5Paisa Capital Ltd Management Discussions

Global Economy

In 2024, the global economy demonstrated a degree of stability despite navigating a complex environment shaped by numerous economic, geopolitical, and policy challenges. According to the International Monetary Funds (IMF) World Economic Outlook, the growth of global Gross Domestic Product (GDP) slowed to 3.3%. There were notable differences in growth trends; while developed economies experienced a more gradual rate of expansion, emerging markets, particularly in Asia, continued to show a comparatively steady growth path.

Geopolitical issues such as the ongoing conflict between Russia and Ukraine, disturbances in the Red Sea, ongoing supply chain disruptions, and trade tensions among major economies continued to challenge global economic stability. Additionally, the shifting landscape of climate change policies and regulations impacted investment decisions across various sectors.

Despite these hurdles, the United States economy demonstrated notable strength, achieving a growth rate of 2.8%, boosted by a strong labor market and easing inflation. In contrast, the Eurozone saw slower growth at 0.9%, with Germany experiencing a slight contraction. Emerging markets, maintained a stronger growth trajectory, averaging 4.3%, driven by investments in technology and infrastructure. Chinas economy expanded by 5.0%, supported by government initiatives and a recovering property market.

Global inflation showed signs of improvement, estimated at 5.7% for 2024, down from 6.7% in the previous year. Advanced economies are expected to meet their inflation targets sooner than their emerging market counterparts, where the decline in inflation may be more gradual. Advanced economies are projected to average an inflation rate of 2.6% in 2024, likely reaching target levels by late 2025, while emerging markets will see a slower but still positive trend.

In response to economic challenges, major central banks undertook significant interest rate cuts to stimulate growth. The Federal Reserve lowered its federal funds rate by 100bps, bringing it to a range of 4.75% to 5% by the end of 2024. The European Central Bank also reduced its deposit rate to 3.0% by December, down from a peak of 4.0% earlier in the year. Similarly, the Bank of England cut its key interest rate to 4.5% in November, down from 5.25%, to support the UK economy amid ongoing uncertainties. December 2024 marked the most significant wave of interest rate cuts among G10 central banks since the pandemic, totaling 825 basis points for the year, reflecting an aggressive easing cycle not witnessed since 2009.

Outlook

The global economy is expected to maintain a steady growth trajectory, with projected GDP growth rates of 2.8% and 3.0% in 2025 and 2026. This optimistic forecast is backed by strong economic growth in the United States and significant advancements in key emerging markets.

In the United States, growth is anticipated to dip at 1.8% in 2025, and to to 1.7% in 2026, influenced by changes in labor market conditions and a decline in consumer spending. The Eurozone is predicted to be at 0.8% in 2025 and improving to 1.2% in 2026, driven by increased consumer spending and lower inflation rates. Overall, growth in developed economies is expected to stabilize within the range of 1.4% to 1.5% during this period.

While global disinflation is ongoing, some regions are facing stagnation due to persistently elevated inflation levels. Global inflation is projected to fall to 4.3% in 2025 and further to 3.6% in 2026, with developed economies likely to meet their inflation targets ahead of others. Monetary policies are expected to vary across different regions, reflecting the diverse economic conditions.

(Source: WEO)

Indian Economy

Indias economy has exhibited steady growth and stability during FY 2024-25, reaffirming its position as one of the fastest-growing major economies globally. According to the Second Advanced Estimate (SAE) data from the National Statistical Office (NSO), the real Gross Domestic Product (GDP) is projected to grow by 6.5% for FY 2024-25, following an impressive 9.2% growth as per the First Revised Estimates from the prior financial year. This ongoing growth trend highlights the nations solid economic foundations, supportive government policies, a flourishing services sector, and a strong domestic demand, all of which promotes confidence in Indias long-term growth trajectory.

Significant government reforms and considerable investments in both physical and digital infrastructure, alongside initiatives such as Make in India and the Production-Linked Incentive (PLI) scheme, have been instrumental in enhancing the countrys growth trajectory and promoting self-sufficiency.

GDP Growth Rate

The services sector experienced consistent growth of 7.2% during FY 2024-25, driven by strong activity across various segments, including finance, real estate, professional services, public administration, and defense, among others.

Indias economic position continues to improve, now ranking as the fifth-largest economy in the world by nominal Gross Domestic Product (GDP) and the third-largest when measured by purchasing power parity (PPP). The nation has set ambitious goals to achieve a $5 trillion economy by FY 2027-28 and a $30 trillion economy by 2047. These objectives are to be realized through significant investments in infrastructure, ongoing reforms, and the widespread integration of technology. The capital investment budget for 2025-26 reflects this commitment, increasing to Rs11.21 lakh crore, which accounts for 3.1% of GDP

Outlook

Indias economy is anticipated to grow at 6.2% in FY 2025-26. By 2030, it is projected to become the third-largest economy globally, driven by investments in infrastructure, increased private capital expenditure, and the growth of financial services. Ongoing reforms are expected to support this longterm expansion.

This positive outlook is bolstered by Indias demographic advantages, rising capital investments, proactive government initiatives, and strong consumer demand. Enhanced rural consumption, aided by easing inflation, further reinforces this growth path. The governments focus on capital expenditure, fiscal prudence, and boosting business and consumer confidence is conducive to both investment and consumption.

