Ladies and gentlemen, good day and welcome to Nippon Life India Asset Management Limited Q1 and FY26 earnings conference call. 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 Touch-Tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Meghna Luthra from InCred Capital. Thank you and over to you, Ma'am.
Thank you and good evening everyone. On behalf of InCred Equities, I welcome you all to Nippon Life India Asset Management first quarter FY2026 earnings conference call. We have along with us Mr. Sundeep Sikka, Executive Director and CEO, along with the senior management team. We are thankful to the management for allowing us this opportunity. I would now like to hand it over to Mr. Sundeep Sikka for his opening remarks.
Thank you very much. Good evening and welcome to our Q1FY26 earnings conference call. We have with us our CFO Parag Joglekar, CBO Saugata Chatterjee, Deputy CFO Amol Bilagi, Chief Digital Officer Arpanarghya Saha, Deputy Head AIF Aashwin Dugal, and Shin Matsui-san, Nominee of Nippon Life Insurance, Japan. I would like to share key highlights of our performance and post that I will hand over to Parag to speak in greater detail on the recent industry trends as well as our performance, post which we will move to Q&A. Coming to the highlights, I would like to start by mentioning that NAM- India has achieved its highest ever quarterly operating profit at INR 3.78 billion and the profit after tax at INR 3.96 billion. Further, NAM- India was the fastest growing AMC in top 10 AMCs both on quarter-on-quarter and on year-on-year basis.
This led to an increase of overall AUM and equity AUM market share. We had the highest increase in AUM market share in the industry on a quarter-on-quarter basis, with the market share increase across all asset classes. Our market share at 8.49% is highest since June 2019. Importantly, both equity net sales market share and SIP market share remain well above our equity market share. Our SIP market share was again greater than 10% in June 2025 and our equity net sales market share also moved into double digit for the quarter. Lastly, on the AIF front we have a team in place led by industry veteran Mr. Andrew Holland and we will be launching our products in due course. Now I will hand it over to Parag for further details on the shipments and our performance.
Good evening.
Thank you Sundeep. Let me start with the market. Equity market in Q1FY26 witnessed a sharp rebound from prior quarter levels. The Nifty increased by 8.5% quarter-on-quarter while the Nifty mid and small cap indices increased by 15% and 17.8% quarter-on-quarter respectively. RBI cut the repo rate by 75 basis to 5.5% while the 10-year GSEC yield decreased by 26 basis quarter- on- quarter to 6.32%. Coming to data on the mutual fund industry, industry quarterly average AUM grew by 22% YoY and 7% quarter- on- quarter in Q1FY26 to INR 72.1 trillion. The share of equity in overall AUM increased marginally quarter- on- quarter ending at 56.6% for Q1FY26 from 56.3% in Q4FY25.
Now moving to the industry flows, the equity category excluding index fund and arbitrage fund witnessed a gross inflow of INR 2.12 trillion and a net inflow of INR 0.82 trillion. Gross inflows were relatively flat quarter-on-quarter while net inflows were lower quarter-on-quarter. Categories with the highest inflow were flexi-cap, small-c ap, and mid-c ap funds. Moving on to SIP. SIP contribution for the quarter was INR 806 billion, up 29% YoY and 3% QoQ . Monthly SIP flows in June 2025 stood at INR 273 billion, all-time high. The fixed income category witnessed a net inflow of INR 2 trillion in the quarter after the net outflow in the prior quarter. The ETF category had a net inflow of INR 264 billion at the end of the quarter. Unique investors in the mutual fund industry increased to INR 55.3 million.
That is an increase of 18% YoY . Now moving to our business performance, we closed the quarter with total assets under management of INR 7.44 trillion. This includes mutual fund, managed assets, offshore fund, and GIFT City. Our mutual fund quarterly average AUM grew 27% year-on-year and 10% quarter-on-quarter to reach INR 6.13 trillion. We were the fastest growing AMC in the top 10 both quarter-on-quarter and YoY in Q1FY26 and had the highest increase in quarterly average AUM market share on quarter-on-quarter basis among all AMCs. I would like now to share a few highlights for the quarter starting with the market share. Our market share increased 23 basis quarter-on-quarter to 8.49%. Our EBITDA market share increased 12 basis quarter-on-quarter to 7.04%.
