ICICI Securities Ltd (ISEC) Q2 FY23 Earnings Concall Transcript

ICICI Securities Ltd (NSE:ISEC) Q2 FY23 Earnings Concall dated Oct. 20, 2022

Corporate Participants:

Vijay Chandok — Managing Director & Chief Executive Officer

Ajay Saraf — Executive Director

Harvinder Jaspal — Chief Financial Officer

Analysts:

Sahej Mittal — HDFC Securities — Analyst

Nidhesh Jain — Investec — Analyst

Unidentified Participant —

Dipanjan Ghosh — Citi — Analyst

Prayesh Jain — Motilal Oswal — Analyst

Aejas Lakhani — Unifi Capital — Analyst

Bhushan Shah — Congruence Advisors — Analyst

Sanket Godha — Spark Capital — Analyst

Presentation:

Operator

Good evening, ladies and gentlemen and welcome to the Earnings Conference Call of ICICI Securities Limited for the Quarter Ended September 30, 2022.

We have with us on the call Mr. Vijay Chandok, Managing Director and Chief Executive Officer. Mr. Ajay Saraf, Executive Director. Mr. Harvinder Jaspal, Chief Financial Officer. Mr. Vishal Gulechha, Head, Retail Equities. Mr. Anupam Guha, Head, Private Wealth Management. Mr. Subhash Kelkar, Chief Technological and Digital Officer. Mr. Khaitan Karkhanis, Head, Digital Client Execution and Co-Head New Solutions Group. Mr. Nilotpal Gupta, Head, Data Science Unit. [Operator Instructions] Please note that this conference is being recorded. The business presentation can be found on the company’s corporate website icicisecurities.com under Investor Relations.

I now hand the conference over to Mr. Vijay Chandok, MD & CEO, ICICI Securities. Thank you and over to you, sir.

Vijay Chandok — Managing Director & Chief Executive Officer

Thank you very much. A very good evening to all of you and a warm welcome to the ICICI Securities Q2 earnings call for fiscal 2023. First of all, let me take this opportunity and wish you in advance a very happy Diwali and season’s greetings for the — to all of you and your families. So, I am sure. And I do hope that by now, you have already, by now you have introduced to our Investor Presentation which has been uploaded on our website. So, what I’m going to do right now is I’m going to start with a very brief highlights of the industry performance and what transpired there during this quarter.

And thereafter, I will take you through some of the key aspects and the final points of our performance during the same period. So talking about the industry first, as compared to the previous quarter in which the industry witnessed moderation across most parameters. I think there were some encouraging signs visible this quarter, so I’ll first highlight these encouraging signs. First and foremost, the if not trading activity continue to grow with the ADTOs, the average daily turnover was growing sequentially by 25% compared to 11% sequential growth that happened in the previous quarter.

The second positive point to take-away was that the cash volumes in this quarter was actually flat compared to the previous quarter halting a sequential decline after five quarters, so I think it’s a notable development in the industry. So the third point is what was observed is that the flows into SIPs from mutual fund, systematic investment plans for mutual funds continued to show an increasing trend and it actually grew 4% sequentially. So while these were some of the positive takeaways for the industry during the quarter. On the flip side, I’ll highlight a few points as well. So on the flip side, the newcomers, the new demand accounts that opened during this quarter continued to witness moderation in fact on a sequential basis, it declined by about 11%.

The NSE active clients for the industry declined actually by 2% — minus 2% sequentially and this is the first quarterly decline after more than three years. So NSE Active at the end of this quarter came in at a lower level for the industry compared to the end of previous quarter. The gross flows and equity and debt mutual funds also declined by 11% and 1% on a sequential basis. So clearly, these are some signs of slowing in the market. When it comes to ECM activities, equity capital market activity the fundraise showed a de-growth sequentially and obviously the reason for that was that the primary market activity remains quite weak amidst all the uncertainties in the marketplace.

Against this kind of a backdrop as you would have observed, our revenue for the quarter for ICICI Securities Limited grew 9% on a sequential basis and 1% on a Y-o-Y basis and came in at INR865.6 crores. The profit-after-tax increased by 10% on a sequential basis and came in at about INR300.4 crores. However, when you look at it on a Y-o-Y basis, it declined by about 14%. When you look at this Y-o-Y decline, you could attribute this predominantly due to our continued emphasis on the franchise enhancing spends which we are doing to harness the medium-term prospects of our industry.

The other notable point that I would like to talk about our financial performance is that the Board of Directors today and I have approved an interim dividend of INR9.75 per share. In the context of these somewhat uncertain market conditions, our company redoubled our efforts and continue to work on four key focus areas and I’ll take you on the nuances of the four key focus areas that this company focused on. The first important focus for us was improving market share across various areas of business. The second one was diversifying the mix of our revenue and intensifying the focus on the wealth franchise of the company. This was with a view to reduce revenue cyclicality in our business model. The third focus was on cost efficiencies without compromising on growth opportunities. And lastly the focus was on building a product proposition pipeline to be future-ready as the opportunity keeps unlocking for the various product propositions that we offer to the customers.