Programs such as Make in India 2.0, reforms aimed at improving the Ease of Doing Business, and the Production-Linked Incentive (PLI) scheme are intended to enhance infrastructure, manufacturing, and exports, positioning India as a key player in global manufacturing. With inflation projected to meet targets by 2025, a more accommodating monetary policy is expected. Infrastructure development and supportive public policies will facilitate capital formation, while rural demand will benefit from initiatives like the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY).

(Source: PIB, MoSPI, Economic Survey)

Union Budget 2025-26

The Union Budget 2025-26 outlines a balanced, growth-oriented financial strategy that addresses both immediate and long-term economic needs. By enhancing disposable income, prioritizing infrastructure development, and promoting domestic manufacturing, the budget sets the stage for sustained economic growth while maintaining fiscal responsibility.

A key highlight is the increased income tax exemption limit of Rs12 lakh per annum, which significantly boosts disposable income for middle-class households. This change is expected to stimulate consumer spending and savings, benefiting salaried individuals and contributing to overall economic growth. The focus on infrastructure includes substantial investments in roads, railways, and urban projects, aimed at improving connectivity, generating employment, and driving demand in related sectors.

Additionally, the budget reinforces the Production Linked Incentive (PLI) scheme, targeting sectors such as electronics and textiles, and supports the "Make in India" initiative to establish India as a global manufacturing hub. The transformation of India Post into a catalyst for the rural economy will enhance logistics and financial inclusion, integrating rural areas into the broader economy.

The governments commitment to clean mobility and renewable energy is evident through the extension of subsidies under the FAME India Phase II scheme and investments in electric vehicle (EV) charging infrastructure, promoting a more sustainable economy. With a targeted fiscal deficit of 4.4% of GDP for 2025-26, reduced from 4.8%, the government showcases its commitment to fiscal prudence, ensuring that growth-focused reforms are implemented sustainably.

Industry Overview Indian Financial Services

The Indian financial services sector is a vital component of the nations economy, encompassing a wide range of institutions and services, including banking, non-banking financial companies (NBFCs), insurance, mutual funds, and digital financial services.

Scheduled Commercial Banks (SCBs) experienced a notable improvement in asset quality, with Gross Non-Performing Assets (GNPAs) declining to a 12-year low of 2.6% in FY 202425 (as on September 30, 2024). This reduction in GNPAs reflects effective risk management and recovery strategies implemented across the banking sector. Profitability metrics also showed positive trends, with SCBs reporting a 22.2% YoY increase in Profit After Tax (PAT) during the first half of FY 2024-25.

This surge in profitability can be attributed to improved asset quality and operational efficiencies.

Government initiatives such as Digital India and the Jan Dhan Yojana have significantly improved access to formal financial services. In FY 2024-25, Unified Payments Interface (UPI) transactions surged, recording over 18.3 billion monthly transactions by March 2025. The rise of digital payments has transformed transaction processes and operational frameworks across various financial institutions.

Despite the growth in FY 2024-25, challenges remained, including elevated non-performing assets (NPAs) in the banking sector and liquidity issues faced by some NBFCs. The Reserve Bank of India (RBI) implemented measures to address these challenges, such as providing liquidity support and enforcing stricter asset quality regulations.

The banking sector experienced strong deposit growth, with aggregate deposits in scheduled commercial banks (SCBs) increasing 11.1% YoY as of FY 2024-25 (November 2024), reflecting continued public trust. Credit expansion was broad- based. Agricultural credit grew to 5.1% as of November 29, 2024. Industrial credit accelerated to 4.4% in FY 2024-25 (by end-November 2024), up from 3.2% the previous year, suggesting a revival in industrial activity. MSME credit demonstrated a solid 13% YoY growth, significantly outpacing the 6.1% growth for large enterprises, highlighting targeted support for smaller businesses.

Indias capital markets experienced heightened activity, with the National Stock Exchange (NSE) facilitating 80 Mainboard Initial Public Offerings (IPOs) in FY25, raising approximately Rs1.63 trillion. This surge positioned India as a leading contributor to global primary market issuances.

Outlook

The outlook of the Indian financial sector faces a complex landscape in FY 2025-26, influenced by regulatory reforms, economic conditions, and evolving market dynamics. The RBI projects that the Gross Non-Performing Assets (GNPA) ratio may rise to 3% by March 2026 (from 2.6% in September 2024) under baseline scenarios, and potentially to 5.3% in adverse conditions. However, all banks are expected to maintain capital adequacy above the 9% minimum.

Fitch Ratings anticipates a 10-basis point decline in banks net interest margins (NIMs) in FY 2025-26 due to the RBIs 25 basis point policy rate cut to 6.25%. India Ratings forecasts loan growth to moderate to 13-13.5% in FY 2025-26, with deposit growth at 12-13%, due to competition and rising delinquencies in unsecured loans.

The Union Budget 2025-26 proposes increasing the FDI limit in insurance from 74% to 100%, conditional on companies investing the entire premium within India. A revamped Central KYC registry is planned for 2025. A new Income Tax Bill aims for greater tax certainty. The budget also outlines measures to rationalize customs duty rates and decriminalize over 100 legal provisions.

With an expected slowdown in IPOs, private equity and venture capital are expected to play a larger role in funding. PE and VC investments totaled $56 billion in 2024. Financial services and IT are projected to be the most attractive sectors for PE buyouts in 2025.

Inflation is projected at 4.6% in Q1 and 4.0% in Q2 of FY 202526. The government aims for a fiscal deficit of 4.4% of GDP in FY 2025-26 (down from 4.8% in FY 2024-25).