Please note that starting this quarter we have carved out arbitrage as a separate category for better representation. The share of equity AUM in our overall AUM decreased by 0.3% quarter-on-quarter to 46.9% for Q1FY26. We achieved a double-digit market share in Lexis in Equity + Hybrid segment in Q1FY26 which is the highest market share we have achieved in the last eight quarters. We continue to have the largest investor base in the mutual fund industry with 21.2 million unique investors. We are humbled to have over one in three mutual fund investors in with u s.
During the quarter, we also completed the NFO of Nippon India Income Plus Arbitrage Active Fund of Funds. As end of the quarter, the AUM of this fund stood at INR 5.8 billion. I would also like to touch upon some of the important aspects of systematic book. I am happy to share that there has been a continued momentum in our systematic loans. Our monthly systematic book rose by 29% year-on-year and 4% quarter-on-quarter to INR 33.2 billion for June 2025. This resulted in an annualized systematic book of INR 398 million. SIP market share stood at 10.07% for June 2025. Moving on briefly to the ETF segment, we continue to be one of the largest ETF players with AUM of INR 1.74 trillion and a market share of 19.76%, which increased 69 basis points quarter-on-quarter.
Our share in industry ETF folio is 52%. We also have a 51% share of ETF volume on the NSE and the BSE. Our ETF average daily volume across coupons remains far higher than rest of the industry. Our Gold ETF is among the top 10 globally in terms of AUM as on June 2025. In Q1FY26, we launched four new products: Nippon India Nifty 500 Quality 50 Index Fund, Nippon India Nifty 500 Low Volatility 50 Index Fund, Nippon India BSE Sensex Next 30 ETF, and Nippon India BSE Sensex Next 30 Index Funds. Moving on to our digital purchase, digital purchase transactions rose to INR 3.57 million in Q1FY26, up 27% YoY. Digital business contributed 75% of the total new purchases transaction in Q1FY26.
Nippon Life India Asset Management focused digital strategy in delivering results driven by a real-time intelligent platform, simplified onboarding, tenant communication, and pioneering content design to engage Gen Z investors. Nippon Life India Asset Management robust digital distribution framework, data-driven targeted campaigns, and best-in-class digital assets continue to strengthen its leadership across t he overall digital landscape.
Now I would like to briefly update you on our subsidiary, namely the AIF and Singapore subsidiary. Starting off with AIF, under the Nippon India AIF, we offer Category 2 and Category 3 AIF and have raised cumulative commitment of INR 81 billion across various schemes, up by 25% YoY in Q1 FY26, with INR 7 billion of commitment. This being our highest quarterly fundraiser ever, we have launched a real estate scheme, Nippon India Yield Optimizer INR, with INR 3 billion of commitment raised. Fundraising is currently underway for two of our listed equity AIFs, performing credit AIF, residential RE fund, and direct VC fund. Fund deployment across all strategies was robust in Q1 FY26, with nine active investments in performing credit and full deployment in our venture capital FOF across 14 funds with underlying exposure to 395+ startup companies.
Our future products pipeline includes Empowered India Long Only Focused Flexicap Strategy, Nippon India Credit Opportunity AIF Scheme 2, Second Performing Credit Fund. On the offshore front, we continue to witness equity inflows in the quarter from international geographies in Asia and Europe. Offshore AUM grew 10% year-on-year to INR 166 billion, with our UCIT Equity Fund reaching an AUM of USD 543 million. We continue to expand our footprint in Japanese institutional and retail market. In conjunction with NISA Asset Management Corporation, Japan, we also continue to expand our footprint in new geographies in Asian, European, and Latin American markets. Moving to GIFT City, as stated previously, in Q1 FY26, we launched the Nippon India ETF Nifty 50 Bees GIFT Fund, which primarily offers Japanese investors vetted access to Indian equity markets through the NISA scheme in Japan.
