Anand Rathi Wealth Limited (NSE: ANANDRATHI) Q2 2025 Earnings Call dated Oct. 11, 2024
Corporate Participants:
Feroze Azeez — Deputy Chief Executive Officer
Jugal Mantri — Group Chief Financial Officer
Vishal Sanghavi — Head of Investor Relations
Analysts:
Sanidhya — Analyst
Lalit Deo — Analyst
Krishna — Analyst
Samyak Shah — Analyst
Aman Singh — Analyst
Dipanjan Ghosh — Analyst
Prayesh Jain — Analyst
Rohan Mandora — Analyst
Sunil Shah — Analyst
Viraj Mehta — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the Anand Rathi Wealth Limited Earnings Conference Call for Q2 and H1 FY 2024 to ’25. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Feroze Azeez, Deputy CEO of Anand Rathi Wealth Limited. Thank you. And over to you, Mr. Feroze.
Feroze Azeez — Deputy Chief Executive Officer
Good afternoon. Thank you, Sejal, for giving me the opportunity to talk to the audience. Good afternoon. Thank you everyone for joining us for the earnings conference call for the quarter and half year ended 30 September, 2024.
With me, I have our Group CFO, Mr. Jugal Mantri; our CFO, Mr. Rajesh Bhutara; and our Head of Investor Relations, Mr. Vishal Sanghavi.
In H1 FY ’24, our consolidated total revenues grew by about 35% year-on-year to about INR495 crores and profit after tax grew 35% to INR150 crores. We have revised our revenue guidance to INR980 crores from INR910 crores, and we have revised our PAT guidance from INR280 crores to INR295 crores. The mutual fund revenue registered a stronger growth of about 70% year-on-year to INR195 crores of the INR495 crores in H1 FY ’25.
Total AUM grew by about 57% year-on-year to reaching about INR75,084 crores. And since our guidance was INR72,000 crores for the full year and we’ve crossed that number, so we are giving a new guidance of about INR80,000 crores with God’s grace. During H1, our total net flows registered a remarkable year-on-year growth of about 128%, reaching INR5,700 crores for a six-month period.
Equity mutual fund net inflows achieved a year-on-year growth of about 64% to INR3,116 crores. Share of equity mutual funds in the AUM increased to 55% from 50% the same time last year. Return on equity on an annualized basis stood at about 44.4% for the first half year of FY ’25. In alignment with our policy rewarding shareholders, we have declared an interim dividend of about INR7 per equity share for FY ’25.
Now, in our flagship private wealth business, in the first half of FY ’25, we’ve added 1,066 new client families on net basis, bringing our total number of clients to 10,977. Our client-centric approach has resulted in 0.28% client attrition rate for the first six months of this year. We have added 63 new relationship managers over the past 12 months from September last year, bringing the total count to 374. We have had an impressed — immense pride in achieving zero regret RM attrition for the fifth consecutive quarter, which is about 15 months period. No regret RM attrition. Regret RM, by which, I mean, any RM which has cost INR40 crores of AUM has not left us in about a 15-month period.
Our digital wealth businesses, which is a B2B2C business, registered a growth of about 32% year-on-year to reach INR1,826 crores. The number of clients increased 22% to 5,454. The OFA business, which is an abbreviation to Omni Financial Advisors, which is a SaaS platform, has 6,188 subscribers, with platform assets of about INR1.55 lakh crores at the end of H1 FY ’25. And this means — this mean — the mean of the year-on-year growth, very distinguished data, [Foreign Speech] little differentiated data. So, I want your attention. For the last 10 quarters, our profits have grown on a year-on-year basis. The mean growth has been 33.9%. The median growth is 34.2%. The standard deviation of these 10 quarters quarterly growth — [Foreign Speech] year-on-year growth is 4.5%.
Our performance has been consistent and also market agnostic is the belief we have. How do we check market agnosticity. If you look at the worst Nifty performance after we’ve got listed was in the quarter one FY ’23 where the Nifty fell about 9.6%, which was April to June 2022. Our profit in that quarter on a year-on-year basis grew almost to the mean, which is 33.6%.
Now, I will hand over the call to Mr. Jugal Mantri to take us through the financial performance of the company in more detail. Jugal sir, over to you.
Jugal Mantri — Group Chief Financial Officer
Thank you. Thank you, Feroze bhai. Thanks, Sejal.
First, let me speak about Q2 FY ’25 consolidated financial performance. Our consolidated total revenue for the Q2 FY ’25 stood at INR250 crores compared to INR189 crores in Q2 FY ’24, registering a 32% year-on-year growth. Trail revenue was INR106 crores, registered a strong Y-o-Y growth of 69% from INR62 crores in last year’s same quarter. Our profit after tax stood at INR76 crores, registering a 32% Y-o-Y growth compared to INR58 crores in Q2 FY ’24. Profit after tax margin for Q2 FY ’25 was at 30.6% as compared to 30.5% for Q2 FY ’24, which was slightly better.
Now, I will take you all through first half of FY ’25 financial results. The revenue for first half FY ’25 stood at INR495 crores compared to INR368 crores in H1 FY ’24, registering a 35% healthy year-on-year growth. Trail revenue was at INR195 crores, witnessing a strong growth of 70% year-on-year. Profit after tax also grew by 35% year-on-year to INR150 crores for H1 FY ’25 compared to INR111 crores for H1 FY ’24. And profit after tax margin was 30.2% for H1 FY ’25.
