Prudent Corporate Advisory Services Limited (NSE: PRUDENT) Q2 2025 Earnings Call dated Oct. 31, 2024
Corporate Participants:
Sanjay Shah — Chairman and Managing Director
Shirish Patel — Whole-time Director and Chief Executive Officer
Analysts:
Lalit Deo — Analyst
Lakshminarayanan KG — Analyst
Niranjan Kumar — Analyst
Dipanjan Ghosh — Analyst
Ajox Frederick — Analyst
Sanketh Godha — Analyst
Krupanshu Shah — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to Prudent Corporate Advisory Services Limited 2Q FY25 Earnings Conference Call hosted by Equirus Securities. 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. [Operator Instructions] Please note that this conference is being recorded.
This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict.
I now hand the conference over to Mr. Lalit Deo from Equirus Securities. Thank you, and over to you, sir.
Lalit Deo — Analyst
Yeah. Hi, good morning, everyone. Wish you all a very Happy Diwali. Welcome to the 2Q FY25 Results concall of Prudent. So to give a brief update on the results and address investor questions, we have the management of Prudent Corporate Advisory Services Limited, represented by Mr. Sanjay Shah, Chairman and Managing Director; Mr. Shirish Patel, CEO and Director; Mr. Chirag Shah; Non-Executive Director; Mr. Chirag Kothari, CFO; and Mr. Parth Parekh from Investor Relations.
Now, we would request the management to start with the opening comments, post which we can open the floor for Q&A. Thank you, and over to you, sir.
Sanjay Shah — Chairman and Managing Director
Thank you, Deo. And first of all, let me wish Happy Diwali to everybody who has joined this call. I welcome all of you to this earnings call. I thank you all for sparing a valuable time to join us today. I hope you have the investor presentation handy, which we uploaded on the exchange yesterday, as we’ll be giving references to the various slides of the presentation.
So before I move to the discussion on quarterly numbers, I just wanted to update you on the key milestone which we achieved during the quarter. Our asset under management crossed INR1,00,000 crore on 26th of July, almost one and a half year before our guidance, is mainly due to significant mark-to-market movement by Indian markets.
The next milestone which we are working towards is reaching a SIP flow of INR1,000 crore by March 2025. So this is the introduction, now let me tell you to move to page number 41 [Phonetics] — slide number 41. So now coming to Prudent numbers, I would like to go to slide number 41, this chart on the left-hand side indicate that the tailwind for growth in mutual fund business in second half of this fiscal. In the first half FY25, we earned our revenue based on a daily average AUM of INR95,701 crore. We began the second half of FY25 with an opening AUM of INR1.07 lakh crores, which is almost 12% higher than the first half full-year average. Despite the correction post-September till date, our current AUM is still above INR1.04 lakh crore. Hence, even if this number sustains for the second half, our revenue growth in second half compared to first half should be higher by 10% to 12%. As far as quarter is concerned, our quarterly average AUM in June quarter has grown 53% y-o-y and 14% sequentially to INR1.02 lakh crores.
Now please move to Slide 42. On this slide, we have shared the details of what moved our equity AUM on a year-on-year and quarter-on-quarter basis. As seen in the left-hand chart, closing equity AUM has moved higher by 59% year-on-year to around INR1.03 lakh crore with almost three-fourth of the movement being contributed by mark-to-market gain. The mark-to-market gain for the trailing 12 months stood at a very strong INR28,600 crore. If you see the right-hand chart, which shows the movement in equity on a sequential basis, and our equity AUM has also moved sequentially by 12%. Net equity sales during the first half of FY25 has been really very, very strong. In the FY25 first half, our net equity sales stood at INR5,700 crores, which is almost or you can say equivalent to the net sales in the full year of FY24. So that shows that how strong the first half was as far as accessibility of the mutual fund and participation of retail is concerned.
Now please move to Slide 43. Moving to Slide 43, wherein there is a detail of our market share in overall equity AUM and the SIP data. Our market share in equity AUM ex-ETF has improved from 2.51% year before in September ’23 to 2.52% in September ’24. On the bottom-left, we have given our data on monthly SIP flows and our market share in SIPs. During the month end, our monthly SIP book has touched INR870 crore. We have added INR280 crore to our SIP book during last 12 months and we are confident to touch the mark of INR1,000 crores by March 2025. In the month of September, we collected INR115 crore through STP, Systematic Transfer Plan. This number is reported by us on the actual realized basis. The STP value of INR115 crore is not included in the SIP number. So if you look at SIP and STP numbers together, almost INR1,000 crore is invested systematically by Prudent’s retail investors in equity and hybrid every month.
Now let me tell you to — let me take you to the Slide number 46. So now let me turn to the current financials. So please move to Slide 46, which is the last slide of our presentation, which talks about our standalone number. Please note that we have merged Prudent Broking Services, a wholly-owned subsidiary, with Prudent Corporate and hence standalone numbers are combined for mutual funds and the broking business and has been restated for all the periods, which are reported in this presentation. It’s an extremely satisfying quarter as far as revenue and the profits are concerned, as both has grown by 53% and 73%, respectively.