(Sources: PIB, E&Y, Reuters)

Indian Capital Markets

In the fiscal year 2024-25, Indias capital markets demonstrated notable growth. The National Stock Exchange (NSE) saw its market capitalization rise by 7% in FY25, reaching Rs409 trillion by March 31,2025. This increase was accompanied by a 22.8% surge in investor numbers, totaling 11.3 crore by March 31, 2025. (Source: NSE Pulse-April 2025)

Indias capital markets experienced significant growth, reflecting the countrys economic trajectory. The market capitalization of companies listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) reached to Rs413 trillion and Rs409 trillion respectively by the end of March 2025, marking a notable increase from the previous fiscal year. This surge was driven by strong corporate earnings, increased investor participation, and a series of successful initial public offerings (IPOs).

Recent findings from the National Stock Exchange (NSE) reveal a substantial growth in the Indian capital markets. Over the past 24 years, the number of Indian companies achieving a market capitalization exceeding Rs1 lakh crore has increased dramatically, showing a forty-fold rise. This growth not only signifies the strong economic development of the country but also a considerable expansion of its market.

The NSE report further indicates that the proportion of total market capitalization held by these large-cap companies, within NSE-listed entities, has climbed from approximately 18 percent to over 60 percent. This significant increase is attributed to several key factors like, Indias strong economic foundation, the successful implementation of critical reforms, the influx of global liquidity following the 2008 financial crisis, and a consistent growth in the investor population. (Source: Economic Times)

Investor participation saw a substantial uptick, with the number of registered investors increasing from 9.2 crore in FY24 to 11.3 crore by FY25. This growth underscores the deepening penetration of capital markets among the Indian populace. (Source: Press Information Bureau)

The primary market was vibrant, with Indias share of global IPO listings rising to 30% in 2024, up from 17% in 2023, positioning the country as a leading contributor to global primary resource mobilisation. Additionally, the corporate bond market witnessed heightened activity, with issuances increasing to Rs8.6 lakh crore from f7.6 lakh crore in the previous year. (Source: Business Today)

Foreign portfolio investors (FPIs) played a pivotal role, infusing a net $41.0 billion into Indian markets during FY 2024-25, with $25.3 billion directed towards equities and $14.2 billion towards debt instruments. This influx was instrumental in bolstering market liquidity and sentiment. (Source: ICRA, Reuters)

The Nifty 50 index experienced a 5.34% gain for the fiscal year ending in March 2025, while the BSE Sensex increased by 5.1%. This performance was bolstered by a 6.3% rise in March, marking the Nifty 50s best performance in 15 months and aiding a recovery from a historic five-month losing streak. Financial stocks were significant contributors, with the sector gaining nearly 20% during FY 2024-25. Analysts project a 12-13% credit growth for the banking sector in FY 2025-26, driven by demand in services and retail segments. (Source: Reuters)

Outlook

The outlook for Indias capital markets in FY 2025-26 appears promising, underpinned by several key factors. The Reserve Bank of India (RBI) is anticipated to implement interest rate cuts in August, which could stimulate credit expansion and enhance corporate profitability. (Source: Reuters)

Sectors such as banking, oil and gas, and real estate are expected to offer favorable risk-reward opportunities, attracting both domestic and foreign investments. HDFC Securities forecasts Nifty earnings to grow by 12% to 15% over the next two fiscal years, reflecting strong corporate performance. (Source: Reuters)

The governments continued emphasis on infrastructure development and digitization is likely to further catalyze market growth. Additionally, Indias inclusion in major global bond indices is projected to attract substantial foreign inflows, enhancing market depth and stability.

However, potential challenges remain. Global geopolitical tensions, fluctuations in commodity prices, and changes in foreign investment patterns could introduce volatility. Nonetheless, the underlying strength of Indias economy, coupled with proactive policy measures, positions the capital markets for sustained growth in the forthcoming fiscal year.

Stock Broking Sector

In FY 2024-25, Indias stock broking sector experienced significant growth, driven by heightened investor participation and technological advancements. The industrys aggregate net operating income (NOI) increased by over 40% year- on-year, leading to record profitability with a profit after tax (PAT) to NOI ratio of 46% and a return on equity (RoE) of 29%. (Source: worldonomics.in, ICRA)

The number of demat accounts surged, reflecting a growing retail investor base. In FY25, 4.1 crore new demat accounts were opened, marking a 11.2% increase from the previous year. This trend highlights the growing participation of Indians in capital markets. (Source: NSDL & CDSL)

Technological innovations have played a pivotal role in reshaping the brokerage industry. The adoption of Application Programming Interfaces (APIs) and algorithmic trading has enhanced trading efficiency, while the transition to a T+1 settlement cycle has expedited transaction processes. Additionally, AI-driven interventions, such as predictive analytics, chatbots, and personalized investment recommendations, are further transforming client engagement and decisionmaking. These advancements have collectively contributed to increased trading volumes and improved client experiences. (Source: worldonomics.in)

However, the sector also faced challenges. The Securities and Exchange Board of India (SEBI) implemented stricter regulations to mitigate risks associated with the booming derivatives market. These measures included reducing the number of weekly options contracts and increasing the minimum contract size nearly threefold. Such regulatory changes impacted trading volumes and necessitated adjustments in brokerage operations. (Source: Reuters)

Outlook

The Indian stock broking sector is poised for continued evolution. While the previous fiscal year witnessed strong growth, projections indicate a moderation in performance from the fourth quarter of FY 2024-25 onwards. Factors contributing to this outlook include the anticipated impact of regulatory changes and a potential slowdown in market activity. (Source: ICRA)

Nonetheless, opportunities remain. The governments emphasis on digitization and financial inclusion is expected to further expand the investor base. Additionally, the growing interest in algo trading may open new avenues for brokerage firms to diversify their service offerings.

