Motilal Oswal Financial Services Limited (NSE: MOTILALOFS) Q3 2025 Earnings Call dated Jan. 29, 2025
Corporate Participants:
Manish Kayal — Head Investor Relations
Navin Agarwal — Group Managing Director
Unidentified Speaker
Shalibhadra Shah — Group Chief Financial Officer
Analysts:
Uday Pai — Analyst
Vivek Ramakrishnan — Analyst
Abhijeet Sakhare — Analyst
Manan Mundra — Analyst
Umang Shah — Analyst
Dipanjan Ghosh — Analyst
Avinash Singh — Analyst
Sanil Desai — Analyst
Lalit Deo — Analyst
Sanjaya Satapathy — Analyst
Mahek Shah — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Q3 FY ’25 Earnings Conference Call of Motilal Oswal Financial Services Limited.
As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded.
I now hand the conference over to Mr. Manish Kayal. Thank you and over to you, sir.
Manish Kayal — Head Investor Relations
Thank you, Reyo. Good afternoon, and a warm welcome to all the participants to Motilal Oswal Financial Services Limited earnings call to discuss the results for Q3 and nine months FY ’25 period. I’m Manish Kayal I look after Investor Relations in the firm. We hope that you have got an opportunity to go through our investor deck and the press release uploaded on stock exchanges yesterday and also on our website. We have also uploaded the Excel data book on our website that has the operational and financial numbers.
Before we proceed with this call, please note that the — today’s discussion may include forward-looking statements and these forward-looking statements are tentative based on current analysis and anticipation of the management. Actual results may vary and subject to risks and uncertainties that could impact future outcomes and includes volatility in the securities market, economic and political conditions, new regulations, government policies and volatility in the interest rates that may impact our businesses. We encourage you to consider these factors when evaluating our performance.
On today’s call, the company is represented by Mr. Raamdeo Agarwal, our Chairman; Mr. Motilal ji Oswal, Managing Director and CEO; Mr Navin Agarwal, Group Managing Director; Mr. Ajay Menon, CEO of the Wealth Management business; Mr. Prateek Agarwal, MD and CEO, Asset Management business; Mr. Ashish Shanker, CEO of Private Wealth Management; Mr. Sukesh Bhowal, CEO of Home Finance — Housing Finance; Mr. Shalibhadra Shah, Chief Financial Officer.
We’ll start this call with an opening remark by Navin and then we’ll have a Q&A session.
With this, I now request Navin to start the call by sharing his thoughts. Over to you, Navin.
Navin Agarwal — Group Managing Director
Good afternoon, everyone. It is my pleasure to welcome all of you once again to our earnings call to discuss the corporate performance for the quarter-ending December of 2024.
I will start by highlighting some of the Group level achievements and then go down to the segment-wise business performance. As of December of ’24, Oswal Group has crossed a major milestone by servicing more than 10 million customers comprising of 6.8 million unique mutual fund folios and over 4.7 million unique broking accounts, putting us in a very leading position in both the business — businesses that we operate. Our operating revenue for the 3rd-quarter was at INR1,345 crores, which is up by 43% year-on-year and our operating profits after taxes were at INR525 crores, continuing the strong growth trajectory that we have been reporting for the past quarters at 38% year-on-year.
Our assets under advice crossed the INR6 lakh crore mark, which is up by 62% year-on-year. Annual recurring revenues as a percentage of the Group revenues are well over 50% and at 56% for the 3rd-quarter. Our fee-based revenue contribution to the total revenues increased from 30% in the same quarter of last year to 41% in this quarter. Our net-worth as of December 24 stood at INR11,569 crores. This is up by 40% year-on-year and our annualized return-on-equity stands at 36%.
Based on the strong operating profitability, the Board of Directors have decided to distribute an interim dividend of INR5 per share to our shareholders. Last year, our interim dividend was also the full-year dividend. And as you can see, we have stepped-up the dividend in-line with the growth in the profits of the firm. Turning to the segmental performance, our wealth management business comprises of retail broking business, the distribution businesses as well as NII income. Our total assets under advise in the wealth management business grew to INR3,88,000 crores, up by 67% year-on-year.
Our 3rd-quarter acquisition of clients stood at 1.6 lakh clients, which is up by 13% on a year-on-year basis. Our revenues for the business stood at INR570 crores, up by 30% year-on-year and profit after taxes were at INR190 crores, which is up by 16% year-on-year. Our retail cash business broking volumes ADTO have grown by 19% Y-o-Y to INR3,230 crores. Our cash market volume share has gone up to 7.4%. This was 5.6% in FY ’21. And so we’ve seen almost a 200 basis-points gain over the course of the last four years, notwithstanding the substantial change in the market structure where discount brokers now account for a large part of the overall volume market-share.
