojit has highlighted to
you. Secondly, we are investing in our digital strategy. We have a
fourteen members team in digital space. We may hire more people in
digital, particularly data analysts and also give the state-of-art IT and
digital assets to our investors. As young Indians, they would like to
interact or make investments digitally through apps. We have three
different strategies, one - top eight cities, second - expansion. We need
to go beyond 30 cities because they are growing. And third, digital. All
three cylinders will be fired.
Moderator:
Thank you. We have the next question from the line of Lalit Deo from
Equirus Securities. Please go ahead.
Lalit Deo:
Just one question. So like in the last two to three quarters we have been
seeing our market share of more than 8% in gross sales, but it has not
been reflected in our net sales numbers. So now within this 8.5% market
share of gross sales, could you bifurcate between like how is the market
share in the gross segment and in the equity segment or the hybrid
17
segment and what are we doing to both improve our net income as
well?
Vinay Lakhotia:
You want a gross sale percentage across scheme category. Is that
question correct?
Lalit Deo:
Yes.
Vinay Lakhotia:
OK. So for quarter 4, our share of wallet for equity is around 2.5%, ETF
is around 9%, income fund is 4.5% and Liquid fund is actually 9%. So on
a weighted average, roughly around 8.5% is our share of wallet as far as
the gross sales is concerned.
Lalit Deo:
Just to follow up on this, now within this equity segment, we have a 2.5%
market share; in terms of AUM market share, we are at about 5%. How
are we looking to improve our catch-up on the market share gain going
ahead? What are the different strategies we are looking to reach over
there?
Vinay Lakhotia:
So the focus is actually on performance. As and when your fund is
performing it should take up the sales. So, the focus strategy is that we
should have three to four equity funds that deliver superior returns for
our investors and the outcome will be the sales number.
Moderator:
Thank you. We have the next question from the line of Prayesh Jain from
Motilal Oswal, please go ahead.
Prayesh Jain:
Firstly, on the ETF portfolio, what will be the share of EPFO in our ETF
portfolio overall? And secondly with respect to equity market share,
while fund performance is a focus area, are any other strategies with
18
respect to distribution that you guys are working on in order to kind of
really recoup the market share in terms of flows? And just adding to
that, what would be a flow market share?
Vinay Lakhotia:
I'll answer the ETF part. In terms of gross inflows, the EPFO share is
around 50%. The remaining 50% comes either from a retailisation of
index funds as well as selling to the corporate fund houses. On the
overall AUM, I don't have the exact number, but it could be very well in
the range of around 60% to 65% will be the EPFO mandate. I'll come
back to you with the specific number on the overall book AUM.
Sandeep Samsi:
So far as the sales strategy is concerned, yes, we realized that one of our
strategies which was on the growth stocks has not been doing well,
because growth stocks overall have not been doing well. But we have
been positioning our flanking products in this category. I don't want to
take names, but we have enough strategies which are in place to tide
over this issue. Secondly, we are again approaching our distribution
partners with these new strategies for marketing our products. So we
are hopeful that with all of these, we should be able to get a good share
of our market in the equity funds.
Imtaiyazur Rahman: Our products are on the platforms, including banking platforms. We are
in continuous touch with our distributors. Our sales team is completely
engaged, and it is our focused strategy today, to work with the sales
team to basically regain our market share on the equity side.
Prayesh Jain:
On the SIP flow market share and how do you plan to increase the
same?
19
Sandeep Samsi:
Yes. So our gross inflows in the SIP for the month of March were about
Rs. 573 crore, our average ticket size is around Rs. 3,262 and the closing
SIP count is around 25.18 lakh.
Vinay Lakhotia:
So the market share on the gross sale is close to around 4.2% to 4.3%
and the market share on the overall book AUM is close to around 3.5%
to 3.6%.
Moderator:
Thank you. We have the next question from the line of Dipanjan Ghosh
from Citi. Please go ahead.
Dipanjan Ghosh:
Just two questions from my side. First, can you give some colour on the
possible expense drag in FY24 or 25 because of the new fund launches
in your subsidiaries, mostly UTI International? And second, while you
give the equity flow equity gross flow market share, if you can give some
colour on the similar market share on the equity side across the major
channels?