Indian Mutual Fund Sector

Indias mutual fund industry experienced remarkable growth, underscoring its pivotal role in the nations financial ecosystem. The Assets Under Management (AUM) surged to Rs66 trillion by March 2025, representing a 23% increase from Rs53 trillion in March 2024. This expansion was predominantly driven by equity mutual funds, which accounted for Rs29 trillion or 45% of the total AUM. A decade earlier, in 2013, the equity mutual fund AUM was a mere Rs1.9 lakh crore, highlighting the sectors exponential growth. Investor participation also saw a significant uptick. By March 31, 2025, the total number of mutual fund accounts, or folios, reached 23.45 crore.

(Source: AMFI India)

The industry witnessed a surge in New Fund Offers (NFOs). In the first three quarters of FY 2023-24, 122 mutual fund schemes were launched across various categories, including debt, equity, hybrid, solution-oriented, and other specialized funds. These NFOs collectively mobilised significant funds, reflecting investors growing appetite for diverse investment avenues. (Source: AMFI India)

Systematic Investment Plans (SIPs) continued to gain traction as a preferred investment method. Monthly SIP contributions reached an all-time high of Rs25,926 crore in March 2025, underscoring the increasing commitment of retail investors to disciplined, long-term investment strategies.

(Source: AMFI India)

Outlook

The Indian mutual fund industry is poised for multifaceted growth. Projections indicate that the industrys market size will reach Rs660 billion (approximately $80 billion) in 2025, with a Compound Annual Growth Rate (CAGR) exceeding 18% from 2019 to 2033. This expansion is expected to be fueled by increasing financial literacy, a burgeoning middle class, and the proliferation of digital investment platforms. Data Insights Market

Regulatory initiatives are also set to influence the industrys trajectory. The Securities and Exchange Board of India (SEBI) is encouraging fund houses to introduce monthly investments as low as Rs250 to widen equity investing across the country, particularly targeting smaller towns to enhance financial inclusion. In addition, many fund houses have launched Daily SIP options starting at amounts as low as Rs10, providing even greater flexibility for small investors and promoting the habit of regular investing. This strategy aims to make systematic investment plans more accessible and broaden the investor base. (Source: Reuters)

Furthermore, the governments emphasis on infrastructure development and capital expenditure revival is anticipated to create new investment opportunities within the mutual fund landscape. These initiatives are expected to stimulate economic growth, thereby enhancing the performance of various sectors and, consequently, mutual fund returns.

Indian Discount Brokerage Industry

Indias discount brokerage sector continued to transform the financial services landscape, driven by technological innovation and a surge in retail investor participation in FY 2024-25. The industrys growth was marked by a significant increase in active client accounts, with discount brokers market share rising from 8% in FY 2017-18 to 73% in FY 2024-25. (Source: LinkedIn and NSE website)

The overall securities brokerage market in India was valued at $3.94 billion in 2024 and is projected to reach $5.75 billion by 2029, reflecting a compound annual growth rate (CAGR) of 7.9%. This expansion is largely attributed to the proliferation of discount brokers offering cost-effective trading solutions, which have attracted a growing number of retail investors seeking affordable access to capital markets. (Source: LinkedIn)

However, the sector faced regulatory challenges during this period. The Securities and Exchange Board of India (SEBI) implemented stricter regulations to curb speculative trading in derivatives. These measures included increasing the minimum contract size and reducing the number of weekly options contracts available for trading, which had surged in popularity following the introduction of weekly expiries on multiple indices. Such regulations aimed to enhance market stability but posed challenges for discount brokers, who traditionally relied on high- volume, low-margin transactions.

(Source: Financial Times, The Economic Times)

Outlook

The discount brokerage industry is expected to navigate a landscape shaped by both opportunities and challenges. The anticipated growth of the securities brokerage market, projected to reach $5.75 billion by 2029 with a CAGR of 7.9%, suggests a favorable environment for discount brokers. Additionally, the increasing adoption of digital platforms and a tech-savvy population are likely to further drive the demand for online trading services. (Source: linkedIn)

Nonetheless, the implementation of SEBIs new regulations may impact trading volumes and revenue streams for discount brokers. Firms may need to adapt by diversifying their service offerings, enhancing technological infrastructure, and focusing on investor education to maintain competitiveness. The evolving regulatory landscape underscores the importance for discount brokers to balance innovation with compliance to sustain growth in the forthcoming fiscal year. (Source: Financial Times)

Company Overview

Established in 2007, 5paisa Capital Limited operates as a technology-focused financial services provider with a significant online presence. The company is registered with the Securities and Exchange Board of India (SEBI) as a stock broker, depository participant, and research analyst, and with the Association of Mutual Funds in India (AMFI) as a mutual fund distributor. Our primary client base consists of retail investors and high-volume traders participating in the securities market.

