Arihant Capital Markets Ltd Management Discussions

Macroeconomic Overview

FY25 highlighted Indias resilience amidst global economic turbulence, underscored by robust sectoral performances, controlled inflation, and sustained domestic demand. As of March 2025, the aggregate market capitalization of all listed Indian companies surpassed Rs.443 lakh crore (~$5.3 trillion), positioning India as the fourth-largest stock market globally. The BSE alone crossed the $5 trillion threshold in April 2025, recovering from prior declines. The outlook for FY26 remains optimistic, supported by sound policy frameworks and consumption-driven growth.

Key Developments and Events

India-EFTA Trade Agreement

On March 10, 2025, India signed a landmark Trade and Economic Partnership Agreement with the EFTA bloc (Iceland, Liechtenstein, Norway, and Switzerland), enhancing bilateral trade and investment avenues.

Startup Ecosystem Milestone

India surpassed 120 unicorn startups by early 2025, driven by proactive government support and a thriving venture capital landscape.

Trump Reclaims U.S. Presidency and Announces Tariffs

In early 2025, Donald Trump reclaimed the U.S. presidency and immediately announced plans to impose higher tariffs on several countries, including India. This move escalated global trade tensions and sparked concerns over a potential trade war. The announced tariffs aimed to address trade imbalances but also threatened to disrupt global supply chains and international trade relations, prompting countries like India to engage in urgent negotiations to mitigate impacts.

Economic Indicators and Growth

GDP and Consumption

Indias real GDP grew 6.5% in FY25 (vs. 9.2% in FY24), reaching $3.9 trillion. The Jan-Mar 2025 quarter delivered a strong 7.4% growth,

led by construction and manufacturing. Private Final Consumption Expenditure (PFCE) rose 7.2%, signifying a revival in rural and discretionary consumption.

Fiscal and Monetary Indicators

Fiscal Deficit: The fiscal deficit stood at Rs.15.77 lakh crore, or 4.8% of GDP, aligning with the revised estimates set by the Union Budget.

Inflation: Retail inflation averaged 4.9% during April-December 2024, down from 5.4% in FY24. In April 2025, CPI reached a six-year low of 3.16%, prompting the Reserve Bank of India (RBI) to consider a third consecutive rate cut.

Monetary Policy: The RBI reduced the repo rate by 50 basis points (bps) to 5.50%, and lowered the cash reserve ratio by 1003bps in its June meeting, balancing growth support with inflation control, currently adopting a neutral stance.

Q4 FY25 Results: A sample of 1,893 companies reported a 5.4% increase in net sales and a 7.6% rise in net profits, indicating resilience amid global economic challenges

Banking and Financial Sector

Banking Profits: Indias banking sector achieved record profits of Rs.3.71 lakh crore in FY25, a nearly 14-fold increase over the past decade. Public sector banks (PSBs) led this surge, with a 26% profit increase, narrowing the gap with private banks.

Asset Quality: Moodys Ratings projects that Indian banks will maintain stable asset quality over the next 12 months, with non-performing loan (NPL) ratios expected to remain between 2% and 3%.

Deposit Growth: Bank deposits grew by 10.6% in FY25, a slowdown from 13% in FY24. Term deposits remained dominant, driven by attractive interest rates.

Corporate Cash Reserves: Listed Indian companies cash and bank balances surpassed Rs.10 lakh crore for the first time in FY25, reflecting cautious treasury management amid economic uncertainties.

Generating Wealth

Indian Capital Markets: FY25 Overview

Stock Market Performance

Nifty 50: The Nifty 50 index concluded FY25 with a gain of 5.34%, despite experiencing volatility in the latter half of the year.

BSE Sensex: The BSE Sensex registered a 5.1% increase over the fiscal year.

Sectoral Performance: Sectors such as defence, financials, and pharmaceuticals outperformed, while media and energy sectors lagged.

IPO Market

In total, 319 companies went public in FY25 (80 mainboard + 239 SME), raising close to nearly Rs.1.92 trillion. Funds raised nearly tripled, from Rs.61,915 crore in FY24 to Rs.1.92 trillion in FY25, driven by several large issues (like HDB Financial and Tata Technologies) and strong investor sentiment. A significant trend has been the rise of Tier II and III city promoters, accounting for 15% of total IPO funding.