This follows our first GIFT City fund, the Nippon India Large Cap Fund GIFT, launched in January 2025 to provide global investor access to our flagship large cap fund. Our future product pipeline includes Nippon India Brazil Innovation Fund 2B, our follow-on VC fund of fund for repeat Japanese investors, and Nippon India Sharp Equity Fund, a long short equity fund. Now on to our financial performance. For Q1 FY26, revenue stood at INR 6.07 billion, up 20% YoY and 7% quarter-on-quarter. Other income stood at INR 1.46 billion, up 12% YoY and up 5.3x quarter-on-quarter. Operating expenses stood at INR 2.29 billion, up 16% YoY and 8% quarter-on-quarter. Excluding the impact of ESOP, operating expenses grew at 15.8% YoY for Q1, driven mainly by investment in talent, non-mutual fund business, and technology infrastructure.
Operating profit stood at INR 3.78 billion, up 23% year-on-year and 7% quarter-on-quarter. Profit after tax stood at INR 3.96 billion, up 19% year-on-year and up 33% quarter-on-quarter. With this, I would like to conclude my remarks and open the floor for questions.
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 their Touch-T one 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. The first question is from the line of Shreya Shivani from CLSA. Please go ahead.
Thank you for the opportunity and congratulations on a good set of numbers. I have three questions. My first question is a data keeping question. Can you help us with the yields for the different segments for the quarter? I can see that sequentially your yields have really stood up. There has not been any decline. Any commentary around that? Second is on the volume data for the systematic book. The systematic folio seems to have declined sequentially. Any reason, any explanation for that? My last question is actually on the ESOP cost. You had guided that the ESOP cost for this year would be at about INR 48-49 crore. We were expecting the ESOP cost to be about, I mean it should have been more than what you've reported in this quarter.
There's a sharp decline between last quarter and this quarter and the run rate is such that it looks like the remaining quarters would see a much higher ESOP cost coming through. If you can help us with that data as well. Thank you.
Thank you, Shreya. I will take the yield and ESOP cost question, and then I will ask Saugata t o take up the SIP book question.
Yields for the current quarter, the blended yield is 36 basis. The equity yield is 55 basis. Debt yield is 25 basis. Liquid is 12 basis and ETF is 17 basis. On ESOP cost, the yearly ESOP expected is in the range of around 46 crore, which we mentioned earlier. The current quarter cost is around 4 odd crore.
For INR 11 crore. Overall for the new segment is INR 4 crore.
Sorry, this quarter the shop cost is 11 plus 4.
Right?
15 crore or so.
11 crore total. INR 7 crore plus INR 4 crore.
Oh, okay, okay. INR 11 crore total. All right.
All right.
For the full year, it will be at about 46 or whatever, 47, 48, whatever you have mentioned. For next year, sir, FY2027.
Next year it will be around INR 26- 27 crore.
So.
Hi, this is Saugata here with regards to SIP. Actually, SIP booked for us this quarter on a month-on-month basis has gone up. You know what has happened in the industry in March, April, there was a one-time cleanup which the industry as well as we had done on the number of SIPs which were inactive. Hence, there was some impact on the numerator, which of course has settled down in June and July also. The numbers will now stabilize at an industry level as well. As for us, what we need to s ee is the flow.
That book is increasing on a month-on-month basis. We did not have any impact of the inactive folios on our SIP book because they were, as it is, inactive and they were not contributing to this SIP book at any point in time. Our market share on SIP folios continues to grow. Rather, our discontinuation percentage is much better than the industry even as we speak.
Got it. Just one follow-up on that systematic folio thing. Is this cleanup a regular activity? I mean, just for my understanding, I've seen it the first time in the past so many years. Is this something which would happen on a regular basis going ahead, or was this just a one-off? How do you think about that?
