Thank you. Thank you so much.

Good afternoon, everyone, and a very warm welcome to all of you for joining us today. As always, it's a pleasure to connect with you all.

Joining me today on the call is Bharat, our Group CFO, along with our investor relations advisor, SGA. We'll begin with a brief overview of our performance for the quarter, and once I'm done, Bharat takes over, and once both of us are done, we can quickly jump to take your questions.

Just a quick summary, I think it was a strong beginning for us this year delivering record quarterly profits and healthy all-around performance across all our businesses. This was also reflected in a significant milestone for us this quarter.

Client assets crossed ₹5 lakh crore. Our quarterly revenues crossed ₹900 crore, and our quarterly PAT crossed ₹300 crore, an all-time high for us.

ROE still stands near 30% and remains to be one of the best in the industry. Before I discuss our business performance, let me just share some quick observations on how the industry is evolving and how we see the opportunity ahead.

I think I've said some of these before, I'll be brief. Some of you may find it repetitive, but I think nevertheless, it merits a discussion.

Firstly, I think the value of full platform models is becoming increasingly evident. Across the industry, you'll witness that if someone is a standalone wealth manager or asset manager, they are trying to build capital market capabilities, while the traditional capital market broking investment banking firms are clearly seeking to strengthen their wealth franchise.

I think that convergence is clearly visible across the market now, which we've been talking about for five, six years that this is inevitable, this is going to happen. Second, I think independent wealth management as a cluster is becoming an emerging powerful force.

A lot of new entrants are coming into this business, whether it's banks bringing focus back or private equity funded players. A lot of action you're seeing in this segment.

Third, I think in addition to ultra-high-net-worth, which of course has been mainstream for quite some time now, the affluent and HNI segment is also emerging as a very, very attractive opportunity. It's extremely large, it's growing, it's omnipresent across the country, and it remains structurally underserved, and it remains difficult to serve.

It's not a very easy segment to crack. It takes time, but it is an attractive opportunity.

Lastly, I think it merits to say that technology and more so generative AI is playing a very, very transformative role. I don't know how it is going to evolve in the next four, five years, but I think it is definitely going to bring in lots of efficiency for everybody.

Some may be slightly ahead in the curve like it happens in any technology innovation. Initially, it is always non-mainstream or few people do it, and in two, three years, it becomes mainstream, it becomes par for course, it becomes hygiene.

Most of the players have it. I don't think people need to panic about it.

We are investing around it. We are investing heavily, and I think it will benefit most of the industry because it will bring efficiency in every part of the value chain which we deal with.

With that context, let me now quickly share a few highlights across our businesses. Starting with Nuvama Wealth, I think we took a call long back that putting the power of choice in the hands of the client is a central differentiator to us, and this is what this business represents.

Our MPIS model is a strong reflection of this philosophy. The platform empowers clients to define their objectives and access to investment solutions across the board.

It's not narrow. It doesn't confine the clients to choose from only one or two categories.

It keeps it open because we understand that every client is unique, and their needs are unique, and it can be fulfilled through the wide range of solutions available. Revenue from MPIS grew by about 20% year-on-year.

Net new money, one of the highest quarters ever, we crossed ₹3,000 crore in this, and overall assets also increased by about 32% year-on-year hitting ₹42,500 crore. I think one of the interesting observations which we are seeing that Tier 2 and beyond is expanding faster.

I think now it has started contributing to more than 35% and growing even in the MPIS segment. Second, I think the success in this model ultimately is driven by the quality of advice which gets delivered to the client, and to support this, we continue to invest in our talent ecosystem, which begins by hiring the right cohort, the right seniority.

As I mentioned last time, we are doing a seniorization of the entire team. We added 40 more net relationship managers in that cohort this quarter.

Third, to continue my discussion on tech, we are deliberate and intentional in investing in technology and AI across the value chain, and this business, I think, will get the most of it. We've introduced concepts like Nuggets.

This is a AI-based chatbot which services RMs and our external wealth managers. We have something called RM Buddy, which is a voice-enabled AI assistant for supervisors and RMs to manage their whole life cycle client book and gives personalized insights to them as to how they can improve their performance.

We have a customer profiler, which is now completely AI-based. We've done a POC with about 200 people and will roll out to the full team very soon.

I think all this has led to significant productivity jump across MPIS, both revenue, net new money, assets. We have seen more than 25% jump per RM year-on-year, and overall revenue jump of about 17% per RM year-on-year.

Lastly, on lending, we continue to scale the book. We had mentioned a few quarters back that the growth of the book will be in line with the overall business.

The book has now crossed ₹5,000 crore lending book, and NII growth was also about 12% Q-on-Q. It remains at about 20%-22% of our overall revenues in the wealth.

Moving on to Nuvama Private, first and foremost, RM addition. I think I mentioned last time that this segment is seeing some intense competition.

It's not that it was not there earlier, but I think it's become more heightened now, and I shared my views around it last time. I keep telling my colleagues that it's a good thing that we keep struggling for RMs because it actually shows the hypothesis that the growth is intact in the industry.

We made a bet long back, and I think it's playing out now. Against this backdrop, we are happy to state that we've added about 11% of our force in the last one year, and we've added about six to eight RMs in the last quarter.

I think we offer one of the most comprehensive platforms for seasoned RMs in the industry across the entire solution spectrum. It basically allows them to serve their clients in the best possible way and also gives immense opportunity to create wealth for themselves.

During the quarter, we expanded our presence both in Tier 1 and emerging wealth markets adding people across Mumbai, Chandigarh, Ahmedabad, and Chennai. Moving to recurring revenue assets, we continue to see decent momentum there.

Full-year basis, the ARR assets grew by about 20% to ₹58,000 crore, and net new money to managed accounts continued to remain strong at about ₹1,800 crore. Overall ARR flows this quarter was slightly soft on net basis at ₹1,000 crore because we are in the process of weeding out some extremely low-cost mandates which were acquired long, long back.

