Prudent Corporate Advisory Services Limited (NSE : PRUDENT) Q4 FY23 Earnings Concall dated May. 25, 2023.
Corporate Participants:
Shirish Patel — Whole Time Director and Chief Executive Officer
Sanjay Shah — Chairman and Managing Director
Analysts:
Ansuman Deb — ICICI Securities — Analyst
Rohan Mandora — Equirus Securities Private Limited — Analyst
Ashwani Kumar Agarwalla — Edelweiss Mutual Fund — Analyst
Lalit Deo — Equirus Securities Private Limited — Analyst
Prayesh Jain — Motilal Oswal Financial Services Ltd — Analyst
Srinath V. — Bellwether Capital Private Limited — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the Q4 FY ’23 Earnings Conference Call of Prudent Corporate Advisory Services Limited hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Ansuman Deb from ICICI Securities. Thank you, and over to you, sir.
Ansuman Deb — ICICI Securities — Analyst
Thanks, Michele. Good morning, ladies and gentlemen. On behalf of ICICI Securities, we welcome you all to Q4 and FY ’23 results call of Prudent Corporate Advisory Services. The Company is represented by Mr. Sanjay Shah, Chairman and Managing Director; Mr. Shirish Patel, CEO and Whole Time Director; Mr. Chirag Shah, Whole Time Director; Mr. Chirag Kothari, Chief Financial Officer; and Mr. Parth Parekh, Investor Relations.
I will now hand over the call to Mr. Sanjay Shah for his opening remarks, post which we will open the floor for Q&A. Over to you, sir.
Sanjay Shah — Chairman and Managing Director
Thank you, Deb. Thank you very much. And I thank you all who has joined the call today for sparing the valuable time. And I hope you all have got an access to the investor presentation which has been uploaded by — on the exchanges. And I wish it is handy with you because during the discussions, I might give reference to various slides.
So now, if I start the — if I start talking about the fiscal year which has ended, we crossed very key important milestones in FY ’23. Number one is, our mutual fund vertical revenue has crossed INR500 crores for the first time. Then our cash flow from operations has exceeded INR100 crore and actually it ended at INR127 crore. And insurance, which is a very important business for us, has crossed 10% in our overall consolidated revenue. So for the stellar performance, I would like to extend my warm thanks and gratitude to our Prudent partners, who are our key pillars to the strength in helping us to achieve these milestones.
As you’re aware that in case of Prudent, we continue to drive the mutual fund business through our granular systemic investment plan and our SIP flow in the month of March 2023 stood at INR522 crore, which was 27% higher than a year ago. So despite we being a very strong player on the SIP front, we believe there is a much more ground for us to cover and for that matter, I would like to take you to our Slide #31. So if you look at this slide of our investor base of 15.3 lakh clients, 50% of our investor base has not even started the SIP at March ’23. So there is a huge base for — out of our active investors who have not — who have just done a lump sum, but they’ve not done any SIP or did not having [Phonetic] on those SIP.
And I would like to just tell you that if I look at, there is one research which is from CAMS. And CAMS says that — CAMS service about 2.4 crore plus investors. And in the CAMS data also, 51% of investors of CAMS has not started SIP. So this data of Prudent also coincide with the CAMS number. So there is a good scope for us to grow our SIP base. Not only this, if you look at out of 7.5 lakh investors who has started SIP, 50% of that, so roughly 3.2 lakh investors only one SIP. So there also, we feel there is a good scope for us to increase the number of SIPs of these investors.
In the same slide, I would like to highlight you to look at another data point, which is about a number of years experience of investors, which they had with Prudent. So when I’m talking about number of experience what we did is, the first transaction which they did with Prudent from that date till date, they’re considering as a relationship has been enjoyed with Prudent. So looking at the chart on the right-hand side, which says that out of our total AUM, 68% of the AUM is — these are bold [Phonetic] investors who has done their first transaction before March 2020. And these are the investors who have seen at least one down cycle in their life span. And this is a data point which gives us a confident to increase our wallet share from the existing customers. So as stated, we ended March ’23 with a monthly SIP flow of INR520 crores, which is almost — with almost a second rupee in our gross inflow is coming from SIP.
Now, I would like you to take a look at the Slide #23. And if you look at the movement in AUM, between March ’18 to March ’23, 52% of our AUM has been contributed by net sales while the balance 48% is from the mark-to-market gain. So bearing the COVID hit years, our net sales number has been equal to or higher than our gross flow from SIP. So we can fairly assume that our net sales will be closely — we can closely track our net sales to our gross SIP numbers.
In the same context, if you annualize my monthly SIP flow of INR522 crore in the month of March, we expect that our gross flow from SIP would be INR6,200 crore in FY ’24, which is approximately 11% of our FY ’23 closing AUM. So we are confident of generating 10% to 11% growth from net sales. And we expect that balance 10% can easily accrue from mark-to-market, enabling us to grow at an annualized rate of 20% over the longer run and we believe that we can reach the INR1 trillion AUM mark in the next three, four years. Add to this, as you are aware that we have been exploring inorganic opportunity in the industry because of significant cash surplus, which we have currently about INR142 crores. And we continuously generate the healthy cash every year. So probably if you are able to identify good acquisitions and this landmark of INR1 lakh crore can be achieved earlier also.
