Building for a stronger future
Overall assets of the Mutual
Fund sector increased by 34% to Rs. 54.1 Lakh Crore in FY24
(on a QAAUM basis). This was the highest growth witnessed since FY17
and was aided by robust inflows and the rally in the equity markets."
Sundeep Sikka
ED & CEO
Dear Shareholders,
It is my pleasure to write this note on behalf of the entire team at
NAM India. I am pleased to present the Annual Report for
FY24 and share some of the highlights of our progress with you.
WORLD ECONOMY FARED BETTER THAN EXPECTED, INDIAN ECONOMY REMAINED
STRONG
FY24 started on a difficult note as central banks in most of the world
adopted a tight monetary policy to deal with persistently high inflation, giving rise to
fear of recession, especially in the developed world. However, inflation settled and the
world economy grew at 3.2%, much better than what was anticipated at the beginning of the
year. The IMF expects the world economy to grow at a similar pace next year, however
geopolitical crises like the trouble in the Middle East could pose some risks.
Growth for the Indian economy remained strong at 7%+, for a third year
in succession, supported by its demographic dividend, policy and structural reforms. This
helped India again emerge as one of the fastest growing economies in the world. On the
other hand, inflation eased to 5.4% YoY in FY24 from an average of 6.7% YoY in FY23. Going
ahead, India is expected to continue its robust growth trajectory. The high frequency
indicators like GST collections, auto sales, PMI and service index remain close to
all-time highs, generating confidence in the India growth story.
In FY24, Indian equity markets delivered an impressive performance with
a 29% YoY growth in the NIFTY, as compared to remaining flattish in FY23. Growth in the
NIFTY Mid and Small Cap indices was particularly robust at 56% YoY and 63% YoY,
respectively. The Repo Rate remained flat at 6.50% after a 250 basis points increase in
the prior year, while the 10 Year G-Sec yield moderated by 26 basis points YoY to 7.06%
(versus an increase of 50 basis points in the prior year).
A RECORD YEAR FOR THE MUTUAL FUND INDUSTRY
Overall assets of the Mutual
Fund sector increased by 34% to Rs. 54.1 Lakh Crore in FY24 (on a QAAUM
basis). This was the highest growth witnessed since FY17 and was aided by robust inflows
and the rally in the equity markets. At ~Rs. 19,300 Crore, March
2024 recorded the highest-ever monthly SIP flows and this SIP has grown
at a 24% Cagr over the past seven years. Total SIP folios increased by 32% YoY in March
2024 to 8.4 Crore and total SIP AUM increased by 57% YoY to Rs. 10.7
Lakh Crore. The Industry added
73.3 lakh unique investors in FY24 to reach a total of 4.46 Crore
investors. This represented a YoY growth of 20% and a Cagr of 21% over the previous four
years. This growth in the asset management industry was driven by higher retail
participation owing to increasing financialization and income levels as well as better
awareness and access to mutual fund products, all of which was given a large boost by the
performance of the markets in the year. Higher preference for household savings in the
form of financial assets over physical assets as a trend, seems to be here to stay. This
is a positive for the asset management industry with the potential to increase the share
of mutual funds within household financial savings going forward.
NAM INDIA'S POSITION SIGNIFICANTLY STRENGTHENED
At the outset, I would like to mention that the strong growth witnessed
in FY24 has been a result of the infrastructure (both physical and digital) that we have
put in place over the last
5-7 years as well as strong focus on people and processes. In FY24, NAM
India had a record year, achieving its highest ever
Operating Profit at Rs. 958 Crore (up 26% YoY) as well as Profit After
Tax at Rs. 1,107 Crore (up 53% YoY).
Our mutual fund QAAUM grew at a decadal high of 47% YoY to
Rs. 4,31,308 Crore, including a 63%
YoY growth in our Equity QAAUM. We were the fastest growing AMC among
the top-10 largest AMCs and this despite the absence of a parent banking partner. This saw
our market share increase by 73 bps to 7.97%, which was the highest increase in market
share among the entire Industry.
This market share also happens to be the highest level we have achieved
since post FY19. Equity market share improved by 58 bps to 6.76%, aided by strong scheme
performance, our distribution network, digital capabilities, and strong risk management.
While we maintained our rank of fourth in terms of total QAAUM, we
moved up two positions to fourth in terms of equity AUM (excluding the arbitrage segment).
Our unique investor base grew by 22% YoY to 1.65 Crore, leading
The Industry added
73.3 lakh unique investors in FY24 to reach a total of 4.46 Crore
investors. This represented a YoY growth of 20% and a Cagr of 21% over the previous four
years .
to an increase in unique investor market share to 37%. We therefore
continue to have the largest investor base in the mutual fund industry and we are humbled
to have over 1 in 3 investors in the mutual fund industry invest with us. Total folios as
of FY24 stood at 2.43 Crore, up by 47 lakh folios over FY23. Systematic flows in the year
grew by an impressive 92% to ~Rs. 21,081 Crore and Systematic AUM rose by 70% over the
year to reach Rs. 98,738 Crore. Our annualised systematic transaction book stood at ~Rs.
28,000 Crore as of March 2024. Our SIP folios and AUM continue to demonstrate higher
stickiness versus the industry. 62% of our SIP AUM has continued for over 5 years
vis-a-vis 28% for the industry. 14% of our SIP folios have continued for more than 5 years
against the industry average of 12%. Given our focus on the retail investor segment right
from the outset, we also have a higher proportion of equity AUM derived from our
systematic AUM versus the Industry and this bodes well for us given the more resilient
nature of systematic inflows versus lumpsum investments.