These are historical mandates, and we are in the process of cleaning them up. I think that number is a reflection of post that cleanup.

Our target for the full year still remains at 20%-22% of the opening assets. We've launched an offering here for the super ultra-HNI called Pinnacle.

It's a very, very differentiated offering bundling multiple things and delivering a lot of value proposition to the client. I think it will help us in garnering more ARR assets here.

Talking a bit about offshore, our focus over the last 18 months has been to build the platform out, and I think now we are seeing the delivery happen. We have two locations, Dubai and Singapore.

Dubai, we've already broken even, and Singapore will break even by the end of this year. Overall revenue contribution from offshore will remain between 5% to 7%, at least in this year.

We are now in the process of ramping up capacity there. It is a highly accretive ROE business because lending in this business doesn't sit on our books.

Any offshore lending sits in the books of our partners, basically, there is no capital usage which happens. Once you break even, everything is straight addition to return on equity.

I think overall, offshore is becoming an important element, not only to serve clients outside, but also to deliver a holistic value proposition for clients in India. Clients in this segment and even in the HNI segment are, in some sense, becoming globally integrated citizens, and allocations are moving out to global assets, not rapidly, but I think slowly and steadily.

Our view is that over a three-, four-year period, you will see a 20 maybe around 15%-20% allocation sitting in a lot of client portfolios which have offshore assets. If you have a presence overseas, your ability to serve them becomes better.

I don't think offshore any longer is a luxury. It's a necessity which every wealth manager will have to have.

RM productivity here also continues to be strong. We've seen a jump of about 17% to 20% year-on-year.

Moving to asset management, let me start with commercial real estate. We successfully closed our first commercial real estate fund.

It's branded as Prime Offices Fund. We closed at around ₹4,000 crore.

We had initially launched with a target of ₹3,000 [crore]. We've completed deployment of around 40% across three to four marquee assets between Chennai, Delhi, Pune.

We are on the verge of completing a few other transactions, and the target is to deploy about 70% of the AUM in the next maybe two, three months so that by end of Q3, we can launch the second fund, which we want to have around ₹4,000 to ₹5,000 crore again. Slightly different strategy from the current one, but in the same space.

Then eventually over the next 24 months, we are contemplating of looking at building a REIT platform because many of these assets which we are acquiring are real marquee assets, and there is no point of selling it out completely. We can move into a REIT platform and have a source of permanent capital in this business.

Moving to private equity, in the last call, I had mentioned we have done a change of leadership there. Under the new leadership, our objective, single sole objective remains to complete the deployment of the old funds and start returning money, which we are now doing.

From first fund, we've returned about 30% of the capital. Second fund, we've returned about 15% of the capital.

We are in the process of raising our fourth fund. It's branded as Crossover 4.

We've done about ₹300 crore to ₹350 crore. We are targeting anywhere between ₹700 to ₹1,000 crore there.

Moving to private credit, our CIO hiring was done last quarter. Now the team buildout is happening.

I think it may take another two, two and a half months to have basic level of team in place, and then again middle to end of quarter three, we will see the launch of our first private credit fund. I think private credit, in some sense, will have a multiplier effect on the transactional income or also the co-invest income for both the wealth businesses because credit offers significant co-investment opportunity and has a decent appetite across the client spectrum, which right now we work with the external credit fund managers whose products we offer to our clients.

In addition to that, we'll also start offering our own funds co-invest opportunity. Lastly, coming to public markets, I think there we've seen some amount of volatility given the performance and also due to the launch of SIFs, which are clearly a more superior tax vehicle.

We've seen some redemptions in our absolute return fund and our long-short fund. We have received the MF license, are in the process of getting the SIF license, and once our SIF is launched, hopefully, we will be able to move the assets from this to that.

On a overall P&L perspective on asset management, many of you have asked me in the past that when do you think it starts making money. I wanted to tell you that at a strategy level now, commercial real estate is making money, private equity is also making money, and public markets is also making money.

Because we are investing into new categories, which has a drag of one to two years, and we've taken an MF license, which needs a separate sort of team from front to back, I think that part of the investment will get over this year. Right now, our cost run rate is between ₹30 to ₹33 crore a quarter.

Our assessment is that it'll peak at ₹35-₹36 crore a quarter, and Q4 by the end of Q4, we will start seeing the revenue inching up with the launches of new products. This year, we will end up at a cumulative loss of around ₹35-₹40 crore, and subsequent to that, you will see the path to breakeven start.

With that, let me move to our next segment, Asset Services. Momentum was extremely strong this quarter.

There was a significant business growth of around 20% quarter-on-quarter. Average client assets have come back to Q1 level of last year when we had lost a very large client, and retention yields continue to be strong.

Just one word of caution, we have seen extraordinary level of growth here. I think over the coming few quarters, we are not expecting a quarter-on-quarter growth like this.

There will be some amount of moderation as new client acquisition has happened and a lot of collateral is right now sitting in cash, which will get converted between cash and G-Sec, we may see some level of moderation. On a full-year basis, we are confident that revenue growth will be more than 20%-25% here.

We are also investing and building the proposition on this business. You're aware that business is divided into two segments, international and domestic.

On the international side, I think some significant initiatives are being planned right now, which will start yielding results. Specifically, three areas of opportunities have been identified.

One, subsequent to this STT coming on futures and all, single stock futures in GIFT have become a proposition where we are seeing few international players wanting to start activity and are asking us to support them, which we will start. Commodities is becoming important for clients, and you fundamentally can see right now the collateral of client is being used on Tuesdays and Thursdays because these are the two expiries.

If we are able to onboard commodities, then Monday, Wednesday, Friday opens up, it gives significant amount of efficiency and improves the return on capital for our clients. I think that is where we are working on.

