Ladies and gentlemen, good day, and welcome to Q4 FY 2026 earnings conference call of HDFC Asset Management Company Limited. From the management team we have with us Mr. Navneet Munot, Mr. Naozad Sirwalla, and Mr. Simal Kanuga. 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 this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Simal Kanuga, who will give us a brief, following which we will proceed with the Q&A session. Thank you, and over to you, sir.
Thanks. Good evening, everyone, and thank you for joining this call. We'll begin with an overview of the industry. Looking at the year gone by, Nifty 50 ended down 5%. Through the year, markets had to deal with multiple challenges/news flows, global uncertainty around tariffs and trade, geopolitical tensions leading to volatility in crude oil prices, et cetera. On top of this, we saw persistent FPI outflows which kept sentiment under pressure. Overall, a fairly difficult environment for markets. What clearly stood out was the continued participation of domestic investors. Despite the volatility, they not only stayed invested, but continued to repose their confidence in long-term India growth story and markets. In fact, many used this corrective phase as an opportunity to allocate more prudently and systematically, rather than getting carried away by short-term market movements.
Interestingly, if we look at the March quarter, the Nifty 50 was down by 14.5%. The flows into equity-oriented funds came in at around INR 1,340 billion compared to INR 1,188 billion in December 2025 quarter, when Nifty in fact was up by 6%. SIP flows continued to inch up at a healthy pace. In March 2026, monthly SIP collections touched an all-time high of INR 321 billion, up 24% year-over-year with 97 million contributing accounts. For the full year, the industry across asset classes saw healthy net inflows of INR 7.4 trillion. Equity-oriented funds continued to be the primary driver, contributing close to INR 4.9 trillion. ETFs witnessed strong inflows of about INR 1.8 trillion, of which gold and silver ETFs combined attracted nearly INR 1 trillion.
On the fixed income side, flows were relatively muted. Debt-oriented funds saw inflows of INR 66 billion. Liquid funds saw inflows of INR 5 billion during the year. Let me highlight an interesting data point here. This marks 14th consecutive financial year of positive net inflows for the industry as a whole. Another important trend is growth in number of mutual fund investors. It's not just deeper wallet share from existing set of investors, but also steady addition to new investors driving industry growth. During the year, 7.2 million new investors entered mutual funds, taking the total investor base to 61.4 million. Participation from B30 locations also remains encouraging, with over 40% of SIP flows now coming from these markets. We now move to us.
Overall QAAUM grew by 20% YOY to reach INR 9.3 trillion, while equity-oriented AUM reached INR 6 trillion. SIP and STP flows together stood at INR 48.8 billion in March of 2026, growing by 33% year on year. Our total accounts crossed 30 million, and unique investors with us are now at 16.7 million, an addition of 3.5 million over the year. To put that in context, industry as a whole added 7.2 million. In terms of mix, direct plans continue to gain traction and now account for about 31% of our equity AUM. Digital adoption remains very strong, with 97% of our transactions being digital. To zoom in, this number was 81% three years back and 69% six years back. During the year, we further strengthened our mutual fund offerings with launch of seven new schemes.
Beyond mutual funds, we also made good progress in expanding our alternatives business with the announcement of first close of our private credit fund with IFC as a partner and anchor investor. In our international business based out of GIFT City, we launched two inbound funds during the year, taking the total now to five. On portfolio management services side, we are seeing encouraging traction. We were awarded two marquee mandates during the year. One was from EPFO and the second one is from SPFO, the Siemens Provident Fund Organization, both on fixed income. Now we move to financials. Total revenue for the year was INR 46.2 billion, with revenue from operations at INR 41.2 billion, growth of 18% year-over-year. Total expenses were INR 9.1 billion.
Operating profit for the year came in at INR 32.1 billion, a YOY growth of 18% with an operating margin at 35 basis points of AUM. Profit after tax stood at INR 28.6 billion, a year-on-year growth of 16%.
Board earlier today recommended a dividend of INR 54 per share compared to INR 45 per share adjusted for bonus issuance last year. That translates to a payout ratio of 81%. Of course, this is subject to shareholder approval. Thank you very much. We can open up for questions starting now.
Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their 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. Participants, you may press star and one to ask the question. The first question is from the line of Suchit Patel from ICICI . Please go ahead.
Good evening to the team. I have two questions. My first question to Mr. Munot is, what are the key priorities for HDFC AMC in the coming quarter? How do you plan to bring more retail investors into mutual funds, strengthen distribution in smaller cities, and leverage digital platforms to make investing simpler and more engaging? Just want to hear your insights on this. That's my first question, and I'll ask my second question after this. Thank you.
For sure. Thank you, Suchit. As you can see, over the last couple of years, our industry has grown from strength to strength. Over the last couple of years, we are seeing a tremendous focus on expanding the systematic book across all channels, across all geographies, across all investor segments. While the industry has grown, we have got our fair share. We continue to focus on that, continue to serve investors across various channels through the physical branch network that we have, where we have significantly expanded in last couple of years, and we will continue to evaluate opportunities on that side. On the other side, continue to invest in our digital capabilities. Both our portal website as well as the app are best in class in the industry.