Sequentially, mutual fund revenues have grown in line with the growth in quarterly average AUM. Last quarter, which was the April, May, June quarter, as we already communicated last time also, we had one-off revenue impact of INR4.41 crores, which was mainly due to the receipt of withheld brokerage released following the relaxation of KYC norm prescribed by the SEBI. As a result, our yield was higher by 2 basis points in the last quarter, which is April, May, June at 92 basis points. If we adjust for this one-off item of the last quarter, our yield has remained steady sequentially at roughly about 90 basis points to 91 basis points.
Additionally, on the yield front, I just wanted to communicate about a couple of changes which has occurred, prominent being the HDFC AMC, and as all knew, that HDFC AMC has revised rates on the back-book, that means the existing book for most of their non-debt schemes. Nippon has also revised rates in one of their main scheme, Nippon India Small Cap Fund. This back-book rate revision were primarily due to significant rise in assets caused by a sharp mark-to-market movement in the last couple of years. We do not expect this to be a regular occurrence as it was mainly due to exceptional mark-to-market movement.
Just to explain how significant the impact of mark-to-market movement is concerned, I’ll just tell you that Prudent’s total AUM in the March 2020 was less than INR20,000 crore, while as I explained you earlier, in the last 12 months, our mark-to-market gain is above INR28,000 crores. So that shows that how significant mark-to-market gain has been in last couple of years. So now I will explain about the impact of these changes which has occurred because of the HDFC and one big scheme of Nippon. The full year top-line revenue impact for this change is estimated to be around INR6 crores, which is less than 0.5 basis point of our total revenue. So I think the — even though it’s a revision of the back-book, overall, if you look at the impact may not be that meaningful. This time, we also absorb the part of rate cut and transferred partially to our distributors.
If you remember, we have been all the time otherwise saying that, if there will be some change, we’ll be able to transfer fully to the sub-distributor, however, in this particular time, we also absorbed certain amount of reduction in the revenue, which has been absorbed by us. However, I’ll just tell you that the overall impact on us because of this revision is neutral as far as impact on GP margins are concerned. So now coming to the commission and fee expenses. If you look at commission and fee expense payout at 63.4% is looking bit elevated compared to last quarter, largely on account of one-off as talked about pertaining to the receipt and payout of the partner related to relaxation of KYC norms. Adjusting this, payout ratio has also increased by roughly about 60 basis points. This is mainly because of movement in the direct and the indirect mix, wherein the indirect mix has — indirect share has now again moved to 89.5%. So if I tell you about this quarter, the share of indirect has moved up by another 0.7 basis points. So I think that is broadly I’m just trying to explain.
Also, I’ll take you to another expense item, which is the employee expenses. So you would have observed that the employee expenses also increased by 8% sequentially. There are various factors which has led to this increase. First being the net addition to the employee count. We added 58 new employees during this quarter, also 78 employees were added in the first quarter of FY25. Around 45 of those who were added in the first quarter were added in the June alone. Hence, last quarter was having the additional salary expense for only two months. So second factor was increase in the variable provisioning. Given how the business is shaping up for the entire year, we expect variable pay to be at the higher end, hence sequential increase in variable provisioning is around 25% more.
Third factor is leading to increase in employee cost in some extra provisioning taken for the leave compensation. So we have changed the policy of allowing the accumulation leave, which somebody can accumulate till the retirement. We have moved from 65 leave to 100 leave as an accumulation policy and hence the provisioning has increased. So all these three put together has led to sequential rise in the employee cost. Overall, after considering all these things, operating profit grew by 60% y-o-y. There was a margin expansion of 110 basis points y-o-y and operating margins in the — during the quarter stood at 23.2%. Our strong operating profit — operating performance coupled with higher other income has led to a profit growing at a healthy pace of 73% on a y-o-y basis.
Now, coming to Slide 45, one slide previous, which is providing you the consolidated numbers. So if you look at the difference between consolidated numbers and the standalone, I think it is only the standout number would be the difference between these two would be the insurance only. So if you look at on the insurance front, our insurance revenue grew by 35% y-o-y to INR34 crore. On account of changes in surrender value from 1st October, there might be changes to the life insurance commission structure post-1st October. The negotiations are going on with the insurance companies and we are yet to get full clarity on the rate structure. However, the broader indication is that the insurance company might resort to reduction of commission as well as clawback [Phonetics] based on the persistency ratio.
I’m just giving you this explanation, however, this has no impact in the second quarter, because whatever impact which will come, which will come now as far as revenue on the insurance is concerned. So overall, I think the only item which I wanted to explain in the consolidation was the insurance number. So overall, consolidated profit grew by 73% to INR51.5 crores. So overall, it has been a very, very satisfactory quarter. For the first time on a quarterly number, we crossed INR50 crore of net profit, which is very, very satisfactory for all of us.
With this, I’ll just keep the floor open for Q&A. Thank you.
Questions and Answers:
Operator
Thank you. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Lakshminarayanan KG from Tunga Investments. Please go ahead.
Lakshminarayanan KG
Thank you. Sir, if I just look at the total AUM, which we have – which has gone through us, what’s the mix of index fund and non-index funds?
Sanjay Shah
Sir, the index fund, they won’t be more than even INR1,000 crore in my total AUM because we don’t have any kind of passive book at all because I think the — we believe our advisors are capable enough to identify quality fund managers and the quality fund. So I think the index is hardly about INR2,000 crore, yeah. It’s roughly about INR2,000 crores, so [Indecipherable] 2%.