We continue to be aggressive on diverging our — diversifying revenue stream. And on the revenue front, from — revenue from other products, which has grew by 114% year-on-year during FY ’23. And this year, in the distribution basket, we also added liquiloan, which is a P2P product. And we also started distributing the smallcase product on our FundzBazar trade firm. The insurance as a vertical has performed exceptionally well in FY ’23 with revenue almost doubling. So it is now close to about 11% of our overall revenue. Our total premium grew by 78% [Phonetic] during FY ’23 and commissions grew at a much faster pace due to higher share of remunerative live insurance policies in the fresh premium. We have around 7,750 mutual fund distributors or their family members working as a point of sales in insurance segment. Insurance, as you all are aware that Jan, Feb, March was a robust and exceptional year because of taxes and related changes.
Now, I’ll take you to Slide #46, which talks about our stand-alone result. So in FY ’23, our quarterly average AUM grew by about 33% led by strong SIP flow. And as you all know that in last year, we acquired Karvy about October, November. So the full-year average of Karvy came in current year, and that’s the reason because Karvy was not there in last year for about nine, 10 months. So because of that, our overall AUM grew by about 33% on average. Consequently, revenue also grew by 33% because our average AUM grew by 33%, revenue also grew by 33% and our net revenue yield has remained stable at 95 basis points.
Operating profit grew at a faster pace than the revenue growth at 38%, mainly aided by benefit of operating leverage and margin has expanded by 95 basis points to 22.8%. Our profit after tax grew by 26%, a tad lower than operating profit, mainly because the amount which we paid for acquiring Karvy has been now amortized. And this year were full year amortizing the scheme, so depreciation has reduced our profit after tax a tad lower.
Our cash flow from operations has been very, very steady and very, very healthy. And from our stand-alone operational Prudent Corporate itself, we reached the INR100 crore mark. We reached closer to INR100 crore. So we ended the year with INR94 crore of cash flow from mutual fund distribution operations.
If you look at Slide #41, the good part in this stand-alone operation is that, our opening AUM for FY ’24 is at INR56,189 crore, which is almost 6.4% higher than full-year average of last year, which is — which was FY ’23, so our average was INR52,864 crore. And as you all are aware that it’s a revenue which is linked to average assets under trail [Phonetic]. And you can easily look at that because we may be starting with 6.5%, the higher in the opening AUM. We also in the good head start, not only on the average AUM, but also, if I’ll just tell you about the current number, we’ve already surpassed by INR60,000 crore AUM, which is about 13% or 14% higher than last year’s full-year average. So overall, just wanted to communicate that mutual fund verticals has a good head start for FY ’24.
Now, look at the Slide #45, which provides our consolidated results or consolidated revenue from operation in FY ’23 grew by 35.6% led by healthy growth in mutual fund vertical, as well as excellent performance of our insurance vertical. Operating profit grew by 51% year-on-year to INR173 crore led by benefit of operating leverage, coupled with a large share of insurance in the overall revenue comparison. Consequently, our profit after tax grew by 55% to INR117 crore. Cash flow from operations, during the year stood at INR122 crore and our cash flow from operations to net income stood at 104%, indicating a healthy cash conversion. So this is all about the FY ’23.
If I sum up FY ’23, it was really a very great year for us, and we expect that this momentum will continue in FY ’24 also. There are some headwinds going into FY ’24, mainly led by SEBI consultations paper on the review of TER, which has been for the public comment currently. However, we are in the business of volume, and we believe that volume to compensate for the margin comparison in absolute basis points, which we may witness going forward, given that we are growing almost 2 times than the industry on the equity AUM front.
So it is all about Prudent performance and the data. I’ll now keep the floor open for question — Q&A. Thank you.
Questions and Answers:
Operator
Thank you very much, sir. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Rohan Mandora from Equirus Securities. Please go ahead.
Rohan Mandora — Equirus Securities Private Limited — Analyst
Good morning, sir. Thanks for the opportunity and congrats on good set of numbers. Sir, I just want to understand, currently within the SIP book, how is split between, say, pure equity, hybrid and solution-oriented funds? And similarly, on the AUM also, if you can shed similar stats on the equity AUM?
Sanjay Shah — Chairman and Managing Director
Rohan, you can move to next question. I’ll just get the data and I can pass it over the information.
Rohan Mandora — Equirus Securities Private Limited — Analyst
Sure, sure.
Sanjay Shah — Chairman and Managing Director
[Speech Overlap] con call only. If you can move to another question?
Rohan Mandora — Equirus Securities Private Limited — Analyst
Thanks. Sir, second was that there are certain schemes, which are of SIP plus SWP nature and where the SIP flows is for a relatively long period of time. So as a distributor, how do you see and as an investor also, how do they see this kind of a product? And are we more inclined to do these kind of products because we get a longer tenure of flows on them? Just wanted to understand your view on this.
Sanjay Shah — Chairman and Managing Director
So yeah, I think there are SIP, SWP combo product, which is like say, ICICI has, the SBI has. So we do provide those products on our FundzBazar. We have already onboarded them. And definitely, I think if the focus as far as — because — you’re absolutely right because that gives you, not only the longer duration money, but I think it takes care of the retirement requirement of the investors. It definitely is a very good product for us to focus on that, yeah.
Rohan Mandora — Equirus Securities Private Limited — Analyst
Sure. And sir, here also, what would be the share in the SIP book for this product if you can share along with that data? Third was, sir, in terms of what will be your view on the recent decision paper that has come out from SEBI, how do you read that and the whole impact on Prudent?
Sanjay Shah — Chairman and Managing Director
So, Rohan, I think it’s little premature for us to say anything as of now because if you look at the consultation paper, which is open for the public debate, and I think everybody would give their suggestion. And finally, what is going to be the actual change which will come from the regulator. So I think there are lot of floating points. For example, SEBI has said that the TER should include, not only the brokerage, but incidental costs like STT also, and which is probably very difficult for somebody to project, right, because I don’t know which particular fund what kind of churning. So I think — so that cost is very, very floating. And there is one point which is probably keeping everybody on tender [Phonetic] that how should they come to a conclusion of what is the actual impact because of revised TER. So there are important point I just wanted to communicate that the stand-alone, if you do not look at the inclusion of probably brokerage and GST in the revised TER is reasonably compensating the overall structure of the AMC at an individual level, but what is hurting is probably inclusion of brokerage in STT and definitely GST also.
