Ladies and gentlemen, good day and welcome to the Q2 and H1 FY 2027 earnings conference call of Anand Rathi Wealth Limited. 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, please signal an operator by pressing star then zero on your touchtone phone. I now hand the conference over to Mr. Feroze Azeez, Joint CEO of Anand Rathi Wealth Limited. Thank you, and over to you, Mr. Feroze.
Thank you so much. Good afternoon, and thank you everyone for joining the earnings conference call for the quarter and half year ended 30th September 2026. Today on this call, we have with us the CFO, Mr. Rajesh Bhutara, our head of investor relationships, Mr. Vishal Sanghavi. Jugal Mantri is in Europe holidaying, so we do not have him on the call today. This is the first quarter call I am doing without him, so I miss him in this call. I am very pleased to share that we have delivered another quarter of consistent and fortunately market-agnostic performance despite the challenging environment. This is our 20th quarter result since we got listed in December 2021.
In every quarter since listing, with God's grace, the PAT growth year-on-year has been greater than 20%, excluding the impact of non-business related items, fair value gains and ESOP expenses and related tax effects. After tax for the first half year of FY 2027, the PAT grew by. Oh, sorry.
After-tax PAT grew by about 23% year-on-year to INR 238 crore, while revenue increased 17% year-on-year to INR 693 crore. Similar for the Q2 FY 2027, we reported a consolidated net profit of INR 122 crore, registering a year-on-year growth of 22%. Total revenue during this period rose by about 16% to INR 357 crore. In the first half year of FY 2027, the company has delivered 49% of the full year revenue guidance, which stands at INR 1,415 crore. So 49% penetration on the guidance of revenue and 52% penetration on the PAT guidance, 48% more to go of the INR 460 guided.
Continuing our policy of rewarding shareholders, the board of directors have declared an interim dividend of INR 4 per share and after a bonus, so INR 4 per share of the new 16 odd crore shares which are outstanding. In the first six months, we have achieved 52% of the PAT guidance of INR 460. I think that is already mentioned. We have achieved three important milestones in this quarter which have gone by. The highest net flow ever in the history of ANAND RATHI WEALTH of the last 20 years happened in this quarter which went by, and we collected new fresh monies of INR 4,186 crore, which is up 39% from the last year's corresponding number of FY 2026 quarter ending September. So INR 4,186 crore of net mobilization on new monies with our clients' gratefulness.
When the clients realized that this portfolio during bad times can hold up, bad times, clients have shared more monies with us. Second, we recorded our highest ever quarterly equity mutual fund net flow. Again, in the last 20 years, we have not been able to achieve that. With your support and client support, we have achieved INR 2,867 crore, up 39%. It is easy to say buy equities low and sell high, and clients pragmatically have bought more equity, which shows up in IRRs over long periods of time. Courage translates into IRRs, but not in the short term, in few years. I am very happy to note that our clients, unlike the mutual fund industry, has not delivered the best net mobilizations in the first half year. SIPs, of course, have been robust. Lump sums have been low.
In that half year and the last quarter, we have had a 39% increase in equity mutual fund purchase. Third, we recorded our highest ever monthly client acquisition in the month of September, which will not be apparent in the result because I am speaking about September. With God's grace and clients when they see their portfolios doing relatively better, of course, sadly not the best times, they start referring their friends who are "pareshaan" with what has happened in their portfolios with aggressive strategies. In our flagship business of private wealth, during the last 12 months, we have added 1,500 new client families on the net basis, bringing our total client families to 14,309. Client attrition rate in terms of AUM lost remained low, 0.17% for quarter 2 FY 2027, and 0.26% for half year FY 2027.
Of course, these are second decimal numbers, but yeah, we would ideally want every client family who trusts us with their hard-earned life savings to be satisfied. Regret RM attrition continued to remain low. Two RMs whom we considered regret mathematically, of which one I might want to not call mathematically, I can not call that person a non-regret. I would say one regret attrition we have had in H1 FY 2027. Digital wealth business, which is B2B2C business, registered an AUM growth of 14% year-on-year and reached INR 2,531 crore, and the number of clients increased 15% to 7,584. OFA business, Omni Financial Advisor business, which is a SaaS platform, has close to about 6,898 subscribers with the platform assets of about INR 1.66 crore at the end of September 2026. It has to be remembered, these are just platform assets which we report.
Also, last quarter, we started operations in London, U.K., and we have received requisite regulatory approvals to commence operations in GIFT City, India. That is where I stop and hand over the mic back to the moderator.
Thank you very much. We will now begin the question- and- answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. 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. First question is from the line of Prayesh Jain from Motilal Oswal Financial Services Limited. Please go ahead.