We offer a suite of financial products and services delivered through online platforms and mobile applications, employing a self-directed (DIY) model that prioritizes accessibility and affordability. By leveraging streamlined, technology-driven solutions - such as intuitive mobile applications, advanced trading and charting tools, algorithmic trading capabilities, and a fully digital account opening process - 5paisa Capital Limited has accelerated its growth to become one of Indias leading online brokerage firms.

Customer Acquisition

5paisa Capitals strategic focus is on the development of a forward-looking product pipeline, designed to capitalize on emerging opportunities across our diverse product offerings. We have aligned our business strategy with evolving market demands, placing a strong emphasis on the creation of specialized products that address specific customer requirements.

Our objective is to broaden the reach of our value proposition, extending our financial services to a wider customer base, including those residing in Indias semi-urban and rural regions. During the financial year, we acquired 6 lakh new customers, bringing our total customer base to 4.8+ million.

Enhancing Onboarding Experience

This financial year, a strategic emphasis was placed on encouraging prospective clients to complete the account opening process autonomously, transitioning from predominantly assisted methods. To achieve this, we streamlined the customer journey, driving greater adoption of self-directed (DIY) interactions.

Enhancements to the user interface (UI) and user experience (UX) across both the application and web platforms.

• Improvements in API latency to ensure faster response times

• Streamlining and simplification of backend logic

• Automation of previously manual processes

• Integration of new vendor partnerships to provide industryleading features

• Reduction of user input requirements

• Utilization of data to pre-populate fields, thereby reducing user input

Automation:

• The Know Your Customer (KYC) process was automated, which previously required manual intervention and was time-consuming. This automation resulted in significant Man-hour savings and a reduction in the turnaround time (TAT) for Demat account openings.

Strategic Partnerships:

• Implementation of bank account verification via reverse penny drop, eliminating the need for manual input of account numbers and IFSC codes.

• I ntegration of digital e-signature capabilities with dual backup systems to ensure uninterrupted service availability.

• Direct bank statement retrieval, streamlining the process for customers and eliminating the need for downloads and uploads.

• Automated retrieval and pre-filling of user personal details, minimizing errors and accelerating the account opening process.

Technological Updates

5paisa Capital continues to be a leader in technology-driven innovation within the equity market. We are committed to ongoing investment in our engineering systems to enhance reliability, speed, and overall performance. During the reporting year, significant advancements were made in strengthening our technological infrastructure and improving user experience across all platforms.

Streamlining the Onboarding Process

• As part of our modernization efforts, we have streamlined our onboarding workflows to create a more efficient customer journey.

• Significant API performance optimizations have been implemented, resulting in faster account creation and reduced friction during the customer acquisition process.

Enhanced Mobile Experience

• We have completely re-engineered our mobile application using cutting-edge technology, delivering substantial improvements in user experience and performance.

• The revamped application has been successfully launched on both iOS and Android platforms, providing our users with enhanced navigation, faster load times, and improved overall efficiency.

Web Platform Transformation

• Our web trading platform has undergone a comprehensive revamp, focusing on intuitive design and seamless functionality.

• This redesign has significantly improved user satisfaction by simplifying complex trading activities and providing more accessible market insights.

Xstream API Capabilities

• Our Order Placement APIs have been optimized to power the Xstream API platform specifically designed for algorithmic traders, reducing latency and increasing execution speed.

• These optimizations enable algo traders to execute strategies with greater precision and reliability.

F&O 360 Platform Expansion

• Significant enhancements have been made to our F&O 360 platform on the web, incorporating advanced analytical tools and improved visualization features.

• We successfully launched F&O 360 on mobile devices for both Android and iOS, bringing comprehensive derivatives trading capabilities to mobile users.

Infrastructure Optimization

• We have made substantial optimization efforts on our infrastructure, resulting in both cost efficiency and performance improvements.

• These optimizations have enhanced system reliability during peak trading hours while reducing operational expenditure.

Future Roadmap

In the coming year, we will continue to double down on our efforts to improve user experience, increase the speed and efficiency of our platform, and optimize overall infrastructure spending. Our commitment to technological excellence remains central to our strategy as we develop innovative solutions that address evolving market demands.

Risk and Cyber Security Management

• To strengthen our operational risk management framework and protect against cyber threats, we have developed a comprehensive Cyber Security and Cyber Resilience policy, aligned with SEBI guidelines.

• Regular system audits are conducted by recognized exchange/depository auditors, and audit reports, along with action taken reports, are reviewed by the audit committee.

• Management conducts periodic reviews of technology- related concerns and risks, including customer data protection, identity theft, cybercrime, data leakage, business continuity, and access controls.

Prioritizing Customer Data Security

• We have implemented various tools and measures to mitigate security risks, including privileged identity management, advanced malware detection and protection, endpoint encryption, mobile device management, network firewalls, web application firewalls, secure remote access, brand protection, dark web monitoring, and secured internet access.

Maintaining Regulatory Compliance

• As a financial services provider, we adhere to regulatory requirements from SEBI, BSE, NSE, CDSL, and NSDL. We have maintained a consistent record of compliance without any reported deviations.

SWOT ANALYSIS Strengths

Innovative Digital Operational Structure

5paisas business approach is centered on digital innovation, scalable growth, and a focus on customer satisfaction. Digital transformation is integrated into all facets of our operations, delivering a streamlined and personalized experience for our clientele.

High-Performance Trading Interface

Our trading platform is recognized for its intuitive user interface, sophisticated functionalities, and rapid transaction processing. It is designed to accommodate the varied requirements of investors and traders, providing a comprehensive range of services. Moreover, we consistently integrate cutting-edge technology into our trading platform and mobile application to ensure a seamless user journey.