So, this is all on the financial numbers. Over to you, Mr. Vishal or Sejal.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Sanidhya [Phonetic] from Unicorn Assets [Phonetic]. Please go ahead.
Sanidhya
Hi. Good afternoon, everyone. Good set of numbers. My first question is, can you explain the different yield — what are the yields on different product segments like equity MF, debt MF, NSP and Others?
Feroze Azeez
Sorry, your voice was a little muffled. Please go again. I’m so sorry.
Sanidhya
Yeah. It’s good now?
Feroze Azeez
Yeah. It’s a little marginally better.
Sanidhya
Okay. So could you explain me on the yields on different products like equity MF, debt MF, NSP and Others for us?
Feroze Azeez
Sure. The yields are — on equity mutual funds about 1.08%, 1.09% post-GST. On an yield basis, yields are always computed per annum. So if you look at the yields of all the matured structured products, which is greater than 1,500 over the last 12 years, the yield has been 1.17% calculated per annum on average assets on structured products. And then coming to debt, debt is about 0.43% post-GST, is the yield on the debt funds.
Sanidhya
Okay. And what’s the part that Others include?
Feroze Azeez
See, others is practically raw material because we believe in these three instruments, largely equity mutual funds and structures, which is what intergenerational wealth is all about. Debt is also a smaller portion. Others is just — our assets, which are in custody now is raw material for its alignment over a period of six months, one year. So, Others is something which we don’t track the yield because that’s not what we recommend, but those are broker code transfers of PMSs and all products, which are in pipeline to get aligned into the three products, which I stated.
Operator
Thank you. The next question is from the line of Lalit Deo from Equirus Securities. Please go ahead.
Lalit Deo
Yeah. Hi, sir. Good afternoon. Congratulations on good set of numbers. So, sir, first question was broadly on the industry front. Like we have been hearing that a large AMC has tried to cut distributor payouts on the back book of — on the back book of AUM. So, have we received any such kind of intimation. And like just a follow-up on this. Like in such cases, like how should we see to it that our yields remain constant in this scenario?
Feroze Azeez
Yes. Some AMCs might have tried to try to reduce the yields of the distributor wherever the TRs have come down because of mark-to-market. But since we are the only wealth management outfit in the country for sure, which uses only equity mutual funds for long-only positions. We have not sold one PMS. We have not sold direct equity. We have not sold AIF long-only. We stand apart in terms of only using mutual fund platform for long-only positions, because we think that’s far better Sharpe ratios than most other equity participation vehicles. So, our bargaining power is significantly more because we have only one platform. And I think that’s the reason why you will not see a dip and that’s why you see a 70% increase in trade, in spite of this pressure, which does not impact us as much or not at all.
Does that answer? That is all?
Lalit Deo
Yes. And sir — secondly, sir, just like — so while the net flows in the equity mutual fund have remained steady, but it has declined on a sequential basis, whereas in the industry front, like, if we look at the equity flows in the equity mutual fund, so they have remained elevated or they have increased also like on a sequential basis. So, like, anything to look into it? Like, why has been there a decline in the net flows on a Q-o-Q basis, I would say?
Feroze Azeez
Absolutely. Very good question, Lalit sahab. But now that we’ve been listed for about 12 quarters, I’m trying to reiterate how you should look at our business, whoever wishes just keenly look at our business and seriously wants to understand this business, which I’m sure you do Lalit bhai. See, this business is about 1,977 portfolios. The client’s objective, risk reward. And whatever the allocation is a culmination of an allocation, which is bottom-up rather than top-down. What do I mean by that is, if my total INR5,700 crores is the net sales for the first half year, if markets run-up, I’m duty bound to realign one’s portfolio towards structured products or vice versa depending on which asset has a larger mark-to-market. For example, if you have 1 April, 2023, if you look at our result, the structured product proportions were 29%, if I’m not wrong. Now, it might be 23%, 24%.
Vishal ji, give me the correct number?
Vishal Sanghavi
24.66%.
Feroze Azeez
24.66%, Lalit sahab, Now what happens is, why has this proportion come down? Because there is more mark-to-market in equity mutual funds. Because our model portfolio has outperformed Nifty by 16.88% last year. And it has outperformed as of yesterday by 66.09% on Nifty. So, when I reallocate money from equity mutual funds to structured product for a client who had agreed to have 65-35, it might have changes in the allocation from a sequential quarter-on-quarter basis.
So having said, which, to answer your pointed question, what does this imply? This implies that there is some degree of realignment happening because of higher mark-to-market. So, you should look at — if you look at my net sales, which is what we were aspiring to have INR1,000 crores per month, did we get there? The answer is no. We got somewhere close to that INR5,700 crores. Ideally, I would like to see this at INR6,000 crores.
Does it answer, Lalit bhai?
Lalit Deo
Yes, sir. But that would be on the overall front. But I was more talking about from the — in the equity segment itself, like, equity mutual fund scheme itself.
Feroze Azeez
Let me further elaborate for 30 more seconds. Now, if I am at 24.66% of structured product, if the agreed allocation is 29% before the mark-to-market, that implies that 4% to 5% needs to move back to structured product, right, if I have to restore the location of 1 April, 2023 with a specific client. So it might mean that I might sell some mutual funds and buy structured products or vice versa depending on the mark-to-market is what I was trying to help you understand. And you should be looked at the overall asset perspective because it is bottom-up rather than top-down. I don’t sell mutual funds thinking [Foreign Speech]. I don’t sell structured products thinking that [Foreign Speech]. You’re creating the portfolio, and allocations are an outcome rather than an input.
