Prudent Corporate Advisory Services Limited (NSE: PRUDENT) Q3 2025 Earnings Call dated Jan. 28, 2025
Corporate Participants:
Sanjay Shah — Chairman and Managing Director
Shirish Patel — Whole-time Director and Chief Executive Officer
Chirag Kothari — Chief Financial Officer
Analysts:
Shubham Prajapati — Analyst
Swarnabh Mukherjee — Analyst
Dhawal — Analyst
Prayesh Jain — Analyst
Lalit Deo — Analyst
Dipanjan Ghosh — Analyst
Nikhil Suresh — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Prudent Corporate Advisory Services Limited 3Q FY 25 results update conference call hosted by ICICI 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. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on. A touchstone phone. Please note that this conference has been recorded.
I now hand the conference over to Mr. Shubham Prajapati from ICICI securities. Thank you. And over to you sir.
Shubham Prajapati — Analyst
Yeah. Hi. Good morning, everyone, and welcome to the Q three FY 25 results Con call Of Prudent Corporate Advisory. We have with us management of Prudent Corporate Advisory Services Limited, represented by Mr. Sanjay Shah, Chairman and managing director; Mr. Shirish Patel, CEO and Whole-time Director; Mr. Chirag Shah, Non-Executive Director; and Mr. Chirag Kothari, CFO.
Now, we would request the management to start with the opening comments post, which we can open the floor for Q and A. Thank you. And over to you, sir.
Sanjay Shah — Chairman and Managing Director
Thank you, Shubham. Thank you and good morning to everybody. I welcome you all to the earning call. I thank you all for sparing your valuable time to join us today. I hope you have the investor presentation handy with you, because during the discussions, I will be referring a lot of slides which has been given in the investor presentation.
So before I start discussing the current quarter’s number, please turn to slide 20, where we have showcased a compelling story of how mutual fund distributors can exponentially scale that business by aligning with a platform like Prudentin top two bar illustrates how prudence am has outpaced industries regular am. Growth for last decade, while the industry has groww at a steady 18% CAGR Prudent has achieved a remarkable 36% CAGr, growing at twice the pace of industry. What is even more striking are the two charts at the bottom here. We compared the growth of our top thousand mfds with those of industries top thousand distributors to ensure a fair comparison. We have excluded banks from the industry data. The results are extraordinary. The industry’s top thousand distributors have. Grown their EM at a kegar of 18.6%, multiplying their AUM by 5.5 times in last decade.
However, in comparison, our top thousand distributors have achieved an impressive 41.1% kegar, multiplying their aum by staggering 31 times. This data clearly demonstrates unparalleled growth potential of partnering with a platform like Prudentin. It’s evident that such an alignment is not just beneficial, even it is essential. For the mutual fund distributors who aspire to scale their business exponentially.
Now please turn to slide 21. This slide highlights how leveraging technology within our platform has accelerated the growth for our top distributors. The slide segments our top thousand distributors into the group of 202 hundred each money 1st 200, then 201 to 400, 401 to 600. Likewise, based on their aum. The first chart on the left hand side. Shows the percentage of AM on our technology platform fund Bajar by these subgroups. So from top 200 distributors, you will see that a significant 72% of am they have on our fund. Bajan, while the 802,000 distributors group this figure is only about 52%.
The correlation is clear when we examine the ten year growth rates. Top 200 distributors who use fund budget extensively has achieved a 45% CAGR in last ten years. In contrast, 801 2000 distributors group has Groww at a slower pace of 30%. Technology adoptions directly impact the number of clients a distributor can handle. The top 200 distributors manages an average of 730 clients visa visa category of 800,000 802,000 who manages 164 clients. So this slide number 20 and 21 collectively emphasizes a powerful message.
Partnering with a platform and adoption of technology are two critical drivers for the exponential growth. For the mutual fund distributors. So we thought we’ll just try and tell you what are the growth drivers of people aligning their interest with the Prudentin.
So now please move to our slide. Number 43 coming to the student numbers. I would like you to go. To the slide. 43 the chart on the left hand side of the slide states. AUM on a catalysing am business as of December end and we are 7.4% higher compared to nine month average AVM. However, I just wanted to tell you that in the current month due to significant corrections. As of yesterday, our am is down by almost about 6.1% due to mark to market. So from 1.6 lakh Groww we are now close to one lakh crore. However, I want to categorically call out that the retail sentiment is very much intact.
Our net sales in first nine month is 50% higher than what we did in last full fiscal of 2024. The redemption ratio at 44% during the last quarter. Is much lower than the 30 quarter historic average of 60%. The gross new active investors added in first nine months of our fiscal is already equal to the number of active investors we have added in last entire financial year of 2024, our monthly run rate of adding 20 crore sips. Is still continuing, and we are continuing to add the same number in the current month also, so if you look at the chart on the right hand side, quarterly average, um, is up by 3.4%. Sequentially and 44.6% on a Yy basis.