Our FLO premium market-share stands at 7.8% and our total ADTO market-share stands at 7.6% for the 3rd-quarter. The quarter witnessed induced volumes on a quarter-on-quarter basis due to the new F&O regulations as well as market correction. Yeah, we have seen similar instances in the year 2022 and even before where such instances of contraction — temporary contraction in-market volumes have followed by strong growth, typically after a lag of a couple of quarters.
Our confidence this time around stems from the fact that the demand account addition of 10 million accounts during the quarter — last quarter implied a growth of 33% on a Y-o-Y basis, 6% on a quarter-on-quarter basis, taking the total base of DMAD accounts to 185 million. This number was 40 million at the onset of COVID back-in January of 2020. Given the continued low penetration of financial savings in the overall savings and the rising mutual portfolios as well as demand accounts, we expect the growth trajectory to continue in the coming years.
On the other side, broking industry will also see further consolidation in the hands of the larger players due to many reasons, including increasing compliance, costs and norms being one of them. And hence, we expect Oswal to be the largest full-service broker in the country and to benefit from this consolidation.
Turning to distribution, we have strong focus on increasing our distribution book. This will be led by cross-sell to our existing 4.5 million strong client base apart from acquiring new clients. And for this purpose, we’ve created a dedicated distribution team, which is now a strong 600 people with plans to increase this to 1,000 people in the near-future. Around 60% of our DP AUM comprise of clients with more than INR1 crore DP balance, implying serious cross-sell, cross-sellability to these clients. With these initiatives, we plan to grow our distribution book multifold and it stands at about INR30,000 crores currently.
Our distribution AUM grew by 38% year-on-year to INR32,000 crores. Distribution net flows quadrupled to about INR3,000 crores during the quarter. Distribution revenues grew by 90% year-on-year to INR104 crores and its contribution to the total revenues from this segment increased from 13% in the same quarter last year to 18% in this quarter.
The third aspect of the wealth management business is the NII, net interest income, which grew by nearly 40% year-on-year due to growth in the lending book as well as improvement in spreads, which improved from 5.9% in the same quarter last year to 6.8% in the current quarter. That was a deep-dive into our wealth management business.
Turning now to the Asset and Private Wealth businesses comprising of asset Management, private free and private wealth business. The overall revenues for these businesses stood at INR551 crores, a very strong growth of 57% year-on-year, while profits were at INR234 crores, even stronger growth due to operating leverage at 63% growth over the same-period last year.
Starting with the asset Management business, the strong performance momentum across mutual funds, PMS and AIFs, coupled with rising distribution network resulted in gross flows in the 3rd-quarter of INR23,300 crores, which is up by 362% year-on-year. Our asset management net flows also grew multifold from INR2,400 crores in the same quarter last year to INR18,500 crores in the 3rd-quarter of this year, which is more than 7 times Y-o-Y, led by 97% of the AUM are meaningfully outperforming the underlying benchmarks.
As you know, we had announced earlier that we crossed a INR1 lakh crore AUM milestone in July. And by December, I’m happy to state that our asset management AUM stands at over INR130,000 crores, up by over 100% year-on-year. Our mutual fund AUM out of this INR1,30,000 crores stood at INR98,000 crores, up by 128% year-on-year. We added 16 lakh SIPs in the 3rd-quarter. Our SIP flows for the 3rd-quarter stood at INR2,922 crores, resulting in an SIP AUM book of nearly INR21,000 crores as of December of ’24. I’m happy to share that our mutual fund market-share continues to rise.
Our sales market-share increased from 1.9% in the 3rd-quarter of last year to 5.8% in the 3rd-quarter of this year. Our net sales market-share increased from 3% in the same quarter last year to 9.7% in the 3rd-quarter of this year. And finally, our SIP market-share increased from 1.5% in the same quarter last year to 3.8% in the 3rd-quarter of this year. Also, aside of mutual fund, our alternates AUM grew by 50% year-on-year to nearly INR33,000 crores. We are now amongst the top players in terms of incremental flows even in alternates led by strong performance and rising distribution network. Our AMC business has strong processes in-place to deliver a reasonable returns for our unitholders and we expect to be among the top players in the segment, supported by strong scale-up in distribution as well.
Turning to the private-equity and real-estate businesses, these businesses have a fee-earning AUM of INR10,560 crores and a mark-to-market AUM of over INR17,000 crores. A substantial amount of carry as we have explained in the past calls will be earned on these funds. The 3rd-quarter revenues for this business stands at INR52 crores, up by 34%. Here again, like mutual funds and other alternate assets, we believe that there is low penetration of private-equity real-estate products compared to the Western world and a long runway for growth. Our revenues for asset Management and PRE business collectively were at INR274 crores, up by 54% and profit stood at INR137 crores, up by 65%.
