Aditya Birla Money Ltd Management Discussions

OVERVIEW

Indian economy remained resilient for the most part of FY25 amidst evolving global headwinds, including tight global monetary conditions, ongoing geopolitical disruptions and rising protectionist trade policies. This justifies the fact that India remains at a pivotal point in its growth journey to become a $5 Trillion economy by 2027 and $10 Trillion by 2032. As per the National Statistical Office (NSO), GDP growth for FY25 is projected and moderate to 6.4% as compared to the previous years upward revision of 9.2% growth. The growth will be supported by broad-based contributions across agriculture, industry and services. Manufacturing PMI continued to remain in expansionary phase while Services PMI moderated in FY25 but continued to witness expansion. Services exports, in particular, recorded robust growth of 13.6% in FY25, reflecting Indias expanding footprint.

Inflation remained within RBIs comfort zone for most of H2FY25 before undershooting to end FY25 with 3.34%. Core inflation remained well-anchored, enabling the RBI to maintain a long neutral and calibrated stance with 1 rate cut of 25bps in Q4FY25. While RBI may look for further rate cuts in FY26, growth should outweigh the disinflationary trends.

On the fiscal front, the Union Government continued its consolidation path, with the fiscal deficit estimated at 4.8% of GDP for FY25, down from the revised 4.9%, and further targeted to decline to 4.4% in FY26 as per Ministry of Finance, strong revenue buoyancy, driven by record net tax collections of over Rs 20 Lakh Crore till February 2025 and higher capex, particularly in infrastructure have provided a dual impetus to growth and supply-side resilience.

Indias external sector remained healthy with foreign exchange reserves at ~$676 bn as on FY25 ending, sufficient to cover 11 months of imports and 90% of total external debt. Merchandise exports were largely flat in FY25 while services exports contributed significantly to foreign exchange inflows. The labour market demonstrated positive momentum, with unemployment rate dropping to 3.2% in FY24 while Urban unemployment rate remained steady at 6.4% in Q3FY25, supported by recovery in contact-intensive services and expanding employment in construction and logistics. The Government also emphasised its long-term growth support through the highest ever CAPEX budget allocation of over 11 Lakh Crore for FY26, that translates to 3.1% of GDP. The income tax rate cuts in the ensuing budget should also give a boost to private consumption.

Looking ahead, RBI projects FY26 GDP growth to be in the range of 6.5%, contingent on benign inflation, supportive monetary conditions and a stable external environment. However, emerging challenges such as the geopolitical conflicts and imposition of tariffs by US could pose moderate downside risks to the overall economy. Nonetheless, Indias economic fundamentals remain strong, underpinned by a prudent fiscal trajectory, resilient domestic demand, healthy financial sector balance sheets, expectations of an above-normal monsoon and accelerating digital transformation. These factors collectively position India as one of the most dynamic and investible growth stories among large markets.

GLOBAL ECONOMIC OUTLOOK

FY25 has been a pivotal year for the global economy, characterised by a fragile yet stabilising environment as nations grappled with the lingering effects of tight monetary policy, diverging inflationary trends, a rapidly evolving geopolitical landscape and resurgence of protectionist trade dynamics. According to IMF, global GDP growth is estimated to moderate to 2.8% in CY25 down from 3.2% projected in CY24, with advanced economies witnessing a sharper deceleration, while emerging markets, notably India and Southeast Asia, demonstrated greater resilience.

