Q1 2027 Edelweiss Financial Services Ltd Earnings Call

August 6, 2026

Speaker #1: Ladies and gentlemen, good day and good afternoon. Welcome to the first quarter FY27 earnings conference call of Edelweiss Financial Services Limited. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes.

Operator 2: Ladies and gentlemen, good day, good afternoon, and welcome to Q1 FY27 earnings conference call of Edelweiss Financial Services Limited. As a reminder, all participant lines will be in the listen-only mode, there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Priyadeep Chopra, President, Edelweiss Financial Services Limited. Thank you, over to you, ma'am.

Operator: Ladies and gentlemen, good day, good afternoon, and welcome to Q1 FY27 Earnings Conference call of Edelweiss Financial Services Limited. As a reminder, all participant lines will be in the listen-only mode, there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Priyadeep Chopra, President, Edelweiss Financial Services Limited. Thank you, over to you, ma'am.

Speaker #1: Should you need assistance during the conference call, please signal an operator by pressing 'star' then '0' on your touchscreen phone. Please note that this conference is being recorded.

Speaker #1: I now hand the conference over to Ms. Priya Deep Chopra, President, Edelweiss Financial Services Limited. Thank you, and over to you, ma'am.

Speaker #2: Thank you very much, Renju, and good afternoon, everyone. A very warm welcome to our earnings call today. We have on the call with us Rashesh Shah, Chairman of Edelweiss; Ananya Saneja, the Chief Financial Officer of Edelweiss Financial Services; and Amit Agarwal, who is the CEO of the Alternative Asset Management Business.

Priyadeep Chopra: Thank you very much, Renju. Good afternoon, everyone. A very warm welcome to our earnings call today. We have on the call with us Rashesh Shah, Chairman of Edelweiss, Ananya Suneja, the Chief Financial Officer of Edelweiss Financial Services, and Amit Agarwal, who's the CEO of alternative asset management business. We hope you've all had a chance to review the investor presentation that we filed. This quarter, we've also filed a deep in-depth presentation on our alternative asset management business, during the discussion, we will be making references to it. Please do take a moment to review the safe harbor statements in our presentation. We will be making some statements today that may be forward-looking in nature, hence may involve some risk and some uncertainty. With that, I'll hand over the call to Rashesh to begin the proceeding. Thank you all, over to you, Rashesh.

Speaker #2: We hope you all had a chance to review the investor presentation that we filed. This quarter, we've also filed a detailed, in-depth presentation on our alternative asset management business.

Speaker #2: And during the discussion, we will be making references to it. Please do take a moment to review the Safe Harbor statements in our presentation.

Speaker #2: We will be making some statements today that may be forward-looking in nature and hence may involve some risk and uncertainty. With that, I'll hand over the call to Rashesh to begin the proceedings.

Speaker #2: Thank you all, and over to you, Rashesh.

Speaker #3: Hey Priya, thank you, and good afternoon to all of you. On this quarterly earnings call, there is a lot of excitement going on in India, and I'm sure all of you have a very busy schedule.

Rashesh Shah: Hey, Priya. Thank you, good afternoon to all of you on this quarterly earnings call. There is a lot of excitement going on in India, I'm sure all of you have a very busy schedule. The fact that all of you have joined on this call a few times in the past also, have come today, we are very thankful. Thank you once again, a warm welcome. I'll just kick off by saying there's not much to speak about the external environment. The last one year there has been volatility, within that volatility, there has been stability. I think India has obviously also been affected by the global volatility, oil price, the Iran war. Within that, our markets have been stable, our economy has been stable. The government and RBI has done great work. I won't speak too much about that.

Speaker #3: But the fact that all of you have joined on this call, you know, a few times in the past also and have come today, we are very thankful.

Speaker #3: Thank you once again, and a warm welcome to everyone. I'll just kick off by saying there hasn't been much to speak about regarding the external environment over the past year.

Speaker #3: There has been volatility, but within that volatility, there has been stability. I think India has obviously also been affected by the global volatility—oil prices, you know, the Iran war.

Speaker #3: But within that, our markets have been stable. Our economy has been stable. The government and the RBI have done great work. So I won't speak too much about that.

Speaker #3: I think India continues the way it has continued for many years now. But coming to Edelweiss, we have had a good quarter. Our consolidated profit after minority interest has grown by 83% on a year-on-year basis.

Rashesh Shah: I think India continues the way it has continued for many years now. Coming to Edelweiss, we have had a good quarter. Our consolidated profit after minority interest has grown by 83% on a YOY basis. We are at INR 122 crore profit after tax consolidated for the quarter. The key highlights for the business have been, first of course, is our alternative asset management business, EAAA. The CEO of EAAA, Amit Agarwal, is also on this call and after I finish maybe he'll say a few words and then we will start on the Q&A. Alternative asset management business where we are one of the leaders continues to grow well. Our fee paying AUM, which is the most important metric, has grown by 27% to INR 48,623 crore. Quarterly profit has grown by 45%.

Speaker #3: We are at ₹122 crores profit after tax, consolidated, for the quarter. The key highlight for the business has been, first of course, our alternative asset management business, EAAA. The CEO of EAAA, Amit Agarwal, is also on this call.

Speaker #3: And after I finish, maybe he'll say a few words, and then we will start on the Q&A. So, the alternative asset management business, where we are one of the leaders, continues to grow well.

Speaker #3: Our fee-paying AUM, which is the most important metric, has grown by 27% to ₹48,623 crore. Quarterly profit has grown by 45% for the first quarter.

Rashesh Shah: For Q1, we clubbed INR 81 crore PAT for the business and we are currently at a 29% ROE on this business. Afterwards, Amit will say a couple of words. We're obviously working towards an IPO for this business so there's only so much we can say given the DRHP and all, but it's a very exciting phase for that business for us. Our other asset management business, the mutual fund business, has also grown equity AUM by 32%. At the end of June, we were at INR 96,000 crore equity AUM. After that, obviously we have crossed that in the month of July. Again, it also has had a good growth clip going on. Our Zuno business, the general insurance, has also had a good quarter.

Speaker #3: We climbed to ₹81 crore TAT for the business, and we are currently at a 29% ROE on this business. Afterwards, Amit will say a couple of words.

Speaker #3: We obviously are working towards an IPO for this business, so there's only so much we can say, given the DRSP and all. But it's a very exciting phase for that business for us.

Speaker #3: Our other asset management business, the mutual fund business, has also grown equity AUM by 22%. As of the end of June, we were at ₹96,000 crore in equity AUM.

Speaker #3: After that, obviously, we have crossed that in the month of July. But again, it has also had a good growth clip going on. Our Zumo business, the general insurance, has also had a good quarter.

Speaker #3: Our GWP increased by 58%. We are very focused on the motor side, and the motor insurance has been growing pretty well. The other good news is that, on the wholesale book—ECL Finance—we have been winding down the wholesale book.

Rashesh Shah: Our GWP increased by 58%. We are very focused on the motor side and the motor insurance has been growing pretty well. The other good news is that on the wholesale book, ECL Finance, we have been winding down the wholesale book, the SR that we have had, and we are now down to INR 600 crore from a peak of INR 18,000 crore. The project on wholesale wind down is almost over. I think at INR 600 crore we are very comfortable that in the next few quarters this should go to zero. What was INR 18,000 crore a few years ago is zero. I think our wholesale scale down has been a good clip on this quarter. Edelweiss Asset Reconstruction Company also has started growing again. We're acquiring assets. We're seeing a lot of NPAs in the banking and the NBFC system.

Speaker #3: The SR that we have had, we are now down to ₹600 crore from a peak of ₹18,000 crore. So the project on wholesale wind-down is almost over.

Speaker #3: I think at ₹600 crore, we are very comfortable that in the next few quarters, this will go to zero. But what was ₹18,000 crore a few years ago is now zero.

Speaker #3: So I think our wholesale scale-down has been at a good clip this quarter. On Edelweiss Asset Reconstruction Company, growth has resumed as well. We are acquiring assets.

Speaker #3: We're seeing a lot of NPAs in the banking and NBFC system. However, we are also seeing good growth. That business has achieved a 30% annualized ROE for the quarter.

Rashesh Shah: We are seeing good growth. That business also has achieved a 13% annualized ROE for the quarter. Our focus on that business has been on ROE. As you know, we've been clipping along at 10% to 11% ROE, but we want to be at 14% and 15% ROE in that business. The ROE improvement has also been. Lastly, the most important one, both our insurance businesses continue to be on the path to breakeven. We should be breakeven for the year FY27. A few of you had asked us whether breakeven will be by Q4 or it'll be for the year FY27. We are on path to our stated target of breakeven in the year FY27. Along with that, we continue to grow our customer franchise. Our total customer reach has now become 14 million people.

Speaker #3: So our focus on that business has been on ROE, as you know. We've been clipping along at 10–11% ROE, but we want to be at 14–15% ROE in that business.

Speaker #3: And the ROE improvement has also held. And lastly, the most important one, both our insurance businesses continue to be on the path to break-even.

Speaker #3: We should be break-even for the year FY27. A few of you had asked us whether break-even will be by the fourth quarter, or if it will be for the year FY27.

Speaker #3: We are on path to our stated target of break-even in FY27. Along with that, we continue to grow our customer franchise.

Speaker #3: Our total customer reach has now become 14 million people. It's grown by 30% year over year. And we have total customer assets of ₹2.8 trillion.

Rashesh Shah: It has grown by 30% YOY and we have a total customer assets of INR 2.8 trillion. That has also grown by 23% on a YOY basis. I think all our businesses continue to be well-capitalized, good capital adequacy, good solvency in the insurance business. On the strategic areas that we continue to remain focused on, one is EAAA listing. It is on track. We expect to do the IPO by Q3 of this year. The Carlyle investment in Nido is progressing. We are in process of getting all the regulatory approval. We expect to close this in the next four weeks. Scaling up of the profit after tax and asset management businesses, both of them have had a good growth. EAAA profit has grown by 45%, and mutual fund profit has grown by 33%. Our insurance businesses are on the path to breakeven.

Speaker #3: So, that has also grown by 23% on a year-over-year basis. I think all our businesses continue to be well-capitalized, with good capital adequacy and good solvency in the insurance business.

Speaker #3: Regarding the strategic areas that we continue to remain focused on, one is the EAAA listing. It is on track, and we expect to do the IPO by the third quarter of this year.

Speaker #3: The car line investment in NIDO is progressing. We are in the process of getting all the regulatory approvals. We expect to close this in the next four weeks.

Speaker #3: Scaling up of the profit after tax in asset management businesses—both of them have had good growth. EAAA profit has grown by 45%, and mutual fund profit has grown by 33%.

Speaker #3: Our insurance businesses are on the path to break-even, and our credit businesses have started scaling up very carefully. Housing finance AUM has grown by 14% year-over-year.

Rashesh Shah: Our credit businesses have started scaling up very carefully. Housing finance AUM has grown by 14% YOY, and our MSME AUM has increased by 94% YOY. It is still a small book. Our AUM is only INR 1,700 crores, but our disbursement for Q1 have tripled YOY basis. Basically, on all fronts, whatever was our plan, we continue to execute on that. The other news in alternative asset management is that we achieved the full exit in our first infra yield fund, EIYP One. It is now a full exit. All the money has been returned to investors. The other is we continue to strengthen our operating asset management platform called Sekura because, as Amit will explain, in EAAA, Sekura is a very important part of the platform of managing assets. Other than that, there is a lot of details in our presentation.

Speaker #3: And our MSME AUM has increased by 94% year-over-year. It's still a small book—our AUM is only ₹1,700 crore. But our disbursement for the first quarter has tripled on a year-over-year basis.

Speaker #3: So basically, on all fronts, whatever was our plan, we continue to execute on that. The other news in alternative asset management is that we achieved the full exit in our first infra yield fund, EYIP 1.