Lakshminarayanan KG
Got it. And in terms of the top-10 AMC, do we work with all the top-10 or if we don’t work with couple of them?
Sanjay Shah
Shirish?
Shirish Patel
Yeah. We work with all 10 — top-10 AMCs. So practically, if you see the AUM mix [Foreign Speech] it would be in line with what the industry is all about. So yes, I think — because we being retail, we cannot ignore working with bigger AMCs. So that does answer to your question. We work with all 10 big AMCs.
Lakshminarayanan KG
Got it. Third and last question, if you can just give a split of your AUM by large cap, flexi cap, and ex of large and flexi cap?
Sanjay Shah
So actually readily breakup may not be available, but I think the — that also, Shirish, would be in line with market only, right?
Shirish Patel
Yeah, yeah.
Lakshminarayanan KG
Okay. The reason we’re asking this question is that if you look at the last one month or maybe the last few days, you see there is a marked decline in a particular segment of the mutual — the index, right? So just want to understand the sensitivity for us on that account, is it in line with the overall mix, which we — which we get from AMC so that you are sensitive to the [Speech Overlap]
Shirish Patel
Hybrid would be little higher in our case compared to the industry, but otherwise in the mix of equity that is large, mid, and small, [Foreign Speech] I think probably I would say that you would be following the industry.
Lakshminarayanan KG
Got it. Thank you, sir. I’ll come back in the queue.
Sanjay Shah
And another thing I just wanted to explain about the sensitivity of our AUM. As I told you, last month we ended at INR1,07,000 crore and currently after about 7.5% fall, yesterday our AUM was INR1.04 lakh crores, so definitely there will be net sales also, but however, the impact on AUM is 3.5%, while the overall market has gone down by 7.5%. So what Shirish also said that our share in the multi-asset and the dynamic asset location of the hybrid category would be higher in the market, plus we have regular flows also.
Lakshminarayanan KG
Got it, sir. If you could just give us what is the mix of multi-asset and hybrid in our incremental flows? For example, in the last six months, you would have got incremental flow, in that how — what is this proportion of multi-asset and hybrid?
Sanjay Shah
Shirish?
Shirish Patel
So — currently, I’m just talking about, let us say, first of the AUM, 18% of our AUM is in hybrid category, including the multi-asset, you can say, so 18% of our AUM is in for this category. If you are talking about business, I think we actually need to get the actual number, but let me check if I can provide you. I think, Sanjay, we can take this question separately because I think the data is not handy right now, so.
Lakshminarayanan KG
Sure, sir. I’ll take it later. Thank you so much. Happy Diwali, sir.
Shirish Patel
Happy Diwali.
Sanjay Shah
Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Niranjan Kumar from Equirus. Please go ahead.
Niranjan Kumar
Good morning, sir. Thank you for giving the opportunity and congratulations on the great set of numbers. Sir, I have a few questions. So the first question is, during the quarter have you seen any impact on account of the broker code change regulation?
Sanjay Shah
Shirish?
Shirish Patel
So, already we have started getting a few change of broker code request in our books, at the same time, we also would have lost little, but net-net, the net addition is much, much higher compared to the loss of AUM. Revenue-wise, till the — the revenue recognition is not yet started, because now from September onwards we start getting the tail [Phonetics] commission. So revenue front, there would not be any impact because of change of broker code. But in terms of addition of the AUM, it would be positive. We have not started aggressively going after this. I think last call also we stated, we will be the beneficiary of this change in the rule, but we are not going very, very aggressive in the market to acquire the assets due to change in broker.
Niranjan Kumar
Okay, sir. Sir, my second question is, you have already mentioned that HDFC AMC and Nippon AMC have sorted to back commission — cutting the commission on the back books. So further, how should we see this in the overall context, like in the industry or on the impact which we might have?
Shirish Patel
So, as and when we see huge mark-to-market gain in any AMC, in addition to that, if the same AMC or the same scheme is also attracting huge flows, the TER [Phonetics] charge ability of that scheme or that AMC goes down. Now, since few of the AMCs have already passed on the TER cut to the distributors, I’m sure many others may follow as and when they start feeling the pain of the TER cut. So this has started. Yes, I think few AMCs might follow this. But as Sanjay said in this call that we could be able to pass on the percentage sharing. So I think on an overall basis, whatever we are passing on to our distributor, hopefully in future also, whenever any cut comes from the AMC, we’ll be able to pass on [Indecipherable] so that our GP might not get impacted. But yes, many AMCs might follow this going forward.
Niranjan Kumar
Okay, sir. Thank you. Thank you for the information. That’s useful. That’s it from my side. Happy Diwali to everyone.
Shirish Patel
Happy Diwali.
Operator
Thank you. The next question is from the line of Dipanjan Ghosh from Citibank. Please go ahead.
Dipanjan Ghosh
Hi, good morning, sir. So just a few questions from my side. First, it is a data-keeping question. if you can give your market share in the new MFD addition. So let’s say, if 100 or 1,000 new ARNs [Phonetics] are getting created, let’s say in 2Q or 1H, what would be the proportion of your acquisition of this new MFD? So just wanted to get a sense of, you know, you have added like 1,000 plus MFDs in the quarter, what would be the mix between, let’s say, new ARNs versus existing ARNs and the market share in new ARNs?