US continued to anchor global growth but remained at the center of inflation management. The Federal Reserve held interest rates steady at 5.25%-5.50% for most of the year to manage sticky core inflation, which hovered above 3%, though headline CPI steadily declined towards 2.4% by March 2025. In H2CY24, with consumer demand softening, job creation slowing, and financial conditions tightening, the Fed signaled a pivot towards measured rate cuts with a 25 bps cut in December 2024. Markets are now pricing in 2 more rate cuts in 2025. In Europe, economic activity remained subdued weighed down by structural weaknesses in industrial production, subdued consumer sentiment and energy supply constraints. However, the European Central Bank adopted a strong expansionary approach from H2CY24, starting continuous rate cuts and an accommodative stance. It began its first rate cut of 25 bps in June 2024 and has sharply cut rates ever since, dragging down the interest rate by over 200 bps to 2.4% by April 2025. Meanwhile in Asia, Japan undertook a historic policy shift by ending its negative interest rate policy and hiking rates for the first time in 17 years, as wage inflation and moderate consumer price growth supported a gradual policy normalisation. Chinas economy, while still growing, faced structural headwinds, with GDP growth moderating amidst the ongoing real estate sector weakness, subdued domestic consumption and rising youth unemployment continuing to challenge growth momentum. Though the Chinese government implemented targeted fiscal and monetary support, including infrastructure spending and credit easing, investor confidence remained fragile.

Geopolitically, FY25 was marked by heightened uncertainty. The continuation of the Russia-Ukraine war which is now in its 4^th year, escalation in the Israel-Hamas conflict, and rising tensions in the Red Sea region adversely impacted global trade routes, elevated shipping costs, and introduced volatility in commodity markets. Crude oil prices fluctuated in the range of $80-85 per barrel for the most of 2024, reflecting tight supply dynamics and geopolitical risk premia. Geopolitical uncertainty also led to shifting of investment to safe-haven instruments like gold which increased by ~45% in last 1 year.

A notable development in 2025 was the introduction of new tariffs by the US on imports from all of its trading partners. The biggest impact faced was by China with duties imposed on various sectors reaching upto 145%. These measures induced retaliatory actions by some and led to potential disruptions in global supply chains and intensified the decoupling of global trade regimes. Effects on each economy and headwind to each industry remains uncertain as policy changes remain ongoing. Emergence of friendshoring, export controls on strategic resources and regional trade blocs further underscored the global shift towards economic fragmentation. In its revised outlook, the WTO projected global trade volume growth of only 2.4% in 2025, citing the risk of escalating trade protectionism and geopolitical instability. However, negotiations are underway between US and its selected trade partners towards a friendly bi-lateral trade agreement, with India amongst the frontrunners to strike a deal.

The global outlook entering 2025-26 remains delicately poised with IMF projecting the global GDP growth to moderate to 2.8% in CY25. While disinflationary progress and the expected onset of monetary policy easing are encouraging, several downside risks persist which includes escalation of geopolitical tensions, retaliatory trade policies, energy market volatility and increased frequency of cyber threats. Conversely, a coordinated global policy response, easing of key conflicts, and sustained investment

in supply chain diversification and digital resilience could foster a more stable recovery trajectory. In this context, stakeholders across financial markets, businesses, and governments must maintain a posture of vigilance, policy agility, and strategic hedging to navigate the complex global environment.

INDUSTRY STRUCTURE AND DEVELOPMENTS

The Indian broking industry witnessed a landmark year in FY25, marked by a two-phase narrative of exceptional growth and returns followed by regulatory moderation and global headwinds. During the first three quarters of the fiscal, the industry achieved record performance driven by buoyant primary and secondary market activity, robust retail participation, and sustained inflows into equity mutual funds.

Retail broking businesses continues to improve their product offerings through digital initiatives. The rise of discount brokers has made it easy to invest in capital market products via zero brokerage, e-KYC, UPI integration and user-friendly platforms which has made investing seamless and intuitive. With that, investor participation reached new highs in FY25, also reflecting the growing democratisation of capital markets in India. FY25 saw a record 4.11 Crore new demat accounts opened, a growth of 11% YoY, pushing the total to 19.24 Crore. On the primary market front, 78 mainboard IPOs and 239 SME IPOs cumulatively raised ~ 1.72 Lakh Crore—surpassing the cumulative totals of the previous two years.

