This is due to a concept called expense ratios. 


The expense ratio is defined as the annual fee that an investor is charged for the management of the fund. For example, if you’re investing ₹10,000 in a fund with an expense ratio of 1.5%, then you are paying the Mutual fund ₹150 a year to manage your money.


The higher the expense ratio, the higher is the deduction in price and the lower is the NAV. The Direct mutual funds don’t have additional distribution expenses like a regular mutual fund and therefore, the expense ratio of direct mutual funds are typically less. This results in higher NAV.