Anand Rathi Wealth Limited (NSE: ANANDRATHI) Q3 2025 Earnings Call dated Jan. 14, 2025
Corporate Participants:
Feroze Azeez — Deputy Chief Executive Officer
Jugal Mantri — Group Chief Financial Officer
Vishal Sanghavi — Head, Investor Relations
Analysts:
Bhavin Pande — Analyst
Nemin Doshi — Analyst
Krishna Raghavan — Analyst
Mann Ashar — Analyst
Lalit Deo — Analyst
Srinath Sridhar — Analyst
Nehar Dave — Analyst
Arman — Analyst
Sunil Shah — Analyst
Prayesh Jain — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the Quarter Three and Nine Months Ended FY ’25 Earnings Conference Call hosted by Anand Rathi Wealth Limited. As a reminder, all participant lines will be in listen-only mode and there will be an opportunity for you to ask question after the presentation concludes. [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, sir.
Feroze Azeez — Deputy Chief Executive Officer
Thank you, madam. Good afternoon, everyone, for joining us in the earnings call — conference call for the quarter and nine-month ending 31st December 2024. We are all joined with our Group CFO, Jugal Mantri; Product and Research Head, Mr. Shenoy; Chethan Shenoy; CFO, Rajesh Bhutara; Head Investor Relationships — Relations, Mr. Vishal Sanghavi.
Let me give you a quick highlight of the company’s performance. During the nine-month of FY ’24, our consolidated total revenues grew by about 33% year-on-year to INR739 crores, and our profit after tax increased by 34% year-on-year to INR227 crores. We have achieved 75% of our revised revenue guidance as well of INR980 crores on the revenue side and 77% of our revised PAT guidance of INR295 crores in the first nine months of FY ’25. Total AUM grew by about 39% year-on-year to INR76,402 crores.
In alignment with our policy of rewarding shareholders, the company has declared a bonus share in the ratio of 1:1. We have recorded highest ever quarterly net flows during the last quarter in spite of sentiments not being the best. During nine months FY ’25, our total net flows registered a remarkable year-on-year growth of 69%, reaching INR9,145 crores. Equity mutual funds net flows achieved year-on-year growth of about 51% to INR5,831 crores. Share of equity mutual funds in AUM increased to 55% as of December compared to 52% last December.
We believe that our company’s performance is consistent and market agnostic, and numbers say so. If you look at the worst Nifty performance after we got listed, was quarter one FY ’23, where Nifty fell 9.6%, and last quarter, Nifty fell 8.4%. However, for both the quarters, our profit grew by more than 33% on a year-on-year basis.
The mean of the year-on-year growth of our last 11 quarters has been 33.8%. That’s the mean quarterly year-on-year growth we have shown. The median is 34%, which implies that we have almost produced a normal distributed curve. And the standard deviation of the growth number, which I’m sure is something very unique, most companies don’t compute this, we are very positive about trying to keep consistency as one of the attributes for our shareholders benefit. And the standard deviation is as little as 4.3%. So our quarterly results growth on a year-on-year basis, mean is 33.8%, median is 34%, and the standard deviation is 4.3%. I’m trying to emphasize this a little more because with the limited articulation skills I possess, I wanted to make sure that it gets registered in the listeners’ mind.
In our flagship Private Wealth business, the first nine months of FY ’25, we added 1,515 new client families on net basis, bringing our total number of client families to 11,426. Client attrition rate in terms of AUM lost for the nine-month period was as little as 0.28%. Ideally, this client attrition number, we would like to see it as zero because every human being should be satisfied with our services. That’s an aspiration which we will try to always aim for. But nevertheless, 0.28% is a smaller number related to what industry sees.
We have added 61 new relationship managers on net basis over the past 12 months, bringing our total RM count [Phonetic] to 383. In the last quarter, we have achieved near-zero regret RM attrition. We have lost one RM who had an AUM greater than INR40 crores, which we call as regret attrition. So over the last six quarters, this is the first attrition. So five previous quarters, we had zero regret RM attrition. And the last quarter, we had one RM who left who had greater than INR40 crores of assets, which we think is the threshold to cross the bridge of wealth management.
Digital Wealth business, which is a B2B2C platform, registered an AUM growth of 23% year-on-year to INR1,827 crores. The number of clients increased 24% to 5,772. The OFA business, Omni Financial Advisors business, which is abbreviated as OFA, which is a SaaS platform, has 6,273 subscribers which — with platform assets of INR1.4 lakh crores at the end of nine months FY ’25.
Now I would love to hand over the call to Jugal sir, who’s our Group CFO, to take us through the financial performance. Jugal sir, it will be great if the audience could hear you.
Jugal Mantri — Group Chief Financial Officer
Thank you very much, Feroze bhai. Good afternoon to everyone, and wish you all the first festival of new calendar year, happy Makar Sankranti, happy Pongal, happy Lohri to all you.
First, I will speak about Q3 FY ’25 consolidated financial performance. Our consolidated total revenue for the Q3 FY ’25 stood at INR244 crores compared to INR187 crores in Q3 FY ’24, registering a healthy growth of 30% Y-o-Y. Trail revenue was INR109 crores in Q3, registering a strong Y-o-Y growth of 52% from INR72 crores in last year’s same quarter. Our profit after tax stood at INR77 crores, registering a 33% Y-o-Y growth compared to INR58 crores in Q3 FY ’24. Profit after tax margin for Q3 FY ’25 was at 31.7% as compared to 31% for Q3 FY ’24.
Now I will take you all through, first nine months of FY ’25 financial performance. The revenue for nine-month FY ’25 stood at INR739 crores compared to INR555 crores in nine-month FY ’24, registering a 33% Y-o-Y growth. Mutual fund distribution revenue, which is the trail revenue, registered a strong growth of 63% Y-o-Y to INR303 crores in nine-month FY ’25. Profit after tax also grew by 34% Y-o-Y to INR227 crores for nine-month FY ’25 compared to INR169 crores for nine-months FY ’24. Profit after tax margin was 30.7% for nine-month FY ’25, improved from 30.5% for nine-month FY ’24. Return on equity on an annualized basis stood at 44.8% for nine-month FY ’25.
