Prudent Corporate Advisory Services Limited (NSE: PRUDENT) Q4 2025 Earnings Call dated May. 13, 2025
Corporate Participants:
Sanjay Shah — Chairman and Managing Director
Shirish Patel — Chief Executive Officer
Analysts:
Sai Adithya Menon — Analyst
Lalit Deo — Analyst
Yash Mehta — Analyst
Dipanjan Ghosh — Analyst
Arjun Bagga — Analyst
Ajox Frederick — Analyst
Shrishti Jagati — Analyst
Sanyam Shah — Analyst
Ranveer Singh — Analyst
Presentation:
Operator
Hello, ladies and gentlemen, good day and welcome to Prudent Corporate Advisory Services Limited Q4 and FY ’25 Earnings Conference Call, hosted by Avendus Sparks. 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 your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr Sai Adity Menon from Avendus Spark. Thank you, and over to you, sir.
Sai Adithya Menon — Analyst
Thank you. Good morning, and welcome to the 4Q and FY ’25 Results con-call of Prudent Corporate Advisory. We have with us the management of Prudent Corporate Advisory Services Limited, represented by Mr Sanjay Shah, Chairman and Managing Director; Mr Shirish Patel, Chief Executive Officer and Whole-Time Director; Mr Chirag Shah, Non-Executive Director; Mr Chirag Kothari, Chief Financial Officer; and Mr Path from Investor Relations.
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, Dear. Thank you very much and good morning to everybody. So I welcome you all to the earnings call for the 4th-quarter of FY ’25. I thank you for spending a valuable time to join us today. We have the investor presentation handy, which we uploaded on the exchange yesterday as when I’ll start talking about the opening remarks, we’ll be giving references to the various slides. So to start with, I will take all of you to go to Slide 27.
So if you look at post recent market volatility, we thought of analyzing the volatility in our AUM vis-a-vis the market volatility. Our idea was to analyze our AUM and whether the AUM is as volatile as Nifty or we are part of — of — and are we a part of the cyclicality. So we have added a new slide number 27, so please come to that slide. Here we have analyzed one-year monthly ruling return from April 2010 to March 2025, which covers about 168 observations.
We bucketed these observations in three phases based on the nifty 12-month rolling return. One is negative return where Nifty has given a return less than zero, which is a beer phase. Another is positive return, which is up to 15%, which we consider the range-bound period and last one is above 15%, which is a bull phase. Now look at the outcome in each of the three phases. So first, look at the top row where return are less than 0%, that is the first the table.
In this situation, there are 38 observations, which is roughly 23% of total 168 observations. Average return during this period was negative by 8.4% as mentioned in the fourth column.
During the same-period, industry’s equity AUM grew during this 38 months was roughly flat of about 0.2%, which brought in the last column, but prudent’s equity AUM grew a strong base of positive 11.1%, this is mentioned in the second-last column. This clearly shows that even in weak market, we continue to thanks to our granular SIP book, which drives steady flow during downturns. In fact It is during this very phase that our granular SIP book becomes a true competitive advantage, delivering steady and scalable growth when others are facing net outward stagnation. Now look at the second row, where returns of were between 0% and 15%, this phase covers roughly 65 observations, which is 39% of the time. During these phase, Nifty 500 had given an average written of 7.5%. Industry equity AUM grew by 15.2%, while Prudence equity AUM grew by 27.2%. So while the broad mutual industry saw moderate growth, our equity AUM grew nearly twice as fast as the industry. So bottom-line is 61% of the time market conditions were challenging, yet during these period Prudent significantly outperformed both in absolute terms and relative to the industry showing the power of our SIP engine and resilient distribution model. So this is we thought I’ll just tell you about how cyclical we are. So now let us come to Slide 44. So this slide talks about our numbers. So we’ll state and move to our numbers now. So if you — if you look at the Slide 44, starting with the chart on the left-hand side, it compares the daily average AUM for the FY ’25 with the opening AUM of April 2025. We average revenue on a daily average AUM of around INR99,678 crores. We entered FY ’26 with an opening AUM of INR13,000 crore, which is roughly 3.8% higher than the FY ’25 average. This gives us a headroom starting in FY ’26. And as of now, our AUM has further improved to around INR1,9000 crores, which is roughly about 9.2% higher than the full-year average of FY ’25. Now moving to right-hand side of the slide, this shows the quarter early average AUM trend. For Q4 FY ’25, our average AUM was INR1,1764 crores, which is down by 3.6% sequentially compared to Q3. It is mainly due to mark-to-market losses driven by weakness in the broader equity market. That said, on a year-on-year basis, our Q4 AUM is still 26% higher than the same quarter last year. Now please move to Slide 45, which shows the movement in our equity AUM on a both year-on-year and a quarter-on-quarter basis. Starting with the year-on-year perspective on the left-hand side, our equity AUM increased by 25% during FY ’25, rising from around INR80,000 crore in March 2024 to INR1,61 crore by March ’25, an increase of nearly INR19,900 crore. Of this, roughly two-third of increase came from the net sales. We did an equity net sales of INR12,606 crore in FY ’25, which is almost double than the growth over the previous year’s number of INR6,164 crores. With this, our gross SIP inflow stood at INR10,24 crores in the full-year of FY ’25. The remaining addition of INR7,226 crore was from mark-to-market gain, which is around 9% of our opening AUM. Now if you look at the quarter-on-quarter AUM movement, our equity AUM declined marginally by 2.6% from INR1,200 crore in December 2024 to roughly INR161 crore in March 2025. This decline was primarily due to broader market correction, which led to a negative mark-to-market impact of INR5,900 crore, which is roughly about 5.8% of my AUM. Despite