Second question is now on the flow part. If you can give some color on what would be the breakup between NFO and non-NFO net flows? And also within the overall flows, qualitatively over the, let’s say, last two years to three years or during your — over the last decade, how do you see the flow mix changing between, let’s say, existing customers, let’s say, with a Vintage of one year, two years versus new customers — versus old customers?
Third question is on this back-book repricing that HDFC and Nippon have done. You know, what I would want and we have heard from two other competitors who have not — who are also listed, I just wanted to get some sense, is it also a function of you mentioned that there has been strong traction in flows in select schemes of these AMCs and that has really propelled them to kind of take this decision. Just want to get an understanding of how does this change the market dynamics in terms of you — your ability to kind of swing flows towards other AMCs or in terms of the underlying distributor, the granular MFD, how is their mindset really changing? Because there are lot of new AMCs also coming up, there has been new asset classes coming up, how does that dynamics change? Yeah, so those are the three questions.
Sanjay Shah
Yeah, Shirish?
Shirish Patel
So in terms of cut, few AMCs have cut it, we are sure that many other AMCs might follow as and when they start feeling the pain. As you said that how the dynamics would change in terms of flows towards the smaller or the mid-sized AMC or the mid-sized schemes? Now obviously, I think many of the distributors might start seeing where they can improve the revenue. So you could see that in the industry also a few of the AMCs or the few of the smaller schemes have started gaining some kind of traction. But having said that, as a distributor, we also try to give the schemes which distributors believe that are consistent in performance. So though we would like to influence the flows, but most of the time still because of the schemes consistency in the performance, we might not be able to do. So overnight, you can’t say that the flows will move from the bigger schemes or bigger AMCs to the smaller AMC, but over a period of time, some kind of flows we might see, but that might not change the yield immediately.
Coming to your second point that the flows between NFOs and non-NFOs, obviously, I think last six months, the number of NFOs came in the industry where many, many. We didn’t participate in all the NFOs, but having said that, out of almost, you can say, around 10% to 12% of our business on this financial or the six months would be towards NFO. So our share in the NFOs would be little lesser compared to the industry, mainly because of our SIP book. So percentage share of NFO in the gross share would be little lesser than the industry. And secondly, we don’t participate in all the NFOs, so that is another reason.
Third, you said that, how the — the recruitment of MFDs is there in the system. To give you the perspective, last entire financial year, we added some 3,100 new ARN holders. While we are talking, we already have added more than 2,900 ARN holders. So versus the entire year, 12 months, 3,100, we added 2,900 this year. So practically, the AUM — sorry, the ARN recruitment is getting momentum. Out of the industry, my guess is that last year industry recruited, Sanjay, correct me if I’m wrong, I think some 21,000, 22,000 ARN — new ARN holders were added in the industry last year and out of that we added 3,100. So that is what the numbers are all about.
Sanjay Shah
Yes. This precise number is 23,000 and we added 3,100. Yeah, you’re right, Shirish.
Dipanjan Ghosh
Sir, just a follow-up on the last bit, for this first half or especially for 2Q because the MFD additions have been very strong, so has something really changed in the industry or how do you kind of — your kind of expansionary plans have become more aggressive?
Shirish Patel
So, one, we added few branches in first quarter, so that has helped us in getting more number of MFDs. Second is, we also have increased some spend on social media to make Prudent as a brand and attracting MFDs to the Prudent platform, so that is another reason. And third, I would say that our focus for new MFD recruitment has gone up significantly compared to the last year.
Dipanjan Ghosh
Sure. Sir, just a small question on the Insurance business. The premium — the fresh premium growth in both life and non-life has kind of moderated in terms of y-o-y when I compare with, let’s say, FY24 or 1Q ’25 trends. So on the life side, would it be like slower non-par [Phonetics], and on the non-par side, what would kind of explain this moderation in pace of growth?
Shirish Patel
So, on the health side, the growth is decent. It’s a good growth on the new premium on the health insurance side, that is the general insurance side. In the life insurance side, yes, you can say that the first six months basis is a moderate growth, mainly obviously because of all the noise of the change in the regulation. And obviously, I think our business, as you know that, most of our POS, we try to convert from our mutual fund distributors. So when the equity will do better, maybe I think some impact in the Insurance business when the equity market or the mutual fund business is doing great.
Dipanjan Ghosh
Sir, it would be fair to assume that within your non-life, almost two-third or more will be health?
Shirish Patel
It’s almost, I would say, health in non-life. Motor, we hardly do?
Dipanjan Ghosh
Okay. Sure. Thank you, sir, and all the best.
Shirish Patel
Thank you.
Sanjay Shah
Thank you.
Operator
Thank you. The next question is from the line of Ajox Frederick from Sundaram Mutual Fund. Please go ahead.
Ajox Frederick
Hi, sir. Congrats on a very good set of numbers. Sir, one question. This INR6 crore impact you’re talking about, that is on the current basis, right? Meaning, if we are to assume a current AUM on INR234 crores, INR6 crores is the impact we are talking about in the subsequent quarters.