Lalit Deo
Right, sir. And sir, just last one data keeping question. Like, in this quarter, like, what has been our primary and secondary issuance on the structured product side?
Feroze Azeez
Jugal sir, would you want to take that? So, Jugal sir, are you there or should I take that? This is for primary, right? 3,283 is primary for six months full period and secondary is 958.
Lalit Deo
Sure, sir. And sir — sorry, sir, just last question. Like, has there been any change like post the taxation rate — post the taxation change, what is the current tax rate, which we are — is there on the MLDs?
Feroze Azeez
See, the tax rate change does not impact my structured product business because the Sharpe ratio of the structured product is 1.93, okay? Out of the 16 products, which are there in wealth management, if some — and there are about 15,000 plus ISINs, which a client can cut a check through, if you look at — arrange them in a descending order of Sharpe ratios, post-tax or pre-tax, you will see structured products right on top, the ones which we make. So, 1.93 is the Sharpe ratio of structured products.
The next best is mutual funds, 0.78%. PMSs are at 0.3, 0.4. That’s point which I’m saying. So does it change our product allocation? The answer is no. The second is that if you look at taxation, taxation is always at file level and the great part of Section 50A is that it counts all the gains as short-term capital gain. And short-term capital gain gives you the provision to use Section 70 to Section 74 for any set-offs, which an equity loss can throw up. So having said which, the average taxation at a family level, which we believe is about 19%, 20% for the maturity, which have happened after the tax changes.
Lalit Deo
Okay. But in general, like, on — if you talk about only the structured products, then I was just trying to reference.
Feroze Azeez
No problem, sir. Okay. Now let me elaborate further. Unfortunately, I’m trying to compress an answer, which is an odds discussion with the client for about 30 seconds, 50 seconds. But, yeah, having said which, with that limitation, let me give you one more data point. In India’s new tax regime, which is the new tax regime, even if you earn INR50 lakhs, the post-tax tax — post-tax — well, a tax rate is 24% on a graded fashion, if you put it on an STCG [Phonetic]. So if there is a gain of INR50 lakh, as per the new tax slabs, if I don’t take any provisions of those section 80Cs and those total provisions of Section 80DD, if you are put on a weighted-average basis, even if there is a INR50 lakh gain, INR49 lakh gain, the weighted average tax goes out to 24% and not 37%. And in a family of five, you would always have a file, which is a major file, which does not have a clubbing provision under the 65 — Section 65. So it’s a longer story, Lalit bhai. So as a standalone also, it’s not something which can be at a product level. It’s at a file level, including all provisions and a family level. That’s the point I’m trying to make. I can take this one-on-one in a meeting or something like that and help you understand what does Section 65 say, what does Section 94(8) say, what does Section 70 to 74 say, Section 112 say and 115 say.
Lalit Deo
Sure, sir. Thank you, sir. Thanks. This was very helpful.
Operator
Thank you. The next question is from the line of Krishna [Phonetic] from ULK [Phonetic]. Please go ahead.
Krishna
Hi. Am I audible?
Operator
Yes, sir. You are audible?
Krishna
Thank you. Great to see that the numbers are spiking year-on-year. My question is not so much around the numbers, but it is around people management, if I may say so. I do see that for the last five to six quarters, there has been zero attrition in your organization. I don’t think this is — this is very intriguing for me to begin with, because when my Relationship Manager calls me from my bank, by the time I add him to my contacts, he’s already switched jobs. So, I don’t know whether this is business as usual in Anand Rathi, but I find this to be a little fascinating. So, would appreciate if you could give me some insights there?
Feroze Azeez
Sure, Mr. Krishna. Point one, yes. First, I want to clarify, it’s not zero attrition at a company level. We have 1,157 total colleagues at current point in time. This zero attrition is regret. RM attrition is zero for 15 consecutive months. That’s point one. Point two, we basically believe that RM is the easiest to retain because it is not — unless you do something wrong, RM does not need to start his life back from zero in a new platform. And we about 10 years, 12 years back, Rakesh sir, I and some of our colleagues had discussed why we quit the previous company. And then we realized, there are about five, six reasons why a person needs to change a job. Like I — this is my third job, unfortunately.
My first job was ABN AMRO. I spent seven years. And there was a reason why I left ABN AMRO because they told me to sell insurance, and I was not okay with it. So if you can make sure that those five, six items are not done in a company, then people don’t leave is our belief and that’s the hypothesis, which is proof, point one. Because an RM needs to convince 50 clients, 30 clients to come along, which is a tough task, especially when the client portfolios — if you look at our client portfolios, their Sharpe ratios for the last 10 years of my 297 largest client is greater than the best Sharpe ratio of another competitor, okay, mathematically provable. So Krishna, sir, so what I’m trying to say is this was RM. Regret RM attrition is zero, point one.
Point two, RMs find it very difficult to restart life. Unless the organization is being very unfair, there is no reason why a Feroze as an RM should go to a new platform and rebuild life from zero. And we just have identified those five things, which industry does wrongly and that we don’t do. That’s about it. We don’t do anything extra. We don’t do contests. We don’t give RMs more than what is said. We don’t give them less than what is said. We give them exactly the same formula from 2007 when Rakesh sir set up the bonus formula or the remuneration formula. That’s remained constant for 18 years, 17 years, which has not happened in the industry. So, that’s one of the key reasons. Stability of remuneration is one of the five, six reasons why this is the way it is. And we want to be the Finland of the corporate world, which is the happiest country as they claim.