And so, overall, probably, I think how industry will react, how much they’ll pass on to everybody in the entire value chain? What are their views on passing to a retail IFA [Phonetic], as well as to us? There are just a lot of things which will remain floating for us to come to a real conclusion that what is going to be the impact. But I can tell you the positive part of this would be that as the industry become more and more competitive, the need for people to align their interests with a larger platform, quality platform would become very, very important. And that’s — we feel that it’s going to be an important thing for us over the period of time. Sure, sir. And Rohan, in the SIP book we have 93% in equity and 7% in the hybrid. Yeah.
Rohan Mandora — Equirus Securities Private Limited — Analyst
Sorry, sir. I missed the number. 93% is equity and 7% is hybrid?
Sanjay Shah — Chairman and Managing Director
Yeah, 7% is hybrid, yeah. 6% is hybrid, 1% — less than 1% is probably debt or solution-related fund kind of a thing.
Rohan Mandora — Equirus Securities Private Limited — Analyst
Okay. And sir, what would be the mix of this SIP plus SWP [Indecipherable] kind of thing?
Operator
Mr. Mandora, I would request you kindly repeat because we did not understand what you spoke just now.
Rohan Mandora — Equirus Securities Private Limited — Analyst
Yeah. Sorry. Sir, on that SIP plus SWP, how much that would be within the SIP book?
Sanjay Shah — Chairman and Managing Director
So SIP, SWP that I think separate number because ICICI Freedom, SBI Mitra, [Indecipherable] probably we can get the number and we will communicate to you.
Rohan Mandora — Equirus Securities Private Limited — Analyst
Sure, sure.
Sanjay Shah — Chairman and Managing Director
They may not be that same.
Rohan Mandora — Equirus Securities Private Limited — Analyst
Sure, sir. Okay. Thank you.
Sanjay Shah — Chairman and Managing Director
Normally, it will be a vanilla product which is sold very, very significantly. But it’s a good product for us to do. And we have been doing a lot of efforts, but if you look at the number, I think that number is not handy as of now.
Rohan Mandora — Equirus Securities Private Limited — Analyst
Thanks, sir. Thanks. Okay. Thank you.
Operator
Thank you. We have the next question from the line of Ashwani Kumar Agarwalla from Edelweiss Mutual Fund. Please go ahead.
Ashwani Kumar Agarwalla — Edelweiss Mutual Fund — Analyst
Good morning, sir. Sir, as you said that the margins may take a hit because of the new TER regulations. Sir, you must be in talks with various mutual funds. So what is the glide path the mutual funds have given to you in terms of the brokerage revenue or the commission revenue which you get in terms of percentage?
Sanjay Shah — Chairman and Managing Director
I want Shirish to address it. Shirish?
Shirish Patel — Whole Time Director and Chief Executive Officer
Yeah. So basically, we’ve always spoken to multiple AMCs. As of now, we believe that most of the AMCs are seems to have — actually, you can see the total impact on the various schemes. None of the AMCs have yet decided or rather initiated [Phonetic] they are not yet clear that what would be the exact impact on every scheme and what would be the pass on to the distribution and to the other stakeholder. So you’ve been from one of the AMC as well, I think when we spoke to your AMC also, and we could get a definite answer. We believe that still it would take some more time to get clarity from the AMCs [Indecipherable] to the industry that what will be the cut share between various stakeholders. So it’s very, very early for us to comment.
Ashwani Kumar Agarwalla — Edelweiss Mutual Fund — Analyst
Okay. We have seen the TER cut in the last two instances in 2014, 2018. So how much of that TER cut was passed on to us? And across base, mutual funds, do larger mutual funds pass on more, or smaller mutual funds pass on more? Or where we have bargaining power?
Shirish Patel — Whole Time Director and Chief Executive Officer
See, if you look at the last two TER cuts, majority of the AMCs are passed on full. Specifically, the bigger ones have passed on the full TER cut to the distributors. Smaller AMCs, yes, I think they did not pass on 100%, but if you look at in totality, probably they pass on over almost 95%. This year, the situation — this time the situation would be a little different. So I think taking the reference from the past that history, AMCs have passed on 100% to the distributor, will they be able to pass on 100% this time, I think on that I would say. But it is a questionable thing right now because the impact on the TER is not only and only because of the SEBI’s new TER structures because now the brokerage and the GST and every parts are included. So frankly, it’s too early for us to tell, but we’ve seen historically I think more than 95% of the TER was passed on to the distributor. But we strongly believe that this time it will only the same [Phonetic].
Ashwani Kumar Agarwalla — Edelweiss Mutual Fund — Analyst
Okay, sir. That’s all from my side. Thank you.
Operator
Thank you. The next question is from the line of Lalit Deo from Equirus Securities. Please go ahead.
Lalit Deo — Equirus Securities Private Limited — Analyst
Yeah, hi, sir. Good morning. Thank you for the opportunity, and congratulations on a good set of numbers. So, sir, like, first question was on the data which you have provided on the AUM front…
Operator
Sorry to interrupt. Mr. Deo, we would request you to kindly use your handset, please. Your voice is muffled, sir.
Lalit Deo — Equirus Securities Private Limited — Analyst
Hello. Is it better?