this market drag, we continued to head healthy positive net sales of INR3,296 crores during this quarter. Going into FY ’26, we believe that we should do net equity sales equivalent to our gross inflow from SIP to the tune of INR11,000 c Ire, which is roughly 11% or 12% of our opening equity AUR. Now let me tell you please move to Slide 46. On the bottom-left, we have given the data on monthly SIP flow and our market-share in SIP. As of March 2025, our monthly SIP book stood at INR981 crore, up from INR935 crore in the December month. While industry saw a slight dip in SIP number during this period, our SIP book continued to grow. Looking at the full-year fiscal, we have added INR240 crore INR255 crore to our SIP book, which is a solid 35% growth year-on-year basis. Now let me tell you, please move to Slide 49. So now we’ll turn to the current financials. So please move to Slide 49, which is the last slide of our presentation, which talks about the standalone number. Please look at our mutual fund revenue has declined by 5.1% in this quarter on a quarter-on-quarter basis, which is slightly more than 3.6% drop-in our quarterly average AUM. This is primarily due to two days lower in this quarter, that is 90 days in March quarter versus 92 days in December quarter, which reduces the revenue by approximately INR3.8 crore in this quarter because of that two days impact. If we adjust, then revenue would have declined in-line with quarterly average AUM. Our revenue from financial and non-financial product at INR7 crore has degrown by about 1.7% Y-o-Y. In FY ’25, we earned INR31 crore from other financial and non-financial product segment, of which INR6.9 crore came from P2P lending. However, following RBI’s new regulation introduced around August last year, there have been no freight inflow in the P2P segment. As a result, existing P2P AUM is gradually coming down due to scheduled maturities and we do not expect any revenue from this product in FY ’26. So while P2P revenue stream is expected to taper off, we see encouraging traction in our PMS, AIF and FT segment, which should help mitigate the overall impact which might arise in next year due to withdrawal of P2P product from our system. Our average AUM of PMS and AIFs in FY ’25 stood at INR1,018 crore to INR80 crores, which is a growth of 80% over the average AUM of FY ’24. So that is the first positive point. Second, as of now, PMS AIF book is close to INR1,200 crores, which is 10% higher than FY ’25 monthly average, reflecting strong momentum heading into FY ’26. On the fixed deposit side, mobilizations in FY ’25 was 43% higher than FY ’24. We also onboarded two additional bank efforties towards the end of FY ’25, which gives us further confidence in continuing this growth into FY ’23. Now let me turn to a very important data point related to commission payout expenses. On commission payout expenses, I’ll address commission and fee expenses from a full-year FY ’25 perspective. If you look at our payout ratio on a full-year basis rose by 300 basis-points from 61.1% in FY ’24 to 64.1% in FY ’25. Now this increase is mainly due to 3% shift in our AUM mix towards partner channel, which involves a payout to the partners. Based on 65% average pass-through rate. This mix change explains 180 basis-point of our increase in the payout cost, number-one. The remaining 120 basis-points is due to additional train scheme launched by us to boost the sales. Since additional train scheme was launched in September ’24, around 80% of our provisioning towards this expenditure was done in second-half of FY ’25, which makes the commission payout ratio in last two quarters appear on a higher side. A similar scheme for incentivizing distributor-based on-net sales will also be there in FY ’26 as well. However, Q4 payout ratio of 66% should not be seen as a new baseline since most of the provisioning has happened in H2. Going-forward, full-year payout ratio, which is 64.1% in FY ’25 gives a more realistic picture. And just to give you a guide, please keep in mind for every 1% in our AUM mix towards partner channel, you can expect a payout ratio to increase by around 65 basis-points. As of now, when I’m talking, the partner channel contribute roughly about 90% in our system as far as our AUM is concerned and 10% comes from the direct channel and the old AUM, which has not been assigned to anybody. So this put together is roughly about 10% of our system. So to close-out the standalone business performance, for the full-year FY ’25, our revenue grew by 40% and profit by 42%, reflecting underlying strength of our core model. While operating leverage is not fully visible in the profit growth, that’s largely due to shift in AUM mix towards the partner channel, which carries a higher payout ratio. To put this in proper context, let us assume if there had not been any change in the mix, assuming that mix remains stable, our profit growth would have been comfortably exceeded 55% against current growth of 41%, giving you a clear sense of operating strength. Beyond the numbers, we have also made strong strategic progress in FY ’25, which I would like to address here. We added 4,900 new distributors in FY ’25, a 56% growth, which depends our Market reach and reflects the growth — growing trust in prudent platform. On the platform, which has been — we have fully revamped that entire platform in — before a month and both on the desktop and mobile to deliver a smoother, faster and more entity experience. Most importantly, insurance is now integrated into the transforming the entire FundBaja platform into a holistic solution for both investment and the protection needs. With this enhancement, Fond Bajar is not just a transaction platform, it’s evolving into a full-service ecosystem for our distributor and their client, supporting them across the entire spectrum of product basket. Now let me take you to the consolidated numbers slide, which is slide number 48. On the insurance front, our sales premium grew by 67% during the quarter on a sequential basis. Consequently, insurance revenue grew by 40% sequentially. On GI front, which is predominantly a retail health business for us is also picking-up really well. Freight business sourced on GI in FY ’25 grew by 40% and our total book has roughly