So I’ll now take you through each of these four areas and how things have played out. So coming first to the market share, we continued to witness some green shoots in the retail derivative market share and during this period it increased by 20 basis points and came in at about 3.7%. And I’m also encouraged to share that there was growth in all the underlying parameters of number of customers orders and so on and so forth. Our retail equity market share increased by about 90 basis points on a sequential basis and came in at about 10.6%.

We continued to maintain our leadership position with regards the MTF business. And in this area our market share improved further by about 60 basis points. And, now it stands at approximately 23%. The commodity trading segment for us seems to be performing again in an encouraging way and we continue to gain market share there. For the end of quarter one, the market share was at about 4.4% and I am happy to again report that this is increased to 5.5% in quarter two FY 2023. With regards to incremental DMAC market share for this quarter we increased our share from 6.5% to 7.6% sequentially.

So while we have gained market share on most of our parameters, our NSE market share actually marginally declined by about 20 basis points during this quarter and stood at about 8.2%. In this context we continue to guide you not to look at this NSE Active market share parameter on a standalone basis. And our performance in this quarter is a testimony to the as we saw growth in revenues and gaining market share in the context of what NSE Active market share came in as. We continue in this on the subject to focus on acquiring better-quality clients as we move forward as well.

Coming to our second area of focus which is diversification of revenues. Reducing cyclicality has been an important part of our strategy and we’ve been stressing on that time and again. Quarter despite the cash ADTOs falling by 21% and the capital markets being muted in the current quarter as compared to the corresponding current quarter last year, our revenue actually grew by 1% on a Y-o-Y basis. I think this outcome is pure testimony to our continued focus to diversify and texture our revenue base. You would recollect that we have been focusing on scaling up MTF prime increasing distribution revenue from multiple products that we have been systematically adding over-time. And strengthening of our derivative proposition which tends to have a less cyclical behavior as compared to cash and sharpening our focus on wealth franchise, which also tends to display a much more sticky behavior.

So going-forward as well we will continue on this journey of diversification of our revenue and focusing on generating multiple sources of revenue with meaningfully contribute to reduce the proportion of cyclical component, so the cyclical component in our revenue which is now only cash broking and the capital markets business. Since I specifically mentioned to you about our wealth franchise, I will like to highlight the scale and strength of this franchise. Just for your reference any customer having an AUM of more than INR1 crore with us is classified as a wealth customer.

While this segment existed for a long-time it was actually three years back in 2019, we made this segment a key focus area and pivoted for amount product-centric customer organogram to customer-centric coverage organogram and we accordingly aligned the KRAS of the leadership team. We increased our offerings in this segment to capture the entire financial ecosystem relevant for these wealth customers and also added our proprietary portfolio management schemes. You would also recollect over-time we’ve added products like Masters of the Street, Premium Portfolios, Retirement Solutions, Ease of Finance, Margin Trading Facilities and more recently even loans through our partners to the existing booklet of products which we offer to these wealth customers.

Our efforts have started yielding results and I would again be encouraged to highlight to you that we have today become a significant wealth franchise in the country. The qualifying AUM of customers for us now has crossed INR3 trillion during this quarter. As we have grown this customer this segment through our customer-centric strategy, we have witnessed some very interesting customer behavior which I want to share with you. The first point that we have observed is that the AUM and revenue persistency of this segment is much higher as compared to the other segments and it is demonstrated by the fact that the average customer retention rate at the end of one year is 98% with — and when it comes to average AUM and revenue persistency, it is actually 120% and 111% at the end of one year. This is calculated by taking the average of one year a retention across seven periods starting from financial year of 2015.

So clearly a high persistency business when it comes to customer, when it comes to AUM and when it comes to revenue. Secondly, we have also observed that the AUM revenue and ARPU of these customers in the wealth segment actually increases with vintage. So as the customer continues to stay with us, more-and-more ARPU start coming from these customers and that’s a trend that we have also observed in this segment. The third nuance that I want to highlight about our wealth business is that there is a reasonable secular trend of customers who have an AUM of just under a crores of rupees and many of them are breaking into the INR1 crore AUM club and becoming part of our wealth franchise.

This along with our new customer acquisition that the wealth management team does has today given us the ability to add anywhere between 1500 to 3000 customers to the franchise of our wealth business on a quarterly run rate basis. Having spoken about the second point which is diversification of revenue mix and our wealth franchise which is adding greater stickiness to our total business model. I’ll now shift to the third area of focus which is with regards to our cost. So cost for this quarter has actually increased by 8% sequentially and by 20% on a Y-o-Y basis. And in-line with our broad guidance our cost-to-income ratio has been flat. The increase in cost is mainly on account of the finance cost which is linked with the MTF business which has actually increased. Employee cost-related to the areas where we are adding helped in our manpower strength and also some technology costs.

As we move forward, we just wanted to assure you will continue to look at costs in a judicious manner so that we don’t miss out on any of the growth opportunities and franchise enhancing opportunities and at the same time run it efficiently to keep, keeping in mind the impact on our P&L. Finally, the fourth point that we focused on during this period is about the product launches and the initiatives that we have done to continuously modernize and make our platform, make our app future ready.

