arihant capital markets ltd share price Management discussions


Financial Year 2023: A Glance

FY23 witnessed a significant milestone with the Indian economy positioning itself as the fifth-largest global economy while showcasing unwavering resilience. Despite formidable challenges like inflationary pressures and a high-interest rate environment that affected the global economy, India markets remained buoyant.

Here is a recap of the major events of FY23.

• Ukraine War Impact: Russias invasion of Ukraine in February 2022 triggered an energy supply shortage, causing fuel, food, and raw material prices to soar globally. This resulted in the US experiencing its highest inflation rate in forty years.

• Covid-Threat and China: The fiscal year started with the threat of the spread of new Covid-virus subtype, which resulted in Chinas decision to continue lockdown in its cities. This had a detrimental impact on the global supply chain. It also resulted in a significant increase in oil and food prices which in turn in resulted in steep rise in inflation across the global economies. Even India was not spared either, and for most part of the year inflation remained beyond the RBIs tolerance limit.

• Interest Rate Hikes: Central banks, including the US Fed and the RBI, responded to high inflation fears by implementing aggressive rate hikes.

• Foreign Portfolio Investment (FPl) Outflows: Foreign investors withdrew ?37,631 crores from Indian equity markets since April 2022 due to higher interest rates and concerns about market overvaluation.

• Banking Crisis in the West: Tech-focused regional banks in the US, such as SVB, Silicon Bank, and Signature Bank, collapsed due to deposit runs caused by higher interest rates and losses on bond portfolios. The crisis spread to Europe, resulting in UBS rescuing Swiss Lender Credit Suisse through a government-mediated deal.

The financial year 2022-23 was a subdued year for the Indian stock market, majorly influenced by a range of factors discussed above. The Indian stock markets were very volatile during FY23 and ended the year on a flat note. The benchmark BSE Sensex closed the year up 0.78%, while the Nifty ended down 0.44%. However, Nifty and Sensex outperformed most major global peers like the American Dow Jones, S&P 500, Nasdaq 100, Hong Kongs Hang Seng and Australias S&P/ASX 200 in financial year 2023,

Remarkably, India emerged as the second-best performer among emerging markets, trailing only South Africa. The resilience of Indian equities was primarily attributed to robust investments from domestic institutions, amounting to nearly ?1.62 lakh crores. Foreign portfolio investors sold Indian shares worth ?37,631 crores. Despite their sell-off, domestic sectors like FMCG, auto, and banks experienced notable gains, with the Nifty FMCG index rising by 26%, while auto and banking sectoral indices increased by 16% and 11%, respectively, by the end of the fiscal year. On the other hand, sectors such as pharma, energy, metals, realty, and IT witnessed declines ranging between 12% and 28% in FY23. Robust growth in the agriculture, construction, and services sectors and a rebound in manufacturing in the March quarter supported Indias 7.2% growth in FY23, beating the official forecast of 7%.

Indian Economy Outlook FY24

According to the International Monetary Fund (IMF), in FY24, the Indian economy is expected to grow at 6.5%. The logistic costs and commodity costs, which had risen substantially due to the Ukraine-Russia war, have started tapering and have also resulted in better margins for various companies. To control inflation, the Reserve Bank of India (RBl) had to adopt a tightening policy and raise interest rates by 250 basis points during the year. However, we expect the interest rates hikes to come to a pause during the next fiscal year.

Indias oil import bill is crucial as it is a major component of cross-border trade. Indias trade deficit in merchandise exports had gone up in FY23 from the previous year, and improvements in service exports were insufficient to offset the imbalance in trade. In FY24, the major challenges for India will be a slowdown in exports as the global economy is showing signs of a slowdown and the impact of higher interest rates. The projections of all major global rating agencies are also indicating a global slowdown.

On the positive side, India has one of the youngest population in the world. The government is committed to infrastructure growth, and adequate capex is happening on defense and infrastructure. Moreover, Indian banking sector has shown resilience during a global banking crisis demonstrating inherent strength of the economy and the banking system. We are likely to see consolidation with a strong positive bias and continue to attract the attention of global investors amidst a forecasted global slowdown.