touched INR150 crores. The GIL are looking bit lower during the March quarter mainly because of the fact that we recognize revenue in our books only based on the confirmation which we received from the insurance company. So similarly the situation for the life also. Due to March-end, we usually get confirmation in next quarter and some part of GI income might spill-over into the next quarter. So same issue was already there in the last year, Jan, Feb, March where the GI yield has came down to a 23%. On the LI front, last quarter was bit subdued on the insurance front on account of surrender value change. On a low-base, we have grown the fresh premium in ally by 88% during the quarter. Now important point I want to cover would be the employee cost. On the employee cost, the same has reduced by 19% during the quarter to INR24.3 crore. This is mainly on back of lower provisioning for variable expense cost in the 4th-quarter. As far as our fixed employee cost for FY ’26 is concerned, let me just tell you that our wage bill and the full-year review for employee has been completed by us in the month of April. And post review of all our employees, we just want to communicate that our salary bill in April has gone up by 14.5% compared to March ’25’s salary. So it’s a cost escalation of about 14.5% on the fixed component side. Additionally, as you all would have gotten access of — we have done a filing to the exchanges yesterday. So we are in the process of introducing ESOP program for our employee in the current year, definitely subject to shareholder approval. Let me just tell you that it’s a plan for next 10 years wherein we are taking a total dilution over a 10-year roughly in the range of 4% of our current equity. So our current shareholder number of shares are INR4.14 crore and the ESOP plan gives us power to give 16.5 lakh equity shares as a ESOP plan to our employees over the next 10 years. So roughly about 4% dilution which might happen over a period of next 10 years. And assuming let us assume that the — and then on the cost side, we assume that let us assume the 1% — so 16.5 letters assume that this year we might have an ESOP of let’s say 120,000 or INR150,000 between this range. We assume that cost of these ESOP would be in the range of 2.5% to 2.75% of profit before-tax. And this entire amort cost would be amortized over a period of four quarters after the announcement. So in the current quarter, I assume that first-quarter, April, May, June may not have any cost, but then after you’ll see a regular cost, which is going to be a part of our P&L. So now looking at the consolidated profit on a full-year basis, profit have grown at 41% year-on-year to INR195.4 crore. Our average return-on-equity during the year stood at 34%. Our treasury book is close to INR500 crore, is giving us a war chance to grow inorganically. Now let me end by drawing your attention to Slide 16, please move to Slide 16. So this slide 16 captures the extraordinary opportunity which lies ahead for India’s mutual free industry. Back-in 1980, United States saw its per-capita GDP tripled over two decades, but what was truly remarkable is that during the same-period, mutual free industry grew by 52 times and explosion of wealth creation and financial participation. Today, India stands at a similar inflection point according to Bhara 2047 report published by MC. India’s per-capita GDP is expected to grow by nine times over next two decades, a far steeper climb than what US has experienced. And alongside this economic transformation, India’s mutual industry is also projected to grow by 42 times to nearly INR2,800 lakh crore by 2047. That’s a CAGR of 18.9% to 19%. We are not just witnessing incremental growth, we are also participating in a generational shift in financializations and wealth creation. At Prudent, we are deeply aligned with this vision and we believe we are exceptionally well-placed to benefit from the structural and long-term opportunity. So with this, I would like to open the floor for Q&A.
Questions and Answers:
Operator
Thank you. Yeah. Thank you, sir. Should we begin the question-and-answer session? Yes, please. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to withdraw yourself from the question queue, you may press star and 2. Participants are requested to use handsets only while asking a question.
Ladies and gentlemen, we’ll wait for a moment while the question queue assembles. I repeat, if you wish to ask a question, you may press star and 1. We have a first question from the line of Lalit Dev from Equirus Securities. Please go-ahead.
Lalit Deo
Yeah. Hi, sir, good morning. Good set of numbers. Sir, I have two questions. So firstly, like in the recent times like in the last — how has been the trend in case of — in the month of April and May in terms of net growth and the AUM growth? Just wanted to understand that. And second, like if you just back-calculate the commissions in the other financial products, so there the payout seems to be much higher.
So just wanted to understand what would be the steady-state payout in the business as well as the other financing and non-financial to that.
Sanjay Shah
So April in the series address about how is the net flow and the movement. Movement in the aim already told you, right, we are at INR109,000 crores when I’m talking about. However, when you look at the commission payout in other businesses other than the mutual fund and the insurance, I think it is broadly in range because the payout ratio in broking is roughly about 55% and other product would be similarly in the range of 65%.
So I mean, there has been significant change as far as our payout structure is concerned for the non-mutual fund non-insurance segment. Regarding the flow,?
Shirish Patel
Hello. Yeah. So month net sales was in-line with what it was in the last financial year as net sales. In the month of May, initial seven days number looks little slowdown in the net sales. But of course, I think the gross is also down a little bit in the month of May. We hope that I think after this market settling down on positive sentiments, I think it should come back. But bearing last seven, 10 days, I think the net flows in the month of April is in-line with last year.
Lalit Deo
Okay. Yeah. Thanks. Thank you, sir.