If you look at the transactions, which used to be almost 40% physically done five, six years back, are almost now 97% or so get done digitally. We believe in what I call phygital. Continue to expand our physical base to serve our distributors, our investors across the country. On the other side, best-in-class digital capabilities to serve our investors. On the product side, as per the SEBI classification, most of the categories that a mutual fund house can have, we are present in all of those categories. Our aspiration is to keep growing our market share in all of those categories, keep delivering good returns to the investors. They have more faith, and then we get more money in those products. On the other side, continue to build our distribution capability.
Over the next several years, apart from the mutual funds, we also see opportunities to grow the non-mutual fund side of the business, which includes our PMS capabilities. We had some early wins, as well as on the alternative side. In the initial comments, Simal has mentioned about what we are doing on the private credit side, on the category two AIF, on the fund of fund side. Over a period of time, you will hear more from us on that side. The another opportunity I will highlight is on the international business. We have a 100%, fully owned subsidiary in Gift City, where we have five funds live over a period of time. We want to continue to build the product range and the distribution capability on that side, both for inbound money from global investors investing into India and outbound Indian investors investing globally.
Some of these are, I would say that we'll continue to focus.
Thank you. My second question to Mr. Sirwalla is, how are you approaching risks such as market volatility or any regulatory compliances that keeps on changing over the time and rising cost, while still ensuring profitability remains steady and growth keeps on going from the company?
Sure. I'll take the cost question first. If you break down our costs essentially into two components, employee costs and all other expenses are together. On the employee cost front, excluding ESOPs, our cost has grown by about 2.5% year-over-year. If you take this over the last five years, the CAGR for employee costs, again, ex ESOPs, non-cash charge, is around 13%. During that period, our employee count has grown from 1,250 to around 1,700 employees. Similarly, on the non-employee costs, they have increased at a CAGR of about 13.5% over the last five years. While we don't give specific guidance, these will broadly grow in line with the business and the investments we are making across technology and people.
Again, if we step back and look at costs related to AUM over the last few years, there has been a clear downward trend. Despite investing in talent, building new capabilities, and factoring long-term investment initiatives like stock options, we have improved overall efficiency. I think the focus is not necessarily cutting costs, but on managing them well while we continue to invest for growth.
I think on risk management and volatility, of course, we have a team that ensures that they have the appropriate risk factors in place, and we sort of manage that very actively across our compliance and risk team.
Thank you and best wishes.
Thank you very much.
Thank you very much. Ladies and gentlemen, you may press star and one to ask a question. Next question is from line of Kushan Shah from The Financial Express. Please go ahead.
Hello?
Yes, please.
Yeah. My question was on the EPFO and SPFO mandates that you said that the AMC received. Is there any data on that?
SPFO, that we've already started managing. EPFO, we are signing the agreement. Both of them were part of a RFP that was issued, and both of these were awarded to us.
Okay.
Kushan, do you have any follow-up question?
No. That's all.
Thank you.
Thank you.
Next question is from the line of Piyush Kumar from Magnus Hathaway Investments. Please go ahead.
Yeah. Hi, am I audible?
Yes.
Yes, sir. Go ahead.
Oh, okay, sir. My question is regarding the market share. How do you see HDFC AMC growing its market share over the next few quarters, and what exactly are you planning to do to gain further market share in this industry, sir?
As I mentioned earlier that we have a good long-term track record across all strategies. On the other side, the work that we have been doing on the distribution side, and given the product range, the performance track record, the platform that we have, over a period of time, we want the most optimized market share across all products. Incrementally, what I mentioned earlier on both what we are doing on physical presence, relationships with all channels, be it mutual fund distributors, tens of thousands of them across the country, all the institutional distributors, the aggregators, all the banks where we have relationship, and of course, the fintech channel, which has been growing quite a bit over the last couple of years. We continue to focus on each one of them. Yeah, I think some of the other things I've mentioned earlier.
Okay, sir. One last question, sir.
Sorry.
Sir, how do you think artificial intelligence tools are going to affect the mutual fund industry? How do you see going ahead the role of mutual fund distributor in raising of the AUM for any AMC? Do you think there is any chance of disruption from AI or any cloud plugins from that, sir? Anything which you see coming for the mutual fund industry, maybe from the B2B side or maybe from the B2C side? Do you see anything like that?
Our digital strategy is organized around becoming the digital AI wealth creator for every Indian. Our overall mission as an organization is to be the wealth creator for every Indian, and the digital strategy is to be digital AI wealth creator for every Indian. Clear focus on three stakeholders, our investors, our distribution partners, and the HDFC Group ecosystem. The approach is not to merely adopt technology, but to use it to strengthen our scale, our efficiency, our investor experience. I mentioned earlier that 97% of the transactions are already digital. With the help of AI and all the digital tools, we continue to simplify our onboarding, our discovery, our engagement to drive the long-term participation from everyone rather than just the transactional usage. We are clearly on a trajectory towards becoming 100% digital transaction AMC.
