SBI Funds Management Ltd (SBIFUNDS) Q2FY27 Concall Transcript - Sep-2026 Qtr
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Moderator: Ladies and gentlemen, good day, and welcome to the Q2 FY '27 earnings conference call of SBI Funds Management Limited. As a reminder, all participant lines will be in the listen-only mode, and 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 touch-tone phone. From the management team, we have Mr. Debashish Mishra - Managing Director and CEO, Mr. Srinivas Jain - Joint CEO, Mr. Manish Mehta - Chief Business Officer, Mr. Amol Joshi - Chief Financial Officer, Vinaya Datar - Chief Compliance Officer, Dinesh Balachandran - Head of Investments, Manish Cheeda - Chief Investor Relations Officer joining the call. I now hand the conference over to Mr. Debashish Mishra. Thank you, and over to you, sir.
Debashish Mishra (SBI Funds Management Ltd): A very good evening to everyone and thank you for taking the time to join the call. Let me begin with a brief view of the macro environment. The second quarter was marked by steady domestic fundamentals and broadly stable earnings, even as global pressures from higher crude, firm US yields, and a stronger dollar triggered foreign outflows and bouts of volatility. Despite this, strong domestic participation helped absorb the outflow shock, reflecting ongoing shift of household savings into financial assets and keeping overall market sentiment resilient. Now, I'll brief about the mutual fund industry. Mutual fund quarterly average AUM expanded by 13% year-on-year and 5% sequentially as on 30th September 2026, touching INR 87.5 trillion at the end of September 30th. Monthly SIP inflows continue to show strength despite market volatility, and touched all-time record high of INR 32,490 crore in September '26. On fixed income, debt AUM saw a 5% year-on-year moderation, while liquid AUM recorded a strong 27% increase. Passive AUM grew 23% year-on-year, highlighting sustained investor interest. Overall, industry inflows remained constructive despite short-term volatility across all categories. Industry continue to have a positive new customer addition, reaching out to 6.33 crore unique customers, increase of 11% year-on-year. Now let me tell you the performance of SBI Funds Management. Your company sustained its leadership in the industry, quarterly average AUM market share of 15%. Our mutual fund quarterly average AUM stood at INR 13.14 lakh crore or 13.14 trillion, registering 10% YoY growth compared to 12 lakh crore in the same quarter last year. As on September 30, 2026, our active quarterly AUM was INR 8.99 lakh crore, reflecting 9% year-on-year increase and our five-year CAGR was at 17%, backed by stable performance and sustained investor flows. On passive front, we remain the largest passive asset manager with quarterly average AUM of INR 4.15 lakh crore, up to 11% year-on-year, further strengthening our leadership in the segment. On the alternate side, PMS and advisory, our QAAUM, that is quarterly average AUM, stood at INR 13.32 lakh crore, broadly in line with expectations. While the previous quarter saw a one-time relocation of a large mandate, it doesn't have any material impact on our revenues and the underlying business momentum remains stable. Our
Debashish Mishra (SBI Funds Management Ltd): and institutional engagement. Offshore funds contributed approximately ₹42,100 crores to the overall AUM. Gross margin across equity, debt, liquid, and passive strategies remained stable during the quarter, and there has been a continued expansion in gross yields on year-on-year basis. Our unique customer count increased by 10% during the year, rising to 1.85 crore as of September 30, 2026. Our SIP AUM rose to 2.07 lakh crore with a 15% year-on-year increase. Monthly SIP inflows continued to remain steady at about ₹3,900 crores. We continue to maintain one of the largest distribution network in the industry, supported by nearly 136,000 distribution partners. This includes over 125,000 independent financial advisors, over 10,000 national distributors, and over 96 banking partners, including State Bank of India, supplemented by 23, 23,000 plus SBI branches and 297 SBI Funds Management branches, our branches. This extensive reach enables us to service investors across more than 98% pin codes in the country. Our strong presence across tier 2 and tier 3 cities is reflected in the healthy B30 contribution with nearly 2/3 of SIP inflows originating from these markets, underscoring our expanding reach and commitment to broad-based financial inclusion. Let me brief you about the new product launches. We continue to maintain a strong product pipeline across mutual fund, SIF, PMS, and AIF, with a clear emphasis on differentiated investor-focused offerings. During Q2 Q2, we launched five new products, including one SIF, further strengthening our overall product suite. Among the filed offerings, both the Magnum Equity Extra Fund, a long-short fund, and SBI Balanced Hybrid Fund saw stronger investor responses. Our Magnum Equity Extra Fund, a long-short fund, closed its NFO as one of the largest fund in its category. Our GIFT City franchise continues to scale well, supported by the launch of SBI Global Thematic Advantage Fund. This initiative enables us enable the investors in India to access global investment opportunities through LRS route. We are enhancing our capabilities across active, passive, and alternate strategies, with strong traction in AIF, PMS, and SIF and growing international reach through GIFT City and offshore mandates, reinforcing our ability to serve rising India-focused demand. Now I'll brief you about technology and digital improvements. We continue to strengthen our digital-first approach. Today, 94% of our transactions