Ladies and gentlemen, good day and welcome to the UTI Asset Management Company Limited Q1 FY 2027 earnings conference call. From the management, we have with us Mr. Vetri Subramaniam, Managing Director and Chief Executive Officer; Mr. Vinay Lakhotia, Chief Financial Officer and Head Corporate Strategy; and Mr. Sandeep Samsi, Head Investor Relations, Marketing, and Corporate Communications. We also have the investor relations team from Adfactors PR. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need any assistance during this conference call, please signal for an operator by pressing star and then zero on your touchtone telephones. Please note that this conference call is being recorded.
Before we begin, I would like to mention that some of the statements made in today's discussion may be forward-looking in nature and may involve risks and uncertainties. Please note the disclaimer mentioning these risks and uncertainties are on the disclaimer slide of the investor presentation that has been shared earlier. I will now hand over the conference to Mr. Vetri Subramaniam for opening remarks. Thank you, and over to you, sir.
Yes. Good evening, everybody. Thank you for joining us today. Our financial results presentation and press release have already been shared on the stock exchanges as well as our website, we trust you've had the opportunity to review them. Joining me today is familiar faces Vinay Lakhotia, CFO and Head of Strategy, and Sandeep Samsi, Head of Investor Relations, Marketing, and Corporate Communications. Before we discuss the quarter, I would like to briefly touch upon three areas, but I'll keep it very brief because I'm sure all of you are familiar with this. One is the macroeconomic environment. Second is the progress UTI AMC is making against our strategic priorities. Finally, why we remain confident about our long-term growth trajectory. The markets in the first quarter of 2027 witnessed a resilient domestic economy despite global uncertainty.
While geopolitical developments and evolving trade dynamics continue to impact market sentiment, India's growth story has remained intact. This could be distinctly seen in the mutual fund industry data, which continued to demonstrate strong structural resilience during the quarter, with average AUM reaching INR 84,018,486 crores in June 2026, registering a robust year-on-year growth of approximately 12.6% from the same period in June 2025. Also, there's healthy retail participation reflected in the industry's investor folio base expanding to nearly 28 crores. Sustained systematic investment plan contributions and continued financialization of household savings reinforce our confidence in the long-term growth opportunity for the asset management industry. Against this backdrop, I just thought it's a good time once again to remind you of our Mission 2031 strategy to transform UTI AMC into a larger, more competitive, technology-enabled and, crucially, an investor-centric organization.
Our strategic priorities remain firmly anchored around five key milestones: accelerating the AUM growth, strengthening our SIP franchise, expanding our distribution reach, deepening digital capabilities and, above all, delivering better outcomes for our investors. With that, I'm pleased to highlight that the first quarter reflects encouraging progress across each of these priorities. Our mutual fund franchise continued to build reach and momentum during Q1 FY 2027, supported by healthy investor participation across retail and institutional segments.
As our business approaches the INR 4 lakh crore quarterly average AUM milestone, our focus remains not only on growing with the industry but on consistently improving our competitive position and increasing our share of industry assets through disciplined execution and investment excellence. As of 30th June 2026, our mutual fund franchise continued to strengthen with quarterly average AUM reaching INR 392,691 crore, contributing to UTI AMC's total group AUM of slightly over INR 20 lakh crore.
We remain particularly encouraged by the improving quality of our asset mix, with equity assets across both active and passive strategies accounting for 70% of our average mutual fund AUM compared to the industry's equity to non-equity mix of 60%- 38%, reflecting our continued focus on long-term wealth creation. Our investor franchise also continued to expand. We added approximately INR 3.89 lakh folios, taking our total live folio base to INR 1.42 crore. We also added INR 2.51 lakh new investors as measured by their PAN as of 30th June 2026. This has been supported by one of UTI AMC's enduring competitive advantages that continues to be the breadth of our distribution franchise, with presence in 699 districts across India. During the quarter, we further strengthened our engagement with banks, national distributors, MF distributors, and wealth partners through focused fund manager interactions, distributor education programs, and data-driven sales initiatives.
We believe that expanding our reach beyond the largest cities will remain a significant driver of future growth as mutual fund penetration deepens across the country. A key indicator of the strength of our franchise continues to be the momentum in our SIP business. SIPs remain a key driver of sustainable growth, with our gross SIP inflows of INR 2,502 crore during the quarter, and SIP AUM increasing 8.05% year-on-year to INR 45,595 crore. At the same time, our digital capabilities continued to gain traction, with digital purchase transactions reaching INR 60.9 lakh in June 2026 from INR 49.14 lakh in June 2025. A year-on-year increase of 23.93%, underscoring the growing adoption of digital platforms and this once again speaks to our ability to engage investors across channels. While these numbers are encouraging, we view them as milestones in a much longer journey.
