Nippon Life India Asset Management Ltd

Page 2 of 17 Ladies and gentlemen, good day, and welcome to Nippon Life India Asset Management Limited Q1 and FY '26 Earnings Conference Call.

As a reminder, all participant lines will be in a listen-only mode. And there will be an opportunity for you to ask questions after the presentation concludes.

Should you need assistance during this conference call, please signal an operator by pressing “*,” then “0” on your touch-tone phone. Please note that this conference is being recorded.

I now hand the conference over to Ms. Meghna Luthra from InCred Capital. Thank you, and over to you, ma'am.

Thank you, and good evening, everyone. On behalf of InCred Equities, I welcome you all to Nippon Life India Asset Management's First Quarter FY '26 Earnings Conference Call.

We have along with us Mr. Sundeep Sikka – Executive Director and CEO, along with the Senior Management Team. We are thankful to the Management for allowing us this opportunity. I would now like to hand it over to Mr. Sundeep sir for his Opening Remarks.

Good evening and welcome to our Q1 FY26 earnings conference call.

We have with us, Chief Financial Officer – Parag Joglekar, Chief Business Officer - Saugata Chatterjee, Deputy Chief Financial Officer - Amol Bilagi, Chief Digital Officer - Arpan Saha, Head ETF - Arun Sundaresan, Head AIF - Ashish Chugani, Deputy Head AIF - Aashwin Dugal and Shin Matsui-san, nominee from Nippon Life Insurance (Japan).

I would first like to share key highlights of our performance and post that I will hand-over to Parag, to speak in greater detail on the recent Industry trends as well as our performance, post which we will move on to QnA.

Now I will hand over the call to Parag for further details on Industry trends and our performance.

Thanks, Sundeep. Let me start off with the markets:

Equity markets in Q1 FY26 witnessed a sharp rebound from prior quarter levels. The NIFTY increased by 8.5% QoQ, while the NIFTY Mid & Small Cap indices increased by 15.0% & 17.8% QoQ, respectively. RBI cut the repo- rate by 75 bps to 5.50%, while the 10 Year G-Sec yield decreased by 26 bps QoQ to 6.32%.

Page 4 of 17 Now, moving to Industry flows: 1. The Equity category (excluding index funds and arbitrage funds) witnessed a gross inflow of INR 2.12 trillion and a net inflow of INR 0.82 trillion. Gross inflows were relatively flat QoQ, while and net inflows were lower QoQ. 2. Categories with the highest inflows were Flexi Cap, Small Cap and Mid Cap funds. 3. Moving on to SIP - SIP contribution for the quarter was INR 806 bn, up 29% YoY and 3% QoQ. 4. Monthly SIP flows in Jun-2025 stood at INR 273 bn – an all-time high. 5. The Fixed Income category i.e. (Debt + Liquid), witnessed a net inflow of INR 2 trillion in the quarter, after a net outflow in the prior quarter. 6. The ETF category had a net inflow of INR 264 bn.

At the end of the quarter, unique investors in the Mutual Fund Industry increased to 55.3 mn i.e., an increase of 18% YoY.

Page 5 of 17 4. We achieved a double-digit market share in net sales in the Equity + Hybrid segment in Q1 FY26, which is the highest market share we have achieved in the last 8 quarters. 5. We continue to have the largest investor base in the Mutual Fund industry, with 21.2 mn unique investors. We are humbled to have over 1 in 3 mutual fund investors invest with us. 6. During the quarter, we also completed the NFO of the Nippon India Income Plus Arbitrage Active Fund of Fund. As at the end of the quarter, the AUM in this fund stood at INR 5.8 bn.

I would also like to touch upon some important aspects of our Systematic

Now, I would like to briefly update you on our subsidiaries - namely the

Page 7 of 17 8. We continue to expand our footprint in the Japanese Institutional and Retail markets in conjunction with Nissay Asset Management Corporation, Japan. 9. We also continue to expand our footprint in new geographies in the Asian, European and Latin America region.

With this, I would like to conclude my remarks and open the floor for questions.

Thank you very much. We will now begin the question-and-answer session.

The first question is from the line of Shreya Shivani from CLSA.

Page 8 of 17 Thank you for the opportunity. Congratulations on a good set of numbers. I have three questions. My first question is a data keeping question, can you help us with the yields for the different segments for the quarter? I can see that sequentially your yields have really stood up, there has not been any decline, so any commentary around that?

Second is on the volume data for the systemic book. The systematic folio seems to have declined sequentially. Any reason, any explanation for that?