Operator
Thank you. Thank you. A reminder to all participants, if you wish to ask a question, you may press star M1. We have our next question from the line of Yash Mehta from Malabar Investments. Please go-ahead.
Yash Mehta
Hi, thank you for the opportunity. I wanted to understand the split of the book where the commission is paid out to you on an AUM basis versus a flow basis. That’s question number-one. And I’ll ask my second question.?
Shirish Patel
Yeah. So 100% of our AUM is based on the detail commission is on the AUM based. Flow basis, but there is no revenue because mutual fund 100% business is the AUM based only. EMS AF also nowadays is completely trail based. So it is nothing on a flow-based commission. It is 100% on an AUM basis.
If you really split the total income between the new business, what we did in this financial year, almost around INR23,000 INR24,000 crores of gross sales we have done, but there also the payout is in the base of the tail only. So there is no upfront revenue what we have received in this financial year-on the mutual fund side or the PMS side.
Yash Mehta
Sir, my question was on the, let’s say, when you do the commercial negotiations with the MF, I understand that it is done on a flow basis and it remains the same for the years to come . But what we’ve seen is we’ve seen some of the mutual funds, especially too in the listed domain, kind of passing on the impact on an AUM basis with pre-flexible pricing. My question was relating to that part.
Shirish Patel
So basically, if you look at throughout the year-around four to five AMCs has cut commission on a historical AUM that is on our book. Obviously, when they cut the tail commission, they also cut for us as well as for the general MFDs in the market. So fortunately, we could pass-on almost in a similar line. So today if my payout ratio is around 2.1/3, almost the entire cut that is the two-third, one-third ratio, we are able to pass it on.
If you look at the roughly impact on our yield, I think I would say that the total cut on a gross basis would have impacted our yield by around 1.2 basis-points to 1.4 basis-points. So that is the total impact on our gross yield side. Having said that, as we said that almost two-third of that cut, we are able to pass it on to our distributors. So the ratio is almost similar to our payout ratio. I hope this clarifies your question.
Yash Mehta
So that basically would suggest that only less than 2% of the AUM has been repriced with — do you mean one
Shirish Patel
Impact on my gross yield, 1.5 basis-point impact on the gross income.
Yash Mehta
Okay, because we have 90 odd 90 bps odd revenue. So I was just trying to back work and try and see what share of the AUM was impacted
Shirish Patel
As I said the yield impact is around 1.3 basis-point to 1.4 basis-points. So on the gross yield of 90 basis-points, you can see that the yield has come down by around 1.3, 1.4 basis-points.
Yash Mehta
Okay. Understood.
Sanjay Shah
I think your question is what is the percentage of AUM which has been repriced, right? So HDFC alone, I’m telling you, which is about 12% of our system and the equity was almost about 10% of my system, which has been repriced. So you can’t look at that the impact is about 1 basis-point on a 100 basis-point is 1%, right
So it’s not that 1% AUM is repriced. Impact is 1%, but the AUM reprice might be about, 10%, 12% or more than that. So I’m roughly I’m just giving you. So you can’t make out the percentage repricing of the book based on the percentage impact on the yield?
Yash Mehta
Okay. Yeah. Okay. And fair enough, sir. And the second question is essentially, what share of the NFDs in the market today would be using a tech platform and how do you kind of think about your share within those MFDs who are trying to use a tech platform to leverage their business?
Shirish Patel
So today the acceptability of technology in MFD segment has gone up drastically post COVID. Simply, if you put our numbers we have got almost 33,000 MFD registered with us. If I assume that around 24,000 25,000 MFDs are working with me out of around 2 lakh plus registered NISM certified MFDs in the market. So on 25,000 over 2 lakh, so you can say that percentage of MFDs are currently active with us.
The remaining MFDs, those who are not working with us out of that, but some may be working with other platforms on our technology side, remaining are working directly with the MFDs. Now here, definitely you always can say that the acceptably — the acceptance of technology earlier in NFD segment was not there. Now there are many software providers that are available in the market last few years or last seven, 10 years.
The of technology is improving, but understanding of platform, the benefit of platforms is changing over-time. So I think I can tell you before five, 10 years, the acceptability of software or the technology was not there. Now I would say that the acceptability of platforms working every product in a single roof, single place, I think that is changing. But more, if you can say, I think today almost around 10%, 12% of the industry is working with us on the technology side.
Yash Mehta
Understood. And sir, if I can squee in one question. As far as, let’s say, the guidance on-net sales is concerned, you mentioned that net sales will be equal to the SIP run-rate that you — that you currently have, but 40% of your customers do not actually participate in an SIC. So just want to understand that there is significant amount of lump-sum also that should come into that net sales number. Just wanted to kind of time the two.
Shirish Patel
So any net sales is the outcome of total gross sales minus the redemptions. If we look at the long-term trend, I think and year-on-year, the trend may change. Today, if you look at around INR980 crores of our SIP book that gives us the confidence that for this year our net sales may be in the range of around INR12,000 crore. Now that not necessarily that this year’s net sales would be INR12,000 crores that I think there are many other parameters as well.
But over, I think seven, 10 years trend, what we have seen there, the net sales is equivalent to SIP sales and that is what we are trying to say. Of course, I think that doesn’t mean that SIPs are not getting terminated or redeemed. So when you are saying that 40% of our clients don’t have SIPs. Obviously, I think the — they don’t do SIP, they only invest through lump-sum, they also ready. But the SIP clients also ready.