The third area, which is also extremely I think important for us, is trying to work on a global custodian-local custodian arrangement where we have a strategic partnership with a global custodian who doesn't have a presence in India, and we give them the India leg, which allows us to access client segments which, let's say, most of the other global custodians which have a presence in India can access, which is long-only funds and hedge funds. It's a new segment that'll open up for us big time.

On the domestic side, I think I've mentioned in the past and we'll continue to progress on our RTA offering and trustee buildout. I think maybe another quarter or so, and we should yield that out, and that hopefully will lead to a further increase in our market share in that segment.

Lastly, coming to Capital Markets, I think the equity market environment remained broadly similar to what we witnessed in Q4. Primary market activity was very, very selective.

The total number of IPOs which we saw in Q1 were 8 as compared to 15 in Q4 and maybe 14, 15 last year, and even the total amount of fund raise fell by around 60%-65%, both against Q4 and last year's Q1. Now we are seeing that activity come back, and there is a lot of pent-up demand.

A lot of documents have been filed, I think the balance nine months, hopefully, we should see better activity there. On secondary markets, the volumes have been steady.

I think cash volumes have actually seen an uptick, and derivatives have been rather flat. There is one key monitorable, which basically on the new regulations which have come around derivatives, which is STT and on intraday financing and bank guarantee collateral around these two.

We've seen the numbers, we've ran through the numbers. At least, we don't feel that there is going to be a very, very significant impact, but we'll closely monitor on that.

In the Capital Markets side, I think one point which we wanted to highlight, which numbers are actually showing, our fixed income activity saw phenomenal activity in this quarter. The most of the jump actually on the investment banking side has come from fixed income, and there was significant amount of FPI activity in this quarter initially because they were selling as rupee was depreciating and there was hardening of yields, and towards the end of the quarter, they were buying as government made the capital gains on G-Sec tax-free, and I think we participated wholeheartedly on both the sides and made significant amount of money.

I think there is some amount of I would say income which may not be repeatable in the coming quarters, maybe about ₹15-₹20 crore which we benefited in Q1. With that, I think I'll come to an end and will hand over to Bharat to share the granular numbers.

Over to you, Bharat. Thank you.

Yeah.

Thank you, Ashish, and good afternoon, everyone, and a warm welcome to all the participants on the call. Ashish anyways covered the headline numbers.

Just to repeat few headline numbers, we started this year on a strong note with quarterly profit of ₹300 crore-plus. Just to put this number in perspective, in FY22 full year, we did a profit of around ₹292 crore and after four years in quarter one, we have done a profit of around ₹300 crore.

That is also not coming from one or two business lines, it is across the business lines. I think that says it all in terms of the platform strength and the multi-business model is working fine for us.

Along with that, the CRISIL has also upgraded our rating from AA- to AA stable, so that has also been reflected because of the financial strength. Now coming back to the Q1 specific numbers, we have actually crossed the ₹5 lakh crore mark on the client assets, and now the client assets stood at around ₹5,36,000 crore.

Obviously, it is led by the strong net new money as well as the mark-to-market during the quarter. There's another milestone which we have achieved.

If you look at wealth and private, we always talk about more on the MPIS asset for wealth and ARR asset for private, both put together has also crossed the ₹1 lakh crore mark. Now MPIS asset stands at around ₹43,000 crore and ARR asset stands around ₹58,000 crore.

This is a strong growth of around 32% and 21% respectively for both wealth and private. In terms of the net new money, again this has been a highest-ever quarterly flows for us crossing ₹3,000 crore for Nuvama Wealth in the MPIS asset side.

Even if you look at private, ARR, as Ashish was referring to a low earning advisory kind of an AUM which we have actually let it go, our overall net new money on an ARR has actually been ₹1,800 crore for Q1 for private, so that has been going fine. On the asset management side, we actually closed the Prime Fund at ₹4,000 crore.

We actually initially launched it with a ₹3,000 crore target, but we actually ended up doing it at ₹4,000 crore. We have got the SEBI mutual fund approval as well as we have applied for our SIF license, hopefully starting quarter three, quarter four, we'll have lot more strategies coming up in the market, and that'll give that momentum to the asset management business.

Coming to the overall revenue, our revenue was at ₹909 crore, which is an 18% growth, and within that, wealth management grew by 19%, which is almost 50% of the revenue. Asset Services, as we discussed, that has seen a very good number in quarter one of this year around a 34% growth over previous year at ₹260 crore.

As Ashish also referred to, not that this continued to grow at this kind of a number going forward, this will moderate to some extent, but that's where we are. It's a base effect.

In terms of the Capital Markets, our overall revenue number is flattish versus quarter one at around ₹180 crore, but this is because the IE revenue is actually dropped compared to quarter one of last year because we had a large AS client which was sitting and helping in that business, which is not there in this case. Despite that, our total number is around ₹180 crore.

As we discussed that on the IB side, it is the fixed income business which has actually done very good in this quarter. Again, this was led to because of there was an opportunity on 7th of June, when the government has actually made G-Sec interest income as well as capital gain tax-free, and including there is no withholding tax, so that led to a little bit more market-led opportunities for the FIM market, and they obviously capitalized it because this was a opportunity.

Maybe some part of this revenue may not repeat in quarter two and all, but having said that, fixed income is genuinely doing a pretty good job for us in terms of year-on-year growth, in terms of actually expanding to new client segments, new revenue sources. I think that's a pretty steady business doing well for us.

On the cost side, you will see that the quarter one cost has actually gone up by 19%, and within that, employee cost is increased by 17%, and opex is up by 24%. If I come to the employee cost in the 17%, we have actually added almost 5% net capacity, net people in over the last one year, and we have actually replaced our low-cost wealth RM with more senior experienced RMs, so that is playing in.