Speaker #3: It is now a full exit. All the money has been returned to investors. The other thing is, we continue to strengthen our operating asset management platform called Sakura.

Speaker #3: Because, as Amit will explain in EAAA, Sakura is a very important part of the platform for managing assets. Other than that, there are a lot of details in our presentation.

Speaker #3: All mutual funds continue to grow. ARC acquired ₹300 crore of retail assets in this quarter, and we recovered ₹304 crore in the quarter.

Rashesh Shah: All mutual fund continues to grow. ARC acquired INR 300 crores of retail assets in this quarter, and we recovered INR 304 crores in the quarter. Housing finance AUM is now INR 4,900 crores. Housing finance, we had to readjust the strategy because the co-lending model that we were working on has undergone a change as per the new RBI rules, we have recalibrated the strategy in that business. In the ELI, Zuno General Insurance, we have a gross premium of INR 287 crores for the quarter. We issued 9,363 policies for the quarter. More important, our embedded value now is at INR 2,306 crores in that business. We still continue to remain focused on par and non-par products in the insurance business.

Speaker #3: Housing finance AUM is now ₹4,900 crores. In housing finance, we have had to readjust the strategy because the co-lending model that we were working on has undergone a change as per the new RBI rules.

Speaker #3: So, we have recalibrated the strategy in that business. In EGI, Edelweiss General Insurance, we have a gross premium of ₹287 crore for the quarter.

Speaker #3: We issued 9,363 policies for the quarter. More importantly, our embedded value now stands at ₹2,306 crore in that business. We continue to remain focused on PAR and non-PAR products in the insurance business.

Speaker #3: So with that, I think I will sum up and maybe just hand it over to my colleague, Amit Agarwal, CEO of EAAA, to say a few words. Then we can open it up for questions.

Rashesh Shah: With that, I think I would sum up and maybe just hand it over to my colleague, Amit Agarwal, CEO of EAAA, to say a few words, then we can open it up for questions. Over to you, Amit.

Speaker #3: Over to you, Amit.

Speaker #2: Thank you, Ashish. Hi, everyone. Edelweiss Alternatives is a journey that we started in 2011—a journey that we are truly proud of, and a journey that has actually made us one of the leading alternative asset management platforms.

Amit Agarwal: Thank you, Ashish. Hi, everyone. Edelweiss Alternatives is a journey which we have started in 2011, a journey that we are truly proud of. A journey that has actually made us one of the leading alternative asset management platforms with INR 48,600 crore plus of fee-paying AUM with a PAT margin of 24% plus and nearly a 29% ROE. Alternative asset management is still in a very nascent stages in India with a very low penetration of nearly 3% as compared to nearly 25% plus in the US on GDP basis. We do think that this business is an interesting cross-section of rising private wealth in the country and the rising need for getting yield and income on that wealth. Yield and income is one of the verticals that we have focused upon. That has been the fastest-growing segment of the alternatives business.

Speaker #2: With ₹48,600 crore plus of fee-paying AUM, a PAT margin of 24% plus, and nearly a 29% ROE, alternative asset management is still in a very nascent stage in India, with a very low penetration of nearly 3%, as compared to nearly 25% plus in the US on a GDP basis.

Speaker #2: We do think that this business is an interesting cross-section of rising private wealth in the country, and the rising need for getting yield and income on that wealth.

Speaker #2: Yield and income is one of the verticals that we have focused upon, and that has been the fastest growing segment of the alternatives business.

Speaker #2: We are quite excited about this journey. And, as Rashid said, we can say only so much given our current DRHP filings. But we have put out an addendum which gives a lot more details about this business.

Amit Agarwal: We are quite excited about this journey. We are, as Ashish said, we can say only so much given our current DRHP filings. We have put out an addendum which gives a lot more details about this business and happy to take any questions on that. Thank you.

Speaker #2: I'm happy to take any questions on that. Thank you.

Speaker #1: Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone.

Operator 2: Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Jill Runakaria with Equirus Securities. Please go ahead.

Operator: Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.

Speaker #1: If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question.

Speaker #1: Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Jill Lunakaria, Equity Securities.

Operator: The first question comes from the line of Jill Runakaria with Equirus Securities. Please go ahead.

Speaker #1: Please go ahead.

Speaker #3: Yeah, thank you. So I had multiple questions. Sir, firstly, you mentioned the EAAA IPO, and that you are planning it in the third quarter of FY27.

Jill Runakaria: Yeah, thank you. I had multiple questions. Sir, firstly, you mentioned about the EAAA IPO that you are planning it in Q3 of FY27. Looking at the current improved market condition, is there any possibility that we can expect it earlier?

Jil Narkaria: Yeah, thank you. I had multiple questions. Sir, firstly, you mentioned about the EAAA IPO that you are planning it in Q3 of FY27. Looking at the current improved market condition, is there any possibility that we can expect it earlier?

Speaker #3: So, looking at the current improved market conditions, is there any possibility that we can expect it earlier? I'll get Amit to answer that.

Rashesh Shah: I'll get Amit to answer that. We have started our roadshows and all that. We are about to start our roadshows and all, and we want to do a good marketing and all. I think as for now, October looks like a good time for us to achieve that. I think August and September, we want to make sure we have time for the investor roadshows. Amit, you want to add something?

Speaker #3: We have started our book shows and all that. Sorry, we are about to start our road shows and all. And we want to do good marketing and all.

Speaker #3: So, I think as of now, October looks like a good time for us to achieve that. I think August and September, we want to make sure we have time for the investor roadshows.

Speaker #3: But Amit, do you want to add something?

Speaker #2: So, Rashish, I think this is perfect. We are following the process, and we do think that, given the current state of the process, October seems like a good timeline.

Amit Agarwal: Rashesh, I think this is perfect. We are following the process, and we do think that given the current state of process, October seems like a good timeline.

Speaker #3: Okay. So when can we expect the RHP? The RHP is already filed? The RHP will be filed, Amit, by when?

Jill Runakaria: When can we expect the RHP?

Jil Narkaria: When can we expect the RHP?

Rashesh Shah: The DRHP is already filed. The RHP will be filed, Amit, by when?

Speaker #2: So, I think it is filed as close to the listing date as possible. So we are with the bankers, and they are guiding us.

Amit Agarwal: I think it is filed as close to the listing date as possible. We are with the bankers and they are guiding us, and there are counsels, Rashesh, who are guiding us, and we will do it in an appropriate time for the listing.

Speaker #2: And there are counsels, Rashish, who are guiding us. And we will do it at an appropriate time, for the listing.

Speaker #3: Okay, understood. Secondly, we wanted to understand regarding the products and strategy, but I just want to add that we have already filed the DRHP.

Jill Runakaria: Okay, understood. Secondly, wanted to understand regarding the products and strategies.

Jil Narkaria: Okay, understood. Secondly, wanted to understand regarding the products and strategies.

Rashesh Shah: I just want to add, we have already filed the DRHP, and it is already approved by SEBI.

Speaker #3: And it is already approved by SEBI. Okay, okay, understood. And secondly, I wanted to understand regarding the products and strategies. So, could you tell us more about the economics of yield and income strategies of EAAA?

Jill Runakaria: Okay. Understood. Secondly, I wanted to understand regarding the products and strategies. Could you tell us more about the economics of yield and income strategies of EAAA? Additionally, with the eight strategies that are currently across these verticals, how do you see the product suite evolving going forward? Also, you recently launched a private equity firm. Are there any other alternative asset categories that you are exploring to enter? Also, could you share the target fee-paying AUM mix in the medium term?

Jil Narkaria: Okay. Understood. Secondly, I wanted to understand regarding the products and strategies. Could you tell us more about the economics of yield and income strategies of EAAA? Additionally, with the eight strategies that are currently across these verticals, how do you see the product suite evolving going forward? Also, you recently launched a private equity firm. Are there any other alternative asset categories that you are exploring to enter? Also, could you share the target fee-paying AUM mix in the medium term?

Speaker #3: And additionally, with the eight strategies that are currently across these verticals, how do you see the products evolving going forward? And also, you recently launched the private equity firm.

Speaker #3: Are there any other alternate asset categories that you are exploring to enter? Also, could you share the target fee-paying AUM mix in the medium term?

Speaker #3: Yeah. Amit, would you like to answer that?

Rashesh Shah: Yeah. Amit, you want to answer that?

Speaker #2: So, we cannot make any forward-looking statements or provide any target AUMs on this business. What we can tell you is that currently, we have these eight lines of business.

Amit Agarwal: We cannot make any forward-looking statements or any target AUMs on this business. What we can tell you that is currently we have these eight lines of businesses, private equity being the latest line of business that we have recently added. Our current total income yield, as you see for this quarter, is around 2.89%, which is also mentioned, and our PAT yields are 0.69%. This is the data. More data is available in our DRHP, and it is in those lines that we are continuing to have. This is a very sustainable business model, and it focuses on generating superior risk-adjusted returns for our clients. That is why you see yields in this business also very strong.

Speaker #2: Private equity is the latest line of business that we have recently added. Our current total income yield, as you can see for this quarter, is around 2.89%, which is also mentioned.

Speaker #2: And our PAT yields are 0.69%. So, this is the data. More data is available in our DRHP, and it is in those lines that we are continuing to have.

Speaker #2: This is a very sustainable business model, and it focuses on generating superior risk-adjusted returns for our clients. That is why you see yields in this business also remain very strong.

Speaker #2: Because, as Rashish mentioned, we are focused on creating alpha through our operating capabilities inside Secura and looking at building those assets on a superior risk-adjusted return basis.

Amit Agarwal: Because as Rashesh mentioned, we are focused on creating alpha through our operating capabilities inside Sekura and looking at building those assets on a superior risk-adjusted return basis. Thank you.

Speaker #2: Thank you.

Speaker #3: So, I would add here, a parameter to look at in this is the PAT yield. If you look at most of the mutual funds in India, the PAT yield varies from 20 basis points of AUM to 40–45 basis points of AUM at the very upper end.

Jill Runakaria: Okay.

Jil Narkaria: Okay.

Rashesh Shah: One parameter to look at in this is the PAT yield. If you look at most of the mutual funds in India, the PAT yield varies from 20 basis points of AUM to 40, 45 basis points of AUM at the very upper end. I think in alternatives for most of the businesses, if you look at, there are others like 360 ONE and others. The PAT yield is usually between 50 basis points to 100 basis points of the fee-paying AUM.

Speaker #3: I think in alternatives, for most of the businesses, if you look at it, there are others like 361 and others. The PAT yield is usually between 50 basis points to 100 basis points of the fee-paying AUM.

Speaker #3: Okay, understood. And coming to the last question, regarding the listing of EAAA and C, over the past year, we have seen multiple ANCs listing with HBM Mutual Fund as the latest one.

Jill Runakaria: Okay, understood. Coming to the last question regarding the listing of Edelweiss AMC. Over the past year, we have seen multiple AMC listings with HBM Mutual Fund as the latest one. Is listing Edelweiss AMC something you would consider over the medium term? How should we think about the long-term capital market strategy for this business?

Jil Narkaria: Okay, understood. Coming to the last question regarding the listing of Edelweiss AMC. Over the past year, we have seen multiple AMC listings with HBM Mutual Fund as the latest one. Is listing Edelweiss AMC something you would consider over the medium term? How should we think about the long-term capital market strategy for this business?

Speaker #3: So, is listing EAAA something you would consider over the medium term? And how should we think about the long-term capital market strategy for this business?

Speaker #3: So, I think in the mutual fund, obviously, we remain focused on growth and innovation. To just make a general statement about all our businesses, at the right time, we would like to list all of our businesses.

Rashesh Shah: I think in the mutual fund, obviously, we remain focused on growth and innovation. To just make a general statement of all our businesses. At the right time, we would like to list all of our businesses. We want to not exit the business, but we would like to get them listed by selling or IPO-ing with a small stake or even looking at demergers and all that. We have found that being listed gives a lot of strength to our business. Institutionalization, continuity, stability, governance, guardrails, all of those become stronger. Even on the Nuvama front, after we spun off the business, we have seen how strong the growth has been, but how strong the platform has become.

