HDFC Asset Management Company Ltd (NSE: HDFCAMC) Q4 2025 Earnings Call dated Apr. 17, 2025
Corporate Participants:
Simal Kanuga — Chief Investor Relations Officer
Navneet Munot — Managing Director and Chief Executive Officer
Naozad Sirwalla — Chief Financial Officer
Unidentified Speaker
Analysts:
Lalit Deo — Analyst
Shreya Shivani — Analyst
Ronak Chheda — Analyst
Dipanjan Ghosh — Analyst
Bhavin Pande — Analyst
Melwin Mehta — Analyst
Prayesh Jain — Analyst
Unidentified Participant
Madhukar Ladha — Analyst
Anki Bihani — Analyst
Abhijit Sakhare — Analyst
Gaurav Sharma — Analyst
Mohit Mangal — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Q4 FY ’25 Earnings Conference Call of HDFC Asset Management Company Limited. As a reminder, all participants lines will be in listen-only mode and there will be an opportunity for you to ask question after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing start and zero on your touchstone phone. Please note that this conference is being recorded.
From the management team we have, Mr Navneet Manor, Mr Navzad Sarwala; and Mr Simal Kanooga. I now hand this call over to Kanooga, who will give us a brief following which we will proceed with the Q&A session. Thank you, and over to you,.
Simal Kanuga — Chief Investor Relations Officer
Yeah, thanks,. Good afternoon, good evening, everyone, and thank you for joining us today. Our presentation is available both on exchanges as well as our website. As usual, we’ll start with a quick overview of the industry. So the year got concluded, FY ’25 with AUM reaching INR65.7 trillion, reflecting a 23% increase over the previous year. Of the INR12.3 trillion increase, approximately INR8.2 trillion was in form of net-new flows. The comparable number for the previous financial year was INR3.5 trillion. This is the 13th consecutive year where industry has witnessed positive net flows. For FY ’25, equity markets witnessed two distinct phases, more or less cut into two equal half. 50 rose by 16% in the first-half, that was April to September of 2024 and declined by 9% in the second-half, October to March, October ’24 to March ’25. And in terms of flows into equity-oriented funds, the first-half saw net flows of INR2.81 trillion and second-half witnessed Net flows of INR2.74 trillion. So for context, net-new flows for financial year ending March ’24 were INR2.62 trillion. During the current financial year, actively managed equity-oriented NFOs contributed INR900 billion, that is 18% of the net-new actively managed equity-oriented flows. The corresponding number for previous year was INR546 billion, which made-up 23% of the flows of the previous year. Monthly SIP flows touched record-high of INR265 billion in December 2024 with March ’25 logging in INR2.9 billion. Comparable number for March ’24 was INR193 billion. That is, industry has added just about INR67 billion to monthly flows. In FY ’25, the industry witnessed inflows into debt and liquid funds adding up to INR1.35 trillion. ETF saw inflows of INR831 billion, while arbitrage funds attracted INR508 billion. We now move to us. We crossed INR7.5 trillion in overall AUM with a market-share of 11.5% and 12.7% if we exclude TTF on QAUM basis. Equity-oriented assets at INR5 trillion, 64% of our quarterly average AUM are well-above industry average of 56%. For actively managed equity oriented AUM, our market-share is 12.8%, while for debt and liquid, it is at 13.1% and 12.5% on QA AUM. Individual investors’ contribution to our monthly average AUM remained steady at 70% compared to 60% for the industry. We held a 13.2% share of individual monthly average AUM for March 2025. The industry added 9.7 million new investors over the year. We added 3.5 million. Flows through systematic transactions for March 2025 were INR36.5 billion, up 24% as compared to March of ’24. We also continued to expand our physical presence, adding 25 new offices in Jan 2025, which means we have added 50 new offices over the past 15 months. That takes our network to 280 offices with 196 offices in beyond the top-30 cities. We continue to constantly enhance and better our digital experience for our customers and now 94% of our transactions are processed digitally. Quick update on financials. Our revenue from operations for FY ’25 came in at INR3,4980 million, growth of 35% Y-o-Y. Operating profit for the year added up to INR27261 million, growth of 43% Y-o-Y with an operating profit margin of 36 basis-points of AUM AUS. PAT for the year was INR2,4609 million, growth of 26% Y-o-Y. Board earlier today has recommended a dividend of INR90 per share as against INR70 per share last year, translating into a dividend payout ratio of 78%. This, of course is subject to shareholders approval. We can now open the open the call for questions. And both are — both are very much in the same room. So, we can start queuing up questions, please. Thank you.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles the first question is from the line of Lalit from Equirus Securities. Please go-ahead.
Lalit Deo
Yeah, hi. Good evening, sir, and congrats on a good set of numbers. So just have two questions. Firstly, on the revenue yield side. So in this particular quarter, we thought that it has declined by about 1 basis-point. So just wanted to understand whether it is a function of mix change or is there anything else to read into it? Further like if we look at the — if we look at our direct disclosures there, we were seeing that in some of the equity schemes, it has increased it has increased materially. So wouldn’t that would have helped in some of your the inching up the revenue each.