Sanjay Shah
No, no, INR6 crores, which I talked to you about the full year impact, assume that in my INR1 lakh crores, I think the HDFC is roughly about INR11,000 crores. And in INR11,000 crores, I think they have made changes based on certain formula. So based on those formulas, the overall impact on the HDFC AUM for the full year would be about INR6 crores. So I was just trying to explain you that on the INR1 lakh crore of AUM, if I’m going to earn, let’s say, INR1,000 crores, I think my impact would be about INR6 crores. So I was saying that my total impact, even though 11% of my assets got repriced, I think the impact is less than 0.5 basis points.
Ajox Frederick
Okay. Okay. This is for that INR11,000 crore, INR6 crore is the revenue impact. Okay. Got it. Got it. Understood, sir.
Sanjay Shah
As far as other way, if I tell you, if you look at the numbers, I think the INR6 crores divided by 12, roughly about INR40 lakh, INR41 lakh is the impact for last two months. So I think the revenue — so I think [Indecipherable] from 1st of August, so August and September, only two months got the impact in last quarter.
Ajox Frederick
Okay. Okay.
Sanjay Shah
We got the revenue less by about INR80 lakh and the payout has also decreased by — so I think the GP has remained constant, but the revenue impact is about INR80 lakh in last quarter.
Ajox Frederick
Okay. Okay. You are talking about GP margins, right? It’s been stable.
Sanjay Shah
Yeah. Income has gone down by INR80 lakh and GP margin has remained constant.
Ajox Frederick
Got it, sir. Very helpful. And sir, number two, let me flip it, it’s a hypothetical question. Assuming that markets are correcting, any chance of this getting reversed, sir? Because we are talking about this cut because of markets being so buoyant. So when it’s coming off, are we having that clause or this is just a one-directional move?
Sanjay Shah
I think it’s very difficult because, I don’t know, we have not gone into that domain, but ideally what we believe is that we may not reprice the assets, but whatever they have taken away because of increase in the TER, to an extent whatever this has recovered, they can technically give back, but I think legal interpretation is something which will be difficult to tell you because [Speech Overlap] that might — because on one-side, the regulation doesn’t allow you to reprice the assets upward. Upward revision is not allowed. However, whatever — you are — what you are asking about the cut, which has been done by them because of significant rise in the AUM, if the same benefit goes to them because significant fall in AUM to an extent they have recovered from us can be given back, I don’t know. I’m just — it’s my hypothesis.
Ajox Frederick
Okay. Okay, sir. And [Speech Overlap]
Shirish Patel
One point to add, at least — sorry, one point to add, the yield on the — if you are saying that the market going down, the TER goes up, the yield on the new business at least might increase because normally the new business commission or the pricing is linked to the TER. [Speech Overlap] so the historical — historical yield might not change if the market goes down and TER increasing, then the yield on the new business can go.
Ajox Frederick
Okay. Okay. And sir, secondly, my understanding was that the old book or the stock, usually it doesn’t get repriced, but is this the first time you’re seeing the stock getting repriced? Historically, has this been done?
Shirish Patel
So what you are saying is right, historically, this was not happening, but post-2019 TER guidelines, this is the time I think we can say that the market has seen this kind of relief. At the same time, the flows are very, very great in few of the AMCs. So that is where we said only those AMCs wherein the mark-to-market gain is huge and the flows are very, very high. These AMCs or those schemes are impacted severely, and maybe these AMCs or these schemes might cut. I think it was again who will do the cut first. Now, I think since few AMCs have already done this cut, many other AMCs might think that others have done it, we might as well do it. So that is where we are hoping that you might also come to cut.
Ajox Frederick
Okay, sir. Very, very helpful, sir. And congrats once again on a very good set of numbers. Thank you.
Shirish Patel
Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Sanketh Godha from Avendus Spark. Please go ahead.
Sanketh Godha
Yeah, thank you for the opportunity. Sir, in this current quarter, we have seen that gross equity flows has been much higher than the equity SIP flow, so just wanted to understand that because markets have been doing well, there is a natural more demand for lump-sum compared to SIP in the current half or NFO has played a role to see a little more growth in gross flows compared to the SIP flows.
Shirish Patel
Historically, if you see when the market sentiments are great, the lump-sum flows increases, and when the sentiments are bad, the lump-sum flows will come down. So there is no other reason. There is no NFO impact. I don’t see, as we said that we don’t participate in all NFOs and our NFO percentage mix is not in line with the industry. So this is mainly and mainly because of the market sentiment, and hence the lump-sum flows are higher than the last year.
Sanketh Godha
Okay. No, the reason I’m asking is that our market share in the SIP flows has also marginally reduced from 3.7% in the Q1 to 3.6%. So the kind of customers we are trying to cater are a little more tweaked to lump-sum is that reason, or you believe this SIP market share will come back to better than 3.8% what we witnessed in fourth quarter of last year?
Shirish Patel
So you are talking about the SIP market share going down from September ’23 to September ’24. One reason, definitely, you can see that all these fintech are getting huge number of SIPs. So obviously, I think the growth of this fintech or the online SIPs has gone up and the growth of — percentage growth of online SIPs is much higher than the offline SIP. That is one reason. Second, these numbers are — so mainly, I think we’ll attribute this number to the fintech growth only. Sanjay, any other point if you want to add?