This is all on the financial performance front. Over to you, Sezal, for the next session of question and answers.
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 Bhavin Pande from Athena Investments. Please go ahead.
Bhavin Pande
Hi. Am I audible?
Operator
Yes, sir.
Bhavin Pande
Yes. Congratulations, team, on a wonderful set of performance. Happy new year and greetings of Makar Sankranti to entire team at Anand Rathi. My first question was around operating margins. We can see that at least from the past few quarters, our operating margins have been highest. So the term that we all were looking for a few quarters back, operating leverage, has it started kicking in somehow?
Feroze Azeez
Yes. Bhavin, good morning. Thank you for your question. See, of course, there’s some degree of operating leverage which has kicked in. But we, as a business, believe that we have a target of 40%, 41% of PBT. If operating leverage kicks in, we are going to reinvest that to ensure that this kind of growth, which we have shown for the last 13 quarters after getting listed, or probably 14 years since we have started this business, continues for the longest periods of time.
So to answer your pointed question, as a shareholder, you expecting a larger operating leverage is not something I would like to create as an expectation for you because we are still scratching the surface in this business, and we believe in a life cycle of a business. In the initial part, you reinvest to make sure there’s longevity to growth rather than efficiency in terms of operating margin.
Does it answer, Bhavin. I’m very diplomatically trying to answer because I don’t want you to create an expectation of operating leverage in spite of having seen it for the last one quarter or two quarters.
Bhavin Pande
No, no, I was just trying to get a brief perspective. Second thing, Feroze, on the macro front, all the high frequency indicators are sort of manifesting themselves into a delayed rate cut cycle, which brings me to our structured product where one of the ideal scenarios is high interest rates which, in my opinion, might prevail for a while. So how are we looking at that?
Feroze Azeez
Okay, higher interest rates. Okay. Perfect. So first is, see, from a structured product standpoint, if you — I have to — unfortunately, I have to get a little technical. See, what happens is in a structured product, firstly, the NBFC, which is our sister company, which is Anand Rathi Global Finance, does not borrow at aggressive rates at all. The implied cost of borrowing in those products are going to be very low. Because why am I calling it the implied cost? Because if there’s an optionality, a person can’t just optically decipher what’s the borrowing cost. The implied borrowing cost could be with a spread of not more than 1% with the G-Sec of the corresponding period. If that’s the kind of low margins vis-a-vis G-Sec, NBFC borrow that because the money has to be kept safe, so there’s hardly any headroom for a reduction in interest rates.
Having said which, when you actually embed a derivative, there is some degree of neutrality to interest rates. What happens is the derivatives are priced as per the row of the derivative, by which I mean the carry cost also comes down. So if interest rates come down in the structured product which we design, which are put spread fell, and it’s — that’s how you expect the long position in the derivative side, which the cost of carry also comes down. In fact, if the repo rate comes down, the cost of carry, which is nothing but the roll cost in the futures or the synthetic futures, market reduces.
So let’s assume — if I have to try and make it a little bit more simpler, if there is an interest rate reduction of 1% on the NBFC side, if at all, which is not — which is hypothetical, then the row which is nothing but the 1% reduction in the query cost also comes down. So there is a reasonable amount of neutrality between the row of the derivatives and the interest rates of the NBFC, which are there in the product.
Bhavin Pande
Okay, okay. Understood.
Feroze Azeez
Because of the roll cost [Foreign Speech]. There’s a REPO rate [Foreign Speech]. Now if REPO is at 6.5%, and it was 4.5% on 3rd April, 2020, after COVID, it was brought down. From there on, roll costs would be higher because the REPO is higher. So in fact, this is a very good news. If REPOs are brought down, 10-year G-Sec isn’t going to move down, because today the 10 years — India has seen the flattest yield curve in the history of at least me being born. So the point I’m trying to get to is a reduction in interest rate could may not reduce the interest rate — borrowing cost, but can definitely reduce the roll cost.
Bhavin Pande
Okay, okay. And Feroze, the flows numbers, they have defied the odds to a larger extent. So how do we look at the contribution? Is it more of an increase to wallet share from existing customers or new families have also contributed equally?
Feroze Azeez
In fact, both, sir. If I have to answer your question, see, let me not answer it in the typical way an analyst is given an answer. I’m just going to tell you conceptually what happens is bad markets make us look better because we run a model portfolio, which has a beta of nothing greater than 0.6, 0.65 with Nifty. Whereas people in good times also plant several aggressive strategies. When the tide turns, then the risk fructifies. So the point I’m trying to make is bad quarters collection is generally given — when there is a headwind in the industry, I get a tailwind because somebody’s win is somebody’s lost. That’s how you distinguish between a good and a bad advisor. And if you go to the first quarter of this financial year, nobody optically — if you showed in five statements, nobody would be able to decipher who was the best. But in a quarter like last quarter, risk-adjusted return is apparent to naked eye. So bad quarters help us similarly to what happened about four quarters, five quarters back when the markets were bad.
Now coming to, is this — is this penetration our new clients? In fact, we tried to increase our threshold of onboarding a client. We were first okay to accept INR50 lakhs, now we accept only INR1 crore, at least for new clients whom we add. In spite of that, we started seeing that people are ready to give us larger money than we were hesitant to ask them. So that has created some degree of flip, and I think wallet share increase. And the mathematical way we are trying to establish, now for example, if someone were to come and tell me, why do I do mutual funds with you? I take his 10-year transactions and show them. If you just follow my model portfolio, which is audited by one of the Big Fours and also in the public domain, if you followed how richer or how poorer would he be, that’s why in spite of giving no discounts, we have been able to collect INR800 crores, INR900 crores in equity mutual funds for the last quarter. And that should continue. I’m sure that’s what you want to know. And I think it will get force [Foreign Speech] it will increase, the rate at which it increases. So the acceleration will be higher, not just the velocity.
Bhavin Pande
That’s great, Feroze, and pretty much encouraging. Good luck and congrats again.