Now come to slide 44. We have shared the details of what moved our equity area on a Yoy basis and quarteronquarter basis as seen in the left hand chart catalysing equity AM has moved higher by 38% yy to around 1.2 lakh crore with 40% of the movement being contributed by net sales and the balance by market gains, net equity sales. As stated during the last fourth quarter has been really strong at 11,654 crore. If you see the right hand chart which shows the movement in equity on a sequential basis. Equity has declined by 1.2% mainly due to negative mark to market of 4.7%. In last quarter, however. Our mpm losses were lower than the Nifty 500 downfall of 7.7%. In last quarter.
Now please move to slide 45, wherein our bottom left. We have given the data. On monthly sip flows and our markets are in sips during the month and our monthly SIP book has touched 935 crore. We have added 200 and. 80 crore to our sip book in last twelve months and we are confident to touch the mark. Of 1000 crore by March 2025. In the month of September, we collected 143 crore through systematic transport plan. This number is reported by us on the actual or realized basis, the STP value of 143 crore is not included in the SIP number which I have talked about.
Now, let me now turn to the current financials. So please move to slide 48, which is. The last slide of our presentation, which talks about the standalone number. Now, let us look at the revenue front. On the revenue front, you would have seen a sequential decline in other financial and nonfinancial product to the tune of 21%. This is mainly triggered by fall in the aum of PTP product, which we are distributing. Called liquilone. With the implementation of new regulations by RBI around August last year, there is no fresh inflow in this segment, and with no phase inflow, existing area is going to run down due to constant mat. Maturity in FY 24. We earn a gross revenue of 13 crore from p two p distribution.
And in first nine months, the current fiscal our revenue stands at 6.6 crore. If you look at the bifurcation of first nine months. The last quarter alone, which is the quarter period previous to this quarter. That means September quarter alone. Beyond two point. 56 crore. And the December quarter we earn 43. 43 lakhs only. So there was a. Significant drop of 2.1 crore in the p two p segment in this quarter alone. However, On the other side, there is a strong growth in the PMS AIF as well as fixed deposit vertical. Our average PMS AIf in first nine months of the current fiscal has doubled to 1060 crore from full year average of 605 crore of last year. Our catalysing AUM in the PMS am segment as on 34 December was 1270 crore. So this reflect a significant growth from previous year in the PMS and EIF. And we believe PMSN, AIF is a pure, pure trail driven product, which is very very aligned with the mutual fund business for us.
Now coming to another line item, which is the stockbroking. So on the stockbroking, two sequentially revenue have fallen by a third. Large part of this fall is attributed to a fall in transnational revenue owing to a heightened volatility and fall in the market. Also, there are some teaching issues which we have faced in the last quarter due to the merger. Of Prudentin broking with the Prudentin corporate, which also led to an incremental revenue fall in the particular segment. However, In the broking segment. Let me tell you that in the current quarter, very soon, we are going to lie with margin trading facility. A large part of our broking revenue comes from cash. Segment, and we believe this will be a good valueadded product for our broking clients.
Now trying to address another revenue item, which is our treasury income classified as. The other income. And if you look at there on a standalone number, our other revenue has also fallen by 26% from 5.8 crore to 4.3 crore. It’s mainly because of marktomarket losses on our small portion of money, which we have invested into equity. So I’ll just tell you that we have roughly about 1516 lakhs. Rupees of sip. Going on per month and we have hardly about 1012 crore of exposure into the equity book. I think Uska mark to market losses last quarter can be rah. So that is also I think one of the reason for falling. So I think there are a lot of things which has impacted the revenue item. And that’s the reason you will see that revenue invest came under. Pressure in spite of there being almost 3.4% growth in the average AVM and mutual fund revenue has Groww in the same line.
Now, another major change you will see is in the commission and the fee expense item sequentially. The payout ratio has increased from 63.4% to 64.6%. So let me just try and address this also. So by end of second quarter, That is the end of September quarter. We rolled out a scheme of additional trail for our partners. Based on the net sales did by them in the current financial year. So the partial cost of that based on certain projections was provided by first six months.
However, when we are preparing the result for the December number, we. Reassess the possible costs because of this additional trail. And as I already told you, that. There is a significant higher net sales, which is done by us or our distributors in the current quarter. And so I think we realized that there is a need to make higher provision for the same due to strong net sales and which we are witnessing. Hence, we need to provide additional six crore towards this. And out of this six crore we have done an extra provision of three crore this quarter and balance we will be providing based on the actual number in the March Qu? Quarter. So this was on the payout front. So despite the challenges, our standalone revenue and profit in the quarter grew by 42% and 43%, respectively, on a y basis.
Now, let me take you to the consolidated number of slides. So move to a slide number 47 on the insurance. Front also. I think the incense revenue degrew by 15.6% sequentially to 28.6 crore. Which has laid by a fall in the life insurance phase premium. So if you look at industry as a whole. Also, if you look at the data for individual new business premium for allied industry also degrew by about 10% on account of channelise in the surrender value, which has been implemented by the regulator from 1 October. The race structure. Were not clear, and because of no clarity which has emerged from the manufacturer in the first month, I think the October month was significantly impacted. So that has led to a phase premium at a very low level in the month of October and mid of November. So, however, business is much better. In January when I’m talking about to you the December compared to. December. We are expecting the business is likely to be reasonably okay in this quarter.