Krishna
Thank you, sir. That was helpful. No more questions.
Operator
Thank you. The next question is from the line of Samyak Shah from Sameeksha Capital. Please go ahead.
Samyak Shah
Yes. Am I audible?
Operator
Yes, sir. You’re audible.
Samyak Shah
Yeah. Yeah. Congratulations on a good set of numbers. I just want to know about the alpha generated on our model MF portfolio. So, can you just throw some light on that?
Feroze Azeez
Samyak, sorry. I again missed hearing your question with some…
Samyak Shah
Yeah. Yeah. So, alpha generated on our model portfolio.
Feroze Azeez
Yes. Alpha generated on model portfolio, we like to compare ourselves to Nifty because that’s the most familiar benchmark. If you look at Nifty, of course, some people might debate why not NSE 500, why not Nifty Smallcap 250? But Nifty 50 is what the Tier-2 benchmark most fund managers in India have chosen. And that’s our fund benchmark as well. When given a choice, most fund managers actually chosen Nifty 50 surprisingly. Even Small Cap Fund Managers have chosen Nifty 50 as their Tier-2 benchmark. Tier-1 is mandatory by SEBI.
So coming back to — now the Alpha, first, I gave you some color on the benchmark because benchmark has to be something which is familiar. Nifty — NSE 500, my clients don’t even know the levels of it. Coming to Nifty. Nifty last year, I think 16.88. Like I said, with the Alpha on Nifty of our model portfolio, we went small cap heavy. We were zero small cap schemes in December — in March 2023. On 1 April, 2023, we were suddenly three small cap funds. So, we were zero small cap for four years. With whatever God’s grace and some degree of mathematics, we had decided that we will be out of small cap just before — or no, just after the IL&FS crisis in September 2018. So, we stayed without any small cap for four years.
Then we went straight to three small cap schemes. Now, we have two small cap schemes. And that resulted that whole broader market call with God’s grace went right. And that gave us some serious alphas last year. And then this year, of course, the liquidity in the small cap space continues and we track that on a daily basis. And that’s why there’s a broader market rally continuing unlike most of these institutions. Several institutions believing that it’s broad-based rally is overdone. Till the liquidity tide turns, we believe that there is some more juice left. And so the alpha this year, if I have to tell you the precise number, I’ll tell you, as of yesterday, just bear with me for a minute, Samyak Shah. I’ll tell you precisely. As of yesterday, it is 7.34.
Samyak Shah
Okay. Till date?
Feroze Azeez
Yeah. It is 7.34 till date. Yes, for this financial year.
Samyak Shah
Okay, okay. Patient. And my other question is, like, we have seen increase in finance cost in this quarter. So, is it like one-off item on account of buyback or anything else?
Feroze Azeez
Yes. Jugal sir is best equipped to answer this.
Jugal Mantri
So, actually see, if you recall that we have done the buyback and the treasury got deployed. So now whatever this finance cost is there, there is no borrowing we have. In fact, we have got the other income and the fixed deposits are placed. So as and when there is a treasury requirement is there, there is an overdrawn on the FD line. So it is FD OD used and the cost is largely on account of that.
Samyak Shah
Okay.
Jugal Mantri
We don’t have any borrowing in the company. It is a debt-free company.
Samyak Shah
Yeah. Got it. Thank you.
Jugal Mantri
Does that answer your question?
Samyak Shah
Yes. Yes.
Operator
Thank you. The next question is from the line of Aman Singh [Phonetic] from ProfitGate Capital Services. Please go ahead.
Aman Singh
Hello. Am I audible?
Operator
Yes, sir. You’re audible.
Aman Singh
Thank you for the opportunity, and congratulations on a good set of numbers. Sir, I wanted to understand, as you rightly highlighted, Y-o-Y decline on equity MF net inflows for the quarter two is due to the realignment of portfolio toward structured product. So, can you give us the gross inflow numbers in equity MF so for a better comparison of how the book is growing and also for the market share that we have against the industry?
Feroze Azeez
Aman sahab, one second. [Foreign Speech] Aman, in the meantime, one of my colleague pulls out precise numbers, let me tell you. If you look at our equity mutual fund sourcing for the first half year, I think it’s about INR3,300 crores. Now, I’ll tell you some industry numbers. Now, here, I have it in my hand. H1 FY ’25, the net flow in the category as per — 3, right? Category 3 of AMC, as it is mentioned in the website, which is the active managed funds, the total net flow is INR2,03,994 crores. SIP purchases for the same period of H1 FY ’25 was INR133,925 crores.
Net inflows minus the SIP purchase is INR70,069 crores and Anand Rathi’s number, sorry, is INR3,116 crores. And our SIP purchase is INR310 crores, which implies that our net inflow in equity mutual funds for the same period of the first half year of 2025 FY is INR2,805 crores, which makes it a 4% market share in lump-sum purchases and 1.5% market share, including SIP number, because we have not focused on SIP being an HNI platform. I think we have missed that opportunity so far. We have woken up to that opportunity, and you will see SIP numbers going up. But if you look at lump-sum purchases, INR2,800 crores is what has come from ARWL on a total base of INR70,000 crores for the industry.