Across the organization, AI is being embedded as an operating layer from marketing and client engagement to investment processes, risk management, compliance, and it's like acting as a force multiplier for our teams rather than a replacement. This allows faster decision-making. It allows better risk oversight and of course, higher productivity. All of this is built on a robust and cloud-based technology foundation. We are very particular about strong data architecture and a very rigorous cybersecurity standards. To summarize, I would say the objective is clear, to build scalable, defensible digital and AI capabilities that enhance the investor outcome, improve operating leverage, and create a durable long-term competitive moat for HDFC AMC. We have announced today that board has approved the appointment of Mr. Rajan Anandan as an invitee and external expert on the technology committee for a three-year term.
Mr. Rajan Anandan is currently a managing director at Peak XV Partners. He brings a deep global technology leadership experience. He's worked earlier with and has led Google in India and Southeast Asia. He had senior roles at Microsoft and Dell and was a partner at McKinsey. I think this strengthens the board's technology oversight and provides an independent and high-quality guidance as our endeavor is to deepen our focus on digital and AI-led transformation.
All right, sir. Thank you, sir. Thank you. All the best. Thank you. Next question is from line of Abhijit from Kotak Securities Limited. Please go ahead.
Yeah. Good evening, everyone. I hope I'm audible. My first question was to pick up from the opening remarks on investor behavior, especially in March. Broadly, given the volatility in the preceding year, we don't see any major change in trends on the reported numbers. Maybe under the hood, have you seen any change in behavior in terms of ticket sizes? Or let's say, self-directed customers, their share kind of coming down in overall flows. Anything that you can highlight beyond the reported numbers?
I'm sure you have seen the March industry flow data and the numbers really speak for themselves. If you look at the book at the start of the year versus now, in the context of how markets have behaved, what Simal touched upon earlier, one thing is quite clear, that domestic households are increasingly investing with a long-term mindset. They are beginning to appreciate the benefits of rupee cost averaging. In fact, feedback from all the distribution partners I engage with, it clearly suggests that many investors are comfortable with market corrections because it allows them to accumulate more units. Credit to our industry campaigns, credit to our regulator, credit to all the distribution partners on the ground, and the whole ecosystem that more and more investors are looking at investing in a disciplined manner with more long-term orientation.
Interesting part, I was looking at the data today that, if I remember correctly, highest flows in equity funds, equity and equity-oriented funds, hybrid funds, have come in the month of March, where we had significant global geopolitical volatility. The other month where we had higher flows was in the month of July, when India got hit with additional tariffs by U.S. That clearly shows that in extreme volatility and when markets were not doing well, the Nifty and the other indices were down, investors use that as an opportunity to put more money to work. I mean, that clearly shows a very mature behavior of investors. During the year, SIP book of the industry has grown by INR 6,000 crores. You would have seen our number on the systematic book, the way it has grown during the year.
I think that gives us quite a bit of comfort. I would still say on the cautionary note that we have to see the investor behavior if markets stand up to pressure for a much longer period. While over the last 18 months or so, we have seen good volatility and investors have behaved in a highly mature manner. It is always tested over time. For now, I can say the trend is clearly encouraging.
Got it. Just one small follow-up, Munot there. Would you say that this correlational approach is true across both the assisted as well as the self-directed channel, or is there a marked difference between the two?
I think across both, yeah. Across. You can see the way number of contributing accounts have increased during the year. On the SIP side, at the beginning of the year, there were 81 million SIP contributing accounts that AMFI publishes, and that number closed at 97.2 million as of March 2026. There is an increase of 16 million accounts. As you mentioned in the beginning opening remarks that this year markets have not done well.
Got it. I had one question on, when I look at the share of HDFC Bank in the mix of Equity AUM, that has kind of come down. Any thoughts on that number, please?
The bank share and the distribution pie decreasing, I don't think that's the right way of looking at it. What we are seeing is broad-based growth across all our distribution channels. I mentioned in the beginning itself that we are focused on all channels, that includes all the banks, national distributors, our mutual fund distributors, fintechs, direct, all the registered advisors, et cetera. It's really a case of the overall opportunity expanding rather than any other channel losing out. HDFC Bank remains a very important partner for us, and the potential within that channel is very significant. We continue to work very closely with the bank, and there is clear alignment at the top. All my interactions with Sashidhar Jagdishan and team reinforces that point. There are changes that take time to play through, but we are confident that results will follow.
You know that HDFC Bank has always followed an open architecture approach. This occasionally results in event-driven or seasonal variation, particularly in quarters when peers launch a large NFO and the parent bank is actively involved, that can lead to short-term movement in the flow market share. Importantly for us, the particular thing that we monitor closely is the quality of flows and the SIP share through the bank. That continues to remain strong and which is what will be durable AUM over a period of time. I should also mention about the relationship with HDFC Securities. The share of flow with the HDFC Securities continue to remain very encouraging. Overall, I remain very constructive on the opportunity it presents over medium- to long-term.
Got it. Just one small data point question. It's possible to give some sense on what could be the contribution of flows or SIP from fintech players that we are. Thank you.
Contribution of SIP from fintechs, you are saying? Abhijit, you are asking for total.
Yes. It's like on a flow basis, how much money comes from those set of guys.
We can get back to you with this data point.
Okay, sure. Thank you.
Thank you. Next question is from Madhukar Ladha from JP Morgan. Please go ahead.