Yeah. Hi, good afternoon, everyone. Sir, just a few questions. Firstly, a broader one. If you have to think about your, say top 100 customers, roughly in your estimate, what would be the wallet share that ANAND RATHI WEALTH would have for them?
Firstly, yes. My top 100 clients, I do not have to think of them because I think of them 24/7. Sorry, I do not like to know. Okay. So coming back, because that is where we have the platinum segment. Okay?
Yeah.
More than 10 and a half of our clients fall in the platinum segment. What kind of wallet share? It is very dispersed. See, basically we have this principle of home grow the colleagues, home grow the clients. So we do not knock on the doors of people who have just had a business sale of INR 200 crore. So, I would say that our platinum clients, I can say confidently that 50%-60% of the wallet would be with us. And the same clients, if I see the trend, which is what I think is important, would be a upward trend for 95% of the families. So top 100, I would say 60%-70%, and there will be several with 100% with us. That is what—
That's a part of when you say the denominator is the mutual fund net worth or you're saying of the total net worth?
See, wealth has only one definition, unfortunately, market defines however. I'm speaking about wealth. Wealth includes all the assets, physical also, which they don't live in.
Okay. Got it.
Not just mutual stocks, I count everything as wealth. Wealth is everything one human being has, which he does not consume or aspires to consume.
Got that. The second actually is more of financial question. We have seen, including the ESOP cost, we have seen a very sharp increase in employee cost from the time we have given ESOPs, which was in fourth quarter. How should we see this and model, say, next year? Do we see an increase in expense? Ideally, the ESOP expenses is the highest in the first year, and then it is on a declining trajectory. Should we go in similar manner and assume that the overall ESOP cost would decline in next year and possibly the overall employee cost will see a much lower growth in next year?
Yes, sir. Non-cash expenses, which is where ESOP falls, mark-to-market and non-cash expenses. The dispersion between your profit before tax, which is INR 122 crore, and this INR 90 crore will reduce. Yes. To answer your question, will the ESOP cost reduce? Yes, dramatically, yes.
Got that. And, sir, just one final question is on the MLD part where, anything that worries you on this business, which kind of, say, runs at the top of your mind. That business has been growing well for us, no doubt on that front, but does any part of that business worry you in any sense?
Prayesh, whatever worries us, we start working on it. Okay? Long before it becomes an actual wolf knocking on our door. If you ask me, I said the same thing four years back, it does not worry me because all the variables which were my risk were identified much before. Does it worry me? No. Does it require professional management to be able to make sure it is not worrisome? The answer is yes. Is it scalable? The answer is a big yes. Of course, people would still take it with a pinch of salt because they do not trust the professional, which generally people, I do not know why, but, yeah, I would do a straight talk. So no, that does not worry me, but, yeah, I know most people will not believe that statement. They did not four years back, they do not today.
Even in this falling market, you would have given very healthy IRRs on these products?
Yes, sir, we would have given. Some of them didn't give the maximum IRR in the last quarter. Otherwise, we had 1,190 consecutive products. Consecutive products from December 2020 till as much as May, June this year, which is the longest streak of wins any product in the history of India would have given expected return, all of them. But that streak broke in this year, and some products didn't deliver the full 14%- 15%, but delivered 6%- 7%. None of them in the history of Anand Rathi's issuance from 2012 December have ever lost money at maturity.
Do you think this slowdown in the growth now will be a challenge for this MLD business? In the near term.
MLD—
The question is from the near-term perspective, do you see that as a risk for your future flows?
I can answer it in two ways. One is, if I don't see a growth of 20%-25% this two quarters, for example, if that's near term, I would have revised my guidance downwards.
Got that.
Okay? One thing you can expect from us as professionals is courage.
Right.
Mistakes we do, but we generally have been taught by both my bosses, Rakesh Rawal and Rathi Ji, that do a straight talk and tell them. Near term, am I worried about the summation of 20%-25% PAT growth? The answer is no. If that was the case with the slightest of the probabilities, I would have revised my PAT guidance down from INR 460, and you can expect this from us in the future as well. Now coming to the structure product. Long term, do such small cycles or larger cycles also impact structure product business? The answer is no. Why? Because unlike another wealth management product, the agility of a structure products is very high.
Tomorrow, today, now let's assume, I was just speaking to a journalist a few days back, a couple of days back, and I said NIFTY has stopped representing the Indian broader market because there's a lot of short build-up of FIIs in the NIFTY stocks. Because we have opened up some degree of short possibilities there by some regulatory changes. If tomorrow NIFTY is not a great barometer for me to issue a structure product, can I do it on NIFTY, broad NIFTY, NSE 500 if there were futures listed? There is a lot of agility is the point I'm making. If 30% target for five years is too much to ask for in the contemporary situation, can I make a product with 15? The answer is yes.