Navneet Munot
So I mean, the management fees is same indirect as well as the regulatory. So that wouldn’t impact. But it has broadly been in-line with the last quarter. I think we have been saying in the last quarter also that equity is around 58 basis-points. Debt is — debt is 28 basis-point and liquid is 12 basis-points and revenue margins over the last four quarters, if I remember correctly, in Q1 was 46.3% with equity-asset mix was 64% and Q2 was 46.4% or something with mix coming in slightly higher 65.7% or so. Q3 was 47% with again a similar mix. And this time the mix was slightly lower at 63.8% and Q4 margins were 47.2%.
Lalit Deo
I actually like second question was on the ESOP scheme. So we have announced a new ESOP plan. So just wanted to understand like how should we the cost from the cost perspective for the overall ESOP plan.
Navneet Munot
Sure. So firstly, as of now, we are seeking approval from shareholders for stock options to performance stock units, PSU. This is not what we are giving or alloting as of now. This is for future. And this just gives me an opportunity to give you a perspective on what this is about. So in HDFCMC, we recognize that our people are central to delivering consistent long-term sustainable value to our clients and shareholders. And as part of our efforts to attract, retain and align high-quality talent with business outcome, the NRC, the Nomination and Remuneration Committee of the Board approved these changes, which is that in 2020, we had secured shareholder approval to allocate approximately 32 lakh shares to employees over-time. Since then, out of these 32 lakh shares, NRC has granted around 23 lakh shares, that remaining 8.7 lakh have now been canceled, so no further shares will be alloted under that scheme. The NRC has approved a new scheme that is ESOP and PSU scheme 2025.
This will now go for shareholder approval. So we are seeking approval for 25 lakh shares, including performance stock unit, PSUs. It will be NRCs prerogative to allocate these shares over a period of time. Last-time we took approval in 2020 for 32 lakh shares, as I mentioned. And of that, we are canceling 8.7 lakhs. The balanced 23 lakh shares were allocated over the last five years, including 10.5 lakh shares to over 600 of our people in 2023. So the previous scheme had vesting spread equally over three years. New scheme will have deferred westing that is 10% in first year, 20% in second, 30% in third and 40% in four, so 10% 20%, 30% 40 over a four-year period. And we are of the opinion that this is better aligned with interest of our shareholders and reinforces our long-term performance. The NRC has also approved the issuance of PSUs within this overall limit of 25 lakh shares.
So 25 lakh includes both the ESOPs as well as the PSUs, which will be granted at face value and will wear 30% in third year and 70% in fourth year. Contingent upon meeting clearly defined performance parameters, primarily based on revenue, profitability, et-cetera. Importantly, and I must say this, PSUs will not be granted to me or my direct reports who are classified as Head of Department. The HDFC Group, I’ve always said, has consistently championed employee ownership across its companies and this new framework reinforces that ethos while responding to the evolving expectations of talent and demand of our industry. So let me reiterate that there is no intention of alloting entire 25 lakh shares at this instance, it will be spread over-time, similar to our old scheme and we’ll come back to you after the shareholder approval and the discussion with the NRC on allocation, et-cetera.
Lalit Deo
Thank you, sir.
Operator
Thank you. The next question is from the line of Sreyash From CLSA India Private Limited. Please go-ahead.
Shreya Shivani
Yeah. Hi, thank you for the opportunity and congratulations on a good set of numbers. My question broadly was around the equity segment and the trend in the retail and H&I within that retail and H&I as the breakup we get from. So what I noticed was on quarter-on-quarter basis, both the segments have contracted similarly in — between December to March. So if you can help us understand how has the behavior of customers in these two segments been — have there been any differences or any qualitative comments you can make about these two categories? Because one would think that during volatile markets, the H&I exits much more and much faster, etc. So any comments would be here would be useful.
Navneet Munot
So — and as you mentioned in the opening remarks that if you look at last year and you have split into the two phases and then someone — I mean, you can say that a year or two half, Nifty was up 16% or so in the first-half and the market was down I think, 9%, 10% or so in the second-half. But if you look at the flows into equity-oriented funds, the first-half saw net flows of INR2.81 trillion and second-half was INR2.74 trillion. I mean, and as you compare with the last year, last year had net flows of INR2.62 trillion in the entire year. Also, if you look at the SIP flows in last four or five months, I think it’s almost flat around INR26,000 crores or so. So I think we are seeing greater resilience among investors.
I think it’s a collective effort of the industry, collective efforts of all the — I mean of the industry association, collective efforts by all the industry players, our distributors, advisors and everyone to give the message to the investors that they need to invest with a long-term orientation. And clearly, I think that seem to be bearing fruit and we are seeing people continuing with their investments. In fact, if I draw your attention to gross flows and redemption numbers, which will give you some more insight into the investor behavior. So in the — as I said earlier that this was a year of two halves. And in the first-half of FY ’25, when market was up, gross inflows stood at INR5.87 trillion with redemptions at INR3.06 trillion. In the second-half, when market was down by 9% or so, while gross inflows moderated to INR5.1 trillion, redemptions also declined to INR2.38 trillion. So people are also going slow on renewing, right? I mean, if you got the point that I’m trying to make.
Shreya Shivani
Yeah. Yeah. But sir, one of the things that we saw also with AMC reporting the monthly data is in terms of the number of tips registered and number of closed or redeemed whatever. In that the number of ships registered in the past two months, that data has — that number has been on a declining trend. So is it fair to say that while the ones who are invested are continuing to be in the game, but it — the choppy market has sort of dissuaded or you know, it has dissuaded the newer customer from entering. Would that be a fair assessment right now?