Imtaiyazur Rahman: UTI International launch of any fund - we are expecting some expenses
in the UTI International balance sheet that will be the legal cost. We
don't have the right number at this particular point in time, but we are
also in the process of hiring the team for our U.S. market and all legal
expenses towards registrations will also be there. The exact number I
don't have at this particular point in time. So, for the launch of products
in UTI Capital is concerned, we are not expecting many expenses in
launching the fund because there's only the license cost or document
filing cost which we need to pay to SEBI which is not very high.
Dipanjan Ghosh:
And on the second question? Your equity flow market share may be
across some of the larger channels.
20
Sandeep Samsi:
Yes. So if I look at my share across the various channels - across the
banking channel, my equity share is around 2%. And this is pure equity,
it does not include ETF and index. While for other MFDs it is around
7.5%. So for equities, these are the main two channels.
Dipanjan Ghosh:
Just to clarify, this is on AUM or on gross flows?
Sandeep Samsi:
This is on the AUM.
Dipanjan Ghosh:
OK, would you like to get some colour on the flow side also?
Sandeep Samsi:
I don't have the numbers on the flow side and maybe offline I can share
it with you.
Moderator:
Thank you. We have the next question from the line of Abhijeet Sakhare
from Kotak. Please go ahead.
Abhijeet Sakhare:
The first one is on the expense line. How should we look at growth in
staff costs and non-staff costs for FY24? Is there some indicative range
that you would like to give?
Imtaiyazur Rahman: Generally as per Hewitt report, the financial services may give raise of
9% to 11%. We are not expecting to give such a raise to our employees.
But we will also have the advantage of the retirement during this
financial year. So our staff cost is expected to grow at around 3.5%.
Because we are not expecting to give that 10% or 12% raise to our
employees.
21
Abhijeet Sakhare:
Got it. That's useful. And on the non-staff, because I think that's where
you'll have a little bit of cost pressure.
Imtaiyazur Rahman: As for Non-staff, as our CFO Mr. Surojit Saha has mentioned that there
is a CSR expense as we grow and make more profit which continues to
be there, but one-time expenses of sales meet which we had, where we
called the entire sales team to Mumbai and we have sales meet, these
expenses will not be there. Travel will continue to be there. We don't
know how the currency will behave, and this year's investment in IT will
be less than the previous year. We have already incurred a lot of
expenses in revamping our IT assets. These one-time expenses will go,
but the expenses towards the CSR will again come because of the profit
to meet the regulatory requirement. NPS expense is a variable expense,
and it is related to the income that is charged to the profit & loss account
of the retirement solution. One-time expenses will be eliminated. We
may have the renovation cost because we plan to renovate 2 1/2 floors
more in the existing building which will have some expenses.
Abhijeet Sakhare:
Got it. So this year, I think we closed the year with overall annual
expense growth of 6% and again for next year, you're looking at a few
more initiatives that will add to costs and some savings as well. But I do
think that going ahead, you can do better than this.
Imtaiyazur Rahman: We have especially targeted to basically optimize our costs and to
ensure that the costs are not increased. If you recall our data, for the
last 6-7 years we have been outperforming inflation. We will continue
to do that, and we will keep you updated on the quarter-on-quarter
basis as we go along to share with you our cost management strategy.
We are not expecting much rise in administrative expenses rise.
22
Abhijeet Sakhare:
Sorry. On the hybrid side, we've seen continuous net outflows, so
probably that is linked to how the fund performance is shaping up. Do
you think that pressure will remain? Is it driven by the more retail IFA
channels, or you've seen funds kind of being removed from focused lists
or recommendation lists? So if that's the case, I think this pressure can
sustain for a few more quarters. So how should we look at the next two
numbers for the next few quarters?
Imtaiyazur Rahman:
I would like to submit that none of our schemes has been removed from
the list of distributors. Vinay will give you further details, but from a
strategic perspective, we don't have a BAF product with us. We have
submitted our application. Maybe we are expecting approval from SEBI,
and we will launch the BAF product that will help us in raising funds.
