Ladies and gentlemen, good day and welcome to the Nuvama Wealth Management Limited Q1 FY '26 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 * and 0 on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Ashish Kehair, Managing Director and CEO. Thank you, and over to you, sir.
Thank you. Good afternoon, everyone, and thank you once again for joining us today for our Q1 investor call. I have with me Bharath, our Group CFO, and the SGA team, our investor relations advisors. I'll quickly begin by sharing an overview of our performance for the last quarter and the progress we've made against most of our priorities. Following that, Bharath can take you through the detailed financial results and some of the key metrics, and then we can jump into Q&A.
So just to give you a highlight of the key themes and achievements that defined the last quarter for us, I think we were able to get a reasonable broad-based growth across most of our businesses. We saw an increase in revenue and profits, and this happened with an efficiency quotient, which we typically track. Cost income also was lower than last year's same period. Client assets grew by about 19% year-over-year, reaching about INR 4.6 lakh crores, and profits at about INR 264 crores grew by again 19%, and an ROE was about 30% plus in Q1.
Just a bit on macro, Q1 was not necessarily one of the best quarters from a macro perspective. I think all of us saw that the markets had been range-bound. Corporate profitability remains under stress. I think the two positives were the reduction of rates by RBI and liquidity infusion that still essentially held things at some level, and looking ahead, I think external tailwinds, particularly the U.S. tariffs and broader global trade tensions, I mean, these will remain as a potential drag on sentiment and FPI flows for the next few quarters.
Having said that, I think the business delivery on the wealth asset management front continues to be robust because I think in some sense we deal with the upper end of the K curve, and that segment doesn't get impacted that much with these kind of things. So that remains robust. And I think from a long-term and a medium-term perspective, wealth and asset management, the structural growth story of these segments is now very well understood. That's why you see an increasing amount of competition in these segments. Most of the traditional brokers are also entering into this area.
Capital Markets was, I think, a bit dry in Q1. Mostly IPOs and QIPs were slow, at least for April and May. Towards the end of June, I think activity picked up, and it continues to remain strong now as compared to April and May. And I think the second half of the year is what everybody's betting that should lead to a flurry of issues. With that, having said that, I think structural growth drivers remain intact, supporting medium-term and long-term optimism. Also, near-term, there could be some earnings pressures on corporates, which will play out in the markets. But I think broadly, our businesses should continue to do well.
Getting into our business performance now, the first business being Nuvama Wealth. Like we've been speaking for the last, I think, two years now almost, Managed Products and Investment Solutions, or MPIS, as how we term it, continues to remain as the core focus area for us. And I think the net flows in Q1 remain strong, about INR 2,300 crores, with managed products being well above 77% out of that. If we are able to maintain this growth rate, we will be able to deliver about 30% on the starting base for this year. The MPIS has now reached a majority of the revenues, more than 54%, 55%, and that is what our desired objective was.
Within that, the salience of Managed Products continues to increase, which continues to add to the annuity stream, which obviously essentially becomes a part of the growth that you keep seeing on a consistent basis. I think if we take just the annuity stream, the jump this year would be more than 50%, 60% over last year in terms of the income stream. And the way we've essentially constructed our offering for this segment is to focus more on holistic asset allocation, not monoline asset classes, which basically makes it more client-friendly, in line with what they actually need, and more resilient to markets' ups and downs because then you become an evergreen service provider rather than if you're only focused on equity as an asset class.
And if you see a long winter, then it goes through its own sets of stresses. Plus, I don't think that's necessarily a very client-friendly business in the long run. Second big lever in this business, which we feel, is technology because you're dealing with a large number of clients and a large number of delivery points in terms of relationship managers. Currently, we may have, let's say, 1,200-1,300, and if you look at a three-, four-year horizon, it could go to anywhere between 3,000-4,000. At that scale, if you don't have most of the technology tools helping each component of the value chain, starting from onboarding of client to delivery of advice to executing the transaction and to complete the servicing and reporting, it becomes extremely difficult to deliver a standardized and a uniform service and also very, very difficult to personalize at a client level.
So we've invested in our portfolio solutions tool, Multi-Asset Recommendation System, MARS, which is now tested over INR 30,000 crores of portfolios. We continuously keep it evolving by adding multiple dimensions, like we've now created a family-level access, cash flow, tax loss harvesting, and stuff like that, which basically enables delivery of value to this segment, which typically you are able to give to a high-net-worth segment. Secondly, we have what we call One Platform, which essentially means that both are actually all the constituents: our relationship managers, our external wealth managers, our clients are all on that platform.
