With strong retail sentiment, SIP is now at record levels. How is the overall demand and client confidence looking for you for the second half of the year?
Anuj Kumar: From a fundamental level, the business is looking strong and poised for similar growth trends that we have seen in the last four to six quarters. Overall, from the demand side, the retail investors continue to participate through the SIP formats. The monthly collection figures released by AMFI month-on-month, which continue to grow by about Rs 300 to 400 crore in successive months, are well in excess of 20,000 crore now.
At the CAMS level, the SIP count registered, which is new customers coming in to register to opt in is over 30 lakhs, almost one lakh a day. When we count all of this together and then see the new business we won – AMC clients last year – we have about 75% share in net equity sales, which is a very strong foundational metric to see which way overall assets are heading and combined with our investment in technology, talent and overall in risk and compliance kind of dimensions, I think we are poised for growth this year too. Of course, a lot will depend upon the market. But we are upbeat and bullish.
We understand that RBI has granted you authorisation for online payment aggregator CAMSPay as well. Plus the Street is expecting you to go ahead and launch some new products around payment. Talk to us a little more about that. What are the new products which you are planning?
Anuj Kumar: Payments has been a very niche business. We have largely played in the financial services sector and played largely with capital markets, both mutual funds and brokerages, which account for about 50% of our franchise. The balance 50% is insurance companies and people who have loan books like housing finance companies. We are looking to now expand into education as one potential, extra niche that could scale up the business. From a licence perspective, this business back in 2021 was declared to be a licence business, so think of it as more procedural. It does not add more dimensions to the business. But yes, we are moving forward to be both a payment aggregator and payment gateway and you will see some build out of opportunity in the education space.
What could be the contribution from the overall non-MF business? Given the kind of forays that you are making into other businesses, what is the entire potential let us say 18 to 24 months out.
Anuj Kumar: Last year, non-MF grew about 50% plus and of course, it was stratospheric growth riding a few reasons. This year we are banking on non-MF to grow about 30%, so you could see this grow about 40% to 50% in an 18-month time period. But the more important thing is that from a financial sector participant perspective we are now strongly focused on the capital markets through MF RTA, alternatives and KRA. But outside of that, through account aggregator and through our push on insurance and all the business that 360 brings in, I think we have a nice carveout of the non-capital markets business too. So, it leads to some diversification, opening of other segments and therefore we are confident that in about 18 to 24 months you could see about a 50% revenue up from current levels that you see on non-MF.
What do the new launches and the new product lines that we are talking about actually do to your margins overall blended and you are also talking about next one or two years the product line or the offerings actually widen even more, do your blended margins have scope to go up from here?
Anuj Kumar: Blended at company level EBITDA margins are at about 45% now and historically, in the last four years, they have grown by about a percent every year. Our expectation is that that growth, that margin expansion in the EBITDA line of about a percent every year will continue for the next three to four years. There is a strong possibility. It is aided by the core business, which continues to scale.
It is also aided by revenue build out in the non-MF businesses where we are kind of ending the cycle where we were investing in platform, so the platforms are built and whatever cost it takes to build out the go to market that will continue. But we expect non-MF revenue contribution to be in the range of 30% annually, for overall margins at company level to expand by about 1% on EBITDA line every year for the next two or three years.
But what kind of top line growth do you envisage?
Anuj Kumar: Last year we grew top line company at about 24%. Our expectation is that we should be in excess of 20% this year. A lot of that is just the base growth effect of last year because the MF business and non-MF expanded almost quarter-to-quarter last year. On a longer scale, on a three- to four-year scale, we expect to be growing revenue about 15% to 16% in a sustained manner. Of course, market tailwinds and a lot that happens in the capital markets will continue to impinge upon how we grow. But at broad level, you could think of a 15% to 16% revenue growth in the next four years.
In FY24, you managed to get on 3 AMC mandates — Angel One, Taurus as well as Unifi. Any more in the pipeline right now? Also how is the Gift City RTA work picking up?
Anuj Kumar: From a new MF perspective, the number of applicants has gone down significantly. This read as about 10 plus at one point in time, most of them have got their in-principle approvals of those mandates. There are one or two large ones still out there waiting for the licence and we are very hopeful of winning most of the new ones that come in but there are not too many. They are just about one or two.
From the Gift City perspective, we have spoken about expansion of office space and headcount, so we are doing that. We should be inaugurating the new office in August. We are servicing 17 Gift City clients and we are seeing the first signs of being able to double this count in the next 12-18 months.