Our focus remains firmly on building sustainable market share and strengthening the quality of our growth rather than optimizing for any single quarter. One of the most encouraging aspects of our business, which I already referred to earlier, is that nearly 70% of our average mutual fund assets are now equity oriented, reflecting our continued emphasis on long-term wealth creation. This is a combination of active and passive investments and reflects the choice of the customer. Investment excellence remains the cornerstone of our strategy. Our product development philosophy has always centered on delivering differentiated investment solutions rather than simply expanding the number of schemes. We continue to identify structural opportunities where our investment capabilities can create long-term value for investors. During the quarter, our fixed income franchise delivered consistent investment performance, supported by a resilient credit portfolio with no rating downgrades.
Our liquid fund reached a new milestone in assets under management. At the same time, we are significantly expanding our passive investment franchise through a strong pipeline of index and ETF offerings, enable investors to participate efficiently in evolving sectoral, thematic, and long-term structural opportunities while addressing changing investment preferences. Alongside our disciplined investment approach and robust risk management framework, we continue to support investment outcomes across asset classes. This positions us well to benefit from the structural shift of household savings towards financial assets. Based on this momentum, we continue to make meaningful progress in strengthening our international and our passive investment franchise.
Our passive product strategy for the international market remains on track. We advanced our global product pipeline through the discussions that we have for emerging market strategy and also for a Gift City outbound product initiative. You will hear more on this through the rest of the year. We also continue to deepen engagement with global asset managers, distribution platforms, and thematic ETF providers. We also hosted our first U.S. institutional roadshow to showcase our private credit capabilities given our strong track record over our two funds where we have now returned capital to investors. These initiatives reflect our long-term commitment to expanding UTI AMC's global footprint, broadening our investment offerings, and creating additional avenues for sustainable growth beyond our domestic franchise. Our alternatives business continues to build momentum.
We strengthened our private equity platform or unlisted equity offerings with the appointment of a dedicated head of private equity. We have also progressed on our Gift City retail initiative in collaboration with our domestic and international teams. As I mentioned earlier, you will hear more about this later during the year. We also launched our second multi-opportunities fund, MOF II, and continue to see strong investor interest in Structured Debt Opportunities Fund IV, which is the fund we launched earlier this year. This has secured commitments of approximately INR 900 crores as of 30th June 2026. These developments reinforce our strategy of building a diversified alternatives platform with multiple growth engines across private credit, private equity, and also offering these solutions to international clientele. Our pension business continues to make meaningful progress in advancing financial inclusion and expanding social security across underserved segments.
During this quarter, we achieved an industry first milestone by signing the country's first ever memorandum of understanding between a pension fund and a pharma producer organization, strengthening retirement awareness across the farming community. We also expanded our presence across the MSME ecosystem with strategic partnerships with industry leading bodies and continue to deepen our rural outreach by onboarding agricultural and cooperative banks and engaging with primary agricultural credit societies, self-help groups, tea plantation workers, and women-led communities. These initiatives reflect UTI's commitment to broadening pension access and supporting India's long-term retirement savings ecosystem and speaks back to the origins of UTI more than 60 years ago. Further, customer engagement and digital transformation continued to be key focus areas during the quarter. We strengthened our direct investor engagement model with the launch of our customer experience channel in Mumbai, providing dedicated relationship management to some of our customers.
Our AI-powered voice assistant, VAANI, continues to transform customer servicing and now handles over 60% of inbound calls, improving both responsiveness and operational efficiency. Additionally, our digital marketing partnership with Google has expanded us to reach over INR 10 crore unique individuals over the past nine months, significantly expanding our engagement with India's potential investor base. Together, these initiatives are helping us build stronger investor relationships, enhance customer experience, and drive long-term business growth. As we continue to focus on disciplined execution and operational efficiency, the organizational initiatives undertaken over the past year have created a leaner and more agile operating model, enabling us to support higher business volumes while maintaining cost discipline. Our objective is to generate sustainable operating leverage as we continue to invest selectively in areas that strengthen our long-term competitive position. As we look ahead, our priorities remain clear.
While one quarter does not define long-term success, we believe the progress made during the first quarter reinforces the strategic direction we have set for the company. The investments we have made in people, technology, products, distribution, and operating efficiency are creating a stronger and more scalable organization. As India's asset management industry continues to benefit from favorable structural trends, we believe our company is well-positioned to participate meaningfully in the next phase of industry growth while creating sustainable long-term value for our investors and shareholders. With that, I will now request Sandeep to take you through the operational and financial performance of the company in greater detail.
Thank you, sir. I will now speak about UTI AMC's operational and financial performance during the first quarter ended 30th June 2026. UTI AMC financials on a standalone basis. The core revenue, that is the sale of services, amounted to INR 308 crore, stable at YOY and up by 1% on quarter-on-quarter basis. The core EBITDA stood at INR 171 crore for the first quarter of FY 2026/2027, up by 1% YOY and 20% QOQ. The core profit after tax for the quarter one FY 2026/2027 is INR 119 crore, up by 1% YOY and 72% quarter-on-quarter. The shareholders of the company have approved a final dividend of INR 40 per equity share at the annual general meeting held on 21st July 2026, representing 95% of the payout ratio.