Global Outlook FY24

According to the International Monetary Fund (IMF), the global economy is anticipated to face a slowdown in the coming years. Projections suggest that growth rates will see a dip in 2023 before stabilizing in 2024 (as per calendar year). Advanced economies, including the USA, are likely to experience a notable decline in growth rates, with estimates falling from 2.7% in 2022 to 1.3% in 2023.

The IMFs analysis highlights an anticipated global economic slowdown, particularly in advanced economies. Inflation is projected to decrease, although core inflation may take additional time to reach desired levels.

Indian Broking Industry

The Indian broking industry exhibits a remarkable diversity, encompassing numerous intermediaries that contribute to the market infrastructure. In the past few years, many new digital and discount broking companies have entered the market resulting in severe competition and low brokerage rates. The growth and competition in the market further intensified during the Covid-19 pandemic when the number of demat account openings saw record growth. This has helped in increasing the penetration of equity as an asset class among Indians and the entry of many young Indians into the markets.

We are happy to announce that our new mobile app Arihant Plus and web trading platforms launched in August 2022. This will help us compete better in the market and help in the next leg of the companys growth. We have discussed elaborately about the trading platforms and the digitization journey in the forthcoming section.

Who We Are and What We Do?

We are Arihant Capital, Indias leading financial services company helping investors meet their financial goals for over three decades. Our main objective is to assist our customers in growing their wealth by effectively managing risk and maximizing returns and offering them the right tools and services. Over the years, we have expanded our operations and gained a reputation as a trusted and respected financial firm.

Over the years, our company has broadened our service offerings to include equity and equity derivatives, commodity, and currency broking services, margin funding, portfolio management, merchant banking services, financial product distribution, financial planning, insurance services, and depository services. Our extensive network comprises 644 investment centers spread across 161 cities in India. We cater to a diverse client base exceeding two lac clients, which includes retail investors, high net-worth individuals, and both domestic and foreign financial institutions.

At Arihant Capital, we strive to provide personalized financial solutions, leveraging our expertise, experience, and comprehensive range of services. Our commitment to client-first approach, professionalism, and integrity has established us as a trusted partner for individuals and institutions.

Here is a list of products and services offered by Arihant Capital:

Our Digital Platform- Arihant Plus Mobile App

The Arihant Plus Mobile App, launched across multiple platforms including iOS, web, and Android, has gained significant traction among both existing and new clients.

Investing in general can be very complex for the average user. After gathering data on how traders and investors use the mobile application and other trading platforms, we designed Arihant Plus to make trading and investing easier and accessible for everyone. Our goal is to uncomplicate investing in stock markets and provide users with the right tools and resources to create wealth. With Arihant Plus, we have tried to create a well-thought-out Ul (user interface) thats cleaner, simpler, and caters to both beginners and experienced traders and combined it with the right tools and features so Othat even first-time users can quickly and easily understand.

With an already impressive Play Store rating of 4.84 stars, the application has been received well. Moving forward, Arihant Plus will continue to expand features and products, ensuring seamless and smart trading and investment experience for its users.

What does Arihant Plus offer to clients

• Convenience: The Arihant Plus mobile app is designed to create a friction-free trading journey for clients. The app provides users with a convenient and user-friendly platform to trade and invest in stocks. The new mobile app has been designed after a lot of research and based on feedback from clients to make their trading journey smoother, simpler, and quicker. Clients can conveniently track market trends, execute trades, find advanced charting and order types, and monitor their portfolios, anytime, anywhere with ease through our new trading platforms.

• Great Ul/uX: The right Ul/lIX enables users to make more rational decisions and better trade execution thereby helping them to achieve their financial goals, resulting in higher user satisfaction scores. By presenting information in an easily understandable form, users can get actionable insights about their money. Thats what we are trying to achieve with Arihant Plus.

• Innovation: Arihant Capital s investment in developing the Arihant Plus mobile app showcases its commitment to innovation and embracing digital transformation. By leveraging cutting-edge technology, the app offers a seamless and immersive user experience, empowering clients with advanced tools and features to make informed investment decisions.