Coming back, long-term, the agility of a structure product which can embed any long-term derivative becomes so flexible that if the interest rates are very high, I will start selling calls instead of buying puts. Basically, if your volatility is low, the design changes. If the volatility is high, you will make a low vega product. If your rhos are high, then you will make a low delta product. Of course, this might sound like Greek and Latin, which literally it is. These are Greek alphabets. But that's the agility the structure product has. To become contemporary, unlike a long-only mutual fund, has to be long only, right? The extent of long is also not calibratable in the category 2 of equity mutual funds, for example, and PMSs can, of course. But structure product, if my bullishness is low, then I will take a lower target for NIFTY.
That's the long-term indication. Short-term, do I worry about the demand? No. I worry about when do I get my trails to 50%, which I have given a guidance.
Got that. Yeah. Thanks. That's helpful. If I have a few questions, I'll come back with you. Thanks.
Thank you, sir.
Thank you. The next question is from the line of [Shrenik Mehta] from [IndoAlps]. Please go ahead.
Hi. Congratulations for the great set of numbers. Very consistent. You have these HNI clients, which are INR 50 crores and above. These are big chunk of your overall revenue. I just wanted to understand if the yields that you get are similar for this segment versus, say, the INR 5 crore- INR 50 crore segment yields that you fetch?
Absolutely. I get, if not the same, marginally better maybe. I have not checked, but we do not give any discount on fee. Economies of scale only increases value-added services but does not reduce fee. So I can proudly say we may be one of the few wealth management outfits which has never taken a check indirect from a client, irrespective if the person offered us thousands of crores. So the answer is no. As you go up the pyramid in terms of my clients, that is why we home-grow them. So most of my largest clients have been with us for 15 years. They would have started with INR 2 crores.
Wonderful. Thank you so much.
Thank you, Mehta sir.
Thank you. The next question is from the line of Sukrit D. Patel from ICICI FinTrade Private Limited. Please go ahead.
Good afternoon to the team. I have two questions. My first question is, I just want to understand the forward guidance. Beyond the regular outlook, what are the top two to three execution priorities you are focusing on in the next few quarters to drive client acquisition, wallet share expansion, and AUM growth. Alongside that, what do you see as the key risk from market volatility changing the constant changing investor's sentiment or increasing competition, and how are you preparing to manage them while strengthening the company's overall market share. That is my first question. I will ask my second after this. Thank you.
Wow. This is a question that I can go on and on because you asked me everything practically I do. On the lighter note, I was saying that, but on a serious note, when you look at our principle, our siddhant, or our bunyad on which we build our business is not do new things every quarter or every year, do the same old thing in a better fashion again and again. What do I do for client acquisition? I do events. Of my clients, colleagues, societies, very low-cost events. I go to their places and collect 15 people. I have done 130 events. Okay. I do not know. Ask Tejas. I have an events department which do not do those fancy events. They do, of course, but those are not the premise of my acquisition.
If my client loves me, I will say, "Sir, organize an event in your society." Then he will speak. I have to spend INR 20,000 there, or they actually refer us clients there. If they think I have added enough value in life. If I have 14,000 families, my 7,000 families have finished three and a half years. There are 2,500 families who finished 10 years, maybe. Right? 2,000 odd. Do not hold me to that number. Those are the guys who actually give me events. That is one way. Acquisition, we acquire on the basis of. Now, today, website leads have become a reasonable source. Now where people reach out to us, thanks to some degree of awareness of our services, they reach out to us.
Over the next three, four years, I would see cold calling is something which we do not like we doing because we do not like, as human beings, receiving phone calls on a Sunday afternoon, random people. We want to avoid that in the future. But we are building references, have always been 50%-70% of our clientele. We want that plus website leads. People either have to walk up to us or they have to be referred. That is the destination model in three years.
Okay, great. Thank you.
165 events we did in this financial year. Vishal sir has figured out in the meantime. 165 events we have done. Small events, not those where you are trying to brand yourself as bigger and spend crores. That is not the aim. That is on the acquisition side. Wallet penetration is deliver Jensen's Alpha. Most people don't deliver Jensen's Alpha. If you deliver somebody a Jensen's Alpha, in India, Jensen's Alpha is mistaken to be alpha Jensen's alpha deliver, that will give you the wallet. We go with the assumption that my client is smart. Of course, that is why he is HNI. He is 1% or little lesser than 1% of India. Do I have to convince him to give me money, or I have to deliver to give him money? Actually, if you think logically, I don't have to convince him. I just have to deliver.