And in this context, there were some very, very interesting developments during the quarter which I will highlight. The first one is that we launched a product for our traders. The derivative segment a product called Flash Trade. There is no such equivalent product in the industry today and it has been very well received on our platform and we are shortly looking to launch the same version of it on our app.

The second interesting product was a launch of our integrated watchlist, which enables customers to look at all kinds of asset classes under one screen and provides a single-screen trading experience on our website. Again, this is a fairly unique proposition for ICICI Direct to offer to its customers. We also launched something called the Smart Order tool. This Smart Order tools enable customers to place order-based on rules and these rules, which can be set by the customer and executed at the swipe offer smart on-screen. Also, happy to share with you that during this quarter we soft-launched our Super App.

This Super App integrates all products offering that we do. Equities, ethanol, currency, commodities, mutual fund, insurance products, global investments and very shortly loans all of them in one place to our customers. During this quarter we also entered into an exclusive partnership with IDFC First Bank to offer three in one broking services, a service which is which is very similar to what we do with ICICI Bank, so we’ve added one more bank as a partner during this quarter. And the service has now been launched in the marketplace. As far as our issuer and advisory business is concerned, we have a strong pipe — IPO pipeline of about INR54,000 crores spread across 28 deals.

In addition to this we also are running 16 approved mandates where the amounts of the IPO is yet to be decided. We are optimistic that as and when the market sentiments improve many of these deals will be executed as quite a lot of them are in a ready to launch kind of stage. Having said that I would say that as we move forward the very short-term near-term outlook remains uncertain, considering the rising inflation, the interest rates, the geopolitical tensions all of us are aware of all these factors. However, despite these short-term uncertainties we continue to believe strongly that the medium-to-long term growth story of the industry remains actually very strong and our key focus areas. As we continue to pursue these opportunities will be number-one to gain market share across products like derivatives equities mutual funds, insurance and loans.

Number two, to diversify our revenue stream by reducing proportion of revenue from cyclical components and grow our wealth franchise, which offers stickiness and helped to the business model. In-line with our approach to enriching our disclosures we have added some more information this quarter which pertains to derivative and cash broking revenue split. This is available in our presentation. Some of you might have already noticed it. We also have given data with respect to the number of customers who do MTF with us. And we’ve also enhanced the disclosures that we do with respect to our wealth franchise all available in our investor presentation.

I’m going to now end this commentary and open the call for any questions that you may have. Thank you so much. Over to you.

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 Sahej Mittal from HDFC Securities. Please go ahead.

Sahej Mittal — HDFC Securities — Analyst

Hi, good evening, everyone. Thanks for the opportunity.

Operator

Mr. Mittal, sorry to interrupt you. The audio is very low from your line.

Sahej Mittal — HDFC Securities — Analyst

Is it better now?

Operator

Yes, sir. Please proceed.

Sahej Mittal — HDFC Securities — Analyst

Hi. Yes, so a couple of questions from my side. Sir, firstly. I mean what is your outlook on the option volumes given the pace of growth in the industry. How sustainable do you think are these volumes. That would be my first question, and maybe then I’ll follow-up.

Vijay Chandok — Managing Director & Chief Executive Officer

Yes, thank you, Sahej. Well, if you look at Fast as an indicator of what’s happened to volumes. I think it’s been a secular growth trend not just quarter-on-quarter but for several years now. Having said that we do not want to double gets the movement of how options will happen from here onwards. We are very clear. It is one of the important line items. It’s an area of importance and focus cannot be we have been a late started in this space. We will — we have started investing through tools apps, experiences and products, plans and we continue to press the lever very, very hard to gain market share there. We are very clear we are not a one-horse pony, one tail pony. as you call it. So, we will focus on multiple products across the spectrum of financial services that we’ve been highlighting which is across savings investments as space segment one. Obviously, being part of that the protection insurance basis number two and the loan distribution space number three, so we will prefer pedal on, all these three baskets of opportunity.

Sahej Mittal — HDFC Securities — Analyst

I mean, deep diving on the option side. I mean if you could give us some color around the retail customers so what is the median size of the order and options in terms of the number of lots in a single order and how does it trend maybe in a bull market or when markets fall down so because the option volumes have continued to improve so but is there a trend in terms of the number of lots or the order size. How the retail investors actually trade-in the market. For example, like most customers trade more than three lots in order or something of that sort — the medium-size.

Vijay Chandok — Managing Director & Chief Executive Officer

Yes. So hence we have not disclosed the number of lots etcetera in every order. focus largely on increasing the customer-base for each and every product and so as for the derivatives also. I can say that this quarter. I mean we did reasonably well and touch ever, yes, number of customers in derivatives and other two metrics is like number of orders. As well as the total volume was on a higher side. So, these are the important parameters and then of course market plays a very important role. I mean the entry and exit given.

