Ladies and gentlemen, good day, and welcome to the Q2 and H1 FY24 earnings conference call of Computer Age Management Services Limited, hosted by Orient Capital. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, you may signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Shivani Karwat from Orient Capital. Thank you, and over to you, ma'am.
Hi, good afternoon, everyone. Welcome to the Q2 and H1 FY 2024 earnings conference call for Computer Age Management Services Limited. As mentioned today from the Management, we have with us Mr. Anuj Kumar, Managing Director, Mr. Ramc haran SR, CFO, and Mr. Anish Sawlani, Head of Investor Relations. Before we proceed to start the call, I'd like to give a small disclaimer that this conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on date.
These statements are not guarantees of future performance and involve risks and uncertainties, which are difficult to predict. A detailed disclaimer has also been published in the investor presentation, which was released to the stock exchanges. I hope everybody had a chance to go through the presentation. I will now hand over the call to Mr. Anuj Kumar, Managing Director. Thanks, everyone, and over to you, sir.
Thank you, Shivani, and good afternoon, everyone. I thank each one of you for taking time out to join our Q2 earnings call. Like we've done in the past, we will take you through a structured presentation, and then we will have about 35-40 minutes for Q&A once we are done with the presentation. This has already been uploaded, so I estimate most of you have already gone through it. But just to expand on the performance of the company during the second quarter, I would say it was a great sustained story of growth in the second quarter. Like we said, we saw several historic highs. I will talk about them.
Expanding the business share across both mutual funds and outside of mutual funds in terms of how we got share, and then we achieved several key milestones across businesses. You would have seen that we reported, we have been sharing with you five mutual fund wins. Four companies which are just starting off in the market. Now we are the fifth of these four both Helios and Zerodha went live. This was, of course, outside 2Q. This happened in October, but it's worth sharing with each one of you that both of them have formally launched in the market. So, we've expanded our account of active AMCs, other AMCs that work with us.
On the overall mutual fund AUM, the first six months of this year and the quarter have been the best ever in recent times in terms of absolute and percentage expansion of assets. Our overall assets at the end of the quarter stood over INR 32 lakh crore. You'll see an order of INR 32.2 trillion. This went up 20% year-on-year, and on a large base, that's certainly a very significant number. Overall market share continued at 68.5%. Our equity AUM crossed INR 15 lakh crore; end of the quarter was INR 15.2 trillion. This registered a 28% growth year-on-year, as you're aware. And our equity market share expanded by almost 130 basis points, so it's now 65.5%.
A year back, this would have been 64 and some change, so that's been a sustained increase. Also, in the first quarter, we've shown you our equity net sales market share, which was in the 90s in the first quarter, which obviously a 90% share of anything can look like an aberration, but, very happy to share with you that, it's holding up quite well. Net sales is really the net money that comes into the market from investors. We had an 80% share, in the second quarter, and, and this is probably the reason why the, equity, asset market share has gone up.
Outside of mutual funds, our overall, and I'm giving you a one-year picture from second quarter last year to this year, about 3% or 300 basis points increase year-over-year, in the share of non-MF revenue. This was in the range of 10%, just short of 10 one year back in the second quarter. It's now about 13%. How did this happen, n on-MF revenue, if I take absolute numbers, grew 47% year-on-year. If I take out the one-time contribution of Think360, it is still 30%, which is a very salutary number. You know that we've been talking about an overall earnings compounding of 15%, saying non-MF should be growing in the 20s or beyond that. So, this was a great occurrence, 30% non-MF growth.
In alternatives, which has been a sweet spot for us, we went past INR 2 lakh crore or INR 2 trillion overall assets under management, under administration number. And then CAMS KRA, which is a product where we were focused on mutual funds till about a year and a half back. We started planning a complete revamp of the platform and, and from a product perspective, to stay ahead of the curve... and also to make a strong go-to-market efforts. I think all of that has has done very well. CAMS KRA has grown almost 100% in revenue in the last one year, 2Q to 2Q. So that's been a great story, too. So, you see the financial highlights. As you know, you've read all of this.
Revenues are 13.5%, EBITDA up 15.5%, EBITDA percentage at 44.5% is almost 70 points up year-on-year. Then, profit after tax, as you know, grew 17%. So overall, just a strong story across all key metrics across the business. Go to the next. Some of the stuff that's on the other chart, I think, in summary, I may have covered, but I'll just go through this. Transaction volumes you see was a historic high, crossing about 14 crore transactions in a quarter. Similarly, on the unique investor growth, we are now getting very close to 3 crore unique investors at about 2.83 crore. Equity gross sales, again, you see about 67% share in the market.
But what stays back, back with us, growth is always growth of redemptions. When you net it out, that's a 99% share in the last quarter, 80% in this quarter. And again, this is a great number to have on our side. Of course, we have to continue watching. This is the cumulative impact of how our AMCs and their schemes are performing in the market in terms of their relative share of sales. But I would say a great number for us to have on our side. And similarly, as you've seen, the SIP juggernaut continues to move in terms of overall SIP registrations, in the market. CAMS individually is now registering anything between 60-65 lakh gross SIPs. In a quarter, you see a number of over 30 lakh or 3 million net SIPs.