Turning to the private wealth management business, the rising wealth among H&Is, UHNIs will drive strong growth for our private wealth business. We continue to take several initiatives in this business. In the nine months, we focused on several senior-level hiring to strengthen the overall leadership strength of the business. This improves our UHNI and family office proposition and positions us strongly to be a leading player in the private wealth business in the next three years’ time. Our private wealth AUM stands at about INR1,50,000 crores as of December, up by 34% year-on-year. Revenue stood at INR278 crores for the quarter, up by 63% year-on-year. Profits stood at INR97 crores, up by 57% year-on-year.
For the nine-month period two, we have seen very strong growth rates. Our revenues grew by 48% to INR706 crores, while profits grew by 45% to INR246 crores. The total relationship manager count increased by 27% year-on-year to INR600 crores. The stronger revenue growth that you saw during the nine-month period is clearly an outcome of the improved productivity that we have guided for. We expect improvement in productivity to continue in the coming quarters and the next couple of years as only 29% of all our RMs have a vintage of over three years.
Turning to our capital market businesses, which is institutional Equities and investment banking, revenues for the 3rd-quarter stood at INR151 crores, up by 70% year-on-year. Fee income stood at INR60 crores, up by 154% year-on-year. Profit-after-tax stood at INR61 crores, up by 50% year-on-year. In the institutional equities business, we now have a 70 plus corporate equity research and corporate access team. This team covers over 300 companies across 24 sectors, caping to about 900 institutional clients. The investment banking business has seen a meaningful scale-up. We have completed 35 deals aggregating to INR46,000 crores in the Nine-Month period.
Once again, we are very happy to share that we were ranked number-one all-India in the QIP league tables for the nine months ending December ’24. We’ve strengthened our team over the last few quarters and given that our deal pipeline, including IPOs is the richest ever, it gives us strong growth visibility in the coming quarters. Turning to our housing finance business, our AUM for this business grew by 15% year-on-year to INR4,343 crores. We have — we have meaningfully invested in our sales team, our RM count has increased by 46% to 1,246 numbers. Disbursements as a consequence has gone up by 92% year-on-year to INR1,000 crores with quarter three disbursements at INR394 crores, up by 67% year-on-year. The NII for the business stood at INR88 crores, up by 10% year-on-year and the asset quality continues to be quite good with gross NPAs of 140 basis-points and net NPAs of 80 basis-points.
Finally, turning to our treasury investments, our total equity investments, including alternate funds grew to INR8,464 crores, up by 44% year-on-year as of December ’24. Our 10-year CAGR growth rate of this treasury book led by an ex-IRR of over 20% and reinvestment of our cash flows has also been over 40% for the last 10 years’ time. To conclude, we believe that the cumulative household savings, which was $14 trillion in the last quarter essentially or last 25 years as per a study that we have published will rise to nearly $126 trillion in the next 25 years. Importantly, there’ll be higher share of financial savings, allocation to equities, exposure to alternates and greater concentration of wealth as we have — as we create this additional $126 trillion of savings.
This we believe is really the megatrend that is driving multiple businesses of the Group, whether it’s the asset management business, wealth management business, private wealth business, alternate capital markets, nearly every business of ours will be favorably impacted by the financialization of this huge pool of $126 trillion of savings. We have already delivered a profit-after-tax CAGR of 42% over the last 10 years and a net-worth CAGR of 24% over the last 10 years while maintaining strong payouts, doing three buybacks, not raising any capital since our IPO back-in 2007. We expect these megatrends supported by a strong brand and very strong balance sheet will help us deliver continued best-in-class earnings growth and return ratios to our shareholders.
We’ll now open the floor for Q&A. 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 your touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles.
The first question is from Uday Pai from Investec. Please go-ahead.
Uday Pai
Yeah, hi. Thanks for the opportunity. I have multiple questions on the wealth management side. So firstly, this quarter, you saw a mix of your ex and direct revenue shifting towards more of direct. And simultaneously, you saw a quarter-on-quarter decline in-market share, both in terms of cash and FNO premium. So can you give some color on that as to what has happened?
And secondly, have you changed the pricing in FNO because there is a change in regulation and it impacts your revenue directly. That’s on the wealth side. And on the private wealth management side, while your distribution income has increased meaningfully quarter-on-quarter basis, your AUM has not increased. So is there some kind of transactional products or insurance like products, which are not included in AUM but in accounts for some revenue? Or those are the questions.