On a consolidated basis, the core revenue that is sale of services amounted to INR 379 crore, stable at YOY and up by 1% QOQ. The core EBITDA stood at INR 178 crore for the first quarter of FY 2026/2027, up by 3% YOY and 21% QOQ. The core profit after tax for quarter one of FY 2026/2027 is INR 129 crore, up by 6% YOY and 31% QOQ. On UTI Pension Fund Limited, our 100% owned subsidiary, UTI Pension Fund Limited, has recorded a year-on-year growth of approximately 13% in its AUM, reaching approximately INR 4.31 lakh crore as on 30th June 2026, as compared to INR 3.81 lakh crore as of 30th June 2025. It currently manages approximately 24.16% of the NPS industry's AUM as compared to 24.67% at the end of quarter one FY 2026. On UTI International.
UTI International, which represents our international business, has an AUM of approximately $1.48 billion, which is INR 14,027 crores as of 30th June 2026. Our international clients are spread across more than 30 countries and are primarily institutions, pensions, insurance companies, banks, and asset managers. Our flagship India Dynamic Equity Fund, domiciled in Ireland, has an AUM of approximately $511.56 million, which is INR 4,839 crores as of 30th June 2026. On UTI Alternatives. As of 30th June 2026, UTI Alternatives has an AUM with a total commitment of all active funds, including the co-investment portfolio manager of INR 3,843 crores, which is an increase from approximately INR 2,679 crores in June 2025. We have an AUM of $206 million as of June 2026 across two pooled vehicles in Gift City, India Opportunity Fund 1 and India Opportunity Fund 2, which act as feeder funds for MOF1 and HDOC4 respectively.
UTI Alternatives currently manages six active funds across performing credit and multi-strategy themes. The UTI Structured Debt Opportunities Fund 3 has an AUM of approximately INR 609 crores as compared to INR 615 crores as of June 2025, and the fund is currently in investing stage. UTI HDOC4, launched in Q2 FY 2026 and planned as an INR 1,500 crore fund with an INR 500 crore green shoe option, has currently an AUM of approximately INR 887 crores. UTI Multi-Opportunities Fund 1 has an AUM of approximately INR 1,599 crores and is currently in investing stage. UTI Multi-Opportunities Fund II started marketing in Q2 FY 2026 and is planned as an INR 1,000 crore fund with an INR 1,000 crore green shoe option. It currently has an AUM of INR 321 crore as of 30th June 2026.
UTI Real Estate Opportunities Fund I is a total commitment of INR 189 crores as compared to INR 147 crores as of June 2025, remains in fundraising and investing stage. As of 30th June 2026, UTI AMC's PMS AUM stood at INR 12,015,000 crores, while GPAFO AUM was at INR 10,063,000 crores. The implementation of the revised EPFO mandate and consequent transfer of assets led to a decline of INR 36,000 crores in the PMS AUM on a quarter-on-quarter basis. Overall, the quarter reflects continued improvement in the quality of our earnings, a healthy growth trajectory across our core businesses, and disciplined execution against our strategic priorities. I would now request the managing director and CEO for his concluding remarks.
Thank you, Sandeep, for sharing that detailed operational update with everybody. I think we can now open the forum for questions and answers.
Thank you very much, sir. Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask a question may enter star followed by one on their touchtone telephones. If you wish to remove yourself from the question queue, you may enter star and two. Participants are requested to please use only handsets while asking a question. We will wait for a moment while the question queue assembles. The first question is from the line of Uday Pai from Investec. Please go ahead.
Thank you for the opportunity. I have a couple of questions. First is, can you share the yields across equity, hybrid, ETF, and liquid for the quarter? This quarter, we see in your financials that there is no non-controlling interest line item or that it's zero. What is the reason for that? The third question would be, the net flows that we see in ETF, is that a contribution from GPAFO money also, or is it pure retail HNI category flows? Lastly, if I can squeeze one, what's the dividend policy going forward?
Hi, Uday. Yield for the equity and hybrid fund is closely around 72 basis points, 72-73 basis points. ETF and index fund is around eight basis points. Cash and arbitrage fund are at around 12, and for the fixed income fund is close to around 20 basis points. That's on the yield part. On the non-controlling interest, we had investment in two of our AIF funds, SDOF II and SDOF III, where because of the controlling interest and because of accounting standard, we were required to consolidate their balance sheet with UTI AMC.
Since SDOF II has already returned the money and SDOF III, we have sold a part of our stake, for this particular quarter, the fund, the consolidation was not required to be carried out in our balance sheet and the non-controlling interest, which represent the other shareholder interest in that particular fund has actually come down. That's on the non-controlling part. What was the third question?
Net flow in ETF. Net flow in ETF.
The ETF net flows, is there a contribution from GPAFO or is it retail?
Yeah, actually, we don't comment on specific customer flows, I can't answer that question. I would just say.
Sure.
Index fund inflows which is actually significantly retail, were significantly positive for the quarter.