Operator
Please continue. Thank you.
Lalit Deo — Equirus Securities Private Limited — Analyst
Yeah. So I was asking, sir, like, in this AUM bucketing which we have given. So like the — so that data shows that like above 40% of the AUM comes from — comes before April 2017. So is it like the AUM or is it just the investors who are — who have been associated with Prudent prior to April 2017?
Sanjay Shah — Chairman and Managing Director
So yeah. So what we believe is that, the — your AUM might be recent, but we will look at whether — what was the relationship of the customer with Prudent, so you are right. Let us assume, for example, I would have invested — out of my INR1 crore portfolio, INR90 lakhs would have been invested in the probably last two years, but I — my first transaction might go back to probably 2015, 2016. So just wanted to communicate that, 67% of the AUM which we have today, these are the people who started relationship with Prudent before COVID period. And they would have seen at least one or two cycles, so they’re the mature investors. We just wanted to communicate that 67% of the AUM belong to those people who are reasonably mature and they have seen the volatility. That was the message.
Lalit Deo — Equirus Securities Private Limited — Analyst
Sure, sure, sir. And sir, secondly, on the insurance piece. So right now, like this quarter, we have seen a strong growth. Sir, like currently, like, what will be the mix between the origination between the in-house employees and the POSPs model? And how do we see it increasing over the next two, three years?
Sanjay Shah — Chairman and Managing Director
Shirish, Chirag Kumar [Phonetic], anybody want to address?
Shirish Patel — Whole Time Director and Chief Executive Officer
See, if you look at historically, the majority of the business which should come from three channels of ours, that is online, other wealth channel and other direct channel. POSP, as we said in the prior calls also, that POSP was a new channel we introduced before a few years. And incrementally the contribution that’s coming from the POSP channel is very, very high. So if you look at every quarter, the contribution of the POSP channel is increasing. In the last year, whatever growth we have seen, of course, one is because of the taxation change in the industry, but at the same time, the POSP contribution to our total overall duration is also increasing the asset base. As Sanjay [Phonetic] said that currently almost 7,500-plus POSPs are now registered with us. And more and more people are — more and more POSPs are getting active in our base. So definitely, if you can see, last year, the business contributed by POSP is almost 50% in last quarter from the POSP [Phonetic] I would say.
Lalit Deo — Equirus Securities Private Limited — Analyst
Sir, just wanted to say, sir, a large — like the number which you quoted was how much, sir? Hello?
Shirish Patel — Whole Time Director and Chief Executive Officer
Sorry. I couldn’t hear you. Hello?
Lalit Deo — Equirus Securities Private Limited — Analyst
So sir, I — sorry, sir. Your voice got muffled in the last part of the answer, so could you repeat that, please?
Shirish Patel — Whole Time Director and Chief Executive Officer
I said that the POSP contribution in the insurance business is increasing quarter-and-quarter. And specifically, last quarter, when we did the [Indecipherable] business contribution was mainly because of the two parts. And also one is the taxation changes. And secondly, the POSP contribution in the last quarter has increased. So in the insurance business, last quarter, POSPs contribution towards the business would be around 50%.
Lalit Deo — Equirus Securities Private Limited — Analyst
Sure, sure, sir. And sir, just — and the last question was on this TER regulation. Sir, like hypothetically if there is some passing also, which is done to us and all the other distributors. So, like, then what will be our intent in passing on these TER cuts to our channel partners? So like how do we see in this whole scenario panning out for us in terms of net yields?
Shirish Patel — Whole Time Director and Chief Executive Officer
So if you look at the — historically, I think two TER cuts, we could pass on majority, or rather, I would say, that almost everything what was cut by AMCs for us [Phonetic]. Because there are two parts that were very, very important for us to decide and how much we will be able to pass it on to the — our distributors. One is, of course, how much AMCs are cutting to us. And second, very important parameter is that, how much AMCs are cutting to their IFAs because we also — I think you can see indirectly we also cater to the IFA segment of the industry. So two important variables will decide and how much we will be able to pass it on for these forthcoming TER cuts. But historical reference, if you want to look at, I think I would say that we could pass on almost everything what was cut by the AMCs [Phonetic].
Lalit Deo — Equirus Securities Private Limited — Analyst
Sure, sir. Sure, sir. Thank you, sir. That’s it. Helpful.
Operator
Thank you. The next question is from the line of Prayesh Jain from Motilal Oswal. Please go ahead.
Prayesh Jain — Motilal Oswal Financial Services Ltd — Analyst
Yeah. Hi, sir. Congrats on great set of numbers. Firstly, just continuing on this new TER regulations. Whatever the calculations we’ve done suggest that the smaller AMCs are actually benefiting out of this move. And they might have some room to kind of distribute better — or give better commissions to distributors. So in that kind of a scenario where the larger player — larger ones will market kind of they are the lowest-cost ones, on the other hand, you will have distributors kind of willing — wanting to sell more of the smaller ones where commissions will be better. How would this kind of eventually — in your sense, how will this kind of play out for the industry?
Sanjay Shah — Chairman and Managing Director
Yeah, Shirish?
Shirish Patel — Whole Time Director and Chief Executive Officer
So maybe also if you look at [Indecipherable] TER, I would say these are schemes’ or these are AMCs’ TER, lower than the smaller AMCs’ TER — or schemes’ TER, I would say. If TER cut or TER is the only, I would say, information which investors are looking at, there is a probability there is no — would not be any buyer for the smaller schemes. Maybe if you see last few years, the smaller AMCs’ market share incrementally is increasing in the industry. Now, obviously, there are multiple factors affecting why smaller AMCs’ market share is increasing in the industry, but one definition is the performance consistency. Obviously, I think, few of the AMCs have shown their performance track record now. Second, always I think I would say that mutual fund, to a certain extent, [Indecipherable] distributors play are very, very critical role in [Indecipherable]. So, obviously, because of that also, you would have seen that the smaller AMCs’ market share is increasing.