Their execution, their servicing, everything is managed at one place. They don't have to toggle between multiple applications. It's both on desktop and on mobile. It's basically a digital-first application. We've also revamped our website, which is a client-facing website. I think some of you can have a look at it, nuvamawealth.com. It basically is a reflection of how the product landscape is moving. Traditionally, the digital platforms used to cater only to, let's say, exchange-traded products or mutual funds, which were, in a sense, more MARS and more readily rendered themselves to a digital platform.
But we've taken it to a step ahead. We've taken more bespoke products like PMSs, AIFs, insurance, everything onto that, OTC products, where partially clients can evaluate and then even lead the execution. Maybe some part of the execution gets done online. Some of them happen through a payment gateway. But it's, in a sense, a complete digital experience for the clients. And lastly, what we focus here, which we keep saying, is productivity. And I think two big levers. One, as the vintage, as the team vintage increases, automatically the productivity goes up.
Second, tactically using the lending book to increase productivity, which I mentioned in the last quarter, and you see some sort of reflection in the numbers in Q1. Moving to Nuvama Private, I think here the, again, focus has clearly been what we call ARR. And again, if you look at the flows, we saw about INR 2,900-3,000 crores in Q1, which again, if you analyze and if you maintain the run rate, we should be able to deliver anywhere around 26%-27% of the opening base. And second, obviously, the addition of relationship managers. We've maintained that this part of the market is going through its own set of challenges because many people are entering at the same time.
But I think the nuance of a superior platform to service clients and therefore also create more economics for themselves, I think continues to attract relationship people. The better ones, the more discerning ones, and the people who want to build a more solid long-term book, we continue to attract that segment without any, I would say, significant challenge. The areas where we are working on here, I think lending is one place where you will see some movement, which will start to happen now in the next three quarters, and more syndication opportunities is what we are building a pipeline on.
Moving to asset management, I think Q1, the focus was deployment. So we had raised our first round of commercial real estate fund, and the whole focus was to do our first deal, which we are happy to state that we've concluded it. It's a prime property in Delhi, in Saket. We bought it from one of the funds, and second deal, also definitive documents have been signed. It's again a large transaction in Chennai, some sort of a GCC, and again being sold by one of the leading international real estate funds.
So I think deployment action now is there. We will now focus on raising the second leg of this fund, and maybe in the next six to nine months, we want to add another INR 2,000-2,200 crores to take the fund to about INR 4,000 crores. In public markets, which is a long-short fund, an absolute return fund, performance remains top-notch. The challenge in Q1 was because of the Indian market conditions. I think we saw some redemptions. Therefore, the net flows are negative. But that was largely in April, May. June onwards, the trend has changed, and July also, the trend has remained robust.
So I think we will see a reasonable positive addition from second quarter onwards. And private markets, again, the focus was on completing deployment and Crossover IV, which is our pre-IPO private equity fund. That fundraiser started, so maybe in the next two, three quarters. So between these three funds, I think in the next three quarters, anywhere between INR 4,000-5,000 crores is what we are targeting today. And the new product category, which we've been talking about, Private Credit, we will start maybe by the end of Q3.
Asset Services, both international and domestic, continue to be strong. Pipeline of clients in both never been more robust. I think some of the rules have been clarified by the regulators, so more and more people are coming in. On the domestic front, we are planning to add two value-added services in order to create more backward integration and become a one-stop shop for our clients, which are more PMSs and AIFs. We want to add the RTA service for them, and we also will add trusteeship services.
And we've essentially got the approval from the board to start these lines, and we will start floating the subsidiaries. And maybe in the next six months, you will see that action also happening here. In institutional equities and investment banking, I think secondary market volumes witnessed some recovery in Q1 as compared to Q4. However, I think they're still moderate when we compare it to Q1 of last year. Near-term volumes in RMU will remain moderate as the market adjusts to the disruptions till the time there's some certainty which prevails on tariffs because right now, most of the global players are shifting their flows out to maybe Japan, Korea, Indonesia.
And the way they are funding it is that they are exiting Indian markets to fund their investments there. So I think that should change once some level of clarity emerges on this tariff side. And yeah, and on the primary market side, which was more dry in April and May, I think that activity has started, which we should see increased traction in Q2 and Q3 and Q4. I think with that, I will hand over to Bharath to take you through the detailed financial performance, and then we can go to the Q&A section. Thank you, Bharath. Over to you.