Feroze Azeez
Thank you, sir.
Operator
Thank you. The next question is from the line of Nemin Doshi from Geojit PMS. Please go ahead.
Nemin Doshi
Hi, team. Congratulations on a great set of numbers. Firstly, I just wanted to get some idea as to how are we seeing our SIP flows increasing from a quarter-on-quarter basis? How has this trend been shaping for the current quarter as to are we seeing any reduction closure, or there have been an increase in wallet share as you mentioned? So how are we seeing trends over there? And secondly, with respect to our Digital Wealth platform, what are the various initiatives which would be driving this business ahead for us?
Feroze Azeez
So when it comes to trend, okay, we try to — we try — in our business, we try to make sure that we’re not trend dependent, firstly, because you’re speaking to the same 11,467 families. We first spend a couple of years for them to think like us. So we keep designing their mind to long-term, to preparing them to fall. See, if I try and prepare a person for a fall when the fall is happening, I will be — it will look like a justification. So we prepare them and we take the check. That stands us apart. When I’m taking a check of INR10 crores, I’ll tell him sir, [Foreign Speech]. This is how we try and prepare them before the fall.
So coming back to the most important question which you asked, how do we see this trend? We see the trend, we’re putting an effort for a 30%, 40% growth in net mobilization rate. So if we have collected INR3,500 crores this quarter, just — I’m just rounding it off, I would like to see INR4,500 crores, INR5,000 crores for the same quarter next year, at least. When I model my business to get to INR2 lakh crores, I will model only 10% to 12% increase in the net mob. But am I preparing for a 50% increase net mob every year for the next three years at least? The answer is yes. Will I achieve that? Only God knows. Will the effort be there? I’m sure so.
Nemin Doshi
Perfect. Perfect. Perfect. Thanks.
Operator
Thank you. The next question is from the line of Krishna Raghavan, who is an individual investor. Please go ahead.
Krishna Raghavan
Hi. Thank you. Hi, Feroze. Feroze, we have a substantial investment in your stock, close to six digits. I don’t mind holding it forever. But of late, when I look at the valuations, it’s significantly higher compared to an HDFC AMC or a 361. So I’m a little tempted to keep looking at it very often. So I’m just trying to understand, are these deep valuations justified?
Feroze Azeez
See, I [Technical Issues] when I was at 13p, some analyst told me that I’m very expensive. Now when I have 13p more than the next — second best in terms of valuation, I’m still expensive. If I have to now — let me — Mr. Krishna, let me answer this question, not as a part of the company, but as a shareholder. See, I personally think markets always discount future and not present. So there are four, five things which stand us apart. In fact, there was one report which came last week, which was [Technical Issues] 13 businesses across wealth management, asset management in India and globally. One thing which I was happy to note on the two x and y-axis, Anand Rathi stood out, ROE was the highest out of those 12, 14 businesses which were listed on that graph. And PEG, PEG which is PE to the — per unit of growth, how much PE are you paying, it was 0.8 in that report. It was one of the reports [Indecipherable] do not know. So I don’t know.
That’s — so what I’m trying to get to is, Krishna, one is PE. If you look at PEG, I look at PEG as a shareholder. PEG is less than 1, which I think is okay. But from a more business standpoint, there are three, four things which stand out. Attrition in the people’s business being near zero is something so unique. So whatever PE you want to attach, the market wants to attach, it is okay. But people say, I’m a people’s business. So in a people’s business, if people don’t leave you, if somebody is tempting you with them with 100% drive, there must be some reason why they won’t leave because the client gets the best risk adjusted return, right.
We — if you measure the sharpe ratio of my client for the last 10 years, take the top 100, I would be reasonably confident with the significant levels of upwards of 90% that there would be very few sharpe ratios on wealth management industry, which will be my average of the top 100 vis-a-vis any other wealth managers top 100 clients. So that’s why attrition is low. That stands out. I’m just trying to highlight.
No new product launch, okay. We have not launched a new product. Like we’ve done the same old giga [Phonetic] beta product, 1,000 times, 1,500 times, the same structured product. So no newness and business continuity is something unique. Generally, even if somebody is manufacturing cars, he launches a new car and then the revenues go up. Mundane same products, trying to put the business on autopilot stands unique. Does it deserve any incremental premium valuation? I don’t know. Only market knows and you know.
The third is consistency. It’s something which is so unique, I think, because I was looking at how results of other companies swing between plus 30 and minus 10 and plus 20. We have delivered mean median of 33% and 34% for 11 quarters, which if you did for the NSE 500 companies, which we are a part of, you’ll be surprised how many fingers would you need to count that kind of low volatility in growth numbers. That’s one.
Agnostic market results, most people I speak to in the industry say [Foreign Speech]. So we’re giving agnostic — market-agnostic results is unique for a financial services business. That’s why our stock has delivered a point 0.42 beta — how much Vishal sir, from the date of listing, with Nifty, the stock has given 0.42 beta because it’s a little more market-agnostic. These are some of the reasons which make me feel happy about. Does it justify any premium? Maybe discount, I don’t know. But I can just tell you as a shareholder, what I feel unique in this business if have added a few lakh crore shares after it has got listed. This is what I saw.
Krishna Raghavan
Great. That’s comforting. Thank you, Feroze.
Operator
Thank you. The next question is from the line of Mann Ashar from GrowthSphere Ventures. Please go ahead.
Mann Ashar
Hello. Hi, sir. Congrats for a great set of numbers. Sir, I just had two questions. The first one was from the passive fund industry perspective, right? So when we see the passive fund as an industry, how is the industry trend currently basically shaping up? Because when we are seeing a kind of efficient market in terms everything is getting priced in, and there’s lot of efforts which is basically pushed from the analysts side. So how do you think the active versus passive fund industry will compete and how the industry will shape up in the future going forward from here basically in terms of competition against active mutual funds and active products that we provide to our S&I families?
Feroze Azeez
So I personally think the trend from an industry standpoint is clear, that the ratio of passive will go up.
Mann Ashar
Okay.