Comprehensive Financial Product Range

As a prominent fintech brokerage, 5paisa Capital Limited offers a broad spectrum of financial products and services to cater to the diverse needs of its customers. This includes Stock Broking, Systematic Investment Plans (SIPs), Initial Public Offerings (IPOs), Commodities, Currencies, Direct Mutual Funds, and Exchange-Traded Fund (ETFs). Additionally, 5paisa provides access to US equities, algorithmic trading, and educational resources for traders seeking to improve their knowledge and skills.

Expert Management and Governance

Our Board of Directors comprises individuals with extensive industry expertise, and our management team has been instrumental in steering the company through both prosperous and challenging periods. Their collective experience enables us to anticipate future market shifts and effectively pursue our growth objectives.

Weaknesses

Significant Competitive Market Pressures

The Indian brokerage market is characterized by intense competition, with numerous companies actively competing for market share and providing a wide variety of services aimed at attracting and retaining customers. This sector includes full- service, discount, and hybrid brokers, each targeting specific investor demographics with unique operational models and service offerings.

Opportunities

Expansion of Digital Financial Services

The rapid development of Indias digital financial services sector is driven by several factors, including increased smartphone and internet penetration, a growing need for accessible and economical financial services, and regulatory changes that have streamlined digital service delivery by financial institutions.

Demographic and Economic Growth

Indias large and increasing young population, alongside rising prosperity, has stimulated demand for financial products and services. The expanding Indian middle class also creates a substantial market for financial offerings.

Supportive Governmental Policies

The Digital India initiative has promoted the growth of online platforms and mobile applications, which 5paisa Capital utilizes in its operations. Regulations implemented by SEBI and other regulatory bodies have improved market transparency, investor protection, and market integrity, benefiting 5paisa Capital and other market participants. Government policies, such as the Fintech Regulatory Sandbox, have facilitated the development and testing of innovative fintech solutions. Additionally, the Start-up India initiative allows 5paisa Capital to capitalize on various incentives and benefits available to start-ups, further enhancing its growth prospects.

Regulatory Shifts and Ambiguities

The possibility of regulatory alterations is a significant concern for 5paisa Capital, particularly given its operations within the highly regulated capital market sector. Uncertainties in regulatory landscapes, including policy and rule changes, could substantially affect the companys operational activities and financial outcomes. Therefore, maintaining up-to-date awareness of regulatory developments and ensuring adherence to compliance requirements is vital for 5paisa Capital to minimize the potential impact of regulatory changes on its business.

Threats

Impact of Global Economic Weakness

A slowdown in global economic activity may create an unfavorable macro environment, with reduced liquidity and fewer new orders potentially slowing the industrys pace of growth.

Challenges from Rapid Technological Change

On the technology front, the risk of obsolescence remains significant for 5paisa Capital in a rapidly evolving financial services sector. As new technologies emerge, legacy systems and software may struggle to keep pace, which could lead to operational inefficiencies, increased security threats, and limited ability to deliver innovative products to clients. This scenario may also result in a weaker market position, lower client satisfaction, or regulatory concerns if critical systems do not comply with prevailing standards.

Key regulatory changes affecting the companys operational segments during FY 2024-25 are summarised below:

• From July 1, 2023, SEBI classified certain stock brokers as Qualified Stock Brokers (QSBs). This classification is based on various factors, including the scale and extent of operations. QSBs are required to fulfill enhanced obligations and responsibilities to ensure appropriate governance structures, risk management policies and procedures, scalable infrastructure, and a efficient framework for cybersecurity and investor services, including online complaint resolution mechanisms

5paisa Capital Limited was recognized as a Qualified Stock Broker from July 1, 2023, in compliance with these regulations

• SEBI implemented measures to protect client funds held by stockbrokers and clearing members, requiring daily transfer of funds to Clearing Corporations. This initiative aims to decrease fund-related risks by investing surplus funds in low-risk instruments and providing clients with independent daily confirmations

• To mitigate leverage and client fund risks, SEBI mandated that stockbrokers cease creating new Bank Guarantees (BGs) using client funds from May 1, 2023, and that all existing BGs created from client funds be terminated by September 30, 2023

• SEBI revised short selling regulations for both institutional and retail investors, with the goal of enhancing market transparency

• Under SEBIs guidance, BSE Limited (BSE) and the National Stock Exchange of India Limited (NSE) established a technology-based platform to streamline data backup and repository processes for IPOs, FPOs (Follow-on Public Offers), Rights Issues, and other capital market activities. This platform will serve as a central repository for due diligence documents prepared and maintained by merchant bankers for various capital market transactions

• PFA SEBI introduced Online Dispute Resolution (ODR) as the primary mechanism for resolving disputes within the Indian securities market. The circular issued by SEBI outlines a detailed framework for escalating disputes to ODR, selecting ODR institutions, conducting ODR processes, defining process timelines, and determining associated costs

• SEBI reduced the share listing timeline on stock exchanges following IPO closures from T+6 days to T+3 days. This reduced timeline, voluntary for public issues opening on or after September 1,2023 and mandatory for issues after December 1,2023, benefits both issuers and investors

• SEBI, via its Master Circular dated October 16, 2023, established a comprehensive framework for Offer for Sale (OFS) of shares to employees through the stock exchange mechanism. Previously, OFS to eligible company employees occurred outside this mechanism. To improve efficiency, simplify compliance, and reduce costs, SEBI amended the procedure, allowing promoters to offer shares to employees in OFS through the Stock Exchange Mechanism. This process, effective from February 23, 2024, aligns employee OFS with the retail category on a T+1 day basis

FINANCIAL PERFORMANCE

During the financial year 2024-25, the company demonstrated resilient performance despite a decline in total revenue, which stood at Rs3,598 million. This decrease was effectively mitigated by a substantial reduction in operational expenses. Employee costs fell by 17.3%, primarily due to the strategic recruitment of new personnel in the previous financial year at optimized cost levels. Additionally, Other Expenses declined by 18.6% because of cost optimization measures.