Our passive AUM crossed the milestone of Rs. 1,00,000 Crore in the year
and ETF QAAUM stood at Rs. 1,11,542 Crore, with a market share of ~16.7% (up by ~300 bps
in the year). Our share in the industry's ETF folios was stable at 60% and we
continued to remain a market leader in the ETF segment with a volume share of 60%+ on the
exchanges. We cater to a diverse investor base from individuals to institutions including
retail, HNI, institutional, corporate, and offshore. We offer all-encompassing product
suite including equity, debt, liquid funds, ETFs, commodities, real estate, and VC funds.
Apart from the mutual fund business, we also continue to focus on the AIF and Offshore
businesses both of which had a strong year in FY24 with a 39% and 52% YoY growth in AUM,
respectively. We will continue to focus on adding more products and geographies in these
businesses as we strive to make them a more significant portion of our overall revenue.
DIGITAL LEADERSHIP
At NAM India, we believe in digital democratization i.e. breaking down
barriers to empower all our investors, distributors, and employees alike. Our
digital-centric strategy is based on the build-operate-distribute philosophy. We rolled
out several digital initiatives like WhatsApp and investor portfolio log-in dashboard for
our customers. We entered into strategic collaboration with digital partners to attract
the new
Our passive AUM crossed the milestone of Rs. 1,00,000 Crore in the year
and ETF
QAAUM stood at Rs. 1,11,542 Crore, with a market share of ~16.7%
(up by ~300 bps in the year). Our share in the industry's ETF
folios was stable at 60% and we continued to account for a majority volume share of 60%+
in the ETF segment.
generation to our platforms. We witnessed an impressive 2x growth in
digital transactions, clocking 6.6 million transactions in FY24 (Lumpsum + new SIPs).
OUR PEOPLE
We won the Kincentric Best Employer Award for 2023. This is a hat trick
for us and we are the only AMC to win the award. This is result of a work culture that
places immense value on its employees and works for their well-being. We are an equal
opportunity employer with an emphasis on diversity and inclusion. Our women employees have
increased from 16% four years ago to 20% now, a testament to our efforts in
Diversity, Equity, and Inclusion
(DEI). I would like to thank the team of 1,000+ employees for each
playing their part in our growth story.
For more on our people, please refer to page 87.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) FRAMEWORK
We have adopted an
Environmental, Social, and
Governance (ESG) framework aligned with our commitment to responsible
and sustainable investing. We became a UN-
PRI signatory in June 2021 to fulfil our responsibility towards the
sustainability of planet Earth. In our own offices, we take consistent efforts to reduce
our carbon footprint. We realize that the well-being of our communities is also important
and our CSR efforts are directed towards providing them with access to healthcare
facilities, supporting education, and sports. At
NAM India, we also recognize the importance of upholding ethical
practices, ensuring transparency, and adhering to regulatory requirements. For more on CSR
and ESG, please refer to page 63 and page 185.
OVERALL OUTLOOK REMAINS UPBEAT
Growth is expected to remain robust in FY25 as well, driven by
favourable macros, policy continuity as well as continued government-led capital
expenditure and a possible revival in private capital expenditure. While policy rates seem
to have peaked, rate
We believe that the
Mutual Fund Industry will continue on its strong growth path while
becoming the most preferred avenue for retail investors.
easing is expected to be more drawn out than first anticipated. The
medium term outlook for equity markets remains positive, however there could be higher
volatility in the near term influenced by evolving global macros, domestic demand scenario
and corporate earnings growth. We at NAM India, remain committed to building a granular
and retail investor base, with a strong focus on smaller cities and towns as this helps us
fulfill a social need and also enables people in these areas with the necessary access to
invest. The
Company thus remains at the forefront of financialization of savings in
India as well as being part of the India growth story. We also remain committed to
sustainability, innovation, and the pursuit of excellence.
We focus on sustainability not only internally, but also for our
investee companies. Continuous innovation on all fronts, including products, processes and
risk management would be key in ensuring that we continuously bring in greater operational
efficiencies. Our transformative growth journey is reflected in our Annual Report theme
for the year ‘Progress in Motion,' along with the key pillars for our success -
Purpose, Process and People.
We believe that the Mutual Fund Industry will continue on its strong
growth path while becoming the most preferred avenue for retail investors. We at NAM India
will play our part in this journey as well as in bringing more foreign capital into India
via various routes including AIF,
Offshore Funds etc. We will also continue giving voice to our retail
investors and aim to protect the interest of minority shareholders through our Stewardship
Code.
I remain very optimistic about the future, both for India as well as
the Mutual Fund Industry. Driven by this optimism, we will continue to focus on future
growth for the Company with an even stronger thrust on risk management. We believe that
the key to success in this Industry will be differentiated execution and NAM India will
continue to execute and add new investors to the Mutual Fund
Industry and Capital Markets on top of its base of unique mutual fund
investors, which is already the largest in the Industry. Our stated dividend policy is to
distribute 60%-90% of our profits subject to approvals from our Board of Directors. In
FY24, we once again exceeded this and are distributing 99% of our profits to the
shareholders (similar to the payout ratio in FY23).
Lastly, I would like to reiterate that the NAM India team remains
committed to creating value for all our stakeholders including investors, shareholders,
employees, partners, and society.