Then there is an annual increments and as well as the variable cost, which is linked to the business. The data book captures in terms of the fixed cost and variable cost increase over the previous year and previous quarter, so that can give more insights to that.

Opex is actually up by 24%, but compared to Q4, it is down by 4%, there are a few seasonal expenses which comes in this quarter. They'll be towards the marketing expenses, business promotion expenses, that'll be around ₹10 to ₹12 crore.

If I remove that, the opex would have grown by around 14%-15% kind of a number, which we always been maintaining that'll grow. Our opex to revenue has been steady at, say, 14%-15%, to that extent, it is okay with us.

If you look at the overall full-year opex, I would imagine it'll still be in the range of 15% to 16% for the full year. Two-thirds will go to the typical business-related inflation-related expenses, and one-third will be towards the new initiatives.

There's one more update on the opex side which I would like to highlight is that we are looking for our new office because our current lease is coming for renewal. As you guys know that under Ind AS 116, when you do a lease accounting, there'll always be some charge which comes upfront, and then as the lease matures, it starts decreasing.

As of now, we have not completely finalized anything, but we'll keep the investor updated on this development and will provide further details during our quarterly results. This costs will be over and above what I have mentioned in terms of the usual opex growth for the firm.

This will be there. Having said that, on a consolidated basis, our cost-to-income ratio is around 55%, and maybe for the full year, this will remain around this level only.

See, if you look at from a cost perspective, there are three things which will play in. One is the operating leverage, which is coming in wealth and private.

You would have noticed that wealth C/I has actually dropped by 160 basis points. To that extent, these two businesses will start giving us operating leverage.

Asset management, as Ashish was also saying that this year could be a peaked out in terms of our cost for the year, and subsequent to that, this will start coming down as a cost-to-income ratio. The third will be the Capital Markets.

Within that, Asset Services is pretty stable. I think within Capital Markets, when you look at IE and IB, and within IB, it's mainly the ECM part.

I think these two businesses are very much linked to the market activity, and hence on a quarter-on-quarter basis, you may see a cost-to-income ratio goes up and down. Having said that, on a full-year basis, we still believe that it could be closer to 55%.

Maybe a quarter can be a plus 1%, and a quarter maybe a minus 1%. We are okay with that.

Finally, if you look at our operating PAT, this is at ₹306 crore, which is a 16% growth year-on-year, and our ROE is still close to 30%, which is a pretty, I would say, good number to have. That's where we are.

Looking at the time, I will request the moderator to take the Q&A now.

Yeah. Hi, everyone.

Congrats on a good set of numbers. Firstly, on the well on the private side, the cost to income is at 70%.

We have been discussing that the overall wealth cost to income should tend towards 60%-62% in the near term and then in the in the medium term. When and how do you see this progressing particularly on the private side?

Because wealth definitely is progressing towards that mark, but on the private side, it's still kind of elevated. What is the kind of RM addition that you're looking forward from here year as well?

Prayesh, Q1 actually should not form the basis. If you look at Q1 FY26 also, it was 69%

and

Q1 FY27 is 70%, but overall profit growth delivered is about 22%, right? We also basically load the variable incentive in line with the revenue growth that happens.

Full-year basis last year was around 66%. I think we will be lower than that this year.

RM addition, essentially our desire always is to basically keep adding 15%-16% every year provided the market allows us to do that at costs which are not upsetting to the overall business. Last 12 months, we've added about 11%, 15 RMs on a net basis, and even Q1, we've added around six.

I think that will continue. That won't stop.

Overall, as you rightly said that 60%-62% medium term, that target also remains over the next three years.

Got that. On the wealth side, the retention seems to have fallen from about 90 bps to 85 bps.

What was the reason for that?

Typically, Q4, Q1, the one biggest phenomenon in that business is insurance. In insurance, Q4 numbers are normally higher, for a lower denominator, you get higher income, there is a few bps uptick that happens.

Second, in that business, we report the total yield. What happens that in a quarter when the equity market has high mark-to-market, positive mark-to-market, but your overall brokerage revenue doesn't go up in tandem, then there is a downward movement of yield, and on the reverse, if there is a decline in Nifty and broader markets and your brokerage doesn't fall that much, there's the uptick in yield.

That adjustment you'll have to keep in mind in line with the mark-to-market that happened. Got that.

Got that. On the AMCP, the yields have shot up significantly, particularly if I look at your yields on the private market side.

What kind of things have changed that kind of yield has gone up so much?

If you see, Prayesh, last year after Q1 in I think Q1 end or Q2, I don't remember, we had mentioned in the call that we will give a pause to the fees that we are charging on our venture debt fund because there was a change in the market condition, and the yields in the market had fallen significantly and the riskiness in the deals had gone up significantly. We had slowed down the pace of deployment.

We said in order to not disadvantage the investors in the fund, we will forego our fees, and we will start charging it next year. Three quarters, we did not charge, and Q1, we have restarted charging.

Basically, it's that difference only. Nothing else.

This should persist now?

Yes. Unless we stop again, this will sustain.

Okay. Last question on the Capital Markets side and the Asset Services.

You mentioned that there should be some moderation, and full-year growth should be 20%-25%. In that sense, it will be more driven by yields and not by flows, is that the right way to think, and how should we think about...

That's right. Flows will continue.

The yield will adjust because some amount of collateral may shift from cash to G-Sec.

Just last point here, the cost to incomes hasn't dropped in the segment, probably looking at the revenue growth. In previous quarter, it was 40%.

It's now 39%. Any IE or IB is just putting the pressure?

Otherwise, we would have expected much more significant improvement here. What should we think about full-year cost to income in that segment?

Similar range only because we've also provided for the variable cost in line with the revenue growth. Investment banking, at least the ECM side and a bit of IE has been under pressure, which I think as it comes out, there will be an improvement.