Sure. Dividend policy, any color on that?
I think we have been maintaining a very healthy payout ratios of the profit in excess of 95%. I think hopefully that will continue.
Sure, sir. Thank you. That's it from my side.
Thank you. Participants with questions may please enter star followed by one on your handsets. The next question is from the line of Mohit Mangal from Centrum. Please go ahead.
Yeah. Good evening, everyone, and thanks for the opportunity. My first question is basically I wanted to know the impact of five years exit load on your yields. Have you taken the hit or have you passed on to the distributor?
Mohit, as you can see from our yield number, there are no dilutions as far as the margins are concerned. Basically, whatever the impact of the TER changes has been there, we have passed on the impact to all our intermediaries, and there's no impact on our margin number as such.
Okay, that's great. My second question is basically on the.
I'm sorry to interrupt, sir. Your voice is not very audible.
Oh, one second.
Could you use your handset?
Is this better?
Yes, better. Thank you so much.
Yeah. On the net flows, I think if I have to look at your equity schemes, three biggest schemes, flexi-cap, large-cap, and mid-cap. Just wanted to know, qualitatively, was there any redemption pressure or how were the flows in these schemes?
The net sales number, Mohit, we have already published that. There have been some redemption pressure under our flexi-cap category. Large and mid-cap, we have been receiving quite a positive inflows. In fact, in flexi-cap fund as well, the SIP inflows have been encouraging. While the overall number, the net sales numbers are negative in flexi-cap fund, there are gross sales in that particular fund and large and mid-cap fund has been doing very well as far as net inflows are concerned.
All right. My last question is towards the PMS. I think in your opening comments, you said that we had to transfer some amount with respect to EPF money, and therefore there has been a decline. For the entire year, how should we look at the PMS fees?
The impact is very marginal in terms of fees, and that has already been factored into this particular quarter financial number. There is no meaningful impact on the fee number for the PMS on account of this transfer.
Understood. Lastly, in terms of the international business, I think.
I'm sorry, sir. Your voice is breaking up again.
Is this better now?
Yes. No, I'm sorry, sir. It's again breaking up. We are not able to hear you, sir.
Yeah. Is this better now?
Yes, much better. Thank you.
Yeah. My last question is on the international business. Basically, we are seeing some kind of pressure over the last two to three quarters. I understand that's because of global uncertainty and other factors as well. How should we look in terms of this business going forward?
From our point of view, the international business is essentially an international sales and distribution business for the investment management capabilities that we already have in India. It's the same team which effectively is able to manage the products which are then getting distributed in different geographies, almost about 38+ geographies where we have licenses or the product is registered and licensed for sale. What you are seeing in terms of the flows over the last, I would say actually almost two years, a combination of both the lack of appetite for India, I should actually say negative sentiment towards India, and the fact that our own scheme has struggled in terms of performance over the last two years. That's the reason why the flows were negative. I see that as essentially a cyclical issue.
At some point, you will see interest in India come back. I think the scope for India to attract money as an individual geography as opposed to being just a part of a global pool, we see that trend already. I think that will only accentuate if we stay on the structural growth path. Therefore, we think there is a great opportunity for us as an India-based manager with local investment management capabilities to capture a share of that market rather than allow that to go accrue only to the global firms who actually don't necessarily have much on-ground fund management presence.
All right. This is helpful. Thanks a lot.
Thank you. To ask questions, please enter star followed by one. The next question is from the line of Divij Punjabi from Banyan Tree Advisors. Please go ahead.
Yeah, hi. I had three questions. The first was, we were discussing some time ago that there is a strategy to diversify focus away from the top two, three equity and hybrid funds into the other funds as well, so that across cycles, the AUM is more consistent. Can you just comment on how that effort has been progressing so far?
Okay. You want me to answer that? Yeah, actually. I would say that is well underway, and that's reflected in the fact that now the team is actually focused, and I would say they've also demonstrated their own capability in terms of being able to push the gross sales across a whole host of funds rather than it be limited to just a few, historically, what we may have called flagship schemes. I think this comment perhaps Vinay made earlier. If you look at the larger midcap fund, that is actually the fund in which we are having maximum traction at this point of time. Based on the month, I think we are pushing almost 3%-3.5% in terms of our share of net sales on that strategy.
At the same time, in a strategy like Flexi Cap, which has been challenged, I think the team has done a great job of communicating the positioning of that strategy, the potential inflection points. Therefore, even though we've lost money because of redemption, we've actually managed to increase the SIP pipeline over there. I think that strategy is underway. It's a continuous sort of learning experience to the team to sort of push them and nudge them. I think we are on the right track in terms of being able to get the benefit of a diversified set of products to reflect in our sales numbers. Even in, I would say, what has been a challenge strategy for us in the pure midcap fund, actually, the team has managed to clock in a positive net sales number year to date.