Mutual Funds

In 2013, monthly SIP inflows were under Rs.1,000 crore. Fast forward to June 2025, SIPs touched a record Rs.27,269 crore/month, with 8.64 crore active SIP accounts and SIP AUM crossing Rs.15.3 lakh crore. Total industry AUM reached Rs.74.4 lakh crore (Rs.74.4 trn) in June 2025 a nearly ninefold increase in just over a decade. These are not just numbers its the story of millions of people choosing to build wealth, one monthly investment at a time.

Foreign Portfolio Investments (FPI)

While equities witnessed significant outflows during the year, robust inflows into debt, mutual funds, and alternative investment avenues stood at Rs.20,018 crore, that helped balance the overall trend, resulting in a modest net inflow. According to NSDL data, the overall net FPI outflows from equities for FY 2024-25 stood at Rs.1,27,041 crore.

Broking Industry & Retail Boom

Market Size & Growth:

The Indian securities brokerage market was valued at around $4.2 billion in 2025, up from $3.9 billion in 2024, with a projected CAGR of approximately 8% over 2024-2029 due to rising retail participation and technology-driven brokerage services.

The total number of demat accounts in India as of March 2025 is approximately 192.4 million (19.24 crore). This figure represents a record addition of 41.1 million new demat accounts during the financial year 2024-25.

Global Economic Standing - India stands at a Sweet Spot

In 2025, India became the 4th largest global economy, overtaking Japan—driven by structural reforms, policy continuity, and its strategic global positioning under the Aatmanirbhar Bharat vision. As the fastest-growing major economy, India is firmly on track to become the third-largest economy by 2027 and is projected to reach a GDP of $7.3 trillion by 2030.

Outlook for FY26

GDP Projections: The Reserve Bank of India projects a GDP growth rate of 6.5% for FY26, supported by strong domestic consumption, strategic reforms, and rising private investment.

Inflation Expectations: Inflation is expected to stabilize around the 4% target, providing room for sustained economic expansion.

Fiscal Targets: The government aims to reduce the fiscal deficit to 4.4% of GDP in FY26, emphasizing fiscal consolidation, growth sustainability, and macroeconomic stability.

Arihant Capital Overview:

Since last three decades, Arihant Capital has been helping Indians meet their financial goals through investment in securities. Our client first approach and integrity has established us as one of the nations premier financial services companies, earning a reputation for trust and respect.

We offer both full brokerage services and digital only brokerage services to retail, institutional, and corporate clients. Our main objective is to assist our customers in growing their wealth by providing them with the right tools, platforms, and services so they can effectively manage their risk and maximize returns. The company offers a flat fee broking plan for its digital customers and a turnover-based fee model to full-service brokerage clients

We are building a comprehensive financial services ecosystem designed to serve our clients needs at every milestone of their wealth journey, strengthening engagement and increasing wallet share.

Products and Services We Offer:

Broking and Depository: Retail broking (equity, derivatives, commodity and currency), depository services (NSDL and CDSL).

Institutional Broking: Serving banks, insurance companies, mutual funds and other institutions.

Trading Platforms: Mobile, web and desktop trading platforms for equities, ETFs, derivatives, mutual funds, IPOs, NCDs, commodities and currencies.

Merchant Banking: Capital markets services, corporate finance, strategic advisory services, valuation and specialised services Third party solutions: Mutual funds, fixed income, bonds, NPS distribution services.

NBFC & MTF Loan against shares and margin trading funding services .

Portfolio Management Services Investment portfolio in stocks, fixed income.

NRI Depository services, investment across asset classes and platforms.

Our broking and distribution network blends the strengths of both physical and digital channels to create unmatched value for clients.

Arihants extensive footprint across Indias Tier2 and Tier3 cities remains a cornerstone of our growth strategy. Flere, experienced relationship managers deliver high touch, personalised services, offering clients tailored investment guidance powered by our robust inhouse research.

This deep rooted, localised approach not only fosters trust but also nurtures enduring relationships, enabling us to serve clients with relevance, consistency, and long term value.