Yeah. At an industry level, AMFI had taken a stance that they want to do it one time for all AMCs. This was a large cleanup which has happened over a period of three months. Across all AMCs, everything was done. It's not only pertaining to a particular month or a particular AMC. We feel that this is an activity which has been done. Probably, you know, industry might take a view after 6 months or 12 months if the data again shows up some number which needs attention. As of now, it's a one time cleanup.
All right, all right. This is very useful. Thank you. All the best.
Sure.
Thank you. The next question is on the line of Mohit Mangal from Centrum Broking, please go ahead.
Yeah, thanks for the opportunity and congratulations on an excellent set of numbers. My first question is in terms of, you know, we have launched quite a few active funds in the last quarter and even this quarter we had launched an MNC fund. Just wanted to know how the inflows in that are and if you could give a color on the passive fund, how much, how much, you know, we were able to get into those things.
Yeah, so thanks Mohit. Passive as a strategy, if you have been following our calls every quarter, we keep mentioning that we will keep feeding unique ideas in the market, and hence some of the funds which we had launched in the last three to six months have been unique. We keep seeing a lot of interest as the fund is launched and it is open for subscription. We keep seeing flows coming into it. We don't target any volumes in this fund, so they predominantly will not show any size coming up. Over the period of time, it builds up as investors start flowing into these passes for ideas. When it comes to the NFO, the MNC fund, which is more July specific, it's something which has just got closed.
Our idea, again aligning to our thought process in the past, if something is very unique, something is very distinct as a strategy, we will launch, and hence this fund was aligned to our thought process. We came to the market after three years with a new fund in the active space, and we have got reasonably good response in this fund.
All right. In terms of the distributor commission, I think we have rationalized, but if I look in terms of yield—yeah, can I go ahead? Hello?
Yeah, sure.
In terms of the distributor commission rationalization, I think we have done for most of the equity schemes, and there have been around 2 bps decline in yields if I look as compared to YoY. I just wanted to know, in terms of yield decline, should we expect two to three bps going forward for the next two to three years as well?
Actually, yeah, the yield decline is mainly due to the telescopic pricing where.
The size, the higher the size is, lower the yield impact will be.
We have communicated earlier also.
That on a blended, we should see around two to three basis year-on-year drop in the U.S.,
Okay.
Lastly, in terms of you said in your opening remarks that you know we had a double-digit market share, which was the highest in eight quarters. Just wanted to know if you can just throw a color as to how much we have gained, that it was the highest in eight quarters.
We don't disclose the numbers, but the overall growth is in the double digit on the net move.
For us, the equity net sales has always been on the higher side, and last quarter was also in the double digits, which we continue to build on. That's the reason why the market share has been, you know, one of the best.
All right, all right, thanks and wish you all the best.
Thank you.
Thank you. The next question is from the line of Lalit Deo from Equirus Security. Please go ahead.
Congratulations. Just tell me, the question was on the easy side as well. Like on the easiest side, you mentioned that around 17 basis points. In the last quarter, it was around 15 basis points. Is there any particular reason why we have seen an increase in the yield on the ETF side, and secondly, on the equity book as well? Now, this two basis points of compression, this is roughly, as we are mentioning, that the yield decline is roughly going to be around 2- 3 basis points on an annual basis. Over the last 15- 18 months, we believe the yield compression has been slightly higher. Is it mainly because of the higher payout ratios to the distributors? Is that something?
Thanks for the question. On the yields on the ETF side, our yield has gone up due to the composition of the various fund.
In the ETF segments, which has resulted in an improvement in yield where the higher expense fees have sizably grown. That has helped us to improve the overall yield on the ETF side.
On the overall yield, we always mention.
That there can be some drop in the yield on the consolidated basis, 2 to 3 basis.
Last couple of years we have seen a slightly higher drop mainly due to our size going up significantly.
Last two years, which has impacted the overall use.