So net-net, what we are trying to say that the total gross flow is a combination of SIP flows plus the purchase and the redemption may happen from both the set of customers. Net-net, our net sales comes in the range of SIP sales and that is the trend of last seven, 10 years on an average.
Year-on-year, it may change. If you look at, I think four years before, the entire net sales was completely flat for us and negative for the industry. At the same time, one or two years would be there wherein the net sales is much higher than the SIP sales. But long-term and that is what I think Sanjay reflected that the long-term, the net sales is equal to the SIP chance.
Yash Mehta
Understood. Fair enough. Thank you very much for patiently answering my question.
Operator
Thank you. We have our next question from the line of Dipansh Dipanjan Ghosh from Citigroup. Please go-ahead.
Dipanjan Ghosh
Hi, good morning, sir. So I have a few questions. Maybe I’ll ask the first three initially. So one, if you can spell out the cross-sales mix for the year from the top-five or top-10 asset managers versus the others? And also in this line, if you can give the NFO-led sales that you have seen during the year? The second question is on the commissions.
Now in the previous participant question, you mentioned that the net yield impact because of that book repricing was probably around 0.4 bps to 0.5 bps on a net basis. But if I look at annually, your yields are flattish to marginally up. So now what will explain whether is it like better realization that you’re getting on your new business?
And if so, let’s say, whatever you have AUM mix on your back-book, if I were to replicate that on your new book, how — what would be the differential between fresh realization versus, let’s say, this 91 bps 91.5 bps of overall realization that you have today. And two other questions from a long-term perspective. One is, you mentioned inorganic in your presentation, you’re sitting on a decent cash pile.
So, what value additions or what sort of integrations or strategic expansions would you really want to have in the inorganic domain? And lastly, a theoretical question, I mean, how do you see the ARM registrations in the country really increasing from a long-term perspective? And do you see competition really kind of picking-up in this segment and maybe that 20% sort of MFT market-share are increasing or tapering down from a medium to long-term perspective? Thank you
Shirish Patel
I think first, I think top-five AMCs, if you look at the kind of gross sales, what these top-five AMCs contributed in our total gross sales was in the range of around 45%, 41% roughly. So top-five AMCs gross sales was in this range. NFOs out of our total grosses what we did in last financial year, I think roughly, I think we don’t have the exact accounted number, but roughly our NFO number would be in the range of 10% to 12% of our total gross sales during the year.
So, yes, I think we do participate in the NFOs, but we don’t participate in all NFOs. So that is where — and second, I think out of our total gross sales, significant component is contributed by SIP. So — and hence, I think in total gross sales, NFO sales is always lesser than maybe you can say compared to the industry.
What you talk about the yield 91, 92 basis-points that is yield on a total book you are considering, some component of debt AUM is also there. So always when we compare the yield, it is always the yield on the equity, equity or the full fees, equity that the hybrid combined. On the book as well as on the new flows, while we are talking this year, our yield on the new book was new business was a little higher than the existing book. So that is a comfortable situation currently. The trend on the ARM registration, I think we believe that incrementally more-and-more distributors or more-and-more people are entering in the distribution business, the ARM registration trend should improve. Even MP is focusing more on getting more-and-more MFDs or more-and-more people selling the mutual funds and we are very, very confident that this number of new ARN registration will improve over a time — over a period of time. You are asking that whether the share of around 30% of MFD will improve or not, I think if I understood your question currently, that depends on two parameters, how the productivity or MFD segment do business. And second is how the banking segment and the Fintech segment grow over-time. So the percentage contribution on MFD, difficult to say. But definitely, I think one trend is also visible that more-and-more wealth managers are also trying to become MFDs or the advisor. So my guess is that over-time, the MFDs talk ND or platform like us, I think their share should improve. That is what our feeling is. Any other question if I missed it correct?
Dipanjan Ghosh
Yeah. Inorganic,
Sanjay Shah
I just Depanja, I think we — on the inorganic side, we’ll be look we are definitely looking for somebody who is similar to our business in the industry, but there are less opportunity because B2B2C may other than our largest competitor, is significant. So I think the opportunity in the mutual fund looks a little bit restricted, but we get a lot of opportunity, but still unable to control any of them.
Other than mutual fund, insurance, we are seriously looking for on the driven business model. But one of the problem OE is that when you look at the positive-driven model, I think the comfort may arrive, but I think the — these are two segments which we are regularly scouting for and looking for. Nothing on the technology side because technology is reasonably significantly better for us. So we don’t even see some acquisition on the technology side also, which can be supplemented to our existing tech platform. But the current tech platform itself is better
Dipanjan Ghosh
Sanjesh, if I can just let me kind of expand this question. I mean, obviously as time progresses, your share of customers with a certain range of AUM more than INR5 crores, more than INR10 crores continues to go up because of national mark-to-market accretion. And obviously there is MFDs where vintage is also increasing. So — and your alternate business, which you mentioned, which has been growing at 80% plus in terms of AU obviously on low-base.
So don’t you think I mean expanding capabilities on the well that you do know and the overall B2B2C wealth segment, I mean, do you consider any opportunities in that space that you might be — that you think might be supported?
Sanjay Shah
So B2B2C in the wealth, I think we already working in such a way that what Siri has already said, a lot of people from the that living and starting the business. And I can tell you a lot of guys are joining our platform. We have seen lot of success stories in last couple of years who has came from a banking or wealth background and has done significantly better with us.