Speaker #3: We do not want to exit the business, but we would like to get them listed, either by selling or IPO-ing with a small stake, or even looking at demergers and all that.

Speaker #3: Because we have found that being listed gives a lot of strength to our business—institutionalization, continuity, stability, governance, guardrails—all of those became stronger.

Speaker #3: Even on the Noama front, after we spun off the business, we have seen how strong the growth has been and how strong the platform has become.

Speaker #3: So on all of our businesses—the insurance businesses, the asset management business—at the right time, we want to make sure that the IPO timing, listing timing, is right for the business.

Rashesh Shah: On all our businesses, insurance businesses, asset management business, at the right time, we want to make sure that the IPO timing, listing timing is right for the business. Eventually, we would aspire that all our businesses should be listed independently on their own.

Speaker #3: But eventually, we would aspire that all of our businesses should be listed independently on their own. Okay. Thank you so much, Amit. That was very helpful.

Jill Runakaria: Okay. Thank you so much. This was very helpful. That's it from my side.

Jil Narkaria: Okay. Thank you so much. This was very helpful. That's it from my side.

Speaker #3: That's it from my side.

Operator 2: Thank you. Next question comes from the line of Rajiv Rangnekar with HDFC Securities. Please go ahead. Mr. Rangnekar, please go ahead.

Operator: Thank you. Next question comes from the line of Rajiv Rangnekar with HDFC Securities. Please go ahead. Mr. Rangnekar, please go ahead.

Speaker #1: Thank you. Next question comes on the line of Rajiv Rangwani with HDFC Securities. Please go ahead. Mr. Rangwani, please go ahead. Mr. Rangwani? Yes.

Rajiv Rangnekar: Yeah. Can you hear me?

Rajiv Rangwani: Yeah. Can you hear me?

Operator 2: Mr. Rangnekar?

Operator: Mr. Rangnekar?

Rajiv Rangnekar: Yeah.

Rajiv Rangwani: Yeah.

Speaker #1: Please go ahead.

Operator 2: Yes, please go ahead.

Operator: Yes, please go ahead.

Speaker #4: Yeah, sorry. So, yeah, my question is that the ROE for EAAA has improved to 29% this quarter from around 26% in FY26. So, as this platform continues to scale, how should we think about sustainable ROE over the medium term?

Rajiv Rangnekar: Sorry. Yeah, my question is that the ROE for EAAA has improved to 29% this quarter from around 26% in FY26. As this platform continues to scale, how should we think about sustainable ROE over the medium term? FPAUM and PAT also have shown very good growth in this quarter. What are the aspirations for FPAUM and PAT growth over the next few years, and what will be the key factors driving this trajectory?

Rajiv Rangwani: Sorry. Yeah, my question is that the ROE for EAAA has improved to 29% this quarter from around 26% in FY26. As this platform continues to scale, how should we think about sustainable ROE over the medium term? FPAUM and PAT also have shown very good growth in this quarter. What are the aspirations for FPAUM and PAT growth over the next few years, and what will be the key factors driving this trajectory?

Speaker #4: Also, FPAUM and PAT have shown very good growth this quarter. So, what are your aspirations for FPAUM and PAT growth over the next few years?

Speaker #4: And what will be the key factors driving this trajectory?

Speaker #3: So again, it is hard to make any forward-looking statement about how it will grow. But our approach has been that it isn't like any other asset management company, which will have a fairly good dividend payout from the profits that it makes.

Rashesh Shah: Again, it's hard to make any forward-looking statements of how it will grow. Our approach has been that it isn't like any other asset management company, which will have fairly good dividend payout from the profits that it makes. I think an ideal good asset management company should distribute, say, 50% of their profits as dividend, and the balance can be retained for growth and other, because in this business also you have to make some co-investments in your funds. I think given all of that, we do feel comfortable that our current ROE is pretty healthy. A good asset management business should make about 30. I think between 25% to 35% ROE is a good target for an asset management business. Our business will evolve. As you can see, we are creeping along.

Speaker #3: So, I think an ideal asset management company should distribute, say, 50% of their profits as dividend. The balance can be retained for growth and other purposes, because in this business, also, you have to make some co-investments in your funds.

Speaker #3: So I think, given all of that, we do feel comfortable that the current ROE is pretty healthy. But a good asset management business should make about 30—I think between 25 to 35 percent ROE is a good target for an asset management business.

Speaker #3: And our business will evolve. As you can see, we are clipping along. For us, the most important parameter is the fee-paying AUM.

Rashesh Shah: For us, the first and most important parameter is the fee-paying AUM, which over the last few years has grown at about close to 25%, if you see that. We would be keen to maintain that growth. I think fee-paying AUM, if it grows, then most of the other economics is fairly automatic. I think this is a good ROE on this business.

Speaker #3: Which, over the last few years, has grown at about close to 25%, if you see that. And we would be keen to maintain that growth.

Speaker #3: So, I think fee-paying AUM, if it grows, then most of the other economics are fairly automatic. So, I think this is the good ROE on this business.

Speaker #4: Okay. And following the Westbridge transaction in the mutual fund business, and the proposed listing of EAAA, and the ongoing transaction with NIDO as well, what are your plans to unlock value across the remaining businesses, given that the insurance business is also expected to break even this year?

Rajiv Rangnekar: Okay. Following the WestBridge transaction in the mutual fund business and the proposed listing of EAAA and ongoing transaction with Nido also, what are your plans to unlock value across the remaining businesses, given that insurance business is also expected to break even this year? Are there any plans to pursue value unlocking in these businesses?

Rajiv Rangwani: Okay. Following the WestBridge transaction in the mutual fund business and the proposed listing of EAAA and ongoing transaction with Nido also, what are your plans to unlock value across the remaining businesses, given that insurance business is also expected to break even this year? Are there any plans to pursue value unlocking in these businesses?

Speaker #4: Are there any plans to pursue value unlocking in these businesses?

Speaker #3: So I think, to look at value unlocking, as you know, we have two-pronged objectives. One is to look at recycling our capital, and also reducing the corporate debt.

Rashesh Shah: We continue to look at value unlocking. As you know, we have a two-pronged objective. One is to look at recycling our capital and also reducing the corporate debt. You would have seen the corporate debt has come down in this quarter. We'll continue to bring it down. We, of course, have assets like office building and property and all, which can support the debt. We want to bring down the debt. With the Nido transaction, with the EAAA transaction, I think this year we'll get into a comfortable zone for where we want to be on the corporate debt. Our objective number one was obviously to use the capital for reducing corporate debt. Objective number two is, as I said, to unlock value, make these businesses independent, and use that value to share with the shareholders of Edelweiss. We continue to evaluate that.

Speaker #3: So you would have seen that corporate debt has come down in this quarter. We'll continue to bring it down. We, of course, have assets like office buildings and property and all, which can support the debt.

Speaker #3: But we want to bring down the debt, so with the NIDO transaction and the EAAA transaction, I think this year we'll get into a comfortable zone for where we want to be on the corporate debt.

Speaker #3: So, our objective number one was, obviously, to use the capital for reducing corporate debt. Objective number two is, as I said, to unlock value and make these businesses independent.

Speaker #3: And use that value to share with the shareholders of EAAAs. And we continue to evaluate that. We are in no hurry because our businesses are growing pretty well, as you would have seen—not just in the last year, but over the last three or four years, all our businesses have maintained a pretty good growth rate.

Rashesh Shah: We are in no hurry because our businesses are growing pretty well, as you would have seen not just the last year but the last three, four years. All our businesses have maintained a pretty good growth rate. As long as the businesses are growing and we don't need to raise a lot of capital to reduce debt, we will do it for the business strengthening and the value unlocking perspective. We keep on getting a lot of inquiries from many people on insurance and others, and we just evaluate. We are very open-minded. We evaluate everything. We have learned the importance of having good investors in the individual businesses. We'll continue to evaluate, and now our focus is on Carlyle, the Nido transaction and the EAAA IPO.

Speaker #3: So, as long as the businesses are growing and we don't need to raise a lot of capital to reduce debt, we will do it from the business strengthening and value unlocking perspective.

Speaker #3: We keep on getting a lot of inquiries from many people on insurance and other matters. We are very open-minded and evaluate everything.

Speaker #3: We have learned the importance of having good investors in the individual businesses, so we'll continue to evaluate. Now, our focus is on the Carlyle and NIDO transaction and the EAAA IPO.

Speaker #4: Okay. Thanks. Thanks. I'm done.

Rajiv Rangnekar: Okay, thanks. Thanks. I'm done.

Rajiv Rangwani: Okay, thanks. Thanks. I'm done.

Speaker #1: Thank you. The next question comes from the line of Shriyansh Jain with IFL Capital AMC. Please go ahead.

Operator 2: Thank you. Next question comes from the line of Shriyansh Jain with IIFL Capital AMC. Please go ahead.

Operator: Thank you. Next question comes from the line of Shriyansh Jain with IIFL Capital AMC. Please go ahead.

Speaker #5: Yeah. Hi. Thank you for the opportunity, sir. Just a couple of questions. Zuno delivered around 6 crore here in this quarter, with the motor segment growing nearly 20% year-on-year.

Shriyansh Jain: Yeah. Hi. Thank you for the opportunity, sir. Just a couple of questions. Zuno delivered around year on year growth this quarter, with the motor segment growing nearly 20% year on year. It was significant ahead of an industry growth. Could you please elaborate on the strategy on this side, like driving this strong performance and also beyond the motor insurance, which product categories do you see as the key growth drivers after this?

Speaker #5: So it was significant ahead of industry growth, but could you please elaborate on the strategy on this side—like what is driving this strong performance? And also, beyond more insurance, which product categories do you see as the key growth drivers after this?

Speaker #3: Yes, as you know, at Zuno, we are very focused on motor insurance. As you know, the two large segments in insurance are motor and health.

Rashesh Shah: Yeah. If you know, on the Zuno, we are very focused on the motor insurance. As you know, the 2 large segments in insurance are motor and health. We have not focused on health because we think the others with stronger advantages and a stronger network and because we can only focus on what our strengths are, our focus has been on motor. We have done a lot of work on innovation, database, underwriting. We also have products like pay as you drive and know how you drive. We focus a lot on telematics and just, I think innovating products which meet the customer needs. Along with that, we also strengthened a lot of our OEM partnerships for getting distribution. As you know, motor has been doing well for the last 2 quarters. The car sales in India have improved.

Speaker #3: We have not focused on health because we think there are others with stronger advantages and a stronger network. And because we can only focus on what our strengths are, our focus has been on motor.

Speaker #3: We have done a lot of work on innovation, data-based underwriting. We also have products like pay-as-you-drive and know-how-you-drive. And we focus a lot on telematics, and just, I think, innovating products which meet the customer needs.

Speaker #3: Along with that, we also strengthened a lot of our OEM partnerships for getting distribution. And as you know, motor has been doing well for the last two quarters.

Speaker #3: Car sales in India have improved, so that has given us a tailwind. But our own innovation and the OEM partnerships we have have allowed us to achieve this growth.

Rashesh Shah: That car sales have given us a tailwind. Our own innovation and the OEM partnerships we have has allowed us to have this growth. In the business, I think on the car insurance, we have maintained a 40% average growth for the last 4, 5 years. We continue to be on that trajectory. This quarter was exceptionally good because quite a few things fell in place at the same time. Overall, we have maintained on auto insurance about 40% to 41% growth over the last 5 years.

Speaker #3: So in the business, I think on the car insurance, we have maintained a 40% average growth for the last four or five years. So we continue to be on that trajectory.

Speaker #3: This quarter was exceptionally good because quite a few things fell well into place at the same time. But overall, we have maintained about 40 to 41 percent growth in auto insurance over the last five years.

