MOTILALOFS — earnings call

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Prepared remarks

Moderator · Conference Operator

Thank you very much.

We will now begin the question and answer session.

The first question is from Uday Pai from Investec.

Please go ahead.

Uday Pai- Participant

I have multiple questions on the Wealth Management side.

So firstly, this quarter, you saw a mix of your APs and direct revenue shifting towards more of direct.

And simultaneously, you saw a quarter-on-quarter decline in market share, both in terms of cash ADTO and F&O premium.

Can you give some color on that, as to what has happened?

And secondly, have we changed the pricing in F&O because there is a change in regulation and it impacts your revenue directly.

That's on the wealth side.

And on the Private Wealth Management side, while your distribution income has increased meaningfully quarter-on quarter basis, your AUM has not increased.

Is there some kind of transactional products or insurance-like products which are not included in AUM, but in accounts for some revenue?

These are my questions.

Moderator · Conference Operator

Thank you.

The next question is from Vivek Ramakrishnan from DSP Mutual Fund.

Please go ahead.

Vivek Ramakrishnan- Participant

I have two questions on the lending book on the Wealth Management business as well as in the housing finance companies.

In Wealth Management, as well as private wealth management, your lending book has been coming down.

I guess that is linked to market volatility and decline.

But do you see the trend reversing or in terms of people not wanting to do as much speculative activity or taking margin trading funding as in the past?

And you also mentioned that the margins have expanded, so I wanted to know in the competitive business like this, what would be the sustainable level of margins.

So that's on the Wealth Management business.

I'll just ask the HFC business question also.

Are you seeing that the credit quality is holding up because in many parts of the business you're seeing, actually, your numbers are quite strong?

And what I wanted to ask was your credit costs are actually a negative number this quarter.

So, what drove that?

Shalibhadra Shah- CFO

As far as the lending book is concerned on the both Wealth Management and Private Wealth Management, there is a marginal dip on a sequential basis of about 5%.

While markets have corrected very sharply but this book has largely been resilient.

However, NIIs have gone up because of the improvement in our spreads as our cost of funds have declined by 30 bps on a sequential basis.

On HFC business, the negative credit cost is actually a function of recoveries from our past written-off cases.

This recovery is from assets which were written off prior to FY20 and which is resulting in the credit cost reversal in Q3FY25.

Also, on a steady-state basis, our asset quality has been very strong.

So, there's no incremental provision cost also in our quarterly P&L.

Moderator · Conference Operator

Thank you.

Next question is from Abhijeet Sakhare from Kotak Securities.

Please go ahead.

Abhijeet Sakhare- Participant

I had a question on the Private Wealth business.

If you could give some broad breakup of the overall AUM there?

Shalibhadra Shah- CFO

ARR assets is at ~Rs.

32,000 cr. and the transaction bearing assets are at ~Rs 116,000 cr. Out of that ~Rs.

116,000 cr of transaction bearing assets, ~Rs.

46,000 cr is the custody assets.

Abhijeet Sakhare- Participant

And the ARR asset, is there a further split that you can share in terms of, let's say, equity debt, fixed income?

Shalibhadra Shah- CFO

These are distribution assets into mutual funds and alternate assets.

Total ARR distribution assets are ~Rs 26,000 cr, almost ~Rs 3,000 cr of advisory assets and ~Rs 2,700 cr of lending book.

Moderator · Conference Operator

Thank you.

The next question is from Manan Mundra who is an Individual Investor.

Please go ahead.

Manan Mundra- Participant

I have two questions relating to customers' stickiness.

First is, if you can provide the customer vintage-wise revenue, just if we segregate them in separate buckets, for example, 0 to 2 years, 3 to 6 years and 6 years and above.

So that's one.

Second, whether the client revenue increases as their age increases because generally, the income of the clients also increases with their age in the wealth management business?

Shalibhadra Shah- CFO

As the vintage improves, all our revenues have been increasing for our clients.

That's because not only we have broking, but we also do the cross-sell, and our cross-sell ratio has been improving.

We don't provide the exact numbers of the vintage of the customer.

Manan Mundra- Participant

Okay.

And as the age of the clients are increasing, are we getting additional revenue from those clients?

Shalibhadra Shah- CFO

Yes.

As the vintage improves across every bucket, we see the increase in the revenue from the same customer.

Manan Mundra- Participant

Okay.

And have we seen any disproportionate rise in the margin calls from the clients – for the clients because of the recent fall in the market?

And do we see any systemic risks around that?

Moderator · Conference Operator

Thank you.

The next question is from Umang Shah from Kotak Mutual Fund.

Please go ahead.

Umang Shah- Participant

Congratulations on a good quarter and thanks for taking my question.

I had two questions pertaining to the asset management business.

One is, if you could just throw some light, I mean, last few weeks have been fairly volatile in markets.