The volatility also plays an important role because that besides the premium that the number of lots is again a derivative of the premium which is started in every lot in a volatile time the premium goes up and that is where customer will be able to buy less and stable period the P&L and more number of lots can be bought. So. I mean the focus clearly is on increase in the customer-base using all kind of enablers us like Flash Trade, the Integrated Watch List, New Margin Products which we have introduced and we will continue to focus on that. So, we will keep increasing our disclosures from time-to-time as we enriched our disclosure the statement well, but let me just address one just point. I don’t know if you’re what you trying to drive at our derivative business is fairly granular. It’s not concentrated if that’s what you’re trying to understand.

Sahej Mittal — HDFC Securities — Analyst

Got it. But sir, I mean some sense on the order size if you could give because given the kind of increase of the derivatives in the overall broking, right? It is very important being a broking company if we track a broking company to understand the size of these orders, right? Even from the customer behavior point-of-view that if these customers are coming from the tier two, tier three cities.

Vijay Chandok — Managing Director & Chief Executive Officer

Yes. I’d just like to clarify we don’t view it as a broker please. We are not a broker, we are also we also do equity business, we are far more broad-based equity business if I’m not this quarter would be about broking would be just 40% and a large reasonably large proportion of that is derivative. So it’s increasingly becoming a small part of our business. We are actually broad-basing to become a financial services player, so just request you to consider as context but coming specifically to your question.

Ajay Saraf — Executive Director

Yes. So I think Vishal, I’ll clarify. Vijay also referred to the fact that we have slightly granular kind of a franchise having said that. I mean of course whether you look at lots or whether you look at ADTOs or number of orders our sense is that. There is a lesser linkage to-market cycles on derivative if you look at the correlation compared to cash equity and, that’s why I think over a long period of time we have seen growth. So I think whatever parameter you look at it whether lots or orders or this thing. I think the trend is similar. I don’t think we find any different trend. Also incrementally as you rightly said a lot of customers are coming from tier two-three towns. They are joining this. Our aim is to kind of how to simplify their experience, we’ve launched a couple of products in this light in this quarter which we have mentioned. And that helps us in-kind of simplifying the experience and making it relevant even for the young new to-market new joining, so that’s our approach.

Sahej Mittal — HDFC Securities — Analyst

Got it. And just to get some sense on the employee expenses on which side of the business are we hiring them on manpower.

Ajay Saraf — Executive Director

Yes. So, the manpower so it is being largely technology is a big, big zone. Second is data sciences. Third is digital marketing. Fourth is certain rules which require supporting digital. So, we’re digital journeys drop-off. Vijay to come through Colin activity and then getting we’ll be back on-track. So broadly I would say, these four areas.

Operator

Thank you, Mr. Mittal. We request that you return to the question queue for follow-up questions.

Sahej Mittal — HDFC Securities — Analyst

Hello?

Operator

Yes, Mr.Mittal, request you to ask follow-up questions, please.

Sahej Mittal — HDFC Securities — Analyst

Just one last quick question maybe so, sir. I mean on the penalty charges under the peak margin regulation so have we provided for it or have you paid. I mean there were some regulations from the NSE.

Harvinder Jaspal — Chief Financial Officer

No. So, actually in our kind of what we do is we collect any kind of upfront penalty prior whatever penalties whatever margin is required to be collected before placing the order is collected only then an order can be placed so we have very strong processes in-place. So therefore, that may not be relevant for us in terms of getting a penalty on upfront margin. Yes, I understand that in the industry there is a lot of discussion happening, but at least from whatever the applicable surplus our we have been complying with them and therefore no such provision.

Sahej Mittal — HDFC Securities — Analyst

So, we haven’t collected any penalty charges from the customer is that right?

Harvinder Jaspal — Chief Financial Officer

As I explained in our case if you’re talking about surplus, it says that no upfront penalty can be passed on. In our kind of a module, we collect the margin before the client places an order, we do not have a scenario where a client can place order without giving the margin prior to placing the order so we do not have that scenario.

Operator

Thank you. Mr Mittal, may we request that you return to the question queue for follow-up questions. [Operator Instructions] The next question is from the line of Nidhesh Jain from Investec, please go ahead.

Nidhesh Jain — Investec — Analyst

Sir, thanks for the opportunity. Then the question is bulk franchise. So, when the customer process with us how the life for the customer and how our approach to the customer changes that is first question and second is how many of the customers that we have added on the bulk franchise of, 300 has come our distinct to high tech customers and how much of the new customers try tech.

Unidentified Participant —

Yes, hi, this is Anupam here. I had the factors. So. The moment our customer crosses INR1 crore. Obviously, we have — as you are aware that private will have close to 500 odd team members and we have a very seasoned the relationship team as well. Our entire model of engagement is an omnichannel model. We while we have the ICICI Direct platform being available but we have a relationship manager, who handles the customer. And the way we look at our entire practice that we focus on getting more clients into our ecosystem and really engage on an asset allocation model. The way we approach is that and the metrics that we would want to look at is are we growing the overall AUM. And once we have the AUM which is nothing but share of wallet and the trust of the customer then this is the market scenario, we are able to advise recommend the customer across the asset classes. One of the other things in fact Vijay in his opening comments you also spoke about is really the proposition that we have enhanced to make customers so if you were to look at the proposition on equities, we have direct equities we have managed equities through mutual funds, PMS, AIF both category three long-shot. Private-equity on the fixed-income right from government securities at one end to mutual funds and the other, global investments offshore. So we’ve got almost the entire work. And we are really able to engage with our customers right from wealth creation preservation and all the way approval wealth transfer so that’s really our model like classical private banking the way we do.