Speaker #5: Understood, sir. And sir, another thing— it was a relatively soft quarter for NIDO with a small reported loss. Could you help us understand what was the main reason behind this?

Shriyansh Jain: Understood, sir. Another thing, it was relatively soft quarter for Nido with a small reported loss. Could you help us understand what was the main reason behind this?

Speaker #3: So, Nido, there were two things in this quarter. One was, as you know, the co-lending rules got changed in the last quarter by RBI.

Rashesh Shah: Neeru, there were two things in this quarter. One was, as you know, the co-lending rules got changed in the last quarter by RBI. As a result of that, we have recalibrated. Earlier we used to originate and sell down immediately. The DA was immediately with your co-lending partner. Now we originate, and we have to hold it on our books before we sell down. That has required some amount of board capital getting allocated to holding the assets on your business until 180 days are over. We are still pursuing an asset-light model. I think that co-lending change affected the business. Along with that, we are getting ready for an expansion post Carlyle investment. We have opened some new branches. We have recalibrated a lot of our processes on standardizing underwriting across branches and all that.

Speaker #3: So, as a result of that, we have recalibrated. Earlier, we used to originate and sell down immediately. The DA was immediately with your co-lending partner.

Speaker #3: Now we originate, and we have to hold it on our books before we sell down. So, that has required some amount of more capital getting allocated to holding the assets on your business until 180 days are over.

Speaker #3: Because we are still pursuing an asset-light model, I think that the coal ending change affected the business. Along with that, we are getting ready for an expansion post Carlyle investment.

Speaker #3: So we have opened some new branches. We have recalibrated a lot of our processes. On standardizing underwriting across branches and all that. So there has been a lot of organization building work that we've been doing on strengthening the business for growth in this quarter.

Rashesh Shah: There has been a lot of organization building work that we've been doing on strengthening the business for growth in this quarter. That, coupled with no co-lending income, has resulted in this. We remain confident that once we close the Carlyle deal, the additional capital comes in, the next innings of growth for this business will start.

Speaker #3: And that, coupled with no co-lending income as a result in this. But we remain confident that once we close the Carlyle deal and the additional capital comes in, the next innings of growth for this business will start.

Speaker #5: Okay. Okay. Thank you, sir. Thank you.

Shriyansh Jain: Okay. Thank you.

Speaker #1: Thank you. Next question comes on the line of Siddharth Shah with SRS Capital. Please go ahead.

Operator 2: Thank you. Next question comes from the line of Siddharth Shah with SRS Capital. Please go ahead.

Operator: Thank you. Next question comes from the line of Siddharth Shah with SRS Capital. Please go ahead.

Speaker #6: Yeah. I had two somewhat similar questions.

Siddharth Shah: Yeah. I had two somewhat similar questions.

Speaker #1: Mr. Shah, sorry for interrupting. We cannot hear you. Can you speak a little louder? Yes, please go ahead.

Operator 2: Mr. Shah, sorry for interrupting. We cannot hear you. Can you speak a little louder?

Operator: Mr. Shah, sorry for interrupting. We cannot hear you. Can you speak a little louder?

Siddharth Shah: Hello.

Operator 2: Yes, please go ahead.

Operator: Yes, please go ahead.

Speaker #6: Yeah, hi. I had two questions on EAAA. I think in this quarter, FPAUM grew 27%, but our revenues grew 50%. And similarly, if you look at the EAAA presentation, over the last few years, revenue as a percent of FPAUM has gone from close to 2% to nearly a 3% yield.

Siddharth Shah: Yeah, hi. I had two questions on EAAA. I think in this quarter, FPAUM grew 27%, but our revenues grew 50%. Similarly, if you look at the EAAA presentation over the last few years, revenue as a percent of FPAUM has gone from close to 2% to nearly 3% yield. Can you, for both those instances, help us understand what's driving that? Is it product mix change? Is it carry income or something else?

Speaker #6: So, for both those instances, can you help us understand what's driving that? Is it product mix change, carry income, or something else?

Speaker #3: Yeah. Do you want to answer that?

Rashesh Shah: Amit, you want to answer that?

Speaker #6: So our business is obviously in a flywheel effect. If you see, this business is built over a period of time. And across, as we go along the path, we have more AUMs getting added.

Amit Agarwal: Our business is obviously in a flywheel effect. If you see this business has built over a period of time. Across, as we go along the path, we have more AUMs getting added, and the margins are quite strong and robust. This business actually scales up over a period of time very significantly. Here, also in this business, scale starts giving you a lot of, what I would say, advantage over a period of time. This has happened in the US over the last 30 years, where Blackstone from INR 3 billion has today become a INR 1 trillion plus sort of an asset manager. This has happened over a period of time in the US in a very, very deep way. This is both a flywheel effect, a change in terms of the mix, the product.

Speaker #6: And the margins are quite strong and robust, so this business actually scales up over a period of time, very significantly. Here also, in this business, scale starts giving you a lot of, what I would say, advantage over a period of time.

Speaker #6: This has happened in the US. Over the last 30 years, Blackstone has grown from $3 billion to over $1 trillion as an asset manager.

Speaker #6: So, this has happened over a period of time in the US in a very, very deep way. So, this is both a flywheel effect—a change in terms of the mix, the product.

Speaker #6: We've added private equity to the portfolio, which is a small fund at this point in time. But our yield and income funds have also started becoming a stronger franchise with the client.

Amit Agarwal: We've added private equity to the portfolio, which is a small fund at this point of time, but our yield and income funds have also started becoming stronger franchises with the client because we are in the third and fourth vintages now. Vintages matter in this business a lot. Vintages also reflect the client confidence in the product, and that all allows your revenues to grow steadily. We do think that the growth will continue, the momentum will continue, but at this point of time, we are also generating a lot of our carry is getting or variable additional returns are getting materialized as well. It's a combination of all the factors put together.

Speaker #6: Because we are in the third and fourth vintages now. Vintages matter in this business a lot. Vintages also reflect client confidence in the product.

Speaker #6: And that all allows your revenues to grow steadily. We do think that the growth will continue. The momentum will continue. But at this point of time, we are also generating—a lot of our carry is getting—our variable additional returns are getting materialized as well.

Speaker #6: So, it's a combination of all the factors put together.

Speaker #5: Understood.

Siddharth Shah: Understood.

Speaker #3: And so I will just add, Siddharth, that what happens in alternative asset management, unlike a normal mutual fund or a normal NBFC, is that here, when you exit a fund, you actually make a good return because a lot of your carry comes in.

Rashesh Shah: I will just add, Siddharth, that what happens in alternative asset management, unlike a normal mutual fund or a normal NBFC, here, when you exit a fund, you actually make a good return because a lot of the carry comes in. As I said, in this quarter, we also exited our EIYP 1 fund. We now have a series of funds which we had raised 8 years ago, which are all now getting towards the closure exit mode and all that. We have 8 strategies. Every year, every quarter, there are some older funds which are exiting. The best time for a business like alternatives is after 11, 12 years have passed, where a lot of your older funds have now been proven, the exits have started happening.

Speaker #3: And as I said, in this quarter, we also exited our EYIP 1 fund. And we now have a series of funds which we had raised eight years ago.

Speaker #3: Which are all now getting towards closure, exit mode, and all that. And we have eight strategies. So every year, every quarter, there are some older funds which are exiting.

Speaker #3: So, the best time for a business like alternatives is after 11 or 12 years have passed, where a lot of your older funds have now been proven, and the exits have started happening.

Speaker #3: And in the AI business, especially in yield and income kind of strategies, a lot of your upside really comes from the second or third fund.

Rashesh Shah: In the AIF business, a lot of your, especially in yield and income kind of strategies, a lot of your upside really comes from the second, third fund, and when you exit the businesses. It's a very back-ended business. We are now getting the tailwind benefit of this business being 14, 15 years old.

Speaker #3: And when you exit the businesses. So these are very back-ended businesses. We are now getting the tailwind benefit of this business being 14–15 years old.

Speaker #5: Understood. That's very

Siddharth Shah: Understood. That's very helpful. Thank you.

Speaker #6: helpful. Thank you.

Operator 2: Thank you. Next question comes from the line of Sujal Chandak with Wallfort PMS. Please go ahead.

Operator: Thank you. Next question comes from the line of Sujal Chandak with Wallfort PMS. Please go ahead.

Speaker #1: Thank you. Next question comes from the line of Sujal Chandaliya with Walford PMS. Please go ahead.

Speaker #5: Sure. Hello, and thank you for the opportunity. I had a couple of questions from my side. Firstly, what is the current mix of domestic and offshore clients in the alternative asset business?

Sujal Chandak: Hello. Thank you for the opportunity. I have a couple of questions from my side. Firstly, what is the current mix of domestic and offshore clients in alternative asset business? Have recent geopolitical developments and market conditions impacted this mix? Are there plans to expand into new geographies? Additionally, how do you expect the mix of retail and institutional investors to evolve over time?

Sujal Chandaliya: Hello. Thank you for the opportunity. I have a couple of questions from my side. Firstly, what is the current mix of domestic and offshore clients in alternative asset business? Have recent geopolitical developments and market conditions impacted this mix? Are there plans to expand into new geographies? Additionally, how do you expect the mix of retail and institutional investors to evolve over time?

Speaker #5: And have recent geopolitical developments and market conditions impacted this mix? And are there plans to expand into new geographies? Additionally, how do you expect the mix of retail and institutional investors to evolve over time?

Speaker #3: Yeah. Amit, will you take that?

Rashesh Shah: Yeah, Amit, you will take that?

Speaker #6: Yes, so as you see, we have provided—this is an addendum. We have nearly a 50-50 mix of institutional and non-institutional clients, and now we are actually spread across multiple geographies.

Amit Agarwal: Yes. As you see, we have provided this in an addendum. We have nearly a 50/50 mix of institutional and non-institutional clients. Now we are actually spread across multiple geographies. We have now North America, Canada, Europe, Australia. We have got multiple geographies, and our clients are also spread across those geographies. The important point for us is actually more repeat client AUM as well, because that also showcases that the performance of the funds has been in line with the client's expectation for him to, A, come into the same fund again, as well as come across our product suite. It's also deepening as well as broadening of the client base. This is still a very small number of clients in the retail-- Sorry, I would say UHNI and HNI space, because this business is largely UHNI and family office business in India today.

Speaker #6: So, we have now North America, Canada, Europe, and Australia. We have got multiple geographies, and our clients are also spread across those geographies. The important point for us is actually more repeat client AUM as well.

Speaker #6: Because that also showcases that the performance of the funds has been in line with the client's expectations—for him to, A, come into the same fund again, as well as come across our product suite.

Speaker #6: So it's also deepening as well as broadening of the client base. This is still a very small number of clients in the retail—sorry, I would say UHNI and HNI space.

Speaker #6: Because this business is largely UHNI and family office business in India today. But going forward, the domestic institutional capital will also, hopefully, start looking at this business.

Amit Agarwal: Going forward, the domestic institution capital will also start hopefully looking at this business. Globally, mostly institutions are invested into alternatives. In India, the exposure of institutions to alternative is still very low. That also is a mixed thing which could potentially change the institutional and non-institutional mix.

Speaker #6: Globally, most institutions are invested in alternatives. In India, the exposure of institutions to alternatives is still very, very low. So that will also be a mixed thing, which could potentially change the institutional and non-institutional mix.

Speaker #5: Okay, sir. That's helpful. Sir, secondly, in your life insurance business, around 80% of the premium is contributed by PAR and non-PAR products. What is your view on the future evolution of the product landscape?

Sujal Chandak: Okay, sir. That's helpful. Sir, secondly, in your life insurance business, around 80% of premium is contributed by par and non-par products. What is the view on the future evolution of the product landscape, and how are you thinking of aligning your medium-term product strategy accordingly?