I think overall full-year basis, anywhere between 36% to 40% range is what will remain here.

Got that. Thank you, and all the best.

They

changed your name.

I think they changed my name. Yeah.

Yes, Dipanjan Ghosh, yeah. Just to go ahead with my questions, first in terms of Nuvama Private MPIS and Nuvama Wealth managed particularly the managed accounts and MPIS piece in both the businesses, just wanted to get some color on the asset mix and the underlying product mix in this two segments and how that would have changed during this current geopolitical crisis if there has been some change or if you can give some color on that.

Second was, I think in the domestic asset servicing business, I think you mentioned that you will be going live with RTA and trusteeship business, which should kind of help you gain market share. If I were to think from medium- to long-term perspective, I think in your IB, IE, all the other segments, you might be servicing some of the domestic mutual funds also.

Any plans let's say at a foreseeable future to kind of try to get into that large segment on the MF side in terms of cross-sell opportunity through your RTA? The third question is how should one think of the ESOP cost and dilution over the next two to three years?

Those were my three questions.

Asset mix, I don't think one or two quarters have significantly changed it, but broadly for us, it remains in the managed account and managed products and ARR segment between 30% to 35% would be equity and 65% will be non-equity. It's not fixed income, it will be fixed income plus alternatives like credit, real estate, infrastructure, products that could deliver clients returns ranging from 7%-8% right up to 18% to 20%, but non-correlated with the equity market performance.

People typically try to say that it's fixed income. It's not necessarily fixed income.

It's yield, but the range is very wide depending on the product the clients have chosen. I think now some amount of comeback to equities we are starting to see once there is some adjustment in the AI trade globally and some good I think discussion around India is happening.

Maybe in the next two quarters, the proportion of equity may go up. On the RTA and trustee, both would be targeted towards the current client segments only, which is your PMS and AIF.

I don't think right now we've firmed up to go behind mutual funds because there banks still continue to have a better right to win because you need some form of balance sheet if they need intraday financing to manage redemption flows and all. We would not be superior.

However, for products which are like arbitrage funds or products which are SIFs, which let's say involve usage of derivatives or let's say categories where usage of derivative and efficiency of collateral becomes a more important paradigm for a AMC to improve the return delivery to their clients, we have a play. Categories which are vanilla like long-only fixed income and equities where intraday financing is the play, we are not the preferred choice, I think it'll remain like that.

I think ESOP cost, important question. Right now it's gone to shareholders for approval.

It's not actually ESOP, it's stock appreciation rights, ESAR. I'll just explain the difference because it has a significant impact on dilution.

Most of the companies in India do an ESOP, which means if you do 1,000 units and if you grant 1,000 units and people exercise 1,000 units, it's a dilution of 1,000 units. Whereas in ESAR, what happens if you grant 1,000 units, finally the shares which are given to people who exercise, it's only to the extent of profit.

Now assume that if Nuvama price today is, say hypothetically, ₹1,500 or ₹1,800, and let's say average exercise of people is at, hypothetically say double, at ₹3,600, your dilution will become half. If it is, say, 30% above the current price, your dilution will become even lower.

Whereas in ESOP, the dilution is one to one, the EPS loss to shareholders is significant. Our calculation is very simple.

If the stock price appreciates by 20% every year for the next five years and people exercise one year after their vesting, against a 7.5% pool, our dilution will be 3%, less than half. The cost to the company remains same as ESOP, the option premium, which will get recognized over the five-year vesting period.

Obviously, it'll be up-fronted more. The profit to the employee will be same as ESOP.

The dilution to the shareholders is less than half, it's like a win-win for everybody. Cost for us is typically the premium cost is around 20%, let's say if we end up granting options worth ₹1,500 crore or ₹2,000 crore, cost order of magnitude is ₹300 to ₹400 crore over a five-year period, slightly heavier up-fronted because that's how the Ind AS costing structure flows down.

It's a non-cash cost, there is no cash outflow, and you end up saving tax of 25%, actually the cost is 75% of the premium cost. That's how it plays out.

There's some bit more technicality here. Whenever the exercise happens, there is a perquisite value on which an employee gets taxed.

Actually, companies have started claiming that perquisite also as cost, and you end up saving. If you are able to do that, against a total cost of ₹400, our net cost will be ₹150 only over a five-year period.

That's the sum and substance of our ESAR plan.

Got it. Thank you, sir, for the comprehensive answers.

Just one small question on the wealth business. You previously classified your Nuvama Wealth AUM between relationship manager-driven and external asset manager-driven, but from a flow perspective in the ARR segment, since you categorically mentioned that a lot of flows are coming in from Tier 2 and Tier 3, is there any breakup that we could get maybe on a rolling basis between RM and EAM from an ARR flow perspective in the Nuvama Wealth segment?

We'll have a look at it, and if we can incorporate, we will add it. It's broadly in similar range as AUM right now.

Got it. Thank you, sir, and all the best.

Hi, Ashish. Hi, Bharat.

Thank you for taking my question. You spoke about the external optionalities and the business that you want to create on that side.

In particular, you spoke about the GIFT City option, and second was making that margin line with you on the Asset Services side available for other exchanges. Specifically on the second option, can you elaborate a little bit as to what stage are we in this thinking process?

Can this actually be done given certain restrictions on commodity exchanges? Where are we over here?

Also, how large can the opportunity be on the GIFT City's derivatives trading business over there? Any sort of guidance and additional color on this is what I would want to know.

Thanks.

I think, Madhukar, more clarity will evolve in the next two, three quarters at least on the GIFT City because, as it's right now premature because the cost structure in India has created this opportunity where there is no STT in GIFT City and there is an STT on the domestic exchange. For any derivative market to thrive, there has to be volume.

Right now, the volume is restricted to index. It's not in single stock.