Sanjay Shah
No, no. I think the — if you look at the — absolutely right. If you take out, about 30% is the market share, I think the market share of direct has gone up by about 8% to 10% in last one year. So if you take out the direct and if you look at only the regular, I think, either we are constant or we would have improved a few basis points. However, periodically, we don’t get the regularly — we do not get the numbers from AMFI [Phonetics] about the direct and the regular — otherwise, we can never report that number also, but we are unable to get the numbers regularly. But overall, I think what Shirish is trying to tell you is mainly because of growing share of direct piece.
Sanketh Godha
Sir, are you seeing this as a structural challenge for the Indirect business — for mutual fund industry? If more and more young guy goes towards fintech way to procure the business, just wanted to understand any counter strategy we have to overcome this market share. Maybe today, the growth is there, but if the growth slows down a bit due to market correction then how you want to overcome the challenge?
Shirish Patel
So one, definitely, I think earlier also we have said that in near term, we believe that the growth of direct — percentage growth of direct may be higher than the percentage growth of regular. Second, I would say that in last three years, four years, we have only seen the market going up. So obviously, I think these guys, those who have invested recently have not seen the negative returns, and hence, they probably might not understand the need of an adviser or a distributor. So that may be another reason. Third, definitely, because of this fintech, because of this awareness about SIP, these guys have created this kind of awareness and new investors, probably I think we might not have reached every small villages, which probably the fintech with the direct guy have reached. So these are the only reasons.
But yes, the strategy for us, definitely, FundzBazar as a platform is becoming more and more popular. So in terms of technology, we are at par with these guys. In terms of reach, the number of distributors are definitely reaching to all these investors. With the social media, as I earlier also I said that we have started using social media more compared to what we used to do one year back. So that also could be one of the strategy for us to compete with all these platforms. And again, I would say that when the market might see some kind of correction, I think we can see some kind of consolidation in the share of our direct versus regular.
Sanketh Godha
Got it, sir. Got it. And the second question what I had was, suppose most of the AMCs — as the market remains buoyant and most of the AMCs follow the same thing what the HDFC AMC and Nippon has followed, then — again, it’s a hypothetical question, then if back-book — entire back-book gets repriced in a similar way what HDFC or Nippon has repriced, then the impact in your view for the entire INR1 lakh crore or more than INR1 lakh crore AUM would be how much?
Shirish Patel
First of all, I think taking an assumption that all the schemes, all the AMCs might cut the book, I think, which is not logical because if the AUM size is small, the flows are not that big, if majority of the collection is with the new price, I don’t think that all these things will make other AMCs to follow the same thing what HDFC has done. Yes, as we said that many others might follow in specific schemes where there is a pain, assuming that even HDFC has not cut in all schemes. So taking an assumption that the entire INR1 lakh crores will get impacted, I think, is a little aggressive.
Second point, I would say that for us, what is more important is what AMCs are doing with other set of distributors. Now, as we are B2B and if the AMCs are cutting for their MFDs as well, we will be able to pass it on. So I don’t see a problem when the AMC will come and say that I will only cut for Prudent and not for the MFDs. So whenever any AMC or any scheme will cut the commission on the book, obviously, they will cut for Prudent as well as other distributors, and hence, we’ll be able to pass it on the way — the AMCs will do for the MFDs.
Sanketh Godha
Got it, sir. But our — maybe top five [Indecipherable] consolidation which are a little big, who can probably follow HDFC AMC for, how much they contribute to our total INR1 lakh crores — more than INR1 lakh crores AUM, top 5 AMCs?
Shirish Patel
So, top 5 AMCs, in terms of AUM
Sanjay Shah
Roughly about 36%.
Shirish Patel
So, top…
Sanjay Shah
Top 5 is 52%, sorry. 52%.
Shirish Patel
So, around 50% is top 5.
Sanketh Godha
Okay, got it, sir. Got it. And lastly, on this broker code, have you really seen the bigger MFDs, I mean, you said that net addition is there to do the MFDs because people have left and the people have joined also. So there is a net addition in MFDs, because of the broker code. But any bigger MFDs, which were significant contributors or decent contributors to you have seen moving out, because of this thing. And as you rightly highlighted that your AUM yield or the revenue accretion is not happening because six months cooling period is there, so because of the net addition, any expected bump-up will happen in revenue, because of six-month cooling period revenue recognition?
Shirish Patel
That AUM acquisition because of change of broker is not that big. As I said that the number is not that big because we are not aggressively marketing, number one. Number two, as you said that the way I think money will come, is there a risk of bigger distributor going out? Theoretically, if you assume, always say that is there a possibility, there is a possibility, but why we believe that it is less churn because the change of broker code theoretically should or will happen in a case when the distributor is not getting the commission on the existing assets.
Now say, for example, my distributor come across any investor — investor’s investment, where he is not getting that trade, probably he will do the change of broker code. But the distributor who himself is getting the tail commission from Prudent, I don’t think that he will be motivated to move the assets somewhere else in expectations of earning and by compromising six months tail. So that is where we believe that the chances of bigger distributor or any distributor of Prudent moving out with change of broker code, I think it’s very, very late. Yes, somebody else — some other distributor might take away Prudent’s distributors per AUM, that is a possibility, but distributor himself might not do it.