Deliver, not absolute return, because absolute is not in my control. From stop beta. Relative is in my influence, not even in control. That is where you do a mutual fund selection out of 927. You try and make sure that you beat the NIFTY or NSE 500 by 2%-3% after earning my 1%. Then the client knows, okay, he is accumulating small buffers. Like our model portfolio on the equity mutual fund side from 1st of June 2013, audited, across 13 years, has delivered 198% alpha on NIFTY and about 100% alpha on NSE 500. Even if the market fell by 50%, the guy has still beaten NIFTY in 13 years. Do you understand what I am saying? That is in control. How do you penetrate into one's wallet? By doing finance like a treasury, not like a wealth manager.
Great. Thank you. Can I ask my second question?
Yes, sir. Absolutely. At your service.
My second question is to Mr. Bhutara. From operations and financial management point of view, what are the key risks you are monitoring around cost structures, technology investments, and regulatory compliance for business scalability? What measures are being taken to ensure the cash keeps on flowing and margins are maintained at stable rates?
Rajesh Bhutara has to only be Rajesh Bhutara, and this all will happen because Rajesh Bhutara has finished 25 years in this company. Rajesh, sir, are you there? Tell one or two things, then I will give my comment.
Yes, sir. Hello. Good afternoon, everyone.
Yes, sir. They are asking if the margin will be maintained.
No, we have maintained all the margin. No treasury-wise risks in our case.
Thank you, Rajesh. You were saying something. Yes, tell me, Rajesh.
No, on the technology side, we have a strong technology team as well as a strong system. So technology side does not have any issue for our business.
Thank you, Rajesh. To add to Rajesh, one is how we look at cost. We look at it like we do not want operational efficiencies. What do you call that? Operating leverage. We want to reinvest in our business. 40% is my target. I have to have my PBT above 40%. I have to have my PAT above 30%. This is what has been told by my boss. So it is written in stone. We try and do that. How do we look at cost? We do not become flamboyant sometimes when things are good. So on and so forth. So point one, is our technology going to become more efficient? Are costs are going to go up? I do not think it will go up. Second, are we building our technology on a different tangent than the industry? The answer is yes.
For example, we hired four IITians who are designing algos for me to research. One of the kind of stuff which happens in a treasury more so. Technology, we will spend some money, but anytime our PAT, PBT increases beyond a certain level, we would want to reinvest in strengthening a lot of verticals. Which is what Rakesh says. If you have to in good times, when your PBT is going to go up more than you expected, 43, 44, 45 is okay. It's in the order of magnitude of 40. If we become 48, now I don't want to impress the shareholder saying that I have operational efficiencies. I would bring it back down by investing in things which I think would keep my business up and running and consistently running 20 years from now.
Thank you.
Does that answer or you can get a little more narrow? I'll tell you. I'm sorry.
No, it pretty much answers my question. Thank you and best wishes.
Thank you, sir.
Thank you. The next question is from the line of Mohit Jain from Tara Capital Partners. Please go ahead.
Good evening. Just one question. How is the management team—
I am sorry to interrupt you, Mr. Jain. We are unable to hear you. Your voice is breaking. Can you please check?
Can you hear me now?
No, sir, we are unable to hear you.
Is it better?
Mr. Jain, we are unable to hear you. We would request to please kindly check your connection and join back in the queue. In the meanwhile, we will move to the next question, which is from the line of Milind Kulkarni from MLDL. Please go ahead.
Good afternoon. How much are the non-cash charges in the quarter?
Sir, non-cash charges and mark-to-market, right?
Yeah.
How much is the non-cash charge? I think INR 40 crore.
Non-cash charges, Milind, are INR 46 crore.
INR 46 crore.
What was it in the corresponding quarter of the last year?
Zero, sir.
Last year it was zero.
Same quarter last year was zero.
Yeah.
Yes.
Okay. Thank you.
Thank you for the question, Milind.
Thank you. The next question is from the line of Nikhil Agarwal from Choice International. Please go ahead.
Hi, everyone. My question is, while reviewing over the company, in July 2026, your new owned subsidiary, ANAND RATHI WEALTH Academy, it received in-principle approval from IFSCA. Could you please throw some light about the revenue opportunity you are targeting through it?
Okay, sir. If I understand it right, GIFT City, you have got an approval. What kind of revenues would you expect or what kind of revenue opportunities do you expect?
Yes.