So now, finally. Looking at the consolidated profit for the entire quarter, which grew by 35% Yoy to 48.2. Crore. Additionally, our treasury book has reached 330 crore which is also giving us a watches. To grow inorganically. So, to summarize, The result. To summarize the result, slower growth in revenue is mainly because of non mutual fund product like p two, p broking, insurance and the treasury book. The deep in margin was mainly laid by the management call to announce additional trail based on the net sales to a distributors despite challenges during the quarter, our profit grew by 43% Yoy.
Our growth is driven by flow through retail investors, which is predominantly coming through SIP, which with an average ticket size of rs2900. This reflect the strength and the resilience of our retail base, the SIP are ingrained as a disciplined habit rather than a discretionary investment. So this solid foundation reinforces our belief in. The structural shift over mutual fund and positions us for the sustainable growth.
So I think with this I’ll rest and I’ll keep the floor open for question answers.
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 the 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 a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.
The first question comes from the line of Swarnabh Mukherjee with B&K securities, please go ahead.
Swarnabh Mukherjee
It’s a good morning and thank you for the opportunity. Sir. First question is on the flow part of the business, so just wanted to understand that. Till the December. The number looks fairly strong. And you have given some qualitative idea also in your opening remark. But if you could give some clarity in terms of quantitatively, like the 935 crore SIP flow number that was there in monthly December, what it would be broadly in case of January, because we are almost catalysing January now. And in terms. Of net sales. How is it panning out again in January? And. Given the market, in fact, that is there in the market. Much degrowth. Broadly, we should expect. In some particular month in terms of. Our overall revenue. So that is the first question.
In terms of. The MFD activation and getting new business. I just. Wanted to. Situation right now because the kind of correction that is there in the market. Would have occurred after. A good amount of time. So wanted to understand how you are seeing in terms of MMP activation in that space. And again in terms of the distribution of financial products, We are also seeing a lot of. Players like fintech. And entities who were in broking earlier now starting to focus on this line of business. Both through a digital medium as well as, I think, through an intermediate medium. So wanted to understand. How you are gauging the scenario. Would the competitive intensity go up further in this case? How you are seeing that. So that is on the mutual fund business.
On the life insurance business. I just wanted to understand that the blended commission rate has come. Off this quarter. I guess because of the surrender value change. In the commission structure, so. Has it kind of stabilized, or should we see any further compression going forward? Also, your view on that. Will be my question.
Sanjay Shah
I think Shirish to address about the sIP net flows incidence, about the MFP edits and the new business. Yes, Shirish.
Shirish Patel
Yeah, because of the market correction, I think last seven, eight days we have seen that some drop. In the new business. But we are confident that we should be able to achieve the new SIP numbers, which would be higher than my November and December number to January till date. Also, whatever we have done and what remaining is we are anticipating probably January business would be higher than what we did in the month. Of November December. Similar would be the case in. Case of good fresh sales as well. So fresh sales also last four or five days, I think. I would say that volumes have dropped significantly, but January month till we are hopeful that we should do better fresh sales compared to what we did in the month of November and December.
Coming to the net sales side. I think we are very confident and nature also would be higher. Than what we did in. Obviously, we were anticipating January to be a very great month compared to what we used to do. In last one, two quarters. But because of the correction, we could not deliver the extraordinary number in the month of January. But surely we’ll be able to do much higher than what we did in the month of November, December, so that we are very confident on.
Second point was the MFD activation to peers. New business has come down. The volume has come down in last 5710 days but MFD activation in current month. Also. Is the same like what we used to do in the previous months. There is no drop in the number of MFD participating in this particular month. Mfd acquisition. New mfd acquisition. Is rather little higher than what we did in last two, three months. So that parameter also, we are on track, so we are not much worried about it.
Another point. The blanket yield because of the surrender value. Lended yield has come down mainly because of two reasons. One definitely is the surrender value changes post October. And second is some business mix, mainly because. In this quarter. Our new business. In life insurance has dropped, so that has attributed some drop. And secondly, the product mix also has changed. Earlier. We never used to. Do the Uly product now. At least 51% of our business is contributed in the ULIP product, and that also has brought down a little bit of the branded. Hopeful that I think the blended yield should. Rise to the current level. I don’t think that. I think. It should. Change mainly.
But yes, I think should stabilize at the current level. Your other point was the other product, which the new competition, fintechs and all these companies. Have started selling. Mainly we talk about five products apart from mutual funds, one on one. One is the p two. P obviously, we were. Our growth in the p two p was very, very high, but mainly because of this rule change or the RBN new guidelines. We stopped selling the p two p products. From August onwards and hence. There is a drop. So obviously, I think we are not hoping that the p two p revenue will come back. So that could be the major loss in the near future. Unless we replace it. By some other product coming to the pms side. Pms and AIf side we have Groww that pie. So that is helping us to compensate some loss from the p two p Business.
FD is a new vertical, new business. Historically, the revenue was not great in the fixed deposit business, but incrementally we are doing a better volume in the fixed deposit business. So that is a positive thing, stockbroking. Earlier. Also, we used to contribute around three to 4% of our revenue. We don’t. See a major movement on the stockbroking business side and insurance. We are very, very hopeful. That the numbers should come back.
