Your revenue growth this time around has been around 17% but the profit growth is almost double of that. What have been the drivers of this kind of performance?
We are very excited. This is the first financial year annual accounts after our listing and overall our income has grown from Rs 1400 crore to Rs 1800 crore, which is an increase of 26% and the PAT has also gone up from Rs 402 crore to Rs 522 crore, a jump of 30%.
Even if we were to look at quarter on Q4 basis, the PAT has grown up from Rs 120 crore to Rs 162 crore, which is a jump of 35%. The focus of the company has been profitable growth. We have been building up an asset mix which is basically more retail and more profitable.
When you look at the overall numbers last year, the industry saw a lot of inflows into the mutual fund industry. But Reliance Mutual Fund got the highest inflows in retail segment. Also, post demonetisation, a total of Rs 1,90,000 crore of retail money has come into the mutual fund industry. Out of this, the highest amount – Rs 30,000 crore has come to Reliance Mutual Fund.
We have been focussing on retail a lot and clearly for us the distribution network that we have built up and the very strong digital penetration saw doubling of digital inflows.
Last quarter, we did more than 3,35,000 of digital transactions and our equity as a percentage of assets have gone up from 28% to 36%. All these things put together have been very helpful in increasing the profitability by 30%.
Your overall AUM is up about 2% sequentially. Which regions and segments are contributing to this high growth?
Broadly. as an asset management company, we are about Rs 396,000 crore which includes mutual fund, offshore fund, pension funds. Out of that mutual fund is Rs 2,45,000 crore. We have clearly seen a lot of flows coming from smaller cities and towns and are actually more than the bigger cities.
Every month, we are adding roughly 100,000 investors. Also, from a systematic investment plan, we are adding over 1.25 lakh SIPs every month. The overall SIP book which started when we started the year was Rs 5600 crore.
We have closed the year with Rs 9000 crore. Overall, the numbers have been coming from across the country but we have seen very strong flows coming from smaller cities and towns. This is the segment where a lot of these investors have started coming in post demonetisation. Investors started coming to the mutual fund industry and because of our focus and execution capability, we have been gaining disproportionately in the segment.
What kind of margins are you clocking on two segments of your asset under management, equity and debt? What is the mix you would like to see shaping up in overall AUM over the next one or two years?
At this point of time, the maximum that can be charged in equity schemes is 225 bps. The highest that can be charged in mutual fund, in debt, is 150 bps. For us, from realisation perspective, equity is roughly about 125 bps net retention for us; debt is about 55. Overall, the blended yield for us is about 65 to 67 bps and going forward, we clearly see that with the increase in equity assets, the yield will keep getting better.
Also, going forward, the volumes will increase like I mentioned earlier. We remained very excited about the opportunity in the mutual fund industry. Clearly, even if this 2% wants to become 4%, we see the volume doubling from here and we see no reason why that will not happen in the next two-three years.
We remain excited. As far as the percentage of equity assets is concerned, we believe there is a very big opportunity for us both in debt and equity, but our focus will remain on equity. Directionally, it will only keep increasing.
What is the growth strategy ahead? What are your organic and inorganic plans if any?
For us, the focus remains long-term profitable growth. We clearly see this as an annuity business. The focus remains on long-term sticky assets and long-term profitability.
We clearly believe there is a lot of opportunity in the industry but at the same time, we also believe industry may not have scope for 45 players. So, the industry will likely see consolidation. As and when this consolidation happens, if we see there is any opportunity to add value for shareholders, we will be open for acquisition.
We are very conscious of the fact that today organically we are growing very fast and we are adding Rs 9,000 crore annually through systematic investment plans. If you look at the 10th or 15th largest asset management company, they do not even have Rs 10,000 crore of equity assets.
Going forward, we will continue focussing on both organic and inorganic opportunities but we will only do inorganic opportunity if we see it adds value to the shareholders.