Feroze Azeez
The ratio of passive, if you are speaking about smart beta strategy, some people will get wrapped on the knuckles for smart beta trend. Because everybody has back tested them. Nobody has used Monte Carlo simulation to front test them. And I have tested some beta strategies, smart beta strategies using a simulator. So point is, will the industry gravitate towards passive? The answer is ye. Because most of my competitors believe in low-cost, low-value strategy, right. So — but let me now come to Anand Rathi Wealth Limited. We don’t do anything which is trend-based. I’ve not sold an NFO. I have not sold any other product than mutual fund and structured products, that was not the front. I’ve never touched an unlisted stock. You will not find one direct core client of mine — you will not find ETF more than 0.2% or 0.3% [Foreign Speech].
So Anand Rathi Wealth and industry may not match. So as a shareholder, I’m just giving you my disclaimer. If you’re trying to derive Anand Rathi Wealth margin, business, strategy, product offering, client benefit from the market trend, you may — history has proven that they will — they may not be matching. So that’s one thing. So the industry will move towards passive because quite a few people don’t want to spend energy in talking too much and taking what comes their way.
I personally think last two years, okay, if you look at passive, 80% of the AUM is between Nifty and Sensex. Let’s assume all the money in passive, which is about 200-odd funds, all of it belongs to one human being. And all the money which is there in 431 active funds belong to one human being. Who did better? You’d be surprised active did better because AUMs of passives are not in NSE 500. NSE 500 is an academic index because the smaller stock will never be able to absorb all the INR50 lakh crores of AUM, which will grow into equity. So to answer your pointed question, you will see more passive in the industry. You will see no passive in Anand Rathi till data emerges that my client will be benefited either with a reduced risk or an increased [Indecipherable].
Mann Ashar
Got it. Sir, but from the industry standpoint, when we see U.S., basically bifurcations of active versus passive is approximately 60-40. And in India, it’s still 85-15. So how do you see the numbers panning out going forward? Do you have any internal estimates? Or how do you see — or how do you envisage the industry of active versus passive in terms of your products or in terms of industry as well?
Feroze Azeez
See, I personally think U.S. has two things which are very unique. One is U.S. throws up more standard deviation than India. I’ll tell you why in my opinion. But coming back, U.S. has become a market — valuation agnostic market practically. Because if you go passive, passive respects momentum. That’s how indices are created. The top five stocks of either Nasdaq, S&P or Dow Jones, you will see — because if there’s index fund investing, there’s more money coming in. If there’s more money coming in, there’s more valuation. If there’s more valuation, there’s more weightage. If there’s more weightage, there’s more money coming in. So it’s like that [Foreign Speech], right. You’ve tightened that. That’s how it is.
So valuation agnostic market is what U.S. has turned out to become. So passive has this collateral damage to a capital market that valuation and business models will have lesser respect, momentum, and price will have more respect. That’s one thing which stands apart. Second, if you ask me the ratio, India will get there. But if you — it will be ironical and I’ll be saddened if India got through those ratios. Because a passive fund guy will buy whichever stock has the maximum weightage irrespective whether the price at 100p or 2p, right. And I’ll be saddened if we go the U.S. way in Indian equity markets.
Now coming to the point of why India is throwing up, people say, India, my volatilities are there. [Foreign Speech] has a derivative percent, that volatility in India is lower. If you go from 22nd March 2020, which is when NSE declared — brought in a circular, which limited shorting in India, I think, because there are quite a few financial services professionals here, I’m just trying to bring your attention to one of the most important circulars. After that, S&P 500 has thrown up 18.6% standard deviation on a daily basis and Nifty has thrown up 18% standardization. In spite of S&P 500 representing 50% of world’s market cap, throwing up a more standard deviation than Nifty, which is 4% of world’s market cap is because of that circular, which is — which ideally was day — one day before the lockdown.
I’m just trying to create curiosity so you could read that circular up. You can’t short more than INR500 crores in Indian market. So I’m very positive about Indian market because it’s a more investor-friendly market than a speculator friendly. When real estate, you can’t short, why should equity, which is another growth asset, have unlimited shorting capability. That’s why somebody today, any of us have INR4 lakh in our account, and I want to buy a Thursday put option, the last one, which is INR1, you will not be permitted to spend more than INR2.5 lakhs of premium on buying that because we will beat the INR500 crore notional, Nifty being at INR23,000.
So coming back to your pointed question, I see passive happening. But I think Indian markets are going to be very different. They’re going to be different because of this circular becoming tightened from 1st of April. And if the circular was supposed to be withdrawn, I wouldn’t bore [Phonetic] the group with that circular being highlighted. But on 1st of April, this will become an intraday circular from a daily circular, which will make that market more stable.
Mann Ashar
Got it. Sir, one of the discount broking houses has recently entered into passive funds and are aggressively distributing as well. Those guys have also basically got a significant AUM and are going towards E&C. How do you see the competition shaping up from that direction because those guys have already figured out the distribution side of the products?
Feroze Azeez
See, I think we’ve — I’m not too worried about competition because if it is good for my client, I will embrace it. And I know how to as a business, add enough value in a business where the best and the worst equity fund has a performance difference for last calendar year, if I’m not wrong, 42%. When I say dispersed [Foreign Speech]. So I think even if I go passive, I’ll be able to charge that from the client. So it doesn’t bother me. But competition definitely makes us become more mathematical. And because if I have to say no to passive, I need to have a story of mathematics rather than English. So if you see why did INR800 crore get collected when passive is taking most of the share? Now if you see sectorial funds took the maximum share last year. If you look at INR15,000 crores, INR16,000 crores of sectoral inflows in the last month of December [Indecipherable] number sales, I’m not doing sectoral. I didn’t do NFOs, but I still sold something as mundane as the same 14 schemes to everybody. And that too rich people who don’t like standardization because they make them feel that they’re not as big as they are.
Mann Ashar
Got it, sir. Okay. You are not very worried about the competition coming from that trend?
Feroze Azeez
I’m waiting, so that I can get little more mathematical than where I am today.