Correct? We are a very India-centric organization, so we will use that license as, of course, expected, and the license in nature as well, to bring money to India. When you bring money to India, we will try and deliver the Indian resident proposition to an NRI. Today, in an Indian resident proposition, we have mutual funds which we choose mathematically, and then we design structure product. We will try and deliver the same proposition in a more tax-efficient fashion to an NRI. That is the expectation. What kind of revenues are possible? I do not want to count my eggs today. Do I see very exciting times for me if I can get global capital into an already validated proposition? The answer is yes. Will I do anything different? No.
Will I do what I have done in a different platform for a larger universe and larger canvas? That is a yes. If for example, if there is a London guy who wants to invest in India, I would use the platform to be able to offer my India proposition, which has a credibility of 13- 14 years, to him.
Okay. Any schemes planned for this year? Sorry to interrupt. Any schemes planned for this year in GIFT City?
Yes. There are lot of advantages there. Should I plan out any revenue you should go with for my first 20%-25% PAT growth or revenue guidance for this year? I've not provisioned anything.
Okay.
We've not provisioned anything. We like to see the proof of concept, what are client objections initially, then we mend that. We do a lot of trial and error before we become very confident to put them into our revenue targets.
Got it. Thank you.
Thank you, sir.
Thank you. Next question is from the line of Sunil Shah from SRE PMS. Please go ahead.
Yeah. Hello, sir, and everybody in the team. Always wonderful to have a talk here. Sir, my point was about the GIFT City thing, and I think we got some clarity there. So it's going to be inward remittances or inward investments. Are we looking at doing something out of India, replicate our model to take money out of India through the GIFT City as well, or it's just going to be inward at least to start with? That's my first point there.
Yes. Sunil, sir. Okay, you want me to answer the first one first?
Yeah.
Yes. Because you paused, that is implied.
Yeah.
Sunil sir, in the short term and in the long term, current thought process is to only look at inward. Because I think India itself requires a lot of homework currently, and I can give you example after example of what kind of research is unraveling our understanding of Indian capital markets. Right now, we were doing a study on 213 derivative stocks, and there is so much understanding still left, and I feel ashamed that I have worked in this market for 22 years. As a professional, I have still not understood some facets of the hypothesis which I tested. Coming back to the point and not go beat around the bush, it will be inward, and even long term inward. Because we want to miss some opportunities to have focus. Focus is underrated, opportunities are overrated, is our belief. Right?
Opportunity is there, but that comes at a cost of focus. We want to master India as much as possible, and I think we are still scratching the surface, and if I told you some hypothesis I have tested, which I am surely going to put it on media, will surprise us, saying that India research ability. Yes, sir, always inward so far. Long term also inward.
Great. Good. Very happy to know that. My second point was on the mutual fund license application. Have we done something on those lines? Some media news were talking. We have applied for a mutual fund license, and if so, what are the thoughts around that?
Rajesh speaks in [Foreign language].
This month end, we applied for mutual fund license application.
Okay.
We already in preparation. Almost data is prepared. Mostly up to 20th of October, we can file.
Oh. By this month end, sir is expected to file. Sunil sir, that is the confidence of Rajesh. If we tell Rajesh anything, then follow-up is not required. I am unaware, but he is as prepared as this month end. Okay. Whenever Rajesh speaks, I feel very happy and excited because he is one person who has been in this company longer than half my product team was born.
Okay, great.
Okay. It gives me so much pride because that is where finance is where maximum attention is needed so that you do not slip anywhere inadvertently as well. Thank you, Rajesh. I am using this platform to acknowledge his contribution to bring us thus far and further.
Sir, if I can just—
Yes, sir.
Add this more detail. See, essentially, we like the company with the reason that we are very focused on the things which we do. We are taking care of the client wealth, and we are investing into mutual funds. Managing money and the part of distributorship, that is significantly different. What is required for a mutual fund would be more about investment mindset, et cetera. Sir, I just wanted to understand, are we digressing from what we are great at? Just wanted to understand this piece, if it is possible to be shared on the platform.
Of course, it is possible, sir. Transparency is the least my shareholder can expect, especially Sunil sir, who has added value to us by every question all the 19- 20 quarters. Yes. Will we digress? The answer is no. Only a platform doesn't imply digression. What you do with the platform implies digression. I could have used GIFT City to invest in Korea, then it implies digression. Whatever we will do on the mutual fund platform, if somebody can do better, we are not an egoistic platform to try and do it ourselves. We will do something which is not me too whatsoever. If anything can be delegated, has to be delegated, is our principle. So why do I need to build a long-only ability when I have the stars in the country?
What we will build will again, of course, unfold for people to see, but it's not going to be me too, for sure.