This is net of redemptions or net of, SIP expiry and withdrawals. So that's a great number, too. We've never had a number as large as that. And, thriving on all of this, our live SIP share, like you can see, has grown from 56.1 in 1Q to its grown about 0.7% per day in the September quarter. Similar numbers when you juxtapose them with the market. I'm sure you've been watching these numbers closely, so I will not go through this individually. But I think, overall, equity share gain and equity mix sales, overall share has been a great story for us. So has been SIP collection and net SIP release. Next slide. Move forward. From a transaction volume perspective, you can see almost a 24% year-on-year growth.
Points to a degree of retailization when transactions are moving faster than AUM and moving faster than revenue growth. But that's a great story again, because the middle of the pyramid and going towards the bottom is really where a lot of participation will come in these markets as individual, you know, transaction sizes and commitments by investors continue to become smaller. But that's a great sign of participation. SIP booked, I spoke about that, grew about 24% year-on-year, 8% in the quarter. You see similarly, live folios grew about 18% year-on-year, and unique investors about 17%. Systematic transactions process, this is the SIPs that we trigger and collect against each year, grew about 13% on a year-on-year basis.
From an overall, and I'll give you a short commentary of each of these businesses. As you can see on alternatives, the story continues to be very strong and steady. We won, from a full-service perspective, 50 new to CAMS logos in 2Q. WealthServ, now we've introduced WealthServ 2.0, so which is several markers and steps ahead in terms of digital onboarding and servicing of investors. And we have 100+ clients that we will, you know, naming in the past, who have now adopted a digital onboarding capability on AIF. Temenos Multifonds, which is part of the fund accounting suite, which we'd announced in the last quarter, is now ready to take on clients.
So we expect to report this to be live and in service in about two months from now. We also built out and did a beta limited launch of our first analytics platform, WealthTrak, which will aggregate data on the alternative side, largely on AIF, and then provide contrast, just like we do on our backs of you view versus industry, for industry participants. But also, very importantly, Fintuple, which is done, we've told you in the past, bespoke work has is near conclusion of a very large transformation in one of the top private sector banks. You will see some announcement come from us in December. So this is starting from their custody operations.
This basically integrates every other component of the alternatives operating arena and creates ability for them to share data, onboard investors, and just takes out all the inconsistencies used from their operating setup. So you'll see this announcement in December and as the platform goes through a formal launch. This is a very synergistic offering, so whether it is video KYC capabilities from both CAMS and Think360, and several other things, including CAMS KRA and RTA operations for AIF. It blends in all of that, and you will see some media ads on this in December. From a FinServ perspective, I think the great number is that we are holding at about close to 10% market share. This used to be small single digit till about two to three quarters back.
A number of live FIUs continuously takes time and has crossed 50. I must say that while this was thought of mostly as, you know, lending use cases in terms of, you know, small ticket lending, like, mostly digital lenders adopting Account Aggregator for creditworthiness of individuals. The other use cases are now becoming very popular, so large broking houses are using this for F&O account opening for collating bank statements. PFM use cases are now getting bolstered. Similarly, third-party verification are use cases now live in several of the brokerages and MFs, etc. So non-lending use cases are now kind of gaining prominence. Of course, this will happen over a few quarters or years, but it's a good first sign to see in the market.
From a payments perspective, we've continued to expand and do well. UPI AutoPay, like I said last time, is continuing to get adopted and may become over a period of time, as the preferred option for SIP payments and recurring payments for individuals. KYC, this is something that I alluded to, and you may have seen some press and a lot of information on our website, et cetera. So we brought out this 10-minute KYC solution where it enables almost instant onboarding from a brokerage Demat account, and from that perspective, it's become a very popular solution.
When you bring in all the components of technology that we've done, which is, you know, things like OCR and face match, liveness check, et cetera, it used to happen in a lagged in time kind of format, which is all now getting done quickly. The algos and the technology enables all of this, and that's what has enabled us broaden out the offering to bring in both Fintechs and brokerages. It was largely a mutual fund-focused offering. We were selling largely to MFs, but we've gone beyond that. We've seen a 3x increase in monthly volumes, but importantly, almost over 100% year-on-year revenue growth. This, of course, was on a small base.
The base is larger, but we expect to see more growth in the coming 12 months as some of these operations stabilize, large customers continue to opt for us, and then existing customers scale. We expect this to continue growing in the next 12-24 months. From a repository perspective, you will see, and this is now available in both the Play Store and the App Store, capability called Bima Central, which essentially allows you to open an eIA account and then start linking your policies. But over a period of time, it will allow you to do various other things, including, like I said, making payments as the regulatory blessings are received, to do lien marking and borrowing money against your policies.
We're seeing a single screen with all surrender values, et cetera. So, various augmented capabilities. Now, this requires us to tie up with all the almost 50 odd insurers, both in life and non-life. The good news is that the top five have now been signed up, for this. Also from an overall policy perspective, we are 40% up year-on-year in terms of, eIA addition. And, like we said, there is sustained interest. While the eIA was an important product for the life insurance sector, now the non-life insurers are showing sustained interest on this. So, as we, continue our journey, continue expanding the number of e IA accounts, make the journey of opening an account frictionless, linking all your policies and then value-added services of the kind that I said, we will see a lot more interest.