Retail investors continued to dominate market flows, supported by growing financial awareness and digital enablement. The number of active traders on the NSE increased nearly five-fold since FY2020, reaching ~ 5 Crore by October 2024. Mutual fund participation also saw substantial growth, with unique retail investors rising to more than 5 Crore while SIP registrations touched record highs. While aggressive FII outflows continued to challenge the Indian equity markets in H2FY25, domestic retail and institutional flows provided a resilient counterbalance, reinforcing the trend of localisation in market ownership. Despite headwinds from FPI outflows, regulatory intervention, geopolitical tensions and ongoing policy uncertainty, Indian markets displayed structural resiliency as the benchmark indices managed to outperform most developed and emerging markets. For FY25, Nifty 50 gained ~5% while Nifty Midcap 100 was up 5.4% and Small cap index extended by 7.5%.

FINANCIAL PERFORMANCE

The Companys Revenue from Operations grew to Rs448 Crore in the FY 24-25 compared to Rs390 Crore in FY 23-24, an increase of 15% YoY mainly led by higher interest income, higher fees and commissions.

The profit after tax stood at Rs74 Crore for the year ended 31^st March 2025, as compared to Rs53 Crore in the previous financial year, an increase of 40%.

SEGMENTAL PERFORMANCE

The Company has identified its business segments (referred to as Industry Verticals) as reportable segments. The revenue breakdown by Industry Vertical is provided below.

Industry Vertical	Segment Revenue		YoY Revenue	Segment Margin (%)
	(Rs in Lakh)		Growth %
	FY25	FY24		FY25	FY24
Broking	36,448	33,400	9.1	16.2	15
Wholesale debt market	7,998	5,198	53.9	35.9	29.9
Others	315	421	(25.2)	(30)	(34.7)

OUTLOOK

Indias GDP growth is expected to grow by 6.5% in FY25 as per RBI, a slight moderation from its earlier projection of 6.7%, citing global trade volatility and policy uncertainties. Still, Indias fundamentals remain strong, underpinned by a prudent fiscal trajectory, political continuity, strong domestic consumption, healthy financial sector balance sheets, expectations of an above-normal monsoon, decelerating inflation and expected rate cuts. However, developments over the US trade policies and geopolitical tensions needs to be closely monitored. IMDs initial southwest monsoon forecast suggests that India could receive above-normal rainfall for the second year in a row. Its expected that monsoon could be 105% of the long period average of 87 cm in FY26. This should be positive for the agricultural sector and overall rural sentiment.

RBI expects Inflation to average at 4% in FY26, assuming a normal monsoon. Indian economy is expected to be amongst the fastest growing large economies in FY26, mainly backed by strong domestic drivers and strengthening macroeconomic fundamentals. With softening of the commodity prices, India

Inc is likely to witness some relief on the input cost thereby driving its gross margins. Further, most of the companies have now adopted the risk of managing supply side challenges along with cost optimisation measures which can uplift their margins. Governments impetus on growth and capex and boosting domestic consumption was quite visible through a balanced Budget for FY26. It showcased a strong balance between fiscal prudence and consumption boost.

India growth story remains one of the best over medium to long term in a world overflowing with structural and demographics challenges. Governments strong impetus on growth and continued focus on capex is visible as its budgeted at Rs 11.21 Lakh Crore for FY26, i.e. 3.1% of GDP. Apart from that, the strong policy initiatives Aatmanirbhar Bharat, Make in India, Heal in India, Dekho Apna Desh supported by PLI schemes, will take India to the next level of growth in the coming years. Thus, we believe that Indian economy is on right track and is on its way to becoming $ 5tn economy by 2027 and $ 10tn by 2032.

OPPORTUNITY AND THREATS

The stock broking industry continues to evolve rapidly, driven by a confluence of regulatory reforms, technological advancements, and increasing retail investor participation. While the sector presents significant growth opportunities backed by a rising investor base, financial inclusion efforts, and digital innovation, it also faces emerging challenges such as intense competition, regulatory compliance burdens, and market volatility. In this dynamic environment, agility, innovation, and robust risk management remain critical for sustained value creation.