• Real-Time Updates: Users of the app stay updated with real-time market information, enabling them to make timely investment decisions. The app provides live streaming of stock prices, market news, research, and market analysis, ensuring users can make informed decisions.

• Security: Arihant Plus prioritizes the security and privacy of its users. The app incorporates top-notch robust security measures to ensure the confidentiality and integrity of client information.

Review of Operations

The financial performance of our company in FY23 was directly influenced by the volatility witnessed in the Indian financial markets. The fluctuations in the market had a substantial impact on our revenues. However, despite these challenges, we remained resilient and focused on strengthening our digital capabilities.

The companys financial performance and key financial ratios for the period under review are mentioned as follows:

Year ended (Rs in lacs)

March 31,2023

March 31,2022

Income from operations



Other Income



Total Income



Total Expenditure



Profit before Tax



Tax on Profit



Net Profit for the period



Earnings Per Share




S. No.


March 31, 2023

March 31, 2022


Earning Per share (KPS)




Debt Equity Ratio




Debtors Turnover Ratio




Total Debt to Total Assets

0.1 i



Return on Net worth




During the financial year, your companys revenues dropped 18.97% from i?16,975.09 lacs in FY22 to ?13,754.77 lacs in FY23. This drop in revenue and also the profits were due to several factors:

• Stock market performance has a direct correlation to our business. Due to global economic uncertainty resulting in increased volatility in the market, lower participation was seen from our clients.

• To achieve the next level of growth, the company kickstarted its digitization journey which required significant investments in technology and hiring the right talent. We also engaged top consultants in the country to help us in our digitization efforts. This increased our costs considerably.

• Last year, the company had an exceptional income due to sale of wholly owned subsidiary. Due to its addition to the total revenues, the drop seen in FY23 revenues is steeper

Recognizing the importance of the digital landscape, we made significant investments to attract top talent, reinforcing our commitment to innovation and customer-centricity. Notably, in FY23, we achieved a major milestone with the successful launch of the Arihant Plus Mobile App.

While market volatility posed obstacles, we remain steadfast in our pursuit of growth and are confident in our ability to navigate through dynamic market conditions.

Risk factors relating to our business operations

The company pays close attention to the risks associated with its products, as they could potentially harm the business. It has established clear risk management policies to handle changing market conditions and evolving regulations, regularly reviewing its risk management framework. The company has dedicated resources in terms of people, processes, and technology to effectively manage its risk management system. It takes proactive measures to identify and address risks and opportunities, aiming to safeguard and add value for its stakeholders. Some key risks that affect the companys overall governance include economic and geopolitical risks, technology risks, operational risks, market risks, regulatory risks, governance risks, resource risks, and reputation risks.

1. Economic & Geopolitical Risk

As a financial services company, the companys business is materially affected by the economic conditions of the country and even global economies, global economic slowdown, and any geopolitical risks.

2. Technological Risk

• The Company will have to be abreast with the rapidly changing technology to offer seamless and improved experience to its clients. If the Company is unable to keep pace with this, it runs the risk of technology obso lescence.

• The management periodically reviews various technology risks such as protecting sensitive customer data, identity theft, cyber-crimes, data leakage, business continuity, access controls, etc. While the Company has put in place processes, systems and tools and is actively monitoring suspicious activities, there can be times that.

• The substantial amount of costs involved in deployment of technology is a critical factor. Obsolescence is another major concern as upgradation of technology is an ongoing exercise. Any significant changes in technology would pose pressure on our profitability.

• Our success depends largely upon our highly skilled technology professionals and our ability to hire, attract, motivate, retain and train these personnel.

3. Operational Risks

Security breaches pose a significant operational risk for financial services company, potentially resulting in significant liability and reputational damage. The breach of the company’s systems, as well as those of its clients or third parties, can lead to unauthorized access, theft of sensitive information, such as client personal data or financial details, and potential financial fraud. Such incidents can result in financial losses, legal implications, regulatory penalties, and erosion of customer trust.