Thank you, Ashish. Good afternoon, everyone, and welcome to the call. Ashish anyways covered most of the headline business priorities as well as the performance, but I'll still take on the business-wise numbers, a little bit more granular than what Ashish has covered. So if you look at overall our company performance for the quarter, and I'm using a frame of YoY here, more of YoY and less of QoQ, but I'll still cover wherever Q1Q is required. The consolidated client assets have actually grown 19% YoY to INR 4.6 lakh crores.
This is because of the net flows during the period, as well as obviously the market movement which has helped in. But that's where we are on the client assets. In terms of the revenue for the quarter, it is at INR 770 crores, which is a 15% YoY growth. Our cost is up by around 13%. Many moving parts, including the fact that the year increments have also now been added here, as well as we have added the capacity on the distribution side. But if you look at on the OpEx side, it is pretty steady.
There is nothing on the OpEx side. It's mainly the employee side or the distribution capacity which we have added. Our cost-to-income ratio for the quarter one is around 55%, which is last year quarter one was around 56%, so is the quarter four was around 56%. Operating PAT actually grew by 19%, so it's 264 crores, which is an ROE of around 30%, is where on the consolidated basis. Similarly, if you go to the Nuvama Wealth, the client asset is now at around 1.05 lakh crores, which is a growth of 20%. But as Ashish was also mentioning, our focus on the MPIS, so where the assets have actually grown much faster at 30%, and now it has already touched a base of around 32,500 crores.
This quarter, we have actually recorded our highest quarterly net flows of around INR 2,900 crores, and within that, MPIS was around INR 2,300 crores, which is like a 64% growth YoY basis. So the stated focus on MPIS is actually reflecting in the NLM also. The last year, quarter one, we did an MPIS net flows of around INR 1,300 crores. Now it is at INR 2,300 crores for this quarter. Overall revenue for wealth is up by 17%. And again, within that, if you look at our MPIS revenue, it has actually grown by 59% on a YoY basis.
And the share of MPIS revenue has actually moved from 40% to 54%. So almost 55% now comes from MPIS within wealth business. Cost-to-income ratio is steady at 66%, same as first quarter of last year. And the operating PBT is actually INR 75 crores, which is a growth of 18%. So, headline, 20% growth on the client assets, 17% growth on the revenue, and 18% growth on the PBT for wealth business. Now moving to Nuvama Private. If you look at Nuvama Private, the client assets are 2.2 lakh crores, which is a 17% YoY growth.
Again, similar to what happened in wealth, where the MPIS assets are growing much faster. Here also, the ARR assets are growing at 25% compared to the overall asset growth of 17%. And now the ARR asset base is touching almost 50,000 crores. We are at 48,300 crores. So give and take, we are close to 50,000 crores. And the net flows on the ARR asset also were very strong at 2,900 crores. In terms of the overall revenue, the revenue was 155 crores, 19% YoY growth. Within that, ARR revenue was growing much faster at 25%.
This is the transactional revenue, which grew by 9% YoY. You would also notice that the transactional revenue has actually grown lesser than Q4. See, basically, transactional revenue, I would suggest we should not look at on a quarterly because there will always be a seasonality impact depending on the market opportunities, which anyways has a cascading effect on the quarterly CI ratio. So in a quarter, our CI ratio would look a little higher. In a quarter, it will look a little lower. But on a full-year basis, it will smoothen out.
That's how we look at it because transactional revenue is not that it will continue to grow quarter on quarter. It will have a higher growth as well as it may have lower growth. But otherwise, ARR revenue for private is now two-thirds of the total revenue, 66% of our private revenue comes from ARR side. That is, I think, is more reassuring saying that the predictability of the future performance is coming from the ARR side. Cost-to-income ratio I covered 69%, same as quarter one.
Obviously, there is some seasonality impact which happened between quarter one and quarter four, but I think we seem to be fine with this as well as because we have added almost like 19-20 RMs over the last year on a base of 118. We're currently at 137. So they are in the early year of working with the organization. So the productivity level has yet to come to the full capacity. Operating PBT grew by 19% to INR 48 crores. Again, as a headline number, if you look at revenue grew by 19% as well as the PBT grew by 19% for private, which is steady growth numbers.
Overall asset management, the AUM grew by 54% at INR 11,800 crores. Out of this, 93% of the revenue is actually fee-paying. The assets are fee-paying. Net flow for the quarter one was lower because of the volatility in the public market side of the funds. But otherwise, if you look at June was better than April and May, July seems better than June. And hence, we believe that as we progress to the subsequent quarters, it will be back on track. It's just a quarter phenomenon which is playing in. Overall asset services, the assets under custody and clearing has actually grown by 19% to INR 1.27 lakh crores, and the revenue is up by 46% year on year for the quarter one. As Ashish also mentioned, this is coming not only from the existing client, but we have actually onboarded new clients.