And my last question is actually on the ESOP cost. You had guided that the ESOP cost for this year would be at about INR 48 crores, INR 49 crores. We were expecting the ESOP cost to be about, I mean, it should have been more than what you have reported in this quarter. There's a sharp decline between last quarter and this quarter. And the run rate is such that it looks like the remaining quarters would see a much higher ESOP cost coming through. So, if you can help us with that data as well.

Thank you, Shreya. I will take the yield and ESOP cost question, and then I will ask Saugata to take up the SIP book question. So, yields for the current quarter, the blended yield is 36 basis, the equity yield is 55 basis, debt yield is 25 basis, liquid is 12 basis and ETF is 17 basis. On ESOP cost, the yearly cost expected is in the range of around INR 46 crores, which we mentioned earlier.

The current quarter cost is around INR 4-odd crores, so INR 11 crores overall for the new segment is INR 4 crores.

Okay. So, sorry, sir, this quarter the ESOP cost is INR 11 crores plus INR 4 crores, right, INR 15 crores or so?

INR 11 crores total for the quarter, 7 plus 4.

Okay. INR 11 crores total. All right. And for the full year, it will be at about 46 or whatever 47, 48, whatever you have mentioned. And for next year, sir, FY '27?

Next year, it will be around INR 26 crores, INR 27 crores.

Page 9 of 17 Hi, Shreya. This is Saugata here. With regard to SIP, actually, SIP book for us this quarter on a MoM basis actually has gone up. What has happened in the industry in April, there was a onetime clean-up, which the industry as well as we had done on the number of SIPs which were inactive. So, hence, there was some impact on the numerator, which, of course, has settled down in June, and July. So, the numbers will now stabilize at an industry level as well as for us.

What we need to see is the flow. That book is increasing on a month on basis.

So, we did not have any impact of the inactive folios on our SIP book because they were as it is inactive, and they were not contributing to this SIP book at any point in time. And market share on SIP folios continue to grow, rather our discontinuation percentage is much better than the industry as we speak.

Got it. Sir, just one follow-up on that systematic folios’ thing. So, is this a cleanup a regular activity? I mean, just for my understanding, I have seen it first time in the past so many years, but is this something which would happen on a regular basis going ahead? Or I mean, this was just a one-off? How you think about that?

So, at an industry level, AMFI has taken a stance that they want to do it one time for all AMCs. This was a large clear up, which has happened over the period of 3 months. And across all the AMCs, everything was done. So, it's not only pertaining to a particular month or a particular AMC. And we feel that this is an activity which has been done. Probably even industry might take a view after six months, 12 months if the data again throws up some numbers, which needs attention. But as of now, it's a onetime cleanup.

Alright. This is very useful. Thank you and all the best.

Thank you. The next question is from the line of Mohit Mangal from Centrum Broking. Please go ahead.

Thanks for the opportunity. And congratulations on excellent set of numbers.

The first question is in terms of, we have launched a quite a few passive funds in the last quarter. And even this quarter we had launched an MNC fund. So,

Page 10 of 17 just wanted to know how is the inflows in that? And if you could give a color on the passive fund, how much we were able to get into those things?

So, thanks, Mohit. Saugata this side. So, passive as a strategy, if you have been following our calls, every quarter we keep mentioning that we will keep seeding unique ideas in the market. And hence, some of the funds which we had launched in the last three to six months, have been unique, and we keep seeing a lot of interest as the fund is launched and it is open for subscription.

We keep seeing flows coming into it. We do not target any volumes in this fund so they predominantly will not show any size coming up. But over the period of time, it builds up as investors start flowing into these passive ideas.

When it comes to the NFO, the MNC Fund, which is more July specific, of course, it's something which has just got closed. Our idea, again, aligning to our thought process in the past, if something is very unique, something is very distinct, as a strategy we will launch. And hence, this fund was aligned to our thought process, we came to the market after some time with a new fund in the active space. And we have got reasonably good response in this fund.

All right. In terms of the distributor commission rationalization, I think we have done for most of the equity schemes. And there have been around 2 bps decline in yields, if I look as compared to YoY. So, just wanted to know in terms of yield decline, should we expect 2 bps to 3 bps going forward, for say, for the next two to three years as well?

So, actually, yes, the yield decline is mainly due to the telescopic pricing where the higher the size, lower is the yield impact will be. And so we have communicated earlier also that on a blended, we should see around 2-3 basis YoY drops in the yields.

Okay. Understood. And lastly, in terms of you said in your opening remarks that we had a double-digit market share, which was the highest in eight quarters. So, I just wanted to know, I mean, if you can just throw a color as to how much we have gained that it was the highest in eight quarters?

Page 11 of 17 We do not disclose the numbers, but the overall growth is in the double digit on the net flows.