The digital model caters to self-directed investors through Arihant Plus—a worlddass application featuring intuitive interface, seamless onboarding, access to an extensive range of wealth products and powered by smart research driven insights. This empowers tech savvy investors to make informed decisions and manage their investments across asset classes with speed, convenience, and confidence.

Revenue Performance - FY2024-25

Arihant Capital reported a total income of Rs.248.01 crore in FY2024-25, an increase from 7235.61 crore in FY2023-24, reflecting a 5.3% year-on-year growth. This growth, achieved in a year marked by intermittent market volatility, demonstrates the strength of our diversified business model, operational agility, and ability to capture opportunities across equity broking, distribution, merchant banking, and allied services. However, PAT declined from 770.12 Cr in FY 2024 to 758.57 Cr in FY 2025, largely due to higher operating and finance costs, along with a sharp fall in treasury gains.

Review of Operations: The companys financial performance and key financial ratios for the period under review are mentioned as follows: Consolidated Financial Figures

Year ended	March 31,2025	March 31, 2024
Income from operations	24731.70 L	23514.36 L
Other Income	69.38 L	46.21 L
Total Income	24801.08 L	23560.57 L
Total Expenditure	17721.66 L	14502.10 L
Profit before Tax	7728.62 L	9269.57 L
Tax on Profit	1858.37 L	2218.53 L
Net Profit for the period	5870.28 L (PAT)	7051.04 L (PAT)
Total Comprehensive Income	5857.38 L	7012.03 L

 

Key Financial Ratios:		(Rs. in lacs)
SNo. Ratios	March 31,2025	March 31, 2024
1. Earnings per Share	24731.70 L	23514,36 L
2, Debt to Equity Ratio	69.38 L	46.21 L
3. Return on Net Worth	24801.08 L	23560.57 L
4. ROCE	17721.66 L	14502.10 L

Over the last five years, our total income has grown from Rs.116.16 crore in FY2020-21 to Rs.248.01 crore in FY2024-25, representing a CAGR of 20.9%. This sustained performance has been underpinned by:

Consistent expansion in our client base through both physical and digital channels.

Higher retail and institutional participation supported by a robust research and advisory ecosystem.

Increased contribution from interest income, distribution, and merchant banking fees alongside our core brokerage business.

Our strategic focus on strengthening revenue streams, scaling wealth management offerings, and deepening wallet share has positioned us to deliver resilient growth even in challenging market environments. Going forward, we remain committed to leveraging our omnichannel presence, technology investments, and research driven approach to accelerate income growth while ensuring sustainable value creation for s takeholders.

Segmental Revenue Growth

Brokerage Income: rose from Rs.10,765.70 lakhs in FY24 to Rs.12,481.33 lakhs in FY25, a growth of 15.9%, driven by higher retail participation, increased trading volumes, and our enhanced omnichannel distribution strategy.

Interest Income: grew 26.1%, from Rs.6,361.16 lakhs to Rs.8,018.78 lakhs, supported by increased deployment of client assets, margin funding activity, and efficient treasury management.

Third Party Distribution & Commission Income: recorded a robust 38.5% growth, from Rs.396.77 lakhs to Rs.549.91 lakhs, reflecting the success of our expanded wealth product suite and cross sell initiatives.

Fees from Merchant Banking: moderated slightly from Rs.495.45 lakhs to Rs.462.97 lakhs. During the year under review, the division successfully completed one SME IPO, two rights issues (including Rs. 550 crores issue by Jyoti Structures Ltd.) and two open offers, besides several advisory assignments. The Division has a healthy pipeline for the upcoming year having signed several mandates for SME IPOs, main board IPOs and other advisory assignments, which are in advanced stages of execution.

Other Income: improved from Rs.43.21 lakhs to Rs.69.15 lakhs, mainly on account of treasury gains and ancillary business income. Gain on Fair Value saw a reduction from Rs.4,398.09 lakhs to Rs.2,168.49 lakhs, reflecting market linked valuations, while Dividend Income and Depository Receipts Income remained stable.