Does that answer, Aman sir?
Aman Singh
And sir, what would be the gross equity inflow market share, including SIP lump sum everything for H1?
Feroze Azeez
For the industry or for us?
Aman Singh
For us compared to industry, the market share.
Feroze Azeez
Yeah. The market share is 1.5%. INR3,116 crores on a INR2,03,994 crores.
Aman Singh
So it would be net inflow market share, right? I am asking about gross inflow market share.
Feroze Azeez
Gross inflow, we don’t track it at all.
Jugal Mantri
Gross — so it is next to impossible to track because there are lot of switches from — and the realignment even within the equity mutual fund portfolio. So it is next to impossible to track the gross number. Besides the equity, what is important is that even the net inflow in the first half, which we have is INR5,700 crores in the products, which are being distributed. Compared to that, we had net inflow of INR2,500 crores. So in fact, the net inflow in our products, which are being advised, it has gone up by 127% in the first half of this financial year.
Aman Singh
Right. Right. Yes. So as you explained in quarter two, there was some realignment from equity mutual fund to structured products. So, was it across the categories in equity mutual fund or you made redemptions from a vertical category like you did in small cap a few quarters back?
Feroze Azeez
Yeah. We — no, see, we release a new model portfolio every 15 months, okay? Then start the realignment. Okay. The model portfolio is a lump sum now. The same 14 schemes I own, the same 14 schemes my largest client as an RM owns. So it is never going to be so transactional.
Aman Singh
Got it. Thank you so much, and all the best.
Feroze Azeez
Thanks, Aman Sahab.
Operator
Thank you. The next question is from the line of Dipanjan Ghosh from Citigroup. Please go ahead.
Dipanjan Ghosh
Hi. Good afternoon, sir. Sir, just on the guidance part, when I look at it for the second half, you have built in almost a high single-digit sort of a AUM growth guidance compared to 1H when I look at it, the accretion. But when I look at your revenue numbers or even when I look at your PAT numbers, for the second half, you’re building in a tad lower than what you have achieved in 1H. Now, given that our opex structure probably might — when I now subtract and get lesser opex number, the opex number seems to be broadly flattish what you’re assuming between 1H and 2H. So, now just on the revenue part, I mean, why would you kind of assume a relatively lower revenue number for the second half compared to the first half, even when you are assuming an AUM accretion. So, that’s my question number one.
The second question is now when I look at your flows that you’re getting into your business, just if you could give some color between flows from, let’s say, the new customers and from the existing customers, what that breakup would be and if that has changed in the last year or quarter out there?
And my last question is more from a structural perspective. I mean, in the segment that you’re operating, do you see increased competition from some of the domestic boutiques. And if so, can that lead to some sort of maybe not immediate, but maybe a near-to-medium-term pressure on the cost side?
Feroze Azeez
Great. So firstly, from a guidance standpoint, — sorry, I missed your name?
Dipanjan Ghosh
Dipanjan.
Feroze Azeez
Dipanjan. Thank you, Dipanjan, for your question. Firstly, I think, if you would have heard us in the past, we always try to under commit and over-deliver. That’s our principle, and that’s the principle. Any business which is supposed to be in the trust business, to clients also, we try to under commit and try our best to over-deliver. We don’t show Sensex INR2 lakhs and then sell equity. We show Sensex can go down every eight months, 10% and then sell equity. So, one is the principle and the DNA, which Mr. Rakesh Rawal, who is the CEO of our company and incidentally also our professional crew has imbibed in us is to under commit, over-deliver. So, any guidance numbers have to be seen with that color. And we also believe in God.
So, there could be surprises. That’s why you would always have some conservatism and not look at sequential growth. Half year to half year growth are not supposed to be seen in this business for the nth time. I’m mentioning this in my calls that it is a business of managing money and revenue is an outcome. I can’t decide, this is the revenue I want and that’s how I will manage the money, okay? And we have to respect the fact that we have collected INR75,000 crores of hard-earned monies, which on an average takes 15 years, 20 years for every family to accumulate. So revenue can’t result in allocations. Allocations have to result in revenue. So, that’s on the guidance part, right?
Second, which was — first question was existing vis-a-vis new clients. 65 old clients and 35 new clients, okay? We believe that we are one of the wealth management outfits. We like to believe that we are more secure as a group of professionals, saying that we don’t push people to start big. We say you start with whatever INR1 crores. But as long as you have INR8 crores, INR10 crores, INR15 crores as your investable surplus, I would allow somebody to start with INR1 crore. Earlier, I used to allow them to start with INR50 lakhs also. And once I established that my Sharpe ratios, the worst Sharpe ratio is better than the best Sharpe ratio of somebody else, there is no reason why I will not be able to consolidate. That’s why two-thirds come from existing clients and one-third comes from new clients.
And the third question was what, Vishal sir?
Dipanjan Ghosh
Third question was more on the competitive intensity. How do you see that shaping up?
Feroze Azeez
See, competitive intensity, our competition is with anybody who has a Sharpe ratio less than me, okay? There are two — how we see competition? Of course, it might look too idealistic. There is a competitor to sales team. There is a competitor to research team. Now, for example, if there is anybody better than us in terms of risk reward to a client that is a competitor to my product team, Mr. Chethan Shenoy and 145 people saying that why is somebody delivering a better Sharpe ratio than me?