And if you could just share some of the trends that you guys are witnessing into your net flows or the SIP registrations, how the flows have been, given that markets have been volatile and some of our schemes have also seen a fair bit of softness in terms of performance.

So that's the first one.

And on the SIP bit, probably if you could also throw some color in terms of while the gross number looks extremely strong, I mean, it's sort of an ongoing debate in the industry about gross and net.

If you could just throw some color on that, that would be really helpful?

Moderator · Conference Operator

Thank you.

Next question is from Dipanjan Ghosh from Citi.

Please go ahead.

Dipanjan Ghosh- Participant

Just a few questions from my side.

First, on the private wealth business.

If I look at your overall transactional income, ex of broking income, it seems that has gone up meaningfully during the quarter compared to a steady-state run rate.

So, is there some carry income that has been booked or some sort of syndication activity that you have done?

If you can give some color on that.

So that would be my first question?

My second question would be, while you mentioned that your overall flows on the mutual fund side has been quite strong, maybe similar to November levels or maybe one of the best in the history of the company.

I wanted to get some color on, when you talk to, let's say, feet on street or your distributors, what are they sensing in terms of incremental sentiment because this is probably the first-time retail customers are likely to see a prolonged period of paying out there?

The third and the last question is more on -- again, going back to the Private Wealth division and maybe in sync with the Capital Markets division, you mentioned that your pipeline on the IB side is holding up quite well, but when you talk to, let's say, your clients what is the hope that you see a fructification of some of these deals?

And in that context, from a new client addition in the private wealth side or new money getting created, how do you see the trajectory maybe in FY26?

Moderator · Conference Operator

Thank you.

Next question is from Avinash Singh from Emkay Global.

Please go ahead.

Avinash Singh- Participant

Congratulations on a great set of numbers.

A couple of questions.

The first one, if you can help us in terms of your asset management, AUM, how much of it is within your group ecosystem distribution, like wealth and private wealth?

Together, how much they contribute to this distribution?

And in your data, say, disclosure, where these are get captured?

Do they get captured in direct and or wealth management piece?

So that's question number one.

And on the private wealth side, the thing here is that, of course, you have been kind of in expansion mode ramping up your RM and all.

So, the question is that if I were to look at in terms of your kind of a focused segment, where this private wealth split in, I mean, like Rs.

5 crores per client investable asset or higher or lower or put it the other way, what is the median typically investable asset, not the customer you said, investable asset you will have as your kind of a focus segment for the private wealth?

Shalibhadra Shah- CFO

On the first question, the captive AMC AUM is just 15% between Wealth and Private Wealth.

This number is also moderately coming down.

Moderator · Conference Operator

Thank you.

Next question is from Sanil Desai from ICICI Securities.

Please go ahead.

Sanil Desai- Participant

I just wanted to ask that what kind of traction you have seen in the net flows and the new NFOs which Moti has launched?

Because I think in last one or two con call, the strategy was said that to expand the AMC business you were targeting around 1 NFO per month.

So how has that strategy been?

What is the pipeline of NFOs?

And if I may, then in this period where there has been market weakness, has there been any weakness in the flows seen in the NFOs?

Moderator · Conference Operator

Thank you.

Next question is from Lalit Deo from Equirus Securities.

Please go ahead.

Lalit Deo- Participant

Sir, just two questions.

So firstly, in the Private Wealth Management side, so like in this particular quarter, like we have seen a strong addition of the family.

However, in terms of net sales, that number might not have picked up very well.

So just wanted to understand, like when we onboard a family, then do we get that initial Rs 3 cr per family at one go or is it like spread over multiple months?

Moderator · Conference Operator

Thank you.

Next question is from Sanjaya Satapathy from Ampersand Capital.

Please go ahead.

Sanjaya Satapathy- Participant

Sir, two questions.

One on brokerage side, we hear that your market share has gone down a bit again, and you've taken some pricing action.

Can you just help me understand what will be the near-term as well as long-term strategy in this area for you to gain market share?

Moderator · Conference Operator

Thank you.

Next question is from Mahek from Emkay.

Please go ahead.

Mahek- Participant

Just one question from my side.

If I look at the private wealth business, the employee cost has gone up significantly on a sequential basis.

So just wanted to know, is it largely on account of the RM addition or is there anything else there?

Moderator · Conference Operator

Thank you very much.

Due to time constraints, we'll have to take that as the last question.

I will now hand the conference back to Mr. Shalibhadra Shah for closing comments.

Shalibhadra Shah- CFO

On behalf of Motilal Oswal Financial Services, I would like to thank every participant for attending the concall.

In case of any further queries, please do get in touch with our Investor Relations Desk or me.

Thank you, and have a good day.

Moderator · Conference Operator

Thank you very much.

With that, we conclude today's conference.

Thank you for joining us, ladies and gentlemen.

You may now disconnect your lines.

Disclaimer

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