And one positive things which would like to highlight now till date we used to do the Broking. And the subsidiary called Gen X Insurance as a broker. We also have started doing insurance business in the name of Prudentin with the corporate agency. And recently we have launched. Insurance business on our same portal funds, Bajar, where we distribute mutual funds. So that could be. A positive trigger. So we are hoping that the insurance also should become stronger over a period of time, I hope. I think I address all your questions.
Swarnabh Mukherjee
Yeah, understood, sir. I just had some follow up on this. So in terms of the product distribution by competitors, also, I just wanted. To ask that. In a couple of large companies. Also announced getting into mutual fund distribution as well. So is that a risk to our model in any way. I just wanted to understand that. And secondly, in terms of. The chart that you have shared. That is very insightful, but I wanted to understand that among the thousand distributors. In the industry. Top thousand distributors in the industry. How many of our distributors would broadly figure out there and what would be their growth rate visa. The remaining.
Shirish Patel
So, first part, I think. Let me answer, second part Sanjay bhai will come in. What I understood. I think you are trying to ask that there are few other platforms who enter in the b two B mutual fund distribution business. is my understanding right?
Swarnabh Mukherjee
Even b. Two c also. There are three. Which has been shown.
Shirish Patel
Only if you look at when you are talking about b two, C. Historically, all of them, or majority of them are mainly on the direct plan side. Obviously, if you have seen the number, definitely the direct plan is growing faster than the regular plan. But within regular plan. I think we are very confident that we should be able to maintain our market share. Or rather, we should be able to increase the markets on our regular side. Direct plans may grow faster than the regular, but that does not mean that the regular plants or the regular distributors might not grow. That is our view which we are holding for last many years. And still we are holding on that particular view.
Second part, I think let Sanjay come in and answer. Are you there?
Sanjay Shah
I think Shirish has answered your question.
Swarnabh Mukherjee
Yeah, if you can highlight on the top thousand distributor part.
Sanjay Shah
Yeah. So the top thousand. What we did is that. We took the current list of top distributors. We strike. Of all the banks and those were occupying the top league or the top table today. They should be in the business before ten years. And those are the lists we have compiled, so. Which includes ngine student also right, because all the banks has been removed and everybody is a part of that table, but I think none of my distributor would be a part of that because. Anybody who is working with me that ARn would not be there in the industry because that ERN would not be forming part of at least 12,000.
Swarnabh Mukherjee
Okay, so the top thousand. Is not necessarily individual, but includes. NB’s also.
Sanjay Shah
Yes. Because it was very difficult. Because NDRD and other is a very difficult thing for you. To classify, right? Because then it was. And we got this number audited by a chartered accountant. So it was very difficult for you to classify because it’s always based on your own. Perception. So we just removed the bank and all non bank top thousand player has been taken.
Swarnabh Mukherjee
Okay, sir. Understood. Very helpful. Thank you so much, sir, and all the best.
Operator
Thank you. The next question comes from the line of Dhawal from DSP Asset Managers, please. Go ahead.
Dhawal
Yeah. Hi, Sanjay bhai Congrats on good quarter. Just had a couple of questions. First was relating. To where we are in terms of Aum and where we closed in December. So assuming. The 27th Jan number holds for the rest of the quarter. So from an earnings perspective, it should be like a 5% kind of decline from where we were last quarter. Is that how one should think about it or just trying to understand. Mark to market has how much. Impact from where we are.
Sanjay Shah
No, if you look at I think you look at the average aum to closing Aum chart which we have provided. So last nine months, average ju mean last quarter, every GM is roughly about close to one lakh crore. And today we are at one lakh crore. So actually if you look at from one lakh 6000 crore to one leg, I think average would be in the range of one lakh 2000. Crore. So motorboti a quarter may pay me anachia gham. Ghamajo. But if you fall from here, then you keep in mind that there is a strong word series. Also said. I am also telling you there is strong cells still I think the retail is not hugely impacted. So if you assume that my 950 crore thousand crore kind of a sip, which I have been getting. If that money stays in, then, which is almost about a percent right. [Foreign Speech] Then I should be reasonably with a couple of percentage variation. So, frankly, Dhawal, you need to keep in if you do a projection of what is going to be the impact of Mark to market. [Foreign Speech]
Dhawal
Understood. Sanjay bhai, what I was referring to was the third quarter number. But I understand your point. That nine month average is by and large almost similar. So it should not be too much different. So that point I understand. The other bit, which I wanted to clarify, was on the non mf side. Directionally, what is the kind of growth that one should expect. In next couple of years. From a net revenue perspective, what kind of growth you are budgeting? In for the nonmf revenues.
Sanjay Shah
So non fs significant revenue comes from, I think, now — Shirish?
Shirish Patel
Non MF insurance is our biggest insurance. Mainly it is life insurance and health insurance. Life insurance. Main revenue comes from the PH business, health insurance. Even comes from fleece, as well as the renewal business. If you look at our health insurance growth as a bookside. Also, we are growing far, far better, our entire focus mainly to grow the total book off with the health insurance, and we are very, very hopeful and confident. Business is growing, and surely it’s going to grow faster. Mainly after Prudent launching the insurance business on the funds Bajar. Till now also the nine month number in the health insurance business [Technical Issues].