Unidentified Speaker
Yeah, good afternoon. On the wealth management side, as you spoke about the fall in the market-share on cash and ethanol and regarding the pricing, surely the turnout pricing based on the contract size increase has been implemented for our customers based on the changes in the lot size, which is a normal process, which we had done earlier when it got reduced and now when it got increased. So that’s the standard thing which we do.
Coming to the overall market-share, if you must-have seen the changes which has happened across the market for and similar overall trend in the market. And typically, we have seen in our customer-base with the advisory facilities which we have in the short-term that we surely have a bigger impact when the markets go down. And similarly, we see a bigger impact in the positive side also. So I think it is more of a trend because of the immediate fall in the market where we have slightly fallen the market-share. But if you look at the overall revenue, we are much better-off in the overall perspective when you look at the revenue side of it. So coming to the…
Unidentified Speaker
As far as the private wealth management assets are concerned, so while net flows during the quarter is at INR5,300 crores, but the overall assets have marginally dip because of the mark-to-market on the assets.
Uday Pai
Okay, thank you for that.
Unidentified Speaker
Okay. Thank you.
Operator
Thank you. Before we take the next question, a reminder to participants that you may press star and one to join the question queue. The next question is from Vivek Ramakrishnan from DSP Mutual Fund. Please go-ahead.
Vivek Ramakrishnan
Hello, good afternoon. I have two questions on the on the lending book on the wealth management business as well as in the housing finance companies. In Wealth management as well as private wealth management, your lending book has been coming down. I guess that is linked to-market volatility and decline. But do you see the trend in a reversing or in terms of people not wanting to do as much speculative activity or taking margin trading funding as in the past? And you also mentioned that the margins have expanded. So I wanted to know in a competitive business like this, what would be the sustainable level of margins? So that’s on the wealth management business.
I just asked the HFC business question also. Are you seeing that the credit quality is holding up because in many parts of the business, you are seeing — actually your numbers are quite strong. And what I wanted to ask was your credit costs are actually a negative number this quarter. So what drove that? Thank you.
Unidentified Speaker
As far as the lending book is concerned on the wealth management side, so actually, if you see there is a wealth and board private wealth, there is a marginal dip on a sequential basis of about 5%. So you’ll see that while markets have corrected very sharply, but this book has largely been resilient to that. So there’s only a marginal dip which is there. However, actually NIIs have gone up and in fact because of the improvement of our spreads also because our cost of funds have come down by 30 basis-points on a sequential basis. In terms of housing, if you could just repeat the question, yeah?
Unidentified Speaker
Credit cost.
Unidentified Speaker
Yeah. So the negative credit cost is actually a function of recoveries from our past written-off cases because earlier what we had written-off in FY 2019, ’20, we had a recovery from those assets and that is why you see the credit cost to that extent is a reversal in the quarter three P&L. However, on a steady-state basis, our asset quality has been very strong. So there is no incremental provision cost also in our quarterly P&L.
Vivek Ramakrishnan
Thank you very much and wish you all luck.
Unidentified Speaker
Thank you, Vivek.
Operator
Thank you. Participants who wish to ask questions, please press star and one on your touchstone telephone. Next question is from Abhijeet Sakhare from Kotak Securities. Please go-ahead.
Abhijeet Sakhare
Hi, good afternoon, everyone. I had a question on the private wealth business. If you could give some broad breakup of the overall AUM there.
Unidentified Speaker
So actually the ARR assets is at INR32,000 crores, yeah. And transaction bearing assets are at INR,16,000 crores. And within this INR1,16,000 crores of transaction bearing assets, INR46,000 crore is the custody assets.
Abhijeet Sakhare
Okay, got that. And the ARR asset, is there a further split that you can share in terms of let’s say, equity that fixed-income stand.
Unidentified Speaker
So actually these are distribution assets into mutual funds and alternate assets. So the total ARR assets are INR26,000 crores of distribution assets, almost INR3,000 crores of advisory assets and INR2,700 crore of lending book.
Abhijeet Sakhare
Got that. Got that. And last one is, if people — between the private wealth and your alternates business, what would be the overall what you call cross-sell or double-count of?
Unidentified Speaker
Yeah so we will come back with this cross-sell number.
Abhijeet Sakhare
Sure, no problem.
Unidentified Speaker
Okay. Thank you.
Abhijeet Sakhare
Thank you.
Operator
Thank you. Participants who wish to ask questions, please press star and 1. Ladies and gentlemen, to ask a question you may press star and 1. The next question is from Manan Mundra, an individual Investor. Please go-ahead.
Manan Mundra
Hi, thanks for the opportunity. I have two questions relating to customer — customers’ stickiness. First is, if you can provide the customer vintage wise revenue just if we segregate them in separate buckets, for example, zero to two years, three to six years and six years and above. So that’s one. Second is our client revenue — whether the client revenue increases as their age increases, because generally the income of the clients has also increases with their age.