Of course, the prerequisite is to bring every insurer on board. That's a process that will take some time. But happy to report this is a unique product. This is not available with any of the repositories today, and we're expecting to scale on the back of these capabilities. Of course, there is no change in the overall overall regulatory position on insurance policies being pushed into Demat. So that remains as an item which is under work, under progress, but has not finally been declared as mandatory. From a KRA perspective, we've continued to make inroads into the POPs and some progress in the corporate segment. We continue to retain the number two position in eNPS .
Then from a Think360 perspective, we've continued to the three key products, and that story is going well. From an intellectual property perspective, the PFM module and Account Aggregator is now fully built by Think360, and we have acquired several customers. Think360 is also introducing to the market a Geo Wealth Index, which is able to take legal address and through various direct and surrogate means, is able to establish the potential wealth capability of the individual who resides or rents in that space. And similarly, we are doing some work around generative AI and finding use cases in the market to be able to sell this profitably. So that's the overall story on Think360.
Like I said, both from an Algo360 and Kwik.ID perspective, we continue to scale and sign new relationships. So that's really it in terms of overall operating highlights and what's happened to the different businesses in terms of scale, share, volumes, et cetera. I will hand over to Ramcharan to speak about the financials.
Thank you, Anuj. I'll just spend a couple of minutes on the broad financial numbers. As Anuj mentioned, this was a strong quarter from a revenue as well as from a profit perspective. So revenue for the quarter was INR 275 crore, which was up almost 13.5% year-on-year and 5.3% quarter-on-quarter. The revenue last quarter, if you recall, it was around INR 261 crore, and the last year, same quarter, was INR 242 crore. This was on the back of a smart growth in the AUM, and the mutual fund revenue. The AUM on a year-on-year basis grew more than 20%, translating into MF revenue growth of almost 10%. And on quarter-on-quarter, the AUM grew by 8.7%, translating into a MF revenue growth of 5%.
So on tracking this smart growth in AUM, we have been able to grow the revenue, almost in line with the growth of AUM, especially on a quarter-on-quarter basis. The asset-based revenue grew 9% and 6% on year-on-year and quarter-on-quarter. We are at almost INR 202 crore of asset-based revenue. The non-asset-based revenue grew 13.6% year-on-year. We have seen some uptick coming in the applications that we run, including MF Central and various other applications and platforms that we license to the mutual funds. So that's seen a good momentum and continued momentum on the revenue, and there has been some increase in the call center, too, on both year and quarter. Translating into a smart growth on a year-on-year basis of 13.6% on the non-asset-based revenue.
Currently, the non-asset-based revenue per quarter is around INR 38 crore. Non-MF revenue, Anuj touched upon this. We have seen a good growth in non-MF revenue, almost 37% on a year-on-year basis, equalizing for Think Analytics acquisition, which was not in the base, even then it's at 30%. So we have seen, you know, what we have estimated, it's little ahead of what we estimate in terms of the non-MF revenue growth, and that's translating into the percentage of non-MF revenue being close to 13% for the quarter. On a year and a quarter-on-quarter basis, we saw an uptick of 7.4% on the non-MF revenue. So the non-MF revenue is currently around INR 35.5 crore of the overall revenue. So we're continuing to see positive trends on this, especially on the KRA business.
We are seeing, you know, stable to improved revenue from AUM perspective. Payments is continuing to do well in terms of the ramp-up that we are seeing in the number of transactions. So all in all, we are on track to meet our targets in terms of increasing the pie of non-MF revenue. The asset mix you will note, you'll note for the quarter is actually very favorable. The equity component, which used to be around, 45% last year, is around 47.7%, and hence it's translating to some benefit for us in terms of yield.
On the yield commentary, I think in the last couple of quarters or more than that, we had indicated that there is a large contract that is being renegotiated after five years, and we had indicated some impact of that will be felt. During the last earnings call, we have clearly stated that there will be some spillover impact in the current quarter, post which we believe that it will be business as usual. Happy to say that, that's been the actual case, and we have concluded the contract, and we are seeing some spillover impact of a marginal decline in yield in the current quarter.
But going forward, our estimate is that we will not see any unusual yield movements, and it will be restricted to the impact of the telescopic pricing, at least for the foreseeable future or the next few quarters. So that's the commentary on the yield. Hence, you will see a small depletion in the yield, but we feel that the impact of all the renegotiations has already been considered, and we do not see any big impact going forward on the yields, other than the telescopic pricing impact.
On the profit perspective, you know, backed by the growth in revenue as well as some operating leverage, productivity and automation, and some cost control measures, you will see that we have entered the quarter with a 44.5% EBITDA, which is equal to or better than the margins that you saw in the earlier many quarters, right? So we ended the quarter with an operating EBITDA of INR 122.5 crore, as opposed to INR 110 crore and a 42.2% in Q1 of FY 2024. And last year, we had INR 106 crore or 43.8% EBITDA. So we are seeing an uptick in the margin as well as the absolute number in terms of the operating EBITDA. This is translating into a margin growth even from a PBT and a PAT perspective.
For the quarter, our PAT percentage was close to 30%, 29.7%, with a PAT of INR 84.5 crores. Again, trending upwards in terms of the margin percentages, reflective of our cost control as well as the operating leverage that we feel is flowing into the bottom line, in spite of a small depletion in yields that we are seeing in the top line. Our return on net worth continued to be impressive at more than 42%, and we ended the quarter, thirtieth September, we had a cash and cash equivalents of INR 528 crores. This was after payment of dividend of INR 98 crore during the last quarter, and the board was pleased to declare an interim dividend of INR 10 per share in their meeting yesterday, for which the record date is announced on the seventeenth.