The only thing is that as a franchise, we have almost 70,000 customers, 70,000 -plus crores plus and then it really is the differentiator, which really makes us unique. The other thing — the other question that you spoke asked was really about the new to ISEC. So what’s happened is that obviously the franchises, 20 year old ICICI Securities 20 years plus. And. We have a lot of clients whom we’ve not been able to deeper mine. With data analytics now what’s happened is that obviously we are able to get many surrogate data which actually allows us to know the net-worth of the customer and hence our approach and our engagement is far more sharper and which is why you’re able to see the kind of trend and growth in terms of the count of customers that we, have been able to add. So it’s a combination of both upgrades improving our engagement sharp shooting and new client acquisition as well.

Operator

Thank you, Mr. Jain. I may we request that you return to the question queue for follow-up questions. The next question is from the line of Dipanjan Ghosh from Citi, please go ahead.

Dipanjan Ghosh — Citi — Analyst

I hope I’m audible. Two questions from my side. if. I look at your and look at it more from a vehicle perspective it seems to have whereas for the industry by understand it has increased significantly if you can shed some light. My second question…

Vijay Chandok — Managing Director & Chief Executive Officer

Yes, no; properties — we’re poised — very clear your voice is very muffled. Can you just repeat your question. It’s not clear, sorry.

Dipanjan Ghosh — Citi — Analyst

Is this better?

Vijay Chandok — Managing Director & Chief Executive Officer

Yes. Maybe are very close to the receiver or something just recede a little back and speak.

Dipanjan Ghosh — Citi — Analyst

Sure, just give me one.

Vijay Chandok — Managing Director & Chief Executive Officer

Better, now better. Yes, now I can hear you.

Dipanjan Ghosh — Citi — Analyst

Yes. So for my first question I was asking if. I look at your FYP slows that seems to have dipped Q-o-Q if you can give some color on that because for the industry, from what I understand it increased. Second, on your other distribution revenues that has also seen some amount of moderation during the quarter. And lastly if I look at your insurance deals that seems to have gone down so is it like the overall increase in volumes was led by more of non-life for it’s actually sort of products out there so, these are the, three questions.

Vijay Chandok — Managing Director & Chief Executive Officer

Yes. So, let me take one-by-one. So on SIP, it has been our flows have been stable at about INR400 crores to INR420 crores so that has been the run rate that there have been operating at. Today we have about one million SIPs operating on a monthly basis which are live, which keep getting triggered. In the industry if you look at it. I mean we be probably the fourth of the largest players in terms of flows. Yes, on a quarter-on-quarter basis there could be some variation, but. I think with respect to both the competitive position the absolute number of SIPs getting triggered and the flows. It has been relatively stable so nothing really much to highlight over this.

Your second question was with respect to the other distribution revenue. The other distribution revenue on a sequential basis there were two reasons primarily. One was on in terms of the distribution of some of our PMS, AIF and centric products. There was a relatively lower distribution fee in this quarter because last quarter we had reasonably high fee over there. So that was one reason. The second reason was that some of the IPO distribution fee was there last quarter which was relatively lower slightly lower this quarter so, these are the two predominant parameters. Actually, the two things that have actually gone up on a sequential basis is one is the dual business where if you look at it our loan disbursal for the quarter has now started touching almost INR900 crores, so from about INR600 crores run rate this quarter of about INR900 crores.

So this product actually did well in this quarter sequentially. The second product which did well was the fixed-income basket. There also we have seen sequential growth and some money which has started coming into the fixed-income bucket. Your third question was with respect to yields on insurance business so there also on a sequential basis as well as on a Y-o-Y basis we have registered growth in insurance income. The yield one is parameter of mix both two types of mix. One, the mix between new business and distribution and renewal. And second within new business there is a mix between Unit-linked versus the not-linked.

So, these are some of as it is in that range so new business. The yields are in the range of about 20 odd percent and the renewal is as we know is relatively lower so it’s more of a mix impact but this business registered a growth both on sequential and as well as on Y-o-Y basis. Thank you, Mr. Ghosh. May we request that you return to the question queue for follow-up questions. The next question is from the line of Prayesh Jain from Motilal Oswal. Please go ahead.

Prayesh Jain — Motilal Oswal — Analyst

Yes, hi. Good evening, everyone. Just extending the previous question. On the SIP we had as one of 13.2 billion in 4Q and we are down to 11.9 billion now in this quarter. The testing to the sharp fall against that and this is completely against the industry trend, wherein we have possibly much higher from what we were there in Q4 for the industry. I think that this could you explain that as to what really is different happening with ISEC as compared to the rest of the industry. Secondly, our on the brand income fee while these possibly seen for the first time but a sequential dip. Any thoughts there as to what’s the trajectory and what why is the dip. And lastly any thoughts that you can share on the cost-to-income ratio of this one crore plus kind of clients that you were talking about in terms on the wealth side, what kind of profitability here on these clients and those would been three questions.