Vinay Lakhotia:
So in the hybrid category, just wanted to clarify there is within our
scheme categorization, the arbitrage is being categorized under the
hybrid fund category only. The arbitrage fund is actually a Liquid fund in
terms of nature and because of the yield that has been receiving, there
has been a lot of redemption pressure. So for pure hybrid fund, If you
see the net sales are more or less it’s actually flattish, it's not positive.
Net sales are not there, but we are quite hopeful with the view and force
of a Balanced Advantage Fund that is expected close to around the
beginning of the next quarter or maybe the end of this quarter, the
inflows under the hybrid funds should actually improve.
Moderator:
Ladies and gentlemen, we will take one last question from the line of
Gaurav Jani from Prabhudas Lilladher. Please go ahead.
23
Gaurav Jani:
Thank you, Sir. Firstly a question for Vinay Sir. Sir, could you quantify on
a stock basis FY23 versus ‘22 what would have been the reduction in
equity yields?
Vinay Lakhotia:
‘22 versus ‘23, it will be close to around 7 to 8 basis points.
Gaurav Jani:
And just trying to sort of get your sense of so the fall in equity yields in
‘24 and ‘25 would not be as sharp, right?
Vinay Lakhotia:
Again, depending on the redemption analysis. If the older AUM is getting
redeemed at a faster pace, maybe the yield drop can be sharp, but that
will provide respite for the coming financial year. Otherwise, it will be a
marginal decline.
Gaurav Jani:
And stock basis FY23 if you could quantify the equity yields? For the full
year, I mean the average yield in equity.
Vinay Lakhotia:
Close to around 75-76 basis points.
Gaurav Jani:
Secondly, will we launch any equity NFOs in FY23 and if you share the
amount, please?
Sandeep Samsi:
So we launched a number of funds, but not directly in the equity
category. We launched ETF and we launched the fund of funds.
Gaurav Jani:
Understood. Thirdly, Sir, just a question to Sandeep Sir on a YOY basis,
the Banking Channel share on the equity side is about stable at or static
at 12%. What measures are we taking to actually increase that at a faster
pace?
24
Sandeep Samsi:
So as Mr. Rahman also mentioned that our products are listed on
various banking channels, and we are in continuous touch with the
distributors at the banking end to promote our products. This is again,
there are two things. One is the performance of the fund. So whenever
there is a good performance of the fund, automatically, the inflows also
improve. And also the level of interaction and relationship which has
been maintained by the relationship manager of the banking channel.
So we are trying on both. While as I mentioned earlier that some of our
funds, the strategy was different and we couldn't capitalize on that in
the last year, but we have now got flanking products to support these
funds and our people are in continuous touch with the distributors as
well as the bank and we hope that with these measures we will be able
to improve the share.
Gaurav Jani:
So understood, just last bit slightly different question on the cash side.
So this year, Sir, there's a fair bit of an increase in the payout from about
50% to about 63% on a consol level. Fair to assume, this should be
maintained, or this is the payout would increase actually.
Surojit Saha:
Yeah, you are correct. In 21 we have given 48% and in 22 we have raised
it to 63.21% and we hope to maintain this payout ratio, or we'll improve
it definitely.
Imtaiyazur Rahman:
It depends upon the board’s decision from time to time.
Surojit Saha:
I just want to clarify one point to Swarnabh of B&K the total out of the
7000 crore of the seed capital investment today is Rs. 265 crore.
25
Moderator:
Thank you, ladies and gentlemen, due to the time constraints that was
the last question, I would like to hand the flow back to the management
for closing comments. Please go ahead.
Imtaiyazur Rahman: Thank you and thank you very much. I also like to thank my team for
their participation and thanks a lot.
Moderator:
Thank you, ladies and gentlemen, for your participation in our Q4 FY22-
23 earnings conference call. In case of any further queries, you may get
in touch with the Investor Relations team at Adfactors or feel free to get
in touch with us. We look forward to interacting. Thank you.
26