Mann Ashar
Okay. Got it. That’s it, sir. Thank you so much. All the very best, sir.
Operator
Thank you. The next question is from the line of Lalit Deo from Equirus Securities. Please go ahead.
Lalit Deo
Yes. Good afternoon, sir. Congrats on a good set of number. Sir, just two, three questions. So one is the data keeping. So firstly, in this quarter, like what were the flows both primary and secondary in our structured products? Second, sir, given the market conditions, when the markets look weak, then how do we see the mobilization on both the fronts like while equity — there are flows in equity and [Indecipherable], how do you see the flows in the structured products in the next one year or so?
Feroze Azeez
Yes. Firstly, Jugal sir will be the best person to answer.
Jugal Mantri
Yes. So as far as concerned with the mobilization of the — in the primary issuances, this quarter, there was INR1,347 crores were mobilized in non-principal protected structured product, which was like last year comparable, it was INR1,231 crores. And as far as concerned with the secondary structured product, it was INR589 crores in Q3 FY ’25 compared to INR427 Y-o-Y. And if we look at the nine months number, then it was INR4,630 crore primary against about INR4,000 crore in nine months. And secondary was about INR1,546 crores against INR960 crores.
Lalit Deo
Sure, sir.
Operator
Mr. Lalit, does that answer your question?
Lalit Deo
Yes. And the second question was on the flow side in the structured products, like over the next 12 months, like how should we see given the markets behaving?
Feroze Azeez
Okay. Shall I answer this, Jugal sir, or you want to take it?
Jugal Mantri
No, no, you can continue.
Feroze Azeez
Sir, I missed your name. I’m so sorry.
Jugal Mantri
Mr. Lalit.
Lalit Deo
Lalit.
Feroze Azeez
Lalit, so the flows will be good, owing to the fact that quite a few analysts who were worried last year, saying that [Foreign Speech]. So next year, again, since we have moved from three-year to five-year, in the year August 2020, if I’m not wrong. So this was a lull year of maturities. So next year, again, those maturities start happening. So if you look at my gross mobilization, which is maturity plus my new clients, new business and some degree of realignment, all three buckets can fire. Last year [Foreign Speech] the year, which we are sitting in, which we have nine months gone by, so I think next financial year, I’m more positive because all the three cylinders can fire. This year, the main cylinder was not there, but still God was very kind, so we’ve got some growth numbers which we had projected and realigned.
Now come to the second part is that we are adding more clients with a larger size. See, when you add a new client with INR50 lakhs, because INR1 crore was the minimum for structured — is the minimum for structured products, the new clients couldn’t subscribe to structured products so they were underlying portfolios. After we said that we want INR1 crore, people have started giving us INR2 crores, INR2.5 crores. So new clients also now have the capability with our little push of minimum thresholds being higher to begin with structured products. So my three cylinders, new client structured product purchase, maturity and some degree of realignment, all have headroom. I really pray to the Lord that whatever guidance we end up giving in the next quarter, we are able to again live to that DNA which we have, under commit, over deliver.
Jugal Mantri
And what Feroze you’ve said that we have been like — it is based on the advice normally, what happens that it is targeted that the client should hold between 25% to 30% of their AUM into market-linked debentures. So as long as we are confident in the AUM growth, this will have the consequential similar positive impact on the mobilization of MLD also.
Feroze Azeez
Absolutely. Thanks, Jugal. This is the main point actually. The sub point is what I spoke of three.
Lalit Deo
Right, sir. And sir, just wanted to have sir that color on the equity MF flow. So like in this quarter, we have — like on a sequential basis, we have done very well. So just wanted to understand like how should we look at this net flows in the equity mutual fund over the next one year as well?
Feroze Azeez
Our net flows, so you would see some degree of staticness in our net flows. So in the sense, if we are collecting INR800 crores, last quarter how much did we collect equity flows? INR2,700 crore.
Jugal Mantri
INR2,700 crore.
Feroze Azeez
For INR850 crores, INR900 crores, right. So will that be the rate at which we will collect the money? Yes. Because we have promised people — not promise, promise is a very strong word. We’ve indicated that our aspiration is to take our market share to 4% in the total AUM. For me to have a market share of 4%, there are two things which influence market share. I should collect at the rate greater than the industry’s rate of collection and my model portfolio should perform better than the average performance of equity mutual. Correct? So if you see our model portfolio of 14 schemes has beaten Nifty by about 7.5%, 8% till day before yesterday in this financial year in absolute terms. So that gives me more market share in AUM. So to answer your pointed question, will the thrust continue? The answer is yes. Because we have tried to have a desire to get to 4% market share in the next few years in Indian mutual fund Category 3 as per LC. [Phonetic]
Lalit Deo
Sure, sir. Thank you, sir.
Operator
Thank you. The next question is from the line of Srinath Sridhar from Infinite Financial Services. Please go ahead.
Srinath Sridhar
Yes. Hi, thanks for the opportunity. So when you mean by take your market share to 4%, so currently, it’s around INR42,000 crores. So out of the INR30 lakh crore equity mutual fund basket, so it’s around 1.4%, right? So by when do you target to achieve a 4%?
Feroze Azeez
No, no, Mr. Sridhar, I think you have got the old number. Currently, our mutual fund AUM is about INR46,000 crores, to be precise, it is INR45,875 crores. Out of this, INR41,738 crores is in equity mutual fund.
Srinath Sridhar
Right. So — but overall industry is around INR30 lakh crores, right?
Feroze Azeez
Yes. Sir, speaking of the active, so, Category III [Foreign Speech], Vishal. So irrespective, so whatever be the — of course, it’s a very uphill task. Because we are only 383 people, and there are lakhs of people in the ARN, right. So we’ve just one ARN with 383 current representatives. We’re in the private banking business. But I think what is happening is people are — at least in our industry are moving their monies to AIFs, long-only. But we are speaking to mutual funds. As of now, our market share is 3.37% — 1.37% sorry, 1.37%. Beginning of the year, how much was that? It was 1.29%, right? So it will be a sticky number. A couple of years back, it was 1%, 1.01%. So I don’t know, it might take a decade, it might a decade and a half, it might take five years, but yes, that kind of period. I don’t know, but that’s the aspiration. So first, to get that I at least need to have my market share in net flow is 4.8%. [Foreign Speech] If industry is collecting 100, should I at least start collecting four, five.