Vijay Chandok — Managing Director & Chief Executive Officer

Yes, Prayesh. So I’ll again take one-by-one. So the first one is on the SIP as I said I mean, yes, about INR1,200 crores is the number for this particular quarter. It was slightly lower than last quarter. First, I would like to context is said earlier also by saying that in terms of both number of SIPs and in terms of flows it continues to be above INR400 crore-plus one million SIPs, however there was some impact on account of transition of the new regulatory direction whereby the payment has to be directly made instead of through the pool account. So we have kind of had some transition issues which impacted since for a limited period of time but as I responded earlier in terms of run rate I mean that resulted in some pauses if the payment instruction did not get executed, which has got revived we have kind of specifically engaged and revived those.

So there was a transient impact, which impacted the flows but there is nothing specific to highlight structurally on the SIP. We continue to be — I think the fourth or the fifth-largest player in the country in terms of incremental flows into SIP. That was with respect to SIP. I missed your second question pressure. I’ll come back to that. Sorry.

Yes, so this second question was that why there is a dip in prime fee in this quarter, so as that we have made plans lifetime plans so there are less inwards because all the plants about 999. Now carries a lifetime value but the focus clearly is on getting more number of customers using this kind of properties so we have increased our sourcing in 999 and above plan and as that when we get the prime customer prime fees only one small component overall ARPU which we generate. So large focus is on to get the complete wallet share, which includes the brokerage part, the MTF and many other incomes through other products.

So that is the single reason but in terms of number of plans. I think we have done reasonably well and more number of plans in Q2 in comparison to-Q1 as far as high-value is concerned. If I may come to the third question that you asked with respect to the cost-to-income for the wealth business so if you refer to our presentation on slide 33 and 34. You will see that those details disclosed. And I’ll just kind of read-out the numbers so now full-year basis if I look at fiscal ’22 our cost-to-income for the wealth franchise business whilst 45%. And for the Q current quarter which is Q2. It was 54%. It is broadly in-line or and then just broadly in-line with the trajectory that we have seen at the company-level for the reasons that we have articulated.

I would like to kind of highlight over here is that this cost-to-income the way we disclose is are all on a gross basis, which means that if I haven’t MTF income. The interest income is also gross in the revenue and interest expense is also included in the cost. If for example if you were to remove this impact and say that NIM as revenue then the cost-to-income ratio would be slightly lower at maybe about 48% for Q2.

Operator

Thank you. Mr. Jain. May we request that you return to the question queue for follow-up questions. The next question is from the line of Aejas Lakhani from Unifi Capital. Please go ahead.

Aejas Lakhani — Unifi Capital — Analyst

Yes. Hi team, congratulations on the results your efforts are helping gain market share and thank you for the additional disclosure. My first question is that in the journey of migrating the customer true prime where he is paying a lower brokerage and thereby still being retained. And that has impacted of course the absolute cash brokerage revenues where are we in that journey so has that migration that you wanted from prime already taken place or still there is scope and the reason, I asked this is because your absolute cash revenues are down say from 1.80% second-quarter last year to about INR108 crores this year. So where are we in that journey of migration.

Vijay Chandok — Managing Director & Chief Executive Officer

Yes. So see, as far as prime is concerned all the plants are open for the entire set of customers, so there is no selective selling which is happening. We do market prime clients across all sets of customers and the objective is not to look at one quarter in particular. I mean the entire purpose of the prime is to get customer for lifetime and if you can help us managing the attrition better getting the revenue better, making him take many other products which we sell and also if you can help us in acquiring more customers for market activate our non-traders and stop traders. I think, overall, things are working well for us and it is reflected in our MTF book it is reflected in equity market share and many other parameters, so we don’t look at it what are the other this is a very long-term game mid-term to-long-term and dividend side definitely visible now.

Aejas Lakhani — Unifi Capital — Analyst

Okay. I was just trying to that — that will this cash. Cash segment income that we’re sort of receiving given that ADTOs remains the same. Is there any more migration left because of which we may see a decline in this or is this the base from which you expect cash segment level income to keep going up.

Vijay Chandok — Managing Director & Chief Executive Officer

Yes. So I would say the large migration has already happened. I mean as I said that the plan is opened a fairly long-time now and even the lifetime proposition is open for customers. It had been second-quarter. So large part of the migration is already well, of course customers from time-to-time they enter in a lower-value plan to start with and then has the experience their own potential they experience the market opportunity, they keep upgrading so that will continue. But as far as inventory is concerned, I would say that the large migration has already taken this moderate that aren’t going.

Aejas Lakhani — Unifi Capital — Analyst

First question — second. Sir. how do you think I should look at client additions for the rest of the year.