I think it just speaks to the ability of the team to engage and be able to sell a very diversified suite of products. Similar would apply even in hybrids. I think in hybrids, our net flows sometimes don't reflect what the team is doing because we've got two, three, what I would call sunset products, which are just sort of rolling off. Outside of those, something like the aggressive hybrid, et cetera, again, we've been consistently averaging 2%-3% of industry net sales over there. We are continuing to push the team to engage on multiple products with the whole sales architecture, distribution architecture.
Sorry, I'll just put the other two questions also forward. One is around the employee count. Sequentially, we are seeing that the employee count has gone up by 5%, 6% or so. Kind of you can explain that. The other one is there any consideration around the buyback given the cash that is there, and given the price of the stock?
On the employee count, our numbers have remained fairly stable. As we had mentioned that earlier also when we had given the VRS, the numbers came down and we have only replaced people where there was a need. We have not replaced all the people who have taken VRS. I'm not sure about the number of employees increase that you're seeing. Are you talking from a cost point or are you talking from an absolute number point?
Absolute number. Last quarter of Q4, the total employee count was 1,435, and this quarter it is 1,512.
That is the consolidated number, which also includes the people that we have in the pension funds as well as in the alternative business. As Vetri also mentioned in his opening comments, we are investing in all of these businesses, and therefore, we have recruited people for sales in the different subsidiaries.
Okay. Sure.
In the asset management, the number remains fairly stable.
We highlighted earlier as well that for in UTI Pension Fund Limited, since we are expanding our capabilities into the private pensions business, there will be a significant number of recruitment are happening. Plus, on the UTI Alternatives side also, we are building capabilities in terms of two strategies, both on the private equity as well on the real estate front. These subsidiaries, the headcount number has increased, but on the standalone entity, which is the mutual fund business, there the numbers are actually slightly lower only.
Just to give you some color on the AMC side, honestly, it's our belief based on the way we look at the sizing of the organization, that honestly, there's no reason for the AMC number to go up unless something changes dramatically, either in terms of our thought process or industry architecture or distribution architecture. You should not see the AMC number go up. Pension fund, again, just to reiterate, actually over there the numbers will go up dramatically over the next two years, but that's just a function of the growth that we are seeing. We think we can fund that growth quite comfortably without any profitable bank when you look at the pure pension fund company numbers. Over there, we will actually significantly expand the workforce over the next 18 months. We actually approved it for them way back in October, November 2025.
I think they will almost more than double their headcount over the next year and a half.
Sure. Lastly, on buyback?
No, there's no proposal that we are considering at this point of time. It's not on the table.
Okay, sure. Thank you.
Thank you. The next question is from the line of Shreyas Pimple from Nomura. Please go ahead.
Hi, team. Thank you so much for the opportunity. My first question was on the Mission 2031 strategy. Any quantitative metric or targets that we have set for ourselves in terms of, let's say, distribution or capabilities? If you could expand on that please first.
Sure. I think as far as the Mission 2031 targets are concerned, as we said, we think there is scope for us to manage 2X our current AUM because we've already made all the commensurate investments that we would need in terms of people, technology, et cetera. Of course, you have some sort of upgrade cycles in all of this, otherwise, we are well-staffed to be able to do that. That's pretty much I would say on target. We need to ramp up our flow market share in equity because our flow market share in equity is significantly lower than our stock of AUM market share in equity products. That remains the focus area in terms of the numbers that we need to take up.
I think over there our current sort of double down is on SIP, recognizing the fact that we've got some weak performance and redemptions in some of the large schemes, that's why we've been doubling down on SIP. At some point of time, we think cycle will be more favorable. We are also carrying out our own enhancements on process, people within investment management. I think at some point when we are able to get better performance numbers, we'll be able to take up that number in a more cyclical fashion. That's where we are in terms of making sure. The bigger thought process, flow market share eventually needs to exceed stock market share. That's the only way we are going to be able to get to the targets we have set out for ourselves.
Meanwhile, use every other tactic, whether it is SIP, whether it is other products, whether it is passive, to kind of keep the engagement with the entire distribution architecture and continue to meet whatever investment goals that customers have and whatever products they might want to be able to achieve this.
Understood. Just one follow-up on that. When an investor thinks about UTI AMC, what are the unique selling points? What are the USPs that you want an investor to think about when they think of the UTI AMC as a fund house?
That's a very tough one because at some level, sometimes I think the NPS Ki Kahani campaign paints all of us with the same brush, it sometimes gets difficult for people to distinguish. I would say where we've been doubling down is really in terms of pushing our legacy. The fact that we've been around for 60 years, whatever that we do as an organization is focused on the long term, therefore in every part of our engagement, whether it is with distributors, whether it is customers, it's always to stress the longevity of the organization and the fact that the investor's own needs will evolve over 10 years , 20 years, 30 years. This is an institution which has demonstrated it's capable of managing the cycles, managing the challenges, and delivering on what those investors expect over long period of time.