There are large participants globally who have approached us that they obviously run swap books globally, and those swap books can be hedged using there if they trade between themselves also. I think that's how it'll start, and right now they want to work on a minimum commitment basis.

That's how it starts, and I think then we will see how that buildout happens. It's a bit premature to talk about how the volume will evolve because we'll have to see how it goes.

Commodities, on the other hand, the movement is faster. Whatever FPIs are allowed to do, some of our clients have already started doing.

Specific numbers, we'll come back in the next quarter, but I think as a rough-cut assessment, what we were seeing, it can become at least 15% to 20% of the equity market size for our relevant client segment in that sense the way it is evolving. The third one which I mentioned, which actually can become very, very large is the global custodian-local custodian tie-up because right now we are precluded from targeting that client segment where global long-onlys are investing into India.

We are actually closely working with two, three large global custodians who have access to global long-only, but they lose out on their India mandates because they don't have any local presence, and that's what we want to fill up so that they can pitch using our services and we get access to a new client segment.

Got it, sir. Thank you, and all the best.

Yeah. Thank you for the opportunity.

Ashish, is it fair to say that your private, that is ultra-HNI business, because I just want to understand from industry point of view that more and more people choosing advisory over trail-based revenue is becoming a prominent factor which honestly was there, but now you're feeling it to be happening more? Therefore, if you take a call of not doing the business at lower yield, is it fair to say that your heavy lifting of the incremental net flow numbers will be done more by mid-market or wealth segment and maybe AMC segment?

Just need to understand at what point of time you would be okay to do advisory business even if yields are lower.

Sanketh, actually when we say lower yield, this is more like a corporate treasury type mandate, not a UHNI. UHNI, we are more than happy, and I think directionally, we are heading towards advisory like I spoke about our Pinnacle proposition and we have our Infinity proposition.

Maybe in next three, four quarters, you'll see the numbers separately coming from advisory. We are also now fundamentally clear that advisory in the current shape and form will start working, and on the overall book, the yield actually may go up.

Because if you look at the combined yield today for any ultra-HNI business, if you combine the transactional business and the ARR business and you take the full yield, it's not more than 30, 35 bps ex of NII. I think that is easily achievable even through an advisory business and gives far higher stickiness in the long run, and that progression has started internally in terms of creating value proposition, creating teams, and all.

Numbers will eventually start flowing. Because that is a reality that is going to play, and that I'm also seeing the regulatory infrastructure change because today if we are doing advisory with an accredited investor, we can offer all distribution services also to them.

Earlier, that was not the scenario, clients were losing out, advisors were losing out. Right now, the package is becoming far more stronger.

I don't think you should take the statement of weeding out low advisory in that direction. This is more legacy account, typical corporate treasury and all, which we may want to shift to transactional business kind of category.

Ultra-HNI, we will progress towards advisory.

Ashish, is it fair to say that last year you were almost at 90 bps on private, in the quarter you reported 82 bps. On ARR.

Basically, this number, because advisory going up, will keep on seeing little trending downwards assuming you don't get consummate NII business?

Not really. I think in the next two quarters, you will see the range to be again So I've always maintained, Sanketh, that between 80 to 90 at this point in time is what we are able to see.

It depends on the product mix of ARR, what's get what gets done or what proportion of product of between AIF 2, AIF 3, MF, PMS becomes heavy in a quarter. Let's say we have a blockbuster product in Category 2 AIF in a particular quarter, it could cross 1% also.

I don't think right now that impact of advisory will play out. Maybe next year, we may see, but then the flows will become far larger once that happens.

Of course, NII, as you rightly said, that tool remains with us.

Okay. Ashish, if you can give a color, out of that ₹58,500 crore of closing AUM what you are having in ARR, how much is today advisory and how much is on trail?

₹13,000 [crore]. 13.

₹13,000, ₹13,000 crore. Okay.

Understood. Second question which I wanted to check is that there was a SEBI consultation paper on PMS MF.

Do you think this is a material, big opportunity for us in mid-market segment or UHNI segment? I don't know whether the 2.5% fee is what you can charge will hold up or not, but any initial thoughts you have on this piece?

Not the PMS MF piece because actually 50 has become 25, and we already had a product in our setup at 50, which was a PMS MF of direct plans. I think the other measures which they have mentioned, that can have more impact for both our businesses, which is allowing for to be listed securities to be incorporated, that makes PMS come at par with MF and AIF, allowing for overseas investments to be made as part of PMS.

I think that will be helpful because it will allow us to give some amount of global diversification in the portfolios if clients are giving discretionary mandates on the wealth management side. I think these two measures will have better impact than MF only.

MF only was already there. People were using it.

I think it is to enable others who needed higher amount of capital and all to have a light-touch vehicle, not for established wealth managers.

Understood. Ashish, one more, just maybe a color on flows number because last year we did around ₹20,000 crore of net flow if I include MPIS, private ARR, and AMC.

Any color you want to share you will see that number to be in '27 and if you can split among the three segments you just mentioned would be useful?

See, broadly, Sanketh, and these are obviously indicative numbers,

but the

way we are seeing it is that between wealth and private, both are ₹10,000 to ₹12,000, ₹10,000 to ₹12,000, range of ₹20,000 to ₹24,000, and AMC, we are seeing anywhere between ₹3,500 to ₹5,500 [crore].

Okay. Understood.

Lastly, on this IE IB business, largely it was driven by IE in the current quarter and therefore, next year if the IPO market or ECM market become super active, then IB should support incremental growth for subsequent quarters?

First quarter was a combination of institutional equities plus the fixed income part of investment banking. Fixed income part of investment banking really hit it out of the park.

Let's say some bit of moderation happens there, and that will get covered up by the ECM ramp-up plus more. I think ECM, like you said, once it opens up, you will see better growth in that line from where we are because fixed income one base level has been set and IE continues to do well.