So both the clients on the international as well as on the domestic side is helping us. Capital Markets, the revenue is actually down by 10%, but as we mentioned in the earlier quarters also, there was an M&A deal which was there in Q1 last year. If you exclude that, there will be a growth in the Capital Markets as well. Otherwise, it's obviously to some extent linked to the market activity, but we think that it's on the track. This quarter, the fixed income part of our IB desk has actually done very good. Maybe they have done the best quarter ever, which is tracking well. Otherwise, the Capital Markets businesses seem fine. That's all per se. Happy to initiate the Q&A. Moderator can take on for the Q&A.
Thank you very much. We will now begin the Q&A session. Anyone who wishes to ask a question may press * and 1 on the touchtone telephone. If you wish to remove yourself from the question queue, you may press * and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. The first question is from the line of Vivek Ramakrishnan from DSP Mutual Fund. Please go ahead.
Congratulations on a very good quarter, and there was a rating upgrade in the quarter also, which is excellent. What I wanted to ask you was on whether there is any client concentration in revenues. Is there any top five clients account for a significant proportion of your revenues or profitability? And if so, if you can give us a number, that would be nothing like it. If so, what are you doing to reduce this concentration? That's my only question. Thank you.
So Vivek, we have multiple lines of businesses. If I were to aggregate everything and then look at top five clients, I think it will not even be more than 5%-10%. If I look at specific businesses, then it could change because top five clients of each business may have different types of contribution to each of those businesses, revenues and profitability. But what we continuously keep seeing is that whether the top five is constant or they keep changing. And in most businesses, except maybe the domestic part of our institutional equities business, which is largely dominated by domestic mutual funds and where the revenues are driven by the size of the mutual funds, I think in most of the businesses, the composition of top five keeps changing.
Yeah, I needed it in the consolidated basis, and your answer is completely okay. Thanks a lot and wish you good luck.
Thank you.
Thank you. The next question is from the line of Naresh Naiker from Systematix Group. Please go ahead.
Good afternoon, sir. So given the recent developments on Jane Street till date, can you please elaborate on the potential impact of HFT on asset management business and the market share? Approximate what kind of revenue and earnings impact we can see going forward?
Asset management, not Naresh...
Asset services.
Okay. Yeah. So I think Jane Street was one of the clients which have right now not resumed, and they may post their engagement with the regulators, may resume anytime because the regulator has given them a go ahead to resume. But having said that, even if we assume a zero revenue from the day, let's say the regulator gave out the notice to them, on a full-year basis in asset services, we will still end up getting a reasonable amount of growth, maybe early double-digit kind of a growth. Had they been there, it could have been more like late teens.
This could be more early teens. There could be some impact in Q2, but given the run rate which we are seeing both from our existing clients ramping up their balances and the new client pipeline which we have, by maybe end of October or middle of November, we will come back to the same levels where we were, assuming Jane Street is zero. And from there on, the growth again keeps. So on a full-year basis, we will still end up with a decent amount of growth. Okay.
Thank you, sir.
Thank you. The next question is from the line of Lalit Deo from Equirus Securities. Please go ahead.
Yeah. Hi, sir. Good afternoon. Two questions. So one is Asset Services itself. So in this particular quarter, we have seen some 17% decline in the AUMs. So what led to that? And also, the retentions are high. And earlier, we were guiding the retentions on a steady state business should be around 1.8%.
So Lalit, sorry, I'm cutting you because last time when we actually discussed on this, I had mentioned two things. One, that till Q3 of last year, in our Asset Services business, we also had a representation of our Wealth Management business clearing activity happening there, which we shifted to what we said was self-clearing. When we shifted to self-clearing, we pointed out that the yields will now go up because that was a slightly lower yield business, and in our view, depending on where market interest rates are, we should be more around 1.952% to maybe 2.3%-2.4% range over a period of time.
That is point number one, so yield on a steady state basis in line with market interest rate should be in this range, and maybe this year it may be slightly higher also from 2.1%. Second, again, last quarter, I had mentioned that in the clearing assets, there is a composition of cash and non-cash or cash and Gsec. And depending on the client size, depending on what trading volumes they do on the equity or the derivative side, these compositions can change.