Sujal Chandaliya: Okay, sir. That's helpful. Sir, secondly, in your life insurance business, around 80% of premium is contributed by par and non-par products. What is the view on the future evolution of the product landscape, and how are you thinking of aligning your medium-term product strategy accordingly?

Speaker #5: And how are you thinking of aligning your medium-term product strategy accordingly?

Speaker #3: So our focus is on what we call the savings product, because we do believe that, though there is an opportunity in things like unit-linked products and all, the margins are much better in the savings product.

Rashesh Shah: Our focus is on what we call savings product, because we do believe that though there is an opportunity in things like unit-linked products and all, the margins are much better in the savings product. We also come from a very focused investment approach and earning a good return on investment on the corpus that has been there. Our whole idea is that par and non-par is going to remain the focus area. I think we would like to keep about 70% to 75% of our AUM in par and non-par. We do have ULIP and term and all, but those are not really very focused on high-growth areas. We do want to also focus on annuities and pension as we go along, because those are also good savings products.

Speaker #3: We also come from a very focused investment approach, and earning a good return on investment on the corpus that has been there. So our whole idea is that PAR and non-PAR are going to remain the focus areas.

Speaker #3: I think we would like to keep about 70 to 75 percent of our focus, our AUM, in PAR and non-PAR. We do have ULIP and TERM and all.

Speaker #3: But those are not really very focused on high growth areas. We do want to also focus on annuities and. Mentioned as we go along.

Speaker #3: Because those are also good savings products. So, our view is that the insurance industry in India caters to a small need for risk, but a large need for savings to be converted into good long-term investments.

Rashesh Shah: Our view is that insurance industry in India caters to a small need for risk, but a large need for savings to be converted into good long-term investments. Our focus is on that. The reason we are not very gung-ho on ULIP is because the margins are low and ULIP is also, I mean, that need is also being catered by through the mutual fund industry. While the long-term savings need is one where people really look to insurance. That is our focus. That has been our focus, and we have done pretty well. We have innovated a lot on the par and non-par products.

Speaker #3: So our focus is on that. The reason we are not very gung-ho on ULIP is because the margins are low. And ULIP is also—I mean, that need is also being catered to through the mutual fund industry.

Speaker #3: While the long-term savings need is one where people really look to insurance. So that is our focus; that has been our focus. And we have done pretty well.

Speaker #3: We have innovated a lot on the PAR and non-PAR products.

Speaker #5: Okay. Thank you. Thank you, sir, for your detailed answer. That's it from my side.

Sujal Chandak: Okay. Thank you. Thank you, sir, for a detailed answer. That's it from my side.

Sujal Chandaliya: Okay. Thank you. Thank you, sir, for a detailed answer. That's it from my side.

Speaker #1: Thank you. Next question comes from the line of Siddesh Dharmadhikari with PL Capital. Please go ahead.

Operator 2: Thank you. Next question comes from the line of Siddhesh Dharmadhikari, PL Capital. Please go ahead.

Operator: Thank you. Next question comes from the line of Siddhesh Dharmadhikari, PL Capital. Please go ahead.

Speaker #4: Hi. Thank you for the opportunity. Am I audible? Hello?

Siddhesh Dharmadhikari: Hi. Thank you for the opportunity. Am I audible? Hello.

Speaker #3: Yes.

Rashesh Shah: Yes.

Operator: Yes.

Speaker #1: Yes, you are. Please go ahead.

Operator 2: Yes, you are. Please go ahead.

Operator: Yes, you are. Please go ahead.

Speaker #4: Sir, could you give us more details on the transaction with Karel? What is the current status of the transaction?

Siddhesh Dharmadhikari: Sir, could you give us more details on the transaction that you're doing with Carlyle? What is the current status of the transaction?

Speaker #3: So, I think all the agreements are signed. Everything has been done. We have applied for final approvals from RBI and NHB. The process is on.

Rashesh Shah: I think all the agreements are signed, everything has been done. We have applied for final approvals from RBI and NHB. The process is on. We have got a lot of clearances. We should be able to close that deal in the next three to four weeks. As you remember, the contour of the transaction is that Carlyle will buy a portion from us as a secondary purchase, then they will invest another INR 750 crores into the company now, and they will invest another INR 750 crores into the company in 18 months. They will put in INR 1,500 crores into the company. They pay about INR 630 odd crores to us to buy out the stake. Right now, out of the first tranche, we will be 45%. They will own 55%.

Speaker #3: We have got a lot of clearances, and we should be able to close that deal in the next three to four weeks. As you remember, the contour of the transaction is that Kalai will buy a portion from us as a secondary purchase.

Speaker #3: They will invest another ₹750 crore into the company now, and they will invest another ₹750 crore into the company in 18 months. So, they will put in a total of ₹1,500 crore into the company.

Speaker #3: They will pay about ₹630-odd crore to us to buy out the stake. Right now, out of the first tranche, we will be at 45 percent.

Rashesh Shah: Right now, out of the first tranche, we will be 45%. They will own 55%. After the second tranche, they will own 74. We will end up owning 26%.

Speaker #3: They will own 55 percent. After the second tranche, they will own 74 percent. We will end up owning 26 percent.

Rashesh Shah: After the second tranche, they will own 74. We will end up owning 26%.

Speaker #4: Understood, sir. We have seen an initial sense of growth in the NBFC business, with MSME reimbursement tripling year-on-year, AUM nearly doubling, and asset quality improving significantly.

Siddhesh Dharmadhikari: Understood, sir. We have seen initial signs of growth in NBFC business with MSME disbursements tripling year-on-year, AUM nearly doubling, and asset quality improving significantly. However, profitability has remained broadly stable. As the portfolio continues to season, when do you expect this operating momentum to translate into stronger earnings? Also, if you can please share your outlook for the disbursement and AUM growth over FY27.

Speaker #4: However, profitability has remained broadly stable. As the portfolio continues to season, when do you expect this operating momentum to translate into stronger earnings?

Speaker #4: Also, if you can, please share your outlook for the disbursement and AUM growth in FY27.

Speaker #3: So, ECL Finance, we had pivoted to focus more on MSME. But to be honest with you, until last year, our focus was on reducing the wholesale book, which, as I very happily reported, is now down to only ₹600 crore on the wholesale side of the business.

Rashesh Shah: ECL Finance, we had pivoted to focus more on MSME. To be honest with you, until last year, our focus was in reducing the wholesale book, which as I very happily reported, we are now down to only INR 600 crore in the wholesale side of the business. Now we have a lot of elbow room for growing MSME. We hired a new Managing Director, Ajay Khurana, about a year ago, and he is building out a strong MSME business for us. As you can see, the disbursements have grown, almost tripled on a YOY basis. We are currently planning for an INR 2,000 crore disbursement for year FY27. To just give you comparative figures, average for the last three years was about INR 300 to 500 crore per year.

Speaker #3: So now we have a lot of elbow room for growing MSME. We hired a new Managing Director, Ajay Khurana, about a year ago, and he is building out a strong MSME business for us.

Speaker #3: As you can see, the disbursements have grown—almost tripled—on a year-over-year basis. We are currently planning for a ₹2,000 crore disbursement for FY27.

Speaker #3: To just give you a comparative figure, the average for the last three years was about ₹300 to ₹500 crore per year. We are currently looking at about a ₹2,000 crore disbursement for this year.

Rashesh Shah: We are currently looking at about an INR 2,000 crore disbursement for this year. We are also opening branches, strengthening the product portfolio we have. I think the next two years, we will see some uptick in the profit after tax, our focus is on growing branches, growing AUM, growing disbursement. Once we get to, say, AUM of about INR 4,000 to 5,000 crore, which is about couple of years away, is where we will really start seeing real ROE and profitability in this business. We have a fair amount of capital in this business. We have INR 2,000 crore of equity, as you can see, the current borrowing is pretty small. We are geared around 1 is to 1 only, which in NBFC business is very low. Hard to really make good profits if you are geared only 1 is to 1.

Speaker #3: But we are also opening branches and strengthening the product portfolio we have. So I think in the next two years, we will see some uptick in the profit after tax.

Speaker #3: But our focus is on growing branches, growing AUM, and growing disbursements. Once we get to, say, an AUM of about ₹4,000 to ₹5,000 crore, which is about a couple of years away, that is when we will really start seeing real ROE and profitability in this business.

Speaker #3: We have a fair amount of capital in this business. We have ₹2,000 crore of equity. But as you can see, the current borrowing is pretty small.

Speaker #3: We are geared around 1:1 only, which in the NBFC business is very low. It's hard to really make good profits if you are geared only 1:1.

Speaker #3: But I think we have a lot of headroom for growth. We have quite a bit of equity. We have a strong management team. Given the product range and the size we are at, we are still a very small player.

Rashesh Shah: I think we have a lot of headroom for growth. We have quite a bit of equity, we have a strong management team, and the product range and the size we are in, we are still a very small player in MSME, so we have enough space for growth.

Speaker #3: In MSME, we have enough space for growth.

Speaker #4: I understand, sir. That's it from my side. Thank you.

Siddhesh Dharmadhikari: I understand, sir. That's it from my side. Thank you.

Speaker #1: Thank you. Next question comes from the line of Rajesh Ganesh Kumar with GMF. Please go ahead.

Operator 2: Thank you. Next question comes on the line of Rajesh Ganesh Kumar with GMF. Please go ahead.

Operator: Thank you. Next question comes on the line of Rajesh Ganesh Kumar with GMF. Please go ahead.

Speaker #5: Hi. Thank you for the opportunity. Am I audible? Yes, you are. Please go ahead. I have three questions I want to quickly ask. The first question is on the line of the equity AUM and the SIF book.

Rajesh Kumar: Hi. Thank you for the opportunity. Am I audible?

Rajesh Ganeshkumar: Hi. Thank you for the opportunity. Am I audible?

Rashesh Shah: Yes.

Rajesh Kumar: Yes, sure.

Rajesh Ganeshkumar: Yes, sure.

Rashesh Shah: Please go ahead.

Rajesh Kumar: I have three questions I'll quickly ask. The first question comes from the line of the equity AUM and the SIF book. Equity AUM recently, congrats, it has crossed INR 1 lakh crore and the SIF book has reached close to about INR 700 crores. Now, the question that comes to my mind is whether these were solely because of fresh inflows or majorly driven by MTM. Also, as the franchisee continue to scale, what are the long-term aspirations that the business has over the next three to five years? As AMCs have gradually expanded their product horizon beyond mutual funds and they have stepped into adjacent businesses such as PMS, AIFs, and NPLs, how do you think about broadening the product bouquet over the next three to five-year time horizon?

Rajesh Ganeshkumar: I have three questions I'll quickly ask. The first question comes from the line of the equity AUM and the SIF book. Equity AUM recently, congrats, it has crossed INR 1 lakh crore and the SIF book has reached close to about INR 700 crores. Now, the question that comes to my mind is whether these were solely because of fresh inflows or majorly driven by MTM. Also, as the franchisee continue to scale, what are the long-term aspirations that the business has over the next three to five years? As AMCs have gradually expanded their product horizon beyond mutual funds and they have stepped into adjacent businesses such as PMS, AIFs, and NPLs, how do you think about broadening the product bouquet over the next three to five-year time horizon?

Speaker #5: So, equity AUM recently—congratulations—has crossed ₹1 lakh crore, and the SIP book has reached close to about ₹700 crore. Now, the question that comes to my mind is whether these were solely because of fresh inflows, or were they majorly driven by MTM? And also, as the franchise continues to scale, what are the long-term aspirations that the business has over the next three to five years?

Speaker #5: And as AMCs have gradually expanded their product horizon beyond mutual funds, they have also stepped into adjacent businesses such as PMS, AIFs, and NPLs.

Speaker #5: How are you thinking about broadening the product bouquet over the next three- to five-year time horizon?