Unidentified Speaker
Yeah. So this question is for which business?
Manan Mundra
This is for broking — wealth management business basically.
Unidentified Speaker
Yeah. So as the vintage improves, all our revenues have been increasing for our clients that is there. So that because not only we have broking, but we also do the cross-sell and our cross-sell ratio has been improving. So that’s how — so we don’t provide the exact numbers of the vintage of the customer.
Manan Mundra
Okay. And whether the — as the age of the clients are increasing, do we have — are we getting additional shares from additional revenue from those clients?
Unidentified Speaker
Yeah, that’s what I’ve mentioned. So as the vintage improves across every bucket, we see the increase in the revenue from the same customer.
Manan Mundra
Okay. And have we seen any disproportionate rise in the margin calls from the clients — for the clients because of the recent fall in the market and do we see any systemic risks around that?
Unidentified Speaker
No, actually, we have seen that the — because of the changes which has implemented on the margins and upfront margins, the impact of the fall is very minimal and that we don’t see any big impact coming online basis will be. And there’s a lot of cash which the clients are carrying currently and we don’t see a big pressure on the selling as such because of the fall in the markets.
Manan Mundra
Okay. Okay. And the last is, have we — do we — have we implemented any support services? We are giving distribution products like insurance and credit products as well. So have we — do we have any support infrastructure if customers are facing any issues around that?
Unidentified Speaker
Yeah. So we have a separate team for the distribution side. We have got a — as told in the initiative of the call, there are 600 people dedicated for the distribution business. Plus from the insurance perspective, we have our dedicated team plus the insurance companies have their own team which sits out of our office for these focuses.
Manan Mundra
Okay, okay and the last, last and final is have we do we have any restrictions because of any regulations you know around sharing data from one entity to another, for example, say sharing housing finance company share data with AMC or vice-versa.
Unidentified Speaker
Absolutely. There are clear Chinese goes across all the businesses, many of them are regulated by different regulators. So these businesses operate standalone as separate entities.
Manan Mundra
Yeah, so do we have any issues for cross-selling because of those restrictions?
Navin Agarwal
No, so let’s say the broking business has its own customer-base and they are free open architecture to sell the best products. And if it turns out that any of the firms products turn out to be the best products and that is an option that is available also.
Operator
Thank you. We move to the next…
Navin Agarwal
Sorry, I’ll just — so cross-sell does not necessarily mean the firms product cross-sell could mean third-party products. Yeah, please go-ahead with the next question.
Operator
Thank you. The next question is from Umang Shah from Kotak Mutual Fund. Please go-ahead.
Umang Shah
Yeah, hi. Congratulations on a good quarter and thanks for taking my question. I had two questions pertaining to the asset management business. One is, if you could just throw some light. I mean, last few weeks have been fairly volatile, fairly volatile in-markets. And if you could just share some of the trends that you guys are — that you guys are witnessing into your — in terms of the net flows or the SIP registrations, how the flows have been given that markets have been volatile and some of our schemes have also seen a fair bit of softness in terms of performance. So that’s the first one. And on the SIP bit, probably if you could also throw some color in terms of — while the gross number looks extremely strong, I mean, it’s sort of an ongoing debate in the industry about gross and net. If you could just throw some color on that, that would be really helpful.
Unidentified Speaker
Yeah. So on the SIP front, our gross and net is very similar. Second, in terms of incremental flows that we are getting well January is the second strongest month that we have had in incremental flows in our history. The strongest — the earliest strongest was December, January and November look similar. Overall, our net-new flows market-share is higher than our AUM market-share. Even today in all cohorts, you look at it city-wise, you look at it distributor-wise in any cohort our new flow market-share net-new flow market-share is multiple times our AUR market-share.
Umang Shah
Perfect that’s helpful. Just one more question on the asset management piece, while on the wealth and the private wealth piece, we have a detailed our strategy in terms of expanding distribution on the asset management piece, just wanted to understand have we have we added more to our distribution maybe through different channels? Just a little more color on that.
Unidentified Speaker
Yeah. So we are expanding very strongly all across. So to give you some sense, beginning of the year, the AMC business had 250 odd people. Today, we hope to-end the year with over 600. Most of the incremental — has gone into expanding our on-the-ground city presence and beefing up the sales team. So it is both spread and depth. On-top of it, we have also gotten so I would say industry-first, industry second telecalling team to sell to our investors and/or investors okay, very, very strong growth on-the-ground and profitable growth as well. So I think we are pretty good on that part.