Just let me say that bigger AMCs will try to communicate that their expenses is lower. And the smaller AMCs try to go to the distributor, saying that the commissions are higher. Distributors also don’t go only by way of commissions. So, obviously, I think there is a merit in the smaller schemes also, or smaller AMCs, also, there will be a merit in the bigger AMCs or bigger schemes also. So as a distributor, they always try to give the balancing to approach the clients. Based on the client’s requirement, definitely we will offer the products to the client. Simply, we will not go with the lower-TER or the higher commission schemes. Obviously, the way distributors are concerned now, I’m sure I think they will [Indecipherable] similar way going forward as well.
Prayesh Jain — Motilal Oswal Financial Services Ltd — Analyst
Okay. And sir, do you think that this move that has — which may eventually turn out to be into regulations, will that expedite your conversion of existing distributors to insurance distributors as well and scale up the non-MF business at a much faster pace within the — within your set of partners?
Shirish Patel — Whole Time Director and Chief Executive Officer
First question, I couldn’t understand, the first part of your question.
Prayesh Jain — Motilal Oswal Financial Services Ltd — Analyst
So basically what I’m asking is, will this move that turns out into the regulation later. Will it help you to kind of expedite or fasten the process of converting your just MF distributors into more insurance distributors and also some other products that can help you scale up the non-MF distribution business?
Shirish Patel — Whole Time Director and Chief Executive Officer
Yeah. Obviously, it will give answer in two parts. Obviously, for the existing distributor, will — because of this TER cut, would help to penetrate more into the non-mutual fund products. I think, whenever the revenue is reduced in any product, we should look at my concurrent other products more seriously to compensate the loss in one particular product. The same rule applied to us also, yes, I think, because of the revenue cut to the distributors going forward, they always — we try to find out additional product when they can compare to so that they can increase the wallet share of that line. To a certain extent, yes, there could be some we can shift from MF to the other products.
And you said that, whether the focus for mutual funds distribution business will go down from Prudent [Indecipherable], I think probably the answer would definitely be no. But yes, the market share or the share of revenue from other products would definitely increase. But still I would like to add one more point here. Because of the TER cut, eventually the mutual fund revenue for our distributors will come down. So the distributor community who are not associated currently with the platforms like us, obviously, would like to go to the platforms to get the multiple product at a single place, as well as they would like to reduce their operating costs. Those distributors or those IFAs or MFDs still currently not dealing with the platforms, might look at platforms to compensate the shortfall in the revenues, so I think that’s the way we believe that more and more of MFDs will move to the platforms for multiple products. That is the only point I would say like to highlight.
Prayesh Jain — Motilal Oswal Financial Services Ltd — Analyst
That’s very helpful. Thank you so much.
Operator
Thank you. We have the next question from the line of Srinath V. from Bellwether Capital. Please go ahead.
Srinath V. — Bellwether Capital Private Limited — Analyst
Hi, sir. I wanted to understand. So the top three asset management companies with over 10% market share, they put out their disclosures on payouts. And if you see, the payouts for all of them far exceeding equity assets growth. For one of the asset management companies, it’s significantly higher than equity asset growth. So is it fair to assume that the front book or the new flows payouts have drastically gone up? Could you, in our book, kind of tell us, for the new assets we originated this year, what would be a payout? Or what would be revenue versus what it was last year from a yield perspective? Because we’ll be getting a blended yield, but if you can disaggregate it and help us understand. And also want to understand what drove. Is it platforms like us who have been able to aggregate and bargain and get that significantly higher payouts from these large asset management companies?
Shirish Patel — Whole Time Director and Chief Executive Officer
So giving answer to your first question that the last few years, you have seen that the share of commission in the AMCs is much higher than the equity AUM growth. One main reason, I would say that historically when the transactions of — every transaction of distributors is to get trade commissions. The trade commissions were lower. Last few years, specifically after 2019, everything has moved to the trade. So, obviously, when the investments or the transactions are moving on the trade, but the trade commissions are higher. So in the AUM mix of any distributor or any AMC, for that matter, whether assets — the prior assets of 2019, which — where were at a lower trade, of 2019 and 2023, I think four years, much of these assets would have been churned. If you look at the industry, the average life of any equity is around three, three and a half years. So it is definitely we can assume that majority of the assets belong to 2019, I would say that, by now, it would have been churned. So incrementally we don’t see there will be a huge difference between the equity AUM growth and the commission payout growth for the AMCs. So, which is the first point.
Second point, I would say that, you asked the bargaining points. So I think already it happens that, higher the business, the bargaining power grows. But in past, also we have already communicated that now going forward, I think, we don’t see a great improvement in the bargaining power with the AMCs because we believe that we have such that particular ceiling. So incrementally, bargaining power from the AMCs, probably they might not be able to enjoy, to be able to maintain where currently we are. But again, I would say that, as you said, AMCs’ commission share is increasing compared to the equity AUM growth, I believe that, going forward, that should not be the case.
Srinath V. — Bellwether Capital Private Limited — Analyst
So for us, I wanted to understand, would the assets originated in the current financial year have a higher yield than assets originated in the last financial year? Is that a fair assumption to make? Or after 2019 or this year, last year will all have similar payouts, only the prior book has that kind of lower payout?
Shirish Patel — Whole Time Director and Chief Executive Officer
So if you simply [Phonetic] comparing the average yield on the transactions of ’22-’23 or ’21-’22?