OPPORTUNITIES:

a. Rising Retail Participation in Capital Markets

India has witnessed a significant increase in demat account openings, particularly from Tier 2 and Tier 3 cities. This trend, driven by financial literacy, mobile penetration, and ease of digital onboarding, offers immense growth potential.

b. Favorable Regulatory Initiatives

SEBIs proactive reforms such as T+1 settlement cycle, simplification of KYC norms, and investor protection measures are increasing market transparency and efficiency, encouraging participation.

c. Digital Infrastructure and Fintech Integration

Indias growing digital ecosystem, UPI integration, and Account Aggregator (AA) framework enable seamless access to financial services. Leveraging technology through AI/ML, robo-advisory, and data analytics can enhance customer engagement and operational efficiency.

d. Expansion of Financial Products and Asset Classes

Growing interest in mutual funds, ETFs, REITs, InvITs, and international equities allows brokers to diversify revenue streams and cross-sell products to existing clients.

e. Focus on Financial Inclusion

Government and regulatory focus on financial inclusion, supported by JAM trinity (Jan Dhan, Aadhaar, Mobile), is expanding the investable population and driving first-time investors into formal markets.

f. Strong Economic and Demographic Tailwinds

Indias robust GDP growth outlook, rising middle class, and a young, tech-savvy population create longterm structural demand for investment and wealthbuilding services.

THREATS:

a. Market Volatility and Macroeconomic Risks

Global uncertainties, geopolitical tensions, and domestic inflation or interest rate hikes can impact investor sentiment, reduce trading volumes, and increase client inactivity.

b. High Competitive Intensity and Margin Pressure

The rise of discount broking models and zero-commission platforms has led to margin compression and increased pressure to differentiate through technology and service quality.

c. Regulatory Stringency and Compliance Costs

While necessary, continuous regulatory changes (e.g., peak margin norms, changes in leverage rules) increase operational and compliance burdens, potentially affecting agility and profitability.

d. Cybersecurity and Technology Risks

As digital adoption accelerates, risks related to data breaches, fraud, outages, and cyberattacks are heightened. Maintaining robust cybersecurity infrastructure is critical.

e. Customer Retention and Engagement Challenges

With increasing commoditisation and low switching costs, retaining active users and maintaining engagement levels is becoming more challenging.

f. Concentration Risk from Market-Linked Revenues

A large portion of revenue is dependent on market activity such as trading volumes and investor participation. Any slowdown or prolonged downturn can materially affect financial performance.

In navigating these opportunities and threats, strategic agility, technological innovation, regulatory compliance, and a clientcentric approach will be pivotal for stock broking companies like us in FY 2025-26.

RISK AND CONCERNS

The core operations of our Company inherently expose us to a range of risks including market risk, credit risk, and operational risk, all of which remained central to our risk management focus in FY 2024-25. We have in place a comprehensive Risk Management System Policy that serves as a structured framework to identify, assess, monitor, and mitigate these risks in a timely and effective manner. This framework is continually reviewed and updated to remain aligned with evolving market dynamics and regulatory expectations.

Given the heightened volatility in both domestic and global markets, particularly in light of geopolitical tensions and macroeconomic uncertainties such as interest rate fluctuations and inflationary pressures, market risk continues to be a key area of concern. Additionally, with increasing digitalisation and online transaction volumes, cybersecurity and data privacy risks have gained prominence. Operational resilience and system integrity are being prioritised to address these evolving challenges.

Regulatory changes, such as modifications in margin norms, enhanced surveillance requirements, and greater emphasis on compliance, add further complexity and necessitate agile

adaptation. The competitive landscape is also intensifying with fee compression and the emergence of new digital-first players, placing pressure on margins and client retention strategies.

To safeguard our interests, we continue to strengthen our surveillance mechanisms and trade risk mitigation strategies, all of which are designed in alignment with SEBI and Exchange guidelines. In FY 2024-25, our efforts are focused on fortifying internal controls, enhancing automation in risk monitoring, and building a culture of proactive risk management to ensure longterm sustainability and stakeholder confidence.

INTERNAL CONTROL SYSTEMS AND ADEQUACY

The Company has in place an adequate internal audit framework to monitor the efficacy of internal controls with the objective of providing the Audit Committee and the Board of Directors with an independent and reasonable assurance on the adequacy and effectiveness of the organisations risk management, internal controls and governance processes. The framework is commensurate with the nature of the business and the size, scale, and complexity of its operations.