And maybe when the reduction happens, let's say when you said reduction in the AUM has happened, the earning assets can still go up within that, which is the cash component. And last point is that don't look at quarter and end of period. You should ideally look at the averages because end of period may not be a full reflection of how people deploy their money. There are trades for which collateral comes and then goes away. So average is the right reflection, which you should see within which there are moving parts on cash, non-cash. So that's why you see even if the AUM has gone down, the yield has gone up, and the income fall is barely anything from INR 198 crores to INR 193 crores.
Right. And sir, thank you for this elaborate answer. Sir, secondly, could you also break up the cost between the Asset Services and IB business in this particular?
So we've always maintained that overall cost-to-income ratio there, let's say, is about 40%. So Asset Services operates anywhere between 30%-33%, and IB is 50-50% plus range. So you can do the math and arrive at a rough blend.
Sure. And sir, just lastly, one data point. So there was an uptick in this particular quarter, we have seen an increase in the overall debt for ourselves. So what would be that related to? The net debt?
About INR 1,000 crores of net debt has been added. 500 crores, if you see, is the loan book increase. And about 300 crores is the working capital, which is payables-receivables difference. Balance is client facilitation trade and some margin at the exchange. So it's split between these three, four items. But 50% has gone to, let's say, loan book increase. About 30% is the working capital increase.
Sure. Thank you.
Thank you. The next question is from the line of Vikram Raghavan from Moon Capital. Please go ahead.
Congratulations on a good set of numbers. And thank you for the opportunity. I wanted to ask if the current run rate of operating margin is sustainable? Thank you.
So broadly, if you see, in our wealth cluster, the cost-to-income between the two put together is order of magnitude, say, 67%. And in capital markets, it's maybe lower at around 40%-45%. So wealth will go down by the end of the year because in private, where we ended at 69%, on full-year basis, our assessment is that we should end at 65% with growth cost embedded w ealth, which is the Nuvama Wealth, is at 66. That will also be maybe 100 basis points lower. So that reduction will happen, and maybe there could be slight increase in the capital market side. So if you aggregate both, we should end up at the same level.
Thank you, sir.
Thank you. The next question is from the line of Abhijeet Sakhare from Kotak Securities. Please go ahead.
Hi. Good afternoon. So the first question I had was from your opening remarks. I think you mentioned about setting up an RTA business. So just if you could give us a few more details as to what's the thought process behind this and where do you see this business fitting in the overall scheme of things?
So Abhijeet not a regular Fint ech CAMS, which basically services the large mutual funds. This would be mostly for our custody clients, which is PMSs and AIFs, because there we feel that they need a one-stop shop. Most of the new ones which start out, they need the trustee, they need the RTA, and some of our peers have started it, and it has helped them get better market share in new registrations. When new AIFs and new PMSs come, if you can offer them a one-stop proposition, then your market share in that base increases.
So we've actually been working on this for the last one and a half years and evaluating on whether we can partner or we should build. Finally, we concluded that it's best built, and we have seen a demonstration of it in one of our peers, and it has helped them in reasonable gain of market share. So I think it will be reasonably accurate to the overall business. And costs are not much in this.
Understood. And the second one is that if I go back to the Nuvama Wealth Business, I don't know if you clarified this, but the fall in MPIS revenues sequentially, if you could point out what's happening there?
Yeah. It's largely Q4, Abhijeet, has heavy insurance.
Okay. Understood.
So that is also the thing. So if you see, I can give you the specifics about 27-28 crores insurance has fallen, and rest of the streams have gone up by 17-18 crores. So there's a 10-crore movement there. So that catch-up will happen as you move to Q2, Q3, Q4 because Q1 is the weakest in insurance, and Q4 is the strongest in insurance.
Okay. And then again, within this, I'm guessing the managed product part of it is more trail-driven, and investment solution is where you'll have something like debt placements and insurance sales?
Yes.
So then in that context, first, the breakup between these two segments, and then how does this move in line with the net flow number that we kind of report on a quarterly basis?
So managed products basically have in if you look at it from a revenue color perspective, three products, which is AIF, PMS, and MF. The only nuance is within AIF where a Cat II and a Cat III pays us differently. In a Cat II, you earn slightly higher in the first year, and then it falls down. The trail falls down, and Cat III is full uniform. So depending on the salience of sales in a quarter, that component could slightly move up or down in both private and wealth. So that's how it moves. I think overall sales, if I look at the INR 2,900 crores, or 77-78% is managed products and balance net new money.
Sorry, net new money about 23% is your investment solutions. But the right way to look at investment solutions is actually gross sales because you earn, like you rightly said, right on the transaction. So there'll be some fixed income which will get redeemed during the quarter, and people will roll or buy fresh. So net new money is only a reflection for, let's say, the trail products, which is your managed products. And investment solution revenue is a combination of gross sales, which is the net plus whatever rollover has happened.