4. Market Risk

Market volatility is a significant risk, as sudden price movements and increased market fluctuations can affect trading volumes and investor activity. Economic conditions also play a role, as downturns or recessions can reduce investor confidence and trading activity. Hence, like other players in the market, our business is highly sensitive to economic and political conditions prevalent in the country. Any sustained downturn in general economic conditions or Indian equity markets and severe market fluctuations would likely result in reduced client trading volumes and net revenues, and hence, will have a material adverse effect on our profitability.

5. Reputation Risk

Over the years, the company pays special attention to issues that may create a reputational risk. Events that can negatively impact the organization position are handled cautiously ensuring utmost compliance with relevant laws.

Our reputation could be at risk and we may be liable to our clients or to regulators for damages caused by inadvertent disclosure of confidential information and sensitive data. Our reputation, access to capital and longer-term financial stability could be at risk if we are unable to meet our stated action goals.

6. Credit Risk

We provide exposure limits to clients, based on the collaterals of securities that we receive from them, in connection with our brokerage business. Sharp change in market values of securities and the failure by parties to honour their commitments on a timely basis could have a material adverse effect on the profitability of our operations.

7. Competition Risks

As a financial services company operating in the rapidly evolving industry, we face significant challenges due to competition risk. The market landscape has become increasingly competitive, making it harder for us to differentiate ourselves and attract new customers. Aggressive pricing strategies employed by our competitors can trigger price wars, resulting in squeezed profit margins and overall diminished profitability.

Established brokerage firms with strong brand recognition and abundant resources pose a formidable challenge. Furthermore, regulatory changes introduce additional complexities, increasing our compliance costs and creating barriers to entry. To navigate these challenges, we understand the utmost importance of maintaining customer loyalty. Competitors offering attractive incentives, superior service, or additional features can tempt our clients to switch brokers.

8. Compliance Risk

As a participant in the securities markets and a registered merchant banker, we are subject to extensive regulation under the Securities and Exchange Board of India (SEBl), multiple exchanges and other regulatory bodies. The costs and uncertainty related to complying with such regulations continue to increase. While the slew of new regulations introduced by SEBl are in the interest of the investors, and we really welcome such changes, these regulations may impact our business operations, enhance capital requirement and impose restrictions on the activities we are allowed to do and the facilities we can offer to the clients.

Despite our best efforts to comply with all the applicable regulations, there are a number of risks, particularly in areas where applicable regulations or laws may be unclear or where regulators could revise their previous guidelines. Additionally, some legal/regulatory frameworks provide for the imposition of fines and penalties for noncompliance even though the noncompliance was unintentional or inadvertent and even though the systems and processes reasonably designed to prevent violations were in place. Such a finding can affect our business, and damage our reputation.

9. Litigation Risk

As a financial services company, we face significant litigation and regulatory risks. Litigation and arbitration claims include those brought by our clients, authorized partners and the regulators. AnOO unfavorable judgment, settlement, injunction or fine could materially impact our business and affect our operating results. Moreover, such litigation can require the expenditure of significant company resources.

Risk Management

Risk management holds a pivotal role in our business strategy and planning discussions. At Arihant, we have implemented a robust risk management framework that allows us to identify, understand, and effectively manage risks associated with our operations.

Integrating risk management seamlessly across all aspects of our business, we aim to strike the right balance between risk and return while ensuring prudent financial management. Compliance with applicable laws, rules, and regulations is of utmost importance to us. Risk management is deeply ingrained in our overall strategy, fostering a strong risk culture that encourages a holistic approach to risk management throughout our organization.

Regular review of our risk management policies and processes is conducted by the Audit Committee, which also stays informed about risk assessments, the impact of risks on our business, and our mitigation plans. We are committed to maintaining a vigilant and proactive approach to risk management, ensuring the security and stability of our operations in the best interest of our stakeholders.

Human Resources

Arihant has an experienced and talented pool of employees who play a key role in enhancing business efficiency, devising strategies, setting up systems, and responding to an evolving business environment. The company has embarked on several human resource initiatives to enhance the productivity of the organisation. The company endeavours to provide a safe, conducive, and productive work environment. Arihant is committed to providing a positive work environment free of discrimination and harassment. Equal opportunity and fair treatment are part of our code of conduct.