Okay. Fine. We look forward to that interesting opportunity which will come with us going forward.
Yes.
Thanks.
I don't want to—
Yeah, sorry.
I don't want to spill my beans too much because I don't want any shareholder to extrapolate anything before the eggs are hatched. Don't count the chickens, they say. That's why I'm not expressing too much, but I'm so happy and excited for the fact that the group has decided an AMC inside this company. My shareholder gets to participate on the IP built here, which can also be executed on a mutual fund plan. I don't know whether I've been able to articulate that well enough. I was very excited to have that as a fully owned subsidiary of ARWL, which is 50% free float or even more.
Sure. Thanks for all this. All the best, and look forward to many more quarters of growth from the company. Thanks. All the best to each and one everybody.
Thanks. We keep working for the longstanding shareholders like yourself.
Thank you. The next question is from the line of [Arun Gopal] from [Ratree]. Please go ahead.
Yeah. Good evening, and congratulations to you and your team for consistently performing even in testing times. The question is—
Thank you so much.
Yes? I hope I'm clear.
Yes, Arun sir. I can hear you very clearly.
Yeah. Our assets had crossed around INR 1.08 lakh crore and milestone, which is good, which is an 18% growth year-on-year. Could you help break down how much of the growth is driven by the new money which includes versus the mark-to-market gains from the performing equity market? What is the target for the net inflows if the market volatility increases in the coming half yearly?
Arun sir, namaste sir. We have a target of INR 1.2 lakh crore for the year on the AUM byline. Okay.
Okay.
We have a target of generating net flows of INR 6,000 crore, INR 7,000 crore, INR 8,000 crore with God's grace for the residual year. The mark-to-market so far has not contributed too much in the last quarter. Since our mutual funds delivered stupendous excess returns, it has helped us keep the number INR 2,000 crore more from the last quarter end, in spite of one of the worst quarters for NIFTY. How much is the NIFTY, sir? NIFTY fell last quarter by about 8%, 7%.
Yeah.
One second. Vishal sir is checking. In spite of that, we brought in INR 4,000 crores. Ideally, if there was zero mark-to-market, we should have been at INR 110,000 crores. There is a INR 2,000 crores mark-to-market loss this quarter.
Okay? NIFTY is down 5%. Our total overall assets would have fallen about 1.5%.
Okay.
Will we get to INR 120,000? Don't know. But will we get to the net flow of INR 3,000 crore-INR 4,000 crores for the next two quarters? We'll try our best. That will mean if we get some 2%, 3% mark-to-market, our most volatile guidance, which is AUM because it depends on Trump sir, and so many other external variables, is the most volatile one. Unlike revenue and guidance. Because AUM is captured on one single day, September 30, March 31. We have a target. That's the bit. Does it answer, Arun sir?
Yeah, it does answer. Thank you very much. Thank you.
Thank you, sir, for your question.
Thank you. The next question is from the line of Ravi Shankar, an individual investor. Please go ahead.
No, my question on ESOP was asked and answered by Feroze already.
Thank you.
Thank you. The next question is from the line of Sunil from Diamond Asia. Please go ahead.
Yeah, good afternoon, sir. Thank you for the opportunity. Sir, two questions. Firstly, among the net flows, what would be a broad breakup between, let's say, your existing clients and new clients? If you could share, how do you look at that?
Yes, sir. I can tell you this intuitively. Of course, Vishal will give precise number. How we look at it now, sir, we don't push clients to start big. Okay. Generally, our 70% of the net sale is generally 60%-70% will be existing clients. Because unlike other private wealth companies who will say, "Start with INR 5 crore," we say, "Start with INR 1 crore, as long as you have 10 somewhere." I will prove my merit over a period. Of course, in bad times, it becomes difficult to prove to the initial clients, new clients. I am now conceptually wanting to answer rather than mathematically. I'll come to the mathematics of it. Conceptually, we've always as a wealth management outfit, my boss has told me, "Be secure in your skin. Don't push them to start big." Risk business start slowly, keep low expectations, and build your confidence.
If I got some 200 clients last month or more than that, I would tell people start with INR 1 crore, INR 2 crore, no problem. If I get INR 1,000 crore in that month, hypothetically, then I would get 75% from existing clients and INR 250 crore or the new clients would be about INR 1 crore, INR 1.5 crore each. But we generally try and validate whether each of them have the money to give me. If they have INR 10 crore to give me, I'll start with INR 1 crore, no problem. If I deserve it, you will give me. That's the hypothesis. Now, coming to the exact number for the last quarter.
62, 38.
62 is existing, 38 is new, sir.