Sanjay Shah
Shirish, we lost you. Hello? Yeah.
Chirag Kothari
So what he wanted to say was, in line one health insurance business. Cross the last. Whole year. Of presentation.
Shirish Patel
Yeah. And another part was life. In case of life insurance. There may be some kind of slowdown, but overall health insurance will compensate for the sake.
Sanjay Shah
So there are three parts. One is the major revenue comes from the insurance, and probably what Shirish and Chirag is trying to say that overall we feel that it should do reasonably better. We don’t see a lot of pressure on that particular part. Once the thing gets stabilized on the revenue part on the broking and the PMS AIf. So if you look at the non mutual for non insurance. We do a distribution. All the financial p two p nickel here now, and p two p has. To a large extent in last quarter has been already replaced by the PMS AIs because the book has almost doubled from 600 crore of book which we had in the last full year. This year. Now that book is about 1060 crore and this is a catalysing game. Of 1200 crores.
So we believe that one, two. Hundred crore additional revenue. You will definitely compensate the fall of p two p next year or other. It will give you more, better revenue. I think the FD business, which we started in last six, nine months. That also should better over a period of time and broking, which was the transitory phase. Now broking is also with the empty and everything I think should do because they’re very small base. I. Think insurance [Foreign Speech] and they should do definitely much better. But we do not have a projection [Foreign Speech].
Dhawal
Understood. So, Sanjay bhai, just to complete this point, so if you look at nine month net revenue growth of the non MF side, that is about 25%, roughly 124 Corolla versus 99 crore. So that growth trajectory, by and large, should continue is what I was trying to get through, that you’re very confident, Net net, with these new changes that we’ve made.
Sanjay Shah
Yeah yeah.
Dhawal
Okay. Got it. And this last bit is on the opex side. Any thoughts in terms of what? Kind of opex growth one should assume. For next couple of years. Like what kind of growth? Assuming aum again. Just trying to think on its own how much should be the opex growth.
Sanjay Shah
I think the Opex also, if you look at the last year, we added almost about 20, 25 branches and in the current year again, there is an incremental cost which is visible. On the opex side is mainly because of rent, electricity, convenience, because these are all related to branch expansion. I don’t think today we had 135. I think Shirish will definitely come in and. Say, but I don’t see significant rise from here onward. So you can look at the inflation plus kind of about 8,10 12% kind of growth on the opex side without assuming significant addition on what you call the branches.
On the manpower front, I think the salary growth will still continue to be little bit elevated than the normal because of the competition which is emerging. So I think salary [Foreign Speech], but overall, I think it will be. Overall, Opex should be within the range. Of twelve to 13%. 12 to 14%.
Dhawal
Understood. Perfect. Those are a question. Thank you, Sanjay, and all the best.
Sanjay Shah
Thank you.
Operator
Thank you. The next question comes from the line of Prayesh Jain with Motilal Oswal, please go ahead.
Prayesh Jain
Yeah. Good morning, Sanjay bhai. Just a few questions. Firstly. Your market share has been falling. 3.73.63.5 now. Is it because of the competition that is emerging from the discount brokers or the direct route? And how do you see this trajectory going ahead? Second question is. On the new arrangement that you have done with MFD of giving a higher trail now. On the other side, you have your ANC who are kind of linking their commission to the tes and in a growing. Time probably will see a decline in ER and that would lead to decline in commission. In that period, we are increasing the sharing. So is it because. There’s a competitive structurally, does this business change towards a much higher sharing now. We should assume that this sharing ratio that we’ve reached in this quarter are probably slightly lesser than the current quarter because some of the affected are coming of the previous quarter In 3Q. So do you think that structurally we should assume higher scaring going ahead for the next couple of years?
Sanjay Shah
Shirish?
Shirish Patel
Yeah. So, coming to your first point, that sip share has reduced by around. One basis point or something. Here. Obviously, I think the market share of all these fintechs in the direct plan is growing. I think today, if you look at the direct plan contributes significant in the SIP growth more and more sips are coming through the fintech and the directly to the AMCs when you look at the total industry. Also direct will grow faster than the regular. Obviously, I think when you look at the total market, share on the industry. We might be similar or little lower, but when you isolate into the only regular. We are gaining the market share. In terms of regular, I think definitely the growth rate is much higher than the industry’s. Regular growth. So there. I think we are very confident on.
Your second point is that when AMCs are talking about pressure on the margins and why Prudentin has increased the cost by offering the higher additional trail. Obviously, I think we believe that this is the time when the sentiment was really good. I think if you exclude last one. Two, three months. If you see that we believe that. I think this is the time to paddle up to the growth. On the business. So obviously, and that actually has helped us, if you look at our net sales to gross sales ratio has improvised. Obviously, the more and more contribution is also coming in last few quarters. If you add in the total costing the new business. What we have done in the last quarter also will increase some kind of costing. Or important.