The company believes that the quality of its employees is the key to its success and is committed to equipping them with skills that enable them to seamlessly evolve with ongoing technological advancements. Our success depends in large part on our management team, key personnel, and our ability to attract and retain them.

The company conducts training programmes to improve technical and behavioural skills, business excellence, management skills, and leadership skills. It also creates awareness about company values and the code of conduct. The company believes in a safety culture and implements policies and programmes to safeguard the health and well-being of its people. It also strives to create a diverse and inclusive workplace that accommodates people from varied backgrounds with an unbiased attitude towards personal preferences, cultural or sexual orientation, geographical origin, etc.

Corporate Social Responsibility (CSR)

Outline of our CSR Policy

At our core, we are deeply committed to social responsibility, recognizing its pivotal role in fostering positive societal change. Our comprehensive CSR program reflects our dedication to striking a harmonious balance that encompasses human welfare, environmental stewardship, and community empowerment. By seamlessly integrating CSR principles into our business operations and actively participating in CSR initiatives, we are steadfast in our pursuit of continuous contributions to global sustainable development. This policy serves as our guiding framework, outlining the principles and processes that underpin the execution, implementation, and monitoring of our CSR activities. With unwavering commitment, we strive to create a lasting impact and uplift the communities we serve.

Arihants Commitment to Corporate Social Responsibility

In FY23, our company demonstrated its unwavering commitment to Corporate Social Responsibility (CSR) and works in several areas including education, upliftment of the underprivileged, healthcare, and sustainability.

For India to grow, we strongly believe we need to uplift and empower young underprivileged children and give them access to quality education in small villages. To support this, your company engaged in several activities through its CSR initiatives including donation of furniture to schools, financial support to educational institutions, and funding construction of school building. Furthermore, we distributed books and copies, and other stationary materials to students, ensuring they get access to quality education.

We also actively engaged in plantation drives to reduce our carbon footprint.

Recognizing the importance of sports and health, we have invested in sports activities for the underprivileged, organized health camps, and provided diagnostics services.

The comprehensive details of our Corporate Social Responsibility (CSR) activities are included in the Board Report, highlighting our commitment to social impact. For accessing our companys CSR policy, please click here. We invite stakeholders and interested parties to visit our website and familiarize themselves with our CSR initiatives and the strategic framework we have established to drive positive change in the communities we serve- internal Control System

The internal control systems are designed to safeguard the Companys assets and ensure efficient productivity at all levels. The systems are adequate for the size of the business and the industry in which it operates. Well-defined processes, guidelines, and procedures and adequate internal information systems enable the Company to enhance internal controls.

Decision-making is made easier due to proper information flow. Periodic and frequent audits ensure strict adherence to the set procedures and processes. The audit committee reviews reports presented by the internal auditors on a routine basis. The committee makes note of the audit observations and takes corrective actions, if necessary. It maintains a constant dialogue with statutory and internal auditors to ensure that internal control systems are operating effectively.

The Environment

At Arihant, we place great importance on promoting eco-friendly and environmentally conscious practices.

We actively encourage our clients to embrace paperless solutions by opting for electronic trade confirmations (e-contract notes), account statements, and bills. By going paperless, not only do we contribute to preserving the environment, but we also enable our clients to conveniently access vital information electronically, regardless of their location.

Our philosophy encompasses achieving outstanding performance while upholding ethical behavior and a steadfast dedication to minimizing our environmental footprint. We firmly believe that sustainable practices and responsible actions go hand in hand with delivering successful outcomes. By embracing eco-friendly initiatives, we strive to create a positive impact on the environment and foster a greener, more sustainable future for all.

Commitment to doing what is right

At Arihant Capital Markets, our top management team and board of directors are dedicated to doing what is right. We prioritize the best interests of our associates, clients, and shareholders, ensuring ethical leadership and value creation that fosters trust and long-term success.

Opportunities, Challenges & Strengths


• Despite the steep growth in the number of new demat accounts in India over the last five years, the penetration of equity as an asset class is still very low in the country. This presents an opportunity for us to cater to this growing customer base in the equity segment and offer our services.