Hi. Good evening. Sorry, I missed a little bit of your call because your sister concern had a call running parallelly. If you've not given, can you spell out the asset class-wise yields? This quarter, I think on a blended basis, yields are slightly down. Is that mainly because of mix or is there some internal sort of change in the yield? That would be my first question. Second, on expenses, admin and other OPEX has seen a slight increase, nothing too big, but what sort of run rate are we looking at over here? Yep. Also on your flow versus book market share, how has that trended in Q4? Are we sort of broadly flow share is beating book share? Yeah, those would be my three questions. Thanks.
Sure, Madhukar. On the yields for the different classes, equity was around 56 basis points, debt 28 and liquid 13, and blended for the year was 45. There is actually no yield compression in the quarter. This quarter, the Q4 is a 90-day quarter, and Q3 is a 92-day quarter. That if you simply divide without adjusting for number of days, then you may have come to that number, but the yields are flat.
Got it.
Madhukar, just one thing. This 56% of equity that Naozad touched upon, that includes equity index funds. If you take that out, if you look at only actively managed equity and equity oriented, it is 60-61 basis points.
That's right.
Yep. Okay.
On your third question on expenses, it's just BAU. It's up by 7%, so I really don't know.
No, I was looking at it more on a quarter-over-quarter basis.
Yeah. Quarter-over-quarter, other expenses up 8%.
In absolute terms?
In absolute terms, it's like a really small number.
It's not too big. Yeah.
It's up by INR 5 crores.
Nothing special.
Madhukar, even the CSR and all these things, because those things which are linked directly like a royalty CSR, they are linked with our profits revenues. As that goes up by default, these are like mandatory/statutory expenses.
Absolutely.
I would say, Madhukar, that we have always said that we run a very tight ship. Very, very tight ship. Look at our expense as a basis point of our AUM, we would be one of the best run, not only in India but in the world. We are in a growth business, and I would emphasize, we are at very early stage of financialization of savings in India. We want to make the most of the opportunity which lies ahead. We are expanding our footprint on the physical side. We are expanding our digital capabilities, the investment in AI, in our investment capability, product capability. We are very excited from a long-term perspective on the alternatives.
It requires upfront investment in terms of the kind of talent we have got onboarded on the PMS, the kind of talent we have onboarded on the international side, the setup that we have put in place. All of this will result in the business over a period of time. We shouldn't shy away from investing in all of these opportunities.
Yep. No. Point well taken. It's also a very small-
Given the scale of our
Change, yeah. It's not a very
Madhukar, given the scale of our business, few INR crores here and there.
Yeah. No, I get that. Thanks
Be it like investing, be it technology, be it in people, these are foundational blocks for long-term growth, and we should not shy away from that. Yeah.
Yep. The flow versus book market share, and then also, if I can add in one more question. I think it seems that you're going a little bit slower on the entire SIF launch. What are your thoughts over there and when should we expect any action over there? Your build up on alternatives, if you could give some commentary around that. Yeah.
Overall flows are higher than the book share, that much I can tell you. We remain focused, as I said, across all products, across all channels, across all geographies. We continue to remain focused on that. On your question on SIFs. We have secured all necessary regulatory approvals. From our standpoint, getting the approval is just the starting point. Real question is how do we participate in a way that is consistent with our philosophy? For us that means being very clear on two things. One, the product has to be investment-led, and two, it has to solve for a genuine client need rather than just occupy shelf space. We are not approaching this as a race. In a category like this, being early doesn't necessarily create an advantage.
In fact, the first few products will end up shaping investor expectations for the entire segment. We would much rather be thoughtful and deliberate, and that has always been our view on all products. The good part is we are not starting from scratch, right? I mean, we already have the underlying capabilities. What capabilities are needed? You need investment management capability, you need risk management capability, and you need product management capability. Of course, on the other side, we have the best distribution capability. The team is working on designing a couple of products in this space, which are differentiated. In terms of impact, I would view this as more strategic than immediate. It's not going to move the needle overnight. The category itself will take time to develop and investor understanding will have to build.
Over a period of time, having a well-thought-out SIF offering becomes important if you want to be seen as a complete investment platform. We have always mentioned we want to be the one-stop solution provider, so the product will be there. We have always been more thoughtful and deliberate and will always be.
Got it. Understood. All the best, sir.
Thank you, Madhukar.
Thank you. Next question is from Rahat Mehak from Emkay Global. Please go ahead.
Hi, thank you for the opportunity. My first question is on the regulatory change with respect to TERs. I'm sorry if I'm asking the question again maybe, but if you can just help us with any update on how are you looking at the change in TER and whether you have gone into any negotiations with the distributors? That would be my first question. Second is, if I look at the unique investor market share that has increased to around 27%, could you give some color on particularly which geographies are driving this market share accretion and through which channels would be the major driver? Third question would lastly be on whether you are planning to come out with any NFOs in future?
On the new TER regulations that you asked. We have a new terminology in the industry now, it's called BER, the base expense ratio. It is still early days and you will hear more from us over time on how we propose to deal with the impact, including changes in distribution commission, our margins, and the overall impact on the ecosystem. This time the impact is on selective schemes. Larger strategies are the ones seeing the impact, and smaller strategies are even seeing some degree of markup. Let me break this into two parts. One on the existing book and the other one on the new flows.