Okay. Thank you, sir. Very helpful. Secondly, let's say if you look at your business from strategic lens for the next three to four years. What are the key areas where you would like to focus on? Let's say, get deeper into existing clients' wallet share or expand more geographically, or are you looking at new products? How do you look at a business system?
Okay. Let me, again, I might sound a little philosophical. We are only focused, primarily. Obsessed is a bad word. Okay, let me use the word obsessed. We are obsessed with client outcomes. Everything else follows. Now coming to we are looking at how do we deliver 5%-6% Jensen's Alpha to client. That's the sole-minded focus of 182 research people. Also, my relationship managers, they have to implement advice. That is when concepts translate into money into portfolios. Our sales fraternity, if you have to call them that, which I don't like to call them. The delivery engine, which is account managers and RMs, which is about 900 odd people, are focused on making sure that paper money becomes actual money. You don't have to walk up to a client and say, "I told you so." That doesn't help the client.
It just makes me feel good about it. "Oh, I said this, sir, you didn't do, but I told you so." First, in the topic of what are we focusing on, if I went straight to your answer, it will be unfair to not tell you what we are obsessed about. We are obsessed about client outcomes. In the grand environment, of course, my new clients might not be happy. They're saying, "You thought, I thought 10%- 15% will be made. I'm making 2%-3 %." Yes. Now, coming to what are we focusing on, we are focusing on all four engines. The first engine is client's performance. If clients make 12% this year, my revenue next year goes up by 12%. The second, which is what I touched upon. The second thing which we are focusing on is capacity utilization.
Today, we have 431 relationship managers still having a capacity to handle 8,000 more clients. I'm submitting to my existing clients to refer me to their friends if they think I will not be unfair to their friends. That's an utilized capacity. That's the second thing we are focusing on, and client are generously referring their friends, which is a win-win. Third, I am focusing on new plant and machinery or new capacity, which is our relationship managers. We are, for the future, which are our account managers, which is 500 people, some from IIM, some from CA background, some from now IIT, some from basic colleges, but intelligent, sharp, genuine human beings. The next 100 RMs are already identified and being trained to be promoted in the next one year, one and a half years.
But we have some capacity constraint in terms of how many do we want to bite before we can chew. That's the third leg of growth. And the fourth and the final leg of growth is the penetration into clients' wallet, which is my fourth leg of growth. Existing assets, if there is mark-to-market, my revenue increases. Capacity utilization, capacity creation, and lastly, penetration. We may have more than INR 1 lakh crore plus with the same set of 14,000 families who are evaluating us at different stages of life. Somebody who has evaluated me for 10 years is a full sole advisory client, like that. These are the four things we are focusing on: performance, penetration, capacity building, and capacity utilization.
Very helpful, sir. Thank you so much for your time and all the best for what coming.
Thank you for your kind questions.
Thank you. The next question is from the line of Jyoti Khatri from Ambit Wealth. Please go ahead.
Yeah, thanks for taking my question. Sir, just two questions from my end. Firstly, if you can just brief us on how the MLDs work and how the IRR on this product has worked over the years in the bad and the good markets. Secondly, how you tap the ultra HNI segment. You already did mention that you do conduct the events that help you to convert the new clients. But apart from that, more into the fact that how do you tap ultra HNI clients, and how it is different versus peers?
Wow. Great. So firstly, structure products, how do they work? There is a lot of content on the secondary space. If you search Feroze Azeez explaining structure product, they will be there enough. But let me give you a sense of it. Structure product issuance requires some NBFC who is not very flamboyant with their NIMs.
They have to keep the money safe. That is the first condition. Most NBFCs who issue structure products do not want to keep 50% in investments. Generally, an NBFC who issues structure products, which has some derivative hedging to be needed, has to have 50%-60% of their money in a demat account. That is the first step to keep the money safe. Markets are markets. You need to have margin enough to hedge it correctly as per the Black-Scholes pricing model. Then you embed the long-term derivatives depending on delta, gamma, vega, theta, rhos opinions.
That's the second thing. Third, you have to back test and get your outcomes such that your front test using Monte Carlo simulator should always supersede your back test results. That's what most of the products which we have designed and launched from the last 14 years would have shown a probability of 90% of the victory, but actual transpired is 94%-95%. That's where the Monte Carlo simulator needs to throw up. In the future, probabilities have to be greater than past probabilities. On that whole thing, you will design two things and continue the same two things 2,000 times. We do the same product. The product I did in 2012—
Sorry to interrupt. Ms. Jyoti, may I request you please mute yourself while management is answering. There is a disturbance from your line. Thank you very much. Sir, you may please continue.