Srinath V. — Bellwether Capital Private Limited — Analyst
Yes, yes.
Shirish Patel — Whole Time Director and Chief Executive Officer
Every year, including, every distributor, I would say that ’22-’23 transactions would have faced lower yields compared to ’21-’22, everyone, because when the AMC — I think, as you understand, the TER — current TERs of the AMCs. So as and when the AUM increases, by default, the commission payout decreases. So today, AMCs are maintaining whatever percentage share to the various channel [Phonetic], the percentage remains stable. So when the TER goes down for the AMC, obviously, the net yield or the gross yield to the distributors also comes down. So if you are simply comparing ’21-’22 and ’22-’23. So ’22-’23, yield would be lower than ’21-’22.
Srinath V. — Bellwether Capital Private Limited — Analyst
But that, sir, I’m very confused because, if you look, like I said, a couple of AMCs and you look at the numbers, they’re actually at payout growth of 40% Y-o-Y. And asset growth will be 15%, 16%, 17%.
Shirish Patel — Whole Time Director and Chief Executive Officer
That is the reason I am saying, because of the historical assets it’s turning. But when you are simply asking the new transactions of ’21-’22 and ’22-’23, this will be case, that’s what I’m saying.
Srinath V. — Bellwether Capital Private Limited — Analyst
Got it, got it. And in the backdrop of last two years of commission payouts growing — and especially this year growing significantly faster than asset growth, do you see the larger AMCs coming down and saying that, we want the full pass-through of whatever cuts we are taking, given that we have had very enhanced payouts over the last 18 months? In that context, do you feel it will be very difficult for us to push back, saying, you guys have to take 30%, 40% of the hit [Phonetic], we’ll take 60%? How is this whole thing going to transpire, especially in the context that they’ve all had 40%, 50% payout growth for the — for FY ’23?
Shirish Patel — Whole Time Director and Chief Executive Officer
I couldn’t hear it completely, but what I got is, historically, 2018 and 2019, both the TER cuts, majority of the AMCs have cut 100% of the TER to the industry — almost 100%, I will say. This time, as I said sometime back, I think the scenario may be different. AMCs might not be able to pass on the 100% cut to the distributors. As I said, I think it’s too early for us to comment on because none of the AMCs have made their strategy here. It will take a little more time for us to understand what AMCs are thinking.
Srinath V. — Bellwether Capital Private Limited — Analyst
Okay. And whatever cuts, we will pass on 100% of that down or we would be taking some proportion rate on our unit economics? How will it work for us now as a platform?
Shirish Patel — Whole Time Director and Chief Executive Officer
I think that depends on what AMCs are doing for the MFDs, anyone doing business with them directly. If the AMCs is treating everyone the same, obviously, we also have to treat our distributors the same. So as I said, it is not a stand-alone decision right now. That again depends on how AMCs are cutting the TER or passing on the TER cuts to their MFDs pool. That only — we can also comment only and only when we know AMC stance for their distributors or their MFDs and us. So as of now, it’s — for us, I think giving any indicative number that what percentage we will be able to pass it on, I think it’s too early for us.
Srinath V. — Bellwether Capital Private Limited — Analyst
Thank you, sir. It was absolutely very informative. Thanks for taking time and clarifying everything very patiently. I’ll get back in the question queue.
Operator
Thank you. [Operator Instructions] The next question is from the line of Varship Shah from Envision Capital. Please go ahead.
Varship Shah — Envision Capital — Analyst
Yes, sir. Thank you for taking my question. If we see the commission and fee or expanse as a percentage of revenue, that has fallen significantly this year, like almost 3 percentage points. Has there been any change in our sharing with MFDs? Or is it — while the mix changed, like, are we selling more direct from our own employees?
Sanjay Shah — Chairman and Managing Director
Sorry. I think, probably for the purpose of commission, you should look at the stand-alone number of mutual fund distribution business, wherein the growth in commissions payout and the growth in top line is more or less in line with that. So giving an answer to your question, is there any change in payout metrics? No. It doesn’t steady. Absolutely rock steady. I think the profitability mix would have improved mainly because of insurance vertical, where a lot of business comes from [Indecipherable] and the direct business where profitability has been very, very strong.
Varship Shah — Envision Capital — Analyst
Okay, sir. Thank you. Thank you for taking the question.
Operator
Thank you. The next question is from the line of Ashutosh Garud from Ambit PMS. Please go ahead.
Ashutosh Garud — Ambit Private Limited — Analyst
Hello? Am I audible? Yeah. So…
Operator
I’m sorry, sir. Your voice is breaking. Can you please use your handset?
Ashutosh Garud — Ambit Private Limited — Analyst
Yeah. I’m on the handset. Am I audible now?
Operator
Sir, but your audio is not clear. It’s breaking.
Ashutosh Garud — Ambit Private Limited — Analyst
Is it better?
Operator
Yes, sir. Please continue.
Ashutosh Garud — Ambit Private Limited — Analyst
Yeah. So in the initial [Technical Issues], you mentioned about the contributions from Karvy acquisition for this particular quarter. Can you quantify what kind of a top line and bottom line got contributed from that particular business in this quarter compared to the previous one?
Sanjay Shah — Chairman and Managing Director
So Karvy, we do not report the separate number because virtually if you look at the asset of Karvy, as partners — who became Prudent partners, so assets also got merged with their existing unit with Prudent, as well as their AUM which came from Karvy. However, in the first three months when we acquired, we analyzed the earning from Karvy, which was close to about INR2 crore, INR2.5 crore a month. And if I look at last 12 months, there has not been any slippage from the Karvy assets. So I believe — I think Karvy would have contributed close to about INR20 crore, INR25 crore in our — INR25 crore, INR30 crore kind of bottom line profit before tax would have been contributed by them, or at the gross profit level. So I think, when we acquired, when we did the calculation of payback period which was close to about five years, I think, probably I feel it remains the same.