Navneet Munot
So thank you for asking that. And there seems to be I mean, lot of noise around this point. So I’m happy that you asked me this. M3 has started publishing an additional data point on their website, you might have seen that is the number of contributing SIP accounts, which is a true reflection of investor activity. The contributing accounts in December 2024 was INR8.27 crores and the number for March was INR8.11 crore. It would be good idea to keep this number at the core. The more relevant of course is the fund flow-through SIP than I mentioned this point several times. SIP collections reached a record-high of 26,400 something in December ’24. And even in March ’25, contributions were strong at INR25,900 odd crores.
So it’s just a 2% dip or in absolute terms around INR500 crore dip on a base of INR26,000 crores plus. So — and it would be pertinent to note that the last working day for March 2025 was 28 as against 31st for December ’24. So it’s three days short. And you know, I mean every day matters for SIP trigger. So some part of this dip can also be attributed to this also. So SIP collections in March ’25, I mean, we believe remain resilient at 98% of their record-high. So it’s — and if you compare year-on-year, then it’s a robust 35% growth Y-o-Y. And this is despite, I mean, heightened volatility and global uncertainties. So the resilient participation reflects the growing maturity, confidence and I strongly believe it’s the long-term orientation of Indian investors and commitment to the disciplined value-creation. So while we appreciate that there may be periodic closures or pauses on a month-on-month basis, which are natural. The overall trend continues to remain strong and as I see it, there is clearly growing investor interest in systematic investing.
Shreya Shivani
Got it, sir. This is very useful. Thank you so much and all the best.
Navneet Munot
Thank you.
Operator
Thank you. Thank. The next question is from the line of Moksha from Millennium Money Finance. Please go-ahead.Thank you. Moksha, I would request you to please unmute your line. Due to no response from the current participant, we will move on to the next participant. The next question is from the line of Ranak Chheda from Everga Capital. Please go-ahead.
Ronak Chheda
Hello. Am I audible?
Operator
Yes. Yes, sir.
Navneet Munot
Yeah, yeah.
Ronak Chheda
Yeah. Thanks for the opportunity. Congrats on the result in such a tough quarter. My question is on the cash balances. In — previously when we’ve spoken to you guys, you had mentioned that we might be looking at using some of this cash to become an anchor investor in our efforts to build the alternative side of the business. Just wanted to know where are we in that journey? Can you elaborate, is there something in the near offering?
Navneet Munot
I can answer on the automate side, but on the cash balance, I want to highlight anything on that.
Naozad Sirwalla
So just to cover the cash balance, we’ve always made a priority to return value to our stakeholders, right? So this year our payout ratio is 78%. And in fact, if you look at our sort of realized operating post-tax profit, given that we have a mark-to-market on other income, we have practically distributed the entire realized post-tax profit this year as dividends. That’s on the cash-flow status. Our skin in the game from a perspective, we continue to have to invest in our own schemes based on the SEBI formula. So that continues. And on the AIF front, we have mentioned in the past, will add, but we have committed significant capital to ceding our fund of fund, which is our first initiative on the Authorized platform. We are going to soon launch the credit fund and where again the balance sheet of the AMC will be a significant investor maybe that.
Navneet Munot
Sure. So you’ve already mentioned, that the alternatives platform continues to gain momentum. As we mentioned, we closed our first to AI Fund of fund. The portfolio construction has been progressing very well. As we mentioned earlier, we got over 400 investors and we believe that over the next couple of quarters, we would have more offerings within the alternative space. We’ve got the approval to launch a Category 2 credit fund. So we are expanding our presence in the old space with the launch of NDFCMC Credit Opportunities Fund. The team has been in-place for over a year and we would be approaching investors and then our distributors for that product. On the oil subsidiary side, LDFCMC International IFSC Limited, we went live with refunds in the 3rd-quarter of FY ’25 and has since witnessed a good response. It is positioned to enable international investors to tap into India’s growth story and we are also gearing up to empower Indian investors to explore global opportunities as we build-out these capabilities. So we remain committed to seizing any emerging opportunities to drive growth and strengthen our competitive edge. And as you asked that, yeah, over a period of time, this will be a good deployment of our capital.
Ronak Chheda
So would there be a — would it be possible for you to quantify the amount of money we are planning to use from our own balance sheet For the next near-term of funds which are we going to launch?,
Navneet Munot
I mean, so in the fund, I mean, last-time in the fund of fund whatever we got, we put 10% from our balance sheet as seen in the game. In our credit opportunities fund, we will do the same. And over a period of time as we come with more offerings, we would have an opportunity to deploy capital there.
Ronak Chheda
Okay. Thank you so much.
Navneet Munot
Just to make one more point on that. While you mentioned about the capital going into automate or the Gib City opportunity. But I mentioned it earlier also that with a healthy cash position, we are well-placed to take advantage of strategic opportunities. We also remain proactive in evaluating any M&A opportunity that can accelerate growth or strengthen our presence in the relevant segments. So it gives us a lot of strategic advantage.
Operator
Thank you. Ladies and gentlemen, you may press star and one to ask a question. The next question is from the line of Dipanjan from Citigroup. Please go-ahead.
Dipanjan Ghosh
People. Good evening. Just few questions from my side. First of all, over the last, let’s say, 15 days in terms of the quarter, we have seen a revival in-markets or bounce-back or whatever we want to call that. So in terms of incremental flows, are we seeing any sort of revival still early days, but if you can give some color on that? And the second question is, if I look at your ticket size of FIP, it seems on a March exit basis, it’s down around 12%, probably a little bit higher than what we have seen
Navneet Munot
Hello.