Obviously, the new flows come at slightly higher cost compared to the stock, and that is also impacting. That is not the only reason. The size is the main reason; due to telescopic pricing, it will impact the o verall yield on the AIF.
Sure. Just back to the new asset classes, which is AIF. If you want to understand this fact, then the new fund which is in the, in the PY that the long short exists, this will fall under this AIF category, right, or this is AIF.
That is an AIF, you know, strategy. The ones which we spoke in the opening remark, which is in Nippon India Sharp Equity Fund, the long short equity fund, that will be on the.
I think under SIF also we will be launching a couple of fund different things. I think we are still awaiting the launch of these, but I think we remain open. I think we have built up a great team, and I think you will see for us SIF will be a very important category going forward.
Thank you. The next question is on the line of Madhukar Ladha from Nuvama Wealth Management Limited. Please go ahead.
Hi, good evening. Couple of questions from my side. Number one sir, how has your inflow market share shaped up in this quarter? Two, there is this new discussion paper for AMC which basically talks about if your scheme size crosses INR 50,000 crore you can launch a new scheme and new inflows would not be allowed in the old scheme and the new scheme can charge a TER which is up to the old scheme's TER. That was sort of my understanding when I read that paper. If you could help explain what is the logic behind this and it would seem that this would be marginally positive for the AMCs. Is that the right way to sort of think about it? Some background thought process will be helpful on this topic. Thanks.
Hi Madhukar. With regard to the, you know, compared to the previous quarter, last quarter flows have been definitely better. The flows are in the double- digit, lower side of the double- digit, and hence we continue to get put in our equity market share because our net sales market share is better than our overall equity AUM market share, which definitely helps us to grow our overall equity AUM. SRT flows and the lump sum flows are adding to this growth.
Sundeep, this side. I think on the SEBI proposal, the different views will be talked across the industry also, especially launching of additional schemes in the same category. When the AUM crosses INR 50,000 crore, one of the views is that with the increase in size, it becomes more difficult to move on the portfolio. Our view is a little different. We are of the view that it's not about the size. It's more to be able to continue strengthening the research and the risk management capability to remain relevant for investors. We actually do not have either a very positive or a negative view. While we wait for the proposal to get through, because it's still a consultation paper, we do not see any negative in it.
Sir, would this be sort of marginally better because given that you can launch a new scheme with a TER which is equivalent to the earlier scheme?
I w ould tend to understand it as that you would get a slightly additional yield as that is my understanding. I mean, correct on this or am I missing something out of here?
I think we like to wait and watch for the final guidelines. I think again as I've always mentioned, in part, asset management business is a volume game. I think whether it's one basis point getting extra yield or reduction in yield, that is, you know, I mean, it's a short-term positive or negative, but the idea here is going to be that how can we scale up 2x, 3x, 5x from here? That is where the extra growth of the AMC is going to come from. We will wait and watch. I think, like I said, there is nothing negative in it. There might be a little positive bias if it was to come in a formal manner as it has been proposed.
Understood sir.
Thank you.
All the best, sir.
Thank you. Before we take the next question, we would like to remind the participants to press star and one to ask a question. The next question is from the line of Mutka Chopra from Motilal Oswal. Please go ahead.
Hello. Hi, this is Jain. Just a couple of questions. Firstly, is there any change in behavior in customers, particularly in the last six months, wherein we are seeing that the markets have been volatile, and do you think that the preference for stronger brands versus purely looking at the returns, and even among distributors, presence of brands over commission payout? Is there any change in the way the distributors and the customers are behaving?
I think broadly it's not anything has changed in the last six months, but there is a continuous able to see industry has been evolving over the last four, five years. What we have seen is investors are maturing a lot. First, I think we have seen whenever there is a market volatility, they do not react or react the way they used to do. Earlier, I think we first go five years back, there was a very high fund. Performance remains paramount, but that is not the only thing. The brand and the comfort that you get from the brand, that also plays a very big role. That's why you have seen some of the bigger brands getting bigger.