And the most important point, I would say that. More and more, as you know, that our commission structures are the tiered structures. So as the distributor becomes bigger and bigger and bigger. Obviously, they get the little higher share in terms of Aum. Share now, I think more and more people have migrated from the smallest to the little higher. Structure. So that also has contributed a very, very little. Thing. On the higher sharing, but I don’t see that incrementally. It is going to be very costly affair or it will impact the margin in a big way. Obviously, percentage margins. Will be able to maintain absolute margin might come down, because as the size of the scheme grows, the receivable comes down will not be able to maintain the absolute margin, but obviously, I think the percentage margins we should be able to maintain. So we are not seeing any big problem in that.
Prayesh Jain
The current levels will sustain, right?
Shirish Patel
Pardon? Hello?
Prayesh Jain
The ratio. Is that the current level is sustainable?
Shirish Patel
Yes, it is sustainable, at least for the near future.
Prayesh Jain
Okay, got that. And just the clarification. If you — mentioned you have 1200 crore of Aum. In AIf and TMS together, right?
Shirish Patel
Right.
Prayesh Jain
And what kind of revenues would have earned out of that product in the quarter?
Sanjay Shah
So it’s about 4.31 crore in the current quarter. So if you analyze that, it’s roughly about 16 crore. Based on the current quarter, I think the yield would be in the range of 1.3, 1.4.
Prayesh Jain
Got the time. The sharing is similar as mutual fund or other product.
Sanjay Shah
No, it’s much better than the mutual fund. Mutual fund blended deal, which we report is 90, 91 basis point. Here I’m catalysing about 1.3 business point because here you get the GST over and above your regular reel while in case of mutual fund, whatever. You receive GST has to be paid out of pocket.
Prayesh Jain
Okay.
Shirish Patel
Absolute margin is higher.
Prayesh Jain
Absolute margin is higher. Okay. Got that. Thank you so much, sir. And. All the best.
Operator
Thank you. The next question comes from Lalit Deo with Equirus Securities. Please go ahead.
Lalit Deo
Yeah. Just a few questions. Firstly on…
Operator
[Technical Issues] use your handset please.
Sanjay Shah
Lots of disturbance yeah.
Lalit Deo
Is this better?
Operator
No. Sir, can you please use your handset? Your audio still muffled, sir.
Lalit Deo
Is this better?
Operator
Yes, please, go ahead.
Lalit Deo
Yeah, so just two questions, actually. Right now, we are hearing that a lot of AMCs have been rationalizing their distributor commission. So just wanted to get a sense, like, how should we see our commission yields? Gross yields for the next two for the next couple of years. Going ahead and what would be the impact of the sale on the top line as well as the bottom line. And secondly. When we look at the insurance business. So just wanted to know how is the business trading doing? In the month of January. Are we back to the normal volumes in the life insurance or is it still lower than what we have envisaged?
Sanjay Shah
Shirish?
Shirish Patel
Yes, I think few AMCs have hit the commission in last few quarters. We believe that the bigger ones already have started or they are already cut. This is mainly because if you see the AVM growth in last two or three years and that has impacted AMC’s margin severely and hence they have cut the commission. Whether this kind of card will continue or will go to all the AMCs. I think the opinion might be little different compared to what you might be thinking. Yes. I think few AMCs might come in to cut historical assets. Obviously, when the historical estates on certain schemes is reduced, it might impact the gross yield, gross revenue. At the aggregate level, but the impact might not be that great. Because last few years. As and when the size has become bigger and bigger. The AMC, they already reduced the commissions on the new business. That depends on how many AMCs do come in to cut the commission and which all schemes they cut the commission.
So today, if you see, I think, hardlift, four or five amcs, cut the commission on the historical assets and therefore not on all schemes. So only time would say that, I think which all AMCs and which all schemes, they cut the commission, but till now. Whatever. They have cut is already absorbed in the system. And you can see that I think we could. Be able to maintain the margins on the gross side coming to the net side, net yield side. Also because we believe that as and when the AMCs cut the commission for us, Simultaneously. They also will cut the commission. For the MFD community or the other distributors as well. So whenever they cut our commission, we are also able to pass it on the commission in the almost the sharing ratio to our distribution. So we don’t see that that might impact. Our net margin in a big way.
Lalit Deo
Right.
Operator
Sir, does that answer your question?
Lalit Deo
Just on the insurance question as well.
Sanjay Shah
Insurance. What do you look at in the month of January?
Shirish Patel
Insurance business, I think, till now. So I’ll answer two ways. One is the health and life. As I said, that health insurance, we are very, very bullish, very, very aggressive and definitely I think last few quarters, we have improved our health insurance business. That we believe it is more sustainable. And long term in revenue, health insurance, probably January. We have done the highest ever number with a huge margin. So that is a very strong message. We would like to give. Life insurance side. Yes. We might not be able to see the numbers, what we did in 2023, but compared to the last quarter. Definitely. We have done the better number till now in. The month of January, and we are hoping to continue a similar kind of number in the next two, three months.
Lalit Deo
Just two data keeping questions. So, like, one was just the confirmation, like in the MF commission. Payout ratio that has increased to about 64.6%. Is that right? In this quarter?
Sanjay Shah
So, Lalit, I think the payout ratio, which I just gave you, that there is some additional provisioning of about three, three and a half flow in the current quarter because of additional trail linked to net sales, which we announced. At the end of last quarter and that the reason is the additional provision of recro so if you adjust that. So I think there is an additional cost of six crore in this two. Quarters this and next quarter. If you rationalize two year full year, I think the impact would be about one business point.