Operator
Yes, sir. It’s from the current participant.
Navneet Munot
So is he available back online or should we move to the next question?
Unidentified Speaker
I think if I just can add that it trend in last few days, but he might have a long-time.
Navneet Munot
I think he was also asking about SIP average something. So that is maybe of the STP. You might have just divided the systematic number for us. Okay. So maybe we can just come back again.
Unidentified Speaker
Can you take the next question?
Operator
Sure, sir. The next question is from the line of Pande from Athena Investments. Please go-ahead.
Bhavin Pande
Hi, good evening, everybody. Thanks for the opportunity. First question on the distribution side, we can see that the equity AUM distribution mix direct specifically has seen an uptick. So in your opinion, how do we look at it from a long-term horizon?
Navneet Munot
Your question is the direct channel percentage of total AUM is increasing, right?
Bhavin Pande
Yes, sir.
Navneet Munot
One that because of the lower PER, automatically you would assume that direct as a percentage would keep increasing because I mean, you have a lower PR as simple as that. But overall, I mean, the distribution pie data provided should not be viewed as a direct representation of market-share within a specific channel. In the last like one year or so or maybe a little lower that the direct channel has seen a notable increase, it’s grown from 25% to 27.8%. This is driven by fintech platforms plus RIAs and of course, large family offices and high-net worth individuals who invest with AMCs directly. And additionally, we have to keep in mind that with everything else being saved, the share of direct plan will keep on increasing by default that I mentioned earlier due to differential TR between the direct and regular plan.
Bhavin Pande
Okay. And on the — second on the market-share side, does our flow market-share continue to be higher than the stock market-share both in as well as IP.
Navneet Munot
Yes.
Bhavin Pande
And for fund performance, how do we sort of look at it?
Navneet Munot
No, I think it’s been very encouraging and I think we have navigated the market cycle very well. We have seen significant volatility over the last couple of months and I think portfolios were positioned rightly. Some of the funds which went quite cautious, I can take the names of, let’s say, our mid-cap fund or a small-cap fund where we clearly noticed growth in pockets of market. I think the fund managers took the right call. And in last couple of months, we have seen significant uptick in our performance in those funds. And across-the-board, I think we feel very proud of the performance that our investment team has delivered.
Bhavin Pande
Okay. And indicatively, so-far FIT chains continue to be at par with what we saw over the last or four months or they are tad higher given the recovery in-markets.
Navneet Munot
You are seeing the overall SIP? Because what April, I think we would want to pass that. As of now, we don’t want to comment on any data we would do with April.
Bhavin Pande
Okay, okay. That helps. Thanks a lot and thanks a lot and good luck to you.
Navneet Munot
Thank you.
Naozad Sirwalla
Thank you.
Operator
Thank you. The next follow-up question is from the line of Dipanshan Ghosh from Citigroup. Please go-ahead.
Dipanjan Ghosh
I hope I’m audible now and apologies for the confusion earlier.
Navneet Munot
Yes, go-ahead.
Dipanjan Ghosh
Yeah. So first question is on the SIP number. And if I see your SIP ticket size on a March exit basis, it seems that it has gone down by around 10%, 12% on a Y-o-Y basis. While I understand the industry numbers have also kind of been a little soft on the SIP ticket side, but it seems that for you, the decline has been a little bit more and also your SIP market-share also over the last two quarters has seen a little soft. So just get some idea of why is this differential in ticket size trajectory between you and the industry? That was my first question.
My second question is a follow-up on one of the previous participant question in terms of the EV number. Now normally seasonally always in the 4th-quarter historically, we have also seen some adjustments that happened. So first is, has there been any adjustment in this quarter or the entire 0.9 bps of decline can be entirely attributed to the mix change-out there? And the last question is on the opex part. I mean, do you — ex of ESOP or even including ESOP, so for that matter, the expense guidance of 10% to 15%, does that hold through going ahead?
Navneet Munot
Sure. Depends also first on the systematic numbers and I must clarify, as you are aware, systematics numbers that we report includes both SIP and STP, systematic investment plan and systematic transfer plan. The decline that you have seen in our systematic transactions can largely be attributed to STP. And you would know that STPs are higher in value terms and hence you are seeing that effect.
Naozad Sirwalla
On the yields, where are you seeing the decline in the margin? I mean the yields?
Dipanjan Ghosh
Because I’m just taking your operational revenue, which is like, let’s say, say, INR9 billion almost for the quarter,
Naozad Sirwalla
You don’t have only revenue operating revenue.
Dipanjan Ghosh
Operating revenue. Yes, that only operating revenue, only the operational yields, not the operating margins.
Navneet Munot
It was 47.1% to 47.2 basis revenue
Naozad Sirwalla
Revenue
Navneet Munot
Of basis-points. So basically, if you look at yield, it was 47.1% in the last quarter, 47.2% in this quarter.
Naozad Sirwalla
It’s a three days, it’s also a number of days issue, if I’m in Q3 at 92 days, Q4 has 90 days that itself is an impact, plus AUM has been overall lower than last quarter. Is that?