For us, the equity net sales has always been on the higher side. Last quarter was high single digits, which this quarter moved into double digits.

Alright. Thanks and wish you all the best.

Thank you. The next question is from the line of Lalit Deo from Equirus Securities. Please go ahead.

Congratulations on a good set of numbers. Sir, the question was on the yield side as well. So, like on the ETF side you mentioned that yields have stood at around 17 basis points. Now in last quarter, it was around 15 basis points. So, like any particular reason why we have seen an increase in the yield on the ETF side?

And secondly, on the equity book as well. So, now this 2 basis points of compression. So, like this is probably like as we are mentioning that the yield decline is roughly going to be around 2 to 3 basis points on an annual basis.

But over the last 15 to 18 months, the yield compression has been slightly higher. So, is it mainly because of the higher payout ratios to the distributors? These are the two questions.

So, Lalit, thanks for the question. So, on the yields, on the ETF side, our yields have gone up due to the composition of the various funds in the ETF segments and which has resulted in an improvement in yields where the higher expense scheme has sizably grown. So, that has helped us to improve the overall yield on the ETF side.

On the overall yield, yes, we always mentioned that there can be some drop in the yield on the consolidated basis, 2 to 3 basis. Last couple of years, we have seen a slightly higher drop mainly due to our size going up significantly in the last two years, which has impacted the overall yields. Obviously, the new flows come at slightly higher cost compared to the stock, and that is also impacting.

Page 12 of 17 But that is not the only reason. The size is the main reason due to telescopic pricing, it will impact the overall yield on the AUM.

Yes. Sure, sir. And sir, just lastly on the new asset class, this SIF category. So, I just wanted to understand this sharp in the new fund, which is in the pipeline, with the long/short equities. This will fall under this SIF category, right? Or this is the AIF piece?

So, that is an AIF strategy. The ones which we spoke in the opening remark, which is the Nippon India Sharp Equity Fund, the long/short equity fund that will be on the AIF side.

But under SIF also, we will be launching a couple of funds. We are still awaiting the launch of these. We have built up a great team. So, you will see for us, SIF will be a very important category going forward.

Thanks sir.

Thank you. The next question is from the line of Madhukar Ladha from Nuvama Wealth Management Limited. Please go ahead.

Hi. Good evening. A couple of questions from my side. Number one, so how has your inflow market share shaped up in this quarter? And two, there is this new discussion paper for AMCs which basically talks about if your scheme size crosses INR 50,000 crores, you can launch a new scheme and the new inflows would not be allowed in the old scheme. And the new scheme can charge a TER which is up to the old scheme’s TER. That's sort of my understanding when I read that paper. If you could help explain what is the logic behind this? And it would seem that this would be marginally positive for the AMCs, is that the right way to sort of think about it? Some background thought process will be helpful on this topic.

Madhukar, this is Saugata this side. So, with regard to the flows, compared to the previous quarter, this quarter flows have been definitely better. The flows are in the double digits, lower side of the double digit. And hence, we continue to get growth in our equity market share because our net sales market share is

Page 13 of 17 better than our overall equity AUM market share, which definitely helps us to grow our overall equity AUM. And SIP flows and the lump sum flows are adding to this growth.

Madhukar, Sundeep this side. Touching on the SEBI proposal, there are different views, when we talk across the industry also especially launching of additional schemes in the same category when the AUM cost of INR 50,000 crores. One of the view is that with the increase in size, it becomes more difficult to manage with the portfolio. Our view is a little different. We are of the view that it's not about this size, it's more to be able to continue strengthening your research and the risk management capability to remain relevant for investors. So, we actually do not have either very positive or either negative. But while we will wait for the proposal to get through because it's still a consultation paper, but we do not see any negative in it.

Sir. And would this be sort of marginally better because given that you can launch a new scheme, with a TER which is equivalent to the earlier scheme, I would tend to understand it is that you would get a slightly additional yield. Is my understanding correct on this? Or am I missing something out of here?

No, I think we would have to wait and watch for the final guidelines. But again, as I have always mentioned in the past, asset management business is a volume game. So, whether it's a 1 basis point getting extra yield or reduction in yield that is some short-term positive or negative. But the idea here is going to be that how can we scale up 2x, 3x, 5x from here, and that is where the actual growth of the AMC is going to come from. But we will wait and watch. But like I said, there is nothing negative in it, there might be a little positive, if it was to come in the formal manner as it has been proposed.

Understood, sir. Thank you and all the best, sir.

Thank you. The next question is from the line of Muskan Chopra from Motilal Oswal. Please go ahead.