So this, you know, you-- when you see the trend going forward also-- when you see the trend in the later part of the presentation, you'll see that the margin trend as well as the revenue and the PBT percentage absolute numbers seem to be trending upwards which is reiterating the, commentary that Anuj and me have given in terms of this being a strong quarter and looking forward to maintaining and, and a minor improvement in margins going forward, as we think we have seen the worst, already is over in terms of the yield compression over the last few quarters.... So this is the commentary I had on the, revenue and profit numbers. I'll hand it back to the moderator, they can open it up for questions.
Thank you so much. We will now begin the Q&A session. Anyone who wishes to ask a question may press star and one on their touch-tone phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants who wish to join the question queue may please press star and one now. The first question is from the line of Mr. Santosh K eshri from Keshri Finance. Please go ahead.
Am I audible?
Yes, you are.
Okay. So, congratulations on a good set of numbers. I just had one question, and one question in fact. When you say telescopic impact of the revenue negotiation is over-
Mr. Keshri, is it possible for you to use your headset while asking a question, please?
Okay, sure. Am I audible better now?
Yes, sir.
Yes. So I had just one question. When you say that the telescopic impact of the revenue initiation is over, what exactly you mean by that? I do not understand the term telescopic.
Yeah, sure. So, let me just try and explain that. The pricing structure that we have with our mutual fund customers is actually scale-based, which is that there is no single bps rate that we charge for the asset under management. So, I'll, we broadly divide this, and while the rates may be different for different customers, the structure is broadly the same for all the customers. There is asset class-based bps that we agree upon. For example, equity, debt, liquid and others or ETFs, Passives, et cetera. So, for example, take the equity, the rate of this that we arrive at for a particular customer is not the same.
As the AUM keeps growing, for example, if you had INR 5,000 crore AUM of equity, assuming that your bps was, say, 7 bps if you get to the next INR 500 crore, the rate will fall from 7 bps- 6.5 bps. So, as you grow in AUM, the marginal billing that we do or the marginal cost for the mutual fund customer keeps decreasing. This is a deliberate inbuilt structure that is there in the pricing agreements with our customers, to ensure that the benefit of scale gets passed on to the customers without them having to come back to us every time that there is a big growth in assets.
Typically, what we see is as the assets keep growing for the mutual fund customers, if your asset growth is, say, 10, then my asset fee growth is generally between 6 and 7, which is that we have a 20%-30% depletion that generally happens, sometimes 25%, sometimes 30%, that happens between the growth that you see in the assets versus the growth you see in the asset fee, which is what is called a telescoping pricing structure.
Okay. So, sorry, then what exactly is the meaning of telescopic impact? The grade-wise increase or decrease is not going to happen anymore?
No, sorry. What I said was, barring the telescopic pricing impact, because the rates generally go down because of, A telescopic pricing, because of any renegotiation, large renegotiation that happens on the base rates itself with the customer. We had indicated during the last few quarters that, a large customer's contract for the last 5 years was renewed just now with a decrease in rates. What we indicated was the impact of that will not be felt further. The only impact you will feel will be the impact of the telescopic pricing.
Okay, understood. Understood. Thank you so much. That was my only question.
Thank you so much. Participants who wish to join the question queue may please press star and one now. The next question is on the line of Mr. Sanil Desai from ICICI Securities. Please go ahead. Mr. Desai, your line is unmuted. Please proceed with your question. Mr. Desai, could you please unmute your line? As there is no response from the line of the current participant.
Hello, am I audible now?
Yes, sir, you are audible now.
Yeah, sorry for the technical problem. My question was related with the yield movement. As you said that there was a, you know, some effect of the yield reset in this quarter. In a way, going ahead, also in this quarter, we also saw a big AUM jump. So, part of the impact was also because of telescopic, and part of it would be because of the yield reset. Any color which you can share on the extent of decline that we have seen in this quarter because of the yield reset, which will give us a better idea about what to take the yield assumptions for the coming quarter and also the year ahead?
So, you know, the, the way to think about this is, you saw a 20% AUM expansion, 2Q to 2Q, last year to this year. Normally, you would have seen about a 14%-15% revenue growth. What you saw is about a 10% revenue growth. The 15 minus 10 is perhaps a bar equivalent of what you're asking for, right? If, if we did not have that one-time adjustment, then we would have delivered the 14%-15% on the overall asset growth, which was only 10%. The 15 minus 10 is then approximately the impact of whatever we're talking about.
Understood. Understood. So going ahead, it will fall back to our historical way of decline, which is in line with the telescopic thing, right?
That, that's correct. That's correct. So if assets, let's say, in the next 12 months grow 20%, there's no reason that revenue will grow only 10%. Revenue should grow 14%-15%.
Sure. Sure. That, that's really helpful. Thanks a lot. I'll get back in touch.
No problem.
Thank you so much. Before we take the next question, we would like to remind participants that you may press star and one to ask a question. The next question is from the line of, Dipanjan Ghosh from Citi. Please go ahead.
H i, sir. Good morning. Hope I'm audible?
Yes, you are.