are done digitally, supported by stronger adoption across InvesTap, Mitra, and partner platforms. InvesTap has grown into one of the largest digital investing app in the industry, with over 4.3 million, that is 43 lakh registered users. Monthly digital volumes now exceed 1.4 million transactions, and our ongoing investments technology, AI, and automation are helping us to scale efficiently, enhance distributor productivity, and deliver seamless experience to investors. We recently showcased our new tech platform, that is called Aarambh, in the Global FinTech Fest in Mumbai. Aarambh is one of the first assisted digital onboarding solutions built specifically for first-time investors. It enables Aadhaar-based biometric KYC, folio creation, and first investment in a single seamless journey all together. Importantly, it helps us to reach customer segments that remain outside the formal financial ecosystem, strengthening our financial inclusion efforts. Aarambh also integrates digital PEKRN, that is PAN-exempt KYC reference number. This is for the customers without a PAN card, allowing us to extend mutual fund access to the masses in a simple and compliant manner. Coming back to the financial performance, for HY for H1 FY27, operating revenue increased to ₹2,336 crores, up to 12% from ₹2,089 crores in same period. Operating profit rose to ₹1,797 crores compared to ₹1,626 crores in H1 '26, 11% increase. Profit after tax came to ₹1,566 crores in H1 '27. And our strong net worth of ₹7,270 crore as on September 30, 2026, continue to support strategic investment in scale, capabilities, and long-term value creation. To conclude, our strategy will focus on four key pillars: democratizing wealth creation, accelerating digital delivery, strengthening investment performance, and building new growth engines. With this clear agenda, we aim to deliver consistent outcomes for our investors and continue to build a strong
Debashish Mishra (SBI Funds Management Ltd): given and future ready franchise. Thank you for joining the call. We now look forward to your questions.
Moderator: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone 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. First question is from the line of Shreyash Deval from Motilal Oswal Financial Services Limited. Please go ahead.
Shreyash Deval (Motilal Oswal Financial Services Limited): Yeah. Hi. Thank you for the opportunity. A few questions. Firstly, you know if I look at your flows, you know we've seen a very strong traction in September. So if you could just highlight some data points around that number as to, you know, how was the exit flows in September for us compare comparing to the back book market share, how has been the flow market share on the equity side, equity plus hybrid side? That would be our first question. Second question is on the cost front. We have seen a significant increase both sequentially and YoY in terms of employee expense as well as other expenses. So what has driven this and what should we think about these nu- these costs from a full year perspective? And last question will be on the yield front where we have seen a marginal dip dip in terms of yields sequentially. Is it just attributable to telescopic structure or is there anything else? And also if you could share the yields across equity, you know, debt, high debt, liquid, etc.? Yeah. Thanks.
Debashish Mishra (SBI Funds Management Ltd): Yeah. Thank you. Thank you for the question. I'll I'll tell you the flows in active equity, passive, and liquid. Of course, I mentioned the numbers. YoY it has gone up. Our AUM has 11,995 billion to 13,140 billion and active equity QAAUM grew by 9% YoY to 8,986 billion, passive 11% YoY to 4,154 billion and liquid AUM has seen a strong traction with 1.2 lakh crores, 1.2 trillion rupees and 31% YoY. SIP, I mentioned already, it is 15% YoY growth and monthly SIP flows are nearly always at 40 billion. And coming to your second question on the cost factor, yes, we are heavily invested into a few technology and human resources in the last quarter, that is September quarter and these are quite quite kind of one-off instances that our cloud infrastructure, our AI driven systems and we are created a new taken a new head for alternatives. So all this have been a one-time kind of factors of cost in the quarter two, which will not be repeated in the quarter three. For the yield part, I'll ask Srini to please cover that.
Srinivas Jain (SBI Funds Management Ltd): Yeah. Thank you, sir. On the yield, the I mean I think the marginal dip is basically, you're comparing our last year H one to now, but when you look at it from Q1 to Q Q1 to Q2 is, I think this is what you asked, there has been just a minor dip because in Q1, we had seen some significant lower cost at our operating operating cost level. Which again because of the little higher cost this time, the operating cost is actually kind of marginally operating profit is marginally come down. But from an yield point of view, our equity yield continues to be strong. In fact, right now at F at Q2 FY '27, equity yield would be closer to about 62, 63 bps on an average. And our debt yields are in the range of about 30, 30 34, 35 bps. Liquid around 11, 11 and 1/2, 12 bps. That's the range that we have today. These are usually competitive or close to best-in-class in each category. Yeah. Thank you.
Moderator: Thank you. The next question is from the line of Mehak from Emkay Global. Please go ahead.
Mehak (Emkay Global): Yeah. Hi. Thank you for the opportunity. So my first question was on the other expenses. So actually you mentioned that, you know, there were some tech related costs which were there in Q2 and Q3 onwards, you would see
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