We'll always double down on that trust and comfort that people have with the brand. The second thing that we've articulated for a while now is the fact that whatever we do in terms of our products, in terms of our processes or rather in terms of our investment management, at the core of it, there is always a very strong process because we think what gives institutions longevity over long periods of times in terms of meeting investor requirements is processes. At the same time, you also need to make sure that your talent, the people within the organization are appropriately skilled, they are engaged, they are meeting with the marketplace, they are engaged with investors, they are engaged in all sort of public medium because this is an environment in which people want to see what their fund managers are saying and doing.
We are conscious of that. We target a lot of our media conversations to make sure there is appropriate visibility for the fund managers, there is regular contact with our partners at every level. I would say it's really the trust, it's the process, and it's the engagement that we think will continue to define what UTI means to the customer and continue to stress the fact that this is a very long-term journey. It's not a question of buying the fund which had the best performance in the last one year. It's a question of a fund which has the right thought process in terms of processes, in terms of risk management to meet the needs of the investor over the medium to long term.
Sure. Sir, in terms of the target customer segment, while I understand we will be happy to cater to every Indian, what are some of the target customer segments that we are going after?
Maybe Sandeep can share some data on that which we sort of know based on our own marketing efforts.
Shreyas, the main target audience that we are looking at is the first-time investors which are coming into the mutual fund, the young investors who have started working, as well as we are looking at people who have got into the next cycle of their life stages, getting married and then starting a family and increasing their responsibilities. If you look at some of the data that we have, we can clearly see in our data that in the first quarter of FY 2027 we saw about 18.6% increase on a quarter-on-quarter basis on the SIP registrations which happened between the age group of 18%-25%. They have now jumped up to, in this first quarter itself, to 98,127. This is a very strong growth and this is the strongest growth that we have seen across age groups.
Even in the 26%-40% which I mentioned as the people who have started investing for different goals, that grew at a rate of around 6.8% in the new SIPs and 11.4% across the segment. There has been a lot of growth that we are seeing in the younger segment and that remains a focus area for us as we believe that in India's growth potential.
Just to add the strategic thought process behind that. The brand is very well recognized, I would say with the older cohorts, if I can use that word and maybe anybody above 40+ . For us, we recognize that we are not the first financial brand that younger cohorts have experienced. Younger cohorts have most probably seen the big bank brands which are visible on high streets. Those are better known to them. Which is why our digital team is very aggressive in terms of making sure we have visibility with that cohort in the digital space because that is where that cohort is very active.
I would say when I think about UTI, not over the next one, two years but over the next 10 years, 20 years, we need to make sure that this brand resonates strongly with the younger cohorts because if you don't resonate with them you will not have the benefit of their brand support when they become larger, both in terms of numbers as well as the investment value that they would bring to the table. We believe that this is really a long-term thing that we need to do in terms of making sure the brand is visible to that younger cohort and lot of our efforts are targeted towards that.
The other thing that we know from history is that when you are one of the first or preferably the first mutual fund that somebody has experienced, they tend to have that brand in their consideration set for whatever decisions they might make later on in life. Which is why we are very specifically also targeting that, is this a new PAN that we are bringing into the industry? Then our ability to engage with them both through our digital partnerships that we run with Google as well as our own sales and marketing automation capability that we have with Salesforce. We have the ability to communicate with that cohort because they are digitally very savvy and if we don't do that today we will have an even bigger problem 20 years out.
I'm very focused on the fact that to ensure this institution's brand legacy, we have to significantly engage with that younger cohort and make sure we are one of the first brands that they engage with, which is why we are very aggressive in the digital visibility.
Yeah. That is very heartening to hear from you, sir. Thank you so much. My second question was on the OpEx front. We have seen both staff cost, employee cost, as well as other OpEx being muted this quarter. Minus 8% employee cost quarter-on-quarter decline. Can you explain the reason why the cost was muted this quarter?
As we highlighted in our April con call as well, because of the benefit of VRS that we gave sometime in the third quarter of last financial year, the employee cost net run rate has come down.
Is it fair to say that the expenses would look like in this range for this full year in the quarter?
Yeah. The guidance on the employee cost that we gave earlier was INR 95 crore for the standalone entity and close to around INR 130 crore per quarter for the consolidated entity. That's the run rate that we are looking at.
Sure. That is very helpful. Yeah, those were my questions. Thank you so much.
Thank you.
Thank you. Participants, as a request, please limit your questions to only two questions per participant. The next question is from the line of Chirag from DSP. Please go ahead.
Yes, sir. Thank you for the opportunity. Sir, just on the buyback, we are sitting on 40% of market capitalization as cash. This keeps growing 10% every year. Across the Nifty 500, I don't think any other company will meet these metrics. What needs to happen for you to think about a buyback?
Nothing to add relative to my previous answer. That's not on the table right now. I don't think you will see it growing at that pace because whatever we are making in terms of profits-
Although-
When I said earlier we are almost paying out 95%-100%. I think for me, the bigger challenge is to make sure that I grow the market cap quickly. If I can do that, then that comparison that you're making will not look as stark as it does today.
Is there any constraints on the buyback?
Nothing. It's not on the table right now.