Ashutosh Garud — Ambit Private Limited — Analyst
And would we have [Technical Issues]
Sanjay Shah — Chairman and Managing Director
Pardon?
Operator
Mr. Garud, I would request you to kindly repeat your question, as your audio is breaking, sir.
Ashutosh Garud — Ambit Private Limited — Analyst
[Technical Issues]
Operator
I’m sorry, sir. We are not able to hear you. I would request you to kindly rejoin the queue.
Ashutosh Garud — Ambit Private Limited — Analyst
Sorry. Thanks.
Operator
No problem. Thank you, sir. The next question is from the line of Ajox Frederick from Sundaram Mutual Fund. Please go ahead.
Ajox Frederick — Sundaram Mutual Fund — Analyst
Hello, sir. Congrats on a good set of numbers. Sir, my question is on the insurance side, where we did see a strong inflow for the quarter. So what proportion of this is because one-time tax benefit, out of this INR100.5 crores business?
Sanjay Shah — Chairman and Managing Director
Shirish?
Shirish Patel — Whole Time Director and Chief Executive Officer
I could not hear question completely, but I understand that what percentage of the business is contributing because of — contributed because of the one-time gain of the taxation.
Ajox Frederick — Sundaram Mutual Fund — Analyst
Exactly, exactly.
Shirish Patel — Whole Time Director and Chief Executive Officer
If that is the case, definitely I would say that largely of life insurance business, almost you can say around 18% to 20% kind of business where you contributed because of that one-time gain of the taxation. So there was a prepayment or payment [Phonetic] of the — by the [Speech Overlap] roughly you can say 18% to 20% kind of numbers would have been contributed because of this taxation change.
Ajox Frederick — Sundaram Mutual Fund — Analyst
Okay. That is helpful, sir. The second question is on the distribution, again insurance. 50% is coming from POSP, right, so what is our take rate? So how does the model work in POSP?
Shirish Patel — Whole Time Director and Chief Executive Officer
So as I said, incrementally, month-on-month, quarter-on-quarter, the share of POSP is increasing. And we communicated in earlier calls that we believe that next growth of our business also should start coming in from the POSP. So to reiterate, I think the percentage sharing again depends on the product to product — average you can see around a similar basis what we do in the mutual fund side, two-third, one-third is the kind of average number we will be normally applying to that.
Ajox Frederick — Sundaram Mutual Fund — Analyst
Or I’m just trying to understand, is it very much different from the other distribution channels, like a bank or an online channel, through POSP?
Shirish Patel — Whole Time Director and Chief Executive Officer
Banks, definitely would not — I mean, again, you are talking about the sharing with the POSP, if I understand [Speech Overlap]?
Ajox Frederick — Sundaram Mutual Fund — Analyst
Yeah, yeah, correct.
Shirish Patel — Whole Time Director and Chief Executive Officer
No. Banks would not be doing any kind of sharing with their POSP because banks is in a B2C model. We are a B2B model, so obviously we have to pass it on to our POSP.
Ajox Frederick — Sundaram Mutual Fund — Analyst
Okay, okay. Got it, sir. All right. Thanks. That’s it from me.
Operator
Thank you. We have the next question from the line of Nilesh Jethani from BOI Mutual Fund. Please go ahead.
Nilesh Jethani — BOI AXA Investments Managers Private Limited — Analyst
Hi. Thanks for the opportunity and congrats for the great set of number. My first question would be, can you help me understand what would be our share of AUM from top five mutual funds?
Sanjay Shah — Chairman and Managing Director
Shirish?
Shirish Patel — Whole Time Director and Chief Executive Officer
So of the top five mutual funds [Technical Issues] currently, I will share the number. You can tell most — I don’t have the exact number right now to — number could be a little bit — or different. But yes, almost you can see 55% kind of number will be top five AMCs contribution. But this is not the accurate number, but I don’t have that number handy.
Nilesh Jethani — BOI AXA Investments Managers Private Limited — Analyst
No problem.
Sanjay Shah — Chairman and Managing Director
Shirish, it’s 50%, 5-0, Shirish. Top five AMC contribute 50% of the AUM, yes.
Nilesh Jethani — BOI AXA Investments Managers Private Limited — Analyst
Got it. My second question would be on the redemptions. So for last two quarters, can you help me understand, how has the redemption trend going up? Because in Q4, it seems like we were able to arrest that. And net flows seem to be a little better. So can you help me understand how are the redemptions currently for Prudent? And how you expect this trajectory going forward?
Shirish Patel — Whole Time Director and Chief Executive Officer
See, if you look at the Q4’s redemptions, they are definitely lower than what it was in Q3. Currently, if you look at our run rate that we talk about, which is somewhere in between of Q3 to Q4. So — but we won’t say that it’s similar like Q4, but we won’t say that it is as bad as Q3. So you can say somewhere in between of Q3 and Q4 kind of sentiment on the redemptions number target.
Nilesh Jethani — BOI AXA Investments Managers Private Limited — Analyst
Got it, got it. And the third piece of the question was on the SIP. So today with INR510 crore or INR520-odd crore monthly SIP book. I just wanted to understand, if I see one interesting slide which you have given, on Page 32, where no live SIP for approximately 50% of your investors. So I wanted to understand, from the current bucket of investors we have at Prudent, can we improve this number? And what growth do you anticipate in this SIP book per month inching up to over the course of FY ’24?