Yeah. So just a few questions. First, if I look at your non-asset-based mutual and revenue, on a quarter-on-quarter, it seems to be almost on flattish side. So, given that there are a lot of activities going on in the mutual fund space in terms of be it NFOs or, you know, the market being bull. So, I would have expected that, you know, mutual funds will be spending a little bit more on this front. If you can give some color on that. That's question number one. Question number two is on your non-MF revenue. So, if I strip off the KRA business and look at the other businesses from a momentum perspective sequentially, like if you look at Think360, over there, it has been relatively flattish or down on a Q-o-Q.
So the other businesses have also been, you know, not, not, not that great in terms of momentum of take on the revenue side, compared to, let's say, the client wins or logo wins or business expansion side. I just wanted to get some color on that. Lastly, you know, in terms of expenses, can you give some color on increment, incremental costs that you need to incur on the new businesses, and what sort of everyday trajectory should we even see on that?
So, thank you, Dipanjan. I'll take the question on the non-asset-based revenue as well as the expenses, and I will request Anuj to come in on the non-MF business. See, on the non-asset-based revenue, you know that there are four components, major f ive components, major of it, which is the transaction-based, the miscellaneous application-based, the call center, the NFOs that we built for, and the out-of-pocket expenses. What we have seen as a trend is, in the last quarter, we have not seen any big increase in the transaction-based assets from a paper transactions perspective. What we have seen is some moderate increase that's happened from a call center and from a miscellaneous application perspective. So, while year-on-year, we do see a good increase, you know, in terms of revenue.
Quarter- on- quarter, it has been flattish. What we expected, and again, as I was earlier mentioning, we do not expect the non-asset-based revenue to kind of propel any growth for us or to propel any profit for us. Because basically, the transactions being up or down does not increment or incrementally impact the profits. So, we would assume that they'll be static within the same levels that we are seeing now. The only upside that we could see is some increase because of the MFC entral related revenue that is currently application base. That's the only increase that we could probably see to be profitable growth in that entire bucket that we see there.
You know, OP, because of some reasons in terms of, you know, liquidity issues and all those things, should go up and come down by INR 1 crore here and INR 1 crore there, but all those things are compensated by increase or decrease in revenue. So, that's the reason for the non-asset-based revenue remaining static on a quarter-on-quarter basis. From an expenses perspective, I think, the major expense increase that you will see, will be the salary expenses. Even on a year-on-year basis, my entire salary head has increased by INR 7.6 crores, INR 7.6 crores, and that includes the salary impact that we given in April, you know, which is more than INR 6 crores. So we have been remarkably disciplined in terms of adding manpower or regulating the cost from the manpower perspective.
It includes the ESOP cost increase, it includes the Think Analytics cost. Everything put together on a year-on-year basis, we have increased cost in a salary only to the extent of INR 7.6 crore. So we feel that going forward, there will be stable cost that you will see. In fact, on a quarter-on-quarter basis, if you see the increase in revenue is almost like INR 13 crore, and the increase in EBITDA is INR 12 crore. So while that could not be replicated every quarter going forward, we feel that the incremental cost will be measured. It will. And we generally expect 50%-60% of the increase in revenue to flow down as the EBITDA in a, in a normal quarter.
So from a fixed cost perspective or from an operating expenses perspective, operating expenses generally remain at around 7 to 7.5% of revenue, generally less than 8%. That's what they will continue to remain if you remove the OP part of it. With OP, it will be around 12%. The trend has been remarkably stable across the last many quarters that we have seen. The, the employee expenses, as I said, since we are able to come out, we are in fact seeing a downward trend. It's a little more than 34% of overall revenue. And your fixed expenses, even on a quarter-on-quarter basis, you have seen this decreasing. And, you know, a couple of quarters back, there was a concern raised regarding why have your fixed expenses gone up?
I want to set expectations saying that you will see this as the peak, and you will not see a lot of increase other than inflation-driven increase going forward. I think that's, that's what it's been over the last couple of quarters, too. I will kind of wait for any questions from you on this, or Anuj can probably take the question on the non-MF.
So on the non-MF revenue, while we've stated that overall year-on-year growth is 47%, netted for the one-time Think360 revenue, which started accruing in the first quarter, that's about 30%. You are right, in this quarter, KRA has really driven a lot of this growth. Now, last quarter also, KRA driven growth, this has been a substantial quarter from a CAMS KRA contribution perspective. However, from our overall, you know, sales focus and signing pipeline, et cetera, we are very sure that the others, which is CAMS Pay, Think360, AIF, and Insurance, will be large contributors in the coming two quarters. But in this quarter, you, you're correct, the large part of non-MF increase outside of Think has been driven by CAMS KRA.
Sure. Could just if I can ask two more follow-up questions. One, on your AIF side, on the incremental sign-ups, your competitor highlighted that they have moved from a flat fee-based slab to to more of a AUM-linked slab, like you see in mutual funds. I just wanted to get some color on whether you have also made some changes on that part. Second, you know, more of a structural question, you know. Now, let's say in this quarter, for example, mutual funds, or last two quarters, mutual funds have seen very sharp growth in AUM, and some of them have seen change in slabs for themselves on the gross TER side.
Now, your contracts, you know, are more from a two, three-year perspective. So when they say change in slab, is it like a direct translation that you have built in the contract, or how does it happen? Or do you expect renegotiations to be much more frequent in this sort of a market trajectory, let's say, for instance, hypothetically?