Umang Shah
Okay, perfect. Sorry. And just one last question which I want to just squeeze in. On our housing finance business, I mean, in the past, we have guided for a more normalized or a growth of about 15% to 20% on AUM. Or do we still hold the same guidance or are there any changes to that?
Navin Agarwal
Yeah, hi, Umang. So we hold the same guidance to that. In fact, we hold the 20% increase in the AUM guidance for this financial year.
Umang Shah
And going-forward?
Navin Agarwal
So going-forward, this run-rate would improve because if you see, we have been continuously adding talent on our sales side. So in fact, our RM count in FY ’24 was doubled over FY ’23. Similarly in FY ’25, this base is up by another 50%. So we are clearly building a capacity of RMs to improve our disbursement run-rate and that’s why you will see the AUM growth to be better overall with the additions in the RMs as well as improvement in their product availability also, which has happened in the last one year as well.
Umang Shah
Understood. Understood. Perfect. Thank you so much and wish you good luck. Thanks.
Navin Agarwal
Thank you. Thank you. Next question is from Dipanjan Ghosh from Citi. Please go-ahead.
Dipanjan Ghosh
Hi, good morning. Just a few questions from my side. First on the Private wealth business. If I look at your overall transactional income, ex of broking income, it seems that has gone up meaningfully during the quarter compared to steady-state run-rate. So is there some carry income that is being booked or some sort of syndication activity that you have done, if you can give some color on that? So that would be my first question.
My second question would be, while you mentioned that your overall flows on the mutual fund side has been quite strong, maybe similar to November levels or maybe one of the best-in the history of the company. But I wanted to get some color on when you talk to, let’s say, on feet on-street or your distributors, what are the sensing in terms of incremental sentiment? Because this is probably the first time retail customers are seeing a prolonged period or likely to see a prolonged period of pain out there?
The third and the last question is more on, again, going back to the private Wealth division and maybe in sync with the Capital markets division, you mentioned that your pipeline on the IB side is holding up quite well. But when you talk to, let’s say, your clients, what is the scope that you see of fluctification of some of these deals? And in that context from a new client addition in the private wealth side or new money getting created, how do you see the trajectory or maybe in FY ’26?
Unidentified Speaker
So let me take the first question on the private wealth management business. So in the last quarter, we’ve seen increased activity of alternate sales — alternate asset sales. So we’ve seen a lot of activity from ultra family offices in the co-investment space. So that has contributed to the increase in transactional revenues. Point number three, yes, there is a lot of increase in activity on the IB side. And we are increasing coverage over monetization events over large liquidation events. So we should see a lot of traction around that in terms of new client acquisition and new client sales in FY ’26.
Unidentified Speaker
Yeah. In terms of distributors and client response to this correction. Well, if I share with you the trends that we have seen over the past four weeks on the mutual fund side, we have seen some reduction. Believe we haven’t lost market-share. So this should be industry level reduction in net flows. So that is something that we have noticed. On the alternate side, know, I think our flows are the close to record levels. So there we haven’t seen any slowdown. So if we look at it, the behavior of retail versus HNI, so I think the HNI part is holding up much better. They are taking it as an opportunity the correction gives them a great opportunity to put in the next lot of money to work. Retail may be behaving a tad differently.
Dipanjan Ghosh
Got it. Just one small follow-up, if I may, on the first question. When you mentioned that the activity levels were strong in 3Q and maybe more on the alternate side. So the transactional income that you have booked would be the upfront fees that is still permissible, right? Is my understanding correct?
Unidentified Speaker
That’s right. That’s right. That’s right.
Dipanjan Ghosh
Got it. Thank you, sir, and all the best.
Operator
Thank you. Next question is from Avinash Singh from Emkay Global. Please go-ahead.
Avinash Singh
Yeah, hi. Congrats on great set of numbers. Thanks for the opportunity. A couple of questions. The first one, if you can help us in terms of your asset management AUM, how much of it is a is within a your group ecosystem distribution like wealth and private wealth put together, how much they contribute to this distribution? And in your dataset disclosure where of these are get captured, do they get captured in a direct and-or wealth management piece? So that’s the question number-one.
And on the private wealth side, the thing here is that, of course, you have been kind of in expansion mode ramping-up your RM and all. So the question is that if I were to look at in terms of your head of a focused on segment, do you have — I mean where this private wealth fit is, I mean like a INR5 crore per client investable asset or higher or lower or put it the other way, then what is the median typically investable asset, not the — investable asset you will have as your kind of a focus segment for the private work? Thanks.