Yes. How has been the output? Monte Carlo simulator, when we designed it, told us 94%. It delivered 94% of maximum outcomes. Back tests are very short period of time. We don't do path-dependent products. We do only end-dependent products. All our learnings, which I learned in Religare and Macquarie when I started issuance from 2016, whatever mistakes I did became an embargo to not do here. And do the same product. Clients tell you to design customized structure products. We say, "Sir, you don't understand embedded derivatives. You don't understand option Greek first order, so you will not customize. If you want to buy what I put on the table, buy it, because for you to customize, you will have to run so many models." Unlike most wealth management outfits who are ready to design anything for anyone, we don't customize structure products.
If somebody wants customization, then they need to understand option Greeks so deeply. Third-order Greeks have to be understood. What do we do in structure products? We embed derivatives which have a larger probability, not certainty of victory. That's why all the 1,900 products approximately matured have not lost money in spite of some of them having matured in COVID. That's one. Second, we don't acquire ultra HNI. We build ultra HNI. That's the key difference. Today, newspapers can tell you who sold the biggest property, who sold the biggest business to a private equity guy, who did an IP. Those information is available. Most wealth management outfits go to those doors saying that, "I will do it in low cost. Come to me." We say we don't do in low cost. If I don't deserve 1%, I don't want to be on that table.
I will try and do my best to add value to you and earn my 1%. We don't go to ultra HNI straight unless he's my client's friend. We take a client with INR 5 crore, INR 7 crore, INR 10 crore, and build them to hundreds of crores. If that answers.
Yes, sir. Thanks. Thank you.
Thank you, Madam Jyoti.
Thank you. The next question is from the line of Anish Pawar from Ventura Securities. Please go ahead.
Good afternoon, sir. Congratulations for good set of numbers. I had a question that what are the primary and secondary issuances of MLDs for this quarter?
Vishal sir will give us this.
Primary for the quarter was INR 4,200 crore. Sorry, sir. One second. Primary, INR 2,000 crore, INR 2,073.
INR 2,073. Total?
Secondary for the quarter is INR 750 odd crore.
INR 750 secondary, INR 2,000 odd in primary.
Okay. Thank you so much, sir.
Thank you, sir.
Thank you. The next question is from the line of Anuj Kashyap from A3 Capital. Please go ahead.
Hello. I am on it.
Yes, sir.
Sir, there was a news article that SEBI is preparing to give the portfolio managers also the mutual fund advisory services. Any take on it, sir?
Yes, sir. Actually, on this subject, I had spoken some time back that most people who surrendered their advisory license were using a PMS license to run a mutual fund portfolio. Basically, SEBI has regularized it by creating PMS where mutual funds can be bought. I think in a mutual fund, a PMS platform is not so required because mutual funds you don't transact every day. In stocks, you transact every day. In PMS, I don't know why, only to charge a fee, a PMS becomes easier because if you are a registered investment advisor and you go and take a check from a bank account, it is not very easy.
I think registered investment advisors will find it very useful because if you put mutual funds in a platform and then charge them in terms of units with the power of attorney, it becomes lesser emotional drain for an Indian to pay a fee, especially during bad markets. Does it have a huge merit for registered investment advisories to move into mutual fund PMS platform? The answer is yes. I don't see a reason why a client, especially in the HNI segment, needs to delegate a discretionary mandate to something which he transacts two times a year.
No, sir. I was just asking whether it will be competitive. It will not be competitive for us then?
No, sir. Not at all.
Thank you, sir. Best of luck for the future.
Thank you, sir.
Thank you. The next question is from the line of [Sourabh Jagirdar], an individual investor. Please go ahead.
Hello, sir. Good afternoon.
Good afternoon, sir.
Congratulations on your numbers and also on the approval for a GIFT City operating, sir. My question is, when do you think could that become operational? Initially, how many funds are you planning to launch?
Vishal sir, two and in the next two, three months latest. By the next quarter, I think we would be able to give them a good news. In January results, December.
Yes, sir. In a couple of months. Not too far. And two funds.
Thank you, sir. That was of great help.
Thank you, sir.
Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to Mr. Feroze for closing comments.
Thank you, madam. I like to thank everyone for being a part of this call. We hope we have tried to answer your questions. If you need any more information, please feel free to reach out to Mr. Vishal Sanghavi, our beloved investor relations head, and Rajesh Bhutara, our beloved CFO. Wishing everyone a very happy Diwali in advance, because we're going to speak after Diwali, and hope the festival season brings joy and prosperity to one and all. Thank you to spend time on a Monday evening. Have a wonderful week.
Thank you. Ladies and gentlemen, on behalf of Anand Rathi Wealth Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.