Understood. Okay, sir. Thank you so much.
Thank you. The next question is from the line of Krunal Shah from ENAM. Please go ahead.
Hi. Just wanted to understand the outlook on the other expenses for FY 2027.
I think the earlier guidance we gave, all the major technological or IT initiative, digital initiative, we have already carried out, including a revamp of our digital assets, cloud infra architecture, Salesforce automation, data lake. Don't foresee a major IT or digital expenses for the remaining of the financial year. Something may work out on the AI side. That's why in the April month, we gave a target that 8%-10% increase on the FY 2025, 2026 number will be the target run rate number for this particular financial year.
Got it. We're maintaining the guidance. Okay.
Yeah.
My second question is to Vetri. The investment that you are doing in UTI International, UTI Pension, how are you looking at the ROI on these investments, say, five, six years down the line, given that most of these are through the P&L right now?
In UTI Pension, did you say?
Yeah, UTI Pension and UTI International as well. We are adding a lot of people, so we are booking a lot of expenses, but the revenue is not yet coming.
On Pension, you want to give the numbers? I think Pension relative to our investment is actually hugely profitable from our point of view.
No, the incremental. The meaning I said, you said that you're going to double the headcount.
Yeah, absolutely.
Okay. Yeah, good.
So-
That context
In pension, honestly, the business is so unbelievably attractive from my point of view, 15-year money coming in. Obviously, it's at a much lower margin, but from a manufacturer perspective, having that kind of money for 15 years is actually a mouth-watering proposition. I am focused on making sure that we keep getting rupee profit growth, but no desire to exploit that business for margins at this point of time, because that would be missing the woods for the trees. We want that pension fund to continue to grow the private sector product. I think somewhere down the road, you will see a lot more collision between these products in the customer heads when they make their choices of where they want to go.
Again, I can't understate the attractiveness of a product where for 15 years the customer is going to stay in a relationship with you, which is very different from what happens in the MF space.
Got it.
We are happy to take INR profits growth in that business. We are not interested in trying to exploit operating leverage. I'd rather just reinvest it in the business for growth because I think that's the right thing to do in a business which has a 15-year outlook.
International business. Look, that international business, just remember when you look at, and I can give you the numbers later. Effectively, their network today is 4x what we had given them many, many years ago. Yes, there is some pain that they give us on the P&L account. Some of it is just related to the horrible cyclicality that we've seen in terms of the lack of appetite for India in the last year and a half. In the international business, our last big people expansion in terms of headcount happened when we entered the U.S.-
Yes.
Which was in 2024.
Is where we enter. After having done that U.S. expansion, I am not seeing any reason for the headcount to go up, simply because now we've pretty much covered all the areas that we wanted. Europe was already fully under coverage, Middle East is under coverage, Singapore covers pretty much the entire Asian region for us. In international, I think 2024 was the last expansion in headcount in a significant way. You should see it at stable state thereafter. The challenge has been AUM, not increase in headcount cost. Of course, because of their initial seed money, you see volatility in the reported numbers because that flows through the P&L account.
The stated thought process in International, which will maybe in some way address if that is your concern, is our own thought process in International now is wherever possible, or not only wherever possible, but rather the first principle should be grow through alliances rather than creating large fixed cost bases first and then trying to figure out where the AUM growth will come from. I think U.S. was the last place where we had to nail down that team and say, "Let's take this cost and then see how to build the business." Hereafter, our thought process is go the alliance route to scale it rather than take the cost on our own books upfront.
Got it. Got it. Interesting. In UTI Retirement, now that we're doubling the headcount, where will we be deploying these people? Are we adding more branches?
Combination of branches and feet on street.
Understood. Understood. Got it. Thank you so much.
It's pretty much all RM business development, sales-related roles.
Okay. Understood. Thank you.
Thank you. The next question is from the line of Abhijeet Sakhare from Kotak Securities. Please go ahead.
Hi. Thanks. Good evening. My first question was, in the opening remarks you had mentioned about leaner and agile business model. If I go back to your remarks couple of quarters back around fixing the entire sales supervisory, and the junior layer there in terms of the ratio between the two and how that had to be fixed. Just wanted to understand, where are we in that process? Broadly, except for the fund performance issue which will probably solve for its own, but everything else is now in place or that's still a few quarters away?
Thanks for that. I'd say on the sales reorg stuff, once that VRS was completed, we pretty much got to where we wanted in terms of changing the ratio of supervisory to feet on street. We sort of clustered some of the branches. Effectively that allowed us to address that. I'd say we are pretty much there in terms of that 4.5 number. Can it go slightly higher over time? Maybe. But I think we've achieved where we wanted to go. It's also a young team, so I'm also conscious of the fact that we effectively moved from 5% of our workforce being Gen Z in 2021 to almost 39% of our workforce being Gen Z. Significantly, those bring up the numbers in sales today. Gen Z and Gen Y put together is, I think, 80% of the sales team.