Speaker #3: So, to answer your first question—and thank you—I think we are very excited that equity AUM has crossed ₹1 lakh crore. Out there, I think our target has been to raise, to get net new money, as you know.

Rashesh Shah: To answer your first question, and thank you, I think we are very excited when equity AUM has crossed INR 1 lakh crores. Out there, I think our target has been to get net new money. As you know, equity markets MTM growth has been fairly subdued in the last one year. It changes quarter-to-quarter, but on a year-to-year basis, there has not been much MTM growth because equity markets are flat. I think we are adding about, currently at the current run rate, we are adding about INR 18,000 to 20,000 crores of new equity money every year. That is our current run rate that we are maintaining. I would say conservatively INR 15,000 to 20,000 crore addition of new equity money every year is the current expectation that we will maintain. If you look at Q1, that is what we have maintained also.

Speaker #3: Equity markets, MTM growth has been fairly subdued in the last one year. I mean, it changes quarter to quarter, but on a year-to-year basis, there has not been much.

Speaker #3: MTM growth because equity markets are flat. So, I think we are adding about—currently, at the current run-rate, we are adding about ₹18,000-20,000 crore of new equity money every year.

Speaker #3: That is our current run rate that we are maintaining. So I would say, conservatively, ₹15,000 to ₹20,000 crore addition of new equity money every year is the current expectation.

Speaker #3: That we will maintain, and if you look at the first quarter, that is what we have maintained also. Along with that, our MTM growth will happen if it happens for the industry as a whole.

Rashesh Shah: Along with that, our MTM growth will happen if it happens for the industry as a whole. I think SIF has been a good product. We were able to innovate quite a bit on that. Our focus is on client needs. If the client need can be served on the mutual fund platform, on the asset platform, we will do that. We already have an AIF business in AAA in any case, but if there is equity AIFs to be done, we will also explore that. We are not really focused on product side. We are very focused on the client needs. If there is a client need, we basically evaluate only two things. Is there a client need and have we got an ability to innovate or cater to that client need in a strong manner?

Speaker #3: I think SIF has been a good product. We were able to innovate quite a bit on that. But our focus is on client needs.

Speaker #3: So if the client need can be served on the mutual fund platform or on the SIF platform, we will do that. We already have an AIF business in EAAA in any case.

Speaker #3: But if there is equity AIFs to be done, we will also explore that. We have no real focus on the product side. We are very focused on the client needs.

Speaker #3: So, if there is a client need, we basically evaluate only two things: Is there a client need, and do we have the ability to innovate or cater to that client need in a strong manner?

Speaker #3: If we have that, then whether it's AIF, whether it's PMS, or whether it's SIF, or whether it's a mutual fund, we'll explore all of that.

Rashesh Shah: If we have that, whether it's AIF, whether it's PMS or whether it's SIF or whether it's mutual fund, we'll explore all of that. A mutual fund will largely remain focused on listed market and alternatives. AAA is largely focused on the private markets.

Speaker #3: A mutual fund will largely remain focused on the listed market, and alternatives we are largely focused—EAAA is largely focused on the private markets.

Speaker #5: Thank you. Thank you. This was really helpful. Speaking of EAAA, in the last phrase when you ended the answer, in the recent business update which has been filed for EAAA, there is a mention about the asset operating and management platform, Secura.

Rajesh Kumar: Thank you. Thank you. This was really helpful. Speaking of AAA, the last phrase where you ended the answer. In the recent business update which has been filed for AAA, there is a mention about the asset operating and management platform, Sekura, right? Which honestly seems like a great competitive edge. Could you throw some light on what Sekura platform actually is and how does it compare with similar platforms which are offered by other market participants?

Rajesh Ganeshkumar: Thank you. Thank you. This was really helpful. Speaking of AAA, the last phrase where you ended the answer. In the recent business update which has been filed for AAA, there is a mention about the asset operating and management platform, Sekura, right? Which honestly seems like a great competitive edge. Could you throw some light on what Sekura platform actually is and how does it compare with similar platforms which are offered by other market participants?

Speaker #5: Which honestly seems like a great competitive edge. Could you throw some light on what the Secura platform actually is, and how it compares with similar platforms offered by other market participants?

Speaker #3: Yeah, I'm happy you asked that. I think it's an excellent question. Amit, do you want to elaborate on that?

Rashesh Shah: Yeah, I'm happy you're asking that. I think it's an excellent question. Amit, do you want to elaborate on that?

Speaker #2: Sure. So, Secura is our dedicated asset operating and management platform. This is a capability we have built over a decade. It has got people who actually have domain knowledge and expertise in their respective areas.

Amit Agarwal: Sure. SEKURA is our dedicated asset operating and management platform. This is a capability we have built over a decade. It has got people who are actually having domain knowledge and expertise in their respective areas. The team member on the energy side would have been hired from an organization where he would have done almost 20 years of work only on building renewable energy and working on renewable energy. Similarly, on the transport side, you will have people who would have done only roads. This is nearly a 60-member team now having capabilities across the asset classes that we own and operate. These are engineers, domain knowledge experts, which are in-house and provide us across the portfolio access. It also helps us in diligencing the assets, even at the start of the investing process, in a much more efficient and clean manner.

Speaker #2: So the team member on the energy side would have been hired from an organization where he would have done almost 20 years of work only on building renewable energy and working on renewable energy.

Speaker #2: Similarly, on the transport side, you will have people who would have done only roads. And this is a nearly 60-member team. Now, having capabilities across the asset classes that we own and operate.

Speaker #2: These are engineers, domain knowledge experts, who are in-house and provide us access across the portfolio. It also helps us in diligencing the asset, even at the start of the investing process, in a much more efficient and clean manner.

Speaker #2: It also helps us in adding what we think is the additional alpha, which comes from improvement in processes, systems, using the right materials, and ensuring that our operation costs are controlled.

Amit Agarwal: It also helps us in adding what we think is the additional alpha, which comes from improvement in processes, systems, using the right materials, ensuring that our operation costs are controlled. These are very focused business people. They supplement the investment team, which is generating the returns and doing the transactions. This is at the heart of the asset management. We have a fully automated, what I would say, a center or a control center where we analyze nearly a terabyte of data on a very regular basis, which allows us to improve our operations. In the recent past, we've started using AI also on that data to ensure that we try and optimize even on how we generate electricity in some of our solar plants to allow for higher revenues. All of this is very operational.

Speaker #2: So these are very focused business people. They supplement the investment team, which is generating the returns and doing the transactions. But this is at the heart of asset management.

Speaker #2: We have a fully automated, what I would say, a center or a control center where we analyze nearly a terabyte of data on a very regular basis, which allows us to improve our operations.

Speaker #2: In the recent past, we have started using AI also on that data to ensure that we try and optimize even how we generate electricity in some of our solar plants.

Speaker #2: To allow for higher revenues. So all of this—this is very operational. It allows adding small bits to actually create a massive impact. So this is one of the things we are most proud of, and it has been built over a period of time.

Amit Agarwal: It allows adding small bits to actually create a massive impact. This is one of the most things we are proud of and that has been built over a period of time. We do think it is a moat in this business, and this is something which global platforms have done in multiple other geographies. In India, I think this is one of the most unique offerings that are sitting inside the EAAA platform.

Speaker #2: We do think it is a moat in this business, and this is something which global platforms have done in multiple other geographies. But in India, I think this is one of the most unique offerings that is sitting inside the EAAA platform.

Speaker #3: And I would just add that, as Amit said, I think large players like Brookfield and Blackstone also built their own platforms—the operating platforms.

Rashesh Shah: I would just add that, as Amit said, I think large players like Brookfield and Blackstone also build their own platforms, the operating platforms. A lot of the Indian asset managers have either outsourced this or they partner, and there are good outsourcing companies available. You can outsource the asset management, you can partner with an operating partner. We have decided to do this in-house because, as Amit said, it gives us the advantage at the due diligence stage. It gives us an efficiency on operating management advantage, and it gives us a lot more control. Because when you own a road for 20 years or when you own a renewable plant for 25, 30 years, it's actually very good not to be dependent on outsiders for operating and managing and controlling that asset.

Speaker #3: A lot of the Indian asset managers have either outsourced or have a partner. And there are good outsourcing companies available. You can outsource the asset management.

Speaker #3: You can partner with an operating partner, but we have decided to do this in-house because, as Amit said, it gives us the advantage at the due diligence stage.

Speaker #3: It gives us an efficiency on operating management advantage, and it gives us a lot more control. Because when you own a road for 20 years, or when you own a renewable plant for 25, 30 years, it's actually very good not to be dependent on outsiders for operating, managing, and controlling that asset.

Speaker #5: Understood. Thank you, thank you for the detailed answer. This is a great initiative, and I'm sure Secura will continue to do very well. One last question before I get back in the queue: Has the life insurance business taken the path toward achieving its break-even this year?

Rajesh Kumar: Understood. Thank you. Thank you for the detailed answer. This is a great initiative, and I'm sure Sekura will continue to do very well. One last question before I get back in the queue is, has the life insurance business taken the path on to achieving its breakeven this year? How do you see the next three or four quarters planning out? If you could throw any light on that. I think that will be all from my end.

Rajesh Ganeshkumar: Understood. Thank you. Thank you for the detailed answer. This is a great initiative, and I'm sure Sekura will continue to do very well. One last question before I get back in the queue is, has the life insurance business taken the path on to achieving its breakeven this year? How do you see the next three or four quarters planning out? If you could throw any light on that. I think that will be all from my end.

Speaker #5: And how do you see the next week or four quarters planning out, if you could throw any light on that? I think that will be all from my end.

Speaker #3: Can you repeat that? Sorry, I didn't hear that.

Rashesh Shah: Can you repeat that? Sorry, I didn't hear that.

Speaker #5: Regarding the life insurance business, my question is whether the life insurance business is on the path to achieving its break-even this year. And with respect to the life insurance business, how do you see the next three quarters planning out?

Rajesh Kumar: The life insurance business. My question is whether the life insurance business is on the path to achieving its breakeven this year. With respect to the life insurance business, how do you see the next three quarters planning out?

Rajesh Ganeshkumar: The life insurance business. My question is whether the life insurance business is on the path to achieving its breakeven this year. With respect to the life insurance business, how do you see the next three quarters planning out?

Speaker #3: Yeah, I think we are on the path to break-even—break-even for the year as a whole, not just in the fourth quarter. For the fourth quarter, it will be much easier, but we are on path for that.

Rashesh Shah: Yeah. I think we are on path to breakeven. Breakeven for the year as a whole, not just in Q4. The Q4 will be a much easier one. We are on path for that. We are focused a lot on our productivity, efficiency, branch productivity, all of that. I think the way we are on this current path, we remain confident of achieving breakeven in that business.

Speaker #3: We have focused a lot on our productivity, efficiency, branch productivity, all of that. So, I think the way we are on this current path, we remain confident of achieving break-even in that business.

Speaker #5: Done. Thank you. Thanks a lot for answering all the questions patiently. I hope Edelweiss Group great success in all the products that they are launching and in the financial space.

Rajesh Kumar: Well, thank you. Thanks a lot for answering all the questions patiently, and I hope Edelweiss Group a grand success in all the products that they are launching and the financial spaces. Thank you once again. Thanks.

Rajesh Ganeshkumar: Well, thank you. Thanks a lot for answering all the questions patiently, and I hope Edelweiss Group a grand success in all the products that they are launching and the financial spaces. Thank you once again. Thanks.

Speaker #5: Thank you once again. Thanks.

Speaker #1: Thank you. Next question comes from the line of Sarvesh Gupta with Maximal Capital. Please go ahead.

Operator 2: Thank you. Next question comes on the line of Sarvesh Gupta with Maximal Capital. Please go ahead.

Operator: Thank you. Next question comes on the line of Sarvesh Gupta with Maximal Capital. Please go ahead.