Dipanjan Ghosh
Okay. Now I guess, you know, the revenue decline I understand is a function of three less number of days. But average AUM is, let’s say, whatever you have reported from around 70 740 and your — and your A&D revenues are around 9 billion. So if you kind of do a simple math on that and annualize it, I think the number comes out to be around 46.3, but anyway, I’ll maybe take it offline if that’s
Navneet Munot
46 basis. Yeah, 46 47 basis. I don’t know what, but we can discuss it offline as.
Dipanjan Ghosh
Sure. And maybe on the expense part, if you can give some guidance?
Navneet Munot
You are saying of —
Dipanjan Ghosh
Operating expense as an overall expenses, the guidance of 10% to 15%, does that still hold with the new ESOF plans being rolled-out? Or? Or kind of going-forward shareholder provision.
Navneet Munot
So part of the other ESOP currently it’s too premature to comment on the cost assets because the specific Quantum of allocation of ESOP, PSUs, timing of issuance will all be driven by NRC in due course. First thing is that we’d like to highlight that this will be a one-time non-cash cost, right. The way it works in accounting is based on the Black valuation, you amortize that cost over the vesting period and it does not impact the company’s cash-flow. That’s it.
Dipanjan Ghosh
But ex of, what should — how should one think of the growth in expense if, let’s say, the next year continues to be a little bit soft on incremental volumes?,
Navneet Munot
So we don’t give specific forward-looking guidance, but you want us to be always prudent when it comes to spending, right? And in our — the way we think about costs. Having said that, we are very keen and want to capitalize on all opportunities that strengthen our position, right, and broaden our capabilities. So our focus is remains on building a leading futured asset management company. And in that regard, if we are to continue to invest in the future we build, the past trend of growth in expenses of employee costs as well as other expenses is well available, which is a CAGR over three years, five years, you can — you have the numbers. They are fairly, very, very much in control.
Our total expense as a basis-point of AUM has about 10 basis-points for FY ’25. This is aided by obviously the rapid rise in AUM and despite increase in number of people and 50 branches over the last 15 months and investments in technology, etc., we have managed to keep the cost at 10 basis-points. I would just like to add a lot of caution here that 10 basis-point is not what one would like to build future estimates on because if and when during a period when if AUM growth moderates, this number might look different.
Dipanjan Ghosh
Got it. Thank you, sir and all the best.
Naozad Sirwalla
But just one thing depends on the ESOP that you are referring to as of now, it is just taking an approval, right?
Navneet Munot
It is after the NRC will decide then allocations will happen. And after that, that will come. So of course, at that point in time, we’ll give all the details.
Operator
Thank you. The next question is from the line of Melvin Mehta from Sterling Investments. Please go-ahead.
Melwin Mehta
Thank you very much. Am I clear?
Operator
Yes, sir.
Melwin Mehta
Thank you very much. A quick question on this kind of having the asset management company having investment in the funds. And just to clarify, is it only at the start of that fund formation or is that continuing as the fund grows larger and bigger?
Navneet Munot
So actually in our funds, it is regulatory. So basically there is a game in the game curricular, whereby depending on the risk of the particular asset class, there is a certain basis-points of AUM that we need to keep investing. So more capital that kind of we are able to raise, our investment in that fund keeps going up
Melwin Mehta
And can that be kind of shared with an external agency or it’s absolutely necessary for us to fund that? No, in-balance sheet capital. It has to be from the balance sheet.
Navneet Munot
So it has been regulation, yes.
Melwin Mehta
Yes. And is it 10% for all funds? Is it 5% — I’m sorry, I’m.
Navneet Munot
10% was for alternative investment fund or fund that we launched and the private credit fund that we are about to launch. This is a different thing. This is in our mutual fund business where there is a CV circular on in the game, depending on the profile of an asset class, there is a certain basis-point of AUM that we have to invest from the AMC’s balance sheet.
Melwin Mehta
Got you. Got you. And is this a recent?
Naozad Sirwalla
The service in the game has been around for almost some time.
Melwin Mehta
Okay.
Navneet Munot
And just to clarify, the investments in the AIF are voluntary from our balance sheet. There is a minimum criteria at we are of course, investing way above that criteria.
Melwin Mehta
Sure. Thank you very much. And given the kind of strong HDFC brand, which needs no introduction at least in the Indian context, is raising more foreign money to invest in India a priority or clearly the management is focusing on the domestic market?
Navneet Munot
You are asking investing globally by domestic investors.
Melwin Mehta
But that was my second question, connected question. So I’m asking two questions here. One is HDFC’s brand basically, basically given the domestic market, but also raising money from abroad to invest in the domestic market. And Part B was obviously, given the HDFC’s brand in the domestic market to basically launch global funds that — which will be obviously where the investors will be the domestic Indian investors.
Navneet Munot
So you’re absolutely right. So with that intent, we’ll set-up a wholly-owned subsidiary LDFC, MC International IFSC Limited. And I mentioned earlier that we have gone live with three funds in the 3rd-quarter of FY ’25. We would be coming with more number of funds in months-to come. And it is positioned for both. One, to enable global investors to tap into Indian markets. And second, over a period of time, also to empower Indian investors to invest globally and then we are building out capabilities to enable both.
Melwin Mehta
Okay. Thank you. Thank you for that.
Navneet Munot
Thank you.
Operator
Thank you. The next question is from the line of Jain from Motilal Oswal Financial Services Limited. Please go-ahead.