Lalit Deo
Okay, sure.
Operator
Mr. Lalit, do you have any more questions?
Lalit Deo
No, thanks.
Operator
Thank you, sir. The next question comes from the line of Dipanjan Ghosh with Citi. Please go ahead.
Dipanjan Ghosh
Hi, sir. Good morning. Just a few questions. First, on the mutual fund business. If you can kind of give a qualitative understanding of how does the commission. Yields really get restructured. For example. When the Aums have declined at such a sharp pace. I assume that the absolute quantum that you would be getting from your asset management partners would also go down. So in terms of the commission yields, are they on a daily basis of Aum. How does it really work? Both from what you get from the asset managers and what you pay? Out to your underlying agents on an absolute basis. How does the construct really be second? You mentioned that. Your December to yesterday. Ams are down 6%. 6.1%. But if I look. At Nifty Midcaps market Midcap is down like 9% more than 10%. So just wanted to get some sense of is it the underlying scheme mix or asset manager? Makes or what is really driving this relatively better. AUM movement compared to what we are seeing in the broader market.
Lastly, on the MFP part. While I’ve already answered, one of the asset management companies seem to be suggesting that on incremental flows. They are moving to more of a mirror pricing, or rather linear pricing. Of the expense ratio with the distributor commission below. Did you see that? More of a structural. Trend or is that specific to one or two asset management companies? So these are the questions on the mutual fundraiser. I have one or two questions on the…
Sanjay Shah
Shirish, you’ll address?
Shirish Patel
I will address the last point first. Yes. Mcs are adjusting their payouts based on the latest, er, I think last few years. AMCs are repricing the new business every month. Every month we are getting the commission based on the latest DTR or the latest marginal Tr of the AMC, so I don’t see that any channelise in the AMC business in the new pricing. The only new thing which is happening in last few quarters is the repricing the older assets. That has been done by few AMCs and mainly, I think, those schem. Schemes wherein the UM has groww very, very significantly, and that is very few AMCs have. Done it. We don’t see that all the AMCs will follow to cut the historical aum. But on the new business all AMCs are doing, and they are doing for last. Many years. It is already in built in the daily routine, daily pricing. So we don’t see any impact on that.
Second point. You said that the average aum. So if you look at last quarter’s average, AuM was around one lakh 2000. Crores. And today. This month. Our average aum till now is around one lakh 2000. Around. As on right now our Aum is one lakh 1000 around. So as of now, our average aum in the month of January is almost similar to the average aum of last quarter. As of now, we don’t see any big change in the commission.
Your third question was — I think I could not understood your first question, but it was, I believe, the absolute commission. What we should be, or we’ll be getting from the AMC and the absolute commission what we’ll be passing on to the distributors? Is that the question? I think I couldn’t understand first question. Dipanjan?
Sanjay Shah
He wanted to understand how you get. So it’s basically based on the daily average AUM.
Dipanjan Ghosh
That is what I was asking.
Shirish Patel
So it’s an industry norm that the commission is based on the daily average, um, into the percentage what AMC is negotiated with us. Same is the. Rule for what we distribute.
Sanjay Shah
And Dipanjan on your question regarding our ability to do better than the industry. Than the Nipsey find. It is. You are very, very true. Because if you look at we said our Coventry also last quarter. OUR AUM due to mark to market has fallen by 4.5% while Nifty find it fallen by 7.7%. Similar is the case in the current quarter also overall broader market, and the small cap midcap has fallen at a pace better more than what we have followed. So if you look at, if you add the net sales, roughly about 89 crore then our. Fall is definitely better. We are able to control the losses of the investor because we have a reasonably about 18 20% in the multi asset allocations and the hybrid category. And the exposure is definitely, I think you have the versatile book, which is having an exposure to a various category, and that’s the reason. And my belief is that even the fund management industry is also doing better in this fall, recent fall.
Operator
Mr. Dipanjan, you can go ahead with the next question.
Dipanjan Ghosh
Sorry, I got dropped off. But. Yeah, sorry. I have one or two questions on the insurance side. In the last participant’s question, you mentioned that retail plus life is doing well, but on the life side. The volume should be lower than 23. Did I understand correctly? The 23 or 24? I mean, last year or the year prior to that. When I look at the life, new business, let’s say this year, Jan. 25 versus Jan. 24 how that is shaping up.
Second. In terms of, let’s say, competition from some of the other POSC players, incrementally you are also doing newly Groww assume that some of them are also selling eulips and other products. Do you see a possibility that over a period of time. Some of the pos. Posners can make a shift. The second question. And last question is on the expense growth. When you mentioned that your expense growth will be like 12% around for the next year. That only includes core employee expense, other expense, depreciation and finance cost, right?
Sanjay Shah
So let me address the third question first. I was just giving you a general expectation that in the current year. So employee cost and the operation cost is bit elevated because we have added lot of branches in the current year. So if I consider that next year growth is not going to be as significant as what we did in the current year, then the operating cost of rent and others would remain. Morally in the range of eight to 10%. And employee, we still. Believe that. The cost of salary rise would be little bit higher than an average, so I’m assuming that would be in the risk of twelve to 14%. All in all, you can expect that. Twelve to 14% growth should come.