Driven by these cost efficiencies, the company reported a Profit After Tax (PAT) of over Rs682 million for FY 2024-25, up from Rs544 million in FY 2023-24. This result underscores the companys strong financial discipline and operational efficiency in the face of challenging revenue conditions.

Consolidated Financial Statement

Particulars	March 31, 2025	March 31, 2024
1. Income
a. Brokerage Income	1,714	1,827
b. Allied Broking Income	886	1,175
c. Other Operating Income	998	945
Total Revenue	3,598	3,947
2. Expenses
Employee Benefits Expense	740	895
Finance Cost	238	286
Depreciation and Amortization Expense	122	95
Other Expenses	1,586	1,950
Total Expense	2,686	3,226
3. Profit before tax (1+2)	912	721
4. Tax Expense
Current Tax	258	195
Deferred Tax	(28)	(18)
Total Tax Expenses	230	177
5. Profit for the period (3-4)	682	544

Key Financial Ratios (Consolidated)

Key Ratios	March 31, 2025	March 31, 2024
Debt/Equity Ratio	0.36	0.62
Return on Net Worth	11.9%	10.9%
Interest Coverage Ratio	3.59	3.86
Net Profit Ratio	19.0%	14.0%
Return on Capital Employed	13.6%	11.0%

OPERATIONAL PERFORMANCE

During FY 2024-25, 5paisa Capital Limited delivered strong operational performance, demonstrating growth across key performance indicators. The company recorded a revenue of Rs360 crore, supported by a 14% increase in its client base, which now exceeds 4.8 million.

Despite an 11% decline in Average Daily Turnover (ADTO), which stood at Rs3.1 trillion, and an 11% reduction in the average client funding book, the companys strategic focus on digital acquisition and client engagement remained effective.

Operational efficiencies were further enhanced by a decline in employee costs and finance expenses. As a result, 5paisa Capital reported a robust 25% year-on-year growth in Profit After Tax (PAT), reaching Rs68 crore.

This performance reflects the companys resilient business model and disciplined financial management in a dynamic market environment.

RISK MANAGEMENT

Effective risk management is vital for our organization as it preserves value, enhances decision-making, and ensures the continuity of our business operations. It fosters compliance, nurtures our reputation, and strengthens stakeholder confidence, all while driving long-term sustainability and competitive advantage.

To navigate risks effectively, our company employs the "three lines of defense" (3 LOD) model. The first line is comprised of management controls implemented at the operational level, while the second line encompasses various risk control and compliance functions overseen by management. The third line is represented by our internal audit and assurance function, which provides an additional layer of oversight.

We encounter a range of risks stemming from both inherent business characteristics and shifts in the external landscape. Below, we identify some of these risks along with our proactive measures to mitigate them:

Risk	Impact	Mitigation
Market Risk	The performance of our digital financial services brokerage is closely tied to the broader economic climate, which can directly affect the expansion of the Indian capital market. Our earnings, operational activities, and financial returns are substantially affected by prevailing market conditions, regulatory changes, international political situations, and shifts in interest rates, all of which have a direct impact on Indian trading volumes. A prolonged decline in market activity would likely lead to a reduction in the number of trades we process for clients, consequently lowering our revenue.	To counteract these risks, we conduct ongoing analysis of market trends, economic data, and international political events, enabling us to adapt our operational strategies quickly. Furthermore, our company provides a varied selection of financial products through our service offerings, which helps to mitigate reliance on specific market conditions.
Regulatory Risk	5paisa Capital functions within a very competitive market and is subject to the supervision of multiple regulatory authorities and legal frameworks. Increased regulatory oversight and unfavorable changes in regulations could potentially create disruptions in our business operations. Moreover, failure to meet regulatory requirements or breaches of compliance standards could result in the loss of licenses, financial penalties, and damage to our companys reputation.	To manage this, we have a specialized compliance department that provides immediate assistance to all corporate divisions, enabling them to respond to significant alterations in compliance standards. Furthermore, we implement detailed internal audit procedures to guarantee that we meet all legal obligations and industry benchmarks.
Technology Risk	The risks associated with technology encompass possible negative outcomes arising from problems with technological infrastructure, data protection, and online security breaches. Such issues could lead to monetary losses and damage the companys public image.	To address these concerns, our company allocates substantial resources to technological advancements and cyber security protocols. We perform routine risk evaluations and maintain operational continuity strategies. Furthermore, our company has secured all required certifications and consistently adheres to relevant legal and regulatory standards regarding online security and data confidentiality.
Operational Risk	The company faces potential revenue loss and reputational harm should internal procedures, staff actions, or technological systems fail, or in the event of external incidents. A failure to act, oversights, miscommunications, false representations, or improper conduct by a large number of employees across different locations could lead to significant damage to our reputation and financial stability.	To mitigate these risks, we have established a layered and geographically distributed system of risk control self-assessment for our essential business activities. These procedures are monitored through a management information system (MIS) and regular audits. Furthermore, a maker/checker protocol is implemented, which significantly reduces the potential for such risks to materialize.
Human Resource Risk	The company is exposed to risks stemming from employee misconduct, fraudulent activities, and operational mistakes, including unauthorized trading, inaccurate reporting, and failure to comply with regulations. Even with preventative measures in place, these actions may remain undiscovered, resulting in legal and regulatory problems that affect our operational capacity, financial stability, and public image.	To lessen these risks, the company provides comprehensive training to staff, ensuring they are aware of their responsibilities and adhere to company policies. The Human Resources Department oversees compliance with employment law and performs extensive pre-employment screening for all-new staff. Furthermore, we implement a clear separation of duties to minimize the potential for fraudulent activities.