Unidentified Speaker
On the first question, on the captive AUM for the asset management business, so actually between wealth and private wealth, the asset is just 15% of our AMC AUM and this number is also moderately coming down. Yeah. As far as the private wealth business…
Navin Agarwal
We look at families with a financial net-worth of INR25 crore-plus in the private wealth management business and we on-board with INR3 crores plus.
Avinash Singh
Okay.
Operator
Thank you. Next question is from Sanil Desai from ICICI Securities. Please go-ahead. Yeah. Good afternoon, sir. So I just wanted to ask that what kind of traction we see flows in the new NFOs which Moti has launched? Because I think in last one or two con-call, the strategy was said that to expand the MC business, we were targeting around one NFO per month. So how is that strategy been? What is the pipeline of NFOs? And if I may, then in this period where there has been market weakness, has there been any weakness in the flows seen in the NFOs?
Unidentified Speaker
No. So as we speak, we are just opening our innovation fund. This is the first stage of that fund launch, so we will get the trends over a period of time. Otherwise, we have been launching a clear of new products with overall with very, very satisfactory inflows during the NFO period. And post NFO is when we have seen very, very strong scale-ups in several of our products. Products so something like a business cycle fund fund small-cap fund you know and large-cap when they were launched was of ex-size but today they account for very large part of the net inflows in that cohort and the current sizes are multi times our loan sizes. So that has definitely happened to us. So now our spread of inflows is very well-diversified.
Sanil Desai
Okay. Thank you, sir. And just a small follow-up that is our strategy changed because of the market weakness of launching one NFO per month or is that broadly safe going ahead?
Unidentified Speaker
[Foreign Speech].
Sanil Desai
Thank you, sir. That’s helpful.
Operator
Thank you. Next question is from Lalit Deo from Equirus Securities. Please go-ahead.
Lalit Deo
Yeah. Yeah, hi, sir. Thank you for the opportunity. Sir, just two questions. So firstly, in the Private wealth management side, so like in this particular quarter, like we have seen a strong addition of the families. However, in terms of net sales — net sales, that number might not have picked-up very well. So just wanted to understand like when we onboard a family, then do we get that initial INR3 crores per family at one-go or is it like a spread over multiple months?
Navin Agarwal
Yeah. So typically we would onboard a family if we find that the financial net-worth is about INR25 crores at a lower amount as well, but then the endeavor will be to get the family up to INR3 crores plus within a year.
Lalit Deo
Oh, sure, sir. And similar to that, like so we are seeing this addition in the family side. So probably the RMs, which we have added over the last three years, so they are — their productivity levels are improving. So from here on, do we are — do we plan to add more RMs or first to improve the productivity of the existing RM base and then look to add more RMs further?
Navin Agarwal
No, we continue to invest in both engines. So first is addition of new wealth managers is a constant effort. And second is all the wealth managers who are on-board and below three years of vintage, we continue to work on the productivity.
Lalit Deo
And sir, just on the AMC side of it. Just wanted to understand like, so we have seen good traction in the flows on the alternate side. So like probably how should we look at it for like for FY ’26, like do we have any products in pipeline for this in the same?
Navin Agarwal
No. So we have — so let’s understand who we are. We are a growth-focused house. We seek to make money for our investors by looking at spaces, businesses where earnings growth portion can be an order higher than the index earning growth pushioned. So towards that, if you see our alternate platters, we have five strategies which look at the problem from different sides. You know, if we think founders, promoters can drive growth faster, we have one. If we think there are spaces in the market where the tailwind of value migration will aid growth is another. Third cut could be mid to mega if there are businesses which today being small have a better propensity of growth. That’s the third one.
We have another one where where we are looking at the next $1 trillion growth of the country, which spaces will be touched and formulate the portfolios. So I think in terms of growth, we have covered all sides. So on the ultimate front, our whole thought is to stick to these strategies and grow them all over a period of time. So if you look at our strategies, the construct and the name, you should feel that our strategies are managed in through to label format.
Lalit Deo
Sure. Sure, sir. And sir, just lastly, sir, a lot of — so what we have been hearing like a lot of AMCs have been trying to — due to the increase in MTMs gains, a lot of AMCs have rationalized some distributor commissions. So like we also have some large schemes within ourselves. So do we also envisage that like where we will be cutting trying to cut-down our rational distributor commissions?
Navin Agarwal
Yeah, so growing profitability is going to be our endeavor. We have taken some steps. 4Q will show the full impact of those steps.
Lalit Deo
Thank you.
Operator
Thank you. Next question is from Sanjaya Satapathy from Ampersand Capital. Please go-ahead.
Sanjaya Satapathy
Yeah. Hi, sir. Thanks a lot for the opportunity. Sir, two questions on one brokerages side, we hear that your market-share has gone down a bit again and you’ve taken some pricing action. So just can you just help me understand what will be the near-term as well as long-term strategy in this area for you to gain market-share?