Sanketh Godha
Got it, sir. Perfect. That’s it from my side. Thank you for the answer.
Operator
Thank you. The next question is from the line of Lakshminarayanan KG from Tunga Investments. Please go ahead.
Lakshminarayanan KG
Sir, I just want to understand what is the net cash on the books as on end of the first half.
Shirish Patel
I think it’s roughly about INR430 crore — INR430 crores, INR440 crores.
Sanjay Shah
So actually, I think the cash on the balance sheet would be roughly about INR400 crore and because of the merger of Prudent Corporate with Prudent Broking, what we did is we haven’t provided bank guarantee to the exchange, but we provided our additional cash in form of FD to that exchange. So I think that some INR40 crore, INR50 crore has been — even though it is a liquidity, but will not be visible in the liquidity. So all in all, about INR450 crore, if I take over that FD to exchange, it’s about INR400 crores.
Lakshminarayanan KG
So what kind of income we generate on this cash? Because I see that the other income what we see in the top-line seems to be a little underwhelming, so if you can just help me understand where the benefit of this holding cash is captured in the income statement?
Sanjay Shah
No, no, the entire cash is deployed in the liquid and liquid category. So it’s — either it will be in form of liquid or we might be holding some AAA-rated bonds. So it’s definitely into the debt category. We have small SIP going on since years [Speech Overlap]
Lakshminarayanan KG
What’s the yield we get there, sir? I mean, what’s the per — what’s the yield we are getting there in?
Sanjay Shah
The average yield is roughly about 6.1%, 6.2% kind of thing on the overall liquid portfolio. But other income, which you are looking that includes a lot of other business income also like we distribute the FDE bonds.
Lakshminarayanan KG
Okay. So I mean our cash is high and we also would generate significant cash this year also, but our dividend distribution has been lower. Now what’s the plan for the organization? What is your dividend distribution policy and why do you need to hold a lot of cash? How is the organization thinking about this?
Sanjay Shah
So the cash generation has started happening since last year because previously we had the cash which was used for acquiring Karvy, and we believe there will be some acquisition which will be on the way. So I think we have been telling consistently that we would like to preserve cash for at least next one years, two years, and we might see within one years, two years, we might reach a war chest of about INR100 crore. So I think we will try — we have been constantly looking for some acquisitions. However, if we are unable to identify something, then definitely we will distribute, but at least for next few years, we’d like to preserve this cash.
Lakshminarayanan KG
Got it, sir. Thank you so much.
Sanjay Shah
Thank you very much.
Operator
Thank you. [Operator Instructions] The next question is from the line of Krupanshu from Thinqwise Wealth. Please go ahead.
Krupanshu Shah
Hi, thanks for the opportunity. So I have one question on yield. So, sir, you mentioned that last quarter we had a one-off, which was to the tune of roughly two bps, and if we see this quarter, we’ve maintained our yields, and there was some rationalization because of [Indecipherable] of the AUM in our yield, but I don’t see any impact, in fact, we’ve got better yield. So I just wanted to understand what explains this? That’s my first question.
Secondly, we have this line item of distribution of financial and non-financial assets, right? Sir, could you please give us a breakup as to what’s the mix of, say, liquid loans, PMS, AIF unlisted share broadly? And my last question is more of, if you can just explain like in the last one month, we’ve seen slight correction, right, in the month of October. So when [Indecipherable] is significantly down, say, 1%, 2%, so what were the clients’ reaction, like just what I wanted to understand from you, like were they increasing their SIP amounts? Were they putting in more lump-sum or something — some industry trend as to how customer behavior was, if you can give us some thought. Thanks.
Sanjay Shah
So let me first of all address about the yield. So you said that in the first quarter, our yield was a bit higher because of some prior period income, which has been booked in the first quarter due to relaxation in KYC norms, that was about some INR4.4 crores, which was roughly about 2 basis points of my revenue. So if you look at first quarter yield was roughly about 92 basis points, if you take away that 2 basis points, our yield was in the range of 90 basis points. In the current quarter also, it is similarly the same range, roughly about 90 basis points, 91 basis points.
Second, about B-30 [Phonetics], it’s already out of the way since last February. So the B-30 income was only there in the last year, but from February onwards, it was zero. So first quarter and the current year second quarter, B-30 is practically zero. Third, about the impact in the second quarter about the HDFC, as I said you, hardly about INR73 lakh is the lower income because of HDFC reduction in back-book. So I think the impact is very, very less. So overall, I think we believe the yield would remain more or less constant in the range of 90 basis points even after all the adjustments are concerned. [Speech Overlap]
Krupanshu Shah
Just a follow-up [Speech Overlap] This quarter yields are 91.8 bps, right, if I’m not wrong.
Sanjay Shah
Yeah, I think the — I think 91 basis points. So roughly, I think it’s — if we adjust, I think you’re right, yield is showing the improvement about some 70 basis points, 80 basis points, but still we need to look at the current quarter to get it validated.