Srinath Sridhar
Right, right.
Feroze Azeez
That’s what we — first step was that. So don’t know, sir, 15 years, 10 years, but that’s our aspiration.
Srinath Sridhar
Great. Sir, my other question is on the MF trail, so you made around 0.74% last year, in the nine months in the last year. And it’s around 0.88% this year. So how — can you just explain that increase in MF trail in the current year? Is it just due to the increase in market gone up, so AUM has gone up? Or is it — have we moved their model portfolio to smaller AMCs where the trail is higher?
Feroze Azeez
No, sir, we don’t do anything. No, smaller AMCs or smaller schemes because it is at scheme level still, there was a circular last December but that didn’t get implemented. So trails at our expense are scheme dependent, not even AMC dependent, point one. Point two, you are — you might be dividing my model portfolio 14 schemes, I can tell you as transparently as it could get 1.09% post-GST is my trade. If I brought in INR1 crore, I earn INR1,09,000 post-GST in a year if there was no market movement up or down. Now what you may be calculating my yield is on the basis of the year end of the quarter-end number, and the trails are calculated on average assets per AMC. So that’s our 1.09% is what is our trail. If you — that’s the stated trail. Of course, markets could move up and down and some degree of — pardon me, for a tolerance of [Foreign Speech].
Srinath Sridhar
Right, right. All right. Got it. Thank you.
Feroze Azeez
Thank you, sir.
Operator
Thank you. The next question is from the line of Nehar Dave [Phonetic] from IIFL Capital. Please go ahead. Mr. Nehar, I would request you to unmute your line and speak, please.
Nehar Dave
Yes. Hi, sorry for that. Good afternoon, everyone. Thank you.
Operator
Sorry to interrupt, sir. Your voice is very less. I would request you to please use your handset.
Nehar Dave
Yes. Is this better?
Operator
Yes, sir. Please go ahead.
Nehar Dave
Okay. Yes. Hi. So my question, and apologies if it’s already been asked, my audio was a bit spotty so I may have missed it. So what is the gross inflows into structured products for the nine months and this quarter?
Feroze Azeez
Jugal sir will…
Jugal Mantri
Nine months, we have shared with you, it was INR4,630 crores in primary compared to INR3,994 crores last year. And for the quarter, it was INR1,347 crores compared to INR1,231 crores last year in primary.
Nehar Dave
Got it. Okay. All right. Thank you very much.
Feroze Azeez
Okay, Nehar.
Operator
Thank you. [Operator Instructions] The next question is from the line of Arman from Bluesky Capital. Please go ahead.
Arman
Yes, good afternoon, everyone. My — just a simple question to Feroze is something which you emphasized, I guess, never been answered, more color have never been put on, is that standard deviation part which you told, which is quite exceptional. If I see just the five-year standard division of Nifty itself, it’s around 18% to 19%. And you said about their mean to standard deviation is just around 4.3%. So what does make us so exceptionally outperforming in this kind of that we can give consistent return with such a low standard deviation? What does make us that we consistently deliver quarter after quarter from 13 quarters, in spite market volatility, in spite Nifty moving here and there, we consistently deliver this kind of standard deviation?
Feroze Azeez
So let me clarify again. So I think — sir, I missed your name.
Jugal Mantri
Arman.
Arman
Arman.
Feroze Azeez
Arman, so when you look at any number — any variable you can calculate the standard deviation for, correct? Nifty has a standard deviation, like you rightly said. It has thrown up a daily standard deviation of 18%. And clients’ portfolio standard deviation is a separate topic. That’s not what I alluded to, if at all, I was misunderstood, if at all, I’m just [Indecipherable].
Now coming to the quarterly results which we have given, can you just help me show that results. So we — first two quarters was a COVID base, so we ignored those COVID bases and tried to see how much have we grown year-on-year for a quarter, okay. And there, you would see that we sometimes do 31%, sometimes 32%, 33%. The worst one I could see was [Speech Overlap].
So when I say that 4.3% is the standard deviation, it is a standard deviation of these numbers, which I’m now going to read out to you. Quarter four FY ’23, we grew by the worst after we got listed, which was 23.4% year-on-year growth for that quarter, okay. Like that, if I look at all the quarters like Q1 FY ’24, we grew by 34%; Q2 FY ’24, we grew by 34.3%. So if I look at all these quarterly growth, 11 data points are very few in a listed company’s life. As time progresses, this will become more meaningful data. So we have grown 33%, average 33.8%; median is 34%. And this 4.3% is nothing but the standard deviation of these 11 data points, right. I’m just trying to make sure that nobody misunderstands me. So does it answer? Why are we able to do that? Now…
Arman
Yes, yes. Yes, sir. Yes, sir. Yes, sir, that was very clear. Just I’m telling because in this 11 quarters or 12 quarters or 13 quarters, which the data which you are telling about, this is — if we see just Nifty or maybe any other listed companies return which are into the same business, that will be — I’m sure a few of the companies I have read there, more than 15%. So that’s what make us exceptional. So what we are doing exceptionally well, in spite doing the same versus everyone else is doing?
Feroze Azeez
Everybody has their uniqueness in their own right, okay. Right or wrong, okay. I would — so now let me tell you why. There are two things. One is this business has a huge advantage, that I’m speaking to the same 11,467 people quarter-on-quarter. If I was selling a commodity, which was hard — whether it was a physical commodity, phone, cars, I would be speaking about 11,000 different customers every year, every quarter. So that’s one huge benefit in this business. Now do you capitalize on that benefit is a separate story.