If somebody is delivering worse off than me, then it’s a competitor to my sales fraternity because [Foreign Speech]. So that’s how we see and we learn from our competitors. So to answer your question, competition will come. But there’s enough and more money, which is not delivering the Sharpe ratios of even 0.5. And people don’t even measure risk-adjusted return of their portfolio. So if you measure and somebody is doing very well, better than us, we don’t treat that as competition. We let that be.
And so we have the courage to say no to some clients, which I don’t think wealth management outlets as a client. Once I say no to those 5% people who are doing better than us and learn from them, I have the conviction to get the 95% in and that’s been the principles. That’s how we see competition. And there is so much underutilization on a risk-reward basis, you’ll be surprised. Even INR100 crore clients have a Sharpe ratio of 0.3. So many of them.
Dipanjan Ghosh
Got it. But if I can just come back on the first question, my question was not from a guidance perspective, more from the perspective that barring asset allocation, if I just look at your mutual fund distribution business, do you see any risk to the yield? I think one of the first questions was regarding back book repricing from one of the larger AMCs. I mean, is that more of a trend that you expect for the other incumbents to follow? Or it’s just more of a one-off even from one of the larger players? I mean, a question is more from a yield perspective how you see that shaping up or is there any risk to the MF yield?
Feroze Azeez
We personally think that — we generally like to manage risk. Risks will be there. There is — I can give you 100% that not just the 10 risks which I’ve written on my notes in my phone, there will be some unknown risk. And risks are practically the ones, which you don’t see coming, right? So, I have total 17. I call the green risks. Higher likely risks are 10. So after having provisioned, that is why Rakesh Rawal gives the guidance of 20%, 25% for the next 10 years.
Dipanjan Ghosh
Got it.
Feroze Azeez
So to answer your question, yield compression unlikely. We were the only wealth management, or one of the few wealth management outfits, which went all trail in 2016 when it was regulatorily mandated in 2018. And we have not had to change our distribution and advisory model from 2013 1st January when it has been released. Most of our industry participants have had to be toying between advisory distribution, PMS platform for the mutual fund business. I think if I’m not wrong, at least three changes have happened in most wealth management outfits from 2013 in their business model. When we look at regulation, we look at regulation not from what is written, but between the lines. And probably on a one-on-one discussion, I can tell you what we read as a regulatory change, yield compression is the least of our risk. And even if there is a INR0.05, INR0.07 risk of having 1% only trade commission, we are very well poised to handle that.
Dipanjan Ghosh
Got it. Thank you, and all the best.
Feroze Azeez
Thank you, sir.
Operator
Thank you. The next question is from the line of Prayesh Jain from Motilal Oswal Financial Services. Please go ahead.
Prayesh Jain
Yeah. Hi. Congrats on a great set of numbers. Just a couple of questions. Firstly, when you’re mentioning about your alpha generation, you mentioned your performance versus the Nifty. But could you also give some color as to how many of your portfolio schemes would have outperformed their respective benchmarks and what would be the average delta over the respective benchmark?
Feroze Azeez
I can tell you that. But that’s something, which I don’t track as much. But of course, I track. But that’s not a commitment I give. Because everybody has a Tier-1, Tier-2 benchmark. If you want to know what is the outperformance on the respective benchmarks, which I think is itself flawed is 2.91 for this year.
Prayesh Jain
2.91. Okay. Great. And the other thing is, from a structural perspective, how do you see the share of your structured products, say, over the next three years, five years? How do you see that kind of changing?
Feroze Azeez
I don’t think there could be too much change. When we started in 2012, November, our first structured product issuance at Anand Rathi, we had a 30% allocation as the maximum allocation today is 35%. So, we went in 12 years to 40%, came back to 30%. We are now at 35%. For most of the portfolios, we recommend this. So to answer your pointed question, it’s going to be a plan B in the portfolio and that to my mind would be one-third or close to that for the next 10 years. Unless the macroeconomics change, if the delta, vega, gamma, theta, rho, which are the first order Greeks of long-term options change dramatically, which I think is unlikely vega and theta, which are the second order Greeks, which we track to make a product unless they change to over hedge, there is no reason why this allocation would change or the same product which we have done 1,500 times each will change. We don’t believe in innovation. We believe in optimal innovation because innovation for the heck of it is something, which is detrimental to the Sharpe ratios of the portfolio. That’s what our study shows.
Does it answer, sir?
Prayesh Jain
Okay. Yeah, yeah. That’s it from my side. Thank you.
Operator
Thank you. The next question is from the line of Rohan Mandora from Equirus Securities. Please go ahead. Yes. Sorry to interrupt you, sir. May I request you to please use your handset.
Rohan Mandora
This is better?
Operator
Yes, sir. Please go ahead. Mr. Rohan?
Rohan Mandora
Hello?
Operator
Sir, we are not able to hear you very clearly.
Rohan Mandora
Sorry, I’ll join back the queue. Sorry.
Feroze Azeez
We can hear you, Rohan bhai now. I could hear you. Sejal, I could hear Rohan.
Operator
Sir, he got disconnected.
Feroze Azeez
Okay.
Operator
Due to no response from the current participant, we will take the next participant. The next question is from the line of Sunil Shah from SRE PMS. Please go ahead.