On the operating expenditure, I think the depreciation would be rock steady, because we do not. Have any significant addition, which will bring more cost on the depreciation side, I think finance cost is practically zero. So ye, though item. Overall, we expect that the next year growth looking at the current year. Gap. So 12 to 14% should be the range for operating expenditure, which includes the employee cost also. Shirish, now you can address the insurance in the ULIP.
Shirish Patel
To the point what you asked that lib. It was 2023 when this rule of five lakh rupees taxibility has come in. So 2020 to 23 was the base year for the life insurance business, so that is where I said that this quarter we will not be able to break what we did in. 23. We are not talking about 24. But 23 was an exceptional year in the life insurance business. So that was the point. Coming to the other pos I think the insurance business side, I think there are many other companies focusing on the PosP business, but we always have focused on the PoS. Posps from the cross selling perspective, because we already have more than 34 35,000 distributors, Arn holders working in mutual funds with us.
We normally are not in the competition, in the open market for the POSP business, we always believe that all the mutual fund distributors or the Aaron holders who are doing insurance business either somewhere outside. With a manufacturer or the insurance companies directly or those who are not doing the insurance business. I think we normally try to cater to that segment of distribution. So there is no overlap with the other. Companies focusing aggressively on the POS markup USB market from the open market. They are in existence for last four or five years in the similar business. So they are doing their own business. We are doing our own business. So there’s no overlap, big overlap between the pos.
Dipanjan Ghosh
So just one small follow up. When I look at four q 23 insurance numbers, Across the industry. It was obnoxiously high, which I think many of the countries might not be able to distribute. It might not be able to repeat in this year also, but. If you exclude the one off sales, that would have happened in four Q 23. If you just look at folk Q 24 as a relatively normalized base. On that. Do you see a positive traction? Because I think the industry might still end up with a positive y over in folk. So would you be in line with the industry or do you see the challenges of last quarter still persisting?
Shirish Patel
We might be in line with the industry, but obviously the impact of surrender value is visible in this quarter in the industry’s number as well, and probably our numbers as well. Probably our number also would be in line with the industry’s number. We are not saying that we should be able to do the. 23 number. But yes, it would be better than what we did in the previous quarter. Or the average number during the year in the life insurance side, health insurance side, definitely our numbers should be far better than what we used to do in any years.
Dipanjan Ghosh
Got it. Thank you, sir, and all the best.
Operator
Thank you. A reminder to all participants, ladies and gentlemen, you may press star and one to ask a question. The next question comes from Nikhil Suresh from Kotak Securities. Please go ahead.
Nikhil Suresh
Yes. Can you give some color on what is the mix between NFO and non NFO fuse for this year in the first quarter. And my second question would be, is there any update on the backlog revision of commissions? In terms of is there any effect on swinging flows towards other AMCs incrementally? Looking at the market dynamics. Thank you.
Shirish Patel
I could not understand the first point. If you can take it?
Sanjay Shah
The first question he was asking about the percentage of sales of NFO in our niche. So I think that number we normally used to talk to them. So last second quarter, it was roughly about 30%. First quarter it was roughly about 21%. Last quarter, Shirish, it came down to 14%. So last quarter, the [Foreign Speech] and on the total needs sales, I think the contribution of NFA scale down to 14%. That was the first question. Second, Shirish you can address.
Shirish Patel
I think if you can take the second question also.
Sanjay Shah
Second [Foreign Speech]. I didn’t understood second.
Operator
Can you repeat your question, please?
Nikhil Suresh
Yeah. Is there any effect on flows towards other AMCs incrementally because ff the backlog, revisions of commissions?
Sanjay Shah
[Foreign Speech]
Nikhil Suresh
Yeah. Is there any your update on, from your perception, an update on what is the impact of is there any impact of swinging close towards other amcs incrementally based on the backbook revision of commissions by HDFC and Nippon.
Shirish Patel
Sure. Distribution level lately. We have at some moment, but not significant, some movement happening to the flows from the bigger amcs. To mid size amcs, but that is not going to impact the overall yield in a big way incrementally as few percentage flows might go to the mid size ANC which can help us. Distribution, improving little yield, but. It is not going to impact. The gross field or the book level, so not impacting much.
Nikhil Suresh
Okay. Thank you. Thank you, sir.
Operator
Does that answer your question?
Nikhil Suresh
Yes, sir. Thank you. No, no.
Operator
Thank you. As there no further questions from the participants, I now hand the conference over to the management for closing comments.
Sanjay Shah
Thank you. Thank you. I think we could be able to answer all the queries of all the participants. This time. Our industry relationship. Guy Path is not a part of this call. However, if you have any query you can definitely come back to us or Shirish. So anybody who is a part of this call. And even the Parth Parekh, who handles the IR is always going to be he’ll be available to address all your incremental queries. Thank you. Thank you.
Operator
Thank you.
Shirish Patel
Thank you so much.
Operator
On behalf of ICICI securities, that concludes this conference. Thank you for joining us. And you may now disconnect your lines.