Yes, ECM was very, very bad in Q1.

Okay. Understood.

Basically, ₹180-odd crore kind of run rate is more manageable number for next four quarters, three quarters. Yeah.

Yes.

Okay. Thanks.

That's it from my side. Thank you.

Lalit, Lalit, we can't hear you, Lalit, at all.

Yeah. Sir, is it better?

Yeah.

Yeah.

Sir, just one question on this lending book. We have seen a good growth on a sequential basis.

When we calculate the margins now, I understand this is based on the period-end numbers, but in terms of margins, we are somewhere currently trading at around 3.7%, 3.8% on a period-end basis. What would be the steady-state margins in our lending book, and going ahead, how should we see this overall lending book both in private as well as in wealth business?

About 30, 40 bps higher than this because, like I've mentioned in few calls, our cost of debt basically moves a bit up and down because of the hedging gains and losses which comes on our MLD book. Our overall borrowing has about 25% which is MLD on which we keep hedging.

On a full-year basis, we are able to save around 50 basis of cost. In some quarters, you go slightly negative, in some quarters, you go slightly positive.

If you see Q4 of last year and Q1 of last year is where we saved about 60, 70 basis, and Q2, Q3, we were slightly negative. This year, Q1 is like the Q2, Q3.

Basically blended, if you're asking me from the current level, you can add 40, 50 basis points from here.

Sure, sir. That's it.

Thank you, sir.

Hi, Sanidhya this side. Hi, Ashish.

Fairly good color in the opening remarks about the tech capabilities that are driving the sector right now. Would want to hear more upon how do you see in the wealth segment, particularly if you see the largest retail-focused broker in the sense or the other brokers as well, which are basically platform- or technology-driven, they are focusing more on the mid to lower ticket size of clients in terms of wealth management.

In their holistic sense, mainly driven by the technological benefits that they have, how do we see ourselves placed in that because I think Nuvama is also in the same category? Are we competing?

Are we looking at...

Actually, there is a category difference in the customers which we handle,

and

each of the segments are very, very large. Segments which can be largely managed by technology as the end delivery channel to a customer has to enable execution using very, very simple products.

It can't be complex. It can't have multiple categories, unlisted, offshore, AIFs, PMS.

It's very easy to say that I will enable all execution online, but for a customer to consume that much and take action on it is virtually impossible. There have to be simple products, which means the ticket size or the disposable net worth which the customer has has to be significantly smaller so that they don't go beyond.

You're talking about ₹25 lakh, ₹50 lakh, ₹1 crore, ₹2 crore customers where their investable surplus is in that range. Maybe technology can end up doing the end-to-end execution in perhaps the next five years because you'll reduce the product complexity maybe to only MF or MF plus maybe maximum one more category.

Beyond that, it's difficult. It's not that technology can't do, don't get me wrong.

Technology can do everything, and if it happens, we will also offer. The customer is not in the position to consume that and to take that service using technology.

That is the state, and that is the play. That I don't think is going to change.

People who have 15 ₹10, ₹15, ₹20 crore, they will have needs which will become significantly more complex, and human interface and advisory will still remain.

Yeah. You were highlighting that we're trying to penetrate deep and reaching to the clients which were not easily available earlier.

Could you share more color on that?

We are going beyond Tier 1, but we are not changing the segment in which we are operating. There is geographical distribution, and there is affluence distribution.

Affluence distribution, we are not diluting. We are not saying that we are going retail or we are not saying we are going down the value curve right now because the segments in which we operate are large enough and they are fairly well expanding.

It's not that we have some dominant market share there, I think there is a lot of play available. There are segments which are below us, they are also large enough, and different types of players are suited to capture that.

I think it'll be difficult for people to cross each other. It's a different DNA, different customer set, different product set.

Everything is very, very different.

Do we think beyond Tier 1, there is enough density for us to operate and be profitable on the large scale? Because obviously, initially, it would be less, but then eventually, we think we can do that?

Yeah. Absolutely.

That setup for us has worked out, and we've been now present in 65, 70 cities directly, and through our external wealth manager model, we are present in about 400, 450 pin codes. I don't think that's a challenge anymore for us.

Okay. Are we setting up physical offices there or how?

Not everywhere, but top 70, 80 places now we have physical offices.

We are actively getting relationship managers in those places?

Yes, yes. Yes.

Cool. That explains.

On the private business, is there anything to read except for the few Q4 versus Q1 differences in the revenue?

I don't think quarter numbers should be looked at so much. You should see full year, and if you have to look at a quarter, you should compare with the relevant quarter in the previous year.

There's nothing much to read. There's no structural change in the market space or in the margin or at a product-level margin or customer's behavior, nothing.

Okay. On the commodity trading, whatever we were discussing, the other participant also asked, where do the revenues end up for that business?

Is it largely the Asset Services and the Capital Markets?

Both. If there is obviously on the wealth management side, also customers who do commodities, that would sit in wealth and private, but that's smaller.

When I was talking at that point in time, I was talking more on the Asset Services business. Our international clients, they are opening up to doing systematic quant trading on commodities in addition to what they do on derivatives, equity derivatives, and that is opening up.

The key point is that their collateral, which right now sits unused on let's say Monday, Wednesday, Friday, will start getting used if they build on commodities. It's just for them, that return on capital today is let's say zero.

Anything they get is superior, so that improves the possibility of more capital flow coming into the country and also mitigates the negative impact that would happen on derivative tightening or whatever.

Makes sense. Is it more linked towards now NSE also launching different commodities?

Yes, it does. That also helps.

It really does help, right? GIFT City and MCX as well?

Yes, sir. It does help.

Great. Good quarter.

All the best for the next one. Have a good one.

Hi. Congrats on a good quarter.

Just two questions. One, a clarification on whether I got that right.