Yeah, sure. So when you take the first part on whether AIFs are moving from flat pricing to a tiered pricing, we are not seeing that. We are not seeing that, and you must, I'm sure you appreciate that the market, if I juxtapose what it was two years back to what it is now, is a lot more competitive. There are a couple of global players who are competing, the domestic, both us and a key competitor, so also us and KFin. So in those kind of competitive scenarios, it's not easy to change a pricing paradigm. The current pricing model works well for us, so it is contained the way it is. No large changes. We are not reporting any large changes.
On the mutual fund side, just think of these as two separate trains. And how do those two separate trains move? Mutual funds, when they grow, they will charge as per the TER slab. The TER slabs can continue falling from, you know the number, right? From around 2.25% all the way down to, let's say, 1% and some change. So that is something that the mutual fund experiences. What we experience is our pricing contract with them, which is saying that the telescopic impact, I'm just throwing a number, may not be very accurate. Let's say the telescopic impact is 2%. So we will see our contraction irrespective of what change in fees they are underway. Are they using the argument of their change in slab and their change in fee to negotiate something else?
With us, the answer is no. While they are seeing, I'm sure there are many schemes which have crossed over to higher and higher slabs, it's also a fact that our telescopic, our telescopic methodology keeps rates at very, very affordable levels. But it's not a one-to-one mapping between what they experience and what we experience.
Got it, sir. If I can just follow one small question on the Account Aggregator side, have rates stabilized in terms of pricing, or is the pricing pressure out there? That was all. Thank you.
Yeah. They, they have stabilized. The rates are maybe 20%-25% from where we had started, right? So, they have stabilized to a certain level. Competition, of course, in both AA and TSP is intense, but yeah, we are seeing some stabilization of rates now.
Sure. Thank you, sir, and all the best.
Thank you.
Thank you.
Thank you. The next question is from the line of Mr. Lalit Deo from Equirus Securities. Please go ahead.
Yeah. Hi, sir. Good afternoon. So I have a couple of questions. So firstly, on the fund, the AIF revenue. So, like, if you see the total AUM, so, like, there we are seeing a sharp-
Can you please use the handset and not just speak into your speakerphone, please?
Hello. Is this better?
Yes, sir.
Yeah. So, so coming on the AIF revenue piece, so, like, if you see the overall AUM growth in the AIF segment, so that has grown materially during this quarter, but since the revenues have not grown, have remained broadly flattish on a sequential basis. So do we expect that, from this growth in the AUM, the revenues could come up in the coming quarters? That was the first question. And second, like you mentioned, like that, because of the renegotiation happening, there was some kind of pressure on the revenue yields. So do... So what is, what is the pipeline, over the next 12-18 months? Like, is there any major, contract negotiation, have, going to take place with our mutual fund clients?
Correct. So, from an AIF perspective, we've seen a steady pipeline of signings, and therefore, yes, we are expecting that the growth numbers that we've been reporting in the past should be back in the coming two quarters. We're quite confident of that. The AUM does continue to grow. Every pricing is not AUM linked. A lot of it is activity linked pricing, but that notwithstanding, we are seeing significant growth coming back in the next two quarters. From a MF perspective, you can see that we are the, we had stated that there was a large contract where we were resetting prices because of some historical context. That exercise is now over in the second quarter.
There is nothing major which we believe, and that was like a once-in-a-10-year event, and you've seen that we saw price depletion in a sustained manner for about four to five quarters. In the next four to five quarters, we do not see any event like that happening again. So, like Ramcharan said, you can expect marginal, small, telescopic rate-led depletion, but nothing major from a price negotiation perspective.
Sure. And so just last, one data question. Like you mentioned, clarification, like you mentioned, that the fixed expenses will be a pass, will be 12% of our revenue, will be below 12% of the revenue. Or was it something else?
Sorry, can you just repeat your question, please? Sorry.
So the other fixed expenses, like, as you mentioned, that the operating expenses will be, like, below 8%, below 8% of the revenues, and then there was some 12% of the revenue. So I just missed that part.
So, I think what we mentioned was operating expenses. If you take the out-of-pocket expenses, right? Which is included in the operating expenses as well as in the revenue. If you just do a division of the two, it comes to 12%. But if you remove the out-of-pocket expenses from the numerator and denominator, just from the sales as well as the expenses, the real operating expenses that you incur, which is mainly some data entry cost, the sponsor bank charges that they do for the payments businesses and some things like that. The amount will be less than 8%. It is generally between 7.5%-8%. That was what I was mentioning on this, on this 12%, 7%.
Sure. Yeah. Thanks. Thanks for that.
Thank you.
Thank you. The next question is from the line of Mr. Abhijeet Sakhare from Kotak Securities. Please go ahead.
Yeah, hi, good morning. I joined the bit, so some of it could be repetitive. Sorry for that. So, first question is that, on the non-MF side, there is little bit of volatility on the insurance. If you could explain that first. And, secondly, let's say, on a 12-month basis, is there, like, a visibility on, could the group, solve these, businesses put together? I think we are delivering somewhere close to about 20%-25%. So, does that run rate, still hold, when you look forward, one to two years?
Second question is that, when we look at the overall EBIT margins at around 40%, is it possible to kind of break it down, you know, how the RTA business is doing and the rest of the business is doing? The related one is that, are we largely done on the investment front on the non-MF businesses? So from here on, the translation of revenue growth to bottom line, as Ramcharan mentioned earlier, that should kind of continue, as well.