Starting with the existing book, for us, the gross impact is about three to four basis points, and our approach is to largely offset this through optimization of commission structure, along with prudent management of both the direct as well as indirect costs. Overall, the targeted impact on our P&L should not be material. I know the obvious question is around quantification of the same, but still early for us to give a precise number. Having said that, you would appreciate we have navigated similar changes in the past, and I would point you to look at how we have managed outcomes over time. Second part is coming on the flows. Coming to flows, there are a couple of changes here as well. Firstly, the erstwhile five basis points available in lieu of exit load is now removed, which is a straight reduction.
Secondly, there is a shift in the structure post April 1, 2026. Earlier it was TER, which included GST on distribution commission and other expenses, while GST on management fees was in addition to TER. Whereas now we move to a base expense ratio framework with GST kept completely outside of TER. Yes, we will need to make suitable adjustment to ensure margins evolve in line with our expectations.
Yeah. Thanks, sir. That answers the question. Secondly, on the unique investor market share increase, what would be the kind of geographies driving? Would be the tier two, tier three markets? What would be the channel through which these customers are largely coming in?
We get money from almost 98% or so of zip codes from the country. The share of new investors, I think, have been coming from almost all geographies. The B30 towns in the parlance in our industry beyond the top 30 towns have been adding a lot of new investors. We have been a beneficiary of that. Yeah, the fintech is a channel where a lot of new accounts on the SIP side getting opened up where we have a very decent share. Of course, all the other channels continue to see expansion of new and unique investors.
Okay. Are you planning out for any NFOs in the near future?
We look at some product gap, but overall, if you look at our product bouquet, our portfolio is fairly well-rounded. We are present across most of the key categories, so there isn't a need to keep adding products for the sake of it. I think the bigger opportunity for us actually is within the existing lineup. There are funds which have delivered steady, consistent outcome for decades but haven't necessarily been in the top bracket in terms of visibility and the AUM that they have. So a lot of our effort is going into sharpening these and moving them up the curve. On the new launches, we'll stay very selective. If we do something in the thematic or sector space or in the passive space, it will be backed by strong conviction from the investment team and a clear market opportunity.
Otherwise, we are quite comfortable with the portfolio that we have. As I mentioned earlier, beyond mutual funds, from an overall platform perspective, we continue to expand on the PMS, AIF, international, GIFT City, all of those opportunities to cater to a wider set of client needs.
Got it, sir. Thank you so much.
Thank you.
Thank you. Next question is from Nana Shreyas from Nomura. Please go ahead.
Hi. Thank you so much for the opportunity. I wanted to understand flow market share qualitatively. While I understand we have a robust track record of investment performance, but our calculations suggest that in Q4, the flow market share has been lower than the flow market share that was in Q3. Can you help us understand the reasons behind it?
No, I don't think so.
How are you arriving at that?
No, actually, you would have missed the dividend payout. See, most of our schemes pay out dividend in the last quarter. You would have taken dividend payouts as redemptions, IDCW in the way it is now called.
Right.
Investors who have subscribed for the IDCW scheme, for them that would have led to your computation, but that's not the data point.
Okay, understood. Second question was in terms of the performance of schemes in one year bucket. Actually, except mid-cap and value category within the equity-oriented schemes, the scheme performance and the rank of HDFC AMC among the industry players has deteriorated. Can you help me understand what was the reason behind it, and how are we trying to improve the performance?
No, I've not heard this. In fact, we continue to be in top two quartiles across most of the categories across time periods, including longer term performance. Large number of funds are rated four and five star by Value Research. As I said, flow market share remains better than the book market share. The team is clearly amongst the most experienced in the top tier. The investment philosophy or style has stood test of time and has delivered best-in-class performance over a long period of time. There is enough and more data now available on the flows, and that does suggest continuing trend in our favor. Finally, let me leave you with one thing. Investors as well as distributors, they do not look at fund performance over one or two quarters. As you move right on the timeline graph, we stand out clearly.
There's more and more appreciation of a long-term track record of alpha generation across our strategies. If I remember correctly, 12 or 13 of our funds have got a track record over 15 years, and several of them going back 20 or 25 or 30 year plus track record of alpha generation. Investors, distributors, they all appreciate the kind of long-term track record that we have got.
Understood. Thank you so much. Just the last clarifying question. You highlighted that the impact on yields on two fronts, existing book and new flows. Existing book, you highlighted that there will not be any material impact. On new flows, you said that five basis point in lieu of exit load. Overall on new flows, there will be five basis point impact is what?
No. The earlier five basis point available in lieu of exit load is now removed. That will be a straight reduction from the distribution commission, right? Because this was paid out as the commission.
Okay.
Yeah. The new commissions that we have published takes care of that. They factor that into account, and thereby we have kind of come out with new commission structure, which is lower to that percent extent.
Understood. There is overall no material impact on P&L.
That is what we are striving for.
Okay. Thank you so much, sir, for answering my questions.
Thank you.
Thank you. Next question is from the line of Prayesh Jain from Motilal Oswal Financial Services. Please go ahead.