You mentioned that the ARR yields net of lending would be very similar to the 35-odd bps that one get on advisory? No.

What I said was that if you take the total revenue in private, which is transactional plus ARR, and divide by the total AUM, and from that, if you remove the lending or actually don't remove the lending, take the full yield, then advisory yield is actually similar. Right now, what people bifurcate is that transactional, you don't calculate yield.

ARR is the only one where you calculate yield. When you do advisory, there is nothing called transactional.

For that client, everything you earn on the full asset. Right now, it's getting bifurcated into two streams, advisory in the end can actually become more rewarding for a wealth manager if played well.

Got it. The second question was given the strong growth on the transaction side in quarter one, do you see there being any one-offs there that again, like you mentioned on the fixed income side, may not come through in subsequent quarters?

Not really. Even in fixed income, I'm not saying it is one-off, it's a heightened level of activity, and you may see a compression of some ₹10-₹15 crore in the coming quarters.

Private, as I've mentioned in our transactional income, about 70% to 80% is BAU, which is basically equity broking, fixed income, and MLDs, about 70% to 80%. 20% is opportunistic trades, which can be unlisted shares, which can be credit deals, which can be secondary deals in AIFs.

The only variation is 20. At some times in some quarters, you may get opportunities which are more attractive, it will be higher.

In some quarters, it'll be lower. On a full-year basis, let's say we ended up last year at around ₹300, ₹305 crore.

This year, we should be anywhere between ₹350, ₹360 crore.

Got it. That's useful.

I'm assuming some of the extra jump that we've seen this time is coming from that 20%-30% which is a little more variable.

Yeah.

Okay. Clear.

Thank you. Thank you, and all the best.

Hi, can you hear me?

Yeah.

Okay. Good evening.

Sir, I just wanted to ask you about the Asset Services and the Capital Markets. Just you have combined in a single ₹269 crore PBT.

Within that ₹269 crore PBT, what is the Capital Markets PBT in Q1 versus the Q1 of FY26?

That we don't share.

Okay. What is the absolute decline that you've seen in the Capital Markets if you can share that because your fixed income has grown 2x, there will be some...

Capital Markets, listed equity and ECM piece between Q4 and Q1 is nearly flat to marginally positive. Okay.

Between Q4 and Q1.

Between Q4 and Q1. Also positive growth in institutional equities and IB as well?

Marginally, yeah. Marginally.

Okay.

Fixed income was stronger. This was marginal.

All right. Thank you for this.

All the best for your next coming quarters.

Hi. Thank you.

Good morning. Ashish, I had a very broad question.

In terms of your entire scale of offerings, in terms of where would you place yourself in terms of being able to capture the range of things that a client wants and the range of things that an issuer wants, right? Basically, the wallet share both at the client side as well as at the corporate side in the range of things that you are able to offer today.

Client side, I think wallet share is a different question, but in terms of solution capability, I think it's 100%. Wallet share, as I've always maintained that at least in the ultra-high-net-worth segment, clients prefer to have at least two core advisors, and then they have a long tail of other players where they may like a single product of somebody.

There, order of magnitude, the share could be around 40%-50%, but from a solution capability perspective, it will be 100%. On the issuer side, again from a solution perspective, on their capital raise side, if you are restricting ourselves to, let's say, debt and equity, we are possibly have all the solutions today.

Yes, we don't have offshore fund raise capability if somebody wants to raise a bond overseas or stuff like that. There we say that we have a offering, but I don't think we are a preferred choice partner for them.

For domestic debt capital markets or equity markets, the solution offering is today 100%.

Got it. Just one more question on the wealth business.

In terms of following up on your comment on the advisory business, in your experience, what is that rough threshold after which you actually don't mind offering the advisory services and probably below which it still doesn't make sense from a financial point of view?

I think more from a client perspective, Abhijeet, it's important because what we do should be aligned to what is right for the client. Any client who is actually below maybe ₹100, ₹200 crore, it doesn't really make sense for them to go for advisory, and anybody who's above ₹500 crore is a clear case.

There is no doubt in my mind that they should move towards that because it gives them reasonable access. Many of them don't want to.

The issue is many of them want to continue with this combo relationship because they want to have access to mutual funds completely free of cost, they want to have access to deals, they don't really want to shift. I think it will never be a utopian world that all large clients are doing advisory, neither will it be a world that everybody is on a combination of transaction plus distribution.

Neither globally it has happened in any country, it will be a mix. Directionally, people or clients whose preferences shift towards letting go of control, maybe second generation, third generation, there the proliferation of advisory will increase.

Got it. Just last one, in terms of the talent capability on the advisory side, any gaps in terms of at the experience level or maybe geographically, whether you want to ramp up it's in north or south or any of those points that you can highlight?

I think advisory in that sense is slightly easier to deliver because if you look at it from a practical sense right now, okay, one is what we look at is the revenue model, and second is the customer delivery. Typically, everybody ends up confusing between the two.

Whether you're running a model of transaction plus distribution, the customer engagement is still advisory. Right?

No customer you go with a laundry list and say, 'Okay, choose the product.' Every relationship manager at least the core job is to understand the customer, is to understand how his overall asset allocation is, and within that asset allocation, how the set product will fit in, what portfolio sizing of the said product has to be there.

That all still happens. How you earn is different.

Now, in that sense, a transaction-cum-distribution model is a fairly difficult model to execute because every relationship manager is an advisor in his own right handling the client. The minute you shift a portfolio into an advisory model, there is a central team which also has an overlay where the advice recommendation, the generation, the actions to be taken can be done jointly between the relationship manager and the central team.

In my view, it's more easier to develop than a transaction-cum-distribution model at scale.

Got it. That's very helpful.

Thank you so much, Ashish.

Thank you. Thank you once again for being here.

We will look forward to meeting you again at the end of quarter two.

Thank you.