Understood. This is very helpful. Thank you so much.
Thank you. The next question is from the line of Mohit from Centrum. Please go ahead.
Yeah. Thanks for the opportunity. So basically, my first question is in terms of the private business. So we saw that the number of clients increasing from around 4,250 to around 4,400 plus. Can you tell me how many of these they have an AUM of more than INR 25 crores?
Overall, if you see, about 1/3 of our clients have AUM of more than INR 10 crores. And I think if I remember correctly, I'll have to look at the number. I think more than 50%-60% have 5 crores. Now, AUM with us is a different concept versus the potential of the client. If you're asking whether each of these clients have a potential to invest INR 25 crore plus, the answer is yes. Most of them would have a potential to invest INR 100 crore plus. But you will appreciate and understand that the AUM builds over a period of time.
It takes three years for it to build. Maybe the first transaction can be a INR 1 crore transaction or INR 2 crore transaction, but the client can be a INR 500 crore, right? So whenever we onboard a client, what we need to ensure that whether the potential of the client is above 25 crores. And if that is your question, the answer is 100% of those clients will be more than INR 25 crores.
Understood. No, that is helpful. Now, my second question is in terms of the net flows in the private division. So what we saw is that we saw a very big steep decline in that. I assume we saw in one of the quarters in 2025, also the numbers were anemic, and we saw it bouncing back. Do you want to give any guidance in terms of flows in the private division?
Broad math, if you want to use, it will range between 25%-30% of the opening ARR assets. If you see the opening ARR assets, it would be order of magnitude INR 42-43 thousand crores. If you take a 25%-30%, so anywhere between INR 11-12 thousand crores is where we land. There could be quarters where it could be slightly higher, and there could be quarters where it could be slightly lower. What happened last year was in Q1, there was a large inflow because we had acquired one of the investment banking clients who had sold their business to a private equity.
That entire flow came in the first quarter, which itself was on INR 2,000-2,500 crores. So the total net inflow was, I think, INR 4,800 crores, out of which 50% was this one client, which was 17 families. I mean, 17 different accounts. Now, that whichever quarter it comes, it will just jack up. But if you remove that and see, then it's fairly uniform in that sense. And sequentially, also, it has moved up over Q4.
Understood. No, that is helpful. My last question is on the Asset Services. I think you broadly told the different scenarios and growth. But do you think that this division is kind of being very clouded by the regulatory thing? And maybe tomorrow, more and more such companies come into the radar. We can have variations in the revenue. If you can just try to give us something that is this kind of little concentrated to the top clients, or how does this division work, that would be very helpful.
S o broadly, you have to break Asset Services into two units. One is international clients, and second is domestic clients, and if you look at our overall revenue stream, I think depending on which quarter we are talking about, I think between 70%-75% comes from international, and 25%-30% comes from domestic. Domestic is fully granular. It's spread across a large number of PMSs and AIFs through which we earn. So now coming to international, international, the set of clients which we have would be more than 150-200. And there are different stages of evolution.
Out of that, 50-60 will be very large internationally, and they continue to test their strategies in India and whichever strategy works. Then they start to increase their exposure. I think this incident which has happened will be helpful for the market because I don't know which direction it will go because it's right now under regulatory scrutiny. So I can't comment much, but it is between the client and the regulator. Interactions are happening, and it will take its own course. But I think from a signaling perspective, others will be more careful. So it will be a more inclusive market.
What we've heard from most of the other proprietary traders or HFTs, both in domestic and international side, that now the profit pool has expanded and is available to a larger number of players. So yes, people will be tentative as to what the regulator will say, but as long as they are careful in how they are deploying their strategies, I don't see a problem. However, having said that, we should also be mindful that derivatives in general is a topic which bothers regulators because of the losses which retail segment makes. Now, on that, I mean, your guess is as good as mine as to what is going to happen.
But in my view, as long as there is derivative trading that is happening, you will see market makers, you will see liquidity providers, you will see proprietary funds, you will see hedge funds, high-frequency trading funds. Because all these also add to giving volume to the market, which helps your regular long-only hedgers, arbitrage funds also to operate. If they go away, market will, I mean, the depth of the market will completely collapse.
Right. Understood. No, but I think my question was that we don't have any concentration of top five or top 10 clients, right, in this business.
No, sir, I think it keeps changing. If I look at my book today, maybe in the international business, the top 10 would contribute 30%-35%. But that is the nature of the business. At any point in time, it will always remain like that. But it's not like top five is 90% of the business.