Technology & Digital Transformation:

In FY 2024-25, we fast-tracked our digital transformation by modernizing infrastructure, adopting hybrid cloud and microservices, and strengthening our in-house tech stack. At the core of this journey is Arihant Plus - our Al-powered super app, unifying investments, advisory, and wealth solutions into a seamless platform. This innovation enhances scalability, security, and customer experience while unlocking new revenue streams and long-term value for our investors.

At Arihant, operational resilience is more than continuity—it is the strategic capability to anticipate and withstand disruptions, adapt swiftly, and maintain seamless client service across our physical and digital channels. Backed by robust technology infrastructure, strong governance, and research driven processes, we ensure our clients financial journeys remain uninterrupted, secure, and well supported in any market condition.

Across our businesses, we are relentlessly focusing on operational leverage, nurturing human capital, and driving digital transformation creating a future-ready organisation built for sustainable growth and client excellence.

Risk factors relating to our business operations:

The company prioritizes risk management to mitigate potential business impacts. It has established clear policies to address changing market conditions and evolving regulations, regularly reviewing its risk management framework. Dedicated resources, including people, processes, and technology, are in place to manage risks effectively. Proactive measures are taken to identify and address risks and opportunities, safeguarding and adding value for stakeholders. Key risks include economic, geopolitical, technology, operational, market, regulatory, governance, resource, and reputation risks.

Risk Management:

At Arihant, risk management is central to our business strategy and decision-making. We have established a comprehensive framework that enables us to identify, assess, and mitigate risks across all aspects of our operations. By integrating risk management into our core processes, we oim to maintain an optimal balance between risk and return while ensuring prudent financial discipline. Compliance with applicable laws and regulations remains a top priority, supported by a strong risk culture that promotes accountability and foresight across the organization. The Audit Committee regularly reviews our risk policies, assessments, and mitigation plans, ensuring a vigilant and proactive approach to safeguarding business continuity and stakeholder interests.

Human Resources:

Our people are at the heart of Arihants success. Guided by our Code of Conduct and Ethics, we are committed to fostering a workplace built on respect, equality, and inclusion—free from discrimination or harassment. With a talented and experienced workforce, we continue to drive business efficiency, innovation, and adaptability in a dynamic environment.

We prioritize career development and employee growth through structured promotions, role enhancements, and enrichment opportunities. Training programs focus on technical expertise, leadership, business excellence, and behavioural skills, while reinforcing our core values and ethical standards. We also place strong emphasis on employee well-being, implementing robust health, safety, and wellness initiatives. By nurturing a diverse, inclusive, and future-ready workforce, Arihant ensures long-term organizational growth and resilience.

Generating Wealth

Corporate Social Responsibility (CSR:

At Arihant Capital, Corporate Social Responsibility is woven into our purpose of creating sustainable value for all stakeholders. We view CSR as a commitment to inclusive growth and community development. We believe that our business growth is meaningful only when it uplifts communities and preserves the environment. By empowering individuals with education, skills, and opportunities, Arihant Capital strives to contribute to Atmanirbhar Bharat and build a more equitable future.

Governance:

Our CSR activities are aligned with Schedule VII of the Companies Act, 2013, and overseen by the CSR Committee of the Board. Projects are implemented both directly and through credible registered agencies, ensuring transparency and measurable outcomes.

FY 2024-25 CSR Highlights:

CSR Obligation (2% of average net profit): Rs.118.87 Lakhs

Total Spent During the Year: Rs.82.34 Lakhs

Focus Areas: Education, skill development, preventive healthcare, gender equality, environment sustainability, and community development.

Key Initiatives Undertaken:

Skill Development Training Programme : A multi-year project to empower women, youth, and students with employable skills and entrepreneurial capacity.

Education Support: Contributions to schools, academies, trusts, and educational institutions, providing facilities to socially and economically backward groups.

Healthcare & Preventive Care: Support to hospitals, trusts, and healthcare initiatives to improve community health access.

Community & Environmental Projects: Initiatives through registered trusts for sustainability, rural development, and ecological balance.

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 and other incidental factors. Therefore, it is essential to consider these dynamic elements when interpreting the information presented in the MDA report.