HUMAN RESOURCE

At 5paisa Capital, our employees are the foundation of our success. We pride ourselves on cultivating a talented and committed workforce, providing ample opportunities for innovation and diverse team, recognizing that our employees drive our expansion across market segments. With 539 permanent staff members as of March 31, 2025, we prioritize continuous learning, offering extensive training programs to enhance skills and align with evolving industry demands.

To attract and retain top talent, we offer competitive salaries, performance-linked bonuses, and benefits such as Employee Stock Ownership Plans (ESOPs) and comprehensive health coverage. Our commitment to diversity and inclusion ensures fair treatment for all employees, encouraging a culture that values every individual. We engage our workforce through open communication channels, regular town hall meetings, and feedback surveys to enhance satisfaction and motivation.

Further to explore our commitment to employee development and well-being please refer to the Our Employee chapter included in the ESG section within this Annual Report.

INTERNAL CONTROLS

Our organization undertakes internal audits based on the Annual Audit Plan sanctioned by the Audit Committee. This audit encompasses all operational areas, including both front- end and back-end activities, alongside compliance checks. The primary objective is to evaluate process controls, assess our risk management strategies, and identify any instances of noncompliance, leakage, or fraudulent behavior.

We have prioritized the enhancement of our internal audit and control systems to ensure they are suitable for our business model, regulatory demands, and operational scale. Our internal control framework is reinforced through ongoing audits, special assessments, and regular management reviews. For comprehensive audits across the company, we have partnered with A N S A & Associates LLP, Chartered Accountants, an independent firm that brings a diverse perspective to the verification process, thereby increasing the overall value of our audits.

Moreover, we engage specialized audit firms to perform targeted audits of critical functions. This includes half-yearly internal audits as required by SEBI, Exchanges, and Depositories, as well as audits related to DP processes, Know Your Customer (KYC) checks, demat transfers, payout assessments, systems audits, end-use verification, and related party transaction assessments. We also comply with various audits mandated by regulatory authorities, ensuring timely submission of reports to SEBI, Exchanges, and Depositories.

The Board and Audit Committee are responsible for reviewing the overall risk management framework and evaluating the effectiveness of the internal controls established by management. The Audit Committee examines significant fraud cases quarterly and takes appropriate actions as necessary.

It also focuses on implementing systems and controls that enhance our processes and mitigate the risk of future incidents. Our internal procedures are designed to maintain effective checks and balances, ensuring compliance with regulations at every level. The internal audit team conducts risk-based assessments of these processes to confirm the adequacy and effectiveness of our internal controls in preventing, detecting, reporting, and addressing non-compliance and fraud.

INTERNAL FINANCIAL CONTROLS

We have established effective internal controls concerning our financial statements and operations, which are functioning well. Our Internal Auditors have assessed 66 critical financial controls across various areas, including Finance & Accounts, Fixed Assets, Administration, HR Payroll, and Retail Broking, Compliance and have identified no significant weaknesses. Furthermore, the Statutory Auditors have reviewed our systems and processes, confirming the adequacy of our Internal Financial Controls over financial reporting, which are also operating effectively.

OUTLOOK

The Indian economy continues to thrive and is currently well- positioned within the global landscape, which has become increasingly uncertain due to international disruptions affecting countries worldwide. Looking forward, India is poised to leverage its youthful demographic, which is increasingly inclined towards digital technology. This trend is permeating various sectors, particularly finance, where individuals and businesses can expect faster, more transparent, and efficient services.

The capital markets, especially the stock markets, have witnessed a notable surge in activity, driven by an influx of new investors and listings. This includes heightened participation from both individual and institutional investors, alongside numerous IPOs throughout the year. As the equity culture expands, our company is strategically positioned to serve a growing customer base across the nation, particularly in tier 2 and 3 towns and rural areas. This advantage is bolstered by significant investments made in people, processes, and technology in previous years. Our commitment remains steadfast in delivering consistent performance while staying ahead of trends in the capital market and brokerage sectors, leveraging our technological capabilities.

CAUTIONARY STATEMENT

This document contains forward-looking statements regarding anticipated future events and the financial and operational outcomes of 5paisa Capital Limited. By their nature, these statements necessitate the Company to make certain assumptions and are subject to inherent risks and uncertainties. There is a considerable risk that the assumptions, predictions, and other forward-looking statements may not be accurate. Readers are advised to exercise caution and not place undue reliance on these forward-looking statements, as various factors could lead to actual results and sevents differing materially from those expressed.