I would say not only have we managed to get that ratio in a more favorable position, we've also managed to bring in a lot more energy. Yes, some of our experience moved out with the VRS, but we've got fresh energy into that team. I think that part is working well for us. Investment performance is where we are not where we would like to be. In my opening remarks, I made the call investment excellence, and we've not managed to execute well on that. That is where we are sort of working with the team to see what we need to do in terms of both process readjustments and talent to make sure that we are able to execute better. That to my mind is the key.
Awesome. Thanks for that. Just one follow-up on the cost front. While this year we'll have some benefits because of the one-off costs in the previous year. Because the industry is competitive, next year onwards, do we start to see some creep up on the cost growth, especially if the top line doesn't really start to come through?
I think hard to give any guided number apart from 2026, 2027. Let's see how this year goes through, then we'll give a call sometime next year.
Got it, sir. Thanks a lot.
Thank you. Participants, if you have any questions, you may enter star followed by one. The next question is from the line of Sagar Doshi from Clever Byte Capital. Please go ahead.
I just wanted to understand the growth outlook for this year. As I could see, we have been losing market share over time. How are you looking at growing the AUM on a net basis? Are you looking at NFOs, how many new schemes or new products you are looking to launch? If you could give a color on the growth outlook, that would be good.
On the NFOs, we have a product pipeline which continues to remain robust. We have a strategy to expand both our passive as well as active investment offerings. We have recently received regulatory approval for several passive products that strengthen our existing index fund investing franchise. This includes the UTI Nifty 500 ETFs and index fund, UTI BSE Sensex ETF, and there are other funds which are in the pipeline. On the active side, we are looking at launching, subject to regulatory approvals, a balanced hybrid fund and some sectoral debt funds. We have a good pipeline which we have for the year.
Okay.
Apart from that, SIF and Gift City outbound funds are also in the pipeline in H2 of this particular financial year.
Can you also give me some light on, we are losing our market share in our average AUM. Anything on that, what steps you're taking and by when can we see like we are at least not losing out?
I think what you see there is effectively the impact of the redemptions that are happening. As I mentioned in my earlier comment, where some of the larger strategies have had performance issues. I think that will turn around only once we start to see some stronger tailwinds from a performance standpoint. That's why I called out. We know that where we have strong performance, our share of flow tends to match our share of stock or even go higher than share of stock. When we have redemptions, then your net sales number gets crowded out by what's happening in terms of gross. Just from a messaging point of view, we keep the team focused both on that gross number as well as that net number. Therefore, I think when we have slightly more favorable tailwinds on performance, that will take care of itself.
Got it. Thank you.
Thank you. The next question is from the line of [Jagannatham], an individual investor. Please go ahead.
Hey, thanks for the opportunity. Congratulations for great numbers because I think if I understand it right, be it in terms of revenue, operating profit, net profit, I think this is the best quarter UTI had produced. Congratulations to the team and to Vetri. Just one question, again, connecting back to that buyback question considering the liquidity levels. In the previous concall, you mentioned that while buyback is not on the cards, you are keeping the optionality from the M&A point of view. I would like to understand whether you are referring to you want to acquire or the other way around. I mean, what is the thought process on that M&A that you mentioned in the previous quarter?
Yeah, as a listed company, you always want to have the optionality to buy something if the price is right. As an independent company, which as you know, if you look at our corporate structure, there is no promoter that UTI has. I think, that is important. As an independent company, we maintain some level of cash buffer within the company. I think right now the industry is a little bit of an expansion phase. At some point, there will be opportunities to acquire bolt-on businesses. At that point, we need to have that. We can't at that time go looking for where will we get the cash to do some acquisitions.
I think any company which doesn't have at least a viewpoint that at the right price, I will look to acquire and bolt-on capability I would say you're not doing your job well. Certainly at some point we'd look to acquire.
Are you actively-
It need not necessarily be-
It's more of a possible trend.
It need not be only AMC. It could be in the alternative space, it could be in the international space. We'll see.
Okay. Are you actually in talks with somebody or it's more of a possible market rattling?
No. No active talks going on.
Okay. Thank you.
Thank you. The next question is from the line of Shailendra Mundra, an individual investor. Please go ahead. Mr. Mundra, your line is unmuted. Please ask your question. I'm sorry, sir. We are not able to hear you. Can you use your handset?
Just a moment.
We are still not able to hear you, sir. I'm sorry, sir. We are not able to hear you. Ladies and gentlemen, that was the last question. I now hand the call over to Mr. Vetri Subramaniam for closing comments. Over to you, sir.
Thank you. Thank you everybody for your participation on this call today and for all the questions that you had. Sandeep and Vinay and me, we are all happy to be able to have this opportunity to engage with all of you and look forward to doing this both during the quarter and obviously at the next quarterly results. Thank you and have a good evening.
Thank you.
Thank you very much. Thank you, sir. Ladies and gentlemen, thank you for joining the call. In case of any queries, feel free to connect with Adfactors' Investor Relations team. You may now disconnect your lines. Thank you.