• The Indian market is witnessing a significant shift towards digital platforms for trading and investing. We look to leverage technology to provide a seamless and user-friendly trading experience to our clients, attracting more customers in the process.

• Offering a wide range of investment options, including equities, derivatives, mutual funds, commodities, merchant banking activities and more.

• Providing personalized services to retail investors. Building relationships, offering tailored investment advice, and providing prompt customer support can help attract and retain clients.

• Corporates looking at consolidation/acquisitions / restructuring open out opportunities for the corporate advisory business.

• There has been an increase in disposable income, and this provides an opportunity for getting more wallet share from our customers.

• By adhering to regulatory compliance, maintaining transparency, and providing a reliable and secure trading platforms, we seek to establish trust with clients, leading to long-term relationships.


• The brokerage industry in India is highly competitive, with several established players and new entrants vying for market share. We may face tough competition from larger brokerage firms with more extensive resources and established brands.

• Customer preferences and expectations are continually evolving. Retail investors now seek seamless, user-friendly interfaces, mobile trading apps, and personalized services. We need to continuously assess and respond to changing customer demands to stay competitive.

Regulatory Changes.

• The stock markets can be volatile, influenced by various factors such as economic conditions, political developments, and global events. We need to have robust risk management systems in place to mitigate potential losses and protect our clients investments.

• Market trends making other assets relatively attractive as investment avenues.


• Established Brand: Arihant Capital Markets Limited (ACML) is a well-known and respected brand in the brokerage industry in India, instilling trust and credibility among clients and stakeholders.

• Experienced Management Team: The company is backed by a highly experienced top management team with a proven track record, ensuring effective leadership and strategic decision-making.

• Strong Franchisee Network: ACML has established leadership in the franchisee business, fostering strong relationships with its franchisees and promoting growth and profitability for both parties.

• Focus on Research and Differentiation: The companys understanding of equity as an asset class and its commitment to quality research set it apart from competitors, providing valuable insights to clients and enhancing its competitive edge.

Commitment to superior quality and process execution.


Our strategic vision at Arihant Capital Markets is to seize the immense growth and consolidation opportunities within the brokerage industry. Leveraging our robust infrastructure, experience and knowledge, we aim to expand our market share and enhance profitability. Staying at the forefront of industry dynamics, we will embrace technological advancements to ensure our offerings are aligned with evolving client expectations.

By strategically expanding our network in high-potential markets with manageable competition, we will strengthen our position and reinforce our relevance to clients. Our client-centric approach will enable us to deeply understand their investment requirements and deliver tailored solutions that meet their unique needs. Through these initiatives, we are committed to building a sustainable organization that remains attuned to our clients agendas, fosters growth opportunities for our employees, and delivers profitable returns for our valued investors.

Statutory Compliance

At Arihant Capital Markets, we place great emphasis on statutory compliance, ensuring that we adhere to all relevant regulations and laws. Our company has established a robust and transparent compliance framework that is well-documented and easily demonstrable. This framework enables our management to effectively monitor and report on compliance risks and exposures to the Board. To ensure comprehensive compliance, our Chief Compliance Officer provides a declaration at each Board Meeting, confirming adherence to the provisions of various statutes. This declaration is obtained after obtaining confirmation from all operating departments across our subsidiary companies in India. By maintaining a strong focus on statutory compliance, we prioritize operating ethically and responsibly, thereby earning the trust and confidence of our stakeholders.

Cautionary Statement

The Management Discussion and Analysis (MDA) report provides a comprehensive overview of the companys objectives, projections, estimates, and expectations. It is important to note that these statements may be forward-looking, as defined by applicable laws and regulations. However, it is crucial to understand that the actual outcomes and results may vary significantly from what is expressed or implied in the report. Numerous factors can influence the companys operations, including changes in governmental regulations, tax regimes, forex markets, economic developments both in India and the countries where the company operates, and other incidental factors. Therefore, it is essential to consider these dynamic elements when interpreting the information presented in the MDA report.