For sure. So on the insurance side, while we've been reporting growth in eIA accounts and policies, you are aware that there's a large fraction of the revenue which still comes from outsourcing services. In our persistency operations, there was some, you know, falloff from last year to this year, which is why you've seen a small deterioration in the overall insurance revenue. From a non-MF perspective, we've stated that we would like to grow 20% in revenue terms. And right now, for the next 12-24 months, we'll be just holding that number. We expect to grow 20%+ in the overall non-MF portfolio for the next one to two y ears. So we're holding that number.
On the third part of the EBIT on the. So, Abhijeet, on the EBIT part of it, yeah, you know, the as a bucket, the non-MF, if you kind of combine the non-MF versus MF, I think that was your question in terms of what will be the split between the two. See, your MF EBIT is obviously on the higher side. You know, it is much higher than the 40%, 44% EBIT that you're seeing there. But having said that, I think, as a if you look at the single bucket, non-MF might be less, but within that, AIF is also equally profitable and CAMSPay is reasonably profitable.
So, non-MF, MF, yes, MF is higher EBIT than the remaining things. But within non-MF, there is a pocket like AIF or a payment, which continues to be very profitable. So that's, that's basically the numbers how they pan out. And also, It's actually very profitable. You know, AIF is a platform-based business, so that, that profitability is really high. So that's, that's how it breaks out.
That 20% growth rate on the revenue front for non-MF does that deliver even better growth rate on the EBIT or EBITDA front?
It will. It will, for sure, because, you know, as we said, you know, from an insurance perspective or from a payments, the platform is ready. And we would, with the incremental policies that come on board and the Bima Central, if it goes, and then when it goes live this quarter and start getting some traction from a, from a revenue perspective, we feel that it will be accretive to the EBITDA. And hence, as a business, I think both insurance and the payments business but could see some uptick in margins and late payments maybe.
Got it. And last one, the core RTA business, from a OpEx front, there is nothing, like a lumpy expense, in the pipeline, right? Like, all the cloud and tech related, expenses, regulations, all of that is behind us, right?
So, yes, that's right. From an OpEx perspective, we do not see a big lumpy expense that needs to be done, from our side. However, if there is a big project that we are doing from a technology perspective, you know, we would probably have to, you know, think about it, and that, that will be more long term. So on the immediate, you know, few quarters from an OpEx perspective, we do not see any lumpy expenses that are going to come to you. Although regulations do continue to come. In fact, even from a KYC perspective, there have been regulations on infrastructure and movement to cloud, et cetera. But we are confident of keeping those things under check, and you will not see a big lumpy expenses that's coming.
Okay, got it. Thanks a lot.
Thank you so much. The next question is from the line of Mr. Prayesh Jain from Motilal Oswal. Please go ahead.
Yeah, hi. Hi, good afternoon, everyone. Firstly, on the core business of, we've seen a lot, you know, SIP addition coming in from the Fintech platform, and the transactions that we are doing are coming in from Fintech more than, you know, earlier, where we see a lot of paper-based transactions. So do you think it... Does that incrementally contribute in any form to the revenues, apart from the AUM that they add? Or how much of our revenues would be, kind of, have some linkages to the number of transactions as well? Any clarity there?
First, think of it this way, that, you know, that train has been moving for many years now. Think of it as having been moving for the last five years. We are seeing AMCs whose paper transactions are in single digits, which means that digital and electronic is 90, 91, 92, 93 t hat kind o ur gross portfolio level paper is 12, so 88% is non-paper. Paper, like we've said, is not revenue accretive, but not margin accretive. It also creates risk, because once we digitize the papers and everything else remains identical in our system, the process of digitization takes effort, cost, and introduces a form of risk. So, we are very happy with the way things are.
Also, do remember that the Fintechs have brought scale to this market. The scale was not available to the market in the traditional distribution paradigm. The Fintechs have brought scale and have brought, you know, packet sizes which are much smaller. So overall, if you see, we do book revenue from paper transactions, which is not a very large number. And, and even if it is drying up, and it is drying up for the last, I mean, as long as I can think, last seven, eight years, every successive quarter it would have dried up. But the scale, the efficiency that it brings into the system is accretive to us and takes out a lot of labor and a lot of risk. So that's a positive movement for us. The revenue from loss is a very small sacrifice to make.
Your voice seems to be breaking in.
Hello, can you hear me?
Yes, sir. Much better.
Yeah. What I'm saying is, a INR 100 SIP will still get you, fetch you a 3.5 basis point yield, and, same, say, a INR 100,000 SIP by HNI will fetch you the same yield. Is that the fair way to look at it, or is there some, or from a cost angle, both would require same amount of efforts or from your side on? Is that the right way to think?
Yeah, absolutely. That is the right way to think. That from an AUM perspective, the INR 100 SIP will be much smaller. It will take a long time to create a mass. An HNI INR 100,000 SIP will be very different in, in character because it will create AUM much faster. But think of the INR 100 SIP in millions, while the HNI SIPs will be a few hundred or a few thousands. So when you see the scale, we have crossed now INR 10,000 crore of net monthly SIP collection at just CAMS level.