So we try to provide all which is required by a quality wealth manager to be offered to their customer and that is majority what you require is a significant quality product basket, research, information, execution capability and that we are having. So, if you want to add something on that, B2B2C for wealth?
Shirish Patel
Definitely. I think if you look at last four, five years, the product addition, we always thought that only on mutual fund focus or insurance focus, we cannot grow our business. And hence, last four, five years, we have added more-and-more products. We also added technological advantage of offering multi-product valuation report and many other features wherein we can offer the facility to all these wealth focused distributors.
I don’t think that anything else is required on this. But as Sanjiv has said that, yes, we are looking for any acquisition is suitable to us. We are actively looking at it, but we are not desperate to have it. So let me put it this way.
Dipanjan Ghosh
Sir, just one follow-up on the yield question, which I had asked. You mentioned that your incremental fresh yields are higher than the back-book, which kind of benefited you in FY 2025. I just wanted to ask, is there a way you can kind of quantify this or at least give us a direction of what that number is, I mean, is it higher 5, 10, 15, 20 basis-points?
The reason I’m asking is, you know because there has been — I mean, obviously, you’re a distributor to multiple partners and obviously there is a differential asset mix across all of these partners in terms of sub-segments of equity. So any direction in this regard, I think will be really helpful.
Shirish Patel
So directionally, we cannot say that how long the incremental yield would be higher than the book yield that depends on many other parameters, the kind of the scheme mix what we have sold during the year, the number of NFOs per where we have participated. Third is what is the kind of cut what the AMCs are doing on a historical book. Fourth is of new flows are coming to the mid-sized schemes, smaller schemes or the bigger schemes of which AMC is getting more flows during the year.
So I think there are multiple parameters which can impact our yield on a new business as well as on a book business. But one important thing I would like to highlight is definitely out of our total book, the almost around 7%, 8% — 6%, 7% book is still the assets, acquired assets. The yield on that asset is much lower.
So as and when that money goes out and the same money is getting invested even in a new business, I think that also that itself is improving our yield. So 7%, 8% of our book is still available at a lower yield than which we acquired from. So that is our sweet-spot right now whenever that money moves out and comes back with a better yield. I think that is one thing. But otherwise, I think we are not saying that what could be the exact difference between the yield of a new business and the whole business?
Dipanjan Ghosh
Got it. Got sir. Thank you and all the best.
Operator
Thank you. We have our next question from the line of Arjun Baga from Baroda BNP Paribas. Please go-ahead.
Arjun Bagga
Yeah, hi, sir. Thanks a lot for the opportunity. So just trying again to understand this decline in the net commissions that we get. I do understand the reasons that you gave, but just wanted to understand this number of INR160 crores on the standalone side as commission and fee expenses. Does that also include the other financial products?
Sanjay Shah
Yeah. Yeah. So commission and fee expense is a single-line which we provide. When you look at the standalone number or you look at the console, I think we do not provide the segment reporting on the commission expenditures. So you’re absolutely right. On the standalone, it includes the payout on account of all non-mutable products which we distributed. Yeah.
Arjun Bagga
But would you be able to give some guidance here that how big would that number be?
Sanjay Shah
Yeah. So I think more or less, it would be in-line with the current setup because I think you look at the PMS AIA, where you look at the B2P product which we used to sell or the FDs. So probably it could be a case where in FD, our payout might be a little bit higher than the mutual funds. PMS AI would be in-line with the mutual fund. So broadly, you can probably take it as a similar.
I think it’s not a very significant large number and the payout will remain this business has been sourced from the MFD only. It’s not a direct team, which contributes significantly larger. So the payout cost would be similarly in-line with the MF cost.
Arjun Bagga
Sure, sir.
Shirish Patel
So you know this income from mutual fund and income from other financial product. As we say that our roughly average payout ratio is similar in almost all products. That doesn’t vary usually. So the payout ratio is remained similar. I think we have already given the brokerage received from various products, so almost the cost is in the similar line.
Arjun Bagga
Got it, sir. Got it. Thank you. That’s all from my side. Thank you.
Operator
Thank you. We have our next question from the line of Ajay Fedric from Sundra Mutual Fund. Please go-ahead.
Ajox Frederick
Hi, sir. Thanks for the opportunity. A couple of questions from my side. One is on the employee costs. You mentioned it is going to go up by 15% on fixed costs. So can you help me understand how much was the fixed-cost for the year for FY ’25?
Sanjay Shah
So fixed-cost, I can give you my March salary bowl deal was roughly about INR6.05 crore or INR6.10 crore on a console level, which is reset to about INR6.95 crores. It’s roughly about, I think about 14.5% increase in the March salary bill.
Ajox Frederick
This is your point your question. Combined,
Sanjay Shah
I’m not talking about the standalone and the console in around. The fixed salary was INR6.1 crores INR6.15 crore. We just came to now close to INR7 crores. 6.95 divided by 61G lo yeah. So roughly about 14.5%, 14%, yeah. Precisely 14.5% is the growth and my fixed salary bill is roughly about INR7 crores in the month of April. So 84 crore annualized a fixed-cost.
Ajox Frederick
Very clear, sir. Secondly, on the partner channels proportion, you mentioned it is 90%. So incrementally, how far can this go ? Can it go to 95%? You mentioned one every 1 percentage point move will hit the payout by 60 basis-points. So when do you think this will rationalize going-forward?