Second, if you adopt a portfolio approach, not a product approach, then like Jugal sir said, it’s an allocation, right. I don’t have to resell the same thing. If a person has decided to put 65% in equity mutual fund, 35% in structure, I don’t have to again every month go and reinforce that, right. A client — I am a relationship manager myself, I manage about 19 clients as a relationship manager, apart from whatever else I do in the company. I don’t have to even have a conversation with them. There’s a maturity, it gets reinvested. So if I was going to build this business on [Foreign Speech] then I have to explain them on a hard fund, sometime I have to sell him a buying fund sometimes which I did in ABN AMRO unfortunately.
So this business has been built on portfolio level management rather than product level innovation. So that is the key reason why same set of people, convince them on a portfolio allocation and then just manage it. You don’t have to resell the same thing. That’s one of the key reasons or the only reason. And then you don’t have a leaking bucket, right. You don’t do RM attrition, then client will not leave. Client attrition is 0.28%. RM attrition in 1.5 year is 1%. That also is a cleansing. I’ll not get into that. But people have to fit into my culture. If they don’t fit into my culture, then I would let them go irrespective as a company, not as in Feroze, I might sound pompous, I would let them go. I mean ARWL, whom I’m speaking for.
If there’s no cultural fitment, commercial attractiveness, doesn’t lure us at all, right. So these are some of the reasons. No leaking bucket and portfolio level management to the same set of people, you don’t have to remarket. If I’m launching one structured product for the 2000th time, do I have to again explain in the futures. The collateral benefit of the marketing to the same person or the fourth maturity, fourth maturity [Foreign Speech]. So I’m trying to cascade the marketing benefit by not being overly innovative at the product level.
Arman
Got it. Got it. Thank you.
Feroze Azeez
To capture the essence, I know long-ish kind of answer.
Arman
Got it. Thanks a lot.
Operator
Mr. Arman, does that answer your question?
Arman
Yes, yes. Thanks a lot. Thanks a lot.
Operator
Thank you. The next question is from the line of Sunil Shah from SRE PMS. Please go ahead.
Sunil Shah
Yes. Thanks for the opportunity. Congratulations, Feroze, and the entire team at Anand Rathi for such wonderful performance. Great, good to almost hear you on a quarterly basis under the minimum side. Feroze, one data point that you shared, which was minus 4.3%, which is about the profitability growth rate. That’s really very, very impressive. And as my invest colleague also shared, so that’s really very, very positive thing to know. And we always want to ask for more. So perhaps we could also do a study on the net profit margin as well and the standard deviation around it. So that would also be one more important message to communicate, that not only the growth rate is secured and positive, but also the margin is pretty intact. Lastly, from a shareholder’s point of view, the ROE ratio as well. So if the return on equity is also in a very low volatility, that also would help. We can also do the calculation at our end. Perhaps an exercise from your side on a quarterly basis would help us immensely. So a soft request on that. That was one point. Second is on the clients. We have almost close to 11,000 odd families or clients that we address to is what I understand. Is that correct?
Feroze Azeez
Yes, sir.
Sunil Shah
Yes. Sir, so how about now tapping the global market? India has arrived, and we have done that. We have faced volatility, everything. The ticket size that we are now talking about INR1 crore in the domestic market, could be significantly higher in the global market. And we have a track record which is so phenomenal of general health [Phonetic] for clients. So any thoughts around that? Are we looking at other market for the next leg of growth? Anything that you could share with us?
Jugal Mantri
[Speech Overlap] So Sunil bhai, we have got a very large presence in Dubai, okay, where we have got a full-fledged repo office. And in the Board meeting concluded yesterday, it was proposed and decided that we are going to form a subsidiary in U.K. to kick start and explore the wealth management opportunities there in U.K. So though it is going to take six months to nine months to have the subsidiary come up and it gets incorporated, but there is a plan that having successfully settled and come to a stage at Dubai, let us go out in other markets and explore the same. So the plans are already afoot for the same.
Sunil Shah
Sure. Sir, Jugal sir, and also Feroze, now that the GIFT City windows also opened up to serve the global clients and where we can also save on the tax side. So anything there where we can have a PMS or an AIF, which can then indirectly invest also in the mutual fund industry, meaning PMS or AIF? My guess is PMS can certainly do that to invest on behalf of the clients in the mutual fund industry, which will still further up our margin of 1.15%, 1.2% to slightly higher and save on taxes as well. So just the food for thought, just something to think upon or work on that direction, or have you evaluated such an opportunity? Can I understand that better?
Feroze Azeez
Yes. Sunil. Firstly, let me promise you that Vishal ji has taken note of the analysis you have needed, and we will try and produce that on a quarterly basis or at least, Vishal sir, do you know Sunil sir’s e-mail id?
Vishal Sanghavi
Yes.
Feroze Azeez
So we’ll send that to you. Second, I think just a comment on the positive comments you gave. I think we deserve to give [Foreign Speech] we are duty bound to try and be as consistent and predictable to a shareholder. That has always been our aspiration. So we’re trying our best to keep this standard deviation low because I think [Foreign Speech]. Equity, we’ve tried really best, and we promised — one thing which I want to assure you is with our effort to bring in consistency is going to always supercede super normal growth in a few years, right. You can grow 70%, but it’s okay, but you have to try and bring consistently. That’s what, Rakesh sir, who is our professional guru has already guided us, saying that they are predictable — that’s where it comes from.
Coming to the ROE and margin bit, margin, Rakesh sir says that he’s not on the call, so let me articulate his mandate to me as one of his direct reports. [Foreign Speech] There, we are not too worried about the volatility but we are very much worried about the benchmark. [Foreign Speech] But that’s the key mandate, which is given to me. And I try my best to not disappoint my boss, which is Rakesh sir. So that I thought I should highlight, definitely, this volatility numbers will be completed.
Now coming to [Foreign Speech] now coming to GIFT City. We have this litmus test, saying that [Foreign Speech]. With that, so in the GIFT City thing, I’m talking to a couple of very, very good friends in the industry who run a couple of large asset management companies. And if they have an AIF license already there, I will not try and be so positive about having a Anand Rathi AIF license there. We have a AIF license, the normal AIF license, which is so far not used. But that’s a backup product testing platform yet. So, yes, sir, [Foreign Speech] At a subsidiary level, those are also being explored, [Foreign Speech].