Yeah. Hi. Just one question on the top three schemes for us. They account for a significant portion of the AUM equity side, probably closer to above 50% of equity plus hybrid put together. Given that the smaller schemes would have relative more advantage in the new TER structures, do you think that can be a strategy for us, where we kind of push these more, the smaller category product, smaller sized schemes to kind of protect our yields as well, and also from a diversification of AUM perspective?
Advantage to whom, Prayesh? It is advantageous to investors. We exist for our investors.
I think so.
As the scheme, given the telescopic pricing.
Right
as the scheme becomes bigger, you have a lower TER and that much of additional returns baked in for the investor, and I feel very happy for them. Over a period of time, I think people underappreciate this aspect. One, if you look at the long-term track record of larger schemes, I think that has been outstanding. On the other side, as the TER has impact from the telescopic pricing, investors tend to gain. Ultimately, the fate of our industry is decided by the investors, and if they make better returns, good for us.
Okay. The other question was on the yields on the AIF and the PMS book. If you could spell that out for us so it's kind of easier for us to think about what kind of incremental revenue contribution that can come in from these two products over the next few years.
On the alternative business, marginal premium to our equity margins. On the PMS side, pure discretionary is in line with equity margins. The non-discretionary, particularly the EPFO and SPFO kind, these are government of India.
Right
It is one of the mandates and among the most prestigious and very tightly contested opportunities. We are honored to have been selected. That said, this is a segment that operates under very, very tight economics.
When you say this is, these are the net yields, right? Ex of distribution income. Distribution fees-
That's right.
Right. Just on the guidance on expense growth for FY 2027 and 2028, anything that you can guide on what kind of expense growth we should look at on an absolute basis? That would be great.
We don't give out guidance generally, and I think I said it on one of the previous questions, that if you look at our last five-year CAGR of employee costs and other expenses, it's been around the 13% mark. I think you heard Navneet also say that we focus on cost at the same time. We are mindful of the opportunity ahead of us in terms of growth, and we'll keep investing around it. There's no specific guidance we generally give out on cost.
Got that. Last question, any color that you want to give on how the SIP trajectory has now. Is there any change? Because obviously March data was good and probably was because of some rollover effect of February. Any color on how the SIP book has been progressing and also any difference between how the direct channel versus assisted channel is kind of seeing differential trends between the SIPs that they're generating?
I mentioned earlier, I gave the numbers in terms of the SIP contributing accounts. We started the year at 81 million in March 2025 and closed the year at 97.2 million. Increase of 16 million accounts in a year where markets were down. In the last quarter of the financial year where there's significant volatility, particularly in the month of March. We not only closed with highest ever SIP monthly flow, but we also had relatively higher, the overall flow into equity and equity-oriented funds. That just reflects the maturity of individual investors. There's more stickiness of investor behavior and reinforces the long-term nature of SIP participation, and we are seeing that across both direct as well as distributor-led.
Over a longer period of time, I think AMFI has published this data sometime back that the longevity of investors has been greater with those who have come through distributors. There is more handholding versus the direct investors. In last couple of years, we have seen very significant increase in investors who have invested directly. Last couple of quarters, notwithstanding the volatility, numbers have been encouraging. We have to observe that trend over a longer period of time. We continue to, as a house and as an industry, as a large player in the industry, continue to focus a lot on investor education, the awareness campaigns, both physically and digitally. In fact, as a house, we have been very passionate about investor education campaigns across the country and keep highlighting to investors that rupee cost averaging works in your favor. Think long-term. Don't get swayed by the volatility.
Stay true to your goals, focus on the goals rather than the short-term market movement. I think, those efforts are really paying off. We hope that investors will continue to maintain this disciplined way of investing.
Thank you so much.
Thank you. Next question is from the line of Supratim Datta from Jefferies India. Please go ahead.
Thanks for the opportunity. Most of my questions have been answered. It was very heartening to hear the feedback on how investors have behaved in March. Just wanted to understand, is there some color around where the lump sum flows or the additional flows that came in during March or during the market correction, was it from new investors or existing investors putting in more money into the existing folios? If you could give some color there, that would be helpful. Thank you.
Sure. In fact, interesting part is a larger part of flows into equity and equity-oriented funds are coming in the form of SIPs. They are relatively more sticky. Predicting lump sum flows have not been easy, and there is some, I would say, variability in that. The interesting trend that I talked about earlier, that two particular months where there was volatility and more FPI selling, I think it was month of July last calendar year and the month of March in 2026. Both the months saw higher flows on a relative basis versus, I think it was May last year, where FPIs turned buyers and markets were volatile but were better, and we saw lower flows.
Maybe there is a contrarian behavior among the investors who are investing in a lump sum manner, trying to take advantage when market is down while waiting on the sidelines or booking little bit of profit when market is up.
Understood. That's very clear. Thank you.
Thank you.
Thank you. Next question is from the line of Dipanjan Ghosh from Citi. Please go ahead.
Hi, good evening. Sir, so just two questions from my side. First, you quantified the impact of this new base TER and other regulations at a gross level, and also the strategies in terms of distributor commission cuts that you might undertake going ahead. I just wanted to understand that you also mentioned that other non-distributed costs and other overheads also that you can manage. Just wanted to understand, is there a thought process around your RTA payouts, and when do these renegotiations really happen? Do you think that at least for the next two to three year perspective, there is any scope or headroom available on that side to curtail cost? The second question was on the unique investor count.