Sunil Shah
Yeah. Thanks for the opportunity. Congratulations, Feroze, and the entire team at Anand Rathi, Jugal sir and all. Sir, I’ve been there in the company for like reasonable period of time. And I’m really looking at being there for like another five years, 10 years as you stated, Rahul ji and all are targeting 20% — 20%, 25% growth over the next decade. That’s the sense and we are clearly preparing our company in that direction. Really, really appreciate the client acquisition to employee retention, to the products, processes, everything. Sir, my only point is this one and don’t want to sound negative, but are we working or preparing for — or Feroze himself as creating a proxy of Feroze in the organization Because Feroze has been there for a long period of time and has all the firepower today also when I hear him speak. But my only, that is Six Sigma event or the black swan is Feroze kind of decides to move on or whatever, are we preparing any proxy of just an outlier completely minus 3 sigma event? But are we working towards creating any such thing? This is just one thought because that’s the only risk, which I see in the company at this point of time. So, just wanted to bounce this, just create some thought and just want to hear your thoughts as well, Feroze. Thank you so much.
Feroze Azeez
Thank you, Sunil sahab for your question. Thank you to be our investor for so long in your PMS — PMS side, which has [Technical Issues]. So, Sunil sir, see [Foreign Speech], but I think I am not — I am just a postman, to be honest. And I’m not being trying to sound modest. Rakesh sir, who is a backbencher is the person who’s actually put the strategy in place. Segment was chosen by Rakesh sir. The strategy mathematical approach was chosen by Rakesh sir. And his experience is what I try and articulate today. Like, you rightly said sir, I joined in September 2012. So, I finished about 12 years. Now, I speak like Rakesh sir, but he doesn’t speak so much in the public is why it is misconstrued that it’s my language. Point one.
Now, I’ll give you a little more tangible answers. This was just a disclaimer. And in 2015, July, I was chosen by Rakesh sir to be the Deputy CEO, not from a purpose of a transition because one of us can die, right? To be honest, right? A Six Sigma event, right? Not Six Sigma. It’s a certainty that one of us will die sooner unless we take the same flight and something happens. And so on a lighter note here, I’ve had a very strong long chat. Sunil, what I’m saying is [Foreign Speech]. Right? On a lighter note. [Foreign Speech]. So, we are two of us, point one and not one, okay? I might be doing the talking in the public domain, but his brain is significantly more than mine in the business because of he joining in 2007, 1 April, 2007. That’s point one.
Point two, if you look at it, sir, [Foreign Speech], barring the last four, five hires, have been there for more than 12 years, 14 years. My Hyderabad unit is taken care by Protima. She’s 17 years. Our Delhi unit is taken care by Manish Srivastava who’s 17 years. Adil came with us, again, co-head Delhi. So if you just went the second in line, the average period the unit heads have spent is anything more than 11 years, 12 years, 13 years, 14 years. We’ve hired three people from Karvy, who came in 2015, ’18, ’19 and ’16. So, they would bring down the average because they’ve spent some period.
Then coming to the product head, who heads this division of 145 people, which is the brain in the anatomy, if I have to draw up an analogy. Chethan Shenoy, who’s the Product Head, has worked as a colleague of mine from the first day I started in the corporate world in 2004, on February 10, 2004, when I joined ABN AMRO, that was one of the first people I met. So, we have worked together as a group for really long periods of time like Chethan Shenoy, 20 years. My product deputy head close to 14 years. So if you look at all the product top 10 people, I actually have six people, plus 14 people. Six people have worked as a colleague to me for at least 14 years, 15 years from 2010, 14 years. And the next in line in the product, 14 people have spent at least eight years average. So the only way to prepare for somebody’s absence in an unfortunate event is to have near-zero attrition, both at product level and the RM level. That’s what we’ve tried to do, but you really set us thinking, Sunil bhai. We will try and see if there can be a more cogent plan and I will take this as a feedback.
Sunil Shah
No, really appreciate the detailed explanation that you shared with me. And good to know the Tier-2, the people working. So, thanks for all this. That really puts to rest all the doubts that I had in my mind. Thank you so much, Feroze and wish you a real long journey ahead in all aspects. Thank you so much. Take care.
Operator
Thank you. The next question is from the line of Viraj Mehta [Phonetic], who is an Individual Investor. Please go ahead.
Viraj Mehta
Hello? Am I audible? Hello?
Operator
Yes, sir. You are audible.
Viraj Mehta
Yeah. Hi. Hi. Great set of numbers and quite an up and up growth for the last two years. You are reaching almost 4,000 number. Great achievement, Feroze. I have only one question, which is, any plan of corporate action going forward?
Feroze Azeez
Sir, like we said the last time also at the AGM, I quote my Chairman saying that we will surely consider corporate action is what was said. And that stands to today as well in the same manner, which was told in the past. But one very interesting data, we made a predictive model to see which are the companies which give a bonus. Maybe if you get in touch with Vishal ji, he can share with you a predictive analytics of which are the companies which end up giving bonuses on NSE 500. We’ve done some interesting data. And company which has risen has a larger probability of giving bonuses and any company, which has given larger bonuses have risen, so vice versa. Vishal ji [Foreign Speech]. I think he can give you. So that’s an answer, Viraj sir. So, I’m giving you an abstract answer, but we have done some predictive analytics in terms of the NSE 500 companies in terms of bonus. Not specific to Anand Rathi, but whatever I had heard Mr. Rakesh — hearing him in the AGM, I’m repeating the same thing. Yes, we will consider. We believe in rewarding the shareholders.