Sanjay Shah
Yeah. So directionally, if you look at in last one year, that ratio has moved in favor of channel by 300 basis-points, right? And if you look at the growth, growth is happening only on the MFD side because our traditional old B2C business, which we had — we are not growing in that segment. That is number-one. Second is, when we acquired, we got INR8,500 crore from, roughly about INR4,000 crore was belonging to MFD and INR4,500 crore was not distributor ready.
So these are the — so MF — the CarV business is not growing at all. It’s a steady business. And the B2C we are not expanding. So naturally the incrementally the share of MFD has to grow. To what extent grow, I think it depends on how better the business growth comes from that segment. But ideally, I believe that in the current year itself, you can have projects of 100 to 150 basis-points till towards the MFD. So there might be — because of that, let me assume 100 basis-point till towards MFD would have a pressure on margin of 65 basis-points.
Ajox Frederick
Yes. Yes. Very clear, sir. Thanks
Operator
Thank you. We have our next question from the line of Shishti Jagati from Ambit Capital. Please go-ahead.
Shrishti Jagati
Hi, sir, good morning a good set of numbers. I’ll just take the previous participant question ahead. You mentioned about 100, 150 basis-points of — impact with every 1% shift. Is that right?
Sanjay Shah
No, no, with every 1% shift, 65 basis-point impact. So understand that if a rupee comes from mutual fund distributors, I have to pay a 65 basis-point as a salary to them, right? So as a cost to them. So if I earn our rupee, 65 basis-points, 65% of that rupee would go as a brokerage payout cost. So today my ratio of indirect versus direct is 90% and the 10%. Now let’s say this 90% becomes 91%, today my brokerage cost is 64.1%, you need to add another 65 basis-points there. So it will come down to 64.1 plus 65 basis-points, it has to be 65.75%. My GPPR.
Shrishti Jagati
This company is completely understood. So the 3% shift because of this income function, the 150 basis-point impact has come in for the current — in the current quarter. But sir, going ahead as to when does this become — the channel mix become a little margin-dilutive and then starts to affect the profitability at what point? Now we are at about a 90% through mutual fund distributors and 10% direct. At what point does it settle going ahead?
Sanjay Shah
So I think it’s not going to be margin — so you look at because this is linked to a growth in business, right? So incrementally whatever you earn, you pay to them. And today let us assume that at INR10,000 crore, if my UM goes to, let’s say INR150,000 crore, additional INR40,000 crore, let us assume the 95% business comes from the indirect channel where I’ll have pay-out. So I don’t think it has an impact on the margin. It is going to be an incremental business from where it comes.
If it comes from B2C, there will be a cost inform of variable and the incentive to the team. It comes from the indirect, then it will be a cost in form of commission payout to them. But this 90% can difficult to say when 90 will go, it can go to 90%, 93, 94%. But I believe that 2, 3 basis-point a change over the next one or two years is possible. So I’m saying in the current year, if somebody is trying to work on the model, you can assume that the — by end of this year, indirect might be 91% or 92% roughly. I’m just giving you the my personal estimates.
Shirish Patel
And on average 1% to 1.5% or the mix can shift?
Shrishti Jagati
That’s right. Makes sense. Makes sense. Sir, in terms of the salary inflation and the ESOP related costs that you’ve indicated, what sort of internal cost-to-income do we target over the next couple of years?
Sanjay Shah
I think there is nothing like the target on the cost-to-income because the salary inflation would depend on how the performance of each and every employee and the market are trend on the things, right. So there are two major component of our employee cost. One is the expansion and the new manpower which we had, number-one. And number two would be a natural salary inflation.
Secondly, if inflation is elevated for last two years, which I believe because last two years has been significantly better on a business front. And there was a competition pressure was also there. So these are the thing. On the number of employee growth, I think in the current year also we have a, let’s say the overall strength of employees, 1,430 people. We are assuming that in the current year, we’ll add about 100, 115 people.
So because of the additional employee which will add, I think there is an additional cost of about, let’s say, INR40 crore 50 lakh a month, roughly about INR4, INR5 crore a year. So that also will come. So it depends on how much employees you add and what is the — the — and normal inflation should be, my belief is you can assume in the range of 10% to 12%, 13%
Shrishti Jagati
Yeah. Makes sense. And sir, under the ESOP program that you initiated, what number of employees would be covered as the ESOP program, if you can give us some indication?
Sanjay Shah
No, I think we just cleared the NRC as far as ESOP policy is concerned. I think the next step would be once it is approved by the shareholders, I think the management will sit and discuss, but it’s — I think we roughly — I think we have tried and look at what are the industry standards and roughly I assume that 10% to 15% of my employee stream might be covered into this, 10% to 12% of my current employee streams would be covered. So nothing has been still decided, but I’ll just give you rough indication.
Shrishti Jagati
All right. All right. Makes sense. Thank you. Thank you so much, sir.
Operator
Thank you. A reminder to all participants, if you wish to ask a question, you may press star and one on your phone. I repeat, if you wish to ask a question, you may press star and 1. We have our next question from the line of Sayam Shah from Advisors. Please go-ahead.