I think overall I think it's a package of performance. It's a package of brand and also the service experience that you're able to give. One thing is very clear, it is not only dependent on brokerages, it is not only dependent on performance. It is a package that we list out, are looking at, and that is what is deciding which is differentiating between successful AMCs and not successful. AMC's.
Got that answer. With respect to your flows, could you give any color whether you know the flows are very widely distributed between the scenes, or it's still kind of lopsided between small cap, large cap, and mix?
Yeah. Hi. The flows from our perspective, I think the best part is we have been able to get flows across our funds. If you see the various market cap offerings which are there, across all market cap offerings, we have flows. That's primarily because we have a very strong SIP book which cuts across most of these categories. Over a period of time, we have also seen that the more we are able to communicate with the distributors and the investors on the various categories which we offer to them, we are able to get reasonable flows in those categories. For us, it's quite widespread. We have de-risked our business flows over the last two years, and hence the net sales growth is also very strong.
What results is very granular SIPs. 75% of our SIPs by value are less than INR 10,000. I think that also adds to the stability and long-term profitability.
Another question on SIF. We could have parallels between the existing team and SIF team, and we can about the net. Could we have used the existing team or we need to build a bit.
I think your voice broke in between. If I've got your question, I think the existing team has been used for SIF. We are proud of our team and the kind of wealth they are creating for the investors. SIF is a different business vertical and we want to take it very seriously. We do not want to be just one other product. We see that as a new business line for us. That's the reason, from our point of view, while a better option, what you said was always there, we thought of fitting some of the best professionals for this. We leverage wherever we can, wherever the regulations allow us to leverage internal research. The idea is we see this vertical as a very, very critical separate line of business for us going forward. I think we are investing in it very differently.
Got it. Last question, sir, is a big thing.
Sorry to interrupt, sir, but your voice broke in the middle.
Is this better?
Yeah,
Yeah.
I'm asking from an investment book standpoint, there is a movement from, you know, equity related assets and other assets to debt. Is there a change in approach towards the investment book in terms of how do we managing it?
We have just rationalized some of our distributor commission rationalization.
Exposure, exposure on the equity side, this is the fee cap in which we have been investing. That is the only change which we have done.
Okay. Because even on your mutual fund schemes, while you know, sequentially from about INR 510 crore to INR 480 crore on the equity side, AIF you mentioned that there is some sheet fund realignment. Just checking there whether some approach in terms of thinking about equities being at the top or some approach there.
No, I think I'll just give you a directional approach rather than quarter by quarter. I think whatever is required for seed capital, we'll always have that. Broadly, I think what we want to do is from the proprietary book of the company. We don't want it to be volatile with the market conditions. I think it will be basically more on the fixed income side rather than equity.
Got that? That's very helpful. Thank you so much.
Thank you. The next question is from the line of Ms. Meghna Luthra from InCred Equities. Please go ahead.
I just had one question. How much scope do we have to cut down on distributor commissions, and what proportion is already, like how many percent of the schemes have already been cut?
I think we don't have a target for that, you know, how much it has to be cut further and all. I think we'll continue to evaluating. It also depends on the market conditions, various things.
I think the only thing I like to answer is I think it's.
A dynamic and I think we'll keep evaluating at different points of time.
At this point of time.
Three schemes which are 45% of our equity AUM, I think we have already cut there. I'll repeat, we don't have any target. It all depends on the market conditions, industry, and we receive the factors.
Okay, is there anything lined in this quarter that you would be cutting or maybe not?
If there is anything, I think in.
The next quarterly call we will share with you.
Okay, thank you.
Thank you, ladies and gentlemen. As there are no further questions from the participants, I now hand the conference over to the management for closing comments.
Thank you all of you for joining this conference call and for any question if you have which you want.
Any insights you can touch base with our Head of IR and we will be happy to answer. Thank you.
Thank you on behalf of Nippon Life India Asset Management Limited. That concludes this conference. Thank you for joining us. You may now disconnect your lines.