Sanjay Shah — Chairman and Managing Director
The number is concerned –. Yes, yes. Sorry, you can continue. You can continue, Shirish. I just wanted to say that the number which we took is about — there are 50% people who has no SIP. That number, I just wanted to explain you that these are the numbers in line with industry number also. So just wanted to say that we really represent truly retail of the industry. So CAMS’ number also say that 57% out of the 2.4 crore investor has no SIP, same in the case of Prudent also, out of 15.5 lakh customers, almost 50% has no SIP. So definitely there is a scope for us to improve. And that is the reason we have given this data. Another 50% who has already SIP with us, out of that, 50% of people has only one SIP, so there also we can definitely do a lot of efforts. So now I’ll probably just tell Shirish to take it forward.
Shirish Patel — Whole Time Director and Chief Executive Officer
Yeah. So if you look at what kind of number we are looking at provided in the SIP number, if you see over last two, three years trajectory, I think, all in average, we are adding around INR100 crores to INR120 crores of net SIP investment [Phonetic]. That is the addition in last few years. I would say that net addition is always sentiment-driven. I think, for good years, the addition is higher. For bad years, the additions will be lower also. Before, you as the industry used to be like negative net addition. Currently, if you look at the kind of run rate, what we are seeing — what is the trend we have seen in last couple of months, I think there is no reason to believe that we should not do better than what we did in the previous year the addition — in terms of additions, rather, I think the kind of acceptability, what we are seeing for SIP, the kind of interest, what the investors say for SIP, and kind of media campaign, what we have as an industry, everybody, is doing. We believe that incrementally SIP flow should increase. So definitely we would like to add much, much higher than what we did in last few years. But yeah, as I said, finally, it is still a sentiment-driven number.
Nilesh Jethani — BOI AXA Investments Managers Private Limited — Analyst
Got it. Sir, I asked this question because when I see your MFD addition, that slightly slowed down in FY ’23 versus what a hyper growth we saw in FY ’22. So it was always a thought process that Prudent with higher MFD growth will drive a higher SIP book number. So any color on that? Where are you seeing MFD? And also, what are number of active MFD today versus this 23,000-odd number of total MFDs?
Shirish Patel — Whole Time Director and Chief Executive Officer
So as we said, that ’22-’23, we have added lesser MFDs compared to ’21-’22. One reason is Karvy acquisition. So almost 1,200 plus distributors, we added, because of the Karvy’s merger in ’21-’22. So that is one-time thing what we had in ’21-’22. Second is MFD additions also, I would say, when the market returns are better, more and more people will be interested to join the industry, but new MFDs coming to the industry also depends on the historical returns of the mutual fund. So yes, I think it has little bit slowed down in this financial year that is ’22-’23.
The point what you said that SIP growth should be linked to the new MFD addition at Prudent. And I think probably I do not fully agree on this particular part. The SIP additions may be contributed by multiple factors, one being the new addition of distributors, but additionally I will say that Prudent has added almost 50% of the MFDs in last two, two and a half years. So, obviously, as you would agree, that when any person starts a business, initially his growth rate might not be that much. Once he settles down, once he understands the product, systems and everything, I think the growth rate actually comes. So here we will definitely say, I would say that our growth should come from three people — three set of distributors, I would say. Whatever we have recruited or those who are dealing — working with us for last three, four, five years or more than that, I think now they are rock stable. I think they’ve proved their contribution and the productivity is increasing solidly. And the much growth definitely would come from those people whom we recruited in last two, two and a half years. So that growth is also enormous. And our focus for adding new distributors is not less. So definitely we are out in the market very, very aggressively to add more and more distributors. So, obviously, our growth should come from that side as well.
I had shown you the numbers in our slide that our share, Prudent’s share in SIP number is increasing year-on-year, and definitely we would like to see that we’ll keep on increasing our share on the industry.
Nilesh Jethani — BOI AXA Investments Managers Private Limited — Analyst
Okay. And then last question from my side, you’ve said — you passed an initial comment where you said that, as of now, there has been 14% growth in AUM versus the FY ’23 average. Out of this 14%, what you would attribute to M2M, and what to the net flows?
Sanjay Shah — Chairman and Managing Director
So the current year’s, if you look at the growth which has came, I think net sales has been reasonably okay. Nothing has changed significantly. However, mark-to-market gain has been significant. So as you are aware that we ended the year at INR56,700 crore roughly in March. And today, we have crossed INR60,000 crore, so that additional — the mark-to-market growth has been very, very robust in these two months. So just wanted to communicate that [Foreign Speech] we are already having a positive opening balance of — so we — our opening balance is INR106 versus last full year average of INR100. So that was already built into the opening balance. And then from opening to current, we are again up by about roughly — about 7%, 8%, 10%. So I think, that put together, we are saying that the mutual fund is starting with a healthy base of about 14% positive.
Nilesh Jethani — BOI AXA Investments Managers Private Limited — Analyst
Got it, sir. Got it. That was really helpful. And thank you so much for all the answers and all the best.
Operator
Thank you. [Operator Instructions] Ladies and gentlemen, as there are no further questions from the participants, I would now like to hand the conference over to Mr. Sanjay Shah, Managing Director, Prudent Corporate Advisory Services Limited, for closing comments. Over to you, sir.
Sanjay Shah — Chairman and Managing Director
Thank you. Thank you, everybody, for joining this call. And we wish that FY ’23-’24 also turns out to be a very good year for us, based on the strong tailwind. And thank you, everybody, for joining. Thank you.
Operator
Thank you very much, sir. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.