Speaker #4: Sir, thank you for giving me the opportunity. I had two questions. The first is on EAAA, wherein, I think, a participant mentioned that the yields have actually moved up from 2% to almost 3%.

Sarvesh Gupta: Sir, thank you for giving the opportunity. I have two questions. One is on EAAA, wherein you mentioned, I think a participant mentioned that the yields have actually moved up from 2% to almost 3%. You also mentioned that there can be some lumpiness because of this carry income. What is the expected steady-state yield for the revenues as well as PAT for EAAA? That is the first question.

Speaker #4: And you also mentioned that there can be some lumpiness because of this carry income. So, what is the expected steady-state yield for the revenues as well as PAT for EAAA?

Speaker #4: That is the first question.

Amit Agarwal: Yeah. I think we should look at the FY26 number, which is the 2.45% income yield on the FPA unit, and the PAT yield is 0.68%. We think these businesses over a long period have a very steady state yield on the income.

Speaker #2: Yeah. So I think we should look at the FY26 number, which is the 2.45% income yield on the FPAUM. And the PAT yield is 0.68%.

Speaker #2: We think these businesses, over a long period, have very steady-state yields on the income and on the PAT side. The quarterly numbers might look a little different because the FPAUM that you create is an average of the opening and the closing of each of those years.

Rashesh Shah: The quarterly numbers might look a little, because the FP AUM that you create is an average of the opening and the closing of each of those years. I would say that the total income of yield of 2.45 and the PAT yield of 0.68 is more reflective of how an FP AUM yield for this business would look like. These are very steady state yields for these businesses.

Amit Agarwal: The quarterly numbers might look a little, because the FP AUM that you create is an average of the opening and the closing of each of those years. I would say that the total income of yield of 2.45 and the PAT yield of 0.68 is more reflective of how an FP AUM yield for this business would look like. These are very steady state yields for these businesses.

Speaker #2: So, I would say that the total income yield of 2.45 and the PAT yield of 0.68 are more reflective of how an FPAUM yield for this business would look like.

Speaker #2: But these are pretty steady-state yields for these businesses.

Speaker #4: Understood. And secondly, Rashish, I had one sort of observation. As we are looking to unlock value through various investor inductions as well as through the IPO, at some point in time, the holding company discount that we will have to suffer would become very substantial.

Sarvesh Gupta: Understood. Secondly, Rashesh, I had one sort of observation. As we are looking to sort of unlock the value of our business through various investor induction as well as through IPO, at some point of time, the holding company discount that we will have to suffer with would become very substantial. It would probably become maybe 30%, 40%, 50% of our market cap itself. How or what was all that? Given that we have done a demerger and now we are in progress for some IPOs, how do we think that the holding company discount there? Right now we have a corporate net debt of INR 5,700 crores. Till that point, when it is paid, till that point, everything is fine because the EV conversion to equity value will happen directly.

Speaker #4: It would probably become maybe 30, 40, 50 percent of our market cap itself. So how—and given that we have done a demerger and now we are only Progress for some people—how do we think about that, because I know we have a corporate net debt of ₹5,700 crore.

Speaker #4: So, till that point when it is paid, everything is fine, because the EV conversion to equity value will happen directly. But after this is paid down substantially, this holding company discount will come into the picture in a big way.

Sarvesh Gupta: After this is paid down substantially, this holding company discount will come into picture in a big way. If you can give some thought process and color on that.

Speaker #4: So, if you could give some thought process and color on that.

Speaker #3: So, we are pretty clear that we are not a holding company; we are an investment company. And, as an investment company, there are a lot of options we have.

Rashesh Shah: We are pretty clear that we are not a holding company. We are an investment company. As an investment company, there are a lot of options we have. Basically, you are asking how do you narrow the discount between intrinsic value and the market value? As you know, about a couple of years ago, we did the demerger with Nuvama. What we distributed to the Edelweiss shareholders in the Nuvama demerger is, I think, worth today more than $1 billion. There are many ways of unlocking value and narrowing the discount between intrinsic value and the market value. If you look at the discount in India, I think for a lot of investment companies, holding companies, the discount is anywhere from 10% to 50%. I think, yeah, you correctly said 50 is very high.

Speaker #3: Basically, you are asking how do you narrow the discount between intrinsic value and the market value. As you know, about a couple of years ago we did the demerger with BOAMA.

Speaker #3: And what we distributed to the Edelweiss shareholders in the NOAMA demerger is, I think, worth today more than $1 billion. So there are many ways of unlocking value and narrowing the discount between intrinsic value and the market value.

Speaker #3: And if you look at the discount in India, I think for a lot of investment companies, holding companies, the discount is anywhere from 10% to 50%.

Speaker #3: And I think, yeah, you correctly said 50 is very high. But unlike others, we are not a holding company, so we don't need to hold stock forever in the underlying companies.

Rashesh Shah: Unlike others, we are not a holding company, we don't need to hold stock forever in the underlying companies. We showed in Nuvama that we can demerge and distribute and unlock value in that way also. We will have a lot of options, I mean, how to unlock value. The good news is that we are all at a primary level, we are shareholders. As you know, Edelweiss has a very strong ESOP culture. As you will see in the annual report also, a lot of our senior management, even at EFSL, the holding company level, have quite a bit of ESOP. I think equity price finding its right value is important for us. You see, we have basically two objectives after we reduce the corporate debt. One is to grow the value in the underlying business.

Speaker #3: And we showed in NOAMA that we can demerge, distribute, and unlock value in that way also. We will have a lot of options.

Speaker #3: I mean, how to unlock value. And the good news is that we are all at a primary level—we are shareholders. As you know, Edelweiss has a very strong ESOP culture.

Speaker #3: As you will see in the annual report also, a lot of our senior management, even at EFSL, have quite a bit of ESOP. So I think the equity price finding its right value is important for us.

Speaker #3: See, we have basically two objectives after we reduce the corporate debt. One is to grow the value in the underlying business. That is and will remain the primary, number one focus: how do we continue to build value via growth in the underlying business.

Rashesh Shah: That is and will remain the primary number one focus. How do we continue to build value via growth in the underlying business? That, as you would have seen, continues, and we remain very focused on that. After that, the second objective is, after we have built that value and we continue to build the value, how do we unlock it? How do we make sure all the shareholders of Edelweiss also enjoy and participate in that value via market price or via distributions? On that, we have quite a few options. As we get there. I think next one year, our focus will still be on stabilizing corporate debt and continue to grow the business, because we do believe that growing the business is the harder one. I think unlocking the value, there is a lot of optionality available in that.

Speaker #3: That, as you would have seen, continues, and we remain very, very focused on that. After that, the second objective is, after we have built that value and continue to build the value, how do we unlock it?

Speaker #3: How do we make sure all the shareholders of Edelweiss also enjoy and participate in that value, either via market price or via distributions? And on that, we have quite a few options.

Speaker #3: And as we get there, I think for the next one year, our focus will still be on stabilizing corporate debt and continuing to grow the business, because we do believe that growing the business is the harder work.

Speaker #3: I think unlocking the value there, there is a lot of optionality available in that.

Speaker #1: Understood. And if I can ask one more question, I think we had some property, which you had mentioned was around ₹1,500-odd crore. So, is there any specific reason why we are waiting to unlock or reduce our corporate debt by the sale of those properties?

Sarvesh Gupta: Understood. If I can ask one more. I think we had some property, which you had mentioned around INR 1,500 odd crores. Is there any specific reason why we are sort of waiting to sort of unlock or reduce our corporate debt by sale of those properties?

Speaker #3: No. So, as we said, our current corporate debt is about ₹5,700 crore. Out of that, when we close the NEDO transaction and the EAAA IPO, we expect that our corporate debt will come down below ₹4,000 crore.

Rashesh Shah: No. I think, as we said, our current corporate debt is about INR 5,700. Out of that, when we close the Nido transaction and the EAAA IPO, we expect that our corporate debt will come down below INR 4,000 crores. I think our property and investments, we can sustain about INR two and a half to INR 3,000 crores. Now our property is worth INR 1,500, where even if we do a sale and leaseback, we'll have an 8%, 9% cost. Currently, we are borrowing at about 10% cost. There is not much saving in taking the property off the books and paying the lease rental on that. I think up to INR 2,000, INR two and a half thousand, INR 3,000 crore debt, we don't really want to bother, and we are getting comfortable if it is against property and investments that we have in terms of our funds and all that.

Speaker #3: I think our property and investments, we can sustain about 2,500 to 3,000; our property is worth 1,500, where even if you do a sale and leaseback, we'll have an 8 to 9 percent cost.

Speaker #3: Currently, we are borrowing at about 10 percent cost, so there is not much saving in taking the property off the books and paying the lease rental on that.

Rashesh Shah: Currently, we are borrowing at about 10% cost. There is not much saving in taking the property off the books and paying the lease rental on that. I think up to INR 2,000, INR two and a half thousand, INR 3,000 crore debt, we don't really want to bother, and we are getting comfortable if it is against property and investments that we have in terms of our funds and all that.

Speaker #3: So I think up to Rs 2,000 crore, Rs 2,500 crore, Rs 3,000 crore debt—we don't really want to bother, and we are getting comfortable if it is against property and investments that we have, in terms of our funds and all that.

Speaker #3: So I think from 5, 7, our current target is how do we get to we will get to under 4,000 crore pretty quickly. And then once we get to 3,000 crore is where we say that now it is year marked against property and investments.

Rashesh Shah: I think from five, seven, our current target is how do we get to under INR 4,000 crore pretty quickly, and then once we get to INR 3,000 crore is where we say that now it is earmarked against property and investments, and now we can be more strategic about it. We have all the underlying businesses are there, as we said, with the IPO of EAAA and all. After that, other businesses also. We own 100% of Zuno, we own 85% of AMC, we own 83%, 84% of ARC. All these are good, powerful, strong businesses. Where there is a fair amount of interest from investors, either in the private market or through IPO, that we can explore.

Speaker #3: And now we can be more strategic about it. But we have all the underlying businesses there, as we said, with the IPO of EAAA and all.

Speaker #3: And after that, other businesses also—we own 100% of Zuno. We own 85% of AMC. We own 83, 84% of ARC. All these are good, powerful, strong businesses.

Speaker #3: Where there is a fair amount of interest from investors, either in the private market or through IPO, that we can explore. So, I think our idea would be this: as I said, a triangulation of reducing corporate debt first, growing the underlying value in the businesses first, and then looking at unlocking value and making sure the market price, and the shareholders, enjoy the real underlying value.

Rashesh Shah: I think our idea would be this, as I said, a triangulation of reducing corporate debt first, growing the underlying value in the businesses first, and then looking at unlocking value and making sure the market price and the shareholders enjoy the real underlying value as close to the real value as possible. I think these three, as we have said, continue to remain our focus area. Of this, if you ask me, I would continue to say growing the value of the underlying business is the most important, because that is forever and it continues to grow. Is financial engineering at a particular point of time.

Speaker #3: As close to the real value as possible. So I think these three, as we have said, continue to remain our focus areas. Of these, if you ask me, I would continue to say growing the value of the underlying business is the most important because that is forever.

Speaker #3: And it continues to grow. It's financial engineering at a particular point in time.

Speaker #1: Thank you. Mr. Gupta, please rejoin the queue for more questions. Due to time constraints, we will take the last question from the line of Rishabh Jogani on the call.

Operator 2: Thank you. Mr. Gupta, please rejoin the queue for more questions. Due to time constraints, we take the last question from the line of Rishabh Choudhary with Wallfort. Please go ahead.

Operator: Thank you. Mr. Gupta, please rejoin the queue for more questions. Due to time constraints, we take the last question from the line of Rishabh Choudhary with Wallfort. Please go ahead.

Speaker #1: Please go back.

Speaker #4: Hello, am I audible, sir? Hello. Hello. Hello.

Rishabh Choudhary: Hello? Am I audible, sir? Hello? Hello?