Unidentified Speaker
So on the overall side, what we have seen is that we have been continuously increasing our market-share. If you look at the overall trend in the last two years. This blip which we have seen in this quarter is mainly because of market we have seen that when the markets fall, typically because of our advisory and all that, we are also a little cautious with the investors. So typically, when we see this kind of trends, there can be a blip in the overall market-share. But the overall trend, if you look at it from the last two years perspective, we have been growing the market-share. And we feel with the quality of advice and the quality of investors where we focus on much more quality clients, our market-share strategy will always be on the growth phase because of the changes also which has come into picture, where the contract size has gone up and the overall expiry turnover, which was not our strength compared to discount vehicles, our overall market-share should increasingly benefit in the overall scheme of things.
Coming to the pricing part, as I told you earlier, the pricing is mainly a factor of the number of the law size. So we changed based on the lot size of the contract, which has gone up now. So automatically the brokerage is that exchange changes based on the lot size. So which had come down when the lot size came down, when the went up, we increase the brokerage. So it’s more linear to the loss it.
Sanjaya Satapathy
So what — is there any long-term plan of aggressively tapping the retail market through technology intervention, which — an app-based thing which many, many and others have done. Can you just share your thought on that?
Unidentified Speaker
So we do have a digital setup and we have got — we have — have a mobile app, which is very clearly aligned with the overall competition as such. And we are continuously seeing increasing growth on the digital side also in our overall volumes. And we are very confident on the overall growth in that segment, including the overall distribution which we align with our overall broking business. However, we are very clear that we will not be going on the discount side of the business and we are focusing on the quality. Having said that, the digital business and the digital client acquisition has been increasing month-on-month for us on overall scheme of mix.
Sanjaya Satapathy
Thank you. And last question, sir, on your — this mutual fund AUM, can you please give me a bit of a in terms of debt-equity and within that equity, how much is ETF and how much is non-ETF? And very last thing that I would like to understand is that because you are one of those who have the NASHDAQ ATM, etc., which — and then because of which are you seeing some better inflow and are you being able to kind of withstand this slowdown in Indian market better.
Unidentified Speaker
Sanjaya, offshore is — people can’t invest in the offshore strategies. We are limit up in those. So no house can recept money is for offshore strategies. So that’s not the source of growth. Second of our INR1.3 close to INR27,000 crores is passives, of which NASDAQ and S&P is in total of INR10,000 crores, rest of it is India-focused strategies. ETFs are a very, very small part of total. We have just now started to launch ETFs of several of our strategies. But AUM wise, it’s not very meaningful.
Sanjaya Satapathy
Yeah. So will the number of schemes go up meaningfully over next one, two year for and that will be the biggest — one of the key driver of growth?
Unidentified Speaker
No, so as we understand from the mutual fund side, people look at various cohorts which have been decided by industry participants and investors allocate money. We are today not there in a few cohorts. We will be there as the year goes by. On the thematics side, we have just started the journey. If we see some of the larger houses, they have 10, 11 thematics. We just have bought two. So over the period of the year, we have a very stiff launch calendar frankly. You would see us cover a lot of ground on the active side and also on the passive side. So every month, one should expect us to launch a new fund, you know broadly speaking.
Sanjaya Satapathy
Understood. I don’t want to kind of sound give any value judgment, but any publicity is good publicity as they say and hoping that the controls, etc., that we saw throughout last one month, you will leverage it positively. I wish you all the best. Thank you.
Unidentified Speaker
Thank you.
Unidentified Speaker
Thank you.
Operator
Thank you. Next question is from Mahek from Emkay. Please go-ahead.
Mahek Shah
Yeah. Thank you for the opportunity. One — just one question from my side. If I look at the private wealth business, the employee cost has gone up significantly on a sequential basis. So just wanted to know, is it like largely on account of the RM addition or is there anything else there?
Navin Agarwal
So as indicated in our presentation, we continue to invest in senior talent to grow the and family office business as well as wealth managers. And typically, as I explained in the earlier calls as well, the productivity comes in as the vintage grows.
Mahek Shah
Thank you.
Operator
Thank you very much. Due to time constraints, we’ll have to take that as the last question. I will now hand the conference back to Mr. Shalibhadra Shah for closing comments.
Shalibhadra Shah
On behalf of Motilal Oswal Financial Services, I would like to thank every participant for attending the Q3 FY ’25 con-call. In case of any further queries, please do get-in touch with our Investor Relations company. Thank you and have a good day.
Operator
Thank you very much. With that, we conclude today’s conference. Thank you for joining us. Ladies and gentlemen, you may now disconnect your lines.