Obviously, your market share has expanded rapidly, and it kind of showcases maybe a lot of new customers coming in through the fintech channels, given that they are probably the largest originators of new customers. Now, given this current market downturn and maybe the ongoing pain in the broader Indian equities over the last many quarters now, two things. One is, how is the customer wallet fairly divided between different players on these platforms? Have you guys done any study on that? Second is in terms of the customer behavior during this current downturn, any difference between the more assisted channels and let's say the DIY sort of channels out there? Yeah, those are my questions.
A couple of questions. First on the expenses on the fund side. I think I mentioned in the context of operating expenses on the AMC that we run a very tight ship. I can say the same about the fund expenses also. We try to optimize it for our investors across all the costs that we have while ensuring that they get best-in-class service. Won't comment more on that. The second question was on the way we have been adding the unique investors. From the presentation, you can see that the penetration, which was 17.6% in March 2023, has gone up to 27% in March 2026. Over the last three financial years, we would have added almost 10 million investors, one crore new unique investors in the fund house. It's been a very interesting, good journey for us.
I think reflection of the investment performance, reflection of all the investments that we have been making and on the distribution side, and of course, the reflection of the brand and the franchise. We continue to remain focused on that. Your other question was on fintech as a channel, right? Our share in the fintech.
Yes.
Yeah.
Yes. The question was more on, let's say the wallet share of a customer, how that would be divided between you and other players when they're deciding on, let's say, allocation through the fintech channel. In that regard, also how their behavior has been versus, let's say, the assisted channels during this downturn.
As I said that our flow share through the fintech channel is also higher than the book share. That reflects, I think, a strong presence on their platforms. Our folios also, I think, this year we have moved up from 2.3 crore folios to 3 crore folios. 70 lakh folios have got added in last one year or so, and we have added around 35 lakh new investors. Every investor is on an average investing in more than one product of ours.
Sorry, but let me see if you can give some color on the customer behavior on these channels versus, let's say, the assisted channels in like the last two or three months?
Sure, two and three months, it will be really difficult. We can only look at the data at our end, and I think we should when you get an opportunity to ask some of these guys. See, they have added very large number of new investors to the industry in last four or five years. I think in FY 2020, the number of investors coming through the fintechs would have been less than 1 million, and that number is now multiple of that in the last year. I think probably more than 30 million or so. It has been an exponential growth in last four or five years, and I think we have to give it a little bit of more time to really assess the behavior of all of these investors.
Got it. Thank you, and all the best.
Thank you.
Thank you. Next question is from Manav Mohit Munjal from Centrum Broking. Please go ahead.
Yeah. Thanks for the opportunity. Good evening, everyone. My first question is on the distribution mix. I was looking at your distribution mix, and I was looking at the share of banks excluding the HDFC Bank. Now, if I compare, say, over the last 12 months, the share is basically down by around 30-40 basis points both on overall basis as well as on the equity AUM basis. I just wanted to know that, is the flow market share higher than the book market share here as well? What are the strategies so that we increase the share here as well?
You're talking about. I've answered about the HDFC Bank share. Are you asking about banks other than HDFC Bank?
Yes, sir.
Yeah. Other than few banks like SBI, which is almost a closed architecture, and few other banks which are more guided, particularly on the retail distribution side where there would be a lesser share, but we have a very healthy relationship with almost all the other banks, continue to work hard with them. Won't be able to share like individual data, but with all the other banks who operate under an open architecture, our share has been decent, yeah, has been healthy.
Okay. Would you say the market share is increasing with all these banks?
No. I think what you are seeing is like the overall pie. What happens that there is a broad-based growth across all distribution channels, right? Banks are growing, national distributors are growing, MFDs are growing, fintechs are growing, and then of course the direct investors are growing. It's like opportunity is expanding for all the channels. Then there could be periods where on a relative basis, one channel has grown higher than the other. Endeavor at our end is to ensure that we optimize across all channels.
Understood. My next question is on the market share basis. Actually, I was looking at your market share the last eight to nine quarters. It's pretty much constant at around 12.8%-13% or so. Do you have any aspiration to increase your market share to say maybe 14% or 15%? Or do you have any vision or strategy to how one can achieve the same?
If I remember correctly, I think in the early part of last decade it would have been 20%. Of course, the overall size of the market was small. Incremental flows were like a small fraction of what we get now. In last two years, the net flows in the industry are like over INR 9 lakh crores. This was a total equity AUM couple of years back what we have got in terms of flows, so, I mean, now the market share, what you are seeing is on a much larger base of AUM and much, much larger base of flows. Having said that, aspiration is always very high. As I said, 10, 15 years back, we used to have a much larger share. Of course, the overall environment is different. Our aspiration is always to grow more. I'll put it this way.
At our end, and I generally get deeply driven by this and each and everybody in HDFC AMC, our mission is to be the wealth creator for every Indian. To be the wealth creator for every Indian. While on this call, I answer all the questions surrounding market share and margins and everything, but over a period of time, we believe that in a country of 1.4 billion people, industry has only got 60 million investors, and we have got 17 million. We take pride that every fourth investor has invested with us. There are three investors in the industry out of those four who are yet to invest. We have penetrated quite deeply in last couple of years and want to penetrate more over a period of time.