Krupanshu Shah
[Speech Overlap] So going forward, [Speech Overlap]
Sanjay Shah
I think you are right, even if I adjust the yield is still showing some amount of at least about 1 basis point or 0.5 basis point elevated level. We have to look at whether it’s a continuous improvement in the current quarter or it’s the one-off item because of gross flows, just need to validate that.
Krupanshu Shah
OKay, sir. Thank you.
Sanjay Shah
Coming to the breakup of our non-business. Yeah, so mainly it comes from — it’s roughly about INR2.97 crores would be the revenue from liquid only in the first six months. I think the P&L we have would be about INR4.2 crores and the total — then all the miscellaneous item would be less and your small case and everything will be less.
Now regarding third question about — you asked about the…
Krupanshu Shah
Market coming down how the flow is impacted?
Sanjay Shah
Yes, yes. If you want to address.
Shirish Patel
So basically, yes, I think — the last few weeks, we can say that we have seen the market correction and historically we have seen that when the first correction comes, more and more people participate in the investments and if this correction continues for few months, then probably we see the moderation of the business. Currently, if I look at my October basis, probably I would say that in terms of new SIPs, we mostly will do much higher than my September number. So that itself says that the new flows have not got impacted. Even if I look at my first purchase for October, I believe I think we’ll be able to beat our September’s number so that itself says that the — this correction has not impacted the flows. But yes, if this kind of correction continues for a few months, we might see some moderation in the flows.
Krupanshu Shah
Understood. Thank you, sir. And Happy Diwali.
Sanjay Shah
Thank you.
Operator
Thank you. The next question is from the line of Dipanjan Ghosh from Citibank. Please go ahead.
Dipanjan Ghosh
Hi, sir. Sorry, just a few follow-ups. Now, on this other financial products, this number has kind of stagnated around that INR8 crore to INR9 crores per quarter. So just wanted to get some sense of can we kind of expect some traction on this number going ahead? And sir, second question is on the — on basically this HDFC, Nippon again. So what — correct me if I’m wrong, what I understood is that overall impact is around INR6 crore annually, but because you have been able to kind of pass it on a bit of it to the distributor, net-net, your 2Q impact was a few lakhs like, 70 lakh, INR80 lakh, is that a fair understanding?
Sanjay Shah
So, Shirish?
Shirish Patel
No. Sanjay spoke about the impact in the revenue in last quarter is around INR80 lakh. The annual impact would be around INR6 crore in the revenue. As we said that we will be able to pass it on to our distributor in the ratio of our sharing. So that is what we have spoken about. So INR6 crores is the annual impact. Quarterly revenue impact would be around INR1.5 crores, out of that, we’ll be able to pass it on in the ratio what we normally pay to our distributors. I hope I addressed your question.
Dipanjan Ghosh
So in the ratio of like 2:3 broadly 70:30 or 65:35 something?
Sanjay Shah
Yeah. So in the similar ratio.
Shirish Patel
So every time the ratio might not be followed exactly because we need to see that what AMCs are doing for other MFDs in the market. So that varies AMC to AMC, but in the recent cut, we believe we could manage to maintain our margin or the GP margin.
Dipanjan Ghosh
Got it. And sir, on the other financial credits, the absolute revenue seems to have kind of stagnated around INR8 crores to INR9 crores.
Shirish Patel
So last quarter, because of this P2P guideline, there was certain reduction in the AUM, we give the exit to the investor, last two months, we didn’t do any new business in P2P. So one, mainly in the P2P product, the revenue has come down mainly because of the regulation change. All other product revenue growth is still there.
Dipanjan Ghosh
And so any like — I mean, do you continue to foresee this segment growing at, let’s say, 30%, 40% plus, which has been the historical run rate?
Shirish Patel
So except P2P products, yes, we can — we can believe that this product revenue growth should be there. P2P, we are yet to evaluate the new avatar of the products and then we’ll take a call on the P2P.[Speech Overlap]
Dipanjan Ghosh
So my last question will be [Speech Overlap]
Shirish Patel
All other products we are comfortable with.
Dipanjan Ghosh
And sir, my last question in that case will be, could you quantify P2P in FY24 revenue mix within this particular segment?
Sanjay Shah
So I think in the FY24, our revenue was about INR5.5 crore from P2P. In first six months, our revenue from P2P was about INR297 crore — INR2.97 crore and we started the year with about INR650 crore of AUM on the P2P. When I’m talking to now that AUM has came down to INR340 crore. So you can say that the — there might be impact of about INR3 crore, INR4 crore — INR3 crore roughly if I assume that INR300 crores remains stagnant, then my 50% income will come down.
Dipanjan Ghosh
Got it, got it. Thank you. Thank you for the detailed explanation and all the best.
Operator
Thank you. [Operator Instructions] As there are no further questions, I would now like to hand the conference over to the management for closing comments.
Sanjay Shah
Thank you. Thank you very much for all your questions and everybody who has joined on this call. If at all, if there is any question which has been unanswered, Parth Parekh, who handles our investor relationship as well as we all are aware that the phone call away, so anytime you can reach out. And I wish everybody a Happy Diwali and a very, very prosperous New Year. Thank you.
Shirish Patel
Happy Diwali. Thank you.
Operator
Thank you. On behalf of Equirus Securities Private Limited, that concludes this conference. [Operator Closing Remarks]