Rishabh Jogani: Hello? Am I audible, sir? Hello? Hello?

Speaker #1: Yes, please go ahead.

Operator 2: Yes, please go ahead.

Operator: Yes, please go ahead.

Speaker #3: Yes, you're audible. Yes, yes.

Rashesh Shah: Yes, you're audible. Yes.

Speaker #4: Okay, okay, okay. Sorry, sorry. So there are two questions. You are in the process of listing your alternative asset arms, so can you give a brief color on the industry, what is the market size, and how the growth trends have been for a few years?

Rishabh Choudhary: Okay. Sorry. There are two questions. You are in the process of listing your alternative asset arm. Can you give a brief color on the industry and what is the market size and how the growth trends have been for a few years? Can you compare it with developed markets, like US, and what growth trajectory you see going forward? Second question is on corporate debt. Your debt declined to INR 5,700 crore. You mentioned that you will go below INR 4,000 crore very quickly. What levels we can see for FY27 and what will contribute that debt reduction, from where the cash flow will come and what percentage or what proportion you want to identify for each driver? Yeah, that's it. Hello?

Rishabh Jogani: Okay. Sorry. There are two questions. You are in the process of listing your alternative asset arm. Can you give a brief color on the industry and what is the market size and how the growth trends have been for a few years? Can you compare it with developed markets, like US, and what growth trajectory you see going forward? Second question is on corporate debt. Your debt declined to INR 5,700 crore. You mentioned that you will go below INR 4,000 crore very quickly. What levels we can see for FY27 and what will contribute that debt reduction, from where the cash flow will come and what percentage or what proportion you want to identify for each driver? Yeah, that's it. Hello?

Speaker #4: And can you compare it with developed markets like the US? What growth trajectory do you see going forward? And the second question is on corporate debt. So, your debt declined to ₹5,700 crore.

Speaker #4: You mentioned that you will go below ₹4,000 crore very quickly. So can you share what levels you expect for FY27, and what will contribute to that debt reduction? From where will the cash flow come?

Speaker #4: And what percentage or what proportion do you want to quantify for each driver? Yeah, that's it. Hello.

Speaker #3: Okay, I'll ask Amit to first answer on EAAA.

Rashesh Shah: Okay. I'll ask Amit to first answer on EAAA.

Speaker #5: Sure. So as I said, asset management, especially the alternatives also scales up as the economy goes to a larger level. The penetration in India is hardly three and a half percent of GDP, while in US it is nearly 27 percent of the GDP.

Amit Agarwal: Sure. As I said, asset management, especially the alternatives also scales up as the economy goes to a larger level. The penetration in India is hardly 3.5% of GDP, while in the US it is nearly 27% of the GDP. There is both broadening and a deepening of the market that is expected in India. Currently, as we see, the alternative AUM is projected to move from INR 166 billion to nearly almost INR 276 billion in India, which is what we have mentioned. Within that, the focus that we have is on the income and yield category. That category is expected to grow faster, and that is expected to grow at nearly 18% CAGR at an industry level.

Speaker #5: So there is both broadening and deepening of the market that is expected in India. Currently, as we see, the alternative AUM is projected to move from $166 billion to nearly $276 billion in India, which is what we have mentioned.

Speaker #5: But within that, the focus that we have is on the income and yield category. And that category is expected to grow faster and is expected to grow at nearly 18 percent CAGR at an industry level.

Speaker #5: And we do think that there are significant macro drivers, both in terms of the rise in private wealth—where the HNI and UHNI population is expected to grow—and the wealth management penetration in family offices is also expected to grow. This, in turn, will allow them to look for products with superior risk-adjusted returns, with income and yield, and that will allow for the growth of the industry.

Amit Agarwal: We do think that there are significant macro drivers, both in terms of the rise in private wealth, where the HNI and the UHNI population is expected to grow. The wealth management penetration in the family offices is also expected to grow, which will in turn allow them to look for products with superior risk-adjusted returns with income and yield, and that will allow for the growth of the industry. EAAA is a significant player in the industry, and all these tailwinds will help EAAA. This is currently not considering all the capital that potentially domestic institutions will also look to put as they start getting more comfortable with this asset class. Again, in the US, as the US economy in the last 20 years, from 2005 to 2025, moved nearly 2.5 times.

Speaker #5: And EAAA is a significant player in the industry, and all these tailwinds will help EAAA. This is currently not considering all the capital that potentially domestic institutions will also look to put in as they start getting more comfortable with this asset class.

Speaker #5: So again, in the US, the US economy in the last 20 years, from 2005 to 2025, moved nearly two and a half times, while the AUM of Blackstone moved almost 25 times in the same period.

Amit Agarwal: The AUM of Blackstone moved almost 25 times in the same period. The AUM of KKR moved, and these are all public data. The AUMs there moved also more than 30 times. The industry is, again, as I said, it is a flywheel industry where vintage, track record, and client repeatability makes a lot of difference, and that will allow both the industry to grow, and we do think that we will be beneficiaries of the tailwind.

Speaker #5: The AUM of KKR moved—AUMs there moved also more than 30 times. So, the industry is, again as I said, it's a flywheel industry where vintage and track record and client repeatability make a lot of difference.

Speaker #5: And that will allow both the industry to grow, and we do think that we will be beneficiaries of the tailwind.

Speaker #3: Yeah, and I would just add that, you know, what we have seen in alternatives is—because basically, alternatives are ultimately a trade-off between higher returns with some kind of illiquidity, because you are in closed-ended funds, you are in private markets.

Rashesh Shah: Yeah. I would just add that what we have seen in alternatives is because there is, basically, alternatives is ultimately a trade-off between higher return with some kind of illiquidity because you are in close-ended funds, you are in private markets. As you would have seen over the last 30 years in the US, a lot of the large insurance companies, pension funds, and endowments, slowly, the same thing is happening with HNI and the ultra HNI industry in India. The same thing will happen with institutional investors in India, where you will trade off some amount of your portfolio, maybe 3%, 4%, 5% of your portfolio into illiquid assets in AIFs and all, which will give you a higher yield.

Speaker #3: And as you would have seen over the last 30 years in the US, a lot of large insurance companies and pension funds and endowments, slowly—and the same thing is happening with the HNI and ultra-HNI industry in India.

Speaker #3: It is same thing will happen with institutional investors in India where you will trade off some amount of your portfolio, maybe 3%, 4%, 5% of your portfolio into illiquid assets in AIFs and all, which will give you a higher yield because if you get a 3 to 5 percent pickup in yield over a strategy that has a 4, 5, 6 years, then a lot of people are now allocating capital more and more to this, especially in India.

Rashesh Shah: If you get a 3% to 5% pickup in yield or a strategy that has 4, 5, 6 years, a lot of people are now allocating capital more and more to this, especially in India, it is currently ultra HNI, but eventually we think insurance companies and others will also come, insurance and pension funds, and all. Along with that, I think the awareness and SEBI has done a fabulous amount of work on that. In AIFs, there are actually two markets. One is the growth market, which is mainly private equity. The other is a yield market, which is mainly infra and private credit and all of that. I think private equity has grown. Now yield market is also growing.

Speaker #3: It is currently ultra-HNI, but eventually we think insurance companies and others will also come—insurance and pension funds and all. And along with that, I think the awareness, and SEBI has done a fabulous amount of work on that.

Speaker #3: And in AIFs, there are actually two markets. One is a growth market, which is mainly private equity, and the other is a yield market, which is mainly infra, private credit, and all of that.

Speaker #3: So, I think private equity has grown. Now, the yield market is also growing. And a lot of insurance companies and pension fund people who don't want P&L volatility actually are more interested in income and yield strategies.

Rashesh Shah: A lot of insurance companies and pension fund people who don't want PNL volatility actually are more interested in income and yield strategies, and that is where EAAA is focused on. We have seen this market, how it has grown in the US over the last 30 years, and we do think there are some similarities with the Indian market opportunity in that sense. Now, on the corporate debt side, as I said, from 5,700, we get to under 4,000 by the end of this year. We have some investments that we can sell and keep on getting money. We have investment in our funds, and we have investment in some wholesale assets that we had, which will all get liquidated. About INR 500 to 1,000 crore we do expect will come from there also.

Speaker #3: And that is where EAAA has focused. We have seen this market and how it has grown in the US over the last 30 years.

Speaker #3: And we do think there are some similarities with the Indian market opportunity in that sense. On the corporate debt side, as I said, from 5,700, we'll get to under 4,000 by the end of this year.

Speaker #3: We have some investments that we can sell and keep on getting money. We have investments in our funds, and we have investments in some wholesale assets that we had, which will all get liquidated.

Speaker #3: So about 500 to 1,000 crores we do expect will come from there also. We also starting to get dividend income from underlying companies as mutual fund and EAAA and ARCR profitable and throwing out free cash.

Rashesh Shah: We're also starting to get dividend income from underlying companies as mutual fund and EAAA and ARC are profitable and throwing out free cash. As you can just add up, these three businesses have a free cash flow of between INR 600 to 800 crore per year. On that basis also, that cash that they throw out as a dividend also helps us reduce our corporate debt. I think our idea is get down to 4,000, then inch it to under 3,000. Regroup and decide whether debt should remain a priority or we should then focus on unlocking or using that money for more distribution to shareholders, distribute spin-offs, demergers. I think look at all of those options also.

Speaker #3: As you can just add up, these three businesses have a free cash flow of between ₹600 to ₹800 crore per year. So, on that basis also, that cash that they throw out as dividend also helps us reduce our corporate debt.

Speaker #3: So, I think our idea is to get down to 4,000, then inch it back—inching it to under 3,000—then regroup and decide whether that should remain a priority or whether we should then focus on unlocking or using that money for more distribution to shareholders: distribute, spin-offs, demergers.

Speaker #3: I think look at all of those options also.

Rishabh Choudhary: Okay. Thank you, sir. That was helpful.

Rishabh Jogani: Okay. Thank you, sir. That was helpful.

Speaker #1: Thank you, sir. That was helpful.

Speaker #2: Thank you very much. We will take that as the last question. I would now like to hand the conference back to Ms. Priyadip Chopra for closing comments.

Operator 2: Thank you very much. We will take that as the last question. I would now like to hand the conference back to Ms. Priyadeep Chopra for closing comments.

Operator: Thank you very much. We will take that as the last question. I would now like to hand the conference back to Ms. Priyadeep Chopra for closing comments.

Speaker #4: Thank you, Ranju. And thank you all for your time today. We truly appreciate you taking the time to join us. Please do write to us at Edelweiss Investor Relations for any further questions or feedback you may have for us.

Priyadeep Chopra: Thank you, Renju, and thank you all for your time today. We truly appreciate you taking the time out and joining us. Please do write into us at Edelweiss Investor Relations for any other questions or feedback that you may have for us. Thank you, Rashesh. Always a joy to listen in to you. Thank you, Amit, very insightful to have you on the call today. Thank you all. Have a great day ahead. Bye-bye.

Speaker #4: Thank you, Rashesh. Always a joy to listen in to you. And thank you, Amit. Very insightful to have you on the call today. Thank you all.

Speaker #4: Have a great day ahead. Bye-bye.

Speaker #2: Thank you very much. Ladies and gentlemen, on behalf of Edelweiss Financial Services, that concludes this conference. Thank you for joining us. You may now disconnect your lines.

Operator 2: Thank you very much. Ladies and gentlemen, on behalf of Edelweiss Financial Services, that concludes this conference. Thank you for joining us. You may now disconnect your lines.

Operator: Thank you very much. Ladies and gentlemen, on behalf of Edelweiss Financial Services, that concludes this conference. Thank you for joining us. You may now disconnect your lines.

Speaker #5: The meeting is not live yet. 'Raise hand' is disabled.

Operator 1: The meeting is not live yet. Raise hand is disabled. You've been muted. To unmute yourself.

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Q1 2027 Edelweiss Financial Services Ltd Earnings Call

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