In addition, the Company goes through periodic internal audits both through its internal team and external auditors, which includes branch and franchisee audits as well as all operations control. All the audit and inspection reports are placed at the Audit Committee meetings. Key issues are specifically brought to the attention of the Audit Committee and deliberated in detail along with the action plan for closure.

HUMAN RESOURCES

Human Capital plays a key role in creating a forward-thinking future ready organisation that enables Aditya Birla Money Ltd. to win in the marketplace by aligning its people with the organisations vision, purpose, and values. Our practices, processes, and initiatives are aligned with the core strategic and cultural drivers outlined in our 5Cs - Customer, Capacity, Capital Efficiency, Cost & Culture and IMABC culture framework —Integrity, Mindset Digital, Accountability, Sensitivity, Collaboration, and Customer First.

Aditya Birla Money Ltd. attracts & retains right talent keeping in mind our core strategic & cultural drivers. With a vision of building a young and passionate talent workforce funnel we launched our Young Relationship Officer Program. We provide a safe, secure, inclusive space for people of all ages, genders, identities, orientations, and races. So, our employees go above and beyond work to better themselves and society. We reward & recognize exemplary performances.

Our Talent Management Process & Practices like identifying, developing, engaging, nurturing talent enables us to build continuity for future growth. By providing diverse career opportunities, we offer development through experience, education and exposure which helps us ensure a ready pipeline.

Learning is a cultural norm, we bring best in class learning via instructor led & self-learning modules, via mentoring/coaching and on the job. We ensure a continuous learning environment through both physical and digital interventions with a focus on quick access courses and webinars via Gyanodaya Virtual Campus, which is Aditya Birla Groups e learning platform, Aditya Birla Capitals virtual learning arena - AB Capital, ABC University and other modules covering induction, regulatory, functional and behavioural developmental needs.

To ensure learning on the job, we have launched AI Bot & AI roleplay accessible anytime, anywhere, ensures ongoing knowledge enhancement & skill development without disrupting daily tasks. Live complex cross functional and geography projects, peer-peer learning environment, buddy mechanisms are key tools to ensure on the job learning.

We encourage learning via mentoring or coaching, to bring this to life we enabled cross-functional project teams led by senior management to exemplify collaboration and partnerships that inspires trust thus strengthening our collective commitment to our shared values and organisational goals.

Being a people centric organisation, employee wellbeing is an imperative drive for us as it helps us live our purpose of Enriching Lives. We have 360-degree focus on our employee wellness which includes Workplace, Financial, Physical and Mental wellbeing. This is done via focused sessions, physical health coaching & mental health counselling & through our in-house health app. We have encouraged employees to complete digital health scans, assessments, and check-ups, with an added benefit of gym sessions and doctor consultations. Our health and life cover garners a bond of trust and ensures a stress-free mind.

We have lived our Employee Value Proposition of Enriching Lives, Winning as ONE by focusing on not only professional success but also personal growth.

As on 31^st March 2025, the total employees on the Companys rolls stood at 857.

KEY FINANCIAL RATIOS

The key financial ratios are given below:

Particulars	FY25	FY24
a) Operating Profit Margin (%)	22.71	17.67
b) Net Profit Margin (%)	16.57	13.57
c) Return on Net Worth (%)	37.20	39.00
d) Interest Coverage Ratio	1.90	1.85
e) Current Ratio	1.06	0.96
f) Debt Equity Ratio	7.11	8.45

There has been an improvement in the ratios on account of the improved performance of the Company.

CAUTIONARY NOTE

Statements in this Report, describing the Companys objectives, projections, estimates and expectations may constitute forward looking statements within the meaning of applicable laws and regulations. Forward-looking statements are based on certain assumptions and expectations of future events. These statements are subject to certain risks and uncertainties. The Company cannot guarantee that these assumptions and expectations are accurate or will be realised. The actual results may be different from those expressed or implied since the Companys operations are affected by many external and internal factors, which are beyond the control of the management. Hence the Company assumes no responsibility in respect of forward-looking statements that may be amended or modified in future on the basis of subsequent developments, information or events.