The other opportunity is, if you compare the people who have invested in capital market versus the people who are in the mutual fund industry. My sense is at least 13 crore people have invested in capital markets, and there are 60 million in the mutual funds. There are another 60, 70 million investors who have invested directly. Last couple of years would have given them, I mean, looking at the market, and you would have better data than me, last couple of years of experience would have taught them that it's better to invest through a professional fund manager like us than doing on their own. Of course, there is opportunity beyond that. I think a very big opportunity on expanding the market, lot of efforts that we put in place.
As I said that everybody at our end is passionate about investor education, and we do many interesting things on the ground, digitally, virtually, in many ways. Several of our campaigns have been extraordinarily popular and appreciated, not only by the investors, but even the other industry players. Our focus as a large player is on growing the market as much as getting higher share in the flows that we are getting. In fact, the SIP flows that everybody talks about in last four or five years, there is huge contribution of HDFC AMC. Because we were one of the earliest one to talk about importance of long-term investing, importance of investing through the SIPs, remaining disciplined, et cetera. All the players who did that over the years. I mean, overall, as an industry, we have been a beneficiary.
Right. This is very helpful. Thanks, and wish you all the best.
Thank you.
Thank you. Next question is from the line of Saurabh Munjal from Artha Research. Please go ahead.
Hi. Can you listen to me?
Yes. Yes, Saurabh, go ahead.
As retail investors, as we see these days, are increasingly seeking personalized portfolios rather than generic mutual fund units. How do you see the firm positioning its technology stack to offer direct indexing kind of a thing at a scale? Over the next decade, how do you foresee this impacting the traditional active asset management?
I mentioned earlier that we have large number of products which have been in existence for a long period of time. I'm a very big believer in active investing, and our track record speaks about it. I also believe over the next several years, given the opportunity in Indian market, I always call this a stock picker's paradise. There is time arbitrage. If you think long-term and ignore the short-term noise, there is research opportunity. If you put in good resources with good people, a well-laid-out philosophy, the processes in place, you can continue to generate alpha. We continue to invest in those capabilities. We have one of the most experienced team in the industry and remain positive on that.
On the other side, there would be investors who would meet their certain needs through the passive funds, and we have the best-in-class product bouquet on that, be it index fund or ETFs, be it market cap indices or the smart beta or sector thematic passive and ETFs as well as index fund. Of course, the distribution capability to grow both sides of our business.
Thank you. The next question I have is regarding on alternative. Alternative needs kind of a specialized talent and what kind of cost to AUM ratio do you see on alternative division versus, let's say, the mutual fund?
We don't give segment-wise cost to income, but I mentioned earlier, the work that we have been doing to grow our alternative business and our PMS business.
As of now, we have hired high-quality investment resources, putting in place client service capabilities, putting in place all the other capabilities in place to grow it over a period of time. We don't give segmental costs. Yeah.
Okay. Thank you. That's all from my side.
Thank you. A reminder to all the participants, you may press star and one to ask a question. The next question is from Ansh Mehta from Value Partners. Please go ahead.
Yeah. Hi. Thanks for the color so far and all the responses. Just one question from my side. This is on the other income component. I'm assuming this has come from the dip in yields towards the end of March. Just want to understand if, because one of the other AMCs reported a loss in this quarter, so was this driven because of a heavier tilt towards sort of debt instruments as yields softened or was it more through active tactical rotation? I mean, how should we think about that? Also, given the correction in Nifty in March because of the crisis, how are we adjusting our investment books, bond books duration or equity sensitivity to ensure that other income continues to remain plus, to be a smoothing quotient of our total income?
Okay. Right. If you see page 34 of our investor presentation, we have given the breakdown of the investments across multiple asset classes. The equity investment in mutual funds that we have on the balance sheet is largely due to the skin in the game circular from SEBI. That portion of the equity investment saw a drawdown because of the market correction in Q4. Right? The rest of the portfolio is largely in liquid and debt mutual funds. We of course have invested in some of our own AIFs. Those are early days of investment. On the liquid and debt side, we run a fairly reasonable duration, and we keep it fairly passive there. We are not trying to do too much active management on the mutual fund debt investments that we have on the balance sheet. Equity is largely...
Almost all of the equity investments in the mutual fund are because of skin in the game circular. This is an outcome of the market movement.
Sure. Just going forward, do you plan to continue this comfortable duration on the debt side?
Yes. We are not very long on the debt duration in any case.
Okay. Sure. Thanks.
Thank you very much. As there are no further questions, I would now like to hand the conference over to Mr. Navneet Munot for closing comments.
To sum up, despite a volatile year for markets, investors continued to invest in a highly disciplined manner, as reflected in rising SIP flows. For us, it has been a year of consistent progress across AUM, investor base, and product expansion, along with strengthening our presence across mutual funds, alternatives, and international business. We remain focused on disciplined execution and delivering long-term value to all our stakeholders. Thank you for your time today.
Thank you very much. On behalf of HDFC Asset Management Company Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.