Sunil Shah
Sure, sure, sure. Great to hear that just my $0.02 on what we can do as investors or you people running the company to be better. That was the only idea there, just food for thought. And…
Feroze Azeez
Very useful. Very useful.
Sunil Shah
Sure, sure. So thanks for the opportunity and you know, I’m done. So operator, can you move to the next question. Thanks.
Operator
Thank you. The next question is from the line of Prayesh Jain from Motilal Oswal Financial Services Limited. Please go ahead.
Prayesh Jain
Yes. Hi. Just one question on your — if I divide your distribution of financial products revenue by the AUM of the non-PPSP product AUM, right, the yield seems to be dropping consistently, okay. Now how do I look at this? And why is this decline?
Feroze Azeez
Firstly, let’s check the hypothesis, whether my yield is declining consistently. The hypothesis might not be true if you divide it by the average asset, not quarter end asset. Because market [Foreign Speech] AUM is a picture [Foreign Speech] one click, right, at the end of the quarter. Profit is a movie, right. [Foreign Speech] So yields of our structured products, which have matured, if you calculate the yield, yield is always per annum. However, it’s being recognized upfront later all that. If I look at the yield of structured products which have matured at market value, it is 1.1617% and our mutual funds is 1.09%, okay.
Sometimes what happens is you bring a lot of raw material that could definitely be the reason. Sorry, I didn’t highlight that. Now what happens is the client tells you, these are my mutual funds, these are my stocks, take them all. So I will do a change of broker, which will yield me nothing for the first six months. So my yields will drop on an overall AUM basis. Because I’ve brought in — if I do a good job of transferring assets and establishing that I’m a better mutual fund distributor, that drops my yield unless it gets realigned. Just because I want him in the 14 scheme basket, I will not book his taxes.
I would want to wait till it gets into long term sometimes. Sometimes, it’s — I will never do surgical cut, right. If somebody says, [Foreign Speech]. So I will not earn nothing on that asset. So better my business, sometimes yield will drop. I’m just giving you an illustration, and that’s the most practical illustration. Because quite a few clients of ours realize that we have one of the okay distributors in mutual funds and they transfer their broker codes, change of broker, as you call it, six months you earn nothing. Does it answer, sir?
Prayesh Jain
I’ll come back to — I’ll come back and probably discuss it with Vishal separately on this. Secondly, on the AUM bit of the structured products, how do you think about the growth there?
Feroze Azeez
Sir, it will be in the range of 25% to 35% of my total AUM. If market drops, mutual fund drops, so it will show a larger number. Sometimes when market rise very sharply, it will show like a smaller number. Last year [Foreign Speech] we had 29%, 30% in structured products. Now it is lesser because the extent of mark-to-market on the long-only side is greater than in the structured products. So it will range between 25% and 35%, depending on how the market performs. But in a client’s portfolio, it’s generally in the range of 30% to 35%.
Jugal Mantri
Feroze bhai, I will add to what you said on yield. Mr. Jain, there are like — as Feroze bhai has rightly said that as far as concerned with the yield on individual product, okay, there is no change which has happened. So fact of the life is that the yields which I’m earning be it on equity, mutual fund or net mutual fund or on the market-linked debenture, the rates are — in last three years, it has not moved more than, say a few percentage points. But what happens that when your proportion of one asset class in overall AUM changes, that impact your overall average yield.
So if you’ll see the equity mutual fund, the mutual fund proportion, which has gone up from, say, 52% to 55%, okay, in the last one year, in my overall AUM, there you will find that because of this, there is a slight drop. And on top of it, the second point which Feroze bhai has already added that you will have to consider the daily average balances of the mutual fund AUM. And if you calculate the yield, that will give a clear picture instead of taking only the period-ended number. So anyway, you are more than welcome to have a detailed discussion with Vishal on the yield computation front.
Prayesh Jain
Just again on that AUM bit of the structured product. So you mentioned a mix, right? But given the interest rate trajectory and scenario, would you say that this is a product which could give better returns in the case that the interest rates would decline? And resultantly, you would possibly want to grow this business at a pace which could be better — or it is unrelated to the mutual fund business?
Feroze Azeez
Mr. Jain…
Jugal Mantri
That is not the objective, Feroze bhai — Mr. Jain, that is not the objective to this versus that. The overall solution, which as Feroze bhai has explained, I think Feroze bhai you can repeat the same about the asset allocation, which we have been doing instead of focusing on a single product.
Feroze Azeez
Yes. Mr. Jain, how we look at it, like Jugal ji said, we don’t do anything which is top-down. If my client’s objective is my only reason why I exist. If we have to deliver 14% return with 0.6 beta, whatever helps me achieve that is where I will be married to. Macroeconomic [Foreign Speech] Now coming to the point of how this works is if a person has a certain objective, 14% with least risk, 13% with the least standard deviation possible, 65-35 [Foreign Speech] allocation time, that will be the allocation. We will not take a single product and say [Foreign Speech]. So we have counseled — we, in fact, Rakesh has sacked a person who had more allocation in his book for structured products. Okay. I’m just telling you this. That’s the cultural attribute. A few years back, he’s found us RMOs in the [Indecipherable] of upfront income, he was selling more proportions to its clients of structured products, mutual funds or structured products, not sold as a combination for a portfolio objective is frowned upon internally.
Prayesh Jain
Got that. That answers. Thank you.
Operator
Thank you. Ladies and gentlemen, due to time constraints, we will take this as the last question. I now hand the conference over to Mr. Feroze for closing comments.
Feroze Azeez
Yes. Thank you so much, everyone, to join us on this call and be patient with us. And we hope we tried to answer your questions. If you need more information, Vishal Sanghavi, our Investor Relations Head; and Rajesh Bhutara, our Group — our CFO, are always there. And please reach out to us. We’re duty-bound to answer them to our best ability.
Operator
[Operator Closing Remarks]
Feroze Azeez
Thank you, everyone.
Jugal Mantri
Thank you. Wish you all happy 2025.