Right. No, I think that is very helpful. Thanks, and wish you all the best.
Thank you.
Thank you. The next question is from the line of Sanketh Godha from Avendus Spark. Please go ahead. Yeah. Thank you for the opportunity.
Ashish, this movement of assets from asset clearing to self-clearing in wealth, how much it impacted the overall AUM at the asset clearing? INR 10,000 crores.
Okay. INR 10,000 crores. And I'm assuming that was meaningfully low yield, and that's the reason why the yield bumped up in wealth.
Yield went up, Yes.
Yes. Yes. Okay. Got it. And second thing with asset clearing, I just want to check if that means if the deposit, if we are being on the path of doing rate cuts, and if it remains for a little longer period, like 12-18 months or 18-24 months, then is it fair to say this 2.1% yield, what you are trying to guide, will hold up, or it could come off, or you have measures like extra cash taking to keep it at 2.1 kind of a number?
So I think we could see if, let's say, there is a further fall from here of interest rates of maybe another 30, 40, 50 basis points across the yield curve, then maybe this 2.1 can fall to 2. Because we also have laddered maturity, and like you said, we will increase the cash component and so on and so forth. So it doesn't fully go because this is a combination of Gsec and cash. So full doesn't translate to us.
Got it. Got it. Got it. And two more questions, sorry. One, just wanted to check, last year in IB, we had a lumpy piece. So overall, it looks minus 10%. So just wanted to segregate the growth into IE and IB, point number one for the quarter. Second, given Jane Street impact is there in IE too, in your view, how you see IE growth to play out, or you think this IPO pipeline coming back can still help you to report at least flattish kind of a trend in the full year?
If I take IE plus IB, and I take Q1 over Q4, let's say there is a jump of revenue of some maybe INR 18-20 crores, largely has come from IB and mostly from the fixed income side because you know that on the ECM side, it was reasonably dry in the first quarter, and IE was largely flattish in Q1.
I don't think if, let's say, let's say the Jane Street impact on IE, if we run the analysis and we look at the scenarios, and let's say if what you said, if the ECM activity picks up, then maybe we will go through a INR 15 crore-INR 20 crore net impact for the full year. If it doesn't pick up, maybe slightly higher. But this is assuming reasonably low volume growth on the IE side. If the markets were to recover and if some volume comes back, then I think a part of it will be made over.
Understood. Understood. One more is on the cost. I just wanted to check. See, the other OpEx on sequential basis has come down with non-employee cost. So anything to read there because we reported INR 126 crores in fourth quarter, and it's INR 105 crores in Q1. Year on year also, it looks a little muted compared to the top-line growth, relatively lower. So just wanted to understand how it will turn out going ahead.
So if you remember, Sanketh, last quarter when we did the call, we clearly pointed out that there is INR 15-20 crore extra in Q4, and there were multiple items like we did the CNBC deal, so there was a payout on that and charging on that. All our offsites got bunched. Our institutional equity conference happened. And I clearly mentioned that in next year, again, Q1 to Q4, we will have INR 105-110 crore per quarter kind of an OpEx range, and which is where we should end up at. So these were largely Q4 related items which don't happen in Q1. So that is the fall which you have seen.
Okay. Then Q4, again, it should go back to that INR 125-130 crore level in the current year.
This year, we will not have the CNBC and some of the expenses. So full year basis, you can basically take a 7-8% jump over the last full year.
Got it. Got it. Perfect. Perfect. And lastly, on net flow guidance, which you told last time was will be around INR 19-20 thousand crores. So we should assume that number you will be confidently delivering given we are at INR 5,000-odd crores of ARR flow in the current quarter?
Looks like because if I take, let's say, about INR 32-33 thousand crores in wealth and take about 30% of that, so that should give 7-8 thousand, and private should give another INR 12,000 crore. So INR 19-20 crore looks at this point in time reasonably confident that we should be able to deliver.
Perfect. That should be all I said. Thank you. Thank you for your answers.
Thank you. The next question is from the line of Shyam Sampat from Avendus Capital Partners. Please go ahead.
Yeah. Hi. Good afternoon. I just have one question. I wanted to ask if you can give some color on our view on the SIF and when we start applying for it.
So we've already applied for the license for MF because we don't have MF license and only MFs can do SIF. Our first round of inspection has happened, and so it is basically progressing. So as and when we get the license, I don't know how much time it will take, maybe a quarter or maybe four, five months. And because from a strategy perspective, from the team perspective, from performance track record, everything is in place. The day we get the license, after that, whatever logistics is required to file the scheme, get the approval, is the time that will be taken, and we will be up and running.