Prayesh Jain
Yeah. Hi, good evening, everyone. Firstly, on the — on the closures, why do you alluded to the fact that it’s not an alarming sign yet, but any behavioral difference between online platforms and the advised or the mutual fund distributor route. What we are hearing is the closes are more on the direct side rather than rather than the advice side. Could you give some color there as to what’s the trend there?
Navneet Munot
Yeah. The Y-o-Y, if you look at, there has been a significant increase in the monthly crores to INR26,000 crores. And in terms of accounts, I gave you the number earlier. I mean, over the last couple of months, as of now, I mean the looking at the investor behavior gives us confidence that investors are a lot more resilient, they are showing more maturity, more confidence in the long-term potential of markets and industry continues to put you know huge efforts to ensure that investors invest in a disciplined manner. Are there big differences among different channels, not that I can honestly comment more on that.
Prayesh Jain
Okay. Okay. And any
Navneet Munot
Factors have come in last couple of years and this is like a good test the volatility of last few months and we are encouraged to see the response of the way investors have behaved in last few months.
Prayesh Jain
Yeah. Any trends that you can see on the debt side where with the interest-rate cuts, the duration, the longer duration or a pickup in any of that — that category?
Navneet Munot
So I mean, this is the first year where we have seen positive flows both in debt fund as well as a liquid fund net flows standing positive. Debt, mutual funds in general haven’t — I mean despite that, I would say that debt mutual funds haven’t quite caught on with retail investors. The industry is still working very hard to change that. In MP, we started a campaign debt funds here around a year back or so. That was a good step, aiming to raise more awareness, especially around how debt products can support long-term goals like retirement planning. We believe that serve as a strategic tool in managing market volatility, helps investors optimize for stability and overall returns while balancing risk. We have seen encouraging trend. Flows who have invested over the long-term have benefited and corporates continue to use the short-term debt products for liquidity management and we have seen flows in this year. So I remain optimistic and hopeful for favorable change in the debt fund taxation. I mentioned it earlier also that along with sustained awareness efforts will help unlock the full potential of India’s debt market.
Prayesh Jain
Is the institutional money kind of coming to the longer duration? Is there some initial trends where people have started looking at debt music funds or hybrid with a higher proportion of debt. Any Of those trends are visible right now?
Navneet Munot
Yeah. So in India, when we say institution, that’s largely corporate treasuries, I think their investments would more be at the shorter end-of-the curve. Individual investors have shown interest in long-term bond product like our long-term bond fund has seen healthy flows in last year or two. We have seen that trend from individual investors. But otherwise, corporate treasuries are largely at the short-end.
Prayesh Jain
Okay. Last question on other income, we’ve seen a sequential improvement there. I believe the markets were flattish, equity markets were flattish on an FT basis and small car mid-cap were down. What kind of explains this any increase in other income sequentially?
Navneet Munot
So it is a function of our balance sheet. A lot of the investments are also in debt mutual funds on our own, right? And there were couple of rate cuts. So we had some benefit of that on duration of mutual.
Prayesh Jain
Got that, got that. Thank you.
Operator
Thank you. The next question is from the line of Krishna Manothra from NJ India Investments. Please go-ahead.
Unidentified Participant
Congratulations of numbers.
Operator
Sorry to interrupt, sir. I would request you to please use your handset.
Unidentified Participant
Am I audible?
Navneet Munot
Yes.
Operator
Yes, sir. I would request you to please be a little loud.
Unidentified Participant
Okay. So I just had one question. There is currently going around in the market regarding thematic and fund space. So like most of them have not performed in the past six months and so. So — and as the data I have is we have a higher yields in the thematic and funds compared to the mid-cap and small-cap funds. So going-forward, should we consider that lower inflows in the rule funds. So can we consider the equity yield slowing down to further position?
Navneet Munot
No, overall, that’s still a very small part of our overall product portfolio, but our product portfolio and also in-line with the views of our investment team and the product team. We have launched a couple of products in last few years. But that’s still a not meaningful part of our overall equity portfolio.
Unidentified Participant
Thank you.
Operator
Thank you. Thank you. A reminder to all the participants that you may press star and one to ask a question. The next question is from the line of Madhukar Ladha from Nuvana Wealth. Please go-ahead.
Madhukar Ladha
Good evening. Thank you for taking my question. Just coming back on the SIP discontinuances, I know that the overall flow number has been very resilient and it seems to suggest obviously something is structurally changed or at least looks like. But there is a little bit of worry in the sense that we continue to see higher FIP stoppages versus the new creation. And if this sustains, then should we be actually worried that at some point of time, this will flow-through in the SIP flow number. Is that the correct way to think about it or are we missing anything over here? Because also secondly, I think there was also this narrative around you know, free cleaning up this number because some of the, you know direct platforms or online platforms continue to show SIPs which were not getting triggered or which were not getting paid also in that number. So has that played out some sense on these two things would be helpful. Thanks.
Navneet Munot
So with regard the SIP, these counts have grown over the earlier baseline in the four-month period from December ’24 to past ’25. But I mentioned earlier, the one number that everybody should track is that the peak collection — I mean, over the peak collections in December, gross SIP collections are down just about 2% from December ’24 and December ’24 was the peak and it’s down 2% in March ’25. A large number of these SIP or the SIP closed are part of a superset which had missed more than three installments. Now the real paying SIPs, that number that column that has got added and I think you are referring to that number and then on the MP website, the real paying SIPs have not suffered too much because of any negative investor sentiment.