During the COVID phase, this number used to be four. So in less than three years, we are almost 2.5. That kind of scale has been built on distribution and built on, you know, this creation of small sachets. It's not built on HNI participation in this market, as you can see. That's really the right thing for the market. It's going in the right direction.
The only thing I'll add to your question is, Prayesh, is that the process of this SIP collection trigger is largely automated. So if your question is whether you incur the same cost, the incremental cost that you'll incur, and hence INR 100 is not very beneficial to you, I think the process is largely automated, and hence, that should not be a big part in this.
Got that. Okay. The other part was on the Account Aggregator piece. We're hearing that the PSU banks are still finding it challenging or apprehensive about coming on board for the Account Aggregator platform. And so, what's your sense there? And you know, earlier whenever we used to interact, you said that FY 2024 we'd have much more clarity about you know, when this Account Aggregator will start contributing to our revenue stream. So, any thoughts on these two aspects of the Account Aggregator?
So from a participation perspective, every PSU bank is on board. Each one of them. In fact, most of the private sector banks are on board. The smaller regional rural banks are coming on board. What you're observing, but you're partially correct. What you're observing with the public sector banks is that they may not have built the or the finesse and technology for data transmission to be 100%. So if we send 100 requests, will all 100 get answered? The answer is no. Typically, in an exchange like this, 60-70 should get answered. If you're answering only 10 or 20, then there is something wrong which needs to be fixed. So there are small incidents of that kind, but from a signing and formal participation perspective, all of them are there.
I think we are seeing signs of revenue, and that revenue will be this year would be maybe a few crore INR, right? So it could be a 2, 3, 4 crore INR number as we progress. But, but, but it's a good number to have, because it's the beginning of a revenue stream. We are pushing through transactions, we have integration charges and sign-up charges, so all of that is happening. Of course, like we told you, that price depletion has been almost 80%. What used to sell for INR 10 is selling for INR 1.5 and 2, so revenue has contracted to that extent. It still remains a very exciting market. I think the good thing to focus on is how many use cases are emerging.
For how many physical, actual labor-intensive officers can you find a substitute to Account Aggregator? Like I said, whether it is small ticket digital lending, whether it is account verification, part of the KYC process, NFO onboarding, third party verification of bank accounts, there are multiple uses. So if you keep your eyes on that, you will find that slowly the manual process will get phased out from the country, and these revenue scales will be much larger than what I'm talking about right, right now.
Interesting. And last bit, on the EBIT margins. You mentioned on that, you know, there are the non-MF businesses are at lower margins compared to the MF businesses, but, you know, some of them have reasonably good margins. But any of these businesses that can or the MF business margins say, in the next two or three years, thoughts there?
So, I will just give you one. We have achieved platform capability, which means I have hundreds of small units. I don't have to deploy. All I need to deploy is storage, servers, connectivity, ability to manage APIs, b usinesses start delivering 40% EBITDA, a great example is our KRA business, which is delivering that margin as of today. After the recent scale up, our AIF business is very close to that margin. So, they are very close to the MF margins. Payments have undergone some pricing pressures, et cetera, recently, so maybe a little lower, but as payments will let's say, another 30%-40% in size. So, the good thing about the business is so will insurance repository. You can think that as a bus- so as a scale of business to, let's say, INR 25 crore of revenue, 20-25 crore, it is possible for that business to be at 40% margin.
We are seeing that in MF, we are seeing that in KRA, we are seeing that in AIF. The ones to watch out for are, let's say, payments and insurance, where you'll start seeing similar character, maybe three or four quarters from now.
So that's very helpful. Thank you so much.
Thank you. The next question is from the line of Mr. Jeet Suchak from Nuvama Wealth Management.
Hi, Narendran, thank you for taking my call. Am I audible?
Yes, you are.
Okay. So for mutual fund business, transaction volume grew year-over-year 24% and QOQ 10%. So how is it contributing to revenue or cost? If you can give me an idea about that.
Most of this is digital volume. Most of it is the digital volume. If you see, we do about 60 crore transactions in a year, 55-60 crore. Over 80% of this is SIP triggers, and that's a completely digital process from the time we collect all the information about the SIPs being live to a KYC check of them, to, you know, placing them with a sponsor bank, NPCI, et cetera, to collect the payment to creating the units. It's completely untouched by hand.
So, it is... There is no real cost implication there. I used to trigger, let's say, 2 crore SIPs a few years back, I'm triggering 4 crores. I could also trigger 8 crores, but the quality of processing that we've built in automation is not really cost accretive. From time to time, we will add server capacity and storage, et cetera, but there is really no labor in this, which is managing anything.
Okay, and any increment in revenue for the transaction volume?
So generally, most of the digital transactions, triggers, SIPs, et cetera, do not result in any incremental revenue also. It's only the paper transactions that generally are giving us revenue in terms of per paper transaction being processed. So these could not have a large impact on revenue and cost.
Okay. Thank you for your time.
Thank you so much. That was our last question. I would now like to hand the conference over to Mr. Ramc haran, CFO, for closing comments.
Thanks, Sagar, and thank you to all the participants for your participation in the call and the continued interest you are showing in CAMS. Please feel free to reach out to either Orient Capital or Anish Sawlani in investor relations for any questions that you may have, and Anuj and me are also reachable in case you have any, you need any clarifications. So once again, thank you for being part of this call.
Thank you. On behalf of Computer Age Management Services Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.