Viraj Mehta
Well, thank you. And I get all the details from the website, is it?
Feroze Azeez
Thank you.
Operator
Thank you. The next follow-up question is from the line of Sanidhya from Unicorn Assets. Please go ahead.
Sanidhya
Hi, sir. Just a follow-up that — see, the number of clients that we have added in this H1 FY ’25 or say one full year if we compare from H2 FY ’24 and H1 FY ’25. So what kind of client base that is like in terms of the AUM that they are bringing? In which category do you place, and what percentages would you assign like INR5 lakh to — INR50 lakh to INR5 crores, and INR5 lakh to INR50 lakh or more than that?
Feroze Azeez
Sir, your name? I missed again. Sorry.
Sanidhya
Sanidhya.
Feroze Azeez
Aditya, is it?
Sanidhya
Sanidhya.
Feroze Azeez
Sanidhya, sorry. Sanidhya, see, how we look at it is the first filter is we try and see whether the client is from our segment. What is our segment is INR5 crores to INR50 crores of investable surplus other than the offices and home he occupies. That’s the first check we do. Let’s assume Sanidhya’s balance sheet apart from the home he lives in is INR15 crores. Then I know the first tick mark that he has the potential to be my client segment. Then I’ll tell Sanidhya Sahab [Foreign Speech]. But I think we’ve come some distance unlike most private banks who say that you start with INR5 crores, which we think is a little unfair because — so most of the clients, most if not all would be — most if not all will be in investable surpluses greater than INR5 crores, INR7 crores and below INR50 crores. We don’t like to go after rich people who have got into money just now, unlike most of our friends in the industry do. They see this guy has sold a business for INR200 crores. They would go to him. We would not want to go to him because I don’t want to fight a cost war. And we like to get intergenerational wealth. And INR5 crores to INR50 crores is the segment, starting with INR1 crore. Does it answer, sir?
Sanidhya
Yeah. That definitely answers. And what do you hear from those people? Like, what are their aspirations in terms of returns. What are they looking for really, like, INR5 crores to INR50 crores is, I think, the best segment in the entire wealth management industry. That’s my belief.
Feroze Azeez
Absolutely. That’s a good segment, provided I am building a business on the basis of MAT. So if you ask me of what do these clients have? They don’t have clarity. Okay. That’s why our business is tagline as uncomplicated. What is happening to a INR15 crores client, if I describe? He is distributing — he has put INR5 crores, INR7 crores in real estate. He has got INR7 crores, INR8 crores in financial assets, distributed across three different financial advisors. One is surely going to be his bank. He is acting like a INR2 crores client to four people. And that is resulting in people selling him products, which may not suit his need. So, what is their first requirement? They don’t want it, but the need is clarity of objective. They don’t want it. They want something fancy to start with. When we meet somebody [Foreign Speech] is the first question.
[Foreign Speech] And your beta is measured. Today, most of the advisers — most of the clients at INR15 crores, INR20 crores balance sheet will not even know the beta of their portfolio, right? So what do they want. They want new products. What do they need? They need clarity of objective. They need clarity of mathematics. They need services, which are peripheral. We have done about 6,000, 7,000 wills. And most of the wills which we audit are incorrect, even if there are INR500 crore wills.
So, we have done 7,000 wills. We have listed down 11 most popular mistakes. They need it, but they don’t want it. So, we have to create the need before we address it. So, uncomplicated is only appealing to a person whose life is complicated, and you open his eyes saying [Foreign Speech] complexity. I have seen portfolios, you’d be surprised, 100 ISINs, okay? 100 ISINs with a Sharpe ratio of 0.1. I have seen 92 ISINs with Sharpe ratio of minus 0.2, right? So what do they need? They need some mathematics. And since this segment is filled with professionals, professionals respect mathematics, because they have to present to the Board and CFOs [Phonetic]. So, they work with mathematics a little more than a promoter does because promoter is lesser answerable than a professional. I as a professional, I’m more answerable than my promoter. So, that’s why that segment is good and we believe in mathematics. That’s why our RMs being introverts do a good job because they straight come to the point, throw the mathematics and does not ask them what you ate last night or how was your golf game.
Sanidhya
Great. Great. And do we do any insurance kind of product?
Feroze Azeez
Yes, sir?
Sanidhya
Do we sell any insurance kind of product?
Feroze Azeez
No, no, no.
Sanidhya
Great. Great.
Feroze Azeez
There is a ton on my head.
Sanidhya
Great, great, great. Perfect, perfect. Thank you so much.
Feroze Azeez
And investment-based insurance. Would we have sold some term plans or general insurance to protective house? The answer is yes. Anything which is investment and insurance mixed trying to [Foreign Speech].
Sanidhya
Yeah. Exactly. Exactly. Great. Thank you so much.
Operator
Thank you. [Operator Instructions] As there are no further questions from the participants, I would now like to hand the conference over to Mr. Feroze Azeez for closing comments.
Feroze Azeez
I’d like to thank everyone for being a part of this call. We hope we have tried our best to answer the questions to our ability. If you need any more information, please feel free to contact Mr. Vishal ji Sanghavi, our Investor Relations Head; and our Rajesh ji Bhutara, who is our CFO for decades. I would like to extend my good wishes for the upcoming festive season, and may you have a great weekend. And thank you for your time and patience.
Operator
[Operator Closing Remarks]