Vijay Chandok — Managing Director & Chief Executive Officer

Yes. So if you look at new client additions, we are broadly in the ballpark of around for 54 like 60,000 customers per quarter. While obviously it will depend, you can see that the market has been showing a declining trend sequentially now from quarter-four versus quarter one versus now quarter to each quarter has been lower than the previous one. That’s why I said short-term headwinds remains. Our endeavor would be to broadly keep our market share in this story impact new customer addition. So to some extent it would be fair to say that we will. Numbers will depend on what’s the number of new comers coming into the market. Broadly, trying to maintain this kind of a run rate market share that we have which is broadly in that seven which varied between 7% and 7.5%. So our endeavor would be to keep it somewhere there. Yes, I mean we are not we are not chasing new customers for the sake of numbers we are chasing for the sake of quality so certain channels and the quality surrogacy indicator channels.

There are certain channels where it is very nice and certain channels where we get numbers, which are not so nice so. I think numbers is one part of the story but the channel mix is important for us in last few quarters, we’ve been putting massive emphasis on getting the right channel mix better. And I think there is some green shoots visible in that effort get your channel mix right numbers on a standalone basis if you chase then you will find some growth in one story and then nothing really will transpire revenue since.

Aejas Lakhani — Unifi Capital — Analyst

Got it. And sir, these investment and trading income and other revenues this quarter has seen quite a big so could you just comment on how we should look at it from a trajectory perspective for the next two quarters. Is there a one-off and how should we look at-cost to income?

Vijay Chandok — Managing Director & Chief Executive Officer

Yes. So it just two things treasury, yes, we had a good quarter this time. I mean the kind of positions that were available opportunities that were available in the market we were able to leverage that so it was one of the better quarters that we had in treasury. They’re primarily gave out of the mark-to-market and the investments that we’ve done in debt instruments. That I would not say it would be kind of you cannot used whereas our sustainable run rate. We could see some moderation in Q3, Q4 in the treasury income the trading segment income. On the second part other income, yes, there was. INR5.7 crores worth of interest that we got on prior income tax refund. So we got decisions in our favor which is what we have if you look at our performance note, we’ve mentioned that reasons so, about INR5.7 crores out-of-the other income that you’ve seen is a one-off for the particular for this quarter.

Operator

Thank you, Mr. Lakhani. May we request that you return to the question queue for follow-up questions. The next question is from the line of Bhushan Shah from Congruence Advisors, please go ahead.

Bhushan Shah — Congruence Advisors — Analyst

Hi sir, one question. What value we have paid to multi for acquiring the whole team and. So for that —

Vijay Chandok — Managing Director & Chief Executive Officer

Sorry, your voice has faded out. Can you just repeat your question?

Bhushan Shah — Congruence Advisors — Analyst

Yes. Now am I audible?

Vijay Chandok — Managing Director & Chief Executive Officer

Yes, audible.

Bhushan Shah — Congruence Advisors — Analyst

Yes. So what we have paid to multi-pay for the acquisition.

Vijay Chandok — Managing Director & Chief Executive Officer

So, we have not put that out so principal two principal transaction that we did a bilateral transaction but it’s nothing very material is guidance I can give.

Bhushan Shah — Congruence Advisors — Analyst

Okay, thank you so much.

Operator

Thank you. [Operator Instructions] We have the next question from the line of Sanket Godha from Spark Capital. Please go ahead.

Sanket Godha — Spark Capital — Analyst

Thank you for the opportunity. Sir, I just have one question with respect to how the mix with respect to any differently ESOP book is playing out. We see that in the current quarter despite MTF book increasing development. I mean this is wanted to understand because if it calculates the investment yield interest yield on the MTF book it comes to closer to 9%. But the MTF income has come off a bit maybe because of the — but just wanted to understand the particularly how the moving over last two-three quarters.

Vijay Chandok — Managing Director & Chief Executive Officer

Yes. So, two things over years and get one on a quarter-on-quarter basis the average book is actually slightly lower from Q1 to Q2 the exit is higher but the average is slightly lower. However, on NIM basis we depending on what are these are we get about 3% to 4% as NIM. Currently, I mean as you rightly said it’s about at 9%, 9.2% would be the gross and our cost of borrowing would be in the range of let’s say about 5.5% to 6%. So 3% to 4% it kind of varies in that range. But that range you did compress Harvinder because just wanted to understand given we have gained performance of market share from in last two years by 350 basis points so whether within this market share gain came at the expense of little margin compression.

Harvinder Jaspal — Chief Financial Officer

So, yes — so, I get marginally because obviously there is always a lag where you make pricing adjustments. We have increased recently our pricing where we have gone from let’s say the best plan that we had used to offer a pricing of 7.9%. Now the best plan for the pricing of about 8.11%. So, those are some changes that we have done recently we’re which I think for a full quarter the impact would not be visible but that is would go up going-forward but yes for the quarter on average there was a minor competition.

Sanket Godha — Spark Capital — Analyst

Got it. And the last one from my side given you how the disclosed the first time the broking income broken-down into cash and derivatives for the retail segment. Sir, just if I and I see that the cash yields, it will come down from 9.4 point is which on the business and it has remained flat on a sequential basis. This compression because we are still on a basis still is it largely because of the prime and prepaid. And the seven point it is the kind of bottom need to see going ahead. Assuming that in Saudi and intraday and delivery broadly remained similar.