Sanyam Shah
Hello, sir. So my first question, what’s in the distributor handle? Where-is there a distributor a saying INR100 crores. So how income investor is working for prudent for another national distributor like an MG or local bank or independently if he is working with AMP
Shirish Patel
Voice is not clear so couldn’t understand your okay.
Sanyam Shah
Sorry. Yeah, hello. Is it audible now?
Shirish Patel
A little better. Yeah.
Sanyam Shah
So sir, my question was from a distributors angle. When a distributor with an AUM of AUM of say INR100 crores. So how would his income booker say if he’s working with prudent or if he is working with another distributor like NJ or with the bank or if he’s independently working with the AMC?
Shirish Patel
Okay. So you are saying that if the INR100 crore AUM guy working with prudent and AMC is directly, what would be the difference in the income, right?
Sanyam Shah
Yes, sir. Yes.
Shirish Patel
Basically, if you look at the platform like we are NJ, we never competitive — we never had a competition in terms of the pricing. So roughly a distributor working with prudent or working with NJ would get almost a similar or prudent maybe one or two basis-point higher than NJ. When a company of distributor works with AMCs, what would be the difference versus brokerage in terms of AMC and the prudent.
We always communicate to our channel partners that when you work with a platform like us, the percentage commission may be lower by 5% to 10% versus what you work with the AMCs directly. But at the same time, what they say on the technology development, what they can save on the terms of time, back-office management and everything other things, definitely we help them increase the productivity by 30% to 40%.
So they compromise on 10% of the revenue, but at the same time, they gain the productivity of 30% 40% and totality they gain. So by giving the answer, roughly you can assume about 8% to 10% lower commission compared to working with the AMCs.
Sanyam Shah
Well, sir. And first, if you were to answer this for a bank having, so we have seen many employees shifting from banks and wealth management firms and starting their own firms, like so how would their income broadly look like? If you ask us to manage INR100 crore — INR100 crores OM.
Shirish Patel
Yeah. So as you said that if any bank wealth RM is intending to start on his own, there should be work. I think in initial phase, what they need is that I think their entire focus should be on-sales.
They should not be worried about the back-office and the client management. If they spend time in client map, the back-office thing and servicing aspect, they will not be able to give more time on the sales side. So obviously, when anybody starts up on their own, I think the platform is the best solution for them because they need not to invest on a technology, they can — they are not worried about their back-office management,, Product and all these things. So obviously, for any wealth RM starting on their own by compromising 10% around revenue versus AMCs, but there is a lot of cost also and they can say a lot of time. So obviously, I think the platforms are always better.
Sanyam Shah
Got it, sir. Sir, do you think is there a scale at which once the distributor reaches after which for him it might just make sense to hire one or two guys to take care of his back-office work and just independently work with the so that he might get 10.15% extra income if you work directly to the AMC.
Shirish Patel
It is not only one of 2% can manage. I think many other technological advantages, benefits, multiple project reporting, many other things. It is not only back-office management, which you can address some or two guys. I think if you study what the — what are the advantages working with AMCs, as I said, I think the 10% higher commission, what are the advantages of working with prudent platform? I think you will actually understand that what all things. It is not — it is not like I think the same work can be done by recruiting order backup in there.
Sanyam Shah
Okay, sir. Got it. Got it. So helpful.
Sanjay Shah
Thank you. Sorry, I just want to add one more point. You’ll slide — we have provided one slide wherein top 1,000 distributor of the industry and top 1,000 distributor who are working with prudent. What growth they have achieved in last 10 years and that number is itself will give an indication that working with the platform is going to be super, super beneficial and very, very productive. Have looked at part of my
Sanyam Shah
Thank you.
Operator
We have our next question from the line of Ranvir Singh from Yashi Securities Private Limited. Please go-ahead,
Ranveer Singh
Hi, am I audible?
Operator
Yeah, now you are.
Ranveer Singh
Yeah. So I was going to your financials. So in Q2 and Q3 FY ’25, your employee benefit expenses were around INR30 crores. And in Q4 FY ’25, it was INR25 crores. What was the reason for the difference?
Sanjay Shah
So I think I just say in the early commentary also that we projected the variable-cost for the full-year and accordingly, we have provided in first 3/4. But however, finally, when the year was ended, we — there was a higher provisioning in the first 3/4 and the total amount was lower and that’s the reason the last quarter it got adjusted and hence the actual cost was lower by INR5 crores compared to previous quarter.
Ranveer Singh
Okay.
Sanjay Shah
Okay.
Ranveer Singh
So around INR72 crores, RUS said INR6.15 crores, approximately INR75 crores is the fixed pay and the rest of the part is the variable pay which pay to themselves, correct? Thanks.
Sanjay Shah
Thanks. I need to give you the exact number, but the March was INR6.5 crores the variable pay we have — whatever the total variable we pay INR23 crore crores.
Shirish Patel
INR24 crore
Sanjay Shah
Was the variable pay. So if you look at the total cost of INR110 crore, INR25 crore was the variable and raised for the fixed thank you.
Operator
Thank you. Thank you. As there are no further participants, further questions, I now hand the conference over to the management for closing comments. Over to you, sir.
Sanjay Shah
Thank you. Thank you very much for all who has joined. And if still you have any query, any questions, we are always available, including who takes care of our IR and would be happy to address any further questions which you have. Thank you very much. Thank you.
Operator
Thank you, sir. On behalf of Avendus Park, that concludes this conference. Thank you for joining us and you may now disconnect your lines