Okay. All right. Thank you.
Thank you. The next question is from the line of Ashish Agarwal from Oaklane Capital. Please go ahead.
Thank you, sir, for giving me the opportunity. I have a question. So overall, there is an expectation that wealth management industry will grow from here given there are tailwinds. So based on what I understand is that overall, pie should definitely expand from here. But there are more players coming in, which means that there will be more pieces of the pie. So how are larger players like Nuvama placed? If the market share gain happens for these players, like players like Nuvama and other players, will it happen at the cost of unorganized players or how it will be going forward?
I think largely you hit the nail on the head. So there are two things. One, the size of the pie growth. I don't think people are really able to comprehend how big it will become. I mean, in the last two years, if you see the MF asset book has grown by 50%. A INR 50 lakh crore has become INR 75 lakh crore. That is order of magnitude INR 25 lakh crores, right? And now on this, when it starts compounding, the effect will be huge.
Similarly, if you take PMS, AIF, if you take each component and just compound it at 10-12%, and then calculate the pie, and then look at the penetration, today the formal penetration of all of us, all of us put together, is not more than 15%. If that doubles in next 10 years, I think the overall size grows by 8-9x. So in my view, everyone who's currently operating, in the next 10 years, their market share will actually fall, but they would have still grown by 20-25% compounded for 10 years. Because newer players are needed, the size will become very, very large.
That is where I agree, sir. The pie will definitely expand for all players. But someone will lose market share, right? So who is that?
So unorganized, t he unorganized insurance agents, the sub-brokers, and the IFAs, because they are monoline products. So for a particular client segment, which is a certain threshold and above, and as tier two, tier three, tier four start becoming more and more mainstream, you will see that they will either move or fold into the larger players who will be aggregators in some sense and give a multi-product platform, but they will cede market share to the more organized players.
Okay. Thank you, sir. That answers my question. Thank you.
Thank you. The next question is from the line of Vedant Sarda from Nirmal Bang Securities Private Limited. Please go ahead.
Thank you for the opportunity, sir. Can you please tell what kind of bottom line is currently contributed from the clients who are deploying derivative strategy?
For us, in our wealth management side, our total broking revenue, if you take in a year, is about order of magnitude INR 240 crores. In that, about 40% comes from F&O, 60% comes from cash. So maybe INR 100 crores of revenue comes from F&O for us.
So these include clients like Jane Street?
No, no, no. That is institutional equity. So there about another, let's say, INR 180 crores, INR 190 crores or INR 200 crores would come from F&O on the institutional side.
Thank you so much, sir.
Thank you. The next question is from the line of Manoj from Kivah. Please go ahead.
Hello, sir. Thanks for the opportunity. So as you said, we can grow 20-25% of the industry for the next 10 years. Can I assume we are also aiming for the same for our net profits for the next couple of years?
We are aspiring for the same. Yes. Of course, we are about it. And so even whatever everybody's trying to ask and not ask in the straight way, even with that, we can aim or aspire for the similar 20% growth as we've done in the past for the next couple of years as well, sir? So that event can have a bearing on this year, maybe to some extent, but not so it will not impact Wealth Management, Asset Management, or Investment Banking at all. So they will grow at the pace. And Wealth Management, both the businesses, I think, will grow faster than what we grew last year.
Asset Management also will be faster. The only area that impacts is Asset Services where, again, based on the scenario analysis which we've done, we will end up with growth and not negative. So that leaves only one line item, which is Institutional Equities, where we will see some impact, where I mentioned about maybe INR 15-16 crore of that impact in the current year. Once the base is set, then you again start growing.
So I think things are looking great, sir. So no impact on the news we've been hearing about our private equity deal. So the current scenario should not impact that as well. Those talks, whatever?
That is actually not. I mean, we don't get involved in that because that is a shareholder matter. And if anything happens, I mean, you'll also come to know. I'll also come to know at the same time. So I mean, I have nothing more to add on that. Whenever it happens, it happens. But that has no bearing on the company performance or the growth prospect the way we see it.
Of course, sir. All the best, and thank you.
Thank you. Ladies and gentlemen, due to time constraints, we will take that as the last question for the day, and I now hand the conference over to the management for closing comments.
Thank you. I think it was a reasonably engaging session. Thank you once again for taking time out. We'll look forward to meeting all of you again in quarter two. Thank you, Moderator.
Thank you. On behalf of Nuvama Wealth Management, that concludes this conference. Thank you for joining us, and you may now.