Harvinder Jaspal — Chief Financial Officer

If you make that assumption yes so Vishal tried to explain that in response to an earlier question as well thank you that today we have substantial migration to plan which has happened. We launched towards the end of Q4, we launched these lifetime variants that was in March. So Q1, we have seen round off, people who opted for lifetime variant which also tend of stabilize so if the mix is constant there may be some. I mean I would not say that it’s absolute zero, there may be incremental migration but I don’t expect that to be substantial going-forward. In terms of our revenue contribution also you would have seen that for the last four quarters the prime revenue contribution has stabilized at about 70% to 78% of our overall portfolio so we expect stability over there. Again, the assumption I’m making and as you started with that the mix of intraday and delivery remaining similar.

Sanket Godha — Spark Capital — Analyst

Got it, perfect. And finally, has been seen a bit tougher better traction in the derivative segment sign that we have seen market share in sync up EBIT. So now still it is 3.7. Any number you have in your mind by end-of-the year what you want to test our aspiration working how have maybe in next four to six quarters with respect to derivative market share.

Harvinder Jaspal — Chief Financial Officer

No number in mind for as the guidance we have a number in mind or the internal guidance for sure.

Sanket Godha — Spark Capital — Analyst

Okay. But can we expect the 3.7 to incrementally improve product. Maybe, it can go beyond to those numbers in 1Q FY 22, it was around 0.2. So can we expect that number to come.

Harvinder Jaspal — Chief Financial Officer

So, if I would be in your place, I would expect an improvement.

Sanket Godha — Spark Capital — Analyst

Okay, sir. Thanks. That’s it from me keep in.

Operator

Thank you.

Vijay Chandok — Managing Director & Chief Executive Officer

You can tell is there a question being asked.

Operator

So we have the next question from the line of Benoit Bank [Phonetic], an Individual Investor. Please go ahead.

Unidentified Participant —

Thank you for the opportunity, sir. So. I have more broad-based question like if we see the comment of recently from zero that he has said that you do a regular showing that performance of settlement periods. They say that they may pillar upward pressure on the brokerage. I understand that ICICI it doesn’t this present with us for us there upon one of in in ICICI remains ICICI. Clients are a three he does. Great. So, if there is upward pressure on the brokerage just so it will inherently benefit us because we are already at very established with sector.

Vijay Chandok — Managing Director & Chief Executive Officer

Yes. So what is your question?

Unidentified Participant —

My question is that if there is a pressure on both brokerages. It will indirectly benefit us view you should be able to gain much high markets are very pressure Andres [Phonetic] Lopez now coming.

Vijay Chandok — Managing Director & Chief Executive Officer

No, certainly if there is an — as per what you just said, yes, I also so that we if there is an upward pressure and there is indeed an actual translation of that upward pressure in terms of discount brokers increasing brokerage, it certainly makes us more competitive in the marketplace so that should be a plus for us. So we have nothing to lose with an increasing and everything to gain and an increasing brokerage scenario from the discount brokers side.

Unidentified Participant —

But we don’t feel the cost pressure right now and because of the subjects we are also may have been in the future.

Vijay Chandok — Managing Director & Chief Executive Officer

No. You answered the question because we do not actually keep the floor. I mean predominantly as you correctly pointed out. We have a block model and not really are. Model of float the float Model is there only for a few plants, which is a very minuscule part of our overall story and we also found that the money that came back within a short period of three days virtually the entire money in fact but money has crossed the money that went out in those specific accounts. But having said that to your question the only observation I will give is that right now. I think SEBs having circulated discussion paper. This discussion paper on the asthma model kind for secondary market now if something like that comes. I think that will have a meaningful impact on the float opportunity for discount brokers and that could be a very material. I would be. I would say that would be a more significant pressure point on discount brokers then the current regulation.

Unidentified Participant —

Okay, sir. Thank you, sir. Just one more thing is that. Thank you for conducting this. Hong call during times thinking sort of afternoon or morning most of the players do that and as either it was it be may not be able to join the call I. due to keep following this model. I don’t know following this but, in the future, also for this. Thanks.

Vijay Chandok — Managing Director & Chief Executive Officer

Thank you. I appreciate it. All the best to you. God bless. Thank you.

Operator

As there are no further questions from the participants. I would now like to hand the conference over to Mr. Vijay Chandok for closing comments.

Vijay Chandok — Managing Director & Chief Executive Officer

So, thank you very much for hearing our Emeritus [Phonetic] patiently and also the questions that you asked in case there are any follow-up questions are unanswered questions in your mind please, do not hesitate to get-in touch with us. We’ll be happy to address or any questions that pop-up in your minds. You know whom to contact. All of us are available in the IR team, myself.

So, look-forward to hearing from you keeping in touch and wish you all a very, very Happy Diwali. Take care and stay safe. Thank you very much, and good night.

Operator

[Operator Closing Remarks]