Hello. This is Prayesh Jain. Just a couple of questions. Sir, firstly, is there any change in behavior in customers, particularly in the last six months wherein we

Page 14 of 17 have seen that the markets have been volatile? And do you think that the preference for stronger brands versus purely looking at the returns and even amongst distributors, looking for brands over commission payout, is there any change in the way the distributors and the customers are behaving or it's still based on return on—

So, broadly, it's not anything has changed in the last six months, but there is continuously to see industry has been evolving over the last four, five years.

What we have seen is, investors are maturing a lot. First, we have seen whenever there's a market volatility, they do not react or over-react the way we used to do earlier. If we first to go five years back, while fund performance remains paramount, but that is not the only thing. The brand and the comfort that you get from the brands, that also plays a very big role. That's why you have seen some of the bigger brands getting bigger.

So, overall, it's a package of performance. It's a package of brand and also the service experience that you are able to give. But one thing is very clear, it is not only dependent on brokerages. It is not only dependent on performance. It's a package that the investors are looking at, and that is which is differentiating between successful AMCs and not so successful AMCs.

Got that. And sir, with respect to your flow, could you give any color whether the flows are very widely distributed between the schemes or it's still kind of lopsided between the small cap, large cap, and mid cap?

Saugata this side. So, the flows from our perspective, the best part is, we have been able to get flows across our funds, which if you see the various market cap offerings which are there, across all market cap offerings we have flows.

And that's primarily because we have a very strong SIP book, which cuts across most of these categories. And over a period of time, we have also seen that the more we are able to communicate with the distributors and the investors on the various categories which we offer to them, we are able to get reasonable flows in those categories. So, for us, it's quite widespread. We have derisked our business flows over the last two years. And hence, the net sales growth is also very strong.

Page 15 of 17 And also, what helps us is a very granular SIP, 75% of our SIPs by value are less than INR 10,000. So, that also adds to the stability and long-term profitability.

Right. Sir, just another question on SIF. Sir, we could have got parallels between the existing team and SIF team or whether you have invested in a completely new team. Could you have used the existing team or you need to build up?

Your voice broke in between. But if I have got your question, could the existing team have been used for SIF? We are proud of our team, and what the kind of wealth they are creating for the investors. SIF is a different business vertical, and we want to take it very seriously. We do not want to be just one other product. We see that as a new business line for us. And that's the reason from our point of view, while the option what you said was always there, but we thought of getting some of the best professionals for this. And we leverage wherever we can, wherever the regulations allow us to leverage internal research. But the idea is, we see this vertical as a very, very critical separate line of business for us going forward. So, we are investing in it very differently.

Got it. And last question. I think from an investment book standpoint, there is a movement from equity-related assets and other assets to debt. Is there a change in approach towards the investment book in terms of how we are managing it?

So, Prayesh, we have just rationalized some of our exposure on the equity side basis versus seed capital, which we have been investing. That is the only change which we have done.

Okay. Because even on your mutual fund schemes, while sequentially from about INR 510 crores to INR 480 crores on the equity side, AIF, you mentioned that there is some seed fund realignment. So, just checking there whether some approach in terms of thinking about equities being at the top or some approach there?

Page 16 of 17 No, I think I will just give you a directional approach, rather than QoQ.

Whatever is required for seed capital, we will always have that. But broadly, what we want to do is, from the proprietary book of the company we do not want it to be volatile with the market conditions. So, it will be basically more on the fixed income side rather than equity.

Got it. That’s very helpful. Thank you very much.

Thank you. The next question is from the line of Ms. Meghna Luthra from InCred Equities. Please go ahead.

Hi. Thank you. Sundeep, I just had one question. How much scope do we have to cut down on distribution commissions? And what proportion, like how percentage of the schemes have already been cut?

We do not have a target for that within that, that how much it has to be cut further and all. I think we will continue evaluating. It also depends on the market conditions, various things. But I think the only thing I would like to answer is I think it's a dynamic, and I think we will keep evaluating at different points of time. So, at this point of time three schemes which are 45% of our equity AUM, we have already cut there. So, again, I will repeat, we do not have any target. It all depends on the market conditions, industry, and various other factors.

Okay. Is there anything lined in this quarter that you would be cutting or maybe not?

If there is anything, in the next quarterly call we will share with you.

Okay. Thank you.

Thank you. Ladies and gentlemen, as there are no further questions from the participants, I now hand the conference over to the management for closing comments.

Page 17 of 17 So, thank you, all of you, for joining this Conference Call. And for any questions if you have, which you want any insights, you can touch base with Arash, our Head of IR, and we will be happy to answer. Thank you.

Thank you. On behalf of Nippon Life India Asset Management Limited, that concludes this conference. Thank you for joining us. And you may now disconnect your lines.