And again, I would repeat that despite the sharp fall in the market, monthly SIP collections holding to within 98% of the peak number is a strong testimony to the investor sentiment and collective effort that the industry has made. And honestly, I mean, two years back had you asked me to project the SIP number, nobody would have projected the number where we are today. And a year back when we were at 19,000, I mean few people would have projected that we would be at 26,000 given what has happened in the market in last six months. So we feel very encouraged.
Madhukar Ladha
Yeah, that is that is that is bang on, that is completely true. And I agree with you completely over here. So just one follow-up. So is this a cleanup sort of done? You said more or more than three months if people have not paid that number has actually or they’ve removed that it seems. So are we largely done with that or this can have like maybe a couple of more months or?
Navneet Munot
Because there’s been so much noise around it, the way you should see is, one that the amount that has been collected is what reflects in that INR26,000 odd crore of the gross flow. That’s an important number. And the second important number is the people who have credited that amount in the month. So both these numbers are very relevant and gives you a true reflection of what’s happening on the SIP.
Madhukar Ladha
Understood, sir. Thank you.
Naozad Sirwalla
How there is a number published of contributing SIPs on AMC website. So you don’t need to say that number was contributed in this month. Yeah.
Madhukar Ladha
Yeah, yeah. No, that is also quite — very robust. So there is no problem with that. Yeah. Got it. So — and we had done the distributor payout rationalization or I think I’m just — I just did some back-of-the-envelope calculation and if we were to account for the 90 and 92 days in the quarter, then it seems that the equity yields are holding up or are slightly better on a Q-o-Q basis. Would that be a fair assessment?
Navneet Munot
They are more else in the same the equity is a bit the third basis-points what we mentioned around 58 basis-points.
Madhukar Ladha
Okay. Okay, got it. Thank you. Thank you.
Operator
Thank you. Thank you. The next question is from the line of Anki Bihani from Nomura. Please go-ahead.
Anki Bihani
Hi, good evening. Am I audible?
Navneet Munot
Yes.
Operator
Yes, sir.
Anki Bihani
Yeah. So we have seen flows from NFOs into schemes for the industry declined sharply over the past two, three months. Though NFO flows have been quite strong in FY ’25, accounting for around about 15% to 20% of the overall equity flows. So what is your take on NFF flows going-forward and its impact on overall flows into the equity schemes? Should we see some slowdown there?
Navneet Munot
We have seen some cycles. I think we see some quarters where NFOs contribute a larger part to the overall flows. There are quarters when they are low. So at our end, I think we believe our product suite is very comprehensive and we cover a wide spectrum of investor needs across all categories. But for the industry overall, I think fund houses who don’t have a product in certain categories, they would continue to launch but yeah, I mean as I mentioned, the flows are little if I can use the word volatile on account of NFOs what you get?
Operator
Thank you. The next question is from the line of Abhijit from Kotak Securities. Please go-ahead.
Abhijit Sakhare
Hi, good evening, everyone. My question was on the SIP or the STP plus SIP number that you disclosed. So the industry number, as you were saying is almost flat on a — on a quarter-to-quarter basis versus the decline that we’ve seen. But adjusting for the STP issue, would it be fair to say that it’s kind of mirroring the broader industry trend itself?
Navneet Munot
Yeah. So I told you that the industry’s SIP number for December was 26,500 or something and March was 25,900. So this was a decline of 2%. However decline during the same-period was less than 2%. But the fall that you are seeing in our systematic number is on account of impact on STP, the systematic transfer plan, yeah.
Abhijit Sakhare
Got it. That was the only question I had. Thank you.
Operator
Thank you. The next question is from the line of Gaurav Sharma from HSBC. Please go-ahead.
Gaurav Sharma
Yeah. Hi, am I audible?
Navneet Munot
Yes.
Operator
Yes, sir.
Gaurav Sharma
Thank you for taking my question. Sir, again, hoping on this SIP. So while we understand that the gross inflows have been steady for you as well as the industry, just wanted to understand whether segmentally, is there any change like those have been moving towards the taxi care and large hardcap more from the mid-cap or small-cap in last six months, if you can provide some color around that? And second one is related to this specialized investment funds. So any timelines or any further communication you have received from the regulator, then we can expect the launch of these funds. These are my two questions.
Navneet Munot
So first on the SIP flows, I mean, in a very short period of time, investors may not switch from one category of fund to another fund. Incremental flows have a tendency to see a trend depending on how the markets have been and how the investors’ views have been. And as I mentioned earlier, again, at our end, the systematic number that we report are both SIP and STPs, there is some bit of fall on the STP side. SIPs are like higher in value. So you see that effect depending on the market. On the SIF side, see, the purpose of introducing SIF was to offer investors who are leaning towards unregulated or unregistered products, a regulated alternative with mutual funds who are very well governed and our transparency levels, our risk management, our overall governance is very different. So to provide a very secure framework under the regulatory umbrella, that was the genesis behind coming out with the whole SIF regulation as SCB Chair had mentioned earlier.
With the regulatory framework now in-place, we are actively evaluating potential opportunities in this space. So team is working on creating right set of products that leverage our investment capability, our risk management and product capability on one-side and the evolving investor needs on the other side. So I mean, just like any other thing, whether it be it active funds, be it passive funds, be it alternatives, PMS, they all revolve around like we want to be a one-stop shop offering a wide range of savings and investment products. And the strength comes from a combination of factors, large and well-diversified investor base on one-side and the deep investment, risk management and product capability on the other side.
Gaurav Sharma
Understood, sir. Those are my indications. Thank you, sir.
Navneet Munot
Thank you.
Operator
Thank. Thank you. Thank you. The next question is from the line of Mohit Mangal from Centrum Broking Limited. Please go-ahead.
Mohit Mangal
Yeah. Thanks for the opportunity and congratulations on a good set of numbers. My first question is on the tax-rate. So I think this quarter we had around 23.5%. Last — I mean if I look at the full-year, it 25% and for the entire, I mean, so maybe two, three years, should we assume the tax-rate to be 25%? And the reason why I’m asking is that because in financial year ’24, we just had around 21.5% tax-rate. So how should we do that or see that going-forward?
Navneet Munot
So this year the tax-rate is higher than last year simply because the capital gains tax-rate was increased in the budget. So we obviously create deferred tax liabilities on our mark-to-market gain. So that’s the reason for the tax-rate. So now our tax is very close to corporate tax-rate.
Mohit Mangal
Thank you. You. And right. So going-forward also, I think we should assume that this would be kind of maintained.
Navneet Munot
We typically don’t give guidance going-forward. Is it tax or is it tax sequent change
Mohit Mangal
Understood. Next is in terms of the number of branches, I think we opened around 26 branches this year. So going-forward, do you think you’ll increase number of branches or you’ll keep it constant? Any kind of color on that?
Navneet Munot
On the branch expansion side, you rightly noticed, I mean, we have opened around 50 odd branches in last 15 months or so. We keep evaluating our physical presence across the country. We also keep investing in our — in our digital capability and keep taking a view. This is also driven by looking at the different geographical spread where our presence is and where the potential for the business is. But I must add — I might have mentioned earlier in earlier calls that we approach branch opening very thoughtfully. So when I mean focusing on the building business in a city or town through branches in neighboring areas and a decision to open a new branch is made only after achieving a desired AUM and they generally breakeven in a good.
Mohit Mangal
Understood. Thanks and wish you all the best.
Operator
Thank you. Thank you. The next follow-up question is from the line of Melvin Mehta from Stoling Investments. Please go-ahead.
Melwin Mehta
Thank you very much for allowing me the second round. Am I clear, operator?
Operator
Yes, sir.
Melwin Mehta
Thank you for that. But probably this was for. It says probably half the question is actually an AMP question and half as you as a leader of HDFC. So in terms of these direct plans, you rightly said kind of having a take-up, you see the MFD market kind of evolving, let’s say, in the year or two period and a little bit of a longer-term period. Do you think the automatic route would then — the natural expectations to be that the RIAs will take-up? Do you think India is a market where some of would be basically around for a longer time.
Navneet Munot
So India is a market where I think all of these channels will flourish and I think whether it’s MMDs who have worked very hard over the last several decades. Industry used to be substantially smaller than the size we are seeing now. And I think we are to all of those hundreds of thousands of distributors who worked very hard in bringing the industry to where it is currently across the length and breadth of the country. There are national distributors, the platforms who have a large base of subbrokers or distributors who work very hard banks who sell-through their branches and relationship managers across the country and the fintech channel, which has done wonderfully well over the last couple of years in terms of bringing new investors, particularly through the SIP route in last couple of years and of course they registered investment advisers while their numbers haven’t grown but as an industry, they also continue to work with the regulator and all of us to have increased and their reach over a period of time and there is room for all of them to grow.
And I’m pretty sure that over the next several years as penetration increases in India, all of these channels have a role to play.
Melwin Mehta
Thank you,. And are you expecting the RIs which are kind of more regulated at the moment and which are very, very light regulated. Are you expecting the MFBs to be regulated slightly more than where they are currently and RI is to slightly be reduced in terms of their compliance requirements,
Navneet Munot
That’s on the right way to put it. I think MFDs are also, I would say, well-regulated in terms of like adhering to the Board of Conduct and all the other business practices, which are guided by MP and of course, asset managers who deal with the mutual fund distributors. All of us are deeply focused that we have right set of practices in the industry . And RIA, as I mentioned earlier, that are smaller in numbers currently, but given the needs of investors over a period of time and with some of the recent changes in the regulation, I see tremendous scope for them to grow well.
Melwin Mehta
Yes, because only recently in my India trip got call from two insurance agents I just feel that the insurance agents are very, very lightly regulated compared to our industry.
Navneet Munot
I mean, it won’t be fair on my part to comment on some other industry.
Melwin Mehta
But in terms of — given that most — most people in this world are not kind of natural investors and there is an element of sales required, which I think the Indian — the insurance industry does very well and there I say even sell strong U-lit products. The industry seems to be regulated in very harsh terms, right
Navneet Munot
No, I mean, we have always mentioned as an industry that greater level of transparency, better disclosure as well, better, better customer-centricity is always good. I think we are managing somebody else’s money and trust is central to everything that we do and that applies to the entire ecosystem, whether it’s asset managers or our distributors or our advisors or everybody else in the ecosystem. For us, I mean, trust is central to the way we see growing this industry.
Melwin Mehta
Okay. Thank you very much.
Navneet Munot
Thank you.
Operator
Thank you. That was the last question. I would now like to hand this call over to Mr Monan for closing comments.
Navneet Munot
Thank you so much. We can close the call. Thank you.
Operator
Thank you. On behalf of HDFC Asset Management Company Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines